UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(MARK ONE)
FOR THE QUARTERLY PERIOD ENDED
OR
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER
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(STATE OR OTHER JURISDICTION OF | (I.R.S. EMPLOYER | |
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(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act: | ||
Tile of each class | Trading Symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
At November 9, 2023,
GOLDEN MINERALS COMPANY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2023
INDEX
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 26 | |
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37 | ||
39 | ||
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39 | ||
39 | ||
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42 |
2
PART I. FINANCIAL INFORMATION
Item 1. | Financial Statements |
GOLDEN MINERALS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
(Unaudited)
| September 30, |
| December 31, |
| |||
2023 | 2022 | ||||||
(in thousands, except share data) |
| ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents (Note 5) | $ | | $ | | |||
Short-term investments (Note 5) | | | |||||
Inventories, net (Note 7) |
| |
| | |||
Value added tax receivable, net (Note 8) |
| |
| | |||
Prepaid expenses and other assets (Note 6) | | | |||||
Total current assets |
| |
| | |||
Property, plant and equipment, net (Note 9) |
| |
| | |||
Investments (Note 5) | | | |||||
Other long-term assets (Note 10) |
| |
| | |||
Total assets | $ | | $ | | |||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Accounts payable and other accrued liabilities (Note 11) | $ | | $ | | |||
Other current liabilities (Note 13) |
| |
| | |||
Total current liabilities |
| |
| | |||
Asset retirement and reclamation liabilities (Note 12) |
| |
| | |||
Other long-term liabilities (Note 13) |
| |
| | |||
Total liabilities |
| |
| | |||
Commitments and contingencies (Note 20) | |||||||
Equity (Note 16) | |||||||
Common stock, $ |
| |
| | |||
Additional paid-in capital |
| |
| | |||
Accumulated deficit |
| ( |
| ( | |||
Shareholders’ equity |
| |
| | |||
Total liabilities and equity | $ | | $ | |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
3
GOLDEN MINERALS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States dollars)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
(in thousands except per share data) | (in thousands, except per share data) | |||||||||||
Revenue: | ||||||||||||
Sale of metals (Note 17) | $ | | $ | | $ | | $ | | ||||
Total revenue | | | | | ||||||||
Costs and expenses: | ||||||||||||
Cost of metals sold (exclusive of depreciation shown below) (Note 17) | ( | ( | ( | ( | ||||||||
Exploration expense |
| ( | ( | ( | ( | |||||||
El Quevar project expense |
| ( | ( | ( | ( | |||||||
Velardeña care and maintenance costs |
| ( | ( | ( | ( | |||||||
Administrative expense |
| ( | ( | ( | ( | |||||||
Stock-based compensation |
| ( | ( | ( | ( | |||||||
Reclamation expense |
| ( | ( | ( | ( | |||||||
Other operating income, net |
| | | | | |||||||
Depreciation and amortization |
| ( | ( | ( | ( | |||||||
Total costs and expenses |
| ( |
| ( |
| ( |
| ( | ||||
Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Other income (expense): | ||||||||||||
Interest and other income (expense), net (Note 18) |
| | ( | | ( | |||||||
(Loss) gain on foreign currency transactions | ( | | | | ||||||||
Litigation settlement (Note 20) |
| ( | — | ( | — | |||||||
Total other income (expense) | ( | | ( | | ||||||||
Loss from operations before income taxes |
| ( |
| ( |
| ( |
| ( | ||||
Income taxes (Note 15) | — | | — | | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per common share - basic (1) | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted-average shares outstanding - basic (2) |
| | | | |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
4
GOLDEN MINERALS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
(Unaudited)
Nine Months Ended September 30, | |||||||
| 2023 |
| 2022 |
| |||
(in thousands) |
| ||||||
Cash flows used in operating activities: | |||||||
Net cash used in operating activities (Note 19) | $ | ( | $ | ( | |||
Cash flows from (used in) investing activities: | |||||||
Proceeds from sale of assets |
| |
| | |||
Investment in Golden Gryphon Explorations Inc. | ( | ( | |||||
Acquisitions of property, plant and equipment |
| — |
| ( | |||
Net cash from (used in) investing activities | $ | | $ | ( | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock, net of issuance costs |
| |
| | |||
Common stock shares relinquished to pay taxes |
| — |
| ( | |||
Net cash from financing activities | $ | | $ | | |||
Net decrease in cash and cash equivalents |
| ( |
| ( | |||
Cash and cash equivalents, beginning of period |
| |
| | |||
Cash and cash equivalents, end of period | $ | | $ | |
See Note 19 for supplemental cash flow information.
