Golden Minerals Suspends Production Until...

DenverDave

Gold & Silver Prices Rise to a “Sustainable Cash Margin”

The plunging paper prices for gold and silver are making mining operations no longer sustainable (at the paper futures prices). One of the first casualties appears to be Golden Minerals Company, who Friday announced that it has suspended all operations at its Velardena mine until prices for silver and gold “indicate a sustainable margin for operations“.

GOLDEN, Colo., June 21, 2013 /PRNewswire/ – Golden Minerals Company (NYSE MKT: AUMN); (TSX: AUM) (“Golden Minerals” or “the Company”) announced that it has suspended operations at its Velardena mine as of June 21, 2013, in order to conserve the asset until operating plans and prices for silver and gold indicate a sustainable cash margin for operations. The employees at the Velardena mine were informed of the Company’s decision in the afternoon of June 21, 2013. In February 2013 the Company anticipated the Velardena operations would achieve operating cash neutrality during the third quarter 2013, assuming gold and silver prices of $1,600 per ounce and $30 per ounce, respectively. In May 2013 the Company projected a $5 million negative margin from the operations for the remaining three quarters of 2013 at prices of $1,500 gold and $25 silver. Metals prices have continued to decline and remain below these levels.

The Company is placing the mine and processing plants on a care and maintenance program to enable a re-start when operating plans and metals prices support a cash positive outlook for the property. Approximately 470 positions at the Velardena operations are being eliminated as a result of the suspension. The Company is presently negotiating the specific terms of a severance package with its labor unions. The Company plans to retain a core group of approximately 50 to 60 employees to facilitate a re-start of operations and to maintain and safeguard the longer term value of the asset.

http://www.silverdoctors.com/golden-minerals-suspends-production-until-gold-silver-prices-rise-to-a-sustainable-cash-margin/

ricko

Interesting.... though I believe they are doing this to sustain supplies for profit rather than anything to do with operating costs. Unless, of course, this particular mine has such poor yields that high PM prices are truly necessary. Could be... Cheers, RickO

OPA

I suspect this may be a ploy to get concessions from the labor unions...I could be wrong, but that's my take.

CaptHenway

There was an article in the Denver Post a week or two ago that said that Newmont Mining was cutting production and laying off people because of the lower prices.

timcoin

Reminds me of when Carter fixed gas prices. Refineries cut production, and then the shortage began. It seems likely premiums on physical metals will increase.

DenverDave

Proof once again, Paper is easier to print then silver is to Mine...

Most are saying production cost on Silver these days is in the $20/$30oz range...