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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

GOLDEN MINERALS COMPANY

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
 
    (2)   Aggregate number of securities to which transaction applies:
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
    (4)   Proposed maximum aggregate value of transaction:
 
    (5)   Total fee paid:
 

ý

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

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GOLDEN MINERALS COMPANY LOGO

350 Indiana Street, Suite 800
Golden, Colorado 80401

To Our Stockholders:

        You are cordially invited to attend a special meeting of stockholders of Golden Minerals Company ("Golden") to be held at Courtyard by Marriott Denver West/Golden, 14700 W. 6th Avenue Frontage Road, Golden, Colorado 80401 on Tuesday, August 30, 2011 at 9:00 a.m., Denver time to consider and vote on the issuance of Golden shares in connection with the proposed "merger of equals" business combination transaction (the "Transaction") between Golden and ECU Silver Mining Inc. ("ECU"). The Transaction will be carried out by way of a plan of arrangement pursuant to the Business Corporations Act (Quebec) under which ECU shareholders will receive 0.05 shares of Golden common stock and Cdn$0.000394 in cash for each ECU common share held immediately prior to the consummation of the Transaction. You will also be asked to consider and vote on a proposal to increase the authorized common stock of Golden following the Transaction from 50,000,000 shares to 100,000,000 shares. The increase in authorized capital will assist the combined company in future acquisition or financing transactions.

        This merger of equals will be a transformative transaction for Golden and create a new junior silver mining company with a diversified portfolio of assets including ECU's silver, gold and base metals mines and exploration projects in the Velardeña Mining District, Durango, Mexico; Golden's El Quevar advanced silver exploration project in the Salta Province, Argentina; and Golden's Zacatecas silver exploration project in Zacatecas, Mexico. In evaluating and approving the Transaction, Golden's board of directors considered a number of factors including, among others:


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        The Sentient Group, one of Golden's largest stockholders with approximately a 19% ownership stake, has indicated to Golden 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.

        Your vote is very important.    We cannot complete the Transaction unless the Golden common stockholders vote to approve the issuance of Golden common stock in connection with the Transaction, and it is important for our future flexibility in pursuing growth and financing opportunities that Golden stockholders approve the increase in our authorized common stock.

        The board of directors hopes that you will attend the special meeting. However, whether or not you plan to attend the meeting, please sign, date and return the accompanying proxy card in the enclosed postage paid pre-addressed envelope, or otherwise return your proxy in a manner described in the accompanying proxy card, as soon as possible. Your vote is important, regardless of the number of shares you own, so please return your proxy card TODAY.

        All of us at Golden Minerals appreciate your continued support, and look forward to seeing you at the special meeting.

    Sincerely,

 

 

SIG

 

 

Jeffrey G. Clevenger
Chairman of the Board, President and
Chief Executive Officer

July 29, 2011

 

 

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GOLDEN MINERALS COMPANY LOGO

350 Indiana Street, Suite 800
Golden, Colorado 80401



NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held August 30, 2011



To Our Stockholders:

        NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Golden Minerals Company ("Golden") will be held at Courtyard by Marriott Denver West/Golden, 14700 W. 6th Avenue Frontage Road, Golden, Colorado 80401 on Tuesday, August 30, 2011 at 9:00 a.m., Denver time, for the following purposes:

        Our board of directors has fixed the close of business on July 29, 2011 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting or any adjournments, postponements or delays thereof. This proxy statement and accompanying proxy card are dated July 29, 2011, and are first being mailed or given to Golden stockholders on or about August 2, 2011.

    By Order of our Board of Directors,

 

 

SIGNATURE

Deborah J. Friedman
Corporate Secretary

July 29, 2011

 

 

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YOUR VOTE IS IMPORTANT

Whether or not you plan to attend the special meeting, please complete, sign and return the enclosed proxy card or submit your proxy by telephone or over the Internet following the instructions on the proxy card. If you hold your shares in "street name," you should instruct your broker how to vote in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. If you have any questions or need assistance, please call Morrow & Co., LLC, which is assisting us in our solicitation efforts, at 1-877-705-9707.



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CAUTIONARY NOTE TO UNITED STATES STOCKHOLDERS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES

  1

CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING INFORMATION

 
1

CONVERSION TABLE

 
2

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

 
2

EXCHANGE RATES

 
3

INFORMATION CONTAINED IN THIS PROXY STATEMENT

 
3

QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND THE SPECIAL MEETING

 
4

SUMMARY

 
10
 

The Transaction

 
10
 

The Arrangement Agreement

  10
 

Parties to the Transaction

  10
 

General Information Concerning the Golden Stockholders Meeting

  11
 

Opinion of Golden's Financial Advisor

  12
 

Québec Court Approval

  12
 

Anticipated Closing of the Transaction

  12
 

Post-Transaction Governance

  12
 

U.S. Federal Income Tax Consequences

  13
 

Private Placement Transaction

  13
 

Risk Factors

  13
 

Pro Forma Financial Statements of the Combined Company

  13

RISK FACTORS

 
14

GENERAL INFORMATION CONCERNING THE GOLDEN MEETING

 
26
 

Record Date and Voting Information

 
26
 

Required Vote of Golden's Stockholders

  27
 

Golden's Board Recommendation

  27
 

Opinion of Golden's Financial Advisor

  27
 

How You Can Vote

  27
 

Proxies; Revocation

  28
 

Shares Beneficially Owned by Golden Directors and Executive Officers

  28
 

Expenses of Proxy Solicitation

  28
 

Dissent Rights

  29
 

Adjournments

  29
 

Other Matters

  29

THE TRANSACTION

 
30
 

General

 
30
 

Background of the Transaction

  30
 

Subscription Agreement and Private Placement

  34
 

Golden's Reasons for the Transaction; Recommendation of Golden's Board of Directors

  35
 

Fairness Opinion of Financial Advisor to Golden

  37
 

Voting Agreements

  43

i


 

Court Approval

  44
 

Canadian Securities Law Matters

  44
 

Interests of, and Potential Payments to, Directors and Officers in Connection with the Transaction

  45

ARRANGEMENT MECHANICS

 
51
 

Payment of Consideration

 
51
 

Withholding Rights

  51
 

No Fractional Securities will be issued

  51
 

Distributions with Respect to Unsurrendered Certificates

  52

THE ARRANGEMENT AGREEMENT

 
53
 

Conditions Precedent to the Transaction

 
53
 

Covenants

  56
 

Termination of the Arrangement Agreement

  57
 

Termination Fee

  58
 

Expense Reimbursement

  60
 

Amendment of the Plan of Arrangement

  60

THE COMBINED COMPANY UPON COMPLETION OF THE TRANSACTION

 
61
 

Business of the Combined Company

 
61
 

Directors and Officers of the Combined Company

  62
 

Capital Structure

  63
 

Unaudited Pro Forma Combined Condensed Financial Statements

  65

INFORMATION CONCERNING GOLDEN

 
69
 

Overview

 
69
 

Golden Documents Incorporated by Reference

  69
 

El Quevar

  69
 

Golden Comparative Market Prices

  70
 

Dividends

  71
 

Security Ownership of Certain Beneficial Owners and Management

  71
 

Selected Historical Financial Data of Golden

  73

INFORMATION CONCERNING ECU

 
75
 

Overview

 
75
 

Property Description

  76
 

Exploration

  80
 

Drilling and Sampling Method and Approach

  80
 

January 2009 Mineral Resource Estimate

  81
 

Mining and Milling Results

  83
 

ECU Comparative Market Prices

  84
 

Dividend Policy

  85
 

Selected Historical Financial Data of ECU

  86
 

Management's Discussion and Analysis of Financial Condition and Results of Operations

  87

ADDITIONAL INFORMATION

 
94
 

Future Stockholder Proposals

 
94
 

Delivery of Documents to Stockholders Sharing an Address

  94
 

Fees and Expenses

  94
 

Where Stockholders Can Find More Information About Golden

  95

ii


 

Where Shareholders Can Find More Information About ECU

  96

PARTICULARS OF MATTERS TO BE ACTED UPON AT THE GOLDEN MEETING

 
97
 

Proposal No. 1—The Share Issuance Proposal

 
97
 

Proposal No. 2—The Charter Amendment Proposal

  99

ANNEX A—GLOSSARY OF TERMS

 
A-1

ANNEX B—ARRANGEMENT AGREEMENT

 
B-1

ANNEX C—PLAN OF ARRANGEMENT

 
C-1

ANNEX D—HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF ECU

 
D-1

ANNEX E—UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

 
E-1

ANNEX F—OPINION OF BMO CAPITAL MARKETS

 
F-1

ANNEX G—FORM OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 
G-1

ANNEX H—PROXY CARD

 
H-1

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CAUTIONARY NOTE TO UNITED STATES STOCKHOLDERS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES

        The terms "mineral resource," "measured mineral resource," "indicated mineral resource" and "inferred mineral resource" that are used in this proxy statement are defined in Canadian National Instrument 43-101—Standards of Disclosure for Mineral Projects ("NI 43-101"). These Canadian terms are not recognized under Securities and Exchange Commission ("SEC") Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC by U.S. registered companies. Under SEC disclosure standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. In addition, disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as in place tonnage and grade without reference to unit measures. Accordingly, stockholders are cautioned that the information contained in this proxy statement regarding ECU describing "mineral resources" is not directly comparable to information made public by U.S. companies subject to reporting requirements under U.S. securities laws. Stockholders are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically minable.


CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING INFORMATION

        Some information contained in or incorporated by reference into this proxy statement may contain forward-looking statements. These statements include statements in respect of the expected timing and anticipated benefits of the proposed business combination transaction between Golden and ECU (the "Transaction") and statements regarding future operations and activities of ECU, Golden or the combined company, including planned and potential exploration and development opportunities of the combined company, plans, expectations and assumptions concerning the El Quevar project or the Velardeña project, the timing and budget for exploration of our portfolio of exploration properties, our expected cash needs, and statements concerning our financial condition, operating strategies and operating and legal risks. There are also risks inherent in the nature of the proposed Transaction, including risks regarding the integration of the two entities, incorrect assessments of the values of the other entity, and failure to obtain the required securityholder, court, regulatory and other third party approvals.

        This proxy statement also includes forward-looking statements relating to the potential for further investment by The Sentient Group in the combined company. Golden and ECU caution investors that no agreement with respect to such further investment has been reached and provide no assurance that any such agreement will be reached.

        We use the words "anticipate," "continue," "likely," "estimate," "expect," "may," "could," "will," "project," "should," "believe" and similar expressions to identify forward-looking statements. Statements that contain these words discuss our future expectations, contain projections or state other forward-looking information. Although we believe the expectations and assumptions reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct. The actual results of the combined company could differ materially from those expressed or implied in these forward-looking statements as a result of various risks, including the risk factors described in this proxy statement beginning on page 14, the risk factors

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set forth in our annual report on Form 10-K, and the risk factors set forth in ECU's annual information form, including:

        Many of those factors are beyond our ability to control or predict. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this proxy statement. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this proxy statement.


CONVERSION TABLE

        In this proxy statement, figures are presented in both metric and United States standard measurements. Conversion rates from United States standard to metric and metric to United States standard measurement systems are provided in the table below.

US. Unit   Metric Measure   Metric Unit   U.S. Measure
1 acre   0.4047 hectares   1 hectare   2.47 acres
1 foot   0.3048 meters   1 meter   3.28 feet
1 mile   1.609 kilometres   1 kilometre   0.62 miles
1 ounce (troy)   31.103 grams   1 gram   0.032 ounces (troy)
1 ton   0.907 tonnes   1 tonne   1.102 tons


REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

        Unless otherwise indicated, all references to "$" or "dollars" in this proxy statement refer to United States dollars. References to "Cdn$" in this proxy statement refer to Canadian dollars. ECU's financial statements are reported in Canadian dollars and are prepared in accordance with Canadian GAAP (for periods prior to 2011) or IFRS (for 2011). Golden's financial statements that are incorporated by reference herein, as well as the pro forma financial statements included as Annex E to this proxy statement, are reported in U.S. dollars and are prepared in accordance with U.S. GAAP. Accordingly, in preparing the unaudited pro forma consolidated financial statements of the combined company as at and for the three months ended March 31, 2011, and the fiscal year ended December 31, 2010, as applicable, certain material adjustments were made in order to reconcile Canadian GAAP and IFRS with U.S. GAAP, as described in "Unaudited Pro Forma Combined Condensed Financial Statements" attached as Annex E.

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EXCHANGE RATES

        The following table sets forth (i) the noon rates of exchange for the Canadian dollar, expressed in Canadian dollars per U.S. dollar, in effect at the end of the period indicated, (ii) the average noon rates of exchange for such periods, and (iii) the high and low noon rates of exchange during such periods, in each case based on the noon rates of exchange as quoted by the Bank of Canada.

 
   
  Year ended December 31,  
 
  January 1, 2011
through July 26, 2011
 
Canadian Dollar per U.S. dollar
  2010   2009   2008  

Noon rate at end of period

  0.9449     0.9946     1.0466     1.2246  

Average noon rate for period

  0.9745     1.0299     1.1420     1.0660  

High noon rate for period

  1.0022     1.0778     1.3000     1.2969  

Low noon rate for period

  0.9449     0.9946     1.0292     0.9719  

        On June 23, 2011, the last trading day before the announcement of the Transaction, the rate of exchange was $1.00 equals Cdn$0.9799, based on the noon rate of exchange as quoted by the Bank of Canada.

        On July 26, 2011, the rate of exchange was $1.00 equals Cdn$0.9449 based on the noon rate of exchange as quoted by the Bank of Canada.


INFORMATION CONTAINED IN THIS PROXY STATEMENT

        The information contained in this proxy statement is given as of July 29, 2011 except where otherwise noted and except that information in documents incorporated by reference is given as of the dates noted therein.

        No person has been authorized by Golden to give any information or to make any representation in connection with the proposed business combination transaction or any other matters described herein other than as contained in this proxy statement and, if given or made, any such information or representation should be considered not to have been authorized by Golden or ECU.

        Certain information pertaining to ECU included or described herein (including financial statements of ECU) has been provided by or on behalf of ECU or is based on publicly available documents and records on file with the relevant Canadian provincial securities regulators and other public sources. Although Golden does not have any knowledge that would indicate that any such information is inaccurate or incomplete, Golden assumes no responsibility for the accuracy or completeness of such information, nor for the failure by ECU to disclose events which may have occurred or which may affect the completeness or accuracy of such information but which is unknown to Golden. Unless the context otherwise indicates, references in this proxy statement to "we," "our," "ours" and "us" refer to Golden and its subsidiaries, collectively.

        This proxy statement does not constitute the solicitation of an offer to purchase any securities or the solicitation of a proxy by any person in any jurisdiction in which such solicitation is not authorized or in which the person making such solicitation is not qualified to do so or to any person to whom it is unlawful to make such solicitation.

Information contained in this proxy statement should not be construed as legal, tax or financial advice and Golden stockholders are urged to consult their own professional advisors in connection with the proposed transaction.

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND THE SPECIAL MEETING

        The following questions and answers briefly address some commonly asked questions about the Transaction and the special meeting. You should carefully read this entire proxy statement, including the attached Annexes. Capitalized terms in this proxy statement have the meanings set out in the Glossary of Terms attached as Annex A or in the proxy statement.

Q:    What is Golden proposing?

A:
Golden stockholders are being asked to consider and vote upon two proposals. First, Golden stockholders will vote upon a proposal approving the issuance of Golden common stock in connection with a business combination transaction pursuant to which Golden will acquire all of ECU's outstanding common shares and convertible securities and ECU will become a wholly-owned subsidiary of Golden. The Transaction will be carried out pursuant to (i) an arrangement agreement dated June 24, 2011, between Golden and ECU, which we refer to as the "Arrangement Agreement," and (ii) a court-approved plan of arrangement under Chapter XVI—Division II of the Business Corporations Act (Québec), which we refer to as the "Plan of Arrangement." The Arrangement Agreement and Plan of Arrangement provide that ECU shareholders will receive 0.05 shares of Golden common stock and Cdn$0.000394 in cash for each ECU common share held immediately prior to the consummation of the Transaction. In addition, upon the consummation of the Transaction, new Golden options to purchase Golden common stock, or "Golden Replacement Options," will be exchanged for all outstanding options to purchase ECU common shares, and new Golden warrants to purchase Golden common stock, or "Golden Replacement Warrants," will be exchanged for all outstanding warrants to purchase ECU common shares. It is anticipated that consummation of the Transaction pursuant to the Plan of Arrangement will result in Golden paying an aggregate of approximately Cdn$125,000 in cash and issuing a total of approximately 16.0 million new shares, not including up to approximately 2.9 million new shares that will be issuable following the exercise of currently outstanding ECU options and warrants (or upon the exercise of the Golden Replacement Options and Golden Replacement Warrants to be received in exchange therefor) and approximately 167,000 shares that are expected to be issued, in the aggregate, in satisfaction of certain ECU change of control payments.

Q:    How does the board of directors recommend that I vote?

A:
Golden's board of directors unanimously recommends that Golden's stockholders vote:

FOR the issuance of Golden common stock (including stock issuable upon exercise of Golden Replacement Options and the Golden Replacement Warrants) in connection with the Transaction, which we refer to as the "Share Issuance Proposal;" and

FOR the adoption of the amendment to Golden's certificate of incorporation to increase the authorized number of shares of Golden's common stock, which we refer to as the "Charter Amendment Proposal."

Q:    Why is Golden proposing to combine with ECU?

A:
Golden is proposing to combine with ECU because Golden believes that the Transaction will create a combined company with an attractive and more diversified portfolio of assets, greater scale and financial strength, and an enhanced capital markets profile. We believe that the

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Q:    Why is Golden proposing to amend its certificate of incorporation?

A:
Golden is proposing to amend its certificate of incorporation because, while an increase in authorized shares is not necessary to enable Golden to complete the Transaction, the increase will provide the Golden board with additional capacity to issue shares in future offerings or acquisitions following consummation of the Transaction as determined by Golden's board to be in the best interests of Golden's stockholders. The approval of the Charter Amendment Proposal is not a condition precedent to the consummation of the Transaction. Moreover, if the Share Issuance Proposal is not approved or the Transaction is not consummated for any reason, Golden will not amend its certificate of incorporation even if the Charter Amendment Proposal is approved.

Q:    Are there risks I should consider in deciding whether to vote for the Share Issuance Proposal?

A:
Yes. The Share Issuance Proposal and the Transaction are subject to a number of risks and uncertainties. Golden may not realize the benefits it currently anticipates from the Transaction due to the challenges associated with integrating the companies and other risks inherent in its mining business. See "Risk Factors" beginning on page 14.

Q:    Am I entitled to dissenters' appraisal rights?

A:
No. Holders of Golden shares are not entitled to dissenters' appraisal rights in connection with the Transaction or any other action to be taken at the special meeting. See "General Information Concerning the Golden Meeting—Dissent Rights" beginning on page 29.

Q:    How does Golden intend to finance the Transaction?

A:
The consideration to be paid by Golden in the Transaction consists primarily of Golden common stock. In addition, Golden will pay cash consideration of Cdn$0.000394 for each ECU share outstanding (an aggregate of approximately Cdn$125,000), with all such payments made from available cash on hand.

Q:    When do Golden and ECU expect to complete the Transaction?

A:
Golden and ECU expect to complete the Transaction when all of the conditions to completion of the Transaction have been satisfied or waived. The parties are working toward satisfying these conditions and completing the Transaction as quickly as possible. The parties currently plan to complete the Transaction on or about September 2, 2011.

Q:    What is the role of Canadian courts with respect to the Transaction?

A:
Under the Business Corporations Act (Québec), a Québec court must approve the Plan of Arrangement. If ECU Securityholders approve the Transaction and Golden Stockholders approve the issuance of Golden common stock to be issued pursuant to the Transaction, the Superior Court of Québec will hold a hearing regarding a final order to approve the Plan of Arrangement and any amendments thereto made in accordance with the Arrangement Agreement. The court will consider, among other things, the fairness and reasonableness of the Plan of Arrangement. The

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Q:    What will the share ownership, board of directors and management of Golden look like after the combination?

A:
We estimate that upon completion of the Transaction, former shareholders of ECU will own approximately 51% of the outstanding common stock of Golden, assuming that no outstanding ECU options or warrants are exercised before the consummation of the Transaction. If all of those options and warrants are exercised before the consummation of the Transaction, former securityholders of ECU will own approximately 55% of the outstanding stock of Golden. Upon consummation of the Transaction, we expect that we will expand the size of our board of directors in order to add one current ECU director, Michael T. Mason, to our board. In addition, it is our intention that ECU's current President, Stephen J. Altmann, will become the President of Golden after the Transaction. Golden's current Chairman and CEO, Jeffrey G. Clevenger, will retain these positions following the Transaction.

Q:    Why am I receiving this proxy statement?

A:
You are receiving this proxy statement and enclosed proxy card because, as of July 29, 2011, the record date for the special meeting, you owned shares of Golden common stock. Only holders of record of Golden common stock as of the close of business on July 29, 2011 will be entitled to vote those shares at the special meeting. Our board of directors is providing these proxy materials to give you information to determine how to vote in connection with the special meeting of our stockholders.

Q:    When and where is the special meeting?

A:
The special meeting will be held at Courtyard by Marriott Denver West/Golden, 14700 W. 6th Avenue Frontage Road, Golden, Colorado 80401 on Tuesday, August 30, 2011 at 9:00 a.m., Denver time.

Q:    What vote is required to approve the proposals?

A:
The Share Issuance Proposal must be approved by the affirmative vote of a majority of the shares of Golden common stock present at the special meeting and entitled to vote thereon, assuming a quorum is present.

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Q:    What constitutes a quorum at the special meeting?

A:
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Golden common stock entitled to vote at the special meeting constitutes a quorum for the transaction of business at the special meeting. If you hold your shares through a broker or bank, and your broker or bank votes your shares on the Charter Amendment Proposal, those shares will be counted for purposes of determining the presence of a quorum at the meeting.

Q:    How many votes do I have?

A:
You have one vote for each share of Golden common stock that you own as of the record date.

Q:    How are votes counted?

A:
Votes will be counted by the inspector of election appointed for the special meeting, who will separately count "For" and "Against" votes, abstentions and broker non-votes. A "broker non-vote" occurs when a nominee holding shares for a beneficial owner does not receive instructions from the beneficial owner with respect to proposals relating to non-routine matters. The Share Issuance Proposal is considered a non-routine matter and the Charter Amendment Proposal is considered a routine matter.

Q:    How do I vote my Golden common stock?

A:
Before you vote, you should read this proxy statement in its entirety, including its Annexes, and carefully consider how the Transaction affects you. If you are a stockholder of record, you should mail your completed, dated and signed proxy card in the enclosed return envelope or submit your proxy by telephone or over the Internet as soon as possible so that your shares can be voted at the special meeting. For more information on how to vote your shares, see the section entitled "How You Can Vote."

Q:    What happens if I do not vote?

A:
If you do not vote, your shares will not be counted toward the approval requirement for the Share Issuance Proposal. If you hold your shares through a broker, your broker may vote your shares on the Charter Amendment Proposal. Broker non-votes, if any, will have no effect on the Share Issuance Proposal but will have the same effect as a vote "AGAINST" the Charter Amendment Proposal. Abstentions will have the same effect as a vote "AGAINST" the Share Issuance Proposal and the Charter Amendment Proposal.

Q:    What happens if I don't indicate how to vote on my proxy?

A:
If you are a record holder of Golden common stock and sign and send in your proxy card, but do not include instructions on how to vote, your shares will be voted "FOR" the Share Issuance Proposal and "FOR" the Charter Amendment Proposal. Golden's management does not currently

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Q:    What happens if I sell my shares of Golden common stock before the special meeting?

A:
The record date for stockholders entitled to vote at the special meeting is earlier than the date of the special meeting. If you transfer your shares of Golden common stock after the record date but before the special meeting, you will, unless special arrangements are made, retain your right to vote at the special meeting.

Q:    If my shares are held in "street name" by my broker, will my broker vote my shares for me?

A:
If your shares are held through a broker, bank or other nominee (collectively referred to as "brokers"), under applicable rules of NYSE Amex LLC ("NYSE Amex") (one of the exchanges on which our common stock is traded), the broker will vote your shares according to the specific instructions it receives from you. If the broker does not receive voting instructions from you, the broker may vote only on a proposal that is considered a "routine" matter under the NYSE Amex rules. At the special meeting, your broker may vote without your instructions only on the Charter Amendment Proposal, because it is considered a routine matter. Your broker may not vote on the Share Issuance Proposal because it is non-routine. The broker's failure to vote on the Share Issuance Proposal because it lacks discretionary authority to do so, commonly referred to as a "broker non-vote," will not affect the outcome of the vote on the Share Issuance Proposal. Any broker non-votes will have the same effect as a vote "AGAINST" the Charter Amendment Proposal.

Q:    Will my shares held in "street name" or another form of record ownership be combined for voting purposes with shares I hold of record?

A:
No. Because any shares you may hold in "street name" will be deemed to be held by a different stockholder than any shares you hold of record, shares held in "street name" will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in a retirement investment account must be voted under the rules governing the account.

Q:    What does it mean if I receive more than one set of materials?

A:
This means you own shares of Golden common stock that are registered under different names. For example, you may own some shares directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope. If you vote by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.

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Q:    May I vote in person?

A:
Yes. You may attend the special meeting and vote your shares in person whether or not you sign and return your proxy card. If your shares are held of record by a broker, bank or other nominee and you wish to vote at the special meeting, you must obtain a "legal" proxy from the record holder.

Q:    May I change my vote after I have mailed my signed proxy card?

A:
Yes. You may revoke and change your vote at any time before your proxy card is voted at the special meeting. You can do this in one of three ways:

First, you can send a written notice to the Golden corporate secretary stating that you would like to revoke your proxy;

Second, you can complete and submit a new proxy in writing, by telephone or over the Internet; or

Third, you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy.

Q:    Who can help answer my questions?

A:
If you have questions about the Transaction and the special meeting, including the procedures for voting your shares, you should contact our proxy solicitor, Morrow & Co., LLC, toll-free at 1-877-705-9707.

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SUMMARY

        The following information is a summary of certain information contained in this proxy statement. The information contained in this summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information and financial data and statements contained elsewhere in this proxy statement, including the Annexes and the documents incorporated by reference. Capitalized terms in this Summary have the meanings set out in the Glossary of Terms attached as Annex A or as set out in this Summary.


The Transaction

        Golden and ECU are proposing to engage in a business combination transaction pursuant to which Golden will acquire all of the outstanding common shares, options and warrants of ECU, and ECU will become a wholly-owned subsidiary of Golden. The Transaction will be carried out pursuant to (i) the Arrangement Agreement dated June 24, 2011, between Golden and ECU, and (ii) a Court-approved arrangement under Chapter XVI—Division II of the Business Corporations Act (Québec), which we refer to as the "Plan of Arrangement". The Arrangement Agreement and Plan of Arrangement provide that ECU shareholders will receive 0.05 shares of Golden common stock and Cdn$0.000394 in cash for each ECU common share held immediately prior to the consummation of the Transaction. In addition, upon the consummation of the Transaction, new Golden options to purchase Golden common stock, or "Golden Replacement Options," will be exchanged for all outstanding options to purchase ECU common shares, and new Golden warrants to purchase Golden common stock, or "Golden Replacement Warrants," will be exchanged for all outstanding warrants to purchase ECU common shares. It is anticipated that consummation of the Transaction pursuant to the Plan of Arrangement will result in Golden paying an aggregate of approximately Cdn$125,000 in cash, and issuing a total of approximately 16.0 million new shares, not including up to approximately 2.9 million new shares that will be issuable following the exercise of currently outstanding ECU options and warrants (or upon the exercise of the Golden Replacement Options and Golden Replacement Warrants to be received in exchange for those options and warrants) and approximately 167,000 shares that are expected to be issued, in the aggregate, in satisfaction of certain ECU change of control payments.

        See "The Transaction" beginning on page 30.


The Arrangement Agreement

        Golden and ECU entered into the Arrangement Agreement on June 24, 2011. The terms and conditions of the Transaction are governed by the Arrangement Agreement. The Arrangement Agreement is attached to this proxy statement as Annex B and is part of this proxy statement. Golden urges you to read the Arrangement Agreement carefully as it is the legal document that governs the Transaction.

        See "The Arrangement Agreement" beginning on page 53.


Parties to the Transaction

Golden Minerals Company

        Golden Minerals Company is a Delaware corporation headquartered in Golden, Colorado. We are a mineral exploration company with a diversified portfolio of precious metals and other mineral exploration properties located in or near the traditional precious metals producing regions of Mexico and South America. We are currently focused on advancement of our 100% controlled El Quevar silver project in northwestern Argentina and are engaged in additional drilling, metallurgical analysis and other advanced exploration work at El Quevar. In addition to El Quevar, we own and control a portfolio of approximately 45 exploration properties located primarily in Mexico and South America.

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Our 100% controlled Zacatecas silver and base metals project in Mexico is in an advanced stage of exploration, with six separate target areas on which we are currently conducting exploration activities, including drilling at the Adriana, San Manuel-San Gil, and the Pánuco targets. We also have reconnaissance properties on which we are conducting preliminary sampling and geological analysis to determine the best potential areas for more detailed exploration. Our principal offices are located in Golden, Colorado at 350 Indiana Street, Suite 800, Golden, CO 80401, and our telephone number is (303) 839-5060.

        See "Information Concerning Golden" beginning on page 69 of this proxy statement.

ECU Silver Mining Inc.

        ECU Silver Mining Inc., a Québec corporation, is a Canadian-based mining company focused on the exploration, development and mining of silver, gold and base metals at its Velardeña District properties in Durango, Mexico. ECU owns and operates two mills with a combined capacity of 820 tonnes per day. ECU's executive offices are located at 87 Front Street East, 2nd Floor, Toronto, Ontario M5E 1B8, and its telephone number is (416) 366-2428.

        See "Information Concerning ECU" beginning on page 75.


General Information Concerning the Golden Stockholders Meeting

Date, Time and Place of the Meeting

        The Golden stockholders' vote will take place at a special meeting to be held at Courtyard by Marriott Denver West/Golden, 14700 W. 6th Avenue Frontage Road, Golden, Colorado 80401 on Tuesday, August 30, 2011 at 9:00 a.m., Denver time.

Record Date for the Golden Stockholders Meeting

        You are entitled to vote at the special meeting if you owned Golden common stock at the close of business on July 29, 2011.

Purpose of the Golden Stockholders Meeting

        Golden's stockholders are being asked to consider and vote upon:

        Approval of the Share Issuance Proposal is required to enable Golden to complete the Transaction. Approval of the Charter Amendment Proposal is not required to complete the Transaction. Approval of the Charter Amendment Proposal is being solicited in order to provide the Golden board with additional capacity to issue shares in future offerings or acquisitions following consummation of the Transaction as determined by the Golden board to be in the best interests of the Golden stockholders. See "General Information Concerning the Golden Meeting" beginning on page 26.

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Required Vote of Golden's Stockholders

        The Share Issuance Proposal must be approved by the affirmative vote of a majority of the shares of Golden common stock present at the special meeting and entitled to vote thereon, assuming a quorum is present. The Charter Amendment Proposal must be approved by the affirmative vote of a majority of the outstanding shares of Golden common stock. Abstentions will have the same effect as a vote "AGAINST" the Share Issuance Proposal and the Charter Amendment Proposal. Shares held through brokers may be voted without instruction by such brokers on the Charter Amendment Proposal but not the Share Issuance Proposal. A broker's failure to vote on the Share Issuance Proposal because it lacks discretionary authority to do so, commonly referred to as a "broker non-vote," will not affect the outcome of the vote on the Share Issuance Proposal.

Golden's Board Recommendation

        Golden's board of directors unanimously recommends that Golden's stockholders vote "FOR" the Share Issuance Proposal and "FOR" the Charter Amendment Proposal.


Opinion of Golden's Financial Advisor

        On June 23, 2011 Golden's board of directors received an opinion from BMO Capital Markets Corp. to the effect that, as of June 23, 2011, and subject to the various assumptions in the opinion, the exchange ratio, together with the cash consideration payable in the Transaction, was fair, from a financial point of view, to Golden.

        See "Fairness Opinion of Financial Advisor to Golden" beginning on page 37.


Québec Court Approval

        Under the Business Corporations Act (Québec), the Transaction requires court and ECU securityholder approval. On July 14, 2011, ECU obtained an interim order from the Superior Court of Québec (the "Québec Court") providing for the calling and holding of the ECU special meeting and other procedural matters. Subject to receipt of the requisite approvals of the Transaction by securityholders of ECU and Golden at their respective special meetings, the hearing in respect of a final order from the Québec Court is expected to take place on or about August 31, 2011.


Anticipated Closing of the Transaction

        Golden and ECU will complete the Transaction when all of the conditions to completion of the Transaction have been satisfied or waived. The parties are working toward satisfying these conditions and completing the Transaction as quickly as possible. The parties currently plan to complete the Transaction on or about September 2, 2011, although there can be no assurance that the Transaction will be completed by this date, or at all.


Post-Transaction Governance

        Upon consummation of the Transaction, Golden plans to increase the size of its board of directors in order to add one current ECU director, Michael T. Mason, to the Golden board. In addition, ECU's current President, Stephen J. Altmann, is expected to become the President of Golden after the Transaction. Golden's current Chairman and CEO, Jeffrey G. Clevenger, will retain those positions in Golden following the Transaction.

        See "Directors and Officers of the Combined Company" beginning on page 62.

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U.S. Federal Income Tax Consequences

        There are no material U.S. federal income tax consequences to Golden's current stockholders that will result from Golden's acquisition of ECU or the issuance of Golden common stock pursuant to the Transaction.


Private Placement Transaction

        On June 24, 2011, Golden and ECU entered into the subscription agreement, pursuant to which ECU issued to Golden on July 13, 2011 Cdn$15.0 million principal amount 0.0% senior unsecured convertible notes in a private placement. The private placement is intended to provide ECU with interim financing of its operations pending consummation of the Transaction. The convertible notes will mature on June 30, 2012 (subject to extension as described below), and will be convertible by Golden at any time prior to 5:00 p.m. (Toronto time) on June 29, 2012 into ECU Shares at the rate of 1,032 shares per Cdn$1,000 principal amount, consistent with the exchange ratio. The convertible notes will also be redeemable by ECU at any time after the record date for the special meeting of ECU Shareholders to approve the Transaction and prior to the maturity date, at 100% of the face value of the notes plus accrued and unpaid interest. ECU may elect to extend the maturity of the convertible notes to December 31, 2012 for a cash payment equal to 4% of the face value of the then outstanding notes, payable on the day the extension option is exercised, with interest accruing on the notes at 10% per annum during such extension period. Under the terms of the subscription agreement, the proceeds of the private placement are held in an escrow account and may be used only for certain specified purposes. As of July 13, the shares issuable upon conversion of the convertible notes represented approximately 4.7% of ECU's common shares outstanding on an as-converted basis.

