Name and Location
La Colorada silver mine expansion project, Zacatecas, Mexico.

Client
Pan American Silver.

Project Description
La Colorada’s expansion project will be built progressively, ramping up from the current mining and processing rates of 1 250 t/d to 1 800 t/d by the end of 2017. Once the expansion is complete, La Colorada’s production capacity is estimated to grow 64% to about 7.7-million ounces of silver a year in 2018.

According to the preliminary economic assessment (PEA), the mine’s expansion will be achieved through the construction of new mining infrastructure, the development of new mining zones to reach deeper, higher-grade areas of mineralisation and the expansion of the sulphide ore processing plant.

A new 600-m-deep shaft will be built between the main Candelaria area that contains the NC2 and HW veins and the Estrella area that contains the Amolillo vein using a highly efficient raise boring technique. The new shaft will increase hoisting capacity to 2 300 t/d, accommodating ore and waste extraction, and serve as the main access to working areas for mine personnel and materials.

The new shaft will enable increased underground development rates to access additional mining areas, allowing for production rates to increase.

Mining at the Estrella and Candelaria areas will continue, using the cut-and-fill method.

The capacity of the ventilation and dewatering systems will be increased to handle the mine’s hot and wet ground conditions as mining operations extend at depth. The expansion plan also includes the addition of 22 new pieces of mining equipment to the fleet and the hiring of more than 100 additional mining personnel.

Total throughput at La Colorada’s processing plants will progressively increase from 1 250 t/d to 1 800 t/d by 2018. The mine currently produces doré bars from a conventional cyanide leach plant for the oxide ore, and silver-rich lead and zinc concentrates from a flotation plant that treats the sulphide ore. Both circuits currently share a single crushing plant. While the oxide plant will not be modified, owing to La Colorada’s oxide production remaining at current levels for the rest of the mine’s life, the sulphide plant will be expanded to treat the increased sulphide ore feed.

Expansion of the sulphide plant to 1 500 t/d will be implemented through the installation of a new crusher and grinding mill.

The existing zinc flotation cells will be converted to lead floatation and a new zinc floatation circuit will be built.

The plan also includes an upgrade and expansion of the plant’s dewatering circuits and the installation of a new 115 kV power line connection to the national grid to replace the existing 33 kV lines.

Net Present Value/Internal Rate of Return
The PEA estimates an after-tax net present value of $38.6-million at a 10% discount rate, an estimated internal rate of return (IRR) of 22% and an estimated payback period of 2.5 years.

Value
Total capital expected to be invested at La Colorada for ongoing operations and the expansion project over the next four years is estimated at $163.8-million.

Duration
Construction of the new shaft is scheduled to start early in 2015, following the completion of sufficient underground development around the shaft bottom, and commissioning is expected in the latter half of 2016.

Latest Developments
None stated.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Pan American Silver, tel +1 604 684 1175, fax +1 604 684 0147 or email info@panamericansilver.com.