Gold Resource Corporation Reports Results of Operations for the Year Ended December 31, 2023
- None.
- Lower financial results than planned due to external factors like a strengthened Mexican Peso and lower metal prices.
- Cash balance decreased by $17.4 million from the previous year, primarily driven by cash outflows for capital investments and operating activities.
- Working capital decreased by 29% from the previous year, mainly due to the decline in cash balance.
- Total cash costs and all-in sustaining costs per gold equivalent ounce were $1,250 and $1,630, respectively.
- The company suspended future quarterly dividends to focus on exploration and resource development.
- Formal review process initiated to evaluate strategic alternatives for maximizing shareholder value, including a potential sale or merger of the company.
Insights
Gold Resource Corporation's announcement of its full-year operational results and corporate update presents several key financial metrics that are crucial for evaluating the company's performance and future prospects. The reported cash balance of $6.3 million at the end of 2023, alongside a working capital of $15.2 million, are indicators of the company's liquidity and short-term financial health. A significant decrease from the previous year's figures could indicate cash flow challenges or large capital expenditures. The total cash cost after co-product credits of $1,250 per gold equivalent ounce is a vital measure of production efficiency, directly impacting profitability. The net loss of $16.0 million and operating cash outflow of $5.2 million are concerning, as they suggest the company is not currently generating profit from its operations.
The suspension of future quarterly dividends reflects a strategic shift to preserve capital and focus on exploration and development, which could be seen as a move to strengthen long-term value at the expense of short-term shareholder returns. The initiation of a formal review process to evaluate strategic alternatives, including a potential sale or merger, is a signal that the company is actively seeking ways to enhance shareholder value, which could lead to significant stock market movement depending on the outcome of this review.
From a market perspective, the operational results and strategic decisions of Gold Resource Corporation are likely to influence investor sentiment. The production and sale of 18,534 ounces of gold and 1,036,229 ounces of silver, along with other metals like zinc, copper and lead, show the company's diverse commodity exposure, which can affect its resilience to metal price volatility. The lower metal prices for co-product metals and external factors such as the strengthened Mexican Peso and increased local power costs have negatively impacted the financial results, which is critical information for investors considering the company's exposure to commodity prices and exchange rate risks.
The Back Forty Optimization Study results, indicating an After-Tax NPV6% of $214 million with a 25.7% IRR and a 2.5-year payback, are promising for the project's future profitability and could be a catalyst for future investment. However, the environmental considerations and the success of the permitting process will be crucial for the project's advancement and are factors that environmentally-conscious investors will monitor closely.
Analyzing the operational specifics, the Don David Gold Mine has achieved a lost time injury frequency rate of 0.96 per million hours, substantially below the industry benchmark, indicating a strong safety culture that could lead to fewer operational disruptions. The discovery of the Gloria vein system and the successful testing of northern extensions of existing veins signal potential for resource expansion, which is critical for the mine's long-term sustainability and could positively impact the stock valuation if these explorations translate into increased reserves.
The decrease in royalty fee from 5% to 3% for certain mining claims is a positive development that will reduce operational costs. However, the company's 2024 guidance with projected production costs and capital investments suggests an anticipation of increased spending, which could pressure the company's financials if not offset by higher metal prices or production efficiencies.
2023 Highlights include:
- Produced and sold 18,534 ounces of gold and 1,036,229 ounces of silver
- Produced and sold 10,954 tonnes of zinc, 904 tonnes of copper, and 3,681 tonnes of lead
-
Total cash cost after co-product credits for the full year was
$1,250 -
Cash balance of
$6.3 million $15.2 million -
Completed Back Forty Optimization Study that indicates an After-Tax of
$214 million 25.7% IRR and a 2.5 year payback
“Our operational results for the final quarter of 2023 were in line with our mine plan and guidance even though our financial results were lower than planned,” stated Allen Palmiere, President and CEO for the Company. “Factors that are out of our control affected our bottom line, including a strengthened Mexican Peso to the US dollar, increased local power costs, and lower metal prices for our co-product metals of copper, lead, and zinc. We continue to be committed to the identification and implementation of opportunities that will reduce costs and increase efficiencies to offset these factors as we move forward. Our exploration drilling program at DDGM yielded encouraging drill results from our underground exploration program and will continue with the goal of increasing the average grade of our 2024 mine plan and life of mine resources. We also completed the optimization work for the Back Forty project and filed an inaugural S-K 1300 that resulted in an improved project valuation and increased economic returns, while reducing environment impacts.”
