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Durango State, Mexico

Land Area
557 hectares

Property Description
Two underground Ag/Au mines & two mills (oxide & sulfide)

Silver and gold; lead and zinc byproducts

100% owned

Project Stage
Continuing work regarding potential 2022 re-start of production

Current Activities & Work
Third round of bulk sample testing; to be followed by mine planning

Current and complete

Overview & History

The Velardeña Properties in Durango State, Mexico contain two past-producing underground silver and gold mines and two processing mills. Mining was suspended in November 2015 when a combination of low metals prices, dilution and metallurgical challenges rendered operations unprofitable. We subsequently leased one of Velardeña’s two mills to Hecla Mining Company - beginning late 2015 and ending in November 2020 -- and this lease arrangement provided cash flow that supported Golden's exploration activities.

In recent years we have evaluated and tested various mining methods and processing alternatives that could potentially enable sustainable profitable operations at Velardeña. In late 2019, Golden announced it had achieved successful results from testing Velardeña gold concentrate material using Finnish firm Outotec’s bio-oxidation or “BIOX” process. BIOX is a unique and sustainable technology that was developed to pre-treat refractory ores and concentrates ahead of conventional cyanide leaching. The gold in these types of mineralized material, such as those found at Velardeña, is encapsulated in pyrite and arsenopyrite which prevents the gold from being successfully cyanide leached. BIOX utilizes bacteria to oxidize these sulfide materials, thereby exposing the gold for subsequent cyanide leaching and increasing overall gold recoveries. Golden Minerals believes BIOX technology is key to unlocking successful and sustainable value from production at Velardeña. Indeed, 2019 BIOX testing of Velardeña material achieved gold recoveries of 92% from pyrite concentrates, compared to sub-30% gold recoveries realized when Golden last operated Velardeña in 2015. 

Golden published an updated PEA in April 2020 that incorporates refinements to the resource model as well as bio-oxidation processing technology designed to enhance the recovery of gold from pyrite and arsenopyrite that is common in the veins at both the Velardeña and Chicago mines. 

During 2021, we have continued to optimize Velardeña's mine plan and processing details as well as conducted bulk sample test-mining and processing, all in advance of establishing a definite schedule for restarting commercial production at the Velardeña mines and the installation of the bio-oxidation circuit. In June 2021, we began limited scale mining activities at our Velardeña underground mine to obtain further bulk samples for use in final optimization of the bio-oxidation plant design and for use in additional flotation separation studies that will indicate how we can best separate the gold-bearing minerals into the pyrite-arsenopyrite concentrate that is proposed for processing in the bio-oxidation circuit. We are also testing mining methods to ensure that we can effectively control mining dilution to obtain the head grades that we expect based on our PEA study. We expect to have the results of these studies in early 2022. No development decision has yet been made regarding a potential restart of the Velardeña mines. 

The oxide mill at Velardeña is currently being used to process gold-silver material from our Rodeo project. A second ball mill was installed in April 2021 that is used in the processing of Rodeo's gold-silver material.

Highlights - 2020 Velardeña PEA

Tetra Tech, an independent engineering company, prepared the PEA for the Company in accordance with Canadian National Instrument 43-101 “Standards of Disclosure of Mineral Projects” (“NI 43-101”). The PEA assumes prices of $1,324/oz gold, $16.23/oz silver, $0.90/lb lead and $1.25/lb zinc. Preliminary results of the economic analysis are shown in pre-tax U.S. Dollars as highlighted below. The complete PEA will be published on SEDAR within 45 days of our April 2, 2020 press release.

  • Pre-tax net present value (“NPV”): (US)$85.9 million at an 8% discount rate
  • Pre-tax Internal rate of return (“IRR”):  138.6%
  • Pre-tax Payback period:  1 year
  • Total pre-production capital cost:  $10.27 million, including 10% contingency*
  • Post-production and sustaining capital:  $ 15.93 million, including 10% contingency
  • Pre-production development time:  1 year
  • Life of mine (“LOM”):  10 years
  • LOM contained silver:  12.3 Moz; LOM contained gold:  188 Koz
  • LOM average silver grade:  337 grams per tonne (“g/t”); LOM average gold grade:  5.15 g/t
  • LOM pre-tax free cash flow:  $130.2 million
  • LOM payable silver:  10.2 Moz; LOM payable gold production:  119 Koz
  • LOM payable Ageq:  19.7 Moz (Au and Ag only at a ratio of 80Ag:1Au)

