Golden Minerals Reports Third Quarter 2023 Financial Results

Rhea-AI Summary

AUMN: Golden Minerals Company releases Q3 financial results, including $4.2 million public offering, $87.6 million net present value for Velardeña Properties, and $3.2 million net loss. Settlement negotiations with Unifin Financiera ongoing.

Positive

• Gross proceeds from the November 2023 Offering were approximately $4.2 million, strengthening the Company's financial position.
• The updated PEA estimates an after-tax net present value of $87.6 million for Velardeña Properties, indicating a potentially lucrative opportunity for the Company.
• Net loss increased to $3.2 million in the third quarter of 2023, reflecting financial challenges that the Company is facing.
• Settlement negotiations with Unifin Financiera have not resulted in a written agreement, posing a potential risk for the Company.

Negative

• Net operating margin was negative $0.8 million in the third quarter of 2023, indicating a decrease in profitability compared to the same period in 2022.
• Cash and equivalents balance decreased to $1.6 million as of September 30, 2023, down from $4.0 million on December 31, 2022.

GOLDEN, Colo.--(BUSINESS WIRE)-- Golden Minerals Company (“Golden Minerals,” “Golden” or the “Company”) (NYSE-A: AUMN and TSX: AUMN) has today released financial results and a business summary for the quarter ending September 30, 2023. (All figures are in approximate U.S. dollars.)

Third Quarter Business Summary and Subsequent Events

• On November 8, 2023, the Company closed a public offering of an aggregate of 6 million shares of the Company’s common stock and related warrants, at a purchase price of $0.70 per share (the “November 2023 Offering”). Gross proceeds from the offering were approximately $4.2 million, prior to deducting placement agent’s fees and other offering expenses payable by the Company. Full details of the November 2023 Offering may be found in the Prospectus filed with the Securities and Exchange Commission on November 8, 2023, a copy of which is available on the Company’s website at https://www.goldenminerals.com/financials-filings/sec-filings/.
• The Company is engaged in settlement negotiations regarding the dispute with Unifin Financiera, S.A.B. de C.V. (“Unifin”). Although no definitive settlement agreement has yet been executed, an accrued liability of $0.25 million has been recorded as of September 30, 2023. Given that the settlement proposals have not resulted in a written agreement, we cannot give any assurances that the settlement will be effected upon the terms under discussion or at all.
• The Company continued with activities in preparation for restarting production at the Velardeña Properties. Preparations include permitting, equipment readiness, arrangements with union staff, contract miners, plant operators and support personnel. The Velardeña mines last operated in November 2015.
• The Company completed and filed an updated Technical Report (“TR”), completed as a Preliminary Economic Assessment (“PEA”), for its Velardeña Properties (Durango State, Mexico). The updated PEA estimates an after-tax net present value (“NPV”) of $87.6 million, using a discount rate of 8%, with a mine life of 10.5 years. The TR is prepared as an update of a previous PEA dated March 1, 2022 and incorporates additional information developed by the Company since the 2022 report, including updated pricing and concentrate sales terms, and the exclusion of a bio-oxidation plant that was formerly contemplated.
• The Company concluded mining activities at the Rodeo mine in June 2023 as previously disclosed. During the third quarter of 2023, the Company continued to process material which had been stockpiled from the Rodeo mine. The processing of the stockpiled material concluded in August when the grade of the stockpiles became uneconomic. The last pour of doré occurred in September.

Third Quarter Financial Summary

• Revenue was $2.5 million in the third quarter 2023 and included sales of the Rodeo mine’s metals and slag material, as well as sales of Velardeña concentrates from previously stockpiled material. Revenue was $5.3 million in the third quarter 2022 and was comprised solely of Rodeo’s sale of metals.
• Net operating margin (defined as revenue from the sale of metals less cost of metals sold) was negative $0.8 million in the third quarter 2023. Net operating margin was positive $0.9 million in the third quarter 2022 which related solely to the Rodeo mine’s sale of metals. The lower net operating margin in the third quarter 2023 compared to the third quarter of 2022 was due mainly to the processing of the stockpiled material in the third quarter 2023 which had lower grades than the mined material processed in the third quarter of 2022.
• Cash and equivalents balance as of September 30, 2023 was $1.6 million, compared to $4.0 million on December 31, 2022.
• Zero debt as of September 30, 2023, unchanged from December 31, 2022.
• Net loss was $3.2 million or $0.38 per share in the third quarter 2023, compared to a net loss of $2.7 million or $0.40 per share in the third quarter 2022.

Cash Inflows and Expenditures

Cash expenditures during the nine months ended September 30, 2023 totaled $8.6 million and included:

• $2.9 million in exploration expenditures;
• $0.9 million in care and maintenance costs at the Velardeña Properties;
• $0.4 million in care and maintenance costs at the El Quevar project, net of reimbursements from Barrick Gold Corporation (“Barrick”) pursuant to the Earn-In Agreement between the Company and Barrick;
• $3.7 million in general and administrative expenses; and
• $0.7 million of negative net operating margin from Rodeo operations (which includes Mexico G&A).

