The Cerro Moro low sulfidation, silver-gold deposit is located within the Deseado Massif approximately 70 km southwest of the coastal port city of Puerto Deseado in the Santa Cruz province of Argentina. The project contains a number of high grade epithermal gold and silver deposits, some of which will be mined via open pit and some via underground mining methods.
Cerro Moro is currently in development and Yamana’s planned construction expenditures for 2018 is $61 million. Construction is on schedule with the ramp-up of operations to commence in the second quarter of 2018. The Probable Reserve estimate as of Dec. 2017 was 1.95 Mt containing grades of 648.3 g/t silver and 11.4 g/t gold (1.0 g/t AuEq cut-off). Yamana is targeting the addition of 1.0 million gold equivalent mineral resources to the mineral inventory over the coming years.
First production is expected in 2018 with 2019 production estimated to be approximately 125,000 ounces of gold, and 6,000,000 ounces of silver.
The concentrator will consist of a standard crushing, grinding and flotation circuit with a counter current decantation and a Merrill Crowe circuit included. Metallurgical recoveries are expected to average 95% for gold and 93% for silver.
Sandstorm has a silver stream agreement to purchase an amount of silver from Cerro Moro equal to:
- 20% of the silver produced, up to a maximum of 1.2 million ounces of silver annually, until Yamana has delivered to Sandstorm 7.0 million ounces of silver; then
- 9.0% of the silver produced thereafter for the life of the mine.
As part of the Cerro Moro Stream, Sandstorm has agreed to purchase an amount of silver from the Minera Florida mine in Chile and the Chapada mine in Brazil, during the years 2016 through 2018 equal to:
- 38% of the silver produced, up to a maximum of 200,000 ounces of silver annually from Minera Florida; and
- 52% of the silver produced, up to a maximum of 100,000 ounces of silver annually from Chapada.
If by January 1, 2019, the Cerro Moro processing facility has not averaged 80% of its daily nameplate production capacity over a 30-day period (the “Commencement of Production”), then Yamana’s producing El Peñon mine in Chile will provide a 24 month backstop until the Commencement of Production has begun. During the 24 month backstop, if applicable, Sandstorm will purchase an amount of silver equal to 16% of El Peñon’s silver production up to a maximum of 1.2 million ounces per annum.
Sandstorm will make ongoing payments for each ounce of silver received, equal to 30% of the spot price per ounce of silver. Sandstorm made an upfront payment of US$70 million to acquire the stream in October 2015.