Sandspring Resources (SSP.TO) has announced that even though the company has completed all the field and design engineering work for the feasibility study at its Toroparu gold project in Guyana, it has elected to defer further spending on the feasibility study until the markets improve. That’s an interesting decision as Sandspring only has until the end of this year to deliver a feasibility study as per the streaming agreement with Silver Wheaton (SLW.TO, SLW), and it doesn’t look like the markets will improve soon. However, Silver Wheaton will likely agree to extend the deadline as the major streaming company doesn’t really have a lot of other decent investment opportunities.
The company has also released a resource estimate which now includes a silver resource on the Toroparu project which now contains 6.3 million ounces of silver in the measured and indicated category. Sandspring would like to use this silver in some sort of silver streaming deal, but we’re afraid this won’t be a huge success. Assuming a recovery rate of 80% there’s approximately 5 million recoverable ounces of silver in the currently planned pit and taking the current silver price into consideration we don’t think Sanspring will be able to raise more than $25-30M on the back of it in the current climate. It will have an impact and it’s good to see additional value being created, but a silver streaming agreement definitely isn’t a miracle solution.
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Disclosure: The author holds no position in Sandspring Resources. Please see our disclaimer for current positions.