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
5
GOLDEN MINERALS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in United States dollars)
(Unaudited)
Additional | ||||||||||||||
Common Stock (1) | Paid-in | Accumulated | Total | |||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||
(in thousands except share data) | ||||||||||||||
Balance, December 31, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Adjustment related to correction of immaterial error (Note 4) | — | — | — | ( | ( | |||||||||
Adjusted balance at January 1, 2022 (Restated) | | | | ( | | |||||||||
Stock compensation accrued (Note 16) | — | — | | — | | |||||||||
KELTIP shares issued net of shares relinquished to cover withholding taxes (Note 16) | | | ( | — | ( | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, March 31, 2022 | | $ | | $ | | $ | ( | $ | | |||||
Stock compensation accrued and restricted stock awards granted (Note 16) | | — | | — | | |||||||||
Warrants exercised (Note 16) | | | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, June 30, 2022 | | $ | | $ | | $ | ( | $ | | |||||
Stock compensation accrued and restricted stock awards granted (Note 16) | | — | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, September 30, 2022 | | $ | | $ | | $ | ( | $ | | |||||
Balance, December 31, 2022 | | $ | | $ | | $ | ( | $ | | |||||
Stock compensation accrued (Note 16) | — | — | | — | | |||||||||
Shares issued under the at-the-market offering agreement, net (Note 16) | | | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, March 31, 2023 | | $ | | $ | | $ | ( | $ | | |||||
Stock compensation accrued (Note 16) | — | — | | — | | |||||||||
Shares issued under the at-the-market offering agreement, net (Note 16) | | | | — | | |||||||||
Offering and private placement transaction (Note 16) | | | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, June 30, 2023 | | $ | | $ | | $ | ( | $ | | |||||
Stock compensation accrued (Note 16) | — | — | | — | | |||||||||
Warrants exercised (Note 16) | | | ( | — | — | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, September 30, 2023 | | $ | | $ | | $ | ( | $ | |
(1) Reflects the one-for- reverse stock split that became effective June 9, 2023. Refer to Note 1, “Basis of Preparation of Financial Statements and Nature of Operations.”
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
6
GOLDEN MINERALS COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)
(Unaudited)
1. | Basis of Preparation of Financial Statements and Nature of Operations |
Golden Minerals Company (the “Company”, “we” “our” or “us”), a Delaware corporation, has prepared these unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements do not include all disclosures required by GAAP for annual financial statements, but in the opinion of management, include all adjustments necessary for a fair presentation. Certain prior period amounts may have been reclassified to conform to current classifications. Interim results are not necessarily indicative of results for a full year; accordingly, these interim condensed consolidated financial statements should be read in conjunction with the annual financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and filed with the SEC on March 22, 2023 (the “2022 Annual Report”).
