Discovery Reports First Quarter 2024 Financial Results
Discovery Reports First Quarter 2024 Financial Results
May 14, 2024, Toronto, Ontario – Discovery Silver Corp. (TSX: DSV, OTCQX: DSVSF) (“Discovery”
or the “Company”) today announced financial results for the three months ended March 31, 2024 (“Q1
2024”). The Company also provided a summary of key events since the beginning of 2024, including
the release on February 20, 2024, of the feasibility study results (the “Feasibility Study” or “Study”) for
Discovery’s 100%-owned Cordero silver project (“Cordero” or the “Project”) in Chihuahua State, Mexico.
All figures are stated in Canadian dollars unless otherwise noted.
Tony Makuch, CEO, commented: “During Q1 2024, we achieved a major milestone with the release of
the Feasibility Study for our Cordero Project. The Study results clearly establish Cordero as one of the
world’s largest silver development projects both in terms of reserves and estimated production. The
Project will average 37 million silver equivalent (“AgEq”)1 ounces (“Moz”) annually over the first 12 years
with low unit costs that will generate attractive ec onomic returns. Very importantly, the Project will
deliver substantial socio-economic benefits in Mexico in the form of job creation, skills training, direct
investment, the purchasing of local goods and services and tax revenue, and will be developed and
operated in a manner that achieves best practice in responsible mining. In addition, we will be bringing
valuable technology and infrastructure as part of the Project that will provide important benefits in key
areas like water treatment and purification. We will also be continuing our work to build Cordero’s
presence in the community around Parral, and in Chihuahua State, through ongoing direct participation
in, and support for, local initiatives, organizations and institutions.
“Another key feature of the Cordero project is the tremendous leverage it provides to the price of silver.
The Project’s robust economic returns were estimated using a silver price of US$22 per ounce. To date
in 2024, the price of silver has increased close to 20%, to over US$28 per ounce, fueled largely by
favourable market fundaments with the silver market expected to be in deficit for the fourth consecutive
year in 2024 reflecting record demand in key sectors like electric vehicles, solar and other forms of
green energy. At current spot metal prices 2, the Project’s after-tax net present value (“NPV5%”)
increases by 70%, from US$1.2 billion to US$2.0 billion and reaches US$3.0 billion in Year 4 when the
Project reaches final completion to 51,000 tonnes per day. This significant leverage does not include
the potential benefit of growth in reserves that could occur at higher prices, with there being 240 million
tonnes of Measured and Indicated Resource situated outside the Feasibility Study reserve pit that was
estimated using a silver price of US$24 per ounce.
“Looking ahead, our work program in 2024 is aimed at further de-risking Cordero, continuing to advance
permitting, acquiring or leasing additional surface access rights and making further progress with our
community relations program as we work towards completing permitting and financing for the Project.”
NEWS RELEASE
HIGHLIGHTS FROM Q1 2024:
2024 Work Program: Highlights of the 2024 work program were released in January 2024 and
included plans to complete Front-End Engineering Design (“FEED”) work to permit the ordering of
long lead-time items; additional permitting, including a target to submit the Change of Land Use
(“Cambio de Uso de Suelo” or “CUS”) during the third quarter; engineering and permitting work
related to power generation and transmission and water treatment; further progress acquiring or
leasing land surface rights; and continuing to advance community relations work in support of the
permitting process.
Feasibility Study: Results of the Feasibility Study for Cordero were released on February 20, 2024.
The results position Cordero as a world-leading silver development project with large-scale, long-
life, low-cost production that will generate attractive returns, deliver substantial benefits for Mexico
and achieve best practice in responsible mining.
o Large-scale, long-life, low-cost production: 19-year life-of-mine (“LOM”) with average
annual production of 33 Moz AgEq LOM and average all-in sustaining costs 3 under
US$13.50 per AgEq ounce.
o Attractive returns: Two-stage development plan contributes to favourable economics, with
a LOM NPV5% of US$1.2 billion at US$22 per ounce silver, which increases to US$2.2
billion in Year 4 when the Project reaches final completion.
o Substantial benefits for Mexico: Total investment of US$1.4 billion (including a US$606
million initial investment), 2,500 direct jobs created during construction, peak employment
of over 1,000 direct jobs during operation, an estimated US$4 billion of goods and services
purchased and expected tax payments of approximately US$1.4 billion within Mexico.
o Industry-leading environmental standards: Third-party reviews of proposed
environmental practices completed to ensure compliance with industry-leading standards;
US$130 million budgeted for site restoration and rehabilitation; significant investment
included for infrastructure and technology to recycle wastewater with treated water to be the
primary source of water for the Project.
