Silver Bull Resources, Inc. (TSX:SVB)(NYSE MKT:SVBL) ("Silver
Bull") is pleased to provide the results that will be reported in
its Preliminary Economic Assessment ("PEA") for the Sierra Mojada
Project in Coahuila, Mexico. The PEA was prepared by JDS Energy and
Mining Inc. ("JDS") of Vancouver, British Columbia.
Highlights from the base case study of $23.50 per silver ounce
and $0.95 per zinc pound include:
-- Pre-tax Net Present Value ("NPV") at a 5% discount rate of $641.1
million and an Internal Rate of Return ("IRR") of 26.9%;
-- After-tax NPV at a 5% discount rate of $463.9 million and IRR of 23.1%;
-- After-tax payback of 2.9 years after plant start-up;
-- Pre-production capital cost ("CAPEX") of $297.2 million including a 15%
contingency;
-- Sustaining Capital of $79.6 million over life of mine ("LOM") including
a 15% contingency;
-- An 18 year mine life, mining and processing 55.9 million tonnes of ore
at 8,500tpd, averaging 73.4 grams per tonne ("g/t") silver and 2.79%
zinc, and producing 98.4 million ounces of silver dore, and 982,000
tonnes of a high quality zinc concentrate (64% Zinc concentrate grade);
-- An overall strip on the open pit of 5.6:1, with the first 5 years of
production ofthe phase 1 pit having a lower strip of 3.6:1;
-- An average payable silver production of 5.5 million ounces of silver per
year with a LOM cash cost of $6.58 per ounce of silver, net of by-
product credits.
-- Years 2 to 6 will produce an average of 7 million ounces a year with a
peak production of 9.3 million ounces of silver in year 2;
-- The JDS Study does not take into account the potential mining of an
additional 37 million tonnes of "lower" grade ore which lies immediately
outside of the pit and has the potential to extend the current projected
mine life.
Tim Barry, President and CEO of Silver Bull states, "We are very
pleased with this Preliminary Economic Assessment. It shows the
Sierra Mojada project as a robust, long life, low cost mining
operation that will put it within the top quartile of global silver
producing mines. We are fortunate to have a near surface high grade
zone which will act as our starter pit and is expected to produce
an average of 7 million ounces per year allowing for a fast payback
on initial capital expenditures. It is also important to remember
the significant upside on this project. A mineralized "lower" grade
halo surrounds the core of the ore body that may be mined and be
brought into the pit at a time in which we anticipate will be a
higher metal price environment. This combined with obvious
extensions of mineralization to the east, west and north coupled
with the numerous regional showings suggest Sierra Mojada is part
of a much larger mineralizing system."
A sensitivity table showing the NPV and IRR is shown below at
different silver prices.
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Pre-Tax After-Tax
Ag Price Pre-Tax After-Tax Pre-Tax After-Tax Payback Payback
Per Ounce NPV ($M) NPV ($M) IRR IRR (Years) (Years)
----------------------------------------------------------------------------
$16 $ 190.9 $ 135.3 11.7% 10.4% 7.0 7.0
----------------------------------------------------------------------------
$18 $ 310.9 $ 225.7 15.9% 14.1% 4.9 4.9
----------------------------------------------------------------------------
$20 $ 431.0 $ 312.4 20.0% 17.5% 3.6 3.7
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$22 $ 551.1 $ 399.0 23.9% 20.7% 2.9 3.1
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$23.50 $ 641.1 $ 463.9 26.9% 23.1% 2.7 2.9
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$25 $ 731.2 $ 528.8 29.7% 25.5% 2.6 2.7
----------------------------------------------------------------------------
$28 $ 911.3 $ 658.7 35.3% 30.1% 2.3 2.4
----------------------------------------------------------------------------
$30 $ 1,031.4 $ 745.2 38.8% 33.0% 2.1 2.2
----------------------------------------------------------------------------
(i) assumed zinc price of $0.95 per pound zinc
Table 1: Capital Costs and Economic Highlights
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Summary of Results Unit Value
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Silver Cash Cost (Net of By-Products) $/oz 6.58
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Avg Operating Cash Flow during Production $M 92.0
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LOM Operating Costs $M 1,483
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LOM Operating Costs / tonne milled $/tonne milled 26.54
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Capital Costs
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Pre-Production Capital $M 260.7
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Pre-Production Contingency (15%) $M 36.5
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Total Pre-Production Capital Costs $M 297.2
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$/tonne milled 5.31
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Sustaining & Closure Capital $M 67.7
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Sustaining & Closure Contingency (15%) $M 11.9
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Total Sustaining & Closure Capital Costs $M 79.6
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$/tonne milled 1.43
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Total Capital Costs (incl. contingency) $M 376.8
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$/tonne milled 6.74
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(i) based on $23.50 per ounce silver price and $0.95 per pound zinc and
silver and zinc production as outlined in Table 2
Table 2: Mine Plan Highlights
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Summary of Results Unit Value
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Mine Plan
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Mine Life Years 18.0
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Total Milled M tonnes 55.9
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Total Waste M tonnes 310.8
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Strip Ratio w:o 5.6
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Average Plant Throughput tpd 8,500
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Average Head Grades
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Zn % 2.79%
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Ag g/t 73.39
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Production
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Total Zn Concentrate Produced dmt 982,354
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Average Zn Concentrate Produced dmt/yr 54,559
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Total Zn production M lbs 1,178.1
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Average Zn produced M lbs/yr 65.4
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Total Ag Dore Produced M oz 98.4
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Average Ag Dore Produced M oz/yr 5.5
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Resources
The initial mineral resource estimate was developed using
MineSight(TM) software to create a partial block-model, with blocks
sized 5 m x 5 m x 4 m. For the purpose of resource estimation, all
assay intervals within the mineralized units were composited to two
metres and grades were capped prior to estimation. All resources
identified in the Lerchs Grossman (LG) optimized pit fell into the
Indicated category and were reported in Silver Bull's NI43-101
resource report published on May 2, 2013.
