GOLD RESOURCE CORP - Quarter Report: 2010 March (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
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QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended March 31, 2010
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
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For the
transition period from _____ to _______
Commission
File Number: 333-129321
GOLD
RESOURCE CORPORATION
(Exact
Name of Registrant as Specified in its Charter)
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Colorado
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84-1473173
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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222
Milwaukee Street, Suite 301, Denver, Colorado 80206
(Address
of Principal Executive Offices) (Zip Code)
Registrant's
telephone number including area code: (303) 320-7708
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No
o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to post such
files). Yes o No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of "large accelerated filer," "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
| Larger accelerated filer o | Accelerated filer x |
| Non-accelerated filer o | Smaller reporting company o |
Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No
x
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 48,748,825 shares of common stock, par
value $0.001, outstanding as of May 6, 2010.
GOLD
RESOURCE CORPORATION
Index
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References
in this report to agreements to which Gold Resource Corporation is a party and
the definition of certain terms from those agreements are not necessarily
complete and are qualified by reference to the agreements. Readers
should refer to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2009 and the exhibits listed therein.
PART
I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
GOLD RESOURCE CORPORATION AND
SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED BALANCE
SHEETS
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March
31,
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December
31,
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2010
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2009
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(unaudited)
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$ | 3,689,631 | $ | 6,752,325 | ||||
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Restricted
cash
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9,651,097 | 11,436,074 | ||||||
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Inventories
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1,879,653 | 224,853 | ||||||
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Prepaid
and refundable taxes
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3,318,650 | 2,132,495 | ||||||
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Other
current assets
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422,994 | 155,658 | ||||||
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Total
current assets
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18,962,025 | 20,701,405 | ||||||
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Land
and mineral rights
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226,610 | 226,610 | ||||||
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Property
and equipment - net
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2,076,716 | 1,726,278 | ||||||
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Other
assets
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12,917 | 10,465 | ||||||
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Total
assets
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$ | 21,278,268 | $ | 22,664,758 | ||||
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LIABILITIES AND SHAREHOLDERS'
EQUITY
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Current
liabilities:
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Accounts
payable and accrued expenses
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$ | 941,055 | $ | 724,439 | ||||
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Total
current liabilities
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941,055 | 724,439 | ||||||
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Asset
retirement obligation
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2,113,667 | 1,991,987 | ||||||
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Shareholders'
equity:
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Preferred
stock - $0.001 par value, 5,000,000 shares authorized:
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no
shares issued and outstanding
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- | - | ||||||
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Common
stock - $0.001 par value, 60,000,000 shares authorized:
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48,700,284
and 48,100,284 shares issued and outstanding, respectively
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48,700 | 48,100 | ||||||
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Additional
paid-in capital
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100,946,391 | 95,692,273 | ||||||
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(Deficit)
accumulated during the exploration stage
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(82,083,213 | ) | (74,817,721 | ) | ||||
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Other
comprehensive income (loss):
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Currency
translation adjustment
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(688,332 | ) | (974,320 | ) | ||||
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Total
shareholders' equity
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18,223,546 | 19,948,332 | ||||||
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Total
liabilities and shareholders' equity
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$ | 21,278,268 | $ | 22,664,758 | ||||
The
accompanying notes are an integral part of these financial
statements.
1
GOLD RESOURCE CORPORATION AND
SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF
OPERATIONS
for
the three months ended March 31, 2010 and 2009
and
for the period from Inception (August 24, 1998) to March 31, 2010
(unaudited)
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Inception
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(August
24, 1998) to
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2010
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2009
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March
31, 2010
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Revenues:
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Gold
sales
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$ | - | $ | - | $ | - | ||||||
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Costs
and Expenses:
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Production
start up expenses
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$ | 728,654 | $ | - | $ | 728,654 | ||||||
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Property
exploration and evaluation
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1,215,873 | 627,921 | 25,701,083 | |||||||||
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Engineering
and construction
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4,599,048 | 5,843,952 | 40,094,945 | |||||||||
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General
and administrative
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822,179 | 639,952 | 15,238,561 | |||||||||
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Depreciation
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61,002 | 33,651 | 424,710 | |||||||||
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Accretion
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16,723 | - | 16,723 | |||||||||
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Management
contract - U S Gold, related party
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- | - | 752,191 | |||||||||
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Total
costs and expenses
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7,443,479 | 7,145,476 | 82,956,867 | |||||||||
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Operating
(loss)
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(7,443,479 | ) | (7,145,476 | ) | (82,956,867 | ) | ||||||
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Other
income:
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Interest
income
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177,987 | 4,167 | 873,654 | |||||||||
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(Loss)
before income taxes
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(7,265,492 | ) | (7,141,309 | ) | (82,083,213 | ) | ||||||
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Provision
for income taxes
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- | - | - | |||||||||
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Net
(loss)
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(7,265,492 | ) | (7,141,309 | ) | (82,083,213 | ) | ||||||
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Other
comprehensive income:
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Currency
translation gain (loss)
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285,988 | 96,143 | (688,332 | ) | ||||||||
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Net
comprehensive (loss)
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$ | (6,979,504 | ) | $ | (7,045,166 | ) | $ | (82,771,545 | ) | |||
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Net
(loss) per common share:
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Basic
and Diluted
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$ | (0.15 | ) | $ | (0.19 | ) | ||||||
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Weighted
average shares outstanding:
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Basic
and Diluted
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48,253,617 | 38,135,296 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
2
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH
FLOWS
for
the three months ended March 31, 2010 and 2009
and
for the period from Inception (August 24, 1998) to March 31, 2010
(unaudited)
