Andrew Pollard, President and CEO of Blackrock Silver (TSX.V:BRC – OTCQX:BKRRF), joins us to unpack the positive Preliminary Economic Assessment (PEA) at its 100% controlled Tonopah West Project, located along the Walker Lane trend, in one of the largest historic silver districts in North America, located on private land in Nye and Esmeralda counties, Nevada; approximately 1 kilometer (km) northwest of Tonopah.
- At the base case gold price of $1,900 per ounce and silver price of $23 per ounce, the Project commands an after-tax net present value (“NPV”) discounted at 5% of $326-million on a low initial capex of $178-million (including $22-million contingency) with a payback of 2.3 years and an after-tax internal rate of return (“IRR”) of 39.2%
- At a gold price of $2,280 per ounce and a silver price of $27.60 per ounce (base case +20%), the economic profile of the Project escalates to an after-tax NPV 5% of $495-million and an after-tax IRR of 54.0%.
- All-in Sustaining Costs (“AISC”) of $11.96 per silver equivalent ounce basis.
- Over the approximately 8-year life of mine (“LOM”), production from the mining and processing of approximately 4.1 million diluted tonnes of material containing 75.4 million silver equivalent (“AgEq”) ounces (silver/gold ratio of 90/1) which equates to 66.8 payable AgEq ounces.
- Recoveries of 96.1% for gold and 88.9% for silver from a 3-stage crushing circuit and processing plant.
We discuss that the updated resource estimate at Tonopah West contains a total of 570,000 ounces of gold and 48.5 million ounces of silver, for a total of 100.04Mozs of silver equivalent. However, some of those resources, including the near 12million ounces of AgEq from the Northwest Step Out deposit, were excluded in this PEA. The Company is working on de-risking an initial 3 years of production and bridging a 1km mineralized strike potential to the NW step-out zone that could bring additional ounces on and into the mine development plan in future economic studies. 3 drills are at site currently engaged in an ongoing 20,000 meter resource expansion and conversion program aimed at further growing the project.
We also review the various project derisking that their team is doing in the background like metallurgical testing and process flowsheet, hydrology studies, environmental studies, permitting, site infrastructure and the potential placement of a decline and processing mill, all in tandem with the exploration strategy. The Company just raised $10Million in May, bringing in a larger stake from Eric Sprott, and so it is cashed up to do this large drill program and future derisking work.
If you have any follow up questions for Andrew regarding Blackrock Silver, then please email us at Fleck@kereport.com or Shad@kereport.com.
- For full disclosure, Shad is shareholder of Blackrock Silver at the time of this recording.
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