Diablillos Project PFS Reveals US$1.29B Upside and High-Grade Silver-Gold Potential

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AbraSilver Resource Corp. (ABRA: TSX.V; ABBRF:OTCQX) has released its updated Pre-Feasibility Study (PFS) for the Diablillos silver-gold project in Argentina, showcasing significant improvements in project economics and resource confidence. The study, led by Mining Plus Peru S.A.C and other technical consultants, highlights robust production estimates and enhanced economic metrics, further positioning Diablillos as a world-class project.

Key findings from the updated PFS include an after-tax Net Present Value (NPV) of US$747 million, calculated at a 5% discount rate, and an Internal Rate of Return (IRR) of 27.6%, with a rapid payback period of 2.0 years. At current spot metal prices, the after-tax NPV increases to US$1.29 billion with an IRR of 39.3%, demonstrating the project's significant leverage to silver and gold price increases.

Production over the 14-year mine life is projected to average 13.4 million ounces of silver equivalent annually, supported by a low average All-in Sustaining Cost (AISC) of US$12.67 per ounce silver equivalent. The project's initial five years of full-scale production are expected to yield an average of 16.4 million ounces silver equivalent annually, underscoring a high-grade production profile in the early operational years.

The PFS outlines US$544 million in initial pre-production capital expenditures, which include contingency costs, with an additional US$77 million in sustaining capital over the life of the mine. AbraSilver has identified multiple avenues for further economic optimization, such as grid power integration and processing marginal materials, to potentially enhance project returns.

AbraSilver's President and CEO, John Miniotis, stated in the press release, "The updated PFS confirms Diablillos as an economically attractive silver-gold project, with strong economics and significant growth potential that has yet to be fully-realized.  With an after-tax NPV of over CAD $1 billion (USD$747M) and a rapid payback period, Diablillos is poised to deliver significant returns to our shareholders.  Our team remains focused on advancing Diablillos towards production while continuing to unlock additional Mineral Resource potential through our ongoing successful exploration program."

The updated study incorporates Argentina's Incentive Regime for Large Investments (RIGI), which reduces the corporate tax rate to 25% and eliminates export duties, among other financial benefits. Diablillos qualifies for these incentives, providing an estimated US$430 million in fiscal savings over the project's life.

Silver's Critical Role and Market Dynamics

In a November 22 article, Kitco Media discussed the influence of stop orders in the trading of silver, which are used by traders to manage risks or protect profits. These orders are typically tied to key technical support or resistance levels, and their activation can intensify buying or selling pressure. Kitco emphasized that understanding the placement of these stops offers traders insights into potential price movements, reflecting the dynamic nature of silver's market behavior.

On November 28, David Brady of Sprott Money analyzed the positioning trends in the silver market. Brady explained that Bullion Banks often hold significant net short positions at market peaks, while Money Managers, or Funds, hold net long positions. These trends, revealed in Commitment of Traders reports, illustrate how speculative positions influence silver's price dynamics. Brady observed that shifts in these positions often signal upcoming market movements, showcasing the interconnected nature of speculative activity and price trends.

SilverWars, on November 30, highlighted the long-standing issue of global silver shortages. In doing so, the report referred to a statement from 1982 by the Ministry of Machinery Industry of the People's Bank of China. The ministry warned that known silver resources at the time were only sufficient for 16 to 42 years of mining. SilverWars also noted that a 2023 report from the Hunan Geological Survey described silver as an "indispensable" material due to its unmatched electrical, thermal, and reflective properties. This report underscores the ongoing importance of silver in modern technologies despite its exclusion from the United States Department of Energy's Critical Materials Assessment.

Most recently, on December 3, Capital.com explored silver price forecasts for 2025 and beyond. The post noted that silver reached a 12-year high during 2024, driven by geopolitical risks and industrial demand. Analysts cited in the article predicted that silver prices could reach US$50 per ounce in 2025, buoyed by its role in renewable energy technologies like solar panels and electric vehicles. The "World Silver Survey 2024" further supported this outlook, emphasizing the sustained pressure from growing industrial demand combined with limited supply. These factors point to the potential for elevated silver prices over the medium to long term.

Key Drivers Shaping AbraSilver's Growth Opportunities

AbraSilver Resource Corp. is well-positioned for growth with its advanced Diablillos silver-gold project. According to the company's December 2024 investor presentation, multiple near-term milestones could further enhance shareholder value and project economics. The presentation highlights the ongoing Phase IV exploration program, which aims to increase resource size and grade while identifying new high-priority targets.

