GOLDEN MINERALS COMPANY (TSE:AUM) Files An 8-K Termination of a Material Definitive Agreement
Item 1.02 Termination of a Material Definitive Agreement
On June 26, 2019, Golden Minerals Company (the Company) and its indirectly wholly-owned subsidiary, Minera de Cordilleras S. de R.L. de C.V., entered into an agreement (the Agreement) to sell certain assets to Compañía Minera Autlán S.A.B. de C.V. (Autlán) for US$22.0 million. On September 9, 2019, the Agreement was terminated in accordance with its terms.
Under the terms of the Agreement, Autlán had agreed to purchase three of the Companys Mexican subsidiaries, which together hold the Velardeña properties, including the Velardeña and Chicago mines (which are currently on care and maintenance), two processing plants, mining equipment and other adjacent exploration properties. The sale would have included the lease agreement to which the Company has leased the Velardeña oxide plant to Minera Hecla, S.A. de C.V. through December 31, 2020 (the Velardeña Lease). The proposed transaction also included the sale of the Rodeo and Santa Maria project concessions.
The Agreement provided for a period of up to 75 days for Autlán to conduct due diligence related to the three subsidiary companies, the Rodeo concessions and the Santa Maria concessions. Under the Agreement, Autlán had the right to terminate the Agreement at any time during the due diligence period.
Upon execution of the Agreement, Autlán paid a deposit of US$1.5 million to the Company. The Company has an obligation to repay the deposit in the manner described below under Item 2.03.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
As a result of the termination of the Autlán purchase and sale agreement, the Company is required to repay the $1.5 million deposit, together with interest accruing at 3.0% per annum from the date of termination (the Repayment Amount), on or before December 8, 2019 (the Due Date). If the Company does not pay such amount prior to the Due Date, then the Company shall transfer the Rodeo concessions to Autlán in full settlement of the deposit. However, if the Rodeo concessions cannot be conveyed for any reason (as determined by Autlán in its reasonable discretion), then the Company will be obligated to repay the Repayment Amount, together with interest accruing at 11% per annum commencing on the Due Date, in monthly installments equal to the greater of (i) US$257,000 or (ii) 50% of the sum of the Monthly Lease Payments and the Monthly Per Tonne Payments (each as defined in the Velardeña Lease) until the Repayment Amount has been repaid with interest.