GOLDEN, Colo., Nov. 17, 2020 (GLOBE NEWSWIRE) -- Golden Minerals Company (“Golden Minerals”, “Golden” or the “Company”) (NYSE American and TSX: AUMN) is pleased to announce it has received final environmental permits for its Rodeo gold-silver project located in Durango State, Mexico. The Company is presently on track to begin gold production in January 2021, which will mark the transition of Golden Minerals to gold producer from precious metals exploration company.
President and Chief Executive Officer of Golden Minerals, Warren Rehn, notes, "The receipt of the environmental permits for our Rodeo mine puts us on schedule to begin mining in January 2021. We expect to begin delivering gold-bearing material to our Velardeña mill early in January and begin processing immediately.”
Mining Plans and April 2020 Preliminary Economic Assessment (“PEA”)
Rodeo is located approximately 115 kilometers (“km”) by road from the Company’s Velardeña Properties in Durango State, Mexico. The Company intends to truck mined material from Rodeo to Velardeña using a commercial trucking contractor, upon which the material will be mined through Golden’s existing and newly vacated oxide plant. The plant is a typical agitated leach plant rated to handle up to 450 tonnes per day (“tpd”) of throughput from Rodeo. It is equipped with a Merrill Crowe circuit and a modern doré refinery, and the attached tailings facility was recently expanded and is expected to be sufficient for the tailings produced from Rodeo’s operations.
The Company published a PEA in April 2020 (Mineral Resources Engineering - April 1, 2020, see https://www.goldenminerals.com/projects/technical-reports/ for the complete report) which called for an open pit mining operation at Rodeo. In August 2020, the Company completed a 35-hole 1,400-meter drilling program in order to further verify continuity of the high-grade core of the Rodeo deposit. Results from this drilling program were slightly better than assumptions used in the PEA. The results of this program enabled Golden to finalize the initial start-up mine plan. Further metallurgical testing on newly obtained material confirmed recovery assumptions and enabled the Company to plan appropriately to modify the oxide plant by adding a regrind mill for higher throughput. Results of the 2020 metallurgical testing revealed that the harder characteristics of Rodeo’s mined material would necessitate an additional regrind circuit in the oxide plant in order to achieve a finer grind size at desired throughput rates to attain recoveries projected in the PEA. The need for an additional regrind circuit and its estimated $0.6 million cost were already included in the PEA’s estimated $1.5 million of start-up costs and capital expenditures.
Golden has begun hiring key mine and plant supervisory personnel. The Company anticipates only minor hiring needs given it has a plant operating workforce in place at Velardeña currently working under the terms of Golden’s oxide plant lease with Hecla Mining Co. (this lease will terminate on November 30, 2020). In December 2020, employees will transition to Rodeo-related activities, preparing the plant to receive Rodeo’s mined material. Golden has engaged a regional contractor to perform mine excavation work, while Golden will provide overall mine management and engineering work, including in-pit technicians who will determine whether material is suitable for processing. The Company will shortly engage a second contractor to haul mined material to the oxide plant. Golden’s assay lab located in Velardeña will be used for the project’s assaying requirements.
The Company currently believes the oxide plant will be ready to begin milling and processing operations in January 2021. Following a two to three-month start-up period, the Company anticipates daily throughput in the oxide plant of roughly 450 tpd, slightly lower than the 480 tpd in the PEA due to the added regrind circuit. Mine life at 450 tpd is estimated to be approximately 2.5 years or 10 quarters, one quarter longer than outlined in the PEA.
The doré produced is, according to the PEA, expected to be comprised of approximately 25% gold and 65-70% silver, and to be of a readily marketable and saleable quality.
Mining Projections
The April 2020 PEA incorporated pricing assumptions of $1,622/oz gold and $14.38/oz silver. It estimated an after-tax net present value of US$22.5 million (using an 8% discount rate) and an All-In Sustaining Cost (“AISC”) per gold ounce, net of by-product credits, of US$843. The Company has updated its internal preliminary projections to apply to the PEA assumptions of current metals prices of $1,887/oz gold and $23.73/oz silver (London Fix PM prices on September 30, 2020, as reported by Kitco) and the results of the recently completed drilling program, metallurgical testing and proposed contract mining and hauling contracts. These current projections were outlined in the Company’s Form 10-Q for the period ending September 30, 2020 and may be summarized as follows. The Company notes these projections are preliminary in nature and actual results may vary significantly due to a number of factors, as detailed in the Cautionary Statements section of this press release.
