TSX: SIL | NYSE American:
SILV
VANCOUVER, BC, Oct. 26, 2021 /PRNewswire/ - SilverCrest Metals
Inc. ("SilverCrest" or the "Company") is pleased to provide an
update on construction activities at the Company's Las Chispas
Project ("Las Chispas" or the "Project") located in Sonora, Mexico. All currency amounts herein
are presented in United States
Dollars, unless otherwise stated.
Highlights
- Construction Remains on Schedule – At the end of the third
quarter of 2021 ("Q3, 2021"), overall construction progress at Las
Chispas was 54% complete compared to an overall scheduled
completion of 48%. Construction continued to progress well in the
quarter with the main access road, plant detailed engineering, and
concrete work now complete, bridge construction 88% complete, plant
construction 49% complete, powerline 47% complete, and underground
infrastructure ongoing. Construction progress continued to benefit
from no delays due to COVID-19 or any other reason.
- Capital Spend Tracking Well Against Budget – Through Q3, 2021,
68% of the $137.7 million Feasibility
Study* capital cost estimate was committed, of which 57%
has been incurred across all capital cost scopes, in-line with
budget. At the end of Q3, 2021, approximately $59.0 million in capital remains to be incurred
through commissioning. A number of key infrastructure tasks are now
complete or nearing completion, limiting cost inflation risk.
- Underground Development Ahead of Schedule– With underground
development ahead of schedule at the end of H1, 2021, development
rates continued to progress well in Q3, 2021 for a total of 15.7 km
completed since underground development began in Q1, 2019. Unit
underground mining costs continue to track slightly under budget
and development metres remain well ahead (1.6 km) of the
Feasibility Study budget, year to date.
- Site Safety Remains Key Priority – At the end of Q3, 2021,
after 1.33 million work-hours completed at site, the Company's lost
time injury ("LTI") frequency rate was 0.60. COVID-19 risk
mitigation efforts continued successfully in the quarter with an
additional 4,800 COVID-19 tests completed and positivity rates
remaining low. The Company also participated in a local vaccination
program to complement the federal program. This local program
allowed for full vaccination of 220 employees and contractors and
first dose vaccination of an additional 110 employees and
contractors.
- Funded for Construction, Near-Term Cash Flow – As at
September 30, 2021, SilverCrest had
cash and cash equivalents of $199.0
million and $60.0 million
remaining under a $120.0 million
project financing facility (the "Credit Facility"). Once fully
operational and using Base Case metal prices ($1,500/oz Au and $19.00/oz Ag), which are approximately 17% and
22% (respectively) below current prices, the Feasibility Study
estimated after-tax project free cash flow of approximately
$160.0 million in 2023 and an
estimated average of $110.0 million
per year from 2023 to 2029. With more than 80% of the initial
capital costs expected to be committed by the end of 2021,
SilverCrest expects to be well funded for commissioning and ramp-up
in 2022, while still retaining the flexibility to pursue continued
exploration, further optimization work and growth
opportunities.
* NI 43-101 Technical Report & Feasibility Study on The Las
Chispas Project dated January 4, 2021
("Feasibility Study")
Pierre Beaudoin, COO, remarked,
"Our team and contractors, fueled by their success to date,
continue to make steady progress in safely advancing the
construction of the Las Chispas Project. As the Project passes its
halfway mark of the construction timeline and capital spend,
construction will get into its peak period, and we are increasing
our focus on the operational readiness plan in preparation for
plant commissioning (expected in Q2, 2022) and production ramp-up
through H2, 2022. In parallel, our focus on risk mitigation will
continue and include the continued build of the on-surface
stockpile and the advancement of underground development. The
construction team continues to target reaching approximately 80%
completion of overall construction progress by the end of 2021,
with plant ore commissioning expected as planned in Q2, 2022".
N. Eric Fier, CPG, P.Eng, and
CEO, stated, "The outstanding efforts from our team and contractors
in Mexico and Canada continued in Q3, 2021 with notable
progress being made on a number of key areas of the Project
including the process plant, the access road, powerline, and the
bridge. Las Chispas Project construction remains on time and budget
and our strong working capital position allows us to progress our
growth and optimization plans while de-risking in parallel".
Las Chispas Construction
The Company estimates that
the initial capital cost (estimated at $137.7 million) and construction schedule (from
January 1, 2021 to end of
construction period projected to be in Q2, 2022) outlined in the
Feasibility Study remains valid. Construction of the plant and
surface infrastructure is tracking on schedule and budget. At the
end of Q3, 2021, overall construction was 54% complete compared to
scheduled completion of 48%. Construction progress has benefited
from no delays due to COVID-19 or any other reason.
