Goldgroup Mining Inc 10-Q, filed Nov 1, 2022

Goldgroup Mining Inc. (GORO)

10-Q 2022-11-01 For: 2022-09-30

Added on August 02, 2026

About this 10-Q

Goldgroup Mining Inc filed this 10-Q on November 1, 2022, covering the quarter ended September 30, 2022.

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $23.87M; down 17.8% from $29.03M a year earlier
Net loss: $9.73M; compared with net income of $1.53M a year earlier
Diluted EPS: -$0.11; compared with $0.02 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
	Third Quarter 2022 Highlights	2

	Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Ø Condensed Consolidated Interim Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	3
	Ø Condensed Consolidated Interim Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)	4
	Ø Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021 (unaudited)	5
	Ø Condensed Consolidated Interim Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	7
	Ø Notes to the Condensed Consolidated Interim Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48

	Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	50
Item 6.	Exhibits	50
Signatures		51


		As of		As of
		September 30,		December 31,
	Note	2022		2021
ASSETS
Current assets:
Cash and cash equivalents		$	22,531	$	33,712
Accounts receivable, net			3,741		8,672
Inventories, net	4		13,593		10,361
Promissory note	6		3,575		3,885
Prepaid expenses and other current assets	7		4,457		2,285
Zinc zero cost collar	17		432		-
Total current assets			48,329		58,915
Property, plant and mine development, net	8		149,232		156,771
Other non-current assets			1,977		76
Total assets		$	199,538	$	215,762
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	11,267	$	13,308
Income taxes payable, net			567		6,801
Mining royalty taxes payable, net			3,156		2,975
Zinc zero cost collar	17		-		1,844
Accrued expenses and other current liabilities	9		4,476		4,731
Total current liabilities			19,466		29,659
Reclamation and remediation liabilities	11		3,232		3,112
Gold and silver stream agreements	10		43,201		42,560
Deferred tax liabilities, net	5		11,826		13,126
Contingent consideration	12		4,036		4,603
Other non-current liabilities	9		2,133		1,952
Total liabilities			83,894		95,012
Shareholders' equity:
Common stock - $0.001 par value, 200,000,000 shares authorized:
88,398,109 and 88,338,774 shares outstanding at September 30, 2022 and December 31, 2021, respectively			89		89
Additional paid-in capital			110,736		110,153
Retained earnings			11,874		17,563
Treasury stock at cost, 336,398 shares			(5,884)		(5,884)
Accumulated other comprehensive loss			(1,171)		(1,171)
Total shareholders' equity			115,644		120,750
Total liabilities and shareholders' equity		$	199,538	$	215,762


		For the three months ended				For the nine months ended
		September 30,				September 30,
	Note	2022		2021		2022		2021

Sales, net	3	$	23,869	$	29,029	$	106,350	$	87,133
Cost of sales:
Production costs			19,380		17,216		61,176		51,982
Depreciation and amortization			6,609		3,521		19,829		11,299
Reclamation and remediation			58		47		181		152
Total cost of sales			26,047		20,784		81,186		63,433
Mine gross (loss) profit			(2,178)		8,245		25,164		23,700
Costs and expenses:
General and administrative expenses			1,799		2,355		5,618		6,070
DDGM exploration expenses			1,143		1,805		3,190		3,660
Back Forty Project expenses			3,830		-		6,925		-
Restructuring expenses			-		-		-		496
Stock-based compensation	16		450		30		1,617		711
Realized and unrealized (gain) loss on zinc zero cost collar	17		(218)		184		120		184
Other expense (income), net	18		765		(10)		1,817		543
Total costs and expenses			7,769		4,364		19,287		11,664
(Loss) income before income taxes			(9,947)		3,881		5,877		12,036
Provision for income taxes	5		(217)		2,352		8,915		6,697
Net (loss) income		$	(9,730)	$	1,529	$	(3,038)	$	5,339
Net (loss) income per common share:
Basic and diluted net (loss) income per common share	19	$	(0.11)	$	0.02	$	(0.03)	$	0.07

Weighted average shares outstanding:
Basic	19		88,391,220		74,552,545		88,358,188		74,481,281
Diluted	19		88,391,220		74,898,520		88,358,188		74,842,095


	For the three months ended September 30, 2022 and 2021
	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, June 30, 2021	74,868,322	$	75	$	85,269	$	14,974	$	(5,884)	$	(1,171)	$	93,263
Stock-based compensation	-		-		160		-		-		-		160
Common stock issued for vested restricted stock units	50,183		-		-		-		-		-		-
Dividends declared	-		-		-		(745)		-		-		(745)
Surrender of stock for taxes due on vesting	(428)		-		-		-		-		-		-
Net income	-		-		-		1,529		-		-		1,529
Balance, September 30, 2021	74,918,077	$	75	$	85,429	$	15,758	$	(5,884)	$	(1,171)	$	94,207

