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1 Initiation Report WASSERMAN MORRIS & CO Gold Resource Corporation (OTCBB: GORO) BUY Volatility Risk: High 12 month Price Target: $3.06 Analyst: Waheed Hassan, CFA Date: January 17, 2007 Research Market Data Current share price (16 Jan 2007) $ week Low-High ($) $0.90/$1.90 Shares Outstanding 28.1mn Market Cap. $45mn Insider Holding 31% Fiscal Year End Dec-06 Book value/share (30 Sept 06) $0.13 Total Assets (30 Sept 06) $0.14 * Analyst estimates, Yahoo Finance, SEC filings Investment Highlights Summary: We are initiating coverage of GORO with a Buy rating and a 12-month target price of $3.06/share. Our investment rating is premised on: a) strong management credentials; b) positive outlook for gold and silver demand and pricing; c) company s strategy to be a low cost producer;d) encouraging scoping study results; e) high grade drill intercepts; f) ability to raise funds without significantly diluting shareholders ; and g) favorable valuation. Successful management: We believe that management s track record is critical for success of junior mining companies. Given that these companies do not have producing properties yet, investors have to depend on the management s ability to identify promising properties, and to undertake a drilling program which would yield results. Regarding GORO, the current management has a strong track record in terms of developing and growing US Gold Corp (AMEX: UXG), prior to starting GORO. US Gold s stock price increased from $0.195/share on 1 Jan 2000 to $1.45/share on 1 Aug In July 2005, GORO s current management executed a transaction whereby it sold 33.3% interest (11.1 million shares) in US Gold to a strategic investor, thereby creating liquidity for shareholders. US Gold is currently trading at $4.72/share. Non-dilutive fund raising: GORO s management has been successful in raising funds without significant dilution for shareholders. In Dec. 2006, the company announced that it had raised $5.2 million at $1.20/share, at a 20% premium to the $1.00/share initial public offer in Sept Currently, the company has sufficient funding for 24 months of operations. Moreover, the company managed to get significant institutional interest in the private placement including Gold 2000, one of the largest gold funds in Europe; Heemskirk Consolidated Ltd, a global mining investment firm headquartered in Australia, and several London-based gold funds. Institutional investors own approx. 32% of the shares outstanding. (PLEASE SEE RISK FACTORS ON PAGE 4 & DISCLOSURES AT THE END OF THIS PAID FOR REPORT)

