Discovery Reports Q4 2021 Financial Results and Update Discovery Reports Q4 2021 Financial Results and Update
Discovery Silver Corp.
TORONTO, April 28, 2022 (GLOBE NEWSWIRE) -- Discovery Silver Corp. (TSX-V: DSV, OTCQX: DSVSF) (“Discovery” or the “Company”) is pleased to announce its financial results for the fourth quarter (“Q4 2021”) and year ended December 31, 2021, and to provide a summary of key events for the quarter and subsequent to year-end. All figures are stated in Canadian dollars (“C$”) unless otherwise noted.
Discovery’s flagship project is our 100%-owned Cordero silver project (“Cordero” or the “Project”) located in Chihuahua State, Mexico. Following the completion of a Preliminary Economic Assessment (“PEA”) in 2021 that demonstrated Cordero is a large-scale, high-margin asset with a long mine life, our focus now is the delivery of a Pre-Feasibility Study (“PFS”) on the Project in the fourth quarter of this year.
HIGHLIGHTS FROM Q4 2021 & SUBSEQUENT EVENTS:
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Completion of our PEA on Cordero that outlined a 16-year mine life with average annual production of 26 Moz AgEq at an AISC of $12.35/oz AgEq. The after-tax NPV5% was US$1.2 B and the IRR was 38% at base case metal prices of Ag - US$22.00/oz, Au - US$1,600/oz, Pb - US$1.00/lb and Zn - US$1.20/lb.
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The appointment of Tony Esplin as Chief Operating Officer; Mr. Esplin has more than 30 years of experience in the mining industry including over two decades of executive and senior management roles at Tier 1 operations with Newmont Corporation and Barrick Gold Corporation.
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The appointment of Tony Makuch to the Company’s Board of Directors; Mr. Makuch has over 35 years of mining industry experience and was most recently President and CEO of Kirkland Lake Gold Ltd up to its merger with Agnico Eagle Mines Limited in 1Q 2022.
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The release of our inaugural Environmental, Social and Governance (“ESG”) report and launch of a brand-new Sustainability section on our website. These materials set out the Company’s current practices and future priorities, and provide details of our strategic pillars that form the foundation needed to advance the Cordero Project.
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Announcement of our work program for 2022 that includes the planned completion of our PFS in the fourth quarter of this year along with 55,000 m of drilling focused on reserve definition, resource growth and property wide exploration.
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As at December 31, 2021, we had a cash and cash equivalents and short term investment balance of $69.7 million.
LOOKING AHEAD:
Work on our Pre-Feasibility Study is advancing well and we remain on schedule to deliver the study in the fourth quarter of this year. Our metallurgical testwork on the sulphides, which is focused on reagent optimization and the testing of high-grade samples ranging from 100 – 200 g/t AgEq to confirm grade versus recovery variability is now more than 50% complete. Our reserve definition drilling will wrap up later this quarter while our engineering drilling will commence in the coming weeks. We expect the PFS will continue to incorporate staged expansions of the processing facility and we will look to optimize the mining rates early in the mine life as well as the timing and size of the oxides/heap leach project to maximise capital efficiency.
In parallel with these work plans our ESG program continues to be an important area of focus, with our 2021 ESG report scheduled for issuance in the summer and key government and international accreditation certifications planned for completion in the second half of 2022. We also remain committed to the growth potential of Cordero with more than 30,000 m of drilling planned this year on resource expansion targets and our first ever drilling of five highly prospective property targets within 10 km of Cordero.
Our balance sheet remains exceptionally strong with a current cash balance of approximately $60 million and no debt. This puts us in a very strong position to fund all our activities at Cordero in 2022, as well as all necessary work to advance Cordero to a construction decision through the completion of a Definitive Feasibility Study currently scheduled for the second half of 2023.
SUMMARY OF Q4 2021 & SUBSEQUENT EVENTS:
Environment, Social, Governance:
Inaugural ESG Report / Sustainability website launch
In the fourth quarter we released our first Environmental, Social and Governance (“ESG”) report and launched a brand-new Sustainability section of our website. Report highlights include:
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Over $1.7 million in goods and services purchased from local Mexican businesses;
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Over $1.3 million in salaries and benefits paid to local employees;
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Total workforce of 124 includes 58 employees (89% Mexican) and 66 contractors (98% Mexican);
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Total GHG emissions of 167 tonnes of CO2 equivalent;
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Total water withdrawal of 36,017 m3 and total water discharged of 36,007 m3; and
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Zero fatalities and only 5 first-aid incidents
The full ESG Report is available in English and Spanish for download at:
www.discoverysilver.com/sustainability
Projects:
Preliminary Economic Assessment (PEA)
On November 30, 2021, we announced the results from the PEA on Cordero. Highlights from the study include (all figures are in USD unless otherwise noted):
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Excellent project economics: Base Case after-tax NPV5% of $1.2 B (C$1.5 B) and IRR of 38% (Ag - $22.00/oz, Au - $1,600/oz, Pb - $1.00/lb and Zn - $1.20/lb).
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Exceptional silver price leverage: Upside Case after-tax NPV5% of $1.9 B (C$2.4 B) and IRR of 55% (Ag - $27.50/oz, Au - $1,880/oz, Pb - $1.10/lb and Zn - $1.45/lb based on one-year trailing 90th percentile prices).
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Large-scale, high-margin, long mine life asset: 16-year mine life with average annual production of 26 Moz AgEq at an AISC of $12.35/oz AgEq.
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Low capital intensity: initial development capex of $368 M; attractive NPV-to-capex ratio of 3.2x.