Corporate and Financial:
-
The Company closed the year with a
$6.3 million $17.4 million $12.5 million $5.2 million $7.8 million $4.2 million $1.6 million $0.2 million -
Working capital at December 31, 2023, was
$15.2 million 29% decrease from the December 31, 2022, working capital of$21.4 million -
DDGM total cash costs (after co-product credits) and total all-in sustaining cost per gold equivalent (“AuEq”)1 ounce sold were
$1,250 $1,630 -
The Company’s At-The-Market Offering Agreement with H.C. Wainwright & Co., LLC (the “Agent”), which was entered into in November 2019 (the “ATM Agreement”), pursuant to which the Agent agreed to act as the Company’s sales agent with respect to the offer and sale from time to time of the Company’s common stock having an aggregate gross sales price of up to
$75.0 million - On February 13, 2023, the Company announced the suspension of future quarterly dividends to protect the balance sheet and to focus capital resources on exploration and resource and reserve development.
- In November 2023, the Company’s Board of Directors decided to initiate a formal review process, with the assistance of outside financial and legal advisors, to evaluate strategic alternatives for the Company. The comprehensive process, which is ongoing, is evaluating a broad range of options to maximize shareholder value, including a potential sale or merger of the Company.
Don David Gold Mine:
- The Don David Gold Mine (“DDGM”) safety program aims to bolster the overall health and safety culture of our employees.
- In 2023, two incidents resulting in lost time were recorded. Despite their low potential for harm, comprehensive investigations were conducted, and requisite measures were implemented accordingly.
- The full year lost time injury frequency rate per million hours was 0.96, which is substantially below the 3.95 Camimex (Mexican Chamber of Mines) benchmark.2
- DDGM received the Mexican Empresa Socialmente Responsable (“ESR”) award in 2023 for the ninth consecutive year.
-
The Don David Gold Mine produced and sold a total of 31,085 gold equivalent ounces, comprising of 18,534 gold ounces and 1,036,229 silver ounces, sold at an average price per ounce of
$1,955 $23.68 - During the year, our exploration program was executed as planned, maintaining a dual focus on both infill and expansion drilling, with encouraging results from targets in the Switchback, Arista, and Three Sisters vein systems. The 2023 expansion (step-out) drilling program proved highly successful, culminating in the discovery of the Gloria vein system, located immediately north of the Three Sisters system, as well as successfully testing the projected northern extensions of the Splay 31 and Marena North veins of the Arista system.
-
The Company purchased over two thousand tonnes of tailings material for
$0.3 million -
During the fourth quarter of 2023, negotiations were successfully undertaken to decrease the royalty fee from
5% to3% for the mining claims at La Tehuana,El Aguila , and Mina El Aire.
Back Forty Project:
-
Optimization work related to the metallurgy and the economic model for the Back Forty Project in
Michigan, USA was completed, and the Company filed the Back Forty Project Technical Report Summary, which was prepared in accordance with subpart 1300 of Regulation S-K (“S-K 1300”), as Exhibit 96.1 to the Form 8-K filed on October 26, 2023 (the “Back Forty Project Technical Report Summary”). Results of the work indicate a more robust economic project with no planned impacts to wetlands that is more protective of the environment, which should facilitate a successful mine permitting process.
