TSX-V-listed Discovery Silver is “extremely pleased” with the results of a prefeasibility study (PFS) on its 100%-owned Cordero silver project, in Chihuahua state, Mexico, CEO Tony Makuch says.

“The PFS positions Cordero uniquely in the silver developer space with a long mine life of 18 years and production averaging over 35-million silver equivalent ounces (SEOs) in the first 12 years of mine life.

“This represents an approximate 40% increase in total ounces produced compared with our 2021 preliminary economic assessment (PEA). Despite significant industry-wide cost escalation over the last year, cost savings from a streamlined process design and improved metallurgical performance have resulted in a highly capital efficient project with excellent margins,” he notes.

The study also outlines the significant economic contribution the project will have through employment, taxes and the purchases of local goods and services in the municipality of Parral, in Chihuahua state and in Mexico, Makuch says.

“We now look forward to advancing the project toward a feasibility study and surfacing additional value through numerous optimisation opportunities we have already identified,” he adds.

The PFS project team was led by Ausenco Engineering, with support from AGP Mining Consultants and Knight Piésold.

Highlights include excellent project economics, with a base case after-tax net present value (NPV) of $1.2-billion (C$1.5-billion) and an internal rate of return of 28%.

There is also an extended mine life and higher production, with an 18-year mine life with average yearly production of 33-million SEOs representing an increase of about 40% in total SEOs produced over the life of the project compared with the 2021 PEA.

High margins and low capital intensity have been maintained, with an average all-in sustaining cost of $12.80 per SEO in years 1 to 12, with an initial development capital expenditure (capex) of $455-million, resulting in an attractive NPV-to-capex ratio of 2.5x.

There is also a significantly derisked reserve base, with new reserves declared of 266-million silver ounces, 790 000 oz of gold, 2.97-billion pounds of lead and 4.65-billion pounds of zinc. More than 70% of mill feed in years one to five is classified as proven.

There is also an exceptional silver price leverage, with the PFS mine plan assuming only 42% of measured and indicated resource tonnes are processed and clear potential to significantly extend mine life at higher silver prices.

In terms of environmental, social and governance, and economic contribution, total estimated taxes payable are $1.2-billion, while the peak local workforce is estimated at over 1 000 employees and more than $4-billion of goods and services are expected to be bought locally within Mexico over the life of the mine.