La Cigarra PEA: $763M NPV, 41% IRR
Kootenay Silver Inc.'s La Cigarra in Parral Silver District, Chihuahua, Mexico has a Preliminary Economic Assessment (PEA) outlining an after-tax NPV of $763M, an after-tax IRR of 41%, and initial capital of $332M. The mine plan runs 14 years at about 4.55 Moz Ag (LOM avg payable) per year.
Kootenay Silver Inc.'s La Cigarra has reported Preliminary Economic Assessment (PEA) results for the silver project in Parral Silver District, Chihuahua, Mexico. The study headlines an after-tax net present value of $763M at a 5% discount rate. It reflects Kootenay Silver Inc.'s (KTN.V) latest disclosed economics for the asset.
Economics. The after-tax NPV is $763M using a 5% discount rate. After-tax IRR is 41%. Initial capital expenditure is estimated at $332M, with life-of-mine sustaining capital of $80M. The study models a payback period of 1.9 years. All-in sustaining costs are pegged at 18.73 USD/oz. Economics are based on Consensus: $50.00/oz Ag, $3,611/oz Au, $0.91/lb Pb, $1.25/lb Zn. Spot: $67.23/oz Ag, $4,210/oz Au, $0.91/lb Pb, $1.57/lb Zn. MRE: $36.00/oz Ag, $3,100/oz Au, $0.91/lb Pb, $1.23/lb Zn.
Production and mine plan. The project envisions an open-pit operation. Life of mine is 14 years. Average annual production is approximately 4.55 Moz Ag (LOM avg payable). Metallurgical recovery averages 89.3%.
These figures are extracted from Kootenay Silver Inc.'s technical disclosures and reflect the most recent PEA on file. Compare this project against other developers and producers in our project economics database, and always verify the numbers against the original technical report before making any investment decision.
Reserves & Resources
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Measured | 2.93 Mt | 84 g/t Ag, 0.06 g/t Au, 0.14% Pb, 0.19% Zn | 7.87 Moz Ag, 5.60 koz Au, 9.1 Mlb Pb, 12.4 Mlb Zn |
| Indicated | 20.09 Mt | 81 g/t Ag, 0.06 g/t Au, 0.14% Pb, 0.19% Zn | 52.14 Moz Ag, 39.60 koz Au, 62.2 Mlb Pb, 84.6 Mlb Zn |
| Measured & Indicated | 23.02 Mt | 81 g/t Ag, 0.06 g/t Au, 0.14% Pb, 0.19% Zn | 60.02 Moz Ag, 45.20 koz Au, 71.3 Mlb Pb, 97.0 Mlb Zn |
| Inferred | 6.78 Mt | 79 g/t Ag, 0.05 g/t Au, 0.15% Pb, 0.17% Zn | 17.25 Moz Ag, 11.90 koz Au, 22.7 Mlb Pb, 25.5 Mlb Zn |
Our Analysis
- IRR after-tax
- 41%
higher than 58% of 24 projects we track
- NPV after-tax
- $763M
higher than 74% of 27 projects we track
- Initial capex
- $332M
44% of NPV
costlier than 77% of 31 projects we track
- Payback
- 1.9yrs
slower than 57% of 14 projects we track
- Mine life
- 14yrs
- Discount rate
- 5%
- Study price assumption
- Consensus: $50.00/oz Ag, $3,611/oz Au, $0.91/lb Pb, $1.25/lb Zn. Spot: $67.23/oz Ag, $4,210/oz Au, $0.91/lb Pb, $1.57/lb Zn. MRE: $36.00/oz Ag, $3,100/oz Au, $0.91/lb Pb, $1.23/lb Zn
- Spot silver today
- $67.16/oz
The math on this one is brutal and simple: the build costs about 3.5x this company's entire US$95M market cap. That is not a financing gap a micro-cap quietly bridges with internal cash flow or a modest debt facility. Someone external has to write a US$332M cheque, and the only realistic candidates are a strategic acquirer, a streaming or royalty partner, or a heavily dilutive equity raise. For existing holders, the first two paths mean selling a piece of the upside at a discount; the third means watching their stake get carved down. The 41% after-tax IRR and the 1.9-year payback are the supporting arguments for why that cheque gets written, but they do not answer the question of who signs it.
The economics themselves are credible at this stage. The after-tax NPV of US$763M ranks in the top quartile of the silver projects we track, and the IRR sits comfortably above the 20% hurdle a higher-risk junior typically needs to attract project finance. Payback in under two years is genuinely fast, which matters because it shortens the window of execution risk between first pour and cash generation. But this is a PEA, scoping-level work, and the capital estimate carries a wide band of uncertainty. The study's 5% discount rate is at the low end of convention and flatters the headline NPV; the real test is whether the returns survive a more demanding financing reality.
The price deck is the other swing factor. The study assumes US$50.00/oz silver against a live spot of US$67.16/oz, so the base case is not stretched, it is conservative relative to today's market. That gives the project cushion, but it also means the headline returns are not pricing in any upside from current metal prices. The jurisdiction, Parral Silver District in Chihuahua, Mexico, is a known silver region, though permitting and community risk are never absent in that country. The single question that decides this project is not whether the rock is good, it is whether a partner or financier emerges who can fund a build worth several times the company's entire value without wiping out the existing shareholders in the process.
Our take, benchmarked against the project economics in the Mining Stocks database. Figures are estimates drawn from company technical reports — not investment advice; always verify against the source filing.