Golden Minerals Company (“Golden Minerals”, “Golden” or the
“Company”) (NYSE American: AUMN and TSX: AUMN) announced today that
it plans to restart silver-gold mining operations at its Velardeña
Properties located in Durango State, Mexico, subject to the receipt
of sufficient capital.
Warren M. Rehn, Golden’s President and Chief Executive Officer,
stated, “I am very pleased to announce that Golden Minerals’ board
of directors has approved plans to restart mining operations at
Velardeña. The decision to begin operations again at Velardeña was
primarily based on vastly improved sales terms now available to us
for the gold-rich pyrite concentrate that is produced from
flotation processing of Velardeña mineralized material, which
permit us to restart operations without the significant expense of
the previously planned bio-oxidation facility. Since the start of
2023, we successfully processed 3,000 tons of material mined in our
test mining activities in 2022 and we sold approximately 600 tons
of these concentrates under the improved terms with net receipts of
approximately $1.5 million or about $500 per ton of mined material.
These recent sales augur well for the potential success of our
restart plans. We anticipate that we can start mining operations
with minimal initial capital of approximately $0.5 million. Our
internally developed mine plan projects the production of
approximately 0.4 million silver equivalent ounces1 during 2023,
with the potential to ramp up to approximately 1.6 million silver
equivalent ounces per year thereafter. We have contracted for
completion of an independent technical report, which we expect will
support our internal projections. We intend to begin preparations
to start mining immediately.”
Our internal mine plan calls for underground resue mining,
starting with four active stopes initially with processing at
Velardeña’s Plant I flotation facility at an initial throughput
rate of approximately 80 tonnes per day (“tpd”). As underground
development progresses, the number of stopes is anticipated to
steadily increase over a period of months until 15 to 18 stopes are
ultimately in continuous production. The mill is expected to reach
a steady-state processing rate of approximately 325 tpd by the end
of the year. All required permits are already in place, and because
Plant I has recently been in use and processing previously mined
Velardeña sulfide material, after startup as development costs
continue to exceed net revenue, the maximum cash outflows of about
$2.3 million, inclusive of the initial $0.5 million, are predicted
to be paid back within the first nine months of operations.
The Company, through engagement with an independent engineering
firm, intends in the third quarter of 2023 to update the March 2022
Technical Report Summary for Velardeña that was previously
completed (including plans for the previously contemplated but no
longer required bio-oxidation facility) in accordance with SEC
SK-1300 guidelines. That report is available here, for reference:
Velardeña Technical Report Summary, Mar. 2022. It summarizes the
underlying model from which the Company’s current
internally-developed forecasts have been developed.
1 Silver equivalent production estimate calculated based on
$1,900 per ounce gold and $22.50 per ounce silver with 64% payable
gold recovery and 81% payable silver recovery and does not include
lead and zinc, which will also be produced.
Current Company-developed forecasts for mining a portion of the
published resource over an approximate seven-year life of mine
(“LOM”) estimate processing 700,000 - 800,000 tonnes of material at
Plant I, with LOM payable gold production of 60,000 - 70,000 ounces
and LOM payable silver production of 5.5 million - 6.5 million
ounces. Operating costs are estimated at $225 - $275 per tonne.
Capital Resources and Financial Outlook
The Company does not currently have sufficient resources to
initiate the restart of mining operations at Velardeña or to
otherwise meet its expected cash needs during the twelve months
ending May 31, 2024. At May 31, 2023, our total cash resources were
approximately $2.4 million and we have accrued accounts payable of
approximately $1.7 million. The mining operations at Rodeo have
ceased, and although we continue to process ore from the Rodeo
stockpile, we do not expect to generate a significant amount of
positive operating margin from Rodeo going forward. The Company
needs to raise additional cash in the very near term, whether
through the sale of non-core assets or equity financing, including
the use of its ATM program. In the absence of sufficient asset
sales, equity financing or other external funding the Company’s
cash balance is expected to be depleted early in the third quarter
of 2023. If financing or asset sales are not available to us, we
could be forced to liquidate our business. The Company’s board of
directors is considering various financing alternatives, sales of
assets and other available strategic alternatives to avoid that
result.
