GRC PDF Presentation - GoldResourceCorp.com

11‐7‐14
FORWARD LOOKING STATEMENTS
This presentation is to be read in conjunction with the most current 10K available at the Securities & Exchange Commission website www.sec.gov. or www.Goldresourcecorp.com
This brochure contains statements that plan for or anticipate the future. Forward‐looking statements include statements about the Company's ability to develop and produce gold or other precious metals, statements about our future business plans and strategies, statements about future revenue and the receipt of working capital, and most other statements that are not historical in nature. Forward‐looking statements are often identified by words such as "anticipate," "plan," "believe," "expect," "estimate," and the like. Because forward‐looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied, including those described in our filings with the SEC. Prospective investors are urged not to put undue reliance on these forward‐looking statements.
2
INDUSTRY TRANSFORMATION
Investor Demands Are Changing the Mining Industry
 Dismissing the Concept of “Growth for Growth’s Sake”
 Changing to a Return on Capital Investment Standard
 Changing allocations of Cash Flow to include Dividends
Gold Resource Corporation Welcomes The Change
3
MAXIMIZING SHAREHOLDER VALUE
Shareholder Focused Precious Metal Producer
 Delivering a growth profile of low cost, high margin production
 Demanding high returns on owner invested capital
 Distributing meaningful monthly dividends to maximize total return to owners
4
TWO MINING UNITS
Nevada Mining Unit
Exploration Stage
Oaxaca Mining Unit
Production & Exploration Stage
 Focused on the Americas
 Mining friendly jurisdictions
 High‐grade gold & silver potential
5
RETURN ON CAPITAL METRIC
Project Return on Starting Capital (1 year payback target)
 Company operating philosophy established one year return on capital metric
 Generate Mine Gross Profit in initial 12 months of commercial production to pay back capital necessary to achieve first production  El Aguila Project generated $36 million Mine Gross Profit in first 12 months on starting capital of $34 million (see Co’s Q2 10Q 2011 filing for details)
6
GROWTH & INCOME EQUITY
 Growth Equity
• ~25 million MC to ~$200 million MC growth (since 2006)
 Income Equity
• Consecutive monthly dividends (since July 2010)
• Currently $0.01 per share/month
• $1.89 dividends distributed; 2006 IPO @ $1.00/share • +$100 million in dividends returned to shareholders
 Tight Capital Structure
• ~54 million shares outstanding as a producer
7
COMMITTED TO GOLD & SILVER
 Diversifying treasury with physical gold & silver
• ~$3.6 million of gold and silver metal
 Providing dividend option: cash, gold, silver
• Cash: Currently $0.12 / share annually
• Gold and Silver option: one ounce .999 fine “GRC Eagles” rounds (shown below)
“GRC Eagles” rounds
8
THE REGION
Oaxaca Mining Unit
 Mining friendly jurisdiction
 6 Potential high‐grade Gold & Silver Properties
• 684 square kilometers
 55 kilometer mineralized structural corridor  El Aguila Project
• 1 operating mine; La Arista underground
Property
Interest
Production
Development
Exploration
El Aguila
100%



El Rey
100%

Alta Gracia
100%

Las Margaritas
100%

El Chamizo
100%

El Fuego
100%
 9
GROWTH PROFILE
Annual Production
2014 TARGET RANGE: 85,000 – 100,000 AuEq
Production Range TBD
125,000
Precious Metal (AuEq) oz’s
100,000
90,432
75,000
84,835
66,159
Q1‐Q3 ‘14 65,182
33.9KozAu
3MozAg
50,000
25,000
10,493
0
12/31/2010
T/D
~773
T/D
~619
12/31/2011
12/31/2012
T/D
~866
T/D
1,040 Q1‐Q3
12/31/2013
12/31/2014E
12/31/2015E
AuEq= precious metal gold equivalent. T/D=tonnes per day. Production targets assume ~63:1 silver gold ratio, dependent on actual tonnage and grade. Mill capacity as built = ~1,500 T/D or 525K T/YR. 10
PRODUCTION COSTS
 Q1‐Q3 2014 AISC costs $982
Gold Institute Total Cash Cost/Ounce *Precious Metal (AuEq) Total Cash Cost /oz
 2013; expansion year with mill construction and increased costs
$736**
800
600
$434*
400
200
0
63:1 Au,Ag
GRC Q1‐Q3 2014
Industry Avg
• Precious metal gold equivalent (AuEq) total cash cost/oz production including 5% royalties using industry standard base metal by‐product credits of: Cu, Pb, Zn. Total Cash Cost as defined by The Gold Institute
** Thomson Reuters GFMS’s Gold Survey Q3 2013 YTD
***All‐in Sustaining cost is a non‐GAAP measure. The Company calculates all‐in sustaining costs as defined by the World Gold Council guidance ‐ June 2013. This non‐GAAP measure is intended to provide further transparency into the costs associated with producing gold.
