Mineral Resource Estimate
Aguablanca Project – Technical Report and Preliminary Feasibility Study, March 24, 2024
Following our acquisition of a 50% equity interest in Aguablanca, we engaged Resource Development Associates to prepare an updated Mineral Resource estimate (“MRE”) for the project based on a database including 496 historical diamond drillholes containing 25,025 assay intervals.
The resultant updated MRE for the underground mine, with an effective date of March 24, 2024, is comprised of 5.3 million tonnes in the Measured & Indicated category grading 0.65% nickel (Ni) and 0.58% copper (Cu) containing a total of 76.8 million pounds of nickel and 68.0 million pounds of copper. The MRE also includes smaller quantities of gold, platinum, palladium and cobalt.
Aguablanca Resource Tables
| Average Grade | ||||||||
| Class | Tonnes (Kt) | Ni (%) | Cu (%) | Co (%) | Pd (ppm) | Pt (ppm) | Au (ppm) | NiEq (%) |
| Measured | 4,048 | 0.66 | 0.60 | 0.02 | 0.29 | 0.34 | 0.17 | 0.95 |
| Indicated | 1,273 | 0.64 | 0.52 | 0.02 | 0.27 | 0.31 | 0.14 | 0.89 |
| Measured + Indicated | 5,321 | 0.65 | 0.58 | 0.02 | 0.29 | 0.33 | 0.16 | 0.93 |
| Inferred | 4 | 0.67 | 0.61 | 0.02 | 0.31 | 0.37 | 0.17 | 0.96 |
| Metal Content | |||||||
| Class | Ni (Klbs) | Cu (Klbs) | Co (Klbs) | Pd (Oz) | Pt (Oz) | Au (Oz) | NiEq (Klb) |
| Measured | 58,836 | 53,512 | 1,473 | 38,033 | 43,919 | 21,954 | 84,493 |
| Indicated | 17,986 | 14,462 | 503 | 11,060 | 12,492 | 5,760 | 24,919 |
| Measured + Indicated | 76,822 | 67,974 | 1,976 | 49,094 | 56,411 | 27,715 | 109,412 |
| Inferred | 66 | 60 | 2 | 45 | 54 | 24 | 95 |
Notes:
- Scott Wilson, CPG, President of RDA is responsible for this mineral resource estimate and is an “independent qualified Person as such term is defined by NI 43-101
- Reasonable prospects of eventual economic extraction were assessed by enclosing the mineralized material in the block model estimate in a 3D wireframe shape that was constructed based upon geological interpretations as well as adherence to a minimum mining unit with geometry appropriate for underground mining.
- The cutoff grade of 0.35% Ni considered mining costs of:
a. Metal selling prices Ni at US$7.30/lb and Cu selling prices of US$3.50/lb,
b. Recoveries of Ni 82.8% and Cu 93.6%, and
c. Costs including mining, processing, general and administrative (G&A), and off-site realization (TCRC). - Nickel Equivalent is estimated as ((3.50/7.30) * Cu grade) + Ni Grade.
- Mineral resources are not mineral reserves and do not have demonstrated economic viability.
- Mineral resources are inclusive of mineral reserves.
- Figures may not add up due to rounding.
mineral Reserve
Aguablanca Project – Technical Report and Preliminary Feasibility Study, March 24, 2024
Resource Development Associates also prepared a Pre-Feasibility Study (“PFS”) for the Aguablanca underground mine with an effective date of March 24, 2024. The mine plan for the PFS is based on Mineral Reserves which represent approximately 89% of the tonnes in the Measured & Indicated category of the MRE. Proven & Probable Mineral Reserves total 4.7 million tonnes grading 0.67% Ni and 0.59% Cu containing a total of 69.6 million pounds of nickel, 61.7 million pounds of copper and smaller quantities of gold, platinum, palladium and cobalt.
