Tableof Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

 

##### **FORM 10-Q**

##### ** **

**(****MARKONE)**

 
| **x**                                                  | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |
|--------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|
|                                                   |
| **FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009.** |
| ** **                                             |
| **OR**                                                 |
|                                                   |
| **o**                                                  | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**FOR THE TRANSITION PERIODFROM                TO                .**

** **

**COMMISSION FILE NUMBER 1-13627**

 

###### **GOLDENMINERALS COMPANY**

(EXACT NAME OFREGISTRANT AS SPECIFIED IN ITS CHARTER)

 

| **DELAWARE**                             | ** ** | **26-4413382**      |
|------------------------------------------|------------|---------------------|
| (STATE OR OTHER JURISDICTION OF          |       | (I.R.S. EMPLOYER    |
| INCORPORATION OR ORGANIZATION)           |       | IDENTIFICATION NO.) |
|                                     |       |                |
| **350 INDIANA STREET, SUITE 800**        | ** ** | ** **          |
| **GOLDEN, COLORADO**                     | ** ** | **80401**           |
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |       | (ZIP CODE)          |

 

**(303) 839-5060**

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

 

INDICATEBY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TOBE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THEREGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TOSUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS: YES x NO o

 

INDICATEBY CHECK MARK WHETHER THE REGISTRANT HAS SUBMITTED ELECTRONICALLY AND POSTED ONITS CORPORATE WEB SITE, IF ANY, EVERY INTERACTIVE DATA FILE REQUIRED TO BESUBMITTED AND POSTED PURSUANT TO RULE 405 OF REGULATION S-T (§232.405 OF THISCHAPTER) DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THEREGISTRANT WAS REQUIRED TO SUBMIT AND POST SUCH FILES). YES o NO o

 

INDICATEBY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, ANACCELERATED FILER, A NON-ACCELERATED FILER, OR A SMALLER REPORTING COMPANY:

 

| LARGE ACCELERATED FILER o |   | ACCELERATED FILER x         |
|--------------------------------|--------|-----------------------------|
| NON-ACCELERATED FILER o        |   | SMALLER REPORTING COMPANY o |

 

INDICATEBY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE12B-2 OF THE EXCHANGE ACT): YES o NO x

 

INDICATEBY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND REPORTSREQUIRED TO BE FILED BY SECTIONS 12, 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLANCONFIRMED BY A COURT: YES x NO o

 

ATOCTOBER 30, 2009, 3,232,735 SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE,WERE ISSUED AND OUTSTANDING.

 

 

 

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Table of Contents

 

GOLDEN MINERALSCOMPANY

FORM 10-Q

QUARTER ENDEDSEPTEMBER 30, 2009

 

INDEX

 
| ** **                                | ** **                                                                                  | ** ** | **PAGE**   |
|-------------------------------------------|---------------------------------------------------------------------------------------------|------------|------------|
| ** **                                | ** **                                                                                  | ** ** | ** ** |
| PART I  – FINANCIAL INFORMATION |                                                                                        |
|                                      |                                                                                        |       |       |
| ITEM 1.                                   | FINANCIAL STATEMENTS (Unaudited)                                                            |       | 3          |
|                                      |                                                                                        |       |       |
| ITEM 2.                                   | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |       | 26         |
|                                      |                                                                                        |       |       |
| ITEM 3.                                   | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 |       | 32         |
|                                      |                                                                                        |       |       |
| ITEM 4.                                   | CONTROLS AND  PROCEDURES                                                                    |       | 32         |
|                                      |                                                                                        |       |       |
| PART II  – OTHER INFORMATION    |                                                                                        |
|                                      |                                                                                        |       |       |
| ITEM 1.                                   | LEGAL PROCEEDINGS                                                                           |       | 33         |
|                                      |                                                                                        |       |       |
| ITEM 1A.                                  | RISK FACTORS                                                                                |       | 33         |
|                                      |                                                                                        |       |       |
| ITEM 2.                                   | UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                |       | 33         |
|                                      |                                                                                        |       |       |
| ITEM 3.                                   | DEFAULTS  UPON SENIOR SECURITIES                                                            |       | 33         |
|                                      |                                                                                        |       |       |
| ITEM 4.                                   | SUBMISSION  OF MATTERS TO A VOTE OF SECURITY HOLDERS                                        |       | 33         |
|                                      |                                                                                        |       |       |
| ITEM 5.                                   | OTHER INFORMATION                                                                           |       | 33         |
|                                      |                                                                                        |       |       |
| ITEM 6.                                   | EXHIBITS                                                                                    |       | 33         |
|                                      |                                                                                        |       |       |
| SIGNATURES                                | 34                                                                                          |

 

2

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**PART I. FINANCIAL INFORMATION**

 

**Item 1.    Financial Statements**

 

# **GOLDENMINERALS COMPANY**

# **CONSOLIDATEDBALANCE SHEETS**

**(Expressed in United States dollars)**

**(Unaudited)**

 
| ** **                                                                                                               | ** ** | **September 30,**                | ** ** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|------------|-----------------------|------------|
| ** **                                                                                                               | ** ** | **2009**                              | ** ** | ** ** | **2008**              | ** ** |
| ** **                                                                                                               | ** ** | **(Successor)**                       | ** ** | ** ** | **(Predecessor)**     | ** ** |
| ** **                                                                                                               | ** ** | **(in thousands, except share data)** | ** ** |
| **Assets**                                                                                                               |       |                                  |       |       |                  |       |
| Current assets                                                                                                           |       |                                  |       |       |                  |       |
| Cash and cash  equivalents                                                                                               |       | $                                     | 13,549     |       |                  | $          | 33,723 |   |
| Restricted cash                                                                                                          |       | —                                |       |       | 20,575                |       |
| Investments                                                                                                              |       | 416                                   |       |       | 16,351                |       |
| Trade receivables                                                                                                        |       | 211                                   |       |       | 7,315                 |       |
| Inventories                                                                                                              |       | —                                |       |       | 75,008                |       |
| Prepaid expenses and  other assets                                                                                       |       | 2,064                                 |       |       | 15,550                |       |
| Total current assets                                                                                                     |       | 16,240                                |       |       | 168,522               |       |
| Property, plant and  equipment, net                                                                                      |       | 8,210                                 |       |       | 202,534               |       |
| Assets held for sale                                                                                                     |       | 3,499                                 |       |       | —                |       |
| Ore stockpile  inventories                                                                                               |       | —                                |       |       | 72,628                |       |
| Value added tax  recoverable                                                                                             |       | —                                |       |       | 157,146               |       |
| Investments                                                                                                              |       | —                                |       |       | 5,487                 |       |
| Prepaid expenses and  other assets                                                                                       |       | 547                                   |       |       | 30                    |       |
| Total assets                                                                                                             |       | $                                     | 28,496     |       |                  | $          | 606,347 |   |
| ** **                                                                                                               |       |                                  |       |       |                  |       |
| **Liabilities  and Equity (Deficit)**                                                                                    |       |                                  |       |       |                  |       |
| Current liabilities                                                                                                      |       |                                  |       |       |                  |       |
| Accounts payable and  other accrued liabilities                                                                          |       | $                                     | 2,680      |       |                  | $          | 48,861 |   |
| Accrued interest  payable                                                                                                |       | —                                |       |       | 8,660                 |       |
| Other current  liabilities                                                                                               |       | 63                                    |       |       | —                |       |
| Current portion of long  term debt                                                                                       |       | —                                |       |       | 523,610               |       |
| Total current  liabilities                                                                                               |       | 2,743                                 |       |       | 581,131               |       |
| Long term debt                                                                                                           |       | —                                |       |       | 59,951                |       |
| Asset retirement  obligation                                                                                             |       | —                                |       |       | 9,155                 |       |
| Other long term  liabilities                                                                                             |       | 634                                   |       |       | 4,398                 |       |
| Total liabilities                                                                                                        |       | 3,377                                 |       |       | 654,635               |       |
| Commitments and  contingencies (Note 18)                                                                                 |       |                                  |       |       |                  |       |
| Equity (deficit)                                                                                                         |       |                                  |       |       |                  |       |
| Common stock,  (Successor) $.01 par value, 50,000,000 shares authorized; 3,232,735 shares  issued and outstanding        |       | 32                                    |       |       | —                |       |
| Ordinary Shares,  (Predecessor) $.01 par value, 175,000,000 shares authorized; 59,000,832 shares  issued and outstanding |       | —                                |       |       | 590                   |       |
| Additional paid in  capital                                                                                              |       | 37,447                                |       |       | 680,901               |       |
| Accumulated deficit                                                                                                      |       | (13,314                               | )          |       | (880,020              | )          |
| Accumulated other  comprehensive income (loss)                                                                           |       | 160                                   |       |       | (551                  | )          |
| Parent company’s  shareholder’s equity (deficit)                                                               |       | 24,325                                |       |       | (199,080              | )          |
| Noncontrolling interest  in subsidiaries                                                                                 |       | 794                                   |       |       | 150,792               |       |
| Total equity (deficit)                                                                                                   |       | 25,119                                |       |       | (48,288               | )          |
| Total liabilities and  equity (deficit)                                                                                  |       | $                                     | 28,496     |       |                  | $          | 606,347 |   |

 

The accompanyingnotes form an integral part of these consolidated financial statements.

 

3

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**GOLDEN MINERALS COMPANY**

# **CONSOLIDATED STATEMENTS OF OPERATIONS ANDCOMPREHENSIVE INCOME (LOSS)**

**(Expressedin United States dollars)**

**(Unaudited)**

** **
| ** **                                                                                       | ** ** | ** **                            | ** ** | ** ** | ** **              | ** ** | ** ** | **For The Period**          | ** ** | ** ** | **For The Period**      | ** ** | ** ** | ** **                  | ** ** |
|--------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|------------|-------------------------|------------|------------|-----------------------------|------------|------------|-------------------------|------------|------------|-----------------------------|------------|
| ** **                                                                                       | ** ** | **Three Months Ended**                | ** ** | ** ** | **March 25, 2009** | ** ** | ** ** | **January 1, 2009**    | ** ** | ** ** | **Nine Months**         | ** ** |
| ** **                                                                                       | ** ** | **September 30,**                | ** ** | ** ** | **Through**             | ** ** | ** ** | **Through**                 | ** ** | ** ** | **Ended**               | ** ** |
| ** **                                                                                       | ** ** | **2009**                              | ** ** | ** ** | **2008**                | ** ** | ** ** | **September 30, 2009** | ** ** | ** ** | **March 24, 2009** | ** ** | ** ** | **September 30, 2008** | ** ** |
| ** **                                                                                       | ** ** | **(Successor)**                       | ** ** | ** ** | **(Predecessor)**       | ** ** | ** ** | **(Successor)**             | ** ** | ** ** | **(Predecessor)**       | ** ** |
| ** **                                                                                       | ** ** | **(in thousands, except share data)** | ** ** |
| **Revenue:**                                                                                     |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Management service fees  (Note 17)                                                               |       | $                                     | 2,652      |       |                    | $          | 1,350      |                        |       | $          | 6,010                   |       |       | $                           | 1,350      |   |   | $ | 4,050 |   |
| **Costs  and expenses:**                                                                         |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Costs of services (Note  17)                                                                     |       | (1,179                                | )          |       | —                  |       |       | (2,263                      | )          |       | —                  |       |       | —                      |       |
| Exploration expense                                                                              |       | (3,598                                | )          |       | (6,108                  | )          |       | (7,067                      | )          |       | (3,482                  | )          |       | (21,437                     | )          |
| Administrative expense                                                                           |       | (2,521                                | )          |       | (6,769                  | )          |       | (5,857                      | )          |       | (4,779                  | )          |       | (15,406                     | )          |
| Stock based  compensation                                                                        |       | (609                                  | )          |       | (864                    | )          |       | (1,218                      | )          |       | (2,717                  | )          |       | (2,463                      | )          |
| Depreciation, depletion  and amortization                                                        |       | (232                                  | )          |       | (115                    | )          |       | (384                        | )          |       | (102                    | )          |       | (439                        | )          |
| Total costs and  expenses                                                                        |       | (8,139                                | )          |       | (13,856                 | )          |       | (16,789                     | )          |       | (11,080                 | )          |       | (39,745                     | )          |
| Loss from operations                                                                             |       | (5,487                                | )          |       | (12,506                 | )          |       | (10,779                     | )          |       | (9,730                  | )          |       | (35,695                     | )          |
| **Other  income and expenses:**                                                                  |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Interest and other  income                                                                       |       | 386                                   |       |       | 730                     |       |       | 676                         |       |       | 1,010                   |       |       | 4,312                       |       |
| Royalty income                                                                                   |       | 272                                   |       |       | 293                     |       |       | 399                         |       |       | 88                      |       |       | 491                         |       |
| Interest and other  expense                                                                      |       | —                                |       |       | (2,283                  | )          |       | —                      |       |       | (345                    | )          |       | (7,562                      | )          |
| Gain (loss) on disposal  of assets, net                                                          |       | 13                                    |       |       | —                  |       |       | (167                        | )          |       | —                  |       |       | —                      |       |
| Gain (loss) on foreign  currency                                                                 |       | 76                                    |       |       | 7                       |       |       | 170                         |       |       | (13                     | )          |       | 213                         |       |
| Gain on extingushment  of debt                                                                   |       | —                                |       |       | —                  |       |       | —                      |       |       | 248,165                 |       |       | —                      |       |
| Loss on auction rate  securities                                                                 |       | (867                                  | )          |       | (4,902                  | )          |       | (2,199                      | )          |       | (828                    | )          |       | (8,002                      | )          |
| Reorganization costs,  net                                                                       |       | (249                                  | )          |       | —                  |       |       | (917                        | )          |       | (3,683                  | )          |       | —                      |       |
| Fresh start accounting  adjustments                                                              |       | —                                |       |       | —                  |       |       | —                      |       |       | 9,122                   |       |       | —                      |       |
| Total other income and  expenses                                                                 |       | (369                                  | )          |       | (6,155                  | )          |       | (2,038                      | )          |       | 253,516                 |       |       | (10,548                     | )          |
| Income (loss) from  continuing operations before income (taxes) benefit                          |       | (5,856                                | )          |       | (18,661                 | )          |       | (12,817                     | )          |       | 243,786                 |       |       | (46,243                     | )          |
| Income taxes                                                                                     |       | (284                                  | )          |       | (177                    | )          |       | (497                        | )          |       | (165                    | )          |       | (464                        | )          |
| Net income (loss) from  continuing operations                                                    |       | (6,140                                | )          |       | (18,838                 | )          |       | (13,314                     | )          |       | 243,621                 |       |       | (46,707                     | )          |
| **Loss  from discontinued operations**                                                           |       | —                                |       |       | (481,112                | )          |       | —                      |       |       | (4,153                  | )          |       | (214,852                    | )          |
| Net income (loss)                                                                                |       | $                                     | (6,140     | )          |                    | $          | (499,950   | )                           |       | $          | (13,314                 | )          |       | $                           | 239,468    |   |   | $ | (261,559 | ) |
| Net (income) loss  attributable to noncontrolling interest                                       |       | —                                |       |       | $                       | 168,172    |       |                        | $          | —     |                    |       | $          | (7,869                      | )          |   | $ | 133,042 |   |
| Net income (loss) attributable  to the Successor/Predecessor shareholder’s                  |       | $                                     | (6,140     | )          |                    | $          | (331,778   | )                           |       | $          | (13,314                 | )          |       | $                           | 231,599    |   |   | $ | (128,517 | ) |
| **Other  comprehensive loss:**                                                                   |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Unrealized gain (loss) on  securities                                                            |       | (666                                  | )          |       | $                       | (1,524     | )          |                        | $          | 160        |                    |       | $          | 940                         |       |   | $ | 140 |   |
|                                                                                             |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Comprehensive income (loss)  attributable to Successor/Predecessor shareholder’s            |       | $                                     | (6,806     | )          |                    | $          | (333,302   | )                           |       | $          | (13,154                 | )          |       | $                           | 232,539    |   |   | $ | (128,377 | ) |
|                                                                                             |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| **Net  income (loss) per Common/Ordinary Share — basic**                                    |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| ** **                                                                                       |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Income (loss) from  continuing operations attributable to the Successor/Predecessor shareholders |       | $                                     | (2.06      | )          |                    | $          | (0.32      | )                           |       | $          | (4.46                   | )          |       | $                           | 4.13       |   |   | $ | (0.79 | ) |
| Loss from discontinued  operations attributable to the Successor/Predecessor shareholders        |       | —                                |       |       | (5.31                   | )          |       | —                      |       |       | (0.20                   | )          |       | (1.39                       | )          |
| Income (loss) attributable  to the Successor/Predecessor shareholders                            |       | $                                     | (2.06      | )          |                    | $          | (5.63      | )                           |       | $          | (4.46                   | )          |       | $                           | 3.93       |   |   | $ | (2.18 | ) |
|                                                                                             |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| **Net  income (loss) per Common/Ordinary Share — diluted**                                  |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| ** **                                                                                       |       |                                  |       |       |                    |       |       |                        |       |       |                    |       |       |                        |       |
| Loss from continuing  operations attributable to the Successor/Predecessor shareholders          |       | $                                     | (2.06      | )          |                    | $          | (0.32      | )                           |       | $          | (4.46                   | )          |       | $                           | (0.06      | ) |   | $ | (0.79 | ) |
| Loss from discontinued  operations attributable to the Successor/Predecessor shareholders        |       | —                                |       |       | (5.31                   | )          |       | —                      |       |       | (0.17                   | )          |       | (1.39                       | )          |
| Loss attributable to  the Successor/Predecessor shareholders                                     |       | $                                     | (2.06      | )          |                    | $          | (5.63      | )                           |       | $          | (4.46                   | )          |       | $                           | (0.23      | ) |   | $ | (2.18 | ) |
| **Weighted  average Common Stock/Ordinary Shares outstanding - basic**                           |       | 2,987,735                             |       |       | 58,935,475              |       |       | 2,987,735                   |       |       | 59,000,832              |       |       | 58,934,882                  |       |
| **Weighted  average Common Stock/Ordinary Shares outstanding - diluted**                         |       | 2,987,735                             |       |       | 58,935,475              |       |       | 2,987,735                   |       |       | 69,171,400              |       |       | 58,934,882                  |       |

 

The accompanying notes form an integral part of theseconsolidated financial statements. 

