Vizsla Silver’s (TSXV: VZLA; NYSE: VZLA) preliminary economic assessment (PEA) of its main Panuco silver-gold project in Mexico shows it to be a global contender, according to Raymond James.
Panuco has a $1.1 billion after-tax net present value at a 5% discount rate, an 86% after-tax internal rate of return and a nine-month payback period, according to the study issued on Wednesday. It could cost $224 million to build.
“Panuco blows past our estimates,” mining analyst Craig Stanley at Raymond James said in a note on Wednesday. The PEA “confirms Panuco as one of the top undeveloped silver projects,” he said.
The proposed underground mine in Sinaloa state could produce 162.1 million silver-equivalent oz. over an initial 10.6-year life, the study showed. It was based on prices of $26 per oz. silver and $1,975 per oz. gold.
A feasibility study is scheduled for the second half of next year and the company is well-funded with C$38 million in cash and C$53 million in working capital as of April 30, Stanley said.
“We continue to model construction commencing in first quarter 2026 and first production in third quarter 2027,” he said.
Shares in Vizsla Silver gained 3.8% to C$2.72 apiece by mid-Wednesday in Toronto for a market capitalization of C$657.7 million. The stock has traded between C$1.26 and C$3.02 over the past 52 weeks.
Vizsla proposes contractor mining to reduce upfront capital costs and achieve higher productivity. Panuco may have all-in sustaining costs of $9.40 per oz., according to the early-stage study. Total capital costs including sustaining capital, expansion, contingencies and closure among other items amounts to nearly $500 million.
The study envisions a 3,300-tonnes-per-day production rate for the first three years before expanding to 4,000 tonnes a day.
It could produce 9.3 million oz. silver and 78,000 oz. gold per year, equalling 15.2 million oz. silver-equivalent, Vizsla said. The first two years would average 13.8 million oz. silver and 85,000 oz. gold for 20.2 million oz. silver-equivalent, it said.
The “high-margin” project would provide “exceptional free cash flow, particularly in the early years, allowing for a very rapid payback of the estimated low capital spending,” president and CEO Michael Konnert said in a release.
Panuco is a collection of silver-gold deposits from surface to depths of more than 600 metres. The deposits range in thickness from 1.5 metres to greater than 20 metres, Vizsla said.
The study considers two contiguous underground mines, Copala and Napoleon. Copala, the larger of the two, would access the Copala, Cristiano and Tajitos deposits. Napoleon, west of Copala, would mine the Napoleon, La Luisa, Cruz Negra and Josephine deposits.
The mines are to be contractor-operated using ramp access and a combination of long-hole stoping and drift-and-fill mining methods, the company said.
Ore is to be processed through a three-stage crushing and grinding circuit, along with a leach and Merrill Crowe circuit to produce silver-gold doré bars, according to the study.
In January, Vizsla updated Panuco’s indicated resource to 7.5 million tonnes grading 243 grams silver per tonne, 2.12 grams gold, 0.23% lead and 0.71% zinc for contained metal of 58.3 million oz. of silver, 508,000 oz. gold, 17,000 tonnes lead and 53,300 tonnes zinc.
The company highlighted the 71% increase in indicated contained silver-equivalent to 104.8 million oz. from 61.1 million oz. reported in March last year.
Less than a third of Panuco’s land package, which is in a 72-sq.-km. district hosting past producing mines, has been explored, Konnert said.
“It’s important to note that this PEA represents only a snapshot of the potential value of Panuco,” he said.
“Furthermore, ongoing drilling with two drill rigs continues to expand and convert high-grade veins in and around the proposed mine plan, enhancing the potential for improved economics.”
