Precious Metals
February 23, 2022

AYA Gold and Silver (TSX: AYA)

Delivers A Robust Feasibility Study, Pegs Zgounder Expansion Npv At $373M


Aya Gold & Silver (TSX: AYA) has released positive results from its feasibility study (FS) to expand the Zgounder silver mine located in the Kingdom of Morocco from 700 tonnes per day (tpd) to 2,700 tpd capacity. All amounts are in U.S. dollars unless otherwise stated. All figures are on a 100-per-cent ownership basis.

Highlights of the 2,000 tpd expansion feasibility study

  • Robust project economics (base case at $22 per ounce silver):
  • Before-tax 5-per-cent net present value (NPV): $471-million;
  • Before-tax internal rate of return (IRR): 57 per cent;
  • After-tax 5-per-cent NPV: $373-million;
  • After-tax IRR: 48 per cent;
  • Payback period: 1.7 years postexpansion;
  • Initial life of mine (LOM) of 11 years.
  • 394-per-cent increase in annual production: Increased throughput expected to drive annual silver production to 7.9 million ounces by 2024;
  • 364-per-cent increase in revenue: Annual revenue expected to increase from $37-million in 2021 to $172-million by 2024;
  • Low quartile costs: LOM all-in sustaining cost (AISC) of $9.58/oz, including sustaining capital expenditures;
  • Initial proven and probable mineral reserves estimate of 8.59 million tonnes (t) grading 257 grams per tonne Ag for 71 million ounces of Ag positions Zgounder among the highest-grade Ag projects globally;
  • Low initial capital expenditures: $139.4-million, including $16.6-million in contingency cost;
  • Short expansion time frame: First Ag pour planned in Q1 2024;
  • Further optimization opportunities:
  • Exploration along strike and at depth;
  • Potential to optimize the flow sheet during the front-end engineering design (FEED) and the mine plan as part of the underground expansion.
  • Enhanced ESG (environmental, social and governance) plan: Reduction in water consumption and carbon emissions intensity.

"We are thrilled to deliver our Zgounder expansion feasibility study less than two years after taking over as management, a testament to our team's hard work. The feasibility study is supported by a high-grade maiden reserve and is expected to quadruple production at industry-low costs while delivering superior economic returns for all stakeholders," said Benoit La Salle, president and chief executive officer. "With its low capital outlay, low operating costs and quick payback, Zgounder ranks among the highest-return silver projects globally."

"While we see exceptional economics on the basis of reserves-based mining only, our long-term plan incorporating a portion of the exploration upside and optimization opportunities positions Zgounder as a long-life cornerstone asset for Aya. Based on the success achieved to date, we believe there remains significant upside to be gained through exploration."

"With the mine development already under way, Zgounder will be a significant economic driver in the region with this initial expansion providing more than 400 jobs during construction, 450 jobs during operations and extending the mine life by at least 11 years. We will draw on our experience and expertise, in addition to the transformative groundwork laid since 2020, as we expedite expansion of our unique pure-play silver mine."

Silver price sensitivity analysis

The Zgounder sensitivity analysis was performed using a Ag price varying from $16 oz Ag to $36 oz Ag as illustrated in the relevant attached table.

Project Milestones:

  • Environmental study impact assessment (ESIA) approval in Q1 2022;
  • Complete front-end engineering design in Q2 2022;
  • Construction start-up in Q3 2022;
  • New plant first Ag pour by Q1 2024;
  • Continuing exploration with the aim of increasing reserves and resources, and enhancing economics.


The mineralization at Zgounder is hosted within a low-sulphidation Ag epithermal deposit contained in complex lenses, clusters and shear zones. The mineralization typically occurs in three styles: millimetre-thick beds of crystallized, finely disseminated pyrite associated with quartz; native Ag veinlets associated with proustite, argentite and filling microfractures in stockwork; and native Ag dissemination in brecciated sandstone-shale layers and spotted by chlorite and/or carbonate and quartz, and other sulphides. The host lithology consists of Proterozoic volcano-sedimentary series. The mineralization is predominately hosted at the contact, or near the contact, between a sedimentary sequence and a volcanic package. Mineralization is dominated by mercuriferous native Ag (proustite), with few Ag sulphosalts (acanthite, pearceite), arsenopyrite and base-metal sulphides (sphalerite and chalcopyrite).

