ABRA.TO · 2024-03-25 12:00:00

AbraSilver Announces Robust Diablillos PFS With US$494M After-Tax NPV and 26% IRR

Economic Studies

220 Bay Street, Suite 550, Toronto, ON, M5J 2W4

www.abrasilver.com

Toronto – March 25, 2024: AbraSilver Resource Corp. (TSX.V:ABRA; OTCQX: ABBRF)

("AbraSilver" or the “Company”) is pleased to announce results from its Preliminary Feasibility Study

(“PFS” or the “Study”) for its wholly-owned Diablillos project (the “Project”) in Salta Province, Argentina.

The PFS project team was comprised of SGS Geological Services (“SGS”), with support from Knight

Piesold Ltd., SGS Bateman, Bmining (Chile), and INSA (Argentina).

All dollar ($) figures are presented in US dollars unless otherwise stated. Base case metal prices used in

this analysis are $1,850 per gold (“Au”) ounce (“oz”) and $23.50 per silver (“Ag”) oz.

PFS Study Highlights:

 Attractive project economics – $494 million after-tax Net Present Value discounted at 5% per

annum (“NPV 5%”), at base-case metal prices, with an after-tax Internal Rate of Return (“IRR”) of

25.6% and payback of 2.4 years. At current spot prices1 an after-tax NPV5% of $661 million with

an IRR of 30.3% and payback of 2.1 years

 Substantial silver and gold production – 13.3 Moz silver-equivalent (“AgEq”) average annual

production over a 13-year life-of-mine (“LOM”), comprised of 7.7 Moz Ag and 71 koz Au, or, with

average annual production of 17.9 Moz AgEq over the first five years of full mine production,

comprised of 14.5 Moz Ag and 44 koz Au

 Low All-in Sustaining Cash Costs (“AISC”)2 – Average AISC of $12.40/oz AgEq over LOM

 Low capital cost – Initial pre-production capital expenditure of $373 million and sustaining capital

of $65 million

 Open pit mine with high grades – Conventional open pit mining and processing plant focused

exclusively on oxide mineralization with average grades of 91 g/t Ag and 0.81 g/t Au (155 AgEq)

over the LOM

 Maiden Proven & Probable (“P&P”) Mineral Reserves – Based on the PFS, Diablillos is

estimated to hold P&P Minerals Reserves containing 210 Moz of AgEq metal (42.3 Mt at 91 g/t

Ag & 0.81 g/t Au)

 Potential for additional economic improvements – Several opportunities have been identified

that may significantly enhance the economic returns as detailed later in this release:

o A preliminary internal study estimates that a significant amount of mineralized material

below cut-off grade, which is treated as waste in the PFS, could be amenable to heap

leaching or other low-cost processing technologies, with further study work expected to

be completed by mid-2024.

o A Phase IV drill campaign is planned to further expand the Mineral Resource and Reserve

estimates within the existing deposits and to define new adjacent mineralized zones

through step-out drilling.

John Miniotis, President and CEO, commented, “We are delighted to share the positive outcomes of the

PFS which demonstrates that Diablillos is economically robust and reaffirms our confidence in the

Project’s significant upside potential. Unlike many other silver projects, the PFS highlights that Diablillos

is a true primary silver project, with a substantial amount of gold and no base metals. The PFS indicates

that Diablillos may produce an annual average of 17.9 Moz of silver-equivalent in the first five years,

1 Spot prices: $24.76/oz Ag & $2,180.81/oz Au closing prices on March 21, 2024 (Source: Reuters.com)

2 Please see “Non-IFRS Financial Measures”

which would make it one of the top ten primary silver mines in the world2. In addition, we are very excited

to have identified several opportunities to further enhance and optimize the PFS economics, which we

will be evaluating as we advance towards a Feasibility Study. This PFS is a great starting position from

which we plan to continue to unlock value for all stakeholders.”

