TSX: SIL | NYSE American: SILV
VANCOUVER, BC, Jan. 4, 2021 /CNW/ - In anticipation of
making a final construction decision based on a Feasibility Study
("Feasibility Study") for the Las Chispas Project ("Las Chispas"),
SilverCrest Metals Inc. ("SilverCrest" or the "Company") is pleased
to announce that its Canadian subsidiary has entered into a credit
agreement (the "Credit Agreement") with an affiliate of RK Mine
Finance ("RK") to provide a secured project financing facility (the
"Facility") for a total of US$120
million for the purpose of funding the construction of Las
Chispas. Concurrently, one of the Company's Mexican subsidiaries
has entered into a fixed price Engineering, Procurement and
Construction contract (the "EPC Contract") with Ausenco Engineering
Canada Inc. ("Ausenco"), and one of its affiliates, for
construction of the Las Chispas process plant. While the
Feasibility Study is still pending finalization by Ausenco, with
announcement of results targeted for late January 2021, SilverCrest is confident entering
into the Credit Agreement and the EPC Contract based on the
substantial feasibility information currently
available. However, in the absence of a feasibility study of
mineral reserves demonstrating economic and technical viability,
there is increased uncertainty and historically a higher economic
and technical risk of failure associated with the development of a
commercially mineable deposit until such time as the Feasibility
Study has been completed. See "EPC Contract and Feasibility
Study" below.
Highlights:
Project Finance Facility
- US$120 million Facility with a
total cost of capital of approximately 10% (refer to details
below);
- Facility does not require mandatory hedging, cash sweeps,
offtakes, production linked payments or equity issuances as part of
its structure;
- US$30 million of the Facility has
been drawn, and subsequent drawdowns are available upon
satisfaction of certain customary conditions precedent. Drawdowns
are not tied to any construction milestones;
- Facility has a four-year term with a 20-month availability
period if 50% of the Facility is drawn or committed to be drawn
within six months (June 30, 2021) and
75% of the Facility is drawn within 12 months (December 31, 2021);
- Up to US$30 million of the
Facility can be used for exploration and regional acquisitions;
and
- US$90 million remaining on the
Facility, plus estimated cash at year-end of US$135 million, will provide a substantial
component of funding for construction, exploration and regional
growth initiatives.
EPC Contract
- Lump sum turnkey price of US$76.5
million will include construction of a 1,250 tonne per day
process plant at Las Chispas;
- Execution of Ausenco's scope of work will begin in February 2021, and commissioning of the process
plant is targeted for Q2 2022, with production ramp-up starting in
Q3 2022;
- The construction execution plan includes stringent COVID-19
protocols including the use of a confined single room occupancy
camp, designed to limit the potential for a virus outbreak at the
site and in the local communities; and
- The EPC Contract represents a portion of the total scope of the
planned construction but does not include development of the
underground mine, confined camp, powerline, dry stack tailings
facility, establishment of an analytical laboratory in the local
community or the owner's site costs.
N. Eric Fier, CPG, P.Eng and CEO,
remarked, "We are very pleased to have concurrently signed the
Credit Agreement and the EPC Contract with two well-established and
respected partners in the mining industry. The commitment by both
partners ahead of the targeted January
2021 release of the Las Chispas Feasibility Study speaks to
the strength of our team and project. While we recognize the
challenges of building during this unprecedented time, we believe
the strict and effective COVID-19 protocols that we have
implemented on site, which are highlighted in these two important
agreements, limit our risk. This news marks another important
milestone on our path to production at Las Chispas."
Pierre Beaudoin, COO, remarked,
"We are pleased to be working with Ausenco, a well-known and
respected engineering firm with substantial global experience in
designing, constructing, and commissioning precious metal process
facilities. We have been working closely with Ausenco to complete
the EPC Contract and the Feasibility Study in close
succession. We are confident that their intimate knowledge of
the project will benefit the successful construction and
commissioning of Las Chispas."
Project Finance Facility
Key terms of the Credit Agreement include:
- US$120 million facility with
initial 25% drawdown complete at close on December 31, 2020 ("Closing")
-
- Subsequent drawdowns available upon satisfaction of certain
customary conditions precedent, but subsequent drawdowns are not
tied to any construction milestones
- No requirement for hedging, cash sweeps, offtakes, production
linked payments, shares or warrants
- Term of four years
-
- Principal repaid on the fourth anniversary of Closing
(December 31, 2024)
- Voluntary prepayment at any time, subject to prepayment fee (4%
before year 1; 3% for years 1 to 3; and 1.5% beyond year 3)
- The Facility has an availability period of up to 20 months
if:
-
- 50% or greater of the Facility is drawn or committed to be
drawn within six months of Closing, and
- 75% or greater of the Facility is drawn within 12 months of
Closing
- Interest rate of 6.95% plus the greater of 3-month LIBOR (or
agreed upon equivalent) or 1.5%
-
- Interest payable quarterly, with option to accrue during the
availability period
- 3% arrangement fee paid upon Closing of the Credit
Agreement
- Up to US$30 million of the
Facility can be used for exploration and acquisitions within
Sonora, Mexico
EPC Contract and Feasibility Study
The EPC Contract with Ausenco locks in a fixed price of
US$76.5 million for construction of a
1,250 tonne per year process plant at Las Chispas. Ausenco will
begin construction in February 2021,
as the SilverCrest managed earthworks program for the process plant
nears completion. Commissioning of the process plant is targeted
for Q2 2022 and production ramp-up is slated to begin in Q3
2022.
