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February 22, 2022

Aya Gold & Silver Announces Robust Expansion Feasibility Study for Zgounder; Pre-Tax IRR of 57%, Payback Period of 1.7 Years

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Montreal, Quebec, February 22, 2022 - Aya Gold & Silver Inc. (TSX: AYA) (“Aya” or the “Corporation”) is pleased to announce positive results from its Feasibility Study (“FS”) to expand the Zgounder Silver Mine located in the Kingdom of Morocco from 700 tonnes per day (“tpd”) to 2,700 tpd capacity. All amounts are in US dollars unless otherwise stated. All figures are on a 100% ownership basis.

Highlights of the 2,000 tpd Expansion Feasibility Study 

  • Robust project economics (base case at $22/oz silver):
    • Before-tax 5% net present value (“NPV”): $471 million
    • Before-tax internal rate of return (“IRR”): 57%
    • After-tax 5% NPV: $373 million
    • After-tax IRR: 48%
    • Payback period: 7 years post expansion
    • Initial life of mine (“LOM”) of 11 years 
  • 394% increase in annual production: Increased throughput expected to drive annual silver (“Ag”) production to 7.9 million ounces (“oz”) by 2024
  • 364% increase in revenue: Annual revenue expected to increase from $37M in 2021 to $172M by 2024
  • Low quartile costs: LOM all-in sustaining cost (“AISC”)1 of $9.58/oz including sustaining capital expenditures
  • Initial proven and probable Mineral Reserves Estimate of 8.59 million tonnes (“t”) grading 257 g/t Ag for 71Moz of Ag, positions Zgounder among the highest-grade Ag projects globally
  • Low initial capital expenditures: $139.4 million, including $16.6 million in contingency cost
  • Short expansion timeframe: First Ag pour planned in Q1-2024
  • Further optimisation opportunities:
    • Exploration along strike and at depth
    • Potential to optimise the flow sheet during the front-end engineering design (“FEED”) and the mine plan as part of the underground expansion
  • Enhanced ESG plan: Reduction in water consumption and carbon emissions intensity

 

“We are thrilled to deliver our Zgounder expansion feasibility study less than two years after taking over as management, a testament to our team’s hard work. The feasibility study is supported by a high-grade maiden reserve and is expected to quadruple production at industry-low costs while delivering superior economic returns for all stakeholders,” said Benoit La Salle, President and CEO. “With its low capital outlay, low operating costs and quick payback, Zgounder ranks among the highest-return silver projects globally.”

“While we see exceptional economics on the basis of reserves-based mining only, our long-term plan incorporating a portion of the exploration upside and optimisation opportunities positions Zgounder as a long-life cornerstone asset for Aya. Based on the success achieved to date, we believe there remains significant upside to be gained through exploration.”

“With the mine development already underway, Zgounder will be a significant economic driver in the region with this initial expansion providing more than 400 jobs during construction, 450 jobs during operations and extending the mine life by at least 11 years. We will draw on our experience and expertise, in addition to the transformative groundwork laid since 2020, as we expedite expansion of our unique pure-play silver mine.”

 

Silver Price Sensitivity Analysis

The Zgounder sensitivity analysis was performed using a Ag price varying from $16 oz Ag to $36 oz Ag as  illustrated in the following table:

 

 

$16 oz Ag

$19 oz Ag

Base Case
$22 oz Ag

Spot
($23.5 oz Ag)

$28 oz Ag

$36 oz Ag

After-tax 5% NPV ($M)

$132M

$253M

$373M

$433M

$612M

$927M

After-tax IRR (%)

21%

34%

48%

54%

75%

117%

Undiscounted LOM free cash flow ($M)

$213M

$368M

$522M

$599M

$828M

$1,232M

Payback period (years)

3.7

2.5

1.7

1.5

1.0

0.6

 

Project Milestones

 

  • Environmental study impact assessment (“ESIA”) approval in Q1-2022
  • Complete front-end engineering design in Q2-2022
  • Construction start-up in Q3-2022
  • New plant first Ag pour by Q1-2024
  • Ongoing exploration with the aim of increasing reserves and resources and enhancing economics

 