Balance, June 30, 2022	88,709,090	$	89	$	110,480	$	22,488	$	(5,884)	$	(1,171)	$	126,002
Stock-based compensation	-		-		285		-		-		-		285
Common stock issued for vested restricted stock units	41,666		-		-		-		-		-		-
Dividends declared	-		-		-		(884)		-		-		(884)
Unclaimed shares related to the Aquila acquisition	(16,249)		-		(29)		-		-		-		(29)
Net income	-		-		-		(9,730)		-		-		(9,730)
Balance, September 30, 2022	88,734,507	$	89	$	110,736	$	11,874	$	(5,884)	$	(1,171)	$	115,644


	For the nine months ended September 30, 2022 and 2021
	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, 2020	74,713,356	$	75	$	84,865	$	12,653	$	(5,884)	$	(1,171)	$	90,538
Stock-based compensation	-		-		506		-		-		-		506
Net stock options exercised	217,718		-		263		-		-		-		263
Common stock issued for vested restricted stock units	52,797		-		-		-		-		-		-
Dividends declared	-		-		-		(2,234)		-		-		(2,234)
Surrender of stock for taxes due on vesting	(65,794)		-		(205)		-		-		-		(205)
Net income	-		-		-		5,339		-		-		5,339
Balance, September 30, 2021	74,918,077	$	75	$	85,429	$	15,758	$	(5,884)	$	(1,171)	$	94,207

Balance, December 31, 2021	88,675,172	$	89	$	110,153	$	17,563	$	(5,884)	$	(1,171)	$	120,750
Stock-based compensation	-		-		952		-		-		-		952
Stock options exercised - settled in cash	-		-		(331)		-		-		-		(331)
Common stock issued for vested restricted stock units	80,169		-		-		-		-		-		-
Dividends declared	-		-		-		(2,651)		-		-		(2,651)
Unclaimed shares related to the Aquila acquisition	(16,249)		-		(29)		-		-		-		(29)
Surrender of stock for taxes due on vesting	(4,585)		-		(9)		-		-		-		(9)
Net income	-		-		-		(3,038)		-		-		(3,038)
Balance, September 30, 2022	88,734,507	$	89	$	110,736	$	11,874	$	(5,884)	$	(1,171)	$	115,644


	2022		2021

	(in thousands)
Reclamation liabilities – balance at beginning of period	$	1,833	$	1,890
Foreign currency exchange loss (gain)		25		(57)
Reclamation liabilities – balance at end of period		1,858		1,833

Asset retirement obligation – balance at beginning of period		1,279		1,208
Accretion		77		109
Foreign currency exchange loss (gain)		18		(38)
Asset retirement obligation – balance at end of period		1,374		1,279
Total period end balance	$	3,232	$	3,112


	Gold		Silver		Copper		Lead		Zinc			Total
	(ounces)		(ounces)		(tonnes)		(tonnes)		(tonnes)
Under contract		4,784		253,342		282		1,647		3,373
Average forward price (per ounce or tonne)	$	1,741	$	19.52	$	7,738	$	2,011	$	3,474
Unsettled sales contracts value (in thousands)	$	8,329	$	4,945	$	2,182	$	3,312	$	11,718	$	30,486


		For the three months ended September 30,				For the nine months ended September 30,				Statements of Operations Classification
		2022		2021		2022		2021

	Note	(in thousands)
Realized and unrealized derivative (loss) gain, net	14	$	(934)	$	(478)	$	(1,064)	$	156	Sales, net
Realized gain (loss) on zinc zero cost collar	17	$	61	$	(40)	$	(2,396)	$	(40)	Realized and unrealized loss on zinc zero cost collar
Unrealized gain (loss) on zinc zero cost collar	17	$	157	$	(144)	$	2,276	$	(144)	Realized and unrealized loss on zinc zero cost collar


	Gold		Silver		Copper		Lead		Zinc		Total
For the three months ended September 30, 2022
Realized loss	$	(198)	$	(141)	$	(158)	$	(88)	$	(627)	$	(1,212)
Unrealized (loss) gain		(95)		(81)		108		96		250		278
Total realized/unrealized derivatives, net	$	(293)	$	(222)	$	(50)	$	8	$	(377)	$	(934)


