Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

 

**FORM 10-Q**

 

**(MARKONE)**

 

**x****      QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

** **

**FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010.**

 

OR

 

**o****         TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934**

 

**FOR THE TRANSITION PERIODFROM                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.) |

 

| **350 INDIANA STREET, SUITE 800**        | ** ** | ** ** |
|------------------------------------------|------------|------------|
| **GOLDEN, COLORADO**                     | ** ** | **80401**  |
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |       | (ZIP CODE) |

 

**(303) 839-5060**

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

 

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

 

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

 

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

 

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

 

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

 

ATAUGUST  3, 2010, 9,274,786 SHARES OFCOMMON STOCK, $0.01 PAR VALUE PER SHARE, WERE ISSUED AND OUTSTANDING.

 

 

 

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GOLDEN MINERALS COMPANY

FORM 10-Q

QUARTER ENDED JUNE 30, 2010

 

INDEX

 
| ** **                               | ** **                                                                                  | **PAGE** |
|------------------------------------------|---------------------------------------------------------------------------------------------|----------|
|                                     |                                                                                        |     |
| PART I — FINANCIAL INFORMATION |                                                                                        |
|                                     |                                                                                        |     |
| ITEM  1.                                 | FINANCIAL STATEMENTS (Unaudited)                                                            | 3        |
|                                     |                                                                                        |     |
| ITEM 2.                                  | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 18       |
|                                     |                                                                                        |     |
| ITEM 3.                                  | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 | 24       |
|                                     |                                                                                        |     |
| ITEM 4.                                  | CONTROLS AND  PROCEDURES                                                                    | 24       |
|                                     |                                                                                        |     |
| PART II  — OTHER INFORMATION   |
|                                     |                                                                                        |     |
| ITEM 1.                                  | LEGAL PROCEEDINGS                                                                           | 25       |
|                                     |                                                                                        |     |
| ITEM 1A.                                 | RISK FACTORS                                                                                | 25       |
|                                     |                                                                                        |     |
| ITEM 2.                                  | UNREGISTERED  SALES OF EQUITY SECURITIES AND  USE OF  PROCEEDS                         | 26       |
|                                     |                                                                                        |     |
| ITEM 3.                                  | DEFAULTS  UPON SENIOR SECURITIES                                                            | 26       |
|                                     |                                                                                        |     |
| ITEM 4.                                  | REMOVED AND RESERVED                                                                        | 26       |
|                                     |                                                                                        |     |
| ITEM 5.                                  | OTHER INFORMATION                                                                           | 26       |
|                                     |                                                                                        |     |
| ITEM  6.                                 | EXHIBITS                                                                                    | 26       |
|                                     |                                                                                        |     |
| SIGNATURES                               |                                                                                        | 27       |

 

2

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**PART I. FINANCIAL INFORMATION**

 

**Item 1.   Financial Statements**

 

**GOLDEN MINERALS COMPANY**

**CONSOLIDATED BALANCE SHEETS**

**(Expressed in United Statesdollars)**

**(Unaudited)**

** **
| ** **                                                                                                          | ** ** | **June 30,**                     | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                          | ** ** | **2010**                              | ** ** | **2009**              | ** ** |
| ** **                                                                                                          | ** ** | **(in thousands, except share data)** | ** ** |
| **Assets**                                                                                                          |       |                                  |       |                  |       |
| Current  assets                                                                                                     |       |                                  |       |                  |       |
| Cash  and cash equivalents                                                                                          |       | $                                     | 33,764     |                  | $          | 8,570 |   |
| Investments  (Note 4)                                                                                               |       | 6,065                                 |       | 444                   |       |
| Trade  receivables                                                                                                  |       | 91                                    |       | 1,460                 |       |
| Prepaid  expenses and other assets (Note 5)                                                                         |       | 1,969                                 |       | 2,087                 |       |
| Total  current assets                                                                                               |       | 41,889                                |       | 12,561                |       |
| Property,  plant and equipment, net (Note 6)                                                                        |       | 9,343                                 |       | 7,774                 |       |
| Assets  held for sale (Note 6)                                                                                      |       | 538                                   |       | 813                   |       |
| Prepaid  expenses and other assets (Note 5)                                                                         |       | 588                                   |       | 552                   |       |
| Total  assets                                                                                                       |       | $                                     | 52,358     |                  | $          | 21,700 |   |
| **Liabilities and Equity**                                                                                          |       |                                  |       |                  |       |
| Current  liabilities                                                                                                |       |                                  |       |                  |       |
| Accounts  payable and other accrued liabilities (Note 7)                                                            |       | $                                     | 2,357      |                  | $          | 2,428 |   |
| Other  current liabilities                                                                                          |       | 63                                    |       | 63                    |       |
| Total  current liabilities                                                                                          |       | 2,420                                 |       | 2,491                 |       |
| Other  long term liabilities                                                                                        |       | 626                                   |       | 651                   |       |
| Total  liabilities                                                                                                  |       | 3,046                                 |       | 3,142                 |       |
|                                                                                                                |       |                                  |       |                  |       |
| Commitments  and contingencies (Note 13)                                                                            |       |                                  |       |                  |       |
| Equity  (Note 10)                                                                                                   |       |                                  |       |                  |       |
| Common  stock, $.01 par value, 50,000,000 shares authorized; 9,271,286 and 3,238,615  shares issued and outstanding |       | 93                                    |       | 32                    |       |
| Additional  paid in capital                                                                                         |       | 80,225                                |       | 37,854                |       |
| Accumulated  deficit                                                                                                |       | (30,945                               | )          | (20,276               | )          |
| Accumulated  other comprehensive income (loss)                                                                      |       | (61                                   | )          | 154                   |       |
| Parent  company’s shareholder’s equity                                                                    |       | 49,312                                |       | 17,764                |       |
| Noncontrolling  interest in subsidiaries (Note 11)                                                                  |       | —                                |       | 794                   |       |
| Total  equity                                                                                                       |       | 49,312                                |       | 18,558                |       |
| Total  liabilities and equity                                                                                       |       | $                                     | 52,358     |                  | $          | 21,700 |   |

 

The accompanying notes form an integral partof these consolidated financial statements.

 

3

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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**      | ** ** |
|---------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|-------------------------|------------|------------------------|------------|--------------------------|------------|-------------------------|------------|
| ** **                                                                                        | ** ** | **Three Months Ended**                | ** ** | **Six Months** | ** ** | **March 25, 2009** | ** ** | ** **             | ** ** | **January 1, 2009** | ** ** |
| ** **                                                                                        | ** ** | **June 30**                      | ** ** | **Ended**      | ** ** | **Through**             | ** ** | ** **             | ** ** | **Through**              | ** ** |
| ** **                                                                                        | ** ** | **2010**                              | ** ** | **2009**       | ** ** | **June 30, 2010**  | ** ** | **June 30, 2009** | ** ** | ** **               | ** ** | **March 24, 2009** | ** ** |
| ** **                                                                                        | ** ** | **(Successor)**                       | ** ** | ** **     | ** ** | **(Predecessor)**       | ** ** |
| ** **                                                                                        | ** ** | **(in thousands, except share data)** | ** ** |
| **Revenue:**                                                                                      |       |                                  |       |           |       |                    |       |                   | ** ** | ** **               | ** ** | ** **              | ** ** |
| Management  service fees (Note 12)                                                                |       | $                                     | 7,945      |           | $          | 3,147                   |       | $                      | 11,118     |                     | $          | 3,358                   |       |   |   | $ | 1,350 |   |
| **Costs and expenses:**                                                                           |       |                                  |       |           |       |                    |       |                   |       |                     |       |                    |       |
| Costs  of services (Note 12)                                                                      |       | (918                                  | )          | (1,004         | )          | (2,535                  | )          | (1,084                 | )          |                     |       | —                  |       |
| Exploration  expense                                                                              |       | (2,912                                | )          | (3,021         | )          | (6,138                  | )          | (3,469                 | )          |                     |       | (3,482                  | )          |
| El  Quevar feasibility                                                                            |       | (3,504                                | )          | —         |       | (5,973                  | )          | —                 |       |                     |       | —                  |       |
| Administrative  expense                                                                           |       | (2,131                                | )          | (2,980         | )          | (4,427                  | )          | (3,336                 | )          |                     |       | (4,779                  | )          |
| Stock  based compensation                                                                         |       | (778                                  | )          | (609           | )          | (1,300                  | )          | (609                   | )          |                     |       | (2,717                  | )          |
| Depreciation,  depletion and amortization                                                         |       | (335                                  | )          | (143           | )          | (444                    | )          | (152                   | )          |                     |       | (102                    | )          |
| Total  costs and expenses                                                                         |       | (10,578                               | )          | (7,757         | )          | (20,817                 | )          | (8,650                 | )          |                     |       | (11,080                 | )          |
| Loss  from operations                                                                             |       | (2,633                                | )          | (4,610         | )          | (9,699                  | )          | (5,292                 | )          |                     |       | (9,730                  | )          |
| **Other income and expenses:**                                                                    |       |                                  |       |           |       |                    |       |                   |       |                     |       |                    |       |
| Interest  and other income                                                                        |       | (8                                    | )          | 166            |       | 675                     |       | 290                    |       |                     |       | 1,010                   |       |
| Royalty  income                                                                                   |       | 159                                   |       | 127            |       | 159                     |       | 127                    |       |                     |       | 88                      |       |
| Interest  and other expense                                                                       |       | (153                                  | )          | —         |       | (279                    | )          | —                 |       |                     |       | (345                    | )          |
| Loss  on sale of asset                                                                            |       | —                                |       | (180           | )          | —                  |       | (180                   | )          |                     |       | —                  |       |
| Gain  (loss) on foreign currency                                                                  |       | (1                                    | )          | 90             |       | 12                      |       | 94                     |       |                     |       | (13                     | )          |
| Gain  on extingushment of debt                                                                    |       | —                                |       | —         |       | —                  |       | —                 |       |                     |       | 248,165                 |       |
| Loss  on auction rate securities                                                                  |       | —                                |       | (1,332         | )          | —                  |       | (1,332                 | )          |                     |       | (828                    | )          |
| Reorganization  costs, net                                                                        |       | —                                |       | (565           | )          | —                  |       | (668                   | )          |                     |       | (3,683                  | )          |
| Fresh  start accounting adjustments                                                               |       | —                                |       | —         |       | —                  |       | —                 |       |                     |       | 9,122                   |       |
| Total  other income and expenses                                                                  |       | (3                                    | )          | (1,694         | )          | 567                     |       | (1,669                 | )          |                     |       | 253,516                 |       |
| Income  (loss) from continuing operations before income (taxes) benefit                           |       | (2,636                                | )          | (6,304         | )          | (9,132                  | )          | (6,961                 | )          |                     |       | 243,786                 |       |
| Income  taxes                                                                                     |       | (994                                  | )          | (187           | )          | (1,537                  | )          | (213                   | )          |                     |       | (165                    | )          |
| Net  income (loss) from continuing operations                                                     |       | (3,630                                | )          | (6,491         | )          | (10,669                 | )          | (7,174                 | )          |                     |       | 243,621                 |       |
| **Income (loss) from discontinued operations**                                                    |       | —                                |       | —         |       | —                  |       | —                 |       |                     |       | (4,153                  | )          |
| Net  income (loss)                                                                                |       | $                                     | (3,630     | )              | $          | (6,491                  | )          | $                      | (10,669    | )                        | $          | (7,174                  | )          |   |   | $ | 239,468 |   |
| Net  (income) loss attributable to noncontrolling interest                                        |       | —                                |       | $              | —     |                    | —     |                   | $          | —                   |       |                    |       | $ | (7,869 | ) |
| Net  income (loss) attributable to the Successor/Predecessor shareholder’s                   |       | $                                     | (3,630     | )              | $          | (6,491                  | )          | $                      | (10,669    | )                        | $          | (7,174                  | )          |   |   | $ | 231,599 |   |
| **Other comprehensive loss:**                                                                     |       |                                  |       |           |       |                    |       |                   |       |                     |       |                    |       |
| Unrealized  gain (loss) on securities                                                             |       | 73                                    |       | 826            |       | (215                    | )          | $                      | 826        |                     |       |                    | $          | 940 |   |
| Comprehensive  income (loss) attributable to Successor/Predecessor shareholder’s             |       | $                                     | (3,557     | )              | $          | (5,665                  | )          | $                      | (10,884    | )                        | $          | (6,348                  | )          |   |   | $ | 232,539 |   |
| **Net income (loss) per Common/Ordinary Share — basic**                                      |       |                                  |       |           |       |                    |       |                   |       |                     |       |                    |       |
| Income  (loss) from continuing operations attributable to the Successor/Predecessor  shareholders |       | $                                     | (0.41      | )              | $          | (2.17                   | )          | $                      | (1.59      | )                        | $          | (2.40                   | )          |   |   | $ | 4.13 |   |
| Discontinued  operations attributable to the Successor/Predecessor shareholders                   |       | —                                |       | —         |       | —                  |       | —                 |       |                     |       | (0.20                   | )          |
| Income  (loss) attributable to the Successor/Predecessor shareholders                             |       | $                                     | (0.41      | )              | $          | (2.17                   | )          | $                      | (1.59      | )                        | $          | (2.40                   | )          |   |   | $ | 3.93 |   |
| **Net income (loss) per Common/Ordinary Share — diluted**                                    |       |                                  |       |           |       |                    |       |                   |       |                     |       |                    |       |
| Income  (loss) from continuing operations attributable to the Successor/Predecessor  shareholders |       | $                                     | (0.41      | )              | $          | (2.17                   | )          | $                      | (1.59      | )                        | $          | (2.40                   | )          |   |   | $ | (0.06 | ) |
| Discontinued  operations attributable to the Successor/Predecessor shareholders                   |       | —                                |       | —         |       | —                  |       | —                 |       |                     |       | (0.17                   | )          |
| Income  (loss) attributable to the Successor/Predecessor shareholders                             |       | $                                     | (0.41      | )              | $          | (2.17                   | )          | $                      | (1.59      | )                        | $          | (2.40                   | )          |   |   | $ | (0.23 | ) |
| **Weighted average Common Stock/Ordinary Shares outstanding -  basic**                            |       | 8,900,648                             |       | 2,987,735      |       | 6,711,052               |       | 2,987,735              |       |                     |       | 59,000,832              |       |
| **Weighted average Common Stock/Ordinary Shares outstanding -  diluted**                          |       | 8,900,648                             |       | 2,987,735      |       | 6,711,052               |       | 2,987,735              |       |                     |       | 69,171,400              |       |

