Fast emerging New South Wales silver producer Cobar Consolidated Resources (ASX: CCU) has increased its silver mineral resource at the Wonawinta project.
Located south of Cobar in western New South Wales, Wonawinta now boasts a resource of 50m ounces of silver (previously 44m ounces) at an average silver grade of 52g/t, up from 48g/t.
60% of the silver resource inventory has been upgraded from inferred to indicated resource status.
A recent scoping study indicated favourable project economics producing 3.1moz/ pa, with average cash cost at US$6.25/oz and a mine life of 5-6 years from four open pits. Estimated processing plant capital cost is $21m.
However, there are signs that exploration at Wonawinta, might lift the current resource of 50m oz by another 20-30 m oz.
The lift in indicated resource category should now provide Cobar with the confidence to achieve that production schedule. The feasibility study is due for completion in mid 2010, with production potential by 2011.
A second phase of the RC drilling program will start in the central pit area of the project this week.
Also, in Cobar's favour, the stunning rise in the gold price has lifted the silver price to US$17.80/oz. So there would appear to be significant scope for re-rating of Cobar on these fundamentals relative to current valuation.