Shares of silver mining company Silver Standard Resources Inc. (SSRI) rose 3.3% during the trading session following the news of the of the completion of sale of its San Agustin project in Durango, Mexico, to U.S.-based Argonaut Gold Inc. for an aggregate consideration of roughly $75 million. The company’s shares eventually closed at $6.96, gaining around 3%.
Argonaut is a gold company mainly engaged in exploration, mine development and production activities.
On Nov 5, 2013, Silver Standard entered into a definitive agreement with Argonaut to sell its 100% interest in the San Agustin project.
Under the deal, Silver Standard agreed to divest its Agustin project for $15 million in cash payable at closing and $30 million shares of Argonaut (based on the 5-day volume weighted average sale price for Argonaut shares trading on the Toronto Stock Exchange prior to signing the definitive agreement) issued at closing.
Also included in the agreement, another $10 million and $20 million are to be paid in 6 months and 18 months after signing the agreement, respectively. Silver Standard is also expected to hold a 2% NSR royalty on sulphide ore produced from San Agustin.
The sale of the San Agustin project has been completed in accordance with the aforementioned terms and conditions of the definitive agreement.
The San Agustin project retains an indicated resource of 1.6 million ounces of gold and 48 million silver ounces within 121 million tons. Additionally, the project holds an inferred resource of 1.06 million gold ounces and 37 million silver ounces within 91.2 million tons.
The sale of the San Agustin property in cash and shares is expected to add value within Silver Standard’s portfolio beyond the mine and development projects. The asset sale will also add significantly to its cash position, facilitating the funding of future growth. With this, the company continues to focus on optimizing its business to deliver long-term, sustainable shareholders return.
Silver Standard, which is among the leading players in the silver mining industry along with Pan American Silver Corp. (PAAS) and Hecla Mining (HL), currently retains a Zacks Rank #3 (Hold).
Alexco Resource Corp. (AXU), with a Zacks Rank #1 (Strong Buy), is a good investment option in the silver mining industry.
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