Discovery Silver to make construction decision on US$455mn Mexican project by early 2025

Toronto-based Discovery Silver aims to reach a construction decision on its US$455mn Cordero silver project in Mexico in late 2024 or early 2025, the company said in a statement. 

The company outlined its 2024 work program for the Chihuahua state project and expects to deliver the feasibility study later this quarter. 

Tony Makuch, president and CEO, stated: “The study will incorporate an additional 35,000m of drilling that highlighted the potential to extend the mine life beyond the 18 years outlined in the pre-feasibility study, as well as the results from recent metallurgical testwork that demonstrated higher silver payabilities and reduced reagent consumption.”

“The feasibility study is expected to position Cordero as the only silver development stage asset in the industry that will produce more than 30 million ounces of silver-equivalent production annually once built. This impressive scale is accompanied by a long mine life, excellent capital efficiency due to staged expansions of the process plant, and operating costs in the bottom half of the cost curve, emphasizing the strategic importance of Cordero within the silver space,” he added.

In 2024, the CEO said he was looking forward to progressing with the permitting and project financing process to reach a construction decision in late 2024 or early 2025. “We remain well funded to deliver on our key milestones this year with a cash balance at the end of 2023 of approximately Cdn$60mn [US$60mn],” Makuch said.

Following the delivery of the feasibility study, the company plans to commence front-end engineering design (FEED) work for the project. “This engineering work consists of early project planning and will enable the company to place orders for long lead-time items and to award the EPC/EPCM contract for the development of the project,” Discovery stated.

Financing options for the project include equity, debt, offtake, joint ventures, partnerships, lease financing on significant equipment, streams, royalties, and other strategic alternatives.   

PERMITTING

The two principal environmental permits required for the construction, operation and closure of Cordero are environmental impact assessment (MIA by the Spanish acronym) and the required change of land use (CUS).

Both permits are subject to review and approval by the environment and natural resources ministry (Semarnat).

The Mexico-focused company formally submitted its MIA for assessment in August 2023. “The MIA incorporates extensive social and environmental work programs completed by the company’s team in Mexico since 2020 in conjunction with multiple reviews by third-party consultants. The review process of the MIA submission by Semarnat is ongoing,” the company said. 

The CUS submission is supported by a study known as a justifying technical study (ETJ). 

“Compilation of the ETJ by the company and third-party consultants will be finalized in the coming months, with formal submission of the CUS expected to be made by 3Q 2024,” Discovery said. 

The 100%-owned Cordero initiative is Discovery’s flagship project and one of the world’s largest silver deposits, in addition to containing gold, zinc, and lead. The project entails the first of two phases of open-pit mine development.