UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

~~[X]~~☒

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2017.~~2022.


~~[ ]~~
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-13627

GOLDEN MINERALS COMPANY

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

~~DELAWARE~~		~~26-4413382~~
DELAWARE		26-4413382

(STATE OR OTHER JURISDICTION OF		(I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)		IDENTIFICATION NO.)


350 INDIANA STREET, SUITE ~~800~~650
GOLDEN, COLORADO			80401

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)			(ZIP CODE)

~~(303)~~

(303) 839-5060

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS: YES ☒ NO ☐

INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS SUBMITTED ELECTRONICALLY AND POSTED ON ITS CORPORATE WEB SITE, IF ANY, EVERY INTERACTIVE DATA FILE REQUIRED TO BE SUBMITTED AND POSTED PURSUANT TO RULE 405 OF REGULATION S-T (§232.405 OF THIS CHAPTER) DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO SUBMIT AND POST SUCH FILES): YES ☒ NO ☐

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, A NON-ACCELERATED FILER, A SMALLER REPORTING COMPANY OR AN EMERGING GROWTH COMPANY. SEE DEFINITION OF “LARGE ACCELERATED FILER”, “ACCELERATED FILER”, “SMALLER REPORTING COMPANY”, AND “EMERGING GROWTH COMPANY” IN RULE 12B-2 OF THE EXCHANGE ACT.:


~~LARGE ACCELERATED FILER ☐~~Securities registered pursuant to Section 12(b) of the Act:		~~ACCELERATED FILER ☐~~
~~NON-ACCELERATED FILER ☐~~Tile of each class	Trading Symbol	~~SMALLER REPORTING COMPANY ☒~~Name of each exchange on which registered
~~EMERGING GROWTH COMPANY ☐~~Common Stock, $0.01 par value	AUMN	NYSE American

IF AN EMERGING GROWTH COMPANY, INDICATE BY CHECK MARK IF THE REGISTRANT HAS ELECTED NOT TO USE THE EXTENDED TRANSITION PERIOD FOR COMPLYING WITH ANY NEW OR REVISED FINANCIAL ACCOUNTING STANDARDS PROVIDED PURSUANT TO SECTION 13(A) OF THE EXCHANGE ACT.☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:Yes ☒ No ☐

~~INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT): YES ☐ NO ☒~~

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ☐

INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE FILED BY SECTIONS 12, 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A COURT: YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

~~AT NOVEMBER 7, 2017, 92,005,448 SHARES OF COMMON STOCK,~~

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

At November 10, 2022, 167,477,992 shares of common stock, $0.01 ~~PAR VALUE PER SHARE, WERE ISSUED AND OUTSTANDING~~par value per share, were issued and outstanding.

Table of Contents

GOLDEN MINERALS COMPANY

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, ~~2017~~2022

INDEX

~~INDEX~~

Table of Contents

PART I. FINANCIAL ~~INFORMATION~~INFORMATION

Item 1.Financial Statements

~~Item 1.Financial Statements~~

GOLDEN MINERALS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in United States dollars)

(Unaudited)

September 30,

December 31,

2017

2016

(in thousands, except share data)

Assets

Current assets

Cash and cash equivalents (Note 4)

$
4,966

$
2,588

Short-term investments (Note 4)

242

334

Trade receivables

391

380

Inventories, net (Note 6)

267

245

Value added tax receivable, net (Note 7)

1

5

Related party receivable (Note 21)

—

643

Prepaid expenses and other assets (Note 5)

466

578

Total current assets

6,333

4,773

Property, plant and equipment, net (Note 8)

8,569

9,235

Total assets

$
14,902

$
14,008

Liabilities and Equity

Current liabilities

Accounts payable and other accrued liabilities (Note 9)

$
1,348

$
1,224

Deferred revenue (Note 15)

293

—

Other current liabilities

9

24

Total current liabilities

1,650

1,248

Asset retirement and reclamation liabilities (Note 10)

2,449

2,434

Deferred revenue (Note 15)

674

—

Warrant liability - related party (Note 12)

—

976

Warrant liability (Note 12)

—

922

Other long term liabilities

51

66

Total liabilities

4,824

5,646

Commitments and contingencies (Note 19)

Equity (Note 14)

Common stock, $.01 par value, 200,000,000 and 100,000,000 shares authorized; 92,005,448 and 89,020,041 shares issued and outstanding, respectively

919

889

Additional paid in capital

516,237

495,455

Accumulated deficit

(507,041)

(488,037)

Accumulated other comprehensive (loss) income

(37)

55

Shareholders' equity

10,078

8,362

Total liabilities and equity

$
14,902

$
14,008


			December 31,
	September 30,		2021
		2022	(Restated)*

	(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents (Note 4)	$	6,504	$	12,229
Short-term investments (Note 4)		35		67
Inventories, net (Note 6)		1,786		1,608
Value added tax receivable, net (Note 7)		1,770		1,290
Prepaid expenses and other assets (Note 5)		1,182		1,145
Total current assets		11,277		16,339
Property, plant and equipment, net (Note 8)		6,404		6,627
Investments (Note 4)		225		—
Other long-term assets (Note 9)		643		747
Total assets	$	18,549	$	23,713

Liabilities and Equity
Current liabilities
Accounts payable and other accrued liabilities (Note 10)	$	4,345	$	3,509
Deferred revenue (Note 8)		344		1,469
Other current liabilities (Note 11)		276		721
Total current liabilities		4,965		5,699
Asset retirement and reclamation liabilities (Note 12)		3,805		3,569
Other long-term liabilities (Note 11)		149		353
Total liabilities		8,919		9,621

Commitments and contingencies (Note 19)

Equity (Note 15)
Common stock, $.01 par value, 350,000,000 shares authorized; 167,477,992 and 162,804,612 shares issued and outstanding respectively		1,675		1,628
Additional paid-in capital		541,835		540,518
Accumulated deficit		(533,880)		(528,054)
Shareholders' equity		9,630		14,092
Total liabilities and equity	$	18,549	$	23,713

* See Note 3

The accompanying notes form an integral part of these condensed consolidated financial statements.

Table of Contents

GOLDEN MINERALS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE LOSS~~

(Expressed in United States dollars)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(in thousands except per share data)				(in thousands, except per share data)
Revenue:
Sale of metals (Note 16)	$	5,268	$	8,479	$	18,700	$	16,118
Total revenue		5,268		8,479		18,700		16,118
Costs and expenses:
Cost of metals sold (exclusive of depreciation shown below) (Note 16)		(4,374)		(4,292)		(13,335)		(9,156)
Exploration expense		(2,376)		(2,146)		(7,038)		(4,021)
El Quevar project expense		(154)		(90)		(448)		(249)
Velardeña care and maintenance costs		(370)		(414)		(843)		(754)
Administrative expense		(918)		(911)		(3,466)		(3,451)
Stock-based compensation		(194)		(75)		(543)		(1,491)
Reclamation expense		(71)		(67)		(211)		(196)
Other operating income, net		384		138		1,274		472
Depreciation and amortization		(89)		(143)		(241)		(466)
Total costs and expenses		(8,162)		(8,000)		(24,851)		(19,312)
(Loss) income from operations		(2,894)		479		(6,151)		(3,194)
Other income (expense):
Interest and other expense, net (Note 17)		(3)		(13)		(17)		(336)
Gain on foreign currency transactions		154		133		252		156
Total other income (expense)		151		120		235		(180)
(Loss) gain from operations before income taxes		(2,743)		599		(5,916)		(3,374)
Income taxes (Note 14)		46		(188)		90		(203)
Net (loss) income	$	(2,697)	$	411	$	(5,826)	$	(3,577)
Net (loss) income per common share - basic	$	(0.02)	$	0.00	$	(0.04)	$	(0.02)
Weighted-average shares outstanding - basic (1)		166,948,751		162,477,039		164,872,701		161,751,452

Three Months Ended

Nine Months Ended

September 30,

September 30,


2017

2016

2017

2016

(in thousands except per share data)

(in thousands, except per share data)

Revenue:

Oxide plant lease (Note 15)

$
1,771

$
1,729

$
5,107

$
4,768

Total revenue

1,771

1,729

5,107

4,768

Costs and expenses:

Oxide plant lease costs (Note 15)

(619)

(549)

(1,704)

(1,478)

Exploration expense

(977)

(927)

(1,968)

(2,865)

El Quevar project (expense) income

(183)

65

(524)

(308)

Velardeña shutdown and care and maintenance costs

(379)

(456)

(1,098)

(1,589)

Administrative expense

(694)

(897)

(2,592)

(3,141)

Stock based compensation

7

(95)

(300)

(666)

Reclamation expense

(49)

(47)

(146)

(144)

Other operating income, net (Notes 7 and 8)

951

1,281

1,813

1,558

Depreciation and amortization

(138)

(346)

(456)

(1,317)

Total costs and expenses

(2,081)

(1,971)

(6,975)

(9,950)

Loss from operations

(310)

(242)

(1,868)

(5,182)

Other income and (expense):

Interest expense (Note 11)

—

—

—

(515)

Interest and other income (Note 16)

15

10

37

12

Warrant derivative loss (Notes 3 and 17)

—

(545)

—

(2,821)

Derivative loss (Note 17)

—

—

—

(778)

Loss on debt extinguishment (Note 11)

—

—

—

(1,653)

Loss on foreign currency

(23)

(21)

(20)

(63)

Total other income (expense)

(8)

(556)

17

(5,818)

Loss from operations before income taxes

(318)

(798)

(1,851)

(11,000)

Income tax benefit

—

—

—

26

Net loss

$
(318)

$
(798)

$
(1,851)

$
(10,974)

Comprehensive loss, net of tax:

Unrealized (loss) gain on securities

11

107

(92)

278

Comprehensive loss

$
(307)

$
(691)

$
(1,943)

$
(10,696)

Net loss per common share — basic

Loss

$
(0.00)

$
(0.01)

$
(0.02)

$
(0.14)

Weighted average Common Stock outstanding - basic (1)

91,097,279

88,878,371

90,028,480

78,080,858

(1)Potentially dilutive shares have not been included for loss periods because to do so would be anti-dilutive. Potentially dilutive shares at September 30, 2022 consist of 11,005,040, equivalent shares related to stock compensation and 9,803,846 equivalent shares related to warrants outstanding. Potentially dilutive shares at September 30, 2021 consist of 9,533,372 equivalent shares related to stock compensation and 14,303,846 equivalent shares related to warrants outstanding. See Note 15 for a discussion of stock-based compensation and warrants.

The accompanying notes form an integral part of these condensed consolidated financial statements.

Table of Contents

GOLDEN MINERALS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in United States dollars)

(Unaudited)


	Nine Months Ended September 30,
	2022		2021

	(in thousands)
Cash flows from operating activities:
Net cash used in operating activities (Note 18)	$	(6,401)	$	(2,093)
Cash flows from investing activities:
Proceeds from sale of assets		125		17
Investment in Golden Gryphon Explorations Inc.		(225)		—
Acquisitions of property, plant and equipment		(46)		(1,542)
Net cash used in investing activities	$	(146)	$	(1,525)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		1,050		2,714
Common stock shares relinquished to pay taxes		(228)		—
Net cash from financing activities	$	822	$	2,714
Net decrease in cash and cash equivalents		(5,725)		(904)
Cash and cash equivalents, beginning of period		12,229		9,704
Cash and cash equivalents, end of period	$	6,504	$	8,800

Nine Months Ended

September 30,

2017

2016

(in thousands)

Cash flows from operating activities:

Net cash provided by (used in) operating activities (Note 18)

$
22

$
(5,123)

Cash flows from investing activities:

Proceeds from sale of assets

750

898

Capitalized costs and acquisitions of property, plant and equipment

(5)

(36)

Net cash from investing activities

$
745

$
862

Cash flows from financing activities:

Proceeds from issuance of common stock, net of issuance costs

1,611

3,599

Net cash from financing activities

$
1,611

$
3,599

Net increase (decrease) in cash and cash equivalents

2,378

(662)

Cash and cash equivalents, beginning of period

2,588

4,077

Cash and cash equivalents, end of period

$
4,966

$
3,415

See Note 18 for supplemental cash flow information.

The accompanying notes form an integral part of these condensed consolidated financial statements.

Table of Contents

GOLDEN MINERALS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in United States dollars)

(Unaudited)




				Additional
	Common Stock			Paid-in		Accumulated			Total
	Shares	Amount		Capital		Deficit			Equity

	(in thousands except share data)
Balance, December 31, 2020	157,512,652	$	1,575	$	536,263	$	(525,866)		$	11,972
Stock compensation accrued (Note 15)	—		—		429		—			429
Shares issued under the at-the-market offering agreement, net (Note 15)	1,856,960		19		1,681		—			1,700
Warrants exercised (Note 15)	3,100,000		31		984		—			1,015
Net loss	—		—		—		(3,178)			(3,178)
Balance, March 31, 2021	162,469,612	$	1,625	$	539,357	$	(529,044)		$	11,938
Stock compensation accrued and restricted stock awards granted (Note 15)	335,000		3		984		—			987
Net loss	—		—		—		(810)			(810)
Balance, June 30, 2021	162,804,612	$	1,628	$	540,341	$	(529,854)		$	12,115
Stock compensation accrued (Note 15)	—		—		75		—			75
Net income	—		—		—		411			411
Balance, September 30, 2021	162,804,612	$	1,628	$	540,416	$	(529,443)		$	12,601

Balance, December 31, 2021	162,804,612	$	1,628	$	540,518	$	(527,961)		$	14,185
Adjustment related to correction of immaterial error (Note 3)	—		—		—		(93)	��		(93)
Adjusted balance at December 31, 2021 (Restated)	162,804,612		1,628		540,518		(528,054)			14,092
Stock compensation accrued (Note 15)	—		—		149		—			149
KELTIP shares issued net of shares relinquished to cover withholding taxes (Note 15)	1,123,380		11		(240)		—			(229)
Net loss	—		—		—		(316)			(316)
Balance, March 31, 2022	163,927,992	$	1,639	$	540,427	$	(528,370)		$	13,696
Stock compensation accrued and restricted stock awards granted (Note 15)	500,000		5		195		—			200
Warrants exercised (Note 15)	3,000,000		30		1,020		—			1,050
Net loss	—		—		—		(2,813)			(2,813)
Balance, June 30, 2022	167,427,992	$	1,674	$	541,642	$	(531,183)		$	12,133
Stock compensation accrued and restricted stock awards granted (Note 15)	50,000		1		193					194
Net loss							(2,697)			(2,697)
Balance, September 30, 2022	167,477,992	$	1,675	$	541,835	$	(533,880)		$	9,630

Accumulated

Additional

Other

Common Stock

Paid-in

Accumulated

Comprehensive

Total

Shares

Amount

Capital

Deficit

Income (loss)

Equity

(in thousands except share data)

Balance, December 31, 2015

53,335,333

$
534

$
484,742

$
(477,378)

$
(127)

$
7,771

Stock compensation accrued and shares issued for vested stock awards

317,968

2

250

—

—

252

Shares issued on conversion of Sentient Note (Note 11)

27,366,740

273

6,944

—

—

7,217

Registered offering common stock, net and warrants (Note 14)

8,000,000

80

3,519

—

—

3,599

Unrealized gain on marketable equity securities, net of tax

—

—

—

—

182

182

Net loss

—

—

—

(10,659)

—

(10,659)

Balance, December 31, 2016

89,020,041

$
889

$
495,455

$
(488,037)

$
55

$
8,362

Cumulative adjustment related to change in accounting principle (Note 3)

—

—

19,046

(17,148)

—

1,898

Adjusted balance at January 1, 2017

89,020,041

$
889

$
514,501

$
(505,185)

$
55

$
10,260

Stock compensation accrued and shares issued for vested stock awards

150,000

1

149

—

—

150

Shares issued under the at-the-market offering agreement, net (Note 14)

1,024,392

11

671

—

—

682

Consideration shares sold to Hecla, net (Note 15)

1,811,015

18

911

—

—

929

Deemed dividend on warrants (Note 3)

—

—

5

(5)

—

—

Unrealized loss on marketable equity securities, net of tax

—

—

—

—

(92)

(92)

Net loss

—

—

—

(1,851)

—

(1,851)

Balance, September 30, 2017

92,005,448

$
919

$
516,237

$
(507,041)

$
(37)

$
10,078

The accompanying notes form an integral part of these condensed consolidated financial ~~statements.~~statements

Table of Contents

GOLDEN MINERALS COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

(Unaudited)

1. Basis of Preparation of Financial Statements and Nature of Operations

Golden Minerals Company (the “Company”), a Delaware corporation, has prepared these unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements do not include all disclosures required by GAAP for annual financial statements, but in the opinion of management, include all adjustments necessary for a fair presentation. Certain prior period amounts may have been reclassified to conform to current classifications. Interim results are not necessarily indicative of results for a full year; accordingly, these interim financial statements should be read in conjunction with the annual financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2021 and filed with the SEC on ~~February 28, 2017.~~March 23, 2022.

The Company is a mining company, holding a 100% interest in the Rodeo property in Durango State, Mexico (the “Rodeo Property”), a 100% interest in the Velardeña and Chicago precious metals mining properties and associated oxide and sulfide processing plants in the state of Durango, Mexico (the “Velardeña Properties”)~~. During November 2015~~, a 100% interest in the ~~Company suspended mining and sulfide processing activities at its Velardeña Properties~~El Quevar advanced exploration silver property in ~~order to conserve~~ the ~~asset until the Company~~province of Salta, Argentina, which is able to develop mining and processing plans that at then current prices for silver and gold indicate a sustainable positive operating margin (defined as revenues less costs of sales) or the Company is able to locate, acquire and develop alternative mineral sources that could be economically mined and transportedsubject to the ~~Velardeñ~~terms of the April 9, 2020 earn-in agreement (the “Earn-in Agreement”) pursuant to which Barrick Gold Corporation (“Barrick”) has the option to earn a ~~Properties for processing. The Company has placed~~70% interest in the ~~mine~~El Quevar project (see Note 8), and ~~sulfide processing plant on care and maintenance to enable~~ a ~~re-start~~diversified portfolio of ~~either the mine or mill when mining and processing plans and~~precious metals ~~prices support a cash positive outlook. The Company incurred approximately $2.0 million in related shutdown costs for employee severance, net working capital obligations,~~ and other ~~shutdown expenditures during the year ended December 31, 2016 and $1.1 million~~mineral exploration properties located primarily in care and maintenance costs for the nine months ended September 30, 2017. The Company expects to incur approximately $0.4 million in quarterly care and maintenance costs while mining and processing remain suspended.

The Company has retained a core group of employees, most of whom have been assigned to operate the oxide plant, which is leased to a third party and not affected by the shutdown. The oxide plant began processing material for the third party in mid-December 2015, and the Company expects to receive net cash flow under the lease of approximately $4.6 million in 2017. During March 2017, the third party exercised its right to extend the lease through December 31, 2018. On August 2, 2017, the Company granted the third party an option to extend the lease for an additional period of up to two years ending no later than December 31, 2020 in exchange for a $1.0 million cash payment and the purchase of $1.0 million, or approximately 1.8 million shares of the Company’s common stock, issued at par at a price of $0.55 per share, based on an undiscounted 30-day volume weighted average stock price (see Note 14). The retained employees also include an exploration group and an operations and administrative group, led by a newly appointed general managernear historical precious metals producing regions of Mexico, ~~operations to continue to advance the Company’s plans in Mexico, oversee corporate compliance activities,~~Argentina and ~~to maintain and safeguard the longer term value of the~~Nevada. The Rodeo Property, Velardeña Properties and ~~other Mexican assets.~~the El Quevar advanced exploration property are the Company’s only material properties.

The Company ~~remains~~is primarily focused on ~~evaluating~~mining operations at the Rodeo Property as well as further studies of a restart plan for the Velardeña mine, including the use of bio-oxidation to improve payable gold recovery. The Company is also focused on (i) advancing the El Quevar exploration property in Argentina through the Earn-in Agreement with Barrick and ~~searching~~(ii) continuing to evaluate and search for mining opportunities in North America (including Mexico) with ~~near term~~near-term prospects of mining, and particularly for properties within reasonable haulage distances of our processing plants at the Velardeña Properties. The Company is also reviewing strategic opportunities, focusing primarily on development or operating properties in North America, including Mexico. ~~We are also focused on evaluation~~

The Company began mining activities at ~~our El Quevar~~the Rodeo Property during December 2020 and began processing mined material from Rodeo at the Velardeña plant in January 2021. The employees at the Rodeo and Velardeña Properties, in addition to those who operate the plant that processes the Rodeo mined material, include an operations group, an administrative group and an exploration ~~property~~group to continue to advance the Company’s plans in ~~Argentina,~~Mexico and ~~are continuing our exploration efforts on selected properties in our portfolio~~to provide oversight for corporate compliance activities as well as maintaining and safeguarding the longer-term value of ~~approximately [10] exploration properties located primarily in Mexico.~~ the Velardeña Properties assets.

