Vancouver, British Columbia - October 21, 2013 (Investorideas.com Mining Stocks Newswire) SilverCrest Mines Inc. (
TSX.V:SVL) (
NYSE MKT: SVLC)
("SilverCrest" or the "Company") is pleased to announce that it has
completed the Preliminary Economic Assessment ("PEA") for its La Joya
Silver Copper Gold Project ("La Joya") located in Durango, Mexico.
Summaries of the current resources used for the PEA, a preliminary Life
of Mine Plan (LOMP), operating costs, capital costs and project
economics are presented in tables below. A Technical Report compliant
with NI 43-101 is being completed by EBA Engineering Consultants, a
Tetra Tech Company (EBA) with an effective date of September 23, 2013 to
be filed within 45 days of this release. All currency values are
presented in US$ unless otherwise specified.
N. Eric Fier, President & COO stated, "The positive results of
this PEA will enable us to plan the next steps, establish achievable
milestones and identify additional studies and analyses to optimize the
project economics. We have engaged extensively with local communities at
this early stage of the La Joya project development, emphasizing the
importance of building collaborative, long term and sustainable
relationships with all stakeholders."
The PEA focuses on the first stage of La Joya development ("Starter
Pit") as a low strip, open pit with an initial 9 year life of mine plan
("LOMP") and opportunities for expansion. This approach provides
attractive economic returns using conservative metal price estimates and
lower initial capital costs, which are more attractive in the current
market. The conceptual open pit operation would be in conjunction with a
5,000 tonnes per day (tpd) conventional mill and flotation/leaching
plant to produce a high grade silver-copper concentrate with gold
credits. The Starter Pit will have a conceptual average annual
production of 3.9 million silver equivalent (AgEQ)* ounces per year and
approximately 5 million ounces AgEQ* per year for each of the first 4
years of operation. An expansion of the Starter Pit to include
additional resources within a larger pit would then be contemplated.
The Company cautions that the PEA is preliminary in nature in that
it is based on Inferred Mineral Resources which are considered too
speculative geologically to have the economic considerations applied to
them that would enable them to be characterized as mineral reserves, and
there is no certainty that the PEA will be realized. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability.
HIGHLIGHTS OF THE PRELIMINARY ECONOMIC ASSESSMENT
The PEA incorporated Base Case metal prices of $22/oz Ag, $3/lb Cu
and $1200/oz Au (5 year historical average). Highlights of the Base Case
economic estimates for the Starter Pit are as follows:
- Pre-tax NPV5% of $133 million and an Internal Rate of Return ("IRR") of 30.5%
- Pre-tax NPV5% of $156 million and IRR of 34% using current metal
prices of $21.93/oz Ag, $1316.25/oz Au and $3.27/lb Cu (as of
18/10/2013)
- After-tax NPV5% of $93 million and an IRR of 22%
- Payback period of approximately 2 years on initial capital
- Pre- production capital costs of $141 million including contingencies of $17 million
- Sustaining capital is estimated at $8 Million
- Cash operating costs for the first three years average $10 per ounce AgEQ* and $13 per ounce AgEq* for the 9 years Starter Pit
- Pre-tax undiscounted operating cash flow before capital
expenditures totalling $342.5 million at an average of $38 million per
year with the first four years averaging $60 million per year
- A 9 year LOMP with 15.5M tonnes grading 50g/t Ag, 0.33%Cu and 0.19 g/t Au
- Life of mine production of an estimated 34.8 million payable
AgEQ*ounces, consisting of 19 million ounces of silver and 53 thousand
ounces of gold and 93 million pounds of copper in concentrate, and
- Production of an attractive high grade silver-copper concentrate (averaging 35% Cu and 4kg/t Ag) with a gold by- product.
* Silver equivalency for the PEA includes silver, gold and copper
and excludes lead, zinc, molybdenum and tungsten values. The Price Ratio
for Ag:oz Au is (54.4:1), lb Cu:oz Ag is (7.3:1), both based on 5 year
historic metal price trends of US$22/oz silver, US$1200/oz gold,
US$3/lbs. copper. Metallurgical recoveries are incorporated in the
economic analysis (see Summary of PEA parameters in table below).
