Silver Standard completes prelim assessment of Snowfield

Silver Standard Resources (SSO-T, SSRI-Q) already has the largest published in-ground silver resource of all publicly traded silver companies with projects throughout Argentina, Peru, Mexico, Canada, Chile, the United States, and Australia, according to UBS research.

Now the silver producer has another feather in its cap: a positive preliminary assessment for its 100%-owned Snowfield project in northern British Colombia.

In a research note to clients UBS values Snowfield at US$460 million and argues that its sale “would be ideal as it could unlock value in the near-term and help fund some of SSRI’s several other projects.”

Snowfield’s preliminary assessment of an open-pit mining scenario outlines a processing plant that would produce a copper-gold-silver concentrate, a molybdenum concentrate and a gold-silver dore. The proposed mill would produce an annual average of 607,000 oz. gold, 57.8 million lbs. copper, 1.5 million oz. silver and 4.5 million lbs. molybdenum.

Total production over a mine life of 23 years would add up to 966 million tonnes at a processing rate of 120,000 tonnes per day.

Capital expenditures including contingencies have been estimated at US$3.4 billion, and operating costs of US$8.52 per tonne milled. The project has a pre-tax net present value of US$877 million (at a 5% discount rate) and an internal rate of return of 8.1% using base case metal prices of US$878 per oz. gold, US$14.50 per oz. silver, US$17 per lb. molybdenum and US$2.95 per lb. copper.

At spot prices the NPV rises to US$3.6 billion and the IRR to 16.3%, assuming US$1,150 per oz. gold, US$3.50 per lb. copper, US$19.54 per lb. molybdenum and US$18.10 per oz. silver.

Based on an open-pit mine scenario, the average life-of-mine waste to mineral material stripping ratio would be 0.54:1.

The company has already started working on an updated preliminary assessment, due in the fourth quarter of this year, which will incorporate rhenium discoveries at Snowfield and also higher grade gold and silver resources at Silver Standard’s adjacent Brucejack project.

At presstime in Toronto Silver Standard was trading at $18.51 per share and has traded in a 52-week range of $17.07 to $27.19 per share.

In New York, Silver Standard was trading at US$17.73 per share and has a 52-week trading range of US$16-$25 per share.

UBS has a buy on the stock with a 52-week price target of US$24 per share.