AISC Per AuEq* Ounce Sold
All‐In Sustaining Cost Per AuEq Ounce Sold *** 1200
$1,263
$994
$982
900
600
300
0
GRC 2012
54:1 Au,Ag
GRC 2013
62:1 Au,Ag
GRC Q1‐Q3
2014
63:1 Au,Ag
11
BY-PRODUCT CREDITS
2014 Q1‐Q3 By‐Product Credits
Base Metal
Copper
Tonnes
By-Product Credit Per Ounce
By-Product credit by $ value
891
$
98
$ 5,188,000
Lead
3,273
$
119
$ 6,336,000
Zinc
9,340
$ 307
$ 16,312,000
$ 524
$ 27,836,000
Total Credit Per AuEq* Ounce Sold
*AuEq= Precious Metal Gold Equivalent
12
FINANCIAL PERFORMANCE
2014 Q1‐Q3 Revenue Distribution
Financial Performance
U.S. $ M
2012
2013
Q3 YTD 2014
Sales
132
126
86
Mine Gross Profit
88
58
40
EBITDA
47
9
25
Operating Income
50
10
24
Net Income
34
0.1
13
0.64
0.00
0.24
36
26
4.8
0.69
0.43
0.09
(6)
(6)
2
Exploration
8
9.5
5.8
Cash
36
15
25
EPS (US$/ share)
Dividend
DPS (US$/ share)
Accum. Deficit
Mine Gross Profit: sales – cost of sales
EBITDA: Earnings before income tax, depreciation, amortization
Accumulated Deficit: A negative (debit) balance in account Retained Earnings
68%
32%
Precious Metals: Gold,
Silver
Base Metals: Copper,
Lead, Zinc
13
GROWTH
El Aguila Mill
 Flexible mill design
• 2 production circuits
 Flotation Circuit
• Successful 2013 expansion
• Nominal ~1500 tonnes /day
 Agitated leach circuit
• Nominal ~300 tonnes /day
14
EL AGUILA PROJECT
Arista Mine
 Epithermal vein system
• Intermediate sulfidation
 Deposit open on strike and depth
• Discovering additional veins and splays
~600 meters
 High‐Grade gold, silver deposit (polymetallic)
• Base metals; copper, lead and zinc
Splay 05
Splay 03 Alta Vein
December 2012
February 2013
Arista Vein
Baja Vein
15
LA ARISTA MINE
RESERVE ESTIMATE
December 31, 2013 SEC Proven & Probable Reserve Summary
Reserve
Class
Tonnes
Au
g/t
Ag
g/t
AuEq
g/t
Au
oz
Ag
oz
AuEq
oz
Cu
%
Pb
%
Zn
%
Proven
954,700
3.86
285
9.39
118,500
8,757,100
288,200
0.4
1.7
4.3
Probable
399,700
2.35
253
7.25
30,200
3,250,200
93,200
0.4
1.6
3.0
1,354,400
3.41
276
8.76
148,700
12,007,300
381,400
0.4
1.7
3.9
TOTAL
Cutoff grade; 3 g/t AuEq using gold and silver only in AuEq calculation. Metallurgical recovery assumptions of 90% for gold and 91% for silver. Estimated average mining dilution ranges between 15% and 20% depending on mining method.
SEC guided 3 year trailing average price assumptions per troy ounce; $1,549.70 gold $30.03 silver.
