Silver Elephant: Gibellini Vanadium Project’s PEA Shows 25.4% After Tax IRR At $10/lb V2O5, Capex $147 million
Silver Elephant: Gibellini Vanadium Project’s PEA Shows
25.4% After Tax IRR At $10/lb V2O5, Capex $147 million
Vancouver, British Columbia, August 30, 2021 –Silver Elephant Mining Corp. (“Silver
Elephant” or the “Company”) (TSX:ELEF, OTCQX:SILEF, Frankfurt:1P2N) is pleased to
announce the results of a preliminary economic assessment (the “2021 PEA”) for its Gibellini
vanadium project (“Gibellini project”) that demonstrates an after-tax internal rate of return
(“IRR”) of 25.4%, and after-tax cumulative cash flow of $260.8 million, assuming an average
vanadium pentoxide (V2O5) price of $10.00 per pound.
The Gibellini project is designed to be an open pit, heap leach operation in Nevada’s Battle
Mountain region (25 km south of Eureka) with initial capital cost of $1 47 million, average
annual production is 10.2 million pounds of V 2O5 , at an all-in sustaining cost of $6.04 per
pound with strip ratio of 0.18 to 1 (waste rock:leach material).
As of August 27, 2021, the European price of vanadium pentoxide (98%) was $9.60 per pound
according to www.asianmetal.com.
The 2021 PEA was prepared by Wood Group USA, Inc (Wood) and Mine Technical Services
Ltd. (MTS) . The technical report that summarizes the 2021 PEA will be filed under the
Company’s SEDAR profile and available within 45 days.
All dollar values are expressed in US dollars unless otherwise noted.
2021 PEA Highlights:
The 2021 PEA is preliminary in nature, 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 PEA will be realized. Mineral resources are not mineral reserves and do not have
demonstrated economic viability.
Highlights of the 2021 PEA (after tax):
Internal rate of return 25.4%
Payback period 2.49 years
Life of mine 11.1 years
Total V2O5 recovered 114.6 million lbs
Average V2O5 selling price $10 per lb
Cash operating cost $4.70 per lb V2O5
All-in sustaining cost $6.04 per lb V2O5
Initial capital cost including 25% contingency $147 million
Average grade 0.271% V2O5
Strip ratio (waste:leach) 0.18:1
Mining operating rate 9,700 tons per day
Total material leached 33.4 million tons
Average V2O5 recovery through direct heap leaching 63.4%
Mineral Resources
The PEA Mineral Resource is based on Measured, Indicated and Inferred Mineral Resource
estimates for the Gibellini deposit and Inferred Mineral Resource estimate s for the Louie Hill
and Bisoni McKay deposits, totaling131.34 million pounds of contained V2O5 in the Measured
and Indicated categories, and 227.81 million pounds of contained V2O5 in the Inferred catetory.
Mineral Resource Statement, Gibellini
Confidence Category Domain Cut-off
V2O5 (%)
Tons
(kton)
Grade
V2O5 (%)
Contained
V2O5 (klb)
Measured
Oxide 0.101 3,960 0.251 19,870
Transition 0.086 3,980 0.377 29,980
Indicated
Oxide 0.101 7,830 0.222 34,760
Transition 0.086 7,190 0.325 46,730
Total Measured and Indicated 22,950 0.286 131,340
Inferred
Oxide 0.101 160 0.170 550
Transition 0.086 10 0.180 30
Reduced 0.116 14,800 0.175 51,720
Total Inferred 14,970 0.175 52,300
Notes:
1. The Qualified Person for the estimate is Mr. Todd Wakefield , RM SME of Mine Technical
Services Ltd. The Mineral Resources have an effective date of 5 June 2021 . The resource
model was prepared by Mr. E.J.C. Orbock III, RM SME.
2. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
3. Mineral Resources are reported at various cut -off grades for oxide, transition, and reduced
material.
4. Mineral Resources are reported within a conceptual pit shell that uses the following
assumptions: Mineral Resource V 2O5 price of $14.64/lb; mining cost: $2.21/st mined; process
cost: $13.62/st processed; general and administrative (G&A) cost: $0.99/st processed;
metallurgical recovery assumptions of 60% for oxide material, 70% for transition material and
52% for reduced material; tonnage factors of 16.86 ft3/st for oxide material, 16.35 ft 3/st for
transition material and 14.18 ft3/st for reduced material; royalty: 2.5% net smelter return (NSR);
shipping and conversion costs: $0.37/lb. An overall 40° pit slope angle assumption was used.
