New Pacific Metals Reports After-Tax NPV(5%) Of $740 Million For Silver Sand Project
New Pacific Metals Corp. (TSX: NUAG) has released its pre-feasibility study (PFS) results for its Silver Sand project located in Potosi Department, Bolivia. This announcement marks a significant milestone in the development of the project, which has been touted for its potential to become a high-grade, low-cost silver producer.
The PFS, conducted in accordance with National Instrument 43‐101 standards, outlines several promising economic indicators for the Silver Sand project. Highlights include:
- Post-tax Net Present Value (NPV): $740 million at a 5% discount rate and an internal rate of return (IRR) of 37% at a base case silver price of $24.00 per ounce.
- Mine Life: 13 years, producing approximately 157 million ounces of silver, with annual production exceeding 15 million ounces in the first three years and an average of 12 million ounces annually over the life of the mine.
- Initial Capital Costs: $358 million with a post-tax payback period of 1.9 years from the start of production.
- All-In Sustaining Cost (AISC): $10.69 per ounce of silver.
“We are excited to share the results of the PFS for Silver Sand, a significant milestone for our Company. These strong results confirm that Silver Sand has the potential to become a high-grade, low-cost, pure silver producer, setting it apart as a rare and valuable asset in our industry,” stated CEO Andrew Williams.
The PFS includes detailed economic sensitivities to various silver prices and operating costs, indicating that at a silver price of $27.00 per ounce, the post-tax NPV rises to $936 million with an IRR of 43%, while at a silver price of $21.00 per ounce, the post-tax NPV is $535 million with an IRR of 30%.
The initial capital investment primarily covers the construction of a mineral processing plant, pre-production mining, and site infrastructure. The processing plant, accounting for $207 million of the total estimated initial capital of $358 million, is the most significant expenditure. Sustaining capital over the life of the mine is estimated at $85 million.
Operating costs are projected to be $24.63 per tonne milled, with mining costs at $9.28 per tonne, processing and tailings costs at $13.71 per tonne, and general and administrative costs at $1.65 per tonne.
The Silver Sand project will employ conventional open-pit mining methods. Ore will be processed through a plant that includes crushing, semi-autogenous and ball milling, tank leaching with cyanidation, and zinc precipitation. The processing flowsheet aims to maximize silver recovery while minimizing environmental impact.
New Pacific Metals said it is actively engaging with local communities to secure the necessary permits and land rights. The company has encountered some resistance from a minority group of artisanal and small-scale miners (ASMs) operating illegally within the project area. However, significant progress has been made with local community leaders who support the project’s development.
“We remain optimistic about achieving a favorable resolution, bolstered by community and governmental support to uphold our mining rights and drive positive development outcomes for the Project,” added Williams.
New Pacific Metals will continue negotiations with the Bolivian state mining corporation, COMIBOL, and local mining cooperatives to finalize the Mining Production Contract. The company aims to ensure that the Silver Sand project delivers shared benefits, including access to infrastructure, technology, and capital for the local communities.
In its previous report, the company noted that the mineral resource estimate for the Silver Sand project, as of October 31, 2022, used conceptual open pit mining constraints and reported at a 30 g/t silver cut-off grade. The estimate includes measured resources of 14.9 million tonnes at an average grade of 131 g/t silver, containing 62.6 million ounces of silver. Indicated resources stand at 39.4 million tonnes at an average grade of 110 g/t silver, containing 139.2 million ounces of silver. The combined measured and indicated resources total 54.3 million tonnes at an average grade of 116 g/t silver, containing 201.8 million ounces of silver.
Additionally, inferred resources are estimated at 4.6 million tonnes at an average grade of 88 g/t silver, containing 13.0 million ounces of silver.
Meanwhile, the mineral reserve estimate for the project’s open pit design, as of June 19, 2024, includes proven reserves of 15.1 million tonnes at an average grade of 121 g/t silver, containing 58.8 million ounces of silver. Probable reserves are estimated at 36.9 million tonnes at an average grade of 98 g/t silver, containing 116.6 million ounces of silver. The total proven and probable reserves are 52.0 million tonnes at an average grade of 105 g/t silver, containing 175.4 million ounces of silver.
New Pacific Metals last traded at $2.03 on the TSX.
Information for this story was found via Sedar and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
