Golden Minerals PEA pegs Rodeo NPV at $22.46M (U.S.)

2020-04-15 07:22 ET - News Release

Mr. Warren Rehn reports

GOLDEN MINERALS ANNOUNCES PRELIMINARY ECONOMIC ASSESSMENT FOR RODEO GOLD PROJECT

Golden Minerals Company has released results from a preliminary economic assessment (PEA) completed for its Rodeo open-pit gold project located in Durango state, Mexico. All currency figures are in U.S. dollars unless otherwise indicated.

PEA financial and economic highlights

Independent engineering firm Mineral Resources Engineering has prepared the PEA for the company in accordance with Canadian National Instrument 43-101 Standards of Disclosure of Mineral Projects. The resource used for this PEA was developed in accordance with Canadian NI 43-101 by the independent engineering firm Tetra Tech. The PEA assumes prices of $1,622 per ounce gold and $14.38 per ounce silver. Preliminary results of the economic analysis are shown in after-tax U.S. dollars as highlighted below. The complete PEA will be published on SEDAR within 45 days of this press release.

Highlights:

• After-tax net present value (NPV): $22.5-million at an 8-per-cent discount rate;
• Life-of-mine (LOM) after-tax free cash flow: $24.9-million;
• Preproduction development time: one quarter (three months);
• LOM: nine quarters;
• Total preproduction costs, including capital and contingency: $1.5-million;
• After-tax payback period: during the first production quarter;
• LOM contained production: 41,000 ounces gold; 118,000 ounces silver;
• LOM payable production: 34,000 ounces Au; 89,000 ounces Ag;
• LOM average gold grade: 3.31 grams per tonne; average silver grade: 9.65 g/t;
• Cash cost per Au ounce, net of byproduct credits: $798;
• All-in sustaining cash cost per Au ounce, net of byproduct credits: $843.

Warren M. Rehn, Golden's president and chief executive officer, noted: "We've purposely held onto the Rodeo project for several years, waiting for the right opportunity to monetize this asset by utilizing our existing infrastructure to process its gold and silver. With the Hecla lease coming to an end this year, we intend to bring Rodeo into production in 2021. This PEA indicates that Rodeo presents us with the opportunity to realize over $24-million of after-tax cash flow in two years time with very low capital requirements, which will in turn support our work at Velardena and other exploration projects."

 
               AFTER-TAX ECONOMIC RESULTS OF THE PROJECT
 
Item                                     Total LOM             Total LOM
                                      ($ millions)           (per tonne)

Gross payable                               $55.67               $146.03
TCs, freight,
ins, etc. (loss)                             (1.05)                (2.75)
NSR                                          54.63                143.28
Royalties (loss)                             (1.37)                (3.58)
Operating (costs)
Mining (loss)                                (9.12)               (23.91)
Processing (costs)                          (12.92)               (33.90)
G&A and head office (loss)                   (0.43)                (1.14)
Contingency (loss)                           (2.25)                (5.89)
Operating margin                             28.54                 74.86
Capital (cost)
Mine capital (loss)                          (0.54)                (1.41)
Preproduction (costs)                        (0.81)                (2.14)
Contingency (loss)                           (0.16)                (0.42)
Pretax cash flow                             27.03                 70.89
Pretax NPV8                                  24.36
Income tax provision                         (2.14)
After-tax cash flow                          24.89
After-tax NPV8                               22.46

Mine planning

The strip ratio for the project is 1.7:1, and the processing plant's daily throughput is estimated to be 480 tpd (based on a 350-day operating year). The excavation of the Rodeo resource will be completed in three pushbacks starting in the highest-grade material closest to the surface.

The mining excavation will be completed using a regional contractor. Golden Minerals will supply overall project management and engineering, which include in-pit technicians that will determine whether material is suitable for process or placement on the waste dump. The Golden Minerals lab, located in Velardena, Durango, will be used for the project's assaying requirements. Golden Minerals' oxide plant at Velardena, which will be used to process the mined material from Rodeo, is a typical agitated leach plant that can handle up to 550 tpd of throughput. The plant is equipped with a modern dore refinery, and the attached tailings facility recently underwent a major expansion.

PEA information and cautionary note regarding inferred resources

The discounted cash flows in the PEA are provided after tax and are prepared in compliance with NI 43-101 of the Canadian Securities Administrators. 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 the economic results described in the PEA will be realized. In addition, the company may determine to proceed with a production decision without completion of customary feasibility studies demonstrating the economic viability of the Rodeo project. 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.

No mineral reserves have been estimated for the project. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Review by qualified person and quality control

David Drips is the independent qualified person from Mineral Resources Engineering who authored the technical report that will be filed on SEDAR within 45 days of this news release. Mr. Drips has reviewed and approved the information presented in this news release that derives from the PEA study.

About Golden Minerals Company

Golden Minerals is a Delaware corporation based in Golden, Colo. The company is primarily focused on advancing its Velardena properties in Mexico and its El Quevar silver property in Argentina, as well as acquiring and advancing mining properties in Mexico and Nevada.

We seek Safe Harbor.

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