GOLDEN MINERALS COMPANY

FORM 10-K

YEAR ENDED DECEMBER 31, 20162019

INDEX

References to “Golden Minerals, the “Company,” “our,” “we,” or “us” mean Golden Minerals Company, its predecessors and consolidated subsidiaries, or any one or more of them, as the context requires. Many of the terms used in our industry are technical in nature. We have included a glossary of some of these terms below.

FORWARD-LOOKING STATEMENTS

Some information contained in or incorporated by reference into this annual report on Form 10-K may contain forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. We use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,” “may,” “could,” “will,” “project,” “should,” “believe” and similar expressions (including negative and grammatical variations) to identify forward-looking statements.  These statements include statementscomments relating to our plans, expectations regardingand assumptions concerning the Velardeña oxide plant lease, including its durationthe expected term, anticipated revenues, care and revenues,maintenance costs, and potential future tailings expansion; expectations related toregarding the updated Velardeña PEA; the El Quevar project, including assumptions and projections contained in the El Quevar PEA (including life of mine, grade and production expectations), the timing of results from the current drilling program and our plans regarding further advancement of the project; the Santa Maria property, including the assumptions and Rodeo propertiesprojections contained in Mexico including planned exploration the updated Santa Maria PEA (including life of mine, grade and production expectations)and other expectations regarding the project, and the proposed sale of 100% of our interest in the property; future evaluation work and costs, planneddrilling plans and exploration activities at Sand Canyon, Yoquivo, Rodeo and costs related toother properties; our other exploration properties,financial outlook in 2020, including anticipated 2017 income from the use of our ATM Program and LPC Program (each defined herein) and expenditures during the year; expected need for external financing costs and expectations related to our El Quevar project, and statements concerning our financial condition, business strategies and business and legal risks. Although we believe the expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct. Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various factors described in this annual report on Form 10-K, including:

Higher than anticipated care and maintenance costs at the Velardeña Properties in Mexico or at El Quevar in Argentina; 

Lower revenue than anticipated from the oxide plant lease, which could result from delays or problems at the third party'sHecla’s San Sebastian mine or at the oxide plant, permitting problems at the third party'sHecla’s San Sebastian mine or the oxide plant, delays in constructing additional tailings capacity at the oxide plant, earlier than expected termination of the lease or other causes;

Continued decreases or insufficient increasesDecreases in silver and gold prices;

Whether we are able to raise the necessary capital required to continue our business on terms acceptable to us or at all, and the likely negative effect of continued lowdecreased silver and gold prices or unfavorable exploration results;  

Unfavorable results from exploration at ourthe Sand Canyon, Rodeo, Yoquivo, Santa Maria or other exploration properties and whether we will be able to advance our Santa Maria and Rodeo propertiesthese or other exploration properties; 

Risks related to the El Quevar project in Argentina, including whether we will be able to fund further exploration ourselves or find a joint venture partner to advance the project,unfavorable results from our evaluation activities, the feasibility and economic viability and unexpected costs of maintaining the project, and whether we will be able to find a joint venture partner or secure adequate financing to further advance the project; 

Variations in the nature, quality and quantity of any mineral deposits that are or may be located at the Velardeña Properties or the Company'sour exploration properties, changes in interpretations of geological information, and unfavorable results of metallurgical and other tests; 

CAUTIONARY STATEMENT REGARDING MINERALIZED MATERIAL

“Mineralized material” as used in this annual report on Form 10-K, although permissible under the United States Securities and Exchange Commission’s (“SEC”) Industry Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any deposits at the Velardeña Properties, any part of the Yaxtché deposit at the El Quevar, projectSanta Maria or Rodeo properties or any deposits at our other exploration properties, will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves”. Investors are cautioned not to assume that all or any part of the disclosed mineralized material estimates will ever be confirmed or converted into reserves or that mineralized material can be economically or legally extracted. In addition, in this annual report on Form 10-K we also modify our estimates made in compliance with National Instrument 43-101 to conform to SEC Industry Guide 7 for reporting in the United States. Mineralized material is substantially equivalent to measured and indicated mineral resources (exclusive of reserves) as disclosed for reporting purposes in Canada, except that the SEC only permits issuers to report “mineralized material” in tonnage and average grade without reference to contained ounces.

“Core Drill” means a rotary type of rock drill that cuts a core of rock and is recovered in long cylindrical sections, usually two centimeters or more in diameter.

“Deposit” means an informal term for an accumulation of minerals.

“Development Stage” means a project with an established resource, not in production, engaged in the process of additional studies preparing for completion of a feasibility study or for commercial extraction.

“Diorite” means a grey to dark grey intermediate intrusive igneous rock composed principally of plagioclase feldspar, (typically andesine), biotite, hornblende, and/or pyroxene.

“Doré” means gold and silver bullion that remains in a cupelling furnace after the lead has been oxidized and skimmed off.

“Epithermal Calcite-Quartz” means deposits, typically occurring in veins, of calcite-quartz from hydrothermal fluids at shallow depths under conditions in the lower ranges of temperature and pressure.

“Net Smelter Return Royalty” or “NSR Royalty” means a defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of transportation, insurance, and processing costs.

“Open Pit” means a mine working or excavation open to the surface.

“Sulfide” means a compound of sulfur and some other element.metallic element or elements.

