After-Tax NPV (5%) of US$1,137 million, After-Tax IRR of 85.7%, Initial Capex of US$224 million, Average Annual Production of 15.2 million oz AgEq at AISC of US$9.40 per oz AgEq
Vizsla Silver Corp. (TSX-V: VZLA) (NYSE: VZLA) (Frankfurt: 0G3) is pleased to announce the results from the independent preliminary economic assessment on its 100%-owned flagship Panuco silver-gold project located in Mexico.
The PEA, completed by Ausenco Engineering Canada ULC, supported by Entech Mining Ltd. and SGS Canada Inc. provides a robust base case assessment for developing Panuco as a long-life, high-margin underground precious metals mine with low initial capital requirements and a fast timeline to production.
“An estimated after-tax NPV (5%) of more than US$1.1 billion, an after-tax IRR of 85.7% and a payback period of approximately nine months, helps solidify Panuco as a world class development project in the precious metals space,” commented Michael Konnert, President and CEO. “The PEA, based on conservative metals prices of US$26/oz silver and US$1,975/oz gold, outlines a high-margin, underground silver primary mine with substantial silver-gold production of 162.1 million silver-equivalent ounces over an initial 11-year mine life. Annually, the mine is projected to produce an average of 15.2 million silver-equivalent ounces, providing exceptional free cash flow, particularly in the early years, allowing for a very rapid payback of the estimated low initial Capex of US$224 million. It’s important to note, that this PEA represents only a snapshot of the potential value of Panuco, as we have only explored less than 30% of the known targets in the district. Furthermore, ongoing drilling with two drill rigs continues to expand and convert high-grade veins in and around the proposed mine plan, enhancing the potential for improved economics in a feasibility study planned for the second half of 2025. Panuco benefits from excellent access to existing infrastructure, significant exploration upside potential to discover new mineralized centers and potentially new standalone projects hosting similar economics to that outlined in today’s study. As such, it’s becoming increasingly clear that Panuco will be a meaningful contributor to the silver industry for decades to come. I would like to thank everyone at Vizsla Silver, our stakeholders and community members for all the hard work over the years to reach this monumental milestone.”
The Company cautions that the results of the PEA are preliminary in nature and include inferred mineral resources that are considered too speculative geologically to have economic consideration applied to them to be classified as mineral reserves. There is no certainty that the results of the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
PEA Highlights (Base Case)
Notes: |
|
1. | Underground mineralized material contains, Indicated and Inferred Resources |
2. | Payable Silver Equivalent (AgEq.) calculated by dividing gross sales revenue by $26.00 (silver price) |
3. | Total cash costs consist of operating cash costs plus royalties and offsite (refining & transport) charges |
4. | AISC consist of total cash costs plus sustaining capital |
PEA Overview
The PEA considers two contiguous underground mines, the Copala Mine and the Napoleon Mine, with on-site treatment of the mined material processed through a 3-stage crushing-grinding circuit, along with a leach and Merrill Crowe circuit to produce silver-gold doré bars. The mines will be contractor-operated utilizing ramp-access and a combination of long-hole stoping and drift-and-fill mining methods.
The processing throughput capacity of 3,300 tonnes per day for the first three years, expanding to 4,000 tonnes per day in year four, results in an initial mine life of 10.6 years. The PEA leverages Panuco’s existing infrastructure, including all-weather access roads, permits, power and its proximity to the Concordia Municipality with its skilled labour pool.
The PEA is derived using the Company’s mineral resource estimate published on September 01, 2023. The effective date of the PEA is July 24, 2024, and a technical report will be filed on the Company’s website and SEDAR+ within 45 days of this news release.
