UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-34857

Gold Resource Corporation

_{(Exact Name of Registrant as Specified in its charter)}

Colorado

84-1473173

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~2000 South Colorado Blvd,~~7900 E. Union Ave~~Tower One,~~, Suite ~~10200,~~320, Denver, Colorado ~~80222~~80237

(Address of Principal Executive Offices) (Zip Code)

(303) 320-7708

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


a
Title of each class	Trading Symbol	Name of each exchange where registered
Common Stock	GORO	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes⌧No◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes⌧No◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	◻	Accelerated filer	☒

Non-accelerated filer	◻	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act◻

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐No⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~74,581,679~~88,372,692 shares of common stock outstanding as of ~~October~~July 26, ~~2021~~2022.

Table of Contents

~~THIRD~~SECOND QUARTER ~~2021~~2022 HIGHLIGHTS

Highlights for the three months ended ~~September~~June 30, ~~2021~~2022 are summarized below and discussed further in our Management’s Discussion and Analysis:

Strategic

●

~~On September 7, 2021,~~For the eighth consecutive year, the Don David Gold ~~Resource Corporation (the “Company”~~Mine (“DDGM”) ~~entered into~~earned the prestigious Empresa Socialmente Responsable (“ESR”) award from the Mexican Center for Philanthropy (CEMEFI). Awards are given to organizations who demonstrate a ~~binding letter agreement with Aquila Resources Inc. (“Aquila”) in connection with the Company’s proposed acquisition of all the issued~~commitment to supporting social and ~~outstanding common shares of Aquila.~~environmental protection programs within their local communities.

●

~~Subsequent to~~During the quarter, ~~close,~~ the Company ~~entered into~~continued to process tailings material from a ~~definitive arrangement agreement with Aquila.~~nearby community in an effort to ensure the proper environmental treatment and storage of the material.

●

~~On September 24, 2021,~~In a continuous effort to strengthen the ~~Company released its 2020 Sustainability Accounting Standards Report.~~senior leadership team, Patrick Frenette was hired as Vice President, Technical Services and Steve Donohue was seconded as Vice President, Environmental and Regulatory Affairs (Michigan) to further derisk the delivery of the optimized feasibility study and permit applications for the Back Forty Project.

●

The Company’s Annual Meeting of Shareholders was held in person on May 19, 2022. During the meeting, shareholders approved the current five Directors to serve another annual term and ratified the appointment of BDO USA, LLP as the independent auditor for the fiscal year ending December 31, 2022.

●

$~~0.7~~0.9 million was distributed in shareholder dividends this quarter, totaling ~~$118.5~~over $121 million since 2010.

Operational

●

~~Don David Gold Mine initiated a safety program that aims to bolster the health and safety culture. Despite program progress, one~~Three lost time ~~incident~~incidents occurred during the quarter. ~~While the incident was not categorized as serious, it was~~The incidents were thoroughly investigated, and the appropriate actions were taken.

●

The Don David Gold Mine produced and sold a total of ~~9,170~~11,475 gold equivalent ounces, comprising ~~5,809~~8,746 gold ounces and ~~255,394~~231,622 silver ounces ~~sold~~ at an average price per ounce of ~~$1,762~~$1,874 and ~~$23,~~$22, respectively.

●

~~Construction of~~Exploration continued to focus on infill drilling with encouraging results from the ~~water filtration plant~~Arista vein system. The step-out resource expansion drilling is ongoing. Sampling programs at the Alta Gracia and dry stack tailings facilities is 95% complete. The dry stack facilities will conserve and recirculate water, eliminate risks related to traditional tailings facilities, accelerate reclamation of certain areas of the open pit mine, and extend the life of the operations.Chamizo projects have begun.

●

~~During~~The feasibility study work for the ~~third quarter, we announced encouraging result regarding~~Back Forty Project in Michigan, USA progressed during Q2 2022 with completion expected in the ~~potential to increase higher grade mineralized material and the down-dip extension~~second half of ~~the Switchback vein system mineralization at depth.~~

●

With a focus on unlocking the future value at the Don David Gold Mine, a total review of first principles of the mineral reserve and mineral resource block models continued during the quarter, including assessments of the geology, metallurgy, ground support, mining methods and other key criteria. The full review is expected to be completed during the fourth quarter and is expected to form the basis of the December 31, 2021 SK-1300 Technical Report Summary and 2022 production guidance.

●

~~In August the Company experienced an increase~~this year, followed by permit applications being submitted with state agencies in COVID-19 cases at the Don David Gold Mine and temporarily reduced certain activities for 12 days. The effort controlled the spread of COVID-19 and operations have steadily ramped back up under enhanced screening and safety protocols.Michigan.

Financial

●

Our balance sheet remains strong with ~~$29.5~~$33.3 million in cash as of ~~September~~June 30, ~~2021, an increase~~2022, a decrease of ~~$4.1~~$0.4 million since December 31, ~~2020~~2021, after investing ~~$18.9~~$15.7 million in capital and exploration expenditures. ~~Our investment in Mexico is focused on favorably impacting our environment, social~~(See Management’s Discussion and ~~governance programs while creating operational efficiencies~~Analysis of Financial Condition and ~~longevity.~~Results of Operations – 2022 Capital and Exploration Investment Summary below for details.)

●

Year-to-date cash flow from operating activities was ~~$21.9~~$12.2 million.

●

Net income was ~~$1.5~~$2.7 million or ~~$0.02~~$0.03 earnings per share for the quarter.

●

Working capital was ~~$31.0~~$37.1 million ~~at September~~as of June 30, 2022, $7.8 million higher than as of December 31, 2021. The increase is primarily due to a decrease in the liability related to the zinc zero cost collar.

●

Total cash cost for the quarter was ~~$466~~$247 per gold equivalent (“AuEq”) ounce (after co-product credits)~~. We currently expect to meet our full year guidance of $250 to $290 per AuEq ounce.~~

●

~~Total~~ and total all-in sustaining cost for the quarter was ~~$1,031~~$799 per AuEq ounce (after co-product credits). Both non-GAAP measures were favorably impacted by higher co-product credits for base metals sold. (See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures~~We currently expect~~ below for a reconciliation of non-GAAP measures to ~~achieve full year guidance of $800 to $900 per AuEq ounce.~~applicable GAAP measures.)

Gold Resource Corporation
‌1

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(U.S. dollars in thousands, except share and per share amounts)

(Unaudited)

As of

As of

September 30,

December 31,

Note
2021

2020
ASSETS

Current assets:

Cash and cash equivalents

$
29,544

$
25,405
Gold and silver rounds/bullion
5

559

671
Accounts receivable, net

4,947

4,226
Inventories, net
6

10,876

9,995
Prepaid expenses and other current assets
8

2,999

2,576
Total current assets

48,925

42,873
Property, plant and mine development, net
9

66,317

62,511
Deferred tax assets, net

434

309
Other non-current assets

505

41
Total assets

$
116,181

$
105,734
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$
8,988

$
8,782
Income taxes payable, net

3,215

73
Mining royalty taxes payable, net

1,861

955
Accrued expenses and other current liabilities
10

3,888

2,275
Total current liabilities

17,952

12,085
Reclamation and remediation liabilities
11

3,121

3,098
Other non-current liabilities
10

901

13
Total liabilities

21,974

15,196
Shareholders' equity:

Common stock - $0.001 par value, 200,000,000 shares authorized:

74,581,679 and 74,376,958 shares outstanding at September 30, 2021 and December 31, 2020, respectively

75

75
Additional paid-in capital

85,429

84,865
Retained earnings

15,758

12,653
Treasury stock at cost, 336,398 shares

(5,884)

(5,884)
Accumulated other comprehensive loss

(1,171)

(1,171)
Total shareholders' equity

94,207

90,538
Total liabilities and shareholders' equity

$
116,181

$
105,734


		As of		As of
		June 30,		December 31,
	Note	2022		2021
ASSETS
Current assets:
Cash and cash equivalents		$	33,335	$	33,712
Accounts receivable, net			6,277		8,672
Inventories, net	4		12,506		10,361
Promissory note	6		4,041		3,885
Prepaid expenses and other current assets	7		3,992		2,285
Zinc zero cost collar	17		275		-
Total current assets			60,426		58,915
Property, plant and mine development, net	8		152,777		156,771
Other non-current assets			403		76
Total assets		$	213,606	$	215,762
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	11,742	$	13,308
Income taxes payable, net			3,021		6,801
Mining royalty taxes payable, net			3,021		2,975
Zinc zero cost collar	17		-		1,844
Accrued expenses and other current liabilities	9		5,589		4,731
Total current liabilities			23,373		29,659
Reclamation and remediation liabilities	11		3,258		3,112
Gold and silver stream agreements	10		42,987		42,560
Deferred tax liabilities, net	5		11,757		13,126
Contingent consideration	12		4,293		4,603
Other non-current liabilities	9		1,936		1,952
Total liabilities			87,604		95,012
Shareholders' equity:
Common stock - $0.001 par value, 200,000,000 shares authorized:
88,372,692 and 88,338,774 shares outstanding at June 30, 2022 and December 31, 2021, respectively			89		89
Additional paid-in capital			110,480		110,153
Retained earnings			22,488		17,563
Treasury stock at cost, 336,398 shares			(5,884)		(5,884)
Accumulated other comprehensive loss			(1,171)		(1,171)
Total shareholders' equity			126,002		120,750
Total liabilities and shareholders' equity		$	213,606	$	215,762

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

Gold Resource Corporation—~~Interim~~ Condensed Consolidated Interim Financial Statements and Notes—Unaudited‌
2

Table of Contents

GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share amounts)

(Unaudited)


											For the three months ended				For the six months ended
		For the three months ended				For the nine months ended					June 30,				June 30,
		September 30,				September 30,				Note	2022		2021		2022		2021
	Note	2021		2020		2021		2020
Sales, net	4	$	29,029	$	26,435	$	87,133	$	61,105	3	$	37,064	$	30,836	$	82,481	$	58,104
Mine cost of sales:
Cost of sales:
Production costs			17,216		16,286		51,982		42,856			21,722		19,523		41,796		34,766
Depreciation and amortization			3,521		4,340		11,299		13,537			7,262		4,379		13,220		7,778
Reclamation and remediation			47		44		152		119			61		54		123		105
Total mine cost of sales			20,784		20,670		63,433		56,512
Total cost of sales												29,045		23,956		55,139		42,649
Mine gross profit			8,245		5,765		23,700		4,593			8,019		6,880		27,342		15,455
Costs and expenses:
General and administrative expenses			2,355		2,360		6,070		5,961			1,920		2,134		3,819		3,715
Exploration expenses			1,805		1,019		3,660		2,132			2,837		648		5,142		1,855
Restructuring expenses			-		-		496		-			-		-		-		496
Stock-based compensation	14		30		305		711		1,175	16		393		197		1,167		681
Other expense (income), net	16		174		(599)		727		(1,043)
Realized and unrealized (gain) loss on zinc zero cost collar										17		(3,799)		-		338		-
Other expense, net										18		214		867		1,052		553
Total costs and expenses			4,364		3,085		11,664		8,225			1,565		3,846		11,518		7,300
Income (loss) before income taxes			3,881		2,680		12,036		(3,632)
Provision for income taxes (benefit)			2,352		2,931		6,697		(420)
Net income (loss) from continuing operations			1,529		(251)		5,339		(3,212)
Net income from discontinued operations, net of income taxes	3		-		5,252		-		3,280
Income before income taxes												6,454		3,034		15,824		8,155
Provision for income taxes										5		3,781		1,751		9,132		4,345
Net income		$	1,529	$	5,001	$	5,339	$	68		$	2,673	$	1,283	$	6,692	$	3,810
Net income per common share:
Basic and diluted net income (loss) per common share from continuing operations	17		0.02		0.01		0.07		(0.05)
Basic and diluted net income per common share from discontinued operations	17		-		0.06		-		0.05
Basic and diluted net income per common share	17	$	0.02	$	0.07	$	0.07	$	0.00	19	$	0.03	$	0.02	$	0.08	$	0.05

Weighted average shares outstanding:
Basic	17		74,552,545		70,641,938		74,481,281		68,896,059	19		88,343,992		74,485,672		88,341,398		74,445,058
Diluted	17		74,898,520		71,044,528		74,842,095		69,289,349	19		88,791,552		74,987,559		88,646,849		74,868,187

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

Gold Resource Corporation—~~Interim~~ Condensed Consolidated Interim Financial Statements and Notes—Unaudited‌
3

Table of Contents

GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(U.S. dollars in thousands, except share amounts)

(Unaudited)

For the three months ended September 30, 2021 and 2020

Number of
Common
Shares

Par Value of
Common
Shares

Additional Paid-
in Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Total
Shareholders'
Equity
Balance, June 30, 2020

70,397,497

$
70

$
160,937

$
10,570

$
(5,884)

$
(1,171)

$
164,522
Stock-based compensation

-

-

305

-

-

-

305
Common stock issued for vested restricted stock units

58,133

-

-

-

-

-

-
Dividends declared

-

-

-

(708)

-

-

(708)
Issuance of stock, net of issuance costs

1,731,433

2

6,872

-

-

-

6,874
Net income

-

-

-

5,001

-

-

5,001
Balance, September 30, 2020

72,187,063

$
72

$
168,114

$
14,863

$
(5,884)

$
(1,171)

$
175,994

Balance, June 30, 2021

74,868,322

$
75

$
85,269

$
14,974

$
(5,884)

$
(1,171)

$
93,263
Stock-based compensation

-

-

160

-

-

-

160
Common stock issued for vested restricted stock units

50,183

-

-

-

-

-

-
Dividends declared

-

-

-

(745)

-

-

(745)
Surrender of stock for taxes due on vesting

(428)

-

-

-

-

-

-
Net income

-

-

-

1,529

-

-

1,529
Balance, September 30, 2021

74,918,077

$
75

$
85,429

$
15,758

$
(5,884)

$
(1,171)

$
94,207


	For the three months ended June 30, 2022 and 2021
	Number of Common Shares	Par Value of Common Shares		Additional Paid- in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance, March 31, 2021	74,775,604	$	75	$	84,966	$	14,436	$	(5,884)	$	(1,171)	$	92,422
Stock-based compensation	-		-		205		-		-		-		205
Common stock issued for vested restricted stock units	-		-		-		-		-		-		-
Dividends declared	-		-		-		(745)		-		-		(745)
Spin-off of Fortitude Gold Corporation	-		-		-		-		-		-		-
Issuance of stock, net of issuance costs	-		-		-		-		-		-		-
Net income	-		-		-		1,283		-		-		1,283
Balance, June 30, 2021	74,868,322	$	75	$	85,269	$	14,974	$	(5,884)	$	(1,171)	$	93,263

Balance, March 31, 2022	88,675,172	$	89	$	109,982	$	20,699	$	(5,884)	$	(1,171)	$	123,715
Stock-based compensation	-		-		507		-		-		-		507
Net stock options exercised	-		-		-		-		-		-		-
Common stock issued for vested restricted stock units	38,503		-		-		-		-		-		-
Dividends declared	-		-		-		(884)		-		-		(884)
Issuance of stock, net of issuance costs	-		-		-		-		-		-		-
Surrender of stock for taxes due on vesting	(4,585)		-		(9)		-		-		-		(9)
Net income	-		-		-		2,673		-		-		2,673
Balance, June 30, 2022	88,709,090	$	89	$	110,480	$	22,488	$	(5,884)	$	(1,171)	$	126,002

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

~~Gold Resource Corporation—Interim Condensed Consolidated Financial Statements and Notes—Unaudited~~

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
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Table of Contents

GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(U.S. dollars in thousands, except share amounts)

(Unaudited)

For the nine months ended September 30, 2021 and 2020

Number of
Common
Shares

Par Value of
Common
Shares

Additional Paid-
in Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Total
Shareholders'
Equity
Balance, December 31, 2019

66,027,925

$
66

$
148,171

$
16,876

$
(5,884)

$
(1,171)

$
158,058
Stock-based compensation

-

-

1,175

-

-

-

1,175
Common stock issued for vested restricted stock units

93,205

-

-

-

-

-

-
Dividends declared

-

-

-

(2,081)

-

-

(2,081)
Issuance of stock, net of issuance costs

6,065,933

6

18,768

-

-

-

18,774
Net income

-

-

-

68

-

-

68
Balance, September 30, 2020

72,187,063

$
72

$
168,114

$
14,863

$
(5,884)

$
(1,171)

$
175,994

Balance, December 31, 2020

74,713,356

$
75

$
84,865

$
12,653

$
(5,884)

$
(1,171)

$
90,538
Stock-based compensation

-

-

506

-

-

-

506
Net stock options exercised

217,718

-

263

-

-

-

263
Common stock issued for vested restricted stock units

52,797

-

-

-

-

-

-
Dividends declared

-

-

-

(2,234)

-

-

(2,234)
Surrender of stock for taxes due on vesting

(65,794)

-

(205)

-

-

-

(205)
Net income

-

-

-

5,339

-

-

5,339
Balance, September 30, 2021

74,918,077

$
75

$
85,429

$
15,758

$
(5,884)

$
(1,171)

$
94,207


	For the six months ended June 30, 2022 and 2021
	Number of Common Shares	Par Value of Common Shares		Additional Paid- in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance, December 31, 2020	74,713,356	$	75	$	84,865	$	12,653	$	(5,884)	$	(1,171)	$	90,538
Stock-based compensation	-		-		346		-		-		-		346
Net stock options exercised	217,718		-		263		-		-		-		263
Common stock issued for vested restricted stock units	2,614		-		-		-		-		-		-
Dividends declared	-		-		-		(1,489)		-		-		(1,489)
Surrender of stock for taxes due on vesting	(65,366)		-		(205)		-		-		-		(205)
Net income	-		-		-		3,810		-		-		3,810
Balance, June 30, 2021	74,868,322	$	75	$	85,269	$	14,974	$	(5,884)	$	(1,171)	$	93,263

Balance, December 31, 2021	88,675,172	$	89	$	110,153	$	17,563	$	(5,884)	$	(1,171)	$	120,750
Stock-based compensation	-		-		667		-		-		-		667
Stock options exercised - settled in cash	-		-		(331)		-		-		-		(331)
Common stock issued for vested restricted stock units	38,503		-		-		-		-		-		-
Dividends declared	-		-		-		(1,767)		-		-		(1,767)
Surrender of stock for taxes due on vesting	(4,585)		-		(9)		-		-		-		(9)
Net income	-		-		-		6,692		-		-		6,692
Balance, June 30, 2022	88,709,090	$	89	$	110,480	$	22,488	$	(5,884)	$	(1,171)	$	126,002

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

~~Gold Resource Corporation—Interim Condensed Consolidated Financial Statements and Notes—Unaudited~~

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
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Table of Contents

GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

(Unaudited)


	For the nine months ended September 30,					For the six months ended June 30,
	2021		2020		Note	2022		2021
Cash flows from operating activities:
Net income	$	5,339	$	68		$	6,692	$	3,810
Net income from discontinuing operations		-		3,280
Net income (loss) from continuing operations	$	5,339	$	(3,212)
Adjustments to reconcile net income from continuing operations to net cash from operating activities:
Deferred income taxes		(74)		(4,617)
Depreciation and amortization		11,405		13,690
Adjustments to reconcile net income to net cash from operating activities:
Deferred income tax benefit							(1,198)		(699)
Depreciation and amortization, including amortization in reclamation							13,294		7,855
Stock-based compensation		711		1,175			1,167		681
Other operating adjustments		475		(831)	21		(1,827)		441
Changes in operating assets and liabilities:
Accounts receivable		(721)		5,185			2,395		(916)
Inventories		(810)		838			(1,688)		(391)
Prepaid expenses and other current assets		(1,038)		(178)			(1,829)		(1,015)
Accounts payable and other accrued liabilities		2,730		(897)			(943)		3,254
Mining royalty and income taxes payable, net		3,855		935			(3,857)		3,109
Net cash provided by operating activities from continuing operations		21,872		12,088
Net cash provided by operating activities							12,206		16,129

Cash flows from investing activities:
Capital expenditures		(15,217)		(6,546)			(10,518)		(9,333)
Proceeds from the sale of gold and silver bullion/rounds		-		133
Net cash used in investing activities from continuing operations		(15,217)		(6,413)
Proceeds from the sale of gold and silver rounds							533		-
Net cash used in investing activities							(9,985)		(9,333)

Cash flows from financing activities:
Proceeds from the exercise of stock options		263		-
Proceeds from issuance of stock		-		18,673
Proceeds (for) from the exercise of stock options							(376)		263
Dividends paid		(2,481)		(2,062)			(1,767)		(1,737)
Cash related to the spin-off		-		(7,616)
Other financing activities		3		(6)			-		3
Net cash (used in) provided by financing activities from continuing operations		(2,215)		8,989
Effect of exchange rate changes on cash and cash equivalents from continuing operations		(301)		(303)
Net cash used in financing activities							(2,143)		(1,471)
Effect of exchange rate changes on cash and cash equivalents							(455)		(195)

Cash flows from discontinued operations:
Net cash provided by operating activities		0		5,198
Net cash used in investing activities		0		(6,368)
Net (decrease) increase in cash and cash equivalents							(377)		5,130
Cash and cash equivalents at beginning of period							33,712		25,405
Cash and cash equivalents at end of period						$	33,335	$	30,535

Net increase in cash and cash equivalents		4,139		13,191
Cash and cash equivalents of continuing operations at beginning of period		25,405		10,210
Cash and cash equivalents of continuing operations at end of period	$	29,544	$	23,401

Supplemental Cash Flow Information Continuing Operations
Supplemental Cash Flow Information
Interest expense paid	$	-	$	25		$	-	$	-
Income and mining taxes paid	$	3,898	$	1,915		$	15,972	$	2,233
Non-cash investing activities:
Change in capital expenditures in accounts payable	$	(72)	$	(675)		$	(1,094)	$	502
Change in estimate for asset retirement costs	$	7	$	(307)		$	-	$	7

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

‌Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
6

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GOLD RESOURCE CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

~~September~~June 30, ~~2021~~2022
(Unaudited)

1. Basis of Preparation of Financial Statements

The Condensed Consolidated Interim Financial Statements (“interim financial statements”) of Gold Resource Corporation and its subsidiaries (collectively, the “Company”) are unaudited and have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”) for interim statements. Certain information and footnote disclosures required by United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted as permitted by such rules, although the Company believes that the disclosures included are adequate to make the information presented not misleading. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim financial statements have been included. The results reported in these interim financial statements are not necessarily indicative of the results that may be reported for the entire year. These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2020~~2021 included in the Company’s annual report on Form 10-K. The year-end balance sheet data was derived from the audited financial statements. Unless otherwise noted, there have been no material changes to the footnotes from those accompanying the audited consolidated financial statements contained in the Company’s annual report on Form 10-K.