Prior to suspending mining and processing at the Velardeña Properties in November 2015, we had revenues from the sale of silver, gold, lead and zinc products from the Velardeña and Chicago mines. We have not completed a feasibility study with regard to all or a portion of any of our properties to date. Any mineralized material discovered or extracted by us should not be considered proven or probable mineral reserves. As of December 31, 2016,2019, none of our mineralized material met the definition of proven or probable mineral reserves. We expect to remain an exploration stage company for the foreseeable future, even though we were extracting and processing mineralized material.future. We will not exit the exploration stage until such time, if ever, that we demonstrate the existence of proven or probable mineral reserves that meet the guidelines under SEC Industry Guide 7.

Company History

We were incorporated in Delaware under the Delaware General Corporation Law in March 2009. From March 2009 through September 2011, we focused on the advancement of our El Quevar silver project in Argentina. On

current exploration budget and remain open to finding a partner to contribute to the funding of further exploration and development.

Exploration Focus. We are focused on evaluating and searching for mining opportunities in North America (including Mexico) with high precious metal grades and low development costs with near term prospects of mining, and particularly properties within reasonable haulage distances of our Velardeña Properties, which may include the Rodeo property located west of the Velardeña Properties in Durango.

During the first two quarters of 2016 we mined approximately 4,500 tonnes of material from the Santa Maria mine as bulk samples with grades of approximately 235 grams per tonne (“gpt”) silver and 0.7 gpt gold. During February 2017, we completed a preliminary economic assessment (“PEA”) on the Santa Maria property. The PEA results reported by the engineering firm of Tetra Tech, Inc (“Tetra Tech”), based on an updated estimate of mineralized material, show a potentially profitable operation based on a 200 tonnes per day mining rate and processing at a local third party mill.  See “—Exploration Properties –Santa Maria” below for additional information regarding the Santa Maria Tetra Tech report.

In June 2016, we began a 2,080 meter core drilling program at the Rodeo property.  The results from the program showed a gold and silver bearing epithermal vein and breccia system with encouraging gold and silver values over an approximate 50 to 70 meter true width. During January 2017, Tetra Tech completed an estimate of mineralized material at the Rodeo deposit, which presents two mineralized material estimates based on two different operating scenarios. See “—Exploration Properties—Rodeo” below for additional information regarding the Rodeo Tetra Tech report.

During 2017 we plan to focusplants. We are also continuing our exploration efforts primarily on the Santa Maria mineselected properties in our portfolio of approximately [12] exploration properties located in Mexico, Nevada and exploration on certain other properties, including Rodeo. We expect our expenditures for the exploration program in 2017 to be approximately $1.8 million.Argentina.

Experienced Management Team. We are led by a team of mining professionals with approximately 60 years of combined experience in exploration, project development, and operations management, primarily in the Americas. Our executive officers have held senior positions at various large mining companies including, among others, Cyprus Amax Minerals Company, INCO Limited, Meridian Gold Company, Barrick Gold Exploration and Noranda Exploration.

Velardeña Properties

Location, Access and Facilities

The Velardeña Properties are comprised of two underground mines and two processing plants within the Velardeña mining district, which is located in the municipality of Cuencamé, in the northeast quadrant of the State of Durango, Mexico, approximately 65 kilometers southwest of the city of Torreón, Coahuila and approximately 140 kilometers northeast of the city of Durango, which is the capital of the State of Durango. The mines are reached by a seven kilometer road from the village of Velardeña which is reached by highway from Torreón and Durango. The Velardeña mining district is situated in a hot, semi-arid region.

Of the two underground mines comprising the Velardeña Properties, the Velardeña mine includes five different major vein systems including the Terneras, Roca Negra, San Mateo, Santa Juana and San Juanes systems. During 2015, we mined from the San Mateo, Terneras and Roca Negra vein systems as well as the Santa Juana vein system to augment grades as mining and processing rates ramped up.

We own a 300 tonne per day flotation sulfide mill situated near the town of Velardeña, which accounted for 100% of our revenue from saleable metals during 2015.a. The mill includes lead, zinc and pyritethree flotation circuits in which we can process the sulfide material to make lead, zinc and pyrite concentrates. Most of the silver and gold sold in 2015 was contained in the lead concentrate. During 2015 we processed all our mined material through the sulfide plant.

We also own a conventional 550 tonne per day cyanide leach oxide mill with a Merrill-Crowe precipitation circuit and flotation circuit located adjacent to our Chicago mine, which we previously used to process oxide and mixed sulfide/oxide material from the Velardeña Properties.mine. In July 2015, we leased the oxide plant to a third partyHecla to process its

The following map shows the location of the Velardeña Properties (other than the El Mogote Fraccion concession, which is located southeast of the identified properties).

Properties.

