# Golden Minerals Co: Form 10-Q for the period ended Jun 30, 2024

- Company: [Golden Minerals Co](/companies/aumn.md) (CIK 1011509)
- Form: 10-Q
- Filed: 2024-08-14
- Accepted by EDGAR: Aug 14, 2024, 00:10 ET
- Period: 2024-06-30
- Accession: 0001558370-24-012118
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1011509/000155837024012118/aumn-20240630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1011509/000155837024012118/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$1.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$3.6m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$2.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$7.3m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.19 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.51 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$4.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-04-01 to 2024-06-30 | $28.0k | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $28.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $1.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $2.5m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $6.1m | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $4.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $8.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | −$2.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 33,312 characters.

### Our Company

We were incorporated in Delaware in March 2009 under the Delaware General Corporation Law. During the six months ended June 30, 2024, our principal source of revenue was from the sale of gold and silver contained in concentrate from our Velardeña Properties in Durango, Mexico. We also had secondary sources of revenue from tolling material at our oxide plant for a third party and selling the Velardeña assets that are held for sale. We incurred net operating losses for the six months ended June 30, 2024 and 2023.

We restarted mining at our Velardeña Properties in December 2023 and continued through the end of February 2024 when it was determined that the initial performance of both the mine and the plant did not achieve expected results. We processed all the mineralized material that had been mined and shut down the sulfide processing plant at the end of March 2024 and held the Velardeña Properties for short-term sale as we evaluated options to realize value from the assets. As previously disclosed, we entered into certain sales agreements to sell the Velardeña and Chicago mines, both sulfide and oxide processing plants, water wells, and related equipment of the Velardeña Properties to a privately held Mexican company (the “Buyer”) in exchange for an aggregate purchase price of $5.5 million in cash, plus VAT. There were 4 separate sales agreements. The first three sales agreements which include the combined sales of the Velardeña and Chicago mines, the sulfide processing plant and various related equipment were completed on June 20, 2024 and the titles to the assets have been transferred to the Buyer. The Buyer agreed to pay $3.0 million plus VAT on July 1, 2024, to complete the last sales agreement which covered the oxide processing plant and water wells. The Buyer has made payments of approximately $477,000 through August 7, 2024 and is currently in default. The Buyer has operational control of the plant, and we are no longer operating the oxide plant. We are uncertain as to when or if additional payments will be received. We are negotiating an extension of the agreement which would allow for the transfer of title of the oxide plant to the Buyer and the Company would hold a mortgage to secure the payment. The collection of the amount due from the sale may satisfy a portion of our projected capital needs over the next twelve months (See Note 2 above). We hold other exploration properties, including the Yoquivo exploration property in Mexico and our El Quevar advanced exploration property in Argentina. We also hold an additional portfolio of approximately 11 properties located in Mexico, Nevada and Argentina.

Because we have ceased production at the Velardeña Properties, our only near-term opportunity to generate cash flow is from the sale of assets or new sources of debt or equity capital. We are evaluating alternatives to obtain funds to continue as a going concern, including finalizing the sale of our Velardeña oxide plant, seeking buyers or partners for the Company’s other assets including El Quevar or obtaining equity or other financing. In the absence of additional cash inflows, we anticipate that our cash resources will be exhausted in September 2024. If we are unable to obtain additional resources, we may be forced to cease operations and liquidate. See “—*Liquidity, Capital Resources and Going Concern—2024 Liquidity Forecast and Going Concern Qualification”* below.

This discussion should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operation” included in our 2023 Annual Report.

### 2024 Highlights

#### Velardeña Properties

The Velardeña Properties contain two underground mines. Prior to the recent restart in December 2023, the last time the mines were operated was in late 2015, at which point mining activities were suspended when a combination of low metals prices, mining dilution and metallurgical challenges rendered operations unprofitable. We elected to preserve the asset for future use, and continued to evaluate and test various mining methods and processing alternatives that could enable sustainable profitable operations.

