Aya Gold & Silver TSE: AYA President and CEO Benoit La Salle highlighted Morocco’s mining jurisdiction, the ramp-up of the Zgounder silver mine and the company’s plans to advance the Boumadine development project during a company presentation.
La Salle described Morocco as a mining-friendly country with a long operating history, established mining workforce and relatively rapid permitting timelines. He said mining represents less than 1% of Morocco’s economy and is supported by local institutions and major domestic mining companies, including phosphate producer OCP Group and Managem.
“It is a mining culture, it is a mining country,” La Salle said, adding that permits can be issued in two to three months, compared with substantially longer timelines cited for Canada and France. He also said state-issued permits carry no royalty or free-carried interest, while Boumadine’s tax rate over its projected mine life is 22%.
Zgounder Ramp-Up and Exploration
La Salle said Zgounder, Aya’s flagship operating mine, was built in 18 months, on time and on budget, with a nameplate processing capacity of 2,700 tonnes per day. The operation has since reached 4,000 tonnes per day, he said.
According to La Salle, Zgounder has an 11-year mine life and is expected to produce about 6 million ounces of silver annually. He cited cash costs of roughly $16 per ounce and all-in sustaining costs of about $19 per ounce, adding that the mine could generate approximately $250 million in annual operating cash flow at current silver prices.
He attributed the mine’s development progress partly to local contractors and infrastructure costs. Aya built a 72-kilometer power line for approximately C$6 million, La Salle said, and initially encountered some dilution issues as local contractors adjusted from underground mining to open-pit work. Those issues have since been addressed, he said.
The company is continuing to invest in exploration at and around Zgounder. La Salle said Aya has 400 people in geology and exploration, operates 20 drills and spends approximately $60 million annually on exploration, including about $15 million at Zgounder.
Aya aims to extend Zgounder’s mine life to 13 to 15 years and may consider increasing throughput to between 5,000 and 6,000 tonnes per day if resources support an expansion. The company recently acquired 10 exploration permits about 30 kilometers from Zgounder for C$3 million, including existing infrastructure, according to La Salle. He said early work has identified potentially interesting silver structures on the newly acquired ground.
Boumadine PEA and Early Construction Plans
La Salle also discussed the updated preliminary economic assessment for Boumadine, which followed an additional 190,000 meters of drilling and a revised resource estimate. He said the project’s net present value increased to $3.5 billion from $1.7 billion, while its internal rate of return rose to 93% from 40%, using base-case assumptions of $3,500 gold and $50 silver.
He said the updated assessment reflected a combination of commodity-price assumptions, a more detailed mine plan, verified capital and operating cost estimates, and improved concentrate payability. Payability increased to 83% from 73% in the initial PEA after the company received offers from smelters, he said.
La Salle said Boumadine is projected to have a 14-year mine life and that Aya has drilled less than 1% of the property. The company has tracked the mineralized structure for nearly eight kilometers through geophysics, while drilling has covered 5.4 kilometers and reached depths of 600 meters, he said.
Although the feasibility study is targeted for the second half of 2027, Aya has already made an investment decision to begin certain infrastructure work in the fourth quarter. Planned early work includes a power line, water line, tailings facility and camp, while detailed engineering and drilling continue.
- A 92-kilometer, 50-megawatt power line is expected to cost about C$18 million, according to La Salle.
- A life-of-mine tailings facility is expected to cost approximately C$8 million.
- The company expects to pursue international bids for the processing plant.
La Salle said Aya is targeting a 10,000-tonne-per-day nameplate operation at Boumadine and expects to seek opportunities for future throughput increases. He said the mine plan is expected to include both open-pit and underground mining.
Funding and Market Valuation
According to La Salle, Aya had about C$200 million in cash, while Zgounder was generating approximately C$170 million annually after expenses. He said the company expects Boumadine capital expenditures of about C$450 million and plans to make a final financing decision in the second quarter of the following year, with approximately C$500 million of available funding targeted.
Potential financing sources include operating cash flow, up to approximately C$300 million available from the European Bank for Reconstruction and Development, and potential offtaker prepayments, La Salle said.
La Salle said the market may undervalue Boumadine because it remains at the PEA stage, despite what he described as reduced permitting, geological and financing risks. He said Aya’s principal remaining risk is construction execution, which management believes it can manage based on its experience building Zgounder.
About Aya Gold & Silver (TSE:AYA)
Aya Gold & Silver is a Canadian precious metals mining company anchored in Morocco and active across the full mining value chain. The Company has established an exploration track record through a systematic, technology-led, data-driven approach and is focused on expanding its resource base and land package along the Anti-Atlas fault - one of Africa's most geologically rich, underexplored and mining-friendly regions. Aya operates Zgounder, a rare, silver-only mine, producing silver doré from its new processing facility.
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