Gold Resource (US:GORO)2024-05-03 21:53Financial Data and Key Metrics Changes - For Q1 2024, the company reported a net loss of $4 million or $0.05 per share, with net sales of $18.7 million, which is 40% lower than the same period in 2023 due to lower volumes of all metals sold and a 22% decrease in zinc prices [11][12][36] - Cash provided by operating activities was $1.5 million, including $900,000 spent on exploration in Mexico and over $200,000 on the Back Forty optimization project in Michigan [25] - The cash balance at the end of the quarter was $5.7 million, reflecting a decline primarily due to lower sales and increased cash costs [34] Business Line Data and Key Metrics Changes - The company processed nearly 98,900 tonnes of ore, selling approximately 3,567 ounces of gold and 216,000 ounces of silver, equating to over 5,965 gold equivalent ounces [9] - Total cash cost after co-product credit was $1,667 per gold equivalent ounce sold, with all-in sustaining cash cost at $2,295 per ounce [39] - Production costs for the quarter were approximately $16.1 million, slightly lower than the prior year, but lower tonnes processed and gold equivalent ounces sold negatively impacted unit costs [35] Market Data and Key Metrics Changes - The Mexican peso remained stronger than planned against the US dollar, adversely affecting production and capital costs [6] - The company noted a lower-than-forecast price of zinc, which negatively impacted byproduct revenues [6] Company Strategy and Development Direction - The company is focused on reducing costs and increasing productivity while exploring strategic alternatives to unlock shareholder value [14] - Exploration efforts are concentrated in areas known as the Three Sisters: Gloria, Marena, and Splay 31, which are critical for future development [21] - The company plans to replace aging mining equipment to reduce operating costs significantly [66] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in the quarter, including fluctuating commodity prices and foreign exchange rates, but expressed optimism about improving cash generation due to rising commodity prices and a softening peso [14][27] - The management team is confident in the exploration results and believes they point to a bright future for the company [14] Other Important Information - The company experienced equipment availability issues due to an aging fleet and unexpected poor ground conditions, necessitating a redevelopment of the mine plan [41] - The company is undertaking a process review in the concentrator to improve recoveries, which initially resulted in lower-than-anticipated recoveries but showed positive results by the end of the quarter [7][27] Q&A Session Summary Question: What improvements have been seen regarding throughput and recoveries in Q2? - Management indicated that throughput was down primarily due to design, but they are on budget aiming for about 1,200 tonnes per day throughput this year. Recoveries were down due to optimization efforts affecting circuit balance, but stability was achieved in Q1, with anticipated improvements in Q2 [45][56] Question: Can you discuss your hedging strategies regarding the peso and base metal prices? - Management noted that the peso is volatile, and while they are monitoring the situation, they would consider hedging if the peso softens further. They have hedged zinc in the past but currently see no opportunity to hedge due to low prices [62][74] Question: Have you identified opportunities to target more precious metal-rich areas? - Management stated that while they will target higher precious metal grades, flexibility is limited due to the current mine plan. They anticipate better results from exploration in 2025 [69]