Certain items in the prior period’s ~~Condensed Consolidated Financial Statements~~consolidated financial statements and notes have been reclassified to conform to the current presentation. These reclassifications ~~were mostly related to Discontinued Operations and separate presentation~~had no effect on the reported results of ~~stock-based compensation.~~operations.

2. Recently Adopted Accounting Standards

Recent accounting pronouncements issued have been evaluated and do not presently impact our financial statements and supplemental data.

~~3. Discontinued Operations~~

~~On December 31, 2020, the Company completed its spin-off of its wholly-owned subsidiary Fortitude~~ Gold ~~Corporation and its subsidiaries (“FGC” or “Nevada Mining Unit”). FGC is presented as discontinued operations in the Company’s~~ Resource Corporation—Condensed Consolidated Interim Financial ~~Statements.~~

~~Results of discontinued operations for the three~~Statements and ~~nine months ended September 30, 2020, are as follows (~~~~in thousands~~):

For the three months ended September 30,

For the nine months ended September 30,

2020

2020

(Unaudited)

(Unaudited)

Sales, net
$
15,851

$
30,284

Mine cost of sales

10,714

25,872

Mine gross profit

5,137

4,412

Exploration expenses

780

1,373

Other expense, net

62

172

Profit before income taxes

4,295

2,867

Income tax benefit

(957)

(413)

Net income from discontinued operations
$
5,252

$
3,280

‌Notes—Unaudited
7

~~Table of Contents~~

~~Selected Statements of Cash Flows presenting depreciation and amortization, capital expenditures, sale proceeds and significant operating noncash items of FGC were as follows:~~

For the three months ended September 30,

For the nine months ended September 30,

2020

2020

(Unaudited)

(Unaudited)
Cash flows from discontinued operating activities:

Net income

$
5,252

$
3,280
Adjustments to reconcile net income to net cash from discontinued operating activities:

Deferred income benefit

(957)

(413)
Depreciation and amortization

2,981

6,263
Other operating adjustments

24

17
Changes in operating assets and liabilities:

Accounts receivable

(1,500)

(1,599)
Inventories

154

(2,662)
Prepaid expenses and other current assets

(6)

(17)
Other non-current assets

(1,048)

(1,304)
Accounts payable and other accrued liabilities

1,654

958
Mining royalty and income taxes payable, net

675

675
Net cash provided by discontinued operating activities

7,229

5,198

Cash flows from discontinued investing activities:

Capital expenditures

(173)

(6,368)
Net cash used in discontinued investing activities

(173)

(6,368)

Cash flows from discontinued financing activities:

Cash transferred from Gold Resource Corporation prior to spin-off

294

8,786
Repayment of loans payable

109

(326)
Repayment of finance leases

(440)

(656)
Net cash provided (to) by discontinued financing activities

(37)

7,804

Supplemental Cash Flow Information Discontinued Operations

Non-cash investing activities:

Change in capital expenditures in accounts payable

$
(14)

$
(1,532)
Change in estimate for asset retirement costs

$
307

$
1,404

Effective December 31, 2020, in connection with the spin-off, the Company entered into an agreement with FGC that governs the relationship of the parties following the spin-off. The Management Services Agreement provided that the Company and its subsidiaries provide services to FGC to assist in the transition of FGC as a separate company. The agreed upon charges for services rendered were based on market rates that align with the rates that an unaffiliated service provider would charge for similar services. Due to the successful development of FGC’s corporate, administrative, and technical capabilities, the Company terminated the Agreement effective on May 21, 2021.

‌8

Table of Contents

4.3. Revenue

The Company derives its revenue from the sale of doré and concentrates. The following table presents the Company’s net sales for each period presented, disaggregated by source:


	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	(in thousands)				(in thousands)				(in thousands)				(in thousands)
Doré sales, net
Gold	$	1,634	$	1,495	$	6,816	$	5,155	$	2,484	$	2,695	$	3,728	$	5,182
Silver		38		878		643		2,232		57		228		77		605
Less: Refining charges		(21)		(67)		(112)		(212)		(10)		(20)		(17)		(91)
Total doré sales, net		1,651		2,306		7,347		7,175		2,531		2,903		3,788		5,696
Concentrate sales
Gold		8,709		5,211		22,904		13,894		13,850		7,671		28,391		14,195
Silver		6,179		6,857		19,443		14,638		5,146		6,951		11,231		13,264
Copper		2,447		2,911		9,547		6,470		2,708		3,714		6,805		7,100
Lead		3,641		3,501		8,641		8,730		3,768		2,595		7,595		5,000
Zinc		9,187		10,894		27,193		25,110		14,352		9,240		30,669		18,006
Less: Treatment and refining charges		(2,307)		(5,795)		(8,098)		(14,930)		(3,127)		(2,907)		(5,868)		(5,791)
Total concentrate sales, net		27,856		23,579		79,630		53,912		36,697		27,264		78,823		51,774
Realized (loss) gain embedded derivative, net		(246)		653		204		250
Unrealized (loss) gain embedded derivative, net		(232)		(103)		(48)		(232)
Realized gain - embedded derivative, net⁽¹⁾										1,160		359		2,026		450
Unrealized gain (loss) - embedded derivative, net										(3,324)		310		(2,156)		184
Total sales, net	$	29,029	$	26,435	$	87,133	$	61,105	$	37,064	$	30,836	$	82,481	$	58,104

(1)

Copper, lead, and zinc are co-products. In the Realized gain - embedded derivative, net, there are $1.2 million and $1.7 million gain, respectively, related to these co-products for the three and six months ended June 30, 2022. There is $0.3 million in the Realized gain - embedded derivative, net, related to the co-products for both the three and six months ended June 30, 2021.

5~~. Gold and Silver Rounds/Bullion~~

The Company sponsored a dividend exchange program under which shareholders could exchange their cash dividends for minted gold and silver rounds. The Company determined to discontinue its dividend exchange program effective Q3 2021 due to its administration costs and limited shareholder participation.

~~At September 30, 2021 and December 31, 2020, the Company’s holdings and value of rounds/bullion, using quoted market prices, consisted of the following:~~

As of September 30, 2021

As of December 31, 2020

(Unaudited)

Ounces

Per Ounce

Amount

Ounces

Per Ounce

Amount

(in thousands)

(in thousands)
Gold

176

$
1,743

$
307

189

$
1,888

$
357
Silver

11,715

$
21.53

252

11,842

$
26.49

314
Total holdings

$
559

$
671

‌9

~~Table of Contents~~

6.4. Inventories, net

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, inventories, net, consisted of the following:


	As of		As of		As of		As of
	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
	(Unaudited)

	(in thousands)				(in thousands)
Stockpiles - underground mine	$	796	$	648	$	61	$	-
Stockpiles - open pit mine		-		41
Concentrates		1,745		1,919		2,986		2,048
Doré, net ⁽¹⁾		602		459
Doré, net						800		452
Subtotal - product inventories		3,143		3,067		3,847		2,500
Materials and supplies ⁽²⁾		7,733		6,928
Materials and supplies ⁽¹⁾						8,659		7,861
Total	$	10,876	$	9,995	$	12,506	$	10,361

(1)	Net of reserve for obsolescence of ~~NaN and $368 at September~~$384 as of June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

~~(2)~~

~~Net of reserve for obsolescence of $209 both as of September 30, 2021 and December 31, 2020.~~

7.5. Income Taxes

The Company recorded an income tax expense of ~~$2.4~~$3.8 million and ~~$6.7~~$9.1 million, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company recorded an income tax expense of ~~$2.9~~$1.8 million and ~~a benefit of $0.4~~$4.3 million, respectively. In accordance with applicable accounting rules, the interim provision for taxes is calculated using the estimated consolidated annual effective tax rate. The consolidated effective tax rate is a function of the combined effective tax rates for the jurisdictions in which the Company operates. Variations in the relative proportions of jurisdictional income could result in fluctuations to the Company’s consolidated effective tax rate. At the

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
8

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federal level, the Company’s income in the U.S. is taxed at 21%, and a 5% withholding tax applies to dividends received from Mexico. The Mexico income is taxed at 37.5% (30% income tax and 7.5% mining tax), and Canada income is taxed at 26.5%, which results in a consolidated effective tax rate above statutory U.S. Federal rates. The U.S. jurisdiction does not currently generate taxable income.

Mexico Mining Taxation

Mining entities in Mexico are subject to two mining duties in addition to the 30% Mexico corporate income tax. The first is a “special” mining duty of 7.5% of taxable income as defined under Mexican tax law (also referred to as “mining royalty tax”) on extraction activities performed by concession holders. The mining royalty tax is generally applicable to earnings before income tax, depreciation, depletion, amortization, and interest, and it is considered an income tax for purposes of financial reporting. The second is a 0.5% mining duty over sales of gold and silver, but this duty is not considered an income tax for financial reporting purposes and reported as production cost. Both duties are tax deductible for Mexico income tax purposes. ~~In addition,~~

On January 1, 2022, the 2022 Tax Reform became effective in ~~Q1 2021,~~Mexico, which included several amendments to the ~~Mexican~~Income Tax ~~Authorities introduced new~~Law relevant to tax regulation wherein the treatment of exploration expenses for mining royalty taxes were aligned with the income tax treatment. Exploration expenses that were previously 100% deductible in the year incurred are now being deducted atdeductions. For 2022, a depreciation rate of ~~10%~~5% per year was established for ~~10 years.~~construction of facilities, additions, repairs, improvements, adaptations, as well as any other construction performed in a mining lot, in accordance with Article 12 of the Mining Law.

The Company periodically transfers funds from its Mexican wholly-owned subsidiary to the U.S. in the form of dividends, which are subject to a 10% Mexico withholding tax, unless otherwise provided per a tax treaty. The current U.S.-Mexico tax treaty limits the dividend withholding tax between these countries to 5%, as long as certain requirements are met. Based on the Company’s understanding that it meets these requirements, the Company pays a 5% withholding tax on dividends ~~received~~paid from ~~Mexico in 2021.~~Mexico. The impact of the planned annual dividends for ~~2021~~2022 is reflected in the estimated annual effective tax rate.

As of ~~September~~June 30, ~~2021,~~2022, the Company believes that it has 0 liability for uncertain tax positions.

‌10

6. Promissory Note

~~Table~~

A promissory note was acquired in the Aquila Resources, Inc. (“Aquila”) acquisition. In October 2021, Aquila sold its Wisconsin assets to Green Light Metals in return for a Canadian dollar (“C$”) 4.9 million ($3.9 million) promissory note. In June, an amended agreement was executed. Under the amended promissory note, Green Light Metals is to deliver C$4.9 million in Green Light Metal common shares once Green Light Metals goes public, or private shares of ~~Contents~~

Green Light Metals at the maturity date of December 31, 2022, whichever occurs first. The ~~U.S. Treasury Department issued final regulations in July 2020 concerning global intangible low-taxed income, commonly referred~~shares are expected to as GILTI tax, which was introduced by the Tax Act of 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The final tax regulations allow incomerepresent approximately 20% to ~~be excluded from GILTI tax that is subject to an effective tax rate higher than 90%~~28% of the ~~U.S. tax rate (18.9%). The Company completed its assessment, and due~~total outstanding shares of Green Light Metals. Due to the ~~high tax exception,~~short maturity of the promissory note, the carrying amount approximates the fair value, and likewise, no ~~GILTI tax was incurred for~~interest and collateral is required. Until maturity, the ~~nine months ended September 30, 2021.~~Company will record unrealized foreign currency gain or loss on the promissory note.

8.7. Prepaid Expenses and Other Current Assets

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, prepaid expenses and other current assets consisted of the following:


	As of		As of		As of		As of
	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
	(Unaudited)

	(in thousands)				(in thousands)
Advances to suppliers	$	247	$	374	$	1,149	$	188
Prepaid insurance		1,763		709		2,414		1,222
IVA taxes receivable, net		665		846
Other current assets		324		647		429		875
Total	$	2,999	$	2,576	$	3,992	$	2,285

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
9

Table of Contents

In Mexico value added (“IVA”) tax assessed on the sales of products and purchases of materials and services. Businesses owe IVA taxes as the business sells a product and collects IVA taxes from its customers. Likewise, businesses are generally entitled to recover the taxes they have paid related to purchases of materials and services, either as a refund or credit to IVA tax payable. Amounts recorded as IVA taxes in the consolidated financial statements represent the net estimated IVA tax payable or receivable, since there is a legal right of offset of IVA taxes. As of June 30, 2022, this resulted in a small asset balance ($0.03 million), which is included in Other current assets above.

9.8. Property, Plant and Mine Development, net

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, property, plant and mine development, net consisted of the following:


	As of		As of		As of		As of
	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
	(Unaudited)

	(in thousands)				(in thousands)
Asset retirement costs	$	1,071	$	1,064	$	1,065	$	1,065
Construction-in-progress⁽¹⁾		13,265		7,158		2,729		15,854
Furniture and office equipment		1,896		1,839		1,703		1,685
Land		230		230		9,230		9,230
Mineral interest						79,543		79,964
Light vehicles and other mobile equipment		2,236		2,192		2,376		2,224
Machinery and equipment		33,083		31,227		39,288		33,213
Mill facilities and infrastructure		24,455		24,407		35,200		24,973
Mine Development		89,760		83,859		98,900		92,138
Software and licenses		1,636		1,619		1,631		1,592
Subtotal		167,632		153,595		271,665		261,938
Accumulated depreciation and amortization		(101,315)		(91,084)		(118,888)		(105,167)
Total	$	66,317	$	62,511	$	152,777	$	156,771

(1)	Includes accrued capital expenditures of ~~$1.0~~$0.1 million ~~both~~and $1.7 million at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively.

The Company recorded depreciation and amortization expense of ~~$3.5~~$7.3 million and ~~$11.3~~$13.2 million, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022 as compared ~~with $4.3~~to $4.4 million and ~~$13.5~~$7.8 million, respectively, for the same periods ended ~~September~~June 30, ~~2020.~~2021.

‌11

~~Table of Contents~~

~~10.~~9. Accrued Expenses and Other Liabilities

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, accrued expenses and other liabilities consisted of the following:


	As of		As of		As of		As of
	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
	(Unaudited)

	(in thousands)				(in thousands)
Accrued royalty payments		1,401		1,796	$	2,145	$	1,743
Dividends payable		-		247
Zinc derivatives		144		-
Employee profit sharing obligation		1,569		-		2,113		1,888
Other payables		774		232		1,331		1,100
Total accrued expenses and other current liabilities	$	3,888	$	2,275	$	5,589	$	4,731

Accrued non-current labor obligation		682		-	$	1,105	$	920
Deferred stock unit ("DSU") compensation liability		204		-		671		206
Other long-term liabilities		15		13		160		826
Total other non-current liabilities	$	901	$	13	$	1,936	$	1,952

On April 23, 2021, a decree that reforms labor outsourcing in Mexico was published in the Federation’s Official Gazette. This ~~new~~ decree ~~amends~~amended the outsourcing provisions, whereby operating companies ~~will~~are no longer be able to source their labor resources used to carry out the core business functions from service entities or third-party providers.

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
10

Table of Contents

Under Mexican law, employees are entitled to receive statutory profit sharing (Participacion a los Trabajadores de las Utilidades or “PTU”) payments. The required cash payment to employees in the aggregate is equal to 10% of their employer’s profit subject to PTU, which differs from profit determined under U.S. GAAP. ~~In the past,~~Prior to 2021, the Company was not subject to PTU payments, as it had been sourcing its labor resources through a third-party service provider.

As a result of ~~adoption~~the legislation, as of ~~the new legislation, in year-to-date 2021, $1.6~~June 30, 2022, $2.1 million was recorded for PTU ~~was~~current liabilities. Additionally, $1.1 million is recorded ~~in current liabilities and production cost, as well as $0.7 million~~ for statutory employee severance benefits ~~was recorded~~ in other long-term ~~liabilities and other expenses.~~

liabilities.

10. Gold and Silver Stream Agreements

The following table presents the Company’s liabilities related to the Gold and Silver Stream Agreements as of June 30, 2022 and December 31, 2021:


	As of		As of
	June 30,		December 31,
	2022		2021

	(in thousands)
Liability related to the Gold Stream Agreement	$	20,459	$	20,364
Liability related to the Silver Stream Agreement		22,528		22,196
Total liability	$	42,987	$	42,560

Periodic interest expense will be incurred based on an implied interest rate. The implied interest rate is determined based on the timing and probability of future production and an 8% discount rate. Interest expense is recorded to the Consolidated Statements of Operations and the gold and silver stream agreement liability on the Consolidated Balance Sheet.

Gold Streaming Agreement

In November 2017, Aquila entered into a stream agreement with Osisko Bermuda Limited (“OBL”), a wholly-owned subsidiary of Osisko Gold Royalties Ltd (TSX & NYSE: OR), pursuant to which OBL agreed to commit approximately $55 million to Aquila through a gold stream purchase agreement. In June 2020, Aquila amended its agreement with Osisko, reducing the total committed amount to $50 million, as well as adjusting certain milestone dates under the gold stream to align with the current project development timeline. Aquila had received a total of $20 million of the committed funds at the time of the Gold Resource Corporation acquisition. Remaining deposits from OBL are $5 million upon receipt of permits required for the development and operation of the Back Forty Project and $25 million upon the first drawdown of an appropriate project debt finance facility. OBL has been provided a general security agreement over the Back Forty Project which consists of the subsidiaries of Gold Resource Acquisition Sub, Inc., a 100% owned subsidiary of Gold Resource Corporation. The initial term of the agreement is for 40 years, automatically renewable for successive ten-year periods. The agreement is subject to certain operating and financial covenants, which are in good standing as of June 30, 2022.

The $20 million received from OBL through June 30, 2022 is shown as a long-term liability on the Consolidated Balance Sheet along with an implied interest. The implied interest rate is applied on OBL advance payments and calculated on the total expected life-of-mine production to be deliverable (as supported in the Back Forty Project Preliminary Economic Assessment) at the five-year average street consensus metal prices (based on the median) evaluated as of December 31, 2021 and is discounted at 8.0%. As the remaining $30 million deposit is subject to the completion of certain milestones and the satisfaction of certain other conditions, this amount is not reflected on the Consolidated Balance Sheet.

Per the terms of the gold stream agreement, OBL will purchase 18.5% of the refined gold from Back Forty (the “Threshold Stream Percentage”) until the Company has delivered 105,000 ounces of gold (the “Production Threshold”). Upon satisfaction of the Production Threshold, the Threshold Stream Percentage will be reduced to 9.25% of the refined gold (the “Tail Stream”). In exchange for the refined gold delivered under the Stream Agreement, OBL will pay the Company ongoing payments equal to 30% of the spot price of gold on the day of delivery, subject to a maximum payment of $600 per ounce. Where the market price of gold is greater than the price paid, the difference realized from the sale of the gold will be applied against the deposit received from Osisko.

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
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Silver Stream Agreement

Through a series of contracts, Aquila executed a silver stream agreement with OBL to purchase silver produced at the Back Forty Project. A total of $17.2 million has been advanced under the agreement as of June 30, 2022. There are 0 future deposits remaining under the agreement. The initial term of the agreement is for 40 years, automatically renewable for successive ten-year periods. The agreement is subject to certain operating and financial covenants, which are in good standing as of June 30, 2022.

Per the terms of the silver stream agreement, OBL will purchase 85% of the silver produced from the Back Forty Project at a fixed price of $4 per ounce of silver. Where the market price of silver is greater than $4 per ounce, the difference realized from the sale of the silver will be applied against the deposit received from Osisko.

The $17.2 million received from OBL through June 30, 2022 is shown as a long-term liability on the Consolidated Balance Sheet along with an implied interest.

11. Reclamation and Remediation

The following table presents the changes in reclamation and remediation obligations for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and the year ended December 31, ~~2020:~~2021:


	2021		2020		2022		2021
	(Unaudited)

	(in thousands)				(in thousands)
Reclamation liabilities – balance at beginning of period	$	1,890	$	2,003	$	1,833	$	1,890
Foreign currency exchange loss (gain)		(34)		(113)		55		(57)
Reclamation liabilities – balance at end of period		1,856		1,890		1,888		1,833

Asset retirement obligation – balance at beginning of period		1,208		1,105		1,279		1,208
Changes in estimate		7		82
Accretion		72		79		51		109
Foreign currency exchange loss (gain)		(22)		(58)		40		(38)
Asset retirement obligation – balance at end of period		1,265		1,208		1,370		1,279
Total period end balance	$	3,121	$	3,098	$	3,258	$	3,112

The Company’s undiscounted reclamation liabilities of $1.9 million and $1.8 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, are related to the Don David Gold Mine in Mexico. These represent reclamation liabilities that were expensed through 2013 before proven and probable reserves were established and the Company was considered to be a

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~~Table of Contents~~

development stage entity; therefore, most of the costs, including asset retirement costs, were not allowed to be capitalized as part of our Property, Plant & Mine Development.