Land access agreement reached: The Company finalized a land access agreement for the use of
600 hectares of land adjacent to the Project in March 2024, which will be used for the access road
to the mine as well as for water storage. The agreement was reached with Ejido Cordero, a local
land cooperative, and is part of the Company’s ongoing efforts to advance and de-risk the Cordero
project.
Increase in silver prices: Spot silver prices have increased close to 20% year to date in 2024 (as
of May 13, 2024) to US$28.39 per ounce. Higher silver prices largely reflected continued strong
market fundamentals, with the Silver Institute4 projecting a market deficit in 2024 of over 200 million
ounces, the fourth consecutive year of market deficits and the second highest deficit in over 20
years. According to the Silver Institute, market deficits are being driven by record levels of industrial
demand for silver, largely related to the use of s ilver in electric vehicles, solar panels and other
forms of green energy, as well as the emerging us e of silver in many artificial intelligence
applications. Mine production of silver declined by 1% in 2023, with another slight reduction
expected in 2024.
1. Please see the Technical Disclosure section of this news release for more information related to AgEq production.
2. Current spot metal prices as at May 13, 2024 include silv er: US$28.39 per ounce; gold: US$2,346 per ounce, zinc: US$1.34 per
pound and lead: US$1.02 per pound versus Feasibility Study prices of silver: US$22.00 per ounce; gold: US$1,600 per ounce;
zinc: US$1.20 per pound; lead: US$1.00 per pound.
3. Non-GAAP Measure. Please see the Te chnical Disclosure and Non-GAAP Measures sections of this news release.
4. Please see the Silver Institute’s World Silver Survey 2024, and related news release, available at www.silverinstitute.org.
SELECTED FINANCIAL DATA:
The following selected financial data is summarized from the Company’s unaudited condensed interim
consolidated financial statements and related notes thereto (the “Financial Statements”) and the
Management’s Discussion and Analysis (“MD&A”) for the quarter ended March 31, 2024.
The Company’s Financial Statements and MD&A are available at www.discoverysilver.com or on
SEDAR at www.sedarplus.ca.
March 31, 2024 December 31, 2023
Cash and cash equivalents $ 50,704,880 $ 58,944,459
Total assets $ 147,418,451 $ 146,065,998
Total current liabilities $ 11,443,293 $ 12,168,225
Working capital(1) $ 42,866,483 $ 49,691,371
Total Shareholders’ equity $ 131,420,682 $ 129,421,106
(1) Defined as current assets less current liabilities from the Company’s consolidated financial statements.
About Discovery
Discovery’s flagship project is its 100%-owned Cordero project, one of the world’s largest undeveloped
silver deposits. The Feasibility Study completed in February 2024 demonstrates that Cordero has the
potential to be developed into a large-scale, long-life project with low unit costs and attractive economic
returns that offers the combination of margin, size and scalability. Cordero is located close to
infrastructure in a prolific mining belt in Chihuahua State, Mexico.
On Behalf of the Board of Directors,
Tony Makuch, P.Eng
President, CEO & Director
For further information contact:
Forbes Gemmell, CFA
VP Corporate Development
Phone: 416-613-9410
Email: [email protected]
Website: www.discoverysilver.com
Q1 2024 Q1 2023
Net Loss $ (680,805) $ (3,999,718)
Basic and diluted per share $ (0.00) $ (0.01)
Total comprehensive income (loss) $ 1,118,080 $ (3,344,648)
Total weighted average shares outstanding 395,973,316 352,071,321
Qualified Person
Gernot Wober, P.Geo, VP Exploration, Discovery Silver Corp. and Pierre Rocque, P.Eng., an
independent consultant to the Company, both “Qualified Persons” as such term is defined in NI 43-101,
are the Company's designated Qualified Persons for this news release within the meaning of National
Instrument 43-101 Standards of Disclosure for Mi neral Projects (“NI 43-101”). Mr. Wober and Mr.
Rocque have reviewed and validated that the information contained in this news release is accurate.
