Each one in plain English, with the numbers worked through for a shareholder.
28 Aug 2015resource reserve update● NeutralMajor
A resource estimate for the Cruz de Mayo silver project - two concessions totalling 452 hectares in Sonora, 35 km from Santa Elena - prepared jointly for SilverCrest Mines and SilverCrest Metals. The report states plainly that the property is being transferred to SilverCrest Metals as part of the First Majestic transaction, and that SilverCrest Metals shares will be distributed to SilverCrest shareholders as a standalone company. One concession carries a 2.5% net smelter royalty capped at $1 million.
Pulled El Cholugo forward from the 2016 plan into the 2015 mine plan after underground work found high grades over useful widths. The zone's Alejandra and El Cholugo Dos veins run 1 to 15 m wide over about 200 m of strike and 150 m of height, with drifting under way on three levels and geometry suited to long-hole stoping.
The updated pre-feasibility study replaced the reserves mined and renewed an eight-year life from January 2015 on lower metal prices. Probable reserves of 7.45 million tonnes at 1.23 g/t gold and 78.4 g/t silver hold 295,000 ounces of gold and 18.76 million ounces of silver - down only 10% and 5% after nearly two years of mining and a cut in the gold price assumption from US$1,450 to US$1,300. Base-case pre-tax net present value US$144 million at a 5% discount, US$119 million after tax, on US$555 million of revenue and cash costs of US$11.59 per silver-equivalent ounce. A newly defined El Cholugo reserve of 252,000 tonnes at 2.58 g/t gold and 147.0 g/t silver was added; indicated and inferred resources fell sharply as material converted to reserve.
Twenty-one surface holes (9,393 m) tested the eastern and western extensions of the Santa Elena Main Mineralized Zone and the adjacent Tortuga and El Cholugo zones, confirming continuity beyond the resource model limits. Results fed the reserve and resource update released the following day.
First drilling ever on the Ermitano concessions - nine shallow holes, about 2,656 m - found near-surface gold and silver at the El Durazno target, which management read as a possible low-grade oxide open-pit source. Its value is that Santa Elena's leach pad sits nearby, so a small low-grade deposit could still pay.
Twenty-five underground infill holes (2,856 m) confirmed the resource model in the first production stopes: 13 m at 2.54 g/t gold and 307.0 g/t silver, including 0.7 m at 18.25 g/t gold and 2,900 g/t silver.
Twenty-two closely spaced underground holes (1,590 m) confirmed continuity and grade in the Main Mineralized Zone ahead of the first planned production stopes - 11.6 m at 5.83 g/t gold and 232.5 g/t silver, including 1.15 m at 21.7 g/t gold and 572 g/t silver.
The La Joya preliminary economic assessment technical report itself, dated 5 December 2013, filed with ten qualified-person consents. Same study as the 21 October announcement and the 23 December filing notice - three rows in this record cover one piece of work.
Filed the La Joya preliminary economic assessment report with Canadian regulators; results unchanged from the 21 October announcement. Paperwork behind an already-announced study.
A preliminary economic assessment for a La Joya starter pit - a low-strip open pit with a nine-year life feeding a 5,000 tonne-a-day plant - showing a base-case pre-tax net present value of US$133 million at a 5% discount and a 30% internal rate of return. Deliberately scoped small and cheap for the market conditions, with expansion left as an option.
Results for the 47 holes that missed the cut-off for the pre-feasibility study - 15 m at 4 g/t gold and 243 g/t silver including 2 m at 17.5 g/t gold and 664 g/t silver - expanding El Cholugo and El Cholugo Dos and finding a third new zone, Tortuga. Of the 181-hole programme, 134 holes went into the reserve; the deposit was still open laterally and at depth.
Filed the full NI 43-101 technical report behind the 25 July pre-feasibility announcement, effective 30 April 2013. Paperwork behind an already-announced study.
The Santa Elena expansion pre-feasibility study added eight years of mine life from January 2014: US$684.9 million of revenue from 12.11 million ounces of silver and 262,739 ounces of gold, US$282.2 million of operating costs at an average cash cost near US$11 per silver-equivalent ounce, US$87.8 million of capital, and a base-case pre-tax net present value of US$243.7 million at a 5% discount with an 88% internal rate of return, on US$1,450 gold and US$28 silver.
The payoff from eighteen months of delineation drilling: Santa Elena probable reserves - underground, open pit and leach pad - restated at 8.2 million tonnes grading 74.9 g/t silver and 1.24 g/t gold for 19.7 million ounces of silver and 327,430 ounces of gold, up 103% in silver and 50% in gold. Indicated resources outside reserves rose 127% in silver and 99% in gold to 7.9 million ounces and 116,000 ounces.