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Inception
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(August
24, 1998) to
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2010
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2009
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March
31, 2010
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Cash
flows from operating activities:
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Net
(loss)
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$ | (7,265,492 | ) | $ | (7,141,309 | ) | $ | (82,083,213 | ) | |||
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Adjustments
to reconcile net (loss) to net cash
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(used
in) operating activities:
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Depreciation
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61,002 | 33,651 | 424,710 | |||||||||
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Accretion
expense
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16,723 | - | 2,008,710 | |||||||||
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Stock
compensation
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82,718 | 59,677 | 6,870,350 | |||||||||
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Management
fee paid in stock
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- | - | 392,191 | |||||||||
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Related
party payable paid in stock
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- | - | 320,000 | |||||||||
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Foreign
currency translation adjustment
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285,988 | 96,143 | (688,332 | ) | ||||||||
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Issuance
cost forgiven
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- | - | 25,327 | |||||||||
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Changes
in operating assets and liabilities:
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Restricted
cash
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1,784,977 | - | (9,651,097 | ) | ||||||||
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Prepaid
and refundable taxes
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(1,186,155 | ) | - | (3,318,650 | ) | |||||||
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Other
current assets
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(267,336 | ) | (42,773 | ) | (422,994 | ) | ||||||
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Inventories
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(1,654,800 | ) | - | (1,879,653 | ) | |||||||
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Accounts
payable and accrued liabilities
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216,616 | (888,903 | ) | 941,055 | ||||||||
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Other
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(2,452 | ) | - | (16,027 | ) | |||||||
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Total
adjustments
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(662,719 | ) | (742,205 | ) | (4,994,410 | ) | ||||||
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Net
cash (used in) operating activities
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(7,928,211 | ) | (7,883,514 | ) | (87,077,623 | ) | ||||||
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Cash
flows from investing activities:
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Capital
expenditures
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(329,914 | ) | (60,750 | ) | (2,769,701 | ) | ||||||
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Net
cash (used in) investing activities
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(329,914 | ) | (60,750 | ) | (2,769,701 | ) | ||||||
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Cash
flows from financing activities:
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Proceeds
from sales of stock
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5,172,000 | 12,990,000 | 92,412,823 | |||||||||
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Proceeds
from exercise of options
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- | - | 427,500 | |||||||||
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Proceeds
from debentures - founders
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- | - | 50,000 | |||||||||
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Proceeds
from exploration
funding
agreement - Canyon Resources
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- | - | 500,000 | |||||||||
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Net
cash provided by financing activities
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5,172,000 | 12,990,000 | 93,390,323 | |||||||||
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Effect
of exchange rates on cash and equivalents
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23,431 | - | 146,632 | |||||||||
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Net
increase (decrease) in cash and equivalents
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(3,062,694 | ) | 5,045,736 | 3,689,631 | ||||||||
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Cash
and equivalents at beginning of period
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6,752,325 | 3,534,578 | - | |||||||||
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Cash
and equivalents at end of period
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$ | 3,689,631 | $ | 8,580,314 | $ | 3,689,631 | ||||||
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Supplemental
Cash Flow Information
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Interest
paid
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$ | - | $ | - | $ | - | ||||||
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Income
taxes paid
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$ | - | $ | - | $ | - | ||||||
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Non-cash
investing and financing activities:
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Conversion
of Canyon Resources funding into
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common
stock
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$ | - | $ | - | $ | 500,000 | ||||||
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Conversion
of founders debentures into
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common
stock
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$ | - | $ | - | $ | 50,000 | ||||||
The
accompanying notes are an integral part of these financial
statements.
3
GOLD
RESOURCE CORPORATION AND SUBSIDIARIES
(An
Exploration Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2010
(Unaudited)
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1.
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Summary
of Significant Accounting Policies
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Gold Resource
Corporation (the “Company”) was organized under the laws of the State of
Colorado on August 24, 1998. The Company has been engaged in the
exploration for precious and base metals, primarily in Mexico, as an exploration
stage company. It plans to develop mineral properties and ultimately
become a producer of gold, silver, and base metals. The Company has
not generated any revenues from operations. The consolidated
financial statements included herein are expressed in United States dollars, the
Company’s reporting currency.
Basis of
Presentation. The interim consolidated financial statements
included herein have been prepared by the Company, without audit, in accordance
with the rules and regulations of the Securities and Exchange Commission (“SEC”)
pursuant to Item 210 of Regulation S-X. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America (“US GAAP”) have been condensed or omitted pursuant to such SEC rules
and regulations, although the Company believes that the disclosures included are
adequate to make the information presented not misleading.
In
management’s opinion, the unaudited consolidated financial statements contained
herein reflect all adjustments, consisting solely of normal recurring items,
which are necessary for the fair presentation of our financial position, results
of operations, and cash flows on a basis consistent with that of our prior
audited consolidated financial statements. However, the results of
operations for interim periods may not be indicative of results to be expected
for the full fiscal year. Therefore, these financial statements
should be read in conjunction with the audited financial statements and notes
thereto and summary of significant accounting policies included in the Company's
Form 10-K for the year ended December 31, 2009.
Basis of
Consolidation. The consolidated financial
statements include the accounts of the Company and its wholly owned Mexican
corporation subsidiaries. The significant subsidiaries are Don David
Gold S.A. de C.V. and Golden Trump Resources S.A. de C.V. The
expenditures of Don David Gold and Golden Trump Resources are generally incurred
in Mexican pesos. Significant intercompany accounts and transactions
have been eliminated.
Reclassifications. Certain
amounts previously presented for prior periods have been reclassified to conform
with the current presentation. The reclassifications had no effect on
net loss, total assets, or total shareholders’ equity.
Restricted
Cash: Pursuant to the terms of two
subscription agreements that were
completed during 2009, the Company agreed to reserve cash proceeds of
$12,000,000 for specific purposes. Under the first agreement,
$4,000,000 was
restricted for the purpose of additional exploration at the El Aguila
Project. Under the second agreement, $8,000,000
was restricted for the purpose of constructing a decline ramp, drifts and
crosscuts, and associated surface facilities to support underground development
and mining of the La Arista
vein.
4
The
restricted cash balances were placed in separate interest bearing bank
accounts. Transfer of funds from the restricted bank accounts
requires the approval of Hochschild Mining Holdings Limited (“Hochschild”), the
other party to the subscription agreements. The approval process includes the
presentation of documentation that demonstrates use of the funds for the
intended purpose. As of March 31, 2010, funds of $2,348,903 had been
used for the intended purpose and had been released from the restricted cash
accounts.
