Gold Resource Corp (GORO.OB)

Gold Resource Corporation (Gold Resource) is engaged in the exploration of gold and silver properties, primarily in Mexico. The Company has an interest in four properties, the El Aguila property, the Las Margaritas property, the El Rey property and the Solaga property. Gold Resource leases claims comprising the El Aguila property and the Las Margaritas property from an individual who serves as its consultant in Mexico and the Solaga property from an entity partially owned by its consultant in Mexico. The Company owns mining concessions for the El Rey property. All of these properties are in the exploration stage and have no probable reserves.

If they have no probable reserves, why did the price go up so high in the last two months? Was it because they had "gold" in their name? Like in the late 1990's when everything dot-com was expected to double. Even it they did find gold, local corruption would probably limit profits.

GORO is an interesting junior with HUGE upside potential. As long as production starts soon, this stock should grow by leaps and bounds while offering (hopefully) a very solid dividend. With the mill all but completed and training soon to begin, production should still be on track to start by year end meaning they may actually generate some cash flows soon.

Planned dividend of $1.00 per share
Gold production has just started

A new low cost producer of gold and other associated metals. Processing of their banked material will start very soon, an estimated 70,000 oz of gold this year at a cost of $100 per oz.

The company has said they are going to also pay a dividend to all stockholders.

Gold resource corp purchase rationale:

1-Strong backer in the mid-tier miner Hoschchild (provide both financial stability and mine exploitation expertise). They own 24% of the company and have usually a goal to acquire up to 40% (so goldcorp result can be accreditive to their results). The other 16% is likely to be acquire via the market.

2-Management own about 24% of the company. Usually a good sign.

3-Production start plan for 2009. Production ramp up from 70K ounces per year to 100K to 177K.

4-Using by product credit, forecasted production cost is plan to be in the 0$ range (starting the second year).

5-Market cap divided by cash flow is expected to be around 3 the first year, 1.9 the second year and 1.05 the thrid year.

6-Great exploration potential to add resources, in fact it is likely whart has attracted Hoschchild in the first place.

7-Management seems shareholder friendly, they want to grow the company with cash plow and pay as follow: 1/3 cash flow dividend, 1/3 mine development and exploration and 1/3 taxes.

Short term catalyst for price increase: They are waiting their final permit in order to be able to start the open pit production.

"Exploration stage company" + "engaged in the search for" = underperform

GORO.OB has a too high valuation compared to its sales potential. Its current sales are nil, and so is one of the most loss making companies.

Gold Production mid 2009 projected @ $100/oz cost.

As noted in Forbes, no revenues and looking at their filings, they trade at 13x book value. In this tough environment, if a company is this type of company and is not able to generate cash flows from operations, it could spell disaster in the future.

A tip 'o the hat to goldminingXpert

"Exploration stage company"... not in this market. Either you have cash and hunker down, or you are done for.

2 thumbs down out of 3

Burning through cash fast. Will have to get a loan soon to survive...(oh wait...).

Forbes indicates they have no gold reserves and have not produced any gold. So they are relying primarily on the "good will" associated with having "gold " in their name!

As far as gold miners go, they seem unprofitable and with shaky finances, massive deleveraging is bad for gold especially speculative juniors.

Doesn't Goro mean Fat in Spainish? It does not matter, this company is fat on Stock equity and skinny on earnings and income.

Ref:

dew250 (98.58)

Submitted: 1/16/08 2:58 PM

From Forbes Magazine:

"In barely two years shares of Gold Resource Corp. have gone up 345% to a recent $4.44 producing a $126 million market cap... latest quarterly financials acknowledges a 'lack of provable resources'. A rep -one of just three employees-... boss William W. Reid developed six mines... but no revenue since 1990."

gold play

From Forbes Magazine:

"In barely two years shares of Gold Resource Corp. have gone up 345% to a recent $4.44 producing a $126 million market cap... latest quarterly financials acknowledges a 'lack of provable resources'. A rep -one of just three employees-... boss William W. Reid developed six mines... but no revenue since 1990."

This stock is riding Gold's rise, but they don't have anything that even remotely suggests any revenue at all at any point in the future. They pump the stock with PR and line their pockets. It will catch up with them, especially as commodities appreciation slows.

Lacks revenues, flamed by Forbes this week and that will attract the short sellers. No provable reserves and the boss has not generated any revenue since 1990 in his companies.

Can't imagine the allure of this one.

Goro is building a low cost gold mine in Mexico. Very low cost mine with projected costs of $100/oz. Experienced, shareholder friendly mgmt who have started 6 previous mines over 25 years. They have committed to start the mine in late 08 or 09 with no more than 35 million shares out. Initial production of 65,000 oz, ramping up to 110,000 oz in two years. Have multiple mine prospects within their 8 km mineralized holdings.