Gold Resource Corporation Makes Headway in 2008
Gold Resource Corporation [[GORO.OB]] announced its full-year 2008 results and plans for the future earlier this month in a 10-K filing with the U.S. Securities and Exchange Commission. The gold company has made substantial progress in 2008, and anticipates beginning production activities in mid-2009. Despite the risks associated with the company, many investors are bullish on the stock over the long-term.
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El Aguila, Gold Resource’s flagship property, was the primary focus of exploration during 2008. Using funds obtained from a private placement in 2007, the company drilled in three areas and found several exceptional gold and silver surface samples, including a 36 grams-per-ton (g/t) gold sample and a 3,100 g/t silver sample. However, many of other areas have around 5 g/t to 15 g/t across the project’s land, and samples are no guarantee of widespread mineral deposits.
Gold Resource has spent approximately $15 million on construction of a mill and an additional $5 million on infrastructure for its El Aguila project. The company believes that another $5 million to $6 million may be necessary to complete the mill facility. The company plans to complete the mill in mid-2009, and it will have the capacity to process 850 tonnes of ore per day through a floatation circuit and 150 tonnes per day through an agitated leach circuit.
So far, Gold Resource has only raised financing, acquired mineral properties, conducted limited exploration and prepared to commence production at the El Aguila project. The company has yet to produce gold or other metals and hasn’t received any revenues to date. Additionally, the company has no proven or probable reserves, as defined by the U.S. Securities and Exchange Commission. As a result, this company carries substantial risk for investors.
In the end, prudent investors may want to hold off on investing until Gold Resource can show tangible revenues. However, speculators are beginning to take a position in the stock in anticipation of production announcements coming later this year.
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