New Pacific Metals Delivers Strong Economics for Carangas in Preliminary Economic Assessment
VANCOUVER, BC,
Highlights from the PEA are as follows (all figures in US Dollars):
- Post-tax net present value ("NPV") (5%) of
$501 million and internal rate of return ("IRR") of 26% at a base case price of$24.00 /oz silver,$1.25 /lb zinc, and$0.95 /lb lead;- NPV and IRR of
$748 million and 34%, respectively, at$30 /oz silver;
- NPV and IRR of
- 16-year life of mine ("LOM"), excluding 2-years of pre-production, producing approximately 106 million oz ("Moz") of payable silver, 620 million pounds ("Mlbs") of payable zinc and 382 Mlbs of payable lead;
- Payable silver production of approximately 8.5 Moz per year in years one through six; with LOM average silver production exceeding 6.5 Moz per year;
- Initial capital costs of
$324 million and a post-tax payback of 3.2 years; - Average LOM all-in sustaining cost ("AISC") of
$7.60 /oz silver, net of by-products; and - Approximately 500 direct permanent jobs to be created from the Project.
"The PEA for the Carangas project marks a significant milestone for our company, outlining a robust, high-margin project with strong economics. By focusing our efforts on a discrete, near surface, subset of silver rich material we were able to define a project with a post-tax NPV of $501 million, an IRR of 26% and an initial capital expenditure of
"This study not only underscores the quality of this asset but also highlights the exceptional work of our team who discovered this
greenfield project only three years ago. While
Economic Results and Sensitivities
Table 1 shows key assumptions and summarizes the projected production and economic results of the PEA. Tables 2 and 3 show sensitivities to silver prices and operating and capital costs.
Table 1: Carangas Open Pit Mining – Key Economic Assumptions and Results
Item |
Unit |
Value |
|
$/oz |
24 |
Zinc Price |
$/lb |
1.25 |
Lead Price |
$/lb |
0.95 |
Total Mill Feed |
Mt |
64.4 |
Open Pit Strip Ratio1 |
t:t |
1.7 |
Annual Processing Rate |
Mtpa |
4.0 |
Average |
g/t |
63 |
Average |
g/t |
83 |
Silver Recovery |
% |
87.3 |
Total Payable Silver |
Moz |
106 |
Total Payable Zinc |
Mlbs |
620 |
Total Payable Lead |
Mlbs |
382 |
|
Yrs |
16.2 |
Average Annual Payable Silver Metal over LOM |
Moz |
6.6 |
Annual Payable Silver Metal in first 6 years |
Moz |
8.5 |
Total Revenue |
$M |
3,296 |
Total Revenue Contribution from Silver |
% |
76 |
Total Operating Costs (net of by-products)4 |
$/oz |
4.25 |
Government Royalties |
$/oz |
1.79 |
AISC (net of by-products) 5 |
$/oz |
7.60 |
Initial Capital Costs |
$M |
324 |
Sustaining Capital Costs6 |
$M |
128 |
Payback Period (post-tax)7 |
Yrs |
3.2 |
Cumulative |
$M |
1,447 |
Cumulative |
$M |
867 |
Post-tax NPV (5%) |
$M |
501 |
Post-tax IRR |
% |
26 |
NPV (5%) to Initial Capex Ratio |
$:$ |
1.5 |
Notes |
|
1. |
LOM average strip ratio. |
2. |
LOM average. |
3. |
Excludes 2 years pre-production period. |
4. |
Includes mining costs, processing costs, tailing costs, G&A costs, and selling costs. |
5. |
Includes total operating costs, royalties, sustaining capital costs, and closure costs. |
6. |
Excludes mine closure costs of |
7. |
The payback period is measured from the beginning of production after construction is completed. |
Table 2 : Carangas Project Economic Sensitivity Analysis for Silver Prices – Post-Tax
|
Silver Price Sensitivity |
||||
Silver Price (US$/oz) |
|
|
|
|
|
Results (post-tax NPV $M / IRR) |
254/17% |
378/22% |
501/26% |
625/30% |
748/34% |
Note: Inputs for the base case (100%) are listed in Table 1. Table 2 presents how the Project's post-tax NPV and IRR are affected by varying the selling price of silver. For example, if the silver price increases by |
