Silver Elephant Mining Corp. press release

Silver Elephant: Gibellini Vanadium Project's PEA Shows 25.4% After Tax IRR At $10/lb V2O5, Capex $147 Million

2021-08-30

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Silver Elephant: Gibellini Vanadium Project’s PEA Shows 25.4% After Tax IRR At $10/lb V2O5, Capex $147 Million

VANCOUVER, BC / ACCESSWIRE /August 30, 2021 / Silver Elephant Mining Corp. ("Silver Elephant" or the "Company") (TSX:ELEF)(OTCQX:SILEF)(Frankfurt:1P2N) is pleased to announce the results of a preliminary economic assessment (the "2021 PEA") for its Gibellini vanadium project ("Gibellini project") that demonstrates an after-tax internal rate of return ("IRR") of 25.4%, and after-tax cumulative cash flow of $260.8 million, assuming an average vanadium pentoxide (V2O5) price of $10.00 per pound.

The Gibellini project is designed to be an open pit, heap leach operation in Nevada's Battle Mountain region (25 km south of Eureka) with initial capital cost of $147 million, average annual production is 10.2 million pounds of V2O5 , at an all-in sustaining cost of $6.04 per pound with strip ratio of 0.18 to 1 (waste rock:leach material).

As of August 27, 2021, the European price of vanadium pentoxide (98%) was $9.60 per pound according to www.asianmetal.com.

The 2021 PEA was prepared by Wood Group USA, Inc (Wood) and Mine Technical Services Ltd. (MTS). The technical report that summarizes the 2021 PEA will be filed under the Company's SEDAR profile and available within 45 days.

All dollar values are expressed in US dollars unless otherwise noted.

2021 PEA Highlights:

The 2021 PEA is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

Highlights of the 2021 PEA (after tax):

Mineral Resources

The PEA Mineral Resource is based on Measured, Indicated and Inferred Mineral Resource estimates for the Gibellini deposit and Inferred Mineral Resource estimates for the Louie Hill and Bisoni McKay deposits, totaling131.34 million pounds of contained V2O5 in the Measured and Indicated categories, and 227.81 million pounds of contained V2O5in the Inferred catetory.

Mineral Resource Statement, Gibellini

| Confidence Category | Domain | Cut-off V2O5(%) | Tons (kton) | Grade V2O5 (%) | Contained V2O5 (klb) | | Measured | Oxide | 0.101 | 3,960 | 0.251 | 19,870 | | Transition | 0.086 | 3,980 | 0.377 | 29,980 | | | Indicated | Oxide | 0.101 | 7,830 | 0.222 | 34,760 | | Transition | 0.086 | 7,190 | 0.325 | 46,730 | | | Total Measured and Indicated | | | 22,950 | 0.286 | 131,340 | | Inferred | Oxide | 0.101 | 160 | 0.170 | 550 | | Transition | 0.086 | 10 | 0.180 | 30 | | | Reduced | 0.116 | 14,800 | 0.175 | 51,720 | | | Total Inferred | | | 14,970 | 0.175 | 52,300 |

Notes:

1. The Qualified Person for the estimate is Mr. Todd Wakefield, RM SME of Mine Technical Services Ltd. The Mineral Resources have an effective date of5 June 2021. The resource model was prepared by Mr. E.J.C. Orbock III, RM SME.

2. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

3. Mineral Resources are reported at various cut-off grades for oxide, transition, and reduced material.

4. Mineral Resources are reported within a conceptual pit shell that uses the following assumptions: Mineral Resource V2O5price of $14.64/lb; mining cost: $2.21/st mined; process cost: $13.62/st processed; general and administrative (G&A) cost: $0.99/st processed; metallurgical recovery assumptions of 60% for oxide material, 70% for transition material and 52% for reduced material; tonnage factors of 16.86 ft3/st for oxide material, 16.35 ft3/st for transition material and 14.18 ft3/st for reduced material; royalty: 2.5% net smelter return (NSR); shipping and conversion costs: $0.37/lb. An overall 40° pit slope angle assumption was used.

5. Rounding as required by reporting guidelines may result in apparent summation differences between tons, grade and contained metal content. Tonnage and grade measurements are in US units. Grades are reported in percentages.

