Value investing

Golden Arrow Inks ‘Fairytale’ Deal with Future ‘Lottery Tickets’

Golden Arrow Resources Inc. (TSX-V: GRG) (OTC: GARWF) was recently featured in The Northern Miner magazine - a 100 year old paid publication covering the mining and exploration industries - following its joint venture deal with Silver Standard Resources (TSX: SSO) (NADSAQ: SSRI). The mention could bring significant attention to the company and its stock as it continues to pursue future projects to generate further shareholder value.

In this article, we will take a look at some of the main points highlighted in the article and why investors may want to consider the stock.

A Fairytale-esque Deal

The Northern Miner recently published an article covering Golden Arrow’s joint venture with Silver Standard Resources (TSX: SSO) (NASDAQ: SSRI). “It’s a Cinderella story,” said Golden Arrow CEO Joseph Grosso to the Northern Miner. “And we are just entering the ballroom.”

Under the terms of the deal, the company will receive a 25% stake in Silver Standard’s Pirquitas mine, take home US$15 million, and fast-track the production of its flagship Chinchillas project in a joint venture deal. The Pirquitas mine is expected to have US$45 million to US$60 million in remaining production, while the company will still receive 25% of Chinchillas’ annual production. The investment also included a US$2 million option payment to the company. Closing of this deal is expected to occur on or before May 31, 2017.

The deal was struck because the Pirquitas mine was running out of ore while the Chinchillas mine needed a partner - making it a win-win scenario. “The deal is fantastic for Golden Arrow and it should be just as fantastic for Silver Standard,” added Grosso, who said that Pirquitas can expand its mine life and preserve the value of its infrastructure, as well as the Silver Standard’s skilled operations team on the ground at the mine.

More Lottery Tickets

Golden Arrow will now focus its efforts on several other properties that have tremendous potential. “I call Chinchillas a lottery ticket that won,” says Grosso. “But now we have several expensive [partial] lottery tickets that we have developed in the last 24 years.”

The most promising of its remaining assets is the Antofalla project, which the company has budgeted US$2 million for exploration. The team aims to drill the 87 square kilometer project that has ‘geological similarities’ to Chinchillas during the second half of the year. On May 2, the company identified several new high potential targets and promising test results with good mineralization and the potential for new mineralization outside the known zones.

Golden Arrow’s management team - the Grosso Group - has decades of experience in the mining industry and strong relationships with key officials in Argentina. These attributes provide a high likelihood of success when it comes to executing on these ‘lottery ticket’ projects and generating value for shareholders as it has done in the Chinchillas project, Gualcamayo gold project, and the Navidad project that have all been partnered out with majors.

Looking Ahead

Golden Arrow Resources Inc. (TSX-V: GRG) (OTC: GARWF) represents a compelling investment opportunity in the mining sector. With its recent joint venture deal and promising results from Antofallas, the company is well positioned to generate significant shareholder value and potentially realize even greater opportunities in the future. Investors may want to keep a closer eye on the stock as it continues down the path toward commercialization.

For more information, visit the company’s website or investor presentation.