Silver Standard Evaluating Chinchillas Deposit
Under the terms of the agreement, Silver Standard is evaluating Chinchillas during an 18-month preliminary period as a mining operation to supply feed to the Pirquitas plant beginning in the second half of 2017. Silver Standard has committed to spend a minimum of $4 million for predevelopment activities. Expenditures may total up to $12.6 million based on the success of the predevelopment activities, including exploration, mine planning, metallurgical studies, permitting and engineering studies.
Silver Standard has agreed to pay Golden Arrow up to C$2 million during the preliminary period in four C$500,000 cash installments. The first installment was paid on signing, and the remaining payments are conditional upon completion of project milestones.
If Silver Standard elects to proceed to development, the two companies will enter into a 75:25 joint venture that will encompass both the Pirquitas and Chinchillas properties, with Silver Standard as majority partner and operator. Silver Standard may elect to exercise this option at any time during the preliminary period. Upon entering into the joint venture, Silver Standard will pay Golden Arrow an amount equal to 25% of mine earnings generated by Pirquitas less certain expenditures for exploration and capital investment.
Golden Arrow will initiate the process to obtain the necessary court and shareholder approvals required to form the joint venture.