Discovery Silver PEA for Cordero demonstrates potential Tier 1 asset with $1.2bn NPV

Cordero is considered to be one of the world’s largest undeveloped silver resources, with 910 Moz AgEq (silver equivalent) in the measured and indicated category, plus 140 Moz AgEq inferred.

Since acquiring the project in 2019, Discovery Silver has focused on the underexplored higher-grade areas within the larger mineralized system, with the objective of defining and eventually developing what it views as a high-margin project with scale.

According to the company, its flagship silver project boasts “excellent economics”, including a base case after-tax NPV (using a 5% discount rate) of $1.2 billion and an IRR of 38%, as shown in the PEA report.

The large-scale asset would have a 16-year mine life with average annual production of 26 Moz AgEq at an AISC of $12.35/oz AgEq.

Initial development capex for the project is $368 million, which gives a an NPV-to-capex ratio of 3.2x. The post-tax payback period is two years under the base case scenario.

“With annual AgEq production averaging more than 26 moz over a 15-plus-year mine life, we believe this PEA clearly positions Cordero as a Tier 1 silver asset,” CEO Taj Singh said in a news release.

“This impressive scale of production is achieved through modest development capex of $368 million and returns excellent margins with AISC averaging less than $12.50/AgEq oz over the life of the mine. These costs highlight the benefits of existing local infrastructure, excellent metallurgy, and a straight-forward open-pit mine with excellent grades and a low strip ratio,” he added.

The metrics demonstrated in the PEA are supported by a mine plan with more than 99% of tonnes processed in the measured and indicated category, and a simple and conventional process design based on the company’s metallurgical testwork program earlier this year.

According to Singh, this would provide his company with a “huge head start” as it looks ahead to the delivery of a Prefeasibility Study (PFS) on Cordero in 2022.

Shares of Discovery Silver rose 4.4% by 12:20 p.m. ET, giving the Toronto-based silver miner a market capitalization of C$614.5 million ($480.6m).