Silver Mountain Delivers Positive Preliminary Economic Assessment For Its Reliquias Project, Peru; Pre-Tax NPV 5% Of C$107 million, Pre-Tax IRR Of 57%, And Payback Of 1.8 Years Key Highlights – Preliminary Economic Assessment ("PEA")
Silver Mountain Delivers Positive Preliminary
Economic Assessment For Its Reliquias
Project, Peru; Pre-Tax NPV 5% Of C$107
million, Pre-Tax IRR Of 57%, And Payback Of
1.8 Years
Key Highlights – Preliminary Economic Assessment ("PEA")
Pre-Tax Net Present Value ("NPV"),
C$107 million
1
at 5% discount rate, and Pre-Tax Internal
Rate of Return ("IRR") of 57%
After-Tax Net Present Value ("NPV"),
C$85 million
1
at 5% discount rate, and After-Tax Internal
Rate of Return ("IRR") of 51%.
Construction time of 10 months
Payback Period of 1.8 years
Profitability ratio (Initial CAPEX/NPV) of 2.5 times
Average annual metal production of 2.2 million ounces AgEq per year
Initial CAPEX of
US$24.8 million
All-in Sustaining Cost ("AISC")
2
of
17 US$
/Oz AgEq
Benefits from existing and fully permitted infrastructure
TORONTO
,
May 15, 2024
/CNW/ - Silver Mountain Resources Inc. ("Silver Mountain" or the
"Company") (TSXV: AGMR) (OTCQB: AGMRF) is pleased to announce the results of a Preliminary
Economic Assessment (the "PEA") of its 100% owned Reliquias Project, Huancavelica department,
central
Peru
("Reliquias" or the "Project"). The PEA shows Reliquias to be a robust silver and base
metals project with significant infrastructure in place. Restarting operations at this historic past
producer could position Silver Mountain as the next producer in
Peru
, taking advantage of a
favourable metals market.
Alvaro Espinoza
, CEO of Silver Mountain, stated:
"
This PEA reflects 18 months of diligent work
by our team, highlighting a strong business case for Reliquias as a future silver producer in
Peru
and supported by favourable market conditions. Essential infrastructure, including a tailings facility,
is already in place, and permitting is progressing as planned. This is reflected in a reduced initial
CAPEX of
US$24.8 million
and a short payback period of less than two years considering a
conservative silver price of
US$24
per ounce. Silver Mountain's experienced technical team, led
by
Richard Contreras
and known for developing deposits like Panamerican Silver's Morococha
mine, ensures that our mine plan and methods are achievable and cost-effective. We are on track
with our development timeline and budget. Furthermore, the exploration potential within our 60,000
hectare land package holds potential for significant resource expansion through future drilling,
setting the stage for increased production over time.
The results of the PEA will be disclosed in an independent technical report in accordance with
National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and
prepared by independent consulting firm RECURSOS RESERVAS Y EVALUACIONES MINERAS
S.A.C. with specific subject matter expertise including Plenge Laboratorios for metallurgical test
work, Airex, as ventilation consultants, DTC as geotechnical consultants, and Apeg for mine
planning. A NI 43-101 compliant technical report in respect of the PEA will be filed on SEDAR+
within 45 days of this news release.
Note: The PEA is preliminary and includes Inferred Mineral Resources that are considered too
speculative geologically to have the economic considerations applied to them that would enable them
to be categorized as Mineral Reserves, and there is no certainty that the preliminary economic
assessment will be realized. Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
_________________________________
1
Based on a US$ to C$ exchange rate of 1.3498.
2
AISC is a non-IFRS financial ratio that does not have any standardized meaning prescribed under IFRS and therefore may not be comparable to other issuers. Please refer to "Non-
IFRS Measures".
Discussion of Preliminary Economic Assessment
A summary of the key financial information for the PEA is provided in Table 1.
Table 1: Key financial information from the Reliquias Project PEA.
Table 1: Key financial information from the Reliquias Project PEA. (CNW Group/Silver Mountain
Resources Inc.)
A Life of Mine (LOM) operating summary for the updated PEA is shown in Table 2.
Table 2: Operating summary and main assumptions used for the Reliquias Project PEA.
Table 2: Operating summary and main assumptions used for the Reliquias Project PEA. (CNW
Group/Silver Mountain Resources Inc.)
Base Case Metal Prices and Exchange Rate Assumptions (CNW Group/Silver Mountain Resources
Inc.)
Figure 1: Projected Annual and Cumulative LOM Post-Tax Unlevered Free Cash Flow (C$M) (CNW
Group/Silver Mountain Resources Inc.)
The Project is planned as an underground mine operation. For the PEA, the annual mining rate will
be up to 322 ktpa. Production of both the bulk and zinc concentrates will begin simultaneously, each
feeding separate processing circuits. The LOM is 9 years. Two separate mining methods, Bench
and Fill Stoping, and Sublevel Stoping, have been selected for Reliquias, considering the existing
infrastructure and the ventilation and drainage plans.
