Strengthening metal prices have buoyed Polymetals Resources Ltd (ASX:POL) as it seeks to recommence production at the Endeavor silver, zinc and lead mine near the mining centre of Cobar in central New South Wales.
An uplift in lead and zinc prices coupled with silver now trading above A$42.50 per ounce, the highest Australian dollar silver price for more than a decade, have enhanced the Endeavor Mine economics by 28%.
Restart momentum
This adds significant momentum to the restart strategy with a Pre-Tax NPV8% of $257 million and an IRR of 120%, particularly as the first three years of planned production includes mining high-grade silver from the Upper Main Lode which contains +5.1 million ounces.
Polymetals executive chairman Dave Sproule said, “I am pleased to announce the progress we have made on advancing the Endeavor project towards production.”
Ongoing optimisation of the mine plan for Endeavor has identified a significant amount of additional mineable ore sources which could potentially be included in an updated ore reserve.
Excellent progress has also been made by Polymetals in replacing the Endeavor Environmental Rehabilitation Bond and this links positively to advancing financing discussions with debt providers and strategic partners.
Positive metrics
"Last year’s Mine Restart Study showed the high value and optionality of the project, which will only improve with the accelerating silver, zinc and lead prices currently in swing,” Sproule said.
"A reduction in zinc supply is now evident which has reduced global concentrate treatment charges by +40% which will have a significant positive impact for zinc producers.
"We are working diligently to complete the bond replacement, optimise the mine plan, establish synergies with regional partners and finalise project financing.
"Our near-mine exploration is also progressing very well with follow-up drilling of the Carpark Prospect planned to commence during the quarter.
"The company is excited to be advancing the high-value Endeavor mine toward recommencement of operations.”
Financing discussions
The Endeavor Silver-Zinc-Lead Mine is one of the three large mines at Cobar with Polymetals seeking to become a long-term, consistent and profitable base and precious metal producer.
The improved economics come as project financing and strategic partnering discussions are progressing.
Continued operational funding in the form of short-term, non-convertible and unsecured loan funding for the company has been provided by an entity related to the chairman which will allow Polymetals to close on its various corporate initiatives in the near term.