The Velardeña Properties are subject to the Mexican ejido system requiring us to contract with the local communities, or ejidos, surrounding our properties to obtain surface access rights needed in connection with our mining and exploration activities. We currently have contracts with two ejidos to secure surface rights for our Velardeña Properties with a total annual cost of approximately $25,000.$35,000. We have a ten-year contract with the Velardeña ejido, which provides surface rights to certain roads and other infrastructure at the Velardeña Properties through 2021, and a 25-year contract with the Vista Hermosa ejido, which provides exploration access and access rights for roads and utilities for our Velardeña Properties until 2038.

oxide plant. We are licensed to pump water from all six wells up to a permitted amount. We are required to make annual payments to the CNA to maintain our rights to these wells. In 20162019 we made such payments totaling approximately $25,000 and expect to pay approximately the same amount in 2017.2020. We are required to pay a fine to the CNA each year if we use

Mineralization in the deposits located at the Velardeña mine belongs primarily to epithermal calcite quartz veins with associated lead, zinc, silver, gold and copper mineralization, typical of the polymetallic vein deposits of northern Mexico. The veins are usually thin, normally in the 0.2 meter to 0.5 meter range, but consistent along strike and down dip. Coxcomb and rhythmically banded textures are common.

Chicago Mine

On the Chicago property, the oldest rocks outcropping are Cretaceous limestone of the Aurora Formation which are highly folded. This limestone is locally metamorphosed by the intrusion of the Tertiary dioritic stocks and dykes. The general geology of the Chicago property is very similar to the geology of the Velardeña property. The Chicago veins strike northeast and dip steeply southeast. Chicago ore tends to be higher in lead and zinc than the Santa Juana ore. Vein widths at Chicago are variable and tend to be narrower than at the Santa Juana deposit, especially in the skarn host.

2014 Technical Report

During the first quarter of 2015, the engineering firm of Tetra Tech, Inc. (“Tetra Tech”) completed an estimate of mineralized material at the Velardeña Properties, set forth in the following table:

Note: Results may not tie precisely due to rounding.

The Tetra Tech mineralized material estimate assumed a silver price of $25 per troy ounce, a gold price of $1,446 per troy ounce, and a cutoff grade of a net smelter return (“NSR”) of $100 per tonne.

The following table shows the commodity prices and metallurgical recoveries used to determine the cutoff grade.

* Amounts represent three-year average prices.

The following table shows the reduction in mineralized material reported in the Tetra Tech report that resulted from extraction and processing of mineralized material in 2015. As a result of the shutdown of mining and processing in November 2015, there are no results for 2016.2016, 2017, 2018 or 2019.

Note: Results may not tie precisely due to rounding. Additionally, silver ounces, zinc pounds and leads pounds are rounded to the nearest thousand and gold ounces are rounded to the nearest ounce and tonnes. The variance in rounding different commodities and units is for convenience and does not reflect any differences in the level of accuracy of the calculated mineralized material estimate.

net reimbursable costs related to the services we provide under the lease. The lease is described in detail below. We also incurred approximately $2.0$1.7 million in expenses related to shut down costs and maintenance at our Velardeña Properties as a result of the suspension of mining and processing activities in November 2015 and expect to incur approximately $0.4 million in quarterly holding costs for as long as mining and processing activities remain suspended.2015. We retained a core group of employees, most assigned to operate the oxide plant that is leased to a third party and not affected by the shutdown. The retained employees also include an exploration group and an operations and administrative group to continue to advance our plans in Mexico, oversee corporate compliance activities, and to maintain and safeguard the longer termlonger-term value of the Velardeña assets.

In July 2015 we entered into a leasing agreement with a wholly-owned subsidiary of Hecla Mining Company to lease our Velardeña oxide plant for an initial term of 18 months beginning July 1, 2015. DuringThe lease agreement contained several lease extension options, and in the third quarter 2016, Hecla exercised its right to extend the initial 18-month term for six additional months untillease was extended through June 30, 2017, as permitted under the original lease agreement. As contemplated by the original agreement, the Company and Hecla also reached2017. The 2016 extension included an agreement regarding anunder which Hecla would construct, at its cost, certain tailings expansion of the tailings impoundment, at Hecla's cost,facilities to accommodate Hecla's increased use of tailings capacity in excess of an agreed amount, while preserving flexibility for future tailings expansions. The agreedtailings expansion is estimated to cost approximately $1.5 million, and we have obtained the necessary permits for such expansion.has since been completed. The parties agreed that Hecla would either leave unused at the end of the lease term an agreed amount of capacity in the expanded tailings facility or construct an additional expansion at its cost. In connection with their agreement regarding tailings impoundment expansions, the parties agreed that Hecla hashad the right to extend the lease for an additional 18 months following June 30, 2017, or until December 31, 2018. On March 24, 2017, Hecla exercised its right to extend the lease until December 31, 2018.

On August 2, 2017, we granted Hecla an option to extend the oxide plant lease for an additional period of up to two years ending no later than December 31, 2020. On October 1, 2018, Hecla exercised its option to extend the oxide plant lease until December 31, 2020. On December 2, 2019 we entered into an additional amendment of the lease agreement with Hecla to reduce the per tonne fee payable by Hecla for the duration of the lease term, commencing on January 1, 2020, from $22 per tonne to $11 per tonne, however, the per tonne fee reverts back to $22 per tonne for any month in which either of the following conditions are met: (1) the Comex daily silver spot closing average price for such month is $20 per ounce or greater, and (2) the mill head grade average from the metallurgical balance for such month is 1,000 grams per ton equivalent silver head grade or greater. If either condition is met in any month, Hecla will pay the higher fee of $22.00 per tonne on all amounts processed in the oxide plant during such month. The reduced fee only applies to the tonnage-based payments under the lease agreement; the monthly lease payment of $125,000 per month is not affected by the amendment. The latest amendment also extended notice period for Hecla’s right to terminate the lease for any reason from 120 days’ notice to 150 days. Hecla has a one-time right of first refusal to continue to lease the plant following a termination notice through December 31, 2020 if we decide to use the oxide plant for our own purposes before December 31, 2020.

