GOLDEN, Colo., Feb. 15, 2017 /PRNewswire/ -- Golden
Minerals Company (NYSE MKT: AUMN; TSX: AUM) ("Golden Minerals",
"Golden" or "the Company") is
pleased to announce positive results of a Preliminary Economic
Assessment ("PEA") for its Santa
Maria silver and gold project located near Santa Barbara in Chihuahua State, Mexico.
The PEA presents a base case assessment of developing
Santa Maria's mineral resource and
incorporates the results of an updated National Instrument 43-101
("NI 43-101") compliant mineral resource estimate dated as of
February 15, 2017.
PEA Highlights
- Post-tax net present value ("NPV") of $6.4 million and pre-tax internal rate of return
of 84 percent at an 8 percent discount rate
- Total capital requirements of $1.2
million (initial capital $1.0
million, sustaining capital $0.2
million)
- Pre-production development time 10 to 11 months
- Life of mine ("LOM") 3.2 years
- Payback in month 16
- LOM free cash flow $8.5
million
- LOM silver production 2.1 Moz; LOM gold production 7.2 koz
- LOM average silver grade 332 grams per tonne ("gpt"); average
gold grade 1.28 gpt
- LOM cash cost of $12 per Ag oz
(net of Au credits)
Note: PEA parameters assume prices of $1,222/oz gold, $17.30/oz silver and a discount rate of eight
percent. Values above are approximate. All $ values in $US.
Warren Rehn, President and Chief
Executive Officer of Golden Minerals, commented, "We are pleased
with the results of this independently-prepared PEA, as it presents
a low cost and profitable operation at current metals prices. If we
go ahead with the project, production at Santa Maria would mark Golden's re-emergence as a producer of close
to one million silver equivalent ounces annually, with the
potential to move the company to positive net cash flow. We believe
there is also excellent potential for expansion of the project
which could lead to continued production beyond the initial
three-year period considered in the PEA."
Next Steps
Golden will continue work
related to optimizing operating plans for the project and obtaining
permits for the potential mining operation as considered in the
current PEA. Permit applications have been submitted and are
pending comment and acceptance. Golden is also developing plans for additional
exploration work to expand the resource.
Mining Operations
The PEA contemplates a 38-month underground mining operation
initially utilizing pre-existing underground development at a mine
production rate of 200 tons per day using a combination of cut and
fill, shrinkage and other mining techniques, and custom milling at
a local third-party flotation mill. As Golden Minerals
already owns the mining equipment required to complete this
project, the out of pocket capital costs for start-up are expected
to be low.
Key parameters of the PEA are as follows.
Description
|
Unit
Cost
($/t-milled)
|
Total
Value
($M)
|
|
Net Smelter
Return
|
$148.56
|
$34.3
|
|
Land
Acquisition
|
-$4.48
|
-$1.0
|
|
Net
Revenue
|
$144.08
|
$33.3
|
Operating
Costs
|
|
|
|
Mining
|
$55.13
|
$12.7
|
|
Processing
|
$40.00
|
$9.2
|
|
G&A
|
$1.34
|
$0.3
|
|
Lease
|
$0.84
|
$0.2
|
|
Operating
Costs
|
$97.31
|
$22.5
|
|
Operating
Margin
|
$46.77
|
$10.8
|
Capital
Costs
|
|
|
|
Mining
|
-
|
$0.4
|
|
Infrastructure
|
-
|
$0.5
|
|
Owner
Costs
|
-
|
$0.3
|
|
Capital
Costs
|
-
|
$1.2
|
Estimate of
Tax
|
|
|
|
Federal Tax
1
|
-
|
$0.0
|
|
Special Mining
Tax
|
-
|
-$0.9
|
|
Precious Metals
Tax
|
-
|
-$0.2
|
|
Estimate of
Tax
|
-
|
-$0.9
|
|
Cash Flow
|
-
|
$8.5
|
|
NPV
8%
|
-
|
$6.4
|
|
IRR
|
-
|
84%
|
|
Payback
(months)
|
-
|
16
|
|
|
|
|
1 Assumes
Company uses existing Net Operating Loss carry forward
|
General
Assumptions
|
|
|
Description
|
Units
|
Value
|
Market
Prices
|
|
|
|
Gold
|
$/oz
|
$1,222
|
|
Silver
|
$/oz
|
$17.30
|
Taxes
|
|
|
|
Federal
Tax*
|
%
|
30.0%
|
|
Special Mining
Tax
|
%
|
7.5%
|
|
Precious Metals
Tax
|
%
|
0.5%
|
Financial
|
|
|
|
Discount
Rate
|
%
|
8.0%
|
*Not applied due to
the assumption that existing
Net Operating Losses would be utilized.
