GOLDEN, Colo., June 18, 2014 /CNW/ -- Golden Minerals Company
("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX:
AUM) today announced plans for a July
2014 restart of mining at its Velardena Properties located
in Durango state, Mexico.
Once mining and processing are ramped up to approximately 285
tonnes per day (tpd) of sulfide ore in mid-2015, the Company
expects output of approximately 1.0 to 1.2 million silver
equivalent ounces per annum (including silver and gold but
excluding lead and zinc), with cash costs between $12 and $15 per silver ounce net of by-product
credits. Golden has
completed a 9,000-meter drill program at Velardena in vein systems located largely
outside the currently defined Canadian National Institute NI 43-101
compliant resource. That drill program represents the first
known drilling of the Terneras vein system sulfides in the area
below the historic mine workings. The Company's drilling,
mine planning and analysis indicate that positive net cash flow may
be achieved at the Velardena Properties at current silver and gold
prices. An independent engineering firm participated in the
preparation of the mining plan.
Chairman, President and Chief Executive Officer Jeffrey G. Clevenger noted, "Our team has worked
diligently since the suspension of operations at Velardena to streamline the operation for a
restart. A year ago we were looking at cash costs in excess
of $30 per silver ounce and now we
are excited to begin the ramp-up process to achieve costs and
margins based on production at $12 to
$15 per silver ounce. Once ramped up, our restart
plans show incremental cash for the Company of about $5 to $8 million per year at today's prices
(approximately $20 per ounce silver
and $1,250 per ounce gold) as
compared to holding the property for the future."
LOWER COST OPERATION
The Company plans to re-open Velardena as a leaner and lower cost
mine. The Company has hired a new and proven team of mining
professionals including a new General Manager and managers for both
the mine and mill. By year end 2014, the property is
projected to employ approximately 150 people, with approximately
100 employees under a new labor union agreement. This figure
is less than one-third the number employed prior to June 2013 when the Company was running both
sulfide and oxide plants and processing a combined total of
approximately 500 tpd.
Shortly prior to suspending mining operations in 2013, Golden
Minerals completed a 1.9 kilometer, production-sized access ramp
into the Velardena mine.
This ramp will provide more efficient and lower cost removal of
mined material from the underground mine workings as compared to
pre-suspension haulage primarily from a low capacity internal
shaft.
The Company plans to re-open Velardena utilizing an overhand cut and fill
mining method and slusher mucking in the stopes. This mining
method should allow mining vein widths as narrow as 0.5 meters,
which should significantly decrease dilution and allow higher grade
material to be hauled to the mill. For conservative planning
purposes, the Company has assumed dilution of the veins to one
meter widths.
Going forward, the Company expects mining to focus on the
San Mateo and Terneras vein
systems. Drilling results and metallurgical studies indicate
that these two systems, mined only intermittently by Golden in the past, contain higher grade
material over more consistent widths in the 0.5 to 1.0 meter range,
with significantly lower arsenic levels than those seen in the
Santa Juana vein system that was the focus of previous mining
activity. The Company expects that the lower arsenic will
provide improved payment terms and metallurgical recovery of the
metals.
TIMELINE OF ACTIVITIES
Golden Minerals plans to begin mining in the third quarter 2014,
focused primarily in the San Mateo
vein. The Company anticipates stockpiling mined material
until the fourth quarter 2014, at which time we expect to commence
processing mined material through the sulfide mill. Golden
Minerals anticipates mining from both the San Mateo and Terneras vein systems during the
fourth quarter 2014, with mining in the Terneras vein ramping up in
the second quarter 2015. Plans call for sulfide mill
processing of approximately 150 tpd during the fourth quarter 2014,
with processing increasing to approximately 285 tpd in
mid-2015. The Company expects to produce payable metals
beginning in the fourth quarter 2014 of approximately 150,000
ounces of silver equivalents (including silver and gold but
excluding lead and zinc), increasing to approximately 275,000
ounces of silver equivalents per quarter in mid-2015 when the
ramp-up is completed. The plan forecasts cash costs per
silver ounce, net of by-product credits, of approximately $30
in the fourth quarter 2014, decreasing to between $12 and $15 by mid-2015.
The mining plan calls for production of lead, zinc and
gold-bearing pyrite concentrates. The mining plan is based on
favorable results of preliminary metallurgical testing and the
Company's expectation, based on the results of the 2014 drill
program, that processed material will contain an average of
approximately 4 grams per tonne gold and from 200 to 250 grams per
tonne silver. As noted above, other than portions of the
San Mateo vein, this material is
not included in the Company's 43-101 resource or in the Company's
reported mineralized material.
2014 COSTS
The incremental 2014 cash outlay to resume operations is
estimated at $3 million. This
is comprised of $1 million in
re-start capital costs for mill improvements and slusher equipment
plus $3 million of negative gross
margin (revenue less cost of sales) in 2014, offset by
approximately $1 million of avoided
care and maintenance costs associated with holding the property in
suspension. The Company also plans to explore possible sales
of excess mining equipment which could offset part of the
$3 million cash outlay.
