Golden Minerals Reports First Quarter 2016 Results
GOLDEN, CO ‐ /PRNEWSWIRE/ ‐ April 29, 2016 – Golden Minerals Company (“Golden Minerals” or the “Company”) (NYSE MKT: AUMN and TSX: AUM) announces results for the first quarter ended March 31, 2016.
First Quarter Summary
- Revenue of (US)$1.5 million in the first quarter 2016 compared to $2.3 million in the first quarter 2015
- Loss from operations of $2.3 million compared to a loss of $5.0 million in the first quarter 2015
- Net loss of $6.3 million in the first quarter 2016, including $3.9 million of noncash expenses related to the Company’s warrants and convertible loan, compared to a net loss of $3.4 million in the first quarter 2015 that included $0.7 million in noncash income related to the Company’s warrants
- Cash and equivalents balance of $2.1 million as of March 31, 2016
Financial Results
The Company reported a net loss of $6.3 million in the first quarter 2016 compared to a net loss of $3.4 million in the first quarter 2015. Revenue of $1.5 million in the first quarter 2016 (which is wholly related to the lease of the Company’s oxide plant) was lower than revenue of $2.3 million in the first quarter 2015 which was generated from the Company’s mining and processing activities at its Velardeña Properties. Operating costs in the first quarter 2016 were $3.8 million compared to $7.3 million in the year‐ago period, with the decrease largely due to $3.0 million costs of metals sold incurred in the year‐ago period. In the first quarter 2016, the Company recorded $3.9 million of other expenses related to its outstanding warrants and one‐year convertible loan with The Sentient Group (“Sentient”). An increase in the Company’s stock price during the first quarter 2016 resulted in a noncash mark‐to‐market loss of $1.2 million for the warrants and $0.6 million to a derivative value associated with the remaining Sentient loan. Also during the first quarter 2016, approximately 80 percent of the Sentient loan’s $5.0 million original face value was converted into Golden Minerals common stock, resulting in a noncash loss on debt extinguishment of $1.7 million. The company also recorded $0.4 million of interest expense during the first quarter 2016.
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The Company’s cash and cash equivalents balance of $2.1 million on March 31, 2016 was $2.0 million lower than the year‐end 2015 balance of $4.1 million. The primary uses of cash during the first quarter 2016 were as follows:
- $0.6 million in shutdown and care and maintenance expenses at the Velardeña Properties
- $0.8 million in exploration expenditures, including costs related to drilling at the San Luis del Cordero project
- $0.2 million in care and maintenance plus property holding costs at the El Quevar project
- $1.2 million in general and administrative expenses
- A $0.2 million increase in net working capital related primarily to a reduction in deferred revenue from the oxide plant lease, offset in part by $1.0 million of net operating margin received in conjunction with the oxide plant lease
Financial Outlook
In addition to the $2.1 million cash balance at March 31, 2016, the Company expects to receive approximately $3.6 million in net operating margin from the lease of the oxide plant during the remaining three quarters of 2016. The Company currently expects to spend approximately $5.7 million during the remainder of 2016 as estimated below, ending the year with a projected zero cash balance if external funding is not obtained or expenses reduced:
- $0.9 million at the Velardeña Properties for care and maintenance expenses;
- $1.6 million on exploration activities and property holding costs primarily in Mexico, including project assessment and development costs related to the San Luis del Cordero project;
- $0.4 million on El Quevar project maintenance activities, property holding costs and continuing project evaluation costs;
- $2.4 million on general and administrative costs; and
- $0.4 million on an increase in working capital related primarily to a reduction in current liabilities
In addition, the Company is required to pay the remaining $1.2 million principal and interest due on the convertible loan to Sentient on October 27, 2016 if Sentient does not convert these amounts to Golden Minerals common stock as permitted under the loan agreement. Even if Sentient does convert the remaining principal and interest to the Company’s common stock, Golden Minerals does not currently expect that it will have sufficient cash to continue its business plans into 2017 without external funding. The Company plans, and is required by the Sentient loan, to seek external funding through the sale of equity or securities convertible into equity. If the Company is not successful in obtaining sufficient external funding, the Company expects to reduce its planned 2016 expenditures.
