TORONTO, Nov. 30, 2021 (GLOBE NEWSWIRE) --
Discovery Silver Corp.
(TSX-V: DSV, OTCQX: DSVSF) (“Discovery” or the “Company”) is pleased to announce results from its Preliminary Economic Assessment (“PEA” or “the Study”) on its 100%-owned Cordero silver project (“Cordero” or “the Project”) located in Chihuahua State, Mexico.
Study highlights include (all figures are in USD unless otherwise noted):
- Excellent project economics: Base Case after-tax NPV5% of $1.2 B (C$1.5 B) and IRR of 38% (Ag - $22.00/oz, Au - $1,600/oz, Pb - $1.00/lb and Zn - $1.20/lb).
- Exceptional silver price leverage: Upside Case after-tax NPV5% of $1.9 B (C$2.4 B) and IRR of 55% (Ag - $27.50/oz, Au - $1,880/oz, Pb - $1.10/lb and Zn - $1.45/lb based on one-year trailing 90 th percentile prices).
- Large-scale, high-margin, long mine life asset: 16-year mine life with average annual production of 26 Moz AgEq at an AISC of $12.35/oz AgEq.
- Low capital intensity: initial development capex of $368 M; attractive NPV-to-capex ratio of 3.2x.
- Rapid payback: post-tax payback of 2.0 years for Base Case and 1.4 years for Upside Case.
- Technically robust study: 99% of tonnes processed in the PEA mine plan are in the Measured & Indicated category; process design and metallurgical recovery estimates are based on the Company’s comprehensive 2021 metallurgical testwork program.
-
Silver-dominant revenues:
silver represents +60% of the net smelter return in the first five years of the mine life and +50% of the net smelter return over the life of mine, in-line with the senior/mid-tier silver producer group.
Taj Singh, President and CEO, states: “With annual AgEq production averaging more than 26 Moz over a +15-year mine life we believe this PEA clearly positions Cordero as a Tier 1 silver asset. This impressive scale of production is achieved through modest development capex of $368 M and returns excellent margins with AISC averaging less than $12.50/AgEq oz over the life of the mine. These costs highlight the benefits of existing local infrastructure, excellent metallurgy, and a straight-forward open pit mine with excellent grades and a low strip ratio.
“Importantly, the outstanding metrics demonstrated in the PEA are supported by a mine plan with more than 99% of tonnes in the Measured and Indicated category, and a simple and conventional process design based on our detailed metallurgical testwork program completed earlier this year. This provides us with a huge head start as we look ahead to the delivery of a Prefeasibility Study on Cordero in 2022.”
PEA SUMMARY :
Study support :
- The Study is based on the updated Mineral Resource Estimate (“Resource”) press released on October 20, 2021 (see Appendices for Resource details), and the Company’s comprehensive metallurgical testwork program described in our press release dated September 7, 2021.
- The PEA project team was led by Ausenco Engineering Canada Inc. (“Ausenco”), an industry leader in cost-effective design and construction. Ausenco was supported by AGP Mining Consultants Inc. (“AGP”) and Knight Piésold and Co. (USA) (“Knight Piésold”).
Project Economics:
Sensitivity of the Project’s expected after-tax NPV, IRR and payback at different commodity price assumptions is outlined in the table below:
| Units | Base Case | Upside Case | Base Case +15% | Base Case -15% | |||||||||
| After-Tax NPV (5% discount rate) | (US$ M) | $1,160 | $1,889 | $1,692 | $622 | ||||||||
| Internal Rate of Return | (%) | 38.2 | % | 54.6 | % | 49.9 | % | 25.2 | % | ||||
| Payback | (yrs) | 2.0 | 1.4 | 1.6 | 3.5 | ||||||||
- Base Case price assumptions: Ag = $22.00/oz, Au = $1,600/oz, Pb = $1.00/lb, Zn = $1.20/lb
- Upside Case price assumptions: Ag = $27.50/oz, Au = $1,880/oz, Pb = $1.10/lb, Zn = $1.45/lb based on one-year trailing 90 th percentile prices
After-Tax Free Cash Flow:
A chart summarizing the expected annual and cumulative after-tax free cash flow (“FCF”) over the life-of-mine (“LOM”) is provided below:
https://www.globenewswire.com/NewsRoom/AttachmentNg/d1131062-ffa4-4091-b528-d23ac46806b3
Production & Costs:
Annual production over the LOM is expected to average 26 Moz AgEq with production averaging over 33 Moz AgEq when fully ramped up (Years 5 – 12); this positions Cordero as one of the largest silver mines globally.
| Units | Year 1 – 4 | Year 5 - 12 | Year 13 -16 | LOM | |||||
| AgEq Produced - Average | (Moz) | 29 | 33 | 9 | 26 | ||||
| AgEq Payable - Average | (Moz) | 26 | 29 | 8 | 23 | ||||
| AgEq Produced - Total | (Moz) | 117 | 265 | 37 | 426 | ||||
| AgEq Payable - Total | (Moz) | 104 | 230 | 32 | 372 | ||||
| All-In Sustaining Cost (AISC) | (US$/AgEq oz) | $11.64 | $11.77 | $18.88 | $12.35 | ||||
Note – LOM production/payable totals include production from Year -1. AgEq Produced is metal recovered in doré/concentrate. AgEq Payable is metal payable from doré/concentrate and incorporates metal payment terms outlined in the Concentrate Terms section below. See Technical Disclosure section for AgEq and AISC calculation methodology.
