Altaley Mining Announces Positive Pre-Feasibility Study & Updated Mineral Reserves/Resources Estimates as its Flagship Tahuehueto Mine Nears Production
Altaley Mining Corporation
1000 – 1111 Melville St.
Vancouver, BC, V6E 3V6
www.altaleymining.com
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Altaley Mining Announces Positive Pre-Feasibility Study &
Updated Mineral Reserves/Resources Estimates as its
Flagship Tahuehueto Mine Nears Production
VANCOUVER, BRITISH COLUMBIA, MARCH 07, 2022
Altaley Mining Corporation ( TSXV:ATLY) ( OTCQX:ATLYF) ( FSE:TSGA) (“ Altaley” or the
“Company”) today announced the results of an updated Pre-Feasibility study (the
“PFS”) for its Tahuehueto Gold Mining Project (the “ Project”) located in Durango,
Mexico. (All currencies within this press release are quoted USD.)
2022 Prefeasibility Study improves 2017 PFS increasing throughput to 1,000
tonnes per day returning a post-tax NPV of US$110 million at 5% discount rate.
Total Capital Cost estimate of US $56.9 million with only $6 million capital
remaining to be invested to initiate production at 1,000 tpd. Project
construction over 95% complete with initial pre-production targeted during
March 2022.
Life of Mine All In Sustaining costs (AISC) estimated at US $844 per gold
equivalent ounce at $1,647.52/ounce Au, $21.64/ounce Ag, $0.92/pound Pb,
$1.14/pound Zn and $3.60/pound Cu)
Proven & Probable Reserves of 3.58 million tonnes grading 2.55g/t gold, 50.06
g/t silver, 1.92% zinc, 1.11% lead, 0.26% copper.
10.9-year Life of Mine (LOM) utilizing mostly low-cost bulk underground Sub-
level Open Stoping mining method.
Significant opportunities exist to expand the Projects Mineral Resources and
Reserves base with near mine and regional exploration. Altaley plans to
aggressively pursue exploration as soon as free cash flows allow or alternative
funding is secured.
“As our Tahuehueto Gold Mine Project construction nears completion we are happy to
disclose results of the projects updated pre-feasibility study which continues to show
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robust economics.” said Ralph Shearing, CEO & President. “The disclosure of the 2022
PFS economics, updated reserve and resource estimation, along with our anticipated
March startup of pre-production operations at Tahuehueto, are the culmination of
many years of hard work by the Altaley team and as our Tahuehueto mine ramps up
to full production during Q2-Q3 2022, increased cash flow will allow Altaley to
recommence exploration drilling and unlock the ultimate potential of our Tahuehueto
district scale project.”
Pre-Feasibility Study Overview
The Project configuration evaluated in the PFS is a conventional, owner-operated
underground mine, that will utilize contractor mining in a combination sub-level long
hole open stope and cut and fill mining methods. Mill feed will be processed in a 1,000
tonnes per day comminution circuit consisting of primary and secondary crushing, wet
grinding to an initial two-circuit flotation/concentration plant producing precious
metal rich lead and zinc concentrates and subsequently, in second year of operation a
third circuit added to produce copper concentrates.
The PFS was prepared by independent third-party consultants, Resource Development
Associates Inc. (“ RDA”) and integrated updated geological interpretations based on
expanded knowledge of the mineral deposit, geological modeling, an optimized mine
plan and production schedule, additional metallurgical work, a mill currently under
construction and updated cost estimates, all of which de-risk the Project.
The PFS provides information on the optimized Project with higher throughput rates,
updated resource estimate, and capital and operating cost estimates as compared to
the project evaluated in the National Instrument 43-101 – Standards of Disclosure for
Mineral Projects (“NI43-101”) January 2017 Technical Report (the “2017 Report”). The final
version of the NI 43-101 technical report containing the PFS will be filed on SEDAR within
45 days. As a result of the changes to the Project as evaluated in the PFS, including
differences in mineral resource estimation methodology and changes to the economic
parameters applied to the geologic block model (metal selling prices, recovery, CAPEX,
and OPEX), all of which resulted in a change in mineral resources, the Project as
evaluated in the 2017 Report is no longer considered current and the 2017 Report
should therefore not be relied upon by investors.
