Gold Resource Corporation Reports Record Annual Production Results for 2011 and Maintains 2012 Outlook

COLORADO SPRINGS, CO -- (Marketwire - Feb 29, 2012) - Gold Resource Corporation (NYSE Amex: GORO) today announced record 2011 production, fourth quarter results and provides its 2012 production outlook which continues to target an aggressive low-cost growth profile. Gold Resource Corporation is a low-cost gold producer with operations in the southern state of Oaxaca, Mexico.


2011 YEAR-END HIGHLIGHTS

- Record production of 66,159 ounces precious metal gold equivalent (AuEq)
- Annual cash cost of $136 per ounce AuEq (excluding royalty expense)
- Record annual revenue of $105 million
- Record annual mine gross profit of $87 million
- Record annual net income of $58 million or $1.10 per share
- Record annual dividend distributions of $26.5 million, or $0.50 per share
- Physical gold and silver treasury of $2.5 million
- Stock repurchase of 104,251 shares at an average price of $18.69 per share
- Increased cash in bank from approximately $48 million to $52 million


Overview of 2011 Results from El Aguila Project

Mr. Jason Reid, President of Gold Resource Corporation, stated, "We are very pleased with our first full year of production and proud of our good people in Oaxaca that made it possible. Ramping up a mining operation, particularly an underground mine, is not an easy task. The results for the year underscore our ability to execute as a company, as much was accomplished in 2011."

Gold Resource Corporation produced a total of 66,159 ounces of precious metal gold equivalent (AuEq), up 531% over its 2010 production of 10,493 gold ounces. Cash costs for 2011 averaged $136 per ounce AuEq, a 37% decrease from cash costs of $217 per gold ounce in 2010.

Record revenues were $105.2 million, up 611% from 2010, mine gross profit was $87.2 million, up 790% from 2010, and net income was $58.34 million, compared to net loss of $23 million in 2010.

Mr. Jason Reid added, "These results allowed management to continue our shareholder friendly and focused philosophy by distributing 2011 record dividends of $26.5 million, or $0.50 per share."


Production and Sales Statistics - El Aguila Project

Year 2011 Year 2010
Combined
Open Pit and
Underground
(12 months) La Arista -
Underground
(10 months) El Aguila -
Open Pit
(2 months) El Aguila -
Open Pit
(6 months)
2011 2011 2011 2010
Production Summary
Milled:
Tonnes Milled 214,215 167,806 46,409 166,237
Tonnes Milled per Day 619 561 829 755

Grade:
Average Gold Grade g/t 3.43 3.45 3.35 3.70
Average Silver Grade g/t 357 446 39 43
Average Copper Grade % 0.46 0.46 - -
Average Lead Grade % 1.28 1.28 - -
Average Zinc Grade % 2.84 2.84 - -

Recoveries:
Average Gold Recovery % 87 88 81 76
Average Silver Recovery % 89 93 75 68
Average Copper Recovery % 77 77 - -
Average Lead Recovery % 78 78 - -
Average Zinc Recovery % 76 76 - -
Gross Payable metal produced
Gold (ozs.) 21,586 16,027 5,559 10,493
Silver (ozs.) 2,180,309 2,122,000 58,309 111,316
Copper (tonnes) 620 620 - -
Lead (tonnes) 1,840 1,840 - -
Zinc (tonnes) 3,730 3,730 - -

Payable metal sold
Gold (ozs.) 19,092 15,175 3,917 9,918
Silver (ozs.) 2,073,027 2,029,422 43,605 105,222
Copper (tonnes) 464 464 - -
Lead (tonnes) 1,510 1,510 - -
Zinc (tonnes) 2,812 2,812 - -
Average metal prices realized
Gold (ozs.) $ 1,596 $ 1,644 $ 1,383 $ 1,201
Silver (ozs.) $ 35 $ 35 $ 34 $ 20
Copper (tonnes) $ 8,095 $ 8,095 - -
Lead (tonnes) $ 2,184 $ 2,184 - -
Zinc (tonnes) $ 1,995 $ 1,995 - -