The Company is considered an exploration stage ~~company~~issuer under the criteria set forth by the SEC under Regulation S-K subpart 1300 (“S-K 1300”) as the Company has not yet demonstrated the existence of ~~proven or probable~~ mineral reserves ~~as defined by SEC Industry Guide 7,~~ at ~~the Velardeña Properties, or~~ any of the Company’s ~~other~~ properties. As a result, and in accordance with GAAP for exploration stage companies, all expenditures for exploration and evaluation of the Company’s properties are expensed as incurred. As such, the Company’s financial statements may not be comparable to the financial statements of mining companies that do have proven and probable mineral reserves. Such companies would typically capitalize certain development costs including infrastructure development and mining activities to access the ore. The capitalized costs would be amortized on a units-of-production basis as reserves are mined. The amortized costs are typically allocated to inventory and eventually to cost of sales as the inventories are sold. As the Company does not have proven and probable mineral reserves, substantially all

~~Table of Contents~~

expenditures at the Company’s Rodeo property and the Velardeña Properties for mine construction activity, as well as operating costs associated with the mill facilities, and for items that do not have a readily identifiable market value apart from the mineralized material, have been expensed as incurred. Such costs are charged to cost of metals sold or project expense during the period depending on the nature of the costs. Certain of the costs may be reflected in inventories prior to the sale of the product. The ~~term “mineralized material” as used herein, although permissible under SEC Industry Guide 7, does not indicate “reserves” by SEC standards. The~~ Company cannot be certain that any deposits at ~~the Velardeña Properties or~~ any ~~other exploration property~~of its properties will ever be confirmed or converted into ~~SEC Industry Guide 7~~S-K 1300 compliant ~~“reserves.”~~“reserves”.

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2. New Accounting Pronouncements

~~In July 2017, the FASB~~There were no new accounting pronouncements issued ~~ASU 2017-11,~~ “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Non public Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). Part I relates to the accounting for certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down round features are features of certain equity-linked instruments (or embedded features)during 2022 that ~~result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments~~ would be classified as equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. Foraffect the Company ASU 2017-11 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted, including in an interim period. The Company early adopted ASU 2017-11 during the interim period ended September 30, 2017 (see Note 3).

In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. For a lessor, the accounting applied is also largely unchanged from previous guidance. The new rules will be effective for the Company in the first quarter of 2019. The Company does not anticipate early adoption. The Company does not expect the adoption of ASU 2016-02 to materially change the amounts related to leases that are currently recorded as none of its operating leases are material and therefore the Company does not expect the adoption toor have a material impact on its consolidated financial position or results of operations.

3. Correction of Immaterial Error

In ~~January 2016,~~ the ~~FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which amended its standards~~first quarter 2022, the Company became aware that at December 31, 2021, it had failed to properly record a royalty tax payable in Mexico related to ~~the accounting~~its Rodeo operations. The effect of certain financial instruments. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. Specifically, available for sale investments will not run through other comprehensive income. The new rules will become effective for annual and interim periodscorrecting this error was to reduce beginning ~~after December 15, 2017. Early adoption is not permitted. The Company is~~retained earnings by $93,000 at January 1, 2022, as reflected in the ~~process of evaluating the impact the amendment will have on its consolidated financial position and results of operations.~~

In May 2014, FASB and the International Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized and the related cash flows. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017; early adoption is not permitted. ASU 2014-09 was originally effective December 15, 2016 but ASU 2015-14 deferred the effective date by one year. As the Company’s current accounting practices per the guidance of ASU 2014-09 are comparable to the requirements of ASU 2014-09, the Company does not expect the adoption of this update to result in a material impact on its consolidated financial position or results of operations.

~~3.Change in Accounting Principle~~

~~In July 2017, the FASB issued ASU 2017-11,~~ “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of

~~Table of Contents~~

Certain Non public Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). Part I relates to the accounting for certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. In the case where the exception from derivative accounting does not apply, warrants must be accounted for as a liability and recorded at fair value at the date of grant and re-valued at the end of each reporting period.

The September 2012 and 2014 warrants (see Note 14) include anti-dilution provisions characterized as down round features and have previously been accounted for as liabilities, with the fair value of the warrant liabilities remeasured at each reporting date and the change in liabilities recorded as other non-operating income or loss. The ~~Company had recorded a “Warrant liability” of $1.9 million and a warrant derivative gain of $17.1 million in its “Accumulated deficit” as reported in its~~accompanying Condensed Consolidated ~~Balance Sheets for the year ended December 31, 2016 relating to the September 2012 and 2014 warrants.~~The Company had recorded a warrant liability of $1.5 million as of June 30, 2017 and reported a warrant derivative gain of $0.4 million for the six months ended June 30, 2017 relating to the September 2012 and 2014 warrants.

In addition, for freestanding equity-classified financial instruments, ASU 2017-11 also requires entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Certain equity transactions following the issuance of the September 2012 and 2014 warrants have triggered anti-dilution clauses in the warrant agreements resulting in additional warrant shares and a reduction to the original strike price of the warrants. ASU 2017-11 prescribes a method to measure the value of a deemed dividend related to a triggering event by computing the difference in fair value between two instruments that have terms consistent with the actual instrument but that do not have a down round feature, where the number of warrant shares and strike price of one instrument corresponds to the actual instrument before the triggering event and the number of warrant shares and strike price of the other instrument corresponds to the actual instrument immediately after the triggering event. Following ASU 2017-11, for periods ending on or prior to December 31, 2016 the Company would have reduced its “~~Accumulated deficit~~” as reported on its Condensed Consolidated Balance Sheets by approximately $0.3 million related to prior triggering events. During the nine month period ending September 30, 2017 the Company would have reduced its accumulated deficit by approximately $5,000 related to triggering events.

~~Except for the down round features in the September 2012 and 2014 warrants, the warrants would have been~~ ~~classified in equity under the guidance in Subtopic 815-40 and therefore qualify for the scope exception in ASU 2017-11~~. ~~As permitted, the Company has elected to adopt the accounting principles prescribed by ASU 2017-11 for the interim period ended September 30, 2017~~ and has recorded a cumulative-effect adjustment stemming from a change in accounting principle in its financial statements for the three and nine months ended September 30, 2017 measured retrospectively to the beginning of 2017. The cumulative effect adjustment appears at the beginning of 2017 in the Company’s Condensed Consolidated StatementStatements of Changes in Equity.

The Company evaluated the materiality of the error described above from a qualitative and quantitative perspective. Based on such evaluation, the Company concluded that while the accumulation of the error was significant to the three months ended March 31, 2022, the correction would not be material to results of operations for the ~~Company~~period ended December 31, 2021, nor did it have an effect on the trend of financial results, taking into account the requirements of SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). Accordingly, the error was corrected for the ~~three and nine months ended September 30, 2017 reflect application of the change in accounting principle from the beginning of 2017.~~

~~The following table details the impact stemming from the cumulative effect of the change in accounting principle on the Company’s~~December 31, 2021, Condensed Consolidated Balance Sheets ~~as of the beginning of 2017.~~included in this Form 10-Q.

Reported after


As Previously


Cumulative

the Effect of a Change in

Reported

Effect Adjustment

Accounting Principle
Balance Sheet Accounts Impacted by

December 31,

at the Beginning

at the Beginning
September 2012 and 2014 Warrants

2016

of 2017

of 2017

(in thousands)
Warrant Liability - Related Party

$
976

$
(976)

$
—
Warrant Liability

922

(922)

—
Additional Paid-in Capital

495,455

19,046

514,501
Accumulated Deficit

(488,037)

(17,148)

(505,185)

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As noted above, the Company had previously reported a warrant derivative gain of $0.4 million during the six month period ending June 30, 2017. Because the Company has retroactively applied the change in accounting principle discussed above to the beginning of 2017, the Company is no longer reporting warrant derivative gains or losses for the September 2012 and 2014 warrants beginning in 2017. Amounts reported for periods ending on or prior to December 31, 2016 have not been adjusted.

4. Cash and Cash Equivalents and ~~Short-term~~ Investments

Cash and Cash Equivalents

Of the $6.5 million reported as “Cash and cash equivalents” on the Condensed Consolidated Balance Sheet at September 30, 2022, the Company had approximately $153,000 that was unavailable for use due to a court order freezing the bank accounts of one of the Company’s subsidiaries in Mexico related to a lawsuit, as further described in Note 19. The restrictions imposed on the subsidiary’s bank accounts do not impact the Company’s ability to operate the Rodeo mine, which is held through a different Mexico subsidiary, or to continue with the Company’s evaluation plans for a potential Velardeña mine restart or move forward with any of the Company’s other exploration programs in Mexico.

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Short-Term Investments

Short-term investments include investments with maturities greater than three months, but not exceeding 12 months, or highly liquid investments with maturities greater than 12 months that the Company intends to liquidate during the next 12 months for working capital needs.

The Company determines the appropriate classification of its investments in equity securities at the time of acquisition and re-evaluates those classifications at each balance sheet date. Available for sale investments are marked to market at each reporting period with changes in fair value recorded as a component of other comprehensive income (loss). If declines in fair value are deemed other than temporary, a charge is made to net income (loss) for the period.

The following tables summarize the ~~Company’s~~Company's short-term investments at September 30, ~~2017~~2022, and December 31, ~~2016:~~2021:


			Estimated		Carrying
September 30, 2022	Cost		Fair Value		Value

		(in thousands)
Short-term investments:
Trading securities	$	59	$	35	$	35
Total trading securities		59		35		35
Total short-term investments	$	59	$	35	$	35

December 31, 2021
Short-term investments:
Trading securities	$	59	$	67	$	67
Total trading securities		59		67		67
Total short-term investments	$	59	$	67	$	67

Estimated

Carrying

September 30, 2017

Cost

Fair Value

Value

(in thousands)

Investments:

Short-term:

Available for sale common stock

$
275

$
242

$
242

December 31, 2016

Investments:

Short-term:

Available for sale common stock

$
275

$
334

$
334

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Investment in Fabled

The ~~available for sale common stock consists~~short-term investments at September 30, 2022 and at December 31, 2021 consist of ~~7,500,000 common shares, approximately 10% of the outstanding~~1,000,000 common shares of ~~Golden Tag Resources, Ltd.~~Fabled Silver Gold Corp. (“~~Golden Tag”~~Fabled”), and 200,000 common shares of Fabled Copper Corp. Fabled is a junior mining company that ~~was a joint venture partner in~~entered into an option agreement with the Company to acquire the Company’s ~~previously owned San Diego exploration property in Mexico. The Company acquired the shares during 2015 and 2016 in transactions involving the sale of its remaining 50%~~option to earn a 100% interest in the ~~San Diego property~~Santa Maria mining claims located in Chihuahua, Mexico (see Note 8). The common shares were issued to the Company as partial consideration per the terms of the option agreement. The Fabled Copper Corp. shares were received in a spin-off of assets from Fabled that occurred on December 21, 2021, to which all existing shareholders of Fabled were entitled.

Long-Term Investments

Investments in equity securities are generally measured at fair value. Gains and losses for equity securities resulting from changes in fair value are recognized in current earnings. If an equity security does not have a readily determinable fair value, the Company may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period, the Company reassesses whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment, consider whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, record an impairment loss.

Investment in Golden ~~Tag.~~Gryphon Explorations Inc.

Long-term investments at September 30, 2022 consist of approximately 1,500,000 shares of Golden Gryphon Explorations Inc. (“GGE”). In 2019, the Company entered into an earn-in agreement with GGE for the Sand Canyon project located in northwestern Nevada. In August 2022, pursuant to the second amendment to the earn-in agreement by which the earn-in period was extended an additional year, the Company purchased approximately 1.5 million shares of GGE’s common stock for an aggregate purchase price of $225,000.

For a description of the earn-in agreement, see “Exploration Properties - Sand Canyon” in our Annual Report Form 10-K for the year ended December 31, 2021.

The GGE investment is accounted for at cost less impairment pursuant to ASC topic 321 as there is no ready market for the shares and it is recorded to non-current investments on the consolidated balance sheets. The Company concluded it was impractical to estimate fair value due to the absence of a public market for the stock. The Company identified no events or changes in circumstances that might have had a significant adverse effect on the carrying value of the investment, and have therefore, not recorded any impairment against the asset.

There were no long-term investments at December 31, 2021.

Credit Risk

The Company invests substantially all of its excess cash with high credit-quality financial institutions or in U.S. government or debt securities. Credit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument. For cash and equivalents and investments, credit risk represents the carrying amount on the balance sheet. The Company mitigates credit risk for cash and equivalents and investments by placing its funds and investments with high credit-quality financial institutions, limiting the amount of exposure to each of the financial institutions, monitoring the financial condition of the financial institutions and investing only in government and corporate securities rated “investment grade” or better. The Company invests with financial institutions that maintain a net worth of not less than $1 billion and are members in good standing ofwith the Securities Investor Protection Corporation.

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5. Prepaid Expenses and Other Assets

Prepaid expenses and other current assets at September 30, 2022, and December 31, 2021, consist of the following:


					September 30,		December 31,
					2022		2021

	September 30,		December 31,
	2017			2016
	(in thousands)
					(in thousands)
Prepaid insurance	$	168	$	296	$	279	$	575
Deferred offering costs		137		153
Recoupable deposits and other		161		129		903		570
	$	466	$	578
					$	1,182	$	1,145

The ~~deferred offering~~September 30, 2022, recoupable deposits and other includes a receivable from Barrick for reimbursement of costs ~~are~~of approximately $0.4 million related to the ~~ATM Program discussed in detail in~~Earn-in Agreement (see Note ~~14.~~8).

6. Inventories, net

Inventories at the ~~Velardeña Properties~~Rodeo operation at September 30, ~~2017~~2022, and December 31, ~~2016~~2021, consist of the following:

September 30,

December 31,

2017

2016

(in thousands)

Material and supplies

$
267

$
245

$
267

$
245


	September 30,		December 31,
	2022		2021

	(in thousands)
Doré inventory	$	416	$	481
In-process inventory		624		668
Material and supplies		746		459
	$	1,786	$	1,608

~~The material~~Doré and ~~supplies~~in-process inventories, recorded at book value, include $28,000 of capitalized depreciation and amortization. Doré inventory at September 30, ~~2017~~2022 consists of 277 payable ounces of gold and 1,309 payable ounces of silver.

Doré inventory at December 31, 2021 consists of 626 payable ounces of gold and 1,958 payable ounces of silver and includes approximately $21,000 of capitalized depreciation and amortization.

The materials and supplies inventories at September 30, 2022, and December 31, ~~2016 is~~2021, are primarily related to the Rodeo operation and are reduced by a ~~$0.2~~$0.3 million obsolescence ~~charge reflected in shutdown and care and maintenance costs.~~reserve.

7. Value ~~Added Tax Receivable, Net~~added tax receivable, net

~~The~~At September 30, 2022, the Company ~~has~~ recorded a net value added tax (“VAT”) paid in Mexico ~~and~~of $1.8 million, related to the Velardeña Properties and the Rodeo operation, as a recoverable ~~asset.~~asset, which appears in “Value added tax receivable, net” on the Condensed Consolidated Balance Sheets. Mexico law allows for certain VAT payments to be recovered through ongoing applications for refunds. The Company expects that the current amounts will be recovered within a one-year period. At September 30, ~~2017,~~2022, the Company ~~has also~~ recorded approximately ~~$10,000~~$0.7 million of VAT ~~receivable~~payable as a reduction to the VAT ~~payable~~receivable in ~~Mexico, which appears in “Accounts payable and other accrued liabilities”~~ ~~on the Condensed Consolidated Balance Sheets.~~

During the third quarter 2017, the Company received refunds of approximately $1.1 million from the government of Argentina for VAT paid in that country during 2012 and 2013. Because of uncertainties relating to collectability of the taxesMexico. At December 31, 2021, the Company had recorded ~~a full valuation allowance against the VAT receivable at the time the taxes were paid. The Company reported the $1.1~~approximately $1.3 million of VAT ~~refunds received during the nine months ended September 30, 2017 in~~ ~~“Other operating income”~~ on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company has remaining Argentina VAT refund claims totaling $0.2 million. The Company cannot predict if or when it will receive these VAT refunds and accordingly has recorded a full valuation allowance for these pending VAT refund claims.receivable.

The Company has also paid VAT in Mexico as well as other countries, primarily related to exploration projects, which has been charged to expense as incurred because of the uncertainty of recoverability.

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8. Property, Plant and Equipment, Net

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


					September 30,		December 31,
					2022		2021

	September 30,		December 31,
	2017		2016
	(in thousands)
					(in thousands)
Mineral properties	$	9,352	$	9,352	$	9,353	$	9,353
Exploration properties		2,518		2,518		2,418		2,418
Royalty properties		200		200		200		200
Buildings		4,221		4,386		3,806		3,806
Mining equipment and machinery		15,996		16,351		17,144		17,477
Other furniture and equipment		957		952		1,333		1,328
Asset retirement cost		865		992		1,057		1,057
		34,109		34,751
						35,311		35,639
Less: Accumulated depreciation and amortization		(25,540)		(25,516)		(28,907)		(29,012)
	$	8,569	$	9,235
					$	6,404	$	6,627

~~The asset retirement cost (“ARC”) is all related to~~During the ~~Company’s Velardeña Properties. The amounts for ARC have been fully depreciated as of~~nine months ended September 30, ~~2017 and December 31, 2016. The decrease in the ARC during the period is related to an adjustment to the asset retirement obligation (“ARO”), as discussed below in Note 10.~~

~~In August 2016,~~2022, the Company sold ~~certain mining~~a fully depreciated non-essential piece of equipment ~~consisting~~for $125,000. The gain is recorded in “Other operating income, net” on the Condensed Consolidated Statements of ~~two haul trucks, two scoop trams and a compressor to Minera Indé, an indirect subsidiary~~Operations.

El Quevar Earn-In Agreement

At September 30, 2022, Barrick has continued with exploration activities, per the terms of ~~Sentient, for $687,000 (see Note 21). The equipment sold was excess equipment held~~the Earn-in Agreement, at the Company’s ~~Velardeña Properties~~El Quevar project located in the Salta Province of Argentina. Barrick has met the $1 million in work expenditures that would permit them to withdraw from the ~~Company did not expect to use. The Company received $69,000 or 10%~~Earn-in Agreement.

Sale of the sales price at the closing of the sale, with the remaining $618,000 plus interest on the unpaid balance at an annual rate of 10% due in February 2017. The Company and Minera Indé amended the original equipment sale on March 31, 2017 to include the sale of an additional piece of excess equipment for $185,000 and extend the time for payment relating to the original equipment sale. Upon execution of the amendment the Company received an additional payment of $100,000. The remaining principal and interest balance, plus additional interest on the unpaid balance at an annual rate of 10%, was amended to be due in August 2017. Santa Maria Property

The Company recorded a ~~gain of $105,000~~$1.5 million payment it received from Fabled in December 2021 to “Deferred revenue” on ~~the sale of the additional equipment, included in “Other operating income” in~~ the accompanying Condensed Consolidated ~~Statements~~Balance Sheets and is amortizing the amount to income over a one-year period. Upon receipt of ~~Operations and Comprehensive Loss, equal~~each cash payment, the agreement imposes a performance obligation on the Company to provide Fabled an exclusive right to the ~~gross proceeds less~~Santa Maria Properties to conduct exploration and mining activities during the period from receipt of the payment until the due date of the next required payment. Accordingly, the Company has determined that its performance obligation for each option payment received is satisfied over time. At September 30, 2022, there is a remaining ~~basis~~unamortized balance of $0.3 million.

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9. Other Long-Term Assets

Other long-term assets at September 30, 2022, and December 31, 2021, consist of the following:


	September 30,		December 31,
	2022		2021

	(in thousands)
Deferred offering costs	$	70	$	70
Right of use assets		416		677
Deferred tax asset		157		—
	$	643	$	747

The deferred offering costs at September 30, 2022, and December 31, 2021, are associated with the ATM Agreement (see Note 15).

The right of use assets at September 30, 2022 include $0.3 million related to certain office leases and $0.1 million related to a mining equipment lease at our Rodeo Property. The right of use assets at December 31, 2021 include $0.4 million related to certain office leases and $0.3 million related to a mining equipment lease at our Rodeo Property.

The Company took possession of new office space and began a new long-term lease for its principal headquarters office with an effective commencement date of June 1, 2019. The new office lease will expire five years and eight full calendar months following the commencement date. There are no options to extend the lease beyond the stated term. The Company recorded a right of use asset of approximately $465,000 and a lease liability of approximately $450,000 in the ~~equipment. On May 2, 2017,~~second quarter of 2019 based on the net present value of the future lease payments discounted at 9.5%, which represents the Company’s incremental borrowing rate for purposes of applying the guidance of Topic 842. As required, the Company ~~received approximately $750,000 from Minera Indé as payment in full for the remaining balance due related to the equipment sale, including interest through that date.~~will recognize a single lease cost on a straight-line basis.

