Gold Resource (US:GORO)2019-02-27 22:09Financial Data and Key Metrics Changes - In 2018, the company achieved net sales of $115.3 million, with a mine gross profit of $33.7 million and an annual net income of $9.3 million, representing a 124% increase in net income compared to the previous year [9][5][6] - The total cash cost was $84 per ounce after by-product credits, and the all-in sustaining cost was $655 per ounce [13] - The company maintained profitability for the eighth consecutive year, a notable achievement in the mining industry [5] Business Line Data and Key Metrics Changes - The company produced 26,838 gold ounces and 1.67 million silver ounces in 2018, successfully meeting its production outlook from the Oaxaca Mining Unit [9][10] - For 2019, the company targets a similar production outlook of 27,000 ounces of gold and 1.7 million ounces of silver from the Oaxaca Mining Unit, with expectations of significant base metal production [10] - The Isabella Pearl Project in Nevada is expected to contribute 29,000 gold ounces in its first year of production, ramping up to over 40,000 ounces annually in subsequent years [11] Market Data and Key Metrics Changes - The company expanded its proven and probable reserves in both the Oaxaca and Nevada Mining Units, with gold ounce increases of 26.6% and 11.5% respectively [14][15] - The company is finalizing construction of the Isabella Pearl Project, with the potential for early gold sales before the targeted June 2019 production start [8][23] Company Strategy and Development Direction - The company aims to position itself as a profitable, low-cost producer with substantial production growth and increased monthly dividends [24] - The focus remains on expanding the Arista Mine and developing the Isabella Pearl Project, with a commitment to maintaining a tight capital structure and avoiding excessive dilution [57][58] - The company is also working on several CapEx projects to enhance operational efficiency and safety [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for increased production and profitability, particularly with the upcoming contributions from the Isabella Pearl Project [24][23] - The management acknowledged the challenges posed by fluctuating energy costs and the importance of connecting to the power grid for cost savings [31][32] - The company remains cautious about returning to a historical dividend policy until a stronger market environment is established [67] Other Important Information - The company raised $15 million through an ATM equity sales program, resulting in a 6.3% dilution, which was deemed acceptable for the targeted increase in production [7][57] - Significant progress has been made on the power grid project, which is expected to provide additional power and cost savings once completed [19][18] Q&A Session Summary Question: Will gold sales from Isabella Pearl show up in the P&L in Q3 or Q4? - Management indicated that while June is the public target for production, there is a possibility of selling gold sooner [30] Question: What percentage of costs are energy-related? - Energy is one of the largest costs, with potential savings of $4 million to $5 million if the diesel credit is removed [31][32] Question: Will grades improve in the Aguila project mill? - Management explained that while grades have fluctuated, they expect to see a reversal in grades over time as they mine higher up in the system [41][42] Question: What is the status of the Mirador project? - The Mirador project is expected to see slow and steady increases in tonnage as it is developed [46] Question: Will the dividend policy return to a third, third, third? - Management stated that a return to the historical dividend policy would depend on a stronger gold market, but they aim to increase dividends as soon as possible [67]