Altaley Mining Files Tahuehueto PFS Technical Report with Significantly Improved Project Economics
Altaley Mining Corporation
1000 – 1111 Melville St.
Vancouver, BC, V6E 3V6
www.altaleymining.com
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Altaley Mining Files Tahuehueto PFS Technical Report
with Significantly Improved Project Economics
VANCOUVER, BRITISH COLUMBIA – APRIL 26, 2022
Altaley Mining Corporation ( TSXV: ATLY ) ( OTCQX: ATLYF ) ( FSE: TSGA ) ("Altaley" or the
"Company") is pleased to announce that it has filed an updated technical report, including a
Preliminary Feasibility Study (“PFS”), for its Tahuehueto Project in Durango, Mexico. (the
“Project”) on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at
www.sedar.com in accordance with National Instrument 43-101 – Standards of Disclosure for
Mineral Projects (“NI 43-101") and in accordance with Canadian Institute Mining’s (“CIM”) Best
Practice Guidelines for the Estimation of Mineral Resources and Mineral Reserves.
The Company made a preliminary disclosure of the PFS economics in a new release dated
March 7, 2022, which results contained errors related to net smelter return calculations that
under-estimated the PFS economics. With the filing of the PFS report, Altaley now updates
the March 7 , 2022 disclosure with a significant increase of approximately 30% to the overall
economics of the project.
• 2022 Prefeasibility Study improves 2017 PFS increasing throughput to 1,000 tonnes
per day returning a post-tax NPV of $161.3 million, at a discount rate of 5%, ($141.8
Million and $131. 8 million at discount rate of 8% and 10% respectively).
• IRR of 65% with a 2-year payback period. (5% discount rate)
• Total Life of Mine Capital Cost estimate of US $56.9 million with project construction
over 95% complete and initial pre-production targeted during April 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 with average annual production of 25,987 oz of gold,
453,952 oz of silver, 827 tonnes of copper, 3,155 tonnes of lead and 6,123 k -lbs of zinc.
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• Significant opportunities exist to expand the Projects Mineral Resources and
Reserves base with near mine and regio nal exploration. Altaley plans to aggressiv ely
pursue exploration as soon as free cash flows allow or alternative funding is secured.
The technical report, entitled “NI43-101 Technical Report Preliminary Feasibility Study, Altaley
Mining Corporation, Tahuehueto Project, Durango, Mexico” and dated with an Effective date
of February 23, 2022 and report date of April 21, 2022, was authored by Mr. Scott E. Wilson, CPG,
President of Resource Development Associates Inc., an independent consulting geologist
specializing in Mineral Reserve and Resource calculation reporting, mining project analysis
and due diligence evaluations. He is acting as the Qualified Person, as defined in NI 43-101, for
the overall technical report, and the Mineral Resource and Mineral Reserve Statement. Mr.
Wilson has over 32 years' experience in the mining industry and is a Registered Member
(#4025107RM) of Society for Mining, Metallurgy and Exploration, Inc. Mr. Wilson and Resource
Development Associates Inc. are independent of the Company under NI 43-101.
“As our Tahue hueto Gold Mine Project construction nears completion we are happy to
disclose final results of the project ’s updated pre -feasibility study which continues to show
robust economics.” said Ralph Shearing, CEO & President. “The disclosure and filing on SEDAR
of the updated PFS and reserve and resource estimation , along with our anticipated May
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 u nder 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 has been filed on SEDAR. As a result of the
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changes to t he 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 press release, 95% 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 estimate effective as of
February 23, 2022. As the Company has elected to bring the Tahuehueto Mining Project into
production without the project’s 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 filed 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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IMAGE 1
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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
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
March 7,2022
Disclosure
(Corrected in
column to right)
Final
2022 PFS US$
Total Net Smelter Return (Pb, Zn, Au, Ag, Cu) 533.1 645.4 $Million
Gold Net Revenue 341.5 392.8 $Million
Silver Net Revenue 74.0 87.5 $Million
Lead Net Revenue 55.8 60.5 $Million
Zinc Net Revenue 48.3 78.4 $Million
Copper Net Revenue 13.4 26.2 $Million
Pre-tax Net Cash flow 240.9 352.5 $Million
Post tax Net Cash Flow 186.3 258.9 $Million
Annual Average pre-tax net cash flow 21.4 98 $Million
Pre-tax net cash flow per tonne of ore 67 72 $/tonne ore
LOM Total Capital cost – Plant, mine development,
infrastructure, working capital (no contingency) 56.9 56.9 $Million
OPEX – Development Mining 1,278.1 1,278.1 $/meter
OPEX – Ore Mining 35.0 35.0 $/tonne ore
OPEX – Processing 22 22 $/tonne ore
OPEX – General &Administrative (G&A) 3.0 3.0 $/tonne ore
OPEX - Operating Cost – LOM 69.5 69.5 $/tonne ore
All-In Sustaining Cost of Production – LOM 844 855 $/AuEq oz
Pre-tax Net Present Value (NPV) at 5% discount 152.8 234.4 $Million
Post-tax NPV at 5% discount* 110.0 161.3 $Million
Post-tax NPV at 10% discount 90.6 130.8 $Million
EBIDTA LOM 246.1 357.7 $Million
Internal Rate of Return (IRR)** 45 65.5 %
Payback Period 2.58 2.0 Years
*5% discount considered reasonable due to adva nced state of Tahuehueto construction where 95% 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. $19 million of pre-
2015 costs of exploration, acquisition and carrying costs have been treated as sunk costs.
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Sensitivity Analysis
Table 3 below shows the after-tax sensitivity of NPV, IRR to varying gold prices (US Currency)
TABLE 3
Gold Price
($/oz)
After Tax
NPV 0%
($M)
After Tax
NPV 5%
($M)
After Tax
NPV 8%
($M)
After Tax
NPV 10%
($M) IRR (%)
Payback
(Years)
1,450 171.6 134.2 117.3 107.8 50.5 2.6
1,550 187.7 146.9 128.5 118.2 55.9 2.3
1,650 204.4 161.3 141.8 130.8 65.5 2.0
1,750 219.7 172.3 151.0 139.0 66.7 2.0
1,850 237.7 185.1 162.2 149.4 72.2 1.9
PFS Baseline
Table 4 below shows the after-tax sensitivity of NPV, IRR to various gold mill recoveries. (US
Currency)
TABLE 4
Mill
Recovery
Gold (%)
After Tax
NPV 0%
($M)
After Tax
NPV 5%
($M)
After Tax
NPV 8%
($M)
After Tax
NPV 10%
($M) IRR (%)
Payback
(Years)
85% 170.2 134.1 117.7 108.5 53.3 2.4
90% 190.1 149.9 131.7 121.4 60.5 2.2
95% 204.4 161.3 141.8 130.8 65.5 2.0
97% 210.4 166.0 146.0 134.7 67.6 2.0
PFS Baseline
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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.