SilverCrest's Las Chispas Construction Update - Tracking Ahead of Schedule and On Budget

2022-01-25

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Canada NewsWire

TSX: SIL | NYSE American: SILV

VANCOUVER, BC , Jan. 25, 2022 /CNW/ - 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 Ahead of Schedule - At the end of the fourth quarter of 2021 ("Q4, 2021"), overall construction progress at Las Chispas was 86.2% complete compared to a scheduled completion of 79.3%. Start-up of the plant could now be earlier in Q2, 2022 than previously expected.

Capital Costs Remain on Budget - During 2021, the Company committed 75.2% ( $103.6 million ) of the $137.7 million Feasibility Study* capital cost estimate. A review of the capital cost estimate was completed in Q4, 2021 ("2022 Capital Forecast") and it confirmed the validity of the Feasibility Study estimate while including additional investment in a number of key areas (power, underground development, ESG). Of the remaining capital to be incurred in 2022, 20.7% is related to the Ausenco fixed price EPC contract for process plant construction and 14.7% is unused contingency.

Powerline Progressing Well, Temporary Power Plant on Site - Construction of the powerline is expected to be completed in Q2, 2022. To ensure the plant can be energized immediately upon completion, a contingency plan of utilizing rental diesel generators was identified in Q3, 2021*. These diesel generators have all arrived at site and are expected to be commissioned by February 2022 . Total temporary power available to the Project will be sufficient to support the mining operations, ramp-up and operation of the plant at full capacity. The Company's goal is to minimize the use of these generators and connect to the grid as soon as possible.

Underground Development Continues Ahead of Schedule - SilverCrest has completed a total of 17.5 kilometres ("km") of underground development since 2019. Approximately 1.8 km of additional development occurred in 2021 beyond the Feasibility Study life of mine ("LOM") plan. Unit underground development costs continued to track slightly under budget. Planning for stopes was initiated in Q4, 2021 with mining from stopes to start in Q1, 2022.

Site Safety Progress - At the end of 2021, after 1.9 million work-hours completed at site, the Company's Lost Time Injury Frequency Rate ("LTIFR") was 0.63 per 200,000 working hours and its Total Recordable Injury Frequency Rate ("TRIFR") was 4.11 per 200,000 working hours. In 2020, the Company voluntarily registered with Mexico's PASST, a program which defines safety standards and health and safety management plans. The initial evaluation was performed by STPS (Mexico Labour Department) as part of this program in Q4, 2021, and is expected to be completed in H1, 2022.

Strict COVID-19 Protocols Remain - SilverCrest's strict COVID-19 protocols, including its confined camp, resulted in no delays due to COVID-19 or any other reason in 2021 and also resulted in additional benefits in productivity. To date, SilverCrest has conducted more than 15,000 PCR tests and a majority of our employees (92%) and contractors (82%) are fully vaccinated. With the highly contagious Omicron variant becoming more prevalent, the Company remains committed to its COVID-19 protocols. Management expects the camp to be utilized throughout 2022 and has adjusted its 2022 budget for this inclusion. The 2022 construction schedule includes some contingency to cope with potential delays due to COVID-19.

Strong Balance Sheet Ahead of Near-Term Cash Flow - As at December 31, 2021 , SilverCrest had cash and cash equivalents of $176.5 million and $30.0 million remaining available under a $120.0 million project financing facility (the "Credit Facility"). In addition to the $43.0 million remaining capital costs remaining to be incurred in 2022, of which $8.9 million has been committed, the Company has budgeted for sustaining capital, spare parts, company-wide exploration, value added taxes ("IVA"), debt servicing, and corporate general and administrative costs. SilverCrest is well funded for plant start-up and ramp-up beginning in Q2, 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") Engineering, Procurement, and Construction ("EPC") contract with Ausenco Engineering Canada Inc. ("Ausenco") SilverCrest Las Chispas Project Construction Remains on Schedule and Budget , October 26, 2021. |