The above expenditures were offset by cash inflows of $6.2 million from the following:

• $1.2 million of net operating margin from sales of Velardeña concentrates;
• $1.8 million, net of fees from the Company’s ATM Program;
• $1.9 million, net of fees from the previously reported June 2023 registered direct offering and concurrent private placement of the Company’s common stock; and
• $1.3 million from changes in working capital (mainly due to a decrease in inventory associated with the end of operations at Rodeo).

Capital Resources and 12-Month Financial Outlook

At September 30, 2023, the Company had current assets of approximately $5.9 million, including cash and cash equivalents of approximately $1.6 million. On the same date, it had accounts payable and other current liabilities of approximately $5.6 million. Because the Company has ceased mining at the Rodeo mine, its only near-term opportunity to generate cash flow from mining to support continued operations is the Velardeña mine.

On November 8, 2023, the Company closed the November 2023 Offering which raised gross proceeds of $4.2 million and net proceeds of approximately $3.8 million after expenses. These funds were anticipated in the Company’s forecast. The Company’s forecast for the twelve-month period ending September 30, 2024 also projects the receipt of additional capital inflows of $3.0 to $4.5 million. In order to commence and maintain production at Velardeña, the Company expects to spend approximately $3.0 to $3.5 over the first five months of production primarily for additional underground development, which is included in the capital forecast discussed above. The actual amount of additional capital required during the twelve-month period ending September 30, 2024 may vary significantly from the amounts specified above and will depend on a number of factors, including variations in the anticipated administrative costs, costs to restart Velardeña, costs at El Quevar, and costs for continued exploration, project assessment, and advancement of its other exploration properties. Assuming that the Company is successful in restarting production and that it meets its production objectives at the Velardeña Properties, cash flow from Velardeña is expected to be positive by the end of the second quarter of 2024. The additional capital required may take the form of non-core asset sales (such as the one described below), debt financing, production-based financing (such as streaming or royalty financing), collection of outstanding VAT receivable, or otherwise. After the November 2023 Offering, the Company’s available shares authorized but not issued or outstanding is approximately 2.2 million shares. Should the Company desire to make future stock offerings of more than 2.2 million shares, the number of authorized shares will need to be increased which will require shareholder approval.

With regards to the sale of non-core assets, Golden executed a non-binding letter of intent for the sale of its Santa Maria property for a total consideration consisting of (i) initial cash proceeds of $1.5 million (plus an additional $0.24 million in VAT payment that the Company can retain) and (2) a 1.5% net smelter return royalty on the Santa Maria concession up to a cap of $1.0 million (which may be purchased by the potential buyer from Golden for $0.5 million at any time prior to the commencement of commercial production on the Santa Maria property). If that transaction is consummated, the funds would likely be received in November 2023 or later.

Golden Minerals has also held discussions with various financing parties with regard to equity and/or debt financing as well as streaming or royalty arrangements involving future production at Velardeña.

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 September 30, 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 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.

Forward-Looking Statements

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, such as statements regarding (i) the Velardeña Properties, including plans and preparation for restarting production at the properties, estimated NPV and mine life, cash flow from the properties, additional capital requirements to restart production on the properties in the form of non-core asset sales, debt financing, production-based financing and/or collection of outstanding VAT receivable, expected expenditures over the first five months of production on the properties for additional underground development and discussions with various financing parties with regard to equity and/or debt financing as well as streaming or royalty arrangements involving future production at the properties; (ii) settlement of the Unifin dispute; (iii) projected receipt of additional capital during the twelve-month period ending September 30, 2024; (iv) increase in the authorized shares of the Company should the Company decide to make a future stock offering; and (v) the potential sale of the Company’s Santa Maria property. These statements are subject to risks and uncertainties, including increases in costs and declines in general economic conditions; changes in current payable terms for gold-bearing pyrite concentrates; changes in political conditions, in tax, royalty, environmental and other laws in Mexico and other market conditions; unanticipated variations in grade; challenges associated with our proposed mining plans, including difficulties in controlling grade dilution and interruptions in mining; variations in the anticipated administrative costs, costs to restart Velardeña, costs at El Quevar, and costs for continued exploration, project assessment, and advancement of the Company’s other exploration properties, or an adverse result in the pending lawsuit with Unifin Financiera, S.A.B. de C.V. 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, 2022.

Follow us at www.linkedin.com/company/golden-minerals-company/ and https://twitter.com/Golden_Minerals.

For additional information, please visit http://www.goldenminerals.com/ or contact:

Golden Minerals Company
Karen Winkler, Director of Investor Relations
(303) 839-5060

View source version on businesswire.com: https://www.businesswire.com/news/home/20231110526239/en/

Golden Minerals Company

Karen Winkler, Director of Investor Relations

(303) 839-5060

Source: Golden Minerals Company

FAQ

What were the gross proceeds from the November 2023 Offering?

The gross proceeds were approximately $4.2 million, strengthening the Company's financial position.

What is the after-tax net present value estimated for Velardeña Properties?

The updated PEA estimates an after-tax net present value of $87.6 million, indicating a potentially lucrative opportunity for the Company.

What was the net loss in the third quarter of 2023?

The net loss increased to $3.2 million, reflecting financial challenges that the Company is facing.

What is the cash and equivalents balance as of September 30, 2023?

The cash and equivalents balance was $1.6 million, down from $4.0 million on December 31, 2022.