TORONTO, Dec 19 (Reuters) - Pan American Silver Corp has decided to go ahead with an expansion at its La Colorada mine in Mexico, and expects to boost mine production to 7.7 million ounces of silver per year by the end of 2017 from about 4.7 million ounces currently.
The Vancouver-based company has completed a preliminary economic assessment of the project, which requires about $80 million in capital spending, it said on Wednesday.
Many miners have slowed down or mothballed new projects due to a drop in metal prices and a rise in capital costs. Pan American Chief Executive Geoff Burns said La Colorada makes sense because a modest amount of capital could significantly increase production.
“This is a low-risk project, at one of our best-performing and most stable mines, which we can comfortably finance with our internal resources,” he said.
Pan American has said it expects to produce between 25 million ounces and 26 million ounces of silver in 2013. The expansion would make La Colorada the company’s largest producing mine.
By 2018, it would produce silver at cash costs of $6.10 per ounce, down from some $10.00 in 2013. Silver traded near $19.30 an ounce on Thursday.