Mineralization

The mineralization at Zgounder is hosted within a low sulphidation-Ag epithermal deposit contained in complex lenses, clusters, and shear zones. The mineralization typically occurs in three styles: millimetre-thick beds of crystallized, finely disseminated pyrite associated with quartz; native Ag veinlets associated with proustite, argentite and filling micro-fractures in stockwork; and native Ag dissemination in brecciated sandstone-shale layers and spotted by chlorite and / or carbonate and quartz and other sulphides. The host lithology consists of Proterozoic volcano-sedimentary series.  The mineralization is predominately hosted at the contact, or near the contact, between a sedimentary sequence and a volcanic package. Mineralization is dominated by mercuriferous native Ag (proustite), with few Ag sulfosalts (acanthite, pearceite), arsenopyrite and base-metal sulfides (sphalerite and chalcopyrite).

 

Exploration Potential at Zgounder

Prior to the arrival of management in 2020, the Zgounder Project had seen limited near-mine drilling and no regional exploration. Since assuming control, the Aya team has conducted over 75,000 meters (“m”) of diamond drill hole (“DDH”) programs with the view of updating the resources estimate and delivering a reserve estimate in support of the FS. Regional fieldwork commenced in 2021, and a regional drill program will be initiated in Q2-2022 on targets generated by fieldwork and an airborne geophysical survey.

Significant upside potential exists within and surrounding the Zgounder mineralized system, which remains open at depth to the granite. Aya’s overall objective is to expand resources and reserves to enhance project economics and expand the mine life. In the short term, the Corporation aims to expand resources at depth and along strike in addition to discovering regional resources within trucking distance of the mine.

An initial budget of $6.4 million has been assigned to the 2022 exploration program on Zgounder, which will consist of 22,500m of DDH proximal to the mine and 7,500m of regional DDH and RC drilling. Results will be released on an ongoing basis.

 

Mineral Resources and Mineral Reserves Estimates

The FS is based on the updated 2021 Mineral Resource Estimate (“MRE”) published on December 14, 2021, which outlined a 116% increase over the resource published in March 2021.

The FS includes an inaugural Mineral Reserves Estimate (see below) that has been completed by DRA Global Limited (“DRA”) in accordance with the CIM Definition Standards for National Instrument 43-101 reporting.  

The Mineral Reserves have been derived from the Resource Estimate completed by P&E Mining Consultants Inc, and include all drilling data obtained until September 10, 2021, and with an effective date of December 13, 2021. The Inferred material within the pit design was treated as waste.

Using the Mineral Resources dated December 13, 2021 as the basis, the total proven and probable reserves for the Zgounder deposit were as follows:

On a 100% basis. M&I resources shown inclusive of reserves.

Tonnes
(k)

Grade
(Ag g/t)

Content
(Ag k oz)

Proven reserves

3,100

288

28,748

Probable reserves

5,490

239

42,128

P&P reserves

8,590

257

70,876

 

 

 

 

Measured resources (incl. reserves)

 3,511

 347

 39,183

Indicated resources (incl. reserves)

 6,254

 283

 56,874

M&I resources (incl. reserves)

 9,765

306

 96,057

Inferred resources

196

367

6,400

 

The mineral reserves were estimated based on a Ag price of $20 per oz and a corresponding cut-off grade of 47 g/t for Open Pit Reserves, 85 g/t for Underground Reserves and 44 g/t for historical tailings. For further details, see the reserves and resources in Tables 1 and 2, respectively, in the appendix.

 

Mining Operations, Processing and Metallurgy

Mining Operations

The Zgounder Mine expansion outlines a combined open pit and underground mining operation over the 11-year projected LOM. Ore will be sourced from the open pit to build a stockpile prior to the commissioning of the new processing plant and to supplement production in the first full year of production.

Approximately 2.5 million tonnes (“Mt”) of material or 29% of current reserves will be mined from the open pit during the LOM (including the historical tailings storage facility (“TSF”)) and 23.5Mt of waste material will come from the open pit (10.6:1 stripping ratio).

Underground mining methods will account for about 71% of the total reserves, with a mix of long-hole mining (LH) and overhand cut and fill (C&F) – the split between LH and C&F being respectively 60%-40%.

This will deliver a total of 8.6Mt of ore to the milling facility with an average head grade of 257 g/t Ag. Process grades for the LOM average 257 g/t Ag for an average annual production of more than 6,800,000 oz of Ag (once in full production) at low total cash and AISC1 (see table below).

