US-based precious metals company Golden Minerals’ stock plummeted after announcing a US$4.2 million public offering to raise capital to continue mining operations and to face general expenses.
On Nov. 6, 2023, Golden Minerals announced a public offering of 6 million shares of its common stock at US$0.70 per share, along with Series B warrants, also priced at US$0.70, allowing the purchase of up to 3 million common shares. The company's objective with this offering was to raise a minimum of US$4.2 million, which would be used as general working capital, as disclosed in a press release, without specifying particular projects or actions.
The offering was announced five months after Golden Minerals reported its intention to restart operations at its La Velardeña project in Durango. At the time, the company acknowledged that it did not have sufficient resources to restart mining operations at Velardeña. “The company needs to raise additional cash in the very near term, whether through the sale of non-core assets or equity financing, including the use of its ATM program,” the company stated in a press release.
Since then, the company has been seeking capital to fund the expenses. On June 27, 2023, Golden Minerals announced it entered into direct offering agreements to raise up to US$2.1 million from over 1.4 million shares at US$1.45 per share. Within a day of the announcement, Golden Minerals' stocks experienced a notable decrease in value. They were traded at US$1.58, marking a substantial drop from the US$1.90 value observed just one day after the offering, representing a decrease of approximately 16.84% in the stock's value.
However, the most recent offering underscored a significant decline in the company's common share price, which was approximately half of its previous value. On Monday’s market close, Golden Minerals was trading at approximately US$0.54 on the NYSE American exchange, reflecting a decrease of 42.5% when compared to June’s offer.
Throughout the year, the company's stock saw a substantial decline of nearly 95%. The most pronounced decline was in May, which could be attributable to the company’s difficulties in covering its forecasted cash needs for the period between March 2023 and May 2024. Furthermore, on Apr. 4, 2023, MBN reported there was fear among some Golden Minerals’ investors of mining dilution at the Velardeña property if operations restart. However, the company said that it would schedule production from the property’s best-performing veins.
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