 

The accompanying notes forman integral part of these consolidated financial statements. 

 

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**GOLDEN MINERALS COMPANY**

**CONSOLIDATED STATEMENTS OF CASHFLOWS**

**(Expressed in United States dollars)**

**(Unaudited)**

 
| ** **                                                                                                     | ** ** | ** **             | ** ** | **For The Period**      | ** ** | ** **        | ** ** | **For The Period**       | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-------------------------|------------|-------------------|------------|--------------------------|------------|
| ** **                                                                                                     | ** ** | **Six Months**         | ** ** | **March 25, 2009** | ** ** | ** **        | ** ** | **January 1, 2009** | ** ** |
| ** **                                                                                                     | ** ** | **Ended**              | ** ** | **Through**             | ** ** | ** **        | ** ** | **Through**              | ** ** |
| ** **                                                                                                     | ** ** | **June 30, 2010** | ** ** | **June 30, 2009**  | ** ** | ** **        | ** ** | **March 24, 2009**  | ** ** |
| ** **                                                                                                     | ** ** | **(Successor)**        | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** |
| ** **                                                                                                     | ** ** | **(in thousands)**     | ** ** |
| Cash  flows from operating activities:                                                                         |       |                   |       |                    |       |              |       |                     |       |
| Net  cash used in operating activities (Note 14)                                                               |       | $                      | (8,098     | )                       | $          | (10,138           | )          |                     |       | $ | (13,849 | ) |
| Cash  flows from investing activities:                                                                         |       |                   |       |                    |       |              |       |                     |       |
| Purchase  of available for sale investments                                                                    |       | (6,003                 | )          | —                  |       |              |       | (4,447                   | )          |
| Sale  of available for sale investments                                                                        |       | 376                    |       | —                  |       |              |       | 21,113                   |       |
| Released  from restricted cash to collateralize credit facility, letters of credit and  interest payments, net |       | —                 |       | —                  |       |              |       | 5,732                    |       |
| Proceeds  from sale of interest in subsidiary, net                                                             |       | —                 |       | —                  |       |              |       | 25,225                   |       |
| Proceeds  from sale of assets                                                                                  |       | 125                    |       | 600                     |       |              |       | —                   |       |
| Capitalized  costs and acquisitions of property, plant and equipment                                           |       | (1,741                 | )          | (424                    | )          |              |       | (4,580                   | )          |
| Net  cash provided by (used in) investing activities                                                           |       | $                      | (7,243     | )                       | $          | 176               |       |                     |       | $ | 43,043 |   |
| Cash  flows from financing activities:                                                                         |       |                   |       |                    |       |              |       |                     |       |
| Proceeds  from issuance of common stock, net of issue costs                                                    |       | 40,535                 |       | —                  |       |              |       | —                   |       |
| Payments  of notes payable and long term debt                                                                  |       | —                 |       | —                  |       |              |       | (47,297                  | )          |
| Amounts  drawn on DIP facility                                                                                 |       | —                 |       | —                  |       |              |       | 6,500                    |       |
| Non-controlling  interest contributions                                                                        |       | —                 |       | —                  |       |              |       | 3,500                    |       |
| Net  cash (used in) provided by financing activities                                                           |       | $                      | 40,535     |                    | $          | —            |       |                     |       | $ | (37,297 | ) |
| Net  increase (decrease) in cash and cash equivalents                                                          |       | 25,194                 |       | (9,962                  | )          |              |       | (8,103                   | )          |
| Cash  and cash equivalents - beginning of period                                                               |       | 8,570                  |       | 25,620                  |       |              |       | 33,723                   |       |
| Cash  and cash equivalents - end of period                                                                     |       | $                      | 33,764     |                    | $          | 15,658            |       |                     |       | $ | 25,620 |   |
|                                                                                                                |            |                        |            |                         |            |                   |            |                          |            |  |  |  |  |

 

See Note 14 for supplemental cash flow information.

 

The accompanying notes forman integral part of these consolidated financial statements.

 

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**GOLDEN MINERALS COMPANY**

**CONSOLIDATED STATEMENTS OFCHANGES IN EQUITY (DEFICIT)**

**(Expressed in United Statesdollars)**

**(Unaudited)**

** **
| ** **                                                           | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | **Accumulated**    | ** **   | ** **   | ** ** | ** **    | ** ** |
|----------------------------------------------------------------------|------------|---------------------------------------|------------|-------------|------------|-----------------|------------|-------------|------------|--------------------|--------------|--------------|------------|---------------|------------|
| ** **                                                           | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | **Other**          | ** **   | ** **   | ** ** | ** **    | ** ** |
| ** **                                                           | ** ** | ** **                            | ** ** | ** **  | ** ** | **Additional**  | ** ** | ** **  | ** ** | **Comprehensive**  | ** **   | ** **   | ** ** | **Total**     | ** ** |
| ** **                                                           | ** ** | **Common Stock**                      | ** ** | **Paid-in** | ** ** | **Accumulated** | ** ** | **income**  | ** ** | **Noncontrolling** | ** **   | **Equity**   | ** ** |
| ** **                                                           | ** ** | **Shares**                            | ** ** | **Amount**  | ** ** | **Capital**     | ** ** | **Deficit** | ** ** | **(loss)**         | ** **   | **Interest** | ** ** | **(Deficit)** | ** ** |
| ** **                                                           | ** ** | **(in  thousands except share data)** | ** ** |
| **(Predecessor)**                                                    | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **  | ** ** | ** **         | ** **   | ** **   | ** ** | ** **    | ** ** |
| **Balance, December 31, 2008**                                  | ** ** | **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        | )          | (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               | )            | —       |       | (389          | )          |
| Elimination  of Predecessor Noncontrolling Interest                  |       | —                                |       | —      |       | —          |       | —      |       | —             |         | (170,060     | )          | (170,060      | )          |
| **Balance, March 24, 2009**                                     | ** ** | **—**                            | ** ** | **$**       | **—** | ** **      | **$**      | **—**  | ** ** | **$**              | **—**   | ** **   | **$**      | **—**    | ** ** | **$** | **—** | ** ** | **$** | **—** | ** ** |
| **(Successor)**                                                      |       |                                  |       |        |       |            |       |        |       |               |         |         |       |          |       |
| Issuance  of new equity in connection with emergence from Chapter 11 |       | 3,000,000                             |       | $           | 30         |            | $          | 36,230      |       | $                  | —       |         | $          | —        |       | $ | — |   | $ | 36,260 |   |
| Stock  compensation accrued, net of forfeitures                      |       | 242,500                               |       | 2           |       | 1,664           |       | —      |       | —             |         | —       |       | 1,666         |       |
| Treasury  shares acquired and retired                                |       | (3,885                                | )          | —      |       | (40             | )          | —      |       | —             |         | —       |       | (40           | )          |
| Unrealized  gain on marketable equity securities                     |       | —                                |       | —      |       | —          |       | —      |       | 154                |         | —       |       | 154           |       |
| Noncontrolling  interest in mineral properties                       |       | —                                |       | —      |       | —          |       | —      |       | —             |         | 794          |       | 794           |       |
| Net  loss                                                            |       | —                                |       | —      |       | —          |       | (20,276     | )          | —             |         | —       |       | (20,276       | )          |
| **Balance, December 31, 2009**                                  | ** ** | **3,238,615**                         | ** ** | **$**       | **32**     | ** **      | **$**      | **37,854**  | ** ** | **$**              | **(20,276**  | **)**        | **$**      | **154**       | ** ** | **$** | **794** | ** ** | **$** | **18,558** | ** ** |
| Purchase  of El Quevar noncontrolling interest                       |       | 400,000                               |       | 4           |       | 790             |       | —      |       | —             |         | (794         | )          | —        |       |
| Private  placements, net                                             |       | 1,749,759                             |       | 18          |       | 12,965          |       | —      |       | —             |         | —       |       | 12,983        |       |
| Public  offering, net                                                |       | 3,652,234                             |       | 36          |       | 27,516          |       | —      |       | —             |         | —       |       | 27,552        |       |
| Stock  compensation accrued                                          |       | 255,750                               |       | 3           |       | 1,297           |       | —      |       | —             |         | —       |       | 1,300         |       |
| Treasury  shares acquired and retired                                |       | (25,072                               | )          | —      |       | (197            | )          | —      |       | —             |         | —       |       | (197          | )          |
| Unrealized  loss on marketable equity securities                     |       | —                                |       | —      |       | —          |       | —      |       | (215               | )            | —       |       | (215          | )          |
| Net  loss                                                            |       | —                                |       | —      |       | —          |       | (10,669     | )          | —             |         | —       |       | (10,669       | )          |
| **Balance, June 30, 2010**                                      | ** ** | **9,271,286**                         | ** ** | **$**       | **93**     | ** **      | **$**      | **80,225**  | ** ** | **$**              | **(30,945**  | **)**        | **$**      | **(61**       | **)**      | **$** | **—** | ** ** | **$** | **49,312** | ** ** |

 

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

 

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**GOLDEN MINERALS COMPANY**

**NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS**

**(Expressed in United States dollars)**

 

**1.****             ****Basisof Preparation of Financial Statements and Nature of Operations**

 

Golden Minerals Company (the “Company”), a Delawarecorporation, has prepared these unaudited interim consolidated financialstatements in accordance with the rules and regulations of the Securitiesand Exchange Commission (“SEC”). Such rules and regulations allow theomission of certain information and footnote disclosures normally included infinancial statements prepared in accordance with accounting principlesgenerally accepted in the United States (“GAAP”), so long as such omissions donot render the financial statements misleading.

