Claude Resources Acquisition Delivers Growth and Value for Silver Standard Resources Shareholders - Paul Benson
Canadian based metals producer Silver Standard Resources Inc (SSO.TO, SSRI) has agreed to buy fellow Candian metals producer Claude Resources Inc (CRJ.TO)(CLGRF.OB).
Under the terms of the Agreement, all of the Claude Resources issued and outstanding common shares will be exchanged on the basis of 0.185 of a Silver Standard common share and C$0.001 in cash per Claude Resources share, representing total consideration of C$1.65 per share of Claude Resources based on the value of Silver Standard’s common shares as of the close of business on March 4, 2016. This implies an equity valuation of C$337 million for Claude Resources. The consideration represents a premium of approximately 25% based on the 20-day volume weighted average prices of Silver Standard and Claude Resources and 30% to Claude Resources’ closing price of C$1.27 per common share on March 4, 2016. Upon completion of the Transaction, existing Silver Standard and Claude Resources shareholders will own approximately 68% and 32% of the combined company, respectively.
Establishes a high-quality intermediate precious metals producer: Combines high-margin precious metals operations with scale and financial strength in attractive mineral belts and political regions.
Significant pro forma mining company: In 2016, the combined company is expected to produce approximately 390,000 gold equivalent ounces at cash costs of approximately $735 per equivalent ounce of gold sold.
Immediately strengthens financial position: Increased free cash flow generation, enhanced credit quality, and improved financial flexibility with combined cash and marketable securities of $330 million as at December 31, 2015.
Combines complementary technical skills: Brings safe underground and open pit mining skills together to realize portfolio growth and exploration opportunities.
Well positioned to pursue growth: Accelerate exploration of the +19,000 hectare Seabee property while continuing to explore Marigold in Nevada and Pirquitas/Chinchillas Page 2 properties in Argentina, as well as continuing our disciplined approach to reviewing external project and production opportunities.
Paul Benson, President and CEO of Silver Standard said, “The addition of the Santoy and Seabee mine complexes to our operating portfolio demonstrates our disciplined acquisition strategy to deliver growth and value to our shareholders. Through this transaction we are adding a third high quality, strong cash flowing operation located in Canada, one of the best places in the world to operate mines. We also acquire a large underexplored land position with significant exploration upside. With financial synergies and our strong balance sheet, the combined company is well positioned to maximize value from our assets and pursue further growth opportunities.”
Brian Skanderbeg, President and CEO of Claude Resources said, “This transaction provides our shareholders with meaningful ownership of an emerging Americas focused mid-tier precious metals producer. Our long-term production profile, free cash flow, strong balance sheet and significant exploration potential are a great addition to Silver Standard’s portfolio of producing mines and development projects and we are excited that we can share in the growth opportunities that exist going forward. ”
About Silver Standard Resources Inc
Silver Standard is a Canadian-based precious metals producer with two wholly-owned and operated mines, including the Marigold gold mine in Nevada, U.S. and the Pirquitas silver mine in Jujuy Province, Argentina. In 2016, Silver Standard is expected to produce over 320,000 gold equivalent ounces at cash costs of $770 per gold equivalent ounce sold 1. We also have two feasibility stage projects and an extensive portfolio of exploration properties throughout North and South America. We are committed to delivering safe production through relentless emphasis on Operational Excellence. We are also focused on growing production and Mineral Reserves through the exploration and acquisition of assets for accretive growth, while maintaining financial strength.
About Claude Resources Inc
Claude Resources Inc. is a public gold exploration and mining company based in Saskatoon, Saskatchewan, with an asset base located entirely in Canada. Its shares trade on the Toronto Stock Exchange (TSX:CRJ) and the OTCQB (OTCQB:CLGRF). Since 1991, Claude Resources has produced over 1,100,000 ounces of gold from its 100 percent owned Seabee Gold Operation in northeastern Saskatchewan. In 2016, Claude Resources is expected to produce between 65,000 and 72,000 ounces gold at cash costs of C$700 to C$770 per ounce gold. The Company also owns 100 percent of the Amisk Gold Project in northeastern Saskatchewan.
SOURCE: Silver Standard Resources Inc. and Claude Resources Inc.
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.