Gold Resource Corporation

Thank you. Good morning, everyone, and thank you for joining Gold Resource Corporation's 2014 Year-end and Fourth Quarter Conference Call.

I'm calling you from my cell phone from the beautiful City of Oaxaca, Mexico. If for any reason, I get disconnected, please hold the line while I dial back in.

Today's call will include a 2014 fourth quarter and year-end performance review, an update on past and future mine development and exploration, and some thoughts on gold and silver. We have a lot of ground to cover this morning on both the challenging, but successful 2014 years, so let's begin.

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

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 was issued yesterday along with the comments on this call are made only as of today, March 20, 2015, 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-K filed with the SEC for the year-end December 31, 2014.

2014 saw the continuation of the bear market in the metal space as market volatility, especially during the second half of year, pushed gold and silver prices to 4-year lows during the fourth quarter. Cost pressures continued to weigh on miners as the industry's fought to lower production costs.

In 2014, mining equities were among if not the most unloved equities in the investment world. To say it was a challenging year for the metal prices, the industry and the company would be an understatement.

Though 2014, like the preceding 2 years of the bare metal market, created challenges, it also created opportunities for the company. Opportunities that the company took advantage of by reevaluating, modifying and streamlining operations, of which we had our share of successes during the 2014 year.

Although metal prices in a tough operational third quarter were factors weighing on us for the year, overall we are pleased with the company's 2014 production results, which saw record production levels of gold, silver, copper, lead and zinc.

Before moving on, I apologize for the file extension, and I am pleased to report that during 2014 we remediated 2 out of the 3 material weaknesses that the KPMG identified in 2013. We remediated the material weakness pertaining to the design and operating effectiveness of our internal controls of our cash disbursements and our information technology control environment.

We have made significant headway in our material weakness around the income tax provision, but unfortunately, we did not have enough time to implement additional controls and procedures to fully remediate material weakness by year end. We filed an extension for additional time to file a 10-K, so that we can ensure we had accurate and complete income tax information.

In 2013, we had a material weakness related to the monitoring and oversight of our external tax service providers. We spent 2014 trying to remediate this finding.

While we discovered is that this particular area is a difficult -- is difficult to find appropriate assistance. Through this process, we terminated 2 of our tax service providers during this past year due to a lack of performance in preparing and reviewing our income tax provision.

Our third provider was working with us for the 10-K filing and it took some additional time to make sure everyone was up to speed. We take this very seriously, and we continue to strive to engage an external tax service provider that can adequately address the strict requirements for delivering an accurate and complete income tax provision.

Over the past few years, we have hired tax professionals in the form of a big 4 firm, another well-known second-tier tax firm and specialist firms, and had to let them all go due to their performance. I mentioned this so you understand we are not being cheap in our hiring of tax providers, but with even very big names and big firms having difficulty, it underscores how complicated taxes are.

Income taxes in general are complex in nature, but when you compound that with income taxes in foreign jurisdictions, it brings another level of complexity to the preparation and review of the income tax provision. We are actively evaluating our external service provider as it pertains to our income tax provision and our goal is to fully remediate material weakness around income taxes just as we have remediated the 2 other material weaknesses from 2013.

An overview of our year-end 2014 production from the La Arista Mine totaled 83,903 ounces of precious metal gold equivalent and a realized 68.2 silver-to-gold ratio, of which 19,057 ounces were produced during the fourth quarter, at a realized 77.6 ratio. The company's 2014 production year budget used an estimated 63.2 silver-to-gold ratio average at $19 silver and $1200 gold based on spot metal prices at the beginning of the year.

Had 2014 seen less volatility in the metal prices and the budget estimate of 63.2 silver-to-gold ratio held for the year, the company would have produced approximately 87,723 ounces precious metal gold equivalent, but lost 3,850 gold equivalent ounces to metal price volatility. We therefore came in near the low end of our production range on a gold equivalent basis, which was set at 85,000 to 100,000 ounces at the beginning of 2014.

We were 1.3% shy of the low end of our gold equivalent production range, while sustaining a 7.3 weakening of the silver-to-gold ratio working against us in that calculation. Though metal prices moved against us on a precious metal gold equivalent basis, we had a record production of each metal, gold and silver as well as copper, lead and zinc production in 2014.

It is difficult to estimate metal prices for annual production goals, to introduce more ounces of gold and more ounces of silver than the prior year and ultimately lose production ounces on a precious metal gold equivalent basis based on metal price volatility and price declines. 2014 higher silver-to-gold ratio underscores some of the challenges we faced during 2014.

