Nyrstar is in the process of selling off some of its mining assets, the latest being the acquisition of the Coricancha gold-silver-lead-zinc-copper mine and mill complex (the CMC) by Great Panther Silver in an agreement with subsidiaries of Nyrstar. The CMC is located in the central Andes of Peru, approximately 90 km by paved highway east of the city of Lima. The acquisition will be structured as a share purchase whereby the company’s wholly owned Peruvian subsidiary (GP Peru) will acquire all of the shares of Nyrstar Coricancha from subsidiaries of Nyrstar. Coricancha is the owner of a 100% interest in the CMC. This is just one of dozens of projects covered in the latest issue of International Mining Project News (published fortnightly) – ask [email protected] for more information on a subscription.
Robert Archer, President & CEO “We are very excited about the prospects for the Coricancha mine. We have built Great Panther by acquiring past producing mines in Mexico and successfully bringing them back into production. We now hope to replicate this success in Peru, starting with the CMC. The work we completed in 2015 and 2016 during the option term demonstrated substantial upside and we believe that we have the expertise and discipline to capitalize on that. The project has the potential for annual production of approximately 3 Moz silver equivalent, which would be a significant contribution to our growth. Importantly, with more than $54 million in cash, the company is fully financed to bring the mine back into production.”
The CMC is a fully permitted polymetallic mine that includes an operational 600 t/d flotation and gold BIOX® bio-leach plant along with supporting mining infrastructure. The CMC has been on care and maintenance since August 2013 when it was closed due to falling commodity prices. The CMC property comprises more than 3,700 ha in the prolific Central Polymetallic Belt and production at the mine dates back to 1906. Gold-silver-lead-zinc-copper mineralization (approximately 80% gold-silver by value) occurs as massive sulphide veins that have been mined underground by cut and fill methods.
The execution of the agreement follows on the option agreement entered into between Great Panther and Nyrstar in May 2015. Great Panther undertook significant exploration and evaluation work on the CMC in 2015 and 2016 that led to continued negotiations with Nyrstar following the termination of the option agreement.
Under the terms of the purchase agreement, Great Panther will acquire Coricancha from Nyrstar for a purchase price comprising (i) $0.1 million to be paid on closing, (ii) an amount equal to cash on hand in Coricancha at completion, and (iii) earn-out consideration of up to $10.0 million. Under the earn-out, Nyrstar will be paid 15% of the free cash-flow generated by the CMC during the five-year period after which the CMC is cumulative free cash-flow positive from closing.
Great Panther is continuing with its engineering and technical evaluation for the reactivation of the CMC, with the objective of further refining the costs and timing for start-up. At this time, it is expected that it will take approximately 12 to 18 months to bring the mine back into production, based on the engineering studies completed to date, and that the costs to reactivate the mine will be in the order of $25 million. However, these estimates are subject to further review and refinement of the start-up plans. The company expects to announce further details closer to closing, and to commence the program to restart the mine shortly thereafter, including underground drilling, surface drilling (once permits are obtained), mine development, plant upgrades and other start-up evaluations and undertakings. In addition, an ongoing compilation of underground sampling data will be combined with the data obtained from the Company’s 2015 – 2016 drilling programs, during the option phase, to update the resource base.
Nyrstar has agreed to be responsible for certain reclamation work and outstanding fines related to legacy tailings facilities at the CMC that Coricancha will undertake following closing, subject to agreed maximum amounts. In addition, Nyrstar will maintain the existing CMC mine closure bond for three years.
Great Panther Silver is a primary silver mining and exploration company listed on the Toronto Stock Exchange. Its current activities are focused on the mining of precious metals from its two wholly-owned operating mines in Mexico: the Guanajuato mine complex, which includes the San Ignacio mine, and the Topia mine in Durango.