Published: September 20, 2016 |

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Americas Silver Corporation has received approval to begin construction on its 100 percent owned, San Rafael zinc-lead-silver project within the Cosalá district of Sinaloa, Mexico.

The San Rafael Project is expected to deliver average annual production of 1.0 million ounces of silver, 50 million pounds of zinc and 20 million pounds of lead over a 6 year initial mine life at negative AISC based on current reserves and have a pre-tax IRR of greater than 80 percent using current silver, zinc and lead prices.

The project is a brownfield development that will utilize certain existing infrastructure at the Cosalá Operations and is expected to have an initial capital cost of approximately $20 million using current exchange rates. The company targets commercial production in Q3 2017 following stockpiling of development ore starting in Q2 2017. The project is permitted for development, road access has already been completed and portal construction has begun.

Americas Silver currently has the necessary financial resources to fully fund the project, and is using existing cash to commence construction, but is actively evaluating a number of low cost, non-dilutive financing proposals.

“We are very excited to start full construction on our brownfield San Rafael Project,” said Darren Blasutti, president and CEO of Americas Silver.

“Once commercial production is achieved in the third quarter of 2017, it will provide a step change in terms of both reducing cash costs and creating significant free cash flow for the company. We expect that the mine life will extend well beyond the initial estimate of 6 years with resource conversion through underground exploration drilling and the increase to metal prices since the prefeasibility study was published in April,” added Blasutti.

PREFEASIBILITY STUDY

The San Rafael property hosts a zinc-lead-silver deposit and is located approximately 8km north of the company’s Los Braceros process plant. Preliminary evaluation work completed in 2012 considered exploitation of a larger deposit by open pit with a relatively small underground mine component.

A prefeasibility study was initiated on the San Rafael Project by new management in H1-2015 and published on April 30, 2016. The study considers a stand-alone underground operation at San Rafael focused on the main zone with processing at the existing Los Braceros facility to produce separate zinc and lead concentrates. The resources have been estimated by Mine Development Associates of Reno, Nevada. Following a ten-month development period, the existing Los Braceros processing plant will begin producing zinc and lead concentrates. The project is expected to produce approximately 1.0 million ounces of silver, 50 million pounds of zinc and 20 million pounds of lead over the initial 6 year mine life. As a result of the project’s by-product credits, the silver AISC will be negative.

Since the publication of the prefeasibility study the project’s initial capital has been reduced from $22-25 million to $20 million. The prefeasibility study considered San Rafael as a stand-alone project, ignoring contributions from the existing operations. The decrease in capital is a result of current operations in Cosalá offsetting the projects initial working capital until San Rafael start-up and the devaluation of the Mexican peso used in the prefeasibility study.

On-going optimization of the project is expected to enhance the project’s economics by further reducing initial capital expenditures and future operating costs by:

•  maximizing existing mill capacity through changes in operating practices,

•  using existing but reconditioned equipment brought over from Nuestra Señora in place of new equipment purchases, and

•  applying productivity improvements which were not included in the prefeasibility study but have since been demonstrated at the Nuestra Señora mine.

Since publishing of the prefeasibility study in H1-2016, metal prices have increased significantly. Current prices allow the project to extend its mine life by lowering the cut-off grade and converting additional resources.

Improved future access from the San Rafael underground infrastructure will allow more for efficient exploration in the immediate area. The initial focus of this work will be to extend the existing San Rafael resource as well as to delineate and expand the silver-rich zone 120.

About Americas Silver
Americas Silver Corporation is a mining company focused on growth in precious metals from its existing asset base and execution of targeted accretive acquisitions. The company owns and operates the Cosalá Operations in Sinaloa, Mexico and the Galena Mine Complex in Idaho, USA.

To stop by Americas Silver’s website, CLICK HERE

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