Silver Mines (ASX: SVL) has unveiled a feasibility study for its wholly-owned Bowdens silver project in New South Wales, which estimates a 16-year open-pit operation at an annual production rate of 2 million tonnes of silver.
The feasibility results are based on a reserve of 29.9 million tonnes at 69 grams per tonne silver, 0.44% zinc and 0.32% lead.
During its mine-life, Silver Mines hopes to produce 52.9 million ounces of silver, 108,000t of zinc and 79,260t of lead.
The feasibly estimates that in its first three years of operation, the mine would produce concentrates containing 5.4Moz of silver, 6,000t of zinc and 5,200t of lead annually.
The company, which had a market capitalisation of A$24.1 million this morning, revealed it would need about A$246 million of initial development capital.
Silver Mines’ board has already given the okay for the company to finish up an environmental impact statement which it needs to submit to the NSW state government.
The company’s managing director Anthony McClure told the market that by completing the feasibility study the company had achieved “a critical milestone” in advancing the asset.
“We see a robust operation with strong revenues particularly in the early years of the operation,” he said.
Mr McClure tipped the mine life would be expanded and said the project was leveraged to benefit from “an accretive commodity price environment”.
“For example, a 20% increase in the silver price and minor metals leads to almost a 240% increase in the project’s net present value,” he said.
The current net present value of the project is A$143.90 million pre-tax, with a 20.8% internal rate of return, and A$70.58 million post-tax with a 17.9% IRR.
Silver Mines estimates that during the 16-year life-of-mine its operating net direct cash costs would be A$15.47/oz while its all-in sustaining cost would be A$17.25/oz.
The company had A$1.54 million in cash and cash equivalents at the end of the March 2018 financial quarter.
Silver Mines securities added 2.13% to reach A$0.048 by midday.