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Golden Arrow Resources (GRG.v) (GARWF: OTCBB)
Maintain Buy up to: $0.85UDS, $1.14 CAN
Position sizing: 3%
Golden Arrow shares traded slightly down last week and sideways over the past month.
The share price is down considerably from our entry point, but I believe that we're about to see a major turnaround. Consider how, back on March 31, shares popped about 20% within an hour after the company announced news about its relationship with Silver Standard. There's upside built into Golden Arrow, and I'd hate to miss out on it.
As I discussed last week, Golden Arrow finally received notice from Silver Standard Resources Inc. that the latter will exercise its option on Golden Arrow's Chinchillas project, in northern Argentina. Golden Arrow and Silver Standard will form a joint venture to combine Chinchillas with Silver Standard's already-producing Pirquitas mine and form a single new operation. The joint venture will be owned on a 75%/25% basis by Silver Standard-Golden Arrow. Silver Standard will be the project operator.
This week Golden Arrow founder and CEO Joe Grosso issued a letter to shareholders that explains the deal in great detail.
This combination is the reason why I added Golden Arrow to the portfolio last year. The idea has always been to combine Golden Arrow's ore asset with Silver Standard's milling asset. Now with this great news, Golden Arrow can fast-track development of the Chinchillas property in a capital-efficient manner, through use of existing production facilities at the Pirquitas Mine. There's much common infrastructure in all of this.
Looking ahead, I've heard from management at Golden Arrow that the company plans a major new marketing push to make funds and institutions aware of this new deal in Argentina. I expect that the company will add many new names to the shareholder list in the weeks and months to come.
Meanwhile, Golden Arrow remains a significant holder of mineral claims up and down the spine of Argentina. Here's the map showing Golden Arrow's points under control:
This map highlights how, in addition to Chinchillas, Golden Arrow holds a variety of precious metal ore deposits in Argentina. Overall, there are several different pathways to development. Golden Arrow offers significant upside in a rising environment for gold-silver. Maintain buy on GRG.v , GARWF, up to $0.85USA $1.14 CAN per share.