* Silver equivalency for the PEA includes silver, gold and copper
and excludes lead, zinc, molybdenum and tungsten values. Price ratio for
Ag: Au is (54.4:1), Ag:Cu is (7.3:1), both based on 5 year historic
metal price trends of US$22/oz silver, US$1200/oz gold, US$3/lbs.
copper. Metallurgical recovery is incorporated as recoverable metal.
The PEA for the Starter Pit reports strong revenues in the initial
four years of operations and a decrease in the revenues for subsequent
two years due to decrease in the grades. It is anticipated that
additional drilling and optimization of the mine schedule could improve
these results based on the presence of high grade material in some
sectors of the deposit which may ultimately be incorporated into the
mine plan.
Sensitivity analyses were completed by adjusting commodity prices, the results of which are presented in the following graph.
To view the graph, please click on the following link: http://media3.marketwire.com/docs/svl1021-Graph.pdf.
The Starter Pit economics are more sensitive to silver and copper
price, as they represent 55% and 36% of the total revenues respectively
under the base case scenario. Each 10% increment in metal prices from
the base case changes the pre-tax NPV by approximately $60 million and
the IRR by approximately 8%.
PEA CAPITAL COSTS
EBA completed detailed cost estimates for the mine and processing
plant based on preliminary vendor quotes, contract mining and similar
projects recently completed in Mexico. Pre-production capital costs are
estimated to total US$141 million including a $17 million contingency
using an open pit mine contractor. This includes development of the
project over a period of 1.5 years including initial mining for one year
before start-up of operations. The La Joya property has excellent
infrastructure to keep capital costs reasonable with a nearby
international airport, highways, railway, main power grid and lines,
several operating mines and communities with available workforce. The
pre-production capital costs from the PEA are summarized below.
Provisions for $8 million of working capital and $6 million in mine
closure have been made as part of the economic analyses in the PEA.
PEA STUDY PARAMETERS
The PEA has incorporated the following operational and economic
parameters used in the Net Smelter Return Model ("NSR") for the
silver-copper-gold concentrate and also gold-silver dore production
model from tailings leaching.
No smelter penalty charges for deleterious metals were applied to
the concentrate for the PEA. The study assumes that silver copper
concentrate will be shipped overseas by trucking from site to a port in
Mexico which is the most used route for concentrate producers in
operation near La Joya.
PROCESSING & METALLURGY
The most recent metallurgical studies indicate that a conventional
flotation circuit will potentially recover a high grade silver copper
concentrate with gold credits. Depending on mineralization style and
conditioning applied on the ALS locked cycle flotation tests,
preliminary metal recoveries to the third cleaner concentrates range
from 82.7 to 86.7% Cu, 76.7 to 84.3% Ag, and 18.2 to 42.4% Au for Manto
and Structure composites. A gold leaching circuit with potential to
recover 90% of gold and silver from the tailings to produce metal dore
has also been incorporated in the PEA.
The bulk silver copper concentrates from preliminary results
produced from Manto and Structure composites show certain potentially
deleterious elements for smelting such as arsenic, antimony and bismuth.
Adding cyanide at cleaner flotation stages reduces the arsenic content
to acceptable market limits without sacrificing copper, silver and gold
recoveries. Additional test work is in progress to assess the
distribution, concentration and potential reduction of antimony and
bismuth.
LA JOYA RESOURCES
The La Joya mineral deposit is defined as a silver copper-gold
skarn with disseminated to semi-massive sulphide (bornite -
chalcopyrite) with three main ore types; Mantos, Structures and Contact
Zone. The updated Mineral Resource estimations for the La Joya Project
provided estimated Inferred Resources of 126.7 million tonnes grading
23.5 gpt Ag, 0.19%Cu and 0.17 gpt Au containing 198.6 million ounces of
silver, 533 million pounds of copper and 95,900 ounces of gold. These
resource estimates were announced by news release dated January 29, 2013
and are contained in a technical report dated March 27, 2013 titled
"Updated Resource Estimate for the La Joya Property, Durango, Mexico"
and are the basis for the PEA.
