Sierra Metals announces pre-feasibility study to provide supporting details for the Bolivar Mine, Mexico (Revised)
TORONTO, April 24, 2013 /PRNewswire/ – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra Metals” or the “Company” previously Dia
Bras Exploration) is pleased to provide this revised news release which
includes additional supporting details on the pre-feasibility study
completed by Gustavson Associates, LLC (“Gustavson”) of Lakewood,
Colorado, for its Bolivar copper-zinc-silver mine located in Chihuahua
State, Mexico announced on April 17, 2013. The study, mine plan and
reserve estimate are based on Gustavson’s work and mine plan.
_____________________________________________________________________ |Press Release Highlights: | | | | -- Proven and Probable reserves total 7,456,806 tonnes at 1.044%| | CuEq averaging 19.5 g/t silver, 0.759% Cu, 0.329% Zn. Gold | | contents average 0.226 g/t but were not included in the CuEq | | calculation, but were included within the project's | | economics. | | | | -- The reserves are based on the October 15, 20123 NI 43-101 | | Technical Report on Resource, which reported 15,404,000 | | tonnes of Measured and Indicated Resources averaging 19.4 g/t| | silver, 0.79% copper, and 1.01% zinc at a cut-off grade of | | 0.66% CuEq. Gold contents, applicable only to portions of the| | Gallo Superior and Gallo inferior zones that were modelled, | | averaged 0.226 g/t and were added to the Resource model in | | January 2013 using the same data used to do the NI 43-101 | | Technical Report on Resource. | | -- | | | | -- Of the modelled tonnage, approximately 80% of the Measured | | and Indicated Resources are mineable. Only the Gallo Inferior| | deposit and a portion of the Gallo Superior were modelled in | | the pre-feasibility study because additional drilling is | | required to convert M&I resources of Alta Ley and Gallo | | Superior to Proven and Probable Reserves. | | | | -- Of the modelled tonnage, approximately 80% of the Measured | | and Indicated Resources are mineable. Only the Upper and | | Lower Gallo deposits were modelled in the pre-feasibility | | study because additional drilling is required to convert M&I | | resources of Alta Ley and Gallo Superior to Proven and | | Probable Reserves. | | | | -- Economic results show capital costs of US$43.0 million, with | | initial cost of approximately US$7.0 million and sustaining | | capital over the Life of Mine of approximately US$36.0 | | million | | | | -- The project has an estimated pre-tax NPV of US$135.6 Million | | and a post-tax, base case NPV of US$91.7 million, at an 8% | | discount rate. | | | | -- At a production rate of 2,000 tonnes per day, these reserves | | provide a 10-year mine life with an additional year of | | processing from the stockpile for a total of 11 years. | | | | -- Bolivar is in commercial production at a rate of 1,000 tons | | per day and is expected to double its production capacity to | |________2,000_tons_per_day_by_Q2_____________________________________|
Sierra Metals has conducted exploration, development and mining at the
BolÃvar Mine since 2003. Exploration includes geologic mapping and
diamond core drilling in the El Gallo, IncreÃble and Alta Ley areas,
which are located within the area of resource modeling, and in the La
Narizona, La Montura, La PequeÃ±a and El Val areas, which are located
outside the area of resource modeling. Pilot mining has been conducted
and has provided valuable information regarding metallurgy, recovery
rates, smelter treatment and refining charges, etc.
Bolivar built its new Piedras Verdes ore processing mill in 2010-2011
and declared commercial production in November 2011 with a processing
capacity of 1,000 tonnes per day. The data of prior production were
used in the development of the pre-feasibility study preparation and as
a guide to continued mining as well as doubling of production capacity
to 2,000 tons per day, which will be effective by the end of April
This work resulted in a NI 43-101 and CIM compliant resource estimate
(see press release of August 30, 2012), which is the basis for this
pre-feasibility study. Table 1 shows the Measured and Indicated
Resources of each deposit with the compliant resource estimate broken
out by Measured, Indicated and Measured+Indicated. Table 1A shows the
Resources by each deposit.
The effective date of this resource estimate is April 5, 2013, and was
completed by Gustavson as an independent report by Zachery J. Black,
Qualified Person as defined by NI 43-101. Mineral resources are not
mineral reserves and do not demonstrate economic viability. There is no
certainty that all or any part of the mineral resource will be
converted to mineral reserves.
