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Silver Standard suspends Pitarrilla project

Bnamericas Published: Friday, May 09, 2014

Silver Standard Resources (TSX: SSO, Nasdaq: SSRI) has suspended work on its US$741mn Pitarrilla silver project in Mexico's Durango state.

The move follows the Vancouver-based company's acquisition of the Marigold gold mine in the US from Goldcorp and Barrick, following which "our resources need to be deployed appropriately," CEO John Smith told the Q1 earnings call.

The decision also hinged on the impact of metals prices on the project's economics, a moratorium on new water drilling in Mexico and the country's new mining taxes, including a 7.5% tax on sales minus certain deductions and a 0.5% gross revenue royalty on precious metals mines.

Silver Standard will consider advancing the project when conditions are more supportive, Smith said.

The company will maintain a presence in Mexico and will continue to work with local communities and to advance land holdings at Pitarrilla, as well as exploring options to enhance the value of the project in Durango state.

The company began a review of the project last year in response to falls in metals prices. An environmental permit was previously turned down mainly because sufficient water rights could not be secured.

In Peru, the company expects to receive approval from the energy and mines ministry (MEM) for a drilling project at the Bonita zone of its San Luis silver project in May, with drilling expected to start in June.

The aim of the program is to define the Bonita resource which could provide an additional development path for the project, Smith told the call.

Collective contract negotiations are continuing at Silver Standard's Pirquitas mine in Argentina, he added, which saw 2.5 days lost to stoppages in April.

The company expects stronger performance at the mine during the rest of the year after operations were impacted by waterlogged soil for the main part of Q1.

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