 

In the opinion of management, these financialstatements reflect all adjustments that are necessary for a fair statement ofthe financial results for the periods presented. These interim financial statementsshould be read in conjunction with the annual financial statements included inthe 2009 Annual Report on Form 10-K.

 

The Company is primarily engaged in the explorationand advancement of its portfolio of exploration properties in South America andMexico.  The Company ceased providingoperations management services to Sumitomo Corporation for the San Cristóbalmine effective June 30, 2010.  Thefinancial statements have been prepared on a going concern basis under which anentity is considered to be able to realize its assets and satisfy itsliabilities in the normal course of business. However, the continuing operations of the Company are dependent upon itsability to raise sufficient capital and to generate future profitableoperations.  The underlying value andrecoverability of the amounts shown as mineral properties in the consolidatedbalance sheet are dependent on the ability of the Company to continue tofinance exploration and development activities that would lead to profitableproduction or proceeds from the disposition of the mineral properties.  There can be no assurance that the Companywill be successful in raising additional financing in the future on termsacceptable to the Company or at all.

 

Prior to its emergence from Chapter 11 and the saleof the San Cristóbal mine, Apex Silver Mines Limited (“ASML”) was the 65% ownerand operator of the San Cristóbal silver and zinc mine in Bolivia.  Upon emergence from Chapter 11 reorganizationon March 24, 2009, the Company became the successor to ASML for purposesof reporting under the U.S. federal securities laws.  References in this Form 10-Q to “Successor”refer to the accounts of the Company and its subsidiaries on or after March 25,2009, the day following emergence from Chapter 11.  References to “Predecessor” refer to theaccounts of ASML and its subsidiaries prior to March 25, 2009.

 

**2.****             ****DiscontinuedOperations**

 

Results of operations of the San Cristóbal mine andrelated subsidiaries are presented as discontinued operations for the periodson the Consolidated Statements of Operations and Comprehensive Income (Loss)through March 24, 2009, the date the San Cristóbal mine and relatedsubsidiaries were sold, including all direct financing related to the SanCristóbal mine.  Additionally, costsincurred for management service fees that were previously eliminated uponconsolidation have not been eliminated and are reflected as a cost of servicebetween the discontinued operations and the Company.

 

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The results of discontinued operations for theperiod January 1, 2009 through March 24, 2009 are as follows (amountsin thousands):

 
| ** **                                      | ** ** | **For The Period**       | ** ** |
|-------------------------------------------------|------------|--------------------------|------------|
| ** **                                      | ** ** | **January 1, 2009** | ** ** |
| ** **                                      | ** ** | **Through**              | ** ** |
| ** **                                      | ** ** | **March 24, 2009**  | ** ** |
| ** **                                      | ** ** | **(in  thousands)**      | ** ** |
| **Revenue:**                                    |       |                     |       |
| Sale  of concentrates, net                      |       | $                        | 99,049     |   |
| **Costs and expenses:**                         |       |                     |       |
| Costs  applicable to sales                      |       | (59,955                  | )          |
| Management  fee                                 |       | (1,350                   | )          |
| Asset  retirement accretion expense             |       | (232                     | )          |
| Foreign  currency gain                          |       | 1,960                    |       |
| Depreciation,  depletion and amortization       |       | (10,527                  | )          |
| Total  costs and expenses                       |       | (70,104                  | )          |
| Income  (loss) from operations                  |       | 28,945                   |       |
| **Other income and expenses:**                  |       |                     |       |
| Interest  and other income                      |       | 67                       |       |
| Interest  expense and other borrowing costs     |       | (22,233                  | )          |
| Total  other income and expenses                |       | (22,166                  | )          |
| Income  before income taxes                     |       | 6,779                    |       |
| Income  taxes                                   |       | (2,523                   | )          |
| Income  before sale of interest in subsidiaries |       | 4,256                    |       |
| Loss  on sale of interest in subsidiaries       |       | (8,409                   | )          |
| **Loss from discontinued operations**           |       | $                        | (4,153     | ) |

 

**3.     Significant AccountingPolicies**

 

*Recently Adopted Standards*

 

On January 1, 2010 the Company adopted the Accounting StandardsCodification (“ASC”) guidance for consolidation accounting which was updated torequire an entity to perform a qualitative analysis to determine whether theenterprise’s variable interest gives it a controlling financial interest in avariable interest entity (“VIE”). This analysis identifies a primarybeneficiary of a VIE as an entity that has both of the followingcharacteristics: (i) the power to direct the activities of a VIE that mostsignificantly impact the entity’s economic performance and (ii) theobligation to absorb losses or receive benefits from the entity that couldpotentially be significant to the VIE. The updated guidance also requiresongoing reassessments of the primary beneficiary of a VIE. The Companycurrently has no VIEs.

 

*Recently Issued Pronouncements*

 

In January 2010, ASC guidance for fair value measurements anddisclosure was updated to require additional disclosures related to: (i) transfersin and out of level 1 and 2 fair value measurements and (ii) enhanceddetail in the level 3 reconciliation. The guidance was amended to provideclarity regarding the level of disaggregation required for assets andliabilities and the disclosures required for inputs and valuation techniquesused to measure the fair value of assets and liabilities that fall in eitherlevel 2 or level 3.  The updated guidance is effective for the Company’sfiscal year beginning January 1, 2010, with the exception of the level 3disaggregation which will be effective for the Company’s fiscal year beginning January 1,2011. The adoption had no impact on the Company’s condensed consolidatedfinancial position, results of operations or cash flows. Refer to Note 8 forfurther details regarding the Company’s assets and liabilities measured at fairvalue.

 

**4.****             ****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, or highly liquid investments with maturities greaterthan 12 months that the Company intends to liquidate during the next 12 monthsfor working capital needs.

 

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The Company determines the appropriate classification of its investmentsin debt and equity securities at the time of purchase and re-evaluates thoseclassifications at each balance sheet date. Debt securities are classified as held to maturity when the Company hasthe intent and ability to hold the securities to maturity. Held to maturitydebt securities are stated at amortized cost. Available for sale investments are marked to market at each reportingperiod with changes in value recorded as a component of other comprehensiveincome (loss). If declines in value are deemed other than temporary, a chargeis made to net income (loss) for the period.

 

Thefollowing tables summarize the Company’s investments at June 30, 2010 and December 31,2009:

 

 
| **June 30,  2010**           | ** ** | **Cost**            | ** ** | **Estimated  Fair Value** | ** ** | **Carrying  Value** | ** ** |
|-----------------------------------|------------|---------------------|------------|---------------------------|------------|---------------------|------------|
| ** **                        | ** ** | **(in  thousands)** | ** ** |
| Investments:                      |       |                |       |                      |       |                |       |
| Short-term:                       |       |                |       |                      |       |                |       |
| Available  for sale               |       |                |       |                      |       |                |       |
| U.  S. treasury securities        |       | $                   | 6,003      |                      | $          | 6,003               |       | $ | 6,003 |   |
| Warrant  to purchase common stock |       | 124                 |       | 62                        |       | 62                  |       |
| Total  available for sale         |       | 6,127               |       | 6,065                     |       | 6,065               |       |
| Total  short term                 |       | $                   | 6,127      |                      | $          | 6,065               |       | $ | 6,065 |   |

 
| **December 31,  2009** | ** ** | **Cost**            | ** ** | **Estimated  Fair Value** | ** ** | **Carrying  Value** | ** ** |
|-----------------------------|------------|---------------------|------------|---------------------------|------------|---------------------|------------|
| ** **                  | ** ** | **(in  thousands)** | ** ** |
| Investments:                |       |                |       |                      |       |                |       |
| Short-term:                 |       |                |       |                      |       |                |       |
| Available  for sale         |       |                |       |                      |       |                |       |
| Common  stock               |       | $                   | 191        |                      | $          | 444                 |       | $ | 444 |   |
| Total  available for sale   |       | 191                 |       | 444                       |       | 444                 |       |
| Total  short term           |       | $                   | 191        |                      | $          | 444                 |       | $ | 444 |   |

 

Quoted market prices at June 30, 2010 and December 31, 2009were used to determine the estimated fair values of the above investmentsexcept for the warrant to purchase common stock. The fair value of the warrantto purchase common stock was determined using a Black-Scholes model with inputsbased on quoted market price, historic volatilities, risk free interest ratesand the life of the warrant (see Note 8).

 

*CreditRisk*

 

Credit risk is the risk that a third party might fail to fulfill itsperformance obligations under the terms of a financial instrument. For cash andcash equivalents and investments, the Company’s maximum exposure to credit riskrepresents the carrying amount on the balance sheet. The Company attempts tomitigate credit risk for cash and cash equivalents and investments by placingits funds and investments with high credit-quality financial institutions,limiting the amount of exposure to each financial institution, monitoring thefinancial condition of the financial institutions and investing only ingovernment and corporate securities rated “investment grade” or better. TheCompany invests with financial institutions that maintain a net worth of notless than $1.0 billion and are members in good standing of the SecuritiesInvestor Protection Corporation.

 

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**5.   Prepaid expenses and othercurrent assets**

 

Prepaid expenses and other current assets consist of the following:

 
| ** **                                   | ** ** | **June 30,**       | ** ** | **December 31,** | ** ** |
|----------------------------------------------|------------|-------------------------|------------|-----------------------|------------|
| ** **                                   | ** ** | **2010**                | ** ** | **2009**              | ** ** |
| ** **                                   | ** ** | **(in thousands)** | ** ** |
| Prepaid  insurance                           |       | $                       | 347        |                  | $          | 306 |   |
| Prepaid  contractor fees and vendor advances |       | 636                     |       | 191                   |       |
| Deferred  leasehold costs                    |       | 233                     |       | 329                   |       |
| Prepaid  offering costs                      |       | —                  |       | 576                   |       |
| Royalty  receivable                          |       | 159                     |       | —                |       |
| Recoupable  deposits and other               |       | 594                     |       | 685                   |       |
|                                         |       | $                       | 1,969      |                  | $          | 2,087 |   |

 

*June 30, 2010*

 

Thedeferred leasehold costs are related to the Company’s headquarters office leasein Golden, Colorado.  Prepaid contractorfees and vendor advances consist primarily of advance payments made tocontractors and suppliers primarily at the El Quevar project in Argentina. The royaltyreceivable is related to the Company’s retained royalty interest on the Platosaproperty in Mexico.

 

Inaddition, included in non-current assets is approximately $0.6 million ofprepaid insurance on which amortization will be recognized through 2015.

 

*December 31, 2009*

 

Thedeferred leasehold costs are related to the Company’s headquarters office leasein Golden, Colorado.  Prepaid contractorfees and vendor advances consist primarily of advance payments made tocontractors and suppliers for exploration related services.  Prepaid offering costs are related to directcosts and fees associated with the then anticipated public offering of commonstock that had not been completed at year-end 2009.  These costs were netted against the proceedsfrom the offering in the first quarter 2010. Included in recoupable deposits and other is a $0.2 million receivablerelated to the sale of certain investments which settled January 4, 2010and a $0.2 million recoupable deposit made to a firm providing legal servicesrelated to the reorganization that was returned to the Company during the firstquarter 2010.