Mineral Resource Statement, Louie Hill

Notes:

1. The Qualified Person for the estimate is Mr. Todd Wakefield, RM SME, of Mine Technical Services Ltd. The Mineral Resources have an effective date of 5 June 2021. The resource model was prepared by Mr. Mark Hertel, RM SME.

2. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

3. Oxidation state was not modeled.

4. Mineral Resources are reported within a conceptual pit shell that uses the following assumptions: Mineral Resource V2O5price of $14.64/lb; mining cost: $2.21/st mined; process cost: $13.62/st processed; general and administrative (G&A) cost: $0.99/st processed; metallurgical recovery assumptions of 60% for mineralized material; tonnage factors of 16.86 ft3/st for mineralized material; royalty: 2.5% net smelter return (NSR); shipping and conversion costs: $0.37/lb. An overall 40° pit slope angle assumption was used.

Mineral Resource Statement, Bisoni-McKay

| Area | Confidence Category | Domain | Cut-off V2O5(%) | Tons (kton) | Grade V2O5 (%) | Contained V2O5 (klb) | | North Area A | Inferred | Oxide | 0.107 | 6,970 | 0.29 | 39,720 | | Transition | 0.124 | 1,500 | 0.33 | 9,900 | | | | Reduced | 0.139 | 9,080 | 0.39 | 70,580 | | | | Total North Area A | Inferred | All | Variable | 17,540 | 0.34 | 120,210 | | South Area B | Inferred | Oxide | 0.107 | 1,470 | 0.28 | 8,160 | | Transition | 0.124 | 320 | 0.40 | 2,540 | | | | Reduced | 0.139 | 510 | 0.30 | 3,100 | | | | Total South Area B | Inferred | All | Variable | 2,300 | 0.30 | 13,810 | | Total | Inferred | All | Variable | 19,850 | 0.34 | 134,020 |

Notes:

1. The Qualified Person for the estimate is Mr. Todd Wakefield, RM SME, of Mine Technical Services Ltd. The Mineral Resources have an effective date of 5 June 2021.

2. Mineral Resources are reported at various cut-off grades for oxide, transition, and reduced material.

3. Mineral Resources are reported within a conceptual pit shell that uses the following assumptions: Mineral Resource V2O5price of $11.50/lb; mining cost: $2.90/st mined; process cost: $13.75/st; general and administrative (G&A) cost: $1.00/st processed; metallurgical recovery assumptions of 65% for oxide material, 56% for transition material and 50% for reduced material; tonnage factors of 16.86 ft3/st for oxide material, 16.35 ft3/st for transition material and 14.18 ft3/st for reduced material; royalty: 2.5% net smelter return (NSR); shipping and conversion costs: $0.625/lb. An overall 40° pit slope angle assumption was used.

4. Rounding as required by reporting guidelines may result in apparent summation differences between tons, grade and contained metal content. Tonnage and grade measurements are in US units. Grades are reported in percentages.

Mining & Processing

A subset of the Gibellini and Louie Hill Mineral Resource estimates were adopted in the 2021 PEA mine plan. Bisoni McKay Mineral Resource estimate was not included in the mine plan in the 2021 PEA to better reflect the Company's already submitted plan of operation in its permitting efforts.

Subset of the Gibellini Mineral Resource Estimate within the 2021 PEA Mine Plan

| Leach Material | Domain | Cutoff V2O5(%) | Tons ('000) | V2O5Grade (%) | Contained V2O5Lbs ('000) | | Measured | Oxide | 0.135 | 3,890 | 0.253 | 19,684 | | Transition | 0.135 | 3,944 | 0.378 | 29,824 | | | Reduced | 0.135 | - | 0.000 | - | | | Indicated | Oxide | 0.135 | 6,246 | 0.240 | 30,024 | | Transition | 0.135 | 7,056 | 0.316 | 44,624 | | | Reduced | 0.135 | - | 0.000 | - | | | Total Measured and Indicated | | | 21,136 | 0.294 | 124,156 | | Inferred | Oxide | 0.135 | 116 | 0.174 | 403 | | Transition | 0.135 | - | 0.000 | - | | | Reduced | 0.135 | 5,183 | 0.163 | 16,919 | | | Total Inferred | | | 5,299 | 0.163 | 17,323 |