        Golden, as holder of the convertible notes, is entitled to vote any ECU common shares received upon conversion of the Notes. Further, Golden may vote the convertible notes themselves in any vote of ECU's outstanding common shares, options, warrants and convertible securities voting as a single class, with respect to the vote of ECU Securityholders to approve the Transaction. See "The Transaction—Subscription Agreement and Private Placement" on page 34.


Risk Factors

        There are certain risk factors relating to Golden, ECU and the Transaction which should be carefully considered by stockholders, including the fact that the Transaction may not be completed if, among other things, Golden or ECU securityholder approval is not obtained, or if any other conditions precedent to the completion of the Transaction are not satisfied or waived, as applicable.

        See "Risk Factors" beginning on page 14.


Pro Forma Financial Statements of the Combined Company

        See "Unaudited Pro Forma Combined Condensed Financial Statements" attached as Annex E.

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RISK FACTORS

        In addition to the other information contained in, or incorporated by reference into, this proxy statement (including the risk factors applicable to Golden contained under the heading "Risk Factors" in Golden's annual report on Form 10-K for the fiscal year ended December 31, 2010), the following factors should be considered carefully when considering risks related to the Transaction and the combined company. These risks and uncertainties are not the only risks Golden, ECU and the combined company may face, nor do they include all of the risks and uncertainties associated with the Transaction. If any such risks actually occur, the business, prospects, financial condition, cash flows and operating results of Golden, ECU and the combined company could be materially adversely affected. See "Where Stockholders Can Find More Information About Golden" beginning on page 95 for a list of the documents incorporated by reference.


Risks Related to the Transaction

The Transaction will present challenges associated with integrating operations, personnel and other aspects of the companies and assumption of liabilities that may exist at ECU and which may be known or unknown by Golden.

        The results of the combined company following the Transaction will depend in part upon Golden's ability to integrate its business with ECU's business in an efficient and effective manner. Golden's attempt to integrate two companies that have previously operated independently may result in significant challenges, and Golden may be unable to accomplish the integration smoothly or successfully. In particular, the necessity of coordinating geographically dispersed organizations and addressing possible differences in corporate cultures and management philosophies may increase the difficulties of integration. ECU has operated as a Québec corporation, with substantially all of its personnel and operations in Mexico, and Golden has not previously conducted mining operations in Mexico. The integration will require the dedication of significant management resources to become familiar with the Mexican operations and the culture of ECU, which may temporarily distract management's attention from the day-to-day operations of the businesses of the combined company. In addition, the combined company may adjust the way in which ECU has conducted its operations and utilized its properties, which may require retraining and development of new procedures and methodologies. The process of integrating operations and making such adjustments after the Transaction could cause an interruption of, or loss of momentum in, the activities of one or more of the combined company's businesses and the loss of key personnel. Employee uncertainty, lack of focus or turnover during the integration process may also disrupt the businesses of the combined company. Any inability of management to integrate the operations of Golden and ECU successfully could have a material adverse effect on the business and financial condition of the combined company.

        In addition, the Transaction will subject Golden to any environmental, contractual or other obligations and liabilities of ECU, some of which may be unknown. While Golden and its legal and financial advisors have conducted due diligence on ECU and its business, there can be no assurance that Golden is aware of all obligations and liabilities of ECU. These liabilities, and any additional risks and uncertainties related to ECU's business and to the Transaction not currently known to Golden or that Golden may currently be aware of, but that prove to be more significant than assessed or estimated by Golden, could negatively impact the business, financial condition and results of operations of the combined company following consummation of the Transaction.

Golden will incur significant transaction, combination-related and restructuring costs in connection with the Transaction.

        Golden and ECU expect to incur transaction fees and other expenses related to the Transaction totaling approximately $12.0 million, including financial advisors' fees, filing fees, legal and accounting fees, soliciting fees, regulatory fees and mailing costs. ECU expects to incur costs for executive bonuses

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and change of control payments related to the Transaction totaling approximately Cdn$4.0 million (some of which is expected to be paid in Golden common stock). Golden also expects to incur significant costs associated with combining the operations of the two companies. It is difficult to predict the amount of these costs before Golden begins the integration process. The combined company may incur additional unanticipated costs as a consequence of difficulties arising from efforts to integrate the operations of the two companies. Although Golden expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, can offset incremental transaction, combination-related and restructuring costs over time, Golden cannot assure that this net benefit will be achieved in the near term, or at all.

We may incur significant costs related to ECU's contractual arrangements that we don't currently anticipate.

        We may incur significant costs related to ECU's contractual arrangements that we don't currently anticipate. For example, if the Transaction is completed, under certain circumstances ECU's term loan lender may terminate its contractual arrangements with ECU. Although ECU is attempting to obtain the consent of ECU's term loan lender to the transaction, ECU may not be successful in these efforts. If the Transaction is completed without the consent of ECU's term loan lender, we may be required, in certain circumstances, to immediately repay the full amount borrowed under the term loan facility (expected to be approximately $16.0 million at closing), plus certain other amounts. There may be other ECU agreements with similar provisions, contracts with respect to which there are disputes and contractual obligations of which we are not currently aware, any of which could impose unanticipated costs on the combined company following completion of the Transaction. If these events were to occur, the additional expenditures in connection with repayment of the term loan or other unanticipated costs would significantly reduce the amount of cash that we currently expect to have available for deployment at our El Quevar project, ECU's Velardeña properties, or other properties in our exploration portfolio on the schedule we currently anticipate.

The officers and directors of Golden and ECU may have interests that are different from the interests of Golden Stockholders.

        Because current stockholders of ECU will own 51% of the Golden common stock after the Transaction (55% on a fully diluted basis), the Transaction constitutes a change of control under several significant agreements to which Golden is a party, which triggers certain rights and obligations under those agreements. Unvested awards under Golden's 2009 Equity Incentive Plan (including stock options, restricted stock and restricted stock units) will vest immediately upon closing of the Transaction. At the closing of the Transaction, current officers and directors of Golden will hold stock options to purchase 85,874 shares of common stock, and officers of Golden will hold 201,735 shares of restricted stock that would have vested on various dates between December 2011 and December 2013. Directors of Golden will hold 14,355 restricted stock units that would have vested during May 2012. In addition, Golden has change of control agreements with each of its executive officers that provide for severance benefits if, within two years of the closing of the Transaction, either the combined company terminates his or her employment without cause, or the officer terminates his or her employment for good reason. Although Golden does not currently anticipate that any such terminations will occur, if terminations of all the existing Golden executives were to occur, Golden's executives would be entitled to receive severance payments consisting of cash, tax reimbursement, and perquisites equal to approximately $9.9 million.

        In addition, ECU will make bonus payments for successful completion of the Transaction to its executive officers totaling approximately Cdn$3.3 million (some of which is expected to be paid in Golden common stock) and severance payments to certain of its officers upon closing the Transaction totaling approximately Cdn$0.7 million.

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        These payments and potential benefits give the directors and management of Golden and ECU an interest in the Transaction that differs from the interest of Golden Stockholders.

Golden Stockholders will suffer immediate and substantial dilution to their equity and voting interests as a result of the issuance of Golden common stock to the ECU stockholders.

        In connection with the Transaction, Golden will issue approximately 16.0 million shares of common stock, which excludes up to 2.9 million new shares that will be issuable upon exercise of currently outstanding ECU warrants and options (or, following the Transaction, upon the exercise of the Replacement Options and Replacement Warrants issued in exchange for ECU warrants and options) and common stock expected to be issued in lieu of Cdn$2.75 million in transaction completion bonuses to Mr. Roy and Mr. Altmann. If all outstanding ECU options and warrants were exercised before the consummation of the Transaction, former ECU Shareholders would own approximately 55% of the outstanding stock of the combined company. Accordingly, the issuance of Golden common stock to ECU Shareholders will reduce the percentage of equity and voting interests held by each of Golden's current stockholders.

        Golden has previously completed private placement transactions with Sentient Global Resources Fund III, LP and SGRF III Parallel I, LP (collectively, "Sentient") and Sentient has indicated a potential interest in further investing in the combined company in a private placement following consummation of the Transaction. The Transaction will increase the need of the combined company for additional financing to support the exploration and development of ECU's Velardeña properties in addition to Golden's historic properties. Because cash from operations is not expected to be sufficient to provide needed capital, and because debt financing is difficult to obtain for early stage mining operations, the likelihood is high that Golden would seek such financing in the equity markets. If the combined company were to engage in a private equity financing with Sentient or any other party, or engage in a public equity offering following the Transaction, current Golden Stockholders' ownership interest in the combined company would be further diluted.

Golden's common stock price could be depressed by sales of shares by ECU or Golden shareholders who sell their Golden shares.

        Some ECU Shareholders may intend not to hold Golden common stock and some Golden Stockholders may decide to sell their shares following the Transaction, particularly if the market reaction to the Transaction is not favorable. If a significant number of Golden or former ECU Shareholders seek to sell their Golden common stock following completion of the Transaction, the trading price of Golden common stock may be adversely affected. A decrease in the trading price of the Golden common stock could impair the combined company's ability to raise capital through future sales of common stock.

The existence of a significant number of options and warrants may have a negative effect on the market price of Golden common stock.

        ECU currently has outstanding ECU Options and ECU Warrants to purchase ECU Shares, which will, in the Transaction, be replaced by the Golden Replacement Options and Golden Replacement Warrants to purchase Golden common stock. The Golden Replacement Options will consist of employee options to purchase 661,750 shares of Golden common stock at exercise prices ranging from $16.00 to $31.80, and expiring between September 2011 and October 2014, and the Golden Replacement Warrants will consist of warrants to purchase 386,363 and 1,831,929 shares of Golden common stock, respectively, at exercise prices of $18.00 and $19.00, respectively, expiring in December 2011 and February 2014, respectively. The existence of securities available for exercise and resale is referred to as an "overhang", and, particularly if the options and warrants are "in the money", the

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anticipation of potential sales could exert downward pressure on the market price of Golden common stock.

Potential payments made to any dissenting ECU Shareholders in respect of their shares could exceed the amount of consideration otherwise due to them under the terms of the Arrangement Agreement.

        Under the Business Corporations Act (Québec), ECU Shareholders will have the right to dissent with respect to the proposed Transaction. If any ECU Shareholders properly exercise their right to dissent, such ECU Shareholders will be entitled to be paid the judicially determined fair value of their ECU Shares. While Golden and ECU believe that the value of the consideration to be paid to ECU Shareholders pursuant to the Transaction is equal to or exceeds the fair value of the ECU Shares, there can be no assurance that a court would agree with this assessment and consequently the amount any dissenting ECU Shareholders receive could be higher than the consideration to which those shareholders would have been entitled under the Arrangement Agreement. In addition, Golden may be required to pay dissenting ECU Shareholders all or a portion of the judicially determined value of their ECU Shares in cash, which would reduce the cash available to the combined company for advancement of the El Quevar project, expansion efforts at the Velardeña properties and advancement of the combined company's other exploration properties. A condition to closing in the Arrangement Agreement is that holders of no more than 5% of ECU's shares have exercised dissent rights, but Golden could waive this condition.

ECU's public filings are subject to Canadian disclosure requirements, which differ from SEC requirements.

        ECU is a Canadian issuer that is required to prepare and file its periodic and other filings in accordance with Canadian disclosure requirements. As a result, certain of the information about ECU that is contained in this proxy statement was prepared with a view to compliance with Canadian GAAP or IFRS and Canadian disclosure regulations, rather than the requirements that would apply in the United States. Because Canadian disclosure requirements are different from SEC requirements, the information about ECU contained in this proxy statement may not be comparable to similar information available about Golden or other U.S. issuers.

The presentation of historical financial statements of ECU will not be comparable to the presentation of ECU's financial results following completion of the Transaction.

        ECU has been a Québec corporation whose financial statements, until December 31, 2010, were prepared in accordance with Canadian GAAP, and since January 1, 2011, have been prepared in accordance with IFRS. After the Transaction, ECU will be a wholly-owned subsidiary of Golden, and its financial statements will be consolidated with those of Golden, and will be prepared in accordance with U.S. GAAP. Under Canadian GAAP and IFRS, ECU has been capitalizing exploration and development costs incurred during the development stage, including the operating expenses at its active mining operations, and offsetting those capitalized costs with revenue generated from saleable minerals. Under U.S. GAAP, those exploration and development costs would have appeared as expenses on the statement of operations and revenues generated during the development stage would have appeared as Other Income, Net of Incremental and Direct Costs Associated with the Revenue, on the statement of operations. If ECU had reported in U.S. GAAP for the fiscal year ended December 31, 2010, its net losses would have increased by approximately $2.5 million. Because of these and other differences, ECU's historical financial results will not be comparable to the results as they will appear in the consolidated financial statements of the combined company.

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Risks Relating to the Businesses of Golden, ECU and the Combined Company

        After the completion of the Transaction, the business of the combined company, as well as the price of Golden common stock, will be subject to numerous risks currently affecting the businesses of Golden and ECU.

ECU and Golden have both historically incurred operating losses and operating cash flow deficits and we expect that the combined company will continue to incur operating losses in the foreseeable future.

        ECU and Golden have a history of operating losses and we expect that the combined company will continue to incur operating losses unless and until such time as ECU's Velardeña Properties in Central Mexico, our El Quevar project in Argentina, or another of our exploration properties generates sufficient revenue to fund continuing operations of the combined company. None of Golden's properties is currently in commercial production. While ECU is currently in production at its Velardeña Properties, it is still considered to be a development stage company, as it has not determined that a sufficient portion of its mineral resources are economically exploitable and, accordingly, it has no mineral reserves. We do not expect that revenues generated by production at ECU's properties will exceed the expenses of the combined company for at least the next few years. In 2010, ECU suffered a decrease in cash during the year of Cdn$7.3 million, leaving cash and cash equivalents of only Cdn$344,826 at December 31, 2010, and Golden has purchased Cdn$15.0 million principal amount interest-free convertible notes from ECU to provide ECU with needed liquidity pending the closing of the Transaction. We expect the combined company's operating expenses, capital expenditures and other expenses will increase in future years as we advance exploration, development and commercial production of the combined company's properties and any other properties that we may acquire. The amounts and timing of expenditures will depend on the progress of our efforts to expand production at the Velardeña Properties, advance our El Quevar project and continue exploration at these and other properties, the results of consultants' analyses and recommendations, the rate at which operating losses are incurred, the execution of any joint venture agreements with strategic partners, if any, and our potential future acquisition of additional properties, in addition to other factors, many of which will be beyond our control. We expect that the advancement or development of the combined company's properties and any other properties we may acquire will require the commitment of substantial resources. There can be no assurance that the combined company will continue to generate revenues or will ever achieve profitability.

ECU's and Golden's properties may not contain mineral reserves.

        None of our El Quevar project, ECU's Velardeña Properties or any of our other properties, has been shown to contain proven or probable mineral reserves. Expenditures made in the exploration and advancement of the properties of the combined company may not result in discoveries of commercially recoverable quantities of ore. Most exploration projects do not result in the discovery of commercially mineable ore deposits and we cannot assure you that any mineral deposit we identify will qualify as an ore body that can be legally and economically exploited or that any particular level of recovery of silver from discovered mineralization will in fact be realized.

        Micon has completed technical reports on Golden's El Quevar property, which indicated the presence of "mineralized material," and on ECU's Velardeña Properties, which indicated the presence of measured, indicated and inferred resources. Mineralized material, and measured, indicated and inferred resource figures based on estimates made by geologists are inherently imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling that may prove to be unreliable or inaccurate. We cannot assure you that these estimates will be accurate or that proven and probable mineral reserves will be identified at El Quevar, Velardeña or any of Golden's and ECU's other properties. Even if the presence of reserves is established at a project, the economic viability of the project may not justify exploitation. We plan to spend significant amounts on the

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advancement of El Quevar and the expansion of the Velardeña Properties prior to establishing the economic viability of the project in a technical report compliant with NI 43-101.

        Estimates of reserves, mineral deposits and production costs can also be affected by such factors as governmental regulations and requirements, fluctuations in metals prices or costs of essential materials or supplies, environmental factors, unforeseen technical difficulties and unusual or unexpected geological formations. In addition, the grade of ore ultimately mined may differ from that indicated by drilling results, sampling, feasibility studies or technical reports. Short term factors relating to reserves, such as the need for orderly development of ore bodies or the processing of new or different grades, may also have an adverse effect on mining operations and on the results of operations. Silver or other minerals recovered in small scale laboratory tests may not be duplicated in large scale tests under on-site production conditions.

We expect that the combined company will continue to require substantial external financing to pay its operating and general and administrative expenses, continue the advancement of the Velardeña expansion and El Quevar projects, and fund its other exploration activities.

        We will be required to continue to raise substantial funds from external sources in order to pay our operating and general and administrative expenses, advance the Velardeña expansion and El Quevar projects, maintain our other exploration properties and continue our exploration activities, as we do not expect that cash generated by the Velardeña mining operations will be sufficient to fund these activities. If the Velardeña expansion or the El Quevar project proceeds to development and construction, we anticipate that we would need to raise additional capital during 2011. The size and capital cost for the Velardeña expansion or a possible mine and processing facilities at El Quevar have not been determined and would depend, among other things, on the results of our ongoing efforts to further define the Yaxtché deposit. We do not have a credit agreement in place that would finance development of either the Velardeña expansion or the El Quevar project, and believe that securing credit for these projects may be difficult given our limited history and the continuing volatility in global credit markets. Access to public financing has been negatively impacted by the volatility in the credit markets, which may impact the ability of the combined company to obtain equity or debt financing in the future and, if obtained, to do so on favorable terms. We cannot assure you that we will be able to obtain the necessary financing for the Velardeña expansion or the El Quevar project on favorable terms or at all. Failure to obtain sufficient financing may also result in the delay or indefinite postponement of exploration activities at our other properties.

The existence of secured indebtedness at ECU may limit the flexibility of the combined company to obtain additional financing and pursue certain business opportunities.

        Prior to the Transaction, Golden had no indebtedness. At June 30, 2011, ECU had approximately $17.0 million of outstanding term loan indebtedness, bearing interest at an effective rate of 12.8% and requiring 30 monthly principal repayments of $553,951, commencing July 31, 2011 through maturity on December 31, 2013. The term loan is secured by a first mortgage covering substantially all of ECU's assets, including its mining properties and mills. This indebtedness may be prepaid prior to maturity, subject to a prepayment penalty equal to the greater of either the total interest for the immediately preceding three months or 3% of the outstanding term loan principal amount. If such indebtedness had been prepaid on June 30, 2011, the prepayment penalty would have been $498,556. ECU refinanced this indebtedness in early 2011 to extend the maturity on the loan from January 2012 to December 2013.

        The presence of secured indebtedness, particularly in a company with limited revenues, has important consequences to the combined company, including (i) making it more difficult to obtain additional financing, (ii) subjecting it to the risk that its assets may be foreclosed upon if it is unable to make required principal and interest payments, (iii) reducing cash flows available for development of

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properties, and (iv) making the combined company more vulnerable than competitors without debt to a downturn in business, the economy or commodity prices. The combined company's ability to service its debt will depend on its operating performance, which is affected by prevailing economic conditions that are outside of its control. If it is unable to support debt service from revenues from ECU's mining operations, the combined company may be forced to divert resources from the development of its other properties, which may have material adverse effects on its growth and future prospects.

The ECU properties could be subject to environmental and other regulatory risks, which the combined company will assume after the Transaction and which could expose the combined company to significant liability and delay, and potentially the suspension or termination of exploration and development efforts.

        Mining is subject to federal, state and local environmental regulation in the jurisdictions where the mines are located. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste.

        ECU's activities related to the Velardeña Properties are subject to regulation by SEMARNAT, the environmental protection agency of Mexico. Regulations require that an environmental impact statement, known in Mexico as a Manifestación de Impacto Ambiental, be prepared by a third-party contractor for submission to SEMARNAT. Studies required to support the Manifestación de Impacto Ambiental include a detailed analysis of soil, water, vegetation, wildlife, cultural resources and socio-economic impacts. The Manifestación is then published on SEMARNAT's web page and in its official gazette in a national and local newspaper. The Manifestación is discussed at various open hearings, including hearings in the local communities, at which third parties may voice their views. ECU is required to provide proof of local community support of the Manifestación as a condition to final approval. These requirements are applicable to permitting new facilities at ECU's operations and to expansion of ECU's existing facilities.

        Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors and employees. On January 28, 2011, Article 180 of the Mexican Federal General Law of Ecological Balance and Environmental Protection was amended. Among other things, this amendment extends the term during which an individual or entity having a legitimate interest may contest administrative acts, including environmental authorizations, permits or concessions granted, without the need to demonstrate the actual existence of harm to the environment, natural resources, flora, fauna or human health, making it sufficient to argue that the harm may be caused. Further, the amendment permits the contesting party to challenge a Manifestación de Impacto Ambiental through a variety of administrative or court procedures. As a result of the amendment, more legal actions supported or sponsored by non-governmental groups interested in halting projects may be filed against companies operating in all industrial sectors, including the mining sector. Mexican operations are also subject to the environmental agreements entered into by Mexico, the United States and Canada in connection with the North American Free Trade Agreement. Another initiative that has not yet been enacted, but is being analyzed by the Chamber of Deputies is one related to amendments to the Civil Federal Procedures Code ("CFPC"). This initiative consists of establishing three categories of collective actions, by means of which 30 or more people claiming injury resulting from, among other things, environmental harm, will be deemed to have a sufficient and legitimate interest in seeking, through a civil procedure, restitution, economic compensation or suspension of the activities from which the alleged injury derived. The initiative is expected to be approved by the Chamber of Deputies this year and the related provisions to become effective six months thereafter. If approved, the amendments to the CFPC may result in more litigation with plaintiffs seeking remedies, including suspension of the activities alleged to cause harm.

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        Future changes in environmental regulation in the jurisdictions where the mines are located may adversely affect the operations of the combined company, make the operations of the combined company prohibitively expensive, or prohibit them altogether. Environmental hazards may exist on the properties in which Golden and ECU currently hold interests, or may hold interests in the future, that are unknown to Golden or ECU at present and that have been caused by Golden, ECU, or previous owners or operators, or that may have occurred naturally. The combined company may be liable for remediating any damage that ECU may have caused. The liability could include response costs for removing or remediating the release and damage to natural resources, including ground water, as well as the payment of fines and penalties.

        Insurance fully covering many environmental risks (including potential liability for pollution or other hazards as a result of disposal of waste products occurring from exploration and production) is not generally available. In addition, U.S. or international legislative or regulatory action to address concerns about climate change and greenhouse gas emissions could negatively impact the operations of the combined company.

Title to ECU Properties may be defective or may be challenged.

        Under the laws of Mexico, mineral resources belong to the state, and government concessions are required to explore for or exploit mineral reserves. Mineral rights derive from concessions granted, on a discretionary basis, by the Ministry of Economy, pursuant to the Mexican mining law and regulations thereunder. ECU holds title to the Velardeña Properties through these government concessions, but there is no assurance that title to the concessions comprising the Velardeña Properties will not be challenged or impaired following the Transaction. The Velardeña Properties may be subject to prior unregistered agreements, interests or native land claims, and title may be affected by undetected defects. There may be valid challenges to the title of any of the claims comprising the Velardeña Properties that, if successful, could impair development and/or operations with respect to such properties in the future. A defect could result in the combined company losing all or a portion of its right, title, and interest in and to the properties to which the title defect relates.

        ECU was previously involved in litigation concerning its ownership of title to four mineral concessions comprising the Santa Juana portion of the Velardeña Properties. In 2009, ECU entered into an agreement to settle the litigation whereby ECU agreed to pay $6.0 million to obtain full title to the concessions. ECU has previously paid $5.0 million of the settlement amount with the remaining $1.0 million installment becoming due in November 2011. Failure to make the remaining payment would result in loss of a 30% interest in the title to the four mining concessions at issue.

        Mining concessions in Mexico may be terminated if the obligations of the concessionaire are not satisfied, including obligations to explore or exploit the relevant concession, to pay any relevant fees, to comply with all environmental and safety standards, to provide information to the Ministry of Economy and to allow inspections by the Ministry of Economy. In addition to termination, failure to make timely concession maintenance payments and otherwise comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure could result in reduction or expropriation of entitlements.

        Mining concessions give exclusive exploration and exploitation rights to the minerals located in the concessions, but do not include surface rights to the real property, such that ECU is required to negotiate the necessary agreements with surface landowners. Many of ECU's mining properties are subject to the Mexican ejido system requiring ECU to contract with the local communities surrounding the properties in order to obtain surface rights to land needed in connection with its mining operations or exploration activities. ECU's contract with the Velardeña Ejido, which provides surface rights to approximately 70% of the Velardeña Properties, expires in December 2011. Negotiations to renew the contract have not yet begun and while ECU expects to be able to obtain a new contract providing the

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same surface rights as the existing contract, no assurances can be made that ECU will be able to do so on favorable terms or at all. The inability to extend these surface rights on favorable terms or otherwise could have a material adverse effect on the operations and financial condition of the combined company.

ECU is actively engaged in mining activities and there are significant hazards involved, not all of which are fully covered by insurance. To the extent the combined company must pay the costs associated with such risks, its business may be negatively affected.

        The operation of mines and conduct of exploration programs are subject to numerous risks and hazards, including, but not limited to, environmental hazards, industrial accidents, encountering unusual or unexpected geological formations, formation pressures, cave-ins, fires, power outages, labor disruptions, flooding, seismic activity, rock bursts, accidents relating to historical workings, landslides and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Although the combined company will maintain insurance against risks inherent in the operation of its business in amounts that it considers to be reasonable, such insurance will contain exclusions and limitations on coverage, the combined company's insurance will not cover all potential risks associated with mining and exploration operations, and related liabilities might exceed policy limits. As a result of any or all of the forgoing, particularly if the facilities are older, the combined company could incur significant liabilities and costs that could adversely affect its results of operation and financial condition.

ECU's mining operations are located in Mexico and are subject to various levels of political, economic, legal and other risks with which Golden has limited or no previous experience.

        ECU's operations are conducted in Mexico, and, as such, ECU's operations are exposed to various levels of political, economic, legal and other risks and uncertainties, including military repression; extreme fluctuations in currency exchange rates; high rates of inflation; labor unrest; the risks of war or civil unrest; local acts of violence, including violence from drug cartels; expropriation and nationalization; renegotiation or nullification of existing concessions, licenses, permits and contracts; illegal mining; acts of political corruption; changes in taxation policies; restrictions on foreign exchange and repatriation; and changing political conditions, currency controls and governmental regulations that favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.

        In the past, Mexico has been subject to political instability, changes and uncertainties, which have resulted in changes to existing governmental regulations affecting mineral exploration and mining activities. Mexico's status as a developing country may make it more difficult for the combined company to obtain any required financing for the expansion of the Velardeña mines or other projects in Mexico in the future.

        ECU's Mexican operations and properties are subject to a variety of governmental regulations governing health and worker safety, employment standards, waste disposal, protection of historic and archaeological sites, mine development, protection of endangered and protected species and other matters. Specifically, ECU's activities related to the Velardeña Properties are subject to regulation by SEMARNAT, the environmental protection agency of Mexico, Comision Nacional del Agua, which regulates water rights, and Mexican mining laws. Mexican regulators have broad authority to shut down and/or levy fines against facilities that do not comply with regulations or standards.

        ECU's mineral exploration and mining activities in Mexico may be adversely affected in varying degrees by changing government regulations relating to the mining industry or shifts in political

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conditions that increase the costs related to ECU's Mexican operations or the maintenance of its properties. Changes, if any, in mining or investment policies or shifts in political attitude may adversely affect ECU's operations and financial condition. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, currency remittance, income and other taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Expansion of ECU's facilities will also be subject to the need to assure the availability of adequate supplies of water and power, which could be affected by government policy and competing operations in the area.

        The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on the combined company's operations and financial condition.

        Future changes in applicable laws and regulations or changes in their enforcement or regulatory interpretation could negatively impact current or planned exploration and development activities on the Velardeña Properties or in respect of any other projects in which the combined company becomes involved in Mexico. Any failure to comply with applicable laws and regulations, even if inadvertent, could result in the interruption of exploration and development operations or material fines, penalties or other liabilities.

ECU's employees in Mexico are represented by a collective bargaining unit, and ECU is subject to Mexican regulations regarding labor and employment matters.

        ECU's employees in Mexico are represented by a collective bargaining unit, the Sindicato. ECU has two Sindicatos, one for the mine and a second for the plant. The current collective bargaining agreement expired in late June 2011. Salaries are negotiated annually, and labor contracts bi-annually. In addition to the negotiated terms of such agreement, relations between ECU and its employees may be affected by changes in regulations regarding labor relations that may be introduced by the Mexican authorities. Changes in such legislation or in the relationship between ECU and its employees may have a material adverse effect on the combined company's operations and financial condition.

The long-term cash flow and profitability of the combined company will be affected by changes in the prices of silver and other metals.

        The ability of the combined company to establish reserves and develop its exploration properties, and its profitability and long-term viability, depend, in large part, on the market prices of silver, zinc, lead, gold, copper and other metals. The market prices for these metals are volatile and are affected by numerous factors beyond our control, including:

        Future weakness in the global economy could increase volatility in metals prices or depress metals prices, which could in turn reduce the cash flow generated by the Velardeña Properties, or make it uneconomical for the combined company to continue its mining or exploration activities. Volatility or sustained price declines may also adversely affect the ability of the combined company to build its business.

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Results from ECU's Velardeña properties are subject to exchange control policies, the effects of inflation and currency fluctuations between the U.S. Dollar and the Mexican Peso.

        ECU's revenues are primarily denominated in U.S. dollars. However, operating costs of ECU's Velardeña Properties are denominated principally in Mexican pesos. These costs principally include electricity, labor, maintenance, local contractors and fuel. Accordingly, when inflation in Mexico increases without a corresponding devaluation of the Mexican peso, ECU's financial position, results of operations and cash flows could be adversely affected. The annual inflation rate in Mexico was 4.4% in 2010, 3.6% in 2009 and 6.5% in 2008. At the same time, the peso has been subject to significant devaluation, which may not have been proportionate to the inflation rate and may not be proportionate to the inflation rate in the future. The value of the peso increased by 5.4% and 3.5% in 2010 and 2009, respectively, and decreased by 24.5% in 2008. In addition, fluctuations in currency exchange rates may have a significant impact on our financial results. There can be no assurance that the Mexican government will maintain its current policies with regard to the peso or that the peso's value will not fluctuate significantly in the future. The imposition of exchange control policies could impair ECU's ability to meet its U.S. dollar-denominated obligations, including payments on its debt. We cannot assure you that currency fluctuations, inflation and exchange control policies will not have an adverse impact on the financial condition, results of operations, earnings and cash flows of the combined company.

If the combined company is unable to obtain all of its required governmental permits or obtain property rights on favorable terms or at all, its operations could be negatively impacted.

        Future operations of the combined company, including the new tailings facility at and potential expansion of the Velardeña Properties, the advancement of the El Quevar project, and other exploration and potential development activities, will require additional permits from various governmental authorities. Operations of the combined company are and will continue to be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety, mining royalties and other matters. The combined company may also be required to obtain certain property rights to access or use its properties. Obtaining or renewing licenses and permits, and acquiring property rights, can be complex and time-consuming processes. There can be no assurance that the combined company will be able to acquire all required licenses, permits or property rights on reasonable terms or in a timely manner, or at all, and that such terms will not be adversely changed, that required extensions will be granted, or that the issuance of such licenses, permits or property rights will not be challenged by third parties. Delays in obtaining or a failure to obtain any licenses, permits or property rights or any required extensions; challenges to the issuance of licenses, permits or property rights, whether successful or unsuccessful; changes to the terms of licenses, permits or property rights; or a failure to comply with the terms of any licenses, permits or property rights that have been obtained, could have a material adverse effect on the business of the combined company by delaying or preventing or making continued operations economically unfeasible.

ECU owns its interest in its San Diego property in a 50-50 joint venture and is therefore unable to control all aspects of exploration and development of this property.

        ECU holds the San Diego property in a 50-50 joint venture with Golden Tag Resources Ltd. This interest in the San Diego Property is subject to the risks normally associated with the conduct of joint ventures. A disagreement between joint venture partners on how to conduct business efficiently, the inability of joint venture partners to meet their obligations to the joint venture or third parties, or litigation arising between joint venture partners regarding joint venture matters could have a material adverse effect in the viability of ECU's interests held through the joint venture. In 2009, ECU received

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a notice of arbitration from its joint venture partner. The dispute was settled in September 2010, and resulted in an increase in ECU's mining property costs of $61,000.


Risks Related to the Increase in Authorized Capital.

The increase in authorized capital could have anti-takeover effects, and could lead to greater dilution to existing stockholders.

        Stockholders are being asked to approve an increase in Golden's authorized capital from 50,000,000 shares to 100,000,000 shares. At the conclusion of the Transaction, Golden will have approximately 12.9 million shares available for issuance. The additional shares will be available for use in acquisitions, future equity financings and for employee equity compensation plans. If the Charter Amendment Proposal is approved, Golden Stockholders will not have the ability in the future to vote on the use of the shares, except in limited instances mandated by stock exchange rules. Accordingly, the directors would be able to issue shares in financings or acquisitions at prices that may not reflect market prices, or are otherwise dilutive to stockholders. In addition, the availability of a number of authorized and unissued shares could have anti-takeover effects and could be used by incumbent management to perpetuate its positions, even in the face of an acquisition that is regarded as beneficial by stockholders. For example, shares could be placed with a stockholder that is supportive of existing management, diluting the ownership of a hostile acquirer. There can be no assurance that the shares will be issued in a manner that is advantageous to existing stockholders.

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GENERAL INFORMATION CONCERNING THE GOLDEN MEETING

        The enclosed proxy is solicited on behalf of Golden's board of directors for use at a special meeting of Golden's stockholders to be held on August 30, 2011, at 9:00 a.m., Denver time, or at any adjournments, postponements or delays thereof, for the purposes set forth in this proxy statement and in the accompanying notice of special meeting. The special meeting will be held at Courtyard by Marriott Denver West/Golden, 14700 W. 6th Avenue Frontage Road, Golden, Colorado 80401. Golden intends to commence mailing of this proxy statement and the accompanying proxy card to Golden's stockholders on or about August 2, 2011.

