Golden Minerals Company

Greetings and welcome to the Golden Minerals Company full year 2021 earnings webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Karen Winkler, Director of Investor Relations for Golden Minerals Company. Please go ahead.

Thanks, Operator. Good morning, everyone. On behalf of the Gold and Minerals team, I'd like to welcome you to today's earnings poll, during which we'll be discussing operating and financial results for the full year 2021. Before we get started, please note that certain statements made by management today will be forward-looking within the meaning of applicable securities laws. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to be materially different from those expressed or implied by such statements. Please refer to our most recently filed Form 10-K for details of risks and other important factors that could cause actual results to differ materially from those in our forward-looking statements. On the call today are Golden Minerals President and CEO, Warren Ring, and our Chief Financial Officer, Bob Vogelf. Following their prepared remarks, they will be available to answer questions. This webcast will also be available for replay on the company's website beginning tomorrow, where it will remain posted for approximately 30 days. I will now turn the call over to Warren.

Thank you, Karen, and thanks to everyone joining our call today. 2021 was a transformational year for Golden Minerals. We moved from exploration firm to junior gold silver producer, reporting two quarters of bottom line net income based on our Rodeo mine operations. We also completed a resource expansion drilling program at Rodeo, increasing mine life by about six months, and we conducted drill programs at two potentially significant exploration projects. Notably, we also moved Velardeña closer to a possible resumption of production, thereby focusing our efforts on achieving the sustained profitable production that's a critical piece of the gold and minerals strategy. We began processing gold-silver mineralized material from our Rodeo open pit mine in Durango State, Mexico in January 2021, and Rodeo performed strongly for the company throughout the year. We realized sequential quarterly growth in both revenue and net operating margin from the Rodeo operations and reported over $25 million in revenue and $12 million in net operating margin for the full year 2021. Rodeo's total cash cost per payable gold ounce net of silver credits decreased sequentially throughout the year, coming in at $754 per ounce in the fourth quarter, and averaging $937 per ounce for the full year. Rodeo generated over $12.3 million of net operating margin in 2021, surpassing our guidance of 10 to 11 and a half million. We also exceeded our 2021 guidance for payable production of between 12,000 and 14,000 ounces of gold and 25,000 to 30,000 ounces of silver, as we reported production figures of approximately 14,400 ounces of gold and 51,000 ounces of silver. During the fourth quarter of 2021, we completed a drill program targeting resource expansion near the Rodeo pit. As a result, we've been able to expand the resource to the southeast of the current pit and also, to a lesser extent, to the north end of the pit. We've added around six months of mine life to the project and currently anticipate operating profitably at Rodeo through the third quarter of 2023. The updated resource represents about a 25% increase in gold ounces as compared to the previous 2020 resource estimate. The drilling program also allowed us to truly delineate the lower grade resource, which we are stockpiling, and depending on metals prices, will likely process after the primary higher grade resource is mined out. For the full year 2022, we estimate processing between 175,000 and 185,000 tons of material through our oxide plant at an average rate of 500 tons per day. Available extraction is estimated at approximately 12,000 to 14,000 ounces of gold and 42,000 to 47,000 ounces of silver. Where those average grades in 2022 will be approximately 2.9 grams per ton for gold and 9.4 grams per ton for silver. These grades are lower than what we mined in 2021 as we work our way into lower grade parts of the resource, but they are fully in line with the mine plan. Mill recoveries are expected to remain around current levels of 80% for both gold and silver. Higher anticipated total throughput in the plant in 2022 compared to 2021 will offset the lower gold grades anticipated, resulting in similar payable gold extraction in 2022 as we had in 2021, but at a higher unit cost. Cash costs per payable gold ounce net of silver byproduct credits are expected to be between $1,100 and $1,200 during 2022. We continue to work on advancing our Velardeña underground silver gold mines ahead of making a production restart decision. We're in the final stages of testing pyrite concentrates for optimum processing using bio-oxidation technology in South Africa. And we estimate we will receive final results in April. These results will enable us to complete the detailed design of the proposed bio-oxidation plant. We're also conducting test mining underground this spring to ensure that with our chosen mining subcontractor, we can control mining dilution, which is critical to the ultimate success of the project. Upon completion of test mining, we plan to make the formal decision on a resumption of mining activities around mid-year. If we make the decision to restart mining activities at Billardania, construction of the biox plant would take roughly one year, running into mid-year 2023. The timing of production startup will depend in part on metals prices. It is conceivable, as I related to you last year, that we could begin mining activities with a three- to four-month ramp-up period and begin to sell silver lead and zinc concentrates while stockpiling the pyrite concentrates, which contain most of the gold, while the BIOX facility is being completed. Last week, we published updated technical reports for both our Velardeña and Rodeo projects at the PEA level. because of the new SEC disclosure regulations. The Velardeña report included updated operating and capital costs for the proposed BIOX plant. As anticipated, underlying costs associated with building the BIOX plant have risen. However, higher recent metal prices offset higher costs and support an estimated $119 million in pre-tax net present value at an 8% discount rate.