Pierre Beaudoin , COO, remarked, "Our progress to date has been solid on all three main project development fronts. Ausenco's progress on the processing plant construction continued to impress in Q4, 2021 and now stands approximately one month ahead of schedule. The infrastructure construction managed directly by SilverCrest adjusted well to the pace of progress imposed by the process plant construction, and with contingency measures for power, will be capable of supporting the projected earlier plant start-up. Finally, our mining team reported a record year of underground development, exceeding both the expectations set in the 2021 budget and the Feasibility Study. The combined efforts of our employees and contractors in 2021 have de-risked the Project construction and paved the way for a successful production start-up in Q2, 2022."

N. Eric Fier , CPG, P.Eng, and CEO, stated, "2021 marked an extraordinary year of efforts from our team and contractors in Mexico and Canada . The progress made throughout the year has positioned us well for Las Chispas start-up in Q2, 2022. We thank our team, contractors, and the community for their continued support. We are also pleased to be in a financial position that allows us to properly commission and ramp-up the Project while having flexibility in the budget to further de-risk the mine plan and simultaneously work on growth initiatives."

Las Chispas Construction After a thorough examination and re-forecasting of the budget inclusive of new work planned, 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 are tracking on budget and ahead of schedule. At the end of 2021, overall construction was 86.2% complete compared to scheduled completion of 79.3%. In 2021, construction progress benefited from no delays due to COVID-19 or any other reason.

Q4, 2021 constituted the peak of construction at Las Chispas and despite the holiday period and increased risk associated with COVID-19, productivity exceeded our plans. The combination of strict COVID-19 protocols within a confined camp has served the Project well. Bridge construction was completed in Q4, 2021 adding to the list of already completed infrastructure which includes, the internal power line, the camp and the access road. Other key infrastructure projects (tailings, assay lab and pumping station) are on schedule. The Company's Q4, 2021 progress on its planned construction and development activities are as follows and shown in Figures 1 to 11 attached :

[](https://mma.prnewswire.com/media/1733130/SilverCrest_Metals_IncSilverCrest_s_Las_Chispas_Construction_U.pdf?p=original)

Concrete work was completed in Q3, 2021. Fabrication work, pre-engineered buildings, site tanks and refinery contracts have reached 100% completion. The steel-mechanical-piping (SMP) contract has reached 86% completion. The Electrical and Instrumentation (EI) contract has also progressed well with 56% completion.

With construction progress passing the critical 80% level in December 2021, commissioning detailed planning was initiated and pre-commissioning has started.

Ausenco is focusing on the completion of the SMP and EI contracts and has mobilized its commissioning team in January 2022. The Ausenco commissioning team will be responsible for all aspects of pre-commissioning (C0 to C2) at which point the plant is expected to be handed over to SilverCrest for the C3 Commissioning (start-up with ore). | | Electrical Grid Powerline (81 km) Construction | Partial energization in Q1, 2022 and full energization in Q2, 2022 | The 33 KV powerline planned for the Las Chispas Project is 81 km long. The first section (27 km) is owned and managed directly by Comisión Federal de Electricidad ("CFE"), the state-owned electric utility, and consists of the upgrade of a 33 KV line already in service. This upgrade (financed by SilverCrest) will be complete in Q2, 2022 (completion timeline revised from Q1, 2022 as previously stated in Q3, 2021). The construction completion is expected to coincide with the delivery of the additional equipment (Power Factor and Harmonic Filter equipment) identified in the power grid assessment completed by SilverCrest and validated by CFE.

The second section of 54 km is owned and managed directly by SilverCrest, and the construction is progressing per plan. This section is expected to be completed in Q1, 2022 with a temporary limited capacity of approximately 2 MW (given the 27 km CFE upgrade has not been completed). This grid capacity will be directed to the underground mine.

