Last checked at 9 Mar 2010 10:00
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9 March 2010
Hochschild further increases stake in Gold Resource Corporation
• Hochschild enters into $5.2 million private placement with GRC, increasing ownership to 29% • Purchase of 600,000 GRC shares at $8.6 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 $5.2 million. Following completion of the purchase and purchases undertaken on the open market, Hochschild's ownership in GRC will increase from 27% to 29%. Since December 2008, Hochschild has invested a total of $59.2 million in GRC, a US OTC traded underground precious metals mining company with a number of prime development projects in southern Mexico. GRC has a current market capitalisation of over $470 million, valuing Hochschild's investment at approximately $136 million. This additional investment increases Hochschild's exposure to GRC's high grade, low cost ounces and expands the Company's operational cluster in southern Mexico, a mining friendly country with significant mineral potential. It also demonstrates Hochschild's commitment and ability to deliver on its strategy following the $260 million capital raising undertaken in October 2009, which strengthened the Company's balance sheet and provided funds for further acquisition opportunities. Proceeds will be used at GRC's El Aguila project for working capital during mill optimisation, training and continued construction of the phase 2 tailings facility. The El Aguila project commenced production in February 2010 and is on track to produce 70 thousand ounces of gold in the first year of operation (4.2 million silver equivalent ounces).
Miguel Aramburú, Chief Executive Officer of Hochschild Mining plc, commented: "We are delighted to announce this transaction which demonstrates the continued delivery of our selective M&A strategy following our $260 million capital raising in early October 2009. We are extremely impressed with the quality of GRC's assets and the speed at which the company is progressing towards commercial production which is due to commence this quarter. We will continue to evaluate and invest in opportunities which maximise long term value for Hochschild's shareholders." Gold Resource Corporation's president, William W. Reid stated: "As we make the transition to commercial production at our El Aguila project, we appreciate the continued operational support and financial assistance from Hochschild Mining.
Enquiries:
Hochschild Mining plc +44 (0)20 7907 2932
Finsbury
Robin Walker +44 (0)20 7251 3801
Public Relations
About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico and numerous long-term prospects throughout the Americas. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits.For further information please visit www.hochschildmining.com.
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 48,700,284 shares outstanding and no warrants. For more information, please visit GRC's website, located at www.Goldresourcecorp.com and read the Company's 10-K for an understanding of the risk factors involved.
Forward looking statements:
The statement in this press release relating to the advancement and development of Gold Resource Corporation's El Aguila project is a forward looking statement within the meaning of securities legislation. The statement is based on the public disclosures of Gold Resource Corporation, and is subject to the statements by Gold Resource Corporation about such forward looking statements and the assumptions and risks associated with it.