Joseph Grosso, Executive Chairman, President, CEO, reports that Golden Arrow Resources Corp. [GRG-TSXV; GARWF-OTCQB; GAC-FSE] has completed the transaction with Silver Standard Resources Inc. [SSO-TSX; SSRI-NASDAQ] and has formed a joint venture called Puna Operations Inc., which combines Golden Arrow’s Chinchillas Project with the producing Pirquitas operation of Silver Standard. The joint venture is owned on a 75%/25% basis by Silver Standard and Golden Arrow, respectively. Silver Standard will be the operator.
“This news release cannot do justice to express the huge significance that the formation of Puna Operations Inc. has for Golden Arrow and our shareholders,” stated Grosso. “We are looking forward to play any role that best supports our partnership in the merged assets.”
The full details of the company’s business combination agreement with Silver Standard dated September 30, 2015, for the formation of the joint venture were set out in the company’s news release dated October 1, 2015. The following is a summary of the key provisions and benefits of the transaction:
- Creates a joint venture composed of the Pirquitas operation and the Chinchillas property with Silver Standard and Golden Arrow holding 75%/25% interest, respectively, with Silver Standard being the operator;
- Provides Golden Arrow an opportunity to fast-track development of the Chinchillas property, in a capital-efficient manner, through use of the existing production facilities at the Pirquitas operation and establishment of common infrastructure;
- 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;
- Immediately benefits from existing infrastructure, operating capabilities and cash flow generated by the currently producing Pirquitas operation;
- Option exercise payment by Silver Standard to Golden Arrow of 25% of Pirquitas Mine earnings less certain expenditures incurred since October 1, 2015, until April 30, 2017, $17.5-million of which was paid on closing; a final payment, representing April 30, 2017, until closing, shall be payable on or about June 21, 2017;
- A prefeasibility study (PFS) has been completed for the development of Chinchillas, as detailed in Golden Arrow’s news release dated March 31, 2017; a copy of the PFS is available on the company’s profile on SEDAR; the PFS contemplates a joint venture project requiring an initial investment of US $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. The supported NI 43-101 technical report was filed on SEDAR on May 31, 2017;
- The joint venture will be managed and overseen by Silver Standard’s proven operational management team with extensive mine construction and operational expertise.
Production decision and next steps
Based on and subject to the permitting process, construction at Chinchillas is anticipated to begin during the third quarter of 2017 with ore delivery to the Pirquitas mill expected in the second half of 2018. 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 is in progress with local communities on social programs and understanding of the Chinchillas project as it advances to production.