The Company is a mining company, holding a
We concluded mining operations at the Rodeo Property in June 2023, and we are engaged in planning for a restart of the Velardeña mine. We continue to evaluate and search for mining opportunities in North America (including Mexico) with near-term prospects of mining, and particularly for properties within reasonable haulage distances of our Velardeña Properties. We are also focused on advancing our Yoquivo exploration property in Mexico, and through the Earn-In Agreement with Barrick, our El Quevar advanced exploration property in Argentina. We are holding an additional portfolio of approximately
The Company is considered an exploration stage issuer under the criteria set forth by the SEC under Subpart 1300 of Regulation S-K (“S-K 1300”) as the Company has not yet demonstrated the existence of mineral reserves at any of the Company’s properties. As a result, and in accordance with GAAP for exploration stage companies, all expenditures for exploration and evaluation of the Company’s properties are expensed as incurred. As such, the Company’s financial statements may not be comparable to the financial statements of mining companies that have proven and probable mineral reserves. Such companies would typically capitalize certain development costs including infrastructure development and mining activities to access the ore. The capitalized costs would be amortized on a units-of-production basis as reserves are mined. The amortized costs are typically allocated to inventory and eventually to cost of sales as the inventories are sold. As the Company does not have proven and probable mineral reserves, substantially all expenditures at the Company’s Rodeo Property and the Velardeña Properties for mine construction activity, as well as operating costs associated with the mill facilities, and for items that do not have a readily identifiable market value apart from the mineralized material, have been expensed as incurred. Such costs are charged to cost of metals sold or project expense during the period depending on the nature of the costs. Certain costs may be reflected in inventories prior to the sale of the product. The Company cannot be certain that any deposits at any of its properties will ever be confirmed or converted into S-K 1300 compliant “reserves.”
Reverse Stock Split
On May 26, 2023, the Company’s Board of Directors approved a reverse stock split (the “Reverse Stock Split”) of the Company’s common stock, par value $
7
As a result of the Reverse Stock Split, each
In addition, proportionate adjustments were made to the number of shares issuable upon the exercise or vesting of all outstanding warrants and restricted stock units, resulting in a proportional decrease in the number of shares of common stock reserved for issuance upon exercise or vesting of such warrants and restricted stock units and the number of shares of common stock then reserved for issuance under the Company’s equity compensation plans, including the Company’s 2023 Equity Incentive Plan, which was reduced proportionately.
Accordingly, all share and per share data (including share and per share information related to share-based compensation and outstanding warrants), number of shares outstanding and other common stock equivalents for the periods presented in the accompanying interim condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.
2. | Liquidity, Capital Resources and Going Concern |
We do not currently have sufficient resources to meet our expected cash needs during the twelve months ended September 30, 2024. At September 30, 2023, we had current assets of approximately $
We will require further sources of capital. In order to commence and maintain production at Velardeña, we expect that we will need approximately $
We have previously announced the execution of a non-binding letter of intent for the sale of our Santa Maria property for a total consideration consisting of (i) initial cash proceeds of $
We have also held discussions with various financing parties with regard to equity and/or debt financing as well as streaming or royalty arrangements involving future production at Velardeña.
As of September 30, 2023, we had value-added-tax (“VAT”) receivable in Mexico of approximately $
The interim condensed consolidated financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the normal course of business. However, as noted above, our continuing long-term operations will be dependent upon our ability to secure sufficient funding to generate future profitable operations. The underlying value and recoverability of the amounts shown as property, plant and equipment in our interim condensed consolidated financial statements are dependent on our ability to continue to generate positive cash flows from operations and to continue to fund general administrative, and exploration
8
activities that would lead to additional profitable mining and processing activities or to generate proceeds from the disposition of property, plant and equipment.
The ability of the Company to maintain a positive cash balance for a period of twelve months beyond the filing date of this Quarterly Report on Form 10-Q is dependent upon its ability to generate sufficient cash flow from operations, collect VAT accounts receivable from the Mexican government, reduce expenses, sell non-core assets, and raise sufficient funds through equity or external sources. These material uncertainties cast significant doubt on the Company’s ability to continue as a going concern. Therefore, the Company cannot conclude that substantial doubt does not exist as to the Company’s ability to continue as a going concern for the twelve months following the filing date of this Quarterly Report on Form 10-Q. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or liabilities which might be necessary should the Company not continue as a going concern.
3. | New Accounting Pronouncements |
The Company does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying interim condensed consolidated financial statements.
4. | Correction of Immaterial Error |
In the first quarter of 2022, the Company became aware that at December 31, 2021, it had failed to properly record a royalty tax payable in Mexico related to its Rodeo operations. The effect of correcting this error was to reduce beginning retained earnings by $
The Company evaluated the materiality of the error described above from a qualitative and quantitative perspective. Based on such evaluation, the Company concluded that while the accumulation of the error was significant to the three months ended March 31, 2022, the correction would not be material to results of operations for the period ended December 31, 2021, nor did it have an effect on the trend of financial results, taking into account the requirements of SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”).