Table 1 Total Resources for the BolÃvar Mine
____________________________________________________________________________ |Total Bolivar Measured Resources | |____________________________________________________________________________| |Cutoff|Tonne | Copper | Silver | Copper | Zinc | Gold | | | | Equivalent | | | | | |______|______|_____________|__________|_____________|_____________|_________| |Cueq | (x | |lbs. (x| |oz. | |lbs. (x| |lbs. (x| |oz. | | (%) |1000) | % | 1000) |gpt | (x | % | 1000) | % | 1000) |gpt| (x | | | | | | |1000)| | | | | |1000)| |______|______|_____|_______|____|_____|_____|_______|_____|_______|___|_____| |0.66% |8,847 |1.35%|264,205|22.3|6,333|0.87%|169,423|0.98%|190,851|0.2|49.6 | |______|______|_____|_______|____|_____|_____|_______|_____|_______|___|_____| |Total Bolivar Indicated Resources | |____________________________________________________________________________| |0.66% |6,557 |1.14%|164,706|15.6|3,285|0.67%|97,316 |1.05%|151,389|0.2|30.8 | |______|______|_____|_______|____|_____|_____|_______|_____|_______|___|_____| |Total Bolivar Measured + Indicated Resources | |____________________________________________________________________________| |0.66% |15,404|1.26%|428,912|19.4|9,619|0.79%|266,739|1.01%|342,240|0.2|80.4 | |______|______|_____|_______|____|_____|_____|_______|_____|_______|___|_____| | Note: Gold grade is not included in copper equivalent calculation and is | | only estimated in El Gallo Superior and El Gallo Inferior. | |____________________________________________________________________________|
Table 1A: M&I Tonnes and Grade by Deposit
_____________________________________________________________________ | Zone | Tonnes | Ag | Cu | Zn |CuEq (%)| Au (gpt) | | | |(gpt) |(%) |(%) | | | |_________|________________|________|______|______|________|__________| |El Gallo | 2,041,527 | 30.920 |1.226 |0.468 | 1.663 | 0.208 | |Superior | | | | | | | |_________|________________|________|______|______|________|__________| |El Gallo | 8,550,959 | 20.820 |0.757 |0.366 | 1.064 | 0.243 | |Inferior | | | | | | | |_________|________________|________|______|______|________|__________| |Increible| - | - | - | - | - | Not | | | | | | | |Modeled | |_________|________________|________|______|______|________|__________| |Alta Ley | 4,811,788 | 12.161 |0.649 |2.530 | 1.446 | Not | | | | | | | | Modeled | |_________|________________|________|______|______|________|__________| |Total | 15,404,274 | 19.454 |0.785 |1.055 | 1.263 | 0.236 | |_________|________________|________|______|______|________|__________|
Note: CuEq>0.66 AND M&I
The equation for copper equivalent is presented below.
Equation for Copper Equivalent
Cueq(%) = Cu % + Zn% * Zn price * Zn recovery + Ag gpt * Ag Price * Ag recovery Cu Price * Cu recovery 22.0462 * Cu price * 31.10348 * Cu recovery
Values used for copper equivalent calculation are provided below:
-- Copper o $3.56 per pound o 82% recovery -- Zinc o $0.96 per pound o 81% recovery -- Silver o $26.28 per pound o 77% recovery.
Gustavson received diamond drill data for 683 drill holes located within
the area of the underground mine workings, and in the BolÃvar III,
BolÃvar IV, Piedras Verdes, and El Gallo concessions to characterize
the skarn-type mineralization. Data from these holes as well as
underground mapping and sampling were included in the study.
The recovered tonnes, including dilution, for each area were then
scheduled for production. The total tonnes and grades shown in Table 2
constitute the Reserve Statement for the Bolivar Project as of the date
of this pre-feasibility report. These tonnes are mined from only the
El Gallo Superior and El Gallo Inferior. Additional information,
namely additional drill holes, is required to move the Measured and
Indicated tonnes at Alta Ley to reserves.
On an overall recovery of the Gallo Deposits, 7.46 million tonnes are
mined from the Gallo deposits (2.04 + 8.55 million tonnes for a total
of 10.59 million tonnes). This is an overall recovery of 70.5% of the
material modeled. However, from the economic model where only the
final logical mine layout was used, the recoveries of the mineable
Resources range from 76.0 % to 83.5%. Essentially the mine plan
recovers 70.5% of the M+I, but recovers 76-83% of the M+I.
