AbraSilver Announces Robust Diablillos PFS With US$494M After-Tax NPV and 26% IRR (2024)

(TheNewswire)

Toronto – TheNewswire - March 25,2024: AbraSilver Resource Corp.(TSX.V:ABRA; OTCQX: ABBRF) ("AbraSilver" or the“Company”) is pleased to announceresults from its Preliminary Feasibility Study (“PFS” or the“Study”) for its wholly-owned Diablillos project (the“Project”) in Salta Province, Argentina. The PFS project team wascomprised of SGS Geological Services (“SGS”), with support fromKnight Piesold Ltd., SGS Bateman, Bmining (Chile), and INSA(Argentina).

All dollar ($) figures are presented in US dollarsunless otherwise stated. Base case metal prices used in this analysisare $1,850 per gold (“Au”) ounce (“oz”) and $23.50 per silver(“Ag”) oz.

PFS Study Highlights:

• Attractive project economics – 494 million after-tax Net Present Valuediscounted at 5% per annum (“NPV5%”),at base-case metal prices, with anafter-tax Internal Rate of Return (“IRR”) of25.6% and payback of2.4 years.At current spotprices1 an after-taxNPV5% of $661 million with an IRR of 30.3% and payback of2.1 years

• Substantial silver and gold production – 13.3 Mozsilver-equivalent (“AgEq”) average annualproduction over a 13-yearlife-of-mine (“LOM”), comprised of 7.7 MozAg and 71 kozAu, or, with average annual production of17.9 Moz AgEq over thefirst five years of full mine production, comprised of 14.5 Moz Ag and44 koz Au

• Low All-in Sustaining Cash Costs(“AISC”)– AverageAISC of $12.40/oz AgEqover LOM

• Low capital cost – Initialpre-production capital expenditure of $373million and sustaining capital of $65million

• Open pit mine with high grades – Conventional open pit mining and processing plant focusedexclusively on oxide mineralization with average grades of91 g/t Ag and 0.81 g/t Au (155 AgEq) over the LOM

• Maiden Proven Probable (“P”) MineralReserves Based on the PFS, Diablillos isestimated to hold PP Minerals Reserves containing 210 Moz of AgEq metal (42.3 Mt at 91g/t Ag 0.81 g/t Au)

• Potential for additional economic improvements –Several opportunities have been identified thatmay significantly enhance the economic returns as detailed later inthis release:

  • A preliminary internalstudy estimates that a significant amount of mineralized materialbelow cut-off grade, which is treated as waste in the PFS, could beamenable to heapleaching or other low-cost processing technologies, with further study work expected tobe completed by mid-2024.

  • A Phase IV drill campaign is planned to further expandthe Mineral Resource and Reserve estimates within the existingdeposits and to define new adjacent mineralized zones through step-outdrilling.

John Miniotis, President and CEO, commented, “We aredelighted to share the positive outcomes of the PFS which demonstratesthat Diablillos is economically robust and reaffirms our confidence inthe Project’s significant upside potential. Unlike many othersilver projects, the PFS highlights that Diablillos is a true primarysilver project, with a substantial amount of gold and no base metals.The PFS indicates that Diablillos may produce an annual average of17.9 Moz of silver-equivalent in the first five years, which wouldmake it one of the top ten primary silver mines in theworld2. In addition, weare very excited to have identified several opportunities to furtherenhance and optimize the PFS economics, which we will be evaluating aswe advance towards a Feasibility Study. This PFS is a great startingposition from which we plan to continue to unlock value for allstakeholders.”

Project Economics

Table 1 – Commodity Price Sensitivity Analysis

1Note: Spot Price as at closeon March 21,2024, per Reuters.com

The PFS presents a range of metal pricing scenarios onan after-tax basis to evaluate the economics of both upside anddownside price scenarios. The economics of the Diablillos project arevery robust and offer significant leverage to both silver and goldprices, with an after-tax NPV5% of $742 Million (+50%) if prices rise15% from the Base Case (Table 1).