Aguablanca Reserve Tables
| Average Grade | ||||||||
| Class | Tonnes (Kt) | Ni (%) | Cu (%) | Co (%) | Pd (ppm) | Pt (ppm) | Au (ppm) | NiEq (%) |
| Proven | 3,650 | 0.67 | 0.61 | 0.02 | 0.29 | 0.34 | 0.17 | 0.97 |
| Probable | 1,062 | 0.67 | 0.53 | 0.02 | 0.28 | 0.31 | 0.14 | 0.92 |
| Proven + Probable | 4,713 | 0.67 | 0.59 | 0.02 | 0.29 | 0.33 | 0.16 | 0.96 |
| Metal Content | |||||||
| Class | Ni (Klbs) | Cu (Klbs) | Co (Klbs) | Pd (Oz) | Pt (Oz) | Au (Oz) | NiEq (Klb) |
| Proven | 54,051 | 49,281 | 1,343 | 34,454 | 39,798 | 19,835 | 77,678 |
| Probable | 15,582 | 12,452 | 429 | 9,419 | 10,578 | 4,875 | 21,553 |
| Proven + Probable | 69,633 | 61,733 | 1,772 | 43,874 | 50,375 | 24,709 | 99,231 |
Notes:
- CIM Definition Standards were followed for Mineral Reserves
- Mineral reserves are not additive to mineral resources
- Mineral reserves are based on the March 24, 2024 mineral resource estimate
- Totals may not add up due to rounding
- Mineral reserves are reported using US$7.30/lb Ni, US$3.50/lb Cu, US$12/lb Co, US$2,000/oz Au, US$900/oz Pt and US$1,200/oz Pd
- The cutoff grade of 0.35% Ni considered mining costs of:
a. Metal selling prices Ni at US$7.30/lb and Cu selling prices of US$3.50/lb,
b. Recoveries of Ni 82.8% and Cu 93.6%, and
c. Costs including mining, processing, general and administrative (G&A), and off-site realization (TCRC). - Mineral reserves are constrained within a mine design.
- Units are metric tonnes, metric grams, troy ounces and imperial pounds. Contained metal are estimates of in situ material and do not account for dilution of processing losses.
pre-feasibility study
Aguablanca Project – Technical Report and Preliminary Feasibility Study, March 24, 2024
The Aguablanca Project PFS is based on the Mineral Reserves outlined above and incorporates local contract mining, alleviating the need for a significant upfront investment in underground mining equipment. The Aguablanca Project is currently in a position to quickly restart mining and processing operations. The 5,000 tpd processing plant has been maintained in good condition over the years since it was last operated by Lundin Mining. Total capital expenditures in 2024 of US$6.1 million include approximately US$2.7 million to restart the processing plant, US$1.3 million for surface mobile equipment and underground infrastructure and US$1.6 million to dewater the existing open pit to gain access to the underground mine workings. Dewatering is expected to commence following receipt of the permit for the Water Use Concession. Capital expenditures in 2024 also include approximately US$0.5 million associated with the commencement of underground mine development.
Over the approximately 6-year life-of-mine (“LOM”), production from the mining and processing of approximately 4.8 million tonnes of material is expected to recover 43.2 million pounds of payable nickel and 34.6 million pounds of payable copper through the sale of approximately 406,359 tonnes of nickel-copper concentrates. LOM all-in sustaining costs (“AISC”) are expected to average US$4.04 per pound of payable nickel on a by-product credit basis.
At long-term nickel and copper prices of US$7.30 per pound and US$3.50 per pound, respectively, total LOM undiscounted after-tax Project cash flow from mining operations amounts to US$105.7 million. At a 5% discount rate, the net present value (“NPV”) of the total LOM after-tax Project cash flow amounts to US$83.1 million. The Project has an after-tax internal rate of return (“IRR”) of 213% and payback by the end of 2025.
Key Economic Parameters of the PFS
| Assumption / Results | 100% Basis (*) |
| Total tonnes processed from underground mining over the LOM | 4,807,000 |
| Average LOM process rate | 2,403 tpd |
| Projected mine life | 6 years |
| Average Nickel Grade / Recovery | 0.66% | 82.8% |
| Average Copper Grade / Recovery | 0.58% | 93.6% |
| Average Gold Grade / Recovery | 0.16g/t | 75.0% |
| Average Platinum Grade / Recovery | 0.33g/t | 75.0% |
| Average Palladium Grade / Recovery | 0.28g/t | 75.0% |
| Total Payable Production | |
| Nickel | 43,204 Klbs | 19,597 t |
| Copper | 34,612 Klbs | 15,700 t |
| Gold | 7,205 ozs |
| Platinum | 15,092 ozs |
| Palladium | 13,144 ozs |
| Expected long-term nickel/ copper prices (US$/lb) | $7.30 | $3.50 |
| Expected long-term gold/ platinum/ palladium prices (US$/oz) | $2,000 | $900 | $1,200 |
| LOM net revenue, after refining and treatment charges (US$ millions) | $480.3 |
| LOM capital costs, including contingency (US$ millions) | $36.2 |
| LOM operating costs, including contingency (US$ millions) | $303.2 |
| LOM cash cost per lb of nickel(US$) | $3.20 |
| LOM AISC per lb of nickel(US$) | $4.04 |
| After-tax undiscounted LOM Project Cash Flow (US$ millions) | $105.7 |
| After-Tax NPV (5% discount) (US$ millions) | $83.1 |
| After-Tax IRR | 213% |
| Payback Period | 1.2 Years |
(*) Denarius Metals has a 50% equity interest in the Aguablanca Project.
