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It's becoming more and more apparant that Silver Standard really needs to make a move on Golden Arrow's Chinchillas asset. Silver Standard knew this was the case last year, and so it entered into a joint venture (JV) deal with Golden Arrow on Oct 1, 2015 to invest over US$12.5m into the company and do a feasibility study. 

Silver Standard's Pirquitas is going to run out of ore next year. It either goes through with the JV deal struck last year, and Golden Arrow gets 25% of the mining operation... or it buys Golden Arrow outright. 

Below is Silver Standard's just-released Q2 results. The Golden Arrow references are highlighted in yellow. 

_________________________

Silver Standard Reports Second Quarter 2016 Results

VANCOUVER, Aug. 10, 2016 /PRNewswire/ - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) ("Silver Standard") reports consolidated financial results for the second quarter ended June 30, 2016.

Paul Benson, President and CEO said, "In the second quarter of 2016 we completed the acquisition of Claude Resources, adding a third cash-flow generating mine to our portfolio. The combined production for our operations totaled nearly 100,000 gold equivalent ounces, including full quarter production at the Seabee Gold Operation and we are well-positioned to deliver a strong second half of the year."

"We have an enviable balance sheet, with cash and cash equivalents increasing to $233 million as a result of realizing $30 millioncash flow, while investing in exploration and projects for the future. Additionally, our marketable securities stood at $193 millionat the end of the quarter.  Our financial strength along with excellent exploration potential and a seasoned team will enable us to enhance shareholder value."

Second Quarter 2016 Highlights:
(All figures are in U.S. dollars unless otherwise noted)

  • Completed the acquisition of Claude Resources: Purchase of Claude Resources Inc. completed on May 31, 2016, through a share exchange transaction, adding the Seabee Gold Operation, a high quality, free cash generating gold operation in Canada.
     
  • Generated net income and adjusted net income: Net income of $12.5 million and adjusted net income of $23.6 million, or $0.25 per share.
     
  • Increased cash balance: Quarter-end balance increased by $15.0 million to $232.6 million. Cash generated by operating activities totaled $30.2 million. Value of marketable securities increased by $98.4 million, to $193.2 million.
     
  • Cash costs guidance lowered at Marigold: Produced 47,195 ounces of gold at cash costs of $663 per payable ounce of gold sold. Lowered cash costs guidance to between $650 and $700 per payable ounce of gold sold.
     
  • Improved cash costs and production guidance at the Pirquitas mine: Produced 2.5 million ounces of silver at cash costs of $8.87 per payable ounce of silver sold. Annual production guidance range was revised for the second time this year to between 9.0 and 10.0 million ounces of silver and annual cash costs guidance was reduced to between $9.00 and $10.00per payable ounce of silver sold due to continued strong operating performance and effective cost controls.
     
  • Established operating guidance for the second half of 2016 for the Seabee Gold Operation: Produced 17,524 ounces of gold in the second quarter, with 6,721 ounces produced from date of acquisition on May 31 to June 30, 2016. We expect to produce between 32,000 and 35,000 ounces of gold at cash costs of between $610 and $640 per payable ounce of gold sold during the second half of 2016 as we continue to increase ore mined from the Santoy mine complex.
     
  • Advanced the Chinchillas project: Drilling program and metallurgical testing completed on schedule for a fourth quarter development decision.
     
  • Continued exploration success: Positive exploration results at the Marigold mine and the Seabee Gold Operation. Increased exploration budget at Marigold by $2.1 million for 2016.
     
  • Favorable resolution of tax dispute with CRA: On August 8, 2016, we announced the resolution in our favor of the Notice of Reassessment issued to us by the CRA in January 2015. The CRA is required to issue new notices of reassessment reversing the NOR, and refund the C$24.1 million ($19.2 million) we paid to the CRA to appeal, plus accrued interest from the date of payment.

 

Marigold mine, U.S.