The Company’s asset retirement obligations reflect the additions to the asset for reclamation and remediation costs in Property, Plant & Mine Development, post 2013 development stage status, which are discounted using a credit adjusted risk-free rate of 8%. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s asset retirement obligation related to the Don David Gold Mine in Mexico was ~~$1.3~~$1.4 million and ~~$1.2~~$1.3 million, respectively.

12. Commitments and Contingencies

Commitments

~~Both as~~As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company has equipment purchase commitments of approximately $0.8 million and $0.4 ~~million.~~million, respectively.

Contingent Consideration

With the Aquila acquisition, the Company assumed a contingent consideration related to the December 30, 2013, Aquila acquisition of 100% of the shares of HudBay Michigan Inc. (“HMI”), a subsidiary of HudBay Minerals Inc. (“HudBay”), effectively giving Aquila 100% ownership in the Back Forty Project (the “HMI Acquisition”). Pursuant to the

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HMI Acquisition, HudBay’s 51% interest in the Back Forty Project was acquired in consideration for the issuance of common shares of Aquila, future milestone payments tied to the development of the Back Forty Project, and a 1% net smelter return royalty on production from certain land parcels in the project. The issuance of shares and 1% net smelter obligations were settled before the Company acquired Aquila.

The contingent consideration is composed of the following in Canadian dollars:

The value of future installments is based on C$9 million tied to development of the Back Forty project as follows:

C$3 million payable on completion of any form of financing for purposes including the commencement of construction of Back Forty. Up to 50% of the C$3 million can be paid, at the Company’s option, in Gold Resource Corporation shares with the balance payable in cash (if as of November 2023 this milestone has not been achieved or payment made, HMI has the right to repurchase a 51% ownership in the Back Forty Project);

C$2 million payable in cash 90 days after the commencement of commercial production;

C$2 million payable in cash 270 days after the commencement of commercial production, and;

C$2 million payable in cash 450 days after the commencement of commercial production.

The value of the contingent consideration as of June 30, 2022 was $4.3 million. The contingent consideration will be adjusted for the foreign currency translation, time value of money, and the likelihood of the milestone payments. Any future changes in the value of the contingent consideration will be recognized in the Consolidated Statements of Operations.

Other Contingencies

The Company has certain other contingencies resulting from litigation, claims, and other commitments that are subject to a variety of environmental and safety laws and regulations ~~incident~~incidents related to the ordinary course of business. The Company currently has no basis to conclude that any or all of such contingencies will materially affect its financial position, results of operations, or cash flows. However, in the future, there may be changes to these contingencies, or additional contingencies may occur, any of which might result in an accrual or a change in current accruals recorded by the Company, and there can be no assurance that their ultimate disposition will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

With the successful acquisition of Aquila Resources Inc. on December 10, 2021, the Company assumed substantial liabilities that relate to the gold and silver stream agreements with Osisko Bermuda Limited (see Note 10 - Gold and Silver Stream Agreements). Under the agreements, Osisko deposited a total of $37.2 million upfront in exchange for a portion of the future gold and silver production from the Back Forty Project. The stream agreements contain customary provisions regarding default and security. In the event that our subsidiary defaults under the stream agreements, including by failing to achieve commercial production at an agreed upon date, it may be required to repay the deposit plus accumulated interest at a rate agreed with Osisko. If it fails to do so, Osisko may be entitled to enforce their remedies as a secured party and take possession of the assets that comprise the Back Forty Project.

13. Shareholders’ Equity

During the three and six months ended June 30, 2022, the Company declared and paid dividends of $0.01 per common share and $0.02 per common share for an aggregate total of $0.9 million and $1.8 million, respectively. During the three and six months ended June 30, 2021, the Company declared dividends of $0.01 per common share and $0.02 per common share, respectively, and paid an aggregate total of $1.0 million and $1.7 million, respectively. As of June 30, 2022, there are 88,372,692 issued and outstanding shares of common stock.

14. Derivatives

Embedded Derivatives

Concentrate sales contracts contain embedded derivatives due to the provisional pricing terms for unsettled shipments. At the end of each reporting period, the Company records an adjustment to accounts receivable and revenue to

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reflect the mark-to-market adjustments for outstanding provisional invoices based on forward metal prices. Please see Note 18- 20 Fair Value Measurement for additional ~~information.~~information on the realized and unrealized gain (loss) recorded to adjust accounts receivable and revenue.

The following table summarizes the Company’s unsettled sales contracts at ~~September~~June 30, ~~2021~~2022 with the quantities of metals under contract subject to final pricing occurring through ~~October 2021:~~May 2022:


	Gold		Silver		Copper		Lead		Zinc			Total	Gold		Silver		Copper		Lead		Zinc			Total
	(ounces)		(ounces)		(tonnes)		(tonnes)		(tonnes)				(ounces)		(ounces)		(tonnes)		(tonnes)		(tonnes)
Under contract		2,579		118,576		146		740		3,148				5,029		158,039		163		1,711		3,553
Average forward price (per ounce or tonne)	$	1,770	$	23.07	$	9,324	$	2,261	$	2,988			$	1,845	$	21.87	$	9,092	$	2,157	$	3,984
Unsettled sales contracts value (in thousands)	$	4,565	$	2,736	$	1,361	$	1,673	$	9,406	$	19,741	$	9,279	$	3,456	$	1,482	$	3,691	$	14,155	$	32,063

Other Derivatives

Derivative instruments that are not designated as hedging instruments are required to be recorded on the balance sheet at fair value. Changes in fair value will impact the Company’s earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled. The fair value does not reflect the realized or cash value of the instrument.

As of ~~September~~June 30, ~~2021,~~2022, the Company’s derivatives not designated as hedges consist of zinc zero cost collars used to manage its near-term exposure to cash flow variability from zinc price ~~risks in 2021.~~risks. A zero cost collar is a combination of two options: a sold call option and a purchased put option. The Company sold call options to establish the ceiling price of ~~$2,992~~$3,500 per tonne of zinc that the Company will receive for the contracted zinc volume of ~~5,500~~3,900 tonnes for ~~June~~July through

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~~Table of Contents~~

December ~~2021.~~2022. The purchased put establishes the floor price of ~~$2,860~~$3,200 per tonne of zinc that wethe Company will receive for the same contracted tonnes and period of time.

Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. Otherwise, any fair value gains or losses are recognized in earnings in the current period. The fair value does not reflect the realized or cash value of the instrument. Mark-to-market adjustments are made until the physical commodity is delivered or the financial instrument is settled. The September 2021 London Metal Exchange (“LME”) average zinc price during the first half of ~~$3,042~~2022 exceeded the call option ceiling of ~~$2,992,~~$3,318, resulting in a realized loss of ~~$40 thousand.~~$2.5 million for the six months ended June 30, 2022. The ~~mark-to-market adjustment~~zinc price forward curve as of June 30, 2022 is below the call option ceiling, resulting in a $0.3 million asset on the remaining ~~2,550 tonnes~~3,900 tonnes. The asset recognized resulted in an unrealized ~~loss~~gain of ~~$0.1~~$2.1 million ~~recorded in Accrued expenses and other current liabilities.~~

Subsequent to quarter end, on October 11, 2021, the Company executed additional derivatives of zero cost collars to manage its near-term exposure to cash flow variability from zinc price risks through March 2022. The Company sold call options to establish the ceiling price of $3,200 per tonne of zinc that the Company will receive for the ~~contracted zinc volume~~six months ended June 30, 2022 due to the reversal of ~~4,000 tonnes for October 2021 through March 2022. The purchased put establishes~~ the ~~floor price of $2,910 per tonne of zinc that we will receive for the same contracted tonnes and~~prior period ~~of time.~~liability.

The Company manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring other credit risk mitigants, as appropriate. The Company actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits, and monitors credit exposures against those assigned limits.

15. Employee Benefits

Effective October 2012, the Company adopted a profit sharing plan (the “Plan”) which covers all U.S. employees. The Plan meets the requirements of a qualified retirement plan pursuant to the provisions of Section 401(k) of the Internal Revenue Code. The Plan also provides eligible employees the opportunity to make tax deferred contributions to a retirement trust account up to 50% of their qualified wages, subject to the IRS annual maximums.

Under Mexican law, employees are entitled to receive statutory profit sharing (Participacion a los Trabajadores de las Utilidades or “PTU”) payments. The required cash payment to employees in the aggregate is equal to 10% of their employer’s profit subject to PTU, which differs from profit determined under U.S. GAAP. Please see Note 9 - Accrued Expenses and Other Liabilitiesfor additional information.

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~~14.~~16. Stock-Based Compensation

The Company’s compensation program comprises three main elements: base salary, an annual short-term incentive plan (“STIP”) cash award, and long-term equity-based incentive compensation (“LTIP”) in the form of performance share units (“PSUs”), restricted stock units (“RSUs”), stock options, and deferred stock units (“DSUs”).

The Gold Resource Corporation 2016 Equity Incentive Plan (the “Incentive Plan”) allows for the issuance of up to 5 million shares of common stock in the form of incentive and non-qualified stock options, stock appreciation rights, ~~restricted stock units (“RSUs”),~~RSUs, stock grants, stock units, performance shares, performance share units, and performance cash. Additionally, pursuant to the terms of the Incentive Plan, any award outstanding under the prior plan that is terminated, expired, forfeited, or canceled for any reason, will be available for grant under the Incentive Plan.

Effective January 1, 2021, the Company’s Board of Directors, on the recommendation of the Compensation Committee, implemented a program to issue ~~deferred stock units (“DSUs”).~~DSUs. DSUs are a qualifying ~~instrument~~instruments under the terms of the Company’s ~~2016 Equity~~ Incentive Plan and therefore do not require additional shareholder approval. The vesting and settlement terms of the DSUs are determined by the Compensation Committee at the time the DSUs are awarded.

~~130,000~~ DSUs of NaN and 214,357 were granted to the Board of Directors during the ~~period~~three and six months ended ~~March 31,~~June 30, 2022, respectively. DSUs of NaN and 130,000 were granted to the Board of Directors during the three and six months ended June 30, 2021, ~~and~~respectively. DSUs are redeemable in cash or shares at the earlier of 10 years or upon the eligible directors’ termination. Termination is deemed to occur on the earliest of (1) the date of voluntary resignation or retirement of the director from the Board; (2) the date of death of the director; or (3) the date of removal of the director from the Board whether by shareholder resolution, failure to achieve re-election, or otherwise; and on which date the director is not a director or employee of the Company or any of its affiliates. These awards contain a cash settlement feature and are therefore classified as a liability and are marked to fair value each reporting period. The Company may also issue DSUs for directors in lieu of board fees at their request. AsDuring the three and six months ended June 30, 2022, respectively, there were 3,352 and 6,708 DSUs granted in lieu of ~~September~~board fees that are also subject to mark-to-market adjustment. Both during the three and six months ended June 30, 2021, respectively, there were 1,960 DSUs granted in lieu of board fees that are also subject to mark-to-market adjustment. As of ~~September~~June 30, 2022 and 2021, the ~~Company recorded $0.2~~liability balance related to DSUs was $0.6 million ~~of other non-current liability~~ and ~~expense~~ ~~for the DSUs based on the fair value of the Company’s stock price.~~$0.3 million, respectively.

~~During~~RSUs of 377,076 and 611,681 were granted during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. NaN RSUs were granted during the three and six months ended June 30, 2021. Both during the three and six months ended June 30, 2022, a total of ~~49,755 and 52,797~~77,801 RSUs vested, ~~respectively,~~ and 33,918 common shares were issued with an intrinsic value ~~of $0.1 and $0.1 million, respectively,~~ and a fair value of ~~$0.1 and $0.1 million, respectively. During~~$63,935. Both during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, a total of ~~58,133 and 93,205~~2,614 RSUs vested, ~~respectively,~~ and 2,614 common shares were issued with an intrinsic value ~~of $0.2 and $0.4 million, respectively,~~ and a fair value of ~~$0.3~~$6,692.

Stock options of NaN and ~~$0.5 million,~~320,816 were granted during the three and six months ended June 30, 2022, respectively.

‌14

~~Table~~ Stock options of ~~Contents~~

NaN ~~stock~~and 600,000 were granted during the three and six months ended June 30, 2021, respectively. Stock options of NaN and 355,000, respectively, were exercised during the three and six months ended ~~September~~June 30, ~~2021.~~2022. These exercises were settled in cash. During the ~~nine~~three and six months ended ~~September~~June 30, 2021, respectively, stock options to purchase an aggregate of ~~217,718~~92,719 and 217,719 shares of the Company’s common stock were exercised at a weighted average exercise price of $1.30 and $1.31 per share. ~~NaN stock options~~

PSUs of 400,894 and 695,041 were ~~exercised~~granted during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~

~~Stock-based compensation expense for stock options, RSUs, and DSUs for the periods presented is as follows:~~

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Stock options

$
74

$
140

$
436

$
535

Restricted stock units

87

165

71

640

Deferred stock units

(131)

-

204

-

Total

$
30

$
305

$
711

$
1,175

The Company has a short-term incentive plan (“STIP”) for its executive officers that provides for the grant of either cash or stock-based bonus awards payable upon achievement of specified performance metrics. As of September 30, 2021 we accrued $0.4 million related to the STIP program. As of December 31, 2020, there2022, respectively. NaN PSUs were ~~0 accruals related to the STIP~~.

~~15. Shareholders’ Equity~~

On April 3, 2018, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with an investment banking firm (“Agent”) pursuant to which the Agent agreed to act as the Company’s sales agent with respect to the offer and sale of the Company’s common stock from time to time, having an aggregate gross sales price of up to $75.0 million (the “Shares”), which was subsequently renewed in June 2020. The ATM Agreement will remain in full force and effect until the earlier of (i) June 3, 2023 or (ii) the date that the ATM Agreement is terminated in accordance with its terms. ~~An aggregate of 1,705,323 shares and 6,039,823 shares of the Company’s common stock were sold through the ATM Agreement~~granted during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, respectively, for net proceeds~~2021. PSUs cliff vest usually in three years based on the relative total shareholder return of a predetermined peer group and are expected to the Company, after deducting the Agent’s commissions and other expenses, of $6.8 million and $18.7 million, respectively. NaN ATM shares were sold during the three and nine months ended September 30, 2021.

During the three and nine months ended September 30, 2021, the Company declared dividends of $0.01 per common share and $0.03 per common share, respectively, and paid an aggregate total of $0.7 million and $2.5 million, respectively. During the three and nine months ended September 30, 2020, the Company declared and paid dividends of $0.01 per common share and $0.03 per common share, respectively, for an aggregate total of $0.7 million and $2.1 million, respectively.

~~At the Company’s annual meeting held~~be settled in ~~June 2021, shareholders approved an amendment to the Company’s articles of incorporation to increase the number of authorized shares of common stock from 100 million to 200 million shares.~~cash.

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~~16. Other (Income) Expense, net~~

~~Other (income) expense, net, for the periods presented consisted of the following:~~

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Unrealized currency exchange (gain) loss ⁽¹⁾

$
(59)

$
163

$
257

$
221

Realized currency exchange loss (gain)

24

(76)

(35)

(191)

Unrealized loss (gain) from gold and silver rounds/bullion, net⁽¹⁾

55

(716)

86

(1,175)

Unrealized loss on zinc zero cost collar ⁽¹⁾

144

-

144

-

Realized loss on zinc zero cost collar

40

-

40

-

Employee benefit obligation

-

-

700

-

Other (income) expense

(30)

30

(465)

102

Total

$
174

$
(599)

$
727

$
(1,043)

~~(1)~~

Gains and losses due to changes in fair value are non-cash in nature until such time that they are realized through cash transactions. For additional information regarding the Company’s fair value measurements and investments, please see Note 18.

Stock-based compensation expense for the periods presented is as follows:


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Stock options	$	250	$	135	$	399	$	362
Restricted stock units		256		70		304		(16)
Performance stock units		94		-		94		-
Deferred stock units		(207)		(8)		370		335
Total	$	393	$	197	$	1,167	$	681

The Company has a short-term incentive plan (“STIP”) for its management team that provides annual cash payable upon achievement of specified performance metrics. As of June 30, 2022 we accrued $0.4 million payable in cash related to the 2022 STIP program.

17. Zinc Zero Cost Collar

During the three and six months ended June 30, 2022 and 2021, the realized and unrealized losses related to the Company’s Zinc Zero Cost Collar are the following:


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Realized loss on zinc zero cost collar	$	829	$	-	$	2,457	$	-
Unrealized gain on zinc zero cost collar ⁽¹⁾		(4,628)		-		(2,119)		-
Total	$	(3,799)	$	-	$	338	$	-

(1)

Gains and losses due to changes in fair value are non-cash in nature until such time that they are realized through cash transactions.

On May 18, 2021, the Company entered into a Trading Agreement with Auramet International LLC that governs nonexchange traded, over-the-counter, spot, forward and option transactions on both a deliverable and non-deliverable basis involving various metals and currencies. Please see Note 14 - Derivatives and Note 17 - Zinc Zero Cost Collar for additional information. As of June 30, 2022, the zinc zero cost collar was in an asset position ($0.3 million), while in prior periods we had a liability related to the program.

18. Other Expense, net

Other expense, net, for the periods presented consisted of the following:


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Unrealized currency exchange loss ⁽¹⁾	$	77	$	75	$	522	$	316
Realized currency exchange loss (gain)		30		114		159		(59)
Realized and unrealized loss (gain) from gold and silver rounds, net		8		(34)		(28)		32
Employee benefit obligation ⁽²⁾		-		700		-		700
Interest on streaming liabilities		134		-		310		-
Other (income) expense		(35)		12		89		(436)
Total	$	214	$	867	$	1,052	$	553

(1)	Gains and losses due to changes in fair value are non-cash in nature until such time that they are realized through cash transactions. For additional information regarding the Company’s fair value measurements and investments, please see Note 20 - Fair Value Measurement.

(2)	In year-to-date 2022, Employee benefit obligation of $0.1 million is recorded in production cost rather than in other expense, net. In 2021, the initial Employee benefit obligation due to the Mexico Labor Reform was recorded as other expense.

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19. Net Income per Common Share

Basic net income per common share is calculated based on the weighted average number of common shares outstanding for the period. Diluted earnings per common share are calculated based on the assumption that stock options and other dilutive securities outstanding, which have an exercise price less than the average market price of the Company’s common shares during the period, would have been exercised on the later of the beginning of the period or the date granted and that the funds obtained from the exercise were used to purchase common shares at the average market price during the period. All the Company’s RSUs and DSUs are considered to be dilutive in periods with net income.

The effect of the Company’s dilutive securities is calculated using the treasury stock method and only those instruments that result in a reduction in net income per common share are included in the calculation. Options to purchase ~~2.1~~2.3 million and ~~3.6~~2.6 million shares of common stock at weighted average exercise prices of ~~$5.11~~$4.49 and ~~$8.97~~$6.92 were outstanding ~~at September~~as of June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, but were not included in the computation of diluted weighted average common shares outstanding, as the exercise price of the options exceeded the average price of the Company’s common stock during the reporting period, and therefore are anti-dilutive.

Basic and diluted net income per common share is calculated as follows:


	For the three months ended				For the nine months ended				For the three months ended				For the six months ended
	September 30,				September 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Numerator:
Net income (loss) from continuing operations		1,529		(251)		5,339		(3,212)
Net income from discontinued operations		-		5,252		-		3,280
Net income (in thousands)	$	1,529	$	5,001	$	5,339	$	68	$	2,673	$	1,283	$	6,692	$	3,810

Denominator:
Basic weighted average shares of common stock outstanding		74,552,545		70,641,938		74,481,281		68,896,059		88,343,992		74,485,672		88,341,398		74,445,058
Dilutive effect of share-based awards		345,975		402,590		360,814		393,290		447,560		501,887		305,451		423,129
Diluted weighted average common shares outstanding		74,898,520		71,044,528		74,842,095		69,289,349		88,791,552		74,987,559		88,646,849		74,868,187

Basic and diluted net income (loss) per common share:
Continuing operations		0.02		0.01		0.07		(0.05)
Discontinued operations		-		0.06		-		0.05
Basic and diluted net income per common share	$	0.02	$	0.07	$	0.07	$	0.00	$	0.03	$	0.02	$	0.08	$	0.05

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~~18.~~20. Fair Value Measurement

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

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As required by accounting guidance, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth certain of the Company’s assets measured at fair value by level within the fair value hierarchy as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


	As of		As of			As of		As of
	September 30,		December 31,		Input Hierarchy Level	June 30,		December 31,		Input Hierarchy Level
	2021		2020			2022		2021

	(in thousands)					(in thousands)
Cash and cash equivalents	$	29,544	$	25,405	Level 1	$	33,335	$	33,712	Level 1
Gold and silver rounds/bullion	$	559	$	671	Level 1
Accounts receivable, net	$	4,947	$	4,226	Level 2	$	6,277	$	8,672	Level 2
Derivative asset - zinc zero cost collar						$	275	$	-	Level 2
Derivative liability - zinc zero cost collar	$	(144)	$	-	Level 2	$	-	$	(1,844)	Level 2

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents: Cash and cash equivalents consist primarily of cash deposits and are valued at cost, which approximates fair value. ~~Gold and silver rounds/bullion consist of precious metals which are valued using quoted market prices. Please see~~ ~~Note 5~~~~for additional information.~~

Accounts receivable, net:Accounts receivable, net ~~include~~includes amounts due to the Company for deliveries of concentrates and doré sold to customers, net of embedded derivatives mark-to-market value of ~~$0.1~~$1.9 million as of ~~September~~June 30, ~~2021,~~2022, and ~~$0.2 million~~NaN as of December 31, ~~2020.~~2021. Concentrate sales contracts provide for provisional pricing as specified in such contracts. These sales contain an embedded derivative related to the provisional pricing mechanism and are accounted for as a derivative. At the end of each reporting period, the Company records an adjustment to sales to reflect the mark-to-market of outstanding provisional invoices based on the forward price curve. Because these provisionally priced sales have not yet settled as of the reporting date, the mark-to-market adjustment related to these invoices is included in accounts receivable as of each reporting date and included in its accounts receivable on the accompanying Condensed Consolidated Interim Balance Sheets related to mark-to-market adjustments. Please see Note 1314 - Derivatives for additional information.