The Project team has been working on a contingency plan for energization, identified in Q3, 2021 and put into action in Q4, 2021. The plant is expected to be energized via temporary diesel generators. The installed capacity of this temporary rental system (6 MW) combined with the currently operating diesel generators (2 MW) will total 8 MW and be enough to power the underground operation, energizing the plant, pre-commissioning, and if necessary, ramp-up and operation of the process plant at full design capacity in 2022. The six new diesel generators have arrived at site and are expected to be operational in February 2022.

The full grid energization of the entire site (7.6 MW) is expected to be finalized in Q2, 2022 after the completion of CFE section (27 km) and the reception/ installation of Harmonic Filters/Power Factor Correctors.

Overall, the estimated progress of the 81 km (up-grade of 27 km and construction on 54 km) is 71.5%. | | Bridge Construction | Completed Ahead of Schedule | The Tetuachi bridge construction was completed in Q4, 2021 ahead of schedule. An opening ceremony was held in December 2021. | | Confined Camp Construction | Completed in H1, 2021. | 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 | At the end of 2021, total underground development completed at the Project reached 17.5 km and is now 1.8 km ahead of the Feasibility Study LOM plan. | | Underground Infrastructure and Stockpile Growth | On Schedule | Detailed engineering of the underground infrastructure (electrical, ventilation, emergency preparedness and services) was completed in Q4, 2021. The scope was reviewed and generated significant capital costs savings which were included in the 2022 Forecast. Stockpiles increased by an estimated 7,300 tonnes of mineralized material at grades estimated to be in-line with the Feasibility Study Mineral Reserve. | | Tailings Facility Construction

(Dry Stack) | On Schedule | The Feasibility Study design was modified to include a High Density Polyethylene (HDPE) liner to add robustness to the design of the Filtered Tailing Facility. Construction started in Q4, 2021 and reached 68.2% at the end of Q4, 2021. The HDPE liner installation is expected to be completed in Q1, 2022. | | 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 now been finalized. Construction reached 73.5% at the end of Q4, 2021 and the lab is expected to be commissioned ahead of plant start-up. | | Pumping Station | On schedule | The pumping station construction began in Q4, 2021 and is progressing as planned and expected to come in service in parallel with Ausenco's plant pre-commissioning activities in Q1, 2022. Completion of construction has reached 84.0% by the end of Q4, 2021. |

Capital Cost Remains In line with Feasibility Study Estimate In 2021 $103.6 million (or 75.2% of the total capital cost estimate) was committed across all capital cost categories (process plant, underground development and infrastructure, surface infrastructure, and owner's costs) and $94.7 million was incurred.

A 2022 Capital Forecast completed in Q4, 2021 confirmed the validity of the Feasibility Study estimate. The 2022 Capital Forecast also included the extra underground development completed in 2021, additional investment in the community related to water programs, a special allocation of $2.2 million to further advance Babi Vista Vein Splay ("BAVS") development and the costs associated with a temporary diesel power plant.

$43.0 million of capital cost is estimated to be incurred in 2022. Of the estimated remaining capital cost to be incurred, 20.7% ( $8.9 million ) are related to the fixed price Ausenco scope of work (process plant construction) and 14.7% ( $6.3 million ) is contingency available. The remaining capital pertains to the SilverCrest scope of work ( $9.3 million , includes tailings, powerline, assay lab, pumping station and other smaller items), underground development and infrastructure ( $11.9 million ) and owner's costs ( $6.6 million ).

Underground Mining Contract During Q4, 2021, the Company's Mexico subsidiary entered into a five-year underground mining contract with Cominvi Servicios, S.A. de C.V. ("Cominvi"), the underground mining contractor used at the Project since 2019. The new contract includes an updated cost structure, and covers underground mine operation, development and production. The contract includes the procurement of all underground equipment by Cominvi, with a few exceptions procured directly by SilverCrest. Equipment delivery began in Q4, 2021. SilverCrest instructed Cominvi to use Battery Electric Vehicles (BEVs) for a part of its mining fleet. These BEVs represent 35% of the LHD (scoop tram) fleet. In early 2022, Cominvi started to mobilize additional personnel to site.

