Bear Creek es­ti­mates Co­rani has $586M (U.S.) capex

Stockwatch Daily - - FRONT PAGE - Ms. Bar­bara Hen­der­son re­ports

GMI INGENIEROS Con­sul­tores SA has pro­vided Bear Creek Min­ing Corp. with the re­sults of the phase 1 de­tailed engi­neer­ing work at the Co­rani sil­ver-lead-zinc project in Peru that com­menced in Novem­ber, 2016.

GMI’s phase 1 de­tailed engi­neer­ing in­cor­po­rates fur­ther op­ti­miza­tions and trade-offs to the Co­rani mine plan de­scribed in the fea­si­bil­ity study dated ef­fec­tive May 30, 2015. The re­port will form the back­bone of the com­pany’s ap­pli­ca­tion for a con­struc­tion per­mit for the Co­rani project, sub­mis­sion of which is an­tic­i­pated dur­ing Q4 2017. Ap­proval of the con­struc­tion per­mit is ex­pected dur­ing Q1 2018.

With the com­ple­tion of the re­port, Bear Creek’s evo­lu­tion to­ward be­com­ing an emerg­ing pro­ducer is pro­gress­ing. In or­der that this cor­po­rate tran­si­tion be steered by an ex­pe­ri­enced and suc­cess­ful mine builder, An­drew Swarthout has elected to step down from his po­si­tion as pres­i­dent and chief ex­ec­u­tive of­fi­cer of Bear Creek to as-

sume the role of ex­ec­u­tive chair­man, ef­fec­tive Oct. 1, 2017. Catherine McLeod-Seltzer, cur­rent chair­man, will con­tinue to serve as a di­rec­tor. An­thony Hawk­shaw was se­lected to re­place Mr. Swarthout in the po­si­tion of pres­i­dent and CEO.

Key up­dates and project met­rics (in U.S. dol­lars un­less oth­er­wise noted)

The phase 1 de­tailed engi­neer­ing uses a con­tract min­ing fleet to op­er­ate the Co­rani mine, rather than an owner-op­er­ated fleet as in the 2015 Co­rani fea­si­bil­ity study. As a re­sult, ini­tial capex is re­duced to $585-mil­lion and sus­tain­ing capex is re­duced to $400,000 (from $625-mil­lion and $39-mil­lion, re­spec­tively).

Metal prices used to cal­cu­late the Co­rani project eco­nomics were re­vised to $18 per ounce sil­ver, 95 cents per pound lead and $1.10 per pound zinc.

At the metal prices quoted above, the op­ti­miza­tions, trade-offs and re­vised cost in­puts con­sid­ered in the phase 1 de­tailed engi­neer­ing re­sult in an af­ter-tax net present value (NPV) (at a 5-per-cent dis­count rate) of $402-mil­lion, an in­ter­nal rate of re­turn (IRR) of 15.4 per cent and a pay­back pe­riod of 3.5 years.

The Co­rani project re­tains its ex­cep­tional lever­age to metal prices, with an ap­prox­i­mate $112-mil­lion dif­fer­ence in Co­rani NPV (af­ter tax, at a 5-per-cent dis­count rate) for every $1 move­ment in the sil­ver price, with pro­por­tional changes in lead and zinc prices.

(See BCM Ta­ble 1 on page 4)

Next steps

The com­pany has en­gaged fi­nan­cial con­sul­tants to as­sess project fi­nanc­ing al­ter­na­tives and gauge in­ter­est amongst prospec­tive par­tic­i­pants in a project fi­nance struc­ture for the Co­rani mine. Feed­back dur­ing this as­sess­ment phase has been pos­i­tive, and the com­pany ex­pects these ef­forts to es­ca­late in the com­ing months.

Pend­ing re­ceipt of the con­struc­tion per­mit, Bear Creek an­tic­i­pates con­sid­er­a­tion of a pro­duc­tion de­ci­sion for the Co­rani project in the first half of 2018, de­pend­ing on favourable mar­ket con­di­tions and firm in­ter­est from project fi­nance par­tic­i­pants.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

David Eric De Witt, Catherine A McLeod-Seltzer, Kevin Robert Mo­rano, An­drew Todd Swarthout, Frank R Twed­dle, Nolan Allan Wat­son

(BCM) Shares: 103,085,064

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