An anonymous director reports

GOLDEN MINERALS ANNOUNCES INTENT TO SELL EL QUEVAR SILVER PROJECT AND PROVIDES CORPORATE UPDATE

Golden Minerals Company has signed a letter agreement to sell Silex Argentina SA, its wholly owned subsidiary that owns the El Quevar project, and also provided updates on additional corporate activities.

Silex Argentina sale

The company signed a letter agreement with Butte Energy Inc. whereby Butte agreed to purchase 100 per cent of the issued and outstanding shares of Silex, which is the sole owner of the El Quevar project located in Salta province, Argentina. The letter agreement is intended to be binding on the parties, pending (i) negotiation of a definitive acquisition agreement on or prior to Sept. 30, 2024, and (ii) closing of the sales transaction on or prior to Oct. 31, 2024. The purchase price for the acquisition of 100 per cent of Silex is $3.5-million (U.S.), payable in cash, as follows:

• $500,000 (U.S.), as a non-refundable deposit, payable to Golden by the close of business on Sept. 3, 2024;
• $500,000 (U.S.) payable to Golden upon execution of the acquisition agreement;
• $2.5-million (U.S.) payable to Golden upon closing of the transaction.

Given its immediate cash requirements, the company has entered into the letter agreement to address near-term liquidity needs. As previously disclosed, the closing of the sale of the final portions of the Velardena properties (located in Durango state, Mexico) has not been completed and there is an outstanding payment with respect to that sale of approximately $2.8-million (U.S.) currently owed to the company. While the company initially planned to conduct additional drilling and complete an updated technical report at El Quevar, the company believes that the sale of Silex is the most effective strategy for alleviating the company's short-term financial pressures. Moving forward, the company intends to concentrate its exploration efforts on its other projects, including Sarita Este/Desierto and Sand Canyon, subject to the availability of future funding.

Closing of the transaction will be subject to additional conditions, including receipt of regulatory approvals, completion of due diligence review by Butte, and approvals from the board of directors of each of Butte and Golden. INFOR Financial Inc. is acting as financial adviser to Golden Minerals in relation to this transaction.

CUCA sales

On Aug. 28, 2024, the company sold its wholly owned Mexican subsidiary, Minera Labri SA de CV, to a private Mexican company for approximately $445,500 (U.S.). Minera Labri previously owned the Velardena properties' Plant 1, which together with the Velardena mines, was sold to another privately held Mexican group earlier in 2024. Upon consummation of that transaction, Minera Labri held no assets but held net operating losses and inflation-adjusted capital contributions. Under Mexican law, the balance of Minera Labri's capital contribution accounts (CUCAs) may be bought and sold. All funds related to the sale of the CUCAs have now been received and are expected to be deployed to reduce existing liabilities of the company and its subsidiaries.

Desierto claim returned to Golden

In the third quarter of 2022, the mining court of the province of Salta, Argentina, declared the cancellation of the company's Desierto I mining concession. The company disputed the cancellation, believing it to be without merit. On Aug. 28, 2024, the judges of the court of appeals of Salta (i) accepted the company's appeal, (ii) revoked the mining court's resolutions of cancellation and (iii) ordered the restitution to the company of the Desierto I mining concession.

Liquidity update

The company previously disclosed in August, 2024, that it did not have sufficient resources to meet its expected cash requirements over the 12 months ending June 30, 2025. The company ceased mining at the Velardena mines in the first quarter 2024 and subsequently sold the mines and certain related assets; the payment of $2.8-million (U.S.) of the purchase price for the remaining Velardena assets has been delayed and is overdue. The company's only near-term opportunity to generate cash flow to meet its expected cash requirements is from the sale of assets, equity or other external financing. As of Aug. 30, 2024, the company has cash and cash equivalents of approximately $900,000 (U.S.).

The company is taking actions to address its liquidity and financial stability concerns. As a part of these efforts, the company is evaluating and pursuing alternatives to obtain sufficient funds to continue as a going concern, including the potential sale of the company, finalizing the sale of its assets at the Velardena properties, closing of the transaction to sell Silex, seeking buyers or partners for the company's other assets, or obtaining equity or other external financing. The proceeds from these sales would be directed toward addressing the company's continuing operating expenses and satisfying its liabilities, while seeking to maximize any remaining value for its shareholders. If the company is unable to obtain additional resources, it may be forced to cease operations and liquidate.

We seek Safe Harbor.