At Silver Bull's request, JDS combined the partial model
resource estimate into one standard block model compatible with
Silver Bull's GEMS(TM) software. A small underground void was added
in an area that had an overlap of solids within the silver ore body
and resulted in a minor change in reportable silver grade and
tonnes. JDS does not consider this change significant but it does
support the recommendation for tighter geologic modeling.
The combined GEMS block model resources have been compared to
the original LG optimized pit and are restated in Table 3 at the
same 25g/t silver cut-off.
Table 3: Sierra Mojada Resources as of September 30, 2013(1), Silver and
Zinc
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Silver Silver Zinc Pounds
Cut-Off Grade Ounces Grade Zinc
(Ag g/t) Tonnage (g/t) (Moz) (%) (lbs)
-------------------------------------------------------------------------
I greater than 100 g/t 13,553,000 170.1 74.1 1.59 476,081,000
-------------------------------------------------------------------------
N greater than 80 g/t 19,205,000 146.2 90,3 1.57 662,915,000
-------------------------------------------------------------------------
D greater than 65 g/t 25,318,000 128.3 104,5 1.54 860,189,000
-------------------------------------------------------------------------
I greater than 55 g/t 31,321,000 115.2 116 1.50 1,035,550,000
-------------------------------------------------------------------------
C greater than 45 g/t 39,949,000 101.0 129,8 1.44 1,266,764,000
-------------------------------------------------------------------------
A greater than 35 g/t 52,560,000 86.3 145.8 1.39 1,613,697,000
-------------------------------------------------------------------------
T greater than 25 g/t 71,208,000 71.4 163.6 1.39 2,184,270,000
-------------------------------------------------------------------------
E greater than 15 g/t 95,566,000 58.2 179.1 1.36 2,873,033,000
-------------------------------------------------------------------------
D greater than 0 g/t 127,722,000 45.7 187.8 1.80 5,068,527,000
----------------------------------------------------------------------------
Note: Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
The methodology used is consistent with the Canadian Institute
of Mining and Metallurgy ("CIM") definitions referred to in
National Instrument 43-101. Note however that the assumptions for
the LG pit were based on different parameters than those of the PEA
which is now an NSR-based block model.
In addition to silver and zinc resources, lead and copper
resources were estimated although lead and copper were not
considered in the PEA. Results of on-going testwork focused on the
economic recovery of lead were not available at the time the PEA
was completed.
NSR/Mining Model Construction
Once sufficient work was completed on metallurgical testing for
the Sulphidization-Acidification-Recycle-Thickening (SART) process,
updated silver and zinc recoveries and operating cost estimates
were collated for the PEA analyses to follow. The Net Smelter
Return (NSR) model is based on the in situ resources for these two
metals.
Results of on-going test work which focused on the economic
recovery of lead were not available at the time the PEA was
completed, and copper added no significant value anywhere in the
envisioned process stream. Lead and copper have been excluded from
the NSR model.
JDS constructed a (NSR) block model from the combined block
model described above. The NSR model equates the block value to US$
to allow a Whittle(TM) economic optimization of the resource. The
defining variables used for this work are summarized in Table 4
below.