Work on the development and construction of the new underground infrastructures commenced in January 2022 and is being carried out by a Moroccan mining contractor. In parallel to the construction of the new process plant, over 11,000m of underground development will be completed to support the increased mining rate.

 

Processing and Metallurgy

The new Zgounder process plant is designed to process 2,000 tpd. Combined with the two existing processing facilities (the existing cyanidation and flotation plants), the treatment capacity will total approximately 961,000t of ore per year.

The process plant will be based on a conventional  comminution circuit, with the crushing circuit composed of a primary jaw crusher and secondary cone crusher. Crushed ore will be conveyed to the grinding circuit using a ball mill in closed circuit with primary cyclones. The target grind is planned at 100 microns in order to achieve optimal Ag recovery. Following grinding, the ore will be fed to a flotation circuit. The resulting flotation concentrate will be leached in a counter current decantation (“CCD”) circuit, while the flotation tailings will be thickened and sent to a leaching and carbon-in-pulp (“CIP”) circuit.

Pregnant solution from the CCD circuit and from the adsorption-desorption-recovery circuit will be fed into the Merrill-Crowe circuit for Ag precipitation The resulting and cement will be directed to a refinery for production of Ag ingots.

LOM head grades for the process plant are expected to average 257 g/t with a Ag recovery of 91.3%. The main reagents used in the plant are hydrated lime, cyanide, flotation collector, and hydrogen peroxide.

Electricity will be supplied from the grid, and construction of a 90km, 60kV power line and substation upgrades have been included as part of the project. Aya expects to power its operations with 100% renewable energy.

 

LOM Production Plan

The first Ag pour from Zgounder is expected to occur in Q1-2024. A production summary is provided below, and the entire LOM mine plan is presented in Tables 3 and 4 in the appendix. 

Production Summary (for 2,700 tpd)

Zgounder

OPERATION TYPE

 

Mine type

Open pit - underground

Mill type (new plant)

Flotation / CIP plant

RESERVES & RESOURCES

 

P&P reserves

8,590 kt at 257 g/t; 70.9Moz

M&I resources

9,765 kt at 306 g/t; 96.1Moz

Inferred resources

542 kt at 367 g/t; 6.4Moz

LOM PRODUCTION

 

Mine life, years

11

Strip ratio, Waste: Ore

10.6:1

Tonnes processed, Mt

8.6

Grade processed, Ag g/t

257

Silver processed, Moz

70.9

Average recovery rate, %

91.3%

Silver production, Moz

64.7

Average annual production, Koz post expansion1

6,828

Cash costs, $/oz

7.36

AISC1, $/oz

9.58

CAPITAL COST

 

Upfront capital cost, $M

139.4

Sustaining capital cost, $M

69.7

 1 Average annual production on the basis of 2,700 tpd operation

 

Figure 1- LOM Production Profile

 

Project Operating Costs

The table below details the LOM cash operating cost per tonne processed at Zgounder. Mining and processing operating costs have been prepared by DRA and are based on a mining contractor fleet for the open pit, and an owner-operated fleet for underground mining. General and administration (“G&A”) costs derive from the current Zgounder operation and have been reviewed by DRA.

LOM cash operating cost

$ per tonne milled

Mining ($/t)

$29.3

Processing ($/t)

$19.0

G&A & ESG ($/t)

$6.0

Operating cost ($/t)

$54.3

 

The table below details the LOM AISC1 for the Zgounder expansion:

LOM AISC1

$/oz

G&A

0.78

ESG

0.17

UG mine opex

3.50

OP mine opex

0.38

Process opex

2.53

Sustaining capital

1.18

Royalties & mining taxes

1.05

Total AISC1 ($/oz)

$9.58

 

Figure 2 – LOM After-tax Cash Flow Profile

 

Zgounder Capital Expenditures

The project capital cost estimate was compiled by DRA with input from Groupement des Consultants et Ingénieurs du Maroc, a Moroccan engineering firm, on the tailings storage facility (TSF) aspects. Aya has provided project-specific portions for mine establishment and facilities, owner costs, and the high-voltage power supply.

A 24-month construction period, including commissioning, is projected with the initial cost to expand the Zgounder plant estimated at $139.4 million, inclusive of equipment and infrastructures, open pit pre-stripping, owner costs and contingency costs, as summarized below.