Production Summary

The Diablillos project is envisioned as a conventionalopen pit operation over a mine life of approximately 13.5 years ofproduction with mill throughput of 9,000 tonnes per day. Totalmaterial moved (excluding stockpile rehandle and commissioning) is313.5 Mt (42.3 Mt mineralization and 271.2 Mt waste) at a strip ratioof 6.4 (excluding pre-stripping).

The proposed operation consists of a common open pitthat will extract both the Oculto and JAC deposits, the mineralizationof which are connected by a narrow node. The JAC deposit containshigher silver grade ore that occurs near-surface and, consequently,will be mined and processed in the earlier years of the mine plan.Additionally, the overburden at JAC provides suitable constructionmaterial for the project infrastructure and tailings storage facility(“TSF”). As a result, the highest-grade feed material is expectedin the first five years of full mine production, with average grades168 g/t silver and 0.51 g/t gold, resulting in average annualproduction of 14.5Moz silver and 44koz gold during that period (Table2 and Figure 1).

Table 2 – Grade and Production Profile

Note: AgEq is calculated using base case prices forsilver and gold (Au/Ag price ratio of 78.72)

Figure 1 – Annual Silver Equivalent Production andGrade Profile

Click Image To View Full Size

Processing and Metallurgy

The process facility has been designed for a nameplatecapacity of 9,000 tonnes of mineralization per day (“tpd”), or3.15 million tonnes per annum (“tpa”) considering 350 days a yearof operation. A conventional silver/gold processing plant flowsheetwas developed that incorporates crushing, grinding, gravityconcentration, an intense cyanidation circuit, cyanide leaching withoxygen addition, counter current decantation washing thickeners andMerrill-Crowe precious metal recovery from solution followed byon-site smelting to doré bars. The leached solids are detoxified,thickened, and pumped to a TSF for permanent disposal.

Metallurgical test work has been carried out in a rangeof different laboratories between 1996 and 2023 and all the resultshave been considered as part of the PFS. A geo-metallurgical model hasbeen developed segregating the deposit into five distinct domains,with overall LOM silver and gold recoveries averaging 82.8% and 86.6%,respectively. A schematic showing the proposed flowsheet is providedin Figure 2.

Tailings from the process plant will be stored in amulti-phase, fully lined, cross valley TSF. The facility will beraised using the downstream method with the initial starterimpoundment, constructed from borrow material and open pit pre-stripwaste, providing storage for the first three years ofproduction.

Figure 2 - Process Flowsheet

Click Image To View Full Size

Operating Costs

The operating cost estimates are based on anowner-operated truck and shovel mining operation, conventionalprocessing plant, and TSF.

The PFS operating cost estimates are shown on a pertonne mined and milled basis in Table 3. The PFS estimates that All-InSustaining Costs ("AISC") average $9.97/oz AgEq in Year 1– Year 5, and $12.40/oz AgEq over the LOM. This AISC is believedto be at the low end of the primary silver production costcurve3.

Table 3 – Mine Operating Cost Estimates

Project Capital Costs

The initial pre-production capital expenditures for theproject are summarized in Table 4. Capital expenditures to be incurredafter the start-up of operations are assigned to sustaining capitaland are projected to be covered by operating cash flows. Initialcapital costs are estimated at $373.5 million and total sustaining capital costs are estimated at $65.0million. Particular attention was given to the capital cost estimateduring the PFS with approximately 80% of the costs based on quotedprices and this has resulted in a lower estimated contingency cost of$20.3 million. Over 60% of equipment,supplies, construction, and service procurement packages will comefrom local companies, complying with local regulations.

Table 4 – Summary of Capital Cost Estimates

Taxes and Royalties

Taxes and royalties in the PFS are based on currentArgentinean legislated tax rates and were reviewed by an independenttax consultant. The current rates are:

• Argentina corporate income tax: 35%

• Municipal taxes: 0.6%

• Provincial mining royalty: 3%

• Gold/Silver export duties: 8% / 4.5%

In total, these taxes, royalties and export dutiestotal $1,087 million in the PFS. The Company believes that the currentgovernment of Argentina may implement changes to corporate incometaxes and export duties that would have a favourable impact on the PFSeconomics, although there is no guarantee that such changes will besuccessfully implemented and approved.

