Gold Resource Corporation

Jason D. Reid - Chief Executive Officer, President and Director Joe A.

Rodriguez - Chief Financial Officer

Thank you. Good morning, and thank you for joining Gold Resource Corporation's 2014 Second Quarter Conference Call.

I am pleased to report that during the second quarter of 2014, we delivered results in line with our company objectives. We had an excellent operating performance of production of precious metals.

Just as important as production ounces, those ounces were at low cost, helping us to substantially increase our cash position and continue our monthly dividend. We delivered an excellent operating and financial quarter.

I will go into specific details of the quarter after the brief customary housekeeping comments. Let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements.

These statements are subject to numerous risks and uncertainties, as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued yesterday, along with the comments on this call, are made only as of today, August 8, 2014.

And we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks in our Form 10-Q just filed with the SEC for the second quarter ending June 30, 2014.

Gold and silver prices continue to be volatile during the second quarter. We continue to position the company to emerge from this market volatility as a leaner, stronger, efficient and more profitable company, well positioned to generate cash at these current metal prices and in an even stronger position to generate more when the metals markets resume their longer-term bull market trend.

Today's call will include a 2014 second quarter performance review, an Arista mine development update and an exploration update. I will also comment on the recent trading activity and large-volume trades in our stock.

Joining me on the call today for the Q&A portion will be Mr. Joe Rodriguez, our Chief Financial Officer.

To review the second quarter of 2014. Mill production totaled 24,172 ounces of precious metal gold equivalent, or 10,205 ounces of gold and 940,268 ounces of silver, before payable metal deductions.

We processed an aggregate of 99,876 tonnes of ore with an average grade of 3.41 grams per tonne gold and 315 grams per tonne silver. During the quarter, we sold 20,647 precious metal gold equivalent ounces, or 8,328 ounces of gold and 829,351 ounces of silver, at a total cash cost, which is after byproduct credits and including royalties, of $438 per precious metal gold equivalent ounce sold.

Our all-in sustaining cash cost, which can be referenced from our corporate presentation on our company website, which aims to mirror the World Gold Council's all-in cost metric, totaled $837 per ounce. We reported revenue of $33.7 million, mine gross profit of $17.8 million and net income of $7.8 million or $0.14 per share.

Cash and cash equivalents increased 98% from December 31, 2013, or put another way, from the first of this year. Monthly dividends distributed to shareholders during the second quarter totaled $1.6 million or $0.03 per share.

During the same period, the average gold price realized was $1,276 per ounce, and silver was $19 per ounce. We milled an average of 1,098 tonnes per day in the second quarter and averaged 1,128 during the first half of 2014.

Average grades and recoveries for the second quarter included: gold grade at 3.41 grams per tonne gold with 93% recovery, silver grade at 315 grams per tonne with 93% recovery, copper grade at 0.40% with 97% recovery, lead grade at 1.34% with 75% recovery and a zinc grade at 3.18% with an 82% recovery. Mill recoveries were some of the best recoveries to date thus far, especially for our 93% gold and 93% silver recoveries.

Base metal recoveries were excellent as well, and base metal revenues are a significant component in driving the company's low-cost production, with quarterly revenues from base metals generating $8.5 million. Our cost on a per tonne basis during the second quarter was $159.

Our first 6 months of 2014 production of 47,896 ounces precious metal gold equivalent is in line with and keeps us on track to reach our targeted annual production outlook range of 85,000 to 100,000 ounces precious metal gold equivalent and an estimated 63:1 ratio. The financials clearly show that second quarter of 2014 was another very good quarter operationally with solid production, a solid number of tonnes mined and milled and an increase to our treasury while holding down our cost of production, both on a per ounce and per tonne basis.

The company continues to position itself among the low-cost producers. The second quarter results continue to demonstrate a leaner, more efficient, more profitable and stronger company.

Mine development during the quarter consisted of 15 to 20 working spaces in ore ranging from levels 7 through 18, spanning the Arista system's numerous veins. The mine exhaust ventilation raises were deepened to the level 19.

I am very pleased with the operational results of the second quarter, knowing our team overcame various challenges, including infrastructure needs as we go deeper in the mine, dewatering of the mine, management of carbon dioxide gas, limiting dilution of mineralized material, wall mining and variable mineral grades depending on the location and particular veins of the deposit being mined at any point in time. We expect these and other challenges to continue in 2014.

