Over the course of his career, Graham Hill has worked in some remote and challenging locations.
He helped build the Yatela and Sadiola gold mines in Mali for Anglo American (NASDAQ: AAUKY; LSE: AAL), developed and managed Oxus Resources’ Jerooy and Amantaytau gold and silver mines in Central Asia (in the mountains of the Kyrgyz Republic and the desert-like Kyzylkum Region of the Navoi Oblast in Uzbekistan); and most recently developed the Passendro gold project in the Central African Republic for Axmin (TSXV: ASM; US-OTC: AXMIF).
So when he was invited in November 2014 to join Silver Bear Resources (TSX: SBR) as CEO to oversee the development of the company’s remote Mangazeisky silver property in Russia’s Far East, 400 km north of the capital city of Yakutsk in the Republic of Sakha, Hill jumped at the opportunity.
“I felt the role fit my experience perfectly,” he says in a telephone interview from his new base in Moscow. “One of the challenges is to be able to perform this role in a remote location with challenging but not impossible to overcome logistics, and that makes the whole thing really exciting for me, and it’s the sort of job I really wanted.”
Access to the site is limited to a seasonal winter road from January to April, while it’s accessible by plane or helicopter during the rest of the year.
Silver Bear acquired 100% of the project in October 2004 and has outlined resource estimates on three open-pit targets (Vertikalny Central and Vertikalny Northwest; Nizhny Endybal; and Mangazeisky North and South). Hill says a lot of these, and other targets, would be open-pit mines initially, some of which would later extend underground, and all of them would be served by a central processing facility. The deposits are all within a 6 km radius.
The project’s total indicated resource stands at 800,000 tonnes grading 909 grams silver per tonne for 23.4 million contained oz. silver, and inferred resources total 2.3 million tonnes grading 457 grams silver per tonne for 33.1 million contained oz. silver.
“It’s a fantastic resource with an incredibly high grade and fantastic long-term potential,” Hill says of the 570 sq. km exploration licence and its 20 known silver anomalies. “It’s one of the highest-grade silver deposits in the world. I’m not familiar with anything that has grades that are quite comparable to ours. It’s a phenomenal deposit.”
So far Silver Bear has concentrated on the Vertikalny Central and Northwest zones, and completed a preliminary economic assessment based on the two zones. (Silver Bear was granted a 20-year mining licence for the Vertikalny deposit in September 2013.)
The PEA outlined a 19-year mine life, US$39-million capital expenditure, 63% post-tax internal rate of return and a US$129.9-million net present value at a 5% discount rate. In the first five years, the study says the average head grade would be 911 grams silver per tonne, with production at 2.6 million oz. per year.
The company is working on a feasibility study based on the entire resource, which Hill expects to complete before year-end, with production starting in the second half of 2016. “It’s a challenging call, but it’s a call we’re all standing behind,” Hill says of the production target date.
Hill notes that the company is already building some of the required infrastructure. At the end of July, Silver Bear will have put the finishing touches on an 80-man dormitory and a heated workshop and warehouse. “They are all substantial buildings, and all of it was built on technologies that have evolved locally and in permafrost areas of the world, and they were all built in a short period of time,” he says. “When I started, none of this work was planned, and the fact that we’ve achieved so much in such a short period of time is a testament to the real ability of the people we have in Yakutsk.”
Throughout the rest of 2015, the company will also lay down some of the foundation for the processing plant, with the help of a Russian design institute.
Silver Bear says there is a lot of exploration upside along a 35 km mineralized trend on the property. “It’s a thrilling location with great potential,” he says. “We’re very happy with the progress we’re making in terms of developing other resources. We have a whole 35 km mineralized corridor and another interesting area south of our licence area where there is potential gold and silver, and that’s exciting for us. We have other areas where we still have to do further exploration.”
As far as working in Russia is concerned, Hill says “it’s a regulated system, and one that works.” Russia’s Far East also offers significant tax incentives, which include zero corporate tax for the first five years of production, and no silver royalty payments for the first two years.
Two of the company’s largest shareholders are Russian privately held investment management firms, Inflection Capital Partners, with a 25.6% stake, and Aterra Capital, with a 25.2% stake. Aterra is owned by Russian businessman Alexey Mordashov.