	Oaxaca, Mexico		Michigan, USA		Corporate and Other		Consolidated
As of September 30, 2022
Total current assets	$	41,848	$	3,911	$	2,570	$	48,329
Total non-current assets		59,908		89,347		1,954		151,209
Total assets	$	101,756	$	93,258	$	4,524	$	199,538
Total current liabilities		15,893		2,636		937		19,466
Total non-current liabilities		2		62,706		1,720		64,428
Total shareholders' equity		85,861		27,916		1,867		115,644
Total liabilities and shareholders' equity	$	101,756	$	93,258	$	4,524	$	199,538

As of December 31, 2021
Total current assets	$	50,057	$	5,528	$	3,330	$	58,915
Total non-current assets		66,756		90,018		73		156,847
Total assets	$	116,813	$	95,546	$	3,403	$	215,762
Total current liabilities		25,833		2,459		1,367		29,659
Total non-current liabilities		1,436		63,438		479		65,353
Total shareholders' equity		89,544		29,649		1,557		120,750
Total liabilities and shareholders' equity	$	116,813	$	95,546	$	3,403	$	215,762


	Oaxaca, Mexico		Michigan, USA ⁽¹⁾		Corporate and Other		Consolidated
For the three months ended September 30, 2022
Sales, net	$	23,869	$	-	$	-	$	23,869
Total mine cost of sales, including depreciation		26,016		21		10		26,047
Exploration expense		1,143		3,830		-		4,973
Total other costs and expenses, including G&A		(105)		349		2,552		2,796
Provision for income taxes		(1,235)		-		1,018		(217)
Net loss	$	(1,950)	$	(4,200)	$	(3,580)	$	(9,730)

For the three months ended September 30, 2021
Sales, net	$	29,029	$	-	$	-	$	29,029
Total mine cost of sales, including depreciation		20,784		-		-		20,784
Exploration expense		1,802		-		3		1,805
Total other costs and expenses, including G&A		122		-		2,437		2,559
Provision for income taxes		2,089		-		263		2,352
Net income (loss)	$	4,232	$	-	$	(2,703)	$	1,529


		For the nine months ended September 30, 2022		2022 full year projection
		(in thousands)
Sustaining Investments:
Underground Development	Capital	$	5,251	$	7.0 - 8.0 million
Infill Drilling and Exploration Development	Capital		5,056		7.0 - 7.5 million
Other Sustaining Capital	Capital		1,922		2.0 - 2.5 million
Subtotal of Sustaining Investments:			12,229
Growth Investments:
DDGM growth:
Gold Regrind	Capital		745		-
Dry Stack Completion	Capital		1,149		-
Surface Exploration / Other	Exploration		1,641		2.0 - 2.5 million
Underground Exploration Drilling	Exploration		1,549		2.0 - 2.5 million
Back Forty growth:
Back Forty Feasibility Study & Permits	Exploration		6,925		9.0-9.5 million
Subtotal of Growth Investments:			12,009
Total Capital and Exploration:		$	24,238	$	29.0 - 32.5 million