~~Gains~~Derivative liability - zinc zero cost collar: Derivatives are carried at fair value and on a net basis as a legal right of offset exists with the same counterparty. The valuation is using the Black Scholes model as applied to zinc call options and considers interest rate forecast, market volatility, and the zinc forward price curve for each respective hedge period. Any fair value gains or losses ~~related to changes~~are recognized in earnings in the current period. The fair value does not reflect the realized or cash value of ~~these~~the instrument. Mark-to-market adjustments are made until the physical commodity is delivered or the financial instrument is settled. At each reporting period Management evaluates the unrealized gain (loss) on the derivatives instruments ~~were included~~based on average London Metal Exchange forward underlying price over a period from the trade date to the payment date.

For the zinc zero cost collar, when the prior month LME average zinc price is greater than the call price, positions settling in the ~~Company’s Condensed Consolidated Interim Statements of Operations~~period are recorded as ~~shown in the following table:~~a realized gain or loss, and unsettled positions are recorded as an unrealized gain or loss.

For the three months ended September 30,

For the nine months ended September 30,

Statement of Operations Classification

2021

2020

2021

2020

Note
(in thousands)

Realized and unrealized derivative (loss) gain, net
14
$
(478)

$
550

$
156

$
18

Sales, net
Unrealized gold and silver rounds/bullion (loss) gain
16
$
(55)

$
716

$
(86)

$
1,175

Other expense, net
Realized (loss) on zinc zero cost collar, net
16
$
(40)

$
-

$
(40)

$
-

Other expense, net

‌17Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
18

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Gains and losses related to changes in the fair value of these financial instruments were included in the Company’s Condensed Consolidated Interim Statements of Operations as shown in the following table:


		For the three months ended June 30,				For the six months ended June 30,				Statements of Operations Classification
		2022		2021		2022		2021

	Note	(in thousands)
Realized and unrealized derivative gain (loss), net	14	$	(2,164)	$	669	$	(130)	$	634	Sales, net
Realized loss on zinc zero cost collar	17	$	(829)	$	-	$	(2,457)	$	-	Realized and unrealized loss on zinc zero cost collar
Unrealized loss on zinc zero cost collar	17	$	4,628	$	-	$	2,119	$	-	Realized and unrealized loss on zinc zero cost collar

Realized/Unrealized Derivatives

The following tables summarize the Company’s realized/unrealized derivatives for the periods presented (in thousands):


	Gold		Silver		Copper		Lead		Zinc		Total		Gold		Silver		Copper		Lead		Zinc		Total
For the three months ended September 30, 2021
Realized (loss) gain	$	(110)	$	(295)	$	(4)	$	72	$	91	$	(246)
Unrealized gain (loss)		28		(11)		(16)		(84)		(149)		(232)
For the three months ended June 30, 2022
Realized gain (loss)													$	56	$	(95)	$	(58)	$	37	$	1,220	$	1,160
Unrealized loss														(243)		(164)		(121)		(246)		(2,550)		(3,324)
Total realized/unrealized derivatives, net	$	(82)	$	(306)	$	(20)	$	(12)	$	(58)	$	(478)	$	(187)	$	(259)	$	(179)	$	(209)	$	(1,330)	$	(2,164)


	Gold		Silver		Copper		Lead		Zinc		Total		Gold		Silver		Copper		Lead		Zinc		Total
For the three months ended September 30, 2020
For the three months ended June 30, 2021
Realized gain	$	132	$	339	$	89	$	16	$	77	$	653	$	21	$	87	$	62	$	30	$	159	$	359
Unrealized (loss)		(11)		(47)		(24)		(10)		(11)		(103)
Unrealized gain (loss)														130		103		(47)		87		37		310
Total realized/unrealized derivatives, net	$	121	$	292	$	65	$	6	$	66	$	550	$	151	$	190	$	15	$	117	$	196	$	669


	Gold		Silver		Copper		Lead		Zinc		Total		Gold		Silver		Copper		Lead		Zinc		Total
For the nine months ended September 30, 2021
Realized (loss) gain	$	(133)	$	(123)	$	63	$	146	$	251	$	204
Unrealized gain (loss)		58		10		(24)		(63)		(29)		(48)
For the six months ended June 30, 2022
Realized gain													$	182	$	154	$	(15)	$	56	$	1,649	$	2,026
Unrealized gain														(1)		111		(105)		(199)		(1,962)		(2,156)
Total realized/unrealized derivatives, net	$	(75)	$	(113)	$	39	$	83	$	222	$	156	$	181	$	265	$	(120)	$	(143)	$	(313)	$	(130)


	Gold		Silver		Copper		Lead		Zinc		Total		Gold		Silver		Copper		Lead		Zinc		Total
For the nine months ended September 30, 2020
Realized gain (loss)	$	651	$	451	$	20	$	(143)	$	(729)	$	250
Unrealized (loss) gain		(209)		(290)		(9)		41		235		(232)
For the six months ended June 30, 2021
Realized (loss) gain													$	(23)	$	172	$	67	$	74	$	160	$	450
Unrealized gain (loss)														30		21		(8)		21		120		184
Total realized/unrealized derivatives, net	$	442	$	161	$	11	$	(102)	$	(494)	$	18	$	7	$	193	$	59	$	95	$	280	$	634

For the zinc zero cost collar, when the prior month LME average zinc price is greater than the call price, positions settling in the period are recorded as a realized gain or loss, and unsettled positions are recorded as an unrealized gain or loss.

Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and Notes—Unaudited
19

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~~19.~~21. Supplementary Cash Flow Information

Other operating adjustments and write-downs within the net cash provided by operations on the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 consisted of the following:


	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	(in thousands)				(in thousands)				(in thousands)				(in thousands)
Unrealized loss (gain) on gold and silver rounds/bullion	$	55	$	(716)	$	86	$	(1,175)
Unrealized foreign currency exchange (gain) loss		(59)		163		257		221
Unrealized (gain) loss on gold and silver rounds									$	8	$	(35)	$	(62)	$	31
Realized loss on gold and silver rounds										-		1		34		1
Unrealized foreign currency exchange loss										77		75		522		316
Unrealized loss on zinc zero cost collar		144		-		144		-		(4,628)		-		(2,119)		-
Other		(106)		81		(12)		123		165		60		(202)		93
Total other operating adjustments	$	34	$	(472)	$	475	$	(831)	$	(4,378)	$	101	$	(1,827)	$	441

22. Segment Reporting

As of June 30, 2022, the Company has organized its operations into 3 geographic regions: Oaxaca, Mexico, Michigan, U.S.A., and Corporate and Other. Oaxaca, Mexico represents the Company’s only production stage property. Michigan, U.S.A. is an advanced exploration stage property. Intercompany revenue and expense amounts have been eliminated within each segment in order to report on the basis that management uses internally for evaluating segment performance. The Company’s business activities that are not considered production stage or advanced exploration stage properties are included in Corporate and Other.

The following table shows selected information from the Consolidated Balance Sheets relating to the Company’s segments (in thousands):


	Oaxaca, Mexico		Michigan, USA		Corporate and Other		Consolidated
As of June 30, 2022
Total current assets	$	50,771	$	4,586	$	5,069	$	60,426
Total non-current assets		63,224		89,578		378		153,180
Total assets	$	113,995	$	94,164	$	5,447	$	213,606
Total current liabilities		20,289		1,738		1,346		23,373
Total non-current liabilities		655		62,758		818		64,231
Total shareholders' equity		93,051		29,668		3,283		126,002
Total liabilities and shareholders' equity	$	113,995	$	94,164	$	5,447	$	213,606

As of December 31, 2021
Total current assets	$	50,057	$	5,528	$	3,330	$	58,915
Total non-current assets		66,756		90,018		73		156,847
Total assets	$	116,813	$	95,546	$	3,403	$	215,762
Total current liabilities		25,833		2,459		1,367		29,659
Total non-current liabilities		1,436		63,438		479		65,353
Total shareholders' equity		89,544		29,649		1,557		120,750
Total liabilities and shareholders' equity	$	116,813	$	95,546	$	3,403	$	215,762

~~20. COVID-19 Pandemic~~

~~The Company continues to protect the health~~Gold Resource Corporation—Condensed Consolidated Interim Financial Statements and safety of our employees, contractors, and communities, by taking precautionary measures, including specialized training, social distancing, screening workers before they enter facilities, a work from home mandate where possible, and close monitoring of national and regional COVID-19 impacts and

‌18Notes—Unaudited
20

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~~governmental guidelines. Since our non-mining workforce is able~~The following table shows selected information from the Consolidated Statements of Operations relating to ~~work remotely with~~ the ~~benefit of technology, we are able to maintain our operations and internal controls over financial reporting and disclosures.~~Company’s segments (in thousands):

~~On August 18, 2021, we announced the temporary suspension of activities at the Don David~~


	Oaxaca, Mexico		Michigan, USA ⁽¹⁾		Corporate and Other		Consolidated
For the three months ended 2022
Sales, net	$	37,064	$	-	$	-	$	37,064
Total mine cost of sales, including depreciation		28,995		33		17		29,045
Exploration expense		810		2,027		-		2,837
Total other costs and expenses, including G&A		(3,568)		121		2,175		(1,272)
Provision for income taxes (benefit)		3,518		-		263		3,781
Net income (loss)	$	7,309	$	(2,181)	$	(2,455)	$	2,673

For the three months ended 2021
Sales, net	$	30,836	$	-	$	-	$	30,836
Total mine cost of sales, including depreciation		23,956		-		-		23,956
Exploration expense		643		-		5		648
Total other costs and expenses, including G&A		911		-		2,287		3,198
Provision for income taxes (benefit)		1,751		-		-		1,751
Net income (loss)	$	3,575	$	-	$	(2,292)	$	1,283

(1)

Michigan, USA was acquired on December 10, 2021, and therefore, there is no information for the three months ended June 30, 2021.


	Oaxaca, Mexico			Michigan, USA ⁽¹⁾			Corporate and Other			Consolidated

For the six months ended June 30, 2022
Sales, net	$	82,481	$		-	$		-	$	82,481
Total mine cost of sales, including depreciation		55,089			33			17		55,139
Exploration expense		2,047			3,095			-		5,142
Total other costs and expenses, including G&A		1,124			438			4,814		6,376
Provision for income taxes (benefit)		8,869			-			263		9,132
Net income (loss)	$	15,352	$		(3,566)	$		(5,094)	$	6,692

For the six months ended June 30, 2021
Sales, net	$	58,104	$		-	$		-	$	58,104
Total mine cost of sales, including depreciation		42,649			-			-		42,649
Exploration expense		1,840			-			15		1,855
Total other costs and expenses, including G&A		533			-			4,912		5,445
Provision for income taxes (benefit)		4,345			-			-		4,345
Net income (loss)	$	8,737	$		-	$		(4,927)	$	3,810

(1)

Michigan, USA was acquired on December 10, 2021, and therefore, there is no information for the six months ended June 30, 2021.

Gold Mine in response to a spike in COVID-19 cases at our mine and surrounding communities. The suspension lasted twelve days and by September 7, 2021, we had significantly ramped back up operations under further enhanced COVID-19 protocols. The Company incurred COVID-19 specific costs of $0.1 million in 2021 for activities such as additional health and safety procedures, increased transportation and community contributions. We are working with local authorities, to improve the availability of vaccines to our employees and host communities.

~~As of the date of the issuance of these unaudited~~ Resource Corporation—Condensed Consolidated Interim Financial Statements ~~there have been no other significant impacts, including impairments, to the Company’s operations~~ and financial statements. However, the long-term impact of the COVID-19 outbreak on the Company’s results of operations, financial position, and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of COVID-19 on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position, and cash flows may be materially adversely affected. The Company is not able to estimate the duration of the pandemic and potential impact on its business if disruptions or delays in business developments and shipments of product occur. In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including a decreased ability to raise additional capital when and if needed on acceptable terms, if at all. As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly. The Company has completed various scenario planning analyses to consider potential impacts of COVID-19 on its business, including volatility in commodity prices, temporary disruptions and/or curtailments of operating activities (voluntary or involuntary). The Company believes that current working capital balances will be sufficient for the foreseeable future, although there is no assurance that will be the case.

~~21. Subsequent Events~~

Subsequent to quarter end, on October 6, 2021, the Company entered into a definitive arrangement agreement with Aquila Resources Inc., whereby GRC will acquire all the issued and outstanding common shares of Aquila by way of a plan of arrangement under the Business Corporations Act (Ontario). Subject to the satisfaction of customary conditions precedent, the Company expects to complete the transaction in the fourth quarter of 2021.

‌19Notes—Unaudited
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion summarizes the results of operations of Gold Resource Corporation and its subsidiaries (“we”, “our”, or “us”) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and compares those results with the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021. It also analyzes the Company’s financial condition ~~at September~~as of June 30, ~~2021~~2022 and compares it to the financial condition atas of December 31, ~~2020.~~2021. This discussion should be read in conjunction with management’s discussion and analysis and the audited consolidated financial statements and footnotes for the year ended December 31, ~~2020~~2021 contained in our annual report on Form 10-K.

The discussion also presents certain non-GAAP financial measures that are important to management in its evaluation of our operating results, and which are used by management to compare our performance with what we perceive to be peer group mining companies and are relied on as part of management’s decision-making process. Management believes these measures may also be important to investors in evaluating our performance. For a detailed description of each of the non-GAAP financial measures and a reconciliation to GAAP financial measures, please see the discussion under “Non-GAAP Measures”.

See Forward-Looking Statements at the end of this Item 2 for important information regarding statements contained herein.

Overview

Gold Resource Corporation is a mining company that pursues gold and silver projects that are expected to achieve both low operating costs and high returns on capital. The Don David Gold Mine currently has six projects with the primary mineral production coming from the Arista underground ~~mine located at the Aguila project.~~mine. This mine supplies ore to our processing facilities ~~also located at the Aguila project. We~~to produce gold and silver doré and copper, lead, and zinc concentrates which also contain gold and silver.

~~During~~ The Back Forty Project, when developed, is expected to produce gold and silver doré and copper and zinc concentrates bearing gold and silver. The current feasibility study work is planned to be completed in the ~~first~~second half of ~~2021,~~2022 with permitting to continue into 2023. The Company has formed an integrated project team to optimize the feasibility study, related mine plan, and to ensure a ~~new management team was assembled with a directive to unlock~~positive long-term impact on the ~~value of the Mexican assets~~environment and a mandate to grow the company. Year-to-date initiatives have focused on safety culture and related programs, identifying additional mineral reserves, improving mine planning and execution, identification and implementation of operational efficiencies, all while exploring organic and strategic opportunities for growth.host communities.

Working safely continues to underpin all that we do, with our goal of developing a zero-harm workplace for our employees, the environment, and our local communities. Despite rigorous safety protocols being in place, we ~~have~~ had ~~three~~five lost time incidents ~~this year. During~~during the first half of ~~the year,~~2022. In 2021, we initiated a Global Health and Safety Directive with an objective to lower first aid, medical aid, lost time accidents, and near misses.

This program builds on the protocols already in place and provides our operation’s personnel with a common approach to achieving our safety objectives. ~~More recently,~~Current safety program objectives ~~have been~~are focused on identification and monitoring of leading indicators of a safe workplace such as leadership in the field, regular and consistent risk assessment, behavioral observations, training records, and department safety meetings.

The team at Gold Resource Corporation holds itself accountable to the highest environmental, social, and governance standards. Our commitment to acting responsibly and delivering excellence in sustainability allows us to deliver benefits to all our stakeholders, including our employees and local communities. In September 2021, we issued our 2020 Sustainability Disclosure Topics & Accounting Metrics report (“2020 SASB Report”), which uses the Value Reporting Foundation’s Metals & Mining Sustainability Accounting Standard of reporting to outline our progress on our sustaintability performance. As described in the 2020 SASB Report, during 2020, we achieved significant progress when compared with 2019, including the following:

~~A 38% decline in greenhouse gas emissions (or 23% decline related to CO2 equivalent tons produced per tonne of ore processed);~~

‌20

~~Table of Contents~~

~~A 14.8% decline in the water withdrawn from the fresh water source per tonne of ore processed;~~

~~A 31% decline in the fresh water consumed per tonne of ore processed; and~~

~~The percentage of tailings recycled through the paste plant and deposited in underground workings rose to 26% from 5.7% in 2019.~~

The declines in CO2 equivalent tons are largely due to the conversion to the electrical grid from diesel generating capacity. We continue to focus on identifying opportunities to lower our power consumption and improve efficiency in this area. The declines in water consumption were due to the installation of the paste tailings plant, as water is recycled back to the processing plant from this process.

With a focus on unlocking the value of the Don David Gold Mine, we are undertaking a comprehensive review of our geological data base and interpretation of the mineralization, the block models derived from them, and ultimately the mine plan and production guidance to ensure more reliable and accurate mine planning and forecasting. In addition, metallurgy, mining methods, ground control, and other parameters are being reviewed. During the first half of 2021, changes to the mine plan were made to allow management to evaluate and put into effect ground support measures in the Switchback vein system of the underground mine. Accordingly, we changed our mining approach to ensure stability and to reduce dilution. During the third quarter, mining resumed in the Soledad vein of the Switchback vein system, which improved the mining productivity due to wider mining widths and higher grade ore.

Identification and implementation of operational efficiencies include regrinding tails from the zinc concentrate to increase gold recoveries by 6% to 10%, improving ground support designs and shotcrete application, optimizing the position of re-muck bays, and improving blasting techniques, among other initiatives.

During the third quarter, we announced encouraging results regarding the potential to increase higher grade mineralized material and the down-dip extension of the Switchback vein system mineralization at depth. The underground exploration drill program progressed with the completion of 10 drill holes totaling 3,851 meters, as well as 37 mine infill and definition drill holes totaling 3,801 meters at our Arista and Switchback vein systems. Surface drilling at the Aguila Project is ongoing, with 22 drill holes completed during the quarter totaling 3,917 meters.

After careful and lengthy evaluation of the investment opportunity of acquiring Aquila Resources Inc., whose principal asset is the Back Forty Project in the Upper Peninsula of Michigan, USA, on September 7, 2021, we announced we had entered into a binding letter agreement with Aquila, and on October 6, 2021, we announced we entered into an arrangement agreement with Aquila to purchase all of the issued and outstanding shares of Aquila by way of a plan of arrangement under the Business Corporation Act (Ontario). The acquisition, upon closing, is expected to be immediately accretive to the Company’s shareholders on a net asset value basis that includes a potential to increase the Company’s gold resources by more than 500%. Additionally, the Company combined is expected to benefit from a peer leading growth profile, a robust balance sheet with no debt and free cash flow generation from its Don David Gold Mine. The Company’s financial strength should result in an improved ability to secure a project financing facility sufficient to fund the development of the Back Forty Project. The acquisition provides shareholders the opportunity to participate in the growth of a multi-operation, diversified precious and base metal producer with a lower jurisdictional risk.

Back Forty Project, when developed, is expected to produce gold and silver doré and copper, lead and zinc concentrates bearing gold and silver. The current Aquila feasibility study is planned to be completed in the first half of 2022 with permitting and detailed engineering to continue into 2023. The Company has commenced early integration of the project team to optimize the feasibility study, related mine plan and to ensure a positive long-term impact on the environment and host communities.

Our financial statements report the sale of precious and base metals as revenue, and we periodically review our revenue streams to ensure that this treatment remains appropriate. We consider precious metals to be the long-term primary driver of our economic decisions and believe that base metals are secondary products for non-GAAP financial measures.

Gold equivalent is determined by taking gold ounces produced and sold, plus silver ounces produced and sold converted to gold equivalent ounces using the gold to silver average realized price ratio for the period.

‌21Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
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COVID-19 Pandemic

The Company continues to protect the health and safety of our employees, contractors, and communities by taking precautionary measures, including specialized training, social distancing, screening workers before they enter facilities, a work from home mandate where possible, and close monitoring of national and regional COVID-19 impacts and governmental guidelines. Since our non-mining workforce is able to work remotely with the benefit of technology, we are able to maintain our operations and internal controls over financial reporting and disclosures.

On August 18, 2021, we announced the temporary suspension of activities at the Don David Gold Mine in response to a spike in COVID-19 cases at our mine and surrounding communities. The suspension lasted twelve days and by September 7, 2021, we had significantly ramped back up operations under further enhanced COVID-19 protocols. The Company incurred incremental COVID-19 specific costs of $0.1 million during the quarter for activities such as additional health and safety procedures, increased transportation and community contributions. We are working with local authorities, to improve the availability of vaccines to our employees and host communities.

As of the date of the issuance of these unaudited Condensed Consolidated Interim Financial Statements, there have been no other significant impacts, including impairments, to the Company’s operations and financial statements. However, the long-term impact of the COVID-19 outbreak on the Company’s results of operations, financial position, and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of COVID-19 on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position, and cash flows may be materially adversely affected. The Company is not able to estimate the duration of the pandemic and potential impact on its business if disruptions or delays in business developments and shipments of product occur. In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including a decreased ability to raise additional capital when and if needed on acceptable terms, if at all. As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly. The Company has completed various scenario planning analyses to consider potential impacts of COVID-19 on its business, including volatility in commodity prices, temporary disruptions and/or curtailments of operating activities (voluntary or involuntary). The Company believes that current working capital balances will be sufficient for the foreseeable future, although there is no assurance that will be the case.

