USGS releases first study to assess global earthquake risk to mineral supplies
Earthquakes have the potential to substantially affect mining operations, leading to supply chain disruptions that adversely affect the global economy.
Shares of Bear Creek Mining Corp. (TSX.V: BCM) gained 18% during Wednesday’s market session after the company announced it has received final approval for its Environmental and Social Impact Assessment (ESIA) on the Corani Project in southern Peru.
With ESIA approval the company now plans to obtain financing and begin construction as early as 2014 at Corani.
“We sincerely appreciate the strong support from the local communities and the various Peruvian Ministries, including MEM, during the approval process,” said Bear Creek CEO Andrew Swarthout. “We also express our gratitude to the Peruvian central government for establishing investments in infrastructure along side of our life-of-mine community investment commitments. Bear Creek is excited to move this important project forward towards development.”
Bear Creek held public hearings with local community members in April and noted strong public support for Corani. Development of the project would generate over 2,000 jobs during the construction phase and provide long-term employment for more than 400 people once full commercial production is commissioned.
Current National Instrument (NI) 43-101 Proven plus Probable mineral reserves at Corani total 270 million ounces of silver, 3.1 billion pounds of lead and 1.7 billion pounds of zinc. An additional 89 million ounces of silver reside in the Measured and Indicated categories.
The company completed an NI 43-101 compliant Feasibility Study (FS) in 2011 that suggested a 20-year mine producing 23 million ounces of silver equivalent (AgEq) during each of the first five years and 14.7 million ounces of AgEq for the remaining 15 years.
Because of the high base metal content associated with the deposit, life of mine cash costs were estimated at just $3.66 per ounce of silver produced. The FS used a 5% discount rate and $18 per ounce silver to calculate a Net Present Value (NPV) of $463 million and an Internal Rate of Return (IRR) of 17.6%.
Initial capital expenditures to fully develop the project were estimated at $574 million with sustaining capital costs of $7.2 million annually over the life of mine. The project payback period was estimated at 3.8 years using base case metal prices.
Bear Creek also hopes that acceptance of the ESIA for Corani will pave the way for an agreement over the long disputed Santa Rosa Project. The project has been in dispute since 2011 but could soon be resolved, allowing the company to move forward with development of a second mine in Peru.
Added Mr. Swarthout: “We look forward to working with the government and local communities in reaching a resolution [at Santa Ana] thereby avoiding ongoing and future litigation while providing the opportunity for advancing Santa Ana and providing much needed employment, investment, and revenues in those local communities.”
Shares of Bear Creek are traded on the TSX Venture under the ticker symbol BCM. The company has just 92 million shares outstanding and holds a market cap of $206 million as of Wednesday’s close. Top shareholders in Bear Creek include Silver Wheaton Corp. (TSX: SLW) and Sprott Asset Management.
