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Analyst Says “Stay Away” from Gold Resource Stock

Nov. 14, 2023 — Gold Resource Corp. (GORO) stock “has completely disintegrated” since its third quarter 2023 results were made public last week and should be avoided by all but the most sophisticated investor, said a freelance analyst who goes by the name Fun Trading in a post to the crowd-sourced Seeking Alpha website today.

The company’s stock has dropped more than 25 percent since it released negative third-quarter results on Nov. 6. It closed today at 28 cents per share, down from 40 cents per share when the results were announced.

Fun Trading called GORO’s recent performance “a debacle.” Its cash on hand is severely depleted, “which begs a few questions about the management’s ability to run this company in the best interest of its shareholders.”

Referring to the proposed Back Forty mine on the Menominee River west of Stephenson, Michigan, Fun Trading said: “The most puzzling issue is the reason behind GORO’s management’s decision to purchase such a contentious project from Aquila Resources Inc. on December 10, 2021, for about $24 million on an all-share basis. Even though I don’t think there is any foul play here, it should be thoroughly investigated.”

GORO has spent over $1 million so far this year for preliminary studies on its proposed Back Forty mine, Fun Trading said, and $4 million on exploration at its Mexican mine, which is losing money due to declining ore quality, a strengthening Mexican Peso to the US dollar, increased local power costs, and lower base metal prices.

Fun Trading pointed out another dark cloud for the company: the Mexican government has hit it with an $18 million sanction after a 2015 tax audit. GORO says its tax return was correct and it is “in the process of assessing” the tax notification.

Fun Trading advised investors to “stay away from this company unless you are a trader who knows the risks that come with investing in a company experiencing such challenges and who can remain composed under pressure.” However, he also noted that GORO “is debt-free and faces no threat from a Chapter 11 restructuring (bankruptcy),” and the stock price might go up significantly if it is acquired by another company “for pennies on the dollar.”

Ed. Note: The individual who calls himself Fun Trading claims over 21,000 followers on the Seeking Alpha website and is highly regarded by reviewers. The use of anonymous sources is not favored here but objective information about Gold Resource Corp. is so difficult to come by that we’ve made an exception here.

Marchers Demand Access to Boneyard Road

Nov. 11, 2023 — Members of the Menominee Tribe and their supporters walked Boneyard Road today to assert their right of access to cultural sites that were recently included on the National Register of Historic Places.

Gold Resource Corp., which is attempting to develop a mine on a site that is crossed by Boneyard Road, claims the road is private property.

Mine opponents say the road is now, and always has been, a public right of way. To press their point, about 60 men, women and children, Natives and non-Natives, marched over Boneyard Road, which forms a horseshoe starting north of the proposed mine site and exiting to the south.

The road, which is unimproved, got its name because numerous Menominee burial sites are located near it. The area is part of the Anaem Omot, or “Dog’s Belly,” cultural district, where the Menominee Tribe lived for thousands of years on both sides of the Menominee River before they were removed to a reservation in Wisconsin.

Today’s event was billed as a “Walk with Our Ancestors, to honor and protect our ancestral home, the water, and the ancestors who have been here since time immemorial.” It was a grassroots effort that was not formally endorsed by the tribe.

After leaving River Road, marchers eventually reached a gate set up across Boneyard Road by Gold Resource, marking what the mining company considers private property.

Most of the marchers chose to go past the gate and continue up Boneyard Road. After a long hike, they reemerged at River Road under the watchful eyes of two Gold Resource security guards, who remained silent and allowed them to pass.

No law enforcement officers were present and there were no attempts to cite any of the marchers for trespassing.

Total attendance at the event was well over 100 people.

Ore Quality and Income Down at Gold Resource’s Mexican Mine

Nov. 9, 2023 — Declining ore quality and lower base metal prices have contributed to a net loss of $13 million so far this year for Gold Resource Corp., which owns the proposed Back Forty project and operates the Don David Gold Mine in Mexico.

The mineral content of ore at the Don David Mine has declined but production costs have remained stable. As a result, the cost per ton of finished product has gone up and the company is currently unable to operate at a profit.

Gold Resource has been drilling test holes in search of higher-quality ore at the Don David Mine and hopes to see improvements next year.

“Our exploration program, which has been our primary use of cash over the last 2.5 years, continues to produce good results, which will result in a growth in reserves and resources increasing the mine life,” said Gold Resource CEO Allen Palmiere during a conference call with investors Nov. 7.

A stronger Mexican peso, in relation to the dollar, and lower prices for copper and zinc, which Gold Resource produces along with gold and silver, have further eroded the junior miner’s bottom line.

The negative cost trends have dramatically affected Gold Resource’s ready cash: it’s down from $22.5 million at the close of the third quarter of 2022 to $6.7 million for the same period in 2023.

As a result, the company is focusing its available resources on bringing the Don David Mine back into profitability and other initiatives are, for now, on the back burner.

“We’re not going to commit to spending a bunch of money on exploration on those other concessions we have,” Palmiere said during the investor call. “We will not spend a lot of money on Back Forty next year. There are a couple of things that we could potentially do that we’re evaluating. But the real focus is ensuring that Don David is operating to the best of its ability to reestablish our bank accounts. And that is our focus for next year.”

The company released its negative third-quarter performance and financial report on Nov. 6, and its stock price dropped 22.5 percent by the close of trading on Nov. 8.

Gold Resource was given the opportunity to comment on this report.