Our mining team takes a proactive approach to mitigate these challenges as we strive to improve and optimize our mining techniques, targeting production growth. Our team continued to do a good job managing development and overcame these and other mining challenges.

Preliminary mine design to access the Switchback discovery is well underway. We are currently double-drifting northeast from the Arista underground levels 10 and 14 and plan to set up a drill station approximately 250 meters to the southwest of the Switchback mineralization.

We have advanced approximately 190 meters of development toward the Switchback and are presently 60 meters from our first drill station. The new drill station is expected to be in a much more advantageous drilling location to further test Switchback mineralization.

We target the completion of the drill station and resumed Switchback drilling late in the third quarter. Thus far, our exploration team has defined Switchback mineralization 450 meters along strike and 450 meters at depth.

Additional infill and step-out holes will assist with our model and mine planning at Switchback. I am optimistic that Switchback could be our next economic deposit on the El Aguila Project.

During the second quarter, our exploration focus continued on the La Arista vein system. We also targeted potential feeder veins at the El Aguila open pit and the vein targets at the Chacal Red Zone, both on the El Aguila Project.

22 diamond drill holes totaled 10,444 meters were completed during the second quarter. We had 2 service drills and 2 underground drills working at the end of the quarter.

The majority of our drilling consisted of both infill and step-out holes testing the mineralized vein extensions at the La Arista mine. Primary drill targets included the northwest and southeast extensions of the Arista, Baja, Candelaria, Luz and Splay 66 veins and the recently discovered Santa Lucia vein, which are all currently in production in the La Arista mine.

Underground drilling continued to define extensions of the Santa Lucia vein, intercepting 2.68 meters of 11.72 grams gold, 748 grams per tonne silver, 1.68% copper, 2.41% lead and 4.02% zinc. The Santa Lucia vein is a parallel vein structure located approximately 60 meters northeast of the Arista vein on level 14.

Underground drilling also expanded the Socorro and Splay 5 veins located at the southwest of the system. Grades up to 3.93 grams per tonne gold and 2,223 grams per tonne silver over 1.41 meters were returned on the Splay 5 vein.

Surface drilling southwest of the Arista deposit focused on the Aire and Splay 6 veins. Surface drilling highlights include 2.43 meters of 3.85 grams per tonne gold, 681 grams per tonne silver on the Aire vein, and 2.06 meters of 1.36 grams per tonne gold and 813 grams per tonne silver on the northern extension of the Splay 6 vein.

Surface drilling at the Chacal Red Zone, located 4 kilometers due west of the La Arista mine, targeted many of the same geologic features as those seen at La Arista underground mine and in the El Aguila open pit. Our previously drilled holes at the Chacal Red Zone intercepted narrow veins with elevated gold and silver values, and we are now drilling deeper to explore for possible high-grade ore zones.

At the end of the second quarter, we commence surface drill testing the down-dip extensions of the possible feeder veins of the El Aguila manto vein below the El Aguila open pit. Numerous interesting quartz manto and vein intercepts were encountered in drill holes, and assay results are pending.

Other activities at El Aguila during second quarter included detailed geologic mapping, sampling and a review of existing geologic and geophysical data to identify priority exploration targets for future surface drilling. We also completed our review of existing geological, geophysical, diamond drilling and underground sampling data from our Alta Gracia property, and surface diamond drilling is now scheduled to commence during the third quarter.

During the second quarter, we finished reviewing existing geologic and geophysical data for our Las Margaritas property. An extensive geochemical soil something program is now underway at Margaritas to better define targets for surface drilling planned for late this year.

We remain very busy on the exploration front. As I have stated before, but it bears repeating, as a junior producer, we are comparable to and distribute more in dividends per share today than many major producers.

The most recent dividend in July marks our 49th consecutive monthly dividend. Since commercial production in July of 2010, we have now returned $1.83 per share and have returned over $98 million to date.

We're closing in on a major dividend milestone of returning $100 million to shareholders. This has not been an easy task to accomplish while balancing the capital needs of our operations, all the capital expenditures, paying taxes and coupled with the newly enacted Mexican royalty tax, which is expected to negatively impact our dividend distribution ratios.

