07:25 AM EDT, 09/03/2024 (MT Newswires) -- Golden Minerals ( AUMN ) on Tuesday said it has signed a letter agreement to sell Silex Argentina, its subsidiary that owns the El Quevar silver project in Argentina, to Butte Energy.

The letter agreement is intended to be binding on the parties pending negotiation of a definitive acquisition agreement on or before Sept. 30 and closing of the sales transaction by Oct. 31.

The purchase price is US$3.6 million, payable in cash, consisting of US$500,000 as a non-refundable deposit payable by the close of business on Sept. 3; US$500,000 payable upon execution of the acquisition agreement; and US$2.5 million payable upon closing of the transaction.

The letter agreement was made given the company's immediate cash needs. The closing of the sale of portions of the Velardena properties in Mexico has not been completed and there is an overdue payment of about US$2.8 million currently owed to Golden Minerals ( AUMN ).

The company initially planned to conduct additional drilling and complete an updated technical report at El Quevar, but it believes the Silex sale is the most effective strategy for alleviating its short-term financial pressures.

Moving forward, Golden Minerals ( AUMN ) plans to concentrate exploration efforts on other projects, including Sarita Este/Desierto and Sand Canyon, subject to funding availability.

Golden Minerals ( AUMN ) on Aug. 28 sold its Mexican subsidiary Minera Labri to a private Mexican company for about US$445,500. Minera Labri previously owned the Velardena properties' Plant 1, which, together with the Velardena mines, was sold to another privately-held Mexican group earlier in 2024.

Also on Aug. 28, the judges of the Court of Appeals of Salta, Argentina, accepted an appeal by Golden Minerals ( AUMN ) disputing the cancellation of its Desierto I mining concession in the third quarter of 2022.

The appeals court revoked the Mining Court of the Province of Salta's resolutions of cancellation and ordered the restitution to Golden Minerals ( AUMN ) of the Desierto I mining concession.

The company previously disclosed that it did not have sufficient resources to meet its expected cash requirements over the 12 months ending June 30, 2025. Golden Minerals ( AUMN ) ceased mining at the Velardena mines in the first quarter of 2024.

The company's only near-term opportunity to generate cash flow is from asset sales, equity or other external financing. As of Aug. 30, Golden Minerals ( AUMN ) has cash and cash equivalents of about US$0.9 million.

To address its liquidity concerns, the company is evaluating and pursuing alternatives to obtain enough funds to continue as a going concern, including a potential sale of the company, finalizing the Velardena asset sale, closing the Silex transaction, seeking buyers or partners for its other assets or obtaining equity or other external financing.

If Golden Minerals ( AUMN ) is unable to obtain additional resources, it may be forced to cease operations and liquidate.

The company's share price dropped 7.6% to US$0.29 in U.S. pre-market trading on Tuesday.