Later in the call I will discuss our 2015 production targets, which will include breaking out each metal individually along with precious metal gold equivalent targets based on several silver-to-gold ratios as we expect continued metal price volatility in 2015. No one can accurately predict what the actual ratio will average at year end 2015.

During 2014, we milled an average of 1,111 tonnes per day for a total mill tonnes of 375,623. This was a 19% increase over 2013's 866 tonnes per day and 316,720 tonnes per day.

From those tonnes, our 2014 production totaled 35,552 ounces of gold, 3,297,000 ounces of silver, 1,254 tonnes of copper, 4,555 tonnes of lead and 13,195 tonnes of zinc before payable metal deductions. Our total cash costs after base metal byproduct credits per precious metal gold equivalent an ounce and including royalties, totaled $449 per ounce for the year and $550 per ounce for the fourth quarter compared to $625 per ounce and $684 per ounce for 2013, respectively.

The company reduced its 2014 total cash cost by over 28% from the prior year. Our all-in sustaining cash costs per ounce, a non-GAAP measure, for 2014 totaled $1,073 compared to $1,144 during 2013.

Had we sold more of our 6,400 ounces of stockpiled backlog during the fourth quarter, our all-in sustaining cash costs would have been substantially lower. I will go into the backlog more in detail shortly.

During 2014, we sold 25,872 ounces of gold and 2,998,685 ounces of silver, 1,139 tonnes of copper, 4,208 tonnes of lead and 10,833 tonnes of zinc. Inventory of unsold gold and silver ounces increased during the fourth quarter to approximately 6,400 ounces of high-grade gold concentrate.

The increase in inventory in both the third and fourth quarter was due to stockpiling additional production and a backlog of high-grade gold concentrates to be processed into Doré, in our new Doré Facility commission during the fourth quarter. I will have much more on the new Doré Facility later in the call.

Average grades and recoveries for the 2014 year included gold grade at 3.21 grams per tonne with 92% recovery, silver grade at 296 grams per tonne with 92% recovery, copper grade at 0.43% with 78% recovery, lead grade at 1.57% with 77% recovery and a zinc grade at 4.21% within an 83% recovery.

We generated revenues. Now our revenues are net of smelter charges, of $115.4 million generated mine gross profit of $50.9 million and net income of $16.2 million, our net income of $0.30 per share compared to $0.01 per share in the same period in 2013.

Our average 2014 metal prices realized were $1,260 per ounce gold and $18.48 per ounce silver. In 2014, we distributed $6.5 million in dividends to the shareholders or $0.12 per share.

Cash and cash equivalents at December 31, 2014, totaled $27.5 million. That is a $12.6 million increase over the same period in 2013.

Receivables at December 31, 2014, totaled $1.4 million. The company remained debt free except for the short-term capital equipment leases, of which totaled $2.3 million as of December 31, 2014.

That was down from $3.9 million over the same period of 2013. The company only paid $1 million in taxes during the 2014 year due to a tax overpayment from 2013 of $3 million.

To review the fourth quarter of 2014, we milled an average of 1,068 tonnes per day for a total of 91,830 tonnes. Mill production totaled 19,057 ounces of precious metal gold equivalent or 8,865 ounces of gold and 790,738 ounces of silver before payable metal deductions.

Average grades and recoveries for the fourth quarter included the gold grade at 3.3 grams per tonne with 91% recovery, silver grade at 290 grams per tonne with 92% recovery, copper grade at 0.5% with 80% recovery, lead grade at 1.75% with 80% recovery and zinc grade at 4.95% with an 85% recovery.

During the fourth quarter of 2014, we sold 6,026 ounces of gold and 827,386 ounces of silver at a total cash costs after byproduct credits and including royalty of $550 per precious metal gold equivalent ounce sold versus $684 total cash costs per ounce sold during the same period of 2013.

During the fourth quarter, we reported revenue of $29.5 million, mine gross profit of $10 million and a net income of $3.4 million or $0.06 per share. Total monthly dividends distributed to shareholders totaled $1.6 million or $0.03 per share during the fourth quarter.

During the same period, the average gold price realized was $1,169 per ounce and silver was $15 per ounce.

During the fourth quarter, we commissioned a new Doré Facility at the El Aguila mill separate from our mills flotation circuit and agitated leach circuit. This facility produces and converts a high-grade gold concentrate into Doré.

