CLAUDE RESOURCES INC

The material change report confirming the 31 May closing: Claude became a wholly-owned subsidiary of Silver Standard and every share was exchanged for 0.185 of a Silver Standard share plus C$0.001 in cash, with the Toronto and OTCQB listings ending around 6 June and deregistration to follow. Twenty-five years after Seabee poured its first gold in 1991 and just under five years into the SEC record held here, holders were paid in the acquirer's stock rather than wiped out.

other material event

The acquisition completed on 31 May 2016. Adding Seabee to Silver Standard's Marigold and Pirquitas mines gave a producer expected to make about 390,000 gold-equivalent ounces in 2016 at cash costs of US$715, and Claude's former board chairman Brian Booth joined the Silver Standard board. Silver Standard also repaid Claude's debt on closing.

business combination

Claude shareholders approved the arrangement with about 94% of votes cast, and Silver Standard shareholders approved issuing the consideration shares with about 93%. Closing was set for 31 May subject to final court approval.

business combination

2015 net earnings of $32.3 million ($0.17 a share), including a $4.4 million non-cash tax recovery, against $4.6 million in 2014, on record production of 75,748 ounces and an all-in sustaining cost of C$1,122 (US$878) an ounce, down 14%. Cash and bullion rose $28.6 million to $39.8 million and reserve grade rose 8% to 7.62 g/t. This is the last full-year result before the takeover, and the strongest in the record held here.

production update

Drilling at Santoy Gap returned 29.16 g/t cut over 6.26 m true width up-dip and 137.58 g/t uncut (41.99 g/t cut) over 1.12 m at depth, with 7.44 g/t over 12.96 m in a Santoy 8A step-out. An 83,000 m programme was set for 2016 - 65,000 m underground and 18,000 m of surface exploration - funded, management said, off the balance sheet's own strength. Announced nine days after agreeing to be taken over.

drilling result

Silver Standard Resources agreed to acquire Claude Resources outright: 0.185 of a Silver Standard share plus a nominal cash amount per Claude share, worth C$1.65 a share on Silver Standard's 4 March close and implying an equity value of C$337 million. That was a 30% premium to Claude's C$1.27 close on 4 March and about 25% on 20-day volume-weighted averages, leaving Claude holders roughly 32% of a combined company expected to produce about 390,000 gold-equivalent ounces in 2016 at cash costs near US$735.

business combination

Record 2015 production of 75,748 ounces, 20% above 2014 and past the raised guidance, from 277,368 tonnes at 8.82 g/t with 96.3% recovery; the fourth quarter alone produced 18,340 ounces at 8.99 g/t. Cash and bullion closed the year at $39.8 million and 2016 was guided at 65,000-72,000 ounces. Grade, not tonnage, did all the work: throughput was essentially unchanged from 2012.

production update

The deepest hole yet at Santoy Gap returned 43.28 g/t uncut (30.54 g/t cut) over 1.15 m true width at 675 m below surface, with up-dip step-outs of up to 31.10 g/t uncut over 7.06 m. A 6,000 m deep drill programme was launched from a new underground chamber to follow JOY-13-692, the 2013 hole that cut 18.80 g/t over 13.86 m below Santoy 8.

drilling progress report

Third-quarter production of 15,722 ounces despite losing ten days of underground mining to the forest-fire evacuation, taking nine-month output to a record 57,408 ounces, up 13%. Guidance was raised to 70,000-75,000 ounces and cash and bullion rose $6.1 million in the quarter to $27.0 million.

production update

Replaced the expensive debt with a $25 million senior secured facility from Scotiabank - a $10 million revolver and a $15 million term loan, three years to September 2018, priced at 3-4% over prime depending on leverage and repayable at $1.25 million a quarter with no prepayment penalty. It retired the $19.9 million Crown Capital term loan at 10% and the undrawn Canadian Western Bank revolver, cutting the cost of long-term debt from 10% to about 4.8%.

debt financing

Suspended underground mining at Seabee as a precaution and pulled non-essential staff out, with a forest fire about 8 km south of the mine threatening heavy smoke and ash. The mill kept running on a 10,000-tonne surface stockpile, roughly twelve days of feed, and full-year guidance was held.