Table 4: Parameters used to create the NSR model for the Sierra Mojada
Deposit
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Parameter Unit US$
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Ag price US$/oz $23.50
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Zn price US$/lb $1.10
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Exchange rate US$:CDN$ 1.00
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Ag recovery % 75
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Overall Zn recovery from Ore % 41
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Zn recovery from SART % 99
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Zn concentrate grade % 64
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Ag payable % 99.5
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Zn payable % 85
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Zn smelting cost US$/tonne $212.00
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Zn haul cost US$/tonne $20.00
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Zn insurance US$/dmt $0.02/100
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Zn losses 30% of NIV $0.5/100
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Zn Price Participation(i) US$/dmt $5.66
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Ag refining US$/oz $0.225
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Ag haul US$/oz $0.15
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Ag insurance US$/dmt $0.12
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Zn dilution factor 1.00
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Ag dilution factor 1.00
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Short tons to pounds 2000
----------------------------------------------------------------------------
Lbs to metric tonnes 2204.6
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(i) Based on Zn price of US $0.95/lb
Mining
The mine plan developed for the PEA mines the Sierra Mojada
deposit in a series of five phases which have been scheduled
targeting ore of the highest value early in mine life. This is done
to accelerate capital payback and maximize cash flow.
To view Figure 1, please visit the following link:
http://media3.marketwire.com/docs/svb1001-F1.pdf.
Standard open pit mining methods are utilized involving typical
drilling, blasting, and material movement using shovels and trucks.
The fleet required to mine all potential ore-grade material and
associated waste has been identified with the primary fleet and
ancillary/support equipment prices obtained from recent quotes. The
primary fleet quoted consists of Caterpillar 777G trucks, 992K
wheel loaders, D10T and D9T track dozers, MD6290 and MD6540 rotary
drills, and Komatsu PC2000 front shovels.
The Base Case economics utilizes a leased mining fleet over the
life of mine with realistic market terms expected from equipment
dealers in Mexico at a 7% interest rate. Mining costs per tonne are
based solely on fleet operating costs. Leasing costs are applied
separately and included in overall operational costs.
In Year 2 of mine operations, a contractor fleet will be used to
supplement pre-stripping of Phase 3. The additional waste stripping
required in Year 2 is short-lived and does not justify the purchase
of additional equipment. This also creates the ability to backfill
Phase 1 beginning in Year 5 and Phase 2 in Year 13 without
affecting ore delivery to the plant - effectively maximizing
backfill potential and minimizing surface area required for waste
rock storage and also minimizing haulage costs. Mining Phases 3, 4,
and 5 during Years 15 through 17 will also require assistance by
contractor mining. Contractor costs have been assumed to be equal
to owner mining costs plus 20% and have been incorporated into the
economic model based on projected contractor unit requirements.
Processing
A planned Sierra Mojada process plant is designed to process
polymetallic mineralization at a rate of 8,500 tonnes per day. The
process facility will consist of a primary crushing plant, grinding
circuit, agitation leaching for silver recovery and a Bio-SART
plant that not only produces a high-grade zinc concentrate but also
recovers an estimated 95% of cyanide used in leaching for re-use.
The process plant will operate two shifts per day and 365 days per
year with an overall availability of 92%. The process plant will
produce silver dore and zinc concentrate as separate saleable
products.
Infrastructure
The Sierra Mojada project is accessible by paved highway and
there is a rail line in use nearby that could be extended to the
conceptual plant site location for delivery of bulk supplies and
transport of zinc concentrates. Power can be provided either
through the national grid which would require extending main
transmission lines to the site, or generators located at site or
off site. Diesel and natural gas generation were considered, and
the choice of natural gas generators located proximal to an
existing natural gas supply line in combination with lower-voltage
transmission lines to site was deemed a reliable, lowest cost
option among the alternatives considered. Make-up water supply is
planned to be sourced from regional groundwater sources.
Capital Costs
The initial capital requirement for the Project is estimated to
be US$297.2 M, as detailed in Table 5.
Table 5: Sierra Mojada Pre-production Capital Costs as of September 30, 2013
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Pre-Production Capital Costs $M
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Pre-Stripping 10.9
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Mining Equipment 10.5
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Site Development 4.8
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Crushing & Coarse Ore Stockpile 14.2
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Processing Plant 69.2
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Tailings 9.4
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On-Site Infrastructure 24.3
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Off Site Infrastructure 39.2
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Project Indirects 38.4
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Engineering & EPCM 29.9
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Owner's Costs 5.6
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Pre-Production Lease Payments 4.3
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Total Pre-Contingency Initial Capital Costs 260.7
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Contingency 36.5
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Total Pre-Production Capital Costs 297.2
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The Project has a total sustaining capital requirement of
$60.9M. Closure costs amount to $6.8M. Contingency for sustaining
and closure capital amounts to $11.9M.
Operating Costs
Total operating costs per tonne ore milled for the Project are
outlined in Table 6.
