Discovery Silver Corp. (TSX-V: DSV, OTCQX: DSVSF)
(“Discovery” or the “Company”) is pleased to announce its financial
results for the fourth quarter (“Q4 2021”) and year ended December
31, 2021, and to provide a summary of key events for the quarter
and subsequent to year-end. All figures are stated in Canadian
dollars (“C$”) unless otherwise noted.
Discovery’s flagship project is our 100%-owned
Cordero silver project (“Cordero” or the “Project”) located in
Chihuahua State, Mexico. Following the completion of a Preliminary
Economic Assessment (“PEA”) in 2021 that demonstrated Cordero is a
large-scale, high-margin asset with a long mine life, our focus now
is the delivery of a Pre-Feasibility Study (“PFS”) on the Project
in the fourth quarter of this year.
HIGHLIGHTS FROM Q4 2021 & SUBSEQUENT
EVENTS:
- Completion of
our PEA on Cordero that outlined a 16-year mine life with average
annual production of 26 Moz AgEq at an AISC of $12.35/oz AgEq. The
after-tax NPV5% was US$1.2 B and the IRR was 38% at base case metal
prices of Ag - US$22.00/oz, Au - US$1,600/oz, Pb - US$1.00/lb and
Zn - US$1.20/lb.
- The appointment
of Tony Esplin as Chief Operating Officer; Mr. Esplin has more than
30 years of experience in the mining industry including over two
decades of executive and senior management roles at Tier 1
operations with Newmont Corporation and Barrick Gold
Corporation.
- The appointment
of Tony Makuch to the Company’s Board of Directors; Mr. Makuch has
over 35 years of mining industry experience and was most recently
President and CEO of Kirkland Lake Gold Ltd up to its merger with
Agnico Eagle Mines Limited in 1Q 2022.
- The release of
our inaugural Environmental, Social and Governance (“ESG”) report
and launch of a brand-new Sustainability section on our website.
These materials set out the Company’s current practices and future
priorities, and provide details of our strategic pillars that form
the foundation needed to advance the Cordero Project.
- Announcement of
our work program for 2022 that includes the planned completion of
our PFS in the fourth quarter of this year along with 55,000 m of
drilling focused on reserve definition, resource growth and
property wide exploration.
- As at December
31, 2021, we had a cash and cash equivalents and short term
investment balance of $69.7 million.
LOOKING AHEAD:
Work on our Pre-Feasibility Study is advancing
well and we remain on schedule to deliver the study in the fourth
quarter of this year. Our metallurgical testwork on the sulphides,
which is focused on reagent optimization and the testing of
high-grade samples ranging from 100 – 200 g/t AgEq to confirm grade
versus recovery variability is now more than 50% complete. Our
reserve definition drilling will wrap up later this quarter while
our engineering drilling will commence in the coming weeks. We
expect the PFS will continue to incorporate staged expansions of
the processing facility and we will look to optimize the mining
rates early in the mine life as well as the timing and size of the
oxides/heap leach project to maximise capital efficiency.
In parallel with these work plans our ESG
program continues to be an important area of focus, with our 2021
ESG report scheduled for issuance in the summer and key government
and international accreditation certifications planned for
completion in the second half of 2022. We also remain committed to
the growth potential of Cordero with more than 30,000 m of drilling
planned this year on resource expansion targets and our first ever
drilling of five highly prospective property targets within 10 km
of Cordero.
Our balance sheet remains exceptionally strong
with a current cash balance of approximately $60 million and no
debt. This puts us in a very strong position to fund all our
activities at Cordero in 2022, as well as all necessary work to
advance Cordero to a construction decision through the completion
of a Definitive Feasibility Study currently scheduled for the
second half of 2023.
