Golden Minerals – Exploration And Operations Update At The Rodeo Mine And The Pathway To Production At Velardena
Warren Rehn, President and CEO of Golden Minerals (TSX:AUMN – NYSE:AUMN), joins us for an operations and exploration update. We start off with an exploration update from some of the expansion drilling around the Rodeo Mine in Mexico. Next Warren discusses the operations at the Rodeo Mine and improved production metrics from Q3, with financial results scheduled for the first week of November.
We then move on to the development and path to production for the Velardena Property in Mexico slated for Q1 2022. We wrap up with a quick review of exploration planned for other projects and joint ventures in Mexico and Argentina.
If you have any follow up questions for Warren regarding Golden Minerals, then please email us at Fleck@kereport.com or Shad@kereport.com.
GM is on a very strong success track. Building a beautiful house, brick by brick. Little to no dilution going forward. Core holding.
Agreed JustTruth. Building it brick by brick, and steady progress made quarter after quarter.
How’s this for a click-bait headline?
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$500k Bitcoin: The Fed Will Be ‘Abolished’, BTC Will Be Global Reserve Currency, Gold Will Hit $5k
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Kitco News – Oct 17, 2021
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“The demise of the Fed is coming, and with the collapse of the current monetary system comes the adoption of Bitcoin as the new global reserve currency,” said Gareth Soloway, chief market strategist of IntheMoneyStocks.
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“What I’m actually calling for is a total collapse of the monetary system, actually. So, there will have to be a reset. And I do think that what we’re going to go through as a country, as a world, is something that’s going to equal if not worse than 1929 in the thirties of the Great Depression, it is going to be cataclysmic. But from its dust, Bitcoin and cryptocurrencies will rise and be the future of society,” Soloway told David Lin, anchor for Kitco News, at the Future Blockchain Summit in Dubai.
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https://youtu.be/zzpZDqC3k_U
Ex, another alarmist prognosticator with bitcoin and 5k gold, the end of the world etc etc.
I’m hoping my expection has gold closing over 1800 by week’s end, permitting a quick trip to 1840 or so. LOL
You never hear from the guys that actually make money.
It was a really click-bait and doom & gloom session from Kitco with Gareth, and it did come off somewhat alarmist, but it was still a good segment, and he made a lot of good points. It was a bit out-of-character though, as Gareth is a pretty savvy technical trader, and he IS one of the guys making money in a few different sectors. Even though I like both Gareth and David Lin, this interview was just a different and seems more like wild targets to get eyeballs.
doesn’t sound very savy to me. Kitco obviously talking their book. Not exactly a non biased source of information.
I understand Col. Saunders loved chicken LOL
Well Garreth isn’t an entrenched gold bull, and is actually a generalist investor and swing trader, so he covers a number of markets including many of the tech and financial stocks in the general indexes. It did come off that way, like Kitco just found a gold bull preaching to the choir, but in watching about 4 other interviews with Garreth, he never came across as wild-eyed gold bull waiting for the end of the world. Having said that, he does makes some good points about it not ending well for the central bankers and the need for a reset to the financial system, which is one of the bullish and oft-told narratives in the precious metals space.
Rehn says, “If you’re not drilling, you’re not doing anything as an exploration company.”
This is a flawed statement and indicates why AUMN lost $800K in Q2. Rehn has been saying for months that “we are finally a producer.” As a producer, the company should be focusing on bottom line earnings and cash flow and not waste money during this critical transition by spending money on long term drilling projects. But, Rehn is a Geologist and that’s how they think. If they aren’t drilling, “they’re not doing anything.” There’s plenty of time later to focus on long term exploration projects. Even Rodeo exploration could be deferred a year because they already have identified 2.5 years of ore.
If Rehn focused on bottom line earnings, enhancing them further by a reduction in grossly overpaid compensation of the staff and B.O.D., the stock would not be 63% off the $1.35/share high this year.
Then, maybe AUMN would be able to attract more investors and analytical support.
Case in point, gold is up nearly $50 this week and silver is up $1.45, but AUMN is down.
Wistar – I’d respectfully disagree, and completely understand why it was mission critical for the company to expand the resources and mine life at Rodeo. The biggest knock against the company from retail investors to institutional investors was that it was great that they have moved Rodeo into production, but it was a short mine-life and smallish resource, so it has received a big discount to NAV as a result of that.
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Yes, generating revenues from production is nice, but they don’t need to be focusing on free cash flows at this point in their business cycle, and as Jr producer, they need to put those revenues back to work into expanding their mining operations and resource base, because most companies work 2-5 years out in their mine plan, and a 2.5 year mine life was not enough to go on. The best work they could have been doing is drilling around Rodeo like they did, and they have seen success from their hard work that will eventually help in getting them rerated.
