Golden Minerals Reports Second Quarter 2012 Results

GOLDEN, Colo., Aug. 8, 2012 /CNW/ - Golden Minerals Company ("Golden Minerals" or the "Company") (NYSE Amex: AUMN) (NYSE MKT: AUMN) (AUM.TO) announces second quarter 2012 results.

For the quarter ended June 30, 2012 , Golden Minerals recorded revenue of $4.9 million from the sale of metals at the Velardeña Operations, located in the state of Durango, Mexico . The Company's net loss for the second quarter 2012 was $7.6 million , as compared to a net loss of $10.1 million in the first quarter 2012. The net loss included a negative gross margin of $1.7 million at the Velardeña Operations, $2.1 million of costs related to mine development and expansion activities at the Velardeña Operations, $2.0 million of depreciation expense, $1.8 million of exploration expenses, $1.8 million of corporate general and administrative expenses, $1.2 million of expenses at the El Quevar project, and a $1.8 million gain from the sale of the Platosa royalty interest.

The Company's cash and short term investments balance decreased by $9.2 million during the quarter to $23.1 million as of June 30, 2012 . The decrease is due primarily to the expenditures described above plus capital expenditures of $2.3 million and an increase in net working capital of $0.5 million , both related primarily to the Velardeña Operations.

A component of the Company's current strategy is to selectively monetize and reduce expenditures on its portfolio of exploration properties. During the second quarter 2012, the Company sold its net smelter royalty interest in the Platosa property to Excellon Resources for $2.4 million . To date, the Company has reviewed and relinquished approximately 200,000 hectares in Mexico , Peru and Argentina as being of no further interest, thus reducing ongoing expenditures. We are negotiating sale or farm-out arrangements affecting an additional 200,000 hectares, and we are consolidating our exploration management and administrative offices and functions. Expenditures for El Quevar and our exploration properties for the first half of 2012 were approximately one quarter of the expenditures made during the first half of 2011, with more monetization and cost cutting efforts in progress.

The Company is developing plans to expand production at the Velardeña Operations to approximately 1,150 tonnes per day. The expansion would include replacement of one of the sulfide plant ball mills, the addition of flotation and filtration capacity at the sulfide plant, and the addition of an autoclave to increase recovery of payable gold and silver from metal-bearing pyrites and to eliminate the use of current third party tolling arrangements. Our preliminary estimate of capital costs for this yet-to-be-engineered expansion is in the range of $30.0 million . We are proceeding with preliminary design and test work for the autoclave project as it indicates superior returns compared to the Company's current third party toll processing arrangements and our engineering consultants have advised that the autoclave facility cost could be as low as $20 million in capital. Any expansion is dependent on external funding.

The Company is planning a 2,000-meter, six-hole drilling program at the Quevar Norte prospect at El Quevar in northwestern Argentina , with the goal of outlining a new mineralized system that runs parallel to the main Yaxtché target. Drilling is expected to begin in September. We have also identified three prospects in Mexico on currently held ground, unrelated to Velardeña or Zacatecas, for which we continue exploration programs with the goal of drilling one or more of these prospects as funding becomes available.

Jeff Clevenger , Chairman, President and Chief Executive Officer, commented, "Most of the necessary infrastructure projects at Velardeña have been completed and mine development has resumed as originally planned, now that we have all of the mining equipment we need to access areas of the mine that have had no previous development. We anticipate increasing grades of gold and silver as the year progresses and increasing throughput and recoveries in the plant as a result of projects completed to date at both the oxide and sulfide plants. Rationalization of our exploration portfolio is progressing as planned. We are also delighted to have added strength to our operating team with the addition of David Travis , a mining engineer with international underground experience, who will be overseeing the mining operation at Velardeña, allowing Dave Drips to focus on optimization and longer term value from the Velardeña property."

Additional information regarding second quarter financial results may be found in the Company's 10-Q Quarterly Report which is available on the Golden Minerals website atwww.goldenminerals.com.