Subset of the Louie Hill Mineral Resource Estimate within the 2021 PEA Mine Plan

| Leach Material | Domain | Cut-off (%) | Tonnage (kton) | V2O5 (%) | V2O5 (klb) | | Inferred | Oxide | 0.155 | 6,963 | 0.282 | 39,315 | | Transition | 0.155 | - | 0.000 | - | | | Reduced | 0.155 | - | 0.000 | - | | | Total Inferred | | | 6,963 | 0.282 | 39,315 |

Capital and operating costs for the 2021 PEA are based on supplying 3 Mt of crushed and agglomerated leach material annually from two open pits at Gibellini and Louie Hill. Initial mine development will be focused on Gibellini, with Louie Hill following nine years later.

Mining at the Gibellini and Louie Hill deposits is planned to be a conventional open pit mine using a truck and loader fleet consisting of 100-ton trucks and front-end loaders. A power line would be constructed from an existing transmission line and water will be leased from a private ranch. Both water and power sources are within five miles of the planned mining operations.

The average annual mine production during the 11.1 year mine life will be 3.56 million tons of leach material (3 Mst) and waste (0.56 Mst) at a strip ratio of 0.18 (w:l).

V2O5 | Produced V2O5 | | | (kt) | (kt) | (kt) | (kt) | (kt) | (kt) | (% V2O5) | (mbls) | (mbls) | | YR1 | 3,002 | 2 | 2,573 | 424 | 2 | 3,000 | 0.298 | 17,877 | 10,915 | | YR2 | 3,072 | 72 | 2,025 | 974 | 1 | 3,000 | 0.320 | 19,221 | 12,297 | | YR3 | 3,117 | 117 | 766 | 2,185 | 50 | 3,000 | 0.401 | 24,059 | 16,293 | | YR4 | 3,096 | 96 | 2,423 | 577 | 0 | 3,000 | 0.227 | 13,602 | 8,638 | | YR5 | 3,081 | 81 | 1,096 | 1,862 | 42 | 3,000 | 0.281 | 16,881 | 11,252 | | YR6 | 3,011 | 11 | 395 | 2,158 | 447 | 3,000 | 0.292 | 17,519 | 11,824 | | YR7 | 5,943 | 2,943 | 641 | 1,817 | 542 | 3,000 | 0.224 | 13,447 | 8,926 | | YR8 | 4,232 | 1,232 | 308 | 960 | 1,732 | 3,000 | 0.178 | 10,657 | 6,409 | | YR9 | 3,203 | 203 | 591 | 44 | 2,365 | 3,000 | 0.187 | 11,214 | 6,121 | | YR10 | 3,067 | 67 | 3,000 | 0 | 0 | 3,000 | 0.364 | 21,857 | 12,999 | | YR11 | 4,191 | 1,191 | 3,000 | 0 | 0 | 3,000 | 0.218 | 13,057 | 7,922 | | YR12 | 518 | 121 | 397 | 0 | 0 | 397 | 0.177 | 1,405 | 870 | | YR13 | | | | | | | | | 101 | | Total | 39,533 | 6,136 | 17,215 | 11,000 | 5,183 | 33,397 | 0.271 | 180,794 | 114,568 |

Mining will be completed using contract mining, with Silver Elephant's mining staff overseeing the contracted mining operation and performing the mine engineering and survey work.

The processing method envisioned will be to feed leach material from the mine via loader to a hopper that will feed a crushing plant. The leach material will be fed to the agglomerator where sulfuric acid, flocculent and water will be added to achieve adequate agglomeration. The agglomerated leach material will be transported to a stacker on the leach pad, which will stack the material to a height of 15 feet. Once the material is stacked, solution will be added to the leach heap at a rate of 0.0025 gallons per minute per square foot. The solution will be collected in a pond and this pregnant leach solution ("PLS") will be sent to the process building for metal recovery. In the process building, the PLS will go through solvent extraction ("SX") and stripping processes to produce vanadium pentoxide.

