Today
Empress enacts $5M (U.S.) Ag stream on Tahuehueto
2021-04-16 07:04 ET - News Release
Ms. Alexandra Sherron reports
EMPRESS EXECUTES TAHUEHUETO SILVER STREAM
Empress Royalty Corp. has executed the $5-million (U.S.) silver stream agreement on the Tahuehueto project in Mexico owned by Telson Mining Corp.
"We are excited to be working with Telson and our strategic partners to get this remarkable asset into production," stated Alexandra Woodyer Sherron, chief executive officer and president of Empress. "This transaction demonstrates the unique funding solutions we can provide to our mining company partners and highlights the value of our strategic partnerships. We continue to deliver on our strategy to build a portfolio of near-term producing assets and creating value for our shareholders."
The investment and transaction
Empress has now executed the $5-million (U.S.) silver stream agreement on production from Telson's Tahuehueto project in Mexico. The $5-million (U.S.) stream is on 100 per cent of the payable silver production from Tahuehueto for the first 1.25 million payable ounces; thereafter, the percentage will step down to 20 per cent of the payable silver production to a maximum of 10 years from first production after which the stream terminates.
Telson has announced that its Tahuehueto project is approximately 60 per cent constructed, with initial production forecast for late 2021 and full-scale production forecast for early 2022.
Full financing solution
The $5-million (U.S.) silver stream will be provided in two tranches ($2-million (U.S.) shortly and $3-million (U.S.) on closing of the Accendo Banco loan) and represents the second stage of a $25-million (U.S.) full financing solution being provided to Telson by Empress and its strategic partners Accendo Banco and Endeavour Financial. The first stage was the $8-million (U.S.) private placement in Telson, which closed on March 30, 2021. The third stage is the Accendo Banco $12-million (U.S.) loan facility and refinance of existing loans. In the event the third stage fails to close, the obligations of the stream will terminate and any partial drawdowns of the stream advance are to be converted into shares of Telson at the then market price as calculated on the date of termination. Telson has informed the company that documentation is progressing well and anticipates closing near the end of April or early May, 2021.
This full financing package demonstrates the opportunity that Empress and its strategic partners can offer its mining company partners to expand production or get development assets into production.
The project
Tahuehueto is located in the mining-friendly jurisdiction of Durango, Mexico. It is a typical epithermal polymetallic mineral deposit in this part of Mexico, with metals consisting of gold silver, zinc, copper and lead. Based on the PFS (prefeasibility study) completed in 2017, the project had a 21-year life of mine (LOM) at a production rate of 550 tonnes per day.
The mine is fully permitted, has all social licences to operate, including with the local Ejido, has offtake agreements in place with Trafigura, and has already produced a saleable concentrate, processing over 42,000 tonnes of ore on a toll mill basis during 2018 and 2019. This confirmed the metallurgy as straightforward, with no need for fine or ultrafine grinding and no refractory ore and the process uses standard off-the-shelf technology realizing excellent recoveries of payable metals.
Tahuehueto project -- National Instrument 43-101 resource and reserve
TAHUEHUETO PROJECT MINERAL RESERVE ESTIMATE Classification Tonnes Au Oz Au Ag Oz Ag Cu Lb Cu Pb Lb Pb Zn Lb Zn (000) (g/t) (000) (g/t) (000) (%) (000) (%) (000) (%) (000) Probable reserves 3,264 3.40 356 41.80 4,387 0.35 25,028 1.19 85,762 2.24 161,314 Note Mineral Reserves were defined as mineralized material that occurred within the stope shapes that were based on and NSR (net smelter return) value of $62/tonne. Measured and indicated resources within the defined mining shapes (stopes) were used to estimate probable reserves. No proven reserves were defined due to the limited definition resource drilling, limited definition by exploratory mining and the lack of geotechnical data that addresses underground mining. Probable mineral reserves include the effects of mining dilution assumptions, which average 15 per cent, and extraction ratio assumptions, which averaged 94 per cent. Mining dilution was assumed to have zero grade.
Canadian Institute of Mining, Metallurgy and Petroleum standards were followed in the estimation of the mineral reserves. Mineral reserves were estimated using metal price forecasts of 60 cents per pound for lead, 75 cents/lb for zinc, $2.10/lb for copper, $1,000/ounce for gold and $19.12/oz for silver. The low metal prices were selected to drive the mine plan toward mineralization with the highest confidence in the prospects of economic extraction. These metal prices were not used for the economic analysis of the mineral deposit. Totals may not add due to rounding. The foregoing mineral reserves are included within the current mineral resource estimate for the project.
TAHUEHUETO MEASURED AND INDICATED RESOURCES Classification Tonnes Au Oz Au Ag Oz Ag Cu Lb Cu Pb Lb Pb Zn Lb Zn (000) (g/t) (000) (g/t) (000) (%) (000) (%) (000) (%) (000) Measured 2,771 2.77 247 44.70 3,982 0.31 18,914 1.27 77,827 2.29 139,821 Indicated 3,343 2.23 240 41.26 4,435 0.30 22,466 1.15 84,455 2.04 155,687 Total M+I 6,114 2.48 487 42.82 8,417 0.31 41,380 1.20 162,282 2.15 295,508 TAHUEHUETO INFERRED RESOURCES Classification Tonnes Au Oz Au Ag Oz Ag Cu Lb Cu Pb Lb Pb Zn Lb Zn (000) (g/t) (000) (g/t) (000) (%) (000) (%) (000) (%) (000) Inferred 3,501 1.31 147 37.59 4,230 0.27 20,469 1.34 103,080 2.44 188,409 Note The mineral resources have been calculated using a cut-off of 2.5 g/t AuEq. These resource numbers are preliminary in nature. They include inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.
For further information, please see the Telson Mining corporate website for more information.
Richard Mazur, PGeo, a director of Empress Royalty and qualified person under National Instrument 43-101, has reviewed and approved the contents of this news release.
About Empress Royalty Corp.
Empress is a new precious metals royalty and streaming company focused on the creation of unique financing solutions for mining companies. Empress has a portfolio of 15 investments and is actively focused on finding industry partners with development- and production-stage projects which require additional non-dilutive capital. The company has strategic partnerships with Endeavour Financial in London, Terra Capital in Australia and Accendo Banco in Mexico which allow Empress to not only access global investment opportunities but also bring unique mining finance expertise, deal structuring and access to capital markets.