2 2 Low-cost production strategy & property potential: GORO s ability to attract institutional interest can also be attributed to the company s production strategy and property potential. In terms of production strategy, the company plans to become a low cost producer of gold and silver in Mexico. A scoping study conducted in June 2004 by Lyntek Inc. (an independent engineering firm) indicated recoveries of 94% for gold and 90% for silver (in 72 hours at 100 mesh grind). Based on the assumptions made at the time of the scoping study, the company estimates cash costs of producing an ounce of gold at $102, using silver revenues as a credit against costs (the silver price used for the study was $7.00/ounce and the gold price used was $430/ounce). The payback of the capital for the project is expected to be 7 months. In Nov. 2006, the company announced results of its geochemical survey. The study was conducted over a limited portion of the property, and returned significant anomalies in several areas, including over a possible high-grade vein. This geochemical anomaly extended over a 2km structure that connects the previously drilled intercepts of four meters of grams per ton (g/t) (1.6 ounces/ton) gold and 701 g/t (20.45 ounces/ton) silver at one end, and the four meters of 1.9 g/t (0.06 ounces/ton) gold and 755 g/t (22 ounces/ton) silver at the other end. Performance catalysts: We expect short/medium term stock price performance to depend on results of El Aguila drilling program. On Jan.3, 2007, the company announced the first four drill holes from its recently initiated third drilling program at the El Aguila property. Assays for the first four drill holes have been received where the best intercepts include: o Hole 603, (60deg, at 47 meters), 3 meters of 5.54 g/t gold and 404 g/t silver (or a gold equivalent value of oz/ton); and o Hole 604, (60deg, at 29 meters), 2 meters of 5.49 g/t gold and 180 g/t silver (or a gold equivalent value of oz/ton). Previous drill program intercept highlights include: o Hole 301, (60 deg, at 40 meters), 16 meters of 6.56 g/t gold and 23 g/t silver (or a gold equivalent value of oz/ton); o Hole 302, (90 deg, at 30 meters), 6 meters of g/t gold and 112 g/t silver (or a gold equivalent value of oz/ton); o Hole 303, (60 deg, at 22 meters), 6 meters of g/t gold and 133 g/t silver (or a gold equivalent value of oz/ton); o Hole 330, (60 deg, at 6 meters), 6 meters of 8.46 g/t gold and 111 g/t silver (or a gold equivalent value of oz/ton); o Hole 331, (60 deg, at 50 meters), 4 meters of g/t gold and 701 g/t silver (or a gold equivalent value of oz/ton); o Hole 333, (70 deg, at 8 meters), 6 meters of g/t gold and 101 g/t silver (or a gold equivalent value of oz/ton); o Hole 343, (60 deg, at 60 meters), 14 meters of 6.89 g/t gold and 40 g/t silver (or a gold equivalent value of oz/ton); o Hole 363, (90 deg, at 4 meters), 6 meters of g/t gold and 100 g/t silver (or a gold equivalent value of oz/ton); o Hole 509, (33 deg, at 20 meters), 6 meters of 10.4 g/t gold and 32.9 g/t silver (or a gold equivalent value of oz/ton); and o Hole 511, (60 deg, at 40 meters), 12 meters of 10.2 g/t gold and 20 g/t silver (or a gold equivalent value of oz/ton).

3 3 According to William W. Reid, president of GORO, This initial drilling is centered on expanding and defining the boundaries of our first potential open-pitable deposit. Previous drilling of that mineralized material averaged 7.45 g/t gold and 63 g/t silver (or a gold equivalent value of 0.26 oz/ton). We are expecting multiple, shallow open-pitable deposits that are silicified mantos in rhyolite of which this is the first. Each of these mantos may overlie higher-grade feeder veins such as the 4 meters of 54.7 g/t gold and 701 g/t silver (or a gold equivalent value of 2.1 oz/ton gold) that we previously intersected under this first manto." The recently initiated third drill program is contracted for a minimum 10,000 meters and will involve approximately 100 holes. The first 20 will center on helping delineate the previously drilled mineralization after which the data will be submitted to an independent engineering firm for the purpose of designing the Project s first open pit. The drill will continue testing the additional targeted mantos and veins. The company has also contracted a second drill rig for the El Aguila project. That rig will begin testing for additional high-grade vein mineralization at the El Aire mine area. The arrival of a second drill is expected to accelerate the exploration program. Drilling over the next three months is intended to delineate sufficient mineralization to make a production decision in 1Q2007. Positive commodity outlook: With both gold and silver demand/supply dynamics expected to remain positive and commodity prices relatively firm, GORO should benefit from strong product demand. According to a research report by JP Morgan, gold supply and demand fundamentals are likely to remain strong with demand continuing to outstrip supply at least in the medium term (in fact the short-fall is expected to increase over the coming 2 years). We believe, GORO s low cost production strategy coupled with favorable commodity outlook could result in a positive multiplier impact on earnings. Valuation: GORO s ultimate value depends on the reserve estimates and the extent of actual reserves in its properties. However, as the company is an exploration stage company, no estimate of actual, probable or potential reserves is currently available. Moreover, the volatile nature of commodity prices adds further uncertainty to valuations. Regarding valuation methodology, in the absence of earnings, relative valuation models such as PE ratio etc. cannot be used for junior mining companies. While the use of net present value (NPV) approach is common in the resources sector, GORO s properties have not progressed far enough to ascertain their resource potential to be used in a NPV model. Consequently, we used the Market Capitalisation to Mining Asset ratio of comparable companies engaged in the exploration of base metals and industrial minerals. Our comparables include junior mining companies that are involved in gold and silver production in Mexico. Moreover, our comparable valuation analysis includes non-producing companies only. Going forward, once GORO achieves production status, we might use other valuation metrics such as Market Cap/Annual Ounces of Production, which could result in higher target price estimate. Furthermore, given that our peer group includes companies that are in the exploration phase, with no producing properties, we did not assign any further development stage discount. The selected sample reflects uncertainties surrounding GORO s early stage properties and yet to be proven reserves.