General | LOM Total / Avg. |
Gold Price (US$/oz) | 1,975 |
Silver Price (US$/oz) | 26.00 |
Mine Life (Years) | 10.6 |
Total Processed Feed Tonnes (kt) | 14,607 |
Total Waste Tonnes (kt) | 4,975 |
Production | LOM Total / Avg. |
Head Grade – Ag (g/t) | 228 |
Head Grade – Au (g/t) | 1.90 |
Recovery Rate – Ag (%) to doré | 92.2 % |
Recovery Rate – Au (%) to doré | 93.8 % |
Total Metal Payable – Ag (koz) | 98,697 |
Total Metal Payable – Au (koz) | 835 |
Average Annual Payable Production – Ag (koz) | 9,268 |
Average Annual Payable Production – Au (koz) | 78 |
Average Annual Payable Production – AgEq. (koz) | 15,225 |
Average Annual Payable Production (Yrs 1-2) – AgEq. (koz) | 20,185 |
Operating Costs | LOM Total / Avg. |
Mining Cost (US$/t Processed) | 47.21 |
Processing Cost (US$/t Processed) (incl. TSF) | 21.96 |
G&A Cost (US$/t Processed) | 7.24 |
Total Operating Costs (US$/t Processed) | 76.40 |
Cash Costs (Co-Product Basis) (US$/oz Ag)* | 7.98 |
AISC (Co-Product Basis) (US$/oz Ag)** | 9.40 |
Capital Costs | LOM Total / Avg. |
Initial Capital (US$M) | 223.6 |
Expansion Capital (US$M) | 11.1 |
Sustaining Capital (US$M) | 230.2 |
Closure Capital (US$M) | 31.8 |
Salvage Value (US$M) | 9.5 |
Financials | Pre-Tax |
NPV (5%) (US$M) | 1,778 |
IRR (%) | 124.1 % |
Payback (Years) | 0.6 |
Financials | Post-Tax |
NPV (5%) (US$M) | 1,137 |
IRR (%) | 85.7 % |
Payback (Years) | 0.8 |
Post-Tax NPV/Initial Capital | 5.1 |
* Total cash costs consist of operating cash costs plus royalties and offsite (refining & transport) charges | |
** AISC consist of total cash costs plus sustaining capital | |
Table 1: Panuco PEA Detailed Parameters and Outputs
NPV remains positive for changes of +/-20% in revenue drivers including metal prices, head grade, recovery, initial capital expenditure and operating costs. After-tax economic sensitivities are presented in Tables 2 and 3 below. Additional project sensitivities will be presented in the Technical Report.
Inputs | Sensitivity Summary Post-Tax NPV 5% (US$M) | |||||
(+/-%) | (20.0 %) | (10.0 %) | PEA | 10.0 % | 20.0 % | |
Metal Price | $747 | $942 | $1,137 | $1,333 | $1,528 | |
Head Grade | $732 | $935 | $1,137 | $1,335 | $1,531 | |
Recovery | $751 | $944 | $1,137 | $1,281 | $1,288 | |
Operating Costs | $1,241 | $1,189 | $1,137 | $1,086 | $1,034 | |
Initial Capex | $1,185 | $1,161 | $1,137 | $1,113 | $1,089 |
Table 2: Sensitivity Summary Post Tax NPV 5% (US$M)
Inputs | Sensitivity Summary Post-Tax IRR (%) | |||||
(+/-%) | (20.0 %) | (10.0 %) | PEA | 10.0 % | 20.0 % | |
Metal Price | 62.9 % | 74.6 % | 85.7 % | 96.3 % | 106.5 % | |
Head Grade | 60.9 % | 73.6 % | 85.7 % | 96.4 % | 106.7 % | |
Recovery | 63.2 % | 74.7 % | 85.7 % | 93.7 % | 94.3 % | |
Operating Costs | 89.7 % | 87.7 % | 85.7 % | 83.6 % | 81.5 % | |
Initial Capex | 105.9 % | 94.8 % | 85.7 % | 78.0 % | 71.6 % |
Table 3: Sensitivity Summary Post Tax IRR (%)
Mineral Resources
The MRE forms the basis for this PEA. The MRE is based on a total drill database of 822 holes (302,931 metres) completed by Vizsla Silver between November 2019 and September 2023.
Indicated mineral resources are estimated in the MRE at 9.5 Mt grading 289 g/t silver, 2.41 g/t gold, 0.27% lead, and 0.84% zinc (511 g/t AgEq). The MRE includes indicated mineral resources of 88.2 million ounces (“Moz“) of silver, 736 koz of gold, 25.4 kt of lead, and 79.9 kt of zinc (155.8 Moz AgEq).