SUMMARY OF Q4 2021
& SUBSEQUENT EVENTS:
Environment, Social,
Governance:
Inaugural ESG Report / Sustainability website
launch
In the fourth quarter we released our first
Environmental, Social and Governance (“ESG”) report and launched a
brand-new Sustainability section of our website. Report highlights
include:
-
Over $1.7 million in goods and services purchased from local
Mexican businesses;
-
Over $1.3 million in salaries and benefits paid to local
employees;
-
Total workforce of 124 includes 58 employees (89% Mexican) and 66
contractors (98% Mexican);
-
Total GHG emissions of 167 tonnes of CO2 equivalent;
-
Total water withdrawal of 36,017 m3 and total water discharged of
36,007 m3; and
-
Zero fatalities and only 5 first-aid incidents
The full ESG Report is available in English and
Spanish for download at: www.discoverysilver.com/sustainability
Projects:
Preliminary Economic Assessment (PEA)
On November 30, 2021, we announced the results
from the PEA on Cordero. Highlights from the study 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.
The PEA was based on an updated Mineral Resource
Estimate that was press released on October 20, 2021. Further
details on the PEA results can be found in our news release dated
November 30, 2021. Supporting technical disclosure and further
details on the Mineral Resource Estimate can be found at the bottom
of this release.
Phase 2 drilling
Subsequent to the year ended December 31, 2021,
we announced two sets of drill results from our ongoing Phase 2
drill program. Phase 2 drilling will continue through the remainder
of the year and will be focused on three key areas: (1)
Pre-Feasibility Study drilling consisting of reserve definition and
engineering drilling; (2) resource expansion in the northeast of
the deposit and at depth; and (3) initial drill testing of five
property-wide targets on the Company’s extensive land package.
There are currently four drill rigs operating on site.
PFS Drilling – highlight
intercepts from upgrading resources for inclusion in the PFS
include:
-
49.9 m averaging 247 g/t AgEq from 124.5 m (99 g/t
Ag, 0.26 g/t Au, 1.9% Pb and 1.8% Zn) including 21.4 m
averaging 446 g/t AgEq (185 g/t Ag, 0.46 g/t Au, 3.5% Pb
& 3.2% Zn) in hole C21-533
-
46.8 m averaging 288 g/t AgEq from 366.5 m (61 g/t
Ag, 0.07 g/t Au, 1.4% Pb and 4.8% Zn) in hole C21-556
-
113.6 m averaging 101 g/t AgEq from 160.9 m (28
g/t Ag, 0.09 g/t Au, 0.2% Pb and 1.6% Zn) in hole C21-555
-
165.0 m averaging 92 g/t AgEq from 399.8 m (33 g/t
Ag, 0.06 g/t Au, 0.7% Pb and 0.9% Zn) including 31.3 m
averaging 141 g/t AgEq (58 g/t Ag, 0.07 g/t Au, 1.1% Pb
& 1.2% Zn) in hole C21-545
-
38.6 m averaging 189 g/t AgEq from 191.8 m (91 g/t
Ag, 0.11 g/t Au, 1.3% Pb and 1.3% Zn) beneath the PEA pit in hole
C21-573
-
32.3 m averaging 142 g/t AgEq from 28.5 m (70 g/t
Ag, 0.12 g/t Au, 0.8% Pb and 1.0% Zn) on the margins of the PEA pit
in hole C21-538
Resource Expansion Drilling –
highlight intercepts from outside the resource pit constraint
include:
-
45.6 m averaging 328 g/t AgEq from 327.0 m (125
g/t Ag, 0.54 g/t Au, 2.0% Pb and 2.7% Zn) including 17.4 m
averaging 674 g/t AgEq (254 g/t Ag, 0.94 g/t Au, 4.0% Pb
& 6.1% Zn) in hole C21-575
-
44.5 m averaging 106 g/t AgEq from 355.7 m (20 g/t
Ag, 0.03 g/t Au, 0.1% Pb and 2.2% Zn) in hole C21-549
For further details on the drill results noted
above refer to our news releases dated February 10 and March 31,
2022. Supporting Technical Disclosure for drill results can be
found at the end of this release
SELECTED FINANCIAL DATA:
The following selected financial data is
summarized from the Company’s consolidated financial statements and
related notes thereto (the “Financial Statements”) for the year
ended December 31, 2021, and the Management’s Discussion and
Analysis (“MD&A”) for the year ended December 31, 2021.
