Discovery Silver Corp. (TSX: DSV, OTCQX: DSVSF)
(“Discovery” or the “Company”) is pleased to announce its financial
results for the second quarter (“Q2 2023”) ended June 30, 2023, and
to provide a summary of key events for the quarter and subsequent
to quarter-end. All figures are stated in Canadian dollars (“C$”)
unless otherwise noted. Discovery’s flagship project is the
100%-owned Cordero silver project (“Cordero” or the “Project”)
located in Chihuahua State, Mexico.
Tony Makuch, CEO, states: “We have made
excellent progress on our Feasibility Study (FS) during Q2 2023 and
subsequent to quarter end. The reserve expansion and definition
program component of our FS drill program is now complete with
results demonstrating the potential to expand reserves at Cordero
at what is already one of the world’s largest undeveloped silver
reserves of 266 million ounces. Engineering drilling is ongoing and
our metallurgical testwork program, focused on achieving higher
recoveries with lower reagent consumption, should be completed by
the end of this quarter. We have also made significant progress on
critical de-risking items including securing the surface rights for
the open pit and key infrastructure locations and identifying the
potential sources of water for the Project. We also plan on
initiating the construction permitting process later this month
with the submission of our Environmental Impact Statement
(“Manifesto de Impacto Ambiental” or “MIA”) to the Mexican Federal
Environmental Department (“SEMARNAT”). Our balance sheet remains
exceptionally strong with a cash balance of $68 million at the end
of the quarter and no debt putting us in an excellent position to
successfully advance Cordero through the completion of the FS and
the permitting process.”
HIGHLIGHTS FROM Q2 2023 & SUBSEQUENT
EVENTS:
- Release of the
Company’s 2022 Environmental, Social and Governance (“ESG”) report
highlighting the Company’s current practices and priorities going
forward.
- Completion of a
“marketed” public offering for aggregate gross proceeds of
approximately C$51.75 million putting the Company in a strong
position to advance the Project to a construction decision.
- Delivered
significant progress on critical key de-risking milestones
including securing surface rights covering the proposed open pit
and key infrastructure locations at the Project.
- Completion of
the reserve expansion and definition component of our Feasibility
Study program consisting of an additional 35,000 m of drilling in
over 100 drill holes completed since the cut-off for the
Pre-Feasibility Study with results demonstrating the potential to
further grow reserves within and on the margins of the open
pit.
- As of June 30,
2023, the Company had a cash and cash equivalents balance of $68
million.
SUMMARY OF Q2 2023
& SUBSEQUENT EVENTS:
2022 ESG Report
On July 2, 2023, the Company announced it had
released its 2022 Environmental, Social and Governance (“ESG”)
report, highlighting the Company’s current practices and priorities
going forward. Key highlights include:
- Receipt of the
Socially Responsible Enterprise (Empresa Socialmente Responsable)
(ESR) distinction from the Mexican Centre for Philanthropy (Centro
Mexicana para la Filantropía) (CEMEFI) and achieving a ranking in
the top 10% of approximately 1,000 participating small to medium
sized companies in Mexico.
- Receipt of the
Great Place to Work Certification (achieving an overall score of
84%), an internationally recognized certification program awarded
to companies that create an outstanding employee experience.
- The Company held
19 engagement sessions with local stakeholders in 2022 and made
significant community investments in health, education and
training.
The full 2022 ESG Report is available for
download at: www.discoverysilver.com/sustainability
Public Offering:
The Company announced on April 19, 2023, that it
closed its previously announced “marketed” public offering of
common shares of the Company for aggregate gross proceeds of
approximately C$51.75 million (the “Offering”). The Offering was
conducted by a syndicate of agents co-led by Clarus Securities Inc.
and Cormark Securities Inc., and including BMO Nesbitt Burns Inc.,
Eight Capital, and PI Financial Corp. (collectively, the “Agents”),
and consisted of the sale of 43,125,000 common shares of the
Company which included the full exercise of the Agents’ option at a
price of C$1.20 per Share.