4 4 Comparable valuation table Company Ticker Country Total Assets Mining assets Mkt cap Mkt cap /mining assets Conplats Resources Corp. CPQ.V Canada $4,664,457 $2,514,778 $16,343, Continuum Resources Ltd. CNU.V Canada 9,177,696 7,311,625 25,487, Cream Minerals Ltd. CRMXF.OB USA 3,237,293 2,364,490 16,203, Kimber Resources Inc. KBR.V Canada 39,666,573 25,487, ,191, MacMillan Gold Corp. MMG.V Canada 5,162,389 2,901,267 12,144, Nayarit Gold Inc. NYG.V Canada 5,639,750 2,301,236 25,573, Soho Resources Corp SOH.V Canada 1,043,863 6,158,989 37,132, San Anton Resources Corp SNN.T Canada 6,134,998 4,841,261 98,584, Average Mkt cap/mining assets ratio 7.87 Source: Analyst estimates, SEDAR filings, Yahoo finance, GORO s target value estimate Since Inception to 30 Sept 2006 Property acquisition $458,681 Property exploration and evaluation 2,144,875 Total Mining assets (assuming GORO uses Canadian accounting for determining mining assets) $2,603,556 Expected future spend based on cash on hand incl. funds from private placement $8,227,039 Net estimated mining assets $10,830,595 Avg Mkt cap/mining asset multiple 7.87 Estimated Mkt cap - GORO $85,197,806 Number of shares (incl. private placement shares) (mn) Estimated Target Price per share $3.06 Source: Analyst estimates, SEDAR filings RISKS: GORO is a high-risk investment. It is an exploration stage company, and there is no assurance that a commercially viable mineral deposit exists on either of its properties. Additional exploration will be required before a final evaluation as to the economic and legal feasibility is determined. Moreover the company has limited operating history. It does not have a track record of producing gold or silver from its properties. Moreover, no details about the level of proven or probable reserves are available. The company may need equity or debt injection to undertake production, which could be potentially dilutive for shareholders. The company is unlikely to be profitable in the short term. Investors also need to be careful about the liquidity risk in GORO shares given its relatively low trading volume. GORO share price is also subject to high volatility.