 

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**GOLDEN MINERALS COMPANY**

# **CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(Expressedin United States dollars)**

**(Unaudited)**

 
| ** **                                                                                                                    | ** ** | **For The Period**          | ** ** | ** ** | **For The Period**       | ** ** | ** **                  | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                    | ** ** | **March 25, 2009**     | ** ** | ** ** | **January 1, 2009** | ** ** | **Nine Months**             | ** ** |
| ** **                                                                                                                    | ** ** | **Through**                 | ** ** | ** ** | **Through**              | ** ** | **Ended**                   | ** ** |
| ** **                                                                                                                    | ** ** | **September 30, 2009** | ** ** | ** ** | **March 24, 2009**  | ** ** | **September 30, 2008** | ** ** |
| ** **                                                                                                                    | ** ** | **(Successor)**             | ** ** | ** ** | **(Predecessor)**        | ** ** |
| ** **                                                                                                                    | ** ** | **(amounts in thousands)**  | ** ** |
| Cash flows from  operating activities:                                                                                        |       |                        |       |       |                     |       |                        |       |
| Net cash used in  operating activities (Note 19)                                                                              |       | $                           | (15,760    | )          |                     | $          | (13,849                     | )          | $ | (60,844 | ) |
| Cash flows from  investing activities:                                                                                        |       |                        |       |       |                     |       |                        |       |
| Purchase of available  for sale investments                                                                                   |       | —                      |       |       | (4,447                   | )          | (33,527                     | )          |
| Sale of available for  sale investments                                                                                       |       | 2,498                       |       |       | 21,113                   |       | 74,985                      |       |
| Maturities of  held-to-maturity investments                                                                                   |       | —                      |       |       | —                   |       | 2,000                       |       |
| Settlement of metal  derivative instruments                                                                                   |       | —                      |       |       | —                   |       | (156,974                    | )          |
| Released from (transfer  to) restricted cash to collateralize credit facility, letters of credit and  interest payments , net |       | —                      |       |       | 5,732                    |       | 7,962                       |       |
| Proceeds from sale of  interest in subsidiary, net                                                                            |       | —                      |       |       | 25,225                   |       | 70,000                      |       |
| Proceeds from sale of  assets                                                                                                 |       | 1,650                       |       |       | —                   |       | —                      |       |
| Receipt of deferred  payments from noncontrolling interest                                                                    |       | —                      |       |       | —                   |       | 14,100                      |       |
| Capitalized costs and  acquisitions of property, plant and equipment                                                          |       | (459                        | )          |       | (4,580                   | )          | (25,869                     | )          |
| Net cash provided by  (used in) investing activities                                                                          |       | $                           | 3,689      |       |                     | $          | 43,043                      |       | $ | (47,323 | ) |
| Cash flows from  financing activities:                                                                                        |       |                        |       |       |                     |       |                        |       |
| Payments of notes  payable and long term debt                                                                                 |       | —                      |       |       | (47,297                  | )          | (6,346                      | )          |
| Amounts drawn on DIP  facility                                                                                                |       | —                      |       |       | 6,500                    |       | —                      |       |
| Non-controlling  interest contributions                                                                                       |       | —                      |       |       | 3,500                    |       | 107,750                     |       |
| Net cash (used in)  provided by financing activities                                                                          |       | $                           | —     |       |                     | $          | (37,297                     | )          | $ | 101,404 |   |
| Net decrease in cash  and cash equivalents                                                                                    |       | (12,071                     | )          |       | (8,103                   | )          | (6,763                      | )          |
| Cash and cash  equivalents - beginning of period                                                                              |       | 25,620                      |       |       | 33,723                   |       | 40,736                      |       |
| Cash and cash  equivalents - end of period                                                                                    |       | $                           | 13,549     |       |                     | $          | 25,620                      |       | $ | 33,973 |   |

 

SeeNote 19 for supplemental cash flow information.

 

The accompanying notes form an integral part of theseconsolidated financial statements.

 

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**GOLDEN MINERALS COMPANY**

**CONSOLIDATEDSTATEMENTS OF CHANGES IN EQUITY (DEFICIT)**

**(Expressed in United States dollars)**

**(Unaudited)**

 
| ** **                                                                  | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | **Accumulated**    | ** **   | ** **   | ** ** | ** **    | ** ** |
|-----------------------------------------------------------------------------|------------|---------------------------------------|------------|-------------|------------|-----------------|------------|-------------|------------|--------------------|--------------|--------------|------------|---------------|------------|
| ** **                                                                  | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | **Other**          | ** **   | ** **   | ** ** | ** **    | ** ** |
| ** **                                                                  | ** ** | ** **                            | ** ** | ** **  | ** ** | **Additional**  | ** ** | ** **  | ** ** | **Comprehensive**  | ** **   | ** **   | ** ** | **Total**     | ** ** |
| ** **                                                                  | ** ** | **Ordinary  Shares**                  | ** ** | **Paid-in** | ** ** | **Accumulated** | ** ** | **income**  | ** ** | **Noncontrolling** | ** **   | **Equity**   | ** ** |
| ** **                                                                  | ** ** | **Shares**                            | ** ** | **Amount**  | ** ** | **Capital**     | ** ** | **Deficit** | ** ** | **(loss)**         | ** **   | **Interest** | ** ** | **(Deficit)** | ** ** |
| ** **                                                                  | ** ** | **(in thousands except share  data)** | ** ** |
| **Balance,  December 31, 2008**                                        | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | ** **         | ** **   | ** **   | ** ** |          | ** ** |
| **(Predecessor)**                                                           |       | **59,000,832**                        | ** ** | **$**       | **590.0**  | ** **      | **$**      | **680,901** | ** ** | **$**              | **(880,020** | **)**        | **$**      | **(551**      | **)**      | **$** | **150,792** | ** ** | **$** | **(48,288** | **)** |
| Stock compensation  accrued                                                 |       | —                                |       | —      |       | 2,920           |       | —      |       | —             |         | —       |       | 2,920         |       |
| Ordinary Shares of Apex  Silver Mines Limited to be canceled                |       | (59,000,832                           | )          | (590.0      | )          | (683,821        | )          | —      |       | —             |         | —       |       | (684,411      | )          |
| Unrealized loss on  marketable equity securities                            |       | —                                |       | —      |       | —          |       | —      |       | 940                |         | —       |       | 940           |       |
| Net income (loss)                                                           |       | —                                |       | —      |       | —          |       | 231,599     |       | —             |         | 7,869        |       | 239,468       |       |
| Capital contributions                                                       |       | —                                |       | —      |       | —          |       | —      |       | —             |         | 3,500        |       | 3,500         |       |
| Interest payable to non  controlling interest                               |       | —                                |       | —      |       | —          |       | —      |       | —             |         | 7,899        |       | 7,899         |       |
| Elimination of  Predecessor accumulated deficit                             |       | —                                |       | —      |       | —          |       | 648,421     |       | —             |         | —       |       | 648,421       |       |
| Elimination of  Predecessor accumulated OCI                                 |       | —                                |       | —      |       | —          |       | —      |       | (389               | )            | (170,060     | )          | (170,449      | )          |
| **Balance,  March 24, 2009**                                           | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | ** **         | ** **   | ** **   | ** ** |          | ** ** |
| **(Successor)**                                                             |       | **—**                            |       | **$**       | **—** | ** **      | **$**      | **—**  | ** ** | **$**              | **—**   | ** **   | **$**      | **—**    | ** ** | **$** | **—** | ** ** | **$** | **—** |   |
| Issuance of new equity  in connection with emergence from Chapter 11   |       | 2,987,735                             |       | $           | 30.0       |            | $          | 36,231      |       | $                  | —       |         | $          | —        |       | $ | — |   | $ | 36,261 |   |
| Stock compensation  accrued, net of forfeitures                             |       | 245,000                               |       | 2.3         |       | 1,216           |       | —      |       | —             |         | —       |       | 1,218         |       |
| Unrealized gain on  marketable equity securities                            |       | —                                |       | —      |       | —          |       | —      |       | 160                |         | —       |       | 160           |       |
| Noncontrolling interest  in mineral properties                              |       | —                                |       | —      |       | —          |       | —      |       | —             |         | 794          |       | 794           |       |
| Net loss                                                                    |       | —                                |       | —      |       | —          |       | (13,314     | )          | —             |         | —       |       | (13,314       | )          |
| **Balance,  September 30, 2009**                                       | ** ** | **3,232,735**                         | ** ** | **$**       | **32.3**   | ** **      | **$**      | **37,447**  | ** ** | **$**              | **(13,314**  | **)**        | **$**      | **160**       | ** ** | **$** | **794** | ** ** | **$** | **25,119** | ** ** |

 

The accompanyingnotes form an integral part of these consolidated financial statements.

 

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**GOLDEN MINERALS COMPANY**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(Expressedin United States dollars)**

 

**1.****             ****Basis of Preparation of FinancialStatements and Nature of Operations**

 

Uponemergence from Chapter 11 bankruptcy on March 24, 2009 as discussed inNote 2, Golden Minerals Company (the “Company”), a Delaware corporation, becamethe successor to Apex Silver Mines Limited (“ASML”) for purposes of reporting underthe U.S. federal securities laws. References in this Form 10-Q to “Successor” refer to the accountsof the Company and its subsidiaries on or after March 25, 2009, the dayfollowing emergence from Chapter 11. References to “Predecessor” refer to the accounts of ASML and itssubsidiaries prior to March 25, 2009.

 

Theseunaudited interim consolidated financial statements have been prepared inaccordance with the rules and regulations of the Securities and ExchangeCommission (“SEC”). Such rules and regulations allow the omission ofcertain information and footnote disclosures normally included in financialstatements prepared in accordance with accounting principles generally acceptedin the United States (“GAAP”), so long as such omissions do not render thefinancial statements misleading.

 

In theopinion of management, these financial statements reflect all adjustments thatare necessary for fair statement of the results for the periods presented. Withthe exception of the adjustments made in connection with fresh startaccounting, as described in Note 2 below, all adjustments were of a normalrecurring nature. Certain reclassifications have been made to the prior periodfinancial statements to conform to the current period presentation. Theseinterim financial statements should be read in conjunction with the annualfinancial statements of ASML included in its 2008 Annual Report on Form 10-K.

 

Priorto the emergence from Chapter 11 and the sale of the San Cristóbal mine, ASMLwas the 65% owner and operator of the San Cristóbal silver and zinc mine inBolivia.  Following emergence fromChapter 11 and the sale of the San Cristóbal mine to Sumitomo, the Company isprimarily engaged in the exploration and advancement of its portfolio ofexploration properties primarily in South America and Mexico and in providingoperations management services to Sumitomo for the San Cristóbal mine.  The financial statements have been preparedon a going concern basis under which an entity is considered to be able torealize its assets and satisfy its liabilities in the normal course ofbusiness.  However, the continuingoperations of the Company are dependent upon its ability to raise sufficientcapital and to generate future profitable operations.  The underlying value and recoverability ofthe amounts shown as mineral properties in the consolidated balance sheet aredependent on the ability of the Company to continue to finance exploration anddevelopment activities that would lead to profitable production or proceedsfrom the disposition of the mineral properties. There can be no assurance that the Company will be successful in raisingadditional financing in the future on terms acceptable to the Company or atall.

 

**2.****             ****Chapter 11 Proceedings, FinancialRestructuring and Sale of the San Cristóbal Mine**

 

*Chapter11 Reorganization*

 

On January 12,2009, ASML and its wholly owned subsidiary, Apex Silver Mines Corporation (“ASMC”),filed voluntary petitions for reorganization relief under Chapter 11 of theU.S. Bankruptcy Code (the “Bankruptcy Code”). ASML also commenced a provisional liquidation proceeding in the CaymanIslands.  ASML’s subsidiaries outside ofthe United States, including Minera San Cristóbal  S.A. (“MSC”), the Bolivian subsidiary thatowns and operates the San Cristóbal mine, were not included in the Chapter 11filing or in any other bankruptcy or reorganization proceeding.

 

UnderChapter 11, ASML operated its businesses between January 12, 2009 and March 24,2009 as a debtor-in-possession under court protection from creditors andclaimants under the jurisdiction of the Bankruptcy Court and under thesupervision of the joint provisional liquidators in the Cayman Islands.

 

AJoint Plan of Reorganization (the “Plan”) was approved by the U.S. BankruptcyCourt for the Southern District of New York (the “Bankruptcy Court”) on March 4,2009, and the Company emerged from Chapter 11 protection on March 24, 2009(the “Effective Date”).  At that time,and subsequent to the closing of the sale of the San Cristóbal mine to

 

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Sumitomo as describedbelow, all of the remaining assets of ASML, other than a small cash reserve forthe payment of ASML’s liquidation expenses, were transferred to theCompany.  A compulsory liquidationproceeding was initiated for ASML in the Cayman Islands and all of the ordinaryshares of ASML will be formally canceled in that proceeding.

 

Underthe Plan, holders of ASML’s 2.875% and 4.0% Convertible Senior SubordinatedNotes due 2024 (collectively, the “Notes”) received in exchange for thecancellation of the Notes a pro rata distribution of (i) 2,987,735 sharesof common stock of the Company, and (ii) approximately $45.0 million ofcash plus any other cash or cash equivalents held by the Company in excess ofthe sum of $15.0 million plus an amount equal to accrued liabilities at March 31,2009 and certain projected reorganization expenses.  In addition, the Company anticipates that12,265 shares, originally reserved for possible distribution to holders ofunsecured claims, will be distributed pro rata to the former holders of theNotes at the final determination during November 2009. To record theeffect of the reorganization, ASML wrote off the $290.0 million liabilityrelated to the Notes plus $3.2 million interest accrued through January 12,2009, the Chapter 11 filing date, and recorded a $248.2 million gain at March 24,2009.

 

Otherholders of unsecured claims against ASML and ASMC, except ASML’s equityholders, received or  will receive cashpayment for their claims up to a maximum recovery of $10,000 per claim, or apro rata distribution of common stock of the Company.  Through September 30, 2009 the Companyhas made cash payments of $52,000 in resolution of such claims and has issuedno shares of common stock.  If no sharesare issued to holders of unsecured claims, the total 12,265 shares reserved forthat purpose will be distributed pro rata to the former holders of the Notes.It is anticipated that the final determination will occur in November 2009.  ASML’s equity holders received no recoveryunder the Plan, and their shares will be canceled in connection with ASML’sCayman Islands liquidation proceeding.

 

*Sale ofthe San Cristóbal Mine*

 

On theEffective Date, in conjunction with, and as a condition to the emergence frombankruptcy, ASML sold to Sumitomo its remaining direct and indirect interestsin the San Cristóbal mine, including its 65% interest in MSC, for a cashpurchase price of $27.5 million, plus $2.5 million in expense reimbursementsand the assumption of certain liabilities. On the Effective Date, Sumitomo and the other senior lenders waived andreleased ASML and the Company from any liability associated with amountsoutstanding under the project finance facility relating to the San Cristóbalmine.

 

On theEffective Date, ASMC, renamed Golden Minerals Services Corporation (“GoldenServices”), entered into a Management Services Agreement with Sumitomo (the “ManagementAgreement”) under which it is providing certain operations management serviceswith respect to the San Cristóbal mine. The initial term of the ManagementAgreement has been extended until June 30, 2010 and thereafter may beterminated by Golden Services with twelve months’ prior notice or by Sumitomowith six months’ prior notice.  Ifterminated by Sumitomo, Golden Services would be entitled to a $1.0 milliontermination fee.  Golden Services wouldnot be required to pay a termination fee.

