Quaterra Shifting Away from Silver, Agrees to Sell Nieves Project

Quaterra Resources (TSXV:QTA) ended long-term speculation on Monday by confirming that it has agreed to sell its 50-percent stake in the Nieves silver project to Blackberry Ventures I for US$4 million.

The company has been looking to shift the project for the better part of two years in the face of a depressed metals market and a desire to focus on its Yerington assets.

“It hasn’t been a strategic fit for us,” said CEO Steve Dischler. “We’ve been talking off and on in a variety of ways to manage the Nieves project. Over the last few months it became obvious that if we were going to get out of our option then [Blackberry] would be the obvious choice.”

The idea of selling Nieves arose in a June conference call between investors and Dischler, with investors questioning what the future held for non-Yerington assets in light of Quaterra’s offtake agreement with Freeport-McMoRan (NYSE:FCX).

A preliminary economic assessment for Nieves was completed in September 2012; it estimates that an open-pit mine would produce more than 5 million ounces of silver per year over a 10-year lifespan. However, since then, the project has been largely dormant as new management moved in and looked to consolidate Quaterra’s focus.

A depressed silver market has also done little to help the project generate appeal, with silver falling 21 percent this year. The white metal has been in a free fall since 2011, plummeting 64 percent since it saw a high of $45 per ounce in April 2011.

That said, Christopher Ecclestone, principle and mining strategist with Hallgarten & Company, said the sale is a “stunning” good deal for Blackberry and will allow the project to finally grow. “[It’s] taking the asset out of the ‘do-nothing’ hands of Quaterra and potentially putting it on a path to production,” wrote Ecclestone in an email.

Blackberry has not yet indicated whether it plans to go down that road. If it elects to put the project up for sale, Quaterra will receive 5 percent of the future net sale price.

Securities Disclosure: I, Nick Wells, hold no direct investment in any of the companies mentioned in this article.

Editorial Disclosure: Quaterra Resources is a client of the Investing News Network. This article is not paid-for content.