SilverCrest Announces Positive Feasibility Study Results and Technical Report Filing for the Las Chispas Project

2021-02-03

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VANCOUVER, BC , Feb. 2, 2021 /CNW/ - SilverCrest Metals Inc. ("SilverCrest" or the "Company") is pleased to announce positive results from a Feasibility Study (the "Feasibility Study") for the Las Chispas Project ("Las Chispas" or the "Project") in Sonora, Mexico . Details of the Feasibility Study, including an updated Mineral Resource Estimate and an initial Mineral Reserve Estimate, are provided in a technical report filed under the Company's SEDAR profile entitled, "NI 43-101 Technical Report & Feasibility Study on the Las Chispas Project" with an effective date of January 4, 2021 (the "Technical Report"). The Technical Report has been prepared by Ausenco Engineering Canada Inc ("Ausenco") with the assistance of several other independent engineering companies and consultants.

Highlights:

All dollar ($) figures are presented in US dollars unless otherwise stated. Base Case metal prices used in this analysis are $1 ,500 per gold ("Au") ounce ("oz") and $19.00 per silver ("Ag") oz. These prices are based on long-term consensus average prices. A silver equivalent ("AgEq") 1 ratio of 86.9:1 (Au:Ag) applies throughout this news release to Mineral Resources and Reserves, production and all-in sustaining cost ("AISC") per oz. Net free cash flow and AISC are non-IFRS measures. Refer to the Non-IFRS measures section of this news release.

Robust Economics – The Feasibility Study considers a 1,250 tonne-per-day ("tpd") operation, with an initial mine life of 8.5 years. On an after-tax basis, Las Chispas generates a Base Case NPV(5%) of $486.3 million ("M"), IRR of 52%, and a payback period of 1.0 year. Using spot prices on the effective date of the Technical Report ( $1,946 /oz Au and $27.36 /oz Ag) the after-tax NPV(5%) is $802.5 M , IRR is 74% and payback period is 0.7 year.

High-Grade Updated Mineral Resource and Initial Reserve Estimate – Initial Proven and Probable Reserves ( 3.35 M tonnes, grading 4.81 gpt Au and 461 gpt Ag, or 879 gpt AgEq) total 94.7 Moz AgEq (Table 3). These estimates place Las Chispas amongst the highest-grade primary silver projects globally 2 . The mine plan excludes Inferred Resources ( 1.2 M tonnes grading 745 gpt AgEq totaling 29.7 M oz AgEq), which includes the recently discovered high-grade Babi Vista Vein Splay ("BAVS") (211,400 tonnes grading 2,039 gpt AgEq totaling 13.9 Moz AgEq). Expansion and infill drilling for BAVS is underway and targeted to be included in a revised Mineral Resource and Reserve update in 2022.

Enhanced Near Term Production Profile – The Feasibility Study outlines average annual production of 12.4 Moz AgEq from 2023 through 2029, with net free cash flow beginning in 2023. Production will benefit from improved metallurgical recoveries for Au and Ag of 97.6% and 94.3%, respectively. This compares to 94.4% for Au and 89.9% for Ag reported in the Preliminary Economic Assessment ("PEA"), titled, "Technical Report and Mineral Resource Estimate for the Las Chispas Property, Sonora, Mexico ", effective date of May 15, 2019 , as amended July 19, 2019 . Commissioning of the processing plant is targeted for Q2 2022 with ramp-up through H2 2022. It is anticipated that SilverCrest will have accumulated 8 months (~300,000 tonnes) of mineralized material on surface when the processing plant is expected to reach nameplate capacity of 1,250 tpd, providing flexibility in the early stages of production.

Lowest Quartile AISC – Average project-level life of mine ("LOM") AISC of $7.07 /oz AgEq, and $6.68 /oz AgEq over seven (7) full years of production, positions Las Chispas amongst the lowest quartile AISC globally 3 .

