We start here, with a basic earnings overview chart for GORO that shows the quarterly evolution for revenues, costs and the resulting gross profit for the last two years:
See that big drop in revenues in 3q14? Back when it announced its 3q14 numbers, here's how GORO explained the revenues shortfall in its news release (IKN highlighting in red):
“The Company delivered weaker than expected quarterly operating results with production levels approximately 24% lower in the quarter compared to the quarterly average of the first half of
2014,”stated Gold Resource Corporation’s CEO and President, Mr. Jason Reid. “The Company has implemented new mine management in 2 response to these unsatisfactory results and believes that fourth quarter production can rebound, which puts the lower range of the Company’s 2014 Outlook within reach. We stockpiled much of our high-grade gold and silver concentrates produced during the quarter in preparation for pouring Doré bars in our new Doré facility, which we began commissioning at the end of the quarter and which increased our unsold inventories. We recorded a $(0.03) per share loss which was contributed by unsold concentrate inventory as a result of stockpiling the high-grade concentrates for the Doré facility process. These inventoried ounces are planned to be processed and sold during the fourth quarter as Doré bars
If we then look to the production and sales of silver, the pattern also matches.
- Inventories went up in 3q14, then down again in 4q14.
- Silver sales dropped in 3q14, then made up for the quarter with extra sales in 4q14.
- But gold sales didn't. For reasons known only GORO insiders, the amount of gold sold is much less than it should have been, even accounting for the poor Au production in the six month period.