Project Economics

Table 1 – Commodity Price Sensitivity Analysis

Economic Parameters Base Case

Prices

Spot

Prices1

Base Case

Prices

+15%

Base Case

Price

-15%

2021 PEA

Price Deck

Silver Price ($/oz) $23.50 $24.76 $27.03 $19.98 $24.00

Gold Price ($/oz) $1,850 $2,181 $2,128 $1,573 $1,650

After-tax NPV (5%, US$ million) $493.7 $661.5 $741.9 $245.6 $447.3

After-tax NPV (8%, US$ million) $363.4 $498.5 $567.7 $159.0 $328.2

After-Tax IRR (%) 25.6% 30.3% 33.3% 16.7% 24.6%

Payback (years) 2.4 2.1 2.1 3.2 2.4

1Note: Spot Price as at close on March 21, 2024, per Reuters.com

The PFS presents a range of metal pricing scenarios on an after-tax basis to evaluate the economics of

both upside and downside price scenarios. The economics of the Diablillos project are very robust and

offer significant leverage to both silver and gold prices, with an after-tax NPV 5% of $742 Million (+50%)

if prices rise 15% from the Base Case (Table 1).

Production Summary

The Diablillos project is envisioned as a conventional open pit operation over a mine life of approximately

13.5 years of production with mill throughput of 9,000 tonnes per day. Total material moved (excluding

stockpile rehandle and commissioning) is 313.5 Mt (42.3 Mt mineralization and 271.2 Mt waste) at a strip

ratio of 6.4 (excluding pre-stripping).

The proposed operation consists of a common open pit that will extract both the Oculto and JAC deposits,

the mineralization of which are connected by a narrow node. The JAC deposit contains higher silver

grade ore that occurs near-surface and, consequently, will be mined and processed in the earlier years

of the mine plan. Additionally, the overburden at JAC provides suitable construction material for the

project infrastructure and tailings storage facility (“TSF”). As a result, the highest-grade feed material is

expected in the first five years of full mine production, with average grades 168 g/t silver and 0.51 g/t

gold, resulting in average annual production of 14.5Moz silver and 44koz gold during that period (Table

2 and Figure 1).

3 Source: https://www.statista.com/statistics/253333/leading-primary-silver-mines/

Table 2 – Grade and Production Profile

Units Avg.

Year 1 - 5

Avg. LOM

(Year 1 – 13)

Silver Grades (g/t) 168 91

Gold Grades (g/t) 0.51 0.81

Silver-Equivalent Grades (g/t) 209 155

Silver Production (M oz) 14.5 7.7

Gold Production (k oz) 44.0 71.0

AgEq Production (M oz) 17.9 13.3

Note: AgEq is calculated using base case prices for silver and gold (Au/Ag price ratio of 78.72)

Figure 1 – Annual Silver Equivalent Production and Grade Profile

Processing and Metallurgy

The process facility has been designed for a nameplate capacity of 9,000 tonnes of mineralization per

day (“tpd”), or 3.15 million tonnes per annum (“tpa”) considering 350 days a year of operation. A

conventional silver/gold processing plant flowsheet was developed that incorporates crushing, grinding,

gravity concentration, an intense cyanidation circuit, cyanide leaching with oxygen addition, counter

current decantation washing thickeners and Merrill-Crowe precious metal recovery from solution followed

by on-site smelting to doré bars. The leached solids are detoxified, thickened, and pumped to a TSF for

permanent disposal.

Metallurgical test work has been carried out in a range of different laboratories between 1996 and 2023

and all the results have been considered as part of the PFS. A geo-metallurgical model has been

developed segregating the deposit into five distinct domains, with overall LOM silver and gold recoveries

averaging 82.8% and 86.6%, respectively. A schematic showing the proposed flowsheet is provided in

Figure 2.

Tailings from the process plant will be stored in a multi-phase, fully lined, cross valley TSF. The facility

will be raised using the downstream method with the initial starter impoundment, constructed from borrow

material and open pit pre-strip waste, providing storage for the first three years of production.

Figure 2 - Process Flowsheet

Operating Costs

The operating cost estimates are based on an owner-operated truck and shovel mining operation,

conventional processing plant, and TSF.

The PFS operating cost estimates are shown on a per tonne mined and milled basis in Table 3. The PFS

estimates that All-In Sustaining Costs ("AISC") average $9.97/oz AgEq in Year 1 – Year 5, and $12.40/oz

AgEq over the LOM. This AISC is believed to be at the low end of the primary silver production cost

curve3.

