Silver Standard Resources plans to sell its interest in the Parral properties in Chihuahua, Mexico, which includes the Veta Colorada, La Palmilla, and San Patricio properties, to Endeavour Silver Corp. Endeavour Silver is a midtier precious metals company with a track record of exploring, developing and operating mines in Mexico.
“The sale of these noncore properties demonstrates our focus on optimizing the portfolio and maximizing value from all of our assets,” Paul Benson, president and CEO of Silver Standard. “Through this transaction, we retain exposure to the success of the properties and, more importantly, we are enabled to redirect capital elsewhere in our portfolio to continue generating value for our shareholders.”
Under the terms of the definitive agreement, Endeavour gets Silver Standard’s interest in the Parral properties for $6 million of Endeavour Silver shares. Silver Standard would also have the right to receive $200,000 of Endeavour Silver shares for each 1 million silver oz included in the resources estimate for the San Patricio and La Palmilla properties and 1% net smelter returns royalty on all mineral products from those properties.
In addition, Endeavour Silver has committed to perform a minimum $2 million exploration program over a two-year period on the San Patricio and La Palmilla properties, and is required to complete the resource estimate within one year after the completion of the exploration program. Silver Standard expects the transaction to close in the fourth quarter of 2016.