5. Rounding as required by reporting guidelines may result in apparent summation differences
between tons, grade and contained metal content. Tonnage and grade measurements are in
US units. Grades are reported in percentages.
Mineral Resource Statement, Louie Hill
Confidence Category Cut-off
V2O5 (%)
Tons
(kton)
Grade
V2O5 (%)
Contained
V2O5 (klb)
Inferred 0.101 7,520 0.276 41,490
Notes:
1. The Qualified Person for the estimate is Mr. Todd Wakefield , RM SME, of Mine Technical
Services Ltd. The Mineral Resources have an effective date of 5 June 2021 . The resource
model was prepared by Mr. Mark Hertel, RM SME.
2. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
3. Oxidation state was not modeled.
4. Mineral Resources are reported within a conceptual pit shell that uses the following
assumptions: Mineral Resource V 2O5 price of $14.64/lb; mining cost: $2.21/st mined; process
cost: $13.62/st processed; general and administrative (G&A) cost: $0.99/st processed;
metallurgical recovery assumptions of 60% for mineralized material; tonnage factors of 16.86
ft3/st for mineralized material; royalty: 2.5% net smelter return (NSR); shipping and conversion
costs: $0.37/lb. An overall 40° pit slope angle assumption was used.
5. Rounding as required by reporting guidelines may result in apparent summation differences
between tons, grade and contained metal content. Tonn age and grade measurements are in
US units. Grades are reported in percentages.
Mineral Resource Statement, Bisoni–McKay
Area Confidence
Category Domain Cut-off
V2O5 (%)
Tons
(kton)
Grade
V2O5 (%)
Contained
V2O5 (klb)
North Area A Inferred
Oxide 0.107 6,970 0.29 39,720
Transition 0.124 1,500 0.33 9,900
Reduced 0.139 9,080 0.39 70,580
Total North Area A Inferred All Variable 17,540 0.34 120,210
South Area B Inferred
Oxide 0.107 1,470 0.28 8,160
Transition 0.124 320 0.40 2,540
Reduced 0.139 510 0.30 3,100
Total South Area B Inferred All Variable 2,300 0.30 13,810
Total Inferred All Variable 19,850 0.34 134,020
Notes:
1. The Qualified Person for the estimate is Mr. Todd Wakefield , RM SME, of Mine Technical
Services Ltd. The Mineral Resources have an effective date of 5 June 2021.
2. Mineral Resources are reported at various cut -off grades for oxide, transition, and reduced
material.
3. Mineral Resources are reported within a conceptual pi t shell that uses the following
assumptions: Mineral Resource V 2O5 price of $11.50/lb; mining cost: $2.90/st mined; process
cost: $13.75/st; general and administrative (G&A) cost: $1.00/st processed; metallurgical
recovery assumptions of 65% for oxide mat erial, 56% for transition material and 50% for
reduced material; tonnage factors of 16.86 ft3/st for oxide material, 16.35 ft 3/st for transition
material and 14.18 ft3/st for reduced material; royalty: 2.5% net smelter return (NSR); shipping
and conversion costs: $0.625/lb. An overall 40° pit slope angle assumption was used.
4. Rounding as required by reporting guidelines may result in apparent summation differences
between tons, grade and contained metal content. Tonnage and grade measurements are in
US units. Grades are reported in percentages.
Mining & Processing
A subset of the Gibellini and Louie Hill Mineral Resource estimates were adopted in the 2021
PEA mine plan. Bisoni McKay Mineral Resource estimate was not included in the mine plan
in the 2021 PEA to better reflect the Company’s already submitted plan of operation in its
permitting efforts.
Subset of the Gibellini Mineral Resource Estimate within the 2021 PEA Mine Plan
Leach Material Domain Cutoff
V2O5 (%)
Tons
('000)
V2O5 Grade
(%)
Contained
V2O5 Lbs
('000)
Measured
Oxide 0.135 3,890 0.253 19,684
Transition 0.135 3,944 0.378 29,824
Reduced 0.135 - 0.000 -
Indicated
Oxide 0.135 6,246 0.240 30,024
Transition 0.135 7,056 0.316 44,624
Reduced 0.135 - 0.000 -
Total Measured and
Indicated 21,136 0.294 124,156
Inferred
Oxide 0.135 116 0.174 403
Transition 0.135 - 0.000 -
Reduced 0.135 5,183 0.163 16,919
Total Inferred 5,299 0.163 17,323
Subset of the Louie Hill Mineral Resource Estimate within the 2021 PEA Mine
Plan
Leach Material Domain Cut-off
(%)
Tonnage
(kton)
V2O5
(%)
V2O5
(klb)
Inferred
Oxide 0.155 6,963 0.282 39,315
Transition 0.155 — 0.000 -
Reduced 0.155 — 0.000 -
Total Inferred 6,963 0.282 39,315
Capital and operating costs for the 2021 PEA are based on suppl ying 3 Mt of crushed and
agglomerated leach material annually from two open pits at Gibellini and Louie Hill. Initial
mine development will be focused on Gibellini, with Louie Hill following nine years later.
