Golden Arrow Resources (GRG.V) has revealed the results of the Preliminary Economic Assessment on its Chinchillas silver project in Argentina. The company uses a base case scenario with an average daily throughput of 6,000 tonnes per day which would cost just over $200M in initial capex. The estimated average annual production would be 5.4 million ounces of silver at a cash cost of close to $11/oz (excluding by-product credits). Using a silver price of $22/oz, the after-tax NPV8% comes in at $98.5M and the payback period will be less than 4 years.
At first sight these results might not look very exciting, but keep in mind this is just the first ever economic assessment of the project and there’s considerable potential to increase the NPV and IRR by fine-tuning some of the parameters. Let’s also not forget that an after-tax NPV8% of $98.5M results in an after-tax NPV/share of C$2.45, which is more than twelve times the current share price of C$0.19..
This PEA is the first step to prove up the value of the Chinchillas project, and we are looking forward to the announced exploration program which will drill another 6,000 meters on the project aiming to increase and upgrade the current existing resource estimate of 104.8M silver-equivalent ounces.
We will release a full report on this PEA when the company has filed its NI43-101 compliant technical report on SEDAR which is expected within 45 days.
Disclosure: The author holds a long position in Golden Arrow Resources. Golden Arrow is a sponsor of the website. Please see our disclaimer for current positions.