Goldgroup Mining Inc 10-Q, filed Aug 4, 2020

Goldgroup Mining Inc. (GORO)

10-Q 2020-08-04 For: 2020-06-30

Added on August 02, 2026

About this 10-Q

Goldgroup Mining Inc filed this 10-Q on August 4, 2020, covering the quarter ended June 30, 2020.

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $21.1M; down 28.2% from $29.37M a year earlier
Net loss: $1.81M; compared with net income of $1.8M a year earlier

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Title of each class	Trading Symbol	Name of each exchange where registered
Common Stock	GORO	NYSE American


Large accelerated filer	◻	Accelerated filer	☒

Non-accelerated filer	◻	Smaller reporting company	☐

		Emerging growth company	☐

		Page
Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets at June 30, 2020 (unaudited) and December 31, 2019	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 (unaudited)	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2020 and 2019 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

Part II - OTHER INFORMATION


Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 4.	Mine Safety Disclosures	33
Item 6.	Exhibits	34
Signatures		35


	June 30,		December 31,
	2020		2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	13,328	$	11,076
Gold and silver rounds/bullion		4,717		4,265
Accounts receivable, net		3,363		8,362
Inventories, net		27,034		24,131
Prepaid taxes		-		786
Prepaid expenses and other current assets		2,514		2,032
Total current assets		50,956		50,652
Property, plant and mine development, net		121,758		125,259
Operating lease assets, net		3,227		7,436
Deferred tax assets, net		8,491		4,635
Other non-current assets		4,344		5,030
Total assets	$	188,776	$	193,012
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	8,513	$	14,456
Loans payable, current		886		879
Finance lease liabilities, current		459		446
Operating lease liabilities, current		3,150		7,287
Mining royalty taxes payable, net		832		1,538
Accrued expenses and other current liabilities		3,507		3,366
Total current liabilities		17,347		27,972
Reclamation and remediation liabilities		6,276		5,605
Loans payable, long-term		340		782
Finance lease liabilities, long-term		203		435
Operating lease liabilities, long-term		88		160
Total liabilities		24,254		34,954
Shareholders' equity:
Common stock - $0.001 par value, 100,000,000 shares authorized:
70,061,099 and 65,691,527 shares outstanding at June 30, 2020 and December 31, 2019, respectively		70		66
Additional paid-in capital		160,937		148,171
Retained earnings		10,570		16,876
Treasury stock at cost, 336,398 shares		(5,884)		(5,884)
Accumulated other comprehensive loss		(1,171)		(1,171)
Total shareholders' equity		164,522		158,058
Total liabilities and shareholders' equity	$	188,776	$	193,012


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Sales, net	$	21,098	$	29,374	$	49,103	$	55,952
Mine cost of sales:
Production costs		17,642		18,677		38,527		36,558
Depreciation and amortization		5,007		4,165		12,405		7,407
Reclamation and remediation		30		41		68		57
Total mine cost of sales		22,679		22,883		51,000		44,022
Mine gross (loss) profit		(1,581)		6,491		(1,897)		11,930
Costs and expenses:
General and administrative expenses		2,197		2,708		4,471		4,719
Exploration expenses		551		631		1,706		2,081
Other income, net		(1,847)		(107)		(334)		(82)
Total costs and expenses		901		3,232		5,843		6,718
(Loss) income before income taxes		(2,482)		3,259		(7,740)		5,212
(Benefit) provision for income taxes		(670)		1,461		(2,807)		2,532
Net (loss) income	$	(1,812)	$	1,798	$	(4,933)	$	2,680
Net (loss) income per common share:
Basic and diluted	$	(0.03)	$	0.03	$	(0.07)	$	0.04
Weighted average shares outstanding:
Basic		69,985,499		62,778,445		68,011,860		61,729,871
Diluted		69,985,499		63,066,616		68,011,860		62,079,859


	Three Months Ended June 30, 2020 and 2019
	Number of Common Shares	Par Value of Common Shares		Additional Paid- in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance, March 31, 2019	61,833,211	$	63		132,935	$	13,231	$	(5,884)	$	(1,171)	$	139,174
Stock-based compensation	-		-		878		-		-		-		878
Dividends declared	-		-		-		(319)		-		-		(319)
Issuance of stock, net of issuance costs	3,314,742		3		10,999		-		-		-		11,002
Net income	-		-		-		1,798		-		-		1,798
Balance, June 30, 2019 (unaudited)	65,147,953	$	66	$	144,812	$	14,710	$	(5,884)	$	(1,171)	$	152,533

Balance, March 31, 2020	69,877,925	$	70	$	158,987	$	13,090	$	(5,884)	$	(1,171)	$	165,092
Stock-based compensation	-		-		400		-		-		-		400
Dividends declared	-		-		-		(708)		-		-		(708)
Common stock issued for vested restricted stock units	35,072		-		-		-		-		-		-
Issuance of stock, net of issuance costs	484,500		-		1,550		-		-		-		1,550
Net loss	-		-		-		(1,812)		-		-		(1,812)
Balance, June 30, 2020 (unaudited)	70,397,497	$	70	$	160,937	$	10,570	$	(5,884)	$	(1,171)	$	164,522


