SilverCrest Metals (TSX: SIL) (NYSE: SILV) late last night filed the results of its feasibility study for the Las Chispas Project, located in Sonora, Mexico. Based on $19.00 per ounce silver, the study determined the project has a net present value of US$486.3 million, an IRR of 52% and a payback period of 1.0 year.
At current spot pricing, reported as $27.36 at the time of release, the after tax net present value climbs to $802.5 million, while IRR is 74%, and the payback period drops to 0.7 years.
The study is based on a 1,250 tonne per day operation, with an initial mine life of 8.5 years. This results in an expected annual operation of 12.4 million ounces of silver equivalent from 2023 through to 2029, with net free cash flow arriving in 2023.
Commissioning of the processing plant has been slated for the second quarter of 2022, with ramp-up occurring through the second half of next year. Roughly 8 months worth of mineralized material is expected to be stockpiled by the time the processing plant is at full capacity.
Production meanwhile is estimated to have an all-in sustaining cost of $7.07 per ounce of silver equivalent over the length of the project, with the first seven years seeing a lower cost of $6.68 per ounce.
With respect to mineral resources of the property, proven and probably reserves have been pegged at 94.7 million ounces of silver equivalent, based on average grades of 4.81 g/t gold and 461 g/t silver. Inferred resources meanwhile total 29.7 million ounces of silver equivalent, including the recent discovery of the Babi Vista Vein Splay which is expected to host 13.9 million ounces of silver equivalent on an inferred basis. Inferred resources however were not included in the mine plan, providing room for expansion of the project upon further expansion and infill drilling that is slated to occur.
The company will now be proceeding with the construction of the project. Initial capital costs are pegged at $137.7 million, while life of mine sustaining capital cost is pegged at $123.9 million. The project is to be funded via $125 million in cash reserves, along with $90 million that is current available under an outstanding credit facility.
SilverCrest Metals last traded at $12.58 on the TSX.
Information for this briefing was found via Sedar and SilverCrest Metals. The author has no securities or affiliations related to these organizations. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