Gold equivalent ounces produced
Gold (ounces) 21,586 16,027 5,559 10,493
Equivalent Gold (ounces) from Silver 44,573 44,573 - -
Total Gold and Gold Equivalent (ounces) 66,159 60,600 5,559 10,493

Unit costs
Costs per tonne - ore mined $ 25 $ 26 $ 16 $ 11
Costs per tonne - ore milled $ 56 $ 51 $ 4 $ 17
Total cost per tonne $ 81 $ 77 $ 20 $ 28
Cash cost per ounce Gold Equivalent (1) $ 136 $ 137 $ 87 $ 217

(1) A reconciliation of this non-GAAP measure to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found in Company's annual report on Form 10-K for 2011


Overview of Q4 2011 Results from El Aguila Project

Fourth quarter production from the El Aguila Project totaled 19,934 ounces AuEq at a cash cost of $120 per ounce AuEq and realized average sales prices of $1,691 per ounce gold and $30 per ounce silver. The mine generated gross profit of $30.0 million. The Company paid $7.9 million to shareholders in dividends, and repurchased 53,251 shares at an average share price of $18.39, after which the Company increased its bank account by $7.0 million over the previous quarter. (See Note 14 contained in the footnotes to the consolidated financial statements in Company's annual report on Form 10-K for 2011)


2012 Production Outlook

The Company maintains its 2012 production target between 120,000 to 140,000 ounces AuEq. The Company is targeting a cash cost per ounce (excluding royalty) ranging between $50 to $150 per ounce AuEq in 2012. (Cash cost per ounce is a Non-GAAP Financial Measure, please see additional information in Management's Discussion and Analysis and Results of Operation in the Company's annual report on Form 10-K for 2011)


Project Update

The Company is proceeding with finalizing a formal resource report in consideration of a possible secondary securities exchange listing in Canada. This NI 43-101* resource report is being prepared by engineering firm Pincock Allen and Holt of Denver and is expected to be completed in March or April.

Recent El Aguila mill improvements include the installation and commissioning of additional cleaner cells in the floatation circuit and the installation of a third filter press. Mill optimization continues as the Company ramps up daily production to an estimated average 900 tonnes per day for 2012.

La Arista Mine development is progressing well with the primary decline ramp approaching Level 11. Drifts on the veins at each level, between Levels 4 and 9, provide five to six working faces at any given time. The intercepted vein width on Level 9.5 was an impressive 12 meters. The Company's mining staff recently began its first long hole stoping on Level 6 and expects to transition away from its original descending benches mining method going forward. In addition to its own mining staff, the Company currently engages two mine contractors to assist with mine development. One mine contractor continues developing the primary spiral decline while a second mine contractor is developing an additional decline ramp (-15% slope) south from Level 7 to access the southern part of the ore body. By developing off the veins, the Company anticipates this Level 7 decline ramp will allow for better and more expedited access for future mine development along the entire strike length of the deposit. As underground mine development at Arista continues, the Company expects to mine more efficiently, pulling greater tonnages with less dilution.


2012 Exploration Program

A total of four exploration drills are currently at the Company's properties, with a fifth drill on order and expected to arrive shortly. Three drills are concentrated at the Arista mine, with two underground and one surface rig. A fourth drill is located at the Alta Gracia property. The anticipated primary focus for drilling in 2012 will be to test the extension of the Arista deposit which remains open on strike and depth. The Company continues to add personnel to its geology department with the recent hiring of an Exploration Manager for the Oaxaca Mining Unit and another core logging geologist. The Company may add additional drills as it expects to gradually increase the size of its exploration program.


El Rey Property

Progress has been made on the refurbishment of the existing mine shaft, which when complete will allow drifting along the veins and an underground drill station. The Company has received permission from the local Ejido (agrarian community) and town to work at El Rey. However, the Company has temporarily ceased work at El Rey following a recent request to obtain additional approvals from local community agencies. For the time being, the Company will focus its exploration efforts elsewhere on its extensive land holdings until work at El Rey can resume.