If we are successful in raising sufficient capital to restart
mining operations at Velardeña during July 2023, and if we are
successful in executing the mine plan described above, the
forecasted net operating margin from the Velardeña Properties
during the twelve-month period ended May 31, 2024 is expected to be
between $1.7 million and $2.0 million. This twelve-month period
includes one-time costs related to restarting operations. As the
mine reaches planned capacity to feed the processing plant
approximately 325 tonnes per day, the second half of 2024 is
forecast to be more favorable, generating a positive operating
margin higher than what is expected during the first eleven months
of operations. Net operating margin is defined as revenue from the
sale of metals less the cost of metals sold. Our internal estimate
for the net operating margin at Velardeña assumes gold prices
average $1,900 per ounce and silver prices average $22.50 per
ounce. The actual amount received in net operating margin from both
Rodeo and Velardeña during the period may vary significantly from
the amounts specified above due to, among other things: (i)
unanticipated variations in grade, (ii) challenges associated with
our proposed mining plans, including difficulties in controlling
grade dilution, (iii) decreases in commodity prices below those
used in calculating the estimates shown above, (iv) variations in
expected recoveries, (v) increases in operating costs above those
used in calculating the estimates shown above, or (vi)
interruptions in mining.
There is no assurance that the Company will be successful in
achieving the positive operating margins at Velardeña described
above. Specifically, the anticipated net operating margin from the
Velardeña Properties is not based on the results of a full
feasibility study. While the Company believes its internal
estimates are realistic, the lack of a full feasibility study may
increase the uncertainty associated with the estimates.
In addition to the estimates described above, the Company
expects to collect approximately $1.5 million in VAT accounts
receivable from the Mexican government; however, the timing for
receipt of these payments is uncertain.
Update on Unifin dispute
As previously disclosed, the Company is party to a lawsuit in
Mexico brought by Unifin Financiera, S.A.B. de C.V. (“Unifin”).
Unifin is alleging that a representative of the Company’s
subsidiary, Minera William, S.A. de C.V. (“Minera William”) signed
certain documents in July 2011 purporting to bind Minera William as
a guarantor of payment obligations owed by a third party to Unifin
in connection with that third party’s acquisition of certain
drilling equipment. At the time the documentation was allegedly
signed, Minera William was a subsidiary of ECU Silver Mining prior
to the Company’s acquisition of ECU in September 2011. A
preliminary hearing on the lawsuit was held on June 2, 2023 and the
trial hearing has been scheduled for June 30, 2023. Unifin is
seeking recovery for as much as US$12.5 million. Because the
Velardeña mine and processing plants are held by Minera William,
any adverse outcome of the action may have a material impact on our
ability to restart production at Velardeña.
About Golden Minerals
Golden Minerals is a gold and silver producer based in Golden,
Colorado. The Company is primarily focused on producing gold and
silver from its Rodeo Mine, advancing its Velardeña and Yoquivo
properties in Mexico and, through partner-funded exploration, its
El Quevar silver property in Argentina, as well as acquiring and
advancing selected mining properties in Mexico, Nevada and
Argentina.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and applicable Canadian securities legislation, including
statements regarding the Company’s plan to restart mining
operations at the Velardeña properties, including the potential
timing of restart, production expectations, required capital to
restart and ramp-up operations, potential plant processing rate,
projected payable gold and silver production, operating costs and
net operating margin; the Company’s expected near-term cash needs;
collection of approximately $1.5 million in VAT accounts receivable
from the Mexican government and the need to raise additional cash
in the near-term to avoid depletion of the Company’s cash balance
early in the third quarter of 2023. These statements are subject to
risks and uncertainties, including increases in costs and declines
in general economic conditions; changes in current payable terms
for gold-bearing pyrite concentrates; changes in political
conditions, in tax, royalty, environmental and other laws in the
Mexico and other market conditions; unanticipated variations in
grade; challenges associated with our proposed mining plans,
including difficulties in controlling grade dilution; decreases in
commodity prices below those used in calculating the estimates
shown above; variations in expected recoveries; increases in
operating costs above those used in calculating the estimates shown
above; interruptions in mining; or an adverse result in the pending
Unifin lawsuit. Golden Minerals assumes no obligation to update
this information. Additional risks relating to Golden Minerals may
be found in the periodic and current reports filed with the SEC by
Golden Minerals, including the Company’s Annual Report on Form 10-K
for the year ended December 31, 2022.
Follow us at www.linkedin.com/company/golden-minerals-company/
and https://twitter.com/Golden_Minerals.
For additional information please visit
http://www.goldenminerals.com/.
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version on businesswire.com: https://www.businesswire.com/news/home/20230605005244/en/
Golden Minerals Company Karen Winkler, Director of Investor
Relations (303) 839-5060
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