Bear Creek releases Corani feasibility study

Vancouver – A feasibility study on Bear Creek Mining‘s (BCM-V) flagship Corani project in southern Peru has added slightly to silver reserves while capital costs have increased 70%.

The project now hosts an estimated 156 million proven and probable reserve tonnes grading 53.8 grams silver per tonne, 0.9% lead and 0.49% zinc for 270 million oz. silver, 3.1 billion lbs. lead and 1.7 billion lbs. zinc.

Silver reserve ounces increased by only 5% compared with the 2009 pre-feasibility study, while measured and indicated resources increased 24% and inferred resources by 35%, due largely to higher metal prices. Measured and indicated resources outside of reserves now stand at 123.6 million tonnes grading 20.5 grams silver, 0.38% lead and 0.29% zinc for  and inferred resources stand at 49.8 million tonnes grading 30 grams silver, 0.46% lead, and 0.28% zinc.

The feasibility study establishes the potential to produce an average of 8 million oz. silver, 104 million lbs. lead and 37 million lbs. zinc per year for 20 years, with silver production significantly higher in the early years. The open pit mine will have a 1.69 to 1 strip ratio and capacity to process roughly 22,500 tonnes of ore per day.

The study estimated recoveries of roughly 60.3% silver and 71.1% lead in a silver-lead concentrate and 3.9% silver and 51.6% zinc in a silver-zinc concentrate, all using conventional flotation. Recoveries in the zinc-silver concentrate were significantly lower than in the pre-feasibility study, with zinc dropping 19% and silver by 8%, factoring in lower grade zinc zones. The company stated that with 50% of payable silver in the zinc concentrate, the lower recoveries mean a 4% drop in payable silver compared with the earlier study.

To build the mine, Bear Creek will have to spend about US$574 million, while sustaining capital is estimated at US$144 million for the life of mine. Capital payback is estimated at a little under four years. Silver cash costs per oz. come in at US$3.68 per lb. for the life of mine, net of lead and zinc byproduct credits. The 2009 pre-feasiblity study outlined capital costs of US$339 million and life-of-mine cash costs at US$2.81 per oz. silver.

Based on US$18 per oz. silver and 85¢ per lb. lead and zinc, the base case scenario establishes an internal rate of return of 17.6% and a net present value, based on a 5% discount, of US$463 million. The company notes that at current metal prices the IRR jumps to 37.7% and the NPV to US$1.5 billion.

Bear Creek plans to submit permitting applications in the first half of next year as it targets 2015 for mine start-up.

The company’s stock price had rallied from under $4 to over $5 in part on anticipation of the study. On the day the study was released after market close, Bear Creek’s share price dropped 25¢ or 4.9% to $4.84 on a tough day for markets. The company has a 52-week share price range between $3.45 and $12.

The company continues negotiations with the Peruvian government about restoring its right to develop the Santa Ana project, which the government revoked in June.