Big picture - Why invest in Gold Resource Corporation
Gold Resource Corporation Snapshot
Gold Resource Corporation (NYSE MKT: GORO) is a gold and silver producer targeting projects that feature low operating costs and high returns on capital. The Company's primary focus is on cash flow, with a priority to return meaningful dividends back to the owners of the Company, its shareholders. The Company's has two mining units located in mining friendly jurisdictions of North America. The "Oaxaca Mining Unit" consists of 100% interest in 6 potential high-grade gold and silver properties in the southern state of Oaxaca, Mexico. The "Nevada Mining Unit" consists of 100% interest in two, with an option to acquire 100% interest in a third, potential high-grade gold properties in the Walker Lane Mineral Belt in western Nevada, U.S.A.
GORO successfully declared commercial production from its Oaxaca Mining Unit July 1, 2010 from a shallow, high-grade open pit at its Aguila project, which enabled the Company to reach production and cash flow in the shortest amount of time with one of the tightest capital structures for a producer. In March of 2011, GORO announced production from its polymetallic Arista mine. The Arista deposit is comprised of the Arista and Switchback vein systems, both contain high-grade gold and silver as well as the base metals of copper, lead and zinc. The Company targets the extensions of this deposit and is exploring for additional deposits at its Oaxaca Mining Unit to add to its production profile.
The Company's Nevada Mining Unit consists of three properties with the Isabella Pearl Project being the closest to reaching gold production. The project is in advanced stage engineering and permitting and the Company is working towards production at the earliest possible point in time.
The Company targets production of its gold and silver mineralization while using industry standard base metal by-product credits of copper, lead and zinc to position GORO among the low-cost producers.
The Company has distributed consecutive monthly dividends since commercial production totaling over $108 million as of August 2016. The Company's dividend target is to return as much back to shareholders as soon as possible, while balancing the needs of the operations and paying taxes. The Company has remained profitable for five consecutive years, four of which were during bear markets in the precious metal space.
Mexico and Nevada U.S.A. are among the leading venues for mineral potential each with an extensive history of mining. Gold Resource Corporation is positioning to add to its current production profile from its underground Arista Mine with its Nevada Mining Unit's potential for open pit heap leach operations.
Gold Resource Corporation has consolidated six properties in the state of Oaxaca, Mexico, and has selected these properties based on their potential to meet the Company's objectives of low operating costs and potential for high returns-on-capital. GRC currently controls over 684 square kilometers, including 55 kilometers of a geologically important structural fault corridor running North 70 West. GRC has 100% interest in all of its properties.
The Company's flagship project is the El Aguila Project, where the Arista underground polymetallic deposit is currently in production. The Arista deposit produces gold and silver, as well as the base metals copper, lead and zinc. The Company's additional five exploration properties are within trucking distance of the El Aguila Project's processing facilities, potentially reducing the capital required to put any future deposit discoveries into production.
Gold Resource Corporation's Arista underground mine is located at the Company's El Aguila Project in the southern state of Oaxaca, Mexico. The El Aguila Project mineralization occurs as structurally-controlled epithermal deposits in veins and stockwork zones consisting of concentrations of sulfides containing gold, silver, copper, lead and zinc, associated with gangue minerals such as quartz, calcite, and other minor elements.
Development of the Arista mine began in 2009, and initial production from the deposit began in March 2011. Ore is trucked approximately 2 kilometers to the Aguila mill where it is processed into three differential concentrates: a copper/gold; a lead/silver; and a zinc.
Since the initial discovery of the Arista and Baja veins in 2007, multiple additional en echelon veins have been discovered, many which have been mined or will be mined in the future. The Arista deposit is currently "open" in both strike and at depth. The deposit currently extends over 1 kilometer along strike, and over 600 meters at depth. The Company continues to drill the extensions of the Arista deposit to extend the mine life.