	2021				2022
	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Operating Data
Total tonnes milled	138,980	129,590	98,010	135,398	136,844	129,099	110,682
Average Grade
Gold (g/t)	1.68	1.93	2.68	1.93	3.00	2.63	1.98
Silver (g/t)	72	77	91	82	81	64	80
Copper (%)	0.43	0.36	0.37	0.38	0.41	0.32	0.37
Lead (%)	1.70	1.63	2.29	2.17	1.97	1.99	1.59
Zinc (%)	4.29	3.64	4.79	4.77	4.89	4.00	4.21
Metal production (before payable metal deductions)
Gold (ozs.)	6,097	6,555	6,933	6,853	11,187	9,317	5,851
Silver (ozs.)	307,610	295,979	265,829	330,873	332,292	249,088	261,256
Copper (tonnes)	441	368	284	413	431	303	296
Lead (tonnes)	1,737	1,654	1,808	2,345	2,073	2,020	1,249
Zinc (tonnes)	4,377	3,683	3,920	5,349	5,562	4,282	3,901
Metal produced and sold
Gold (ozs.)	5,019	5,697	5,809	6,119	8,381	8,746	5,478
Silver (ozs.)	253,061	270,321	255,394	287,805	265,407	231,622	225,012
Copper (tonnes)	382	365	268	405	408	286	282
Lead (tonnes)	1,176	1,214	1,550	2,059	1,639	1,755	1,056
Zinc (tonnes)	3,134	3,193	3,059	4,167	4,359	3,590	2,943
Average metal prices realized
Gold ($ per oz.)	$ 1,787	$ 1,822	$ 1,762	$ 1,811	$ 1,898	$ 1,874	$ 1,627
Silver ($ per oz.)	$ 26.77	$ 26.88	$ 23.19	$ 23.51	$ 23.94	$ 22.05	$ 18.54
Copper ($ per tonne)	$ 8,873	$ 10,375	$ 9,092	$ 9,768	$ 10,144	$ 9,275	$ 7,115
Lead ($ per tonne)	$ 2,082	$ 2,162	$ 2,397	$ 2,339	$ 2,347	$ 2,168	$ 1,882
Zinc ($ per tonne)	$ 2,797	$ 2,945	$ 3,032	$ 3,466	$ 3,842	$ 4,338	$ 3,186
Precious metal gold equivalent ounces sold
Gold Ounces	5,019	5,697	5,809	6,119	8,381	8,746	5,478
Gold Equivalent Ounces from Silver	3,791	3,999	3,356	3,736	3,348	2,729	2,564
Total AuEq oz	8,810	9,696	9,165	9,855	11,729	11,475	8,042
Financial Data ($'s in thousands except for per ounce)
Total sales, net	$ 27,268	$ 30,836	$ 29,029	$ 38,063	$ 45,417	$ 37,064	$ 23,869
Earnings from mining operations before depreciation and amortization	11,974	11,259	11,766	17,744	25,281	15,281	4,431
Total cash cost after co-product credits per AuEq oz sold	408	713	466	73	(121)	247	1,103
Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold	937	1,280	1,031	451	499	799	1,831
Production Costs	15,243	19,523	17,216	20,252	20,074	21,722	19,380
Production Costs/Tonnes Milled	110	151	176	150	147	168	175
Earnings before interest, taxes, depreciation and amortization	8,520	7,413	7,402	10,304	15,328	13,716	(3,338)
Operating Cash Flows	6,831	9,298	5,743	12,911	4,230	7,976	(4,292)
Net income	2,527	1,283	1,529	2,689	4,019	2,673	(9,730)
Earnings per share - basic	$ 0.03	$ 0.02	$ 0.02	$ 0.03	$ 0.05	$ 0.03	($ 0.11)


	For the three months ended September 30,					For the nine months ended September 30,
	2022		2021			2022		2021

	(in thousands)					(in thousands)
Doré sales, net
Gold	$	1,517		$	1,634	$	5,245	$	6,816
Silver		46			38		123		643
Less: Refining charges		(18)			(21)		(35)		(112)
Total doré sales, net		1,545			1,651		5,333		7,347
Concentrate sales
Gold		7,592			8,709		35,983		22,904
Silver		4,266			6,179		15,497		19,443
Copper		2,164			2,447		8,969		9,547
Lead		2,075			3,641		9,670		8,641
Zinc		10,003			9,187		40,672		27,193
Less: Treatment and refining charges		(2,842)			(2,307)		(8,710)		(8,098)
Total concentrate sales, net		23,258			27,856		102,081		79,630
Realized (loss) gain - embedded derivative, net⁽¹⁾		(1,212)			(246)		814		204
Unrealized gain (loss) - embedded derivative, net		278			(232)		(1,878)		(48)
Total sales, net	$	23,869		$	29,029	$	106,350	$	87,133


	As of		As of
	September 30,		December 31,
	2022		2021

	(in thousands)
Asset retirement costs	$	1,065	$	1,065
Construction-in-progress ⁽¹⁾		300		15,854
Furniture and office equipment		1,719		1,685
Land		9,033		9,230
Mineral interest		79,543		79,964
Light vehicles and other mobile equipment		2,328		2,224
Machinery and equipment		40,119		33,213
Mill facilities and infrastructure		35,917		24,973
Mine Development		102,457		92,138
Software and licenses		1,552		1,592
Subtotal		274,033		261,938
Accumulated depreciation and amortization		(124,801)		(105,167)
Total	$	149,232	$	156,771


Exhibit Number		Descriptions
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Allen Palmiere.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Kimberly C. Perry.
32*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Allen Palmiere and Kimberly C. Perry.
101		Financial statements from the Quarterly Report on Form 10-Q of Gold Resource Corporation for the three and nine months ended September 30, 2022, formatted in inline XBRL: (i) the Condensed Consolidated Interim Balance Sheets, (ii) the Condensed Consolidated Interim Statements of Operations, (iii) the Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity, (iv) the Condensed Consolidated Interim Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Interim Financial Statements.
104		Cover Page Interactive Data File (embedded within the XBRL document)


	GOLD RESOURCE CORPORATION

Dated: October 31, 2022		/s/ Allen Palmiere
	By:	Allen Palmiere,
		Chief Executive Officer, President and Director




Dated: October 31, 2022		/s/ Kimberly C. Perry
	By:	Kimberly C. Perry,
		Chief Financial Officer