5 5 Company background GORO is an exploration stage company organized in Colorado on August 24, 1998 to search for gold and silver. The company s initial exploration efforts have been focused on the El Aguila Project, a deposit featuring high-grade gold and silver mineralization, and the Las Margaritas Silver Property and the El Rey Gold Property. Presently, GORO has interests in properties located in Mexico, namely the El Aguila Project, Las Margaritas Silver Property, and the El Rey Gold Property. In October 2002, it leased some mineral claims in the State of Oaxaca, Mexico, designated the El Aguila project. These claims cover approximately 1,896 hectares (4,685 acres) and are located in the historic San Jose de Gracia mining district in the State of Oaxaca. GORO has 100% interest in the El Aguila project. Since acquiring the interest, GORO has drilled approximately 6,700 meters (21,981 feet) of test holes in one section of the property and have encountered gold and silver mineralized material. In 2005, GORO obtained some additional mineral claims in the Mexican State of Oaxaca, called the El Rey project. The El Rey project is an exploration stage property in which GORO acquired mineral claims by filing mineral concessions with the Mexican government. The company has conducted very limited exploration of this property to date. GORO s operations in Mexico are conducted through its wholly-owned Mexican subsidiaries, Don David Gold, S.A. de C.V. and Golden Trump S.A. de C.V. Structure of the mineral industry in Mexico 1 According to the Fraser Institute s Annual Survey of Mining Companies 2005/2006, Mexico ranks 6 th in terms of policy potential index, for mining activity. Government responsibilities for the mining sector are held by the Secretaría de Economía. The Secretaría de Energía is responsible for petroleum and electricity. The Dirección General de Minería is the highest office charged with mining policies with the purpose of fostering new investment and maintaining a healthy mining sector. It is supported by the Servicio Geológico Mexicano (SGM) which, until April 2005 was known as the Consejo de Recursos Minerales. Other agencies responsible for the mining sector are the Dirección General de Minería, the Dirección General de Fomento Minero, and the Fideicomiso de Fomento Minero. The SGM is responsible for promoting and conducting geologic, mining, and metallurgical research with the purpose of improving the use of the mineral resources within the country, identifying and estimating the potential mineral resources of Mexico, and integrating the inventory of Mexico s mineral resources. With the reorganization of the SGM, the new organization and changes in functions were published in the Diario Oficial de la Federación of April 28, The main functions of the Dirección General de Minería are to award mining concessions and to maintain the national mining and mapping registers. The Dirección General de Fomento Minero is responsible for promoting the mining sector by using, for example, incentives for the domestic and foreign investment in the sector. The Fideicomiso de Fomento Minero is responsible for administrative, financial, and technical assistance to the mining sector by the Government. The Cámara Minera de México is another important organization in the mining sector. It promotes the interest of the private sector and maintains a dialog between the private mining sector and the Government. Other prominent mineral-related organizations include the Instituto Mexicano de Aluminio, the Asociación Nacional de Productores de Cal, the Cámara Nacional de la Industria del Hierro y del Acero, and the Federación Nacional de Pequeños Mineros. 1 Source: THE MINERAL INDUSTRY OF MEXICO By Ivette E. Torres. U.S. GEOLOGICAL SURVEY MINERALS YEARBOOK 2004

6 6 In 2004, employment in the mineral sector was 257,349; this was a 3.8% increase compared with that of 2003 and a 9.9% decrease compared with that of Of the total, 129,644 were employed in the manufacturing of nonmetallic mineral products; 67,441, in base-metal industries; 34,271, in the production of coal, graphite, and nonmetals; and 24,095, in the extraction and beneficiation of metals (Secretaría de Economía, 2005 ). Nearly all miners were represented by the Sindicato Nacional de Trabajadores Mineros, Metalúrgicos y Similares de la República Mexica Sindicato Nacional de Trabajadores Mineros, Metalúrgicos y Similares de la República Mexicana. The Confederación de Trabajadores de México, the largest Mexican union, represented the cement employees. Three diversified Mexican companies and a Canadian company dominated the production of nonfuel minerals. These were Empresas Frisco, S.A. de C.V., Grupo Acerero del Norte, S.A. de C.V., Grupo México, S.A. de C.V., and Industrias Peñoles, S.A. de C.V. Minas Luismín, S.A. de C.V. (a subsidiary of GoldCorp Inc., which merged with Wheaton River Minerals Ltd. of Canada) was a significant producer of precious metals. A large number of foreign companies were active in exploration in Mexico, a few of which were in production or development phases. A significant portion of the exploration effort was for gold and silver. Mining Metallurgical Production in Mexico DOMESTIC MINING METALLURGICAL PRODUCTION (tons) Jan-Aug PRODUCT Volume Volume Volume Volume Volume Volume TOTAL I.-PRECIOUS METALS 1_/ Gold (Kg) 22,865 20,820 20,277 21,818 26,782 21,806 Silver (Kg) 2,711,863 2,628,966 2,516,612 2,452,872 2,565,586 1,650,093 II.-NON FERROUS METALS 1_/ Lead 135, , , , ,669 85,234 Copper 349, , , , , ,669 Zinc 426, , , , , ,655 Antimonium Arsenic 2,381 1,946 1,729 1,828 1,664 1,184 Bismuth 1,391 1,126 1,064 1, Tin Cadmium 1,434 1,388 1,638 1,618 1, Molibdenum 5,518 3,427 3,524 3,731 4, Titanio 4/ III.-STEEL AND IRON METALS AND MINERALS Coal 2_/ 6,986,022 6,370,874 6,648,257 6,450,594 7,096,555 4,891,944 Coke 2_/ 2,065,483 1,451,094 1,462,106 1,445,052 1,491,847 1,047,656 Iron 1_/ 5,269,819 5,965,427 6,759,198 6,889,538 7,012,306 4,143,698 Manganese 1_/ 99,751 88, , , ,872 97,749 1/ Metallic content Source: Dirección General de Minas, Secretaría de Economía e INEGI.

