SilverCrest Metals is racing ahead with securing one of the key contracts for its Las Chispas project in Mexico, with one of its Mexican subsidiaries entering into a fixed price engineering, procurement and construction (EPC) contract with Ausenco Engineering Canada and one of its affiliates ahead of the publication of a feasibility study on the silver-gold project.
While the study is still pending finalisation by Ausenco, with announcement of results targeted for late January 2021, SilverCrest says it is confident entering into the process plant agreement based on the substantial feasibility information currently available.
At the same time, the company entered into a $120 million project financing facility with an affiliate of RK Mine Finance for funding the Las Chispas build.
The lump sum turnkey price of $76.5 million for the EPC contract will include construction of a 1,250 t/d process plant at Las Chispas, with execution of Ausenco’s scope of work to begin in February 2021, and commissioning of the process plant targeted for the June quarter of 2022. The process plant production ramp-up is expected to start in the September quarter of that year.
The construction execution plan includes stringent COVID-19 protocols including the use of a confined single room occupancy camp designed to limit the potential for a virus outbreak at the site and in the local communities, SilverCrest says.
Ausenco is in the throes of completing the Las Chispas feasibility study and progressing detailed engineering and the construction management plan. Detailed engineering is progressing well at around 60% completion, according to SilverCrest, and procurement of long lead items started in the final quarter of 2020.
“Advancing these programs in parallel has allowed Ausenco to develop comprehensive capital and operating cost estimates for Las Chispas while progressing detailed engineering beyond what is customary at a feasibility study level,” SilverCrest said.
“The disruption caused by the COVID-19 pandemic also allowed SilverCrest to initiate an early works program tailored to further reduce project execution risks.”
This early works program included the earthworks package, the water pumping system and the first phase of the construction camp. The advancement of the program, coupled with the fixed price nature of the EPC contract, reduces many common construction and market-related risks, the company said.
Beyond the tasks included in the EPC contract, the remaining initial capital costs anticipated for Las Chispas construction will include development costs of the underground mine; owner’s site costs; on-site infrastructure including Phase 2 of the confined construction camp, a bridge and the filtered (dry stack) tailings system facility; a new 33 kV, 49 km long powerline; and an analytical laboratory located in the community.
Pierre Beaudoin, COO of SilverCrest, said: “We are pleased to be working with Ausenco, a well-known and respected engineering firm with substantial global experience in designing, constructing, and commissioning precious metal process facilities. We have been working closely with Ausenco to complete the EPC contract and the feasibility study in close succession. We are confident that their intimate knowledge of the project will benefit the successful construction and commissioning of Las Chispas.”
A February 2019 preliminary economic assessment on Las Chispas outlined a 1,250 t/d production rate with an initial mine life of 8.5 years. This resulted in average annual production of 5.38 Moz of silver and 55,700 oz of gold.