News

2015

Golden Minerals Reports First Quarter 2015 Financial Results

GOLDEN, Colo., May 6, 2015 /PRNewswire/ -- Golden Minerals Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX: AUM) today announced financial results for the quarter ended March 31, 2015.  All references in this press release to "$" are to United States dollars.

First Quarter Highlights

  • Reduced net loss to $3.4 million in the first quarter 2015 from $4.5 million in the fourth quarter 2014 and $5.7 million in the first quarter 2014
  • Achieved improved grades of mined material to 178 grams per tonne (gpt) silver and 2.7 gpt gold
  • Generated approximately 126,000 payable silver equivalent ounces (AgEq oz), in line with previous guidance, and sold approximately 139,000 silver equivalent ounces
  • Reported cash costs, net of by-product credits, per payable ounce of silver of $22.53, in line with previous guidance.  (See "Non-GAAP Financial Measures" below.)
  • Reported results of a Technical Report for the Velardena Properties prepared in accordance with National Instrument 43-101 ("NI 43-101"), which shows significantly higher grades of silver and gold than reported in the previous 2012 NI 43-101 report
  • Reported results of Technical Reports for the Los Azules and Santa Maria exploration properties prepared in accordance with NI 43-101
  • Began, in March 2015, a 2,000-meter diamond drill program at the Company's Celaya property in Guanajuato State, Mexico

Financial Results

The Company reduced its net loss to $3.4 million in the first quarter 2015 compared to $5.7 million in the first quarter 2014.  The difference is primarily attributable to revenue of $2.3 million recorded in the current quarter compared to no revenue in the first quarter 2014; the absence of Velardena care and maintenance expenses in the current quarter as opposed to $1.2 million in the 2014 period; $0.6 million lower exploration expenses and $0.4 million lower general and administrative expenses in the 2015 quarter; and $1.1 million higher other income recorded in the first quarter 2015 related to a reduction in contingent liabilities.  Partly offsetting these items were $3.0 million cost of metals sold in the current period compared to none in the 2014 period, $0.6 million higher depreciation and amortization-related expenses and $0.2 million higher project-related expenses at El Quevar and Velardena.

The Company's cash and cash equivalents balance at March 31, 2015 was $6.1 million compared to $8.6 million on December 31, 2014.  The primary uses of cash during the first quarter 2015 were as follows:

  • $0.7 million negative operating margin (defined as revenues less costs of sales) at the Velardena Properties
  • $0.9 million in other exploration expenditures
  • $0.4 million in maintenance and property holding costs at the El Quevar project
  • $1.3 million in general and administrative expenses, offset in part by a reduction in working capital and other items of $0.8 million

Velardena Properties Update

The Company recommenced mining activities at the Velardena Properties in July 2014 and began processing material from the mine in November 2014.  The Company's decision to restart mining and processing activities followed an extensive evaluation period which began after the shutdown of the Velardena Properties in June 2013 and continued through June 2014.  Velardena re-opened as a leaner and lower-cost mine with a new mine plan and new management.  During the first quarter 2015, the Company focused primarily on mining material from the San Mateo, Terneras and Roca Negra vein systems.  The mill continued to ramp up and averaged about 260 tonnes per day (tpd) in March, near its full capacity of 285 tpd. 

Average grades of mined material in the first quarter 2015 were 178 gpt silver and 2.7 gpt gold, improving from December 2014 average grades of 127 gpt silver and 1.3 gpt gold.  First quarter payable metals generated were approximately 126,000 payable silver equivalent ounces, compared to about 42,000 payable ounces of silver equivalent generated during November and December 2014.  (Silver equivalent ounces include silver and gold but exclude lead and zinc, and are calculated at a ratio of 70 silver ounces to one gold ounce.)  First quarter 2015 cash costs were $22.53 per payable silver ounce, net of by-product credits.  This performance is in line with previous guidance which indicated first quarter 2015 output of between 100,000 and 150,000 payable silver equivalent ounces at cash costs per payable silver ounce, net of by-product credits, of between $20 and $30.

