Updated San Martin NI 43-101 Technical Report and Economic Assessment
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VANCOUVER, May 28, 2013 /PRNewswire/ – FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX) (the “Company” or “First Majestic”) is pleased to
announce an updated NI 43-101 Technical Report (TR), Reserve and
Resource estimate at the San Martin Silver Mine and an economic
assessment of the current expansion program to 1,300 tpd. All figures
are reported in US dollars unless otherwise noted.
-- Proven and Probable Reserves increase by 224% to 22.0 million silver ounces -- Life of Mine (LOM) increases to 9 ½ years at higher throughput rates of 1,300 tonnes per day (tpd) -- After-tax net present value (NPV 5%) of $52.0 million and 130% internal rate of return (IRR) both calculated using a 10% reduction to the three-year average silver price -- LOM average cash cost (co-product) is estimated at $11.45 per ounce, excluding any by-product credits -- LOM average operating cash flow is estimated at $22.8 million per year starting in 2014 -- Operating costs per tonne estimated at $43.44 per tonne excluding third party smelting/refining charges, transportation and insurance costs over LOM -- At the increased rate of 1,300 tpd, the Company expects silver production to increase by approximately 50% to between 1.4 to 1.6 million ounces of silver dorÃ© per year
Keith Neumeyer, CEO and President of First Majestic Silver, states: “Our
geological team deserves recognition for a job well done. After three
years of drilling, not only have they replaced all the mined production
ore, they have also upgraded and discovered many more ounces with a
higher degree of confidence which substantially improved the mine life
of the operation. They make exploration look easy, while in-fact
replacing reserves is a very time consuming process. This very
successful exploration program has allowed us to expand the mill from
900 tpd to 1,300 tpd which is expected to substantially improve the
economics of the San Martin operation.”
The San Martin Silver Mine, located in the state of Jalisco, Mexico near
the town of San MartÃn de BolaÃ±os located in the BolaÃ±os Mining
District consists of 33 contiguous mining concessions totalling 37,518
hectares (73,331 acres). The Company acquired through staking, 29,676
hectares of mineral rights in June 2012, adding to its previous
holdings of 7,842 hectares. These new mining concessions cover
prospective land identified previously by the Company’s geological
Since October 2008, the cut-off date of the previous NI 43-101 Technical
Report, to the current cut-off date of December 31, 2012, an aggressive
exploration program has been underway which has included 332 drill
holes from underground sites totalling 35,901 meters plus an additional
140 drill holes from surface totalling 31,674 meters for a total
exploration program over this period amounting to 67,575 meters. In
addition to this drilling program, an extensive underground development
program has been underway amounting to 6,839 meters of underground
accesses, drifts and crosscuts for production and exploration.
The updated Reserve/Resource estimate consists of 22.0 million ounces of
silver in Proven and Probable Reserves, which represents a significant
increase of 224% over the previously reported estimates; 4.0 million
ounces of silver in Measured and Indicated Resources, representing a
decrease of 46% from the previous estimates; plus 58.6 million silver
ounces in Inferred Resources representing a 20% increase from the
previous estimate. It should be noted that this significant increase
in Reserves comes after continuous mining and production since the
previous NI 43-101 released over three years ago and demonstrates not
only the Company’s ability to identify and process undefined Reserves
but the exploration potential of this prolific region of Jalisco.
Furthermore, due to the increase in silver prices since 2009, an
updated break-even cut-off silver grade of 64 g/t was defined compared
to the previous break-even cut-off grade of 146 g/t resulting in the
expected decrease in the average silver Reserve grade to 160 g/t,
in-line with the three-year average mill head grade of 150 g/t.
Total tonnage consists of 4.3 million tonnes of Reserves, representing a
455% increase from the prior estimates, 777 thousand tonnes of Measured
and Indicated Resources, representing a 48% decrease from prior
estimates plus an additional 11.2 million tonnes of Inferred Resources,
representing a 36% increase from prior estimates. It should be noted
that 3.5 million tonnes, or 78% of the total Inferred Sulphide
Resources were removed and replaced with 6.5 million tonnes of Inferred
Oxide Resources, representing an increase of 179% from prior Inferred
Oxide Resource estimate. This substantial improvement further
demonstrates the success of the exploration program over the past few
years. There is further upside potential for total ounces assuming the
Inferred Mineral Resource is converted to Measured and Indicated
Resources or Reserves through additional drilling and development which
The following table was taken from the complete San Martin Silver Mine
updated NI 43-101 TR prepared by Runge Pincock Minarco (RPM), Lakewood,
Colorado. Shareholders and interested parties are encouraged to read
this positive report in its entirety which can be viewed on SEDAR (www.sedar.com) and the Company’s web site at www.firstmajestic.com.
