Fresnillo plc and MAG Silver Corp. (together, the “JV Partners”)
today provide a Juanicipio project update now that construction is
well underway, detailed engineering is nearing completion and all
major process equipment has been purchased and received on site.
Juanicipio Project Status
Update
- Underground mine will commence
production ahead of schedule in mid-2020, realising commercial and
operational de-risking opportunities for the joint venture.
- Over 25 km of underground
development has been completed to date on the project.
- Based on detailed engineering,
actual equipment purchases and construction contracts,
pre-operative capex, from 1st January 2018, has increased by 11.4%
from US$395 million to US$440 million also reflecting expenditure
incurred on underground development, supporting infrastructure, and
bringing forward some sustaining capital to facilitate the early
underground start.
- Mineralised material from
development and initial production stopes to be processed at the
Fresnillo beneficiation plant from June 2020 pending completion of
the Juanicipio plant.
- Juanicipio now expected to reach
85% name plate capacity in Q4 2021 (previous guidance 65%) and
90-95% in 2022 (in line with previous guidance). Commissioning of
the flotation plant will be underway mid-2021.
- Access to the upper portion of the
resource has been achieved. Initial development indicates that the
grade and width of the vein is in line with previous
estimates.
- Exploration is ongoing on the
property with the intention to increase the deeper resources and
targeting new veins.
Project Benefits
By bringing forward the start-up of the
underground mine to June 2020, the JV Partners are securing a
number of positive outcomes for the project:
- Improved cash flow by deferring
capex spend and accelerating income from the new production ahead
of plan.
- De-risking the metallurgical
process allowing a quicker and more certain ramp-up to 4,000 tonnes
per day.
- Increased certainty around the
geological block model prior to start-up of flotation plant.
Mine development continues to advance, reaching
over 25 km by the end of January 2020. Development activities will
continue in the next few months and we anticipate the first stope
being fully prepared by 3Q20.
The schedule for the construction of the
flotation plant has been adjusted to enable the most efficient use
of contractor labour, and commissioning is now anticipated by
mid-2021 (previous guidance was construction completion by the end
of 2020 with commissioning early 2021).
In the interim, mineralised material from
development and initial production stopes will be processed at the
Fresnillo beneficiation plant from June 2020. The Fresnillo plant
is expected to have spare capacity as the mine continues its
operational recovery.
With detailed engineering almost complete, major
equipment purchases completed, and a number of significant
construction contracts awarded or under review, the JV Partners are
also updating the capex required for the project. The pre-operative
capital cost of US$395 million, from 1st January 2018, has been
revised to $440 million (which is within the expected range of
variance as engineering was advanced) to reflect additional actual
expenditure incurred by the JV Partners on the underground project
more recently, and bringing forward the full construction costs for
two large life of mine ventilation shafts, plus some sustaining
capital to facilitate the early underground start.
Octavio Alvídrez, Chief Executive
Officer of Fresnillo plc, said:
“Juanicipio is an outstanding project which will
generate strong returns for our shareholders, and significant
benefits to the region. We continue to de-risk and refine the best
construction plan that will drive the most value and ensure we
capitalise on the opportunity that Juanicipio presents. I am
pleased to confirm we are accelerating development of the
underground mine and as a result, I expect the mine will be
producing silver and gold ahead of schedule in 2020.”
George Paspalas, Chief Executive Officer
of MAG Silver, said:
“We are very excited about the decision to bring
forward the underground mine development of the Juanicipio project.
Producing quantities of saleable mineralisation provides a very
beneficial de-risking opportunity that gives confidence to both
partners that the originally envisioned plant production ramp up
may be improved.”Juanicipio Project Highlights
- Fresnillo plc is the operator of
Juanicipio and holds a 56% majority stake in the Joint Venture,
with partner MAG Silver Corp. owning the remaining 44%.
- Total average annual anticipated
production of 11.7 moz silver, 43.5 koz gold, with an initial life
of mine (based on Indicated Resources only) of 12 years.
- Additional years of production
expected to be supported by the current Inferred Resources, which
are being converted into the Indicated category. Further
exploration opportunities exist in the JV license area with
potential to scale-up operations in the future.
- Juanicipio development expected to
create approximately 2,750 jobs during construction and 1,720 jobs
once at full production.
The information contained within this
announcement is deemed by Fresnillo plc to constitute inside
information as stipulated under the Market Abuse Regulation (EU)
No. 596/2014. Upon the publication of this announcement, this
inside information is now considered to be in the public domain.
The person making the notification is Carlos Ortiz Mena, Head of
Legal, Fresnillo plc. The time of the notification is 7:00 am UK
time.
For further information, please visit
Fresnillo’s website www.fresnilloplc.com or MAG Silver’s
website www.magsilver.com or contact:
Fresnillo plc London Office Gabriela Mayor, Head
of Investor Relations Patrick Chambers |
Tel: +44 (0)20 7399 2470 |
México City Office Ana Belem
Zárate |
Tel: +52 55 52 79 3206 |
Powerscourt Peter Ogden
or |
Tel: +44 (0)20 7250
1446 |
MAG Silver
Corp. Michael J. Curlook, VP Investor
Relations and Communications |
Tel: +1 (604) 630-1399 |
About Fresnillo plc
Fresnillo plc is the world's largest primary
silver producer and Mexico's largest gold producer, listed on the
London and Mexican Stock Exchanges under the symbol FRES.
