Impending silver bull run has analyst looking at Chinchillas
2017 was the best year for gold since 2010 and the question is whether the white metal can emulate its yellow counterpart. The year definitely started out strong for silver, with silver prices reaching its peak of $17.37/oz in January and the price has since oscillated at a relatively high level between $16/oz and $17.5/oz
In general, mining stocks, leveraged to the underlying commodity prices, outperform direct investments in the ETF or bullion. To take advantage of the impending silver bull run, investors would do well to take a closer look at Golden Arrow Resources Corporation (TSXV: GRG | OTCQB: GARWF) (“Golden Arrow”).
The company owns 25% of Puna Operations Inc., a joint venture with SSR Mining, consisting of the Pirquitas mill and the Chinchillas project in Argentina. Golden Arrow is also actively exploring on its more than 200,000 hectares of properties in the country.
December 2017 was a big month for Golden Arrow; its environmental impact assessment at its Puna Operations was approved and construction started at the Chinchillas project and the Pirquitas mill.
Now first delivery of Chinchillas’ ore to the Pirquitas mill is imminent, with management indicating that we could see delivery by the second half of 2018 and full-scale production by 2019.
Nikolaos Cacos, Director and VP of Corporate Development at Golden Arrow had this to say of the impending production:
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“Chinchillas, at full production will be the seventh largest primary silver mine in the world with an annual average silver equivalent production of 8.4Moz, over a period of eight years.”
In essence, the Puna Joint Venture with SSR Mining is expected to be a cash generating operation by the second half of the year, generating estimated annual revenues for Golden Arrow equal to around 2 million oz of silver equivalent.
In addition to silver, lead and zinc concentrates are expected to be produced from the Chinchillas’ ore, which should add both value and diversification to the mine’s production. Zinc is another metal which we’ve been watching closely on InvestorIntel, as supply is currently constrained and prices are therefore expected to increase.
One can take as many pictures of the ground as one likes, but until you drill extensively, one can never know for sure exactly what metals are below. A common pitfall of junior miners is not channeling enough funds into drilling. Golden Arrow’s management seems to buck this trend as the company is exploring and drilling on multiple site. The intention is to actually extend their exploration programme at Chinchillas and expect to convert their significant resources to reserves.
Furthermore, at Pirquitas there is potential to extract high-grade silver ore on a small scale from underground to supplement the Chinchillas ore. As a second shareholder value stream, Golden Arrow is continuing exploration at the Antofalla and Pescado projects, which are funded by new risk capital through New Golden Explorations Inc.
Golden Arrow, will soon be a producing silver, lead and zinc operation. The smart money knows to get behind a mining company before it goes into production and to take advantage of market dips.