 

*FreshStart Accounting*

 

Asrequired by GAAP, the Company used fresh start accounting effective March 25,2009 following the guidance of ASC 805 “Business Combinations”, (“ASC 805”) andASC 852 “Reorganizations”, (“ASC 852”). The Company adopted fresh start accounting because holders of existingvoting shares of the Predecessor immediately before the Effective Date receivedless than 50% of the voting shares of the Successor and the reorganized valueof the Successor is less than its post-petition liabilities and allowedclaims.  The Company’s financialstatements reflect a new capital structure and a new basis in the identifiableassets and liabilities assumed. Accordingly, the consolidated financial statements on or after March 25,2009 are not comparable to the consolidated financial statements prior to thatdate.

 

ASC852 requires, among other things, the determination of the reorganization valueof the Successor upon emergence from bankruptcy.  Reorganization value approximates the fairvalue of the entity, before considering liabilities, and approximates theamount a willing buyer would pay for the assets of the entity immediately afterthe restructuring. The fair value of the Company’s assets was determined withthe assistance of a third party valuation expert and a minerals engineeringfirm who used available comparable market data and quotations, discounted cashflow analysis, and other methods in determining the appropriate asset fairvalues.  Based on these valuations andapplying the principles of ASC 805, the Company has adjusted upward thereported amounts of certain of its individual assets, net of liabilities, by acombined total of $9.1 million and has reflected that adjustment in thePredecessor’s statement of operations in accordance with ASC 852.  The upward adjustment relates primarily torecording at fair value certain exploration properties and a royalty interestthat were previously reflected on the Predecessor’s balance sheet at a zerocarrying value, because all exploration costs at such properties were expensedas incurred.  Future costs of explorationwill continue to be expensed as incurred.

 

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Thetotal equity of the Successor at the Effective Date of $36.5 million has beenadjusted to reflect no beginning retained earnings or deficit, after takinginto account the cancelation of the Notes, the issuance of new shares in theCompany, and the fresh start accounting adjustments.  The total equity of the Successor at theEffective Date reflects the estimated enterprise value of the Company followingthe principles of ASC 852 and ASC 805. As part of the Company’s bankruptcy proceedings, an enterprise valueranging from $15 million to $30 million was initially projected based on ablend of valuations using market value multiples for peer companies and anassessment of the underlying values of the Company’s mineral properties at thetime of the bankruptcy filing.  Asdiscussed above, and in conjunction with finalizing the fresh start accountingadjustments, additional valuation assessments of the fair value of theSuccessor’s assets were performed with the assistance of a third partyvaluation expert and a minerals engineering firm to arrive at the Company’sreported equity value at the Effective Date of $36.5 million.

 

Thebalance sheet adjustments presented below summarize the impact of thereorganization, the sale of the San Cristóbal mine and the application of freshstart accounting as of the Effective Date.

 

# **GOLDEN MINERALSCOMPANY**

# **REORGANIZEDCONSOLIDATED BALANCE SHEETS**

**(Expressed in United States dollars)**

**(Unaudited)**

 
| ** **                                                 | ** ** | **March 24, 2009**    | ** ** |
|------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                 | ** ** | ** **                 | ** ** | **Sale of** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                 | ** ** | ** **                 | ** ** | **San Cristóbal** | ** ** | **Reorganization** | ** ** | **Fresh Start** | ** ** | ** ** | ** ** |
| ** **                                                 | ** ** | **Predecessor**            | ** ** | **Mine** | ** ** | **Adjustments** | ** ** | **Adjustments** | ** ** | **Successor** | ** ** |
| ** **                                                 | ** ** | **Balances**               | ** ** | **(Note I)** | ** ** | **(Note II)** | ** ** | **(Note III)** | ** ** | **Balances** | ** ** |
| ** **                                                 | ** ** | **(amounts in thousands)** | ** ** |
| **Assets**                                                 |       |                       |       |   |   |   |   |   |   |   |   |
| Current assets                                             |       |                       |       |   |   |   |   |   |   |   |   |
| Cash and cash  equivalents                                 |       | $                          | 43,120     |   | $ | 27,500 |   | $ | (45,000 | ) | $ | — |   | $ | 25,620 |   |
| Restricted cash                                            |       | 14,853                     |       | (14,853 | ) | — |   | — |   | — |   |
| Investments                                                |       | 88                         |       | — |   | — |   | — |   | 88 |   |
| Trade receivables                                          |       | 19,208                     |       | (19,023 | ) | — |   | — |   | 185 |   |
| Inventories                                                |       | 89,633                     |       | (89,633 | ) | — |   | — |   | — |   |
| Prepaid expenses and  other assets                         |       | 8,543                      |       | (7,025 | ) | — |   | — |   | 1,518 |   |
| Total current assets                                       |       | 175,445                    |       | (103,034 | ) | (45,000 | ) | — |   | 27,411 |   |
|                                                       |       |                       |       |   |   |   |   |   |   |   |   |
| Property, plant and  equipment, net                        |       | 190,439                    |       | (187,387 | ) | — |   | 9,605 |   | 12,657 |   |
| Ore stockpile  inventories                                 |       | 74,756                     |       | (74,756 | ) | — |   | — |   | — |   |
| Value added tax  recoverable                               |       | 168,842                    |       | (168,842 | ) | — |   | — |   | — |   |
| Investments                                                |       | 5,249                      |       | — |   | — |   | — |   | 5,249 |   |
| Other                                                      |       | 48                         |       | (44 | ) | — |   | — |   | 4 |   |
| Total assets                                               |       | $                          | 614,779    |   | $ | (534,063 | ) | $ | (45,000 | ) | $ | 9,605 |   | $ | 45,321 |   |
|                                                       |       |                       |       |   |   |   |   |   |   |   |   |
| **Liabilities and Equity (Deficit)**                       |       |                       |       |   |   |   |   |   |   |   |   |
|                                                       |       |                       |       |   |   |   |   |   |   |   |   |
| Current liabilities                                        |       |                       |       |   |   |   |   |   |   |   |   |
| Accounts payable and  other accrued liabilities            |       | $                          | 44,889     |   | $ | (36,312 | ) | $ | — |   | $ | — |   | $ | 8,577 |   |
| Accrued interest  payable                                  |       | 8,987                      |       | (5,809 | ) | (3,178 | ) | — |   | — |   |
| Current portion of long  term debt                         |       | 553,516                    |       | (263,529 | ) | (289,987 | ) | — |   | — |   |
| Total current  liabilities                                 |       | 607,392                    |       | (305,650 | ) | (293,165 | ) | — |   | 8,577 |   |
| Long term debt                                             |       | 37,517                     |       | (37,517 | ) | — |   | — |   | — |   |
| Asset retirement  obligation                               |       | 9,675                      |       | (9,675 | ) | — |   | — |   | — |   |
| Other long term  liabilities                               |       | 2,752                      |       | (2,752 | ) | — |   | 483 |   | 483 |   |
| Total liabilities                                          |       | 657,336                    |       | (355,594 | ) | (293,165 | ) | 483 |   | 9,060 |   |
| Equity (deficit)                                           |       |                       |       |   |   |   |   |   |   |   |   |
| Ordinary Shares (Common  Stock)                            |       | 560                        |       | — |   | (530 | ) | — |   | 30 |   |
| Additional paid in  capital                                |       | 684,122                    |       | — |   | (647,891 | ) | — |   | 36,231 |   |
| Accumulated deficit                                        |       | (897,299                   | )          | (8,409 | ) | 896,586 |   | 9,122 |   | — |   |
| Parent company’s  shareholder’s equity (deficit) |       | (212,617                   | )          | (8,409 | ) | 248,165 |   | 9,122 |   | 36,261 |   |
| Noncontrolling interest  in subsidiaries                   |       | 170,060                    |       | (170,060 | ) | — |   | — |   | — |   |
| Total equity (deficit)                                     |       | (42,557                    | )          | (178,469 | ) | 248,165 |   | 9,122 |   | 36,261 |   |
| Total liabilities and  equity (deficit)                    |       | $                          | 614,779    |   | $ | (534,063 | ) | $ | (45,000 | ) | $ | 9,605 |   | $ | 45,321 |   |

 

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Note I. - The adjustmentsrelated to the sale of the San Cristóbal mine to Sumitomo include $27.5 millionof cash received from the sale, the write-off of $561.5 million of assets soldto Sumitomo, net of $355.6 million of liabilities assumed by Sumitomo, therelease of $170.1 million of noncontrolling interest primarily related toSumitomo and a loss on the sale of $8.4 million.

 

Note II. — Thereorganization adjustments include a $45.0 million reduction of cash foramounts paid to the holders to settle the Notes, a write-off of the $290.0million liability related to the Notes, plus $3.2 million of accrued interestand a $248.2 million gain on extinguishment of debt.  The reorganization adjustments also includethe write-off of $896.3 million of accumulated deficit, $647.6 million ofadditional paid in capital and $0.5 million of ordinary shares to reflect theelimination of the Predecessor’s shareholder’s equity.

 

Note III. — The freshstart adjustments reflect a write-up of property, plant and equipment toestimated fair value including $7.3 million related to the Company’sexploration properties, $2.0 million related to a mineral property royalty heldby the Company and $0.3 million related to an aircraft owned by theCompany.  The fresh start adjustment alsoincludes $0.5 million deferred tax liability adjustment to reflect the taxeffect of the adjustments to property, plant and equipment.  As the result of the above adjustments theCompany recorded a positive $9.1 million fresh start adjustment in thestatement of operations for the period ended March 24, 2009.

 

**3.****             ****Discontinued Operations**

 

As a resultof the sale, results of operations of the San Cristóbal mine and relatedsubsidiaries sold are presented as discontinued operations for the periods onthe Consolidated Statements of Operations and Comprehensive Income (Loss)through March 24, 2009, the date of the sale,  including all direct financing related to theSan Cristóbal mine (see Note 2). Additionally, costs incurred for managementservice fees that were previously eliminated upon consolidation have not beeneliminated and are reflected as a cost of service between the discontinuedoperations and the Company.

 

TheCompany determined that reporting discontinued operations is appropriate inaccordance with ASC 805.  The Company hasdetermined that the continuing cash flows generated by the Management Agreementfor the San Cristóbal mine are not so significant as to constitute continuinginvolvement with the mine.  In addition,management has evaluated the Company’s other ongoing involvement with the SanCristóbal mine as a result of the Management Agreement, and concluded that itdoes not represent significant continuing involvement as defined in ASC 805.

 

Theresults of discontinued operations for the period January 1, 2009 through March 24,2009 and for the three and nine month periods ended September 30, 2008 areas follows (amounts in thousands):

 
| ** **                                       | ** ** | **For The Period**       | ** ** | ** **                  | ** ** | ** **                  | ** ** |
|--------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                                       | ** ** | **January 1, 2009** | ** ** | **Three Months**            | ** ** | **Nine Months**             | ** ** |
| ** **                                       | ** ** | **Through**              | ** ** | **Ended**                   | ** ** | **Ended**                   | ** ** |
| ** **                                       | ** ** | **March 24, 2009**  | ** ** | **September 30, 2008** | ** ** | **September 30, 2008** | ** ** |
| **Revenue:**                                     |       |                     |       |                        |       |                        |       |
| Sale of concentrates,  net                       |       | $                        | 99,049     |                        | $          | 148,789                     |       | $ | 345,320 |   |
| **Costs  and expenses:**                         |       |                     |       |                        |       |                        |       |
| Costs applicable to  sales                       |       | (59,955                  | )          | (124,079                    | )          | (255,840                    | )          |
| Management fee                                   |       | (1,350                   | )          | (1,472                      | )          | (4,463                      | )          |
| Write down of  inventories                       |       | —                   |       | (34,413                     | )          | (34,413                     | )          |
| Impairment of long  lived assets                 |       | —                   |       | (615,032                    | )          | (615,032                    | )          |
| Asset retirement  accretion expense              |       | (232                     | )          | (208                        | )          | (574                        | )          |
| Gain on comodity  drivatives                     |       | —                   |       | 163,285                     |       | 358,924                     |       |
| Foreign currency gain                            |       | 1,960                    |       | 4,790                       |       | 15,418                      |       |
| Depreciation, depletion  and amortization        |       | (10,527                  | )          | (17,376                     | )          | (35,787                     | )          |
| Total costs and  expenses                        |       | (70,104                  | )          | (624,505                    | )          | (571,767                    | )          |
| Income (loss) from  operations                   |       | 28,945                   |       | (475,716                    | )          | (226,447                    | )          |
| **Other  income and expenses:**                  |       |                     |       |                        |       |                        |       |
| Interest and other  income                       |       | 67                       |       | 65                          |       | 417                         |       |
| Interest expense and  other borrowing costs      |       | (22,233                  | )          | (13,272                     | )          | (38,189                     | )          |
| Total other income and  expenses                 |       | (22,166                  | )          | (13,207                     | )          | (37,772                     | )          |
| Income before income  taxes                      |       | 6,779                    |       | (488,923                    | )          | (264,219                    | )          |
| Income taxes                                     |       | (2,523                   | )          | 7,811                       |       | (13,704                     | )          |
| Income before sale of  interest in subsidiaries  |       | 4,256                    |       | (481,112                    | )          | (277,923                    | )          |
| Gain (loss) on sale of  interest in subsidiaries |       | (8,409                   | )          | —                      |       | 63,071                      |       |
| **Loss from  discontinued****operations**        |       | $                        | (4,153     | )                           | $          | (481,112                    | )          | $ | (214,852 | ) |

 

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Theassets and liabilities of discontinued operations reported in the consolidatedbalance sheets at December 31, 2008 consisted of the following (amounts inthousands):

 
| ** **                                      | ** ** | **December 31,** | ** ** |
|-------------------------------------------------|------------|-----------------------|------------|
| ** **                                      | ** ** | **2008**              | ** ** |
| Assets                                          |       |                  |       |
| Cash and cash  equivalents                      |       | $                     | 992        |   |
| Restricted cash                                 |       | 20,070                |       |
| Accounts receivable                             |       | 7,314                 |       |
| Inventories                                     |       | 75,008                |       |
| Prepaid expenses and  other assets              |       | 14,251                |       |
| Current assets                                  |       | 117,635               |       |
| Property, plant and  equipment, net             |       | 199,040               |       |
| Ore inventories                                 |       | 72,628                |       |
| Value added tax  recoverable                    |       | 157,146               |       |
| Other assets                                    |       | 17                    |       |
|                                            |       | $                     | 546,466    |   |
|                                            |       |                  |       |
| Liabilities and Equity                          |       |                  |       |
| Accounts payable and  accrued liabilities       |       | $                     | 44,878     |   |
| Accrued interest  payable                       |       | 5,797                 |       |
| Current portion of long  term debt              |       | 233,623               |       |
| Current liabilities                             |       | 284,298               |       |
| Long term debt                                  |       | 59,951                |       |
| Reclamation &  remediation liabilities |       | 9,155                 |       |
| Other long term  liabilities (income taxes)     |       | 4,398                 |       |
| Noncontrolling interest                         |       | 150,792               |       |
| Accumulated earnings                            |       | 37,872                |       |
|                                            |       | $                     | 546,466    |   |

 

Thereare no remaining assets or liabilities from discontinued operations at September 30,2009.

 

**4.****             ****Significant Accounting Policies**

 

*RecentlyAdopted Standards*

 

During the third quarter2009, the Company adopted the Financial Accounting Standards Board (“FASB”)Accounting Standards Codification (“ASC”). The ASC is the single source of authoritative U.S. GAAP to be applied bynongovernmental entities. Following the Codification, the FASB will not issuenew standards in the form of Statements, FASB Staff Positions or EmergingIssues Task Force Abstracts. Instead, it will issue Accounting StandardsUpdates (“ASU”) which will serve to update the Codification, provide backgroundinformation about the guidance and provide the basis for conclusions on thechanges to the Codification. Rules and interpretive releases of theSecurities and Exchange Commission (“SEC”) under authority of federalsecurities laws are also sources of authoritative GAAP for SEC registrants.Adoption of the ASC did not have an impact on the Company’s consolidatedfinancial position, results of operations or cash flows.

 

During May 2008 theFASB issued an update to ASC 470 “Debt” (ASC 470 Update”) which applies toconvertible debt instruments that, by their stated terms, may be settled incash (or other assets) upon conversion, including partial cash settlement,unless the embedded conversion option is required to be separately accountedfor as a derivative under ASC 815 “Derivatives and Hedging” (“ASC 815”). ASC470 Update requires the liability and equity components of convertible debtinstruments to be separately accounted for in a manner that reflects the entity’snonconvertible debt borrowing rate when interest cost is recognized insubsequent periods.  As the Company didnot have the ability or requirement to cash settle the Notes upon conversion,it did not have any instruments that fell within the scope of ASC 470 Updateand accordingly there was no impact on the Company’s consolidated financialposition, results of operations or cash flows.

 

On January 1, 2009the Company adopted certain provisions of ASC 820 “Fair Value Measurements andDisclosures” (“ASC 820”) related to non-financial assets and non-financialliabilities that are recognized or disclosed at fair value in the financialstatements on a nonrecurring basis. The adoption of these provisions of ASC 820has not had a material impact on our consolidated financial statements.

 

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During March 2008the FASB issued an update to ASC 815 (“ASC 815 Update”) which enhances thedisclosure requirements pertaining to how and why an entity uses derivativeinstruments, how derivative instruments and related hedge items are accountedfor under ASC 815, and how derivative instruments and related hedge itemsaffect an entity’s financial position, financial performance, and cash flows.The adoption of provisions of ASC 815 Update did not impact the Company’sdisclosure requirements.