Hecla is responsible for ongoing operation and maintenance of the oxide plant. During the year ended December 31, 2016,2019, Hecla processed approximately 136,000158,000 tonnes of material through the oxide plant, resulting in total revenues to us of approximately $6.4$7.7 million, comprised of approximately $3.0$5.3 million for direct plant charges plusand fixed fees and approximately $2.4 million for other net reimbursable costs totaling approximately $3.4 million. We incurred costs of approximately $2.0 million related to the services we provide under the lease for a net margin of $4.4lease. The $2.4 million during 2016.  Hecla reached its intended processing throughput of approximately 400 tonnes per day during 2016 and, at this rate, net cash payments to us, net of reimbursable costs should totalare also reported as plant lease costs, resulting in net operating margin of approximately $0.4$5.3 million per month, including variable and fixed fees, or nearly $5.0 million annually.for the year ended December 31, 2019. However, because Hecla has the right to terminate the lease on 150 days’ notice, there is no assurance that these amounts will be received.

Mining and Processing

ThereAside from some minor test mining and crushing activities, there were no mining or processing activities, other than the Hecla lease, at our Velardeña Properties in 20162018 or 2019 as a result of the shutdown of the mining and sulfide processing activities in November 2015. During 2015 the processing facilities generatedWe expect to incur approximately 465,000 payable silver equivalent ounces, including approximately 327,000 ounces of silver and 1,975 ounces of gold, and sold approximately 494,000 silver equivalent ounces.  Silver equivalent ounces include silver and gold but exclude lead and zinc and are calculated at a ratio of 70 silver ounces to 1 gold ounce. Also, during 2015 the processing facilities generated approximately 1.1$0.4 million pounds of payable lead and 1.2 million pounds of payable zinc. Full year 2015 cashin quarterly holding costs were $22.16 per payable silver ounce net of by-product credits.  “Cash costs per payable silver ounce, net of by-product credits” is a non-GAAP financial measure defined below in “Item 7 —Non-GAAP Financial Measures”.

The following table shows actual silver, gold and silver equivalent payables for 2015 until we suspended mining and sulfide processing in mid-November 2015. As a result of the shutdown ofas long as mining and processing in November 2015, there are no results for 2016.

The table below sets forth the mining and processing statistics of our Velardeña Properties for 2015 until we suspended mining and sulfide processing in November 2015. As a result of the shutdown of mining and processing in November 2015, there are no results for 2016.

Environmental Legislation

Mining projects in Mexico are subject to Mexican federal, state and municipal environmental laws and regulations for the protection of the environment. The principal legislation applicable to mining projects in Mexico is the federal General Law of Ecological Balance and Environmental Protection, which is enforced by the Federal Bureau of Environmental Protection, commonly known as “PROFEPA”. PROFEPA is the federal entity in charge of carrying out environmental inspections and negotiating compliance agreements. Voluntary environmental audits, coordinated through PROFEPA, are encouraged under the federal General Law of Ecological Balance and Environmental Protection. PROFEPA monitors compliance with environmental legislation and enforces Mexican environmental laws, regulations and official standards. If warranted, PROFEPA may initiate administrative proceedings against companies that violate environmental laws, which proceedings may result in the temporary or permanent closure of non-complying facilities, the revocation of operating licenses and/or other sanctions or fines. According to the Federal Criminal Code, PROFEPA must inform the relevant governmental authorities of any environmental crimes that are committed by a mining company in Mexico.

Concession holders under the exploration stage may submit themselves to comply with the Mexican Official Norm: NOM-120-SEMARNAT-1997, which provides, among other things, that mining exploration activities to be carried out within certain areas must be conducted in accordance with the environmental standards set forth in NOM-120-SEMARNAT-1997; otherwise, concession holders are required to file a preventive report or an environmental impact study prior to the commencement of the exploration, exploitation and processing of mineral resources. An environmental impact study is required for exploitation and processing of mineral resources activities.

In 2014 Mexico developed an Energy sectorenergy policy applicable to private investment companies whereby new mining concessions are now subject to prior approval from the Ministry of Energy. Current mining concessions forming the Velardeña Properties are not subject to or affected by this approval requirement, but any new mining concessions acquired will be subject to this additional approval.

VAT in Mexico is charged upon alienation of goods, performance of independent services, grant of temporary use or exploitation of goods, or import of goods or services that occur within Mexico’s borders, at a rate of 16%. There is no VAT in the case of export of goods or services or for the sale of gold, jewelry, and gold metalwork with a minimum gold content of 80%, excluding retail sale to the general public. The sale of mining concessions is subject to VAT as concessions are not considered to be land. VAT paid by a business enterprise on its purchases and expenses may usually be credited against its liability for VAT collected from customers on its own sales. In addition,This creditable VAT may also be directly refunded, or overpayments may be used tobut under new regulations beginning in January 2019, the creditable VAT can no longer offset tax liabilities arising from other Mexican federal taxes.