‌22

~~Table~~Gold Resource Corporation—Management’s Discussion and Analysis of ~~Contents~~

~~Updated Guidance~~

~~Ground support challenges in the first half on 2021, coupled with the temporary ramp down~~Financial Condition and Results of ~~operations during late August and early September, will affect our overall production result; accordingly, we are providing an update to our 2021 annual guidance:~~

~~Measure~~	~~Original 2021 Guidance~~		~~Updated 2021 Guidance~~
~~Payable Production~~	~~19,500 to 21,500 Gold Ounces~~		~~21,000 to 23,000 Gold Ounces~~
		~~1,700,000 to 1,800,000 Silver Ounces~~		~~1,100,000 to 1,300,000 Silver Ounces~~
~~Cash Costs~~⁽¹⁾ ~~after co-products credits~~⁽²⁾ ~~per gold equivalent (“AuEq”) ounce~~	~~$210 to $225~~		~~$250 to $290~~Operations ~~Primary due to lower co-product credits due to lower base metal tonnages produced and sold.~~
~~All-in Sustaining Costs~~⁽¹⁾ ~~after co-product credits~~⁽²⁾ ~~per AuEq ounce~~	~~$800 to $900~~		Guidance maintained Lower co-product credits largely offset by less underground development.
~~Capital Investment~~	~~$22.0 million to include:~~		~~$16 million~~
		~~- Gold Regrind~~	~~$1.9 million~~	~~Primary due to lower underground development than originally anticipated, noted in our 10Q for Q2~~
		~~- Dry Stack Completion~~	~~$6.2 million~~
		~~- Underground Development~~	~~$9.8 million~~
		~~- Other Sustaining~~	~~$4.1 million~~
~~Exploration Commitment~~	~~$7.2 million to include:~~		~~Guidance maintained~~
		~~- Surface Exploration~~	~~$3.0 million~~
		~~- Underground Drilling~~	~~$2.6 million~~
		~~- Exploration Development~~	~~$1.6 million~~
~~G & A~~⁽³⁾	~~$6.0 million to $6.5 million, excluding Stock-based Compensation & Restructuring~~		~~$6.5 million to $6.9 million, excluding Stock-based Compensation & Restructuring~~

~~(1)~~

Calculations of cash cost after co-product credits per AuEq ounce and all-in sustaining cost after co-product credits per AuEq ounce are non-GAAP financial measures. Please see the Non-GAAP Measures section of the Management's Discussion and Analysis and Results of Operations for a complete reconciliation of the non-GAAP measures.

~~(2)~~

Co-product credits are based on approximately 7,200 tonnes of lead sold at an $0.90 per pound metal price (originally 8,000 tonnes of lead sold at $0.80 per pound), approximately 1,500 tonnes of copper sold at an $4.00 per pound metal price (originally 1,800 tonnes of copper sold at $2.80 per pound), and approximately 16,000 tonnes of zinc sold at an $1.25 per pound metal price (originally 21,000 tonnes of zinc sold at $1.04 per pound).

~~(3)~~

~~The above revised guidance does not include any costs associated with the acquisition of Aquila Resources Inc.~~

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Results of Operations

Don David Gold Mine

Mine activities during the ~~nine months~~first half of ~~2021~~2022 included development and ore extraction from the Arista mine, while maintaining strict COVID-19 safety protocols to keep employees safe. The Company temporary suspended activities for 12 days at the Don David Gold Mine in response to a spike in COVID-19 cases at our mine and surrounding communities in late August and early September 2021.mine. The following table summarizes certain production statistics about our Don David Gold Mine for the periods indicated:


	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Arista Mine
Milled
Tonnes Milled		97,806		136,618		351,572		373,394		128,884		126,363		264,685		253,766
Grade
Average Gold Grade (g/t)		2.68		1.25		2.04		1.35		2.63		1.91		2.82		1.80
Average Silver Grade (g/t)		91		76		82		78		64		79		73		78
Average Copper Grade (%)		0.37		0.40		0.39		0.39		0.32		0.36		0.37		0.40
Average Lead Grade (%)		2.29		1.93		1.84		1.95		1.99		1.63		1.98		1.66
Average Zinc Grade (%)		4.79		5.02		4.20		4.85		4.00		3.64		4.46		3.97
Aguila Open Pit Mine
Milled
Tonnes Milled		204		16,913		15,008		34,740
Grade
Average Gold Grade (g/t)		3.33		1.35		1.88		1.32
Average Silver Grade (g/t)		14		32		33		36
Mirador Mine
Milled
Tonnes Milled		-		-		-		7,450
Grade
Average Gold Grade (g/t)		-		-		-		0.91
Average Silver Grade (g/t)		-		-		-		130
Combined
Tonnes milled		98,010		153,531		366,580		415,584
Tonnes Milled per Day ⁽¹⁾		1,353		1,745		1,495		1,880
Metal production (before payable metal deductions) ⁽²⁾
Tonnes Milled ⁽¹⁾										129,099		129,590		265,943		268,570
Tonnes Milled per Day ⁽²⁾										1,516		1,506		1,553		1,555
Metal production (before payable metal deductions) ⁽³⁾
Gold (ozs.)		6,933		4,728		19,585		13,619		9,317		6,555		20,504		12,652
Silver (ozs.)		265,829		324,592		869,418		912,464		249,088		295,979		581,380		603,589
Copper (tonnes)		284		428		1,093		1,162		303		368		734		809
Lead (tonnes)		1,808		2,157		5,199		5,811		2,020		1,654		4,093		3,391
Zinc (tonnes)		3,920		5,538		11,980		14,386		4,282		3,683		9,844		8,060

(1)

Combined tonnes milled in Q1 and Q2 2021 included 11,577 and 3,227 tonnes from the Open Pit Mine, respectively. The Open Pit Mine is no longer in production. Additionally, Q1 and Q2 2022 combined tonnes milled includes 1,043 and 215 purchased tonnes, respectively, related to an environmental initiative with a local community.

(2)	Based on actual days the mill operated during the period. ~~Q3 2021 results reflect only 72 days for mill operations due to the suspension of mining operations due to COVID-19.~~

~~(2)~~(3)

The difference between what we report as ~~"Metal Production"~~“Metal Production” and ~~"Metal Sold"~~“Metal Sold” is attributable to the difference between the quantities of metals contained in the concentrates we produce versus the portion of those metals for which we are paid according to the terms of our sales contracts. Differences can also arise from inventory changes related to shipping schedules, or variances in ore grades and recoveries which impact the amount of metals contained in concentrates produced and sold.

Second quarter 2022 compared to second quarter 2021

For the three months ended ~~September~~June 30, ~~2021,~~2022, the Don David Gold Mine production totaled ~~6,933~~9,317 gold ounces and ~~265,829~~249,088 silver ounces, representing a ~~47%~~42% increase in gold production and a ~~18%~~16% decrease in silver production, from the same period in ~~2020.~~2021. The ~~increase~~change is a direct result of the higher gold grades ~~offset by~~and lower ~~tonnes~~silver grades processed.

Production Volumes

During the three months ended ~~September~~June 30, ~~2021,~~2022, total tonnes milled of 129,099 were ~~36% lower than~~in line with the three months ended ~~September~~June 30, ~~2020, as a result of the suspension of mining operations in Q3~~ 2021 ~~for 12 days to manage the spike in COVID-19 cases and the related impact of enhanced safety and quarantine protocols~~.

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The paste fill plant continues to provide substantial efficiencies by returning processing waste to underground workings since it commenced operations in 2019. Such waste would have otherwise been placed in the tailings’ storage facility. The paste fill is an effective method of reducing surface tailings and provides structural ground support that allows for more complete mining of mineral reserves.

Construction of the tailings filtration plant and dry stack facility were completed in 2021. The dry stack facilities will conserve and recirculate water, eliminate risks related to traditional tailings facilities, accelerate reclamation of certain areas

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of the open pit mine, and extend the life of the operations. Currently 85% of the tails are sent to the dry stack facility, and the remaining 15% is sent to the underground operations in the form of paste fill for ground support.

Grades & Recoveries

During the three months ended ~~September~~June 30, ~~2021,~~2022, the majority of ore processed came from the Arista underground mine with an average gold grade of ~~2.68~~2.63 g/t and silver grade of 9164 g/t, compared ~~with 1.25~~to 1.91 g/t and 7679 g/t, respectively, for the same period in ~~2020.~~2021. The average gold grade was ~~114%~~38% higher and silver grade ~~20% higher,~~19% lower, consistent with ~~mine sequencing and~~ the current year mine plan.

Our base metals average grades during the three months ended ~~September~~June 30, ~~2021~~2022 were ~~0.37%~~0.32% copper, ~~2.29%~~1.99% lead, and ~~4.79%~~4.00% zinc. ~~Overall base metal~~Lead and zinc grades ~~are~~were 22% and 10% higher, respectively, and copper was 11% lower than the same period in 2021, consistent with the current year mine plan.

Gold and silver recoveries for the three months ended June 30, 2022 were 85.1% and 93.2%, respectively, reflecting a 5.1% and 2.0% increase over ~~year~~the same period in 2021. Gold recoveries have reached design objectives after the installation of the regrind circuit. Copper and lead recoveries for the three months ended June 30, 2022 decreased 9.1% and 2.4%, respectively, compared to the same period in 2021. The decrease in copper recoveries is primarily due to an isolated section of the mine containing high grade gold, which was reporting to the lead concentrate and impacting the overall metallurgy of both the copper and lead concentrates. Zinc recoveries for the three months ended June 30, 2022 were 83.1%, reflecting a 3.7% increase over the same period in 2021.

Year-to-date 2022 compared to year-to-date 2021

For the six months ended June 30, 2022, the Don David Gold Mine production totaled 20,504 gold ounces and 581,380 silver ounces, representing a 62% increase in gold production and a 4% decrease silver production, from the same period in 2021. The change is a direct result of higher gold grades, partially offset by lower silver grades.

Production Volumes

During the six months ended June 30, 2022, total tonnes milled of 265,943 were in line with the ~~mine plan.~~ six months ended June 30, 2021.

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)
Doré and concentrate sales

$
31,835

$
31,747

$
95,187

$
76,229
Less: Treatment and refining charges

(2,328)

(5,862)

(8,210)

(15,142)
Realized/unrealized derivatives, net

(478)

550

156

18
Sales, net

29,029

26,435

87,133

61,105
Total mine cost of sales

20,784

20,670

63,433

56,512
Mine gross profit

8,245

5,765

23,700

4,593
Other costs and expenses, including tax:

6,716

6,016

18,361

7,805
Net income (loss) from continuing operations

1,529

(251)

5,339

(3,212)
Net income from discontinued operations, net of income taxes

-

5,252

-

3,280
Net income

$
1,529

$
5,001

$
5,339

$
68

Total cash cost after co-product credits per AuEq oz sold

$
466

$
612

$
535

$
844
Total all-in sustaining cost after co-product credits per AuEq oz sold

$
1,031

$
1,109

$
1,090

$
1,360
Total all-in cost after co-product credits per AuEq oz sold

$
1,564

$
1,350

$
1,462

$
1,598

Grades & Recoveries

During the six months ended June 30, 2022, the majority of ore processed came from the Arista underground mine with an average gold grade of 2.82 g/t and silver grade of 73 g/t, compared to 1.80 g/t and 78 g/t, respectively, for the same period in 2021. The average gold grade was 57% higher and silver grade was 6% lower than in the same period in 2021, consistent with the current year mine plan.

Our base metals average grades during six months ended June 30, 2022 were 0.37% copper, 1.98% lead, and 4.46% zinc. Lead and zinc grades were 19% and 12% higher, while copper was 8% lower than the same period in 2021, consistent with the current year mine plan.

Gold and silver recoveries for the six months ended June 30, 2022 were 84.7% and 93.3%, respectively, reflecting a 4.9% and 1.2% increase over the same period in 2021. Gold recoveries have reached design objectives after the installation of the regrind circuit. Copper and lead recoveries for the six months ended June 30, 2022 decreased 5.9% and 2.7%, respectively, compared to the same period in 2021. The decrease in copper recoveries is primarily due to an isolated section of the mine containing high grade gold which was reporting to the lead concentrate and impacting the overall metallurgy of both the copper and lead concentrates. Zinc recoveries for the six months ended June 30, 2022 were 83.5%, reflecting a 4.2% increase over the same period in 2021.

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Sales Statistics

The following table summarizes certain sales statistics about the Don David Gold Mine operations for the periods indicated:


	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020		For the three months ended June 30,				For the six months ended June 30,
									2022		2021		2022		2021
Metal sold
Gold (ozs.)		5,809		3,619		16,525		11,153		8,746		5,697		17,127		10,716
Silver (ozs.)		255,394		316,993		778,776		862,087		231,622		270,321		497,029		523,382
Copper (tonnes)		268		447		1,015		1,090		286		365		694		747
Lead (tonnes)		1,550		1,849		3,940		4,827		1,755		1,214	��	3,394		2,390
Zinc (tonnes)		3,059		4,586		9,386		11,534		3,590		3,193		7,949		6,327
Average metal prices realized ⁽¹⁾
Gold ($ per oz.)		1,762		1,887		1,790		1,766	$	1,874	$	1,822	$	1,886	$	1,806
Silver ($ per oz.)		23.19		25.47		25.63		20.09	$	22.05	$	26.88	$	23.06	$	26.83
Copper ($ per tonne)		9,092		6,711		9,466		5,954	$	9,275	$	10,375	$	9,786	$	9,595
Lead ($ per tonne)		2,397		1,902		2,231		1,779	$	2,168	$	2,162	$	2,254	$	2,123
Zinc ($ per tonne)		3,032		2,392		2,924		2,114	$	4,338	$	2,945	$	4,066	$	2,871
Precious metal gold equivalent ounces sold
Gold Ounces		5,809		3,619		16,525		11,153		8,746		5,697		17,127		10,716
Gold Equivalent Ounces from Silver		3,361		4,279		11,151		9,807		2,729		3,988		6,077		7,775
Total AuEq oz		9,170		7,898		27,676		20,960		11,475		9,685		23,204		18,491

(1)	Average metal prices realized vary from the market metal prices due to final settlement adjustments from our provisional invoices when they are settled. Our average metal prices realized will therefore differ from the average market metal prices in most cases.

Second quarter 2022 compared to second quarter 2021

~~For~~

Metal Sold

During the three months ended ~~September~~June 30, ~~2021, mine gross profit~~2022, gold sales of 8,746 ounces, lead sales of 1,755 tonnes, and zinc sales of 3,590 tonnes increased by ~~$2.5 million,~~54%, 45%, and 12%, respectively, as compared ~~with~~to the same period in ~~2020. The increase was primarily due to $2.6 million increase in revenues due to the decrease in~~ ~~concentrate treatment charges which are netted against concentrate~~2021. Silver and copper sales ~~(refer to Footnote 4 of the Condensed Consolidated Financial Statements~~).

~~Treatment charges for~~decreased by 14% and 22%, respectively, during the three months ended ~~September~~June 30, ~~2021 were $2.3 million, or $473 per base metal tonne sold,~~2022 compared ~~with $5.9 million, or $842 per base metal tonne sold for~~to the same period in 2020. This 44% decrease in the per base metal tonne sold was expected as a result of the negotiations of new treatment charge agreements. The decrease is largely dependent on the spot treatment charge market for zinc, which can be volatile. 2021.

~~Operating Costs~~Average metal prices realized

~~Total production costs~~During the three months ended June 30, 2022, the average metal prices were $1,874 per ounce for gold, $22.05 per ounce for silver, $9,275 per tonne for copper, $2,168 per tonne for lead, and $4,338 per tonne for zinc. Compared to the same period in 2021, the average metal price for zinc increased by 47%, while the average metal price for silver and copper decreased by 18% and 11%, respectively. The average metal price for gold and lead was in line with the average prices in the same period in 2021.

Year-to-date 2022 compared to year-to-date 2021

Metal Sold

During the six months ended June 30, 2022, gold sales of ~~$17.2~~17,127 ounces, lead sales of 3,394 tonnes, and zinc sales of 7,949 tonnes increased by 60%, 42%, and 26%, respectively, as compared to the same period in 2021. Silver and copper sales decreased by 5% and 7%, respectively, during the six months ended June 30, 2022 compare to the same period in 2021.

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Average metal prices realized

During the six months ended June 30, 2022, the average metal prices were $1,886 per ounce for gold, $23.06 per ounce for silver,$9,786 per tonne for copper, $2,254 per tonne for lead, and $4,066 per tonne for zinc. Compared to the same period in 2021, the average metal price for zinc increased by 42%, while the average metal price for silver decreased by 14%. The average metal prices for gold, lead, and copper were similar to the average prices in the same period in 2021.

Financial Measures

The following table summarizes certain financial data of the Company for the periods indicated:


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Doré and concentrate sales	$	42,365	$	33,094	$	88,496	$	63,352
Less: Treatment and refining charges		(3,137)		(2,927)		(5,885)		(5,882)
Realized/unrealized derivatives, net		(2,164)		669		(130)		634
Sales, net		37,064		30,836		82,481		58,104
Total cost of sales		29,045		23,956		55,139		42,649
Mine gross profit		8,019		6,880		27,342		15,455
Other costs and expenses, including tax:		5,346		5,597		20,650		11,645
Net income	$	2,673	$	1,283	$	6,692	$	3,810

Other Non-GAAP Financial Measures:
Total cash cost after co-product credits per AuEq oz sold ⁽¹⁾	$	247	$	687	$	40	$	554
Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold ⁽¹⁾	$	799	$	1,254	$	626	$	1,104
Total all-in cost after co-product credits per AuEq oz sold ⁽¹⁾	$	1,094	$	1,512	$	929	$	1,397

(1)	For a detailed description of each of the non-GAAP financial measures and a reconciliation to GAAP financial measures, please see the discussion below under “Non-GAAP Measures”.

Second quarter 2022 compared to second quarter 2021

Sales, net

DDGM net sales of $37.1 million for the three months ended ~~September~~June 30, 2022 increased by $6.2 million, or 20%, when compared to 2021. The increase in 2022 sales is the result of increased sales volumes and higher realized metal prices outlined in the table above. Gold ounces sold increased significantly in the second quarter of 2022 over 2021 by 3,049 ounces, or 54%.

Total cost of sales

Total cost of sales increased to $29.0 million for the three months ended June 30, 2022 from $24.0 million for the same period in 2021. The $5.0 million increase was primarily related to a $2.9 million increase in depreciation expense and a $2.2 million increase in production costs. Depreciation expense was higher as a result of the reserve base being lower in the units of production calculation, resulting in higher depreciation cost per tonne of ore processed. Production costs of $21.7 million for the three months ended June 30, 2022 are 6%11% higher than the production costs of ~~$16.3~~$19.5 million for the same period in ~~2020.~~2021. The increase is ~~partially~~related to $0.5 million increase in consumable goods driven by price increases, $0.5 million increase in royalties expense due to higher sales, $0.9 million increase related to spare parts for heavy equipment repairs, and $0.5 million increase in transportation costs due to a 9% price increase in negotiated transportation cost.

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Mine Gross Profit

For the three months ended June 30, 2022, mine gross profit increased by 17%, or $1.1 million, compared to the same period in 2021. The increase was primarily due to a 20%, or $6.2 million increase in net sales offset by a 21%, or $5.1 million increase in cost of sales.

Net Income

For the three months ended June 30, 2022, we recorded net income of $2.7 million, as compared to net income of $1.3 million during the same period in 2021. The 108% increase is attributable to the higher mine gross profit discussed above offset by higher other costs and expenses, including taxes discussed below.

Year-to-date 2022 compared to year-to-date 2021

Sales, net

DDGM net sales of $82.5 million for the six months ended June 30, 2022 increased by $24.4 million, or 42%, when compared to the same period in 2021. The increase in 2022 sales is the result of increased sales volumes and higher realized metal prices outlined in the Sales Statistics table above. Gold ounces sold increased significantly in the first half of 2022 over 2021 by 6,411 ounces, or 60%.

Total cost of sales

Total cost of sales increased to $55.1 million for the six months ended June 30, 2022 from $42.6 million for the same period in 2021. The $12.5 million increase was primarily related to a ~~$1.7~~$5.4 million increase in depreciation expense and a $7.0 million increase in production costs. Depreciation expense was higher as a result of the reserve base being lower in the units of production calculation, resulting in higher depreciation cost per tonne of ore processed. Production costs of $41.8 million for the six months ended June 30, 2022 are 20% higher than the production costs of $34.8 million for the same period in 2021. The increase is related to $2.7 million increase in consumable goods ~~caused~~driven by ~~a 13%~~ price increases, $1.3 million increase in ~~chemicals used in the processing and a $0.3~~royalties expense due to higher sales, $1.0 million impact related to the Mexico Labor Reform for long-term employee obligations and profit ~~sharing. These increases were offset by $1.1~~sharing, and $1.6 million ~~lower~~increase in transportation costs due to ~~lower production volume.~~a 9% price increase in negotiated transportation cost.

Mine Gross Profit

For the six months ended June 30, 2022, mine gross profit increased by 77%, or $11.9 million, compared to the same period in 2021. The increase was primarily due to a 42%, or $24.4 million increase in net sales offset by a 29%, or $12.5 million increase in cost of sales.