 

**6.   Property, Plant andEquipment and Assets Held for Sale**

 

*Property, plant and equipment*

 

Thecomponents of property, plant and equipment are as follows:

 
| ** **                      | ** ** | **June 30,**   | ** ** | **December 31,** | ** ** |
|---------------------------------|------------|---------------------|------------|-----------------------|------------|
| ** **                      | ** ** | **2010**            | ** ** | **2009**              | ** ** |
| ** **                      | ** ** | **(in  thousands)** | ** ** |
| Exploration  properties         |       | $                   | 4,228      |                  | $          | 4,228 |   |
| Royalty  properties             |       | 1,207               |       | 1,207                 |       |
| Buildings                       |       | 724                 |       | 383                   |       |
| Mining  equipment and machinery |       | 3,386               |       | 1,984                 |       |
| Other  furniture and equipment  |       | 811                 |       | 601                   |       |
|                            |       | 10,356              |       | 8,403                 |       |
| Less:  Accumulated depreciation |       | (1,013              | )          | (629                  | )          |
|                            |       | 9,343               |       | 7,774                 |       |
|                                 |            |                     |            |                       |            |  |  |

 

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*Assets Held for Sale*

 

The Company has obtained approval from its board of directors to sellits Paca Pulacayo property in Bolivia. The $0.5 and $0.8 million carrying valueof the property is reflected in assets held for sale in the accompanyingconsolidated balance sheets at June 30, 2010 and December 31, 2009,respectively.  Completion of thetransaction is subject to negotiation and execution of definitive agreements,approval of the Company’s board of directors, consents and approvals of thirdparties including governmental entities and the TSX Venture Exchange, and othercustomary closing conditions.  Thecarrying value of the asset held for sale is adjusted at the end of each periodper the guidance of ASC 360, “Property, Plant and Equipment”.  During the first six months of 2010 theCompany wrote down by approximately $0.3 million the carrying value of theproperty to its estimated sales price less selling costs, reflected in interestand other expense on the accompanying consolidated statements of operations.

 

**7.   Accounts Payable and OtherAccrued Liabilities**

 

The Company’s accounts payable and otheraccrued liabilities consist of the following:

 
| ** **                                  | ** ** | **June 30,**   | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|---------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2010**            | ** ** | **2009**              | ** ** |
| ** **                                  | ** ** | **(in  thousands)** | ** ** |
|                                        |       |                |       |                  |       |
| Accounts  payable and accruals              |       | $                   | 1,372      |                  | $          | 1,863 |   |
| Income  taxes payable                       |       | 3                   |       | 22                    |       |
| Accrued  employee compensation and benefits |       | 932                 |       | 543                   |       |
| Deferred  revenue                           |       | 50                  |       | —                |       |
|                                        |       | $                   | 2,357      |                  | $          | 2,428 |   |

 

*June 30, 2010*

 

Accounts payable and accruals consist of $0.8 million related toexploration and corporate administrative activities and $0.6 million related toamounts due to contractors and suppliers at the El Quevar project,respectively.

 

Accrued employee compensation and benefits consist of $0.2 millionrelated to withholding taxes and benefits payable, $0.6 million related tobonuses payable and $0.1 million of accrued vacation payable.

 

Deferredrevenue relates to fees collected for services not yet performed.

 

*December 31, 2009*

 

Accounts payable and accruals consist of $1.0 million related toexploration and corporate administrative activities and $0.9 million related toamounts due to contractors and suppliers, respectively.

 

Accrued employee compensation and benefits consist of $0.3 millionrelated to withholding taxes and benefits payable and $0.2 million of accruedvacation payable.

 

**8.             Fair ValueMeasurements**

 

Effective January 1, 2008, the Company adopted ASC 820, “FairValue Disclosure and Measurements”, for the financial assets and liabilitiesand nonfinancial assets and liabilities which are measured at fair value on arecurring (annual) basis.  ASC 820establishes a framework for measuring fair value in the form of a fair valuehierarchy which prioritizes the inputs into valuation techniques used tomeasure fair value into three broad levels. This hierarchy gives the highest priority to quoted prices (unadjusted)in active markets and the lowest priority to unobservable inputs.  Further, financial assets and liabilitiesshould be classified by level in their entirety based upon the lowest level ofinput that was significant to the fair value measurement.  The three levels of the fair value hierarchyper ASC 820 are as follows:

 

**Level 1: **Unadjustedquoted market prices in active markets for identical assets or liabilities thatare accessible at the measurement date.

 

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**Level 2: **Quoted pricesin inactive markets for identical assets or liabilities, quoted prices forsimilar assets or liabilities in active markets, or other observable inputseither directly related to the asset or liability or derived principally fromcorroborated observable market data.

 

**Level 3: **Unobservableinputs due to the fact that there is little or no market activity. This entailsusing assumptions in models which estimate what market participants would usein pricing the asset or liability.

 

Thefollowing table summarizes the Company’s financial assets at fair value at June 30,2010, by respective level of the fair value hierarchy:

 
| ** **                                | ** ** | **Level 1**         | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|-------------------------------------------|------------|---------------------|------------|-------------|------------|-------------|------------|-----------|------------|
| ** **                                | ** ** | **(in  thousands)** | ** ** |
| Assets:                                   |       |                |       |        |       |        |       |      |       |
| Cash  equivalents                         |       | $                   | 33,764     |        | $          | —      |       | $         | —     |   | $ | 33,764 |   |
| Short-term  available for sale securities |       | 6,003               |       | —      |       | —      |       | 6,003     |       |
| Warrant  to purchase common stock         |       | —              |       | 62          |       | —      |       | 62        |       |
|                                      |       | $                   | 39,767     |        | $          | 62          |       | $         | —     |   | $ | 39,829 |   |

 

The Company’s cash equivalents, comprised principally of U.S. treasurysecurities, are classified within Level 1 of the fair value hierarchy.

 

The Company’s short-term available for sale securities are classifiedwithin Level 1 of the fair value hierarchy. These securities are comprised of common stock and U.S. treasurysecurities, which have been valued using quoted prices in active markets.

 

The Company’s warrant to purchase common stock is classified withinLevel 2 of the fair value hierarchy. The fair value of the warrant to purchasecommon stock was determined using a Black-Scholes model with inputs based onquoted market price, historic volatilities, risk free interest rates and thelife of the warrant.

 

**9.             Income Taxes**

 

The Company, a Delaware corporation, and its subsidiaries file taxreturns in the United States and in various foreign jurisdictions.  The tax rules and regulations in thesecountries are highly complex and subject to interpretation. The Company’sincome tax returns are subject to examination by the relevant taxingauthorities and in connection with such examinations, disputes can arise withthe taxing authorities over the interpretation or application of certain tax rules withinthe country involved.  The Company’stotal unrecognized tax benefits, representing uncertain tax positions taken orexpected to be taken on tax returns, were $1.4 million as of June 30, 2010and December 31, 2009, which resulted in a reduction to the Company’sdeferred tax assets as of June 30, 2010 and December 31, 2009.

 

For the six months ended June 30, 2010, the Company incurredoperating losses and recognized income tax of $1.5 million consisting of $1.4million Bolivian withholding tax on management services provided in Bolivia,and $0.1 million for the reversal of the tax effects of other comprehensiveincome reported as of December 31, 2009. Based on the limited history of the Company, an estimated effective taxrate is not used to report the year-to-date results.  For the period March 25, 2009 to June 30,2009, the Company recognized tax expense due to Bolivia withholding tax on managementservices.  The Predecessor recognizedincome tax of $0.2 million for the period January through March 24,2009, also due to Bolivia withholding tax on management services, and incometax of $2.5 million is included in discontinued operations for the same period.

 

Deferred tax liabilities of $0.2 million exist as of June 30, 2010and December 31, 2009, related to mineral properties owned by certaindisregarded subsidiaries of the Company whose book basis exceed the respectiveUS tax basis.  The deferred taxliabilities are found within the other long-term liabilities account in thebalance sheet.

 

The Company believes it has had a change of ownership for purposes ofI.R.C. section 382 (“Sec. 382”), effective March 19, 2010, due in part toits initial public offering during the year and issuance of new shares as aresult of such offering. Sec. 382 establishes limits on the usage of US netoperating losses generated by a company prior to a 50% change of shareholderownership during a cumulative 3 year period. The Company has made a preliminary calculation of the loss 

 

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limitationresulting from the change of ownership and has determined that such limitationdid not result in the recognition of taxable income for the six months ended June 30,2010.

 

**10.   Equity**

 

*Issuance of common stock for mineral property interest*

 

During January 2010 the Company acquired Hochschild Mining Group’s(“Hochschild”) 35% interest in Minera El Quevar S.A. in exchange for 400,000shares of its common stock and a warrant to acquire 300,000 shares of itscommon stock exercisable for three years at an exercise price of $15.00 pershare.  In accordance with ASC 810, “Consolidations”,the Company has reflected this transaction in equity with charges to commonstock and additional paid in capital and the elimination of approximately $0.8million of noncontrolling interest. No gain or loss was recognized on thetransaction. With the completion of this transaction, the Company now owns orcontrols 100% of the concessions related to the El Quevar project.

 

*Public offering and private placements of the Company’s common stock*

 

During January 2010 the Company completed a private placement of844,694 shares of its common stock to two investment funds managed by TheSentient Group (“Sentient”), which includes 745,318 shares issued in theinitial private placement plus an additional 99,376 shares issued upon exerciseof Sentient’s contractual pre-emptive right in order to maintain its 19.9%equity interest in the Company following completion of the Hochschildtransaction. These shares were sold at a purchase price of Cdn$7.06 per share,resulting in net proceeds to the Company of approximately $5.5 million.

 

On March 24, 2010 the Company completed a public offering of4,000,000 shares of common stock at an offering price of $8.50 per share. TheCompany sold 3,652,234 shares and a selling stockholder sold 347,766shares.  Concurrent with the publicoffering, Sentient exercised its existing pre-emptive right and purchased in aprivate placement pursuant to Regulation S under the U.S. Securities Act of1933 an additional 905,065 shares of common stock at the public offering priceof $8.50 per share. The aggregate net proceeds to the Company from the sale ofthe shares in the public offering and the sale of the shares to Sentient wasapproximately $35.0 million after deducting underwriting discounts, commissionsand expenses.

 

*Equity Incentive Plans*

 

In April 2009, the Company adopted the 2009 Equity Incentive Plan(the “Equity Plan”) pursuant to which awards of the Company’s common stock maybe made to officers, directors, employees, consultants and agents of theCompany and its subsidiaries.  The Company recognizes stock-basedcompensation costs using a graded vesting attribution method whereby costs arerecognized over the requisite service period for each separately vestingportion of the award.

 

Thefollowing table summarizes the status of the Company’s restricted stock grantsissued under the Equity Plan at June 30, 2010 and changes during the sixmonths then ended:

 

 
| **Restricted  Stock Grants**           | ** ** | **Number of  Shares** | ** ** | **Weighted Average  Grant Date Fair  Value Per Share** | ** ** |
|----------------------------------------|------------|-----------------------|------------|--------------------------------------------------------|------------|
| Outstanding  at December 31, 2009 |       | 230,000               |       | $                                                      | 10.75      |   |
| Granted  during the period             |       | 259,750               |       | 8.00                                                   |       |
| Restrictions  lifted during the period |       | (134,000              | )          | 10.52                                                  |       |
| Forfeited  during the period           |       | (4,000                | )          | 8.73                                                   |       |
| Outstanding  at June 30, 2010     |       | 351,750               |       | $                                                      | 8.83       |   |

 

Onethird of the restricted stock granted during the period will vest on each ofthe first, second and third anniversaries of the grant date, provided theofficer or employee is still employed by the Company at that time.  Included in the shares for which therestrictions lifted during the period were 24,000 shares for which the liftingof the restriction was accelerated related to severance benefits for fiveterminated employees.  For the period January 1,2010 through June 30, 2010 the Company recognized approximately $1.0million of compensation expense related to the restricted stock grants and theCompany expects to recognize additional compensation expense related to theseawards of approximately $2.0 million over the next 3 years.