Total Payable Production
| Year | Tonnes Produced | Ag (oz) | Au (oz) |
| 2021 | 148,000 | 43,700 | 13,200 |
| 2022 | 162,000 | 47,800 | 14,400 |
| 2023 | 104,000 | 30,600 | 9,200 |
After-Tax Cash Flow
| Year | Estimated After-tax Cash Flow |
| 2020 | -$1.3 million |
| 2021 | $12.6 million |
| 2022 | $14.5 million |
| 2023 | $9.5 million |
Sensitivity Analysis
The Rodeo project shows high sensitivity to movements in the underlying market price of gold. An increase in gold price from the PEA base case ($1,622/oz) to $2,000/oz changes after-tax net present value (8% discount rate) by an estimated 50%, to $33.4 million.
Non-GAAP Financial Measures
Cash costs per payable gold ounce, net of by-product credits, and all-in sustainable costs per payable gold ounce, net of by-product credits, are non-GAAP financial measures calculated by the Company as set forth below and may not be comparable to similar measures reported by other companies.
Cash costs per payable gold ounce, net of by-product credits, include all direct and indirect costs associated with the physical activities that would generate concentrate and doré 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. 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 Rodeo project. By-product credits include revenues from silver contained in the products sold to customers during the period. Cash costs, after by-product credits, are divided by the number of payable gold ounces generated by the plant for the period to arrive at cash costs, after by-product credits, per payable ounce of gold. All-in sustainable costs per payable gold ounce, net of by-product credits, begins with cash costs per payable gold ounce, net of by-product credits, and also includes pre and post-production capital and sustaining capital.
Cost of sales is the most comparable financial measure, calculated in accordance with 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 GAAP.
About Golden Minerals
Golden Minerals is a Delaware corporation based in Golden, Colorado. The Company is primarily focused on advancing its Rodeo and Velardeña properties in Mexico and, through partner-funded exploration, its El Quevar silver property in Argentina, as well as acquiring and advancing mining properties in Mexico, Argentina and Nevada.
Cautionary and Forward-Looking Statements
We have not established proven or probable reserves, as defined by the SEC under Industry Guide 7 or Canadian securities regulators, at the Rodeo project. In order to establish proven reserves under SEC Industry Guide 7, we would be required to prepare a final, “bankable” feasibility study. Due to the size of the Rodeo deposit and the relatively short anticipated mine life, we do not believe it is necessary to incur the expense and delay involved in preparing a bankable feasibility study in order to bring the Rodeo project into production. As a result, despite the fact that we have undertaken confirmatory drilling to provide additional certainty regarding the Rodeo deposit, there is an increased uncertainty and risk that may result in economic and technical failure which may adversely impact our future profitability. The production and after-tax cash flow estimates provided above are based in part on a mineralized material estimate. Therefore, because the estimate does not constitute proven reserves under SEC Industry Guide 7, the production and after-tax cash flow estimates which are derived therefrom are inherently more uncertain than would otherwise be the case if the Rodeo project were supported by a bankable feasibility study and estimate of proven reserves established in accordance with Industry Guide 7.
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 timing of production at the Rodeo property, including anticipated timing of installation of a new regrind mill circuit and its expected improvement of recoveries and throughout; the timing of milling and processing operations at the Velardeña oxide plant and the anticipated hiring needs to continue to effectively operate the plant; and the general expectations surrounding the geologic potential of the Rodeo project, including projections regarding the after-tax net present value and AISC per gold ounce . These statements are subject to risks and uncertainties, including the reasonability of the economic assumptions at the basis of the results of the Rodeo project Preliminary Economic Assessment and technical report; changes in interpretations of geological, geostatistical, metallurgical, mining or processing information; interpretations of the information resulting from exploration, analysis or mining and processing experience; and the timing duration and overall impact of the COVID-19 pandemic, including the potential future re-suspension of non-essential activities in Mexico, including mining. 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, 2019.
For additional information please visit http://www.goldenminerals.com/ or contact:
Golden Minerals Company
Karen Winkler, Director of Investor Relations
(303) 839-5060
SOURCE: Golden Minerals Company
