SSRM.TO · 2017-05-31 12:00:00

Silver Standard Forms Joint Venture with Golden Arrow and Files Technical Report FOR the Chinchillas Project

Technical Reports (NI 43-101) Mergers & Acquisitions Partnerships & JV

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May 31, 2017 News Release 17–1 8

SILVER STANDARD FORMS JOINT VENTURE WITH GOLDEN ARROW

AND FILES TECHNICAL REPORT FOR THE CHINCHILLAS PROJECT

VANCOUVER, B.C. -- Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) (“Silver

Standard”) announces that the transaction to form a joint venture with Golden Arrow Resources

Corporation (TSX-V: GRG) (“Golden Arrow”) for the development of the Chinchillas project

(“Chinchillas” or the “project”) closed today. The joint venture, named Puna Operations Inc., is

comprised of Silver Standard’s Pirquitas property and Golden Arrow’s Chinchillas property and

is owned on a 75%/25% basis by each company, respectively. Silver Standard is the joint venture

operator and has made an option exercise payment of $13.0 million to Golden Arrow. This

transaction was previously announced in Silver Standard’s news release dated March 31, 2017.

Paul Benson, President and CEO said, “Forming the joint venture is another important step

toward extending the life of the Pirquitas operation. By leveraging the assets of the two

companies, the Chinchillas pre-feasibility study outlines a project with a short pay-back period

for a modest capital investment. We have also begun to evaluate the potential for a small tonnage

Pirquitas underground operation to provide an additional, high grade ore stream to the Pirquitas

plant. Final permitting for Chinchillas is expected shortly, which will enable site development to

commence. In addition to extending the life of Pirquitas and maximizing the value of our

investment, the project will benefit the people and governments of Argentina through job

creation, increased tax base and export revenues. Silver Standard has a solid foundation with

three strong operations generating cash flow and each with growth potential.”

Chinchillas Pre-Feasibility Study Highlights

(All financial results are in U.S. dollars and all technical data are presented on a 100% project basis with an effective

date of December 31, 2016 unless otherwise noted)

Average annual silver equivalent production of 8.4 million ounces over an eight-year mine life

at a 4,000 tonne per day plant throughput.

Robust operating margins based on cash costs of $7.40 per payable ounce of silver sold over

the life of mine.

Post-tax net present value of $178 million using a 5% discount rate and metal prices of $19.50

per ounce silver, $0.95 per pound lead and $1.00 per pound zinc.

Attractive post-tax internal rate of return of 29%.

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Near-term production based on construction beginning in the third quarter of 2017, subject to

permitting, and ore delivery to the Pirquitas mill in the second half of 2018.

Low capital intensity based on initial capital expenditures, including owner’s costs and

contingency, estimated to be $81 million.

Mineral Reserves of 11.7 million tonnes containing 58 million ounces of silver at a grade of 154

g/t, 310 million pounds of lead at a grade of 1.20% and 127 million pounds of zinc at a grade

of 0.49%.

Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) of 29.3 million

tonnes containing 96 million ounces of silver at a grade of 101 g/t, 581 million pounds of lead

at a grade of 0.90% and 386 million pounds of zinc at a grade of 0.60%.

Capital cost estimates assume utilizing certain property, plant and equipment from the

Pirquitas property. All costs incurred prior to the declaration of commercial production are

considered capital costs.

Chinchillas Project Overview

The Chinchillas project is a silver-lead-zinc deposit, located in the Puna region of northwestern

Argentina, in Jujuy Province. Chinchillas is approximately 42 kilometers by road from the

Pirquitas property owned by Silver Standard and 280 kilometers from the provincial capital of

San Salvador de Jujuy. The project is composed of three contiguous claims, totaling 2,043 hectares.

Chinchillas is accessed by paved road to the town of Abra Pampa via National Route No. 9 and

an additional 66 kilometers west across public gravel roads, through the village of Santo

Domingo, with similar road conditions presently utilized to service the Pirquitas property. Santo

Domingo is equipped with electricity, natural gas, and water services.

Mineral Resources Estimate

This Mineral Resources estimate is based on all available data for the Chinchillas deposit as at

October 2, 2016.

