Cash Inflows and Expenditures
Cash expenditures during the first quarter 2023 totaled $3.0 million and included:
The above expenditures were offset by cash inflows of $1.0 million from the following:
Capital Resources and 12-Month Financial Outlook
The Company’s forecasted expenditures during the twelve months ending March 31, 2024, excluding Rodeo and Velardeña cost of metals sold which is included in the forecast of net operating margin discussed below, total approximately $7.6 million. These forecasted expenditures include: (i) exploration expenses of $2.1 million, (ii) Velardeña care and maintenance costs of $0.3 million, (iii) El Quevar spending (net of Barrick reimbursements) of $0.3 million and (iv) general and administrative expenses, including G&A in Mexico of $4.9 million. The actual amount of cash expenditures incurred during the twelve-month period ending March 31, 2024 may vary significantly from the amounts specified above and will depend on a number of factors, including variations in the anticipated administrative costs, care and maintenance costs at the Velardeña Properties or at El Quevar, and costs for continued exploration, project assessment, and advancement of our other exploration properties.
The Company does not currently have sufficient resources to meet its expected cash needs during the twelve months ended March 31, 2024. At March 31, 2023, cash resources were approximately $2.0 million. The forecasted net operating margin from the Rodeo Property during the twelve-month period is expected to be between $0.0 million and $0.5 million. The forecasted net operating margin from the Velardeña Properties during the twelve-month period is expected to be between $5.0 million and $5.5 million. Net operating margin is defined as revenue from the sale of metals less the cost of metals sold. The estimate for Rodeo assumes gold prices per ounce during the period of between $1,950 and $1,990 and silver prices per ounce of $25.00. The margin estimate for Velardeña assumes gold prices average $1,900 per ounce and silver prices average $22.50 per ounce. The actual amount received in net operating margin from both Rodeo and Velardeña during the period may vary significantly from the amounts specified above due to, among other things: (i) unanticipated variations in grade, (ii) unexpected challenges associated with our proposed mining plans, (iii) decreases in commodity prices below those used in calculating the estimates shown above, (iv) variations in expected recoveries, (v) increases in operating costs above those used in calculating the estimates shown above, or (vi) interruptions in mining. Moreover, because the restart of production at Velardeña is still being evaluated, there is a risk that the Company’s board of directors may decide not to restart production at this time. In that event, the Company will require further additional capital than the estimates described below.
There is no assurance that the Company will be successful in collecting the anticipated cash receipts described above. Specifically, the anticipated net operating margin from the Velardeña Properties is not based on the results of a full feasibility study. While the Company believes its internal estimates are realistic, the lack of a full feasibility study may increase the uncertainty associated with the estimates. In addition, the Company expects to collect approximately $1.5 million in VAT accounts receivable from the Mexican government; however, it is possible that those amounts may be delayed. At April 30, 2023, aggregate cash and cash equivalents totaled approximately $2.0 million. In order to cover forecasted expenditures, the Company needs to raise additional cash in the near term, whether through the sale of non-core assets or equity financing, including the use of its ATM program. In the absence of sufficient asset sales, equity financing or other external funding the Company’s cash balance is expected to be depleted near the end of the second quarter of 2023.
Quarterly Report on Form 10-Q
The Company’s consolidated financial statements and management’s discussion and analysis, as well as other important disclosures, may be found in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. This Form 10-Q is available on the Company’s website at Golden Minerals Company - SEC Filings. It has also been filed with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov./edgar and with the Canadian securities regulatory authorities on SEDAR at www.sedar.com.
About Golden Minerals
Golden Minerals is a gold and silver producer based in Golden, Colorado. The Company is primarily focused on producing gold and silver from its Rodeo Mine, advancing its Velardeña and Yoquivo properties in Mexico and, through partner-funded exploration, its El Quevar silver property in Argentina, as well as acquiring and advancing selected mining properties in Mexico, Nevada and Argentina.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and applicable Canadian securities legislation, including statements regarding the Company’s liquidity forecast for 2023; potential restart of production activities at the Velardeña Properties and the requirement for additional capital should the Company’s board of directors decide not to restart production at the Velardeña Properties; the Company’s expectations to collect VAT accounts receivable from the Mexican government; forecasted expenditures and net operating margin; plans to sell non-core assets and seek equity financing in the near term and the amount of proceeds needed to cover forecasted expenditures; and the Company’s expectations regarding the depletion of its cash balance in the second quarter of 2023. These statements are subject to risks and uncertainties, including the timing, duration and overall impact of the COVID-19 pandemic, including the potential future re-suspension of non-essential activities in Mexico, including mining; increases in costs and declines in general economic conditions; changes in political conditions, in tax, royalty, environmental and other laws in the United States, Mexico or Argentina, including the effects of recent reforms to Mexican mining laws, and other market conditions; and fluctuations in silver and gold prices. 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 SEC by Golden Minerals, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
For additional information, please visit http://www.goldenminerals.com/ or contact:
Golden Minerals Company
Karen Winkler, Director of Investor Relations
SOURCE: Golden Minerals Company