Discovery Silver Corp · TSX:DSV
Discovery Silver — Investor Presentation (February 2024)
40 slides from Discovery Silver's investor presentation, February 2024
Slide 1: Cordero – A World-Leading Silver Development Project
Discovery Silver Cordero – A World-Leading Silver Development Project February 2024 TSX: DSV | OTCQX: DSVSF | DISCOVERYSILVER.COM DSV
Slide 2: Forward Looking Statement & NI 43-101 Disclosure
Forward Looking Statement & NI 43-101 Disclosure DSV This presentation may include forward-looking statements that are subject to inherent risks and uncertainties. All statements within uncertainties. Discovery does not assume any obligation to update any forward-looking statements except as require
Slide 3: The Next Major Silver Producer
The Next Major Silver Producer DSV Large-scale, low-cost, capital-efficient project that generates excellent returns Large-scale Excellent Exceptional production profitability economics 37Moz AgEq produced annually Average AISC <$12.50/oz After-tax NPV(5%) of $1.2 billion (Years 1 – 8) (Years 1 – 8)
Slide 4: Socio-Economic Contribution
Socio-Economic Contribution DSV Cordero will have a major positive socio-economic impact locally in Parral and Chihuahua and nationally within Mexico Cordero will be one of the Substantial economic An exemplary track record most significant employers contributions locally and to date: in the region:
Slide 5: Environmental Management
Environmental Management DSV We are committed to meeting the highest industry standards for environmental protection Project Site Water Management Highest Industry Standards • Cordero is located on private land in • Significant capital investment to • Third-party reviews of environmental a sparsely
Slide 6: Operating & Production Metrics
Operating & Production Metrics DSV Poised to become a top 3 global silver producer Unit FS Mine Life (years) 19 Ore Tonnes (Mt) 327 Strip Ratio (w:o) 2.0 Silver Produced – Life of Mine (Moz) 259 Lead Produced – Life of Mine (Blb) 2.6 Zinc Produced – Life of Mine (Blb) 4.4 Silver-equivalent Produced
Slide 7: Financial Metrics
Financial Metrics DSV Cordero is a large-scale, capital-efficient project with low costs that is expected to generate substantial free cash flow Unit FS Silver Price (US$/oz) $22.00 NPV(5%) – After-tax (US$M) $1,177 IRR – After-tax (%) 22.0% Payback – After-tax (years) 5.2 Initial Capex (US$M) $606
Slide 8: After-tax NPV Accretion
After-tax NPV Accretion DSV Rolling After-tax NPV(5%) of Cordero expands to over $2 billion Phase2 Development $2.2 B $2.0 B • After-tax NPV(5%) post 2.0 Phase 1 development of Phase 1 US$2.0 billion Development • After-tax NPV(5%) post NPV(5%) - US$ billion 1.5 Phase 2 development of US$2.2 billion
Slide 9: Silver Reserves
Silver Reserves DSV Cordero ranks as the world’s largest undeveloped silver deposit by reserves 9 Source: S&P Capital IQ
Slide 10: Silver Reserves vs. Producer Peers
Silver Reserves vs. Producer Peers DSV Second highest reserve base among North American listed silver producers 500 400 Ag Reserves (Moz) 300 200 100 0 Pan American Discovery Coeur Hecla Aya First Majestic Endeavour Silvercrest Fortuna Market Cap (C$B) $6.4 $0.3 $1.4 $3.0 $1.3 $1.8 $0.5 $1.0 $1.2 10
Slide 11: Large Scale & Low Cost
Large Scale & Low Cost DSV Cordero is uniquely positioned in the silver space based on its volume of production, low costs and resource size AgEq Production & AISC & Ag Resource (M&I)1 40 Bubble size = M&I silver resource, inclusive of reserves 35 La Colorada La Encantada Huaron 2024 AISC (US$/oz Ag
Slide 12: Expansion Potential
Expansion Potential DSV Substantial mine life extension potential at modestly higher metal prices Reserves (Ag = $22/oz) • Ag – 302 Moz • Pb – 3.0 Blb • Zn – 5.2 Blb Resource (Ag = $24/oz) • Ag – 493 Moz • Pb – 4.8 Blb • Zn – 9.1 Blb Measured & Indicated Resource inclusive of Reserves. 12 See Reserv
Slide 13: Established Infrastructure
Established Infrastructure DSV Cordero is ideally located in a prolific mining region in northern Mexico with established infrastructure Chihuahua (population 1,100,000) • International airport • Major industrial hub for mining and manufacturing Parral (population 120,000) • Mining town dating back
Slide 14: Site Layout
Site Layout DSV Site layout benefits from: • Gentle topography • Competent bedrock • Non-acid generating waste rock • Ample availability of borrow material • No major relocation of infrastructure, lakes or waterways required 14
Slide 15: Corporate Summary
Corporate Summary DSV Capital structure, cash balance and share ownership Ticker: DSV-TSX, DSVSF-OTCQX Cash balance: CDN ~$60M Share price - $0.60 (Feb. 21, 2024) Shares outstanding – 395M Options outstanding – 25 M Fully diluted shares outstanding: 420 M Basic market capitalization – C$240 M P/NAV
Slide 16: Next Steps
Next Steps DSV Our path to becoming the next major silver producer Permit/Financing Construction Operations • Project finance discussions • Commence project construction • Process plant commissioning • Receipt of construction permit/ • ~2-year development period • First metal production construction
Slide 17: Do you have any questions?
