8-K: Barrick Gold Terminates El Quevar Earn-In Agreement, Returning Project to Golden Minerals

Barrick Gold has terminated its earn-in agreement for the El Quevar project, returning the silver and gold exploration property to Golden Minerals.

Summary

• Golden Minerals Company has regained full control of its El Quevar project in Argentina after Barrick Gold terminated their earn-in agreement.
• Barrick spent over $6 million on the project, including a 1,300-meter drill program that identified a potential gold prospect.
• The original agreement required Barrick to spend $10 million over eight years to earn a 70% interest, along with delivering a pre-feasibility study.
• Golden Minerals plans to update the Preliminary Economic Assessment for the Yaxtch silver deposit and explore the newly identified gold prospect.
• The Yaxtch deposit contains 2.9 million tonnes of Indicated material with 45.3 million ounces of silver and 0.3 million tonnes of Inferred material with 4.1 million ounces of silver.
• The El Quevar land package is 57,000 hectares, with the Yaxtch deposit covering less than 1% of the area.

Sentiment

Score: 7

Explanation: The return of the project is positive for Golden Minerals, especially with the identification of a gold prospect. However, the company now bears the full financial burden of development, which introduces some risk.

Positives

• Golden Minerals regains full control of the El Quevar project, which includes a high-grade silver deposit and a newly identified gold prospect.
• Barrick's exploration work, funded by over $6 million, has de-risked the project and identified a potential gold prospect.
• The return of the project is considered 'fortuitous' by management as the company pivots to exploration and development.
• Most of the holding costs for the project have been funded by Barrick since April 2020.
• The Yaxtch deposit is open to expansion to the east and west.

Negatives

• The termination of the earn-in agreement means Golden Minerals will need to fund future exploration and development of the El Quevar project.
• The company will need to secure capital to advance the project and update the resource estimate.

Risks

• The company's ability to advance the El Quevar project is subject to the availability of capital.
• Future exploration and development activities are subject to risks and uncertainties, including changes in political conditions, tax laws, and market conditions.
• Fluctuations in silver and gold prices could impact the economic viability of the project.
• There is a risk of potential future re-suspension of non-essential activities in Mexico.

Future Outlook

Golden Minerals intends to further advance the El Quevar project, update the Preliminary Economic Assessment for the Yaxtch silver deposit, and conduct step-out drilling to follow up on the gold intercept drilled by Barrick.

Management Comments

• The timing of the return of the El Quevar project is fortuitous and quite favorable to the Company as we pivot from production to exploration and development.
• The El Quevar property is one of the largest contiguous high sulfidation alteration systems in northern Argentina and presents a very prospective opportunity to the Company.

Industry Context

This announcement reflects a shift in priorities for Barrick Gold, potentially focusing on other projects, while Golden Minerals now has the opportunity to independently develop the El Quevar project. This is not uncommon in the mining industry where companies often farm out projects to other companies to reduce risk and capital expenditure.

Comparison to Industry Standards

• The El Quevar project's silver resource of 49.4 million ounces is significant, placing it among notable silver exploration projects globally.
• The identification of a gold prospect adds potential value, aligning with the industry trend of exploring for multiple metals in a single project.
• Barrick's expenditure of $6 million is a substantial investment for an exploration project, indicating the potential of the property.
• The return of the project to Golden Minerals is similar to other instances where major mining companies relinquish projects that do not meet their strategic criteria, allowing smaller companies to pursue development.

Stakeholder Impact

• Shareholders may view the return of the El Quevar project positively, given the potential for further exploration and development.
• Employees may see new opportunities as the company focuses on exploration and development.
• The company's suppliers and contractors may benefit from increased activity at the El Quevar project.

Next Steps

• Golden Minerals intends to update the Preliminary Economic Assessment for the Yaxtch silver deposit.
• The company plans to conduct step-out drilling to follow up on the gold intercept drilled by Barrick.
• Golden Minerals will seek capital to advance the El Quevar project.

Key Dates

Keywords

El Quevar, Golden Minerals, Barrick Gold, Silver, Gold, Exploration, Argentina, Earn-In Agreement, Yaxtch Deposit, Mineral Resources