Gold Resource Corp's Performance Amidst Declining Production: Analyst Forecasts 2Q23 Results

H.C. Wainwright analyst Heiko F. Ihle reiterated a Buy rating on Gold Resource Corporation GORO, increasing the price target to $3.25 from $3.00.

On July 13, Gold Resource announced its 2Q23 production results of 7,689 gold equivalent ounces (GEOs), representing a 33% Y/Y decrease. Management reiterated its 2023 guidance of 30,000 – 31,000 GEOs as YTD production continues to track within expectations.

These results came amid a 25% Y/Y and 16% Q/Q drop in tonnes of lead, coupled with a 13% Y/Y and 18% Q/Q decline in zinc tonnes, further exacerbating the lower GEO figure, notes the analyst.

Looking ahead, Ihle emphasizes GRC's ongoing focus on exploration as the firm plans to increase mine life at the site and GRC's available tonnage. 

The company uncovered a new zone of mineralization. The analyst expects the firm to continue targeting this area to expand the known mineralization at the site. 

The analyst thinks these developments will contribute to more substantial future operational results and offset below-trend production figures for the quarter to be reported (2Q23 financial results on July 27, 2023).

Considering the increases in gold and silver prices of about 15% and 36% over the past 12 months, the analyst utilizes an updated price deck of $1,900/oz of gold and $25/oz of silver.

Ihle's new estimates represent price increases of 9% for gold and 32% for silver.

For copper, the analyst continues to anticipate an increase in copper demand for both the near- and long-term, in part due to the ongoing movement to decarbonize. 

The analyst expects global supply to lag, given the timeframe required to bring new sources of copper online.

Price Action: GORO shares are trading higher by 9.9% to $0.6699 on the last check Monday.