Published: September 13, 2021 |

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SilverCrest Metals released update on construction activities at the company’s Las Chispas Project located in Sonora, Mexico.

“We are extremely proud of our team and contractors who have worked together to safely set the construction on a positive path with numerous critical construction milestones completed in H1, 2021. We are very pleased with the progress to date which includes on time and on budget construction since the formal start on February 1, 2021,” said Pierre Beaudoin, COO.

“We expect to reach approximately 80 percent completion of construction by the end of 2021, with plant ore commissioning expected as planned in late Q2, 2022,” added Beaudoin.

“Las Chispas mine construction is currently on time and budget based on several activities including our early decision to implement strict company-wide COVID-19 protocols and build a confined construction camp, which has reduced risks and benefited the project’s overall schedule. This approach has allowed us to see better productivity than anticipated and limited disruption in our work schedules and supply chains,” said N. Eric Fier, CPG, P.Eng, and CEO.

“Underground in-vein development is underway on multiple levels for the Babicanora, Babi Vista, and Babicanora Norte veins and the Babicanora Central zone with 33 working faces in preparation for production. Infill and exploration drilling is continuing with 10 drills at Las Chispas and three at El Picacho,” added Fier.

Las Chispas Construction

Construction of the plant and surface infrastructure is tracking on schedule and budget. At the end of H1, 2021, construction was 33 percent complete compared to scheduled completion of 28 percent. Construction progress has benefited from no delays due to COVID-19 or any other reason.

In H1, 2021 more than $82.5 million was committed, of which an estimated $48.1 million has been spent on construction across all capital cost scopes (process plant, underground, surface infrastructure, and owner’s costs). Capital expenditures remain in-line with budget. In 2021, the company has budgeted to spend approximately $113.7 million of the estimated feasibility study initial capital cost of $137.7 million. While cost inflation is now present in some areas of the industry, SilverCrest’s fixed price EPC agreement with Ausenco represents 39 percent of the total initial capital costs, limiting the impact of this risk. The other significant component of the initial capital costs is underground mine development, which has been tracking slightly under budget to date. Although construction costs are tracking slightly below budget, the feasibility study initial capital cost remains valid.

Construction has progressed well with earthworks 100 percent complete, concrete 74 percent complete, key infrastructure projects (powerline, road, and bridge) commenced, and detailed engineering 90 percent complete.

Underground Development

An estimated 4.6 km of underground development was completed in H1, 2021 for a total of 13.1 km of underground development completed at the project since underground development commenced in Q1, 2019. In-vein drifting now totals 2.5 km (increased from 1.4 km at December 31, 2020) and access has been established in four (4) veins or areas and 33 in-vein work fronts. The company accelerated underground mine development to create operational flexibility and de-risk the mine plan, resulting in an additional 1.0 km of development above budget completed in H1, 2021. This development rate is expected to be maintained in Q3, 2021 and will be re-evaluated as project construction progresses toward the peak of personnel demand in late 2021. Overall, the costs remain under budget despite the additional meterage largely as a result of timing of expenses on underground infrastructure.

The underground ramps accessing the Babicanora Main Vein in Area 51 and Babicanora Central zones have been connected to enhance ventilation, emergency preparedness, and productivity. With access established in four veins, including Babi Vista, the highest-grade reserve vein at the project, the company has the opportunity, well ahead of production, to validate the metallurgy, geology, ground conditions and test mining methods.

Underground waste development was prioritized in H1, 2021 to provide more flexibility when in production; however, the pre-production stockpile did increase by an estimated 19,000 tonnes in H1, 2021 with grades that are estimated to be in-line with the feasibility study mineral reserves of approximately 54,493 tonnes in the planned pre-production stockpile. The feasibility study production profile includes processing from the historical lower grade stockpiles (162,600 tonnes) and recently developed pre-production stockpiles at the start of the mine life, providing upfront material for optimizing the process plant, flexibility, and risk reduction during ramp-up. The lower grade historical stockpiles will be a key element for reducing ramp-up risk as it will be used initially as blending material to commission the process plant in H2, 2022 and as needed through the end of 2024, allowing for a more measured ramp-up of the underground mining rate.

