Gold Resource
Corporation (GRC) (OTCBB: GORO)
(FRANKFURT: GIH) is pleased to announce that it has formed a
strategic alliance with Hochschild Mining plc (Hochschild) through a
$5 million private placement of 1.67 million shares of GRC's
restricted common stock at $3.00 per share (no warrants). Hochschild
is a world leading precious metals producer listed on the London
Stock Exchange. Based in Lima, Peru, Hochschild is a mid-tier gold
producer and the world's 4th largest primary silver producer with
mining projects in five countries in the Americas including Mexico.
Funding will be used
for the continued construction and exploration of GRC's El Aguila
Project in Oaxaca, Mexico. GRC is focused on production of its El
Aguila Project at the earliest possible date, currently targeting
mid-2009, subject to obtaining remaining permits, regulatory
approvals, equipment deliveries and construction schedules.
In addition to the $5
million private placement, Hochschild and Gold Resource Corporation
will evaluate the possible advantages of accelerating development of
GRC's La Arista underground vein mineralization. This could include
driving a decline ramp and underground development at this high-grade
polymetallic deposit. The agreement provides that within the next 80
days Hochschild has the right to purchase from the Company an
additional 4.3 million shares at $3.00 per share. If Hochschild
completes the additional funding it may appoint one new, additional
director to the GRC Board and for the two years following, Hochschild
will be allowed to purchase shares in the open market to the extent
that their total holding in GRC is not greater than 40%. If
Hochschild owns 40% of GRC's shares, it is entitled to a total of two
out of five board nominations. After 2 years HOC is not precluded
from purchasing additional shares in the market.
Gold Resource
Corporation's president, William W. Reid stated, "Hochschild can
trace its mining roots back to 1911. Today they are a mid-tier gold
producer, a leading silver producer and a recognized expert in
underground mining. We believe that Hochschild's corporate strategy
is compatible with ours. Their philosophy emphasizes strong financial
performance and low cash costs of production. We see our strategic
alliance with Hochschild as an important milestone in the creation of
value for our shareholders. This alliance promotes a common goal to
achieve significant production at the Aguila Project at the earliest
possible date. We believe Hochschild's strategic investment in GRC
underscores the significant potential of our El Aguila Project."
Eduardo Hochschild,
Executive Chairman of Hochschild Mining plc, commented, "We are
delighted to announce this transaction which provides Hochschild
access to high grade, profitable ounces with a near term production
profile. We have operated in Mexico for over two years and are keen
to strengthen our position in this mineral rich region of the
Americas. Gold Resource Corporation has a highly experienced
management team and we look forward to working with them to develop
the significant potential of the El Aguila property as well as the
other properties in their impressive project pipeline."
Mr. Reid stated,
"Our goal is and always will be to keep effective dilution to a
minimum. This important strategic alliance with Hochschild results in
approximately 5% dilution from the 1.67 million share purchase or a
possible 15% total dilution if the additional 4.3 million shares are
purchased. However, our recent 67% increase in our production targets
of up to 200,000 gold equivalent ounces of precious metals per year
more than offsets this dilution relative to per share value. With the
additional funds we would accelerate development of our high-grade La
Arista deposit."
Mr. Reid continued,
"Our excellent team in Oaxaca continues to move the Aguila
Project forward on all fronts as we focus, at the earliest possible
date, on emerging in the elite class of low cost gold producers. We
believe the driving force behind Gold Resource Corporation on a going
forward basis will be achieving cash flow with the potential to pay a
meaningful dividend. We welcome Hochschild as a shareholder and
believe their interest and investment in Gold Resource Corporation
creates an alliance that strengthens our Company and its
mission."
About GRC
Gold Resource
Corporation is a mining company focused on production and pursuing
development of gold and silver projects that feature low operating
costs and produce high returns on capital. The Company has 100%
interest in four potential high-grade gold and silver properties in
Mexico's southern state of Oaxaca. The company has 36,087,556 shares
outstanding and no warrants. For more information, please visit GRC's
website, located at www.Goldresourcecorp.com and read the Company's 10-K for an understanding
of the risk factors involved.
This
press release contains forward-looking statements that involve risks
and uncertainties. The statements contained in this press release
that are not purely historical are forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. When used in this press release, the words
"plan," "target," "anticipate,"
"believe," "estimate," "intend" and
"expect" and similar expressions are intended to identify
such forward-looking statements. Such forward-looking statements
include, without limitation, the statements regarding Gold Resource
Corporation's strategy, future plans for production, future expenses
and costs, future liquidity and capital resources, and estimates of
mineralized material. All forward-looking statements in this press
release are based upon information available to Gold Resource
Corporation on the date of this press release, and the company assumes
no obligation to update any such forward-looking statements. Forward
looking statements involve a number of risks and uncertainties, and
there can be no assurance that such statements will prove to be
accurate. The Company's actual results could differ materially from
those discussed in this press release. In particular, there can be no
assurance that commercial production at the El Aguila Project will be
achieved in the time frames estimated, at the rates and costs
estimated, or even at all. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in
the company's 10-K and Form S-1 filed with the Securities and
Exchange Commission
Hochschild
Mining plc, and its affiliates do not accept responsibility for the
use of project data or the adequacy or accuracy of this release.
Contact:
Jason Reid
VP / Corporate Development
303-320-7708