GORO 10-Q

Goldgroup Mining Inc. (GORO)

10-Q 2022-07-28 For: 2022-06-30

View Original

Added on August 02, 2026


a
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
	Second Quarter 2022 Highlights	1

	Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Ø Condensed Consolidated Interim Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021	2
	Ø Condensed Consolidated Interim Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	3
	Ø Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021 (unaudited)	4
	Ø Condensed Consolidated Interim Statements of Cash Flows for the three and six months ended June 30, 2022 and 2021 (unaudited)	6
	Ø Notes to the Condensed Consolidated Interim Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40

	Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		43


		As of		As of
		June 30,		December 31,
	Note	2022		2021
ASSETS
Current assets:
Cash and cash equivalents		$	33,335	$	33,712
Accounts receivable, net			6,277		8,672
Inventories, net	4		12,506		10,361
Promissory note	6		4,041		3,885
Prepaid expenses and other current assets	7		3,992		2,285
Zinc zero cost collar	17		275		-
Total current assets			60,426		58,915
Property, plant and mine development, net	8		152,777		156,771
Other non-current assets			403		76
Total assets		$	213,606	$	215,762
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	11,742	$	13,308
Income taxes payable, net			3,021		6,801
Mining royalty taxes payable, net			3,021		2,975
Zinc zero cost collar	17		-		1,844
Accrued expenses and other current liabilities	9		5,589		4,731
Total current liabilities			23,373		29,659
Reclamation and remediation liabilities	11		3,258		3,112
Gold and silver stream agreements	10		42,987		42,560
Deferred tax liabilities, net	5		11,757		13,126
Contingent consideration	12		4,293		4,603
Other non-current liabilities	9		1,936		1,952
Total liabilities			87,604		95,012
Shareholders' equity:
Common stock - $0.001 par value, 200,000,000 shares authorized:
88,372,692 and 88,338,774 shares outstanding at June 30, 2022 and December 31, 2021, respectively			89		89
Additional paid-in capital			110,480		110,153
Retained earnings			22,488		17,563
Treasury stock at cost, 336,398 shares			(5,884)		(5,884)
Accumulated other comprehensive loss			(1,171)		(1,171)
Total shareholders' equity			126,002		120,750
Total liabilities and shareholders' equity		$	213,606	$	215,762


		For the three months ended				For the six months ended
		June 30,				June 30,
	Note	2022		2021		2022		2021

Sales, net	3	$	37,064	$	30,836	$	82,481	$	58,104
Cost of sales:
Production costs			21,722		19,523		41,796		34,766
Depreciation and amortization			7,262		4,379		13,220		7,778
Reclamation and remediation			61		54		123		105
Total cost of sales			29,045		23,956		55,139		42,649
Mine gross profit			8,019		6,880		27,342		15,455
Costs and expenses:
General and administrative expenses			1,920		2,134		3,819		3,715
Exploration expenses			2,837		648		5,142		1,855
Restructuring expenses			-		-		-		496
Stock-based compensation	16		393		197		1,167		681
Realized and unrealized (gain) loss on zinc zero cost collar	17		(3,799)		-		338		-
Other expense, net	18		214		867		1,052		553
Total costs and expenses			1,565		3,846		11,518		7,300
Income before income taxes			6,454		3,034		15,824		8,155
Provision for income taxes	5		3,781		1,751		9,132		4,345
Net income		$	2,673	$	1,283	$	6,692	$	3,810
Net income per common share:
Basic and diluted net income per common share	19	$	0.03	$	0.02	$	0.08	$	0.05

Weighted average shares outstanding:
Basic	19		88,343,992		74,485,672		88,341,398		74,445,058
Diluted	19		88,791,552		74,987,559		88,646,849		74,868,187


	For the three months ended June 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, March 31, 2021	74,775,604	$	75	$	84,966	$	14,436	$	(5,884)	$	(1,171)	$	92,422
Stock-based compensation	-		-		205		-		-		-		205
Common stock issued for vested restricted stock units	-		-		-		-		-		-		-
Dividends declared	-		-		-		(745)		-		-		(745)
Spin-off of Fortitude Gold Corporation	-		-		-		-		-		-		-
Issuance of stock, net of issuance costs	-		-		-		-		-		-		-
Net income	-		-		-		1,283		-		-		1,283
Balance, June 30, 2021	74,868,322	$	75	$	85,269	$	14,974	$	(5,884)	$	(1,171)	$	93,263