In ~~the third quarter 2016,~~November 2019, the Company ~~through~~renewed its ~~wholly owned~~ Mexican office lease for four years and recorded a right of use asset and lease liability of approximately $174,000. In December 2021, the Company also renewed its Argentina office lease for three years and recorded a right of use asset and lease liability of approximately $27,000.

In December 2020, the Company’s wholly-owned subsidiary, Minera de Cordilleras S. de R.L. de C.V., entered into an ~~earn-in~~ agreement with ~~a 100% owned Mexican subsidiary of Electrum Global Holdings, L.P., a privately owned company (together “Electrum”~~Triturados del Guadiana, S.A de C.V. (“Trigusa”), ~~related to~~whereby Trigusa will carry out mining activities at the ~~Company’s Celaya exploration property in Mexico. The Company received an upfront payment of $0.2 million and Electrum agreed to incur exploration expenditures totaling at least $0.5 million in~~Rodeo Property. Per the ~~first year~~terms of the mining agreement, ~~reduced by certain costs Electrum previously incurred on~~Trigusa will provide services for the ~~property since~~27-month period beginning in 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~~2020 and ending March 31, 2023, with the Celaya project after incurring exploration expenditures totaling $2.5 million during the first three years of the agreement. Electrum would serve as manager of the joint venture. If the Company elects not to contribute to additional exploration or development expenditures after the initial earn-in period, Electrum, at its option, would have the right to earn an additional 20% interest in the Celaya project,potential for a total interest 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 the Company would have the right to maintain its 20% interest or its interest ultimately could be converted into a 10% net profits interest.

In April 2016, the Company entered into an option agreement under which Santacruz Silver Mining Ltd. (“Santacruz”) may acquire the Company’s interest in certain nonstrategic mineral claims located in the Zacatecas Mining District, Zacatecas, Mexico (the “Zacatecas Properties”) for a series of payments totaling $1.5 million. Santacruz paid the Company $0.2 million on signing the agreement, and additional payments of $0.2 million in October 2016, $0.3 million in May 2017 and one half of the October 2017 installment of $0.3 million. To maintain its option and acquire the Zacatecas Properties, Santacruz must pay the Company the remaining one half of $0.3 million already due in October 2017 and the final amount of $0.5 million due in April 2018. Santacruz was not able to make the full October 2017 payment as scheduled and the Company has granted Santacruz an extension of time upon mutual agreement of both parties. The Company has determined that the mining agreement contains an embedded lease, relating to ~~make~~ the ~~payment. Santacruz has~~mining equipment provided by Trigusa, per the guidance of ASU 2016-02 and Topic 842. The Company did not elect the practical expedient permitting the combination of lease and non-lease components of the mining agreement. The Company recorded a right ~~to terminate~~of use asset and a lease liability of approximately $420,000 based on the ~~option~~

~~Table~~net present value of ~~Contents~~

~~agreement~~the future lease payments discounted at ~~any time, and the agreement could be terminated, at~~7.0%, which represents the Company’s ~~option, if Santacruz fails to make subsequent payments when due.~~incremental borrowing rate.

The lease liabilities noted above have been included in “Other liabilities”, short term and long term (Note 11), in the Company’s Consolidated Balance Sheets at September 30, 2022, and December 31, 2021.

10. Accounts Payable and Other Accrued Liabilities

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


	September 30,		December 31,
	2022		2021

	(in thousands)
Accounts payable and accruals	$	2,733	$	1,079
Accrued employee compensation and benefits		1,562		2,009
Income taxes payable		50		421
	$	4,345	$	3,509

September 30,

December 31,

2017

2016

(in thousands)

Accounts payable and accruals

$
273

$
344

Accrued employee compensation and benefits

1,075

880

$
1,348

$
1,224

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September 30, ~~2017~~2022

Accounts payable and accruals at September 30, 2017 consist primarily of $0.1 million due to contractors and suppliers and $0.2 million related to the Company’s Velardeña Properties and corporate administrative activities, respectively. In the case of the Velardeña Properties, amounts due also include a VAT payable of less than $0.1 million that is not an offset to the VAT receivable.

Accrued employee compensation and benefits at September 30, 2017 consist of $0.3 million of accrued vacation payable and $0.8 million related to withholding taxes and benefits payable, of which $0.3 million is related to activities at the Velardeña Properties, and $0.5 million is related to the KELTIP (see Note 14).

~~December 31, 2016~~

~~Accounts payable and accruals at December 31, 2016~~2022 are primarily related to amounts due to contractors and suppliers, denominated in US dollars, in the amounts of ~~$0.1 million and $0.2~~$2.2 million related to the Company’s Velardeña Properties and Rodeo operation and $0.5 million related to exploration and corporate administrative ~~activities, respectively. In the case of the Velardeña Properties, approximately $0.1 million is related to a net VAT payable.~~activities.

Accrued employee compensation and benefits at ~~December 31, 2016~~September 30, 2022 consist of ~~$0.3~~$0.5 million of accrued vacation payable and ~~$0.6~~$1.1 million related to withholding taxes and benefits ~~payable,~~payable. Included in the approximately $1.6 million of ~~which $0.2~~accrued employee compensation and benefits is $1.3 million is related to activities at the Velardeña Properties and ~~$0.3~~Rodeo operation.

December 31, 2021

Accounts payable and accruals at December 31, 2021 are primarily related to amounts due to contractors and suppliers, denominated in US Dollars, in the amounts of $0.7 million is related to the ~~KELTIP~~Company’s Velardeña and Rodeo properties and $0.2 million related to corporate administrative and exploration activities.

Accrued employee compensation and benefits at December 31, 2021 consist of $0.2 million of accrued vacation payable and $1.8 million related to withholding taxes and benefits payable. Included in the approximately $2.0 million of accrued employee compensation and benefits is $1.3 million related to activities at the Velardeña and Rodeo Properties.

The income taxes payable are related to operations at the Company’s Mexican subsidiaries (see Note 14).

11. Other Liabilities

~~10.~~

Other Current Liabilities

The following table sets forth the Company’s other current liabilities at September 30, 2022 and December 31, 2021:


	September 30,		December 31,
	2022		2021

	(in thousands)
Premium financing	$	—	$	394
Office lease liability		160		120
Mining equipment lease liability		116		207
	$	276	$	721

The premium financing consists of the remaining balance, plus accrued interest, related to premiums payable for the Company’s directors’ and officers’ insurance. In November 2021 the Company financed approximately $0.4 million of its premium for directors’ and officers’ insurance. The premium was payable in eight equal payments at an interest rate of 4.0% per annum.

The office lease liability is related to lease liabilities for office space at the Company’s principal headquarters in Golden, Colorado and in Mexico and Argentina.

The mining equipment lease liability is related to equipment used by the contract miner at our Rodeo property (see Note 9).

Other Long-Term Liabilities

Other long-term liabilities of $0.1 million for the period ended September 30, 2022, is all related to lease liabilities for office space at the Company’s principal headquarters in Golden Colorado and in Mexico and Argentina (see Note 9).

Other long-term liabilities of $0.4 million for the period ended December 31, 2021, are primarily related to lease liabilities for office space at the Company’s principal headquarters in Golden, Colorado and in Mexico and Argentina (see Note 9). Also included in other long-term liabilities is approximately $19,000 of deferred income taxes payable (see Note 14).

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12. Asset Retirement Obligation and Reclamation Liabilities

The Company retained the services of a mining engineering firm to prepare a detailed closure plan for the Velardeña Properties. The plan was completed during the second quarter 2012 and indicated that the Company had an ARO and offsetting ARC of approximately $1.9 ~~million.~~million at that time.

In the fourth quarter of 2021, due to the current operating success at Rodeo and the potential of a restart of operations at the Velardeña mine based on recent technical studies and an updated PEA that would further delay the start of any reclamation activity, the Company retained the services of an environmental consultant to review the closure plan to determine the appropriateness of the scope and cost estimates used in the calculation of the ARO. The consultant confirmed the adequacy of the scope of the closure plan and provided certain adjustments to cost estimates. In addition, the timing for the incurrence of reclamation activity was extended approximately seven years to take into account the likelihood of a restart of operations at the Velardeña mine that would further delay the start of any reclamation activity.

The Company will continue to accrue additional estimated ARO amounts based on an asset retirement plan as activities requiring future reclamation and remediation occur. During the first nine months of ~~2017,~~2022, the Company recognized approximately ~~$146,000~~$211,000 of accretion ~~expense and approximately $4,000 of amortization expense related to the ARC.~~expense.

~~Table of Contents~~

The following table summarizes activity in the ARO. The majority of the balance and activity relates to the Velardeña ~~Properties ARO:~~Property, but there is also a nominal amount related to the El Quevar project in Argentina:


					Nine Months Ended
					September 30,
					2022		2021

	Nine Months Ended
	September 30,
	2017		2016
	(in thousands)
					(in thousands)
Beginning balance	$	2,380	$	2,480	$	3,569	$	3,156


Changes in estimates, and other		(128)		(293)		25		(86)
Accretion expense		146		144		211		196
Ending balance	$	2,398	$	2,331	$	3,805	$	3,266

The ~~decreases~~change in estimates of the ARO recorded during ~~the 2017 and 2016 periods are~~2021 is primarily the result of changes in assumptions related to inflation factors ~~and the timing of future expenditures~~ used in the determination of future cash flows.

The ARO set forth on the accompanying Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016 includes approximately $0.1 million of reclamation liabilities related to activities at the El Quevar project in Argentina.

~~11. Convertible Note Payable – Related Party, Net~~

In October 2015, the Company borrowed $5.0 million from The Sentient Group, LLC (“Sentient”), the Company’s largest stockholder, pursuant to the terms of a Senior Secured Convertible Note the (“Sentient Note”) and a related loan agreement (the “Sentient Loan”), with principal and accrued interest due on October 27, 2016. In January 2016, upon approval by the Company’s stockholders, the Sentient Note became convertible, solely at Sentient's option, into shares of the Company's common stock at a price equal to the lowest of: 1) $0.289, 90 percent of the 15-day volume weighted average price ("VWAP") for the period immediately preceding the loan closing date, 2) 90 percent of the 15-day VWAP for the period immediately preceding the loan conversion date, or 3) an anti-dilution adjusted price based on the lowest price for which the Company has sold its stock following the loan closing date. The loan provided for interest at a rate of 9% per annum, compounded monthly.

On February 11, 2016, Sentient converted approximately $3.9 million of principal and $0.1 million of accrued interest (representing the total amount of accrued interest at the conversion date) on the Sentient Note into 23,355,000 shares of the Company's common stock at an exercise price of approximately $0.172 per share, equal to 90% of the 15-day VWAP immediately preceding the conversion date. On June 10, 2016, Sentient converted the remaining approximately $1.1 million of principal and approximately $34,000 of accrued interest (representing the total amount of accrued interest at the conversion date) into 4,011,740 shares of the Company's common stock at an exercise price of approximately $0.289 per share, equal to 90% of the 15‐~~day VWAP immediately preceding the loan’s original issue date.~~

The beneficial conversion feature of the Sentient Note represented an embedded derivative as defined by ASC 815 "Derivatives and Hedging" ("ASC 815"). ASC 815 provides that a derivative instrument's fair value must be bifurcated from the note and separately recorded on the Company's Consolidated Balance Sheet. The Company used a third party consultant to value the embedded derivative in the Sentient Note employing a Monte Carlo type probability analysis, which falls within Level 3 of the fair value hierarchy (see Note 12). For purposes of valuing the embedded derivative as of the Sentient Loan closing date, at December 31, 2015, at February 11, 2016 (first partial conversion date), and at March 31, 2016, the valuation model took into account, among other items: 1) the probability of successfully achieving stockholder approval of the Sentient Note’s conversion feature, 2) future variations in the Company’s stock price, and 3) the probability of entering into an equity transaction prior to the Sentient Loan maturity date that would lower the conversion price. It was determined that the embedded derivative had a fair value of approximately $1.1 million at October 27, 2015, the date the Company entered into the Sentient Loan. Subsequent mark-to-market changes in the value of the derivative were recorded as income or loss in the Consolidated Statements of Operations and Comprehensive Loss. The Sentient Note was recorded net of the bifurcated embedded derivative at October 27, 2015 with the $1.1 million difference between the face value and the recorded value of the Note representing a loan discount that was amortized to interest expense over the life of the loan using the interest rate method.

The Company incurred approximately $0.3 million in legal and other costs associated with the Sentient Loan. Per the guidance of ASU 2015-03 the loan costs were presented as a reduction to the note payable on the accompanying

~~Table of Contents~~

~~Consolidated Balance Sheets and were amortized to interest expense over the life of the Sentient note using the interest rate method.~~

~~The Company adjusted the recorded value of the Sentient Loan at the first partial conversion date and at March 31, 2016 to reflect the amortization of the loan discount and loan costs, shown as “Interest expense~~” in the Consolidated Statements of Operations and Comprehensive Loss. For the nine months ended September 30, 2016, the Company recorded a total noncash loss on debt extinguishment of $1.7 million reflecting the difference between the value of the shares issued to Sentient as a result of the February 11, 2016 conversion and the recorded value of the Sentient Loan, including related loan costs, loan discount and embedded derivative eliminated at the conversion date. The Company marked-to-market the embedded derivative at the February 11, 2016 conversion date and recorded a total derivative loss of $0.8 million for nine months ended September 30, 2016 in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

~~At June 10, 2016, the Sentient Note had been fully converted and the Company had no outstanding debt at September 30, 2017 or December 31, 2016.~~

~~12.~~13. Fair Value Measurements

Financial assets and liabilities and nonfinancial assets and liabilities are measured at fair value under a framework of a fair value hierarchy which prioritizes the inputs into valuation techniques used to measure 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 liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy per ASC 820 are as follows:

Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2: Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

Level 3: Unobservable inputs due to the fact that there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability.

Table of Contents

The following table summarizes the Company’s financial assets and liabilities at fair value on a recurring basis at September 30, ~~2017~~2022, and December 31, ~~2016,~~2021, by respective level of the fair value hierarchy:

Level 1

Level 2

Level 3

Total

(in thousands)

At September 30, 2017

Assets:

Cash and cash equivalents

$
4,966

$
—

$
—

$
4,966

Trade accounts receivable

387

—

—

387

Trade accounts receivable - related party

4

—

—

4

Short-term investments

242

—

—

242

$
5,599

$
—

$
—

$
5,599

At December 31, 2016

Assets:

Cash and cash equivalents

$
2,588

$
—

$
—

$
2,588

Trade accounts receivable

380

—

—

380

Trade accounts receivable - related party

643

—

—

643

Short-term investments

334

—

—

334

$
3,945

$
—

$
—

$
3,945

Liabilities:

Warrant liability - related party

$
—

$
—

$
976

$
976

Warrant liability

—

—

922

922

$
—

$
—

$
1,898

$
1,898


	Level 1		Level 2		Level 3		Total

	(in thousands)
At September 30, 2022
Assets:
Cash and cash equivalents	$	6,504	$	—	$	—	$	6,504
Short-term investments		35		—		—		35
	$	6,539	$	—	$	—	$	6,539

At December 31, 2021
Assets:
Cash and cash equivalents	$	12,229	$	—	$	—	$	12,229
Short-term investments		67		—		—		67
	$	12,296	$	—	$	—	$	12,296

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

The Company’s trade accounts receivable are classified within Level 1 of the fair value hierarchy and are related to the lease of the oxide plant, valued per the terms of the lease rates per the plant lease agreement, and to the sale of mining equipment, based on the terms of the sales agreement.

The Company’s short-term investments consist of the ~~available for sale~~ common stock in ~~Golden Tag~~Fabled and are classified within Level 1 of the fair value hierarchy (see Note 4).

At September 30, 2022, and December 31, ~~2016,~~2021, the Company recorded a liability for warrants to acquire the Company’s stock as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price in the event the Company were to issue additional shares of its common stock in a future transaction at a price lower than the current exercise price of the warrants (see Note 14). The Company assessed the fair value of its warrant liability at the end of each reporting period, with changes in the value recorded as “~~Warrant derivative (loss) gain~~” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. The valuation policies were approved by the Chief Financial Officer who reviewed and approved the inputs used in the fair value calculations and the changes in fair value measurements from period to period for reasonableness. Fair value measurements are discussed with the Company’s Chief Executive Officer, as deemed appropriate. The warrant liability was recorded at fair value as of December 31, 2016, based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which fallsdid not have any financial assets or liabilities classified within Level 2 or Level 3 of the fair value hierarchy. The valuation model took into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the warrants. The Company did not have a warrant liability at September 30, 2017 as the result of a change in accounting principal during the period as discussed in Note 3.

~~Table of Contents~~

~~In addition to the warrant exercise prices (see Note 14) other significant inputs to the warrant valuation model at December 31, 2016 included the following:~~

December 31,

2016

Company's ending stock price

$
0.58

Company's stock volatility

110%

Applicable risk free interest rate

1.39%

~~At September 30, 2017, the remaining warrants are recorded as equity as the result of a change in accounting principal fully detailed in Note 3.~~

Non-recurring Fair Value Measurements

There were no non-recurring fair value measurements at September 30, 2022, or December 31, ~~2016 or September 30, 2017.~~2021.

~~13.~~14. Income Taxes

The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes” (“ASC 740”), on a tax jurisdictional basis. In accordance with ASC 740, the interim provision for taxes was calculated by using the estimated annual effective tax rate applied to the year-to-date income or losses on a jurisdictional basis. Although the Company has generated ordinary losses on a year-to-date basis, the Company has projected taxable income by year end in certain tax jurisdictions, for which an annual effective tax rate has been calculated. For the nine months ended September 30, ~~2017~~2022, the Company ~~did not recognize any~~recognized $90,000 of income tax benefit, ~~or expense. For the nine months ended September 30, 2016 the Company recorded~~of which $87,000 represented a ~~nominal income~~current tax ~~benefit related to the partial removal of~~expense and $177,000 was a valuation allowance on net operating losses resulting from an unrealized gain on held for sale investments reported in other comprehensive income in the Condensed Consolidated Statements of Operations and Comprehensive Loss and treated as a source of taxable income. The Company operates in jurisdictions that have generated ordinary losses on a year-to-date basis. However, the Company is unable to recognize a benefit for those losses, except as described in this paragraph, thus an estimated effectivedeferred tax ~~rate has not been used to report the year-to-date results.~~ benefit.

In accordance with ASC 740, the Company presents deferred tax assets net of its deferred tax liabilities on a tax jurisdictional basis on its Condensed Consolidated Balance Sheets. As of September 30, ~~2017~~2022, the Company had net deferred tax assets of $157,000 and asno deferred tax liability on the Condensed Consolidated Balance Sheets, primarily related to the 7.5% special mining tax in Mexico. As of December 31, ~~2016,~~2021, the Company had no net deferred tax assets orand a net deferred tax ~~liabilities reported on its balance sheet.~~ liability of $19,000, primarily related to the 7.5% special mining tax in Mexico.

The Company, a Delaware corporation, and its subsidiaries file tax returns in the United States and in various foreign jurisdictions. The tax rules and regulations in these countries are highly complex and subject to interpretation. The Company’s income tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is less than a more-likely-than-not probability of the position being upheld upon review by the relevant taxing authority. Such positions are deemed to be “unrecognized tax benefits” which require additional disclosure and recognition of a liability within the financial statements. The Company had no unrecognized tax benefits at September 30, ~~2017~~2022, or December 31, ~~2016.~~2021.

Table of Contents

15. Equity

~~14. Equity~~

Commitment purchase agreement

~~Consideration Shares~~

On ~~August 2, 2017,~~May 9, 2018, the Company ~~granted Hecla an option~~entered into a commitment purchase agreement (the “Commitment Purchase Agreement”) with Lincoln Park Capital (“LPC”), pursuant to ~~extend~~which the ~~oxide plant lease for an additional period of~~Company, at its sole discretion, had the right to sell up to ~~two years (see Note 15). As partial consideration for the option Hecla purchased $1.0~~$10.0 million ~~or approximately 1.8 million shares,~~ of the Company’s common stock to LPC, subject to certain limitations and conditions contained in the Commitment Purchase Agreement (the ~~“Consideration Shares”~~“LPC Program”)~~, issued at par at a price of $0.55 per share, based on an undiscounted 30-day volume weighted average stock price.~~. The ~~Consideration Shares were offered and sold without registration under the Securities Act of 1933, as amended (the “Act”) in reliance~~Company closed on the ~~exemptions provided by Section 4(a)(2) of the Act and/or Regulation D promulgated thereunder.~~Commitment Purchase Agreement in July 2018. Under the terms of the ~~Option Agreement (defined herein),~~agreement, the LPC Program expired as of June 30, 2021.

