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Gold Resource Corp looking to shine this year as Isabella Pearl poised to add near term production

Snapshot

Gold Resource Corp is a metals miner with assets in Mexico and Nevada

Molten gold

Quick facts: Gold Resource Corporation

Price: 3.39 USD

NYSEMKT:GORO
Market: NYSEMKT
Market Cap: $222.33 m
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  • Targeting low cost, high margin gold and silver production
  • Eight consecutive years of profitability
  • Targeting over 100% increase to gold production with new project (Isabella Pearl)
  • Two mining units focused on the Americas
  • Shareholders have received monthly dividends since commercial production started in mid-2010

What Gold Resource Corp does:

Goro (NYSEAMERICAN:GORO) is a resource group, which runs two mining units in mining friendly jurisdictions - Mexico and Nevada.

Mexico

The Oaxaca unit operates the producing Arista underground mine at the El Aguila project, where initial output started in 2011. It is also advancing the Mirador underground mine at theAlta Gracia project, which it says has the potential to increase future annual silver production by around 500,000 silver ounces and 1,000 gold ounces.

The El Aguila mill is the site for processing from both mines. In all, the Mexican unit has six properties, including El Aguila and Alta Gracia, which span 684 square kilometers. The four other exploration properties are Las Margaritas, El Fuego, El Chamizo and El Rey.

Nevada

The  Nevada unit controls over 10,100 hectares (25,000 acres) of development and exploration lands in the US state's south central Walker Lane mineral belt.

The focus of attention is currently the Isabella Pearl project, which is currently in construction, with first gold expected in June this year, and cash flow from this is expected to finance the additional property development.

The company's other three properties in the  state are the County Line, Mina Gold and East Camp Douglas assets.  All have potential to be high-grade open pit heap leach operations, the firm says.

GORO is targeting the first gold pour at Isabella Pearl by June 19 this year. The project covers 494 mining claims comprising 3,642 hectares and the firm is targeting 153,047 gold ounces from  an open pit heap leach operation. Envisaged is two adjacent open pits with the Isabella pit averaging around 1 gram per tonne (g/t) gold and the Pearl pit averaging around 3.7 grams per tonne gold with a higher-grade core averaging nearly 5 grams per tonne gold. The mine life is 4.5 years.

Small amounts of silver are also anticipated, which would be treated as by-product credits against gold production costs.

Capital expenditure to build the project is low - at US$30 million - and the estimated cash cost per ounce has been put at around US$650.

Last month, the potential of Isabella Pearl was further boosted as GORO revealed plans to enlarge the deposit by testing the adjacent Civit Cat North West and Scarlet targets.

It is not uncommon for numerous deposits to lie on the same trend, so Gold Resource  reckons these two targets could become additional open pit deposits.

“We know at least four historic open pit gold deposits operated south east along this same mineralized trend with the nearest one producing about 300,000 ounces of gold,” the firm said last month.

Positive 4Q earnings

In February this year, the group reported a positive annual reserves report and 4Q financials.

On April 17, the group repeated its annual production guidance for its Mexico operations as it posted first-quarter output numbers.

For its Oaxaca unit, the group is forecasting 27,000 gold ounces and 1.7 million silver ounces, plus or minus 10%.

And for the three months to end March, 2019, the miner said it produced approximately 6,538 ounces of gold, 364,653 ounces of silver and 'significant' base metals.

Inflection points:

  • First gold at Isabella Pearl
  • First-quarter results
  • Mirador project advances
  • Exploration results

What the boss says:

Jason Reid, GORO's chief executive, said in February: "We had a great year on the exploration front. We replaced all the tonnes we mined during the year. We increased the tonnes by 16%, the gold ounces by 18% and the silver ounces by 14%. This is one of our best proven and probable reserves to date."

The company boss also revealed he was proud to announce the firm's eighth consecutive year of profitability. "That's no small feat in any industry - especially not in the mining space," he exclaimed.

What analysts say:

Wainwright started coverage on GORO in March with a 'Buy' rating and US$7.75 price target saying it liked the company's focus on low-cost, cash flow generating projects.

GORO provides investors with "a balance of precious and base metal production in geographically favorable jurisdictions with additional near-term gold production," Wainwright's analysts said.

Contact the author at [email protected]

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