I’ve been an investor in Gold Resource Corporation (GORO) since October 2006. I advised them for just under two years, bought shares in the open market, and have since watched their dream become a reality. The stock itself is arguably the best performing gold stock during the 2006-2010 timeframe. The GORO story has everything you look for as a gold stock investor: 1.) A new low cost gold producer 2.) High grade deposit that is still 98% unexplored 3.) Low cost production (sub $200/oz cash cost) 4.) Management owns 20-25% of the company 5.) 1/3 of cash flow going to a dividend [already paid two special dividends since 7/1/10] 6.) Fantastic share structure 7.) 9 year mine life which will be expanded.
First years production is anticipated to be 70,000 oz at a $200/cash cost increasing to 200,000 ounces at a 0 cash cost by year 3. At $1,000 gold, with just over 52 million shares fully diluted, GORO will have $1.07/share in operating cash flow in year one, growing to over $3.81 OCF/share by year 3. Management’s goal is to pay 1/3 of operating cash flow out as a dividend so one could expect dividends to grow from $0.36 – $1.27 per share during this 3 year timeframe. The company has already announced $0.06 in dividends since the start of commercial production on July 1, 2010 which tells investors management is serious about paying them.
