China's Next Silver Producer
Minco Silver (MSV-T) made a giant leap forward with today's announcement of a conditional commitment from the Industrial and Commercial Bank of China for 300 million RMB (approximately US$44.17 million) for construction of a plant estimated to cost $73.1 million at their 157 million ounce silver deposit at Fuwan.
The Feasibility Study released on September 28, 2009 called for a nine-year mine life producing 5.5 million ounces of silver a year at $5.65 per ounce cash cost. Minco was using a silver price of $13.57 in their numbers, which would generate an internal rate of return of 33.2%. Just guessing on my part but with $20 silver, that IRR will almost double.
The plant calls for 3000 TPD capacity and will produce silver, lead and zinc concentrates.
It's been a busy year for Minco. In early June 2010, Minco received the sum of $11.7 million from their investment in Sterling Mining. Minco has applied to the bankruptcy court for the agreed-on termination fee from Sterling in the case of Minco not taking over Sterling. That amounts to an additional US$2.75 million.
In late June 2010 Minco announced their Environmental Impact Assessment has been approved by a technical panel and has been submitted for final approval. When the administrative EIA approval is granted, Minco will submit their final mining license application.
Construction of the plant and commissioning will take between 20 and 24 months from the time the Mining License is granted. Minco hopes to be in production in late 2012.
I have visited the project. I love it and Minco management. I wish they had been successful in bidding for the Sunshine mine but they are still sitting on a world-class silver mine. Anyone who is a believer in the silver story should certainly consider investing in Minco Silver.
Minco Silver is an advertiser. I am a
paid consultant to Minco so anything I say positive about them
should be considered totally biased. We don't share in your profit
so we can't share in your losses. With a market cap of under
$150 million Minco is getting less than $1 an ounce for silver
in the ground. That's still very cheap and the phase between
now and final construction is often the most profitable, and
safest time to invest in a mining stock.