        At the special meeting, Golden's stockholders will be asked to vote on:

        Golden does not expect a vote to be taken on any other matters at the special meeting. If any other matters are properly presented at the special meeting for consideration, however, the holders of the proxies will have discretion to vote on these matters in accordance with their best judgment.

        Golden's board of directors has unanimously approved the Transaction and the issuance of Golden common stock in connection with the Transaction. In addition, our board has determined that an increase in the authorized number of shares of Golden common stock is advisable in order to provide the Golden board additional capacity to issue shares in the future, including for future offerings or acquisitions as determined to be in the best interests of the Golden stockholders. Accordingly, the board of directors unanimously recommends that Golden's stockholders vote "FOR" the Share Issuance Proposal and "FOR" the Charter Amendment Proposal.

        Only approval of the Share Issuance Proposal is required to effect the Transaction. If the Charter Amendment Proposal is approved but the Share Issuance Proposal is not approved, Golden will not amend its certificate of incorporation to increase the authorized number of shares of Golden common stock. Golden stockholders will cast separate votes on each proposal.

        There are certain risks associated with the Transaction, which are described under the heading "Risk Factors," beginning on page 14.


Record Date and Voting Information

        Only holders of record of Golden common stock at the close of business on July 29, 2011 are entitled to notice of and to vote at the special meeting. At the close of business on July 29, 2011, 15,019,770 shares of Golden common stock were outstanding and entitled to vote. A list of Golden's stockholders will be available for review at Golden's executive offices during regular business hours after the date of this proxy statement and through the date of the special meeting. Each holder of record of Golden common stock on the record date will be entitled to one vote for each share held. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Golden common stock entitled to vote at the special meeting is necessary to constitute a quorum for the transaction of business at the special meeting.

        All votes will be tabulated by the inspector of election appointed for the special meeting, who will separately tabulate votes "FOR" and "AGAINST," abstentions and broker non-votes. If a stockholder's shares are held of record by a broker, bank or other nominee and the stockholder wishes to vote at the special meeting, the stockholder must obtain from the record holder a "legal" proxy issued in the

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stockholder's name. Brokers who hold shares in "street name" for clients typically have the authority to vote on "routine" proposals when they have not received instructions from beneficial owners. Absent specific instructions from the beneficial owner of the shares, brokers are not allowed to exercise their voting discretion with respect to the approval of "non-routine" matters, such as the Share Issuance Proposal. Broker non-votes are counted for purposes of determining whether a quorum exists at the special meeting.

        Proxies received at any time before the special meeting and not revoked or superseded before being voted will be voted at the special meeting. If the proxy indicates a specification, it will be voted in accordance with the specification. If no specification is indicated, the proxy will be voted "FOR" the Share Issuance Proposal and "FOR" the Charter Amendment Proposal, and in the discretion of the persons named in the proxy with respect to any other business that may properly come before the special meeting or any adjournment of the special meeting. You may also vote in person by ballot at the special meeting.


Required Vote of Golden's Stockholders

        The Share Issuance Proposal must be approved by the affirmative vote of a majority of the shares of Golden common stock present at the special meeting and entitled to vote, assuming a quorum is present. The Charter Amendment Proposal must be approved by the affirmative vote of a majority of the outstanding shares of Golden common stock. Abstentions will have the same effect as a vote "AGAINST" the Share Issuance Proposal and the Charter Amendment Proposal. Shares held through brokers may be voted by the brokers on the Charter Amendment Proposal but not the Share Issuance Proposal. A broker's failure to vote on the Share Issuance Proposal because it lacks discretionary authority to do so, commonly referred to as a "broker non-vote," will not affect the outcome of the vote on the Share Issuance Proposal.


Golden's Board Recommendation

        Golden's board of directors unanimously recommends that Golden's stockholders vote "FOR" the Share Issuance Proposal and "FOR" the Charter Amendment Proposal.


Opinion of Golden's Financial Advisor

        On June 23, 2011 Golden's board of directors received an opinion from BMO Capital Markets Corp. to the effect that, as of June 23, 2011, and based upon and subject to the factors, assumptions, qualifications and limitations set forth in such opinion, the exchange ratio, together with the cash consideration to be paid by Golden pursuant to the Transaction, was fair, from a financial point of view, to Golden.


How You Can Vote

        Each share of Golden common stock outstanding on July 29, 2011, the record date for stockholders entitled to vote at the special meeting, is entitled to vote at the special meeting. On the record date, 15,019,770 shares of Golden common stock were issued and outstanding and entitled to vote.

        If you are a record holder, you may vote your shares in any of the following ways:

        Voting by mail.    If you choose to vote by mail, simply mark your proxy, date and sign it, and return it in the postage-paid envelope provided.

        Voting by telephone.    You can vote your proxy by telephone by calling the toll free number 1-800-690-6903. You will then be prompted to enter the control number printed on your proxy card and

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to follow the subsequent instructions. Voting by telephone is also available 24 hours a day. If you vote by telephone, do not return your proxy card(s).

        Voting by Internet.    You can also vote your proxy via the Internet. The website for Internet voting is www.proxyvote.com, and voting is also available 24 hours per day. If you vote via the Internet, you should not return your proxy card(s). Instructions on how to vote via the Internet are located on the proxy card enclosed with this proxy statement. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and create an electronic voting form.

        Voting in Person.    You can also vote by appearing and voting in person at the special meeting.

        You should return a proxy by mail, by telephone, or via the Internet even if you plan to attend the special meeting in person.

        If you are a beneficial owner of common stock held in "street name," you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Golden common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner of common stock and wish to vote in person at the special meeting, you must obtain a "legal" proxy from your bank, brokerage firm or other nominee.


Proxies; Revocation

        Any person giving a proxy pursuant to this solicitation has the power to revoke and change it anytime before it is voted. It may be revoked and/or changed at any time before it is voted at the special meeting by:

        If you hold your Golden common stock in "street name," you should contact your bank, brokerage firm or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a "legal" proxy from your bank, brokerage firm or other nominee.


Shares Beneficially Owned by Golden Directors and Executive Officers

        On the record date, Golden directors and named executive officers beneficially owned and had the right to vote approximately 271,661 Golden shares. These shares represent, in the aggregate, approximately 1.8% of the total voting power of Golden's outstanding common stock entitled to vote at the special meeting. During July 2011, ECU entered into a voting agreement with each of Golden's executive officers and expects to enter into such agreements with each of Golden's directors prior to the meeting date. Pursuant to these voting agreements, the Golden directors and officers party to such agreements committed to vote their shares of Golden common stock in support of the Transaction. See "The Transaction—Voting Agreements" beginning on page 43 for a further description of the voting agreements.


Expenses of Proxy Solicitation

        Golden will pay the costs of soliciting proxies for the special meeting. Officers, directors and employees of Golden may solicit proxies by telephone, mail, the Internet or in person. However, they will not receive extra compensation for soliciting proxies. Golden will also request that individuals and entities holding shares in their names, or in the names of their nominees, that are beneficially owned

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by others, send proxy materials to and obtain proxies from, those beneficial owners, and will reimburse those holders for their reasonable expenses in performing those services. Morrow & Co., LLC has been retained by Golden to assist it in the solicitation of proxies, using the means referred to above, and will receive a $20,000 retainer plus a fee for each stockholder contacted, plus reimbursement of out-of-pocket expenses.


Dissent Rights

        Under applicable Delaware laws and U.S. securities laws, Golden stockholders are not entitled to dissenters' appraisal rights in connection with the Transaction or any other matters to be acted upon at the Golden special meeting.


Adjournments

        Although it is not expected, the special meeting may be adjourned for any reason by the chairman of the meeting. If a quorum is not present at the special meeting, the meeting may be adjourned by the chairman or the stockholders present at the meeting. When a meeting is adjourned to another time and place, if any, notice need not be given of the adjourned meeting if the date, time and place, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting. If, however, the adjournment is for more than 30 days, or if a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting must be provided to each stockholder entitled to vote at the adjourned meeting. Such notice will be mailed or transmitted electronically to you and will be provided not less than 10 days nor more than 60 days before the date of the adjourned meeting and will set forth the purpose of the meeting. In addition, in accordance with applicable law, Golden may postpone the special meeting to another time, date, or place.


Other Matters

        Golden's board of directors is not aware of any business to be brought before the special meeting other than that described in this proxy statement.

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THE TRANSACTION

General

        On June 24, 2011, Golden and ECU entered into the Arrangement Agreement, which sets forth the terms under which Golden will acquire all of the ECU Shares, ECU Options and ECU Warrants in accordance with the Plan of Arrangement to be submitted for approval by the Québec Court. Pursuant to the Arrangement Agreement, Golden will acquire all the ECU Shares pursuant to the Plan of Arrangement in exchange for Golden common stock and cash.

        The Arrangement Agreement and Plan of Arrangement provide that ECU shareholders will receive 0.05 shares of Golden common stock and Cdn$0.000394 in cash for each ECU common share held immediately prior to the consummation of the Transaction. In addition, upon the consummation of the Transaction, new Golden options to purchase Golden common stock, or "Golden Replacement Options," will be exchanged for all outstanding options to purchase ECU common shares, and new Golden warrants to purchase Golden common stock, or "Golden Replacement Warrants," will be exchanged for all outstanding warrants to purchase ECU common shares. It is anticipated that consummation of the Transaction pursuant to the Plan of Arrangement will result in Golden paying an aggregate of approximately Cdn$125,000 in cash and issuing a total of approximately 16.0 million new shares, not including up to approximately 2.9 million new shares that will be issuable following the exercise of currently outstanding ECU options and warrants (or upon the exercise of the Golden Replacement Options and Golden Replacement Warrants to be received in exchange for those options and warrants) and approximately 167,000 shares that are expected to be issued, in the aggregate, in satisfaction of certain ECU change of control payments.


Background of the Transaction

        Golden's management and board of directors routinely monitor and assess developments in the mining and exploration industries and regularly consider growth opportunities, including the acquisition of operating mines, exploration properties and businesses.

        On January 11, 2011, Mr. Jeffrey G. Clevenger, Chairman, President and Chief Executive Officer of Golden, and Jerry Danni, Executive Vice President of Golden, met in New York with representatives of Dahlman Rose & Company, an investment banking firm which specializes in the mining industry. Among other issues related to industry developments and strategic considerations, the representatives of Dahlman Rose stated that they had been engaged by ECU to pursue strategic alternatives and discussed with Mr. Clevenger and Mr. Danni the possibility of a strategic investment in or combination with ECU. Following this meeting, representatives of Dahlman Rose provided Mr. Clevenger and Mr. Danni with certain publicly available information regarding ECU. Representatives of Dahlman Rose conducted another informal discussion regarding ECU with Mr. Danni on March 8, 2011, at the Prospectors and Developers Association of Canada annual conference in Toronto.

        In late March 2011, Golden management commenced a review, based on public information, of several potential acquisition targets and strategic business combination partners, including ECU. The preliminary analysis of ECU was completed during the first week of April 2011. On April 4, 2011, Mr. Clevenger asked a representative of Dahlman Rose to arrange an introductory meeting with appropriate ECU executives.

        On April 13, 2011, Mr. Clevenger and Mr. Danni met with Stephen Altmann, President of ECU, and representatives of Dahlman Rose in Zurich, Switzerland, where they were attending the annual meeting of the European Gold Forum. At this meeting, Messrs. Clevenger, Danni and Altmann provided general overviews of their companies based solely on publicly available information. They discussed the possibility of a strategic business combination and whether each party was interested in pursuing further discussions. Messrs. Clevenger, Danni and Altmann concluded the meeting with an

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agreement to continue preliminary discussions and to enter into a confidentiality agreement in respect of the planned discussions.

        Golden management and ECU management then negotiated a mutual confidentiality agreement, which was executed on April 21, 2011. The confidentiality agreement included a two year "standstill" agreement under which each of Golden and ECU agreed not to propose a takeover or business combination transaction to the other or its stockholders without the consent of the other's board of directors. During this period, Mr. Clevenger and Mr. Altmann spoke by telephone and communicated by email regarding the coordination of initial due diligence activities, including travel to ECU's Velardeña District properties in Mexico and Golden's El Quevar advanced exploration project in Argentina.

        On April 27, 28 and 29, 2011, David Drips, Golden's Project Director, Argentina, and Mr. Robert Blakestad, Golden's Senior Vice President and Chief Geologist, conducted on-site due diligence at ECU's Velardeña District mines, processing facilities and properties and received information regarding mining, processing, geology, ore controls, exploration and potential areas for additional discovery.

        On May 2, 2011, ECU provided Golden with preliminary technical data and corporate information.

        On May 9 and 10, 2011, Mr. Clevenger had discussions by telephone with representatives of BMO Capital Markets regarding its acting as Golden's financial advisors and requested BMO Capital Markets to serve as its financial advisor in connection with a potential business combination transaction with ECU.

        On May 10, 11 and 12, 2011, Messrs. Clevenger and Drips conducted additional on-site due diligence of the Velardeña mines, properties and processing facilities. In addition, on May 11, 2011, Mr. Clevenger, Mr. Altmann and Mr. Michel Roy, Chairman and Chief Executive Officer of ECU, discussed their views regarding the potential strategic and financial benefits of a business combination transaction between Golden and ECU. They agreed that a combined company would be stronger and better capitalized, and would have better access to capital markets as a result of increased size and the combination of current silver and other metals production in Mexico, the El Quevar advanced exploration project in Argentina, advanced exploration projects in Mexico and Peru, and a pipeline of advanced and reconnaissance exploration projects. They agreed that ECU's producing operations in Mexico would benefit from the operations expertise and experience of Golden's management, and that Golden's exploration efforts would benefit from the participation of ECU management. They also discussed the roles their respective management teams might have in the combined company, including the likelihood that Mr. Roy would serve as a consultant to the combined entity, and the potential for one of ECU's directors to serve on the board of directors of the combined company. They agreed that a business combination between the two companies was a mutually desirable prospect as an at-market merger of equals, although no specific exchange ratio was discussed at that time. They also discussed the possibility of Golden providing financing to ECU pending completion of an agreed business combination transaction. They agreed that Mr. Roy and members of his management would conduct a due diligence trip to Golden's El Quevar project during the week of May 23. They further agreed that it would be desirable for the two companies to enter into an exclusivity agreement, pursuant to which they would agree to continue discussions and negotiations regarding a business combination, and not to hold such discussions with other parties, until June 30, 2011.

        During the week of May 9, Golden engaged Davis Graham & Stubbs, LLP ("Davis Graham") and Fasken Martineau DuMoulin LLP ("Fasken Martineau") as its respective U.S. and Canadian legal advisors to assist in the potential transaction. During this week, Golden's legal and financial advisors began conducting their preliminary due diligence review of ECU's publicly available materials and preparing an exclusivity agreement and nonbinding proposal setting forth certain terms of a potential business combination.

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        On May 13, 2011, Mr. Clevenger provided the Golden board of directors with a written report regarding ECU and its business, together with the status of the due diligence investigation and discussions with ECU about a potential transaction.

        On May 19, 2011, the Golden board of directors held a regularly scheduled meeting in Golden, Colorado. At the meeting, Golden management presented the results of its technical due diligence investigation and Mr. Clevenger updated the board on the status of discussions with ECU regarding a potential strategic combination. At the same meeting, BMO Capital Markets presented to the Board its preliminary transaction perspectives, based on public information. The technical and legal due diligence process, regulatory filings and requirements, and an anticipated timeline were also discussed. After discussion, the Golden board of directors authorized members of Golden management to continue negotiations with ECU, including negotiation and execution of a nonbinding expression of interest and a binding exclusivity agreement.

        At Mr. Clevenger's invitation, a representative of The Sentient Group attended the May 19, 2011, Board meeting by telephone. Funds managed by affiliates of The Sentient Group own approximately 19.2 percent of Golden outstanding stock, and The Sentient Group and its representative have entered into a confidentiality agreement with Golden. At the Board meeting, the Sentient Group representative indicated its preliminary support for the potential transaction and asked to visit ECU's properties.

        On May 20, 2011, Mr. Clevenger delivered to Mr. Roy and Mr. Altmann drafts of a non-binding preliminary expression of interest, and a binding exclusivity agreement. During the week of May 23, 2011, the parties and their legal and financial advisors discussed the structure of a potential transaction and negotiated the terms of the non-binding expression of interest and exclusivity agreement.

        Also during the week of May 23, 2011, Mr. Roy and representatives of ECU's management conducted technical due diligence at Golden's El Quevar project in Argentina.

        On May 26, 2011, the Golden board of directors held a special meeting by telephone to consider the terms of the non-binding preliminary expression of interest and binding exclusivity agreement. At the meeting, Mr. Clevenger, Davis Graham and BMO Capital Markets briefed the board regarding the status of discussions with ECU and the proposed terms of the expression of interest and exclusivity agreement. After discussion, the board of directors unanimously authorized Golden management to continue negotiations with ECU, to present to ECU the negotiated non-binding preliminary expression of interest, to enter into the exclusivity agreement, to proceed with additional technical and legal due diligence and to present to ECU a draft business combination agreement.

        Following the board meeting, Mr. Clevenger and Mr. Altmann negotiated the final terms of the expression of interest and exclusivity agreement. On May 31, 2011, Golden submitted the non-binding preliminary expression of interest to ECU regarding a "merger of equals" transaction, which ECU countersigned. The expression of interest did not provide for an agreed-upon exchange ratio. The parties also entered into the exclusivity agreement pursuant to which the parties agreed not to pursue a business combination transaction with any other party until June 30, 2011.

        During the week of June 6, 2011, ECU and Golden each provided the other and their respective legal and financial advisors with access to an electronic data room containing non-public information responsive to the due diligence requests each had previously submitted to the other. Golden, ECU and their respective legal and financial advisors conducted due diligence reviews of materials provided until and including the date definitive transaction agreements were signed.

        In addition, Golden and its advisors continued to conduct additional on-site due diligence on ECU's properties. On June 2, 2011, Mr. Danni and a technical consultant expert in tailings dam construction, design and performance reviewed matters at ECU's properties related to the capacity of existing tailings facilities and the status of plans and permitting for a new tailings facility. Mr. Drips also visited ECU properties from May 31 to June 4, 2011. From June 7 through June 9, 2011,

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Mr. Danni and other representatives of Golden and a representative of Davis Graham conducted due diligence at the Velardeña Properties regarding various operational, community affairs, corporate and legal matters. During this visit the Golden representatives met with certain members of ECU senior management, including Mr. Roy. On June 15 and 16, 2011, Robert Vogels, Golden's Chief Financial Officer, met in Toronto with Dwight Walker, ECU's Chief Financial Officer, to discuss financial and accounting due diligence matters. On June 16 and 17, 2011, a metallurgical consultant hired by Golden conducted due diligence regarding metallurgical and recovery matters at ECU's properties. On June 1 and 2, 2011, a representative of The Sentient Group conducted due diligence at the ECU properties.

        On June 7, 2011, Mr. Altmann met with Mr. Clevenger at Golden's offices in Golden, Colorado and discussed certain management issues related to the combined company, additional deal terms and mechanics. Mr. W. Durand Eppler, a director of Golden, attended portions of that meeting.

        On June 10, 2011, members of ECU management conducted due diligence at Golden's Zacatecas properties in Mexico.

        On June 13, 2011, trading volume of ECU's common shares was approximately 3.4 million shares and the share price closed approximately 18% over the June 10, 2011 closing share price. The Toronto Stock Exchange contacted Mr. Altmann on June 13, 2011, regarding the increased trading activity and, in response to questions, Mr. Altmann and a representative of Blake Cassels & Graydon LLP, Canadian legal counsel to ECU, reported that ECU was conducting discussions with Golden regarding a potential business combination transaction, but that no definitive agreements had been entered into and no exchange ratio had been agreed.

        On June 13, 2011, Fasken Martineau sent a draft of the Arrangement Agreement to Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP, U.S. legal counsel to ECU. From then until June 24, 2011, the parties and their legal counsel negotiated the terms of the Arrangement Agreement and related documents, including a term sheet for a convertible debt financing contemplated to be provided by Golden to ECU, and exchanged drafts of the Arrangement Agreement and related documents. During this period, Mr. Clevenger also discussed with Mr. Altmann and with members of the compensation committee of Golden's board of directors the terms on which Mr. Altmann would serve as president of the combined company, if a strategic combination were completed.

        On June 22, 2011, Messrs. Roy and Clevenger met in Denver, Colorado and discussed certain issues related to strategic plans for the combined company.

        On June 22, 2011, the Golden board of directors held a special meeting by telephone which was also attended by Golden management and representatives of BMO Capital Markets, Davis Graham and Fasken Martineau. Davis Graham briefed the Board on the legal standards applicable in the context of evaluating a business combination of the type being considered. In the course of the meeting, members of Golden management and representatives of Davis Graham provided a final report on the due diligence investigation conducted and management's corresponding assessments. The diligence summary included a discussion of ECU's operations and plans, mineral qualities and processes, environmental matters, community relations, and other financial and legal matters. Representatives of Davis Graham and Fasken Martineau also provided an overview of the key terms of the proposed Arrangement Agreement, including termination rights and break-up fees under the Arrangement Agreement. The Golden board of directors then met in executive session to further discuss the information presented, including certain items that remained to be agreed by Golden including the exchange ratio, the amount of the break-up fee, the amount of expense reimbursement to be paid in the event of termination not resulting in a break-up fee and certain issues related to the interim financing. The board received the advice of its financial and legal advisors regarding these matters, authorized management to conclude the negotiation and scheduled a further meeting for the following day.

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        At Mr. Clevenger's invitation, a representative of The Sentient Group attended the June 22, 2011, Board meeting by telephone. At the Board meeting, the Sentient Group representative reiterated Sentient's support for the transaction and indicated that in the event the transaction was consummated, Sentient would be interested in investing further capital in the combined company to retain its current proportionate ownership.

        Over the evening of June 22 and through June 23, 2011, Mr. Clevenger and Mr. Altmann negotiated the final terms of the Arrangement Agreement, including the 0.05 exchange ratio, and Golden and ECU and their respective legal counsel and financial advisors worked to finalize the Arrangement Agreement, the terms of the related financing to be provided to ECU by Golden and related agreements. Following negotiations among the management and financial and legal representatives of Golden and ECU, the Golden board of directors held a special telephonic meeting on June 23, 2011, with members of Golden's management and legal and financial advisors. The Board received an update on resolution of the matters discussed the previous day and discussed the terms of the Arrangement Agreement and related financing. Representatives of BMO Capital Markets then presented to the board its final financial analysis of the proposed business combination and rendered to the Golden board an oral opinion (subsequently confirmed by delivery of a written opinion dated as of June 23, 2011) to the effect that, as of that date and based upon and subject to the factors, assumptions, qualifications and limitations to be set forth in such opinion, the 0.05 exchange ratio and cash consideration provided for in the Arrangement Agreement was fair, from a financial point of view, to Golden. Following discussion with its financial and legal advisors, the Golden board unanimously authorized execution of the Arrangement Agreement and related documents and recommended the issuance of Golden common stock pursuant to the Arrangement Agreement for approval by Golden's stockholders.

        With all remaining transaction issues having been settled during the night of June 23, 2011, the ECU board of directors on June 24, 2011 unanimously approved the proposed Transaction and the private placement.

        On June 24, 2011, members of Golden senior management and ECU senior management executed the Arrangement Agreement and a subscription agreement for the private placement described below, and issued a joint press release announcing the Transaction.


Subscription Agreement and Private Placement

        On July 13, 2011, ECU completed a private placement of Cdn$15.0 million, 0.0% senior unsecured convertible notes at par (the "Convertible Notes") to Golden pursuant to a subscription agreement (the "Subscription Agreement") between the parties dated June 24, 2011 (the "Private Placement"). Golden did not own or exercise control over any securities of ECU prior to the Private Placement. The Convertible Notes will mature on June 30, 2012 (subject to extension as described below), and are convertible by Golden at any time prior to 5:00 p.m. (Toronto time) on June 29, 2012, into common shares of ECU at the rate of 1,032 shares per $1,000 principal amount, consistent with the exchange ratio. As of July 13, 2011, the shares issuable upon conversion of the Convertible Notes represented approximately 4.7% of the outstanding common shares of ECU on an as-converted basis. The Convertible Notes are also redeemable at par by ECU at any time after the record date for voting upon the Transaction at the ECU securityholder meeting. In addition, ECU may elect to extend the maturity of the Convertible Notes for 6 months under certain conditions and upon a cash payment equal to 4% of the outstanding principal amount of the Convertible Notes, with interest accruing at 10% per annum during such extension period. The proceeds of the Private Placement were placed into escrow and are to be advanced to ECU pursuant to specific disbursement requests to be submitted to Golden and the escrow agent identifying the intended use of such funds. The Private Placement proceeds are to be used by ECU for general corporate purposes and to fund its ongoing expansion plans at the Velardeña Properties until closing of the Transaction.

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        Golden, as holder of the Convertible Notes, is entitled to vote any ECU common shares received upon conversion of the Convertible Notes before the record date for voting upon the Transaction at the ECU securityholder meeting or may vote the Notes themselves in any vote of ECU's outstanding common shares, options, warrants and convertible securities voting as a single class with respect to the votes of ECU Securityholders to approve the Transaction.


Golden's Reasons for the Transaction; Recommendation of Golden's Board of Directors

        On June 24, 2011, following completion of due diligence, Golden's board of directors, after an extensive review and thorough discussion of all facts and issues it considered relevant with respect to the proposed transactions, concluded unanimously that the Transaction and Private Placement are fair to, and in the best interests of, the Golden stockholders, and authorized Golden's executive officers to enter into the Arrangement Agreement, Subscription Agreement and related agreements and recommend to Golden stockholders that they vote in favor of the Share Issuance Proposal.

        In reaching its conclusion and making its recommendation, the members of Golden's board of directors consulted with Golden management, as well as its financial and legal advisors, and considered various other factors, both positive and negative. The following discussion of the information and factors considered by Golden's board of directors is not intended to be exhaustive and may not include all of the factors considered by the board. In view of the wide variety of factors considered by the Golden board in connection with its evaluation of the Transaction, the Golden board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. In considering the factors described below, individual members of the Golden board may have given different weight to different factors. The Golden board considered this information as a whole and considered overall the information and factors to be favorable to, and in support of, its determinations and recommendations. The material information and factors considered by the Golden board included the following:

        Strategic Considerations.—Golden's board of directors considered a number of factors pertaining to the strategic rationale for the Transaction, including the following:

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        Fairness Opinion—The fairness opinion provided by BMO Capital Markets on June 23, 2011, subsequently confirmed in writing, to the effect that, as of June 23, 2011, and based upon and subject to the analyses, factors, assumptions, qualifications and limitations set forth in such opinion, the exchange ratio and cash consideration was fair, from a financial point of view, to Golden.

        Recommendation of Management—The recommendation of Golden management in support of the Transaction.

        Stockholder Support—Sentient's expression of its support of the Transaction as one of Golden's largest stockholders, and Sentient's indication of its potential interest in investing additional capital in Golden following consummation of the Transaction in order to maintain its proportionate ownership interest in Golden.

        Due Diligence—The results of the due diligence review conducted by Golden's management and Golden's financial and legal advisors, including the information included in the disclosure letter delivered by ECU to Golden in connection with the Arrangement Agreement. The Golden board also considered the scope of the representations and warranties in the Arrangement Agreement in light of the matters raised in the course of the due diligence review.

        Ability to Accept a Superior Proposal—The fact that, under the terms of the Arrangement Agreement, the Golden board of directors remains able to respond in accordance with its fiduciary duties in the event of certain unsolicited proposals that are more favorable to Golden stockholders than the Transaction, and the fact that the ECU board has the same rights under the agreement.

        Golden Stockholder Approval—The fact that the issuance of Golden common stock to ECU shareholders pursuant to the Transaction must be approved by no less than a majority of the Golden common stock present at the special meeting and entitled to vote thereon. The Golden board of directors believes that the required stockholder approval protects the rights of Golden stockholders.

        Market and Industry Trends—Current economic, industry and market trends affecting Golden and ECU and the current and historical trading prices of their respective common stock.

        Consideration—The amount and type of consideration to be paid and issued pursuant to the Transaction and the fact that the Exchange Ratio is fixed to reflect an at-market combination at the time of negotiations and will not fluctuate based upon changes in the market price of Golden or ECU common stock between the date of the Arrangement Agreement and the date of the completion of the Transaction.

        Dilution of Golden Stockholders' Ownership Interest in the Combined Company—The fact that as a result of the issuance of Golden shares in the Transaction, Golden's existing stockholders will experience a significant degree of dilution in their ownership of Golden to approximately 49% of the combined company (or approximately 45% if all ECU options and warrants were exercised) while former shareholders of ECU will own approximately 51% of the combined company (or approximately 55% on a fully-diluted basis). Additionally, due to the fact that Golden's existing stockholders would hold less than 50% of the company following the Transaction, the board considered that the vesting of certain equity awards made to Golden's directors and officers would accelerate upon consummation of the Transaction, as it would be deemed a change of control of the company pursuant to the governing award agreements, and that certain severance payments may subsequently become payable to Golden executive officers upon the termination of their employment.

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        Restrictions on Business Operations—The fact that Golden and ECU would agree to restrictions on the conduct of each other's business during the period between the execution of the Arrangement Agreement and the completion of the Transaction.

        Termination Fee and Expense Reimbursement—The fact that Golden and ECU may be obligated to pay a termination fee or reimburse the other party's transaction expenses under the Arrangement Agreement in certain circumstances.

        No-Shop Provision—The fact that Golden and ECU would each agree to a "no-shop" clause pursuant to the Arrangement Agreement restricting each party's ability to solicit a competing transaction.

        Dissenters' Rights—The availability of dissenters' rights to the ECU shareholders in connection with the Transaction and the existence of a condition to closing which permits Golden to not close the Transaction if more than 5% of ECU shareholders exercise their dissenters' rights.

        The members of Golden's board of directors also considered potential risks associated with the Transaction, including among other things, the following:

        Inherent Uncertainty of Estimates—The fact that there was inherent uncertainty regarding the estimated value of the Velardeña Properties and the estimates of the future development costs that would need to be incurred with respect to the Velardeña Properties and about the quality, quantity and recoverability of any ore body at the Velardeña Properties.

        Business Risks—The risks associated with and inherent in ECU's business and its operations in Mexico, including the nature and potential scope of items identified pursuant to Golden's managements' and outside advisors' due diligence review and the inherent limitations of such processes.

        Market Disruption if Transaction Not Completed—The fact that if the Transaction is not completed, Golden may be adversely affected due to potential disruptions in its operations and market perceptions.

        Diversion of Management—The possible diversion of management's time and attention from the ongoing business of Golden due to the substantial time and effort necessary to complete the Transaction and plan for and implement the integration of the operations of Golden and ECU.

        Integration Challenges—The challenges inherent in the combination of two enterprises of the size and scope of Golden and ECU, and the risk that anticipated benefits, long-term as well as short-term, of the Transaction for Golden stockholders might not be realized.

        After consideration of these material factors, the Golden board concluded that the risks associated with the Transaction could be (i) mitigated or managed by Golden or, following the Transaction, by the combined company, (ii) were reasonably acceptable under the circumstances, and (iii) in light of the anticipated benefits overall, were significantly outweighed by the potential benefits of the Transaction. The Golden board realized that there can be no assurance about future results, including results considered or expected as described in the factors listed above, such as assumptions regarding the potential benefits of the Transaction. It should be noted that this explanation of the Golden board's reasoning and all other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading "Cautionary Statements Regarding Forward-Looking Information" beginning on page 1.


Fairness Opinion of Financial Advisor to Golden

        Golden retained BMO Capital Markets Corp. to render an opinion to the Golden board of directors as to the fairness, from a financial point of view, to Golden of the exchange ratio of 0.05 of a share of Golden common stock (which is referred to as the exchange ratio) and Cdn$0.000394 in cash,

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to be paid for each outstanding share of ECU stock in connection with the Transaction. On June 23, 2011, at a meeting of Golden's board of directors held to evaluate the Transaction, BMO Capital Markets delivered its oral opinion, which opinion was subsequently confirmed by delivery of its written opinion dated June 23, 2011, to the effect that, as of that date and subject to the various factors, assumptions, qualifications and limitations set forth in such opinion, the exchange ratio, together with the cash consideration payable in the Transaction, was fair, from a financial point of view, to Golden. BMO Capital Markets does not have any obligation to update, revise or reaffirm its opinion.

        The full text of BMO Capital Markets' written opinion to Golden board of directors, which sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the review undertaken, is attached as Annex F to this proxy statement and is incorporated into this proxy statement by reference. Holders of Golden common stock are encouraged to read the opinion carefully and in its entirety. The following summary is qualified in its entirety by reference to the full text of such opinion. BMO Capital Markets' analyses and opinion were prepared for and addressed to the Golden board of directors and relate only to the fairness, from a financial point of view, to Golden of the exchange ratio and the cash consideration payable in the Transaction. BMO Capital Markets' opinion does not address any other aspect of the Transaction or the transactions contemplated by the Arrangement Agreement and such opinion does not constitute a recommendation to Golden Stockholders or anyone else on how to vote at any meeting held in connection with the Transaction. BMO Capital Markets' opinion also does not in any manner address the prices at which Golden or ECU common stock has traded or may trade in the future, including subsequent to the completion of the Transaction. The BMO Capital Markets opinion has been approved by a fairness committee of BMO Capital Markets.

        BMO Capital Markets provided the opinion described herein for the information and assistance of Golden's board of directors in connection with its consideration of the transactions contemplated by the Arrangement Agreement and Plan of Arrangement. The terms of the Arrangement Agreement and the Plan of Arrangement, and the Exchange Ratio and cash consideration payable, were determined through negotiations between Golden and ECU, and were approved by Golden's board of directors. BMO Capital Markets provided financial advice to Golden during such negotiations. However, BMO Capital Markets did not recommend any form of consideration to Golden or that any specific form of consideration constituted the only appropriate consideration for the Transaction.

        In preparing its opinion to the Golden board of directors, BMO Capital Markets performed various financial and comparative analyses, including those described below. The summary set forth below does not purport to be a complete description of the analyses underlying BMO Capital Markets' opinion or the presentation made by BMO Capital Markets to the Golden board of directors. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, BMO Capital Markets did not attribute any particular weight to any analysis or factor considered by it, but rather made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. Each of the analyses conducted by BMO Capital Markets was carried out in order to provide a different perspective on the financial terms of the Transaction and add to the total mix of information available. The analyses were prepared solely for the purpose of BMO Capital Markets providing its opinion and do not purport to be appraisals or necessarily reflect prices at which securities may be sold. BMO Capital Markets did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion about the fairness, from a financial point of view, to Golden of the exchange ratio and cash consideration payable. Rather, in reaching its conclusion, BMO Capital Markets considered the results of the analyses in light of each other and ultimately reached its opinion based on the results of the analyses taken as a whole. Accordingly,

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notwithstanding the separate analyses summarized below, BMO Capital Markets believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors, or focusing on information presented in tabular format, without considering all of the analyses and factors or the narrative description of the analyses, would create a misleading or incomplete view of the process underlying its opinion.

