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Gold Resource Corp achieves $217/oz cash cost in first 6 months at El Aguila

|Includes:GORO, Gold Resource Corporation (GORO)

Gold Resource Corp (AMEX:GORO) said late Tuesday that in the first six months of commercial production at its El Aguila project in Oaxaca, Mexico, it produced 10,493 ounces of gold at a cash cost of just $217 per ounce.

The relatively new Denver-based gold producer, which began commercial output from El Aguila in July last year, said it sold its gold at an average price of $1,201 per ounce and generated a gross profit of $9.8 million in the first two quarters of production.

The company's 2010 mill production throughput rate averaged 755 tonnes per day and mill head grade averaged 3.7 g/t gold. Mill recoveries averaged 77% for the year, despite extensive and unusually heavy rains in the third and fourth quarter.

"Even with the challenges of early production and inclement weather we are pleased as the project continued to demonstrate its low production costs of less than $800,000 per month for the six months of commercial production,” said president Jason Reid.

Earlier this week, the company announced that it has begun the transition from processing lower grade, open pit ore to processing underground ore from its high grade Arista deposit at El Aguila - ahead of the mid-2011 target.

"We expect continued reduction of unit cash cost per ounce of gold by using industry standard base metal by-product credits from the Arista deposit which, in addition to gold and silver mineralization, also contains base metal mineralization of copper, lead and zinc," added Reid.  

The La Arista deposit is the company's largest discovered to date, and as the company continues to ramp up and improve operations, it is targeting higher average grade ore, lower cash costs and greater output levels this year. Flotation optimization is underway to produce three separate concentrates: gold-copper, a lead-silver, and a zinc concentrate.

Since beginning production in July last year, Gold Resource Corp has paid its shareholders a $0.03 per share dividend each month.

As expected, Gold Resource Corp posted a net loss of $23 million, or $0.46 per share, for 2010, due primarily to project construction and development costs. At year-end, the company had $47.5 million in cash and equivalents.

Stocks: GORO, GORO