Capital and Operating Costs

During the capital period, an initial leach pad having a capacity of 16.7 Mst will be constructed, and will be followed by one expansion of approximately 16.7 Mst. The total initial capital cost is estimated at approximately $147 million.

Project Capital Cost Estimate

| Cost Description | Total ($000s) | | Open Pit Mine | | | Mobile equipment | 122 | | On Site Infrastructure | | | Site preparation | 2,740 | | Roads | 1,577 | | Water supply | 2,263 | | Sanitary system | 69 | | On-site electrical | 2,325 | | Communications | 187 | | Contact water ponds | 186 | | Non-process facilities - buildings | 8,594 | | Process Facilities | | | Material handling | 21,730 | | Heap leach system | 22,033 | | Process plant | 24,167 | | Off-Site Infrastructure | | | Water system | 5,095 | | Electrical supply system | 3,657 | | First fills | 975 | | Total Direct Cost | 95,720 | | Construction indirect costs | 5,355 | | Sales Tax/OH&P | 5,333 | | EPCM | 11,178 | | Contingency | 29,396 | | Total Project Cost | 146,982 |

Note: OH&P = overhead and profit, EPCM = engineering, procurement and construction management

Sustaining capital is estimated at $25.2 million.

Sustaining Capital Costs

| Description | Total ($000s) | | Leach pad expansions | 23,069 | | Haul road to Louie Hill | 814 | | Storm water controls Louie Hill pit/waste rock facility/roads | 386 | | Equipment annual allowance | 971 | | Total Sustaining Capital | 25,240 |

Operating costs are estimated to average $16.12 per ton leached, or $4.7/lb V2O5recovered

Operating Costs

| Total Cash Operating Cost | $ per Ton Leached | $ per lb of V2O5Recovered | | G&A | 0.97 | 0.28 | | Mining Cost | 3.36 | 0.98 | | Total Processing Cost | 11.79 | 3.44 | | Total | 16.12 | 4.70 |

The cash operating costs in the first half of the Gibellini project covering years 1-7 is $4.20 per lb of V2O5produced and for years 8-12 is $5.87 per lb of V2O5produced, resulting in a weighted average cash cost of $4.70 per lb of V2O5produced and all-in sustaining cost of $6.04/lb. The cash operating cost is lower in the first half of the Gibellini project due to processing of higher-grade material.

Vanadium Recoveries and Metallurgical Testing

Approximately 114.6 million pounds of V2O5is expected to be produced from the Gibellini and Louie Hill leaching operations at an average recovery of 63.4% (oxide: 60%, transition: 70% and reduced: 52%). The heap leaching will be performed at ambient temperature and atmospheric pressure without pre-roasting or other beneficiation process. The PLS will be continuously collected with leach material undergoing, on average, a 150 day heap-leaching cycle.

The direct heap leach vanadium recovery estimates used in the 2021 PEA were based on extensive metallurgical test work performed by SGS Lakefield Research Laboratories, Dawson Minerals Laboratories, and McClelland Laboratories. Samples were selected from a range of depths within the Gibellini deposit, and are considered to be representative of the various types and styles of mineralization within that deposit. Samples were obtained to ensure that tests were performed on sufficient sample mass. The end results demonstrated low acid consumption (less than 100 lb acid consumption per ton leached) and high recovery through direct leaching.

Solvent extraction processing was conducted to recover vanadium from sulfuric acid PLS generated during pilot column testing on bulk leach samples from the Gibellini project. Laboratory-scale testing was conducted on select solutions generated during the pilot SX processing, to optimize the SX processing conditions. Additional laboratory scale testing was successfully conducted on the loaded strip solution to purify, precipitate and extract final marketable vanadium-bearing products.

Sensitivity Analysis

The tables below show the sensitivity analysis to the vanadium pentoxide price, grade, and to the PEA capital cost and operating costs. A sensitivity analysis to vanadium price indicates strong project economics even in very challenging conditions, and that the Gibellini project is well positioned to benefit from the current rising vanadium price environment. A 30% increase in the vanadium price to $13/lb V2O5relative to the base case translates to a 42% IRR and $295.4 million after-tax net present value at a 7% discount rate.