Fresnillo plc has seven operating mines, all of
them in Mexico - Fresnillo, Saucito, Ciénega (including the San
Ramón satellite mine), Herradura, Soledad-Dipolos1, Noche Buena and
San Julián (Phase I and II), two development projects - the Pyrites
Plant at Fresnillo and Juanicipio, and three advanced exploration
projects – Orisyvo, Las Casas Rosario & Cluster Cebollitas and
Centauro Deep, as well as a number of other long term exploration
prospects. In total, Fresnillo plc has mining concessions covering
approximately 1.8 million hectares in Mexico and 700 thousand
hectares in Peru.
Fresnillo plc has a strong and long tradition of
exploring, mining, a proven track record of mine development,
reserve replacement, and production costs in the lowest quartile of
the cost curve for silver.
Fresnillo plc's goal is to maintain the Group's position as the
world's largest primary silver company and Mexico’s largest gold
producer.
1 Operations at Soledad-Dipolos are currently suspended.
About MAG Silver Corp.
MAG Silver Corp. is a Canadian exploration and
development company focused on becoming a top-tier primary silver
mining company by exploring and advancing high-grade, district
scale, silver-dominant projects in the Americas. Our principal
focus and asset is the Juanicipio Property (44%), being developed
in a Joint Venture partnership with Fresnillo Plc (56%). Juanicipio
is located in the Fresnillo Silver Trend in Mexico, the world's
premier silver mining camp and we are currently developing the
surface and underground infrastructure on the property to support a
4,000 tonnes per day mining operation with the operational
expertise of our JV partner, Fresnillo plc. As well, we have an
aggressive exploration program in place targeting multiple highly
prospective targets across the property.
Qualified Person:
The scientific and technical information
contained in this press release for the Juanicipio Project has been
approved by Gary Methven, P. Eng. an employee of AMC Mining
Consultants (Canada) Ltd. who is independent of both Fresnillo plc
and MAG Silver Corp. By virtue of his education and relevant
experience Mr. Methven is a "Qualified Person" for the purpose of
National Instrument 43-101. Mr. Methven, has read and
approved the content of this press release.
Cautionary Note to Investors Concerning Estimates of
Indicated Resources
This press release uses the term "Indicated
Resources". Investors are advised that although this term is
recognized and required by Canadian regulations (under National
Instrument 43-101 - Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize this
term. Investors are cautioned not to assume that any part or all of
mineral deposits in this category will ever be converted into
reserves.
Cautionary Note to Investors Concerning Estimates of
Inferred Resources
This press release uses the term "Inferred
Resources". Investors are advised that although this term is
recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize this
term. Investors are cautioned not to assume that any part or all of
the mineral deposits in this category will ever be converted into
reserves. In addition, "Inferred Resources" have a great amount of
uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, or economic studies except for Preliminary Assessment as
defined under Canadian National Instrument 43-101. Investors are
cautioned not to assume that part or all of an Inferred Resource
exists, or is economically or legally mineable.
Fresnillo plc Forward Looking Statements
Information contained in this announcement may
include 'forward-looking statements'. All statements other than
statements of historical facts included herein, including, without
limitation, those regarding the Fresnillo Group's intentions,
beliefs or current expectations concerning, amongst other things,
the Fresnillo Group's results of operations, financial position,
liquidity, prospects, growth, strategies and the silver and gold
industries are forward-looking statements. Such forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. Forward-looking statements are not
guarantees of future performance and the actual results of the
Fresnillo Group's operations, financial position and liquidity, and
the development of the markets and the industry in which the
Fresnillo Group operates, may differ materially from those
described in, or suggested by, the forward-looking statements
contained in this document. In addition, even if the results of
operations, financial position and liquidity, and the development
of the markets and the industry in which the Fresnillo Group
operates are consistent with the forward-looking statements
contained in this document, those results or developments may not
be indicative of results or developments in subsequent periods. A
number of factors could cause results and developments to differ
materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in regulation, currency fluctuations (including the
US dollar and Mexican Peso exchanges rates), the Fresnillo Group's
ability to recover its reserves or develop new reserves, including
its ability to convert its resources into reserves and its mineral
potential into resources or reserves, changes in its business
strategy and political and economic uncertainty.
LEI: 549300JXWH1UV5J0XV81
MAG Silver Corp. Forward Looking Statements
Neither the Toronto Stock Exchange nor the NYSE
American have reviewed or accepted responsibility for the accuracy
or adequacy of this press release, which has been prepared by
management.
This release includes certain statements that
may be deemed to be "forward-looking statements" within the meaning
of the US Private Securities Litigation Reform Act of 1995. All
statements in this release, other than statements of historical
facts are forward looking statements, including statements that
address future mineral production, reserve potential, exploration
drilling, exploitation activities and events or developments.
Forward-looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions. These statements involve known
and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking statements. Although MAG
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 in the
forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements
include, but are not limited to, changes in commodities prices,
changes in mineral production performance, exploitation and
exploration successes, continued availability of capital and
financing, and general economic, market or business conditions,
political risk, currency risk and capital cost inflation. In
addition, forward-looking statements are subject to various risks,
including that data is incomplete and considerable additional work
will be required to complete further evaluation, including but not
limited to drilling, engineering and socio-economic studies and
investment. The reader is referred to the Company's filings with
the SEC and Canadian securities regulators for disclosure regarding
these and other risk factors. There is no certainty that any
forward-looking statement will come to pass and investors should
not place undue reliance upon forward-looking statements.
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