	Six Months Ended June 30, 2020 and 2019
	Number of Common Shares	Par Value of Common Shares		Additional Paid- in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance, December 31, 2018	59,186,829	$	59	$	121,602	$	12,656	$	(5,884)	$	(1,171)	$	127,262
Stock-based compensation	-		-		1,214		-		-		-		1,214
Net stock options exercised	69,448		1		97		-		-		-		98
Common stock issued for vested restricted stock units	14,804		-		-		-		-		-		-
Dividends declared	-		-		-		(626)		-		-		(626)
Issuance of stock, net of issuance costs	5,876,872		6		21,899		-		-		-		21,905
Net income	-		-		-		2,680		-		-		2,680
Balance, June 30, 2019 (unaudited)	65,147,953	$	66	$	144,812	$	14,710	$	(5,884)	$	(1,171)	$	152,533

Balance, December 31, 2019	66,027,925	$	66	$	148,171	$	16,876	$	(5,884)	$	(1,171)	$	158,058
Stock-based compensation	-		-		870		-		-		-		870
Common stock issued for vested restricted stock units	35,072		-		-		-		-		-		-
Dividends declared	-		-		-		(1,373)		-		-		(1,373)
Issuance of stock, net of issuance costs	4,334,500		4		11,896		-		-		-		11,900
Net loss	-		-		-		(4,933)		-		-		(4,933)
Balance, June 30, 2020 (unaudited)	70,397,497	$	70	$	160,937	$	10,570	$	(5,884)	$	(1,171)	$	164,522


	2020					2019
	Ounces	Per Ounce		Amount		Ounces	Per Ounce		Amount
				(in thousands)					(in thousands)
Gold	1,865	$	1,768	$	3,297	1,866	$	1,515	$	2,827
Silver	79,535	$	17.85		1,420	79,662	$	18.05		1,438
Total holdings				$	4,717				$	4,265


		Three months ended June 30,				Six months ended June 30,
Lease Cost Type	Consolidated Statements of Operations Location	2020		2019		2020		2019

		(in thousands)
Operating lease cost	General and administrative expenses	$	18	$	21	$	36	$	41
Operating lease cost	Production costs		19		19		39		38
Related party lease cost	General and administrative expenses		9		10		22		21
Short term lease cost	Production costs		16		113		82		304


Year Ending December 31:
2020	$	3,107
2021		151
2022		13
2023		-
Thereafter		-
Total lease payments		3,271
Less imputed interest		(33)
Present value of minimum payments		3,238
Less: current portion		(3,150)
Long-term portion of minimum payments	$	88


	Gold		Silver		Copper		Lead		Zinc
	(ounces)		(ounces)		(tonnes)		(tonnes)		(tonnes)
Under contract		1,323		140,522		174		1,185		2,763
Average forward price (per ounce or tonne)	$	1,729	$	17.44	$	5,744	$	1,728	$	1,991


	2020		2019		Input Hierarchy Level

	(in thousands)
Cash and cash equivalents	$	13,328	$	11,076	Level 1
Gold and silver rounds/bullion	$	4,717	$	4,265	Level 1
Trade accounts receivable	$	3,363	$	8,362	Level 2
Loans payable	$	1,226	$	1,661	Level 2


	Mexico		Nevada		Corporate and Other		Consolidated
Three months ended June 30, 2020
Revenue	$	12,522	$	8,576	$	-	$	21,098
Exploration expense		127		416		8		551
Net loss		(1,283)		(884)		355		(1,812)
Capital expenditures		781		1,379		4		2,164

		Mexico		Nevada	Corporate and Other			Consolidated
Three months ended June 30, 2019
Revenue	$	27,834	$	1,540	$	-	$	29,374
Exploration expense		527		65		39		631
Net income (loss)		3,963		445		(2,610)		1,798
Capital expenditures		4,653		4,714		-		9,367


Exhibit Number		Descriptions

3.1		Articles of Incorporation of the Company as filed with the Colorado Secretary of State on August 24, 1998 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.1, File No. 333-129321).

3.1.1		Articles of Amendment to the Articles of Incorporation as filed with the Colorado Secretary of State on September 16, 2005 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.1.1, File No. 333-129321).

3.1.2		Articles of Amendment to the Articles of Incorporation as filed with the Colorado Secretary of State on November 8, 2010 (incorporated by reference from our quarterly report on Form 10-Q filed on November 10, 2010, Exhibit 3.1, File No. 001-34857).

3.2		Amended and Restated Bylaws of the Company dated August 9, 2010 (incorporated by reference from our current report on Form 8-K filed on August 12, 2010, Exhibit 3.2, File No. 333-129321).

