Falling gold prices and rising production costs proved to be a bad mix for Gold Resource Corp. as together the two factors combined to nearly wipe out any profits last year for the Colorado Springs-based gold mine owner.
The company's 2013 profits fell to just $85,000, or 0 cents a share, from $33.7 million, or 60 cents a share, in 2012 as sales dropped 4.6 percent during the same period to $125.8 million.
At the same time, Gold Resource's spending on mining, administrative, exploration, construction and other costs to operate its Mexican mines jumped 37.7 percent from a year earlier to $116.8 million.
Taxes wiped out nearly all of the company's remaining income, leaving it barely in the black.
"As gold and silver prices dropped 27 percent and 37 percent, respectively, 2013 was a challenging year" for both the company and industry, Gold Resource CEO Jason Reid said in a press release Wednesday.
Reid told stockholders and others on a conference call Wednesday that the company spent $7.5 million last year expanding its largest mine, and added staff to ensure completion of the project, which increased production costs to $1,263, just $125 below the average price its gold fetched.
Gold Resource's financial performance fell short of both sales and profit forecasts from the only stock analyst who follows the company, Josh Elving of Dougherty & Co., who expected profits of 3 cents a share on sales of $127.9 million. But the company finished 2013 meeting the low end of its production estimate. As a result, Gold Resource shares rose 23 cents, or 4.8 percent, to $5 in trading Wednesday.
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