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GR

GOLD RESOURCE CORP (GORO)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 was materially weak: net sales fell to $13.27M, AuEq ounces sold dropped to 3,526, and net loss was $10.5M ($0.11 per share) as equipment constraints, limited mining faces, and unusually heavy rainfall reduced throughput .
  • Management warned of going concern risk and “care and maintenance” if financing is not secured; the Company needs ~$7M for equipment/mill upgrades and ~$8M in working capital to access new mining areas (Three Sisters/Splay 31) .
  • No Q3 earnings call (foregone); preliminary results and full press release emphasized liquidity pressures and the need for capital despite high realized metal prices (gold $2,561/oz, silver $30.61/oz) .
  • FY2024 capital/exploration guidance ranges were maintained (Total: $12.0–$16.2M; Sustaining: $8.8–$11.0M; Growth: $3.2–$5.2M), but liquidity updates and financing needs became the new narrative driver .
  • Potential stock reaction catalysts: explicit going concern language, risk of mine suspension absent financing, and November liquidity update noting improved production and break-even operating cash flow for the month (post-Q3) .

What Went Well and What Went Wrong

What Went Well

  • Realized prices were favorable in Q3: gold averaged $2,561/oz and silver $30.61/oz, supporting revenue per unit despite lower volumes .
  • Safety performance remained strong with zero lost time incidents YTD; LTIFR remained at “ZERO”/“zero” across periods .
  • Targeted drilling continued to delineate high-grade zones (Arista vein system, Marena North, Santa Cecilia, Splay 31), with earlier periods showing success in Three Sisters/Gloria systems; “positive results” expected to support future plan and mine life extension .
    Quote (Q2): “During the quarter our drilling program progressed with positive results that will allow for further expansion of our resources and reserves and lead to a longer mine life...” — Allen Palmiere, President & CEO .

What Went Wrong

  • Production was significantly impacted by equipment unavailability (aging fleet), lack of multiple mining faces, mechanical issues, and unusually high rainfall causing wet ore handling difficulties; throughput fell and mining was limited to one accessible face at a time .
  • Sales and volumes deteriorated sharply QoQ and YoY: net sales dropped to $13.27M, AuEq sold fell to 3,526, and tonnes milled declined to 83,690; net loss was $10.5M .
  • Liquidity worsened: cash fell to $1.4M and working capital to $6.1M at quarter-end, prompting going concern language and a stated need for ~$15M of capital/work capital to continue operations and develop new areas .

Financial Results

Income Statement Snapshot vs Prior Periods and Prior Year

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Total sales, net ($USD Millions)$20.55 $18.70 $20.78 $13.27
Net loss ($USD Millions)($7.34) ($4.02) ($27.73) ($10.50)
EPS - basic ($USD)($0.08) ($0.05) ($0.30) ($0.11)
Net income margin (%)-35.7%-21.5%-133.5%-79.1%
Note: Net income margin is calculated from net loss and net sales using values cited above .

Key comparisons:

  • Revenue: -36.1% QoQ ($13.27M vs $20.78M), -35.4% YoY ($13.27M vs $20.55M) .
  • EPS: improved QoQ to ($0.11) from ($0.30), but worse YoY vs ($0.08) .

Production and Pricing

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Tonnes milled116,626 98,889 93,687 83,690
Gold oz sold3,982 3,557 2,724 1,357
Silver oz sold208,905 216,535 234,560 181,434
Copper tonnes sold245 264 197 98
Lead tonnes sold947 667 491 467
Zinc tonnes sold2,571 1,682 1,771 1,473
AuEq ounces sold6,532 5,965 5,625 3,526
Avg realized gold ($/oz)$1,934 $2,094 $2,465 $2,561
Avg realized silver ($/oz)$23.61 $23.29 $30.49 $30.61

