A Thumb’s Up For Aurcana’s Shafter Silver Project

A recent prefeasibility study on Aurcana’s (AUN-V, AUNFF-O) Shafter silver mine in Presidio Cty., Texas, shows the mine could produce 3.2 million oz. silver per year over 4.7 years.

The study considers the measured and indicated resources — 2.9 million tons grading 8.48 oz. silver per ton for 24.6 million oz. silver — but does not factor in inferred resources, which total another 22.8 million oz. silver.

It would cost about US$40 million in capital expenditures to put the 1,500-ton-per-day project into production. The project would generate an internal rate of return of 23% and a pretax net present value of US$23 million at a 5% discount rate. The study used a silver price of US$13.55 per oz. and predicted an average cash cost of US$7.50 per oz.

Aurcana acquired the project in July 2008 from Silver Standard Resources (SSO-T, SSRI-Q) for US$42 million in cash, shares and a convertible debenture.

Gold Fields (GFI-N, GFI-J) discovered the Shafter deposit when it conducted exploration work at the Presidio mine between 1978 and 1982. Their work included a 1,050- ft. shaft serviced by an 80-ton-per-hour hoist and 5,100 ft. of underground development, which will be used in the later stages of the proposed mine plan to reduce haulage distances.

The Presidio mine was in operation from 1883 to 1942. Total reported production at the mine was 2.3 million tons grading 15.24 oz. per ton for 35 million oz. silver. The old mine workings include close to 100 miles of drifts and stopes with three shafts used for production.

Aurcana says this infrastructure will be integrated into the current mine plan with the shafts providing ventilation for the new decline. As well, some workings would be used as pilot headings to access the remnant blocks of ore left behind by the previous operators and will provide access for underground diamond drilling. Other stopes will be used for waste rock storage.

Further work is needed to decide the best option for cyanide removal and destruction as well as a tailings disposal method, the study found.

The Shafter project is the third acquisition Aurcana has made in two years.

The company has an 80% interest in the La Negra mine in Queretaro state, Mexico. La Negra operates at 1,000 tonnes per day and produces nearly 1 million oz. silver per year.

Aurcana recently sold its third project, the Rosario silver-gold-lead- zinc property, in Sinaloa state, Mexico, to Silvermex Resources (SMR-V, SLVXF-O) for US$4.4 million in cash and shares in order to focus on Shafter and La Negra.