Mining at the Gibellini and Louie Hill deposits is planned to be a conventional open pit mine
using a truck and loader fleet consisting of 100-ton trucks and front-end loaders. A power line
would be constructed from an existing transmission line and water will be leased from a private
ranch. Both water and power sources are within five miles of the planned mining operations.
The average annual mine production during the 11.1 year mine life will be 3.56 million tons of
leach material (3 Mst) and waste (0.56 Mst) at a strip ratio of 0.18 (w:l).
Period Total Rock
Waste
Oxide
Leach
Transition
Leach
Reduced
Leach
Leach
Total V2O5 Contained
V2O5
Produced
V2O5
(kt) (kt) (kt) (kt) (kt) (kt) (% V2O5) (mbls) (mbls)
YR1 3,002 2 2,573 424 2 3,000 0.298 17,877 10,915
YR2 3,072 72 2,025 974 1 3,000 0.320 19,221 12,297
YR3 3,117 117 766 2,185 50 3,000 0.401 24,059 16,293
YR4 3,096 96 2,423 577 0 3,000 0.227 13,602 8,638
YR5 3,081 81 1,096 1,862 42 3,000 0.281 16,881 11,252
YR6 3,011 11 395 2,158 447 3,000 0.292 17,519 11,824
YR7 5,943 2,943 641 1,817 542 3,000 0.224 13,447 8,926
YR8 4,232 1,232 308 960 1,732 3,000 0.178 10,657 6,409
YR9 3,203 203 591 44 2,365 3,000 0.187 11,214 6,121
YR10 3,067 67 3,000 0 0 3,000 0.364 21,857 12,999
YR11 4,191 1,191 3,000 0 0 3,000 0.218 13,057 7,922
YR12 518 121 397 0 0 397 0.177 1,405 870
YR13 101
Total 39,533 6,136 17,215 11,000 5,183 33,397 0.271 180,794 114,568
Mining will be completed using contract mining, with Silver Elephant’s mining staff overseeing
the contracted mining operation and performing the mine engineering and survey work.
The processing method envisioned will be to feed leach material from the mine via loade r to
a hopper that will feed a crushing plant. The leach material will be fed to the agglomerator
where sulfuric acid, flocculent and water will be added to achieve adequate agglomeration.
The agglomerated leach material will be transported to a stacker on the leach pad, which will
stack the material to a height of 15 feet. Once the material is stacked, solution will be added
to the leach heap at a rate of 0.0025 gallons per minute per square foot. The solution will be
collected in a pond and this pregnant leach solution (“PLS”) will be sent to the process building
for metal recovery. In the process building, the PLS will go through solvent extraction (“SX”)
and stripping processes to produce vanadium pentoxide.
Capital and Operating Costs
During the capital period, an initial leach pad having a capacity of 16.7 Mst will be constructed,
and will be followed by one expansion of approximately 16.7 Mst. The total initial capital cost
is estimated at approximately $147 million.
Project Capital Cost Estimate
Cost Description Total ($000s)
Open Pit Mine
Mobile equipment 122
On Site Infrastructure
Cost Description Total ($000s)
Site preparation 2,740
Roads 1,577
Water supply 2,263
Sanitary system 69
On-site electrical 2,325
Communications 187
Contact water ponds 186
Non-process facilities - buildings 8,594
Process Facilities
Material handling 21,730
Heap leach system 22,033
Process plant 24,167
Off-Site Infrastructure
Water system 5,095
Electrical supply system 3,657
First fills 975
Total Direct Cost 95,720
Construction indirect costs 5,355
Sales Tax/OH&P 5,333
EPCM 11,178
Contingency 29,396
Total Project Cost 146,982
Note: OH&P = overhead and profit, EPCM = engineering, procurement and construction management
Sustaining capital is estimated at $25.2 million.