Industry guide 7 SEC Proven and Probable Reserve standards
Full Report located on the Company’s website: www.goldresourcecorp.com/reserve‐reports.php
 3+ year mine life @ 8.76 g/t average AuEq grade
 Deposit open on strike and depth
 Additional mineralization drilled outside reserve report 16
ARISTA UNDERGROUND MINE
Arista Deposit Cross Section
 La Arista Deposit
•
Multiple en echelon veins
North
~1000 meters of strike
•
~600 meters of depth
Open
Open
•
~600 meters depth
•
Deposit remains open
Vetas
Splay 31
Alta
Veta 03
Arista
Baja
Luz
Candelaria
Splay 05
Splay 08
Splay 66
Open
17
ARISTA UNDERGROUND MINE
Arista Deposit Plan View
Vetas
Splay 31
Alta
Veta 03
Arista
Baja
Luz
Candelaria
Splay 05
Splay 08
Splay 66
18
ARISTA MINE 2014 PRODUCTION
Mineralized Blocks
Longhole Stoping
Current Mineralized Blocks
LUZ & CANDELARIA
SPLAY 5
ARISTA & VETA 3
ARISTA & BAJA
19
Underground mining methods; Long hole stoping, Cut and fill
(Current 2013 Arista mine plan; year‐end mine development may vary)
MULTIPLE VEINS & SPLAYS
Splay 5 Vein
Candelaria Vein
Luz Vein
20
(Current Arista mine plan; year end mine development may vary)
LARGE EPITHERMAL SYSTEM
Powerful Vein System
Back/ceiling view
3 Meters of 6 Meter Wide Vein
21
EXPLORATION
Large Consolidated Land Position
 6 properties
• 684 square kilometers
 55 kilometer mineralized structural corridor  High‐grade gold and silver
• Epithermal deposits
• Intermediate polymetallic
• Skarn potential
*1m @ 132 g/t Au *2.85m@ 27.0 g/t Au
2600 g/t Ag *1.2m @
18 g/t Au
1853 g/t Ag
1.59 % Cu 1.76 % Pb
5.21 % Zn
+55 km mineralized structural corridor
*Drill results include 22
ARISTA AREA EXPANSION POTENTIAL
El Aguila Project – Potential for deposit expansion and new discoveries
.85m@ 6.98 g/t Au
139g/t Ag El Aguila
Open Pit Mine
Potential feeder vein
2.5m@ 904 g/t Au,
9720 g/t Ag Channel sample
2.2 meters @
12.9 g/t Au, 410 g/t Ag
0.73 meters @
9.9 g/t Au, 598 g/t Ag
Rock chip @ 12 g/t Au
La Arista Underground Mine
Drill hole
Surface sample
Arista Mine development
23
ARISTA DEPOSIT EXPANSION POTENTIAL
Arista Vein System Plan View
North
Switchback
Vein Splay 31
Splay 03
Splay 39
Splay 25
Numerous Mineralized Veins and Splays New Discovery
15.47 m including 2.2 m 12.9 g/t Au and 410 g/t Ag
Splay 08
Splay 13
Splay 12
South
East
100 200
Splay 05
24
ARISTA DEPOSIT EXPANSION POTENTIAL
Arista Vein System Plan View
North
Switchback
Vein Splay 31
Splay 03
Splay 39
Splay 25
Numerous Mineralized Veins and Splays Splay 08
Splay 13
Splay 12
South
East
100 200
Splay 05
25
ARISTA DEPOSIT EXPANSION POTENTIAL
Switchback Cross Section
 Switchback; extension of Arista deposit or parallel 26
system 500 meters northeast LAS MARGARITAS
EXPLORATION POTENTIAL
Las Margaritas Property
 Drill intercepts include Gold
Silver Meters (down hole)
27.90 g/t 2600 g/t 2.85
 Rock chip samples include Gold
Silver 6.29 g/t 4150 g/t
Historic workings
5.25 g/t 2000 g/t
7.76 g/t 1850 g/t
3.46 g/t 1330 g/t
Ghost town
 High‐grade gold / silver district mined Pre‐Mexican Revolution (1910)
 The Mines of Mexico Mex. Gov. Publication 1905
"...the place in which has been found some of the
richest ores in Mexico, some of the ores having
reached the value of 18,000 [silver] ounces to the ton,
and ores are frequently found which assay 4,000 and
5,000 [silver] ounces to the ton."
Las Margaritas
27
ALTA GRACIA
EXPLORATION POTENTIAL
Alta Gracia Property
Alta Gracia Property
 Discovered many high‐grade targets  Similarities to Arista deposit
• May be above boiling point  Old workings utilized for new exploration
 Surface samples (rock chip) include
•
•
•
•
•
•
•
•
# Meter
101814
101815
101817
101820
101828
101837
101841
101793
0.3
1.2
0.3
0.3
0.5
1.0
0.3
0.3
Ag g/t
Au g/t
2590
604
431
801
356
287
560
926
4.75
1.32
1.08
1.69
0.39
2.08
0.36
2.10
Alta Gracia
28
EL REY
EXPLORATION POTENTIAL
El Rey Property
 High‐grade gold vein system  Exploration / development underground
 Mineralization within 100 meters of the surface
 Vein drill intercepts include (5 holes):
• 1 m of
132.5 g/t Au
• 1.4 m of 55.3 g/t Au
• 9 m of
19.4 g/t Au
• 1 m of
66.4 g/t Au
• 1 m of
31.8 g/t Au
• 1 m of
30.3 g/t Au
• 1 m of
29.1 g/t Au
• 1 m of
23.7 g/t Au
 Goal to set up underground drill station
El Rey
29
NEVADA MINING UNIT
NEVADA
Bruner
Rawhide Mine
1.6MMoz.Au
17.5 MMoz.Ag
Canamex drill results: [email protected]/t Au July 2012
Mineral County
Radar
Calvada 3 Mine
Paradise Peak Mine
2.6MMoz.Au
43 MMoz.Ag
Santa Fe Mine
Calvada 2 Mine
.5MMoz.Au
1 MMoz.Ag
Round Mountain Mine
10MMoz.Au
GRC’s RADAR
Historic Mines
Prospect (GRC a Canamex shareholder)
Structural Interpretation  Located in Historic gold mining district
30
EMPLOYEE SAFETY
& HEALTH FOCUS
Safety Commission
Safety Commission
Protections
Protections
Weekly Waste Collection & Recyclables
First Aid Training
First Aid Training
Labor Environment Studies
Labor Environment Studies Fire Brigade Fire Brigade
31
MINE CAMP
Green construction saved over 2 million plastic bottles from the landfill as recycled plastic “block walls”.
