Chief Executive Officer of Gold Resource Corp (NYSE: GORO), William Reid, speaking in a conference call Thursday -- the same day the US-based gold producer posted quarterly revenues and a reported net income of $7.38 million or 13 cents per diluted share -- reiterated the significance of the milestone reached by the company in the first three months of the year; that of the reduction of the company’s accumulated deficit to zero.
“We have earned back from operations all the money spent by the company in its history. That’s an accomplishment that many companies never achieve.”
Reid, speaking at the conclusion of a quarter that saw $9.5 million returned to shareholders in dividends and cash flow from mine site operations came in at $25.9 million, reaffirmed the company’s dedication to the pursuit of dividend payments, which he said was “very important to our philosophy.”
“Our mantra has been to turn as much back to the owners as possible. We may have been the first company to have paid dividends a month after commencing production. We are very proud of the fact that we have paid back more than the IPO price was in September 2006. We have a shareholder-friendly dividend focus.”
The cost per share in Gold Resource at the time of the company’s IPO was $1.00, an amount that was surpassed as of the payment of the June 2012 dividend, at which point the total dividends declared since the company's start of commercial production in July 2010 reached $1.01 per share.
Reid reiterated the Mexico-focused gold and silver miner’s target of returning to shareholders one third of cash flow from mine site operations because of the yellow metal’s volatility and the desire to “maximize returns to the owners,” but pointed out that the desire to pay dividends tied directly or indirectly to the price of gold carries with it the implication that when the price of the metal falls, the dividend payout may also have to be reduced.
“We are all acutely aware of the fact that gold [recently] had its worse cash drop in 30 years. In 2012 we paid 69 cents back to shareholders under the formula instead of the target of 63 cents. Therefore we felt it prudent to reduce the dividend [for the most recent quarter] in light of the lower metal prices.”
He pointed out that the company, which returned production results for the quarter of 22,330 ounces of precious metal gold equivalent, “is in a good place". "We are expanding operations to be ready for the upswing in prices when they come and we are also paying a good monthly dividend."
In response to an investor question during the question and answer portion of the call, Reid spoke of the company’s course of action should it be faced long-term with gold prices languishing at $1,200 per ounce or silver at $20 per ounce.
“We are fortunate to have a high grade deposit. We have the option to focus on the higher grade if need be, we have certain areas that are quite high in gold and silver values and if prices are reduced, we will move to those areas to take advantage of the high grade nature of the project.”
In response to an investor question regarding the cost of gold production, which has been rising across the industry, Reid said the company was moving to curtail costs.
“We’ve been focused on production. Now we’re focused not only on production but on reducing costs, which we firmly believe we can do over time.”
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