Levon Derisks, Expands Mexico Silver-Gold-Lead-Zinc Project
By Kevin Michael Grace
Next Page 1 | 2
Ron Tremblay asks, “Where are you going to put your money, if you’re a big mining company and need to continue to expand?” The President/CEO of Levon Resources TSX:LVN answers, “You need a big deposit in a good area.” He is more than ever convinced that his company’s Cordero silver-gold-lead-zinc project is just that and will grow ever more attractive to the point where it will be taken out by a major.
First things first. Cordero, which comprises 20,000 hectares, is located in Chihuahua State, on the Chihuahua-Zacatecas Silver-Gold Belt, close to Goldcorp’s TSX:G Peñasquito Mine and Camino Rojo projects and Silver Standard’s TSX:SSO Pitarilla and San Agustin projects. Tremblay is adamant that this area of Mexico is good not just in terms of metals but in security as well. “We’ve been there for four years and have never had any issues whatsoever. According to the mining companies we know well, some of the biggest mining companies in Mexico, we’re in a very safe area. The stuff you read in the papers is sensationalized. There are certain areas where there are issues from time to time, but they’re not looking at us; they’re shooting each other. And they’re not where we are.”
As for a big deposit, Levon issued a new Cordero resource estimate June 19. Indicated resources are 547.7 million tonnes grading 20.67 grams per tonne silver, 0.054 g/t gold, 0.27% lead and 0.51% zinc for 363.9 million ounces silver (up 53 million ounces from the June 2011 estimate or +17.9%), 945,000 ounces gold (+37,000 ounces, +4.1%), 3.3 billion pounds lead (+400 million pounds, +13.8%) and 6.1 billion pounds zinc (+800,000 million pounds, +15.1%) and inferred resources of 134.33 million tonnes grading 21.12 g/t silver, 0.035 g/t gold, 0.23% lead and 0.41% lead for 91.2 million ounces silver, 152,000 ounces gold, 700 million pounds lead and 1.2 billion pounds zinc.
Tremblay comments, “I’m happy because, in my estimation, just using $10 net for silver and $500 net for gold and 50 cents for lead and zinc, we’ve added probably $1.2 billion in net present value [NPV] to the value of the deal. I don’t see anything wrong with that.”
However, “Because we’ve already found so much that sometimes the market thinks we should find maybe 40% or 50% or more after we do some drilling. But what the market doesn’t understand is you’ll find the initial, main part of the resource and then trying to find additional isn’t necessarily going to be that easy.”
Tremblay continues, “It’s just a matter of trying to make people understand about these types of resources. The market is more in tune with high grade, and they’re not quite as familiar with the bulk-tonnage-type deposits. Mostly, junior companies don’t have these types of resources, so it’s unusual for a company like ours to have the largest undeveloped resource of this kind in Mexico or possibly North America. It’s always an education process to make people understand what it’s all about. We’ve been going through this since Day One, and were warned about it by Tom Patton [now President/CEO of Quaterra Resources TSXV:QTA] who found Peñasquito, south of us, which is analogous to our project.”
[The updated resource estimate has] added probably $1.2 billion in net present value to the value of the deal. I don’t see anything wrong with that —Ron Tremblay
Based on the June 2011 resource estimate and open-pit geometry of 2,600 metres on strike, 2,100 metres width and a maximum depth of 600 metres, Levon‘s January 30, 2012, preliminary economic assessment estimated a pretax NPV present value of $652.6 million at a 5% discount rate, a 19.5% IRR (internal rate of return), a $646.8 million CAPEX, a 15-year mine life, operating costs of $13.82 per tonne and a 5.5-year base-case payback.
How does the updated resource estimate affect these numbers? Tremblay replies, “The PEA was only on the first four stages of mining. That’s because we have one little piece of land that we don’t own. We can do the resource on there, but in order to mine some of these pieces we need to lay back on that property. In order to do that, we need to either buy that property, which we’re negotiating, or there is another way of doing it. There is no way of knowing how long that will take, and we’re not going to be mining it tomorrow. But the first four stages would account for a 15-year mine life of 40,000 tonnes per day.”
Next Page 1 | 2
Pages: 1 2