In anticipation of the June 2021 expiration of the agreement, the Company ~~agreed~~wrote off the remaining balance of $353,000 of deferred LPC Program costs to register with the SEC the resale of the Consideration Shares. A resale registration statement with the SEC became effective in September 2017. The $1.0 million received for the Consideration Shares, net of $71,000 in legal“Interest and ~~stock exchange issuance fees, has been recorded as equity in~~Other Expense” on the Condensed Consolidated ~~Balance Sheets for~~Statement of Operations during the ~~quarter~~nine-month period ended September 30, ~~2017.~~2021.

At the Market Offering Agreement

In December 2016, the Company entered into an at-the-market offering agreement (as amended from time to time, the “ATM Agreement”) with H. C. Wainwright & Co., LLC (“Wainwright”), under which the Company may, from time to time, issue and sell shares of the Company’s common stock through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $5.0 million (the “ATM Program”) or a maximum of 10 million shares. On ~~September 29, 2017,~~November 23, 2018, the Company entered into ana second amendment toof the ATM Agreement, ~~with Wainwright to reflect a new registration statement on Form S-3 (File No. 333-220461) under which shares of~~extending the ~~Company’s common stock may be sold under the ATM Program. The ATM Agreement will remain in full force and effect~~agreement until the earlier of December ~~31, 2018,~~20, 2020, or the date that the ATM Agreement is terminated in accordance with the terms therein. ~~Offers or sales~~On December 11, 2020, the Company entered into a third amendment of ~~common shares under the ATM Program will be made only in the United States and no offers or sales of common shares under~~ the ATM Agreement further extending the agreement so that it will ~~be made~~remain in ~~Canada.~~ full force and effect until such time as the ATM Agreement is terminated in accordance with certain other terms therein or upon mutual agreement by the parties, and to reflect a new registration statement on Form S-3 (No. 333-249218).

The common stock will be distributed at the market prices prevailing at the time of sale. As a result, prices of the common stock sold under the ATM Program may vary as between purchasers and during the period of distribution. The ATM Agreement provides that Wainwright will be entitled to compensation for its services at a commission rate of 2.0% of the gross sales price per share of common stock sold. ~~The~~

During the first nine months of 2022, the Company ~~reimbursed certain legal expenses~~did not sell shares of Wainwright totaling $50,000 and incurred additional accounting, legal, and regulatory costs of approximately $109,000 in connection with establishing the ATM Program. Such costs have been deferred and will be amortized to equity as sales are completedcommon stock under the ATM Program. At September 30, ~~2017, the unamortized~~2022, there was a remaining balance of $70,000 of deferred ATM Program costs, ~~appear~~recorded in “Other long-term assets” on the ~~accompanying~~Condensed Consolidated Balance ~~Sheets as “Prepaid expense and other assets.”~~Sheet.

During the first nine months ~~ended September 30, 2017~~of 2021, the Company sold an aggregate of ~~approximately 1,024,000~~1,856,960 shares of common ~~shares~~stock under the ATM Program at an average price of ~~$0.70~~$0.97 per share of common ~~share~~stock for ~~gross~~net proceeds of approximately ~~$720,000.~~$1.8 million. Also, during the first nine months of 2021, approximately $57,000 of deferred ATM Program costs were amortized. The Company ~~paid cash commissions and other nominal transaction fees to Wainwright totaling~~has not sold any shares of common stock under the ATM after March 31, 2021.

There is currently approximately $16,000 or 2.2% of the gross proceeds and amortized approximately $23,000 of deferred accounting, legal and regulatory costs resulting in a net amount of approximately $682,000 that has been recorded as equity in the Condensed Consolidated Balance Sheets. During the nine months ended September 30, 2017 the Company also incurred approximately $15,000 in additional accounting, legal, and regulatory costs associated with$2.2 million remaining available for issuance under the ATM Program ~~that were included in “General and administrative costs” in the Condensed Consolidated Statement of Operations and Comprehensive Loss.~~based on a prospectus supplement filed with SEC on December 11, 2020.

Equity Incentive Plans

Under the Company’s Amended and Restated 2009 Equity Incentive Plan (the “Equity Plan”), awards of the Company’s common stock may be made to officers, directors, employees, consultants and agents of the Company and its subsidiaries. The Company recognizes stock-based compensation costs using a graded vesting attribution method whereby costs are recognized over the requisite service period for each separately vesting portion of the award.

Table of Contents

Restricted Stock Grants

The following table summarizes the status of the Company’s restricted stock grants issued under the Equity Plan at September 30, ~~2017~~2022, and the changes during the nine months then ended:


		Weighted
		Average Grant
		Date Fair
	Number of	Value Per

					Weighted
					Average Grant
					Date Fair
				Number of	Value Per
Restricted Stock Grants	Shares	Share		Shares	Share
Outstanding at December 31, 2016	100,000	$	0.63
Outstanding at December 31, 2021				293,334	$	0.61
Granted during the period	150,000		0.57	550,000		0.38
Restrictions lifted during the period	(50,000)		0.57	(348,332)		0.49
Forfeited during the period	—		—	—		—
Outstanding at September 30, 2017	200,000	$	0.60
Outstanding September 30, 2022				495,002	$	0.44

During the period a 150,000 share restricted stock grant was made to a new employee with 50,000 shares vesting immediately and the remaining shares vesting at 50,000 shares on each of the first and second anniversaries of the grant. For the nine months ended September 30, ~~2017~~2022, the Company recognized approximately ~~$56,000~~$163,000 of stock compensation expense related to the restricted stock grants. ~~The Company expects~~During the nine months ended September 30, 2022, 500,000 shares were granted to ~~recognize additional compensation expense related to these awards of approximately $92,000 over the next thirty-five months.~~

~~The following table summarizes the status~~nine employees, with one-third of the ~~Company’s stock option~~ grants ~~issued under~~vesting on the ~~Equity Plan at September 30, 2017~~grant date and the ~~changes~~remaining shares vesting equally on the first and second anniversaries of the grant date. Also, during the nine months ~~then ended:~~ended September 30, 2022, 50,000 shares were granted to a new employee, with one-third of the shares vesting equally on the first, second and third anniversaries of the grant date. During the period, restrictions were also lifted on the normal vesting of 181,666 shares granted to nine employees in prior years.

Weighted

Average

Exercise

Number of

Price Per

Equity Plan Options

Shares

Share

Outstanding at December 31, 2016

95,810

$
8.02

Granted during the period

—

—

Forfeited or expired during period

(55,500)

8.00

Exercised during period

—

—

Outstanding at September 30, 2017

40,310

$
8.05

Exercisable at end of period

40,310

$
8.05

Granted and vested

40,310

$
8.05

Restricted Stock Units

The Equity Plan permits the Company to issue Restricted Stock Units (“RSUs”), which entitle each recipient to receive one unrestricted share of common stock upon termination of the recipient’s employment or board service. Also, pursuant to the Equity Plan, the Company’s Board of Directors adopted the Non-Employee Director’s Deferred Compensation and Equity Award Plan (the “Deferred Compensation Plan”). Pursuant to the Deferred Compensation Plan, ~~the~~ non-employee directors, and employees as allowed by Equity Plan, receive a portion of their compensation in the form of ~~Restricted Stock Units (“RSUs”)~~RSUs issued under the Equity Plan. The RSUs generally vest on the first anniversary of the ~~grant and each vested RSU entitles the director to receive one unrestricted share of common stock upon the termination of the director’s board service.~~grant.

The following table summarizes the status of the RSU grants issued to Directors of the Company under the Equity Plan, including awards to non-employee directors under the Deferred Compensation Plan, at September 30, ~~2017~~2022, and the changes during the nine months then ended:


		Weighted
		Average Grant
		Date Fair
	Number of	Value Per
Restricted��Stock Units	Shares	Share
Outstanding at December 31, 2016	1,607,317	$	1.28

					Weighted
					Average Grant
					Date Fair
				Number of	Value Per
Restricted Stock Units				Shares	Share
Outstanding at December 31, 2021				4,010,038	$	0.69
Granted during the period	280,000		0.48	1,700,000		0.40
Restrictions lifted during the period	—		—	—		—
Forfeited during the period	—		—	—		—
Outstanding at September 30, 2017	1,887,317	$	1.16
Outstanding September 30, 2022				5,710,038	$	0.60

For the nine months ended September 30, ~~2017~~2022, the Company recognized approximately ~~$93,000~~$244,000 of stock compensation expense related to the ~~RSU grants. The~~restricted stock units. During the nine months ended September 30, 2022, the Company ~~expects to recognize additional~~granted each non-employee Director 100,000 RSUs and recognized approximately $94,000 of stock compensation expense related to the grants.

Included in the grants shown in the table during the period is a grant by the Company to its CEO of 1,000,000 RSUs. One-half of the RSUs vest on each of the first and second anniversaries of the grant. The Company recognized approximately $63,000 of stock compensation expense related to the grant during the first nine months of 2022.

During the nine months ended September 30, 2021, the Company also granted a consultant 100,000 RSUs and recognized $67,000 of stock compensation expense. The RSUs vested on the grant date and each vested RSU ~~grants of approximately $88,000 over~~entitles the ~~next 8 months.~~

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consultant to receive one unrestricted share of common stock upon termination of the consulting agreement with the Company.

Key Employee Long-Term Incentive Plan

The Company’s 2013 Key Employee Long-Term Incentive Plan (the “KELTIP”) provides for the grant of units (“KELTIP Units”) to certain officers and key employees of the Company, which units will, once vested, entitle such officers and employees to receive an amount, in cash or in Company common stock (such method of settlement at the sole discretion of the Board of Directors) issued pursuant to the Company’s Equity Plan, measured generally by the price of the Company’s common stock on the settlement date. KELTIP Units are not an actual equity interest in the Company and are solely unfunded and unsecured obligations of the Company that are not transferable and do not provide the holder with any stockholder rights. Payment of the settlement amount of vested KELTIP Units is deferred generally until the earlier of a change of control of the Company or the date the grantee ceases to serve as an officer or employee of the Company.

The Company intends to settle all the KELTIP Units in common stock of the Company, an option that the Board of Directors holds in its sole discretion so long as sufficient shares remain available under the Equity Plan. As a result, all outstanding KELTIP Units are recorded ~~as a liability, included~~ in “~~Accounts payable~~equity at September 30, 2022, and ~~other accrued liabilities” in~~December 31, 2021.

During the ~~Condensed Consolidated Balance Sheets. On May 23, 2017 and May 19, 2016,~~first quarter of 2022, the Company ~~awarded 435,000 and 585,000~~granted 450,000 KELTIP Units ~~respectively,~~to a new officer of the Company. One-third of the KELTIP Units granted vested on the grant date with the remaining KELTIP Units vesting one-third on each of the first and second anniversaries of the grant. For the nine months ended September 30, 2022, the Company recognized approximately $97,000 of stock compensation expense related to the grant. During the second quarter of 2022, the Company granted 500,000 KELTIP Units to another new officer of the Company. The KELTIP Units granted will vest one-half on each of the first and second anniversaries of the grant. For the nine months ended September 30, 2022, the Company recognized approximately $39,000 of stock compensation expense related to the grant. Also, during the nine months ended September 30, 2022, an officer of the Company retired and was issued 1,123,380 shares of the Company’s common stock net of 456,620 shares relinquished to cover withholding taxes. The shares issued were in settlement of previously granted KELTIP Units.

During the nine months ended September 30, 2021, the Company granted 1,605,000 KELTIP Units to two officers of the Company and ~~recorded~~recognized approximately ~~$0.2~~$1.0 million ~~and $0.3 million respectively,~~ of stock compensation expense ~~included in “Stock based compensation” in~~related to the Condensed Consolidated Statement of Operations and Comprehensive Loss. The KELTIP Units are marked to market at the end of each reporting period and for the nine months ended September 30, 2017 the Company recognized an approximately $59,000 reduction to compensation expense.grants. There were ~~1,020,000~~4,700,000 and ~~585,000~~5,330,000 KELTIP Units outstanding at September 30, ~~2017~~2022, and at December 31, ~~2016,~~2021, respectively.

Common stock warrants

The following table summarizes the status of the Company’s common stock warrants at December 31, 2021, and September 30, ~~2017~~2022, and the changes during the nine months then ended:

Weighted

Number of

Average Exercise

Underlying

Price Per

Common Stock Warrants

Shares

Share

Outstanding at December 31, 2016

17,578,950

$
2.17

Granted during period

—

—

Dilution adjustment

157,302

Expired during period

(6,258,080)

4.62

Exercised during period

—

Outstanding at September 30, 2017

11,478,172

$
0.81


		Weighted
	Number of	Average Exercise
	Underlying	Price Per
Common Stock Warrants	Shares	Share
Outstanding at December 31, 2021	12,803,846	$	0.34
Granted during the period	—
Exercised during period	—
July 2019 Series B warrants	(3,000,000)		0.35
Expired during period	—
Outstanding September 30, 2022	9,803,846	$	0.34

The warrants relate to prior registered offerings and private placements of the Company’s stock. In September 2012, the Company closed on a registered offering and concurrent private placement with Sentient in which it sold units, consisting of one share of common stock and a five-year warrant to acquire one half of a share of common stock at an exercise price of $8.42 per share. A total of 3,431,649 warrant shares were issued and became exercisable on March 20, 2013 and expired on September 19, 2017, five years from the date of issuance.

In September 2014, the Company closed on a registered public offering and concurrent private placement with Sentient in which it sold units, consisting of one share of common stock and a five-year warrant to acquire one half of a share of common stock at an exercise price of $1.21 per share. A total of 4,746,000 warrant shares were issued that became exercisable on March 11, 2015 and will expire on September 10, 2019, five years from the date of issuance.

In May 2016, the Company issued 8.0 million registered shares of common stock at a purchase price of $0.50 per share in a registered direct offering (the “Offering”) resulting in gross proceeds of $4.0 million. In connection with the Offering, each investor received an unregistered warrant to purchase three‐quarters of a share of common stock for each share of common stock purchased. The resulting 6,000,000 warrant shares have an exercise price of $0.75 per share, became exercisable on November 7, 2016 and will expire on November 6, 2021, five years from the initial exercise date.

The warrants issued in September 2012 and September 2014 were recorded as a liability on the balance sheet at December 31, 2016, as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price and the number of warrant sharesAll outstanding in the event the Company were to issue additional shares of its common stock in a future transaction at an offering price lower than the current exercise price of the warrants. The May 2016 warrants are not subject to anti-dilution and the warrants are recorded ~~as equity.~~

~~Table~~in equity at September 30, 2022, and December 31, 2021, following the guidance established by ASC Topic 815-40. The Company’s warrants allow for the potential settlement in cash if certain extraordinary events are effected by the Company, including a 50% or greater change of ~~Contents~~

~~Pursuant to the anti-dilution clauses~~control in ~~the September 2012 and 2014 warrant agreements, the exercise price of the warrants had been adjusted downward as a result of the subsequent issuance of~~ the Company’s common ~~stock in separate transactions, including~~stock. Since those events have been deemed to be within the ~~September 2014 registered public offering and private placement,~~Company’s control, the ~~conversion~~Company continues to apply equity treatment for these warrants.

Table of ~~the Sentient Note, the May 2016 Offering and private placement, the ATM Program and the Hecla Share Issuance (defined herein). As a result~~Contents

16. Sale of these transactions, the number of shares of common stock issuable upon exercise of the September 2012 warrants, prior to their expiration on September 19, 2017, had increased from the original 3,431,649 shares to 6,258,080 shares (2,826,431 share increase) and the exercise price has been reduced from the original $8.42 per share to $4.62 per share. The number of shares of common stock issuable upon exercise of the September 2014 warrants has increased from the original 4,746,000 shares to 5,478,172 shares (732,172 share increase) and the exercise price has been reduced from the original $1.21 per share to $0.87 per share.

At December 31, 2016, the total liability recorded for the 2012 and 2014 warrants was approximately $1.9 million, consisting of approximately $1.8 million for the 2014 warrants and $0.1 million for the 2012 warrants. The Company did not have a warrant liability at September 30, 2017 as the result of a change in accounting principal during the period as discussed in Note 3.

~~15. Revenue, Deferred Revenue~~Metals and Related Costs

~~Oxide Plant Lease and Oxide Plant Lease Costs~~

~~For~~During the nine months ended September 30, ~~2017~~2022, the Company sold gold and silver contained in doré bars related to the Rodeo operation and recorded revenue of approximately ~~$5.1~~$18.7 million and related costs of approximately ~~$1.7 million associated with the lease of the Velardeña Properties oxide plant.~~$13.3 million. The ~~Company recognizes oxide plant lease fees~~gold and ~~reimbursements for labor, utility and other costs as “Revenue: Oxide plant lease~~”silver contained in the Condensed Consolidated Statements of Operations and Comprehensive Loss following the guidance of ASC 605 regarding "income statement characterization of reimbursements received for "out-of-pocket" expenses incurred" and "reporting revenue gross asdoré bars were sold to one customer, a principal versus net as an agent". ASC 605 supports recording as gross revenue fees received for the reimbursement of expenses in situations where the recipient is the primary obligor and has certain discretionmetals refinery located in the ~~incurrence of the reimbursable expense. The actual costs incurred for reimbursed direct labor and utility costs are reported as “Oxide plant lease costs” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company recognizes lease fees during the period the fees are earned per~~United States. Under the terms of the ~~lease.~~

~~On August 2, 2017,~~Company’s agreement with its customer, title passes, and revenue is recognized by the Company ~~granted Hecla an option to extend~~when the oxide plant lease for an additional period of up to two years ending no later than December 31, 2020 (the “Extension Period”) in exchange for a $1.0 million upfront cash payment and the purchase of $1.0 million, or approximately 1.8 million shares,contractual performance obligations of the ~~Company’s common stock, issued~~parties are completed, generally at ~~par at~~the time a provisional or final payment is made. A provisional payment for approximately 95% of the contained gold and silver is made generally within 10-12 days after the product is shipped and customary sales documents are completed. A final payment is made within approximately 30 days following the date of shipment when final assays and refinery charges are agreed upon by the parties. A price ~~of $0.55 per share,~~for the gold and silver sold is set, based on ~~an undiscounted 30-day volume weighted average stock price (see Note 14). The option~~current market prices, at the time a provisional or final payment is made. Refining and ~~lease extension were memorialized in (i) an Option Agreement dated August 2, 2017 among~~transport costs, deducted from the final payments made, are treated as third party agent costs incurred by the Company and Hecla Mining Company (the “Option Agreement”), and (ii) a Second Amendment to Master Agreement and Lease Agreement dated August 2, 2017 among Minera William S.A. de C.V., an indirect subsidiary of the Company, and Minera Hecla S.A. de C.V., an indirect subsidiary of Hecla Mining Company (the “Second Amendment”). Under the Second Amendment, Hecla must exercise the option to extend the lease no later than October 3, 2018. All of the fixed fees and throughput related charges remain the same asin performing its obligations under the ~~original lease. Similar volume limitations apply to any required future tailings expansions, which Hecla will fund, leaving unused at~~agreement with its customer after the ~~end~~transfer of control on provisional sales, and are therefore netted against revenue on an accrual basis.

During the lease term an agreed amount of capacity in the expanded tailings facility. Pursuant to the Second Amendment, Hecla will have the right to terminate the lease during the Extension Period for any reason with 120 days’ notice. Hecla will also have a one-time right of first refusal to continue to lease the plant following a termination notice through December 31, 2020 if the Company decides to use the oxide plant for its own purposes before December 31, 2020.

The Company expects to recognize the $1.0 million of income from granting the option over the expected life of the lease from August 2, 2017 through December 31, 2020 on a straight-line basis, including such income in “~~Other operating income~~” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. As of September 30, 2017 the unamortized portion of the lease option totaled approximately $1.0 million recorded as short and long term “~~Deferred revenue~~” on the Condensed Consolidated Balance Sheets. The $1.0 million received for the Consideration Shares, net of $71,000 in legal and stock exchange issuance fees, has been recorded as equity in the Condensed Consolidated Balance Sheets for the quarternine months ended September 30, ~~2017.~~2021, the Company sold gold and silver contained in doré bars related to the Rodeo operation and recorded revenue of approximately $16.1 million and related costs of approximately $9.2 million.

~~Table~~Costs related to the sale of ~~Contents~~metals products include direct and indirect costs incurred to mine, process and market the products.

17. Interest and Other Expense, Net

For the nine months ended September 30, ~~2016~~2022, the Company ~~recorded revenue~~recognized a nominal amount of ~~approximately $4.8 million and related costs of approximately $1.5 million associated with the lease of the Velardeña Properties oxide plant.~~

~~16.~~ Interest and Other ~~Income~~Expense.

