Entry into a Material Definitive Agreement
Offering and Private Placement Transaction
On July 17, 2019, Golden Minerals Company (the Company), a Delaware corporation, entered into a Securities Purchase Agreement with certain institutional investors (the Securities Purchase Agreement) providing for the issuance and sale by the Company in a registered direct offering (the Offering) of 8,653,846 shares of common stock at a price of $0.26 per share (the Offering Shares), and in a concurrent private placement transaction, the issuance of 8,653,846 Series A warrants (the Series A Warrants) to purchase up to 8,653,846 shares of the Companys common stock at an exercise price of $0.35 per share, for aggregate gross proceeds of $2.25 million. Furthermore, each of the investors in the Offering held warrants that were issued by the Company in May 2016 and were exercisable until November 2021 at an exercise price of $0.75 per share. In connection with the Offering, the Company also agreed to exchange, on a one-for-one basis, the May 2016 warrants for Series B warrants (the Series B Warrants and together with the Series A Warrants, the Warrants) to purchase 4,500,000 shares of common stock at an exercise price of $0.35 per share.
The issuance of the Series A Warrants and the Series B Warrants is together referred to as the Private Placement.
The Offering Shares are registered pursuant to the Companys registration statement on Form S-3 (File No. 333-220461), and a prospectus supplement thereto filed with the Securities and Exchange Commission (SEC). The Warrants were offered and sold without registration under the Securities Act of 1933, as amended (the Act), in reliance on the exemptions provided by Section 4(a)(2) of the Act and/or Regulation D promulgated thereunder. Each Series A Warrant is exercisable six months from the date of issuance and has a term expiring five years after such initial exercise date. Each Series B Warrant is exercisable six months from the date of issuance, has a term expiring in May 2022, but is otherwise subject to the same terms and conditions as the Series A Warrants.
H.C. Wainwright & Co. (the HCW) acted as the exclusive placement agent in connection with the Offering and Private Placement. HCW did not purchase or sell any securities, nor was it required to arrange the purchase or sale of any minimum number or dollar amount of securities. HCW agreed to use its reasonable best efforts to arrange for the sale of the Offering Shares and Warrants (together, the Securities). HCW was paid a cash fee equal to six percent (6%) of the aggregate gross proceeds received by the Company from the sale of the Securities at the closing of the Offering and Private Placement and received $35,000 for reimbursement of its expenses.
The Company intends to use the proceeds from the Offering and Private Placement for working capital requirements and general corporate purposes.
The Offering and concurrent Private Placement closed on July 19, 2019.
Additional Shares Resulting from the Offering and Private Placement
As a result of anti-dilution provisions in certain of the Companys outstanding warrants, the consummation of the Offering and Private Placement will result in adjustments that reduce the exercise price and increase the number of shares issuable under certain of the Companys outstanding warrants.
In September 2014, the Company closed on a public offering in which it sold units consisting of one share of common stock and a five-year warrant to acquire one half of a share of common stock at an exercise price of $1.21 per share (the 2014 Warrants). The exercise price was subsequently adjusted downward after a number of anti-dilution adjustments and, prior to the Offering and Private Placement Transaction, was $0.84 per share, with warrant holders having the right to purchase an aggregate of 5,551,344 shares of common stock for the 9,492,000 outstanding 2014 Warrants. Pursuant to the anti-dilution provisions in the 2014 Warrants, at the closing of Offering and Private Placement Transaction, the number of shares of common stock issuable upon exercise of the 2014 Warrants was increased from 5,551,344 shares to 5,687,421 shares (136,077 share increase), and the 2014 Warrants exercise price was decreased from $0.84 per share to approximately $0.80 per share.