Thank you for joining Gold Resource Corporation's Fourth Quarter and Year End Earnings Conference Call. Mr. Jason Reid, President and Chief Executive Officer, will be hosting today's call. Following Mr. Reid'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 2019 fourth quarter and year-end conference call. I expect my comments to run approximately 10 minutes followed by a question-and-answer period. 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 a 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 this earnings release that we issued yesterday, along with the comments on this call, are made only as of today, March 3, 2020. And we undertake no obligations 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, 2019. 2019 was a stellar year for Gold Resource Corporation with a long list of accomplishments and successes. There are simply too many highlights to mention them all during the call. But three very important highlights include the company delivering its ninth consecutive year of profitability. Secondly, we built commissioned and reached commercial production from our new Isabella Pearl mine in our Nevada Mine Unit. And third, we produced a record number of gold ounces in 2019. What is especially exciting going forward is we are poised to potentially set another annual gold production record in 2020. In addition to producing a record of 40,318 gold ounces, we also produced over 1.7 million silver ounces,…

Let's move on to question-and-answer portion of the call. In an effort to efficiently address the Q&A portion of the call without wasting anyone's time, and since we do not screen filter or limit who can call in, any distracting or antagonistic calls will simply be terminated. And I'll move on to the next productive caller's question. Operator, if you can open up the lines for the Q&A. And those that already can get in the queue. But before I jump to that, I would like to address several e-mail questions. The first is from [indiscernible]. He's asking can we please provide details of the expiration plans for the remainder of the year of both the Mexican and Nevada properties. If possible please include approximate dates with real results should be available for the various properties being explored. I did touch on this. Obviously we're going to be focusing on expanding our Arista Mine. We think it has tremendous potential, both on the Arista and Switchback vein systems to expand. But if we can find another one of these that could be another game changer for the company. And as I mentioned, we are now going to have a specific exploration risk to test new areas we've never been able to test before. So it's going to, I expect it to be very exciting year in Mexico. In Nevada, as I mentioned, we did a great job adding some ounces in the bottom of the pit and around some margins of the pit, where we may have found an extra deposit at Scarlet. It's too early to call it but to have a first drill program hit high grade in meter a half down pole. That could become an economic deposit very soon, given the fact there's very little overburden…

Sure. And this is a product of the new Tax Act that was enacted at the end of 2017 which basically changed the basis on which U.S. firms are taxed from earnings from foreign affiliates. And Congress was concerned that there won't be income shifting because U.S. generally exempts earnings from foreign affiliates now. So they put in a minimum tax, and they call this the guilty tax. I won't explain what that means. But at any rate, it's a minimum tax. It caused us to have to book about $2.1 million, which we otherwise would have had to pay had it not been for net operating losses that we were able to offset that tax with. Looking forward, since it was meant to keep from income shifting to low tax jurisdictions. Mexico is not one of those and there may be an exemption coming down the pike for high tax jurisdictions which would cause us to be no longer a factor for us at all. So it could reverse. Having said that, in 2019, we were hit with an additional 15% tax on our consolidated tax rate. That's why we have 61% instead of about 46%, which would have been in line with the prior year, and nearly $0.04 a share. Our earnings would have been about $0.13 a share rather than $0.09 that we're showing in 2019. Hope that answers the question.

Yeah. No, that's a great explanation, John. Thank you. And again, just to reiterate, it would have been $0.13, but we were hit pretty hard by that additional tax. So with that, operator, there are any questions you can open up the line.

Thank you. [Operator Instructions] We do have one question lined up already. Your line is open. Please go ahead.

Hey, this is [indiscernible] on for Heiko. Thank you for taking our question and congrats on another year of profitability.

Thank you.

Just one quick question for you guys. And I know you mentioned that there would be no interruption to the sale of your product. But has the current coronavirus outbreak had any impact on your corporate operations or even mining operations?

It's a great question. We have been getting out in front of this circling with our General Managers and making sure that any areas that could be sensitive or impacted by China to get out in front of it. At this point, we don't see any issues. Obviously, something could get us we're not seeing at this point. But we don't perceive the impact at this time from the corona virus. Now, obviously, if the corona virus spreads to an extent where everybody at site got it. And obviously our production would be impacted as with any operations, but as far as suppliers and such at this point we do not see that. So to be clear, we have not been impacted and at this point we don't expect to be impacted.

And then any changes in terms of being more conservative with any future dividend payments or minimum cash balances are just like travel arrangements?

This company was founded to pay a dividend. And if you guys are fully aware, and most people on this call are fully aware how committed we are to them. We paid them all the way through the bear [ph] market, and you saw us increasing 100%. We absolutely want to remain consistent with focusing on dividends. Now, having said that, we also want to find another Switchback vein system. And you heard me talk about us putting out these explorations risk and stuff. So, we continue to try to find that balance. It's always been a challenging balance to find right. But I think we've done a good job with it. But at this point, it's business as usual. We hope to increase the dividend. We hope to find another Switchback. So, we'll try to do both, will continue to try to do both. And not a real big game plan change in that.

That's all for us. Thanks.

Appreciated. Thanks for call.

Thank you. We can move along to our next question. Please go ahead.

Good morning, Jason. John, thank you for that discussion on that tax change. That was one of my questions. But jump into metallurgy. The metallurgy on the deep Pearl stuff. Is that complete and you're real confident that your extraction is going to be effective on that deep Pearl processing?