Having said that, we remain committed to dividend distributions and are very proud of our rare achievement in this industry and believe it speaks to our ongoing shareholder focus and shareholder-friendly philosophy. We want to return as much in dividends back to shareholders as soon as possible.

Our philosophy is unique in the industry in that we not only hold physical gold and silver in our treasury, but offer shareholders the ability to convert their cash dividends into physical gold and silver and take delivery as well. We are pleased to continue to see our all-in sustaining cash cost per ounce well below the $1,000 per ounce mark.

During the second quarter of 2014, our all-in sustaining cash cost per ounce sold was $837. We expect our all-in sustaining cash cost per ounce to fluctuate up and down quarter-on-quarter, but our goal is to keep it below the $1,000 per ounce target for as long as possible in the face of the increasing longer-term mining space cost trends.

The successes during the second quarter are a combination -- culmination of our entire team working well together. And our team is strong operationally, led by our Chief Operating Officer, Mr.

Rick Irvine; our VP of Exploration, Mr. Barry Devlin; and our General Manager, Mr.

Jesus Rivera. To summarize the successful second quarter of 2014, we increased production over the prior quarter while continuing to overcome various challenges, a credit to our excellent team.

We maintained our low cost per ounce and low cost per tonne production attributed -- attributable to the tough decisions we made and continue to make for the efficiency and health of the company. We nearly doubled our treasury during the first half of the year.

We continue to distribute a meaningful monthly dividend as a junior producer, having returned $1.86 per share back to shareholders since commencing commercial production. We continue to demonstrate a leaner, more efficient, more profitable company during the quarter while identifying additional areas we can improve upon.

The second quarter of 2014 was a very successful quarter. Turning to recent trading activity in Gold Resource Corporation, you may have noticed some very large blocks of GORO stock in the open market the last several weeks.

One block trade in particular was for 3.5 million shares. As I have commented on in the past, we remain committed to eliminating the continued overhang on our stock from Hochschild Mining and developed an exit strategy to more efficiently help Hochschild exit for their own liquidity needs.

I am pleased to report that for all practical purposes, we have accomplished this goal. I want to thank Hochschild Mining for their years of support and wish them well on their future endeavors.

I would also like to welcome all the new shareholders and thank them for their support. What is important now and going forward is achieving the company's business plan as a low-cost, dividend-paying precious metal producer.

Gold Resource's second quarter did just that. One question on most precious metal equity investors' minds is how long can gold and silver spot prices remain near or at the average all-in sustaining cash cost to production levels.

Arguably, if the average all-in sustaining cash cost for miners is around $1,250 gold, which is very close to the spot metal price, some dramatic supply and demand imbalances may surface in the future. Couple that with an anemic junior exploration space, as risk money is responsible for many new discoveries that drive the industry, and I think we will see that fuel is added to the supply-and-demand fire that has been burning for a few years now.

This scenario points to less competition, less industry production and, ultimately, higher metal prices. We are positioning Gold Resource to capitalize and prosper under this scenario.

On behalf of the Board of Directors and the rest of the team at Gold Resource Corporation, I would like to thank all our long-term shareholders for their continued support of the company during these volatile times in a brutal marketplace. I would also like to welcome the new shareholders, as we continue to acquire many.

And I would also like to thank everyone for their time today on the conference call. Let's move on to the question-and-answer portion of the call if we have any questions.

[Operator Instructions] With that, I would like to welcome our CFO, Mr. Joe Rodriguez, and open up the lines for Q&A.

Good morning, Joe.

Good morning, Jason.

Operator, if there are any calls thus far, please take our first caller.

I was curious. The production seems to be in favor of silver over gold.

I was wondering how the name of the company got to be called Gold Resources rather than, say, Silver Resources? I was just curious about that.

Sure. What is your name, sir?

My name is Larry, Larry Shield [ph]. I'm a shareholder.

Okay. Well, Larry, I don't know how long you've been following us, but we started out -- when we originally made our production decision, it was just with a small gold open pit, and that was the El Aguila open pit.

And since then, we discovered the Arista deposit, which has very high-grade gold and very high-grade silver. Now that ratio of more gold and more silver will fluctuate over time, and we love both of them.

That is what we are in the business to do, is mine gold and silver. So that will continue to fluctuate in the future as other projects come online.

