Silver Standard Resources Inc. (SSRI) has announced that it has entered into an agreement with Saskatoon-based Claude Resources Inc. to purchase all o
Silver Standard Resources Inc. (SSRI) has announced that it has entered into an agreement with Saskatoon-based Claude Resources Inc. to purchase all of the outstanding common shares of the company. — Photo courtesy Claude Resources
Vancouver's Silver Standard Resources Inc. (SSRI) has announced that it has entered into an agreement with Saskatoon-based Claude Resources Inc. to purchase all of the outstanding common shares of the latter, following a plan of arrangement to create a high-quality intermediate precious metals producer with assets in the Americas.
Per the agreement, all of the issued and outstanding common shares of Claude Resources will be exchanged on the basis of 0.185 of a Silver Standard common share and C$0.0001 in cash per Claude Resources share. This represents total consideration of C$1.65 per share of Claude Resources based on the value of Silver Standard's shares as of the close of business on Mar 4, 2016. The offer values Claude Resources at C$337 million (roughly $253 million).
Following the deal closure, Silver Standard’s shareholders will own roughly 68% of the combined company with shareholders of Claude Resources holding the remaining 32%.
The integrated company is expected to produce about 390,000 gold equivalent ounces at cash costs of about $735 per equivalent ounce of gold sold in 2016. The acquisition will also lead to an increase in cash flow generation, improved credit quality and better financial flexibility. The transaction will also provide production growth opportunities for Silver Standard along with exploration of more than 19,000 hectare Seabee property and Marigold in Nevada and Pirquitas/Chinchillas properties in Argentina.
Moreover, the acquisition will be beneficial to the shareholders of Silver Standard in a number of ways. The company will be able to extend its presence in Canada and achieve geographical diversification. It will also entail minimum capital investment and provide strong mineral resources to mineral reserves conversion opportunity. The credit quality will be enhanced as well, leading to a stronger balance sheet.
