Discovery Reports Preliminary Economic Assessment on Cordero with After-Tax NPV of US$1.2 B, IRR of 38% and Payback of 2.0 Years

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Overig advies 01/12/2021 09:01
- A video presentation that accompanies this release can be found at:
https://youtu.be/bmNYuEVzb88

November 30, 2021, Toronto, Ontario - 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 90th 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 90th 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:

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:

see & read more on
https://discoverysilver.com/news/discovery-reports-preliminary-economic-assessment-on-cordero-with-after-tax-npv-of-us-1.2-b-irr-of-38-and-payback-of-2.0-years/



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