Avino Silver & Gold Mines (TSX: ASM) released on Monday results of an NI 43-101-compliant pre-feasibility study for the proposed oxide tailings project at its flagship mine operations located near Durango, west-central Mexico.
The economic analysis was based on a proven and probable mineral reserve estimate of 6.7 million tonnes at an average grade of 54.46 g/t silver and 0.47 g/t gold. This reserve, according to Avino, is adequate to allow for a nine-year project life, based on current tailings recovery assumptions including a processing rate of 2,250 tonnes per day. Metal recoveries are expected to average 77.2% and 74.9% for silver and gold, respectively.
Over the life of mine, the tailings deposit would produce 9.1 million oz. of silver and 76,000 oz. of gold, averaging 1 million oz. of silver and 8,445 oz. of gold per year.
These assumptions, together with an initial capital cost of $49.1 million and ongoing sustaining capital of $5.1 million, would result in a post-tax net present value, at a 5% discount rate, of $61 million, with an internal rate of return of 26%. The payback period is 3.5 years.
The PFS featured improvements in comparison to the PEA that was completed in 2017. The life of the project has increased by two years, the silver production has increased almost 3 million oz., and the gold production has more than doubled.
The notable financial improvements include a more than doubling of the project NPV from $28 million to $61 million on a post-tax basis. Other PFS highlights of significance include a reduced payback period and higher ESG metrics.
The oxide tailings deposit is located within the existing Avino mine operations, with well-established network of roads and power infrastructure. As a result, the risks associated with the tailings and heap leach design would be eliminated, the company said.
“The completion of the PFS is a key milestone in Avino’s path to transformational growth,” CEO David Wolfin said in a news release. “The economics of our oxide tailings project combined with the relatively low capital requirements has the potential to significantly enhance the current Avino operation and grow cashflow.”
“For the first time in Avino’s lengthy history, we are proud to demonstrate proven and probable mineral reserves. We have taken a dynamic leaching approach to the tailings reprocessing to improve overall recoveries and mitigate the potential recovery variability compared with heap leaching,” Peter Latta, VP technical services, added.