GOLD RESOURCE CORP Commitments Disclosure
14. Commitments and Contingencies
As of December 31, 2025 and 2024, the Company had equipment purchase commitments aggregating approximately $4.3 million and $1.5 million, respectively.
Contingent Consideration
With the Aquila acquisition, the Company assumed a contingent consideration. On December 30, 2013, Aquila’s shareholders approved the 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 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 Back Forty 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:
The value of future installments is based on C$9.0 million tied to the development of the Back Forty Project as follows:
| a. | C$3.0 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; |
| b. | C$2.0 million payable in cash 90 days after the commencement of commercial production; |
| c. | C$2.0 million payable in cash 270 days after the commencement of commercial production; and |
| d. | C$2.0 million payable in cash 450 days after the commencement of commercial production. |
Initially, the Company intended to pay the first C$3.0 million in 2023 to prevent HudBay’s 51% buy-back option in the Back Forty Project. Management later decided that it was more likely than not that HudBay would not exercise its buy-back option, and consequently, this amount was not paid. Additionally, since financing of the Back Forty Project was not expected in 2024, this liability was reclassified to long-term. As of the end of January 2024, by the contractual deadline, HudBay did not exercise its buy-back option, and thus, it is forfeited.
The total value of the contingent consideration as of December 31, 2025 and 2024 was $3.6 million and $3.4 million, respectively. The contingent consideration is adjusted for the time value of money and the likelihood of the milestone payments. While the likelihood of milestone payments did not change from the year ended December 31, 2024 to December 31, 2025, the timing of expected commercial production was extended by one year, thus the timing of the payments was likewise shifted to begin one year later. Any future change in the value of the contingent consideration is recognized in other expense, net, in the Consolidated Statements of Operations.
The following table shows the change in the balance of the contingent consideration for the year ended December 31, 2025 and for the year ended December 31, 2024:
| 2025 | | 2024 | |||
(in thousands) | ||||||
Beginning Balance of contingent consideration: | ||||||
Non-current contingent consideration | $ | 3,389 | $ | 3,404 | ||
Change in value of contingent consideration - non-current | 165 | (15) | ||||
Ending Balance of contingent consideration: | ||||||
Non-current contingent consideration | $ | 3,554 | $ | 3,389 | ||
Other Contingencies
The Company has certain other contingencies resulting from litigation, claims, and other commitments and is subject to a variety of environmental and safety laws and regulations incident 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 flow.
On December 10, 2021, the Company acquired Aquilla Resource Inc which had substantial liabilities that relate to the Osisko 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 Osisko Stream Agreements contain customary provisions regarding default and security. In the event that the Company’s subsidiary defaults under the Osisko Stream Agreements, including failing to obtain the required permits or achieve commercial production at a future date, Aquila Resource Inc. may be required to repay the deposit plus accumulated interest at a rate agreed with Osisko. If Aquila fails to do so, Osisko may be entitled to enforce its remedies as a secured party and take possession of the assets that comprise the Back Forty Project.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 18, 2026 | Showing above |
| 2024 | Apr 8, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 13, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Mar 9, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.