LOM Production & AISC:
https://www.globenewswire.com/NewsRoom/AttachmentNg/dc1da013-9e05-4a0a-a7af-78b58ef8af4a
Note – Au/Pb/Zn production is shown on an AgEq basis based on: Ag = $22/oz, Au = $1,600/oz, Pb = $1.00/lb and Zn = $1.20/lb
OPERATIONS:
Mining:
The mine plan incorporates accelerated stripping as well as stockpiling of low-grade material in order to optimize the grade profile over the LOM.
- The mine plan was completed by AGP and is based on a detailed mine design that incorporates mining dilution, safety berms and haul roads.
- Mining rates over the life of the mine are relatively steady at 60 to 70 Mtpa.
- The ultimate pit contains 719 Mt in total consisting of 228 Mt of mill feed and 491 Mt of waste for an average strip ratio of 2.2:1. The strip ratio is relatively even over the LOM.
- Pit slope designs were based on an assessment by Knight Piésold that was supported by two geotechnical coreholes in the North Corridor and logging of core from two exploration coreholes in the South Corridor.
Processing:
Processing was broken into two phases to optimize the capital efficiency of the project.
-
Phase 1 throughput (Year -1 to Year 4)
- Oxides: mined during the preproduction period and are crushed through the Phase 1 crushing plant and stacked on the heap leach from Year -1 to Year 3 at a throughput rate of 5 Mtpa. After Year 3 the Phase 1 crushing plant is dedicated to processing higher-value sulphide material with remaining oxide material processed as uncrushed ‘run-of-mine’ (“ROM”) material via heap leaching.
- Sulphides: crushing, grinding and flotation circuit is constructed in Year -1 and processing occurs at a nameplate rate of 7.2 Mtpa from Year 1 to Year 4. During this period the mine plan focuses on high-grade material from the Pozo de Plata zone.
-
Phase 2 throughput (Year 5+)
- Sulphides: two identical crushing, grinding and flotation circuits from Y5 onwards with total throughput of 14.4 Mtpa
|
Annual Throughput (Mt/a)
|
PHASE 1 | PHASE 2 | ||||
| Year -1 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5+ | |
| Oxides / Heap Leach (Crushed) | 5.0 | 5.0 | 5.0 | 5.0 | - | - |
| Sulphides / Milling | - | 5.8 | 7.2 | 7.2 | 10.8 | 14.4 |
| Total Tonnes | 5.0 | 10.8 | 12.2 | 12.2 | 10.8 | 14.4 |
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Process design
- Oxides: three-stage crushing (targeted crush size of 8 mm), agglomeration, heap leaching and refining in Year -1 to Year 3 and ROM dump leaching and refining in Year 4 to Year 6 to produce Ag-Au doré bars
- Sulphides: three-stage crushing, grinding (targeted grind size of 200 micron) and flotation to produce Pb and Zn concentrates
Head grades:
The mine plan focuses on feeding higher grades to the mill earlier in the mine life:
- Year 1 – 4: processing of higher-grade oxide material from the South Corridor and sulphide material predominantly from the Pozo de Plata zone
- Year 5 – 12: processing of higher-grade sulphides from the NE Extension and the South Corridor
-
Year 13 – 16:
processing of lower-grade material stockpiled during Year 1 to Year 12
|
HEAD GRADES
|
UNIT
|
PHASE 1 | PHASE 2 |
LOM
|
|
| Year 1 – 4 | Year 5 – 12 | Year 13 – 16 | |||
| Oxides | |||||
| Tonnes processed | (Mt) | 25 | 4 | - | 29 |
| Ag | (g/t) | 37 | 29 | - | 36 |
| Au | (g/t) | 0.08 | 0.05 | - | 0.08 |
| AgEq | (g/t) | 43 | 33 | - | 42 |
| Sulphides | |||||
| Tonnes processed | (Mt) | 31 | 115 | 52 | 199 |
| Ag | (g/t) | 57 | 32 | 13 | 31 |
| Au | (g/t) | 0.26 | 0.07 | 0.04 | 0.09 |
| Pb | (%) | 0.80 | 0.50 | 0.17 | 0.46 |
| Zn | (%) | 0.80 | 0.92 | 0.34 | 0.75 |
| AgEq | (g/t) | 118 | 88 | 34 | 80 |
Note – Phase 1 and LOM Oxide tonnes/grades include tonnes processed on the heap leach in Year -1
Recoveries:
- Oxides: recoveries were based on coarse bottle roll tests and preliminary results from column leach tests completed in 2021. Recoveries average 56% for Ag and 63% for Au for crushed feed and 36% for Ag and 35% for Au for uncrushed ROM feed.
- Sulphides: recoveries were based on the 2021 metallurgical test program which included lock-cycle tests and examined metal recoveries to the silver-lead concentrate and the silver-zinc concentrate at varying head grades for each of the major geological rock types at Cordero. Metal recoveries to the two concentrates are summarized below:
|
SULPHIDE RECOVERIES
(weighted average)
|
PHASE 1 | PHASE 2 |
LOM
|
|||||
| Year 1 – 4 | Year 5 – 12 | Year 13 – 16 | ||||||
| Ag | 92% | 83% | 67% | 84% | ||||
| Au | 19% | 19% | 19% | 19% | ||||
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