Balance, March 31, 2022	88,675,172	$	89	$	109,982	$	20,699	$	(5,884)	$	(1,171)	$	123,715
Stock-based compensation	-		-		507		-		-		-		507
Net stock options exercised	-		-		-		-		-		-		-
Common stock issued for vested restricted stock units	38,503		-		-		-		-		-		-
Dividends declared	-		-		-		(884)		-		-		(884)
Issuance of stock, net of issuance costs	-		-		-		-		-		-		-
Surrender of stock for taxes due on vesting	(4,585)		-		(9)		-		-		-		(9)
Net income	-		-		-		2,673		-		-		2,673
Balance, June 30, 2022	88,709,090	$	89	$	110,480	$	22,488	$	(5,884)	$	(1,171)	$	126,002


	For the six months ended June 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	-		-		346		-		-		-		346
Net stock options exercised	217,718		-		263		-		-		-		263
Common stock issued for vested restricted stock units	2,614		-		-		-		-		-		-
Dividends declared	-		-		-		(1,489)		-		-		(1,489)
Surrender of stock for taxes due on vesting	(65,366)		-		(205)		-		-		-		(205)
Net income	-		-		-		3,810		-		-		3,810
Balance, June 30, 2021	74,868,322	$	75	$	85,269	$	14,974	$	(5,884)	$	(1,171)	$	93,263

Balance, December 31, 2021	88,675,172	$	89	$	110,153	$	17,563	$	(5,884)	$	(1,171)	$	120,750
Stock-based compensation	-		-		667		-		-		-		667
Stock options exercised - settled in cash	-		-		(331)		-		-		-		(331)
Common stock issued for vested restricted stock units	38,503		-		-		-		-		-		-
Dividends declared	-		-		-		(1,767)		-		-		(1,767)
Surrender of stock for taxes due on vesting	(4,585)		-		(9)		-		-		-		(9)
Net income	-		-		-		6,692		-		-		6,692
Balance, June 30, 2022	88,709,090	$	89	$	110,480	$	22,488	$	(5,884)	$	(1,171)	$	126,002


		For the six months ended June 30,
	Note	2022		2021
Cash flows from operating activities:
Net income		$	6,692	$	3,810
Adjustments to reconcile net income to net cash from operating activities:
Deferred income tax benefit			(1,198)		(699)
Depreciation and amortization, including amortization in reclamation			13,294		7,855
Stock-based compensation			1,167		681
Other operating adjustments	21		(1,827)		441
Changes in operating assets and liabilities:
Accounts receivable			2,395		(916)
Inventories			(1,688)		(391)
Prepaid expenses and other current assets			(1,829)		(1,015)
Accounts payable and other accrued liabilities			(943)		3,254
Mining royalty and income taxes payable, net			(3,857)		3,109
Net cash provided by operating activities			12,206		16,129

Cash flows from investing activities:
Capital expenditures			(10,518)		(9,333)
Proceeds from the sale of gold and silver rounds			533		-
Net cash used in investing activities			(9,985)		(9,333)

Cash flows from financing activities:
Proceeds (for) from the exercise of stock options			(376)		263
Dividends paid			(1,767)		(1,737)
Other financing activities			-		3
Net cash used in financing activities			(2,143)		(1,471)
Effect of exchange rate changes on cash and cash equivalents			(455)		(195)

Net (decrease) increase in cash and cash equivalents			(377)		5,130
Cash and cash equivalents at beginning of period			33,712		25,405
Cash and cash equivalents at end of period		$	33,335	$	30,535

Supplemental Cash Flow Information
Interest expense paid		$	-	$	-
Income and mining taxes paid		$	15,972	$	2,233
Non-cash investing activities:
Change in capital expenditures in accounts payable		$	(1,094)	$	502
Change in estimate for asset retirement costs		$	-	$	7


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Doré sales, net
Gold	$	2,484	$	2,695	$	3,728	$	5,182
Silver		57		228		77		605
Less: Refining charges		(10)		(20)		(17)		(91)
Total doré sales, net		2,531		2,903		3,788		5,696
Concentrate sales
Gold		13,850		7,671		28,391		14,195
Silver		5,146		6,951		11,231		13,264
Copper		2,708		3,714		6,805		7,100
Lead		3,768		2,595		7,595		5,000
Zinc		14,352		9,240		30,669		18,006
Less: Treatment and refining charges		(3,127)		(2,907)		(5,868)		(5,791)
Total concentrate sales, net		36,697		27,264		78,823		51,774
Realized gain - embedded derivative, net⁽¹⁾		1,160		359		2,026		450
Unrealized gain (loss) - embedded derivative, net		(3,324)		310		(2,156)		184
Total sales, net	$	37,064	$	30,836	$	82,481	$	58,104


