Gold Resource Corporation Reports Results of Operations for the Year Ended December 31, 2023

In this article:

DENVER, March 13, 2024--(BUSINESS WIRE)--Gold Resource Corporation (NYSE American: GORO) (the "Company") is pleased to announce its full-year operational results from its Don David Gold Mine ("DDGM") near Oaxaca, Mexico, and a corporate update on its other activities.

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 per gold equivalent ounce

  • Cash balance of $6.3 million with no debt and working capital of $15.2 million at December 31, 2023

  • Completed Back Forty Optimization Study that indicates an After-Tax of $214 million NPV6% with a 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 cash balance as at December 31, 2023. The decrease of $17.4 million from December 31, 2022 is attributable to a cash outflow of $12.5 million for capital investments and a cash outflow of $5.2 million from operating activities for 2023, which included $7.8 million of income tax payments for the tax years 2022 and 2023, exploration investment of $4.2 million at the DDGM, and $1.6 million in spending on the Back Forty Project optimization work, offset by a $0.2 million increase in the value of cash due to the strengthening of the peso.

  • Working capital at December 31, 2023, was $15.2 million, a 29% decrease from the December 31, 2022, working capital of $21.4 million. The decrease is primarily driven by the decline in cash balance discussed above.

  • DDGM total cash costs (after co-product credits) and total all-in sustaining cost per gold equivalent ("AuEq")1 ounce sold were $1,250 and $1,630, respectively. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures below for a reconciliation of non-GAAP measures to applicable GAAP measures.

  • 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, was renewed in June 2023.

  • 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 and $23.68, respectively.

  • 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 from a third-party artisanal mining operation as a collaborative initiative with the local community at the end of 2022. Some of this material was processed in early 2023 to ensure the proper environmental treatment and storage of the material.

  • During the fourth quarter of 2023, negotiations were successfully undertaken to decrease the royalty fee from 5% to 3% 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)
($’s in millions)

Cash balance at December 31, 2023

$6.3

For the Year Ended December 31, 2023

Cash used in operating activities

$(5.2)

Net loss

$(16.0)

Net sales

$97.7

Production costs

$76.1

Depreciation, amortization, & reclamation

$26.1

Mining gross loss

$(5.3)

EBITDA

$4.4

2023 Capital and Exploration Investment Summary

 

 

 

 

For the nine months
ended
September 30, 2023

 

2023 full year
guidance

 

 

 

 

(in thousands)

Sustaining Investments:

 

 

 

 

 

 

 

 

Underground Development

 

Capital

 

$

4,386

 

 

 

Infill Drilling

 

Capitalized Exploration

 

 

4,096

 

 

 

Other Sustaining Capital

 

Capital

 

 

1,420

 

 

 

Surface and Underground Exploration Development & Other

 

Capitalized Exploration

 

 

1,139

 

 

 

Subtotal of Sustaining Investments:

 

 

 

 

11,041

 

$

9 - 11 million

Growth Investments:

 

 

 

 

 

 

 

 

DDGM growth:

 

 

 

 

 

 

 

 

Surface Exploration / Other

 

Exploration

 

 

2,240

 

 

 

Underground Exploration Drilling

 

Exploration

 

 

1,927

 

 

 

Underground Exploration Development

 

Capitalized Exploration

 

 

357

 

 

 

Back Forty growth:

 

 

 

 

 

 

 

 

Back Forty Project Optimization & Permitting

 

Exploration

 

 

1,642

 

 

 

Subtotal of Growth Investments:

 

 

 

 

6,166

 

$

6 - 7 million

Total Capital and Exploration:

 

 

 

$

17,207

 

$

15 - 18 million

Trending Highlights

 

 

2022

 

2023

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

Operating Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total tonnes milled

 

136,844

 

129,099

 

110,682

 

116,616

 

117,781

 

113,510

 

116,626

 

111,254

Average Grade

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

Gold (g/t)

 

3.00

 

2.63

 

1.98

 

2.51

 

2.33

 

1.59

 

1.52

 

1.44

Silver (g/t)

 

81

 

64

 

80

 

109

 

94

 

86

 

73

 

85

Copper (%)

 

0.41

 

0.32

 

0.37

 

0.45

 

0.37

 

0.37

 

0.32

 

0.39

Lead (%)

 

1.97

 

1.99

 

1.59

 

1.58

 

1.73

 

1.64

 

1.29

 

1.39

Zinc (%)

 

