GOLD RESOURCE CORPORATION FORM 10-Q

Overview

Gold Resource Corporation is a mining company that pursues gold, silver, and other metal projects that require reasonable capital requirements and could achieve high returns. DDGM is the Company’s cornerstone asset comprised of six contiguous land parcels. The Company’s focus is unlocking the significant upside potential of DDGM through optimization of the current operations, growing the existing resource by investing in exploration drilling, and identifying new opportunities near existing infrastructure. The primary mineral production comes from the Arista and Switchback underground mining areas. This mine and processing facilities can produce gold and silver doré as well as concentrates of copper, lead, and zinc.

The Back Forty Project, when developed, is expected to produce gold and silver doré and concentrates of copper and zinc bearing gold and silver. Optimization work related to metallurgy and the economic model was completed during the third quarter of 2023 and the Company filed the Back Forty Project Technical Report Summary (S-K 1300) on October 26, 2023. Results of the work indicate a more robust economic project with no planned impacts to wetlands that is more protective of the environment, which should facilitate a successful mine permitting process. The Company’s Board of Directors continues to evaluate its options with respect to unlocking the value of the Back Forty development project.

DDGM Exploration Update

The Company’s portfolio of properties that make up DDGM are located along a 55-kilometer stretch of the San Jose structural corridor in the Sierra Madre Sur mountain range in the state of Oaxaca, Mexico. This northwest trending structural corridor spans three historic mining districts. Strategic planning and prioritization of regional surface exploration activities continue across several properties, aiming to define additional high-value drill targets and demonstrating the Company’s commitment to long-term investment in Oaxaca.

During the first quarter, underground diamond drilling proceeded as planned, focusing on grade control drilling from accessible areas within the Arista mine. Two diamond drill rigs were operating, one contract and one owned and operated by DDGM. Due to the lack of optimally located drill stations in the Three Sisters system for additional exploration drilling, grade control drilling remained a priority, utilizing access from the new development drifts created during the first quarter at Three Sisters. This drilling targeted veins in the upper levels of the newly defined Three Sisters system and deeper levels of the Marena, Santa Helena and Viridiana veins within the Arista system. This work has identified and defined short-term production opportunities.

The goal of the grade control drilling is to provide additional information and confidence in the detailed short-term geologic modeling, so that the mine plan can deliver ore from each area with the highest possible net smelter return (“NSR”) to the process plant. Although the Company believes the mine has potential to generate positive cash flow, based on current information from the new areas of the Three Sisters as well as other areas that have been discovered near the existing mining zones, the Company does not believe that the mine will generate sufficient free cash flow in the near term without the addition of these areas to the life-of-mine plan. Exploration potential continues to exist in all vein systems at the Arista mine, with a focus on the northwest extension of veins in the Arista system and the veins of the Three Sisters system, which remain open along strike to the northwest as well as up- and down-dip.

Results of Operations

Don David Gold Mine

Mine activities during the first quarter of 2025 included development and ore extraction from the Arista mine.

The following table summarizes certain production statistics about DDGM for the periods indicated:

(1) Based on actual days the mill operated during the period. (2) The difference between what the Company reports as “ounces/tonnes produced” and “payable ounces/tonnes sold” is attributable to the difference between the quantities of metals contained in the concentrates the Company produces versus the portion of those metals actually paid for according to the terms of the Company’s sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades and recoveries, which impact the amounts of metals contained in concentrates produced and sold. (3) The difference between what the Company reports as “ounces/tonnes produced” and “payable ounces/tonnes sold” is attributable to the difference between the quantities of metals contained in the concentrates it produces versus the portion of those metals actually paid for according to the terms of the sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades and recoveries, which impact the amount of metals contained in concentrates produced and sold.

First quarter 2025 compared to first quarter 2024

Production During the three months ended March 31, 2025, total tonnes milled of 56,906 were 42% lower than in the same period in 2024. While metal production for gold, copper, lead, and zinc decreased by 81%, 81%, 67%, and 70%, respectively, silver increased by 2% during the three months ended March 31, 2025, as compared to the same period last year. Although the lower tonnes processed and lower metal grades for all metals, with the exception of silver, were expected in the 2025 mine plan, the first quarter production was significantly impacted by the limited availability of critical mining equipment and the lack of production headings faces.