|
Process
Summary
|
|
|
Description
|
Units
|
Value
|
Concentrate
(dry)
|
kt
|
15
|
Payable Metal
Recoveries
|
|
|
|
Sulfide
|
|
|
|
Gold
|
%
|
80%
|
|
Silver
|
%
|
90%
|
|
Transition
|
|
|
|
Gold
|
%
|
58%
|
|
Silver
|
%
|
75%
|
Recovered
Metals
|
|
|
|
Sulfide
|
|
|
|
Gold
|
koz
|
6.0
|
|
Silver
|
koz
|
1,635
|
|
Transition
|
|
|
|
Gold
|
koz
|
1.2
|
|
Silver
|
koz
|
488
|
Capital and
Operating Costs
|
|
Operating Cost
Estimate Summary
|
|
Description
|
LOM
|
Unit
Cost
|
Cost
($M)
|
($/t-milled)
|
|
Mining
|
$12.7
|
$55.13
|
|
Processing
|
$9.2
|
$40.00
|
|
G&A
|
$0.3
|
$1.34
|
|
Lease
|
$0.2
|
$0.84
|
|
Total (LOM Cash
Cost)
|
$22.5
|
$97.31
|
|
Sustaining
Capital
|
$0.2
|
|
Capital Cost
Estimate Summary
|
|
|
|
Description
|
Initial
|
Sustaining
|
Total
|
Capital
($M)
|
Capital
($M)
|
Capital
($M)
|
|
Mining
|
$0.4
|
$0.0
|
$0.4
|
|
Infrastructure
|
$0.5
|
$0.0
|
$0.5
|
|
Owner's
Costs
|
$0.1
|
$0.2
|
$0.3
|
|
Total
|
$1.0
|
$0.2
|
$1.2
|
Metals Price
Sensitivity
|
Metal
|
High
|
Base
|
Low
|
Au
|
$1,300
|
$1,222
|
$1,144
|
Ag
|
$20.00
|
$17.30
|
$14.60
|
NPV8%*
|
$11,304
|
$6,438
|
$1,974
|
IRR
|
121%
|
84%
|
37%
|
*NPV in
Thousands
|
|
|
|
|
|
|
NPV (8 %) Project
Sensitivity ($000)
|
|
|
|
|
|
% of Base
Case
|
90%
|
100%
|
110%
|
NSR
Revenue
|
$3,870
|
$6,438
|
$9,007
|
Opex
|
$8,165
|
$6,438
|
$4,711
|
Capex
|
$6,548
|
$6,438
|
$6,328
|
Santa Maria Mineral Resource Estimate Dated February 15, 2017
In conjunction with the PEA, the independent firm of Tetra Tech
prepared an updated NI 43-101 compliant mineral resource
estimate. The new estimate incorporates results of 24
additional underground drill holes and 460 channel samples from
drifts and the trial mining face. The underground drilling and
channel sampling has allowed for a more than doubling of indicated
resources since the previous April
2015 mineral resource estimate.
Indicated and Inferred mineral resource estimates as of
February 15, 2017 for Santa Maria are shown as follows:
Classification
|
Cutoff
Grade
|
Tonnes
|
Ag
g/t
|
Au
g/t
|
AgEq
g/t
|
Ag
toz
|
Au
toz
|
AgEq
toz
|
Dilution%
|
Recovered AgEq
g/t
|
(M)
|
(k)
|
(M)
|
Indicated
|
175
|
180,000
|
304
|
1.4
|
404
|
1.73
|
8.1
|
2.31
|
10%
|
Inferred
|
175
|
160,000
|
321
|
0.9
|
387
|
1.64
|
4.7
|
1.98
|
18%
|
Notes:
(1) Mineral resources
are reported as diluted Tonnes and grade;
(2) Cutoff grade and
Ag equivalent calculated using metal prices of $17.3 and $1,222 per
troy ounce of Ag and Au, respectively, with a ratio of 70.6:1, the
three year trailing average as of the end of December
2016;
(3) Cutoff applied to
diluted Ag equivalent blocks grades using recoveries of 90% and 80%
Ag and Au, respectively;
(4) Reported
indicated mineral resources are equivalent to mineralized material
under SEC Industry Guide 7, inferred mineral resource is not a
recognized category under SEC Industry Guide 7; and
(5) Columns may not
total due to rounding.
