Last checked at 26 May 2010 17:21
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26 May 2010
Hochschild acquires further stake in Gold Resource Corporation
• Hochschild enters into $6.0 million private placement with GRC, increasing ownership to 30%* • Purchase of 631,579 GRC shares at $9.5 per share • Transaction demonstrates continued delivery of consolidation strategy
Hochschild Mining plc ("Hochschild") is pleased to announce that it has entered into a private placement with Gold Resource Corporation ("GRC") for a total cash consideration of $6.0 million or $9.5 per share. Following completion of the purchase, Hochschild's ownership in GRC will increase from 29% to 30%*. To date, Hochschild has invested a total of $69.5 million in GRC, a US OTC traded underground precious metals mining company with a number of high grade, low cost development projects in southern Mexico. GRC has a current market capitalisation of over $500 million, valuing Hochschild's investment at approximately $150 million. The company's key project, El Aguila, is due to commence commercial production in the first half of 2010 with a target of 70 thousand ounces of gold (4.2 million silver equivalent ounces) in the first twelve months of operation. GRC will use the proceeds of the private placement for working capital and continued construction of the phase two tailings impoundment as it moves towards commercial production at El Aguila. The company sold its initial gold and silver concentrates in April 2010 and subsequent concentrate sales have been made from low-grade ore processed during the El Aguila mill startup and commissioning. Following good progress at the mill, management has now switched to processing its targeted average grade ore as it moves towards declaring commercial production.
Ignacio Bustamante, Chief Executive Officer of Hochschild Mining plc, commented: "We are extremely impressed with the quality of GRC's project portfolio and the fact that the company is progressing towards commercial production at its El Aguila operation, which is expected in the first half of this year. We continue to execute our three-part strategy which is focused on maximising life of mine and profitability at existing operations, delivering growth through our extensive exploration programme and adding to production through selective acquisitions." William W. Reid, President of Gold Resource Corporation stated, "We are pleased that Hochschild is supporting our need for working capital as we make the transition to commercial production at the El Aguila project. We are making excellent progress and remain on track to achieve our production target of 70,000 ounces of gold in the first 12 months of commercial production."
*On an outstanding basis
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Enquiries:
Hochschild Mining plc
Isabel Lütgendorf +44 (0)20 7907 2934
Head of Investor Relations
Finsbury
Faeth Birch +44 (0)20 7251 3801
Public Relations
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About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over forty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has numerous long-term prospects throughout the Americas.
About GRC:
Gold Resource Corporation is a mining company focused on production and pursuing development of gold and silver projects that feature low operating costs and produce high returns on capital. The Company has 100% interest in five potential high-grade gold and silver properties in Mexico's southern state of Oaxaca. The company has 49,331,863 shares outstanding and no warrants. For more information, please visit GRC's website, located at www.Goldresourcecorp.comand read the Company's 10-K for an understanding of the risk factors involved.