Exploration Update
San Luis del Cordero
The Company commenced a $0.5 million exploration drilling program in the first quarter 2016 at the Santa Rosa vein in the San Luis del Cordero Project in Durango State, Mexico. It expects to complete the drilling program in May 2016 and to release complete results of the drilling program in June 2016. At present the Company has completed 3,500 meters of drilling in 15 holes, of which results have been received for 12 holes. Results for three drill holes are pending final analysis. The Company’s current drilling combined with previous drilling by others and the Company’s underground sampling have identified three ore shoots of potential economic interest, which the Company continues to define. The Company believes that its drill results received to date indicate a more complex distribution of silver grades than was shown by prior drilling of others. Drill hole results with lower grades of silver indicate areas of the vein that are outside of higher grade ore shoots. The Company plans to drill an additional 1,000 to 2,000 meters in five to 10 holes, depending on success, to further define the northwestern and eastern ore shoots of the Santa Rosa vein which have shown the best results to date. When the drill program is complete it will be possible to update the resource for the Santa Rosa vein. Additional information regarding drill results which have been received to date may be found in the Company’s 10‐Q Quarterly Report on the Golden Minerals website.
Santa Maria
The Company continued exploration work at the Santa Maria silver and gold mine in Chihuahua, Mexico, during the first quarter 2016. Golden Minerals mined approximately 3,000 tonnes of material from a mineralized shoot as a bulk sample with grades of approximately 250 grams per tonne (gpt) silver and 0.6 gpt gold. It processed the bulk sample through a toll milling facility, generating approximately 70 tonnes of concentrates containing approximately 15,000 ounces of silver and 26 ounces of gold. The concentrates were sold to a third party for approximately $200,000 in the first quarter 2016 consisting of approximately 14,500 payable ounces of silver and 24 payable ounces of gold, which offset exploration costs. The Company does not have sufficient drilling data to predict the ultimate size of this higher grade zone; however, an underground drill program of about 1,500 meters (18 drill holes) has commenced, with complete results expected early in the third quarter 2016. Upon completion of the drill program the company expects to update the resource and complete a preliminary economic assessment.
Additional information regarding first quarter 2016 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 acquiring and advancing mining properties near its Velardeña processing plants and the exploration of properties in Mexico and Argentina.
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 planned expenditures during the remainder of 2016 and anticipated cash balance at year‐end 2016; net cash flow expected to be received in the remainder of 2016 from a third party lease of the Velardeña oxide mill; planned exploration and anticipated drill results at certain properties in Mexico, including our San Luis del Cordero and Santa Maria properties; expectations and assumptions related to the Sentient convertible loan; and anticipated external financing activities. These statements are subject to risks and uncertainties, including: lower than anticipated net cash flow from the oxide plant lease due to problems at the third party’s mine or the oxide plant resulting in less than anticipated production or due to processing delays or cancellation of the lease due to inability to obtain required permits or for other reasons; unfavorable results from exploration at the San Luis del Cordero or Santa Maria or other exploration properties and whether we will be able to advance these or other exploration properties; whether Sentient will convert the remaining principal and interest of the Sentient loan into our common stock or whether we will be required to pay the remaining principal and interest in cash and, if the latter, whether we will be able to raise the capital necessary to do so on terms acceptable to us or at all; potential delays in our exploration activities or other activities to advance properties towards mining resulting from environmental consents or permitting delays or problems, accidents, problems with contractors, disputes under agreements related to exploration properties, unanticipated costs and other unexpected events; increases in costs and declines in general economic conditions; unfavorable results of exploration; inability to raise external financing on acceptable terms or at all; 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, 2015.
