The joint venture between Silver Standard Resources and Golden Arrow Resources Corp for the development of the Chinchillas project is up and running. The joint venture, named Puna Operations, is comprised of Silver Standard’s Pirquitas property and Golden Arrow’s Chinchillas property and is owned on a 75%/25% basis by each company, respectively. Silver Standard is the joint venture operator and has made an option exercise payment of $13.0 million to Golden Arrow.
Paul Benson, President and CEO said, “Forming the joint venture is another important step toward extending the life of the Pirquitas operation. By leveraging the assets of the two companies, the Chinchillas pre-feasibility study outlines a project with a short pay-back period for a modest capital investment. We have also begun to evaluate the potential for a small tonnage Pirquitas underground operation to provide an additional, high grade ore stream to the Pirquitas plant. Final permitting for Chinchillas is expected shortly, which will enable site development to commence. In addition to extending the life of Pirquitas and maximizing the value of our investment, the project will benefit the people and governments of Argentina through job creation, increased tax base and export revenues. Silver Standard has a solid foundation with three strong operations generating cash flow and each with growth potential.”
“This news cannot do justice to express the huge significance that the formation of Puna Operations has for Golden Arrow,” stated Joseph Grosso, Executive Chairman, President and CEO of Golden Arrow. “We are looking forward to play any role that best supports our partnership in the merged assets.”
Chinchillas PFS highlights
- Average annual silver equivalent production of 8.4 Moz over an eight-year mine life at a 4,000 t/d plant throughput
- Robust operating margins based on cash costs of $7.40 per payable ounce of silver sold over the life of mine
- Post-tax net present value of $178 million using a 5% discount rate and metal prices of $19.50/oz silver, $0.95/lb lead and $1.00/lb zinc
- Attractive post-tax IRR of 29%
- Near-term production based on construction beginning in the third quarter of 2017, subject to permitting, and ore delivery to the Pirquitas mill in the second half of 2018
- Low capital intensity based on initial capital expenditures, including owner’s costs and contingency, estimated to be $81 million
- Mineral Reserves of 11.7 Mt containing 58 Moz of silver at a grade of 154 g/t, 310 Mlb of lead at a grade of 1.20% and 127 Mlb of zinc at a grade of 0.49%
- Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) of 29.3 Mt containing 96 Moz of silver at a grade of 101 g/t, 581 Mlb of lead at a grade of 0.90% and 386 Mlb of zinc at a grade of 0.60%
- Capital cost estimates assume utilizing certain property, plant and equipment from the Pirquitas property. All costs incurred prior to the declaration of commercial production are considered capital costs.
The Chinchillas project is a silver-lead-zinc deposit, located in the Puna region of northwest Argentina, in Jujuy Province. It is approximately 42 km by road from the Pirquitas property owned by Silver Standard and 280 km from the provincial capital of San Salvador de Jujuy. The project is composed of three contiguous claims, totaling 2,043 ha. Chinchillas is accessed by paved road to the town of Abra Pampa via National Route No. 9 and an additional 66 km west across public gravel roads, through the village of Santo Domingo, with similar road conditions presently utilized to service the Pirquitas property. Santo Domingo is equipped with electricity, natural gas, and water services.
The PFS evaluates the development and construction of an open-pit mine and supporting infrastructure, which will supply ore to the Pirquitas processing facilities over an eight-year active mining period.
Chinchillas will be mined by conventional drill, blast, truck, and loading open pit mining methods. A fleet of 35-t road haul trucks will transport ore some 42 km to the Pirquitas processing facilities. Haul trucks, loading equipment and drills at the Pirquitas property will be transferred to Chinchillas, allowing the project to leverage existing equipment and infrastructure for capital cost savings and a shorter time to production.
The Pirquitas processing facility has been in continuous operation since 2009. It will process ore from the Chinchillas project using standard crush, grind and floatation at a rate of 4,000 t/d. Minor modifications to the Pirquitas plant are expected and the associated capital costs are included in the capital cost estimate. Over the life of mine, the plant is expected to produce a silver/lead concentrate and a zinc concentrate. The two concentrates will be shipped internationally to smelters for processing. A tailings storage facility will be located on the Pirquitas property and is included in the capital cost estimate.