SOURCE: Gold Resource Corporation

October 22, 2008 06:00 ET

Gold Resource Corporation Updates Mineralized Material Estimate for El Aguila Project

Increases Gold and Silver Production Targets to 200,000 Gold Equivalent Ounces / Year

DENVER, CO--(Marketwire - October 22, 2008) - Gold Resource Corporation (GRC) (OTCBB: GORO) (FRANKFURT: GIH) is pleased to announce results from an internal analysis of delineation drilling at its Arista deposit. The Arista deposit is part of GRC's 100% owned El Aguila Project in Oaxaca, Mexico. Estimates of in-place mineralized material at the Arista deposit, from Arista and Baja veins only, equal 2,187,000 tonnes grading 5.92 g/t gold (Au), 403 g/t silver (Ag), 0.45% copper (Cu), 1.56% Lead (Pb), 5.05% zinc (Zn). Total metal values yield a 22.40 g/t gold equivalent (AuEq) (0.72 oz/t AuEq) using the metal prices given in the mineralized material estimate table. This AuEq per tonne value multiplied by the estimated 2,187,000 tonnes equates to 1,334,000 AuEq ounces. The mineralized material estimate does not meet the SEC definition of Proven and Probable Reserves. GRC targets production at its El Aguila Project Q1, 2009, subject to obtaining remaining permits, regulatory approvals, equipment delivery and construction schedules.

Mineralized Material Estimates
Arista Deposit High-Grade Veins 3 Meter Nominal Mining Width

                     True
              AuEq*  Width  Au   Ag    Cu    Pb    Zn               Total
Vein          oz/t     M    g/t  g/t    %     %     %    Tonnes   AuEq* oz
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Arista          0.75   3.45 4.82  216 0.45  2.23  9.82    827,000   624,000
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Baja            1.11   2.22 8.23  971 0.63  1.31  3.26    492,000   546,000
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Avg             0.92   2.86 6.45  578 0.54  1.79  6.67  1,319,000 1,170,000
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Arista Deposit High-Grade Veins 5 Meter Nominal Mining Width
                      True
              AuEq*  Width  Au   Ag    Cu    Pb    Zn                Total
Vein            oz/t      M  g/t  g/t     %     %     %    Tonnes  AuEq* oz
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Arista          0.63   6.90 4.32  212 0.44  1.91  7.32  1,416,000   749,000
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Baja            0.81   3.83 7.55  598 0.47  1.21  2.74    771,000   585,000
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Avg             0.72   5.38 5.92  403 0.45  1.56  5.05  2,187,000 1,334,000
              ------ ------ ---- ---- ----  ----  ----  --------- ---------
Gold Equivalent (AuEq*) calculated at: $650 Gold, $13 Silver, $3.20/lb
 Copper, $1.00/lb Lead, $1.00/lb Zinc
Not SEC Proven & Probable Reserves; see Risk Factors in Company’s 10K

The Arista deposit's 1,334,000 AuEq ounce estimate is an internal estimate of in-place metal value using the polygonal method of calculation, uncut assay values and with a 0.30 oz/t AuEq cutoff grade. Both veins remain open laterally as well as with depth. There are indications that a third vein is present for which no mineralized material numbers have been estimated. The Aguila Project's open pit deposit, from which the first 12 months of production is targeted, and the Aire vein system deposit add an additional 290,000 gold equivalent ounces, resulting in the Aguila Project 1,624,000 AuEq ounce estimate.

The Company's Project Manager, Mr. Jorge Sanchez del Toro, is leading the engineering for the Arista underground mine. It is the Company's intent to begin the decline ramp and mine development for the Arista mine immediately upon start of anticipated cash flow generated from the Project's Aguila open pit mine. This timeline would give GRC 12 months, after initial production begins, from which to develop and begin underground operations for the second year of production and beyond.

Gold Resource Corporation's president William W. Reid stated, "Gold Resource was created to maximize shareholder value by emerging in the elite class of low cost gold producers. With a financially focused approach to the business of mining we have come a long way in just two years as a public company. Our decisions are based on anticipated financial performance, not some arbitrary number of ounces in the ground. That is why we were able to make our production decision back in April of 2007 with approximately 300,000 gold equivalent ounces delineated at that time because this high-grade, low cost project had an estimated capital repayment of only 6 months. Project construction is well underway as we continue to increase our estimate of in-place mineralized material. The 1.6 million gold equivalent ounces surpasses our previously stated near term goal of 1.3 million. Based on our increased understanding of this exciting, high-grade geologic system, we now set as our new near term mineralized material target 3 million gold equivalent ounces."