El Aguila Mill
Gold Resource Corporation currently processes all of the Arista underground mine ore through the flotation circuit at the Company's El Aguila mill. The plant was built near the mine site and consists of two separate production circuits: a differential flotation circuit (sulphide ores) and an agitated leach circuit (oxide ores). The current nominal capacity of the flotation circuit is 1,500 tonnes per day, while the agitated leach circuit has a nominal capacity of 300 tonnes per day.
The flotation circuit produces three types of high-grade concentrates: a copper concentrate with gold-silver; a lead concentrate with gold-silver; and a zinc concentrate with gold-silver. All concentrates are marketed to a broker in México.
The Aguila plant's agitated leach circuit is currently idle as the Company evaluates long-term sources of oxide ore.
Oaxaca Mining Unit Exploration
Gold Resource Corporation has consolidated and controls 100% of a large, highly prospective property position in the southern state of Oaxaca, Mexico. The Company's six properties now encompass over 68,000 contiguous hectares (684 square kilometers), including 55 kilometers of the regional "San Jose structural fault corridor" which trends North 70 West.
The Company believes the mineralization along the San Jose structural fault corridor is related to the Cocos tectonic plate subducting the North American plate. As the Cocos plate is subducted, it breaks and is partly re-melted into the surrounding mantle. Any faults overlying the North American plate are exploited by the molten magma, which under immense pressure is forced to the surface forming volcanos. It is these volcanic events that have deposited high-grade mineralization along this fault corridor.
The Company discovered the Arista deposit at its El Aguila Project in 2007, a high-grade epithermal system containing gold and silver, as well as the base metals copper, lead and zinc. This polymetallic deposit is located at the far southeastern portion of the Company's land position. The Arista deposit entered production March 2011.
Gold Resource Corporation has also discovered a high-grade gold vein system at its El Rey property, 55 Km's northwest from El Aguila along the San Jose structural fault corridor. Drilling at El Rey has returned results as high as 132.5 grams per tonne gold over 1.0 meter. The Company also announced in 2013 initial drill results from its centrally located Las Margaritas concession, which included 2.85 meters of 27.90 g/t gold and 2,600 g/t silver. Surface sampling and airborne geophysics have generated multiple targets between El Aguila and El Rey warranting additional exploration along this 55 kilometer mineralized structural fault corridor.
Securities and Exchange Commission (SEC) Proven and Probable (P&P) Industry Guide 7 Reserve Estimates
December 31, 2015
ISABELLA PEARL DEVELOPMENT PROJECT
The Isabella Pearl Project is located in south central Nevada's Walker Lane Mineral Belt in Mineral County, Nevada. The land position totals 341 unpatented mining claims covering approximately 6,800 acres, of which 58 claims encompass the Isabella Pearl deposit and planned mine area.
The Isabella Pearl project contains third party Proven and Probable reserves estimated at 2,733,500 tonnes grading 2.18 grams per tonne, which equates to 191,400 gold ounces (report completed by Mine Development Associates, Reno, Nevada; see table below). Future production development anticipates two adjacent open pits with the Isabella pit averaging approximately 1 gram per tonne gold with mineral outcropping at the surface, and the Pearl pit averaging approximately 3.7 grams per tonne gold with a higher grade core averaging nearly 5 grams per tonne gold. The project estimates an average 5:1 strip ratio with metallurgical tests estimating gold recoveries for crushed oxide rock between 80 and 85 percent using conventional heap leaching. Small amounts of silver are expected in recoveries, which would be treated as by-product credits against gold production costs.
Significant mine permitting has already been completed at Isabella Pearl, which includes an Environmental Assessment draft, a Pre-Feasibility study, a Plan of Operations and a Water Pollution Control Permit. Water rights have been secured with points of diversion located adjacent to historic producing water wells.
The Company's is currently evaluating existing mine plans and engineering, with a goal to schedule the Isabella Pearl mine to potentially utilize early cash flow generated from the project to help fund ongoing development while keeping initial project CAPEX expenditures to a minimum. The Company is also attempting to modify and refine the Isabella Pearl project to reach a target of paying back the initial capital needed to establish production within the first year from mine cash flow.