 

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Thefollowing table summarizes the status of the Company’s stock option grantsissued under the Equity Plan at June 30, 2010 and changes during the sixmonths then ended:

 
| **Equity  Plan Options**               | ** ** | **Number of  Shares** | ** ** | **Weighted  Average  Exercise  Price Per  Share** | ** ** |
|----------------------------------------|------------|-----------------------|------------|---------------------------------------------------|------------|
| Outstanding  at December 31, 2009 |       | —                |       | $                                                 | —     |   |
| Granted  during period                 |       | 136,810               |       | 8.01                                              |       |
| Forfeited  or expired during period    |       | —                |       | —                                            |       |
| Exercised  during period               |       | —                |       | —                                            |       |
| Outstanding  at June 30, 2010     |       | 136,810               |       | 8.01                                              |       |
| Exercisable  at end of period          |       | —                |       | —                                            |       |
| Granted  and expected to vest          |       | 131,693               |       | 8.01                                              |       |
|                                        |            |                       |            |                                                   |            |  |

 

Onethird of the options granted during the period will vest on each of the first,second and third anniversaries of the grant, provided the officer, director oremployee continues to serve the Company at that time.  For the period January 1, 2010 through June 30,2010 the Company recognized approximately $0.1 million of compensation expenserelated to the option grants and the Company expects to recognize additionalcompensation expense related to these awards of approximately $0.5 million overthe next 3 years.

 

Also,pursuant to the Equity Plan, the Company’s board of directors adopted theNon-Employee Director’s Deferred Compensation and Equity Award Plan (the “DeferredCompensation Plan”).  Pursuant to theDeferred Compensation Plan the non-employee directors receive a portion oftheir compensation in the form of Restricted Stock Units (“RSUs”) issued underthe Equity Plan. The RSUs vest on the first anniversary of the grant and eachvested RSU entitles the director to receive one unrestricted share ofcommon stock upon the termination of the director’s board service.

 

Thefollowing table summarizes the status of the RSU grants issued under theDeferred Compensation Plan at June 30, 2010 and changes during the sixmonths then ended:

 

 
| **Restricted  Stock Units**            | ** ** | **Number of  Underlying   Shares** | ** ** | **Weighted Average  Grant Date Fair  Value Per Share** | ** ** |
|----------------------------------------|------------|------------------------------------|------------|--------------------------------------------------------|------------|
| Outstanding  at December 31, 2009 |       | 25,000                             |       | $                                                      | 10.92      |   |
| Granted  during the period             |       | 21,555                             |       | 8.12                                                   |       |
| Restrictions  lifted during the period |       | —                             |       | —                                                 |       |
| Forfeited  during the period           |       | —                             |       | —                                                 |       |
| Outstanding  at June 30, 2010     |       | 46,555                             |       | $                                                      | 9.62       |   |

 

For the period January 1, 2010 through June 30,2010 the Company recognized approximately $0.1 million of compensation expenserelated to the RSU grants and expects to recognize additional compensationexpense related to these RSUs of approximately $0.1 million over the next year.

 

**11.   Noncontrolling Interest**

 

On January 1, 2009 the Company adopted certain provisions of ASC810 related to the presentation of noncontrolling interest, previously called aminority interest.  A noncontrollinginterest is the portion of equity in a subsidiary not attributable, directly orindirectly, to a parent.

 

At December 31, 2009 the major concessions at the Company’s ElQuevar project were within a jointly owned subsidiary of which the Company helda 65% interest and Hochschild held the remaining 35%.  At December 31, 2009 Hochschild’s 35%interest was reflected in the consolidated balance sheets as a noncontrollinginterest of $0.8 million and 

 

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wasincluded as a component of total equity. In January 2010 the Company purchased Hochschild’s 35% interest inMinera El Quevar S.A. for stock and warrants (see Note 10).  As of June 30, 2010 the Company has nononcontrolling interests.

 

The following schedule sets forth the amounts of income from continuingoperations and discontinued operations attributable to the Successor’s andPredecessor’s shareholders:

 
| ** **                                                                                                  | ** ** | ** **             | ** ** | **For The Period**      | ** ** | ** **        | ** ** | **For The Period**       | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-------------------------|------------|-------------------|------------|--------------------------|------------|
| ** **                                                                                                  | ** ** | **Six Months**         | ** ** | **March 25, 2009** | ** ** | ** **        | ** ** | **January 1, 2009** | ** ** |
| ** **                                                                                                  | ** ** | **Ended**              | ** ** | **Through**             | ** ** | ** **        | ** ** | **Through**              | ** ** |
| ** **                                                                                                  | ** ** | **June 30, 2010** | ** ** | **June 30, 2009**  | ** ** | ** **        | ** ** | **March 24, 2009**  | ** ** |
| ** **                                                                                                  | ** ** | **(Successor)**        | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** |
| ** **                                                                                                  | ** ** | **(in  thousands)**    | ** ** |
|                                                                                                        |       |                   |       |                    |       |              |       |                     |       |
| Amounts  attributable to Golden Minerals common stockholders and Predecessor’s ordinary  shareholders: |       |                   |       |                    |       |              |       |                     |       |
| Income  (loss) from continuing operations                                                                   |       | $                      | (10,669    | )                       | $          | (7,174            | )          |                     |       | $ | 243,621 |   |
| Loss  from discontinued operations                                                                          |       | —                 |       | —                  |       |              |       | (12,022                  | )          |
| Net  income (loss)                                                                                          |       | $                      | (10,669    | )                       | $          | (7,174            | )          |                     |       | $ | 231,599 |   |

 

**12.   Revenue and Cost of Services**

 

TheCompany was party to a Management Agreement with Sumitomo under which itprovided certain management services with respect to the San Cristóbal mine.The Management Agreement terminated effective June 30, 2010 as discussedbelow. The Management Agreement provided for an annual fee of $11.4 millionwhich included approximately $5.4 million that constituted reimbursement fordirect administrative expenses the Company incurs on behalf of the SanCristóbal mine. Under the terms of the Management Agreement, the Companyreceived the fee and any reimbursements net of any Bolivian withholding taxes.The fee and reimbursements for administrative costs and Bolivian withholdingtaxes are reported as Revenue from Services in the statement of operationsfollowing the guidance of ASC 605, “Revenue Recognition” regarding “incomestatement characterization of reimbursements received for out-of-pocketexpenses incurred” and “reporting revenue gross as a principal versus net as anagent”.  ASC 605 supports recording as grossrevenue fees received for the reimbursement of expenses in situations where therecipient is the primary obligor and has certain discretion in the incurrenceof the reimbursable expense. The actual costs incurred for the reimburseddirect administrative expenses are reported as costs of services in thestatement of operations. Reimbursed Bolivian withholding taxes are reported asincome taxes in the statement of operations. Prior to entering into theManagement Agreement, ASML received a management fee of $450,000 per month fromSan Cristóbal to cover certain costs incurred directly by ASML.

 

Forthe six months ended June 30, 2010 the Company recorded $6.2 million asrevenue related to the Management Agreement, comprised of $5.4 million of feesand $0.8 million for reimbursed withholding taxes. The Company also recordedcorresponding charges of $2.5 million to cost of services and $0.8 million toincome taxes for the actual administrative costs and withholding taxesreimbursable under the Management Agreement.

 

TheCompany and Sumitomo agreed to terminate the Management Agreement effective June 30,2010, six months earlier than provided by the terms of the agreement.  As a result of the termination the Companyreceived a $4.3 million termination fee comprised of $2.8 million in lieu ofthe performance of services by the Company for the final two quarters of 2010and waiver of Sumitomo’s 6-month notice requirement, $1.0 million for atermination payment (as provided in the Management Agreement) and approximately$0.5 million for a performance bonus for the first two quarters of 2010.  The termination fee proceeds were partiallyoffset by the return of prepaid administration fees for services not performedthrough June 30, 2010 of approximately $1.1 million resulting in a netpayment from Sumitomo of $3.2 million received on June 30, 2010. As aresult of the termination we recognized additional revenue of $4.9 million forthe quarter ended June 30, 2010 comprised of the $4.3 million oftermination fees as discussed above and $0.6 million for reimbursed withholdingtaxes.

 

**13.   Commitments andContingencies**

 

Aspreviously disclosed, the Predecessor 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. ThePredecessor contacted the Department of Justice (“DOJ”) and SEC during 2006 and

 

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reportedthe results of the internal investigation and was informed that the SEC and DOJwould commence investigations with respect to these matters, including possibleviolations of the Foreign Corrupt Practices Act. Subsequently, the Predecessorand then the Company entered into discussions with the SEC staff concerning asettlement of the conduct subject to the SEC’s investigation. As a result, theCompany reached an agreement in principle with the SEC staff which, if approvedby the Commission, would resolve this matter with the SEC. Under the terms ofthe proposed settlement, the Company, on neither an admit nor deny basis, wouldagree to the entry of an administrative cease and desist order prohibiting theCompany from future violations of Sections 13(b)(2)(A), 13(b)(2)(B) and30A of the Securities Exchange Act of 1934. Moreover, under the terms of theproposed settlement, the SEC staff would not recommend that the Commissionrequire the payment of disgorgement, civil money penalties, prejudgmentinterest or the appointment of a corporate monitor. The proposed settlement issubject to Commission approval. The Company cannot guarantee that theCommission will ultimately accept the terms of the proposed settlement.

 

InAugust 2009, the DOJ informed the Company that it has closed itsinvestigation based on, among other things, the Company’s pending settlementwith the Commission.

 

**14.   Supplemental Cash FlowInformation**

 

Thefollowing table reconciles net income (loss) for the period to cash fromoperations:

