Highlights
- Commissioning On Schedule for Q2, 2022 – At the end of the first quarter of 2022 (“Q1, 2022”), overall construction progress at Las Chispas was 95.7%. Start-up of the plant remains on track for Q2, 2022, in line with the Feasibility Study* despite a decline in labour availability in Q1, 2022 due to COVID-19 which eliminated the schedule gains made in 2021.
- Capital Costs Remain on Budget – To the end of Q1, 2022, the Company has committed $114.6 million (83.2%) of the $137.7 million Feasibility Study capital cost estimate and $108.0 million was incurred. Of the remaining capital budget to be incurred in Q2, 2022 ( $29.7 million ), 22% ( $6.3 million ) is related to the Ausenco** fixed price EPC contract for process plant construction and 27% ( $8.0 million ) is unused contingency.
- Temporary Power Installed, Grid Power Partially Energizing Las Chispas – SilverCrest’s section of the power line was energized in early April 2022 . The Comision Federal de Electricidad (“CFE”) is responsible for the remaining part of the power line and it remains on track to be completed in Q2, 2022 and energized in Q3, 2022. To ensure the plant can be energized immediately upon final completion, rental diesel generators sufficient to support the mining operations, ramp-up and operation of the plant at full capacity were commissioned in Q1, 2022 and are operational.
- Underground Development Continues on Schedule, First Stopes Completed – SilverCrest completed 2.0 kilometres (“km”) of underground development in Q1, 2022 for a total of 19.5 km of underground development since 2019. Unit underground development costs continued to track slightly under budget. Two of the four mining methods proposed in the Feasibility Study, long hole and resue, commenced with the extraction of select stopes in the Babicanora Main, Vista and Norte veins.
- Site Safety and COVID-19 – At the end of Q1, 2022, after 2.46 million work-hours completed since the start of construction, the Company’s Lost Time Injury Frequency Rate (“LTIFR”) was 0.57 per 200,000 working hours and its Total Recordable Injury Frequency Rate (“TRIFR”) was 3.98 per 200,000 working hours. To date, SilverCrest continues to operate a confined camp, has conducted more than 20,000 PCR tests and remains committed to its COVID-19 protocols.
- H1, 2022 Exploration and Updated Technical Report – The H1, 2022 exploration focus at Las Chispas is to map and sample unexplored areas and generate new drill targets. The Updated Technical Report is now targeted to be released in H1, 2023 (previously H2, 2022) which will allow for additional data from further in-vein drifting, initial months of stoping and processing, reconciliation, and recent delineation drill results to be included.
- Balance Sheet Remains Robust – As at March 31, 2022 , SilverCrest had cash and cash equivalents of $152.0 million and $30.0 million available under a $120.0 million project financing facility (the “Credit Facility”) with an affiliate of RK Mine Finance. In addition to accounts payable and accrued liabilities of $10.7 million at the end of the quarter, $29.7 million of the capital cost budget remains to be incurred on the Project. SilverCrest remains well funded for plant start-up and ramp-up beginning in Q2, 2022, while still retaining a strong working capital position.
* NI 43-101 Technical Report & Feasibility Study on The Las Chispas Project dated January 4, 2021 (“Feasibility Study”) ** Engineering, Procurement, and Construction (“EPC”) contract with Ausenco Engineering Canada Inc. (“Ausenco”)
Pierre Beaudoin , COO, remarked, “Despite the challenges that Omicron posed in January and February, we are extremely pleased that construction remains on schedule as outlined in the Feasibility Study. This was no doubt a challenging first quarter, but we are in a favorable position as we head into the last stretch of construction. The energization of SilverCrest’s portion of the power line was one of the many milestones that our team has accomplished over the last few quarters, and they are now focused on the last few items that will allow plant start-up on schedule in Q2, 2022. On the mining front, Omicron also created challenging conditions as we started with two mining methods. Despite these challenges, we are entering Q2, 2022 with momentum building and a good understanding of the adjustments required. I wish to take this opportunity to thank all our employees and contractors for their resilience as we enter the final stage of construction. We are excited to know this critical milestone is around the corner.”
N. Eric Fier , CPG, P.Eng, and CEO, stated, “We are excited and proud to be nearing commissioning in Q2, 2022. Our continued success can be attributed to the extraordinary efforts from our team and contractors in Mexico and Canada as well as the support from the local community. Hard work, determination and risk management processes put in place have allowed us to progress to where we are at today despite the many challenges faced by our industry. We are happy to report that we are still on time and budget and have maintained a strong balance sheet which provides flexibility as we begin the transition to the next phase of the Company.”