Full Year 2023 Financial Results
Financial Measures (Unaudited)
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Cash balance at December 31, 2023 |
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For the Year Ended December 31, 2023 |
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Cash used in operating activities |
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Net loss |
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Net sales |
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Production costs |
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Depreciation, amortization, & reclamation |
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Mining gross loss |
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EBITDA |
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2023 Capital and Exploration Investment Summary
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For the nine months
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2023 full year
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(in thousands) |
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Sustaining Investments: |
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Underground Development |
Capital |
$ |
4,386 |
|
|
|
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Infill Drilling |
Capitalized Exploration |
|
4,096 |
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|
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Other Sustaining Capital |
Capital |
|
1,420 |
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Surface and Underground Exploration Development & Other |
Capitalized Exploration |
|
1,139 |
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Subtotal of Sustaining Investments: |
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11,041 |
|
$ |
9 - 11 million |
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Growth Investments: |
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DDGM growth: |
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Surface Exploration / Other |
Exploration |
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2,240 |
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Underground Exploration Drilling |
Exploration |
|
1,927 |
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|
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Underground Exploration Development |
Capitalized Exploration |
|
357 |
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Back Forty growth: |
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Back Forty Project Optimization & Permitting |
Exploration |
|
1,642 |
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Subtotal of Growth Investments: |
|
|
6,166 |
|
$ |
6 - 7 million |
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Total Capital and Exploration: |
|
$ |
17,207 |
|
$ |
15 - 18 million |
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Trending Highlights
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2022 |
2023 |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
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Operating Data |
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Total tonnes milled |
136,844 |
129,099 |
110,682 |
116,616 |
117,781 |
113,510 |
116,626 |
111,254 |
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Average Grade |
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|
|
- |
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Gold (g/t) |
3.00 |
2.63 |
1.98 |
2.51 |
2.33 |
1.59 |
1.52 |
1.44 |
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Silver (g/t) |
81 |
64 |
80 |
109 |
94 |
86 |
73 |
85 |
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Copper (%) |
0.41 |
0.32 |
0.37 |
0.45 |
0.37 |
0.37 |
0.32 |
0.39 |
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Lead (%) |
1.97 |
1.99 |
1.59 |
1.58 |
1.73 |
1.64 |
1.29 |
1.39 |
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Zinc (%) |
4.89 |
4.00 |
4.21 |
4.27 |
3.88 |
3.72 |
3.24 |
2.95 |
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Metal production (before payable metal deductions) |
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Gold (ozs.) |
11,187 |
9,317 |
5,851 |
7,767 |
7,171 |
4,637 |
4,443 |
4,077 |
||||||||
Silver (ozs.) |
332,292 |
249,088 |
261,256 |
370,768 |
322,676 |
289,816 |
247,159 |
282,487 |
||||||||
Copper (tonnes) |
431 |
303 |
296 |
406 |
336 |
334 |
276 |
341 |
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Lead (tonnes) |
2,073 |
2,020 |
1,249 |
1,323 |
1,559 |
1,389 |
1,048 |
1,072 |
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Zinc (tonnes) |
5,562 |
4,282 |
3,901 |
4,198 |
3,837 |
3,569 |
3,223 |
2,884 |
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Metal produced and sold |
|
|
|
|
|
|
|
|
||||||||
Gold (ozs.) |
8,381 |
8,746 |
5,478 |
7,514 |
6,508 |
4,287 |
3,982 |
3,757 |
||||||||
Silver (ozs.) |
265,407 |
231,622 |
225,012 |
335,168 |
294,815 |
274,257 |
208,905 |
258,252 |
||||||||
Copper (tonnes) |
408 |
286 |
282 |
372 |
332 |
327 |
245 |
327 |
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Lead (tonnes) |
1,639 |
1,755 |
1,056 |
941 |
1,417 |
1,317 |
947 |
820 |
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Zinc (tonnes) |
4,359 |
3,590 |
2,943 |
3,265 |
3,060 |
3,141 |
2,571 |
2,182 |
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Average metal prices realized |
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Gold ($ per oz.) |