Underground Development Since commencing underground development in Q1, 2019, ahead of the release of the initial economic study, a total of 17.5 km of development has been completed at the Project. In-vein drifting now totals 3.5 km and access has been established in 4 veins in the Babicanora Area. The Company successfully accelerated underground mine development in 2021 with an additional 1.8 km (above 2021 Feasibility Study budget) completed during the year. During Q4, 2021 and throughout 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 due to significant savings on the initial redesign of underground infrastructure as stated in the 2021 Feasibility Study.

An estimated 7,300 tonnes were placed on the stockpile in the quarter with grades estimated to be in-line with the Feasibility Study Mineral Reserves. At the end of 2022, this stockpile is estimated at 85,500 tonnes. The Feasibility Study production profile includes processing from the historic lower grade stockpiles (162,600 tonnes) and recently developed stockpile at Las Chispas, 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 for processing and as needed through the end of 2024, allowing for a more measured ramp-up of the underground mining rate.

Optimization Studies and Updated Technical Report Results from the 2021 metallurgical testing program were received in late 2021 and early 2022. These results are currently being evaluated by Ausenco and SilverCrest. Preliminary review from the new composite samples sourced from mining activities indicate that the criteria used for the process design are valid. As expected, the samples contained more clays/micas than the core samples from which clays/micas were believed to be washed during the drilling process. These samples, containing more clays/micas, showed reduction in capacity when applied to the installed filters, but still within the designed contingency.

During 2022, further work will be undertaken to complete an Updated Resource and Reserve Estimate as part of an Updated Technical Report in H2, 2022. This report will incorporate;

1. Infill and expansion drilling completed at Las Chispas in 2021, targeting conversion of Inferred Resources to Indicated for potential Reserve estimation,

2. Optimization work for the underground mine design, including consideration for development of the BAVS where underground development was advanced in 2021. The Q1, 2022 budget has $2.2 million to further advance development in this area along with progressing preliminary engineering work on BAVS. If successful, an additional $5.8 million in development and infrastructure could be completed in 2022. BAVS 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 a ratio of 86.9:1 Ag:Au) containing 88,300 oz Au and 6.2 million oz Ag, or 13.9 million oz AgEq. In 2021, infill drilling was completed to assist with conversion of Inferred Resources to Indicated in 2022 (see News Release Dec. 14, 2021 )

3. Completion of an updated reconciliation compared to 2021 Feasibility Study resource estimate,

4. 2021 metallurgical results which focused on validation of the 2021 Feasibility Study design criteria from in-situ mine samples rather than largely core samples for the study,

5. Additional work on blending ore (to manage clay) will be completed during production start-up and may be included for optimization purposes, 6. Potential impact on changes to mining fleet modifications based on use of selective electrical equipment and optimized mine plan,

7. Same design throughput to be used, but costs will be updated, including inflation, starting from H2, 2020 (Feasibility Study cost estimation) 8. Other expected changes might include the potential partial use of the construction camp beyond the completion of construction and commissioning.

Safety, COVID-19, and Community Safety is always a top priority for SilverCrest. In 2020, the Company voluntarily registered for Mexico's PASST, a program which defines standards for health and safety management plans. In Q4, 2021 the Company participated in the completion of its first voluntary safety audit by Mexican authorities to validate its progress on its Health and Safety Management Systems and Standards. PASST is a voluntary program managed by the Mexican Labour Department to support companies in Mexico on their journey toward continuous improvement in Health and Safety. Results from this audit are expected in H1, 2022.

At the end of 2021 the Company's LTIFR stood at 0.63 per 200,000 working hours and its TRIFR stood at 4.11 per 200,000 working hours.

SilverCrest's Las Chispas Construction Update - Tracking Ahead of Schedule and On Budget

TSX: SIL | NYSE American: SILV

Highlights

Earlier from Salazar Resources Limited