Cerro de Pasco Resources Successfully Completes First Full Year of Production CDPR Reports Fourth Quarter and Full Year Results and Provides 2023 Guidance
Cerro de Pasco Resources Successfully Completes First Full Year of
Production
CDPR Reports Fourth Quarter and Full Year Results and Provides 2023 Guidance
MONTRÉAL, QUÉBEC, CANADA / May 1, 2023/ Cerro de Pasco Resources Inc. (CSE: CDPR) (OTCPK: GPPRF)
(Frankfurt: N8HP) (“CDPR,” or the “Company ”) is pleased to announce selected financial information and
production results for the fourth quarter and year ended December 31, 2022. The Company’s consolidated
financial statements for the year ended December 31, 2022, and Management Discussion and Analysis
(“MD&A”) thereon can be viewed under the Company’s profile at www.sedar.com. Production results are
from the Company’s who lly owned Santander Mine (“Santander”), located in Peru. All amounts are in U.S.
dollars, unless otherwise noted.
Selected 2022 Highlights
• Production for 2022 was 32.7 million pounds of zinc, 1.94 million pounds of lead, and 120,000 ounces of
silver.
• Revenue for 2022 of $40.6M on payable production of 31.7 million pounds of zinc, 1.58 million pounds of
Lead, and 120,00 ounces of silver
• Achieved lower end of full year production guidance in payable zinc and lead while meeting upper end
of cost guidance.
• Achieved 2022 target goals to stabilize and ramp -up the operations, starting from 12 thousand tonnes
milled in April to 63 thousand tonnes average in Q4 2022.
• 2022 C1 cash cost (4) of $1.62, and AISC (5) $1.81 per pound of zinc produced remain in-line with the
Company’s projections; AISC was influenced in 2022 by significant capital expenditures including,
exploration, production ramp-up, pumping & power infrastructure, and development in preparation for
Pipe production.
• Achieved a total inventory of 240,000 tonnes of ore developed, or a total of 4 months of production. In
April 2022 this number was less than 20,000 tonnes.
• Positive mine operating cash flow (3) of over $8.5 million.
• Over 80% of the net loss for 2022 comprises either non -cash or one-time items (6); net loss for the year
totaled $18.1M.
• As of December 31, 2022, the Company had cash, cash equivalents, and restricted cash of $5.5 million.
Q4 2022 Highlights
• Production in Q4 2022 was 10.1 million pounds of zinc, 440 thousand pounds of lead, and 34.4 thousand
ounces of silver.
• Revenue for Q4 2022 was $9.9 million on payable production of 9.6 million pounds of zinc, 180,000
thousand pounds of lead, and 34.4 thousand ounces of silver.
• C1 cash cost (4) per pound of zinc produced in Q4 2022 was $1.46.
• Total All-in sustaining cost (“AISC”) (5) per pound of zinc produced in Q4 2022 was $1.68.
• Net loss for Q4 2022 was $9.9 million or ($0.03) per share.
• Santander mine operating cash flow (3) for Q4 2022 was positive $9.2 million.
• Q4 2022 average mill production was 2,100 tonnes per day. This was a 19.6% improvement over
throughput achieved in Q3 2022. This is the highest quarterly production average since 2020.
• Average mine development of 850 meters per month for Q4 2022. November achieved 920 meters, a
record for 2022 and the highest since 2020.
• Subsequent to quarter-end:
o On January 18, 2023, the Company announced that it has been granted by INGEMMET three
additional mining concessions adjacent to its Santander Mine. The new concessions cover an
additional 2,094.103 ha.
o On February 21, 2023, the Company announced the results of Preliminary Economic Assessment
(“PEA”) for its brownfield Pipe Project (“the Project” or “the Santander Pipe”).
o On February 22, 2023, the Company announced the extension of the surface right contract between
CDPR and the community of Quiulacocha for the first phase of the Quiulacocha Tailings Project.
o On March 7, 2023, the Company announced that the Quiulacocha Tailings Reprocessing Project is
included in the 2023 Ministry of Economy and Finance (MEF) Specialized Projects List for the
Promotion of Investment.
o On March 21, 2023, the Company announced that signed a Memorandum of Understanding Volcan
Compania Minera S.A.A., setting out shared objectives and a framework for collaboration with
regards to first phase of development and exploration of CDPR's Quiulacocha Tailings Project. In
addition, the Company announced that Glencore International AG will provide CDPR a $2 Million
term loan to cover the costs associated with the first phase of the QT Project
o On April 4, 2023, the Company announced the closing of a CA$2,519,500 private placement.