The increase in inventory for the fourth quarter and year-end was due to a concentrate backlog during the commissioning of the Doré Facility. We identified an optimization opportunity, and in early January 2015, we doubled the processing capacity of our Doré Facility by installing additional electro winning capacity to assist us with the growing backlog of high-grade gold concentrates scheduled for Doré.

As of February 2015, we produced and shipped our largest amount of Doré to-date along with another shipment in March, so we believe progress is being made on our clearing of our backlog. Over the next several months, we target processing all the high-grade concentrate backlog as well as newly produced high-grade concentrate into Doré.

Our ultimate goal is to have our Doré Facility work through the backlog and keep up with ongoing production as to have -- as do not have concentrate inventory backup. By utilizing the new Doré Facility, we expect increased metallurgical recoveries of gold, while paying less net smelter return royalty to the royalty holder, when compared to concentrate sale and we expect to pay far less in treatment and refining charges on Doré sales than we do on our concentrates.

The order of magnitude between our concentrate sales and Doré sales is significant. We currently see an approximate 9% to 10% discount when selling concentrates compared to the estimated 1% to 2% discount reach from selling Doré.

By producing Doré, we target increased gold recoveries, decreased net smelter royalty charges and decrease treatment charges further optimizing operations at our El Aguila Project. The Doré production is estimated to make up a smaller portion of our overall precious and base metal concentrate production.

We expect this optimizations to ultimately add to our bottom line. To reiterate, over the long run, we do not intend to perversely withhold our production and target timely sales of our gold and silver ounces produced both in concentrate and Doré form.

We expect, all things being equal, our all-in sustaining cash cost to decrease further once the inventory gold concentrate ounces are turned into Doré and sold, so they can be included in the all-in cost calculation at that time. Until that time, we fully eliminate the backlog, that calculation may not be the best representative of all-in costs.

We remain committed to dividend distributions to shareholders, and in 2014, marked a major milestone for the company in this regard. After $102 million return to the shareholders and consecutive monthly dividends, I believe it is safe to say we have proved many skeptics of Gold Resource Corporation wrong.

To put that amount into perspective, our IPOs at a $1 per share in September of 2006, we have now declared $1.92 in dividends to every shareholder since, a creditable achievement by any measure, but especially in the mining space as a junior producer. The majority of mining companies do not return dividends back to their shareholders even at the height of a bull market, let alone during the last 3 years of this bear market.

Even with the volatile metal prices in 2014, Gold Resource Corporation is proud to still be returning dividend back to it shareholders. This rare achievement in the industry speaks to our ongoing shareholder-focused and friendly -- 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 bullion in our treasury, but offer shareholders the ability to convert their cash dividends into physical gold and silver bullion round and take delivery as well.

As I stated in last quarter's conference call, there is in fact real gold and silver 1 ounce 999s fine Gold Resource Corporation rounds at the end of what one early high-profile critic derogatorily called a rainbow. It is easy to snipe a young growing company with a unique vision because that young company is simply not big yet.

But over time, we continue to check those boxes and dismantle the critics. To my knowledge, we are the only company who has ever been able to achieve a successful cash to physical dividend conversion program and we take pride not only in that success, but for returning now over $102 million to our shareholders as a junior producer.

During 2014, at the discretion of the Board of Directors, the company acted on its diversification goals and made several investments into a second mining-friendly jurisdiction. We leased 2 adjoining properties in Nevada, USA, the Radar and Goose properties.

With the option to buy 100% interest in both, they are located in Mineral County, Nevada within the Walker Lane mineral belt. These claims are highly prospective ground in a great neighborhood near past-producing gold mines.

As this -- as the recent press release noted, we currently have a drill rig on the Radar to begin our first drill campaign having spent time mapping and generating drill targets, we are very excited to commence drilling.

We continue to look globally for additional opportunities, which we limit to mining-friendly jurisdictions, but this bear market has -- and gold and silver has and continues to provide us with. We are seeing some success with our diversification efforts and are optimistic we will find more opportunities to capitalize on.

Turning to operations. As an underground miner, we expect our challenges to be essentially twofold in nature, what we can plan for and the unexpected.

We had a bit of both during 2014, with things going as planned during the first half of the year with quality production and a disappointing third quarter with unexpected increases in water inflows and associated carbon dioxide gas, which slowed down development compounded by shortfalls in mine development. It is the mine management's responsibility to keep these challenges in check and communicate them well so that the corrective measures can be taken.

The third quarter operational results necessitated a change, and we have effectively put a new mine management team in place led by Mr. Oscar Zelaya, our new General Manager.