At the end of Q3, 2021 more than $93.7
million (or 68% of the total capital cost estimate) was
committed, of which an estimated $79.0
million (or 57% of the total capital cost estimate) has been
incurred on construction across all capital cost scopes (process
plant, underground development and infrastructure, surface
infrastructure, and owner's costs).
Construction has continued to progress well with detailed
engineering, earthworks, road construction, and concrete 100%
complete and, key infrastructure projects (powerline and bridge)
well advanced. The Company's Q3, 2021 progress on its planned
construction and development activities are as follows and shown in
Figures 1-9 attached:
Area
|
Status
|
Q3, 2021
Progress
|
Plant Detailed
Engineering
|
Completed
|
Plant detailed
engineering is complete.
|
Process Plant
Construction
|
On
Schedule
|
Concrete work has now
been completed, the steel, mechanical, piping (SMP) contract is
well underway. All SAG Mill components have been received or are in
transit and installation will begin in Q4, 2021.
The electrical and
instrumentation (EI) contract has been signed and the management
team has mobilized to site.
On September 30,
2021, there were 230 workers progressing the different contracts
for the processing plant. The plant construction activities will
reach their peak in Q4, 2021 with an estimated 330 workers during
this period.
Ausenco is
progressing well with most contracts and the plant delivery still
planned for Q2, 2022. Commissioning discussions have started
between SilverCrest and Ausenco.
|
Electrical Grid
Powerline (81 km)
Construction
|
Construction on
schedule
(energization
delayed)
|
The construction of
the powerline is progressing as planned for both sections (CFE and
SilverCrest). The energization of the powerline will, however, be
pushed from Q1, 2022 to Q2, 2022 due to procurement delays in the
Harmonic Filter/Power Factor Correction systems.
The Project team has
been working on a contingency plan for energization, which has been
put into action. The plant is expected to be energized via
temporary diesel generators ahead of the commissioning period. The
capacity of this temporary rental system (5 MW) will be enough to
power the entire process plant, but it is expected that it will
operate for a limited period at a fraction of its ultimate
capacity. The service provider has been selected and the
contract negotiations are well underway.
Status of powerline
construction:
CFE (27.0 km -
refurbishment of existing infrastructure)
All the material has
now been received including cables and poles. SilverCrest expects
CFE completion in Q1, 2022.
SilverCrest (54.0 km
– new infrastructure)
The completion of the
SilverCrest section of the powerline is also expected in Q1, 2022.
Section 1 (9 km) has reached 92% completion, Section 2 (18.0 km)
has reached 46% completion, and Section 3 (27.0 km) has reached 43%
completion.
|
Bridge
Construction
|
Ahead of
Schedule
|
The Tetuachi bridge
construction has progressed well during Q3, 2021. This construction
has reached 88% completion and it is now expected to be completed
in Q4, 2021, ahead of schedule and the plant start-up.
|
Confined Camp
Construction
|
Completed
|
Construction of 513
single occupancy rooms, kitchen, and recreational facilities for
use during construction to reduce COVID-19 and scheduling risks was
completed in H1, 2021.
|
Access Road
Construction
|
Completed Ahead
of Schedule
|
Construction of the
access road was completed ahead of schedule during Q3,
2021.
|
Underground
Development
|
Ahead of
Schedule
|
During Q3, 2021,
total underground development completed at the project reached 15.7
km and in 2021 is now 1.6 km ahead of the Feasibility Study life of
mine (LOM) plan.
|
Underground
Infrastructure and
Stockpile Growth
|
On
Schedule
|
Detailed engineering
of the underground infrastructure (electrical, ventilation,
emergency preparedness and services) continued to progress.
Stockpiles increase by an estimated 6,000 tonnes of mineralized
material at grades estimated to be in-line with the Feasibility
Study Mineral Reserve.
|
Tailings Facility
Construction
(Dry
Stack)
|
On
Schedule
|
Detailed engineering
has been completed with additional geotechnical test work.
Construction of the dry stack tailings facility started in October
2021.
|
Assay Lab
Construction
|
On
Schedule
|
Construction of the
assay lab facility in the nearby (est. 14 km) community of Arizpe
began in Q3, 2021 and procurement of lab equipment has been
initiated. The construction has reached 40% and the lab is expected
to be commissioned in Q1, 2022 ahead of plant start-up.
|
Underground Development
Since underground development
commenced in Q1, 2019, ahead of the release of our initial economic
study, a total of 15.7 km of underground development has now
been completed at the Project. In-vein drifting now totals 3.0 km
and access has been established in four (4) veins or areas and 44
in-vein work fronts. The Company accelerated underground mine
development for the first three quarters of 2021 to create
operational flexibility and de-risk the mine plan, resulting in an
additional 1.6 km of development (above the Feasibility Study
budget) completed year to date. As planned, the development rate is
expected to reduce in Q4, 2021, as Project construction progresses
toward the peak of personnel demand. During Q3, 2021, development
costs continued to track slightly under the budgeted unit cost per
metre. Underground development costs remained under budget despite
the additional metreage largely as a result of timing of expenses
on underground infrastructure.
