TORONTO (miningweekly.com) – Despite improved output during the three months ended September, high-grade silver miner Excellon Resources is aiming to hit the lower end of its full-year guidance, as its cornerstone Platosa mine, in Mexico, continues to struggle with excessive water inflows.
As such, there has been a delay in the implementation of the mine's optimisation plan. "The optimisation plan continues to be the company's top priority, with our technical teams currently working to improve the project's efficacy and cost. We expect to provide an update on the optimisation plan shortly,” president and CEO Brendan Cahill stated on Friday.
Excellon targeted 2015 production of 900 000 oz to 1.1-million ounces of silver.
The Durango-based Platosa deposit comprised several massive sulphide mantos hosted in permeable limestone, which had been mined by Excellon since 2005. In 2007, as mine workings extended below the local water table, the company started an intensive programme of reactive grouting and pumping to control and prevent water inflows.
Excellon said during the third quarter, water management at Platosa was effective at controlling inflows; however, it continued to limit productivity and development in operations.
The company in June published the results of an independent preliminary economic assessment (PEA) by Roscoe Postle Associates on an optimisation project at Platosa to comprehensively manage water in the future through an enhanced pumping system. The optimisation project was still in the preparatory stages, with ongoing reengineering of the existing pump infrastructure, before drilling dewatering wells and underground drain wells.
The PEA calculated a base case after‐tax net present value of $39-million, with an after‐tax internal rate of return of 118%, at a discount rate of 7.5%.
Assuming surface-well drilling started early in the third quarter, the $9.9-million project was expected to be completed by the first quarter in 2016 and fully operational by mid-2016 onwards.
Silver output during the third quarter was 241 872 oz, up 12% over the comparable quarter of 2014. The mine also produced lower volumes of lead at 1.27-million pounds and zinc at 2.12-million pounds.
Ore production during the third quarter was mainly from the 6A, Guadalupe South and the 623 mantos, with development focused on the 6A and 623 mantos. Grades improved during the quarter as higher-grade mineralisation was mined in mantos 623 and 6A.
Excellon was currently accessing the periphery of the high-grade 623 manto, hosting mineral resources of 83 000 t, grading 1 231 g/t silver, and, as it completed ramps providing full access to the manto, expected to reach full production during 2016.
The company’s TSX-listed stock on Friday lost more than 14% to trade at C$0.33 apiece.