Las Chispas

The Las Chispas property is located approximately 180 kilometres northeast of Hermosillo, Sonora, Mexico. The community of Arizpe (estimated population 2,000) is located approximately 12 kilometres to the north of the property. The property consists of 28 concessions totalling 1400.96 hectares. Currently SilverCrest has 8 drill rigs spinning and are testing discovery/ expansion/ infill targets. Currently only 21 of 45 known veins have been put towards our latest reserve estimate.

FS Economics

Highlights:

All dollar ($) figures are presented in US dollars unless otherwise stated. Base Case metal prices used in this analysis are $1,500 per gold (“Au”) ounce (“oz”) and $19.00 per silver (“Ag”) oz. These prices are based on long-term consensus average prices. A silver equivalent (“AgEq”)1 ratio of 86.9:1 (Au:Ag) applies throughout this news release to Mineral Resources and Reserves, production and all-in sustaining cost (“AISC”) per oz. Net free cash flow and AISC are non-IFRS measures. Refer to the Non-IFRS measures section of this news release.

 

Base Case

 AISC ($/oz AgEq) $7.07
 After-tax NPV (5%) (US$ M) 486.3
 IRR 52%
 Payback Period (yrs) 1.0
 Tonnes Processed (k) 3,351.2
 Au Grade (gpt) 4.81
 Ag Grade (gpt) 461
 AgEq Grade (gpt) 879
 Au Recovery (%) 97.6%
 Ag Recovery (%) 94.3%
 Au Production (koz) 503.6
 Ag Production (Moz) 46.6
 AgEq Production (Moz) 90.4
 Total Revenue (US$ M) 1,610.1
 Total Operating Costs (US$ M) 397.1
 Royalties (US$ M) 88.6
 Taxes (US$ M) 214.5
 Initial Capex (US$ M) 137.3
 Sustaining Capex (US$ M) 123.9
 Working Capital (US$ M) 25.6
 Closure Costs (US$ M) 3.4
 Cumulative Net Free Cash Flow (US$ M) 656.4

1 AgEq is based on an Au:Ag ratio of 86.9:1 calculated using $1,410/oz Au and $16.60/oz Ag, with average  metallurgical recoveries of 96% Au and 94% Ag.

2 Based on top 10 producing projects by 2019 silver production with public disclosure on a primary silver basis from S&P Market Intelligence.

3 Based on data from S&P Market Intelligence, comparing to forecasted 2020 AISC for silver producers using the following metal prices: gold: US$1,500/oz, silver: US$19.00/oz, lead: US$0.83/lb and zinc: US$1.03/lb).

 

Mineral Resource and Reserve Estimates

The Mineral Resource Estimates were prepared by Yungang Wu, P. Geo., and Eugene Puritch, P.Eng., from P&E Mining Consultants Inc. (“P&E”) and are provided in Table 3.  Estimates were completed for potential underground mining of in-situ vein deposits at the Las Chispas and Babicanora Areas and for surface extraction of stockpiles from historical and current operations. All drilling, surveying and assay databases were provided by SilverCrest including data up to the cut-off date of October 16, 2020.  Full details for the Mineral Resource Estimate can be found in the Technical Report.

Table 3: Mineral Resource Estimate

Classification  Tonnes  Grade Contained Metal
(k)  Au (gpt) Ag

 

(gpt)

AgEq

 

(gpt)

Au 

 

(koz)

Ag 

 

(koz)

AgEq

 

(koz)

Babicanora Area M+I 2,214.5 7.35 681 1,319 523.2 48,471 93,939
Las Chispas Area Indicated 445.1 4.20 548 913 60.1 7,845 13,065
Total Undiluted Veins M+I 2,659.6 6.82 659 1,251 583.3 56,316 107,004
Historic Stockpiles Indicated 164.2 1.23 108 215 6.5 572 1,135
Total Veins +

 

Stockpiles

M+I 2,823.8 6.50 627 1,191 589.8 56,888 108,139
Babicanora Area Inferred 861.6 5.47 409 884 151.6 11,325 24,496
Las Chispas Area Inferred 378.4 1.80 272 428 21.9 3,308 5,209
Total Undiluted Veins Inferred 1,240.0 4.35 367 745 173.4 14,634 29,705
 

Notes:

  • Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
  • The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  • The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It can be reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
  • The Mineral Resources in the Report were estimated using the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines and 2014 CIM Definition Standards for Mineral Resources & Mineral Reserves.
  • Historical mined areas were removed from the wireframes and block model.
  • AgEq is based on gold to silver ratio of 86.9:1 calculated using US$1,410/oz Au and US$16.60/oz Ag, with average metallurgical recoveries of 96% Au and 94% Ag using information available at the effective date of October 16, 2020.
  • Mineral Resources are inclusive of the Mineral Reserves.
  • All numbers are rounded.