Inferred mineral resources are estimated in the MRE at 12.2 Mt grading 239 g/t silver, 1.93 g/t gold, 0.29% lead, and 1.03% zinc (433 g/t AgEq). The MRE includes inferred mineral resources of 93.7 Moz of silver, 758 koz of gold, 35.4 kt of lead, and 125.3 kt of zinc (169.6 Moz AgEq).
Classification | Tonnes | Average Grade | Contained Metal | ||||||||||
Ag | Au | Pb | Zn | AgEq | Au Eq | Ag | Au | Pb | Zn | AgEq | AuEq | ||
(Mt) | (g/t) | (g/t) | ( %) | ( %) | (g/t) | (g/t) | (koz) | (koz) | (kt) | (kt) | (koz) | (koz) | |
Indicated | |||||||||||||
Copala | 4.5 | 380 | 2.46 | 0.08 | 0.15 | 573 | 7.64 | 55,201 | 358 | 3.7 | 6.9 | 83,270 | 1,110 |
Tajitos | 0.6 | 358 | 2.24 | 0.12 | 0.21 | 538 | 7.18 | 7,295 | 46 | 0.7 | 1.3 | 10,953 | 146 |
Cristiano | 0.2 | 581 | 3.37 | 0.25 | 0.43 | 858 | 11.45 | 3,961 | 23 | 0.5 | 0.9 | 5,851 | 78 |
Copala Area Total | 5.4 | 385 | 2.48 | 0.09 | 0.17 | 580 | 7.74 | 66,457 | 427 | 5.0 | 9.2 | 100,074 | 1,343 |
Napoleon | 3.3 | 162 | 2.39 | 0.52 | 1.73 | 425 | 5.66 | 17,276 | 255 | 17.2 | 57.4 | 45,223 | 603 |
Napoleon HW | 0.4 | 164 | 1.72 | 0.42 | 1.53 | 365 | 4.87 | 2,259 | 24 | 1.8 | 6.5 | 5,029 | 67 |
Luisa | 0.3 | 177 | 2.56 | 0.39 | 2.01 | 459 | 6.12 | 1556 | 22 | 1.1 | 5.5 | 4,027 | 54 |
Josephine | 0.1 | 221 | 2.88 | 0.39 | 1.11 | 492 | 6.56 | 491 | 6 | 0.3 | 0.8 | 1,092 | 15 |
Cruz | 0.0 | 144 | 2.01 | 0.37 | 1.71 | 373 | 4.97 | 153 | 2 | 0.1 | 0.6 | 396 | 5 |
NP Area Total | 4.1 | 164 | 2.34 | 0.50 | 1.72 | 421 | 5.66 | 21,735 | 309 | 20.4 | 70.7 | 55,767 | 743 |
Total Indicated | 9.5 | 289 | 2.41 | 0.27 | 0.84 | 511 | 6.81 | 88,192 | 736 | 25.4 | 79.9 | 155,841 | 2,076 |
Inferred | |||||||||||||
Copala | 3.2 | 332 | 1.77 | 0.12 | 0.20 | 476 | 6.34 | 33,722 | 179 | 3.7 | 6.2 | 48,320 | 644 |
Tajitos | 1.0 | 365 | 2.04 | 0.22 | 0.39 | 540 | 7.21 | 12,260 | 69 | 2.3 | 4.0 | 18,140 | 242 |
Cristiano | 0.7 | 443 | 2.54 | 0.15 | 0.29 | 650 | 8.66 | 10,213 | 59 | 1.1 | 2.0 | 14,974 | 200 |
Copala Area Total | 4.9 | 355 | 1.94 | 0.15 | 0.25 | 515 | 6.86 | 56,195 | 307 | 7.1 | 12.3 | 81,434 | 1,081 |
Napoleon | 3.2 | 137 | 1.64 | 0.45 | 1.76 | 342 | 4.57 | 14,045 | 168 | 14.4 | 55.9 | 35,063 | 467 |
Napoleon HW | 0.8 | 220 | 2.17 | 0.59 | 2.02 | 479 | 6.39 | 5,976 | 59 | 5.0 | 17.0 | 13,027 | 174 |
La Luisa | 2.0 | 159 | 2.13 | 0.30 | 1.51 | 386 | 5.15 | 10,439 | 139 | 6.0 | 30.8 | 25,326 | 338 |
Josephine | 0.2 | 161 | 2.05 | 0.33 | 1.00 | 364 | 4.85 | 1161 | 15 | 0.7 | 2.2 | 2,618 | 35 |
Cruz | 0.3 | 170 | 3.75 | 0.31 | 1.48 | 519 | 6.91 | 1698 | 37 | 1.0 | 4.6 | 5,169 | 69 |
NP Area Total | 6.6 | 157 | 1.97 | 0.41 | 1.68 | 383 | 5.10 | 33,319 | 418 | 27.1 | 110.6 | 81,203 | 1,082 |
San Antonio | 0.3 | 226 | 1.30 | 0.01 | 0.03 | 325 | 4.33 | 2,038 | 12 | 0.0 | 0.1 | 2,936 | 39 |