The engineering design to estimate capital costs used in the PFS are within a 20%
accuracy however, the Company in 2021 elected to proceed with construction of the
project which, as of the date of this this press release, 90% of required construction
capital has been invested in the project, advancing construction past 95% completion
with most capital expenditures completed and therefore capital equipment and
construction costs are known with substantially increased accuracy.
The Company cautions that the PFS is preliminary in nature and is based on technical
and economic assumptions which could be further refined and evaluated in a full
feasibility study. The PFS is based on an updated Project reserve and resource
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estimate effective as of February 23, 2022. As the Company has elected to bring the
Tahuehueto Mining Project into production without the projects mineral reserves
supported by a full feasibility study, the Company cautions that this could result in a
higher risk of economic or technical failure of the operation that if a full feasibility
study had been prepared demonstrating economic and technical viability. There are
no assurances that the Tahuehueto Mining Project will be found to be economic.
The following is a summary of the material aspects and assumptions of the PFS.
Investors are urged to review the complete NI 43-101 report following its filing on
SEDAR for complete details of the PFS.
Project Location
The Tahuehueto Project is located in the northwest portion of the state of Durango,
Mexico, approximately 250 km northwest of the capital city of Durango. The Project is
located about 25 km north of the Topia polymetallic-silver mine, 48 km northwest of
the La Cienega gold, silver, base metal mine, 85 km southwest of the Guanacevi silver
district, 280 km southeast of the Palmarejo silver and gold mine, and 150 km northwest
of the San Dimas mining district, most notable for the Tayoltita silver and gold mine.
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Summary of Results of the 1,000 Tonnes Per Day PFS
TABLE 1
OPERATING METRICS 2022 PFS
Mill Throughput (tonnes/day) 1,000
Mine Life (years) 10.9
Total Ore Processed (tonnes) 3.55M
Annual Mining Rate (tonnes) 336,000
Development-to-ore ratio (waste:ore) 0.6
Head Grade (average for the LOM)
Pb (%) 1.1
Zn (%) 1.9
Au (g/tonne) 2.58
Ag (g/tonne) 50.5
Cu (%) 0.3
AuEq (g/tonne) 6
Recovery (average for the LOM)
Pb (%) 85
Zn (%) 68
Au (%) 87
Ag (%) 85
Cu (%) 85
Metal Produced (total for the LOM)
Pb (tonnes) 33,911
Zn (tonnes) 65,821
Au (troy ounces) 279,359
Ag (troy ounces) 4,879,980
Cu (tonnes) 8,893
Average Monthly Production – LOM
Pb (tonnes) 263
Zn (tonnes) 510
Au (troy ounces) 2,166
Ag (troy ounces) 37,829
Cu (tonnes) 69
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TABLE 2
FINANCIAL METRICS 2022 PFS US$
Total Net Smelter Return (Pb, Zn, Au, Ag, Cu) 533.1 $Million
Gold Net Revenue 341.5 $Million
Silver Net Revenue 74.0 $Million
Lead Net Revenue 55.8 $Million
Zinc Net Revenue 48.3 $Million
Copper Net Revenue 13.4 $Million
Pre-tax Net Cash flow 240.9 $Million
Post tax Net Cash Flow 186.3 $Million
Annual Average pre-tax net cash flow 21.4 $Million
Pre-tax net cash flow per tonne of ore 67 $/tonne ore
LOM Total Capital cost – Plant, mine development,
infrastructure, working capital (no contingency) 56.9 $Million
OPEX – Development Mining 1,278.1 $/meter
OPEX – Ore Mining 35.0 $/tonne ore
OPEX – Processing 22 $/tonne ore
OPEX – General &Administrative (G&A) 3.0 $/tonne ore
OPEX - Operating Cost – LOM 69.5 $/tonne ore
All-In Sustaining Cost of Production – LOM 844 $/AuEq oz
Pre-tax Net Present Value (NPV) at 5% discount 152.8 $Million
Post-tax NPV at 5% discount* 110.0 $Million
Post-tax NPV at 10% discount 90.6 $Million
EBIDTA LOM 246.1 $Million
Internal Rate of Return (IRR)** 45 %
Payback Period 2.58 Years
*5% discount considered reasonable due to advanced state of Tahuehueto construction where 90% of
required capital has been invested in the project, advancing construction past 95% completion with
most capital expenditures completed and therefore capital costs are known with substantially
increased accuracy.
