Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, DC 20549**

 

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

**(MARKONE)**

 

**x  QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

** **

**FOR THE QUARTERLY PERIOD ENDED MARCH 31,2008.**

** **

**OR**

 

**o****  TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

** **

**FOR THE TRANSITION PERIOD FROM         TO         .**

 

**COMMISSION FILE NUMBER 1-13627**

 

###### **GOLDEN MINERALS COMPANY**

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

| **DELAWARE**                             | ** ** | **26-4413382**      |
|------------------------------------------|------------|---------------------|
| (STATE OR OTHER JURISDICTION OF          |       | (I.R.S. EMPLOYER    |
| INCORPORATION OR ORGANIZATION)           |       | IDENTIFICATION NO.) |
|                                     |       |                |
| **1700 LINCOLN STREET, SUITE 3050**      | ** ** | ** **          |
| **DENVER, COLORADO**                     | ** ** | **80203**           |
| (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

 

INDICATE BY CHECK MARK WHETHER THE REGISTRANT HASSUBMITTED ELECTRONICALLY AND POSTED ON ITS CORPORATE WEB SITE, IF ANY, EVERYINTERACTIVE DATA FILE REQUIRED TO BE SUBMITTED AND POSTED PURSUANT TO RULE 405OF REGULATION S-T (§232.405 OF THIS CHAPTER) DURING THE PRECEDING 12 MONTHS (ORFOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO SUBMIT AND POSTSUCH FILES).   YES o   NOo

 

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

 

AT MAY 11,2009, 3,257,735 SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE, WERE ISSUEDAND OUTSTANDING.

 

 

 

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GOLDEN MINERALS COMPANY

FORM 10-Q

QUARTER ENDED MARCH 31, 2009

 

INDEX

 
| ** **                               | **PAGE**                                                                                    |
|------------------------------------------|---------------------------------------------------------------------------------------------|
|                                     |                                                                                        |
| EXPLANATORY NOTE                         | 3                                                                                           |
|                                     |                                                                                        |
| PART I – FINANCIAL INFORMATION |                                                                                        |
|                                     |                                                                                        |   |
| ITEM 1.                                  | FINANCIAL STATEMENTS (Unaudited)                                                            | 4 |
|                                     |                                                                                        |   |
| ITEM 2.                                  | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 28 |
|                                     |                                                                                        |   |
| ITEM 3.                                  | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 | 32 |
|                                     |                                                                                        |   |
| ITEM 4.                                  | CONTROLS AND  PROCEDURES                                                                    | 33 |
|                                     |                                                                                        |   |
| PART II – OTHER  INFORMATION   |                                                                                        |
|                                     |                                                                                        |   |
| ITEM 1.                                  | LEGAL PROCEEDINGS                                                                           | 34 |
|                                     |                                                                                        |   |
| ITEM 1A.                                 | RISK FACTORS                                                                                | 34 |
|                                     |                                                                                        |   |
| ITEM 2.                                  | UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                | 34 |
|                                     |                                                                                        |   |
| ITEM 3.                                  | DEFAULTS  UPON SENIOR SECURITIES                                                            | 34 |
|                                     |                                                                                        |   |
| ITEM 4.                                  | SUBMISSION  OF MATTERS TO A VOTE OF SECURITY HOLDERS                                        | 34 |
|                                     |                                                                                        |   |
| ITEM 5.                                  | OTHER INFORMATION                                                                           | 34 |
|                                     |                                                                                        |   |
| ITEM  6.                                 | EXHIBITS                                                                                    | 34 |
|                                     |                                                                                        |   |
| SIGNATURES                               | 35                                                                                          |

 

2

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**EXPLANATORY NOTE**

 

On January 12, 2009, Apex Silver Mines Limited (“ApexSilver”) and its wholly-owned subsidiary, Apex Silver Mines Corporation, filedvoluntary petitions for reorganization relief under Chapter 11 of the U.S.Bankruptcy Code. A Joint Plan of Reorganization (the “Plan”), was approved bythe Bankruptcy Court for the Southern District of New York on March 4,2009.  On March 24, 2009, the Planbecame effective, and pursuant to the Plan, the assets of Apex Silver weretransferred to Golden Minerals Company, which is treated as the successor toApex Silver for purposes of reporting under the U.S. federal securities laws.This Quarterly Report on Form 10-Q for the quarterly period ended March 31,2009 is the first interim report filed by Golden Minerals Company and includesresults of operations for Apex Silver for the period from January 1through March 24, 2009 and for Golden Minerals Company from March 25through March 31, 2009.

 

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**PART I. FINANCIAL INFORMATION**

**Item 1.    Financial Statements**

 

# **GOLDEN MINERALS COMPANY**

# **CONSOLIDATED BALANCE SHEETS**

**(Expressed in United States dollars)**

**(Unaudited)**

** **
| ** **                                                                                                               | ** ** | **March 31,**                                        | ** ** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|------------|-----------------------|------------|
| ** **                                                                                                               | ** ** | **2009**                                                  | ** ** | ** ** | **2008**              | ** ** |
| ** **                                                                                                               | ** ** | **(Successor)**                                           | ** ** | ** ** | **(Predecessor)**     | ** ** |
| ** **                                                                                                               |       | **(in thousands, except share data)** |       |
| **Assets**                                                                                                               |       |                                                      |       |       |                  |       |
| Current assets                                                                                                           |       |                                                      |       |       |                  |       |
| Cash and cash  equivalents                                                                                               |       | $                                                         | 24,373     |       |                  | $          | 33,723 |   |
| Restricted cash                                                                                                          |       | —                                                    |       |       | 20,575                |       |
| Investments                                                                                                              |       | 88                                                        |       |       | 16,351                |       |
| Trade  receivables                                                                                                       |       | 185                                                       |       |       | 7,315                 |       |
| Inventories                                                                                                              |       | —                                                    |       |       | 75,008                |       |
| Prepaid expenses  and other assets                                                                                       |       | 1,642                                                     |       |       | 15,550                |       |
| Total current  assets                                                                                                    |       | 26,288                                                    |       |       | 168,522               |       |
| Property, plant  and equipment, net                                                                                      |       | 12,648                                                    |       |       | 202,534               |       |
| Ore stockpile  inventories                                                                                               |       | —                                                    |       |       | 72,628                |       |
| Value added tax  recoverable                                                                                             |       | —                                                    |       |       | 157,146               |       |
| Investments                                                                                                              |       | 5,249                                                     |       |       | 5,487                 |       |
| Other                                                                                                                    |       | 4                                                         |       |       | 30                    |       |
| Total assets                                                                                                             |       | $                                                         | 44,189     |       |                  | $          | 606,347 |   |
| **Liabilities  and Shareholders’ Equity (Deficit)**                                                                 |       |                                                      |       |       |                  |       |
| Current  liabilities                                                                                                     |       |                                                      |       |       |                  |       |
| Accounts payable  and other accrued liabilities                                                                          |       | $                                                         | 8,128      |       |                  | $          | 48,861 |   |
| Accrued interest  payable                                                                                                |       | —                                                    |       |       | 8,660                 |       |
| Current portion  of long term debt                                                                                       |       | —                                                    |       |       | 523,610               |       |
| Total current  liabilities                                                                                               |       | 8,128                                                     |       |       | 581,131               |       |
| Long term debt                                                                                                           |       | —                                                    |       |       | 59,951                |       |
| Asset retirement  obligation                                                                                             |       | —                                                    |       |       | 9,155                 |       |
| Other long term  liabilities                                                                                             |       | 483                                                       |       |       | 4,398                 |       |
| Total  liabilities                                                                                                       |       | 8,611                                                     |       |       | 654,635               |       |
| Commitments and  contingencies (Note 18)                                                                                 |       |                                                      |       |       |                  |       |
| Shareholders’  equity (deficit)                                                                                     |       |                                                      |       |       |                  |       |
| Common stock,  (Successor) $.01 par value, 50,000,000 shares authorized; 2,987,735 shares  issued and outstanding        |       | 30                                                        |       |       |                  |       |
| Ordinary Shares,  (Predecessor) $.01 par value, 175,000,000 shares authorized; 59,000,832 shares  issued and outstanding |       |                                                      |       |       | 590                   |       |
| Additional paid  in capital                                                                                              |       | 36,231                                                    |       |       | 680,901               |       |
| Accumulated  deficit                                                                                                     |       | (683                                                      | )          |       | (880,020              | )          |
| Accumulated  other comprehensive income (loss)                                                                           |       | —                                                    |       |       | (551                  | )          |
| Parent Company’s  shareholder’s equity (deficit)                                                               |       | 35,578                                                    |       |       | (199,080              | )          |
| Noncontrolling  interest in subsidiaries                                                                                 |       | —                                                    |       |       | 150,792               |       |
| Total  shareholders’ equity (deficit)                                                                               |       | 35,578                                                    |       |       | (48,288               | )          |
| Total  liabilities and shareholders’ equity (deficit)                                                               |       | $                                                         | 44,189     |       |                  | $          | 606,347 |   |

 

The accompanying notesform an integral part of these consolidated financial statements.

 

