Aya completes design for processing plant at Zgounder

Aya Gold & Silver (TSX: AYA; US-OTC: AYASF) has reached the first milestone in its proposed expansion of the Zgounder silver mine operations in Morocco: the completion of front-end engineering design (FEED), including flowsheet modifications, of a new 2,000 tonne-per-day flotation-CIP processing plant.

The FEED phase saw the company check off many important items previously recommended by the Zgounder expansion feasibility study, including completion of additional metallurgical test work and simplification of the processing plant flowsheet for better water management and recycling.

According to Benoit La Salle, Aya’s president and CEO, “Our updated, simplified flowsheet keeps capex and opex costs in line with the feasibility study and improves operability.”

To date, the company has received quotations for 21 mechanical equipment packages, including all key long-lead items, from a pre-approved list of vendors. Earthworks for the new process plant and the new haulage road have been awarded to a Moroccan contractor. Mobilization to site is planned for the second half of July 2022.

Aya is currently in discussions with two engineering and project delivery companies for construction of the processing plant, and expects to receive offers from both before month-end. Selection of the contractor is anticipated in the coming months.

An aerial view of the Zgounder silver mine in Morocco. Credit: Aya Gold and Silver

A local Moroccan civil engineering firm has been also been contracted for the detailed design of a new tailings storage facility. The first 60,000 m³ water storage basin has already been completed.

Located in the central Anti-Atlas mountains, approximately 260 km east of the city of Agadir in Taroudant province, the Zgounder mine has been in commercial production since 2019. Aya currently holds an 85% interest in the underground mine, considered the second most important silver mine in Morocco, with a state-owned enterprise holding the remaining 15%.

The feasibility study was delivered in February 2022. The proposed expansion would expand the mill’s nameplate capacity to 2,700 tonnes per day from 700 tonnes per day and will quadruple its silver production to 6.8 million oz. Completion of the expansion is expected in 2024.

Silver production at Zgounder is expected to reach 1.65 million to 1.80 million oz. of silver metal this year, supported by a current mineral reserve base of 8.59 million tonnes at 257 grams silver per tonne for 70.88 million oz. of contained silver.

Ryan Thompson of BMO Capital Markets has an outperform rating on the company.

“We believe 100% of revenue derived from silver makes Aya unique,” he wrote in a research note. “In our extensive silver producer coverage universe, Aya is the only pure play producer. With a dearth of primary silver assets in the marketplace, we think Aya has a scarcity value for investors looking to maximize leverage to silver.”

Thompson also pointed to the company’s management track record.

“Although Zgounder is an operation which has been mined off and on for centuries, it flew under the radar until Benoit La Salle took over as CEO in 2020,” he wrote. “Since new management took over, an operational turnaround unfolded. Production stabilized and there was a renewed focus on exploration that resulted in resources growing by 116% at the end of 2021 following a 240% increase in 2020. Mr. La Salle is more broadly known as the founder of Semafo, which he established in 1995 and led as CEO until 2012.”