7 7 Policy Potential Index Mexico ranks high for policy attractiveness Source: Fraser Institute Annual Survey of Mining Companies 2005/2006

8 8 Property overview El Aguila Project The El Aguila Project (100% owned by GORO), located 120 kilometers southeast of the capital city of Oaxaca, Mexico, is a significant, newly discovered high-grade gold and silver system. The property has yielded several exceptional gold and silver surface samples, including a 36 grams-per-ton (g/t) gold sample and a 3,100 g/t silver sample.

9 9 Geological Map of Oaxaca Source: US Geological Survey The first drill hole initiated from the area of these surface samples resulted in the discovery of 16 meters of mineralization at 6.56 g/t of gold. Subsequent drilling identified a shallow, sub-horizontal mineralized zone (manto) with an inferred grade of 7.43 g/t of gold and 63 g/t of silver. The Company believes the discovery can be mined via an economical, shallow open pit. The cross-section of figure below shows the exceptional high-grade nature of this discovery. In addition, the best 2-meter drilled intercept, off section, of g/t of gold and 1,040 g/t of silver suggests the intersection of a high-grade, vein type, feeder zone to this manto deposit, with the potential for mineralization extending to depth.

10 10 El Aguila cross section The second round of drilling confirmed and expanded this initial mineralization and established the possibility of additional vein mineralization at El Aire, located 2 kilometers south east from El Aguila along the same important structural corridor, with the best intercept of 4 meters of 1.9 g/t of gold and 755 g/t of silver. Management believes this limited, early work on one very small portion of the property is an encouraging indicator, as there are numerous additional areas along this important structural corridor where high-grade surface samples exist, such as Turkey Hill (up to 20.9 g/t of gold), Cerro Colorado (up to 18.9 g/t of gold) and Andesite Hill, where the highest-grade surface samples of both gold (35.2 g/t) & silver (3,170 g/t) occur.

11 11 The gold and silver mineralization at the El Aguila Project is of classic low-sulfidation, epithermal character. These types of deposits form some of the richest, most sought-after deposits in the world. An exploration program designed to expand the known mineralization and test the many additional targets of high-grade surface samples over 4 kilometers is underway. Management's objective is to define sufficient mineralization to justify mine development at El Aguila. Scoping Study A Scoping Study was performed in June 2004 by the independent Denver engineering firm Lyntek Inc. The goal of the study was to assess certain aspects of a possible mining operation based on results from the first round of drilling. As part of that study, metallurgical testing indicated recoveries of 94% for gold and 90% for silver (in 72 hours at 100 mesh grind) (see figure below). Cost Assumptions Based on the assumptions made at the time of the Scoping Study, cash costs of producing an ounce of gold would be $102 using silver revenues as a credit against costs (the silver price used for the study was $7.00/ounce and the gold price used was $430/ounce) The payback of the capital for the project would be 7 months. Based on the work performed to date, GORO believes it has an exciting project that will meet the Company's development and production criteria. Las Margaritas Project Las Margaritas is a high-grade silver property in which GRC holds a 100% interest. It comprises the four northwest kilometers of the important N 70 W structural corridor, which is an extension of the El Aguila system. In addition, Las Margaritas occupies ground within an inferred caldera (collapsed volcanic center). Historical records from a 1905 Mexican Government-authorized report titled The Mines of Mexico described the Las Margaritas mining district as, "...the place in which has been found some of the richest ores in Mexico, some of the ores having reached the value of 18,000 ounces to the ton, and ores are frequently found which assay 4,000 and 5,000 ounces to the ton."

