Vancouver-based mining company
Silver Standard Resources Inc.
) has entered into a definitive agreement with Mandalay Resources
Corporation to divest 100% stake of its Challacollo silver
project in Region I, Northern Chile. Mandalay Resources is a
natural resource company based in Canada.
ALEXCO RESOURCE (AXU): Free Stock Analysis
HECLA MINING (HL): Free Stock Analysis Report
SILVER WHEATON (SLW): Free Stock Analysis
SILVER STD RES (SSRI): Free Stock Analysis
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Per the deal, Silver Standard will vend its Challacollo project
for $7.5 million in cash and 12 million common shares of Mandalay
(the current value of which stands at $8.9 million based on the
share price as of Dec 19, 2013) to be issued at closing. Another
5 million common shares of Mandalay will be issued at the end of
first quarter in which commercial production begins.
The agreement will also include a cash payment equivalent to
240,000 ounces of silver (based on the average quarterly silver
price). This amount is payable in eight quarterly installments
from second quarter after the beginning of commercial production.
Silver Standard will also hold a 2% Net Smelter Returns royalty
on silver sales in excess of 36 million ounces, up to a maximum
of $5 million.
The proposed deal is subject to customary closing conditions,
including the receipt of Toronto Stock Exchange approvals. The
transaction is expected to close in the first quarter of 2014.
This transaction will position Silver Standard well in the market
and is expected to further boost its robust balance sheet. This
transaction will augment Silver Standard's growth strategy, which
comprises monetizing its portfolio by building mines and selling
The Challacollo transaction meets Mandalay's acquisition criteria
of a well-established resource, existing mine infrastructure,
significant exploration potential and a two- to three-year
timeline to production. This deal will also represent a
significant growth step for Mandalay and will add to its
portfolio of assets in Australia and Chile.
Mandalay's Canadian legal counselor, Chilean legal counselor and
technical advisors for the transaction are Goodmans LLP,
Philippi, Yrarrázaval, Pulido & Brunner and Roscoe Postle
Associates Inc., respectively.
Silver Standard, which is among the leading players in the silver
mining industry along with
Silver Wheaton Corp.
), currently retains a Zacks Rank #3 (Hold).
Alexco Resource Corp
), with a Zacks Rank #1 (Strong Buy), is a good investment option
in the silver mining industry.