Each one in plain English, with the numbers worked through for a shareholder.
2 June 2016other material event▲ GoodMajor
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.
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.
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.
ISS and Glass Lewis both recommended shareholders vote for the Silver Standard arrangement, and the board recommended it unanimously, ahead of the 18 May special meeting. Terms restated as 0.185 of a Silver Standard share plus C$0.001 cash per Claude share, leaving Claude holders about 31% of the combined company fully diluted.
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.
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.
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.
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.
Corrected the same day's earnings release: third-quarter total cash cost per ounce sold of C$677 (US$517) had excluded production royalties; including them it was C$721 (US$551). A disclosure correction, not a change in the underlying result.
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.
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.
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%.
Began bringing crews back as the fire risk eased, with full underground production expected the following week; the mill had run at about 850 tonnes a day off the stockpile, which was down to 8,500 tonnes. Guidance was still intact. The mine lost ten days of underground production in all.
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.
The press-release version of the auditor change: KPMG resigned effective 16 June 2015, Deloitte was appointed to hold office until the next annual meeting, with no reservations in the prior two years' audit reports and no reportable events. Notably, the going-concern qualification that triggered the 2013 NYSE MKT disclosure was on the 2012 accounts, not these.
KPMG resigned as auditor effective 16 June 2015 and Deloitte was appointed. The notice records no reservations in the last two audit reports and no reportable events; KPMG's own letter agrees with the notice except that it could not agree or disagree with one item.
Staked about 3,000 hectares east and north of Santoy, taking the Seabee land package to 19,950 hectares, and bought out its only two joint ventures on the property - Karoo Exploration's 65 hectares for 73,529 shares and Star Minerals' 642 hectares for 134,664 shares. The company now controls 100% of the gold belt within its own operation.
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.
Adopted an advance notice policy setting deadlines and disclosure requirements for shareholders nominating directors, so that no one can be elected unless nominated under it. Standard for Canadian issuers, but it raises the bar for an outsider putting up a board slate.
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.
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.
Received the final C$2.5 million cash from the Madsen sale, taking total cash to C$8.75 million alongside about 9.8 million buyer shares. The buyer had renamed itself Pure Gold Mining; Claude had already sold about 5.7 million of those shares and held roughly 4.1 million.
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.
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.
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.
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.
About 50,000 m of 2013 underground drilling returned 49.02 g/t over 2.0 m (U13-089), 31.54 g/t over 5.2 m (U13-321), 22.62 g/t over 6.1 m (U13-076) and 23.58 g/t over 4.8 m (U13-077) at Seabee, and 17.32 g/t over 4.0 m (SUG-13-301) and 13.90 g/t over 5.7 m (SUG-13-347) at the Santoy complex - all close to active mining and cheap to bring into the mine plan.
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.
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.
4 Mar 2014asset acquisition disposition▲ GoodMajor
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.
