VANCOUVER (miningweekly.com) – TSX-V-listed project developer Bear Creek Mining has signed an agreement with the Peru Ministry of Energy and Mines (MEM) and ProInversion (an agent for the Peru government) that allows the company to recover, at its option and on an accelerated basis, the 18% taxes applied to engineering and construction costs incurred during the future development of the proposed Corani silver/lead/zinc mine.
The agreement provides that Bear Creek can recover certain taxes associated with the initial capital expenditures (capex) to develop Corani and covers a three-year development period, during which detailed engineering, permitting, construction, commissioning and project ramp-up is expected to take place.
The agreement is retroactively applicable to costs incurred from November 2016, and allows the company to request modifications regarding expenditure amounts and timelines. According to a July 2015 optimised feasibility study, capex has been estimated at about $625-million.
"The [contract] will streamline anticipated cash flow and capital requirements, as the Corani operation is developed, by allowing the company to periodically recoup … taxes payable on capital expenditures as they are made rather than after construction is completed,” president and CEO Andrew Swarthout stated Thursday.
Bear Creek reported that Phase 1 detailed engineering at the Corani project is advancing well and is on schedule to be complete in June. This phase of detailed engineering will provide key documentation for the construction permit application, which the company expects to submit during the third quarter.
In parallel, Bear Creek and its outside advisers are investigating and assembling Corani project financing alternatives so that it is ready to move forward quickly as anticipated improvements in metal prices accelerate. Pending receipt of the construction permit, solidification of a project financing plan, and favourable commodity and market conditions, the company's board hopes to consider a construction decision for the Corani project by year-end.
The feasibility study envisions average payable silver output of 13.4-million ounces per year for the first five years and 8.4-million ounces a year over the 18-year life-of-mine (LOM).
Cash cost is negative $0.23/oz of silver for the first five years, with a LOM cash cost of $3.85/oz of silver, net of base metal credits.