|
An NI 43-101-compliant technical report will be filed on SEDAR
(www.sedar.com) and made available on the Golden Minerals website
within 45 days.
Property Title and Ownership
Golden has the right to acquire
the Santa Maria property under an
option agreement that requires approximately $0.9 million more in payments in order to acquire
100 percent of the property. Minimum payments of $0.1 million are due every April and October, and
Golden has already advanced the
minimum payments for 2017 to the property owner. In addition, until
Golden has paid the remaining
$0.9 million due under the option
agreement, the property owners have the right to 50 percent of any
net profits from mining activities at the property, after
reimbursement of all costs incurred by Golden since April
2015, to the extent that such net profit payments exceed the
minimum payments.
PEA Information
The discounted cash flows in the PEA are provided post-tax and
are prepared in compliance with National Instrument 43-101 of the
Canadian Securities Administrators. Tetra Tech is an independent
engineering firm that served as principal author of the PEA
prepared on behalf of the Company. Geoff Elson, PG is the independent Qualified
Person from Tetra Tech who reviewed and approved the portions of
this press release regarding mineral resources. Mark Horan, P.Eng of Tetra Tech is the
independent Qualified Person who has reviewed and approved the
portions of this press release regarding the results of the PEA.
Dr. Deepak Malhotra of Resource
Development Inc. is the independent Qualified Person who has
reviewed and approved the metallurgical recoveries.
The PEA is preliminary in nature and includes Inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorized as mineral reserves. Standalone economics have
not been undertaken for the indicated resources and as such no
reserves have been estimated for the Project. There is no certainty
that the economic results described in the PEA will be realized.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
About Golden Minerals
Golden Minerals is a Delaware
corporation based in Golden,
Colorado. The Company is primarily focused on acquiring and
advancing mining properties in Mexico with emphasis on areas near its
Velardena processing plants.
Cautionary Note to U.S. Investors concerning Estimates of
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 by 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. Mineral resources are not mineral reserves,
and U.S. investors are cautioned not to assume that mineral
resources will be converted into 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. U.S. investors are cautioned not to assume
that estimates of inferred mineral resources exist, are
economically mineable, or will be upgraded into measured or
indicated mineral resources.
Cautionary Statement regarding Mineralized Material
"Mineralized material" as used in this press release, although
permissible under the SEC's Industry Guide 7, does not indicate
"reserves" by SEC standards. We cannot be certain that any deposits
at the Santa Maria project will
ever be confirmed or converted into SEC Industry Guide 7 compliant
"reserves". Investors are cautioned not to assume that all or any
part of the disclosed mineralized material estimates will ever be
confirmed or converted into reserves or that mineralized material
can be economically or legally extracted.
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 Santa Maria PEA results (including cost
estimates, development timing, expected cash flow and life of mine
and production expectations), estimates of mineral resources for
the Santa Maria project, and other
expectations regarding the Santa
Maria project, including operating and exploration plans,
cost expectations and title and ownership matters. These statements
are subject to risks and uncertainties, including: the
reasonability of the economic assumptions at the basis of the PEA,
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; new
information from drilling programs or other exploration or
analysis; unexpected variations in mineral grades, types and
metallurgy; fluctuations in silver and gold metal prices; failure
of mined material or veins mined to meet expectations; increases in
costs and declines in general economic conditions; and changes in
political conditions, in tax, royalty, environmental and other laws
in Mexico, and financial market
conditions. 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, 2015.
For additional information please visit
http://www.goldenminerals.com/ or contact:
Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/golden-minerals-announces-preliminary-economic-assessment-for-santa-maria-project-300407677.html
SOURCE Golden Minerals Company