12 12 Though mineralization at these levels is rare, the important point is that the Las Margaritas property shows indications of potentially significant silver mineralization. Surface samples taken by GRC have yielded silver mineralization as high as 1,200 g/t. GRC is in the early stages of exploration at Las Margaritas. El Rey Project El Rey is a high-grade gold property in which GRC has a 100% interest. While the site has been mined previously, very little information is known about the property. GRC has taken two selective grab samples from the dump material around the original shaft. The two samples assayed 80 and 85 g/t of gold, indicating that the samples are of potential vein material. GRC intends to explore this property as a potential high-grade gold vein. If it were mined, material could be trucked to the prospective El Aguila mill for processing.

13 13 Commodity Outlook Gold According to a recent sector research report by JP Morgan 2, its commodity team predicts that gold supply and demand fundamentals will remain strong with demand continuing to outstrip supply at least in the medium term (in fact the short-fall is expected to increase over the coming 2 years). This should lend further support the gold prices and gold equities. Furthermore, the report highlights the following reasons supporting JP Morgan s positive stance on the sector: Falling supply mine supply peaked in 2001 and continues to decline. Limited exploration spending and Central bank purchases to exacerbate. Strong fabrication demand from India continued economic growth and a more liberalized gold environment to support ongoing demand. No early signs this is slowing. China also provides demand upside following deregulation of its gold market. Inflation risks rising Gold s position as a traditional inflation hedge has been gaining traction in recent months. Continued high oil prices are unlikely to see this argument erode. At the least, inflation fears should provide some downside support in the medium term. Paper gold (ETFs) gaining popularity ETFs continue to gain in popularity given their advantages over holding the physical and project risk around gold equities. Gold price moderate compared to history although gold is close to 25 year highs, in real terms it remains well below its peak of $1500/oz. We don t expect a return to previous highs but a $650/oz price should not prove a psychological barrier nor prevent strong fundamentals from driving it higher. Gold market small vs. other Investible assets The total investible gold market is small at only $200bn or around 0.5% of global equity markets. This is likely to also underpin demand. Deteriorating outlook for alternative asset classes Another poor year of equity market returns alongside slowing growth in property markets may further raise the attractiveness of gold as an alternative investment class in the year ahead. Resumption of US$ weakening an end to Fed interest rate tightening may begin to place increased downside pressure on the US$ particularly given structural imbalances and rising interest rates in the rest of the world. 2 Source: The Whole Nine Yards: U.S. Portfolio Strategy: All that Glitters Is Gold. April

14 14 Global Supply & Demand for Gold Historical Gold prices Gold Price, $ per ounce (London pm fix) Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Source: World Gold Council.