production update

2014 net profit of $4.6 million against a $73.4 million loss in 2013 that had included $63.8 million of impairments, on record production of 62,984 ounces and an all-in sustaining cost of C$1,310 (US$1,186) an ounce, down 29%. Reserve grade rose 23% to 7.03 g/t and debt fell $10.6 million - the turn from the going-concern warning of April 2013 is complete in these numbers.

production update

Record 2014 production of 62,984 ounces, up 44%, from 279,597 tonnes at 7.32 g/t and 95.7% recovery - the gain came almost entirely from grade, with throughput flat, after Santoy Gap came on ahead of schedule. Debt fell $10.6 million during the year, cash ended at about $11.2 million, and 2015 was guided at 60,000-65,000 ounces.

production update

A second consecutive record quarter at 20,614 ounces, up 96% year on year, on a head grade of 8.88 g/t. Nine-month output of 50,700 ounces already beat the whole of 2013, and guidance was raised to 61,000-64,000 ounces from 50,000-54,000.

production update

Record quarterly production of 18,742 ounces, up 51% on the same quarter of 2013, driven by a 50% jump in head grade to 7.70 g/t on essentially flat throughput of 79,746 tonnes. Half-year output reached 30,086 ounces.

production update

Santoy Gap produced its first ore ahead of schedule - about 125 tonnes a day at roughly 7.1 g/t in May from three levels - two and a half years after discovery. It held 266,100 ounces of proven and probable reserves at 5.68 g/t, and infill drilling was coming in above reserve grade.

production update

Filed the executed documents behind the previous eighteen months of balance-sheet work: the 5 April 2013 credit agreement showing the $25 million lender was Norrep Credit Opportunities Fund, managed by Crown Capital; the 14 February 2014 waiver and credit amendment for the year-end covenant breach; the Laurentian asset purchase agreement of 19 December 2013 for Madsen; and the 20 March 2014 royalty purchase and net smelter returns agreements with Orion's 8248567 Canada Limited.

asset acquisition disposition

First-quarter output of 11,344 ounces was up 40% on a year earlier on a 34% higher head grade of 5.76 g/t, the best first quarter in a decade despite severe winter conditions. Guidance of 47,000-51,000 ounces was held, with Santoy Gap - then 266,100 ounces of reserve at 5.68 g/t - on track for production in the fourth quarter.

production update

Issued 4,545,454 shares at C$0.22 to Crown Capital as payment for waiving a covenant breach at 31 December 2013 under the April 2013 credit agreement and for modifying the covenants; the 5.75 million warrants from the original deal were cancelled as part of the same bargain. Read plainly: the company had broken a covenant on the expensive debt taken a year earlier and paid in stock to be let off.

capital raising announcement

Sold Orion Mine Finance a 3% net smelter royalty over the whole Seabee Gold Operation for US$12 million, with an option to buy half of it back for the same US$12 million before the end of 2016. Together with the Madsen proceeds this was the money that carried Santoy Gap into production - a permanent claim on revenue traded for cash at the bottom of the cycle.

material agreement

Closed the Madsen sale, taking C$6.25 million cash on closing (rather than the staged C$3.75m plus C$2.5m originally set out), about 9.8 million Laurentian shares for roughly 10.1% ownership, and a further C$2.5 million due at six months. Cash went to cutting bank debt. The company also engaged a financial adviser.

asset acquisition disposition

Produced 43,850 ounces in 2013 from record mill throughput of 280,054 tonnes at 5.11 g/t and 95.25% recovery, selling 44,823 ounces at about $1,423 - below the 50,000-54,000 ounce guidance, on grade. Mine production also set a record at 286,145 tonnes with 10% fewer site staff.

production update

Filed the Seabee technical report behind the 7 November reserve increase, setting out proven and probable reserves of 2,785,200 tonnes at 6.19 g/t for 554,100 ounces (Seabee 221,100 oz at 7.26 g/t, Santoy 8 89,900 oz at 4.45 g/t, Santoy Gap 243,000 oz at 6.24 g/t), 77,000 ounces measured and indicated and 603,400 ounces inferred at 6.35 g/t.