The initial Mineral Reserve estimate was prepared by Carl Michaud, P.Eng., Underground Mining Engineer of G Mining Services Inc. (“GMS”), dated of January 4, 2021.

Table 4: Mineral Reserve Estimate

Classification  Tonnes  Grade Contained Metal
(k) Au

 

(gpt)

Ag

 

(gpt)

AgEq

 

(gpt)

Au

 

(koz)

Ag

 

(Moz)

AgEq

 

(Moz)

Total  Proven  336.5  6.21 552  1,091 67.1 6.0 11.8
Probable  3,014.7  4.65  451  855  451.0 43.7 82.9
Proven + Probable  3,351.2  4.81  461  879  518.1 49.7 94.7
 

Notes: 

  • The Mineral Reserve is estimated using the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines and 2014 CIM Definition Standards for Mineral Resources & Mineral Reserves.
  • The Mineral Reserve is estimated with a variable COG which was calculated by vein width and economic and operating parameters.
  • A government gold royalty of 0.5% is included in the Mineral Reserve estimates.
  • The Mineral Reserve is estimated with a mining recovery of 95%.

History

In 1640, rich silver veins where discovered near Arizpe by soldiers under the command of Pedro de Perra. The property did not receive any notable exploration or production until the late 1800s. From 1880 to 1930, several mines on the property had intermittent production. From public information, approximately 100 million ounces of silver and 200,000 ounces of gold were cumulatively produced from the property. Since 1930, no significant work has been completed on the property.

Las Chispas

During the early 1980s, a local Mexican company reprocessed old waste and tailings dumps from Las Chispas. Processing was by vat leaching with no production records available.

Geology

Geologically, the Las Chispas property consists of a Late Cretaceous – Early Tertiary low sulfidation epithermal system. Host rocks are volcanic tuffs, rhyolites, agglomerates and rhyolite breccias. Andesite dykes are noted in underground workings sub-parallel to mineralized structures.

The Las Chispas Mine is known for its world-class silver mineral specimens including polybasite, stephanite, native silver and pyrargyrite. Specimens are on display in private collections and museums worldwide.

Historical Production

Mineralization occurs in 0.5 to 5 metre wide veins with adjacent stockwork and breccias trending northwest- southeast for 1 to 1.5 kilometres. Depth from surface of known mineralization is estimated at 300 metres. Main veins dip 55 to 85 degrees to the southwest. Fourteen epithermal veins have been previously defined on the property of which 3 have had notable production. The historical producing veins included Las Chispas, William Tell, and Babicanora. From public information, the Las Chispas mill production between 1908 through 1911 was approximately 25,000 tonnes grading 35 gpt gold and 4,500 gpt silver totalling an estimated 25,000 ounces of gold and 3.2 million ounces of silver. Several kilometres of underground workings exist on the property and are partially accessible.


Las Chispas area
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Babicanora area
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Continued Development 

Due to the impact that COVID-19 has had on the Company, the resource estimate is continuing at a slower pace, resulting in a schedule shift into Q4, 2020 for feasibility study completion. With this extension in the feasibility schedule, the Company plans to allocate extra time to;

  1. Add further drill results beyond the March 1, 2020 assay cut-off date for resource estimation.
  2. Optimize resource estimation, mine design and schedule with emphasis on frontend high-grade production including the Babi Vista Vein and Babi Norte SE extention;
  3. Finalize site power selection to potentially reduce operating costs; and
  4. Optimize the process gravity circuit for increased confidence in operations. Other ongoing feasibility work is nearing completion (June 2020) for the process facility design, capital costs and operating costs.

The Company also anticipates completing its Basic Engineering study as planned by the end of June 2020. The Company is fully financed to begin major construction, which provides for more flexibility in the schedule to secure long lead time items impacted by supply chain disruptions from COVID-19.  


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N. Eric Fier, CPG, P.Eng., Chief Executive Officer & Director of the Company, is the Qualified Person under National Instrument 43-101, Standards of Disclosure for Mineral Projects, responsible for the preparation of the technical information included in this website and for supervision of field activities related to the Company projects.

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