Silvertip achieves commercial production
Production increases continue at Coeur's new BC silver mine North of 60 Mining News – September 8, 2018
Last updated 9/25/2020 at 6:29am
Less than a year after its acquisition of Silvertip, Coeur Mining Inc. has reached commercial production at the high-grade silver-zinc-lead mine in northern British Columbia.
During August, the mill at Silvertip processed an average of roughly 450 metric tons of ore per day, up from around 350 metric tons per day during July and approximately 250 mtpd during June. Processing rates regularly ranged between 500 and 650 mtpd during August and exceeded 800 mtpd late in the month.
As a result of this performance, Coeur declared commercial production at its new Canadian mine on Sept. 1.
"The commencement of commercial production at Silvertip is a significant milestone," said Coeur Mining President and CEO Mitchell Krebs. "We completed the acquisition of Silvertip in October 2017 and commenced production in March after successfully commissioning the mill. Since then, our team has been focused on optimizing plant performance and on upgrading the mine's infrastructure."
Coeur acquired Silvertip from JDS Silver Inc., a company formed by JDS Energy & Mining Inc. in 2012, for US$250 million – US$200 million at the time of the purchase plus US$50 million to be paid when certain production and permitting milestones are met.
For this price, the Chicago-based miner acquired a newly built mine with 2.35 million metric tons of indicated resource averaging 352 g/t silver, 9.4 percent zinc and 6.7 percent lead; and 460,000 metric tons of inferred resource averaging 343 g/t silver, 9.8 percent zinc and 6.2 percent lead.
Once running at capacity, Coeur anticipates this operation to produce roughly 3 million oz silver, 45-50 million lb zinc, and 40-45 million lb lead annually over an initial 7.5-year mine life.
"Once in full production, we expect Silvertip to produce about 10 million silver-equivalent-ounces annually," Krebs said at the time of the purchase.
By March, Coeur had commissioned the mill at Silvertip and began ramping up production with the goal of reaching 750 mtpd by year-end.
Coeur is well on its way to meet that goal and plans further expansion of capacity next year.
"Optimization efforts at Silvertip will continue over the next several quarters, with processing rates on-track to average 750 tonnes (metric tons) per day by year-end and reach 1,000 mtpd in early 2019," said Krebs.
While ramping up production, Coeur is carrying out a rigorous drill program aimed at expanding and upgrading the high-grade resources at Silvertip.
By the end of June, the company had completed 44,500 meters of drilling at the high-grade silver mine. The company said the mineralized zone encountered during this program were thicker and higher grade than modeled.
"Drilling targeted three zones with a particular emphasis on upgrading resources to reserves in the Central zone, where results also confirmed the continuity of mineralization in zones previously thought to be discrete," said Krebs.
With the success of the initial phase of drilling, the Chicago-based miner budgeted an additional US$4 million for further exploration and resource expansion this year.
Results from the drilling completed through early July is being incorporated into an updated NI 43-101-compliant resource model for Silvertip that includes a maiden reserve estimate for the northern B.C. mine.
"We remain on-track to publish an initial NI 43-101 technical report in the fourth quarter and expect to receive approval of the permit amendment application to operate at 1,000 mtpd around year-end," said Krebbs.
Despite the steady ramp up to production, Coeur has lowered its expectations for 2018 production at the new mine. The company's original guidance was 4.03 million to 5.08 million silver-equivalent ounces this year, which includes the value of the zinc and lead also produced. The mine is now expected to produce 2.03 million to 3.48 million silver-equivalent ounces this year.
Coeur's near-term priorities at Silvertip include the construction of improved camp facilities for the mine's 250 employees, acceleration of underground development activity and the introduction of long-hole stope mining to selected areas.