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Shafter silver mine on ‘permanent layoff’

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Posted: Thursday, January 2, 2014 2:55 pm

About 170 employees plus contractors at the historic Shafter silver mine in Presidio County got some unwelcome news this Christmas season.

A 38 percent drop in the price of silver has forced Aurcana Corp. to put the mine in a “care and maintenance” condition, causing the “permanent layoff” of all employees. The company’s chief operating offi - cer, Andrew Kaczmarek, said in a telephone interview from Vancouver, BC, last week that the drop in silver prices did now allow the mine to continue after having been closed for maintenance earlier. “We were closed for extensive maintenance,” he said. “A main gear had to be repaired and we had a temporary closure.

While it was closed, we did a review of the mine.” Kaczmarek said silver was trading at $32.25 last January. “Today, it’s around 20 bucks,” he said. “That’s a 35 to 38 percent drop in price. We came to the conclusion that with today’s prices, we can’t be in that business.” While the mine produces only silver ore, he noted that gold also dropped a similar amount in the same period. “It was as high as $1,800, now it’s about $1,200,” he said. “We are planning to do some drilling from the surface [at Shafter] to see if we can get to higher grade zones,” Kaczmarek said. “Meanwhile, the mine is in a care and maintenance condition, making it safe. But we are going to wait for better silver prices.”

He said Aurcana Corp., which acquired the Shafter mine in 2008, “has spent a lot of money on equipment and bringing in a lot of people. But at the current short and medium term prices, it didn’t make sense to keep the mine open.” The employees were informed of the layoff on Wednesday, Dec. 18. “Aurcana’s management and its board of directors are very disappointed that in spite of many of our employees’ best efforts, the prevailing economic conditions, in particular low silver prices, have caused the company to suffer signifi cant losses from the Shafter project’s operations, resulting in an unsustainable drain on the company’s treasury,” Aurcana President and CEO Lenic Rodriguz said. “We wish to thank all our employees and stakeholders for their efforts and support.”

As a result of the decision to place the Shafter Project on care and maintenance, the company decided it would not immediately proceed with the planned updated resource estimate on the Shafter Project, which was referenced in the Company’s news release dated December 12. Shafter is an historical mine which produced 35 million ounces of silver between 1883 and 1942 when it closed due to the War Act and low silver prices. From 1979 to 1982, an extensive surface and underground drilling program resulted in a resource of 24 million ounces of silver.

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