        In arriving at its opinion, and performing the related financial analysis, BMO Capital Markets:

        In rendering its opinion, BMO Capital Markets assumed and relied on the accuracy and completeness of information supplied or otherwise made available to BMO Capital Markets by Golden, ECU or their representatives or advisors or obtained by BMO Capital Markets from other sources. BMO Capital Markets did not assume any responsibility for independently verifying and did not independently verify such information. BMO Capital Markets did not independently evaluate, physically inspect or appraise any of the respective assets or liabilities (contingent or otherwise) of Golden or ECU and was not furnished with any such valuations or appraisals. BMO Capital Markets was not asked to and did not evaluate the solvency or fair value of Golden or ECU. With respect to financial projections, including estimated synergies, for Golden and ECU, BMO Capital Markets was advised by Golden, and assumed, without independent investigation, that they had been reasonably prepared and reflected the best currently available estimates and good faith judgments of senior management of Golden and ECU (or, with respect to estimates and forecasts obtained from public sources, represent

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reasonable estimates and forecasts) of the expected future competitive, operating and regulatory environments and related financial performance of Golden and ECU. BMO Capital Markets was not asked to and did not consider the possible effects of any litigation or other legal claims. BMO Capital Markets further assumed that the Transaction will have the tax consequences described in discussions with, and materials furnished to BMO Capital Markets by, representatives of Golden. BMO Capital Markets also assumed that the Transaction will be consummated in a timely manner and in accordance with the terms of the Arrangement Agreement and Plan of Arrangement without waiver, modification or amendment of any material term, condition or agreement and that all governmental, regulatory and other consents and approvals necessary for the consummation of the Transaction will be obtained without any material adverse effect on Golden or ECU or on the contemplated benefits of the Transaction.

        BMO Capital Markets' opinion is necessarily based upon financial, economic, market and other conditions and circumstances as in effect on, and information made available to BMO Capital Markets as of June 23, 2011. BMO Capital Markets disclaims any undertakings or obligations to advise any person of any change in any fact or matter affecting the opinion which may come or be brought to its attention after the date of the opinion.

        BMO Capital Markets' opinion does not constitute a recommendation as to any action the board of directors of Golden should take in connection with the Transaction or any aspect thereof and is not a recommendation to any person on how such person should vote with respect to the adoption of the Arrangement Agreement or Plan of Arrangement or with respect to the Share Issuance Proposal. BMO Capital Markets' opinion relates solely to the fairness, from a financial point of view, to Golden of the exchange ratio and the cash consideration. BMO Capital Markets expresses no opinion as to the relative merits of the Transaction and any other transactions or business strategies discussed by the board of directors of Golden as alternatives to the Transaction or the decision of the board of directors of Golden to proceed with the Transaction, nor does BMO Capital Markets express any opinion on the structure, terms or effect of any other aspect of the Transaction or the other transactions contemplated by the Arrangement Agreement. BMO Capital Markets is not an expert in, and its opinion does not address, any of the legal, tax or accounting aspects of the proposed Transaction, including, without limitation, whether or not the transactions contemplated by the Arrangement Agreement constitute a change of control under any contract or agreement to which Golden, ECU or any of their respective subsidiaries is a party. BMO Capital Markets relied solely on Golden's legal, tax and accounting advisors for such matters.

        The following is a summary of the material analyses performed by BMO Capital Markets in connection with its opinion to the Golden board of directors dated June 23, 2011. The following summary, however, does not purport to be a complete description of the financial analyses performed by BMO Capital Markets, nor does the order of analyses described represent relative importance or weight given to those analyses by BMO Capital Markets. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before June 23, 2011 and is not necessarily indicative of current market conditions. Some of the financial analyses summarized below include information presented in tabular format. In order to understand fully BMO Capital Markets' financial analyses, the tables must be read together with the text of the summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of BMO Capital Markets' financial analyses.

        Arrangement Consideration.    BMO Capital Markets calculated the implied Transaction consideration price per share by multiplying the exchange ratio of 0.05 by the closing price per share of Golden's common stock on the Toronto Stock Exchange of Cdn$19.38 on June 23, 2011, plus the cash consideration of Cdn$0.000394 per share.

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        Stock Trading History.    To provide background information and perspective with respect to the historical share prices of Golden and ECU, BMO Capital Markets reviewed the share price performance and implied premium or discount to the implied Transaction consideration price per share, based on various time periods ending on June 23, 2011. The following table lists the implied premium or discount for these periods:

 
  Historical Stock Prices on
the Toronto Stock Exchange
   
   
 
 
  Implied Transaction
Price per Share
  Implied Premium/
(Discount) to ECU
 
 
  Golden   ECU  
 
  (TSX:AUM)
  (TSX:ECU)
   
   
 

As of June 23, 2011 close:

                         
 

1-day Price (23-Jun-11)

  Cdn$ 19.38   Cdn$ 1.04   Cdn$ 0.97     (7 )%
 

20-day VWAP*

  Cdn$ 18.29   Cdn$ 0.93   Cdn$ 0.91     (2 )%
 

30-day VWAP*

  Cdn$ 17.59   Cdn$ 0.90   Cdn$ 0.88     (3 )%
 

52-week High (intraday)

  Cdn$ 29.50   Cdn$ 1.45   Cdn$ 1.48     2 %

*
VWAP refers to the volume weighted average price

        Historical Exchange Ratio Analysis.    BMO Capital Markets analyzed and reviewed the historical trading price of Golden common stock relative to ECU common shares based on closing prices between June 24, 2008, and June 23, 2011, and calculated the historical exchange ratios during certain periods within those dates implied by dividing the daily closing prices per share of ECU's common shares by those of Golden's common stock, and the average of those historical trading ratios for the various periods reviewed. BMO Capital Markets next compared the exchange ratio of 0.05 provided for in the Transaction with historical exchange ratios for the various periods ending June 24, 2010, and June 23, 2011. The following table lists the implied exchange ratios for these periods:

Days Trading
  Implied
Exchange
Ratio
 

June 23, 2011

    0.0537  

Last three months average

    0.0452  

Last six months average

    0.0483  

Last twelve months average

    0.0530  

Golden / ECU Transaction

   
0.0500
 

        Relative Contribution Analysis.    BMO Capital Markets analyzed the contribution of each of Golden and ECU to the pro forma combined company with respect to net asset value (as defined below, the "NAV"), non-GAAP operating cash flow, ounces of production on a silver equivalent basis, measured and indicated resources and total resources on a silver equivalent basis, and current market capitalization. BMO Capital Markets analyzed the operating cash flow and production metrics for projected operating results for the fiscal year ending 2015 provided by Golden management. For the NAV, BMO Capital Markets utilized the projected operating results over the life-of-mine for both Golden and ECU's assets as provided by Golden management. Projected operating results were prepared by Golden and ECU management, respectively, and assumed no cost savings or other synergies.

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        The analyses yielded the following pro forma equity value contributions on a fully diluted in-the-money basis:

 
  Implied
Percentage
Contribution
   
 
 
  Implied
Exchange
Ratio
 
 
  Golden   ECU  

Pro forma metrics:

                   
 

NAV (5% Discount Rate)

    46 %   54 %   0.0501  
 

2015 operating cash flow

    39 %   61 %   0.0673  
 

2015 production of silver equivalent ozs

    36 %   64 %   0.0741  
 

Measured & indicated resources

    31 %   69 %   0.0946  
 

Total resources

    29 %   71 %   0.1051  
 

Current market capitalization

    44 %   56 %   0.0537  

Golden / ECU Transaction

   
46

%
 
54

%
 
0.0500
 

        NAV Overview.    To value Golden and ECU's key mining assets, El Quevar and the Velardeña Mining District respectively, BMO Capital Markets relied primarily on a discounted cash-flow ("DCF") analysis whereby it discounted the unlevered, after-tax, constant-dollar free cash flows of each asset over the life of the asset at different discount rates to generate present values. Based on a number of assumptions, each asset's real (or inflation-adjusted) discount rate was estimated and used to calculate the present value of the cash flows. All forecasts of free cash flow were based on Golden's management operating estimates, using consensus research analyst commodity price forecasts, and BMO Capital Markets' assessment thereof in the exercise of its professional judgment.

        Under the NAV approach, the value of El Quevar, the Velardeña Properties, and other mining assets are summed to produce a total asset value, from which is added or subtracted the company's financial assets and liabilities as well as an estimate of the present value of corporate general and administrative costs that were not directly assignable to the operating and development assets. The operating assumptions used in the DCF for both El Quevar and the Velardeña Properties are based on Golden's view of these two assets. These projections, as well as other estimates used by BMO Capital Markets in its analyses, were based on numerous variables and assumptions that are inherently uncertain, and accordingly, actual results could vary materially from those set forth in such projects.

        Accretion/Dilution Analysis.    BMO Capital Markets analyzed the expected pro forma impact of the Transaction on Golden's NAV per share on a fully diluted in-the-money basis, utilizing projections provided by Golden and ECU management teams which excluded any value ascribed to either anticipated expense synergies or further exploration upside. The analysis indicated that the Transaction would be accretive to Golden's stockholders on a NAV per share basis, excluding one-time Transaction costs associated with the transaction. Factoring in the estimated $13.0 million in transaction costs, the Transaction would be dilutive to Golden based on a NAV per share basis.

        Miscellaneous.    In performing its analyses, BMO Capital Markets made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of BMO Capital Markets, Golden or ECU. Any estimates contained in the analyses performed by BMO Capital Markets are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than those suggested by such analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, as described above, BMO Capital Markets' opinion was only one of several factors taken into consideration by Golden board of directors in making its determination to approve the Arrangement

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Agreement and the Plan of Arrangement. Consequently, BMO Capital Markets' analyses should not be viewed as determinative of the decision of Golden's board of directors or Golden's management with respect to the fairness of the consideration provided for in the Arrangement Agreement and the Plan of Arrangement.

        Golden retained BMO Capital Markets as its financial advisor based upon BMO Capital Markets' experience and expertise. BMO Capital Markets is a globally recognized investment banking and advisory firm. Pursuant to the terms of the engagement letter between Golden and BMO Capital Markets, Golden has agreed to pay BMO Capital Markets a transaction fee of approximately $3.5 million, $1.0 million of which was payable upon execution of the Arrangement Agreement and the rendering of its opinion, and approximately $2.5 million of which is contingent upon consummation of the Transaction. Golden also has agreed to reimburse BMO Capital Markets for reasonable expenses incurred by BMO Capital Markets in performing its services and to indemnify BMO Capital Markets and related persons and entities against liabilities, including liabilities under the U.S. federal securities laws, arising out of BMO Capital Markets' engagement.

        As part of its investment banking business, BMO Capital Markets is continually engaged in the valuation of businesses and their securities in connection with arrangements and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. BMO Capital Markets has consulted with Golden from time to time on various matters, although none of such prior consultations involved a formal engagement of BMO Capital Markets by Golden. In addition, certain of BMO Capital Markets' affiliates are providing, and may have in the past provided, corporate banking services to Golden, or its affiliates from time to time, and BMO Capital Markets or its affiliates may provide investment and corporate banking services to Golden, ECU and their respective affiliates in the future for which BMO Capital Markets or they may have received or will receive customary fees. BMO Capital Markets provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold securities, including derivative securities, of Golden or its affiliates for its own account and for the accounts of customers.


Voting Agreements

        During July 2011, ECU entered into a customary voting agreement with each of Golden's executive officers and expects to enter into such agreements with each of Golden's directors prior to the stockholder meeting. The voting agreement represents 271,661 shares of Golden common stock, or approximately 1.8% of the Golden common stock entitled to vote at the stockholder meeting.

        Pursuant to these voting agreements, each Golden director and officer party to such agreement committed to vote in favor of approving the Transaction and, among other things, to:

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Nothing contained in the voting agreements restricts, limits or prohibits a Golden director or officer from exercising his or her fiduciary duties to Golden in his or her capacity as a director or officer of Golden. During July 2011, Golden entered into a customary voting agreement with each of ECU's officers and directors. The voting agreement represents 4,923,226 ECU common shares, or approximately 1.5% of the ECU common shares entitled to vote at ECU's securityholder meeting, and 11,630,000 ECU options to purchase ECU common shares. The voting agreement between Golden and the ECU directors and officers contained provisions relating to the voting of ECU shares by those directors and officers which are substantially the same as those described above.


Court Approval

        Under the Business Corporations Act (Québec), the Transaction requires court and ECU securityholder approval. On July 14, 2011, ECU obtained an interim order from the Québec Court providing for the calling and holding of the ECU special meeting and other procedural matters. Subject to receipt of the requisite approvals of the Transaction by ECU and Golden securityholders at their respective special meetings, the hearing in respect of a final order from the Québec Court is expected to take place on or about August 31, 2011.


Canadian Securities Law Matters

        ECU is a reporting issuer in all of the provinces of Canada. ECU common shares currently trade on the Toronto Stock Exchange ("TSX") under the symbol "ECU" and the ECU Warrants issued in February 2009 currently trade on the TSX under the symbol "ECU.WT." After the Transaction, ECU common shares and the ECU Warrants will be delisted from the TSX, and Golden will apply to the applicable Canadian securities regulators to have ECU cease to be a reporting issuer. Golden is a reporting issuer in the provinces of Alberta, British Columbia and Ontario. Golden common stock is listed on the TSX under the symbol "AUM" and on the NYSE Amex under the symbol "AUMN." It is a condition of the Transaction that the shares of Golden common stock issued to ECU shareholders pursuant to the Transaction, and which are reserved for issue upon exercise of the Golden Replacement Options and Golden Replacement Warrants, be conditionally approved for listing on the TSX and listed on the NYSE Amex, and that the Golden Replacement Warrants issued to holders of ECU's February 2009 Warrants pursuant to the Transaction be conditionally approved for listing on the TSX.

        The issuance of Golden common stock, Golden Replacement Options and Golden Replacement Warrants pursuant to the Transaction, and the issuance of Golden common stock upon the exercise of such Golden Replacement Options and Golden Replacement Warrants, will constitute distributions of

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securities which are exempt from the prospectus requirements of Canadian securities laws. Such Golden common stock, Golden Replacement Options and Golden Replacement Warrants may be resold in each province and territory of Canada, provided: (i) that Golden is a reporting issuer in a jurisdiction of Canada for the four months immediately preceding the trade; (ii) the trade is not a "control distribution" as defined National Instrument 45-102, Resale of Securities as adopted by the Canadian Securities Administrators; (iii) no unusual effort is made to prepare the market or create a demand for those securities; (iv) no extraordinary commission or consideration is paid in respect of that trade; and (v) if the selling security holder is an insider (as such terms are defined in the Canadian securities laws) or officer of Golden, the insider or officer has no reasonable grounds to believe that Golden is in default of Canadian securities laws.


Interests of, and Potential Payments to, Directors and Officers in Connection with the Transaction.

        In considering the recommendation of the Golden board of directors that Golden stockholders vote to approve the Share Issuance Proposal, you should be aware that our directors and executive officers have interests in the Transaction that may be different from, or in addition to, those of our stockholders generally. The board of directors of Golden was aware of and considered these potential interests, among other matters, in evaluating, negotiating and approving the Arrangement Agreement and the Plan of Arrangement, and in recommending the approval of the Share Issuance Proposal.

        Pursuant to Golden's 2009 Equity Incentive Plan (the "Incentive Plan"), any unvested awards made under the Incentive Plan (including stock options, restricted stock and restricted stock units) will vest immediately prior to the closing of any transaction in which stockholders of Golden immediately prior to the transaction own less than 50% of the outstanding voting power of the company following the transaction. At the time of the Transaction, each of Golden's executive officers will hold unvested stock options and/or restricted stock pursuant to the Incentive Plan. In addition, each of Golden's non-executive directors will hold unvested stock options pursuant to the Incentive Plan and unvested restricted stock units pursuant to Golden's Non-Employee Directors Deferred Compensation and Equity Award Plan, which was established under the Incentive Plan. Because the Transaction will result in ECU shareholders owning at least 51% of the voting power of the combined company, all such unvested stock options, restricted stock, and restricted stock units will vest immediately prior to the consummation of the Transaction in accordance with the terms of the Incentive Plan.

        In addition, we have entered into a change of control agreement with each of our executive officers. The change of control agreements contain "double trigger" severance provisions pursuant to which certain payments will be made to the executive if his or her employment is terminated by us or the surviving company, as applicable, without cause, or by the executive with good reason, within two years following a change of control. For purposes of these agreements, "cause" is defined to include a substantial and repeated failure to perform duties as reasonably directed by the board of directors, and "good reason" is defined to include certain adverse changes in the nature or status of the executive's duties or certain decreases in the compensation of the executive. Because the Transaction will result in ECU shareholders owning at least 51% of the voting securities of the combined company, the closing of the Transaction will constitute a change of control under the agreements. Payments made under the agreements are based on a multiple of the executive's salary and target bonus. Our Chief Executive Officer would be entitled to receive three times his salary and target bonus and each of the other executive officers would be entitled to receive two times his or her salary and target bonus. In order to ensure that our executives actually receive the intended benefits, the change of control agreements provide that we will reimburse the executive officers for the amount of the excise tax, if any, imposed on the change of control benefits under Internal Revenue Code Section 4999. This payment will be equal to an amount such that after the executive officer timely pays the excise tax, his or her liability for all taxes would be the same as if this tax had not applied. Receipt of benefits upon termination

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would be subject to the execution of a general release of claims by the executive officer or his or her beneficiary.

        We do not expect the employment of any of our executive officers to be terminated in connection with the Transaction, and therefore do not expect to make any severance payments under the change of control agreements unless a qualifying termination subsequently occurs within two years of the closing of the Transaction.

Summary of Potential Payments to Golden's Directors and Officers

        Golden's directors will not receive any payments in connection with the Transaction. In connection with the Transaction, unvested restricted stock units held by our non-employee directors will vest. Directors will not be entitled to receive any shares vesting, but will be entitled to receive common stock upon retirement from the Board. Each non-employee director currently holds restricted stock units which will entitle such director to receive 2,871 shares of common stock. All of such awards will vest in connection with the Transaction.

        The following table indicates the estimated dollar amounts payable to Golden's named executive officers under the Incentive Plan and the change of control agreements described above upon the completion of the Transaction, assuming completion of the Transaction on September 2, 2011. Pursuant to SEC rules, amounts shown in the "cash," "perquisites/benefits" and "tax reimbursement" columns reflect an assumption that a qualifying termination of each executive's employment will occur contemporaneously with the closing of the Transaction. As described above, we do not expect the employment of any of our executive officers to terminate in connection with the Transaction, and therefore do not expect to make these payments unless a qualifying termination subsequently occurs within two years of the closing of the Transaction. Amounts shown in the "equity" column reflect the aggregate dollar value of previously awarded stock amounts and in-the-money option awards that will vest upon the closing of the Transaction, and are not new equity awards.

Name Executive Officer
  Cash Payable
Upon
Qualifying
Termination
($)(1)
  Equity
($)(2)
  Pension/
NQDC
($)
  Perquisites/
Benefits
($)(3)
  Tax
Reimbursements
($)
  Total
($)
 

Jeffrey G. Clevenger

    2,362,500     2,158,880     0     42,722     0     4,564,102  

Jerry W. Danni

    900,000     700,315     0     47,787     0     1,648,102  

Robert P. Vogels

    750,000     606,395     0     47,787     0     1,404,182  

Robert B. Blakestad

    750,000     613,723     0     47,787     0     1,411,510  

Deborah J. Friedman

    480,000     397,354     0     (4)   0     877,354  

(1)
Represents a multiple of the executive officer's base salary and target bonus as described above; the relevant amount must be paid in a lump sum within 10 business days after the date of termination of employment. Amounts in this column will not be paid unless a qualifying termination occurs within two years following the Transaction.

(2)
Represents the aggregate dollar value of stock awards, and in-the-money option awards, for which vesting will occur upon the closing of the Transaction, assuming a per share price of $18.32 for Golden common stock (the average closing market price on the NYSE Amex over the first five business days following the first public announcement of the Transaction on June 24, 2011). Amounts in this column vest regardless of whether there is a concurrent or subsequent termination event.

(3)
Following a qualifying termination, we will pay, on each executive's behalf, the portion of premiums of Golden's group health insurance, including coverage for his or her eligible dependents, that Golden paid immediately prior to the date of termination ("COBRA Payments")

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(4)
Since May 2009, Ms. Friedman has devoted approximately half her time to service as our Senior Vice President, General Counsel and Corporate Secretary and approximately half her time to her legal practice at Davis Graham & Stubbs LLP, where she is a partner. Ms. Friedman is not employed by Golden and does not receive health or other insurance benefits from us.

Summary of Potential Payments to ECU Directors and Officers in Connection with the Transaction

        ECU has informed Golden that it has entered into a Change of Control Bonus Agreement with each of Michel Roy, the current Chairman and Chief Executive Officer of ECU, and Stephen Altmann, ECU's President. Under the terms of the Change of Control Bonus Agreements, upon consummation of the Transaction, Mr. Roy is entitled to receive Cdn$1.5 million and Mr. Altmann is entitled to receive Cdn$1.25 million. It is anticipated that Mr. Roy will agree to waive this payment and instead receive Cdn$1.5 million in shares of Golden common stock. In addition, as described below, in connection with the anticipated terms of Mr. Altmann's employment with Golden following the Transaction, it is anticipated that Mr. Altmann will waive the benefit of this payment and instead receive Cdn$1.25 million in Golden restricted stock, of which 40%, 40% and 20% would vest on the first, second and third anniversaries, respectively, of the grant date, or 100% upon termination of Mr. Altmann's employment with Golden.

        In addition to the Change of Control Bonus Agreements with Messrs. Roy and Altmann, the ECU board of directors has approved a discretionary pool of Cdn$500,000 to be paid, in the discretion of Messrs. Roy and Altmann, to certain officers or employees of ECU upon consummation of the Transaction. The recipients of the payments from this discretionary bonus pool have not been determined, but it is anticipated that Dwight Walker, ECU's Chief Financial Officer, would receive a payment of Cdn$150,000. Neither Mr. Roy nor Mr. Altmann are eligible to receive payments from this

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discretionary bonus pool. Amounts payable to Mr. Roy, Mr. Altmann and Mr. Walker in connection with the Transaction are shown in the table below:

Name
  Cash
(Cdn$)
  Equity
(Cdn$)
  Pension/
NQDC
  Perquisites/
Benefits
(Cdn$)
  Tax
Reimbursements
(Cdn$)
  Total
(Cdn$)
 

Michel Roy

    1,500,000 (1)                   1,500,000  

Stephen Altmann

    1,250,000 (1)                   1,250,000  

Dwight Walker

    600,000 (2)                   600,000  

(1)
As noted above, it is anticipated that Mr. Roy will agree to waive his payment and instead receive Cdn$1.5 million in shares of Golden common stock. In addition, it is anticipated that Mr. Altmann will waive his payment and instead receive Cdn$1.25 million in Golden restricted stock, of which 40%, 40% and 20% would vest on the first, second and third anniversaries, respectively, of the grant date, or 100% upon termination of Mr. Altmann's employment with Golden. The number of shares to be issued to Mr. Roy and Mr. Altmann in lieu of their cash change of control payments will be determined on the closing date based on the five-day volume weighted average price of Golden's common stock on the NYSE Amex immediately prior to such date. Based on the closing price of $17.42 for Golden's common stock on the NYSE Amex on July 26, 2011 (and the currency exchange rate on such date), 91,128 shares would be issued to Mr. Roy and 75,940 shares would be issued to Mr. Altmann.

(2)
Amount shown reflects Cdn$450,000 for severance payable to Mr. Walker under the terms of his employment agreement as a result of his termination in connection with the Transaction, and Cdn$150,000 that is anticipated to be awarded to Mr. Walker under the discretionary change of control bonus pool.

        In addition to the payments described above, the board of directors of ECU has approved the payment of certain amounts to Messrs. Roy and Altmann, as well as other members of ECU's management team, as compensation for past services. The payments are in lieu of option awards that ECU planned to award to the individuals; ECU had previously concluded that such option awards were not advisable because of ECU's ongoing review of strategic alternatives. The cash payments are equal to Cdn$175,000 for Mr. Roy, Cdn$150,000 for Mr. Altmann, and $100,000 in the aggregate for the remaining members of ECU's management team, as determined in the discretion of Messrs. Roy and Altmann. It is anticipated that ECU will make these payments prior to the consummation of the Transaction. These payments are not contingent upon the completion of the Transaction.

        Finally, the board of directors of ECU has approved the payment of certain amounts to each of the two independent directors of ECU as consideration for past services. The cash payments are equal to Cdn$12,000 (representing Cdn$3,000 per quarter for the last four calendar quarters), plus an additional cash payment of Cdn$50,000. This Cdn$50,000 payment is in lieu of option awards that ECU planned to award to the directors. It is anticipated that ECU will make these payments prior to the consummation of the Transaction. ECU advises that these payments are consistent with ECU's ordinary pay practices and are not contingent upon the completion of the Transaction.

Stephen Altmann Employment Arrangements

        In connection with the Transaction, Golden intends to offer Mr. Altmann the position of President, with an annual salary of $350,000, an annual target bonus equal to 50% of annual salary and an annual target equity award valued at 100% of annual salary. Mr. Altmann would waive benefits under his Change of Control Bonus Agreement with ECU and the Cdn$1.25 million bonus to be paid by ECU upon completion of the Transaction, and would instead receive Cdn$1.25 million in Golden restricted stock, of which 40%, 40% and 20% would vest on the first, second and third anniversaries, respectively,

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of the grant date, or 100% upon termination of Mr. Altmann's employment for any reason. The number of shares to be issued to Mr. Altmann in lieu of his cash change of control payment will be determined on the closing date based on the five-day volume weighted average price of Golden's common stock on the NYSE Amex immediately prior to such date. Based on the closing price of $17.42 for Golden's common stock on the NYSE Amex on July 26, 2011 (and the currency exchange rate on such date), 75,940 shares would be issued to Mr. Altmann. Mr. Altmann would be offered a change of control agreement on the same terms as the change of control agreements with Golden's other executive officers, including an enhanced severance payment of 200% of target salary and bonus in the event of termination following a change of control, and would be eligible to participate in all other benefits available generally to all salaried employees of Golden.

        Mr. Altmann's responsibilities initially, in conjunction with Mr. Clevenger, would be the development and implementation of the growth plans of the combined company. Mr. Altmann would also have primary responsibility for investor relations.

Pro Forma Economic Ownership of Golden

        Upon completion of the Transaction, we estimate that former stockholders of ECU will own approximately 51% of the outstanding common stock of the combined company and that current Golden stockholders will own approximately 49%, assuming that no outstanding ECU options and warrants and any Replacement Options and Replacement Warrants are exercised before the consummation of the Transaction. Assuming that all such warrants and options are exercised before the consummation of the Transaction, former stockholders of ECU would own approximately 55% of the outstanding stock of the combined company on a fully diluted basis, while the current Golden stockholders would own approximately 45%.

Dissenting Stockholder Rights

        Under applicable Delaware laws and U.S. securities laws, Golden stockholders are not entitled to dissenters' appraisal rights with respect to any matters to be acted upon at the Golden special meeting. Any registered holder of ECU common shares who properly dissents at the ECU special meeting in accordance with the Business Corporations Act (Québec) and the Plan of Arrangement will be entitled, in the event the Transaction becomes effective, to be paid by Golden, in accordance with the terms of the Plan of Arrangement, the fair value of the ECU common shares held by such dissenting ECU stockholder, determined by the Québec Court as of the close of business on the day before the ECU stockholder approval of the Transaction is obtained. If ECU shareholders holding greater than 5% of the outstanding ECU shares exercise dissenters' rights, Golden will not be obligated to consummate the Transaction.

Fees, Costs and Expenses

        Except as otherwise noted herein, all fees, costs and expenses incurred in connection with the Transaction will be paid by the party incurring those expenses.

Accounting Treatment

        Golden will account for the Transaction under U.S. GAAP as an acquisition of ECU by Golden. As required under U.S. GAAP, we considered all pertinent facts and circumstances in identifying Golden as the acquiring entity for accounting purposes. These facts and circumstances include the relative voting rights in the combined company of former holders of ECU common shares and holders of Golden common stock prior to the combination, the composition of the board of directors of the combined company and the terms of the exchange of Golden common stock for ECU common shares. The purchase price will be allocated to ECU's identifiable assets and liabilities based on their estimated

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fair market values at the date of the completion of the Transaction, and any excess of the purchase price over those fair market values will be allocated to mining properties. Final valuations of property, plant and equipment, mining properties and intangible and other assets have not yet been completed as management is still reviewing the existence, characteristics and useful lives of ECU's tangible and intangible assets. The completion of the valuation work could result in significantly different amortization expenses and balance sheet classifications. After completion of the Transaction, the results of operations of ECU will be included in the consolidated financial statements of Golden.

Material U.S. Federal Income Tax Consequences

        There are no material U.S. federal income tax consequences to Golden's current stockholders that will result from Golden's acquisition of ECU or the issuance of Golden common stock pursuant to the Transaction.

Supplemental Listings on NYSE Amex and TSX

        In connection with the Transaction, Golden has agreed to obtain conditional listing approval from the NYSE Amex and the TSX for the Golden common stock that will be issued in the Transaction, including the Golden common stock issuable upon exercise of the Golden Replacement Options and Golden Replacement Warrants. Golden has also agreed to obtain conditional approval for the listing and posting for trading on the TSX of the Golden Replacement Warrants issued to replace the February 2009 ECU Warrants.

Issuance and Resale of Golden Common Stock

        The Golden common stock to be issued pursuant to the Transaction has not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction. The Golden common stock to be issued in the Transaction will be issued pursuant to an exemption from the prospectus requirements of Canadian securities law and from the registration requirements provided by Section 3(a)(10) of the Securities Act based on the approval of the Plan of Arrangement by the Québec Court.

        Section 3(a)(10) of the Securities Act exempts securities issued in exchange for one or more bona fide outstanding securities from the general requirement of registration where the fairness of the terms and conditions of the issuance and exchange of the securities have been approved by any court or authorized governmental entity, after a hearing upon the fairness of the terms and conditions of exchange at which all persons to whom the securities will be issued have the right to appear and to whom adequate notice of the hearing has been given. If the Québec Court approves the Plan of Arrangement, its approval will constitute the basis for the Golden Replacement Options and Golden Replacement Warrants to be issued without registration under the Securities Act in reliance on the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) of the Securities Act.

        On July 14, 2011, the Québec Court issued the interim order and, subject to the approval of the Plan of Arrangement by the ECU Securityholders and the approval of the Share Issuance Proposal by the Golden stockholders, a hearing for the Québec Court's final order on the fairness of the Transaction will be held on or about August 31, 2011.

        Section 3(a)(10) of the Securities Act does not exempt the issuance of Golden common stock upon exercise of the Replacement Options or Replacement Warrants from the registration requirements of the Securities Act. Accordingly, pursuant to the terms of the Arrangement Agreement, Golden has agreed to file with the SEC a registration statement on Form S-8 and a registration statement on Form S-3 to register the Golden shares issuable upon the exercise of the Replacement Options and Replacement Warrants, respectively.

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ARRANGEMENT MECHANICS

Payment of Consideration

(a)
Following receipt of the Final Order and prior to the filing of the Articles of Arrangement with the Enterprise Registrar, Golden shall deposit with the Depositary in escrow, for the benefit of holders of ECU Securities, sufficient funds, shares of Golden common stock and Golden Replacement Warrants in the aggregate amounts necessary to pay the Consideration required by the Plan of Arrangement.

(b)
Subject to surrender to the Depositary for cancellation of a holder's ECU Share certificate or ECU Warrant certificate, together with the duly completed and executed Letter of Transmittal and such additional documents and instruments as the Depositary may reasonably require, following the Effective Time the holder of such surrendered certificate shall be entitled to receive the Consideration to which such holder is entitled under the Plan of Arrangement, less any amounts required to be deducted and withheld under applicable Laws in respect of taxes, and any certificate so surrendered shall forthwith be cancelled.

(c)
Until surrendered, each ECU Share certificate or ECU Warrant certificate shall be deemed after the Effective Time to represent only the right to receive, upon such surrender, the Consideration to which the holder thereof is entitled in lieu of such certificate under the Plan of Arrangement, less any amounts required to be deducted and withheld under applicable Laws in respect of taxes. Any such certificate formerly representing ECU Shares or ECU Warrants not duly surrendered on or before the sixth anniversary of the Effective Date shall cease to represent a claim by, or interest of, any former holder of ECU Shares or ECU Warrants of any kind or nature against or in ECU or Golden and be deemed to have been surrendered to Golden and shall be cancelled.

(d)
Any right or claim to payment pursuant to the Plan of Arrangement that remains outstanding on the sixth anniversary of the Effective Date shall cease to represent a right or claim of any kind or nature whatsoever and the right of the former ECU Securityholder to receive the Consideration pursuant to the Plan of Arrangement shall terminate and be deemed to be surrendered and forfeited, for no consideration, to Golden.

(e)
No holder of ECU Securities shall be entitled to receive any consideration with respect to its ECU Securities other than the Consideration in accordance with the Plan of Arrangement and, for greater certainty, no such holder will be entitled to receive any interest, dividends, premium or other payment in connection therewith.


Withholding Rights

        Golden, ECU and the Depositary, as applicable, shall be entitled to deduct and withhold from any Consideration payable or otherwise deliverable to any former holder of ECU Securities such amounts as they may be required to deduct and withhold therefrom under any provision of applicable Laws in respect of applicable taxes. Any such deducted and withheld amounts shall be treated as having been paid to the person to whom such amounts would otherwise have been paid.


No Fractional Securities will be issued

        No fractional shares of Golden common stock, fractional Golden Replacement Options or fractional Golden Replacement Warrants shall be issued to any person pursuant to the Plan of Arrangement. Instead, the number of shares of Golden common stock or the number of Golden Replacement Options or Golden Replacement Warrants to be issued to any person shall be rounded up or down, as applicable, to the nearest whole share of Golden common stock. In calculating such fractional interests, all ECU Shares, ECU Options or ECU Warrants, as applicable, registered in the name of or beneficially held by an ECU Securityholder or its nominee shall be aggregated.

