Tuesday, 30 April 2013

Gold Resource modifies monthly dividend, still on track to return a third cash flow from mines

Shares are holding steady on the news Monday that Gold Resource Corp (NYSE:GORO) has modified its monthly instituted dividend from $0.06 per share per month to $0.03 per share, starting with the April payment. Unpredictability in the precious metals market, which could impact net revenue and a need for capital to fund current expansion activities, was cited as the reason behind the low-cost gold producer’s move.
The board of directors of the company approved the modification of the instituted monthly dividend for the time being, citing the recent and dramatic plunge in the spot price of physical gold and silver as a factor contributing to the change.
The miner, which focuses on production and development of high-grade, low-cost gold and silver projects, is also currently expanding the mill at its flagship El Aguila property, targeting a throughput increase to a nominal 1,500 tonnes per day capacity.  The construction phase on the mill, in the Mexican state of Oaxaca, includes the installation of a second ball mill, new thickener surge tanks, and additional flotation cells to the mill’s flotation circuit.  Construction is targeted to be complete by the end of 2013.  
The dividend reduction also brings the payout ratio more in line with the company’s long-term target of one-third annual dividend distribution from cash flow from mine site operations (CFMSO), a rate Gold Resource Corp reaffirmed as a goal in the statement announcing the dividend modification.
“Multiple factors contributed to the decision to decrease monthly dividend distributions”, Gold Resource Corporation’s president, Jason Reid, said in a company statement.
“Our long-term company objective remains intact to distribute approximately one-third of CFMSO to the shareholders.  The company’s 2012 dividend distribution averaged in excess of 39 per cent CFMSO, and we were pleased to return that higher percentage last year when we could.  
"Current construction capital needs, coupled with the recent market volatility and precious metal spot price pullback, necessitated modifying our dividend.  We are proud of our return to date of $81 million dollars back to our shareholders since commercial production, which demonstrates the company’s shareholder friendly focus.” 
The miner, which has an 100 per cent interest in six high-grade gold and silver properties in the south of Mexico, also offers shareholders the option to convert their cash dividends into physical gold and silver.
Shares in Gold Resource were trading slightly up this morning, at US$9.99 on the NYSE, from an open of US$9.47.

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