15 15 Silver Supply dynamics According to a report by GFMS 3, mine production is forecast to increase by some 4 Moz (125 t) or 0.6% in Globally in 2006 by source, GFMS predict growth in lead, zinc, copper, and gold by-product (all up by roughly 2%), with primary production, in contrast, expected to fall by some 3%. The outlook for 2007 is for a greater increase of around 16 Moz (500 t) in total silver output, with strong growth forecast to continue into Scrap supply is expected to be broadly unchanged in 2006, in spite of the massive year-onyear rise in silver prices. GFMS point out that scrap supply for silver is far less price-sensitive than for gold (where scrap has surged in 2006) due to the very different composition of the above-ground stock of fabricated products and much higher margins over the metal value on silver than gold jewellery. Furthermore, a large share of silver scrap supply is from recycled photographic products, which is experiencing a secular decline. Meanwhile, government sales appear to be on track for a marginal increase. There is strong evidence that Chinese and Russian sales have held up in 2006 probably due to the attractive price level. In addition, India looks likely to sell up to 30 Moz (930 t) into its domestic market. Demand dynamics Fabrication demand is forecast to fall by just over 3% or nearly 28 Moz (860 t) from 2005 s revised level. GFMS are currently forecasting a full year gain of nearly 1% to a new record level for However, demand is expected to fall in 2007 under the impact of much slower growth in global industrial production and a less strong year for the electronics industry. Jewellery & Silverware fabrication in many countries has been little affected by the silver price rise. However, in the case of the key Indian market, a continued secular shift in favor of investment in bullion instead of high carat jewellery, plus the impact of record local prices has had a dramatic impact on demand. Lower Indian fabrication explains much of the near 8% year-on-year global fall forecast for this category. Photographic use of silver is expected to drop by close to 11% in Demand continues to be affected by the switch to digital technology. In addition, the high silver price has prompted some economization in silver use in photographic products, for example consumer Þlm. Investment demand has risen in 2006 for the third consecutive year and may well exceed a net 80 Moz (2,500 t) in The early part of 2006 was dominated by speculative buying, mainly by hedge funds ahead of the launch of the Exchange Traded Fund (ETF). Moreover, silver has been a major indirect beneþciary of the general growth in investor interest in commodities (e.g. silver is 2% of the Dow Jones- AIG Index). Prices: For the Þrst ten months of 2006, the average silver price basis the London Þxing was $11.24, up no less than 58% year-on-year. Investment demand remains the main driver of the price and has raised silver to well above the equilibrium level that would likely prevail in the absence of investment. Mine production growth will start to come into play in 2007, with a substantial rise forecast. Nevertheless, GFMS believe that silver is more likely to follow gold s lead (higher) than base metals direction (lower) over the next year. GFMS expect signiþcant price volatility but, over the next few months at the least a bias to the upside, with a spike to $15/oz very possible. 3 Source: GFMS Quarterly Newsletter December Issue 22

16 16 Global Supply & Demand for Silver 4 Historical Silver Prices 4 Source: Silver Industry Review & Update - August 23, 2006, CIBC World Markets.

17 Management 17 William W. Reid Mr. Reid has served as a director, President and Chief Executive Officer since the company s inception in Since August 2005, Mr. Reid has devoted all of his business time to the company s affairs. From 1977 to August 18, 2005, he served as the President, Chief Executive Officer and Chairman of the Board of Directors of U.S. Gold Corporation, a Colorado corporation engaged in the exploration of gold mining properties. While he was employed with U.S. Gold, Mr. Reid spent approximately 25% of his business time on the affairs of GORO. During his tenure with U.S. Gold, that entity acquired, developed and produced gold from five different mines, but has not produced any revenue since From July 2001 through July 2005, U.S. Gold owned an interest in GORO. In August 2005, as part of terminating their employment contracts with U.S. Gold, that interest was distributed to GORO s officers and a financial consultant. Mr. Reid received a Bachelor of Science in physics in 1970 and a Master's in Economic Geology in 1972 from Purdue University. David C. Reid Mr. David Reid has served as a director and Vice President of GORO since its inception in Since August 2005, he has devoted all of his time to the company s business and affairs. From 1977 to August 18, 2005, he was the Vice President and a director of U.S. Gold during the time that it acquired, developed and produced gold. Like his brother William, David spent a minor amount of his business time on the company s affairs prior to his separation from U.S. Gold. Mr. Reid received a Bachelor of Science degree in geology from Ball State University in Consultants Mr. Reynoso Mr. Reynoso, a Mexican national, has served as a full time consultant of GORO since In that capacity, he oversees all the company s operations in Mexico, and provides advice in relations with the Mexican Government. From 1995 to 2002, he was a consulting geologist for mining companies operating in Mexico. Mr. Reynoso received an undergraduate degree in geology and engineering in 1974 and a master's degree in economic geology in 1979 from the National University of Mexico. GORO leased the El Aguila property from Mr. Reynoso in Mr. Reynoso, a Mexican national, has been a consulting geologist for the mining industry, and has operated his own mines in Mexico. He received an undergraduate degree in geology and engineering in 1974 and a Master's degree in economic geology in 1979 from the National University of Mexico. Monty Jennings Monty Jennings serves as the Chief Financial Officer of Gold Resource Corporation and is responsible for maintaining the company s system of controls over accounting and financial reporting. Mr. Jennings began his career with Coopers & Lybrand (now PriceWaterhouseCoopers) in Texas where he specialized in the extractive and energy sectors. He was instrumental in developing generally accepted accounting principles now used by royalty trusts. For the past 10 years, he has served as an executive officer and director of several public companies, including American Educational Products, Global Casinos and OnSource. His area of expertise has expanded to include mergers, acquisitions and other strategic growth opportunities. His past experience in the non-profit sector includes service as the President of The Family Extension, a child welfare organization committed to at-risk youth and stints as an instructor in various accounting matters, including corporate income taxation and financial reporting.