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**GOLDEN MINERALS COMPANY**

# **CONSOLIDATED STATEMENTS OFOPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

**(Expressed in United States dollars)**

**(Unaudited)**

** **
| ** **                                                                                       | ** ** | **For The Period**                              | ** ** | ** ** | **For The Period**  | ** ** | ** **                   | ** ** |
|--------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|------------|-------------------------------|------------|------------------------------|------------|
| ** **                                                                                       | ** ** | **March 25, 2009**                                   | ** ** | ** ** | **January 1, 2009** | ** ** | **Three Months**        | ** ** |
| ** **                                                                                       | ** ** | **Through**                                               | ** ** | ** ** | **Through**                   | ** ** | **Ended**                    | ** ** |
| ** **                                                                                       | ** ** | **March 31, 2009**                              | ** ** | ** ** | **March 24, 2009**  | ** ** | **March 31, 2008** | ** ** |
| ** **                                                                                       |       | **(Successor)**                                           |       |       | **(Predecessor)**             |       |
| ** **                                                                                       |       | **(in thousands, except share data)** |       |
| **Revenue:**                                                                                     |       |                                                      |       |       |                          |       |                         |       |
| Management  service fees (Note 17)                                                               |       | $                                                         | 211        |       |                          | $          | 1,350                        |       | $ | 1,350 |   |
| **Costs  and expenses:**                                                                         |       |                                                      |       |       |                          |       |                         |       |
| Costs of  services (Note 17)                                                                     |       | (80                                                       | )          |       | —                        |       | —                       |       |
| Exploration  expense                                                                             |       | (448                                                      | )          |       | (3,482                        | )          | (6,192                       | )          |
| Administrative  expense                                                                          |       | (352                                                      | )          |       | (7,496                        | )          | (6,138                       | )          |
| Depreciation,  depletion and amortization                                                        |       | (9                                                        | )          |       | (102                          | )          | (161                         | )          |
| Total costs and  expenses                                                                        |       | (889                                                      | )          |       | (11,080                       | )          | (12,491                      | )          |
| Loss from  operations                                                                            |       | (678                                                      | )          |       | (9,730                        | )          | (11,141                      | )          |
| **Other  income and expenses:**                                                                  |       |                                                      |       |       |                          |       |                         |       |
| Interest and  other income                                                                       |       | 124                                                       |       |       | 997                           |       | 1,844                        |       |
| Royalty income                                                                                   |       | —                                                    |       |       | 88                            |       | —                       |       |
| Interest expense  and other borrowing costs                                                      |       | —                                                    |       |       | (345                          | )          | (2,638                       | )          |
| Gain on  extingushment of debt                                                                   |       | —                                                    |       |       | 248,165                       |       | —                       |       |
| Loss on auction  rate securities                                                                 |       | —                                                    |       |       | (828                          | )          | —                       |       |
| Reorganization  costs, net                                                                       |       | (103                                                      | )          |       | (3,683                        | )          | —                       |       |
| Fresh start accounting  adjustments                                                              |       | —                                                    |       |       | 9,122                         |       | —                       |       |
| Total other  income and expenses                                                                 |       | 21                                                        |       |       | 253,516                       |       | (794                         | )          |
| Income (loss)  from continuing operations before income (taxes) benefit                          |       | (657                                                      | )          |       | 243,786                       |       | (11,935                      | )          |
| Income taxes                                                                                     |       | (26                                                       | )          |       | (165                          | )          | (142                         | )          |
| Net income  (loss) from continuing operations                                                    |       | (683                                                      | )          |       | 243,621                       |       | (12,077                      | )          |
| **Income  (loss) from discontinued operations**                                                  |       | —                                                    |       |       | (4,153                        | )          | 10,103                       |       |
| Net income  (loss)                                                                               |       | $                                                         | (683       | )          |                          | $          | 239,468                      |       | $ | (1,974 | ) |
| Net (income)  loss attributable to noncontrolling interest                                       |       | $                                                         | —     |       |                          | $          | (7,869                       | )          | $ | 27,694 |   |
| Net income  (loss) attributable to the Successor/Predecessor shareholder’s                  |       | $                                                         | (683       | )          |                          | $          | 231,599                      |       | $ | 25,720 |   |
| **Other  comprehensive loss:**                                                                   |       |                                                      |       |       |                          |       |                         |       |
| Unrealized gain  (loss) on securities                                                            |       | $                                                         | —     |       |                          | $          | 940                          |       | $ | (568 | ) |
| Comprehensive  (loss) income attributable to Successor/Predecessor shareholder’s            |       | $                                                         | (683       | )          |                          | $          | 232,539                      |       | $ | 25,152 |   |
| **Net  income (loss) per Common/Ordinary Share - basic**                                         |       |                                                      |       |       |                          |       |                         |       |
| Income (loss)  from continuing operations attributable to the Successor/Predecessor shareholders |       | $                                                         | (0.23      | )          |                          | $          | 4.13                         |       | $ | (0.20 | ) |
| Discontinued  operations attributable to the Successor/Predecessor shareholders                  |       | —                                                    |       |       | (0.20                         | )          | 0.64                         |       |
| Income (loss)  attributable to the Successor/Predecessor shareholders                            |       | $                                                         | (0.23      | )          |                          | $          | 3.93                         |       | $ | 0.44 |   |
| **Net  income (loss) per Common/Ordinary Share - diluted**                                       |       |                                                      |       |       |                          |       |                         |       |
| Income (loss)  from continuing operations attributable to the Successor/Predecessor shareholders |       | $                                                         | (0.23      | )          |                          | $          | (0.06                        | )          | $ | (0.17 | ) |
| Discontinued  operations attributable to the Successor/Predecessor shareholders                  |       | —                                                    |       |       | (0.17                         | )          | 0.55                         |       |
| Income (loss) attributable  to the Successor/Predecessor shareholders                            |       | $                                                         | (0.23      | )          |                          | $          | (0.23                        | )          | $ | 0.37 |   |
| **Weighted  average Common Stock/Ordinary Shares outstanding - basic**                           |       | 2,987,735                                                 |       |       | 59,000,832                    |       | 58,914,066                   |       |
| **Weighted  average Common Stock/Ordinary Shares outstanding - diluted**                         |       | 2,987,735                                                 |       |       | 69,171,400                    |       | 69,292,039                   |       |

 

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

 

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**GOLDEN MINERALS COMPANY**

# **CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Expressed in United States dollars)**

**(Unaudited)**

** **
| ** **                                                                                                                    | ** ** | **For The Period**          | ** ** | ** ** | **For The Period**       | ** ** | ** **              | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|------------|--------------------------|------------|-------------------------|------------|
| ** **                                                                                                                    | ** ** | **March 25, 2009**     | ** ** | ** ** | **January 1, 2009** | ** ** | **Three Months**        | ** ** |
| ** **                                                                                                                    | ** ** | **Through**                 | ** ** | ** ** | **Through**              | ** ** | **Ended**               | ** ** |
| ** **                                                                                                                    | ** ** | **March 31, 2009**     | ** ** | ** ** | **March 24, 2009**  | ** ** | **March 31, 2008** | ** ** |
|                                                                                                                          |       | **(Successor)**             |       |       | **(Predecessor)**        |       |
|                                                                                                                          |       | **(amounts  in thousands)** |       |
| Cash flows from  operating activities:                                                                                        |       |                        |       |       |                     |       |                    |       |
| Net cash used in  operating activities (Note 19)                                                                              |       | $                           | (1,247     | )          |                     | $          | (13,849                 | )          | $ | (1,104 | ) |
| Cash flows from investing  activities:                                                                                        |       |                        |       |       |                     |       |                    |       |
| Purchase of  available for sale investments                                                                                   |       | —                      |       |       | (4,447                   | )          | (7,130                  | )          |
| Sale of  available for sale investments                                                                                       |       | —                      |       |       | 21,113                   |       | 52,917                  |       |
| Maturities of  held-to-maturity investments                                                                                   |       | —                      |       |       | —                   |       | 2,000                   |       |
| Settlement of  metal derivative instruments                                                                                   |       | —                      |       |       | —                   |       | (52,012                 | )          |
| Released from  (transfer to) restricted cash to collateralize credit facility, letters of  credit and interest payments , net |       | —                      |       |       | 5,732                    |       | (34,596                 | )          |
| Proceeds from  sale of interest in subsidiary, net                                                                            |       | —                      |       |       | 25,225                   |       | —                  |       |
| Receipt of  deferred payments from minority interest                                                                          |       | —                      |       |       | —                   |       | 1,929                   |       |
| Capitalized  costs and acquisitions of property, plant and equipment                                                          |       | —                      |       |       | (4,580                   | )          | (1,248                  | )          |
| Net cash  provided by (used in) investing activities                                                                          |       | $                           | —     |       |                     | $          | 43,043                  |       | $ | (38,140 | ) |
| Cash flows from  financing activities:                                                                                        |       |                        |       |       |                     |       |                    |       |
| Payments of  notes payable and long term debt                                                                                 |       | —                      |       |       | (47,297                  | )          | (2,199                  | )          |
| Amounts drawn on  DIP facility                                                                                                |       | —                      |       |       | 6,500                    |       |                    |       |
| Non-controlling  interest contributions                                                                                       |       | —                      |       |       | 3,500                    |       | 33,250                  |       |
| Net cash  provided by (used in) financing activities                                                                          |       | $                           | —     |       |                     | $          | (37,297                 | )          | $ | 31,051 |   |
| Net decrease in  cash and cash equivalents                                                                                    |       | (1,247                      | )          |       | (8,103                   | )          | (8,193                  | )          |
| Cash and cash  equivalents - beginning of period                                                                              |       | 25,620                      |       |       | 33,723                   |       | 40,736                  |       |
| Cash and cash  equivalents - end of period                                                                                    |       | $                           | 24,373     |       |                     | $          | 25,620                  |       | $ | 32,543 |   |

 

See Note 19 for supplemental cash flow information.

 

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

 

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**GOLDEN MINERALS COMPANY**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’EQUITY (DEFICIT)**

**(Expressed in United States dollars)**

**(Unaudited)**

** **
| ** **                                                            | ** ** | ** **                                               | ** ** | ** **  | ** ** | ** **  | ** ** | ** **  | ** ** | **Accum-**          | ** **   | ** **   | ** ** | ** **             | ** ** |
|-----------------------------------------------------------------------|------------|----------------------------------------------------------|------------|-------------|------------|-------------|------------|-------------|------------|---------------------|--------------|--------------|------------|------------------------|------------|
| ** **                                                            | ** ** | ** **                                               | ** ** | ** **  | ** ** | ** **  | ** ** | ** **  | ** ** | **-ulated**         | ** **   | ** **   | ** ** | ** **             | ** ** |
| ** **                                                            | ** ** | ** **                                               | ** ** | ** **  | ** ** | ** **  | ** ** | ** **  | ** ** | **Other**           | ** **   | ** **   | ** ** | ** **             | ** ** |
| ** **                                                            | ** ** | ** **                                               | ** ** | ** **  | ** ** | **Addi**    | ** ** | ** **  | ** ** | **Compre**          | ** **   | ** **   | ** ** | **Total**              | ** ** |
| ** **                                                            | ** ** | ** **                                               | ** ** | ** **  | ** ** | **-tional** | ** ** | **Accum**   | ** ** | **-hensive**        | ** **   | ** **   | ** ** | **Shareholders’** | ** ** |
| ** **                                                            | ** ** | **Ordinary Shares**                                 | ** ** | **Paid-in** | ** ** | **-ulated** | ** ** | **income**  | ** ** | **Non-controlling** | ** **   | **Equity**   | ** ** |
| ** **                                                            | ** ** | **Shares**                                               | ** ** | **Amount**  | ** ** | **Capital** | ** ** | **Deficit** | ** ** | **(loss)**          | ** **   | **Interest** | ** ** | **(Deficit)**          | ** ** |
| ** **                                                            | ** ** | **(in thousands except share data)** | ** ** |
| **Balance,  Dece mber 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 comnnection with emergence from Chapter 11 |       | 2,987,735                                                |       | 29.9        |       | 36,231      |       | —      |       | —              |         | 3            |       | 36,261                 |       |
| Net loss                                                              |       | —                                                   |       | —      |       | —      |       | (683        | )          | —              |         |         |       | (683                   | )          |
| **Balance,  March 31, 2009**                                          | ** ** | **2,987,735**                                            | ** ** | **$**       | **29.9**   | ** **  | **$**      | **36,231**  | ** ** | **$**               | **(683**     | **)**        | **$**      | **—**             | ** ** | **$** | **—** | ** ** | **$** | **35,578** | ** ** |

 

The accompanying notes form an integral part of these consolidatedfinancial statements.