*Animas | 0.4 | 169 | 1.68 | 0.29 | 0.60 | 327 | 4.37 | 2,101 | 21 | 1.1 | 2.3 | 4,074 | 54 |
Total Inferred | 12.2 | 239 | 1.93 | 0.29 | 1.03 | 433 | 5.76 | 93,653 | 758 | 35.4 | 125.3 | 169,647 | 2,261 |
*Animas is Rosarito and Cuevillas veins |
Table 4: Mineral Resources Reported at 150 g/t AgEq cut-off (effective date September 01, 2023)
Capital and Operating Costs
The PEA estimates initial capital requirements of US$224 million and cumulative sustaining capital of US$230 million. LOM operating costs for Panuco are estimated to average US$76.4 per tonne processed.
Sustaining capital is expected to average approximately US$21.6 million per year largely attributable to continual mine development. In Year 3, with the mill expansion and increase in underground development associated with opening up the Napoleon Area veins, an expansion cost of US$11.1 million is added (to be funded through initial cash flows). The projected timing of increases in capital expenditures in year 3 may be pushed further into the future with continued exploration success along the Copala structure.
The PEA is based on contractor underground mining, which has an estimated LOM cost of US$47.21 per tonne milled. Processing costs are estimated at US$21.96 per tonne milled, which includes TSF handlings of US$0.33 per tonne milled. G&A costs are estimated at US$7.24 per tonne milled.
The capital and operating cost estimate was developed in Q3 2024 United States Dollars (US$). The capital cost summary is presented in Table 5 and the operating cost summary is presented in Table 6.
WBS Description | Initial Capital Cost (US$M) |
Sustaining Capital Cost (US$M) |
Expansion Cost (US$M) |
Total Cost (US$M) |
Mining | 64.5 | 207.7 | 272.3 | |
Process Plant | 63.2 | 7.2 | 70.4 | |
Additional Facilities | 8.7 | 22.4 | 31.1 | |
On-Site Infrastructure | 13.5 | – | – | 13.5 |
Off-Site Infrastructure | 0.8 | – | – | 0.8 |
Total Directs | 150.7 | 230.2 | 7.2 | 388.2 |
Project Indirects | 6.1 | 0.6 | 6.7 | |
Project Delivery | 12.9 | – | 0.7 | 13.7 |
Total Indirects | 19.0 | – | 1.3 | 20.4 |
Owner’s Cost | 7.5 | – | 0.4 | 7.9 |
Provisions (Contingency) | 46.3 | 2.1 | 48.5 | |
Closure (Incl. Contingency) | – | 31.8 | – | 31.8 |
Project Totals | 223.5 | 262.0 | 11.1 | 496.7 |
Table 5: Project Capital Cost Estimates (US$M) (totals may differ due to rounding)
Cost Area | Average Annual Costs (US$M) | US$/t Processed |
Mining | 64.7 | 47.21 |
Process | 29.7 | 21.96 |
G&A | 9.9 | 7.24 |
Total | 104.3 | 76.40 |
Table 6: Project Operating Cost Estimates (US$M) (totals may differ due to rounding)
Mining
The Panuco Project is a collection of silver-gold deposits located in the Panuco-Copala mining district in Sinaloa, Mexico, which extend from surface to over 600 m in depth. The deposits range in thickness from 1.5 m to greater than 20 m.