Sustaining Capital Costs
Description Total ($000s)
Leach pad expansions 23,069
Haul road to Louie Hill 814
Storm water controls Louie Hill pit/waste rock facility/roads 386
Equipment annual allowance 971
Total Sustaining Capital 25,240
Operating costs are estimated to average $16.12 per ton leached, or $4.7/lb V2O5 recovered
Operating Costs
Total Cash Operating Cost $ per Ton Leached $ per lb of V2O5 Recovered
G&A 0.97 0.28
Mining Cost 3.36 0.98
Total Processing Cost 11.79 3.44
Total 16.12 4.70
The cash operating costs in the first half of the Gibellini project covering years 1 –7 is $4.20
per lb of V 2O5 produced and for years 8 –12 is $5.87 per lb of V 2O5 produced, resulting in a
weighted average cash cost of $4.70 per lb of V 2O5 produced and all -in sustaining cost of
$6.04/lb. The cash operating cost is lower in the first half of the Gibellini project due to
processing of higher-grade material.
Vanadium Recoveries and Metallurgical Testing
Approximately 114.6 million pounds of V2O5 is expected to be produced from the Gibellini and
Louie Hill leaching operations at an average recovery of 6 3.4% (oxide: 60%, transition: 70%
and reduced: 52%). The heap leaching will be performed at ambient temperature and
atmospheric pressure without pre -roasting or other beneficiation process. The PLS will be
continuously collected with leach material undergoing, on average, a 150 day heap-leaching
cycle.
The direct heap leach vanadium recovery estimates used in the 2021 PEA were based on
extensive metallurgical test work performed by SGS Lakefield Research Laboratories,
Dawson Minerals Laboratories, and McClelland Laboratories. Samples were selected from a
range of depths within the Gibellini deposit, and are considered t o be representative of the
various types and styles of mineralization within that deposit . Samples were obtained to
ensure that tests were performed on sufficient sample mass. The end results demonstrated
low acid consumption (less than 100 lb acid consumption per ton leached) and high recovery
through direct leaching.
Solvent extraction processing was conducted to recover vanadium from sulfuric acid PLS
generated during pilot column testing on bulk leach samples from the Gibellini project.
Laboratory-scale testing was conducted on select solutions generated during the pilot SX
processing, to optimize the SX processing conditions. Additional laboratory scale testing was
successfully conducted on the loaded strip solution to purify, precipitate and extract final
marketable vanadium-bearing products.
Sensitivity Analysis
The tables below show the sensitivity analysis to the vanadium pentoxide price, grade, and to
the PEA capital cost and operating costs . A sensitivity analysis to vanadium price indicates
strong project economics even in very challenging conditions, and that the Gibellini project is
well positioned to benefit from the current rising vanadium price environment. A 30% increase
in the vanadium price to $13/lb V2O5 relative to the b ase case translates to a 42% IRR and
$295.4 million after-tax net present value at a 7% discount rate.
Sensitivity Analysis to Changes Vanadium Price
V2O5 Price Change V2O5 Price After-tax IRR After-tax NPV After-tax Cashflow
(%) (US$/lb) (%) (US$ M @ 7%) (US$ M)
45 14.50 49% 377.0 671.5
30 13.00 42% 295.4 536.8
15 11.50 34% 212.3 399.7
Base Case 10.00 25% 127.9 260.8
-15 8.50 14% 42.1 122.3
-30 7.00 0% (55.8) (38.9)
-45 5.50 0 (155.1) (202.0)
Sensitivity Analysis to Changes in Vanadium Grades
Grade Change After-tax IRR After-tax NPV After-tax Cashflow
(%) (%) (US$ M @ 7%) (US$ M)
45 48% 363.8 649.7
30 41% 286.6 522.2
15 34% 207.7 392.2
Base Case 25% 127.9 260.8
-15 15% 46.9 130.0
-30 0% (45.2) (21.4)
-45 0 (139.0) (175.5)
Sensitivity Analysis to Changes in Capital Cost Estimates
CAPX Change After-tax IRR After-tax NPV After-tax Cashflow
(%) (%) (US$ M @ 7%) (US$ M)
45 14% 69.2 197.5
30 17% 89.2 218.6
15 21% 108.6 239.7
Base Case 25% 127.9 260.8
-15 31% 146.9 281.9
-30 38% 165.8 303.0
-45 0 184.7 324.1
Sensitivity Analysis to Changes in Operating Cost Estimates OPEX
Change After-tax IRR After-tax NPV After-tax Cashflow
(%) (%) (US$ M @ 7%) (US$ M)
45 8% 3.6 50.6