Technical Disclosure
• The Feasibility Study project team was led by Ausenco Engineering Canada ULC (“Ausenco”), with
support from AGP Mining Consultants Inc. (“AGP”), WSP USA Inc. (“WSP”) and RedDot3D Inc.
• Mineral resources that are not mineral reserves do not have demonstrated economic viability.
• A full technical report has been prepared in accordance with NI 43-101 and was filed on SEDAR on
March 28, 2024.
• AgEq produced is metal recovered in concentrate. AgEq payable is metal payable from concentrate.
AgEq produced and AgEq payable are calculated as Ag + (Au x 72.7) + (Pb x 45.5) + (Zn x 54.6);
these factors are based on metal prices of Ag - $22/oz, Au - $1,600/oz, Pb - $1.00/lb and Zn -
$1.20/lb.
• AISC is calculated as: [Operating costs (mining, processing and G&A) + Royalties + Concentrate
Transportation + Treatment & Refining Charges + Concentrate Penalties + Sustaining Capital
(excluding $37M of capex for the initial purchase of mining fleet in Year 1)] / Payable AgEq ounces.
NON-GAAP MEASURES:
The Company has included certain non-GAAP performance measures and ratios as detailed below. In the mining industry,
these are common performance measures and ratios but may not be comparable to similar measures or ratios presented by
other issuers and the non-GAAP measures and ratios do not have any standardized me aning. Accordingly, these measures
and ratios are included to provide additional information and should not be considered in isolation or as a substitute for
measures of performance prepared in acco rdance with IFRS Accounting Standards. Total cash costs per ounce, all-in
sustaining costs, and free cash flow, are all forward-looking non-GAAP financial measures or ratios. As the Cordero Project is
not in production, these prospective non-GAAP financial measures or ratios may not be reconciled to the nearest comparable
measure under IFRS and there is no equiva lent historical non-GAAP financial meas ure or ratio for these prospective non-
GAAP financial measures or ratios. Each non-GAAP financial measure and ratio used herein is described in more detail below.
TOTAL CASH COSTS
The Company calculated total cash costs per ounce by dividing the sum of operating costs, ro yalty costs, production taxes,
refining and shipping costs, net of by-product silver credits, by payable ounces. While there is no standardized meaning of the
measure across the industry, the Company believes that this measure is useful to external users in assessing operating
performance.
ALL-IN SUSTAINING COSTS
The Company has provided an all-in sustaining costs performance measure that reflects all the expenditures that are required
to produce an ounce of silver from operat ions. While there is no standardized mean ing of the measure across the industry,
the Company’s definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its updated
Guidance Note issued in 2018. The Company believes that this measure is useful to external users in assessing operating
performance and the Company’s ability to generate free cash flow from current operations. Subsequent amendments to the
guidance have not materially affected the figures presented.
FREE CASH FLOW
Free Cash Flow is a non-GAAP performance measure that is calc ulated as cash flows from operations net of cash flows
invested in mineral property, plant, and equipment and explorat ion and evaluation assets. The Company believes that this
measure is useful to the external users in assessing the Company’s ability to generate cash flows from its mineral projects.
FORWARD-LOOKING STATEMENTS:
Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Exchange) accepts responsibility
for the adequacy or accuracy of this release.
This news release is not for distribution to United States newswire services or for dissemination in the United States.
This news release does not constitute an offer to sell or a solic itation of an offer to buy nor shall there be any sale of any of the securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful, including any of the securities in the United States of America. The
securities have not been and will not be registered under the Unit ed States Securities Act of 1933, as amended (the “1933 Act”) or any state
securities laws and may not be offered or sold within the United States or to, or for account or benefit of, U.S. Persons (as defined in Regulation
S under the 1933 Act) unless registered under the 1933 Act and applic able state securities laws, or an exemption from such regi stration
requirements is available.