Mineral Reserves and Resources as of December 31, 2012
Ag Vein Mineral Mineral Mineral Equivalent Ounces Total Ag Clasification Type of Tonnage Width Grade Grade % Grade % Ounces of Ag Equivalent Mineral (000´s) in gpt Ag Pb Zn from Pb (000's) Ounces meters and Zn (000's) (000'S) Reserves Proven Oxides 1,349 2.7 168 - - - 7,287 7,287 Probable Oxides 2,923 4.1 157 - - - 14,722 14,722 Total P&P Oxides 4,271 3.7 160 - - - 22,008 22,008 Resources Measured Oxides - - - - - - 0 0 Indicated Oxides 35 1.8 136 - - - 154 154 Total M&I oxides Oxides 35 1.8 136 - - - 154 154 Measured Sulphides 365 4.2 61 0.73 1.53 1,153 2,545 3,697 Indicated Sulphides 376 4.6 60 0.64 1.39 553 1,281 1,834 Total M&I sulphides Sulphides 741 4.4 61 0.68 1.46 1,706 3,825 5,531 Oxides and Total M&I Sulphides 777 4.3 64 0.65 1.39 1,706 3,979 5,685 Total Oxides Resources and and Reserves Sulphides 5,048 8.0 146 0.10 0.21 1,706 25,987 27,693 Inferred Oxides 10,163 4.2 169 - - - 55,218 55,218 Inferred Sulphides 994 2.8 54 0.68 1.60 1,642 3,364 5,006 Total Oxides Inferred and Resources Sulphides 11,157 4.1 159 0.06 0.14 1,642 58,582 60,224
(1) A minimum width of vein of 2 meters was considered for the blockage
(2) 15 cm at both sides of the vein are considered as dilution for
over-breaking when mining, the walls of the vein has been sampled along
open drifts, assaying from zero to below the cut-off grade.
(3) The density considered based on laboratory measurements is 2.7.
(4) The resource estimate was prepared by internal QP, Carlos Wong who
is a full time employee of the Company and reviewed by Leonel Lopez,
who is the QP for RPM.
(5) Mineral resources are reported at a cut-off grade for the oxide
mineral of 64 g/t Ag, and for the sulphide mineral of 37 g/t of eq Ag
based on consideration of operating costs (mining, processing, and G&A)
and includes metallurgical recovery at 78% and payable values at 99.5%
in accordance to contracted terms. The silver price base is
$28.82/troy ounce, the lead is $1.00/lb and the zinc is $0.95/lb.
(6) Totals may not add due to rounding.
(7) Mineral Resources are reported exclusive of Mineral Reserves.
(8) Proven and Probable Mineral Reserves and Measured and Indicated
Mineral Resources are both inclusive of the total Mineral Resources.
The reclassification of Proven and Probable Mineral Reserves is in
compliance with current CIM best practices guidance. Measured and
Indicated Mineral Resources consists of the remaining of the total
Mineral Resources after the reclassification of the Proven and Probable
For the purposes of the economic evaluation only oxide Measured and
Indicated Resources were considered for the Resource to Reserve
conversion. This conversion procedure follows industry best practices
and is backed up with many years of operating history. The converted
Reserve estimates were calculated after applying assumptions for
breakeven cutoff grades, mining dilution and recovery, as well as
metallurgical recoveries and payable values.
Based on the updated NI 43-101 Reserve estimate at San Martin, a LOM
production plan was completed. This updated Technical Report defines an
Economic Assessment for the planned operation being extended to the
year 2022, based on the 1,300 tpd production rate. The economic
evaluation assumes flat long-term silver prices equal to the industry
rolling three-year average of $28.82 per silver ounce resulting in an
after-tax NPV (5%) of $90.0 million and 255% IRR. Assuming a 10%
reduction in the silver price to $25.94 per ounce, the after-tax NPV
(5%) reduces to $52.0 million and a still robust 130% IRR.
The capital cost for the plant expansion is estimated at $14.0 million.
As of May 20, 2013, a total of $7.5 million has been spent or committed
towards the plant expansion with the remaining capital planned to be
spent over the next couple of months. Total sustaining capital over the
LOM of 9 ½ years, to 2022, amounts to approximately $12.8 million and
includes new mine and plant equipment costs, tailings pond lift and
mine closing reclamation.
For the purposes of this Technical Report, by-product credits for gold
were omitted due to the absence of historic sampling of gold assays.
The LOM average cash costs are estimated at $11.45 per payable silver
ounce which excludes any by-products. This co-product estimate
compares to the average cash cost of $13.81 per payable silver ounce in
2012 (excluding a $2.09 by-product credit as a result of gold recovery
in dorÃ© bars). The following table shows a breakdown of actual costs
in 2012 compared to the estimated costs over the LOM.
Operating Costs for LOM Plan at 1,300 tpd
2013-2022 Projected Cost Center 2012 cost US$ per tonne Cost US$ per tonne Mine Cost $12.62 $13.11 Mill & Process Plant Cost $22.71 $22.71 Site G&A Cost $8.13 $7.62 Subtotal $43.46 $43.44 Freight Insurance Cost $1.47 $1.34 Smelting and Refining $1.07 $1.41 Total Cost $46.00 $46.19 Total Cash Cost per Ounce of Payable Silver (1) $13.81 $11.45
(1) Cash cost per ounce excluding any by-product credits.
