Wildcat Silver has just announced positive pre-feasibility study results from its Hermosa project, near the small town of Patagonia in Santa Cruz County, Arizona.
According to the press release:
The pre-feasibility study includes the contribution from the projects’ two primary metals, silver and electrolytic manganese metal (EMM), and three by-product metals, gold, zinc and copper. The Company also announces an updated resource estimate and an initial mineral reserve for Hermosa.
After-tax NPV (5%) of $830 million, after-tax IRR of 21.3%, and payback of 2.8 years.
Average silver production of 12.2 million ounces per year for the first five years and 5.7 million ounces per year for the life of mine (LOM).
Average EMM production of 110 million pounds per year for the LOM.
Average cash costs of $4.35 per ounce silver and $0.74 per pound of EMM for the first five years and $4.45 per ounce of silver and $0.73 per pound of EMM for the LOM.
Average silver cash costs, considering all other metals as by-products, of $4.37 per ounce for the LOM.
Mine life of 18 years.
Initial capital expenditures of $834.6 million including $189.3 million for a 55,000 tons per annum EMM plant.
The mineral resource includes a proven and probable mineral reserve of 59.7 million tons averaging 2.43 ounces per ton (opt) silver, containing 145 million ounces. The proven and probable mineral reserve also includes 43.5 million tons averaging 8.31% manganese, containing 7.2 billion pounds.
Measured and indicated mineral resource of 189.6 million tons averaging 1.29 opt silver, containing 245 million ounces. The measured and indicated mineral resource also includes 91.2 million tons averaging 5.67% manganese, containing 10.3 billion pounds.
Inferred mineral resource of 49.6 million tons averaging 1.02 opt silver, containing 50 million ounces. The inferred resource also includes 16.3 million tons averaging 3.80% manganese, containing 1.3 billion pounds.
1) Results are reported on a 100% ownership basis (Wildcat’s interest in Hermosa is 80%). All dollars are U.S. dollars and all tons are short tons unless noted otherwise throughout this press release.
2) Based on metal prices of: $23.50/oz Ag, $1,250/oz Au, $1.19/lb EMM, $0.92/lb Zn, $3.25/lb Cu
3) Cash costs are calculated on a co-product basis whereby production costs are allocated to silver and manganese based on the relative revenues of each metal. Silver cash costs are net of gold, zinc and copper by-products.
The pre-feasibility study reflects the results of significant metallurgical and engineering test-work completed, which principally focused on using magnetic separation for the recovery of manganese and by-product metals. The Company has now successfully produced a 35% manganese concentrate that will be used as the feed-stock to an EMM plant. The stand-alone nature of the EMM facility provides the Company greater flexibility as that part of the project could be financed separately or phased in and funded through cash flow from production.
“The results of this pre-feasibility study demonstrate the size and economically robust nature of the Hermosa project,” said Richard Warke, Wildcat’s Chairman and Chief Executive Officer. “Our detailed and extensive metallurgical test-work has paid off as we now have the ability to produce EMM domestically, which makes Hermosa the only North American producer allowing us to service the local steel and aluminium industry. With manganese being defined as a strategic metal in the USA and with worldwide demand surging, entering into the domestic manganese market as one of the lowest cost EMM producers worldwide provides Wildcat a tremendous opportunity. When considered in conjunction with its substantial silver production, Hermosa has become a very unique and valuable mining project.”