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.
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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.
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