U.S. Silver & Gold reports strong fourth quarter

U.S. Silver & Gold, operators of the Galena mine in the Silver Valley, on Friday announced strong fourth quarter results and the discovery of a new high-grade vein structure at the mine.

Consolidated silver production in the fourth quarter totalled 661,337 ounces, according to a company press release. For the year, the company reported consolidated annual production of 2.57 million ounces of silver, an increase of 6 percent over 2011. They have a year-end cash balance of approximately $19 million.

The company, which recently went to 24/7 operations at the Galena, forecast 2013 silver production to increase 10 to 15 percent to 2.7 to 3.0 million ounces with projected cash costs decreasing to $17 - $19 per ounce, according to the press release. Silver currently sells for just over $30 per ounce.

U.S. Silver & Gold reported the discovery of a large high-grade area of silver-copper mineralization adjacent to the Caladay Zone. Drill results, according to the press release, include 3.7 feet at 65.3 ounces per ton silver, 5.5 feet at 59 ounces per ton, and two feet at 66 ounces per ton.

Year-end financial statements for U.S. Silver & Gold are scheduled to be released around March 27, according to the press release. The final calculations of operating costs have not been completed but total cash costs for all of 2012 are expected to be in line with forecasts.

"Our goals for 2013 are to increase production, reduce costs and raise the profitability of the ounces we mine," said Darren Blasutti, president and CEO of U.S. Silver & Gold. "With the increased silver production achieved during the fourth quarter of 2012, and the expected higher productivity of our new 24/7 schedule, we are confident we can meet the goals set for 2013."

Blasutti said the company is particularly excited about the increasing potential of the Caladay Zone.

"Recent drilling, along with the modelling of past results, has led to the expansion of existing silver-lead areas and the discovery of a large, high-grade silver-copper target that is close to our existing mine infrastructure," he said. These new areas will enable us to take advantage of our additional mining and hoisting capacity to increase production in 214 and beyond with modest capital outlays."

The Galena complex produced 625,604 ounces of silver during the fourth quarter of 2012 and 2.25 million ounces in total for the year. Ore grade for the quarter improved to 10.7 ounces of silver to rhe ton from 10 ounces to the ton. Quarterly ore tonnage grew 7 per cent to 60,497 tons following a planned workforce increase.

During late 2012 and early 2013, a review of historic data for the Caladay Zone, along with continued exploration, identified an area of high-grade copper-silver mineralization between the 4700 and 5200 levels, according to the press release. It is a zone of silver-copper mineralization found on the hanging wall side of a broader area of lead-silver mineralization. It occurs as a cluster of narrow stringer veins, shear fillings and siderite veins. This discovery is in a location that is distinct from the area previously known as the Lead Zone, but overlaps it.

The high grade silver-lead and new copper-silver areas between the 4700 and 5200 levels in the Caladay Zone are in close proximity to existing Galena Mine infrastructure, according to the press release. The Galena Complex has over 600 tons of unused hoisting capacity which would allow increased production from those areas as soon as Q4, 2013.

The first priority, according to the press release, will be to pursue a low-capital-cost option to fully utilize existing production capacity over the next several years while the company studies expansion options beyond the existing 1,500 tons per day milling and hoisting capacity. These studies will consider activation of the adjoining 4900-foot Caladay shaft which is currently idle. Current drilling and planned 2013 test mining will provide a further opportunity for geologists and engineers to further understand both the high-grade lead-silver resource and the new copper-silver deposit. Preliminary findings are expected at mid-year.

Initial production from redevelopment of the Coeur Mine began in the fourth quarter of 2012, according to the press release. As expected the silver-copper ore mined has been of a similar grade to the ore from the adjacent Galena.

According to the press release, continued new development as well as rehabilitation of existing workings will contribute to overall site production and will provide access for exploration in the coming year. U.S. silver & Gold expects the mine to be cash-flow positive in 2013 at current metals prices. The coeur is expected to ramp up from about 125,000 ounces of silver in 2013 to 500,000 ounces in 2016.

The company announced last October that a new silver-copper vein system was identified at the Galena Complex. The 350-370 vein has been traced to within 150 feet of existing workings. The area has the potential to offer near-term production opportunities at grades and widths comparable to other areas being mined.