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The high-grade, gold-silver Ayelén vein system of the San Luis Project in central Peru has the potential to become Silver Standard's next development project. The San Luis Project is located approximately 25 kilometers northwest of Barrick Gold Corporation's Pierina gold mine, and can be accessed by two all-weather roads. A feasibility study on placing the project into production was completed in the second quarter of 2010.
The feasibility study estimates a net present value of $39.2 million (5% discount rate) and internal rate of return of 26.5% using base case prices of $800 per ounce gold and $12.50 per ounce silver. Capital expenditures are estimated to be $90.4 million (+/- 15%) for a 400 tonne/day underground mine with average annual production of 78,000 ounces of gold and 1.86 million ounces of silver over its 3.5 year mine life. The base case financial summary assumes recovered gold production of 270,031 ounces and silver production of 6,454,810 ounces over the life of the mine and operating cost for the mine is estimated at $160.83/tonne of ore processed.
Silver Standard obtained 100% interest in the San Luis Project in the third quarter of 2011.
Project permitting and community relations negotiations are ongoing.