Import duties apply for goods and services entering the country, unless specifically exempted due to a free trade agreement or registered under specific programs like IMMEX, under which we are currently registered. Payroll taxes are payable in most states including Durango and Coahuila, and social security, housing and pension contributions must be made to the federal government when paying salaries.

Employees of Mexico entities are statutorily entitled to a portion of the employer’s pre-tax profits, called PTU. The rate of profit sharing is currently 10% of the employer’s taxable income as defined by the Income Tax law. A taxpayer may reduce its income tax base by an amount equal to the PTU. Certain companies are exempt from paying PTU, which include companies in the extractive industry (principally the mining industry) during the period of exploration.

Under the 2014 amendments to the federal corporate income tax law, titleholders of mining concessions are required to pay an annual special duty of 7.5% of their mining related profits, determined by deducting from mining related revenues certain specified types of cash expenditures. Payment of the special duty is due at the end of March each year.

Titleholders of mining concessions also are required to pay a 0.5% special mining duty, or royalty, on an annual basis, on revenues obtained from the sale of silver, gold and platinum. Similar to the 7.5% annual special duty, the 0.5% duty is due at the end of March each year.

El Quevar

Location and Access

Our El Quevar silver project is located in the San Antonio de los Cobres municipality, Salta Province, in the altiplano region of northwestern Argentina, approximately 300 kilometers by road northwest of the city of Salta, the capital city of the province. The project is also accessible by a 300 kilometer300-kilometer dirt and gravel road from the city of Calama in northern Chile. The small village of Pocitos, located about 20 kilometers to the west of El Quevar, is the nearest settlement. We have established a camp approximately 10 kilometers west of the project to house project workers. A high tension

The following map shows the location of the El Quevar project.

Property History

Mining activity in and around the El Quevar project dates back at least 80 years. Between 1930 and 1950, there was lead and silver extraction of mineralized materials from small workings in the area, but we have no mining records from that period. The first organized exploration activities on the property occurred during the 1970s, although no data from that period remains. Over the last 30 years, several companies have carried out exploration activity in the area, including BHP Billiton, Industrias Peñoles, Mansfield Minerals and Hochschild Mining Group, consisting primarily of local sampling with some limited drilling programs.

December 31st of each calendar year). Each time a new mining concession is granted, concession holders are exempt from the canon payment fee for a period of three years from the concession grant date. However, this exemption does not apply to the grant of vacant exploitation concessions; only to the grant of new mining concessions.

The El Quevar project is currently comprised of 31 mining concessions that we hold directly. In total, the El Quevar project encompasses approximately 57,000 hectares. The area of most of our exploration activities at El Quevar is within the concessions that are owned by Silex Argentina S.A., our wholly-owned subsidiary.

We are required to pay a 1% net smelter return royalty on the value of all minerals extracted from the El Quevar II concession and a 1% net smelter return royalty on one-half of the minerals extracted from the Castor concession to the third party from whom we acquired these concessions. We can purchase one half of the royalty for $1 million in the first two years of production. The Yaxtché deposit is located primarily on the Castor concession. We aremay also be required to pay a 3% royalty to the Salta Province based on the mine mouthnet smelter value of minerals extracted from any of our concessions.concessions less costs of processing. To maintain all of the El Quevar concessions, we paid canon payment fees to the Argentine government of approximately $40,000$57,000 and $112,000$36,000 in 20152018 and 2016,2019, respectively. In 20172020 we expect to pay approximately $115,000.$30,000.

The surface rights at El Quevar are controlled by the Salta Province. There are no private properties within the concession area. To date, no issues involving surface rights have impacted the project. Although we have unrestricted access to our facilities, we have been granted easements to further protect our access rights.

Geology and Mineralization

The geology of the El Quevar project is characterized by silver-rich veins and disseminations in Tertiary volcanic rocks that are part of an eroded stratovolcano. Silver mineralization at El Quevar is hosted within a broad, generally east-west-trending structural zone and occurs as a series of north-dipping parallel sheeted vein zones, breccias and mineralized

they are intersected by the structures. The silver mineralization at the Yaxtché zone is of epithermal origin. The cross-cutting nature of the mineralization, the assemblage of sulfide and alteration minerals, and the presence of open spaces with euhedral minerals, all point to an origin at shallow to moderate depths (a few hundred meters below surface) from hydrothermal solutions.

During 2012, RungePincockMinarco (“RPM”) completedwe released an updated estimate of mineralized material at our El Quevar project. This SEC Industry Guide 7 estimate assumed mining of oxide material from an open pit on the east end of the Yaxtché deposit and sulfide material from both the open pit and an underground mine on the western portion of the Yaxtché deposit. According to the RPMThe estimate was based on results from 270 core drill holes.

In 2017, Wood Group USA, Inc. (formerly known as Amec Foster Wheeler E&C Services, Inc.) (“Wood”) undertook an analysis and re-modeling of data utilized in a 2012 mineralized material estimate based on results from 270 core drill holes mineralizedand assumed mining material infrom the Yaxtché zone, atdeposit. The Wood estimate, which we announced in February 2018, used updated geologic controls and a cut-offmodeling method that optimized silver grade of 26 grams per tonne silver for the open pit and 100 grams per tonne silver for underground material, and using a three-year average silver price of $24.41 per ounce, was as follows:assuming mining would occur solely underground.

