Golden, Colorado / November 7, 2017 / JMN Wire / Golden Minerals Company ("Golden Minerals", "Golden" or "the Company") (NYSE American: AUMN) (TSX: AUMN) today provided a business summary and financial results for the third quarter ended September 30, 2017.
Third Quarter Financial Results
- Cash and cash equivalents balance of $5.0 million as of September 30, 2017 compared to $2.6 million as of December 31, 2016
- Revenue of $1.8 million and positive 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 2017, compared to revenue of $1.7 million and positive net operating margin of $1.2 million related to the oxide plant lease in the third quarter 2016
- Net loss of $0.3 million in the third quarter 2017 compared to a net loss of $0.8 million in the third quarter 2016
- Loss from operations of $0.3 million in the third quarter 2017 compared to a loss from operations of $0.2 million in the third quarter 2016
- Debt balance of zero as of September 30, 2017
Financial Results
The Company reported revenue of approximately $1.8 million in the third quarter 2017 related to the oxide plant lease and costs of approximately $0.6 million related to the services Golden provides under the lease, for a net margin of $1.2 million. Exploration expense was $1.0 million during the third quarter, incurred primarily on drilling activity and property acquisition payments related to the Santa Maria and Mogotes properties. Golden also incurred $0.2 million of project expenses related primarily to holding costs at its El Quevar project, as well as $0.4 million related to care and maintenance at the Velardena Properties. Administrative expenses totaled $0.7 million during the third quarter compared to $0.9 million in the third quarter 2016. Golden reported a net loss of $0.3 million in the third quarter 2017 compared to a net loss of $0.8 million in the year ago period. The prior year figure included non-cash losses of $0.5 million related to certain of the Company's warrants which, subsequent to a change in accounting principle related to a recent pronouncement issued by the U.S. Financial Accounting Standards Board, have been reclassified from liabilities to equity retroactively to January 1, 2017.
Cash and Financial Outlook
The Company ended the third quarter with $5.0 million in cash and equivalents, or $2.4 million greater than the $2.6 million in similar assets held at December 31, 2016. The increase is due in part to the following expenditures and cash inflows during the first three quarters of 2017:
Expenditures totaled $6.2 million:
- $2.0 million in exploration expenditures, including work at Santa Maria, Mogotes and Rodeo
- $1.1 million in care and maintenance at the Velardena Properties
- $0.5 million in evaluation activities and related holding costs at El Quevar
- $2.6 million in general and administrative expenses
Cash inflows totaled $8.6 million:
- $3.4 million of net operating margin related to the lease of the Company's oxide plant to Hecla
- $1.9 million from Hecla for an option to extend its oxide plant lease, which was comprised of $1.0 million cash and $1.0 million for the purchase of Company common stock, less $0.1 million in legal and stock exchange issuance costs
- $1.1 million in refunds of previous Value Added Tax payments made in Argentina in 2012 and 2013
- $0.8 million from final payments related to the sale of excess mining equipment to Minera Inde
- $0.7 million of net proceeds received from the issuance of Company common stock under its ATM Program
- $0.2 million of net proceeds from the sale of other nonstrategic exploration properties and mining equipment
- $0.2 million from a decrease in working capital
In addition to the $5.0 million balance as of September 30, 2017, during the next 12 months the Company expects to receive approximately $4.6 million in net operating margin from the lease of the oxide plant and an additional $0.8 million from Santacruz related to the exploration property farm out noted above. With the transactions referred to above and if no additional sales of common stock under the Company's ATM program occur, Golden projects it would end 2017 with a cash balance of approximately $3.5 million and end September 30, 2018 with a cash balance of approximately $2.5 million, based on the following forecasted expenditures during the next 12 months:
- $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 the Santa Maria, Rodeo, Mogotes and other properties;
- $1.5 million at the Velardena Properties for care and maintenance;
- $1.0 million at the El Quevar project to fund ongoing exploration and evaluation activities, care and maintenance and property holding costs; and
- $3.4 million on general and administrative costs.
Third Quarter Business Summary
- In August, the Company granted Hecla Mining Company ("Hecla") an option to extend its lease of Golden's oxide mill for an additional two years, or through December 2020. In consideration for such option, Golden received (US) $1.0 million cash and Hecla purchased $1.0 million of Company common stock.
- In August, the Company expanded the size of its Santa Maria gold and silver project in Chihuahua, Mexico, when it acquired three additional claims that cover the eastward extension of the Santa Maria vein.
- In August, Golden began a new 1,500-meter drill program at Santa Maria, with the goal of at least doubling the size of the project and identifying it as a prospect for near-term production with low capital requirements.
- In September, the Company received a permit to dewater the underground mine workings at its El Quevar silver project in Salta, Argentina, to evaluate the possibility of underground exploration drilling in conjunction with a current project to re-model the existing resource.
- In September, Golden began a 1,500-meter drill program at the Mogotes project, located adjacent to the Company's Velardena Properties in Durango State, Mexico.
Additional information regarding third quarter 2017 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.
