Silver Mining in Chile

Chile is well known for its prolific copper production, accounting for nearly a third of the world’s total output. However, the nation’s highly productive Andean geology doesn’t just hosts world-class copper deposits — it is home to abundant precious metals resources as well.
In fact, the Chilean silver rush of the mid-19th century did much to drive demographic, infrastructural and economic growth in the South American nation, firmly establishing mining as an essential pillar of its economy.
Today, silver mining in Chile is an exciting prospect, and the nation is among the world’s top silver-producing countries, with 50.6 million ounces in silver output for 2014. It remains one of the region’s fastest-growing economies, and the “2014-2015 Global Competitiveness Report” by the World Economic Forum ranks it 33rd in the world, topping all Latin American countries.
As is the case for much of the world, in Chile silver is a by-product of copper and gold production. In 2014, Chile’s state-owned Codelco, the world’s top copper producer, rose eight spots to make it one of the world’s top silver-producing companies, with silver output of 19.9 million ounces for the year. A third of that production comes from the company’s Ministro Hales mine located on the outskirts of Calama in Northern Chile.

Silver mining in Chile: An overview

Kinross Gold (TSX:K,NYSE:KGC) holds the La Coipa gold-silver mine in the Atacama region of Northern Chile. La Coipa contains a 2014 measured and indicated resource of 876,000 ounces of gold and 23.5 million ounces of silver. The mine was put on care and maintenance in 2013 due to higher costs.
In the third quarter of 2015, Kinross completed a prefeasibility study to review the potential for restarting operations at La Coipa using the existing infrastructure. At a gold price of $1,200 per ounce and a silver price of $17 per ounce, the estimated internal rate of return (IRR) is 20 percent with a net present value (NPV) of $120 million. The company is now moving to complete additional studies and proceed with the permitting process.

Revelo Resources (TSXV:RVL) has a joint venture agreement with Kinross on the Las Pampas epithermal gold-silver project in Northern Chile. The project is in the early exploration stage, and Kinross has the option to earn up to a 75-percent interest by making $25 million worth of exploration expenditures over nine years. To date, Kinross has completed detailed geological mapping over key parts of the property, as well as geochemical sampling of more than 5,000 samples and detailed ground magnetics surveying. Revelo also holds three other early exploration-stage gold-silver properties in Northern Chile that are available for joint ventures.

Gold Fields (NYSE:GFI) is actively exploring its Salares Norte gold-silver project located in the Maricunga belt of the Atacama region of Northern Chile. The project has an inferred mineral resource of 3.1 million ounces of gold and 33.6 million ounces of silver. The company recently completed a $24-million exploration campaign at Salares Norte. The results will form the basis of an updated resource estimate due out in early 2016.

In the same mineral belt as Gold Fields’ Salares Norte, Mirasol Resources’ (TSX-V:MRZ) partner Yamana Gold (TSX:YRI,NYSE:AUY) is undertaking a Phase 1 drill campaign at the Atlas gold-silver project — one of the nine properties within the Gorbea Belt joint venture. The 4,000-meter program is focused on seven priority targets in addition to expanding the existing IP geophysical survey by up to 30 line-kilometers. Trenching has outlined a section grading 39.9 g/t silver over 55.9 meters, and individual samples of up to 542 g/t silver over 0.2 meters. Results of the program will be released in the coming months. A drill program for the adjacent Titan project is currently being finalized and is expected to be completed before May of 2016.

Los Andes Copper’s (TSXV:LA) Vizcachitas porphyry copper-molybdenum project is 150 kilometers northeast of Santiago. Vizcachitas is the largest undeveloped copper project in South America not owned by a major mining company. A 2014 preliminary economic assessment (PEA) on the project demonstrates robust economics, including a pre-tax NPV of US$1,581 million (at an 8-percent discount rate and a copper price of $3 per pound) and a pre-tax IRR of 14.7 percent.
The PEA also points to the presence of silver in metallurgical samples; however, the core used in determining the current resource estimate was never assayed for silver. Drilling is underway to expand and upgrade the resource estimate, as well as to assess the silver content of the deposit for inclusion in an upcoming updated resource estimate. An optimized PEA is due out in early 2016, and it will evaluate the potential for economic silver by-product from Vizcachitas. Los Andes Copper expects to begin work on a prefeasibility study on the project during the third quarter of 2016.

Mandalay Resources (TSX:MND) has an extensive precious metals land package in Chile that covers exploration through production properties. The company’s Cerro Bay silver-gold mine is a 1,400-tonne-per-day operation with recently reported third-quarter 2015 production of 632,498 silver ounces and 5,305 gold ounces.
Mandalay is also developing its wholly owned Challacollo silver-gold project in the Tarapaca region of Chile. An updated resource estimate was completed in March 2015, including an indicated resource totaling 30.2 million ounces of silver and an inferred resource totaling 6.9 million ounces of silver. Metallurgical studies show recoveries of 93 percent silver and 70 percent gold. A feasibility study is currently underway at Challacollo, with permitting expected to begin in 2017.

Kingsgate Consolidated’s (ASX:KCN) wholly owned Nueva Esperanza gold-silver project is located in the Maricunga region of Chile and consists of three well-defined deposits. The property also hosts several undeveloped exploration targets. Following a successful 2014/2015 exploration season, the company recently updated the resource estimate at Nueva Esperanza; it includes measured and indicated resources of 72.6 million ounces of silver.

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.