COMPANY-SPONSORED INVESTOR RELATIONS REPORT

Natural Resource Investor
 
 
Golden Arrow Resources Corporation
(TSXV: GRG; OTCQX: GARWF)
September 6, 2017

Near-Term Catalyst Alert

•   Permitting and Construction News with JV Partner SSR Mining (Silver Standard)
•   Large New-Project Drilling – Antofalla Silver, Pescado Gold
•   Negotiations toward Major New Acquisitions
•   Income and News from Production

Onto the Priority Watch List: This Report Highlights Many of the Catalysts That Could Launch Golden Arrow Stock Values Near-Term.

Golden Arrow is a Grosso Group company. The Grosso Group – headed by Executive Chairman Joseph Grosso – has specialized in resource exploration in Argentina since 1993. Importantly, this exploration team has 3 world-class discoveries to its credit thus far:

•  The Gualcamayo Gold Mine, one of Yamana's lead producers with approx.164,000 oz. gold production in 2016;

•  The Navidad Silver Mine, controlled by Pan American Silver and containing one of the world's largest silver resources with 632 mm oz silver measured and indicated;

•  And the Chinchillas Silver Project, now in joint venture with SSR Mining, earlier known as Silver Standard Resources (NASDAQ/TSX: SSRM), and advancing toward production, targeted to start 2H, 2018, with reserves of 58 million ounces of silver grading 154 grams/tonne, 310 mm lbs of lead grading 1.2% and 127 mm. lbs of zinc grading 0.49%.

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These prodigious mine-finding skills, plus the company's portfolio of exceptional exploration projects in Argentina – 25 properties covering +220,000 hectares – have now been turbo-charged by its new joint venture with SSR. And this new JV opens the company up to additional larger opportunities as well, as we demonstrate shortly.

The JV with SSR commenced on June 1 – 3 months ago – and excites GRG shareholders. The JV is a 25% GRG/75% SSR split of the production from the Pirquitas-Chinchillas Silver Mine. GRG is contributing the ore from Chinchillas and SSR provides the mill, the concentrator facilities and the production know-how and miners.

Pirquitas has been in production by SSR since 2009, and the pit there is running out of ore. Production today is from stockpiles with approx. 5 mm oz of silver anticipated to be produced this year. Pirquitas holds significantly more silver at higher grades beneath the pit and these resources will be evaluated after Chinchillas is in production. Moving forward, everything to come from Pirquitas belongs 25% to GRG. Here are the key provisions of the new JV:

•   Creates a joint venture comprised of the Pirquitas operation from SSRM and the Chinchillas project from GRG with SSR and Golden Arrow holding 75%/25% interest, respectively, with SSR being the operator.

•   Provides Golden Arrow an opportunity to fast-track development of the Chinchillas property, in a capital efficient manner, through use of the existing production facilities at the Pirquitas operation and establishment of common infrastructure.

•   Near-term production from Chinchillas based on construction beginning in the third quarter of 2017, followed by ore delivery to the mill in the second half of 2018.

•   GRG benefits right away from the existing infrastructure, operating capabilities and cash flow generated by the currently producing Pirquitas operation.

•   SSR paid Golden Arrow C$18.5 million for 25% of Pirquitas mine earnings from October 1, 2015 through May 31, 2017. Going forward, the income from GRG's 25% earnings from Pirquitas production, and then from Chinchillas production, is attributable to GRG on a quarterly basis.

•   A Prefeasibility Study ("PFS") was completed for the development of Chinchillas. The PFS calls for capital investment of US$81 million to develop a pit at Chinchillas to deliver ore to the existing Pirquitas mill that has an operating life of eight years, producing an annual average of 8.4 million silver-equivalent ounces at an estimated cash cost of US$7.40/oz. Mineral reserves are 58 million ounces of silver as noted above, plus another 38 mm oz. of silver which could also become producible ounces and which are not included in the reserves.

Follow this link for additional information from the Prefeasibility Study (PFS) prepared by independent engineers for SSR and Golden Arrow. This document provides guidance for what to expect from the JV over the next 12 – 24 months.

