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Gold Resource to hold around $1.0m of treasury in physical gold, silver

Mexico-focused Gold Resource Corp (AMEX:GORO) said Wednesday that its board has approved the holding of roughly $1.0 million of its treasury in physical gold and silver.

The gold producer, which declared commercial production in July of last year at its operations in Oaxaca, Mexico, said that to the extent the company's production increases and its treasury expands, it anticipates holding an increasing portion of its assets in physical precious metals.

“Holding physical gold and silver in our treasury provides an excellent means of diversification in light of today’s world economic conditions and not only provides that diversification to shareholders but underscores Gold Resource Corporation’s commitment to precious metals,” said president Jason Reid.

“Minting Gold Resource’s Double Eagle precious metal coins, currently underway, not only marks the next company milestone but takes a large step towards potentially offering our shareholders a future in-kind dividend."

A dividend-in-kind is a dividend paid out in stock, as opposed to cash.

Reid went on to say that with the unprecedented printing of Fiat currencies around the world, and the potential negative global impact of government policies, the company's increasing precious metal exposure is set to benefit shareholders.

Directly a result of production from its El Aguila project in Mexico, the company has returned over $22 million to shareholders in special monthly dividends since July 2010.

Despite some challenges at its El Aguila project due to a freak storm, the company still reported record second quarter results, beating its first ever profit recorded in the first quarter.
 
For the three months ending June 30, the Denver-based gold producer, recorded net income of $4.9 million, or 9 cents per share, excluding losses from a storm at its operations in April.

With these losses of $1.76 million, the company still generated a profit of $3.14 million, or 6 cents per share. This compares to a loss in the year-earlier period, and a profit of $2 million, or 4 cents per share, in the first quarter.

Gold Resource also managed to generate record revenue in the latest quarter of $20.7 million, versus $11.3 million in the previous three month period - an increase of 83%.

The company produced 13,457 ounces of gold equivalent at a cash cost of $156 per ounce, generating a $17.2 million gross profit from the El Aguila mine.

Production is set to only increase, as the company has now begun processing ore from its high grade La Arista deposit, with lower cash costs and greater output levels expected in the future.