Goldgroup Mining Inc 10-Q, filed Nov 2, 2020

Goldgroup Mining Inc. (GORO)

10-Q 2020-11-02 For: 2020-09-30

Added on August 02, 2026

About this 10-Q

Goldgroup Mining Inc filed this 10-Q on November 2, 2020, covering the quarter ended September 30, 2020.

Headline figures

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

Revenue: $42.29M; up 5.5% from $40.07M a year earlier
Net income: $5M; up 67.9% from net income of $2.98M a year earlier
Diluted EPS: $0.07; up 40.0% from $0.05 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 September 30, 2020 (unaudited) and December 31, 2019	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (unaudited)	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2020 and 2019 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

Part II - OTHER INFORMATION



Item 4.	Mine Safety Disclosures	36
Item 6.	Exhibits	37
Signatures		39


	September 30,		December 31,
	2020		2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	31,313	$	11,076
Gold and silver rounds/bullion		5,241		4,265
Accounts receivable, net		4,777		8,362
Inventories, net		26,977		24,131
Prepaid taxes		-		786
Prepaid expenses and other current assets		2,168		2,032
Total current assets		70,476		50,652
Property, plant and mine development, net		117,409		125,259
Operating lease assets, net		1,411		7,436
Deferred tax assets, net		8,617		4,635
Other non-current assets		5,550		5,030
Total assets	$	203,463	$	193,012
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,991	$	14,456
Loans payable, current		840		879
Finance lease liabilities, current		465		446
Operating lease liabilities, current		1,371		7,287
Income taxes payable, net		876		-
Mining royalty taxes payable, net		1,162		1,538
Accrued expenses and other current liabilities		3,754		3,366
Total current liabilities		20,459		27,972
Reclamation and remediation liabilities		6,710		5,605
Loans payable, long-term		165		782
Finance lease liabilities, long-term		84		435
Operating lease liabilities, long-term		51		160
Total liabilities		27,469		34,954
Shareholders' equity:
Common stock - $0.001 par value, 100,000,000 shares authorized:
71,850,665 and 65,691,527 shares outstanding at September 30, 2020 and December 31, 2019, respectively		72		66
Additional paid-in capital		168,114		148,171
Retained earnings		14,863		16,876
Treasury stock at cost, 336,398 shares		(5,884)		(5,884)
Accumulated other comprehensive loss		(1,171)		(1,171)
Total shareholders' equity		175,994		158,058
Total liabilities and shareholders' equity	$	203,463	$	193,012


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Sales, net	$	42,286	$	40,066	$	91,389	$	96,018
Mine cost of sales:
Production costs		24,027		24,611		62,554		61,169
Depreciation and amortization		7,289		6,117		19,694		13,524
Reclamation and remediation		68		20		136		77
Total mine cost of sales		31,384		30,748		82,384		74,770
Mine gross profit		10,902		9,318		9,005		21,248
Costs and expenses:
General and administrative expenses		2,665		2,194		7,136		6,913
Exploration expenses		1,799		1,129		3,505		3,210
Other (income) expense, net		(537)		600		(871)		518
Total costs and expenses		3,927		3,923		9,770		10,641
Income (loss) before income taxes		6,975		5,395		(765)		10,607
Provision (benefit) for income taxes		1,974		2,417		(833)		4,949
Net income	$	5,001	$	2,978	$	68	$	5,658
Net income per common share:
Basic	$	0.07	$	0.05	$	-	$	0.09
Diluted	$	0.07	$	0.05	$	-	$	0.09
Weighted average shares outstanding:
Basic		70,641,938		65,495,958		68,896,059		63,001,178
Diluted		71,044,528		65,796,899		69,289,349		63,336,131


	Three Months Ended September 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, June 30, 2019 (unaudited)	65,147,953	$	66	$	144,812	$	14,710	$	(5,884)	$	(1,171)	$	152,533
Stock-based compensation	-		-		367		-		-		-		367
Common stock issued for vested restricted stock units	106,256		-		-		-		-		-		-
Dividends declared	-		-		-		(329)		-		-		(329)
Issuance of stock, net of issuance costs	773,716		-		2,642		-		-		-		2,642
Net income	-		-		-		2,978		-		-		2,978
Balance, September 30, 2019 (unaudited)	66,027,925	$	66	$	147,821	$	17,359	$	(5,884)	$	(1,171)	$	158,191

Balance, June 30, 2020 (unaudited)	70,397,497	$	70	$	160,937	$	10,570	$	(5,884)	$	(1,171)	$	164,522
Stock-based compensation	-		-		305		-		-		-		305
Dividends declared	-		-		-		(708)		-		-		(708)
Common stock issued for vested restricted stock units	58,133		-		-		-		-		-		-
Issuance of stock, net of issuance costs	1,731,433		2		6,872		-		-		-		6,874
Net income	-		-		-		5,001		-		-		5,001
Balance, September 30, 2020 (unaudited)	72,187,063	$	72	$	168,114	$	14,863	$	(5,884)	$	(1,171)	$	175,994