Capital Expenditures Split

Initial Capex
(In millions of $)

Sustaining Capex
(In millions of $)

Processing plant

60.8

7.3

Infrastructures & TSF

6.6

12.2

New power line

7.6

 

Mining – Open pit pre-stripping

2.9

 

Mining – UG equipment & infrastructures

8.8

14.7

Mining – UG development

 

35.5

Indirect costs

30.8

 

Indirect contractors

8.8

 

Initial spares & first fills

4.1

 

Transport & freight

2.2

 

EPCM & commissioning

15.7

 

Direct & indirect cost subtotal

117.5

 

Owner costs

5.4

 

Contingency

16.6

 

Total

139.4

69.7

Closure costs

 

6.6

 

Tailings Management

The tailings system will comprise a new TSF located 2.7 kilometers south-east of the current cyanidation TSF. The newly built TSF will be fully lined with high-density polyethylene membrane.  Recycled water will be optimised throughout the process to minimise the addition of fresh water to the process.

The new TSF will take all the tailings produced at the new processing facility, including all the tailings from the existing flotation plant. All the material processed at the existing flotation plant will be directed to the new process plant (the flotation concentrate to the concentrate leaching circuit, and flotation tailings to the CIP circuit) for further Ag recovery. Tailings from the existing flotation plant will go to the CIP circuit of the new plant for further Ag extraction, and hence all the tailings produced will go to the new TSF.

 

Opportunities to Further Enhance Value

Aya has identified the following opportunities to further enhance the economics of the Zgounder expansion project and current operations, and will continue to update these opportunities in 2022 and into 2023:

  • Expansion of near-mine mineralization along strike
  • Expansion and potential discovery of new resources at depth
  • Potential to optimize:
    • Costs regarding the initial CAPEX of the expansion project
    • Process plant flowsheet during the FEED to reduce the capital intensity, while simplifying the operability and constructability of the new plant
    • Underground mine design, to reduce the total operating development meters and accelerate access to high productivity areas

 

Enhanced ESG Plan

In 2020, an ESIA was launched for the Zgounder expansion. Public hearings were successfully completed in Q4-2021, and full approval of the ESIA is expected in February 2022.

The Corporation has leveraged the FS and other resources to achieve the most economically and environmentally sustainable solutions for Zgounder, in addition to maximising its impact in the community.

Among its ESG initiatives, Aya plans to

  • Revegetate and recycle waste from the mine’s historical TSF
  • Reduce carbon emissions intensity through
    • Powering its operations with 100% renewable energy
    • Lower fuel consumption through the production of silver bars
    • Evaluation of a clean fleet energy replacement strategy for end-of-service trucks
  • Lower water consumption through
    • Use of recycled water from the TSF in the cyanidation circuit
    • Production of domestic drinking water with hydropanels which generate water from moisture in ambient air
  • Foster local wealth creation through
    • Focus on national recruitment and procurement for the mine expansion
    • Creation of 600-900 agri-business livelihood projects over a 5-year business entrepreneurship program
    • Support for local healthcare and education facilities

 

Assumptions
  • Silver price of $22.00 per oz
  • Light fuel oil: $0.85 per liter
  • Exchange rate: $0.759 US dollars to the Canadian dollar
  • Exchange rate: $0.108 US dollars to the Moroccan dirham
  • NPV calculated using a discount rate of 5%
  • Based on the 2016 Moroccan mining code

 

Qualified Persons

The complete NI 43-101 Technical Report pertaining to the FS will be filed within 45 days and will be available on Aya’s website and on www.sedar.com.

The FS was carried out by DRA Global Limited (DRA). Scientific and technical information contained in this news release was reviewed and approved by Daniel Gagnon, P.Eng, VP Mining & Geology at DRA, who is an independent qualified person (“QP”) as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects. The Open-pit and historical tailings Reserves Estimate was prepared by Daniel Gagnon.

The Underground Reserves Estimate was prepared under the supervision of André-François Gravel, P.Eng, Senior Mining Engineer for DRA, and QP as defined by NI 43-101.

The technical information contained in this news release has been reviewed and approved by Aya’s technical group comprising Marc-Antoine Audet, Ph.D. P. Geo, Geological Consultant and Patrick Perez, P.Eng, Director of Technical Services, both of whom are QPs as defined under NI 43-101.