Do you have any questions? info@discoverysilver.com 416 613 9410 TSX: DSV | OTCQX: DSVSF | DISCOVERYSILVER.COM DSV
Slide 18: Appendices: Cordero Feasibility Study Results
Appendices Cordero Feasibility Study Results TSX: DSV | OTCQX: DSVSF | DISCOVERYSILVER.COM DSV
Slide 19: Construction
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Slide 20: Capex Summary
Capex Summary DSV Highly capital efficient project with an NPV to Capex ratio of 2x INITIAL EXPANSION SUSTAINING TOTAL LOM Capital efficiency driven by: CAPITAL EXPENDITURES (US$ M) • Staged expansion of process plant Mining $117 $2 $110 $229 • Simple and conventional process design On-site Infrastr
Slide 21: Initial CAPEX FS vs. PFS
Initial CAPEX FS vs. PFS DSV Capex increase driven by scope expansion, scope de-risking and cost inflation Changes in Initial Capital estimate vs. PFS caused by: • Mining – increased pre-strip and additional equipment & infrastructure • Power station – upgrade to Camargo substation • Water treatment
Slide 22: Process Design
Process Design DSV Low execution and operating risk from a simple conventional flowsheet Phase 1 • Initial throughput rate of ~26,000 tpd Phase 2 • Expanded throughput rate of ~51,000 tpd • Flexibility on timing of Phase 2 expansion; currently assumed to be built in Y3 and operational in Y4 • Coarse
Slide 23: Process Site Layout
Process Site Layout DSV 23 Cordero Feasibility Study – February 2024
Slide 24: Operations
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Slide 25: Mine Plan
Mine Plan DSV Simple open pit with a low strip ratio • Starter pit (Phase 1A) contains highest grade material in deposit • 88% of mill feed in Proven category in Y1 – Y4 • Mine plan is based on a detailed mine design incorporating dilution, ore loss, safety berms & haul roads 25 Cordero Feasibility
Slide 26: Mine Plan
Mine Plan DSV Straight-forward executable mine plan with steady mining rate 80 4.0 • Average strip ratio of 2.0:1 over 70 3.5 life of mine • Stockpiling of low-grade 60 3.0 material allows higher grade Strip Ratio (w:o) material to be fed to mill earlier Tonnes (Mt) 50 2.5 • Steady mining rate of ~7
Slide 27: Process Throughput
Process Throughput DSV High head grades in initial years drive early cash flow 20.0 120 • Average head grade +100 g/t AgEq in Y1 – Y3 • Mill expansion complete by Y4; 15.0 90 expansion can be accelerated or Head Grade (AgEq g/t) deferred as required Tonnes Processed (Mt) • Slight throughput variatio
Slide 28: Metallurgical Performance
Metallurgical Performance DSV High recoveries achieved through conventional flotation at a coarse grind size • Positive relationship between head grade Y1 – Y4 Life of Mine and recoveries Ag recovery – Total 91% 87% • ~90% of recovered Ag is recovered to Precious Metals concentrate where highest Ag
Slide 29: Metal Production
Metal Production DSV At 33Moz AgEq of average annual production, Cordero will be one of the world’s largest silver mines 60 • 33Moz AgEq average annual production 50 • 64Moz AgEq peak annual production AgEq Produced (Moz) 40 • 635Moz AgEq life of mine production 30 • Silver represents +50% of net sm
Slide 30: Concentrate Marketing