The near-term catalysts from this arrangement are very exciting and could well cause strong gains for GRG shareholders. GRG goes on the Priority Watch List for interested investors now. Follow these catalysts:


Near-Term Catalysts from Exploration

1)  Golden Arrow's exploration properties are highly prospective. The company controls 25 properties in Argentina, totaling 220,000 hectares (2,200 square kilometers), carefully selected by the company's professional geological staff over the last 25 years. Note well that this company does not make small discoveries. Each prospective project is big, and when they hit, it's big.

These properties are NOT included in the joint venture and are wholly-controlled by GRG. GRG is in the process of putting all exploration properties in a wholly-owned subsidiary named New Golden Explorations Inc. New Golden Explorations is planned to list on the TSX-Venture Exchange and in order to sell shares which will fund all exploration expenditures. Given GRG's large successes with exploration, New Golden Exploration makes an exciting opportunity for exploration-driven investors.

This development opens up GRG, the mother company, with attributable funds each quarter from production by the JV, to make accretive acquisitions, as we address shortly.

2)  The company's Antofalla silver-gold-base metal project in Catamarca Province is undergoing a US$2 million exploration program culminating in 3,000 meters of drilling starting in October. Here, VP of Exploration and Development, Brian McEwen, stated, "Not since our first months at the Chinchillas project has the team been so excited about the potential for a significant discovery."

Geologically, Antofalla has strong similarities to the company's flagship Chinchillas project – a 4-km x 5-km volcanic dome complex with alteration zones hosting several areas of mineralization. Channel samples include 281 g/t silver with 0.5% lead over 3.35 meters and 168 g/t silver over 8 meters. Specific drill locations are being targeted over the summer, which is winter in Argentina.

3)  Similarly, the company's Pescado Gold Project is anticipated to be drilled near-term. Located 10 km. south of Yamana's Gualcamayo Gold Mine and its 2 mm oz gold reserve, this is an area GRG geologists know well. Initial field sampling includes rock chips with up to 17 g/t gold. Two magnetic targets have been defined where plutonic rocks have intruded the sedimentary sequence, both co-incident with gold anomalies. GRG controls 22,000 hectares here with two key zones for initial drilling which is anticipated later this year.

  Follow this link to see graphically how the company's Development Plan is and will increasingly contribute to market values.

  Follow this link to view Golden Arrow's current presentation


Near-Term Catalysts from Acquisitions

4)  With the company's exploration efforts set up to be funded by subsidiary New Golden Explorations, per above, GRG is addressing exceptional acquisition opportunities today, and every quarter the company's capital position rises from new funds from the JV with SSR. Today's focus on acquisitions could involve acquiring prefeasibility-stage assets, or producing assets, or establishing royalty or equity interests in such projects. What is known is that management is highly experienced and has a keen eye for value-adding acquisitions. Keep in mind – Golden Arrow never does anything in a small way.


Near-term Catalysts from the Joint Venture

5)  First, SSR essentially always meets or beats its guidance. The company's guidance for production from Pirquitas for 2017 is 4-1/2 to 5-1/2 mm oz silver. And the net income from 25% of this production is attributed to GRG when the accounting for each quarter is completed and reported approx. 6 weeks after completion of each quarter. This steady income funds GRG's portion of costs for bringing Chinchillas into production with SSR and keeps the company's focus on its proven skills: finding and delineating large new resources, and making value-adding acquisitions.

6)  This steady attributed income is anticipated to rise. The PFS calls for production from Chinchillas starting in 2H, 2018 at the rate of 8.4 mm oz/year for 8 years, or a credit of the net income from 2.1 million oz/year to GRG, at an anticipated cash cost of US$7.40/oz.

7)  Note that the estimate of 8.4 mm oz/year is based on an average throughput of 4,000 tonnes/day. Capacity at the mill is actually 5,000 tonnes/day, so this factor – plus many others – could well increase the quarterly payout to GRG. This is the way SSR works: They put out the lowest possible expectation so they match or exceed it every quarter and year.

8)  With the production from Chinchillas, SSR will be able to assess if production from Pirquitas can be extended. Beneath the pit at Pirquitas lie significant silver resources at higher grades, and this area will be assessed by the partners for additional production. Likewise, at Chinchillas, an additional 38 mm oz of silver grading 101 g/t are not included in the mineral reserve, and are shown as resources. These additional zones will require further evaluation and may extend production also.