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Silver ($ per oz.) |
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Copper ($ per tonne) |
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Lead ($ per tonne) |
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Zinc ($ per tonne) |
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Gold equivalent ounces sold |
|
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|
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Gold Ounces |
8,381 |
8,746 |
5,478 |
7,514 |
6,508 |
4,287 |
3,982 |
3,757 |
||||||||
Gold Equivalent Ounces from Silver |
3,348 |
2,729 |
2,564 |
4,107 |
3,547 |
3,402 |
2,550 |
3,011 |
||||||||
Total AuEq oz |
11,729 |
11,475 |
8,042 |
11,621 |
10,055 |
7,689 |
6,532 |
6,768 |
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Financial Data |
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Total sales, net (in thousands) |
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Production Costs (in thousands) |
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Production Costs/Tonnes Milled |
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Operating Cash Flows (in thousands) |
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( |
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( |
( |
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Net income (loss) (in thousands) |
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( |
( |
( |
( |
( |
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Earnings (loss) per share - basic |
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( |
( |
( |
( |
( |
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Trending Highlights of Non-GAAP Measures
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2022 |
2023 |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
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(in thousands, except per oz) |
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Gold equivalent ounces sold (oz) |
11,729 |
11,475 |
8,042 |
11,621 |
10,055 |
7,689 |
6,532 |
6,768 |
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Total production costs |
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|
|
|
|
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Treatment and refining charges |
2,748 |
3,137 |
2,860 |
3,327 |
3,184 |
3,328 |
2,788 |
2,330 |
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Co-product credits (1) |
(24,732) |
(22,027) |
(13,369) |
(13,314) |
(15,881) |
(13,384) |
(9,733) |
(9,908) |
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Total cash cost after co-product credits |
( |
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Total cash cost after co-product credits per AuEq oz sold |
( |
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Sustaining - capitalized expenditure |
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Sustaining - Exploration Expenditure |
- |
- |
- |
- |
548 |
531 |
52 |
8 |
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Reclamation and remediation (2) |
62 |
61 |
58 |
620 |
195 |
200 |
216 |
163 |
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Subtotal of DDGM sustaining costs |
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DDGM all-in sustaining cost after co-product credits per AuEq oz sold |
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Sustaining - general and administrative, including stock-based compensation expenses |
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Consolidated all-in sustaining cost after co-product credits |
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Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold |
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Non-sustaining cost- capital expenditure |
|
|
$ - |
$ - |
$ - |
|
|
|
||||||||
Non-sustaining cost- exploration expenditure |
2,305 |
2,837 |
4,973 |
2,934 |
1,839 |
1,440 |
1,960 |
570 |
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Subtotal of non-sustaining costs |
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Total all-in cost after co-product credits |
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Total all-in cost after co-product credits per AuEq oz sold |
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(1) |
Refer to Realized/Unrealized Derivatives for copper, zinc, and lead in the Annual and Quarterly Reports, Item 8— Financial Statements and Supplementary Data: Fair Value Measurement and Item 1—Condensed Consolidated Interim Financial Statements and Notes (unaudited): Fair Value Measurement. Note that Co-product credits for the prior year (2022) comparable numbers were adjusted to include realized embedded derivatives only for co-products (which better represents the cash cost after co-product credits because it now excludes unrealized gains or losses) and align with the current year presentation. |
|
(2) |
Refer to Reclamation and remediation in the Annual and Quarterly Reports, Item 8— Financial Statements and Supplementary Data: Reclamation and Remediation and Item 1—Condensed Consolidated Interim Financial Statements and Notes (unaudited): Reclamation and Remediation. Note that the prior year’s (2022) comparable numbers were adjusted to include Reclamation and remediation (which better represents the all-in sustaining cost after co-product credits because Reclamation and remediation are part of normal operating activities) and to align with the current year’s presentation. |
