Canadian mineral explorer Salazar Resources has released results of the preliminary economic assessment (PEA) at its El Domo project in Ecuador.

The PEA report prepared by Buenaventura Ingenieros in Peru, noted that total waste production for open pit was 46.22Mt and mining strip ratio was 7.44.

As per the assessment, total open pit production that is factored in for mining extraction and mining dilution was 6.21Mt (79% indicated and 21% inferred resources) at 2.06% copper, 2.98% zinc, 0.39% lead, 2.90g per tonne of gold and 57g per tonne of silver.

"The high-grade feed in the early years of the open pit operation is expected to achieve a payback period of two years."

Total underground production that is factored for mining extraction and mining dilution was 1.75Mt (35% indicated and 65% inferred resources) at 2.10% copper, 1.39% zinc, 0.08% lead, 1.09g per tonne of gold and 31g per tonne of silver.

As per the PEA, the 14-year mine life was split into nine years for open pit at 2,000t a day and five years for underground mining at 1,000t a day. Pre-operational CAPEX was $110.28m, which includes studies, mine equipment, pre-stripping, processing plant, tailing reservoir, waste dump, power supply and ancillary services.

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After-tax internal rate of return is 30%, and net present value is $86.72m at a 10% discount rate. Net after-tax cashflow is $202.58m.

The PEA report studied several alternative sites for waste dump, tailings reservoir, processing plant and ancillary facilities, which identified the most likely sources for process-water and electricity.

Salazar Resources CEO Fredy Salazar said that the results of the PEA show positive economics to proceed to the pre-feasibility stage in the incoming months.

"The high-grade feed in the early years of the open pit operation is expected to achieve a payback period of two years, an IRR of 30% and a NPV of $86.72m, while at the same time generate a cashflow for further exploration and discoveries in the district," Salazar said.