Golden Minerals Announces Updated Preliminary Economic Assessment For Velardeña Project
GOLDEN, April 02, 2020 - Golden Minerals Company (NYSE American and TSX: AUMN) (“Golden Minerals”, “Golden” or “the Company”) is pleased to announce positive results from the updated Mineral Resource Estimate and Preliminary Economic Assessment (“PEA”) for its Velardeña Properties, a 100%-owned silver and gold project located in Durango State, Mexico.PEA Financial and Economic Highlights
Tetra Tech, an independent engineering company, has prepared the PEA for the Company in accordance with Canadian National Instrument 43-101 “Standards of Disclosure of Mineral Projects” (“NI 43-101”). The PEA assumes prices of $1,324/oz gold, $16.23/oz silver, $0.90/lb lead and $1.25/lb zinc. Preliminary results of the economic analysis are shown in pre-tax U.S. Dollars as highlighted below. The complete PEA will be published on SEDAR within 45 days of this press release.
- Pre-tax net present value (“NPV”): (US)$85.9 million at an 8% discount rate
- Pre-tax Internal rate of return (“IRR”): 138.6%
- Pre-tax Payback period: 1 year
- Total pre-production capital cost: $10.27 million, including 10% contingency*
- Post-production and sustaining capital: $ 15.93 million, including 10% contingency
- Pre-production development time: 1 year
- Life of mine (“LOM”): 10 years
- LOM contained silver: 12.3 Moz; LOM contained gold: 188 Koz
- LOM average silver grade: 337 grams per tonne (“g/t”); LOM average gold grade: 5.15 g/t
- LOM pre-tax free cash flow: $130.2 million
- LOM payable silver: 10.2 Moz; LOM payable gold production: 119 Koz
- LOM payable Ageq: 19.7 Moz (Au and Ag only at a ratio of 80Ag:1Au)
*Capital estimate for bio-oxidation plant includes additional contingency
Golden Minerals President and Chief Executive Officer Warren M. Rehn remarked, “The Velardeña mines now present an attractive scenario for a potential restart. The most difficult challenge we previously faced at the Velardeña mines was the low payable gold recovery, a challenge which we believe is solved with the addition of a relatively low-cost bio-oxidation circuit at our existing processing facility. Because we already have most of what is required for recommencing mining and processing, the capital needs for the project are modest. The one-year payback on pre-production capital signifies a very robust project. The projected cash costs for silver production at less than a dollar per ounce net of byproducts points to the strong projected profitability of this operation.”
| Pre-Tax Technical Economic Model Results | |||||
| Item | Total | per Tonne | |||
| ($000s) | of Material | ||||
| Gross Payable | $375,728 | $330.19 | |||
| TCs, RCs and penalties | ($33,130) | ($29.12) | |||
| Freight & Insurance (1) | ($12,311) | ($10.82) | |||
| NSR | $330,288 | $290.21 | |||
| Operating Costs | |||||
| Mining costs | ($94,303) | ($82.87) | |||
| Milling costs | ($54,241) | ($47.67) | |||
| Site Administration | ($15,656) | ($13.76) | |||
| G&A | ($8,014) | ($7.04) | |||
| Federal Mining Royalty | ($1,651) | ($1.45) | |||
| ($173,866) | ($152.79) | ||||
| Operating Margin | $156,423 | $137.46 | |||
| Capital Costs | |||||
| Mine Development | ($10,791) | ($9.48) | |||
| Process Plant | ($9,460) | ($8.31) | |||
| Infrastructure | ($782) | ($0.69) | |||
| Other Non-Operating Costs* | ($5,158) | ($4.53) | |||
| Cash Flow | $130,232 | $114.44 | |||
| NPV8% | $85,914 | ||||
| IRR | 139% | ||||
| Payback (years) | 1 | ||||
| * includes contingency equal to 10% of capital costs above | |||||
| Cash Costs | ||
| Cash cost per payable Ag ounce, net of by products | $0.92 | |
| All in Sustainable cost per payable Ag ounce, net of by products | $3.48 |
The updated PEA has been prepared to incorporate new and updated elements of the project database and mine plan, most notably the inclusion of bio-oxidation treatment of gold concentrates. In late 2019, Golden obtained successful results from testing Velardeña gold concentrate material using Finnish firm Outotec’s “BIOX” process. BIOX is a unique and sustainable technology that was developed to pre-treat refractory ores and concentrates ahead of conventional cyanide leaching. The gold in these types of mineralized material, such as those found at Velardeña, is encapsulated in pyrite and arsenopyrite which prevents the gold from being successfully cyanide leached. BIOX utilizes bacteria to oxidize these sulfide materials, thereby exposing the gold for subsequent cyanide leaching and increasing overall gold recoveries. Golden Minerals believes this technology is key to unlocking successful and sustainable value from production at Velardeña. Indeed, 2019 BIOX testing of Velardeña material achieved gold recoveries of 92%, compared to sub-30% gold recoveries realized when Golden last operated Velardeña in 2015.