We restarted mining at Velardeña in December 2023. In the first quarter of 2024, we sold just over 2,000 tonnes of concentrate containing approximately 640 ounces of gold and approximately 21,750 ounces of silver. Mill throughput of mined material totaled 5,186 tonnes over the period of operations in February and March 2024. We stopped mining at the end of February when we determined that the initial performance of the mine and the processing plant did not achieve expected results due to operational issues caused by a combination of insufficient experienced miners, issues with ventilation and issues with aging mining equipment at the mine. We stopped processing the mined material at the end of March 2024.

The table below sets forth the key processing and sales statistics for the Velardeña operation for the three months and the six months ended June 30, 2024:

*(in thousands except per unit amounts)*

| ​ Velardeña Operations Statistics ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2024 | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2024 |
| --- | --- | ---: | --- | ---: |
| Tonnes mined1 | ​ | - | ​ | 14,961 |
| Tonnes processed | ​ | - | ​ | 5,186 |
| Average tonnes per day processed | ​ | - | ​ | 185 |
| ​ | ​ | ​ | ​ | ​ |
| Gold sold in concentrate (ounces) | ​ | - | ​ | 639 |
| Silver sold in concentrate (ounces) | ​ | - | ​ | 21,745 |
| ​ | ​ | ​ | ​ | ​ |
| Average realized price, before refining and selling costs | ​ | ​ | ​ | ​ |
| Gold (dollar per ounce) | ​ | $ - | ​ | $ 2,077 |
| Silver (dollar per ounce) | ​ | $ - | ​ | $ 23.82 |
| ​ | ​ | ​ | ​ | ​ |
| 1 Includes all mined material transported to the plant, stockpiled or designated as waste |  |  |  |  |

As noted above, we have entered into sales agreements pursuant to which a third-party has agreed to purchase theVelardeña and Chicago mines, both sulfide and oxide processing plants, water wells, and related equipment of the Velardeña Properties. The first three agreements have closed. The Buyer has made payments on the fouth agreement of approximately $477,000 through August 7, 2024 and is currently in default. The Buyer has operational control of the plant, and we are no longer operating the oxide plant. We are uncertain as to when or if additional payments will be received.

#### Yoquivo

We hold 100% ownership of the Yoquivo concessions subject to royalty interests between 2% and 3% net smelter return payable on production to third parties and capped at $2.8 million in the aggregate.

With an effective date of February 24, 2023, an initial mineral resource estimate was completed for Yoquivo that estimates an inferred mineral resource of 937,000 tonnes at 570 g/t Ag eq (equivalent ounces are calculated using prices of $1,840/oz Au and $24.00/oz Ag) on five veins that had enough drill density to support mineral resources. Further information regarding this initial mineral resource estimate is included in our 2023 Annual Report. Numerous other veins on the property have yet to be drilled sufficiently to allow estimation of additional resources. Since 2020, exploration and delineation drilling of 16,565 meters in 70 holes has advanced the project to this stage. We are seeking opportunities to sell Yoquivo.

#### El Quevar

In April 2020, we entered into the Earn-in Agreement with Barrick. For a description of the Earn-In Agreement, see “Our Material Mining Properties—El Quevar” in our 2023 Annual Report. In March 2024, Barrick notified us that it was withdrawing from the Earn-In Agreement. The termination was effective on April 20, 2024 and the El Quevar project reverted back into the full control of Golden Minerals. We are seeking to sell or find a partner for El Quevar.

#### Sarita Este / Desierto

In December 2019, we entered into an option agreement with Cascadero Minerals Corporation (“Cascadero”) to acquire a 51% interest in the gold/copper Sarita Este concession, located in the northwest portion of the Province of Salta, Argentina, adjacent to the Taca Taca project owned by First Quantum Minerals. We have exceeded the drilling requirement and have spent approximately $3.0 million since entering into the agreement in December 2019. After satisfying the drilling and expenditure requirements, we notified Cascadero of our intention to proceed with the joint venture as 51% owners of the concession. Completion of the joint venture documents and formation of the joint venture company are in progress.

