Golden Minerals Announces Second Quarter 2013 Results

GOLDEN, Colo., Aug. 8, 2013 /CNW/ - Golden Minerals Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX: AUM) announces results for the quarter ending June 30, 2013.

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Financial Results

For the second quarter 2013, Golden Minerals recorded revenue of $4.5 million and costs of metals sold of $8.1 million for a negative gross margin of $3.6 million from the Company's Velardena Operations in Mexico. For the same period 2012, the Company recorded revenue of $4.9 million, cost of metals sold of $6.6 million and a negative gross margin of $1.7 million. The decrease in revenue was driven primarily by lower metals prices and approximately 32 fewer mill production days in the second quarter 2013. The Company recorded a net loss of $217.8 million for the second quarter 2013 as compared to a net loss of $7.6 million in the second quarter 2012. The second quarter 2013 net loss includes a one-time non-cash impairment charge, net of tax, of $204.2 million related to lower metals prices and the suspension of production at the Velardena Operations on June 19, 2013. Loss from operations in the second quarter 2013 was $261.9 million compared to $11.0 million in the second quarter 2012, primarily attributable to the impairment charge mentioned above and also to the decrease in gross margin and the recording of $2.3 million in Velardena severance and shutdown expenses, partially offset by decreases in exploration, Velardena project and administrative expenses.

The Company's cash and short-term investments balance on June 30, 2013 was $30.0 million as compared to $44.6 million on December 31, 2012. The decrease during the six month period is due primarily to $6.7 million in operating losses at the Velardena Operations; $4.5 million in Velardena Operations capital and development expenditures; $2.3 million in severance and shutdown costs at the Velardena Operations; $2.8 million in exploration expenditures; $3.5 million in general and administrative expenses and $1.7 million in El Quevar project expense; offset by net proceeds of $4.0 million from the sale of non-strategic exploration property interests and a decrease in working capital of $2.9 million primarily related to an increase in accrued liabilities at the Velardena Operations. The Company currently expects to have a cash balance of approximately $16.0 million at year-end 2013. This estimate is $2.0 million higher than our previous estimate.

Velardena Operating Results

Payable production during the second quarter 2013 totaled approximately 166,400 silver equivalent ounces (calculated at 60:1 gold to silver), comprised of 100,400 payable ounces of silver and 1,100 payable ounces of gold. This compares to payable production in the second quarter 2012 of approximately 184,400 silver equivalent ounces (calculated at 60:1 gold to silver), comprised of 94,400 payable ounces of silver and 1,500 payable ounces of gold. 2013 production was negatively affected by approximately 32 fewer mill production days during the quarter due to the previously-announced suspension of an explosives permit and the suspension of operations on June 19, 2013. On a daily basis, 2013 production during the second quarter increased by 67% for silver and 15% for gold as compared to 2012.

The table below sets forth the operating statistics of the Velardena Operations for the first six months of 2013 and 2012:

Combined grades feeding both plants increased year over year by 29% for gold and 53% for silver. Silver and gold production for the six months ended June 30, 2013 was negatively impacted by an approximately 33-day suspension of the explosives permit between the first and second quarters and the shutdown of operations on June 19 which together resulted in 36 fewer mill production days during the period.

Velardena Update

The Company completed construction of the San Mateo ramp at the end of May 2013. The ramp provides production-sized access to the Santa Juana mining area and should provide more efficient and less costly ore haulage from the mine.

On June 19, 2013 the Company suspended production at its Velardena Operations in order to conserve the asset during the current period of depressed metals prices. The Company has placed the mine and processing plants on care and maintenance to enable a re-start when operating plans and metals prices support a cash positive outlook for operations. Approximately 420 positions at the Velardena Operations were eliminated as a result of the suspension. The Company has retained a core group of approximately 50 to 60 employees to facilitate a re-start of operations and to maintain and safeguard the longer term value of the asset.

The Company has identified multiple shoots with grades higher than the overall resource grade at Velardena, and during the suspension the Company intends to conduct underground mapping and sampling to validate mine planning data incorporating these shoots. Additionally, Golden will develop and evaluate potential new operating strategies with the goal of re-starting production with a sustainable cash margin for operations. The Company will also continue with testing of technologies designed to improve gold recoveries and will conduct training for key supervisory personnel at Velardena.

The decision to resume production is not tied solely to specific metals prices, but instead to a combination of factors including silver and gold prices, mining method utilized, mine plans, technologies related to ore processing and gold recovery, plant utilization decisions and workforce decisions.

Financial Outlook

The Company plans to incur costs of approximately $3.0 million for one-time suspension-related activities and $2.5 million for care and maintenance during the remainder of 2013 should operations remain suspended. Additionally, the Company intends to incur combined costs of $6.5 million for El Quevar, exploration and general and administrative activities. Following a projected increase in working capital of $2.0 million the Company expects to have a cash balance of approximately $16.0 million on December 31, 2013.

Additional information regarding second quarter financial results may be found in the Company's 10-Q Quarterly Report which is available on the Golden Minerals website at www.goldenminerals.com.

About Golden Minerals

Golden Minerals is a Delaware corporation based in Golden, Colorado, primarily engaged in the ramp-up and expansion of existing production at the Velardena Operations in Mexico and advancement of the evaluation stage El Quevar project in Argentina.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and applicable Canadian securities laws, including statements regarding anticipated costs for activities related to the suspension of production at the Velardena Operations and continued care and maintenance of the assets; anticipated expenditures on exploration, El Quevar and general and administrative costs in the last half of 2013; planned activities during the production suspension period including activities related to validation of mine planning data, development and evaluation of potential new operating strategies; testing technologies to improve gold recoveries and training supervisors; anticipated year-end 2014 cash and cash equivalents. These statements are subject to risks and uncertainties, including unexpected events at the Velardena Operations, including higher than anticipated suspension or care and maintenance costs, accidents or damage to equipment or environmental or permitting problems; difficulties in or inability to develop a new operating plan for production at a sustainable cash positive margin, which could be caused by, among other things, inability to confirm the new mine model, variations in ore grade and relative amounts, grades and metallurgical characteristics of oxide and sulfide ores; labor or union problems; delays or failure in receiving or maintaining required government approvals or permits; technical, permitting, mining, metallurgical or processing issues; inability to identify a treatment option to improve gold recoveries; further decreases in silver and gold prices; loss of and inability to adequately replace skilled mining and management personnel; interpretations and changes in interpretations of geologic information; volatility or other changes in the U.S. and Canadian securities markets; availability and cost of materials, supplies and electrical power required for mining operations and exploration; fluctuations in costs and general economic conditions; changes in political conditions, tax, environmental and other laws; and diminution of physical safety of employees in Mexico, and other conditions in the countries in which the Company operates. Additional risks relating to Golden Minerals Company may be found in the periodic and current reports filed with the Securities Exchange Commission by Golden Minerals Company, including the Annual Report on Form 10-K for the year ended December 31, 2012 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 .

Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com

SOURCE Golden Minerals Company

http://www.goldenminerals.com

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