Well, interesting if you’re a boring numbers nerd like your humble scribe, at least.
All sorts of things stand out of the 2q12 financial results (linked right here for your own viewing pleasure), starting with the net EPS of 7c/share. In fact that’s not the comprehensive income number, because Gold Resource Corp (GORO) also took a $1.64m forex charge which brings the earnings down to just 3.6c/share. Now that might seem like splitting hairs to you, but it’s not for me because GORO has no problem about adding nearly $1.3m to its non-adjusted net (via “other income”) for forex adjustments, but prefers not to subtract the counter-transaction for its headline profits number. It’s the type of accountancy tomfoolery we see all too often from this type of sophist-run enterprise, so next time forget the number GORO prefer to offer you and home in on the comprehansive net income, the bottom line of the bottom line, because if you work in Mexico, you pay Mexico related charges, period.
Anyway, the quarter was clearly going to be poor after the production numbers and guidance that sent the stock tumbling back in July, but the way in which that net was arrived at, for example…
…the big fat $5m jump in operating costs
…the $10m drop in sales revenues, from around $40m in 1q12 to around $30m in 2q12
…the way in which the financial result was “luckily” saved by selling more gold than it produced (777 oz) and more silver than it produced (116,373 oz), with those two taps into the previous quarter inventory (presumably) accounting for $4.41m in gross sales (assuming average fetched prices for Au and Ag in the period, as per the 10-Q.
…and how many other companies this size charge $3.4m in one quarter for G&A, anyway? They bathing in Dom Perignon at HQ or something?
…it all (well, all and other vignettes that are in the figures) adds up to a company trying its hard to paper over some pretty big cracks. As for the sales breakdown, we already know that calling GORO a “gold” mining company is a misnomer, because only a fraction of its total sales come from said metal. Here’s the sales breakdown by metal from 1q12 (a chart that was featured in The IKN Weekly a couple of issues ago):
And here’s the same breakdown type for tonight’s figures, from 2q12:
You can see for yourself that the ‘fortunate’ use of inventory sales kept the gold revenues up to around the same $10m or so in the comparative of the quarters, but the big hit was taken by silver sales that dropped $10m, because even though GORO added 116 oz Ag to sales from inventory, it couldn’t get close to matching the 828k oz Ag sold in 1q12.
By the way, it looks like charges (tc/rc etc) jumped from around 11% in 1q12 to around 12.5% in 2q12, but that’s another story. The story of this quarter is GORO the crack-paperer, so if it wants to keep paying those 6c/share monthly dividends (that’s $9.5m per quarter, which from now on will be U.S. taxable according to the 10-Q, oopsy) the 3q12 doesn’t just have to be a bit better, it has to be a LOT better. Which brings us on to guidance and outlook for the rest of the year as contained in this 10-Q…there isn’t any.
Hey, maybe all this is why David C. Reid decided to sell 183,960 of his shares on August 6th (mere days ago)? I hope we get to find out all that at the Conference Call, where people can actually grill the GORO meisters instead of being filtered through its IR system….what?…No ConfCall scheduled? Cue owly!
Avoid this dog like the plague, folks. When that divi is pulled, the 2nd shoe drops.
UPDATE: Oh wait, apparently there is a ConfCall after all, 11am Friday EDT