Since acquiring the project in 2019, Discovery Silver has focused on the underexplored higher-grade areas within the larger mineralized system, with the objective of defining and eventually developing what it views as a high-margin project with scale.
According to the company, its flagship silver project boasts “excellent economics”, including a base case after-tax NPV (using a 5% discount rate) of $1.2 billion and an IRR of 38%, as shown in the PEA report.
The large-scale asset would have a 16-year mine life with average annual production of 26 Moz AgEq at an AISC of $12.35/oz AgEq.
Initial development capex for the project is $368 million, which gives a an NPV-to-capex ratio of 3.2x. The post-tax payback period is two years under the base case scenario.
“With annual AgEq production averaging more than 26 Moz over a 15-plus-year mine life, we believe this PEA clearly positions Cordero as a Tier 1 silver asset,” Taj Singh, President and CEO of Discovery Silver, commented in a news release.
“This impressive scale of production is achieved through modest development capex of $368 million and returns excellent margins with AISC averaging less than $12.50/AgEq oz over the life of the mine. These costs highlight the benefits of existing local infrastructure, excellent metallurgy, and a straight-forward open-pit mine with excellent grades and a low strip ratio,” he added.
Importantly, the metrics demonstrated in the PEA are supported by a mine plan with more than 99% of tonnes processed in the measured and indicated category, and a simple and conventional process design based on the company’s metallurgical testwork program earlier this year.
According to Singh, this would provide his company with a “huge head start” as it looks ahead to the delivery of a Prefeasibility Study (PFS) on Cordero in 2022.
Shares of Discovery Silver rose 4.4% by 12:20 p.m. ET, giving the Toronto-based silver miner a market capitalization of C$614.5 million.