Mr. Reid stated, "Because drilling results have yielded higher values than originally anticipated and because the mill we are building is capable of approximately 1,100 tonnes per day, we are pleased to set increased production targets up to 200,000 gold equivalent ounces of precious metals (gold and silver only) targeted by year three. These targets are hypothetical at this point because they depend on the rate of mining from the underground mine which is currently being designed but this level of production is what we target."

Targets in the estimated production table are for precious metal (gold and silver) production only as the base metal production revenue will be used as by-product credits against production costs. These targets use the 3 meter vein width values from the mineralized material estimates table to maximize cash flow in the early years and are subject to change with variations in metal prices and actual performance.

Estimated Precious Metal Production Targets* (7% Dilution, 94% Recovery)

                                 Precious
                                  Metal                   By-     Targeted
                        Tonnes    Grade    Production   Product    Cash
Year        Deposit     Milled  (AuEq*oz/t)   AuEq*     Credits   Cost/oz
           ---------- --------- ---------- ---------- ---------- ----------
           El Aguila                 0.26
1          (Open Pit)   300,000   oz/tonne  70,000 Au     Silver $      100
           ---------- --------- ---------- ---------- ---------- ----------
                                     0.58               Copper,
2           La Arista   250,000   oz/tonne    125,000 Lead, Zinc $        0
           ---------- --------- ---------- ---------- ---------- ----------
                                     0.58               Copper,
3           La Arista   400,000   oz/tonne    200,000 Lead, Zinc $        0
           ---------- --------- ---------- ---------- ---------- ----------
                                     0.58               Copper,
4           La Arista   400,000   oz/tonne    200,000 Lead, Zinc $        0
           ---------- --------- ---------- ---------- ---------- ----------
                                     0.58               Copper,
7months     La Arista   269,000   oz/tonne  116,000** Lead, Zinc $        0
           ---------- --------- ---------- ---------- ---------- ----------
4.58                  1,619,000               711,000
           ---------- --------- ---------- ---------- ---------- ----------
*AuEq values: $650/oz Gold, $13/oz Silver. Base metal revenues are used
 as by-prodct production credits at the following metal values: copper at
 $3.20/pound, lead at $1.00/pound, zinc at $1.00/pound.
**7 months of Yr 5 Production Targeted @ 200,000 AuEq

Mr. Reid continued, "We are pleased with our drilling results and with our evolving geologic understanding of this potentially large and robust system that has enabled us to increase our near term exploration target to 3 million gold equivalent ounces. We are excited to move closer to production each day as we target a Q1, 2009 mill start up. And, we are encouraged by the opportunity to not only emerge in the elite class of low cost gold producers, but emerge with an increased production target of 200,000 gold equivalent ounces at a targeted 'zero' cash cost in the third year of operations."

* The estimated mineralized material number is an in-place number without regard to recoveries, mining dilution or mining economics. Gold Resource, like many in the industry, subscribe to the use of gold equivalent (AuEq) as a means to present the aggregate value of polymetallic (gold, silver, copper, lead, zinc) mineralization in the ground. Gold equivalent valuation quantifies the precious metal ounces and base metal percentages of the mineralization into one "gold equivalent" value. This calculation converts the metals quantity into its dollar value and converts that dollar value back into an equivalent gold value. Gold equivalent is a valuation calculation that places the emphasis on the total dollar value per tonne of the mineralization. The company believes this calculation best conveys the aggregate, in-place estimate of the deposit's hypothetical value. The following mineral values were used in this gold equivalent conversion: gold at $650/ounce, silver at $13/ounce, copper at $3.20/pound, lead at $1.00/pound, and zinc at $1.00/pound. Different mineral prices will result in different gold equivalent values.

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 four potential high-grade gold and silver properties in Mexico's southern state of Oaxaca. The company has 34,324,619 shares outstanding and no warrants. 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.

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 commercial production at the El Aguila Project will be achieved in the time frames estimated, at the rates and costs estimated, or even at all. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the company's 10-K and Form S-1 filed with the Securities and Exchange Commission.

Contact Information

  • Contact:
    Jason Reid
    VP / Corporate Development
    303-320-7708