November 10, 2014 - Golden Queen Mining Co. Ltd. (TSX:GQM; OTCQX:GQMNF)
(the “Company” or “Golden Queen”) today released its third quarter
financial results and construction updates for its 50%-owned Soledad
Mountain gold-silver project (the “Project”) located just south of the
town of Mojave, California. The financial results for the three and
nine month periods ended September 30, 2014 are presented in the
condensed consolidated interim financial statements and quarterly report
filed on Form 10-Q with the SEC, which will be available on the
Company’s website at
www.goldenqueen.com, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov. All amounts are in U.S. dollars and are shown on a 100% basis unless otherwise stated.
The Company noted the following progress in the third quarter of 2014:
- The Company’s shareholders voted to accept the joint venture
transaction (the “JV Transaction”) with Gauss LLC (“Gauss”) at the
special meeting held on September 9th, 2014. The JV Transaction closed
- The Company’s subsidiary repaid its July 2014 $10 million loan
advanced by Leucadia National Corporation (“Leucadia”) and Auvergne LLC
- Construction continued on site and proceeded smoothly with no incidents to report.
- The workshop - warehouse and a number of infrastructure and site grading projects were completed.
- Golden Queen’s consolidated cash position was $97.5 million as at September 30, 2014
Joint Venture Transaction
At the special meeting of shareholders held on September 9, 2014, the
Company’s shareholders voted overwhelmingly in support of the resolution
approving the JV Transaction with Gauss. Pursuant to the JV
Transaction, Golden Queen converted its wholly-owned subsidiary, Golden
Queen Mining Co., Inc. (“GQ Inc.”), that is developing the Project, into
a California limited liability company (Golden Queen Mining Company,
LLC or “GQ California”). On closing of the JV Transaction, Gauss
acquired 50% of GQ California in exchange for its $110,000,000
investment. Golden Queen Mining Holdings, Inc. (“GQ Holdco”), a newly
incorporated U.S. subsidiary of Golden Queen, holds the other 50% of GQ
When the JV Transaction closed, GQ California used a portion of the
investment to repay principal and accrued interest on the $10,000,000
loan advanced by Leucadia and Auvergne in July 2014. GQ California also
made a $5,000,000 early distribution to each of Gauss and GQ Holdco,
for a total early distribution of $10,000,000. GQ California also paid
Leucadia and Auvergne a transaction fee of $2,275,000.
GQ California will apply the remainder of the investment to the continued development of the Project.
For the third quarter ended September 30, 2014, the Company reported a net loss attributable to the Company of $1.8 million (or $0.02 basic and diluted loss per share), compared to a net loss of $0.6 million (or $0.01 basic and diluted loss per share) for the corresponding period in 2013. This difference is due in part to higher general administrative expenses in the third quarter of 2014 and one-time fees related to the JV Transaction, partially off-set by a decrease of the derivative liability in the amount of $2.9 million.
The Company incurred general and administrative expenses of $1.1 million during the three months ended September 30, 2014, compared to $0.8 million for the same period in 2013. This increase is due to the Company’s extensive work required to conclude the JV Transaction and an increase in corporate activities both at the Company’s head office and on site as the Company continues to advance the Project.
The Company capitalized development costs of $6.7 million in the third quarter of 2014, compared to development costs of $3.3 million for the corresponding period in 2013. Costs included $2.3 million towards the high pressure grinding roll, $0.7 million in engineering costs, $0.5 million towards power supply and distribution and $0.4 million spent on the water supply infrastructure. The capitalized development costs include $0.8 million in capitalized interest costs.
The results for the third quarter of 2014 are summarized in the table below, in thousands, except per share data.
|Financial position as at:
||September 30, 2014
||December 31, 2013
|On a consolidated basis *
|Mineral property interests
|Non-controlling interest - Temporary portion
|Non-controlling interest - Permanent portion
|Results for the quarter ended on:
||September 30, 2014
||September 30, 2013
|Attributable to Golden Queen
|Net income (loss) and comprehensive income (loss)
|Basic income (loss) per share
|Diluted income (loss) per share
These consolidated results include the accounts of Golden Queen, GQ Holdco and GQ California. GQ California meets the definition of a Variable Interest Entity. Golden Queen has determined it is the member of the related party group that is most closely associated with GQ California and, as a result, is the primary beneficiary who consolidates GQ California. Golden Queen’s economic interest in GQ California is 50%.
Shareholders are reminded that the Company has no revenues from mining operations as the Project is not yet in production.
Construction continued on site and proceeded smoothly with no incidents to report during the third quarter. Construction proceeded at a much-reduced rate as all major projects that were committed earlier in 2014 had been completed.
Highlights of the third quarter include placing an order for a high-pressure grinding roll which is a key piece of equipment for the Project with delivery scheduled for the third quarter of 2015. As well, the workshop-warehouse and a number of infrastructure and site grading projects were completed during the quarter.
Detailed designs and cost estimates were completed for the assay laboratory, and a contract for the construction of the assay laboratory building was signed in the third quarter.
Detailed engineering for the critical turn-key projects was essentially completed during the third quarter. Plans and specifications were submitted the Kern County Building Department for approval.
About Golden Queen Mining Co. Ltd:
The Company is developing a gold-silver, open pit, heap leach operation on its fully-permitted Soledad Mountain property, located just outside the town of Mojave in Kern County in southern California. The Project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore.
Technical information in this news release was approved by H. Lutz Klingmann, President & CEO, and a Qualified Person as defined under NI 43-101.
For further information regarding this news release please contact:
Lutz Klingmann, President & CEO
Telephone: (604) 921-7570
Caution With Respect To Forward-looking Statements: The
information in this news release includes certain “forward-looking
statements”. All statements in this news release, other than statements
of historical fact, including, without limitation, the ability of the
Company to maintain its current interest in the Project by funding
additional capital requirements; plans for and intentions with respect
to capital requirements, construction and other development activities
on the Project; expectations related to management and operation of GQ
California and future mining operations on the Project, are
forward-looking statements. There can be no assurance that such
statements will prove to be accurate, and actual results and future
events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to differ
materially from statements in this news release regarding our
intentions include, without limitation, risks and uncertainties
regarding: failure to fund the Company’s required capital contribution
to GQ California in accordance with the joint venture agreement and
related dilution in GQ California; the development and operation of the
Project, including additional capital requirements for the Project,
accidents, equipment breakdowns and non-compliance with environmental
and permit requirements. Other risks and uncertainties include risks
related to fluctuations in gold and silver prices; changes in planned
work resulting from logistical, technical or other factors; that results
of operations on the Project will not meet projected expectations due
to any combination of technical, operational or market factors;
uncertainties involved in the interpretation of technical data and the
estimation of gold and silver resources and reserves; and other risks
and uncertainties disclosed in the section entitled “Risk Factors”
contained in our Annual Report on Form 10-K for the year ended December
31, 2013 and our Quarterly Report on form 10-Q for the period ended
September 30, 2014.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and, accordingly, investors should not
put undue reliance on forward-looking statements. Any forward-looking
statement made by us in this news release is based only on information
currently available to us and speaks only as of the date on which it is
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