 

ASC 805 “BusinessCombinations” (“ASC 805”) provides guidance on how an acquirer in a businesscombination recognizes and measures in its financial statements theidentifiable assets acquired, the liabilities assumed, non-controllinginterests acquired, and goodwill acquired. Under fresh-start accounting, theCompany re-measured the assets and liabilities assumed from ASML at fair valueand recorded a $9.1 million gain on reorganization per the guidance of ASC 805.

 

On January 1, 2009the Company adopted certain provisions of ASC 810 “Consolidation” (“ASC 810”)related to noncontrolling interests. A noncontrolling interest, formerly calleda minority interest, is the portion of equity in a subsidiary not attributable,directly or indirectly, to a parent. The objective of this Standard is toimprove the relevance, comparability, and transparency of the financialinformation that a reporting entity provides in its consolidated financialstatements by establishing accounting and reporting standards related tonon-controlling interests. The provisions of ASC 810 became effective for thePredecessor on January 1, 2009 and have been applied prospectively, exceptfor the provisions related to the presentation of non-controlling interests,which have been applied retrospectively for all periods presented. Uponadoption of ASC 810, noncontrolling interests of approximately $150.8 millionas of December 31, 2008 were recast to a component of total equity in theconsolidated balance sheet.  In addition,prior to the adoption of ASC 810, GAAP did not permit the allocation of lossesto the noncontrolling interest in excess of the non-controlling interest’srecorded interest in the subsidiary. At December 31, 2008, anoncontrolling interest of the Predecessor had accumulated approximately $2.4million of such unallocated losses.  At September 30,2009 the Company had recorded $0.8 million of noncontrolling interest relatedto its El Quevar project in Argentina (see Note 16).

 

During April 2009,the FASB issued an update to ASC 820 regarding the determination of fair valuewhen the volume and level of activity for the asset or liability havesignificantly decreased and identifying transactions that are not orderly. Thisupdate relates to determining fair values when there is no active market orwhere the price inputs being used represent distressed sales. It reaffirms theneed to exercise judgment to ascertain if a formerly active market has becomeinactive and in determining fair values when markets have become inactive. TheCompany adopted these provisions beginning with the interim period ended June 30,2009 (see Note 13). The adoption of these provisions did not have a materialimpact on our consolidated financial statements.

 

During April 2009,the FASB issued an update to ASC 320 “Investments — Debt and Equity Securities”(ASC 320”) regarding the recognition and presentation of other-than-temporaryimpairments. This update applies to investments in debt securities for whichother-than-temporary impairments may be recorded. If an entity’s managementasserts that it does not have the intent to sell a debt security and it is morelikely than not that it will not have to sell the security before recovery ofits cost basis, then an entity may separate other-than-temporary impairmentsinto two components: 1) the amount related to credit losses (recorded inearnings) and 2) all other amounts (recorded in Other comprehensive income).The Company adopted these provisions beginning with the interim period ended June 30,2009. The adoption of these provisions did not have a material impact on ourconsolidated financial statements.

 

During April 2009,the FASB issued an update to ASC 320 regarding the interim disclosures aboutfair value of financial instruments. This update requires fair value disclosuresfor financial instruments that are not currently reflected on the balance sheetat fair value on a quarterly basis. The Company adopted these provisionsbeginning with the interim period ended June 30, 2009. The adoption ofthese provisions did not have a material impact on our consolidated financialstatements.

 

*Recently Issued Pronouncements*

 

In May 2009, theFASB issued ASC 855 “Subsequent Events” (“ASC 855”) which establishesaccounting and reporting standards for events that occur after the balancesheet date but before financial statements are issued or are available to beissued. The statement sets forth (i) the period after the balance sheetdate during which management of a reporting entity should evaluate events ortransactions that may occur for potential recognition or disclosure in thefinancial statements, (ii) the circumstances under which an entity shouldrecognize events or transactions occurring after the balance sheet in itsfinancial statements, and (iii) the disclosures that an entity should makeabout events or transactions occurring after the balance sheet date in itsfinancial statements. The Company adopted the provisions of ASC 855 beginningwith the interim period ended June 30, 2009. The adoption of ASC 855 hadno impact on the Company’s consolidated financial position, results ofoperations or cash flows.

 

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In August 2009, theFASB issued Accounting Standards Update No. 2009-05 (“ASU 2009-05”), anupdate to ASC 820, “Fair Value Measurements and Disclosures”. This updateprovides amendments to reduce potential ambiguity in financial reporting whenmeasuring the fair value of liabilities. Among other provisions, this updateprovides clarification that in circumstances in which a quoted price in anactive market for the identical liability is not available, a reporting entityis required to measure fair value using one or more of the valuation techniquesdescribed in ASU 2009-05. ASU 2009-05 will become effective for the Company’sannual financial statements for the year ended December 31, 2009. TheCompany does not believe that its consolidated financial position, results ofoperations or cash flows will be significantly impacted by the adoption of ASU2009-5.

 

**5.****             ****Investments**

 

The Company considers all highly liquid investments with a maturity ofthree months or less when purchased to be cash equivalents. Short-terminvestments include investments with maturities greater than three months, butnot exceeding 12 months. Long-term investments include investments withmaturities greater than 12 months.

 

The Company determines the appropriate classification of itsinvestments in debt and equity securities at the time of purchase andre-evaluates those classifications at each balance sheet date.  Debt securities are classified as held tomaturity when the Company has the intent and ability to hold the securities tomaturity. Held to maturity debt securities are stated at amortized cost.  Available for sale investments are marked tomarket at each reporting period with changes in value recorded as a componentof other comprehensive income (loss). If declines in value are deemed otherthan temporary, a charge is made to net income (loss) for the period.

 

The followingtables summarize the Company’s investments at September 30, 2009 and December 31,2008:

 
| **September 30, 2009** | ** ** | **Cost**            | ** ** | **Estimated  Fair Value** | ** ** | **Carrying  Value** | ** ** |
|-----------------------------|------------|---------------------|------------|---------------------------|------------|---------------------|------------|
| ** **                  | ** ** | **(in  thousands)** | ** ** |
| Successor                   |       |                |       |                      |       |                |       |
| Investments:                |       |                |       |                      |       |                |       |
| Short-term:                 |       |                |       |                      |       |                |       |
| Available for sale          |       |                |       |                      |       |                |       |
| Common stock                |       | $                   | 256        |                      | $          | 416                 |       | $ | 416 |   |
| Total available for  sale   |       | 256                 |       | 416                       |       | 416                 |       |
| Total short term            |       | $                   | 256        |                      | $          | 416                 |       | $ | 416 |   |

 
| **December 31,  2008** | ** ** | **Cost**            | ** ** | **Estimated  Fair Value** | ** ** | **Carrying Value** | ** ** |
|-----------------------------|------------|---------------------|------------|---------------------------|------------|--------------------|------------|
| ** **                  | ** ** | **(in  thousands)** | ** ** |
| Predecessor                 |       |                |       |                      |       |               |       |
| Investments:                |       |                |       |                      |       |               |       |
| Short-term:                 |       |                |       |                      |       |               |       |
| Available for sale          |       |                |       |                      |       |               |       |
| Common stock                |       | $                   | 761        |                      | $          | 124                |       | $ | 124 |   |
| Corporate notes             |       | 223                 |       | 224                       |       | 224                |       |
| Government bonds            |       | 15,924              |       | 16,003                    |       | 16,003             |       |
| Total available for  sale   |       | 16,908              |       | 16,351                    |       | 16,351             |       |
| Total short term            |       | $                   | 16,908     |                      | $          | 16,351             |       | $ | 16,351 |   |
| Long-term:                  |       |                |       |                      |       |               |       |
| Available for sale          |       |                |       |                      |       |               |       |
| Corporate notes             |       | $                   | 405        |                      | $          | 386                |       | $ | 386 |   |
| Auction rate securities     |       | 5,101               |       | 5,101                     |       | 5,101              |       |
| Total available for  sale   |       | 5,506               |       | 5,487                     |       | 5,487              |       |
| Total long term             |       | $                   | 5,506      |                      | $          | 5,487              |       | $ | 5,487 |   |

 

Quoted market prices at September 30,2009 and December 31, 2008 were used to determine the estimated fairvalues of the above investments, except with respect to the ARS. See Note 13for further discussion on the fair value measurement techniques used by theCompany to value the above investments.

 

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*AuctionRate Security Investments (ARS)*

 

During July and September 2009,the Company sold its remaining ARS investments in a secondary market for $3.0million through two brokerage firms.  TheCompany recognized losses of $2.2 million related to the sale of these ARSsecurities with $1.3 million recognized during the second quarter 2009 and $0.9million recognized during the third quarter 2009.  At September 30, 2009 the Company has noremaining ARS investments.

 

*Credit Risk*

 

Credit risk is the riskthat a third party might fail to fulfill its performance obligations under theterms of a financial instrument. For cash and cash equivalents and investments,the Company’s maximum exposure to credit risk represents the carrying amount onthe balance sheet. The Company attempts to mitigate credit risk for cash andcash equivalents and investments by placing its funds and investments with highcredit-quality financial institutions, limiting the amount of exposure to eachfinancial institution, monitoring the financial condition of the financialinstitutions and investing only in government and corporate securities rated “investmentgrade” or better. The Company invests with financial institutions that maintaina net worth of not less than $1 billion and are members in good standing of theSecurities Investor Protection Corporation.

 

**6.****             ****Prepaid expenses and other assets**

 

Prepaid expenses andother assets consist of the following:

 
| ** **                                   | ** ** | **September 30,** | ** ** | ** ** | **December 31,** | ** ** |
|----------------------------------------------|------------|------------------------|------------|------------|-----------------------|------------|
| ** **                                   | ** ** | **2009**               | ** ** | ** ** | **2008**              | ** ** |
| ** **                                   | ** ** | **Successor**          | ** ** | ** ** | **Predecessor**       | ** ** |
| ** **                                   | ** ** | **(in  thousands)**    | ** ** |
| Current portion of note  receivable          |       | $                      | —     |       |                  | $          | 2,079 |   |
| Royalty receivable                           |       | 399                    |       |       | —                |       |
| Deferred leasehold  costs                    |       | 345                    |       |       | —                |       |
| Prepaid insurance                            |       | 203                    |       |       | 3,356                 |       |
| Prepaid legal costs                          |       | 171                    |       |       | —                |       |
| Accrued interest on  investments             |       | —                 |       |       | 236                   |       |
| Prepaid contractor fees  and vendor advances |       | 147                    |       |       | 7,266                 |       |
| Insurance premium  refund receivable         |       | —                 |       |       | 778                   |       |
| Recoupable deposits and  other               |       | 799                    |       |       | 1,835                 |       |
|                                         |       | $                      | 2,064      |       |                  | $          | 15,550 |   |

 

*September 30,2009*

 

The deferredleasehold costs are related to the Company’s headquarters office lease inGolden, Colorado. Prepaid legal costs are related to retention amounts paid forlegal services and are expected to settle during the fourth quarter 2009.  Prepaid contractor fees and vendor advancesconsist primarily of advance payments made to contractors and suppliers forexploration related services.  Includedin recoupable deposits and other is a $551,000 receivable related to the saleof our remaining ARS which settled October 1, 2009 (see Note 5).

 

In additionincluded in non-current assets is approximately $527,000 of prepaid insuranceon which amortization will be recognized through 2015.

 

*December 31,2008*

 

The currentportion of notes receivable was related to funds previously advanced by theCompany to the contractor that constructed the load out facilities at the Portof Mejillones (see Note 11).  Prepaidcontractor fees and vendor advances consisted primarily of advance paymentsmade to contractors and suppliers for mining and processing supplies andservices at the San Cristóbal mine.  Eachof these amounts was eliminated in the sale of the San Cristóbal mine toSumitomo.

 

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**7.****             ****Inventories**

 

Inventories at the SanCristóbal mine at December 31, 2008 consisted of the following:

 
| ** **                       | ** ** | **December 31, 2008** | ** **   |
|----------------------------------|------------|---------------------------------|--------------|
| ** **                       | ** ** | **(in  thousands)**             | ** **   |
| Current  Inventories             |       |                            |         |
| Concentrate                      |       | $                               | 18,638       |   |
| Material and supplies            |       | 56,370                          |         |
|                             |       | $                               |  75,008 |   |
| Long  Term Stockpile Inventories |       |                            |         |
| Oxide ore stockpiles             |       | $                               | 72,628       |   |
|                             |       | $                               |  72,628 |   |

 

The Company had noinventories at September 30, 2009, as all inventories were associated withthe San Cristóbal assets sold (see Notes 2 and 3).

 

Concentrate inventoriesat December 31, 2008 consisted of approximately 46,467 tonnes ofconcentrates and were carried at the lower of cost or market. The long termstockpile inventories consisted of stockpiled ore that will be processed laterin the mine life and were carried at the lower of cost or market.  Material and supplies inventory consistedprimarily of fuel, reagents and operating supplies at the San Cristóbal mineand were carried at the lower of cost or market.

 

**8.****             ****Value Added Tax Recoverable**

 

The Company recordedvalue added tax (“VAT”) paid in Bolivia related to the San Cristóbal mine as arecoverable asset. At September 30, 2009, the Company had no recoverableVAT as all recoverable VAT was associated with the San Cristóbal assets sold(see Notes 2 and 3).  At December 31,2008 the VAT recoverable amount was $157.1 million and included$19.5 million of recoverable Bolivian import duties.

 

The Company has also paidVAT in Bolivia as well as other countries, primarily related to explorationactivities, which is charged to expense as incurred because of the uncertaintyof recoverability.

 

**9.****              Property,Plant and Equipment and Assets Held for Sale**

 

*Property,plant and equipment*

 

The components of property, plant and equipment are as follows:

 
| ** **                                   | ** ** | **September 30,** | ** ** | ** ** | **December 31,** | ** ** |
|----------------------------------------------|------------|------------------------|------------|------------|-----------------------|------------|
| ** **                                   | ** ** | **2009**               | ** ** | ** ** | **2008**              | ** ** |
| ** **                                   | ** ** | **Successor**          | ** ** | ** ** | **Predecessor**       | ** ** |
| ** **                                   | ** ** | **(in  thousands)**    | ** ** |
| Mining properties                            |       | $                      | —     |       |                  | $          | 49,596 |   |
| Exploration properties                       |       | 5,648                  |       |       | —                |       |
| Construction in  progress                    |       | —                 |       |       | 14,782                |       |
| Buildings &  leasehold improvements |       | 382                    |       |       | 3,709                 |       |
| Mining equipment and  machinery              |       | 1,915                  |       |       | 123,139               |       |
| Other furniture and  equipment               |       | 657                    |       |       | 5,128                 |       |
|                                         |       | 8,602                  |       |       | 196,354               |       |
| Less: Accumulated  depreciation              |       | (392                   | )          |       | (56,446               | )          |
|                                         |       | 8,210                  |       |       | 139,908               |       |
| Equipment under capital  lease               |       | —                 |       |       | 72,425                |       |
| Less: Accumulated  depreciation              |       | —                 |       |       | (21,337               | )          |
|                                         |       | —                 |       |       | 51,088                |       |
| Port facilities under  lease                 |       | —                 |       |       | 12,283                |       |
| Less: Accumulated  depreciation              |       | —                 |       |       | (745                  | )          |
|                                         |       | —                 |       |       | 11,538                |       |
|                                         |       | $                      | 8,210      |       |                  | $          | 202,534 |   |

 

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The increase inexploration properties is the result of recording certain of the Company’sexploration properties at fair market value per the requirements of fresh startaccounting as discussed in Note 2.

 

Property, plant andequipment with a net book value of $187.4 million were included in the netassets and liabilities sold with the San Cristóbal mine on March 24, 2009.

 

During the second quarter2009, the Company sold an office building it owned in La Paz, Bolivia for$650,000 and recorded a loss on the sale of $147,000 plus tax expense relatedto the transaction of $33,000.  TheCompany received an upfront cash payment of $600,000 and received the remaining$50,000 upon final closing during the third quarter 2009.  During the third quarter 2009 the Companysold a property in Mexico consisting of a few mining concessions located on thesouthern edge of the Zacatecas district, outside the Company’s targetedexploration program in the area.  TheCompany received $1.2 million of cash, including $0.2 million of VAT collectedon the transaction and recorded a $0.6 million gain on the sale.  The Company also retained certain slidingscale net return payments on the property, based on production quantities andmetals prices. The fair value of the sliding scale net return payments is $0.2million and is reflected in property, plant and equipment, net on theaccompanying consolidated balance sheets. The losses and gains on the above transactions are included in gain(loss) on the disposal of assets, net.

 

After conductingevaluations on several of its exploration properties, during the third quarter2009, the Company determined that certain of the properties did not meet theCompany’s minimum requirements for continued evaluation and the rights to thoseproperties were relinquished.  TheCompany recorded an approximately $0.6 million write down of the carrying valueof those properties to gain (loss) on the disposal of assets, net.

