Endeavour Silver to purchase SSR’s Pitarrilla venture in Mexico for $70m

SSR can even obtain a 1.25% internet smelter return royalty, which it says is at the moment value $57 million.   

 “The acquisition of Pitarrilla, one of many world’s largest undeveloped silver tasks, accelerates our imaginative and prescient to develop into a premier senior silver producer,” Dan Dickson, Endeavour Silver’s CEO, stated in an interview. He expects Pitarrilla to take precedence over the corporate’s different tasks as soon as the corporate analyzes “the economics of assorted scales and choices for manufacturing.”   

The choice to purchase the venture took place in a comparatively quick time, Dickson stated, noting that the 2 firms began speaking in regards to the acquisition within the fourth quarter of final 12 months.

“For us generally offers take a very long time, generally rapidly,” he stated. “On the finish of the day, it’s [one of] the largest undeveloped our bodies on the planet.”  

“There’s simply not many main silver producers on the market and our capability to choose up one of many crown jewels within the area is an enormous testomony,” he stated, including that for SRR Mining, which was shifting in the direction of gold, “it didn’t make sense for them to develop this ore physique.”   

For SSR, the transaction is part of the corporate’s aim of “realizing worth by monetizing non-core property,” SRR stated. “Along with the sale of our non-core royalty portfolio within the third quarter of 2021 and ongoing rationalization of non-core fairness positions, SSR Mining has realized in extra of $235 million … over the previous seven months,” the corporate said in a press launch.   

Endeavour Silver has dedicated to spend a minimal of $10 million on exploration at Pitarrilla over a five-year interval after the transaction closes, SSR stated.   

The Pitarrilla venture, 160 km north of town of Durango, has measured and indicated sources of 164.7 million tonnes grading 99.1 grams silver per tonne, 0.36% lead and 0.91% zinc for contained steel of 525.7 million oz. of silver, 1.3 billion lb. of lead and three.2 billion lb. of zinc.  

Endeavour Silver is treating the sources, which SSR first outlined in a 2012 technical report, as “historic” and goals to construct present useful resource information inside the subsequent six months, stated Dickson.   

The deposit stays open and based on Endeavour, the geology at Pitarrilla is “broadly comparable” to its Guanacevi and Bolanitos underground mines, additionally in Mexico.   

Positioned 260 km away from Durango metropolis, in northern Mexico, the Guanacevi mine, which Endeavour acquired in 2004, is the corporate’s highest-grade silver operation.  The mine produced 4.3 million oz. silver in 2021. 

The Bolanitos mine, situated 12 km northwest of  Guanajuato metropolis, was acquired in 2007. The mine produced 491,412 oz. of silver in 2021.  

Ovais Habib, an analyst who covers SRR Mining at Scotiabank, described the transaction as impartial.    

“We view the announcement neutrally because the sale monetizes a non-core asset whereas additionally permitting the corporate to take care of upside potential via the 1.25% NSR and ~5% fairness stake in Endeavour Silver,” he wrote.  

“We stay up for future updates from SSR and Endeavour Silver about Pittarilla’s exploration and improvement.”  

Habib has an outperform ranking on SRR and a one-year goal value of C$31 per share.  

BMO analyst Ryan Thompson in a analysis observe to purchasers said that the money and inventory deal of $70 million was larger than BMO’s “prior carrying worth” of C$47 million. “The corporate additionally retains a 1.25% NSR on Pitarrilla. We’re happy to see SSR monetize one other non-core asset following the sale of its royalty portfolio, which closed in late October.” 

(This text first appeared in The Northern Miner)

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