 

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**APEX SILVER MINES LIMITED**

 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(Expressed in United States dollars)**

 

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

 

*General Information*

 

Golden Minerals Company (the “Company”) a Delawarecorporation, is the successor to Apex Silver Mines Limited (“ASML”) forpurposes of reporting under the U.S. federal securities laws.  Prior to the emergence from Chapter 11 andthe sale of the San Cristóbal mine, discussed below, ASML was the 65% owner andoperator of the San Cristóbal mine in Bolivia. References in this Form 10-Q to “Successor” refer to the accounts of theCompany and its subsidiaries on or after March 25, 2009, after giving effect to(1) the anticipated cancellation of all outstanding ordinary shares of ASML; (2)the issuance of common stock of the Company upon emergence from Chapter 11 tothe holders of ASML’s 2.875% and 4.0% Convertible Senior Subordinated Notes due2024 (collectively, the “Notes”); (3) the sale of the San Cristóbal mine toSumitomo Corporation (“Sumitomo”) and (4) the application of fresh startaccounting.  References to “Predecessor”refer to the accounts of ASML and its subsidiaries prior to March 25, 2009.

 

Following emergence from Chapter 11 and the sale ofthe San Cristóbal mine to Sumitomo, the Company is primarily engaged in theexploration and advancement of its portfolio of approximately 45 exploration propertiesprimarily in South America and Mexico and in providing contract managementservices 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 to realizeits assets and satisfy its liabilities in the normal course of business.  However the continuing operations of theCompany are dependent upon its ability to raise sufficient capital and togenerate future profitable operations. The underlying value and recoverability of the amounts shown as mineralproperties in the consolidated balance sheet is dependent on the ability of theCompany to continue to finance exploration and development activities thatwould lead to profitable production or proceeds from the disposition of themineral properties.  There can be noassurance that the Company will be successful in raising additional financingin the future on terms acceptable to the Company or at all.

 

*Chapter 11 Reorganization*

 

On January 12, 2009, ASML and its wholly ownedsubsidiary, Apex Silver Mines Corporation (“ASMC”), filed voluntary petitionsfor reorganization relief under Chapter 11 of the U.S. Bankruptcy Code (the “BankruptcyCode”).  ASML also commenced aprovisional liquidation proceeding in the Cayman Islands.  ASML’s subsidiaries outside of the UnitedStates, including Minera San Cristóbal S.A. (“MSC”), the Bolivian subsidiary that owns and operates the SanCristóbal mine, were not included in the Chapter 11 filing or in any otherbankruptcy or reorganization proceeding.

 

Under Chapter 11, ASML operated its businesses betweenJanuary 12, 2009 and March 24, 2009 as a debtor-in-possession under courtprotection from creditors and claimants under the jurisdiction of theBankruptcy Court and under the supervision of the joint provisional liquidatorsin the Cayman Islands. On January 20, 2009, ASML entered into a $35 milliondebtor-in-possession term credit facility (the “DIP Financing Facility”) withSumitomo as lender.  The purpose of theDIP Financing Facility was to provide ASML with the cash and liquiditynecessary to fund its 65% share of working capital required by the SanCristóbal mine.  As of March 24, 2009,ASML had borrowed $6.5 million under the DIP Financing Facility. Upon emergencefrom Chapter 11 and the sale of the San Cristóbal mine to Sumitomo, asdiscussed below, Sumitomo waived and released the Company from any liabilityassociated with amounts outstanding, including interest, under the DIPFinancing Facility, and the Company recorded a gain of $6.6 million which isincluded as an offset to the loss on the sale of interest in a subsidiary whichis a component of discontinued operations.

 

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A Joint Plan of Reorganization (the “Plan”) wasapproved by the U.S. Bankruptcy Court for the Southern District of New York(the “Bankruptcy Court”) on March 4, 2009, and the Company emerged from Chapter11 protection on March 24, 2009 (the “Effective Date”).  At that time, and subsequent to the closingof the sale of the San Cristóbal mine to Sumitomo as described below, all ofthe remaining assets of ASML, other than a small cash reserve for the paymentof ASML’s liquidation expenses, were transferred to the Company.  A compulsory liquidation proceeding wasinitiated for ASML in the Cayman Islands and all of the ordinary shares of ASMLwill be formally canceled in that proceeding.

 

Under the Plan, holders of the Notes received inexchange for the cancellation of the Notes a pro rata distribution of (i) 2,987,735shares of common stock of the Company, and (ii) approximately $45 million ofcash plus any other cash or cash equivalents held by the Company in excess ofthe sum of $15 million plus amounts to pay for accrued liabilities at March 31,2009 and certain projected reorganization expenses that are expected to beincurred after March 31, 2009.  To recordthe effect 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.  Had ASML not been in Chapter 11bankruptcy between January 12, 2009 and the Effective Date, the Notes wouldhave accrued an additional $1.9 million of interest.

 

Other holders of unsecured claims against ASML andASMC, except ASML’s equity holders, received or will receive cash payment for their claims up to a maximum recovery of$10,000 per claim, or a pro rata distribution of common stock of theCompany.  ASML’s equity holders receivedno recovery under the Plan, and their shares will be canceled in connectionwith ASML’s Cayman Islands liquidation proceeding.

 

On the Effective Date, Sumitomo and the other seniorlenders waived and released ASML and the Company from any liability associatedwith amounts outstanding under the project finance facility relating to the SanCristóbal mine.

 

*Sale of the San Cristóbal Mine*

 

On the Effective Date, in conjunction with, and as acondition to the emergence from bankruptcy, ASML sold to Sumitomo its remainingdirect and indirect interests in the San Cristóbal mine, including its 65%interest in MSC, for a cash purchase price of $27.5 million, plus $2.5 millionin expense reimbursements and the assumption of certain liabilities.  The transaction was completed pursuant to thePurchase and Sale Agreement dated January 12, 2009 (the “Purchase Agreement”)among ASML, certain other wholly-owned subsidiaries of ASML, Sumitomo and oneof Sumitomo’s wholly-owned subsidiaries. Under the Purchase Agreement and the Plan, ASML and the Company werereleased from all liabilities associated with the San Cristóbal mine, includingASML’s guarantee of San Cristóbal’s indebtedness.

 

On the Effective Date, ASMC, which has been renamedGolden Minerals Services Corporation (“Golden Services”), entered into aManagement Services Agreement with Sumitomo (the “Management Agreement”) underwhich it is providing certain management services with respect to the SanCristóbal mine in exchange for an annual fee of approximately $6 million, plusapproximately $3.5 million annually to cover the cost of administering certainprograms for the expatriate employees of MSC, net of applicable withholdingtaxes, and a potential annual incentive fee of up to $1.5 million. TheManagement Agreement has an initial term of twelve months and thereafter may beterminated by Golden Services with twelve months’ prior notice or by Sumitomowith six months’ prior notice.  Ifterminated by Sumitomo, Golden Services will be entitled to a $1.0 milliontermination fee.  Golden Services willnot be required to pay a termination fee.

 

*Fresh Start Accounting*

 

As required by accounting principles generallyaccepted in the United States of America (“GAAP”), the Company used fresh startaccounting effective March 25, 2009 following the guidance of AmericanInstitute of Certified Public Accountants’ (“AICPA”) Statement of Position90-7, “Financial Reporting by Entities in Reorganization under the BankruptcyCode” (“SOP 90-7”).  The Company adoptedfresh start accounting because holders of existing voting shares immediatelybefore the Effective Date received less that 50% of the voting shares of theSuccessor and the reorganized value of the Successor is less than its 

 

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post-petition liabilitiesand allowed claims.  The Company’sfinancial statements reflect a new capital structure and a new basis in theidentifiable assets 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.

 

SOP 90-7 requires, amongother things, the determination of the reorganization value of the Successorupon emergence from bankruptcy. Reorganization value approximates the fair value of the entity, beforeconsidering liabilities, and approximates the amount a willing buyer would payfor the assets of the entity immediately after the restructuring. The fairvalue of the Company’s assets was determined with the assistance of a thirdparty valuation expert and a minerals engineering firm who used availablecomparable market data and quotations, discounted cash flow analysis, and othermethods in determining the appropriate asset fair values.  Based on these valuations and applying theprinciples of FAS 141R, the Company has adjusted upward the reported amounts ofcertain of its individual assets, net of liabilities, by a combined total of$9.1 million and has reflected that adjustment in the Predecessor’s statementof operations in accordance with SOP 90-7. The upward adjustment relates primarily to recording at fair value,certain exploration properties and a royalty interest that were previouslyreflected on the Predecessor’s balance sheet at a zero carrying value, becauseall exploration costs at such properties were expensed as incurred. Futurecosts of exploration will continue to be expensed as incurred.

 

The total equity of the Successor at the EffectiveDate, totaling $36.5 million, has been adjusted to reflect no beginningretained earnings or deficit, after taking into account the cancelation of theNotes, the issuance of new shares in the Company, and the fresh startaccounting adjustments.  The total equityof the Successor company at the Effective Date reflects the estimatedenterprise value of the Company following the principles of SOP 90-7 and FAS141R.  As part of the Company’sbankruptcy proceedings, an enterprise value ranging from $15 million to $30million was initially projected based on a blend of valuations using marketvalue multiples for peer companies and an assessment of the underlying valuesof the Company’s mineral properties at the time of the bankruptcy filing.  As discussed above, and in conjunction withfinalizing the fresh start accounting adjustments, additional valuationassessments of the fair value of the Successor company’s assets was performedwith the assistance of a third party valuation expert and a mineralsengineering firm to arrive at the Company’s reported equity value at theEffective Date of $36.5 million.

 

The balance sheet adjustments presented belowsummarize the impact of the reorganization, the sale of the San Cristóbal mineand the application of fresh start accounting as of the Effective Date.

 

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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 MINERALS COMPANY**

# **REORGANIZED CONSOLIDATED 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 Shareholders' 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 |   |
| Shareholders’  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  shareholders’ equity (deficit)                 |       | (42,557                    | )          | (178,469 | ) | 248,165 |   | 9,122 |   | 36,261 |   |
| Total  liabilities and shareholders’ deficit          |       | $                          | 614,779    |   | $ | (534,063 | ) | $ | (45,000 | ) | $ | 9,605 |   | $ | 45,321 |   |

 

NoteI. - The adjustments relate to the sale of the San Cristóbal mine to Sumitomoinclude $27.5 million of cash received from the sale, the write-off of $561.5million of assets sold to Sumitomo, net of $355.6 million of liabilitiesassumed by Sumitomo, the release of $170.1 million of non-controlling interestprimarily related to Sumitomo and a loss on the sale of $8.4 million.

 

NoteII. — The reorganization adjustments include a $45.0 million reduction of cashfor amounts 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 interest,and a $248.2 million gain on extinguishment of debt.  The reorganization adjustments 

 

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alsoinclude the write-off of $896.3 million of accumulated deficit, $647.6 millionof additional paid in capital and $0.5 million of ordinary shares to reflectthe elimination of the Predecessor’s shareholder’s equity.

 

NoteIII. — The fresh start adjustments reflect a write-up of property, plant andequipment to estimated 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 the Company.  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.  The fresh start adjustment also includes $0.5million deferred tax liability adjustment to reflect the tax effect of theadjustments to property, plant and equipment.

 

**2.****             ****Basis of Preparation of FinancialStatements**

 

These unaudited interim consolidated financialstatements have been prepared in accordance with the rules and regulations ofthe Securities and Exchange Commission (“SEC”). Such rules and regulationsallow the omission of certain information and footnote disclosures normallyincluded in financial statements prepared in accordance with GAAP, so long assuch omissions do not render the financial statements misleading.

