Golden Minerals earns $1.58-million (U.S.) in Q3

2018-11-06 07:48 ET - News Release

Ms. Karen Winkler reports

GOLDEN MINERALS REPORTS THIRD QUARTER 2018 RESULTS

Golden Minerals Company has released its financial results and a business summary for the third quarter ended Sept. 30, 2018.

Third quarter summary financial results:

• Net income of $1.6-million or two cents per share in the third quarter 2018, compared with a net loss of $300,000 or nil per share in the third quarter 2017;
• Revenue of $1.9-million and a net operating margin (oxide plant lease revenue less lease costs) of $1.2-million related to the lease of the company's oxide plant in the third quarter 2018, compared with a $1.2-million net operating margin realized in the third quarter 2017;
• Other operating income of $3.2-million including $3.0-million related to the Celaya sale and $200,000 related to the farmout of Golden's Zacatecas property; compares with $1.0-million in the year-ago period related primarily to a refund of Mexican value-added tax payments and an equipment sale;
• Exploration expenses of $1.1-million comparing with $1.0-million in the year-ago period, with the 2018 figure reflecting increased exploration activities at projects in Mexico including Santa Maria;
• Cash and cash equivalents balance of $5.0-million as of Sept. 30, 2018, compared with $3.3-million at year-end 2017;
• Debt balance of zero as of Sept. 30, 2018.

Third quarter business summary:

• Golden sold its remaining 20-per-cent interest in the Celaya property to the Electrum Group LLC for $3.0-million (U.S.) in August, 2018. Earlier in 2018, Golden also sold 20 per cent of its interest in the property (taking the company's percentage interest from 40 per cent to 20 per cent) to the Electrum Group LLC for $1.0-million.
• Golden completed the first and positive preliminary economic assessment (PEA) for the El Quevar silver project in Argentina, outlining a potential six-year mining operation providing approximately $80-million in life-of-mine (LOM) free cash flow with LOM payable production of 29 million ounces silver and a $45-million after-tax net present value (NPV) at a 5-per-cent discount rate.
• The company reported improved economics in a second PEA completed for its Santa Maria silver and gold project in Mexico, outlining a potential 4.2-year mining operation with $12.4-million in LOM free cash flow, LOM payable production of 3.1 million ounces silver equivalent and a $10.6-million NPV at a 5-per-cent discount rate.
• Subsequent to Sept. 30, at the beginning of October, 2018, Hecla Mining Company exercised its option to extend the lease of Golden's Velardena oxide mill in Mexico for an additional two years, thus extending the lease period through the end of 2020.

Financial results

The company reported revenue of approximately $1.9-million in the third quarter 2018 related to the oxide plant lease and costs of approximately $700,000 related to the services Golden provides under the terms of the lease, for a net margin of $1.2-million. Other operating income of $3.2-million included $3.0-million from the sale of Golden's remaining interest in the Celaya project to the Electrum Group LLC, as well as prorated income from the farmout of the company's Zacatecas properties to Santacruz Silver. El Quevar project expense was $400,000 in the third quarter 2018 and includes costs associated with the recently announced PEA as well as project evaluation and property holding costs. Exploration expenses were $1.1-million in the third quarter, reflecting increased exploration and project evaluation activities at the Santa Maria as well as other projects in Mexico. Exploration expenses also include property holding costs and allocated administrative expenses for all company exploration projects other than El Quevar. Administrative expenses (including all costs associated with being a public company, costs incurred in support of the company's exploration properties and other administrative expenses and professional fees) were $700,000 in the third quarter. Golden reported net income of $1.6-million or two cents per share in the third quarter 2018 compared with a net loss of $300,000 or nil per share in the year-ago period.

12-month financial outlook

The company ended the third quarter 2018 with a cash balance of $5.0-million and expects to receive approximately $4.6-million in net operating margin from the lease of the oxide plant during the 12 months ending Sept. 30, 2019. Assuming no sales of common stock under the company's at-the-market offering agreement or Lincoln Park Capital programs occur, the company projects it would end 2018 with a cash balance of $3.5-million and end Sept. 30, 2019, with a cash balance of $1.0-million, based on the following forecasted expenditures during the next 12 months:

• Approximately $2.0-million on exploration activities and property holding costs related to exploration properties located primarily in Mexico, including project assessment and evaluation costs related to Santa Maria and other properties;
• Approximately $1.5-million at the Velardena properties for care and maintenance;
• Approximately $1.3-million at the El Quevar project to finance continuing exploration and evaluation activities, care and maintenance and property holding costs;
• Approximately $3.2-million on general and administrative costs and $400,000 on an increase in working capital.

Additional information regarding third quarter 2018 financial results may be found in the company's 10-Q quarterly report which is available on the Golden Minerals website.

                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands except per-share data)
 
                                                           Three months ended       Nine months ended
                                                                    Sept. 30,               Sept. 30,
                                                             2018        2017        2018        2017
Revenue
Oxide plant lease                                          $1,900      $1,771      $5,267      $5,107
Total revenue                                               1,900       1,771       5,267       5,107
Costs and expenses
Oxide plant lease (costs)                                    (657)       (619)     (1,685)     (1,704)
Exploration (expense)                                      (1,077)       (977)     (3,017)     (1,968)
El Quevar project (expense)                                  (364)       (183)       (917)       (524)
Velardena shutdown and 
care and maintenance (costs)                                 (428)       (379)     (1,409)     (1,098)
Administrative (expense)                                     (673)       (694)     (2,556)     (2,592)
Stock-based compensation (loss)                               139           7        (111)       (300)
Reclamation (expense)                                         (53)        (49)       (156)       (146)
Other operating income, net                                 3,188         951       4,638       1,813
Depreciation and amortization (loss)                         (337)       (138)       (897)       (456)
Total costs and (expenses)                                   (262)     (2,081)     (6,110)     (6,975)
Income (loss) from operations                               1,638        (310)       (843)     (1,868)
Other income and (expense)
Interest and other (expense) income, net                      (59)         15          54          37
Gain (loss) on foreign currency                                 6         (23)        (50)        (20)
Total other income (loss)                                     (53)         (8)          4          17
Income (loss) from operations before income taxes           1,585        (318)       (839)     (1,851)
Income tax                                                      -           -           -           -
Net income (loss)                                           1,585        (318)       (839)     (1,851)
Comprehensive income (loss), net of tax
Unrealized gain (loss) on securities                            -          11           -         (92)
Comprehensive income (loss), net of tax                     1,585        (307)       (839)     (1,943)
Net income (loss) per common share -- basic                  0.02           -       (0.01)      (0.02)

About Golden Minerals Company

Golden Minerals is a Delaware corporation based in Golden, Colo. The company is primarily focused on advancing its El Quevar silver property in Argentina and in acquiring and advancing mining properties in Mexico with emphasis on areas near its Velardena processing plants.

We seek Safe Harbor.

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