Alta Gracia Property

2011 exploration efforts at Alta Gracia returned positive results including multiple high-grade drill intercepts. 21 shallow exploratory core holes for a total of 5,030 meters were drilled on the property during 2011. This program encountered 33 intercepts grading over 200 grams silver per tonne from intervals averaging over one meter down hole length. Assays identified mineralization up to 1,020 grams per tonne silver with 3.73 grams per tonne gold. The Company has budgeted approximately $1 million for exploration at Alta Gracia in 2012.


Las Margaritas Property

The Company has permission from authorities to explore the area and is constructing a new road which will allow year-round access to the property. A drill program is planned for 2012 to test multiple high-grade targets identified from surface mapping and sampling. The Company expects to spend approximately $700K at Las Margaritas in 2012 for drilling, geochemical and geophysical surveys.


Regional Surveys

Gold Resource Corporation is planning a 2012 regional airborne geophysical survey for five of its contiguous properties which span a mineralized structural corridor over 48 kilometers. This important survey will give the Company data to analyze for developing more detailed exploration programs for these properties. This will be the first wide-scale exploration program to cover the Company's entire mineralized trend.

The Company is also continuing an IP-Resistivity and CSAMT survey launched in 2011 on selected target areas. Those surveys are being conducted by Zonge International of Tucson, Arizona under the direction of Ellis Geophysical Consulting, Inc. of Reno, Nevada.

"Gold Resource Corporation provides premier precious metal exposure with an aggressive production growth profile of low cost ounces, growing cash and physical precious metal treasury, high-grade exploration prospects and distribution of a substantial monthly dividend," stated Mr. Jason Reid. "2011 was an excellent year for Gold Resource Corporation, but more importantly, it sets a solid base for the Company's exciting growth trajectory."


About GRC:

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 52,902,620 shares outstanding, no warrants and no debt. For more information, please visit GRC's website, located at www.Goldresourcecorp.com and read the Company's annual report on Form 10-K for an understanding of the risk factors involved.

*NI 43-101 report required by Canadian securities regulators would provide measured, indicated and inferred resources, measurements which are generally not permitted in filings with the SEC. U.S. investors are cautioned not to assume that all or any part of measured or indicated resources in a NI 43-101 report will ever be converted into reserves as defined by the SEC.


Cautionary Statements:

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 Securities and Exchange Commission.


See Accompanying Tables

The following information summarizes the results of operations for Gold Resource Corporation for the year ended December 31, 2011 and 2010, its financial condition at December 31, 2011 and 2010 and its cash flows for the year ended December 31, 2011 and 2010. The summary data for the year ended December 31, 2011 and 2010 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2011, but do not include the footnotes and other information that is included in the complete financial statements. Readers are urged to review the Company's Form 10-K in its entirety, which can be found on the SEC's website at www.sec.gov.

The calculation of our cash cost per ounce contained in this press release is a non-GAAP financial measure. Please see "Management's Discussion and Analysis and Results of Operation" contained in the Company's most recent report on Form 10-K.



Gold Resource Corporation
(An Exploration Stage Company)
Consolidated Statements of Operations
For the years ended December 31, 2011 and 2010
(U.S. dollars in thousands, except shares and per share amounts)

2011 2010
Sales of metals concentrate, net $ 105,163 $ 14,754

Mine cost of sales:
Production costs applicable to sales 17,402 4,721
Depreciation, depletion, amortization 473 166
Accretion 82 68

Total mine cost of sales 17,957 4,955

Mine gross profit 87,206 9,799

Costs and expenses:
General and administrative 9,049 6,608
Stock-based compensation expense 6,570 2,694
Exploration expenses 4,927 4,692
Construction and development 20,986 18,435
Production start-up expense, net -- 209

Total costs and expenses 41,532 32,638

Operating income (loss) 45,674 (22,839 )

Other income 2,414 (235 )

Income (loss) before income taxes 48,088 (23,074 )
Income tax benefit (expense) 12,037 --

Net income (loss) before extraordinary item 60,125 (23,074 )
Extraordinary item:
Flood loss, net of income tax benefit of $750 (1,756 ) --
Net income (loss) 58,369 (23,074 )

Other comprehensive income:
Currency translation adjustment (3,218 ) 215

Net comprehensive income (loss) $ 55,151 $ (22,859 )