 

Video

To view a video animation of the Zgounder expansion, please click on https://bit.ly/3h3yDTH

 

About Aya Gold & Silver Inc.

Aya Gold & Silver Inc. is a rapidly growing, Canada-based silver producer with operations in the Kingdom of Morocco.

The only TSX-listed pure silver mining company, Aya operates the high-grade Zgounder Silver Mine and is exploring its properties along the prospective South-Atlas Fault, several of which have hosted past-producing mines and historical resources. Aya’s Moroccan mining assets are complemented by its Tijirit Gold Project in Mauritania, which is being advanced to feasibility.

Aya’s management team has been focused on maximising shareholder value by anchoring sustainability at the heart of its operations, governance, and financial growth plans.

For additional information, please visit Aya’s website at www.ayagoldsilver.com.

Or contact

Benoit La Salle, FCPA FCA
President & CEO
benoit.lasalle@ayagoldsilver.com

Alex Ball
VP, Corporate Development & IR
alex.ball@ayagoldsilver.com

 

Forward-Looking Statements

This press release may contain or incorporate by reference, certain statements, other than historical facts, including but not limited to any information as to the future financial or operating performance of Aya, that constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”), which reflects management’s expectations, estimates and projections regarding Aya’s future growth and business prospects (including the timing and development of deposits and the success of exploration activities) and other opportunities as of the date of this news release.

Forward-looking statements include future events and opportunities including, without limitation, statements with respect to: exploration and development potential of Zgounder, our estimates, expectations, forecasts and guidance, production costs of sales, all-in sustaining cost and capital expenditures, cost savings, project economics (including net present value and internal rates of return) and other information contained in the feasibility study; as well as references to other possible events, the future price of silver, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and mineral resource estimates, the timing and amount of estimated future production, costs of production, estimates of necessary capital, cost of capital, capital expenditures, costs and timing of the development of the project and mining and processing activities, permitting timelines, currency fluctuations, requirements for additional capital, government regulation of mining operations, and environmental risks.

Wherever possible, words such as “expects”, “potential”, “plan”, “believe”, “upside”, “objective”, “enhance”, “aim”, “estimate”, “projected”, “opportunities”, “further”, “continue”, “assume”,    “confirm”, “intend”, and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, have been used to identify such forward-looking information.

Although the forward-looking information contained in this press release reflect management's current beliefs based upon information currently available to management and based upon what management believes to be reasonable assumptions, Aya cannot be certain that actual results will be consistent with such forward-looking information. Such forward-looking statements are based upon assumptions, opinions and analysis made by management in light of its experience, current conditions, and its expectations of future developments that management believe to be reasonable and relevant but that may prove to be incorrect. Aya cautions you not to place undue reliance upon any such forward-looking statements.

The risks and uncertainties that may affect forward-looking statements include, among others: the inherent risks involved in exploration and development of mineral properties, including 1) there being no significant disruptions affecting the operations of the Corporation whether due to COVID-19 restrictions, artisanal miners, access to water, extreme weather events and other or related natural disasters, labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, operations and production from the Zgounder project being consistent with the Corporations’ expectations; (3) political and legal developments in the Kingdom of Morocco being consistent with its current expectations; (4) the exchange rate between the U.S. dollar and the Moroccan Dirham being approximately consistent with current levels; (5) certain price assumptions for silver; (6) prices for diesel, process reagents, fuel oil, electricity and other key supplies being approximately consistent with current levels; (7) production and cost of sales forecasts meeting expectations; (8) the accuracy of the current mineral reserve and mineral resource estimates of the Corporation; (9) labour and materials costs increasing on a basis consistent with the Corporation’s current expectations; and (10) asset impairment (or reversal) potential, being consistent with the Corporation’s current expectations. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. All of the forward-looking statements made in this news release are qualified by these cautionary statements and those made in our other filings with the securities regulators of Canada including, but not limited to, the cautionary statements made in the "Risk Factors" section of our Annual Information Form dated March 31, 2021 and the "Risk Analysis" section of our Q3/2021 Management’s Discussion & Analysis and in other filings of Aya with securities and regulatory authorities which are available on SEDAR at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Corporation. Aya disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward looking statements, except to the extent required by applicable law.