Strong Capital Position, Formal Construction Decision – With the completion of the Feasibility Study, SilverCrest's Board of Directors has formally approved construction of the Project. The Company currently has $125 M in cash as of January 31, 2021 and $90 M currently available under its credit facility. Orders for critical long lead items have been placed and all permits required to begin process plant construction are in hand.

Opportunities to Grow and Optimize – Given that Las Chispas has been advanced through the Feasibility Study stage within only five (5) years of its discovery, numerous opportunities remain for growth and optimization. The most significant opportunities are the potential to expand and convert Mineral Resources, particularly for BAVS, Granaditas, Babi Vista and Babicanora Norte veins, and the El Muerto Zone, all of which are close to the planned underground development. Other notable opportunities include optimization of the LOM grade profile and potential acceleration of the mine ramp-up.

| | | 1 AgEq is based on an Au:Ag ratio of 86.9:1 calculated using $1,410/oz Au and $16.60/oz Ag, with average metallurgical recoveries of 96% Au and 94% Ag. | | 2 Based on top 10 producing projects by 2019 silver production with public disclosure on a primary silver basis from S&P Market Intelligence. | | 3 Based on data from S&P Market Intelligence, comparing to forecasted 2020 AISC for silver producers using the following metal prices: gold: US$1,500/oz, silver: US$19.00/oz, lead: US$0.83/lb and zinc: US$1.03/lb). |

Pierre Beaudoin , COO, remarked, "The Las Chispas Feasibility Study defines a project with robust economics and potential for further improvements during operations. With our EPC Contract and underground development contracts in place, initial construction is already underway and is expected to ramp up through Q1, 2021. Our on-site team has been integral in advancing the study and operating successfully under challenging conditions. The recent achievement of completing more than 9,000 metres of underground mine development while surpassing one million man-hours without a Lost-Time Injury is a testament to our work force diligence to get the job done and continued commitment towards a strong health and safety culture. We thank the team for the outstanding efforts during a challenging year."

N. Eric Fier , CPG, P.Eng and CEO commented: "We are thrilled to have completed a robust Feasibility Study within five years of drilling the first hole at Las Chispas. The Feasibility Study confirms what we have believed for a while, that Las Chispas is economic as a stand-alone operation. It is important to note that the Feasibility Study is just a snapshot in time. We are already working hard to increase our high-grade reserves while simultaneously constructing the mine and process plant. We are excited about the extensive opportunities that remain to grow and optimize Las Chispas. We are greatly appreciative of our employees, partners in the community, contractors and our shareholders, who together have supported us to achieve this important milestone safely, quickly and in a very capital efficient manner. While there is a lot of hard work ahead of us, we look forward to making the shift to production and cash flow which we expect will finance our continued growth."

Further details on the Feasibility Study are presented below.

Table 1: Feasibility Study Overview

| Las Chispas Feasibility Study Summary (Base Case) | | | Throughput (tpd) | 1,250 | | Mine Life (years) | 8.5 | | Reserves Proven & Probable (kt) | 3,351 | | | | | Average Diluted Au Grade (gpt) | 4.81 | | Average Diluted Ag Grade (gpt) | 461 | | Average Diluted AgEq Grade (gpt) | 879 | | | | | Contained Au koz | 518.1 | | Contained Ag koz | 49,679 | | Contained AgEq koz | 94,704 | | | | | Average Au Metallurgical Recovery | 97.6% | | Average Ag Metallurgical Recovery | 94.3% | | | | | Payable Au koz (LOM) | 502.8 | | Payable Ag koz (LOM) | 46,559 | | Total AgEq koz | 90,271 | | | | | Average Annual Production (LOM) | | | Au koz | 56.0 | | Ag koz | 5,181 | | AgEq koz | 10,044 | | | | | Average Annual Production (2023-2029) | | | Au koz | 69.0 | | Ag koz | 6,360 | | AgEq (1) koz | 12,354 | | | | | Mining Cost ($/t) | 71.40 | | Process Cost ($/t) | 31.69 | | G&A Cost ($/t) | 15.40 | | Total Operating Cost ($/t) | 118.49 | | Initial Capital Cost ($ M) | 137.7 | | LOM Sustaining Capital Cost ($ M) | 123.9 | | Closure costs ($ M) | 3.4 | | | | | AISC ($/oz AgEq) LOM | $7.07 | | AISC ($/oz AgEq) 2023-2029 | $6.68 | | | | | Au Price ($/oz) | $1,500 | | Silver Price ($/oz) | $19.00 | | Post-Tax IRR | 52% | | Post-Tax NPV (5%, $ M) | $486.3 | | Undiscounted LOM net free cash flow ($ M) | $656.4 | | Payback period (years) | 1.0 |