Net Income

For the six months ended June 30, 2022, we recorded net income of $6.7 million, as compared to net income of $3.8 million during the same period in 2021. The 76% increase is attributable to the higher mine gross profit discussed above offset by higher other costs and expenses, including taxes discussed below.

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Other Costs and Expenses, Including Taxes


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Other costs and expenses:
General and administrative expenses	$	1,920	$	2,134	$	3,819	$	3,715
DDGM Exploration expenses ⁽¹⁾		810		648		2,047		1,855
Back Forty Project expenses ⁽¹⁾		2,027		-		3,095		-
Restructuring expenses		-		-		-		496
Stock-based compensation		393		197		1,167		681
Realized and unrealized (gain) loss on zinc zero cost collar		(3,799)		-		338		-
Other expense, net		214		867		1,052		553
Total other costs and expenses		1,565		3,846		11,518		7,300
Provision for income taxes		3,781		1,751		9,132		4,345
Total other costs, including taxes	$	5,346	$	5,597	$	20,650	$	11,645

For the three months ended September 30,

For the nine months ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Other costs and expenses:

General and administrative expenses

2,355

2,360

6,070

5,961

Exploration expenses

1,805

1,019

3,660

2,132

Restructuring expenses

-

-

496

-

Stock-based compensation

30

305

711

1,175

Other (income) expense, net

174

(599)

727

(1,043)

Total other costs and expenses

4,364

3,085

11,664

8,225

Provision for income taxes

2,352

2,931

6,697

(420)

Total other costs, including taxes

$
6,716

$
6,016

$
18,361

$
7,805

~~For the three months ended September 30, 2021~~

(1)	Exploration expenses reported in the Condensed Consolidated Interim Statements of Operations is the sum of the DDGM exploration expenses and the Back Forty Project expenses in this table.

General and administrative expenses – For the three and six months ended ~~September~~June 30, ~~2021,~~2022, general and administrative expenses were ~~$2.4~~$1.9 million ~~similar to~~and $3.8 million, respectively, representing a slight quarterly decrease and a year-to-date increase from the same period of ~~2020.~~2021 primarily due to the impact of increased audit fees and consulting services related to finalizing the Aquila acquisition and 2021 fiscal year end audit.

DDGM Exploration expenses – For the three and six months ended ~~September~~June 30, ~~2021, property~~2022, exploration expenses in DDGM totaled ~~$1.8~~$0.8 million and $2.0 million, respectively, compared ~~with $1.0~~to $0.6 million and $1.9 million for the same period in ~~2020. The increase of $0.8 million was the result of increasing efforts to invest in exploration~~2021. Exploration activities in Oaxaca, ~~Mexico.~~ Mexico remained in line with the same period in 2021.

Back Forty Project expenses – For the three and six months ended June 30, 2022, feasibility study and permitting costs, totaled $2.0 million and $3.1 million, respectively. There were no expenses for the Back Forty Project for the same period in 2021. Until a Mineral Reserve and Mineral Resource is defined by Gold Resource Corporation, Back Forty expenditures will continue to be reported as advanced exploration expense.

Stock-based compensation – Stock-based compensation ~~decreased $0.3~~increased by $0.2 million and $0.5 million, respectively, for the three and six months ended ~~September~~June 30, ~~2021~~2022 compared ~~with~~to the same period in ~~2020,~~2021. This increase is mainly due to the ~~change~~equity awarded in ~~key personnel~~March 2022 to Senior Management related to 2021 performance, equity awarded in June 2022 related to Senior Management’s 2022 compensation structure, and DSUs granted in March 2022 to the ~~Fortitude Gold Corporation spin-off and subsequent restructuring. Current management~~Board of Directorsrelated to their 2022 compensation structure. Management continues to work with an independent compensation consultant to ~~design~~evaluate the stock-based compensation ~~program going forward.~~program.

Realized and unrealized loss on zinc zero cost collar – For the three and six months ended June 30, 2022, respectively, a $3.8 million gain and a $0.3 million loss was recorded related to the zinc zero cost collar. The zinc forward price decreased from $4,244 per tonne as of March 31, 2022 to $3,130 per tonne as of June 30, 2022. This decrease resulted in the $4.4 million liability as of March 31, 2022 turning into a $0.3 million asset as of June 30, 2022. The year-to-date loss of $0.3 million is the result of the year-to-date realized loss of $2.4 million offset by the $2.1 million unrealized gain related to the zero cost collars that will mature July through December 2022.

Other ~~(income)~~ expense, net – For the three and six months ended ~~September~~June 30, ~~2021,~~2022, respectively, $0.2 million and $1.1 million of other expense was recorded compared ~~with~~to $0.9 million and $0.6 million other ~~income~~expense during the same period of ~~2020.~~2021. The ~~$0.8~~$0.5 million increase in the year-to-date expense is primarily due to ~~$0.7~~a $0.2 million increase in realized and unrealized ~~gain for~~foreign exchange loss and $0.3 million in interest expense related to the gold and silver ~~bullions in 2020 compared~~stream liabilities assumed with the ~~$0.1 million loss in 2021.~~Aquila acquisition. See Note 18 - Other expense, net for a detailed breakdown.

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Provision for income taxes – For the three and six months ended ~~September~~June 30, ~~2021,~~2022, respectively, income tax expense ~~decreased~~increased to ~~$2.3~~$3.8 million and $9.1 million from ~~$2.9~~$1.8 million ~~for~~and $4.3 million from the same period in ~~2020.~~2021. The 2022 income tax expense ~~for~~is driven by 108% increase in the ~~three months ended September 30, 2021~~three-month and ~~2020 reflected year-to-date adjustments related to year-to-date taxable income~~76% increase in the six-month net income.

Other Non-GAAP Financial Measures

~~Net Income (loss) from continuing operations~~Total cash cost after co-product credits per AuEq oz sold – For the three months ended ~~September~~June 30, ~~2021, we recorded $1.5 million of net income from continuing operations~~2022, the total cash cost after co-product credits per AuEq oz sold is $247 compared ~~with a net loss from continuing operations of $0.3 million during~~to $687 for the ~~same period in 2020. The change was attributable~~three months ended June 30, 2021. In 2022, total cash cost per ounce is lower due to the ~~factors noted above.~~higher amount of co-product credits we received related to the higher base metal prices realized and the 18% increase in total number of gold equivalent ounces sold in the quarter.

~~Net income from discontinued operations~~ – ~~No income or loss was recorded for~~For the ~~period from discontinued operations due~~six months ended June 30, 2022, the total cash cost after co-product credits per AuEq oz sold is $40 compared to ~~the completion of the spin-off as of December 31, 2020. A net income of $5.3 million was reported~~$554 for the same period in ~~2020.~~2021. In 2022, total cash cost per ounce is lower due to the higher amount of co-product credits we received related to the higher base metal prices realized and the 25% increase in total number of gold equivalent ounces sold in the quarter.

~~Net income~~Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold – For the three months ended ~~September~~June 30, ~~2021, $1.5 million in net income~~2022, the total consolidated all-in sustaining cost after co-product credits per AuEq oz sold was ~~recorded~~$799 compared ~~with $5.0 million net income during~~to $1,254 for the same period in ~~2020.~~2021. The ~~change was attributable~~decrease is directly related to the ~~discontinued operations~~lower cash costs per ounce discussed above offset by higher sustaining capital expenditures and ~~other factors noted above.~~stock-based compensation.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022, the total consolidated all-in sustaining cost after co-product credits per AuEq oz sold was $626 compared to $1,104 for the same period in 2021. The decrease is directly related to the lower cash costs per ounce discussed above offset by higher sustaining capital expenditures and stock-based compensation.

~~General and administrative expenses~~Total all-in cost after co-product credits per AuEq oz sold – For the ~~nine~~three months ended ~~September~~June 30, ~~2021, general and administrative expenses of $6.1 million were in line with~~2022, the ~~$6.0 million~~total all-in cost after co-product credits per AuEq oz sold was $1,094 compared to $1,512 for the same period in 2021. The decrease is due to the lower all-in sustaining costs discussed above offset by higher exploration expense related to advancing the Back Forty feasibility study work and permitting activities.

For the six months ended June 30, 2022, the total all-in cost after co-product credits per AuEq oz sold was $929 compared to $1,397 for the same period in 2021. The decrease is due to the lower all-in sustaining costs discussed above offset by higher exploration expense related to advancing the Back Forty feasibility study work and permitting activities.

For a detailed description of ~~2020.~~each of the non-GAAP financial measures and a reconciliation to GAAP financial measures, please see the discussion below under “Non-GAAP Measures.”

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
30

Table of Contents

2022 Capital and Exploration Investment Summary


		For the six months ended June 30, 2022		2022 full year guidance
		(in thousands)
Sustaining Investments:
Underground Development	Capital	$	3,168	$	8.5 - 9.5 million
Infill Drilling and Exploration Development	Capital		4,040		7.0 - 7.5 million
Other Sustaining Capital	Capital		1,416		4.0 - 4.5 million
Subtotal of Sustaining Investments:			8,624
Growth Investments:
DDGM growth:
Gold Regrind	Capital		745		-
Dry Stack Completion	Capital		1,149		-
Surface Exploration / Other	Exploration		935		2.5 - 3.0 million
Underground Exploration Drilling	Exploration		1,112		3.0 - 3.5 million
Back Forty growth:
Back Forty Feasibility Study & Permits	Exploration		3,095		8.0-9.0 million
Subtotal of Growth Investments:			7,036
Total Capital and Exploration:		$	15,660	$	33.0 - 37.0 million

The Company’s investment in Mexico continued in Q2 2022 totaling $12.6 million year-to-date. Our investment in Mexico is focused on favorably impacting our environment, social and governance programs while creating operational efficiencies and longevity. Year-to-date at the Back Forty Project, $3.1 million has been invested in feasibility and permitting initiatives.

‌

Gold Regrind Project:27Zinc tailings are being reground and leached to produce doré bars. Gold recovery is expected to continue to increase, and we have seen an approximate 5% increase in the gold recovery since the same period in 2021. Completion and commissioning were finalized in Q2 2022. A total of $1.8 million was invested in this project, $1.1 million in 2021.

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
31

Table of Contents

~~Restructuring expenses –~~ Restructuring expenses of $0.5 million incurred in Q1 2021 has not changed for the nine months ended September 30, 2021 and were related to legal, accounting, consulting, and employee severance compensation related to the spin-off of Fortitude Gold Corporation.

~~Exploration expenses –~~ For the nine months ended September 30, 2021, property exploration expenses totaled $3.7 million compared with $2.1 million for the same period in 2020. The increase of $1.5 million was the result of increasing efforts to invest in exploration activities in Oaxaca, Mexico.

~~Stock-based compensation –~~ Stock-based compensation of $0.7 million decreased for the nine months ended September 30, 2021 compared with $1.2 million during the same period of 2020, mainly due to the change in key personnel related to the Fortitude Gold Corporation spin-off and subsequent restructuring. Current management continues to work with an independent compensation consultant to design the stock-based compensation program going forward.

~~Other (income) expense, net –~~ For the nine months ended September 30, 2021, $0.7 million of other expense was recorded compared with $1.0 million of other income during the same period of 2020. The $1.8 million increase in expenses is primarily due to the $0.2 million in foreign currency losses recorded in 2021 and the long-term employee severance benefit obligation of $0.7 million recorded in 2021 as a result of Mexico Labor Reform implemented during the quarter.

~~Provision for income taxes –~~ For the nine months ended September 30, 2021, income tax expense increased to $6.6 million from $0.4 million tax benefit in the same period in 2020. The 2021 income tax expense is primarily driven by the taxable income generated in 2021. Please see Note 7 for additional information.

~~Net income (loss) from continuing operations –~~ For the nine months ended September 30, 2021, we recorded $5.3 million of net income from continuing operations compared with net loss from continuing operations of $3.2 million during the same period in 2020. The change was attributable to the factors noted above.

~~Net income from discontinued operations –~~ No income (or loss) was recorded for the period from discontinued operations due to the completion of the spin-off as of December 31, 2020. A net income of $3.3 million was reported for the same period in 2020.

~~Net income –~~ For the nine months ended September 30, 2021, $5.3 million net income was recorded, resulting in a $5.3 million increase compared with the same period in 2020. The change was attributable to the factors noted above.

~~2021 Capital and Exploration Investment Summary~~

For the nine months ended September 30,

2021 full year guidance

(in thousands)
Sustaining Investments:

Underground Development
Capital
$
3,498

$
5,000
Infill Drilling
Capital

1,453

1,600
Other Sustaining Capital
Capital

3,617

4,100
Growth Investments:

Surface Exploration Expense
Exploration

2,757

3,000
Underground Exploration Drilling
Exploration

903

1,000
Surface Exploration & Other
Capital

1,037

1,600
Gold Regrind
Capital

507

700
Dry Stack Completion
Capital

5,105

6,200
Total

$
18,877

$
23,200

‌28

~~Table of Contents~~

The Company’s investment in Mexico continued in Q3 2021 with year-to-date investments totaling $18.9 million. Capital guidance was revised to reflect a decrease in underground development and the redesign of the Gold Regrind Project. The decrease in guidance for underground development from $9.8 million to $5.0 million is related to the reallocation of resources early in the year to address ground support challenges. The reduction in the Gold Regrind Project from $1.9 million to $0.7 million is due to final engineering identifying opportunities to utilize existing equipment.

~~Gold Regrind Project:~~Metallurgical testing, full-scale design, and engineering of the zinc tailings regrind circuit was completed through Q2 2021. In Q3 2021, work began to repurpose the existing ball mill and refurbish flotation cells while new flotation cells are expected to be delivered later in Q4 2021. Regrinding of the zinc tailings is expected to increase gold recovery by 6% to 10%. The reground material will be leached to produce doré bars. Completion and commissioning are expected in the fourth quarter of 2021. As of September 30, 2021, $0.5 million has been invested in this project with another $0.2 million expected before completion.

Dry Stack Tailings Project: ~~Significant construction progress was made on~~Construction of the tailings filtration plant and dry stack ~~tailings project which~~facility were completed in 2021. During the first half of 2022, work continued to optimize the operations of the filtration plant. Currently 85% of the tails are ~~95% complete. Commissioning will commence in November 2021 with completion expected in December 2021. Delays were incurred due~~sent to the ~~temporary COVID-19 shutdown in August and certain materials being delivered later than expected. The open pit preparation work to receive~~ dry stack facility, and the remaining 15% is sent to the underground operations in the form of paste fill for ground support. The dry stack facilities will conserve and recirculate water, eliminate risks related to traditional tailings ~~material is complete. The dry-stacked tailings will~~facilities, accelerate reclamation of certain areas of the open pit mine, and extend the life of the ~~operations, and reduce water consumption as approximately 80% of the process water will be available for reuse.~~operations. As of ~~September~~June 30, ~~2021, $12.4~~2022, a total of $15.1 million has been invested in this project, ~~$5.1~~$14.0 million inthrough 2021.





Dry Stack ~~Tailings Filtration Plant and Dry Stack~~ Area	~~Filtration Plant Press~~

‌29

~~Table of Contents~~

Underground and Exploration Development: Mine development during the quarter included ramps and accesses to different areas of the deposit, vertical shafts, and exploration development drifts. A total of ~~2,501~~2,346 meters of ~~underground development and exploration~~ development, at a cost of ~~$4.9~~$5.3 million (1,252 meters at a cost of $2.9 million in Q2), was completed during the ~~year, including access to new~~first half of 2022. For the first half of 2022, underground mine development was $3.2 million and exploration ~~drill stations on level 17.~~development was $2.1 million (included in Infill Drilling and Exploration Development in the table above). We plan to invest a total of ~~$6.6~~$8.5 million to $9.5 million in ~~2021 for~~ underground development ~~of which $1.6~~and an additional $4.0 million ~~is for access~~ to ~~underground~~$4.5 million in exploration ~~drill stations.~~development in 2022.

Back Forty Feasibility and Permitting: Work on the optimized feasibility study progressed during Q2 2022. Current initiatives are focused on mine planning and process plant design. Environmental considerations are a key factor in the overall site layout and infrastructure decisions being made. The feasibility study work for the Back Forty Project in Michigan, USA progressed during Q2 2022 with completion expected in the second half of this year, followed by permit applications being submitted with state agencies in Michigan.

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
32

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~~2021~~2022 DDGM Exploration Updates

Our portfolio of properties that make up our Don David Gold Mine are located along a 55 kilometer trend of the San Jose structural corridor in the Sierra Madre Sur mountain range. This structural corridor trends north 70 degrees west and spans three historic mining districts within Oaxaca. Exploration activity ~~is performed~~continues on several properties with ~~an emphasis on the Aguila Project,~~a goal to define priority drill targets, demonstrating our commitment to long-term investment in Oaxaca, Mexico. ~~Drilling~~Exploration drilling during the first half of 2022 focused on priority targets at the ~~Aguila Project is ongoing, where 21 surface holes have been completed during the quarter (3,917 meters) mostly in the vicinity of the Aguila open pit~~Arista mine that could add to future Mineral Reserves and ~~include some condemnation drilling of the dry-stack tailings location.~~Mineral Resource.

Underground exploration drilling is ~~on-going~~ongoing from various locations within the Arista ~~mine to:~~mine: 1) ~~test new targets including~~to continue testing of the Three Sisters Zone, ~~discussed below,~~as well as other new vein targets and 2) to further define and expand the reserves and resources of the current vein systems in production. ~~We have~~During the quarter, we completed 105 exploration drill holes ~~(3,851~~(2,890 meters) and 3834 infill ~~and definition~~ drill holes ~~(3,801~~(4,404 meters) ~~to date.~~.

●

Infill drilling continued to focus on the Arista vein system up- and down-dip of existing workings. Additional drilling in the Switchback system was initiated. Infill drilling continues to confirm zones of high grade mineralization within the resource model as well as additional mineralized structures outside existing models.

●

Exploration drilling continued to test expansion of the Switchback system which extends for over a kilometer along strike and remains open in both directions as well as up- and down-dip.

●

Exploration drilling was focused on the southeastern extension of Switchback, with some drilling in the zone between the Arista and Switchback systems and to the south of the Three Sisters system.

During the second quarter of 2022, advances on underground exploration ~~activities were focused on: 1)~~development headings continued. These will enable further expansion and infill drilling to be undertaken in the second half of the year at both the Switchback ~~vein system, which extends for over a kilometer along strike~~ and ~~down-dip where it remains open in both directions, and 2) the~~ Arista vein system and the Three Sisters Zone located between the Arista and Switchback systems at the northwestern limits of known mineralization. Exploration and development drilling have identified high grade gold mineralization up to 80 meters below current mine level in the Switchback system in addition to the previously identified base metal mineralization. Delineation and expansion drilling was also completed on the principal Soledad vein and the Three Sisters system in an effort to optimize the mine plan and to define potentially additional resources and reserves.systems.

Surface exploration programs ~~were designed to prioritize drill targets~~targeted two areas in ~~areas close to~~ the ~~open pit and plant site.~~Alta Gracia mining district, including a soil sampling program on the Fundición prospect within the Alta Gracia project. Mapping and rock chip sampling ~~continued~~was initiated in the ~~Cerro Colorado~~Chamizo project area ~~notably in~~to the ~~vicinity~~northwest of the ~~Aguila open pit, and the surrounding area where surface drilling is ongoing.~~Alta Gracia mine.

Non-GAAP Measures

Throughout this report, we have provided information prepared or calculated according to U.S. GAAP and have referenced certain non-GAAP performance measures which we believe will assist with understanding the performance of our business. These measures are based on precious metal gold equivalent ounces sold and include cash cost before co-product credits per ounce, total cash cost after co-product credits per ounce, and total all-in sustaining cost per ounce (“AISC”). Because the non-GAAP performance measures do not have any standardized meaning prescribed by U.S. GAAP, they may not be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation, or as a substitute for, measures of performance prepared in accordance with U.S. GAAP. These non-GAAP measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP.

For financial reporting purposes, we report the sale of base metals as part of our revenue. Revenue generated from the sale of base metals in our concentrates is considered a co-product of our gold and silver production for the purpose of calculating our total cash cost after co-product credits for our Don David Gold Mine. We periodically review our revenues to ensure that our reporting of primary products and co-products is appropriate. Because we consider copper, lead, and zinc to be co-products of our precious metal production, the value of these metals continues to be applied as a reduction to total cash costs in our calculation of total cash cost after co-product credits per precious metal gold equivalent ounce sold. Likewise, we believe the identification of copper, lead, and zinc as co-product credits is appropriate due to their lower per unit economic value contribution compared to the precious metals and since gold and silver are the primary products we intend to produce.

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
33

Table of Contents

Total cash cost, after co-product credits, is a measure developed by the Gold Institute to provide a uniform standard for industry comparison purposes. AISC is calculated based on the current guidance from the World Gold Council.

‌30

~~Table of Contents~~

Total cash cost before co-product credits includes all direct and indirect production costs related to our production of metals (including mining, milling and other plant facility costs, smelter treatment and refining charges, royalties, and site general and administrative costs) less stock-based compensation allocated to production costs plus treatment and refining costs.

Total cash cost after co-product credits includes total cash cost before co-product credits less co-product credits, or revenues earned from base metals.

AISC includes total cash cost after co-product credits plus other costs related to sustaining production, including allocated sustaining general and administrative expenses, and sustaining capital expenditures. We determined sustaining capital expenditures as those capital expenditures that are necessary to maintain current production and execute the current mine plan.

Cash cost before co-product credits per ounce, total cash cost after co-product credits per ounce, and AISC are calculated by dividing the relevant costs, as determined using the cost elements noted above, by precious metal gold equivalent ounces sold for the periods presented.