5. | Cash and Cash Equivalents and Investments |
Cash and Cash Equivalents
Of the $
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Short-Term Investments
Short-term investments include investments with maturities greater than three months, but not exceeding 12 months, or highly liquid investments with maturities greater than 12 months that the Company intends to liquidate during the next 12 months for working capital needs.
9
The following tables summarize the Company’s short-term investments:
|
| Estimated |
| Carrying |
| |||||
September 30, 2023 | Cost | Fair Value | Value |
| ||||||
(in thousands) | ||||||||||
Short-term investments: | ||||||||||
Trading securities | $ | | $ | | $ | | ||||
Total trading securities |
| |
| |
| | ||||
Total short-term investments | $ | | $ | | $ | | ||||
December 31, 2022 | ||||||||||
Short-term investments: | ||||||||||
Trading securities | $ | | $ | | $ | | ||||
Total trading securities |
| |
| |
| | ||||
Total short-term investments | $ | | $ | | $ | |
Investment in Fabled
The short-term investments at September 30, 2023, and December 31, 2022 consist of
Long-Term Investments
Investments in equity securities are generally measured at fair value. Gains and losses for equity securities resulting from changes in fair value are recognized in current earnings. If an equity security does not have a readily determinable fair value, the Company may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period, the Company reassesses whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment, considers whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, records an impairment loss.
Investment in Golden Gryphon Explorations Inc.
Long-term investments at September 30, 2023 consist of approximately
For a description of the earn-in agreement with GGE, see “Exploration Properties—Sand Canyon” in our 2022 Annual Report.
The GGE investment is accounted for at cost less impairment pursuant to ASC topic 321 as there is no ready market for the shares and it is recorded as non-current investments on the Condensed Consolidated Balance Sheets. The Company concluded it was impractical to estimate fair value due to the absence of a public market for the stock. The Company identified no events or changes in circumstances that might have had a significant adverse effect on the carrying value of the investment and have therefore not recorded any impairment against the asset.
10
Credit Risk
The Company invests substantially all of its excess cash with high credit-quality financial institutions or in U.S. government or debt securities. Credit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument. For cash and equivalents and investments, credit risk represents the carrying amount on the balance sheet. The Company mitigates credit risk for cash and equivalents and investments by placing its funds and investments with high credit-quality financial institutions, limiting the amount of exposure to each of the financial institutions, monitoring the financial condition of the financial institutions and investing only in government and corporate securities rated “investment grade” or better. The Company invests with financial institutions that maintain a net worth of no less than $
6. | Prepaid Expenses and Other Assets |
Prepaid expenses and other current assets consist of the following:
| September 30, |
| December 31, | ||||
2023 |
| 2022 | |||||
(in thousands) |
| ||||||
Prepaid insurance | $ | | $ | | |||
Current portion of deferred offering costs | — | | |||||
Recoupable deposits and other |
| |
| | |||
$ | | $ | |
The current portion of deferred offering costs is associated with the ATM Agreement (see Note 16).
Recoupable deposits and other at September 30, 2023 and December 31, 2022 includes a receivable from Barrick for reimbursement of costs of approximately $
7. | Inventories |
Inventories at the Velardeña Properties were as follows:
September 30, | December 31, |
| |||||
| 2023 |
| 2022 |
| |||
(in thousands) | |||||||
Doré inventory | $ | | $ | | |||
In-process inventory |
| — |
| | |||
Material and supplies, net | | | |||||
$ | | $ | |
Doré and in-process inventories, recorded at book value, include approximately $
The materials and supplies inventories are primarily related to the Velardeña operation and are reduced by a $
8. | Value Added Tax Receivable, Net |
At September 30, 2023, the Company recorded a net VAT paid in Mexico of $
11
VAT receivable in Mexico. At December 31, 2022, the Company had recorded approximately $
The Company has also paid VAT in other countries, primarily related to exploration projects, which has been charged to expense as incurred because of the uncertainty of recoverability.
.
