Although Vancouver-based Silver Standard's flagshipPirquitas silver project is scheduled to be commissioned in Argentina during thefourth quarter of this year, the company's executives said they do not believethe project will suffer serious impacts from Argentina'sdecision to eliminate tax exemptions from export duties for mining companies.
During a conference call with analysts and investors todiscuss quarterly results, Silver Standard Senior Vice President, CorporateJoseph Ovsenek said, Things are still in limbo as to how mining companieswill be treated.
He noted that initially the Argentine government proposed anacross-the-board reinstatement of the export duty for all mining companiesdoing business in the country. However, officials then subsequently decided tonegotiate with each of the mining projects affected by the imposition of exportduties that would range from 5-10%.
As mining companies doing business in the country foughtback and threatened to sue, Ovsenek said the government is now sitting downand trying to work out a consensus with the various groups impacted by thedecision.
Silver Standard reported this week that proven and probablereserves at Pirquitas have increased by 43% to 195.1 million ounces of silver.In addition, tin reserves jumped 411% to 159.2 million pounds, while zincreserves increased 32% to 548.5 million pounds. Due to the increased reserveestimates, Pirquitas mine life has been extended to 4.5 years to 14.5 years.
The tin concentrates to be produced by Pirquitas are ofparticular significance as George Paspalas, Senior Vice President, Operations,declared, It's a good time to be making tin and selling it... People areknocking down the door. He added that Pirquitas will also benefit from itschief energy source, natural gas, which is subsidized in Argentina.
Concentrate shipping is expected to commence in the firstquarter of 2009 at the mine.
Meanwhile, Silver Standard President and CEO RobertQuartermain updated investors and analysts on the fate of $57.1 million thecompany invested in the Canadian Asset Backed Commercial Paper Market (ABCP).
Late last year, Cdn$33 billion worth of notes were frozen asinvestors worried about exposure to U.S.subprime mortgages. A court has proposed restructuring the asset-backcommercial paper, which formerly yielded more than Treasury bills, was apopular took for companies, pension funds and individuals to invest. In Canada abouttwo-third of this market is sponsored by large banks.
In response, Silver Standard sold 1.95 million ounces ofsilver bullion for a $23.5 million gain, while $US$138 million of convertibledebt financing was completed in the first quarter, generating net proceeds of$129.8 million.
At March 31, 2008, the company held $57.1 million, which has beenwritten down to $26.7 million, the estimated fair market value. Quartermainsaid Silver Standard is looking at all options, including litigation, tomaximize the value of its ABCP.
Nevertheless, he told analysts and investors, We have allthe liquidity and more to build Pirquitas as well as do all of our explorationprograms and some for next year.
Silver Standard reported first quarter net earnings ofUS$2.2 million (3-cents per share) for the first quarter of this year, comparedwith a net loss of $1.6 million (3-cents per share) for the first quarter of2007. The improvement in earnings was attributed to the sale of the silverbullion offsets by costs of the convertible debt financing and the additionalwrite down of the ABCP.