Important Results of Joaquin Preliminary Feasibility Study

Pan American Silver Corp. finalized a preliminary feasibility study on the La Morocha deposit, which is part of the Joaquin project (“Joaquin”), located in Santa Cruz. The study recommends the development of the La Morocha deposit as an underground mine, with processing to occur at Pan American’s Manantial Espejo mill. Based on the results of the preliminary feasibility study, Pan American’s Board of Directors has approved a capital investment of approximately $37.8 million to construct the La Morocha underground mine and fund activities up to the point of commercial production (excluding $3.6 million of reimbursable value-added tax (“VAT”)).

La Morocha Preliminary Feasibility Study Highlights:

  • Ore to be delivered to Manantial Espejo for processing is estimated to be 474 thousand tonnes at 721 grams per tonne of silver.
  • Life-of-mine recovered silver ounces are estimated at 8.9 million and account for 96% of the total estimated project revenue. Total recovered gold ounces are estimated at 5,100.
  • Metallurgical test work confirms that the Manantial Espejo mill is suited to process the ore from La Morocha at a slightly higher cost per tonne than the ore from Manantial Espejo. Silver and gold recovery is estimated to average 81%.
  • An estimated mine production and ore transport rate of 600 tonnes per day during peak operations.
  • The mining method will be primarily post pillar cut and fill using unconsolidated mine development waste rock for backfill.
  • Ore will be hauled to surface by mine trucks and then transported by road to the Manantial Espejo processing facility, located 145 kilometres to the south of Joaquin.
  • Development of the underground access decline ramp is scheduled to begin in the second quarter of 2018, with first ore production starting in late 2019 and running until the end of 2021.
  • The estimated $37.8 million project development capital investment (excluding $3.6 million of reimbursable VAT) is scheduled to be incurred during 2018 and 2019, and is anticipated to be funded from the cash flow generated through the Company’s operating activities.
  • The base case economic estimate for La Morocha is an after-tax net present value (“NPV”) of $9.1 million, using a 5% discount rate, with an after-tax internal rate of return (“IRR”) of 18%, at assumed metal prices of $18.50 per ounce silver and $1,300 per ounce gold.

Developing Joaquin is a low-risk project that enhances the value of our Manantial Espejo processing plant and infrastructure assets. The ore from La Morocha will supplement ore feed from the underground mine and stockpiles at Manantial Espejo, as well as the feed from our COSE project. We expect the combined production from these sources to contribute approximately 21 million ounces of silver to Pan American’s consolidated silver production over the 2018 to 2021 time period,” said Michael Steinmann, President and Chief Executive Officer of Pan American. “Furthermore, extending the life of our operations at Manantial Espejo supports our efforts to continue exploring across our large mineral concessions in the area, including the attractive exploration potential at the La Negra deposit and other prospects acquired with Joaquin.”

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