	Gold		Silver		Copper		Lead		Zinc			Total
	(ounces)		(ounces)		(tonnes)		(tonnes)		(tonnes)
Under contract		5,029		158,039		163		1,711		3,553
Average forward price (per ounce or tonne)	$	1,845	$	21.87	$	9,092	$	2,157	$	3,984
Unsettled sales contracts value (in thousands)	$	9,279	$	3,456	$	1,482	$	3,691	$	14,155	$	32,063


		For the three months ended June 30,				For the six months ended June 30,				Statements of Operations Classification
		2022		2021		2022		2021

	Note	(in thousands)
Realized and unrealized derivative gain (loss), net	14	$	(2,164)	$	669	$	(130)	$	634	Sales, net
Realized loss on zinc zero cost collar	17	$	(829)	$	-	$	(2,457)	$	-	Realized and unrealized loss on zinc zero cost collar
Unrealized loss on zinc zero cost collar	17	$	4,628	$	-	$	2,119	$	-	Realized and unrealized loss on zinc zero cost collar


	Oaxaca, Mexico		Michigan, USA		Corporate and Other		Consolidated
As of June 30, 2022
Total current assets	$	50,771	$	4,586	$	5,069	$	60,426
Total non-current assets		63,224		89,578		378		153,180
Total assets	$	113,995	$	94,164	$	5,447	$	213,606
Total current liabilities		20,289		1,738		1,346		23,373
Total non-current liabilities		655		62,758		818		64,231
Total shareholders' equity		93,051		29,668		3,283		126,002
Total liabilities and shareholders' equity	$	113,995	$	94,164	$	5,447	$	213,606

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 2022
Sales, net	$	37,064	$	-	$	-	$	37,064
Total mine cost of sales, including depreciation		28,995		33		17		29,045
Exploration expense		810		2,027		-		2,837
Total other costs and expenses, including G&A		(3,568)		121		2,175		(1,272)
Provision for income taxes (benefit)		3,518		-		263		3,781
Net income (loss)	$	7,309	$	(2,181)	$	(2,455)	$	2,673

For the three months ended 2021
Sales, net	$	30,836	$	-	$	-	$	30,836
Total mine cost of sales, including depreciation		23,956		-		-		23,956
Exploration expense		643		-		5		648
Total other costs and expenses, including G&A		911		-		2,287		3,198
Provision for income taxes (benefit)		1,751		-		-		1,751
Net income (loss)	$	3,575	$	-	$	(2,292)	$	1,283


		For the six months ended June 30, 2022		2022 full year guidance
		(in thousands)
Sustaining Investments:
Underground Development	Capital	$	3,168	$	8.5 - 9.5 million
Infill Drilling and Exploration Development	Capital		4,040		7.0 - 7.5 million
Other Sustaining Capital	Capital		1,416		4.0 - 4.5 million
Subtotal of Sustaining Investments:			8,624
Growth Investments:
DDGM growth:
Gold Regrind	Capital		745		-
Dry Stack Completion	Capital		1,149		-
Surface Exploration / Other	Exploration		935		2.5 - 3.0 million
Underground Exploration Drilling	Exploration		1,112		3.0 - 3.5 million
Back Forty growth:
Back Forty Feasibility Study & Permits	Exploration		3,095		8.0-9.0 million
Subtotal of Growth Investments:			7,036
Total Capital and Exploration:		$	15,660	$	33.0 - 37.0 million



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


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

	(in thousands)
Asset retirement costs	$	1,065	$	1,065
Construction-in-progress ⁽¹⁾		2,729		15,854
Furniture and office equipment		1,703		1,685
Land		9,230		9,230
Mineral interest		79,543		79,964
Light vehicles and other mobile equipment		2,376		2,224
Machinery and equipment		39,288		33,213
Mill facilities and infrastructure		35,200		24,973
Mine Development		98,900		92,138
Software and licenses		1,631		1,592
Subtotal		271,665		261,938
Accumulated depreciation and amortization		(118,888)		(105,167)
Total	$	152,777	$	156,771


	2022		2021

	(in thousands)
Reclamation liabilities – balance at beginning of period	$	1,833	$	1,890
Foreign currency exchange loss (gain)		55		(57)
Reclamation liabilities – balance at end of period		1,888		1,833

Asset retirement obligation – balance at beginning of period		1,279		1,208
Accretion		51		109
Foreign currency exchange loss (gain)		40		(38)
Asset retirement obligation – balance at end of period		1,370		1,279
Total period end balance	$	3,258	$	3,112


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 six months ended June 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: July 27, 2022		/s/ Allen Palmiere
	By:	Allen Palmiere,
		Chief Executive Officer, President and Director




Dated: July 27, 2022		/s/ Kimberly C. Perry
	By:	Kimberly C. Perry,
		Chief Financial Officer