Golden Arrow Lays Out Plans in Argentina
July 26, 2017 8:34 pm ET
The Grosso Group has a long history of identifying promising mineral properties in Argentina and spinning them out into publicly-traded companies. These companies are focusing on developing these properties and eventually signing joint ventures for commercialization. Earlier this year, Golden Arrow Resources Corp. (TSX-V: GRG) (OTCQB: GARWF) did exactly that through its joint venture with Silver Standard Resources Inc. (TSX: SSO) (NASDAQ: SSRI).
In this article, we will look at how the Grosso Group and Golden Arrow Resources plans on moving forward following this joint venture and why investors should take note.
Silver Standard Joint Venture
Golden Arrow and Silver Standard recently formed a joint venture, called Puna Operations Inc., to hold both the Chinchillas and Pirquitas projects. The 75/25-owned joint venture has been staffed with an experienced technical and administrative team that’s overseen by a board of directors with over six decades of combined mining production experience, according to a recent press release.
Currently, the Chinchillas project is undergoing the necessary permitting to enable development and ore supply to the Pirquitas operation that will add eight years of operating life. Management anticipates average annual silver production of 8.4 million ounces over an eight year lifespan, which would generate US$66.75 million in annual cash flow for Golden Arrow, given its 25% ownership stake, according to a recently published pre-feasibility study.
Golden Arrow recently received an option exercise payment of C$17.8 million from Silver Standard for 25% of the mine earnings less capital expenditures between October 1, 2015 and May 30, 2017. This helps put the company in a favorable financial position to finance its 25% share of the projected capital expenditures for Puna Operations to develop the Chinchillas project without significantly diluting existing shareholders.
Spinning Off Other Properties
Golden Arrow also announced plans to transfer the rest of its Argentine assets, covering up to 215,000 hectares, into a newly incorporated, wholly-owned B.C. subsidiary called BA Exploration Corp., pending registration as a shareholder in Argentina. BA Exploration will be responsible for all future development as a separate division of Golden Arrow, which should simplify the process of raising capital and entering into future joint ventures.
Golden Arrow will initially provide BA Exploration with a one-time seed private placement of C$1 million and the operation will be self-financing after that point. Management eventually expects to spin-off the division into its own publicly-traded entity to unlock shareholder value by enabling investors to value Golden Arrow based on its production mining revenue and BA Exploration by its potential as it works to prove resources.
Golden Arrow will then focus on following its proven strategy to identify future mineral properties that could be valuable addition to its portfolio down the road. With Grosso Group’s tremendous experience, this process could yield entirely new opportunities in Argentina down the road, which could in turn unlock significant long-term shareholder value.
Golden Arrow Resources Corp. (TSX-V: GRG) (OTCQB: GARWF) represents a compelling investment opportunity in the mining industry. With Puna Operations moving toward production, the company is well-positioned to begin generating meaningful revenue from a production silver mine. The decision to transfer other assets to BA Exploration also sets the stage for a potential spin-off down the road that could further unlock value for shareholders.
For more information, visit the company’s website at www.goldenarrowresources.com.