An estimated 6,000 tonnes were placed on the stockpile in the
quarter with estimated grades in-line with the Feasibility Study
Mineral Reserves. The Feasibility Study production profile includes
processing from the historic lower grade stockpiles (162,600
tonnes) and recently developed pre-production stockpiles at the
start of the mine life, providing upfront material for optimizing
the process plant, flexibility, and risk reduction during ramp-up.
The lower grade historic stockpiles will be a key element for
reducing ramp-up risk as they will be used initially as blending
material to commission and ramp-up the process plant and as needed
through the end of 2024, allowing for a more measured ramp-up of
the underground mining rate.
Throughout Q3, 2021, discussions continued with regards to
awarding a five-year contract for underground mining. A contractor
has been selected and final negotiations and equipment selection
are in the process of being completed. The contract will include
flexible terms with regards to the mining rate to allow for
opportunities identified through the ongoing optimization work to
be pursued. SilverCrest has reached a preliminary agreement
with the contractor to utilize battery operated equipment for a
portion of the mining fleet required for narrow veins utilizing the
resue mining method. The Company expects to sign the new mining
contract in Q4, 2021.
Optimization Studies
Optimization work is ongoing for
the mine design and schedule. The result of this work will be
included in a Resource and Reserve update planned for 2022. Ahead
of these efforts being finalized, modifications to the initial
Feasibility Study mine plan have been implemented through the
course of 2021 to improve operational flexibility, emergency
preparedness, ventilation and potential early access to the Babi
Vista Splay and Granaditas veins. As such, at the end of Q3, 2021,
underground development reached the area of Babi-Vista Splay Vein
and has been halted until completion of the Resource and Reserve
Estimate. Once this estimate is complete, the Company will
determine the economics and budget to further develop this area.
The Babi Vista Splay Vein currently hosts an Inferred Mineral
Resource totaling 211,400 tonnes at an average grade of 13.00 gpt
gold ("Au") and 909.0 gpt silver ("Ag"), or 2,039 gpt silver
equivalent ("AgEq", using 86.9:1 Au:Ag) containing 88.3 koz Au and
6.2 million oz Ag, or 13.9 million oz AgEq. The bulk of Las Chispas
drill program in 2021 was to infill this area ahead of any possible
underground development.
On the processing side, the validation of metallurgical results
is progressing well, and representative samples of all exposed
underground veins are currently being tested. This additional
metallurgical testing is focused on enhancing the Company's
knowledge of the clay content in various veins to ensure process
plant performance (including settling and filtration), to further
de-risk, and to optimize in preparation for the ramp-up period.
Safety, COVID-19, and Community
Safety is always a top
priority for SilverCrest and the Company has made significant
progress to support a first safety audit (expected in Q4, 2021) by
Mexican authorities to validate its progress on its Health and
Safety Management Systems and Standards. At the end of Q3, 2021 the
Company's LTI frequency rate stood at 0.60 and its total recordable
injury frequency rate ("TRIFR") stood at
3.91.
The Company's COVID-19 prevention measures continue to be
critical for construction at Las Chispas. COVID-19 risk mitigation
efforts continued successfully in Q3, 2021 with more than
4,800 rRt-PCR tests completed. The use of rapid antigen tests has
been discontinued during Q3, 2021 in favor of the more accurate
rRt-PCR tests. In total, since May
2020, SilverCrest has completed more than 11,000 COVID-19
rRt-PCR tests. Positivity rates prior to site access remained low
in Q3, 2021. Although no serious occurrences have been recorded at
site, subsequent to quarter end, a cluster of COVID infections was
recorded at the Company's satellite offsite camp. The Company has
taken the appropriate measures including further testing of all
employees and contractors, temporary closure of this satellite
off-site camp, extensive cleaning, and review of key protocols. The
main construction camp remains fully operational and, at this
point, there is no expected impact to the construction camp or
related ongoing work. SilverCrest's original schedule included
contingency in the case of a COVID-19 outbreak, and this remains
unused.
The Company also participated in a local vaccination program to
complement the federal program. This local program allowed for full
vaccination of 220 employees and contractors and first dose
vaccination of an additional 110 employees and contractors.
