Sierra metals announces results of expansion PEA for Mexican mine

Sierra Metals (TSX:SMT; BVL:SMT; NYSE American:SMTS) has announced the results of the preliminary economic assessment (PEA) for expansion of its Cusi underground silver-lead mine in Mexico’s Chihuahua state.

At 1,200 tonnes per day, Cusi is Sierra’s smallest operation. The PEA studies a doubling of capacity to 2,400 t/d. The incremental expansion carries a net after-tax cash flow of US$132 million. The estimated after-tax net present value at 8% is US$28.1 million, and an internal rate of return of 46.8%. Total operating unit cost will be US$8.83 per ounce silver equivalent.

Based on the existing resources – 31.3 million oz. silver equivalent in measured and indicated plus 23 million oz. in inferred – the expanded mine will have a 12-year life. Grades at anticipated to be 127.2 grams silver per tonne, 0.34% lead, 0.48% zinc, and 0.12 grams gold per tonne.

To reach the 2,400 tonnes per day rate, Sierra plans to “massify” its bench and fill mining method. The processing capacity of the Mal Paso plant, 50 km from the mine, will also increase to match the mining rate. The mineral processing plant uses conventional crushing-milling-flotation to produce commercial lead-zinc and zinc concentrates.

The Sierra stock price on the TSX was $4.06 per share at time of writing, down 7 cents from earlier in the day,