Grades & Recoveries During the three months ended March 31, 2025, all of the ore processed came from the Arista mine with an average gold grade of 0.70 g/t and silver grade of 169 g/t, compared to an average gold grade of 1.89 g/t and silver grade of 88 g/t, respectively, for the same period in 2024. For the three months ending March 31, 2025, the average gold grade was 63% lower and the average silver grade was 92% higher when compared to the same period in 2024. This reduction in grade is partly due to the additional dilution caused by mining narrower veins, as scheduled in the first quarter. As shown in the Technical Report Summary for DDGM incorporated by reference in the 2024 Annual Report (the “Technical Report Summary”), the ore grades are generally expected to decline over time in line with the life of mine average shown in the estimates of mineral reserves (as defined by subpart 1300 of Regulation S-K, “Mineral Reserve”) and mineral resources (as defined by subpart 1300 of Regulation S-K, “Mineral Resource”) tables contained therein (the “Mineral Reserve and Mineral Resource Tables”). As grades decline, recoveries are expected to decline as well. The Company’s base metals average grades during the three months ended March 31, 2025 were 0.18% for copper, 0.72% for lead, and 1.68% for zinc. The copper, lead, and zinc grades were lower by 51%, 42%, and 40%, respectively, as compared to same period in 2024.

Gold and silver recoveries for the three months ended March 31, 2025 were 70.6% and 83.3%, respectively, reflecting an 11% decrease for gold and an 8% decrease for silver over the same period in 2024. Copper, lead, and zinc recoveries for the three months ended March 31, 2025 were 53.5%, 66.3%, and 73.2%, respectively. While recoveries for copper and zinc declined by 30% and 11%, respectively, in the three months ended March 31, 2025 when compared to the same period in 2024, lead increased by 1%.

Sales Statistics

The following table summarizes certain sales statistics about DDGM operations for the periods indicated:

(1) Average metal prices realized vary from the market metal prices due to final settlement adjustments from the Company’s provisional invoices when they are settled. The Company’s average metal prices realized will therefore differ from the average market metal prices in most cases.

First quarter 2025 compared to first quarter 2024 Besides the expected lower tonnes mined and changes in metal grades and recoveries for the three months ended March 31, 2025, as compared to the same period in 2024, the key drivers of the production and financial results relate to the issues the Company faced especially in the first quarter of 2025, including the issues with equipment availability due to the age and condition of some of the critical mining equipment, the decreasing cash and working capital affecting the Company’s sales and production.

Metal Sold During the three months ended March 31, 2025, gold sales of 859 ounces, copper sales of 50 tonnes, lead sales of 277 tonnes, and zinc sales of 617 tonnes decreased by 76%, 81%, 58%, and 63%, respectively, compared to the same period in 2024. Silver sales of 230,320 ounces increased by 6% compared to the same period in 2024. The lower metal production was partially expected due to mine sequencing, but challenges with equipment availability and the lack of multiple faces to mine negatively affected the Company’s metal sales and production.

Average metal prices realized During the three months ended March 31, 2025, the average metal prices were $2,956 per gold ounce, $32.54 per silver ounce, $9,656 per tonne for copper, $1,950 per tonne for lead, and $2,710 per tonne for zinc. Compared to the same period in 2024, the average metal price for gold and silver increased by 41% and 40%, respectively. The average metal price for copper and zinc also increased by 13% and 9%, respectively, while the average metal price for lead decreased by 1%.

Financial Measures

The following table summarizes certain financial data of the Company for the periods indicated:

First quarter 2025 compared to first quarter 2024

Sales, net Net sales of $12.4 million for DDGM for the three months ended March 31, 2025 decreased by $6.3 million, or 34%, when compared to the same period in 2024. The decrease in 2024 net sales is the result of decreased production volumes as outlined in the sales statistics table above. Additionally, treatment and refining charges during the three months ended March 31, 2025, decreased by 72% as a result of the decline in production in the first quarter of 2025 as compared to the production in the first quarter of 2024.

Total cost of sales Total cost of sales of $13.8 million for the three months ended March 31, 2025 decreased by 34% from $20.9 million for the same period in 2024. The $7.1 million decrease was primarily related to a $5.4 million decrease in production cost and a $1.5 million decrease in depreciation expense. Production costs of $10.7 million for the three months ended March 31, 2025 are 34% lower than the production costs of $16.1 million for the same period in 2024.

Mine gross loss For the three months ended March 31, 2025, the Company had a mine gross loss of $1.5 million, compared to a mine gross loss of $2.2 million for the three months ended March 31, 2024. Mine gross loss decrease by $0.7 million, or 32%, compared to the same period in 2024. The decrease in loss was primarily due to the $5.4 million, or 34% decrease in production costs and a $1.5 million, or 36% decrease in depreciation and amortization expenses due to the 42% lower tonnes milled in the first quarter of 2025, compared to the first quarter of 2024.

Net loss For the three months ended March 31, 2025, the Company recorded a net loss of $8.3 million, compared to a net loss of $5.7 million during the same period in 2024. The $2.6 million increase in net loss is mainly attributable to the 34% decrease in net sales.

Other Costs and Expenses, Including Taxes