4.89

 

4.00

 

4.21

 

4.27

 

3.88

 

3.72

 

3.24

 

2.95

Metal production (before payable metal deductions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Lead (tonnes)

 

2,073

 

2,020

 

1,249

 

1,323

 

1,559

 

1,389

 

1,048

 

1,072

Zinc (tonnes)

 

5,562

 

4,282

 

3,901

 

4,198

 

3,837

 

3,569

 

3,223

 

2,884

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

Lead (tonnes)

 

1,639

 

1,755

 

1,056

 

941

 

1,417

 

1,317

 

947

 

820

Zinc (tonnes)

 

4,359

 

3,590

 

2,943

 

3,265

 

3,060

 

3,141

 

2,571

 

2,182

Average metal prices realized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold ($ per oz.)

 

$ 1,898

 

$ 1,874

 

$ 1,627

 

$ 1,734

 

$ 1,915

 

$ 2,010

 

$ 1,934

 

$1,985

Silver ($ per oz.)

 

$ 23.94

 

$ 22.05

 

$ 18.54

 

$ 21.25

 

$ 23.04

 

$ 24.93

 

$ 23.61

 

$23.14

Copper ($ per tonne)

 

$ 10,144

 

$ 9,275

 

$ 7,115

 

$ 8,221

 

$ 9,172

 

$ 8,397

 

$ 8,185

 

$8,205

Lead ($ per tonne)

 

$ 2,347

 

$ 2,168

 

$ 1,882

 

$ 1,954

 

$ 2,158

 

$ 2,153

 

$ 2,196

 

$2,122

Zinc ($ per tonne)

 

$ 3,842

 

$ 4,338

 

$ 3,186

 

$ 2,577

 

$ 3,195

 

$ 2,485

 

$ 2,195

 

$2,516

Gold equivalent ounces sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales, net (in thousands)

 

$ 45,417

 

$ 37,064

 

$ 23,869

 

$ 32,374

 

$ 31,228

 

$ 24,807

 

$ 20,552

 

$21,141

Production Costs (in thousands)

 

$ 20,074

 

$ 21,722

 

$ 19,380

 

$ 19,773

 

$ 19,850

 

$ 20,302

 

$ 18,957

 

$17,034

Production Costs/Tonnes Milled

 

$ 147

 

$ 168

 

$ 175

 

$ 170

 

$ 169

 

$ 179

 

$ 163

 

$153

Operating Cash Flows (in thousands)

 

$ 4,230

 

$ 7,976

 

($ 4,292)

 

$ 6,243

 

$ 1,024

 

($ 551)

 

($ 7,475)

 

$1,783

Net income (loss) (in thousands)

 

$ 4,019

 

$ 2,673

 

($ 9,730)

 

($ 3,283)

 

($ 1,035)

 

($ 4,584)

 

($ 7,341)

 

$(3,057)

Earnings (loss) per share - basic

 

$ 0.05

 

$0.03

 

($ 0.11)

 

($ 0.04)

 

($ 0.01)

 

($ 0.05)

 

($ 0.08)

 

$(0.03)

Trending Highlights of Non-GAAP Measures

 

 

2022

 

2023

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

 

(in thousands, except per oz)

Gold equivalent ounces sold (oz)

 

11,729

 

11,475

 

8,042

 

11,621

 

10,055

 

7,689

 

6,532

 

6,768

Total production costs

 

$ 20,074

 

$ 21,722

 

$ 19,380

 

$ 19,773

 

$ 19,850

 

$ 20,302

 

$ 18,957

 

$ 17,034

Treatment and refining charges

 

2,748

 

3,137

 

2,860

 

3,327

 

3,184

 

3,328

 

2,788

 

2,330

Co-product credits (1)

 

(24,732)

 

(22,027)

 

(13,369)

 

(13,314)

 

(15,881)

 

(13,384)

 

(9,733)

 

(9,908)

Total cash cost after co-product credits

 

($ 1,910)

 

$ 2,832

 

$ 8,871

 

$ 9,786

 

$ 7,153

 

$ 10,246

 

$ 12,012

 

$ 9,456

Total cash cost after co-product credits per AuEq oz sold

 

($ 163)

 

$ 247

 

$ 1,103

 

$ 842

 

$ 711

 

$ 1,333

 

$ 1,839

 

$ 1,397

Sustaining - capitalized expenditure

 

$ 4,596

 

$ 4,028

 

$ 3,605

 

