SOURCE: Gold Resource Corporation

Gold Resource Corporation

May 10, 2011 17:46 ET

Gold Resource Corporation Reports Q1 Results; Company Records First Profit

COLORADO SPRINGS, CO--(Marketwire - May 10, 2011) - Gold Resource Corporation (GORO) (NYSE Amex: GORO) today announced its first Company profit while reporting financial results for the first quarter ended March 31, 2011. Gold Resource Corporation is a low-cost gold producer with operations in the southern state of Oaxaca, Mexico.

2011 Q1 HIGHLIGHTS

--  Record revenue of $11.3 million
--  Company's first profit of $2 million, or $0.04 per share
--  Produced 7,479 ounces precious metal gold equivalent
--  Cash cost of $87 per gold equivalent ounce
--  Generated $8.8 million mine gross profit
--  Dividend distributions of $4.8 million, or $0.09 per share for quarter
--  Transitioned to processing Arista underground ore in March, 2011
--  Continued Arista underground mine development

Overview of Q1 2011 Results from El Aguila Project

Gold Resource Corporation's El Aguila Project produced 7,479 ounces of precious metal gold equivalent at a cash cost of $87 per gold equivalent ounce and sold its gold at an average price of $1,373/ounce and silver at $34/ounce. The mine generated a gross profit of $8.8 million.

For the three months ended March 31, 2011, the Company reported its first net income of $2 million, or $0.04 per share, compared to a net loss of $7.3 million or ($0.15) per share for the three months ended March 31, 2010. Net income per share in the three months ended March 31, 2011 increased as a result of generating record revenues from sales of metals concentrate.

The Company's Q1, 2011 mill production throughput rate from the open pit mineralization averaged 829 tonnes/day and mill head grade averaged 3.35 grams per tonne gold and 39 grams per tonne silver with recoveries averaging 81% gold and 75% silver. Mill throughput rate from the La Arista underground polymetallic mineralization averaged 501 tonnes/day and mill head grade averaged 1.94 grams per tonne gold, 405 grams per tonne silver, 0.92% lead and 1.92% zinc with recoveries averaging 86% gold, 89% silver, 90% lead and 74% zinc. The Company focused on lead and zinc separation during initial optimization and did not focus on copper separation, but expects to in Q2 2011. The underground ore processed came from development work, which dilutes grade more than what is expected from actual mining of the vein, which will start in Q2 2011.

The Arista mine was impacted from an anomalous storm on April 20th that flooded the lower levels and caused damaged to the mine and some equipment. All work stopped and the mine has been undergoing cleanup and repairs. This has delayed continued development work and mining by at least one month, which may temporarily impact production at some point in the future.

Gold Resource Corporation's President, Mr. Jason Reid, stated, "Our first-ever profitable quarter of $0.04 per share marks another milestone in the Company's progress and underscores our potential at this early stage. We are still targeting 90,000 ounces precious metal gold equivalent production this year."

Mr. Jason Reid continued, "We remain consistent in our long-term objective to return cash back to the owners of the Company: its shareholders. Using cash flow generated from mine operations, the Company declared and paid its shareholders a $0.03 per share dividend each month during the quarter and increased the dividend declared in April 2011 to $0.04 per share."

About GRC:

Gold Resource Corporation is a mining company focused on production and pursuing development of gold and silver projects that feature low operating costs and produce high returns on capital. The Company has 100% interest in five potential high-grade gold and silver properties in Mexico's southern state of Oaxaca. The Company has 52,998,303 shares outstanding, no warrants and no debt. For more information, please visit GRC's website, located at www.Goldresourcecorp.com and read the Company's 10-K for an understanding of the risk factors involved.

Cautionary Statements

This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this press release, the words "plan," "target," "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding Gold Resource Corporation's strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material. All forward-looking statements in this press release are based upon information available to Gold Resource Corporation on the date of this press release, and the company assumes no obligation to update any such forward-looking statements. Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. The Company's actual results could differ materially from those discussed in this press release. In particular, there can be no assurance that production will continue at any specific rate. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the company's 10-K filed with the Securities and Exchange Commission

See Accompanying Tables

The following information summarizes the results of operation for Gold Resource Corporation for the three months ended March 31, 2011 and 2010, its financial condition at March 31, 2011 and December 31, 2010 and its cash flows for the three months ended March 31, 2011 and 2010. The summary data for the three months ended March 31, 2011 and 2010 is unaudited; the summary data for the year ended December 31, 2010 is taken from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2010, but do not include the footnotes and other information that is included in the complete financial statements. Readers are urged to review the Company's Form 10-K in its entirety, which can be found on the SEC's website at www.sec.gov.

The calculation of our cash cost per ounce contained in this press release is a non-GAAP financial measure. Please see "Management's Discussion and Analysis and Results of Operation" contained in the Company's most recent Form 10-Q and Form 10-K.


