Aya Gold & Silver Reports First Quarter 2022 Results; Maintains Guidance, Operations on Track

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13/05/2022 16:23
Montreal, Quebec, May 13, 2022 - Aya Gold & Silver Inc. (TSX: AYA, OTCQX: AYASF) (“Aya” or the “Corporation”) is pleased to report interim financial and operational results for the first quarter ended March 31, 2022. All amounts are in US dollars unless otherwise stated.


Produced 308,345 ounces (“oz”) of silver (“Ag”), a 21% decrease from Q1-2021, which is a result of the lower grade mined as per the planned mining sequence
Revenue of $9.2 million, a 7% increase from Q1-2021 driven by Ag oz withheld in Q4-2021 that were sold in Q1-2022 at a higher Ag price
Processed 62,001 tonnes (“t”) of ore, a 28% increase from Q1-2021
Mill recoveries reached 80.4%, compared to 82.8% in Q1-2021
Silver sales of 406,808 oz, a 16% increase from Q1-2021
Head grade of 192 grams per ton (“g/t”) Ag, which will improve in line with guidance as development increases and mining of higher-grade stopes restarts
Successful drill program at Zgounder
Delivered a maiden reserve estimate of 8.59 million tonnes (“Mt”) grading 257 g/t for 70.9 million ounces (“Moz”) Ag
Initial drill results extended eastern strike by 50 meters (“m”) and increased continuity at depth Over 4,100m of diamond drill hole (“DDH”) drilling completed on Imiter bis with results pending ESG initiatives with long-life impact
Launched a five-year community investment and entrepreneurship program
Entered into a partnership to implement zero-emission power at Zgounder by 2024 through an interconnection agreement with ONEE and plan to sign a renewable power purchase agreement
Progress on Zgounder production expansion
Completed the Zgounder 2,000 tpd expansion Feasibility Study (“FS”) that extends the mine life to 11 years and quadruples post-expansion annual production to +7 Moz Ag
Received Environmental and Social Impact Assessment approval (“ESIA”)
Awarded underground development contracts: 365m of lateral work completed
Completed 75% of the front-end engineering design (“FEED”)
Commenced trading on the OTCQX under the ticker symbol “AYASF”

““We had a slow start to the year as our focus on mining infrastructure, stope accesses, and backfilling historical stopes temporarily impacted our access to high-grade zones. February and March production and grade were less affected. I am pleased with the operational improvements since January and our on-schedule construction start-up, which included delivering on some key construction milestones in the quarter. Overall, Zgounder operations performed well, particularly as we kicked off our mine development program in the quarter,” said Benoit La Salle, President and CEO. “As development progresses, our access to richer ore and greater mining capacity will position us well for delivering 2022 production guidance. Mine development to date is also running to plan, with the FEED tracking slightly ahead of schedule.”

“Exploration at Zgounder continues to return impressive results that we expect to include in the updated resource statement later this year. We are excited to be completing geophysical surveys on our three key exploration properties and start adding value for all stakeholders through our next phase of exploration drilling. Combined with our clean balance sheet and strong development pipeline, we are just beginning our journey as one of the largest primary-silver producers.”.”

Q1-2022 Operational and Financial Highlights
Key Performance Metrics
Q1-2022 Q1-2021 Variation ’22 vs ’21

Ore Processed (tonnes) 62,001 48,472 28%
Average Grade (g/t Ag)192 296 (35%)
Mill Recovery (%) 80.4 82.8 (3%)
Silver Ingots Produced (oz) 123,336 190,621 (35%)
Silver in Concentrate Produced (oz) 185,009 198,511 (7%)

Total Silver Produced (oz) 308,345 389,132 (21%)

Silver Ingots Sold (oz) 199,500 162,50023%
Silver in Concentrate Sold (oz) 207,308 189,519 9%

Total Silver Sales (oz) 406,808 352,019. 16%

Avg. Net Realized Silver ($/oz) 22.52 24.26 (7%)
Avg. Silver Production Cost ($/oz) 17.11 11.26 52%

