Silver Hidden in Decades-Old Tailings Delivers 94% Recovery in Pilot Tests

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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Cerro de Pasco Resources Inc. (CDPR:TSXC; GPPRF:OTCQB; N8HP:FSE) reported new metallurgical test results from its Quiulacocha Tailings Reprocessing Project in central Peru, outlining a potential processing route that could recover silver, zinc, lead, and other metals from decades-old mine tailings while creating a separate pyrite concentrate stream.

The company said more than 110 metallurgical tests conducted across several laboratories have helped advance a conceptual two-concentrate flowsheet. Under the approach, a bulk sulphide concentrate would first be produced and then separated into a high-grade pyrite concentrate and a base metal concentrate containing zinc, lead, copper, and silver.

According to the company, mini-pilot plant testing recovered approximately 94% of the silver contained in the tested material while capturing more than 92.5% of total sulphides into a bulk concentrate. The company said those results generally aligned with earlier bench-scale testing and support continued optimization work.

Management said the project's unusually high pyrite content is shaping development plans. Mineralogical studies indicate pyrite accounts for more than half of the portion of the Quiulacocha tailings drilled during the company's 2024 program. As a result, Cerro de Pasco is evaluating whether a pyrite concentrate could serve as a sulphur-bearing feedstock for industries such as fertilizer production and chemical manufacturing.

"This program has moved us from promising bench-scale results to a continuous mini-pilot test," Executive Chairman Steven Zadka said in the company's announcement.

The company noted that silver appears closely associated with sulphide minerals within the tailings, helping explain the strong recovery rates reported during testing. Future work will focus on separating base metals from the bulk concentrate, producing cleaner pyrite concentrates, and conducting roasting and leaching studies to determine how much additional silver and other metals may be recoverable downstream.

Beyond silver, Cerro de Pasco is also studying opportunities involving gallium and indium. Early mineralogical work suggests gallium is concentrated within silicate-rich portions of the tailings, while indium is primarily associated with zinc-bearing minerals. The company described those programs as exploratory and said no economic conclusions have been reached.

The Quiulacocha project is located in the historic Cerro de Pasco mining district, which produced metals for more than a century. The tailings facility covers roughly 115 hectares and contains material generated from historical mining and processing operations between 1921 and 1992. The company completed a 40-hole Phase 1 drilling program in 2024 and is preparing for additional drilling, resource definition work, and technical studies. The project is being advanced as a tailings reprocessing operation rather than a conventional mine.

Cerro de Pasco said additional metallurgical updates are expected during the second half of 2026 as testing continues and the company works toward its first mineral resource estimate for the Quiulacocha tailings project. The company recently secured a project development agreement with the U.S. International Development Finance Corporation and continues advancing technical, environmental, and permitting studies.

Silver Market Faces Short-Term Volatility as Supply Constraints Remain in Focus

According to a June 9 analysis published by Kitco News, Paul Wong, managing partner and market strategist at Sprott Inc., described a silver market that remained undersupplied despite recent price fluctuations. Wong wrote that "the silver market remains in a sustained structural deficit," citing the Silver Institute's 2026 World Silver Survey. He stated that, except for a brief surplus in 2020, the market had been undersupplied since 2021, resulting in "a cumulative deficit of roughly 762 million ounces over the past six years."

"When you include ETF flows, the imbalance is even more pronounced, exceeding 1 billion ounces," Wong added. He characterized the situation as "a prolonged structural shortfall rather than a temporary cyclical imbalance."

Wong also wrote that "supply growth is limited, industrial demand is structurally higher, and investment demand is returning." According to the analysis, "the broader supply-demand balance continues to tighten," reflecting continued attention on physical silver availability and demand trends.

Writing on June 10, Peter Krauth discussed recent price movements in the silver market following stronger-than-expected U.S. employment data. "Silver took it on the chin last week," Krauth wrote, noting that silver fell about 7% after the jobs report. He stated that a stronger U.S. dollar and rising interest rates had pressured commodity prices, adding that "a stronger dollar pressures commodity prices," while higher rates can make bonds relatively more attractive.

Also on June 10, CNBC reported that gold and silver prices moved lower as traders reassessed the outlook for U.S. interest rates. Ewa Manthey, commodities strategist at ING, told CNBC that gold and silver had come under pressure as "market focus shifts back to rates and inflation rather than pure safe-haven demand."

"The escalation in the Middle East is pushing oil higher and lifting inflation risks, which in turn is reinforcing expectations that central banks stay tighter for longer," Manthey said. She added that higher real yields represented "a clear headwind for non-yielding assets like gold and silver."

The CNBC report also cited Alex King, investment strategy analyst at Wellington Management, who discussed broader precious metals demand trends. King said gold had been supported by central bank buying and ETF inflows since late 2022 and stated that "gold's recent pullback may reflect cyclical excess rather than a broken trend." He also pointed to reserve diversification, central bank demand, and ETF inflows as factors that had continued to support interest in precious metals.