This Reserves Statement has an effective date of April 5, 2013 and was
completed by Gustavson as an independent report under the supervision
of Karl D. Gurr, Qualified Person as defined by NI 43-101.
Table 2 Combined Reserve Statement for the Bolivar Project
_____________________________________________________________________ |RoM | Tonnes | Ag | Cu % | Zn % | CuEq %| Au | |Tonnes +| |gpt | | | (no |gpt | |Diluted | | | | | Au) | | |Grades | | | | | | | |________|____________|______|___________|___________|_________|______| |RoM - | 4,339,914 |22.52 | 0.84% | 0.19% | 1.11% |0.223 | |Proven | | | | | | | |________|____________|______|___________|___________|_________|______| |RoM - | 3,116,893 |15.35 | 0.65% | 0.52% | 0.95% |0.231 | |Probable| | | | | | | |________|____________|______|___________|___________|_________|______| |Total | 7,456,806|19.52 | 0.76% | 0.33% | 1.04% |0.226 | |P+P | | | | | | | |________|____________|______|___________|___________|_________|______|
Economic parameters used in the calculation are shown in the Appendix
Gustavson is of the opinion that these deposits could potentially yield
more Reserves as data collection and interpretation continue, based on
The technical content of this news release has been approved by Thomas
L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101
and Senior Vice President, Exploration, for Sierra Metals, Inc. and
Donald E. Hulse of Gustavson Associates LLC, Qualified Person as
defined by NI 43-101
About Sierra Metals
Sierra Metals Inc. is a Canadian mining company focused on precious and
base metals from its Yauricocha mine in Peru and its Bolivar mine in
Mexico. The Company is also advancing its Cusi silver project in Mexico
from advanced development into commercial production. In addition,
Sierra Metals is exploring several precious and base metal targets in
Peru and Mexico. Projects in Peru include Adrico (gold), Victoria
(copper-silver) and Ipillo (polymetallic) at the Yauricocha Property in
the province of Yauyos. Projects in Mexico include Bacerac (silver) in
the state of Sonora, La Verde (gold) at the Batopilas Property in the
state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo
Property in the state of Zacatecas.
The Company’s shares trade on the Bolsa de Valores de Lima and TSXV
under the symbol “SMT”.
This press release does not constitute an offer to sell or solicitation
of an offer to buy the securities in the United States or any other
jurisdiction. The Common Shares will not be and have not been
registered under the United States Securities Act of 1933, as amended,
and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements.
Neither the TSXV nor its Regulation Services Provider (as that term is
defined in policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
Except for statements of historical fact contained herein, the
information in this press release may constitute “forward-looking
information” within the meaning of Canadian securities law. Other than
statements of historical fact, all statements are “forward-looking
statements”, which involve various known and unknown risk and
uncertainties and other factors, including market conditions that may
affect the Company’s ability to execute its current business plan.
Actual results might differ materially from results suggested in any
forward-looking statements. The Company assumes no obligation to update
the forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward-looking
statements unless and until required by securities laws applicable to
the Company. Additional information identifying risks and uncertainties
is contained in filings by the Company with the Canadian securities
regulators, which filings are available at www.sedar.com.
Economic Results Value Units Market Price Assumptions (3 year trailing average) Copper $3.69 $/lb Zinc $0.95 $/lb Gold $1,487.00 $/oz Silver $28.80 $/oz Estimate of Cash Flow (all values in $000s) Net Smelter Return (NSR) $/t-conc Copper Concentrate $459,964 $2,487.44 Zinc Concentrate $17,313 $576.29 NSR $477,277 Freight & Handling ($1,005) Gross Revenue $476,272 Royalty $0 Net Revenue $476,272 Operating Costs $/t-ore Mining $119,594 $16.04 Processing $99,783 $13.38 G&A $20,418 $2.74 Total Operating $239,795 $32.16 Operating Margin (EBITDA) $236,477 Initial Capital $7,002 LoM Sustaining Capital $35,966 Income Tax $60,183 Cash Flow Available for Debt Service $133,325 NPV (8% discount Rate) $91,665
SOURCE Sierra Metals Inc.