	Nine Months Ended September 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	-		-		1,581		-		-		-		1,581
Net stock options exercised	69,448		1		97		-		-		-		98
Common stock issued for vested restricted stock units	121,060		-		-		-		-		-		-
Dividends declared	-		-		-		(955)		-		-		(955)
Issuance of stock, net of issuance costs	6,650,588		6		24,541		-		-		-		24,547
Net income	-		-		-		5,658		-		-		5,658
Balance, September 30, 2019 (unaudited)	66,027,925	$	66	$	147,821	$	17,359	$	(5,884)	$	(1,171)	$	158,191

Balance, December 31, 2019	66,027,925	$	66	$	148,171	$	16,876	$	(5,884)	$	(1,171)	$	158,058
Stock-based compensation	-		-		1,175		-		-		-		1,175
Common stock issued for vested restricted stock units	93,205		-		-		-		-		-		-
Dividends declared	-		-		-		(2,081)		-		-		(2,081)
Issuance of stock, net of issuance costs	6,065,933		6		18,768		-		-		-		18,774
Net income	-		-		-		68		-		-		68
Balance, September 30, 2020 (unaudited)	72,187,063	$	72	$	168,114	$	14,863	$	(5,884)	$	(1,171)	$	175,994


	2020					2019
	Ounces	Per Ounce		Amount		Ounces	Per Ounce		Amount
				(in thousands)					(in thousands)
Gold	1,816	$	1,887	$	3,426	1,866	$	1,515	$	2,827
Silver	76,481	$	23.73		1,815	79,662	$	18.05		1,438
Total holdings				$	5,241				$	4,265


		Three months ended September 30,				Nine months ended September 30,
Lease Cost Type	Consolidated Statements of Operations Location	2020		2019		2020		2019

		(in thousands)
Operating lease cost	General and administrative expenses	$	19	$	20	$	58	$	61
Operating lease cost	Production costs		18		19		54		57
Related party lease cost	General and administrative expenses		13		14		35		35
Short term lease cost	Production costs		48		77		130		381


Year Ending December 31:
2020	$	1,245
2021		175
2022		13
2023		-
Thereafter		-
Total lease payments		1,433
Less imputed interest		(11)
Present value of minimum payments		1,422
Less: current portion		(1,371)
Long-term portion of minimum payments	$	51


	Gold		Silver		Copper		Lead		Zinc
	(ounces)		(ounces)		(tonnes)		(tonnes)		(tonnes)
Under contract		1,914		194,345		275		1,420		3,303
Average forward price (per ounce or tonne)	$	1,930	$	26.36	$	6,629	$	1,915	$	2,441


	2020		2019		Input Hierarchy Level

	(in thousands)
Cash and cash equivalents	$	31,313	$	11,076	Level 1
Gold and silver rounds/bullion	$	5,241	$	4,265	Level 1
Accounts receivable, net	$	4,777	$	8,362	Level 2
Loans payable	$	1,005	$	1,661	Level 2


	Mexico		Nevada		Corporate and Other		Consolidated
Three months ended September 30, 2020
Revenue	$	26,435	$	15,851	$	-	$	42,286
Exploration expense		982		780		37		1,799
Net income (loss)		4,716		3,869		(3,584)		5,001
Capital expenditures		3,066		564		4		3,634

		Mexico		Nevada	Corporate and Other			Consolidated
Three months ended September 30, 2019
Revenue	$	34,086	$	5,980	$	-	$	40,066
Exploration expense		775		322		32		1,129
Net income (loss)		5,426		(480)		(1,968)		2,978
Capital expenditures		3,870		6,056		12		9,938

Oaxaca Mining Unit Production and Sales Oaxaca Mining Unit Production The following Production Statistics table summarizes certain information about our Oaxaca Mining Unit operations for the periods indicated:
	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Arista Mine
Milled
Tonnes Milled		136,618		163,259		373,394		469,167
Grade
Average Gold Grade (g/t)		1.25		1.76		1.35		1.72
Average Silver Grade (g/t)		76		85		78		84
Average Copper Grade (%)		0.40		0.39		0.39		0.38
Average Lead Grade (%)		1.93		1.92		1.95		1.91
Average Zinc Grade (%)		5.02		4.70		4.85		4.71
Aguila Open Pit Mine
Milled
Tonnes Milled		16,913		3,640		34,740		23,976
Grade
Average Gold Grade (g/t)		1.35		1.49		1.32		1.76
Average Silver Grade (g/t)		32		58		36		45
Mirador Mine
Milled
Tonnes Milled		-		11,690		7,450		22,540
Grade
Average Gold Grade (g/t)		-		0.76		0.91		0.95
Average Silver Grade (g/t)		-		197		130		203
Combined
Tonnes milled		153,531		178,589		415,584		515,683
Tonnes Milled per Day ⁽¹⁾		1,745		2,007		1,880		1,967
Metal production (before payable metal deductions) ⁽²⁾
Gold (ozs.)		4,728		7,462		13,619		21,881
Silver (ozs.)		324,592		473,810		912,464		1,304,975
Copper (tonnes)		428		492		1,162		1,407
Lead (tonnes)		2,157		2,459		5,811		6,916
Zinc (tonnes)		5,538		6,057		14,386		17,949


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 June 3, 2020, 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).