An additional 1% NSR royalty is payable to EMX RoyaltyCorporation.

Community Relations & Permitting

The Company continues to be very actively involved incommunity relations and maintains very positive relations with allnearby communities. The Project is expected to have a positiveimpact with the creation of new employment opportunities andinvestment in the region. The PFS estimates that over 65% of the totalcapital costs will be purchased domestically, and that the majority oflocal contractors will be hired regionally from Salta, Catamarca andnearby provinces.

Regarding permitting, the Company has submitted acomprehensive Environmental Baseline Study which is an importantmilestone towards the ongoing advancement of Diablillos as asustainable mining project. The Company is now working on finalizingthe Environmental Impact Assessment (“EIA”), which is an essentialpart of the final approval process required for the ultimateconstruction of the project, and the EIA application is expected to besubmitted later this year.

Summary of Economic Results

Table 5 summarizes the key economic results andparameters of the PFS.

Table 5 – Summary of Project Economics

The results of this PFS supersede those of the 2021Preliminary Economic Assessment (the “2021 PEA”) reported in “NI43-101 Preliminary Economic Assessment Technical Report – DiablillosProject” filed on SEDAR+ by AbraSilver on January 13,2022. Theresults reflect several positive changes to the planned development ofthe Diablillos Project compared with the 2021 PEA. The changesincorporated include:

• Maiden Mineral Reserve Estimate: A maiden Proven and Probable Mineral Reserve estimate hasbeen declared at Diablillos containing 123.4 Moz Ag and 1.1 Moz Au(42.3 Mt with average grades of 91 g/t Ag and 0.81 g/t Au). Theconversion rate of MI Mineral Resources to PP Mineral Reserves is 79%on a tonnage basis and 83% on a contained metal basis.

• Inclusion of JAC Deposit: Thediscovery and inclusion of the JAC deposit into the mine plan hascontributed to higher silver grades and an overall increase in theMineral Resource and Reserve estimates. Importantly the high-gradeJAC deposit will be mined and processed throughout years 2 – 5,resulting in elevated cash flow levels in the early years of the mineplan.

• Higher Throughput: The processingplant throughput rate has been expanded by 29% to 9,000 tpd versus7,000 tpd in the 2021 PEA. This has helped contribute to higherannual silver and gold production rates, with a peak annual productionrate of 19.7 Moz AgEq in Year 5 of the PFS.

• Higher Recovery Rates: The PFSprocess plant includes the addition of a gravity separation circuitbefore cyanide leaching, which contributes to higher recovery ratesfor both silver and gold. Overall, silver and gold recovery rates nowaverage 82.8% and 86.6%, respectively, compared to 73.4% for silverand 86.0% for gold in the 2021 PEA.

• Power Generation and Site Infrastructure: The PFS incorporates plans to power the Project by usingon-site diesel-fueled generators and installing a 20-megawatt solararray on-site to provide a clean source of renewable energy. The2021 PEA assumed that power would be secured from a regional naturalgas pipeline. This still represents a possibility going forward but todate the Company has not secured any assurances on the availability ofnatural gas from this pipeline.

• Increased Estimated Accuracy on Capital and OperatingCosts: The PFS costing accuracy has improved to+25% /-10% (from +50%/-20% in the 2021 PEA). Additionally,approximately 80% of the cost estimates have been based on third-partycontractor and equipment manufacturer quotations, providing anincreased level of accuracy.

• Updated Capital CostsTotalinitial capital expenditures increased by $118 million. Beyondgeneral cost inflation, the primary drivers behind this increasewere:

  • Mining – Colluvial pre-strip material and higherthroughput capacity commanded a larger mine fleet. The 2021 PEAassumed that mining was performed by contractors while the PFS assumesan owner-operated mining operation. Pre-stripping costs weresignificantly lower in the PFS due to near-surface mineralizationidentified by the Company since the 2021 PEA.

