GOLDEN, Colo., Feb. 28, 2017 /PRNewswire/ -- Golden
Minerals Company ("Golden Minerals", "Golden" or the "Company")
(NYSE MKT and TSX: AUMN) has today announced financial results for
the full year ending December 31,
2016.
2016 Highlights
- Generated a positive net operating margin (defined as lease
revenue less lease costs) of $4.4
million in 2016 from the Velardena oxide plant lease compared to a
negative net operating margin of $2.0
million in 2015 from a combination of the Velardena oxide plant lease and mining
activities
- Granted Hecla Mining Company ("Hecla") the right to extend the
oxide plant lease through the end of 2018
- Generated an additional $1.8
million in other operating income related to sales and
farm-outs of non-strategic property and equipment
- Spent $3.7 million in exploration
expenses to advance exploration properties including Santa Maria and Rodeo:
- At the Santa Maria property:
- Completed test mining and processing and sold concentrates
containing silver and gold for approximately $0.3 million, which offset exploration
costs for the year
- Began a mineral resource estimate and Preliminary Economic
Assessment which were completed in February
2017
- At the Rodeo property,
completed a 2,100-meter drilling program and began a mineral
resource estimate which was completed in January 2017
- Electrum Global Holdings ("Electrum") began exploration
drilling in December 2016 on Golden's farmed-out Celaya silver
and gold property through their 100 percent-owned subsidiary
- Cash and cash equivalents of $2.6
million with zero debt as of December
31, 2016, as compared to $4.1
million and $5.0 million face
value convertible debt, respectively, as of December 31, 2015
- Net loss of $0.13 per share in
2016 compared to net loss of $0.48
per share in 2015
Business Summary
Oxide Mill Lease
In July 2015 the Company entered
into a leasing agreement with Hecla to lease the Velardena oxide plant for an initial term of
18 months beginning July 1, 2015.
During 2016 Hecla exercised its right to extend the initial
18-month term for six additional months until June 30, 2017, as permitted under the original
lease agreement. The Company and Hecla also reached an agreement
regarding an expansion of the tailings impoundment, at Hecla's
cost, to accommodate Hecla's increased use of tailings capacity in
excess of an agreed amount while preserving flexibility for future
tailings expansions. In connection with the agreement regarding
tailings impoundment expansion, Golden also granted Hecla the right
to extend the lease for an additional 18 months following
June 30, 2017, or until December 31, 2018.
Hecla is responsible for ongoing operation and maintenance of
the oxide plant. During the year ended December 31, 2016, Hecla processed approximately
136,000 tonnes of material through the oxide plant, resulting in
total revenues to Golden of approximately $6.4 million. Golden incurred costs of
approximately $2.0 million related to
the services it provides under the lease for a net margin of
approximately $4.4 million during
2016. Hecla reached its intended processing throughput of
approximately 400 tonnes per day during 2016 and, at this rate, net
cash payments to Golden, net of reimbursable costs, should total
approximately $0.4 million per month,
including variable and fixed fees, or nearly $5.0 million annually.
Based on recent public disclosures by Hecla, Golden believes
that Hecla has sufficient reserves at their San Sebastian mine to
continue to process ore at current throughput rates at the
Company's Velardena oxide plant
through the end of 2018, should they elect to do so.
Sentient Loan Financing
The Company closed on a $5.0
million secured convertible loan borrowing from The Sentient
Group ("Sentient") in October 2015.
The proceeds from this loan enabled Golden to fund the suspension
of mining and processing activities at the Velardena Properties and
continue its long term business strategy into 2016. The loan
was converted by Sentient in two separate transactions, in
February 2016 and June 2016, into a total of 27,366,740 shares of
Golden Minerals common stock. As a result, Golden Minerals'
debt balance was reduced to zero. As of February 24, 2017, Sentient holds approximately
46 percent of the Company's 89.7 million issued and outstanding
shares of common stock.