Production is assumed to commence following 10 months of refurbishment and commissioning of the
existing flotation plant. The mine plan for Reliquias is based on mining a total of 2.4 million tonnes
with a head grade of 3.71 oz / t silver, 0.32 g / t Au, 2.45% Zn, 1.62% Pb, and 0.26% Cu over a 9-
year LOM using an NSR cut-off of
$85.64
/ t. A lower marginal cut-off grade of
$74.28
/ t was used,
whereby lower grade blocks adjacent to existing infrastructure were incorporated into the resource
base. Mining dilution is variable, depending on the stope sizes, and rates between 17% and 36%
were applied.
Processing of the polymetallic mineralization will be through a conventional crushing and grinding
circuit followed by froth flotation, concentrate thickening, and filtration in the existing plant. Two
products, a bulk concentrate, and a zinc concentrate will be produced. Metallurgical test work
indicates a bulk concentrate grading 69.88 oz/t Ag, 31.09 % Pb and 4.88 %Cu. The zinc
concentrates grade 53.45 %. Table 3 below shows the concentrate grades and recovery
assumptions for both products.
Table 3: Concentrate grades and metallurgical recoveries for the Reliquias Project
Table 3: Concentrate grades and metallurgical recoveries for the Reliquias Project (CNW
Group/Silver Mountain Resources Inc.)
Note: The recoveries have changed compared to those published in
January 2024
(Bulk concentrate
recoveries of 88% Ag, 75% Au, 93% Pb, and 91% Cu, and Zinc concentrate recovery of 84% Zn),
considering a mineral blend most suitable for the first three years of LOM operation, where the main
contributors are the Matacaballo, Sacasipuedes, Ayayay, and Vulcano veins.
Infrastructure
Access
There is a good existing road network from the Project to the Peruvian coast. The Project lies
approximately 250 km from the Port of Callao, the main hub for concentrate exports in the country.
The road leaving the Project is an all-weather gravel road that connects to a bitumen road to the
coast and then to the Port of Callao via the Pan-American highway.
Tailings and Mine Waste Management
The existing tailings storage facility is permitted to store up to
770,000 m
3
, equivalent to four years
of production. An old open pit is permitted to store up to
200,000 m
3
of waste material, enough for
the LOM of the deposit.
Power, Water
The Project is connected to an existing substation belonging to Consorcio Energético Huancavelica
(CONENHUA), a private company dedicated to power generation and distribution. Potable water is
supplied through existing pipes from approved sources to two large storage tanks. Finally, the
existing mine hosts an operational water treatment facility that collects, stores, processes, and
recirculates water for the metallurgical process.
Capital and Operating Costs
The major components of the initial capital expenditure of
US$24.8 million
include
US$21.5 million
for
underground development and
US$2.1 million
for processing plant refurbishment. The low capital
expenditure for the plant reflects the current state of the facility, which can be quickly put back into
full operation. Total sustaining capital is
US$32.3 million
over the 9-year mine life. The major
components of sustaining capital are
US$12.6 million
for lateral development and
US$4.7 million
for
increasing the capacity of the tailings dam.
The estimated capital costs, over the life of the Project, are as follows in Table 4.
Table 4: Capital expenditure costs for the Reliquias Project
Table 4: Capital expenditure costs for the Reliquias Project (CNW Group/Silver Mountain Resources
Inc.)
Numbers may not add up due to rounding errors.
The total operating cost over the life of mine is
US$ 207.9 million
, and the breakdown is shown in
table 5.
Table 5: LOM operating costs for the Reliquias Project
Table 5: LOM operating costs for the Reliquias Project (CNW Group/Silver Mountain Resources
Inc.)
Sensitivity Analysis
During the PEA study, an initial sensitivity analysis was conducted, focusing on metal pricing
parameters within practical ranges. This analysis elucidates how each variable affects essential
project financial indicators like NPV and IRR.
Silver Price & Au Price (CNW Group/Silver Mountain Resources Inc.)
Opportunities and Exploration Potential
The Reliquias deposit has not been fully delineated by exploration drilling, and the extension of
several of the veins remain open along strike and at depth. Opportunities for additional value at
Reliquias include, but are not limited to:
i.
Potential to extend individual vein systems both along strike and at depth with more drilling.
ii.
Potential to find different styles of mineralization under the large alteration areas found in the Brownfields targets identified by Company geologists.
iii.
Exploration potential for large porphyry-style mineralization under mineralized tourmaline breccias at the Yahuarcocha and Caudalosa targets which have not been
reflected in the PEA.
