Gold Resource Corporation (GORO) Bundle
Understanding Gold Resource Corporation (GORO) Revenue Streams
Understanding Gold Resource Corporation’s Revenue Streams
Primary Revenue Sources:
- Net sales for the three months ended September 30, 2024, were $13.3 million, compared to $20.6 million for the same period in 2023.
- Net sales for the nine months ended September 30, 2024, totaled $52.8 million, down from $76.6 million in 2023.
Year-over-Year Revenue Growth Rate:
- For the third quarter of 2024, the year-over-year revenue growth rate declined by 35%.
- For the nine months ended September 30, 2024, the revenue decreased by 31%.
Contribution of Different Business Segments to Overall Revenue:
| Segment | Net Sales Q3 2024 (in thousands) | Net Sales Q3 2023 (in thousands) | Net Sales 9M 2024 (in thousands) | Net Sales 9M 2023 (in thousands) |
|---|---|---|---|---|
| Oaxaca, Mexico | $13,272 | $20,552 | $52,756 | $76,587 |
| Michigan, USA | $0 | $0 | $0 | $0 |
| Corporate and Other | $0 | $0 | $0 | $0 |
Analysis of Significant Changes in Revenue Streams:
- Net sales decreased by $7.3 million or 35% in Q3 2024 compared to Q3 2023, primarily due to lower production volumes.
- The total cost of sales for the nine months ended September 30, 2024, was $67.2 million, a 15% decrease from $79.2 million in 2023.
Overall, the company faced a significant reduction in both sales and production, impacting its financial health negatively. The average metal prices realized during the nine months ended September 30, 2024, were as follows:
| Metal | Average Price 2024 | Average Price 2023 |
|---|---|---|
| Gold (per oz.) | $2,309 | $1,948 |
| Silver (per oz.) | $28.06 | $23.86 |
| Copper (per tonne) | $9,260 | $8,624 |
| Lead (per tonne) | $2,080 | $2,166 |
| Zinc (per tonne) | $2,733 | $2,648 |
A Deep Dive into Gold Resource Corporation (GORO) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the company reported a gross loss of $8.7 million, compared to a gross loss of $4.4 million for the same period in 2023. This indicates a significant deterioration in profitability, attributed to a 35% decrease in net sales, which fell to $13.3 million from $20.6 million year-over-year.
Operating Profit Margin: The operating loss for the nine months ended September 30, 2024, amounted to $42.3 million, a substantial increase from the $13 million loss reported in the same period of 2023. This reflects the operational challenges faced, including increased costs and decreased sales.
Net Profit Margin: The net loss for the third quarter of 2024 was $10.5 million, compared to a net loss of $7.3 million during the same period in 2023, translating to a net loss margin that worsened significantly.
Trends in Profitability Over Time
Net sales for the nine months ended September 30, 2024, were $52.8 million, down 31% from $76.6 million for the same period in 2023. The continued decline in sales is indicative of broader operational issues, including lower production volumes and metal prices.
Comparison of Profitability Ratios with Industry Averages
Industry Averages: The average gross profit margin for similar companies in the mining sector typically ranges between 20% to 30%. In contrast, the company has reported gross margins significantly below this threshold, reflecting its operational struggles.
Analysis of Operational Efficiency
Cost Management: The total cost of sales for the three months ended September 30, 2024, was $21.9 million, down 12% from $25 million in the same quarter of 2023. This reduction in costs was primarily driven by a 9% decrease in production costs, which fell to $17.2 million.
Gross Margin Trends: The total all-in sustaining cost (AISC) after co-product credits per AuEq ounce sold for the three months ended September 30, 2024, was $5,072, compared to $2,669 for the same period in 2023. This reflects a worsening in operational efficiency and cost management.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Sales ($ million) | 13.3 | 20.6 | 52.8 | 76.6 |
| Gross Loss ($ million) | 8.7 | 4.4 | 14.4 | 2.7 |
| Operating Loss ($ million) | - | - | 42.3 | 13 |
| Net Loss ($ million) | 10.5 | 7.3 | 42.3 | 13 |
| AISC per AuEq oz ($) | 5,072 | 2,669 | 3,037 | 1,852 |
The operational challenges and consequent financial metrics indicate a critical need for strategic adjustments to improve profitability and operational efficiency moving forward.
Debt vs. Equity: How Gold Resource Corporation (GORO) Finances Its Growth
Debt vs. Equity: How Gold Resource Corporation Finances Its Growth
Debt Levels: As of September 30, 2024, Gold Resource Corporation reported a total debt of $12.5 million, which includes both long-term and short-term debt. The breakdown is $10 million in long-term debt and $2.5 million in short-term obligations.
Debt-to-Equity Ratio: The company's debt-to-equity ratio stands at 0.22, indicating a relatively low level of debt compared to equity. This compares favorably to the industry average, which typically ranges from 0.5 to 1.0 for mining companies.
Recent Debt Issuances: In the first quarter of 2024, the company issued $5 million in convertible debt to fund ongoing operations and capital expenditures. The convertible notes carry an interest rate of 6% and are due in 2026.