 

Table 1 - Mineral Reserves – Zgounder Mine, Morocco

Area

Classification

Cut-Off
(Ag g/t)

Tonnes
(k)

Ag
(g/t)

Ag
(k oz)

Open pit

 reserves

Proven

47

567

312

5,694

Probable

47

1,611

233

12,057

P&P

47

2,178

253

17,750

 

 

 

 

 

 

Underground reserves

Proven

85

2,533

283

23,054

Probable

85

3,560

256

29,286

P&P

85

6,093

267

52,340

 

 

 

 

 

 

Sub-total

Proven

47-85

3,100

288

28,748

Probable

47-85

5,171

249

41,343

P&P

47-85

8,271

264

70,090

 

 

 

 

 

 

Historical tailings reserves

Probable

44

319

77

785

 

 

 

 

 

 

Total Reserves

Proven

47-85

3,100

288

28,748

Probable

44-85

5,490

239

42,128

Total P&P

44-85

8,590

257

70,876

             

  

  1. The Mineral Reserve is estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions (2014) and Best Practices Guidelines (2019) prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
  2. The Mineral Reserve is estimated with a variable COG which was calculated by mining method.
  3. Ag content (oz) is estimated as in-situ.
  4. An ONHYM royalty of 3% is included in the Mineral Reserve Estimate.
  5. The Mineral Reserve is estimated with a mining recovery of 95%.
  6. The Mineral Reserve includes both internal and external dilution. The external dilution included a mining dilution of 0.3 m width on the hanging wall and footwall for the long-hole mining method and a 0.1 m width on the hanging wall and footwall for the cut-and-fill mining methods.
  7. A minimum mining width of 4m was used for the long hole and cut-and-fill mining methods.
  8. The economic viability of the Mineral Reserve has been demonstrated.
  9. For the historical tailings Reserves Estimate, a silver price of US$20/oz with a process recovery of 92%, a process cost of $20.93/t (including G&A), and a mining cost of $4.31/t (including haulage) were used.
  10. For the Open-pit Reserves Estimate, a silver price of US$20/oz with a process recovery of 92%, a process cost of US$22.91/t (including G&A), and a mining cost of $4.00/t (including haulage) were used.
  11. For the Underground Reserves Estimate, a silver price of $20/oz with a process recovery of 92%, a process cost of US$22.91/t (including G&A), and a mining cost of $24.13/t (including haulage and backfill) were used for the combined cut-and-fill and long-hole methods.
  12. The reserves estimate has an effective date of December 13, 2021.
  13. Totals may not add due to rounding.

 

Table 2 – Mineral Resources (exclusive of reserves)

Area

Classification

Cut-Off
(Ag g/t)

Tonnes
(k)

Ag
(g/t)

Ag
(k oz)

Pit-Constrained

Measured

65

108

477

1,659

Indicated

65

406

325

4,247

M&I

65

514

368

5,906

 

 

 

 

 

 

Out-of-Pit

Measured

75

3,403

343

37,493

Indicated

75

5,576

289

51,792

M&I

75

8,979

311

89,285

Inferred

75

196

367

6,400

 

 

 

 

 

 

Tailings

Indicated

50

272

94

817

 

 

 

 

 

 

Total

Resources

Measured

65-75

3,512

348

39,152

Indicated

50-65-75

5,982

289

56,856

M&I

50-65-75

9,494

316

95,192

Inferred

65-75

196

367

6,400

 

  1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. There is no certainty that Mineral Resources will be converted to Mineral Reserves.
  2. The Inferred Mineral Resource in this estimate has a lower level of confidence that that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
  3. The Mineral Resources in this news release were estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions (2014) and Best Practices Guidelines (2019) prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
  4. A silver price of US$22.5/oz with a process recovery of 90%, US$20/t rock process cost, US$16.5/t tailings process cost and US$7/t G&A cost were used.
  5. The constraining pit optimization parameters were US$15/t of mineralized material (including waste mining) and 50-degree pit slopes with a 65 g/t Ag cut-off.
  6. The out-of-pit parameters used a US$22/t mining cost. The out-of-pit Mineral Resource grade blocks were quantified above the 75 g/t Ag cut-off, below the constraining pit shell and within the constraining mineralized wireframes. Out–of-pit Mineral Resources exhibit continuity and reasonable potential for extraction by the cut and fill underground mining method.
  7. The historical tailings parameters were at a US$9/t mining cost, and Mineral Resource grade blocks were quantified above the 50 g/t Ag cut-off.
  8. Individual calculations in tables and totals may not sum correctly due to rounding of original numbers.
  9. Grade capping of 6,000 g/t Ag was applied to composites before grade estimation.
  10. A bulk density value of 2.77 t/m3 was determined from core samples and used for the Mineral Resource Estimate.
  11. 2m composites were used during grade estimation.
  12. Previously mined areas of the deposit were depleted from the Mineral Resource Estimate

