Release Date: April 09, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gold Resource Corp (GORO) successfully discovered a new system called the Three Sisters, which is expected to improve mining grades and reduce costs due to its proximity to the surface and existing infrastructure.
• The company celebrated a significant milestone of one year without a lost time injury, showcasing a strong commitment to workplace safety.
• GORO has made significant improvements in drilling and blasting practices, resulting in reduced mining costs and better quality material processing.
• The company is negotiating the purchase of a used mining fleet in good condition, which is expected to improve mechanical availability and productivity.
• GORO plans to increase daily production to 1,500 tons by the end of Q1 next year, which should significantly impact profitability due to fixed cost absorption.

Negative Points

• 2024 was a challenging year for GORO, with back-to-back hurricanes, political road blockades, and equipment availability issues impacting performance.
• The company had to restate its BAC 40 project gold and silver stream liabilities due to an error in the application of accounting principles, affecting past financial statements.
• GORO's cash balance decreased by $4.7 million during the year, with significant spending on exploration and overhead costs.
• There has been no insider buying from executives for a while, raising concerns about confidence in the company's stock.
• The company has been in a blackout period for insider trading due to ongoing funding opportunities, limiting executive stock purchases.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with GORO.

Q: Can you provide an update on the development of the Three Sisters system and when you expect to reach significant ore production? A: Alan Palmier, President and CEO: We have already intersected the first vein structure of the Three Sisters and are currently extracting limited amounts of ore. By the end of the year, we expect the Three Sisters to contribute significantly to ore feed, aiming to reach 1,500 tons per day by January or February next year, with over half from the Three Sisters. Initial channel samples showed higher grades than anticipated, supporting our belief in the system's potential.

Q: How is the development capital of $8 million expected to be allocated over the next few quarters? A: Alan Palmier, President and CEO: The development capital will be heavily weighted towards Q2 and Q3. Development costs will exceed $20 million for the year, with the contractor focusing on development initially. As ore release from the Three Sisters increases later in the year, cash flow is expected to compensate for these costs.

Q: Can you elaborate on the cost reduction strategies and improvements expected over the next 6-9 months? A: Alan Palmier, President and CEO: We are bringing in a contractor to focus on the Three Sisters, which will increase volume and reduce unit costs due to better fixed cost absorption. Additionally, acquiring a new mining fleet with minimal hours will reduce repair costs and improve productivity, further lowering unit costs.

Q: Is the new mining fleet already in Mexico, and what does it include? A: Alan Palmier, President and CEO: The equipment is located in Canada, and we are considering shipping it by sea to avoid potential customs issues. The fleet includes 16 pieces of equipment, such as rock bolters, jumbos, scoops, and low-profile trucks, originally scoped for an 1,800-ton per day mine. We are negotiating a payment plan to minimize cash flow impact.

Q: Are any of your product buyers located in Asia, and what is your response to the lack of insider buying? A: Alan Palmier, President and CEO: None of our buyers are in Asia; they are all based in Europe. Regarding insider buying, we have been in a blackout period due to ongoing funding opportunities. I share the pain of shareholders as I am personally underwater by over $2 million. We are focused on executing our plan to restore profitability and shareholder value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.