The RPM estimate includesIn September 2018, we completed a smaller tonnagePEA prepared pursuant to NI 43-101 that used the February 2018 revised estimate of mineralized material for the Yaxtché deposit as a basis. The PEA contemplates a six-year underground mining operation using pre-existing and new underground development at a mine production rate of 1,200 tonnes per day using a post-pillar cut-and-fill mining method that will deliver 2.45 million tonnes of diluted sulfide material at an average grade of 409 g/t silver. As contemplated in the possible open pit atPEA, the mined material would be processed using a higher likely grade as compared to the technical report prepared by RPM pursuant to Canadian National Instrument 43-101 (“43-101”). In the RPM report pursuant to 43-101, RPM used inferred resources beneficially to the possible operation in the optimization ofconventional single product flotation mill that would produce a resource level open pit. When preparing its mineralized material estimate under Industry Guide 7, RPM did not use the inferred resources calculated pursuant to 43-101 to beneficially optimize the pit. As such, optimization without the benefit of inferred material yielded a smaller tonnage of mineralized material in the possible open pit at a higher likely grade as compared to the RPM report pursuant to 43-101.silver-rich bulk concentrate suitable for sale.

For further detail regarding mineralized material, see “CAUTIONARY STATEMENT REGARDING MINERALIZED MATERIAL”.

Exploration and Advancement of El Quevar

The Yaxtché deposit is the primary target currently identified at the El Quevar project. We believe thatIn the El Quevar deposit may be amenablefirst quarter 2019, we initiated a 3,000 meter, approximately $0.6 million, drilling program to bulk mining, which could include an open pit onfurther define the eastern and central areas ofpotential for additional mineralized material in the Yaxtché deposit and bulk underground miningsurrounding area and completed that drill program in the western area. Our work indicates thatsecond quarter 2019. In September 2019, we released final results from the Yaxtché deposit is at least 2 kilometers in strike lengthdrilling program.  See “Management’s Discussion and is continuous laterallyAnalysis of Financial Condition and to depthsResults of more than 300 meters below surface in the main area. More recent results also supportOperations – 2019 Highlights – El Quevar” for a possible eastward extensiondiscussion of the Yaxtché deposit and recognize an emerging new mineralized trend five kilometers north of the Yaxtché deposit. We continue to hold our El Quevar property on care and maintenance until we can fund further exploration ourselves or find a partner to fund further exploration. We have completed environmental baseline studies, and a further environmental impact assessment process would be required to support the permits necessary for construction and mining. If the El Quevar project proceeds to development and construction, we would be required to obtain numerous additional permits from national, provincial and municipal authorities in Argentina.2019 drill program.

We spent approximately $1.1$1.3 million and $0.5$2.0 million at our El Quevar project on holdingin 2018 and maintenance costs2019, respectively. The increase in 2015 and 2016, respectively.2019 was primarily related to a drilling program conducted during the year. From the inception of our exploration activities in 2004 through December 31, 20162019 we have spent approximately $75.8$82.0 million on exploration and related activities at El Quevar.Quevar, including amounts spent by our predecessor, Apex Silver Mines Limited. In 20172020, we expect to spend approximately $0.5$0.8 million at our El Quevar project onto fund ongoing exploration and evaluation activities, care and maintenance and property holding costs.

We are continuing surface exploration in the district to identify further drill targets in the 57,000-hectare property area. Our property holdings contain two district-scale high sulfidation epithermal systems with potential to host additional precious metals deposits. We plan to continue to advance El Quevar as much as possible within the limits of our current exploration budget and remain open to finding a partner to contribute to the funding of further exploration and development.

Exploration Properties

In addition to Velardeña and El Quevar, we currently control a portfolio of approximately 1012 exploration properties located primarily in certain traditional precious metals producing regions of Mexico.Mexico, Nevada and Argentina. We do not consider any of our exploration properties to be individually material, including those noted below.

In 20172020 we plan to focus our exploration efforts primarily on the Santa Maria mineevaluating and searching for mining opportunities in North America with near term prospects of mining. We are also focused on continuing our exploration efforts on selected properties in our portfolio of approximately 12 exploration properties located in the Parral District in Chihuahua StateMexico, Nevada, and the Rodeo property located west of the Velardeña Properties in Durango.Argentina. During 20172020 we expect our expenditures for the exploration program to total approximately $1.8$3.0 million, with approximately $0.3 million in property holding costs in Mexico, $0.1 million in holding costs in Nevada and approximately $0.5 million in administrative and general reconnaissance costs in Mexico.

Santa MariaSale of Mogotes and Pistachon Properties

In August 2014,On December 18, 2019, we entered into an option agreement giving ussold the rightnon-strategic Mogotes and Pistachon properties in Mexico to acquirea subsidiary of Industrias Peñoles for $1.2 million the Santa Maria mine, a privately held property$3.0 million. The Mogotes and Pistachon properties are comprised of a singletotal of four mining claimconcessions located near our Velardeña Properties in Durango State, Mexico and adjacent to mineral concessions controlled by subsidiaries of 18 hectares westIndustrias Peñoles. None of Hildalgo de Parral, Chihuahua State, Mexico. During the first two quarters of 2016 we mined approximately 4,500 tonnes ofclaims in the properties contained any identified mineralized material as a bulk sample with gradesestimates.