 
| ** **                                                                                   | ** ** | ** **             | ** ** | **For The Period**      | ** ** | ** **        | ** ** | **For The Period**       | ** ** |
|----------------------------------------------------------------------------------------------|------------|------------------------|------------|-------------------------|------------|-------------------|------------|--------------------------|------------|
| ** **                                                                                   | ** ** | **Six Months**         | ** ** | **March 25, 2009** | ** ** | ** **        | ** ** | **January 1, 2009** | ** ** |
| ** **                                                                                   | ** ** | **Ended**              | ** ** | **Through**             | ** ** | ** **        | ** ** | **Through**              | ** ** |
| ** **                                                                                   | ** ** | **June 30, 2010** | ** ** | **June 30, 2009**  | ** ** | ** **        | ** ** | **March 24, 2009**  | ** ** |
| ** **                                                                                   | ** ** | **(Successor)**        | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** |
| ** **                                                                                   | ** ** | **(in  thousands)**    | ** ** |
| Cash  flows from operating activities:                                                       |       |                   |       |                    |       |              |       |                     |       |
| Net  (loss) income before noncontrolling interests                                           |       | $                      | (10,669    | )                       | $          | (7,174            | )          |                     |       | $ | 239,468 |   |
| Adjustments  to reconcile net income (loss) to net cash used in operating activities:        |       |                   |       |                    |       |              |       |                     |       |
| Amortization  and depreciation                                                               |       | 444                    |       | 152                     |       |              |       | 10,977                   |       |
| Accretion  of asset retirement obligation                                                    |       | —                 |       | —                  |       |              |       | 232                      |       |
| Amortization  of premiums and discounts                                                      |       | —                 |       | —                  |       |              |       | 37                       |       |
| Mark-to-market  loss on derivative positions                                                 |       | —                 |       | —                  |       |              |       | 36                       |       |
| Gain  on sale of marketable securities                                                       |       | (131                   | )          | —                  |       |              |       | —                   |       |
| Fair  value of stock/warrants received for mineral rights                                    |       | (231                   | )          | —                  |       |              |       | —                   |       |
| Loss  (gain) on sale of assets, net                                                          |       | (123                   | )          | 180                     |       |              |       | —                   |       |
| Loss  on auction rate security investments                                                   |       | —                 |       | 1,332                   |       |              |       | 828                      |       |
| Income  tax provision                                                                        |       | 91                     |       | —                  |       |              |       | —                   |       |
| Gain  on extingushment of debt                                                               |       | —                 |       | —                  |       |              |       | (248,165                 | )          |
| Loss  (gain) on sale of interest in subsidiary                                               |       | —                 |       | —                  |       |              |       | 8,409                    |       |
| Fresh  start accounting adjustment                                                           |       | —                 |       | —                  |       |              |       | (9,122                   | )          |
| Treasury  shares acquired and retired                                                        |       | (197                   | )          | —                  |       |              |       | —                   |       |
| Stock  compensation                                                                          |       | 1,300                  |       | 609                     |       |              |       | 2,920                    |       |
| Changes  in operating assets and liabilities:                                                |       |                   |       |                    |       |              |       |                     |       |
| (Increase)  decrease in trade accounts receivable                                            |       | 1,369                  |       | (98                     | )          |              |       | (11,893                  | )          |
| (Increase)  decrease in accrued interest receivable                                          |       | —                 |       | 126                     |       |              |       | 84                       |       |
| Port  fees applied to Port of Mejillones note receivable                                     |       | —                 |       | —                  |       |              |       | 709                      |       |
| (Increase)  decrease in prepaid expenses and other assets                                    |       | 146                    |       | (427                    | )          |              |       | 6,063                    |       |
| Increase  in inventories                                                                     |       | —                 |       | —                  |       |              |       | (12,000                  | )          |
| Increase  in value added tax recoverable, net                                                |       | —                 |       | —                  |       |              |       | (11,696                  | )          |
| Increase  in accrued interest payable                                                        |       | —                 |       | —                  |       |              |       | 11,496                   |       |
| Increase  (decrease) in deferred revenue                                                     |       | —                 |       | —                  |       |              |       | (3,227                   | )          |
| Increase  (decrease) in accounts payable and accrued liabilities net of amounts  capitalized |       | (121                   | )          | (5,017                  | )          |              |       | 2,462                    |       |
| Increase  in deferred leasehold payments                                                     |       | —                 |       | 369                     |       |              |       | —                   |       |
| Decrease  in deferred taxes, net                                                             |       | —                 |       | (193                    | )          |              |       | (2,262                   | )          |
| Other  increase                                                                              |       | 24                     |       | 3                       |       |              |       | 795                      |       |
| Net  cash used in operating activities                                                       |       | $                      | (8,098     | )                       | $          | (10,138           | )          |                     |       | $ | (13,849 | ) |

 

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Thefollowing table sets forth supplemental cash flow information and non-cashtransactions:

 

 
| ** **                                              | ** ** | ** **             | ** ** | **For The Period**      | ** ** | ** **        | ** ** | **For The Period**       | ** ** |
|---------------------------------------------------------|------------|------------------------|------------|-------------------------|------------|-------------------|------------|--------------------------|------------|
| ** **                                              | ** ** | **Six Months**         | ** ** | **March 25, 2009** | ** ** | ** **        | ** ** | **January 1, 2009** | ** ** |
| ** **                                              | ** ** | **Ended**              | ** ** | **Through**             | ** ** | ** **        | ** ** | **Through**              | ** ** |
| ** **                                              | ** ** | **June 30, 2010** | ** ** | **June 30, 2009**  | ** ** | ** **        | ** ** | **March 24, 2009**  | ** ** |
| ** **                                              | ** ** | **(Successor)**        | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** |
| ** **                                              | ** ** | **(in  thousands)**    | ** ** |
| Supplemental  disclosure of non-cash transactions:      |       |                   |       |                    |       |              |       |                     |       |
| Initial  measurement of asset retirement obligation     |       | $                      | —     |                    | $          | —            |       |                     |       | $ | 288 |   |
| Mineral  rights acquired with common stock and warrants |       | $                      | 794        |                    | $          | —            |       |                     |       | $ | — |   |

 

**15.   Subsequent Events**

 

*Registration Statement Filed*

 

On July 26, 2010 the Companyfiled with the Securities and Exchange Commission a universal shelfregistration statement on Form S-3.  Oncedeclared effective by the SEC, the registration statement will allow theCompany to issue up to $150 million of securities as described in theProspectus.

 

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**Item 2: Management’s Discussionand Analysis of Financial Condition and Results of Operations**

 

**General**

 

Golden Minerals Company (“Golden Minerals” or “we”)was incorporated in Delaware under the Delaware General Corporation Law in March 2009,and is the successor to Apex Silver Mines Limited (“ASML”) for purposes ofreporting under U.S. federal securities laws. References in this discussion and analysis to “Successor” refer toGolden Minerals and its subsidiaries on or after March 25, 2009, andreferences to “Predecessor” refer to ASML and its subsidiaries prior to March 25,2009.

 

We are a mineral exploration company with adiversified portfolio of precious metals and other mineral explorationproperties located in or near the traditional precious metals producing regionsof Mexico and South America. We are currently focused on the advancement of ourEl Quevar silver project in northwestern Argentina.

 

During the six months ended June 30, 2010, ouronly sources of income have been fees under our management services agreementwith Sumitomo, recorded as revenue, royalty and interest income, and sales ofnon-core properties. The management services agreement with Sumitomo wasterminated effective June 30, 2010 as discussed below.  We incurred a net operating loss during thefirst six months of 2010 and expect to incur a net operating loss for theremainder of 2010 and future periods unless and until El Quevar or one of ourother exploration properties is developed and begins to generate operatingincome. We cannot predict when or if that will occur.

 

This discussion should be read in conjunction withManagement’s Discussion and Analysis included in our Annual Report on Form 10-Kfor the fiscal year ended December 31, 2009.

 

**Overview**

 

During the second quarter and first six months of2010 we focused our efforts primarily on raising additional capital, advancingour El Quevar project and managing the San Cristóbal mine for Sumitomounder the terms of the San Cristóbal Management Services Agreement (the “ManagementAgreement”). We have also continued to make progress in advancing theexploration of our portfolio of exploration properties. Significant eventsoccurring during the first six months of 2010 are described below:

 

·      On January 7, 2010, we completed atransaction with Hochschild Mining Group (“Hochschild”), pursuant to which weacquired Hochschild’s 35% interest in Minera El Quevar S.A., an Argentinecompany in which we held the other 65% interest.  We issued 400,000 shares of our common stockto Hochschild and a warrant to acquire an additional 300,000 shares of ourcommon stock exercisable for three years at an exercise price of $15.00 pershare. With the completion of this transaction we now own or control 100% ofthe concessions related to the El Quevar Project.

 

·      In January 2010, we sold to SentientGlobal Resources Fund III, LP and SGRF III Parallel I, LP, collectivelyreferred to as “Sentient”, a total of 844,694 shares of our common stock, in aprivate placement at a price of Cdn$7.06 per share, resulting in net proceedsto us of approximately $5.5 million. Following this transaction, Sentient held approximately 19.9% of ouroutstanding common stock, excluding restricted stock held by our employees.

 

·      In March 2010, we closed a public offeringof 4,000,000 shares of our common stock, of which 3,652,234 shares were sold byus and 347,766 shares were sold by a selling stockholder. All of the shareswere sold at a price per share of $8.50. Concurrent with the public offering, Sentient exercised its existingpre-emptive right and purchased in a private placement pursuant to Regulation Sunder the Securities Act an additional 905,065 shares of our common stock at thepublic offering price of $8.50, maintaining its 19.9% shareholding. Theaggregate net proceeds to us from the public offering and the Sentient privateplacement was approximately $35.0 million, net of offering costs ofapproximately $1.3 million, the underwriting discount of approximately $2.1million, and the placement agent commission of approximately $0.3 million.

 

·      Our common stock commenced trading on theNYSE Amex LLC on March 19, 2010 under the ticker symbol “AUMN”.

 

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·                  During the sixmonths ended June 30, 2010 we continued to drill at El Quevar,focusing on extending and further defining the strike extensions of the highgrade Yaxtché deposit and on providing infill drill intercepts in the west areato support and update resource estimations. Through August 4, 2010 we have drilled a total of 242 holestotaling approximately 50,000 meters at El Quevar. Drilling results indicatedthat mineralization remains open up and down dip at the Yaxtché deposit andcontinues to the west beneath the post mineral volcanic cover.  During the second quarter we commencedconstruction of a production quality underground development drift with theintention of accessing the Yaxtché deposit from underground as part of the workfor the feasibility study expected to be completed by year end 2010.

 

·                  We completedapproximately 5,900 meters of drilling on an initial 24 drill hole test of thePanuco silver-gold target, in the northern part of the Zacatecas district,resulting in intercepts of silver mineralization in epithermal veins. Wecompleted an initial drill test consisting of approximately 3,000 meters innine holes at the San Pedro de Hercules target in the southern part of theZacatecas district, Mexico and were successful in intercepting veins andmineralized zones containing variable amounts of silver, gold and basemetals.  We also completed approximately3,000 meters of drilling in twenty holes at our Palca project in southern Peru,where we intersected silver and base metal mineralization in five differentveins.

 

·                  In January 2010,we reached a non-binding agreement in principle to sell to ApogeeMinerals Ltd. our subsidiary that owns the Paca Pulacayo explorationproperty in Bolivia for 5 million common shares of Apogee at closing andan additional 3 million common shares of Apogee and $500,000 to be paid18 months following closing. The property is currently subject to a jointventure arrangement pursuant to which Apogee has the right to earn up to a 60%interest in the property. Completion of the transaction is subject tonegotiation and execution of definitive agreements, approval of our board ofdirectors, consents and approvals of third parties including governmentalentities and the TSX Venture Exchange, and other customary closing conditions.

 

·                  Effective June 30,2010, we and Sumitomo Corporation agreed to terminate the Management Agreement,six months earlier than provided by the terms of the agreement.  As a result of the termination we received a$4.3 million termination fee comprised of $2.8 million in lieu of theperformance of services by Golden Minerals for the final two quarters of 2010and waiver of Sumitomo’s 6-month notice requirement, $1.0 million for atermination payment (as provided in the Management Agreement) and approximately$0.5 million for a performance bonus for the first two quarters of 2010.  The termination fee proceeds were partially offsetby the return of prepaid administration fees for services not performed throughJune 30, 2010 of approximately $1.1 million resulting in a net paymentfrom Sumitomo of $3.2 million received on June 30, 2010. As a result ofthe termination we recognized additional revenue of $4.9 million for thequarter ended June 30, 2010 comprised of the $4.3 million termination feeas discussed above and $0.6 million for reimbursed withholding taxes.

 

·                  On July 26,2010 we filed with the Securities and Exchange Commission a universal shelfregistration statement on Form S-3. Once declared effective by the SEC, the registration statement willallow us to issue up to $150 million of securities as described in theProspectus.

 

**Results of Operations**

 

For the results of continuing operations discussed below, we comparethe results from continuing operations of the Successor for the three monthperiod ended June 30, 2010 to the results from continuing operations forthe three month period ended June 30, 2009.  We also compare the results from continuingoperations for the six month period ended June 30, 2010 of the Successorto (i) results of the continuing operations of the Successor for theperiod from March 25, 2009 through June 30, 2009 and (ii) theresults of continuing operations of the Predecessor for the 83-day period endedMarch 24, 2009. The results of operations of the San Cristóbal mine andrelated subsidiaries that were sold during the first quarter 2009 areaggregated and presented as discontinued operations of the Predecessor for the83-day period ended March 24, 2009. The Successor has no discontinued operations to report.