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Warren also mentioned that they held off on many of the longer range exploration projects, to instead focus on Rodeo and Velardena, and that was the right call. Velardena is mission critical as the next mine, as this will get their production profile increased to the point where more investors and funds will be of interest. 12,000 – 14,000 ounces of production from this year is a good start, but that isn’t going to trip most investors triggers. If they can increase the production and reserves at Rodeo, while bringing Velardena back into production in 2022, then this will get them on the map and is the best path forward, not worrying about bottom line earnings at this point.
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As it relates to Velardena, it sounds like it will be December before they get back the economics on the bio-oxide project to produce Gold at the mine, (in addition to Silver-Lead-Zinc). Originally they were considering a production decision in Q4 for next year on starting with the Silver-Lead-Zinc production first, and stockpiling the gold bearing ore. However, as Warren mentioned in the interview, he’s less interested in that 2-phased launch back into production unless Silver gets up into the higher $20’s, as they want to have the gold production in the mix in tandemn.
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They’ll need to take on debt to get the bio-oxide plant built, and again, this would be the right call when/if they make that decision, because they need to get Velardena into production to get their production profile larger, and be able run at a larger clip and produce even more revenues. This will help them get picked up by my more institutions and analysts, and may help with ETF inclusion and weightings.
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At that point once both mines (Rodeo and Velardena) are up and running with larger production output and optimized in costs…. THEN…. they can worry about their bottom line revenues.
Let me remind you that this stock is down 96% since the merger with ECU in 2011 and they haven’t produced a positive earnings quarter for 9+ years or so. In Q2 they had an opportunity to show a positive quarter had they not wasted valuable capital on mostly long term drilling expenses. Q2 could have improved market psychology with the transition from years of losses to their first positive quarter in years. Instead, another quarter wasted with an $800K loss.
You miss my point on Rodeo drilling. This could have been deferred another 6-12 months to generate more short term earnings momentum Q2-Q4 and after that, drill and expand the Rodeo ore body. Nothing would have been lost in the deferral, and the market psychology for the pitiful stock price would have benefitted from the initiation of a string of positive earnings quarters.
As you defend Rehn, I noticed you didn’t comment on the compensation. What level of salary, bonuses, free stock, and free options do you think mgmt. should receive for a stock down 96% since 2011? Many of us long term (ECU) shareholders are tired of the perpetual mismanagement.
I got your point, but don’t feel that the market today is waiting on them to have a positive earnings statement, nor do they care about a merger from 10 years ago. There was no reason to delay the expansion around Rodeo for 2-3 quarters of window dressing, when the big knock against the company is the small resource and short mine life around Rodeo. What was mission critical was expanding those resources through drilling, which is what they did, and yes, it would have been even more detrimental to have deferred it with a depleting resource in production at Rodeo, and the need to plan out several years in the mine plan, which were barely there.
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Also to keep looking at their performance from the vantage point of some takeover from over a decade ago, negates the larger macro picture with most gold producers and developers disappointing since then, as 2011 marked the top of the PM sector for 5 years, and miners didn’t start to rebound again until Jan of 2016.
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So, of course they pulled back for those bear market years, starting in 2011, with whole rest of the sector mind you, so that’s an arbitrary place to start measuring their performance from. Nobody looking to enter stocks today is measuring their performance from the very peak of the last bull market to today for trading or even investing, other than as a reference point of how undervalued they are at similar gold prices, which is actually a bullish statement (not a bearish) one.
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Unless someone is a longer-term suffer and bag holder in AUMN from that era, which 99.9% of people on this forum are not, then it’s an irrelevant point, and the position should have been sold at any point in that bear market to limit more losses, and bought back during bottoming period or pullback to capitalize on the nice pops it’s had a few different times since the new bull market in mining stocks started in 2016.
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Most haven’t even started looked strongly at miners again since 2016, where we saw the first turn higher in the PMs, and where AUMN had a great rally for anyone that bought into the lows near the Major bottom. It also discounts how well the stock moved in the more recent run in 2019-early 2021, where Golden Minerals also had a nice run from $.26 to $1.65. That is a huge multi-bagger gain that happened without regard for your feelings on their compensation or how they manage the company, so clearly their lack of revenues, or the other gripes you had didn’t stop it from going up 6 times in that run.
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The question is what will move the valuation higher today in this stock, aside from higher metals prices (which would obviously help)?
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That answer is growing the resources at Rodeo through drilling, which they just finished and it was successful as we are seeing those assay results come back in, and will help with the inevitable rerating. The second most critical action for the company will be moving forward with getting Velardena back into production as a 2nd mine; giving the company a large production profile that attracts larger investors. Having one to 2 quarters of revenue growth, while the rest of the company was problematically paused from drilling or development, would not have changed the performance in the slightest, except possibly as a going concern.
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They are not going to get rerated higher immediately for pausing and doing nothing (the complete wrong signal to send to the market) just for the sake of stating they had a positive quarter or two for window dressing. What will help them get rerated higher, aside from a rising metals price, is growing Rodeo resources, getting Velardena into production, and a discovery on one of their other exploration projects. That is where we fundamentally disagree, which is fine by the way, and that’s what makes a market.