             Gold Resource Corporation and Subsidiaries
                   (An Exploration Stage Company)
               Consolidated Statements of Operations
      (amounts in thousands, except share and per share amounts)

                                                         Three Months
                                                        Ended March 31,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------

Sales of metals concentrate                         $   11,280  $        -

  Production costs applicable to sales                   2,352           -
  Depreciation, depletion and amortization                  64           -
  Accretion                                                 21           -
                                                    ----------  ----------
    Total mine cost of sales                             2,437           -
                                                    ----------  ----------
  Mine gross profit                                 $    8,843  $        -
                                                    ----------  ----------

Costs and expenses
  General and administrative                             3,112         899
  Exploration expenses                                     512       1,216
  Construction and development                           3,066       4,446
  Production start-up expense, net                           -         729
                                                    ----------  ----------
    Total costs and expenses                             6,690       7,290
                                                    ----------  ----------

Operating income (loss)                             $    2,153  $   (7,290)
                                                    ----------  ----------
Other income (expense)
  Currency exchange (loss)                                (152)          -
  Other income                                               6           4
  Interest income                                           26          21
                                                    ----------  ----------
    Total other income (expense)                    $     (120) $       25
                                                    ----------  ----------

Income (loss) before income taxes                        2,033      (7,265)
  Provision for income taxes                                 -           -
                                                    ----------  ----------
Net income (loss)                                   $    2,033  $   (7,265)
                                                    ----------  ----------

  Other comprehensive income:
  Currency translation adjustment                          464         286
                                                    ----------  ----------
Net comprehensive income (loss)                     $    2,497  $   (6,979)
                                                    ==========  ==========

Net income (loss) per common share:
  Basic                                             $     0.04  $    (0.15)
                                                    ==========  ==========
  Diluted                                           $     0.04  $    (0.15)
                                                    ==========  ==========

Weighted average shares outstanding:
  Basic                                             52,998,303  48,253,617
                                                    ==========  ==========
  Diluted                                           57,840,414  48,253,617
                                                    ==========  ==========





              Gold Resource Corporation and Subsidiaries
                   (An Exploration Stage Company)
                     Consolidated Balance Sheets
             (amounts in thousands, except share amounts)

                                                      As of
                                        March 31, 2011   December 31, 2010
               ASSETS
Current assets:
  Cash and cash equivalents            $         37,904  $          47,582
  Accounts receivable                             4,393              1,185
  Inventories                                     7,750              3,063
  Prepaid and refundable taxes                    6,276              5,848
  Other current assets                                6                  9
                                       ----------------  -----------------
    Total current assets                         56,329             57,687
                                       ----------------  -----------------

Land and mineral rights                             227                227
Property and equipment, net                       6,130              4,849
Other assets                                         44                 34
                                       ----------------  -----------------
    Total assets                       $         62,730  $          62,797
                                       ================  =================

             LIABILITIES
Current liabilities:
  Accounts payable and accrued
   expenses                            $          5,587  $           4,866
  Dividends payable                               1,590              1,590
                                       ----------------  -----------------
    Total current liabilities                     7,117              6,456
                                       ----------------  -----------------

Asset retirement obligation                       2,604              2,495
                                       ----------------  -----------------

SHAREHOLDERS' EQUITY
  Preferred stock                                     -                  -
  Common stock                                       53                 53
  Additional paid-in capital                    149,050            152,444
  (Deficit) accumulated during
   exploration stage                            (95,858)           (97,891)
Accumulated other comprehensive income
  Currency translation adjustment                  (296)              (760)
                                       ----------------  -----------------
    Total shareholders' equity                   52,949             53,846
                                       ----------------  -----------------

    Total liabilities and
     shareholders' equity              $         62,730  $          62,797
                                       ================  =================





               Gold Resource Corporation and Subsidiaries
                     (An Exploration Stage Company)
                 Consolidated Statements of Cash Flows
                         (amounts in thousands)

                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2011           2010
                                              -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                             $       2,033  $      (7,265)
                                              -------------  -------------
Adjustments to reconcile net income (loss)
 to net cash (used in) operating activities:
  Depreciation                                          144             61
  Accretion expense                                      21             17
  Stock compensation                                  1,377             83
  Foreign currency translation adjustment               464            286
Change in operating assets and liabilities:
  Accounts receivable                                (3,209)             -
  Prepaid and refundable taxes                         (428)        (1,186)
  Other current assets                                    4           (267)
  Inventories                                        (4,688)        (1,655)
  Accounts payable and accrued liabilities              720            216
  Other                                                  (9)            (2)
                                              -------------  -------------
Total adjustments                                    (5,604)        (2,448)
                                              -------------  -------------
  Net cash (used in) operating activities     $      (3,571) $      (9,713)
                                              -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                               (1,425)          (330)
  Restricted cash                                         -          1,785
                                              -------------  -------------
  Net cash (used in) provided by investing
   activities                                 $      (1,425) $       1,455
                                              -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from sale of stock                             -          5,172
  Dividends paid                                     (4,770)             -
                                              -------------  -------------
  Net cash (used in) provided by financing
   activities                                 $      (4,770) $       5,172
                                              -------------  -------------
Effect of exchange rate on cash and
 equivalents                                             88             24
Net (decrease) in cash and equivalents               (9,678)        (3,062)
Cash and equivalents at beginning of period          47,582          6,752
                                              -------------  -------------
Cash and equivalents at end of period         $      37,904  $       3,690
                                              =============  =============


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