Table 1: Chinchillas Mineral Resources Estimate (as at October 2, 2016)

Category

Tonnes AgEq Ag Pb Zn AgEq Ag Pb Zn

(Mt) (g/t) (g/t) (%) (%) (Moz) (Moz) (Mlb) (Mlb)

Proven 1.6 221 180 0.75 0.42 11 9 27 15

Probable 10.1 217 150 1.27 0.50 70 48 282 111

Total 11.7 217 154 1.20 0.49 81 58 310 127

Notes:

1. Mineral Reserves estimate was prepared in accordance with the CIM Standards and reported in accordance with NI 43-101

under the direction of Anoush Ebrahimi, P.Eng, Ph.D., SRK Consulting (Canada) Inc., a qualified person.

2. Mineral Reserves estimate is based on metal price assumptions of $18.00/oz silver, $0.90/lb lead and $1.00/lb zinc.

3. Mineral Reserves estimate is reported at a cut-off grade of $32.56 per tonne net smelter return.

4. All figures include dilution. The average mining dilution is calculated to be 11%.

5. Ore loss is estimated at 2%.

6. There is an estimated 54.89 Mt of waste in the ultimate pit. The strip ratio is 4.69 (waste:ore)

7. Processing recoveries vary based on the feed grade. The average recovery is estimated to be 85% for silver, 95% for lead and

approximately 80% for zinc.

8. Metals shown in this table are the contained metals in ore mined and processed.

9. Silver equivalent grade has been calculated in block level using prices and recoveries for each metal. Actual grades were

used for mine design and not equivalent grades. The recovery varies by grade in each block so the silver equivalent formula

changes for each block. The following formulas have been used for the average grades in the estimate for each of the Mineral

Reserves categories and total Mineral Reserves: Proven AgEq = Ag g/t + (Pb% כ27.24) + (Zn% * 14.04); Probable AgEq = Ag

g/t + (Pb% כ49.73) + (Zn% * 17.23); and Total AgEq = Ag g/t + (Pb% כ46.61) + (Zn% * 16.81).

10. This Mineral Reserves estimate assumes that all required permits, as discussed under the heading “Environment Studies,

Permitting and Social or Community Impact” of the technical report for the Chinchillas project, will be obtained.

11. Figures may not total exactly due to rounding. All ounces reported represent troy ounces, and “g/t” represents grams per

tonne.

Mining and Processing

The pre-feasibility study evaluates the development and construction of an open-pit mine and

supporting infrastructure, which will supply ore to the Pirquitas processing facilities over an

eight-year active mining period.

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Chinchillas will be mined by conventional drill, blast, truck, and loading open pit mining

methods. A fleet of 35-tonne road haul trucks will transport ore approximately 42 kilometers to

the Pirquitas processing facilities. Haul trucks, loading equipment and drills at the Pirquitas

property will be transferred to Chinchillas, allowing the project to leverage existing equipment

and infrastructure for capital cost savings and a shorter time to production.

The Pirquitas processing facility has been in continuous operation since 2009. It will process ore

from the Chinchillas project using standard crush, grind and floatation at a rate of 4,000 tonnes

per day. Minor modifications to the Pirquitas plant are expected and the associated capital costs

are included in the capital cost estimate provided in Table 5. Over the life of mine, the plant is

expected to produce a silver/lead concentrate and a zinc concentrate. The two concentrates will

be shipped internationally to smelters for processing. A tailings storage facility will be located on

the Pirquitas property and is included in the capital cost estimate. Selected operating and

production statistics are presented in Table 3.

Table 3: Operating and Production Statistics

Units Annual Average Total

Total Material Mined Mt 7.8 66.6

Waste Removed Mt 6.3 54.9

Ore to Process Plant Mt 1.5 11.7

Strip Ratio waste:ore - 4.7

Processing Rate tpd 4,000 -

Mine Life years - 8

Silver Grade g/t 154 -

Silver Recovery % 88% -

Lead Grade % 1.20% -

Lead Recovery % 95% -

Zinc Grade % 0.49% -

Zinc Recovery % 85% -

Silver Production Moz 6.1 51.0

Lead Production Mlb 35.0 295.8

Zinc Production Mlb 12.3 107.4

Notes:

1. Processing rate excludes the first two quarters of year one, when the processing rate is lower due to ramp up. See Table 4 for

additional details.