 

*Assets Held for Sale*

 

The Company has obtainedapproval from its board of directors to sell two of its explorationproperties.  One of the properties is inBolivia and has a carrying value of $2.5 million and the other property islocated in Mexico with a carrying value of approximately $1.0 million for theinterests being sold.  Per the guidanceof ASC 360 “Property, Plant and Equipment” (“ASC 360”), the carrying values ofthe two properties are reflected in assets held for sale in the accompanyingconsolidated balance sheets at September 30, 2009.

 

**10.****      ****Accounts Payable and OtherAccrued Liabilities**

 

The Company’s accountspayable and other accrued liabilities consist of the following:

 
| ** **                                  | ** ** | **September 30,** | ** **  | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|------------------------|-------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2009**               | ** **  | ** ** | **2008**              | ** ** |
| ** **                                  | ** ** | **Successor**          | ** **  | ** ** | **Predecessor**       | ** ** |
| ** **                                  | ** ** | **(in  thousands)**    | ** **  |
|                                        |       |                   |        |       |                  |       |
| Accounts payable and  accruals              |       | $                      | 1,324       |       |                  | $          | 27,502 |   |
| Deferred revenue                            |       | —                 |        |       | 3,227                 |       |
| Amounts due smelters                        |       | —                 |        |       | 7,974                 |       |
| Income taxes payable                        |       | —                 |        |       | 1,764                 |       |
| Accrued employee  compensation and benefits |       | 1,356                  |        |       | 8,394                 |       |
|                                        |       | $                      |  2,680 |       |                  | $          | 48,861 |   |

 

Accrued employeecompensation and benefits at September 30, 2009 consist of $0.7 million ofaccrued performance bonuses payable, $0.2 million of accrued vacation payableand $0.3 million related to withholding taxes and benefits payable.

 

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**11.****      ****Debt**

 

The Company’s debt at December 31,2008 consisted of the following:

 
| ** **                                             | ** ** | **Current**         | ** **    | **Long-term** | ** ** |
|--------------------------------------------------------|------------|---------------------|---------------|---------------|------------|
| ** **                                             | ** ** | **(in  thousands)** | ** **    |
| 2.875% Convertible  Senior Subordinated Notes due 2024 |       | $                   | 180,000       |          | $          | — |   |
| 4.0% Convertible Senior  Subordinated Notes due 2024   |       | 109,987             |          | —        |       |
| Project finance  facility                              |       | 225,000             |          | —        |       |
| Note assigned to  Sumitomo                             |       | —              |          | 9,060         |       |
| Capital leases                                         |       | 8,307               |          | 39,549        |       |
| Port lease liability                                   |       | 316                 |          | 11,342        |       |
|                                                   |       | $                   |  523,610 |          | $          | 59,951 |   |

 

Subsequent to December 31,2008 all of the Company’s debt was sold or extinguished as a result of the saleof the net assets and liabilities of the San Cristóbal mine and Chapter 11reorganization (see Note 2).

 

*2.875%Notes and 4.0% Notes*

 

Under the Plan, holdersof the Notes received a pro rata distribution of (i) 2,987,735 shares ofthe Company’s common stock and (ii) approximately $45.0 million of cash inexchange for the cancellation of the Notes.  An additional 12,265 shares were reserved for issuance to holders ofunsecured claims of ASML, and any such shares that are not issued the holdersof such claims will be issued to the Note holders on a pro rata basis.  To record the effect of the reorganization,ASML wrote off the $290.0 million liability related to the Notes plus $3.2million of accumulated interest and recorded a $248.2 million gain at March 24,2009.  At September 30, 2009, theCompany had no further obligations related to the Notes, other than thepossible issuance of the additional shares noted above.  Had ASML not been in Chapter 11 bankruptcybetween January 12, 2009 and the Effective Date, the Notes would haveaccrued an additional $1.9 million of interest.

 

*SanCristóbal Project Finance Facility*

 

On December 17,2008, Sumitomo purchased 90% of the loans under the San Cristóbal ProjectFinance Facility (the “Facility”) from the senior lenders.  ASML’s guarantee and other obligations toSumitomo with respect to the 90% of the facility owned by Sumitomo wereterminated as part of the Plan and the sale of the San Cristóbal mine.  The remaining 10% of the Facility held by thesenior lenders was canceled in connection with the Company’s emergence frombankruptcy under the Plan.  ThePredecessor (ASML) recognized a $22.5 million gain on the termination of itsobligations related to the Facility and recorded the gain as a reduction of theloss on the sale of interest in subsidiaries as the Facility was the primaryobligation of MSC.  At September 30,2009, the Company had no further obligations related to the Facility.

 

The Company segregatescash that is restricted by contractual agreement, and reports these amountsseparately in the financial statements. At December 31, 2008 the Company reported as current restrictedcash $20.6 million that was restricted to provide operating capital for the SanCristóbal mine and the payment of the Facility principal and interest.

 

*SumitomoNote Assignment*

 

During 2006 and 2007 ASMLloaned funds to San Cristóbal Transportadad de Eletricidad S.A. (“SC TESA”),the contractor that constructed the power line for the San Cristóbal mine, andreceived a promissory note from SC TESA in the amount of $21.2 million.  In connection with the September 2006sale of 35% of the San Cristóbal mine to Sumitomo, ASML sold 35% of this noteto Sumitomo.  At December 31, 2008the Company had recorded a note payable to Sumitomo in the amount of $9.1million, which includes accrued interest, as a result of the assignment of the35% interest in the SC TESA promissory note. In connection with the sale of the San Cristóbal mine to Sumitomo, theremaining amount of the SC TESA note receivable was sold to Sumitomo and thenote payable to Sumitomo was terminated. At September 30, 2009, the Company had no further obligationsrelated to the note assignment.

 

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*CapitalLeases*

 

Certain mining equipmentused by the contractor that provides mining services for the San Cristóbal minehad been recorded as capital leases because the equipment is used exclusivelyat the San Cristóbal mine.  At December 31,2008 ASML had recorded on its balance sheet $51.1 million of equipment, net ofaccumulated depreciation, and a capital lease obligation of $47.9 millionrelated to the leased equipment. Following the sale of the San Cristóbal mine to Sumitomo, the Companyretained no interest in the mining contract or equipment.  At September 30, 2009 the Company had nocapital lease obligations.

 

*PortLease Liability*

 

Certain assets wereconstructed at the Port of Mejillones for the exclusive use of the SanCristóbal mine, including concentrate reception, unloading and storage facilities.  ASML determined that a leasing arrangementexists with respect to those assets.  Asof December 31, 2008 ASML had recorded on its balance sheet $11.5 millionof plant and equipment, net of accumulated depreciation, and a financingobligation of $11.7 million related to the port facility.  Following the sale of the San Cristóbal mineto Sumitomo, the Company retained no interest in the contracts or other rightsor obligations related to the port.

 

*SumitomoWorking Capital Line of Credit*

 

During 2008, Sumitomoprovided $150.0 million in funding to the San Cristóbal mine under a workingcapital credit line to augment cash flow from concentrate sales in order tofund San Cristóbal’s operating costs, income and other taxes, capital costs andfinancing costs.  All obligations of theCompany with respect to the Sumitomo working capital line of credit wereterminated with the sale of the San Cristóbal mine to Sumitomo and at September 30,2009 the Company had no obligations related to the working capital line ofcredit.

 

**12.****      ****Asset Retirement Obligations**

 

ASMLhad developed an asset retirement plan for the San Cristóbal mine whichincluded estimated reclamation, remediation and closure requirements based onBolivian government requirements, World Bank financing requirements and theCompany’s policies.

 

Thefollowing table reconciles the beginning and ending balance for ASML’s assetretirement obligations:

 
| ** **                         | ** ** | **The Period  Ended March  24, 2009** | ** ** | **Year Ended  December  31, 2008** | ** ** |
|------------------------------------|------------|---------------------------------------|------------|------------------------------------|------------|
| ** **                         | ** ** | **(in  thousands)**                   | ** ** |
| Beginning balance                  |       | $                                     | 9,155      |                               | $          | 6,981 |   |
|                               |       |                                  |       |                               |       |
| ARO arising in the  period         |       | 288                                   |       | 1,380                              |       |
| Changes in estimates,  and other   |       | —                                |       | —                             |       |
| Liabilities settled                |       | —                                |       | —                             |       |
| Accretion expense                  |       | 232                                   |       | 794                                |       |
| Obligation assumed in  sale of MSC |       | (9,675                                | )          | —                             |       |
|                               |       |                                  |       |                               |       |
| Ending balance                     |       | $                                     | —     |                               | $          | 9,155 |   |

 

All assetretirement obligations of the Company were terminated in connection with thesale of the San Cristóbal mine.  At September 30,2009 the Company had no asset retirement obligations related to the SanCristóbal mine or any of its exploration properties.

 

**13.****                              ****Fair Value Measurements**

 

Effective January 1,2008 the Company adopted ASC 820 for the financial assets and liabilities andnonfinancial assets and liabilities which are measured at fair value on arecurring (annual) basis.  ASC 820establishes a framework for measuring fair value in the form of a fair valuehierarchy which prioritizes the inputs into valuation techniques used tomeasure fair value into three broad levels. This hierarchy gives the highest priority to quoted prices (unadjusted)in active markets and the lowest priority to unobservable inputs.  Further, financial assets and liabilitiesshould be classified by level 

 

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in their entiretybased upon the lowest level of input that was significant to the fair valuemeasurement.  The three levels of thefair value hierarchy per ASC 820 are as follows:

 

**Level1: **Unadjusted quoted market prices in active markets foridentical assets or liabilities that are accessible at the measurement date.

 

**Level2: **Quoted prices in inactive markets for identical assetsor liabilities, quoted prices for similar assets or liabilities in activemarkets, or other observable inputs either directly related to the asset orliability or derived principally from corroborated observable market data.

 

**Level3: **Unobservable inputs due to the fact that there islittle or no market activity. This entails using assumptions in models whichestimate what market participants would use in pricing the asset or liability.

 

The following tablesummarizes the Company’s financial assets at fair value at September 30,2009, by respective level of the fair value hierarchy:

 
| ** **                                | ** ** | **Level 1**         | ** **   | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|-------------------------------------------|------------|---------------------|--------------|-------------|------------|-------------|------------|-----------|------------|
| ** **                                | ** ** | **(in  thousands)** | ** **   |
| Assets:                                   |       |                |         |        |       |        |       |      |       |
| Cash equivalents                          |       | $                   | 10,005       |        | $          | —      |       | $         | —     |   | $ | 10,005 |   |
| Short-term available  for sale securities |       | 416                 |         | —      |       | —      |       | 416       |       |
|                                      |       | $                   |  10,421 |        | $          | —      |       | $         | —     |   | $ | 10,421 |   |

 

The Company’s cashequivalents, comprised principally of time deposits, are classified withinLevel 1 of the fair value hierarchy.

 

The Company’s short-termavailable for sale securities are classified within Level 1 of the fair valuehierarchy.  These securities arecomprised of common stock, which have been valued using quoted prices in activemarkets.

 

The Company’s ARS whichwere sold during the third quarter 2009, were classified within Level 3 of thefair value hierarchy.  These securitieswere valued by the Company, with the assistance of a third party valuationfirm.  They were valued based upon theestimated present value of expected cash flows using a Monte Carlo simulationmodel taking into account significant assumptions regarding coupon payments,recovery, and redemption values.  TheCompany used these significant Level 3 inputs as there was no current marketactivity for these, or similar, securities nor relevant corroborating marketdata with readily observable inputs to support a Level 1 or 2 valuation.

 

The following tablesummarizes the change in fair value of the Company’s Level 3 (ARS) financialassets (amounts in thousands):

 
| ** **         | ** ** | **For The Period**          | ** ** | ** ** | **For The Period**       | ** ** |
|--------------------|------------|-----------------------------|------------|------------|--------------------------|------------|
| ** **         | ** ** | **March 25, 2009**     | ** ** | ** ** | **January 1, 2009** | ** ** |
| ** **         | ** ** | **Through**                 | ** ** | ** ** | **Through**              | ** ** |
| ** **         | ** ** | **September 30, 2009** | ** ** | ** ** | **March 24, 2009**  | ** ** |
| ** **         | ** ** | **(Successor)**             | ** ** | ** ** | **(Predecessor)**        | ** ** |
| Beginning balance  |       | $                           | 5,249      |       |                     | $          | 5,101 |   |
| Realized losses    |       | (2,200                      | )          |       | (827                     | )          |
| Unrealized gains   |       | —                      |       |       | 975                      |       |
| Proceeds from sale |       | (3,049                      | )          |       | —                   |       |
| Ending balance     |       | $                           | —     |       |                     | $          | 5,249 |   |

 

**14.****                              ****Income Taxes**

 

The Company, a Delawarecorporation, and its subsidiaries file tax returns in the United States and invarious foreign jurisdictions.  The tax rules andregulations in these countries are highly complex and subject tointerpretation. The Company’s income tax returns are subject to examination bythe relevant taxing authorities and in connection with such examinations,disputes can arise with the taxing authorities over the interpretation orapplication of certain tax rules within the country involved.  The Company’s total unrecognized taxbenefits, representing uncertain tax positions taken or expected to be taken ontax returns, were $1.4 million and $2.3 million as of September 30, 2009and December 31, 2008, 

 

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respectively.  Of these, $1.4 million and $2.3 millionresulted in a reduction to the Company’s deferred tax assets as of September 30,2009 and December 31, 2008, respectively. As a result of the reorganization, pursuant to the Plan, the Companyreduced unrecognized tax benefits by $0.9 million.

 

For the period March 25through September 30, 2009, the Company incurred operating losses, andrecognized income tax of $0.5 million consisting of $0.7 million withholdingtax on management services provided to Bolivia, less $0.2 million tax benefitsfor losses which offset previously recognized deferred tax liabilities.  Based on the limited history of the Company,an estimated effective tax rate is not used to report the year-to-date results.  The Predecessor recognized income tax of $0.2million for the period January through March 24, 2009 also due toBolivia withholding tax on management services, and income tax of $2.5 millionis included in discontinued operations for the same period in the accompanyingconsolidated statement of operations and comprehensive income (loss).  For the nine months ended September 30,2008, the Predecessor recognized income tax of $0.5 million for Bolivianwithholding tax, and income tax of $13.7 million which is included indiscontinued operations.

 

As part of the Plan, theCompany received the remaining assets of the predecessor company, which includeinvestments in subsidiaries, some of which are disregarded for U.S. taxpurposes.  The US tax basis of the assetsreceived from the Predecessor is limited to the fair value placed on them forfresh start purposes.  A deferred taxliability of $0.5 million was recognized for fresh start purposes for assetswhose fresh start value exceeded the tax basis. Deferred tax liabilities were reduced to $0.3 million as of September 30,2009, as the result of the recognition of $0.2 million of deferred tax benefitsresulting from losses incurred during the period.

 

**15.****       Equity**

 

*EquityIncentive Plans*— The Predecessor had established stock plans to issue share options and othershare awards to officers, directors, employees, consultants and agents of thePredecessor and its subsidiaries (the ‘‘Stock Plans’’).

 

The Predecessorrecognized stock-based compensation costs using a graded vesting attributionmethod whereby costs are recognized over the requisite service period for eachseparately vesting portion of the award. The Predecessor recognized stock-based compensation costs of $0.5 millionand $0.9 million for the 83 day period ended March 24, 2009 and the threemonth period ended March 31, 2008, respectively.

 

Asdiscussed in Note 2, the Predecessor’s equity holders received no recoveryunder the Plan following emergence from Chapter 11.  As such, the following shares underlyingawards granted under the Stock Plans were cancelled and the holders of grantsunder the Stock Plans have no further rights or recovery: approximately2.5 million stock option grants to employees and directors, with anaverage exercise price of $14.83; 211,975 restricted share grants to employees,with a weighted average grant date fair value of $15.22 per share; and 55,549restricted stock units granted to directors, with a weighted average grant datefair value of $11.70 per unit. Per the guidance of ASC 718 “Compensation —Stock Compensation” (“ASC 718”) ASML recognized $2.4 million of compensationexpense related to the cancelled stock options, restricted share grants andrestricted stock unit grants.  Thecompensation expense recognized was the unrecognized grant date fair value ofthe options and grants remaining at the date of cancellation.  In addition, 350,000 warrants, held by thirdparties, to purchase Ordinary Shares at a price of $20.79 per Ordinary Sharewere cancelled.

 

On April 3,2009, the Company adopted the 2009 Equity Incentive Plan (the “Equity Plan”)and the Company’s board of directors granted 270,000 shares of restrictedcommon stock to the Company’s executive officers and employees pursuant to theEquity Plan.  One-half of the sharesawarded will vest on the first anniversary of the grant date and one-half willvest on the second anniversary of the grant date, provided that the officer oremployee is employed by or continues to serve the Company on the applicablevesting date.

