The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
BC mine lifts company's reserves by 14 percent, grade by 13% North of 60 Mining News – January 4, 2019
The sunset paints the sky over Coeur Mining's Silvertip Mine, a northern B.C. operation with 1.6 million metric tons of reserves averaging 289 grams per metric ton (14.98 million oz) silver, 8.2 percent (292.71 million pounds) zinc and 5.6 percent (198.66 million lb) lead.
The 2018 drill program at Silvertip primarily targeted three zones with a particular emphasis on upgrading resources to reserves.
Coeur Mining Inc. rolls into 2019 with more silver reserves at higher grades, thanks to a maiden reserve calculation for its Silvertip Mine in the far north reaches of British Columbia.
Coeur acquired Silvertip from JDS Silver Inc. in October of 2017 for US$250 million – US$200 million at the time of the purchase plus US$50 million to be paid when certain production and permitting milestones are met.
For this price, the Chicago-based miner acquired a newly built mine with 2.35 million metric tons of indicated resource averaging 352 g/t silver, 9.4 percent zinc and 6.7 percent lead; and 460,000 metric tons of inferred resource averaging 343 g/t silver, 9.8 percent zinc and 6.2 percent lead.
While this newly constructed operation came with a rich resource base and an operation that Coeur has ramped up to commercial production, a technical report and mine plan to elevate the high-grade silver resources to reserves had yet to be completed for Silvertip.
With the information gleaned from a rigorous drill program carried out over the 14 months since its acquisition, Coeur has converted some 58 percent of the resources that came with Silvertip into enough reserves to support the mine for about 4.5 years.
"We are pleased with the successful conversion of a large portion of the resource to an initial reserve and related mine plan at Silvertip," said Coeur Mining President and CEO Mitchell Krebs.
According to this first ever reserve calculation, Silvertip hosts 1.6 million metric tons of reserves averaging 289 grams per metric ton (14.98 million oz) silver, 8.2 percent (292.71 million pounds) zinc and 5.6 percent (198.66 million lb) lead.
This is enough ore to boost Coeur's silver-equivalent reserves by 14 percent, while also boosting its company-wide silver-equivalent grade by 13 percent.
It is also enough ore to feed a 1,000-metric-ton-per-day mill at the Silvertip Mine for about 4.5 years.
Over that initial span, the Silvertip Mine is expected to average around 2.9 million oz of silver, 45 million lb of zinc and 37 million lb lead, or roughly 8.2 million oz silver-equivalent, per year. This would put Silvertip on par with the second highest producing operation in Coeur's portfolio, the Rochester silver-gold mine in Nevada.
When Coeur bought Silvertip, the northern B.C. mine was designed and permitted to operate at 750 metric tons per day.
Since beginning production in March, Coeur has steadily ramped Silvertip up to its current capacity.
By August, the mill was processing between 500 and 650 mtpd and exceeded 800 mtpd late in the month. As a result of this performance, Coeur declared commercial production at its new Canadian mine on Sept. 1.
"We have made substantial progress over the past fourteen months since acquiring Silvertip and will carry that momentum into 2019," said Krebs.
The next step is to complete the upgrades and acquire the permits needed to ramp the mill up to 1,000 mtpd.
The company has been working closely with regulators and said it remains on track to receive approval of the permit amendment application to expand mill throughput in early 2019.
This approval will mark the first milestone under the purchase agreement and Coeur said it will make a US$25 million payment – 75 percent cash and 25 percent Coeur Mining shares – to JDS within 15 business days of receiving the permit approval.
The second milestone payment of up to US$25 million is contingent upon the amount of metric tons of resource added to Silvertip by the end of 2019, with US$5 million payable for a total resource of at least 2.5 million metric tons and US$5 million for each additional increment 300,000 metric tons, up to a total of 3.7 million metric tons.
Investing $11 million into exploration – US$8 million on infill drilling and US$3 million on expansion drilling – through the first nine months of 2018, Coeur is not trying to lower its second milestone payment.
So far, Coeur's drilling has expanded the global Silvertip resource by about 18 percent. As a result, nearly as much tonnage remains in the resource categories as has been converted to reserves.
Silvertip hosts 1.1 million metric tons of measured and indicated resources averaging 223 g/t (8.42 million oz) silver, 8.6 percent (222.48 million lb) zinc and 4.1 percent (105.95 million lb) lead; plus 529,000 metric tons of inferred resources averaging 271 g/t (4.61 million oz) silver, 9.3 percent (108.62 million lb) zinc and 5 percent (58.59 million lb) lead.
In addition to these resources that are prime to be elevated to reserves, this year's drilling at Silvertip has identified high-priority expansion targets for 2019.
"We look forward to continuing our exploration efforts to expand the size of this prospective, high-grade deposit and further extend the mine life," said Krebs.
Given the exploration success it has had at Silvertip so far, Coeur is enthusiastic about the future of its first Canadian mine.
"Silvertip has enhanced our geographic and political risk profile and is expected to be a long-term source of high-margin cash flow," the Coeur Mining CEO added. "We remain excited about its potential and its evolution into one of the company's cornerstone assets."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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