The placement to institutional and sophisticated investors earlier this month will give Andean a cash balance of around A$82.7 million.

Andean acquired the brownfields Cerro Bayo project in 2024 for just A$5 million when the silver price was just US$25 an ounce.

Since then, the company has drilled over 60,000m, boosting the resource and its market capitalisation to more than A$400 million.

The project was initially built by silver major Coeur Mining in the 1990s, then operated by Mandalay Resources until as recently as 2022, producing as much as 3.4 million ounces of silver per annum.

Cerro Bayo 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 plant is] currently on warm idle, and we’re preparing that for a restart over the next 12 to 24 months,” Andean managing director Matthew Allen told the Precious Metals Summit in Beaver Creek, Colorado this week.

Development plans progressing

In July, Andean announced an increase in the resource to 20 million tonnes at 211 grams per tonne silver equivalent for 136 million ounces of AgEq, with ounces increasing by 23%.

It comprises open pit resources of 12.1Mt at 112g/t AgEq for 44Moz of AgEq and an underground component of 7.9Mt at 362g/t AgEq for 92Moz of AgEq.

Importantly, the indicated component jumped by 230% to 60Moz of AgEq, which will form the basis for a scoping study.

Argonaut head of research Hayden Bairstow forecasts capital costs of A$120 million, based on the use of the existing plant and the upgrade of the tailings dam, as well as the development of multiple open pit and underground mines.

“Our development scenario leverages the existing 500,000tpa process plant and associated infrastructure, which materially lowers the restart risk compared to projects that need to construct new process plant infrastructure,” he says, while maintaining a speculative buy rating and A$5 price target for Andean.

Andean currently has six drill rigs operating at Cerro Bayo.

“Four of those are going into the infill drilling, and we’ll start to move two rigs over to the Cerro Bayo district very shortly, and start extension drilling over there,” Allen said.

Infill drilling recently returned the highest-ever grades of 1.4m at 3045g/t silver and 268.6g/t gold, or 25,340g/t AgEq at the Trinidad Vein within the Laguna Verde mine area.

“We’re now moving into the restart planning for the mine, though,” Allen said.

“We have a scoping study plan to be released early in calendar year ‘27, that will be accompanied by an updated mineral resource report that incorporates results from our infill drilling underway currently.”

Andean expects to immediately move into a feasibility study to be completed by the end of next year.

“In parallel, we’ll be looking to refurbish the infrastructure, the process plant, de-water the undergrounds, and look to regain access to those during next year to bring those online in calendar year ‘28.”

Exploration upside

The drilling program in the Cerro Bayo district that will kick off this quarter will be the first drilling in the area in 20 years.

“The reason that we really liked the Cerro Bayo project was not only the existing infrastructure and resource, but the exploration potential in this prolific district,” Allen said.

Andean recently announced surface sampling results of up to 62,663g/t AgEq from the Juanita prospect outside the resource.

“These are prolific high-grade results over a very extensive 2km zone,” Allen said.

“This is going to be an area that we’re going to fast track for drilling.

“It potentially forms a bulk, open-pittable operation that will form a high-grade feeder for our mine planning.”

Unlike the vein-style mineralisation seen elsewhere on the property, Juanita is breccia-hosted.

“So, something new, something very exciting, and something that has potential to add large scale to this project,” Allen said.

Drilling will also soon begin at Guanaco, where field work has identified new veins among historical mines.

“Our team have come along, stepped across those faults, and found these veins do continue on beyond those faults, and we’ve now mapped another kilometre or so of continuation of these high-grade mines within a few hundred metres of existing known production,” Allen said.

Andean has also identified a district-scale exploration opportunity along the 8km-long Droughtmaster corridor.

“We are permitting around 200 drill pads through this area currently, and we expect to start drilling again late next year,” Allen said.

“We have seen, again, very high-grade surface results and it’s something we’re looking forward to getting in and following up with the drilling.”