Mina Gold is located in the Walker Lane Mineral Belt, Nevada, U.S.A. The property has a third party mineralized material estimate of 1,606,000 tonnes grading 1.88 g/t gold in the property’s "Monster Zone". The Monster Zone consists of parallel structures approximately 45 meters apart which remain open on strike and depth. The Monster Zone mineralization is covered by patented claims, which are surrounded by multiple unpatented claims included in the transaction, giving additional exploration upside potential along this mineralized trend.
Gold Mesa is located in the Walker Lane Mineral Belt, Nevada, U.S.A. Gold Resource Corporation optioned the property in November 2015. Gold Mesa covers an area of approximately 4,580 acres consisting of 229 unpatented claims and 3 patented claims. A small portion of the property's claims were mined historically on a small scale as an underground mine in the early 1900's and as a small open pit mine in the late 1980's. The property has potential for a high grade gold open pit, or multiple gold open pits with mineralization at shallow depths below surface. Existing infrastructure includes nearby electricity, road access and potential water from a historic well located on the property. Historical metallurgical test work by N.A. Degerstrom Inc. in 1986 showed up to 88% recovery of contained gold and up to 35% recovery of contained silver obtained by a 35 mesh grind and agglomeration.
Drill intercept highlights include;
15.24 meters of 6.27 g/t gold
33.54 meters of 1.89 g/t gold
Jason Reid: CEO, President & Director
Jason Reid was appointed Company CEO October 1, 2013 and also serves as Company President and as a director. Jason Reid was appointed President of the Company in July 2010 and also served as Vice President of Corporate Development from January 2008 to July 2010. He was named to the Board of Directors in 2010. Jason has been with the Company since it was a private Company and helped take it public in Sept of 2006 with its self-underwritten "IPO". Jason was part of a management team that took Gold Resource Corporation from an exploration stage company, to a development stage company, and finally to the gold and silver dividend paying producer that Gold Resource Corporation is today. Prior to joining the Company Jason was the founder and president of two successful businesses he ran for 13 years. Jason holds a Bachelor of Science degree (1997) in Anthropology/Archeology from Fort Lewis College, Durango, Colorado.
Rick Irvine: Chief Operating Officer
Rick is a Mining Engineer with 22 years of industry experience spanning Canada, Mexico, Central and South America. Rick has contributed to the start-up of three new mining operations in Bolivia, Argentina and Mexico. He holds a BSc in Geology from the University of New Brunswick and a BSc. in Mining Engineering from Queen's University, Kingston, Ontario, Canada.
John Labate: Chief Financial Officer
Mr. Labate is a seasoned executive with over thirty years of financial management and accounting experience. From August 2008 to February 2012, he served as Senior Vice President and Chief Financial Officer of Golden Star Resources Ltd., a gold mining company with securities listed on the NYSE MKT and TSX. Prior to that, from March 2004 to August 2008 he was Vice President and Chief Financial Officer for Constellation Copper Corporation, a copper mining company with securities formerly traded on the TSX. Prior to March 2004, Mr. Labate held senior financial management positions in mining and technology companies, including chief financial officer positions at Crown Resources Corporation and Applied Optical Technologies. Mr. Labate received a bachelor's degree in Accounting from San Diego State University.
Barry Devlin: Vice President of Exploration
Mr. Devlin has 30+ years of professional experience in managerial phases of exploration and mine geology. He has participated in the discovery, acquisition and development of numerous mineral deposits including extensive experience in epithermal gold-silver (high and low sulfidation) systems and porphyry copper gold skarns. Prior to joining the Company, Mr. Devlin was Endeavour Silver Corporation's Vice President Exploration. He holds a BS degree with honors in Geology, 1981, and a Masters in Geology, 1987, from the University of British Columbia, Vancouver, Canada.