Some are heavily weighted to gold, some are silver, and it will vary. But we're in the business to produce precious metals, and that's what we do.

This is Bill Tippins [ph]. I'm also a private investor.

Two-part question. The first one is on the capacity at the mill right now running about 11,000 tonnes -- 1,100 tonnes a day with a capacity of 1,500, I know we're going to ramp up to 1,500, but can you add a little more color to that on when we might start seeing that because it looks like first quarter and second quarter are about the same.

And then the second question regards the dividend. I know and appreciate the fact that you guys are giving us the dividends, and we certainly like to see those.

As we build the treasury, do you have any guidance on when we might raise that a little bit from, say, $0.01 to $0.015 or maybe $0.02 to get us up to -- oh, not necessarily a target of 30%, but a little bit higher than where we are?

Sure. Thanks for the question, Bill.

You had 2 questions, 1 on capacity, 1 on dividends. Let's talk about the capacity first.

What I would refer you to is our corporate presentation on the slide of our production profile. And at the bottom of that, you'll see T per D, which is tonnes per day, and you'll notice its growth over the years.

And notice the substantial increase from last year's average of roughly 850 tonnes up to 1,150 this -- the first quarter and then on into the second quarter. That is a substantial jump.

Now we can't expect those kind of jumps every quarter or even every year, for that matter. In large part, as an underground miner, it's all about developing enough working faces to pull additional tonnes from the underground.

But I'm very pleased with the increase from last year's average to this year's first and second quarter, and I think that speaks to, over the long run, increasing. But we won't be reaching 1,500 tonnes any time soon.

But that's okay. That's our future growth.

But I'm hesitant to give guidance on timing. Let's just keep focusing on performance and increasing it over time.

But that slide on our corporate presentation clearly shows, on averages, tonnes per day over the last couple of -- since going into commercial production have been quite well. As for the dividend question, yes, we pulled back our dividend when the metal prices were declining and we were building or expanding our mill and we needed to conserve capital.

Obviously, in the future, we want to increase them, the timing of which is still unknown. Why?

Clearly, we have our increased cash position, and we could increase it today, but we want to keep our optionality open. Secondly, we don't know where the metal prices are going to end up.

They're very volatile. And so just taking a bit of a conservative approach, we're not going to be raising it next month, so to speak.

To give you a sense of what that costs us, it costs us about $0.5 million to pay that $0.01 dividend, so it's completely doable at this point. And yes, arguably, we could bump it up a bit, but I don't think right now is the time to do it.

But hopefully, in the not-too-distant future, there will be a time to increase it. So hopefully, I've addressed those 2 questions satisfactorily for you, Bill?

My name is Adam Smirkin [ph]. I'm a holding company shareholder.

I just have 2 questions. I hope I can get them answered.

Is Gold Resource Corp looking to do any acquisitions by taking advantage of the recent downturn in metal prices? And by doing acquisitions, is the management worried about the relatively shorter mine life at La Aguila (sic) [El Aguila], especially if wasting these -- I won't say wasting, but pulling out high-grade resources in a downturn, then when the metal prices recover, hopefully, in the future, that mine will have a shorter life at that point?

Okay. I got both of your questions.

I didn't hear everything you said. For some reason, there's a bit of feedback for your questions, but I did get your question on the M&A and then the mine life.

So as far as M&A goes, our focus is the Oaxaca mining unit, and that will remain our focus. Having said that, this window of opportunity that is out there in front of us, we would be remiss if we didn't at least look around.

Just like those investors in mining equities get to look around and all mining companies have been beaten up and they're on sale, so to speak, the same thing holds true for a lot of exploration plays. And so this year, me and my team have been to Chile.

We've looked at several United States -- in the United States. And we continue to look around.

We used to look at Turkey, we don't so much anymore there, but we continue to look for opportunities. The time and place to do that is in a depressed market, and that's the situation that we're in.

So we are looking, but our primary focus is our Oaxaca mining unit. So yes, we're looking.

That's all I can pretty much tell you on that. As far as mine life, when you're dealing with an epithermal underground system and mine like we are, it's very difficult to drill out extensively in front of an operating mine.

So a 3- to 4-year mine life is a very respectable mine life for an underground mine. I won't name specific company names, but in the past, there's been majors who have operated for a very long time with 1 year in front of them, just from the difficulty of drilling out in front of an operating mine.

