Golden Minerals (AUMN) - Gold Producer Expansion Plan on Target

Golden Minerals is a Colorado-based precious metals producer with a pipeline of exploration gold projects in Mexico, Argentina and Nevada. As of January 2021, their Rodeo project in Durango State, Mexico is now in production.

The company is also looking to restart production at their silver-gold Velardeña Properties, hopefully in 2021-2022, where the use of bio-oxidation (BIOX) processing of sulfide concentrates is expected to result in a dramatic increase in overall gold recovery, giving rise to longer term profitable operations.

Progress Overview: Production Right On Schedule

Golden Minerals is already seeing that they are cash positive on a project basis and will be cash positive as a company in Q2/21. 

Now the company has successfully transitioned from explorer to producer, Gold production is on schedule and the company will reach full production by March. The share price is also performing well, doubling since we last spoke to them back in November.

The Projects

The Rodeo project has a short mine life of about 2.5 years but has exploration opportunity to expand. Rodeo was a low capital cost to the company, and they already had the production facility and mill - the total was less than USD$1.5M. They were able to fund the purchase from cash and get into production in a short amount of time, giving them capital to advance the other projects. The next focus is the Velardeña Properties, two past producing underground silver and gold mines and two processing mills. They have plans to move that project forward using new technology involving a bio-oxidation process.

They also have an additional portfolio of exploration projects in Mexico, Nevada and Argentina. The hope is to set themselves up for sustainable and profitable production starting with Rodeo, then Velardeña whilst moving forward with their other exploration projects.

Allocating $10M & Cash Flow from Rodeo

The Rodeo project will be the cash producing machine for the company for the next 2-3 years and is scheduled to produce between 12,000oz to 14,000oz of Gold in 2021. That gives the company cash flow and a net operating margin of USD$11M to $12.5M allowing them to advance the BIOX work at Velardeña, the Feasibility Study, and potential restart in late 2021.

Velardeña. What Have They Got? 

The Velardeña Properties are past past-producing silver and gold mines. The 560-ha property also has two processing plants, an oxide mill and a sulfide mill (the oxide mill is currently processing material from Rodeo). All of the necessary mining equipment and infrastructure is in place and the company has plans to restart production in late 2021, early 2022 but a formal decision has yet to have been made.

Golden Minerals put out a PEA on the properties last spring which highlighted a 10 year LOM with a potential of 10.2Moz of payable silver, and a 119,000oz of payable gold production.

BIOX Process: Testing & Schedule for Results

Golden Minerals is doing another round of testing on the BIOX process which is on the schedule for this year. They will produce another bulk sample, do the flotation concentrations and send the appropriate representative concentrate to South Africa for additional testing to finalise the size of the reactor vessels they will need for the bio-oxidation. They have no question that the BIOX process works well but they just need some further definition for the engineering and construction. They are expecting this to cost about USD$6M for the BIOX plant and will be self-funded. 

The plan is to have that flotation concentrate in South Africa by late spring and the results back in the summer. The engineering design will follow at the end of the 2021 with the potential to start building the following year.  

The Other Projects: Plans & Cost Mitigation

The Yoquivo project, an exploration-stage gold-silver project located in Western Chihuahua State, Mexico, has had some great initial results with very high Gold and Silver grades in some of the veins. There are 5 significant veins which are being investigated so far and the next stage of drilling will show the size potential and determine the high-grade zones. They need to find out more about the widths and strike lengths to work out how long it will take to get to a possible resource position at Yoquivo.

The other projects are low cost for the company.  For example, their US based Sand Canyon exploration project based in Nevada won't need a lot of money spent to fund the next stage of exploration.

The Future for Golden Minerals: What's Next? 

The company has been re-rated thanks to a successful transition into production, with a share price that has doubled since we last spoke. The company will continue with plans to ramp up the Rodeo project to full production by the end of Q3/21. And with the potential restart at Velardeña, Golden Minerals are looking to prove that they can have sustainable income from both projects.

The market will be paying close attention to the progress on Velardeña which is the next big project for the company, starting the sulphide production, results from the BIOX test work, and moving into the full-scale benefit of that asset. The exploration results from Yoquivo and the other projects hope to show a solid pipeline of exploration for the future. Golden Minerals wishes to build a viable company, with expansion possibilities and a future based on the organic growth through existing projects.

To find out more, go to Golden Minerals' Website.