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Distributions with Respect to Unsurrendered Certificates

        No dividend or other distribution declared or paid after the Effective Time with respect to Golden common stock shall be delivered to the holder of any certificate formerly representing ECU Shares unless and until the holder of such certificate shall have complied with the provisions of the Plan of Arrangement in respect of the surrender of such certificates. Subject to applicable law and to the Plan of Arrangement, at the time of such compliance, there shall, in addition to the delivery of the Consideration to which such holder is thereby entitled, be delivered to such holder, without interest, the amount of any dividend or other distribution declared or made after the Effective Time with respect to the Golden common stock to which such holder is entitled in respect of such holder's Consideration.

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THE ARRANGEMENT AGREEMENT

        The Transaction will be carried out pursuant to the Arrangement Agreement and the Plan of Arrangement. The following is a summary of the principal terms of the Arrangement Agreement. This summary does not purport to be complete and is qualified in its entirety by reference to the Arrangement Agreement, which has been filed by Golden on EDGAR at www.sec.gov and on SEDAR at www.sedar.com, and is appended hereto as Annex B.

        The Arrangement Agreement contains representations and warranties made by ECU and Golden. These representations and warranties were made by and to the parties thereto for the purposes of the Arrangement Agreement and are subject to the limitations and qualifications agreed to by the parties in connection with negotiating and entering into the Arrangement Agreement. In addition, these representations and warranties were made as of specified dates, may be subject to a contractual standard of materiality different from what may be viewed as material to Golden Stockholders or may have been used for the purpose of allocating risk between the parties rather than for the purpose of establishing facts. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Arrangement Agreement.

        On June 24, 2011, ECU and Golden entered into the Arrangement Agreement, pursuant to which ECU and Golden agreed that, subject to the terms and conditions set forth in the Arrangement Agreement, Golden will acquire all of the issued and outstanding ECU Shares, ECU Options and ECU Warrants. As a result of the Transaction, each ECU Shareholder (other than Dissenting Shareholders and Golden) will receive 0.05 of a share of Golden common stock and $0.000394 in cash for each ECU Share held. The terms of the Arrangement Agreement are the result of arm's length negotiation between ECU and Golden and their respective advisors.


Conditions Precedent to the Transaction

Mutual Conditions

        The obligations of the parties to complete the Transaction are subject to the satisfaction of each of the following conditions, each of which may only be waived with the mutual consent of ECU and Golden:

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Additional Conditions in Favor of Golden

        The obligation of Golden to complete the Transaction is subject to the satisfaction of the following additional conditions (each of which is for the exclusive benefit of Golden and may be waived by Golden):

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Additional Conditions in Favor of ECU

        The obligation of ECU to complete the Transaction is subject to the satisfaction of the following additional conditions (each of which is for the exclusive benefit of ECU and may be waived by ECU):

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Covenants

Covenants

        ECU and Golden have each given, in favor of the other Party, usual and customary mutual covenants for an agreement of this nature including mutual covenants to conduct their respective businesses in the usual and ordinary course, to use their respective commercially reasonable efforts to satisfy or cause the satisfaction of the conditions precedent to their respective obligations under the Arrangement Agreement to the extent they are within such Party's control and to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable under applicable Laws to complete the Transaction.

Mutual Non-Solicitation Covenants

        Golden and ECU have each agreed that it will not, directly or indirectly, solicit, initiate, facilitate, or encourage the initiation of any inquiries or proposals, participate in any discussions or negotiations, or accept or enter into any agreement, understanding or arrangement regarding, or that may reasonably be expected to lead to, an Acquisition Proposal in respect of Golden or ECU, as applicable.

Adverse Recommendation Change

        ECU or Golden may each make an ECU Board Change in Recommendation or a Golden Board Change in Recommendation, as applicable, (i) following receipt of an Acquisition Proposal that it determines to be a Superior Proposal or (ii) solely in response to any Intervening Event, in each case if it determines in good faith, after consultation with its legal advisors, that the failure to take such action would be inconsistent with its fiduciary duties under applicable Law.

Superior Proposal; Right to Match or Respond to a Potential Adverse Recommendation Change

        Upon payment of the ECU Termination Fee, the ECU Board may terminate the Arrangement Agreement in order to accept and enter into an agreement in respect of an Acquisition Proposal that the ECU Board in good faith, after consultation with its financial and outside legal advisors, has determined is a Superior Proposal. Golden will have the right, but not the obligation, to amend the terms of the Transaction upon notification by ECU of a Superior Proposal or Intervening Event, as applicable, within a five (5) Business Day response period.

        Upon payment of the Golden Termination Fee, the Golden Board may terminate the Arrangement Agreement in order to accept and enter into an agreement in respect of an Acquisition Proposal that the Golden Board in good faith after consultation with its financial and outside legal advisors has determined is a Superior Proposal. ECU will have the right, but not the obligation, to amend the terms of the Transaction upon notification by Golden of a Superior Proposal or Intervening Event, as applicable, five (5) Business Day response period.

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Termination of the Arrangement Agreement

        The Arrangement Agreement may be terminated and the Transaction may be abandoned at any time prior to the Effective Time (notwithstanding any approval of the Arrangement Agreement or the Arrangement Resolution by ECU Shareholders or the ECU Securityholders or the Transaction by the Québec Court or the approval by the Golden Stockholders of the Golden Meeting Resolution):

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Termination Fee

ECU Termination Fee

        ECU will pay the ECU Termination Fee in the amount of Cdn$10,000,000 to Golden if an ECU Termination Fee Event occurs, meaning the termination of the Arrangement Agreement:

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Golden Termination Fee

        Golden will pay the Golden Termination Fee in the amount of Cdn$10,000,000 to ECU if a Golden Termination Fee Event occurs, meaning the termination of the Arrangement Agreement:

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Expense Reimbursement

        In the event the Arrangement Agreement is terminated:


Amendment of the Plan of Arrangement

        The Plan of Arrangement may be amended, modified and/or supplemented as follows:

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THE COMBINED COMPANY UPON COMPLETION OF THE TRANSACTION

        Upon completion of the Transaction, ECU will become a wholly-owned subsidiary of Golden. The business and operations of Golden and ECU will be consolidated and the principal executive office of the combined company will be at Golden's current office in Golden, Colorado at 350 Indiana Street, Suite 800, Golden, Colorado, 80401, and the registered office will be the Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801.


Business of the Combined Company

ECU's Velardeña Properties, Durango, Mexico

        Following completion of the Transaction, Golden plans to continue to operate the mines on the Velardeña Properties and to advance the expansion of these operations as currently being considered by ECU. In 2010, the mines on the Velardeña Properties produced approximately 380,000 ounces of silver, 10,000 ounces of gold, 182,000 pounds of zinc, and 155,000 pounds of lead. In the first quarter of 2011, the mines on the Velardeña Properties produced approximately 79,000 ounces of silver, 1,900 ounces of gold, 43,000 pounds of zinc, and 47,000 pounds of lead. Golden has developed a plan to test potential improvements to the grinding and process controls and optimization of certain circuit retention times that could result in low cost productivity improvements in the existing oxide plant. Golden is developing a plan for grade control in the mines that could improve the grade of ore processed through the oxide plant.

        Golden has developed a metallurgical testing plan focused on improving metal recoveries and product (concentrate) qualities for the planned sulfide plant. Golden intends to conduct various test work to determine optimal metallurgical characteristics of both the oxide and sulfide ores. For the planned sulfide plant, crushing, grinding and flotation parameters would be examined to produce a process flow sheet which optimizes value from the silver, gold, lead and zinc minerals contained in the deposit. Following completion of this work, Golden expects to produce a NI 43-101 compliant Preliminary Economic Assessment. Current target production rates for the anticipated new sulfide plant are approximately 2000 tonnes per day. Golden's current preliminary estimate of the cost to complete a 2000 tonne per day sulfide plant and associated 7500 meters of underground mine development is approximately $120 million, with testwork, engineering and construction and mine development being completed over about a three year period. The new sulfide plant is currently expected to produce annually approximately 4 million silver ounces, 70,000 gold ounces and 15 to 20 million pounds each of lead and zinc. Golden currently expects that the existing oxide plant would continue to operate while the new sulfide plant is built and may continue to operate following commencement of production from the new sulfide plant.

Golden's El Quevar Project, Salta, Argentina

        Golden has been focused on advancing its El Quevar silver project and has completed more than 820 meters of development drifting. The drifting has encountered a large number of mineralized structures believed to be tension faults that were not anticipated in the current model of the El Quevar deposit, in which mineral concentrations are modeled to follow the alteration envelope. As a result, we decided to delay completion of a NI 43-101 compliant Preliminary Economic Assessment and a planned mid-year 2011 resource update to allow further work to assess the impact that these newly discovered structures may have on the mining plan and global El Quevar resource.

        As part of this effort, Golden is currently examining the bulk mining potential of the Yaxtché zone at El Quevar. Preliminary engineering indicates that an open pit could be feasible on the eastern end of the Yaxtché zone and Golden is performing an optimization analysis of the potential pit. Following completion of these analyses, Golden plans to examine the potential for bulk underground mining of the higher grade western zone. We may reduce our level of activity in advancing the drift until this

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work has been completed, as the open pit would encompass the area through which the drift would advance. Golden has targeted the fourth quarter 2011 for a resource update based on the bulk mining studies. If these efforts are successful, Golden plans to proceed with a NI 43-101 compliant Preliminary Economic Assessment in the first half of 2012.

Golden's Pánuco Exploration Target, Zacatecas, Mexico

        Golden has commenced a third drilling program at its Pánuco exploration target at the Zacatecas properties in the state of Zacatecas, Mexico. Results from the first two rounds of drilling have identified a vein system striking one and a half kilometers with silver grades up to one kilogram per tonne over more than a meter. More than 70 percent of the approximately 48 holes drilled in the first two drilling programs encountered silver mineralization averaging about 270 grams of silver per tonne. The third drilling program is planned to include an additional 40 to 50 holes for a total of approximately 100 holes. Golden expects that the results of the three drilling programs will support preparation of a NI 43-101 compliant estimate in the first half of 2012.

Other Golden Exploration Properties

        Golden is also advancing other exploration properties, and is currently focused on the three prospects described below.

        At the Cochabamba silver prospect in the Ancash Province of Peru, Golden is preparing for a 10 hole program to test an outcropping vein system of more than 1.5 kilometers in length characterized by quartz and carbonate vein material containing gold, silver and base metals. Surface and limited underground sampling has returned up to 10 grams per tonne gold, 450 grams per tonne silver and more than 3% combined lead and zinc. A similar occurrence ten kilometers to the northeast is characterized by a high grade resource averaging 17 grams per tonne gold and 450 grams per tonne silver.

        At the Atlas gold prospect in the Santa Cruz Province of Argentina, Golden is conducting field geologic work to prepare for a 10 to 20 drill hole program prior to year-end 2011. Golden has identified a system at Atlas characterized by epithermal veins in a zone about 1.5 kilometers in length and 40 meters width where surface channel sampling has returned gold values ranging from 0.5 grams to 10 grams per tonne gold.

        At the La Pinta prospect, directly south of Goldcorp's Penasquito mine in Zacatecas state, Mexico, Golden is conducting a geophysical survey in an attempt to define the source of intrusive float anomalous in zinc and silver and up to three grams per tonne gold found on the top of a ridge in the center of the property. Depending on the results of this survey, Golden may drill the prospect in the later part of the year.


Directors and Officers of the Combined Company

        The current directors and officers of Golden will continue to serve as the directors and officers of Golden after the completion of the Transaction, with the following changes:

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Capital Structure

        If the Charter Amendment Proposal is not approved by our stockholders at the special meeting, or if the Charter Amendment Proposal is approved but the Share Issuance Proposal is not approved, the authorized capital of Golden will continue to consist of 50,000,000 shares of common stock, $0.01 par value, and 10,000,000 shares of preferred stock, $0.01 par value. If the Charter Amendment Proposal is approved by our stockholders at the special meeting and the Transaction is consummated, the authorized capital of Golden will consist of 100,000,000 shares of common stock, $0.01 par value, and 10,000,000 shares of preferred stock, $0.01 par value. In either event, the rights and restrictions of the classes of capital stock of Golden will not be affected by the Transaction.

        In connection with the Transaction, ECU shareholders will receive 0.05 shares of Golden common stock and Cdn$0.000394 in cash for each ECU common share held immediately prior to the consummation of the Transaction. As of June 24, 2011, the date of the Arrangement Agreement, ECU had 317,081,333 shares outstanding and an additional 3,000,000 shares were issued by ECU after that date as payment for the prior exercise of an option to purchase an exploration property. Assuming that no ECU options or warrants are exercised after June 24, 2011, ECU would have 320,081,333 shares outstanding, and Golden would issue approximately 16,004,066 shares to ECU shareholders at closing. The exact number of shares issued at closing will be subject to adjustment for rounding. In addition, an estimated 167,068 shares of Golden common stock would be issued, in the aggregate, to Mr. Roy and Mr. Altmann in lieu of their cash change of control payments. The exact number of shares to be issued will be determined on the closing date based on the five-day volume weighted average price of Golden's common stock on the NYSE Amex immediately prior to such date. Also, as further discussed below, assuming that none of the ECU options or warrants are exercised prior to the closing date, 661,750 Golden shares would be issuable upon exercise of Golden Replacement Options and 2,218,292

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Golden shares would be issuable upon exercise of Golden Replacement Warrants. A summary post-Transaction equity capitalization table is set forth below:


Golden Minerals
Summary Equity Capitalization Table(1)

Outstanding Common Stock Following Transaction:

    31,306,741  

Shares Issued in Lieu of ECU Change of Control Obligations

    167,068  

Shares Issuable Upon Exercise of Options and Restricted Stock Units Outstanding under Golden's Incentive Plan:

    197,720  

Shares Issuable Upon Exercise of Golden Replacement Options:

    661,750  

Shares Issuable Upon Exercise of Golden Replacement Warrants:

    2,218,292  

Total Fully-Diluted Common Stock:

    34,551,571  

(1)
Amounts shown assume that no ECU options or warrants or Golden options are exercised prior to the closing date.

Golden Replacement Options

        As of June 24, 2011, ECU had a total of 13,235,000 outstanding options to purchase common shares. All ECU options are vested and currently exercisable.

        Effective at the closing of the Transaction, Golden plans to adopt a stock option plan containing substantially the same terms as the existing ECU Stock Option Plan, and the Golden Replacement Options will be issued pursuant to this plan. Other than the Golden Replacement Options, no awards will be made pursuant to this plan.

        The ECU options were issued to employees, directors or consultants of ECU. Upon termination of employment or other service to the company, the ECU options are exercisable until the earlier of (i) the original expiration date for the options, (ii) 90 days following the termination of employment or service (or, for persons engaged in certain investor relations activities, 30 days following termination of employment or service), or (iii) in the event of the optionholder's death, 12 months following the date of death. The expiration date of the Golden Replacement Options will be identical to the expiration date of the ECU options for which they are exchanged, provided, however, that the Golden Replacement Option Plan will provide that if any optionholder ceases to be an employee, officer, director or consultant of ECU within 180 days following the closing date, the expiration date for the Golden Replacement Options held by such person will be the earlier of (i) the original expiration date for the options, or (ii) two years following the closing date.

        If none of the ECU options are exercised prior to the closing date, the Golden Replacement Options issued to the optionholders would be issuable for an aggregate of approximately 661,750 shares of Golden common stock. The exact number of shares issuable upon exercise of the Golden

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Replacement Options would be subject to adjustment for rounding. The number of shares and expiration date of the Golden Replacement Options are set forth in the table below:

Expiration Date
  Number of Golden
Replacement
Options
  Exercise Price
(Cdn$)
 

September 24, 2011

    30,000     31.80  

December 21, 2011

    100,000     60.00  

October 10, 2012

    255,750     48.00  

November 19, 2012

    7,500     48.00  

July 25, 2013

    142,500     34.00  

October 22, 2014

    126,000     16.00  
             

TOTAL

    661,750        

Golden Replacement Warrants

        As of June 24, 2011, ECU had outstanding warrants exercisable for a total of 44,365,826 common shares, including 36,638,576 ECU Warrants issued in February 2009 and 7,727,250 ECU Warrants issued in December 2009. Assuming that none of the ECU Warrants are exercised prior to the closing date, the Golden Replacement Warrants issued to the ECU warrantholders would be issuable for an aggregate of approximately 2,218,292 shares of Golden common stock. The exact number of shares issuable upon exercise of the Golden Replacement Warrants would be subject to adjustment for rounding. The number of warrant shares, expiration date and exercise price for the Golden Replacement Warrants are set forth in the table below:

 
  Expiration Date   Shares Issuable
Upon Exercise of
Golden
Replacement
Warrants
  Exercise Price
(Cdn$)
 

February 2009 ECU Warrants

  February 20, 2014     1,831,929     19.00  

December 2009 ECU Warrants

  December 9, 2011     386,363     18.00  
                 

TOTAL

        2,218,292        

        The February 2009 ECU Warrants currently trade on the TSX under the symbol "ECU.WT." After the Arrangement, the February 2009 ECU Warrants will be delisted from the TSX and as a condition of the Arrangement, Golden will apply for listing on the TSX of the Golden Replacement Warrants issued to replace the February 2009 ECU Warrants.


Unaudited Pro Forma Combined Condensed Financial Statements

        The Golden unaudited pro forma combined condensed financial information as of March 31, 2011, for the three-month period then ended and for the fiscal year ended December 31, 2010, is attached as Annex E to this proxy statement. The pro forma financial information is presented to show the results of operations and financial position of Golden as if the Transaction had occurred as of January 1, 2010, and with respect to the balance sheet, as if the Transaction had occurred as of March 31, 2011.

Liquidity and Capital Resources of the Combined Company

        At March 31, 2011 our aggregate cash and short-term investments totaled $106.1 million, which included $104.3 million of cash and cash equivalents and $1.8 million of short-term investments. Our cash and short-term investment balance is lower than the $121.6 million in similar assets held at December 31, 2010 due to approximately $16.9 million spent during the three months ended March 31, 2011 on the El Quevar project, exploration and general and administrative activities, including changes

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in working capital, offset partially by the receipt of approximately $1.4 million of common shares in Apogee Silver Ltd. ("Apogee") in connection with our sale to Apogee of the Golden subsidiary holding the Paca Pulacayo property.

        As of July 13, 2011, Golden held Cdn$15.0 million of ECU 0.0% senior unsecured convertible notes, which it received in exchange for Cdn$15.0 million of cash invested in ECU through a private placement. The proceeds of the convertible notes are intended to be used by ECU for general corporate purposes and for ongoing exploration, development, and operations at Velardeña until closing of the proposed Transaction, to the extent that current ECU cash flows from the sale of doré and concentrates are not sufficient to fund those expenditures. Among the ECU expenditures which may be funded from the proceeds of the convertible notes are expenditures related to the Transaction and for scheduled debt service. Golden anticipates that ECU's current cash flow from sales will be sufficient to fund ongoing operations at Velardeña until closing of the Transaction. However, Golden anticipates that prior to closing ECU will spend approximately Cdn$12.5 million of the proceeds from the convertible notes for costs related to exploration and capital equipment at Velardeña, ECU corporate overhead, debt service, and costs related to the Transaction, including bankers and attorneys fees. Following the closing of the Transaction, the remaining Cdn $2.5 million of proceeds from the convertible notes would, unless used for other purposes, be available for Golden's general use.

        With our cash and investment balance at March 31, 2011 of $106.1 million, and assuming that we are able to close the Transaction prior to the end of September 2011, we plan to spend the following amounts during the remaining nine months of 2011 pursuant to our long-term business strategy:

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        We plan to fund the expenditures described above from our cash and investment balances at March 31, 2011 of $106.1 million and from approximately $0.3 million from royalties and other income through the end of 2011. Based on these projections we would end the year 2011 with cash and investment balances of approximately $30.0 to $33.0 million.

        The actual amount that we spend through the end of 2011 may vary significantly from the amounts specified above, and will depend on a number of factors, including the results of our continued exploration activities and project assessment work at El Quevar and our other exploration properties, and the results of continuing operations and further development work and project assessment work at Velardeña. There can be no assurance the expenditures planned for El Quevar or Velardeña will demonstrate the economic viability of either project.

        If economic studies at either the El Quevar or Velardeña projects are positive, significant additional capital would be required to complete development and plant construction associated with the projects. To fund completely either project or other exploration drilling programs beyond 2011 we will have to raise additional capital or enter into other financing arrangements. The Sentient Group has expressed an interest in investing further capital in the combined company in order to maintain its current ownership of approximately 19%, which could generate approximately $67.0 million in additional cash at $17.42 per share, which was Golden's closing stock price on the NYSE Amex on July 26, 2011. However, no agreement has been reached with Sentient, and it is uncertain whether an additional investment by Sentient will occur, the number of Golden shares that would be purchased, or the amount of cash that would be generated by the investment if it were to occur. There can be no assurance that we will be successful in raising additional capital or obtaining financing in the future on terms acceptable to us or at all. In addition, if we are required to immediately repay the term loan facility of ECU or if other unanticipated costs arise, this may significantly reduce the amount of cash that we currently expect to have available for the above uses on the schedule we currently anticipate. If we are unable to obtain additional capital or alternative financing arrangements during 2011 or beyond, the potential development of the El Quevar or Velardeña projects could be delayed following the completion of economic studies and we may have to significantly reduce spending on other exploration projects to preserve cash.

Comparative Historical and Pro Forma Per Share Data

        The following tables set forth historical and pro forma per share data for Golden and historical per share data for ECU. The Golden historical data have been derived from, and should be read together with, the audited consolidated financial statements of Golden and the related notes thereto incorporated by reference into this proxy statement and the unaudited condensed consolidated financial statements of Golden and the related notes thereto contained in Golden's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 incorporated by reference into this proxy statement. The Golden pro forma data have been derived from the unaudited combined condensed pro forma financial data of Golden included elsewhere in this proxy statement. See "Additional Information—Where Stockholders Can Find More Information About Golden" and "—Where Stockholders Can Find More Information About ECU."

        This summary of comparative historical and pro forma per share data is being provided for illustrative purposes only and is not necessarily indicative of the results that would have been achieved had the Transaction been completed during the period presented, nor are they necessarily indicative of any future results. Golden and ECU may have performed differently had the Transaction occurred prior to the period presented. You should not rely on the pro forma per share data presented as being indicative of the results that would have been achieved had Golden and ECU been combined during the period presented or of the future results of Golden following the Transaction.

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        The following tables present certain historical and pro forma per share data for Golden and ECU:

 
  As of and for the Fiscal Year Ended December 31, 2010  
 
  Historical   Pro Forma  
 
  Golden   ECU(1)   Golden   ECU(2)  

Earnings Per Share Data:

                         
 

Basic

  $ (3.72 ) $ (0.03 ) $ (1.70 ) $ (0.09 )
 

Diluted

  $ (3.72 ) $ (0.03 ) $ (1.70 ) $ (0.09 )

Shares of common stock used to compute earnings per share:

                         
 

Basic

    8,947,739     306,073,467     24,951,806     499,036,120  
 

Diluted

    8,947,739     307,360,967     24,951,806     499,036,120  

Cash dividends declared per share of common stock:

                 

 


 

As of and for the Three Months Ended
March 31, 2011

 
 
  Historical   Pro Forma  
 
  Golden   ECU(1)   Golden   ECU(2)  

Earnings Per Share Data:

                         
 

Basic

  $ (1.08 ) $ (0.00 ) $ (0.54 ) $ (0.03 )
 

Diluted

  $ (1.08 ) $ (0.00 ) $ (0.54 ) $ (0.03 )

Shares of common stock used to compute earnings per share:

                         
 

Basic

    14,777,817     308,992,450     30,781,884     615,637,680  
 

Diluted

    14,777,817     312,750,098     30,781,884     615,637,680  

Book value per share of common stock:

  $ 7.91   $ 0.09   $ 11.95   $ 0.60  

Cash dividends declared per share of common stock:

                 

(1)
Historical ECU amounts have been converted to U.S. GAAP and US$ for presentation in this table.

(2)
Pro forma amounts for ECU are multiplied by 0.05 except for shares of common stock which were divided by 0.05, the exchange ratio in the Arrangement.

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INFORMATION CONCERNING GOLDEN

Overview

        We are a mineral exploration company with a diversified portfolio of precious metals and other mineral exploration properties located in or near the traditional precious metals producing regions of Mexico and South America. We are currently focused on advancement of our El Quevar silver project in northwestern Argentina and engaged in additional drilling, metallurgical analysis and other advanced exploration work at El Quevar. In addition to El Quevar, we own and control a portfolio of approximately 45 exploration properties located primarily in Mexico and South America. Our 100% controlled Zacatecas silver and base metals project in Mexico is in an advanced stage of exploration. We also have reconnaissance properties on which we are conducting preliminary sampling and geological analysis to determine the best potential areas for more detailed exploration. Our principal offices are located in Golden, Colorado at 350 Indiana Street, Suite 800, Golden, CO 80401, and our telephone number is (303) 839-5060. We also maintain exploration offices in Argentina, Mexico, Peru and Chile.


Golden Documents Incorporated by Reference

        The SEC allows Golden to incorporate by reference information into this proxy statement. This means that Golden may disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this document, except for any information that is superseded by information that is included directly in this document or incorporated by reference subsequent to the date of this document. See "Additional Information—Where Stockholders Can Find More Information About Golden" on page 95.


El Quevar

        Our El Quevar silver project is located near Nevado Peak in the San Antonio de los Cobres municipality, Salta province, in the Altiplano region of northwestern Argentina.

        The Yaxtché deposit is one of three primary targets currently identified at the El Quevar project. As of July 1, 2011, Golden has completed approximately 80,270 meters of diamond drilling in 330 drill holes. Of these holes, 227 were drilled to test the main Yaxtché zone for potential mineralization, with about 70% of the holes intersecting significant silver mineralization. Golden's work indicates that the Yaxtché central zone is at least 650 meters in strike length, with other drilling results to the east and west indicating a total length of more than 1,500 meters, and between 40 to 150 meters in width. Golden's drilling further indicates that the silver mineralization is continuous laterally and to depths of 350 meters below surface in the main area.

        As of July 1, 2011, we have also completed more than 820 meters of development drifting at El Quevar and have advanced approximately 600 meters along strike in the central Yaxtché zone. The drifting has encountered more than 40 mineralized structures believed to be tension faults that were not anticipated in the current modeling of the El Quevar deposit, in which mineral concentrations are modeled to follow the alteration envelope. Although the structures are narrow, generally less than a quarter of a meter in width, results from detailed sampling show that the structures tend to be of substantial grade, typically in excess of one kilogram per tonne of silver. We are conducting uniform channel sampling of the structures and the alteration envelope. Our evaluation of the features seen in the development drift should contribute to the understanding of these newly discovered structures and provide further information regarding confirmation of the mine model. We decided to delay completion of a NI 43-101 compliant Preliminary Economic Assessment and a planned mid-year 2011 resource update to allow further work to assess the impact that these newly discovered structures may have on the mining plan and global El Quevar resource.

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        As part of this effort, Golden is currently examining the bulk mining potential of the Yaxtché zone at El Quevar. Preliminary engineering indicates that an open pit could be feasible on the eastern end of the Yaxtché zone and Golden is performing an optimization analysis of the potential pit. Following completion of these analyses, Golden will examine the potential for bulk underground mining of the higher grade western zone. We may reduce our level of activity in advancing the drift until this work has been completed, as the open pit would encompass the area through which the drift would advance. Golden has targeted the fourth quarter 2011 for a resource update based on the bulk mining studies. If these efforts are successful, Golden would proceed with a NI 43-101 compliant Preliminary Economic Assessment in the first half of 2012.

        In addition to further in-fill drilling on the Yaxtché deposit, we have completed a first-phase drill program on the ManiSub target, which is located approximately 500 meters southwest of the Yaxtché deposit, and may also conduct additional drilling on the Carmen target, located approximately 500 meters north of the Yaxtché deposit.


Golden Comparative Market Prices

        Shares of Golden common stock are traded on the NYSE Amex under the symbol "AUMN" and on the Toronto Stock Exchange under the symbol "AUM." As of July 26, 2011, 15,302,675 shares of common stock were outstanding, and we had 26 shareholders of record. On June 23, 2011, being the day prior to the public announcement of the Transaction, the closing price per share for our common stock as reported by NYSE Amex was $20.22 and as reported by the Toronto Stock Exchange was Cdn$19.38 ($19.77 as converted into U.S. dollars) and on July 26, 2011, the closing price per share was $17.42 on the NYSE Amex and Cdn$16.40 on the TSX ($17.36 as converted into U.S. dollars).

        Our common stock began trading on the NYSE Amex on March 19, 2010, and began trading on the Toronto Stock Exchange on July 16, 2009. The following table sets forth, for the periods indicated, the high and low sales prices per share of Golden common stock as reported by the NYSE Amex and the Toronto Stock Exchange:

 
  NYSE Amex
(AUMN)
  Toronto
Stock Exchange
(AUM)
 
 
  High   Low   High   Low  
 
  ($)
  (Cdn.$)
 

2011

                         
 

First Quarter

  $ 27.40   $ 17.78   $ 27.30   $ 17.54  
 

Second Quarter

    25.95     16.26     24.55     15.69  
 

Third Quarter (through July 26, 2011)

    19.30     17.19     18.43     14.81  

2010

                         
 

First Quarter

  $ 8.40   $ 7.66   $ 15.65   $ 7.93  
 

Second Quarter

    9.60     7.01     9.78     7.70  
 

Third Quarter

    16.15     6.83     16.66     7.42  
 

Fourth Quarter

    28.90     17.05     29.79     17.57  

2009

                         
 

Third Quarter

  $   $   $ 7.06   $ 3.11  
 

Fourth Quarter

            11.01     5.60  

        Prior to the commencement of trading on NYSE Amex on March 19, 2010, our common stock traded in interdealer and over-the-counter transactions, and price quotations have been available in the "pink sheets" under the symbol "GDMN." The following table sets forth the high and low sales prices per share and volume traded as reported by The Pink Sheets LLC at www.pinksheets.com. Although the prices and volumes have been obtained from a source believed to be reliable, no assurances can be given with respect to the accuracy of such prices. In addition, such prices reflect interdealer prices,

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which may not include retail mark-up, mark down or commission, and may not necessarily represent actual transactions.

 
  The Pink Sheets
(GDMN)
 
 
  High   Low  

2010

             
 

First Quarter

  $ 16.00   $ 7.70  


Dividends

        We have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings, if any, to fund the development and growth of our business.


Security Ownership of Certain Beneficial Owners and Management

        The following table contains information about the beneficial ownership (unless otherwise indicated) of our common stock as of July 26, 2011 by:

        All information is taken from or based upon ownership filings made by such persons with the Securities and Exchange Commission or upon information provided by such persons to us. Except as otherwise noted, we believe that all of the persons and groups shown below have sole voting and investment power with respect to the common stock indicated. Percentage computations are based on 15,302,675 shares of our common stock outstanding as of July 26, 2011.

 
  Beneficial Ownership
as of July 26, 2011
Directors, Executive Officers and
5% Stockholders of Golden Minerals(1)
  Number   Percentage

Gilder, Gagnon, Howe & Co. LLC(2)

    3,196,711   20.89%

Sentient Executive GP III, Limited(3)

    2,939,790   19.21%

RBC Global Asset Management Inc.(4)

    927,950   6.06%

Sprott Asset Management LP(5)

    852,500   5.57%

Jeffrey G. Clevenger(6)

    231,904   1.51%

W. Durand Eppler(7)

    28,332   *

Ian Masterton-Hume(8)

    17,332   *

Kevin R. Morano(9)

    17,332   *

Terry M. Palmer(10)

    18,332   *

David H. Watkins(11)

    22,932   *

Robert B. Blakestad(12)

    62,268   *

Jerry W. Danni(13)

    63,655   *

Deborah J. Friedman(14)

    43,434   *

Robert P. Vogels(15)

    57,368   *

Directors and Executive Officers as a group (10 persons)(16)

    562,886   3.68%

*
The percentage of common stock beneficially owned is less than 1%.

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(1)
The address of these persons, unless otherwise noted, is c/o Golden Minerals Company, 350 Indiana Street, Suite 800, Golden, Colorado 80401.

(2)
This information is based on a Schedule 13G/A filed on February 14, 2011 by Gilder, Gagnon, Howe & Co. LLC ("Gilder"). Gilder beneficially owns 3,196,711 shares of our common stock. The shares reported include 2,682,086 shares held in customer accounts over which partners and/or employees of Gilder have discretionary authority to dispose of or direct the disposition of the shares, 478,105 shares held in accounts owned by the partners of Gilder and their families, and 36,520 shares held in the account of the profit sharing plan of Gilder. Gilder lists the address of its principal offices as 3 Columbus Circle, 26th Floor, New York, NY 10019.

(3)
This information is based on a Schedule 13D/A filed on October 27, 2010 by Sentient Global Resources Fund III, L.P. ("Fund III"), SGRF III Parallel I, L.P. ("Parallel I"), and Sentient Executive GP III, limited ("Sentient Executive"). Fund III beneficially owns 2,673,371 shares of our common stock and Parallel I beneficially owns 266,419 shares of our common stock. Sentient Executive is the general partner of the general partner of Fund III and Parallel I and makes the investment decisions for those entities. Fund III and Parallel I are both Cayman Islands limited partnerships. The sole general partner of each is Sentient GP III, LP, which is a Cayman Islands limited partnership ("GP III"). The sole general partner of GP III is Sentient Executive, which is a Cayman Islands exempted company. Peter Cassidy, Greg Link and Susanne Sesselman are the directors of Sentient Executive. The address of the principal offices of Fund III, Parallel I, GP III and Sentient Executive is: Landmark Square, 1st Floor, 64 Earth Close, West Bay Beach South, P.O. Box 10795, George Town, Grand Cayman KY1-1007, Cayman Islands.

(4)
This information is based on a Schedule 13G filed on February 14, 2011 by RBC Global Asset Management Inc. ("RBC GAM"). RBC GAM beneficially owns 927,950 shares of our common stock. RBC GAM lists its address as RBC Centre, 155 Wellington Street West, Suite 2300, Toronto, Ontario, Canada M5V 3K7.

(5)
This information is based on a Schedule 13G filed on January 24, 2011 by Sprott Asset Management LP ("Sprott"). Sprott beneficially owns 852,500 shares of our common stock. Sprott lists its address as suite 2700, south tower, royal bank plaza, Toronto, Ontario M5J 2J1.

