Thank you for joining Gold Resource Corporation’s Second Quarter 2015 Conference Call. Mr. Jason Reid, CEO, will be hosting today’s call. Following Mr. Reed’s opening remarks, there will be a question-and-answer period. As a reminder, today’s call is being recorded. Please go ahead, Mr. Reid.

Thank you. Good morning everyone and thank you for joining Gold Resource Corporation’s 2015 second quarter conference call. Joining me on the call today for the Q&A portion will be Mr. John Labate, 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 we issued yesterday, along with comments on this call are made only as of today, August 6, 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 ended December 31, 2014. We faced many challenges in the second quarter of 2015 including slower mine development and an unsanctioned work stoppage at our El Aguila project, which were reflected in our second quarter production results that were below our targets. Having said that, and in spite of the continued fall in metal market prices, we did show a modest profit and earnings of $0.01 per share for the quarter. I will walk you through the second quarter challenges and where we stand today. This includes recovering from the ancillary affects of the work stoppage as well as improved mine development thus far in the third quarter. But first let’s breakdown the Q2 production numbers. Second quarter production from the Arista Mine totaled 14,858 ounces of precious metal gold equivalent at a realized 72:1 silver-to-gold…

Thank you, sir. [Operator Instructions] We will now take our first question. Please go ahead, your line is open.

Hello Mr. Reid, Mark Smith [ph], a shareholder. I think you answered my question but I’d like you to comment on the grade, I know that you -- those water management that drove that down because you had to take from less advantageous places but do you see that grade coming back, that’s my first question in the near quarter. And then, a little update on the electricity project.

Okay, Mark thank you for joining the call and thanks for your questions. First of all, we mined off plan as I mentioned through a portion of the quarter. We did that in response to the development challenges and when you mine off plan, you’re obviously not mining your targeted grade. So we do expect to grade to go back to what we estimate it to be. But again, once you’re off plan, you’re not going to hit your targeted grade.

Yeah, that’s one of the things that really stood out to me that grade differential and the production that represented so, that’s good to know and good to know that you got the water management under control again.

We fully expect to have water and we’re very cautious in our development. At some point still, you take on water where you don’t expect and that happened during the quarter and it slowed our mine development down, so we have to focus on getting that water out. I did walk you through all the advancements we’ve made in increasing our water capacity as well as what we’re doing for future because we all want to be at Switchback by year-end, hopefully we can do that and I want to be in the position to be pumping that water out so we can be mining it early next year hopefully. So yeah, we’re definitely and we work with groups like SRK, well respected consulting engineering firm to help us with that. So, we continue to focus on that but it did slow us down, it forced us to mine areas of the mine we didn’t target and when you do that, yeah, you’re grade is going to fluctuate. Now, we’ve seen similar things in the past, so, I mean it is what it is, it was a challenging quarter. So turning to your second question, which was in regard to the power right and how we’re doing with that program. I believe most, probably anybody on this call is aware, we’re trying to eventually get on the power grid and we’ve done numerous analyses on this and we believe we can save a substantial amount of money by hooking to the grid. We are working with the Federal Power Commission in getting all the i's dotted t's crossed to be in the position to move that project forward and they’re working with us quite well. It’s on their timeframe, so I can’t give you any timeframe and I now everybody ask that question all the time, we’re optimistic that by year-end, we’ll well into the early stages of that construction but again I can’t guarantee that by any means because this is a, in large part under their timeframe but I would hope next year, maybe by the year-end, we’ll be on the power grid that’s the goal. And that being the case, I think we could safe a substantial amount of money. Like I mentioned at the Annual Meeting, it could be in the order of magnitude of millions, maybe even 4 million that would be huge for us.

So at this point, you’re just doing, you’ve done everything you can and it is buried in the bureaucracy so to speak.

It’s not too buried but yeah, I mean you can look it at that way. We’re getting to a point which we’re going to start construction but I don’t want to give you the date on that because I don’t know that date. We’re getting close, we’re getting close, it’s not just in paperwork and we’re waiting for approvals, they are working with us. And to give you a little more color on this, the power line that comes from the nearest transfer station has to cross numerous different Ejidos’ properties, Ejidos that we don’t even deal with on a regular basis, so they’ve gone in and have gotten approvals from all these groups on our behalf and we’re getting to the point in which we’re going to start compensating for that line going through the property, so we’re getting closer. That’s for sure.

Good, good. Thank you.