resource reserve update

Agreed to sell the Madsen project in Red Lake outright to Laurentian Goldfields for C$3.75 million cash on closing, C$2.5 million three months later, a further C$2.5 million in cash or shares at six months, and shares equal to 19.9% of Laurentian. Two years of drilling at Madsen ended with the asset going for cash to fix the balance sheet, with equity upside retained.

asset acquisition disposition

Santoy Gap converted to reserve for the first time - 243,000 ounces at 6.24 g/t - lifting Seabee's total reserves 78% to 554,100 ounces. This is the payoff from the 2011 surface discovery, and the reason the company could talk about growing production rather than just sustaining it.

resource reserve update

Chose to leave the NYSE MKT voluntarily to cut costs, with the last US trading day around 31 October and a Form 25 to follow. The TSX listing continued and the company said it would keep filing with the SEC for now, but intended to deregister when permitted - the shares moved to the OTCQB instead.

listing compliance notice

Three step-out holes, two of them decisive: JOY-13-692 cut 18.80 g/t over 13.86 m (including 73.49 g/t over 3.00 m) some 400 m below the base of the Santoy 8 inferred resource, and JOY-13-690 cut 330.35 g/t over 1.55 m at 684 m depth at Santoy Gap. Both were materially higher grade than the existing reserve and resource base.

drilling result

Closed the $25 million five-year Crown Capital facility at 10%, with no principal due for twelve months then $300,000 a month and $10.9 million at maturity, and granted 5.75 million warrants at $0.70. With the expanded Canadian Western Bank lines that gave access to $50 million of debt at a blended cost of about 8% - deliberately chosen, management said, over a large equity raise.

capital raising announcement

Disclosed, as NYSE MKT rules require, that its auditors had put a going-concern qualification on the 2012 accounts filed a week earlier. The company was producing about 50,000 ounces a year and had just arranged $50 million of debt, but its auditors were not satisfied it could fund itself - the low point of the record held here.

listing compliance notice

Completed the Seabee shaft extension from 600 m to 980 m depth. The 20-day shutdown was covered by ore from Santoy 8 and the upper Seabee mine at over 700 tonnes a day, and mining costs at Seabee Deep and L62 were expected to fall by as much as 10% a tonne on shorter trucking and better ventilation.

production update

Met guidance with 49,570 ounces in 2012 from record mill throughput of 275,230 tonnes at 5.86 g/t, up about 10% on 2011, and guided 2013 to 50,000-54,000 ounces. The shaft extension was due to finish in January and the newly upgraded Santoy Gap resource - 281,000 ounces indicated at 8.80 g/t - was being worked into the life-of-mine plan.

production update

Two facilities. Canadian Western Bank's lines were expanded to $25 million in total (line of credit to $10m, leases and demand loans to $10m, a new $5m revolver) at a weighted average rate near 4.5%, with only $8.6 million drawn. And a new five-year $25 million facility with Crown Capital Partners at 10% interest, principal repayments starting in 2014, with 5.75 million warrants struck at $0.70 - expensive money, and not yet closed.

debt financing

Updated Santoy Gap resource from 194 holes and 71,600 m: 994,000 tonnes at 8.80 g/t for 281,000 ounces indicated, plus 1,875,000 tonnes at 5.92 g/t for 357,000 ounces inferred, over 800 m of strike to 690 m depth. Most of the 495,000 inferred ounces of a year earlier had been upgraded and the grade nearly doubled in the indicated category. About 265 m of a planned 800 m exploration drift had been driven.

resource reserve update

The 2012 Santoy Gap programme extended the system down-dip to 650 m and south towards the Santoy 8 mine (8.16 g/t over 5.93 m in JOY-12-686, 6.91 g/t over 16.73 m in JOY-12-636) and discovered a sub-parallel lens about 150 m to the east - evidence the Santoy shear hosts several deposits over a three-kilometre strike.

drilling result

The widest Santoy Gap intercept to date, 14.58 g/t over 29.74 m in JOY-12-677, confirming a high-grade core with combined vein widths of 20 to 30 m. Santoy Gap then held an inferred resource of 495,000 ounces at 6.63 g/t, and underground development from the Santoy 8 workings had started.