(6)
Consists of 113,204 shares held directly, 97,000 shares of restricted stock, 18,500 stock options that will vest within 60 days of July 26, 2011; and 3,200 shares of common stock owned by Mr. Clevenger's spouse for which he disclaims beneficial ownership.

(7)
Consists of 18,000 shares held directly; 9,311 restricted stock units, all of which are vested or will vest within 60 days of July 26, 2011; and 1,021 stock options that will vest within 60 days of July 26, 2011.

(8)
Consists of 7,000 shares held directly; 9,311 restricted stock units, all of which are vested or will vest within 60 days of July 26, 2011; and 1,021 stock options that will vest within 60 days of July 26, 2011.

(9)
Consists of 7,000 shares held directly; 9,311 restricted stock units, all of which are vested or will vest within 60 days of July 26, 2011; and 1,021 stock options that will vest within 60 days of July 26, 2011.

(10)
Consists of 8,000 shares held directly; 9,311 restricted stock units, all of which are vested or will vest within 60 days of July 26, 2011; and 1,021 stock options that will vest within 60 days of July 26, 2011.

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(11)
Consists of 12,600 shares held directly; 9,311 restricted stock units, all of which are vested or will vest within 60 days of July 26, 2011; and 1,021 stock options that will vest within 60 days of July 26, 2011.

(12)
Consists of 29,401 shares held directly, 27,867 shares of restricted stock, and 5,000 stock options that will vest within 60 days of July 26, 2011.

(13)
Consists of 26,188 shares held directly, 31,467 shares of restricted stock, and 6,000 stock options that will vest within 60 days of July 26, 2011.

(14)
Consists of 22,167 shares held directly, 17,933 shares of restricted stock, and 3,333 stock options that will vest within 60 days of July 26, 2011.

(15)
Consists of 24,901 shares held directly, 27,467 shares of restricted stock, and 5,000 stock options that will vest within 60 days of July 26, 2011.

(16)
Consists of 271,661 shares held directly, 201,733 shares of restricted stock, 46,555 restricted stock units, and 42,937 stock options that will vest within 60 days of July 26, 2011.


Selected Historical Financial Data of Golden

        The following table summarizes certain selected consolidated financial data with respect to Golden and its subsidiaries and should be read in conjunction with Golden's historical consolidated financial statements and related notes contained in the Golden annual report on Form 10-K for the year ended December 31, 2010, and quarterly report on Form 10-Q for the period ended March 31, 2011, which have been incorporated by reference into this proxy statement. See "Additional Information—Where Stockholders Can Find More Information About Golden" beginning on page 95 for information on where you can obtain copies of this information.

        Stockholders should also read this summary data with the unaudited pro forma combined condensed financial statements attached as Annex E.

        The selected historical financial data for all periods presented has been derived from our financial statements for that period. Apex Silver emerged from Chapter 11 reorganization on March 24, 2009, and Golden became the successor to Apex Silver for purposes of reporting under the U.S. federal securities laws. In the table below references to "Successor" refer to the accounts of Golden and its

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subsidiaries on or after March 25, 2009, the day following emergence from Chapter 11. References to "Predecessor" refer to the accounts of Apex Silver and its subsidiaries prior to March 25, 2009.

 
   
   
   
  The Year Ended
December 31, 2009
   
   
   
 
 
   
   
   
  For the
Period
March 25,
2009 through
December 31,
2009
  For the
Period
January 1,
2009
through
March 24,
2009
   
   
   
 
 
  Three Months
Ended
March 31,
   
   
   
   
 
 
   
  The Year Ended December 31,  
 
  Year Ended
December 31,
2010
 
 
  2011   2010   2008   2007   2006  
 
  (unaudited)
  (audited)
 
 
  (Successor)
  (Predecessor)
 
 
  (in thousands, except per share amounts)
 

Statement of Operations:

                                                 
 

Revenue

  $   $ 3,173   $ 11,216   $ 11,067   $ 1,350   $ 5,400   $ 5,400   $ 2,640  
 

Income (loss) from continuing operations(1)

  $ (15,925 ) $ (7,039 ) $ (33,274 ) $ (20,276 ) $ 243,621   $ (69,734 ) $ (51,209 ) $ (11,893 )
 

Income (loss) from continuing operations per share

  $ (1.08 ) $ (1.57 ) $ (3.72 ) $ (6.78 ) $ 4.13   $ (1.18 ) $ (0.87 ) $ (0.21 )

 

 
  Three Months
Ended
March 31,
  At December 31,   At December 31,  
 
  2011   2010   2010   2009   2008   2007   2006  
 
  (unaudited)
  (audited)
 

Balance Sheet Data:

                                           
 

Total assets

  $ 122,234   $ 56,532   $ 135,618   $ 21,700   $ 606,347   $ 1,324,911   $ 1,270,096  
 

Long term liabilities

  $ 779   $ 640   $ 802   $ 651   $ 73,504   $ 1,040,098   $ 1,278,474  

Dividends:

                                           
 

Cash dividends declared per share

  $   $   $   $   $   $   $  

(1)
The Predecessor period ended March 24, 2009, includes a $248.2 million gain from extinguishment of debt and a $9.1 million fresh start accounting gain both related to the reorganization and emergence from Chapter 11 bankruptcy. Amounts shown for the years ended December 31, 2008, 2007 and 2006 include gains and losses related to Apex Silver's open metals derivative positions, including realized cash losses related to the settlement of the positions during 2008 and 2007 and unrealized mark-to-market gains and losses during 2008, 2007 and 2006. The 2008 amount also includes a $63.1 million gain related to the sale of our retained interest in Sumitomo's share of future silver and zinc production from the San Cristóbal mine. The 2006 amount also includes a $199.6 million gain related to the sale to Sumitomo of a 35% interest in the subsidiaries that own and operate the San Cristóbal mine.

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INFORMATION CONCERNING ECU

        The following discussion should be read in conjunction with the consolidated financial statements of ECU and the related notes thereto, included as Annex D hereto. Additionally, the terms "mineral resource," "measured mineral resource," "indicated mineral resource" and "inferred mineral resource" used in this proxy statement are defined in NI 43-101. These Canadian terms are not recognized under SEC Industry Guide 7. See "Cautionary Note to United States Stockholders Concerning Estimates of Measured, Indicated and Inferred Resources" on page 1 of this proxy statement.

        The information contained in this section has been provided by or on behalf of ECU and has not been independently verified by Golden.


Overview

        ECU is focused on the exploration, development and mining of gold, silver and base metals at its Velardeña district properties, being the Velardeña, Chicago and San Diego properties, located in Durango, Mexico (the "Velardeña Properties"). The area includes seven historic mines: the Santa Juana, Terneras, San Mateo and San Juanes mines on the Velardeña property, the Los Muertos-Chicago mine on the Chicago property and the La Cruz-La Rata and El Trovador mines on the San Diego property. ECU is defining a large mineral resource and exploring the depth extension of the high grade massive sulfides vein at the Santa Juana mine and is also further defining several higher grade narrow veins within the same area. The locations of the Velardeña Properties are shown on the map below.

MAP

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        ECU employs approximately 550 individuals, of which approximately 325 individuals are employed at ECU's various mine sites in construction, management, underground exploration, development and rehabilitation work, approximately 95 individuals are employed at ECU's 500 tonne-per-day cyanide leach mill located near the town of Velardeña, approximately 80 individuals are employed at ECU's 340 tonne-per-day capacity flotation mill located in the town of Velardeña and approximately 50 individuals performed administrative functions in Mexico (46 individuals) or in Canada (4 individuals).


Property Description

        The technical information appearing in this section of this proxy statement regarding the Velardeña Properties is summarized or extracted from the report entitled "NI 43-101 Technical Report Updated Mineral Resource Estimate for the Velardeña District Properties, Velardeña Mining District, Durango State, Mexico" dated January 20, 2009 prepared by William J. Lewis, BSc., P. Geo. of Micon, a "Qualified Person" as such term is defined under NI 43-101 (the "ECU Micon Report"). The full text of the ECU Micon Report is available on the SEDAR website under ECU's profile at www.sedar.com.

        Reference should be made to the Glossary of Terms attached as Annex A to this proxy statement for an explanation of some of the technical terminology appearing in this section.

Property Description and Location

        The Velardeña Properties are comprised of three properties held by ECU within the Velardeña mining district. The three properties which collectively represent the Velardeña Properties are the Velardeña property, the Chicago property and the San Diego property.

        The Velardeña Properties are located in the Velardeña mining district, within the municipality of Cuencamé, in the northeast quadrant of the State of Durango, Mexico. The property is situated approximately 95 kilometers southwest of the city of Torreón in the State of Coahuila and 140 kilometers northeast of the city of Durango, capital of the State of Durango.

        The Velardeña property contains the Santa Juana mine, which has been the focus of ECU's mining efforts since 1995, as well as the Terneras, San Juanes and San Mateo mines.

        The Chicago property is located approximately 2 kilometers south of the Velardeña property and contains the historical Los Muertos-Chicago mine, the extension of which is being drilled by ECU.

        The San Diego property is situated approximately 9 kilometers northeast of the Velardeña property and contains the La Cruz-La Rata and El Trovador mines as well as a number of other shallower shafts which were sunk on narrower veins such as the Cantarranas, Montanez and El Jal. The San Diego property is subject to a joint venture agreement between ECU and Golden Tag Resources Ltd with each company holding 50% of the joint venture. The operations of the joint venture are currently being managed by an outside third-party contractor.

        ECU holds the Velardeña Properties through its wholly-owned Mexican subsidiaries, Minera William S.A. de C.V. and BLM Minera Mexicana S.A. de C.V. At present, the three properties comprise a total of 33 mineral concessions (20 for the Velardeña property, 9 for the Chicago property and 4 for the San Diego property). The mineral concessions in each of the properties vary in size and the concessions comprising each mineral property are contiguous.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

        The Velardeña Properties are located in the State of Durango approximately 95 kilometers southwest of the city of Torreón and 140 kilometers northeast of the city of Durango. A four-lane toll highway connecting Torreón and Durango passes approximately 500 meters east of the village of

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Velardeña. In addition, the village of Velardeña is connected to a free two-lane highway via a 3 kilometers paved road from the highway. The village is connected to the mine site via a 7 kilometers gravel road.

        The area in which the Velardeña Properties are situated is considered to be a semi-arid region which is predominantly semi-hot and dry. From a physiographical point of view, the zone is mature with a mixed topography. Streams within the area drain either to internal drainage systems or tributaries of the Nazas and Aguanaval rivers which are connected to the Laguna de Mayrán. All of the streams are intermittent and short lived during the rainy season only. A series of water dams were built over the years to control water flow from the two rivers for irrigation and water management purposes. The Francisco Zarco dam, located 25 kilometers to the west, is the closest to the Velardeña Properties.

        ECU owns a 250 tonne-per-day flotation mill situated near the town of Velardeña which has been extensively upgraded and is now capable of milling up to 340 tonnes per day. The mill has a fully operational lead and zinc flotation circuit and has a recently commissioned pyrite circuit to recover more gold and silver from the sulfide ore. Furthermore, ECU has acquired an 80 tpd flotation mill adjacent to its mill to use either for large scale metallurgical testing or for processing specific ores different from the main feed.

        In 2009, ECU purchased a conventional cyanide leach mill with a Merrill Crowe precipitation circuit. The mill, which is located approximately two kilometers from the Santa Juana mine site and adjacent to its Chicago property, is used to process oxide material from the Velardeña property. ECU generates gold/silver doré bars from the mill which are sold to a third party refinery. The mill has a rated capacity to process mineralized material up to 500 tonnes per day.

History

        Mining has played an important role in Mexico since pre-historic times, but it entered a period of rapid expansion after the Spanish conquest when rich mineral deposits were found. The wealth found in these early mines served as an incentive for the early colonizers to locate to more remote and poorly accessible portions of the country.

        It is not known if the indigenous peoples or the Spanish colonists first began mining in the Velardeña district but exploration and mining extends back to at least the late 1500's or early 1600's. The mines were first worked by the Spanish, with the high-grade ore mined by hand and processed on a small scale by direct smelting.

Historical and Present Mining

        The Velardeña mining district and the area contained within ECU's Velardeña Properties are riddled with mine openings and old workings, in a somewhat haphazard fashion near surface, representing the earliest efforts at extraction, and more systematic at depth, which is indicative of later, better organized and engineered mining. Associated with these openings and workings is a number of ruins, which represent the mine buildings, chapels and residences of the inhabitants of the mining district during its past.

        The vast bulk of the material which has been extracted from underground operations through the tunnels, shafts and winzes is scattered over the hillsides in waste dumps and beneath the foundations of the ruins and modern buildings. Historically, individual veins or deposits had separate owners and, in the case of some of the larger veins or deposits, had several owners along the strike length which resulted in a surfeit of adits and shafts and very inefficient operations.

        The mines within the Velardeña mining district have been developed primarily by using open stope/ shrinkage and cut and fill underground mining methods. The ground conditions, which vary from

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good to poor, and the deposit geometries tend to favor both mining methods with development waste used for backfill.

        ECU restarted operations at Velardeña in January 1998 and has been producing fairly continuously since that date.

Geological Setting

Regional Geology

        The Velardeña district is located at the easternmost limit of the Sierra Madre Occidental, on the boundary between the Sierra Madre Oriental and the Mesa Central sub-provinces. Both of these terrains are underlain by Paleozoic and possibly Precambrian basement rocks. Most of Mexico's high-grade silver mines are located in the Mesa Central, near this contact.

        The regional geology is characterized by a thick sequence of limestones and minor calcareous clastic sediments of Cretaceous age, intruded by Tertiary plutons of acidic to intermediate composition. During the Laramide Orogeny, the sediments were folded into symmetrical anticlines and synclines that were modified into a series of asymmetrical overturned folds by a later stage of compression.

        A series of younger Tertiary stocks have intruded the older Cretaceous limestones over a distance of approximately 15 kilometers along a northeast to southwest trend.The various mineral deposits of the Velardeña mining district occur along the northeast-southwest axis and are spatially associated with the intrusions and their related alteration.

        An important northwest-southeast fracture system is associated with these intrusions and in many cases, acts as the main focus of mineralization. These are deep, basement-penetrating boundary faults which served as magma conduits (Clark et al, 1988). A younger fracture system is the north-northeast to northeast trending faults which play an important role as they off-set the northwest trending mineralized veins. This is well demonstrated at ECU's Terneras mine where the northeast trending Tres Aguilas fault off-sets the mineralized northwest trending veins such as the Santa Juana veins.

Local Geology

        The Velardeña Properties are underlain by a thick sequence of limestone that corresponds to rocks of the Aurora and Cuesta del Cura formations of Lower Cretaceous age. The Aurora limestone is generally medium to thick-bedded, dark grey to black and locally cherty. The Cuesta del Cura limestone is thin to medium bedded.

        Several types of Tertiary intrusive rocks are present in the Velardeña district. The largest of these outcrops on the western flank of Sierra San Lorenzo and underlies a portion of ECU's Velardeña mines. It is referred to as the Terneras pluton and forms a northeast oriented, slightly elongated body, considered to represent a diorite or monzodiorite which outcrops over a distance of about 2.5 kilometers. The adjacent limestones have been altered by contact metamorphism (exoskarn) and locally the intrusive has been metamorphosed (endoskarn).

Property Geology and Mineralization

        The following is a description of the individual geological characteristics and mineralizationfound on each of the properties comprising the Velardeña Properties.

Velardeña Property

        The Aurora Formation hosts the Santa Juana, Terneras, San Juanes and San Mateo deposits on the Velardeña property. The limestones are intruded by a series of multiphase diorite or monzodiorite

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stocks (Terneras intrusion) and dikes of Tertiary age that outcrop over a strike length of approximately 2.5 kilometers.

        Two main vein systems are present on the Velardeña property. The first is a northwest striking system as found in the Santa Juana deposit, while the second is east-west trending and is present in the Santa Juana, Terneras, San Juanes and San Mateo deposits.

        In the Santa Juana deposit, two main sets of fracture cleavage are observed. The most economically significant is a steeply dipping northwest-trending cleavage that has acted as the main conduit for the mineralizing fluids in the Santa Juana deposit. This direction includes both linear and curved northwest vein sets. The second fracture cleavage trends 110? and is more widely spaced and not as clearly evident as the first set. This east-west vein system in the Santa Juana deposit is referred to as the Trans vein. These veins dip approximately 70? to 75? south and where they intersect the northwest-trending vein set, a chimney zone which can be up to 6 meters in width is often formed.

        The Terneras, San Juanes and San Mateo veins all strike east-west and dip steeply north. The most prevalent of these is the Terneras vein, which was mined in the past over a strike length of 1,100 meters. All of these veins are observed to have extensive strike lengths and vertical continuity for hundreds of meters. The mineralogy of the east-west system is somewhat different in that they contain less arsenic than the northwest Santa Juana veins.

        Mineralization in the deposits located on the Velardeña Properties primarily belongs to low- temperature calcite-quartz veins with associated lead, zinc, silver, gold and copper mineralization, typical of the polymetallic vein deposits of northern Mexico. The veins are usually thin, normally in the 0.2 meter to 0.5 meter range, but remarkably consistent along strike and down dip. Coxcomb and rhythmically banded textures are common.

        Very little work has been carried out on the mineralogy of the veins and it varies considerably with the extent of oxidation. The sulfide parts of the veins consist primarily of galena and sphalerite with lesser amounts of zinc carbonates, chalcopyrite, tetrahedrite, electrum, freidbergite, arsenopyrite, pyrite and other sulfides. Historical and recent production in the district has been primarily from the oxide portions of the veins that extend to depths of several hundred metres, usually corresponding to the present day water table. The oxide portions of the veins are primarily reported to be composed of oxides, halides, carbonates and sulphosalts of primary mineralization. Oxidation is reported to be less extensive where veins transect the intrusive diorite or skarn. The zonation of the economic mineralization indicates increasing gold/silver and copper/lead ratios with depth.

Chicago Property

        On the Chicago property, the oldest rocks outcropping are Cretaceous limestones of the Aurora Formation which are highly folded. These limestones are affected by the intrusion of the Tertiary dioritic stocks and dykes. The general geology of the Chicago property is very similar to the geology of the Velardeña property. The mineralization is similar to that encountered at the Santa Juana mine in terms of mineralogy, host rocks, geometry of the structures and continuity at depth and laterally.

        The mineralization at the Chicago property is similar to that encountered at the Santa Juana mine in terms of mineralogy, host rocks, geometry of the structures and continuity at depth and laterally. The difference between the two is the strike, northwest dipping to the northeast instead of northeast dipping to the southeast.

San Diego Property

        The vast majority of the San Diego property is underlain by massive beds of grey limestone from the Aurora Formation. These rocks were intruded by a younger Tertiary dioritic stock and porphyritic monzonite sills.

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        The San Diego property hosts a well-developed pattern of high-grade silver-lead-zinc tabular veins that exhibit a persistent continuity both along strike and at depth. Together these veins represent the near-surface expression of a low-sulphidation epithermal system of mineralization that extends further at depth into the mezothermal environment. At least two main systems of veins are recognized, an east-west system that includes the Cantarranas, La Rata, Porvenir and SD veins as well as a northwest system that includes the Montanez, La Cruz, San José and Trovador veins. The other veins on the property, the northeast trending El Jal vein and east-northeast striking Canta-Splay vein, are recognized as subsidiary structures.

        In addition to the veins structures, the present resource estimate includes mineralization outlined in the newly discovered broad zones of mineralization, identified during recent drill programs. These are stockwork zones consisting of a mix of narrow sulfide +/- calcite stringers (1 to 2 centimeters) and veins (up to 30 centimeters) as well as carbonate- replacement sulfide bands (or irregular patches) developed around the veins and stringers which in-fill pre-existing fractures.


Exploration

        Exploration of the Velardeña Properties since January 2008 has consisted mostly of underground work and is largely related to further mine development. This work includes using a small drill to test new areas close to the existing underground workings and various types of underground development focused on discovering new veins. Since 2008, ECU has drilled approximately 140 holes totalling approximately 6,200 meters. ECU's underground exploration development activities consisted of approximately 3,400 meters of drifting along the structures or veins, 400 meters of ramps to access new areas, 900 meters of cross-cuts to reach specific zones on various levels and 1,850 meters of raises in veins and structures to confirm their vertical continuity. In addition, surface geological sampling and mapping has been completed in several specific sections of the Velardeña Properties and certain other properties which were being evaluated. ECU has recently commenced deeper drilling at Velardeña, focused on further defining a sulfide deposit identified in previous drilling that encountered an intercept of massive sulfide mineralization. ECU has also commenced detailed geological sampling and mapping on the Nazas property.


Drilling and Sampling Method and Approach

Surface and Underground Chip Sampling

        Underground chip samples are taken at drift faces, cross-cuts and stopes, wall and/or backs according to the following criteria:

        Surface sampling follows the same criteria listed above, except for the spacing, which is dictated by the condition of the outcrop.

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Drill Core Sampling Protocol

        Diamond drill core samples are taken, according to the following criteria:

        The drill core sampling procedures practiced by ECU are among the commonly practiced procedures used throughout the mineral industry. Along with in-house standards, blanks, and duplicates included in the sample stream, routine check assays are conducted on the samples by a second laboratory as well.


January 2009 Mineral Resource Estimate

        Micon has reviewed the resource estimate for the Velardeña Properties prepared by ECU's geological staff as at November 15, 2008. At this time, ECU is still using the traditional polygonal method based on the use of a long section to estimate the resources.

        Tonnage and grade for all resource blocks are estimated by ECU on longitudinal sections for each of the veins and/or vein packages combined with width and density information for each cross-section for the measured and indicated resources and average widths and densities of all intercepts for the inferred. The block limits are defined by mined out areas, excavated historical mining levels or workings, mineralization style (broad zones versus narrow veins), faults, geological contacts and property limits. Assays are capped and diluted as previously described.

        The geological continuity of each zone was determined on 20 meter cross-sections based on stratigraphy, mineralization and structure using underground development and sampling plus diamond drill holes and surface information when applicable.

        For calculation of the block areas for all blocks that did not changed since the last report, the surface area of each block was measured on the long section (orientated vertically but parallel to the strike of the vein) using MineSite and then this figure was multiplied by the measured horizontal width

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of the vein to obtain the actual block volume. Block tonnage is then estimated by multiplying the volume figure by the applicable specific gravity factors, previously described. For all new blocks, the Pro-Mine software was used to divide the areas in polygons and give tonnages and diluted grades for each polygon.

        The resource estimates are based on a net smelter return value cut-off of $45/tonne for the individual veins and $25/tonne for the vein packages.


Summary of the Assumptions used for the Silver Equivalents

 
   
  NSR Sulfides (%)    
 
Commodity
  Price
(US $)
  High
Lead/Zinc
Veins
  Low
Lead/Zinc
Veins
  Bulk
Tonnage
Areas
  Chicago   San Diego   NSR Oxides
(%)
 

Gold

  $ 775/oz     72 %   69 %   65 %   69 %   44 %   78  

Silver

  $ 14/oz     60 %   59 %   57 %   65 %   65 %   55  

Lead

  $ 0.90/lb     67 %   59 %   55 %   54 %   73 %   n/a  

Zinc

  $ 1.28/lb     44 %   24 %   46 %   36 %   48 %   n/a  


Summary of the Measured, Indicated and Inferred Mineral Resource Estimate for the Velardeña Properties as of November 15, 2008

 
   
   
   
  Grade of Mineralization    
   
 
 
   
   
   
  Silver
Equivalent
(oz)
(Gold + Silver)
  Silver
Equivalent
(oz)
(Lead & Zinc)
 
Vein or Zone
  Type of
Mineralization
  Resource Category   Tonnes   Gold
(g/t)
  Silver
(g/t)
  Lead
(%)
  Zinc
(%)
 

Total All Veins

  Oxides  

Measured

    668,000     3.36     156.3                 9,026,000        

     

Indicated

    407,000     2.27     172.4                 4,587,000        

     

Total Measured + Indicated

    1,075,000     2.95     162.4                 13,614,000        

     

Inferred

    379,000     1.68     186.2                 3,882,000        

  Sulfides  

Measured

    2,205,000     1.84     86.1     0.26     0.45     14,579,000     1,644,000  

     

Indicated

    669,000     2.80     205.1     0.91     1.00     8,293,000     1,576,000  

     

Total Measured + Indicated

    2,874,000     2.06     113.8     0.41     0.58     22,872,000     3,220,000  

     

Inferred

    26,141,000     2.07     158.4     1.74     2.11     244,228,000     142,914,000  

Grand Total

     

Measured + Indicated

    3,949,000     2.31     127.0                 36,486,000     3,220,000  

     

Inferred

    26,520,000     2.06     158.8                 248,109,000     142,914,000  

        The following criteria were used to classify the estimated resources according to the current CIM definitions:

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        The final mineral resource estimate does not include areas within the measured or indicated blocks where previous mining was conducted.

        The resulting mineral resource statement for the Velardeña Properties is effective as of November 15, 2008. The tonnages and grades for the measured, indicated and inferred mineral resource estimates are summarized in the following table. The figures in the table have been rounded to reflect that the mineral resource estimate is an approximation.

        Mineral resources that are not mineral reserves do not have demonstrated economic viability. There are no mineral reserves presently identified on the Velardeña Properties.

        The stated resources are not materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant issues. There are no known mining, metallurgical, infrastructure or other factors that materially affect this mineral resource estimate at this time.

        The mineral resource estimate conducted by ECU is compliant with the current CIM standards and definitions required by NI 43-101 and is, therefore, reportable as a mineral resource by ECU.


Mining and Milling Results

        Since January 2008, ECU has mined sulfide and oxide mineralized material from the Velardeña project, with most production from the Santa Juana mine, and produced zinc, lead and pyrite concentrates through its sulfide mill. During this period, ECU has also produced pyrite concentrates from processed tailings and has custom milled ore from a nearby mine. Since early 2009, ECU has also operated an oxide mill producing doré bars.

Production

        For the period from January 1, 2008 through March 31, 2011, ECU has produced a total of approximately 24,000 gold ounces, 813,000 silver ounces, 1,152,391 pounds of lead and 1,415,082 pounds of zinc. Approximately 3 percent of the silver, 42 percent of the lead and 31 percent of the zinc sold were produced from custom milled ore. In 2010, the mines on the Velardeña Properties produced approximately 380,000 ounces of silver, 10,000 ounces of gold, 182,000 pounds of zinc, and 155,000 pounds of lead. In the first quarter of 2011, the mines on the Velardeña Properties produced approximately 79,000 ounces of silver, 1,900 ounces of gold, 43,000 pounds of zinc, and 47,000 pounds of lead.

Mining

        For the period from January 1, 2008 through March 31, 2011, ECU's extraction from its mines totaled approximately 376,469 tonnes grading 2.73 grams per tonne gold and 126 grams per tonne silver, comprised of both oxide and sulfide material. For the oxide material, 107,039 tonnes were mined from 4,249 meters of ore drifts and 2,271 meters of raises and 178,470 tonnes from stopes giving a total of 285,509 tonnes of oxides grading 2.78 grams per tonne gold and 118 grams per tonne silver. For the sulfide material, 48,965 tonnes were mined from 2,165 meters of ore drifts and 314 meters of raises and 41,995 tonnes were mined from stopes for a total of 90,960 tonnes of sulfide material grading 2.6 grams per tonne gold and 149 grams per tonne silver.

Milling

        For the period from January 1, 2008 through March 31, 2011, ECU has processed at its sulfide mill 145,998 tonnes derived from ECU's mines and tailings pond and from ore custom milled for a nearby mine.

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The total production from the sulfide mill during this period totaled 9,288 gold ounces, 315,660 silver ounces, 1,152,391 pounds of lead, and 1,415,082 pounds of zinc.

        The oxide mill started operating in 2009 and, since then, 347,759 tonnes have been processed to produce 26,716 kilograms of doré bars generating a total of 14,716 ounces of gold and 497,192 ounces of silver.


ECU Comparative Market Prices

        ECU common shares are traded on the TSX under the trading symbol "ECU." As of July 26, 2011, 320,081,333 common shares were outstanding, and ECU had approximately 574 shareholders of record. On June 23, 2011, being the day prior to the public announcement of the Transaction, the closing price per ECU common share as reported by the Toronto Stock Exchange was Cdn$1.04 ($1.06 as converted into U.S. dollars) and on July 26, 2011, the closing price per share was Cdn$0.82 on the TSX ($0.87 as converted into U.S. dollars).

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        The following table sets forth, for the periods indicated, the high and low sales prices per share of ECU common shares as reported by the Toronto Stock Exchange:

 
  Toronto Stock Exchange (ECU)  
 
  High   Low  
 
  (Cdn.$)
 

2011

             
 

January

  $ 1.34   $ 1.01  
 

February

    1.21     1.03  
 

March

    1.18     0.85  
 

April

    1.10     0.75  
 

May

    0.85     0.63  
 

June

    1.09     0.73  
 

July (through July 26, 2011)

    0.93     0.81  

2010

             
 

First Quarter

  $ 0.79   $ 0.56  
 

Second Quarter

    0.80     0.60  
 

Third Quarter

    0.77     0.54  
 

Fourth Quarter

    1.45     0.67  

2009

             
 

First Quarter

  $ 0.90   $ 0.43  
 

Second Quarter

    0.90     0.47  
 

Third Quarter

    0.67     0.46  
 

Fourth Quarter

    0.93     0.50  

2008

             
 

First Quarter

  $ 2.36   $ 1.60  
 

Second Quarter

    1.90     1.32  
 

Third Quarter

    1.95     1.30  
 

Fourth Quarter

    1.95     0.53  

2007

             
 

First Quarter

  $ 3.46   $ 2.25  
 

Second Quarter

    2.79     2.10  
 

Third Quarter

    2.58     1.30  
 

Fourth Quarter

    2.71     1.84  

2006

             
 

First Quarter

  $ 1.70   $ 0.44  
 

Second Quarter

    3.40     1.71  
 

Third Quarter

    3.65     2.15  
 

Fourth Quarter

    3.50     2.36  


Dividend Policy

        ECU has never declared or paid any cash dividends on its common shares. Following the Transaction, we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings, if any, to fund the development and growth of our business.

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Selected Historical Financial Data of ECU

        The following table summarizes certain selected consolidated financial data with respect to ECU and its subsidiaries and should be read in conjunction with ECU's historical consolidated financial statements and related notes attached as Annex D to this proxy statement.

        Stockholders should also read this summary data with the unaudited pro forma combined condensed financial statements attached as Annex E to this proxy statement. The tables below contain summary data prepared under Canadian GAAP (except for the three months ended March 31, 2011, which was prepared under IFRS) and U.S. GAAP, respectively, (amounts in thousands).

 
  For the three months
ended March 31,
  For the years ended December 31,  
 
  IFRS   Canadian GAAP  
 
  2011   2010   2010   2009   2008   2007   2006  
 
  (unaudited)
  (audited)
 

Operating revenue

  $   $   $   $   $   $   $  

Net income (loss)

    (2,082 )   (1,852 )   (6,855 )   (8,418 )   (18,043 )   (8,992 )   (14,390 )

Net loss per share—basic and diluted

    (0.01 )   (0.01 )   (0.02 )   (0.03 )   (0.07 )   (0.04 )   (0.07 )

Total assets

   
74,490
   
89,502
   
86,685
   
92,134
   
63,597
   
60,205
   
24,006
 

Long-term debt

    17,983     20,510     18,382     21,090     23,469     11,784      

Net assets

    47,753     63,177     59,685     64,740     33,283     46,450     9,922  

Cash dividends per share

   
   
   
   
   
   
   
 

Common shares outstanding

   
310,726
   
302,203
   
306,073
   
277,277
   
242,610
   
228,046
   
194,334
 

 

 
  For the three months ended March 31,   For the years ended December 31,  
 
  2011   2010   2010   2009   2008  
 
  (unaudited)
  (audited)
 

US GAAP

                               

Operating revenue

  $   $   $   $   $  

Net income (loss)

    (825 )   (3,256 )   (9,410 )   (13,759 )   (29,716 )

Net income (loss) per share—basic and diluted

    (0.003 )   (0.01 )   (0.03 )   (0.05 )   (0.12 )

Total assets

   
52,865
   
59,755
   
52,175
   
60,179
   
36,985
 

Long-term debt

    17,983     20,510     18,382     21,090     24,340  

Net assets

    26,128     30,019     25,174     32,785     5,800  

Cash dividends per common share

   
   
   
   
   
 

Common shares outstanding

   
310,726
   
302,203
   
306,073
   
277,277
   
242,610
 

        ECU has not prepared US GAAP financial information as of and for the years ended December 31, 2006 and 2007 as such financial information cannot be provided without incurring significant incremental effort and expense.

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Management's Discussion and Analysis of Financial Condition and Results of Operations

        All dollar amounts presented in this section are presented in Canadian dollars.

Liquidity and Capital Resources

        At March 31, 2011, ECU had a working capital deficit of $12,677,443 compared to $11,747,189 at December 31, 2010. The change of $930,254 reflects mainly an increase of $1,548,977 in the current portion of long-term debt. Principal repayment on ECU's long-term debt commences July 2011.

        During the quarter ECU used cash of $863,182 in operations compared to $3,104,977 in the same period in the prior year. The decrease of $2,241,795 reflects mainly an increase in non cash working capital items.

        ECU is focused on improving the cash flows that it generates from its mining and milling operations. It is conducting underground exploration in conjunction with mining operations, and has recommenced exploration. ECU has not completed an economic study related to the treatment of its oxide resource through the plant and therefore cannot provide any assurances that its operation will be economic.

        ECU had no significant commitments to capital spending as at period end.

Changes to Accounting Policies

        Effective for the first quarter of 2011, the Company has prepared its financial statements in accordance with IFRS. The comparative financial information for the 2010 financial year in this Management Discussion and Analysis has also been restated to conform to IFRS. This Management Discussion and Analysis should be read in conjunction with Note 23 "Transition to IFRS" in ECU's March 31, 2011 consolidated interim financial statements attached as Annex D to this proxy statement.

        The primary adjustment as a result of the transition from Canadian GAAP to IFRS in the statement of financial position relates to foreign exchange translation. Under Canadian GAAP, ECU used the temporal method in translating foreign operations and non-monetary assets and liabilities in foreign currency to the presentation currency. An adjustment was required to record the impact of translating mining property costs and property plant and equipment at the closing rates on consolidation rather than the historic rates and removing exchange differences on the consolidation of foreign operations from profit or loss and including in equity.

        Coincident with the IFRS disclosure requirement for finance costs paid and income tax paid to be presented as separate items in the statement of cash flows, ECU has determined to exclude finance costs in the calculation of operating cash flows before movements in working capital, and to include it in cash flow from financing activities.