  • Processing Plant – The throughput rate of theprocessing plant was increased to 9,000 tpd from 7,000 tpd, asoutlined above, and a gravity separation circuit and a covered crushedore stockpile dome were added.

  • TSF – The design has been updated to store newincreased capacities, through a five phases dam expansion, with awater recovery system and seeping control facilities.

  • Power Generation and Site Infrastructure – Asoutlined above, the PFS incorporates plans to power the project byusing an on-site hybrid power generation scheme, composed ofdiesel-fueled generators and a 20-megawatt photovoltaic plant.

Diablillos: Future Opportunities and ValueEnhancements

Several potential opportunities have been identifiedthat may further enhance the economic return outlined in the PFS.Significant opportunities include but are not limited to thefollowing:

• Processing of MaterialBelow Cut-Off Grade: It is anticipated that asignificant amount of mineralization below cut-off grade, which iscurrently being classified as waste, could be processed via otherlow-cost processing alternatives (e.g. heap leaching). This could result in increased Mineral Resources andReserves, a reduction in the overall strip ratio at Diablillos andhigher metal production. The Company plans to complete a preliminaryscoping study in H1/2024 to evaluate the economic potential ofincorporating this mineralization into the overall mine plan.

• Expansion of Mineral Resources and Reserves:A Phase IV exploration campaign is currentlybeing planned to further expand the Mineral Resources and Reserveswithin the existing deposits and to define new, immediately adjacentmineralized zones through step-out drilling. Multiple explorationtargets close to the planned Oculto-JAC open pit warrant additionaldrilling including: Oculto, JAC, Fantasma, Laderas, JAC North,Alpaca, with numerous other targets within the concession block.

• Evaluating Sulphide Potential: The PFS is based exclusively on oxidized mineralization withthe Oculto pit reaching a maximum depth of approximately 300 metres.Selective deeper drilling has encountered mineralization in sulphidesbeneath Oculto and JAC down to a depth of approximately 550 metres. Anevaluation of the mineralization contained in the underlying sulphideswill be carried out, in parallel with a metallurgical test workcampaign, to quantify the contained metal in sulphides and theeconomics of its extraction.

• Implementation of Proposed Reduction in Corporate Taxes Mining Export Duties: The new Argentinefederal government has announced a proposal to reduce corporate incometaxes from 35% to 25%, as well as eliminating export duties, and othermeasures which could introduce other financial benefits to encouragelarge investments in the country. These benefits must still beapproved by the National Congress and, if approved, wouldsignificantly benefit the economics of the Diablillosproject.

Mineral Reserve Estimate – As of March 07,2024

Table 6 shows the Proven and Probable Mineral Reservesat Diablillos by deposit. The Mineral Reserves were estimated using asilver price of $22.50/oz and a gold price of $1,750/oz.

Table 6 – Diablillos Mineral Reserve Estimate

Notes for Mineral Reserve Estimate:

• Mineral reserves have an effective date of March 07,2024.

• The Qualified Person for the Mineral Reserve Estimateis Mr. Miguel Fuentealba, P.Eng.

• The mineral reserves were estimated using the CanadianInstitute of Mining, Metallurgy and Petroleum (CIM), DefinitionStandards for Mineral Resources and Reserves, as prepared by the CIMStanding Committee on Reserve Definitions and adopted by CIMCouncil.

• The mineral reserves were based on a pit design whichin turn aligned with an ultimate pit shell selected from a WhittleTMpit optimization exercise. Key inputs for that process are:

• • Metal prices of U$S 1,750/oz Au; U$S 22.50/ozAg

  • Variable Mining cost by bench and material type.Average costs are U$S 1.94/t for all lithologies except for“cover” Cover mining cost of U$U 1.73/t, respectively.

  • Processing costs for all zone, U$S 22.97/t.