In the coming months, the Company plans to continue to optimize the mine plan and processing details in preparation for future test-mining and processing in advance of establishing a definite schedule for restarting commercial production at the Velardeña mines and the installation of the bio-oxidation circuit.
Mine Planning
Given changes to the resource models and project parameters, a new preliminary mine plan was developed. Mine staff performed test mining to prove a selective mining minimum width of 0.7 meters. Based on the new resource models, new dilution calculations and the updated NSR, the mining areas have changed from the previous PEA. The 2015 PEA considered only a limited subset of areas and tonnes, whereas the update considers all principal veins for the mine plan. This updated mine plan includes 1.14 M tonnes of sulfide material, with a mine life of approximately 10 years at a rate of 310 tonnes per day.
The table below shows the potentially minable material within the preliminary mine plan.
| Mine Plan | |
| Category | Total/Avg |
| Tonnes | 1,137,949 |
| NSR ($/T) | 290 |
| Ag (gpt) | 337 |
| Contained Ag oz | 12,325,300 |
| Au (gpt) | 5.15 |
| Contained Au (oz) | 188,250 |
| Pb (%) | 1.32 |
| Contained Pb (lbs) | 33,096,126 |
| Zn (%) | 1.63 |
| Contained Zn(lbs) | 40,886,729 |
Sensitivity Tables
Project sensitivity to metals prices, capital and operating costs are shown below. The project is most sensitive to metals prices, and to silver slightly more than gold. Given the low remaining required capital expenditures, the project is least sensitive to capital.
A graph accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/676813d4-fb5b-429c-8c60-bccc6291ed7b
Updated Mineral Resource Estimate
The updated Mineral Resource Estimate incorporates work completed on the project database since the previous Technical Report (February 20, 2015: Tetra Tech, NI 43-101 Technical Report and Preliminary Economic Assessment, Velardeña Project, Durango State, Mexico). The database was evaluated and intervals were re-coded by vein, which led to an update of the principal veins (CC, C1, A4, F1, G1, San Mateo, Roca Negra, Hiletas, Terneras, Chicago and Escondida), including wireframe models. The new wireframe models were created in Leapfrog software for the principal veins. Resource estimations for these veins were completed using a 3D block model with a block factor.
Estimation of secondary veins was conducted in the same manner as the 2015 resource estimate, using point models based on vein surfaces, but with updated parameters including minimum 0.7 meters dilution, updated mined out shapes, updated property boundaries and the new NSR cutoff value of $125 per tonne of ore.
The updated Resource Estimate is shown below:
| Classification | Mineral Type | NSR Cutoff | Tonnes | Grade Ag g/t | Grade Au g/t | Grade Pb% | Grade Zn% | Ag toz | Au toz | Pb lb | Zn lb |
| Measured | Oxide | 125 | 135,000 | 260 | 5.55 | 1.72 | 1.54 | 1,130,000 | 24,000 | 5,120,000 | 4,570,000 |
| Indicated | Oxide | 125 | 301,000 | 250 | 4.89 | 1.7 | 1.47 | 2,420,000 | 47,000 | 11,300,000 | 9,750,000 |
| Measured + Indicated | Oxide | 125 | 436,000 | 253 | 5.1 | 1.71 | 1.49 | 3,550,000 | 71,000 | 16,430,000 | 14,310,000 |
| Inferred | Oxide | 125 | 372,000 | 399 | 4.82 | 2.52 | 1.46 | 4,770,000 | 58,000 | 20,680,000 | 11,950,000 |
| Measured | Sulfide | 125 | 269,000 | 346 | 5.38 | 1.53 | 1.88 | 3,000,000 | 47,000 | 9,100,000 | 11,140,000 |
| Indicated | Sulfide | 125 | 645,000 | 327 | 4.62 | 1.43 | 1.94 | 6,790,000 | 96,000 | 20,300,000 | 27,530,000 |
| Measured + Indicated | Sulfide | 125 | 915,000 | 333 | 4.84 | 1.46 | 1.92 | 9,790,000 | 142,000 | 29,410,000 | 38,670,000 |
| Inferred | Sulfide | 125 | 1,393,000 | 342 | 4.7 | 1.51 | 1.97 | 15,320,000 | 211,000 | 46,380,000 | 60,400,000 |
| Measured | All | 125 | 404,000 | 317 | 5.43 | 1.6 | 1.76 | 4,120,000 | 71,000 | 14,220,000 | 15,710,000 |
| Indicated | All | 125 | 946,000 | 303 | 4.71 | 1.52 | 1.79 | 9,220,000 | 143,000 | 31,610,000 | 37,280,000 |
| Measured + Indicated | All | 125 | 1,351,000 | 307 | 4.92 | 1.54 | 1.78 | 13,340,000 | 214,000 | 45,830,000 | 52,990,000 |
| Inferred | All | 125 | 1,765,000 | 354 | 4.73 | 1.72 | 1.86 | 20,080,000 | 268,000 | 67,060,000 | 72,350,000 |
Notes to accompany Mineral Resource table (effective date December 31, 2019):
1) Resources are reported as diluted Tonnes and grade to 0.7-meter fixed width
2) Metal prices for NSR cutoff are 3-year trailing average as of December 2019: (US) $16.30/troy oz Ag, $1,305/troy oz Au, $0.99/lb Pb and $1.27/lb Zn
3) The cutoff value was calculated based on mining and milling costs from the 2015 operation and estimated payable recoveries including smelting and refining fees
4) Columns may not total due to rounding
5) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
PEA Information and Cautionary Note Regarding Inferred Resources
The discounted cash flows in the PEA are provided pre-tax and are prepared in compliance with NI 43-101 of the Canadian Securities Administrators. The following Qualified Persons from Tetra Tech will co-author the technical report that will be filed on SEDAR within 45 days of this news release: Dr. Guillermo Dante Ramírez Rodríguez, Mr. Leonel López, Mr. Randolph P. Schneider, and Ms. Kira Lyn Johnson. Each of these Qualified Persons has reviewed and approved the information presented in this news release that was derived from the sections of the PEA study for which they were responsible. Each of the named Qualified Persons is independent of Golden Minerals.
