Silver Standard Considers Combining Projects

Silver Standard Resources announced on October 29, 2010, it has entered into an agreement to sell its adjacent Snowfield and Brucejack gold-copper projects in northern British Columbia to Pretium Resources Inc. Under the terms of the agreement, Silver Standard will receive total consideration of C$450 million, consisting of a minimum of C$215 million in cash and the balance in common shares of Pretium valued at the offering price of such shares under an initial public offering (IPO) being undertaken by Pretium. The amount of the purchase price payable in cash will increase by the amount of the proceeds realized by Pretium under the IPO in excess of C$265 million. On completion of the transaction, Silver Standard’s ownership interest in Pretium is expected to be less than 50%.

In mid-September, Silver Standard Resources released an NI 43-101 compliant technical report and preliminary assessment, examining the benefits of combining the Snowfield and Brucejack gold-copper projects into a single project. The report considered development of a combined project based on open-pit mines that would produce mill feed at a rate of 120,000 mt/d over a mine life of 27 years. The processing plant would produce a copper-gold-silver concentrate, a molybdenum concentrate and gold-silver doré. Average gold production, including gold in copper concentrate is estimated to be 960,000 oz/y over the first eight years of production and 700,000 oz/y over the life of the mine. Production of copper in concentrate is estimated at 39.5 million lb/y over the first eight years and 44.6 million lb/y life of mine.

Capital expenditures to develop the project, including $454 million for contingencies, are estimated at $3.5 billion. The project has an estimated internal rate of return of 12.4%, using an exchange rate of $0.92 = C$1 and base case metals prices of $878/oz gold, $14.50/oz silver, $17/lb molybdenum, $2.95/lb copper and $7,811/kg rhenium.

Silver Standard emphasized the preliminary nature of the assessment, which includes inferred mineral resources that are considered too speculative geologically to allow them to be categorized as mineral reserves. Given that qualification, the estimated mining inventory for Snowfield- Brucejack totals 1,172 million mt at an average mill feed grade of 0.74 g/mt gold, 4.17 g/mt silver, 0.08% copper, 0.01% molybdenum and 0.42 g/mt rhenium, containing 27.8 million oz of gold, 157.2 million oz of silver, 2.14 billion lb of copper, 198.1 million lb of molybdenum and 487 mt of rhenium.

As featured in Womp 2010 Vol 09 -