Bear Creek Looks To Fast Track Santa Ana

Bear Creek Mining’s (BCM-V, BCEKF-O) bulk-tonnage silver deposit in southern Peru could be developed as a pure silver producer averaging 4.6 million oz. per year over 11.8 years of a heap-leach operation, the company says.

A recently released scoping study on the project shows that for each of the first six years of production, Santa Ana could churn out 5 million oz. silver. Cash costs would come in at about US$7.47 per oz. silver, with capital costs of US$51 million and a payback period of 2.5 years based on a silver price of US$13 per oz.

The study calculated a net present value (NPV) of US$55 million at a 7% discount rate and an internal rate of return of 29%. (The undiscounted after-tax NPV is forecast at US$115 million.) The study envisions a mining rate of 10,000 tonnes per day.

Mark Leduc, senior vice-president of engineering and development, says the Santa Ana project can be built and put into production in a short timeframe because the deposit outcrops at surface and the silver will be recovered using low-cost, conventional heap-leach pads next to the open pit.

“It’s a straightforward project from an execution point of view (and) we don’t see any permitting issues in front of us,” he says. “We’re looking to advance this along the development process very fast.”

Leduc estimates it would take six months at most to build a mine once the permitting is in place. Before then, he estimates it would take between 18 months and two years to get the permits and complete the final feasibility design.

The trick, he says, will be the recovery rates for silver from the heap-leach process. “There’s not a lot of history to silver heap leaches. The majority of silver comes as a byproduct of base metal mines and recovery is mostly from lead concentrates,” Leduc explains.

With heap leach, it takes cyanide longer to dissolve silver than it does gold. “Silver just has slower reaction kinetics,” he says. “In our case, the silver is in argentite, 87 per cent silver by weight and 13 per cent sulphur. . . There are not an awful lot of primary silver mines in the world.”

The proposed mining sequence would involve removing ore from the higher-grade, near-surface parts of the deposit throughout the mine life, leaving resources of about 33.7 million measured and indicated tonnes and 16.3 million inferred tonnes behind that could be mined at a later date and at a reduced cutoff, should metal prices increase.

According to a new resource estimate released in April, measured and indicated resources at Santa Ana grew 19% to 66.8 million tonnes grading 45.5 grams silver per tonne for contained silver of 97.7 million oz. The new resource was based on nearly 55,580 metres of drilling in 306 diamond-drill holes through December 2008.

But the scoping study focuses on just 42.4 million tonnes grading 56.7 grams silver (and includes 25% inferred resources), which leaves upside for expansion and high leverage to silver prices.

“The mine plan is easily modified to react to higher silver prices and mine the approximately 61.9 million ounces in total resource not captured in the (preliminary economic assessment),” Bear Creek’s president and chief executive, Andrew Swarthout, said in a statement.

Santa Ana is 140 km south of Puno and about 20 km south of a paved highway connecting the city to the port of Ilo. The deposit is about 40 km southwest of Lake Titicaca, Peru’s largest freshwater lake, and about 20 km north of the Bolivian border.

Lead and zinc will not be recovered and metal dor will be produced onsite, eliminating the need for smelter contracts.

Bear Creek holds a 100% interest in 63 sq. km covering the mineral deposits, surrounding exploration potential, and necessary project infrastructure.

At presstime, Bear Creek shares traded at about $1.29 apiece. The Vancouver-based junior has a 52- week trading range of 57¢-$7.65 and 55.5 million shares outstanding.