Silvercorp is set to enhance its mining operations by expanding into Ecuador through the acquisition of the El Domo and Condor projects. The El Domo project is projected to boost revenues significantly and diversify the company’s metal production beyond silver. The acquisition also improves Silvercorp’s reserve estimates and positions the company favorably in the mining sector as it aims for production in 2026.
As 2025 approaches, the mining industry is experiencing significant shifts, notably with Discovery Silver transitioning to gold production by acquiring the Porcupine mine in Ontario from Newmont. In parallel, Silvercorp is set to expand its horizons by entering Ecuador through the acquisition of the El Domo and Condor projects, thus diversifying into copper and gold alongside its silver production.
The El Domo project is projected to enhance Silvercorp’s revenues by 50%, potentially reaching $473 million by Fiscal 2027, premised on conservative pricing assumptions. Here, silver will contribute over 40% to revenue, while copper and gold will account for 18% and 12%, respectively. This strategic move promises geographical diversification and enhanced visibility among Western investors for Silvercorp.
The acquisition significantly boosts Silvercorp’s mineral reserves, escalating proven and probable reserves from over 100 million ounces of silver equivalent to 168 million ounces. The resource estimates have also seen substantial growth, allowing for increased production in both China and Ecuador. This inventory expansion positions Silvercorp favorably against its competitors, paving the way for higher market valuation multiples.
El Domo, a fully permitted volcanic massive sulphide (VMS) deposit, is characterized by its compact, high-grade reserves, facilitating prolific metal production from a modest operational footprint. With reserves of 6.5 million tons averaging 1.93% copper and 46 grams per ton silver, the project promises to be a low-cost, high-reward mining operation.
In alignment with the 2021 Feasibility Study, El Domo is anticipated to produce 25 million pounds of copper and 26,000 ounces of gold annually across a 10-year operation period. Initial capital requirements are estimated at $248 million, with expectations to decrease costs through infrastructure optimization and existing financial arrangements, including a $175 million streaming agreement with Wheaton Precious Metals.
Silvercorp is leveraging its extensive operational expertise to optimize the technical aspects of El Domo, aiming to achieve improvements across various project components. Enhanced metallurgical testing is planned to increase recoveries of gold and silver, which would positively impact profitability.
The company is targeting first production in the latter half of 2026, with construction already in progress, including a powerline agreement with local utility CNEL and contractual arrangements with CRCC 14 Bureau Group. Upon successful commencement, El Domo will join the ranks of Ecuador’s modern mines, contributing significantly to the sector’s growth.
The acquisition, finalized in 2024 for C$200 million in all-stock from Adventus Mining, aligns with the Ecuadorian government’s supportive mining sector policies, including protective investment agreements for developments like El Domo. Furthermore, local partner Salazar Resources holds a 25% interest, providing invaluable insight into the Ecuadorian socio-political landscape.
Silvercorp’s second initiative in Ecuador involves the Condor gold deposit, historically characterized by a proposed large open-pit operation. However, the company is now pivoting towards high-grade underground mining, anticipating resource estimates that could support a Preliminary Economic Assessment for an underground operation.
As Silvercorp diligently advances El Domo and refines the Condor project, the upcoming two years promise numerous catalysts that could positively influence the company’s valuation and market position. Their commitment to forging ahead with these projects signifies a concerted effort to expand and enhance their mining portfolio.
In summary, Silvercorp’s acquisition of the El Domo project marks a transformative step forward, enhancing its revenue potential and diversifying its operational scope. The integration of both El Domo and Condor offers promising opportunities in copper and gold, positioning Silvercorp favorably within the evolving mining landscape. As the company advances towards initial production and explores additional optimizations, it stands to gain recognition and potentially increased valuation from investors.
Original Source: stockhouse.com