Ore Stockpile
Inventories. Ore stockpile
inventories are carried at the lower of average cost or net realizable value.
Net realizable value represents the estimated future sales price of the product
based on current and long-term metals prices, less the estimated costs to
complete production and bring the product to sale. The current
portion of ore stockpiles is determined based on the expected amounts to be
processed within the next 12 months. Ore stockpile inventories not expected to
be processed within the next 12 months are classified as
long-term. If write-downs of ore stockpiles and concentrate
inventories are necessary, resulting from net realizable value impairments, they
are reported as a component of production startup income/expense,
net.
Ore stockpile
inventories represent ore that has been mined and is available for further
processing. Ore stockpiles are measured by estimating the number of tonnes added
and removed from the stockpile, the contained metals (based on assay data) and
the estimated metallurgical recovery rates. Costs are
allocated to ore stockpile inventories based on relative values of material
stockpiled and processed using current mining costs incurred up to the point of
stockpiling the ore, including applicable overhead, depreciation, depletion and
amortization relating to mining operations. Material is removed
from the stockpile at an average cost per tonne.
Materials and
Supplies Inventories. Materials and supplies
inventories are valued at the lower of average cost or net realizable value.
Cost includes applicable taxes and freight.
Estimates. The
preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Management routinely makes
judgments and estimates about the effects of matters that are inherently
uncertain. Estimates that are critical to the accompanying
consolidated financial statements include the identification and valuation of
proven and probable reserves, obligations for environmental, reclamation, and
closure matters, estimates related to asset impairments of long lived assets and
investments, classification of expenditures as either an asset or an expense,
valuation of deferred tax assets, and the likelihood of loss
contingencies. Management bases its estimates and judgements on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Estimates and assumptions
are revised periodically and the effects of revisions are reflected in the
financial statements in the period it is determined to be
necessary. Actual results could differ from these
estimates.
Net Earnings (Loss)
Per Share. Basic earnings (loss) per share is
computed by dividing net loss by the weighted average number of common shares
outstanding during each period. Diluted earnings (loss) per share
reflects the potential dilution that could occur if potentially dilutive
securities are converted into common shares. Potentially dilutive
securities, such as stock options and warrants, are excluded from the
calculation when their inclusion would be anti-dilutive, such as periods when a
net loss is reported or when the exercise price of the instrument exceeds the
fair market value. During the three months ended March 31, 2010, and
2009, the calculation excluded potential dilution of 3,500,000 and 2,500,000
shares, respectively, because the effect would have been
anti-dilutive.
5
Proven and Probable
Reserves. The definition of proven and probable
reserves is set forth in SEC Industry Guide
7. Proven reserves are reserves for which (a) quantity is
computed from dimensions revealed in outcrops, trenches, workings or drill
holes; grade and/or quality are computed from the results of detailed sampling
and (b) the sites for inspection, sampling and measurement are spaced so closely
and the geologic character is so well defined that size, shape, depth and
mineral content of reserves are well-established. Probable reserves
are reserves for which quantity and grade and/or quality are computed from
information similar to that used for proven reserves, but the sites for
inspection, sampling, and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower than that
for proven reserves, is high enough to assume continuity between points of
observation. In addition, reserves cannot be considered proven and
probable until they are supported by a feasibility study, indicating that the
reserves have had the requisite geologic, technical and economic work performed
and are economically and legally extractable at the time of the reserve
determination.
As of March
31, 2010, none of the mineralized material at the Company’s properties met the
SEC’s definition of proven or probable reserves.
Fair Value of
Financial Instruments. ASC
825, “Disclosures About Fair Value of Financial Instruments,” requires
disclosure of fair value information about financial instruments. ASC
820, “Fair Value Measurements” (“ASC 820”), defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. Fair value
estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of March 31, 2010.
The
respective carrying value of certain on-balance-sheet financial instruments
approximate their fair values. These financial instruments include
cash and cash equivalents, restricted cash, prepaid and refundable taxes,
accounts payable and accrued liabilities. Fair values were assumed to
approximate carrying values for these financial instruments since they are short
term in nature and their carrying amounts approximate fair value, or they are
receivable or payable on demand.
Prepaid and
Refundable Taxes. In
Mexico, value added taxes (IVA) are assessed on purchases of materials and
services. Businesses are generally entitled to recover the taxes they
have paid, either as a refund or as a credit against future taxes
payable. For the period from inception through 2008, substantially
all of the Company’s refund claims were initially denied by the tax
authorities. Accordingly, the Company provided a full valuation
allowance for potentially refundable IVA. During 2009, the Company
was successful in establishing the validity of its claims and received IVA
refunds. Furthermore, it appears that the tax authorities will honor
the Company’s claims for substantially all of the IVA paid during 2009 and any
future years. Amounts recorded as prepaid and refundable taxes in the
consolidated financial statements represent the estimated recoverable payments
made during 2009 and thru March 31, 2010. Although the taxing
authorities may reconsider claims filed for previous years, significant
uncertainties regarding ultimate recovery preclude recognition of an asset for
taxes paid prior to 2009.
Recently Adopted
Accounting Standards. The Company evaluates the pronouncements
of various authoritative accounting organizations, primarily the Financial
Accounting Standards Board (“FASB”), the SEC, and the Emerging Issues Task Force
(“EITF”), to determine the impact of new pronouncements on US GAAP and the
impact on the Company.
6
In
June 2009, FASB established the Accounting Standards Codification (“ASC”)
as the single source of authoritative US GAAP to be applied by nongovernmental
entities. Rules and interpretive releases of the SEC under authority
of federal securities laws are also sources of authoritative US GAAP for SEC
registrants. The ASC is a new structure which took existing
accounting pronouncements and organized them by accounting topic. The
ASC did not change current US GAAP, but was intended to simplify user access to
all authoritative US GAAP by providing all the relevant literature related to a
particular topic in one place. All previously existing accounting
standards were superseded and all other accounting literature not included in
the ASC is considered non-authoritative. New accounting standards
issued subsequent to June 30, 2009 will be communicated by the FASB through
Accounting Standards Updates (“ASU”). The ASC was effective during
the period ended September 30, 2009. Adoption of the ASC did not have
an impact on the Company’s consolidated financial position, results of
operations or cash flows.
