So there’s a lot of things that play in there. But of course it’s — at the end, it’s all about the quality of the asset. It’s about mine life. It’s about the exploration potential. We already know at La Colorada Skarn we keep drilling and we just keep finding more and more. So we know this asset is still growing. We — for the current study obviously have a cutoff, I think it was like December ’22, we drilled a lot of meters since then actually, it’s Chris just told me it’s 50,000 meter additional drilling. So that deposit is still to grow. This is just a point in time that we’re looking at it. But as I said, and as you mentioned a lot of factors to play into calculating an IRR for a project and a lot of decisions to what we like to see depending on country jurisdiction size location to other mines as you mentioned synergies with other operations et cetera, et cetera.
So there’s a lot of factors in there. And a lot of time, will be discussed in our study.
John Tumazos: So for example is 5% or 10% a minimum hurdle rate of return.
Michael Steinmann: 5% would be a very, very low number of courts. That’s not something we are looking ready for. But as I said look, it depends but the metal prices are that use and that’s probably one of the most critical and also difficult decision when you look at a very, very long mine life — way easier obviously to kind of come up with the metal price. If we look at a normal precious metal kind of projects that normally run like let’s not call them 10 to 12 or 15 years. Very different when you look at long lives like the can not only that, but you’re dealing with not only silver on this side, but also lead and zinc saying. And of course, concentrate contracts that play a lot of into this as well. Just one side note here which is really nice.
Obviously La Colorado polymetallic, a lot of zinc in there, a lot of silver as well. Just as a side note, La Colorado is producing a really, really clean zinc and black concentrate already now from the veins, and the metallurgical testing we do shows that the scar will produce the same. So that’s very attractive concentrates in this term. So again, a lot that plays in there, but we would expect quite favorable concentrate terms for that kind of quality.
John Tumazos: So Michael, someone might be listening and reading between the lines in a way maybe you don’t want to. Should someone infer from your explanation that the project requires higher lead and zinc prices than current prices, but because it’s a many decade project, you’re going to, you might wait for lead and zinc to recovers to $2 and go ahead, assuming that it was a zinc recovers the $2.
Michael Steinmann: No, my point John is that the beauty of long life assets like everywhere in the world is that you don’t have to kind of try to time for a sink price or lab price or precious metal price cycle. We all know that this is very difficult to do because you have construction time upfront and none of us knows where the prices go exactly, but that’s exactly the beauty. When you look at this very, very long mine lives that are going to catch, , a few, quite a few of those cycles anyway. And that’s the beauty. That’s the reason why, mining companies, especially large mining companies look for very large, large, long life assets, because it takes that risk out of the equation.
John Tumazos: Michael, one last one. I’m sorry to be so interested this morning. Some investors are impatient and their clients have quarterly performance pressures on stuff like that. And they don’t understand that it takes a long time, four or five years just to get to the PEA point here. And sometimes in the stock market they love Bre-X that publishes 150 million ounces of gold that don’t exist, and they disrespect meticulous engineers that take five years to plan the project. Do you think that it would be appropriate to buy back a little bit of your stock since some of these short-term investors might give up, sale project that’s like a junior stock that’s going nowhere stale.
Michael Steinmann: Let me first answer on the timing. This has been incredibly fast. If you think it’s like what five years since the first drill hole in this Skarn, resourcing up to 9.25 billion tonnes of resource still to grow as I said. If this will be pure greenfield discovery, we were talking probably about 15 or more years to bring a project to that place. The reason why it went so fast is obviously it sits below in La Colorada, one of our silver mines. So that, of course, helps with infrastructure and drilling way faster and get that work done. So the team has done an excellent job to advance the project that quickly to an economic study here. So that’s pretty impressive and would not be possible if it wouldn’t be on-site discovery, which — and it’s very unusual to make that large of a discovery.
Talking about share buyback that you mentioned, look, as I said this year the Board opted to return capital to shareholders in form of dividends. It’s over $130 million. We’re still working and finalizing the new dividend policy. We will probably put that in place at the beginning of the year, which is the normal and logic place for us to do that. And it will be at the Boards discretion, how we return further capital to shareholders, we’re paying dividend uninterrupted since 2010. Of course, we disposed of quite a few assets, which are a very positive effect as I mentioned on our balance sheet and our shareholders participated with that with the dividend payment. So we’ll see next year, but the Board’s decision will be in what form and shape that return to shareholders will happen.
As I said this year, very strong dividend payments and for sure dividend will always be one part of it and I will continue to do so.
John Tumazos: Thank you.
Michael Steinmann: Thank you, John.
Operator: [Operator Instructions] Your next question comes from the line of Lawson Winder from Bank of America Securities. Your line is now open.
Lawson Winder: Yeah. Thank you, operator for fitting me in. Good morning, Michael, Steve and Sean. Hopefully I can keep my questions pretty snappy. I wanted to ask about Jacobina. So you guys provided the IRR update back in late August and the reserve grade that Jacobina for gold the M&I and inferred grades — M&I and inferred grades material. I wanted to ask a question like example of some of the drill spacing issues that you experienced at El Penon and what are some of the potential other factors? Thank you.
Martin Wafforn: Yes. Hi Lawson, it’s Martin Wafforn here. Pretty much the change that you saw in the reserve grade at Jacobina was related to looking at the metal prices and the cutoff grade, the operating costs going forward. We have a slightly different approach than the way that the Yamana was doing it. They were using a lower gold price than we use. We bumped up the gold price, but we were also looking at the cutoff grade and how that works. And we were able to use a lower cutoff grade for our reserve estimation. It’s based on our sort of methodology and that’s — that brought in quite a lot of ounces and took the overall grade down. And my belief is being mined anyway. And so that’s what happened there. That’s what you see.