9)  In addition to the many near-term catalysts for performance, this joint venture does not carry many of the usual mine construction risks associated with the mining business. The Prefeasibility Study details a satellite open-pit mining operation at the Chinchillas project with ore processing undertaken using the existing mill and concentrator facility at the operating Pirquitas mine 42 kilometers to the west. Capital expenditure estimates are US$81 million which is mostly digging the pit and preparing the area for haulage, plus improving roads. This approaches being turn-key construction to production.

In the market, Golden Arrow trades in the range of US$0.45 – 0.50/share with 98 million shares outstanding, a market cap of approx. US$50 million. The company is being valued at its 25% portion of the Net Present Value of the JV from the Prefeasibility Study, plus its cash position of approx. US$17 million. The potential gains from the 9 catalysts noted above are not valued in the market.

Shareholders get the exploration successes and experience for free. The company's upcoming drilling programs on highly prospective projects come for free. The upside to the joint venture comes for free. Any upside in the silver market comes for free.

In our view, this stock is seriously undervalued and its downside risk is limited compared to most exploration and mining companies. As the JV payments come in, as exploration results are reported, as the partners show ways to increase production with Pirquitas/Chinchillas – like extending the Pirquitas pit underground where the silver grades are richer – this stock could well soar.


Accomplished Management

Really, very few management and geological teams achieve three world-class mineral discoveries. Here are short bios of the professionals at Golden Arrow:

Joseph Grosso, Executive Chairman, CEO & President – Mr. Grosso became one of the early pioneers of the mining sector in Argentina in 1993 when mining was opened to foreign investment, and was named Argentina's 'Mining Man of The Year' in 2005. His knowledge of Argentina was instrumental in attracting a premier team which led to the acquisition of key properties in Golden Arrow's portfolio. He has successfully formed strategic alliances and negotiated with mining industry majors including Barrick, Teck, Newmont , Viceroy (now Yamana Gold) and Vale S.A. – and government officials at all levels. Mr. Grosso's specialty is financing, negotiations, corporate and marketing strategy. He was an early and passionate advocate of best practices in environmental protection and socio-economic development through mineral exploration. He is the founder and president of Grosso Group Management Ltd.

Brian McEwen, PGeol., VP Exploration & Development – Mr. McEwen is a professional geologist with more than 30 years of exploration and production experience in open-pit and underground mining projects and operations. The extent of his experience is global in managing numerous projects in Canada, US, Europe, Asia, Africa and throughout Latin America. Mr. McEwen's previous roles include more than a decade with MRDI (AMEC Peru) where he was responsible for project management, economic resource and reserve calculations for various precious and base metal companies worldwide, including BHP Billiton, CM Antamina, Teck, Hochschild and Phelps Dodge among others.

Nikolaos Cacos, M.I.M., Director and Vice President, Corporate Development – Mr. Cacos brings 24 years of management expertise in the mineral exploration industry. He has extensive experience in providing strategic planning to and administration of public companies. He serves as a director and officer of several publicly traded companies. He holds a Master of International Management degree from Heidelberg, Germany and a Bachelor of Science degree from the University of British Columbia.


Outlook

Golden Arrow is packed with value that is not reflected in the market and current share price. As news unfolds in the near term, these values will manifest. It's a great time to be a shareholder of this company.

Every quarter, GRG receives income from SSR Mining. Next funds are anticipated this month, then mid-November. Current cash is US$17 million. The company is in a viable position to pursue its objectives. And company objectives are never small as demonstrated by the three prior discoveries, each world-class, each in Argentina along with all the company's exploration targets today.

Concurrently, news from exploration programs, including drilling results, is coming shortly. Concurrently, news may develop regarding possible acquisitions. Concurrently, progress with permitting and construction at Chinchillas, headed by one of the world's truly quality miners, SSR Mining.

Get this quality company on your watch list. Track with the news as the company grows and makes its next discovery in Argentina. Visit www.goldenarrowresources.com and sign up for breaking news. To get to know the company directly, call Shawn Perger, Corporate Communications, at 604-687-1828.


© 2017, All Rights Reserved. Natural Resource Investor is a client-sponsored publication. Golden Arrow Resources Corporation has paid expenses of $10,000 for research, writing, editing, production and dissemination of this report. Safe harbor provisions apply as per the company's website.