Furthermore, the Caudalosa mine, located adjacent to the flotation plant used for Reliquias, hosts a
historical resource equivalent to a 38 Moz of contained silver ounces. An aggressive drill program is
planned in the near term to convert these resources into current resource and incorporate them
quickly into the mine plan.
Resource Estimate
The mineral resource estimate for the PEA was prepared in accordance with NI 43-101 and
CIM Standards and is set forth in the technical report entitled "NI 43-101 Technical Report:
Mineral Resource Update, Reliquias Mine" dated
March 8, 2024
and with an effective date of
January 1, 2024
and available on the Company's profile on SEDAR+ at
https://sedarplus.ca
.
Technical Background and Qualified Persons
All scientific and technical information contained in this news release has been reviewed and
approved by Gerardo Acuña FAusIMM (CP), Principal Consultant (Mining Engineering) who is a
Qualified Person as defined in NI 43-101.
About Silver Mountain
Silver Mountain Resources Inc. is a silver explorer and mine developer planning to restart production
at the Reliquias underground mine and undertake exploration activities at its prospective silver
camps at the Castrovirreyna Project in Huancavelica,
Peru
.
For additional information in respect of the Project, please refer to the Company's technical report,
titled "NI 43-101 Technical Report: Mineral Resource Update, Reliquias Mine", Huancavelica-
Peru
,
dated
March 8, 2024
, effective date
January 1, 2024
, available at
https://sedarplus.ca
.
For further information about our drill program, including cross sections of the main veins with drill
hole locations, please refer to our corporate presentation, available on our website at
www.agmr.ca
Silver Mountain's subsidiary Sociedad Minera Reliquias S.A.C. owns 100% of its concessions and
holds more than 60,000 hectares in the district of Castrovirreyna, Huancavelica,
Peru
.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release.
Non-IFRS Financial Measures
This news release contains certain non-IFRS measures, including AISC per Ounce of Payable Silver.
AISC is reflective of all of the expenditures required to produce an ounce of silver from operations.
AISC reported in the PEA includes total cash costs, sustaining capital, and corporate general and
administrative costs. AISC per ounce is calculated as AISC divided by payable silver ounces. The
Company believes that these measures, together with measures determined in accordance with
IFRS, provide investors with an improved ability to evaluate the underlying performance of the
Company and the results of the PEA. Non-IFRS measures do not have any standardized meaning
prescribed under IFRS, and therefore they may not be comparable to similar measures employed by
other companies. The data is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with
IFRS.
Forward Looking Statements
This news release contains forward-looking statements and forward-looking information within the
meaning of Canadian securities legislation (collectively, "
forward-looking statements
") that relate
to Silver Mountain's current expectations and views of future events. Any statements that express, or
involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as "will likely result",
"are expected to", "expects", "will continue", "is anticipated", "anticipates", "believes", "estimated",
"intends", "plans", "forecast", "projection", "strategy", "objective" and "outlook") are not historical
facts and may be forward-looking statements and may involve estimates, assumptions and
uncertainties which could cause actual results or outcomes to differ materially from those expressed
in such forward-looking statements and include, but are not limited to, statements with respect
to: the results of the PEA, including future Project opportunities, future operating and capital costs,
closure costs, AISC per ounce of payable silver, the projected NPV, IRR, timelines, permit timelines,
and the ability to obtain the requisite permits, economics and associated returns of the Project, the
technical viability of the Project, the market and future price of and demand for silver, the
environmental impact of the Project, and the ongoing ability to work cooperatively with stakeholders,
including the local levels of government. No assurance can be given that these expectations will
prove to be correct and such forward-looking statements included in this news release should not be
unduly relied upon. These statements speak only as of the date of this news release.
Forward-looking statements are based on a number of assumptions and are subject to a number of
risks and uncertainties, many of which are beyond Silver Mountain's control, which could cause
actual results and events to differ materially from those that are disclosed in or implied by such
forward-looking statements. Such risks and uncertainties include, but are not limited to, the factors
set forth under "
Risk Factors
" in the Company's annual information form for the year ended
December 31, 2023
and dated
April 26, 2024
, and other disclosure documents available on the
Company's profile at
www.sedarplus.ca
. Silver Mountain undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information, future events or
otherwise, except as may be required by law. New factors emerge from time to time, and it is not
possible for Silver Mountain to predict all of them or assess the impact of each such factor or the
extent to which any factor, or combination of factors, may cause results to differ materially from
those contained in any forward-looking statement. Any forward-looking statements contained in this
news release are expressly qualified in their entirety by this cautionary statement.
SOURCE
Silver Mountain Resources Inc.
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For further information:
Alvaro Espinoza, Chief Executive Officer, Silver Mountain Resources Inc,
82 Richmond Street East, Toronto, ON M5C 1P1, +51 954 475 319, [email protected], www.agmr.ca
CO: Silver Mountain Resources Inc.
CNW 07:00e 15-MAY-24