9. | Property, Plant and Equipment, Net |
The components of property, plant and equipment are as follows:
September 30, | December 31, | ||||||
| 2023 |
| 2022 |
| |||
(in thousands) |
| ||||||
Mineral properties | $ | | $ | | |||
Exploration properties | | | |||||
Royalty properties |
| |
| | |||
Buildings |
| |
| | |||
Mining equipment and machinery |
| |
| | |||
Other furniture and equipment |
| |
| | |||
Asset retirement cost |
| |
| | |||
| |
| | ||||
Less: Accumulated depreciation and amortization |
| ( |
| ( | |||
$ | | $ | |
For the nine months ended September 30, 2023 and 2022, the Company recognized approximately $
For the three months ended September 30, 2023 and 2022, the Company recognized approximately $
El Quevar Earn-In Agreement
On April 9, 2020, we entered into an earn-in agreement with Barrick (the “Earn-In Agreement”), pursuant to which Barrick has acquired an option to earn a
Sale of Santa Maria Property
On December 4, 2020, the Company and Fabled entered into an option agreement (the “Option Agreement”) under which Fabled would have acquired a
On December 19, 2022, the Option Agreement was amended to reschedule the remaining $
12
10. | Other Long-Term Assets |
Other long-term assets consist of right of use assets and at September 30, 2023 include approximately $
In December 2020, the Company’s wholly owned subsidiary, Minera de Cordilleras S. de R.L. de C.V., entered into an agreement with Triturados del Guadiana, S.A. de C.V. (“Trigusa”), whereby Trigusa has carried out mining activities at the Rodeo Property. Per the terms of the mining agreement, Trigusa provided services for the
Lease liabilities are included in “Other liabilities,” short term and long term (see Note 13), in the Company’s Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022.
11. | Accounts Payable and Other Accrued Liabilities |
The Company’s accounts payable and other accrued liabilities consist of the following:
September 30, | December 31, | ||||||
2023 | 2022 |
| |||||
(in thousands) |
| ||||||
Accounts payable and accruals | $ | | $ | | |||
Accrued employee compensation and benefits | | | |||||
Income taxes payable (Note 15) |
| |
| | |||
$ | | $ | |
September 30, 2023
Accounts payable and accruals at September 30, 2023, are primarily related to amounts due to contractors and suppliers in the amounts of $
Accrued employee compensation and benefits at September 30, 2023, consist of $
December 31, 2022
Accounts payable and accruals at December 31, 2022, are primarily related to amounts due to contractors and suppliers in the amounts of $
Accrued employee compensation and benefits at December 31, 2022, consist of $
13
12. | Asset Retirement and Reclamation Liabilities |
In 2012, the Company retained the services of a mining engineering firm to prepare a detailed closure plan for reclamation activity at the Velardeña Properties. The plan was completed during the second quarter of 2012 and indicated that the Company had an asset retirement obligation (“ARO”) and offsetting asset retirement cost (“ARC”) of approximately $
In the fourth quarter of 2021, due to the operating success at Rodeo and the potential of a restart of operations at the Velardeña mine based on recent technical studies at the time and an updated preliminary economic assessment (“PEA”) that would further delay the start of any reclamation activity, the Company retained the services of an environmental consultant to review the closure plan to determine the appropriateness of the scope and cost estimates used in the calculation of the ARO. The consultant confirmed the adequacy of the scope of the closure plan and provided certain adjustments to cost estimates. In addition, the timing for the incurrence of reclamation activity was extended approximately
In late 2022, the Company determined that the restart of the Velardeña Properties would be deferred one year, which would in turn defer the beginning of the reclamation activity assumption by
The Company will continue to accrue additional estimated ARO amounts based on the closure plan and as activities requiring future reclamation and remediation occur.
The following table presents the asset retirement and reclamation liabilities as of September 30, 2023 and December 31, 2022:
September 30, | December 31, | |||||
| 2023 |
| 2022 | |||
(in thousands) | ||||||
Current asset retirement and reclamation liabilities | $ | | $ | — | ||
Non-current asset retirement and reclamation liabilities |
| |
| | ||
$ | | $ | |
Current asset retirement and reclamation liabilities is included in “Other Current Liabilities” (see Note 13).