MILL construction update
As previously disclosed, the Company stated it had decided to expand the
San Martin operation from 900 tpd to 1,300 tpd. This construction
project commenced in the summer of 2012 and is on schedule for
completion by the end of June 2013. Capacity upgrades to the crushing
circuit is in progress alongside the additional upgrade of a third ball
mill. Other mill expansion improvements to the cyanidation plant
include new leaching tanks, new clarification filters and a new
thickening tank. In addition, major improvements to the solution
management system include the installation of six new storage tanks and
two new tailings filters which will allow over 80% of the water used in
the milling process to be recycled.
The initial throughput ramp up period is expected in July 2013 with
commercial production expected by September 2013. Once fully
operational at 1,300 tpd, San Martin’s annual silver production is
expected to increase by over 50% to approximately 1.4 to 1.6 million
ounces of silver plus potential upside resulting from higher silver
grades and gold credits over LOM.
The Company’s independent Qualified Person under the policies of the
Canadian National Instrument 43-101 who have reviewed the contents of
this news release and who authored the most recent qualifying report is
Leonel LÃ³pez, C.P.G., P.G., of Runge Pincock Minarco (RPM), who is
employed by RPM and independent of the Company.
First Majestic is a producing silver company focused on silver
production in MÃ©xico and is aggressively pursuing its business plan of
becoming a senior silver producer through the development of its
existing mineral property assets and the pursuit through acquisition of
additional mineral assets which contribute to the Company achieving its
aggressive corporate growth objectives.
FIRST MAJESTIC SILVER CORP.
Keith Neumeyer, President & CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release includes certain “Forward-Looking Statements” within
the meaning of the United States Private Securities Litigation Reform
Act of 1995 and applicable Canadian securities laws. When used in this
news release, the words “anticipate”, “believe”, “estimate”, “expect”,
“target”, “plan”, “forecast”, “may”, “schedule” and similar words or
expressions, identify forward-looking statements or information. These
forward-looking statements or information relate to, among other
things: the price of silver and other metals; the accuracy of mineral
reserve and resource estimates and estimates of future production and
costs of production at our properties; estimated production rates for
silver and other payable metals produced by us, the estimated cost of
development of our development projects; the effects of laws,
regulations and government policies on our operations, including,
without limitation, the laws in Mexico which currently have significant
restrictions related to mining; obtaining or maintaining necessary
permits, licences and approvals from government authorities; and
continued access to necessary infrastructure, including, without
limitation, access to power, land, water and roads to carry on
activities as planned.
These statements reflect the Company’s current views with respect to
future events and are necessarily based upon a number of assumptions
and estimates that, while considered reasonable by the Company, are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors,
both known and unknown, could cause actual results, performance or
achievements to be materially different from the results, performance
or achievements that are or may be expressed or implied by such
forward-looking statements or information and the Company has made
assumptions and estimates based on or related to many of these factors.
Such factors include, without limitation: fluctuations in the spot and
forward price of silver, gold, base metals or certain other commodities
(such as natural gas, fuel oil and electricity); fluctuations in the
currency markets (such as the Canadian dollar and Mexican peso versus
the U.S. dollar); changes in national and local government,
legislation, taxation, controls, regulations and political or economic
developments in Canada, Mexico; operating or technical difficulties in
connection with mining or development activities; risks and hazards
associated with the business of mineral exploration, development and
mining (including environmental hazards, industrial accidents, unusual
or unexpected formations, pressures, cave-ins and flooding); risks
relating to the credit worthiness or financial condition of suppliers,
refiners and other parties with whom the Company does business;
inability to obtain adequate insurance to cover risks and hazards; and
the presence of laws and regulations that may impose restrictions on
mining, including those currently enacted in Mexico; employee
relations; relationships with and claims by local communities and
indigenous populations; availability and increasing costs associated
with mining inputs and labour; the speculative nature of mineral
exploration and development, including the risks of obtaining necessary
licenses, permits and approvals from government authorities;
diminishing quantities or grades of mineral reserves as properties are
mined; the Company’s title to properties; and the factors identified
under the caption “Risk Factors” in the Company’s Annual Information
Form, under the caption “Risks Relating to First Majestic’s Business”.
Investors are cautioned against attributing undue certainty to
forward-looking statements or information. Although the Company has
attempted to identify important factors that could cause actual results
to differ materially, there may be other factors that cause results not
to be anticipated, estimated or intended. The Company does not intend,
and does not assume any obligation, to update these forward-looking
statements or information to reflect changes in assumptions or changes
in circumstances or any other events affecting such statements or
information, other than as required by applicable law.
SOURCE First Majestic Silver Corp.