SilverCrest Announces Positive Preliminary Economic Assessment for La Joya Base Case Capital Value Before Tax Deduction (5%) of 133 Million US $ and Internal Rate of Interest of 30% at "Starting Pit"
VANCOUVER (BRITISH COLUMBIA), 21. October 2013. SilverCrest Mines Inc. ("SilverCrest" or the "Company") is pleased to announce that it has completed the Preliminary Economic Assessment ("PEA") for its La Joya ("La Joya") silver-copper-gold project in Mexico State of Durango has completed. Summaries of the current resources used for the PEA, a preliminary life plan of the mine ("LOMP"), operating costs, investment costs and economic data of the project are given in the tables below. A NI 43-101 "Technical Report" is prepared by EBA Engineering Consultants ("EBA"), a Tetra-Tech company, and is governed by 23. September 2013. This report will be submitted within 45 days after this press release. All currencies are in US $ unless otherwise stated.
President and COO N. Eric Fier said: "The positive outcomes of this PEA will allow us to plan the next steps, define achievable goals, and identify further studies and analysis to optimize the economics of the project. We have involved local communities at this early stage of the La Joya project, with a particular focus on building long-term and sustainable partnerships with all stakeholders. "
The focus of the PEA is on the first phase of development of La Joya ("start pit") as a low surface mining open pit mine with a mine life ("LOMP") of nine years and expansion opportunities. This approach offers attractive economic results using conservative metal price estimates and lower investment costs, which are more attractive in the current market. The conceptual open pit operation would be combined with a conventional mill and flotation / leaching facility with a capacity of 5.000 tonnes per day (tpd) to produce high grade silver-copper concentrate with gold ore. The launch pit will have a conceptual average annual production of 3,9 million ounces of silver equivalent ("AgEq") * or approximately five million ounces of silver equivalent * in the first four years of operation. An extension of the launch pit would be considered, which would include additional resources within a larger pit.
* The Company notes that the PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to provide economic considerations that would allow their classification as mineral reserves. There is also no certainty that the PEA will be realized. Mineral resources are not mineral reserves that have not demonstrated economic value.
HIGHLIGHTS OF THE PRELIMINARY ECONOMIC ASSESSMENT
The PEA includes base case metal prices of 22 $ / ounce of silver, 3 $ / pound of copper and 1.200 $ / ounce of gold (historical five-year average). The highlights of the economic base case estimates of the launch pit are as follows:
• Net present value before tax deduction (5%) of 133 million $ and internal interest rate flow of 30,5%
• Net present value before tax deduction (5%) of 156 million $ and internal interest rate flow of 34% using current metal prices of 21,93 $ / ounce of silver, 1.316,25 $ ounce of gold and 3,27 $ / pound of copper (as of: 18, October 2013).
• Net present value after tax deduction (5%) of 93 million $ and internal interest rate flow of 22%
• Payback period of about two years after initial investment
• Investment costs before production of 141 million $, including reserves of 17 million $
• Estimated maintenance costs of 8 million $
• Average 10 $ / ounce silver equivalent * operating costs in the first three years or 13 $ / ounce silver equivalent in the nine years of the launch pit
• Non-discounted operating cash flow before tax deduction and total investment cost of 342,5 million $ (average 38 million $ per year, 60 million $ in the first four years)
• LOMP of nine years with 15,5 million tons containing 50 g / t silver, 0,33% copper and 0,19 g / t gold
• Mine lifetime production plan of estimated 34,8 million payable ounces of silver equivalent, consisting of 19 million ounces of silver, 53.000 ounces of gold and 93 million pounds of copper in the form of concentrate
• Production of attractive, high-grade silver-copper concentrate (average 35% copper and 4 kg / t silver) with by-product gold
* The silver equivalent in the PEA includes silver, gold and copper, but not lead, zinc, molybdenum and tungsten. The silver to gold ratio is 54,4: 1 and the 7,3: 1 copper to silver ratio, based on historical five-year metal price trends of 22 US $ / ounce silver, 1.200 US $ / ounce gold and 3 US $ / pound copper , The metallurgical recoveries are included in the economic analysis (see summary of PEA parameters in the table below).
