Thank you for standing by. This is the conference operator. Welcome to the Gold Resource Corporation's conference call concerning the acquisition of Aquila Resources. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the prepared remarks, there will be an opportunity to ask questions. At that time, if you would like to ask a question, please press star one on your phone, and you will be placed in the queue in the order received. If your question has been answered or you wish to remove yourself from the queue, please press one. At this time, I would now like to turn the conference call over to Ann Wilkinson, Vice President, Investor Relations and Corporate Affairs. Please go ahead. Thank you, Karen. Good morning, everyone. On behalf of Allen, Kim, and I, I would like to welcome everyone to this conference call. Before we begin the call, there are certain housekeeping matters I would like to cover. Please note that certain statements to be made by Allen today are forward-looking in nature and, as such, are subject to numerous risks and uncertainties, as described in the forward-looking information and other cautionary statements section of the news release issued yesterday afternoon announcing the binding letter agreement with Aquila for the acquisition of 100% of the issued and outstanding shares of Aquila by way of a plan of arrangement. On the call today, I have Allen Palmiere, President and Chief Executive Officer, and Kim Perry, Chief Financial Officer. Following Allen's prepared remarks, they will be available to answer your questions. This conference call is being webcast. For those of you joining us on the webcast, you can download a PDF copy of the conference call slides from the materials tab under the Ask a Question tab. The event will also be available for replay on our website later today. Yesterday's news release, issued following the close of the market, is available on our website at www.goldresourcecorp.com. It has also been filed with the SEC on EDGAR. Also, finally, please note that all amounts mentioned in this call are in US dollars unless otherwise stated. I will now turn the call over to Allen. Thank you, Ann, and good morning, everyone. I'd like to thank everyone for taking the time to join us as we describe our proposed acquisition of Aquila Resources. Over the next few minutes, I intend to describe where GORO is currently, the rationale for the acquisition of Aquila, why the asset was available, and what the acquisition of Aquila's main asset, the Back 40 Project, accomplishes. I'll also describe the support we have garnered for the acquisition and our next steps. Following my prepared remarks, we'll open the call to questions. GORO has a strong balance sheet with $30 million in cash on hand at the end of June and no debt. We have a tight capital structure of just under 75 million shares outstanding and a listing in the New York American with a trailing three-month average daily volume of 1 million shares. In 2021, we expect to produce between 40,000 and 42,000 ounces of gold equivalent, excluding base metals. This level of production is expected to result in $40 million-$50 million in operating cash flow, enabling Gold Resource to reinvest in the Don David Gold Mine in Mexico, pay a dividend, and seek opportunities to grow. Furthermore, we have a strong technical and operating team, which will enable us to leverage that talent in this acquisition. This proposed business combination offers an attractive opportunity to the shareholders of both Gold Resource and Aquila. The transaction is expected to be immediately accretive to GORO 's shareholders on a net asset value basis and to be similarly accretive to GORO 's shareholders upon the commencement of production at the Back 40 Project, which is anticipated to occur in late 2024. At the same time, Gold Resource is paying approximately CAD 30 million, which is a 29% premium to Aquila's 20-day volume-weighted average price. Further, based upon Aquila's public disclosure and Gold Resource's technical due diligence to date on the Back 40 Project, we anticipate that the gold inventory has the potential to increase by an excess of 500% from where we are today. Finally, significant investment by Aquila and its predecessors has provided us with the opportunity of acquiring an advanced project that is currently undergoing a revised and optimized Definitive Feasibility Study leading to a renewed permitting process. We believe that the opportunity to purchase Aquila came about due to a slow permitting and development process historically, which brought Aquila to a point where a financing overhang developed. The capital markets had taken the view that the funding to production would be too diluted for Aquila, given its share price and the number of shares outstanding. Secondly, a view is held by some that the 18.5% gold stream, which is approximately equal to a 5% NSR, is burdensome, but our initial investigations led us to believe that the gold stream is something the deposit can more than support. Thirdly, there exists a perception of permitting risk around the project. Our due diligence gives us comfort that Michigan is a good jurisdiction for mining and that the permitting issues are all eminently resolvable. Finally, it's not unusual for the capital markets to develop market fatigue around the development of some projects, and this seems to be the case in this instance. By combining our complementary assets, we will add a late-stage developed project, which is expected to provide 10+ years of production. In addition, as I've already indicated, it will enhance our gold inventory, which is expected to increase by approximately 500%. The overall grade and profitability of the Back 40 Project is expected to be similar or greater than our Don David Gold Mine in Mexico. Each of GORO and Aquila is currently a single