GOLDEN, Colo., June 21, 2013 /PRNewswire/ -- Golden Minerals Company (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.
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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.
The Company projects approximately $7 million of one-time costs in the second and third quarters 2013 for employee severance and other activities related to the suspension of operations and approximately $1 million in quarterly holding costs after the third quarter should operations remain suspended. The financial effect of unwinding Velardena's current working capital position is expected to be minimal, with cash proceeds from receivables and sales of existing inventory expected to offset payable accounts. With Velardena under a care and maintenance program, the Company anticipates a cash balance of approximately $14 million at year-end 2013. The Company plans to review whether an impairment of the Velardena asset is indicated for accounting purposes as it prepares financial statements for the quarter ending June 30, 2013.