Chinchillas - Panorama Silver Mantos to Socavon
Chinchillas – Panorama Silver Mantos to Socavon

Golden Arrow Resources (GRG.V) has released an updated resource estimate for its Chinchillas silver project in Argentina’s Jujuy province. This updated estimate is part of the so-called pre-development activities under the agreement with Silver Standard Resources (SSRI, SSO.TO), whereby Silver Standard will have the option to acquire 75% of Chinchillas by giving up a 25% stake in its producing Pirquitas silver project, just a few dozen kilometers down the road.

The updated resource estimate now also contains a maiden measured resource estimate of 17 million silver-equivalent ounces, bringing the total M&I resources to 155 million (again on a silver-equivalent basis). The inferred resource estimate was also quite decent at 90 million silver-equivalent ounces, resulting in a total resource estimate of 245 million silver-equivalent ounces. You might remember one of our reports from 2014 wherein we said we wouldn’t be surprised to see Chinchillas ultimately containing half a billion silver-equivalent ounces, and we’re now almost halfway that target!

Golden Arrow Resources
Golden Arrow Resources

There’s however one minor detail that might grab your attention, and that’s the silver price used to determine the pit shell. At $25/oz silver, one can’t really say this updated resource estimate is ultra-conservative. Don’t get us wrong, it still is a good project, but you should keep this in mind. That’s not necessarily a problem, because if one would use a cutoff grade of 70 g/t AgEq rather than the 45 g/t in the resource estimate, Chinchillas would still contain 205 million silver-equivalent ounces at an average grade which is 20-25% higher.

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The author has a small long position in Golden Arrow Resources. Please read the disclaimer