Table 6: Sierra Mojada Operating Costs
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Operating Cost $/tonne milled
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Mining ($1.68 per tonne mined) 11.03
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Processing 11.55
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G&A 1.39
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Leasing 2.57
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Total Operating Cost 26.54
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Financial Analysis and Sensitivities
Using a silver price of $23.50/oz and a zinc price of $0.95/lb,
the study yields a pre-tax NPV5% of $641.1 million and IRR of 26.9%
with a payback period of 2.7 years. After-tax NPV5% amounts to
$463.9 million and an IRR of 23.1% with a payback of 2.9 years.
Table 7: Project NPV Sensitivity to Discount Rate
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Discount Rate Pre-Tax NPV After-Tax NPV
----------------------------------------------------------------------------
0% 1,280.5 945.4
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5% 641.1 463.9
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7% 491.1 350.3
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8% 430.2 304.0
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10% 329.9 227.7
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Technical Report
A NI 43-101 Technical Report will be filed within 45 days on
SEDAR (www.sedar.com) as well as the Silver Bull corporate website:
www.silverbullresources.com.
Qualified Persons
The PEA was conducted under the overall review of Gordon
Doerksen, P. Eng. of JDS Energy and Mining Inc. of Vancouver,
British Columbia with the following Qualified Persons contributing
to their respective sections:
Gordon Doerksen P. Eng., Project Director, JDS Energy and Mining Inc.
Greg Blaylock P. Eng., Associate, JDS - Mine, Process, and Infrastructure
Capital Costs
Allan Reeves P.Geo.
Bill Pennstrom QP Metallurgy, President Pennstrom Consulting Inc. -
Process Flow Sheet
Development and Operating Costs
On behalf of the Board of Directors
Tim Barry, MAusIMM, Chief Executive Officer, President and
Director
Cautionary Note to U.S. Investors concerning estimates of
Indicated and Inferred Resources: This press release uses the terms
"indicated resources" and "inferred resources" which are defined
in, and required to be disclosed by, NI 43-101. We advise U.S.
investors that these terms are not recognized by the United States
Securities and Exchange Commission (the "SEC"). The estimation of
indicated resources involves greater uncertainty as to their
existence and economic feasibility than the estimation of proven
and probable reserves. U.S. investors are cautioned not to assume
that indicated mineral resources will be converted into reserves.
The estimation of inferred resources involves far greater
uncertainty as to their existence and economic viability than the
estimation of other categories of resources. U.S. investors are
cautioned not to assume that estimates of inferred mineral
resources exist, are economically minable, or will be upgraded into
measured or indicated mineral resources. Under Canadian securities
laws, estimates of inferred mineral resources may not form the
basis of feasibility or other economic studies.
Disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian regulations, however the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures. Accordingly, the
information contained in this press release may not be comparable
to similar information made public by U.S. companies that are not
subject NI 43-101.
Cautionary note regarding forward-looking statements: This news
release contains forward-looking statements regarding future events
and Silver Bull's future results that are subject to the safe
harbors created under the U.S. Private Securities Litigation Reform
Act of 1995, the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and applicable Canadian securities
laws. Forward-looking statements include, among others, statements
regarding estimated payable production, anticipated processing
rates and tonnage, expected recovery rates, anticipated life of
mine, average cash costs net of by-product credits, expected
capital and operating costs, life of mine costs, expected Before
Tax NPV, IRR and payback, expected After Tax NPV, IRR and capital
payback, the mine production schedule, strip ratios, estimates of
resources and potential mining of additional "lower" grade ore.
These statements are based on current expectations, estimates,
forecasts, and projections about Silver Bull's exploration
projects, the industry in which Silver Bull operates and the
beliefs and assumptions of Silver Bull's management. Words such as
"expects", "anticipates", "targets", "goals", "projects",
"intends", "plans", "believes", "seeks", "estimates", "continues",
"may", variations of such words, and similar expressions and
references to future periods, are intended to identify such
forward-looking statements. Forward-looking statements are subject
to a number of assumptions, risks and uncertainties, many of which
are beyond our control, including such factors as the results of
exploration activities and whether the results continue to support
continued exploration activities, unexpected variations in ore
grade, types and metallurgy, volatility and level of commodity
prices, the availability of sufficient future financing, potential
changes to royalties and taxes imposed by the Mexico government and
other matters discussed under the caption "Risk Factors" in our
Annual Report on Form 10-K/A for the fiscal year ended October 31,
2012, as amended, and our other periodic and current reports filed
with the SEC and available on www.sec.gov and with the Canadian
securities commissions available on www.sedar.com. Readers are
cautioned that forward-looking statements are not guarantees of
future performance and that actual results or developments may
differ materially from those expressed or implied in the
forward-looking statements. Any forward-looking statement made by
us in this release is based only on information currently available
to us and speaks only as of the date on which it is made. We
undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
Contacts: Silver Bull Resources Matt Hallaran Investor Relations
+1 604 336 8096info@silverbullresources.com
www.silverbullresources.com
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