Information regarding the drilling completed to date is included in our 2023 Annual Report.

The Desierto concessions (Desierto 1 and 2) which are adjacent to and south of the Sarita Este concession, are subject to an option agreement with a third-party partial owner and a proposed joint venture agreement also between the Company and Cascadero. The Desierto 1 concession is the object of a legal dispute between the Company and the Salta Ministry of Mines in which the Company is disputing the cancellation of the concession by the province. The dispute is expected to be resolved before the end of 2024.

### Financial Results of Operations

For the results of operations discussed below, we compare the results from operations for the three months ended June 30, 2024, to the three months ended June 30, 2023. The operating activities for the three-month period ended June 30, 2024 were related to the Oxide Plant of the Velardeña Properties which processed mineralized material for a third party. Due to the discontinuation of the mining and sulfide processing operations of the Velardeña Properties at the end of March 2024, the Velardeña properties are classified as assets held for short-term sale, and therefore, in the interim condensed consolidated financial statements for the period ended June 30, 2024, the asset values, revenues and expenditures of these discontinued operations have been presented as Assets Held for Sale, Liabilities Held for Sale, and Discontinued Operations (see Note 3 above). The revenues and costs discussed below are the amounts recorded prior to the reclassification of those items to Assets Held for Sale and Discontinued Operations in the interim condensed consolidated financial statements.

#### Three Months Ended June 30, 2024

*Revenue from the sale of metals.* All revenue received in the three months ended June 30, 2024 was generated by the Velardeña properties. The Velardeña operations did not produce concentrate during the three months ended June 30, 2024, but revenue was recorded on several of the concentrate shipments completed earlier in 2024 that were finalized during the three months ended June 30, 2024. During the three months ended June 30, 2023, the Rodeo operations sold mainly doré. We also sold slag remaining from previous doré sales and doré production at Plant 2, and some concentrates produced from material previously stockpiled when test mining at the Velardeña mine.

- *Concentrate Sales –* We recorded $0.1 million of revenue in the three months ended June 30, 2024 from the settlement of previously shipped gold-rich pyrite concentrate, silver-rich lead concentrate and zinc concentrate. We recorded $1.2 million in the three months ended June 30, 2023 from the sale of 656 tonnes of gold-rich pyrite concentrate, 118 tonnes of silver-rich lead concentrate and 63 tonnes of zinc concentrate that were produced from mineralized material which had been mined in 2022 as part of the test mining to analyze the potential restart of the Velardeña Properties.
- *Doré Sales* - We recorded no revenue related to gold and silver in doré for the three months ended June 30, 2024, and $3.5 million for the three months ended June 30, 2023.
- *Slag and Other Sales –* We recorded a nominal amount in revenue related to the gold and silver in precipitate during the three months ended June 30, 2024. We recorded approximately $0.2 million in revenue related to the gold and silver in slag that was sold to a refiner in the United States in the three months ended June 30, 2023.

*Cost of metals sold.* For the three months ended June 30, 2024 and 2023, we recorded $2.5 million and $3.9 million of cost of metals sold, respectively. Lower costs in 2024 compared to 2023 were due primarily to zero mining costs as mining was discontinued at the end of February 2024, and lower processing costs because the sulfide plant discontinued operations at the end of March 2024.

*Exploration expense.* Our exploration expense, including property holding costs and allocated administrative expenses, totaled $0.3 million and $0.8 million for the three months ended June 30, 2024 and 2023, respectively. The lower exploration expense for 2024 is primarily related to less activity in 2024 due to the cash constraints of the Company.

*Velardeña care and maintenance costs*. We recorded no expenses related to care and maintenance at our Velardeña Properties for the three-month period ended June 30, 2024 as the Velardeña Properties were operating during that period and are now being held for short-term sale. We recorded $0.3 million related to care and maintenance for the three-month period ended June 30, 2023, respectively, for expenses related to care and maintenance at our Velardeña Properties as the result of the suspension of mining and processing activities in November 2015.

