GOLDEN, Colo., Sept. 10, 2013 /PRNewswire/ -- Golden Minerals Company (NYSE MKT: AUMN; TSX: AUM) ("Golden Minerals" or "the Company"), a precious metals mining company with primary assets in Mexico and Argentina, reports continued progress with its work at the Velardena Operations in Durango State, Mexico. The Company previously announced it suspended operations at the Velardena mine on June 19, 2013 due to depressed silver and gold prices, and that the suspension was enacted to best conserve the asset until operating plans and metals prices indicate sustainable and profitable operations.
The Company is evaluating an operating plan that would use a modified long hole stoping method to extract ore at the Velardena Operations and is currently engaged in testing to validate the viability of this operating plan. Results of both the testing program and gold recovery testing should be available before year end and will be used in conjunction with precious metals price forecasts to determine the Company's 2014 plan for Velardena.
The long hole stoping method is expected to reduce the requirement for skilled mining labor and should significantly lower mining costs. The use of this method is being considered due to the identification of high-grade shoots within the Velardena vein systems. The higher grade should enable the operation to maintain an economic head grade after the dilution that typically accompanies the long hole stoping method, assuming silver prices in the plus $20 per ounce range. Golden Minerals is currently verifying the resource components used to construct this mining and operating plan, including detailed mapping and sampling of accessible underground high grade shoot locations. The long hole stoping plan contemplates an initial nine month development period to establish the new stopes, followed by a ramp up in production. Processing would increase up to 600 tonnes per day with both sulfide and oxide plants operating, and estimated payable production of up to approximately 1.6 million silver equivalent ounces per annum following the ramp up period. Exclusive of working capital, this plan would have expected initial development and capital costs in the $3 million to $5 million range.
Additionally, the Company continues to actively search for oxide feed from outside sources and to work on gold recovery. To date, the Albion and bio leach processes have been rejected based on unsatisfactory economics. Tests are currently underway for ferric chloride and roasting technologies. These results should be available during the third quarter 2013. An autoclave process has not been rejected but would require significantly greater throughput and confidence in the continuity of ore than is currently indicated.
The Company has previously communicated its interest in securing a partner with whom to advance its El Quevar property, an advanced exploration stage silver project located in the Salta Province of Argentina. Several interested companies have reviewed El Quevar's project data to date. An additional site visit is scheduled at El Quevar during the month of September, 2013.
Golden Minerals continues to look for ways to reduce expenses and is pleased to announce it is on target to achieve a 25 percent reduction in the annual run rate of its general and administrative expenses. Cuts have been made to a variety of areas including executive compensation, employee count, auditing fees, insurance expenses, travel and other consulting and outside services expenses. Some of the reductions take effect as current contracts and leases expire, such that 2013 general and administrative expenses are expected to be approximately seven to ten percent less than 2012 expenses, and 2014 general and administrative expenses are anticipated to be approximately 25 percent less than 2012 levels.
In exploration property updates, the Company signed an option agreement to acquire the Los Azules property in Chihuahua State, Mexico in June 2013. Since June the Company has conducted surface and underground sampling and geologic mapping and has identified exploration drill targets that will be tested with drilling from underground drill stations. Currently we are rehabilitating underground workings to prepare for the start of a 1,600 meter drill program planned for October 2013. Separately, the Company has farmed out properties totaling 19,500 hectares in Mexico with retained royalties of between 1.75 percent and 2.0 percent net smelter return. The Company continues to negotiate and explore possibilities for additional farm-outs in Mexico and Argentina.
"The Company is making progress toward charting its future," said Jeffrey G. Clevenger, Chairman, President and Chief Executive Officer of the Company. "We continue to move forward with developing Velardena's production re-start plans under a more efficient and productive work environment. We are aggressively looking for supplemental feed for the Velardena oxide plant as the sulfide content of the ore increases over time at that property. Be assured we are making every effort to move the Company forward."
About Golden Minerals
Golden Minerals Company is a Delaware corporation based in Golden, Colorado that owns the silver and gold Velardena Operations in Mexico and the evaluation stage El Quevar project in Argentina.
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 Canadian securities legislation, including statements regarding evaluation of a re-start operating plan for the Velardena Operations including the evaluation of modified long hole stoping potential mining methods, lower operating costs, potential production and development and capital costs; timing of results of evaluation of resource components of the potential operating plan; search for oxide feed from outside sources; planned work on new operating plans for the Velardena Operations and treatment options to improve gold recoveries, including timing of results from evaluations of potential gold recovery technologies; continued efforts to obtain a partner for the El Quevar property and to divest exploration properties; planned drilling program at Los Azules; and anticipated reductions in corporate general and administrative expenses. These statements are subject to risks and uncertainties, including whether or when the Velardena Operations re-start operating plan will be adopted and whether it is successfully implemented; unexpected events at the Velardena Operations, including difficulties or higher than anticipated costs in maintaining the properties on a care and maintenance basis, potential sabotage or damage to the assets related to the suspension of operations, and variations in ore grade and relative amounts, grades and metallurgical characteristics of oxide and sulfide ores; technical, permitting, water, mining, metallurgical or processing issues; changes in interpretation of geological or metallurgical information at the Velardena Operations or the El Quevar project; actual costs of the shutdown exceeding current estimates or including unanticipated costs; failure to achieve objectives in the reduction of corporate general and administrative expense; whether the Company can successfully develop or implement operating plans or gold recovery improvements that can achieve sustainable cash positive results at current and future metals prices; delays in obtaining results of technical work on aspects of the resource and gold recovery methods; inability to obtain oxide feed from outside sources for the Velardena oxide plant or if it is obtained to process it economically; loss of and inability to adequately replace skilled mining and management personnel; possible disputes with customers or joint venture partners; failure of undeveloped ore or veins to meet expectations; strikes or other labor problems; increased costs or decreased metals prices; availability and cost of materials, supplies and electrical power required for mining operations and exploration; fluctuations in silver, gold, zinc and lead prices, costs and general economic conditions; changes in political conditions, tax, environmental and other laws; diminution of physical safety of employees in Mexico; and other conditions in the countries in which the Company operates.
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, 2012.
SOURCE Golden Minerals Company