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Rapid payback: post-tax payback of 2.0 years for Base Case and 1.4 years for Upside Case.
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Technically robust study: 99% of tonnes processed in the PEA mine plan are in the Measured & Indicated category; process design and metallurgical recovery estimates are based on the Company’s comprehensive 2021 metallurgical testwork program.
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Silver-dominant revenues: silver represents +60% of the net smelter return in the first five years of the mine life and +50% of the net smelter return over the life of mine, in-line with the senior/mid-tier silver producer group.
The PEA was based on an updated Mineral Resource Estimate that was press released on October 20, 2021. Further details on the PEA results can be found in our news release dated November 30, 2021. Supporting technical disclosure and further details on the Mineral Resource Estimate can be found at the bottom of this release.
Phase 2 drilling
Subsequent to the year ended December 31, 2021, we announced two sets of drill results from our ongoing Phase 2 drill program. Phase 2 drilling will continue through the remainder of the year and will be focused on three key areas: (1) Pre-Feasibility Study drilling consisting of reserve definition and engineering drilling; (2) resource expansion in the northeast of the deposit and at depth; and (3) initial drill testing of five property-wide targets on the Company’s extensive land package. There are currently four drill rigs operating on site.
PFS Drilling – highlight intercepts from upgrading resources for inclusion in the PFS include:
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49.9 m averaging 247 g/t AgEq from 124.5 m (99 g/t Ag, 0.26 g/t Au, 1.9% Pb and 1.8% Zn) including 21.4 m averaging 446 g/t AgEq (185 g/t Ag, 0.46 g/t Au, 3.5% Pb & 3.2% Zn) in hole C21-533
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46.8 m averaging 288 g/t AgEq from 366.5 m (61 g/t Ag, 0.07 g/t Au, 1.4% Pb and 4.8% Zn) in hole C21-556
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113.6 m averaging 101 g/t AgEq from 160.9 m (28 g/t Ag, 0.09 g/t Au, 0.2% Pb and 1.6% Zn) in hole C21-555
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165.0 m averaging 92 g/t AgEq from 399.8 m (33 g/t Ag, 0.06 g/t Au, 0.7% Pb and 0.9% Zn) including 31.3 m averaging 141 g/t AgEq (58 g/t Ag, 0.07 g/t Au, 1.1% Pb & 1.2% Zn) in hole C21-545
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38.6 m averaging 189 g/t AgEq from 191.8 m (91 g/t Ag, 0.11 g/t Au, 1.3% Pb and 1.3% Zn) beneath the PEA pit in hole C21-573
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32.3 m averaging 142 g/t AgEq from 28.5 m (70 g/t Ag, 0.12 g/t Au, 0.8% Pb and 1.0% Zn) on the margins of the PEA pit in hole C21-538
Resource Expansion Drilling – highlight intercepts from outside the resource pit constraint include:
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45.6 m averaging 328 g/t AgEq from 327.0 m (125 g/t Ag, 0.54 g/t Au, 2.0% Pb and 2.7% Zn) including 17.4 m averaging 674 g/t AgEq (254 g/t Ag, 0.94 g/t Au, 4.0% Pb & 6.1% Zn) in hole C21-575
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44.5 m averaging 106 g/t AgEq from 355.7 m (20 g/t Ag, 0.03 g/t Au, 0.1% Pb and 2.2% Zn) in hole C21-549
For further details on the drill results noted above refer to our news releases dated February 10 and March 31, 2022. Supporting Technical Disclosure for drill results can be found at the end of this release
SELECTED FINANCIAL DATA:
The following selected financial data is summarized from the Company’s consolidated financial statements and related notes thereto (the “Financial Statements”) for the year ended December 31, 2021, and the Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2021.
A copy of the Financial Statements and MD&A is available at www.discoverysilver.com or on SEDAR at www.sedar.com.
| Net loss | Q4 2021 | | Q4 2020 | |
| (a) Total | $ | (7,098,928 | ) | $ | (6,125,457 | ) |
| (b) basic and diluted per share | $ | (0.02 | ) | $ | (0.02 | ) |
| Net loss & total comprehensive loss | $ | (7,030,220 | ) | $ | (5,455,362 | ) |
| Total weighted average shares outstanding | | 329,898,229 | | | 302,368,222 | |
| | December 31, 2021 | | December 31, 2020 | |
| Cash, cash equivalents & short-term investments | $ | 69,748,652 | | $ | 82,547,897 | |
| Total assets | $ | 107,790,755 | | $ | 111,564,881 | |
| Total current liabilities | $ | 1,704,530 | | $ | 982,260 | |
| Total liabilities | $ | 1,704,530 | | $ | 1,023,349 | |
| Working capital | $ | 69,611,661 | | $ | 82,435,046 | |
| Total Shareholders’ equity | $ | 106,086,225 | | $ | 110,541,532 | |
About Discovery
Discovery’s flagship project is its 100%-owned Cordero project, one of the world’s largest silver deposits. The PEA completed in November 2021 demonstrates that Cordero has the potential to be developed into a highly capital efficient mine that offers the combination of margin, size and scaleability. Cordero is located close to infrastructure in a prolific mining belt in Chihuahua State, Mexico. Continued exploration and project development at Cordero is supported by a strong balance sheet with a current cash balance of approximately C$60 million.
On Behalf of the Board of Directors,
Taj Singh, M.Eng, P.Eng, CPA,
President, Chief Executive Officer and Director
For further information contact:
Forbes Gemmell, CFA
VP Corporate Development & Investor Relations
Phone: 416-613-9410
Email: forbes.gemmell@discoverysilver.com
Website: www.discoverysilver.com
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