For the nine months ended September 30, ~~2017 and 2016~~2021, the Company ~~had only a nominal amount~~recognized approximately $0.3 million of ~~interest~~Interest and ~~other income. The 2017 amount is~~Other Expense primarily related to ~~interest on amounts receivable from~~ the ~~sale~~write-off of ~~mining equipment as discussed in Note 8.~~

~~17. Derivative Loss~~

During the nine months ended September 30, 2016 the Company recorded approximately $2.8 million of warrant derivative loss related to an increase in the fair value of the liability recorded for warrants to acquire the Company’s common stock. The warrant liability at December 31, 2016 was recorded at fair value based primarily on a valuation performed by a third-party expert using a Monte Carlo simulation which falls within Level 3 of the fair value hierarchy (see Note 12). The third party valuation model takes into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the warrants. Significant inputs to the third party valuation model included prices for the warrants disclosed above, the probability of an additional issuance of the Company’s common stock at a lower price than the current warrant exercise price and the inputs in the table below for the respective periods. The Company did not have a warrant liability at September 30, 2017 as the result of a change in accounting principal during the period as discussed in Note 3.

~~During the nine months ended September 30, 2016 the Company recorded approximately $0.8 million of derivative loss related to an increase in the fair value of the derivative liability~~deferred costs related to the ~~Sentient Loan~~LPC Program (see Note ~~11)~~15). The derivative liability was recorded at fair value at September 30, 2016 based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy (see Note 12). Significant inputs to the valuation model included: 1) future variations in the Company’s stock price, and 2) the probability of entering into an equity transaction prior to the loan maturity date that would lower the conversion price. At September 30, 2017 and December 31, 2016, the Sentient Loan had been fully converted.

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18. Supplemental Cash Flow Information

The following table reconciles net loss for the period to cash used in operations:

Nine Months Ended September 30,

2017

2016

(in thousands)

Cash flows from operating activities:

Net loss

$
(1,851)

$
(10,974)

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization and depreciation

456

1,317

Accretion of asset retirement obligation

146

143

Write off of loss contingency, net

—

(212)

Asset write off

—

24

Gain on reduction of asset retirement obligation

(56)

—

Gain on sale of assets

(605)

(1,522)

Amortization of deferred loan costs

—

57

Warrant liability fair market adjustment

—

2,821

Derivative liability fair market adjustment

—

778

Accretion of loan discount

—

372

Loss on debt extinguishment

—

1,653

Deferred income taxes

—

(26)

Stock compensation

299

666

Changes in operating assets and liabilities:

Decrease in trade accounts receivable

607

41

Decrease in prepaid expenses and other assets

137

150

(Increase) decrease in inventories

(22)

66

(Increase) decrease in value added tax recoverable, net

(3)

347

Increase in accrued interest payable net of amounts capitalized

—

86

Increase (decrease) in deferred revenue

967

(500)

Decrease in reclamation liability

(4)

(8)

Decrease in accounts payable and accrued liabilities

(34)

(389)

Decrease in deferred leasehold payments

(15)

(13)

Net cash provided by (used in) operating activities

$
22

$
(5,123)


	Nine Months Ended September 30,
	2022		2021

	(in thousands)
Cash flows from operating activities:
Net loss	$	(5,826)	$	(3,577)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation		543		1,491
Accretion of asset retirement obligation		211		196
Depreciation and amortization		241		466
Loss (gain) on trading securities		32		(24)
Write off of deferred financing costs		—		352
Gain on sale of assets		(125)		(17)
Changes in operating assets and liabilities from continuing operations:
Increase in inventories		(150)		(1,552)
Increase in value added tax recoverable, net		(480)		(1,058)
(Increase) decrease in prepaid expenses and other assets		(37)		343
Decrease in other long-term assets		104		301
Increase in accounts payable and accrued liabilities		835		2,029
Decrease in deferred revenue		(1,125)		(404)
Decrease in other current liabilities		(445)		(343)
Increase (decrease) in reclamation liability		25		(33)
Decrease in other long-term liabilities		(204)		(263)
Net cash used in operating activities	$	(6,401)	$	(2,093)

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


	Nine Months Ended September 30,
	2022		2021

	(in thousands)
Supplemental disclosure:
Interest paid	$	6	$	7
Income taxes paid	$	413	$	—

Supplemental disclosure of non-cash transactions:
Deferred equity offering costs amortized	$	—	$	57
Deferred equity offering costs written off	$	—	$	352

19. Commitments and Contingencies

During April 2021, the Company became aware of a lawsuit in Mexico against one of the Company’s Mexican subsidiaries, Minera William, S.A. de C.V. (“Minera William”). The plaintiff in the matter is Unifin Financiera, S.A.B de C.V. (“Unifin”). The lawsuit was assigned to the Fifth Specialized Commercial District Court. Although the Company has knowledge of the existence and content of the lawsuit filed by Unifin, the Court has not officially served Minera William with the complaint as of the date of this report. Unifin is alleging that a representative of Minera William signed certain documents in July 2011 purporting to bind Minera William as a guarantor of payment obligations owed by a third party to Unifin in connection with that third party’s acquisition of certain drilling equipment. At the time the documentation was allegedly signed, Minera William was a subsidiary of ECU Silver Mining prior to the Company’s acquisition of ECU in September 2011. As a preemptive measure, Unifin has obtained a preliminary court order freezing Minera William’s bank accounts in Mexico, which has limited the Company’s and Minera William’s ability to access approximately US$153,000 according to current currency exchange rates. Notwithstanding this action, the restrictions imposed on Minera William’s bank accounts do not impact the Company’s ability to operate the Rodeo mine, which is held through a different Mexico subsidiary, or continue with the Company’s evaluation plans for a potential Velardeña mine restart or move forward with

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any of the Company’s other exploration programs in Mexico. Unifin is seeking recovery for as much as US$12.5 million. The Company believes there is no basis for this claim and will defend itself if and when the Company is formally served with notice of the lawsuit. As such, the Company has not accrued an amount for this matter in its Condensed Consolidated Balance Sheets or Statements of Operations as of September 30, ~~2017 and December 31, 2016, the Company had no gain or loss contingencies.~~ 2022.

The Company has certain purchase and lease commitments as set forth in the Company’s Form 10-K for the year ended December 31, ~~2016.~~2021.

20. Segment Information

The Company’s sole activity is the mining, construction and exploration of mineral properties containing precious metals. The Company’s reportable segments are based upon the Company’s ~~revenue producing~~revenue-producing activities and ~~cash consuming~~cash-consuming activities. The Company reports two segments, one for its revenue producing activities in Mexico, which includes both the Velardeña Properties ~~in Mexico~~and the Rodeo Property, and the other comprised of non-revenue producing activities, including exploration, construction and general and administrative activities. Intercompany revenue and expense amounts have been eliminated within each segment in order to report on the basis that management uses internally for evaluating segment performance.

~~Table of Contents~~

The financial information relating to the Company’s segments is as follows:

Exploration, El

Costs

Depreciation,

Quevar, Velardeña

Three Months Ended

Applicable

Depletion and

and Administrative

Pre-Tax (gain)

Capital

September 30, 2017

Revenue

to Sales

Amortization

Expense

loss

Total Assets

Expenditures

Velardeña Properties

$
1,771

$
619

$
53

$
623

$
(2,016)

$
3

Corporate, Exploration & Other

—

—

85

1,609

2,334

2

$
1,771

$
619

$
138

$
2,232

$
318

$
5

Nine Months Ended

September 30, 2017

Velardeña Properties

$
5,107

$
1,704

$
179

$
1,361

$
(3,667)

$
6,573

$
3

Corporate, Exploration & Other

—

—

277

4,820

5,518

8,329

2

$
5,107

$
1,704

$
456

$
6,181

$
1,851

$
14,902

$
5

Three Months Ended

September 30, 2016

Velardeña Properties

$
1,729

$
549

$
249

$
509

$
(1,563)

$
15

Corporate, Exploration & Other

—

—

97

1,706

2,361

—

$
1,729

$
549

$
346

$
2,215

$
798

$
15

Nine Months Ended

September 30, 2016

Velardeña Properties

$
4,768

$
1,478

$
982

$
2,100

$
(1,319)

$
8,370

$
35

Corporate, Exploration & Other

—

—

335

5,803

12,319

6,647

1

$
4,768

$
1,478

$
1,317

$
7,903

$
11,000

$
15,017

$
36



							Exploration, El
			Costs		Depreciation,		Quevar, Velardeña
Three Months Ended			Applicable		Depletion and		and Administrative		Pre-Tax (gain)				Capital
September 30, 2022	Revenue		to Sales		Amortization		Expense		loss		Total Assets		Expenditures
Mexico Operations	$	5,268	$	4,374	$	77	$	1,878	$	1,097			$	17
Corporate, Exploration and Other		—		—		12		1,940		1,646				2
Consolidated	$	5,268	$	4,374	$	89	$	3,818	$	2,743			$	19

Nine Months Ended
September 30, 2022
Mexico Operations	$	18,700	$	13,335	$	204	$	5,815	$	14	$	9,084	$	43
Corporate, Exploration and Other		—		—		37		5,980		5,902		9,465		3
Consolidated	$	18,700	$	13,335	$	241	$	11,795	$	5,916	$	18,549	$	46

Three Months Ended
September 30, 2021
Mexico Operations	$	8,479	$	4,292	$	125	$	(596)	$	(3,007)			$	168
Corporate, Exploration and Other		—		—		18		4,158		2,408				3
Consolidated	$	8,479	$	4,292	$	143	$	3,562	$	(599)			$	171

Nine Months Ended
September 30, 2021
Mexico Operations	$	16,118	$	9,156	$	343	$	753	$	(4,199)	$	8,727	$	1,479
Corporate, Exploration and Other		—		—		123		7,724		7,573		11,335		63
Consolidated	$	16,118	$	9,156	$	466	$	8,477	$	3,374	$	20,062	$	1,542

21. Related Party Transactions

The following sets forth information regarding transactions between the Company (and its subsidiaries) and its officers, directors and significant stockholders.

~~Sale~~Administrative Services, Lease of Equipment:

In August 2016, the Company sold certain mining equipment to Minera Indé, an indirect subsidiary of Sentient, for $687,000 (see Note 8), in a transaction approved by the Company’s Audit Committee and Board of Directors. At September 30, 2017 Sentient holds approximately 45% of the Company’s 92.0 million shares of issued and outstanding common stock. The equipment sold was excess equipment held at the Company’s Velardeña Properties that the Company did not expect to use. The Company used a third party consultant with experience in the used mining equipment market in Mexico to determine a fair value. The Company believes the price paid was at least equal to the fair market value of the equipment had it been sold through auction or in the open market. The Company received 10% of the sales price at the closing of the sale in August 2016, with the remainder, plus interest on the unpaid balance at an annual rate of 10%, due in February 2017.

With the approval of a Special Committee of the Company’s Board of Directors, the Company and Minera Indé amended the original equipment sale on March 31, 2017 to include the sale of an additional piece of excess equipment for $185,000 and extend the time for payment relating to the original equipment sale. Upon execution of the amendment the Company received an additional payment of $100,000. The remaining principal and interest balance, plus additional interest on the unpaid balance at an annual rate of 10%, was amended to be due in August 2017. The Company recorded a gain of $105,000 on the sale of the additional equipment, included in “~~Other operating income~~” in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss, equal to the gross proceeds less the remaining basis in the equipment. On May 2, 2017, the Company received approximately $750,000 from Minera Indé as payment in full for the remaining balance due related to the equipment sale, including interest through that date.

~~Administrative Services:~~

Beginning in August 2016, the Company began providing limited accounting and other administrative services to Minera Indé, an indirect subsidiary of Sentient. At September 30, 2022, Sentient, through the Sentient executive funds, holds approximately 22.5% of the Company’s 167.5 million shares of issued and outstanding common stock. The administrative services are provided locally in Mexico by the administrative staff atin the Company’s ~~Velardeña Properties.~~Mexico office. The Company charges Minera Indé $15,000 per month for the services, which provides reimbursement to the Company for its costs incurred plus a small profit margin. The Company also leases, from time to time, certain nonessential mining equipment to Minera Indé. Amounts received under the arrangement reduce costs incurred for ~~the care and maintenance of the Velardeña Properties and allows the Company to~~

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~~maintain a larger more experienced staff at the Velardeña Properties to support the oxide plant lease and potential future mining or processing activities.~~exploration. The Company’s Board of Directors and Audit Committee approved the agreement. For the nine months ended September 30, ~~2017~~2022, and 2021, the Company charged Minera Indé approximately $135,000 for services and the use of equipment, offsetting costs that are recorded in “~~Velardeña shutdown and care and maintenance~~Exploration expense” in the Condensed Consolidated Statements of ~~Operations and Comprehensive Loss.~~ Operations.

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Item 2.Management's Discussion and ~~Analysis~~Analysis of Financial Condition and Results of Operations

Our Company

We were incorporated in Delaware in March 2009 under the Delaware General Corporation Law. During the nine months ended September 30, ~~2017,~~2022, our principal source of revenue was from the ~~lease~~sale of gold and silver from our ~~oxide plant.~~Rodeo Property in Durango, Mexico. We incurred net operating losses for the nine months ended September 30, ~~2017~~2022, and ~~2016.~~2021.

~~The Company remains~~We remain focused on ~~evaluating~~mining operations at the Rodeo Property as well as further studies of a potential restart plan for Velardeña including the use of bio-oxidation to improve the payable gold recovery. We also continue to evaluate and ~~searching~~search for mining opportunities in North America (including Mexico) with ~~near term~~near-term prospects of mining, and particularly for properties within reasonable haulage distances of our Velardeña Properties. ~~The Company is~~We are also focused on advancing our El Quevar exploration property in Argentina through the Earn-In Agreement with Barrick and on advancing selected properties in our portfolio of approximately 12 properties, located in Mexico, Nevada and Argentina. We are reviewing strategic opportunities, focusing primarily on development or operating properties in North America, including Mexico. We are also focused on evaluation activities at our El Quevar exploration property in Argentina, and are continuing our exploration efforts on selected properties in our portfolio of approximately [10] exploration properties located primarily in Mexico.

This discussion should be read in conjunction with Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2021, filed with the SEC on ~~February 28, 2017.~~March 23, 2022.

2022 Highlights

Rodeo Property

From inception in January 2021, through the end of Q3 2022, we have produced 24,014 ounces of gold and 90,408 ounces of silver from Rodeo. Cash costs per payable gold ounce, net of silver by-product credits have averaged $1,089 during that period. The operation continues to be a significant source of positive cash flow for the ~~Nine Months Ended September 30, 2017~~Company.

~~Velardeñ~~We began mining activities at the Rodeo Property, using contracted equipment, in December 2020. We began hauling the mined material, using a ~~Oxide Plant Lease Agreement~~

~~In July 2015, we leased~~contracted fleet of trucks, for processing at our Velardeña oxide plant ~~to a wholly-owned subsidiary of Hecla Mining Company~~beginning in January 2021. We provide the mine planning, management, and engineering, which includes in-pit technicians who determine whether material is suitable for ~~an initial term of 18 months beginning July 1, 2015.~~ ~~The lease agreement containedseveral lease extension options,~~process or placement on the waste dump. We also employ and insupervise the ~~third quarter 2016, the lease was extended through June2017. The 2016 extension included an agreement under which Hecla would construct, at its cost,certain tailings expansion facilities to accommodate Hecla's increased use of tailings capacity~~ ~~in excess of an agreed amount, while preserving flexibility for future tailings expansions.~~ ~~The tailings expansionwork began in early 2017 and is now 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 had 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 lease for an additional period of up to two years ending no later than December 31, 2020 (the “Extension Period”) in exchange for a $1.0 million cash payment and the purchase of $1.0 million, or approximately 1.8 million shares, of the Company’s common stock issued at par at a price of $0.55 per share (the “Hecla Share Issuance”), based on an undiscounted 30-day volume weighted average stock price. Hecla must exercise the option to extend the lease no later than October 3, 2018. All of the fixed fees and throughput related charges remain the same as under the original lease. Similar volume limitations apply to any required future tailings expansions, which Hecla will fund, leaving unused at the end of the lease term an agreed amount of capacity in the expanded tailings facility. Hecla will have the right to terminate the lease during the Extension Period for any reason with 120 days’ notice. Hecla will also have 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~~workforce responsible for ~~ongoing operation and maintenance of the~~processing activities at our oxide plant. ~~During~~Our assay lab, located in Velardeña, Durango, Mexico is used for the project’s assaying requirements.

Mill throughput averaged 523 tonnes per day in the nine months ended September 30, ~~2017, Hecla processed~~2022. At approximately ~~101,000~~500 tonnes per day, the current life of ~~material~~the Rodeo mine is estimated to run through the third quarter of 2023, based on our current estimate of remaining mineral resources as reported in our most recently filed Technical Report Summary.

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The table below sets forth the key processing and sales statistics for the Rodeo operation for the three and nine months ended September 30, 2022:


Rodeo Operations Statistics
(in thousands except per unit amounts)

	Three Months Ended	Nine Months Ended
	September 30, 2022	September 30, 2022
Tonnes mined⁽¹⁾	192,545	610,061
Tonnes in stockpiles awaiting processing⁽²⁾	23,618	23,618
Tonnes in low grade stockpiles⁽³⁾	121,202	121,202
Tonnes processed	47,947	142,863
Average tonnes per day processed	521	523

Average gold grade processed (grams per tonne)	2.6	2.8
Average silver grade processed (grams per tonne)	10.4	10.8

Plant recovery - gold (%)	74.6	75.1
Plant recovery - silver (%)	77.6	81.0

Payable gold produced in doré (ounces)	2,972	9,584
Payable silver produced in doré (ounces)	11,907	38,619
Payable gold equivalent produced in doré (ounces)⁽⁴⁾	3,103	10,050

Gold sold in doré (ounces)	3,018	9,933
Silver sold in doré (ounces)	11,609	39,269
Gold equivalent sold in doré (ounces)⁽⁴⁾	3,145	10,405

Average realized price, before refining and selling costs
Gold (dollar per ounce)	$1,703	$1,825
Silver (dollar per ounce)	$18.72	$22.02

(1) Includes all mined material transported to the plant, stockpiled or designated as waste
(2) Includes mined material stockpiled at the mine or transported to the plant awaiting processing in the plant
(3) Material grading between 1.6 g/t (current cutoff grade) and 1 g/t Au held for possible future processing
(4) Gold equivalents based on realized $ Au and $ Ag price

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The following table highlights additional non-GAAP cost and revenue statistics related to the Rodeo operations:


		Three Months Ended September 30, 2022	Nine Months Ended September 30, 2022
		(in thousands except per unit amounts)

Total cash operating costs	$	4,255	$	13,175
Treatment and refining costs		95		307
Silver by-product credits		(217)		(865)
Total cash costs, net of by-product credits	$	4,133	$	12,617

Total cash cost per unit
Payable gold ounces produced in doré		2,972		9,584
Total cash operating costs	$	1,432	$	1,375
Treatment and refining charges		32		32
Silver by-product credits		(73)		(90)
Total cash costs, net of by-product credits, per payable gold ounce ⁽¹⁾	$	1,391	$	1,316

Tonnes Processed in plant		47,947		142,863
Total cash operating costs per tonne processed	$	89	$	92

(1) Cash costs, net of by-product credits, per payable ounce of gold is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for a reconciliation to the GAAP financial measure.

Total cash operating costs for the three months and nine months ended September 30, 2022, as depicted in the table above, include all production costs during the period, including mining, milling and general and administrative costs related to mined material.

Total operating margin for the three months and nine months ended September 30, 2022, were $0.9 million and $5.4 million respectively on sales of metal of $5.3 million and $18.7 million respectively offset by cost of metal sold of $4.4 million and $13.3 million.

