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Golden Arrow, Silver Standard to set up Chinchillas-Pirquitas JV in Argentina

Golden Arrow Resources Corp. said March 31 that it received notice from Silver Standard Resources Inc. to exercise its option to form a 75/25 joint venture to combine the Chinchillas and Pirquitas properties in Argentina into a single new operation.

Silver Standard will serve as operator of the joint venture.

According to the terms, Silver Standard will pay Golden Arrow an amount equivalent to 25% of mine earnings generated by Pirquitas, minus certain Chinchillas expenditures, estimated at about US$15 million, incurred since Oct. 1, 2015, until closing, which is expected by May 30.

The joint venture will provide Golden Arrow with an opportunity to fast-track development of the Chinchillas property through use of the existing production facilities at Pirquitas and establishment of common infrastructure.

Silver Standard has approved development on Chinchillas, subject to permitting and closing of the transaction.

Based on and subject to permitting, construction at Chinchillas is expected to start during the third quarter, with ore delivery to the Pirquitas mill anticipated in the second half of 2018.

In a separate same-day release, Golden Arrow noted that a pre-feasibility study for Chinchillas outlined an after-tax net present value of US$178 million at a 5% discount rate, and an internal rate of return of 29%.

The project is expected to produce an average of 8.4 million ounces of silver equivalent over an eight-year mine life, at a 4,000-tonne-per-day plant throughput.

Initial CapEx, including costs and contingency, are pegged at US$81 million.

Chinchillas hosts measured and indicated resources of 29.3 million tonnes containing 96 million ounces of silver, 581 million pounds of lead and 386 million pounds of zinc.

Inferred resources total 20.9 million tonnes containing 34 million ounces of silver, 250 million pounds of lead and 374 million pounds of zinc. Resources are inclusive of mineral reserves.

Silver Standard, meanwhile, noted that it entered into a tax moratorium system in Argentina to resolve the dispute covering the application of export duties on its Pirquitas property.

The conditions require the company to pay about 1 billion pesos, with 5% paid upon entry and the balance in equal installments over 60 months. Outstanding amounts are also subject to a 1.5% interest rate per month.

All liabilities related to historical export duties and interest will be extinguished upon completion of such payments.

As of March 31, US$1 was equivalent to 15.38 Argentine pesos.