This PEA report was prepared as a NI 43-101 technical report for Sierra Metals by SRK Consulting (Canada) Inc.
After-tax net present value (NPV) is US$81-million at an 8% discount rate assuming a long-term silver price of US$20)/ounce. Incremental benefit of increasing the production to 2,400 tonnes per day from 1,200 tpd is estimated to have an after-tax NPV (at 8% discount) of US$28.1-million, and IRR (internal rate of return) of 46.8%. Net after-tax cash flow is US$134-million.
Life-of-mine and sustaining capital cost is US$91-million. Total operating unit cost is US$35.24/tonne and US$8.83/oz silver equivalent.
Plant processing rate after expansion is 2,400 tonnes per day (tpd). Average LOM grades are for silver at 127.2 g/t (4.1 oz/ton), gold at 0.12 g/t, zinc at 0.4% and lead at 0.34%. Mine life is 13 years based on existing mineral resource estimate. Life-of-mine silver payable production is 33.4 million ounces.
Luis Marchese, CEO of Sierra Metals, commented: “I am very encouraged by the results of this PEA, which support the company’s organic growth strategy and plan to profitably develop and expand the Cusi mine production rate to 2,400 tpd from today’s capacity of 1,200 tpd, based on current analyst consensus silver metal price estimates of US$20 per oz long-term. The company plans to continue with its disciplined approach of profitable growth and now plans to proceed with the next step of the completion of a prefeasibility study to further derisk the plan and determine the best path forward.”
He continued, “The PEA study compared the value of the current operations at Cusi at 1,200 tpd against several output expansion alternatives from 2,400 to 3,500 tpd and determined 2,400 tpd as the optimum production level based on our current mineral resource base.”
He concluded: “Cusi is the smallest of our three mining operations; however, its silver resources which include 31.3 million ounces of measured and indicated plus 23 million ounces of inferred provide Sierra Metals with economic leverage to the improving silver market fundamentals. We are continuing with our strategy to increase the value of the company on a per-share basis. This builds upon the demonstrated success we have shown with increasing our current mineral resource base and improving the throughput at all mines.”