Our Rodeo claims are comprised of approximately 235 gpt silver and 0.7 gpt gold. This material was substantially lower in grade than material mined in 2015 from the same vein. We processed the bulk sample through a toll milling facility, generating approximately 100 tonnes of concentrates containing approximately 22,000 ounces of silver and 44 ounces of gold.  The concentrates were sold to a third party for approximately $300,000 during the first two quarters of 2016 consisting of approximately 21,000 payable ounces of silver and 40 payable ounces of gold, which offset exploration costs. The average grade of 7,500 tons mined and processed in bulk samples since 2015 is 338 gpt silver and 0.7 gpt gold.

The option agreement requires an additional approximately $0.9 million to be paid to acquire 100% of the Santa Maria property.  Minimum payments of $0.1 million are due every six months in April and October and the minimum payments for 2017 have already been paid to the property owner.  Until the total due under the option agreement has been paid, the property owners have the right to 50% of any net profits from mining activities at the property, after reimbursement of all costs incurred by the Company since April 2015, to the extent that such net profit payments exceed the minimum payments.

In February 2017 a PEA was completed on our behalf by Tetra Tech based on an updated estimate of mineralized material. The PEA presents a base case assessment of developing Santa Maria’s mineral deposit.  The PEA contemplates a 38-month underground mining operation at a mining rate of 200 tonnes per day using a combination of cut and fill and other mining techniques, and custom milling at a local third-party flotation mill.  Based on the assumptions in the PEA, we believe there may be potential to develop a small mining operation at Santa Maria.

In 2017 we plan to continue work related to optimizing mining plans for the project and obtaining permits for the potential mining operation as considered in the current PEA.  Permit applications have been submitted and are pending comment and acceptance.  We are also developing plans for additional exploration work to potentially expand the deposit.  However, no development decision has been made with respect to the project.

Rodeo

We acquired the Rodeo and Rodeo 2 claims comprising 1,866 hectares1,900-hectares located 80 kilometers west of the Velardeña Properties in Durango, Mexico where previousMexico. Previous exploration by other companies has identified a gold-bearing epithermal system exposed at the surface. In JuneDuring 2016, we begancompleted a 2,080 meter2,080-meter core drilling program at the Rodeo property at a cost of approximately $0.4 million. The results from the program show a gold and silver bearing epithermal vein and breccia system with encouraging gold and silver values over an approximate 50 to 70 meter70-meter true width. The system is exposed at the top of a northwesterly striking ridge and dips steeply to the northeast over about one kilometer of strike length.

Yoquivo

The Yoquivo property was acquired in 2017 and with the recent additional acquisition of a claim internal to the exterior boundary the project consists of 1,975 hectares in 7 claims that cover an epithermal vein district hosted in Tertiary andesitic volcanic rocks that is exposed in an erosional window through Oligocene rhyolite on the eastern margin of the Sierra Madre Occidental of northern Mexico. The property is 200 km SW of Chihuahua city in the state of Chihuahua, Mexico. Surface rock sampling done in 2018 demonstrated gold and silver values of potential economic interest in several of the veins in the district. We have an option to purchase the six concessions that comprise the Yoquivo property for payments totaling $0.75 million over four years subject to a 2% to 3% NSR royalty on production, capped at $2.8 million.

In October 2018 we announced high-grade silver-gold assays from the Yoquivo project. Multiple silver-gold bearing epithermal veins were mapped and sampled, with the two most important veins being the San Francisco and Pertenencia veins. A new vein, the La Nina vein, was discovered in the northwest of the property where it splits off from the main San Francisco vein. Two other veins, the Esperanza and El Dolar veins have been identified and sampled. Based on sampling and mapping we have identified the most attractive targets on the property and have permits in hand to initiate the drill program. Subject to the availability of capital, we intend to begin a drill program in the second or third quarter of 2020 to test the most promising portions of the veins.

On October 16, 2019, we entered into an option agreement for the sale of our right to acquire a 100% interest in the Santa Maria and Las Marias exploration properties to Magellan Gold Corporation (“Magellan”). The agreement provides for a period of up to 150 days during which Magellan will complete its due diligence review and secure financing for the project. Prior to the end of such period, Magellan will have the right to exercise its option to acquire our interests in the project. Under the terms of the agreement, if Magellan exercises its option, it will make a cash payment of $1.0 million to us upon closing. We will retain a 6.5% NSR royalty from all production at Santa Maria until a total of $3.0 million has been paid to us under the royalty agreement. Thereafter, we will retain a 3.0% NSR royalty for the balance of the mine’s life. If Magellan fails to achieve commercial production from the project within one year following closing, we will not be obligated to convey our interests in the project to Magellan and we will retain our interest in the project with no obligation to return any payments to Magellan.

In August 2014, we entered into an option agreement giving us the right to acquire for $1.2 million the Santa Maria mine, a privately held property comprised of a single mining claim of 18 hectares west of Hidalgo de Parral, Chihuahua State, Mexico. Since 2015, we have completed test mining and processing of approximately 7,100 dry tonnes from the Santa Maria mine, with average grades of 338 gpt silver and 0.8 gpt gold. In March 2017, an updated PEA was completed on our behalf by the engineering firm Tetra Tech, prepared pursuant to NI 43-101, and presented a base case assessment of developing Santa Maria’s mineral deposit. In September 2018, Tetra Tech completed an updated PEA for the Santa Maria project that incorporates data accumulated since March 2017 as well as information from a 22-hole, 4,800-meter drilling program begun in August 2017 and completed in April 2018. In total, we planhave drilled 9,900 meters in 59 holes since acquiring the property. Since 2015, we have completed test mining and processing of 7,100 dry tonnes from the Santa Maria mine west of Hidalgo de Parral, Chihuahua, with average grades 338 g/t Ag and 0.8 g/t gold (“Au”).