[](https://mma.prnewswire.com/media/1431950/SilverCrest_Metals_IncSilverCrest_Announces_Positive_Feasibili.html)

The Feasibility Study presents a range of metal pricing scenarios on a post-tax basis to evaluate the economics of the Project in both upside and downside commodity price situations (Table 2). As illustrated in the following table, the Project remains robust even at lower commodity prices. Additional sensitivities are presented in the Technical Report. The Project economics are most sensitive to precious metal prices.

Table 2: Sensitivity Analysis

| | Downside Case

(PEA Prices) | Base Case | Upside Case

(Spot Price - Effective Date) | | Metal Prices | | | | | Gold ($/oz) | $1,269 | $1,500 | $1,946 | | Silver ($/oz) | $16.68 | $19.00 | $27.36 | | Economics | | | | | Post-Tax NPV (5%, $ M) | $370.4 | $486.3 | $802.5 | | Post-Tax IRR | 42% | 52% | 74% | | Undiscounted LOM Free Cash Flow ($ M) | $510.7 | $656.4 | $1,054 | | Payback period in years | 1.2 | 1.0 | 0.7 |

Several aspects of the Feasibility Study are similar to the PEA with respect to: processed tonnes per year, mine life, contained ounces, processing costs, G&A costs and closure costs. Using Feasibility Study Base Case metal prices, the AISC, undiscounted LOM net free cash flow and payback period are similar to those in the PEA. The most significant differences are increased mineral resources, increased mineable grades, decreased mineable tonnes, increased recoveries, more payable ounces, higher mining dilution, and higher mining and capital costs. See further discussion below.

Mineral Resource and Reserve Estimates

The Mineral Resource Estimates were prepared by Yungang Wu, P. Geo., and Eugene Puritch , P.Eng., from P&E Mining Consultants Inc. ("P&E") and are provided in Table 3. Estimates were completed for potential underground mining of in-situ vein deposits at the Las Chispas and Babicanora Areas and for surface extraction of stockpiles from historical and current operations. All drilling, surveying and assay databases were provided by SilverCrest including data up to the cut-off date of October 16 , 2020. Full details for the Mineral Resource Estimate can be found in the Technical Report.

Table 3: Mineral Resource Estimate

(gpt) | AgEq

(gpt) | Au

(koz) | Ag

(koz) | AgEq

(koz) | | | | Babicanora Area | M+I | 2,214.5 | 7.35 | 681 | 1,319 | 523.2 | 48,471 | 93,939 | | Las Chispas Area | Indicated | 445.1 | 4.20 | 548 | 913 | 60.1 | 7,845 | 13,065 | | Total Undiluted Veins | M+I | 2,659.6 | 6.82 | 659 | 1,251 | 583.3 | 56,316 | 107,004 | | Historic Stockpiles | Indicated | 164.2 | 1.23 | 108 | 215 | 6.5 | 572 | 1,135 | | Total Veins +