Also during the quarter, engineering firm Tetra Tech completed a Preliminary Economic Assessment and Technical Report prepared in accordance with NI 43-101 at the Velardena Properties.  The Technical Report showed markedly higher silver and gold grades as compared to the previous (June 2012) NI 43-101 Technical Report; the 2015 report indicates silver grades as at December 31, 2014 in excess of 300 gpt and gold in excess of 4.0 gpt.  Additionally, the 2015 Technical Report forecasts 2015 through 2018 cash costs per silver ounce, net of by-product credits, of $9.17.  

The Company expects continued grade improvement of mined material processed through the plant during the remainder of 2015 as the proportion of stoped material increases and the mine continues to focus on dilution control procedures.  Guidance remains unchanged for full year 2015, with anticipated output between 0.8 and 1.0 million payable silver equivalent ounces and cash costs between $12.00 and $15.00 per payable silver ounce, net of by-product credits (assumes prices of $17 per ounce silver and $1,250 per ounce gold). 

Exploration Update

During the first quarter 2015, engineering firm Tetra Tech completed Technical Reports prepared in accordance with NI 43-101 for two of the Company's exploration properties in the Hidalgo del Parral, Chihuahua Mexico area.  (See press release dated April 20, 2015 for additional information.)  Both reports used metals prices of $1,420 per troy ounce gold and $24per troy ounce silver.

  • The Santa Maria NI 43-101 Technical Report includes, as at April 20, 2015, 86,000 tonnes of Indicated mineral resources at silver and gold grades of 280 gpt and 1.1 gpt, respectively, as well as 306,000 tonnes of Inferred mineral resources at silver and gold grades of 312 gpt and 1.2 gpt, respectively.  The mineral resource estimate used a 165 gpt silver equivalent cut-off grade and was based on 125 composited channel samples and 2,900 meters of drilling in 13 holes over a strike length of 35 meters and down dip depth of 155 meters. 
  • The Los Azules NI 43-101 Technical Report includes, as at April 20, 2015, 78,000 tonnes of Indicated mineral resources at silver and gold grades of 155 gpt and 3.0 gpt, respectively, and 290,000 tonnes of Inferred mineral resources at silver and gold grades of 118 gpt and 3.9 gpt, respectively.  The mineral resource estimate used a cut-off grade of 2.8 gpt silver equivalent and was based on 206 composited channel samples and 30 drill holes totaling 7,479 meters over a strike length of 2,100 meters and a down dip extent of 350 meters.  The Company believes that this property's grades and tonnage, as outlined in the NI 43-101 Technical Report, do not meet company objectives, and therefore Golden Minerals intends to relinquish this property to the concession owner.

In March 2015, Golden Minerals began a 2,000-meter diamond drill program at its Celaya property to test for Guanajuato district-style epithermal veins beneath extensive clay-quartz alteration.   Initial results from the drilling are anticipated in the second quarter 2015.  The Celaya property is located 45 kilometers southeast of the city of Guanajuato in Guanajuato State, Mexico.

Financial Outlook

At March 31, 2015, the Company's cash and cash equivalents balance was $6.1 million.  Assuming metals prices of $17 per ounce silver and $1,250 per ounce gold and a positive operating margin of approximately $2.4 million from the Velardena Properties for the remainder of 2015, Golden expects to spend approximately $6.5 million during the remainder of 2015 on the following items and to end the year with a cash balance of approximately $2.0 million:

  • $0.2 million for sustaining capital at the Velardena Properties
  • $0.5 million at the El Quevar to fund ongoing maintenance activities and property holding costs
  • $2.0 million on other exploration activities and property holding costs related to the Company's portfolio of exploration properties located primarily in Mexico
  • $3.2 million on general and administrative costs and $0.6 million in increased working capital primarily related to the build-up of inventories and accounts receivable and a reduction of accounts payable at the Velardena Properties

A ten percent change in the price per ounce of silver would impact our end-2015 cash balance by approximately $0.6 million (positive or negative).  A ten percent change in the price per ounce of gold would impact our end-2015 cash balance by approximately $0.4 million (positive or negative). 