Results of Operations for the Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010

Loss

        The loss for the first quarter 2011 was $2,081,960 versus a loss of $1,915,436 for the same period in 2010.

Expenses

        Expenses totaled $773,662 in the first quarter of 2011 a decrease of $363,030 over the same quarter in 2010. The foreign exchange account moved from a gain of $802,013 in 2010 to a gain of $574,667 in the current period mainly because of the effect of the volatility of the US dollar on ECU's

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long-term debt. No employee stock options were issued in the first quarter of 2011 and stock-based compensation decreased $347,142.

Finance income and costs

        Finance costs increased by $526,810 from $782,766 in Q1 2010 to $1,309,576 in Q1 2011. The first quarter 2011 includes $483,400 in costs related to the restructuring of ECU's term loan.

Assets

        Total assets were $74,490,097 as at March 31, 2011 compared to $74,196,337 as at December 31, 2010. Cash and cash equivalents increased $875,108 from $344,826 at December 31, 2010 to $1,219,934 at March 31, 2011.

Liabilities

        Liabilities totaled $26,737,570 as at March 31, 2011 compared to $27,000,284 as at December 31, 2010 a decrease of $262,714.

Shareholders' equity

        Shareholders' equity totaled $47,752,527 as at March 31, 2011 compared with a balance of $47,196,053 at the end of 2010. The change reflects the loss for the period of $2,081,960 reduced by the $860,457 gain on translation of ECU's Mexican subsidiaries. ECU issued shares on the exercise of options and warrants for net proceeds of $1,777,977.

        As at March 31, 2011 ECU had 310,726,233 shares outstanding, 13,235,000 options outstanding granted under its stock purchase plan at a weighted average exercise price of $2.00 each, and 48,170,926 warrants outstanding at a weighted average exercise price of $0.93 each.

Cash used in operating activities

        Cash used in operations for the quarter ended March 31, 2011 was $863,182 compared to $3,104,977 in the prior year. The decrease of $2,241,795 arose mainly from a net increase in non-cash working capital items.

Cash used in investing activities

        In the first quarter of 2011, net cash used for mining property costs was $4,383,608 compared to $3,833,904 in the prior year. The increase of $549,704 reflects increased activity levels in mining and milling operations. In the quarter revenue from the sale of doré bars and concentrates amounting to $5,996,092 has been credited against the mining costs compared with $3,186,266 in Q1 of 2010.

Cash from financing activities

        During the quarter ECU did not undertake any new financings.

Cash and cash equivalents

        As of March 31, 2011, ECU held cash and cash equivalents in the amount of $1,219,934 compared to $344,826 at year-end in 2010.

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Results of Operation for the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

Loss

        ECU's loss for the year was $6,854,967 or $0.022 per share, compared to a loss of $8,417,937 or $0.030 per share in 2009.

Expenses

        Expenses totaled $6,854,967 for the year, compared to $8,417,937 in 2009, representing a decrease of $1,562,970. During the year, ECU sold of a portion of its gold pyrite material-in-process inventory which gave rise to a reversal of previous inventory cost write-offs and resulted in a gain in the amount of $2,045,613 and that contributed to the decrease in expenses. Stock-based compensation made up $715,540 of the change. ECU recorded a foreign exchange gain of $1,314,059 in 2010 compared to a gain of $3,520,810 in the prior year. These gains result mainly from the positive effect of the weakening US dollar on ECU's long-term debt. The decrease in gain of $2,206,751 offset the above noted decreases in expenses.

        Depreciation of Property, Plant and Equipment—The amounts related to depreciation remained relatively unchanged at $214,707, compared to $182,679 in 2009.

Assets

        The total assets of ECU decreased $5,449,478 from $92,134,278 as of December 31, 2009 to $86,684,800 at the end of 2010. This change results from an increase in revenues, which are offset against mining property costs, together with ECU's decision not seek financing during year.

Liabilities

        The liabilities were relatively unchanged at $27,000,284 at December 31, 2010 compared to $27,394,645 as of December 31, 2009. Reductions in long-term debt were largely offset by increases in customer advances.

Shareholders' equity

        Shareholders' equity totaled $59,684,516 as of December 31, 2010, compared with $64,739,633 at the end of 2009, representing a decrease of $5,055,117.

        The decrease results mainly from the $6,854,967 loss generated by administrative, financing and other non-mining property costs. Other items affecting shareholders' equity are an increase of $840,000 resulting from the exercising of stock options and warrants, and an increase in contributed surplus of $959,850 reflecting the calculated value of the vesting portion of stock-based compensation.

        At year-end 2010, ECU had 308,236,733 shares outstanding, 15,365,000 options outstanding under its stock option plan and 50,310,426 share purchase warrants outstanding.

Cash flow used in operations

        Cash used in operations was relatively unchanged at $6,396,534 for 2010 compared to $5,853,171 in 2009.

Cash flow used in investments

        For the year 2010, net cash used for mining property costs, being operating and development costs less revenues, was negative ($1,709,790) resulting in the net generation of cash. This compares to a use of cash of $3,977,919 in the prior year. The increase in cash generated of $5,687,709 reflects the effect

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of improved mining and milling operations as well as sales of pyrite stockpiles amounting to $3,191,377. Revenue from the sale of doré bars, concentrates and pyrite stockpiles totaled $19,345,686 and has been credited against the mining costs.

        Costs for the acquisition of property, plant and equipment were $958,378 in 2010 compared to $11,267,378 in the prior year. The 2009 figure consisted principally of costs related to the acquisition and commissioning of the 500 tonne-per-day gold and silver cyanide leach plant. In 2010 ECU paid $2,487,037 for the acquisition of mineral property concessions including payments of $2,331,600 under an installment contract.

        These figures reflect ECU's ongoing commitment to the growth of its mineral resources and the execution of ECU`s plan to create an internal source of cash flows.

Cash flow from financing activities

        In 2010, ECU did not undertake any financings. It received $240,000 from the exercise of stock options under the employee stock option plan and $600,000 from the exercise of warrants.

        In 2009, ECU generated $31,163,086 from financing activities. The financings consisted of a combination of a prospectus offering, private placements and the exercise of stock options. Cash of $783,166 was used for the repayment of promissory notes payable and $918,161 was sourced through an increase in the term loan.

Cash and cash equivalents

        As of December 31, 2010, ECU held cash and cash equivalents in the amount of $344,826 compared to $7,647,023 at year-end in 2009.

Results of Operations for the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Loss

        ECU's loss for 2009 was $8,417,937 or $0.03 per share, compared to a loss of $18,043,280 or $0.07 per share in 2008.

Expenses

        Expenses totaled $8,417,937 for 2009, compared to $18,043,280 in 2008, representing a decrease of $9,625,343. The foreign exchange account moved from a loss of $3,525,156 in 2008 to a gain of $3,520,810 in 2009, mainly because of the positive effect of the weakening US dollar on ECU's long-term debt, making up $7,045,966 of that change. Stock-based compensation made up $2,350,511 of the change. During 2008, we recorded a provision for loan loss of $1,242,934 due to the fact that the decline in the trading price of ECU's common shares had eroded the value of the employee options that were taken as security for such loans. The amounts related to depreciation remained relatively unchanged at $182,679, compared to $148,054 in 2008.

Assets

        The total assets of ECU increased from $63,596,834 as of December 31, 2008 to $92,134,278 at the end of 2009. This increase reflected ECU's continued investment in mining property exploration and development and in the purchase of property, plant and equipment, most notably the acquisition and commissioning of the Plant.

Liabilities

        The liabilities decreased to $27,394,645 as of December 31, 2009, from $30,313,558 in 2008. The change was mainly attributable to the financings undertaken during the year which converted to equity

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the outstanding balance in convertible debentures and certain notes payable, offset by increases that result from the changes in exchange rates on ECU's US dollar denominated debt.

Shareholders' equity

        Shareholders' equity totaled $64,739,633 as of December 31, 2009, compared with $33,283,276 at the end of 2008, representing an increase of $31,456,357.

        The increase in shareholders' equity results mainly from financing activities including debt conversion, option exercises and equity raises, which increased share capital, special warrants, equity component of convertible debentures, contributed surplus, and deficit by a combined net total of $37,887,494.

        Other items affecting shareholders' equity were an increase in share capital of $375,000 as a result of the issuance of shares in connection with the purchase of capital assets, an increase in contributed surplus of $1,611,800 reflecting the calculated value of the vesting portion of stock-based compensation, and an increase in the deficit for the loss for the year of $8,417,937.

        At year-end 2009, ECU had 290,340,733 shares outstanding, 15,740,000 options outstanding under its stock option plan and 42,487,426 share purchase warrants outstanding.

Cash flow used in operations

        Cash used in operations for 2009 was $5,853,171, compared to $6,236,808 in 2008. A decrease in expenses year over year was largely offset by a change in accounts payable and customer advances.

Cash flow used in investments

        ECU made cash investments totaling $10,555,086 in the exploration, development and operation of mining properties compared to $11,197,499 in the prior year. After the commissioning of the Plant, ECU began selling doré bars and that together with sales from concentrates resulted in total sales of $6,577,167 in 2009 which reduces ECU's overall cash investment. In 2009 ECU paid $3,428,880 for the acquisition of mineral property concessions including payments of $2,331,600 under an installment contract. $11,267,378 was paid for the purchase of property, plant and equipment being principally related to the acquisition and commissioning of the plant. These figures reflected ECU's ongoing commitment to the growth of our mineral resources and the execution of its plan to create an internal source of cash flows.

Cash flow from operating activities

        During 2009, ECU generated $31,298,081 from financing activities. The financings consisted of a combination of a prospectus offering, private placements and the exercise of stock options. Cash of $783,166 was used for the repayment of promissory notes payable and $918,161 was sourced through an increase in the term loan.

        In the prior year, ECU generated $10,613,660 from financing activities. The financings consisted of US$3,000,000 under the terms of a long-term debt facility, $6,000,000 in proceeds from the sale of convertible debentures, $75,000 in loan proceeds in connection with expenditures made for leasehold improvements, and $870,000 and US$535,100 in demand loans.

Cash and cash equivalents

        As of December 31, 2009, ECU held cash and cash equivalents in the amount of $7,647,023, compared to $538,215 at year-end in 2008.

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Table of Contractual Obligations

        The following table summarizes ECU's contractual obligations at December 31, 2010, as adjusted to reflect the restructure of outstanding debt which occurred during 2011:

Contractual Obligations
  Total   Less Than
1 Year
  1 - 3
Years
  3 - 5
Years
  More Than
5 Years
 
 
  (in thousands of Cdn$)
 

Customer Advances(1)

    5,018     5,018              

Operating Leases(2)

    301     142     136     23      

Term Loan(3)

    16,530     3,306     6,612     6,612      

Mineral Concession Liability(4)

    1,989     1,989              

Facilities Loan

    40     17     23          

Total

    23,878     10,472     6,771     6,635      

(1)
ECU has made arrangements with the customer of its doré bars to provide financing in the form of advances prior to product delivery. The advances are denominated in U.S. dollars and interest is charged at the rate of 18% per annum on outstanding balances. The amount shown in the table has been converted to Canadian dollars at the exchange rate as of December 31, 2010.

(2)
The operating lease obligations are related to the lease of our corporate headquarters office in Toronto, Ontario, which expires in February 2013, and the lease of our office on Torreón, Mexico, which expires in October 2011.

(3)
As of December 31, 2010, ECU owed Cdn$16.5 million under its term loan facility, the terms of which called for principal repayments in equal monthly installments for 12 months commencing January 31, 2011. During 2011, ECU completed a restructuring of its term loan facility. Principal payments under the amended facility are payable in thirty equal monthly payments commencing July 31, 2011 and ending December 31, 2013. The table above reflects the payment terms of the term loan facility as restructured.

(4)
In 2009, ECU entered into contracts which terminated a legal action related to title on the Velardeña property. Under the terms of the contracts, ECU agreed to pay a total of US$6,000,000 in a series of 6 payments of US$1,000,000, commencing May 19, 2009 and running semi-annually thereafter ending November 17, 2011, without interest. The amount shown in the table has been converted to Canadian dollars at the exchange rate as of December 31, 2010.

Off-Balance Sheet Arrangements

        ECU does not have any off-balance sheet arrangements.

Changes and Disagreements with Accountants

        ECU has had no change of accountants nor disagreements with accountants on any manner of accounting principles or practices or financial statement disclosure during its two most recent fiscal years.

Legal Proceedings

        ECU was a party to a lawsuit, before the courts in Mexico, regarding the title to four of the mineral concessions comprising the Velardeña property, in respect of which a third party had alleged to have an undivided 30% ownership interest. The latest decision by the court, awarding the 30% interest to the plaintiff, was in appeal by ECU. On May 11, 2009, ECU entered into contracts which terminated

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the legal actions and settled the title matter. Under the terms of the contracts, ECU agreed to pay a total of US$6,000,000 in a series of 6 payments of US$1,000,000, commencing May 19, 2009 and running semi-annually thereafter ending November 17, 2011, without interest.

        On June 24, 2009, ECU received a Notice of Arbitration (the "Notice") from its San Diego Property joint venture partner, Golden Tag Resources Ltd., wherein the latter sought to refer certain matters pertaining to the operation of the joint venture to arbitration for resolution. During the year, the arbitration hearing held pursuant to the Notice was completed and on September 20, 2010 the Arbitration Panel rendered their conclusion in the matter. ECU finds the award of the arbitration panel ("Arbitration Award") to be fair and has settled the matter with Golden Tag. The conclusions reached in the Arbitration Award have resulted in an increase in the Velardeña mining property costs of $61,171 related to cost of material from the joint venture property processed in ECU's plant.

Quantitative and Qualitative Disclosures about Market Risk

Metal Price Risk

        It is anticipated that the majority of ECU's revenue will be generated from the sale of gold, silver, lead and zinc. A reduction in the market price of gold, silver, lead or zinc may prevent ECU's properties from being economically mined or result in the write-off of assets whose value is impaired as a result of low metals prices. ECU's sales are directly dependent on metal prices that have historically been subject to wide fluctuations, and are affected by numerous factors beyond the control of ECU, such as interest rates, inflation, currency values, speculative activities, global supply of, and demand for, precious and base metals, metal stock levels maintained by producers and others and international and political conditions. The effect of these factors on the price of base and precious metals cannot be accurately predicted and there can be no assurance that the market price of these metals will remain at current levels or that such prices will improve. A decrease in the market price of gold, silver, lead or zinc could affect the profitability of ECU's properties and ECU's ability to finance exploration and development, which would have a material adverse effect on ECU's financial condition and results of operations.

Exchange rate risk

        ECU reports its financial statements in Canadian dollars and operates mainly in Mexico. As a consequence, the financial results of ECU's operations, as reported in Canadian dollars, are subject to changes in the value of the Canadian dollar relative to the Mexican peso. The majority of ECU's revenue is generated from the sale of gold, silver, lead and zinc, generally denominated in US dollars, and ECU's operating costs are denominated in US dollars and Mexican pesos. ECU has debt obligations that are denominated in US dollars. Fluctuations in the exchange rate of the American and Mexican currencies in relation to the Canadian dollar could have a significant adverse effect on ECU's costs of development, earnings, halt or delay development of new projects and reduce funds available for further mineral exploration. ECU's currency risk is somewhat mitigated through the offsetting streams of metal sales in US dollars and interest and other expenses in US dollars.

Interest Rate Risk

        ECU is exposed to fluctuations in rates of interest. The terms of the long term debt facilities with its principal lender provide for interest to be calculated at the greater of; 12% and 1-month London Interbank Offered Rate ("LIBOR") plus 6%. Should the LIBOR rate increase to 6%, then each further 1% increase would result in an increase in annual interest charges of $166,185 based on principal outstanding at June 30, 2011.

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ADDITIONAL INFORMATION

Future Stockholder Proposals

        Stockholders may present proposals for stockholder action in our proxy statement where such proposals are consistent with applicable law, pertain to matters appropriate for stockholder action and are not properly omitted by our action in accordance with Rule 14a-8. Stockholder proposals prepared in accordance with the proxy rules must be received by us on or before December 6, 2011 to be included in our proxy statement for the annual meeting of stockholders in 2012. In addition, in accordance with our Bylaws, if a stockholder proposal is not received by us between January 20, 2012 and the close of business on February 19, 2012, it will not be considered or voted on at the annual meeting. Our Bylaws also contain other procedures to be followed for stockholder proposals for stockholder action, including the nomination of directors.


Delivery of Documents to Stockholders Sharing an Address

        Stockholders who share a single address will receive only one proxy statement at that address unless we have received instructions to the contrary from any stockholder at that address. This practice, known as "householding," is designed to reduce our printing and postage costs. However, if a stockholder of record residing at such an address wishes to receive a separate copy of this proxy statement or of future proxy statements (if applicable), he or she may contact Golden, 350 Indiana Street, Suite 800, Golden, Colorado 80401, Attention: Secretary. We will deliver separate copies of this proxy statement promptly upon written or oral request. If you are a stockholder of record receiving multiple copies of this proxy statement, you can request householding by contacting us in the same manner. If you own your shares of Golden common stock through a bank, broker or other stockholder of record, you can request additional copies of this proxy statement or request householding by contacting the stockholder of record.


Fees and Expenses

        Golden has retained BMO Capital Markets to provide various financial advisory services to Golden in connection with the Transaction. BMO Capital Markets will receive customary compensation for its services in connection with the Transaction and will be reimbursed for out-of-pocket expenses, including reasonable expenses of counsel and other advisors. Golden has agreed to indemnify BMO Capital Markets and its respective affiliates against various liabilities and expenses in connection with its services in connection with the Transaction, including various liabilities and expenses under securities laws. From time to time, BMO Capital Markets and its affiliates may actively trade the debt and equity securities of Golden and ECU for their own account or for the accounts of customers and, accordingly, may hold a long or short position in those securities. BMO Capital Markets has in the past performed various investment banking and financial advisory services for Golden for which it has received customary compensation.

        Golden has retained Morrow & Co., LLC as proxy solicitor in connection with the Transaction. The proxy solicitor may contact holders of Golden common stock by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward material relating to the Golden stockholder proposals to beneficial owners of Golden common stock. Golden will pay the proxy solicitor reasonable and customary compensation for these services in addition to reimbursing the proxy solicitor for its reasonable out-of-pocket expenses. Golden has agreed to indemnify the proxy solicitor against various liabilities and expenses in connection with the Golden stockholder proposals, including various liabilities under the U.S. federal securities laws.

        Other than as set forth above, Golden will not pay any fees or commissions to any broker, dealer or other person for soliciting proxies pursuant to the Transaction. Golden will reimburse brokers,

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dealers, commercial banks and trust companies and other nominees, upon request, for customary clerical and mailing expenses incurred by them in forwarding proxy materials to their customers.


Where Stockholders Can Find More Information About Golden

        Golden files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document Golden files at the Securities and Exchange Commission's Public Reference Section at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Golden's Securities and Exchange Commission filings are also available to the public at the Securities and Exchange Commission's website at http://www.sec.gov or at Golden's website at http://www.goldenminerals.com. Unless otherwise provided below, the information provided in Golden's SEC filings (or available on Golden's website) is not part of this proxy statement and is not incorporated by reference.

        The Securities and Exchange Commission allows Golden to incorporate by reference into this document, documents it files with the Securities and Exchange Commission. This means that, if you are a Golden stockholder, Golden can disclose important information to you by referring you to those documents.

        The information filed by Golden and incorporated by reference is considered to be a part of this document, and later information that Golden files with the Securities and Exchange Commission will update and supersede that information. Statements contained in this document, or in any document incorporated in this document by reference, regarding the contents of any contract or other document are not necessarily complete and each such statement is qualified in its entirety by reference to such contract or other document filed as an exhibit with the Securities and Exchange Commission. Golden incorporates by reference the documents listed below and any documents filed by Golden pursuant to Sections 13(a), 13(c), 14 or 15(d) of the U.S. Securities and Exchange Act of 1934 (File No. 001-13627), after the date of this document and before the date of the special meeting:

        Notwithstanding the foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits, is not incorporated by reference in this proxy statement.

        Golden undertakes to provide without charge to each person to whom a copy of this proxy statement has been delivered, upon request, by first class mail or other equally prompt means, within one business day of receipt of the request, a copy of any or all of the documents incorporated by reference into this proxy statement, other than the exhibits to these documents, unless the exhibits are specifically incorporated by reference into the information that this proxy statement incorporates.

        Requests for copies of Golden filings should be directed to Golden Minerals Company, 350 Indiana Street, Suite 800, Golden, Colorado 80401.

        Document requests from Golden should be made by August 24, 2011 in order to receive them before the special meeting.

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        The proxy statement does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is not lawful to make any offer or solicitation in that jurisdiction. The delivery of this proxy statement should not create an implication that there has been no change in the affairs of Golden since the date of this proxy statement or that the information herein is correct as of any later date.

        Stockholders should not rely on information other than that contained or incorporated by reference in this proxy statement. Golden has not authorized anyone to provide information that is different from that contained in this proxy statement. This proxy statement is dated July 29, 2011. No assumption should be made that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement will not create any implication to the contrary.

        If you have questions about the special meeting or the proposed Transaction after reading this proxy, or if you would like additional copies of this proxy statement or the proxy card, you should contact Golden Minerals Company, 350 Indiana Street, Suite 800, Golden, Colorado 80401.

        Golden also files reports and other information with Canadian provincial securities commissions. These reports and information are available to the public free of charge on SEDAR at www.sedar.com under Golden's profile. The information provided in Golden's filings on SEDAR is not part of this proxy statement and is not incorporated by reference.


Where Shareholders Can Find More Information About ECU

        ECU files reports and other information with Canadian provincial securities commissions. These reports and information are available to the public free of charge on SEDAR at www.sedar.com under ECU's profile. The information provided in ECU's filings is not part of this proxy statement and is not incorporated by reference.

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PARTICULARS OF MATTERS TO BE ACTED UPON AT THE GOLDEN MEETING

Proposal No. 1—The Share Issuance Proposal

Purpose and Effect of Proposed Issuance of Stock

        Golden is seeking your approval of the proposed issuance of approximately 18.9 million shares of Golden common stock to ECU's stockholders in connection with the Transaction.

        In connection with the Transaction, ECU shareholders will receive 0.05 shares of Golden common stock and Cdn$0.000394 in cash for each share of ECU common stock held immediately prior to the consummation of the Transaction. As of June 24, 2011, the date of the Arrangement Agreement, ECU had 317,081,333 shares outstanding and an additional 3,000,000 shares were issued by ECU after that date as payment for the prior exercise of an option to purchase an exploration property. Assuming that no ECU options or warrants are exercised after June 24, 2011, ECU would have 320,081,333 shares outstanding, and Golden would issue approximately 16,004,066 shares to ECU shareholders at closing. The exact number of shares issued at closing will be subject to adjustment for rounding. In addition, an estimated 167,068 shares of Golden common stock would be issued, in the aggregate, to Mr. Roy and Mr. Altmann in lieu of their cash change of control payments. The exact number of shares to be issued will be determined on the closing date based on the five-day volume weighted average price of Golden's common stock on the NYSE Amex immediately prior to such date. Also, as further discussed below, assuming that none of the ECU options or warrants are exercised prior to the closing date, 661,750 Golden shares would be issuable upon exercise of Golden Replacement Options and 2,218,291 Golden shares would be issuable upon exercise of Golden Replacement Warrants. Therefore, a total of approximately 19,051,175 may be issuable to ECU shareholders (or holders of ECU options or warrants upon exercise of such securities) as a result of Transaction.

        The proposed issuance of Golden common stock will result in dilution in the percentage ownership interest of Golden's existing stockholders. The exact amount of such dilution cannot be determined until the time of issuance; however, if Golden had issued, as of March 31, 2011, the estimated number of shares of Golden's common stock contemplated by the Transaction of approximately 16.0 million shares, which excludes up to approximately 2.9 million new shares that will be issuable upon the exercise of existing ECU options and warrants and approximately 167,000 shares to be issued, in the aggregate, to Mr. Roy and Mr. Altmann in satisfaction of change of control payments, then based upon approximately 15.3 million shares of Golden's common stock outstanding as of that date, a book value per Golden share as of March 31, 2011 of $7.64, and a book value of $6.21 in the assets acquired from ECU, the outstanding shares of Golden's common stock outstanding would have increased by approximately 104%, and the book value per share of Golden's common stock would have increased from $7.64 to $13.85. If Golden issues all 19.1 million shares issuable pursuant to the Transaction, including approximately 167,000 shares to be issued in satisfaction of certin ECU change of control bonus payments, then based on 15.3 million shares of Golden stock outstanding as of June 24, 2011, the dilution to existing stockholders would be approximately 125%.

Requirement for Stockholder Approval

        Golden's listing application with each of the NYSE Amex and the TSX require stockholder approval for the issuance of Golden common stock (including if Golden common stock is issuable upon the exercise of convertible securities) that represents in the aggregate more than 20% and 25%, respectively, of the issued and outstanding shares of Golden common stock.

        As of June 24, 2011, 15,302,675 shares of Golden common stock were issued and outstanding. Upon the consummation of the Transaction, ECU's securityholders will acquire up to approximately 18,884,107 million shares of Golden common stock, including shares of common stock issuable upon exercise of Golden Replacement Options and Golden Replacement Warrants. Since this represents more than 25% of the shares of Golden common stock issued and outstanding prior to the

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consummation of the Transaction, stockholder approval is required pursuant to NYSE Amex and TSX listing rules.

Required Vote and Board of Directors' Recommendation

        The Share Issuance Proposal must be approved by the affirmative vote of a majority of the shares of Golden common stock present at the special meeting and entitled to vote thereon, assuming a quorum is present.

YOUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR"
PROPOSAL 1—THE SHARE ISSUANCE PROPOSAL

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Proposal No. 2—The Charter Amendment Proposal

General

        Golden's board of directors has unanimously adopted a resolution approving, declaring advisable and recommending to stockholders for their approval an amendment to Article IV of Golden's Amended and Restated Certificate of Incorporation increasing the total number of shares of its authorized common stock from 50,000,000 shares to 100,000,000 shares.

        The form of the proposed amendment to Golden's Amended and Restated Certificate of Incorporation is attached as Annex G to this proxy statement. The proposed amendment will become effective upon the filing of the amendment with the Delaware Secretary of State, which Golden plans to do immediately following the consummation of the closing of the Transaction.

        Approval of the Charter Amendment Proposal is not required to approve the consummation of the Transaction. If the Share Issuance Proposal is not approved, or if the Transaction is not consummated for any reason, we will not proceed with the amendment to our Amended and Restated Certificate of Incorporation, regardless of whether the Charter Amendment Proposal is approved.

Reasons for the Proposed Amendment

        Golden's board of directors recommends approval of the proposed amendment so that it will have additional authorized but unissued and unreserved shares to permit the pursuit and effectuation of corporate transactions requiring the issuance of common stock in the future. Those transactions may include:

        As explained below, approximately 12.9 million shares of unissued, unreserved common stock will remain available for future issuance following the Transaction. The Golden board believes that additional authorized shares should be available in the future in order to permit Golden to pursue the various transactions described above and to provide for its growth and financial stability. Many of the above transactions arise under circumstances requiring prompt action and do not allow the necessary time to seek stockholder approval to authorize additional shares. The board believes that it is very important for it to have the flexibility to be able to act promptly in the best interests of Golden and its stockholders when circumstances such as those described above arise. For example, one of our largest stockholders, The Sentient Group, has expressed an interest in investing further capital in Golden following the Transaction in order to retain its current proportionate interest. The additional shares authorized pursuant to this proposal would permit the Board to undertake such transactions in the best interests of stockholders.

        Golden may pursue the acquisition from time to time of other mining companies, mining properties or interests in mining properties in the future. In the event the proposed increase in authorized shares of common stock is approved by stockholders, such future acquisitions may be effected for a consideration that includes the issuance of shares of Golden common stock, or other

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securities convertible into Golden common stock, in partial or full payment of the purchase price. Golden anticipates that the terms of any acquisitions in which it would issue shares will be determined through direct negotiations with the securities holders or controlling persons of the entities or properties being acquired. Factors taken into account in determining the terms may include cash flow, reserves and mineralized material, earnings power, quality of management, properties, market location and position, and growth potential. Other than with respect to the Transaction, Golden has not entered into any agreements nor made any decisions with respect to the issuance of any shares in connection with any future acquisitions. If Golden determines to issue shares of common stock in connection with future acquisitions, Golden will not seek stockholder approval of such issuance unless required as discussed below under "Future Stockholder Approval of Common Stock Issuances." The issuance of any such shares of common stock will have no effect on the rights of existing stockholders.

Risks of Non-Approval

        If the Share Issuance Proposal is approved and the Transaction is consummated, but the Charter Amendment Proposal is not approved, the ability of Golden to raise additional capital or undertake strategic acquisitions may be significantly constrained. As noted below under the heading "Currently Issued or Reserved Common Stock," following the consummation of the Transaction, a total of approximately 37.1 million shares of Golden common stock will be issued or reserved for issuance. This would leave Golden with only approximately 12.9 million shares of unissued, unreserved common stock, representing approximately 25.7% of the currently authorized shares of common stock. Many transactions which may result in the issuance of Golden common stock could require prompt action and may not allow the necessary time to seek stockholder approval to authorize additional shares. Without sufficient authorized capital available, Golden may not be able to undertake such transactions.

Currently Issued or Reserved Common Stock

        The table below sets forth the estimated number of shares of Golden common stock that will have been issued or reserved for future issuance, assuming the Transaction is consummated:

Golden Minerals
Common Shares Issued or Reserved for Issuance(1)

Outstanding Common Stock Prior to Transaction

    15,302,675  

Common Stock Issued to ECU shareholders

    16,004,066  

Shares Issued in Lieu of ECU Change of Control Obligations

    167,068  
       

Total Outstanding Common Stock

    31,473,809  
       

Shares Issuable Upon Exercise of Golden Options

    136,810  

Shares Issuable Upon Exercise of Golden Restricted Stock Units

    60,910  

Shares Issuable Upon Exercise of Golden Replacement Options

    661,750  

Shares Issuable Upon Exercise of Golden Replacement Warrants

    2,218,292  

Shares Reserved for Issuance under Golden Incentive Plan(2)

    2,587,509  
       

Total Shares Reserved for Issuance

    5,665,271  
       

Total Shares of Common Stock Issued or Reserved for Issuance

    37,139,080  
       

(1)
Amounts shown are as of June 24, 2011, the date the Arrangement Agreement was executed, and assume that no ECU options or warrants or Golden options have been exercised subsequent to that date.

(2)
The pool of shares available under our 2009 Equity Incentive Plan is equal to 10% of our outstanding shares of common stock, plus shares issuable upon exercise of outstanding

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Future Stockholder Approval of Common Stock Issuances

        The additional shares of common stock sought by the proposed amendment would be available for future issuance without future action by stockholders, unless such action would be required by applicable law or the rules of the NYSE Amex or TSX. Generally, NYSE Amex and TSX rules require stockholder approval of proposed issuances of additional shares that would result in an increase of 20% or more in the case of NYSE Amex, and an increase of more than 25% in the case of TSX, in the total number of shares of common stock outstanding before any such proposed issuance. The NYSE Amex stockholder approval requirement is subject to exemptions for certain public and private offerings for cash and an exception where the delay in securing stockholder approval would seriously jeopardize Golden's financial viability and where Golden's reliance on such exception is expressly approved by the audit committee of its board of directors. Stockholder approval also is required under NYSE Amex rules prior to an issuance of common stock that would result in a change of control of Golden. Furthermore, NYSE Amex rules require stockholder approval under certain circumstances with respect to certain stock option or purchase plans and with respect to proposed issuances of common stock, or of securities convertible into or exercisable for common stock, to directors, officers or substantial stockholders of Golden or its affiliates.

Potential for Anti-Takeover Effect

        Although the board of directors' purpose for seeking an increase in the number of authorized shares of our common stock is not intended to discourage or prevent takeover attempts, it should be noted that authorized but unissued shares of common stock, if issued, could be used by incumbent directors to make more difficult and thereby discourage an attempt to acquire control of Golden even though its stockholders might deem such an acquisition desirable. For example, the shares could be privately placed with purchasers who might support the board of directors in opposing a hostile take-over bid. The issuance of the new shares could also be used to dilute the stock ownership and voting power of a third party seeking to remove directors, replace incumbent directors, accomplish certain business transactions or alter or amend provisions of Golden's Restated and Amended Certificate of Incorporation. To the extent that it would impede any such attempts, the issuance of additional shares of common stock following effectiveness of the proposed amendment to Golden's Amended and Restated Certificate of Incorporation could potentially serve to perpetuate the existing management.

Required Vote and Board of Directors' Recommendation

        In order for the amendment to become effective, the Charter Amendment Proposal must be approved by the holders of a majority of the shares of Golden common stock outstanding and entitled to vote thereon.

YOUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR"
PROPOSAL 2—THE CHARTER AMENDMENT PROPOSAL

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Annex A

GLOSSARY OF TERMS

Selected Transaction Terms

        "Acquisition Proposal" means, in relation to Golden or ECU, as applicable, other than the transactions contemplated by the Arrangement Agreement, any offer, proposal, expression of interest, or inquiry (oral or in writing) from any person (other than the other Party) after the date of the Arrangement Agreement relating to:

        "Arrangement Agreement" means the arrangement agreement dated June 24, 2011 between Golden and ECU, including the Schedules thereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

        "Articles of Arrangement" means the articles of arrangement of ECU in respect of the Transaction, required to be filed pursuant to section 418 of the QBCA with the Enterprise Registrar after the Final Order is made by the Québec Court, which shall be in form and content satisfactory to ECU and Golden, each acting reasonably.

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        "Arrangement Resolution" means the special resolution approving the Plan of Arrangement to be voted upon by ECU Securityholders at the ECU Meeting.

        "Business Day" means any day, other than a Saturday, a Sunday or any other day on which the principal chartered banks located in (i) Denver, Colorado, or (ii) Montréal, Québec are not open for business during normal banking hours.

        "Canadian GAAP" means generally accepted accounting principles determined with reference to the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time, including, for greater certainty, IFRS, where applicable.

        "Charter Amendment Proposal" has the meaning ascribed thereto on page 4 of this Proxy Statement.

        "Chicago Property" means ECU's mining property located at Latitude and Longitude coordinates 25 3' 42"N and 103 41' 46"W, approximately 1 kilometer south of the Velardeña Property, which contains the historical Los Muertos-Chicago mine.

        "Consideration" means the consideration to which an ECU Securityholder is entitled under the Plan of Arrangement.