Stockpiles | M+I | 2,823.8 | 6.50 | 627 | 1,191 | 589.8 | 56,888 | 108,139 | | Babicanora Area | Inferred | 861.6 | 5.47 | 409 | 884 | 151.6 | 11,325 | 24,496 | | Las Chispas Area | Inferred | 378.4 | 1.80 | 272 | 428 | 21.9 | 3,308 | 5,209 | | Total Undiluted Veins | Inferred | 1,240.0 | 4.35 | 367 | 745 | 173.4 | 14,634 | 29,705 |

| | | | Notes: | | | • | Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. | | • | The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. | | • | The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It can be reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration. | | • | The Mineral Resources in the Report were estimated using the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines and 2014 CIM Definition Standards for Mineral Resources & Mineral Reserves. | | • | Historical mined areas were removed from the wireframes and block model. | | • | AgEq is based on gold to silver ratio of 86.9:1 calculated using US$1,410/oz Au and US$16.60/oz Ag, with average metallurgical recoveries of 96% Au and 94% Ag using information available at the effective date of October 16, 2020. | | • | Mineral Resources are inclusive of the Mineral Reserves. | | • | All numbers are rounded. |

The initial Mineral Reserve estimate was prepared by Carl Michaud , P.Eng., Underground Mining Engineer of G Mining Services Inc. ("GMS"), dated of January 4, 2021 .

Table 4: Mineral Reserve Estimate

(gpt) | Ag

(gpt) | AgEq

(gpt) | Au

(koz) | Ag

(Moz) | AgEq

(Moz) | | | | Total | Proven | 336.5 | 6.21 | 552 | 1,091 | 67.1 | 6.0 | 11.8 | | Probable | 3,014.7 | 4.65 | 451 | 855 | 451.0 | 43.7 | 82.9 | | | Proven + Probable | 3,351.2 | 4.81 | 461 | 879 | 518.1 | 49.7 | 94.7 | |

| | | | Notes: | | | • | The Mineral Reserve is estimated using the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines and 2014 CIM Definition Standards for Mineral Resources & Mineral Reserves. | | • | The Mineral Reserve is estimated with a variable COG which was calculated by vein width and economic and operating parameters. | | • | A government gold royalty of 0.5% is included in the Mineral Reserve estimates. | | • | The Mineral Reserve is estimated with a mining recovery of 95%. | | • | The Mineral Reserve presented includes both internal and external dilution. The external dilution included a mining dilution of 0.5 m width on the hanging wall and footwall for the long hole mining method and a 0.2 m width on the hanging wall and footwall for the cut-and-fill and resue mining methods. Backfill dilution is also included and represents an average of 7% for the long hole mining method and an average of 10% for cut-and-fill and resue mining methods. | | • | A minimum mining width of 1.5 m was used for the long hole and cut-and-fill mining methods. A minimum mining width of 0.5 m was used for the resue mining method. | | • | The economic viability of the Mineral Reserve has been demonstrated. | | • | AgEq is based on gold to silver ratio of 86.9:1 calculated using US$1,410/oz Au and US$16.60/oz Ag, with average metallurgical recoveries of 96% Au and 94% Ag. | | • | Any discrepancies in the totals are due to rounding effects; rounding followed the recommendations in the 2019 CIM Mineral Resources & Mineral Reserves Best Practice Guidelines. |

Production Profile

Underground mining will be completed using four (4) conventional mining methods (43% long hole, 18% cut-and-fill uppers, 27% cut-and-fill breasting, and 12% resue). Overall, underground mine dilution has been estimated to be 52%, mine recovery to be 95%, with, on average, 23 active working faces. Underground development and mining rates are scheduled to ramp-up at a measured pace through 2022 and 2023, with process plant feed during this period sourced from both underground stopes and surface stockpiles (Figure 2). It is anticipated that SilverCrest will have accumulated approximately 300,000 tonnes of mineralized material on surface when the processing plant is expected to reach nameplate capacity, providing flexibility in the early stages of production. This ramp-up profile lowers the risk of start-up and minimizes sustaining capital investment at the outset of the production. There is potential for these rates to be accelerated with further optimization work.