We saw positive improvements during the fourth quarter and attribute those improvements to the new team. Development of the mines' infrastructure and in particular declined access ramps are essential for the continued preparation of the reserves and readiness of new mining areas.

We recently replaced our mine contractor from [indiscernible] to Dumas and are excited to have them on-site with their fleet of brand new equipment. We are working through the initial challenges of shifting mine contractors and believe Dumas is well-suited to execute our 2015 development needs.

This is very important to us so the company can focus primarily on mining, while the contractor focuses solely on development, which was not the case during 2014. On average, we have 15 to 20 working overheads during 2014, the north decline ramp finished the year below 19 level, the south ramp is below 14 level.

During the fourth quarter, mine development focused on veins 1 and 3 between levels 16 and 18, or development of these 2 veins accounted for approximately 30% of mine tonnage during the fourth quarter. We are presently drilling the down-dip extensions of these veins from a drill pad on level 16.

The 2015 mine plan includes continued development of our recent deposit, including extensions of main and ancillary ramps, additional pump stations and vent races.

Let's turn to exploration. Fourth quarter and 2014 year exploration on El Aguila Project included focus on the Arista deposit system extensions.

Exploration consisted of both infill and step-up holes testing the mineralized veins extensions that are producing Arista underground mine. I'll go into more detail on Arista later in the call during the proven and probable reserve update announced yesterday.

Additional exploration included the El Aguila open pit feeder veins and various additional targets at Salina Blanca. The company completed 136 diamond drill holes at El Aguila Project during 2014 both underground and surface drill holes totaling over 43,100 meters.

2014 exploration also included a follow-up drill program at some of the Alta Gracia property and geochemical soil surveys on Las Margaritas property.

A total of 3 exploration drills are currently at the company's properties, with one surface drill and 2 underground drills. The primary exploration focus for 2015 will include the extensions of the polymetallic epithermal Arista vein system and the newly discovered Switchback vein system.

Metal prices, production and margins permitting, we target approximately $9.8 million in the budget for 2015 on exploration at our Oaxaca mining unit properties, of which approximately $2 million are slated for an exploration ramp to reach the Switchback mineralization.

In 2014, we made significant advancements in the exploration at the Switchback discovery. The Switchback discovery is located approximately 500 meters northeast of the producing Arista mine with mineralization of 400 meters -- 450 meters strife and 450-meter depth thus far.

Similar to Arista, the Switchback mineralization is polymetallic high-grade gold, silver, copper, lead and zinc. Up to several last drill holes early in the year due to the challenging horizontal drilling both in the long-distance from the Arista drill pad from the target, the company made the decision to stop drilling at Switchback from the Arista mine underground drill station and develop approximately halfway toward the Switchback to establish the new underground drill station to specifically target the mineralization from a closer distance and better angles.

After the new drill station was completed, we began another Switchback drill campaign. During the last quarter of 2014, we again intercepted the Switchback mineralization with infill holes to assist us with our preliminary Switchback mine plan.

On January 27, 2015, we announced multiple high-grade vein intercepts at Switchback, including 1.71 meters of 13.45 grams per tonne gold and 860 grams per tonne silver, 1.81% copper, 3.52% lead and 7.81% zinc. Intercepts in a second vein included 19.34 meters of grade and 2.56 grams per tonne gold, 129 grams per tonne silver, 0.62% copper, 1.28% lead and 3.84% zinc.

The Switchback mineralization thus far reminds me of the early days of drilling the Arista deposits' multiple veins both visually in the core and the high-grade assays of gold, silver, copper, lead and zinc. I am optimistic the Switchback could be our next economic deposit on the El Aguila project, and we are moving this development toward as such with the goal to make a production decision as soon as possible and develop Switchback using cash flow from our operations.

The following is a top end summary of our 2014 operations. One, we produce more gold, more silver, more copper, more lead and more zinc then we did in 2013 or have ever produced annually.

Two, we maintained our low cash -- our low-cost status with our 2014 cash costs per ounce sold at $449, which was a 28% reduction from 2013, $626 cash cost average and expect our all-in sustaining cash costs to decrease as we decrease our inventory of unsold gold production. Three, we continued to advance the Switchback discovery by drilling multiple high-grade veins and are pushing towards a production decision for future company growth and additional longevity.

Four, we commissioned our new Doré Facility targeting increased gold recovery and lower NSR and treatment charges to further optimize our operations to add to our bottom line. Five, we established interest in Nevada, USA, to diversify our property portfolio.