 

In the opinion of management, these financialstatements reflect all adjustments that are necessary for a fair statement ofthe results for the periods presented. With the exception of the adjustmentsmade in connection with fresh start accounting, as described above, alladjustments were of a normal recurring nature. Certain reclassifications havebeen made to the prior period financial statements to conform to the currentperiod presentation. These interim financial statements should be read inconjunction with the annual financial statements of ASML included in its 2008Annual Report on Form 10-K.

 

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

 

As a result of the sale, results of operations of theSan Cristóbal mine and related subsidiaries sold are presented as discontinuedoperations for the periods on the Consolidated Statements of Operations andComprehensive Income (Loss) through March 24, 2009, the date of the sale,  including all direct financing related to theSan Cristóbal mine (see Note 1). Additionally, costs incurred for management service fees that werepreviously eliminated upon consolidation have not been eliminated and arereflected as a cost of service between the discontinued operations and theCompany.

 

The Company determined that reporting discontinuedoperations is appropriate in accordance with Emerging Issues Task Force 03-13, “Applyingthe Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whetherto Report Discontinued Operations” (“EITF 03-13”).  Based upon the guidance in EITF 03-13, theCompany has determined that the continuing cash flows generated by theManagement Agreement for the San Cristóbal mine are not so significant as toconstitute continuing involvement with the mine.  In addition, management has evaluated theCompany’s other ongoing involvement with the San Cristóbal mine as a result ofthe Management Agreement, and concluded that it does not represent significantcontinuing involvement as defined in EITF 03-13.

 

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The results of discontinued operations for the period January1, 2009 through March 24, 2009 and for the three month period ended March 31,2008 are as follows (amounts in thousands):

 
| ** **                                      | ** ** | **For The Period**  | ** ** | ** **                   | ** ** |
|-------------------------------------------------|------------|-------------------------------|------------|------------------------------|------------|
| ** **                                      | ** ** | **January 1, 2009** | ** ** | **Three Months**        | ** ** |
| ** **                                      | ** ** | **Through**                   | ** ** | **Ended**                    | ** ** |
| ** **                                      | ** ** | **March 24, 2009**  | ** ** | **March 31, 2008** | ** ** |
| **Revenue:**                                    |       |                          |       |                         |       |
| Sale of  concentrates, net                      |       | $                             | 99,049     |                         | $          | 136,853 |   |
| **Costs  and expenses:**                        |       |                          |       |                         |       |
| Costs applicable  to sales                      |       | (59,955                       | )          | (67,805                      | )          |
| Management fee                                  |       | (1,350                        | )          | (1,350                       | )          |
| Asset retirement  accretion expense             |       | (232                          | )          | (169                         | )          |
| Loss on comodity  drivatives                    |       | —                        |       | (27,825                      | )          |
| Foreign currency  gain                          |       | 1,960                         |       | 4,863                        |       |
| Depreciation,  depletion and amortization       |       | (10,527                       | )          | (11,242                      | )          |
| Total costs and  expenses                       |       | (70,104                       | )          | (103,528                     | )          |
| Income from  operations                         |       | 28,945                        |       | 33,325                       |       |
| **Other  income and expenses:**                 |       |                          |       |                         |       |
| Interest and  other income                      |       | 67                            |       | 203                          |       |
| Interest expense  and other borrowing costs     |       | (22,233                       | )          | (13,007                      | )          |
| Total other  income and expenses                |       | (22,166                       | )          | (12,804                      | )          |
| Income before  income taxes                     |       | 6,779                         |       | 20,521                       |       |
| Income taxes                                    |       | (2,523                        | )          | (10,418                      | )          |
| Income before  sale of interest in subsidiaries |       | 4,256                         |       | 10,103                       |       |
| Loss on sale of  interest in subsidiaries       |       | (8,409                        | )          | —                       |       |
| **Income  (loss)from discontinued operations**  |       | $                             | (4,153     | )                            | $          | 10,103 |   |

 

The assets and liabilities of discontinued operationsreported in the consolidated balance sheets at December 31, 2008 consisted ofthe following (amounts in thousands):

 
| ** **                                  | ** ** | **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  Shareholder’s 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                 |       |
| Non-controlling  interest                   |       | 150,792               |       |
| Accumulated  earnings                       |       | 37,872                |       |
|                                        |       | $                     | 546,466    |   |

 

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There are no remaining assets or liabilities fromdiscontinued operations at March 31, 2009.

 

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**4.****              SignificantAccounting Policies**

 

*Recently Adopted Standards*

 

DuringMay2008theFinancialAccountingStandardsBoard(“FASB”)issuedFASBStaffPositionNo.APB14-1,“AccountingforConvertibleDebtInstrumentsThatMayBeSettledinCashUponConversion(IncludingPartialCashSettlement)”(“FSPNo.APB14-1”).  FSPNo.APB14-1appliestoconvertibledebtinstrumentsthat,bytheirstatedterms,maybesettledincash(orotherassets)uponconversion,includingpartialcashsettlement,unlesstheembeddedconversionoptionisrequiredtobeseparatelyaccountedforasaderivativeunderFinancialAccountingStandardsNo.133,“AccountingforDerivativesInstrumentsandHedgingActivities”(“FASNo.133”).  FSPNo.APB14-1willrequiretheliabilityandequitycomponentsofconvertibledebtinstrumentstobeseparatelyaccountedforinamannerthatwillreflecttheentity’snonconvertibledebtborrowingratewheninterestcostisrecognizedinsubsequentperiods.  AstheCompanydidnothavetheabilityorrequirementtocashsettletheNotesuponconversion,itdoesnothaveanyinstrumentsthatfallwithinthescopeofFSPNo.APB14-1andaccordinglytherewasnoimpactontheCompany’sconsolidatedfinancialposition,resultsofoperationsorcashflows.

 

During February 2008 the FASB issued StaffPosition No 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS157-2”). FSP FAS 157-2 delayed the effective date of Financial AccountingStandard No. 157 “Fair Value Measurements” (FAS No. 157”) by oneyear (until fiscal years beginning after November 15, 2008, or fiscal year2009 for the Company) for non-financial assets and non-financial liabilitiesthat are recognized or disclosed at fair value in the financial statements on anonrecurring basis. The Company adopted the provisions of FSP FAS 157-2 for theCompany’s nonfinancial assets and liabilities measured at fair value on anonrecurring basis on January 1, 2009.  The adoption did not have a material impact onthe Company’s financial position or results of operations.

 

During March 2008 the FASB issued Financial AccountingStandards No. 161, “Disclosures about Derivative Instruments and HedgingActivities—anAmendmentofFASBStatementNo.133”AccountingforDerivativeInstrumentsandHedgingActivities”(“FAS No. 161”).  FAS No. 161 enhances thedisclosure requirements under Financial Accounting Standard FAS No. 133 pertainingto how and why an entity uses derivative instruments, how derivative instrumentsand related hedge items are accounted for under FAS No. 133, and how derivativeinstruments and related hedge items affect an entity’s financial position, financialperformance, and cash flows.  The Companyadopted the provisions of FAS No. 161 on January 1, 2009, which did not impact theCompany’s disclosure requirements under FAS No. 133.

 

During December 2007the FASB issued FAS No. 141R which provides revised guidance on how anacquirer in a business combination recognizes and measures in its financialstatements the identifiable assets acquired, the liabilities assumed,non-controlling interests acquired, and goodwill acquired. Under fresh-startaccounting, the Company re-measured the assets and liabilities assumed fromASML at fair value and recorded a $9.1 million gain on reorganization per theguidance of FAS No. 141R and SOP 90-7.

 

DuringDecember2007theFASBissuedFinancialAccountingStandardsNo.160,“Non-controllingInterestsinConsolidatedFinancialStatements—anAmendmentofAccountingResearchBulletinNo.51,“ConsolidatedFinancialStatements”“(“FASNo.160”).Anon-controllinginterest,formerlycalledaminorityinterest,istheportionofequityinasubsidiarynotattributable,directlyorindirectly,toaparent.TheobjectiveofthisStandardistoimprovetherelevance,comparability,andtransparencyofthefinancialinformationthatareportingentityprovidesinitsconsolidatedfinancialstatementsbyestablishingaccountingandreportingstandardsrelatedtonon-controllinginterests.TheprovisionsofFASNo.160becameeffectiveforthePredecessoronJanuary1,2009andhavebeenappliedprospectively,exceptfortheprovisionsrelatedtothepresentationofnon-controllinginterests,whichhavebeenappliedretrospectivelyforallperiodspresented.UponadoptionofFASNo.160,non-controllinginterestsofapproximately$150.8millionasofDecember31,2008wererecasttoacomponentoftotalequityintheconsolidatedbalancesheet.  Inaddition,priortotheadoptionofFASNo.160,GAAPdidnotpermittheallocationoflossestothenon-controllinginterestinexcessofthenon-controllinginterest’srecordedinterestinthesubsidiary.AtDecember31,2008,anon-controllinginterestofthePredecessorhadaccumulatedapproximately$2.4millionofsuchunallocatedlosses.

 

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At March 31,2009 the Company had no activities which would require the reporting of anon-controlling interest.

 

**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 following tables summarize the Company’s investments at March 31,2009 and December 31, 2008:

 
| ** **                | ** ** | ** ** | ** ** | **Estimated**           | ** ** | **Carrying** | ** ** |
|---------------------------|------------|------------|------------|-------------------------|------------|--------------|------------|
| **March 31, 2009**   | ** ** | **Cost**   | ** ** | **Fair Value**          | ** ** | **Value**    | ** ** |
| ** **                | ** ** | ** ** | ** ** | **(in thousands)** | ** ** | ** **   | ** ** |
| Succesor                  |       |       |       |                    |       |         |       |
| Investments:              |       |       |       |                    |       |         |       |
| Short-term:               |       |       |       |                    |       |         |       |
| Available  for sale       |       |       |       |                    |       |         |       |
| Common  stock             |       | $          | 88         |                    | $          | 88           |       | $ | 88 |   |
| Total  available for sale |       | 88         |       | 88                      |       | 88           |       |
| Total  short term         |       | $          | 88         |                    | $          | 88           |       | $ | 88 |   |
| Long-term:                |       |       |       |                    |       |         |       |
| Available  for sale       |       |       |       |                    |       |         |       |
| Auction  rate securities  |       | 5,249      |       | 5,249                   |       | 5,249        |       |
| Total  available for sale |       | 5,249      |       | 5,249                   |       | 5,249        |       |
| Total  long term          |       | $          | 5,249      |                    | $          | 5,249        |       | $ | 5,249 |   |

 
| ** **                 | ** ** | ** ** | ** ** | **Estimated**           | ** ** | **Carrying** | ** ** |
|----------------------------|------------|------------|------------|-------------------------|------------|--------------|------------|
| **December 31, 2008** | ** ** | **Cost**   | ** ** | **Fair  Value**         | ** ** | **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 |   |

 

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Quoted market prices at March 31,2009 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.

