Toronto-based Sierra Metals has delivered a preliminary economic assessment (PEA) for a 66% production expansion at its Yauricocha base and precious metals mine, in Peru.

The production expansion will expand the Yauricocha mine through stages from its current 3 000 t/d to 3 600 t/d in the first quarter of 2019, followed by a capacity upgrade to 5 500 t/d in 2021.

“The expansion adds to the value of our resources by accelerating its production timing and also adds to the potential value to future resource increases, which we expect to continue due to the on-going aggressive exploration campaign at the mine," Sierra Metals president and CEO Igor Gonzales said this week.

The expansion is supported by a positive PEA, which returned a net present value of $393-million, at an 8% discount rate, and a return on investment of 486%. The after-tax payback period will be 4.1 years.

Based on ten years of mining the existing mineral resource, the expanded Yauricocha mine will deliver 621.1-million pounds of payable zinc output.

The life-of-mine capital cost is estimated at $238-million and after-tax cash flow of $532-million.

“The expansion of our capacity is a natural step that follows mineral resources increases in recent years. The expansion adds to the value of our resources by accelerating its production timing and also adds to the potential value to future resource increases, which we expect to continue due to the on-going aggressive exploration campaign at the mine," said Gonzales.

The Yauricocha mine processed 271.39-million tonnes of ore in the March quarter, delivering 366 000 oz of silver, 3.73-million pounds of copper, 6.07-million pounds of lead, 18.14-million pounds of zinc and 835 oz of gold.

The Yauricocha expansion study follows the recently announced expansion of the Cusi mine, in Mexico. The company plans to do a PEA for an expansion at the Bolivar mine, also in Mexico.