Table 3 – Mine Operating Cost Estimates

Operating Costs Basis Avg. LOM ($)

Ore Mining per tonne mined 1.94

Waste Mining per tonne mined 1.94

Waste Mining (Overburden) per tonne mined 1.73

Total Mining per tonne milled 13.66

Processing Plant, Utilities and Maintenance per tonne milled 19.26

Camp and Service Hub per tonne milled 3.70

G&A per tonne milled 3.32

Total Operating Cost per tonne milled 39.94

4www.silverinstitute.org/wp-content/uploads/2023/11/SilverMarket2023_interim-report.pdf

Project Capital Costs

The initial pre-production capital expenditures for the project are summarized in Table 4. Capital

expenditures to be incurred after the start-up of operations are assigned to sustaining capital and are

projected to be covered by operating cash flows. Initial capital costs are estimated at $373.5 million and

total sustaining capital costs are estimated at $65.0 million. Particular attention was given to the capital

cost estimate during the PFS with approximately 80% of the costs based on quoted prices and this has

resulted in a lower estimated contingency cost of $20.3 million. Over 60% of equipment, supplies,

construction, and service procurement packages will come from local companies, complying with local

regulations.

Table 4 – Summary of Capital Cost Estimates

Description 2021 PEA Study 2024 PFS Change

2024 PFS vs. 2021 PEA

$ millions $ millions % Change $ Change

Surface Mining 51.6 39.3 -24.0% -12.4

Processing 76.9 96.9 26.1% 20.0

Site Infrastructure 53.7 152.0 183.2% 98.3

Owner and Indirect Costs 46.3 64.9 40.3% 18.7

Contingency & Other Provisions 26.5 20.3 -23.3% -6.2

Initial Capital Costs 255.0 373.5 46.5% 118.5

Sustaining Capital 15.2 65.0 328.0% 49.8

Closure 8.2 11.1 35.5% 2.9

Total Capital Costs 278.4 449.6 61.5% 171.2

Taxes and Royalties

Taxes and royalties in the PFS are based on current Argentinean legislated tax rates and were reviewed

by an independent tax consultant. The current rates are:

 Argentina corporate income tax: 35%

 Municipal taxes: 0.6%

 Provincial mining royalty: 3%

 Gold/Silver export duties: 8% / 4.5%

In total, these taxes, royalties and export duties total $1,087 million in the PFS. The Company believes

that the current government of Argentina may implement changes to corporate income taxes and export

duties that would have a favourable impact on the PFS economics, although there is no guarantee that

such changes will be successfully implemented and approved.

An additional 1% NSR royalty is payable to EMX Royalty Corporation.

Community Relations & Permitting

The Company continues to be very actively involved in community relations and maintains very positive

relations with all nearby communities. The Project is expected to have a positive impact with the creation

of new employment opportunities and investment in the region. The PFS estimates that over 65% of the

total capital costs will be purchased domestically, and that the majority of local contractors will be hired

regionally from Salta, Catamarca and nearby provinces.

Regarding permitting, the Company has submitted a comprehensive Environmental Baseline Study

which is an important milestone towards the ongoing advancement of Diablillos as a sustainable mining

project. The Company is now working on finalizing the Environmental Impact Assessment (“EIA”), which

is an essential part of the final approval process required for the ultimate construction of the project, and

the EIA application is expected to be submitted later this year.

Summary of Economic Results

Table 5 summarizes the key economic results and parameters of the PFS.

Table 5 – Summary of Project Economics

Metrics Units Results

Life of mine years 13

Total mineralized material mined (Includes Yr. 0) M tonnes 42.3

Total contained silver (Includes Yr. 0) M oz 123.5

Total contained gold (Includes Yr. 0) k oz 1,107.5

Strip ratio (excludes pre-stripping) Waste:ore 6.4

Throughput tpd 9,000

Head grade – silver (first 5 years / LOM) g/t 168 / 91

Head grade – gold (first 5 years / LOM) g/t 0.51 / 0.81

Recoveries – silver (first 5 years / LOM) % 84.4 / 82.8

Recoveries – gold (first 5 years / LOM) % 85.2 / 86.6

Average Production – silver (first 5 years / LOM) M oz 14.5 / 7.7

Average Production – gold (first 5 years / LOM) k oz 44.0 / 71.0

AISC (LOM) – silver equivalent (first 5 years / LOM) $/oz AgEq 9.97 / 12.40

Initial Capital Costs $ M 373.5

Sustaining Capital Costs $ M 65.0

Pre-Tax NPV5% $ M 995.1

After-Tax NPV5% $ M 493.7

The results of this PFS supersede those of the 2021 Preliminary Economic Assessment (the “2021