**IRR is calculated with approximately $34 million of pre-Jan 2022 expenses on the project. $19 million
of pre-2015 costs of exploration, acquisition and carrying costs have been treated as sunk costs.
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Sensitivity Analysis
Table 3 below shows the average annual free cash flow and EBIDTA generated by the
Project at various Gold Prices. (US Currency)
TABLE 3
FREE CASH
FLOW EBIDTA
Gold Price
($/Oz)
Average Annual
(LOM)
Average Annual
(LOM)
1,200 $5.9 million $12.3 million
1,500 $10.3 million $19.1 million
1,700 $13.2 million $23.6 million
1,900 $16.2 million $28.1 million
2,100 $19.1 million $32.6 million
Table 4 below shows the after-tax economics at various gold prices. (US Currency)
TABLE 4
Gold Price
($/oz)
After Tax
NPV 0%
($M)
After Tax
NPV 5%
($M)
After Tax
NPV 10%
($M) IRR (%)
Payback
(Years)
1,200 64.1 51.2 41.6 14.8 4.33
1,500 112.2 89.3 72.8 33.1 3.08
1,700 144.3 114.7 93.6 44.2 2.75
1,900 176.3 140.2 114.4 55.2 2.33
2,100 208.4 165.6 135.2 66.1 2.00
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Capital Costs
Key capital expenditures for initial and sustaining capital requirements are identified
in the following Table 5. (All figures in US$ Millions)
TABLE 5
Initial
investment
up to Feb.
28, 2022
Investment
remaining as at
Feb. 28, 2022 to
generate positive
cash flow*
Investment to
reach
continuous &
sustainable
production **
Sustaining
capital
expenditures
***
Total capital
costs****
Processing facilities 10.29 1.86 0.93 0.13 13.21
Infrastructure
facilities 2.22 2.17 0.85 0.15 5.39
Mine equipment 4.05 0.09 0.78 0.53 5.45
Tailings 0.06 0.83 0.38 1.50 2.77
Mine development 0.48 0.25 0.98 27.18 28.89
Mining rights - - 0.11 1.10 1.21
Subtotal 17.10 5.20 4.03 30.59 56.92
Contingency - - 1.19 3.06 4.25
Total 17.10 5.20 5.22 33.65 61.17
* From Feb 28, 2022 to positive cash flow date
** From reaching positive cash-flow date to January 2023
*** From Jan 2023 to end of mine life
**** Life of mine capital costs and Pre-Jan 2022 capitalized costs
All-in Sustaining Costs
Table 6 highlights the all-in sustaining costs and the all-in cost over the life of the Project.
TABLE 6
Life of Mine
US$/AuEq Oz US$ Million
Operating Costs(1) 734 320.5
Sustaining Capital Expenditures (2) 77 33.65
Corporate G&A 18 8.0
Reclamation 17 7.5
All-In Sustaining Costs (3) (4) 846 369.6
Capital Expenditures 32 13.8
All-In Costs (4) 876 383.4
Rounding of some figures may lead to minor discrepancies in totals.
(1) Includes streaming, penalties, and shipping costs.
(2) Includes all mine development capital expenditures after the first 12 months of production.
(3) Includes initial capital expenditures for the first 12 months of production.
(4) All-In Sustaining Costs and All-In-Costs are non-GAAP measures. See reference to “Non-GAAP” below.
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Annual Metal Production
CHART 1
CHART 2
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Ounces
Gold production
Gold
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Ounces
Silver production
Silver