Wildcat Silver (TSE:WS) advanced late Tuesday afternoon after announcing a pre-feasibility study for its Hermosa project in Santa Cruz County, Arizona showing an after-tax net present value of some $830 million.
The economics, calculated with a 5% discount rate, also showed an IRR of 21.3% and a payback period of under three years.
Average silver production was projected at 12.2 million ounces per year for the first five years, and 5.7 million ounces over the life of the mine.
The study, which considers output from two primary metals at the property, also estimates electrolytic manganese (EMM) production of 110 million pounds per year for the 18-year life of the mine. The project will also produce three by-product metals -- gold, zinc and copper.
"The results of this pre-feasibility study demonstrate the size and economically robust nature of the Hermosa project," said chairman and CEO Richard Warke, in the release.
"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."
Average cash costs for the entire life of the project are seen at $4.45 per ounce of silver and $0.73 per pound of manganese. When factoring in all other metals as by-products, the average silver costs are negative $4.37 an ounce.
Initial capex is forecast at $834.6 million, including nearly $200 million for a 55,000 tons per year electrolytic manganese plant.
The company said that the stand-alone nature of the manganese facility provides it more flexibility as that part of the project can be financed separately or phased in, and funded through cash flow from production. It has successfully produced a 35% manganese concentrate that will be used as feedstock for the plant, according to Wildcat's statement.
"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," added Warke.
"When considered in conjunction with its substantial silver production, Hermosa has become a very unique and valuable mining project."
The company also announced Tuesday an updated resource estimate, and the first mineral reserve for the Hermosa project.
The mineral resource now includes a proven and probable reserve of 59.7 million tons averaging 2.43 ounces per ton of silver, containing 145 million ounces, as well as some 7.2 billion pounds of contained manganese. There are also another 245 million silver ounces in the measured and indicated resource category, and 10.3 billion pounds of manganese, as well as 50 million inferred silver ounces and 1.3 billion pounds of inferred manganese.
Shares of Wildcat were trading 7.1% higher at 37.5 cents in Toronto within an hour of market close.