Summary
- The gold and silver producer reported earnings diluted of $0.05 per share on revenue of $40.07 million, compared with a loss per share of $0.01 on revenue of $24.26 million.
- The dividend has been increased this quarter by 100% from $0.02 per share and per year to $0.04 per share, or a yield of nearly 1% now.
- Gold Resource has an excellent financial position and is managed by a prudent team, which is consistent with a long-term accumulation.
Source: Mining Journal. Image: Isabella Pearl Site in Nevada.
Investment Thesis
Gold Resource (GORO) is one of my selected gold miners that I am regularly covering on Seeking Alpha.
The company holds a 100% interest in a significant property consisting of six distinct locations in Oaxaca, Mexico, including the producing Arista Mine and Aguila Mill at the El Aguila Project.
The Aguila mine is the flagship operation, including the Arista underground deposit - gold, silver, copper, lead, and zinc - which provided for ~90% of the production in 2018, while the open-pit mine at Aguila contributed about 6% of the total output.
On October 7, 2019, the company announced that Isabella Pearl produced 2K Au Oz for September. Shareholders were waiting impatiently for the news after some disappointment recently when Gold Resource indicated that it experienced delays with the construction of the ADR plant.
This move has marked a significant step in diversification for the company. Already, the production of gold and other metals have increased this quarter and will continue stronger for the next few years. Below is the total output of metal indicated by the company for the last three years.
Future growth is tremendous with the new Isabella Pearl mine. The Isabella Pearl should return more positive cash flow than Arista because it's an open-pit heap leach shallow, which has a lower all-in sustaining cost (AISC) consequently.
Furthermore, this new gold production source will come with a significant increase in the price of gold, which now trades around $1,500 per Oz.
The investment thesis remains the same as my earlier article. Gold Resource has an excellent financial position and is managed by a prudent team, which is consistent with a long-term accumulation.
However, because of the volatility attached to the gold industry, it's vital to trade short term about 30% of your position, whereas the long-term potential is manifest. Thus, any profit taken on strength should be used to accumulate on weakness.
Data by YCharts
Mr. Jason Reid, president, and CEO of Gold Resource Corporation, said in the conference call:
The third quarter of 2019 was an excellent quarter on numerous fronts for Gold Resource Corporation. It marked a record gold production quarter for the Company. It positioned the Company to increase its 2019 global gold production outlook by 42% and put the Company in a position to increase its dividend by 100%, starting this month.
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