asset, single jurisdiction company. Through the combination of the two, Gold Resource and Aquila shareholders will have the opportunity to participate in the ongoing growth of a multi-jurisdictional, diversified precious and base metals producer with exposure to gold, silver, zinc, copper, and lead. Finally, while Gold Resource currently benefits from inclusion in the VanEck Junior Gold Miners ETF, the GDXJ, we intend to place the Back 40 Project into production on an accelerated basis, funded by cash flow generation, thus elevating the combined company to intermediate producer status. We expect that we will continue to be included in the index and to benefit from an enhanced capital markets profile in the United States and Canada, as well as to increase trading liquidity and broaden appeal to global index resource and generalist investors. This offers the potential for re-rating to a multiple more in line with other intermediate gold producers. Aquila's directors and officers, together with Aquila's largest shareholder, Orion Mine Finance, have all confirmed to GORO that they are supportive of the transaction and have indicated their willingness to enter into voting support agreements when the arrangement agreement is signed. Additionally, Franco-Nevada Corporation, which is a party to gold and silver stream agreements with Aquila relating to the Back 40 Project, has also confirmed that it considers GORO to be an approved purchaser under those agreements and that it is supportive of the proposed transaction. Upon closing the transaction, we intend to finalize a new block model resource study, develop a new mine plan, evaluate alternative process flow sheets, and complete the previously announced revised and optimized definitive feasibility study. This is to ensure that we're approaching the development of the Back 40 Project in the most environmentally and economically advantageous manner. Finally, we intend to review the permitting strategy with the goal of expediting construction of the project. In closing, the combined company is expected to benefit from a peer-leading growth profile, a healthy balance sheet, and strong cash flow capable of supporting the development of the Back 40 Project combined with improved ability to access debt financing to fund the Back 40 Project's capital expenditures. The combined company will benefit from Gold Resource and Aquila's technical and operational team's expertise in polymetallic, open-pit, and underground mines. The Gold Resource executive team has a demonstrated record of success in developing and operating mining projects in the Americas. Finally, the combined company will benefit from the synergies that accrue from scale in the areas of general and admin expenses, improved concentrate sales, and marketing and supply chain efficiencies. We look forward to entering into the arrangement agreement with Aquila and successfully completing the transaction. Thank you for taking your time to listen. This concludes our prepared remarks, and I will now turn the call back over to the operator for questions. Thank you. We will now begin the question-and-answer session. The floor is now open for questions. If you do have a question, please press star one on your telephone keypad at this time. If you're using a speakerphone, we ask that while posing your question, you pick up your handset to provide the best sound quality. Again, ladies and gentlemen, if you do have a question or comment, please press star one on your telephone keypad at this time. We'll take our first question from Heiko Ihle with H.C. Wainwright & Co. Please go ahead. Mr. Ihle, your line is now open. Sorry, I had you on mute. Happy Wednesday, and thanks for taking my questions. Thanks, Heiko. Question, and I'm usually hesitant to ask this kind of stuff before transactions close, but can you just maybe walk us a little bit in more detail through the pricing that you're paying? I mean, you seem to have gotten a pretty good deal here. Maybe just give a little bit more color on what you think the asset might be worth and what you're seeing out in the market. I think it's a very good transaction for Gold Resource Corp, obviously. Otherwise, I wouldn't have pursued it. The price, it was a negotiated price. As I indicated in my prepared remarks, Heiko, Aquila has been in the development stage for a number of years. There have been a number of PEAs conducted. There was a feasibility study done. It went through the permitting process, and I will say successfully obtained its permits and then lost them due to an administrative review. I think overall, the reason that we were able to acquire Aquila for the price we have is that there was just fatigue around the project in the marketplace. The financial markets will, after a period of time, I won't say give up on a project, but become progressively less willing to finance it. I think that's what we've seen. The price that we're paying, from my point of view, is extremely attractive. All I can do is point you to some of the historic studies that have been done, bearing in mind that there is a revised feasibility study underway. You're looking directionally at the net asset value of anywhere from $150 million-$300 million. The range is very big, and it depends on what kind of pricing you apply to it and what the ultimate mine plans are going to be. Certainly, when you're paying approximately $24 million for a project with that kind of value, you have to take away from it that it's an attractive acquisition. The other thing that we looked at very closely, Heiko, was the fact that the proportion of the revenues that will come from precious metal production is very, very similar to that that we currently produce from our Don David, in that directionally you're looking at 40%-50% from precious metals balanced from base metals. The big difference