Investors don’t like Golden Minerals, ECU Silver merger

Under the terms of the Transaction, which will be structured as a plan of arrangement (the “Arrangement”) under the Quebec Business Corporations Act, each ECU share will be exchanged for 0.05 Golden Minerals shares and $0.000394 in cash. Upon completion of the Transaction, existing Golden Minerals shareholders and ECU shareholders will own approximately 49% and 51%, respectively, of the outstanding common stock of the combined company.

The Sentient Group, one of Golden Minerals’ largest stockholders with approximately a 19% ownership stake, has indicated to Golden Minerals that it supports and intends to vote in favor of the proposed Transaction. Sentient has also expressed an interest in investing further capital in the combined company to retain its current proportionate ownership, although no agreement has been reached.

Highlights of the Transaction:

— Creates a new leading junior silver mining company with an attractive
portfolio of assets consisting of the silver mining operations in the
Velardena mining district, Durango, Mexico; the El Quevar
advanced exploration project in the Salta Province, Argentina; the
advanced exploration-stage Zacatecas project in Zacatecas, Mexico; a
number of drill testing projects in Peru (Cochabamba, Jehuamarca),
Mexico (La Pinta), and Argentina (Atlas); and a large portfolio of
approximately 40 exploration properties in the reconnaissance/target
delineation stage located primarily in South America
— Creates a combined company with greater scale, financial strength and
an enhanced capital markets profile
— The combined company will have sufficient cash to advance
expansion plans at Velardena and the continued development of
El Quevar
— Combined basic market capitalization of over $600 million, based
on current prices, with an expected increased liquidity profile on
both NYSE Amex and the TSX
— Improved access to global capital markets to assist future growth
efforts
— Potential expansion of broker research coverage
— Combines complementary management teams with proven track records of
success to enhance and expand existing portfolio of assets
— Golden Minerals’ management team, with its strong expertise and
proven track record in mine building and operations, to focus on
optimization and potential expansion of Velardena mining
operations
— ECU’s exploration expertise to further enhance exploration efforts
at El Quevar, Zacatecas and other drill testing projects across
South America
— Large portfolio of projects combined with enhanced scale and
broader reach to create opportunities for growth in existing and
new jurisdictions
— Increased leverage to precious metals with significant base metals
credits
— Combined Measured and Indicated resources of approximately 25
million ounces silver, 26 million pounds lead and 37 million
pounds zinc
— Combined Inferred resources of approximately 187 million ounces
silver, 2 million ounces gold, 1 billion pounds lead and 1 billion
pounds zinc
— Opportunities to expand current resource base in Mexico, Argentina
and Peru

Jeffrey Clevenger, President and CEO of Golden Minerals, stated “The combination of Golden Minerals and ECU presents a unique opportunity for the shareholders of both companies to participate in the creation of a new silver mining company with an attractive pipeline for further growth. It accelerates our combined corporate growth plans utilizing Golden Minerals’ operating experience and ECU’s strong record of exploration excellence and discovery. We will continue to grow the combined company with discipline, and use our financial strength with a view to creating future value for all of our shareholders.”

Michel Roy, Chairman and CEO of ECU, stated “This combination represents a true merger of equals and provides the shareholders of both companies an opportunity to participate in a uniquely positioned silver mining company. Golden Minerals’ and ECU’s asset portfolios and management teams are highly complementary and provide both companies with increased opportunities to leverage the extensive, highly prospective projects in Mexico, Argentina and Peru.”

Transaction Details

The proposed business combination between Golden Minerals and ECU is expected to be completed by way of a court-approved plan of arrangement and will be subject to the approval of holders of not less than 66 2/3% of votes cast by holders of ECU common shares and by holders of not less than 66 2/3% of votes cast by holders of ECU common shares and ECU’s outstanding options, warrants and convertible securities voting together with ECU common shares as a single class. In addition, a majority of the common stockholders of Golden Minerals must approve the issuance of the Golden Minerals common stock to be issued in the Transaction. Full details of the Transaction will be included in the ECU management information circular and the Golden Minerals proxy statement, both of which are expected to be mailed to their respective shareholders in July 2011.

Under the terms of the business combination, shareholders of ECU will receive 0.05 common shares of Golden Minerals (the “Exchange Ratio”) and $0.000394 in cash (approximately $125,000 in the aggregate) for each share of ECU held. All of ECU’s unexercised options and warrants will be exchanged for Golden Minerals options and warrants, respectively, with the number and exercise prices of such options and warrants to be adjusted based on the Exchange Ratio.

Based on Golden Minerals’ last closing stock price, the Exchange Ratio represents a premium of approximately 7% to the 20 (trading) day volume weighted average trading price for ECU. The Exchange Ratio represents an “at-market” transaction based on a 20 (trading) day volume weighted average trading price of each of ECU’s common shares and Golden Minerals’ common stock.