ECONOMIC ANALYSIS OF PEA
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* The silver equivalent in the PEA includes silver, gold and copper, but not lead, zinc, molybdenum and tungsten. The silver to gold ratio is 54,4: 1 and the 7,3: 1 silver to copper ratio, based on historical five-year metal price trends of 22 US $ / ounce silver, 1.200 US $ / ounce gold, and 3 US $ / pound copper , The metallurgical recovery rate is included as recoverable metal.
The PEA for the launch pit reports strong revenues in the first four years of operation and a decline in revenues over the next two years due to the decline in cargoes. It is expected that additional drilling and optimization of the mine plan may improve these results due to the presence of high grade material in some sections of the deposit that could eventually be integrated into the mine plan.
Sensitivity analyzes were prepared by adjusting commodity prices; the results are shown in the graph below.
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The economic data of the starting pit are more sensitive to silver and copper prices, as these account for 55 or 36% of total sales in the base case scenario. Any increase in the metal price of the base case by 10% would change the capital value before tax deduction by about 60 million $ and the internal rate of interest by about 8%.
INVESTMENT COSTS OF PEA
EBA prepared detailed cost estimates for the mine and processing plant based on preliminary tenders, contract mining and similar projects recently completed in Mexico. The total investment cost before tax deduction is estimated at 141 million US $, including reserves of 17 million $ using a launch pit mine contractor. This includes the development of the project over a period of 1,5 years, including a reduction of one year before the start of operations. The La Joya concession, with a nearby international airport, expressways, railways, power lines, several active mines and labor communities, has an excellent infrastructure to keep investment costs within reasonable limits. The investment costs of PEA before production are given below.
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As part of PEA's economic analysis, projections of $ 8 million in working capital and 6 $ million in mine clearance have been made.
PARAMETERS OF PEA
The following operational and economic parameters have been applied to the NSA model of the PEA for the silver-copper-gold concentrate and to the gold-silver Doré leaching model for mountains.
The PEA did not apply NSR penalty for harmful metals to the concentrate. The study assumes that the silver-copper concentrate will be shipped overseas from a port in Mexico. This is the route most commonly used by concentrate producers near La Joya.
PROCESSING AND METALLURGY
Recent metallurgical studies indicate that a traditional flotation cycle may recover high-grade gold-silver-copper concentrate. Depending on the type of mineralization and the treatment used in the closed-cycle ALS flotation tests, the preliminary metal recovery rates of the third cleaner concentrates of manto and structural mixtures vary between 82,7 and 86,7% for copper, between 76,7 and 84,3% for silver, and between 18,2 and 42,4 % for gold. A gold leaching cycle with a potential recovery of 90% gold and silver from the mountains to the production of metal doré was also considered in the PEA.
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The bulk silver-copper concentrates of the preliminary results produced by manto and structural blends have certain elements that are potentially harmful to melting, such as arsenic, antimony or bismuth. Adding cyanide during the cleaner flotation phase reduces the arsenic content to acceptable levels without sacrificing copper, silver and gold recovery. Further testing is underway to determine the distribution, concentration and potential reduction of antimony and bismuth.
RESOURCES AT LA JOYA
The La Joya mineral deposit is defined as a silver-copper-gold skarn with isolated to semi-massive sulphide (bornite, chalcopyrite) with three basic ore types: mantos, structures and contact zone. The updated mineral resource estimates for the La Joya project revealed 126,7 million tonnes of inferred resources of 23,5 g / t silver, 0,19% copper and 0,17 g / t gold (198,6 million ounces silver, 533 million pounds copper and 95.900 ounces of gold). These resource estimates were published in a press release from the 29. January 2013 reported, are in a "technical report" from the 27. March 2013, entitled "Updated Resource Estimate for the La Joya Property, Durango, Mexico", and form the basis of the PEA.