Santa Maria
The Company completed an underground drilling program of 2,200
meters in 24 drill holes in 2016, and has mined and processed a
total of 7,500 tonnes of material since 2015. The average grade of
the 7,500 tonnes mined and processed is 338 grams per tonne ("gpt")
silver and 0.7 gpt gold. The Company completed an updated NI 43-101
mineral resource estimate and PEA that estimates an after-tax net
present value of approximately $6.4
million at an 8 percent discount rate and an internal rate
of return of 84 percent. (See the Company's February 15, 2017 press release for additional
details.) In 2017, Golden plans to continue to optimize mining
plans and obtain permits for the potential mining operation as
considered in the current PEA. The Company also plans to conduct
additional exploration work with the goal of expanding the
deposit.
Rodeo
Golden Minerals completed a 2,080-meter core drilling program at
Rodeo during 2016. Results showed
a gold and silver bearing epithermal vein and breccia system with
encouraging gold and silver values over an approximate 50 to 70
meter true width. In January 2017,
the Company announced completion of a NI 43-101 mineral resource
estimate for Rodeo, completed by
the engineering firm of Tetra Tech. (See the Company's
January 26, 2017 press release for
additional details.) The Company believes the mineralized material,
as currently identified, could provide two to three years of mined
material for the Velardena oxide
mill (located within trucking distance of the Rodeo property) following the completion of
the Hecla lease, which is currently set to expire no later than
December 31, 2018. In 2017, Golden
plans to continue work related to metallurgical studies, economic
evaluation and potential resource expansion.
Sales and Farm-outs
The Company generated approximately $1.8
million in other operating income related primarily to
farm-outs and sales of non-strategic exploration properties and
excess equipment during 2016, as detailed in the following two
sections.
Celaya Farm-out
In August 2016, Golden entered
into an earn-in agreement with a Mexican subsidiary of Electrum
related to the 6,200-hectare silver and gold Celaya project in
Mexico. Golden received an upfront
payment of $0.2 million and recorded
a 2016 gain of $0.2 million related
to the farm-out. Electrum has agreed to incur specified exploration
expenditures during the initial one and three year periods, and has
options to acquire interest in a joint venture company to be formed
as well as additional interest in the Celaya project. Electrum has
conducted geologic mapping and sampling on the Celaya property. New
targets have been identified and exploration drilling to test these
targets began in December 2016.
Asset Sales
- In August 2016, Golden sold
certain excess mining equipment to Minera Indé, a related party,
for $0.7M, later amended in 2017 to
include an additional $0.2 million
sale. Approximately $0.2 million has
been received to date, with the remainder plus interest due in
August 2017. The Company recorded a
gain of $0.7 million on the sale in
2016.
- Golden sold its remaining 50 percent interest in the
San Diego property in Mexico to Golden Tag Resources, Ltd. in
August 2016 for approximately
$0.4 million in cash and 2.5 million
common shares of Golden Tag,
recognizing a gain of approximately $0.5
million. Golden Minerals retains a two percent net smelter
return royalty on future production at the property.
- The Company entered into an option agreement with Santa Cruz
Silver Mining Ltd. in April 2016
related to certain non-strategic mineral claims in the Zacatecas
Mining District, for a series of payments totaling $1.5 million over 24 months. Golden recognized a
2016 gain of $0.4 million on the
first two payments received.
Financial Results
The Company reported revenue of $6.4
million and a net operating margin of $4.0 million (defined as lease revenue less lease
costs) in 2016, both of which were wholly attributable to the lease
of the Company's Velardena oxide
plant. This marks an improvement over the negative
$2.0 million net operating margin
recorded in 2015 related to the oxide mill lease and mining
activity at Velardena. The total
loss from operations of $6.3 million
in 2016 compared favorably to a $30.2
million loss from operations in 2015, the latter negatively
impacted by a $13.2 million non-cash
asset impairment charge related to the Velardena Properties
recorded after the Company suspended mining activities.
The Company also reported a net loss of $10.7 million or $0.13 per share in 2016, compared to a net loss
of $25.4 million or $0.48 per share in 2015. Included in the net
loss for 2016 was a non-cash derivative loss of $1.7 million related to an increase in the fair
value of the liability recorded for warrants to acquire the
Company's common stock and a non-cash derivative loss of
$0.8 million related to an increase
in the fair value of the liability associated with the Sentient
convertible loan. The 2015 net loss included non-cash warrant and
convertible loan derivative gains of $1.3
million and $0.6 million,
respectively.