Upon completion of the Transaction, the combined company will have approximately 31.2 million shares outstanding (34.2 million on a fully-diluted basis) and Golden Minerals shareholders and ECU shareholders will hold, on a fully diluted basis, approximately 45% and 55% of the combined entity, respectively.

The definitive agreement includes a commitment by each of Golden Minerals and ECU to not solicit alternative transactions to the Transaction. Each company has agreed to reimburse expenses or pay a break fee to the other party of up to $10 million upon the occurrence of certain events. In addition, each company has granted the other party a right to match any competing proposal. Each of the directors and officers of ECU has indicated an intention to vote in favor of the Transaction, and each of the directors and officers of Golden Minerals has indicated an intention to vote in favor of the issuance of shares in connection with the Transaction.

Private Placement

In connection with the Transaction, ECU and Golden Minerals have entered into a definitive subscription agreement pursuant to which ECU will issue to Golden Minerals $15 million principal amount, 0.0% senior unsecured convertible notes at par (the “Notes”) in a private placement (the “Private Placement”). Subject to regulatory approval, the Notes will mature on June 30, 2012 (subject to extension as described below), and will be convertible by Golden Minerals at any time prior to 5:00 p.m. (Toronto time) on June 29, 2012 into common shares of ECU at a conversion price of $0.97 per common share, consistent with the Exchange Ratio. The Notes will also be redeemable at par by ECU, in whole or in part, at any time after the record date for voting at the ECU shareholder meeting. In addition, ECU may elect to extend the maturity of the Notes for up to 6 months under certain conditions, with interest accruing at 10% per annum during such extension period. The proceeds of the Private Placement will be used for general corporate purposes and for ECU’s ongoing expansion plans at Velardena until closing of the proposed Transaction. Completion of the Private Placement is subject to the satisfaction of certain regulatory requirements.

Management Team and Board of Directors

Following completion of the Transaction, Michael T. Mason is expected to join the board of directors of the combined company, bringing the total number of directors to seven. Jeffrey Clevenger will retain his position as Chairman and CEO, and Stephen Altmann will assume the role of President. Mr. Clevenger brings extensive experience as a senior operator through his past involvement in mining operations at the senior level, including with Cyprus Amax Minerals Company, a former large integrated copper and molybdenum producer with operations in North and South America, and Phelps Dodge Corporation, a former large base metals producer with mining operations all over the world, among others. Mr. Altmann brings over fifteen years of financial and strategic advisory experience, serving as a senior corporate finance and merger and acquisition advisor for firms including RBC Dominion Securities, Credit Suisse First Boston, Scotia Capital and Desjardins Securities prior to joining ECU, as President, in 2007. Michel Roy will be staying on as a senior consultant.

Advisors and Counsel

Golden Minerals’ exclusive financial advisor is BMO Capital Markets, and Golden Minerals is being advised on legal matters by Fasken Martineau DuMoulin LLP and Davis Graham & Stubbs LLP. BMO Capital Markets has provided an opinion to the Golden Minerals board of directors that, subject to the assumptions, limitations, and qualifications set out therein, the Exchange Ratio is fair, from a financial point of view, to Golden Minerals.

ECU’s financial advisor is Dahlman Rose & Company, LLC, and ECU is being advised on legal matters by Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP. Stonecap Securities Inc. has provided an opinion to the ECU board of directors that, as at the date hereof, subject to the assumptions, limitations, and qualifications set out therein, the Transaction is fair, from a financial point of view, to ECU shareholders.

Conference Call and Webcast Information

A joint conference call hosted by Jeffrey Clevenger and Stephen Altmann will be held today at 11:00 am (ET) to discuss the Transaction. Anyone may join the call by dialing toll free (877) 278-9678 to access the call from outside Canada or the U.S. Passcode #79101843. You can listen to a recorded playback of the call by dialing (800) 642-1687 or (706) 645-9291 for calls outside Canada and the U.S. Passcode #79101843.

The Golden Minerals and ECU business combination presentation is available on the homepage of both companies’ websites. The conference call will be available for replay. For further information on Golden Minerals, please visit its website at www.goldenminerals.com . For further information on ECU, please visit its website at www.ecu.ca .

About Golden Minerals

Golden Minerals is a Delaware corporation based in Golden, Colorado, primarily engaged in the advancement of its pipeline of exploration projects in Mexico and South America. Golden Minerals has a large portfolio of exploration projects, including its El Quevar project in the Salta Province of northwestern Argentina and advanced stage drilling projects in Mexico and Peru. Golden Minerals’ experienced management team has a proven in-house ability to explore, develop and operate mining projects.

About ECU

ECU Silver Mining Inc. is focused on the exploration, development and mining of silver, gold and base metals at its Velardena District Properties in Durango, Mexico, where it holds an NI 43-101 compliant mineral resource of 40 million silver equivalent ounces in the Measured and Indicated category and 391 million silver equivalent ounces in the Inferred category. ECU also owns and operates two mills with a combined capacity of 820 tonnes per day.