Golden Arrow Resources (GRG.V) has closed a private placement wherein Silver Standard Resources (SSO.TO, SSRI) has subscribed to acquire an 8% stake in the company at a purchase price of C$0.35 per new share of Golden Arrow Resources.
The deal is quite remarkable as Silver Standard isn’t paying with cash for the new shares, but instead is exchanging the shares of Golden Arrow for a part of its position in Pretium Resources (PVG.TO, PVG). As consideration for issuing C$1.5M worth of shares, Golden Arrow received almost 215,000 shares in Pretium Resources which it intends to liquidate to raise the cash.
This is a creative way of financing a company, but the most important takeaway here is that Silver Standard has now officially expressed its interest in Golden Arrow Resources, and more specific, the Chinchillas project. The potential interest of Silver Standard in Golden Arrow Resources has always played a very important role in our thesis on either the corporate level or the project level, and now Silver Standard has accumulated a position of 8%, it seems to be in the driver’s seat and could be in a position to make a move for Chinchillas if it continues to like what it sees on the project.
No, C$1.5M indeed isn’t much, but the most important part of this deal is the non-monetary side. By taking a sizeable stake in Golden Arrow Resources, Silver Standard is effectively expressing its interest in the Chinchillas silver project.
Disclosure: The author holds a long position in Golden Arrow Resources. Golden Arrow is a sponsor of the website. Please see our disclaimer for current positions.