10.2		Executive Employment Agreement between the Company and Kimberly Perry dated August 10, 2020 (incorporated by reference from our current report on Form 8-K filed on August 10, 2020, Exhibit 10.1, File No. 001-34857).

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 Kimberly C. Perry.

32*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Jason D. Reid and Kimberly C. Perry.

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 September 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)


	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net income	$	68	$	5,658
Adjustments to reconcile net income to net cash from operating activities:
Deferred income taxes		(4,617)		1,091
Depreciation and amortization		19,953		13,881
Stock-based compensation		1,175		1,581
Other operating adjustments		(815)		314
Changes in operating assets and liabilities:
Accounts receivable		3,585		(6,056)
Inventories		(1,823)		(5,727)
Prepaid expenses and other current assets		(196)		1,505
Other non-current assets		(1,304)		(2,882)
Accounts payable and other accrued liabilities		60		349
Mining royalty and income taxes payable, net		1,610		(1,944)
Net cash provided by operating activities		17,696		7,770

Cash flows from investing activities:
Capital expenditures		(12,915)		(29,166)
Other investing activities		133		2
Net cash used in investing activities		(12,782)		(29,164)

Cash flows from financing activities:
Proceeds from the exercise of stock options		-		98
Proceeds from issuance of stock		18,674		24,449
Dividends paid		(2,062)		(944)
Repayment of loans payable		(656)		(597)
Repayment of finance leases		(332)		(311)
Net cash provided by financing activities		15,624		22,695

Effect of exchange rate changes on cash and cash equivalents		(301)		(306)
Net increase in cash and cash equivalents		20,237		995
Cash and cash equivalents at beginning of period		11,076		7,762
Cash and cash equivalents at end of period	$	31,313	$	8,757

Supplemental Cash Flow Information
Interest expense paid	$	84	$	121
Income and mining taxes paid	$	1,915	$	3,743


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019

	(in thousands)				(in thousands)
Doré sales, net
Gold	$	17,449	$	7,399	$	35,663	$	12,192
Silver		878		619		2,232		1,670
Less: Refining charges		(170)		(39)		(436)		(138)
Total doré sales, net		18,157		7,979		37,459		13,724
Concentrate sales
Gold		5,211		7,767		13,894		19,072
Silver		6,857		6,370		14,638		15,673
Copper		2,911		2,502		6,470		7,237
Lead		3,501		4,480		8,730		11,874
Zinc		10,894		13,875		25,110		36,998
Less: Treatment and refining charges		(5,795)		(3,691)		(14,930)		(10,709)
Total concentrate sales, net		23,579		31,303		53,912		80,145
Realized/unrealized embedded derivative, net		550		784		18		2,149
Total sales, net	$	42,286	$	40,066	$	91,389	$	96,018


	2020		2019

	(in thousands)
Stockpiles - underground mine	$	414	$	3,968
Stockpiles - open pit mine		615		833
Leach pad		16,261		9,103
Concentrates		1,716		1,340
Doré ⁽¹⁾		1,032		1,581
Subtotal - product inventories		20,038		16,825
Materials and supplies ⁽²⁾		6,939		7,306
Total	$	26,977	$	24,131


	2020		2019

	(in thousands)
Asset retirement costs	$	4,816	$	3,412
Construction-in-progress ⁽¹⁾		3,686		11,965
Furniture and office equipment		2,140		2,087
Leach pad and ponds		5,649		5,649
Land		242		242
Light vehicles and other mobile equipment		2,601		2,553
Machinery and equipment		45,005		43,364
Mill facilities and infrastructure		32,004		31,408
Mineral interests and mineral rights		18,878		18,228
Mine Development ⁽²⁾		106,181		90,089
Software and licenses		1,659		1,659
Subtotal ^{(3) (4)}		222,861		210,656
Accumulated depreciation and amortization		(105,452)		(85,397)
Total	$	117,409	$	125,259


	GOLD RESOURCE CORPORATION

Dated: November 2, 2020		/s/ Jason D. Reid
	By:	Jason D. Reid,
		Chief Executive Officer and President




Dated: November 2, 2020		/s/ Kimberly C. Perry
	By:	Kimberly C. Perry,
		Chief Financial Officer