The Broadmoor resort in Colorado Springs has served for 93 years as an enclave of leisure and luxury in the shadow of the Rocky Mountains, centered on a five-star hotel and featuring a pro-caliber golf course. This week, it will serve as host to the U.S. Women's Open tournament.

Somewhat more improbably, across the street from the Broadmoor Hotel is a $1.7 million, 3,600-square-foot town house zoned for residential use that serves as the corporate headquarters of Gold Resource (ticker: GORO), a 13-year-old junior mining company working some properties in the southern Mexican state of Oaxaca that has soared to a $1.3 billion stock-market value, thanks to the public zeal for gold investments and management's promises of having "some of the highest-grade deposits in the world." When Gold Resource acquired the town house last summer as a workplace for its five corporate employees, it paid the equivalent of almost 700 months' worth of the rent on its prior office space.

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Tom Kimmell/Bloomberg News

Some neighborhood: Gold Resource has set itself up in a town house across the street from Colorado's Springs' swanky Broadmoor Hotel, above.

If this real-estate indulgence were the only worrisome element in the Gold Resource story, perhaps investors would be safe in overlooking it. But it is only one red flag among many that haven't been heeded as the company's shares have run from 4 to 24 in the past two years, bestowing enough heft in market capitalization to win Gold Resource entry into the Russell 2000 index.

In reality, the company is run by a small group of family members who have steadily sold shares on the way up, consistently promised more production than has been delivered and not conducted formal independent drilling studies to verify their claims that they will soon be mining 200,000 ounces of gold equivalent a year at zero cash cost.

GOLD RESOURCE WAS CO-FOUNDED IN 1998 by William Reid, whose career in mining included a stint as head of U.S. Gold from 1977 to 2005, when he sold control of that company to Canadian gold entrepreneur Rob McEwen at a valuation of around $12 million.

Bill Reid's brother, David, is Gold Resource's vice president of exploration and oversees drilling at the company's main El Aguila property in Mexico. Bill's son, Jason, was named president last year. Rounding out the executive ranks is Greg Patterson, head of corporate development.

The company did a self-underwritten initial stock offering in 2006 with the help of Bill Conrad, co-founder of a firm called MCM Capital Management, in Denver. Conrad has been a backer and/or a director of several public micro-cap companies since the 1990s, some of which were delisted or merged into other companies as shells. Gold Resource's former part-time chief financial officer, Frank "Monty" Jennings, left earlier this year to serve as full-time CFO of Synergy Resources, an oil-and-gas driller for which Conrad also serves as director.

Bill Reid served as interim CFO until last month, when the company signed on another part-time CFO, Paul Oberman, who works for a temporary-CFO firm and will be paid by the hour. The company's auditor, Stark Schenkein, is a local Denver firm with only a handful of small public-company clients.

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Conrad, who owns some 400,000 shares, is on the Gold Resource board as lead director, chairing both the audit and compensation committees. In the latter capacity, he approved his own cash compensation of $260,000 last year for his service as a director in a year when the company lost $23 million on $14.8 million in revenue.

Bill Reid makes the rounds of gold investment conferences, extolling the rich vein of precious metals discovered at El Aguila, where the company built an open-pit mine and a mill and began production about a year ago. Reid claims that the company's mine, and an underground mine that was begun later, will yield enough lead and zinc byproducts to pay all of the cash costs of producing the gold and silver, leading to "zero cost" precious metals to sell, versus an industry average cost of $500 an ounce.

As far back as 2007, company news releases were promising that production would begin the next year. But the start kept being pushed out because of permitting problems and construction delays. A representative explanation came in an April news release headlined, "Anomalous Storm Impacts Gold Resource Corporation's Aguila Project." The open pit, which was targeted to yield 70,000 ounces, produced only 20,000, leading to the expensive and complicated plan to do more underground blasting.

In aggregate, over its dozen years of existence, the company has spent $95 million raised from equity investors to produce a total of $26 million in revenue, with $11.3 million of that coming in the quarter ended March 31 from the sale of "metals concentrates" to a single buyer, the closely held commodity dealer Trafigura Group, which did not respond to a request for comment. Neither Bill Reid nor Conrad responded to e-mailed questions.

INVESTORS NEED TO TAKE the Reids' word on the mineral content of its deposits and how much it will cost to get them out of the ground, because the company has not sought an engineering study that could lead to estimates of "proven and probable reserves" under Securities and Exchange Commission standards. Bill Reid has been vocal about the wisdom of this approach, saying it would have taken years to complete such a study, and it was preferable simply to get into production as quickly as possible. Apex Silver Mines, now called Golden Minerals, explored the site in the early 2000s but walked away. Canyon Resource and Heemskirk were partners in the project but passed on their rights to acquire a larger stake in the company.