Oct 5 2016
Silver Bear Resources Inc. is pleased to announce a 66% increase in pre-tax NPV to US$132.6 million for the Vertikalny Central deposit of its Mangazeisky Silver Project (the “Project”) in the Republic of Sakha (Yakutia), Russia following the results of an updated National Instrument 43-101 (“NI 43-101”) feasibility study (the Updated Feasibility Study”). The NI 43-101 Updated Feasibility Study will be filed on SEDAR within 45 days of this release.
Graham Hill, President and Chief Executive Officer, commented: “The Updated Feasibility Study demonstrates that we are able to realise the increased value in the recently updated Vertikalny mineral resource estimate, and highlights our project's extremely robust economics. The better defined and even higher grade ore zones have allowed us to refine the open pit and underground designs to maximise operating cash flow, particularly in the first half of the mine life. The outcome of this effort is reflected in a 97% increase in pre-tax IRR from 43.6% to 86.1% and the pre-tax NPV (5%) from US$ 79.7 million to US$ 132.6 million, with only a nominal increase in initial capital costs.
The updated mine plan requires no change to the process facility design and associated infrastructure and we continue to drive construction to start commissioning by the end of 2016. During this month, the process plant weather-shield and mill foundations were completed allowing us to continue construction and installation of mechanical and electrical equipment during the remainder of the year. We anticipate starting commissioning work on the boiler heating system for the process plant building and the main power generating plant during October. In addition, we have started the mechanical erection of the ball mill and plan to complete that work by the end of October.”
Updated Feasibility Study Highlights
- Pre-tax NPV at a 5% discount rate is US$132.6 million, the pre-tax IRR is 86.1% and the payback period is 1.3 years.
- With Far East Tax incentives, the post-tax NPV at 5% discount rate is US$123.1 million, the post-tax IRR is 81.9% and the payback period remains 1.3 years.
- Initial capital costs increased nominally to US$49.9 million from US$48.6 million; Cash Cost are lower now US$7.49/oz compared to US$7.97; Total Cost now at US$10.98/oz compared to US$11.32/oz
- Assumptions include a variable silver price of US$19.65/oz, US$18.57/oz, US$19.62/oz, US$19.79/oz, US$19.72/oz and US$19.92/oz during Q1 2017, Q2 2017, Q3/4 2017, 2018, 2019 and 2020 as well as the remaining project life, respectively, with a life-of-mine (“LOM”) weighted average silver price of US$19.76/oz. Exchange rate applied in the base case is RUB66.00/USD.
- Total Proven and Probable Mineral Reserves of 822,000 tonnes at a diluted average grade of 852 g/t Ag for 22.5 million troy ounces of silver.
- Total Vertikalny Central Indicated mineral resources of 27.7 million troy ounces of silver at an average grade of 1,227 g/t Ag, in addition to Inferred mineral resources of 8.9 million ounces of silver at an average grade of 786 g/t Ag
- At full production, processing of 110,000 tonnes of ore per annum.
- Production of 18,875,000 ounces of silver over a 7.3-year LOM with average of 2.5 million ounces per annum
- Average metallurgical recovery of 84% silver.
Project Execution
The Company is on track to commence steady state production starting in Q1 2017. A licensed Russian design institute (EMC Mining LLC (“EMC”) in St Petersburg) continues to provide engineering services for the processing facility and associated mine site infrastructure. Note that the Updated Feasibility Study showed that no change is required to the process design as a result of the updated geology and mine plan. The Company has proceeded with construction in advance of regulatory approval for the project and expects that all of the permits needed for construction and operation will be in place prior to the start of production. The Company will commence production only once all necessary permits and approvals are in place.
Major infrastructure such as the buildings to provide shelter during mechanical and electrical installation have been erected and mechanical and electrical installation can start in October 2016.
More detailed Updated Feasibility Study results can be found in Appendix A The Updated Feasibility Study consultants were led by Tetra Tech WEI Inc. (“Tetra Tech”) and comprised an independent, multidisciplinary team including SRK Consulting (UK) Limited (“SRK”) and Environmental Resource Management Consultants Inc. (“ERM”).
Filing of Technical Report – Vertikalny Mineral Resource Update
The Company is also pleased to announce that on September 21, 2016 it filed the NI 43-101 Technical Report (“Technical Report”) for the mineral resource estimate update of its Vertikalny deposits, located within its wholly-owned Mangazeisky Project. Tetra Tech prepared the Technical Report and it supports the Company’s announcement of August 8, 2016.
To view and download the Technical Report, please visit www.sedar.com under the Company’s profile.