Silver Mines Moves Ahead at Bowdens with Feasibility Study

- June 15th, 2018

According to Silver Mines, Bowdens is Australia’s highest-grade undeveloped silver project. The next step forward will be an environmental impact statement.

Silver Mines (ASX:SVL) continues to make progress on its Bowdens silver project in New South Wales, with the newest milestone being the release of a feasibility study.

According to the study, the open-cut mine will have an initial life of 16 years, with average production expected at 3.4 million ounces of silver per year. This is in combination with the mine’s predicted output of 6,900 tonnes of zinc and 5,100 tonnes of lead per year.

During its first three years of operation, Bowdens will produce closer to 5.4 million ounces of silver, along with 6,000 tonnes of zinc and 5,200 tonnes of lead, due to higher silver grades in early mining stages.

 

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The project, which is wholly owned by the company, has a measured, indicated and inferred resource of 128 million tonnes at 40 g/t silver, 0.38 percent zinc and 0.26 percent lead using a cut off of 30 g/t silver equivalent; that comes out to 275 million silver equivalent ounces.

Meanwhile, a recent maiden proven and probable ore reserves release indicates reserves of 29.9 million tonnes at 69 g/t silver, 0.44 percent zinc and 0.32 percent lead.

Initial capital costs, which include mine development, a processing plant, a tailings storage facility and power supply, are estimated at AU$246 million. On the operational side, the company predicts that life-of-mine C1 costs will be AU$15.47 per ounce, with all-in sustaining costs of AU$17.25 per ounce.

Bowdens’ post-tax NPV is pegged at AU$70.58 million while its post-tax IRR stands at 17.9 percent, both at a 5-percent discount.

“The study provides solid backing for our submission of a Development Application to the New South Wales Government. With the project clearly defined, we are moving to rapidly complete the Environmental Impact Statement,” said Anthony McClure, Silver Mines’ managing director.

Silver prices used for financial modeling were US$21.50 per ounce in 2020, US$22 per ounce in 2021 and US$22.50 per ounce in 2022. Zinc and lead prices were estimated at US$1.25 per pound and US$ per pound, respectively.

According to McClure, Bowdens is “highly leveraged to an accretive commodity price environment,” meaning if prices for the metals being mined increase more than expected the mine will benefit.

For example, he said, “a 20% increase in the silver price and minor metals leads almost a 240% increase in the project’s Net Present Value.”

Silver Mines’ share price was sitting at AU$0.047 at close of day on Friday (June 15).

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

 

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