Positive prefeasibility for Silvercorp

AMC Mining Consultants has given the thumbs-up to Silvercorp Metals’ (SVM-T, SVM-N) Gaocheng silver-lead-zinc project in southern China in a prefeasibility study that outlines a $73.7 million net present value at an 8% discount rate, a 33% internal rate of return and a 2.4-year payback.

The study also establishes the project’s proven and probable reserves for the first time, at 4.8 million tonnes grading 121 grams silver per tonne, 1.31% lead and 2.95% zinc, for a total of 18.5 million contained oz. silver, 62,100 tonnes of lead and 140,200 tonnes of zinc supporting a mine life of 12 years.

Measured and indicated resources total 7.63 million tonnes grading 122 grams silver, 1.32% lead and 3.08% zinc. Inferred resources add 7.96 million tonnes grading 123 grams silver, 1.41% lead and 2.66% zinc. 

Construction of the mine and mill is already underway and Silvercorp expects initial production this third quarter, with full 1,500-tonne- per-day capacity expected in 2013.  

The processing plant is designed for a 1,600 tonne-per-day floatation mill process consisting of a standard sequential floatation of lead, zinc and pyrite, with three-stage lead and zinc concentrate cleaning and single-stage cleaning for pyrite. 

An optional gravity recovery circuit may be added to the main circuit to recover tin from the tailings. 

Concentrates are to be dewatered by conventional thickening and filtration. The final products would be lead, zinc and pyrite concentrates, with a possible tin concentrate. Payable silver would be in the lead concentrate. 

Initial capital costs are pegged at $67.4 million with total operating costs of $40.60 per tonne milled.

Silvercorp picked up Gaocheng in 2008. It is about 200 km west of Guangzhou City.

Silvercorp has received all of the permits it needs for construction, including environmental and mining permits. 

Production can start once the company receives the following permits: a review of the health and safety production measures by the Guangdong Provincial Safety Production Bureau (GPSPB); a post-construction safety measure inspection by GPSPB to ensure that the mine, mill and tailing facilities suit the mine design’s safety measures; and an inspection by the Guangdong Environmental Bureau of the tailing facility, mill and other engineering works. 

News of the prefeasibility study sent Silvercorp’s shares up 7¢ to close at $8.26, within a 52-week trading range of $5.81–$15.60. The company has 171 million shares outstanding. At presstime, though, Silvercorp traded at $7.01.