[](https://mma.prnewswire.com/media/1431951/SilverCrest_Metals_IncSilverCrest_Announces_Positive_Feasibili.html)

The Feasibility Study outlines an average production profile of 12.4 Moz AgEq over the seven (7) full years of mine life, with 2022 and 2030 as partial years of production due to ramp-up and ounces produced at the end of the mine life. Average annual production over the full LOM is 10.0 Moz AgEq. Further optimization may increase grade and ounces in the earlier years of the LOM schedule.

Figure 3: Annual Production Profile

[](https://mma.prnewswire.com/media/1431952/SilverCrest_Metals_IncSilverCrest_Announces_Positive_Feasibili.html)

Processing and Recovery

Since completing the PEA, additional metallurgical testing and process design were concluded. This work highlighted the need for modifications to the process flowsheet to address the presence of higher clay content and higher-grade mineralized materials. The key changes to the circuit are the inclusion of a SAG mill, flotation and corresponding split leach circuits, and larger thickeners, clarifiers and filters. This work resulted in a more flexible process plant and enhanced LOM metallurgical recoveries. LOM estimated metallurgical recoveries post ramp-up are provided below (see details in Table 5).

Table 5: Metallurgical Recoveries

Initial and Sustaining Capital Cost Estimates

The Feasibility Study estimates initial capital requirements of $137.7 M and sustaining capital of $123.9 M over the life of the mine (see details in Table 6). Excluded from the initial capital estimate is $25.8 M of sunk capital that was spent prior to January 1, 2021 , and relates to initial earthworks, Phase 1 of the construction camp, initial EPC milestone payment, and long-lead orders. Also excluded from these estimates are $3.4 M in closure costs at the end of production.

The initial capital has increased from the PEA mainly due to the following: COVID-19 related costs, underground mining infrastructures, process plant modifications to accommodate higher grades and clay content, and the inclusion of a power line to replace diesel-generated power.

Sustaining capital is substantially higher than that in the PEA due to a combination of upward revisions to the amount of underground development required based on longer veins requiring more access and the applicable unit rate. This represents the most significant change from the PEA in terms of capital expenditures.

Table 6: Capital Cost Estimates

| Area | Initial Capital

($ M) | Sustaining Capital

($ M) | | Mine | 27.7 | 120.9 | | Process Plant | 44.9 | 1.4 | | Tailings Management | 3.1 | 0.4 | | Infrastructure | 20.6 | 1.3 | | Owners Costs | 18.2 | - | | Contingency | 23.3 | - | | Project Total | 137.7 | 123.9 | | Closure Costs | | 3.4 |

| Note: Numbers presented are rounded and columns may not add to the sums. |

As announced in the Company's January 4, 2021 news release, one of SilverCrest's Mexican subsidiaries has entered into a fixed price Engineering, Procurement and Construction contract ("EPC Contract") with Ausenco and one of its affiliates for construction of the process plant for a lump sum turnkey price of $76.5 M with work expected to begin at the Project site in February 2021 . The $76.5M price includes sunk capital and a proportionate share of Contingency listed in Table 6. The contract was executed with approximately 60% of detailed engineering being completed and procurement of long lead items having started in Q4 2020.

Operating Costs

LOM operating costs for the Project are estimated to average $118.49 per tonne milled. When using the Base Case commodity price assumptions, the average LOM in-situ contained metal value is approximately $515 per tonne milled. During the start-up period, processing and general and administrative ("G&A") costs per tonne are higher until the process plant throughput ramps up to design capacity. The Feasibility Study is based on contractor underground mining, which has an estimated LOM cost of $71.40 per tonne milled. LOM processing costs are estimated at $31.69 per tonne milled and G&A costs are estimated at $15.40 per tonne milled.