is that this has a very large resource fully developed. And because it's been drilled off so well, we can go into this with directionally a 10-year+ mine life. That, I think, addresses a lot of the concerns that our shareholders have historically had, in that because of the nature of the mineralization in Mexico, it's difficult for us to build up that kind of mine life. We're confident in it, but it just is slow because you have to drill from underground. We've looked at a number of opportunities, and our key metric on any kind of M&A activities is that it has to be accretive out of the chute on virtually every foreseeable metric. This was one of the few opportunities that we had seen that actually achieved all of those thresholds. Does that address your question, Heiko? I think that's a very good amount of color, and I appreciate it. The other one might be a little bit simpler, but walk me through geopolitical risk factors that you have encountered or that you might encounter in Menominee County, Michigan. I have to admit, up until yesterday, I'd never heard of the county before, even though I've been to Michigan a few times. What have you looked into? What should we look into? What keeps you up at night, if anything? What are the possible things, the tailwinds that you might encounter? Thank you. I think that really your question goes to permitting risk. Michigan is actually a state that is very, very supportive, and the Upper Peninsula in particular is very supportive of mining. It is an area that is looking for economic development, and resource development is pretty low-hanging fruit for them. The key takeaway on this particular project is that it has, in fact, been fully permitted before. The issue that arose was a very technical—it is really a very administrative matter—but it was the way with which the wetlands permit was worded, and it was viewed as being a conditional permit rather than an unconditional permit. That was really the reason that that particular permit was pulled. What the company has been doing since then is they have been revising the way with which the deposit is going to be exploited. What does that mean? In all likelihood, what we will end up doing is reducing the size of the pit significantly, thus avoiding any direct impact on wetlands, and working with EGLE, which is the Environment, Great Lakes, and Energy departments of the government. Working very closely with them, we fully anticipate that this project is going to be relatively easy to permit. Now, any project is going to be subject to challenges, but we believe that with our revised approach, most of those challenges, certainly the ones that they've experienced in the past, will fall away. There is nothing about this project that really keeps me awake at night. I'm actually very comfortable with the jurisdiction. I'm very comfortable with the permitting process. Michigan is one of only two states in the union that actually controls all of the permitting within the state. They do not defer to anyone else. They do not deal with the EPA or Army Corps of Engineers. It is all handled by the acronym EGLE, Environment, Great Lakes, and Energy Department. It is a one-stop shop for permitting. They have been actively involved with the company over the past period of time as the company has modified its approach to permitting. Everything we see and everything that we have been able to identify only provides us with comfort that this is eminently permittable, and that really is the ultimate test. Perfect. Sorry for hogging the question queue like that, and I appreciate your time. Thank you. Thanks, Heiko. Appreciate the questions. We'll take our next question from Stefan Ioannou with Cormark Securities. Please go ahead. Hey, great. Thanks very much, guys. Thanks for the color with Heiko's questions. That was helpful for me as well. Maybe just a little bit of a housekeeping question. Just in terms of the near-term sort of cash availability to put into advancing the Back 40 Project further, you've got about $30 million on the balance sheet. You're generating cash at the Don David mine, but you've also got a CapEx and an exploration budget laid out for this year. Will you have sufficient residual funds to keep moving the permitting and everything else you need to do at Back 40 over the near term, or what's the plan there? Quick answer, Stefan, is yes. As of June 30th, we had $30 million in cash. Expectation for year-end directionally is $40 million+ cash on hand. Next year, although it's early stages, I can say that at the Don David, we're going to be mining in areas that are good grade and quite highly productive. I would expect next year's cash generation, commodity price aside, to be very similar to this year. We can fund not only the ongoing study expenses, permitting expenses, but we fully anticipate being able to fund the capital component of the project when we do go into construction. Okay. Okay. You think you mentioned in your comments earlier about maybe sourcing debt as well. Would it be a mix of cash flow from operations and debt, or just cash flow from operations then? It would be a blend. I can't give you a hard number in terms of CapEx on the project as of yet. The feasibility study is still underway, but the historic studies have prices anywhere from $200 million-$250 million. I would fully expect using debt for 50%-60% of the total, and the balance would be funded from cash flow. Okay. Okay. Okay. Great. That's very helpful. Thanks very much. Thanks, Stefan. We'll take our next question from Jim Sotos, private investor. Please go ahead. Hi. Good morning, Allen and Anne. Congrats on an intriguing acquisition. Most of my questions have been asked, but the one question remaining had to do with the Franco-Nevada relationship. Given Gold 's balance sheet and cash flow position, I understand