Additional information regarding first quarter 2015 financial results may be found in the Company's 10-Q Quarterly Report which is available on the Golden Minerals website at www.goldenminerals.com.

About Golden Minerals

Golden Minerals is a Delaware corporation based in Golden, Colorado.  The Company is primarily focused on mining its Velardena Properties and the exploration of properties in Argentina and Mexico.

Technical Information

The technical contents of this press release have been reviewed by Warren M. Rehn, M.Sc., a Qualified Person pursuant to NI 43-101.  Mr. Rehn is Senior Vice President of Exploration and Chief Geologist for Golden Minerals and a QP member of the Society for Mining Metallurgy and Exploration.  For more information regarding our mineral resources, please refer to http://goldenminerals.com/explor2-resources.php.

Non-GAAP Financial Measures

Cash costs per payable silver ounce, net of by-product credits is a non-GAAP financial measure calculated by the Company as set forth below, and may not be comparable to similar measures reported by other companies.

Cash costs per payable silver ounce, net of by-product credits, include all direct and indirect costs associated with the physical activities that would generate concentrate products for sale to customers, including mining to gain access to mineralized materials, mining of mineralized materials and waste, milling, third-party related treatment, refining and transportation costs, on-site administrative costs and royalties.  Cash costs do not include depreciation, depletion, amortization, exploration expenditures, reclamation and remediation costs, sustaining capital, financing costs, income taxes, or corporate general and administrative costs not directly or indirectly related to the Velardena Properties.  By-product credits include revenues from gold, lead and zinc contained in the products sold to customers during the period.  Cash costs, after by-product credits, are divided by the number of payable silver ounces generated by the plant for the period to arrive at cash costs, after by-product credits, per payable ounce of silver.  Cost of sales is the most comparable financial measure, calculated in accordance with GAAP, to cash costs.  As compared to cash costs, cost of sales includes adjustments for changes in inventory and excludes net revenue from by-products and third-party related treatment, refining and transportation costs, which are reported as part of revenue in accordance with GAAP.

Cautionary Note to U.S. Investors concerning Estimates of Indicated and Inferred Resources

This press release uses the terms "indicated resources" and "inferred resources" which are defined in, and required to be disclosed by NI 43-101.  We advise U.S. investors that these terms are not recognized by the United States Securities and Exchange Commission (the "SEC").  The estimation of measured resources and indicated resources involves greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves.  Mineral resources are not mineral reserves, and U.S. investors are cautioned not to assume that measured mineral resources or indicated mineral resources will be converted into reserves.  The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.  U.S. investors are cautioned not to assume that estimates of inferred mineral resources exist, are economically mineable, or will be upgraded into measured or indicated mineral resources.