PEA”) reported in “NI 43-101 Preliminary Economic Assessment Technical Report – Diablillos Project”

filed on SEDAR+ by AbraSilver on January 13, 2022. The results reflect several positive changes to the

planned development of the Diablillos Project compared with the 2021 PEA. The changes incorporated

include:

 Maiden Mineral Reserve Estimate: A maiden Proven and Probable Mineral Reserve estimate

has been declared at Diablillos containing 123.4 Moz Ag and 1.1 Moz Au (42.3 Mt with average

grades of 91 g/t Ag and 0.81 g/t Au). The conversion rate of M&I Mineral Resources to P&P

Mineral Reserves is 79% on a tonnage basis and 83% on a contained metal basis.

 Inclusion of JAC Deposit: The discovery and inclusion of the JAC deposit into the mine plan

has contributed to higher silver grades and an overall increase in the Mineral Resource and

Reserve estimates. Importantly the high-grade JAC deposit will be mined and processed

throughout years 2 – 5, resulting in elevated cash flow levels in the early years of the mine plan.

 Higher Throughput: The processing plant throughput rate has been expanded by 29% to 9,000

tpd versus 7,000 tpd in the 2021 PEA. This has helped contribute to higher annual silver and

gold production rates, with a peak annual production rate of 19.7 Moz AgEq in Year 5 of the PFS.

 Higher Recovery Rates: The PFS process plant includes the addition of a gravity separation

circuit before cyanide leaching, which contributes to higher recovery rates for both silver and gold.

Overall, silver and gold recovery rates now average 82.8% and 86.6%, respectively, compared to

73.4% for silver and 86.0% for gold in the 2021 PEA.

 Power Generation and Site Infrastructure: The PFS incorporates plans to power the Project

by using on-site diesel-fueled generators and installing a 20-megawatt solar array on-site to

provide a clean source of renewable energy. The 2021 PEA assumed that power would be

secured from a regional natural gas pipeline. This still represents a possibility going forward but

to date the Company has not secured any assurances on the availability of natural gas from this

pipeline.

 Increased Estimated Accuracy on Capital and Operating Costs: The PFS costing accuracy

has improved to +25% /-10% (from +50%/-20% in the 2021 PEA). Additionally, approximately

80% of the cost estimates have been based on third-party contractor and equipment manufacturer

quotations, providing an increased level of accuracy.

 Updated Capital Costs : Total initial capital expenditures increased by $118 million. Beyond

general cost inflation, the primary drivers behind this increase were:

o Mining – Colluvial pre-strip material and higher throughput capacity commanded a larger

mine fleet. The 2021 PEA assumed that mining was performed by contractors while the

PFS assumes an owner-operated mining operation. Pre-stripping costs were significantly

lower in the PFS due to near-surface mineralization identified by the Company since the

2021 PEA.

o Processing Plant – The throughput rate of the processing plant was increased to 9,000

tpd from 7,000 tpd, as outlined above, and a gravity separation circuit and a covered

crushed ore stockpile dome were added.

o TSF – The design has been updated to store new increased capacities, through a five

phases dam expansion, with a water recovery system and seeping control facilities.

o Power Generation and Site Infrastructure – As outlined above, the PFS incorporates plans

to power the project by using an on-site hybrid power generation scheme, composed of

diesel-fueled generators and a 20-megawatt photovoltaic plant.

Diablillos: Future Opportunities and Value Enhancements

Several potential opportunities have been identified that may further enhance the economic return

outlined in the PFS. Significant opportunities include but are not limited to the following:

 Processing of Material Below Cut-Off Grade: It is anticipated that a significant amount of

mineralization below cut-off grade, which is currently being classified as waste, could be

processed via other low-cost processing alternatives (e.g. heap leaching). This could result in

increased Mineral Resources and Reserves, a reduction in the overall strip ratio at Diablillos and

higher metal production. The Company plans to complete a preliminary scoping study in H1/2024

to evaluate the economic potential of incorporating this mineralization into the overall mine plan.

