In the past 18 months, the spot silver price has rallied from around US$25 an ounce to its current price of more than US$41/oz.

Andean acquired the brownfields Cerro Bayo project in early 2024, paying just A$5 million for a project that hosts an estimated A$150 million of infrastructure, including a 500,000 tonne per annum processing plant, 30km of underground mining infrastructure, power, offices and workshops.

The project was initially built by Coeur Mining, then operated by Mandalay Resources until as recently as 2022.

Andean has increased the resource by more than 350% since acquisition to 9.8 million tonnes at 353 grams per tonne silver equivalent for 111 million ounces of AgEq, or 47Moz of silver and 800,000 ounces of gold.

“The very interesting thing about this project, with over 30 years of mining history, is we’re still making discoveries,” Andean chief financial officer Matthew Allen told the Precious Metals Summit in Beaver Creek, Colorado, this week.

“We’re making discoveries within 500m of the process plant and we haven’t even yet got onto the greenfield exploration which sees us going ahead with a multi-year drill campaign.”

The project covers 400sqkm over three districts: Laguna Verde, which hosts the plant and bulk of the resource, Cerro Bayo and Cascada.

Andean has three drill rigs in operation, with the current focus being Laguna Verde on deposits within 2km of the plant.

“For something that was thought to have been mined out 10 years ago, this is showing us some pretty amazing growth,” Allen said.

Last month, the company reported the discovery of multiple new veins and extensions of existing veins within 1km of the plant.

Sawn channel samples from outcropping silver and gold veins included 1.3m at 2661g/t AgEq; 0.7m at 6167g/t AgEq; and 0.7m at 2082g/t AgEq, while rock chips returned grades of up to 8965g/t AgEq.

The first drilling results from the Temer area are due in the next few weeks.

An updated resource estimate is due by the end of the year.

The company will start drilling at the Cerro Bayo area, to the east of Laguna Verde, in 2026.

Of particular interest is the Droughtmaster vein system, which spans an area of 4km by 2km and has returned grades of up to 30,202g/t AgEq.

“This is the stuff that gets us really excited,” Allen said. “We can’t wait to get in and drill this area. This has the opportunity to really scale up the size of the Cerro Bayo project in the future.”

Restart study underway

Allen described the plant as being on “warm idle”.

“We’re starting to look at our mine plans and our restart plans for this project and we’re going to start to map out what that looks like over the next two years,” he said.

The company has appointed Entech to assist with an internal restart scoping study, which should be completed by the end of this year.

That will feed into a formal feasibility study which will be finalised by late 2026.

The project has environmental and water permits in place and a fully permitted tailings storage facility.

Allen said the plant capacity was 1500t per day but Andean would look at whether an upgrade to 2000-2500tpa was warranted.

“That’s something we’ll look to answer over the next few months,” he said.

Canaccord Genuity analyst Tim McCormack is assuming pre-production capital costs of A$50 million, with construction kicking off in the March quarter of 2027.

Well-supported

Andean shares hit an all-time high of A$1.71 earlier this month, a stratospheric rise from A20c 18 months ago.

Even at yesterday’s price of A$1.48, the stock is still up by more than 75% since the start of the year.

Canaccord’s McCormack has a speculative buy rating and a price target of A$3.45.

Despite the company’s relatively early stage, it is more than 40% institutionally held.

Major shareholders include Steve Parsons, who also consults to the company, with 10.3%, Scotia Asset Management with 9% and Sprott Inc and the Sprott Silver Miners & Physical ETF with just under 6.5%.

Andean raised A$30 million at A$1.20 via a placement to institutional and sophisticated investors in July, which boosted the company’s cash balance to around A$42 million.

“We’re fully funded for the activity we’re doing and we’ve got a register that’s a pretty enviable register for the stage we’re at,” Allen said.

“The next 12 months for us is a continuation of the last year and a half.”