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Gold Resource Corp produces 4,390 oz gold in initial phase of commercial production

Published: 19:19 21 Jul 2010 BST

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Gold Resource Corp (OTC: GORO, FSE:GIH) has produced 4,390 ounces of gold in the initial phase of commercial production from the Aguila project in Mexico, enough to extinguish certain funding conditions under the terms of its partnership with Hochschild Mining (LON:HOC) – the company’s largest shareholder with 28.7% of the company’s shares.

Under the terms of the strategic alliance, established in December 2008, the company is able to terminate Hochschild's right to preferential funding at a discount, should it produce 4,000oz of gold within a 45 day period.

"We appreciate Hochschild's assistance as a strategic alliance partner as they have been most helpful in our achieving Commercial Production. With the agreement's 4,000 ounce gold requirement behind us and the extinguishment of a first right of funding, Gold Resource now possesses more flexibility in considering opportunities on a going forward basis," GRC president Jason Reid commented. 

Today, the company confirmed that it has now produced 4,390oz of gold in the period between 3 June and 14 July, consequently Hochschild’s right to participate in a discounted fundraising has been terminated. Hochschild will retain its right to participate in any future funding, up to its prorated ownership interest in GRC.

Sales since the declaration of commercial production on July 1 are considered revenue and as of July 14, the group has sold concentrates containing 2,895 ounces of gold (included in the 4,390 ounces of gold).

"We are very pleased with the Aguila project's performance since declaring Commercial Production on July 1, 2010 ... Though the results of this first two week period are very good, they may not necessarily reflect production over any future period. We are very pleased with the project's performance and remain optimistic that our production goals will be met."

Alongside the commencement of commercial production, Jason Reid was promoted from VP of Corporate Development at GRC to become the new company president. Jason succeeds his father, chief executive William Reid, in the role.

The Aguila project is an impressive success story, as the company has moved quickly to reach commercial production since making the initial production decision in April 2007 - with just 3 - 4 years of projected mine life established at that time. “The production decision was based on the excellent economics at Aguila that indicated an estimated capital payback for the project of less than one year”, GRC stated.

Now as it is officially operates under ‘commercial production’, the mine currently has a minimum life of 9 years, and ongoing exploration continues to find new discoveries. Most recently, on 3 June 2010, the company reported a new high-grade gold and silver discovery, with intercepts including 9.9 g/t gold and 598 g/t silver over 0.73 meters.

Earlier this month, on the 8th July, the company announced plans to list on the NYSE-AMEX market. Jason Reid said the new listing should open up GRC to a new segment of gold investors.

Gold Resources One2One Forum presentation - December 9th 2010

Gold Resources One2One Forum presentation - December 9th 2010

on 23/12/10