drilling result

The first resource statement to take in L62 and Santoy Gap. Inferred resources rose 236% to 873,400 ounces at 6.48 g/t from 260,100 ounces at 6.23 g/t, measured and indicated rose 43% to 70,700 ounces at 5.35 g/t, and reserves edged up net of depletion to 355,600 ounces at 5.37 g/t from 352,600 at 5.58 g/t. L62 alone added 70,400 ounces of probable reserve and Santoy Gap 495,000 ounces of inferred - both within reach of existing infrastructure. 130,000 m of drilling was budgeted for 2012.

resource reserve update

Guided 2012 to about 50,500 ounces after producing 44,760 ounces in 2011, a 5% fall the CEO called disappointing: Santoy 8 reached commercial production but lower-grade ore and unforeseen problems held output back. The response was capital spending - a shaft extension, a mill expansion and more mine development - to lift production sustainably and cut unit costs.

production update

Closed the St. Eugene acquisition by court-approved plan of arrangement for about 9.6 million Claude shares, taking Amisk to 100% ownership at 23,450 hectares. St. Eugene holders also received 0.25 of a share in the spun-out Satori Resources per share, which took the Tartan Lake project and began trading as BUD; Claude kept its pro-rata Satori stake, assumed St. Eugene's warrants and cut its Tartan Lake royalty to 2%, repurchaseable at $1 million per percentage point.

business combination

Final 2011 underground results from L62: 195.06 g/t over 2.29 m true width (U11-651), 27.06 g/t over 4.83 m, 24.16 g/t over 5.71 m and 22.03 g/t over 4.41 m. Six months after discovery the zone measured up to 85 m of strike by 400 m of dip and was heading into an updated resource for the first quarter.

drilling result

The widest Santoy Gap intercepts yet - 19.10 g/t over 20.48 m (JOY-11-556) and 12.79 g/t over 20.25 m (JOY-11-555), with 36.51 g/t over 1.72 m and 25.10 g/t over 1.20 m in step-outs. The results were to feed a first Santoy Gap resource in the first quarter of 2012.

drilling result

Agreed to buy the rest of St. Eugene Mining - its 35% of Amisk - for about $19 million in Claude shares, at 0.0789 of a Claude share per St. Eugene share, worth $0.145 each on 20-day averages: a 28% premium to St. Eugene's own 20-day average and 53% to where it traded before Claude first approached it in July. St. Eugene's Tartan Lake project and $800,000 of cash were to be spun out to its shareholders, with Claude keeping its pro-rata share and cutting its Tartan Lake royalty to a flat 2%.

business combination

Surface drilling at Santoy Gap, on strike from and within 400 m of the producing Santoy 8 mine, expanded the system to over 400 m of strike and beyond 450 m depth: 10.30 g/t over 5.43 m (JOY-11-535), 22.06 g/t over 2.82 m (JOY-11-551) and 49.60 g/t over 1.36 m (JOY-11-554), from 30 holes and 11,000 m drilled in 2011. A third surface rig was added.

drilling result

L62 returned 261.28 g/t over 3.6 m true width in U11-638, including 1,563 g/t over 0.5 m, 45 m from the earlier 39.75 g/t hole. Three months after discovery the zone was outlined over 75 m of strike and 300 m of dip, open in all directions, and management said it would materially change Seabee's reserves and production outlook, with development starting in the fourth quarter.

drilling result

Follow-up drilling at the new L62 zone returned 39.75 g/t uncut over 10.0 m true width in U11-629, including 528.10 g/t over 0.7 m, plus 8.81 g/t over 4.9 m and 5.33 g/t over 4.8 m. Two of the seven holes were barren, so the zone was not uniform - but the grades were high enough to matter three weeks after discovery.

drilling result

Half-year underground exploration at the Seabee Gold Operation returned 11.47 g/t over 3.7 m true width (U11-617) and 35.79 g/t over 1.2 m (U10-683) at Seabee Deep, 6.18 g/t over 15.1 m (SUG-11-006) at Santoy 8, and first economic grades from a brand-new zone, L62, 200 m from existing underground infrastructure (6.13 g/t over 4.8 m in U11-345). A second rig was moved onto L62.

drilling result