 

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**Three Months Ended June 30, 2010**

 

*Continuing Operations*

 

*Management service fees.*We recorded $7.9 million ofmanagement service fees for the second quarter 2010 related to the ManagementAgreement.  The management service feesare comprised of $2.6 million of fees, a $4.3 million early terminationpayment, as discussed above, and $1.0 million for reimbursed withholding taxes.Management service fees for the second quarter 2009 were $3.1 million allrelated to the Management Agreement and are comprised of $2.7 million of feesand $0.4 million for reimbursed withholding taxes.

 

*Cost of services.*We recorded $0.9 million ofcosts of services for the second quarter 2010. The cost of services iscomprised of reimbursed direct administrative expenses incurred by us relatedto the Management Agreement.  Cost ofservices for the second quarter 2009 was $1.0 million comprised of reimburseddirect administrative expenses incurred by us related to the ManagementAgreement.

 

*Exploration*. Our exploration expenses, including propertyholding costs and allocated administrative expenses, were $2.9 million for thesecond quarter 2010, as compared to $3.0 million for the second quarter2009.  Exploration expenses for 2010 wereincurred primarily on drilling programs in Argentina, and exclude amounts spenton the El Quevar project feasibility work, and in Mexico and Peru and includeproperty holding costs and costs incurred by the local exploration offices.Exploration expenses for 2009 were incurred primarily at the El Quevar projectin Argentina and in Mexico and Peru and include property holding costs andcosts incurred by the local exploration offices.

 

*El Quevar feasibility*. During the second quarter2010, we incurred $3.5 million of expenses related to feasibility work on theYaxtché deposit of our El Quevar project in Argentina primarily related todevelopment of the exploration drift, drilling and engineering work.  Costs incurred for work performed outside ofthe high grade Yaxtché deposit at our El Quevar project are included inexploration expense discussed above. In addition to amounts expensed during thesecond quarter 2010, we purchased approximately $1.6 million of miningequipment and had outstanding approximately $0.7 million of advance payments toequipment manufacturers at June 30, 2010. We did not incur any costs related to the El Quevar project feasibilitywork during the second quarter 2009.

 

*Administrative*. Administrative expenses were $2.1 million for the second quarter 2010compared to $3.0 million for the second quarter 2009.  Administrative expenses were primarilyrelated to public company costs, corporate activities in support of our ElQuevar feasibility work, exploration programs and our management services forthe San Cristóbal mine.  The reduction inthe second quarter 2010 administrative expenses as compared to administrativeexpenses for the same period of 2009 is primarily related to the reduction ofstaff and office lease costs in 2009 following our emergence fromreorganization.

 

*Loss on Auction Rate Securities.*  During the second quarter 2009 we recorded aloss of $1.3 million related to auction rate securities (“ARS”)investments.  The auctions for certain ofour ARS began to fail during the third quarter of 2007 and continued to failthrough third quarter 2009, at which point we sold all of our remaining ARSinvestments in a secondary market.  Wedid not hold any ARS investments during the second quarter 2010.

 

*Interest and Other Income*.  We recorded nominal interest and other incomefor the second quarter 2010 compared to $0.2 million for the second quarter2009.  The higher second quarter 2009amount was primarily related to higher available interest rates as compared tointerest rates available during the second quarter 2010.

 

*Royalty Income*.  During the second quarter 2010 we recorded$0.2 million of royalty income compared to $0.1 million for the second quarter2009.  The royalty income is fromExcellon’s Platosa mine in Mexico on which we retained a net smelter returnroyalty.

 

*Interest and Other Expense*.  During the second quarter 2010, we recordedother expense of $0.2 million for a fair market value adjustment of the PacaPulacayo property held for sale at June 30, 2010.  During the second quarters 2010 and 2009, weheld no debt and consequently we recorded no interest expense during thoseperiods.

 

*Income Taxes*.  We aresubject to U.S. income taxes on income derived from services provided to theSan Cristóbal mine.  Otherwise, we do notcurrently conduct business in the U.S. that would generate significant U.S.taxable income.  Our income taxprovisions were $1.0 and $0.2 for the second quarter 2010 and the secondquarter 2009, respectively, and 

 

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consistprimarily of withholding taxes either accrued or paid to Bolivia in connectionwith management services provided to the San Cristóbal mine.

 

**Six Months Ended June 30, 2010**

 

*Continuing Operations*

 

*Management service fees.*We recorded $11.1 million ofmanagement service fees for the first six months of 2010.  The management service fees are comprised of$5.4 million of fees, a $4.3 million early termination payment, as discussedabove, and $1.4 million for reimbursed withholding taxes.  Management service fees for the first sixmonths of 2009 were $4.7 million ($3.4 million and $1.3 million for theSuccessor and Predecessor, respectively). The Successor’s $3.4 millioncomprised of $3.0 million of fees and $0.4 million of reimbursed withholdingtaxes. The $1.3 million 2009 Predecessor amount was related to fees received bythe Predecessor from a subsidiary included in discontinued operations.

 

*Cost of services.*We recorded $2.5 million ofcosts of services for the first six months of 2010. The cost of services iscomprised of reimbursed direct administrative expenses incurred by us relatedto the Management Agreement.  Cost of servicesfor the first six months of 2009 was $1.1 million ($1.1 million and $0.0million for the Successor and Predecessor, respectively).

 

*Exploration*. Our exploration expenses, including propertyholding costs and allocated administrative expenses, were $6.1 million for thefirst six months of 2010, as compared to $7.0 million for the first six monthsof 2009 ($3.5 million and $3.5 million for the Successor and Predecessor,respectively).  Exploration expenses for2010 were incurred primarily in Argentina, and exclude amounts spent on the ElQuevar project feasibility work, and in Mexico and Peru and include propertyholding costs and costs incurred by the local exploration offices. Explorationexpenses for 2009 were incurred primarily at the El Quevar project in Argentinaand in Mexico and Peru and include property holding costs and costs incurred bythe local exploration offices.

 

*El Quevar feasibility*. During the first sixmonths of 2010, we incurred $6.0 million of expenses related to feasibilitywork on the Yaxtché deposit of our El Quevar project in Argentina primarilyrelated to development of the exploration drift, drilling and engineeringwork.  Costs incurred for work performedoutside of the high grade Yaxtché deposit at our El Quevar project are includedin exploration discussed above. In addition to amounts expensed during thefirst six months of 2010, we purchased approximately $1.8 million of miningequipment and had outstanding approximately $0.7 million of advance payments toequipment manufacturers at June 30, 2010. We did not incur any costs related to the El Quevar project feasibilitywork during the first six months of 2009.

 

*Administrative and reorganization*.  Administrative expenses were $4.4 million forthe first six months of 2010 compared to $8.1 million for the first six monthsof 2009 ($3.3 million and $4.8 million for the Successor and Predecessor,respectively).  Administrative expensesfor 2010 were primarily related to public company costs, corporate activitiesin support of our El Quevar feasibility work, exploration programs and ourmanagement services for the San Cristóbal mine. Administrative expenses for 2009 included public company costs and wereprimarily related to corporate activities in support of our operation of the SanCristóbal mine and exploration programs. Reorganization expenses for the first six months of 2009 were $4.4million ($0.7 million and $3.7 million for the Successor and Predecessor,respectively).  The reorganizationexpenses related to expenses for professional services incurred as a result ofour bankruptcy filing and the sale of our interest in the San Cristóbal mine toSumitomo during the first quarter 2009. We incurred no reorganization expenses during the first six months of2010.

 

*Loss on Auction Rate Securities.*  During the first six months of 2009 thePredecessor recorded a loss of $2.2 million ($1.4 million and $0.8 million forthe Successor and Predecessor, respectively) related to auction rate securities(“ARS”) investments.  The auctions forcertain of our ARS began to fail during the third quarter of 2007 and continuedto fail through third quarter 2009, at which point we sold all of our remainingARS investments in a secondary market. We did not hold any ARS investments during the first six months of 2010.

 

*Interest and Other Income*.  We recorded interest and other income of $0.7million for the first six months of 2010 compared to $1.3 million for the firstsix months of 2009 ($0.3 million and $1.0 million for the Successor andPredecessor, respectively).  Interest andother income for the first six months of 2010 consisted primarily of $0.4million of income from the sale of certain mineral rights and a $0.3 milliongain on the sale of marketable securities. The first six months of 2009 amountswere primarily related to interest earned on the higher average cash andinvestment balances held during that period as compared to amounts held duringthe first quarter 2010.

 

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*Royalty Income*.  During the first six months of 2010, werecorded $0.2 million of royalty income compared to $0.2 million for the firstsix months of 2009 ($0.1 million and $0.1 million for the Successor andPredecessor, respectively).  The royaltyincome is from Excellon’s Platosa mine in Mexico on which we retained a netsmelter return royalty.

 

*Interest and Other Expense*.  During the first six months of 2010, werecorded other expense of $0.3 million for a fair market value adjustment ofthe Paca Pulacayo property held for sale at June 30, 2010.  During the first six months of 2010, we heldno debt and consequently we recorded no interest expense for the period.  For the first six months of 2009, thePredecessor recorded interest and other expense in the amount of $0.3 millionprimarily for interest incurred on convertible notes cancelled in connectionwith our emergence from bankruptcy.

 

*Income Taxes*.  We aresubject to U.S. income taxes on income derived from services provided to theSan Cristóbal mine.  Otherwise, we do notcurrently conduct business in the U.S. that would generate significant U.S.taxable income.  Our income taxprovisions were $1.5 and $0.4 for the first six months of 2010 and the firstsix months of 2009 ($0.2 million and $0.2 million for the Successor andPredecessor, respectively), and consist primarily of withholding taxes eitheraccrued or paid to Bolivia in connection with management services provided to theSan Cristóbal mine.

 

*Discontinued Operations — San Cristóbal.*

 

The $4.2 million loss from discontinued operationsfor the 83-day period ended March 24, 2009 was related to the SanCristóbal asset group that was sold on March 24, 2009 and includes an $8.4million loss on the sale of the San Cristóbal asset group.  See Note 2 to the consolidated financialstatements for details of the $4.2 million loss from discontinued operations.

 

**Liquidity, Capital Resources and Going Concern**

 

At June 30, 2010 our aggregate cash andshort-term investments totaled $39.8 million, which included$33.8 million of cash and cash equivalents and $6.0 million of shortterm investments. Our cash and short-term investment balance is significantlyhigher than the $9.0 million in similar assets held at December 31,2009 due to the receipt of (i) approximately $40.5 million in net proceedsreceived during the first quarter from the issuance of our common stock in apublic offering and two separate private placements to Sentient,  (ii) $1.1 million in 2009 bonus paymentsearned under the Management Agreement, (iii) $5.4 million of managementservices fees, and (iv) $3.2 million from the termination of theManagement Agreement with Sumitomo, offset by $19.4 million spent during thesix months ended June 30, 2010 primarily on exploration, the El Quevarfeasibility study, management services provided under the Management Agreement,and general and administrative activities, including changes in workingcapital.

 

We plan to spend the following amounts during theremaining six months of 2010 pursuant to our long term business strategy:

 

·      up to$19.0 million to fund the completion of a feasibility study of the Yaxtchédeposit at our El Quevar project, including the construction of an undergrounddrift and related infrastructure in order to develop additional informationregarding the deposit and detailed plant engineering;

 

·      approximately$4.0 million to fund targeted exploration activities on several of ourproperties during 2010, including completion of drilling programs at ourZacatecas project in Mexico, further drilling of targets at Quevar Norte andother locations outside of the Yaxtché deposit at El Quevar, and continuationof early stage exploration on our Palca project in Peru and our Matehuapil andLa Pinta projects in Mexico including initial drilling and bulk sampling;

 

·      approximately$2.0 million on other generative exploration activities and property holdingcosts related to our remaining portfolio of exploration properties conductedthrough our principal exploration offices located in South America;

 

·      dependingon the success of the targeted exploration program and generative explorationactivities noted above, we could spend additional amounts for early andadvanced stage drilling programs on our current or new properties; and

 

·      approximately$3.5 million on general and administrative costs.

