SSR Mining Receives EIA's Approval for Chincillas

The development of the Argentinian silver project will start in July-Dec. 2018

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Through a news release published on its website yesterday, Dec. 27, SSR Mining Inc. (SSRM, Financial) – formerly known as Silver Standard Resources - has informed the market that the Argentinian authorities have approved the Environmental Impact Assessment (thereafter EIA) for the development of the Chinchillas project.

The beginning of development activities is expected by SSR Mining sometime in the second part of fiscal 2018.

The Argentinian silver project called Chinchillas is situated in the province of Jujuy not so far from the Pirquitas mine.

For the development of the Chinchillas project SSR Mining and Golden Arrow Resources Corp. (TSXV:GRG) reached a 75-25% joint venture agreement as per SSR Mining's news release dated May 31, 2017. The development of the Argentinian mineral deposit is undertaken through Puna Operations Inc., a new business entity created by the JV agreement. SSR Mining is the operator of Puna Operations.

The Chincillas project holds a pre-feasibility study with which the miner is evaluating the possibility to feed the Pirquitas processing facilities with ore from open-pit mining activities over a span of eight years.

From Chincillas, SSR Mining expects to produce approximately 6.1 million ounces of silver per year plus base metals such as lead at approximately 35.0 million pounds per year and zinc at approximately 12.3 million pounds per year. The cash costs per ounce of silver sold is expected by the miner to be $7.40.

Since the processing of ore at Chinchillas can be undertaken using the existing machinery available at the nearby Pirquitas, Chincillas is a low capital intensity labeled project.

The company says that “the project has an attractive post-tax net present value of $178 million, based on a 5% discount rate, and post-tax internal rate of return of 29%”.

Paul Benson, SSR Mining's President and Chief Executive Officer commented: "Receipt of the EIA approval is another positive step forward for our growth strategy. Our team can now accelerate development and construction activities to begin processing ore in 2018. Brownfields development of Chinchillas is a low capital, short payback opportunity to create value and growth for our shareholders in the near term."

SSR mining is trading at $8.68 per share versus an analysts’ average target price of $12.50 with a price-sales (P/S) ratio of 2.22 versus an industry average of 1.76 and a price-book (P/B) ratio of 1.11 versus an industry median of 2.01. The Enterprise Value/EBITDA ratio is 3.90 versus an industry average of 10.14.

The 52-weeks range is between $7.80 and $12.25.

Disclosure: I have no positions in any stock mentioned in this article.