An Arizona Wildcat
Wildcat Silver just finished a pre-feasibility study on it's Arizona property called the Hermosa claim.The study showed that the Hermosa mine which Wildcat owns 80% of is hugely profitable.It has an after tax NPV(5%) of $830 million.The mine chiefly contains silver,manganese,gold ,zinc and copper.There is a substantial amount of manganese;enough to make a manganese mill.Manganese is used in the production of steel and aluminum. Wildcat calculates that there would be a mine life of 18 years.The next stage for Wildcat is the feasibility study which should be carried out in Q2 of 2014.Until then it is mainly a waiting game.Wildcat shares will move with the price of silver and the closeness to the production of the feasibility study.
Seed money
Wildcat needs about $1 billion to get into production however that figure includes money for a manganese plant also.It has a resource of 60 million pounds of silver graded at 2.43 ounces per ton and 43.5 tons of manganese ore at 8.31% for 7.2 pounds of manganese.
Interim steps
While waiting for the money to do a feasibility study they could drill outside the target area to get a better measure of the resource size.They could do test work to improve recovery of the primary commodities and the by- product metals.Or they could do infill drilling to expand the size of the resource.
Assumptions
The main assumptions that are used to get the value of the resource are that silver will be at $23.50 per ounce once production begins and gold will be $1250 per ounce and manganese will be selling at $1.19 per pound.This is likely to be a little high for silver since we are not at $20.00 per ounce yet.The last assumption is that the average silver production will be 12.2 million ounces for the first 5 years.This is a little high for a mine starting up so it is likely to be only 1 to 2 million ounces and now the mine life will be closer to 25 years.
What's wrong with 60%
Wildcat does not have much cash on hand and is likely going to have to make a farm-out agreement with a big producer in order to bring this mine into production.But it really is a huge resource that will likely be larger once more exploratory drilling has been done.The target area may prove to be quite a bit larger than originally thought.They may even find an additional deposit of zinc ,copper or gold.All included in the original findings.
Seed money
Wildcat needs about $1 billion to get into production however that figure includes money for a manganese plant also.It has a resource of 60 million pounds of silver graded at 2.43 ounces per ton and 43.5 tons of manganese ore at 8.31% for 7.2 pounds of manganese.
Interim steps
While waiting for the money to do a feasibility study they could drill outside the target area to get a better measure of the resource size.They could do test work to improve recovery of the primary commodities and the by- product metals.Or they could do infill drilling to expand the size of the resource.
Assumptions
The main assumptions that are used to get the value of the resource are that silver will be at $23.50 per ounce once production begins and gold will be $1250 per ounce and manganese will be selling at $1.19 per pound.This is likely to be a little high for silver since we are not at $20.00 per ounce yet.The last assumption is that the average silver production will be 12.2 million ounces for the first 5 years.This is a little high for a mine starting up so it is likely to be only 1 to 2 million ounces and now the mine life will be closer to 25 years.
What's wrong with 60%
Wildcat does not have much cash on hand and is likely going to have to make a farm-out agreement with a big producer in order to bring this mine into production.But it really is a huge resource that will likely be larger once more exploratory drilling has been done.The target area may prove to be quite a bit larger than originally thought.They may even find an additional deposit of zinc ,copper or gold.All included in the original findings.
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