Int’l Minerals to have 4 gold-silver projects at feasibility stage in 2012

International Minerals (IMZ-T) has completed a positive feasibility study for its 40% owned Inmaculada underground gold-silver project in southern Peru, where it anticipates annual gold and silver production totalling 194,000 oz. gold-equivalent starting in December 2013.

The study comes close on the heels of a positive preliminary economic assessment (PEA) for the company’s 100% owned Converse gold project in northern Nevada, released on Dec. 19, 2011. That study outlined a 160,000-oz.-per-year open-pit gold mine with an expected life of 14 years, with a full feasibility study for Converse anticipated to commence later this year.

A third feasibility study for International Minerals’ 100% owned Goldfield gold project in southern Nevada is expected to be released by mid-2012. A PEA for Goldfield completed in 2007 by the project’s previous owner, Metallic Ventures (which International Minerals acquired in 2010), outlined a 50,000-oz.-per-year open-pit gold operation.

Lastly, the company’s former flagship gold-silver project, Rio Blanco, in Ecuador, is also at the feasibility stage. International Minerals first completed the study in 2006, and updated it in 2009, but is still awaiting crucial permits and agreements with the government following the suspension of all mining permits in the country in 2008. Although it is one of only three mining companies currently negotiating production contracts with the Ecuador’s socialist government, deadlines have been repeatedly pushed back with no clear end in sight.

International Minerals’ latest feasibility study for Inmaculada outlines a 3,500-tonne-per-day underground operation mining ore from estimated proven and probable mineral reserves of 7.8 million tonnes averaging 3.4 grams gold per tonne and 120 grams silver per tonne. The company and 60% joint venture partner/operator Hochschild Mining (HOC-L) expect to pour 124,000 oz. gold and 4.2 million oz. silver from the mine each year over an initial seven-year mine life. Roughly 49,600 oz. gold and 1.68 million oz. silver each year would be attributable to International Minerals.

The feasibility study calculates a pretax net present value for the project of $181 million using a 5% discount rate, $1,100 per oz. gold and $18 per oz. silver. Initial capital costs total $315 million, with Hochschild required to contribute the first $100 million toward feasibility study costs and project development (it has spent $11.5 million so far). Subsequent costs will be funded 60% by Hochschild and 40% by International Minerals.

The two companies partnered up to fast-track Inmaculada in late 2010 following a similar and successful joint venture at the Pallancata silver mine 25 km to the north. International Minerals has a 40% stake in the mine, which began production in 2007 and is now the world’s fifth largest primary silver mine. International Minerals earned $14.9 million from its stake last quarter, and has received nearly $100 million since production began.

The company also holds a profitable royalty on Barrick Gold‘s (ABX-T, ABX-N) Ruby Hill gold mine in Nevada, providing $1.2 million in royalty revenues last quarter.

The interests have helped strengthen International Minerals’ balance sheet to its strongest ever position, with cash and cash equivalents increasing to a record $97.9 million as of Sept. 30 2011.

According to data compiled by the Financial Times, five analysts currently cover the company with three saying hold, one rating it outperform and another recommending it as a buy. Adam Graf, an analyst at investment bank Dahlman Rose, has the buy rating with a $10.22 price target for the stock. He raised it from $8.26 in mid-December after the positive PEA at Converse as well as the rising gold price.

Shares of International Minerals have, however, dropped significantly over the past six to nine months, alongside those of many other mining companies. They last traded for $5.72 at presstime on Jan. 11, 2012, down from an all-time high of $8.22 in April 2011. Following the release of the Inmaculada feasibility study on Jan. 11, shares of the company slipped 5¢ at presstime.