The Company intends to use the net proceeds from
the Offering to fund the continued advancement and de-risking of
the Cordero Project and for working capital and general corporate
purposes.
Further details can be found in the news
releases dated April 12, 2023, and April 19, 2023.
Key De-Risking
Items:
The Company has made excellent progress so far
this year on the critical de-risking items for Cordero - surface
rights, water, power, permitting and the Feasibility Study – in the
systematic advancement of Cordero towards a construction decision.
The Company recently secured the surface rights that correspond
with the planned open pit and key infrastructure locations at
Cordero as well as a significant volume of water rights. Discovery
also recently engaged M3 Engineering & Technology Corp to
complete a technical review of the scope and cost to source water
from existing water treatment plants in the region.
An impact assessment study and power
installation study by Mexican electrical infrastructure authority
CENACE were delivered earlier this year, with confirmation that
there is sufficient capacity in the existing power grid to supply
the Project with power for operations at peak throughput levels.
Standard upgrades of the Camargo II substation will be required as
well as the installation of a 74-kilometre powerline along the
existing power corridor. The Company will also be evaluating the
option to use renewable energy sources at site to supplement grid
power.
The Company is set to initiate the permitting
process later this month with the submission of its MIA to
SEMARNAT. The MIA is one of the principal permits required for the
development of Cordero and encapsulates extensive social and
environmental work programs completed by the Company’s team in
Mexico since 2020 in parallel with multiple reviews by third-party
consultants. Cordero benefits from being located on private land in
an area of Mexico (Chihuahua State) where mining has a long history
and is a key economic contributor.
For further details on the progress on key
de-risking items noted above refer to our news release dated June
22, 2023.
Feasibility Study Drilling:
The Company has drilled over 52,000 m (164
holes) as part of its FS drill program (since the data cut-off for
the PFS study). This includes approximately 35,000 m of reserve
definition and expansion drilling, 7,000 m of condemnation drilling
and 10,000 m of engineering drilling (hydrogeology and
geotechnical). Engineering drilling will be ongoing through the
remainder of the year along with the property-wide drill program
which commenced last month.
Reserve Expansion Drilling –
the reserve expansion and definition component of our Feasibility
Study drill program is now complete. Highlight intercepts from this
drilling include:
-
41 m averaging 197 g/t AgEq1 (63
g/t Ag, 0.09 g/t Au, 1.2% Pb and 2.7% Zn) from 386 m and 8
m averaging 416 g/t AgEq1 (195 g/t Ag, 0.23 g/t Au, 2.2%
Pb and 4.1% Zn) from 79 m in the core of the South Corridor in hole
C22-688.
-
37 m averaging 139 g/t AgEq1 (58 g/t Ag, 0.05 g/t
Au, 0.8% Pb and 1.5% Zn) from 236 m and 104 m averaging 86
g/t AgEq1 (37 g/t Ag, 0.04 g/t Au, 0.3% Pb and 1.1% Zn)
from 91 m in hole C22-705; these intervals were in the southern
portion of the South Corridor within the reserves pit.
-
52 m averaging 105 g/t AgEq1 (51
g/t Ag, 0.19 g/t Au, 0.6% Pb and 0.9% Zn) from 102 m and 37
m averaging 171 g/t AgEq1 (79 g/t Ag, 0.09 g/t Au, 1.1% Pb
and 1.5% Zn) from 276 m in hole C22-722 in the southwest of the
South Corridor.
-
15 m averaging 479 g/t AgEq1 (278 g/t Ag, 0.08 g/t
Au, 3.1% Pb and 2.9% Zn) from 145 m in hole C22-713 also in the
southwest of the South Corridor.
-
39 m averaging 134 g/t AgEq1 (104 g/t Ag, 0.17 g/t
Au, 0.5% Pb and 0.3% Zn) from 46 m in hole C22-728 in the southwest
of the North Corridor.