Financial Outlook
In addition to the $2.6 million
cash balance at December 31, 2016,
during 2017 Golden expects to receive approximately $4.8 million in net operating margin from the
oxide plant lease, $0.8 million as
final payment of the August 2016 sale
to Minera Indé of
excess mining equipment, and $0.6
million from the farm-out of a non-strategic exploration
property that occurred in 2016. Subsequent to December 31, 2016, the Company received
$0.5 million in net proceeds from the
sale of its common stock under an At the Market ("ATM") offering
which was announced in December 2016.
Currently, Golden intends to spend the following amounts during
2017, which would result in a cash balance at December 31, 2017 of approximately $1.5 million:
- Approximately $1.8 million on
exploration activities and property holding costs, including
project assessment and development costs related to Santa Maria, Rodeo and other properties
- Approximately $1.5 million at the
Velardena Properties for care and maintenance
- Approximately $0.5 million at the
El Quevar project to fund ongoing maintenance activities and
property holding costs
- Approximately $3.5 million on
general and administrative costs
Additional information regarding full year 2016 financial
results may be found in the Company's Annual Report on Form 10-K
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 in Mexico with emphasis on areas near its
Velardena processing plants.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended, and applicable Canadian securities legislation, including
statements relating to expectations regarding the oxide plant lease
including its duration, revenues and Hecla's future processing
capabilities, expectations related to our Santa Maria and Rodeo properties in Mexico, including planned exploration and
other evaluation work and costs, and statements regarding our
financial outlook, including anticipated 2017 income and
expenditures. These statements are subject to risks and
uncertainties, including: lower than anticipated revenue from the
oxide plant lease as a result of delays or problems at the third
party's mine or the oxide plant, earlier than expected termination
of the lease or other causes, the reasonability of the economic
assumptions at the basis of the Santa Maria PEA and Rodeo 43-101, changes in interpretations of
geological, geostatistical, metallurgical, mining or processing
information and interpretations of the information resulting from
future exploration, analysis or mining and processing experience;
new information from drilling programs or other exploration or
analysis; unexpected variations in mineral grades, types and
metallurgy; fluctuations in silver and gold metal prices; failure
of mined material or veins mined to meet expectations; increases in
costs and declines in general economic conditions; 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 SEC by
Golden Minerals, including the Company's Annual Report on Form 10-K
for the year ended December 31,
2016.
For additional information please visit
http://www.goldenminerals.com/ or contact:
Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com
GOLDEN MINERALS
COMPANY
CONSOLIDATED
BALANCE SHEETS
(Expressed in
United States dollars)
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2016
|
|
2015
|
|
|
(in thousands, except share data)
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,588
|
|
$
|
4,077
|
Short-term
investments
|
|
|
334
|
|
|
72
|
Trade
receivables
|
|
|
380
|
|
|
546
|
Inventories
|
|
|
245
|
|
|
330
|
Value added tax
receivable, net
|
|
|
5
|
|
|
400
|
Related party
receivable
|
|
|
643
|
|
|
