Golden Minerals Announces Sale of Velardeña Assets and Unifin Settlement

Rhea-AI Summary

Golden Minerals Company announces the sale of Velardeña Properties in Mexico for $5.5 million in cash. Additionally, a settlement agreement with Unifin Financiera S.A.B. de C.V. was granted final court approval.

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Insights

Financial Analyst

The sale of Golden Minerals' Velardeña assets represents a strategic shift for the company, pivoting away from production assets in Mexico to focus on exploration and development in Argentina. The transaction involves a $5.5 million cash inflow, which, along with the anticipated sale of tax credits, could provide a liquidity boost. This liquidity is important for funding ongoing exploration projects and may reduce the need for external financing, potentially dilutive equity issuances, or debt. The settlement with Unifin removes a legal overhang and frees up resources for operational activities. From an investor's standpoint, this deal appears to streamline Golden Minerals' portfolio, which could lead to a more focused business model and potentially improve operational efficiencies.

Market Research Analyst

Golden Minerals' disposal of their Velardeña properties suggests a strategic reallocation of resources. By divesting non-core assets, the company may be aiming to enhance value through concentrated efforts in locations where they foresee higher potential returns or lower operational risks. A successful shift towards Argentina could open up new opportunities and partnerships and possibly attract investors with an interest in emerging and frontier markets. However, the effectiveness of this strategy is contingent upon the company's ability to leverage the proceeds from the sale effectively in its Argentine operations and on the geopolitical and economic stability of the region.

Mining Sector Analyst

By offloading its Velardeña properties, Golden Minerals is not only capitalizing on its assets but also possibly mitigating operational risks and liabilities associated with its mining concessions, equipment and land parcels in Mexico. In the mining sector, such sales can contribute to a company's strategic focus on its most promising assets, typically leading to better allocation of capital and human resources. Additionally, investors should consider the impact of this divesture on the company's overall production and revenue, as the sale of revenue-generating assets may lead to short-term income decline. Nonetheless, the move to concentrate on Argentina indicates an optimistic outlook on the region's geological prospectivity and mining-friendly environment, which could have long-term growth implications.

GOLDEN, Colo.--(BUSINESS WIRE)-- Golden Minerals Company (“Golden Minerals,” “Golden” or the “Company”) (NYSE-A: AUMN and TSX: AUMN) announces it has entered into a definitive agreement to sell the primary assets comprising its Velardeña Properties, located in Durango State, Mexico.

On April 29, 2024, two of Golden’s Mexico subsidiaries, Minera William S.A. de C.V. (“Minera William”) and Minera Labri S.A. de C.V. (“Minera Labri”) entered into certain asset purchase and sale agreements with a privately held Mexican company whereby Minera William and Minera Labri agreed to sell certain mining concessions, equipment, land parcels and other assets to the buyer in exchange for an aggregate purchase price of $5.5 million in cash, plus Value-Added Tax (“VAT”). The assets being sold include the Velardeña and Chicago mines, both of the Company’s oxide and sulfide processing plants and related equipment. Under the terms of the sales agreements:

1. On April 29, 2024, the buyer paid a non-refundable advance payment of $1.0 million in cash to the Company;
2. On May 20, 2024, the buyer shall pay $2.0 million in cash, plus VAT (including VAT on the advance payment), to the Company, and
3. On July 1, 2024, the buyer shall pay $2.5 million in cash, plus VAT, to the Company.

Separately, the Company announces that the previously disclosed settlement agreement between Minera William and Unifin Financiera S.A.B. de C.V. (“Unifin”), which related to a lawsuit between the entities, was granted final court approval. As previously communicated in the Company’s Current Report on Form 8-K filed on December 12, 2023, under the terms of the settlement agreement, Minera William agreed to pay $250,000 to Unifin in exchange for Unifin’s withdrawal of the lawsuit and release of Minera William from any future claim related to the dispute.

Golden’s President and Chief Executive Officer, Warren Rehn, commented today, “We are pleased to have negotiated this cash sale for the Velardeña assets in such a timely manner. The sale will enable us to divest of our production assets and related liabilities in Mexico and allow us to focus on exploration and development, principally of our Argentina assets. We also anticipate future net proceeds from the sale of tax credits related to the holding companies of the production assets.”

About Golden Minerals

Golden Minerals is a precious metals mining exploration company based in Golden, Colorado. The Company is primarily focused on advancing its Yoquivo property in Mexico, and, through partner-funded exploration, advancing its El Quevar silver property in Argentina. The Company is also focused on acquiring and advancing selected mining properties in Mexico, Nevada and Argentina.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and applicable Canadian securities legislation, including statements regarding buyer’s scheduled payments to the Company pursuant to the sales agreements, the Company’s expected divestment of its production assets and related liabilities in Mexico; the Company’s expected focus on exploration and development of its Argentina assets and anticipated future net proceeds from the sale of tax credits related to the holding companies of the Company’s production assets. These statements are subject to risks and uncertainties including the Buyer’s ability to make the payments under the sale agreements, increases in costs and declines in general economic conditions; changes in political conditions, in tax, royalty, environmental and other laws in the United States, Mexico or Argentina and other market conditions; and fluctuations in silver and gold prices. Golden Minerals assumes no obligation to update this information. Additional risks relating to Golden Minerals may be found in the periodic and current reports filed with the Securities & Exchange Commission by Golden Minerals, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

For additional information, please visit http://www.goldenminerals.com/.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240510905752/en/

Golden Minerals Company

Karen Winkler, Director of Investor Relations

(303) 839-5060

Source: Golden Minerals Company

FAQ

What assets did Golden Minerals sell in Mexico?

Golden Minerals sold the Velardeña Properties, including the Velardeña and Chicago mines, oxide and sulfide processing plants, and related equipment.

How much did Golden Minerals receive from the sale of Velardeña Properties?

Golden Minerals received an aggregate purchase price of $5.5 million in cash, plus Value-Added Tax (VAT).

What was the settlement agreement with Unifin related to?

The settlement agreement with Unifin was related to a lawsuit between Minera William and Unifin, where Minera William agreed to pay $250,000 to Unifin in exchange for withdrawal of the lawsuit.

Who is Golden Minerals' President and CEO?

Golden Minerals' President and Chief Executive Officer is Warren Rehn.