 

*AuctionRate Security Investments (ARS)*

 

At March 31, 2009the Company held investments in ARS with an estimated adjusted fair value of$5.2 million for which there is currently no liquid market. The estimated fairvalue of the ARS was determined by the Company with the assistance of a thirdparty valuation firm.  The Companycontinues to monitor the liquidity of the ARS markets.  The ultimate disposition of the remaining ARSmay result in recoverable values that are significantly different from theestimates made by management and the Company may be required to recognizeadditional impairments.

 

*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. (See the discussion above regardingthe Company’s ARS investments.)

 

**6.****              Prepaidexpenses and other assets**

 

Prepaid expenses andother assets consist of the following:

 
| ** **                                   | ** ** | **March 31,**  | ** ** | ** ** | **December**    | ** ** |
|----------------------------------------------|------------|---------------------|------------|------------|-----------------|------------|
| ** **                                   | ** ** | **2009**            | ** ** | ** ** | **2008**        | ** ** |
| ** **                                   | ** ** | **Successor**       | ** ** | ** ** | **Predecessor** | ** ** |
| ** **                                   | ** ** | **(in  thousands)** | ** ** |
| Current  portion of note receivable          |       | $                   | —     |       |            | $          | 2,079 |   |
| Prepaid  insurance                           |       | 950                 |       |       | 3,356           |       |
| Prepaid  reorganization fees                 |       | 171                 |       |       | —          |       |
| Accrued  interest on investments             |       | 152                 |       |       | 236             |       |
| Prepaid  contractor fees and vendor advances |       | 173                 |       |       | 7,266           |       |
| Insurance  premium refund receivable         |       | —              |       |       | 778             |       |
| Other                                        |       | 196                 |       |       | 1,835           |       |
|                                         |       | $                   | 1,642      |       |            | $          | 15,550 |   |

 

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 consist primarily of advance payments madeto contractors and suppliers for mining and processing supplies and services atthe San Cristóbal mine.   Each of theseamounts was eliminated in the sale of the San Cristóbal mine to Sumitomo.

 

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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 March 31, 2009, as all inventories were associated with theSan Cristóbal assets sold (see Notes 1 and 3).

 

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

 

**8.****              ValueAdded Tax Recoverable**

 

The Company has recordedvalue added tax (“VAT”) paid in Bolivia and related to the San Cristóbal mineas a recoverable asset. At March 31, 2009, the Company had no recoverableVAT as all recoverable VAT was associated with the San Cristóbal assets sold(see Notes 1 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.

 

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**9.****              Property,Plant and Equipment**

 

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

 
| ** **                      | ** ** | **March 31,**  | ** ** | ** ** | **December 31,** | ** ** |
|---------------------------------|------------|---------------------|------------|------------|-----------------------|------------|
| ** **                      | ** ** | **2009**            | ** ** | ** ** | **2008**              | ** ** |
| ** **                      | ** ** | **Successor**       | ** ** | ** ** | **Predecessor**       | ** ** |
|                            |       | **(in  thousands)** |       |
| Mining  properties              |       | $                   | —     |       |                  | $          | 49,596 |   |
| Exploration  properties         |       | 9,338               |       |       | —                |       |
| Construction  in progress       |       | —              |       |       | 14,782                |       |
| Buildings                       |       | 800                 |       |       | 3,709                 |       |
| Mining  equipment and machinery |       | 1,889               |       |       | 123,139               |       |
| Other  furniture and equipment  |       | 630                 |       |       | 5,128                 |       |
|                            |       | 12,657              |       |       | 196,354               |       |
| Less:  Accumulated depreciation |       | (9                  | )          |       | (56,446               | )          |
|                            |       | 12,648              |       |       | 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                |       |
|                            |       | $                   | 12,648     |       |                  | $          | 202,534 |   |

 

The increase in explorationproperties is the result of recording certain of the Company’s explorationproperties at fair market value per the requirements of fresh start accountingas discussed in Note 1.

 

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.

 

**10.****       AccountsPayable and Other Accrued Liabilities**

 

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

 
| ** **                                  | ** ** | **March 31,**  | ** **  | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|---------------------|-------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2009**            | ** **  | ** ** | **2008**              | ** ** |
| ** **                                  | ** ** | **Successor**       | ** **  | ** ** | **Predecessor**       | ** ** |
| ** **                                  | ** ** | **(in  thousands)** | ** **  |
| Trade  accounts payable and accruals        |       | $                   | 7,431       |       |                  | $          | 27,502 |   |
| Deferred  revenue                           |       | —              |        |       | $                     | 3,227      |   |
| Amounts  due smelters                       |       | —              |        |       | 7,974                 |       |
| Income  taxes payable                       |       | —              |        |       | 1,764                 |       |
| Accrued  employee compensation and benefits |       | 697                 |        |       | 8,394                 |       |
|                                        |       | $                   |  8,128 |       |                  | $          | 48,861 |   |

 

At March 31, 2009,approximately $2.3 million of the trade accounts payable and accruals isrelated to professional fees incurred with respect to the sale of the SanCristóbal mine and $2.3 million is related to professional services related tothe Chapter 11 reorganization.  Theremaining $2.9 million of trade accounts payable and accruals at March 31,2009, is primarily related to amounts due to exploration contractors andconsultants and accounting and legal professionals.

 

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Accrued employeecompensation and benefits at March 31, 2009 consist of $0.4 million ofwithholding taxes and benefits payable.

 

**11.****       Debt**

 

The Company’s debt at December 31,2008 consists 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 1).

 

*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 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 March 31, 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 and 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 for the 90% of the facility owned by Sumitomo were terminated as partof 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 March 31,2009, the Company had no further obligations related to the Facility.

 

The Company segregatescash, the use of which is restricted by contractual agreement, and reportsthese amounts separately in the financial statements.  At December 31, 2008 the Company had$20.6 million, the use of which was restricted to providing operating capitalfor the San Cristóbal mine and the payment of the Facility principal andinterest as current restricted cash.

 

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*SumitomoNote Assignment*

 

During 2006 and2007 ASML loaned funds to San Cristóbal Transportadad de Eletricidad S.A. (“SC TESA”), the contractor thatconstructed the power line for the San Cristóbal mine, and received apromissory 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 March 31, 2009, the Company had no further obligations relatedto the note assignment.

 

*CapitalLeases*

 

Certain mining equipmentused by the contractor that provides mining services for the San Cristóbal minehas 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 March 31, 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 storagefacilities.  ASML determined that aleasing arrangement exists with respect to those assets.  As of December 31, 2008 ASML hadrecorded on its balance sheet $11.5 million of plant and equipment, net ofaccumulated depreciation, and a financing obligation of $11.7 million relatedto the port facility.  Following the saleof the San Cristóbal mine to Sumitomo, the Company retained no interest in thecontracts or other rights or 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 March 31,2009 the Company had no obligations related to the working capital line ofcredit.

 

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**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**     | ** ** | **Year Ended**   | ** ** |
|------------------------------------|------------|--------------------|------------|------------------|------------|
| ** **                         | ** ** | **ended March**    | ** ** | **December 31,** | ** ** |
| ** **                         | ** ** | **24, 2009**       | ** ** | **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 |   |

 

Allasset retirement obligations of the Company were terminated in connection withthe sale of the San Cristóbal mine.  At March 31,2009 the Company has 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 Financial Accounting Standards No. 157 (“FAS No. 157”)for the financial assets and liabilities and nonfinancial assets andliabilities which are measured at fair value on a recurring (annual)basis.  FAS No. 157 establishes aframework for measuring fair value in the form of a fair value hierarchy whichprioritizes the inputs into valuation techniques used to measure fair valueinto three broad levels.  This hierarchygives the highest priority to quoted prices (unadjusted) in active markets andthe lowest priority to unobservable inputs. Further, financial assets and liabilities should be classified by levelin their entirety based upon the lowest level of input that was significant tothe fair value measurement.  The threelevels of the fair value hierarchy per FAS No. 157 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 March 31, 2009,by respective level of the fair value hierarchy:

 

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| ** **                                | ** ** | **Level 1**        | ** **  | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|-------------------------------------------|------------|--------------------|-------------|-------------|------------|-------------|------------|-----------|------------|
| ** **                                | ** ** | **(in thousands)** | ** **  |
| Assets:                                   |       |               |        |        |       |        |       |      |       |
| Cash equivalents                          |       | $                  | 9,000       |        | $          | —      |       | $         | —     |   | $ | 9,000 |   |
| Short-term  available for sale securities |       | 88                 |        | —      |       | —      |       | 88        |       |
| Auction rate  securities                  |       | —             |        | —      |       | 5,249       |       | 5,249     |       |
|                                      |       | $                  |  9,088 |        | $          | —      |       | $         | 5,249      |   | $ | 14,337 |   |

 

The Company’s cashequivalents are classified within Level 1 of the fair value hierarchy.  These securities are comprised principally oftime deposits which have been valued using quoted prices in active markets.

 

The Company’s short-termavailable for sale securites 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 areclassified within Level 3 of the fair value hierarchy.   These securities are valued by the Company,with the assistance of a third party valuation firm.  The ARS are classified into two categories,collateralized debt obligations (“CDOs”) and corporate debt.  The CDOs are valued by estimating the valueof the underlying collateral using significant assumptions regarding default,recovery and prepayment rates, and factoring these estimated collateral valuesin conjunction with the tranche for pay-out of the underlying collateral thatthe Company holds in each respective security. The corporate debt ARS are valued based upon the estimated present valueof expected cash flows using a Monte Carlo simulation model taking into accountsignificant assumptions regarding coupon payments, recovery, and redemptionvalues.  The Company uses thesesignificant Level 3 inputs as there is no current market activity for these, orsimilar, securities nor relevant corroborating market data with readilyobservable inputs to support a Level 1 or 2 valuation.

 

The following tablesummarizes the change in fair value of the Company’s Level 3 financial assets(ARS):

 
| ** **         | ** ** | **Three Months**        | ** ** |
|--------------------|------------|-------------------------|------------|
| ** **         | ** ** | **Ended**               | ** ** |
| ** **         | ** ** | **March 31, 2009** | ** ** |
| ** **         | ** ** | **(in thousands)**      | ** ** |
| Beginning  balance |       | $                       | 5,101      |   |
| Realized losses    |       | (827                    | )          |
| Unrealized gains   |       | 975                     |       |
| Ending balance     |       | $                       | 5,249      |   |

 

**14.  Income Taxes**

 

The Company, a Delawarecorporation, and 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 tax benefits,representing uncertain tax positions taken or expected to be taken on taxreturns, were $1.4 million and $2.3 million as of March 31, 2009 and December 31,2008, respectively.  Of these, $1.4 millionand $2.3 million resulted in a reduction to the Company’s deferred tax assetsas of March 31, 2009 and December 31, 2008, respectively.  As a result of the reorganization, pursuantto the Plan, the Company reduced unrecognized tax benefits by $0.9 million.