* Silver equivalency for the resource estimation filed on March
27th, 2013 includes silver, gold and copper and excludes lead, zinc,
molybdenum and tungsten values. Ag:Au is 50:1, Ag:Cu is 86:1, based on 5
year historic metal price trends ofUS$24/oz silver, US$1200/oz gold,
US$3/lb copper. 100% metallurgical recovery is assumed. Classified by
EBA, a Tetra Tech Company and conforms to NI 43-101 and CIM definitions
for resources. All numbers are rounded. Inferred Resources have been
estimated from geological evidence and limited sampling and must be
treated with a lower level of confidence than Measured and Indicated
Resources. Note that AgEQ calculation for resources is different than
PEA economic analysis based on change in metal prices. Mineralization
boundaries used in the interpretation of the geological model and
resource estimate are based on a cut-off grade of 15 g/t AgEq using the
metal price ratios described above.
The conceptual first stage for development of La Joya with an
initial 9 year Starter Pit uses the 60g/t Ag Eq cut off Inferred
Resource for Manto and Structure Zones representing mineralized zones
close to the surface. The PEA conceptual open pit and economic analysis
excludes the Contact Zone, Santo Nino and Cerro Coloradito resources
which are included in the above table.
The Contact Zone resources, not incorporated in the PEA, contains
consistent Tungsten mineralization which is currently the subject of
additional studies aimed at definition of preliminary economic
parameters to be integrated in future assessment of the La Joya Project.
PEA POTENTIAL PRODUCTION
The Whittle Pit analysis examined the NPV of 41 potential pits
utilizing a 5,000 tpd operational capacity. The optimum pit is #31 with
the highest NPV(see Table below) producing a 15.8 years LOMP, but it did
not meet the criteria established for a Starter Pit with low strip
ratio (less than 3:1) and reasonable capital costs. On this basis the
selected pit for mine design & scheduling was Pit # 18.
* 41 Optimized pit shells have been generated by keeping the
parameters used for the Whittle optimization constant (Operating Costs,
Metallurgical Recoveries, Pit Slope Angles and Discount Factor) and by
varying the Revenue using a range of metal prices illustrated in the
table above.
The optimal mine scheduling incorporates, mining ore and waste in
the year-1 grade optimization and stockpiling of material for
reprocessing during the project life. is The production scheduling (Mill
Feed Tonnes & grades) is illustrated as follows:
The 5,000 tpd processing plant will be comprised of crushing,
milling and standard flotation facilities with production of a
silver-copper concentrate as well as a gold-silver leaching circuit for
re-treatment of tailings. The PEA adopted as a guideline a mitigation of
environmental and social impact by minimizing the footprint of all
proposed operational facilities in the region.
PEA OPPORTUNITIES AND FUTURE STUDIES
Several opportunities are identified that could significantly
enhance the economic return outlined in the PEA, including the
following:
- The current Inferred Resources at La Joya provide opportunity for significant project expansion,
- Mineralization at La Joya is open in most directions with
excellent potential to further increased resources. Further infill and
expansion drilling is recommended to reclassify resources at a
Pre-Feasibility Study level,
- Additional and detailed metallurgical test work will be completed
aiming to optimize the metallurgical flow sheet and potentially improve
metal recoveries,
- Review and optimization of the mining schedule could potentially
provide opportunities for reduction in waste and haulage costs which
could decrease capital and operating mining costs,
- This PEA does not address the potential for recovery of several
other identified potential products including tungsten, molybdenum,
lead, zinc, and tin which may have significant value. Further work is
recommended, and
- Several other targets have been identified on the plus 10,000
hectare concession that remain to be explored for potential new
discoveries.
The Qualified Persons for this Technical Report and who have
reviewed and approved the contents of this news release are Mark Horan,
M.Sc., P.Eng., James Barr, P.Geo., Scott Martin, P.Eng. and Graham
Wilkins, P.Eng. from the consulting firm of EBA, a Tetra Tech Company,
and Ting Lu, M.Sc., P.Eng., Hassan Ghaffari, MASc., P.Eng., Sabry
Abdel-Hafez, PhD., P.Eng. and Nick Michael from Tetra Tech. The
Technical Report for the PEA will be filed on SEDAR with 45 days of this
release.
