Silver Standard Resources Inc. (SSRI, Financial) completed the purchase of a 19.9% interest stake in AbraPlata Resource Corp. (TSXV:ABRA, Financial) on April 24 through a reverse takeover between Huayra Minerals Corp. and AbraPlata.
Huayra is engaged in exploration and development activities in Argentina and owns the Diablillos gold-silver project. The advancement of the Diablillos project, together with the M-18 project, is part of an agreement the company reached with Silver Standard Resources last September. Following the agreement, Silver Standard acquired a 19.9% equity stake in Huayra, a net smelter return royalty of 1% on the Diablillos and M-18's production. The company also appointed W. John DeCooman, its vice president of business development and strategy, to Huayra’s board of directors.
Silver Standard now holds 11,294,609 of AbraPlata’s total issued and outstanding ordinary shares.
AbraPlata is a Canadian company headquartered in Edmonton. It is engaged in the acquisition of mineral resources in Argentina as well as exploration and development activities. The company's main property in Argentina is Diablillos, covering approximately 80 square kilometres.
Besides the Diablillos property, AbraPlata also holds rights to explore other properties in Argentina such as the Cerro Amarillo claim in the Mendoza province, the Aguas Perdidas land in the province of Chubut and the Samenta property in the Salta province.
Argentina is becoming a popular mining prospect for North American companies looking for alternative mining sites to enhance the quality of their assets. In addition, several measures made by the Argentine government, which include the cancellation of duties on the exportation of mineral products and tax incentives for mining companies to the simplification for the entry of capital goods into the country, is attracting foreign investments in the country's mining sector.
After the announcement, shares of Silver Standard Resources lost 5.14% or 54 cents per share yesterday, closing at $9.96 per share on the Nasdaq. This decline suggests the market did not view the news favorably.
On the back of rising precious metal prices, shares of Silver Standard Resources have gained 11.66% year to date. The Canadian mining company has a price-book ratio of 1.32 and a EV/Ebitda ratio of 5.20. The analysts’ average target price is $13.35 per share, bearing a 34% upside from the current price.
Disclosure: I have no positions in any stock mentioned in this article.
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