Why Is Gold Resource Stock Falling Premarket On Tuesday?

Gold Resource Corporation GORO shares declined premarket on Tuesday after the company disclosed a registered direct offering of up to 15.63 million shares at $0.16 per share.

The company aims to raise approximately $2.5 million. The offering is expected to close within 10 days, pending customary conditions.

Last month, Gold Resource provided an update on its operations and liquidity, noting improved production at the Don David Gold Mine in November compared to earlier in the fourth quarter.

Higher metal prices and a favorable USD/MXN exchange rate helped the mine achieve slightly positive cash flow for the month.

While cash balance concerns remain, the company expects DDGM operations to continue through at least the first quarter of 2025 without immediate capital injections.

Gold Resource said last month that additional funding is required for equipment, mill upgrades, and working capital to advance the Three Sisters and Splay 31 areas, which are key to future production at DDGM.

Without new capital, the mine is unlikely to sustain break-even cash flow beyond the first quarter of 2025, and any unforeseen production issues could further threaten near-term operations.

Additionally, DDGM overpaid approximately $3.8 million in Mexican taxes in 2023 and has filed for a refund, expected in 2025, though the timing remains uncertain.

As of September 30, 2024, the company had a cash balance of $1.4 million.

Price Action: GORO shares are down 8.22% at $0.21 premarket at the last check Tuesday.

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