For the full year 2022, we are estimating that we will process 180,000 to 190,000 tonnes in the oxide plant, ~~resulting in total revenues to us of~~or approximately $5.1 million, comprised of approximately $2.2 million for direct plant charges plus fixed fees and other net reimbursable costs totaling approximately $2.9 million. We incurred costs of approximately $1.7 million related to the services we provide under the lease and reported a net operating margin of approximately $3.4 million during the first nine months of 2017. Hecla has been processing material near the intended approximately 400520 tonnes per day, ~~rate during 2017. At this rate, we expect net cash payments~~with payable extraction for 2022 of approximately 12,000 to ~~us, net~~14,000 ounces of ~~reimbursable costs, should total~~gold and 47,000 to 50,000 ounces of silver. Average grades for 2022 are estimated to be approximately ~~$0.4 million~~2.8 grams per ~~month, including variable~~tonne for gold and ~~fixed fees, or nearly $4.5 million annually.~~

~~Santa Maria~~

~~Since 2015, we have completed test mining and processing of 7,500 tons from the Santa Maria mine west of Hildalgo de Parral, Chihuahua, with average~~10.8 grams per tonne for silver, lower than grades ~~338 gpt silver and 0.7 gpt gold. In March 2017, a preliminary economic~~

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assessment (“PEA”) was completed on our behalf by the engineering firm Tetra Tech, prepared pursuant to Canadian National Instrument 43-101, based on an updated estimate of mineralized material. The PEA presented 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 assumptionsachieved in 2021, but as anticipated in the PEA ~~we believe there may be potential~~mine plan for 2022. Mill recoveries are expected to ~~develop a small mining operation at Santa Maria.~~

~~In August 2017, we~~ ~~acquired three additional claims~~ ~~that cover the eastward extension~~continue during 2022 near current rates of ~~the Santa Maria vein. The new claims provide a 600 meter potential extension~~between 75 and 80 percent for gold and 80 to ~~the strike length of the vein system and add substantial downdip expansion potential.~~ ~~In August 2017, we also commenced a new drill program targeting extensions of the vein deposit described~~85 percent for silver. Higher expected total throughput in the ~~PEA and recent estimate of mineralized material~~ ~~with the goal of expanding the existing estimate of mineralized material to improve the overall economics reported in the PEA.~~ ~~Nine~~ ~~holes and approximately 1,900 meters have been drilled to date with mineralized intercepts revealed in completed assay results from the first six holes. A total of twelve holes are planned~~oxide plant for the ~~drill program and assay results from~~year 2022, as compared to 2021, will help offset the ~~remaining six holes already drilled or planned~~lower gold grades anticipated for 2022 resulting in similar payable gold extraction in 2022 as compared to 2021, but unit costs are expected to be ~~available~~higher in 2022 as a result of higher plant throughput. Cash costs per payable gold ounce, net of silver by-product credits, are expected to be approximately $1,300 for the full year 2022 which is slightly higher than previously forecast. The higher-than-previously forecast full year unit cash costs are due to the higher-than-expected mining rates and slightly lower-than-expected recoveries.

Using an assumed gold price of $1,800/oz and an assumed silver price of $25.00/oz, net operating margin for the full year 2022 from the Rodeo Property (defined as revenue from the sale of metals less the cost of metals sold) is estimated at approximately $6.0 million to $8.0 million which is in line with our previous estimations. Our average realized prices for the three and nine months ended September 30, 2022, as shown above, were $1,703 and $1,825 for gold and $18.72 and $22.02 for silver, respectively. The estimates detailed above for 2022 were derived using the actual results of operations achieved year to date through September 30, 2022, and a projection of the mine plan, grades, plant throughput, and recoveries for the fourth quarter ~~2017.~~ 2022. Actual future results from mining at Rodeo may vary significantly based upon, among other things, unanticipated variations in grade, unexpected challenges associated with our proposed mining plan, volatility in commodity prices, variations in expected recoveries, increases in projected operating costs, working capital

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or capital costs or interruptions in mining. See “Risk Factors – Risk Factors related to our Mining and Processing Activities” as described in our Form 10-K for the period ended December 31, 2021.

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

“Total cash costs, net of by-product credits, per payable gold ounce”, is a non-GAAP financial measure calculated by the Company as set forth below and may not be comparable to similar measures reported by other companies.

“Total cash costs, net of by-product credits, per payable gold ounce”, includes all direct and indirect operating cash costs associated with the physical activities that would generate doré products for sale to customers, including mining to gain access to mineralized materials, mining of mineralized materials and waste, milling, third-party related treatment, refining and transportation costs, on-site administrative costs and royalties. Total cash costs do not include depreciation, depletion, amortization, exploration expenditures, reclamation and remediation costs, sustaining capital, financing costs, income taxes, or corporate general and administrative costs not directly or indirectly related to the Rodeo project. By-product credits include revenues from silver contained in the products sold to customers during the period. “Total cash costs, net of by-product credits”, are divided by the number of payable gold ounces generated by the plant for the period to arrive at “Total cash costs, net of by-product credits, per payable gold ounce.”

“Cost of metals sold”, reported as a separate line item in our Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2022, is the most comparable financial measure, calculated in accordance with GAAP, to “Total cash costs, net of by-product credits”. “Cost of metals sold”, includes adjustments for changes in inventory and excludes third-party related treatment and refining costs, which are reported as part of revenue in accordance with GAAP. The following table presents a reconciliation for the three months and nine months ended September 30, 2022, between the non-GAAP measure of “Total cash cost, net of by-product credits” to the most directly comparable GAAP measure, “Cost of metals sold”.

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Reconciliation of Cash Costs to Cost of Metals Sold


		Reconciliation of Costs of Metals Sold (GAAP) to Total Cash Costs, net of By-product Credits (Non-GAAP)
	(in thousands)
Three Months Ended September 30, 2022
Total cash costs, net of by-product credits	$	4,133

Reconciliation to GAAP measure:
Treatment and refining costs	$	(95)
Silver by-product credits		217
Write down of inventories to net realizable value		(75)
Change in inventory (excluding depreciation, depletion and amortization)		194
Cost of metals sold	$	4,374

Nine Months Ended September 30, 2022
Total cash costs, net of by-product credits	$	12,617

Reconciliation to GAAP measure:
Treatment and refining costs	$	(307)
Silver by-product credits		865
Write down of inventories to net realizable value		(75)
Change in inventory (excluding depreciation, depletion and amortization)		235
Cost of metals sold	$	13,335

Rodeo Exploration

The drill programs completed in 2021 extended the life of mine plan for Rodeo through the third quarter of 2023 based on processing material at a cut-off grade of 1.6 g/t Au. In March 2022, we finished a small additional RC drill program (approximately 2,500 m) to finish delineating the mineralized area on the south side of the current pit. The 2022 drilling did not appreciably change the resource or extend the anticipated life of mine.

Velardeña

The Velardeña Properties contain two underground mines that were last operated in late 2015, at which point mining activities were suspended when a combination of low metals prices, mining dilution and metallurgical challenges rendered operations unprofitable. We elected to preserve the asset for future use, and since that time we have evaluated and tested various mining methods and processing alternatives that could enable sustainable profitable operations.

In June 2021, we began limited-scale mining activities at our Velardeña underground mine to obtain further bulk samples for use in final optimization of the bio-oxidation (BIOX™) plant design and for use in additional flotation separation studies (BIOX is a trademark of Metso-Outotec for its proprietary bio-oxidation process.). Test results using the BIOX pre-treatment oxidation process continue to support the use of the technology in future processing at Velardeña. In March 2022 we filed an updated PEA Technical Report Summary and 43-101 Technical Report supporting a possible economic operation at Velardeña using the optimized flotation parameters, BIOX treatment of pyrite concentrates and employing resue mining techniques to control dilution. In May 2022 we began additional test-mining activities with a new mining contractor to evaluate productivity and dilution of resue mining on the principal veins accessible from the San Mateo decline in part to validate the PEA assumptions. The results of the test mining met expected productivity metrics but did not meet anticipated dilution metrics on some of the veins mined. We are continuing to evaluate modified mine plans and mining techniques to address dilution issues including new test work on automated ore sorting which shows potential to allow for upgrading mined material by rejecting waste rock after crushing.

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Yoquivo

We ~~have~~completed a second drill program of 3,949 meters in 21 holes exploring the ~~right~~Pertenencia, Esperanza and Dolar vein systems in 2021. The drill program demonstrated the potential for the Pertenencia vein to ~~acquire~~host significant high-grade mineralization and hit multiple high-grade veins, suggesting there may be additional blind veins to be found on the ~~Santa Maria property under two separate option agreements representing~~property.

In July 2022, we completed a third drilling program of 5,693 meters in 24 drill holes designed to further delineate the ~~total concessions that comprise~~previously encountered vein-hosted mineralized intervals.

A fourth round of drilling of approximately 3000 meters is currently underway and we plan to complete a maiden resource estimate for the property for ~~additional payments~~release Q1 of ~~$1.4 million, payable through~~2023.

El Quevar

In April ~~2022. The first~~2020, we entered into the Earn-in Agreement with Barrick, pursuant to which Barrick has acquired an option ~~agreement, covering concessions acquired in August 2014, requires an additional approximately $0.7 million be paid~~ to ~~acquire~~earn a ~~100%~~70% interest in the ~~concessions~~Company’s El Quevar project located in the Salta Province of Argentina (the “Option”). For a description of the Earn-In Agreement, see “Our Material Mining Properties – El Quevar”in our Annual Report Form 10-K for the year ended December 31, 2021. During the earn-in period, in addition to required exploration spending, Barrick will fund the holding costs of the property, which will qualify as work expenditures. Barrick will reimburse us for expenses related to ~~that option~~maintaining the exploration camp, which will initially be run by ~~continuing~~us under a service agreement, and which will also qualify as work expenditures. As of September 31, 2022, approximately $0.3 million of expenses incurred by us are expected to ~~make minimum payments of $0.1 in 2018 and $0.2 in each of the years 2019 through 2021. In addition, until the total due~~be reimbursable under the ~~first option agreement~~Earn-in Agreement. Barrick has ~~been paid,~~met the ~~property owners have~~minimum $1.0 million in work expenditures required by the ~~right~~Earn-in Agreement. If Barrick elects to ~~50% of any net profits from mining activities from~~terminate the ~~concessions~~Earn-In Agreement, we will become responsible for future holding costs and exploration spending related to the ~~option, after reimbursement~~property.

In June 2022, Barrick completed a 5-hole 1300-meter initial diamond drill program to test highest priority targets at El Quevar. Barrick reported to us the occurrence 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, covering concessions recently acquired~~vuggy silica alteration, which is commonly associated with high sulfidation epithermal gold-silver deposits, in August 2017, requires an additional approximately $0.7 million be paid to acquire a 100% interest in the concessions related to that option by making additional payments of $0.1 million in 2018 and $0.2 million in eachall of the ~~years 2019 through 2021.~~

~~El Quevar~~

~~In September 2017, wereceived~~ ~~a permit to dewater~~drill holes. Final assay results are pending, however, initial results confirm the ~~underground mine workings at our El Quevar silver project located~~occurrence of potentially economic gold values in ~~Salta, Argentina, to evaluate the possibility of exploration drilling from underground~~vuggy silica in conjunction with a current project to re-model the existing silver materialized material at the Yaxtché deposit. Based on the previous mineralized material results and using a higher cutoff grade for silver, we are evaluating the potential to define a smaller but higher grade silver material in the coreone of the ~~previously defined Yaxtché deposit that could be amenable to potentially profitable underground mining and flotation processing.~~drill holes.

To date, the Company has received US$1.1 million in refunds of previous valued added tax (“VAT”) payments made in Argentina during 2012 and 2013. The refunds, available through certain provisions in the Argentina Mining Investment Law, have been pending for several years, but were only recently approved for payment by the Argentine tax authority. The added cash allows the Company more flexibility in advancing its exploration projects, particularly at El Quevar.

We continue to hold our El Quevar property on care and maintenance while we conduct the evaluation activities discussed above and remain open to finding a partner to contribute to the funding of further exploration.Sarita Este

~~Rodeo~~

~~During 2016, we completed a 2,080-meter core drilling program at the Rodeo property, approximately 80kilometers west of the Velardeña Properties in Durango Mexico. The results from the program revealed a gold andsilver bearing epithermal vein and breccia system with encouraging gold and silver values over an approximate 50 to70 meter true width. The system is exposed at the top of a northwesterly striking ridge and dips steeply to thenortheast over about one kilometer of strike length. During January 2017, the engineering firm of Tetra Techcompleted an estimate of mineralized material at the Rodeo deposit, prepared pursuant to Canadian NationalInstrument 43-101. We believe this material, as currently identified, could provide additional mined material for ourVelardeña oxide mill following the completion of the Hecla lease, currently set to expire December 31, 2020.~~

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We have received confirmation of good gold and silver metallurgical recoveries for milled material in initial test work. Bottle roll cyanide leach testing of the high-grade samples resulted in gold extractions of 80 to 86 percent. The gold extraction is size dependent with the lowest extraction at a grind of 100 mesh and the highest extraction at a grind of 200 mesh. Silver extractions ranged from 72 to 76 percent for all tests. The gold and silver readily leached from the samples within 24 hours. Reagent consumption averaged 1.7 kilograms per metric tonne (“kg/mt”) for sodium cyanide and 9.8 kg/mt for lime. Test work also indicates that the material is not suitable for gold and silver recovery by heap leaching.

In 2017, we plan to continue to evaluate the economics of mining the deposit using open pit techniques and processing the material at our Velardeña oxide plant following the termination of the lease of the plant to Minera Hecla.

~~Celaya Farm-out~~

In August 2016, our wholly owned Mexican subsidiary entered into an earn-in agreement with a 100% owned Mexican subsidiary of Electrum Global Holdings, L.P., 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 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 Celaya project after incurring exploration expenditures totaling $2.5 million during the first three years 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 to earn an additional 20% interest in the Celaya project, for a total interest 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.

Electrum Global Holdings’ Mexican subsidiary, Minera Adularia, has completed 5,600 meters of drilling on the property in seven drill holes in their ongoing drill program. Results to date show intercepts of epithermal quartz vein mineralization with grades for gold, silver, lead and zinc that warrant further drill testing. In three of the seven holes, intercepts of quartz vein material carry gold and silver grades that are within the range of economic interest, if sufficient volumes can be found in a configuration amenable to exploitation.

~~Mogotes~~

In September 2017, we began a 1,500 meter drill program on our Mogotes property on the El Mogote claim located 7 kilometers southeast of the town of Velardeña, Durango, Mexico. The drill program is planned to test an area of silicification and breccias hosted in andesitic volcanic rocks. The altered area is exposed over a strike length of 1.5 kilometers and a width of about 500 meters. The breccias are interpreted to be a combination of fault breccias and hydrothermal breccias associated with strong silicification controlled in part by a northwest striking southwest dipping normal fault that juxtaposes Tertiary volcanics west of the fault against Cretaceous limestone east of the fault. The altered area has a strong geochemical signature of widespread anomalously high arsenic and antimony with erratic values of gold up to 1.8 ppm from surface rock samples.

We plan to drill at least seven holes totaling 1,700 meters in this initial test of the Mogotes East target. Five holes totaling 1,500 meters have already been drilled with assay results pending. The Company is targeting veins and breccias that may be associated with the exposed hydrothermal alteration and anomalous geochemistry, and expects to encounter sulfide mineralization at depths of less than 200 meters below surface.

The Mogotes property was purchased from Silver Standard Resources in 2015 and is wholly owned by one of Golden Minerals’ Mexican subsidiaries, subject to a 2 percent Net Smelter Return royalty to Silver Standard and a pre-existing finder’s fee agreement (2 percent of direct exploration and development expenditures, capped at $365,000).

~~Other Exploration~~

In October 2017 we acquired the right to purchase claims covering the Yoquivo District, Ocampo Municipality, Chihuahua through an option agreement. The Yoquivo District is a past producing, bonanza grade epithermal vein gold and silver district located 35 kilometers southeast of the Ocampo Mining District. We have the right to purchase six claims totaling 1,906 hectares for payment of $0.5 million over four years plus outstanding claim taxes totaling approximately

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~~$0.1 million. No cash payments to the owner are due until the second anniversary of the agreement. The owner retains a two percent net smelter return royalty capped at $2.0 million.~~

~~In April 2016,~~2019, we entered into an option agreement ~~under which Santacruz Silver Mining Ltd. may~~with Cascadero Minerals Corporation (“Cascadero”) to acquire ~~our~~a 51% interest in ~~certain nonstrategic mineral claims~~the gold/copper Sarita Este concession, located in the ~~Zacatecas Mining District, Zacatecas, Mexico~~northwest portion of the Province of Salta, Argentina, adjacent to the Taca project owned by First Quantum Minerals. The option agreement calls for us to spend a total $2.5 million over four years including a minimum of 2,000 meters of drilling. We have exceeded the drilling requirement and have spent approximately $2.3 million since entering into the agreement in December 2019.

In the fourth quarter of 2021, we completed the first drill program ever conducted at Sarita Este, which involved drilling 10 diamond drill holes totaling 2,518 meters to explore untested epithermal gold-silver and copper porphyry targets. In January 2022, we announced assay results from the drill program, including the potential of an oxidized gold system. We completed a second drill program in June 2022 designed to offset and further delineate mineralization associated with the gold interval encountered in the first drill program. Recently released assay results from that program point to a potentially economic shallow oxidized gold system. Further drilling was recently completed for a ~~series~~project total since inception of ~~payments totaling $1.5 million. Santacruz paid the Company $0.2 million on signing the agreement and additional payments~~4,925 meters in 51 core drill holes.

Table of $0.2 million in October 2016, $0.3 million in May 2017 and one half of the October 2017 installment of $0.3 million. To maintain its option and acquire the Zacatecas Properties, Santacruz is required to pay the remaining one half of $0.3 million already due in October 2017 and the final amount of $0.5 million due in April 2018. Santacruz was not able to make the full October 2017 payment as scheduled ad we have granted Santacruz an extension of time to make the payment. Santacruz has the right to terminate the option agreement at any time, and the agreement could be terminated, at our option, if Santacruz fails to make subsequent payments when due.Contents

~~Sale of Mining Equipment~~

In August 2016, we sold certain mining equipment consisting of two haul trucks, two scoop trams and a compressor to Minera Indé, an indirect subsidiary of Sentient, a related party, for $687,000. The equipment sold was excess equipment held at our Velardeña Properties that we did not expect to use. We used a third party consultant with experience in the used mining equipment market in Mexico to determine a fair value. We believe the price paid was at least equal to the fair market value of the equipment had it been sold through auction or in the open market. We received 10% of the sales price at the closing of the sale in August, with the additional 90%, plus interest on the unpaid balance at an annual rate of 10%, due in February 2017.

With the approval of a Special Committee of the Company’s Board of Directors, the Company and Minera Indé amended the original equipment sale on March 31, 2017 to include the sale of an additional piece of excess equipment for $185,000 and extend the time for payment relating to the original equipment sale. Upon execution of the amendment, the Company received an additional payment of $100,000. The remaining principal and interest balance, plus additional interest on the unpaid balance at an annual rate of 10%, was amended to be due in August 2017. On May 2, 2017, we received approximately $750,000 from Minera Indé as payment in full for the remaining balance due related to the equipment sale, including interest through that date.

Financial Results of Operations

For the results of continuing operations discussed below, we compare the results from operations for the three and nine months ended September 30, ~~2017~~2022, to the results from operations for the three and nine months ended September 30, ~~2016.~~ 2021.

Three Months Ended September 30, ~~2017~~2022

Revenue from ~~oxide plant lease.~~the sale of metals. We recorded $5.3 million in revenue ~~of $1.8 million and $1.7 million during~~from doré sales for the three months ended September 30, ~~2017~~2022, and ~~2016, respectively, related to~~$8.5 million for the ~~lease of our Velardeña oxide plant to a third party.~~

~~Oxide plant lease costs.~~ ~~We recorded $0.6 million and $0.5 million of costs related to the oxide plant lease during the three-month periods~~three months ended September 30, ~~2017~~2021. Lower revenue in 2022 resulted from 1,659 fewer gold equivalent ounces sold combined with a lower realized price of $1,703 per ounce for the three months ended September 30, 2022, compared to $1,783 per ounce for the three months ended September 30, 2021. Fewer gold ounces were sold in the three months ended September 30, 2022 compared to the three months ended September 30, 2021 due to the lower grade of material processed.

Cost of metals sold. For each of the three months ended September 30, 2022, and ~~2016,~~2021, we recorded $4.4 million and $4.4 million of cost of metals sold, respectively. ~~The costs consist primarily of reimbursable labor and utility costs which for accounting purposes are also included in revenue from the oxide plant lease.~~

Exploration expense. Our exploration expense, including ~~work at the Santa Maria, Rodeo and Mogotes properties,~~ property holding costs and allocated administrative expenses, totaled ~~$1.0~~$2.4 million and $2.1 million for the three months ended September 30, ~~2017, as compared to $0.9 million for the three months ended~~2022, and September 30, ~~2016. Exploration expense for both years was incurred primarily in Mexico.~~2021, respectively. The higher exploration ~~expenses in 2017 are~~expense for 2022 is primarily related to ~~drilling activity and property acquisition payments occurring~~costs required to increase the capacity of the tailings facility at ~~the Santa Maria property, Mogotes and other properties.~~ Velardeña.

Velardeña ~~shutdown and~~ care and maintenance costs. We recorded $0.4 million ~~and $0.5 million~~ for each of the ~~three months~~three-month periods ended September 30, ~~2017~~2022, and ~~2016, respectively,~~September 30, 2021, for expenses related to ~~shut down and~~ care and maintenance at our Velardeña Properties as the result of the suspension of mining and processing activities in November 2015.

