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(Kitco News) Kootenay Silver is moving its La Cigarra silver project in Chihuahua, Mexico, toward development after a June 15, 2026, preliminary economic assessment gave the company its first economic study on the 100%-owned project and outlined a 14-year open-pit silver operation.
The PEA outlined an after-tax net present value of $763 million, a 41% after-tax internal rate of return, initial capital of $332 million, and a 1.9-year payback period. The study also projected 63.6 million ounces of payable silver production over the life of mine, including average annual silver production of 6.22 million ounces during the first five years.
Speaking with Kitco Mining’s Kitco Spotlight, President and CEO Jim McDonald said the study marks a change in how investors should view Kootenay, which has been better known in recent years for exploration at its high-grade Columba project.
“For Kootenay Silver, what this is doing is it's transitioning us from explorer into a developer,” McDonald said.
The PEA gives La Cigarra the lead position in Kootenay’s development pipeline, while McDonald said Columba remains a major exploration driver. That combination gives the company a defined mine-plan story at La Cigarra and ongoing discovery potential at Columba as silver prices draw renewed investor attention.
The PEA also highlighted La Cigarra’s sensitivity to silver prices. At spot metal prices, the study showed the project’s after-tax NPV rising to $1.295 billion and its after-tax IRR increasing to 64%.
McDonald said that leverage is central to the project’s appeal.
“From the base case of $50, a 30% increase in silver price takes that NPV from 763 million USD after tax to just under 1.3 billion, and takes the IRR from 41% to 64% after tax,” he said.
La Cigarra is located in the Parral mining district of Chihuahua state, an established silver region with nearby active operations. McDonald said the project is about 20 kilometers from operating mines along the same mineralized trend, giving Kootenay access to infrastructure and development options that are not typical of remote greenfield projects.
“It sits in the famous Parral district of Mexico, so infrastructure is excellent,” McDonald said.
The June 15, 2026 release also pointed to exploration upside along a 9-kilometer mineralized trend. McDonald said Kootenay’s next work at La Cigarra will include drilling a lightly tested gap zone within the current resource area in early fall 2026, with the target having potential to add 10 million to 20 million ounces if successful.
The location of that target is important because it sits within the current pit shell, where material is already expected to be moved under the mine plan. McDonald said successful drilling could improve the project by converting rock that would otherwise carry no revenue into mineralized material.
“If successful, it, it will improve it,” McDonald said. “It'll improve it materially.”
Kootenay is also preparing technical work needed to move La Cigarra toward more advanced studies, including geotechnical analysis, rock mechanics, metallurgical testing, and hydrology. McDonald said those programs are expected to begin alongside the early fall 2026 drilling program as the company works toward pre-feasibility and feasibility.
The development path will eventually require a financing decision. The PEA outlined initial capital of $332 million, while the interview noted Kootenay is funded for roughly 18 to 24 months of normal operations. McDonald said any future mine-build decision could involve equity, debt, a joint venture, or a transaction with a mining company.
Columba remains the company’s second major asset. Kootenay has expanded the drill program there to 60,000 meters, with the first part of the program focused on defining the limits of known vein and resource areas before moving into additional targets.
McDonald said Columba’s grade line is helping guide exploration in the epithermal vein system, where mineralization remains open at depth.
“So far, we see mineralization open down to 500-meter depth,” he said.
Kootenay also controls the Promontorio and La Negra projects in Mexico. McDonald said the company is evaluating those assets through internal desktop studies to better understand how they perform at different silver prices, but La Cigarra and Columba are the near-term focus.
Mexico remains a key part of the investment discussion for silver developers. McDonald said La Cigarra and Columba are both in Chihuahua, which he described as a supportive mining state with established districts, infrastructure, and local mining experience.
“Chihuahua's a great mining state,” McDonald said.
McDonald also said Kootenay has worked in Mexico for 25 years and avoids areas where it sees unacceptable security risk.
“If it were too risky, we wouldn't be there,” he said.
The PEA comes as producers look for assets to replace reserves and expand production. McDonald said M&A has been more visible in gold than silver, but he expects silver producers to become more active as stronger prices improve balance sheets and increase the need for growth projects.
“If you're a silver producer, there are not an awful lot of assets out there,” McDonald said.
McDonald said he believes silver has entered a multi-year bull market, with capital becoming more available for companies that hold resources and are moving toward development.
“We believe this is a multi-year bull market,” he said.
For Kootenay, the next test is whether the company can use the La Cigarra PEA as a platform for further drilling, de-risking work, and more advanced studies while continuing to expand Columba. The June study gives the company a development-stage anchor, but the coming work will determine how much of La Cigarra’s remaining exploration upside can be added to the project plan.
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This article/video was produced with support from a Kitco sponsor. The views expressed in this content do not necessarily reflect the views of Kitco Metals Inc. Kitco does not endorse or recommend any company, security, investment product, or investment strategy. This content is for informational purposes only and should not be considered investment advice.
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