OTTAWA (dpa-AFX) - Golden Minerals Co. (AUMN, AUM.TO) announced that it plans to restart mining at its Velardena Properties located in Durango state, Mexico in July 2014. Once mining and processing are ramped up to approximately 285 tonnes per day (tpd) of sulfide ore in mid-2015, the Company expects output of approximately 1.0 to 1.2 million silver equivalent ounces per annum (including silver and gold but excluding lead and zinc), with cash costs between $12 and $15 per silver ounce net of by-product credits.
The company noted that it has hired a new team of mining professionals including a new General Manager and managers for both the mine and mill. By year end 2014, the property is projected to employ approximately 150 people, with approximately 100 employees under a new labor union agreement. This figure is less than one-third the number employed prior to June 2013 when the Company was running both sulfide and oxide plants and processing a combined total of approximately 500 tpd.
Shortly prior to suspending mining operations in 2013, Golden Minerals completed a 1.9 kilometer, production-sized access ramp into the Velardena mine. This ramp will provide more efficient and lower cost removal of mined material from the underground mine workings as compared to pre-suspension haulage primarily from a low capacity internal shaft.
Golden Minerals plans to begin mining in the third quarter 2014, focused primarily in the San Mateo vein. The Company anticipates stockpiling mined material until the fourth quarter 2014, at which time it expects to commence processing mined material through the sulfide mill. Golden Minerals anticipates mining from both the San Mateo and Terneras vein systems during the fourth quarter 2014, with mining in the Terneras vein ramping up in the second quarter 2015. Plans call for sulfide mill processing of about 150 tpd during the fourth quarter 2014, with processing increasing to about 285 tpd in mid-2015.
The company expects to produce payable metals beginning in the fourth quarter 2014 of approximately 150,000 ounces of silver equivalents (including silver and gold but excluding lead and zinc), increasing to about 275,000 ounces of silver equivalents per quarter in mid-2015 when the ramp-up is completed. The plan forecasts cash costs per silver ounce, net of by-product credits, of about $30 in the fourth quarter 2014, decreasing to between $12 and $15 by mid-2015.
The incremental 2014 cash outlay to resume operations is estimated at $3 million. This is comprised of $1 million in re-start capital costs for mill improvements and slusher equipment plus $3 million of negative gross margin (revenue less cost of sales) in 2014, offset by approximately $1 million of avoided care and maintenance costs associated with holding the property in suspension.
The company also plans to explore possible sales of excess mining equipment which could offset part of the $3 million cash outlay.
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