By Paul Harris.
The mining sector has seen some big pivots announced as 2025 gets underway, notably silver developer Discovery Silver (TSX:DSV / OTCQX: DSVSF) becoming a gold producer through the acquisition of the Porcupine mine in Ontario, Canada from Newmont (TSX: NGT/ NYSE: NEM). One pivot that has received less attention, although whose impact looks set to be equally transformative, is that of silver producer Silvercorp (TSX/NYSE-A: SVM) moving into Ecuador through the acquisition of two development projects to get exposure to copper and gold—El Domo and Condor.
The addition of the El Domo project provides the company with a robust and executable development project that is expected to grow revenues by 50% to an estimated US$473 million in two years (Fiscal 2027). This is based on NI 41-101 mine plans and conservative metal price estimates, including $3.50/lb copper and $1,900/oz gold. Notably, silver will remain an important economic driver for the company, representing over 40% of revenue, followed by copper (18%), and gold (12%). Beyond the balance sheet, El Domo provides the company geographical diversification beyond its silver production base in China, potentially leading to greater recognition of the company by Western investors. Additionally, El Domo’s development will see the company become a producer of both copper and gold, two metals with a bright future with market expectations of higher prices.
The acquisition has seen the company’s proven and probable reserves jump from just over 100Moz of silver equivalent (comprising silver and gold converted to an equivalent silver value, but no base metals) to 168Moz, measured and indicated resources jump from 120Moz to 350Moz, and inferred resources jump from 103Moz to 499Moz. The increased metals inventory can support further production growth in China and Ecuador, potentially enabling the company to trade at higher multiples and narrow the valuation gap with its peers.
El Domo is fully permitted and funded. It is a volcanic massive sulphide, or VMS, deposit, a type of orebody noted for being polymetallic, compact and high grade. This means a company can produce a lot of metal from a small footprint, which is reflected in its reserves of 6.5Mt grading 1.93% copper, 0.25% lead, 2.49% zinc, 2.52g/t gold and 46g/t silver. VMS orebodies can famously make relatively low cost, low risk and highly profitable mines.
Based on the 2021 Feasibility Study, El Domo can produce about 25 million pounds of copper and 26,000 ounces of gold annually over the life of a 10-year open pit mining operation at an all-in sustaining cost of US$1.26/lb of copper equivalent. The study estimated an initial capital investment of US$248 million, though Silvercorp anticipates reducing this cost by optimizing site infrastructure and leveraging its extensive network of services and equipment providers. Notably, the majority of this, $175 million, has already been arranged from Wheaton Precious Metals via a streaming agreement.
Silvercorp (TSX/NYSE-A: SVM) is a mine builder and operator with experience operating low-cost mines. That takes technical skill, and the company is leveraging the skills of its technical team to review the previous technical work undertaken on the project with a view to finding improvements. This has resulted in the optimization of the designs for the tailing storage facilities, starter dam and impound area, the saprolite waste dump and non-contact water channels. The company has also selected a new site for the process plant so that its preparation will provide non-acid generating rocks for the construction of the starter tailings dam.
Furthermore, the company is working on potential optimizations to improve the project, including undertaking further metallurgical testing to improve the recoveries of gold and silver to copper concentrate. Improved recoveries mean improved payability and greater profitability.
Silvercorp is targeting the first production in the second half of 2026 and construction is now underway, having executed a powerline contract with local energy utility CNEL and awarded the first of three main construction contracts to CRCC 14 Bureau Group. Once in production, El Domo will become the third large-scale modern mine to be developed in Ecuador, following the developments of Fruta del Norte by Lundin Gold and Mirador by Tongling Nonferrous Metals.
Silvercorp bought El Domo in 2024 in a C$200 million all-stock transaction from Canadian junior Adventus Mining. The government of Ecuador has made the development of the mining sector a priority, and to this end, it has signed a number of investment protection agreements with project developers, including for El Domo in December 2022.
The company has a reputable local company as a joint partner in El Domo in Salazar Resources (TSXV: SRL), which has a 25% carried interest in El Domo through to production. Amongst other things, Salazar’s presence in the project ensures the company has good advice and intelligence on the local socio-political environment in Ecuador.
Condor
Silvercorp’s second project in Ecuador is the Condor gold deposit in Zamora-Chinchipe province, which hosts more than 6.6Moz of gold in all categories grading more than 0.7g/t gold. Silvercorp is anticipating a high-grade underground project, a change from the previous operator which considered a large open pit operation that would be costly to build and likely more difficult to permit.
After reviewing the technical data, including re-logging the drill core, Silvercorp’s team believes that the high-grade gold mineralization (in some cases +10 g/t) mostly occurs in subvertical vein/rhyolitic dyke structures containing pyrite and sphalerite. To advance Condor as an underground project, it will focus on high-grade gold structures/rhyolitic dykes.
Silvercorp is working on a new underground mineral resource estimate to potentially underpin a PEA for an underground mining operation. It also plans to permit exploration tunnels at different elevations to confirm the high-grade gold intervals and obtain greater knowledge about the geological and mining conditions for a future feasibility study.
Silvercorp will have many catalysts over the coming two years as it advances El Domo into production, as well as defining an underground project at Condor. As it executes its plans, the potential for its valuation to increase will grow with them.
For more information on Silvercorp’s projects, please visit silvercorpmetals.com/welcome.
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