Northair`s old (Feb 28/16) Financial Post interview “Pan American is one of the largest silver producers in Mexico.” said Zaradic “It has tremendous operating experience in Mexico and Kootenay’s Le Negra deposit is highly attractive given its close proximity to one of Pan American’s operations which is beginning to run out of material.” I was aware that Pan American`s 4,000 tpd operating plant (located in Sonora, Mexico) is running out of ore feed. This is why I immediately checked the distance between Alamo Dorado (Pan American`s operation) and Kootenay`s La Negra deposit.
I figured 200 (+) km was too far for trucking.
It looks like Pan American is leaving this option on the table - for La Negra`s high grade ore.
I guess they figure it might be cheaper to use the Alamo Dorado processing plant to process La Negra ore - even if trucking the ore is more expensive - than spending millions of dollars to build a new operating plant for La Negra. The Alamo Dorado plant would just be sitting there idle.
It makes perfect sense, if the numbers support it. I`m sure Pan Amercan must have done some prelim number crunching already.
This scenario could work out well as La Negra will be an open pit (far less expensive than underground capex). In addition, the La Negra deposit goes right to the surface - very little surface overburden to clear out. We are looking at minimal start up capex, If they can use the Alamo Dorado existing processing plant. The biggest capital start up costs might be the big trucks, under this scenario.
In additional to lower start up capex, timeframe to get into production would be shorter as well, under this scenario.
The biggest benefit to Kootenay would be the substantial reduction in capex payback. If the up front capex is substantially lower (which it would be under this scenario), it leaves us with less capex to pay back through operating profits, which means we realize the 25% dividend payout far, far, far quicker (and get maxed out at 10% for less time). We`ll have to wait and see which scenario Pan American decides to go with. Using the existing Alamo Dorada processing plant will substantially benefit Kootenay, assuming they can control the extra trucking costs (to travel 200 (+) km). They have giant trucks these days - they will help.
Here is a map:
Link, if the image doesn`t work:
https://www.aheadoftheherd.com/Newsletter/2010/kootenay_gold_the_best_of_both_worlds_files/image002.gif Here is the Financial Post article:
https://business.financialpost.com/news/mining/ceo-interviews/northair-and-kootenay-combining-to-create-mexican-silver-consolidator