Pan American Silver Corp.Â [PAAS-TSX, NASDAQ] on Wednesday December 11 announced an initial mineral resource estimate for a large polymetallic deposit discovered in 2018 at the company’s La Colorada Mine in Zacatecas, Mexico.
Pan American said the La Colorada Skarn Deposit contains an inferred mineral resource of 72.5 million tonnes, averaging 44 g/t silver, 0.17% copper, 2.02% lead, and 4.40% zinc. The estimate assumes a cut-off value of US$60 per tonne after accounting for transportation, smelting, and refining costs.
It said the deposit remains open in nearly all directions for resource expansions.
Pan American shares advanced on the news, rising 2.2% or 58 cents to $26.75. The shares are currently trading in a 52-week range of $13.83 and $27.56.
“The initial inferred mineral resource estimate containing 102 million ounces of silver and a large volume of base metals indicates the significance of this new discovery,” said Christopher Emerson, Pan American’s Vice-President Business Development and Geology.
“In just over a year since we first announced the discovery, we have completed 54,000 metres of drilling into the deposit and developed the geological model for this initial resource estimate,” he said. “An aggressive drilling program is planned for 2020 to further explore the deposit’s potential.”
The majority of the mineralization is contained within a larger polymetallic mineralized skarn covering an area measuring 500 by 600 metres. The deposit, as currently defined, is located between 600 to 1,700 metres below surface and east of the current La Colorada Mine workings.
In 2020, Pan American plans to invest US$10 million to drill 44,000 metres, focusing on infill and exploration drilling to further define, expand and add confidence in the mineral resource.
Pan American recently acquired Tahoe Resources in a US$1 billion transaction that created the world’s second largest primary silver producer. The company owns and operates mines in Mexico, Peru, Canada, Argentina and Bolivia. It also owns the Escobal Mine in Guatemala, which is not operating right now.
Strong free cash flow in the third quarter of 2019 allowed Pan American to repay US$20 million on its credit facility and advance the skarn discovery at the La Colorada Mine, which ranks as Pan American’s largest silver producing mine. There are three separate active mining areas on the property, including the Candelaria, Estrella, and Recompensa.
La Colorada generated just over 2.0 million ounces of silver and 12,000 ounces of gold in the third quarter.
Company-wide third quarter silver production of 6.7 million ounces and gold production of 150,200 ounces have put Pan American on track to achieve management’s guidance for 2019. The company has guided the market to anticipate silver production this year of between 25.3 and 26.3 million ounces and gold production to between 550,000 and 600,000 ounces.