Precious metals producer Great Panther Silver Ltd (TSX:GPR; NYSE:GPL) has hailed the results of a preliminary economic assessment (PEA) for its Peru project, which showed robust numbers and low capital costs.
Coricancha is a gold-silver-lead-zinc-copper underground mine and mill complex, 90 km east of the capital Lima.
The document assumes using standard cut-and-fill and resue mining techniques providing ore to support a target annual throughput rate of 550 tonnes per day (tpd) to the mill.
Using base case metal prices, including gold at US$1,300 per ounce and silver at US$16.50 an ounce, Great Panther said the mine was estimated to generate an after-tax net present value (NPV) of US$16.6mln and an after-tax internal rate of return (IRR) of 81%.
Operating costs were pegged at US$55.71 per tonne mining, US$68.83 per tonne processing, and US$23.52 per tonne for general and administration, for a total cost of US$148.06 per tonne.
Cash costs were estimated to be US$14.06 per payable silver ounce, or US$70 per payable gold ounce over the life of the mine.
All-in sustaining costs were estimated by the report to be US$2.20 per payable silver ounce, or US$547 per payable gold ounce, over the life of the mine.
The mine plan envisages 608,053 tonnes being processed over a life of mine (LOM) of 3.75 years, with 193,500 tonnes of annual average throughput.
"We are very pleased with the results of the Coricancha PEA as it confirms the potential for average annual production of three million silver-equivalent ounces and estimates an after-tax internal rate of return in excess of 80%, with low capital costs", said James Bannantine, the president and chief executive at Great Panther.
"We look forward to advancing Coricancha by building on the PEA and gaining a better understanding of the potential of the project as we begin preparations for full-scale mining and milling."
Start of trial stope and bulk sample program
With the report now completed, Great Panther will advance the project, it said, with the start of a trial stope and bulk sample program early in the third quarter this year.
The aim of this bulk sample is to provide confirmation of expectations regarding throughput, grades, and recoveries.
The company said it will leverage its expertise in developing and operating underground, narrow vein mines in Mexico to advance the project.
Existing infrastructure in place includes a crushing and grinding plant, flotation and bio-oxidation plant, electrical and water supply, plus existing mine access development.
It is worth noting that Great Panther has identified several opportunities to further enhance the economics of the project and increase the life of mine.
Great Panther shares were unchanged at C$1.61 each.