The Company
has recently adopted the following new accounting standards:
Subsequent
Events - In May 2009, the ASC guidance for subsequent events was
updated to establish accounting and reporting standards for events that occur
after the balance sheet date but before financial statements are
issued. The guidance was amended in February 2010 via ASU No.
2010-09. The standard sets forth: (i) the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, (ii) the circumstances under which an entity
should recognize events or transactions occurring after the balance sheet in its
financial statements, and (iii) the disclosures that an entity should make
about events or transactions occurring after the balance sheet date in its
financial statements. The amended ASU was effective immediately and
its adoption had no impact on the Company’s consolidated financial position,
results of operations or cash flows.
Fair Value
Measurements – In January 2010, ASU No. 2010-06 amended existing
disclosure requirements about fair value measurements by adding required
disclosures about items transferring into and out of levels 1 and 2 in the fair
value hierarchy; adding separate disclosures about purchase, sales, issuances,
and settlements relative to level 3 measurements; and clarifying, among other
things, the existing fair value disclosures about the level of
disaggregation. The ASU was adopted during the period ended March 31,
2010, and its adoption had no impact on the Company’s consolidated financial
position, results of operations or cash flows.
Consolidations
- ASU No. 2009-17 revises the consolidation guidance for
variable-interest entities. The modifications include the elimination of the
exemption for qualifying special purpose entities, a new approach for
determining who should consolidate a variable-interest entity, and changes to
when it is necessary to reassess who should consolidate a variable-interest
entity. The ASU was adopted during the period ended March 31, 2010 and its
adoption had no impact on the Company’s consolidated financial position, results
of operations or cash flows.
Recently Issued
Accounting Standards Updates. The following
accounting standards updates were recently issued and have not yet been adopted
by the Company. These standards are currently under review to
determine their impact on the Company’s consolidated financial position, results
of operations, or cash flows.
7
ASU No.
2010-11 was issued in March 2010, and clarifies that the transfer of credit risk
that is only in the form of subordination of one financial instrument to another
is an embedded derivative feature that should not be subject to potential
bifurcation and separate accounting. This ASU will be effective for
the first fiscal quarter beginning after June 15, 2010, with early adoption
permitted.
ASU No.
2010-13 was issued in April 2010, and will clarify the classification of an
employee share based payment award with an exercise price denominated in the
currency of a market in which the underlying security trades. This
ASU will be effective for the first fiscal quarter beginning after December 15,
2010, with early adoption permitted.
There were
various other updates recently issued, most of which represented technical
corrections to the accounting literature or application to specific industries
and are not expected to a have a material impact on the Company's consolidated
financial position, results of operations or cash flows.
|
2.
|
Inventory
|
Inventories
at March 31, 2010 and December 31, 2009 consist of the following:
|
March
31,
2010
|
December
31,
2009
|
|||||||
|
Oxide
ore stockpiles
|
$ | 1,638,343 | $ | -- | ||||
|
Materials
and supplies
|
241,310 | 224,853 | ||||||
|
Total
|
$ | 1,879,653 | $ | 224,853 | ||||
As of March
31, 2010, the oxide ore stockpiles inventories consist of approximately 225,231
tonnes of ore and are carried at cost.
|
3.
|
Mineral
Properties
|
The Company
currently has an interest in five properties, the El Aguila Project, the El Rey property, the Las Margaritas property, the
Solaga property and the
Alta Gracia
property.
The El
Aguila
Project. Effective October 14, 2002, the Company leased three
mining concessions, El Aguila, El Aire, and
La
Tehuana. The lease agreement is subject to a 4% net smelter
return royalty where production is sold in the form of gold/silver dore and 5%
for production sold in concentrate form. The Company has made
periodic advance royalty payments under the lease totaling $260,000 and no
further advance royalty payments are due. Subject to minimum
exploration requirements, there is no expiration term for the
lease. The Company may terminate it at any time upon written notice
to the lessor and the lessor may terminate it if the Company fails to fulfill
any of its obligations. The El Aguila and El Aire concessions make up
the El Aguila Project
and the La Tehuana
concession makes up the Las
Margaritas property.
The Company
has filed for and received additional concessions for the El Aguila Project that total
an additional 8,492 hectares. These additional concessions bring the
Company’s interest in the El
Aguila Project to an aggregate of 9,463 hectares. The mineral
concessions making up the El
Aguila Project are located within the Mexican State of
Oaxaca.
8
The El
Rey
Property. The Company has acquired claims in another area in
the state of Oaxaca by filing concessions under the Mexican mining laws,
referred to by the Company as the El Rey
property. These concessions total 892 hectares and are subject to a
2% royalty on production. The Company has conducted minimal
exploration and drilling on this property to date.
The El Rey property is an
exploration stage property with no known reserves. It is
approximately 64.4 kilometers (40 miles) from the El Aguila
Project. There is no plant or equipment on the El Rey
property. If exploration is successful, any mining would probably
require an underground mine but any mineralized material could be processed at
the El Aguila Project
mill.
The Las
Margaritas
Property. The Las Margaritas property is
made up of the La
Tehuana concession. The Company leased this property in
October 2002. It is comprised of approximately 925 hectares located
adjacent to the El Aguila
Project. To date, the Company has conducted limited surface
sampling, but no other significant exploration activities at the
property.
The Solaga Property. In
February 2007, the Company leased a 100% interest in a property known as the
Solaga
property. The property totals 618 hectares, and is located
approximately 120 kilometers (75 miles) from the El Aguila
Project. A dormant silver mine is located on the Solaga property which was in
production as recently as the 1980’s, however the Company cannot estimate if or
when the mine will reopen. The lease requires the Company to perform
$25,000 in additional work and is subject to a 4% net smelter return royalty on
any production. The Company has not conducted any exploration
activities at the property.