Guy Goulet, CDPR’s CEO commented, “In the fourth quarter, we achieved our year-end goal to stabilize
operations at the Santander mine by delivering strong operating performance and meeting our full year 2022
Guidance. Our committed investment in the operation has transformed Santander from an operation that
was expected to wind-down in March of 2022, to a future multi-year operation.”
Jorge Lozano, CDPR’s COO commented, “In 2023, our focus is to continue to establish our operations track
record, fast-track our cost optimization plans and construction of key infrastructure projects necessary for
the Pipe project which we believe will unlock the full value of the Santander mine. Following the independent
validation demonstrated in our PEA Study on the Santander Pipe, the Company is in advanced discussions
with different institutions and is confident in its ability to finance the project.”
Summary of Operating Results at Santander
Q1' 22 Q2' 22 Q3' 22 Q4' 22 Full Year
Production
Ore Mined t 92,602 95,277 153,527 189,139 530,545
Ore Milled t 94,918 94,207 155,270 189,167 533,562
Zn Head Grade % 4.30 3.30 3.70 3.11 3.53
Pb Head Grade % 0.20 0.30 0.20 0.18 0.22
Ag Head Grade oz/t 0.56 0.50 0.44 0.49 0.48
Zn Recovery % 95.30 94.80 94.00 94.50 94.59
Pb Recovery % 75.10 71.10 70.70 61.43 68.84
Ag recovery % 50.30 47.30 47.10 38.76 44.65
Zn Payable Production Mlbs 7.20 5.50 9.90 10.10 32.70
Pb Payable Production Mlbs 0.30 0.40 0.80 0.44 1.94
Ag Payable Production Moz 0.02 0.02 0.05 0.03 0.12
Zn Head Grade % 48.70 48.40 47.70 47.15 47.87
Pb Head Grade % 48.50 50.50 50.30 51.60 50.35
Sales
Zn Payable sold Mlbs 7.50 4.90 9.70 9.60 31.70
Pb Payable sold Mlbs 0.20 0.40 0.80 0.18 1.58
Ag Payable sold Moz 0.02 0.02 0.05 0.03 0.12
Finance
Revenues, net (000)s $ 14,581 6,891 9,221 9,898 40,591
Cost of Goods Sold (000)s $ -9,725 -8,327 -10,431 -12,562 -41,045
Gross Profit (000)s $ 4,856 -1,436 -1,210 -2,664 -454
Sales and Admin Expenses (000s) $ -584 -689 -638 -681 -2,592
Adjusted EBITDA(w) (000)s $ 4,272 -2,125 -1,848 -3,345 -3,046
Other income (expense) -18 -898 -75 -5,459 -6,450
EBITDA (1) (000)s $ 4,254 -3,023 -1,923 -5,794 -6,486
Depreciation (000)s $ 262 265 542 493 1,562
EBIT (1) (000)s $ 4,516 -2,758 -1,381 -5,301 -4,924
Q1' 22 Q2' 22 Q3' 22 Q4' 22 Full Year
Mine Operating Expenses (000)s $ 9,517 10,390 11,369 11,334 42,610
Smelting and refining (000)s $ 2,459 1,990 4,157 4,103 12,709
Distribution (000)s $ 217 180 315 304 1,016
Royalties (000)s $ 27 25 62 29 143
Less: By-product revenues (000)s $ -678 -717 -996 -991 -3,382
C1 total costs(4) (000)s $ 11,542 11,868 14,907 14,779 53,096
Sustaining CAPEX (000)s $ 198 1,235 2,533 2,155 6,121
Lease Payments (000)s $ 0 0 0 0 0
AISC total costs(5) (000)s $ 11,740 13,103 17,440 16,934 59,217
Pounds of zinc payable produced Mlbs 7.2 5.5 9.9 10.1 32.7
C1 Cash Cost (4) per pound $US 1.60 2.16 1.51 1.46 1.62
All-in Sustaining Cost per pound(5) $US 1.60 2.38 1.76 1.68 1.81
2022 Santander Development and Exploration Highlights
• Completed phase-1 equipment reconditioning program.
o Support equipment overhaul is 100% complete.
o Shotcrete fleet is 100% new.
o Scooptram loaders overhaul at 50%.
o Scaler´s overhaul is 100% complete.
o Mining-trucks fleet overhaul is 100% complete.
o Production drills overhaul (Simba´s) 50% competed and face drilling (Jumbo´s) at 33%.