To view the full press release please follow the link:
http://www.irw-press.com/dokumente/SilverCrest_211013_Deutsch.pdf
* The silver equivalent of the 27. March 2013 submitted resource estimate includes silver, gold and copper, but not lead, zinc, molybdenum and tungsten. The silver to gold ratio is 50: 1, the 86: 1 silver to copper ratio, based on historical five-year metal price trends of 24 US $ / ounce silver, 1.200 US $ / ounce gold, and 3 US $ / pound copper , A metallurgical recovery rate of 100% is assumed. Classified by EBA, a Tetra-Tech company, according to NI 43-101 and the CIM definitions for resources. All numbers are rounded. Inferred resources have been estimated on the basis of geological indications and limited sampling and must be considered less trustworthy than measured and indicated resources. Note that the silver equivalent calculation due to the change in metal prices differs from the PEA economic analysis. The mineralization limits used in the interpretation of the geological model and in the resource estimate are based on a cut-off grade of 15 g / t silver equivalent using the above metal price ratios.
At the conceptual initial development phase at La Joya with a nine-year launch pit, a derived resource with a cut-off grade of 60 g / t silver equivalent will be applied to manto and structural zones that are near-surface mineralized zones. However, PEA's conceptual opencast and economic analysis does not include the contact zone resources of Santo Nino and Cerro Coloradito, which are included in the table above.
The contact zone resources not included in the PEA host consistent tungsten mineralization which is currently the subject of further studies to define the preliminary economic parameters that will be considered in future assessments of the La Joya project.
POTENTIAL PRODUCTION OF PEA
The Whittle Pit analysis examined the capital value of 41 potential pits using an operating capacity of 5.000 tpd. The optimal pit is # 31, which has the highest capital value (see table below) and a production of 15,8 years. However, this did not meet the specified criteria for a starting pit with low Abraumverhältnis (less than 3: 1) and reasonable investment costs. On this basis, mine # 18 was selected for mine planning.
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The optimal mine planning involves the mining of ore and final material in the first year of grade optimization as well as the retention of material for reprocessing during the life of the project. The production plan (tons and contents of mill feed) is given below:
The processing plant, with a capacity of 5.000 tpd, will consist of crusher, processing and conventional flotation plants for the production of silver-copper concentrate and a gold-silver leaching cycle for re-processing the mountains. The PEA has adopted a policy to mitigate environmental and social impacts by minimizing the footprint of all facilities in the region.
POSSIBILITIES AND FUTURE STUDIES OF PEA
Several options have been identified that could significantly increase the economic return described in the PEA, such as:
• The current inferred resources at La Joya provide the opportunity for a significant expansion of the project.
• The mineralization at La Joya is open in most directions and has great potential for further resource increases. Further infill and extension drilling is recommended to classify resources for a preliminary feasibility study.
• Further detailed metallurgical test work will be performed to optimize the metallurgical flow scheme and possibly improve metal recovery rates.
• The revision and optimization of the mine plan could provide opportunities to reduce end-of-life and production costs, which in turn could reduce capital and operating costs.
• This PEA does not include the potential promotion of several other identified products, including tungsten, molybdenum, lead, zinc and tin, which could be of significant value. Further work is recommended.
• The 10.000-hectare concession has identified several other targets that need to be investigated for possible new discoveries.
The "Qualified Persons" to this "Technical Report" who 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., of the EBA consulting firm, 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 of Tetra Tech. The "technical report" for the PEA will be submitted to SEDAR within 45 days.
