Bear Creek establishes 63M oz. silver reserve at Santa Ana

Vancouver – Peru-focused Bear Creek Mining (BCM-V, OU6-F) is closer to becoming a serious silver producer with the release of a feasibility study on its Santa Ana project.

The study establishes 63.2 million oz. silver in reserves at Santa Ana, which brings the company’s total reserves to over 321 million oz. silver. While currently not a producer, Bear Creek plans to develop its Santa Ana project by 2012, followed by its Corani silver project in 2014. With both online, the company could be producing 20 million ounces a year which would place it among the top pure silver companies in the world.

The feasibility study on Santa Ana outlines an 11-year open-pit mine life with a 2:1 strip ratio, producing an average of 4 million oz. silver annually from 3.6 million tonnes of ore. Capital costs are estimated at US$68.8 million with a payback in 3.4 years using base-case figures.

Heap-leach silver recovery is estimated to be 70%, though column leach testing has shown that finer crushing could improve recovery to 75% and on-going testing indicates a finer crush size could also significantly accelerate recovery times.

Base case financials work out to an after-tax internal rate of return of 21.8%, and an after-tax net present value of US$66.5 million using a 5% discount. The base case uses a silver price of US$14.50 per oz. while the spot price for silver on October 6 was US$22.92 per oz. Factoring in the spot price, the after-tax IRR jumps to 52.6% and the NPV to US$232 million.

Proven and probable reserves stand at 37.1 million tonnes grading 53 grams silver per tonne for the 63 million contained ounces. Reserves also contain 0.34% lead and 0.58% zinc but only silver will be recovered.

Preliminary mine plans have indicated the possibility of adding 35.7 million ounces to the reserves. In all the the feasibility study pit design did not incorporate measured and indicated resources of 72.8 million ounces silver. The deposit remains open to depth and to the north.

The 5,400-hectare Santa Ana project is located 140 km south of the city of Puno on the southern edge of Peru. The project is a volcanic-hosted epithermal system with mineralization contained in numerous structural feeders and in widespread crackle breccias.

Bear Creek’s flagship Corani project is also located in the Province of Puno. Corani hosts proven and probable reserves of 139.6 million tonnes grading 57.5 grams silver, 0.94% lead and 0.46% zinc for 258 million contained ounces silver, 2.9 billion lbs. lead and 1.4 billion lbs. zinc.

Bear Creek’s share price dropped 11¢ or 1.8% on the news to close at $5.97. The company’s stock price has climbed from roughly $3.60 in late July to a recent 52-week high of $6.35 as the price of silver has gone from roughly US$18 per oz. to almost US$23 per oz. The company has 70 million shares issued.