Based on the characteristics of the deposit, long-hole stoping was selected as the primary mining method for all deposits, with drift-and-fill selected for the northern portion of the Copala North Zone which is located directly under the Copala township. A sublevel spacing of 20 m was selected with variable stope strike lengths for LHS to be used dependant on prevailing ground conditions, and 4 m high DAF drifts (five lifts per sublevel).
The mining methods considered for the Panuco Project are proposed to use a combination of cemented rock backfill, uncemented rock backfill, and paste backfill for stope support.
For the preliminary design of the Panuco Project, planned dilution and unplanned rock dilution were accounted for using the Datamine Mineable Shape Optimiser®. Mineralized and unmineralized dilution within MSO was estimated at 52.8% and additional unplanned dilution from backfill dilution, stope development and DAF mining was estimated at 9.2%. Mining recovery of 92% for LHS and 98% for DAF was applied as a factor to the shapes created by MSO within the production schedule.
A Net Smelter Return model was used to estimate the revenue of the mineralized material. Preliminary process recoveries, doré grades, smelting and refining terms, and transportation costs were assumed to determine the NSR value. A Cut-Off Value was used to flag material by whether the revenue in a block exceeds the costs of extraction and processing of that block. There were three COVs used to assess mining at Panuco: An Elevated COV, a Fully Costed COV and the Marginal COV.
The Fully Costed COV represents the break-even value of mineralized material required to cover all the associated operating and sustaining capital costs of extraction and processing. Fully costed COVs were assumed for Panuco at US$ 106.6/t for LHS and US$ 120.7/t for DAF. The Elevated COV of US$200/t was considered during the pre-production period and the first two years of processing. The Marginal COV of US$22/t was assumed when the operation has committed to development and preparation of stoping blocks. The Marginal COV includes the assumption that the material value exceeds the costs of the incremental haulage, surface handling, processing, and G&A.
Due to the distance between the various geological deposits, the Panuco Project is separated into two separate underground mines. The Copala Mine, the larger of the two, accesses the Copala, Cristiano, and Tajitos deposits. The Napoleon Mine which is located to the west of the Copala Mine accesses the Napoleon, La Luisa, Cruz Negra, and Josephine deposits.
Contractor mining is currently proposed for the Panuco Project to minimize upfront capital and achieve higher productivity.
Period | Waste | Development | Stoping | Total Mineralized Material |
Total Mined Material |
kt | kt | kt | kt | kt | |
YEAR \ TOTAL | 4,974.9 | 2,847.7 | 11,759.1 | 14,606.8 | 19,581.7 |
Y-02 | 226.9 | 26.3 | – | 26.3 | 253.2 |
Y-01 | 177.8 | 226.3 | 182.5 | 408.8 | 586.5 |
Y01 | 497.7 | 193.7 | 596.7 | 790.4 | 1,288.1 |
Y02 | 710.7 | 169.5 | 1,115.6 | 1,285.1 | 1,995.8 |
Y03 | 697.0 | 231.2 | 1,166.2 | 1,397.5 | 2,094.4 |
Y04 | 573.8 | 336.5 | 1,212.6 | 1,549.1 | 2,122.9 |
Y05 | 401.6 | 395.5 | 1,130.7 | 1,526.2 | 1,927.8 |
Y06 | 477.0 | 369.4 | 1,035.1 | 1,404.4 | 1,881.5 |
Y07 | 534.5 | 354.9 | 1,026.3 | 1,381.2 | 1,915.8 |
Y08 | 491.7 | 387.9 | 1,023.7 | 1,411.7 | 1,903.4 |
Y09 | 186.2 | 155.8 | 1,243.8 | 1,399.6 | 1,585.8 |
Y10 | – | 0.6 | 1,403.4 | 1,404.0 | 1,404.0 |
Y11 | – | – | 622.5 | 622.5 | 622.5 |
Table 7: Total and Annual Material Movement Schedule for the Panuco Project
Processing and Metallurgy
Three rounds of metallurgical test work have been completed to date by Vizsla Silver on the main deposits for the Panuco Project dating back to 2021. Flowsheet development, undertaken by Ausenco using samples from the Napoleon, Tajitos and Copala deposits has focused on comminution testing, Drop Weight tests, bond ball tests, mineralogical assessments, froth flotation tests, cyanide leach and whole feed leaching as well as extrapolation of a primary grind size of 70µm P80. Based on the envisioned circuit and corresponding laboratory test response, the overall process recoveries based on the samples tested for all deposits were indicated to be roughly 85-92% Ag and 90-94% Au after 96 hours of leach residence time. The PEA assumes LOM average recoveries of 92.2% for silver and 93.8% for gold. Ongoing test work continues to highlight improved recoveries.