SilverCrest Mines Inc. (TSX-V: SVL; NYSE MKT: SVLC) is a Canadian precious metal producer headquartered in Vancouver, British Columbia. SilverCrest's flagship project is the company's Santa Elena Mine, located 150 km northeast of Hermosillo near Banamichi, in the Mexican state of Sonora. The Mine is a high grade epithermal silver and gold producer with an estimated investment cost of 8 US $ per ounce of silver equivalent (open pit heap leach) over the life of the mine (55: 1 silver to gold ratio). SilverCrest estimates that around 2013 ounces of silver and 2.500 ounces of gold will be extracted in 725.000 offshore Santa Elena, with 30.000 tonnes per day tonnage processing and heap leach processing. Extensive expansion and construction of a traditional processing plant with 3000 tons of daily capacity is underway to significantly increase 2014 metal production at the Santa Elena Mine (above and below ground). Exploration continues to find new discoveries at Santa Elena, and the La Joya property in Durango has relatively quickly defined a large polymetallic deposit that hosts resources equivalent to nearly 200 million ounces of silver equivalent.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" under the securities laws of Canada and the United States Securities Litigation Reform Act of 1995. Such forward-looking statements relate to the Company's planned future results and developments, the planned exploration and development of the La Joya Project, and plans for business and other matters that may arise in the future. These statements relate to analyzes and other information based on expectations of future performance under the PEA, including silver, copper and gold production, and planned work programs at La Joya. Statements regarding reserves and mineral resource estimates could also be forward-looking statements, provided they include estimates of the mineralization found when the La Joya property is developed, and such statements, in the case of mineral reserves, reflect a conclusion based on certain assumptions, according to which the mineral deposit can be economically mined.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to limited: risks associated with price fluctuations of precious and base metals; Risks associated with currency fluctuations (in particular the Mexican peso, the Canadian dollar and the US dollar); Risks associated with the dangers of the mining industry, including circumstances or events beyond our control, as well as operational or technical difficulties in mineral exploration, development or mining operations; the uncertain ability of the company to raise funds and finance the development of the La Joya project in accordance with the PEA; Uncertainties related to actual investment costs, operating costs, production and economic returns and uncertainty as to whether development works will result in a profitable mining operation at La Joya; Risks related to the fact that mineral resources are only estimates based on interpretations and assumptions that in other circumstances could lead to lower mineral production and a decline in the quantities or levels of mineral resources; Risks associated with regulatory requirements and the receipt of required licenses and permits; Risks associated with the business in compliance with environmental laws and regulations that could lead to higher costs and thus affect our operations; Risks associated with the La Joya Property in respect of previous unregistered agreements, transfers or claims and other property disputes; Risks associated with inadequate insurance or the ability to take out such insurance; Risks associated with potential litigation; Risks associated with the global economic situation; Risks associated with the location of the La Joya property in Mexico in terms of political, economic, social and regulatory instability. Should these risks and uncertainties materialize or should assumptions underlying them prove to be incorrect, actual results could differ materially from those described in the forward-looking statements. The Company's forward-looking statements are based on management's expectations and opinions at the time these statements were made. For the reasons mentioned above, investors should not rely on forward-looking statements.
The information contained in this news release does not constitute a comprehensive record of all facts and developments relating to the company. It should be read in conjunction with all other published company records. The information contained herein does not replace detailed research or analysis. The adequacy or accuracy of this information has not been tested by any securities commission or regulatory authority.
"N. Eric Fier "
N. Eric Fier, President & COO
SILVERCREST MINES INC.
Contact: Fred Cooper
Phone: (604) 694-1730 DW 108
Fax: (604) 694-1761
Tel: 1-866-691-1730 (toll-free)
Email: ppgad@pucrs.br
Website: www.silvercrestmines.com
Suite 501 - 570 Granville Street
Vancouver, BC Canada V6C 3P1
The TSX Venture Exchange and its regulators (referred to in the Articles of Association of the TSX Venture Exchange as Regulation Services Providers) accept no responsibility for the adequacy or accuracy of this announcement.
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