Thanks, Mark.

We will move to our next question. Please go ahead. Your line is open.

Hello?

Hello, whom am I speaking with today?

Hi, this is Michael Hambert [ph], private investor. Good morning.

Michael, how are you today?

I’m doing okay. Several questions. One is, the book value of the Company, am I calculating correct, is it right around $1.75 currently?

To be honest, I can’t give you, I don’t have the book value of this Company on top of my head. So, I don’t know.

Okay. On another note, the price of silver, it’s the most sensitive thing to the Company at this juncture with the amount of silver the Company is producing. At what point or at what dollar pricing silver would dividend be in jeopardy?

That’s a good question. The board always evaluates the dividend at least once a quarter if not on a more regular basis and at some point if the -- we can’t keep our costs low enough and keep the dividend going, we may cut it, but -- and we’ve always said that. Having said that, I don’t think anybody could have believed we paid a dividend for as many years as we’ve had, especially during the last three years of this bear market of continually falling silver prices. So, I think my point in saying that is our commitment is there that if it can be done, we’ll do it, and thus far, we’re okay, but there is no guarantee, I would be clear. With the exact silver price, I can’t give you because we adjust and have been adjusting over the last several years. Metal prices fall, we adjust, we cut cost. Metal prices fall, we adjust, we cut cost. And we plan to continue to do that. At some point, there will be a breaking point so to speak and we may need to lower it or cut it for a certain amount of time. But I don’t have the answer to that, everything is moving too quickly in its influx and metal prices are quite volatile.

Okay. The dividend was already declared for this month or I guess you call it last month or prior month and regardless silver has been right around [indiscernible], so that’s $2 left in the average from Q2. So, it’s still seems like this -- at this price, is it comfortable dividend payment?

Listen, there is so much more to the dividend than just the price of silver. It has to do with the entire operation on what CapEx spends we have in front of us. For instance, we’re going to have a CapEx spend at the electric line, we’re finishing up the tailing facility, excuse me. It will be nice not to have the cost of the tailing facility because when we finish that up in the few months but then we’re going to deploy that some of the capital to the electrical lines. So, I mean -- again, it’s -- I can’t give you a specific I think you’re driving at, because it’s very much inflection. It depends on the capital expenditures we see, taxes we have to pay, then on a production, the metal price, all that is an inflection. We just -- we evaluate on a regular basis is kind of all I can tell you. And at some point, I don’t have -- now I’m being clear, at some point, we may modify that, whether it’s a cut or eliminate it for a time being, but nobody ever thought we’d ever pay consecutive month of dividends this long. So, I think again, if it can be done, we’ll do it.

Certainly it’s been impressive. Now, you mentioned, you’ve come close on a couple of potential acquisitions. Are you looking in any sort of jurisdictions and with the stock being so low, you wouldn’t want to use your stock as currency because it’s so cheap in my eyes? Do you have access to lines of credit or other avenues of capital?

Okay, yeah -- hello, can you hear me?

Hello? Yes.

Yes.

Did you get on my question? Hello?

Yes, please go ahead.

Having a little bit of problem with my phone. Can you hear me?

I can hear you, yes. Yeah, I can hear you. You seem to be breaking up.

Hello? Hello, can you hear me?

Yes.

I apologize. My phone -- I have some phone issue. So, if you can hear me now, I’ll go ahead and continue. As it relates to the M&A, you asked several different questions, one of which we’re only looking in mining friendly jurisdictions and those are becoming increasingly scarce. We are focused primarily on the Americas and in large part right now, we’re looking Nevada. I can’t speak any specific on the M&A because we have CAs with some groups. Obviously, this is what it is. So, that answers I think the first part of your question. The second part -- can you hear me, hello?

Yes, I can hear you.

Okay, sorry, the second part, happen to do with access to capital for the right project and if it’s accretive, I believe we can make something work whether that’s a function of some cash, some equity, again, it have to be accretive at these levels, but the time to look is right now where most of the M&A happens is when metal prices are at their all-time highs and mining companies overpay for things and yes, everybody kind of tucks back in their shell at this stage in the cyclical metal market, but this is the time to look and we are looking very hard and because there is tremendous number of opportunities and it’s just is what it is, we’ve got right down to the little box, we couldn’t check in and have to walk away. So, we’re continuing to look for things and as long as it’s accretive, I think we can find the money needed some way somehow as long as it was made sense.