The PEA envisages a two phased approach to mill development. Phase 1, with an initial throughput of 3,300 tpd, assumes run-of-mine material is crushed and screened before grinding using a ball mill. The ground material reports to the leach circuit for a total of 96 hours. Discharge from the whole ore leaching tank will gravitate to the counter current decantation circuit where leached solids will be cleaned of pregnant solution through a series of counter-current decantation thickeners to facilitate extraction and recovery of silver and gold by cyanide leach – Merrill Crowe process and refining to doré bars. Part of the plant tailings is distributed to the paste plant and the rest is deposited onto a wet tailings storage facility.
In Phase 2, the process plant expands to process 4,000 tpd and a flotation and concentrate leaching circuit is introduced to the flowsheet to support improved recoveries from Year 4.
Project Enhancement Opportunities
The PEA demonstrates that Panuco has the potential to become a commercially robust project. Additional opportunities to enhance Project value include:
Next Steps (Feasibility Study and Test Mine)
With the PEA completed, Vizsla Silver is moving forward with a feasibility study for the Panuco Project. The Company is targeting completion of the Feasibility Study in the second half of 2025 and intends to make a production decision only following the release of a positive Feasibility Study. There are currently two drill rigs focused on infill drilling to upgrade inferred resources into the indicated category and indicated resources to the measured category, for inclusion in the Feasibility Study reserves.
The fully funded and permitted bulk sample test-mine will commence at Copala in the fourth quarter of 2024. Access to high-grade mineralization at Copala will allow us to conduct detailed feasibility work including reconciling underground grades with the resource model, assess geotechnical conditions, determine more accurate development costs, complete test mining to define the optimum mining method and stockpile high-grade mineralization on surface for plant commissioning.
Qualified Persons
In accordance with NI 43-101, Jesus Velador, Ph.D. MMSA QP., Vice President of Exploration, is the Qualified Person for the Company and has reviewed and approved the technical and scientific content of this news release.
Additionally, a team of independent Qualified Persons (as such term is defined under NI 43-101) at Ausenco, Entech and SGS have led the PEA and have reviewed and verified the technical disclosure in this press release, including:
About Vizsla Silver and the Panuco Project
Vizsla Silver’s flagship Panuco project is host to a high-grade epithermal silver-gold deposit which has been the subject of the PEA with an effective date of July 24, 2024, and a Mineral Resource Estimate1 on the Panuco Property with an effective date of September 01, 2023. The Mineral Resource Estimate is centered on the western portion of Panuco, encompassing ~8 km of the known 86km of cumulative vein strike in the district. The Mineral Resource Estimate includes 178 infill/expansion holes (100,222 metres) completed by Vizsla Silver between September 2022 and September 2023. In total, the Mineral Resource Estimate is based on a total drill database of 822 holes (302,931 metres) completed by Vizsla Silver since November 2019 (please refer to the Technical Report on Updated Mineral Resource Estimate for the Panuco Ag-Au-Pb-Zn Project, Sinaloa State, Mexico, by Allan Armitage, Ben Eggers and Peter Mehrfert, dated February 12, 2024 and to the Company´s press release dated January 8, 2024).
About Ausenco
Ausenco is a global diversified engineering, environmental, construction and project management company providing consulting, project delivery and asset management solutions to the resources, energy, and infrastructure sectors. Ausenco’s experience in poly-metallic projects ranges from conceptual, pre-feasibility and feasibility studies for new project developments to project execution with EPCM delivery. Ausenco is currently engaged on several global projects with similar characteristics and to the Panuco Project.
Figure 1: Proposed stope shapes by NSR ($US/t) for the Panuco Project (CNW Group/Vizsla Silver Corp.)
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