Name of the Project
Las Chispas gold/silver project.

Location
Sonora, in Mexico.

Project Owner/s
SilverCrest Metals.

Project Description
A preliminary economic assessment (PEA) on the Las Chispas project has suggested that it could be a high-margin project, even at low metal prices.

The PEA has focused initial development and production on the high-grade Babicanora, Babicanora FW and Babicanora Norte veins.

The project envisages a 1 250 t/d production rate with an initial mine life of 8.5 years. Average production is estimated at 5.38-million ounces a year of silver and 55 700 oz/y of gold, or 9.6-million ounces of silver equivalent.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The PEA estimates an after-tax net present value, at a 5% discount rate, of $406.9-million and an internal rate of return of 78%, with a payback of about nine months.

Capital Expenditure
Initial capital expenditure is estimated at $100.5-million.

Planned Start/End Date
Ausenco Engineering will start construction in February 2021, as the SilverCrest-managed earthworks programme for the process plant nears completion. Commissioning of the process plant is targeted for the second quarter of 2022 and production ramp-up is planned to start in the third quarter of 2022.

Latest Developments
SilverCrest Metals' Canadian subsidiary has entered into a credit agreement with an affiliate of mining financier RK Mine Finance to provide a secured $120-million project financing facility to fund the construction of its Las Chispas silver and gold project.

The agreement comes in anticipation of making a final construction decision based on a feasibility study for the project.

Concurrently, one of SilverCrest’s Mexican subsidiaries has entered into a fixed price engineering, procurement and construction (EPC) contract with Ausenco Engineering Canada, and one of its affiliates, for the construction of the Las Chispas process plant.

While the feasibility study is still pending finalisation by Ausenco (with announcement of results targeted for late January), SilverCrest is confident entering into the credit agreement and the EPC contract based on the substantial feasibility information currently available.

The feasibility study undertaken by Ausenco is progressing well and is about 60% complete.

Procurement of long-lead items started in the fourth quarter of 2020. Advancing these programmes in parallel has enabled Ausenco to develop comprehensive capital and operating cost estimates for Las Chispas while progressing detailed engineering beyond what is customary at a feasibility study level.

However, in the absence of a feasibility study of mineral reserves demonstrating economic and technical viability, SilverCrest has reported that there is increased uncertainty and historically a higher economic and technical risk of failure associated with the development of a commercially mineable deposit until the feasibility study has been completed.

The EPC contract with Ausenco locks in a fixed price of $76.5-million for construction of a 1 250 t/y process plant at Las Chispas.

Meanwhile, the disruption caused by the Covid-19 pandemic also enabled SilverCrest to initiate an early works programme tailored to further reduce project execution risks. This programme included the earthworks package, the water pumping system and the first phase of the construction camp.

The advancement of the early works programme, coupled with the fixed-price nature of the EPC contract, reduces many common construction- and market-related risks, the company has stated.

Beyond the tasks included in the EPC contract, the remaining initial capital costs expected for the Las Chispas construction will include development costs of the underground mine, owner’s site costs and on-site infrastructure, including Phase 2 of the confined construction camp, as well as a bridge and filtered (dry-stack) tailings system facility.

It will also include a new 33 kV, 49-km-long powerline to replace the proposed diesel power generation. 

Key Contracts, Suppliers and Consultants
Tetra Tech Canada (PEA) and Ausenco Engineering (feasibility study).

Contact Details for Project Information
SilverCrest Metals, tel +1 604694 1730 or email info@silvercrestmetals.com.