 Expansion of Mineral Resources and Reserves: A Phase IV exploration campaign is currently

being planned to further expand the Mineral Resources and Reserves within the existing deposits

and to define new, immediately adjacent mineralized zones through step-out drilling. Multiple

exploration targets close to the planned Oculto-JAC open pit warrant additional drilling including:

Oculto, JAC, Fantasma, Laderas, JAC North, Alpaca, with numerous other targets within the

concession block.

 Evaluating Sulphide Potential: The PFS is based exclusively on oxidized mineralization with

the Oculto pit reaching a maximum depth of approximately 300 metres. Selective deeper drilling

has encountered mineralization in sulphides beneath Oculto and JAC down to a depth of

approximately 550 metres. An evaluation of the mineralization contained in the underlying

sulphides will be carried out, in parallel with a metallurgical test work campaign, to quantify the

contained metal in sulphides and the economics of its extraction.

 Implementation of Proposed Reduction in Corporate Taxes & Mining Export Duties: The

new Argentine federal government has announced a proposal to reduce corporate income taxes

from 35% to 25%, as well as eliminating export duties, and other measures which could introduce

other financial benefits to encourage large investments in the country. These benefits must still

be approved by the National Congress and, if approved, would significantly benefit the economics

of the Diablillos project.

Mineral Reserve Estimate – As of March 07, 2024

Table 6 shows the Proven and Probable Mineral Reserves at Diablillos by deposit. The Mineral Reserves

were estimated using a silver price of $22.50/oz and a gold price of $1,750/oz.

Table 6 – Diablillos Mineral Reserve Estimate

Mineral Reserve

(all domains)

Tonnage

(000 t)

(g/t)

AgEq

(g/t)

Contained Ag

(koz)

Contained Au

(koz)

Contained

AgEq

(koz)

Proven 12,364 0.86 177.7 246 46,796 341 97,839

Probable 29,930 0.80 79.7 143 76,684 766 136,267

Total Proven and

Probable 42,294 0.81 90.8 154 123,480 1,107 209,619

Notes for Mineral Reserve Estimate:

1. Mineral reserves have an effective date of March 07, 2024.

2. The Qualified Person for the Mineral Reserve Estimate is Mr. Miguel Fuentealba, P.Eng.

3. The mineral reserves were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), Definition Standards for Mineral

Resources and Reserves, as prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.

4. The mineral reserves were based on a pit design which in turn aligned with an ultimate pit shell selected from a WhittleTM pit optimization

exercise. Key inputs for that process are:

• Metal prices of U$S 1,750/oz Au; U$S 22.50/oz Ag

• Variable Mining cost by bench and material type. Average costs are U$S 1.94/t for all lithologies except for “cover” Cover mining cost

of U$U 1.73/t, respectively.

• Processing costs for all zone, U$S 22.97/t.

• Infrastructure and G&A cost of U$S 3.32/t.

• Pit average slope angles varying from 37° to 60°

• The average recovery is estimated to be 82.6% for silver and 86.5% for gold.

5. The Mineral Reserve Estimate has been categorized in accordance with the CIM Definition Standards (CIM, 2014).

6. A Net Value per block (“NVB”) cut-off was used to constrain the Mineral Reserve with the reserve pitshell. The NVB was based on "Benefits =

Revenue-Cost" being positive, where, Revenue = [(Au Selling Price (US$/oz) - Au Selling Cost (US$/oz)) x (Au grade (g/t)/31.1035)) x Au Recovery

(%)] + [(Ag Selling Price (US$/oz) - Ag Selling Cost (US$/oz)) x (Ag grade (g/t)/31.1035)) x Ag Recovery (%)] and Cost = Mining Cost (US$/t) +

Process Cost (US$/t) + Transport Cost (US$/t) + G&A Cost (US$/t) + [Royalty Cost (%) x Revenue]. The NVB method resulted in an average

equivalent cut-off grade of approximately 46g/t AgEq.

7. In-situ bulk density was read from the block model, assigned previously to each model domain during the process of mineral resource

estimation, according to samples averages of each lithology domain, separated by alteration zones and subset by oxidation.

8. All tonnages reported are dry metric tonnes and ounces of contained gold are troy ounces.

9. Mining recovery and dilution factors have not been applied to the Mineral Resource estimates.

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