Golden Arrow Resources (TSX-V: GRG) VP Brian McEwen on JV with Silver Standard at Chinchillas-Pirquitas Project

April 7, 2017

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is VP of Exploration and Development for Golden Arrow Resources (TSX-V: GRG)(OTC: GARWF), Mr. Brian McEwen. Brian, thank you for joining me this morning.

Brian McEwen: Thanks for having me on.

Gerardo Del Real: Well, I had to have you on because some big, big news. The headline obviously, Silver Standard exercises option to form the joint venture with Golden Arrow for the Chinchillas-Pirquitas Project in Argentina. Big, big deal. It literally came down to the wire. Can you give us the details? Congratulations, by the way.

Brian McEwen: Thank you very much for that. Yeah, we're very excited about it. We started looking at the numbers quite a long time ago when they were coming and everything is looking very positive and you can see from the press release that came out, the numbers that we're actually dealing with. Silver Standard had this issue that they needed to straighten out with the government. As much as we were talking to Silver Standard about saying this looks good, we're not moving ahead until we sort out a deal with the government and the tax collectors there. That's what was actually going on behind the scenes. They were trying to get that stuff all sorted out and so once they managed to come up with something that they thought they could live with, then we moved forward and we're very excited to be able to move ahead.

Gerardo Del Real: Excellent. Well, let's talk about what this joint venture means. Obviously, subject to permitting and closing of the transaction, Silver Standard has approved a development decision on Chinchillas. What does that look like from here on out? What are the next steps and what are the benefits obviously to Golden Arrow's shareholders?

Brian McEwen: Well, the benefits are, first of all, we're going to be collecting a check that's going to be retroactive back to the first of November of 2015, which was when we started accruing money from the profits of the operation, so that's going to come our way. As a matter of fact, while we put Chinchillas into production over the next, I don't know what it's going to be, nine months or a year, we're collecting money from the stuff that's running through the plant right now, so we're collecting cash flow now even as we speak or as of the day the deal closes. We're getting into that mode right now. I'm already talking to Silver Standard about what our immediate plans are going to be to go ahead and get everything running. On that side, things are very, very, very good.

Gerardo Del Real: Excellent. Just to provide some context, that payment isn't inconsequential. It's a $15 million US payment, if I'm not mistaken. Is that correct?

Brian McEwen: It's a very, very good point. One of the comments that I've had is that one of the really quick metrics is that people will look at the valuation, they'll say look, $178 million, you get 25% of that. You're looking at $45 million dollars. That doesn't sound like such a good deal, and especially when you look at our market cap right now above $70. You look at that $45 million dollars, and then that's actually in American dollars, so that becomes $60 million Canadian and then you look at the $15 million dollars that we're going to get in a check, that's US. That comes back in Canadian, so now that's up at about $80 million. Now, we consider the fact that we've got $8 million in the bank. Now, we're sitting at $88 million, so our market cap's not looking so bad, not to mention the fact that we're collecting money right now and there's an incredible amount of upside with the project still and we've got this new project that we're working on.

We're in very, very good shape. I think things are all lining up and we're looking very strong right now.

Gerardo Del Real: You may also be hitting a sweet spot as far as the commodities markets go. If I understand it correctly, the near-term production is based on construction beginning in the third quarter of this year followed by ore delivery to the mill in the second half of 2018 and we've seen the zinc market, the silver market respond very favorably here in the past few months. Can you comment a bit on that and just looking forward what the production profile might look like there?

Brian McEwen: Yeah. I'm sorry. I know you asked that question earlier, I missed over that. Right now, we're focused on getting our exploitation permit. We submitted the EIS and it's gone through several iterations. We're hoping to get that very soon. As soon as that happens, we have the exploitation, then we can start building this thing and there is a lot of construction that's going to go on at Chinchillas. We need to build our truck shops, maintenance shops, our powder mags. We got to develop the dumps and then we've got to construct a road that is going to go over, so that's estimated to take about nine months. I think that when you look at what Silver Standard's put out and what we've looked at in the pre-feasibility study is let's give this another couple of months to get through all the things and then we have to procure all of the equipment and we have to get all of that done.

Let's say that takes three months and then it's going to take about nine months to build that other infrastructure and then we'll be running. I think that's a realistic timeframe is probably Q2 next year or something like that we'll be running ore through their plant.

Gerardo Del Real: Excellent. Excellent. Now, you mentioned the other project and that could be a near to midterm catalyst as well the other projects, I should say. Could we talk about those a little bit and what that looks like here moving forward?

Brian McEwen: We're working on our Antofalla project, which we call a little bit of a Chinchillas look-alike. It's quite a bit bigger on the ground and bigger footprint and we've been working there really since January. We're only now just starting to get results back. We hope to have our assays back next week and we'll be putting out a press release. But we've found some very, very interesting results and we're very excited about that. We're also going to be starting some geophysics in the near future there. Yeah, I'm very happy about that project and as well as some other things that we haven't really talked about in the press release yet that are also very interesting for us.

Gerardo Del Real: Well Brian, you obviously have the mid to long term catalyst with Chinchillas. You have the Antofalla drill results that are coming back. Hopefully, I can have you back on next week and we're able to talk about some of the other behind the scenes catalysts that are developing now. I'd love to have you back to go into detail on some of those, if that's all right.

Brian McEwen: Yeah. I just want to clarify one thing. We're not getting back drill results yet at Antofalla. These are just going to be our surface sampling and stuff that we've done. After we do the geophysics, now that we've got the target, we're hoping by October we're going to be drilling, but we haven't started drilling at Antofalla yet.

Gerardo Del Real: Got it. Got it. Got it. These will be surface sample results?

Brian McEwen: Yeah. Surface samples and channel samples, surface samples, that type of thing.

Gerardo Del Real: Excellent. Well, those are important as well. Those are setting up the targets obviously, so I'm glad you made that clarification, Brian.

Brian McEwen: Yeah. Got to start somewhere.

Gerardo Del Real: Absolutely. Absolutely. Well, you've done it before. You've done it several times and you've been pretty successful, so it should be an exciting program. Thank you so much for your time this morning, Brian.

Brian McEwen: My pleasure.

Gerardo Del Real: You have a good one now.

Brian McEwen: You too. 

View Interview Archive

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

Part of the Stock Digest family of websites

Small Cap Stock Digest



Name Last Change
DOW 27758.50 0.24%
S&P 500 3095.76 0.13%
NASDAQ 8494.34 0.10%
TSX 16971.50 0.37%
TSX-V 529.95 0.00%

Resource Commodities

Name Last Change
Gold 1461.20 0.19%
Silver 16.90 0.47%
Copper 2.65 2.646
Platinum 901.00 0.67%
Oil 56.80 0.11%
Natural Gas 2.62 0.61%
Uranium 24.68 0.20%