SilverCrest Metals (TSX: SIL; NYSE: SILV) has discovered a new high-grade zone at its wholly owned Las Chispas project in Mexico’s Sonora state, 180 km northeast of Hermosillo.
Named El Muerto, the new zone is the company’s fourth discovery since the first quarter of 2019. Highlights include drill hole EM20-37, which intersected 2 metres grading 12.68 grams gold per tonne and 1,723.8 grams silver per tonne (2,675 grams silver equivalent per tonne) starting from 272 metres downhole. Hole EM20-35 returned 1 metre grading 9.46 grams gold and 720 grams silver (1,430 grams silver-equivalent) from 310 metres.
“The recent discovery of the El Muerto Zone continues to show that Las Chispas has significant additional potential as we focus on expansion and new discoveries of high-grade mineralization in the district,” Eric Fier, the company’s chief executive, said in a statement.
El Muerto lies in the northwest part of the Babicanora area, 100 metres to 200 metres below the Babicanora vein. It represents SilverCrest’s first successful attempt at intercepting high-grade precious metals deeper in the zone, the company said.
SilverCrest has five drills turning at Las Chispas: two at El Muerto, two at the Babi Vista vein, and one at the Amethyst vein. The company plans to add 6-8 drill rigs in the next year.
The El Muerto drill program consists of 45 holes totalling 11,350 metres with a goal of expanding high-grade mineralization in known veins and testing targets.
The project contains indicated resources of 1 million tonnes grading 6.98 grams gold and 710.6 grams silver (1,234 grams silver-equivalent) for 224,900 contained oz. gold and 22.89 million oz. silver (39.77 million oz. silver-equivalent). Inferred resources add 3.6 million tonnes grading 3.32 grams gold and 332.5 grams silver (581 grams silver-equivalent) for 388,300 oz. gold and 38.91 million oz. silver (68.07 million oz. silver-equivalent).
A preliminary economic assessment (PEA) in 2019 envisions an underground mine producing 55,700 oz. gold and 5.38 million oz. silver (9.6 million oz. silver-equivalent) per year over a mine life of 8.5 years. All-in sustaining costs are forecast to run to US$7.52 per oz. silver-equivalent over the entire mine life and US$4.89 per oz. of silver-equivalent during the first four years.
The PEA estimates an initial capex of $100.5 million and a payback period of nine months using a silver price of US$16.68 per oz. and a gold price of US$1,296 per ounce. The early-stage study projects an after-tax net present value of $406.9 million at a 5% discount rate, and an internal rate of return of 78 percent.
The company plans to update the project’s resource estimate by January 2021. The new resource will include the El Muerto, Area 200, Area 118, and Babi Vista zones.
At press time in Toronto, SilverCrest was trading at $14.11 per share within a 52-week trading range of $4.50 and $14.88.
The company has around 129 million common shares outstanding for a $1.8-billion market capitalization.
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