It's very time-consuming and very costly. And so you often do it in stages.

So I am very pleased with our current mine life, and I'm not concerned with our mine life. And we've had that question in similar forms, like, oh, you only have 3 to 4 years and you're proven improbable, well, we also operated for 3 to 4 years without proven improbable.

So this is a very large system. I expect to be here a very long time, both at the Arista, but now we have the Switchback.

If the Switchback is either an extension of the Arista system or it's a parallel system, if that's as big as Arista, let's just say hypothetically, and it isn't -- and I want to be clear, it's not the case today, but hypothetically, if that was a duplicate of the Arista, well, there you have another 6 years. So that's less than 1% of our landholding, and we have 55 kilometers along this mineralized structure corridor.

I expect to be here a very long time. So that's our focus, but we are looking for opportunities as well in this beaten-up market, as we should.

Unfortunately, most of the M&A in this space happens when metal prices are going through the roof and companies overpay. And so the right thing to do is be looking when the metal prices are down.

So I didn't catch your name because, for some reason, I'm getting a little bit of feedback in your question, but I hope that answered your question.

Jason, it's Charlie Fitzgerald [ph] from The Prince Ray Solo [ph]. And I was wondering if you could talk a little bit about your capital spending expectations for the second half of the year?

Right. Okay.

We had a big capital spend last year with the mill expansion. That's over with, and it's nice because -- nice that, that's over with because, as you all are aware who've been following us, we depleted our cash to do that.

We didn't go raise money to build -- to expand the mill. But that's over with, and now we're seeing our cash position grow.

As far as capital spend going forward, the -- probably, the next capital spend in front of us is the third phase of our tailings. Order of magnitude, plus or minus a few million, you're looking at $4 million to $5 million, so it's not huge.

You obviously have the same capital ongoing for the underground mine, which more or less is about $1 million a month to develop that. As far as capital spend for the Switchback, we're still developing the mine plan, the potential mine plan.

So if and when we make a production decision there, which I'm optimistic we will, we'll have a better handle on capital. But at this point, I don't want to throw out preliminary numbers that we're looking at because it's just too early.

So we're not going to have the big capital expenses that we had last year at this point.

Okay. And I have one more question.

At the current run rate for the last quarter of the $19.4 million of cash flow from mines in operation, I'm getting you guys have capacity for about a $0.04 dividend based upon the $0.30 -- or the 30% of cash flow that you've talked about. Is that still a target that you're, I guess, looking at going forward?

Right. It's a great question.

And in our corporate presentation, we actually highlight how we've done going after our 1/3, 1/3, 1/3 goal. And to clarify that, that was 1/3 for taxes, 1/3 for growth and 1/3 for dividend.

And that's the game plan, the general game plan that we've been after for years. Now the Mexican government just smacked us with an 8% royalty, which is going to make it difficult to hit that 1/3.

I'm more focused now on just trying to return as much back to the shareholders as possible, so I want to take the emphasis off that third because I don't know exactly where we'll come in. Yes, you can run that number and come up with a $0.04 dividend, and arguably -- and we're getting a lot of shareholder calls saying, "Why aren't you increasing your dividend?

You have the cash to do it." We have a track record that demonstrates we try to return as much back to shareholders as soon as possible, and there's no reason to think that, that focus won't continue.

But having said that, if we're going to have optionality to potentially look at some opportunities that are in front of us, it's nice to have a little bit of cash. So maybe we're holding off on increasing the dividend at this point.

But if metal prices launch, which we all hope they do, not only will we have additional funds to potentially put toward a dividend, but M&A is less likely in a real frenzied metal market, as far as I'm concerned, just because companies end up overpaying. So the focus would go to the dividend, and it could go -- increase from there.

But I'm not avoiding your question on increasing dividend. I'm just trying to make -- be very clear that we're trying to be conservative at this point, given the -- and so that we have optionality out in front of us.

But yes, we all are in this stock to pay or to be paid a dividend. I'm one of the large recipients of that dividend, I love the dividend.

But at this point, we're going to keep it at $0.01, but hopefully in the not-too-distant future, it could go up.

I'm -- I have a couple of questions.

Sir, what is your name?

I'm sorry. I'm Rex Jones [ph].

I'm a shareholder. I've been one for several years now.

