TORONTO (miningweekly.com) – TSX Venture Exchange-listed Aurcana has completed a prefeasibility study on its Shafter silver project, in Texas, which indicates that the asset could produce an average of 3,2-million ounces of silver a year for at least 4,7 years.

Aurcana, which bought the past producing mine in 2008 from Silver Standard Resources, will now move ahead with a full feasibility study and final permitting, it reported on Monday.

The initial capital expenditure is estimated at less than $40-million, and the study shows that, with the incorporation of a decline to access the deposit, a production rate of 1 500 t/d can be achieved.

“At this rate, it is estimated that capital payback will be achieved in under two years with approximately 7,75-million ounces of silver produced during this period,” Aurcana said.

The calculations are based on a $13,55/oz silver price, and the company expects to achieve an average total cost of $7,50/oz during the first two years.

The Shafter project currently contains an estimated measured and indicated resource of 24,6-million ounces of silver, plus 22,8-million ounces in the inferred category.

Only the measured and indicated resources were used in the prefeasibility study design, economics, and life-of-mine studies, but future plans will include upgrading the inferred resources through an underground diamond drill programme once access is established, to accommodate an efficient infill drill programme.

An optimised mine design, which includes a decline for mechanised equipment, will allow earlier access to higher-grade ore, and support for a 1 500-t/d operation, Aurcana said.

The central location of the decline will result in an improved start-up rate, and will lead to balanced production from all the known zones.

Mechanised mining, instead of the previously proposed conventional mining using the existing shaft, has increased the capital and operating costs, but these cost increases have been offset by increased daily production rate, improved recoveries and the current higher silver price, the firm said.

The room-and-pillar mining method was selected as the optimal method, and the existing exploration shaft will be used for reducing haulage distance, by hoisting ore from the lower part of the mine and emergency egress.

The study indicated that more work is needed to select the best option for cyanide removal and destruction, and tailings disposal method, Aurcana said.

The company also owns 80% of the operating La Negra silver mine in Queretaro state, Mexico, and announced in May that it would sell its Rosario mine and mill, in Mexico's Sinaloa state, to Silvermex Resources, to focus on La Negra and Shafter.

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