Bolivia is underexplored, with estimates suggesting only 10% of its mineral resources have been extracted
Currently undertaking biggest drill program in the country
Targeting initial mineral resource for Silver Sand by end of 2019
What the company does:
Vancouver-headquartered explorer New Pacific Metals Corp (CVE:NUAG) (OTCMKTS:NUPMF) is advancing precious and base metals properties and the main project is the Silver Sand project in Bolivia, which is one of the fastest growing economies in South America.
This silver asset was added to the portfolio when it bought Alcira for US$40 million in 2017 and it is one of the group's seven polymetallic properties in Bolivia.
Nearby infrastructure is relatively good. It lies 54 km from the city of Potosi, of which 27 km is paved and the rest is gravel. Water is available for any future operations.
The project consists of three 100% owned concessions of around 7 sq km plus an area of around 57 sq km and has been subjected to some small-scale, historic mining and was drilled during the period 2012 through to 2015 by a previous company.
The group's other six properties in Bolivia are early-stage exploration projects, which have either been subject to limited small-scale mining or historical drilling.
Elsewhere, New Pacific owns the Tagish Lake gold project in Yukon, Canada (1,512 claims), and the RZY early stage silver-lead-zinc project in Qinghai province, China.
New Pacific's largest shareholder is Silvercorp Metals Inc (NYSEAMERICAN:SVM) - the largest primary silver producer in China, which owns 27.8% of the company's shares. Silvercorp's chairman and CEO Dr Rui Feng is the CEO at New Pacific Metals, and he owns 7.6% of the company.
Silver mining giant Pan American Silver Corp (NASDAQ:PAAS) also owns 16.2% of New Pacific's stock. It operates six mines, including the San Vicente mine which is located in the Potosí Department of Bolivia.
How is it doing:
In April, New Pacific began a 55,000 metre drill program at Silver Sand, the largest in the country, and now has four rigs turning there. The aim is to publish an NI 43-101 resource estimate by Christmas this year.
In late August, it published assays from 20 holes, which showed wide intervals of silver. Standout results included 165.5 metres (m) at 204 grams per ton (g/t) silver in one hole, which also included 93.5m at an impressive 336 g/t of the metal.
That came after the release, the same month, of results from 31 holes in the program, which started in April this year, which also showed positive assays.
New Pacific recently released positive results from preliminary metallurgy at Silver Sand as well. The work showed that 'good' silver extraction rates were possible using simple extraction methods and that further improvements and refinements should be possible. The firm says because the precious metals is found in cracks and fractures and not disseminated, it lends itself to flotation and carbon and leach processes.
In terms of cash burn, the firm expects to outlay US$12 million on the 55,000m drill campaign this year - April, 2019 to March 2020 - and US$2.89 million on building the camp between April and June next year.
Corporate overheads and property acquisitions between April this year and March next are expected to come in at US$2.74 million, leaving it with estimated funds remaining at June 30 next year of US$19.32 million.
New Pacific is also actively looking for other opportunities in Bolivia, aided by a mining production contract it inked with state-owned mining group COMIBOL, giving it exploration and mining rights over an area covering around 57 sq km surrounding the Silver Sand project.
The contract is valid for 45 years and is subject to a 4% gross sales value payable to COMIBOL on all minerals produced from these areas. New Pacific says it has a strong partnership with the state-owned group.
What the boss says:
Last month, New Pacific president Gordon Neal told Proactive what excited him about the Silver Sand project.
"It looks like it's going to be a pittable, high grade, bulk tonnage situation and in these days of trying to drive down prices in the mining business, a lot of the majors are looking for lower costs and when you are talking about bulk mining, close to surface, that drives down costs and it's exciting."
What the broker says:
Following recent Silver Sand drill assays, Roth Capital Partners lifted its price target on New Pacific to C$4.25 from C$3.50 previously and repeated a 'Buy' rating on the stock. Roth's analysts said the initial resource estimate will be a key catalyst for the company and said they had looked at average grades of the recent drill results, rather than specific standout holes.
"Applying these averages to the surface envelope of the deposit and assuming an 80% true width and 2.5 specific gravity, we would estimate a mineral endowment of 478.9 million ounces of silver,” noted analyst Joe Reagor.
"Additionally, we continue to believe there is significant resource expansion potential beyond the initial drilling area.," the analyst added.