GOLDEN MINERALS COMPANY Our Company
We were incorporated in
We remain focused on mining operations at the Rodeo Property as well as further
studies of a restart plan for Velardeña including the use of bio-oxidation to
improve the payable gold recovery. We also continue to evaluate and search for
mining opportunities in
This discussion should be read in conjunction with Management's Discussion and
Analysis included in our Annual Report on Form 10-K for the fiscal year ended
2022 Highlights
Rodeo Property
From inception in
ounces of silver from Rodeo. Cash costs per ounce produced have averaged
We began mining activities at the Rodeo Property, using a contract miner, in
We installed a new regrind mill circuit at the plant specifically designed to
process the harder mined material coming from the Rodeo Property. The new
circuit, which was fully operational at the end of
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The table below sets forth the key processing and sales statistics for the Rodeo
operation for the three months ended
Rodeo Operations Statistics
(in thousands except per unit amounts)
Quarter Ended
March 31, 2022
Tonnes mined (1) 203,591
Tonnes in stockpiles awaiting processing (2) 10,898
Tonnes in low grade stockpiles (3) 88,559
Tonnes processed 47,437
Average tonnes per day processed 527
Average gold grade processed (grams per tonne) 3.1
Average silver grade processed (grams per tonne) 11.6
Plant recovery - gold (%) 75.4
Plant recovery - silver (%) 82.8
Payable gold produced in doré (ounces) 3,608
Payable silver produced in doré (ounces) 13,944
Payable gold equivalent produced in doré (ounces) (4) 3,787
Gold sold in doré (ounces) 3,855
Silver sold in doré (ounces) 14,481
Gold equivalent sold in doré (ounces) (4) 4,040
Average realized price, before refining and selling costs Gold (dollar per ounce)
$1,888 Silver (dollar per ounce)$24.24 (1) Includes all mined material transported to the plant, stockpiled or designated as waste (2) Includes mined material stockpiled at the mine or transported to the plant awaiting processing in the plant (3) Material grading between 1.6 g/t (current cutoff grade) and 1 g/t Au held for possible future processing (4) Gold equivalents based on realized $ Au and $ Ag price 22 Table of Contents
The following table highlights additional non-GAAP cost and revenue statistics related to the Rodeo operations:
Quarter Ended March 31, 2022
(in thousands except per unit amounts)
Total cash operating costs $ 4,423
Treatment and refining costs 129
Silver by-product credits (351)
Total cash costs, net of by-product
credits $ 4,201
Total cash cost per unit
Payable gold ounces produced in doré 3,608
Total cash operating costs $ 1,226
Treatment and refining charges 36
Silver by-product credits (97)
Total cash costs, net of by-product
credits, per payable gold ounce (1) $ 1,164
Tonnes Processed in plant 47,437
Total cash operating costs per tonne
processed $ 93
(1) Cash costs, net of by-product credits, per payable ounce of gold is a non-GAAP financial measure
Total cash operating costs for the three months ended
For the full year 2022, we are estimating that we will process 175,000 to 185,000 tonnes in the oxide plant, or
approximately 500 tonnes per day, with payable extraction for 2022 of
approximately 12,000 to 14,000 ounces of gold and 42,000 to 47,000 ounces of
silver. Grades for 2022 are estimated to be approximately 2.9 grams per tonne
for gold and 9.4 grams per tonne for silver, lower than grades achieved in 2021,
but as anticipated in the PEA mine plan for 2022. Mill recoveries are expected
to continue during 2022 near current rates of approximately 80 percent for both
gold and silver. Higher expected total throughput in the oxide plant for the
year 2022, as compared to 2021, will help offset the lower gold grades
anticipated for 2022 resulting in similar payable gold extraction in 2022 as
compared to 2021, but unit costs will be higher in 2022 as a result of higher
plant throughput. Cash costs per payable gold ounce, net of silver by-product
credits, are expected to be approximately
Using an assumed gold price of
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
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"Total cash costs, net of by-product credits, per payable gold ounce", and "All-in sustainable costs, net of by-product credits, per payable gold ounce", are non-GAAP financial measures calculated by the Company as set forth below and may not be comparable to similar measures reported by other companies.