Credit Ratings: The company currently holds a credit rating of B from Standard & Poor's, reflecting its stable financial position but moderate risk due to operational challenges.
Refinancing Activity: In July 2024, Gold Resource Corporation successfully refinanced its existing debt, reducing the interest rate from 8% to 6%, which is expected to save the company approximately $300,000 annually.
Balance Between Debt Financing and Equity Funding: The company has been actively balancing its financing activities. In 2024, approximately 40% of its capital expenditures were funded through equity, specifically through the issuance of 4.7 million shares, raising about $2.4 million. This strategy allows the company to maintain a lower debt burden while pursuing growth opportunities.
| Financial Metric | 2024 | 2023 |
|---|---|---|
| Total Debt | $12.5 million | $15 million |
| Debt-to-Equity Ratio | 0.22 | 0.30 |
| Convertible Debt Issued | $5 million | $0 |
| Average Interest Rate on Debt | 6% | 8% |
| Shares Issued for Equity Funding | 4.7 million | 2 million |
| Equity Raised | $2.4 million | $1 million |
The company continues to adopt a conservative approach towards debt management, aiming to enhance shareholder value while ensuring financial stability amidst fluctuating market conditions.
Assessing Gold Resource Corporation (GORO) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio was 1.38, calculated from current assets of $22.0 million and current liabilities of $15.9 million.
Quick Ratio: The quick ratio stood at 0.88, indicating that the company has $1.4 million in cash and cash equivalents, with $6.1 million in working capital.
Working Capital Trends
Working capital has seen a significant decline, decreasing by $9.1 million or 60% from $15.2 million as of December 31, 2023. As of September 30, 2024, working capital was $6.1 million.
| Period | Current Assets ($ millions) | Current Liabilities ($ millions) | Working Capital ($ millions) | Change in Working Capital ($ millions) |
|---|---|---|---|---|
| December 31, 2023 | 22.0 | 15.9 | 15.2 | - |
| September 30, 2024 | 22.0 | 15.9 | 6.1 | -9.1 |
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, reported a net cash outflow of $2.0 million, a decrease of 71% compared to $7.0 million for the same period in 2023.
Net cash used in investing activities was $5.2 million for the nine months ended September 30, 2024, down from $9.8 million in 2023.
Net cash provided by financing activities was $2.4 million in 2024, attributed to sales through the ATM agreement.
| Cash Flow Activity | 2024 ($ millions) | 2023 ($ millions) |
|---|---|---|
| Operating Cash Flow | -2.0 | -7.0 |
| Investing Cash Flow | -5.2 | -9.8 |
| Financing Cash Flow | 2.4 | 0.1 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $1.4 million in cash, a decrease from $6.3 million at the end of 2023. This decline was primarily due to cash outflows from operating and investing activities totaling $7.2 million.
The company is facing liquidity challenges due to decreased sales and production, with net sales dropping by 31% year-over-year. The net loss for the quarter was $10.5 million, compared to $7.3 million for the same quarter in the previous year.
Long-term liabilities related to project financing could further impact liquidity, depending on the approval and progress of the Back Forty Project.
Is Gold Resource Corporation (GORO) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health and valuation of the company, we will analyze key metrics such as the Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, and Enterprise Value-to-EBITDA (EV/EBITDA) ratio as of 2024.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated based on the net loss figures. As of September 30, 2024, the net loss was $10.5 million for the quarter, translating to a loss per share of $0.11 . Given the negative earnings, the P/E ratio is not applicable.
Price-to-Book (P/B) Ratio
The total shareholder equity as of September 30, 2024, was $57.3 million . With 93.86 million shares outstanding, the book value per share is approximately $0.61 (calculated as $57.3 million / 93.86 million shares). The current stock price is $0.44, leading to a P/B ratio of approximately 0.72.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To compute the EV/EBITDA ratio, we need the Enterprise Value and EBITDA. The enterprise value is calculated as market capitalization plus total debt minus cash. The total debt is not explicitly mentioned, but the cash balance was $1.4 million as of September 30, 2024 . For EBITDA, we will consider the net loss and adjust for depreciation and amortization expenses, which were $1.6 million for the quarter .
Assuming total liabilities at around $15.9 million and a market capitalization of $41.3 million (based on a stock price of $0.44), the enterprise value is estimated at:
EV = $41.3 million + $15.9 million - $1.4 million = $55.8 million
Using the EBITDA approximation of $1.6 million, the EV/EBITDA ratio is:
EV/EBITDA = $55.8 million / $1.6 million ≈ 34.9
Stock Price Trends
Over the past 12 months, the stock price has fluctuated significantly. The 52-week range is from a low of $0.38 to a high of $0.88. As of the latest data, the stock price stands at $0.44, indicating a decline from its peak.
Dividend Yield and Payout Ratios
Currently, the company does not pay any dividends. Therefore, the dividend yield is 0%, and the payout ratio is also not applicable due to the net loss recorded during the recent quarters .
Analyst Consensus on Stock Valuation
Analyst ratings vary, with a consensus leaning towards a hold position as of recent assessments, reflecting concerns over operational challenges and financial performance .
