Relief Canyon, added to Americas Silver's portfolio when it acquired Pershing earlier this year, is forecast to produce more than 90,000oz a year for 5.5 years at AISC of about US$800/oz, making what CEO Darren Blasutti has been indicating will be a material difference to the company's cash flow and market standing. "The high-return Relief Canyon project is … expected to catalyse a rerating of the share price and increase the liquidity of the company's shares as a larger, precious metal-focused company with operations focused in North America" he has said.
Americas Silver said this week construction of the Relief Canyon leach pad was 80% done and progressing as expected, the mining contractor was due to mobilise early in August, and all crusher and conveyor fabrication work was on track to meet scheduled delivery in the third quarter. Upgrading of an existing processing plant was underway.
Ore placement is scheduled to run at more than six million tons a year.
Previous mining at Relief Canyon meant Pershing, and now Americas Silver, inherited significant infrastructure that probably carved 50-70% off the pre-production capex for a comparable, new operation. The mine is near Lovelock and about 100 miles north-east of Reno.
Sandstorm Gold will receive about 32,000oz of Relief Canyon gold over 5.5 years under its US$42.5 million mine financing deal.
Americas Silver produced 345,695oz of silver and about 1.7 million ounces silver-equivalent (including zinc and lead) in the 2019 June quarter, up 15% year‐on‐year but with AISC up 200% yoy and compared with the first quarter this year due to "lower realized prices for zinc and lead and lower production at the Galena Complex [in Idaho]".
Silver output in the first half of 2019 was 740,000oz/3.4Moz silver-equivalent at AISC of $10.50/oz and Americas Silver has maintained full-year guidance at 1.6-2Moz/6.6-7Moz silver-equivalent at $10-12/oz AISC. The company's second quarter financials are due out by August 14.
"The company remains on target to achieve its full year production and cost guidance despite the expected lower production from the Galena Complex and lower realized metal prices in the quarter," Blasutti said.
"The second half of 2019 will be a very exciting period for our company as we expect not only higher silver production, but most importantly, first gold pour from the Relief Canyon mine."
Americas Silver's (TSX: USA) share price is up by more than two-thirds since the start of this year, capitalising the company at more than C$300 million.