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Silver Standard Resources: 2013 Shaping Up Much Better Than 2012

 January 11, 2013 10:11 AM

(By Mani) For Silver Standard Resources, Inc. (NASDAQ: SSRI) (TSE:SSO), 2013 would be a better year as it is set to reap benefits from an extensive portfolio of silver development projects which are now starting to receive attention as permitting successes are achieved.

Silver Standard Resources is an exploration and development company focused on silver projects in the Americas. The company's sole producing asset is the Pirquitas Mine in Argentina. Of greater value, however, is the very large Pitarrilla project in Mexico that is expected to be developed in a few years.

Pirquitas has had a rough commissioning period. Product sales for its concentrates have now been resolved, and mining is starting to deliver regular output of silver. During 2012, the Pirquitas mine produced a record 8.6 million ounces of silver.

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The mine produced 2.3 million ounces of silver during the fourth quarter, 4.9 percent quarter-on-quarter improvement reflecting higher average silver recoveries in the plant and higher mill throughput. The mine also produced 3.2 million pounds of zinc in the fourth quarter, bringing total zinc production to 11.2 million pounds for the year, near the high-end of the 2012 zinc production guidance range.

Meanwhile, San Luis is likely to be the second mine for the company as initial permits have been granted and social licensing is now being conducted.

The key development project for the company, however, is Pitarilla, which contains over 700 million ounces of silver. Feasibility work was completed in late 2012, and its leverage could attract renewed investor interest.

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The feasibility study defined a mine with approximately 480 million ounces of reserves and produced 15 million ounces of silver per year on average during the first 18 years of a 32-year project.

The company carries a high degree of country risk although Pitarilla could lower that political risk profile.

For 2013, Silver Standard sees to produce and sell 8.2 to 8.5 million ounces of silver and produce over 20 million pounds of zinc at the cash cost of between $17.00 and $18.50 per silver ounce.

Silver Standard plans to spend approximately $15 million on exploration in 2013. Of this, approximately $7 million is budgeted for exploration at our Mexican projects, with the balance mainly budgeted for Argentina and Peru.

The company expects to spend a minimum of $17 million on development in 2013. Of this, about $8 million and $7 million will be incurred at the Pitarrilla and San Luis projects, respectively, to advance these projects to construction decisions.


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