The company has also outlined a pathway to complete a Definitive Feasibility Study (DFS) by the first half of 2026, incorporating new data from exploration and drilling programs. Permitting and infrastructure development will proceed in parallel, with construction decisions expected by late 2026. AbraSilver's financial position remains strong, supported by a healthy cash balance and backing from strategic investors.

The recently enacted Argentinean incentive regime for large investments, known as RIGI, offers additional fiscal benefits, including a reduced corporate tax rate, export duty exemptions, and accelerated tax depreciation. AbraSilver anticipates leveraging these incentives to enhance the Diablillos project's economic viability, which could result in significant cost savings and improved financial metrics. 

In a November 6 interview with The Daily Gold, AbraSilver's President and CEO, John Miniotis, detailed the substantial benefits introduced by Argentina's new investment incentive regime (RIGI), which provides significant tax and operational advantages to large-scale projects. Miniotis explained that these changes include a reduction of corporate tax rates from 35% to 25%, the elimination of export duties, and the removal of foreign exchange restrictions. He highlighted that Diablillos is one of the few projects that qualify for these incentives. He further explained that the fiscal changes alone would provide "several hundred million dollars" in additional value to the project's updated PFS.

Miniotis elaborated on the company's ongoing efforts to optimize the Diablillos project. Since the release of the March 2024 PFS, the company has engaged Widdup Consulting to refine the mine plan. He noted that adjustments, such as reducing the strip ratio, steepening pit walls, and resequencing operations, have led to improved grades and enhanced economic metrics, particularly in the critical first five years of production. Miniotis emphasized that targeting high-grade zones rather than lower-grade bulk tonnage was a strategic decision designed to maximize near-term value. He explained that "adding 15 million ounces of high-grade silver could contribute approximately US$150 million in after-tax free cash flow," with every additional year of high-grade production significantly improving the project's Net Present Value (NPV).

In the interview, Miniotis also discussed recent drilling successes, particularly in the JAC and Oculto zones. He highlighted intercepts such as 50 meters of 250 grams per tonne (g/t) of silver in the JAC zone and 500 g/t of silver over 15 meters in an area previously classified as waste in the Oculto deposit. These results, he noted, expand the existing pit boundaries and could increase the overall resource base in future studies. Miniotis added that the current 20,000-meter drilling campaign is expected to continue delivering results through the first quarter of 2025, with updates released regularly.

Finally, Miniotis touched on the potential for discovering a significant copper porphyry system near the Diablillos project, which could further enhance the property's exploration upside. Initial drilling results from these targets are expected in early 2025, adding another dimension to the project's value proposition.

What Third Parties Are Saying. . . 

Peter Krauth of Silver Stock Investor provided an analysis on October 28, highlighting the continued strength of AbraSilver's exploration efforts at the Diablillos silver-gold project.

Krauth noted that "AbraSilver shares have remained solidly up this year and ahead 35% since being added to the portfolio in April." He described the recent drilling results as "solid if not exciting," emphasizing the company's ongoing success in expanding known mineralization zones and stepping beyond current resource boundaries. Krauth pointed out that the project's growing scale and resource potential remain attractive to investors, particularly during periods of share price weakness.

Ownership and Share Structure

According to Refinitiv, the top six strategic entities own 21% of AbraSilver. The top 3 shareholders are: Eric Sprott with 9.9%, Kinross Gold with 4.0% and Central Puerto with 4.0%.   Additionally, the top 3 insiders are Chief Executive Officer (CEO) John Miniotis with 1.0% or 1.3M shares, Director Hernan Zaballa with 0.86% or 1.08M shares, and Chairman and Director Robert Bruggeman with 0.74% or 0.93M shares. 

Nine institutions hold 6.84% or 8.58M shares. The Top 3 are Mirae Asset Global Investments (USA) LLC with 2.1% or 2.63M shares, ETF Managers Group LLC with 1.74% or 2.18M shares, and Sprott Asset Management LP with 1.2% or 1.51M shares. 

The company has 125.4M outstanding shares and 121.09M free float traded shares. Its market cap is CA$282.28M. Its 52-week high and low are CA$3.18 and CA$1.30 per share, respectively.