These positive drill results demonstrate the
potential to expand reserves through the conversion of waste to ore
within the reserves pit and through the expansion at depth of the
reserves pit.
For further details on the drill results noted
above refer to our news release dated May 24, and August 2, 2023.
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 quarter
ended June 30, 2023, and the Management’s Discussion and Analysis
(“MD&A”) for the quarter ended June 30, 2023.
A copy of the Financial Statements and MD&A
is available at www.discoverysilver.com or on SEDAR
at www.sedarplus.ca.
Net loss |
|
|
Q2 2023 |
Q2 2022 |
(a) Total |
|
|
|
|
$ |
(3,879,721 |
) |
$ |
(11,986,331 |
) |
(b) basic and diluted per share |
|
|
|
|
$ |
(0.01 |
) |
$ |
(0.04 |
) |
Net loss & total comprehensive loss |
|
|
|
|
$ |
(3,459,046 |
) |
$ |
(12,055,084 |
) |
Total weighted average shares outstanding |
|
|
|
|
|
386,471,109 |
|
|
338,750,309 |
|
|
June 30, 2023 |
December 31, 2022 |
Cash, cash equivalents & short-term investments |
$ |
68,168,006 |
$ |
46,220,938 |
Total assets |
$ |
149,199,876 |
$ |
91,583,326 |
Total current liabilities |
$ |
11,057,495 |
$ |
1,964,868 |
Working capital(2) |
$ |
65,661,086 |
$ |
53,081,932 |
Total Shareholders’ equity |
$ |
133,543,316 |
$ |
89,158,070 |
(2) Non-GAAP measure defined as current assets less
current liabilities from the Company’s consolidated financial
statements.
About Discovery
Discovery’s flagship project is its 100%-owned
Cordero project, one of the world’s largest silver deposits. The
PFS completed in January 2023 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.
On Behalf of the Board of Directors,Tony
Makuch, P.EngCEO & Director
For further information contact:
Forbes Gemmell, CFAVP Corporate
DevelopmentPhone: 416-613-9410Email:
forbes.gemmell@discoverysilver.comWebsite:
www.discoverysilver.com
1TECHNICAL NOTES &
REFERENCES:
Drill results: all drill
results in this news release are rounded. Assays are uncut and
undiluted. Widths are drilled widths, not true widths, as a full
interpretation of the actual orientation of mineralization is not
complete. As a guideline, intervals with disseminated
mineralization were chosen based on a 25 g/t AgEq cutoff with no
more than 10 m of dilution. AgEq calculations are used as the basis
for total metal content calculations given Ag is the dominant metal
constituent as a percentage of AgEq value in approximately 70% of
the Company’s mineralized intercepts. AgEq is calculated as Ag(g/t)
+ 18.39 x Au(g/t) + 30.81 x Pb(%) + 36.54 x Zn(%). This calculation
is based on metal prices of USD $22.00/oz Ag, $1,600/oz Au,
$1.00/lb Pb, $1.20/lb Zn and life-of-mine average recovery
assumptions from the 2023 Pre-Feasibility Study of 87% for Ag, 22%
for Au, 86% for Pb and 85% for Zn.
Sample analysis and QA/QC ProgramThe true width
of the veins is estimated to be approximately 70% of the drilled
width. Assays are uncut except where indicated. All core assays are
from HQ drill core unless stated otherwise. Drill core is logged
and sampled in a secure core storage facility located at the
project site 40km north of the city of Parral. Core samples from
the program are cut in half, using a diamond cutting saw, and are
sent to ALS Geochemistry-Mexico for preparation in Chihuahua City,
Mexico, and subsequently pulps are sent to ALS Vancouver, Canada,
which is an accredited mineral analysis laboratory, for analysis.
All samples are prepared using a method whereby the entire sample
is crushed to 70% passing -2mm, a split of 250g is taken and
pulverized to better than 85% passing 75 microns. Samples are
analyzed for gold using standard Fire Assay-AAS techniques
(Au-AA24) from a 50g pulp. Over limits are analyzed by fire assay
and gravimetric finish. Samples are also analyzed using thirty
three-element inductively coupled plasma method (“ME-ICP61”). Over
limit sample values are re-assayed for: (1) values of zinc > 1%;
(2) values of lead > 1%; and (3) values of silver > 100 g/t.
