Azarga Metals (TSXV: AZR; US-OTC: EUUNF) has tabled a preliminary economic assessment (PEA) for its Unkur copper-silver project in eastern Russia. The company acquired 60% of the project in 2016 and began work on the PEA shortly after acquiring the remaining 40% in early 2018.
At a US$3.25 per lb. copper price and a US$20 per oz. silver price the project has a US$147.5 million after-tax net present value at an 8% discount rate and a 24.4% after-tax internal rate of return. The current prices of copper and silver are US$2.78 per lb. and US$14.77 per ounce.
The project would require US$186.6 million in pre-production capital with US$14.4 million for life of mine sustaining costs and an additional US$3.6 million for closure.
The Unkur mill would process 2 million tonnes annually over eight years. The project would produce 13,217 tonnes copper and 3.7 million oz. silver per year.
The PEA is based on the updated resource estimate Azarga tabled in March 2018. The estimate relies on the same commodity prices as the PEA.
Unkur contains 62 million inferred tonnes grading 0.53% copper and 38.6 grams silver for 724 million lb. copper and 76.8 million oz. silver.
The PEA, however, only considers what Azarga calls a “higher grade subset” of the Unkur deposit that measures 15.5 million tonnes grading 0.76% copper and 66.6 grams silver.
The company says it intends to continue exploration in an attempt to grow the deposit for an updated PEA. The deposit remains open along strike and at depth.
The project is located within 20 km of the town of Novaya Chara, with road and rail access. A regional power line intersects a corner of the property.
Shares of Azarga are currently valued at 12¢ with a 52-week range of 9¢ to 18¢. The company has a $10 million market capitalization.