Table 3: Carangas Project Economic Sensitivity Analysis for Costs – Post-Tax
|
Cost Sensitivity |
||||
Sensitivity Items |
-20 % |
-10 % |
100% |
+10 % |
+20 % |
(post-tax NPV $M / IRR) |
534/27% |
518/26% |
501/26% |
485/25% |
468/25% |
Process Cost (post-tax NPV $M / IRR) |
563/28% |
532/27% |
501/26% |
470/25% |
439/24% |
Life-of-Mine Capex (post-tax NPV $M / IRR) |
558/32% |
530/29% |
501/26% |
473/23% |
444/21% |
Note: Inputs for the base case (100%) are listed in Table 1. Table 3 lists sensitivity analysis for three "Input" variables. For example, if LOM Capex increases by 20% (+20%), while silver price, mine operating cost, and process operating cost remain the same as the "Base Case" input, the NPV becomes |
Capital and Operating Costs
The Project, as outlined in the PEA, is anticipated to include an open-pit operation, with mining to be carried out by a contract mining company, supplying mill feed to a flotation plant, producing silver-lead and zinc concentrates. The PEA anticipates the Project will have several capital and operating cost advantages:
- Mineralized material is flat-lying and near-surface, which is anticipated to result in a shallow pit with a final depth of approximately 230 meters below surface and a low LOM average strip ratio of 1.7:1;
- It is proposed that the mine will be operated by a contractor with current operations in
Bolivia , eliminating the need for the Company to procure a mining fleet and sustain capital for fleet replacement; - Bond ball mill work index (BWi) averaging 12 and a Bond abrasion index (Ai) averaging 0.06, therefore it is anticipated that processing mineralized material will require modest power consumption and low grinding media consumption;
- Test work shows that total silver recoveries are favorable at 87.3%, with the Pb concentrate containing a high silver content expected to exceed 3,500 g/t, along with an absence of deleterious elements to enhance smelter terms;
- It is expected that the mine will be connected to the national electricity grid, providing low-cost power at
$0.05 /kWh to the processing plant and other on-site infrastructure; - The site can be accessed via national highways and all-season local roads; and
- The Project could be a major supplier for a proposed government-operated zinc smelter in Oruro.
Table 4: Total Operating Cost Estimate
Item |
Cost ($/t milled) |
Mining1 |
6.00 |
Processing |
9.00 |
General and Administration |
3.60 |
Total operating cost |
18.60 |
Note |
|
1. |
Mining cost is |
A summary of capital costs is shown in Table 5.
Table 5: Total Capital Cost Estimate
Item1 |
Cost ($M) |
Mine development |
43 |
Processing plant |
188 |
Site infrastructure2 |
68 |
Tailings Storage Facility ("TSF")3 |
14 |
Owner's cost |
11 |
Initial capital |
324 |
Life of mine sustaining capital4 |
167 |
Note |
|
1. |
Includes direct, indirect, and contingency costs. Contingency costs total approximately |
2. |
Includes |
3. |
Tailings capital includes initial earthworks, liners/membranes, and a water management facility. |
4. |
Sustaining capital costs include expansion of the TSF, refurbishment and replacement of processing equipment, and mine closure of |
Mining
It is anticipated that the deposit will be mined using a conventional open pit approach. This entails drilling and blasting, with loading by hydraulic excavators and haulage by off-highway rear dump haul trucks. The PEA pit is designed to be relatively shallow, resulting in comparatively short hauls for both mill feed and waste. A SW-NE cross section showing the resource model grades and pit is illustrated in Figure 1. The mine production schedule is illustrated in Figure 2.