*El Quevar project expense.* We incurred $0.2 million and $0.2 million for the three-month periods ended June 30, 2024 and 2023, respectively, related to holding and evaluation costs for the Yaxtché deposit at our El Quevar project in Argentina. During the three months ended June 30, 2024 and 2023, approximately $0.0 million and $0.1 million, respectively, of costs actually incurred were offset by reimbursements from Barrick.

*Administrative expense.* Administrative expenses totaled $1.1 million and $1.2 million for the three months ended June 30, 2024 and 2023, respectively. Administrative expenses, including costs associated with being a public company, are incurred primarily by our corporate activities in support of the Yoquivo Property, Rodeo Property, Velardeña Properties, El Quevar project and our exploration portfolio.

*Stock-based compensation.* During the three months ended June 30, 2024 and 2023, we incurred approximately $0.2 million and $0.0 million, respectively, of expense related to stock-based compensation. Stock-based compensation varies from period to period depending on the number and timing of shares granted, the type of grant, the market value of the shares on the date of grant and other variables.

*Reclamation and accretion expense.* During each of the three months ended June 30, 2024 and 2023, we incurred approximately $0.1 million of reclamation expense related to the accretion of an asset retirement obligation at the Velardeña and Rodeo properties.

*Other operating income (loss), net.* We recorded $2.1 million of net other operating income for the three months ended June 30, 2024 primarily related to the sale of the Velardeña mine, sulfide plant and related equipment in connection with the cessation of operations at the Velardeña Properties. In June, the underlying value of the Velardeña oxide plant and water wells was written down to its salvage amount which is equal to the amount of the deposits received from the Buyer through June 30, 2024 on the sale of the oxide processing plant and water wells and is recorded in current liabilities as deferred revenue (see Note 3 above). For the three months ended June 30, 2023, we recorded $0.1 million of net other operating income.

*Depreciation, depletion and amortization.* During each of the three months ended June 30, 2024 and 2023, we incurred depreciation, depletion and amortization expense of approximately $0.1 million.

*Interest and other expense, net.* We recorded a nominal amount of interest and other expense, net for each of the three months ended June 30, 2024 and 2023.

*(Loss) gain on foreign currency losses.* During the three months ended June 30, 2024, we recorded $0.1 million of foreign exchange losses. During the three months ended June 30, 2023, we recorded a nominal amount of foreign exchange gains. Foreign currency gains and losses are primarily related to the effect of currency fluctuations on monetary transactions incurred by our foreign subsidiaries that are denominated in currencies other than U.S. dollars.

*Income taxes.* We recorded a zero tax expense for the three months ended June 30, 2024. We recorded a $51,000 income tax benefit for the three months ended June 30, 2023.

#### Six Months Ended June 30, 2024

*Revenue from the sale of metals.* During the six months ended June 30, 2024, all revenue was generated from the Velardeña properties. The Velardeña operations produced three types of concentrate, and also generated revenue from slag sales. During the six months ended June 30, 2023, the Rodeo operations sold mainly doré. We also sold slag remaining from previous doré sales and doré production at Plant 2.

- *Concentrate Sales –* We recorded $1.3 million in the six months ended June 30, 2024 from the sale of gold-rich pyrite concentrate, silver-rich lead concentrate and zinc concentrate. We recorded $1.2 million from the sales of concentrate in the six months ended June 30, 2023.
- *Doré Sales* - We recorded no revenue related to gold and silver in doré for the six months ended June 30, 2024, and $7.8 million for the six months ended June 30, 2023.
- *Slag and Other Sales –* We recorded approximately $30,000 in revenue related to the gold and silver in precipitate during the six months ended June 30, 2024. We recorded approximately $0.2 million in revenue related to the gold and silver in slag that was sold to a refiner in the United States in the six months ended June 30, 2023. The revenue in 2024 was generated from scrap and trace material removed from Plant I during the clean out process following the cessation of operations in 2024.

