TORONTO (miningweekly.com) – An updated prefeasibility study (PFS) for Mexico-focused silver junior SilverCrest Mines’s Santa Elena mine has succeeded in replacing the mined reserves and to extend the mine's life by another eight years.
TSX- and NYSE MKT-listed SilverCrest this week filed a National Instrument 43-101-compliant technical report that confirmed expectations that the transition from the openpit heap leach operation to a conventional mill and underground operation represented an attractive project with robust economics, even at current reduced metals prices.
The resource update highlighted a minimal decrease of overall probable reserves, even after mining depletion that had occurred and decreased metal price assumptions used for the cut-off grade analysis.
The report updated a prefeasibility study and openpit resource update for the project released in April 2013 and then amended in March 2014.
The PFS calculated that the underground operation could create total operating revenue of $555-million from estimated sales of 12.6-million ounces of silver and 270 700 oz of gold. The total operating costs were estimated at $349-million.
The operation would have estimated cash operating costs averaging $11.59/oz of silver equivalent, at a silver-to-gold ratio of 64.5:1 over the life of the mine.
Total sustaining capital costs were expected to amount to $31-million, including underground drilling programmes over the mine life and 2015 surface exploration expenditures.
The project could deliver total pretax undiscounted cash flow of $163-million, including estimated closure cost deductions of $6-million.
The PFS attached an after-tax base case net present value at a 5% discount of $119-million to the underground project.
The base case economic analyses used a gold price per ounce ranging between $1 250 (2015), $1 275 (2016) and $1 300 (2017 to 2022) and for silver, a price of $18 (2015), $19 (2016), $20 (2017) and $21 (2018 to 2022).
“The renewal of an eight-year mine life gives SilverCrest a strong corporate cash flow that provides a solid foundation for continued systematic and aggressive growth. We look forward to a year of continuing operational and financial improvements in 2015 with expansion of our annual metals production at Santa Elena,” CEO Scott Drever said.
Sandstorm Gold is entitled to buy 20% of the gold produced at Sanra Elena at $350/oz. When Sandstorm's output production from Santa Elena had reached 50 000 oz of gold, the on-going per ounce payments would rise to $450.