Samples are re-assayed using the ME-OG62 (high-grade material
ICP-AES) analytical package. For values of silver greater than
1,500 g/t, samples are re-assayed using the Ag-CON01 analytical
method, a standard 30 g fire assay with gravimetric finish.
Certified standards and blanks are routinely inserted into all
sample shipments to ensure integrity of the assay process. Selected
samples are chosen for duplicate assay from the coarse reject and
pulps of the original sample. No QAQC issues were noted with the
results reported herein.
Qualified
Person
Gernot Wober, P.Geo, VP Exploration, Discovery
Silver Corp., is the Company's designated Qualified Person for this
news release within the meaning of National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”) and has
reviewed and validated that the information contained in this news
release is accurate.
The most recent technical report for the Cordero
Project is the 2023 Preliminary Feasibility Study for the Company’s
Cordero project. The report was completed by Ausenco with support
from AGP, Knight Piésold and Hard Rock and is available on
Discovery’s website and on SEDAR under Discovery Silver Corp.
FORWARD-LOOKING STATEMENTS:
Neither TSX Exchange nor its Regulation Services Provider (as
that term is defined in policies of the TSX Exchange) accepts
responsibility for the adequacy or accuracy of this release.
This news release is not for distribution to United States
newswire services or for dissemination in the United States.
This news release does not constitute an offer
to sell or a solicitation of an offer to buy nor shall there be any
sale of any of the securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful, including any of the
securities in the United States of America. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the “1933 Act”) or any state securities
laws and may not be offered or sold within the United States or to,
or for account or benefit of, U.S. Persons (as defined in
Regulation S under the 1933 Act) unless registered under the 1933
Act and applicable state securities laws, or an exemption from such
registration requirements is available.
Cautionary Note Regarding Forward-Looking
Statements
This news release may include forward-looking
statements that are subject to inherent risks and uncertainties.
All statements within this news release, other than statements of
historical fact, are to be considered forward looking. Although
Discovery believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those described
in forward-looking statements. Statements regarding the results of
the pre-feasibility study and the anticipated capital and operating
costs, sustaining costs, net present value, internal rate of
return, payback period, process capacity, average annual metal
production, average process recoveries, concession renewal,
permitting of the Project, anticipated mining and processing
methods, proposed pre-feasibility study production schedule and
metal production profile, anticipated construction period,
anticipated mine life, expected recoveries and grades, anticipated
production rates, infrastructure, social and environmental impact
studies, availability of labour, tax rates and commodity prices
that would support development of the Project. Information
concerning mineral resource/reserve estimates and the economic
analysis thereof contained in the results of the pre-feasibility
study are also forward-looking statements in that they reflect a
prediction of the mineralization that would be encountered, and the
results of mining, if a mineral deposit were developed and mined.
Forward-looking statements are statements that are not historical
facts which address events, results, outcomes or developments that
the Company expects to occur. Forward-looking statements are based
on the beliefs, estimates and opinions of the Company’s management
on the date the statements are made and they involve a number of
risks and uncertainties. Factors that could cause actual results to
differ materially from those described in forward-looking
statements include fluctuations in market prices, including metal
prices, continued availability of capital and financing, and
general economic, market or business conditions. There can be no
assurances that such statements will prove accurate and, therefore,
readers are advised to rely on their own evaluation of such
uncertainties. Discovery does not assume any obligation to update
any forward-looking statements except as required under applicable
laws. The risks and uncertainties that may affect forward-looking
statements, or the material factors or assumptions used to develop
such forward-looking information, are described under the heading
"Risks Factors" in the Company’s Annual Information Form dated
March 30, 2023, which is available under the Company’s issuer
profile on SEDAR at www.sedarplus.ca.
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