• Optimization of grinding circuit at processing plant (ore target: 70% ore passing 200 mesh) and operating
controls in the concentrator plant resulted in:
o Achieving recoveries above 90% for Zinc
o Average concentrate quality for Zinc of 48%
o Average concentrate quality for Lead of 50%
o Average moisture in concentrates of 8.5% or under.
• Executed $ 4.1 million in extensive exploration drilling campaign and project studies resulting on:
o Discovery of Pipe North Extension
o Definition of Santander Pipe resource
o Increased resources at Magistral
o Increased potential at targets: Puajanca & Blanquita
o Update on NI 43-101 Model Resource Estimate (MRE) on Magistral
o New NI 43-101 Model Resource Estimate (MRE) on Santander Pipe
o New NI 43-101 PEA on Santander Pipe (Jan-2023)
Santander Mineral Resource Inventory
Magistral
The Mineral Resources Inventory for the Magistral Mine was declared in CDPR´s technical Report NI 43 -101
by DRA Global in 2021. This report was updated in 2022 by DRA Global-Information Memorandum Report as
of the 9th of September of 2022.:
Magistral Mineral Resources
Category Tonnage
(kt) Zn (%) Pb (%) Ag (g/t) Cu (%)
Measured 666 4.29 0.33 19.5 0.05
Indicated 1,789 3.99 0.18 18.1 0.06
Measured + Indicated 2,454 4.07 0.22 18.5 0.06
Inferred 1,248 3.52 0.12 16.1 0.06
1. All Mineral Resources have been estimated in accordance with the CIM Definition Standards. Mineral
Resources that are not Mineral Reserves do not have demonstrated economic viability.
2. The Magistral Underground Mine Mineral Resource estimate is reported based on a net smelter return
cut-off grade of $ 40/tonne with metal prices of: $ 3,000/tonne for Zn, $ 2,200/tonne for Pb, and $ 25/Oz
for Ag.
3. For Magistral: NSR = (16.7 x %Zn) + (11.9 x %Pb) + (0.41 x g/tAg), assuming recoveries of 90% for Zn, 75%
for Pb and 55% for Ag.
4. The mine Geology Department has prepared the Santander Magistral Underground Mine Mineral
Resource model. Qualified Person, Mr. Graeme Lyall (FAusIMM), DRA independent Resource geology
consultant, has validated the resource with adjustments effective September 09, 2022.
Santander Pipe
The Mineral Resources Inventory for the Pipe Project effective date of the report declared in Preliminary
Economic Assessment (DRA, 2023) as of the 31st of January of 2023:
Pipe Project Mineral Resources
Category Tonnage (kt) Zn (%) Pb (%) Ag (g/t) Cu (%)
Measured - - - - -
Indicated 3,225 6.94 0.017 13.5 0.17
Measured + Indicated 3,225 6.94 0.017 13.5 0.17
Inferred 1,779 5.95 0.013 7.9 0.15
1. All Mineral Resources have been estimated in accordance with the CIM Definition Standards. Mineral
Resources that are not Mineral Reserves do not have demonstrated economic viability.
2. The Santander Pipe Underground Deposit Mineral Resource estimate is reported based on net smelter
return cut-off grade of $ 40/tonne with metal prices of $ 3,000/tonne for Zn, $ 2,200/tonne for Pb, $
9,300/tonne for Cu, and $ 25/Oz for Ag.
3. For Santander Pipe: NSR = (17.5 x %Zn) + (11.1 x %Pb) + (40.8 x %Cu) + (0.37 x g/tAg), assuming recoveries
of 90% for Zn, 70% for Pb, 60% for Cu and 50% for Ag.
4. The mine Geology Department has prepared the Santander Pipe Underground Deposit Mineral Resource
Model. Qualified Person, Mr. Graeme Lyall (FAusIMM), DRA independent Resource geology consultant,
has validated the resource with adjustments effective January 31, 2023.