Throughout H1, 2021 discussions were advanced with numerous parties to award a five-year contract for underground mining. These discussions were aided by the extensive understanding of underground mining costs at Las Chispas, which has been established over the last two years. The company anticipates awarding the underground mining contract in Q3, 2021. The contract will include flexible terms with regards to the mining rate to allow for opportunities identified through the ongoing optimization work to be pursued.

Optimization Studies

Work is underway to further improve the project with a focus on optimizing the underground design and mine schedule. This work includes review of the feasibility study mine plan to assess areas for improvement including ongoing development of an exploration drift to the high-grade Babi Vista Splay to better understand this opportunity, which is currently not part of the mine plan. Work is also underway to validate metallurgical results from all the underground exposed veins well in advance of the start of production in late Q2, 2022.

The new optimized design will provide early access to most reserve veins within the Babicanora Area. This provides an opportunity to validate the feasibility study metallurgy with additional representative samples and to test mining methods, well ahead of production. Metallurgical testing in 2021 will focus on enhancing the company’s knowledge of the clay content of the various veins to ensure the process plant performance can be optimized rapidly through the ramp-up period.

The optimization work underway also includes development of an exploration drift and access toward the high-grade Babi Vista Splay Vein to provide access for further infill drilling, if required and/or early access for production.

Safety, COVID-19, and Community

Safety remains a top priority for SilverCrest. At the end of H1, 2021 the company’s LTI frequency rate stood at 0.26 and its total recordable injury frequency rate stood at 3.57.

The company’s COVID-19 prevention measures continue to be critical for construction at Las Chispas. COVID-19 risk mitigation efforts continued successfully in H1, 2021 with more than 3,900 tests and more than 1,400 rapid antigen tests completed. In total since May 2020, SilverCrest has completed more than 7,000 COVID-19 tests, including over 6,000 rRt-PCR tests. Positivity rates prior to site access remained low in H1, 2021 (below 2 percent) and no serious occurrences have been recorded at site, which has been a key element in maintaining the schedule and budget. SilverCrest has included some contingency in the schedule in the case of a COVID-19 outbreak and this remains unused.

During H1, 2021, the company completed construction of the new 513 single occupancy room camp. This fully confined camp has allowed SilverCrest to continue its exploration, underground development, and construction with the objective of limiting potential exposure of personnel and nearby communities to the virus. Before entering the confined camp, all persons are required to isolate prior to being tested for COVID-19 (rRT-PCR test) and following receipt of negative tests, are transported to site using strict protocols. Once on site, all appropriate COVID-19 related protocols are enforced. To further enhance the company’s COVID-19 measures, the company has partnered and invested in a local laboratory facility capable of detecting variants and conducting more than 300 rRT-PCR tests per day when fully operational. This partnership will allow the company to have preferred access, pricing and quick turn-around time which will benefit both the construction process and the community.

There are currently 745 workers active at the project (including on-site and off-duty personnel) with 10 percent sourced locally and 58 percent from Sonora. During construction in H1, 2021, the company has engaged 13 local businesses and is constructing a local geochemical assay lab and a local lab for COVID-19 testing. These labs are located in the nearby community and are expected to provide full-time employment of 20 to 30 people. Once fully operational, the Las Chispas Mine will have approximately 400-450 full-time employees.

About SilverCrest Metals
SilverCrest is a Canadian precious metals exploration and development company headquartered in Vancouver, BC, that is focused on new discoveries, value-added acquisitions and targeting production in Mexico’s historic precious metal districts. The company’s top priority is on the high-grade, historic Las Chispas mining district in Sonora, Mexico, where it has completed a feasibility study on the Las Chispas Project and is proceeding with mine construction. Startup of production at the Las Chispas Mine is targeted for mid-2022. SilverCrest is the first company to successfully drill-test the historic Las Chispas Property resulting in numerous high-grade precious metal discoveries. The Ccmpany is led by a proven management team in all aspects of the precious metal mining sector, including taking projects through discovery, finance, on time and on budget construction, and production.

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