To further enhance the Company's COVID-19 measures, the Company
has partnered and invested in a local certified laboratory facility
capable of conducting more than 300 rRT-PCR tests per day when
fully operational. This partnership has allowed the Company to have
preferred access, pricing and quick turn-around time which is
benefiting both the construction process and the community. This
facility was commissioned in Q3, 2021 and is now fully
operational.
There are currently 806 workers active at the Project (including
on-site and off-duty personnel) with 15% sourced locally, 50% from
Sonora, and 99% from Mexico. During construction in 2021, the
Company has engaged 13 local businesses and is constructing a local
geochemical assay lab. The assay lab is in the nearby (14 km)
community of Arizpe and is
expected to provide full-time employment of 20 to 30 people. Once
fully operational, the Las Chispas Mine will have approximately 400
to 450 full-time employees and contractors. The Company is also
progressing work related to the impacts of potential climate change
for both Las Chispas and local community. The initial results for
the physical risk assessment portion of the work related to the
Task Force for Climate Related Financial Disclosures ("TCFD") are
expected in 2022 along with a water stewardship plan that will
include and consider the findings of the TCFD data.
Funded for Construction, Near-Term Cash Flow
As at September 30, 2021, SilverCrest
had cash and cash equivalents of $199.0
million and $60.0 million
remaining under its $120.0 million
Credit Facility. To limit risk and enhance flexibility, SilverCrest
expects to drawdown at least 75% of the Credit Facility by the end
of 2021, in-line with the agreed drawdown schedule. This will allow
the Company to maintain availability of the remaining $30.0 million through August 2022, during ramp-up of the plant through
H2, 2022. As of September 30, 2021,
approximately $59.0 million of
initial capital remains to be incurred prior to commissioning. In
addition to the initial capital costs, SilverCrest has budgeted for
corporate G&A, exploration, value added taxes, working capital
and a minimum cash balance through ramp-up.
The Qualified Person under National Instrument 43-101 Standards
of Disclosure for Mineral Projects for this news release is N.
Eric Fier, CPG, P.Eng, and CEO for
SilverCrest, who has reviewed and approved its contents.
ABOUT SILVERCREST METALS INC.
SilverCrest is a
Canadian precious metals exploration and development company
headquartered in Vancouver, BC,
that is focused on new discoveries, value-added acquisitions and
targeting production in Mexico's
historic precious metal districts. The Company's top priority is on
the high-grade, historic Las Chispas mining district in
Sonora, Mexico, where it has
completed a feasibility study on the Las Chispas Project and is
proceeding with mine construction. Startup of production at the Las
Chispas Mine is targeted for mid-2022. SilverCrest is the first
company to successfully drill-test the historic Las Chispas
Property resulting in numerous high-grade precious metal
discoveries. The Company is led by a proven management team in all
aspects of the precious metal mining sector, including taking
projects through discovery, finance, on time and on budget
construction, and production.
FORWARD-LOOKING STATEMENTS
This news
release contains "forward-looking statements" and "forward-looking
information" (collectively "forward-looking statements") within the
meaning of applicable Canadian and United
States securities legislation. These include, without
limitation, statements with respect to: the strategic plans, timing
and expectations for the Company's construction and exploration
programs at the Las Chispas Project and the start up of production
at the Las Chispas Mine by mid-2022. Such forward looking
statements or information are based on a number of assumptions,
which may prove to be incorrect. Assumptions have been made
regarding, among other things: impact of the COVID-19 pandemic; the
reliability of mineralization estimates, mining and development
costs, the conditions in general economic and financial markets;
availability of skilled labour; timing and amount of expenditures
related to rehabilitation and drilling programs; and effects of
regulation by governmental agencies. The actual results could
differ materially from those anticipated in these forward-looking
statements as a result of risk factors including: uncertainty as to
the impact and duration of the COVID-19 pandemic; the timing and
content of work programs; results of exploration activities; the
interpretation of drilling results and other geological data;
receipt, maintenance and security of permits and mineral property
titles; environmental and other regulatory risks; project cost
overruns or unanticipated costs and expenses; and general market
and industry conditions. Forward-looking statements are based on
the expectations and opinions of the Company's management on the
date the statements are made. The assumptions used in the
preparation of such statements, although considered reasonable at
the time of preparation, may prove to be imprecise and, as such,
readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statements were made. The Company undertakes no obligation to
update or revise any forward-looking statements included in this
news release if these beliefs, estimates and opinions or other
circumstances should change, except as otherwise required by
applicable law.
N. Eric Fier, CPG, P.Eng
Chief Executive Officer
SilverCrest Metals Inc
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SOURCE SilverCrest Metals Inc.