Costs, Cash Flow, and Liquidity

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Production costs ($USD Thousands)$18,957 $16,108 $17,768 $17,198
Production costs / tonne milled ($USD)$163 $163 $190 $205
Operating cash flow ($USD Thousands)($7,475) $1,482 ($63) ($3,372)
Cash balance ($USD Millions)n/a$5.7 $5.3 $1.4
Working capital ($USD Millions)n/a$13.6 $14.3 $6.1
Cash cost per AuEq ($/oz)n/a$1,667 —$3,560
AISC per AuEq ($/oz)n/a$2,295 —$5,072
Note: “—” indicates not disclosed in Q2 press release. Q3 liquidity metrics reflect end-September balances .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Capital & ExplorationFY 2024$12.0–$16.2M $12.0–$16.2M Maintained
Sustaining InvestmentsFY 2024$8.8–$11.0M $8.8–$11.0M Maintained
Growth InvestmentsFY 2024$3.2–$5.2M $3.2–$5.2M Maintained
Equipment & Mill UpgradesNear-termn/a~$7M Introduced
Working Capital (Three Sisters/Splay 31)Near-termn/a~$8M Introduced
Mexico Tax Refund2025 expectedn/a~$3.8M Introduced
Dividendn/an/an/aNot discussed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2024)Trend
Equipment availability / mining facesNoted operational delays; mitigation via mine plan; ongoing exploration success (Q1/Q2) Constraints worsened; mining limited to one face; need ~$7M capex for fleet/mill Deteriorated; urgent capex required
Weather / wet ore handlingQ2: Excessive rains caused wet ore handling issues; throughput impacted Unusually high rainfall persisted, lowering throughput and production Persistent headwind
Drilling & resource delineationQ1/Q2: Positive infill and grade control results in Three Sisters/Gloria; high-grade ore shoots identified Focus shifted to Arista NW extension (Marena North, Santa Cecilia, Splay 31); infill drilling suspended Aug 1 to conserve cash Strategic refocus; cash-constrained
FX/commodity pricesQ2: USD strength vs peso; realized prices above budget High realized gold/silver prices partly offset volume declines Mixed: price tailwind vs volume shortfall
Liquidity/going concernQ1: Healthy WC/cash; Q2: large net loss driven by tax valuation allowance/streaming interest Going concern risk disclosed; potential care-and-maintenance absent financing Materially negative
Investor communicationsQ1/Q2 hosted calls Company forewent Q3 call Reduced transparency this quarter

Management Commentary

  • Liquidity and operations: Management cited equipment age/condition, limited faces, and wet ore handling as key drivers of shortfall and emphasized the need for ~$7M in equipment/mill upgrades and ~$8M in working capital to access new areas (Three Sisters/Splay 31) .
  • Strategic drilling: “Infill drilling continued to identify and give definition to high-grade ore shoots in the Sandy 1 and Sandy 2 veins of the Three Sisters system.” (Q2) . Q3 focus shifted to Arista NW extension while suspending infill drilling to preserve cash .
  • CEO perspective: “During the quarter our drilling program progressed with positive results that will allow for further expansion of our resources and reserves and lead to a longer mine life...” — Allen Palmiere (Q2) . “Work during the first quarter...plant throughput was reduced...solutions were achieved.” — Allen Palmiere (Q1) .
  • Communications posture: The Company elected to forego a Q3 2024 conference call .

Q&A Highlights

  • No Q3 earnings call or Q&A session was held; the Company explicitly forewent hosting a Q3 2024 call .
  • Prior quarters (Q1/Q2) held calls, but transcripts are not available in the reviewed documents .

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q3 2024 EPS and revenue was unavailable due to access limitations; comparison vs estimates could not be performed at this time [GetEstimates error].
  • Given the sharp operational underperformance and going concern disclosure, near-term estimate revisions likely skew downward for production/sales and upward for unit costs; however, this requires refreshed consensus once available.

Key Takeaways for Investors

  • Operations require immediate capital: ~$7M capex for equipment/mill and ~$8M working capital to access and develop new mining areas; absent this, care-and-maintenance is possible — a binary catalyst for the equity .
  • Volume-driven revenue compression: AuEq sold fell to 3,526 and tonnes milled to 83,690, driving net sales down to $13.27M despite favorable realized prices; net loss remained large at ($10.5M) .
  • Cost inflation per tonne and cash burn: Production cost/tonne rose to $205; operating cash flow was negative ($3.37M); cash dwindled to $1.4M and working capital to $6.1M at quarter-end .
  • Guidance ranges maintained for FY2024 capital/exploration, but the narrative shifted to liquidity preservation and financing; watch for capital raise structure (dilution vs debt/streaming) .
  • Post-Q3 update: November production improved and operations ran slightly better than break-even cash flow for the month, potentially extending runway into Q1 2025; still contingent on financing .
  • Tactical trading lens: Headlines around financing, any asset-level cure to equipment constraints, or Mexico tax refund timing (~$3.8M expected 2025) can move the stock; absence of a call heightens sensitivity to press releases and filings .
  • Medium-term thesis depends on executing Arista/Three Sisters development and restoring multiple mining faces; drilling success is promising, but capital and operational execution are the gating items .