Concentrate Marketing DSV High demand expected for clean saleable concentrates • Significant volumes of clean Ag-Pb and Zn Ag Au Pb Zn concentrates expected to have significant Precious Metals Concentrate demand from local buyers and offshore Concentrate grades 3,062 g/t 2.05 g/t 50% — smelters/trad
Slide 31: Concentrate Logistics
Concentrate Logistics DSV Both onshore and offshore options to be pursued for concentrate delivery • In-country smelters include Torreon lead-zinc smelter owned by Penoles and the San Luis Potosi zinc smelter (central Mexico) owned by Grupo Mexico • Concentrate for offshore to be trucked to either G
Slide 32: Project Economics
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Slide 33: Operating Costs
Operating Costs DSV Costs benefit from a large-scale operation with a low strip ratio and excellent metallurgy ITEM UNIT COST LOM COST Mining cost • Generated from first principles Mining Cost $2.35 ($/t mined) $2,406M • Assumes owner-operated mining with $7.35 ($/t processed) lease financing Proces
Slide 34: Project Economics
Project Economics DSV Attractive project economics with after-tax NPV(5%) of $1.2 billion and IRR of 22% Unit FS NPV(5%) – After-tax (US$B) $1.2 IRR – After-tax (%) 22.0% • Financial metrics based on Ag - $22/oz, Pb - $1.00/lb and Zn - $1.20/lb Payback – After-tax (years) 5.2 • Payback period curren
Slide 35: Commodity Price Leverage
Commodity Price Leverage DSV Unparalleled leverage to rising silver prices NPV/IRR/Payback sensitivity to Ag/Zn prices: (Fixed prices for Au = $1,600/oz & Pb = $1.00/lb) Ag ($/oz) NPV(5%) upside $18.00 $20.00 $22.00 $25.00 $30.00 estimates do NOT include the mine life NPV (5%) IRR Payback NPV (5%) I
Slide 36: Financial Sensitivities
Financial Sensitivities DSV After-tax NPV(5%) sensitivities to changes to key inputs $1,800 $1,600 Baseline NPV $1,177M $1,400 $1,200 $1,000 $800 $600 $400 $200 $- Metal Prices (+/- 10%) AISC (+/- 10%) Discount Rate (+/- 1%) Recoveries (+/- 2%) Capex (+/- 10%) 36 Cordero Feasibility Study – February
Slide 37: After-tax Free Cash Flow
After-tax Free Cash Flow DSV Total after-tax free cash flow of US$2.3 billion over the life of mine $500 $400 $300 $200 Cash Flow (US$M) $100 -- ($100) ($200) ($300) ($400) ($500) Y-2 Y-1 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Capital Expenditures Operating Cash Flow (Pos
Slide 38: Resources & Reserves
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Slide 39: Resource Statement
Resource Statement DSV GRADE CONTAINED METAL TONNES MATERIAL CLASS Ag Au Pb Zn AgEq Ag Au Pb Zn AgEq (Mt) (g/t) (g/t) (%) (%) (g/t) (Moz) (koz) (Mlb) (Mlb) (Moz) Measured 29 29 0.07 0.23 0.27 49 27 67 148 171 45 Indicated 37 24 0.06 0.25 0.29 44 28 74 207 241 53 OXIDE M&I 66 26 0.07 0.24 0.28 46 55
Slide 40: Reserves Statement
Reserves Statement DSV GRADE CONTAINED METAL TONNES MATERIAL CLASS Ag Au Pb Zn Ag Au Pb Zn (Mt) (g/t) (g/t) (%) (%) (Moz) (koz) (Mlb) (Mlb) Proven 10 46 0.08 0.35 0.38 15 0.03 0.08 0.09 OXIDE Probable 10 40 0.09 0.40 0.42 13 0.03 0.09 0.09 Total P&P 20 43 0.08 0.37 0.40 28 0.05 0.17 0.18 Proven 212
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