Golden Minerals Company (“Golden Minerals”, “Golden” or “the Company”) announced today that it has entered into an option agreement (the “Transaction”) to sell its right to acquire a 100% interest in the Santa Maria silver and gold project located in southern Chihuahua State, Mexico to Magellan Gold Corporation (“Magellan”).
The agreement provides for a period of up to 150 days during which Magellan will complete its due diligence review and secure adequate financing for the project. Prior to the end of such period, Magellan will have the right to exercise its option to acquire the Company’s interests in the project. If Magellan exercises its option, Magellan will pay $1.0 million cash to Golden Minerals at closing. Golden Minerals will retain a 6.5% NSR royalty from all production at Santa Maria until a total of $3.0 million has been paid to the Company under the royalty agreement. Thereafter, Golden will retain a 3.0% NSR royalty for the balance of the mine’s life. If Magellan fails to achieve commercial production from the project within one year following closing, Golden Minerals will not be obligated to convey its interests in the project to Magellan and the Company will retain its interest in the project with no obligation to return any payments to Magellan.
Golden Minerals’ President and Chief Executive Officer, Warren Rehn, notes, “We feel this is a very positive transaction for Golden Minerals. It will let us monetize Santa Maria’s value while keeping our risk to a minimum. The ongoing cash stream that this transaction presents will be used to further some of Golden’s other exploration projects.”