2024 Guidance
The Company’s focus continues to be on unlocking the value of the Don David Gold Mine, existing infrastructure, and large property position in
Measure |
2024 Guidance |
Metals Produced & Sold |
13,000 to 15,000 Gold Ounces
|
Cash Cost after Co-product Credits per AuEq ounces (1) (2) |
|
All-in-Sustaining Cost after Co-Product Credits per AuEq ounce (1) |
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Capital Investment (DDGM) |
|
Exploration Investment (DDGM) |
|
Back Forty Investment |
|
General & Administrative Expense |
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(1) |
Calculations of cost after co-product credits per gold equivalent ounce and all-in sustaining cost after co-product credits per AuEq ounce are non-GAAP financial measures. Please see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures in the Annual Report for a complete reconciliation of the non-GAAP measures to |
|
(2) |
Co-product credits directly impact the Cash Costs and All-in Sustaining Costs per AuEq ounce calculation. Guidance is based on 3,630 tonnes of lead sold at a |
About GRC
Gold Resource Corporation is a gold and silver producer, developer, and explorer with its operations centered on the Don David Gold Mine in
Q4 2023 Conference Call
The Company will host a conference call on Thursday, March 14, 2024, at 10:00 p.m. Eastern Time. Our 2023 Form 10-K will be filed at a future date, no later than April 1,2024, once our External Audit Firm, BDO
The conference call will be recorded and posted to the Company’s website later in the day following the conclusion of the call. Following prepared remarks, Allen Palmiere, President and Chief Executive Officer, Alberto Reyes, Chief Operating Officer, and Chet Holyoak, Chief Financial Officer, will host a live question and answer (Q&A) session. There are two ways to join the conference call.
To join the conference via webcast, please click on the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=F24608AC-00ED-4198-B37C-E83FCE95DDEB
To join the call via telephone, please use the following dial-in details:
Participant Toll Free: +1 (888) 886-7786
International: +1 (416) 764-8658
Conference ID: 34193701
Please connect to the conference call at least 10 minutes prior to the start time using one of the connection options listed above.
Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "seek," "believe," "estimate," "predict," "potential," "continue," "contemplate," "possible," or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. They are not historical facts, nor are they guarantees of future performance. Any express or implied statements contained in this announcement that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding the timing and scope of a process to explore strategic alternatives for the Company, including a potential sale of the Company. It is possible that the Company’s actual results, financial condition, and developments may differ, possibly materially, from the anticipated results, developments, and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. These forward-looking statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation: whether the objectives of the strategic alternative review process will be achieved; the terms, structure, benefits and costs of any strategic transaction; the timing of any transaction and whether any transaction will be consummated at all; the risk that the strategic alternatives review and its announcement could have an adverse effect on the ability of the Company to retain and hire key personnel and maintain relationships with suppliers, employees, shareholders, and other business relationships, and on its operating results and business generally; the risk the strategic alternatives review could divert the attention and time of the Company’s management; the risk of any unexpected costs or expenses resulting from the review; the risk of any litigation relating to the review; and the risks and uncertainties described in “Item 1A. Risk Factors” in our Annual report on Form 10-K for the year ended December 31, 2022, and those described from time to time in our future reports filed with the Securities and Exchange Commission.
___________________________
1 Gold equivalent is determined by taking gold ounces produced and sold, plus silver ounces produced and sold, converted to gold equivalent ounces using the gold to silver average realized price ratio for the period.
2 Further information regarding the Mexican Chamber of Mines benchmark can be found at https://camimex.org.mx/sostenibilidad2023/indicadores.html. Information contained therein is not a part of this report and is not incorporated by reference herein.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240313689211/en/
Chet Holyoak
Chief Financial Officer
Chet.holyoak@grc-usa.com
www.GoldResourceCorp.com
Source: Gold Resource Corporation
FAQ
What were the highlights of Gold Resource Corporation's operational results for 2023?
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What was the cash balance of Gold Resource Corporation at the end of 2023?
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What were the total cash costs and all-in sustaining costs per gold equivalent ounce for Gold Resource Corporation in 2023?
Why did Gold Resource Corporation suspend future quarterly dividends?
What strategic alternatives is Gold Resource Corporation evaluating to maximize shareholder value?
