Gold Resource Corp (GORO)

[stock_peeker]

Good overview published 4 July:

http://goldstocksdaily.com/2010/07/04/gold-resource-corp/

Here's the last portion of the article. I love the chart:

Financial and Production

Since Gold Resource just put its first mine into production its past financials are irrelevant. It does currently have $3.7 million in cash and no debt. The low cash level is typical for a small junior that just hit production. Since they are producing gold now they should be able to fund the business from here forward with cash flow.

Hochschild Mining owns 30% of Gold Resource, and the management of Gold Resource owns 21% of the company.

53 million shares outstanding

Production is going to increase from 70,000 oz of au in 2010 to 200,000 oz aueq by 2012.



Conclusion

I must admit, 200,000 oz of aueq at $0 cost(as a result of by product credits) is pretty amazing. And Gold Resource has some fantastic exploration sites that are located very close to the El-Aguila mine. Also, they “have yet to find the bottoms of their deposits”.

It’s very easy to get excited about a company like this. However, the skeptical side of me wants to see some results first. The fact is Gold Resource hasn’t hit these production numbers yet. They are talking a good game, but will they come through and deliver for shareholders? Management does own 21% of the company, so they are “playing” with their own money too here, which is good to see.

We have seen pie in the sky forecast before out of mining companies, it seems like a lot of them never hit their targets. I would rather have a company under-promise and over-deliver, rather than vice versa. I’m not saying that Gold Resource won’t hit these targets, they seem to be well on their way to these figures. It’s just always good to keep a level head.

With a market cap of $650 million the street seems to be taking a middle of the road valuation. A wait and see approach if you will. 200,000 oz aueq at $0 cash cost would probably equate to a market cap of $1+ billion at today’s gold and silver prices. So investors seems to be a little hesitant as well.

Also, with a market cap this high and so little cash, the company can’t afford to miss these production numbers.

Bottom line, there seems to be a ton of potential here, just take a level headed approach if you are an investor.