Six, we reached a monumental company milestone having now returned over a $102 million back to shareholders in consecutive monthly dividends underscoring our philosophy that earnings are opinion, cash return to shareholders is fact. Seven, we remain the only company offering shareholders a cash to physical dividend program.

Eight, we remain debt-free on a long-term basis and decreased our short-term equipment leases by $1.5 million. Nine, we ended the year with $27 million cash and cash equivalents, a $12.6 million increase over 2013.

And ten, we remain profitable during a difficult 2014 year without diluting shareholders, without raiding money, without going into debt which is a notable achievement compared to many of our peers in the industry during this difficult metal market.

We had many additional successes beyond this top 10 list, which speaks to the great 2014 year we had in the midst of the challenging and difficult declining gold market. So to wrap up the 2014 review, the year was not without challenges, but we saw our shares of successes as well.

Our goal during 2014 and during 2015 is to continue to position the company to emerge from this market volatility as a leaner, stronger, efficient and more profitable mining company, well-positioned to generate cash at these current metal prices and even stronger position to generate more in the metal markets, resume their longer-term bull market trend. Overall, we accomplished that goal in 2014 and optimistically look forward to 2015 as well.

1 ratio at 80,000 to 90,000 ounces. It is important that our shareholders understand a strengthening in the silver-to-gold ratio from 64:1 will result in higher overall precious metal gold equivalent production, while a weakening in the silver gold ratio from 64:1 will result in lower overall precious metal gold equivalent production.

Anticipated results from varying silver-to-gold ratios can be found on our corporate presentation on our company's website.

We are very fortunate to have polymetallic deposit at the El Aguila's -- at the Aguila Project's Arista mine with high-grade gold, silver, copper, lead and zinc. In the past, we have focused primarily on gold and silver ore and then we processed whatever base metals happened to be included in that ore.

For 2015, and in response to the continued bear market in metals in the falling metal prices, we plan to focus on mining tonnes based on a net smelter return or NSR value per tonne of all metals to try to maximize margin and cash flow. I will expand more on this aspect in a moment when we discuss our new proven and probable reserve report recently released.

While we had budgeted over $30 million for capital expenditures in 2015, though exact amounts could change dramatically based on metal price movements throughout the year and available capital. Targeted allocation of our CapEx budget includes Arista mine decline in ancillary ramp advancements, our Phase 2 tailings dam construction and additional underground mine water pump stations.

Substantial exploration of expenditures target approximately $9.8 million, including the aforementioned Switchback ramp. Again the exact amount -- CapEx amounts targeted may vary depending on metal price movements, margins and available capital.

Since the market is dismissing mining equities at this time, we plan to try to more or less duplicate 2014 production levels again in 2015 while allocating substantial capital to position ourselves for our future growth by building infrastructure, advancing our Arista deposit, advancing the Switchback development for future growth and continue to explore other properties in Oaxaca and Nevada as well. Our goal for 2015 is one of building in preparation for future growth after metal prices turned positive.

It makes little sense to produce everything we can and sell it at these artificially low market prices.

Let's turn to some very exciting news for Gold Resource Corporation. An update to the reserve reports for the Arista deposit was announced alongside our 10-K filing.

Keep in mind, as we try to drill the extension through the Arista deposit in an underground mine, the working space is always a premium and it is difficult to balance the needs of the operation with the needs of the exploration. Having said that, our VP of exploration, Mr.

Barry Devlin and our exploration team had a very successful 2014 drill campaign at Arista. We are pleased to report, we have not only replaced all of the tonnage we mined last year back in the proven and probable category, but added to it a bit as well, leaving us basically with the same 3.5 to 4-year Arista mine life depending on annual production levels.

Last year's report totaled 1.35 million tonnes at Arista compared to this year's 1.5 million tonnes at Arista.

We are focusing primarily on margin as opposed to ounces, and that is reflected in this report. We applied a $110 per tonne net smelter return, NSR criteria of all metals, precious and base in the block model this year.

Our production goals and production totals will still remain precious metal gold equivalent, while using base metals as byproduct credits. What changes is that the NSR approach focuses on exploiting the Arista's polymetallic deposit as opposed to our past focus, where we targeted mining gold and silver using the precious metal cutoff grade and then processed whatever base metals happen to be associated with the precious metals.

The latter approach focusing only on mining precious metals was adequate when metal prices were much higher. But during the current declining metal markets, the NSR approach aims to extract the greatest dollar value of all metals from each tonne mined.

