Orko Silver Corp. (CVE:OK) provided Thursday an update on activities at its La Preciosa silver-gold deposit in the State of Durango, Mexico, with the company expected to deliver a new preliminary economic assessment (PEA) by the middle of this year.

In August of last year, the company, along with joint venture partner Pan American Silver Corp (TSE:PAA) released an initial PEA for the property, which showed an after-tax net present value of US$315 million at a five percent discount rate, and a 24.3 percent internal rate of return.

The results assumed prices of US$25 per ounce of silver and US$1,250 per ounce of gold.

The report outlined a conventional surface and underground mining operation of 18 distinct vein structures with a 5,000 tonnes-per-day mill and cyanide leaching plant, producing an average estimated 6.8 million ounces of silver and 11,800 ounces of gold a year, at a cash cost of $11.84 per ounce of silver, net of by-product credits, over a mine life of 12 years.

In a statement Thursday, Orko said: “Orko believes the PEA provides a base case with substantial contingencies included in both capital and operating cost categories based on the approach taken, and the estimates in the PEA relating to mining methods, and mineral resources provide upside potential as questions and answers to these methods and estimates are refined.”

Under the joint venture with Pan American, Orko is fully carried to commercial production, as if a decision is made to mine at La Preciosa, 100 percent of the construction costs will be funded by Pan American, while operating costs and profits will be split between the partners, with Orko receiving 45 percent of the profits.

Pan American is expected to deliver a NI 43-101 compliant feasibility study before April 13, 2012 under the deal, with the possibility of a one-time, three month extension. If Pan American fails to deliver the study, it will lose the right to earn a 55 percent interest in the deposit.

In December 2010, Orko retained the services of AMEC Americas Limited to provide an independent technical review of the Pan American work. While AMEC’s work has not yet been completed, the review of the PEA to date suggests that there could be opportunities to improve the project economics, Orko said.

As a result, Orko has contracted AMEC to complete a new independent PEA – to be delivered in mid-2012.

The new PEA will include an updated resource estimate currently being prepared by Mining Plus, which is scheduled to be completed before the end of March.

Orko also said that the Environmental Impact Study being completed by Clifton Associates is nearing completion, and will be submitted to the Mexican government for approval in order to obtain construction and operating permits for the deposit.

In addition, Pan American is completing a series of auger drill holes, test pits and diamond drill holes at La Preciosa. This work is expected to help determine the optimum location of the proposed tailings site, as well as the best location for the mill and mining infrastructure, Orko said.

President and CEO of Orko, Gary Cope, said: “We believe the new resource estimate and the results of the studies in progress will provide Orko with valuable information to support the strengths of our La Preciosa project and we are looking forward to sharing these results with our shareholders as soon as they become available.”