That’s great. I like to hear that you can close and it didn’t fit exactly, so you walked away and who knows they might turn around in a few months and come back to you because there is a lot of pain out there for certain. Also, my last question with regard to some of the great drill results you’ve had, it’s appealing to the eye, it’s great to see the press releases and excited about for the potential there and I guess that down the road, it will be a cash cow. That being said, I see very little insider buying in stock at all really and so, I’m just curious has this been discussed, I know that there are blackout periods with regard to quarterly announcements and what have you and certainly some of the deals that you’ve been looking at but have this been discussed with some of the board members starting with cumulative shares at these levels?

Yeah, what do you mean discussed among the board on whether insider should be buying or not?

Yeah, whether or not --

You can look back over the past couple of years, I bought a bunch at $16. We’ve bought on the way down. We always get that push back, why aren’t you buying, why aren’t you always in there buying. You’re right, we’re under blackout periods and we have been buying. That’s kind of just is what it is. As it relates to the board though and buying back shares with Company’s treasury money, we’ve done that in the past, it didn’t really work, metal prices kept falling and we didn’t call the time on that. Right now, we’d rather hold our capital for a potential deal; tend to buy back shares right now. So, could we potentially sure if all of the sudden we have no options out there in front of us at the time, we might buy back shares [00:28:56] we’re so focused on trying to find an opportunity right now. That’s where the capital needs to go on the corporate side. On individual side, everybody is under their own situation, but with all the blackout stage we have anyway, it makes it difficult too.

Certainly, but definitely it instilled a lot of confidence in marketplace considering not a lot of companies are doing and they’re cutting dividends, you simply be the anomaly where you’re maintaining the dividend and you continue to produce some great progress out. So, it’d be welcome turn I think in the marketplace and could be -- you could see the stock jump quite a bit. All right, well, thanks so much for taking my questions.

I appreciate it, thanks for calling.

We will now move to our next question, please go ahead. Your line is open.

Good morning, Jason.

Good morning, who is this?

This is [indiscernible], shareholder from way back.

Hi, Jack.

I am interested in your labor situation, if I read correctly, in your annual report, if you contracted all of your labor, do you find that it gives you enough control over your labor union situation that you have got an intermediary there that you have to work with?

That’s a good question. As far as, it doesn’t affect our control, in fact we contracted it out. But the biggest issue is the ability to work with union, union rights take precedence in Mexico and we have to work with the union whether we want to or not and what we wanted – just to give you some facts around that, this is important. Early on, we didn’t want a mining union to come interrupt, they go plant their flag and they say, your union have to get with us. So we worked with local businessmen, local people to create their own union that looks out for the interest of the local communities and then they had passed themselves as the second largest most powerful union in Mexico. And in doing so, right away we aligned our interest -- with some of the union’s interest as it relates to keeping jobs locally and aim for the benefit of the company and the local population. That’s what we always had to focus on as our relationship with the union. This issue that has transpired how to deal with smaller group of people who said, we are going to protest and it wasn’t sanctioned by this union. That kind thing of happens. It is what it is, but it’s often hard to explain somebody who doesn’t follow economics, who doesn’t follow the metal price movements on why they less entitlements, they are seeing less right now. And that was impetus for the situation. We have always had to record to have a good relationship with our union and we will continue to do so depending on perspective. We now go to conferences, we ought to get question from our industry peers as to how do you work in Oaxaca, Mexico, that’s one of the most difficult places to operate in. And I love that question, because it’s – it underscores the fact that we treat everybody with respect and that’s how you’re able to operate there. So I don’t believe the fact we have contracted out to work as far as anything to do with our ability or not to manage that situation. It all stems from our relationship of the union, but more importantly with everybody’s respect.

Thank you, and I do appreciate the dividends. The only question – the other question is what is your estimated CapEx for your Oaxaca facility?

Well, that’s one of the things we are waiting on for a final from the Federal Power Commission. However, we think it maybe – we know the order of magnitude, but we are just waiting on the final and things can vary, right. But the order of magnitude is $3 million, could be $4 million, but we are just – we haven’t nailed that down yet, but that’s the order of magnitude. I think even if we ran up into the fives, you’d still have a one year payback on that project, and so it makes a lot of sense to do it, get our capital back in one year and then lower our cost dramatically. And if we can save $3 million, $4 million a year on power, which is our second largest cost, second to manpower, we can save that. That will lower our cost dramatically. But more importantly just keep – allow us to hang on to our money through this bear market and be the ones who come out on the either side. Just one of the too many cost savings we are working on, we are also working on a different port facility, it’s closure to all our concentrates too and with a much shorter trucking distance. If we can do that as well that should lower our cost. So we continue to strive for that and then are going after both of those big projects right now.