A copy of the Financial Statements and MD&A
is available at www.discoverysilver.com or on SEDAR
at www.sedar.com.
Net loss |
Q4 2021 |
|
Q4 2020 |
|
(a) Total |
$ |
(7,098,928 |
) |
$ |
(6,125,457 |
) |
(b) basic and diluted per share |
$ |
(0.02 |
) |
$ |
(0.02 |
) |
Net loss & total comprehensive loss |
$ |
(7,030,220 |
) |
$ |
(5,455,362 |
) |
Total weighted average shares outstanding |
|
329,898,229 |
|
|
302,368,222 |
|
|
December 31, 2021 |
|
December 31, 2020 |
|
Cash, cash equivalents & short-term investments |
$ |
69,748,652 |
|
$ |
82,547,897 |
|
Total assets |
$ |
107,790,755 |
|
$ |
111,564,881 |
|
Total current liabilities |
$ |
1,704,530 |
|
$ |
982,260 |
|
Total liabilities |
$ |
1,704,530 |
|
$ |
1,023,349 |
|
Working capital |
$ |
69,611,661 |
|
$ |
82,435,046 |
|
Total Shareholders’ equity |
$ |
106,086,225 |
|
$ |
110,541,532 |
|
About Discovery
Discovery’s flagship project is its 100%-owned
Cordero project, one of the world’s largest silver deposits. The
PEA completed in November 2021 demonstrates that Cordero has the
potential to be developed into a highly capital efficient mine that
offers the combination of margin, size and scaleability. Cordero is
located close to infrastructure in a prolific mining belt in
Chihuahua State, Mexico. Continued exploration and project
development at Cordero is supported by a strong balance sheet with
a current cash balance of approximately C$60 million.
On Behalf of the Board of Directors,Taj Singh, M.Eng,
P.Eng, CPA, President, Chief Executive Officer and
Director
For further information contact:
Forbes Gemmell, CFAVP Corporate
Development & Investor RelationsPhone: 416-613-9410Email:
forbes.gemmell@discoverysilver.comWebsite:
www.discoverysilver.com
TECHNICAL NOTES & REFERENCES:
Drill results: all drill
results in this news release are rounded. Assays are uncut and
undiluted. Widths are drilled widths, not true widths, as a full
interpretation of the actual orientation of mineralization is not
complete. As a guideline, intervals with disseminated
mineralization were chosen based on a 25 g/t AgEq cutoff with no
more than 10 m of dilution. AgEq calculations are used as the basis
for total metal content calculations given Ag is the dominant metal
constituent as a percentage of AgEq value in approximately 70% of
the Company’s mineralized intercepts. AgEq calculations for
reported drill results are based on USD $22.00/oz Ag, $1,600/oz Au,
$1.00/lb Pb, $1.20/lb Zn. The calculations assume 100%
metallurgical recovery and are indicative of gross in-situ metal
value at the indicated metal prices. Refer to notes below for
metallurgical recoveries assumed in the 2021 PEA completed on
Cordero.
