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PFS for Americas Silver's San Rafael property indicates US$24.7M NPV, 27% IRR


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PFS for Americas Silver's San Rafael property indicates US$24.7M NPV, 27% IRR

AmericasSilver Corp. said March 30 that a pre-feasibility study for itsSan Rafaelzinc-silver-lead property in Mexico indicated a pre-tax net present value ofUS$24.7 million, at a 5% discount rate, and an internal rate of return of 27%.

The study considers an underground operation focused on theMain Zone, with processing at the existing Los Braceros facility to producesilver-bearing zinc and lead concentrates.

San Rafael is expected to produce about 5.5 million ouncesof silver, 254 million pounds of zinc and 97 million pounds of lead over aninitial 5.5-year mine life, at all-in sustaining costs of negative 19 cents perpound of silver produced.

Permits are in place to allow commencement of minedevelopment, subject to board approval and project financing.

Following an 11-month development period, the existing LosBraceros processing plant will begin treating ore from San Rafael. At the 20thmonth, a mill expansion will increase throughput by 30% to 1,800 tonnes per dayto coincide with the ramp up in mine production.

Americas Silver booked a net loss in 2015 of US$19.4million, or 6 cents per share, improving from the net loss of US$78.7 million,or 39 cents per share, from the previous year. This was due to lower impairmentof mining interests, reductions in depletion and amortization, and lower incometax expense, partially offset by lower net revenue on commodity sales.

The company produced 2.65 million ounces of silver, atall-in sustaining costs of US$17.16 per ounce, meeting both production and costguidance for 2015.

Lead production rose to 22.9 million pounds from 15.4million pounds in 2014 — an increase of 48%, offsetting the lower than expectedbase metal prices. Copper output also went up year over year to 2.1 millionpounds, from 1.8 million pounds.

Meanwhile, zinc output slipped to 11.6 million pounds, from12.6 million pounds.

Consolidated silver production this year is forecast torange from 2.5 million ounces to 3.0 million ounces, at all-in sustaining costsof US$11.75 per ounce to US$12.75 per ounce.

Americas Silver attributed the cost reduction to higher leadproduction at the GalenaComplex, further workforce reductions, lower treatment and refiningcharges, and a more favorable Mexican peso exchange rate.

As of Dec. 31, 2015, Americas Silver's estimated proven andprobable reserves total 5.2 million tonnes at 185 g/t of silver, 0.08% copper,2.57% lead and 2.82% zinc for 31.1 million ounces of silver. This was a 40%increase from the previous 22 million ounces of silver, due to the addition ofa maiden reserve estimate for the San Rafael property.

With the San Rafael number added to the company's reserveestimate, measured and indicated resources decreased from 58 million ounces ofsilver to 11.4 million tonnes at 137 g/t of silver, 0.15% copper, 1.27% leadand 1.18% zinc for 50.1 million ounces of silver.