Silver Standard Resources Delivers a Solid Fourth-Quarter
On Thursday, Silver Standard Resources (NASDAQ:SSRI) announced its fourth-quarter and 2013 year end results. It reported revenues of $49 million for the quarter and a profit of $29.8 million due primarily to the gains from the sale of non-core assets. The company accomplished a lot during the quarter, although it still barely reported an operating profit, meaning that it still needs a higher silver price to be a viable investment.
In the fourth-quarter, Silver Standard accomplished two things. First, it sold two non-core assets. Silver Standard has several non-core assets, and while they add value to the company, management believes correctly that it needs to focus its capital and its efforts on its core assets. This prompted the company to sell its San Agustin project in Durango, Mexico and its Challacollo project in Chile.
The company sold the San Agustin mine to Argonaut Gold (MKTS:ARNGF.PK) for $15 million in up-front cash, $30 million in stock, $30 million in future cash payments, and a royalty on the metal produced at the mine. It then sold the smaller Challacollo mine to Mandalay Resources (MKTS:MNDJF.PK) for $7.5 million in cash, 12 million shares of Mandalay Resources worth about $10 million at the time, an additional 5 million shares of Mandalay Resources once production begins at Challacollo and a royalty on the silver produced there.
These deals not only build up the company’s cash hoard, but Silver Standard’s management was smart enough to retain an interest in the success of these projects. Both Argonaut Gold and Mandalay Resources are well capitalized companies with multiple producing mines that are going to have production plans for these two projects by the end of the year. Had Silver Standard held onto them, these projects would have just sat there gathering dust as the company focuses on its Pitarrilla and Sa Luis development projects.