Golden Arrow Resources GRG 2

Golden Arrow Resources (GRG.V) announced yesterday it is selling its remaining 25% interest in the Puna operations (consisting of Pirquitas and Chinchillas) to joint venture partner SSR Mining (SSR.TO, SSRM) for a total enterprise value of just over C$44M. That’s almost exactly the dollar amount we came up with (C$45M) in our October 2018 report based on a silver price of US$16.

Golden Arrow Resources GRG 1

Of the C$44M, just over C$14M will be a debt settlement (Golden Arrow owed SSR Mining money as part of the construction funding package) while an additional C$1M will consist of 4.3 million shares of Golden Arrow being cancelled. The effective cash and stock inflow to Golden Arrow’s treasury will be C$3M in cash and C$25.9M shares of SSR Mining, for a total value of C$28.9M to be divided over the 119.5M remaining shares, resulting in a value of C$0.24 per share.

A strange move, considering the gold price just broke out and the silver price was finally gaining some momentum as well, but it does answer the concerns we previously had about the (funding) commitments to explore the large Atlantida and Indiana projects. So basically Golden Arrow gives up on its producing asset to continue to explore its Chilean portfolio.

GRG Share price

Let’s just hope that the potential discoveries there will benefit the shareholders, unlike the discovery of the large Chinchillas project. As you can see on the previous chart, Golden Arrow closed at C$0.27 before the first drill results were announced on June 14, 2012, and is currently trading at around C$0.25-0.26 (in a busy trading day as silver speculators are probably selling their positions to exploration-focused investors). Sure, the market cap tripled from 2012 until now-reflecting the importance of the Chinchillas project- but so did the share count.

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

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