Golden Minerals controls a diversified portfolio of approximately 30 precious metals and other mineral exploration properties located primarily in or near historic precious metals producing regions of Mexico and Argentina. Between January 2012 and October 2014, the Company completed exploration property sales totaling approximately $10.0 million and relinquished other properties that were no longer of interest, thus reducing our portfolio from about 80 properties at the beginning of 2012 to about 30 properties as of October 2014. We expect to focus future exploration efforts on a few selected targets in Argentina and Mexico.
Golden Minerals currently controls six active exploration projects: Los Azules, Santa Isabel, Ruby Esmeralda, Zacatecas, Celaya, and San Diego (a 50 percent owned joint venture property with Golden Tag Resources).
None of these properties have established proven or probable ore reserves.
The Los Azules gold property is located approximately 20 kilometers west of San Francisco de Oro in southernmost Chihuahua, Mexico and about 45 kilometers west of Hidalgo del Parral. Los Azules hosts a 2-kilometer, north-south trending and gold-bearing epithermal quartz vein system cutting Tertiary felsic volcanic rocks and a felsic hypabyssal stock. Historic mining on the vein system at Los Azules reportedly produced 500,000 tonnes of gold ore averaging 11 g/t gold (Servicio Geologico Mexicano, p. 411 of Monografia Geologico-Minero del Estado de Chihuahua). Los Azules is located approximately 20 kilometers from the company's Santa Maria mine.
Golden Minerals holds 233 hectares of concessions in the Los Azules property through its wholly owned Mexican subsidiary Minera de Cordilleras, S. De R.L. de C.V under a purchase option agreement. The purchase agreement requires a series of option payments over a four-year period totaling $2.0 million, with $0.1 million required during each of the first and second years and a 5 percent net smelter return royalty, half of which may be repurchased for $1.0 million.
Golden Minerals conducted an initial drill program at Los Azules in the fourth quarter 2013/first quarter 2014. The 2,000-meter drill program tested down dip targets on the previously mined vein system. Drill holes were collared both underground and at surface in this program. As part of the drill program, Golden Minerals rehabilitated about 650 meters of underground drifts, and the Company continues these rehabilitation efforts to access the northern portion of the vein system which depicts better widths and higher silver grades in surface sampling.
Significant results from the initial drill program include 2.0 meters assaying 8.2 g/t (grams per tonne) gold, 1.0 meters assaying 35.2 g/t gold, 0.9 meters assaying 11.1 g/t gold and 0.5 meters assaying 10.5 g/t gold.
Selected Results from Initial Drill Program
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||True Width (meters)
Based upon the initial drill program's encouraging results, the Company authorized additional 2014 drilling focused on definition of a target gold and silver resource within the first 250 vertical meters along the strike of the vein beneath the historic mined areas. That second phase of drilling was completed during the third quarter 2014, bringing totals for the two phases of drilling to 7,475 meters in 30 holes. In October 2014, Golden Minerals retained an outside firm to prepare a National Instrument (NI) 43-101-compliant resource estimate on the Los Azules property. Report completion is expected in the first quarter 2015.
Assay and Drill Results
Santa Maria (Mexico)
On August 1, 2014, the Company entered into an agreement giving Golden Minerals the right to acquire for $1.6 million the Santa Maria mine, a privately-held gold and silver property located near the Parral District of southern Chihuahua State, Mexico and located approximately 20 kilometers from the Company's Los Azules project. The agreement calls for payments of $1.6 million over 1.5 years to complete the purchase. An initial option payment of $35,000 has been made and a $0.5 million option payment is due in January 2015.
Golden Minerals has recently completed a 2,300-meter, 11-hole initial drilling program at the Santa Maria mine. To date the Company has received assays for seven holes, with results for an additional four holes expected before the end of the year. Highlights include hole SM14-08 that returned an intercept of 568 grams per tonne silver and 2.7 grams per tonne gold over 4.42 meters, hole SM14-04 with an intercept of 222 grams per tonne silver and 2.5 grams per tonne gold over 4.95 meters, and hole SM14-06 which returned intercepts of 411 grams per tonne silver and 2.3 grams per tonne gold over 3.02 meters. Results are summarized in the table below.
||Drill Width (meters)
||True Width (meters)
Based on the encouraging results of drilling to date, in October 2014 Golden Minerals retained an outside firm to prepare a National Instrument (NI) 43-101-compliant resource estimate on the Santa Maria property. Report completion is expected in the first quarter 2015.
Our 100 percent controlled Zacatecas silver and base metals project in Mexico is in an advanced stage of exploration. Although we believe that the Zacatecas project may contain significant silver and other mineralization, we have not completed a feasibility study on the property, and the property may not advance further.
The Zacatecas Mining District is located in the central part of Mexico, in the Faja de Plata mineral belt. Our Zacatecas project surrounds the municipalities of Zacatecas, Veta Grande, Guadalupe, Pánuco, and Morelos in the state of Zacatecas, Mexico. We own approximately 150 concessions totaling approximately 8,600 hectares in the Zacatecas project.
To maintain all of the concessions in the Zacatecas project, we pay approximately $120,000 per year to the Mexican government. We are party to a finder's fee agreement with an individual, which requires that we pay a 1 percent net smelter return royalty on any mineral production from certain of our Zacatecas claims. We also have the obligation to pay a 1 percent net smelter return royalty on the San Sabino concession, which we may buy back for $1.0 million and a 2 percent net smelter return royalty on the San Gil concession. For the San Gil concession, on the first anniversary of production, we will be required to purchase the San Gil royalty for $575,000. At that time we will no longer be obligated to pay the 2 percent royalty.
San Diego (Mexico)
We own a 50 percent interest in the San Diego silver and gold exploration property, which is subject to a joint venture agreement between ECU and Golden Tag Resources Ltd., with each company holding 50 percent of the joint venture. The property consists of four concessions and the exploration activities of the joint venture are currently managed by Golden Tag. Golden Tag has the option to earn an additional 10 percent interest in this joint venture by making expenditures related to further exploration drilling and completing an updated resource assessment. We hold the concessions in the San Diego property through our wholly-owned Mexican subsidiary Minera William S.A. de C.V.
The San Diego property, located in the State of Durango, Mexico, is situated approximately nine kilometers northeast of the Velardeña Properties and contains the La Cruz-La Rata and El Trovador mines as well as a number of other shallower shafts which were sunk on narrower veins such as the Cantarranas, Montanez and El Jal. The mineralization at San Diego is similar in many respects to that at our Velardeña Properties but appears to contain less gold.