Don’t be surprised if Silver Standard Resources has been looking elsewhere for another acquisition
SmallCapPower | November 22, 2016: Silver Standard Resources Inc. (TSE:SSO) has been in a buying mood the past few years. In 2014, it purchased the Marigold mine Nevada, one of the largest gold mines in the United States, from Goldcorp and Barrick Gold. Earlier this year, it acquired Claude Resources and its Seabee gold mine in Saskatchewan in an all-stock transaction. And, most recently, Silver Standard failed in an attempt with Gold Fields to takeover Kirkland Lake Gold (TSE:KLG). Despite this setback, don’t be surprised if Silver Standard Resources has been looking elsewhere for another acquisition, and given its purchase history we’ve identified a few Canada-based gold miners that could be a good fit.
Wesdome Gold Mines Ltd. (TSE:WDO): Wesdome is currently mining gold at the Eagle River Complex in northern Ontario from the Eagle River and Mishi gold mines. The Company also has development projects in the Kiena Mine Complex (Quebec) and Moss Lake (Ontario). The Eagle River complex is thought to contain more than one million gold ounces at an average of 9.1 grams per tonne (g/t). Wesdome also had about $29 million in cash as of the end of Q3, 2016. Wesdome Gold Mines has the desired high-grade gold and generated free cash flow of $4.6 million in its third quarter, yet its all-in sustaining costs per ounce are high at just above US$1300.
Richmont Mines Inc. (TSE:RIC): Richmont is currently producing gold from the Island Gold Mine in Ontario and the Beaufor Mine in Quebec. Island’s Proven & Probable reserves are estimated at 561,000 ounces at 8.3 g/t, with 768,000 Inferred ounces at 8.5 g/t. Richmont’s all-in sustaining cost estimates for 2016 are US$935-$1,015, helped by significantly better than expected performance from the Island Gold Mine during the first half of the year. Earnings for the most-recently reported quarter (Q3) were $0.2 million, a $3.1 million decrease year over year, primarily due to increased exploration expense. Operating cash flow for the period, meanwhile, was $5.8 million. The Company is current sitting on about C$80 million in cash as well.
New Gold Inc. (TSE:NGD): New Gold would be a real prize for Silver Standard Resources. It has four producing assets (New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in Australia and the Cerro San Pedro Mine in Mexico) and two development projects (Rainy River and Blackwater in Canada). For the first nine months of 2016, it had all-in sustaining costs of just US$718 per ounce with US$90 million in cash generated from operations in the third quarter. In addition, New Gold had cash and equivalents of $151 million as of September 30, 2016.
Premier Gold Mines Limited (TSE:PG): Premier recently began commercial production at its South Arturo mine in Nevada with average all-in sustaining costs of US$374 per ounce in the third quarter. It also has a high-grade (10g/t) gold development project (McCoy Cove) in Nevada. Thus, there could be some synergies there with Silver Standard’s Marigold mine in that state. Premier also owns the Mercedes gold/silver mine in Mexico, which it acquired from Yamana this year. For the nine months ended September 30, 2016, the Mercedes mine produced 70,274 ounces of gold and 326,876 ounces of silver at average all-in sustaining costs of US$807 per ounce of gold and US$9.03 per ounce of silver.