Silver Mines Ltd (ASX:SVL, OTC:SLVMF, FRA:SWQ) has completed a definitive feasibility study (DFS) for the Bowdens Silver Project in New South Wales, outlining a potential 26-year operation with a pre-tax net present value of A$1.04 billion and silver reserves of 93.5 million ounces.
The updated ore reserve stands at 47.9 million tonnes grading 60.8 g/t silver, 0.36% zinc and 0.26% lead, representing a 30% increase in contained silver and a 46% rise in reserve tonnes compared with the previous estimate.
Silver is expected to generate around 91% of project revenue, reinforcing Bowdens’ position as one of the world’s largest undeveloped, silver-dominant projects.
Strong project returns
The staged development plan carries an estimated initial capital cost of A$455 million.
Using a silver price of US$45 per ounce and an Australian-US dollar exchange rate of 0.70, the full life-of-mine plan is forecast to generate a pre-tax operating margin of A$2.39 billion and an undiscounted pre-tax operating surplus of A$1.94 billion.
The project has a forecast pre-tax internal rate of return of 31.5% and a three-year payback period from the start of production.
At the spot assumptions used in the study — US$61 per ounce silver and an exchange rate of 0.69 — the pre-tax NPV increases to A$2.01 billion and the operating margin rises to A$4.04 billion.
Staged development at Bowdens
Stage 1 would process 29.9 million tonnes grading 68 g/t silver for 65.4 million ounces over approximately 16 years, with a low waste-to-ore strip ratio of 1.47:1.
During the first five years, average silver production is forecast at 4.7 million ounces annually, with all-in sustaining costs of A$20.47 per ounce, or US$14.33 per ounce.
A proposed second stage would process a further 18.3 million tonnes and extend the potential operating life to 26 years. The additional filtered tailings infrastructure required for Stage 2 has currently been assessed to pre-feasibility study level.
Across the full mine plan, payable production is estimated at 73.2 million ounces of silver, alongside 46,000 tonnes of zinc and 84,000 tonnes of lead.
Approvals remain the priority
Immediate focus remains securing development consent from the NSW Government and Independent Planning Commission.
Following consent, Silver Mines will progress the remaining federal environmental permit and state mining lease approvals.
Advanced engineering work relating to the front-end engineering and design process will also begin, while Silver Mines reviews its biodiversity offset strategy and continues discussions with potential project funding partners.
Managing director Jo Battershill said the DFS marked a significant milestone and demonstrated the project’s potential to deliver long-term employment, government revenue and shareholder returns.
“The completion of the Bowdens DFS is a significant milestone for the company and its shareholders. The Board of Silver Mines would like to extend its appreciation to both the shareholder base for its ongoing patience, and the site team for completing this extensive package of works – while facing significant distractions related to the approval process.
“With the Project’s consent now in the hands of the NSW government and Independent Planning Commission, it is important to focus on the economic benefits that the BSP can bring to the community and investors alike. With the regional coal industry under pressure from decarbonisation of the economy, the benefits of this project to the local community are increasingly important.
“With a potential mine life now anticipated to be more than 25 years, the BSP is expected to deliver generational employment opportunities for more than 200 locals at steady state operations, hand-in-hand with strong financial returns to the state government from taxes and royalties, the local council through the voluntary planning agreement and investors alike.
“We very much look forward to progressing the BSP through into the FEED process and subsequent development.”
About Silver Mines
Silver Mines is focused on developing the Bowdens Silver Project, around 26 kilometres east of Mudgee in central New South Wales.
Bowdens is Australia’s largest undeveloped silver deposit and sits within a 2,115-square-kilometre tenement package covering around 80 kilometres of the mineralised Rylstone Volcanics.
The broader district is prospective for further silver-lead-zinc, volcanogenic massive sulphide and copper-gold mineralisation.