*Cost of metals sold.* For the six months ended June 30, 2024 and 2023, we recorded $5.4 million and $7.9 million of cost of metals sold, respectively. Lower costs in 2024 compared to 2023 were due primarily to lower mining costs as mining was discontinued at the end of February 2024, and lower processing costs, as the processing of sulfide material was discontinued at the end of March 2024.

*Exploration expense.* Our exploration expense, including property holding costs and allocated administrative expenses, totaled $0.8 million and $2.2 million for the six months ended June 30, 2024 and 2023, respectively. The lower exploration expense for 2024 is primarily related to less activity in 2024 due to the cash constraints of the Company.

*Velardeña care and maintenance costs*. We recorded no expenses related to care and maintenance at our Velardeña Properties for the six-month period ended June 30, 2024 as the Velardeña Properties were operating during that period and are now being held for short-term sale. We recorded $0.6 million related to care and maintenance for the six-month period ended June 30, 2023, respectively, for expenses related to care and maintenance at our Velardeña Properties as the result of the suspension of mining and processing activities in November 2015.

*El Quevar project expense.* We recorded $0.3 million for each of the six months ended June 30, 2024 and June 30, 2023. During the six months ended June 30, 2024 and 2023, approximately $0.0 million and $0.0 million, respectively, of costs actually incurred were offset by reimbursements from Barrick.

*Administrative expense.* Administrative expenses totaled $2.1 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively. Administrative expenses, including costs associated with being a public company, are incurred primarily by our corporate activities in support of the Yoquivo Property, Rodeo Property, Velardeña Properties, El Quevar project and our exploration portfolio.

*Stock-based compensation.* During the six months ended June 30, 2024 and 2023, we incurred approximately $0.3 million and $0.2 million, respectively, of expense related to stock-based compensation. Stock-based compensation varies from period to period depending on the number and timing of shares granted, the type of grant, the market value of the shares on the date of grant and other variables.

*Reclamation and accretion expense.* During the six months ended June 30, 2024, we incurred approximately $0.2 million of reclamation expense, during the six months ended June 30, 2024, we incurred approximately $0.1 million of reclamation expense related to the accretion of an asset retirement obligation at the Velardeña and Rodeo properties.

*Other operating income (loss), net.* We recorded net operating income of $1.1 million for the six months ended June 30, 2024 primarily related to the sale of certain Velardeña assets offset by severance expenses paid to and accrued for employees who were terminated during the six months ended June 30, 2024 in connection with the cessation of operations at the Velardeña Properties. In June, the underlying value of the Velardeña oxide plant was written down to its salvage amount which is equal to the amount of the deposits received from the Buyer on the sale of the oxide processing plant through June 30, 2024 and is recorded in current liabilities as deferred revenue (see Note 3 above). For the six months ended June 30, 2023, we recorded $0.1 million of net other operating income.

*Depreciation, depletion and amortization.* During each of the six months ended June 30, 2024 and 2023, we incurred depreciation, depletion and amortization expense of approximately $0.2 million.

*Interest and other expense, net.* We recorded a nominal amount of interest and other expense, net for each of the six months ended June 30, 2024 and 2023.

*(Loss) gain on foreign currency losses.* During the six months ended June 30, 2024, we recorded $0.1 million of foreign exchange losses. During the six months ended June 30, 2023, we recorded $0.1 million of foreign exchange gains. Foreign currency gains and losses are primarily related to the effect of currency fluctuations on monetary transactions incurred by our foreign subsidiaries that are denominated in currencies other than U.S. dollars.

*Income taxes.* We recorded a zero tax expense for the six months ended June 30, 2024. We recorded less than $1,000 of tax expense for the six months ended June 30, 2023.

### Liquidity, Capital Resources and Going Concern

#### 2024 Liquidity Forecast and Going Concern Qualification

We do not currently have sufficient resources to meet our expected cash needs during the twelve months ended June 30, 2025. At June 30, 2024, we had current assets of approximately $2.5 million, including cash and cash equivalents of approximately $1.4 million. On the same date, we had accounts payable and other current liabilities of approximately $4.8 million. Because we have ceased mining at the Velardeña mine, our only near-term opportunity to generate cash flow is from the sale of assets and equity or other external financings. As of August 9, 2024, we have cash and cash equivalents of approximately $0.7 million. In the absence of additional cash inflows, the Company anticipates that its cash resources will be exhausted in September 2024. The Company is considering bankruptcy filings for several of the its subsidiaries in Mexico. If we are unable to obtain additional cash resources, we will be forced to cease operations and liquidate.