Reconciliations to U.S. GAAP

The following table summarizes ~~Don David Gold Mine’s~~the Company’s total all-in cost after co-product credits per precious metal gold equivalent ounce sold:


	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	(in thousands, except per oz)								(in thousands, except per oz)
Precious metal gold equivalent ounces sold (oz)		9,170		7,898		27,676		20,960		11,475		9,685		23,204		18,491
Total production ⁽¹⁾	$	17,216	$	16,286	$	51,982	$	42,856	$	21,722	$	19,523	$	41,796	$	34,766
Treatment and refining charges ⁽²⁾		2,328		5,852		8,210		15,142		3,137		2,927		5,885		5,882
Co-product credits ⁽²⁾		(15,275)		(17,306)		(45,381)		(40,310)		(22,027)		(15,800)		(46,759)		(30,407)
Total cash cost after co-product credits		4,269		4,832		14,811		17,688		2,832		6,650		922		10,241
Total cash cost after co-product credits per AuEq oz sold	$	466	$	612		535		844	$	247	$	687	$	40	$	554
Sustaining - capital expenditure ⁽³⁾		2,799		1,260		8,568		3,688
Sustaining - capitalized expenditure ⁽³⁾										4,028		1,611		8,624		4,212
Sustaining - Exploration Expenditure ⁽³⁾										-		1,557		-		1,557
Subtotal of DDGM sustaining costs										4,028		3,168		8,624		5,769
DDGM all-in sustaining cost after co-product credits per AuEq oz sold										598		1,014	$	411	$	866
Sustaining - general and administrative, including stock-based compensation expenses		2,385		2,665		6,781		7,136		2,313		2,331		4,986		4,396
Subtotal of sustaining costs		5,184		3,925		15,349		10,824
Total all-in sustaining cost after co-product credits		9,453		8,757		30,160		28,512
Total all-in sustaining cost after co-product credits per AuEq oz sold	$	1,031	$	1,109		1,090		1,360
Consolidated all-in sustaining cost after co-product credits										9,173		12,149		14,532		20,406
Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold									$	799	$	1,254	$	626	$	1,104
Non-sustaining cost- capital expenditure ⁽³⁾		3,085		882		6,649		2,858		541		1,845		1,894		3,564
Non-sustaining cost- exploration expenditure ⁽¹⁾		1,805		1,019		3,660		2,132		2,837		648		5,142		1,855
Subtotal of non-sustaining costs		4,890		1,901		10,309		4,990		3,378		2,493		7,036		5,419
Total all-in cost after co-product credits		14,343		10,658		40,469		33,502		12,551		14,642		21,568		25,825
Total all-in cost after co-product credits per AuEq oz sold	$	1,564	$	1,350		1,462		1,598	$	1,094	$	1,512	$	929	$	1,397

(1)

Refer to Item 1. Financial Statements: Condensed Consolidated Interim Statements of Operations

(2)

Refer to Item 1. Financial Statements: ~~Footnote 4~~Note 3 - Revenue. The prior year (2021) Co-product credits were adjusted to include realized embedded derivatives.

(3)

Sum of, refer to Item 1. Financial Statements: Condensed Consolidated Interim Statements of Cash Flows

‌31Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
34

Table of Contents

Trending Highlights

2020

2021

2022

YTD

Operating Data

Total tonnes milled

153,531

149,762

138,980

129,590

98,010

366,580

138,980

129,590

98,010

135,398

136,844

129,099

Average Grade

Gold (g/t)

1.26

1.79

1.68

1.93

2.68

2.03

1.68

1.93

2.68

1.93

3.00

2.63

Silver (g/t)

Copper (%)

0.40

0.43

0.36

0.37

0.39

0.43

0.36

0.37

0.38

0.41

0.32

Lead (%)

1.93

1.70

1.63

2.29

1.84

1.70

1.63

2.29

2.17

1.97

1.99

Zinc (%)

5.02

4.93

4.29

3.64

4.79

4.20

4.29

3.64

4.79

4.77

4.89

4.00

Metal production (before payable metal deductions)

Gold (ozs.)

4,728

6,854

6,097

6,555

6,933

19,585

6,097

6,555

6,933

6,853

11,187

9,317

Silver (ozs.)

324,592

276,902

307,610

295,979

265,829

869,418

307,610

295,979

265,829

330,873

332,292

249,088

Copper (tonnes)

428

431

441

368

284

1,093

441

368

284

413

431

303

Lead (tonnes)

2,157

1,914

1,737

1,654

1,808

5,199

1,737

1,654

1,808

2,345

2,073

2,020

Zinc (tonnes)

5,538

5,310

4,377

3,683

3,920

11,980

4,377

3,683

3,920

5,349

5,562

4,282

Metal produced and sold

Gold (ozs.)

3,619

6,314

5,019

5,697

5,809

16,525

5,019

5,697

5,809

6,119

8,381

8,746

Silver (ozs.)

316,993

255,945

253,061

270,321

255,394

778,776

253,061

270,321

255,394

287,805

265,407

231,622

Copper (tonnes)

447

398

382

365

268

1,015

382

365

268

405

408

286

Lead (tonnes)

1,849

1,755

1,176

1,214

1,550

3,940

1,176

1,214

1,550

2,059

1,639

1,755

Zinc (tonnes)

4,586

4,281

3,134

3,193

3,059

9,386

3,134

3,193

3,059

4,167

4,359

3,590

Average metal prices realized

Gold ($ per oz.)

1,887

1,867

1,787

1,822

1,762

1,790

$ 1,787

$ 1,822

$ 1,762

$ 1,811

$ 1,898

$ 1,874

Silver ($ per oz.)

25.47

24.18

26.77

26.88

23.19

25.63

$ 26.77

$ 26.88

$ 23.19

$ 23.51

$ 23.94

$ 22.05

Copper ($ per tonne)

6,711

7,360

8,873

10,375

9,092

9,466

$ 8,873

$ 10,375

$ 9,092

$ 9,768

$ 10,144

$ 9,275

Lead ($ per tonne)

1,902

1,870

2,082

2,162

2,397

2,231

$ 2,082

$ 2,162

$ 2,397

$ 2,339

$ 2,347

$ 2,168

Zinc ($ per tonne)

2,392

2,650

2,797

2,945

3,032

2,924

$ 2,797

$ 2,945

$ 3,032

$ 3,466

$ 3,842

$ 4,338

Precious metal gold equivalent ounces sold

Gold Ounces

3,619

6,314

5,019

5,697

5,809

16,525

5,019

5,697

5,809

6,119

8,381

8,746

Gold Equivalent Ounces from Silver

4,279

3,315

3,791

3,999

3,361

11,151

3,791

3,999

3,356

3,736

3,348

2,729

Total AuEq oz

7,898

9,629

8,810

9,696

9,170

27,676

8,810

9,696

9,165

9,855

11,729

11,475

Financial Data (

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
35

Table of Contents

Liquidity and Capital Resources

As of June 30, 2022, the working capital of $37.1 million, consists of current assets of $60.4 million and current liabilities of $23.4 million. This represents a 27% or $7.8 million increase from the working capital balance of $29.3 million as of December 31, 2021. The primary factors influencing the increase in our working capital was a decrease in the liability related to the zinc zero cost collar, as well as the cash provided by operating activities of $12.2 million, offset by $10.0 million of cash used in investing activities as reported in the Condensed Consolidated Interim Statements of Cash Flows. Our working capital balance fluctuates as we use cash to fund our operations, financing and investing activities, including exploration, mine development, income taxes, and shareholder dividends. We ~~have~~believe that as a ~~disciplined~~result of our cash ~~allocation strategy~~balances, the performance of ~~maintaining financial flexibility~~our current and expected operations, and current metals prices, we will be able to ~~execute~~meet our ~~capital priorities~~obligations and ~~generate long-term value for our shareholders. Consistent~~other potential cash requirements during the next 12 months from the date of this report.

Long-term liabilities assumed with the ~~strategy, we aim~~Aquila acquisition, capital requirements to ~~self-fund development projects~~develop the Back Forty Project, and ~~make strategic partnerships focused~~potential project financing may have an impact on ~~profitable growth, while returning~~liquidity in the long term. These long-term liabilities are contingent upon the approval of the Back Forty Project by the Board of Directors and securing project financing. Project financing would be required no earlier than 2024.

Cash and cash equivalents as of June 30, 2022 decreased to ~~shareholders through dividends.~~$33.3 million from $33.7 million as of December 31, 2021, a net decrease in cash of $0.4 million. The decrease is primarily due to cash from operations which was offset by cash spent on capital and exploration expenditures at DDGM and at the Back Forty Project.

Of the ~~$29.5~~$33.3 million cash balance as of ~~September~~June 30, ~~2021, $24.8~~2022, $28.4 million was held in foreign subsidiaries, primarily held in U.S. dollar denominated accounts with the remainder in foreign currencies readily convertible to U.S. dollars. The

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Don David Gold Mine’s primary source of liquidity is the sale of doré and concentrates. The Don David Gold Mine has been self-sustaining since production commencement in 2010 and has provided excess cash for U.S. operations and ~~projects, including a substantial amount of capital for the Nevada Mining Unit that was spun-off in 2020.~~projects.

As of September 30, 2021, the working capital of $31.0 million, consists of current assets of $48.9 million and current liabilities of $18.0 million. This represents a 0.6% or $0.2 million increase from the working capital balance of $30.8 million at December 31, 2020. The primary factors influencing the increase in our working capital wasNet cash provided by operating activities ~~of $21.9~~for the six months ended June 30, 2022 was $12.2 million ~~offset by $15.2~~compared to $16.1 million offor the same period in 2021. The decrease is primarily due to change in working capital.

Net cash used in investing ~~activities.~~activities of $10.0 million for the six months ended June 30, 2022 increased by $0.7 million from the same period in 2021. The increase is mainly attributable to continued reinvestment in DDGM, offset by $0.5 million cash received for the sale of gold rounds related to the discontinued physical dividend program.

~~The 2021 capital investments are expected~~Net cash used in financing activities for six months ended June 30, 2022 was a net outflow of $2.1 million compared to ~~total $16.0 million. As~~a net outflow of ~~September 30, 2021, capital investments totaled $15.2 million including $5.1~~$1.5 million for ~~the dry stack plant, $3.5 million for underground development,~~same period in 2021. The change is primarily related to higher dividend payment and ~~$3.6 million for other sustaining capital.~~option exercise settled in cash in Q1 2022.

While COVID-19 has not had a significant adverse impact on exploration plans, results of operations, financial position, and cash flows during the current fiscal year, future impacts are unknown at this ~~time; however,~~time. However, we believe there is sufficient liquidity and capital resources to fund operations and corporate activities for the foreseeable future.

~~Cash~~In May 2020, we filed a universal shelf registration statement with the SEC on Form S-3 for the proposed offering from time to time of up to $200,000,000 of our securities, including common stock, preferred stock, and/or warrants (the “Shelf Registration Statement”). We also entered into an At the Market Offering Agreement with H.C. Wainwright & Co., LLC pursuant to which we may sell shares of our common stock under the Shelf Registration Statement at market prices from time to time. However, pursuant to General Instruction I.A.3 of Form S-3, we are not eligible to use the Shelf Registration Statement until the 2022 Form 10-K is filed in 2023 due to the late filing of a Form 8-K including the historical financial statements related to our acquisition of Aquila Resources. Based on our current cash balances and ~~cash equivalents increased $4.1 million~~the anticipated performance of our current and expected operations, we do not currently expect that the unavailability of our Shelf Registration Statement or our inability to ~~$29.5 million during~~utilize the ~~nine months of 2021.~~ATM Agreement will have a material impact on our liquidity.

Net cash provided by operating activities for the nine months ended September 30, 2021 was $21.9 million compared with $12.1 million for the same period in 2020. The change is primarily due to the $5.6 million increase in net income for the nine months ended September 30, 2021 compared with the same period in 2020, as well as timingGold Resource Corporation—Management’s Discussion and Analysis of ~~payables benefiting 2021.~~

~~Net cash used in investing activities~~Financial Condition and Results of $15.2 million for the nine months ended September 30, 2021 increased by $8.8 million from the same period in 2020 mainly due to the refocus on Mexico operation and development, as well as prior year suspensionOperations
36

Table of ~~Mexico operation and capital projects due to COVID-19 and discontinued operation.~~Contents

Net cash used in financing activities for the nine months ended September 30, 2021 was a net outflow of $2.2 million compared with a net inflow of $9.0 million for same period in 2020. The change is primarily related to discontinued operations cash outflows and no sales of common shares under our ATM agreement in 2020, as well as higher dividend payments made to our shareholders in 2021 compared with 2020.

Accounting Developments

For a discussion of Recently Adopted and Recently Issued Accounting Pronouncements, please see Note - 2 Recently Adopted Accounting Standards ~~to the~~in this Condensed Consolidated Interim Financial Statements and Notes.

On October 31, 2018, the Securities and Exchange Commission adopted amendments to modernize the property disclosure requirements for mining registrants, and related guidance, which are currently set forth in Item 102 of Regulation S-K, Subpart 1300 (aka S-K 1300) under the Securities Act of 1933 and the Securities Exchange Act of 1934 (“Exchange Act”) and in Industry Guide 7. The amendments replaced Guide 7 and are intended to provide investors with a more comprehensive understanding of a registrant’s mining properties, which should help them make more informed investment decisions. The amendments also will more closely align the SEC’s disclosure requirements and policies for mining properties with current industry and global regulatory practices and standards, as embodied by the Committee for Reserves International Reporting Standards (“CRIRSCO”). Registrants must comply with the new rules for the first fiscal year beginning on or after January 1, 2021. The Company is in the process of implementing the new guidance and assessing the impact on the control environment and the financial results.

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Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. ~~Forward-looking statements can be identified by~~We use the words ~~such as “plan,” “target,”~~ “anticipate,” ~~“believe,~~“continue,” “likely,” “estimate,” ~~“intend”,~~ “expect,” “may,” ~~“should,~~“could,” “will,” ~~“likely,~~“project,” “should,” “believe” and similar expressions (including negative and grammatical variations) to ~~future periods.~~identify forward looking statements. Such forward-looking statements include, without limitation, statements ~~we make~~ regarding:

● Our strategy for significant future investment in Oaxaca, Mexico and in Michigan, USA for ~~infrastructure~~development and exploration activities;
● ~~Our expectations regarding the benefits~~The anticipated beneficial impacts of the ~~transaction to acquire Aquila;~~
● Our expectations regarding the combined company, including its growth profile and resource profile, the debt financing and development of the Back Forty Project, and cash flow generation from the Don David Gold Mine;
● ~~The timing of key milestones in closing the acquisition of Aquila and the ability of the Company and Aquila to satisfy the conditions to and to complete the acquisition of Aquila;~~
● Expectations regarding the impact of the acquisition of Aquila on the Company including in respect of anticipated financial and operating results, strategy and business, and on stakeholders in general;recently constructed dry stack tailings facility;
● The expected completion ~~date~~dates for the Back Forty feasibility study, permitting, detailed engineering, and ~~estimated cost of the dry stack filtration plant and tailings~~ project ~~at our Don David Gold Mine and the expected benefits from the improved infrastructure;~~financing;
● ~~Guidance~~Our estimated timing for ~~2021 with regard to payable~~completion of project financing and commencement of production ~~total cash costs per gold equivalent ounce, all-in sustaining costs and G&A expenses;~~at the Back Forty Project;
● Expectations regarding ~~drilling activities planned for the balance of 2021;~~
● ~~The expected~~gold recoveries upon completion ~~date and estimated cost~~ of the ~~tailings regrind circuit and the anticipated improvements in~~DDGM gold ~~recoveries as a result of the tailings~~ regrind circuit;
● Expectations regarding ~~2021~~2022 capital investment, exploration spending and general and administrative costs;
● Compliance with existing legal and regulatory requirements, including ~~the uses~~future asset reclamation costs;
● Estimates of Mineral Resources (“Mineral Resources”) and ~~amounts of our capital expenditure budget;~~Mineral Reserves (“Mineral Reserves”);
● Our expectations regarding the future payment of dividends;
● Anticipated grades from future production; and
● Our ability to satisfy our obligations and other potential cash requirements over the next twelve months.

Forward-looking statements are neither historical facts nor assurances of future performance. Rather, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

● The extent of the impact of the COVID-19 pandemic, including the duration, spread, severity, and any repeated resurgence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on our mining operations;
● Commodity price fluctuations;
● Mine protests and work stoppages;
● Rock formations, faults and fractures, water flow and possible CO2 gas exhalation, or other unanticipated geological ~~situations that could affect the mine plan and sequencing;~~challenges;
● Unexpected changes in business and economic conditions, including the rate of ~~inflation;~~inflation and the impact on operating and capital costs;
● Changes in interest rates and currency exchange rates;
● Adverse technological changes and cybersecurity threats;
● Unanticipated increases in our operating costs and other costs of doing business;
● Access to land and availability of materials, equipment, supplies, labor and supervision, power, and water;
● Results of current and future feasibility studies;

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
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●

Interpretation of drill hole results and the geology, grade, and continuity of mineralization;

● Litigation by private parties or regulatory action by governmental entities;
● ~~Force majeure events,~~Acts of God, such as floods, earthquakes, and any other natural disasters;
● The inherent uncertainty of ~~reserve~~Mineral Resource and ~~mineralized material~~Mineral Reserve estimates; and
● Such other factors are discussed below under “Risk Factors”.
Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this quarterly report on Form 10-Q. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this Form 10-Q.

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●

~~Such other factors discussed below in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.~~

Any forward-looking statement made by us in this quarterly report on Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risks includes, but is not limited to, the following risks: changes in commodity prices, foreign currency exchange rates, provisional sales contract risks, changes in interest rates, and equity price risks. We do not use derivative financial instruments as part of an overall strategy to manage market risk; however, we may consider such arrangements in the future as we evaluate our business and financial strategy.

Commodity Price Risk

The results of our operations, cash flows, and financial condition depend in large part upon the market prices of gold, silver, copper, lead, and zinc. ~~Gold and silver~~Metal prices fluctuate widely and are affected by numerous factors beyond our control. The level of interest rates, the rate of inflation, government fiscal and monetary policy, the stability of exchange rates, the world supply of and demand for gold, silver, and other metals, among other factors, can all cause significant fluctuations in commodity prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems, and political developments. The metal price ~~of gold and silver has~~markets have fluctuated widely in recent years, and future price declines could cause a mineral project to become uneconomic, thereby having a material adverse effect on our business and financial condition. We entered into a zinc zero cost collar to protect the selling price for zinc but have not entered into derivative contracts to protect the selling price for gold, silver, copper or ~~silver.~~lead. We may in the future more actively manage our exposure through ~~gold and silver~~additional derivative contracts, although we have no intention of doing so in the near-term.
~~Generally,~~Effective May 18, 2021, the Company historical practice for other commodity price risk management has been to remain exposed to the market prices. In Q2 2021, management elected to hedge 5,500 tonnes or approximately 43% of the Company’s expected 2021 zinc production from June through December 2021 to ensure cash flow stability. The Company entered into a Trading Agreement with Auramet International LLC that govern non-exchange traded, over-the-counter, spot, forward, and option transactions on both a deliverable and non-deliverable basis involving various metals and currencies. Subsequently the Company entered into zinc zero cost ~~collar consisting of call and put options on the same volume~~collars. These derivatives are not designated as hedges. The zero cost collars are used to manage ~~its~~the Company’s near-term exposure to cash flow variability from zinc price risks. ~~The call options were sold at $2,992 per tonne of zinc~~We do not currently use financial instruments with respect to enhance the upside retention and the put options were bought at $2,860 per tonne of zinc to offset the downside through December 31, 2021. As of September 30, 2021, 2,550 tonnes remained open from the zinc hedge. In the future, management may continue to hedge someany of the ~~risk of~~other base metal price fluctuations. Commodity price risk management activities may prevent us from fully benefiting from price increases and may expose us to regulatory, counterparty credit and other risks. The Company manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring other credit risk mitigants, as appropriate. The Company actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. Please see Note 13 in the Interim Condensed Consolidated Financial Statements for additional information.
production.
In addition to materially adversely affecting our reserve estimates, results of operations and/or our financial condition, declining gold and silver prices could require a reassessment of the feasibility of a project. Even if a project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause delays in the implementation of a project.

Foreign Currency Risk
Our foreign operation sells its gold, silver, copper, lead, and zinc production based on U.S. dollar metal prices. Fluctuations in foreign currency exchange rates do not have a material impact on our revenue since gold, silver, copper, lead, and zinc are sold throughout the world in U.S. dollars.

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Foreign currency exchange rate fluctuations can increase or decrease our costs to the extent we pay costs in currencies other than the U.S. Dollar. We are primarily impacted by Mexican peso rate changes relative to the U.S. Dollar, as we incur some costs in the Mexican peso. When the value of the peso rises in relation to the U.S. Dollar, some of our costs in Mexico may increase, thus materially adversely affecting our operating results. Alternatively, when the value of the peso drops in relation to the U.S. Dollar, peso-denominated costs in Mexico will decrease in U.S. Dollar terms. These fluctuations do not impact our revenues since we sell our metals in U.S. Dollars. Future fluctuations may give rise to foreign currency exposure, which may affect our financial results. Approximately 50% to 60% of expenses are paid in currencies other than the U.S. dollar.

We have not utilized market-risk sensitive instruments to manage our exposure to foreign currency exchange rates but may in the future actively manage our exposure to foreign currency exchange rate risk.

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Provisional Sales Contract Risk

We enter into concentrate sales contracts which, in general, provide for a provisional payment to us based upon provisional assays and prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates determined at the quoted metal prices at the time of shipment delivery to the customer. The embedded derivative, which does not qualify for hedge accounting, is adjusted to market through revenue each period prior to settlement. Changes in the prices of metals between the shipment delivery and final settlement date will result in adjustments to revenues related to the sales of concentrate previously recorded upon shipment delivery. Please see Note 1314 - Derivatives in ~~the Interim~~ this Condensed Consolidated Interim Financial Statements and Notes for additional information.