        "Convertible Notes" means the convertible senior unsecured notes due June 30, 2012 issued by ECU on July 13, 2011 to Golden pursuant to the Private Placement.

        "Depositary" means Computershare, in its capacity as depositary for the Transaction, or such other person as the Parties agree to engage as depositary for the Transaction.

        "Dissent Rights" means the rights of a Registered Shareholder to demand the repurchase all of the ECU Shares held by such Registered Shareholder in accordance with Chapter XIV of the QBCA, as modified by the Interim Order and Article 5 of the Plan of Arrangement.

        "Dissenting Shareholder" means a Registered Shareholder that validly exercises Dissent Rights in respect of the Arrangement Resolution and has not renounced or been deemed to have renounced such Dissent Rights.

        "ECU" means ECU Silver Mining Inc., a company existing under the laws of the Province of Québec.

        "ECU Board" means the board of directors of ECU as the same is constituted from time to time.

        "ECU Board Change in Recommendation" means (A) failure of the ECU Board to recommend that the ECU Securityholders vote their ECU Securities in favor of the Arrangement Resolution, (B) withdrawal, withholding, amendment, modification or qualification by the ECU Board, or public proposal by the ECU Board to withdraw, withhold, amend, modify or qualify its recommendation that the ECU Securityholders vote their ECU Securities in favor of the Arrangement Resolution, (C) approval, acceptance, endorsement, or recommendation by the ECU Board or public proposal by the ECU Board to approve, accept, endorse or recommend, any Acquisition Proposal, or (D) failure of the ECU Board to reaffirm its recommendation that the ECU Securityholders vote their ECU Securities in favor of the Arrangement Resolution within five (5) Business Days (and in any case on or prior to the Business Day immediately prior to the ECU Meeting) after having been requested by Golden to do so (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of five (5) Business Days (or beyond the Business Day immediately prior to the ECU Meeting, if sooner) shall be considered a failure of the ECU Board to reaffirm its recommendation within the requisite time period).

        "ECU Material Adverse Effect" means any change, effect, event, occurrence or state of facts that individually or in the aggregate with other such changes, effects, events, occurrences or states of fact,

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(i) would prevent, make illegal, materially delay the consummation of, or impose material limitations or conditions on the consummation of the Transaction or Golden's ability to acquire, own, or exercise full rights of ownership over, the ECU Securities or any material portion of the business or assets of ECU, or (ii) is or would reasonably be expected to be material and adverse to the business, assets (tangible or intangible), capital, properties, liabilities (contingent or otherwise), prospects, operations, results of operations or condition (financial or otherwise) of ECU and its subsidiaries, taken as a whole, other than any change, effect, event, occurrence or state of facts resulting primarily from:

provided that, notwithstanding the foregoing, any change, effect, event, occurrence or state of facts described in clauses (b), (c), (d), (e) and (g) above shall constitute an ECU Material Adverse Effect to the extent that any such change, effect, event, occurrence or state of facts has or would reasonably be expected to have, individually or in the aggregate, a disproportionate impact on the business, assets, capital, properties, liabilities, prospects, operations, results of operations or condition (financial or otherwise) of ECU and its subsidiaries, taken as a whole, relative to comparable entities operating in the industry in which ECU operates.

        "ECU Meeting" means the special meeting of ECU Securityholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution.

        "ECU Optionholder" means a registered holder of ECU Options.

        "ECU Options" means options to purchase ECU Shares granted under the ECU Stock Option Agreement.

        "ECU Securities" means, collectively, the ECU Shares, the ECU Options, the ECU Warrants and the Convertible Notes.

        "ECU Securityholders" means, collectively, the ECU Shareholders, the ECU Optionholders, the ECU Warrantholders and the holders of Convertible Notes.

        "ECU Shareholder" means a holder of ECU Shares.

        "ECU Shares" means the common shares in the capital of ECU.

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        "ECU Termination Fee" has the meaning ascribed thereto under "The Arrangement Agreement—Termination Fee".

        "ECU Termination Fee Event" has the meaning ascribed thereto under "The Arrangement Agreement—Termination Fee".

        "ECU Warrants" means, collectively, the February 2009 Warrants and the December 2009 Warrants.

        "ECU Warrantholder" means a holder of ECU Warrants.

        "Effective Date" means the date shown on the Certificate of Arrangement giving effect to the Transaction.

        "Effective Time" means 12:01 a.m. (Eastern Time) on the Effective Date.

        "Enterprise Registrar" means the enterprise registrar appointed by the Minister of Revenue of Québec.

        "Final Order" means the order of the Québec Court made after application therefor, presented to the Québec Court in form and content acceptable to the ECU and Golden, each acting reasonably, approving the Transaction as such order may be amended by the Québec Court (with the consent of ECU and Golden, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any requested amendment is acceptable to the Parties, each acting reasonably) on appeal.

        "Golden" means Golden Minerals Company, a corporation existing under the laws of the State of Delaware.

        "Golden Board Change in Recommendation" means (A) failure by the Golden Board to recommend that Golden Stockholders vote their Golden Stock in favor of the Golden Meeting Resolution, (B) withdrawal, withholding, amendment, modification or qualification by the Golden Board, or public proposal by the Golden Board to withdraw, withhold, amend, modify or qualify its recommendation that Golden Stockholders vote their Golden Stock in favor of the Golden Meeting Resolution, (C) approval, acceptance, endorsement, or recommendation by the Golden Board or public proposal by the Golden Board to approve, accept, endorse or recommend, any Acquisition Proposal, or (D) failure of the Golden Board to reaffirm its recommendation that Golden Stockholders vote their Golden Stock in favor of the Golden Meeting Resolution within five (5) Business Days (and in any case on or prior to the Business Day immediately prior to the Golden Meeting) after having been requested by ECU to do so (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of five (5) Business Days (or beyond the Business Day immediately prior to the day of the Golden Meeting, if sooner) shall be considered a failure of the Golden Board to reaffirm its recommendation within the requisite time period).

        "Golden Material Adverse Effect" means any change, effect, event, occurrence or state of facts that individually or in the aggregate with other such changes, effects, events, occurrences or states of fact, (i) would prevent, make illegal, materially delay the consummation of, or impose material limitations or conditions on the consummation of the Transaction, (ii) is or would reasonably be expected to be material and adverse to the business, assets (tangible or intangible), capital, properties, liabilities (contingent or otherwise), prospects, operations, results of operations or condition (financial or otherwise) of Golden and its subsidiaries taken as a whole, other than any change, effect, event, occurrence or state of facts resulting primarily from:

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provided that, notwithstanding the foregoing, any change, effect, event, occurrence or state of facts described in clauses (b), (c), (d), (e) and (g) above shall constitute a Golden Material Adverse Effect to the extent that any such change, effect, event, occurrence or state of facts has or would reasonably be expected to have, individually or in the aggregate, a disproportionate impact on the business, assets, capital, properties, liabilities, prospects, operations, results of operations or condition (financial or otherwise) of Golden and its subsidiaries taken as a whole, relative to comparable entities operating in the industry in which Golden operates.

        "Golden Material Subsidiaries" means Silex Argentina, S.A., Compañía de Minerales de Zacatecas, S. de R.L. de C.V., Minera de Cordilleras, S. de R.L. de C.V., and Minera Largo, S. de R.L. de C.V.

        "Golden Meeting" means the special meeting of the Golden Stockholders, including any adjournment or postponement thereof, to be called for the purposes of obtaining the approval of the Golden Meeting Resolution and the increase of Golden's authorized capital above 50,000,000 shares of Golden common stock, all in accordance with the requirements of the TSX and NYSE Amex, as applicable.

        "Golden Meeting Resolution" means the resolutions to be voted upon by Golden Stockholders at the Golden Meeting approving the Share Issuance Proposal and the Charter Amendment Proposal.

        "Golden Replacement February 2009 Warrants" means warrants exercisable to acquire Golden common stock issued pursuant to the Plan of Arrangement, in replacement of the February 2009 Warrants.

        "Golden Replacement Options" means options to purchase Golden common stock issued pursuant to the Plan of Arrangement in replacement of ECU Options.

        "Golden Replacement Warrants" means collectively, the Golden Replacement February 2009 Warrants and the Golden Replacement December 2009 Warrants.

        "Golden Termination Fee" has the meaning ascribed thereto under "The Arrangement Agreement—Termination Fee".

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        "Golden Termination Fee Event" has the meaning ascribed thereto under "The Arrangement Agreement—Termination Fee".

        "Governmental Entity" means (a) any multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board or authority of any of the foregoing, (c) any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, or (d) any stock exchange, including the TSX and the NYSE Amex.

        "IFRS" means, at any given date, International Financial Reporting Standards, as applied in Canada, which include standards and interpretations adopted by the International Accounting Standards Board, applied on a consistent basis.

        "Interim Order" means the order made after application to the Québec Court, presented to the Québec Court in a form and content acceptable to ECU and Golden, each acting reasonably, providing for, among other things, the calling and holding of the ECU Meeting, as the same may be amended by the Québec Court at the request of ECU with the consent of Golden, acting reasonably.

        "Intervening Event" means any material event, development, circumstance, occurrence or change in circumstances or facts (including any change in probability or magnitude of circumstances) not related to an Acquisition Proposal that was not known to the board of directors of the relevant Party on the date the Arrangement Agreement (or if known, the magnitude or material consequences of which were not known to the board of directors of the relevant Party as of the date thereof).

        "Key Regulatory Approvals" means applicable sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities contemplated by the Arrangement Agreement.

        "Key Third Party Consents" means applicable consents, approvals and notices required to proceed with the transactions contemplated by the Arrangement Agreement and the Transaction.

        "Law" or "Laws" means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, writs, awards, decrees, rulings, ordinances, judgments, injunctions, determinations or other requirements, whether domestic or foreign, and the terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity or self-regulatory authority (including, where applicable, the TSX and the NYSE Amex), and the term "applicable" with respect to such Laws and in a context that refers to one or more persons, means such Laws as are applicable to such person or its business, undertaking, property or securities and emanate from a person having jurisdiction over the person or persons or its or their business, undertaking, property or securities.

        "Letter of Transmittal" means the letter of transmittal, to be completed by ECU Shareholders and ECU Warrantholders in connection with the Transaction.

        "NI 43-101" means National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators.

        "NYSE Amex" means the NYSE Amex Stock Exchange.

        "Outside Date" means the date that is four (4) months from the date of entering into the Arrangement Agreement (which was June 24, 2011); provided, however, that in the event the outside date for the ECU Meeting is extended pursuant to Section 2.4(a) of the Arrangement Agreement

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and/or the Golden Meeting is extended pursuant to Section 2.10(a) of the Arrangement Agreement, the Outside Date shall be extended by the same number of days.

        "Parties" means ECU and Golden, and "Party" means either of them.

        "Plan of Arrangement" means the plan of arrangement, attached as Annex C hereto, and any amendments or variations thereto made in accordance with Section 8.3 of the Arrangement Agreement or the Plan of Arrangement or made at the direction of the Québec Court in the Final Order with the consent of ECU and Golden, each acting reasonably.

        "Private Placement" means the subscription by Golden for Cdn$15,000,000 in principal amount of Convertible Notes at par, pursuant to the Subscription Agreement.

        "Québec Court" means the Superior Court of Québec.

        "San Diego Property" means ECU's mining property located at Latitude and Longitude coordinates 25 6' 7"N and 103 37' 19"W, approximately 9 kilometres northeast of the Velardeña Property, which contains the historical La Cruz-La Rata and El Trovador mines as well as a number of other shallower shafts which were sunk on narrower veins such as the Cantarranas, Montanez and El Jal. The San Diego property is subject to a joint venture agreement between ECU and Golden Tag Resources Ltd..

        "SEC" means the United States Securities and Exchange Commission.

        "Section 3(a)(10) Exemption" means the exemption from the registration requirements of the U.S. Securities Act provided under Section 3(a)(10) thereof.

        "SEDAR" means the System for Electronic Document Analysis and Retrieval of the Canadian Securities Administrators.

        "Share Issuance Proposal" has the meaning ascribed thereto on page 4 of this proxy statement.

        "Shareholder Rights Plan" means the Shareholder Rights Plan Agreement dated as of May 1, 2009 between ECU and Computershare, in its capacity as rights agent.

        "Subscription Agreement" means the agreement dated June 24, 2011 between ECU and Golden setting out the terms and conditions of the Private Placement.

        "Superior Proposal" means any bona fide written Acquisition Proposal that is an unsolicited offer made after the date of the Arrangement Agreement (and not obtained in violation of the non-solicitation provisions of the Arrangement Agreement or the Exclusivity Agreement or any agreement between the person making the Superior Proposal and the Party in respect of which the Superior Proposal is made) that relates to 100% of the outstanding ECU Shares or Golden common stock, as applicable, or all or substantially all of the consolidated assets of ECU or Golden, as applicable, and its subsidiaries, and (i) that is reasonably capable of being completed without undue delay, taking into account all financial, legal, regulatory and other aspects of such proposal and the person making such proposal; (ii) that is made on the same terms and conditions to all ECU Shareholders or Golden Stockholders (to the extent the offer relates to the acquisition of securities), as the case may be; (iii) the financing of which is fully committed; (iv) that is not subject to a due diligence condition; (v) in respect of which the applicable Party's board of directors determines, in its good faith judgment, after receiving the written advice of its outside legal advisors and the ECU Financial Advisor or Golden's financial advisor, as applicable, that (a) failure to recommend such Acquisition Proposal to the ECU Shareholders or Golden Stockholders, as applicable, would be inconsistent with its fiduciary duties under applicable Law; and (b) having regard for all of its terms and conditions, such Acquisition Proposal, will, if consummated in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction more favorable to the ECU Shareholders or Golden Stockholders, as the case may be, from a financial point of view than the

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transaction contemplated by the Arrangement Agreement, after taking into account any change to the transaction contemplated by the Arrangement Agreement proposed by the other Party pursuant to such Party's right to match; and (vi) that does not provide for the payment of any break, termination or other fees or expenses to the other party to the Acquisition Proposal in the event that ECU completes the Transaction or any other similar transaction with Golden or any of its affiliates agreed to prior to any termination of the Arrangement Agreement.

        "TSX" means the Toronto Stock Exchange.

        "U.S. GAAP" means the U.S. generally accepted accounting principles.

        "Velardeña Properties" means the Velardeña Property, the Chicago Property and the San Diego Property.

        "Velardeña Property" means ECU's mining property located at Latitude and Longitude coordinates 25 4' 34"N and 103 41' 43"W of the Velardeña Mining District, which contains the Santa Juana mine, as well as the historical Terneras, San Juanes and San Mateo mines.

        "Zacatecas Project" means Golden's Zacatecas Project located in the state of Zacatecas, Mexico.


Selected Mining Terms

        "Ag" means silver.

        "Base Metal" means a classification of metals usually considered to be of low value and higher chemical activity when compared with the precious metals (gold, silver, platinum, etc.). This nonspecific term generally refers to the high-volume, low-value metals copper, lead, tin, and zinc.

        "Breccia" means rock consisting of fragments, more or less angular, in a matrix of finer-grained material or of cementing material.

        "Claim" means a mining interest giving its holder the right to prospect, explore for and exploit minerals within a defined area.

        "Concentrates" means the clean product of ore or metal separated from its containing rock or earth by froth flotation or other methods of mineral separation.

        "Concession" means a grant or lease of a tract of land made by a government or other controlling authority in return for stipulated services or a promise that the land will be used for a specific purpose.

        "Core sample" means one or several pieces of whole or split parts of core selected as a sample for analysis or assay.

        "Crosscut" means a horizontal opening driven from a shaft and (or near) right angles to the strike of a vein or other orebody.

        "Cut-off Grade" means the lowest grade of mineralized rock that qualifies as ore grade in a given deposit, and is also used as the lowest grade below which the mineralized rock currently cannot be profitably exploited. Cut-off grades vary between deposits depending upon the amenability of ore to gold extraction and upon costs of production.

        "Deposit" means an informal term for an accumulation of mineral ores.

        "Development" means underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting and raising.

        "Diorite" means an intrusive igneous rock composed chiefly of sodic plagioclase, hornblende, biotite or pyroxene.

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        "Drift" means a horizontal or nearly horizontal underground opening driven along a vein to gain access to the deposit.

        "Epithermal" means hydrothermal mineral deposit formed within one kilometer of the earth's surface, in the temperature range of 50-200°C.

        "Feasibility Study" means an engineering study designed to define the technical, economic, and legal viability of a mining project with a high degree of reliability.

        "Formation" means a distinct layer of sedimentary rock of similar composition.

        "g/t" means grams per metric tonne.

        "Galena" means lead sulfide, the most common ore mineral of lead.

        "Grade" means the metal content of ore, usually expressed in troy ounces per ton (2,000 pounds) or in grams per ton or metric tonnes which contain 2,204.6 pounds or 1,000 kilograms.

        "Gram" means 0.0321507 troy ounces.

        "Hydrothermal" means processes associated with heated or superheated water, especially mineralization or alteration.

        "Indicated Mineral Resource" is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

        "Inferred Mineral Resource" is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

        "Intrusive" means a body of igneous rock formed by the consolidation of intruded magma.

        "Level" means the horizontal openings on a working horizon in a mine; it is customary to work mines from a shaft, establishing levels at regular intervals, generally about 50 meters or more apart.

        "Measured Mineral Resource" is that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

        "Metallurgy" means the science and art of separating metals and metallic minerals from their ores by mechanical and chemical processes.

        "Metamorphic" means affected by physical, chemical, and structural processes imposed by depth in the earth's crust.

        "Mine" means an excavation beneath the surface of the ground from which mineral matter of value is extracted.

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        "Mineral Reserve" means, in accordance with NI 43-101, the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.

        "Mineral Resource" means, in accordance with NI 43-101, a concentration or occurrence of diamonds, natural solid inorganic material or natural solid fossilized organic material, including base or precious metals, coal and industrial minerals, in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.

        "Mineralization" means the concentration of metals within a body of rock.

        "Minerals" means all ores, doré, concentrates and other products derived therefrom, of precious, base and industrial minerals, including diamonds, which may be lawfully explored for, mined and sold pursuant to Mineral Rights and other instruments of title.

        "Mining" means the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves are expanded during the life of the mine operations as the exploration potential of the deposit is realized.

        "Net Smelter Return" means a payment made by a producer of metals based on the value of the gross metal production from the property, less deduction of certain limited costs including smelting, refining, transportation and insurance costs.

        "Open Pit" means a mine working or excavation open to the surface.

        "Ore" means material containing minerals that can be economically extracted.

        "Ounce (oz)" means a measure of weight in gold and other precious metals, correctly troy ounces, which weighs 31.2 grams, as distinct from an imperial ounce which weighs 28.4 grams.

        "Outcrop" means that part of a geologic formation or structure that appears at the surface of the earth.

        "Oxidation" means a chemical reaction caused by exposure to oxygen that results in a change in the chemical composition of a mineral.

        "Oxide" means mineralized rock in which some of the original minerals have been oxidized (i.e., combined with oxygen).

        "Precious Metal" means any of several relatively scarce and valuable metals, such as gold, silver, and the platinum-group metals.

        "Probable Reserves" means reserves for which quantity and grade and/or quality are computed from information similar to that used for Proven Reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for Proven Reserves, is high enough to assume continuity between points of observation.

        "Proven Reserves" means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and

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the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.

        "Pyrite" means a common, pale-bronze or brass-yellow mineral. Pyrite has a brilliant metallic luster and has been mistaken for gold. Pyrite is the most wide- spread and abundant of the sulfide minerals and occurs in all kinds of rocks.

        "Ramp" means an inclined underground tunnel which provides access for exploration or a connection between levels of a mine.

        "Reclamation" means the process of returning land to another use after mining is completed.

        "Recovery" means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage.

        "Reserves" means that part of a mineral deposit that could be economically and legally extracted or produced at the time of reserve determination.

        "Sampling" means selecting a fractional part of a mineral deposit for analysis.

        "Sediment" means solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the Earth's surface at ordinary temperatures in a loose, unconsolidated form.

        "Sedimentary" means formed by the deposition of sediment.

        "Shaft" means a vertical passageway to an underground mine for moving personnel, equipment, supplies and material including ore and waste rock.

        "Skarn" means the name for the metamorphic rocks surrounding an igneous intrusive where it comes in contact with a limestone or dolostone formation.

        "Stope" means an area in an underground mine where ore is mined.

        "Sulfide" means a compound of sulfur and some other element.

        "Tertiary" means the first period of the Cenozoic Era (after the Cretaceous of the Mesozoic Era and before the Quaternary), thought to have covered the span of time between 65 million years and 3 to 2 million years ago.

        "Tonne (t)" means a metric ton of 1,000 kilograms (2,205 pounds).

        "Vein" means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source.

        "Waste" means rock lacking sufficient grade and/or other characteristics of ore.

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Annex B

Execution Version

GOLDEN MINERALS COMPANY

AND

ECU SILVER MINING INC.



ARRANGEMENT AGREEMENT



DATED JUNE 24, 2011


Table of Contents


TABLE OF CONTENTS

 
   
  Page  

ARTICLE 1

 

INTERPRETATION

  B-1  
     

1.1

 

Definitions

  B-1  
     

1.2

 

Interpretation Not Affected by Headings

  B-15  
     

1.3

 

Number and Gender

  B-16  
     

1.4

 

Date for Any Action

  B-16  
     

1.5

 

Currency

  B-16  
     

1.6

 

Knowledge

  B-16  
     

1.7

 

Schedules

  B-16  

ARTICLE 2

 

THE ARRANGEMENT

 
B-16
 
     

2.1

 

Arrangement

  B-16  
     

2.2

 

Interim Order

  B-16  
     

2.3

 

U.S. Securities Law Matters

  B-17  
     

2.4

 

ECU Meeting

  B-18  
     

2.5

 

ECU Circular

  B-19  
     

2.6

 

Final Order

  B-21  
     

2.7

 

Court Proceedings

  B-21  
     

2.8

 

Articles of Arrangement and Effective Date

  B-21  
     

2.9

 

Payment of Consideration

  B-21  
     

2.10

 

Golden Meeting

  B-22  
     

2.11

 

Preliminary and Definitive Golden Proxy Statements

  B-22  
     

2.12

 

Preparation of Filings

  B-24  
     

2.13

 

Announcement and Shareholder Communications

  B-24  
     

2.14

 

Withholding Taxes

  B-24  

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF ECU

 
B-25
 
     

3.1

 

Representations and Warranties of ECU

  B-25  
     

3.2

 

Survival of Representations and Warranties

  B-40  

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF GOLDEN

 
B-41
 
     

4.1

 

Representations and Warranties

  B-41  
     

4.2

 

Survival of Representations and Warranties

  B-56  

ARTICLE 5

 

COVENANTS

 
B-56
 
     

5.1

 

Covenants of ECU Regarding the Conduct of Business

  B-56  
     

5.2

 

Additional Covenants of ECU

  B-59  
     

5.3

 

Covenants of ECU Relating to the Arrangement

  B-59  
     

5.4

 

Covenants of Golden Regarding the Conduct of Business

  B-60  
     

5.5

 

Additional Covenants of Golden

  B-62  
     

5.6

 

Covenants of Golden Relating to the Arrangement

  B-63  
     

5.7

 

Mutual Covenants

  B-64  
     

5.8

 

Scope of Covenants

  B-65  
     

5.9

 

Deliveries

  B-65  
     

5.10

 

ECU Options

  B-65  
     

5.11

 

ECU Warrants

  B-66  

ARTICLE 6

 

CONDITIONS

 
B-69
 
     

6.1

 

Mutual Conditions Precedent

  B-69  
     

6.2

 

Additional Conditions Precedent to the Obligations of Golden

  B-70  
     

6.3

 

Additional Conditions Precedent to the Obligations of ECU

  B-71  
     

6.4

 

Satisfaction of Conditions

  B-72  

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  Page  

ARTICLE 7

 

ADDITIONAL AGREEMENTS

  B-72  
     

7.1

 

Notice and Cure Provisions

  B-72  
     

7.2

 

Non-Solicitation

  B-72  
     

7.3

 

Right to Match or Respond to a Potential Adverse Recommendation Change

  B-75  
     

7.4

 

Expenses and Termination Fees

  B-76  
     

7.5

 

Access to Information; Confidentiality

  B-79  
     

7.6

 

Insurance and Indemnification

  B-79  

ARTICLE 8

 

TERM, TERMINATION, AMENDMENT AND WAIVER

 
B-80
 
     

8.1

 

Term

  B-80  
     

8.2

 

Termination

  B-80  
     

8.3

 

Amendment

  B-83  
     

8.4

 

Waiver

  B-83  

ARTICLE 9

 

GENERAL PROVISIONS

 
B-83
 
     

9.1

 

Notices

  B-83  
     

9.2

 

Governing Law

  B-84  
     

9.3

 

Injunctive Relief

  B-85  
     

9.4

 

Time of Essence

  B-85  
     

9.5

 

Entire Agreement, Binding Effect and Assignment

  B-85  
     

9.6

 

Severability

  B-85  
     

9.7

 

Further Assurances

  B-85  
     

9.8

 

Counterparts, Execution

  B-86  


SCHEDULE A    PLAN OF ARRANGEMENT


 

A-1

 


SCHEDULE B    ARRANGEMENT RESOLUTION


 

B-1

 


SCHEDULE C    KEY REGULATORY APPROVALS


 

C-1

 


SCHEDULE D    KEY THIRD PARTY CONSENTS


 

D-1

 

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ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT dated June 24, 2011,

        GOLDEN MINERALS COMPANY, a corporation incorporated under the laws of Delaware ("Golden")

- and -

        ECU SILVER MINING INC., a corporation incorporated under the laws of Québec ("ECU")

        WHEREAS Golden and ECU wish to enter into a transaction providing for, among other things, the acquisition by Golden of all of the ECU Securities (as defined below);

        AND WHEREAS Golden and ECU intend to carry out the transactions contemplated by this Agreement (as defined below) by way of an arrangement under the provisions of the QBCA (as defined below);

        AND WHEREAS the ECU Board (as defined below), after consultation with its financial and legal advisors, has determined unanimously that the Plan of Arrangement (as defined below) is fair to the ECU Shareholders (as defined below) and is in the best interests of ECU and has resolved unanimously to recommend to the ECU Securityholders (as defined below), other than the holder of the Convertible Notes (as defined below), that they vote in favour of the Arrangement Resolution (as defined below);

        NOW THEREFORE, in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:


ARTICLE 1
INTERPRETATION

1.1  Definitions

        In this Agreement, unless the context otherwise requires:

        "Acquisition Proposal" means, in relation to Golden or ECU, as applicable, other than the transactions contemplated by this Agreement, any offer, proposal, expression of interest, or inquiry (oral or in writing) from any person (other than the other Party) after the date hereof relating to:

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        "Adverse Recommendation Change" has the meaning ascribed thereto in Section 7.2.3(b);

        "affiliate" means, in respect of a specified person, a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, that specified person;

        "Agreement" means this Arrangement Agreement, including (unless the context requires otherwise) the Schedules hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof;

        "AMF" means the Québec Autorité des marchés financiers;

        "Arrangement" means the arrangement under Chapter XVI—Division II of the QBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.3 hereof or the Plan of Arrangement or made at the direction of the Court in the Final Order with the consent of ECU and Golden, each acting reasonably;

        "Arrangement Resolution" means the special resolution approving the Plan of Arrangement to be voted upon by the ECU Shareholders and the ECU Securityholders at the ECU Meeting, to be substantially in the form and content of Schedule B hereto;

        "Articles of Arrangement" means the articles of arrangement of ECU in respect of the Arrangement, required to be filed pursuant to section 418 of the QBCA with the Enterprise Registrar after the Final Order is made by the Court, which shall be in form and content satisfactory to ECU and Golden, each acting reasonably;

        "Business Day" means any day, other than a Saturday, a Sunday or any other day on which the principal chartered banks located in (i) Denver, Colorado, or (ii) Montreal, Québec are not open for business during normal banking hours;

        "Canadian GAAP" means generally accepted accounting principles determined with reference to the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time, including, for greater certainty, IFRS, where applicable;

        "Certificate of Arrangement" means the certificate of arrangement to be issued by the Enterprise Registrar in accordance with Chapter XVIII of the QBCA in respect of the Articles of Arrangement;

        "Chicago Project" means the Chicago Project, Velardeña Mining District, Durango State, Mexico, as described on Schedule 3.1(w)(i) to the ECU Disclosure Letter;

        "Competition Act" means the Competition Act (Canada), as amended from time to time;

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        "Confidentiality Agreement" means the letter agreement dated April 21, 2011 between Golden and ECU pursuant to which Golden has been provided with access to confidential information of ECU and ECU has been provided with access to confidential information of Golden;

        "Consideration" means the consideration payable by Golden in respect of each ECU Security pursuant to the Plan of Arrangement;

        "control": a person shall be deemed to be controlled by another person or by two or more persons if (i) voting securities of the first-mentioned person carrying more than 50 per cent of the votes attaching to such securities are held, otherwise than by way of security only, by or for the benefit of the other person or by or for the benefit of the other persons, and (ii), in the case of a company, the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of such company;

        "Convertible Notes" means the convertible senior unsecured notes due June 30, 2012 to be issued by ECU to Golden pursuant to the Private Placement;

        "Court" means the Superior Court of Québec;

        "Cultural Heritage Laws" means all applicable Laws relating to the protection, reconnaissance and preservation of archaeological, historical or cultural evidences, remains, sites, features or artefacts;

        "December 2009 Warrants" means the ECU Warrants issued pursuant to the December 2009 Warrant Indenture;

        "December 2009 Warrant Indenture" means the warrant indenture dated as of December 9, 2009 between ECU and the Warrant Agent;

        "Definitive Golden Proxy Statement" means the notice of the Golden Meeting and accompanying definitive proxy statement, including all schedules, appendices and exhibits thereto, filed with the SEC and to be sent to Golden Stockholders in connection with the Golden Meeting, as amended, supplemented or otherwise modified from time to time;

        "Depositary" means Computershare Investor Services Inc., in its capacity as depositary for the Arrangement, or such other person as the Parties agree to engage as depositary for the Arrangement;

        "Dissent Rights" means the rights of dissent in respect of the Arrangement described in the Plan of Arrangement;

        "ECU Approvals" means all Permits from any Governmental Entity necessary to conduct the businesses of ECU or any of its subsidiaries as now conducted or currently proposed to be conducted, as listed on Schedule 5.1(m) to the ECU Disclosure Letter;

        "ECU Benefit Plans" has the meaning ascribed thereto in Section 3.1(ff)(i);

        "ECU Board" means the board of directors of ECU as the same is constituted from time to time;

        "ECU Board Change in Recommendation" has the meaning ascribed thereto in Section 8.2.1(c)(i);

        "ECU Circular" means the notice of the ECU Meeting and accompanying management proxy circular, including all schedules, appendices and exhibits thereto, to be sent to ECU Securityholders in connection with the ECU Meeting, as amended, supplemented or otherwise modified from time to time;

        "ECU Concessions" means any mining freehold title, conventional property interest, concession, claim, lease, licence, permit or other right to explore for, exploit, develop, remove, mine, produce, process or refine minerals or any interest therein which ECU or any of its subsidiaries owns or has a right or option to acquire or use, all as listed in Schedule 3.1(w)(i) to the ECU Disclosure Letter;

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        "ECU Contract" means any contract, agreement, instrument, license, franchise, lease, arrangement, commitment, understanding or other right or obligation (written or oral) to which ECU or any of its subsidiaries is a party or by which ECU or any of its subsidiaries is bound or affected or to which any of their respective properties or assets is subject;

        "ECU Corporate Opinions" means legal opinions of local counsel, dated no earlier than the date that is three (3) days prior to the Effective Date and addressed to Golden, in respect of the legal status of each of the subsidiaries of ECU, substantially in the form and having the substance of the draft ECU Corporate Opinions attached to the ECU Disclosure Letter;

        "ECU Data Room" means the internet-based data room established by or on behalf of ECU at https://ecusilver.sharefile.com/;

        "ECU Data Room Information" means all information, books, maps, records, reports, files, data, interpretations, papers or other records or documents relating to ECU and its subsidiaries or their respective businesses, made available to Golden and its advisors prior to the date hereof in the ECU Data Room;

        "ECU Disclosure Letter" means the disclosure letter dated the date hereof regarding this Agreement executed by ECU and delivered to Golden prior to the execution of this Agreement;

        "ECU Fairness Advisor" means Stonecap Securities Inc.;

        "ECU Fairness Advisor Engagement Letter" has the meaning ascribed thereto in Section 3.1(rr);

        "ECU Financial Advisor" means Dahlman Rose & Company, LLC, financial advisor to the ECU Board;

        "ECU Financial Advisor Engagement Letter" has the meaning ascribed thereto in Section 3.1(rr);

        "ECU Financial Statements" has the meaning ascribed thereto in Section 3.1(k);

        "ECU Lands" means all interests and rights in real and immoveable property, including property rights, possession rights, licenses, leases, rights of way, rights to use, surface rights, easements and any kind of permits or authorizations permitting the use of land or other real property interests (but excluding the ECU Concessions) which ECU or any of its subsidiaries owns or has a right in or interest in or has an option or other right to acquire or use, all as indicated in Schedule 3.1(w)(i) to the ECU Disclosure Letter;

        "ECU Locked-Up Securityholders" means the ECU Securityholders who will enter into the ECU Meeting Voting Agreement with Golden, including all directors and senior officers of ECU, pursuant to which they will agree, subject to the terms of the ECU Meeting Voting Agreement, to vote their ECU Securities (including any ECU Shares issuable upon the exercise of ECU Options or ECU Warrants) in favour of the Arrangement Resolution;

        "ECU Material Adverse Effect" means any change, effect, event, occurrence or state of facts that individually or in the aggregate with other such changes, effects, events, occurrences or states of fact, (i) would prevent, make illegal, materially delay the consummation of, or impose material limitations or conditions on the consummation of the Arrangement or Golden's ability to acquire, own, or exercise full rights of ownership over, the ECU Securities or any material portion of the business or assets of ECU, or (ii) is or would reasonably be expected to be material and adverse to the business, assets (tangible or intangible), capital, properties, liabilities (contingent or otherwise), prospects, operations, results of operations or condition (financial or otherwise) of ECU and its subsidiaries, taken as a whole, other than any change, effect, event, occurrence or state of facts resulting primarily from:

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provided that, notwithstanding the foregoing, any change, effect, event, occurrence or state of facts described in clauses (b), (c), (d), (e) and (g) of this definition shall constitute an ECU Material Adverse Effect to the extent that any such change, effect, event, occurrence or state of facts has or would reasonably be expected to have, individually or in the aggregate, a dispropor