LONDON (Reuters) - Latin American gold and silver producer Hochschild Mining Plc (HOCM.L) said on Wednesday 1 July it exercised an option to up its stake in Gold Resource Corp (GRC) (GORO.OB), buying a further 5 million shares for $20 million (12.2 million pounds).

Hochschild - San Felipe, Mexico

The price is a 20 percent discount to the previous 30-day average closing price as at June 24, it said.

On completion of the purchase, which will be funded from existing cash, Hochschild will boost its stake in GRC to 23.9 percent from 14.6 percent.

GRC will use $16 million of the proceeds to complete the El Aguila project in Mexico.

El Aguila is expected to start production in the second half at 70,000 ounces of gold per year, or 4.2 million silver equivalent ounces, subject to obtaining remaining permits and regulatory approval.

At 8:29 a.m., shares in Hochschild were up 0.5 percent at 278.75 pence.

(Reporting by Julie Crust; editing by Paul Sandle)