Thank you for your elementary “Monday Morning Armchair” analysis. I love the “multi-bagger” comment whereupon the stock rallied off of a 99% decline (.18) only because gold/silver exploded (Q2 ’20) with most of the miners reaching near their highs since “the top of the PM sector (2011).”
Of course AUMN is still down 97.5% since that peak, but you’re absolutely correct, management has done everything right (sic). I think they deserve another raise!
BTW, that “arbitrary” year 2011 happens to be when they acquired ECU, which without, there would be no Rodeo nor Valardena.
(This will be my last comment but feel free to have the last word if you must.)
Wistar – Well right back at you and thanks for your “Monday of 2011 Armchair Analysis”. How are your comments more appropriate analysis than mine as analysis? Here’s a clue they aren’t.
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We both have different opinions as shareholder based on different ways we are looking at the progress of the company, different views and reactions of how management is proceeding with their projects, and our points of view are equally valid. Again, that’s what makes a market. Critiques of a company are fine, and so is not being happy with a management team’s performance from your armchair… but it is still just your opinion. If you don’t like the stock why not just sell it and take the tax loss, instead of complaining about them publicly?
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As for my Monday Morning Analysis, it comes after having had 5 discussions with Warren personally for 30-40 minutes each time to better understand the company assets, company strategy, and realities around brining and keeping Rodeo in production and getting Velardena into production, as well as the prospectivity of their other 4 exploration properties and 2 JV partners. It also comes after over a decade of successfully trading a large portfolio of mining stocks and knowing “when to hold em’, when to fold em’, and when to walk away.”
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My personal due diligence with the company after multiple conversations as well as pouring through all their news releases, presentations, and economic studies was also counterbalanced with bounced ideas off a few different key investors and newsletter writers in the space I respect. One of those investors & newsletter writers was John Feneck, who we’ve had on the show a number of times, and has mentioned AUMN on a few of those interviews, and he has also personally had a number of calls/meetings with management and it’s one of his larger positions as a result. I’m going to place more weight on an opinion like John’s than a disgruntled shareholder that came in through a merger, and didn’t sell during the bear market.
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Wistar – How many conversations with management have you had the last 2 years, or even the last 10 years to develop your armchair analysis? I’m guessing it was less than what John & I have had, based on the kinds of comments you are making on the blog bashing the company we just interviewed.
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Obviously, we have also had vastly different experiences with how we’ve done in the stock. Personally, I’ve swing-traded AUMN about a dozen times for nice gains overall, and am pleased with managements’ progress; and you’ve been sitting on a loss since a merger from a decade ago, without having taken any corrective action in 2011 or 2012 or 2013 or 2014 o 2015 when the PMs were clearly in a bear market across the board in all companies, and now you’ve become a bitter bag-holder, blaming management and bashing the company on the back of our interview with them here, instead of taking responsibility for your own poor trading. If you were a fund manager in past, then why in the world did you not limit you losses during the bear market in 2011 or 2012 or 2013 when it pulled down so much and take the tax loss?
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It comes down to investing rules, knowing when to cut a loss, and also when to buy a dip, and what I pointed out is that those who bought the low in 2019 (just 2 years ago, when the PM sector was in a dip, and and then ran hard into Q1 of this year) could have had a 6 bagger from that trade, or if they positioned later a 5 bagger, 4 bagger, 3 bagger, 2 bagger, or just a nice swing trade for 30% or 50%. So why do you insist on measuring their performance from a starting point at the very peak of the last bull market in PMs in 2011 and comparing it today. Nobody with a clue in investing would have held onto any Gold or Silver stock that they acquired in 2011 to present, as that would be an abysmal return indeed, so it’s a silly argument and starting point.
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Investors today, who are the audience for these company interviews, are looking at what the opportunity is moving forward based on the current assets the company has, their production/development/exploration growth profile, and the work strategy the company is engaged with. I can see plenty of opportunity in AUMN, and agree with the decisions management has made over the last year or two bringing Rodeo into gold production, their recent drilling around Rodeo to expand the pit shell to the south (which was the right call), and on doing the economics on bringing the bio-oxide plant into the mix for getting Velardena into production. When they raise capital through debt to bring that project online, that will also be the right call to get the company up to the level of production output from 2 mines to put it on more investors radar.
A nice update from Golden Minerals, and good to see that their exploration near the Rodeo Mine is going well, expanding the resources to the south of the pit and should mean a larger pit shell can be developed and brought into the mine plan.
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It was also promising that their production guidance is on track for the upper end, and that they had a full quarter of full milling capacity (with both ball mills) with better average head-grade.
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I’ve very interested to see how the economic study comes back on the bio-oxide plant to extract gold at Velardena, and if they’ll make a production decision for the first quarter of next year to produce not just Silver/Zinc/Lead but also Gold.