The Alta Gracia
Property. In August 2009,
the Company acquired claims adjacent to the Las Margaritas property in
the Alta Gracia mining
district by filing concessions under the Mexican mining laws. The
Company refers to this property as the Alta Gracia property. These
concessions are comprised of three mining claims, the David 1, the David 2 and La Hurradura. The concessions
total 5,175 hectares, and the acquisition of these claims extended the Company’s
land position along what is known as the San Jose structural corridor
to just over 16 kilometers. To date, the Company has not conducted
significant exploration activities
at the property.
9
|
4.
|
Property
and Equipment
|
At March 31,
2010 and December 31, 2009, property and equipment consisted of the
following:
|
March 31,
2010
|
December 31,
2009
|
|||||||
|
Trucks
and autos
|
$ | 601,940 | $ | 424,527 | ||||
|
Office
furniture and equipment
|
703,043 | 491,447 | ||||||
|
Exploration
equipment
|
908,193 | 916,879 | ||||||
|
Other
support equipment
|
240,070 | 228,110 | ||||||
|
Subtotal
|
2,453,246 | 2,060,963 | ||||||
|
Accumulated
depreciation
|
(376,530 | ) | (334,685 | ) | ||||
|
Total
|
$ | 2,076,716 | $ | 1,726,278 | ||||
Depreciation
expense for the three months ended March 31, 2010 and 2009 was $61,002 and
$33,651, respectively. The Company evaluates the recoverability of
property and equipment when events and circumstances indicate that such assets
might be impaired.
|
5.
|
Asset
Retirement Obligations
|
The Company’s
asset retirement obligations (“ARO”) relate to the reclamation, remediation, and
closure costs for its El
Aquila Project. The following table presents the changes in
ARO for the period ended March 31, 2010:
|
Three months
ended
March 31,
2010
|
||||
|
Beginning
Balance
|
$ | 1,991,987 | ||
|
Foreign
Currency Translation
|
104,957 | |||
|
Accretion
Expense
|
16,723 | |||
|
Ending
Balance
|
$ | 2,113,667 | ||
|
6.
|
Shareholders'
Equity
|
On March 8,
2010, the Company issued 600,000 restricted shares of common stock for a price
of $8.62 per share to Hochschild pursuant to a subscription agreement in
connection with the parties’ strategic alliance. The Company received
cash proceeds of $5,172,000.
|
7.
|
Stock
Options
|
The Company
has a non-qualified stock option and stock grant plan under which equity awards
may be granted to key employees, directors and others (the
“Plan”). The Plan is administered by the Board of Directors which
determines the terms pursuant to which any option is granted. The
maximum number of common shares subject to grant under the Plan is
6,000,000.
10
The fair
value of each option award is estimated on the date of grant using the
Black-Scholes-Merton option pricing model. The option pricing model
requires the input of subjective assumptions which are based on several
different criteria. Expected volatility is based on the historical
price volatility of the Company’s common stock. Expected dividend
yield is assumed to be nil, as the Company has not paid dividends since
inception. Based on historical experience, forfeitures and cancellations are not
significant. The expected life of the options represents the
estimated period of time until exercise and is based on historical experience of
similar awards, giving consideration to the contractual terms and vesting
schedules. Risk free interest rates are based on US government
obligations with a term approximating the expected life of the
option.
The fair
value of stock option grants is amortized over the respective vesting period.
Total non-cash compensation expense related to stock options included in general
and administrative expense for the three months ended March 31, 2010 and 2009
was $82,718 and $59,677, respectively. The estimated unrecognized
compensation expense from unvested options as of March 31, 2010 was
approximately $726,167, which is expected to be recognized over the remaining
vesting periods, which range from 0.33 to 3.0 years.
Effective
January 25, 2010, grants covering 60,000 shares of common stock were issued to
an employee at an exercise price of $10.10 and a term of ten
years. The options vest over a three year period. The
grant date fair value was calculated as $486,764 ($8.113 per option) using the
following assumptions: expected life of 10 years, stock price of
$10.10 at date of grant, dividend yield of 0%, interest rate 3.63%, and
volatility of 75%.
The weighted
average grant date fair value of options granted was $8.11 per option during the
three months ended March 31, 2010 and there were no options granted for the
comparable period ended 2009. The weighted average grant date fair value of
options vested was $2.56 per option during 2010 and $1.88 per option during
2009.
The following
table summarizes activity for compensatory stock options during the interim
period ended March 31, 2010:
|
Number
of Shares
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic Value
|
Number
of Shares Exercisable
|
|||||||||||||
|
Outstanding,
January 1, 2010
|
3,745,000 | $ | 2.48 | $ | 32,850,250 | 3,500,000 | ||||||||||
|
Granted
|
60,000 | $ | 10.10 | - | - | |||||||||||
|
Cancelled
|
(75,000 | ) | $ | 7.00 | - | - | ||||||||||
|
Outstanding,
March 31, 2010
|
3,730,000 | $ | 2.51 | $ | 29,430,000 | 3,500,000 | ||||||||||
11
The following
table summarizes information about outstanding compensatory stock options as of
March 31, 2010:
| Options Outstanding | Options Exercisable | |||||||||||
|
Exercise
Prices
|
Number of
Shares
|
Remaining Contractual Life
(in years)
|
Weighted Average Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise Price
|
Aggregate
Intrinsic
Value
|
||||||
|
$0.25
|
1,400,000
|
3.8
|
$0.25
|
1,400,000
|
$0.25
|
$14,210,000
|
||||||
|
$3.40
|
1,000,000
|
7.9
|
$3.40
|
1,000,000
|
$3.40
|
$7,000,000
|
||||||
|
$3.74
-$4.51
|
270,000
|
8.4
|
$3.91
|
100,000
|
$3.91
|
$658,900
|
||||||
|
$3.95
|
1,000,000
|
9.1
|
$3.95
|
1,000,000
|
$3.95
|
$6,450,000
|
||||||
|
$10.10
|
60,000
|
9.9
|
$10.10
|
-
|
-
|
-
|
||||||
|
3,730,000
|
$2.51
|
3,500,000
|
$2.31
|
$28,614,900
|
||||||||
|
8.
|
Subsequent
Events
|
Subsequent to
March 31, 2010, an employee exercised options to purchase 70,000 shares of
common stock for an exercise price of $3.74 per share. The employee
elected the “cashless exercise” method, under which he immediately surrendered
options to purchase 21,459 shares of common stock, resulting in a net share
issuance of 48,541 shares. The fair market value of the common shares
on the exercise date was $12.20 per share and the aggregate market value of the
options surrendered was $261,800.
