A preliminary economic assessment (PEA) for Blackrock Silver’s (TSXV: BRC; US-OTC: BKRRF) Tonopah West project in southwest Nevada gives it a net present value almost double its initial capital costs, the company reported Wednesday.
The post-tax NPV (at a 5% discount rate) comes to US$326 million, with capital spending of US$178 million (including a US$22 million contingency) and a post-tax internal rate of return (IRR) of 39.2% at a 2.3-year payback period. That estimate assumes a base gold price of US$1,900 per oz. and silver price of US$23 per oz. for the project.
The NPV rises to US$495 million at a gold price of US$2,280 per oz. and silver price of US$27.60 per oz., and the IRR bumps to 54%. The project is being developed four years after discovery at the site along U.S. Highway 95 about 350 km northwest of Las Vegas, according to the PEA.
“It outlines the potential for it to be a key driver of domestic growth, increasing America’s annual silver production by over 12%,” Andrew Pollard, Blackrock president and CEO, said in a release. “Tonopah West benefits from existing infrastructure and a stream-lined permitting process, of which findings from this PEA will be used as a roadmap to kickstart.”
The company’s PEA represents one of the latest efforts to resume mining in the storied Tonopah silver district that produced 174 million oz. silver and 1.8 million oz. gold from 1900 to 1930. The report and its higher metal price scenarios also come just two weeks after the actual price of the yellow metal hit a historic high of US$2,532 per oz. and during an almost-six month period when prices have been higher than US$2,200 per ounce.