Sensitivity Analysis to Changes Vanadium Price

| V2O5Price Change | V2O5Price | After-tax IRR | After-tax NPV | After-tax Cashflow | | (%) | (US$/lb) | (%) | (US$ M @ 7%) | (US$ M) | | 45 | 14.50 | 49% | 377.0 | 671.5 | | 30 | 13.00 | 42% | 295.4 | 536.8 | | 15 | 11.50 | 34% | 212.3 | 399.7 | | Base Case | 10.00 | 25% | 127.9 | 260.8 | | -15 | 8.50 | 14% | 42.1 | 122.3 | | -30 | 7.00 | 0% | (55.8) | (38.9) | | -45 | 5.50 | 0 | (155.1) | (202.0) |

Sensitivity Analysis to Changes in Vanadium Grades

| Grade Change | After-tax IRR | After-tax NPV | After-tax Cashflow | | (%) | (%) | (US$ M @ 7%) | (US$ M) | | 45 | 48% | 363.8 | 649.7 | | 30 | 41% | 286.6 | 522.2 | | 15 | 34% | 207.7 | 392.2 | | Base Case | 25% | 127.9 | 260.8 | | -15 | 15% | 46.9 | 130.0 | | -30 | 0% | (45.2) | (21.4) | | -45 | 0 | (139.0) | (175.5) |

Sensitivity Analysis to Changes in Capital Cost Estimates

| CAPX Change | After-tax IRR | After-tax NPV | After-tax Cashflow | | (%) | (%) | (US$ M @ 7%) | (US$ M) | | 45 | 14% | 69.2 | 197.5 | | 30 | 17% | 89.2 | 218.6 | | 15 | 21% | 108.6 | 239.7 | | Base Case | 25% | 127.9 | 260.8 | | -15 | 31% | 146.9 | 281.9 | | -30 | 38% | 165.8 | 303.0 | | -45 | 0 | 184.7 | 324.1 |

Sensitivity Analysis to Changes in Operating Cost Estimates OPEX

| Change | After-tax IRR | After-tax NPV | After-tax Cashflow | | (%) | (%) | (US$ M @ 7%) | (US$ M) | | 45 | 8% | 3.6 | 50.6 | | 30 | 15% | 49.2 | 128.5 | | 15 | 21% | 89.2 | 195.3 | | Base Case | 25% | 127.9 | 260.8 | | -15 | 29% | 166.4 | 326.7 | | -30 | 33% | 203.7 | 390.7 | | -45 | 0 | 239.9 | 452.6 |

Permitting

A Notice of Intent ("NOI") to prepare an Environmental Impact Statement ("EIS") for the Gibellini project was published on July 14, 2020 in the Federal Register. The NOI commences the National Environmental Policy Act ("NEPA") review by the Bureau of Land Management ("BLM"). The Gibellini project conforms to the current U.S. administrations green energy initiatives and the EIS Record Of Decision ("ROD") is expected in early 2022. Operating permits from the State of Nevada are on track to be received on the same timeline as the ROD. The renewable energy alternative in the EIS includes 6 MW of solar panels and a 10 MW vanadium flow battery to provide 100% of the Gibellini project's electrical power demand. If selected by the BLM, the Gibellini project would be the first mine in the US completely powered by renewable energy. The Gibellini project would also be the first primary vanadium mine in the U.S.

Vanadium as a Critical Metal

Vanadium was designated a critical material by the U.S. government in 2018 due to its importance to the defense and energy storage sectors and there being no domestic production with all supply through imports, mostly from Russia, China, and South Africa.

Vanadium alloy steel is 30% lighter than non-alloyed steel, with double the tensile strength. It is used extensively in the aerospace and defense sectors, as well as in skyscraper construction. A structural vanadium deficit is expected to occur by 2025 with the rising popularity of the vanadium redox flow battery which is a mature technology featuring up to an eight-hour duration discharge and is scalable to hundreds of megawatt hours. Battery life is projected to be a minimum of 20 years with no expected degradation of the vanadium or the charge density.

Expansion Potential

Opportunity exists to upgrade the Gibellini, Louie Hill and Bisoni Mckay Inferred Mineral Resources to higher confidence categories through drilling, and to incorporate Bisoni McKay Mineral Resources in future economic studies.

Earlier from Silver Elephant Mining Corp.

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