Thank you, good luck.

Thank you.

[Operator Instructions] We will now move to our next question, please go ahead your line is open.

Good morning. This is Amit Ghate, private investor. Just a quick question regarding the agitated leach circuit. My understanding is that it’s never been used, so I was wondering if can give us a little bit of color on how much commissioning tuning will be involved in getting it going?

Right, we actually doing that right now, and there is not to be much. We will try to bring in some specials to help us when we do commission it, especially for the Morocco [ph] precipitation and sign a disrupt portion to help our team get up to speed with operating a circuit. But we are – as you just heard in the call, and seen in the press releases, we are very much gearing up to get this thing started as soon as possible and have many different draw points and that’s the primary goal that we have. I don’t believe there is going to be a whole lot of commissioning, there is just going to be whole lot of – to put it different way, the biggest thing of this would be training of people and how to operate that, there is not a lot to do to the circuit itself, because it’s always been a – it’s ready to go. So we are trying to use it.

Okay, all right, thank you.

You’re welcome.

We will now move to our next question. Please state your name and ask your question.

Hi, Jason, this is Peter Faherty, a shareholder.

Hi, Peter.

Hi, I got a question on Bill Reid and possibly David, what kind of consulting work, if they have been doing any since they retired, they have been doing for the company?

David is not doing any consulting and Bill is doing a little bit, and less and less over time.

Can you be more specific as to what areas he has been working on?

In large part, Bill is looking for M&A opportunities for us and looking for properties, looking for projects.

Excuse me, did he work on the stuff and the beta that you have picked up.

Yes.

Okay. Also I thought the agitated leach circuit hold some materials back and we are actually already using that, am I incorrect there?

That is incorrect. We haven’t run the agitated leach circuit. Now, at the end of that circuit is a dore [ph] processing at the very end. We have used that, so we have used a portion of that circuit, but we have not ever commissioned the agitated leach circuit, just the dore portion of it and we actually increased the dore capacity to handle, we are able to pull off with gravity the gold on the front end, nice percentage of gold on the front end of this floatation circuit that goes straight to the dore and then we are applying dore bars with that. So that’s a little it confusing, I am glad you asked that question because we get that confusion often, but just to be clear, we have never operated the agitated leach circuit, we have only used the dore at the end.

Also is there any problems with the security where you had some gold that we lost, some materials we lost, has that all been resolved and we are securing our deliveries and accounting now?

It’s always a risk for any mining company, that’s happened all over, even in the states that we were. We have had some in the past that you know about, but we haven’t had any since, and a large part has to do with, we are using what I consider to be a far better security group. But that’s just always a growing concern for any mining company to secure the product. So, we haven't had any issues in quite a while and we don't foresee us having any issues. Could potentially happen for sure, but we are very vigilant, have a really good security group that works for a lot of big mining companies in Mexico and so they know what they are doing. And that's why we haven't had any issues.

Well, you briefly touched earlier, I mentioned some money was going to the tailings front, what's the status for them as far as having to expand or how long does that go on, we've got help already.

Right. We've done Phase 1 and 2 of the tailings, Dan and you’ve seen that in pictures and whatnot on our webcast and in our presentations. We are just about completed with Phase 3 and Phase 3 will get us to about two more years, but then Phase 4 adds to the dam height on the Phase 3 and will take us up to about seven year more or less. So we’re well-suited, well situated to handle our tailings for the foreseeable future at this point. We’re just winding down, Dan, and closing out the construction of that. For sure, by year-end, but hopefully much sooner, we’ll be totally done and utilizing that Phase 3.

Phase 4, does that have to be permitted or is that?

No. It's all under the same -- uses the same facility, all we’re doing is raising, bringing up the elevation of the dam for Phase 3 going into Phase 4. So and we could have just gone right in and done the Phase 4, but it's a function of, this is the rough time in the metals space and we’re trying to keep capital costs to a minimum. And so we’ve broken it in to two phases. So we just didn’t have to allocate the capital all right now to do the big dam or bringing it up in lifts and we’re saving a couple of million right now and having two years’ worth of storage and then we’ll finish it later. So it isn't managing the capital right now.