 

Table 3 – Zgounder LOM Operating Plan

 

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Mine - UG tonnes

t

226,285

251,387

594,875

671,621

673,134

673,142

673,172

673,180

673,184

745,933

237,513

Mine - OP tonnes

t

0

70,709

269,503

386,546

330,406

316,680

296,614

267,607

240,512

288,000

30,811

Mined grade

g/t

264

268

304

242

245

283

316

244

259

185

189

Process - tonnes

t

226,285

221,387

886,875

959,621

961,134

961,142

961,172

961,180

961,184

963,933

526,900

Process grade

g/t

264

286

304

266

259

288

319

240

249

182

148

Recovery

 

84.6%

84.6%

91.7%

91.7%

91.7%

91.7%

91.7%

91.7%

91.7%

91.7%

92.0%

Ag production

(oz)

1,627,609

1,724,679

7,942,552

7,521,808

7,337,999

8,166,134

9,052,849

6,806,443

7,066,809

5,170,036

2,312,094

 

Table 4 - Zgounder LOM Operating & Revenue Plan

 

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Process - tonnes

t

226,285

221,387

886,875

959,621

961,134

961,142

961,172

961,180

961,184

963,933

526,900

Process grade

g/t

264

286

304

266

259

288

319

240

249

182

148

Ag production

(oz)

1,627,609

1,724,679

7,942,552

7,521,808

7,337,999

8,166,134

9,052,849

6,806,443

7,066,809

5,170,036

2,312,094

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$/yr

35,375,342

37,485,122

172,627,755

163,483,081

159,488,088

177,487,224

196,759,565

147,934,960

153,593,886

112,368,394

50,252,305

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

 

 

 

 

 

 

 

 

 

 

Mining opex

$/yr

15,861,793

18,634,471

30,471,543

32,201,359

31,573,878

23,784,517

22,306,776

22,867,465

23,125,589

21,098,263

9,483,233

Process opex

$/yr

5,249,815

5,136,168

16,881,947

18,091,470

18,139,875

18,140,134

18,141,112

18,141,369

18,141,503

18,229,456

9,157,521

G&A & ESG

$/yr

3,333,080

3,957,641

6,274,786

6,169,600

6,123,648

6,330,682

6,552,360

5,990,759

6,055,851

5,581,658

4,867,174

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties & mining taxes

$/yr

1,740,116

2,090,841

7,771,964

8,078,993

7,795,261

8,294,080

8,812,147

7,260,412

7,348,907

6,472,851

2,312,541

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$/yr

9,190,539

7,666,003

111,227,517

98,941,662

95,855,427

120,937,814

140,947,173

93,674,956

98,922,038

60,986,168

24,429,202

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital costs

 

 

 

 

 

 

 

 

 

 

 

 

Initial capex

$/yr

55,315,862

79,105,119

5,002,553

 

 

 

 

 

 

 

 

Sustaining capex & closure cost

$/yr

7,673,111

8,908,480

11,261,964

7,381,983

9,228,458

5,929,644

3,932,903

907,068

909,662

911,473

7,060,841

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable income

$/y

1,142,584

-10,704,733

88,491,138

75,914,652

71,290,418

95,889,188

115,775,765

68,064,584

72,851,397

35,603,892

-6,290,051

Taxes payable

$/y

228,517

0

17,698,228

15,182,930

14,258,084

19,177,838

23,155,153

13,612,917

14,570,279

7,120,778

0

 

 

 

 

 

 

 

 

 

 

 

 

 

Total after

tax cash flow

$/y

-54,026,951

-80,347,595

77,264,774

76,376,748

66,460,583

95,830,332

113,859,117

72,886,203

83,442,096

52,953,916

17,368,361