Although the buyer fully compensated the Company for mishandling of certain concentrates, during the course of the investigation, the Company concluded that there was an internal control deficiency in its concentrate sales process that did not prevent or detect on a timely basis the material variance between preliminary assay samples of the concentrates taken at the mine site with those assay samples taken at the buyer's warehouse. This deficiency constitutes a material weakness in the Company's controls over financial reporting, which will require us to restate our first and second quarter financial statements for 2012. Management took immediate action to put forth a remediation plan to correct the internal control deficiency and believes the internal control deficiency has been remediated.
Management believes the settlement is in the best interest of the Company considering the terms of its sales contract with its concentrate buyer and the disadvantages of protracted litigation. To mitigate any potential future issues concerning the sampling and assaying process of its shipments, the Company has instituted additional security, including using its own representatives to accompany and remain with all shipments until samples of the concentrates have been obtained at the buyer's concentrate yard to ensure chain of custody and proper sampling. Since implementing this additional security, there has been no material variance between the Company's preliminary assays and the buyer's final assays. In addition, the concentrate buyer has demonstrated and assured the Company that it has improved its controls concerning security, handling and sampling of the Company's concentrates. The Company will make a decision in the near future whether to retain a new concentrate purchaser.
Gold Resource Corporation is a mining company focused on production and pursuing development of gold and silver projects that feature low operating costs and produce high returns on capital. The Company has 100% interest in six potential high-grade gold and silver properties in Mexico's southern state of Oaxaca. The Company has 52,742,198 shares outstanding, no warrants and no debt. Gold Resource Corporation may be the only Company to offer its shareholders a dividend option to obtain physical gold or silver in addition to cash. For more information, please visit GRC's website, located at www.Goldresourcecorp.com and read the Company's 10-K for an understanding of the risk factors involved.
This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this press release, the words "plan", "target", "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding Gold Resource Corporation's strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material. All forward-looking statements in this press release are based upon information available to Gold Resource Corporation on the date of this press release, and the company assumes no obligation to update any such forward-looking statements. Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. The Company's actual results could differ materially from those discussed in this press release. In particular, there can be no assurance that production will continue at any specific rate. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the Company's 10-K filed with the SEC.
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