Gold Resource Corporation's objective is to create shareholder value by establishing production and generating superior financial performance through the development of gold and silver projects that feature low operating costs and produce high returns on capital. Management's commitment to shareholder value is reflected in the disciplined approach it has taken to the Company's capital structure, its focus on rapid project execution and its goal of meaningful dividend distributions.
Gold Resource Corporation (GRC) targets to emerge in the elite peer group of low-cost producers at the earliest possible date. Production is currently targeted in 2009 subject to remaining permits, equipment deliveries and construction schedules. The Company has 100% interest in its flagship project, El Aguila, located in the southern state of Oaxaca, Mexico. The property features high-grade gold and silver mineralization with significant base metal credits in two of the properties three high-grade deposits. The first 12 months of production is targeted from the projects high-grade open pit deposit called El Aguila open pit. This open pit is a high-grade gold and silver "manto" style deposit, shallow at depth even outcropping at the surface in places. GRC plans to mine underground for the second year of production and beyond. The Projects two other deposits, Arista underground vein deposit and El Aire underground vein deposit, are high-grade polymetallic vein systems with high-grade gold, silver, copper, lead and zinc. 75% of the values of the Arista deposit come from the precious metals gold and silver with the remaining 25% of the values coming from the base metals copper, lead and zinc. Depending on the base metal prices at the time of Arista production, all nominal production costs of the precious metals may potentially be paid for by base metal revenue applied as production credits.
All three deposits discovered to date are within an important regional structural corridor over 16 kilometers long, all within GRC's land concessions. 8 kilometers of this corridor has returned high-grade rock chip surface samples, with the highest 115 samples, running over 0.43 ounce per tonne gold equivalent. Multiple targets exist along and around this regional corridor and GRC plans to explore many of these targets with cash flow from operations.
An independent scoping study indicated cash production costs of approximately $100 per ounce of gold from the El Aguila open pit and an annual return-on-capital of greater than 100%, indicating a capital payback of less than one year. These criteria fit well with the Company's financial focus and approach to the business of mining.
GRC has 100% interest in three additional properties located strategically within trucking distance to El Aguila: the El Rey high-grade gold property, the Las Margaritas high-grade silver property, and the Solaga high-grade silver property. Collectively, they provide the Company with a pipeline of potential projects that would expand and diversify the Company's precious metal production profile. The Company plans to have four high-grade properties feeding one mill.
GRC's project opportunities are enhanced by the very favorable price environment for gold and silver. The Company's high-grade projects also offer the opportunity to maintain profitability when the metal-price cycle turns downward.
Why Mexico?
Mexico is one of the world's leading venues for mineral potential and has a 500 year history of mining. The Fraser Institute's 2004/2005 Mining Survey ranked Mexico fifth out of 64 worldwide venues in current mineral potential. Additionally, Mexico ranked eighth in the same survey for composite policy and mineral potential.