 

For the seven days ended March 31,2009, the Company incurred operating losses, and recognized income tax of $26,000due to withholding tax on management services provided to Bolivia.  Based on the limited history of the Company,an estimated effective tax rate is not used to report the year-to-date

 

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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 first quarter 2008, the Predecessorrecognized income tax of $0.1 million for Bolivia withholding tax, and incometax of $10.4 million is included in discontinued 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 is limited to the fair value placed on them for fresh start purposes.  A deferred tax liability of $0.5 million has beenrecognized for fresh start purposes for assets that were received for which thefresh start value exceeded the tax basis.

 

**15.  Shareholders’ Equity**

 

*StockOption 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 $0.5million and $0.9 million for the 83 day period ended March 24, 2009 andthe three month period ended March 31, 2008, respectively.

 

Asdiscussed in Note 1, Predecessor’s equity holders received no recovery underthe Plan following emergence from Chapter 11. As such, the following shares underlying awards granted under the StockPlans are being cancelled and the holders of grants under the Stock Plans haveno further rights or recovery: approximately 2.5 million stock optiongrants to employees and directors, with an average exercise price of $14.83;211,975 restricted share grants to employees, with a weighted average grantdate fair value of $15.22 per share; and 55,549 restricted stock units grantedto directors, with a weighted average grant date fair value of $11.70 per unit.Per the guidance of Financial Accounting Standards “Statement No. 123(revised 2004) Share-Based Payment” (“FAS No. 123R”), ASML recognized $2.4million of compensation expense related to the stock options, restricted sharegrants and restricted stock unit grants cancelled.  The compensation expense recognized was theunrecognized grant date fair value of the options and grants remaining at thedate of cancellation.  In addition,350,000 warrants, held by third parties, to purchase Ordinary Shares at a priceof $20.79 per Ordinary Share are being cancelled.  There were no outstanding options, restrictedshares or warrants at March 31, 2009.

 

Inconnection with the Plan, the 2009 Equity Incentive Plan was adopted by theCompany and on April 3, 2009, the Company’s board of directors grantedshares of restricted common stock to the Company’s executive officers andemployees pursuant to such plan (see Subsequent Event Note 20).

 

**16.  Non-controlling Interest**

 

On January 1, 2009the Company adopted FAS No. 160 related to non-controlling interest,previously called a minority interest.  Anon-controlling interest is the portion of equity in a subsidiary notattributable, directly or indirectly, to a parent. The objective of thisStandard is to improve the relevance, comparability, and transparency of thefinancial information that a reporting entity provides in its consolidatedfinancial statements by establishing accounting and reporting standards relatedto non-controlling interests. The Company applied the provisions of FAS No. 160prospectively, except for the provisions related to the presentation ofnon-controlling interests, which have been applied retrospectively for allperiods presented. Upon adoption of FAS No. 160, non-controlling interestsof approximately $150.8 million as of December 31, 2008 were recast to acomponent of total equity in the consolidated balance sheet.

 

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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** | ** ** | **Three Months**   | ** ** |
| ** **                                                                                                 | ** ** | **Through**                           | ** ** | **Through**              | ** ** | **Ended**          | ** ** |
| ** **                                                                                                 | ** ** | **March 31, 2009**                    | ** ** | **March 24, 2009**       | ** ** | **March 31, 2008** | ** ** |
| ** **                                                                                                 | ** ** | **(Successor)**                       | ** ** | **(Predecessor)**        | ** ** |
| ** **                                                                                                 | ** ** | **(in thousands, except share data)** | ** ** |
| Amounts  attributable to Golden Mineral common shareholders and Predecessor’s ordinary  shareholders: |       |                                  |       |                     |       |               |       |
| Income (loss)  from continuing operations                                                                  |       | $                                     | (683       | )                        | $          | 243,621            |       | $ | (12,077 | ) |
| Discontinued operations                                                                                    |       | —                                |       | (12,022                  | )          | 37,797             |       |
| Net income  (loss)                                                                                         |       | $                                     | (683       | )                        | $          | 231,599            |       | $ | 25,720 |   |

 

*Sumitomo Corporation*

 

The Predecessorconsolidated 100% of the accounts of the San Cristóbal mine and recordedSumitomo’s 35% non-controlling 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 tonon-controlling interest.

 

Net income attributableto the Predecessor for the period January 1, 2009 through March 24,2009, includes $7.9 million of non-controlling interest expense related toSumitomo’s interest in the San Cristóbal mine earnings during that period (seeNote 3).

 

At March 31, 2009,subsequent to the sale of the San Cristóbal mine, the Company has nonon-controlling interest related 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 FASB Interpretation No. 46R, “VariableInterest Entities,” 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 non-controlling 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 non-controlling interest expense related to SC TESA’sintercompany profit (see Note 3).

 

At March 31, 2009,subsequent to the sale of the San Cristóbal mine, the Company has nonon-controlling interest related to SC TESA recorded on its books.

 

**17.  Revenue and Cost of Services**

 

On the Effective Date,the Company entered into the Management Agreement under which it will providecertain management services with respect to the San Cristóbal mine.  The Management Agreement provides for a baseannual fee of $6 million.  Additionally,the Management Agreement provides for the reimbursement to the Company ofadditional costs incurred by the Company directly related to San Cristóbalexpatriate employee administration and other expenses, estimated at $3.5million annually.  Under the terms of theManagement Agreement, the Company will receive the fee and any reimbursementsnet of any Bolivian withholding taxes. The base fee and reimbursements received for the expatriate services andother expenses, including the Bolivian withholding taxes, that are directlyreimbursable under

 

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the terms of theManagement Agreement are reported as “Revenue from Services” in the statementof operations following the guidance of Emerging Issues Task Force 01-14  (“EITF 01-14”) and Emerging Issues Task Force99-19  (“EITF 99-19”), both of which supportrecording as gross revenue fees received for the reimbursement of expenses insituations where the recipient is the primary obligor and has certaindiscretion in the incurrence of the reimbursable expense.  The actual costs incurred for the reimbursedexpatriate services and other expenses will be reported as costs of services inthe statement of operations.  ReimbursedBolivian withholding taxes will be reported as income taxes in the statement ofoperations.  For the 7-day period ended March 31,2009, the Company recorded in its statement of operations revenue from servicesof $211,000, costs of services of $80,000 and incomes taxes of $26,000 allrelated to the Management Agreement. Prior to entering into the Management Agreement, ASML received a managementfee of $450,000 per month from San Cristóbal to cover certain costs incurreddirectly by ASML including expatriate employee administration and otherexpenses.

 

**18.  Commitments and Contingencies**

 

*OtherContingencies*— As previously disclosed, the Company concluded, based on the results of aninternal investigation conducted under the direction of its Audit Committee inlate 2005 and early 2006, that certain former senior employees of one of itsSouth American subsidiaries were involved in making impermissible payments ofapproximately $125,000 to government officials in 2003 and 2004 in connectionwith an inactive, early stage exploration property that is not related to anyof the Company’s current or former active exploration or operating properties.Based on findings to date, no changes to the Company’s previously filedfinancial statements are warranted as a result of these matters. The Companycontacted the Department of Justice (“DOJ”) and Securities and ExchangeCommission (“SEC”) during 2006 and reported the results of the internalinvestigation. The Company was informed that the SEC and DOJ commenced aninvestigation with respect to these matters, including possible violations ofthe Foreign Corrupt Practices Act. On January 7, 2009, the Companyreceived a “Wells notice” from the staff of the SEC (the “Staff”), which statedthat the Staff intended to recommend to the SEC that an enforcement action becommenced against the Company, alleging that the Company violated Sections13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and 30A of the Securities Exchange Actof 1934. The Wells notice further stated that the Staff may seek permanentinjunctive relief, disgorgement, prejudgment interest and civil money penaltiesagainst the Company. The Company has submitted a Wells Statement putting forthreasons that the SEC should not institute civil enforcement proceedings againstit.

 

The Company haslearned that the Staff also issued Wells notices to individuals who served asChief Financial Officer and executive Chairman of the Board of the Predecessorduring the period of the alleged illegal payments. A Wells notice indicatesthat the Staff believes there may be sufficient evidence of a potentialviolation of the federal securities laws to consider making a recommendation tothe SEC commissioners that civil enforcement proceedings should be instituted.

 

The Company iscooperating fully with the SEC and DOJ investigations. The Company cannotpredict with any certainty the final outcome of the investigations, includingany fines or penalties that may be imposed.

 

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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** | ** ** | ** ** | **For The Period**       | ** ** | ** **         | ** ** |
|----------------------------------------------------------------------|------------|--------------------|------------|------------|--------------------------|------------|--------------------|------------|
| ** **                                                           | ** ** | **March 25, 2009** | ** ** | ** ** | **January 1, 2009** | ** ** | **Three Months**   | ** ** |
| ** **                                                           | ** ** | **Through**        | ** ** | ** ** | **Through**              | ** ** | **Ended**          | ** ** |
| ** **                                                           | ** ** | **March 31, 2009** | ** ** | ** ** | **March 24, 2009**       | ** ** | **March 31, 2008** | ** ** |
| ** **                                                           | ** ** | **(Successor)**    | ** ** | ** ** | **(Predecessor)**        | ** ** |
| ** **                                                           | ** ** | **(in thousands)** | ** ** |
| Cash flows from  operating activities:                               |       |               |       |       |                     |       |               |       |
| Net income  (loss)                                                   |       | $                  | (683       | )          |                     | $          | 231,599            |       | $ | 25,720 |   |
| Adjustments to  reconcile net income (loss) to net                   |       |               |       |       |                     |       |               |       |
| cash provided by  (used in) operating activities:                    |       |               |       |       |                     |       |               |       |
| Amortization and  depreciation                                       |       | 9                  |       |       | 10,977                   |       | 11,403             |       |
| Amortization of  deferred financing costs                            |       | —             |       |       | —                   |       | 1,252              |       |
| Accretion of  asset retirement obligation                            |       | —             |       |       | 232                      |       | 169                |       |
| Amortization of  premiums and discounts                              |       | —             |       |       | 37                       |       | (180               | )          |
| Mark-to-market  (gain) loss on derivative positions                  |       | —             |       |       | 36                       |       | 27,825             |       |
| Loss on auction  rate security investments                           |       | —             |       |       | 828                      |       | —             |       |
| Gain on  extingushment of debt                                       |       | —             |       |       | (248,165                 | )          | —             |       |
| Loss on sale of  interest in subsidiary                              |       | —             |       |       | 8,409                    |       | —             |       |
| Fresh start  accounting adjustment                                   |       | —             |       |       | (9,122                   | )          |               |       |
| Noncontrolling  interest in income (loss) of consolidated subsidiary |       | —             |       |       | 7,869                    |       | (27,694            | )          |
| Stock  compensation                                                  |       | —             |       |       | 2,920                    |       | 1,071              |       |
| Changes in  operating assets and liabilities:                        |       |               |       |       |                     |       |               |       |
| Decrease in  trade accounts receivable                               |       | —             |       |       | (11,893                  | )          | (16,821            | )          |
| (Increase)  decrease in accrued interest receivable                  |       | (124               | )          |       | 84                       |       | 398                |       |
| Port fees  applied to Port of Mejillones note receivable             |       | —             |       |       | 709                      |       | 682                |       |
| Increase  (decrease) in prepaid expenses and other assets            |       | —             |       |       | 6,063                    |       | (4,917             | )          |
| Increase in  inventories                                             |       | —             |       |       | (12,000                  | )          | (21,184            | )          |
| Increase in value  added tax recoverable, net                        |       | —             |       |       | (11,696                  | )          | (11,698            | )          |
| Increase in  accrued interest payable                                |       | —             |       |       | 11,496                   |       | 898                |       |
| Increase in  deferred revenue                                        |       | —             |       |       | (3,227                   | )          | —             |       |
| Increase  (decrease) in accounts payable and accrued                 |       |               |       |       |                     |       |               |       |
| liabilities net  of amounts capitalized                              |       | (449               | )          |       | 2,462                    |       | 7,288              |       |
| Decrease in  deferred taxes, net                                     |       | —             |       |       | (2,262                   | )          | 4,578              |       |
| Other increase  (decrease)                                           |       | —             |       |       | 795                      |       | 106                |       |
| Net cash  provided by (used in) operating activities                 |       | $                  | (1,247     | )          |                     | $          | (13,849            | )          | $ | (1,104 | ) |