Looked to me like you monetized about 85% of production last quarter, and that seems to be a trend that's gone back 1 quarter or 2 that -- I would expect to see inventories actually increasing. And just wondered if you could provide some color on exactly where we are with unsold inventory.

Okay. Unsold inventories in concentrate, it's going to vary quarter-on-quarter depending on settlements, depending on deliveries.

I would -- Joe, you can weigh in on this anytime you want, but there's a lot of variables into that. I don't know necessarily those -- too many trends, but Joe, you may want to weigh into that.

Okay. Well, just seemed like it was a little bit -- it expanded a little bit this quarter compared to the past.

Part of it is just timing, like Jason says.

So there's no really deviation in trying to hold some of that back because prices were extremely low this quarter? It's just a timing mechanism?

No.

You are correct. We're not holding back anything.

Again, we don't pretend to have a crystal ball on what's going to happen. And we just want to make sure this company is -- not only survives, but is strong.

So we need to sell as much precious metals as soon as we can. And so, yes, we're not holding back anything.

It's just a timing issue on deliveries and trucking, et cetera, and settlement dates from the buyer.

But I guess, at the least, it would show that there is possibly some upside based on what the earnings actually were compared with the inventory that we have on hand.

Yes, I guess, if we want to look at it that way. But again, I don't want you to focus on it being a trend because, again, we're not holding anything back.

I understand. You said it was just a timing mechanism.

Yes. It's a timing mechanism.

It varies from period to period, so you can't really focus on that. It's a variable.

I've had kind of an ongoing conversation over the internet with Greg about share buybacks. And I noticed that the share count actually looked like it increased a little bit this quarter, and I didn't hear exactly what the number was on what cash is, just that we've increased cash over the last 6 months.

Is there a possibility that we would see a share buyback, or would shares continue to be increased on a dividend basis rather than purchasing shares back in what looks like a really depressed market right now?

Right. No, great questions.

And depending on what side of the fence you are on buybacks or whatnot, typically, people either think they're a great idea or an awful idea. At this point, we are not actively buying back our shares.

I would say there's -- when there's capital to be deployed to either share buybacks or increasing dividends, I'm going to be favoring increased dividends at this point. We do have a board-approved open buyback at this point in time, so we could buy back shares.

But we have a very tight capital structure. It'd be one thing if we were a typical mining company with hundreds and hundreds of millions of shares outstanding and we were trying to do something about that.

But we -- as a producer, we have a very tight capital structure. And some people actually look at us and say, "You shouldn't be buying back anything because you don't want to tighten your float as it is."

And we have good liquidity. So there's a lot of arguments for and against, but my knee-jerk reaction in response to that is, again, once we have capital to deploy to 1 of the 2, I'm going to favor a dividend at this point.

This is Adam Smirkin [ph]. I was having feedback issues earlier.

Is my flow better?

Yes, but tell me your name again. I still missed your name.

Okay. Great.

My name is Adam Smirkin, from a holding -- we have a holding company that owns a lot of shares. My last question I was asking was, would Gold Resource Corp consider being acquired if a major comes along looking to lower their cash cost?

Or is this company looking to produce its own future?

Right. We've always taken -- that's a great question.

We've always taken the approach that this management can bring the greatest shareholder value, so we're moving the company forward as such. Having said that, we are a public company.

And as a public company, we're always for sale, so to speak. But a major would have to come and bring a very attractive price, obviously, right?

And we pay a dividend that's shoulder-to-shoulder with many majors. I mean, we're operating much different than most of the other majors.

We're not a major, we're a junior. But is it possible that another company could come acquire us?

Sure, we're a public company. But they would have to bring something that's value to all shareholders.

But we're not arrogant enough to say no, that's not a possibility. No, it is.

But that's not our game plan, much -- unlike many junior explorers who their game plan is to be taken out at some point. We don't have that game plan.

Our game plan is to take this company forward, and that's how we're focused. You did, Adam, mention that you were able to get in, in Q1.

For those who have recently gotten in, I see it as a very timely situation in which we were cleaning up the overhang of our -- what was then our largest shareholder who had to sell for their own liquidity needs. And that created a great opportunity for many to get in.

What I'm optimistic is that's taken the pressure off, and hopefully, we see increased share price as that overhang is gone.

