On June 24th Golden Minerals announced it had entered into a merger agreement with ECU

Silver Mining. The new combined entity possess a portfolio of growth projects in Mexico

and Argentina, primarily. Under the transaction terms, each ECU share was exchanged for

0.05 AUMN shares and $0.000394 in cash. On September 2, the business combination was

closed and AUMN and ECU shareholders now own approximately 45% and 55% respectively,

of the outstanding shares of the new entity on a fully diluted basis.

The merger expands Golden Mineral’s project pipeline with the Velardeña District properties

in Durango, Mexico. The properties consists of an NI 43-101 compliant mineral resource

of 40MM Ag Eq oz Measured & Indicated and 391MM Ag Eq oz in the Inferred category.

The properties also include two operational mills with a combined capacity of 820 tpd.

Management has plans to invest and improve operations by lowering dilution in the nearterm,

but ultimately expects to unlock the value at Velardeña by driving down to higher grade

ore with wider widths, and expanding production to 2000 tpd with the construction of a new

and larger sulfide mill. We estimate the ramp-up will cost ~$150MM over 4 years.

After including Velardeña in our model and adjusting for the effect of the merger, our

calculated NAV and price target is now $53.75/sh. Given our perception of the importance

now put on ramping up Velardeña, we have delayed first production at El Quevar to

mid-2014. However, this may prove to be conservative and we await further guidance from

management.