 

The following tablesummarizes the status of the Company’s restricted stock grants issued under theEquity Plan at September 30, 2009 and changes during the period April 3,2009 through September 30, 2009:

 

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| **Restricted Stock Grants**             | ** ** | **Number of  Shares** | ** ** | **Weighted Average  Grant Date Fair  Value Per Share** | ** ** |
|-----------------------------------------|------------|-----------------------|------------|--------------------------------------------------------|------------|
| Outstanding at  beginning of the period |       | —                |       | $                                                      | —     |   |
| Granted during the  period              |       | 270,000               |       | 10.92                                                  |       |
| Restrictions lifted  during the period  |       | —                |       | —                                                 |       |
| Forfeited during the  period            |       | (25,000               | )          | 10.92                                                  |       |
| Outstanding at end of  the period       |       | 245,000               |       | 10.92                                                  |       |
|                                         |            |                       |            |                                                        |            |  |

 

As theCompany’s shares had not yet traded at the time of the restricted stock grants,the grant date fair value was calculated by dividing the total shares of commonstock available under the Joint Plan of Reorganization by the net fair value ofthe reorganized company following the principles of ASC 852 and ASC 805 (seeNote 2).  For the period April 3,2009 through September 30, 2009 the Company recognized $1.1 million ofcompensation expense related to the restricted stock grants and the Companyexpects to recognize additional compensation expense of approximately $1.5million over the next 18 months.

 

Also, pursuant to theEquity Plan, the Company’s board of directors adopted the Non-Employee Director’sDeferred Compensation and Equity Award Plan (the “Deferred Compensation Plan”).  Pursuant to the Deferred Compensation Planthe non-employee directors have received a portion of their compensation in theform of Restricted Stock Units (“RSUs”) issued under the Equity Plan. Thenon-employee directors were granted 25,000 RSUs, with a grant date of May 20,2009. The RSUs will vest on April 2, 2010 so long as the holder is stillserving as a director. Each Restricted Stock Unit entitles the directorto receive one unrestricted share of common stock for each vestedRestricted Stock Unit upon the termination of the director’s board service.

 

The following tablesummarizes the status of the RSU grants issued under the Deferred CompensationPlan at September 30, 2009 and changes during the period May 20, 2009through September 30, 2009:

 
| **Restricted Stock Units**              | ** ** | **Number of  Underlying  Shares** | ** ** | **Weighted Average  Grant Date Fair  Value Per Share** | ** ** |
|-----------------------------------------|------------|-----------------------------------|------------|--------------------------------------------------------|------------|
| Outstanding at  beginning of the period |       | —                            |       | $                                                      | —     |   |
| Granted during the  period              |       | 25,000                            |       | 10.92                                                  |       |
| Restrictions lifted  during the period  |       | —                            |       | —                                                 |       |
| Forfeited during the  period            |       | —                            |       | —                                                 |       |
| Outstanding at end of  the period       |       | 25,000                            |       | 10.92                                                  |       |
|                                         |            |                                   |            |                                                        |            |  |

 

As theCompany’s shares were not yet actively traded at the time of the RSU grants,the grant date fair value was calculated by dividing the total shares of commonstock available under the Joint Plan of Reorganization by the net fair value ofthe reorganized company following the principles of ASC 852 and ASC 805 (seeNote 2). For the period May 20, 2009 through September 30, 2009 theCompany recognized $135,000 of compensation expense related to the RSU grantsand expects to recognize additional compensation expense of approximately$135,000 over the next six month period.

 

**16.****      ****Noncontrolling Interest**

 

On January 1, 2009the Company adopted the provisions of ASC 810 related to noncontrollinginterest, previously called a minority interest.  A noncontrolling interest is the portion ofequity in a subsidiary not attributable, directly or indirectly, to a parent.The Company applied the provisions of ASC 810 prospectively, except for theprovisions related to the presentation of noncontrolling interests, which wereapplied retrospectively for all periods presented. Upon adoption of ASC 810,noncontrolling interests of approximately $150.8 million as of December 31,2008 were recast to a component of total equity in the consolidated balancesheet.

 

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The following schedulesets forth the amounts of income from continuing operations and discontinuedoperations attributable to the Company:

 
| ** **                                                                                                 | ** ** | **For The Period**                     | ** ** | ** ** | **For The Period**       | ** ** | ** ** | ** **                  | ** ** |
|------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|------------|--------------------------|------------|------------|-----------------------------|------------|
| ** **                                                                                                 | ** ** | **March 25, 2009**                | ** ** | ** ** | **January 1, 2009** | ** ** | ** ** | **Nine Months**             | ** ** |
| ** **                                                                                                 | ** ** | **Through**                            | ** ** | ** ** | **Through**              | ** ** | ** ** | **Ended**                   | ** ** |
| ** **                                                                                                 | ** ** | **September 30, 2009**            | ** ** | ** ** | **March 24, 2009**  | ** ** | ** ** | **September 30, 2008** | ** ** |
| ** **                                                                                                 | ** ** | **(Successor)**                        | ** ** | ** ** | **(Predecessor)**        | ** ** |
| ** **                                                                                                 | ** ** | **(in  thousands, except share data)** | ** ** |
|                                                                                                       |       |                                   |       |       |                     |       |       |                        |       |
| Amounts attributable to  Golden Minerals common stockholders and Predecessor’s ordinary shareholders: |       |                                   |       |       |                     |       |       |                        |       |
| Income (loss) from  continuing operations                                                                  |       | $                                      | (13,314    | )          |                     | $          | 243,621    |                        |       | $ | (46,707 | ) |
| Loss from discontinued  operations                                                                         |       | —                                 |       |       | (12,022                  | )          |       | (81,810                     | )          |
| Net income (loss)                                                                                          |       | $                                      | (13,314    | )          |                     | $          | 231,599    |                        |       | $ | (128,517 | ) |

 

*Hochschild Mining*

 

The major concessions atthe Company’s El Quevar project are within a joint venture of which the Companycurrently holds a 65% interest and Hochschild Mining Group (“Hochschild”) holdsthe remaining 35%.  The Company canincrease its interest to 80% by completing a feasibility study by November 2010and commencing production within two years following completion of thefeasibility study.  On August 3,2009, Hochschild’s transferred certain of its mineral properties to the ElQuevar project joint venture and the Company recorded the fair value of theseproperties as a $0.8 million increase to mineral properties with anoncontrolling interest of $0.8 million included as a component of equity toreflect Hochschild’s 35% interest.  TheEl Quevar project joint venture is now carried in mineral properties on theCompany’s books at 100% of its fair value. As part of the joint ventureagreement, the Company is responsible for funding 100% of the joint ventureexploration and development costs and has not recognized a noncontrollinginterest impact on the consolidated statements of operations.  The Company is required to fund allexploration, development and construction costs until the 80% ownershipinterest is achieved at which time the Company will recover amounts paid onbehalf of Hochschild, representing 20% of costs incurred through the date ofthe Company’s 80% increased ownership, from 50% of the Hoschild’s share offuture cash flows.  This would providethe Company with 90% of cash flow until all costs are recovered.  Exploration and development costs incurred todate are $9.7 million.

 

*Sumitomo Corporation*

 

The Predecessorconsolidated 100% of the accounts of the San Cristóbal mine and recordedSumitomo’s 35% noncontrolling interest in the gains or losses of the SanCristóbal mine and its subsidiaries for the period reported.  In addition, the Predecessor recorded certainadvances and loan proceeds from Sumitomo and interest due Sumitomo tononcontrolling interest. Net income attributable to the Predecessor for theperiod January 1, 2009 through March 24, 2009 includes $7.9 millionof noncontrolling interest expense related to Sumitomo’s interest in the SanCristóbal mine earnings during that period (see Note 3).  At September 30, 2009, subsequent to thesale of the San Cristóbal mine, the Company has no noncontrolling interestrelated to Sumitomo recorded on its books.

 

*SC TESA*

 

During 2005 thePredecessor entered into a long-term contract with SC TESA to construct a powerline and transport power to the San Cristóbal mine from the Bolivian powergrid. In accordance with the guidance of ASC 810 related to variable interestentities the Predecessor fully consolidated the accounts of SC TESA forfinancial reporting purposes. Because SC TESA was consolidated for financialreporting purposes, the intercompany profit earned by SC TESA was eliminatedand the Company recognized a noncontrolling interest offset to SC TESA’searnings or loss.

 

Loss from discontinuedoperations for the period January 1, 2009 through March 24, 2009,includes $0.3 million of noncontrolling interest expense related to SC TESA’sintercompany profit (see Note 3).

 

At September 30,2009, subsequent to the sale of the San Cristóbal mine, the Company has nononcontrolling interest related to SC TESA recorded on its books.

 

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**17.****      ****Revenue and Cost of Services**

 

On the Effective Date,the Company entered into the Management Agreement under which it providescertain management services with respect to the San Cristóbal mine. TheManagement Agreement, as subsequently amended during October 2009 providesfor an annual fee of $11.4 million which includes approximately $5.4 million thatconstitutes reimbursement for direct administrative expenses the Company incurson behalf of the San Cristóbal mine. The Company may also earn a potentialpro-rata annual incentive fee for 2009 of up to $1.125 million, which would notbe determined or paid until 2010. Under the terms of the Management Agreement,the Company will receive the fee and any reimbursements net of any Bolivianwithholding taxes. The fee and reimbursements for administrative costs andBolivian withholding taxes are reported as “Revenue from Services” in thestatement of operations following the guidance of ASC 605 “Revenue Recognition”(“ASC 605”) regarding “income statement characterization of reimbursementsreceived for “out-of-pocket” expenses incurred” and “reporting revenue gross asa principal versus net as an agent”. ASC 605 supports recording as grossrevenue fees received for the reimbursement of expenses in situations where therecipient is the primary obligor and has certain discretion in the incurrenceof the reimbursable expense. The actual costs incurred for the reimbursed directadministrative expenses are reported as costs of services in the statement ofoperations. Reimbursed Bolivian withholding taxes are reported as income taxesin the statement of operations. Prior to entering into the ManagementAgreement, ASML received a management fee of $450,000 per month from SanCristóbal to cover certain costs incurred directly by ASML.

 

For the period March 25,2009 through September 30, 2009 the Company had recorded $5.9 million asrevenue related to the Management Agreement, comprised of $5.2 million of feesand $0.7 million for reimbursed withholding taxes. The Company also recordedcorresponding charges of $2.0 million to cost of services and $0.7 million toincome taxes for the actual administrative costs and withholding taxesreimbursable under the Management Agreement.

 

**18.****      ****Commitments and Contingencies**

 

As previously disclosed,the Company concluded, based on the results of an internal investigationconducted under the direction of its Audit Committee in late 2005 and early2006, that certain former senior employees were involved in making impermissiblepayments of approximately $125,000 to government officials in 2003 and 2004.The Company contacted the Department of Justice (“DOJ”) and SEC during 2006 andreported the results of the internal investigation and was informed that theSEC and DOJ would commence investigations with respect to these matters,including possible violations of the Foreign Corrupt Practices Act.Subsequently, the Company entered into discussions with the SEC staffconcerning a settlement of the conduct subject to the SEC’s investigation. As aresult, the Company reached an agreement in principle with the SEC staff which,if approved by the Commission, would resolve this matter with the SEC. Underthe terms of the proposed settlement, the Company, on neither an admit nor denybasis, would agree to the entry of an administrative cease and desist orderprohibiting the Company from future violations of Sections 13(b)(2)(A),13(b)(2)(B) and 30A of the Exchange Act. Moreover, under the terms of theproposed settlement, the SEC staff would not recommend that the Commissionrequire the payment of disgorgement, civil money penalties, prejudgmentinterest or the appointment of a corporate monitor. The proposed settlement issubject to Commission approval, negotiation of the terms of the settlementpapers and approval by the Company’s Board of Directors. The Company cannotguarantee that the Commission will ultimately accept the terms of the proposedsettlement.

 

In August 2009, theDOJ informed the Company that it has closed its investigation based on, amongother things, the Company’s pending settlement with the SEC.

 

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**19.   Supplemental Cash Flow Information**

 

The following tablereconciles net income (loss) for the period to cash from operations:

 
| ** **                                                                                  | ** ** | **For The Period**      | ** ** | ** ** | ** **               | ** ** | ** **                  | ** ** |
|---------------------------------------------------------------------------------------------|------------|-------------------------|------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                  | ** ** | **March 25, 2009** | ** ** | ** ** | **For The Period**       | ** ** | ** **                  | ** ** |
| ** **                                                                                  | ** ** | **Through**             | ** ** | ** ** | **January 1, 2009** | ** ** | **Nine Months**             | ** ** |
| ** **                                                                                  | ** ** | **September 30,**  | ** ** | ** ** | **Through**              | ** ** | **Ended**                   | ** ** |
| ** **                                                                                  | ** ** | **2009**                | ** ** | ** ** | **March 24, 2009**  | ** ** | **September 30, 2008** | ** ** |
| ** **                                                                                  | ** ** | **(Successor)**         | ** ** | ** ** | **(Predecessor)**        | ** ** |
| ** **                                                                                  | ** ** | **(in  thousands)**     | ** ** |
| Cash flows from  operating activities:                                                      |       |                    |       |       |                     |       |                        |       |
| Net (loss) income  before noncontrolling interests                                          |       | $                       | (13,314    | )          |                     | $          | 239,468                     |       | $ | (261,559 | ) |
| Adjustments to  reconcile net income (loss) to net cash used in operating activities:       |       |                    |       |       |                     |       |                        |       |
| Amortization and  depreciation                                                              |       | 384                     |       |       | 10,977                   |       | 36,225                      |       |
| Amortization of  deferred financing costs                                                   |       | —                  |       |       | —                   |       | 3,256                       |       |
| Accretion of asset  retirement obligation                                                   |       | —                  |       |       | 232                      |       | 574                         |       |
| Amortization of  premiums and discounts                                                     |       | —                  |       |       | 37                       |       | (230                        | )          |
| Mark-to-market (gain)  loss on derivative positions                                         |       | —                  |       |       | 36                       |       | (358,924                    | )          |
| Impairment of long  lived assets                                                            |       | —                  |       |       | —                   |       | 615,032                     |       |
| Impairment of inventory                                                                     |       | —                  |       |       | —                   |       | 34,413                      |       |
| Fair value of stock  received for option payment                                            |       | (168                    | )          |       | —                   |       | —                      |       |
| Loss on sale of assets                                                                      |       | 167                     |       |       | —                   |       | —                      |       |
| Loss on auction rate  security investments                                                  |       | 2,199                   |       |       | 828                      |       | 8,002                       |       |
| Gain on extingushment  of debt                                                              |       | —                  |       |       | (248,165                 | )          | —                      |       |
| Loss (gain) on sale of  interest in subsidiary                                              |       | —                  |       |       | 8,409                    |       | (63,071                     | )          |
| Fresh start accounting  adjustment                                                          |       | —                  |       |       | (9,122                   | )          |                        |       |
| Stock compensation                                                                          |       | 1,219                   |       |       | 2,920                    |       | 2,913                       |       |
| Changes in operating  assets and liabilities:                                               |       |                    |       |       |                     |       |                        |       |
| Increase in trade  accounts receivable                                                      |       | (26                     | )          |       | (11,893                  | )          | (2,892                      | )          |
| Decrease in accrued  interest receivable                                                    |       | 152                     |       |       | 84                       |       | 132                         |       |
| Port fees applied to  Port of Mejillones note receivable                                    |       | —                  |       |       | 709                      |       | 2,091                       |       |
| (Decrease) increase in  prepaid expenses and other assets                                   |       | (674                    | )          |       | 6,063                    |       | (4,143                      | )          |
| Increase in inventories                                                                     |       | —                  |       |       | (12,000                  | )          | (55,911                     | )          |
| Increase in value added  tax recoverable, net                                               |       | —                  |       |       | (11,696                  | )          | (54,174                     | )          |
| Increase in accrued  interest payable                                                       |       | —                  |       |       | 11,496                   |       | 6,765                       |       |
| (Decrease) increase in  deferred revenue                                                    |       | —                  |       |       | (3,227                   | )          | 8,782                       |       |
| (Decrease) increase in  accounts payable and accrued liabilities net of amounts capitalized |       | (5,897                  | )          |       | 2,462                    |       | 20,103                      |       |
| Increase in deferred  leasehold payments                                                    |       | 441                     |       |       | —                   |       | —                      |       |
| Decrease in deferred  taxes, net                                                            |       | (227                    | )          |       | (2,262                   | )          | (831                        | )          |
| Other (decrease)  increase                                                                  |       | (16                     | )          |       | 795                      |       | 2,603                       |       |
| Net cash used in  operating activities                                                      |       | $                       | (15,760    | )          |                     | $          | (13,849                     | )          | $ | (60,844 | ) |

 

The following table setsforth supplemental cash flow information and non-cash transactions:

 
| ** **                                          | ** ** | **For The Period**      | ** ** | ** ** | ** **               | ** ** | ** **             | ** ** |
|-----------------------------------------------------|------------|-------------------------|------------|------------|--------------------------|------------|------------------------|------------|
| ** **                                          | ** ** | **March 25, 2009** | ** ** | ** ** | **For The Period**       | ** ** | **Six Months**         | ** ** |
| ** **                                          | ** ** | **Through**             | ** ** | ** ** | **January 1, 2009** | ** ** | **Ended**              | ** ** |
| ** **                                          | ** ** | **September 30,**  | ** ** | ** ** | **Through**              | ** ** | **September 30,** | ** ** |
| ** **                                          | ** ** | **2009**                | ** ** | ** ** | **March 24, 2009**  | ** ** | **2008**               | ** ** |
| ** **                                          | ** ** | **(Successor)**         | ** ** | ** ** | **(Predecessor)**        | ** ** |
| ** **                                          |       | **(in thousands)**      |       |
| Supplemental  disclosure:                           |       |                    |       |       |                     |       |                   |       |
| Interest paid, net of  amounts capitalized          |       | $                       | —     |       |                     | $          | —                 |       | $ | 27,572 |   |
|                                                |       |                    |       |       |                     |       |                   |       |
| Supplemental disclosure  of non-cash transactions:  |       |                    |       |       |                     |       |                   |       |
| Initial measurement of  asset retirement obligation |       | $                       | —     |       |                     | $          | 288                    |       | $ | 1,168 |   |
| Equipment acquired  through capital lease           |       | $                       | —     |       |                     | $          | —                 |       | $ | 3,318 |   |

 

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**20.   Subsequent Events**

 

Subsequent eventswere evaluated by the Company as of November 2, 2009, the date at whichthe Consolidated Financial Statements were issued.