Exploration potential at Zgounder

Prior to the arrival of management in 2020, the Zgounder project had seen limited near-mine drilling and no regional exploration. Since assuming control, the Aya team has conducted over 75,000 metres of diamond drill hole (DDH) programs with the view of updating the resources estimate and delivering a reserve estimate in support of the FS. Regional fieldwork commenced in 2021, and a regional drill program will be initiated in Q2 2022 on targets generated by fieldwork and an airborne geophysical survey.

Significant upside potential exists within and surrounding the Zgounder mineralized system, which remains open at depth to the granite. Aya's overall objective is to expand resources and reserves to enhance project economics and expand the mine life. In the short term, the corporation aims to expand resources at depth and along strike in addition to discovering regional resources within trucking distance of the mine.

An initial budget of $6.4-million has been assigned to the 2022 exploration program on Zgounder, which will consist of 22,500 m of DDH proximal to the mine, and 7,500 m of regional DDH and reverse circulation drilling. Results will be released on a continuing basis.

Mineral resources and mineral reserves estimates

The FS is based on the updated 2021 mineral resource estimate (MRE) published on Dec. 14, 2021, which outlined a 116-per-cent increase over the resource published in March, 2021.

The FS includes an inaugural mineral reserves estimate that has been completed by DRA Global Ltd. in accordance with the CIM Definition Standards for National Instrument 43-101 reporting.

The mineral reserves have been derived from the resource estimate completed by P&E Mining Consultants Inc., and include all drilling data obtained until Sept. 10, 2021, and with an effective date of Dec. 13, 2021. The inferred material within the pit design was treated as waste.

Using the mineral resources dated Dec. 13, 2021, as the basis, the total proven and probable reserves for the Zgounder deposit are shown in the relevant attached table.

The mineral reserves were estimated based on a Ag price of $20 per oz and a corresponding cut-off grade of 47 g/t for open pit reserves, 85 g/t for underground reserves and 44 g/t for historical tailings.

Mining operations, processing and metallurgy

Mining operations

The Zgounder mine expansion outlines a combined open pit and underground mining operation over the 11-year projected LOM. Ore will be sourced from the open pit to build a stockpile prior to the commissioning of the new processing plant and to supplement production in the first full year of production.

Approximately 2.5 million tonnes of material or 29 per cent of current reserves will be mined from the open pit during the LOM (including the historical tailings storage facility (TSF)), and 23.5 million tonnes of waste material will come from the open pit (10.6-to-one stripping ratio).

Underground mining methods will account for about 71 per cent of the total reserves, with a mix of long-hole mining (LH) and overhand cut and fill (C&F) -- the split between LH and C&F being respectively 60 per cent to 40 per cent.

This will deliver a total of 8.6 million tonnes of ore to the milling facility with an average head grade of 257 g/t Ag. Process grades for the LOM average 257 g/t Ag for an average annual production of more than 6.8 million oz of Ag (once in full production) at low total cash and AISC.

Work on the development and construction of the new underground infrastructures commenced in January, 2022, and is being carried out by a Moroccan mining contractor. In parallel to the construction of the new process plant, over 11,000 m of underground development will be completed to support the increased mining rate.

Processing and metallurgy

The new Zgounder process plant is designed to process 2,000 tpd. Combined with the two existing processing facilities (the existing cyanidation and flotation plants), the treatment capacity will total approximately 961,000 t of ore per year.

The process plant will be based on a conventional comminution circuit, with the crushing circuit composed of a primary jaw crusher and secondary cone crusher. Crushed ore will be conveyed to the grinding circuit using a ball mill in closed circuit with primary cyclones. The target grind is planned at 100 microns in order to achieve optimal Ag recovery. Following grinding, the ore will be fed to a flotation circuit. The resulting flotation concentrate will be leached in a counter current decantation (CCD) circuit, while the flotation tailings will be thickened and sent to a leaching and carbon-in-pulp (CIP) circuit.

Pregnant solution from the CCD circuit and from the adsorption-desorption-recovery circuit will be fed into the Merrill-Crowe circuit for Ag precipitation The resulting cement will be directed to a refinery for production of Ag ingots.