3.2.1		Amendment dated March 25, 2013 to Amended and Restated Bylaws of the Company dated August 9, 2010 (incorporated by reference from our current report on Form 8-K filed on March 27, 2013, Exhibit 3.2, File No. 001-34857).

3.2.2		Amendment dated April 3, 2018 to Amended and Restated Bylaws of the Company dated August 9, 2010 (incorporated by reference from our current report on Form 8-K filed on April 3, 2018, Exhibit 3.2, File No. 001-34857).

10.1		At-The-Market Offering Agreement, dated November 29, 2019, between the Company and H.C. Wainwright & Co., LLC (incorporated by reference from our registration statement on Form S-3 filed on November 29, 2019, Exhibit 10.1, File No. 333-235312).

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Jason D. Reid.

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for John A. Labate.

32*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Jason D. Reid and John A. Labate.

95		Mine safety information listed in Section 1503 of the Dodd-Frank Act.

101		Financial statements from the Quarterly Report on Form 10-Q of Gold Resource Corporation for the three months ended June 30, 2020, formatted in inline XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File (embedded within the XBRL document)


	GOLD RESOURCE CORPORATION

Dated: August 4, 2020		/s/ Jason D. Reid
	By:	Jason D. Reid,
		Chief Executive Officer and President




Dated: August 4, 2020		/s/ John A. Labate
	By:	John A. Labate,
		Chief Financial Officer


	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net (loss) income	$	(4,933)	$	2,680
Adjustments to reconcile net (loss) income to net cash from operating activities:
Deferred income taxes		(4,598)		1,275
Depreciation and amortization		12,598		7,641
Stock-based compensation		870		1,214
Other operating adjustments		(368)		(293)
Changes in operating assets and liabilities:
Accounts receivable		4,999		(3,886)
Inventories		(2,274)		(8,464)
Prepaid expenses and other current assets		(437)		97
Other non-current assets		(256)		(2,012)
Accounts payable and other accrued liabilities		(2,644)		6,183
Mining royalty and income taxes payable, net		159		(3,328)
Net cash provided by operating activities		3,116		1,107

Cash flows from investing activities:
Capital expenditures		(10,600)		(21,438)
Other investing activities		4		1
Net cash used in investing activities		(10,596)		(21,437)

Cash flows from financing activities:
Proceeds from the exercise of stock options		-		98
Proceeds from issuance of stock		11,900		21,807
Dividends paid		(1,357)		(617)
Repayment of loans payable		(435)		(385)
Repayment of finance leases		(219)		(204)
Net cash provided by financing activities		9,889		20,699

Effect of exchange rate changes on cash and cash equivalents		(157)		(192)
Net increase in cash and cash equivalents		2,252		177
Cash and cash equivalents at beginning of period		11,076		7,762
Cash and cash equivalents at end of period	$	13,328	$	7,939

Supplemental Cash Flow Information
Interest expense paid	$	56	$	79
Income and mining taxes paid	$	1,066	$	2,897


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019

	(in thousands)				(in thousands)
Doré sales, net
Gold	$	10,531	$	3,110	$	18,214	$	4,793
Silver		678		651		1,354		1,051
Less: Refining charges		(174)		(61)		(266)		(99)
Total doré sales, net		11,035		3,700		19,302		5,745
Concentrate sales
Gold		2,467		6,738		8,683		11,303
Silver		2,566		5,542		7,781		9,303
Copper		1,198		2,621		3,559		4,735
Lead		1,750		3,999		5,229		7,394
Zinc		5,176		10,852		14,216		23,123
Less: Treatment and refining charges		(3,300)		(3,606)		(9,135)		(7,016)
Total concentrate sales, net		9,857		26,146		30,333		48,842
Realized/unrealized embedded derivative, net		206		(472)		(532)		1,365
Total sales, net	$	21,098	$	29,374	$	49,103	$	55,952


	2020		2019

	(in thousands)
Stockpiles - underground mine	$	520	$	3,968
Stockpiles - open pit mine		321		833
Leach pad		15,227		9,103
Concentrates		1,937		1,340
Doré ⁽¹⁾		1,879		1,581
Subtotal - product inventories		19,884		16,825
Materials and supplies ⁽²⁾		7,150		7,306
Total	$	27,034	$	24,131


	2020		2019

	(in thousands)
Asset retirement costs	$	4,509	$	3,412
Construction-in-progress ⁽¹⁾		2,302		11,965
Furniture and office equipment		2,109		2,087
Leach pad and ponds		5,649		5,649
Land		242		242
Light vehicles and other mobile equipment		2,555		2,553
Machinery and equipment		44,207		43,364
Mill facilities and infrastructure		32,004		31,408
Mineral interests and mineral rights		18,878		18,228
Mine development ⁽²⁾		105,221		90,089
Software and licenses		1,659		1,659
Subtotal ^{(3) (4)}		219,335		210,656
Accumulated depreciation and amortization		(97,577)		(85,397)
Total	$	121,758	$	125,259