*Capital estimate for bio-oxidation plant includes additional contingency

Pre-Tax Technical Economic Model Results
Item Total per Tonne
($000s) of Material
Gross Payable $375,728 $330.19
TCs, RCs and penalties ($33,130) ($29.12)
Freight & Insurance (1) ($12,311) ($10.82)
NSR $330,288 $290.21
Operating Costs    
Mining costs ($94,303) ($82.87)
Milling costs ($54,241) ($47.67)
Site Administration ($15,656) ($13.76)
G&A ($8,014) ($7.04)
Federal Mining Royalty ($1,651) ($1.45)
  ($173,866)  ($152.79)
Operating Margin $156,423 $137.46
Capital Costs    
Mine Development ($10,791) ($9.48)
Process Plant ($9,460) ($8.31)
Infrastructure ($782) ($0.69)
Other Non-Operating Costs* ($5,158) ($4.53)
Cash Flow $130,232 $114.44
NPV8% $85,914  
IRR 139%  
Payback (years) 1  
* includes contingency equal to 10% of capital costs above    


Cash Costs  
Cash cost per payable Ag ounce, net of by products $0.92
All in Sustainable cost per payable Ag ounce, net of by products $3.48

PEA Sensitivity Analysis

Velardena Sensitivity

Other Velardeña Information

Location, Access and Facilities

The Velardeña Properties are comprised of two underground silver and gold mines (Velardeña and Chicago) and two processing plants, located within the Velardeña mining district approximately 65 kilometers southwest of the city of Torreón and 140 kilometers northeast of the city of Durango. The properties are accessed by a seven-kilometer road from the village of Velardeña, which is reached by highway from Torreón and Durango.

Power is provided through substations connected to the national grid. Water is provided by wells located in the valley adjacent to the Velardeña Properties. We hold title to three wells located near our sulfide plant and certificates of registration to three wells located near our oxide plant. We are licensed to pump water from all six wells up to a permitted amount.

Title and Ownership

The Velardeña Properties are subject to the Mexican ejido system requiring us to contract with the local communities, or ejidos, surrounding our properties to obtain surface access rights needed in connection with our mining and exploration activities. We currently have contracts with two ejidos to secure surface rights for the Velardeña Properties: one that provides surface rights to certain roads and infrastructure through 2021, and a second that provides exploration access and access rights for roads and utilities until 2038.

We hold 29 mineral concessions covering 557 hectares in the Velardeña Properties.  We also own the land surface rights to 144 hectares that contain the oxide plant, tailings area and access to the Chicago mine, along with surface lands that may be required for potential plant expansions.

Property History

Exploration and mining in the Velardeña district extends back to at least the late 1500s or early 1600s, with large scale mining beginning in 1888 with the Velardeña Mining and Smelter Company. In 1902, the mining properties were acquired by ASARCO, who mined the property until 1926 when the mines were closed. For the next 35 years, the mines were operated from time to time by small companies and local miners. The property was nationalized in 1961, and in 1968 the sulfide processing plant was built by the Mexican government. In 1994, William Resources acquired the concessions comprising the Velardeña Properties. In 1997, ECU Gold (the predecessor to ECU Silver Mining Inc.) purchased from William Resources the subsidiaries that owned the concessions and the oxide processing plant. The sulfide processing plant was acquired in 2004.

Exploration and Mining Activity

Golden Minerals Company mined oxide and mixed oxide/sulfide material from the Velardeña and Chicago mines during the years 2011 to 2013. Between November 2014 and November 2015, we mined from the Velardeña mine’s San Mateo, Terneras, and Santa Juana vein systems, as well as from the Chicago mine.  We suspended mining activities in November 2015 when a combination of low metals prices, dilution and metallurgical challenges resulted in continued operating losses. We placed the mine and sulfide mill on care and maintenance to enable a re-start when mining and processing plans and metals prices indicate mining activities may be conducted profitably, or until we are able to locate and develop alternative mineral sources that may be economically mined and transported to the Velardeña Properties for processing.

We continued to search for and evaluate other oxide and sulfide feed sources, focusing on sources within haulage distance of our sulfide and oxide mills at Velardeña. Additionally, as noted above we have evaluated and tested various mining methods and processing alternatives that could result in sustained profitable operations.  In 2020 we released results of an updated PEA that incorporated refinements to the resource model and a bio-oxidation processing methodology designed to greatly improve the recovery of gold from pyrites and arsenopyrites.


We own a 300 tonne per day flotation mill situated near the town of Velardeña, which accounted for 100% of our revenue from saleable metals during 2014 and 2015. The mill includes three 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 mill with a Merrill-Crowe precipitation circuit which is located adjacent to our Chicago mine. We previously used this mill to process oxide and mixed sulfide/oxide material from the Velardeña Properties. Subsequently, the mill was leased to Hecla Mining Co between late 2015 and November 2020. The mill is presently being used to process Rodeo's gold-silver material (as of January 2021).

