Silver Standard Resources TSX:SSO NASDAQ:SSRI is a mineral production and exploration company that holds interests in tin, zinc, silver, gold, lead and copper containing assets. The Vancouver, Canada based company was founded in 1946, known as Silver Standard Mines Limited until 1979, Consolidated Silver Standard Mines Limited until 1990 and Silver Standard Resources, Inc. since then. It oversees the development of projects in Argentina (Pirquitas), Peru (San Luis, Berenguela), Mexico (Veta Colorada, San Marcial both 100%, San Agustin), Canada (Sunrise Lake NWT 100%, Duthie Property), Chile (Challacollo), the United States (Maverick Springs 55%, Candelaria) and Australia (Bowdens, 100% through GSM Exploration) 2011. It started producing in the fourth quarter of 2010 when Pirquitas (mine and mill) began operating. In 2010 Silver Standard produced 6.302 million ounces of silver all at the Pirquitas mine, ended the year with 285.5 million ounces of proven and probable silver reserves at its 14 properties (993.3 million ounces measured and indicated, 403.6 million ounces inferred).
Former CEO Robert Quartermain launched one of Canada's newest precious metals company (focused on gold), Pretium Resources Inc. on December 21, 2010 after raising US$260 million in its IPO. At the time Pretium's two main properties were ones that it purchased from Silver Standard for Cdn$215 million, Cdn$39.8 million promissory note and 32.5 million common shares. Silver Standard currently owns 42.31% of Pretium Resources.
As of January 2011 only one property was producing and three other ones were at advanced stages of exploration (in Argentina, Peru and Mexico). It had a market cap of $2.2 billion in January 2011. In 2010 it produced 3 million pounds of zinc and 100,000 pounds of tin.
| Financials key data|
(qtrly reports via company&g.finance)
USD $ mil
|long trm debt||118.2||116.78||110.74||6.74%||104.05||0|
|total op expenses||136.33||101.784||27.24||400.5%||42.08||37.10|
As of January 2011 the company had five significant projects going all in South America (2 in Argentina and 1 in Peru) and Mexico (2). In addition there are other key assets in Canada and Australia which are at advanced stages of development.
San Luis in Peru is a joint venture in which it has a 55% interest. The property which has significant gold and silver resources, covers over 33,000 hectares of land in Central Peru.
Argentina - Pirquitas and Diablillos (100%, northern Argentina)
It is Argentina's biggest silver mine with over 190 million ounces of silver (2P reserves, up from 140 million in '09) and a mine life of 14.5 years. Tin is also produced there (2,500 T annually) and zinc (11 million pounds annual production). Over 65% of 2010 silver production happened in the 2nd half of the year.
Canada - Snowfield and Bruceback in northern British Columbia as well as Sunrise Lake, NWT and Duthie.
2010 - In the 4th quarter of 2010 Silver Standard earned $23.949 million from mine operations, a complete reversal from the losses incurred in the same quarter of 2009 and other quarters since (losses in the other 3 quarter of 2010 brought down total mine operation earnings to just under $10 million). Total net earnings were very strong ($376.57 million in the 4th quarter alone) reflecting higher realized silver prices (up to $20.92 million for the fiscal year; sales of silver totalled 5.94 million ounces 94.2% of total production), lower production and operating costs (per ounce $29.32 and $36.61 respectively in the first quarter, significant decreases in subsequent quarters lowered that to $12.16 and $18.13 for the year). Results were also boosted by higher silver recovery rates (increasing consecutively each quarter in 2010, reaching a high of 76.2% in the last quarter (65.2 was the average for the year) and higher silver grades (267 grams/ton in the 4th quarter compared to 129 grams/ton in the first quarter of 2010: averaged 233 for the year). Ended the year with cash and cash equivalents nine times higher than it began with ($232.3 million versus $26.7 million).
|Silver Produced & Sold (oz)|
|Cash Cost (total)||30.19||24.04(3q)||20.76|
In 2010 69% of the 6.302 million ounces of silver production happened during the second half of the year (1st quarter was less than half of the 2nd). In the second half of the year the average realized price was higher (4% higher in the 3rd quarter than the overall nine month period) while total production costs decreased (cash production cost down 20.2% to $10.42/oz in the 3rd quarter, cash operating cost down 12.1% to $16.94/oz, bringing total costs down 13.64%).
Bowdens (200 km northwest/240 km west of Sydney, Australia in NSW) was sold on August 1, 2011 (offer accepted not closed) to gold mining company, Kingsgate Consolidated for US$ 75 million in cash considerations/shares. Bowdens, which has measured/indicated resources of 79.5 million ounces and another 17.6 million ounces inferred, has a mine life of 10 years. Silver Standard realizes a US$ 60 million pre tax gain. The deal was initially said to be worth US$ 83 million. At the time, Kingsgate had a market value of $1.2 billion. Kingsgate operates Thailand's Chatree mine, its last major acquisition was Chile company Laguna Resources in 2010.
|mil oz||% share||2P||indicated||infer||2P||ind||infer|
Mexico is where most of the company's gold and silver is, 69% of its 3.6 million ounces of gold resource and 49% of its 1.397 billion ounces of silver. Argentina is second, 22% of gold and 19% of silver resources. The company's silver is located in 7 countries, gold in 5 countries (properties in Australia and chile have silver but not gold)
The company began reporting revenues when its first operating mine began production in late 2009/early 2010. Though the consecutive quarterly increases in cash flow didn't offset costs related to project and development financing until the fourth quarter of 2010, when net income climbed into positive territory. Revenue comes primarily from the 6-8 million ounces of silver the company mines in Pirquitas, Argentina.
In 2010 the company's bottom line was helped by lower production and operating costs (per ounce $29.32 and $36.61 respectively in the first quarter, significant decreases in subsequent quarters lowered that to $12.16 and $18.13 for the year). Results were also boosted by higher silver recovery rates (increasing consecutively each quarter in 2010, reaching a high of 76.2% in the last quarter (65.2 was the average for the year) and higher silver grades (267 grams/ton in the 4th quarter compared to 129 grams/ton in the first quarter of 2010: averaged 233 for the year). Ended the year with cash and cash equivalents nine times higher than it began with ($232.3 million versus $26.7 million).
The move over to mid summer from spring for silver options contracts to end moved spot silver lower especially when compared to gold the price of which was propped up by heavy demand by central banks in Russia, Mexico and Thailand among others (Canada's BNN interview with a silver anaylist from New York), Russia's central bank purchased about 1 million ounces of gold in the first four months of 2011 up from over 400,000 in the second half of 2010; Russia's last major purchase was in May 2010 when it bought 1.1 million ounces of gold during the month which represented 16.6% of global production that month. Speculators short on silver should boost the price come late June/early July.
In 2010 silver production for its largest pure play-direct competitors was as follows: Pan American Silver:24.3 mil oz, Silvercorp Metals:4.6 mil oz, Silver Standard Resources:6.302 mil oz (up 48%), First Majestic Silver:6.5 mil oz (up 62%) compared to Hecla Mining Company:10.566 mil oz (down); among diversified industry players Rio Tinto (RIO) was down 20% to 6.862 mil oz, BHP Billiton and Fresnillo led the industry at 45 and 38 million ounces respectively, [[Goldcorp (GG)]|Goldcorp]] was the largest silver producer among gold companies (23 million ounces).