 

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

 
| ** **                                          | ** ** | **For The Period** | ** ** | ** ** | **For The Period**       | ** ** | ** **         | ** ** |
|-----------------------------------------------------|------------|--------------------|------------|------------|--------------------------|------------|--------------------|------------|
| ** **                                          | ** ** | **March 25, 2009** | ** ** | ** ** | **January 1, 2009** | ** ** | **Three Months**   | ** ** |
| ** **                                          | ** ** | **Through**        | ** ** | ** ** | **Through**              | ** ** | **Ended**          | ** ** |
| ** **                                          | ** ** | **March 31, 2009** | ** ** | ** ** | **March 24, 2009**       | ** ** | **March 31, 2008** | ** ** |
| ** **                                          | ** ** | **(Successor)**    | ** ** | ** ** | **(Predecessor)**        | ** ** |
| ** **                                          | ** ** | **(in thousands)** | ** ** |
| Supplemental  disclosure:                           |       |               |       |       |                     |       |               |       |
| Interest paid,  net of amounts capitalized          |       | $                  | —     |       |                     | $          | —             |       | $ | 11,516 |   |
|                                                |       |               |       |       |                     |       |               |       |
| Supplemental  disclosure of non-cash transactions:  |       |               |       |       |                     |       |               |       |
| Initial  measurement of asset retirement obligation |       | $                  | —     |       |                     | 288        |               | $          | 756 |   |
|                                                     |            |                    |            |            |                          |            |                    |            |  |  |  |

 

**20.  Subsequent Events**

 

On April 3,2009, the Company’s board of directors granted 270,000 shares of restrictedcommon stock to the Company’s executive officers and employees pursuant to theCompany’s 2009 Equity Incentive Plan.  One-halfof the shares awarded will vest on the first anniversary of the grant date andone-half will vest on the second anniversary of the grant date, provided thatthe officer or employee is employed by or continues to serve the Company on theapplicable vesting date.

 

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**Item2:   Management’s Discussion and Analysisof Financial Condition and Results of Operations**

 

**General**

 

GoldenMinerals Company (“Golden” or “we”) is the successor to Apex Silver MinesLimited (“ASML”) for purposes of reporting under U.S. federal securitieslaws.  References in this discussion andanalysis to “Successor” refer to Golden and its subsidiaries on or after March 25,2009, after emergence from Chapter 11 bankruptcy proceedings (“Chapter 11”), asmore fully described in footnote 1 to the consolidated financialstatements.  References to “Predecessor”refer to ASML and its subsidiaries prior to March 25, 2009.

 

Thefollowing discussion and analysis summarizes the results of operations of thePredecessor and Golden for the 83 day period ended March 24, 2009 and the7 day period ended March 31, 2009, respectively and changes in ourfinancial condition from December 31, 2008.  This discussion should be read in conjunctionwith Management’s Discussion and Analysis included in ASML’s Annual Report on Form 10-Kfor the period ended December 31, 2008.

 

**Overview**

 

Prior toour emergence from Chapter 11, ASML was the 65% owner and operator of the SanCristóbal mine in Bolivia, and all production and financial information for SanCristóbal prior to March 25, 2009 is expressed on a 100% consolidationbasis.  After emergence from Chapter 11,and the sale of our remaining interest in the San Cristóbal mine to Sumitomo Corporation(“Sumitomo”) on March 24, 2009, we are primarily engaged in theexploration and advancement of our portfolio of approximately 45 explorationproperties located primarily in South America and Mexico and in managing theSan Cristóbal mine under the terms of the Management Agreement we entered intoon March 24, 2009.

 

Concentrator throughputat the San Cristóbal mine during the 83-day period averaged 42,000 tonnes perday, exceeding the 40,000 tonnes per day designed capacity.  Zinc concentrate production during the periodwas approximately 109,000 tonnes and lead concentrate production during theperiod was approximately 28,000 tonnes. Payable metal production from the San Cristóbal mine during the periodtotaled approximately 4.1 million ounces of silver, 54,000 tonnes of zinc and18,000 tonnes of lead.  Recovery ratesduring the period were approximately 64% for silver, 82% for zinc, and 72% forlead.  Although prices for silver, zinc,and lead remained at approximately the same levels as the previous quarter,operating margins improved due to declining costs for reagents, diesel fuel andother materials.

 

During the currentperiod, we continued to evaluate our exploration properties, includingadditional drilling on our El Quevar silver project in northwestern Argentina,and a first-stage drilling program at our Microondas project in centralMexico.  At El Quevar, we drilled 10holes totaling approximately 2,900 meters. These holes were primarily designedto test extensions to the east and west of our main mineralized zone.  Our preliminary results confirm that the zoneextends about 400 meters further west and 350 meters east of the previouslyknown mineralization. We also conducted a first stage drill test of ourMicroondas silver-gold vein project in Zacatecas, Mexico. We completed 5 holestotaling approximately 1,000 meters. Results received to date have not been encouraging.  We continue to advance our field evaluationsof certain of our more interesting prospects in preparation for possible drilltesting later in the year.

 

A compulsory liquidationproceeding has been initiated for ASML in the Cayman Islands, and the ordinaryshares of ASML will be canceled in that proceeding.

 

At our emergence fromChapter 11, we had approximately 3,200 beneficial shareholders.  We are pursuing a listing of our common stockon the Toronto Stock Exchange and trading in the United States in theover-the-counter market or a U.S. national securities exchange.  As of the date of this report, our commonstock is not listed and there is no liquid market for our common stock.

 

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**Resultsof Operations for the Predecessor (83-day Period Ended March 24, 2009)**

 

Set forthbelow is a summary of the significant components of our revenues and expensesfor the 83-day period ended March 24, 2009.  Our operations have changed substantially asa result of the sale of our interests in the San Cristóbal mine to Sumitomo inconnection with our emergence from Chapter 11 (see Note 1 to the consolidatedfinancial statements).  Accordingly, theresults of operations of the San Cristóbal mine and related subsidiaries soldare aggregated and presented as discontinued operations on the ConsolidatedStatements of Operations and Comprehensive Income (Loss) through March 24,2009, the date of the sale (see Notes 1 and 3).

 

*DiscontinuedOperations — San Cristóbal.*

 

Theaggregated results of operations for the discontinued San Cristóbal minetotaled a $4.2 million loss and $10.1 million gain for the 83-day period ended March 24,2009 and the quarter ended March 31, 2008 respectively. Revenue from salesof concentrates were $99.0 million and $136.9 million for the 83-day periodended March 24, 2009 and the quarter ended March 31, 2008,respectively. Costs applicable to sales were $60.0 million and $67.8 millionfor the same periods, respectively.

 

Duringthe 83-day period ended March 24, 2009, we completed the sale of ourinterest in San Cristóbal to Sumitomo (see Note 1 to the financial statements)and recognized a loss of $8.4 million related to the transaction. In previousperiods the value of the San Cristóbal asset group had been written downsubstantially.  For the year ended December 31, 2008, we recognized anaggregate impairment loss on the San Cristóbal asset group totaling$625.6 million*.*The finalloss included $27.7 million in proceeds net of selling costs we incurredrelated to the transaction.  The $8.4million loss is included in discontinued operations.

* *

*ContinuingOperations*

* *

*Exploration*. Our explorationexpenses, including property holding costs and allocated administrativeexpenses, were $3.5 million for the 83-day period ended March 24, 2009, ascompared to $6.2 million for the quarter ended March 31, 2008.  Exploration expense was incurred primarily inArgentina, Mexico and Peru. During 2009, we increased drilling programs andother geologic testing to increase the rate of evaluation of many of ourproperties. None of the exploration expenses reported relate to San Cristóbal**.**

 

*Administrative and reorganization*. Administrative and reorganization expenses were $11.2 million and $6.2million for the 83-day period ended March 24, 2009 and the quarter ended March 31,2008, respectively.  Administrativeexpenses are incurred primarily by our corporate activities and consistprimarily of compensation costs, professional fees paid for accounting andlegal services, office and equipment lease costs and other general costs.  Reorganization expenses relate to expensesfor professional services incurred as a result of our bankruptcy filing and thesale of our interest in the San Cristóbal mine to Sumitomo.  Administrative and reorganization expensesduring 2009 were higher than the prior period due primarily to increased costsassociated with the Chapter 11 bankruptcy proceedings and the sale of the SanCristóbal mine.

 

*Loss on Auction Rate Securities.* For the 83-day period ended March 24, 2009 we recorded a loss of$0.8million related to our auction rate securities (“ARS”) investments.  The impairment charge was the result ofdeteriorating markets for certain of the ARS we hold for which the auctionscontinue to fail. For the quarter ended March 31, 2008 we did notrecognized an impairment charge related to our ARS.  The auctions for certain of the ARS began tofail during the third quarter of 2007 and continued to fail through March 31,2009.  At March 24, 2009, thecarrying value of our ARS is $5.2 million.

 

*Interestand Other Income*.  We recorded interest and other income of $1.0million and $1.8 million for the 83-day period ended March 24, 2009 andthe quarter ended March 31, 2008, respectively.  We held lower average cash and investmentbalances during 2009 as compared to the same period in 2008, which resulted inlower interest being earned.  Inaddition, interest rates were lower during 2009 as compared to the precedingyears.

 

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*Royalty Income*. During the 83-day period ended March 24, 2009 and the quarter endedMarch 31, 2008, we earned $0.1 million and $0.0 million, respectively, ofroyalty income from the Platosa property in Mexico on which we retained a netsmelter return royalty.  The property isbeing test mined by a joint venture partner, and we receive a royalty forproduct sold from the test mining operation.

 

*Interest Expense and OtherBorrowing Costs*.  Forthe 83-day period ended March 24, 2009 and the quarter ended March 31,2008, we recorded interest expense and other borrowing costs in the amounts of$0.3 million and $2.6 million, respectively. Interest expense and other borrowing costs consist of interest incurredon ASML’s 2.875% and 4% Convertible Senior Subordinated Notes due 2024 (the “SubordinatedNotes”).  We ceased accruing interest onthe Subordinated Notes following our filing for protection under Chapter 11 on January 12,2009 and the Subordinated Notes were cancelled on March 24, 2009 inconnection with our emergence from bankruptcy. Had we not been in Chapter 11 bankruptcy between January 12, 2009and the Effective Date, the Notes would have accrued and additional $1.9million of interest.