$ 4,110

 

$ 2,588

 

$ 2,187

 

$ 3,489

 

$ 1,638

Sustaining - Exploration Expenditure

 

-

 

-

 

-

 

-

 

548

 

531

 

52

 

8

Reclamation and remediation (2)

 

62

 

61

 

58

 

620

 

195

 

200

 

216

 

163

Subtotal of DDGM sustaining costs

 

$ 4,658

 

$ 4,089

 

$ 3,663

 

$ 4,730

 

$ 3,331

 

$ 2,918

 

$ 3,757

 

$ 1,809

DDGM all-in sustaining cost after co-product credits per AuEq oz sold

 

$ 234

 

$ 603

 

$ 1,559

 

$ 1,249

 

$ 1,043

 

$ 1,712

 

$ 2,414

 

$ 1,664

Sustaining - general and administrative, including stock-based compensation expenses

 

$ 2,673

 

$ 2,313

 

$ 2,249

 

$ 2,768

 

$ 1,790

 

$ 2,137

 

$ 1,662

 

$ 1,675

Consolidated all-in sustaining cost after co-product credits

 

$ 5,421

 

$ 9,234

 

$ 14,783

 

$ 17,284

 

$ 12,274

 

$ 15,301

 

$ 17,431

 

$ 12,940

Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold

 

$ 462

 

$ 805

 

$ 1,838

 

$ 1,487

 

$ 1,221

 

$ 1,990

 

$ 2,669

 

$ 1,912

Non-sustaining cost- capital expenditure

 

$ 1,353

 

$ 541

 

$ -

 

$ -

 

$ -

 

$ 147

 

$ 209

 

$ 1

Non-sustaining cost- exploration expenditure

 

2,305

 

2,837

 

4,973

 

2,934

 

1,839

 

1,440

 

1,960

 

570

Subtotal of non-sustaining costs

 

$ 3,658

 

$ 3,378

 

$ 4,973

 

$ 2,934

 

$ 1,839

 

$ 1,587

 

$ 2,169

 

$ 571

Total all-in cost after co-product credits

 

$ 9,079

 

$ 12,612

 

$ 19,756

 

$ 20,218

 

$ 14,113

 

$ 16,888

 

$ 19,600

 

$ 13,511

Total all-in cost after co-product credits per AuEq oz sold

 

$ 774

 

$ 1,099

 

$ 2,457

 

$ 1,740

 

$ 1,404

 

$ 2,196

 

$ 3,001

 

$ 1,996

(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 Oaxaca, Mexico and therefore we plan to make significant investments for infrastructure and exploration in 2024.

Measure

2024 Guidance

Metals Produced & Sold

13,000 to 15,000 Gold Ounces

1,250,000 to 1,400,000 Silver Ounces

29,500 to 31,500 Gold Equivalent Ounces

Cash Cost after Co-product Credits per AuEq ounces (1) (2)

$1,100 to $1,300

All-in-Sustaining Cost after Co-Product Credits per AuEq ounce (1)

$1,450 to $1,650 (DDGM)

$1,600 to $1,800 (Consolidated)

Capital Investment (DDGM)

$6.8 to $8.0 million (Sustaining Capital)

$2.0 to $3.0 million (Sustaining Capitalized Exploration)

$0.5 to $0.8 million (Non-Sustaining Capitalized Exploration)

Exploration Investment (DDGM)

$2.0 to $3.5 million (Non-Sustaining Exploration Expense)

Back Forty Investment

$0.7 to $0.9 million

General & Administrative Expense

$5.0 to $6.0 million, excluding Stock-based-Compensation

(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 U.S. GAAP.

(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 $0.95 per pound metal price, 1,007 tonnes of copper sold at a $3.80 per pound metal prices and 10,174 tonnes of zinc sold at a $1.15 per pound metal price.

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 Oaxaca, Mexico. Under the direction of an experienced board and senior leadership team, the Company’s focus is to unlock the significant upside potential of its existing infrastructure and large land position surrounding the mine in Oaxaca, Mexico, and to develop the Back Forty Project in Michigan, USA. For more information, please visit GRC’s website, located at www.goldresourcecorp.com, and read the Company’s Form 10-K for an understanding of the risk factors associated with its business.

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 USA, P.C., completes their audit procedures.

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/

Contacts

Chet Holyoak
Chief Financial Officer
Chet.holyoak@grc-usa.com
www.GoldResourceCorp.com

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