Construction at SilverCrest Metals' (TSX: SIL) Las Chispas project, in Sonora, Mexico, is proceeding on time and on budget with 745 workers onsite, and first production at the high-grade silver-gold mine slated for next year.
At the end of June, construction of the US$137.7-million underground operation was 33% complete – ahead of scheduled completion of 28%. Construction formally began on Feb. 1 of this year.
Once complete, the 1,250 t/d mine is expected to produce an average of 5.2 million oz. of silver and 56,000 gold oz. annually (10 million oz. of silver-equivalent) at all-in sustaining costs of US$7.07 per oz. of silver-equivalent. The project has a mine life of 8.5 years with a February 2021 feasibility study projecting an after-tax net present value of US$486.3 million (at a 5% discount rate), and a 52% internal rate of return.
With spending of US$113.7 million budgeted for Las Chispas this year, SilverCrest noted in a release that cost inflation is occurring in some areas of the industry. However, it says its US$76.5-million fixed-price engineering, procurement and construction (EPC) contract with Ausenco for the processing plant (representing 39% of total initial capex) limits the impact of this risk.
So far, a confined COVID-19 camp facility and earthworks have been finished, with concrete foundation 74% done. Plant tank construction and key infrastructure projects (powerline, road, and bridge) have all begun, and plant detailed engineering is 90% complete.
"Las Chispas mine construction is currently on time and budget based on several activities including our early decision to implement strict company-wide COVID-19 protocols and build a confined construction camp, which has reduced risks and benefited the project's overall schedule," said SilverCrest CEO N. Eric Fier in a release. "The approach has allowed us to see better productivity than anticipated and limited disruption in our work schedules and supply chains."
The company expects to reach 80% completion of construction by the end of the year, with plant ore commissioning expected late in the second quarter of 2022.
Underground development at Las Chispas project is well advanced, with access to four veins established and 33 working faces being prepared for production. In the first half of the year, 4.6 km of underground development was completed, for a total of 13.1 km since development began in early 2019. SilverCrest expects to award a five-year contract for underground mining at Las Chispas in the third quarter.
As construction progresses, the company is also focused on optimizing the Las Chispas underground design and mine schedule. As part of this work, it is developing an exploration drift toward the high-grade Babi Vista Splay vein. So far, 175 metres have been completed with another 125 metres to go. While an inferred resource has been calculated for the vein (211,400 tonnes grading 2,039 g/t silver equivalent for 13.9 million oz. silver equivalent), it is not yet part of mine plan. The exploration drift will provide access for infill drilling and, potentially, early production access.
In the first half of the year, SilverCrest drilled more than 71,500 metres with 10 drill rigs at Las Chispas; 70% of the total represents infill drilling. An updated reserve and resource statement is due out next year.
Proven and probable reserves at Las Chispas, 180 km northeast of Hermosillo, are estimated at 3.4 million tonnes grading 461 g/t silver and 4.81 g/t gold (879 g/t silver equivalent) for 94.7 million silver-equivalent oz.
SilverCrest also has three drill rigs working at the high-grade, near-surface El Picacho deposit, 85 km away by road.
For more information, visit www.silvercrestmetals.com.