Gold Resource Corporation (AMEX:GORO) reported late Wednesday record annual results, with 2011 marking its first full year of production from its El Aguila operations in Oaxaca, Mexico.
The gold company, which began commercial production from
its El Aguila project in Oaxaca, Mexico in July 2010, posted net
income of $58.37 million, or $1.10 per share in the year to December 31,
2011, versus a loss of $23.07 million, or 46 cents per share in 2010.
Shares of Gold Resource rallied 5.5 percent on Thursday, to trade at $25.79 as of 12:29pm ET.
Aguila is located 120 kilometres southeast of the state capital city of
Oaxaca, Mexico and has yielded several strong metal samples, including
36.0 grams per tonne (g/t) gold, and 3,100 g/t silver.
March, the company announced that it had begun the transition from
processing lower grade, open pit ore, to processing underground ore from
the high grade La Arista deposit at El Aguila.
Combined open pit
and underground operations in 2011 yielded 66,159 ounces of gold
equivalent production. This compares to the 10,493 gold equivalent
ounces produced from the six months of open pit El Aguila operations in
As underground development continues, Gold Resource
management said on a conference call this morning it expects to mine
more efficiently with greater tonnages and less dilution.
costs in 2011 were $136 per ounce of gold equivalent, excluding royalty
expense, 37 percent lower than $217 per ounce in the six month period in
This led to record annual revenue of more than $105
million in 2011 as the company realized much higher gold and silver
prices for its combined operations of $1,596 per gold ounce, and $35 per
silver ounce. Revenues in 2010 stood at $14.75 million.
The company's gross profit from the mine came in at $87.2 million, way up from $9.8 million the prior year.
Gold Resource Corp
returned $26.5 million in dividend distributions in 2011, which as a
percentage of its gross profit from the mine, is "very close" to its 33
percent target, said the company on a conference call this morning.
company also said Thursday that February production has been its best
month yet, with the Aguila mill now back online. In January, Gold
Resource said that as part of its normal operating procedure, the Aguila
mill was shut down during the last 10 days of 2011 and the first five
days of 2012 for routine maintenance, holidays and the installation of
an expanded cleaner flotation circuit.
The new circuit is part
of the gold producer's ongoing mill optimization, which is expected to
provide opportunities for future expansion, the company added. Mill
optimization continues as the company ramps up daily production to an
estimated average 900 tonnes per day for 2012, with 1,200 tonnes per day
targeted next year.
Average gold recovery in 2011 was 87 percent.
are very pleased with our first full year of production and proud of
our good people in Oaxaca that made it possible," said president of the
company, Jason Reid, in a prepared statement.
"Ramping up a
mining operation, particularly an underground mine, is not an easy task.
The results for the year underscore our ability to execute as a
company, as much was accomplished in 2011.”
allowed management to continue our shareholder friendly and focused
philosophy by distributing 2011 record dividends of $26.5 million, or
$0.50 per share.”
In the fourth quarter, production from the El
Aguila project totaled 19,934 gold equivalent ounces at a cash cost of
$120 per ounce. Average realized sales prices were $1,691 per ounce gold
and $30 per ounce silver.
The company paid $7.9 million to
shareholders in dividends in the latest period, and repurchased 53,251
shares at an average share price of $18.39, after which the it increased
its bank account by $7.0 million over the previous quarter, to $52
Gold Resource Corp
also has a physical gold and silver treasury of $2.5 million, with the
company "very close" to launching its gold/silver dividend program.
company reiterated its 2012 outlook for production in the range of
120,000 to 140,000 ounces of gold equivalent, with cash costs between
$50 to $150 per ounce.
Gold Resource is also looking forward to
its formal NI 43-101 resource report, in consideration for a possible
secondary listing in Canada. The report is being prepared by
firm Pincock Allen and Holt of Denver and is expected to be completed
in March, but could also push into April, the company said.
its operations, mine development at La Arista is progressing well, the
gold producer added, with the primary decline ramp approaching Level 11.
The company is also developing an additional decline ramp south
from Level 7 to access the southern part of the ore body. By developing
off the veins, it anticipates the Level 7 decline ramp will allow for
more "expedited access" for future mine development along the entire
strike length of the deposit.
In 2012, Gold Resource is planning
an aggressive exploration program, with a "great deal of exploration
potential along the company's mineralized trend".
A total of four exploration drills are currently at the company’s properties, with a fifth drill expected to arrive shortly.
Gold Resource Corp has a 100 percent interest in six potential high-grade gold and silver properties in Mexico’s southern state of Oaxaca.
primary focus for drilling in 2012 will be to test the extension of the
Arista deposit, which remains open on strike and depth. The company
added it could add additional drills as it expects to boost the size of
its exploration program. It recently hired an exploration manager for
the Oaxaca mining unit, and another core logging geologist.
the Alta Gracia property, the company has budgeted around $1 million for
exploration this year, with the 2011 program encountering 33 intercepts
grading more than 200 grams per tonne of silver.
Margaritas, Gold Resource is constructing a new road that will allow
year-round access to the property, with a drill program planned for this
year to test high-grade targets identified from surface mapping and
sampling. It expects to spend $700,000 in this area in 2012.
gold miner is also planning a 2012 regional airborne geophysical survey
for five of its contiguous properties, which span a mineralized
structural corridor over 48 kilometres. This will be the first
wide-scale exploration program to cover the company’s entire mineralized
The company also said on the conference call earlier
today that it will look globally for a second project to acquire as it
anticipates the El Aguila project can keep it in production for the next