Mill feed tonnes and grade are a subset of the Mineral Resource Estimate, accounting for planned mining dilution and recovery. A mining net smelter return ("NSR") cutoff grade of
The PEA assumes that mill feed will be hauled to the primary crusher or a run-of-mine ("ROM") stockpile near the crusher. A portion of the oxides and lower grade resources mined in the early years are planned to be stockpiled and processed over the life of mine. Waste rock will be hauled to waste storage facilities. It is anticipated that mine operations will be conducted by a contractor with current operations in Bolivia.
It is anticipated that open-pit mining will commence in the first year of construction. The mine plan anticipates that 19 Mt of waste and oxide material will be mined, with the oxides stockpiled, over a two-year pre-production period. Peak open-pit production is expected to be 15 Mt per year. The planned open pit contains a total of 176 Mt of material (mineralized material and waste) which is scheduled to be mined out by Year 13 of milling operations. 24 Mt of oxide and lower grade material is planned to be processed throughout the mine, with years 14-17 processing stockpiles exclusively.
Notes: Net Smelter Prices ("NSP") and metallurgical recoveries are used to define the NSR cutoff grade. NSPs include market price assumptions of |
Mineral Processing
The Project is designed to process 4.0 Mt of mineralized material per year. The overall production schedule is illustrated in Figure 3. The processing facility will use conventional comminution circuits followed by selective sequential flotation to produce a lead/silver concentrate and a zinc/silver concentrate. This is planned to include primary crushing, followed by a SAG-Ball milling circuit ("SABC") and sequential sulfide flotation to separate silver/lead and zinc while rejecting pyrite and non-sulfidic gangue minerals. Tailings would then be thickened and pumped to a conventional storage facility.
Mineral Resource Estimate
The MRE, which used conceptual open pit mining constraints for reporting purposes, was previously reported by the Company in a news release dated
To minimize upfront capital while maximizing the Project's return, the Company based the PEA on a 64 Mt subset of the near-surface, higher-grade material within the
Table 6: Mineral Resource as of
Domain |
Category |
Tonnage |
Ag |
Au |
Pb |
Zn |
AgEq |
|||||
Mt |
g/t |
Mozs |
g/t |
Kozs |
% |
Mlbs |
% |
Mlbs |
g/t |
Mozs |
||
|
Indicated |
119.2 |
45 |
171.2 |
0.1 |
216.4 |
0.3 |
916.6 |
0.7 |
1,729.6 |
85 |
326.8 |
Inferred |
31.3 |
43 |
43.3 |
0.1 |
104.6 |
0.3 |
202.4 |
0.5 |
350.0 |
80 |
80.8 |
|
|
Indicated |
43.4 |
11 |
15.0 |
0.1 |
77.4 |
0.4 |
343.6 |
0.8 |
739.4 |
56 |
78.1 |
Inferred |
9.3 |
9 |
2.6 |
0.1 |
15.6 |
0.4 |
74.1 |
0.8 |
162.3 |
54 |
16.2 |
|
|
Indicated |
52.3 |
11 |
19.1 |
0.8 |
1,294.4 |
0.2 |
184.7 |
0.2 |
184.7 |
92 |
154.9 |
Inferred |
4.4 |
13 |
1.8 |
0.7 |
97.5 |
0.2 |
21.4 |
0.2 |
21.4 |
91 |
12.8 |
Source: compiled by RPMGlobal, 2023 |
|
Notes: |
|
1. |
CIM Definition Standards (2014) were used for reporting the Mineral Resources. |
2. |
The qualified person (as defined in NI 43-101) for the purposes of the MRE is |
3. |
Mineral Resources are constrained by an optimized pit shell at a metal price of |
4. |
Drilling results up to |
5. |
The numbers may not compute exactly due to rounding. |
6. |
Mineral Resources are reported on a dry in-situ basis. |
7. |
Mineral resources are not Mineral Reserves and have not demonstrated economic viability. |
Next Steps
With the completion of the PEA, New Pacific intends to continue its efforts to secure the necessary permits for the Project. The Company will only proceed with a feasibility study, expected to take 12-18 months, once it has confidence in a favorable and timely permitting outcome. This is anticipated to include securing a comprehensive mine development agreement with the local community, converting the Company's exploration license into a mining license, substantially progressing an Environmental Impact Assessment Study ("EIA") and obtaining legal certainty for the Project's location within 50 kilometers of the Bolivian border with
Significant progress has been made towards these milestones over the past year. For the EIA, the Company has completed baseline environmental data collection for both the dry and wet seasons and has recently secured community consent to begin the primary socioeconomic baseline data collection, which is expected to take several months to complete. This baseline data will help refine the Project's design, assess potential environmental and social impacts and will help inform agreements with the local community.