  • Infrastructure and GA cost of U$S 3.32/t.

  • Pit average slope angles varying from 37° to60°

  • The average recovery is estimated to be 82.6% forsilver and 86.5% for gold.

• The Mineral Reserve Estimate has been categorized inaccordance with the CIM Definition Standards (CIM, 2014).

• A Net Value per block (“NVB”) cut-off was used toconstrain the Mineral Reserve with the reserve pitshell. The NVB wasbased on "Benefits = Revenue-Cost" being positive, where,Revenue = [(Au Selling Price (US$/oz) - Au Selling Cost (US$/oz)) x(Au grade (g/t)/31.1035)) x Au Recovery (%)] + [(Ag Selling Price(US$/oz) - Ag Selling Cost (US$/oz)) x (Ag grade (g/t)/31.1035)) x AgRecovery (%)] and Cost = Mining Cost (US$/t) + Process Cost (US$/t) +Transport Cost (US$/t) + GA Cost (US$/t) + [Royalty Cost (%) xRevenue]. The NVB method resulted in an average equivalent cut-offgrade of approximately 46g/t AgEq.

• In-situ bulk density was read from the block model,assigned previously to each model domain during the process of mineralresource estimation, according to samples averages of each lithologydomain, separated by alteration zones and subset byoxidation.

• All tonnages reported are dry metric tonnes and ouncesof contained gold are troy ounces.

• Mining recovery and dilution factors have not beenapplied to the Mineral Resource estimates.

Technical Disclosure and Qualified Persons

A A technical report in respect of the PFS (the“Technical Report”) will be completed in accordance with NationalInstrument 43-101 - Standards of Disclosure for Mineral Projects(“NI 43-101”) and will be filed and available on the Company’sprofile on SEDAR+ within 45 days of this news release. The TechnicalReport will be authored and signed off by the Qualified Persons listedin Table 7.

David O’Connor P.Geo., Chief Geologist forAbraSilver, is a Qualified Person as defined by NI 43-101 and hasreviewed and approved the scientific and technical information in thisnews release.

Table 7 – NI 43-101 Technical Report Summary

About AbraSilver

AbraSilver is an advanced-stage exploration companyfocused on rapidly advancing its 100%-owned Diablillos silver-goldproject in the mining-friendly Salta province of Argentina. Thecurrent Proven and Probable Mineral Reserve estimate for Diablillosconsists of 42.3 Mt grading 91 g/t Ag and 0.81 g/t Au, containingapproximately 124 Moz silver and 1.1 Moz gold, with significantfurther exploration upside potential. In addition, the Company hasentered into an earn-in option and joint venture agreement with Teckon the La Coipita project, whereby Teck can fund up to US$20 millionin exploration expenditures and make certain other payments to earn upto an 80% interest. AbraSilver is listed on the TSX-V under the symbol“ABRA” and in the U.S. on the OTCQX under the symbol“ABBRF.”

For further information please visit the AbraSilverResource website at www.abrasilver.com, our LinkedInpage at AbraSilver Resource Corp., andfollow us on Twitter at www.twitter.com/abrasilver

Alternatively, please contact:

John Miniotis, President and CEO

john@abrasilver.com

Tel: +1416-306-8334

Non-IFRS Financial Measures

This news release contains certain non-IFRS measures,including AISC. AISC includes operating costs, royalties, sustaining capital,closure costs, and corporate G&A and iscalculated based on guidance provided by the World Gold Council(“WGC”). WGC is not a regulatory industry organization and doesnot have the authority to develop accounting standards for disclosurerequirements. The Company believes that thesemeasures, together with measures determined in accordance with IFRS,provide investors with an improved ability to evaluate the underlyingperformance of the Company and the results ofthe PFS. Non-IFRS measures do not have anystandardized meaning prescribed under IFRS, and therefore they may notbe comparable to similar measures employed by other companies. Thedata is intended to provide additional information and should not beconsidered in isolation or as a substitute for measures of performanceprepared in accordance with IFRS.

