Golden Minerals Reports First Quarter 2016 Results
GOLDEN, Colo., April 29, 2016 /PRNewswire/ -- 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 ResultsThe 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 Velardena 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.
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 Velardena 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
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 Velardena 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.
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.
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.