During this volatile metal market, we are focusing primarily on margin, high-quality tonnes and high-quality ounces as opposed to chasing ounces for ounces' sake that often leads to leaving behind valuable metals. Equally as important as our proven and probable reserves, we now have a maiden, measured and indicated mineralized material for the Switchback vein system on the El Aguila Project located 500 meters northeast of the Arista mine.

We also have a maiden, measured and indicated mineralized material resource with the Santiago vein, northwest of the Arista mine. We also have a maiden, measured and indicated mineralized material resource for the Alta Gracia property.

We believe these 3 areas of new measured and indicated mineralized material resource is just the beginning of what could ultimately lead to additional drill results, tighter drill holes' spacing and additional data which could someday convert to proven and probable reserves. More importantly than being converted into report, we believe that further testing and verification that this mineralization could be mined and fed to the mill at some point in the future, further adding to our production longevity and cash flow.

One thing to bear in mind is that there is a possibility we could begin mining from either the Switchback vein system to Santiago vein or the Alta Gracia vein before these areas are formally incorporated into a potential future reserve study. Remember, we were in production for 3.5 years from the Arista deposit prior to establishing reserves at Arista.

We will likely drill and explore this Switchback Santiago and Alta Gracia until our internal estimates justify moving into production as opposed to drilling these areas for years solely to add them to reserves prior to advancing them. Our updated reserve report should be available on our website within the next few days.

Turning to the gold market. Gold price in most all global currencies showed gains for the last 1.5 years as opposed to gold being down only in U.S.

dollar terms during the same period. Though gold is up in most currencies, gold set lower in U.S.

dollar terms pushed most mining equities to 52-week lows. This was in stark contrast to physical gold demand and physical gold purchases, which remain very strong.

China's appetite for gold is on track to buy $33.5 billion of gold during the first quarter of 2015. Since January 2015, the new Shanghai Gold Exchange gold withdrawals totaled over 315 tonnes of gold.

Shanghai gold withdrawals exceeded the 300 tonnes of global gold production. More physical gold was bought and taken delivery of than total global gold production during the same time frame underscoring strong global gold demand.

Equally as important, the World Gold Council data showed central banks purchased 477 tonnes of gold during 2014, which was the second highest year for Central Bank gold net purchases in 50 years and 17% higher than Central Bank purchases the prior year 2013. There is a noted escalation of countries repatriating their gold including Germany and the Netherlands.

Other countries repatriating are talking about it include Austria, France, Mexico, Belgium, Ecuador, Finland, Libya, Venezuela, Romania and Poland due to losing faith in their currencies and lack of trust in bullion audits, foreign storage facilities and paper gold vehicles. Physical gold demand is strong, which speaks to the potential upward movement in the future prices of the metal.

To close, Gold Resource Corporation continues to make modifications to our operations when needed and continues to look for ways to further optimize our operations to generate cash flow during this volatile gold and silver bear market. We are positioning the company for future prosperity by not only surviving this downturn, but staying cash flow positive, profitable and investing back into the business, exploring our properties and true to our business plan, which have included monthly dividend distributions now totaling over $102 million.

For Gold Resource Corporation, 2014, though difficult and challenging was a successful year on many fronts, and we aim to make 2015 a success as well.

With that, I would like to thank everyone on -- for their time today on this conference call. Let's move on to the question-and-answer portion of the call.

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

Good morning, Joe.

Good morning, Jason.

Operator before we take our first question, I did have an e-mail question I want to get to from a long time shareholder, though I think it will address many questions. This question is from Chris Lewis [ph], a longtime shareholder.

His question is, I would really like an update on the tax delay and what additional tax liability charges, if any, were incurred? Also, can you elaborate on what will be done going forward to prevent this from occurring in the future as it does reflect poorly on management?

Thanks for your question, Chris [ph]. It's good to hear from you.

There is no additional liability being incurred due to the material weakness or delay around taxes. The reason we filed an extension was because KPMG did not have time to finish reviewing and signing off on the tax provision and tax footnote due to the tight time frame when we provided them with all the information.

Cross-border taxes are more than complicated. We have to rely on third-party vendors with a deep bench, a global knowledge and global resources to help us figure out taxes.

Furthermore, we run a very lean operation as you know, Chris [ph], so that we can be profitable. So even if we had 1 or 2 in-house tax experts, which we don't, that's not going to be enough given how complicated taxes are.

Hence, the need and reliance on third-party tax specialists. As I mentioned in the call, we have hired big 4 tax specialists, big names, second-tier tax specialists and other tax specialists in the past, and have had to fire them all due to their inaccurate tax advice.

