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Aurcana reports positive PEA on Texas-based Shafter silver mine

1st September 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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VANCOUVER (miningweekly.com) – Project developer Aurcana Corp on Wednesday announced positive project economics for restarting the Shafter silver project, in Texas.

The Shafter project was put on care and maintenance in December 2013, partly as a result of depressed silver prices.

The company reported the results of an updated preliminary economic assessment (PEA), calculating an after-tax net present value, using a 5% discount rate, of $18-million, and an internal rate of return of 40.9%, based on an assumed silver price of $20/oz.

"The PEA is a significant step forward for Aurcana. It provides a solid foundation for advancing the project to the next stages of development. The fully permitted Shafter deposit is ideally poised in terms of project economics, with existing underground development, a mill and established infrastructure,” stated president and CEO Kevin Drover.

Preproduction capital has been estimated at $13.2-million, including $1.1-million as contingency.

The PEA, based on measured and indicated resources (at a 4 g/t cutoff grade) of 1.21-million tons grading 9.14 g/t for 11.06-million contained ounces, estimated a one-year construction period, followed by mine production of slightly more than six years.

The PEA outlined reopening the existing Aurcana underground access ramp and recommissioning the existing leach-milling operation at 600 t/d. This approach will focus on higher-grade mineralisation and improved silver recovery, the company advised.

The PEA contemplates an underground mine at Shafter maximising the use of the extensive pre-existing underground development. Mining will use conventional mechanised methods.

The total mill throughput in the PEA is estimated to be 1.3-million tons, of which 59% is currently classified in the resource estimate as measured and indicated material, and 41% is currently classified as inferred material totalling 870 000 t grading 7.47 g/t silver, for 6.51-million ounces.

Aurcana expected to produce 1.5-million ounces a year for the first six years of the operation, and 9.3-million ounces of silver over the life of the mine.

The mill is expected to achieve an average life-of-mine silver recovery of 81.73%.

Payback is just under two years.

Aurcana believes future work should include starting the rehabilitation of the Shafter ramp, which will allow for underground definition drilling to take place. It also expects to undertake further exploration comprising in-fill and step-out drilling; variability tests of potential mill feed to confirm process plant performance; and the refinement of engineering studies (mining, process, geotechnical, infrastructure, operating and capital cost estimation, among others).

Silver spot prices have surged about 30% since the start of the year to a bid price of $18.67/oz on Wednesday.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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