Hochschild increases stake in

RNS Number : 3405E
Hochschild Mining PLC
18 December 2009
 



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18 December 2009 



Hochschild increases stake in Gold Resource Corporation


  • Hochschild enters into $16 million private placement with GRC

  • Purchase of 1.95 million GRC shares at $8.2 per share

  • Hochschild's ownership to increase from 23.9% to 27%

  • Transaction demonstrates continued delivery of M&A strategy following Hochschild's successful capital raising in early October 2009 


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 $16 millionOn completion of the purchase, which will be funded from existing cash, Hochschild will have a 27% interest in GRC. 


Since December 2008, Hochschild has invested a total of $54 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 approximately $470 million.  


Today's announcement 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. 


This additional 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 previous investments in GRC. 


GRC will use $8 million of the proceeds to fund development of the El Aguila project including working capital for GRC's recently commissioned Aguila mill which is expected to produc70 thousand ounces of gold in 2010 (4.2 million silver equivalent ounces)The deposit comprises 75% gold and silver and 25% zinc, copper and lead at current prices. In addition, $8 million will be used to accelerate the underground mine development of Arista, GRC's Au-Ag polymetalic deposit which is one of three high grade deposits discovered to date at the El Aguila project. 


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


"This transaction demonstrates the continued delivery of our M&A strategy following our $260 million capital raising in early October. Our investment will enable GRC to further develop El Aguila which we believe has enormous potential and also to accelerate underground mine development at Arista."


Gold Resource Corporation's president, William W. Reid stated, "We are pleased to have the continued support and financial assistance of Hochschild Mining as we make the transition from an explorer to producer. Hochschild continues to assist us in many ways, in addition to financial support, which has been much appreciated."


As at 30 September 2009GRC's total assets were $12,712,964million. For the 12 months ended 31 December 2008GRC reported a net loss for the period of $26,015,203 million.*


For further details about GRC and for information about key individuals important to the business, please visit www.goldresourcecorp.com.


*Extracted from Gold Resource Corporation's 2008 Annual report and 2009 unaudited Third Quarter Report



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  48,050,284 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 disclosureof 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.  




This information is provided by RNS
The company news service from the London Stock Exchange
 
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