Kuya Silver begins underground development to support production later this year

Kuya Silver (CSE: KUYA; OTCQB: KUYAF) has begun development of the past-producing Bethania silver mine project in Huancavelica, Peru, in preparation to commence production later this year. The mine is operated by Kuya subsidiary Minera Toro de Plata.

The mine has been idle for the past seven years. Pre-production work will begin with inspecting, reinforcing, updating, and improving underground support in several areas. The mine will be dewatered, and broken rock removed as the tunnel, rail, and ventilation are brought up to today’s safety standards. Production is to begin in areas of historical development and will transition over time to newly developed areas.

Minera Toro de Plata recently signed a toll milling agreement with CMSV. The terms allow for the delivery of at least 1,000 tonnes of ore which will be processed into silver-lead, zinc, and copper-silver concentrates. Kuya will provide an upfront payment of US$230,000 to CMSV before tolling begins. The term of the agreement is 24 months beginning with the first delivery of ore, and it may be extended.

Resources at the Bethania mine include 404,000 indicated tonnes grading 332 g/t silver and containing 4.3 million oz. plus 700,000 inferred tonnes at 249 g/t silver and containing 5.6 million oz. of silver. The mine also has payable levels of gold, copper, zinc, and lead which are aggregated as 6.1 million oz. silver equivalent in the indicated category and 8.3 million oz. in the inferred category.

The preproduction capex is US$17.8 million to be followed by US$1.4 million in sustaining capital. That will allow mining 350 tonnes of ore daily. Using a silver price of US$25.40/oz., the project has a pre-tax net present value with a 5% discount of US$77.8 million, a 227% internal rate of return, and a payback period of 0.41 year. After-tax numbers include an NPV 5% of US$54.7 million, an IRR of 188%, and a payback of six months.

Read the updated preliminary economic assessment for Bethania at www.KuyaSilver.com.