Golden Minerals completes merger with ECU Silver

2011-09-02 17:53 ET - News Release

Also News Release (C-ECU) ECU Silver Mining Inc

Mr. Michael Mason of Golden Minerals reports

GOLDEN MINERALS AND ECU SILVER ANNOUNCE CLOSING OF BUSINESS COMBINATION

Golden Minerals Company and ECU Silver Mining Inc. have closed their previously disclosed business combination by way of a court-approved plan of arrangement under the Business Corporations Act (Quebec).

Following the issuance on Aug. 31, 2011, of a final order of the Superior Court of Quebec approving the arrangement, Golden Minerals and ECU today filed articles of arrangement to give effect to the arrangement.

At closing, each ECU common share was exchanged for the right to receive 0.05 of a share of Golden Minerals common stock and 0.0394 cent in cash, and ECU became a wholly owned subsidiary of Golden Minerals. In addition, new Golden Minerals options to purchase Golden Minerals common stock will be exchanged for all outstanding ECU options to purchase ECU common shares, and new Golden Minerals warrants to purchase Golden Minerals common stock will be exchanged for all outstanding ECU warrants to purchase ECU common shares. Former holders of ECU common shares and warrants can obtain replacement shares of Golden Minerals common stock and cash, or replacement Golden Minerals warrants, as applicable, by submitting the applicable letters of transmittal and the appropriate documents prescribed thereby to the depositary for the arrangement, Computershare Investor Services Inc. The forms of the letters of transmittal are available under ECU's profile on SEDAR. Former holders of ECU options will receive replacement options directly from Golden Minerals.

The Golden Minerals common stock issued to former ECU shareholders in connection with the arrangement is expected to begin trading on the NYSE Amex and the Toronto Stock Exchange on or about Tuesday, Sept. 6, 2011. The Golden Minerals replacement warrants expiring on Feb. 20, 2014, issued in connection with the arrangement to former holders of ECU warrants expiring on Feb. 20, 2014, are expected to begin trading on the TSX on or about Wednesday, Sept. 7, 2011. ECU's common shares and warrants will be delisted from the TSX.

Michael Mason, formerly on the board of directors of ECU Silver, has joined the board of Golden Minerals in connection with the arrangement. Mr. Mason, who has more than 35 years experience in the minerals industry, is currently a director and president of MBMI Resources Inc., a nickel development company, and a director of Euromax Resources Ltd. and Geovic Ltd. Steve Altmann, the former president of ECU who was expected to serve as president of Golden Minerals, has declined that position for personal reasons. Mr. Altmann has agreed to serve as a consultant to Golden Minerals for the remainder of 2011 in connection with transition and investor relations matters.

The combined company

The combination of Golden Minerals and ECU creates a company with a solid project pipeline, including the production and ramp-up-stage Velardena district project in Mexico, the evaluation-stage El Quevar project in Argentina, the advanced-exploration-stage Zacatecas project in Mexico, two drill testing projects, one each in Peru and Argentina, and more than 40 reconnaissance/target delineation projects in Latin America.

The Velardena district comprises two operating mines with a 500-tonne-per-day oxide plant and a 300-tonne-per-day sulphide plant. An NI 43-101 technical report by Micon International for the Velardena district dated Jan. 20, 2009, demonstrated a measured and indicated resource of 3.9 million tonnes containing approximately 16 million ounces of silver, 26 million pounds of lead and 37 million pounds of zinc, and an inferred resource of an additional 26.5 million tonnes containing approximately 135 million ounces of silver, two million ounces of gold, and one billion pounds each of lead and zinc. Golden Minerals expects to complete a new resource estimate for the Velardena district in the fourth quarter of 2011.

Golden Minerals expects production at Velardena to decline during the fourth quarter of 2011 while it completes additional mine development work designed to decrease dilution and improve the ore grade being sent to the mill. Golden Minerals anticipates that production will begin to increase in the first part of 2012, with Velardena expected to begin generating positive cash flow during the third quarter of 2012, based on current metals prices. Golden Minerals is forecasting production for the fourth quarter of 2011 and 2012, as shown in the attached table.

Production              Q2 2011   
(payable metals)   (ECU actual)   Q4 2011   Q1 2012   Q2 2012   Q3 2012   Q4 2012

Gold (oz)                 1,653     1,000     1,600     2,500     3,800     4,300
Silver (oz)              86,591    41,700    72,500   119,500   184,700   214,300
Lead (lb)               106,909    22,800    38,200    59,200    87,300   100,500
Zinc (lb)               172,848    51,000    85,100   131,400   193,400   222,500

Expenditures at Velardena for the advancement of feasibility work, and for mine development and equipment, are expected to total approximately $10-million through the end of 2011.

Golden Minerals plans to move forward with the evaluation of a new sulphide plant for Velardena, which is expected to take at least three years for engineering, construction and ramp-up. The proposed 2,000-tonne-per-day plant would have an estimated annual production of approximately four million ounces of silver, 80,000 ounces of gold, and 10 million pounds each of zinc and lead. Metallurgical studies are currently under way. Golden Minerals expects to complete a preliminary economic assessment during the second quarter of 2012.

We seek Safe Harbor.