The Company is encouraged by the strong support from both the
Qualified Persons
The qualified persons for the PEA are Mr.
Further details supporting the PEA will be available in an NI 43‐101 Technical Report which will be posted under the Company's profile at sedarplus.com within 45 days of this news release.
This news release has been reviewed and approved by
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About
New Pacific is a Canadian exploration and development company with three precious metal projects in
On behalf of
Director and CEO
For Further Information
Phone: (604) 633‐1368 Ext. 223
E-mail: invest@newpacificmetals.com
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CAUTIONARY NOTE REGARDING RESULTS OF PRELIMINARY ECONOMIC ASSESSMENT
The results of the PEA prepared in accordance with NI 43-101 titled "Carangas Deposit - Preliminary Economic Assessment" with an anticipated effective date of
CAUTIONARY NOTE REGARDING FORWARD‐LOOKING INFORMATION
Certain of the statements and information in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian provincial securities laws. Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance (often, but not always, using words or phrases such as "expects", "is expected", "anticipates", "believes", "plans", "projects", "estimates", "assumes", "intends", "strategies", "targets", "goals", "forecasts", "objectives", "budgets", "schedules", "potential" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements or information. Such statements include, but are not limited to statements regarding: the results of the PEA and the timing of the filing of the PEA; expectations regarding the Project; estimates regarding Mineral Reserves and Mineral Resources; anticipated exploration, drilling, development, construction, and other activities or achievements of the Company; timing of receipt of permits and regulatory approvals; and estimates of the Company's revenues and capital expenditures; and other future plans, objectives or expectations of the Company.
Forward-looking statements or information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks relating to: global economic and social impact of public health crisis; fluctuating equity prices, bond prices, commodity prices; calculation of resources, reserves and mineralization, general economic conditions, foreign exchange risks, interest rate risk, foreign investment risk; loss of key personnel; conflicts of interest; dependence on management, uncertainties relating to the availability and costs of financing needed in the future, environmental risks, operations and political conditions, the regulatory environment in
The forward-looking statements are necessarily based on a number of estimates, assumptions, beliefs, expectations and opinions of management as of the date of this news release that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These estimates, assumptions, beliefs, expectations and options include, but are not limited to, those related to the Company's ability to carry on current and future operations, including: public health crisis on our operations and workforce; development and exploration activities; the timing, extent, duration and economic viability of such operations; the accuracy and reliability of estimates, projections, forecasts, studies and assessments; the Company's ability to meet or achieve estimates, projections and forecasts; the stabilization of the political climate in
Although the forward-looking statements contained in this news release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this news release are qualified by these cautionary statements. Accordingly, readers should not place undue reliance on such statements. Other than specifically required by applicable laws, the Company is under no obligation and expressly disclaims any such obligation to update or alter the forward-looking statements whether as a result of new information, future events or otherwise except as may be required by law. These forward-looking statements are made as of the date of this news release.
CAUTIONARY NOTE TO US INVESTORS
This news release has been prepared in accordance with the requirements of the securities laws in effect in
Additional information relating to the Company, including the AIF, can be obtained under the Company's profile on SEDAR+ at www.sedarplus.ca, on EDGAR at www.sec.gov, and on the Company's website at www.newpacificmetals.com.
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