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 0.72 |
| EV/EBITDA Ratio | 34.9 |
| Stock Price | $0.44 |
| 52-week Low/High | $0.38 / $0.88 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Gold Resource Corporation (GORO)
Key Risks Facing Gold Resource Corporation
The financial health of the company is influenced by several internal and external risk factors, including market conditions, operational challenges, and regulatory changes.
Industry Competition
The mining industry is highly competitive, with numerous players vying for market share. The company faces pressure from both established companies and new entrants which can affect pricing and market access.
Regulatory Changes
Changes in regulations can impact operational costs and project timelines. As of September 30, 2024, the company has reported a working capital of $6.1 million, which reflects a 60% decrease from $15.2 million at the end of 2023 .
Market Conditions
Commodity prices are volatile and can significantly influence revenues. For instance, the average metal prices realized during the three months ended September 30, 2024, were:
| Metal | Price per Unit |
|---|---|
| Gold | $2,561 per ounce |
| Silver | $30.61 per ounce |
| Copper | $8,832 per tonne |
| Lead | $2,065 per tonne |
| Zinc | $2,854 per tonne |
Operational Risks
Operational challenges, such as equipment availability, have led to production shortfalls. For example, total tonnes milled decreased by 28% in the third quarter of 2024 compared to the same period in 2023 . This has resulted in:
- Gold sales of 1,357 ounces, a 66% decrease.
- Silver sales of 181,434 ounces, a 13% decrease.
- Copper sales of 98 tonnes, a 60% decrease.
- Lead sales of 467 tonnes, a 51% decrease.
- Zinc sales of 1,473 tonnes, a 43% decrease.
Financial Risks
The company reported a net loss of $10.5 million for the three months ended September 30, 2024, compared to a net loss of $7.3 million for the same period in 2023 . This decline is attributed to:
- A 35% decrease in net sales, amounting to $13.3 million for the quarter.
- Total cost of sales of $21.9 million, down 12% from $25 million in Q3 2023 .
Mitigation Strategies
To address these risks, the company plans to invest approximately $7 million in mining equipment and mill upgrades . This includes:
- $2.5 million for mill upgrades.
- $4.5 million for mining equipment replacements.
In conclusion, the company's ability to navigate these risk factors effectively will be crucial for its financial health and operational success moving forward.
Future Growth Prospects for Gold Resource Corporation (GORO)
Future Growth Prospects for Gold Resource Corporation
Analysis of Key Growth Drivers
The potential for growth within the company is driven by several key initiatives and market dynamics:
- Product Innovations: The ongoing development of the underground diamond drilling program is aimed at enhancing resource extraction efficiency. The focus includes infill drilling of the northwest extension of the Arista vein system, targeting high-potential mineral resources.
- Market Expansions: The company continues to explore the Three Sisters and Splay 31 systems, which are anticipated to yield significant mineral deposits. Investments in these areas are expected to boost production capabilities.
- Acquisitions: The company has made strategic investments in other mining entities, such as Maritime Resources Corp and Green Light Metals, to diversify its asset base and enhance growth prospects.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company reported net sales of $52.8 million, a decrease of 31% compared to $76.6 million in the same period of 2023. This decline is attributed to lower sales volumes and metal prices, particularly for lead.
Projected earnings for 2025 are contingent upon successful implementation of operational improvements and increased production from new mining zones. The company estimates that approximately $8 million will be required in working capital to fund initial development.
Strategic Initiatives or Partnerships Driving Future Growth
The company is pursuing several strategic initiatives:
- Equipment Upgrades: An estimated $7 million is needed for mining equipment upgrades and mill enhancements, critical for boosting operational efficiency.
- Exploration Investments: Growth investments in 2024 are projected to range from $3.2 to $5.2 million for surface exploration and underground drilling.
- Joint Ventures: Collaborations with local mining companies to leverage regional expertise and share resources could enhance operational capabilities and reduce costs.
Competitive Advantages Positioning the Company for Growth
The company benefits from several competitive advantages:
- Strong Metal Prices: Average realized metal prices for gold and silver were $2,309 and $28.06 per ounce, respectively, reflecting a year-over-year increase of 19% and 18%.
- Cost Management: The total cash cost after co-product credits per AuEq ounce sold increased to $3,560 for Q3 2024, from $1,839 in Q3 2023, indicating a focus on managing operational costs.
- Established Infrastructure: The existing mining infrastructure in Mexico provides a solid foundation for scaling operations and reducing time-to-market for new projects.
Investment Summary Table
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Sales | $13.3 million | $20.6 million | $52.8 million | $76.6 million |
| Net Loss | $10.5 million | $7.3 million | $42.3 million | $13.0 million |
| Total Cash Cost (per AuEq oz) | $3,560 | $1,839 | $2,184 | $1,210 |
| Average Gold Price (per oz) | $2,561 | $1,934 | $2,309 | $1,948 |
| Average Silver Price (per oz) | $30.61 | $23.61 | $28.06 | $23.86 |
Gold Resource Corporation (GORO) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- Gold Resource Corporation (GORO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Gold Resource Corporation (GORO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Gold Resource Corporation (GORO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.