12
|
ITEM
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operation
|
This
discussion updates our business plan for the balance of 2010. It also
analyzes our financial condition at March 31, 2010 and compares it to our
financial condition at December 31, 2009. Finally, this discussion
summarizes the results of our operations for the three month period ended March
31, 2010 and compares those results to the three month period ended March 31,
2009. This discussion and analysis should be read in conjunction with
our audited financial statements for the years ended December 31, 2009 and 2008,
including footnotes, and the discussion and analysis included in our Form 10-K
for the year ended December 31, 2009.
Plan
of Operation
We expect
to commence commercial production at our Mexico mill facility during
2010. Prior to 2010, none of our properties were in production, and
consequently, we have never produced revenue or cash flow from the sale of
minerals and have relied on equity financing to fund our operations to
date.
We are
continuing exploration at our El Aguila Project in
2010. Presently, work continues on the decline ramp on what we
anticipate will be an underground mine at the La Arista vein.
We
continue to refine our initial and ongoing capital requirements. As
an exploration stage company, there is significant uncertainty in our estimates
regarding both future costs and future revenue. We may require
additional capital resources to complete our plans. As of March 31,
2010, $9,651,097 is available in restricted cash to fund ongoing exploration and
construction of the decline ramp.
Anticipated Production at El
Aguila. While we intend to continue exploration at the El Aguila Project and
proximate properties for the foreseeable future, we are moving forward with our
plans for mineral production and construction of an underground
mine. None of the mineralized material on our properties has been
classified as proven or probable reserves in accordance with SEC
criteria. The assumptions used by us in our decision to undertake
construction of the mill and mine may prove to be inaccurate. Thus,
we may never be able to recover sufficient mineralized material to become
profitable.
In
December 2009, we began commissioning the El Aguila mill. In
February 2010, we produced our first concentrate and shipped the first set of
concentrates in April 2010 to Consorcio Minero de Mexico Cormin Mex, S.A. de
C.V. (a Trafigura Group Company), which accepted delivery at a Mexican port for
ultimate shipment to a smelter. As of May 7, 2010, we are in the
process of ramping up and optimizing mill production, which we expect to
continue until the full production rate of approximately 850 tonnes per day of
ore throughput is reached, using ore from the open pit mine. As the
ramp-up proceeds, we are focused on improving the training of the plant
workforce, and improving plant efficiencies. In addition, we continue
to work on the agitated leach circuit and construction of the underground
mine.
Our
immediate goal is to reach commercial production in the second quarter of
2010. Commercial production for our purposes is achieved when the
mill throughput and recoveries are 80% of design. We have not yet
achieved what we consider commercial production. Prior to realizing
commercial production, any sales of concentrates are applied against costs and
are not considered revenue. If commercial production is achieved from
the mill, any silver contained in the mineralization will be produced as a
by-product, revenue from which will help offset the costs of producing the
gold. As the proceeds from our recent equity financings may not be
sufficient to fully fund our capital resource requirements for start-up and
commercial production activities, we may seek additional funding.
13
Construction at the La Arista
Vein. We have begun development of the underground La Arista vein, which we hope
to place in production during our second year of mineral
production. A third party contractor has been hired and is presently
driving a decline haulage ramp, a second ventilation and emergency ramp and
additional developments. We are also constructing a surface facility
to service this underground mine. Since we believe the La Arista mineralization area
also contains base metals such as copper, lead, and zinc, we intend to produce
those metals as by-products, any revenue from which would help offset the costs
of producing gold and silver. We expect that the ore from both the
near-surface deposit and the anticipated underground mine will be processed at
the El Aguila
mill.
A portion
of the proceeds of the December 2009 private placement, in the amount of
$8,000,000, have been reserved for construction of this underground mine and
facilities. However, since we are still in the process of planning
the design and construction of those facilities, we have not yet determined
whether that amount will be sufficient to complete the necessary work to begin
mining of the underground mineralization. If we are successful in
completing the underground facilities and commencing mining at this portion of
our property, we expect that the ore will be processed at our nearby
mill.
Accounting
for Exploration Stage Activities
We are
considered an exploration stage company since we have not demonstrated the
existence of proven or probable reserves. In accordance with
accounting principles generally accepted in the United States, all expenditures
for exploration and evaluation of our properties have been expensed as
incurred. Furthermore, unless mineralized material is classified as
proven or probable reserves, substantially all expenditures for mine and mill
construction have been or will be expensed as incurred. Certain
expenditures, such as for rolling stock or other general purpose equipment, may
be capitalized, subject to our evaluation of the possible impairment of the
asset. Since substantially all of our expenditures to date, including
construction of the mill, have been expensed and we expect to expense additional
expenditures during 2010, most of our investment in mining properties and
equipment does not appear as an asset on our balance sheet. Due to
the absence of any proven or probable reserves, we expect to remain as an
exploration stage company for the foreseeable future, even if we reach
commercial production.
Our
accounting treatment for exploration stage properties, regarding the
classification of construction expenditures as an operating expense rather than
as a capital expenditure, has caused us to report large losses during the last
two years. Although the majority of expenditures for the El Aguila Project were
completed during the last two years, we expect underground mine construction to
continue in future years. In comparison to other mining companies
that capitalize development expenditures because they have exited the
exploration stage, we will report larger losses or lesser profits during periods
of construction.
In
accordance with this policy, from inception to March 31, 2010, we expensed
approximately $40,095,000 in design, engineering, and construction costs, all of
which apply to the El
Aguila Project.
