GOLDEN, Colo., Nov. 8, 2012 /PRNewswire/ -- Golden Minerals Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (AUM.TO) announces results for the quarter ending September 30, 2012 and $2.0 million in fourth quarter exploration property sales.
For the third quarter 2012, Golden Minerals recorded a 45 percent increase in revenue to $7.1 million from the sale of metals at its Velardena Operations in Mexico, as compared to revenue of $4.9 million in the second quarter 2012. Also during the third quarter, the Company recorded a $57.2 million non-cash reduction in goodwill related to its September 2011 transaction with ECU Silver Mining Inc. The goodwill was initially established primarily as a result of recognizing, for accounting purposes, a deferred tax liability for the difference between the fair value of the Velardena property acquired in the ECU transaction and the Mexican tax basis of the property. Since September 2011, an approximate 20% decrease in forecasted future gold and silver prices and certain changes to assumptions related to the long term operating plan for the Velardena Operations has resulted in the reduction of goodwill. There was no reduction in the carrying value of the long-lived Velardena property.
The Company's cash and short term investments balance increased by $30.9 million during the quarter to $54.0 million as of September 30, 2012. The increase is due to $36.9 million in net proceeds received from a registered offering and private placement of our securities during the quarter, offset by the expenditures described above plus capital expenditures of $2.0 million and an increase in net working capital of $2.2 million, both related primarily to the Velardena Operations.
The Company is continuing plans for a two-phased expansion of the Velardena Operations. Phase One is underway and the Company expects production to achieve a rate of 850 tonnes throughput per day during the third quarter 2013. The Company is continuing work on its plans for a subsequent Phase Two expansion to 1,150 tonnes per day throughput.
During the third quarter 2012 we began to open access to new stopes for mining. Due to the acquisition of additional equipment and the arrival of equipment from Argentina, we are increasing mine development activity. We accessed non-exploited ore zones in the Santa Juana mining area in the third quarter 2012 and expect to increase ore extraction in non-exploited vein areas during the fourth quarter 2012.
We have completed the installation and commissioning of a new flotation circuit at the end of the oxide plant leach circuit. The new flotation circuit is intended to recover gold and silver from material that has been leached in the oxide plant, and it is currently producing a lead/silver concentrate that will be sold with the lead/silver concentrate produced at the sulfide plant. The Company is performing additional test work to determine whether the remaining gold bearing pyrites in the tailings are best recovered using flotation or gravity concentration methods. During the third quarter 2012 we continued to advance the San Mateo ramp, which is expected to connect with the lower Santa Juana workings in the fourth quarter 2013. This connection will provide new access to facilitate ore removal from the lower Santa Juana workings and other veins that are accessed by the San Mateo ramp unit. We also have continued to improve ventilation and ore control procedures in the mine and to optimize the oxide and sulfide plants. We expect to complete a significant expansion of the laboratory at about year-end 2012, which will permit improved plant response to changing metallurgical conditions.
In early November 2012 the Company began a 2,000-meter, 10-hole drilling program at the Quevar Norte and Sur areas at El Quevar in northwestern Argentina, focused on outlining new mineralized zones. Also, the Company has identified two prospects with potential to host economic precious metal mineralization on currently held ground in Mexico, unrelated to Velardena or our holdings in Zacatecas. The Company plans to drill one of these prospects in 2012.
Exploration Property Sales
In October 2012, the Company closed on the sale of 100 percent of its interest in two of its exploration subsidiaries, Silex Bolivia S.A. and Minera Memisa S.A., to a subsidiary of Sumitomo Corporation for $250,000.
In early November 2012, the Company completed the sale of four claims in Mexico to Exploraciones Mineras Parreña, a subsidiary of Fresnillo PLC. The claims total over 16,000 hectares and are located approximately 40 kilometers southwest of the city of Fresnillo. The sales price of the transaction was approximately $1.7 million.
These asset sales will be included in the Company's fourth quarter 2012 results.
Additional information regarding third 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.