 

 

 Three months ended

 

Operating data

June 30

2016

 

March 31

2016

 

December 31

2015

 

September 30

2015

 

June 30

2015

 

Total material mined (kt)

18,685

 

17,291

 

18,560

 

18,425

 

19,051

 

Waste removed (kt)

12,005

 

11,611

 

13,788

 

11,242

 

14,163

 

Total ore stacked (kt)

6,680

 

5,680

 

4,772

 

7,183

 

4,888

 

Strip ratio

1.8

 

2.0

 

2.9

 

1.6

 

2.9

 

Mining cost ($/t mined)

1.55

 

1.45

 

1.54

 

1.65

 

1.48

 

Gold stacked grade (g/t)

0.44

 

0.47

 

0.48

 

0.43

 

0.33

 

Processing cost ($/t processed)

0.70

 

0.71

 

0.86

 

0.66

 

0.79

 

Gold recovery (%)

70.7

 

70.0

 

69.9

 

69.7

 

67.6

 

General and admin costs ($/t processed)

0.38

 

0.47

 

0.47

 

0.41

 

0.56

 
           

Gold produced (oz)

47,195

 

50,520

 

61,461

 

41,262

 

48,685

 

Gold sold (oz)

47,124

 

48,605

 

62,827

 

39,525

 

48,121

 
           

Realized gold price ($/oz) (1)

1,259

 

1,189

 

1,084

 

1,110

 

1,205

 
           

Cash costs ($/oz) (1)

663

 

719

 

727

 

719

 

717

 

AISC ($/oz) (1)

1,067

 

841

 

799

 

998

 

870

 
           

Financial data ($000s)

           

Revenue

59,197

 

57,742

 

67,936

 

43,836

 

57,958

 

Income from mine operations

17,641

 

11,227

 

7,902

 

7,288

 

15,395

 

Capital investments

10,154

 

8,796

 

3,641

 

8,931

 

5,255

 

Capitalized deferred stripping

7,231

 

1,435

 

 

 

 

Exploration expenditures (2)

1,597

 

1,102

 

731

 

1,944

 

1,978

 

 

   

(1)

We report the non-GAAP financial measures of realized gold prices, cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income(loss), please refer to "Non-GAAP and Additional GAAP Financial Measures" in section 12 of our management's discussion and analysis of the financial position and results of operation for the three and six months ended June 30, 2016 ("MD&A").

(2)

Includes capitalized and expensed exploration expenses.

   

Mine production

We produced 47,195 ounces of gold in the second quarter of 2016, keeping the mine on target to meet its increased production guidance. Second quarter production was lower than in the first quarter due to planned ore stacking at higher elevations on the leach pads with irrigation of these areas starting later in the quarter. We expect the third and fourth quarter production to increase, relative to the first half of 2016, as the new leach pad is commissioned and the full impact of the additional haul trucks is realized.

Three additional 300-tonne class haul trucks commenced operating ahead of schedule early in the second quarter. A total of 18.7 million tonnes of material was mined in the second quarter, higher than the 17.3 million tonnes in the first quarter of 2016 due to the additional hauling capacity and to the start of stripping the next phase of the Mackay pit.  Approximately 6.7 million tonnes of ore were delivered to the leach pads at a gold grade of 0.44 g/t, containing approximately 67,000 recoverable ounces of gold stacked during the quarter. The strip ratio declined to 1.8:1 in the second quarter, a 10% reduction compared to the previous quarter, and ore tonnes reconciliation continued to be positive. Gold recovery was 71% in the second quarter, slightly higher than the first quarter of 2016. In the second quarter, a premature failure of the swing bearing on one of our two hydraulic shovels occurred, which impacted total material mined. By quarter-end, this repair work was completed and the shovel was operating normally. Total material mined is expected to further increase in the third quarter as the additional haul trucks ramp up to full capacity. 

The construction of a new leach pad, budgeted for 2016, is underway and, once completed in the third quarter, is anticipated to benefit production later in the year.

Mine operating costs

Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see "Cautionary Note Regarding Non-GAAP Measures".

Cash costs, which include all costs of inventory, refining costs and royalties, of $663 per payable ounce of gold sold in the second quarter of 2016 were lower than costs of $719 per payable ounce of gold sold in the first quarter of 2016 primarily due to stacking 11% more recoverable ounces during the second quarter of 2016. Costs per tonne mined increased to $1.55 per tonne in the second quarter of 2016, 7% higher than in the first quarter of 2016 despite the increase in total tonnes mined. Unit mining costs were negatively impacted by higher diesel prices and utilizing higher cost loading gear in the period as a result of one hydraulic shovel being down for rebuild of its swing bearing. Processing unit costs were at the same level as in the first quarter of 2016. General and administrative unit costs were lower in the second quarter of 2016 than in the first quarter of 2016 as comparable costs were offset by higher ore tonnes mined. Our Operational Excellence program remains a core activity at Marigold, with a particular focus on maintenance processes and practices.