Liquidity
and Capital Resources
As of
March 31, 2010, we had working capital of $18,020,970, consisting of current
assets of $18,962,025 and current liabilities of $941,055. This
represents a decrease of $1,955,996 from the working capital balance of
$19,976,966 as of December 31, 2009. Consistent with our plans, our
working capital balance fluctuates as we consume resources to fund our
exploration and construction activities and other operating expenses, and as we
replenish our capital through the sale of common stock.
We have
historically relied on equity financings to fund our operations. From
inception through March 31, 2010, we received $100,995,000 in cash, services,
stock options, and other consideration through issuance of our common
stock. As of March 31, 2010, we did not have any outstanding
debt. We believe that we will continue to fund our future working
capital requirements through the sale of equity, and eventually through cash
flow from operations, and we have not made arrangements to borrow funds for
working capital requirements. However, we may consider debt financing
if market conditions allow.
14
Effective
March 8, 2010, we completed a financing transaction with Hochschild Mining
Holdings Limited (“Hochschild”) whereby we sold 600,000 shares of restricted
common stock at $8.62 per share for gross proceeds of $5,172,000.
During
the three months ended March 31, 2010, we spent $1,215,873 on the exploration
and evaluation of our properties, predominantly at our El Aguila
Project. This compares to $627,921 spent during the three months
ended March 31, 2009. We continued our exploration program to further
delineate the area of mineralized material, even though our emphasis has shifted
to production activities.
During
the three months ended March 31, 2010, we also spent $4,599,048 on engineering
and construction activities. This compares to $5,843,952 spent during
the three months ended March 31, 2009, and reflects our shifting emphasis from
construction of the mill and infrastructure into the production
phase.
Our most
significant expenditures for the remainder of 2010 are expected to be costs
associated with the second phase of our tailings facility, achieving ramp up and
optimization to commercial production at our mill facility, the continued
construction of the underground mine and further exploration of our
properties. We also continue to incur operating expenses
approximating $200,000 per month for salaries and other overhead expenses at our
Denver and Oaxaca locations. We expect to continue depleting our
working capital until such time, if ever, we successfully reach commercial
production and generate cash flow from the production and sale of gold and other
metals.
Although
we expect to commence gold production during 2010, it is uncertain if we will be
successful. Furthermore, the amount of revenue generated during the
start-up phase of a mining operation is difficult to predict and tends to be
highly variable. Our costs to enter the production phase may be
greater than we anticipate. We may require additional funding to
complete our existing plans and we would be dependent upon additional financing
to expand our exploration efforts. We may seek additional funding
during the next twelve months.
Net cash
used in operating activities was $7,928,211 during the three months ended March
31, 2010, compared to $7,883,514 during 2009, an increase of
$44,697. Our use of operating cash is currently shifting from
construction activities to production activities consistent with our plan to
commence production during 2010.
Net cash
used in investing activities for the three months ended March 31, 2010 was
$329,914, compared to $60,750 for the three months ended March 31,
2009. Although most of our exploration stage expenditures are
recorded as an expense rather than an investment, we capitalize the acquisition
cost of land and mineral rights and certain equipment that has alternative
future uses or significant salvage value, including rolling stock, furniture,
and electronics. During the three months ended March 31 2010, we
invested in additional vehicles and computer equipment.
Net cash
provided by financing activities for the three months ended March 31, 2010 was
$5,172,000, consisting of proceeds from the sale of shares to
Hochschild. This represents a decrease of $7,818,000 for the three
months ended March 31, 2009 where financing activities provided cash of
$12,990,000 from the sale of shares to Hochschild.
The
balance of cash and equivalents decreased to $3,689,631 as of March 31, 2010
from $6,752,325 as of December 31, 2009, a net decrease in cash of
$3,062,694. The decrease is consistent with our current activities at
El
Aguila. We expect to continue our plan of raising funds from
equity sales if necessary and to expend our cash for exploration stage and
production start-up activities until such time, if ever, we successfully
commence production and generate cash flow from the production and sale of gold
and other metals.
15
Results
of Operations – Three Months Ended March 31, 2010 Compared to Three Months Ended
March 31, 2009
For the
three months ended March 31, 2010, we reported a net loss of $7,265,492, or
$0.15 per share, compared to a net loss of $7,141,309, or $0.19 per share for
the three months ended March 31, 2009. We expect to incur losses
until such time, if ever, we begin generating revenue from
operations. The decrease in the net loss per share in the three
months ended March 31, 2010 resulted from a greater number of shares outstanding
during the period. In neither period did we report any revenue from
the sale of gold or other minerals. Our only revenue since inception
has consisted of interest income.
Total
costs and expenses during the three months ended March 31, 2010 were $7,443,479
compared to $7,145,476 during the comparable period of 2009, an increase of
$298,003 or 4%. Although total costs and expenses for the two periods
were similar, there has been a shift in the nature of our cost
structure. We are currently shifting from construction activities to
production activities consistent with our plan to commence production during
2010.
During
the three months ended March 31, 2010, we commenced operations at the El Aguila mill and incurred
costs for training, testing, system optimization, salaries, power and light,
among others. We are planning to complete the start-up phase and
enter into commercial production during 2010.
The
property exploration and evaluation component increased $587,952 or 94%, from
$627,921 for the three months ended March 31, 2009 to $1,215,873 for the three
months ended March 31, 2010. We recently contracted for a second
drilling rig to accelerate the exploration of our properties.
The
engineering and construction cost component during the three months ended March
31, 2010 was $4,599,048, compared to $5,843,952 during the comparable period in
2009. We have substantially completed engineering and construction of
the open pit mine and mill and are shifting our construction emphasis to the
underground mine.
General
and administrative expenses increased $182,227, or 28%, to $822,179 for the
three months ended March 31, 2010 as compared to $639,952 for the comparable
period last year.