—
|
Prepaid expenses and
other assets
|
|
|
578
|
|
|
451
|
Total current
assets
|
|
|
4,773
|
|
|
5,876
|
Property, plant and
equipment, net
|
|
|
9,235
|
|
|
11,125
|
Total
assets
|
|
$
|
14,008
|
|
$
|
17,001
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts payable and
other accrued liabilities
|
|
$
|
1,224
|
|
$
|
1,144
|
Convertible note
payable - related party, net
|
|
|
—
|
|
|
3,702
|
Derivative liability
- related party
|
|
|
—
|
|
|
488
|
Deferred
revenue
|
|
|
—
|
|
|
500
|
Other current
liabilities
|
|
|
24
|
|
|
556
|
Total current
liabilities
|
|
|
1,248
|
|
|
6,390
|
Asset retirement and
reclamation liabilities
|
|
|
2,434
|
|
|
2,546
|
Warrant liability -
related party
|
|
|
976
|
|
|
117
|
Warrant
liability
|
|
|
922
|
|
|
93
|
Other long term
liabilities
|
|
|
66
|
|
|
84
|
Total
liabilities
|
|
|
5,646
|
|
|
9,230
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common stock, $.01
par value, 200,000,000 and 100,000,000 shares authorized;
89,020,041 and 53,335,333 shares issued and outstanding,
respectively
|
|
|
889
|
|
|
534
|
Additional paid in
capital
|
|
|
495,455
|
|
|
484,742
|
Accumulated
deficit
|
|
|
-488,037
|
|
|
-477,378
|
Accumulated other
comprehensive income (loss)
|
|
|
55
|
|
|
-127
|
Shareholders'
equity
|
|
|
8,362
|
|
|
7,771
|
Total liabilities and
equity
|
|
$
|
14,008
|
|
$
|
17,001
|
GOLDEN MINERALS
COMPANY
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in
United States dollars)
|
|
|
|
The Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
(in thousands except per share data)
|
Revenue:
|
|
|
|
|
|
|
Oxide plant
lease
|
|
$
|
6,400
|
|
$
|
653
|
Sale of
metals
|
|
|
—
|
|
|
7,418
|
Total
revenue
|
|
|
6,400
|
|
—
|
8,071
|
Costs and
expenses:
|
|
|
|
|
|
|
Oxide plant lease
costs
|
|
|
-2,046
|
|
|
-199
|
Cost of metals sold
(exclusive of depreciation shown below)
|
|
|
—
|
|
|
-9,866
|
Exploration
expense
|
|
|
-3,718
|
|
|
-3,634
|
El Quevar project
expense
|
|
|
-508
|
|
|
-1,042
|
Velardeña project
expense
|
|
|
—
|
|
|
-119
|
Velardeña shutdown
and care and maintenance costs
|
|
|
-2,016
|
|
|
-1,228
|
Administrative
expense
|
|
|
-3,890
|
|
|
-4,242
|
Stock based
compensation
|
|
|
-593
|
|
|
-453
|
Reclamation
expense
|
|
|
-192
|
|
|
-256
|
Impairment of long
lived assets
|
|
|
—
|
|
|
-13,181
|
Other operating
income, net
|
|
|
1,790
|
|
|
471
|
Depreciation,
depletion and amortization
|
|
|
-1,548
|
|
|
-4,480
|
Total costs and
expenses
|
|
|
-12,721
|
|
|
-38,229
|
Loss from
operations
|
|
|
-6,321
|
|
|
-30,158
|
Other income and
(expense):
|
|
|
|
|
|
|
Interest
expense
|
|
|
-515
|
|
|
-126
|
Interest and other
income
|
|
|
390
|
|
|
3,083
|
Warrant derivative
(loss) gain
|
|
|
-1,688
|
|
|
1,344
|
Derivative (loss)
gain
|
|
|
-778
|
|
|
553
|
Loss on debt
extinguishment
|
|
|
-1,653
|
|
|
—
|
Loss on foreign
currency
|
|
|
-94
|
|
|
-79
|
Total other (expense)
income
|
|
|
-4,338
|
|
|
4,775
|
Loss from operations
before income taxes
|
|
|
-10,659
|
|
|
-25,383
|
Income tax
benefit
|
|
|
—
|
|
|
—
|
Net loss
|
|
$
|
-10,659
|
|
$
|
-25,383
|
Comprehensive
loss, net of tax:
|
|
|
|
|
|
|
Unrealized gain
(loss) on securities
|
|
|
182
|
|
|
-127
|
Comprehensive
loss
|
|
$
|
-10,477
|
|
$
|
-25,510
|
Net loss per
common share — basic
|
|
|
|
|
|
|
Loss
|
|
$
|
-0.13
|
|
$
|
-0.48
|
Weighted average
Common Stock outstanding - basic (1)
|
|
|
81,651,896
|
|
|
52,972,352
|
(1) Potentially dilutive shares have not been included because
to do so would be anti-dilutive.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/golden-minerals-reports-year-end-2016-results-300414410.html
SOURCE Golden Minerals Company