Americas Gold and Silver Corp. believes a resolution will be reached soon regarding the Cosalá Operations in Mexico where an illegal blockade has been in place since February 2020. It anticipates that employees will return to work shortly and ramp up to full production will take place in the third quarter of this year.

Full Mexican government support will ensure the long-term stability of the operation, it said. The state and federal governments are supporting a resolution that benefits the people of Cosalá with the peaceful removal of the illegal blockade, according to the company.

“Based on our latest discussions with both the state and federal Mexican government, we are on the cusp of a resolution to the illegal blockade at our Cosalá Operations and anticipate our employees will be back to work this quarter,” President and CEO Darren Blasutti said.

“The restart of the Cosalá Operations and the recent high-grade Silver Vein discovery at the Galena Complex, near existing infrastructure, will increase exposure to silver and cash flow,” he added.

Following months of study at Relief Canyon, the company has decided to transition to run-of-mine heap leaching. “While the ramp-up has been more difficult than the company envisioned, I believe this change will lead to better economics and enhanced profitability for the operation,” Blasutti added.

The ramp-up at Relief Canyon in Nevada has been and continues to be a challenge since USAS poured first gold in February 2020.  During this period, the company has performed extensive analyses and implemented a number of procedural changes to address the startup challenges. The company said it identified naturally occurring carbonaceous material within the Relief Canyon pit, which was not recognized in the feasibility study.

During the first phase of mining (Phase 1 of 5), several adverse impacts affected the operation including the onset of the COVID-19 pandemic and the failure of the company’s radial stacker. Offsetting these challenges was that the definition of the gold mineralized zones through blasthole sampling reconciled reasonably to the block model. However, during Phase 1, an unknown quantity of carbonaceous material was crushed, stacked and disseminated onto the leach pad resulting in lower-than-expected recovery of the placed gold ore.

Following realization of this adverse material, the company said it implemented additional measures to the ore control procedure to minimize the impact the carbonaceous material could have on leach pad performance. Additional efforts focused on improving mining selectivity including the use of a hydraulic excavator operating on split (10 ft) benches when required.

Phase 2 mining, which commenced in late Q4 2020/early Q1 2021, has demonstrated a more structurally complex area than initially interpreted, caused by additional faults and folds, according to the company. Gold mineralization is strongly influenced by structural controls. The impact of the structural complexity, combined with the increased mining selectivity to reject carbonaceous material, has decreased ore availability in Q1 2021 and into Q2-2021.

As a result of these challenges, the company began two small run-of-mine test pads in Q1 2021 to evaluate the possibility of simplifying the flowsheet by bypassing the crushing and conveying circuits. The company said the results have been encouraging and the operation has transitioned to this method of ore placement to further demonstrate its applicability with haul trucks now delivering the ore directly from the pit to the leach pad. The company continues to evaluate options to improve the short-term operational and financial performance of the asset.

An impairment charge of $55.6 million has been taken in Q1 2021, reducing the carrying value of the Relief Canyon mineral interest, and property, plant and equipment. An additional reduction of $23 million was taken to inventory as a result of the decreased recovery expected from crushed gold ounces already placed on the leach pad. As further test work is ongoing, future results may cause a reassessment of the remaining carrying value and cause a subsequent recovery or an increase to the impairment, the company said.

Initial drilling from the new drill station on the 5500 Level at the Galena Complex in Idaho has yielded several high-grade intercepts at depth. Galena geologists discovered a new silver-copper trend south of the prolific Silver Vein. The strike and dip of this new trend matches very well with the strike and dip of the majority of the Silver Vein mined from the 3200 Level to the 4300 Level. Initial interpretations are that this trend is either a southern splay of the Silver Vein or that it is the true Silver Vein at depth. The company said it expects 2021 to be a transitional year at the Galena Complex for future production with continued exploration drilling supporting production growth toward a 2 million oz/y of silver plan. Longer term and assuming continued exploration success, it will again reach peak historical annual production levels of approximately 5 million oz/y, the company said.