The following table presents the changes in the Company’s asset retirement and reclamation liabilities for the nine months ended September 30, 2023 and 2022:
Nine Months Ended | ||||||
September 30, | ||||||
| 2023 |
| 2022 | |||
(in thousands) | ||||||
Balance at January 1, | $ | | $ | | ||
Changes in estimates, and other |
| ( |
| | ||
Accretion expense |
| |
| | ||
Balance at September 30, | $ | | $ | |
The change in estimate of the ARO recorded is due to a combination of changes in assumptions related to the timing of future expenditures, the change in inflation assumptions, and the change in the discount rate.
14
13. | Other Liabilities |
Other Current Liabilities
The following table sets forth the Company’s other current liabilities:
September 30, | December 31, | |||||
| 2023 | 2022 | ||||
(in thousands) | ||||||
Premium financing | $ | | $ | | ||
Office lease liability |
| |
| | ||
Mining equipment lease liability | — | | ||||
Litigation contingency accrual | | — | ||||
Current asset retirement and reclamation liabilities | | — | ||||
$ | | $ | |
The premium financing at September 30, 2023 and December 31, 2022, consists of the remaining balance, plus accrued interest, related to premiums payable for the Company’s directors and officers insurance and general liability insurance. In November 2022, the Company financed approximately $
The office lease liability is related to lease liabilities for office space at the Company’s principal headquarters in Golden, Colorado and in Mexico and Argentina (see Note 10).
The mining equipment lease liability is related to equipment used by the contract miner at our Rodeo Property (see Note 10).
The litigation contingency accrual is related to the Unifin lawsuit (see Note 20 and Note 23).
The current asset retirement and reclamation liabilities is related to the ARO (see Note 12).
Other Long-Term Liabilities
Other long-term liabilities of approximately $
Other long-term liabilities of approximately $
14. | Fair Value Measurements |
Financial assets and liabilities and nonfinancial assets and liabilities are measured at fair value on a recurring basis under a framework of a fair value hierarchy which prioritizes the inputs into valuation techniques used to measure fair value into three broad levels. This hierarchy gives the highest priority to quoted prices (unadjusted) in active markets and the lowest priority to unobservable inputs. Further, financial assets and liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy per ASC Topic 820 are as follows:
Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.
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Level 3: Unobservable inputs due to the fact that there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability.
The following table summarizes the Company’s financial assets and liabilities measured on a recurring basis at fair value by respective level of the fair value hierarchy:
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| |||||
(in thousands) |
| ||||||||||||
At September 30, 2023 |
| ||||||||||||
Assets: | |||||||||||||
Cash and cash equivalents | $ | | $ | — | $ | — | $ | | |||||
Short-term investments |
| |
| — |
| — |
| | |||||
$ | | $ | — | $ | — | $ | | ||||||
At December 31, 2022 | |||||||||||||
Assets: | |||||||||||||
Cash and cash equivalents | $ | | $ | — | $ | — | $ | | |||||
Short-term investments |
| |
| — |
| — |
| | |||||
$ | | $ | — | $ | — | $ | |
The Company’s cash equivalents, comprised principally of U.S. treasury securities, are classified within Level 1 of the fair value hierarchy.
The Company’s short-term investments consist of
At September 30, 2023 and December 31, 2022, the Company did not have any financial assets or liabilities classified within Level 2 or Level 3 of the fair value hierarchy.