Greg Patterson: Vice President Corporate Development
Greg Patterson is VP Corporate Development, a position he has held since October 2013. Since joining the Company in 2010, Greg has managed investor relations and participated in overall corporate strategy. Prior to joining the Company, Greg spent 15 years in marketing and territory sales management for two manufacturers of precision laboratory instruments. Greg holds a Bachelor's degree in Environmental Biology (1991) from the University of Colorado.
Jessica Browne: Vice President Legal Affairs, General Counsel and Corporate Secretary
Jessica Browne is Vice President Legal Affairs, General Counsel and Corporate Secretary. Since joining the company in June 2011, she has been responsible for overseeing its legal and regulatory matters. Prior to working as in-house legal counsel, Jessica spent nearly ten years in private law practice in the Denver area, focusing on mergers and acquisitions, general corporate and securities law. Jessica received a Masters of Science Degree in Taxation Law from the University of Denver in 2005, a Juris Doctor from the University of Colorado School of Law in 2001 and a Bachelor of Science in Business Administration summa cum laude in 1997 from the University of Texas Dallas.
Bill Conrad: Chairman of the Board
Bill M. Conrad currently serves as Chairman of Gold Resource Corporation. Mr. Conrad has held executive management positions with several public companies during the past 15 years, including Wyoming Oil & Minerals, Inc., New Frontier Energy, Inc., Gold Capital Corporation, Wall Street Racing Stables, Inc., Consolidated Capital of NA, Inc. and Synergy Resources, Inc. Mr. Conrad's duties with these companies primarily focused in the areas of financial management and corporate development.
Mr. Conrad is currently a Director of PetroShare Corp., a Colorado based development stage oil and gas exploration company.
Dr. Gary Huber: Director
Dr. Huber is an experienced mining executive bringing over 35 years of diversified natural resource experience to the Board. He holds a Ph. D from the Colorado School of Mines. His past industry experience includes: president and CEO of Neutron Energy Inc., a private uranium development company, founder, CFO, and director of Canyon Resources Corp, a public exploration and mining company which operated 3 precious metal mines in the Western United States, president and director of CR Minerals Corporation, an industrial minerals mining and processing subsidiary of Canyon Resources, director of Capital Gold Corp., a public precious metal mining company operating in Mexico (which was merged into Gammon Gold) and manager of IRC Capital Group, an investment arm of International Royalty Corporation. He was also formerly a director of the Denver Gold Group, chairman of the Society of Economic Geologists' Investment and Audit Committees and chairman of the Audit Committee of the Society of Mining, Metallurgy and Exploration. He is a Utah registered Professional Geologist. Dr. Huber is currently a Director of UR-Energy, a junior uranium mining company.
Alex Morrison: Director
Mr. Morrison is a Chartered Professional Accountant with 30 years of mining industry experience. Mr. Morrison has held senior executive positions at a number of mining companies, including Vice President and Chief Financial Officer of Franco Nevada Corporation (2007 to 2010). Mr. Morrison held increasingly senior positions at Newmont Mining Corporation, including Vice President, Operations Services and Vice-President, Information Technology (2002 to 2007). Prior to that, Mr. Morrison was Vice President and Chief Financial Officer of NovaGold Resources Inc., Vice President and Controller of Homestake Mining Company and held senior financial positions at Phelps Dodge Corporation and Stillwater Mining Company. Mr. Morrison began his career with PricewaterhouseCoopers LLP after obtaining his Bachelor of Arts in Business Administration from Trinity Western University. Mr. Morrison currently sits on the Board of Directors of Detour Gold Corporation, Taseko Mines Ltd. and Pershing Gold Corporation.
Gold Resource Corporation
Greg Patterson / Corporate Development
2886 Carriage Manor Point
Colorado Springs, CO 80906
Jessica Browne / Corporate Counsel
Toll Free (800) 962-4284
Toll +1 (781) 575-3120