Interest Rate Risk

We consider our interest rate risk exposure to be insignificant at this time, as our interest rate is related and embedded in immaterial payments for office leases.

Equity Price Risk

We have in the past, and may in the future, seek to acquire additional funding through sale of common stock and other equity. The price of our common stock has been volatile in the past and may also be volatile in the future. As a result, there is a risk that we may not be able to sell our common stock at an acceptable price should the need for new equity funding arise.

ITEM 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures - During the fiscal period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in ~~our~~the reports that we file under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from management, have evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022. This evaluation included consideration of the material weakness in internal controls over financial reporting that was identified and disclosed in our annual report on Form 10-K for the year ended December 31, 2021. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2022 as the material weakness has not yet been fully remediated. Notwithstanding such material weakness in internal control over financial reporting, our management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of our operations, and our cash flows for the periods presented in this quarterly report, in conformity with U.S. GAAP.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Due to the Aquila acquisition on December 10, 2021, management performed review and approval controls related to the balances consolidated into the statement of financial position and statement of operations at December 31, 2021. The Aquila acquisition consisted of multiple complex valuations including the gold and silver stream agreements, the deferred tax liability and land. While multiple layers of approval and reasonableness tests were conducted, management prepared insufficient documentation related to the performance of these review controls to allow the independent registered public

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accounting firm to reperform the controls. Additionally, due to the timing of the acquisition, it was necessary to perform these review controls in a compressed timeframe, which resulted in an adjustment identified by the independent registered public accounting firm between balance sheet accounts.

Due to the complexity of the acquisition, limited timing from the close of the transaction and the inherent limitation of internal controls over financial reporting, management concluded that our internal control over financial reporting as of December 31, 2021, had a material weakness related to the operating effectiveness of review controls over the accounting for and valuation of acquired assets and liabilities in the application of the acquisition method of accounting for asset acquisitions. All other internal controls over financial reporting as of December 31, 2021 and June 30, 2022 remained effective. Management continues to enhance documentation and evaluate if any additional action is required to further resolve and fully remediate the material weakness.

Changes in Internal Control Over Financial Reporting –

There were no changes that occurred during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 and 2020~~2022, other than those enhancements to documentation discussed above, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION
ITEM 1: Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation.

In February 2020, a local Ejido community (who claim to be an indigenous community) filed an injunction against the Mexican federal government through which they demanded the cancellation of several concession titles. The federal government ordered a suspension to prevent work related to excavating, drilling, opening tunnels and exploiting the mineral resources on the surface and subsoil of the concessions named in the injunction. Presently, the Don David Gold Mine does not perform such works in the named concessions in lands of the indigenous community. The lawsuit filed in February 2020 has not progressed to a final ~~ruling as courts have been closed for extended periods of time due to COVID-19.~~ruling.

ITEM 1A: Risk Factors

“Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, ~~2020~~2021 includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. There have been no material changes from the risk factors described in our Form 10-K.

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3: Defaults upon Senior Securities

None

ITEM 4: Mine Safety Disclosures

~~Not applicable because~~While the Company ~~does~~owns an advanced exploration project in Michigan, USA, the project is not ~~have mining operations in~~yet subject to the ~~U.S.~~Mine Safety and Health Administration (“MSHA”) jurisdiction and therefore, the mine safety disclosure requirements are not applicable.

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ITEM 5: Other Information

None

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ITEM 6: Exhibits

The following exhibits are filed or furnished herewith or incorporated herein by reference:

Exhibit
Number

Descriptions
31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Allen Palmiere.
31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Kimberly C. Perry.
32*

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Allen Palmiere and Kimberly C. Perry.
101

Financial statements from the Quarterly Report on Form 10-Q of Gold Resource Corporation for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, formatted in inline XBRL: (i) the Condensed Consolidated Interim Balance Sheets, (ii) the Condensed Consolidated Interim Statements of Operations, (iii) the Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity, (iv) the Condensed Consolidated Interim Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Interim Financial Statements.
104

Cover Page Interactive Data File (embedded within the XBRL document)
*
This document is not being “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the SEC shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

GOLD RESOURCE CORPORATION

Dated: ~~October~~July 27, ~~2021~~2022

/s/ Allen Palmiere

By:
Allen Palmiere,

Chief Executive Officer,
President and Director

Dated: ~~October~~July 27, ~~2021~~2022

/s/ Kimberly C. Perry

By:
Kimberly C. Perry,

Chief Financial Officer

‌39Gold Resource Corporation
43

s in thousands except for per ounce)

Financial Data (

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Liquidity and Capital Resources

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~~Table of Contents~~

Table of ~~Mexico operation and capital projects due to COVID-19 and discontinued operation.~~Contents

‌33

~~Table of Contents~~

Forward-Looking Statements

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
37

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●

Interpretation of drill hole results and the geology, grade, and continuity of mineralization;

‌34Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
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●

~~Such other factors discussed below in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.~~

‌35

~~Table of Contents~~

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Provisional Sales Contract Risk

Interest Rate Risk

We consider our interest rate risk exposure to be insignificant at this time, as our interest rate is related and embedded in immaterial payments for office leases.

Equity Price Risk

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Changes in Internal Control Over Financial Reporting –

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Gold Resource Corporation
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ITEM 5: Other Information

None

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‌38Gold Resource Corporation
42

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‌39Gold Resource Corporation
43

s in thousands except for per ounce)

Total sales, net

$ 26,435

$ 29,587

$ 27,268

$ 30,836

$ 29,029

$ 87,133

$ 27,268

$ 30,836

$ 29,029

$ 38,063

$ 45,417

$ 37,064

Earnings from mining operations before depreciation and amortization

10,105

11,770

11,974

11,259

11,766

34,999

11,974

11,259

11,766

17,744

25,281

15,281

Total cash cost after co-product credits per AuEq oz sold

612

647

408

713

466

535

408

713

466

(121)

247

Total all-in sustaining cost after co-product credits per AuEq oz sold

1,109

1,357

937

1,280

1,031

1,090

Total consolidated all-in sustaining cost after co-product credits per AuEq oz sold

937

1,280

1,031

451

499

799

Production Costs

16,286

17,770

15,243

19,523

17,216

51,982

15,243

19,523

17,216

20,252

20,074

21,722

Production Costs/Tonnes Milled

106

119

110

151

176

142

110

151

176

150

147

168

Earnings before interest, taxes, depreciation and amortization (from continuing operations)

7,020

6,750

8,520

7,413

7,402

23,335

Earnings before interest, taxes, depreciation and amortization

8,520

7,413

7,402

10,304

15,328

13,716

Operating Cash Flows

6,396

9,125

6,831

9,298

5,743

21,872

6,831

9,298

5,743

12,911

4,230

7,976

Net income (loss)

(251)

(3,119)

2,527

1,283

1,529

5,339

Earnings per share - basic (from continuing operations)

($ 0.00)

($ 0.04)

$ 0.03

$ 0.02

$ 0.07

Net income

2,527

1,283

1,529

2,689

4,019

2,673

Earnings per share - basic

$ 0.03

$ 0.02

$ 0.03

$ 0.05

$ 0.03

Gold Resource Corporation—Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Liquidity and Capital Resources

‌32

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Table of ~~Mexico operation and capital projects due to COVID-19 and discontinued operation.~~Contents

Accounting Developments

For a discussion of Recently Adopted and Recently Issued Accounting Pronouncements, please see Note - 2 Recently Adopted Accounting Standards ~~to the~~in this Condensed Consolidated Interim Financial Statements and Notes.

On October 31, 2018, the Securities and Exchange Commission adopted amendments to modernize the property disclosure requirements for mining registrants, and related guidance, which are currently set forth in Item 102 of Regulation S-K, Subpart 1300 (aka S-K 1300) under the Securities Act of 1933 and the Securities Exchange Act of 1934 (“Exchange Act”) and in Industry Guide 7. The amendments replaced Guide 7 and are intended to provide investors with a more comprehensive understanding of a registrant’s mining properties, which should help them make more informed investment decisions. The amendments also will more closely align the SEC’s disclosure requirements and policies for mining properties with current industry and global regulatory practices and standards, as embodied by the Committee for Reserves International Reporting Standards (“CRIRSCO”). Registrants must comply with the new rules for the first fiscal year beginning on or after January 1, 2021. The Company is in the process of implementing the new guidance and assessing the impact on the control environment and the financial results.

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~~Table of Contents~~

Forward-Looking Statements

●

Our strategy for significant future investment in Oaxaca, Mexico and in Michigan, USA for ~~infrastructure~~development and exploration activities;

●

~~Our expectations regarding the benefits~~The anticipated beneficial impacts of the ~~transaction to acquire Aquila;~~

●

Our expectations regarding the combined company, including its growth profile and resource profile, the debt financing and development of the Back Forty Project, and cash flow generation from the Don David Gold Mine;

●

~~The timing of key milestones in closing the acquisition of Aquila and the ability of the Company and Aquila to satisfy the conditions to and to complete the acquisition of Aquila;~~

●

Expectations regarding the impact of the acquisition of Aquila on the Company including in respect of anticipated financial and operating results, strategy and business, and on stakeholders in general;recently constructed dry stack tailings facility;

●

The expected completion ~~date~~dates for the Back Forty feasibility study, permitting, detailed engineering, and ~~estimated cost of the dry stack filtration plant and tailings~~ project ~~at our Don David Gold Mine and the expected benefits from the improved infrastructure;~~financing;

●

~~Guidance~~Our estimated timing for ~~2021 with regard to payable~~completion of project financing and commencement of production ~~total cash costs per gold equivalent ounce, all-in sustaining costs and G&A expenses;~~at the Back Forty Project;

●

Expectations regarding ~~drilling activities planned for the balance of 2021;~~

●

~~The expected~~gold recoveries upon completion ~~date and estimated cost~~ of the ~~tailings regrind circuit and the anticipated improvements in~~DDGM gold ~~recoveries as a result of the tailings~~ regrind circuit;

●

Expectations regarding ~~2021~~2022 capital investment, exploration spending and general and administrative costs;

●

Compliance with existing legal and regulatory requirements, including ~~the uses~~future asset reclamation costs;

●

Estimates of Mineral Resources (“Mineral Resources”) and ~~amounts of our capital expenditure budget;~~Mineral Reserves (“Mineral Reserves”);

●

Our expectations regarding the future payment of dividends;

●

Anticipated grades from future production; and

●

Our ability to satisfy our obligations and other potential cash requirements over the next twelve months.

Forward-looking statements are neither historical facts nor assurances of future performance. Rather, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

●

The extent of the impact of the COVID-19 pandemic, including the duration, spread, severity, and any repeated resurgence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on our mining operations;

●

Commodity price fluctuations;

●

Mine protests and work stoppages;

●

Rock formations, faults and fractures, water flow and possible CO2 gas exhalation, or other unanticipated geological ~~situations that could affect the mine plan and sequencing;~~challenges;

●

Unexpected changes in business and economic conditions, including the rate of ~~inflation;~~inflation and the impact on operating and capital costs;

●

Changes in interest rates and currency exchange rates;

●

Adverse technological changes and cybersecurity threats;

●

Unanticipated increases in our operating costs and other costs of doing business;

●

Access to land and availability of materials, equipment, supplies, labor and supervision, power, and water;

●

Results of current and future feasibility studies;

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●

Interpretation of drill hole results and the geology, grade, and continuity of mineralization;

●

Litigation by private parties or regulatory action by governmental entities;

●

~~Force majeure events,~~Acts of God, such as floods, earthquakes, and any other natural disasters;

●

The inherent uncertainty of ~~reserve~~Mineral Resource and ~~mineralized material~~Mineral Reserve estimates; and

●

Such other factors are discussed below under “Risk Factors”.

Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this quarterly report on Form 10-Q. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this Form 10-Q.

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●

~~Such other factors discussed below in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.~~

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risks includes, but is not limited to, the following risks: changes in commodity prices, foreign currency exchange rates, provisional sales contract risks, changes in interest rates, and equity price risks. We do not use derivative financial instruments as part of an overall strategy to manage market risk; however, we may consider such arrangements in the future as we evaluate our business and financial strategy.

Commodity Price Risk

The results of our operations, cash flows, and financial condition depend in large part upon the market prices of gold, silver, copper, lead, and zinc. ~~Gold and silver~~Metal prices fluctuate widely and are affected by numerous factors beyond our control. The level of interest rates, the rate of inflation, government fiscal and monetary policy, the stability of exchange rates, the world supply of and demand for gold, silver, and other metals, among other factors, can all cause significant fluctuations in commodity prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems, and political developments. The metal price ~~of gold and silver has~~markets have fluctuated widely in recent years, and future price declines could cause a mineral project to become uneconomic, thereby having a material adverse effect on our business and financial condition. We entered into a zinc zero cost collar to protect the selling price for zinc but have not entered into derivative contracts to protect the selling price for gold, silver, copper or ~~silver.~~lead. We may in the future more actively manage our exposure through ~~gold and silver~~additional derivative contracts, although we have no intention of doing so in the near-term.

~~Generally,~~Effective May 18, 2021, the Company historical practice for other commodity price risk management has been to remain exposed to the market prices. In Q2 2021, management elected to hedge 5,500 tonnes or approximately 43% of the Company’s expected 2021 zinc production from June through December 2021 to ensure cash flow stability. The Company entered into a Trading Agreement with Auramet International LLC that govern non-exchange traded, over-the-counter, spot, forward, and option transactions on both a deliverable and non-deliverable basis involving various metals and currencies. Subsequently the Company entered into zinc zero cost ~~collar consisting of call and put options on the same volume~~collars. These derivatives are not designated as hedges. The zero cost collars are used to manage ~~its~~the Company’s near-term exposure to cash flow variability from zinc price risks. ~~The call options were sold at $2,992 per tonne of zinc~~We do not currently use financial instruments with respect to enhance the upside retention and the put options were bought at $2,860 per tonne of zinc to offset the downside through December 31, 2021. As of September 30, 2021, 2,550 tonnes remained open from the zinc hedge. In the future, management may continue to hedge someany of the ~~risk of~~other base metal price fluctuations. Commodity price risk management activities may prevent us from fully benefiting from price increases and may expose us to regulatory, counterparty credit and other risks. The Company manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring other credit risk mitigants, as appropriate. The Company actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. Please see Note 13 in the Interim Condensed Consolidated Financial Statements for additional information.

production.

In addition to materially adversely affecting our reserve estimates, results of operations and/or our financial condition, declining gold and silver prices could require a reassessment of the feasibility of a project. Even if a project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause delays in the implementation of a project.

Foreign Currency Risk

Our foreign operation sells its gold, silver, copper, lead, and zinc production based on U.S. dollar metal prices. Fluctuations in foreign currency exchange rates do not have a material impact on our revenue since gold, silver, copper, lead, and zinc are sold throughout the world in U.S. dollars.

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Provisional Sales Contract Risk

Interest Rate Risk

We consider our interest rate risk exposure to be insignificant at this time, as our interest rate is related and embedded in immaterial payments for office leases.

Equity Price Risk

ITEM 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures - During the fiscal period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in ~~our~~the reports that we file under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from management, have evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022. This evaluation included consideration of the material weakness in internal controls over financial reporting that was identified and disclosed in our annual report on Form 10-K for the year ended December 31, 2021. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2022 as the material weakness has not yet been fully remediated. Notwithstanding such material weakness in internal control over financial reporting, our management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of our operations, and our cash flows for the periods presented in this quarterly report, in conformity with U.S. GAAP.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Due to the Aquila acquisition on December 10, 2021, management performed review and approval controls related to the balances consolidated into the statement of financial position and statement of operations at December 31, 2021. The Aquila acquisition consisted of multiple complex valuations including the gold and silver stream agreements, the deferred tax liability and land. While multiple layers of approval and reasonableness tests were conducted, management prepared insufficient documentation related to the performance of these review controls to allow the independent registered public

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Changes in Internal Control Over Financial Reporting –

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PART II – OTHER INFORMATION

ITEM 1: Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation.

In February 2020, a local Ejido community (who claim to be an indigenous community) filed an injunction against the Mexican federal government through which they demanded the cancellation of several concession titles. The federal government ordered a suspension to prevent work related to excavating, drilling, opening tunnels and exploiting the mineral resources on the surface and subsoil of the concessions named in the injunction. Presently, the Don David Gold Mine does not perform such works in the named concessions in lands of the indigenous community. The lawsuit filed in February 2020 has not progressed to a final ~~ruling as courts have been closed for extended periods of time due to COVID-19.~~ruling.

ITEM 1A: Risk Factors

“Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, ~~2020~~2021 includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. There have been no material changes from the risk factors described in our Form 10-K.

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3: Defaults upon Senior Securities

None

ITEM 4: Mine Safety Disclosures

~~Not applicable because~~While the Company ~~does~~owns an advanced exploration project in Michigan, USA, the project is not ~~have mining operations in~~yet subject to the ~~U.S.~~Mine Safety and Health Administration (“MSHA”) jurisdiction and therefore, the mine safety disclosure requirements are not applicable.

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ITEM 5: Other Information

None

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ITEM 6: Exhibits

The following exhibits are filed or furnished herewith or incorporated herein by reference:


Exhibit Number		Descriptions
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Allen Palmiere.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Kimberly C. Perry.
32*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Allen Palmiere and Kimberly C. Perry.
101		Financial statements from the Quarterly Report on Form 10-Q of Gold Resource Corporation for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, formatted in inline XBRL: (i) the Condensed Consolidated Interim Balance Sheets, (ii) the Condensed Consolidated Interim Statements of Operations, (iii) the Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity, (iv) the Condensed Consolidated Interim Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Interim Financial Statements.
104		Cover Page Interactive Data File (embedded within the XBRL document)

This document is not being “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the SEC shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


	GOLD RESOURCE CORPORATION

Dated: ~~October~~July 27, ~~2021~~2022		/s/ Allen Palmiere
	By:	Allen Palmiere,
		Chief Executive Officer, President and Director




Dated: ~~October~~July 27, ~~2021~~2022		/s/ Kimberly C. Perry
	By:	Kimberly C. Perry,
		Chief Financial Officer

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		Page
	~~Third~~Second Quarter ~~2021~~2022 Highlights	1

	Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Ø Condensed Consolidated Interim Balance Sheets ~~at September~~as of June 30, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	2
	Ø Condensed Consolidated Interim Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	3
	Ø Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity for the three and ~~nine~~six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	4
	Ø Condensed Consolidated Interim Statements of Cash Flows for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	6
	Ø Notes to the Condensed Consolidated Interim Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3539
Item 4.	Controls and Procedures	3640

	Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	3741
Item 1A.	Risk Factors	3741
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3741
Item 3.	Defaults upon Senior Securities	3741
Item 4.	Mine Safety Disclosures	3741
Item 5.	Other Information	3742
Item 6.	Exhibits	3842
Signatures		3943


	For the three months ended September 30, 2021 and 2020
	Number of Common Shares	Par Value of Common Shares		Additional Paid- in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
Balance, June 30, 2020	70,397,497	$	70	$	160,937	$	10,570	$	(5,884)	$	(1,171)	$	164,522
Stock-based compensation	-		-		305		-		-		-		305
Common stock issued for vested restricted stock units	58,133		-		-		-		-		-		-
Dividends declared	-		-		-		(708)		-		-		(708)
Issuance of stock, net of issuance costs	1,731,433		2		6,872		-		-		-		6,874
Net income	-		-		-		5,001		-		-		5,001
Balance, September 30, 2020	72,187,063	$	72	$	168,114	$	14,863	$	(5,884)	$	(1,171)	$	175,994

Balance, June 30, 2021	74,868,322	$	75	$	85,269	$	14,974	$	(5,884)	$	(1,171)	$	93,263
Stock-based compensation	-		-		160		-		-		-		160
Common stock issued for vested restricted stock units	50,183		-		-		-		-		-		-
Dividends declared	-		-		-		(745)		-		-		(745)
Surrender of stock for taxes due on vesting	(428)		-		-		-		-		-		-
Net income	-		-		-		1,529		-		-		1,529
Balance, September 30, 2021	74,918,077	$	75	$	85,429	$	15,758	$	(5,884)	$	(1,171)	$	94,207


	As of September 30, 2021					As of December 31, 2020
	(Unaudited)
	Ounces	Per Ounce		Amount		Ounces	Per Ounce		Amount
				(in thousands)					(in thousands)
Gold	176	$	1,743	$	307	189	$	1,888	$	357
Silver	11,715	$	21.53		252	11,842	$	26.49		314
Total holdings				$	559				$	671


		For the three months ended September 30,				For the nine months ended September 30,				Statement of Operations Classification
		2021		2020		2021		2020

	Note	(in thousands)
Realized and unrealized derivative (loss) gain, net	14	$	(478)	$	550	$	156	$	18	Sales, net
Unrealized gold and silver rounds/bullion (loss) gain	16	$	(55)	$	716	$	(86)	$	1,175	Other expense, net
Realized (loss) on zinc zero cost collar, net	16	$	(40)	$	-	$	(40)	$	-	Other expense, net


		For the nine months ended September 30,		2021 full year guidance
		(in thousands)
Sustaining Investments:
Underground Development	Capital	$	3,498	$	5,000
Infill Drilling	Capital		1,453		1,600
Other Sustaining Capital	Capital		3,617		4,100
Growth Investments:
Surface Exploration Expense	Exploration		2,757		3,000
Underground Exploration Drilling	Exploration		903		1,000
Surface Exploration & Other	Capital		1,037		1,600
Gold Regrind	Capital		507		700
Dry Stack Completion	Capital		5,105		6,200
Total		$	18,877	$	23,200