Cautionary Note Regarding Forward-Looking Statements
This news release may include forward-looking statements that are subject to inherent risks and uncertainties. All statements within this news
release, other than statements of historical fact, are to be considered forward looking. Although Discovery believes the expectations expressed
in such forward-looking statements are based on reasonable assump tions, such statements are not guarantees of future performanc e and
actual results or developments may differ materially from those described in forward-looking statements. Statements include but are not limited
to the feasibility of the Project and it s attractive economics and significant expl oration upside; construction decision and development of the
Project, timing and results of the feasibility study and the anticipated capital and operating costs, sustaining costs, net present value, internal
rate of return, the method of mining the Project, payback per iod, process capacity, average annual metal production, average pr ocess
recoveries, concession renewal, permitting of the Project, antic ipated mining and processing me thods, feasibility study product ion schedule
and metal production profile, anticipated c onstruction period, anticipated mine life, expected recoveries and grades, anticipat ed production
rates, infrastructure, social and envir onmental impact studies, the completion of key de-risking items, including the timing of receipt permits,
availability of water and power, availability of labour, job creation and other local economic benefits, tax rates and commodity prices that would
support development of the Project, and other statements that expr ess management's expectations or estimates of future performa nce,
operational, geological or financial results Information concerning miner al resource/reserve esti mates and the economic analysi s thereof
contained in the results of the feasibility study are also forwar d-looking statements in that t hey reflect a prediction of the mineralization that
would be encountered, and the results of mining, if a mineral deposit were developed and mined. Forward-looking statements are statements
that are not historical facts which address events, results, outcomes or developments t hat the Company expects to occur. Forwar d-looking
statements are based on the beliefs, estima tes and opinions of the Company’s management on the date the statements are made and they
involve a number of risks and uncertainties.
Factors that could cause actual results to differ materially from those described in forward-looking statements include fluctua tions in market
prices, including metal prices, continued availability of capital and financing, and general economic, market or business conditions, the actual
results of current and future exploration ac tivities; changes to current estimates of mineral reserves and mineral resources; c onclusions of
economic and geological evaluations; changes in project parameters as plans conti nue to be refined; the speculative nature of m ineral
exploration and development; risks in obtaini ng and maintaining necessary licenses, permi ts and authorizations for the Company’ s
development stage and operating assets; operations may be exposed to new diseases, epidemics and pandemics, including any ongoing or
future effects of COVID-19 (and any related ongoing or future regulatory or government responses) and its impact on the broader market and
the trading price of the Company’s shares; provincial and federal orders or mandates (including with respect to mining operations generally
or auxiliary businesses or services required for operations) in Mexico, all of which ma y affect many aspects of the Company's o perations
including the ability to transport personnel to and from site, contractor and supply av ailability and the ability to sell or de liver mined silver;
changes in national and local government legislation, controls or regulations; failure to comply with environmental and health and safety laws
and regulations; labour and contractor avail ability (and being able to secure the same on favourable terms); disruptions in the maintenance
or provision of required infrastructure and information technology systems; fluctuations in the price of gold or certain other commodities such
as, diesel fuel, natural gas, and electricity; operating or technical difficultie s in connection with mi ning or development act ivities, including
geotechnical challenges and changes to production estimates (which assume accuracy of projected ore grade, mining rates, recovery timing
and recovery rate estimates and may be impacted by unscheduled maintenance); changes in foreign exchange rates (particularly th e
Canadian dollar, U.S. dollar and Mexican peso); the impact of in flation; geopolitical conflicts; employee and community relations; the impact
of litigation and administrative proceedings (i ncluding but not limited to mining reform laws in Mexico) and any interim or fin al court, arbitral
and/or administrative decisions; disruptions affecting operations; availability of and increased costs associated with mining inputs and labour;
delays in construction decisions and any development of the Project; changes with respect to the intended method of mining and processing
ore from the Project; inherent risks and haz ards associated with mining and mineral processing including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures and cave-ins ; the risk that the Company’s mines may not perform as plann ed;
uncertainty with the Company's ability to secure additional capital to execute its business plans; contests over title to properties; expropriation
+or nationalization of property; political or economic developments in Canada and Mexico and other jurisdictions in which the Company may
carry on business in the future; increased costs and risks related to the potential impact of climate change; the costs and timing of exploration,
construction and development of new deposits; risk of loss due to sabotage, protests and other civil disturbances; the impact of global liquidity
and credit availability and the values of assets and liabilities based on projected future cash flows; risks arising from holdi ng derivative
instruments; and business opportunities that may be pursued by the Company. There can be no assurances that such statements wil l prove
accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. Discovery does not assume any obligation
to update any forward-looking statements exc ept as required under applicable laws. The risks and uncertainties that may affect forward-
looking statements, or the material factors or assumptions used to develop such forward-looking information, are described under the heading
"Risks Factors" in the Company’s Annual Information Form dated March 28, 2024, which is availabl e under the Company’s issuer profile on
SEDAR+ at www.sedarplus.ca.