VANCOUVER, March 31, 2017 /CNW/ - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) ("Silver Standard") announces it has provided Golden Arrow Resources Corporation (TSX-V: GRG) ("Golden Arrow") with the required notice to exercise its option on the Chinchillas project and form a joint venture with Golden Arrow for the development of the property. The joint venture will be comprised of Silver Standard's Pirquitas property and Golden Arrow's Chinchillas property and will be owned on a 75%/25% basis by each company, respectively. Silver Standard will be the operator.
A news release profiling the Chinchillas pre-feasibility study (the "PFS") was reported by Golden Arrow on March 31, 2017. The associated National Instrument 43-101 technical report is to be filed within 45 days and, upon closing of the transaction, will be available under our profile on SEDAR and on our website. Subject to permitting and closing of the transaction, Silver Standard has approved a development decision on the project and expects construction to begin in the third quarter of 2017.
Paul Benson, President and CEO of Silver Standard said, "Forming the joint venture is an excellent result due to the outstanding cooperation by our partner Golden Arrow, the Argentine government and many within Silver Standard. We believe Chinchillas will extend the life of our Pirquitas operation well into next decade and it enables the joint venture to evaluate the viability of an underground operation at Pirquitas."
"The successful development of Chinchillas will be a great outcome for Argentina and the Province of Jujuy with the creation of jobs, the payment of royalties and taxes and significant export revenue. We look forward to working closely with the local communities and government as we invest in the development of Chinchillas to extend the operating life at Pirquitas, which supports Silver Standard as an intermediate precious metals producer with growth and value."
Transaction Highlights
The full details of our Business Combination Agreement with Golden Arrow dated September 30, 2015, setting out the terms and conditions for the formation of the joint venture were set out in our news release dated October 1, 2015. The following is a summary of the key provisions and benefits of the transaction:
- Creates a joint venture comprised of the Pirquitas operation and the Chinchillas property with Silver Standard and Golden Arrow holding 75%/25% interest, respectively, and Silver Standard being the operator.
- Provides Silver Standard an opportunity to extend the Pirquitas operating life with a limited capital brownfields investment in a prospective silver-lead-zinc deposit approximately 45 kilometers from the mine.
- Near-term production from Chinchillas based on construction beginning in the third quarter of 2017, followed by ore delivery to the mill in the second half of 2018.
- Enables evaluation of potential for a Pirquitas underground operation to supply a small-tonnage high-grade supplementary ore feed to increase the average ore grade and further extend the mine life into the second half of next decade.
- Option exercise payment by Silver Standard to Golden Arrow of 25% of Pirquitas mine earnings less certain expenditures incurred since October 1, 2015 until closing, currently estimated at approximately $15 million, payable on closing, which is expected on or before May 30, 2017.
- The PFS, as further detailed in Golden Arrow's new release, contemplates a joint venture project requiring an initial investment of $81 million to develop a mine to deliver ore to the existing Pirquitas mill that has an operating life of eight years, producing an annual average of 8.4 million silver equivalent ounces.
Production Decision and Next Steps
Subject to permitting and closing of the transaction, Silver Standard has approved the development decision on the Chinchillas project. The permitting process continues to advance with positive support from the local communities and government authorities. The Chinchillas Environmental and Social Impact Assessment has been prepared and submitted to the Argentine regulatory authorities, and is in the consultation process. Work with local communities on social programs and understanding of the Chinchillas project is advancing positively.
Based on and subject to the permitting process, we anticipate construction at Chinchillas to begin during the third quarter of 2017 with ore delivery to the Pirquitas mill expected in the second half of 2018.
Qualified Persons
Except as otherwise set out herein, the scientific and technical information contained in this news release relating has been reviewed and approved by Bruce Butcher, P.Eng., a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Mr. Butcher is our Director, Mine Planning.
About Silver Standard
Silver Standard is a Canadian-based precious metals producer with three wholly-owned and operated mines, including the Marigold gold mine in Nevada, U.S., the Seabee Gold Operation in Saskatchewan, Canada and the Pirquitas silver mine in Jujuy Province, Argentina. We also have two feasibility stage projects and a portfolio of exploration properties in North and South America. We are committed to delivering safe production through relentless emphasis on Operational Excellence. We are also focused on growing production and Mineral Reserves through the exploration and acquisition of assets for accretive growth, while maintaining financial strength.