Yes, that's a great question. This deposit has been with that by almost a handful of metallurgist. McCollum looked at it. Cassie [ph] looked at it with numerous big name groups have looked at this. And we noticed when we first acquired the property that the deep transition zone, if you will, between oxide and sulfide had never really been defined to the point where we knew roughly where it was. But what we wanted to do was go in there and really put additional holes to get a sense for it. And to confirm previous metallurgy that said you could recover it with deep leaching. So we can drill programs, we did just that. It was solely to better define the sulfur dioxide boundary. Every result we gave you in that press release is leachable ore. And we've had that question numerous times although high grade leachable ore. We didn't show you the deeper stuff that doesn't mean you can get leachable that goes into much higher grade ore. But the point being is we added about 20,000 ounces in the bottom, and we put it through a battery of tests, leachability test. And it's so high grade, you don't get quite the recovery put on balance you're making a lot of money. So, yes, at this point, we have tested this. Others have tested it with the same indication that it can be recovered. But it ultimately does transition into a full on sulfide that cannot be recovered. But as far as we're concerned, there's some upside. We always knew there's going to be upside in the bottom of the pit. And we wanted to test that and we did it, and it worked out for us. Great question.

And then one other question on Scarlet up there. A lot of that deposits inside of the permitted pit boundary? And at what point are you in the permitting process to expand that pit boundaries?

Okay, that's a great question as well. As you just mentioned, if you look at the permitted EA boundary, there's a bit of a pop out. I call it a dominoes in the upper left. Where that's where we drill all these holes from we announced. And the trend was it was getting higher and higher grade as it got closer and closer to that border. So what we could not keep drilling past that boundary at that point in time. So we stopped. But we have since gone for the NOI notice of intent, which enables you to go drill and we've received that. So we now can go drill it and we are very excited to keep testing because as that was moving toward that current mine plan boundary and moving off of it that's where that highest grade ore was. And it's only a meter and a half down hole. So if that mineralization continues, which we will know soon because we're going to drill it. That could be an x deposit. The fact that it's only a meter and a half deep is terrific. There's not a huge amount of overburden to access that. And obviously, couple stone throws away from our current operations. So we do have the [indiscernible]. We can test now new areas and couldn't test before. But the initial dill program is terrific, very exciting. It's what we had hoped. And again, it's early days. We have a lot of work to do. But also keep in mind that we have 10 kilometers in this trend. And all we're doing now is - everything we're doing now is on the far right side of this trend. But for 10 kilometers to the North West we have numerous targets. They all will not be deposits, but I believe many of them will. And so I fully expect to be this in Isabella Pearl project mine for over 10 years. Not alone the other properties, not alone East Camp, which mentioned to be home run potential. So I think what this does? What the first drill program does? What the high grade and Isabella Pearl does? What this potential does, really emphasizes what I said in my conference call. We have the Pearl position, the best land there is along this portion of the trend. And it's really exciting. And we couldn't have timed it better. We picked up these properties in the bear market. It looks like now we're going into a bull market. And so if we don't, we're going to do well. But if we do, we're going to exceed expectations. So very exciting times. I think I recognize your voice. You know our story well enough to know that Scarlet could be our next one.

Yeah. Thank you, Jason.

You're welcome. Any other questions?

Thank you. We can move along to our next question. Please go ahead.

Jason, this is Lee [indiscernible].

Hey, Lee. How are you?

I'm fine. Thank you. I've got a question here on your Mexico operation. My understanding is the mill right now is running almost 100% capacity. Is there any plans to expand that mill operation to process more ore?

No, no. And that's just the long and short of it. There's several things. Yes, it could be possible. But where this most fits, we had to flatten the mountain top to actually put the snow here. And over time with cash flow, we've taken this mill from several hundred tons a day, all the way up to 2000 tons a day. So it would be difficult, not impossible, but it would be difficult to increase capacity. But the decision to do that has to hinge on the mine. And pulling 2000 tons a day from the mine we're pushing it, we're doing it and we've done it. But there's no reason to put additional pressure on ourselves in my opinion. We know that we mine down on the Arista vein system for over eight years now. And we know that the mineral in the deposit change in the higher grade precious metals are up toward the top half to two thirds. You still have precious metal deep at the base metals come in very strong deep. So then we drove over to Switchback deep, we're in the heavy base metals. And now we're going to be mining up over the years. So where I expect over the years to see some increase at the current mine throughput is great increases. So I expect to see the reverse happen where we see our precious metals have gone down a bit over the years. And as a reset, they should go up a bit and Switchback just to have some additional growth, if you will. But I don't think at this point in time, we need to put the pressure on the operations to just keep increasing the mill and try to make up for it on the times. Now we did a really great thing and doing the pay scale plan. That allows us I mean, it's a safer to be limits. It lowers the amount of tailings you have to have on the surface because you're putting a lot back on the underground. It allows us to extract 100% of some of these valuable pillars which can be in excess of $1 million on occasion. Plus we are in those wide area, the Switchback vein system where we need it. And so right now we're going to be targeting the approximate 2,000 tons a day for the year, and probably next year as well. But yes, there's no reason to increase it at this point.

Okay, thanks. I just wish thinking and ask that question. Appreciate the answer.

That's a great question. But right now that isn't in the plan. The plan is to perhaps the advantage we get into the higher grade precious metals mining up on the Switchback.

Makes sense and thank you.

Very good question. Thank you. And operator, I do notice that we're out of time. And so with that let's stop the call. And if you're in the queue and you have a question that hasn't been answered, please call the office directly; Greg and myself are here. We're happy to answer any and all questions. With that closing call. I'd like to thank everyone for the time today, and we look forward to updating you next quarter. And at this point 2020 is looking like it's going to be a very exciting year for shareholders. Thank you very much. Have a good day.

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