Silverco’s La Negra posts $329M value over $21M costs

A preliminary economic assessment (PEA) for Silverco Mining’s (TSXV: SICO; US-OTC: SICOF) La Negra mine in central Mexico gives it very high value and returns compared to costs, as the company targets commercial production next year.

Discounted at 5%, the past-producing underground La Negra mine has an estimated post-tax net present value of $329 million (C$460.7 million), with a post-tax internal rate of return of 131% and at initial costs of about $21 million, the company reported Monday. Its low relative costs are due to the site’s existing infrastructure.

“La Negra has a long history of reliable silver production, and this PEA lays out a clear, low-capital path to return to historic production levels with opportunities identified to optimize and extend the mine life through expansion and conversion of our new indicated resource,” Silverco CEO Mark Ayranto said in a release.

100+ years of mining

The PEA marks the latest effort to restore the past-producing La Negra to sustained production after more than a century of intermittent mining, when the project has changed hands and experienced shutdowns several times. The modern, underground operation started production in 1971 under Mexican miner Peñoles. Located in Querétaro state, La Negra is about 160 km north of Mexico City.

Silverco shares gained 1% to C$9.90 apiece on Monday morning in Toronto, valuing the company at C$553.8 million. The stock has traded in a 12-month range of C$3.30 to C$16.67.   

8.2-year life

Based on daily throughput of 2,500 tonnes and over an 8.2-year life, La Negra could produce 19.3 million oz. silver, 39.8 million lb. copper, 93.5 million lb. lead and 197.1 million lb. zinc.  

The mine is currently operating and Silverco targets reaching commercial production in the second half of 2027.

The study includes a resource of 15.2 million indicated tonnes grading 106 grams silver per tonne, 0.59% lead, 1.81% zinc and 0.47% copper for 51.9 million oz. silver, 199 million lb. lead, 608 million lb. zinc and 158 million lb. copper. Inferred resources total 2.2 million tonnes at 92 grams silver, 1% lead, 1.92% zinc and 0.21% copper for 6.7 million oz. silver, 49.7 million lb. lead, 95.7 million lb. zinc and 10.6 million lb. copper.

The PEA assumes metal prices of $50 per oz. silver, $4.50 per lb. copper, 88¢ per lb. lead and $1.30 per lb. zinc.

A 15,000-metre surface and underground drill program is now underway at the project, the first large-scale exploration push in two decades at La Negra, Ayranto said.