NI 43-101 Compliant Mineral Resource Estimate

(M oz)
('000 oz)
Silver Eq.
(M oz)
Velardeña Properties
Measured 0.4 4.1 71.0 9.8 317 5.4
Indicated 1.0 9.2 143.0 20.7 303 4.7
Inferred 1.8 20.1 268.0 41.5 354 4.7
  • Source:  Tetra Tech PEA NI 43-101 TR, March 2020. Prices are 3-year trailing averages as of Dec. 2019: $16.30/oz Ag and $1,305/oz Au. Silver equivalents calculated at 80.6:1.
  • Metal prices for NSR cutoff are 3-year trailing average as of December 2019: (US) $16.30/troy oz Ag, $1,305/troy oz Au, $0.99/lb Pb and $1.27/lb Zn
  • For additional details see the Technical Reports page

Geology & Mineralization

The precious metal deposits in the Velardeña and Chicago mines are narrow epithermal to mesothermal quartz-calcite to quartz-sulfide veins that follow three distinct trends.  In the Velardeña mine east-west striking steeply north-dipping veins include the Terneras and San Mateo vein groups and the north-west striking, steeply northeast dipping Santa Juana veins.  In the Chicago mine, the veins strike north-east and dip steeply to the southeast.  Most veins carry recoverable lead and zinc values in galena and sphalerite as well as silver either in galena or in freibergite and gold hosted in pyrite and arsenopyrite.

The Velardeña district is located at the boundary between the Sierra Madre Oriental to the east and the Mesa Central sub-province to the west. The regional geology is characterized by a thick sequence of limestone and calcareous clastic sediments of Cretaceous age, intruded by Tertiary plutons. During the Laramide Orogeny, the sediments were folded into symmetrical anticlines and synclines that were modified into a series of asymmetrical overturned folds by a later stage of compression.

A series of Tertiary stocks have intruded the Cretaceous limestone over a distance of approximately 15 kilometers along a northeast to southwest trend. The various mineral deposits of the Velardeña mining district occur along the northeast southwest axis and are spatially associated with the intrusions and their related alteration.

Several types of Tertiary intrusive rocks are present in the Velardeña district. The largest of these intrusions outcrops on the western flank of the Sierra San Lorenzo and underlies a portion of the Velardeña Properties. It forms a northeast oriented, elongated body of diorite composition that outcrops over a distance of about 2.5 kilometers. The intruded limestone has been altered by contact metamorphism (exoskarn), and locally the intrusive has been metamorphosed (endoskarn).

Velardeña Mine

The Santa Juana, Terneras, and San Mateo vein groups on the Velardeña property are hosted by Cretaceous Aurora Formation limestone, a diorite intrusion and related skarn.

Two main vein systems are present in the Velardeña mine. The first is the northwest striking, steeply north-dipping Santa Juana group of veins which include over 20 individually named veins, the most important of which are the A1, A4, CC, C1, and Santa Juana veins. The second vein system is east-west trending and steeply north-dipping and is represented by the Terneras and San Mateo vein groups. The Terneras group of veins includes the Roca Negra, Terneras Norte, Terneras Sur, Hiletas, and San Juanes veins. The San Mateo group includes San Mateo Oeste and San Mateo Este.

The most extensive of these is the Terneras vein, which was mined in the past over a strike length of 1,100 meters. All of these veins are observed to have extensive strike lengths and vertical continuity for hundreds of meters. The mineralogy of the east west system is somewhat different in that it contains less arsenic than the Santa Juana veins.

Vein widths in minable portions of the vein systems vary from 0.2 meters to 4 meters but average widths for most veins is 0.3 to 0.5 meters.  Vein widths generally decrease where veins cut skarn.

Chicago Mine

On the Chicago property, the oldest rocks outcropping are Cretaceous limestone of the Aurora Formation which are highly folded. This limestone is locally metamorphosed by the intrusion of the Tertiary dioritic stocks and dykes. The general geology of the Chicago property is very similar to the geology of the Velardeña property. The Chicago veins strike northeast and dip steeply southeast. The main veins of interest at Chicago are the Chicago and Escondida veins.  Chicago veins tend to be higher in lead and zinc than the Santa Juana or Terneras veins.  Vein widths at Chicago are variable and tend to be narrower than at the Santa Juana deposit, especially in the skarn host.

Velardeña Drill Results

Velardeña 2014 Drilling Results