AISC of $1,067 per payable ounce of gold sold in the second quarter of 2016 increased from $841 in the first quarter of 2016 due to increased capitalized stripping and capital expenditures and lower payable ounces sold.

Mine sales

A total of 47,124 ounces of gold were sold at an average price of $1,259 per ounce during the second quarter of 2016, a decrease of 3% from the 48,605 ounces of gold sold at an average price of $1,189 per ounce during the first quarter of 2016. The decrease in sales was a function of decreased gold production.

Exploration

Exploration activities in the second quarter of 2016 focused on drilling at each of the HideOut, Terry Zone North ("TZN") and 8 South pit extension ("8SX") areas at the Marigold mine and on the adjacent Valmy property. The objective of these drilling activities is to convert Mineral Resources to Mineral Reserves and to expand Mineral Resources, in certain instances. Two track-mounted rigs completed 15,575 meters of reverse circulation drilling in 73 drillholes on our targets where previous results show potential for Mineral Resource additions. At TZN, mineralization is open to the south, while the 500-meter long corridor between the HideOut and the 8SX areas has only two drillholes and remains open to the north and south, respectively. At Valmy, mineralization is open to the south, and in the second half of 2016 we expect to drill outside of the current pit areas, including the eastern extension of the Basalt pit mineralization.

During the second quarter 2016, we re-assayed 27,079 historical samples pursuant to our re-assay program (the "Assay Program") initiated in 2015. Our Assay Program was completed during the quarter with a total of 52,600 samples re-assayed in 2016. Results of the Assay Program in 2016 are broadly in line with results achieved in 2015 and provide better spatial definition of the lower grade portions of the Mackay pit.

Due to encouraging exploration results achieved during the first half of 2016, we approved an additional $2.1 million to continue both infill and exploration drilling at the Valmy, HideOut, 8SX and TZN areas to further target Mineral Resource conversion and expansion. The additional exploration spending will also fund two drillholes relating to our deep sulphide exploration program initiated in 2014. These two drillholes are targeting the favorable carbonate debris flow rock units intercepted in 2015 and further analysis of exploration drilling and geologic interpretations conducted during 2015 and 2016. The deep sulphide exploration program is targeting a high-grade style of mineralization similar to that found at the Turquoise Ridge mine located 56 kilometers north of the Marigold mine.

The results of the Mackay North area exploration activities and the Assay Program are being applied, where applicable, to the Marigold life of mine plan. Based on this work and considering other improvements to the operation, including the addition of three haul trucks, we expect to disclose longer dated production and cost outlook for the Marigold mine later in the third quarter of 2016.

Seabee Gold Operation, Canada

 

Operating data

Period from Acquisition

to June 30, 2016 (1)

Three months ended
June 30, 2016(2)

 

Total ore milled (t)

18,856

 

71,218

 

Ore milled per day (t/day)

629

 

783

 

Gold mill feed grade (g/t)

7.79

 

7.97

 

Mining costs ($/t mined)

141

 

N/A

 

Processing costs ($/t processed)

38

 

N/A

 

Gold recovery (%)

96.6

 

96.8

 

General and admin costs ($/t processed)

79

 

N/A

 
       

Gold produced (oz)

6,721

 

17,524

 

Gold sold (oz)

11,306

 

16,305

 
     

Realized gold price (3)

1,278

 

1,271

 
     

Cash costs ($/oz) (3,5)

663

 

N/A

 

AISC ($/oz) (3,5)

776

 

N/A

 
     

Financial data ($000s)

     

Revenue

14,437

 

N/A

 

Income from mine operations

1,216

 

N/A

 

Capital investments

1,140

 

N/A

 

Exploration expenditures (4)

117

 

N/A

 

 

   

(1)

The data presented in this column is for the period from May 31, 2016, to June 30, 2016, the period for which we were entitled to all economic benefits of the Seabee Gold Operation following our acquisition of Claude Resources Inc. ("Claude Resources").

(2)

The data presented in this column includes operating results for the Seabee Gold Operation for the entire second quarter of 2016, including the period from April 1 to May 30, 2016 prior to our acquisition of Claude Resources.

(3)

We report the non-GAAP financial measures of realized gold prices, cash costs and AISC per payable ounce of gold sold to manage and evaluate operating performance at the Seabee Gold Operation. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income (loss), please refer to "Non-GAAP and Additional Financial Measures" in section 12 of our MD&A.

(4)

Includes capitalized and expensed exploration expenses.

