Cerro de Pasco Resources acquiring Trevali’s Santander Mine
Cerro de Pasco Resources Inc. [CDPR-CSE; GPPRF-OTC; N8HP-FSE] has entered into a share purchase agreement to acquire Trevali Mining Corp.‘s TV-TSX: TREVF-OTCQX; 4T1-FSE] Santander Mine about 215 km northeast of Lima, Peru. The mine comprises an underground mine, a 2,000-tonne-per-day processing mill, a conventional sulphide flotation mill and associated infrastructure.
The Santander Mine consists of the currently operational and fully permitted polymetallic Magistral underground mine, a concentrator plant and tailings facilities within a very prospective mining and exploration concession covering 44 km2.
Trevali Guidance for 2021 Santander operations indicates the mine will produce approximately 50-55 Mlb of payable zinc, 4 Mlbs of payable lead and 282-297 koz of payable silver per year at an All-in Sustaining Costs of US1.08-1.14 per payable pound of zinc produced.
Transaction Rationale
A profitable mine with potential to grow operating cash flow and significant exploration upside; steady state, fully permitted operation with stable workforce and good community relations; a modern 2,000 tpd concentrator which could be used ultimately for treating material from CDPR’s El Metalurgista concession, located 60 km from the Santander Mine; significant tailings which can be retreated at the end of the life of mine.
CDPR plans to develop the Santander Pipe orebody by linking the existing underground mine, increasing payable zinc equivalent metal and reducing All-in Sustaining Costs after two years. Closing date working capital will remain positive and intact at USD7.5million.
Guy Goulet, CEO of CDPR commented: “The acquisition of this profitable mine will be transformational for CDPR with material potential to grow operating cashflow and significant exploration upside. Furthermore, the proximity to CDPR’s El Metalurgista concession provides the company potential to utilize Santander infrastructure for future development.”
The company plans to extend the operating life of the Magistral orebody, while developing access into the higher-grade Santander Pipe orebody over the next 24-36 months, which would extend the life of the mine by five years. Additionally, CDPR plans to increase exploration expenditure on the property.
Mineral Resource Estimates filed by Trevali for the Santander Mine effective December 31, 2020 are Measured and Indicated Resources totalling 2.71 Mt of 4.66% zinc, 0.49% lead and 26.42 g/t silver, for 278 Mlbs zinc, 29 Mlbs lead and 2,301 Koz silver. Inferred Resources are 1.16 Mt of 4.01% zinc, 0.21% lead and 21.69 g/t silver, for 103 Mlbs zinc, 5 Mlbs lead and 809 Koz silver.
The Santander Pipe Project hosts Measured and Indicated Resources of 3.48 Mt of 6.59% zinc, 0.02% lead and 12.41 g/t silver, for 506 Mlbs zinc, 2 Mlbs lead and 1,102 Koz silver. Inferred Resources are 0.93 Mt of 5.15% zinc, 0.01 % lead and 7.54 g/t silver, for 506 Mlbs zinc, 2 Mlbs lead and 1,388 Koz silver.
Transaction highlights are CDN$1 million cash to be paid at closing, 10 million shares of CDP; a Net Smelter Royalty equal to 1% on all new deposits beyond those resources currently defined at the Magistral and Santander Pipe deposits; and a contingent payment of up to US$2.5 million in the event that the LME average zinc price for 2022 is equal to or greater than US$1.30/lb. The transaction is subject to closing conditions and is expected to close in Q4 2021.