18 18 Monty received his Bachelor of Arts in economics from Austin College and his Masters in Finance from Indiana University. Bill M. Conrad Bill M. Conrad currently serves as a Director of Gold Resource Corporation. He also serves as Vice President, Chief Financial Officer and Director of MCM Capital Management, Inc., a privately held financial and management consulting firm. MCM assists other companies in developing and implementing their business plans and capital formation strategies. Mr. Conrad also is Vice President, Chief Financial Officer and director of Blue Star Energy, Inc., a privately held oil and gas company. Mr. Conrad has held executive management positions with several public companies during the past 15 years, including Wyoming Oil & Minerals, Inc.; New Frontier Energy, Inc.; Gold Capital Corporation; Wall Street Racing Stables, Inc., and Consolidated Capital of NA, Inc. Mr. Conrad s duties with these companies was primarily focused on the areas of financial management and corporate development. DISCLAIMER Analyst: Waheed Hassan, CFA Mr. Hassan has worked as a Senior Research analyst with Indosuez W.I. Carr Securities, UBS Warburg, and an affiliate of Merrill Lynch. He was rated amongst #1 Financial Sector research analysts in The Reuters Survey of Global Emerging Markets Similarly, he was a member of the #1 rated research team according to The Reuters Survey of Global Emerging Markets 1999 and Euromoney Awards for Excellence He is a member of AIMR, and got his MBA with Beta Gamma Sigma honor membership from Vanderbilt University. He has been featured in the Entrepreneur Magazine, and quoted in The Wall Street Journal, Bloomberg and Reuters. & Company, ltd, is an independent fee based research, publishing and distribution firm whose contract analyst adhere to the ethics and standards of the Association for Investment Research Management. The views expressed in this research report reflect the analyst s personal views about the issuer and its securities. Opinions and recommendations contained in this report are submitted solely for advisory and information purposes and are not intended as an offering or a solicitation to buy or sell the securities mentioned above. The analysts are responsible only to the public and this report is not a service to the company. We received a fee of $25,500 for the Initiation of Coverage contract of one year coverage from Gold Resources Corp. We do not inform any company in advance of the nature or conclusions of our analysts reports in advance of paying the fee nor can a company withdraw from coverage before the expiration of the one year term. Neither the Analysts nor the company own equity or debt securities of the companies on which our contract analysts report. More information about & Company policies are available at & Company Inc. 36 West 44th Street, Suite 620, New York, NY Phone: (212) Fax: (212) Web info@wassermanmorris.com Information, opinions or recommendations contained in this report are submitted solely for advisory and information purposes by the qualified professional analyst. & Company provides report publication and distribution services only. The information used and statements of fact made have been obtained from sources considered reliable but neither guarantee nor representation is made as to the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. This report or study is not intended as an offering or a solicitation of an offer to buy or sell the securities