Analysts praise Aurcana's 115 million ounces silver
Aurcana got kudos from analysts on a new resource that shatters its old 4.2 million ounce silver resource at the La Negra mine in Mexico; but will it expand throughput?
mineweb.co.za
Author: Kip Keen
Posted: Thursday , 30 Aug 2012
HALIFAX, NS (MINEWEB) -
Aurcana's (TSX-V: AUN) updated resources at La Negra mine - a remarkable 27-fold increase to 115 million ounces silver plus base metals over a previous resource estimate - garnered widespread approval, even surprise, from analysts covering the junior silver miner.
Casimir Capital increased its price target to C$1.35 from C$1.70, while Stonecap Securities upped its forecast from C$1.20 to C$1.50. A hold-out was Roth Capital Partners, where analyst Brian Post preferred to maintain a C$1.50 buy target until the resource estimate is filed with regulators, giving more details on La Negra mineralization.
Still, Aurcana's leaping silver resources wowed Post. He called the resource update "massive" in a note to clients and said in an interview Wednesday that while a strong resource update was expected, the sheer scope of the increase was "pretty impressive."
What it means for Aurcana production at La Negra, which recently expanded to 2,500 tonnes per day, is not clear. Gary Lindsey, Aurcana's corporate relations consultant, said the silver miner had yet to define possible expansion at La Negra given the resource increase.
"We will just keep doing what we've been doing," Lindsey said, referring to mine expansion at La Negra since Aurcana started operating it in 2007 at 1,000 tonnes per day.
"Where we reach a maximum (operating rate), we're not quite ready to state."
Undoubtedly this was an impressive resource increase and some standout numbers help put the new La Negra resource estimate in perspective. The quantum leap comes on the back of extensive historical exploration at La Negra, where, as Lindsey pointed out, there are already 60 kilometres of underground workings. In all, the new resource was based on 16,422 diamond drillholes and 22,289 channel samples.
Yes, that is 16,422 drillholes and not metres of drilling, Lindsey confirmed. Some of that drilling is Aurcana's, while much of it comes from Peñoles', which owned and operated the mine between 1970 and 2000.
As for the scale of the increase: Aurcana had previously reported 4.2 million ounces silver @ 105 g/t silver at La Negra, plus base metal credits, in measured and indicated resources. With the new measured and indicated resource, 115 million ounces silver @ 131.3 g/t plus base metals, Aurcana's silver ounces at La Negra jump an eye-popping 27 fold.
Though worth noting: Aurcana president and CEO called it a 50-fold increase, assuming an older resource of 2.3 million ounces silver in measure and indicated resources. However Lindsey confirmed Rodriguez erred and that the last resource was in fact 4.2 million ounces silver, measured and indicated, a fact an analyst had pointed out to Mineweb.
But perhaps Aurcana can save the 50-fold statement for a later date, as more silver looks to be on the way as well. Aurcana and analysts noted that the latest update, comprising 13 skarn deposits at La Negra, did not include some 15 other deposits in the northwest La Negra trend where silver grades tend to be higher. In a note to clients, Post reckoned a resource for these would be out in the first quarter 2013.
If Aurcana - busy ramping up its Shafter silver mine in Texas - wasn't yet laying down new mining plans at La Negra, the implication of a 27 million tonne resource with 115 million ounces silver was clear. Assuming Aurcana mines all or most of the ounces at the current 2,500 tonnes per day, it could run La Negra for some 30-odd years.
More probable though, as Rodriguez intimated, Aurcana will at some point expand La Negra to take advantage of the added resources. Post, at Roth Capital Partners, expected Aurcana would turn the focus back on La Negra in 2013 with an eye to expansion after it brings the Shafter mine to production.
Aurcana's Lenic Rodriguez, president and CEO, and Nils von Fersen, vice president of exploration, were unavailable for comment on Wednesday. |