LOM head grades for the process plant are expected to average 257 g/t with a Ag recovery of 91.3 per cent. The main reagents used in the plant are hydrated lime, cyanide, flotation collector and hydrogen peroxide.

Electricity will be supplied from the grid, and construction of a 90-kilometre, 60-kilovolt power line and substation upgrades have been included as part of the project. Aya expects to power its operations with 100-per-cent-renewable energy.

LOM production plan

The first Ag pour from Zgounder is expected to occur in Q1 2024. A production summary is provided in the relevant attached table.

Project operating costs

The relevant attached table details the LOM cash operating cost per tonne processed at Zgounder. Mining and processing operating costs have been prepared by DRA and are based on a mining contractor fleet for the open pit, and an owner-operated fleet for underground mining. General and administration (G&A) costs derive from the current Zgounder operation and have been reviewed by DRA.

Zgounder capital expenditures

The project capital cost estimate was compiled by DRA with input from Groupement des Consultants et Ingenieurs du Maroc, a Moroccan engineering firm, on the tailings storage facility aspects. Aya has provided project-specific portions for mine establishment and facilities, owner costs, and the high-voltage power supply.

A 24-month construction period, including commissioning, is projected with the initial cost to expand the Zgounder plant estimated at $139.4-million, inclusive of equipment and infrastructures, open-pit prestripping, owner costs and contingency costs, as summarized in the relevant attached table.

Tailings management

The tailings system will comprise a new TSF located 2.7 kilometres southeast of the current cyanidation TSF. The newly built TSF will be fully lined with high-density polyethylene membrane. Recycled water will be optimized throughout the process to minimize the addition of fresh water to the process.

The new TSF will take all the tailings produced at the new processing facility, including all the tailings from the existing flotation plant. All the material processed at the existing flotation plant will be directed to the new process plant (the flotation concentrate to the concentrate leaching circuit, and flotation tailings to the CIP circuit) for further Ag recovery. Tailings from the existing flotation plant will go to the CIP circuit of the new plant for further Ag extraction, and hence all the tailings produced will go to the new TSF.

Opportunities to further enhance value

Aya has identified the following opportunities to further enhance the economics of the Zgounder expansion project and current operations, and will continue to update these opportunities in 2022 and into 2023:

  • Expansion of near-mine mineralization along strike;
  • Expansion and potential discovery of new resources at depth;
  • Potential to optimize;
  • Costs regarding the initial CAPEX of the expansion project;
  • Process plant flowsheet during the FEED to reduce the capital intensity, while simplifying the operability and constructability of the new plant;
  • Underground mine design, to reduce the total operating development metres and accelerate access to high-productivity areas.

Enhanced ESG plan

In 2020, an ESIA was launched for the Zgounder expansion. Public hearings were successfully completed in Q4 2021, and full approval of the ESIA is expected in February, 2022.

The corporation has leveraged the FS and other resources to achieve the most economically and environmentally sustainable solutions for Zgounder, in addition to maximizing its impact in the community.

Among its ESG initiatives, Aya plans to:

  • Revegetate and recycle waste from the mine's historical TSF;
  • Reduce carbon emissions intensity through:
  • Powering its operations with 100-per-cent-renewable energy;
  • Lower fuel consumption through the production of silver bars;
  • Evaluation of a clean fleet energy replacement strategy for end-of-service trucks;
  • Lower water consumption through:
  • Use of recycled water from the TSF in the cyanidation circuit;
  • Production of domestic drinking water with hydropanels which generate water from moisture in ambient air;
  • Foster local wealth creation through:
  • Focus on national recruitment and procurement for the mine expansion;
  • Creation of 600 to 900 agri-business livelihood projects over a five-year business entrepreneurship program;
  • Support for local health care and education facilities.


  • Silver price of $22 per oz;
  • Light fuel oil: 85 cents per litre;
  • Exchange rate: 75.9 U.S. cents to the Canadian dollar;
  • Exchange rate: 10.8 U.S. cents dollars to the Moroccan dirham'
  • NPV calculated using a discount rate of 5 per cent;
  • Based on the 2016 Moroccan mining code.