Non-recurring Fair Value Measurements
The Company recorded a change in estimate to its ARO as of September 30, 2023, of approximately $
15. | Income Taxes |
The Company accounts for income taxes in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”), on a tax jurisdictional basis. In accordance with ASC 740, the interim provision for taxes was calculated by using the estimated annual effective tax rate applied to the year-to-date income or losses on a jurisdictional basis. Although the Company has generated ordinary losses on a year-to-date basis, the Company has projected taxable income by year end in certain tax jurisdictions, for which an annual effective tax rate has been calculated. For the nine months ended September 30, 2023, the Company recognized less than $
In accordance with ASC 740, the Company presents deferred tax assets net of its deferred tax liabilities on a tax jurisdictional basis on its Condensed Consolidated Balance Sheets. As of September 30, 2023 and December 31, 2022, the Company had
The Company, a Delaware corporation, and its subsidiaries file tax returns in the United States and in various foreign jurisdictions. The tax rules and regulations in these countries are highly complex and subject to interpretation. The
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Company’s income tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is less than a more-likely-than-not probability of the position being upheld upon review by the relevant taxing authority. Such positions are deemed to be “unrecognized tax benefits” which require additional disclosure and recognition of a liability within the financial statements. The Company had
16. | Equity |
On May 26, 2023, the Company’s Board of Directors approved a reverse stock split of the common stock, par value $
June 2023 Offering and Private Placement Transaction
On June 26, 2023, the Company entered into a Securities Purchase Agreement with certain institutional investors providing for the issuance and sale by the Company in a registered direct offering (the “June 2023 Offering”) of an aggregate of
The June 2023 Pre-Funded Warrants were sold, in lieu of shares of the Company’s common stock, to such institutional investors whose purchase of shares of Company’s common stock in the June 2023 Offering would otherwise result in such institutional investors, together with their respective affiliates and certain related parties, beneficially owning more than
In a concurrent private placement (the “June 2023 Private Placement” and, together with the June 2023 Offering, the “June 2023 Transactions”), the Company agreed to issue warrants to purchase up to
The net proceeds of the June 2023 Offering were recorded in equity and appear as a separate line item in the Condensed Consolidated Statements of Changes in Equity. Total costs for the June 2023 Offering were approximately $
At-the-Market Offering Agreement
In December 2016, the Company entered into an at-the-market offering agreement (as amended from time to time, the “ATM Agreement”) with H. C. Wainwright & Co., LLC (“Wainwright”), under which the Company may, from time to time, issue and sell shares of the Company’s common stock through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $
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Company entered into a third amendment of the ATM Agreement further extending the agreement so that it will remain in full force and effect until such time as the ATM Agreement is terminated in accordance with certain other terms therein or upon mutual agreement by the parties, and to reflect a new Registration Statement on Form S-3 (No. 333-249218). On March 29, 2023, the Company filed a Prospectus Supplement increasing the total amount available to be sold under the ATM to $
Under the ATM, the common stock is distributed at the market prices prevailing at the time of sale. As a result, prices of the common stock sold under the ATM Program may vary between purchasers and during the period of distribution. Further, on March 29, 2023, the Company entered into a fourth amendment of the ATM Agreement which provides that Wainwright will be entitled to compensation for its services at a commission rate of up to
During the nine months ended September 30, 2023, the Company sold an aggregate of
During the nine months ended September 30, 2022, the Company did not sell shares of common stock under the ATM Program. At September 30, 2022, there was a remaining balance of $
As of September 30, 2023, there was approximately $
Equity Incentive Plans
Under the Company’s Amended and Restated 2009 Equity Incentive Plan (the “2009 Plan”) awards of the Company’s common stock may be made to officers, directors, employees, consultants and agents of the Company and its subsidiaries.
On May 26, 2023, the stockholders of the Company voted to approve the Company’s 2023 Equity Incentive Plan (the “2023 Plan”) to replace the 2009 Plan. Under the 2023 Plan, awards of the Company’s common stock may be made to officers, directors, employees, consultants and agents of the Company and its subsidiaries. The 2023 Plan provides for, among other things, (i) a reserve of
Following the adoption of the 2023 Plan, no further awards may be made under the 2009 Plan.
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Restricted Stock Grants
The following table summarizes the status and activity of the Company’s restricted stock grants at September 30, 2023, and the changes during the nine months then ended:
|
| Weighted |
| |||
Average |
| |||||
Grant Date |
| |||||
Number of | Fair Value |
| ||||
Restricted Stock Grants | Shares | Per Share |
| |||
Outstanding at beginning of period | | $ | | |||
Granted during the period |
|
| ||||
Restrictions lifted during the period |
| ( |
| | ||
Forfeited during the period |
|
| ||||
Outstanding at end of period | | $ | |
As of September 30, 2023,
For the nine months ended September 30, 2023 and 2022, the Company recognized approximately $