Gold Resource to spin out Nevada operations

Gold Resource has announced its intention to spin-off its Nevada mining unit in Nevada, USA, to shareholders as a separate, publicly-traded company to focus on its gold mining operations in Oaxaca, Mexico.

Staff reporter
 Gold Resource operations in Oaxaca, Mexico

Gold Resource operations in Oaxaca, Mexico

The spin out will allow each company to allocate resources and deploy capital according to their own business strategies, while unlocking a value premium for the Nevada mining unit, said the company.

The company produced 27,000oz of gold at Oaxaca in 2019 and 10,800oz in Nevada. Production in Nevada is due to grow to 40,000oz a year from 2021.

"Significant management effort places us at a point where both of our mining units are poised to experience meaningful increases in future free cash flow," said Gold Resource president and CEO Jason Reid.

"Our Oaxaca mining unit looks to benefit from the confluence of several recently completed capital projects that are expected to positively impact our future operations, cost structure and exploration potential, and our Nevada mining unit continues ramping up its gold production rate as it begins to benefit from the high-grade Pearl zone of the Isabella Pearl Mine and exploring our highly prospective properties."

Gold Resource's Oaxaca mining unit has been in production for more than 10 years and the company aims to allocate more of its cash flow and capital back into operations to better facilitate growth in addition to undertaking more exploration to expand and discover new vein systems. It is currently developing two exploration drifts at its Arista Mine to access and target extensions of known vein systems.

Oaxaca has an under-explored 55km fault corridor on a 560sq.km land package of which the company estimates it has drilled about 2%.

In Nevada, the spin out company would have similar benefits, with the company expecting increased margins from its Isabella Pearl project, with increased cash flow potentially funding dividends and exploration and development of its property portfolio in the Walker Lane district. The company controls over 25,000 acres in five properties in various stages of production, delineation and exploration.

Gold Resource would provide a US$10 million capital contribution to the spinco.

Shares in Gold Resource are trading at $3.62, valuing the company at $254 million.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.


Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.


Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.


Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.


Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.