Golden Minerals Company (NYSE:AUMN): Golden Growth

Golden Minerals Company (NYSEAMERICAN:AUMN) (TSX:AUMN) has now made the transition from developer to producer, and is currently ramping up production levels at its open-pit Rodeo Gold-Silver Mine, located in Durango State, Mexico.

At present Rodeo has a short mine life, of 2.5 years, but with a 2,000-metre drill programme currently underway, testing near-surface targets located immediately adjacent to the current open pit, Golden Minerals is confident that the mine life will be expanded.

Despite Rodeo’s current short mine life, Golden Minerals expects the cash flow it generates to play an important role in its business’ growth. Rodeo’s 2021 after-tax cash flow is estimated by Golden Minerals to be between US$9.0mln to US$10.5mln, which should enable the company to fund the initial start-up of silver-lead-zinc operations at its Velardeña Project, and potentially cover the cost of a bio-oxidation circuit to process the gold-bearing pyrite/arsenopyrite concentrates at Velardeña.

Velardeña would be a significantly larger operation generating on average US$20mln after-tax net cash flow per annum for ten years, totalling US$197mln, based on metal prices of US$1,800/oz Au, US$25/oz Ag, US$0.90/lb Pb, and US$1.25/lb Zn.

Alongside its production assets, Golden Minerals has a strong pipeline of exploration projects that it will advance using the cash flow generated from its Rodeo and Velardeña operations.

At the Yoquivo Gold-Silver Project, Golden Minerals plans to build on the success of its initial drill programme, which returned intersections of high-grade gold-silver mineralisation. Golden Minerals plans to commence its Phase 2 drilling programme in Q2 ’21.

At the district scale El Quevar Silver-Gold Project, Golden Minerals has partnered with mining major Barrick Gold Corp (NYSE:ABX) (TSE:ABX) to target large high sulfidation epithermal gold systems at the project.

Under the terms of the earn-in agreement, Barrick must invest US$10mln on exploration and produce a pre-feasibility study with a NI 43-101 compliant mineral resource estimate of over 2moz of Au eq, over an 8-year period to earn a 70%-interest in the project.