AbraSilver Resource Corp. has recently received a substantial financial backing of $15 million to develop its flagship Diablillos project in Salta, Argentina. The investment comes from two significant entities, Kinross Gold, a major player in the gold mining industry, and Central Puerto, Argentina’s leading electricity provider.
To move the project forward, AbraSilver issued 25 million shares to each investor at $0.40 per share, raising total proceeds of C$20 million (approximately $14.5 million). The shares were priced at a 3% premium to the closing stock price on April 19, indicating investor confidence in the company’s prospects.
Although AbraSilver’s stock fell 5.1% to C$0.37 in early trading on Monday following the announcement, the company’s market capitalization remains strong at C$209.3 million ($152.4 million). AbraSilver’s stock is still near its 52-week high of C$0.42.
AbraSilver has received an infusion of funds from Kinross and Central Puerto, with each company holding about 4% of its equity. This investment has granted them standard anti-dilution rights to maintain their shareholdings. In response to the financing, AbraSilver plans to consolidate its shares on a one-to-five basis.
John Miniotis, CEO of AbraSilver, expressed enthusiasm about the investment, stating that it will enable the company to advance the Diablillos project aggressively towards a production decision. He highlighted that the partnership with Kinross and Central Puerto brings extensive expertise in mineral exploration, mine development, and power generation.
The Diablillos project has moved to the pre-feasibility stage and promises significant output. According to a recent technical report, the open-pit operation could have a lifespan of 13 years, with an expected average annual production of 7.7 million ounces of silver and 71,000 ounces of gold. Notably, silver production could surge to approximately 14.5 million ounces annually in the first five years.
AbraSilver predicts that based on these figures, Diablillos could be among the world’s top 10 primary silver mines. “Unlike many other silver projects, the PFS highlights that Diablillos is a true primary silver project, with a substantial amount of gold and no base metals,” Miniotis said.
The Diablillos property has significant mineral reserves and multiple deposits near the surface. The Oculto, JAC, Fantasma, and Laderas deposits together contain 210 million ounces of silver equivalent, which is 42.3 million tonnes at 91 grams per tonne silver and 0.81 grams per tonne gold. The project has a strong financial performance, with an after-tax net present value of $494 million, assuming a 5% annual discount rate, and an internal rate of return of 25.6%. The projected payback period is just 2.4 years, based on base-case metal prices of $1,850 per ounce for gold and $23.50 per ounce for silver.
AbraSilver is exploring different strategies to enhance the project’s economics before moving to a feasibility study. These strategies include processing mineralized material that is currently considered waste and expanding mineral reserves by drilling. The area has undergone extensive exploration, with more than $55 million invested in the 79 square kilometer area and over 130,000 meters of drilling completed to date.
Furthermore, AbraSilver has formed a strategic alliance with Kinross to explore and potentially acquire new mining projects throughout Argentina, focusing on silver, gold, and copper resources. This partnership goes beyond immediate project financing. Earlier this year, AbraSilver expanded its portfolio by partnering with Teck Resources. Teck Resources now has the option to acquire an 80% stake in another major project, La Coipita, which is a copper-gold venture in Argentina. These strategic developments demonstrate AbraSilver’s proactive approach to securing resources and partnerships to achieve its vision for growth in the mining sector.