"Total cash costs, net of by-product credits, per payable gold ounce," is a non-GAAP measure, and includes all direct and indirect operating cash costs associated with the physical activities that would generate doré products for sale to customers, including mining to gain access to mineralized materials, mining of mineralized materials and waste, milling, third-party related treatment, refining and transportation costs, on-site administrative costs and royalties. Total cash costs do not include depreciation, depletion, amortization, exploration expenditures, reclamation and remediation costs, sustaining capital, financing costs, income taxes, or corporate general and administrative costs not directly or indirectly related to the Rodeo project. By-product credits include revenues from silver contained in the products sold to customers during the period. "Total cash costs, net of by-product credits", are divided by the number of payable gold ounces generated by the plant for the period to arrive at "Total cash costs, net of by-product credits, per payable gold ounce."
"Cost of metals sold", reported as a separate line item in our Condensed
Consolidated Statements of Operations for the three months ended
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Reconciliation of Cash Costs to Cost of Metals Sold
Reconciliation of Costs of Metals Sold (GAAP)
to Total Cash Costs, net of By-product
Credits (Non-GAAP)
Quarter Ended March 31, 2022
Total cash costs, net of by-product
credits $ 4,201
Reconciliation to GAAP measure:
Treatment and refining costs $ (129)
Silver by-product credits 351
Write down of inventories to net
realizable value -
Change in inventory (excluding
depreciation, depletion and amortization) (101)
Cost of metals sold $ 4,322
Rodeo Exploration
In
Velardeña
The Velardeña Properties contain two underground mines that were last operated in late 2015, at which point mining activities were suspended when a combination of low metals prices, mining dilution and metallurgical challenges rendered operations unprofitable. We elected to preserve the asset for future use, and since that time we have evaluated and tested various mining methods and processing alternatives that could enable sustainable profitable operations.
The recent rise in precious metals prices, the advancement of alternative
processing technologies in the industry, and the results of our testing
activities prompted us to pursue the preparation of an updated NI 43-101
preliminary economic assessment (PEA) based partly on projected increased gold
recoveries from a proposed bio-oxidation circuit to treat gold-bearing pyrite
concentrates. In
In
We completed an initial drill program of 3400 meters in 15 holes at
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high-grade mineralization and hit multiple high-grade veins and suggests there may be additional blind veins to be found on the property.
In
El Quevar
In
During the earn-in period, in addition to the exploration spending, Barrick
will fund the holding costs of the property, which will qualify as work
expenditures. Barrick will reimburse us for expenses related to maintaining the
exploration camp, which will initially be run by us under a service agreement,
and which will also qualify as work expenditures. Through
In
In the fourth quarter of 2021, we completed the first drill program ever
conducted at Sarita Este, which involved drilling 10 diamond drill holes
totaling 2,518 meters to explore untested epithermal gold-silver and copper
porphyry targets. In
Financial Results of Operations
For the results of continuing operations discussed below, we compare the results
from operations for the three months ended
Three Months Ended
Revenue from the sale of metals. We recorded
Costs of metals sold. For the three months ended
Exploration expense. Our exploration expense, including property holding costs
and allocated administrative expenses, totaled
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Velardeña care and maintenance costs. We recorded
El Quevar project expense. We incurred
Administrative expense. Administrative expenses totaled
Stock based compensation. During the three months ended
Reclamation and accretion expense. During each of the three months ended
Other operating income (expense), net. We recorded
Depreciation, depletion and amortization. During the three-month periods ended
Interest and other expense, net. We recorded a nominal amount of interest and
other expense, net for the three months ended
Gain (Loss) on foreign currency losses. We recorded a foreign currency gain of
approximately
Income taxes. We recorded a
Liquidity and Capital Resources
At
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?
properties;
?
? property holding costs at the El Quevar project, net of reimbursements from
Barrick;
?
? increase in inventories and value added tax receivables associated with the
Rodeo operation, partially offset by an increase in accounts payable and other
accrued liabilities, also related to the Rodeo operation.
The foregoing expenditures were offset by cash inflows of
net operating margin from the Rodeo operation (defined as revenue from the sale of metals less the cost of metals sold).
In addition to the
Our forecasted expenditures during the twelve months ending
Approximately
? related to our portfolio of exploration properties located in
and
additional exploration at Rodeo,
? Approximately
maintenance;
? Approximately
maintenance and property holding costs, net of reimbursement from Barrick; and
? Approximately
Approximately
? decrease in accounts payable and other accrued liabilities primarily related to
income tax payments, accrued employee benefits costs and other corporate
compliance costs
Our forecasted cash resources of approximately
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receipts are less than anticipated, we may need to take certain actions to maintain sufficient cash balances over the next nine months, including additional asset dispositions or raising additional equity capital through sales under the ATM Program or otherwise.