The cash
components of general and administrative expense, including salaries and
benefits, professional fees, investor relations, and travel, increased to
$739,461 during the three months ended March 31, 2010 from $580,275 during the
comparable period in 2009, an increase of $159,186 or 28%. There was
a significant change in the insurance component of our cost structure as we
increased coverage for Mexico operations, in addition to generally increased
activity levels as we prepare the El Aguila Project for
production. We anticipate these costs may further increase if we
commence commercial production.
The
component of general and administrative expense representing stock option
compensation expense (a “non-cash” expense) was $82,718 for the three months
ended March 31, 2010, compared to $59,677 for the comparable period in
2009. We use an option pricing model to estimate the value of stock
options granted to officers, directors, employees and consultants. We
record the estimated fair value of options granted as an expense on a pro-rata
basis over the vesting period of the options.
Interest
income for the three months ended March 31, 2010 increased to $177,987 compared
to $4,167 for the comparable period of 2009, an increase of $173,820, or 98%,
representing increased deposits in short term interest bearing
accounts.
Our
mining operations are located in Mexico and we primarily transact business in
Mexican pesos. Our reporting currency is the US
dollar. Changes in the rate of currency exchange between the Mexican
peso and the US dollar create translation gains and losses, which are reported
as a component of other comprehensive income. For the three months
ended March 31, 2010 and 2009, we recorded currency translation gains of
$285,988 and $96,143, respectively.
16
Critical
Accounting Policies
There
have been no material changes in our critical accounting policies since December
31, 2009.
ITEM
3. Quantitative and Qualitative Disclosures about Market
Risk
Our exposure to market risks includes,
but is not limited to, the following risks: changes in foreign currency exchange
rates, changes in interest rates, equity price risks, commodity price
fluctuations, and country risk. We do not use derivative financial
instruments as part of an overall strategy to manage market risk; however, we
may consider such arrangements in the future as we evaluate our business and
financial strategy.
Foreign
Currency Risk
We
transact a significant amount of our business in Mexican pesos. As a
result, currency exchange fluctuations may impact our operating
costs. The appreciation of non-US dollar currencies such as the peso
against the US dollar increases expenses and the cost of purchasing capital
assets in US dollar terms in foreign countries like Mexico, which can adversely
impact our operating results and cash flows. Conversely, a
depreciation of non-US dollar currencies usually decreases operating costs and
capital asset purchases in US dollar terms in foreign countries.
The value
of cash and cash equivalents denominated in foreign currencies also fluctuates
with changes in currency exchange rates. Appreciation of non-US
dollar currencies results in a foreign currency gain on such investments and a
decrease in non-US dollar currencies results in a loss. We have not
utilized market risk sensitive instruments to manage our exposure to foreign
currency exchange rates but may in the future actively manage our exposure to
foreign currency exchange rate risk. We also hold a small portion of
our cash reserves in non-US dollar currencies.
Interest
Rate Risk
We have
no debt outstanding nor do we have any investment in debt instruments other than
highly liquid short-term investments. Accordingly, we consider our interest rate
risk exposure to be insignificant at this time.
Equity
Price Risk
We have
in the past sought and may in the future seek to acquire additional funding by
sale of common stock and other equity. Movements in the price of our common
stock have been volatile in the past and may also be volatile in the future. As
a result, there is a risk that we may not be able to sell our common stock at an
acceptable price should the need for new equity funding arise.
Commodity
Price Risk
The
profitability of our anticipated operations will be dependent upon the market
prices of gold and silver. Gold and silver prices fluctuate widely and are
affected by numerous factors beyond our control. The level of interest rates,
the rate of inflation, the world supply of gold and silver and the stability of
exchange rates, among other factors, can all cause significant fluctuations in
prices. Such external economic factors are in turn influenced by changes in
international investment patterns, monetary systems and political
developments. The price of gold and silver has fluctuated widely in
recent years, and future price declines could cause a mineral project to become
uneconomic, thereby having a material adverse effect on our business and
financial condition. We have not entered into derivative contracts to
protect the selling price for gold or silver. We may in the future
more actively manage our exposure through derivative contracts or other
commodity price risk management programs.
17
In
addition to adversely affecting our mineralized material estimates and our
financial condition, declining gold and silver prices could require a
reassessment of the feasibility of a particular project. Even if the
project is ultimately determined to be economically viable, the need to conduct
such a reassessment may cause delays in the implementation of the
project.
Country
Risk
All of
our mineral properties are located in Mexico. In the past, that country
has been subject to political instability, changes and uncertainties which may
cause changes to existing government regulations affecting mineral exploration
and mining activities. Civil or political unrest could disrupt our
operations at any time. Our exploration and mining activities may be
adversely affected in varying degrees by changing government regulations
relating to the mining industry or shifts in political conditions that could
increase the costs related to our activities or maintaining our
properties. Finally, Mexico’s status as a developing country may make it
more difficult for us to obtain required financing for our
properties.
ITEM
4. Controls and Procedures
(a) During
the fiscal period covered by this report, our management, with the participation
of the Principal Executive Officer and Principal Financial Officer of the
Company, carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)). Based on such evaluation, our Principal Executive
Officer and Principal Financial Officer have concluded that, as of the end of
the period covered by this report, our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the required time periods and are designed to ensure that
information required to be disclosed in our reports is accumulated and
communicated to our management, including our Principal Executive Officer and
Principal Financial Officer, as appropriate to allow timely decisions regarding
required disclosure.
(b) There
was no change in our internal control over financial reporting that occurred
during the quarter ended March 31, 2010 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
18
PART
II – OTHER INFORMATION
ITEM
6. Exhibits
|
|
19
SIGNATURES
In accordance
with Section 13 or 15(d) of the Exchange Act of 1934, the Company has caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
GOLD
RESOURCE CORPORATION
|
|||
|
Dated:
May 7, 2010
|
By:
|
/s/ William W. Reid | |
| William W. Reid, | |||
|
President
and Principal Executive Officer
|
|||
|
Date:
May 7, 2010
|
By:
|
/s/ Frank L. Jennings | |
| Frank L. Jennings, | |||
|
Principal
Financial Officer
|
|||
20
EXHIBIT
INDEX
|
Exhibit
No.
|
Description
of Exhibit
|
21