Since mid-2012, 132 holes at Santa Elena had delineated the deposit over 1,200 m of strike and to 600 m depth, with 21.6 m at 1.46 g/t gold and 169.1 g/t silver including 0.60 m at 5.2 g/t gold and 1,840 g/t silver in this batch. Management expected the coming reserve estimate to extend mine life well past the 5.5 years originally set for the heap leach.
Filed the La Joya technical report supporting the January resource statement, adding preliminary metallurgy that pointed to a copper-silver-gold concentrate grading over 30% copper. Resource figures unchanged from 29 January: 198.6 million ounces silver-equivalent at a 15 g/t cut-off, 159.8 million at 30 g/t, 100.8 million at 60 g/t.
One hundred and eleven of 114 delineation holes done at Santa Elena: 25.8 m at 1.24 g/t gold and 187.6 g/t silver including 1.9 m at 2.34 g/t gold and 1,281.9 g/t silver, a second new zone (El Cholugo Dos) below the Main Mineralized Zone, and that zone extended about 300 m past the resource boundary. The underground decline had passed 1,200 m, against an open-pit heap leach life of only 6.5 years.
Updated La Joya inferred resource: 198.6 million ounces silver-equivalent at a 15 g/t cut-off, 159.8 million at the 30 g/t base case, and 100.8 million at 60 g/t, plus 75.1 million pounds of tungsten at a 0.05% cut-off. The 60 g/t portion - 27.9 million tonnes at 112 g/t silver-equivalent - was flagged as a potential starter pit for a preliminary economic assessment. Up from the 101.9 million ounce resource the 2012 drilling started from.
More Santa Elena bonanza intercepts - 13 m at 1.6 g/t gold and 324.8 g/t silver including 1 m at 5.07 g/t gold and 2,840 g/t silver, plus a 1.7 m intercept at 42.59 g/t gold and 1,460 g/t silver - and the naming of the new El Cholugo zone. Four of the high-grade hits sit on or beyond the existing resource boundary.
Bonanza grades below the pit at Santa Elena: 15.6 m at 23.9 g/t gold and 307.9 g/t silver, including 2.3 m at 157.3 g/t gold and 1,610.5 g/t silver, and a new high-grade zone sub-parallel to and below the Main Mineralized Zone being mined. Eighty-seven of a planned 100 holes complete. This is the result that turns the underground expansion from an idea into a plan.
The final 15 holes of La Joya Phase II returned 80 m at 78.8 g/t silver, 0.31 g/t gold and 0.5% copper - 137 g/t silver-equivalent - with intervals up to 251 m and silver-equivalent values reaching 411.5 g/t. Phase II closed with the trend at about 2.5 km by 700 m and the Coloradito and Santo Nino targets outlined.
Seventy-nine of a planned 100 Santa Elena holes done, converting indicated and inferred resources towards probable reserves and testing underground extensions. Best intercepts were 30.7 m at 1.61 g/t gold and 169.6 g/t silver (SE-12-54) and 16 m at 2.15 g/t gold and 166.9 g/t silver (SERC-12-36), all at near-true thickness.
Fifteen more La Joya holes returned 45.0 m at 135.5 g/t silver, 0.11 g/t gold and 1.14% copper - 240 g/t silver-equivalent - with mineralised intervals from 15.2 m to 288.7 m and many intercepts close to surface. Testing continued on the southern trend, the Contact Zone and the Santo Nino target.
Twenty-one holes of a planned 110-hole programme at Santa Elena, aimed at confirming remaining open-pit reserves, testing below the pit and re-categorising underground resources for the coming pre-feasibility study. Best results were 52 m at 2.19 g/t gold and 95.5 g/t silver (SERCP-9V, apparent width) and 16 m at 6.18 g/t gold and 103.4 g/t silver (SERCP-11A, true width).
Fifteen more La Joya holes plus surface sampling along newly cut drill roads returned 157 m at 94.1 g/t silver-equivalent and surface values of 72.6 to 187.6 g/t over sample lengths of 39.7 to 99 m, extending the trend to about 2.5 km by 700 m. Phase II was widened to 90 holes and 20,000 m, and the near-surface grades raised the idea of an open-pit starter operation.
Eleven more Phase II holes at the La Joya silver project in Durango returned 50 m at 151.8 g/t silver-equivalent and pushed the Main Mineralized Trend out to about 2 km long by 700 m wide, beyond the ground holding the existing 101.9 million ounce silver-equivalent inferred resource. La Joya is the exploration half of the company; Santa Elena is the mine.