Ausenco is completing the Las Chispas Feasibility Study and
progressing detailed engineering and the construction management
plan. Detailed engineering is progressing well at approximately 60%
completion and procurement of long lead items started in Q4 2020.
Advancing these programs in parallel has allowed Ausenco to develop
comprehensive capital and operating cost estimates for Las Chispas
while progressing detailed engineering beyond what is customary at
a Feasibility Study level. The disruption caused by the COVID-19
pandemic also allowed SilverCrest to initiate an Early Works
program tailored to further reduce project execution risks. This
program included the earthworks package, the water pumping system,
and the first phase of the construction camp. The advancement of
the Early Works program coupled with the fixed price nature of the
EPC Contract reduces many common construction, and market-related
risks.
Beyond the tasks included in the EPC Contract, the remaining
initial capital costs anticipated for Las Chispas construction will
include:
- Development costs of the underground mine;
- Owner's site costs;
- On-site infrastructure including Phase 2 of the confined
construction camp, a bridge and the filtered (dry-stack) tailings
system facility;
- A new 33 kV, 49 km long powerline to replace the proposed
diesel power generation, originally contemplated in the Las Chispas
2019 Preliminary Economic Assessment, effective May 15, 2019, as amended July 19, 2019, to provide better long-term
economics and a reduction in greenhouse gas-emissions; and
- An analytical laboratory located in the community, instead of
on-site, to provide additional local employment.
Details of the costs beyond the EPC contract will be presented
in the upcoming Feasibility Study.
In the absence of the Feasibility Study of mineral reserves
demonstrating economic and technical viability, there remains
increased uncertainty and historically a higher economic and
technical risk of failure associated with the development of a
commercially mineable deposit until such time as the Feasibility
Study has been completed. These risks include, among others,
areas that are analyzed in detail in a feasibility study, such as
applying economic analysis to resources and reserves, more detailed
metallurgy and a number of specialized studies in areas such as
mining and recovery methods, market analysis, and environmental and
community impacts.
SilverCrest's Canadian legal counsel for the agreements were
Cassels Brock &
Blackwell LLP and Koffman Kalef LLP. Urias Romero Y
Asociados, S.C. acted as SilverCrest's Mexican counsel.
ABOUT SILVERCREST
METALS INC.
SilverCrest is a Canadian precious
metals exploration 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 current focus is on the high-grade,
historic Las Chispas mining district in Sonora, Mexico. The Las Chispas Project
consists of 28 mineral concessions, of which the Company has 100%
ownership of where all the resources are located. SilverCrest is
the first company to successfully drill-test the historic Las
Chispas Property resulting in numerous high-grade precious metal
discoveries. The Company 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.
ABOUT RK MINE FINANCE
RK Mine Finance provides
bespoke financing solutions to mining companies including bridge
finance, construction finance, expansion funding, working capital
and acquisition facilities. RK has a strong track record of
supporting mining companies with their financing needs and
since its inception has provided committed capital of over
$2.0 billion. Further information on
RK can be found at www.rkminefinance.com.
ABOUT AUSENCO
Ausenco is a global company redefining
what's possible. Our team is based across 26 offices in 14
countries, with projects in over 80 locations worldwide. Combining
our deep technical expertise with a 30-year track record, we
provide innovative, value-add consulting and engineering studies
and project delivery, asset operations and maintenance solutions to
the mining & metals, oil & gas and industrial sectors.
FORWARD-LOOKING
STATEMENTS
This news release
contains "forward-looking statements" within the meaning of
Canadian securities legislation. These include, without limitation,
statements with respect to: the strategic plans, timing and
expectations for the Company's exploration, development and
construction activities at the Las Chispas Property, including
completion of the Feasibility Study, the ability to complete
further drawdowns under the Credit Agreement, the costs and timing
of construction associated with the EPC Contract and the timing of
completion of the process plant and production ramp up. Such
forward looking statements or information are based on a number of
assumptions, which may prove to be incorrect. Assumptions have been
made regarding, among other things: impact of the COVID-19
pandemic; the reliability of mineralization estimates, he
availability of additional drawdowns under the Credit Agreement,
completion of the Feasibility Study, the conditions in general
economic and financial markets; availability of skilled labour;
timing and amount of expenditures related to rehabilitation and
drilling programs; and effects of regulation by governmental
agencies. The actual results could differ materially from those
anticipated in these forward-looking statements as a result of risk
factors including: uncertainty as to the impact and duration of the
COVID-19 pandemic; the timing and content of work programs;
proceeding with the EPC Contract without completion of the
Feasibility Study, the availability of funds under the Credit
Agreement and otherwise, results of exploration activities; the
interpretation of drilling results and other geological data;
receipt, maintenance and security of permits and mineral property
titles; environmental and other regulatory risks; project cost
overruns or unanticipated costs and expenses; and general market
and industry conditions. Forward-looking statements are based on
the expectations and opinions of the Company's management on the
date the statements are made. The assumptions used in the
preparation of such statements, although considered reasonable at
the time of preparation, may prove to be imprecise and, as such,
readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the
statements were made. The Company undertakes no obligation to
update or revise any forward-looking statements included in this
news release if these beliefs, estimates and opinions or other
circumstances should change, except as otherwise required by
applicable law.
N. Eric Fier, CPG,
P.Eng
Chief Executive Officer
SilverCrest
Metals Inc.
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SOURCE SilverCrest Metals Inc.