Increases stake in Gold Resou

RNS Number : 8695U

Hochschild Mining PLC

01 July 2009

 



July 1, 2009  

Hochschild increases stake in Gold Resource Corporation

• Hochschild exercises option to invest a further $20 million in GRC

• Purchase of 5 million GRC shares at $4 per share, representing a 20% discount to the previous 30 day average closing price 

• Hochschild's ownership to increase from 14.6% to 23.9%

• Investment provides additional exposure to GRC's high grade, low cost ounces in a mining friendly country with significant mineral potential

• Transaction represents continued delivery of cluster consolidation strategy

Hochschild Mining plc ('Hochschild') is pleased to announce that it has exercised its option to purchase a further five million shares of Gold Resource Corporation ('GRC') for a total cash consideration of $20 million, representing a 20% discount to the previous 30 day average closing price as at 24 June 2009. The purchase will be completed in two tranches: a $5 million dollars investment which closed on June 30, 2009 and a second tranche of $15 million dollars, which will close by 20 July 2009.  On completion of the purchase, which will be funded from existing cash, Hochschild will have a 23.9% interest in GRC, a US OTC traded underground precious metals mining company with a number of prime development projects in southern Mexico. 

The investment increases Hochschild's exposure to GRC's high grade, low cost ounces in a mining friendly country with significant mineral potential, and expands the Group's Southern Mexico operational cluster following Hochschild's initial investment in GRC in December 2008. 

GRC will use $16 million of the proceeds to complete the El Aguila project. El Aguila is currently expected to commence production in the second half of 2009 at 70 thousand ounces of gold per year (4.2 million silver equivalent ounces), subject to obtaining remaining permits and regulatory approval. The deposit comprises 75% gold and silver and 25% zinc, copper and lead at current prices. The remaining investment will be used to advance GRC's exploration efforts around the La Arista, Margaritas, El Rey and El Aguila properties.

Miguel Aramburú, Chief Executive Officer of Hochschild Mining plc, commented: 

'We are delighted to announce this transaction which provides Hochschild further exposure to low cost, high grade ounces in the Southern Mexico, in line with our cluster consolidation strategy. We have been extremely impressed with the quality of GRC's assets and the speed at which the El Aguila property is being developed. This investment will enable GRC to complete the construction of the mine and plant as well as to further their exploration efforts.' 

Enquiries:
Hochschild Mining plc	[phone]
Finsbury
Robin Walker	[phone]
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 four potential high-grade gold and silver properties in Mexico's southern state of Oaxaca. The company has 42,345,489 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.  

 

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