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Pan American Silver board approves US$37.8M La Morocha development

Pan American Silver Corp. said Dec. 21 that its board approved a US$37.8 million capital investment to construct and develop the La Morocha deposit at its Joaquin silver-gold project in Argentina up to commercial production, based on the results of a preliminary feasibility study.

The study recommended the development of La Morocha as an underground mine, with processing to be completed at the company's Manantial Espejo mill 145 kilometers to the south.

The analysis defined a posttax net present value of US$9.1 million, using a 5% discount rate, with an 18% internal rate of return, using metal prices of US$18.50/oz of silver and US$1,300/oz of gold.

Pan American Silver noted an initial reserves estimate for La Morocha, comprising 474,000 tonnes at 721 g/t of silver and 0.4 g/t of gold for 11 million ounces of silver and 6,300 ounces of gold in the probable category, effective Nov. 30.

La Morocha is expected to deliver 474,000 tonnes of ore at 721 g/t of silver to the Manantial Espejo mill, with life-of-mine recovered metals estimated at 8.9 million ounces of silver and 5,100 ounces of gold.

La Morocha also hosts indicated resources of 58,000 tonnes at 385 g/t of silver and 0.6 g/t of gold for 700,000 ounces of silver and 1,100 ounces of gold, with inferred resources pegged at 6,000 tonnes at 389 g/t of silver and 1.3 g/t of gold for 100,000 ounces of silver and 200 ounces of gold. Resources were reported in addition to reserves.

Development of the underground access decline ramp is scheduled to begin in the second quarter of 2018, with first ore production anticipated in late 2019 and running until the end of 2021.

Pan American Silver expects La Morocha to increase its consolidated annual production to 21.2 million ounces of silver and 134,900 ounces of gold over 2018 to 2021.

The company acquired the Joaquin property in February after announcing the deal in January.