2023 Production Guidance & Outlook
Units Guidance 2023
Payable production of ZnEq* (000)s lbs 41,661 – 55,365
Payable production of Zinc (000)s lbs 39,182 – 52,071
Payable production of Lead (000)s lbs 1,284 – 1,707
Payable production of Silver (000)s oz 106 – 141
C1 Cost $/lb Zn 1.55 – 1.41
AISC Cost $/lb Zn 2.20 – 2.00
Concentrate Zinc dmt 39,926 – 50,494
1. Cash Costs calculated on a by-product basis measured in zinc equivalent unit pounds. Zinc equivalent
calculated by converting by -product lead and silver units equivalent to a Zinc unit by proportionally
weighted unit value of by-product to the price value of each metal.
2. AISC costs reflect the sustaining capex required at Santander, such as tailings expansion, pumping &
power infrastructure, and development in preparation for Pipe production.
3. Prices considered are $1.51/lb for Zinc, $1.01/lb for Lead and $23/oz for Silver.
The Santander Advantage
The operating assets that Cerro de Pasco Resources owns at the Santander mine are held on the books for
approximately $9.1M having been discounted when the former operator looked to close down the
operation. As the Company works to expand the mine life and resources at Santander, it will enjoy a
significant production advantage due to the potential replacement value of its operating assets and therefore
avoid capex associated with building a new mi ll. The assets are in first -class condition and include a 2,500
tonne per day sulfide milling and flotation plant originally commissioned in 2013, as well as buildings,
communications equipment, underground infrastructure, support facilities, furniture, fixtures and other
equipment. Likewise, social licenses as well as oper ating permits are, for the most part, already in place for
future brownfield expansions.
Positive Preliminary Economic Assessment for the Santander Mine
• On February 21, 2023, the Company announced the results of Preliminary Economic Assessment (“PEA”)
for its brownfield Pipe Project (“the Project” or “the Santander Pipe”). The Project forms a strategic
cornerstone for CDPR’s 100% owned Santander Mine, located in central Peru.
• The Santander Pipe demonstrates positive financial returns, with a pre -tax net present value (“NPV”) at
6% discount rate of $ 71.3 million, generating an estimated internal rate of return (“IRR”) of 46.6%.
• The PEA considers the Project as a standalone operation with zinc concentrate production estimated at
313,600 dry metric tonnes (“dmt”) over a 5-year schedule.
• Project cash cost (“C1”) and all -in sustaining cost (“AISC”) of $ 0.82/lb Zn and $ 1.05/lb Zn, respectively,
generating revenues of $ 388.6 million and pre-tax free cash flow of $ 99.6 million.
• Considered in the Project are synergies to be realized from the existing 2,500 tpd sulfide concentrator,
electrical power grid, pumping station, water treatment plant, tailings facility, and other infrastructure
from the existing Santander Magistral operation. Current on-going Magistral operation—mining and ore
processing—is not considered in the PEA study.
• The mineral resource estimate (“MRE”) to be mined considers Indicated Mineral Resource of 3.23 Mt with
6.94% Zn and Inferred Mineral Resource of 1.78 Mt with 5.95% Zn; while the in dustrial circuit plans to
process an average of 770,000t of mineralized material per year (with peak production at 900,000 tonnes
year), with an average grade of 4.7% of Zn, 89% recovery and 51% in Zn concentrate grade.
• The Project is also set to benefit f rom significant potential resources, such as the Santander Pipe
mineralization above the 4020 level, estimated to contain some 3 to 4 million tonnes averaging 4 to 6%
Zn, and the newly discovered Pipe North zone.
Consolidated Mine Plan
• The Company’s overall consolidated mine plan for the Santander operation consists of further
development of its current Magistral operation and developing the Santander Pipe as outlined in
Santander Pipe PEA study. In addition, the Company will also be looking to develop the potential areas as
outlined in the PEA study, the Pipe´s Upper Zone and North Extension.
• The Upper-Zone is considered potential because the depletion solid (previously mined material) could not
be verified as the mined area is currently flooded . The Upper-Zone has more than 44% more drilling
density than Main Santander Pipe which is where the PEA focused. The actual potential resource of The
Upper-Zone is: 3-4 M tonnes at 5-6%+ Zn. Historically, the mine operated under a 9% Zn grade cutoff,
offering the opportunity to high-grade un-mined areas as well as recover high grade stope and pillars left
over from the historic operation.
• The Pipe North Extension was discovered by the Company last year and it’s an exciting potential zone .
CDPR´s has budgeted over 15,000m of underground drilling in 2023 and expects to produce an updated
mineral resource estimate by early 2024.
