SSR Mining (TSE: SSRM) announced Thursday that it has reached a definitive agreement for the sale of its Pitarrilla project in Durango, Mexico, to Endeavor Silver (TSE: EDR) for total consideration of up to $127 million.
SSR Mining is a Vancouver- and Denver-based producer of gold, silver, zinc and tin that owns Argentina’s largest silver mine.
SSR Continues Monetizing Non-Core Assets
Pitarrilla is a silver, lead, and zinc project located in the state of Durango, Mexico. Endeavor Silver is a mid-tier precious metals mining company that operates two underground high-grade silver and gold mines in Mexico.
Endeavor Silver is currently advancing the Terronera mining project towards a development decision, pending financing and final permits, and is exploring its portfolio of exploration and development projects in Mexico, Chile, and the United States.
The total consideration consists of $35 million in cash, $35 million in Endeavor Silver shares, and a 1.25% net smelter return royalty on the Pitarrilla property currently estimated by SSR Mining at a maximum value of $57 million.
In addition, Endeavor Silver has committed to incur exploration expenses of at least $10 million on the Pitarrilla project over a five-year period following the closing of the transaction.
The cash and equity items of the consideration totaling $70 million will be paid upon closing of the transaction. After the closing of the transaction, which is expected for the second half of 2022, SSR Mining expects to own around 5% of Endeavor Silver’s capital. The company expects the position to be accretive based on current analyst estimates for Endeavor.
Wall Street’s Take
On January 11, Scotiabank analyst Ovais Habib kept a Buy rating on SSRM and lowered its price target to C$31 (from C$38.50). This implies 45.6% upside potential.
The rest of the Street is bullish on SSRM with a Strong Buy consensus rating based on six Buys. The average SSR Mining price target of C$29.97 implies 40.8% upside potential to current levels.
TipRanks’ Smart Score
SSRM scores a 6 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to be in line with the overall market.
Download the TipRanks mobile app now
GoGold Gives Outlook for 2022