(5)

The non-GAAP measure of cash costs from the Seabee Gold Operation was adjusted to eliminate the write-up of inventory to fair value as at the date of our acquisition of Claude Resources.

 

Mine production

The Seabee Gold Operation consists of the Seabee and Santoy underground mines, both of which feed a single processing facility. The mine produced 6,721 ounces of gold from May 31, 2016, the date of our acquisition of Claude Resources, to the end of the second quarter of 2016 (the "Period").

A total of 18,856 tonnes of ore were milled at a gold grade of 7.79 g/t in the Period. Total mill throughput per day for the Period was 629 tonnes per day, while mill throughput per operating day during the same time averaged 820 tonnes per day. The total tonnes milled for the Period were impacted by an unplanned power outage which lasted a total of ten days. The ore tonnes reconciliation in the Period was positive and gold recovery was 96.61%.

During the second quarter of 2016, the Santoy mine represented approximately 72% of total ore milled, while the Seabee mine represented 28%.

Mine operating costs

Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see "Cautionary Note Regarding Non-GAAP Measures".

Cash costs per payable ounce of gold sold, which include all costs of inventory, refining costs and royalties and exclude the effect of the fair value adjustment at acquisition, were $663 in the Period. Costs per tonne mined were at $141 per tonne in the Period. Processing unit costs were at $38 per tonne processed and general and administration unit costs were at $79 per tonne in the Period.

AISC per payable ounce of gold sold, which exclude the effect of the fair value adjustment at acquisition, were $776 in the Period, due to minimal capital expenditures in the Period.

Mine sales

A total of 11,306 ounces of gold were sold at an average price of $1,278 per ounce during the Period. The sales were from gold production during the Period and gold inventory acquired upon closing of the acquisition of Claude Resources.

Exploration

For 2016, Seabee Gold Operations planned 65,000 meters of underground drilling and 18,000 meters of surface drilling to increase and convert Mineral Resources. During the Period, we completed 3,348 meters of underground diamond drilling to upgrade Inferred Mineral Resources and explore further the extensions to the Santoy 8A and Santoy Gap deposits. At surface, preparations were made to re-start drilling to explore the down plunge extension of Santoy Gap 9A, 9B and 9C deposits.

As reported August 8, 2016, six drillholes in a new area down plunge from the Santoy 8A structure returned gold grades above Mineral Resource cut-off grade, and we intend to conduct further drilling in this area.  At the Seabee mine, five drillholes of a planned seven-drillhole drill program were completed on the 15 Vein target, which is a mineralized structure offset along the 19 shear. At the Carr target, located near surface and four kilometers along strike to the north from the Santoy mine complex, we drilled approximately 2,500 meters in nine drillholes over a two-kilometer strike length. At the Herb West target, located 2,200 meters west-north-west of the Seabee mine, we drilled approximately 1,130 meters in four drillholes. Results from drillholes at these three targets revealed quartz-vein structures with gold-bearing mineralization and warrant follow-up drilling.

For the second half of 2016 at the Seabee Gold Operation, our focus will be on infill drilling at the Santoy Gap to convert Inferred Mineral Resources to Mineral Reserves. At surface, our drilling focus for the second half will be on exploring laterally and down plunge to extend mineralization at the Santoy mine complex.

Pirquitas mine, Argentina

 

 

Three months ended

Operating data

June 30

2016

 

March 31

2016

 

December 31

2015

 

September 30

2015

 

June 30

2015

 

Total material mined (kt)

2,543

 

2,520

 

2,712

 

2,746

 

3,087

 

Waste removed (kt)

1,814

 

1,726

 

1,966

 

2,219

 

2,320

 

Ore mined (kt)

729

 

794

 

746

 

527

 

766

 

Strip ratio

2.5

 

2.2

 

2.6

 

4.2

 

3.0

 

Silver mined grade (g/t)

189

 

181

 

187

 

188

 

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MARKET SUMMARY

INDICES

Name Last Change
DOW 26566.00 0.01%
S&P 500 2920.22 0.03%
NASDAQ 8001.72 0.11%
TSX 16223.26 0.10%
TSX-V 710.60 0.00%

Resource Commodities

Name Last Change
Gold 1201.02 0.17%
Silver 14.47 1.52%
Copper 2.82 0.020
Platinum 824.50 0.24%
Oil 72.08 1.80%
Natural Gas 3.04 2.01%
Uranium 27.30 0.29%
Zinc 1.15 0.00%

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