TNM Drill Down: Pan American Silver in Mexico tops YTD silver assays 

Our TNM Drill Down features highlights of the top silver assays of the year to July 31. Drill holes are ranked by silver grade x width.   

Drilling in North America has returned the best silver assays so far this year. Pan American Silver‘s (TSX: PAAS) preliminary economic assessment-stage La Colorada Skarn in Mexico topped the results. Hecla Mining (NYSE: HL) was second with results at its Keno Hill mine in Yukon. Hercules Metals (TSXV: BIG) was third with results from its namesake exploration project in Idaho.

Pan American at La Colorada Skarn  

Hole U-121-22 at Pan American’s La Colorada Skarn cut 77.8 metres at 568 grams silver per tonne from 657.3 metres depth, for a width x grade value of 44,218, the company reported on April 7. That hole was part of the highest-grade intersection to date at the Skarn target, said Christopher Emerson, vice-president of exploration and geology.   

La Colorada Skarn in Zacatecas, north-central Mexico, is located below and next to the currently producing La Colorada mine, Pan American’s largest. The skarn deposit was discovered in 2018.  

The results came almost four months after the company released a preliminary economic assessment for La Colorada Skarn that outlined production potential for a 17-year mine life, with cumulative after-tax cash flow of US$5.6 billion. The early stage study forecast the project could produce 17.2 million oz. of silver, 427,000 tonnes of zinc and 218,000 tonnes of lead annually in its first 10 years.   

With initial capital costs pegged at US$2.8 billion, the project’s post-tax net present value (at an 8% discount) is estimated at just over US$1 billion, with an internal rate of return of 14%.   

The project has a six-year construction period, during which the current La Colorada vein mining operation would continue. Life-of-mine sustaining capital is pegged at US$951 million.   

Indicated resources total 173.6 million tonnes grading 33 grams silver, 1.32% lead and 2.79% zinc for 183 million oz. silver, 4.8 million tonnes of zinc and 2.3 million tonnes of lead. Inferred resources come to 103.6 million tonnes grading 35 grams silver, 1.03% lead and 2.47% zinc, for 116 million oz. silver, 2.6 million tonnes of zinc and 1.1 million tonnes of lead.  

Pan American plans an updated resources and reserves estimate in August, based on drilling in the second half of 2023.   

Hecla at Keno Hill  

Hole BMUG23-105 at Keno Hill cut 12 metres at 1,851.31 grams per tonne from 168.8 metres depth, for a width x grade value of 22,290. That hole, reported on Feb. 13, was drilled into the Bermingham Footwall Vein at Keno Hill in central Yukon.   

The results came just over one month before Hecla released an updated technical report for Keno Hill, which is ramping up toward declared commercial production.   

The update outlines proven and probable reserves of 34.2 million tons grading 26.6 oz. of silver per ton, for 238.2 million contained ounces. That marks a 45% increase over the reserves identified when it bought Alexco Resources for the asset in 2022.   

The report also estimates Keno has an 11-year mine life, with silver production of 52.9 million ounces. That’s expected to produce $420 million in free cash flow, with a post-tax NPV (at 5% discount rate) of $305 million at a silver price of $22 per ounce.   

Hecla also operates the Greens Creek mine in Alaska and Lucky Friday in Idaho.   

Hercules Metals at Hercules 

Hercules Silver drilled 112.2 metres of 193 grams silver from 39.5 metres depth, for a width x grade value of 21,654.59 at its project in Idaho. Hole HER-23-17 was drilled at the Adit zone at the Hercules project, the company reported on Feb. 28.   

Hercules has planned this year’s drill program with technical assistance from Barrick Gold (TSX: ABX; NYSE: GOLD), following its $23.3-million investment last November that gave it a 12.33% stake in the explorer.   

The gold giant said its investment in the junior is to help it find copper porphyry deposits.   

In May, Hercules started its largest campaign to date: a 20,000-metre drill program using three rigs. The program will follow up on copper porphyry discoveries last year and explore anomalies using IP surveys, CEO Chris Paul said.   

Mining and exploration at Hercules dates to 1880, with 28,000 metres drilled since 1965 in the Adit zone. Hercules Metals acquired the pre-resource project in 2021.