Las Chispas Construction
Construction of the plant and surface infrastructure continued to track on budget and schedule. At the end of Q1, 2022, overall construction was 95.7%. In the quarter, the impact of the Omicron variant on construction personnel was felt across all development fronts but more so with the Ausenco scope and underground stoping.
During the quarter, the pumping system was completed and energized, and the temporary power station was also completed and is now operational. Other key infrastructure projects (process plant and assay lab) are on schedule and expected to be completed in early Q2, 2022. The dry stack tailings facility was nearly complete at the end of Q1, 2022 and reached completion in early Q2, 2022. The Company’s Q1, 2022 progress on its remaining construction and development activities are as follows and shown in Figures 1 to 7 attached:
Area |
Status |
Progress to date |
Process Plant Construction |
On Schedule |
Plant construction stands at 97.1% completion and is on track with the Feasibility Study schedule. The Steel-Mechanical-Piping (SMP) contract is 99% complete, the Electricity Instrumentation (EI) contract is 87% complete while the Pre-engineered building, the site tanks and the refinery contracts are all at 100% complete. Pre-c o mmissioning of the plant is at 44% and is expected to be at 100% by May 2022. The crushing, flotation and leach components have completed pre-operational testing and are ready for ore feed. Hand-over to SilverCrest is expected in Q2, 2022. |
Electrical Grid Powerline (81 km) Construction |
Energized at 2.0 MW Expect to increase load to 6.4 MW in Q2, 2022 Full energization expected in Q3, 2022 |
The 33 KV powerline planned for the Las Chispas Project is 81 km long. The combined estimated construction progress is at 78.6%. The first section (27 km) is owned and managed directly by CFE, the state-owned electric utility, and consists of the upgrade of a 33 KV line already in service. The construction (up-grade) progress is estimated at 23%. The upgrade of this section remains on schedule for completion in Q2, 2022. The second section of 54 km is owned and managed by the Company. The construction of this section is now complete and was energized (2.0 MW) in early Q2, 2022. Discussions are underway with CFE to increase the load from 2.0 MW to 6.4 MW in Q2, 2022. The final energization of the powerline to site (7.6 MW) is now anticipated to be in Q3, 2022 due to the delayed delivery of the Power Factor Corrector and Harmonic Filter, both of which are required for the safe and efficient operation at maximum load. The temporary rental 6.0 MW diesel generators were commissioned in Q1, 2022 and are now being used to power up the plant pre-commissioning activities. When combined with existing U/G generators and current grid capacity (2.0 MW), the installed capacity provides enough energy (and flexibility) to power the underground operation and the entire site including operation of the plant at full design capacity. |
Underground Development |
On Schedule |
At the end of Q1, 2022, total underground development completed at the Project reached 19.5 km and is now 2.2 km ahead of the Feasibility Study life of mine (LOM) plan. Initial stopes in the Babicanora Main, Babicanora Norte and Babi Vista veins were extracted in the quarter. |
Underground Infrastructure |
On Schedule |
All major infrastructure components are on site and ready for installation in Q2, 2022; primary ventilation fan upgrade, underground compressor, electrical substations and dewatering pumps. |
Stockpile Growth |
Slightly Behind Schedule |
Stockpiles increased by an estimated 18,500 tonnes of mineralized material. This total is approximately 6,000 tonnes less than expected due to a slower (Omicron impact) than expected ramp up of stoping activities as the Company undertook initial stopes in a number of veins. Mine to Plant Reconciliation will be undertaken throughout 2022 in parallel with plant ramp-up. |
Tailings Facility Construction (Dry Stack) |
Complete |
Construction started in Q4, 2021 and reached 98.6% at the end of Q1, 2022. This project was completed in early April 2022. |
Assay Lab Construction |
On Schedule |
Construction of the assay lab facility in the nearby (est. 14 km) community of Arizpe began in Q3, 2021. Construction reached 92.1% at the end of Q1, 2022 and the lab is expected to be commissioned ahead of plant start-up. |
Pumping Station |
Complete |
The pumping station construction was completed in Q1, 2022. This infrastructure is now fully operational. |
Project Capital Remains on Budget
At the end of Q1, 2022, $114.6 million (or 83.2% of the total capital cost estimate) was…
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