U.S. Markets closed

Silver Standard Resources to Change Its Name

- By Alberto Abaterusso

Silver Standard Resources Inc. (SSRI) announced through a press release that its board of directors decided to change its name to SSR Mining Inc.

The company's new name will correctly reflect its business since gold represents approximately 70% of the Canadian explorer's revenue.

"We have evolved from a silver-focused producer to an intermediate precious metals producer with three mines in the Americas," Paul Benson, president and CEO, said. "The proposed name, which includes the initials of our existing name, is a natural evolution in our more than 70-year history. While we are recommending a change to our name, our relentless focus on creating shareholder value remains."

The name change must be approved by shareholders at its next meeting on May 7.

The company is becoming more and more dependent on gold with the addition of the Seabee Gold Operation. As it is a strong cash-producing asset, the company is more levered to gold than it was in the past.

The company has two other producing mines: the Marigold mine in Nevada, which is expected to add approximately 210,000 ounces of gold to the company's total production for 2017, and the Pirquitas mine in Argentina. The Argentinian asset is expected to produce up to 5 million ounces of silver in 2017.

The increase in the price of gold in 2017, as a response to increased tax rates, will determine a substantial increase in the company's earnings and operating cash flow.

The company will be able to profit more from rising gold prices and will generate more funds to be invested in the development of its pipeline of projects.

The Pitarrilla project in Mexico is characterized by a 32-year silver production lifespan (15 million ounces of silver are expected to be produced annually during the first 18 years) and an IRR of 12.8%. The successful completion of the Mexican project will enhance the quality of the company's asset base as shareholder value accretion is its goal.

The company's fundamentals look very good. Its economics lie on a solid balance sheet with approximately $476.071 million in cash and securities. As of the most recent quarter, the company has $704.24 million in total current assets and $144.31 million in total current liabilities, for a current ratio of 4.9 versus an industry average of 2.51, according to Reuters.com. Silver Standard Resources is able to easily fulfil its short-term obligations with current assets.

Silver Standard Resources is trading at $10.51 per share with a price-sales ratio of 2.63 and a price-book ratio of 1.39. The forward price-earnings ratio is 35.03 and the EPS for 2017 is expected to be 36 cents. The stock looks slightly overvalued, but analysts forecast a 24.2% upside from the current share price with an average target price of $13.05 per share.

Disclosure: I have no positions in Silver Standard Resources Inc.

Start a free 7-day trial of Premium Membership to GuruFocus.

This article first appeared on GuruFocus.