Great Panther Silver pounces on Peruvian polymetallic mine
Great Panther Silver Limited has announced that it has entered into an agreement with subsidiaries of Nyrstar N.V. ("Nyrstar") to acquire the Coricancha gold-silver-lead-zinc-copper mine and mill complex (the "CMC"). The CMC is located in the central Andes of Peru, approximately 90 kilometres by paved highway east of the city of Lima.
The acquisition will be structured as a share purchase whereby the Company's wholly owned Peruvian subsidiary ("GP Peru") will acquire all of the shares of Nyrstar Coricancha S.A. ("Coricancha") from subsidiaries of Nyrstar. Coricancha is the owner of a 100percent interest in the CMC. Closing is subject to customary closing conditions and is expected to take place in the first quarter of 2017.
"We are very excited about the prospects for the Coricancha Mine," stated Robert Archer, President & CEO. "We have built Great Panther by acquiring past producing mines in Mexico and successfully bringing them back into production. We now hope to replicate this success in Peru, starting with the CMC. The work we completed in 2015 and 2016 during the option term demonstrated substantial upside and we believe that we have the expertise and discipline to capitalize on that. The project has the potential for annual production of approximately 3 million silver equivalent ounces, which would be a significant contribution to our growth. Importantly, with more than US$54 million in cash, the Company is fully financed to bring the mine back into production."
The CMC is a fully permitted polymetallic mine that includes an operational 600 tonne per day flotation and gold BIOX® bio-leach plant along with supporting mining infrastructure. The CMC has been on care and maintenance since August 2013 when it was closed due to falling commodity prices. The CMC property comprises more than 3,700 hectares in the prolific Central Polymetallic Belt and production at the mine dates back to 1906. Gold-silver-lead-zinc-copper mineralization (approximately 80percent gold-silver by value) occurs as massive sulphide veins that have been mined underground by cut and fill methods.
The execution of the agreement follows on the option agreement entered into between Great Panther and Nyrstar in May 2015. Great Panther undertook significant exploration and evaluation work on the CMC in 2015 and 2016 that led to continued negotiations with Nyrstar following the termination of the option agreement.
Under the terms of the purchase agreement, Great Panther will acquire Coricancha from Nyrstar for a purchase price comprising (i) US$0.1 million to be paid on closing, (ii) an amount equal to cash on hand in Coricancha at completion, and (iii) earn-out consideration of up to US$10.0 million. Under the earn-out, Nyrstar will be paid 15percent of the free cash-flow generated by the CMC during the 5-year period after which the CMC is cumulative free cash-flow positive from closing.
Great Panther is continuing with its engineering and technical evaluation for the reactivation of the CMC, with the objective of further refining the costs and timing for start-up. At this time, it is expected that it will take approximately 12 to 18 months to bring the mine back into production, based on the engineering studies completed to date, and that the costs to reactivate the mine will be in the order of US$25 million. However, these estimates are subject to further review and refinement of the start-up plans. The Company expects to announce further details closer to closing, and to commence the program to restart the mine shortly thereafter, including underground drilling, surface drilling (once permits are obtained), mine development, plant upgrades and other start-up evaluations and undertakings. In addition, an ongoing compilation of underground sampling data will be combined with the data obtained from the Company's 2015 - 2016 drilling programs, during the option phase, to update the resource base.
Nyrstar has agreed to be responsible for certain reclamation work and outstanding fines related to legacy tailings facilities at the CMC that Coricancha will undertake following closing, subject to agreed maximum amounts. In addition, Nyrstar will maintain the existing CMC mine closure bond for 3 years.
The technical information contained in this news release has been reviewed and approved by Robert F. Brown, P. Eng. and Vice President of Exploration for the Company. Aspects relating to mining and metallurgy are overseen by Ali Soltani, Chief Operating Officer for Great Panther.
Get in touch with our editor Dale Benton at [email protected]
Zimbabwe targets £8.8bn mining industry by 2023
Zimbabwe’s government plans to fast-track exploration, evaluation and digitalisation of selected reserved mining areas under the Ministry of Mines and Mining Development as part of wider measures to achieve a £8.8 billion mining industry by 2023, according to a senior government minister.
Information Minister Monica Mutsvangwa said other plans include stopping the issuance of special grants in the reserved areas under the Ministry of Mines and Mining Development until the exploration and evaluation is complete and a robust value addition program for diamonds is implemented.
Mutsvangwa was speaking at a post-cabinet media briefing on December 15.
She adds that the issuance and renewal of special grants for energy should also be based on the financial and technical capacity to value add all types of coal, as well as for ideal exploration of Coal Bed Methane.
For renewal of special grants, consideration should take into account the period the Special Grant has been held as well as plans with milestones for value addition of the special grant, Mutsvangwa says. She adds that the Zimbabwean government expects gold to drive the mining sector in order to achieve the ambitious target, with the precious metal expected to contribute approximately £2.96 billion to the overall target.
Mining is one of Zimbabwe’s major contributors to its economy, alongside agriculture, which is the mainstay. The mining sector accounted for more than 60 percent of the country’s foreign currency receipts in 2019, and contributed around 16 percent to national Gross Domestic Product, the Chamber of Mines says.
The country’s mining industry is focused on a diverse range of small to medium mining operations. The most important minerals produced in Zimbabwe include gold, asbestos, chromite, coal and base metals.
Zimbabwe expects its economy to expand by 7.4 percent in 2021 from a projected contraction of 4.5 percent this year, due to the effects of drought and the COVID-19 global pandemic.
When presenting the 2021 National Budget in November this year, Finance and Economic Development Minister, Professor Mthuli Ncube, said that the mining sector is projected to rebound by 11 percent next year after surviving a COVID-19 induced shock that saw the sector contract by 4.7 percent in 2020. In September, mining bans in national parks were introduced, according to news agencies.
He added that the National Budget would allocate £1 billion towards the operations of the ministry for planning, promotion and exploration, data capturing, and automation, among other key mining processes.
Other factors necessary for the achievement of the £8.8 billion target include a stable macroeconomic environment, policy consistency, and availability of long-term capital to fund mining projects along the entire mineral value chain, the minister said.
Stopping "illicit financial flows" from gold smuggling is another key issue to address, according to media reports.