Americas Gold and Silver 
pours first gold at Relief Canyon

Nine months after construction began on its Relief Canyon mine in Nevada, Americas Gold and Silver (TSX: USA) has poured first gold and expects commercial production to start before the end of the second quarter of the year.

Relief Canyon, about 153 km northeast of Reno, was built within budget for US$28 to US$30 million.

The mine is expected to produce 91,000 oz. gold per year over a 5.6 year mine life at all-in sustaining costs of US$801 per ounce.

Mining began in December and about 170,000 tonnes of mineralized material is on the leach pad. Production is ramping up (150,000 tonnes stockpiled at the crusher) and the company expects to reach design crushing and stacking rates of about 14,500 tonnes per day by the end of the second quarter this year.

Americas Gold and Silver picked up the Relief Canyon project — which included three small historic open pit mines and a fully permitted and constructed heap-leach processing facility — through its Sept. 2018 acquisition of Pershing Gold. The transaction closed in April 2019 and construction began in May.

Based on the current mine plan, the pit at Relief Canyon will be 1.5 km long by 0.6 km wide and roughly 0.3 km deep.

Darren Blasutti, Americas Gold and Silver president and CEO, said management wanted to acquire Relief Canyon in order to re-rate as a precious metals company. In 2018, gold was less than 25% of its revenues but adding Relief Canyon will bring that up to nearly 70% in 2020.

A stockpile takes shape at Americas Gold and Silver’s Relief Canyon gold mine in Nevada. Credit: Americas Gold and Silver.

Blasutti also noted that when the transaction closed in September 2018, spot gold was trading at US$1,180 per oz., and today is trading at more than US$1,600 per ounce.

“It feels great to pour gold and we think within a couple of months we’re going to be profitable,” Blasutti said in an interview. “The gold will ramp up and by the fourth quarter we’ll be at full capacity for mining, milling and production and that will create a lot of free cash flow for us.”

Blasutti forecasts Relief Canyon will produce between 50,000 and 60,000 oz. gold this year and between 80,000 and 90,000 oz. gold in 2021.

The company will be spending about $2 million on exploration at Relief Canyon starting in July. The drill program will consist of in-pit and exploration drilling to extend the mine life.

Elsewhere in the U.S., the company owns 60% of the Galena complex in Idaho, which produces a silver-lead concentrate.

Outside the U.S., it owns 100% of the Cosala operation in the east-central part of Mexico’s Sinaloa state, about 240 km northeast of Mazatlan.

Consolidated production last year for the company reached 1.2 million oz. silver, at consolidated cash costs of US$4.61 per oz. silver and all-in sustaining costs of US$12.71 per oz. silver.

The results only included nine months of production from the company’s Galena complex, which is undergoing a major recapitalization plan involving new equipment purchases, underground development to get to higher grade ounces, and exploration to define new silver resources.

Americas Gold and Silver acquired Galena through a business combination in 2014 with U.S. Silver & Gold. Since the acquisition, Americas Gold and Silver has cut cash costs per silver oz. by more than 50% by focusing on cost control measures and operating efficiencies.

Its Cosala property in Mexico is made up of 67 mining concessions over about 19,385 hectares, and contains Los Braceros, a process facility that historically produced copper, lead and zinc concentrates from material mined at the nearby Nuestra Señora mine. The property also includes the San Rafael underground zinc-silver-lead mine, the El Cajón silver-copper project, several other smaller past-producing mines and numerous mineralized showings. The company is undertaking an exploration program to explore the land package and extend the mine life at San Rafael.

Mining at Cosala has been stopped since Jan. 26 due to a dispute between two unions — one union representing employees is being challenged by a second union that wants to represent the workers.

“It’s not employee discontent or employees being unhappy, it’s in-fighting between unions, and until the government decides it’s going to fix the issue, our employees will be the ones who suffer. These things generally run a month or two months and then someone emerges the winner.”

If the illegal blockade is removed within a month, Blasutti says, Cosala should produce between 800,000 and 900,000 oz. silver in 2020, up from 600,000 produced in 2019.

Shares of Americas Gold and Silver were trading at $4.01 apiece within a 52-week trading range of $1.97 and $5.20. The company has a market cap of $347 million based on 87 million common shares outstanding.