Golden Minerals Company owns the silver and gold Velardeña Properties located in Durango State, Mexico. The Properties are comprised of two underground mines and two processing plants within the Velardeña mining district, approximately 65 kilometers southwest of the city of Torreón and 140 kilometers northeast of the city of Durango.
Of the two underground mines comprising the Velardeña Properties, the Velardeña mine includes five different major vein systems including the Terneras, Roca Negra, San Mateo, Santa Juana and San Juanes systems. During 2015 we mined from the San Mateo, Terneras and Roca Negra vein systems as well as the Santa Juana vein system to augment grades as mining and processing rates ramped up.
Due to continuing net operating losses, the company suspended mining and sulfide processing activities in November 2015 in order to conserve the asset until we are able to develop mining and processing plans that at then-current prices for silver and gold indicate a sustainable positive operating margin (defined as revenues less costs of sales) or we are able to locate, acquire and develop alternative mineral sources that could be economically mined and transported to the Velardeña Properties for processing.
We own a 300 tonne per day flotation sulfide mill situated near the town of Velardeña, which accounted for 100% of our revenue from saleable metals during 2015 and 2014. The mill includes lead, zinc and pyrite flotation circuits in which we can process the sulfide material to make lead, zinc and pyrite concentrates. Most of the silver and gold sold in 2014 and 2015 was contained in the lead concentrate. During 2015 we processed all our mined material through the sulfide plant.
We also own a conventional 550 tonne per day cyanide leach oxide mill with a Merrill-Crowe precipitation circuit and flotation circuit located adjacent to our Chicago mine, which we previously used to process oxide and mixed sulfide/oxide material from the Velardeña Properties. In July 2015 a wholly-owned subsidiary of Hecla Mining Company leased our Velardeña oxide plant for an initial term of 18 months beginning July 1, 2015. Hecla may extend the initial 18 month term for six additional months at its option. In mid-2016, we agreed to permit Hecla at its option to extend the lease for an additional 18 months following the initial six month extension, until December 31, 2018, in exchange for constructing, at its own cost, an expansion of the tailings impoundment. Hecla began processing material at the plant in mid-December 2015, and we expect to receive net cash under the lease of between $4.0 and $5.0 million in 2016.
We continue to evaluate and search for other oxide and sulfide feed sources, focusing on sources within haulage distance of our sulfide and oxide mills at the Velardeña Properties.
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