Southern Silver offers Cerro Las Minitas PEA with US$349M NPV, 60-month payback

Southern Silver Exploration (TSXV: SSV) has released a preliminary economic assessment (PEA) for its 100%-owned Cerro Las Minitas silver project about 70 km northeast in Durango state, Mexico. The PEA puts gross revenues over 15 years of mining at US$3.7 billion.

With an initial capital requirement of US$341 million for a large-scale, underground mine, the study puts the after-tax net present value (at a 5% discount rate) at US$349 million and the internal rate of return at 17.9%. An additional US$168 million is anticipated for sustaining capital. The study used metals prices of US$21.95 per oz. silver, US$3.78 per lb. copper, US94¢ per lb. lead, and US$1.33 per lb. zinc.

Average annual silver-equivalent production is estimated at  14.2 million oz. (5.8 million oz. silver yearly) at an all-in sustaining cost of US$13.27 per oz. silver-equivalent sold. Silver would represent 42% of revenues, and zinc 39% of revenues.

Two portals will be developed to reach the polymetallic deposits at the Cerro Las Minitas silver project. Credit: Southern Silver Exploration

The Cero Las Minitas project has an indicated reserve of 12.3 million tonnes averaging 106 grams silver per tonne, 0.16% copper, 1.3% lead, and 3.3% zinc, containing 42.1 million oz. silver, 44 million lb. copper, 358 million lb. lead, and 895 million lb. zinc. The inferred resource is 29.6 million tonnes averaging 117 grams silver, 0.23% copper, 1.2% lead, and 2.3% zinc, containing 73.6 million oz. silver, 98 million lb. copper, 500 million lb. lead, and 1 billion lb. zinc. Only sulphide mineralization was included in the study.

Southern Silver anticipates there is further exploration upside at the project. Current drilling and confirmed extensions to the Mina La Bocona and Skarn Front deposits, neither of which is included in the resources.

The mining plan foresees the use of longitudinal and transverse long hole stoping methods. Two separate portals are proposed, one to access the Blind-El Sol and Skarn Front deposits, and the second to access the La Bocona and South Skarn deposits.

The mineral processing plant would have a 4,500-tonne-per-day nominal capacity. The process consists  of primary crushing, a 15,000-tonne run-of-mine stockpile, reclaim and secondary crushing, closed circuit ball milling, and sequential copper-lead-zinc flotation circuit producing three filtered concentrates for sale.

A portion of the tailings will be returned to the mine as cemented paste fill, and the remainder will be dry stacked on the surface.

Note: The story has been updated (the IRR was previously incorrect).