Interview with Andrew Williams, President and CEO of New Pacific Metals
Our previous interview: https://www.cruxinvestor.com/posts/new-pacific-metals-nuag-advancing-2-large-bolivian-ag-au-projects-3092
Recording date: 28th June 2024
New Pacific Metals (TSX:NUAG) is emerging as a compelling player in the silver mining sector, with two significant discoveries in Bolivia that are attracting attention from investors and industry experts. The company's flagship Silver Sand project has recently reached a crucial milestone with the publication of its pre-feasibility study (PFS), while its second project, Carangas, is advancing towards a preliminary economic assessment (PEA).
The Silver Sand project's PFS results are particularly noteworthy, showcasing robust economics that position it as one of the world's premier undeveloped precious metals projects. With an after-tax Net Present Value of $740 million at $24 silver, a 37% Internal Rate of Return (IRR), and a payback period under two years, Silver Sand demonstrates significant potential for value creation. The project's NPV to initial capital expenditure ratio of over 2 further underscores its attractiveness.
New Pacific's second discovery, the Carangas project, adds another dimension to the company's growth potential. With a PEA expected in the coming months, Carangas could potentially unveil another significant silver asset, further enhancing the company's resource base.
One of New Pacific's key strengths lies in its strategic backing. The company boasts strong support from major players in the silver mining industry, with Silver Corp holding a 27% stake and Pan American Silver owning just under 12%. This backing not only provides financial support but also lends credibility to New Pacific's projects and approach.
Operating in Bolivia presents both opportunities and challenges. While the country has a rich mining history, it hasn't seen a new large-scale open-pit mine permitted in some time. New Pacific has taken a strategic approach by employing a 100% Bolivian team for its in-country operations, complemented by experienced expats and Vancouver-based management. This structure effectively balances local knowledge with international mining expertise.
The silver market outlook provides an attractive backdrop for New Pacific's projects. Silver demand is driven by both investment and growing industrial applications, particularly in sectors such as photovoltaics and electric vehicles. The supply side is constrained, as 75% of silver is produced as a byproduct of other metals, potentially setting the stage for significant price movements if demand outpaces supply growth.
From a financial perspective, New Pacific is well-positioned with approximately US$15 million expected in cash reserves by the end of the year. This runway provides the company with flexibility to continue advancing its projects without immediate financing pressure.
For investors, New Pacific Metals offers exposure to two high-quality silver assets in a jurisdiction that, while challenging, offers potential for lower costs and less competition. The company's strong backing, experienced management, and advancing projects make it an attractive option for those seeking exposure to the silver market.
However, investors should be mindful of the risks associated with mine development in Bolivia and the inherent volatility of the silver market. As with any mining investment, careful due diligence is essential. Potential investors should closely monitor progress on permitting, stakeholder engagement, and project advancement, as well as broader trends in the silver market.
View New Pacific Metals' company profile: https://www.cruxinvestor.com/companies/newpacificmetals
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