Sample
analysis and
QA/QC Program: True widths of
reported drill intercepts have not been determined. Assays are
uncut except where indicated. All core assays are from HQ drill
core unless stated otherwise. Drill core is logged and sampled in a
secure core storage facility located at the project site 40km north
of the city of Parral. Core samples from the program are cut in
half, using a diamond cutting saw, and are sent to ALS
Geochemistry-Mexico for preparation in Chihuahua City, Mexico, and
subsequently pulps are sent to ALS Vancouver, Canada, which is an
accredited mineral analysis laboratory, for analysis. All samples
are prepared using a method whereby the entire sample is crushed to
70% passing -2mm, a split of 250g is taken and pulverized to better
than 85% passing 75 microns. Samples are analyzed for gold using
standard Fire Assay-AAS techniques (Au-AA24) from a 50g pulp. Over
limits are analyzed by fire assay and gravimetric finish. Samples
are also analyzed using thirty three-element inductively coupled
plasma method (“ME-ICP61”). Over limit sample values are re-assayed
for: (1) values of zinc > 1%; (2) values of lead > 1%; and
(3) values of silver > 100 g/t. Samples are re-assayed using the
ME-OG62 (high-grade material ICP-AES) analytical package. For
values of silver greater than 1,500 g/t, samples are re-assayed
using the Ag-CON01 analytical method, a standard 30 g fire assay
with gravimetric finish. Certified standards and blanks are
routinely inserted into all sample shipments to ensure integrity of
the assay process. Selected samples are chosen for duplicate assay
from the coarse reject and pulps of the original sample. No QAQC
issues were noted with the results reported herein.
Mineral Resource Estimate:
Sulphide Resource (assumed to be processed via
mill/flotation)
NSR $/t cut-off |
Class |
Tonnes |
Grade |
Contained Metal |
Ag |
Au |
Pb |
Zn |
AgEq |
Ag |
Au |
Pb |
Zn |
AgEq |
(Mt) |
(g/t) |
(g/t) |
(%) |
(%) |
(g/t) |
(Moz) |
(koz) |
(Mlb) |
(Mlb) |
(Moz) |
$7.25/t |
Measured |
128 |
22 |
0.08 |
0.31 |
0.52 |
52 |
89 |
328 |
881 |
1,470 |
212 |
Indicated |
413 |
19 |
0.05 |
0.28 |
0.51 |
47 |
255 |
707 |
2,543 |
4,663 |
625 |
M&I |
541 |
20 |
0.06 |
0.29 |
0.51 |
48 |
344 |
1,035 |
3,424 |
6,132 |
837 |
Inferred |
108 |
14 |
0.03 |
0.19 |
0.38 |
34 |
49 |
99 |
451 |
909 |
119 |
Oxide/Transition Resource (assumed to be
processed by heap leaching)
NSR $/t cut-off |
Class |
Tonnes |
Grade |
Contained Metal |
% Oxide / % Trans |
Ag |
Au |
AgEq |
Ag |
Au |
AgEq |
(Mt) |
(g/t) |
(g/t) |
(g/t) |
(Moz) |
(koz) |
(Moz) |
$4.78/t |
Measured |
23 |
20 |
0.06 |
25 |
15 |
43 |
19 |
92% / 8% |
Indicated |
75 |
19 |
0.05 |
23 |
45 |
125 |
56 |
87% / 13% |
M&I |
98 |
19 |
0.05 |
23 |
60 |
168 |
74 |
88% / 12% |
Inferred |
35 |
16 |
0.04 |
20 |
18 |
44 |
22 |
63% / 37% |
Supporting Technical Disclosure for
Resource:
- Mineral
resources that are not mineral reserves do not have demonstrated
economic viability.
- AgEq for the
Sulphide Resource is calculated as Ag + (Au x 16.07) + (Pb x 32.55)
+ (Zn x 35.10); these factors are based on commodity prices of Ag -
$24.00/oz, Au - $1,800/oz, Pb - $1.10/lb, Zn - $1.20/lb and assumed
recoveries of Ag – 84%, Au – 18%, Pb – 87% and Zn – 88%.
- AgEq for the
Oxide/Transition Resource is calculated as Ag + (Au x 87.5); this
factor is based on commodity prices of Ag - $24.00/oz and Au -
$1,800/oz and assumed recoveries of Ag – 60% and Au – 70%.
- The Resource is
constrained by a pit optimisation based on the following commodity
prices: Ag - $24.00/oz, Au - $1,800/oz, Pb - $1.10/lb, Zn -
$1.20/lb. Additional parameters for the pit constraint are provided
in the October 20, 2021, press release.
- Individual
metals are reported at 100% of in-situ grade.