32
CORPORATE CITIZENSHIP
Plant Nursery/ Reforestation
Plant Nursery/Reforestation
Health Clinic Dental Clinic
Health & Dental Clinics
Town Infrastructure
Town Infrastructure
Sustainable Development
Sustainable Development
Commitment to Hire Locally
Commitment to Hire Locally Student Scholarships Student Scholarships
33
DIVIDENDS
A SHAREHOLDER FOCUSED PHILOSOPHY
Income Equity
Consecutive Monthly Dividends
$1.89 / share returned to shareholders
 2011 dividends = US$26.5m
= ̴30% CFMSO*
 2013 dividends = US$25.5m
= ̴40% CFMSO*
 US$0.01/share monthly dividend
US$0.12/share/yr currently
*CFMSO= Cash Flow From Mine Site Operations: sales – cost of sales adding back non‐cash items; depreciation, stock based compensation, accretion U.S.$/ Month
 2012 dividends = US$36.5m = ̴39.5% CFMSO*
$0.06
$0.04
$0.02
$0.00
2010
2011
2012
2013
2014
Dividends may vary in amount and consistency or be discontinued at management’s discretion depending on variables including but not limited to operational cash flows, Company development requirements, strategies, construction, spot gold and silver prices, taxation, general market conditions and other factors described in the Company’s public filings.
34
DIVIDEND & YIELD
Company
2013 Au Production*
Annual Dividend Estimate (US$/ share)
Yield
Share price close (11/6/2014, US$)
Agnico Eagle
1,099,335
0.32
1.4%
23.12
Barrick
7,166,000
0.20
1.8%
11.34
Goldcorp
2,700,000
0.60
3.4%
18.55
Kinross
2,631,092
*Suspended 7/31/13
n/a
2.21
Newmont
5,100,000
0.10
0.6%
18.20
Yamana
1,200,010
0.06
1.7%
3.54
*N/A
0.84
1.4%
61.10
Royal Gold
1.7%
Average
Gold
Resource
84,835
0.12
3.0%
4.00
Source: Based on each company’s annual public filing and Bloomberg.
*Please view each company’s annual public filing for specific and detailed information on annual production total calculations.
35
DIVIDEND PER OUNCE
PRODUCTION OUNCES REQUIRED TO GENERATE
EACH $0.01 OF ANNUAL DIVIDEND*
600000
510,000
500000
358,300
400000
300000
200000
100000
Dividend suspended
Production Ounces
n/a
80,000
45,000
34,354
7,070
0
Kinross Newmont Barrick
Yamana Goldcorp Agnico
GORO
Source: Based on each company’s Annual Filings and Bloomberg. GRC targets, performance not guaranteed, see Risk Factors in Company’s 10K.