that there may be an opportunity to reduce the remaining stream payments by reducing the collection of the remaining $25 million. Is that something that GORO is looking to do to help kind of reduce that 18.5% gold stream, or is that on the table? Realistically, when you go through the agreement, it's not on the table. The agreement is very solid, and it is a commitment that the Back 40 is going to have to live up to. Of note, though, there is additional funding to be provided under that gold stream to the company. When we complete the feasibility and put together the total funding package for it, there is directionally about $25 million that will come into the company from Franco-Nevada. That $25 million plus our operating cash flow and cash on hand is how we plan on funding the equity component of the project. Fair enough. Thanks, Allen. In terms of the reduction of the size of the open pit as a means to deal with the wetlands permit approval, what kind of impact will that have on the prior FS or the existing PEA or future DFS? Intuitively, it's going to have a fairly significant impact on total resource. However, it's interesting. When you look at it, we might be dropping some tonnage, but the overall grade of the residual increases. The implication, of course, is that we would be dropping lower-grade materials. Very, very preliminary numbers would indicate that the economics associated with the project, even with a smaller pit and a greater focus on the underground, are not going to be adversely impacted. We've got a fair amount of flexibility with this deposit. The last PEA that was done did include a lot of mineralization that was, I'm going to use the term, marginally economic, and in a very large open pit, it's probably economic. It probably made sense to take it. When you contract the pit, you don't want to be chasing that marginal material. You're going to be chasing higher-grade material. The overall economics are not adversely impacted, is the best way to phrase it, James. The tonnage will go down, in my expectation, but I anticipate the grade may very well increase, and the overall economic impact will be negligible. That's my anticipation. Perfect. Have they adjusted or given you any sense of when the DFS would be expected to be completed? The current schedule would be late Q4, more likely Q1 of next year. I do know that a revised resource study is almost complete, and from that, will be developed the revised mine plan. There is a lot of metallurgical testing currently underway to develop the optimal flow sheet or process flow sheet or the way with which the ore will be processed. That is ongoing right now. A lot of the background work for the DFS is underway. We obviously have been keeping a close eye on it. We want to encourage the Aquila team to continue with it. They've got some very good people involved in the study, and what we would hope is that by the time we close the transaction, the DFS will be well advanced. All right. The last question. Yes, sir. I just want to follow up a little bit more, James. Assuming Q1, we will be submitting at that point sort of omnibus application for all of the permits to the environmental group in Michigan, and they have indicated that they will try to deal with this on an expedited basis. The reality is this project has been permitted before. They are all very familiar with it, and the current studies are only reducing any environmental or wetlands impacts. We are very hopeful that that permitting process can be not short-circuited. That's not the term, but it can be, in fact, expedited such that we would hopefully obtain all of the permits by the end of next year. I think that is achievable. Excellent. It's very exciting. I had one last question related to the Nuco transaction in regards to Bend and Reef deposits. Are those expected to be retained by the company, or do you think GORO would be a participant in that entity, or would you look at divesting that to fund the future operations? That transaction is well underway. The Wisconsin properties go with it. We, being GORO, assuming we close, will end up with directionally about an 18% interest in the company that holds those properties. Now, 18% is significant. It gives us the ability to know what's going on. If they're attractive, they're early-stage projects, but if they're attractive, we always have the ability at that point to renew our involvement with them. Currently, we don't have any plans to do so, but you just don't know. It depends on how they develop, James. Okay. Thank you, Allen. I appreciate it. Good luck and everything. That sounds great. Thanks, James. Appreciate it. As a reminder, ladies and gentlemen, if you do have a question or comment, you may press star one on your telephone keypad at this time. Again, that's star one on your telephone keypad if you'd like to enter the queue. Allen, while we're waiting to see if anybody else has questions on the phone, we have a question from the website. Basically, what happens with Aquila's technical and operations staff? Will they be separated from this acquisition? Will they be separated? What does that mean? I'm not quite sure what the question is, but I'll answer it this way. Aquila has, at the corporate level, only four people. Their technical team is primarily located in Michigan, and our intent would be to keep that team intact. They are very critical for the permitting process, and we would look forward to working with them in the future. Perfect. As we have no further questions, we would like to thank everyone again for attending the call, and we look forward to speaking with you in late October when we report our third-quarter results. Ladies and gentlemen, this does conclude today's teleconference. We thank you again for your participation. You may disconnect your lines at this time and have a great day.