 

*RegistrationStatement*

 

On October 14, 2009the Company filed a registration statement on Form S-1 with the SECrelating to a proposed initial public offering of shares of the Company’scommon stock. The offered shares will include shares to be issued by theCompany, and are expected to also include shares to be sold by certain of theCompany’s stockholders. The number of shares to be offered, the allocation ofshares to be sold as between the Company and the selling stockholders, and theprice range for the offering have not yet been determined.  In conjunction with the offering, the Companyhas applied to list its common stock on the NYSE Amex LLC Exchange. There is noassurance that this offering will be successful.

 

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**Item 2:  Management’s Discussion and Analysis of Financial Condition and Resultsof Operations**

 

**General**

 

GoldenMinerals Company (“Golden Minerals” or “we”) is the successor to Apex SilverMines Limited (“ASML”) for purposes of reporting under U.S. federal securitieslaws.  References in this discussion andanalysis to “Successor” refer to Golden Minerals and its subsidiaries on orafter March 25, 2009, after emergence from Chapter 11 bankruptcyproceedings (“Chapter 11”), as more fully described in footnote 2 to theconsolidated financial statements. References to “Predecessor” refer to ASML and its subsidiaries prior to March 25,2009. Since the emergence from Chapter 11 on March 24, 2009 (the “EffectiveDate”), the Chapter 11 proceedings have generally involved the reconciliationof claims.   As of the date hereof, wehave resolved substantially all Chapter 11 claims, and we expect to seek finalclosing of the Chapter 11 proceeding following the resolution of remainingclaims.   In addition, we expect to seekfinalization of the ASML liquidation proceeding that is now pending in theCayman Islands, including cancellation of the ASML ordinary shares.

 

Thefollowing discussion and analysis summarizes the results of operations of thePredecessor for the 83 day period ended March 24, 2009 and Golden Mineralsfor the period March 25, 2009 through September 30, 2009,respectively, the results of operations of Golden Minerals for the quarterended September 30, 2009, and changes in our financial condition from December 31,2008.  This discussion should be read inconjunction with Management’s Discussion and Analysis included in ASML’s AnnualReport on Form 10-K for the period ended December 31, 2008.

 

**Overview**

 

Ouroperations have changed substantially as a result of the sale of our interestsin the San Cristóbal mine to Sumitomo in connection with our emergence fromChapter 11 (see Note 2 to the financial statements).  We are primarily engaged in the explorationand advancement of our portfolio of exploration properties located primarily inSouth America and Mexico and in managing the San Cristóbal mine forSumitomo.  Our common stock commencedtrading on the Toronto Stock Exchange (the “TSX”) on July 16, 2009 underthe ticker symbol “AUM” and our common stock also currently trades ininterdealer and over-the-counter transactions, with price quotations availablein the “pink sheets” under the symbol “GDMN”.

 

As part of the SanCristóbal sale, we entered into the Management Services Agreement under whichwe provide certain operations management services with respect to the SanCristóbal mine. Operations at the San Cristóbal mine have generated positiveoperating cash flow for the quarter ended September 30, 2009 and achievedaverage concentrator throughput of approximately 47,300 tonnes per day,exceeding the 40,000 tonnes per day designed capacity.  Zinc concentrate production during the periodwas approximately 133,500 tonnes and lead concentrate production during theperiod was approximately 28,200 tonnes. Payable metal production from the San Cristóbal mine during the periodtotaled approximately 4.6 million ounces of silver, 66,400 tonnes of zinc and18,200 tonnes of lead.

 

We have completedsignificant additional drilling at our El Quevar project. Through September 30,2009, we have drilled a total of 162 holes totaling approximately 29,000 meterswith 18 holes completed in the third quarter. In October 2009, we receivedan updated independent technical report which estimates 310,000 tonnes ofmineralized material in the Yaxtché deposit at El Quevar at an average silvergrade of 430.02 grams per tonne. We are proceeding with feasibility workincluding permitting, metallurgical work, preliminary mine and plant design andplanning for underground access to the mineralized zone.  Our field work at El Quevar has nowidentified 13 target areas believed to have potential for the discovery ofadditional silver mineralization.

 

We have continued toadvance our field evaluations of certain of our more interesting prospects andhave initiated or continued drilling at several of our properties. Among theseprospects are the high-grade vein targets in the Zacatecas district of centralMexico, where we have identified four areas that contain silver and base metalvalues in quartz veins and as disseminations in sedimentary rocks. In Peru, wehave developed another potential high-grade vein target at our Palca project insouthern Peru, where at least four veins exhibit silver values greater than 100grams per tonne with associated lead, zinc and gold values.  At the La Pinta project located in centralMexico, a field evaluation, including a magnetic survey, has been completed anda drilling program is now being planned. We are currently conducting initial drill tests of the Panuco project inthe Zacatecas district and are awaiting results from our recently completeddrill programs at Antofalla and Elisa de Bordos.

 

During the third quarter2009 we sold our remaining ARS investments in a secondary market for $3.0million through two brokerage firms.  TheARS investments had a carrying value of $5.2 million at March 24,2009.  We recognized loses 

 

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of $2.2 millionrelated to the sale of these ARS securities with $1.3 million recognized duringthe second quarter 2009 and $0.9 million recognized during the third quarter2009.  At September 30, 2009 we hadno remaining ARS investments.

 

During the third quarter2009 we sold a property in Mexico consisting of a few mining concessionslocated on the southern edge of the Zacatecas district, outside of our targetedexploration program in the area.  Wereceived $1.2 million of cash, including $0.2 million of value added taxcollected on the transaction and recorded a $0.6 million gain on the sale.  We also retained certain sliding scale netsmelter return royalties on the property, based on production quantities andmetals prices. There is currently no production from the property.

 

On October 14, 2009we filed a registration statement on Form S-1 with the U.S. Securities andExchange Commission related to a proposed initial public offering of shares ofour common stock. The offered shares will include shares to be issued by us,and are expected to also include shares to be sold by certain of ourstockholders. The number of shares to be offered, the allocation of shares tobe sold as between us and the selling stockholders, and the price range andsize of the offering have not yet been determined.  In conjunction with the offering we haveapplied to list our common stock on the NYSE Amex LLC (“Amex”).  Listing our common stock on the Amex will besubject to meeting the minimum listing requirements of the Amex.

 

**Resultsof Operations**

 

For the results ofcontinuing operations discussed below, we compare (i) the third quarter2009 results from continuing operations of the Successor to the third quarter2008 results of continuing operations of the Predecessor and (ii) theresults of continuing operations of the Predecessor for the 83-day period endedMarch 24, 2009 and the results of continuing operations of the Successorfor the period March 25, 2009 through September 30, 2009 to theresults of continuing operations of the Predecessor for the six month periodended September 30, 2008. The results of operations of the San Cristóbalmine and related subsidiaries that were sold during the first quarter 2009 areaggregated and presented as discontinued operations of the Predecessor for thethird quarter 2008, the nine month period ended September 30, 2008 and the83-day period ended March 24, 2009. The Successor does not report discontinued operations.

 

**ThreeMonths Ended September 30, 2009**

 

*ContinuingOperations*

 

*Management service fees.*Werecorded $2.7 million of management service fees for the third quarter2009.  The management service fees arerelated to the Management Agreement and are comprised of $2.3 million of feesand $0.4 million for reimbursed withholding taxes. Management service fees forthe three months ended September 30, 2008 were $1.4 million and were allrelated to fees received by the Predecessor from a subsidiary included indiscontinued operations.

 

*Cost of services.*We recorded$1.2 million of costs of services for the third quarter 2009. The cost ofservices is comprised of reimbursed direct administrative expenses incurred byus related to the Management Agreement. The Predecessor recorded no cost of services for the second quarter2008.

 

*Exploration*. Our explorationexpenses, including property holding costs and allocated administrativeexpenses, were $3.6 million for the quarter ended September 30, 2009, ascompared to $6.1 million for the quarter ended September 30, 2008.  Exploration expenses were incurred primarilyat El Quevar in Argentina and in Mexico and Peru and include property holdingcosts and costs incurred by the local exploration offices. The 2008 expenseswere all incurred by the Predecessor. None of the exploration expenses reportedrelate to San Cristóbal.

 

*Administrative and reorganization*. Administrative expenses were $2.5 million and $6.8 million for thequarter ended September 30, 2009 and the quarter ended September 30,2008, respectively.  Administrativeexpenses, including public company costs, primarily related to corporateactivities in support of our exploration program and our management servicesfor the San Cristóbal mine.  The 2008administrative expenses were all related to the Predecessor. Reorganizationexpenses consisting primarily of legal and accounting fees related to ourChapter 11 proceedings totaled $0.2 million for the quarter ended September 30,2009.  We did not incur anyreorganization expenses during the quarter ended September 30, 2008.

* *

*Loss on Auction Rate Securities.*  We recorded losses of $0.9 million and $4.9million related to our auction rate securities (“ARS”) investments for thequarters ended September 30, 2009 and September 30, 2008,respectively.  The auctions for certainof our ARS began to fail during the third quarter of 2007 and continued to failthrough September 30, 2009.  Duringthe third quarter 2009 we sold our remaining ARS investments in a secondarymarket for approximately $3.0 million and recognized a $0.9 million loss on thesale.  At September 30, 2009 we hadno remaining ARS investments.  

 

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During the quarterended September 30, 2008 the Predecessor recorded a $4.9 millionimpairment charge as a result of the continuing deterioration of the ARSmarkets.

 

*Interestand Other Income*.  We recorded interest and other income of $0.2million and $0.7 million for the quarters ended September 30, 2009 and September 30,2008, respectively.  We held loweraverage cash and investment balances during 2009 as compared to the same periodin 2008, which resulted in lower interest being earned.  In addition, interest rates were lower during2009 as compared to the preceding years.

* *

*Royalty Income*. During the quarters ended September 30, 2009 and September 30,2008, we recorded a receivable of $0.3 million and received $0.3 million,respectively, of royalty income from the Platosa property in Mexico on which weretained a net smelter return royalty. The property is being test mined by a joint venture partner, and we receivea royalty for product sold from the test mining operation.

* *

*Interest and Other Expense*.  During the quarter ended September 30,2009, we held no debt and consequently we did not record any interest or otherexpense for the period.  For the quarterended September 30, 2008, the Predecessor recorded interest and otherexpense in the amount of $2.3 million which was primarily related to interestincurred on its convertible notes.  Weceased accruing interest on the convertible notes following our filing forprotection under Chapter 11 on January 12, 2009 and the convertible noteswere cancelled on March 24, 2009 in connection with our emergence frombankruptcy. The convertible notes were outstanding during the full quarterended September 30, 2008.

 

*IncomeTaxes*.  We are subject to U.S. income taxes on incomederived from services provided to the San Cristóbal mine.  Otherwise, we do not currently conductbusiness in the U.S. that would generate significant U.S. taxable income.  Our income tax provisions were $0.3 and $0.2for the quarter ended September 30, 2009 and the quarter ended September 30,2008, respectively, and consist of withholding taxes either accrued or paid toBolivia in connection with management services provided to the San Cristóbalmine.

 

*DiscontinuedOperations — San Cristóbal.*

 

Theaggregated results of the discontinued operations related to the San Cristóbalmine totaled a $481.2 million loss for the third quarter 2008.  The loss was primarily the result of a $615.0million impairment of certain San Cristobal assets recorded during the period,a $34.4 million loss related to the write down of inventories at San Cristobal,partly offset by a $163.3 million mark-to-market gain related to thePredecessor’s open metal derivative positions. The Successor does not reportdiscontinued operations.

 

**NineMonths Ended September 30, 2009**

 

*ContinuingOperations*

 

*Management service fees.*Werecorded $7.4 million of management service fee income ($6.0 million and $1.4million for the Successor and Predecessor, respectively) for the nine monthsended September 30, 2009.  TheSuccessor’s $6.0 million of revenue is primarily related to the ManagementAgreement and is comprised of $5.2 million of fees and $0.7 million forreimbursed withholding taxes. The Predecessor’s $1.4 million of managementservice fees is related to fees received from a subsidiary included indiscontinued operations. Management service fees for the nine months ended September 30,2008 were $4.1 million and were all related to fees received by the Predecessorfrom a subsidiary included in discontinued operations.

 

*Cost of services.*We recorded$2.3 million of costs of services (all related to the Successor) for the ninemonths ended September 30, 2009. The cost of services is comprised ofreimbursed direct administrative expenses incurred by us related to theManagement Agreement.  The Predecessorrecorded no cost of services for the nine month period ended September 30,2008.

 

*Exploration*. Our explorationexpenses, including property holding costs and allocated administrativeexpenses, totaled $10.6 million ($7.1 million and $3.5 million for theSuccessor and Predecessor, respectively) for the nine month period ended September 30,2009, as compared to $21.4 million for the nine months ended September 30,2008.  Exploration expenses were incurredprimarily at El Quevar in Argentina and in Mexico and Peru and include propertyholding costs and costs incurred by the local exploration offices. None of theexploration expenses reported relate to San Cristóbal**.**

 

*Administrative and reorganization*. Administrative expenses totaled $10.7 ($5.9 million and $4.8 million forthe Successor and Predecessor, respectively) for the nine month period ended September 30,2009, as compared to $15.4 

 

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million for the ninemonths ended September 30, 2008. Administrative expenses, including public company costs, are incurredprimarily by our corporate activities in support of our exploration program andour management services for the San Cristóbal mine.  Reorganization expenses were $0.9 million and$3.7 million for the Successor’s results and Predecessor’s results for the ninemonth period ended September 30, 2009, respectively.  The reorganization expenses relate toexpenses for professional services incurred as a result of our bankruptcyfiling and the sale of our interest in the San Cristóbal mine to Sumitomo.  We incurred no reorganization expense duringthe nine months ended September 30, 2008.

* *

*Loss on Auction Rate Securities.*  Loss on ARS investments totaled $3.0 million($2.2 million and $0.8 million for the Successor and Predecessor, respectively)for the nine month period ended September 30, 2009, as compared to $8.0million for the nine months ended September 30, 2008.  The auctions for certain of our ARS began tofail during the third quarter of 2007 and continued to fail through September 30,2009.  The markets for the ARS havecontinued to deteriorate resulting in the recording of additional impairmentcharges.  During the third quarter 2009,we sold our remaining ARS investments in a secondary market for $3.0 millionthrough two brokerage firms and recognized a loss of $2.2 million.  At September 30, 2009 we have noremaining ARS investments.

 

*Interest and Other Income*. We recorded interest and other income of $1.7 million ($0.7 million and$1.0 million for the Successor and Predecessor, respectively) for the ninemonth period ended September 30, 2009, as compared to $4.3 million for thenine months ended September 30, 2008. We held lower average cash and investment balances during 2009 ascompared to the same period in 2008, which resulted in lower interest beingearned.  In addition, interest rates werelower during 2009 as compared to the preceding period.

* *

*Royalty Income*. We recorded royalty income from the Platosa property in Mexico on whichwe retained a net smelter return royalty of $0.5 million ($0.4 million and $0.1million for the Successor and Predecessor, respectively) for the nine monthperiod ended September 30, 2009, as compared to $0.5 million for the ninemonths ended September 30, 2008. The property is being test mined by ajoint venture partner, and we receive a royalty for product sold from the testmining operation.

* *

*Interest and Other Expense*. We recorded interest and other expense of $0.3 million (all related tothe Predecessor) for the nine month period ended September 30, 2009, ascompared to $7.6 million for the nine months ended September 30,2008.  The expense for both periods wasprimarily the result of interest incurred on the Predecessor’s convertiblenotes.  We ceased accruing interest onthe convertible notes following our filing for protection under Chapter 11 on January 12,2009 and the convertible notes were cancelled on March 24, 2009 inconnection with our emergence from bankruptcy. The convertible notes wereoutstanding during the full nine month period ended September 30, 2008.

