Gold Resource Corporation Q2 gold equivalent production grew YoY despite lower than targeted mill output and slowed development at its high grade La Arista deposit in Mexico.
The gold producer which yields gold from its El Aguila operations in the southern state of Oaxaca, Mexico said gold equivalent production rose 8% over the prior year quarter to 14,488 ounces.
This number is still less than half of what Gold Resource Corp targeted for the quarter, which prompted the company in July to reduce its full year outlook for production in the range of 100,000 ounces to 120,000 ounces. This compares to its prior guidance for between 120,000 to 140,000 ounces of gold equivalent.
Mr Bill Reid CEO of Gold Resource said that achieving 100,000 ounces of output for the year would still represent 50% increase over last year's production. For the three months that ended June 30th 2012 the company sold 17,211 ounces of gold equivalent, versus 13,097 ounces a year earlier. Average prices realized on sales during the latest period were higher for gold and lower for silver at USD 1,631 per ounce gold and USD 27 per ounce silver respectively.
Mr Bill Reid said that the company achieved a great deal in the period, which speaks to the cash generating power of the La Arista deposit and the El Aguila project. Indeed, the company said net income totalled USD 3.6 million or 7 cents per share, versus USD 3.1 million or 6 cents per share a year earlier.
He said that net comprehensive income including a currency translation loss of USD 1.7 million totalled USD 1.9 million in the most recent period. The gold producer generated a mine gross profit of USD 17.2 million compared with USD 15.4 million a year ago. Sales rose to USD 30 million up from USD 20.7 million last year.
Mr Reid said that Cash costs were significantly higher however at USD 509 per ounce of gold equivalent, versus USD 303 per ounce in the year ago period. Total expenses and costs rose almost 13% to USD 9.7 million. Our total cash cost per ounce of gold equivalent sold this quarter was high as a direct result of the lower production.
Had we achieved our targeted production of 30,000 gold equivalent ounces, we believe total cash costs would have been equal to about half of the USD 509 per gold equivalent ounce we reported. The company believes the higher total cash cost number is temporary and will decrease with anticipated higher production in the "current and future quarters".
He added that we expect increased production from high grade ore zone blocks between levels 7 through 10 prepared in the second quarter, which we are now actively stoping.
Mr Jason Reid president of Gold Resource Corporation said that “The second quarter was a challenge as infrastructure requirements slowed the development and stoping of high grade ore zones at La Arista. This resulted in processing diluted development ore and stoping from available lower grade ore zones. Even with mill production for the quarter below our target, it is still impressive that we were profitable, we paid USD 9.5 million in dividends to the owners of the company and we were still able to put approximately USD 800,000 in the bank.”
Source - Proactive Investors.com
(www.steelguru.com)
