Silver Sand Project
Preliminary Economic Assessment
On January 9, 2023, the Company released the preliminary economic assessment (“PEA”) results for the 100% owned Silver Sand Project in Potosi Department, Bolivia. The PEA study confirms the potential to develop a low capital intensity conventional open pit and tank leach operation at Silver Sand, producing on average 12 million ounces of silver (Doré) per annum over a 14-year mine life.
PEA Highlights ($ figures in USD):
Compelling project economics – Base Case Pre-Tax NPV (5%) of $1.1 billion and an IRR of 52%, and Post-Tax NPV (5%) of $726 million and an IRR of 39% ($22.50/oz silver)
Leveraged to silver – Using a +/- 20% sensitivity analysis for silver price, Post-Tax NPV (5%) of $1,054 million and 50% IRR at US$27/oz silver and a Post-Tax NPV (5%) of $398 million and 26% IRR at US$18/oz silver
Large-scale, long mine life asset – 14-year mine life producing approximately 171 million ounces total payable silver metal
Annual payable metal production exceeds 15 million ounces of silver in years one through four, with life-of-mine (“LOM”) average annual payable metal production exceeding 12 million ounces of silver
High-margin operation – Average LOM operating cash cost of $8.45/oz and total all-in sustaining cost of $10.42/oz silver
Low capital intensity – Initial capital costs of $308 million, which includes $52 million in contingency costs; LOM sustaining capital costs total $20 million
Silver Sand Open Pit Mining – Key Economic Assumptions and Results (Base Case)
Cautionary Note: The Mineral Resource estimate included in the Preliminary Economic Assessment (“Study” or “PEA”) is reported according to the classification criteria set out in the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards for Mineral Resources and Reserves (“CIM Definition Standards”). These standards are internationally recognized and allow the reader to compare the Mineral Resource with that reported for similar projects. Readers are cautioned that the PEA is preliminary in nature and is intended to provide an initial assessment of the project’s economic potential and development options. The PEA mine schedule and economic assessment includes numerous assumptions and is based on both Indicated and Inferred Mineral Resources. Inferred Resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA results will be realized. The estimate of mineral resources may be materially affected by geology , environmental, permitting, legal, title, socio-political, marketing or other relevant issues. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Additional exploration will be required to potentially upgrade the classification of the Inferred Mineral Resources to be considered in future advanced studies.
The PEA is based on the updated Mineral Resource Estimate which was reported on November 28, 2022. The effective date of the 2022 Mineral Resource Estimate for Silver Sand is 31 October 2022. The cut-off applied for reporting the pit-constrained Mineral Resources is 30 g/t silver. Assumptions made to derive a cut-off grade included mining costs, processing costs and recoveries and were obtained from comparable industry situations. The model is depleted for historical mining activities. Mineral Resources are constrained by optimized pit shells at a silver price of US$22.50 per ounce, silver metallurgical recovery of 91%, silver payability of 99%, open pit mining cost of US$2.6/t, processing cost of US$16/t, G&A cost of US$2/t, and slope angle of 44-47 degrees. Key assumptions used for pit optimization for the PEA mining pit include silver price of US$22.50 per ounce, silver metallurgical recovery of 91%, silver payability of 99%, open pit mining cost of US$2.6/t, incremental mining cost of US$0.04/t (per 10 m bench), processing cost of US$16/t, tailing storage facility operating cost of US$0.7/t, G&A cost of US$2/t, royalty of 6.00%, mining recovery of 92%, dilution of 8%, and cut-off grade of 30 g/t silver.