AbraSilver adds one-third more metal at Diablillos

AbraSilver Resource (TSXV: ABRA; US-OTC: ABBRF) has boosted measured and indicated resources at its Diablillos project in Argentina by 34% for silver ounces and 14% for gold, according to an update.

The revised estimate includes 104 million measured and indicated tonnes grading 59.5 grams silver and 0.51 gram gold per tonne for 199 million oz. contained silver and 1.72 million oz. gold, the company said Tuesday. That compares to 76.2 million tonnes grading 60.5 grams silver and 0.62 gram gold for 148 million oz. silver and 1.51 million oz. gold in the November 2023 estimate.

The gains came from substantial expansions at the JAC and Oculto deposits, including the addition of a new 31-million-tonne heap-leach resource containing 13 million oz. silver and 162,000 oz. gold, AbraSilver said. Tonnage at JAC grew by nearly 150% while Oculto rose 23%, the company said.

‘Only precious metals’

“The resource is entirely oxide and contains only precious metals, with no base metals,” Raymond James mining analyst Craig Stanley said in a note. “The additional ounces [at Oculto] could extend the mine life but an increase to the proposed throughput rate of 9,000 tonnes per day would require additional water rights.”

In addition to its positive economics, Diablillos stands to benefit from political changes in Argentina that could give it tax, customs and currency exchange incentives, Stanley said, citing the RIGI (Régimen de Incentivo para Grandes Inversiones) program. AbraSilver would have to apply by next July and spend 40% of the investment amount ($191 million) within two years of approval. If that goes well, Stanley said he models production starting in the third quarter of 2029.

Two projects have been approved by RIGI so far: Galan Lithium’s (ASX: GLN) Hombre Muerto West and Rio Tinto’s (ASX, LSE: RIO) Rincon lithium.

Located in Argentina’s northwest Salta province, Diablillos is one of the more advanced undeveloped silver-gold projects in South America, with road access, nearby power infrastructure and more than 130,000 metres of prior drilling. AbraSilver expects to update the resource again before completing a definitive feasibility study by early next year and assess both conventional milling and heap-leach options.

Stock gains

AbraSilver shares fell 1.9% to C$5.46 apiece on Wednesday morning in Toronto for a market capitalization of C$832.9 million. The stock has traded in a 52-week range of C$2.04 to C$6.15.

Shares have more than doubled this year after reporting several strong assays and an updated pre-feasibility study in December that boosted the project’s value by half.

The update “demonstrates both the large-scale and high-quality of Diablillos,” Chief Geologist David O’Connor said in the release. “The JAC zone, in particular, has been a major driver of mineral resource growth and is expected to be a key focus of early mining stages with its high-grade and near-surface location.”

The $544-million (C$750-million) capital cost project has a net present value of $747 million at a 5% discount rate and internal rate of return of almost 14% using a gold price of $2,050 per oz. and $25.50 per oz. silver, according to the PFS.

14-year life

Diablillos, about 160 km southwest of the city of Salta, would produce 7.6 million oz. silver and 72,000 oz. of gold annually (13.4 million silver-equivalent oz.) over a 14-year mine life at all-in sustaining costs of $12.67 per silver-equivalent ounce. It’s envisioned as a conventional open pit operation with mill throughput of 9,000 tonnes per day.

Analysts and the company view Diablillos as a low-cost, scalable asset with district-scale exploration potential. AbraSilver plans to expand the resource with more discoveries across multiple targets. It’s continuing a fifth-stage drill program targeting extensions at JAC.

“This substantial increase highlights the exceptional mineral endowment of our project and our team’s continued success in unlocking value through exploration,” AbraSilver CEO John Miniotis said in the release.