Net income (loss) per common share:
Basic:
Before extraordinary item $ 1.13 $ (0.46 )
Extraordinary item (0.03 ) --

Net income (loss) $ 1.10 $ (0.46 )

Diluted:
Before extraordinary item $ 1.06 $ (0.46 )
Extraordinary item (0.03 ) --

Net income (loss) $ 1.03 $ (0.46 )

Weighted average shares outstanding:
Basic 52,979,481 50,042,471

Diluted 56,414,654 50,042,471



GOLD RESOURCE CORPORATION
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except shares)

As of
December 31,
2011 December 31,
2010

ASSETS
Current assets:
Cash and cash equivalents $ 51,960 $ 47,582
Gold and silver bullion 2,549 --
Accounts receivable 14,281 1,185
Inventories 4,243 3,063
Refundable IVA taxes 4,425 5,678
Deferred tax asset 11,118 --
Prepaid expenses 951 170

Total current assets 89,527 57,687


Land and mineral rights 227 227
Property and equipment, net 10,318 4,849
Deferred tax asset 19,517 --
Other assets 6 34

Total assets $ 119,595 $ 62,797


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,691 $ 2,449
Accrued expenses 4,879 777
IVA taxes payable 4,984 1,640
Income tax payable 15,987 --
Dividends payable 2,645 1,590

Total current liabilities 30,186 6,456

Asset retirement obligation 2,281 2,495

Total liabilities 32,467 8,951
Commitments and contingencies

Shareholders' equity:
Preferred stock - $0.001 par value, 5,000,000 shares authorized: no shares issued and outstanding -- --
Common stock - $0.001 par value, 100,000,000 shares authorized: 52,998,303 shares issued and outstanding at December 31, 2011 and 2010 53 53
Additional paid-in capital 132,529 152,444
(Deficit) accumulated during the exploration stage (39,522 ) (97,891 )
Treasury stock at cost, 104,251 shares (1,954 ) --
Other comprehensive income- currency translation adjustment (3,978 ) (760 )

Total shareholders' equity 87,128 53,846

Total liabilities and shareholders' equity $ 119,595 $ 62,797


GOLD RESOURCE CORPORATION
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 2011 and 2010
(U.S. dollars in thousands, except shares)

2011 2010
Cash flows from operating activities:
Net income (loss) $ 58,369 $ (23,074 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation 856 324
Accretion expense 82 68
Asset retirement obligation -- 315
Stock compensation 6,570 2,694
Foreign currency translation adjustment (3,218 ) 215
Loss on disposal of asset -- 4
Unrealized loss from gold/silver bullion held 429 --
Deferred tax asset (30,635 ) --
Changes in operating assets and liabilities:
Accounts receivable (13,096 ) (1,185 )
Inventories (1,180 ) (2,838 )
IVA taxes receivable 1,253 (3,716 )
Prepaid expenses and other current assets (772 ) 146
Accounts payable (758 ) 4,142
Accrued expenses 4,102 --
IVA taxes payable 3,344 --
Income tax payable 15,987 --
Dividends payable 1,055 1,590
Other 29 (24 )

Total adjustments (15,952 ) 1,735

Net cash provided by (used in) operating activities 42,417 (21,339 )

Cash flows from investing activities:
Capital expenditures (6,325 ) (3,560 )
Purchase of gold and silver bullion (2,977 ) --
Restricted cash -- 11,436

Net cash (used in) provided by investing activities (9,302 ) 7,876

Cash flows from financing activities:
Proceeds from sales of common stock -- 63,393
Dividends paid (26,484 ) (9,330 )
Treasury stock purchases (1,954 ) --

Net cash (used in) provided by financing activities (28,438 ) 54,063

Effect of exchange rates on cash and equivalents (299 ) 230

Net increase (decrease) in cash and equivalents 4,378 40,830
Cash and equivalents at beginning of period 47,582 6,752

Cash and equivalents at end of period $ 51,960 $ 47,582


Contact Information

Contacts:
Corporate Development
Greg Patterson
303-320-7708
www.Goldresourcecorp.com