Golden Minerals Company Karen Winkler, Director of Investor Relations (303) 839‐5060 [email protected] SOURCE: Golden Minerals Company
CONDENSED CONSOLIDATED BALANCE SHEETS (Expressed in United States dollars)
(Unaudited)
Unaudited March 31, December 31, 2016 2015 (in thousands, except share data) Assets Current assets
| Cash and cash equivalents | $ 2,109 $ | 4,077 |
| Short‐term investments | 154 | 72 |
| Trade receivables | 530 | 546 |
| Inventories | 331 | 330 |
| Value added tax receivable, net | 203 | 400 |
| Prepaid expenses and other assets | 450 | 451 |
| Total current assets | 3,777 | 5,876 |
| Property, plant and equipment, net | 10,254 | 11,125 |
| Total assets | $ 14,031 $ | 17,001 |
Liabilities and Equity Current liabilities
| Accounts payable and other accrued liabilities | $ 1,212 $ | 1,144 | |
| Convertible note payable, net | 963 | 3,702 | |
| Derivative liability | 687 | 488 | |
| Deferred revenue | 138 | 500 | |
| Other current liabilities | 295 | 556 | |
| Total current liabilities | 3,295 | 6,390 | |
| Asset retirement and reclamation liabilities | 2,297 | 2,546 | |
| Warrant liability | 1,390 | 210 | |
| Other long term liabilities | 80 | 84 | |
| Total liabilities | 7,062 | 9,230 |
Equity
Common stock, $.01 par value, 100,000,000 shares authorized; 76,690,333 and 53,335,333 shares
| issued and outstanding, respectively | 767 | 534 |
| Additional paid in capital | 489,912 | 484,742 |
| Accumulated deficit | (483,665) | (477,378) |
| Accumulated other comprehensive income loss | (45) | (127) |
| Shareholders' equity | 6,969 | 7,771 |
| Total liabilities and equity | $ 14,031 | $ 17,001 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in United States dollars) (Unaudited)
Three Months Ended March 31, 2016 2015 (in thousands, except per share data) Revenue:
| Oxide plant lease | $ 1,463 $ | ‐ |
|---|---|---|
| Sale of metals | ‐ | 2,337 |
| Total revenue | 1,463 | 2,337 |
Costs and expenses:
| Oxide plant lease costs | (474) | ‐ |
| Cost of metals sold (exclusive of depreciation shown below) | ‐ | (3,012) |
| Exploration expense | (776) | (969) |
| El Quevar project expense | (163) | (406) |
| Velardena project expense | ‐ | (119) |
| Velardena shutdown and care & maintenance costs | (587) | ‐ |
| Administrative expense | (1,218) | (1,328) |
| Stock based compensation | (32) | (179) |
| Reclamation expense | (51) | (110) |
| Other operating income, net | 39 | 176 |
| Depreciation, depletion and amortization | (550) | (1,359) |
| Total costs and expenses | (3,812) | (7,306) |
| Loss from operations | (2,349) | (4,969) |
Other income and (expense):
| Interest expense | (443) | ‐ |
| Interest and other income | 3 | 916 |
| Warrant derivative (loss) gain | (1,180) | 650 |
| Derivative loss | (648) | ‐ |
| Loss on debt extinguishment | (1,666) | ‐ |
| Loss on foreign currency | (4) | (28) |
| Total other (expense) income | (3,938) | 1,538 |
| Loss from operations before income taxes | (6,287) | (3,431) |
| Income tax benefit | ‐ | ‐ |
| Net loss | $ (6,287) $ | (3,431) |
Comprehensive loss, net of tax:
Unrealized gain (loss) on securities 82 (80) Comprehensive loss $ (6,205) $ (3,511) Net loss per common share ‐ basic Loss $ (0.09) $ (0.07) Weighted average Common Stock outstanding ‐ basic (1) 65,868,598 52,686,250
(1) Potentially dilutive shares have not been included because to do so would be anti‐dilutive.