We will require further sources of capital. In order to satisfy the Company’s projected general, administrative, exploration and other expenses through June 30, 2025, we will need approximately $6.0 to $8.0 million in capital inflows. These capital inflows may take the form of asset sales, equity or other external financing activities, collection of the amount due from the Velardeña sale, or from other sources.

We have previously announced the execution of certain asset purchase and sale agreements with a privately held Mexican company. Pursuant to the terms of the sale agreements, we agreed to sell certain mining concessions, equipment, land parcels and other assets in exchange for an aggregate purchase price of $5.5 million in cash, plus VAT. There are four separate sales agreements. The first three sales agreements which include the combined sales of the Velardeña and Chicago mines, the sulfide processing plant and various related equipment were completed on June 20, 2024 and the titles to the assets were transferred to the Buyer. The fourth agreement covers the oxide plant and water wells, and the Buyer agreed to complete total payments of $3.0 million plus VAT on July 1, 2024. The Buyer has made payments of $477,000 through August 8, 2024 (see Note 19 above) and is currently in default. The Buyer has operational control of the plant, and we are no longer operating the oxide plant. The closing of the last sale may satisfy a portion of our projected capital needs over the next twelve months.

As of June 30, 2024, we had VAT receivable in Mexico of approximately $0.3 million. Although we believe it is likely we will receive some portion of this receivable, there is no certainty as to the timing and amount of such payment.

The interim condensed consolidated financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the normal course of business. However, as noted above, our continuing operations will be dependent upon our ability to secure sufficient funding to support future operations. The amounts shown as mineral properties in our interim condensed consolidated financial statements are dependent on our ability to sell certain assets of the Company and receive future equity or other financings to continue to fund general administrative, and exploration activities that would lead to additional profitable mining and processing activities or to generate proceeds from the disposition of mineral exploration properties.

The ability of the Company to maintain a positive cash balance for a period of twelve months beyond the filing date of this Quarterly Report on Form 10-Q is dependent upon its ability to generate sufficient cash flow from the sale of assets, reduction of expenses, collection of the amount due from the Buyer for the oxide plant and water wells, collection of VAT accounts receivable from the Mexican government, and to raise sufficient funds through equity or other financings or from other sources. These material uncertainties cast significant doubt on the Company’s ability to continue as a going concern. Therefore, the Company cannot conclude that substantial doubt does not exist as to the Company’s ability to continue as a going concern for the twelve months following the filing date of this Quarterly Report on Form 10-Q. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or liabilities, which might be necessary should the Company not continue as a going concern.

#### 2024 Liquidity Discussion

At June 30, 2024, our aggregate cash and cash equivalents totaled $1.4 million, compared to the $3.8 million in similar assets held at December 31, 2023. The June 30, 2024 decrease is the result of the following expenditures and cash inflows for the six months ended June 30, 2024. Expenditures totaled $8.3 million from the following:

- $5.1 million from the loss on discontinued Velardeña operations, which includes, $4.1 million of loss from operations, and $1.0 million of severance payments made to employees who were terminated during the six months ended June 30, 2024;
- $2.1 million in general and administrative expenses;
- $0.8 million in exploration expenditures;
- $0.3 million in care and maintenance costs at the El Quevar project, net of zero reimbursements from Barrick; and

The above expenditures were partially offset by cash inflows of $5.9 million from the following:

- $2.6 million from the collection of VAT receivables from the Mexican Government;
- $2.5 million of proceeds received from the sale of the Velardeña Property assets; and
- $0.8 million of other working capital changes

### Recent Accounting Pronouncements

There were no new accounting pronouncements issued during the second quarter of 2024 that would affect the Company or have a material impact on its consolidated financial position or results of operations.

