William W. Reid - Co-Founder, Chairman and Chief Executive Officer

Thank you for joining the Gold Resource Corporation's First Quarter Earnings Conference Call. Mr. Bill Reid, CEO; and Mr. Brad Blacketor, CFO will be hosting today's call. Gold Resource's CEO, Bill Reid will make a brief statement. Following Mr. Reid's opening remarks, there will be an e-mail question-and-answer period. [Operator Instructions] As a reminder, today's call is being recorded and will be posted to the company's website within 3 to 5 business days. Please go ahead, Mr. Reid.

Thank you. Well, thank you for joining us this morning for the first quarter 2013 conference call. Our CFO, Mr. Brad Blacketor, and I are on the call today. Jason Reid, our President, is not able to attend. Before we get started, let me remind everybody 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 the comments on this call, are made only as of today, May 9, 2013. 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-Q for the quarter ended March 31, 2013, and Form 10-K for the year ended December 31, 2012, filed with the SEC. As we get started here, let me say we are pleased to have KPMG onboard, a Big 4 accounting firm for this quarter and to perform our 2013 audit. For the first quarter of 2013, our mill production was 22,330 precious metal gold equivalent ounces, which is in line with our 2013 annual target of 80,000 to 100,000 gold equivalent ounces. This target may change in the future depending on circumstances, including mine development and mill upgrade construction. We are attempting to minimize mill shutdown days during the construction process, but there is no assurance that it won't impact our production for the year. We sold 24,972 ounces gold equivalent at a total cash cost of…

First question is from Mike Dudas, analyst of Sterne Agee. How are you planning to operate differently, if at all, if gold and silver prices settle in at $1,200 gold or $20 silver? Well, first let me say, we are very fortunate to have a high-grade deposit. Even with lowering gold and silver metal prices, we should still be profitable, but we have the ability to focus on just the higher grade if need be. This is something that most mines -- certainly, open pit mines with their lower grades can't necessarily do. But we have certain areas that are quite high in gold and silver values. And if the prices are reduced, we will move to those areas to really take advantage of the high-grade nature of our deposit. The next question from him is, will dividend and share repurchase decisions be primarily based on operating cash flow, metal prices, capital needs? Well, basically, all of the above. We, as a company, tried successfully, we believe, very hard to limit the capital of this company, meaning the number of shares outstanding. We only have 53 million shares outstanding. So we are not in any -- we don't have the motivation to want to sell shares to raise additional money, and we don't have the motivation to go into debt. So what we are trying to do, which we are doing successfully so far, is to use our cash flow primarily for all of our activities. At this point in time, with the expansion of the mill and with the prices lower, our cash has been reduced. Our cash flow potentially could be reduced, so the decisions for the dividend and the repurchase of shares certainly are affected by that. On the other hand, next year, if what our target…

Ladies and gentlemen, this will conclude your conference for today. We do thank you for your participation.