Forward-Looking Statements

This news release contains “forward-lookingstatements” and/or “forward-looking information” (collectively,“forward-looking statements”) within the meaning of applicablesecurities legislation. All statements, other than statements ofhistorical fact, are forward-looking statements. Generally,forward-looking statements can be identified by the use offorward-looking terminology such as “plans”, “expect”, “isexpected”, “in order to”, “is focused on” (a future event),“estimates”, “intends”, “anticipates”, “believes” orvariations of such words and phrases or statements that certainactions, events or results “may”, “could”, “would”, or thenegative connotation thereof. In particular, statements regardingthe Company’s futureoperations, future exploration and development activities or otherdevelopment plans constitute forward-looking statements. By theirnature, statements referring to mineral reserves or mineral resourcesconstitute forward-looking statements. Forward-looking statements inthis news release include, but are not limited to statements withrespect to the results (if any) of further exploration work to defineand expand or upgrade mineral resources andreserves at the Project; the anticipated exploration, drilling,development, construction and other activities of the Company and theresults of such activities, including the completion of a preliminary scoping study inH1/2024; the mineral reserve estimates of theProject (and the assumptions underlying such estimates); the abilityof exploration work (including drilling) to accurately predictmineralization; the focus of the anticipated Phase IV explorationcampaign at the Project; the completion and timing for the filing ofthe Technical Report; the implementation of proposed reductions incorporate taxes and mining export duties in Argentina; the ability torealize upon mineralization in a manner that is economic; the abilityof the Project to be among the top ten primarysilver mines in the world; and any otherinformation herein that is not a historical fact.

The Company considers its assumptions to be reasonablebased on information currently available but cautions the reader thatthese assumptions regarding future events, many of which are beyondthe control of the Company, may ultimately prove to be incorrect sincethey are subject to risks and uncertainties that affect the Company,its properties and business. Such risks and uncertainties include, butare not limited to, changes in demand for and price of gold, silverand other commodities (such as fuel and electricity) and currencies;changes or disruptions in the securities markets; legislative,political or economic developments in Argentina; changes in any of theassumptions underlying the PFS; the need to obtain permits and complywith laws and regulations and other regulatory requirements; thepossibility that actual results of work may differ fromprojections/expectations or may not realize the perceived potential ofthe Company's projects; risks of accidents, equipment breakdowns andlabour disputes or other unanticipated difficulties or interruptions;the possibility of cost overruns or unanticipated expenses indevelopment programs; operating or technical difficulties inconnection with exploration, mining or development activities; thespeculative nature of exploration and development, including the risksof diminishing quantities of grades of reserves and resources; and therisks involved in the exploration, development and mining business andthe additional risks described in the Company’s most recently filedAnnual Information Form, annual and interim management’s discussionand analysis and other disclosure documents which are available onSEDAR+ (www.sedarplus.ca) under the Company’s issuer profile. TheCompany’s anticipation of and success in managing the foregoingrisks could cause actual results to differ materially from what isanticipated in such forward-looking statements. Although management ofthe Company has attempted to identify important factors that couldcause actual results to differ materially from those contained inforward-looking statements, there may be other factors that causeresults not to be as anticipated, estimated or intended. The Companydisclaims any intention or obligation to update or revise anyforward-looking statements whether as a result of new information,future events or otherwise, except as required by applicablesecurities laws.

Neither the TSX Venture Exchange nor its RegulationServices Provider (as that term is defined in the policies of the TSXVenture Exchange) accepts responsibility for the adequacy or accuracyof this news release

1Spot prices: $24.76/oz Ag & $2,180.81/oz Au closingprices on March 21,2024 (Source: Reuters.com)

2 Please see “Non-IFRSFinancial Measures”

2Source:https://www.statista.com/statistics/253333/leading-primary-silver-mines/

3www.silverinstitute.org/wp-content/uploads/2023/11/SilverMarket2023_interim-report.pdf

Copyright (c) 2024 TheNewswire - All rights reserved.