We have the right to continue workacquire 100% of the Santa Maria property under two separate option agreements representing the total concessions that comprise the property for additional payments of $0.6 million, payable through August 2021. The first option agreement covers concessions we acquired in August 2014 and requires an additional minimum payment of approximately $0.2 million in 2020. In addition, until the total due under the first option agreement has been paid, the property owners have the right to 50% of any net profits from mining activities from the concessions related to metallurgical studies, economic evaluationthe option, after reimbursement of all costs incurred by us since April 2015, to the extent that such net profit payments exceed the minimum payments. The second option agreement covers concessions acquired in August 2017 and potential resource expansion.requires an additional approximately $0.4 million be paid by making additional payments of $0.1 million in 2020 and $0.3 million in 2021. Under

the terms of the agreement discussed above, Magellan will assume responsibility for making the additional payments if it elects to exercise the option.

Celaya Farm-outSand Canyon

In August 2016, our wholly owned Mexican subsidiaryDuring the second quarter 2019 we entered into an earn-in agreement with Golden Gryphon Explorations for the Sand Canyon project located in northwestern Nevada, where surface work has identified a 100% owned Mexican subsidiarylarge system of Electrum Global Holdings, L.P.,epithermal veins with potential for gold and silver deposits. We hold an option to earn a privately owned company (together “Electrum”), related to our Celaya exploration property in Mexico. We received an upfront payment of $0.2 million and Electrum has agreed to incur exploration expenditures totaling at least $0.5 million within the first year of the agreement, reduced by certain costs Electrum previously incurred on the property since December 2015 in its ongoing surface exploration program.  Electrum, at its option, can elect to acquire an undivided 60% interest in a joint venture company to be formed to hold the CelayaSand Canyon project after incurring exploration expenditures totalingby spending $2.5 million during the first threein exploration expenses over four years, with guaranteed minimum expenditures of the agreement. Electrum would serve as manager of the joint venture. If we elect not to contribute to additional exploration or development expenditures after the initial earn-in period, Electrum, at its option, would have the right$0.5 million in year one. To continue to earn an additional 20% interest in the Celaya project, forwe must spend at least $0.75 million in each of years two and three and $0.5 million in year four, and drill at least 5,000 feet of core or 10,000 feet of reverse circulation or a combination of the two, by the end of the second year. We paid $25,000 cash and $50,000 in reimbursed exploration expenditures to acquire the option and will make staged payments of a total interestadditional $135,000 ($35,000 in 2020, $50,000 in 2021 and $50,000 in 2022) over the next three anniversaries of 80%, by incurring an additional $2.5 million of exploration or development expenditures over a second three-year period. Following the second earn-in period we would have the right to maintain our 20% interest or our interest ultimately could be converted into a 10% net profits interest.agreement.

The 6,200-hectare silver and gold Celaya project contains a strongly developed alteration systemWe have completed surface exploration activities on the main Mexico silver belt trend, located 10 kilometers east of Plata Latina’s Naranjillo silver and gold discovery and 45 kilometers southeast of and on trend with the historic Guanajuato District. We have conductedproject including mapping and geochemical sampling activities at Celaya since 2012.  We completedto identify drill targets. Based on this work we have obtained the necessary drill permits and have begun a 2,000 meter, three-hole drilling program, with initial results expected in 2015 that identified epithermal gold and silver mineralization beneath a portionthe second quarter of the widespread clay-silica alteration on the claims comprising the project.

Electrum Global Holdings’ Mexican subsidiary, Minera Adularia, has conducted extensive geologic mapping and sampling on the Celaya property.  New targets have been identified and exploration drilling to test these targets began in January 2017.

Farm-outs, Royalties and Other Dispositions

Exploration properties that we choose not to advance are evaluated for joint venture, sale of all or a partial interest and royalty potential. We currently have minority ownership interests and/or royalties in or have disposed of the following properties that were once part of our exploration portfolio:

Board of Directors of Golden Minerals

Committee Membership

Metals Market Overview

We are an emerging precious metals exploration company with silver and gold mining properties in Mexico and a large silver advanced exploration silver project in Argentina. Descriptions of the markets for these metals are provided below.

Silver Market

Silver has traditionally served as a medium of exchange, much like gold. Silver’s strength, malleability, ductility, thermal and electrical conductivity, sensitivity to light and ability to endure extreme changes in temperature combine to make it a widely used industrial metal. While silver continues to be used as a form of investment and a financial asset, the principal uses of silver are industrial, primarily in electrical and electronic components, photography, jewelry, silverware, batteries, computer chips, electrical contacts, and high technology printing. Silver’s anti-bacterial properties also make it valuable for use in medicine and in water purification. Additionally, the use of silver in the photovoltaic and solar panel industries is growing rapidly, and new uses of silver are being developed in connection with the use of superconductive wire and radio frequency identification devices.