Silver Standard Resources Inc. (NASDAQ:SSRI) (TSX:SSO) announces that it has entered into an agreement with Golden Arrow Resources Corporation (TSX-V:GRG) whereby Silver Standard will explore, evaluate and seek to develop the Chinchillas project in Jujuy Province, Argentina.
“This agreement provides Silver Standard the potential to extend the Pirquitas mine life, leveraging both existing infrastructure and our workforce to accelerate the development of Chinchillas in a capital efficient manner. It also gives us exposure to exploration upside at the project,” said Paul Benson, President and Chief Executive Officer. “Over the next 18 months, Silver Standard will work with Golden Arrow to assess the technical and economic viability of processing Chinchillas mineralization at the Pirquitas mill. Work will focus initially on a portion of the Silver Manto zone of Chinchillas that boasts grades in excess of 200 g/t of silver plus zinc and lead. We look forward to working closely with the local communities and government on this project.”
Summary Terms of the Agreement
Under the terms of the Agreement, Silver Standard will evaluate Chinchillas during the Preliminary Period as a mining operation to supply feed to the Pirquitas plant beginning in the second half of 2017. Silver Standard has committed to spend a minimum of $4 million for pre-development activities. Expenditures may total up to $12.6 million based on the success of the pre-development activities, including exploration, mine planning, metallurgical studies, permitting and engineering studies. The Preliminary Period extends for 18 months from the signing of the Agreement.
Silver Standard has agreed to pay Golden Arrow up to C$2 million during the Preliminary Period in four C$500,000 cash installments with the first installment paid on signing and the remaining conditional upon completion of project milestones. Following signing of the Agreement, Golden Arrow will initiate the process to obtain the necessary court and shareholder approvals required to form the joint venture under a plan of arrangement.
If Silver Standard elects to proceed, Silver Standard and Golden Arrow will enter into a joint venture whereby Silver Standard will be the majority partner and operator. The joint venture would be comprised of Silver Standard’s Pirquitas property and Golden Arrow’s Chinchillas property to be owned by Silver Standard and Golden Arrow on a 75%/25% basis, respectively. Silver Standard may elect to exercise its option at any time over the Preliminary Period. Upon entering into the joint venture, Silver Standard will pay Golden Arrow an amount equal to 25% of mine earnings generated by Pirquitas less certain expenditures for exploration (including Chinchillas pre-development expenditures), capital investment and closure costs incurred during the Preliminary Period.
Subject to the minimum spending commitment described above and satisfying certain cash payments as required, Silver Standard may terminate the Agreement at any time upon 30 days notice during the Preliminary Period.
About the Chinchillas Project
The Chinchillas project is a prospective silver-lead-zinc deposit located in the Jujuy Province, Argentina, approximately 30 kilometers from our Pirquitas mine. Golden Arrow filed a technical report on September 14, 2015, titled “Mineral Resources Estimate for the Chinchillas Silver-Lead-Zinc Project, Jujuy Province, Argentina”.
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