Colorado Springs-based Gold Resource Corp. announced Tuesday it has received approvals to begin building an open-pit mine on property it controls in Nevada, more than doubling its gold and silver production when operations begin next year.
The mine's environmental assessment was approved, and board members OK'd moving the project into production. The U.S. Bureau of Land Management and the Nevada Department of Environmental Protection also have approved the project and issued required permits.
Gold Resource estimates the mine, called Isabella Pearl, will produce 29,000 ounces of gold in its first year, more than it expects to produce from its other mine in Mexico, and more than 40,000 ounces a year for the following three years.
The company said Isabella Pearl probably has nearly 200,000 ounces, an amount likely to grow after further exploration.
Gold Resource expects to spend $30 million to get the mine operating, including $10 million from cash and equipment financing already spent on a crusher, conveyors, a stacker and processing plant. Construction of the mine and processing facilities is expected to begin "as soon as possible" and take up to a year, says a company news release.
The company expects to finance much of the cost through its $28.6 million in cash and from cash flow generated by its Mexican mine, though it could sell stock or borrow to finance the project, which will be built and operated by a contractor it has hired but did not identify.
"This is an exciting milestone and time for Gold Resource Corporation shareholders and our Nevada Mining Unit," Gold Resource CEO Jason Reid said in the release. "We are currently in a strong cash position and focused on completing this project with cash and cash flow if possible. This goal will require metal prices and operations to continue as they have thus far this year.
"While we have other funding alternatives available if needed to help us overcome unforeseen challenges or metal price volatility, the Board of Directors and management of Gold Resource Corporation remain committed to shareholders and are moving forward with a goal to avoid or limit shareholder dilution to the extent possible."
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