Golden Arrow Resources (GRG.V) updated the market last week and said it expects to receive the money from the royalty sale to Premier Royalty Corp in the near future. We expect the C$16.5M to hit the Golden Arrow-accounts later this week, which translates into approximately C$0.30/share in cash.
The company also announced it signed a drill contract with Energold (EDG.V) to drill 6500 meters at its exciting Chinchillas Silver Project in the Jujuy province in Argentina. The first phase of drilling this summer was extremely encouraging, and as we wrote before, we believe Chinchillas is the newest big silver discovery. 37 of the 41 drilled holes have intersected potentially economic grades, and Golden Arrow now wants to drill another 6500 meters at the Silver Mantos and Socavon del Diablo targets, which should lead to a maiden NI43 compliant resource calculation by the summer of 2013.
Although the company didn’t want to guesstimate how big Chinchillas could be, we are quite confident this project will reach the 100Moz AgEq within the next 24 months. The interesting part is you get this project and all other Golden Arrow projects for free, as the company will be trading below cash value.
We believe the closing of the royalty sale will attract new buyers, and if the company can overcome the last hurdle and pay out the shareholders who filed dissent notices, we believe Golden Arrow Resources is poised to go much higher in 2013 if the Chinchillas exploration success continues.
Disclosure: The author holds a long position in Golden Arrow Resources Corp. Please see our disclaimer for current positions.
