Aurcana Silver (OTC:AUNFF) acquired the historic Revenue Virginius Mine in Ouray Colorado in December 2018. This is a mine that has come in and out of production a number of times with the ebb and flow of demand since the 1800’s. Its an extremely vast series of extremely high grade underground veins, with the Revenue Virginius Vein being the initial target. This is going to be a significant operation.
They have a ~500 ton per day processing facility already on site. Modernization and environmental remediation of the site is nearly complete. The long lead time items were ordered a long time ago. Funding is complete and they’re fully permitted.
The market had left them for dead, almost, because they did not have the funding necessary to carry them through to production. At the end of 2020, they finalized their last leg of funding, a $28m debt facility, which will fund them through to the point of being revenue positive. The market has not given them credit for it yet.
By late 2Q21, they’re targeting production to be ramped to 270 tons of feed going through the mill each day. From there, they’ll continue ramping the mill up to its maximum capacity of about 500tpd. Beyond that, they’ll consider different ways to scale further and also start getting their Texas mine ready to come online.
The material they’re working with is producing averages up to 37oz of Silver per ton of material, which is very high grade. They’re All In Sustaining Cost is about $11 per ounce, but they’re also getting other sellable minerals which works the AISC down a couple more dollars. With Silver being at $25/oz, that’s extremely good for the bottom line.
According to the CEO, if Silver was only at $18.50, which the economics of their whole project is based off of, they’d have a Net Present Value of $75 million and an Internal Rate of Return of 71%. With Silver at $27 the NPV would be $177 million and the IRR 148%. I can’t wait until they start running material through the mill.
Historically, large movements in Silver prices and corresponding cycles roughly lag large movements of Gold. The inflationary market forces that drive Gold’s price up for currency hedging and value storage purposes, end up spilling over to Silver as Gold prices go higher and higher, because more and more people perceive Gold as being overpriced. We have Bitcoin in the arena now but it might be a falling knife, time will tell.
Gold isn’t far away from its all-time high levels. Because of a strong US housing market and because of continued inflationary US monetary policy, along with inflation inducing political agendas in the US, I expect Gold to reach new highs in the relative near term. Silver on the other hand is only about half of its all-time high which gives it more room to run. On top of that, consider the increasing industrial demand for Silver fueled by Solar as well as other tech. Those things, at minimum, help support existing price levels long-term.