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Gold Resource Corp.: Appreciating But Still Substantially Undervalued

May 07, 2018 2:14 PM ETGold Resource Corporation (GORO)2 Comments
Amit Ghate profile picture
Amit Ghate


  • GORO's stock price is at 52-week highs, but I believe that this still doesn't come close to fully valuing the company.
  • After reviewing the company and its proven and probable reserves, I calculate a minimum value of $8.16 per share.
  • I then explain why a much more realistic valuation, one which incorporates developments from 2018, is $13.50 per share.

Since the time of my previous update stressing the value of Gold Resource Corp.'s (NYSE:GORO) Switchback mine, GORO has announced numerous additional positive developments, all of which increase the value of the company and the stock. Moreover, the company has been executing well in its actual mining endeavours, such as it has been generally profitable ever since it began mining underground at its premier property El Aguila (though of course precious metals prices were much higher in the early days).

ChartGORO Normalized Diluted EPS (TTM) data by YCharts

Indeed the market appears to be noticing, as the stock is now trading at 52-week highs, though as I argue below, there’s still plenty of price appreciation to be had.

Because there’s so much news occurring, and because I don’t think the market yet fully appreciates the company’s value, rather than just write an update, I’ve decided to present the company to new investors by giving a full summary of the properties, outlook and valuation. However, readers are still encouraged to review my earlier GORO articles to get a sense of the company’s history and accomplishments.

My presentation will begin by looking at the company’s properties, then I’ll develop a conservative valuation based only on proven and probable reserves, after which I’ll conclude by discussing other value drivers accompanied by a more realistic valuation.


GORO has two mining units: the Oaxaca unit has operating mines and development properties in southern Mexico, and the Nevada unit is currently in the exploration and development stage in the Walker Lane gold district in Nevada.

Oaxaca Unit

This slide from the corporate presentation shows GORO’s Oaxaca properties, which all fall on a 55-mile-long mineralized corridor:

The premier property (at least to date) is the El Alguila project, which now encompasses two large epithermal subterranean deposits, the Arista and the

This article was written by

Amit Ghate profile picture
I'm a private trader interested in both long and short ideas. My training and background are in engineering including several decades of consulting engineering practice. I endeavor to apply my analytical skills to investing/trading, which I've done for 20+ years and to which I bring a contrarian style. I've also recently become interested in writing and have published editorials at Forbes, PJM, and a few legacy newspapers.

Analyst’s Disclosure: I am/we are long GORO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I actively trade around core positions.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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