### Forward-Looking Statements

Some information contained in or incorporated by reference into this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. These statements include comments relating to: (i) our anticipated near-term capital needs, and potential sources of capital; (ii) our plans for, and timing of, the sale of our Velardeña oxide plant and water wells, (iii) our plans to sell tax credits held in our Mexican operating companies; (iv) our plans of seeking a sale of the El Quevar project; (v) information regarding the Yoquivo property, including the estimates included in our initial mineral resource study, our future evaluation and drilling plans, information gained from drilling activities, and exploration activities and seeking a sale of the Yoquivo property; (vi) expectations pertaining to the recovery of VAT refunds from the Mexican government; (vii) projected funding and spending for the twelve months ending June 30, 2025; and (viii) statements concerning our financial condition, business strategies and business and legal risks and our financial outlook for 2024, including anticipated expenditures and cash inflows during the year.

We use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,” “may,” “believe,” “will,” “project,” “should,” “could,” “believe” and similar expressions (including negative and grammatical variations) to identify forward-looking statements. Although we believe the expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct. Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of the factors set forth below and other factors set forth in, or incorporated by reference into this report:

- Whether our proposed sale of the Velardeña oxide plant and water wells is consummated;
- whether we are able to sell the El Quevar project or the Yoquivo property;
- whether we are able to raise the necessary capital required to continue our business on terms acceptable to us or at all;
- higher than anticipated care and maintenance costs in Mexico or at El Quevar in Argentina;
- decreases in silver and gold prices;
- risks related to our exploration properties, including unfavorable results from exploration and whether we will be able to advance our exploration properties;
- whether we will be able begin to mine and sell minerals successfully or profitably at any of our current properties at current or future silver and gold prices and achieve our objective of becoming a mid-tier mining company;
- potential delays in our exploration activities or other activities to advance properties towards mining resulting from environmental consents or permitting delays or problems, accidents, problems with contractors, disputes under agreements related to exploration properties, unanticipated costs and other unexpected events;
- our ability to retain key management and mining personnel necessary to successfully operate and grow our business;
- economic and political events negatively affecting the market prices for gold, silver, zinc, lead and other minerals that may be found on our exploration properties;
- political and economic instability in Mexico, Argentina, and other countries in which we conduct our business, and future actions of any of these governments with respect to nationalization of natural resources or other changes in mining or taxation policies;
- volatility in the market price of our common stock; and
- the factors discussed under “*Risk Factors”* in our 2023 Annual Report.

These factors are not intended to represent a complete list of the general or specific factors that could affect us. Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

## Market risk

As filed, 1,251 characters.

### Interest Rate Risk

We invest substantially all of our excess cash in U.S. government and debt securities rated “investment grade” or better. The rates received on such investments may fluctuate with changes in economic conditions. Based on the average cash and investment balances outstanding during the first six months of 2024, a 1% decrease in interest rates would have resulted in only a nominal reduction in interest income for the period.

### Foreign Currency Exchange Risk

Although most of our expenditures are in U.S. dollars, certain purchases of labor, supplies and capital assets are denominated in other currencies, primarily in Mexico. As a result, currency exchange fluctuations may impact the costs of our exploration and mining activities. To reduce this risk, we maintain minimum cash balances in foreign currencies and complete most of our purchases in U.S. dollars.

### Commodity Price Risk

We are primarily engaged in the exploration and mining of properties containing gold, silver, zinc, lead and other minerals. As a result, decreases in the price of any of these metals have the potential to negatively impact our ability to establish reserves and mine on our properties. We currently hold no commodity derivative positions.

## Controls and procedures

As filed, 1,404 characters.

### Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2024, (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 239 characters.

Other than the risk factors set out below, the risk factors for the six months ended June 30, 2024, are substantially the same as those set forth in Part I, Item 1A of our 2023 Annual Report and in our prior quarterly reports on Form 10-Q.

Filed Aug 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-012118. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.