Great. I also have one more minor question.

I don't know if you've ever put any thought into this. With a lot of the businesses going towards more streaming companies, has Gold Resource ever thought in the future with its cash flows to just buying mineral rights or properties or buying joint ventures with companies that do like royalties or stream?

Is that something that has ever came across?

Okay. I'm not sure I understand your question.

Are you saying, would we be interested in selling a stream to some of these streaming companies? Is that what you're asking?

Yes. Like taking -- if the downturn goes on further, just purchasing some mineral properties or something to -- because the streaming companies are starting to pick up back and I think Gold Resource, as a -- being cash flow, one of the few that are cash flow positive, I didn't know if that was just something that was in the future, ever thought of or discussed.

Okay. I still am not 100% sure on your question, so I hope this answer kind of touches on it.

But we're approached often by streaming opportunities. Streaming -- in my opinion, streaming opportunities, or streaming, happens when a junior company needs to raise money to advance their projects, so they sell a stream.

One can look at it this way. Mining is a hard business, and oftentimes, it's those last couple percentages of your margin that actually make money.

And oftentimes, if you sold that in your stream, you've just sold a lot of your upside. So I don't think, at this point -- I can't foresee a reason why we would ever sell any of our production into a stream.

I think what you've done effectively, if we were to do that, why wouldn't you look at us as we just sold our upside? Yes, you could argue, we've affected our downside, but we just put a cap on us when metal prices launch.

And I don't think that's really why people would invest in us.

I apologize, I worded it wrong. I mean, I should say in this term: then conversely, would you buy streaming of other companies that need money because you have cash flow?

Ah, different story. Yes, we'll look at it.

We could potentially look at something, sure. But yes, that's possible.

Okay. I was just wondering if in the future -- obviously not now.

I was just trying to take advantage of this market. It's been a bit prolonged, and Gold Resource has done a great job of cutting cost.

You could take advantage of that way, not necessarily acquiring things, but just buying streams.

Right.

This is Brad Falher [ph]. Anything new on El Rey?

Yes. We continue to work with the local communities there at El Rey.

For those who may or may not know, we were exploring at El Rey for many years. And one of our neighbors, another mining company, had an issue, and that issue spilled over into our community up at El Rey.

And we've been trying to overcome that situation that we didn't create ever since. And so we continue to try to show them at El Rey that we're different, we operate much differently, and we continue to work to get back into El Rey.

I'm optimistic that we'll do that. But we're also taking a different approach than a lot of mining companies do, and this is an important approach that you take in Mexico, and that's one where you don't show up and say, "I have the right to be here, move."

That is, in my opinion, the wrong approach. The right approach is to gain their trust, take time, and they work off of a different time schedule, time frame, and build a solid relationship.

And that's what we're trying to do there. And so we continue to move that relationship forward, and I'm optimistic we'll be back there.

Yes. My name is Chuck Olson [ph].

I did want to ask about your debt situation. If interest rates go up, are we going to get hurt?

Okay. Thank you, Chuck, for calling, and thank you for the comments.

It's always nice to hear friendly comments. Over the last 2 years, there have been few and far between.

It's mostly hate mail and hate voice messages, so it's nice to hear some positive comments. As far as the debt is concerned, we effectively don't have any debt.

We have a few capital equipment leases, but those will be gone in the not-too-distant future. And we, at this point, and from what I see going forward, will remain focused on being debt-free.

And that dovetails into many of the other questions of nobody knows where the gold prices are going to go, and we want to be debt-free for as long as possible. So yes, I mean, we effectively still have no debt.

I'd like to see you continue where you're going, but you already pointed out you have deposits all along that long stream there. There's 6 different anomalies.

So you don't really need to go looking for others. You've got enough...

You're absolutely right. Thank you, Chuck.

And just to emphasize that, our focus is the Oaxaca mining unit. I know I've said it many times, but that -- if we're able to capitalize on something that this window of opportunity has created over the last 2 years, great.

If not, fine. We are fine with our Oaxaca mining unit.

So Chuck, thank you very much. And we're out of time.

So anybody who is in the queue that has additional questions, feel free to reach out to Greg, our VP, or myself. We're in the office right now, so feel free to call us and we'll get your questions answered.

With that, I'll close the call. Thank you for your time, and have a great weekend, everybody.