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Silver Tailings: Profitable Waste?

Posted on 2012-11-05, By A-Best Staff
By Michelle Smith — Exclusive to Silver Investing News

Silver Tailings: Profitable Waste?

Tailings are materials produced from mining such as milled rock and effluents. In many cases, massive quantities of these materials, regarded as waste, are left from previous operations. Given the potential health and environmental risks associated with tailings, they could be viewed as problems or project deterrents, but then again, they could be viewed as a source of cash.

Despite the best of efforts, miners do not achieve 100 percent recovery rates. But that may not be all bad news. Failure to extract all the metal from mined materials may present profitable opportunities for those who are able to economically reprocess waste materials.

Tailings projects underway

A number of companies are exploring or embarking upon tailings projects.

PanTerra Gold (ASX:EVG,OTC Pink:ERGTF), announced plans to commence production from tailings in March or April 2012.

According to the company, the Las Lagunas project in the Dominican Republic involves reprocessing high-grade gold and silver refractory tailings that were accumulated at the Pueblo Viejo mine by a state-owned mining corporation over a period of seven years. PanTerra Gold is expecting to recover 65,000 ounces of gold and 600,000 ounces of silver annually for six and half years from this source.

In August 2011, Brian Johnson, Executive Chairman, said “[i]f current prices are maintained for the first two years of operations, profits over the two year period would be expected to increase from the previously estimated $US78 million to approximately $US104 million after tax and Government profit sharing, which would result in significant early cash flow for an emerging producer.”

El Tigre Silver (TSXV:ELS,OTC Pink:EGRTF,FWB:5RT) is an exploration company looking for cash flow from waste materials. The company announced its intentions for a silver-gold tailings project in Sonora, Mexico where it has access to materials accumulated from production at the El Tigre mine between 1903 and 1938.

The tailings program was initiated last November, with a one-year proposed work plan to achieve production. El Tigre Silver hopes that the resulting revenue will put an end to its stock dilution. Other objectives set for the project include developing infrastructure for future mining and developing in-house production experience.

Silver tailings not ready-made revenue

High silver prices and the need for cash could encourage increased interest in tailings projects, especially among junior miners. However, mining companies and their investors should understand that these are mining operations that are subject to many of the same considerations and procedures as companies that are extracting minerals from the ground, including feasibility studies and an assessment of adequate access to the needed capital.

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