Variscan Mines Limited (ASX:VAR) has announced the results of its San José Mine Restart Study, indicating robust economics for the recommencement of mining operations. Variscan Mines is focused on the exploration and development of zinc, lead, and silver projects. Its primary asset is the Novales-Udias Project, which hosts the former producing San José Mine in Cantabria, northern Spain.
The study outlines a financially attractive ‘starter operation’ with an 11-year mine life, leveraging the existing 1.6 km of mine development to reduce pre-production time and costs. Key findings include low pre-production capital requirements of €19 million (A$33 million) and low sustaining capital expenditure, leading to a reduced capital intensity. The project targets first concentrate production by 2028.
Base case study parameters highlight a total revenue of €186 million (A$326 million) and free cash flow (after tax) of €53 million (A$93 million). The after-tax NPV5 is estimated at €38 million (A$67 million) with an IRR of 45% and a payback period of 3.8 years. At current metal prices, the after-tax NPV5 increases to €55 million (A$96 million) and the IRR to 64%, with a reduced payback period of 3.2 years. Total metal production is projected at 82.7kt of zinc and 9.7kt of lead.
Variscan is prioritising non-dilutive financing options such as debt, royalty, streaming, grants, and commodity off-take structures. Managing Director & CEO Stewart Dickson stated the study demonstrates the viability of recommencing mining operations at the San José Mine, providing attractive financial returns and unlocking significant value for shareholders. The study will be available for download on the company website.