The mine plan evaluated in the PEA is preliminary in nature and additional technical studies will need to be completed in order to fully assess its viability. There is no certainty that a production decision will be made to reactivate the Velardeña mine or that the economic results described in the PEA will be realized. In addition, we may determine to proceed with a production decision without completion of customary feasibility studies demonstrating the economic viability of reactivation of Velardeña. A mine production decision that is made without a feasibility study carries additional potential risks which include, but are not limited to, (i) increased uncertainty as to projected initial and sustaining capital costs and operating costs, rates of production and average grades, and (ii) the inclusion of Inferred Mineral Resources, as defined by NI 43-101 that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be converted to a Mineral Reserve, as defined by NI 43-101. Mine design and mining schedules, metallurgical flow sheets and process plant designs may require additional detailed work and economic analysis and internal studies to ensure satisfactory operational conditions and decisions regarding future targeted production. In addition, the results of test mining may impact projected capital and operating costs, with the result that the projected NPV, IRR and cash flows may be adversely impacted.
No mineral reserves have been estimated for the project. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Cautionary Note to United States Investors Regarding Estimates of Indicated and Inferred Mineral Resources
This press release uses the terms "mineral resources", "indicated mineral resources" and "inferred mineral resources" which are defined in and required to be disclosed by NI 43-101. We advise U.S. investors that these terms are not recognized under the SEC Industry Guide 7. Accordingly, the disclosures regarding mineralization in this news release may not be comparable to similar information disclosed by Golden Minerals in the reports it files with the SEC. The estimation of measured resources and indicated resources involves greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources. US investors are cautioned not to assume that any or all of Mineral Resources are economically or legally mineable or that these Mineral Resources will ever be converted into Mineral Reserves. In addition, the SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit amounts. U.S. investors are urged to consider closely the disclosure in our Form 10-K and other SEC filings.
Review by Qualified Person and Quality Control
On behalf of Tetra Tech, the technical contents of this press release have been reviewed by the Qualified Persons for the purposes of NI 43?101. Tetra Tech’s QPs have extensive experience in mineral exploration, mining engineering and metallurgical processes, and are QP members of the Mining and Metallurgical Society of America and the SME RM.
Non-GAAP Financial Measures
Cash costs per payable silver ounce, net of by-product credits, and all-in sustainable costs per payable silver 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 silver 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 Velardeña Properties. By-product credits include revenues from gold, lead and zinc contained in the products sold to customers during the period. Cash costs, after by-product credits, are divided by the number of payable silver ounces generated by the plant for the period to arrive at cash costs, after by-product credits, per payable ounce of silver. All-in sustainable costs per payable silver ounce, net of by-product credits, begins with cash costs per payable silver 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 Velardeña Properties in Mexico and its El Quevar silver property in Argentina, as well as acquiring and advancing mining properties in Mexico and Nevada.
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 the Velardeña PEA results (including cost estimates, assumption of commodity prices, development timing, expected cash flows and life of mine and production expectations); future activities at Velardeña, and the possibility of future development; and estimates of mineral resources for the Velardeña project. These statements are subject to risks and uncertainties, including: the reasonability of the economic assumptions at the basis of the results of the Velardeña PEA and technical report; changes in interpretations of geological, geostatistical, metallurgical, mining or processing information and interpretations of the information resulting from future exploration, analysis or mining and processing experience; declines in general economic conditions; fluctuations in exchange rates and changes in political conditions, in tax, royalty, environmental and other laws in Mexico; new information from drilling programs or other exploration or analysis; unexpected variations in mineral grades, types and metallurgy; fluctuations in commodity prices; and failure of mined material or veins mined to meet expectations. Additional risks relating to Golden Minerals may be found in the periodic and current reports filed with the Securities and Exchange Commission 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