2. Annual averages are straight average, calculated over the active mining period commencing in year one (after pre-strip) and

ending in year eight.

3. Total production is calculated on a weighted average basis including eight years of active mining and one year of processing

activities in year nine, with the exception of the strip ratio which is stated on a life of mine basis including pre-stripping.

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Table 4: Annual Operating Statistics

Year -1 1 2 3 4 5 6 7 8 9

Ore Mined 7 1,177 1,367 1,456 1,607 1,461 1,405 1,509 1,721 -

Waste Mined 4,332 9,238 9,146 8,959 8,068 8,335 3,507 1,797 1,505 -

Total Material Mined (kt) 4,339 10,415 10,513 10,415 9,674 9,796 4,912 3,306 3,226 -

Strip Ratio (Waste:Ore) 7.8x 6.7x 6.2x 5.0x 5.7x 2.5x 1.2x 0.9x -

Silver head grade (g/t) 125 183 169 156 164 166 159 137 94

Lead head grade (%) 0.87% 0.94% 1.28% 1.24% 1.39% 1.41% 1.44% 1.15% 0.85%

Zinc head grade (%) 0.68% 0.48% 0.53% 0.58% 0.52% 0.26% 0.27% 0.63% 0.53%

Tonnes milled (tpd) 2,813 4,114 4,000 4,000 4,000 4,000 4,000 4,000 4,000

Tonnes milled (kt) 985 1,440 1,400 1,400 1,400 1,400 1,400 1,400 886

Silver recovery (%) 86% 90% 89% 88% 89% 89% 88% 87% 83%

Lead recovery (%) 93% 94% 96% 96% 96% 96% 97% 95% 93%

Zinc recovery (%) 85% 85% 85% 85% 85% 85% 85% 85% 85%

Silver production (koz) 3,386 7,599 6,763 6,194 6,553 6,641 6,317 5,359 2,221

Lead production (klbs) 17,501 28,137 38,047 36,610 41,249 41,872 43,033 33,865 15,503

Zinc production (klbs) 12,567 12,888 13,968 15,168 13,573 6,758 6,967 16,689 8,844

Silver equivalent

production (koz)

4,883 9,630 9,333 8,756 9,259 9,027 8,771 7,865 3,430

Note: Figures may not total exactly due to rounding. Silver equivalent figures are calculated based on metal prices of $19.50/oz silver,

$0.95/lb lead and $1.00/lb zinc.

Capital Costs Summary

Capital cost estimates assume utilizing certain property, plant and equipment from the Pirquitas

property. All costs incurred prior to the declaration of commercial production are considered

capital costs. Ore delivery to the Pirquitas mill is expected in the second half of 2018. The total

capital required to construct the Chinchillas mine and associated infrastructure is $81 million. A

summary of expected capital costs is presented in Table 5.

Table 5: Summary of Capital Costs

Capital Costs Value ($M)

Site Infrastructure $10

Mining Equipment $12

Pre-stripping Capital $11

Plant and Tailings $16

Owner’s Costs $10

Other $5

Contingency $16

Total $81

Note: Figures may not total exactly due to rounding.

Capital costs incurred after the start of commercial production are considered sustaining capital

costs. The sustaining capital, excluding capitalized stripping, is expected to be $44 million,

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including a $9 million contingency, exclusive of closure costs specific to the Pirquitas property. A

summary of expected sustaining capital costs is presented in Table 6.

Table 6: Summary of Sustaining Capital Costs

Sustaining Capital Costs Value ($M)

Mining Equipment $29

Other $7

Contingency $9

Total $44

Note: Figures may not total exactly due to rounding.

Capitalized stripping during the operating period of a three phase open pit is estimated at $62

million.

Operating Costs Summary

Total operating costs are presented in Table 7. These costs were developed based on actual

operating experience and are adjusted where appropriate to characteristics specific to the

Chinchillas project.

