Golden Minerals Reports Significant Operational Improvements at Velardena and Company Strategic Direction

GOLDEN, CO--(Marketwire -01/11/12)- Golden Minerals Company (AMEX: AUMN - News) (TSX: AUM.TO - News) ("Golden Minerals" or "the Company") is pleased to report significant operating improvements at the Velardeña Operations, located in the State of Durango, Mexico, since the merger with ECU Silver on September 2, 2011. The Company also announced plans to rationalize its extensive exploration portfolio.

Velardeña Operations

Payable metals production for September through year-end 2011 exceeded guidance previously provided in September by approximately 30% for gold and 114% for silver, primarily due to the increase in head grades resulting from reduced dilution. The following table shows actual production compared to the previous forecast for September through December 2011. Also shown is the updated 2012 forecast production for gold and silver.

 

                                                                      Full
               Sep-Dec  Sep-Dec                                       Year
              '11 Fcst  '11 Act  Q1 2012  Q2 2012  Q3 2012  Q4 2012   2012
              -------- -------- -------- -------- -------- -------- --------
Production (payable metals)
Gold (oz)        1,000    1,300    1,300    2,000    2,600    3,100    9,000
Silver (oz)     42,000   90,000   90,000  150,000  230,000  270,000  740,000

The 2012 Forecasted Production chart shows gold and silver production in silver equivalent ounces. Lead and zinc production are not included. Amounts shown are September through December 2011 actual gold and silver production compared to the previous forecast production, and forecast production for 2012.

Since the merger with ECU Silver, Golden has made significant operating improvements at the Velardeña Operations. Golden's primary focus has been on improving head grade in the feed supplied to the mills and on moving underground mine development outside the mineral veins. The December average head grade for gold and silver in material supplied to the oxide mill has improved by approximately 70% over the August average head grade (from approximately 1.5 grams per tonne to 2.5 grams per tonne for gold and approximately 90 grams per tonne to 150 grams per tonne for silver). The December average head grade in material supplied to the sulfide mill has also improved significantly to approximately 2.0 grams per tonne gold, 174 grams per tonne silver, 1.7% lead and 2.0% zinc. The improvements are primarily related to moving underground development outside the vein, resulting in reduced dilution of plant feed. The Company has completed approximately 1,200 meters of mine development since early September and has commenced excavation on the San Mateo Ramp, the main production ramp that will access six major ore zones.

Golden has also commenced plant optimization and other work to improve recoveries and product quality in both the oxide and sulfide plants. The Company plans to add a flotation circuit ahead of the current oxide plant to recover and divert to the sulfide plant more of the sulfide material that is currently mixed with the oxides. Based on these efforts, the Company expects the Velardeña Operations to be operationally cash flow positive in mid-year 2012 at current metals prices.

Safety related improvements at the Velardeña Operations have included the installation of 15 face ventilation fans, establishment of three trained and equipped mine rescue teams and safety refresher training for all personnel.

In addition, the Company has commenced engineering studies for a phased expansion of the sulfide plant by adding an additional ball mill, flotation cells and concentrate handling equipment. The phased expansion is expected to increase the sulfide plant's capacity from 320 to 650 tonnes per day which, along with operational improvements to the existing 500 tonne per day oxide plant, could result in annual production rates of up to 2 million ounces of silver and 29,000 ounces of gold by 2013. Expenditures for this phased expansion will be available later in the first quarter and are expected to be in the range of $10.0 million. The phased expansion would allow for an interim production increase pending completion of the proposed 2,000 tonne per day plant, which might occur as early as 2015. The 2,000 tonne per day sulfide plant could result in annual production of up to approximately 4 million ounces of silver and 80,000 ounces of gold.

As was previously announced, the Company expects to complete an updated NI 43-101 compliant resource estimate for the Velardeña Operations towards the end of the first quarter 2012. The independent consulting firm of Chlumsky Armbrust and Meyer (CAM) has been retained to provide the updated resource estimate.

The Company also expects to complete a Preliminary Economic Assessment (PEA) by the end of the third quarter 2012. The PEA will be based on the updated resource estimate and proposed expansion plans for the Velardeña Operations.

Exploration Portfolio

Golden has commenced a process of rationalizing the Company's current exploration portfolio of approximately 80 projects in Mexico, Peru and Argentina. The Company expects the potential monetization of selected assets to generate value as well as significantly reduce greenfield exploration expenditures in 2012 and going forward.

Jeffrey Clevenger, Golden Minerals Chairman, President and CEO, commented, "Management's primary focus is on growing production and establishing the company as an emerging producer." In addition, Mr. Clevenger noted, "This business strategy should allow Golden Minerals to more quickly become self-sufficient and less dependent on raising capital."

El Quevar

An updated NI 43-101 compliant mineral resource estimate on El Quevar is being prepared by the independent consulting firm of Pincock, Allen and Holt (PAH). The updated resource estimate for the El Quevar project is now expected by the end of first quarter 2012. PAH has been asked to include an additional 23 drill holes for which assays have just been received.

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