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Discovery Silver says PEA points to Cordero's Tier 1 potential

Discovery Silver has outlined “excellent” economics for its flagship Cordero project in Mexico which it believes could become one of the world’s largest silver mines.
Discovery Silver says PEA points to Cordero's Tier 1 potential Discovery Silver says PEA points to Cordero's Tier 1 potential Discovery Silver says PEA points to Cordero's Tier 1 potential Discovery Silver says PEA points to Cordero's Tier 1 potential Discovery Silver says PEA points to Cordero's Tier 1 potential

Discovery Silver’s Cordero project in Mexico

Staff reporter

Its preliminary economic assessment was based on Cordero's plus-1 billion ounce global silver-equivalent resource, updated in October, of which 910Moz is measured and indicated. 

The PEA put initial capex at US$368 million, for a 16-year mine producing an average annual 26 million ounces silver-equivalent, at an all-in sustaining cost of $12.35/oz Ag-eq.

It was expected to ramp up to 33Moz annually in years 5-12, positioning Cordero as one of the largest silver mines globally, the company said.

It would only lag Coeur Mining, Hecla Mining and First Majestic Silver's silver-equivalent output, according to a presentation this month.

The PEA pointed to a base case after-tax NPV5 of US$1.2 billion and IRR of 38%.

Payback was two years, using base case prices of $22 an ounce silver, $1,600/oz gold, $1 per pound lead and $1.20/lb zinc.

The well-funded company said there was "exceptional silver price leverage", citing the upside case which used a $27.50/oz silver price that helped lift the IRR to 55%.

"With annual silver-equivalent production averaging more than 26Moz over a +15-year mine life, we believe this PEA clearly positions Cordero as a Tier 1 silver asset," president and CEO Taj Singh said.

"Importantly, the outstanding metrics demonstrated in the PEA are supported by a mine plan with more than 99% of tonnes in the measured and indicated category, and a simple and conventional process design based on our detailed metallurgical testwork programme completed earlier this year.

"This provides us with a huge head start as we look ahead to the delivery of a prefeasibility study on Cordero in 2022."

The company, which changed name from Discovery Metals in April, reported having a cash position of C$73.1 million last week.

It had received about $31 million from warrants exercised at $1 in February, which took its cash balance at the time to $98 million.

Its shares (TSXV: DSV) are trading near the middle of a one-year range, closing up 4.4% yesterday to $1.89 to value it at $625 million (US$491 million).