 

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We plan to fund the expenditures described abovefrom our cash and investment balances at June 30, 2010 of $39.8 millionand from approximately $0.5 million from royalties and other income through theremainder of 2010.  Based on theseprojections we would end the year 2010 with a cash and investments balance ofapproximately $12.0 million.  If theEl Quevar feasibility study is positive, we currently anticipate that atleast an additional $65.0 to $85.0 million would be needed beyond 2010 tocomplete development and construction of an underground mine and processingfacility at El Quevar. This is a preliminary estimate and the actual costmay vary significantly.  To fund the ElQuevar project and other exploration drilling programs beyond 2010 we will haveto raise additional capital.   There canbe no assurance that we will be successful raising additional capital in thefuture on terms acceptable to us or at all. If we are unable to obtainadditional capital during 2010 or 2011, the potential development of theEl Quevar project will be delayed following the completion of thefeasibility study and we will have to significantly reduce spending on otherexploration projects to preserve cash.

 

**Significant Accounting Policies**

 

See Note 3 to the Unaudited ConsolidatedFinancial Statements for recently adopted standards and new accountingstandards.

 

**Forward-Looking Statements**

 

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

 

·                     Our expectation that cash onhand and anticipated revenues and income will be sufficient to fund general andadministrative costs and exploration expenses through 2010;

 

·                     Our planned spending ongeneral and administrative and exploration costs and our expected cash receiptsfrom interest and royalty income;

 

·                     The anticipated timing andcost of the advancement of our El Quevar project, including the timing of thecompletion of a feasibility study and projected costs to complete thedevelopment and construction if the results of the feasibility study arepositive; and

 

·                     The timing and cost of theevaluation and expansion of our exploration portfolio, including activities tobe conducted during 2010 on certain of our exploration properties.

 

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

 

·                        Results of futureexploration at the El Quevar project;

 

·                        Results of futureexploration at our exploration portfolio properties;

 

·                        The economic viability ofthe El Quevar project;

 

·                        Our ability to raisenecessary capital to finance advancement of the El Quevar project and otherprojects in our exploration portfolio;

 

·                        Delay and increased costsassociated with the El Quevar feasibility study;

 

·                        Results of the feasibilitystudy at the El Quevar project;

 

·                        Changes in target drillingprogram expenses and priorities;

 

·                        Worldwide economic andpolitical events affecting the market prices for silver, zinc, lead and otherminerals which may be found on our exploration properties;

 

·                        Political and economicinstability in Argentina, Chile, Mexico, Peru and other countries in which weconduct our business; and

 

·                        The factors discussed under “RiskFactors” in our Form 10-K for the year ended December 31, 2009.

 

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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.

 

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

 

**Interest Rate Risk**

 

Weinvest substantially all of our excess cash in U.S. government and debtsecurities rated “investment grade” or better. The rates received on such investments may fluctuate with changes ineconomic conditions. Based on the average cash, restricted cash, investmentsand restricted investment balances outstanding during the first quarter 2010, a1% decrease in interest rates would have resulted in a reduction in interestincome for the period of approximately $0.1 million.

 

**Foreign Currency Exchange Risk**

 

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

 

**Commodity Price Risk**

 

Oneof our 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 develop ourexploration properties.  None of ourproperties is in production and we currently hold no commodity derivativepositions.

 

**Item 4. Controls and Procedures**

 

(a)         Evaluation of Disclosure Controls and Procedures

 

OurChief Executive Officer (principal executive officer) and Chief FinancialOfficer (principal financial officer) have evaluated the effectiveness of ourdisclosure controls and procedures (as such term is defined inRules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30,2010 (the “Evaluation Date”). Based on such evaluation, such officers haveconcluded that, as of the Evaluation Date, our disclosure controls andprocedures are effective to ensure that information required to be disclosed byus in the reports that we file or submit under the Exchange Act are recorded,processed, summarized and reported within the time periods specified in the SEC’srules and forms and to ensure that information required to be disclosed byus in the reports that we file or submit under the Exchange Act is accumulatedand communicated to our management, including our Chief Executive Officer andChief Financial Officer to allow timely decisions regarding requireddisclosure.

 

(b)         Changes in Internal Control over Financial Reporting

 

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

 

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PART II: OTHER INFORMATION

 

**Item 1.   Legal Proceedings**

 

Our predecessor, ASML, concluded, based on the results of an internalinvestigation conducted under the direction of its Audit Committee in late 2005and early 2006, that certain former senior employees of one of its SouthAmerican subsidiaries were involved in making impermissible payments ofapproximately $125,000 to government officials in 2003 and 2004. ASML contactedthe Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”)during 2006 and reported the results of the internal investigation and wasinformed that the SEC and DOJ would commence investigations with respect tothese matters, including possible violations of the Foreign Corrupt PracticesAct. Subsequently, ASML entered into discussions with the SEC staff concerninga settlement of the conduct subject to the SEC’s investigation. As a result, wehave reached an agreement in principle with the SEC staff which, if approved bythe Commission, would resolve this matter with the SEC. Under the terms of theproposed settlement, we, on neither an admit nor deny basis, would agree to theentry of an administrative cease and desist order prohibiting us from futureviolations of Sections 13(b)(2)(A), 13(b)(2)(B) and 30A of the SecuritiesExchange Act of 1934. Moreover, under the terms of the proposed settlement, theSEC staff would not recommend that the Commission require the payment ofdisgorgement, civil money penalties, prejudgment interest or the appointment ofa corporate monitor. The proposed settlement is subject to Commissionapproval.  We cannot guarantee that theCommission will ultimately accept the terms of the proposed settlement. In August 2009,the DOJ informed us that it has closed its investigation based on, among otherthings, Golden Minerals’ pending settlement with the SEC.

 

On May 3, 2010, we filed a financial industry customer arbitrationclaim against Credit Suisse Securities (USA) LLC with the Arbitration Board ofthe Financial Industry Regulatory Authority (FINRA), seeking to recoverapproximately $32 million and other damages resulting from losses realized onthe sale of auction rate securities in the third quarter 2009.  Theproceeding is styled Golden Minerals Company v. Credit Suisse Securities USA(LLC), FINRA Dispute Resolution Arbitration No. 10-02061.  We alleged in our Statement of Claim thatCredit Suisse misrepresented or failed to disclose material facts to usregarding the risk of the securities.  Credit Suisse Securities (USA) LLC filed its response on approximately July 16,2010, generally denying the Company’s allegations.  We cannot predict the outcome of thisproceeding.

 

**Item 1A.  Risk Factors.**

 

***Following the termination of our agreement tomanage the San Cristóbal mine, we have no revenues and we will require externalfinancing to continue the advancement of El Quevar following completionof the feasibility study and to continue our other activities.***

 

Since our incorporation in March 2009, our revenues have consistedprimarily of the management fees paid to us under the Management ServicesAgreement dated March 24, 2009 under which we managed the San Cristóbalmine in Bolivia for Sumitomo Corporation.  Effective June 30, 2010,our management services were terminated and we received payment of the materialamounts remaining to be paid to us under that agreement.  We do notcurrently anticipate that we will seek or obtain other mine managementservices agreements in the future, and thus do not expect to receive futurerevenue from the performance of mine management services.

 

Unless and until we commence production at the El Quevar project oracquire a producing mine, we will be required to continue to raise funds fromexternal sources in order to pay our general and administrative expenses,advance the El Quevar project following completion of the feasibility study anticipatedin late 2010, maintain our exploration properties and continue our explorationefforts.   Failure to obtain sufficient external financing may resultin the delay or indefinite postponement of the further advancement of the ElQuevar project following completion of the feasibility study and ofexploration at our other properties.  We cannot assure you that we will beable to obtain the necessary financing on favorable terms or at all.

 

Additional risk factors affecting Golden Minerals can be found in Item1A of our Annual Report on Form 10-K for the year ended December 31,2009 and in this Form 10-Q.

 

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

 

Wehad no unregistered sales of equity securities during the three months endedJune 30, 2010.

 

OnMarch 18, 2010, the Securities and Exchange Commission declared effectiveour Registration Statement on Form S-1 (333-162486), which registered thesale of up to 4,000,000 shares of our common stock, $0.01 par value pershare.  On March 24, 2010, wecompleted a public offering of all 4,000,000 shares of common stock registeredunder the Registration Statement.  Atotal of 3,652,234 shares were sold by Golden Minerals, and a total of 347,766shares were sold by a selling stockholder. All 4,000,000 shares of common stock were sold at a price of $8.50 pershare.  Dahlman Rose & Company,LLC acted as sole book-running manager and representative of the underwritersin the United States and Canaccord Financial Ltd. acted as sole book-runningmanager and representative of the underwriters in Canada.

 

Concurrentwith the public offering, two of our shareholders, Sentient Global ResourcesFund III, LP and SGRF III Parallel I, LP (“Sentient”) exercised theirpre-emptive right and purchased in a private placement an additional 905,065shares of our common stock at the public offering price of $8.50.  The aggregate gross proceeds to us of thepublic offering and Sentient private placement was approximately $38.8 million.

 

Thefollowing table shows our expenses incurred in connection with the issuance anddistribution of our common stock pursuant to the Registration Statement on Form S-1and the Sentient private placement:

 
| Underwriting/Placement Agent Discounts and  Commissions |       | $2.4 million     |       |
|---------------------------------------------------------|------------|------------------|------------|
| Expenses Paid to or for Underwriters                    |       | $0.2 million     |       |
| Other Expenses                                          |       | $1.2 million     |       |
| **Total Expenses**                                      | ** ** | **$3.8 million** | ** ** |

 

Ofthe approximately $35.0 million in net proceeds received from the publicoffering and Sentient private placement, through June 30, 2010, we havespent an estimated $6.0 million in connection with the construction of anunderground drift and related infrastructure and the continued work on thefeasibility study for the Yaxtche deposit at our El Quevar project, and anestimated $2.0 million to fund exploration activities on our portfolio ofexploration properties.  Remainingamounts are being held as cash or short term investments.

 

Noneof the payments described above as expenses of the offering or use of proceedsreflect direct or indirect payments to directors, officers or persons owning10% or more of our equity securities.

** **

**Item 3.   Defaults Upon SeniorSecurities**

 

None.

 

**Item 4.   Removed and Reserved**

 

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

 

None.

 

**Item 6.   Exhibits**

 

10.1            MSA Termination Agreement dated June 29, 2010 by andamong Golden Minerals Company, Golden Minerals Services Corporation, Minera SanCristóbal S.A., Summit Minerals GmbH, SC Minerals Aktiebolag, SumitomoCorporation, Comercial Metales Blancos AB and SC Minerals Bolivia S.R.L.

31.1            Certification of ChiefExecutive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.

31.2            Certification of ChiefFinancial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.

32                      Certificationof 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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SIGNATURES

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on behalf of the undersigned thereuntoduly authorized.

 
|   |                 | GOLDEN  MINERALS COMPANY |
|--------|----------------------|--------------------------|
|   |                 |                     |
|   |                 |                     |
| Date:  | August 4,  2010 | By:                      | /s/  Jeffrey G. Clevenger |
|   |                 |                     | Jeffrey  G. Clevenger |
|   |                 |                     | President  and Chief Executive Officer |
|   |                 |                     |   |
|   |                 |                     |   |
| Date:  | August 4,  2010 | By:                      | /s/  Robert P. Vogels |
|   |                 |                     | Robert  P. Vogels |
|   |                 |                     | Senior  Vice President and Chief Financial Officer |

 

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