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El Quevar project expense. ~~During~~We incurred $0.2 million and $0.1 million for the ~~three months~~three-month periods ended September 30, ~~2017 we incurred $0.2 million primarily~~2022, and September 30, 2021, respectively, related to holding and evaluation costs for the Yaxtché deposit at our El Quevar project in Argentina. During each of the three months ended September 30, ~~2016 we recorded net negative expense~~2022, and September 30, 2021, approximately $0.2 million of ~~approximately $0.1 million primarily related to a reversal of an accrual for Argentina equity tax recorded during the 2015 period resulting~~costs actually incurred were offset by reimbursements from ~~an audit of certain prior years.~~Barrick as discussed above.

Administrative expense. Administrative expenses totaled ~~$0.7~~$0.9 million for each of the three months ended September 30, ~~2017 compared to $0.9 million for the three months ended~~2022, and September 30, ~~2016.~~2021. Administrative expenses, including costs associated with being a public company, are incurred primarily by our corporate activities in support of the Rodeo Property, Velardeña Properties, El Quevar project and our exploration portfolio. The $0.7 million of administrative expenses we incurred during the third quarter 2017 is comprised of $0.4 million of employee compensation and directors’ fees, $0.1 million of professional fees and $0.2 million of insurance, rents, travel expenses, utilities and other office costs. The $0.9 million of administrative expenses we incurred during the third quarter 2016 is comprised of $0.4 million of employee compensation and directors’ fees, $0.3 million of professional fees and $0.2 million of insurance, rents, travel expenses, utilities and other office costs.

~~Stock based~~Stock-based compensation. During the three months ended September 30, ~~2017 and 2016~~2022, we incurred ~~a nominal reduction to expense and~~ approximately ~~$0.5~~$0.2 million of expense ~~respectively,~~ related to ~~stock based~~stock-based compensation. ~~Stock based~~Stock-based compensation varies from period to period depending on the number and timing of shares granted, the type of grant, the market value of the shares on the date of grant and other variables. The 2017 and 2016 third quarter stock based compensation amounts include $0.1 million reduction to expense and $0.4 million of expense, respectively, related to KELTIP grants made to two officers (see Note 14 to the consolidated financial statements filed as part of this Form 10-Q for a discussion of KELTIP grants). The 2017 reduction to expense resulted from marking-to-market the outstanding KELTIP grants.

~~Reclamation and accretion expense.~~During the three months ended September 30, ~~2017 and 2016~~2021, we incurred approximately ~~$49,000~~$0.1 million of expense related to stock-based compensation. Stock-based compensation was higher in the 2022 period primarily due to more awards granted to executives.

Reclamation and ~~$47,000~~accretion expense. During each of the three months ended September 30, 2022, and September 30, 2021, we incurred approximately $0.1 million of reclamation expense ~~respectively,~~ related to the accretion of an asset retirement obligation at the Velardeña ~~Properties.~~Properties and environmental liabilities associated with the Rodeo operation.

Other operating income (expense), net. We recorded ~~$1.0 million and $1.3~~$0.4 million of other operating income for the three months ended September 30, 2017 and 2016, respectively. The net amount for the 2017 period consists primarily of a refund of value added tax from Argentina (see Note 7). The net amount for the 2016 period consists primarily of net gains2022, related to the amortization of deferred income related to the option agreement for the sale of ~~certain assets and non-strategic exploration properties.~~

~~Depreciation, depletion and amortization.~~ ~~During~~the Santa Maria property, as discussed above. We recorded $0.1 million of other operating income for the three months ended September 30, ~~2017~~2021, primarily related to the amortization of deferred income related to the option agreement for the sale of the Santa Maria property.

Depreciation, depletion and ~~2016~~amortization. During each of the three months ended September 30, 2022, and September 30, 2021, we incurred depreciation, depletion and amortization expense of approximately $0.1 ~~million and $0.3 million, respectively. The decrease in depreciation, depletion and amortization expense during the 2017 period is primarily the result~~million.

Table of ~~certain equipment at our Velardeña Properties having been fully depreciated.~~Contents

Interest and other ~~income.~~expense, net. We recorded a nominal amount of interest and other ~~income~~expense, net for each of the three months ended September 30, ~~2017~~2022, and ~~2016 respectively, primarily related to cash balances held in banks.~~September 30, 2021.

~~Warrant derivative (loss) gain.~~Gain (Loss) on foreign currency losses. During the three months ended September 30, ~~2016~~2022 we recorded ~~a loss~~approximately $0.2 million of approximately $0.5 million related to an increase in the fair value of the liability recorded for warrants to acquire the Company’s common stock (see Note 12 of our consolidated financial statements filed as part of this Form 10-Q). We did not record any warrant derivative gains or losses during 2017 following a change in accounting principle and the subsequent reclassification of the warrant liabilities to equity retroactively to the beginning of 2017 (see Note 3 to the consolidated financial statements filed as part of this Form 10-Q).

~~Gain (Loss) on~~ foreign ~~currency.~~ ~~We recorded a nominal foreign currency loss and gain for~~exchange gains. During the three months ended September 30, ~~2017 and 2016 respectively.~~2021, we recorded approximately $0.1 million of foreign currency gains. Foreign currency gains and losses are primarily related to the effect of currency fluctuations on monetary ~~assets net of liabilities held~~transactions incurred by our foreign subsidiaries that are denominated in currencies other than US dollars.

Income taxes. We recorded ~~no income~~a $46,000 tax ~~expense or~~ benefit for the three months ended September 30, ~~2017 and~~2022. We recorded $0.2 million of tax expense for the three months ended September 30, ~~2016.~~2021.

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Nine Months Ended September 30, ~~2017~~2022

Revenue from ~~oxide plant lease.~~the sale of metals. We recorded ~~revenue of $5.1~~$18.7 million and ~~$4.8~~$16.1 million ~~during~~in revenue from doré sales for the nine months ended September 30, ~~2017~~2022, and ~~2016, respectively, related~~2021, respectively. The nine-month period of 2021 included the startup phase at our Rodeo property resulting in lower revenue as compared to the ~~lease~~same period of ~~our Velardeña oxide plant to a third party.~~2022.

~~Oxide plant lease costs.~~ ~~We recorded $1.7 million and $1.5 million~~Cost of ~~costs related to the oxide plant lease during~~metals sold. For the nine ~~month periods~~months ended September 30, ~~2017~~2022, and ~~2016,~~2021, we recorded $13.3 million and $9.2 million of cost of metals sold, respectively. The nine-month period of 2021 included the startup phase at our Rodeo property resulting in lower cost of metals sold as compared to the same period of 2022. During the 2022 period, we processed lower-grade material resulting in slightly higher costs ~~consist primarily~~as compared to the same period of ~~reimbursable labor and utility costs which for accounting purposes are also included in revenue from the oxide plant lease.~~2021.

Exploration ~~Expense.~~expense. Our exploration expense, including work at ~~the Santa Maria~~Rodeo and ~~Rodeo~~other properties, property holding costs and allocated administrative expenses, totaled ~~$2.0~~$7.0 million and $4.0 million for the nine months ended September 30, ~~2017,~~2022, and September 30, 2021, respectively. The increase in exploration expense for 2022 is primarily related to increased exploration at the Yoquivo property in Mexico, the Sarita Este property in Argentina as ~~compared~~well as costs to ~~$2.9~~support the potential restart of our Velardeña Properties. The $7.0 million ~~for~~of exploration expenses we incurred during the nine months of 2022 is comprised of $1.2 million of test mining and optimization of the bio-oxidation plant design conducted at Velardeña, $1.1 million of exploration at Yoquivo, $1.0 million at our Sarita Este property in Argentina, $0.8 million at our Rodeo operation, $0.6 million on tailing capacity expansion to support Rodeo production and $2.3 million in other general exploration expenses. The $4.0 million of exploration expenses we incurred during the nine months of 2021 is comprised of $1.2 million at our Rodeo operation, $0.8 million at our Argentina properties that had been previously capitalized which were expensed, $0.2 million at Velardeña and $1.8 million in other general exploration expenses.

El Quevar project expense. For the nine months ended September 30, ~~2016. Exploration expense for both years was~~2022, and September 30, 2021, we incurred ~~primarily in Mexico. The higher exploration expenses in 2016 are primarily~~$0.4 million and $0.2 million, respectively related to ~~test mining activity occurring~~holding and evaluation costs for the Yaxtché deposit at ~~the Santa Maria property~~our El Quevar project in ~~2016 and drilling at the San Luis del Cordero property.~~

~~Velardeña shutdown and care and maintenance costs. We recorded $1.1 million and $1.6 million for~~Argentina. During the nine months ended September 30, ~~2017~~2022, and ~~2016,~~September 30, 2021, approximately $0.7 million and $0.5 million of costs were reimbursed by Barrick, respectively as discussed above.

Velardeña care and maintenance costs. We recorded $0.8 million for each of the nine months ended September 30, 2022, and 2021, respectively, for expenses related to shut down and care and maintenance at our Velardeña Properties as the result of the suspension of mining and processing activities in November 2015. ~~The 2016 expense included certain one-time repair and maintenance costs associated with the plant shut down.~~

~~El Quevar project~~Administrative expense. ~~During~~ Administrative expenses totaled $3.5 million for each of the nine months ended September 30, ~~2017~~2022, and 2016 we incurred $0.5 million and $0.3 million, respectively, primarily related to holding costs for the Yaxtché deposit at our El Quevar project in Argentina. The amount for the 2017 period is higher than the same period in 2016 due to an increase in evaluation activities at the El Quevar project, as discussed above.

~~Administrative expense.~~ ~~Administrative expenses totaled $2.6 million for the nine months ended~~ September 30, ~~2017 compared to $3.1 million for the nine months ended September 30, 2016.~~2021. Administrative expenses, including costs associated with being a public company, are incurred primarily by our corporate activities in support of the Velardeña Properties, El Quevar project and our exploration portfolio. The ~~$2.6~~$3.5 million of administrative expenses we incurred during the nine months ~~ended September 30, 2017~~of 2022 is comprised of ~~$1.1~~$1.5 million of employee compensation and directors’ fees, ~~$0.7~~$0.9 million of professional fees and ~~$0.8~~$1.1 million of insurance, rents, travel expenses, utilities, and other office costs. The ~~$3.1~~$3.5 million of administrative expenses we incurred during the nine months ~~ended September 30, 2016~~of 2021 is comprised of ~~$1.1~~$1.6 million of employee compensation and directors’ fees, ~~$1.2~~$1.0 million of professional fees and ~~$0.8~~$0.9 million of insurance, rents, travel expenses, utilities and other ~~office costs.~~office.

~~Stock based~~Stock-based compensation. During the nine months ended September 30, ~~2017~~2022, we incurred ~~$0.3~~approximately $0.5 million of expense related to ~~stock based compensation compared to $0.7 million for~~stock-based compensation. During the nine months ended September 30, ~~2016. Stock based~~2021, we incurred approximately $1.5 million of expense related to stock-based compensation. Stock-based compensation varies from period to period depending on the number and timing of shares granted, the type of grant, the market value of the shares on the date of grant and other variables. ~~The 2017~~Stock-based compensation was higher in the 2021 period due primarily to accelerated vesting of stock awards granted to executives and 2016 nine-month stock based compensation amounts include $0.2 million and $0.4 million, respectively, related to KELTIP grants made to two officers (see Note 14 to the consolidated financial statements filed as parta consultant.

Table of ~~this Form 10-Q for a discussion of KELTIP grants).~~Contents

Reclamation and accretion expense. During each of the nine months ended September 30, ~~2017~~2022, and ~~2016~~2021 we incurred approximately ~~$0.1~~$0.2 million of reclamation expense related to the accretion of an asset retirement obligation at the Velardeña Properties.

Other operating income (expense), net. We recorded ~~$1.8 million and $1.6~~$1.3 million of other operating income for the nine months ended September 30, ~~2017 and 2016, respectively. The net amount~~2022, related to $1.2 million of amortization of deferred income related to the option agreement for the ~~2017 period consists primarily~~sale of ~~a refund of value added tax from Argentina (see Note 7 to~~ the ~~consolidated financial statements filed~~Santa Maria property, as ~~part of this Form 10-Q), net gains~~discussed above, and $0.1 million related to the sale of non-essential mining equipment ~~to Minera Indé, discussed above, a gain related to the reduction~~in Mexico. We recorded $0.5 million of ~~the asset retirement obligation liability at our Velardeña Properties and the sale of certain assets and non-strategic exploration properties. The net amount~~other operating income for the ~~2016 period is~~nine months ended September 30, 2021, primarily related to the amortization of deferred income related to the option agreement for the sale of ~~certain assets and non-strategic exploration properties.~~the Santa Maria property.

Depreciation, depletion and amortization. During the nine months ended September 30, ~~2017~~2022, and September 30, 2021, we incurred depreciation, depletion and amortization expense of approximately $0.2 million and $0.5 million, compared to $1.3 million for the nine months ended September 30, 2016. The decrease in depreciation, depletion and amortization expense during the 2017 period is primarily the result of certain equipment at our Velardeña Properties having been fully depreciated.respectively.

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Interest and other ~~income.~~expense, net. We recorded a nominal amount of interest and other ~~income~~expense, net for the nine-month period ended September 30, 2022. We recorded approximately $0.3 million of interest and other expense, net for the nine-month period ended September 30, 2021, primarily related to write-off of deferred costs related to the Lincoln Park Capital program.

Gain (Loss) on foreign currency. We recorded a $0.3 million foreign currency gain for the nine months ended September 30, ~~2017, including accrued interest related to the sale of equipment to Minera Indé, discussed above. During the nine months ended September 30, 2016 we recorded only a nominal amount of interest~~2022, and ~~other income primarily related to cash balances held in banks.~~

~~Warrant derivative (loss) gain.~~ ~~During the nine months ended September 30, 2016 we recorded a loss of approximately $2.8~~$0.2 million related to an increase in the fair value of the liability recorded for warrants to acquire the Company’s common stock (see Note 12 of our consolidated financial statements filed as part of this Form 10-Q). We did not record any warrant derivative gains or losses during 2017 following a change in accounting principle and the subsequent reclassification of the warrant liabilities to equity retroactively to the beginning of 2017 (see Note 3 to the consolidated financial statements filed as part of this Form 10-Q).

~~Derivative loss.~~ For the nine months ended September 30, 2016 we recorded a $0.8 million loss related to the fair value adjustment to the beneficial conversion feature of the Sentient Note, which constitutes an imbedded derivative (see Note 12 of our consolidated financial statements filed as part of this Form 10-Q). There were no such amounts recorded for the nine months ended September 30, ~~2017 as the Sentient Note was fully converted and no longer outstanding as of September 30, 2016.~~

~~Loss on foreign currency.~~ ~~We recorded a nominal foreign currency loss and a $0.1 million foreign currency loss for the nine months ended September 30, 2017 and 2016 respectively.~~2021. Foreign currency gains and losses are primarily related to the effect of currency fluctuations on monetary ~~assets net of liabilities held~~transactions incurred by our foreign subsidiaries that are denominated in currencies other than US dollars.

Income taxes. ~~We recorded no income tax expense or benefit for the nine months ended September 30, 2017.~~ We recorded a ~~nominal income~~$0.1 tax benefit for the nine months ended September 30, ~~2016 related to mark-to-market held~~2022. We recorded $0.2 million of tax expense for ~~sale investment gains recorded as other comprehensive income.~~ the nine months ended September 30, 2021.

Liquidity and Capital Resources ~~and Going Concern~~

At September 30, ~~2017,~~2022, our aggregate cash and cash equivalents totaled ~~$5.0~~$6.5 million, ~~$2.4 million greater than~~compared to the ~~$2.6~~$12.2 million in similar assets held at December 31, ~~2016.~~2021. The ~~net increase~~September 30, 2022 balance is due in part ~~from~~to the following expenditures and cash inflows for the nine months ended ~~September~~June 30, ~~2017.~~2022. Expenditures totaled ~~$6.2~~$12.1 million from the following:

●

$~~2.0~~7.0 million infor exploration expenditures ~~including work~~ at the ~~Santa Maria, Mogotes~~Rodeo, Yoquivo and ~~Rodeo properties;~~

other properties, costs associated with the potential restart of Velardeña and other general exploration expenses;

●

$~~1.1~~0.8 million in care and maintenance costs at the Velardeña Properties;

●

$~~0.5~~0.4 million in exploration and evaluation activities, care and maintenance and property holding costs at the El Quevar ~~project; and~~

project, net of reimbursements from Barrick;

●

$~~2.6~~3.5 million in general and administrative ~~expenses.~~

expenses; and

●

$0.4 million related to a net working capital change.

The foregoing expenditures were offset by cash inflows of ~~$8.6~~$6.4 million from the following:

●

$~~3.4~~5.4 million of net operating margin ~~received pursuant to~~from the ~~oxide plant lease~~Rodeo operation (defined as ~~oxide plant lease~~ revenue ~~less oxide plant lease costs);~~

~~$1.9 million from Hecla comprised of $1.0 million for an~~ option to extend the oxide plant lease for an additional period of up to two years and $1.0 million for the purchase 1.8 million shares of the Company’s common stock issued at a price of $0.55 per share, less $0.1 million in legal and stock exchange issuance costs;

~~$1.1 million~~ ~~in refunds of previous VAT payments made in Argentina during 2012 and 2013~~;

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~~$0.8 million from final payments related to the sale of excess mining equipment to Minera Indé;~~

~~$0.7 million of net proceeds received from the issuance of our common stock under the ATM Program;~~

~~$0.3 million from the farm out of certain nonstrategic mineral claims to Santacruz;~~

~~$0.2 million of net proceeds~~ from the sale of ~~other nonstrategic exploration properties~~metals less the cost of metals sold) and ~~mining equipment; and~~

●

$~~0.2~~1.0 million from ~~a decrease in working capital.~~

the exercise of warrants

In addition to ~~our $5.0~~the $6.5 million cash balance at September 30, ~~2017,~~2022, we ~~also~~ expect to receive approximately ~~$4.6~~$5.5 million to $6.5 million in net operating margin from the ~~lease of the oxide plant and $0.8 million~~Rodeo Property (defined as revenue from the ~~aforementioned exploration property farm out~~sale of metals less the cost of metals sold) during the next twelve month period ending September 30, 2018. With the transactions referred to above and if no additional sales of common stock under the ATM Program occur, we project we would end 2017 with a cash balance of approximately $3.5 million and end September 30, 2018 with a cash balance of approximately $2.5 million based on the following forecasted expenditures during the next twelve months ending September 30, ~~2018:~~2023, assuming average gold and silver prices during that period of $1,800 and $25.00 oz respectively (our realized prices for the nine months ended June 30, 2022, as shown above, were $1,825 and $22.02 for gold and silver, respectively). Our forecasted cash inflows during the twelve months ending

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September 30, 2023 also include the anticipated receipts of $1.75 million from the sale of the Santa Maria property to Fabled.

Our forecasted expenditures during the twelve months ending September 30, 2023, apart from Rodeo cost of metals sold, which is already included in our forecast of net operating margin, total approximately $9.6 million as follows:

●

Approximately ~~$2.0~~$4.3 million on exploration activities and property holding costs related to our portfolio of exploration properties located ~~primarily~~ in Mexico, Argentina and Nevada, including project assessment and evaluation costs relating to ~~Santa Maria,~~additional exploration at Rodeo ~~Mogotes~~ and ~~other properties;~~

Yoquivo as well as costs associated with the potential restart of Velardeña and costs to increase the capacity of the tailing facility to process the Rodeo material;

●

Approximately ~~$1.5~~$1.0 million at the Velardeña Properties for care and maintenance;

●

Approximately ~~$1.0~~$0.4 million at the El Quevar project to fund ~~ongoing exploration and evaluation activities,~~ care and maintenance and property holding ~~costs;~~costs, net of reimbursement from Barrick; and

●

Approximately ~~$3.4~~$3.9 million on general and administrative costs.

