GOLDEN, Colo. - Golden Minerals Company (NYSE-A:AUMN and TSX:AUMN) announced today the signing of a letter agreement for the sale of its wholly-owned subsidiary, Silex Argentina S.A., which owns the El Quevar Project. The agreement with Butte Energy Inc. stipulates a purchase price of $3.5 million, aimed at addressing Golden Minerals' immediate cash needs.
The non-refundable deposit of $500,000 is due by the close of business today, with the remainder to be paid upon execution of the definitive Acquisition Agreement by September 30, 2024, and closing of the transaction by October 31, 2024. The transaction is subject to regulatory approvals, due diligence, and board approvals from both companies.
This move comes as Golden Minerals grapples with liquidity challenges, having disclosed in August 2024 insufficient resources to meet its cash requirements through June 30, 2025. The company has ceased mining operations at the Velardeña mines in the first quarter of 2024 and is yet to receive an overdue payment of $2.8 million for the sale of assets related to these mines.
In addition to the Silex sale, Golden Minerals sold its subsidiary Minera Labri S.A. de C.V. on August 28, 2024, for approximately $445,500. The proceeds are expected to be used to reduce the company's liabilities.
Furthermore, Golden Minerals regained ownership of the Desierto I mining concession in Argentina after a successful appeal against its cancellation by the Mining Court of Salta.
Golden Minerals is actively exploring options to maintain operations, including potential asset sales, seeking buyers or partners for other assets, or securing equity or other financing. Failure to secure necessary funds may result in the company ceasing operations.
The information in this article is based on a press release statement from Golden Minerals Company.
In other recent news, Golden Minerals Company is undergoing significant changes. The firm announced the retirement of its Senior Vice President and Chief Financial Officer, Julie Weedman, effective August 15, 2024. Following Weedman's departure, Joe Dwyer, who has a strong background in finance, will assume the role of Chief Financial Officer.
Golden Minerals has also completed the sale of the Velardeña Mine, receiving a full payment of $2.5 million plus Value Added Tax. However, the company disclosed a delay in the closing of another agreement concerning its oxide processing plant and water wells in Durango State, Mexico, with an outstanding balance of $2.627 million plus VAT still pending.
The company is also dealing with non-compliance issues with NYSE American listing standards due to reported stockholders' equity of $0.6 million and recorded net losses over the past five fiscal years. In response, Golden Minerals has submitted a plan to regain compliance by December 6, 2024, which was accepted by the NYSE American.
Lastly, Golden Minerals has finalized a court-approved settlement agreement with Unifin Financiera S.A.B. de C.V., with its subsidiary, Minera William, set to pay Unifin $250,000 as part of this settlement. These developments highlight the continuous evolution within Golden Minerals Company.
InvestingPro Insights
Golden Minerals Company's decision to sell its El Quevar Project subsidiary comes at a critical time for the company, which is reflected in recent financial metrics. According to InvestingPro data, Golden Minerals experienced a significant revenue decline over the last twelve months as of Q2 2024, with a loss of $2.81 million USD. This drop in revenue is stark, representing an 85.23% decrease from the previous period. Furthermore, the company's gross profit margin was deeply negative at -76.78%, indicating that costs far exceeded revenues.
The liquidity challenges are further substantiated by the company's short-term financial obligations, which currently exceed its liquid assets. This is a critical point for investors to consider, as highlighted in one of the InvestingPro Tips, which also notes that analysts do not expect the company to be profitable this year. Additionally, with a one-month price total return of -20.25% and a one-year price total return of -60.32%, the performance of Golden Minerals' stock price has been under considerable pressure.
Investors looking to delve deeper into the financial health and future prospects of Golden Minerals may find additional insights in the 10 InvestingPro Tips available, which include an evaluation of the company's debt levels and dividend payments. For a more comprehensive analysis, visit InvestingPro for further details on these tips and other valuable metrics.
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