Thanks.

Thank you. Let's move to our next question. Please go ahead.

Hi, Jason. This is Paul Bomar [ph], long-time investor with the company. I had a question about the Arista and Baja veins, do you have any better understanding today of what the limits on those veins are in terms of strike and depth and so forth?

Right. I mean we have definitely a better understanding of the deposits, yes, the Arista is made up of numerous veins of which we just found the Viridiana not too long ago. So I'm optimistic we’ll continue to find more veins, but to switch back is either a step out or a parallel vein system or it might be part of – the Arista might just be an extension of the Arista.

What about the debt of those veins. Do you have any better understanding about how deep they go?

Right, these veins go very deep and some of our deepest holes, we get in to higher grade zinc for instance. So this may ultimately go down into a base metal, could be a zinc mine below, we won’t necessarily be interested in that. But we’re 600 meters down and there are still strong veins down there. So and our drill holes, not development. On strike though is more important for us to find, they -- more readily accessible and they’re having to go as deep and I believe this structural system is going to go for a long way with various issues. So I'm still very positive on the Arista itself, but at some point, we’ll find the limits of that and it will move onto the switchback. The switchback again may be part of Arista, may just be an extension of it. And if that's the case, then we’re now 500 meters to the Northwest of Arista. So it's a big system is my point and so we haven't fully defined it, but at some point, the Arista, as we know it, will come to an end or we may just reduce ultimately that it’s moving over towards the switchback.

Sounds good.

Yeah. Thanks for the call. It's good to hear from you. It's been a while.

Yeah. Thanks for answering the question.

Thank you. Let’s move to our next question. Please go ahead. Your line is open.

Hey, guys. [indiscernible] How are you doing today?

Good, Derek. How are you?

I’m good. Hey, my question is your smelter contract, I think there is a lot of misconception in to the marketplace, regarding the way that you report production versus sold and there is that reach that I saw where people are looking for – they see a gap between your production numbers and your sales numbers and I know you guys footnote it, but would you be able to provide any more color to us regarding those contracts to help clear up from these misconceptions?

Right, I think it's a great question, Derek. We get it a lot and people say, you say you produce X and then you are sold ultimately and your revenues comes from Y and that's never equal on a -- they never match 100%. The difference is what the smelter charge is. We have to pay the smelter, we have to pay -- we don’t sell directly to smelter, we sell to a buyer, but their cut is the difference, the long and short of it. I mean, that’s the easiest way to explain that. Yes. We produce X and we sell Y, there is a differential, that’s their piece. And I mean generally speaking, it’s about 9% to 10%. That's why we wanted to move to pull a dore because the charge for some of the concentrates is about 9% to 10%. This charge for selling a dore is about 1%. So to sell dore.

I'm with you on that and I've calculated [indiscernible] It’s just taken off the copy of your revenue. So a lot of people look for that missing number and it’s a charge, and the whole silver industry operates that way with some concentrate -- without the byproduct. So okay, well, good, hopefully, you get things on track regarding the water issues and looking forward to good things.

Alright. Well, hey, I appreciate the call.

Thank you. We will now take our last question in the queue. Please go ahead. Your line is open.

Hi. This is the follow-up. I asked a question earlier. This is Michael [ph], Private investor, current investor and my question is with regard to security and insurance, I know that McEwen had 7,000 ounces of gold stone a few months ago, you spoke about your security crew and how they work for a lot of big firms. Aside from having the security, is there a protocol with regard to the command that you use or could talk about and the second part is are you insured for any potential thefts?

Right. I'm not going to talk about the first part. You got to figure that the people are trying to steal from you are potentially listening. So, but is there –

That’s a good answer. That’s the answer I like.

Of course, we have protocols, that’s all I’m going to say on that. We have plenty of protocols to limit that potential of happening. What was the second part? Insurance. We have struggled to get compensated from our insurance on this and that we still continue to fight them on it and ultimately I hope we see something from it, but yeah, we haven't seen compensation for that yet from insurance.

Interesting. I know McEwen actually was able to get almost –

I know, I read that. My immediate kneejerk reaction is I need to call him and get on the same and I probably should do that. But no, insurance is one of those things, they're happy to take your money doing and it’s time to calling there.

Yes. And then your premiums go up anyway. So, great. Okay.

Okay, well. With that and I will close the call. Thank you everybody for your time and we will talk to you next quarter. Thanks.

Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.