Our forecasted cash resources of approximately $13.5 to $15.5 million, which include cash on hand at September 30, 2022, the forecasted net operating margin from the Rodeo Property, and the anticipated payments of $1.75 million from the sale of the Santa Maria property to Fabled, are greater than our forecasted expenditures of approximately $10.4 million for the twelve months ended September 30, 2023. The actual net operating margin received from the Rodeo Property could be negatively impacted if further interruptions due to COVID-19 occur in Mexico, or if costs rise further due to global supply chain or other issues. The actual amount of cash resources that we receive during the period from the Rodeo operation may also vary significantly from the amounts specified above due to, among other things: (i) unanticipated variations in grade, (ii) unexpected challenges associated with our proposed mining plan, (iii) decreases in commodity prices below those used in calculating the estimates shown above, (iv) variations in expected recoveries, (v) increases in operating costs above those used in calculating the estimates shown above, or ~~the~~(vi) interruptions in production at Rodeo. The actual amount of cash expenditures that we incur at properties other than Rodeo during the ~~remainder of 2017 and the first three quarters of 2018 and the projected cash balances at December 31, 2017 and~~twelve-month period ending September 30, ~~2018~~2023, may vary significantly from the amounts specified above and will depend on a number of factors, including variations ~~from~~in the anticipated care and maintenance costs at the Velardeña Properties or at El Quevar, and costs for continued exploration, project assessment, and development at our other exploration ~~properties, including Santa Maria, Mogotes, Rodeo and El Quevar. Moreover,~~properties. Likewise, if ~~revenues from our oxide plant lease~~cash expenditures are greater than anticipated or ~~payments from the exploration farm out agreement~~if cash receipts are less than anticipated, we may ~~reduce our planned expenditures accordingly.~~need to take certain actions to maintain sufficient cash balances over the next nine months, including additional asset dispositions or raising additional equity capital through sales under the ATM Program or otherwise.

The condensed consolidated financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the normal course of business. However, our continuing long-term operations ~~are~~may be dependent upon our ability to continue currently profitable operations and to secure sufficient funding, ~~and~~if needed, to generate future profitable operations. The underlying value and recoverability of the amounts shown as property, plant and equipment in our condensed consolidated financial statements are dependent on our ability to continue to generate positive cash flows from operations and to continue to fund exploration and development activities that would lead to additional profitable mining and processing activities or to generate proceeds from the disposition of property, plant and equipment. There can be no assurance that we will be successful in ~~generating~~continuing to generate profitable mining and processing activities or to securing additional funding, if needed, to generate future profitable operations ~~or securing additional funding in the future~~ on terms acceptable to us or at all. We believe the ~~continuing~~ cash ~~flow~~on hand, anticipated positive net operating margins from the ~~lease~~Rodeo operation, the payments received for Santa Maria, the potential use of the ~~oxide plant~~ATM Program, and ~~prior~~the potential for additional asset dispositions make it probable that we will have sufficient cash to meet our financial obligations and continue our business strategy beyond one year from the filing of our condensed consolidated financial statements for the period ended September 30, ~~2017.~~ 2022.

Recent Accounting Pronouncements

~~In July 2017,~~There were no new accounting pronouncements issued during 2022 that would affect the ~~FASB issued ASU 2017-11,~~ “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Non public Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). Part I relates to the accounting for certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception

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from derivative accounting. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified as equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. For us, ASU 2017-11 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted, including in an interim period. We early adopted ASU 2017-11 during the interim period ended September 30, 2017 (see Note 3 of our consolidated financial statements filed as part of this Form 10-Q).

~~In March 2016, the FASB issued ASU 2016-08,~~ “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (“ASU 2016-08”), which clarifies principal versus agent when another party, along with the entity, is involved in providing a goodCompany or ~~service to a customer. Topic 606,~~

In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. For a lessor, the accounting applied is also largely unchanged from previous guidance. The new rules will be effective for us in the first quarter of 2019. We do not anticipate early adoption. We do not expect the adoption of ASU 2016-02 to materially change the amounts related to leases that are currently recorded as none of its operating leases are material and therefore we do not expect the adoption to have a material impact on ~~our~~its consolidated financial position or results of operations.

~~In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement~~31

Table of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which amended its standards related to the accounting of certain financial instruments. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. Specifically, available for sale investments will not run through other comprehensive income. The new rules will become effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. We are in the process of evaluating the impact the amendment will have on our consolidated financial position or results of operations.Contents

In May 2014, FASB and the International Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized and the related cash flows. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017; early adoption is not permitted. ASU 2014-09 was originally effective December 15, 2016 but ASU 2015-14 deferred the effective date by one year. As our current accounting practices per the guidance of ASU 2014-09 are comparable to the requirements of ASU 2014-09, we do not expect the adoption of this update to result in a material impact to our consolidated financial position or results of operations.

Forward-Looking Statements

Some information contained in or incorporated by reference into this Quarterly Report on Form 10-Q may contain forward-looking statements. These statements include comments relating ~~to our plans, expectations and assumptions concerning~~to: (i) the ~~oxide plant lease,~~Rodeo mine, including ~~the expected term,~~ anticipated ~~revenues, and potential future tailings expansion; the Santa Maria property, including~~ ~~the PEA results (including~~ life of mine and production, ~~expectations),~~payable extraction, anticipated grades, recoveries, estimated unit costs and ~~other expectations~~net operating margin for 2022, (ii) our plans regarding ~~the project, including future drilling plans, timing~~further advancement of ~~initial drill results, expansion potential for the existing deposit and general cost expectations; the Rodeo property, including~~ ~~the Company's general evaluation plans and cost expectations; the Celaya property, including farm-out terms and possible future drill testing; the Mogotes property, including future drilling plans and evaluation activities;~~ the El Quevar project ~~including~~and reimbursements paid by Barrick under the Earn-in Agreement, to fund the El Quevar project; (iii) timing and results of test mining at Velardeña and the potential restart of mining activities at Velardeña; (iv) information regarding the Yoquivo property, including future evaluation and drilling plans, information gained from drilling activities, exploration activities, the potential of additional blind veins to be found and our plan to produce an initial resource estimate; (v) information regarding the Sarita Este property, including future evaluation and drilling plans, the potential of an oxidized gold system and a copper porphyry system and exploration activities; (vi) our plans to defend ourself against claims by Unifin if served with notice of a lawsuit; (vii) expectations pertaining to the recovery of ~~evaluation activities; our financial outlook~~VAT refunds from the Mexican government; (viii) projected spending for the ~~remainder of 2017~~twelve months ended September 30, 2023; and ~~through the end of the third quarter 2018, including anticipated income and expenditures during those periods; expected need for external financing and~~(ix) statements concerning our financial condition, business strategies and business and legal risks.

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

~~Table of Contents~~

●

Timing duration and overall impact of the COVID-19 pandemic, including potential future suspension of activities at Rodeo or the Velardeña Properties in the event of future orders of the Mexican Federal Government;

~~Lower revenue than anticipated~~●

Deviations from the ~~oxide lease, which could result from delays~~projected timing, amount of estimated production and projected costs at Rodeo due to unanticipated variations in grade, unexpected challenges associated with our proposed mining plan, volatility in commodity prices, variations in expected recoveries, increases in projected operating costs, working capital, capital costs or ~~problems at the third party’s mine or at the oxide plant, permitting problems at the third party’s mine or the oxide plant,~~ delays in ~~constructing additional tailings capacity at the oxide plant, earlier than expected termination~~commencement of ~~the lease~~ or ~~other causes~~;

interruptions in production;

●

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

Argentina;

●

Risks related to the El Quevar project in Argentina, including unfavorable results from our evaluation activities and whether the option with respect to the El Quevar project is exercised pursuant to the terms of the Earn-in Agreement;

~~Continued decreases or insufficient increases~~●

Decreases in silver and gold ~~prices~~;

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 low~~volatility in silver and gold prices or unfavorable exploration results;

●

Unfavorable results from exploration at the ~~Santa Maria, Rodeo, Mogotes~~Yoquivo, Sarita Este, Sand Canyon or other exploration properties and whether we will be able to advance these or other exploration properties;

●

~~Risks related to~~The Rodeo project, including potential inaccuracies in our assumptions and projections contained in the ~~El Quevar project in Argentina, including unfavorable results from~~Rodeo PEA (including life of mine and production expectations), and 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 to~~plans for further ~~advance the project~~;

exploration drilling;

●

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

~~Whether we will be able to mine~~ and ~~sell minerals successfully or profitably at any~~the timing and scope of our ~~current properties~~further evaluation activities at ~~current or future silver and gold prices and achieve our objective of becoming~~ the Velardeña ~~mid-tier mining company~~;

Properties;

●

Potential delays in our exploration activities or other activities to advance properties towards mining resulting from environmental consents or permitting delays or problems, accidents, problems with contractors, disputes under agreements related to exploration properties, unanticipated costs and other unexpected events;

●

Our ability to retain key management and mining personnel necessary to successfully operate and grow our business;

●

Economic and political events negatively affecting the market prices for gold, silver, zinc, lead and other minerals that may be found on our exploration properties;

Table of Contents

●

Political and economic instability in Mexico, Argentina, and other countries in which we conduct our business and future actions of any of these governments with respect to nationalization of natural resources or other changes in mining or taxation policies;

●

Volatility in the market price of our common stock; and

●

The factors discussed under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2016 and item 1A of this Report on Form 10-Q.~~

2021.

Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. You should not unduly rely on ~~these~~any of our forward-looking statements. These statements speak only as of the date of this ~~Quarterly Report~~quarterly report on Form 10-Q. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments.

~~Cautionary Statement Regarding Mineralized Material~~

“Mineralized material” as used in this Quarterly Report on Form 10-Q, although permissible under the SEC Industry Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any deposits at the El Quevar, Santa 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.

~~Table of Contents~~

Item 3.Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk

Interest Rate Risk

We invest substantially all of our excess cash in U.S. government and debt securities rated “investment grade” or better. The rates received on such investments may fluctuate with changes in economic conditions. Based on the average cash and investment balances outstanding during the first nine months of ~~2017,~~2022, a 1% decrease in interest rates would have resulted in only a nominal reduction in interest income for the period.

Foreign Currency Exchange Risk

Although most of our expenditures are in U.S. dollars, certain purchases of labor, supplies and capital assets are denominated in other currencies, primarily in Mexico. As a result, currency exchange fluctuations may impact the costs of our exploration and mining activities. To reduce this risk, we maintain minimum cash balances in foreign currencies and complete most of our purchases in U.S. dollars.

Commodity Price Risk

We are primarily engaged in the exploration and mining of properties containing gold, silver, zinc, lead and other minerals. As a result, decreases in the price of any of these metals have the potential to negatively impact our ability to establish reserves and mine on our properties. We currently hold no commodity derivative positions.

Item 4.Controls and ~~Procedures~~ Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, ~~2017,~~2022, (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us 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’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

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

Table of Contents

PART II. OTHER ~~INFORMATION~~INFORMATION

Item 1.Legal ~~Proceedings~~Proceedings

~~None.~~ During April 2021, we became aware of a lawsuit in Mexico against one of our Mexican subsidiaries, Minera William, S.A. de C.V. (“Minera William”). The plaintiff in the matter is Unifin Financiera, S.A.B de C.V. (“Unifin”). The lawsuit was assigned to the Fifth Specialized Commercial District Court. Although we have knowledge of the existence and content of the lawsuit filed by Unifin, the Court has not officially served Minera William with the complaint as of the date of this report. Unifin is alleging that a representative of Minera William signed certain documents in July 2011 purporting to bind Minera William as a guarantor of payment obligations owed by a third party to Unifin in connection with that third party’s acquisition of certain drilling equipment. At the time the documentation was allegedly signed, Minera Williams was a subsidiary of ECU Silver Mining prior to our acquisition of ECU in September 2011. As a preemptive measure, Unifin has obtained a preliminary court order freezing Minera William’s bank accounts in Mexico, which has limited our and Minera William’s ability to access approximately US $153,000 according to current currency exchange rates. Notwithstanding this action, the restrictions imposed on Minera Williams’ bank accounts do not impact our ability to operate the Rodeo mine, which is held through a different Mexico subsidiary, or continue with our evaluation plans for a potential Velardeña mine restart or move forward with any of our other exploration programs in Mexico. Unifin is seeking recovery for as much as US $12.5 million. We believe there is no basis for this claim and will defend ourselves if and when we are formally served with notice of the lawsuit. As such, we have not accrued an amount for this matter in our Condensed Consolidated Balance Sheets or Statements of Operations as of September 30, 2022.

Item 1A.Risk ~~Factors~~Factors

The risk factors for the ~~quarter~~nine months ended September 30, ~~2017,~~2022, are substantially the same as those set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

Item 2.Unregistered Sales of Equity Securities and Use of ~~Proceeds~~Proceeds

None.

Item 3.Defaults Upon Senior ~~Securities~~Securities

None.

Item 4.Mine Safety ~~Disclosures~~Disclosures

Not applicable.

Item 5.Other ~~Information~~Information

None.

Table of Contents

Item 6. ~~Exhibits~~Exhibits



~~10.1~~	~~Option Agreement dated August 2, 2017 among Golden Minerals Company and Hecla Mining Company. (1)~~
~~10.2~~	~~Second Amendment to the Master Agreement and Lease Agreement dated August 2, 2017 among Minera William S.A. de C.V. and Minera Hecla S.A. de C.V. (1)~~
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.*
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.*
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act).**
101.INS	Inline XBRL Instance Document*
101.SCH	Inline XBRL Taxonomy Extension Schema Document*
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document*
101.DEF	Inline XBRL Taxonomy Definition Document*
101.LAB	Inline XBRL Taxonomy Label Linkbase Document*
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document*
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document)
* Filed herewith ** Furnished herewith ~~(1) Incorporated by reference to our Current Report on Form 8-K filed with the SEC on August 3, 2017.~~

Table of Contents

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GOLDEN MINERALS COMPANY


Date:	November ~~7, 2017~~10, 2022	By:	/s/ Warren M. Rehn
			Warren M. Rehn
			President and Chief Executive Officer



Date:	November ~~7, 2017~~10, 2022	By:	/s/ ~~Robert P. Vogels~~Julie Z. Weedman
			~~Robert P. Vogels~~Julie Z. Weedman
			Senior Vice President and Chief Financial Officer

3936


		PAGE

PART I – FINANCIAL INFORMATION
		3
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26 22

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36 33

ITEM 4.	CONTROLS AND PROCEDURES	36 33

PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	37 34

ITEM 1A.	RISK FACTORS	37 34

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37 34

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	37 34

ITEM 4.	MINE SAFETY DISCLOSURES	37 34

ITEM 5.	OTHER INFORMATION.	37 34

ITEM 6.	EXHIBITS	38
			35


SIGNATURES		39


				36



								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive		Total
	Shares	Amount		Capital		Deficit		Income (loss)		Equity
	(in thousands except share data)
Balance, December 31, 2015	53,335,333	$	534	$	484,742	$	(477,378)	$	(127)	$	7,771
Stock compensation accrued and shares issued for vested stock awards	317,968		2		250		—		—		252
Shares issued on conversion of Sentient Note (Note 11)	27,366,740		273		6,944		—		—		7,217
Registered offering common stock, net and warrants (Note 14)	8,000,000		80		3,519		—		—		3,599
Unrealized gain on marketable equity securities, net of tax	—		—		—		—		182		182
Net loss	—		—		—		(10,659)		—		(10,659)
Balance, December 31, 2016	89,020,041	$	889	$	495,455	$	(488,037)	$	55	$	8,362
Cumulative adjustment related to change in accounting principle (Note 3)	—		—		19,046		(17,148)		—		1,898
Adjusted balance at January 1, 2017	89,020,041	$	889	$	514,501	$	(505,185)	$	55	$	10,260
Stock compensation accrued and shares issued for vested stock awards	150,000		1		149		—		—		150
Shares issued under the at-the-market offering agreement, net (Note 14)	1,024,392		11		671		—		—		682
Consideration shares sold to Hecla, net (Note 15)	1,811,015		18		911		—		—		929
Deemed dividend on warrants (Note 3)	—		—		5		(5)		—		—
Unrealized loss on marketable equity securities, net of tax	—		—		—		—		(92)		(92)
Net loss	—		—		—		(1,851)		—		(1,851)
Balance, September 30, 2017	92,005,448	$	919	$	516,237	$	(507,041)	$	(37)	$	10,078


					Reported after
	As Previously			Cumulative	the Effect of a Change in
	Reported		Effect Adjustment		Accounting Principle
Balance Sheet Accounts Impacted by	December 31,		at the Beginning		at the Beginning
September 2012 and 2014 Warrants	2016		of 2017		of 2017
	(in thousands)
Warrant Liability - Related Party	$	976	$	(976)	$	—
Warrant Liability		922		(922)		—
Additional Paid-in Capital		495,455		19,046		514,501
Accumulated Deficit		(488,037)		(17,148)		(505,185)


			Estimated		Carrying
September 30, 2017	Cost		Fair Value		Value
		(in thousands)
Investments:
Short-term:
Available for sale common stock	$	275	$	242	$	242
December 31, 2016
Investments:
Short-term:
Available for sale common stock	$	275	$	334	$	334


	Level 1		Level 2		Level 3		Total
	(in thousands)
At September 30, 2017
Assets:
Cash and cash equivalents	$	4,966	$	—	$	—	$	4,966
Trade accounts receivable		387		—		—		387
Trade accounts receivable - related party		4		—		—		4
Short-term investments		242		—		—		242
	$	5,599	$	—	$	—	$	5,599

At December 31, 2016
Assets:
Cash and cash equivalents	$	2,588	$	—	$	—	$	2,588
Trade accounts receivable		380		—		—		380
Trade accounts receivable - related party		643		—		—		643
Short-term investments		334		—		—		334
	$	3,945	$	—	$	—	$	3,945
Liabilities:
Warrant liability - related party	$	—	$	—	$	976	$	976
Warrant liability		—		—		922		922
	$	—	$	—	$	1,898	$	1,898



	December 31,
	2016
Company's ending stock price	$	0.58
Company's stock volatility		110%
Applicable risk free interest rate		1.39%


		Weighted
		Average
		Exercise
	Number of	Price Per
Equity Plan Options	Shares	Share
Outstanding at December 31, 2016	95,810	$	8.02
Granted during the period	—		—
Forfeited or expired during period	(55,500)		8.00
Exercised during period	—		—
Outstanding at September 30, 2017	40,310	$	8.05
Exercisable at end of period	40,310	$	8.05
Granted and vested	40,310	$	8.05


		Weighted
	Number of	Average Exercise
	Underlying	Price Per
Common Stock Warrants	Shares	Share
Outstanding at December 31, 2016	17,578,950	$	2.17
Granted during period	—		—
Dilution adjustment	157,302
Expired during period	(6,258,080)		4.62
Exercised during period	—
Outstanding at September 30, 2017	11,478,172	$	0.81


	Nine Months Ended September 30,
	2017		2016
	(in thousands)
Cash flows from operating activities:
Net loss	$	(1,851)	$	(10,974)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation		456		1,317
Accretion of asset retirement obligation		146		143
Write off of loss contingency, net		—		(212)
Asset write off		—		24
Gain on reduction of asset retirement obligation		(56)		—
Gain on sale of assets		(605)		(1,522)
Amortization of deferred loan costs		—		57
Warrant liability fair market adjustment		—		2,821
Derivative liability fair market adjustment		—		778
Accretion of loan discount		—		372
Loss on debt extinguishment		—		1,653
Deferred income taxes		—		(26)
Stock compensation		299		666
Changes in operating assets and liabilities:
Decrease in trade accounts receivable		607		41
Decrease in prepaid expenses and other assets		137		150
(Increase) decrease in inventories		(22)		66
(Increase) decrease in value added tax recoverable, net		(3)		347
Increase in accrued interest payable net of amounts capitalized		—		86
Increase (decrease) in deferred revenue		967		(500)
Decrease in reclamation liability		(4)		(8)
Decrease in accounts payable and accrued liabilities		(34)		(389)
Decrease in deferred leasehold payments		(15)		(13)
Net cash provided by (used in) operating activities	$	22	$	(5,123)



							Exploration, El
			Costs		Depreciation,		Quevar, Velardeña
Three Months Ended			Applicable		Depletion and		and Administrative		Pre-Tax (gain)				Capital
September 30, 2017	Revenue		to Sales		Amortization		Expense		loss		Total Assets		Expenditures
Velardeña Properties	$	1,771	$	619	$	53	$	623	$	(2,016)			$	3
Corporate, Exploration & Other		—		—		85		1,609		2,334				2
	$	1,771	$	619	$	138	$	2,232	$	318			$	5

Nine Months Ended
September 30, 2017
Velardeña Properties	$	5,107	$	1,704	$	179	$	1,361	$	(3,667)	$	6,573	$	3
Corporate, Exploration & Other		—		—		277		4,820		5,518		8,329		2
	$	5,107	$	1,704	$	456	$	6,181	$	1,851	$	14,902	$	5

Three Months Ended
September 30, 2016
Velardeña Properties	$	1,729	$	549	$	249	$	509	$	(1,563)			$	15
Corporate, Exploration & Other		—		—		97		1,706		2,361				—
	$	1,729	$	549	$	346	$	2,215	$	798			$	15

Nine Months Ended
September 30, 2016
Velardeña Properties	$	4,768	$	1,478	$	982	$	2,100	$	(1,319)	$	8,370	$	35
Corporate, Exploration & Other		—		—		335		5,803		12,319		6,647		1
	$	4,768	$	1,478	$	1,317	$	7,903	$	11,000	$	15,017	$	36