Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gold Resource Corp (GORO, Financial) successfully concluded Q2 with zero lost time incidents, highlighting their strong commitment to safety.
- The company has implemented cost reduction initiatives, resulting in a 10% decrease in mining development costs per meter.
- GORO's processing plant is operating at around 1,300 tonnes per day, aligning with their 2024 targets.
- The devaluation of the peso has led to a decrease in operating costs, partially offsetting the decline in commodity prices.
- The company is exploring new areas, such as the Three Sisters and Gloria, with promising drilling results, potentially increasing future production.
Negative Points
- Gold Resource Corp (GORO) faced lower mine production due to limited working areas and challenging ground conditions.
- Work stoppages from road blockades and extremely wet weather conditions negatively impacted production.
- The company reported a net loss of $27.7 million for Q2, primarily due to a valuation allowance and increased interest on liabilities.
- Net sales decreased by 16% compared to the same period in 2023, mainly due to lower volumes of metal sold.
- Cash balance decreased to $5.3 million, attributed to lower sales and production challenges.
Q & A Highlights
Q: Can you provide more details on the impact of heavy rain on throughput rates during the quarter?
A: Allen Palmiere, President and CEO, explained that two tropical depressions in June caused excessive rain, turning ore fines into mud and clogging crusher screens, which hindered material processing. However, weather conditions have normalized, and no similar impact is expected for Q3 or Q4.
Q: Are there any plans for hedging against foreign exchange fluctuations, particularly with the weakening peso?
A: Allen Palmiere stated that the company is considering implementing hedges for the peso soon. Currently, they are not hedged, but the recent peso devaluation has significantly impacted operating costs, prompting a reevaluation of their hedging strategy.
Q: How did excessive rains and election-related work delays affect operations, and what was the financial impact?
A: Allen Palmiere noted that the rains and election delays resulted in losing about a week of production, equating to approximately 6,000 tonnes of ore not processed. This loss translated to a revenue decrease of about one-sixth for the month, while costs remained largely unchanged.
Q: What are the expectations for grade improvements in the coming quarters?
A: Allen Palmiere mentioned that while grades will slightly improve in Q3 and Q4, significant grade improvements are expected in Q1 2026 with access to the Three Sisters area, a new mineralized zone with promising exploration results.
Q: Can you provide an update on the Back Forty project and its current status?
A: Allen Palmiere indicated that while the Back Forty project is not currently a focus due to financial constraints, the company plans to advance it once they generate excess cash from Mexico and the capital markets improve. The permitting process in Michigan is ongoing, with confidence in obtaining necessary permits.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