• The Company’s non-NI43-101 compliant consolidated budget plan envisages mining over 10Mt at 4.4%
Zn producing 1.1Mt Zn, 15kt Pb and 49kt Cu of concentrate, representing ~560,000kt of payable ZnEq
over 13 years at $ 1.00/lb AISC.
(Sources CDPR Corporate Presentation March2023)
2023 Santander Outlook
• 2023 marks the start of the consolidation and expansion phase for the Santander mine, as it ramps up
construction of several projects related to the Santander Pipe project.
• The Company´s goal is to develop a muti-deposit operation as considered in its own consolidated model,
as described on the c ompany website, it utilizes the Magistral and all other available mineral sources
outlined in the PEA report.
• The Company plans to invest over $30 million in capital expenditures over the next 2 years, including $22
million for development of the Santander Pipe project, $9 million for new infrastructure and $3 million in
exploration.
• The highlights of an independent 43 -101 PEA report were reported in a Company press release dated
February 21st, 2023.
• Projects for Santander Pipe include detailed e ngineering, permitting, as well as preliminary construction
activities related to the Santander Pipe project and water treatment capacity.
• Optimize OPEX by procuring a new partial production fleet and optimizing equipment cost and availability.
• Complete targeted construction of an exploration tunnel from Magistral to the Pipe North Extension.
Tunnel is expected to be completed by early Q2 2024 when it reaches the Main Santander Pipe area.
• Complete an underground drilling campaign of the Santander Pipe and Pipe North Extension.
• Initiate and complete surface drilling campaign for Puajanca and Naty exploration targets and define the
potential MRE zone.
• Produce an updated NI 43-101 mineral resource statement.
• Further strengthen the balance sheet through obtainment of project financing and working capital.
Corporate objectives for 2023
• Complete Drilling Campaign for Quiulaocha Tailings Project
• Obtain land access agreement (rights of passage) for permission to access the surface land which
underlays the El Metalurgista concession
• Obtain Peruvian Government assignment of responsibility to restore and remediate the entire area of the
Quiulacocha Tailings and Excelsior stockpile.
• Produce a Resource Estimate on Quiulaochca Tailings
• Complete Geophyscial, Minerolgoical and Metallurgical studies on the Quiulacocha Tailings.
• Advance towards the Santander Pipe.
• Explore and identify for new and additional resource potential at Santander with the focus on a 10 year
plus life of mine
• Advance H2-Sphere’s Resarch and Development on converting mine waste into green hydrogen and other
by-products
• Strengthen balance sheet
Technical Information
Mr. Jorge Lozano, MMSAQP and Chief Operating Officer for CDPR, has reviewed and approved the scientific
and technical information contained in this news release. Mr. Lozano is a Qualified Person for the purposes of
reporting in compliance with NI 43-101.
About Cerro de Pasco Resources
Cerro de Pasco Resources Inc. is a mining and resource management company with unparalleled knowledge
of the mineral endowment in the city of Cerro de Pasco and its surroundings. Initially, the Company will unlock
the useful life of the mine and extend the concession areas in its Santa nder mining operation, applying the
highest safety, environmental, social and governance standards. The key focus of the growth for the Company
is on the development of the El Metalurgista mining concession, one of the world's largest surface mineralized
resources, applying the latest techniques and innovative solutions to process tailings, extract metals and
convert the remaining waste into green hydrogen and derivatives.
Contact Information
Cerro de Pasco Resources Inc.
Guy Goulet, CEO
Tel.: 579 476-7000
Email: [email protected]
Forward-Looking Statements and Disclaimer
Certain information contained herein may constitute “forward -looking information” or “forward-looking
statements” under Canadian securities legislation. Generally, forward -looking information can be identified
by words such as "pro forma", "plans", "expects", "may", "should", "could", "will", "budget", "scheduled",
"estimates", "forecasts" , "intends", "anticipates", "believes", or variations including negative variations
thereof of such words and phrases that refer to certain actions, events or results that may, occur or be taken
or achieved. Such forward -looking statements, including but n ot limited to statements relating to the
expected development and operations of the Company and H2-SPHERE, involve risks, uncertainties and other
factors which may cause the actual results to be materially different from those expressed or implied by such
forward-looking statements or forward-looking information. Such factors include, among others, risks related
to the exploration, development and mining operations; impacts of macroeconomic developments as well as