* *

*IncomeTaxes*.  We are subject to U.S. income taxes on incomederived from services provided to the San Cristóbal mine.  Otherwise, we do not currently conductbusiness in the U.S. that would generate significant U.S. taxable income.  Our income tax provisions of $0.7 million($0.5 million and $0.2 million for the Successor and Predecessor, respectively)for the nine month period ended September 30, 2009, and $0.5 million forthe nine months ended September 30, 2008 consist of withholding taxeseither accrued or paid to Bolivia in connection with management servicesprovided to the San Cristóbal mine.

 

*Discontinued Operations — SanCristóbal.*

 

Theloss from discontinued operations for the nine months ended September 30,2009 of $4.2 million was incurred during the 83-day period ended March 24,2009 as discontinued operations related to the San Cristóbal asset group weresold at that date.  We recognized an $8.4million loss on the sale of the San Cristóbal asset group which is included indiscontinued operations for the period.

 

Theloss from discontinued operations related to the San Cristóbal mine for thenine month period ended September 30, 2008 totaled $214.9.  The loss was primarily the result of a $615.0million impairment of certain San Cristobal assets recorded during the period,a $34.4 million loss related to the write down of inventories at San Cristobal,partly offset by a $358.9 million mark-to-market gain related to thePredecessor’s open metal derivative positions. The Successor does not reportdiscontinued operations.

 

**Liquidity,Capital Resources and Going Concern**

 

At September 30, 2009 our aggregate cash and shortand long-term investments totaled $14.0 million, which included $13.6 millionof cash and cash equivalents and $0.4 million of short term investments.  Our cash and short- and long-term 

 

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investmentbalance is significantly lower than the $76.1 million in similar assets held bythe Predecessor at December 31, 2008. The decrease is primarily attributable to the transactions related tothe Predecessor’s Chapter 11 proceedings and our emergence from suchproceedings in March 2009, as more fully described in footnote 2 to our consolidated financialstatements.  During the third quarter2009, our cash and investment balance decreased from the approximately $20.5million of such instruments held at June 30, 2009, which included illiquidARS investments recorded at fair value of $4.6 million and cash and cashequivalents of $15.7 million.   Thedecrease was as a result of approximately $5.6 million spent on operations anda $1.4 million net decrease in the fair value of our investments, partiallyoffset by $1.0 million received in connection with the sale of certain miningconcessions in Mexico.  In addition, thesale of certain of our remaining ARS investments did not settle until October 1,2009 and accordingly at September 30, 2009 the $0.5 million of proceedswas included in prepaid expense and other assets.

 

During the fourth quarter 2009, we expect to spend atotal of approximately $8.0 million, including approximately $3.0 million ongeneral and administrative costs, and approximately $5.0 million to fund theadvancement of our exploration program. Exploration spending during the fourth quarter 2009 is expected toinclude approximately $3.5 million for additional drilling at the El Quevarproject in order to further define the ore body and approximately $1.5 millionto support drilling activity in Mexico, Chile, and Peru.  We plan to fund these expenditures from ourexisting cash and investment balances, from the approximately $1.5 million ofnet cash flow from the Management Agreement and an anticipated $0.8 million ofinterest and other cash receipts during the period.

 

In October 2009, we filed with the SEC aregistration statement on Form S-1 in connection with a proposed offeringof our common stock.  The size of theoffering has not yet been determined.  Ifwe are able to raise sufficient capital through the offering, we plan to spendthe following amounts during 2010:

 

·                  Approximately $44.0 million to fundthe advancement of the Yaxtché deposit at our El Quevar project, includingapproximately $30.0 million to fund the construction of an underground driftand related infrastructure in order to develop additional information regardingthe deposit and prepare a feasibility study, including detailed plantengineering; and approximately $14.0 million to fund concession option paymentsand a portion of the development and construction of the El Quevar project ifresults from the feasibility study are favorable.

 

·                  Approximately $33.0 million to fundexploration of our portfolio of exploration properties during 2010, includingapproximately $1 million to complete a first phase drilling program on the fourtargets on our Zacatecas project in Mexico, with up to an additional $12.0million for additional drilling and analytical work on the targets if initialresults are favorable; approximately $4.5 million for exploration activities atthe Viejo Campo target and other targets outside of the Yaxtché deposit at ElQuevar; and approximately $7.5 million for early stage exploration on ourAntofalla project in Argentina, our Palca project in Peru, and our Elisa deBordos project in Chile, including initial drilling and bulk sampling.

 

If the El Quevar feasibility study is positive, wecurrently anticipate that an additional approximately $50.0 to $70.0 millionwould be needed to develop and construct an underground mine at El Quevar. Ifthe project advances to development and construction, and if the plannedsecurities offering raises sufficient capital, we intend to use a portion ofthe proceeds to fund these activities, but we will also need to obtainadditional funding. There can be no assurance that we will be successful in theanticipated offering or that we will be successful raising additional capitalin the future on terms acceptable to us or at all.

 

If we do not raise sufficient capital, through theplanned securities offering or an alternative source of funding, we wouldsignificantly reduce our anticipated spending during 2010.  If additional funding were not available overthe next 12 month period ending September 30, 2010, we would expect tospend approximately $10.0 million on general and administrative costs andapproximately $10.0 million to advance our exploration program.  We believe that we would be able to fundthese expenditures from our existing cash and investment balances, fromapproximately $6.0 million of annual net cash flow from the ManagementAgreement (comprised of the annual fee net of direct administrative expenses)and from an anticipated $1.5 of interest and other cash receipts during theperiod.  As such, our financialstatements have been prepared on a going concern basis, under which an entityis considered to be able to realize its assets and satisfy its liabilities inthe normal course of business.  However,the budgeted amounts described above are not sufficient to fund the completionof the feasibility study for the El Quevar project or to develop and constructa mine if results from the feasibility study are favorable.  In order to continue significant advancementof the El Quevar project, we will need to complete the planned securitiesoffering or obtain an alternative source of financing.

 

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** **

**SignificantAccounting Policies**

 

See Part I, Item 1. Note 4 to the UnauditedConsolidated Financial Statements for a discussion of significant accountingpolicies including recently adopted standards and new accounting standards.

 

## **Forward-LookingStatements**

 

Someinformation contained in or incorporated by reference into this report maycontain forward-looking statements. These statements include comments regarding:

 

·                     Our proposed initial public offering;

 

·                     Our expectation that cash on hand and anticipatedrevenues and income will be sufficient to fund general and administrative costsand exploration expenses for the next 12 months;

 

·                     Our planned spending on general and administrative andexploration costs and our expected cash receipts from interest and royaltyincome and from the San Cristóbal management services agreement;

 

·                     The timing and cost of the evaluation and expansion ofour exploration portfolio, including activities to be conducted during 2009 and2010 on certain of our exploration properties and the anticipated timing andcost of the advancement of our El Quevar project; and

 

·                     Our expectation that we will not be required to makeadditional cash payments to the former holders of ASML’s subordinated notes.

 

Theuse of any of the words “anticipate,” “continues,” “estimate,” “expect,” “may,”“will,” “project,” “should,” “believe” and similar expressions are intended toidentify uncertainties. We believe the expectations reflected in thoseforward-looking statements are reasonable. However, we cannot assure that theseexpectations will prove to be correct. Actual results could differ materiallyfrom those anticipated in these forward-looking statements as a result of thefactors set forth below and other factors set forth in, or incorporated byreference into this report:

 

·                        The economic viability of the El Quevarproject;

 

·                        Our ability to successfully complete ourinitial public offering of our common stock or otherwise raise necessarycapital on acceptable terms or at all in order to finance the El Quevarproject;

 

·                        Our ability to continue to retain keymanagement and mining personnel necessary to successfully manage the SanCristóbal mine;

 

·                        Our ability to successfully manage theSan Cristóbal mine on behalf of Sumitomo under the terms of our managementservices agreement and our ability to successfully expand our mine servicesbusiness, particularly if metals prices experience significant declines;

 

·                        Our ability to achieve and maintain aliquid market for our common stock;

 

·                        Worldwide economic and political eventsaffecting the market prices for silver, zinc, lead and other minerals which maybe found on our exploration properties;

 

·                        Political and economic instability inBolivia (and other countries in which we conduct our business) and futureactions of the Bolivian government with respect to nationalization of naturalresources or other changes in the mining or taxation policies of the Bolivian governmentthat may affect the management of the San Cristóbal mine;

 

·                        The factors discussed under “Risk Factors”in ASML’s Form 10-K for the year ended December 31, 2008.

 

Manyof those factors are beyond our ability to control or predict. You should notunduly rely on these forward-looking statements. These statements speak only asof the date of this report on Form 10-Q. Except as required by law, we arenot obligated to publicly release any revisions to these forward-lookingstatements to reflect future events or developments.

 

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## **Item 3.**           Quantitative andQualitative Disclosures About Market Risk

 

## **Interest Rate Risk**

 

Weinvest substantially all of our excess cash in U.S. government and debtsecurities rated “investment grade” or better. The rates received on such investments may fluctuate with changes ineconomic conditions. Based on the average cash, restricted cash, investmentsand restricted investment balances outstanding during the first nine months of2009, a 1% decrease in interest rates would have resulted in a reduction ininterest income for the period of approximately $0.1 million.

## ** **

## **Foreign CurrencyExchange Risk**

 

Althoughmost of our expenditures are in U.S. dollars, certain purchases of labor,operating supplies and capital assets are denominated in other currencies.  As a result, currency exchange fluctuationsmay impact the costs of our operations. To reduce this risk, we maintain minimum cash balances in foreign currenciesand complete most of our purchases in U.S. dollars.

## ** **

## **Commodity PriceRisk**

 

One ofour primary business activities is the exploration of properties containingsilver, zinc, lead and other minerals, As a result, decreases in the price of any of these metals have thepotential to negatively impact our ability to establish reserves and developour exploration properties.  None of ourproperties is in production and we do not currently hold any commodityderivative positions.

 

# **Item4. Controls and Procedures**

# ** **

(a)          Evaluation of Disclosure Controls and Procedures

 

TheCompany’s Chief Executive Officer and Chief Financial Officer have evaluatedthe effectiveness of the Company’s disclosure controls and procedures (as suchterm is defined in Rules 13a-15(e) and 15d-15(e) under theExchange Act) as of September 30, 2009 (the “Evaluation Date”). Based onsuch evaluation, such officers have concluded that, as of the Evaluation Date,the Company’s disclosure controls and procedures are effective to ensure thatinformation required to be disclosed by the Company in the reports that theCompany files or submits under the Exchange Act is recorded, processed,summarized and reported within the time periods specified in the SEC’s rules andforms and to ensure that information required to be disclosed by the Company inthe reports that the Company files or submits under the Exchange Act isaccumulated and communicated to the Company’s management, including its ChiefExecutive Officer and Chief Financial Officer to allow timely decisionsregarding required disclosure.

 

(b)         Changes in Internal Control over Financial Reporting

 

Therehave been no changes in the Company’s internal control over financial reportingthat occurred during the period covered by this report that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internalcontrol over financial reporting.

 

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PART II: OTHER INFORMATION

 

## **Item 1.**            Legal Proceedings

 

The Company concluded, based on the results of an internalinvestigation conducted under the direction of its Audit Committee in late 2005and early 2006, that certain former senior employees were involved in makingimpermissible payments of approximately $125,000 to government officials in2003 and 2004. The Company contacted the Department of Justice (“DOJ”) andSecurities and Exchange Commission (“SEC”) during 2006 and reported the resultsof the internal investigation and was informed that the SEC and DOJ wouldcommence investigations with respect to these matters, including possibleviolations of the Foreign Corrupt Practices Act. Subsequently, the Companyentered into discussions with the SEC staff concerning a settlement of theconduct subject to the SEC’s investigation. As a result, the Company reached anagreement in principle with the SEC staff which, if approved by the Commission,would resolve this matter with the SEC. Under the terms of the proposedsettlement, the Company, on neither an admit nor deny basis, would agree to theentry of an administrative cease and desist order prohibiting the Company fromfuture violations of Sections 13(b)(2)(A), 13(b)(2)(B) and 30A of the ExchangeAct. Moreover, under the terms of the proposed settlement, the SEC staff wouldnot recommend that the Commission require the payment of disgorgement, civilmoney penalties, prejudgment interest or the appointment of a corporatemonitor. The proposed settlement is subject to Commission approval, negotiationof the terms of the settlement papers and approval by the Company’s Board ofDirectors. The Company cannot guarantee that the Commission will ultimatelyaccept the terms of the proposed settlement.

 

In August 2009, the DOJ informed us that it has closed itsinvestigation based on, among other things, the Company’s pending settlementwith the SEC.

 

## **Item 1A.  Risk Factors.**

## ** **

Risk factors affectingthe Company can be found in Item 1A of ASML’s Annual Report on Form 10-Kfor the year ended December 31, 2008.

 

***Weexpect to incur operating losses at least through 2010 and our profitability inthe foreseeable future depends entirely on the success of the El Quevarproject, which has not been shown to contain proven or probable reserves.***

 

We have a historyof losses and we expect that we will continue to incur operating losses unlessand until such time as our El Quevar project in Argentina or another of ourexploration properties enters into commercial production and generatessufficient revenue to fund continuing operations. We are focused primarily onthe advancement of El Quevar.

 

Neither the ElQuevar project, nor any of our other properties, has been shown to containproven or probable reserves and expenditures made in the exploration of ourproperties may not result in discoveries of commercially recoverable quantitiesof ore. Most exploration projects do not result in the discovery ofcommercially mineable deposits of ore and we cannot assure you that any mineraldeposit we identify will qualify as an ore body that can be legally andeconomically exploited or that any particular level of recovery of silver fromdiscovered mineralization will in fact be realized.

 

We have completeda technical report on the El Quevar property, which indicates the presence of“mineralized material.”  Mineralizationfigures based on estimates made by geologists are inherently imprecise anddepend on geological interpretation and statistical inferences drawn fromdrilling and sampling that may prove to be unreliable. We cannot assure youthat these estimates will be accurate or that proven and probable reserves willbe identified at El Quevar or any of our other properties. Even if we establishthe presence of reserves at a project, the economic viability of the projectmay not justify further exploitation.

 

Estimates ofreserves, mineral deposits and production costs can also be affected by suchfactors as governmental regulations and requirements, fluctuations in metalsprices or costs of essential materials or supplies, weather, environmentalfactors, unforeseen technical difficulties, unusual or unexpected geologicalformations and work interruptions. In addition, the grade of ore ultimatelymined may differ from that indicated by drilling results, sampling, feasibilitystudies or technical reports. Short term factors relating to reserves, such asthe need for orderly development of ore bodies or the processing of new ordifferent grades, may also have an adverse effect on mining operations and onthe results of operations. Silver or other minerals recovered in small scalelaboratory tests may not be duplicated in large scale tests under on-siteproduction conditions.

 

***Wewill need substantial additional financing to advance the El Quevar project andwe may not be able to obtain such financing.***

 

We will need toraise capital during 2009 or 2010 in order to complete a feasibility study forthe El Quevar project, and if the El Quevar project proceeds to development andconstruction, we anticipate that we will need to raise additional capitalduring 2010. We currently estimate that an additional $50 to $70 million willbe required following completion of the feasibility study anticipated in thefourth quarter 2010. We do not have a credit agreement in place and believethat securing credit will be difficult given our limited history and continuingconstraints on global credit markets. We cannot assure you that we will be ableto obtain the necessary financing for the project on favorable terms or at all.If we are unable to obtain the additional financing necessary to bring ElQuevar to production within two years after completion of a feasibility study,we will not be able to increase our interest in the project to 80% and ourinterest may decrease to 35%. Failure to obtain sufficient financing may alsoresult in the delay or indefinite postponement of exploration activities at ourother properties.

 

## **Item 2.**            Unregistered Sales ofEquity Securities and Use of Proceeds

 

None.

 

## **Item 3.**            Defaults Upon SeniorSecurities

 

None.

## ** **

## **Item 4.**            Submission of Mattersto a Vote of Security Holders

 

None

 

**Item 5.****          ****Other Information**

 

None.

 

**Item 6.****          ****Exhibits**

 

31.1               Certification of Chief Executive Officerpursuant to Section 302 of the Sarbanes-Oxley Act.

31.2               Certification of Chief Financial Officerpursuant to Section 302 of the Sarbanes-Oxley Act.

32                        Certification of Chief Executive Officerand Chief Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of theSarbanes-Oxley Act).

 

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SIGNATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on behalf of the undersigned thereunto dulyauthorized.

 

 
|                         |   | GOLDEN MINERALS COMPANY |
|------------------------------|--------|-------------------------|
|                         |   |                    |
|                         |   |                    |
| Date: November 2,  2009 |   | By:                     | /s/ Jeffrey G.  Clevenger |
|                         |   |                    | Jeffrey G. Clevenger |
|                         |   |                    | President and Chief  Executive Officer |
|                         |   |                    |
|                         |   |                    |   |
| Date: November 2,  2009 |   | By:                     | /s/ Robert P. Vogels |
|                         |   |                    | Robert P. Vogels |
|                         |   |                    | Senior Vice President  and Chief Financial Officer |

 

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