Golden Minerals to option 70% of El Quevar to Barrick

2020-04-13 07:02 ET - News Release

Mr. Warren Rehn reports

GOLDEN MINERALS SIGNS EARN-IN AGREEMENT WITH BARRICK GOLD CORPORATION AT EL QUEVAR

Golden Minerals Company has entered into an earn-in agreement with Barrick Gold Corp. whereby Barrick has acquired an option to earn a 70-per-cent interest in Golden's El Quevar project located in the Salta province of Argentina.

As part of the agreement, Barrick will purchase $1.0-million (U.S.) of Golden Minerals shares pursuant to a private placement transaction at a price of 21 cents per share, which is equal to the 20-day volume-weighted average price of the company's common shares on the New York Stock Exchange on the date of the agreement. The shares will be subject to applicable restrictions on transfer under U.S. and Canadian securities laws.

In order to earn an undivided 70-per-cent interest in the El Quevar project, Barrick must:

1. Spend $10-million (U.S.) on exploration;
2. Deliver a National Instrument 43-101-compliant prefeasibility study (PFS) describing a potentially profitable operation with mineral resources of not less than two million gold equivalent ounces;
3. Deliver a written notice of exercise to Golden within eight years.

Barrick's $10-million (U.S.) in defined work expenditures must be incurred over a total of eight years. Requirements include $500,000 (U.S.) per year in years 1 and 2; $1.0-million (U.S.) per year in years 3, 4 and 5; and $2.0-million (U.S.) per year in years 6, 7 and 8, although amounts may be spent earlier than required. The PFS must be delivered by Barrick by the end of year 8.

Barrick may withdraw from the agreement at any time after spending $1.0-million (U.S.) in work expenditures, upon providing 30 days notice.

During the earn-in period, in addition to the exploration spending, Barrick will finance the holding costs of the property, which will qualify as work expenditures. Barrick will reimburse Golden for expenses related to maintaining the exploration camp, which will initially be run by Golden under a service agreement, which will also qualify as work expenditures.

Golden will form a new entity (NewCo) that will hold the El Quevar properties. Upon earn-in by Barrick, the NewCo will be 70 per cent owned by Barrick and 30 per cent owned by Golden. Financing of NewCo will be split in proportion to ownership of each shareholder, and industry-standard dilution mechanisms will apply in the case of financing shortfalls by either shareholder. Dilution below 10-per-cent interest will result in conversion to a 1.5-per-cent NSR (net smelter return) royalty applicable to all recovered products, excluding silver during the term of the silver royalty. Golden will retain a 5-per-cent NSR silver royalty payable on the recovered silver from production from the project, capped at the 29 million total payable silver ounces as estimated in Golden Minerals' 2018 preliminary economic assessment (Amec Foster Wheeler E&C Services Inc., a Wood company, NI 43-101 technical report on preliminary economic assessment, Sept. 4, 2018).

Golden Minerals' president and chief executive officer, Warren Rehn, noted: "We are very pleased to have Barrick as a partner in this exploration agreement. Barrick's interest in exploring the El Quevar district underscores, as we have long maintained, the excellent potential of the high sulphidation epithermal systems at El Quevar to host additional important discoveries. Barrick has a long history of success in discovering, developing and mining world-class gold deposits in the Andes and elsewhere. This agreement sets a reasonable base value on our existing asset and allows for substantial upside if Barrick is successful in its exploration efforts at El Quevar."

About Golden Minerals Company

Golden Minerals is a Delaware corporation based in Golden, Colo. The company is primarily focused on advancing its Velardena properties in Mexico and its El Quevar silver property in Argentina, as well as acquiring and advancing mining properties in Mexico and Nevada.

We seek Safe Harbor.

© 2020 Canjex Publishing Ltd. All rights reserved.