Apogee’s La Solucion Mine Goes Under

Declining metal prices and lower grades combined with higher smelting costs and taxes have forced Apogee Minerals (APE-V, AGEEF-O) to close its La Solucion silver- zinc-lead mine north of La Paz in Bolivia — yet another casualty of the worsening financial crisis.

The Canadian junior is negotiating with union officials and Bolivia’s Mines Ministry to figure out the best way forward at La Solucion, which has a 15-year production history.

The La Solucion mine had been producing at a rate of 40,000 tonnes per year with production grades averaging 20 oz. per tonne silver equivalent, according to Apogee’s website.

Apogee management did not return phone calls requesting comment.

While it has had to put La Solucion on hold, however, the company has no plans to scale down development at its Pulacayo-Paca project on which it holds an option to joint venture with Apex Silver Mines (SIL-X).

Under that agreement, Apogee can earn up to a 60% interest in the project in southwestern Bolivia by completing a feasibility study by July 30 next year.

It is unclear whether Apex Silver’s announcement on Nov. 14 that it is selling its stake in the massive San Cristobal zinc and silver mine to Japan-based Sumitomo( SSUMF-O) will have any bearing on Apex Silver’s advancement of Pulacayo-Paca.

According to Apogee, the Pulacayo mine is the second-largest silver mine in Bolivia’s history with past production of more than 600 million oz. silver. The Paca project is a large dacitic dome with open-pit potential.

In late October, Apogee demonstrated a sizable increase in resources at Pulacayo. The new estimate (excluding mining and metallurgical dilution) added 11.6 million oz. silver in the indicated category and 22.4 million oz. in the inferred, with zinc boosted by 225 million indicated lbs. and 307 million inferred lbs., and lead by 97 million indicated lbs. and 128 million inferred lbs.

Total indicated resources are now pegged at an estimated 7 million tonnes grading 53 grams silver per tonne, 1.42% zinc and 0.63% lead. In the inferred category, Pulacayo contains 9.56 million tonnes grading 75 grams silver, 1.46% zinc and 0.61% lead.

Silver makes up about 50% of Pulacayo’s total value, with zinc and lead making up about 25% each. The deposit remains open for further expansion, the company says, because until now it has concentrated its energy on a limited area of mineralization in order to speed up scoping and feasibility studies.

The Paca deposit, meanwhile, contains an inferred resource of 24.7 million oz. silver, 469 million lbs. zinc and 275 million lbs. lead.

All of Apogee’s projects are in the historic silver-producing regions of central and southwestern Bolivia.

The decision to halt production at La Solucion did not seem to weigh on the stock price. At presstime, Apogee’s shares were trading at about 5.5¢ per share in a 52-week range of 3-54¢.