The Silver Lake Resources Limited. (ASX: SLR) share price had climbed higher today following an announcement this morning. Prior to market open, the company reported it has increased the mineral ‘reserves’ of its Deflector Gold Copper Project by 30%. Defector is one of three mines the company operates within Western Australia. Silver Lake has an all-in sustaining cost of ~$1,223 per ounce.
Why is the Silver Lake share price rising?
Silver Lake has increased its mineral ‘resources’ by 54% to 1.27 million ounces and increased the resource grade by 18% to 13.5 grams per tonne (g/t). Resources is a term used within the gold industry to disclose all the likely gold discovered. However, reserves are the amount of gold that can be economically extracted. In the case of the Deflector Project, the reserves increased to 447,000 ounces and 7,000 tonnes copper. This is an increase of 30% with the ore grade increasing 15% to 6.3 g/t .
The cost of discovery has been $14 per ounce (oz). This can be compared with Bellevue Gold Ltd (ASX: BGL) which recently disclosed its costs of discovery were $18/oz since December 2017.
Deflector remains a relatively early-stage and shallow underground mine. It also processes product from other sites located nearby for a fee. The growth in Deflector’s ore reserves increases the mine life, allowing Silver Lake to optimise in-mine and near-mine ore sources.
Since the acquisition of Doray Minerals Limited in April 2019, Deflector’s ore reserves and mineral resources have grown significantly in scale and quality, with ore reserves now at their highest in Deflector’s history. This allows the site to optimise future ore production by adding additional mining fronts and providing optimal ore grades to the mill.
Silver Lake share price
The company has a 5-year track record of meeting its guidance. It is cashflow positive and has cash and bullion of ~$227 million with no debt.
The Silver Lake share price is currently at a multi-year high of $2.39, valuing it at around $2 billion. It has a price to earnings ratio of 41.98 and pays no dividend.
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Motley Fool contributor Daryl Mather owns shares of Bellevue Gold Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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