 

*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 $0.2 and $0.1for the 83-day period ended March 24, 2009 and the quarter ended March 31,2008, respectively, consist of withholding taxes either accrued or paid toBolivia in connection with the San Cristóbal mine.

 

**Resultsof Operations for the Successor (7-day Period Ended March 31, 2009)**

 

Our operations have changed substantially as a resultof the sale of our interests in the San Cristóbal mine to Sumitomo inconnection with our emergence from Chapter 11 (see Note 1 to the financialstatements).  Revenue and costs fromproviding management services, exploration, administrative and reorganizationexpenses, and royalty and interest income reflect a proration of such revenueand expenses incurred during the quarter ended March 31, 2009 to the final7-day period of the quarter.

 

As part of the San Cristóbal sale, on the EffectiveDate, Golden Services entered into the Management Agreement under which it willcontinue to provide certain management services with respect to the SanCristóbal mine.  The Management Agreementprovides for a base annual fee of $6 million. Additionally, the Management Agreement provides for the reimbursement toGolden of additional costs incurred by Golden directly related to San Cristóbalexpatriate employee administration and other expenses, estimated at $3.5million annually.  Under the terms of theManagement Agreement, Golden will receive the fee and any reimbursements net ofany Bolivian withholding taxes.  Ouranticipated annual cash flow from providing management services to the SanCristóbal mine, net of reimbursable expenses and taxes, is approximately $6million.  The base fee and reimbursementsreceived for the expatriate services and other expenses, including the Bolivianwithholding taxes, that are directly reimbursable under the terms of theManagement Agreement are reported as “Revenue from Services” in the statementof operations. The actual costs incurred for the reimbursed expatriate servicesand other expenses will be reported as “Costs of Services” in the statement ofoperations.  Reimbursed Bolivianwithholding taxes will be reported as income taxes in the statement ofoperations.  For the 7-day period ended March 31,2009, the Company recorded in its statement of operations revenue from servicesof approximately $211,000, costs of services of approximately $80,000 andincomes taxes of approximately $26,000 all related to the Management Agreement.

 

**Liquidityand Capital Resources**

 

At March 31, 2009 our aggregate cash and shortand long-term investments totaled $29.7 million compared to an aggregate of$76.1 million in cash, restricted cash, short and long-term investments andrestricted investments at December 31, 2008.  The March 31, 2009 amount includes ARSinvestments recorded at a fair market value of $5.2 million.  The amounts held at December 31, 2008included $5.1 million of ARS investments, $20.1 million in cash and cashequivalents restricted for the purpose of funding the San Cristóbal mine and$0.5 million of cash that was restricted to collateralize certain letters ofcredit. The decrease in our aggregate cash and investment balances as of March 31,2009 compared to December 31, 2008 was primarily the result of completingthe transactions described in Note 1 to our consolidated financial statementswith respect to our emergence from Chapter 11. In those transactions, on March 24, 2009 we sold our remaininginterest in the San Cristóbal mine to Sumitomo for $27.5 million 

 

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plus a $2.5 million reimbursement of certain priorexpenses we had incurred and we subsequently distributed $45 million to theholders of the Subordinated Notes in exchange for cancellation of theSubordinated Notes. The holders of the Subordinated Notes are also entitled toany other cash or cash equivalents held by us in excess of the sum of $15million plus amounts required to pay for accrued liabilities at March 31,2009 and certain projected reorganization expenses that will be incurred after March 31,2009. Based on March 31, 2009 cash and investment balances, accruals andestimated additional reorganization expenses, we do not anticipate that we willbe required to make additional cash payments to the holders of the SubordinatedNotes.  Our aggregate cash and short andlong-term investments were also reduced by approximately $11.0 million duringthe period ended March 31, 2009 for expenditures related to ongoinggeneral and administrative and exploration costs and for reorganization costsassociated with the bankruptcy proceedings.

 

Duringthe 12 month period ending March 31, 2010, we expect to spendapproximately an additional $4 million on final reorganization costs and $12million on general and administrative costs (including amounts already accruedat March 31, 2009), and $11 million on exploration costs.  We plan to fund these expenditures from ourexisting cash and investment balances, from the $6 million of annual cash flowfrom our management services agreement with San Cristóbal and from ananticipated $2 million of interest and royalty income during the period.

 

Weanticipate that cash on hand, together with interest and royalty income andamounts received under the management services agreement, will provide us withenough cash to continue our exploration program and to pay our general andadministrative expenses during the next twelve months.  As such, the financial statements have beenprepared on a going concern basis under which an entity is considered to beable to realize its assets and satisfy its liabilities in the normal course ofbusiness.  However, in the longer term,our continuing operations are dependent upon our ability to raise sufficientcapital and to generate future profitable operations.  We expect that we will need to raisesubstantial additional capital to pursue our business strategy beyond the 12month period.  There can be no assurancethat the Company will be successful in raising additional financing in thefuture on terms acceptable to the Company or at all.

 

**SignificantAccounting Policies**

 

See Part I, Item 1. Note 4to the Unaudited Consolidated Financial Statements for a discussion ofsignificant accounting policies including recently adopted standards and newaccounting standards.

 

## **Forward-LookingStatements**

 

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

 

·       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 reorganization, general andadministrative and exploration costs and our expected cash receipts frominterest and royalty income and from the San Cristóbal management servicesagreement;

 

·       The expected dimensions of the zone ofmineralization at the El Quevar project;

 

·       The timing and cost of the evaluation and expansion ofour exploration portfolio, including activities to be conducted during 2009 oncertain of our exploration properties;

 

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

 

·       Our pursuit of a Toronto Stock Exchange listing of ourcommon stock and trading of our common stock in the United States;

 

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 

 

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these forward-lookingstatements as a result of the factors set forth below and other factors setforth in, or incorporated by reference into this report:

 

·        Our ability to raise necessary capital by the end of2009 on acceptable terms or at all, particularly in light of the deteriorationof financial market conditions and the persistent dislocation of the creditmarkets;

 

·        Our ability to successfully manage the San Cristóbalmine on behalf of Sumitomo under the terms of our management services agreementand our ability to successfully expand our mine services business, particularlyif metals prices experience significant declines;

 

·        Our ability to continue to retain key management andmining personnel necessary to successfully manage the San Cristóbal mine;

 

·        Our ability to achieve a listing of our common stockand a liquid market for our common stock;

 

·        Worldwide economic and political events affecting themarket prices for silver, zinc, lead and other minerals which may be found onour exploration properties;

 

·        Political and economic instability in Bolivia (andother countries in which we conduct our business) and future actions of theBolivian government with respect to nationalization of natural resources orother changes in the mining or taxation policies of the Bolivian governmentthat may affect the management of the San Cristóbal mine or our Bolivianconcessions;

 

·        The factors discussed under “Risk Factors” in ASML’s Form 10-Kfor 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.

 

## **Item3.**    Quantitative andQualitative Disclosures About Market Risk

 

## **InterestRate 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 three months of2009, a 1% decrease in interest rates would have resulted in a reduction ininterest income for the period of approximately $0.1 million.

## ** **

## **ForeignCurrency Exchange Risk**

 

Althoughmost of our expenditures are in U.S. dollars, certain purchases of labor,operating supplies and capital assets are denominated in Euros or othercurrencies.  As a result, currencyexchange fluctuations may impact the costs of our operations.  To reduce this risk, we maintain minimum cashbalances in foreign currencies and complete most of our purchases in U.S.dollars.

 

Wehave previously engaged in a limited amount of currency hedging activities, butas of March 31, 2009, we did not hold any foreign currency derivativepositions.

## ** **

## **CommodityPrice Resk**

 

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.

# ** **

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# **Item 4. 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-14c and 15d-14c under the Exchange Act) as ofMarch 31, 2009 (the “Evaluation Date”). Based on such evaluation, suchofficers have concluded that, as of the Evaluation Date, the Company’sdisclosure controls and procedures are effective to ensure that informationrequired to be disclosed by the Company in the reports that the Company filesor submits under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and formsand to ensure that information required to be disclosed by the Company in thereports that the Company files or submits under the Exchange Act is accumulatedand communicated to the Company’s management, including its Chief ExecutiveOfficer and Chief Financial Officer to allow timely decisions regardingrequired 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

 

## **Item1.**    LegalProceedings

 

The Company hascompleted its submissions in response to the staff’s Wells notice to theCompany. The Company’s submissions put forth the reasons that the Companybelieves why the SEC should not institute civil enforcement proceedings againstit in connection with the investigation previously reported in ASML’s Form 10-Kfor the year ended December 31, 2008 (see Note 18 to the consolidatedfinancial statements).

 

As furtherdescribed in Note 1 to the consolidated financial statements, ASML’s Joint Planof Reorganization became effective and the Company emerged from Chapter 11bankruptcy proceedings on March 24, 2009.

 

## **Item1A.  Risk Factors.**

## ** **

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

## ** **

## **Item2.**    UnregisteredSales of Equity Securities and Use of Proceeds

 

None.

 

## **Item3.**    Defaults UponSenior Securities

 

None.

## ** **

## **Item4.**    Submission ofMatters to a Vote of Security Holders

 

None

 

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

 

None.

 

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

 
| 3.1  | Amended and Restated  Certificate of Incorporation of Golden Minerals Company.(1)                                                                                        |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2  | Bylaws of Golden  Minerals Company.(1)                                                                                                                                   |
| 10.1 | Management Services  Agreement dated March 24, 2009 by and among Minera San Cristóbal, S.A.,  Apex Metals Marketing GmbH and Apex Silver Mines Corporation.(1) |
| 10.2 | Form of  Indemnification Agreement.(1)                                                                                                                              |
| 10.3 | Form of Change of  Control Agreement.(1)                                                                                                                            |
| 10.4 | Golden Minerals Company  2009 Equity Incentive Plan.(2)                                                                                                                  |
| 31.1 | Certification of Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.                                                                        |
| 31.2 | Certification of Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.                                                                        |
| 32   | Certification of Chief  Executive Officer and Chief Financial Officer pursuant to 18 U.S.C., 1350  (Section 906 of the Sarbanes-Oxley Act).                         |

 

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| (1) | Incorporated by  reference to our Current Report on Form 8-K filed March 30, 2009.       |
|-----|----------------------------------------------------------------------------------------------------|
| (2) | Incorporated by  reference to our Registration Statement on Form S-8 filed May 8,  2009. |

 

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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:  | May 11, 2009 | By:                     | \s\ Jeffrey G.  Clevenger |
|   |              |                    | Jeffrey G. Clevenger |
|   |              |                    | President and Chief  Executive Officer |
|   |              |                    |   |
|   |              |                    |   |
| Date:  | May 11, 2009 | By:                     | \s\ Robert P. Vogels |
|   |              |                    | Robert P. Vogels |
|   |              |                    | Senior Vice President  and Chief Financial Officer |

 

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