Nice recap on GORO from Peter Spina, founder of Goldseek.com
Gold Resource Corp. – Ultra Low Cost Producer, Soon to be the highest dividend paying gold stock?
NYSE-AMEX: GORO | www.GoldResourceCorp.com
One of the most incredible gold and silver success stories in recent years. Gold Resource Corp. is discovering what appears to be a very young and large epithermal system in southern Mexico. With production slated to increase in the coming year+ to 200,000 gold equivalent ounces with a $0 cash cost, the very high-grade gold, silver and base metal deposit is rewarding investors with share appreciation.
Since 2006, I have continued to make GORO my #1 gold stock pick. Why? I simply haven not been able to find a better team, asset and gold/silver company structured (and developing) the way this company is. More recently, the company completed a $55 million placement to accelerate production, exploration and expand the mill by 50%. Which could mean the company is now targeting another ramp up to 300,000 gold equivalent ounces per year production with a $0 an ounce production cost.
With fewer than 55 million shares, the company remains a terrific opportunity going forward. A total of 4 consecutive monthly dividends have already been announced (3 cents per month) and more are expected in the months ahead. Assuming a continuation of 3 cents per share and using a 1% dividend yield, that would mean GORO should be valued at $36 a share – the same initial price target Gold Stock Analyst John Doody made in October when making Gold Resource Corp. one of his Top 10.
What other gold producers are paying in dividends and yields:
· Low Cost Gold Producers:
o Goldcorp ($46): $0.36 | 0.80%
o Gold Resource ($23) $0.36+ | 1.65%*
o Agnico Eagle ($80): $0.18 | 0.20%
o Yamana Gold ($12): $0.08 | 0.70%
*assuming $0.03 a month continuation.
· Senior Gold Producers:
o Newmont ($62): $0.60 | 0.95%
o Barrick Gold ($50): $0.48 | 0.95%
o Goldfields ($17): $0.19 | 1.10%
o Randgold ($98): $0.15 | 0.20%
o Harmony Gold ($12): $0.14 | 1.10%
o Kinross ($19): $0.10 | 0.50%
Average yield among all gold producers is 0.72%.
GORO would require a $50 share price to match this average yield (assuming $0.36/share per year dividends).
AND it should get even better, as production and cash flow increases, management will continue to target 1/3 of cash flow in form of dividends. Assuming 200,000 ounces per year at $0 cost, which could turn out to be over $1.50 a share in dividends per year – or roughly 4 times the current monthly amount! Take annual production up to 300,000 ounces/year with gold at $1,400 an ounce, this should generate over $2.50 per share in yearly dividend payments.
Last week GORO announced they have intercepted the Baja vein, one of the two initial veins to be mined. Ore stockpiling will occur in the “near term” and ensures a seamless transition into a much more profitable phase of the mining operations. As production increases from underground mining following completion of the roughly 70,000 ounces of open gold pit mining in 2011, GORO should become the largest gold dividend paying stock!
As I mentioned in July, I believe GORO is in the process of being revalued higher -- and that report was made under now outdated assumptions. Now with the accelerated development of the mine, this continued production growth and upside from aggressive exploration provides GORO with the growth momentum to continue to outperform the gold bull market. GORO will continue to be my #1 holding.