When a big 4 messes up on your taxes leaving you holding the bag, it is a difficult situation. We fired 2 supposed tax specialists during the 2014 year.

Our current tax provider is working hard to get up to speed, but we ultimately needed a bit more time to get it right. We filed for an extension, which is within our rights and within the rules to do, those extra few days are what we needed and what KPMG needed to sign off on our taxes, and that's what happened.

Going forward, we will continue to monitor our third-party tax advisers until we find one that can get the job done on time and without errors. If there is a silver lining on all this, Chris [ph], it's that we have been profitable for years and we pay taxes.

As opposed to many miners who never pay taxes at all due to them not being profitable. So if you have that problem, I guess taxes is a good one.

That we remediated 2 of the 3 material weaknesses for 2013 and I fully intend to remediate this last one on taxes as well. Operator, if you will open up the lines for our first live question if there is one, if not, I have another e-mail question.

Jason, I have a question on the Alta Gracia product -- project...

Who am I speaking with?

Sorry about that. My name is Mark Smith [ph].

I am a shareholder representing myself.

Great. Thank you, Mark [ph].

I noticed when you guys reported your drill, that was a primarily gold, silver deposit, which set off some bells and whistles in that, do you have any metallurgy on that to show that you might be able to be using that in the mill feed sooner than you might have projected that? That will be my question.

Sure. Thank you, Mark [ph].

That's a great question. First of all, Alta Gracia along with many of our other properties, we believe the metallurgy will allow us to process that in the mill that we currently have.

Having said that, more specifically to your question, Alta Gracia, we've drilled several different veins there, and some of the veins don't have any base metal, so that could be processed through our agitated leach potentially. So we're optimistic we can find enough of it, and once we get to that point, we're going to move hard to have additional feed going through the agitated leach circuit.

If it has the base metals, we can push it to the flotation circuit if we find enough as well. But I guess that's positive of having a very flexible mill, where we can process both from the flotation circuit or the agitated leach circuit depending on if it's base metals or not.

Did that answer your question?

Yes. The flotation circuit was where I was really aiming that question and you pretty well answered, if you have enough of it is the question, and then just more drilling won't tell you whether you do or you don't.

I had a secondary question if you don't mind.

Sure.

When speaking with Greg Patterson about this price of oil drop, he explained to me that the Mexican government does a lot of subsidy. So the price of your diesel fuel is a lot stabler than it is, say on the open market or here in the states?

Has the Mexican government moved any toward reducing your cost on that diesel down there yet?

No, the have not. They are fairly stable.

What I mean by that, PEMEX is the national oil company and they do a lot of subsidies, and therefore the oil price is fairly stable year-over-year. I mean it can vary.

So, for instance when gold is spiked -- or excuse me, when oil spiked, we weren't seeing the increase in cost from that and the conversely as oil drops, we're not seeing the benefit as much as other miners because it's fairly stable. So if you're driving at the question of are we going to see some decreased costs because of few will know, I don't believe so here.

But again, that also helps you go in the other way. I don't -- who knows what the future will hold, but that's just where we are right now.

This is Amit Ghate calling. A couple of quick questions.

Can you comment on the drilling of the feeder vein area that you did in 2014? And then for the Alta Gracia drilling, are the results in the proven and probable, do they include the drill holes of January 12 or not -- of the PR of January 12?

Okay. Good questions, thanks.

And the feeder vein you're referring to I believe is the El Aguila open pit, which we first started out mining, and it was primarily just a gold open pit, it had a little bit of silver and base metals. And that's what we originally got started with.

Something fed that deposit. And so we're out trying to find the feeder veins.

We have had some success chasing veins, whether they are the actual feeder veins for that deposit or not, we're unsure. We are still looking for those.

But as of this point, we haven't found what we would consider the feeder vein that would have fed that or if they are, they are not going to be something we mine. But keep in mind, that open pit sits along the fault, and so that this has been moving for million of years, so the feeder vein that actually fed that deposit could be a sizable distance away from the deposit as it sits today.

So we're not giving up on that at this point, but we're still -- that's just the status thus far. Now your second question, have you clarified, you are talking about the Alta Gracia.

Now the Alta Gracia property is just in the measured and indicated mineralized material category. It's not in the proven and probable.

And I want to just make sure that that's a clear distinction. We've drilled 3 areas to an extent where we can actually calculate a mineralized material amount, and that's what we're giving you.

Now these are early days. There's not a ton of holes here, and we fully expect with additional drilling, that will not only -- we hope these areas grow and then we also hope the grade increases.