Revenues 9,162,864 8,541,273 7%
Cost of Sales 6,961,784 3,963,251 76%

Gross Margin 2,201,080 4,578,022 (52%)
Operating (Loss) Income (250,396) 2,458,478 (110%)
Net (Loss) Income (1,962,249) 819,670 (339%)

Operating Cash Flows (792,166) 4,223,564 (119%)

Cash and Restricted Cash 76,594,171 31,820,687 141%

Earnings (Loss) per Share – basic (0.019) 0.009
Earnings (Loss) per Share – diluted (0.019) 0.008

Q1-2022 Operations Review

The focus in the first quarter of 2022 was on commencing development of the underground mine infrastructure to support the expansion. Initial development was completed on schedule with over 365m of permanent infrastructure completed and a new main portal opened. Several road segments were maintained, the base camp was refurbished, and the new administrative offices were fully completed. Additionally, a portion of the project construction team was mobilized on site to prepare the site for construction.

As mine development progresses and the new block model is incorporated in the planning, the mine operation sequencing has been updated to ensure that the ramp-up is aligned with the expansion project timeline.

Mine & Milling Operations

During the first quarter, 308,345 oz were produced at a global silver recovery of 80.4%. The cyanidation plant operated at 96% availability, and the flotation plant at 91.5%, resulting in a total milling rate of 689 tpd. A total of 62,001t were milled at a silver grade of 192 g/t. The lower ounces produced compared to Q1-2021 was directly related to lower grade mined as per the mine sequencing plan for the year and to a lack of ore on the ROM pad as the mining rate is equal to the processing rate.

Mine sequencing in the first quarter was planned to prioritize mining development infrastructure. Mine grade is expected to improve through the year as the recent block model is incorporated in the mine planning, new stopes are opened, and definition drilling accelerates. Delivery of additional mining equipment is expected in Q2-2022 that will provide Aya with more mining capacity than milling capacity. This will allow the Corporation to build up an ore stockpile beginning in Q3-2022.

Capital Projects

Two significant capital infrastructure projects were completed during the first quarter: the new site administrative offices and the 60,000m3 water retention pond, the latter of which will benefit from the ongoing wet season. This water retention pond will secure Aya’s current water needs in the dry season. Improvement is ongoing at the camp, including sanitary installations for camp wastewater that will be used to irrigate the site vegetation.

A new jumbo was received for commissioning in Q2-2022. Furthermore, a 70t crane was delivered to facilitate plant maintenance that will also be useful during the upcoming expansion project. Surface roads between mine levels were improved to sustain interlevel production.

Zgounder Development

On February 22, 2022, Aya completed an expansion FS to grow Zgounder production from 700 tpd to 2,700 tpd capacity (see press release dated February 22, 2022) that includes a maiden reserve estimate of 8.59 Mt at an average grade of 257 g/t for 70.9 Moz Ag . The initial estimated capital expenditures are $139.4 million, and the first Ag pour is planned in Q1-2024. Post-expansion, the mine is expected to produce 7.9 Moz Ag for an initial life of mine of 11 years at an all-in sustaining cost (“AISC”) of $9.58/oz. Project economics, using a Ag price of $22 per oz, indicate an after-tax 5% present value (“NPV”) of $373 million and an after-tax Internal Rate of Return (“IRR”) of 48%. At an Ag price of $23.50, the NPV increases to $433M and the IRR to 54%.

In the first quarter, Aya began advancing the Zgounder expansion towards construction start-up by Q3-2022, notably by achieving the following items:

Completed 75% of the FEED, on track for delivery in Q2-2022
Simplified the general flowsheet of the process plant through additional metallurgical test work
Issued requests for quotation for 13 long-lead items to pre-approved vendors
Launched ball mill tender package
Received ESIA approval
Awarded underground development to two contractors who mobilized on site
Completed 365m of underground work
Continued hiring of key personnel for the construction phase

Zgounder Expansion Projected Timeline (as of April 30, 2022)

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