Resource World Magazine

44 www.resourceworld.com J U N E / J U L Y 2 0 1 6 SilvER SiLvEr STanDarD to acquire claude resources by Ellsworth Dickson SILVER STANDARD RESOURCES INC. [SSO-TSX; SSRI- NASDAQ] has signed a definitive agreement to acquire all the outstanding shares of Saskatchewan gold miner Claude Resources Inc. [CRJ-TSX; CLGRF-OTCQB]. Under the terms of the agreement, all Claude issued and out- standing common shares will be exchanged on the basis of 0.185 of a Silver Standard common share and CDN $0.001 in cash per Claude Resources share, representing total consideration of CDN $1.65 per share of 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 prior to the announcement of the transaction. The transaction requires at least 66 2/3% of votes in favour cast by Claude share- holders and regulatory approval. The primary assets of Claude Resource are the producing Seabee gold mine and Santoy Mine Complex located about 125 km northeast of La Ronge. Silver Standard owns and operates the Pirquitas silver Mine in Argentina, the Marigold gold mine in Nevada plus a portfolio of advanced exploration projects. Noting that Silver Standard has acquired both silver and gold properties, in an interview, Paul Benson, President and CEO, told Resource World, "We classify ourselves as a precious metals producer so we are agnostic to the individual metals – gold or sil- ver. The reality is that the majority of silver actually comes as a byproduct from base metal mines. The probability is that as we continue to open new opportunities they are likely to be gold, but we would be thrilled to welcome good silver opportunities that would add value for shareholders." He added that before the Claude Resources acquisition, Silver Standard had a gold:silver ratio of about 60:40. This ratio will increase with more gold following the Claude acquisition. "Most of our silver comes from the Pirquitas Mine in Argentina where we hope to extend the mine life," said Benson. "We also have the Pitarrilla Project in Mexico which is one of the largest silver projects in the world with over half a billion ounces, so we certainly have exposure to silver in our portfolio." Benson said he is bullish on both gold and silver. "The metal prices are related to some degree," he said. "So if you are bullish on one, you are normally bullish on the other. I am bullish medium to long term, but I don't try to predict prices on a daily basis as they are subject to the vagaries of inter- est rates and currencies." "If you look at what we have done at other operations such as the Marigold Mine in Nevada that we acquired in 2014, we put into place our continuous improvement program which we call 'operational excellence'," said Benson. "We look at the data to see where we can improve, such as improvement in reducing waste, increasing productivity or reducing costs, thereby increasing margins. If you look at both our Marigold and Pirquitas opera- tions, you will see that there have been significant reductions in operating costs." The acquisition of Claude Resources includes the Seabee and Santoy gold mine complex. He remarked that when Silver Standard takes ownership of Claude's operation, it will put into place the same strategy by getting everyone in the work force involved. "It's often the people doing the job that can figure out a smarter or easier way of doing things," he noted. Benson explained that Silver Standard acquired the Marigold Mine in 2014 as the company was looking for producing assets. "Going forward, with three producing mines, we are also able to consider advanced and earlier stage projects," he said. "We are primarily focused on the Americas where most countries are favourable jurisdictions, but you need to look at the specific regions of a country to determine if they are prospective and supportive of mining. We might look further afield if a good opportunity presented itself. It doesn't matter if the projects we acquire are underground operations, open pit, heap leach or con- ventional since we have the skill sets to handle various projects. There aren't enough good projects available to limit ourselves to just one type of operation." Benson said his company looks for acquisitions where they think they can add value keeping in mind that this is a long term invest- ment. "Shareholders can buy and sell our shares every day but you can't buy a mine one day and sell it the next," said Benson. "An important aspect is believing that we can expand existing resources – exploration upside is a key that we look for." n The Seabee gold mine located about 125 km northeast of La Ronge, Saskatchewan. Photo courtesy Claude Resources Inc.

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