And why do I say that? If you were to look at our proven and probable table, you'll notice that most of it is in the proven category and about 2/3, about 1 million tonnes, whereas 0.5 million is in the probable.

The more data we have on this -- on like, for instance the recent deposit, the higher the grade shows itself. And so when you have more data that you can put into the proven, it shows itself to be higher.

I think the same -- I'm optimistic the same thing will hold true for the other mineralized material areas. And that more that the -- the more data we get, why wouldn't that be the same case there.

We will just have to wait and see. But as for the exact date, I don't want to tell you something that's wrong.

So I may need to get back with you on an e-mail, but I believe the cutoff date was the year end. Now whether we had those assays enough to include them or not, I don't have that answer for you, and I'll have to circle back, I guess you can shoot Greg or I an e-mail.

We can follow up to Barry just to clarify with you. But we cut the date off at the end of the year, and if something came in at the end of the year and we're just trying to get the assay data and we're able to include the NPR data I don't know, I don't know the answer yet.

Before we go onto the next live question, I do have another e-mail question from a longtime shareholder. It's from Paul Beaumont [ph].

He is a private investor and GRC shareholder since 2007. Paul says congratulations to the company and all involved through an impressive 2014.

Great results considering the challenging environment for miners in 2014. I found the following statement very interesting and he is quoting us.

He says in September 2014, the company commissioned it Doré production facility and achieved commercial production in the fourth quarter of 2014. The new Doré Facility is expected to reduce refining costs, royalties and treatment costs for a portion of the company's overall gold production.

The company target is approximately 40% of its gold production to be processed into Doré, with the majority of the gold production continuing to be sold in the form of concentrate. And his question is this, I was under the impression that Doré could not be produced from the gold and silver precipitate that is the end product of the cyanide leach process.

Does this mean the leach facility is operating. If so, where is the company getting the oxide ore to feed the leach facility.

So I think it's important, that's a great question. Thank you for the question, Paul [ph].

We have not started up the agitated leach circuit of our mill yet. We installed Knelson concentrators next to the flotation circuits' ball mill -- large ball mills.

Now about 30% of the flotation circuits total mill feed runs through the Knelsons. So not everything is going to the flotation circuit is going through the Knelsons, but 30% is.

We are targeting to recover approximately 40% of our overall gold production from this 30% that's coming through the Knelsons, it's through the mill feed through the Knelsons. These concentrators allow us to pull free gold and produce a very high-grade gold concentrate.

There is no cyanide leaching as this is more gravity. The high-grade gold concentrate is then sent directly to the Doré Facility to be further refined into Doré.

It is bypassing the flotation circuit at this point. Our Doré Facility is working quite well and we're considering and have the option in the future to install additional gravity recovery equipment, like more Knelson concentrators or spend-downs.

That could potentially capture more of the flotation circuit feed that's prior to the feed going in and hitting the cells, recapture that beyond the 30% they were pushing through the Knelsons now. In doing so, we could potentially produce more Doré in the future, and that been what we're targeting now.

But having said that, right now we have a backlog of high-grade gold concentrates from the Knelsons are awaiting further refining into Doré. And we need to get through that backlog, we need to pull the Doré and sell it before we ramp up further.

But we do expect to reduce refining cost, royalties and treatment cost by approximately 8% to 9% on a portion of the production we sell as Doré. So we are highly motivated to be optimizing our production in this regard.

We are going through some optimization pains with the backlog buildup, but are pushing to get that gold sold. This overall is a good optimization challenge to have, but Paul [ph], that was a great question.

Operator, if you can open up another question if we have one.

Jason Ben Murphy [ph], longtime shareholder in Kentucky. Just hoping you can give us an update on the Canamex investment and your thoughts on their maiden resource estimate please?

Okay. As we have stated many different times, we made an investment in Canamex to help them with their drill program, and we may buy, we may hold or we may sell that position.

I mean, that will just be totally dependent on what we see, what we think we need as a company. So that's about all I can tell you on that.

I don't make a habit of talking about other specific companies in any form or fashion, so I'm not going to dissect their 43-101 in this forum or more even on a personal call, I just don't make a habit of doing that. So I can't give you any color there.

But yes, we did make that $2 million investments and we may buy, sell or hold, depending.

Great. Well, again I'd like to thank everybody for their participation on this call.

It was a very challenging year. However, having said that, we executed on a number of fronts, and we are very pleased with the outcome of the year, and we look to 2015 as a repeat of that.

So any additional questions, please feel free to reach out to us via e-mail or by phone. Thank you.

Have a great day.