La Colorada is an underground polymetallic silver mine located in Zacatecas, Mexico, and was acquired by Pan American in 1998.
- Location: Zacatecas, Mexico
- Mine Type: Underground
- Ownership: 100%
- Production: Silver and gold doré, silver rich lead and zinc concentrates
- Capacity: 1,250 tpd
- Deposit Type: Epithermal veins, breccia pipes, mantos, and replacements
Silver, gold, zinc, and lead mineralization is present as epithermal veins, breccia pipes, mantos, and lime stone replacements in three main zones known as Candelaria, Estrella, and Recompense. The mining method used at all three mines is cut and fill stoping.
The operation currently produces approximately 430 tpd of oxide ore and 870 tpd of sulphide ore. Each type of ore is processed through separate circuits which share a single crushing plant. The daily processing capacity of the oxide plant is nominally 650 tonnes of ore and the capacity of the sulphide plant is nominally 750 tonnes.
The oxide plant comprises a conventional cyanide leach plant consisting of crushing, grinding, leaching, Merrill Crowe zinc precipitation, and on-site refining to produce precious metal doré. The sulphide plant is a conventional flotation plant comprised of crushing, grinding and selective lead and zinc froth flotation circuits to recover precious and base metals into separate lead and zinc concentrates.
As the maximum capacity of the La Colorada mine in its existing configuration has been reached, an expansion project was approved in December 2013. The total throughput at La Colorada’s processing plants will progressively increase from the 1,330 tpd achieved in 2015 to 1,500 tpd starting in 2016 when the new shaft has been commissioned and to 1,800 tpd by the end of 2017. The mine’s expansion involves the construction of new mining infrastructure, the development of new mining zones to reach deeper mineralization, the expansion of the sulphide ore processing plant, and the installation of a new power line connection to the national grid.
A new shaft under construction between the Candelaria and Estrella mines, which is necessary regardless of the expansion project, will increase hoisting capacity to 2,300 tpd. Construction and commissioning of the new sulphide plant was completed in Q3 2016. The construction of the new shaft, headframe, and hoisting plant was also completed in 2016.
The total incremental expansion capital was estimated at $80 million. The sulphide plant expansion, additional mining equipment and accelerated development, plus several important infrastructure upgrades account for the largest portion of the incremental capital for the project.
Including sustaining capital, the total investment during the expansion project period of 2014 to 2017 is estimated to be $163.8 million. Assuming a project period of 2014 to 2023, at metal prices of $16 per ounce of silver, the incremental after tax net present value of the expansion project is estimated at $22.0 million at a 10% discount rate, with an internal rate of return of 18.0%, and a payback period of 2.9 years. Over the same period, at metal prices of $19 per ounce of silver, the incremental after tax net present value of the expansion project is estimated at $38.6 million at a 10% discount rate, with an internal rate of return of 22% and a payback period of 2.5 years.
The La Colorada Technical Report, on which the foregoing is based, is a preliminary economic assessment. The results of this preliminary economic assessment are preliminary in nature, in that it includes inferred mineral resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the assessment will be realized. Mineral resources that are not mineral reserves have no demonstrated economic viability.
For more information on La Colorada operations, please see our most recent Quarterly Report.