About Golden Minerals
Golden Minerals is a Delaware
corporation based in Golden,
Colorado. The Company is primarily focused on efforts to
create a new mining and processing plan for its Velardena
Properties, the advancement of its El Quevar advanced exploration
property in Argentina, and the
exploration of properties in Argentina and Mexico.
Non-GAAP Financial Measures
Cash costs, after by-product credits, per payable ounce of
silver produced is a non- GAAP financial measure that is widely
used in the mining industry. Under generally accepted
accounting principles in the United
States (US GAAP), there is no standardized definition of
cash cost, after by-product credits, per payable ounce of silver
produced, and therefore the Company's forecasted cash costs may not
be comparable to similar measures reported by other
companies.
Forecasted cash costs were calculated based on the mining plan,
and include all forecasted direct and indirect costs associated
with the physical activities that would generate concentrate
products for sale to customers, including mining to gain access to
mineralized materials, mining of mineralized materials and waste,
milling, third-party related treatment, refining and transportation
costs, on-site administrative costs, and royalties.
Forecasted cash costs do not include depreciation, depletion,
amortization, exploration expenditures, reclamation and remediation
costs, sustaining capital, financing costs, income taxes, or
corporate general and administrative costs not directly or
indirectly related to the Velardena mine. By-product credits
include forecasted revenues from gold, lead, and zinc contained in
the products sold to customers. Cash costs, after by-product
credits, were divided by the quantity of payable silver forecasted
to be produced during the period to arrive at cash costs, after
by-product credits, per payable ounce of silver
produced. Cost of sales is the most comparable
financial measure, calculated in accordance with US GAAP, to cash
costs. As compared to cash costs, cost of sales includes
adjustments for changes in inventory and excludes net revenue from
by-products and third-party related treatment, refining and
transportation costs, which are reported as part of revenue in
accordance with US GAAP.
Cautionary Note to U.S. Investors concerning Estimates of
Resources
This press release uses the term "resources" which is defined
in, and required to be disclosed by, Canadian NI 43-101. We advise
U.S. investors that these terms are not recognized by the United
States Securities and Exchange Commission (the "SEC"). The
estimation of resources involves greater uncertainty as to their
existence and economic feasibility than the estimation of proven
and probable reserves. Mineral resources are not mineral
reserves, and U.S. investors are cautioned not to assume that
mineral resources will be converted into reserves.
Cautionary Statement regarding Mineralized Material
"Mineralized material" as used in this press release, although
permissible under SEC Industry Guide 7, does not indicate
"reserves" by SEC standards. We cannot be certain that any
deposits at the Velardena Properties will ever be confirmed or
converted into SEC Industry Guide 7 compliant
"reserves". Investors are cautioned not to assume that
all or any part of mineralized material estimates will ever be
confirmed or converted into reserves or that mineralized material
can be economically as legally extracted.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act and applicable Canadian securities legislation,
including statements regarding the planned restart of mining at the
Velardena property including the
anticipated timing of restart activities and ramp up, mining and
processing rates, veins to be mined and dilution levels, types
of concentrates and amounts of salable and payable silver
equivalent ounces to be produced, mining methods, cash costs per
ounce of payable silver, net of by-product credits, employment
levels, cash outlay, amounts of gold and silver contained in
processed material, positive net cash flow at the Velardena
Properties and incremental cash for the Company at current silver
and gold prices, more efficient and lower cost removal of mined
material due to the 2013 completion of the access ramp, potential
improved payment terms due to lower arsenic in the Terneras and
San Mateo vein
systems. These statements are subject to risks and
uncertainties, including results of additional drilling at
Velardena; changes in geological,
geostatistical and other interpretations of the information from
drill programs; reliability of metallurgical testing results and
changes in interpretation; unfavorable interpretations of geologic
information; delays in commencing mining or processing or the
ramp-up of same; mining or processing problems; mining and
processing costs in excess of those anticipated; unexpected
variations in mineral grades, types and metallurgy; fluctuations in
relevant metal prices; technical, permitting, mining,
metallurgical, recovery or processing issues; problems that delay
or reduce underground mine and stope construction; operational
changes or problems; failure of mined material to meet
expectations; failure to meet expectations regarding mining and
processing rates, saleable metals, cash costs, cash flow at the
Velardena Properties and incremental cash for the Company, failure
of veins to be mined to meet expectations; higher than anticipated
cash outlays to resume operations; fluctuations in silver, gold,
zinc and lead prices, costs and general economic conditions,
changes in political conditions, tax, environmental and others laws
in Mexico, and financial market
conditions. Golden Minerals Company assumes no obligation to
update this information. Additional risks relating to Golden
Minerals Company may be found in the periodic and current reports
filed with the Securities Exchange Commission by Golden Minerals
Company, including the Company's Annual Report on Form 10-K for the
year ended December 31, 2013.
Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com
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SOURCE Golden Minerals Company