La Cigarra PEA: $763M NPV, 41% IRR
Kootenay Silver Inc.'s La Cigarra in Mexico, Chihuahua (Parral district) 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 payable (LOM avg) per year.
Kootenay Silver Inc.'s La Cigarra has reported Preliminary Economic Assessment (PEA) results for the silver project in Mexico, Chihuahua (Parral district). 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 Ag. Economics are based on Consensus: $50.00/oz Ag, $3,611/oz Au, $0.91/lb Pb, $1.25/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 payable (LOM avg). 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, 96 g/t AgEq | 7.87 Moz Ag |
| Indicated | 20.09 Mt | 81 g/t Ag, 0.06 g/t Au, 0.14% Pb, 0.19% Zn, 93 g/t AgEq | 52.14 Moz Ag |
| Measured & Indicated | 23.02 Mt | 81 g/t Ag, 0.06 g/t Au, 0.14% Pb, 0.19% Zn, 93 g/t AgEq | 60.02 Moz Ag |
| Inferred | 6.78 Mt | 79 g/t Ag, 0.05 g/t Au, 0.15% Pb, 0.17% Zn, 90 g/t AgEq | 17.25 Moz Ag |
Our Analysis
- IRR after-tax
- 41%
higher than 56% of 27 projects we track
- NPV after-tax
- $763M
higher than 74% of 34 projects we track
- Initial capex
- $332M
44% of NPV
costlier than 74% of 35 projects we track
- Payback
- 1.9yrs
slower than 56% of 16 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 silver today
- $51.80/oz
A US$332M build against a US$59M market cap is a financing problem before it is a mining one. The company cannot fund this from its balance sheet, and a raise of that scale in the equity market would swamp the existing share base. The realistic cheques are a strategic partner buying into the asset, a royalty or streaming package, a silver-focused mid-tier acquirer, or project debt layered over a heavily diluted equity component. Each route hands a large share of the economics to someone else, so existing holders should expect to own a much smaller slice of the project than the headline numbers imply. This is one of 8 projects we track for the company, but at this market cap the portfolio offers little balance-sheet support.
The economics are what make a deal possible. After-tax NPV of $763M is about 12.9x the market cap and ranks higher than 74% of the 34 silver projects we track. The 41% after-tax IRR ranks higher than 56% of 27 peers, a respectable upper-half result, and it clears the roughly 15% hurdle for project finance and the 20%+ expected of a higher-risk junior with little else in the portfolio. Payback of 1.9 years is fast, which helps lenders and streamers underwrite the downside. Capex at 44% of NPV is lower than 26% of the 35 silver projects we track, so the build is lean relative to the value it creates. The NPV gap cuts both ways: it may show a market undervaluing a good asset, or one pricing in heavy dilution, execution risk and the difficulty of financing a build many times the company's size.
Caveats matter. This is a scoping-level PEA, so the capital estimate typically carries a plus or minus 50% band, and inferred resources may be included. The study uses $50.00/oz silver against live spot of $51.80/oz, so the price deck is close to the market and not a source of optimism. Chihuahua's Parral district is an established mining jurisdiction, though Mexico carries general fiscal and permitting risk that financiers will price. The deciding question is whether a credible partner will fund this build on terms that leave current shareholders meaningful ownership, once a feasibility study tests that capital figure.
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.
Get the next one first
Every mining project we track, with its study figures and sources, kept up to date. Sign up and download the data right away.
By signing up, you agree to receive marketing emails from Mining Stocks and to our data license. You can unsubscribe at any time. Privacy policy