- The effective
date of the Resource is October 20, 2021, and is based on drilling
through July 2021.
- There are no
known legal, political, environmental or other risks that could
materially affect the potential development of the Resource.
- A full technical
report titled Mineral Resource Update of the Cordero Silver Project
Chihuahua State, Mexico, dated October 20, 2021, is available on
SEDAR and on the Company’s website.
Preliminary Economic
Assessment:
The most recent technical report for the Cordero
Project is the 2021 Preliminary Economic Assessment (PEA). The PEA
was completed by Ausenco Engineering Canada Inc. with support from
AGP Mining Consultants Inc. and Knight Piésold and Co. (USA). The
full technical report supporting the PEA is available on
Discovery’s website and on SEDAR under Discovery Silver Corp.
Supporting Technical Disclosure for the PEA:
-
Inferred material, representing 0.9% of the mill feed, is included
in the total mill feed. Inferred resources are considered too
speculative geologically to have economic considerations applied to
them that would enable them to be categorized as reserves.
-
Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
-
Readers are cautioned that the PEA is preliminary in nature and
that there is no certainty the estimates utilized in the PEA will
be realized.
-
AgEq is calculated based on the following commodity prices: Ag -
$22.00/oz, Au - $1,600/oz, Pb - $1.00/lb and Zn - $1.20/lb.
-
All-in Sustaining cost (AISC) is calculated as: [Operating costs
(mining, processing and G&A) + Royalties + Concentrate
Transportation + Treatment & Refining Charges + Concentrate
Penalties + Sustaining Capital (includes capital for TMF dams lifts
with capacity for less than five years) + Closure Costs] / Payable
AgEq ounces
-
A full technical report titled Preliminary Economic Assessment of
the Cordero Silver Project Chihuahua State, Mexico, dated November
30, 2021, is available on SEDAR and on the Company’s website. The
report was authored by Ausenco Engineering Canada Inc. with support
from AGP Mining Consultants Inc. and Knight Piésold and Co.
(USA).
Qualified
Person: Gernot Wober, P.Geo, VP Exploration,
Discovery Silver Corp., is the Company's designated Qualified
Person for this news release within the meaning of National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI
43-101”) and has reviewed and validated that the information
contained in this news release is accurate.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
This news release is not for distribution to
United States newswire services or for dissemination in the United
States.This news release does not constitute an offer to sell or a
solicitation of an offer to buy nor shall there be any sale of any
of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful, including any of the
securities in the United States of America. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the “1933 Act”) or any state securities
laws and may not be offered or sold within the United States or to,
or for account or benefit of, U.S. Persons (as defined in
Regulation S under the 1933 Act) unless registered under the 1933
Act and applicable state securities laws, or an exemption from such
registration requirements is available.
Cautionary Note Regarding Forward-Looking
StatementsThis news release may include forward-looking statements
that are subject to inherent risks and uncertainties. All
statements within this news release, other than statements of
historical fact, are to be considered forward looking. Although
Discovery believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those described
in forward-looking statements. Such statements include but are not
limited to: the timeline for the execution and completion of the
Phase 2 drill program including the impacts and benefits; the
timeline and anticipated results to be included in the Resource
update including the impact and benefits; the timeline and
anticipated results to be included in the Preliminary Economic
Assessment including the impact and benefits; Factors that could
cause actual results to differ materially from those described in
forward-looking statements include fluctuations in market prices,
including metal prices, continued availability of capital and
financing, and general economic, market or business conditions.
There can be no assurances that such statements will prove accurate
and, therefore, readers are advised to rely on their own evaluation
of such uncertainties. Discovery does not assume any obligation to
update any forward-looking statements except as required under
applicable laws. For a detailed discussion on the risks faced by
the Company, refer to the documents incorporated by reference
herein, the Company’s MD&A for the year ended December 31, 2021
and the Company’s 2021 Annual Information Form available on the
Company’s website at www.discoverysilver.com or under Discovery’s
profile on SEDAR at www.sedar.com.
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