Cautionary Note to Investors concerning Preliminary Economic Assessments

The Preliminary Economic Assessment is preliminary in nature; it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to the categorized as mineral reserves and there is no certainty that the Preliminary Economic Assessment will be realized.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and applicable Canadian securities legislation, including statements regarding including the Company's expenditures during 2015 and anticipated cash and cash equivalents balance at year-end 2015; assumed silver and gold prices; anticipated metal outputs; expected cash costs per payable silver equivalent ounce, net of by-product credits; anticipated improvements in the grade of mined material processed through the plant; and planned exploration activities.  These statements are subject to risks and uncertainties, including: lower than assumed silver and gold prices, higher than anticipated costs of mining and processing; delays or problems in mining or processing or the anticipated ramp-up in making saleable concentrates at the Velardena Properties; variations in material grade and metallurgical characteristics of processed material; delays or failures in receiving government approvals or permits or suspensions of existing approvals and permits; failure to achieve anticipated metal recoveries or anticipated mining or processing results including expected quantities of anticipated saleable products; failures of new mine plan and stope development to meet expectations; changes in interpretations of geological, geostatistical, metallurgical, mining or processing information and interpretations of the information resulting from future mining and processing experience; reliability of metallurgical testing results and changes in interpretation based on processing results; technical, permitting, mining, metallurgical, recovery or processing issues; problems that delay or reduce underground mine and stope construction; operational changes or problems; failure of mined material to meet expectations; failure of veins mined to meet expectations; increases in costs and declines in general economic conditions; unfavorable results of exploration at Celaya or other exploration projects; and changes in political conditions, in tax, royalty, environmental and other laws in Mexico, and financial market conditions.  Golden Minerals assumes no obligation to update this information.  Additional risks relating to Golden Minerals may be found in the periodic and current reports filed with the Securities Exchange Commission by Golden Minerals, including the Company's Annual Report on Form 10-K for the year ended December 31, 2014.

Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com

GOLDEN MINERALS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
(Unaudited)
         
        March 31,   December 31,
        2015   2014
             
        (in thousands, except share data)
Assets        
Current assets        
  Cash and cash equivalents    $     6,052   $           8,579
  Short-term Investments    119   -
  Trade receivables   92   -
  Inventories    1,166   1,497
  Value added tax receivable, net    949   1,316
  Prepaid expenses and other assets    735   835
    Total current assets   9,113   12,227
Property, plant and equipment, net    27,322   29,031
    Total assets   $  36,435   $         41,258
Liabilities and Equity        
Current liabilities        
  Accounts payable and other accrued liabilities  $     1,905   $           1,639
  Other current liabilities    1,675   2,551
    Total current liabilities   3,580   4,190
  Asset retirement obligation    2,434   2,685
  Warrant Liability    904   1,554
Other long term liabilities    92   95
    Total liabilities   7,010   8,524
             
Equity         
  Common stock, $.01 par value,        
    100,000,000 shares authorized; 53,162,833 shares issued and outstanding for both periods    532   532
  Additional paid in capital   484,399   484,197
  Accumulated deficit    (455,426)   (451,995)
  Accumulated other comprehensive loss   (80)   -
    Shareholder's equity    29,425   32,734
    Total liabilities and equity    $  36,435   $         41,258
GOLDEN MINERALS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in United States dollars) (Unaudited)
         
        Three Months Ended
        March 31,
        2015   2014
        (in thousands, except share data)
Revenue:        
  Sale of metals    $            2,337   $                   -
Costs and expenses:        
  Costs applicable to sale of metals (exclusive         
    of depreciation shown below)    (3,012)   -
  Exploration expense   (969)   (1,600)
  El Quevar project expense   (406)   (334)
  Velardena project expense   (119)   -
  Velardena shutdown and care & maintenance costs   -   (1,249)
  Administrative expense   (1,328)   (1,655)
  Stock based compensation   (179)   (330)
  Reclamation and accretion expense   (110)   (49)
  Other operating income, net   176   2
  Depreciation, depletion and amortization   (1,359)   (846)
    Total costs and expenses   (7,306)   (6,061)
  Loss from operations   (4,969)   (6,061)
Other income and (expense):        
  Interest and other income    916   394
  Warrant derivative gain    650   -
  (Loss) gain on foreign currency   (28)   9
    Total other income    1,538   403
  Loss from operations before income taxes   (3,431)   (5,658)
  Income tax benefit   -   -
  Net loss   $           (3,431)   $           (5,658)
Comprehensive loss:        
  Unrealized loss on securities   (80)   -
  Comprehensive loss   $           (3,511)   $           (5,658)
Net loss per common share – basic        
  Loss   $             (0.07)   $             (0.13)
Weighted average common stock outstanding - basic (1)   52,686,250   42,893,617
(1) Potentially dilutive shares have not been included because to do so would be anti-dilutive.

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SOURCE Golden Minerals Company

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