Together, the reports described a silver sector influenced by interest rate expectations, inflation concerns, and currency movements, while industry observers continued to monitor supply deficits, industrial demand, and investment flows.

Analysts Said Metallurgical Results Advanced Understanding of Quiulacocha

In a June 10 commentary, Peter Krauth and Ted Butler discussed Cerro de Pasco Resources' latest metallurgical update and its implications for the Quiulacocha project.

Senior Analyst Ted Butler wrote that the company's metallurgical studies had converged on "a two-concentrate flowsheet, generating a high-grade pyrite concentrate and a base metal concentrate, with silver carried in both streams." He stated that pyrite represented more than 50% of the Quiulacocha tailings drilled in 2024 and that material, which had initially appeared to be "a metallurgical challenge," was now "emerging as one of the project's most attractive features."

According to Butler, the mini-pilot plant at SGS Santiago delivered "the critical proof of concept," recovering more than 92.5% of total sulphides and approximately 94% of silver into a bulk concentrate. He wrote, "The silver is locked inside the pyrite, meaning the most effective way to capture it is to pull the pyrite out first, then separate the silver and base metals downstream."

Butler further stated that the demonstration of the process as viable suggested: "more silver can ultimately be recovered from Quiulacocha than previously thought." He also noted that the pyrite concentrate, grading 90-95%, had "potential value beyond silver, as a sulphur-bearing feedstock for sulphuric acid production."

The report cited Executive Chairman Steven Zadka, who stated: "The pyrite stream has potential value as a sulphur-bearing feedstock in a market where conventional supply is tightening."

Butler also highlighted mineralogical studies that had identified opportunities to concentrate gallium and indium, noting that targeted exploratory metallurgical test work on both elements was underway. He referenced a previous estimate by CEO Guy Goulet of "US$600 million in cash flow from Quiulacocha if recoveries reach 70% and gallium is included."

Discussing project development milestones, Butler wrote that the metallurgical update represented "the latest milestone in a systematic de-risking process" and described the results as "a critical step toward the first mineral resource estimate in H2 2026." He stated that the company had completed an OTCQX upgrade in April, secured an access agreement in March, and had made progress as metallurgy was "directionally de-risked."

Krauth and Butler also commented on their investment stance, writing that they "both maintain an overweight position in the stock."

In the June 10 edition of the What's Chen Buying? What's Chen Selling? newsletter, investor Chen Lin highlighted the company's metallurgical results, writing that "table 3 is the key to read" and summarizing the findings as: "Silver recovery is over 90% and base metal over 70%. The assumption is 40%."

Lin also pointed to the sulphur content of the concentrate, stating, "their concentrate sulphur grade is from 44-50%." He noted that the company began pursuing the sulphur opportunity when prices were around US$500 per tonne and wrote, "even at 500/ton, the sulphur valuation will pay more than the transportation (less than 100/ton thanks to the rail station nearby) and processing costs."

Describing the potential downstream processing scenario, Lin wrote that a sulphuric acid plant "would only take sulphur in their roasters and all the metals will be dropped to the bottom for us. I call this 'free roasting'!"

Next Phase of Metallurgical Evaluation

Cerro de Pasco outlined several ongoing and planned workstreams as part of the metallurgical program.

The company said additional mini-pilot plant work is focused on separating base metals from the bulk sulphide concentrate and generating cleaned pyrite concentrate samples for downstream evaluation. 

Comparative bench-scale testing of fine-grain flotation technologies is also underway to evaluate fine-grained sulphide recovery and support development of a fine-particle flotation strategy.

The company plans to conduct pyrite roasting trials and calcine leaching programs at two commercial laboratories to evaluate downstream recovery of silver and base metals from the pyrite concentrate. According to the company, these programs are intended to investigate metal distribution between the two concentrate streams and determine the potential payable metal content of each product. 

Targeted exploratory metallurgical programs are also being conducted to assess concentration of gallium from the silicate fraction of the tailings and indium associated with the base metals and pyrite streams.

The company stated that a consolidated metallurgical update is anticipated in the second half of 2026. According to Cerro de Pasco, that update is expected to support advancement toward a first Mineral Resource Estimate and subsequent technical studies for the Quiulacocha Tailings Reprocessing Project.

Ownership and Share Structure¹

About 7% of the company is held by insiders and management. About 21% is held by other strategic entities, and about 11% is held by institutions. The rest is retail.

Top shareholders include 2176423 Ontario Ltd. with 16.22%, Gordaldo Ltd. with 4.99%, Steven Zadka with 4.02%, and Goulet with 1.55%.

Its market cap is CA$411.79 million with 493.39 million shares outstanding. It trades in a 52-week range of CA$0.28 to CA$0.90.