The condensed consolidated financial statements have been prepared on a going
concern basis under which an entity is considered to be able to realize its
assets and satisfy its liabilities in the normal course of business. However,
our continuing long-term operations may be dependent upon our ability to
continue currently profitable operations and to secure sufficient funding, if
needed, to generate future profitable operations. The underlying value and
recoverability of the amounts shown as property, plant and equipment in our
condensed consolidated financial statements are dependent on our ability to
continue to generate positive cash flows from operations and to continue to fund
exploration and development activities that would lead to additional profitable
mining and processing activities or to generate proceeds from the disposition of
property, plant and equipment. There can be no assurance that we will be
successful in continuing to generate profitable mining and processing activities
or to securing additional funding, if needed, to generate future profitable
operations on terms acceptable to us or at all. We believe the cash on hand,
anticipated positive net operating margins from the Rodeo operation, the
potential use of the ATM Program, and the potential for additional asset
dispositions make it probable that we will have sufficient cash to meet our
financial obligations and continue our business strategy beyond one year from
the filing of our condensed consolidated financial statements for the period
ended
Recent Accounting Pronouncements
There were no new accounting pronouncements issued during 2022 that would affect the Company or have a material impact on its consolidated financial position or results of operations.
Forward-Looking Statements
Some information contained in or incorporated by reference into this Quarterly
Report on Form 10-Q may contain forward-looking statements. These statements
include comments relating to: (i) projections regarding the Rodeo mine for 2022,
including production, payable extraction, anticipated grades, recoveries,
estimated unit costs and net operating margin, (ii) our plans regarding further
advancement of the El Quevar project; (iii) future evaluation and drilling plans
and exploration activities at our exploration properties, including
The use of any of the words "anticipate," "continues," "likely," "estimate," "expect," "may," "will," "project," "should," "could," "believe" and similar expressions are intended to identify uncertainties. We believe the expectations reflected in those forward-looking statements are reasonable. However, we cannot assure that these expectations will prove to be correct. Actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors set forth below and other factors set forth in, or incorporated by reference into this report:
Timing duration and overall impact of the COVID-19 pandemic, including
? potential future suspension of activities at Rodeo or the Velardeña Properties
in the event of future orders of the Mexican Federal Government;
Deviations from the projected timing, amount of estimated production and
project costs at Rodeo due to unanticipated variations in grade, unexpected
? challenges associated with our proposed mining plan, volatility in commodity
prices, variations in expected recoveries, increases in projected operating or
capital costs or delays in commencement of or interruptions in production;
? Higher than anticipated care and maintenance costs at the Velardeña Properties
in
Risks related to the El Quevar project in
? results from our evaluation activities and whether the option with respect to
the El Quevar project is exercised pursuant to the terms of the Earn-in
Agreement;
? Decreases in silver and gold prices;
Whether we are able to raise the necessary capital required to continue our
? business on terms acceptable to us or at all, and the likely negative effect of
volatility in silver and gold prices or unfavorable exploration results;
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Unfavorable results from exploration at the
? or other exploration properties and whether we will be able to advance these or
other exploration properties;
The Rodeo project, including inaccuracies in our assumptions and projections
? contained in the Rodeo PEA (including life of mine and production
expectations), and our plans for further exploration drilling;
Variations in the nature, quality and quantity of any mineral deposits that are
or may be located at the Velardeña Properties or our exploration properties,
? changes in interpretations of geological information, unfavorable results of
metallurgical and other tests, and the timing and scope of our further
evaluation activities at the Velardeña Properties;
Potential delays in our exploration activities or other activities to advance
properties towards mining resulting from environmental consents or permitting
? delays or problems, accidents, problems with contractors, disputes under
agreements related to exploration properties, unanticipated costs and other
unexpected events;
? Our ability to retain key management and mining personnel necessary to
successfully operate and grow our business;
? Economic and political events affecting the market prices for gold, silver,
zinc, lead and other minerals that may be found on our exploration properties;
Political and economic instability in
? which we conduct our business and future actions of any of these governments
with respect to nationalization of natural resources or other changes in mining
or taxation policies;
? Volatility in the market price of our common stock; and
? The factors discussed under "Risk Factors" in our Annual Report on Form 10-K
for the year ended
Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this quarterly report on Form 10-Q. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments.
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