*Current dividend vs 2013 annual production
36
A TIGHT CAPITAL STRUCTURE
Present Capitalization
Shares Outstanding 54,179,369 Treasury Shares
(336,398)
Options Outstanding
4,985,000
Warrants Outstanding
0
Shares Fully Diluted 59,164,369
Debt (capital equipment leases)
US$2.8m
Hedging
0
Bullion: (1,685 oz Au; 92,494 oz Ag) ~US$3.6m
Net Cash (9‐30‐14) US$25m
Market Cap (US$4.00/share)
US$215m
Average Daily Volume (3m as of 11‐7‐14) ~615,000
GORO
Shareholders and Analyst Coverage
Substantial Shareholders
Management
Van Eck
Vanguard
Blackrock
Wellington
~ 7%
~ 10%
~ 5%
~ 2%
~ 2%
Analyst Coverage ‐ unpaid Sterne Agee
GLD/GOLD PRICE
37
A COMPREHENSIVE
GOLD INVESTMENT
Cash /
Return on Capital
Growth Curve
Dividends
Gold & Silver
Dividend Adding Ounces
Exploration Upside
Physical
Treasury
Low Cost Producer
38
(GRC targets, performance not guaranteed, see Risk Factors in Company’s 10K)
CONCLUSION
Shareholder Focused Precious Metal Producer
 Delivering a growth profile of low cost, high margin production
 Demanding high returns on owner invested capital
 Distributing meaningful monthly dividends to maximize total return to owners
“GRC Eagles” rounds
39
CORPORATE HEADQUARTERS
Gold Resource Corporation
2886 Carriage Manor Point
Colorado Springs, CO. 80906 USA
Office: (303) 320‐7708
Fax: (303) 320‐7835
Email: [email protected] Website: www.goldresourcecorp.com
40
WHY GOLD, WHY NOW
History demonstrates gold as a form of money and store of wealth for thousands of years, far longer than any current or historic fiat currency has ever survived
World governments sustaining unprecedented debt levels creating fiat currencies out of thin air
Currency wars threaten global fiat devaluations and potential inflation
Gold historically and over the long term has been a store of wealth while being no one else's liability
41 39
WHY GOLD, WHY NOW
CHINA
Now the largest gold producer and one of the largest importers of gold
New middle class
Unwinding their dollar exposure
Encouraging citizens to purchase gold
Buying hard assets including mines
42
http://seekingalpha.com/article/2014211‐a‐true‐statistical‐mystery‐what‐happened‐to‐the‐missing‐chinese‐gold 40
WHY GOLD, WHY NOW
Russia
Increasing gold reserves since 2007 and just bought an additional 900,000 ounces gold ($1.2 billion) in April 2014
Significantly reducing U.S. treasuries, $50 billion between October and March 2014. 43
http://seekingalpha.com/article/2232763‐russian‐gold‐reserves‐increase‐by‐a‐massive‐amount‐in‐april‐could‐russia‐cause‐chaos‐in‐the‐gold‐market
41
WHY GOLD, WHY NOW
Which Side Of Goldman Sachs Is Right About Gold? Many U.S. Bankers and major media calling for gold’s long term bull market end but what are the banks buying?
Oct. 9, 2013 7:57 AM ET | …”The head of Goldman Sachs's commodity research, Jeffrey Currie, reiterated his "sell" recommendation on gold today with a price target of $1050. Interestingly, and in direct conflict with Currie's market call on gold, Goldman Sachs Group (GS) filed an SEC 13‐F disclosure at the end of June, which revealed that GS purchased over 3.7 million shares of the SPDR Gold Trust (GLD) during the 2nd quarter, making GS the 6th largest holder of GLD. Clearly there is a difference of opinion within the firm regarding the outlook for the price of gold. As an investor should you follow the guy selling research or do you follow the money? …
http://seekingalpha.com/article/1735872‐which‐side‐of‐goldman‐sachs‐
is‐right‐about‐gold
Gold manipulators being exposed: Barclays recent $43.9 million settlement for gold‐fix…are they the only one? 44
42
WHY GOLD, WHY NOW
“A cluster of central banking investors has become major players on world equity markets,” says a report to be published this week by the Official Monetary and Financial Institutions Forum (Omfif), a central bank research and advisory group. The trend “could potentially contribute to overheated asset prices”, it warns.
Financial Times June 15, 2014
“The report, seen by the Financial Times, identifies $29.1tn in market investments…” 45 43
WHY GOLD, WHY NOW
Central Bankers Secretly Invest 29 trillion In Market
Central Banks around the world are buying stocks in increasing size.
To summarize, the global equity market is now one massive Ponzi scheme in which the dumb money are central banks themselves, the same banks who inject the liquidity to begin with.
That would explain this.
China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, as the report argues is “partly strategic” because it “counters the monopoly power of the dollar” and reflects Beijing’s global financial ambitions.
46
http://www.zerohedge.com/news/2014‐06‐15/cluster‐central‐banks‐have‐secretly‐invested‐29‐trillion‐market 44
WHY GOLD, WHY NOW
15 year gold price history in US dollars per ounce
Gold’s 12 year bull market
Healthy 2 year bear market correction
http://goldprice.org/gold‐price‐history.html#10_year_gold_price
Recent bear market correction for gold mining equities has created an attractive entry point for those that missed gold’s prior bull market run
Bear markets are for buying and bull markets are for selling
The thesis to own gold not only remains intact during the correction but has intensified
47
45

Download Report