Table 7: Summary of Operating Costs

Operating Costs Units Value

Mining

$/t mined $2.88

$/t milled $15.34

Processing $/t milled $14.72

General and Administrative $/t milled $7.00

Ore Transport to Plant $/t milled $7.86

Tailings Management $/t milled $0.43

Total $/t milled $45.34

Cash costs, which include cost of inventory net of capitalized stripping, and treatment and

refining costs, total $7.40 per payable ounce of silver sold net of by-product revenues and

estimated capitalized stripping over the life of mine. All-in sustaining costs, which include

sustaining capital, capitalized stripping and reclamation, total $9.75 per payable ounce of silver

sold net of by-product revenues over the life of mine.

Financial Analysis

Chinchillas is expected to generate $178 million in post-tax NPV using a 5% discount rate over

the life of mine. Key financial estimates presented in Table 8 are based on the key economic

assumptions presented in Table 9. The joint venture is also responsible for closure costs associated

with the Pirquitas property, but such costs are not included in this financial analysis.

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Argentine peso-denominated cost estimates have been converted into U.S. dollar terms based on

prevailing exchange rates in the third quarter of 2016. Going forward, Argentine inflation rates

in excess of U.S. inflation rates are assumed to be offset by a corresponding devaluation of the

Argentine peso against the U.S. dollar, resulting in no anticipated material changes to Argentine

peso-denominated costs in U.S. dollar terms.

Table 8: Key Financial Estimates

Units Total

Net Revenue $M $1,062

Mining Costs $M ($272)

Processing Costs $M ($177)

General Administration Costs $M ($82)

Royalties and Other $M ($37)

Operating Cash Flow $M $495

Net VAT $M ($10)

Puna Credits $M $24

Stamp Duty $M ($16)

Change in Net Working Capital $M $0

Operating Cash Flow $M $494

Development Initial Capex $M ($81)

Sustaining Capex $M ($44)

Reclamation and Severance $M ($17)

Pre-Tax Cash Flow $M $351

Tax $M ($84)

Post-tax Cash Flow $M $267

Pre-Tax NPV (5%) $M $239

Pre-Tax NPV (10%) $M $162

Pre-Tax IRR % 35.2%

Post-Tax NPV (5%) $M $178

Post-Tax NPV (10%) $M $115

Post-Tax IRR % 29.1%

Payback years 3.5

Note: Figures may not total exactly due to rounding.

Table 9: Key Economic Assumptions

Assumption Units Value

Silver Price $/oz $19.50

Lead Price $/lb $0.95

Zinc Price $/lb $1.00

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Sensitivity Analysis

The Chinchillas project provides significant leverage to silver and lead prices. Estimated NPV

sensitivities for key operating and economic metrics are presented in Tables 10 and 11.

Table 10: NPV Sensitivity Analysis: Lead and Silver Price

Post-tax NPV (5%) Sensitivities ($M)

Silver Price ($/oz)

$16.00 $18.00 $19.50 $22.00 $25.00

Lead

Price

($/lb)

$57 $119 $162 $229 $307

$0.95 $75 $136 $178 $244 $321

$1.05 $93 $152 $194 $259 $336

$1.15 $110 $169 $209 $274 $351

$1.25 $128 $185 $225 $289 $366

Table 11: NPV Sensitivity Analysis: Capital Expenditure and Operating Costs

Post-tax NPV (5%) Sensitivities ($M)

Capex (% change)

-20% -10% 0% +10% +20%

Opex

(% change)

+20% $170 $162 $155 $148 $140

+10% $181 $174 $166 $159 $152

0% $192 $185 $178 $170 $163

-10% $203 $196 $189 $182 $174

-20% $214 $207 $200 $193 $185

Opportunities

Several potential opportunities to improve the economics of the Chinchillas project have been

identified.

The Pirquitas mill has demonstrated operating throughput of up to 5,000 tonnes per day.

Opportunity exists to sustainably process more than 4,000 tonnes per day, the rate utilized in the

pre-feasibility study. This would increase annual production levels and potentially improve

operating costs due to economies of scale.

Further opportunity exists for Mineral Resource discovery and conversion of Mineral Resources

to Mineral Reserves. Mineral Resources in excess of Mineral Reserves exist on the Chinchillas

property. Through additional drilling, higher metal prices or lower costs, there may be an

opportunity to convert Mineral Resources to Mineral Reserves, thereby extending the operating

life of the Chinchillas project. Additionally, more detailed drill testing in the areas surrounding

and to the south-east of the Chinchillas property may have potential to add further Mineral

Resources at the project.

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