Aya Gold & Silver (TSX: AYA) has poured its first silver from the new, expanded mill throughout the whole circuit at its Zgounder mine in Morocco, about 570 km south of the capital Rabat, the company said Monday.
The pour marks the completion of hot commissioning at the mine and the plant reached nameplate capacity two days later on Nov. 29. Commissioning of the gravity circuit is ongoing.
“This milestone brings us closer to the start of commercial production at our expanded Zgounder mill in the coming weeks and marks our transition into a tier-one, pure-play, and profitable silver producer,” CEO and President Benoit La Salle said in a release.
“With a full ramp-up planned for next year, we are encouraged by the strong operating indicators, overall performance, and continued optimization of our deposit.”
Located in the Anti-Atlas mountains of west-central Morocco, Zgounder is considered the second most important silver producer in the kingdom. It currently holds 8.6 million tonnes in reserves at 257 grams silver per tonne for 70.9 million ounces.
Recoveries are higher than 80% and are improving as the circuit stabilizes and the mill head grade increases, Aya said. The mill is being fed with marginal ore to reduce the amount of silver lost through ramp up.
SCP Resource analysts wrote in a note that the silver pour and ramp up puts Aya in a position to set new production records. They model a progressive ramp up through 2025, from a 4.4-million-oz.-per-year run rate in next year’s first quarter to 6.4 million oz. per year by the fourth quarter.
“We think this is a strong team at all levels (executive, in country, and mine site) capable of delivering on Zgounder’s 7-million-oz.-per-year potential,” they said. “As one of the few primary silver producers in the space on the cusp of a major production step-up, Aya remains one of our highest conviction silver names to own.”
They maintain a buy rating for Aya shares at C$21.50 each based on 1.5x net asset value for Zgounder. Aya shares were up 0.1% to C$13.19 apiece on Monday at noon in Toronto, valuing the company at C$1.7 billion. Company shares have traded in a 52-week C$9.40 to C$19.56.
