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Golden Minerals Company (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.
*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.
Agraph 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