SilverCrest Mines Inc. (TSX VENTURE:SVL)(NYSE MKT:SVLC)
is a Canadian precious metals producer headquartered in Vancouver, BC.
SilverCrest's flagship property is the 100%-owned Santa Elena Mine,
located 150 km northeast of Hermosillo, near Banamichi in the State of
Sonora, México. The mine is a high-grade, epithermal silver and gold
producer, with an estimated life of mine cash cost of US$8 per ounce of
silver equivalent (55:1 Ag: Au). SilverCrest anticipates that the 2,500
tonnes per day open pit heap leach facility at the Santa Elena mine
should recover approximately 625,000 ounces of silver and 33,000 ounces
of gold in 2013. Major expansion and construction of a 3000 tonnes per
day conventional mill facility is underway to significantly increase
metals production at the Santa Elena Mine (open pit and underground) by
2014. Exploration programs continue to make new discoveries at Santa
Elena and also have rapidly advanced the definition of a large
polymetallic deposit at the La Joya property in Durango State with
stated resources nearing 200 million ounces of Ag equivalent.
FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking statements" within the
meaning of Canadian securities legislation and the United States
Securities Litigation Reform Act of 1995. Such forward-looking
statements concern the Company's anticipated results and developments in
the Company's operations in future periods, planned exploration and
development of its properties, plans related to its business and other
matters that may occur in the future. These statements relate to
analyses and other information that are based on expectations of future
performance, including silver and gold production and planned work
programs. Statements concerning reserves and mineral resource estimates
may also constitute forward-looking statements to the extent that they
involve estimates of the mineralization that will be encountered if the
property is developed and, in the case of mineral reserves, such
statements reflect the conclusion based on certain assumptions that the
mineral deposit can be economically exploited.
Forward-looking statements are subject to a variety of known and
unknown risks, uncertainties and other factors which could cause actual
events or results to differ from those expressed or implied by the
forward-looking statements, including, without limitation: risks related
to precious and base metal price fluctuations; risks related to
fluctuations in the currency markets (particularly the Mexican peso,
Canadian dollar and United States dollar); risks related to the
inherently dangerous activity of mining, including conditions or events
beyond our control, and operating or technical difficulties in mineral
exploration, development and mining activities; uncertainty in the
Company's ability to raise financing and fund the exploration and
development of its mineral properties; uncertainty as to actual capital
costs, operating costs, production and economic returns, and uncertainty
that development activities will result in profitable mining
operations; risks related to reserves and mineral resource figures being
estimates based on interpretations and assumptions which may result in
less mineral production under actual conditions than is currently
estimated and to diminishing quantities or grades of mineral reserves as
properties are mined; risks related to governmental regulations and
obtaining necessary licenses and permits; risks related to the business
being subject to environmental laws and regulations which may increase
costs of doing business and restrict our operations; risks related to
mineral properties being subject to prior unregistered agreements,
transfers, or claims and other defects in title; risks relating to
inadequate insurance or inability to obtain insurance; risks related to
potential litigation; risks related to the global economy; risks related
to the Company's status as a foreign private issuer in the United
States; risks related to all of the Company's properties being located
in Mexico and El Salvador, including political, economic, social and
regulatory instability; and risks related to officers and directors
becoming associated with other natural resource companies which may give
rise to conflicts of interests. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in
the forward-looking statements. The Company's forward-looking statements
are based on beliefs, expectations and opinions of management on the
date the statements are made. For the reasons set forth above, investors
should not place undue reliance on forward-looking statements.
The information provided in this news release is not intended to be
a comprehensive review of all matters and developments concerning the
Company. It should be read in conjunction with all other disclosure
documents of the Company. The information contained herein is not a
substitute for detailed investigation or analysis. No securities
commission or regulatory authority has reviewed the accuracy or adequacy
of the information presented.
N. Eric Fier
N. Eric Fier, President and COO
SILVERCREST MINES INC.
Contact:
SilverCrest Mines Inc.
Fred Cooper
(604) 694-1730 ext. 108
Toll Free: 1-866-691-1730
(604) 694-1761
info@silvercrestmines.comwww.silvercrestmines.com
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(as defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
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of $0.03, up from $0.01 per share in the previous period.
