Golden Arrow “significantly undervalued” following completion of Silver Standard Resources deal
Upon completion of the deal with Silver Standard Resources to couple the Chinchillas site with the existing Pirquitas processing plant, Golden Arrow Resources Corporation. (TSXV: GRG | OTCQB: GARWF) (“Golden Arrow”) saw a very healthy climb in share prices. Equity prices have since sunk back down to pre-agreement levels and today’s valuation has them trading at C$0.66 with a market cap of C$64.7m, but analysts are suggesting that this is way beneath the true worth of this fast-tracked company given that revenues are ultimately expected to reach over a billion; Hallgarten & Company has a twelve-month target for Golden Arrow of $C1.45, and the newfound cash flow, along with enticing results that continue to emerge from the company’s Antofalla site in Catamarca strongly corroborate their thesis.
A junior of this age would normally have little or no access to regular income, but the deal with Silver Standard provides Golden Arrow with 25% ownership of a joint venture (JV) that includes the continued processing of the remaining ore at the Pirquitas site. This area would be facing the end of its life very shortly, and Golden Arrow would be much further from the title of producer, but the operation created from the JV (Puna Operations Inc.) can now enjoy the benefits of joint infrastructure, a ready-made processing facility, twelve-months of ore already awaiting milling, and further material from Golden Arrow’s Chinchillas site among others.
The company now has access to eight land packages including the Antofalla site in Catamarca province. Recent drilling at Antofalla revealed yet further good news, returning significant silver and gold values, pumping even more potential life into the new JV. Brian McEwen, Golden Arrow’s Vice President of Exploration and Development commented:
“Not since our first months at the Chinchillas project has the team been so excited about the potential for a significant discovery. The last three months have proven extremely successful in advancing our knowledge of the extensive system at Antofalla and the priority target areas. Our preliminary findings confirm that not only are there good opportunities to expand the known mineralization but also to define new mineralization outside the known zones.”
The company released a pre-feasibility study on Chinchillas around the same time as the JV was announced, demonstrating that the site was capable of average annual silver equivalent production of 8.4 million ounces over an eight-year mine life, lead production of 35m lbs per annum and zinc production of 12.3m lbs per annum. Silver prices are expected to be the subject of a strong rally in the near future, and the price of zinc saw a record surge in 2016 driven by mine closures and President Trump’s planned infrastructure drive.
Additionally, the changes in the Argentine government over the last couple of years have seen the new president scrap a 5% mining tax, creating an incentive for new companies to seek projects in the region. President Mauricio Macri pledged to repeal the long history of state intervention which has been perceived by many to scare away investors, and now that he’s making good on his promises, the companies already situated there are the ones reaping the most from the new mining-friendly image of Argentina.
Based on and subject to the permitting process, construction at Chinchillas is anticipated to begin during the third quarter of 2017 with ore delivery to the Pirquitas mill expected in the second half of 2018, but there is really no reason to wait any longer to get in on this favourable cooperative synergy; Golden Arrow really could become one of the top silver players in Argentina in record-breaking time, and their value will be more-accurately represented sooner rather than later.