Cordero

Overview

One of the World's Largest Silver Resources

Location: Chihuahua State, Mexico
Area: 37,000 hectares (91,429 acres)
Ownership: 100%
Minerals: Silver, Gold, Zinc, Lead
Status: Exploration with successful PEA completed

Levon Resources has built Cordero into one of Mexico's premier porphyry targets for silver, gold, zinc and lead. Following completion of a successful PEA in April 2018, the current indicated and inferred resources, combined with the project's eight large-scale mineral targets on more than 370 square kilometres, have established Cordero as a world-class property and a district-scale discovery ready for pre-feasibility studies.

Cordero's host rocks, geology, metal assemblage and size are all analogous to some of Mexico's largest world-class, bulk-tonnage silver deposits including Penasquito (Goldcorp), Camino Rojo (Goldcorp) and Pitarilla (Silver Standard). These deposits are all situated within the same emerging Chihuahua-Zacatecas silver-gold belt in northern Mexico.

Through more than 133,000 meters of drilling, Levon has established a resource* with:

Silver: 407.8 M oz indicated, 187.5 M oz inferred
Gold: 1.27 M oz indicated, 363,000 oz inferred
Zinc: 8.03 B lbs indicated, 4.66 B lbs inferred
Lead: 3.77 B lbs indicated, 1.86 B lbs inferred

Here are tonnage and grade details based on a Net Smelter Return cut-off of US$6.00 per tonne (as announced in Levon's news release dated March 5, 2018). The resource is within an open pit geometry generated by a floating cone algorithm using metal prices and recoveries of: Lead, $1.00/lb and 80% recovery; Zinc, $1.20/lb and 81% recovery; Silver, $20.00/oz with 85% recovery, gold $1,250/oz, 18.00% recovery to a lead concentrate and 15% recovery to a zinc concentrate:*

Cut off grade AgEq g/t Resource Class Million Tonnes AgEq g/t Ag g/t Au g/t Zn % Pb %
15.00 Indicated 990.05 31.92 12.81 0.040 0.37 0.17
Inferred 282.21 56.43 20.66 0.04 0.75 0.30
Click here to see the full Mineral Resource Update published April 18, 2018.

Cordero Project Contained Silver Equivalent (AgEq) Ounces
Cordero 2018 resource update
31.1034768 grams in one troy ounce, reported as oz/t (where t= tonne)
Class Tonnes AgEq g/t AqEq oz/t ContainedAgEq Oz
Indicated 990,054,000 31.92 1.026 1,016,045,000
Inferred 282,217,000 56.43 1.814 512,017,000
1,528,062,000

* The Cordero updated resource estimate is tabulated within a revised open pit geometry and was developed from 292 drill holes encompassing 133,620 meters of core drilling. The current resource remains open to expansion through step out delineation and infill drilling, on strike and beneath the modeled open pit.

The updated Cordero resource estimate presented was prepared under the direction of Herb Welhner (SME registered member #3434330), Vice President of IMC, who is a qualified person under NI 43-101. IMC has utilized updated metal price projections, estimated metallurgical recoveries, production and processing cost estimates from M3 Engineering & Technology ("M3"), Tucson, Arizona. The 2018 Cordero PEA supersedes the 2013 PEA update, which was written before Levon consolidated the current 100% ownership of all claims in the district to complete 2014 drilling and a 2014 resource update (news release of October 20, 2014). The 2018 PEA includes the 2018 resource and re-evaluates the Cordero Project in the context of a long-term silver, zinc, lead, gold project designed to world standards.

The 2018 PEA includes a refined geologic model, the updated 2018 Mineral Resource estimate, updated process recovery, and revised mining and processing costs. The tailings disposal facilities remain unchanged. While a portion of the data generated for the 2013 PEA Update study provided support for some of the assumptions incorporated into the 2018 PEA, the mining, processing, geotechnical, hydrological, social, and capital and operating cost parameters are revised and reported in the 2018 PEA report.

The Cordero resource, located on just one of the property's eight large-scale targets, now ranks amongst the world's largest silver resources.

Preliminary Economic Assessment**

A successful Preliminary Economic Assessment (PEA), updated in April 2018, has established Cordero's potential economic viability. As noted in the PEA: "The project, as it is currently scoped, is taking shape as a major open pittable project with projected mineral resources supporting 29 years of production at 40,000 tpd. Levon is now in a position to advance the Cordero Project to the pre-feasibility study..." Here are the base case figures from the 2018 PEA (conducted by Independent Mining Consultants and M3 Engineering):

Silver Price: US$20
Internal Rate of Return (IRR): 16.5%
Mine Life: 29 years (to complete four stages of a planned eight-stage open pit)
Mill Capacity: 40,000 tpd
Strip Ratio: 0.98/1
Payback: 4.8 years
Net Annual Cash Flow: $77.4M

  • A sub-set of the indicated and inferred mineral resource was used to develop an open pit mining plan at a rate of 40,000 tonnes of mill feed per day, with flotation processing to create high-quality lead and zinc concentrates. This mining rate is identical to the mining rate in the 2013 PEA update (news release of May 15, 2013). Mineral concentrates will be sold to offshore smelters.
  • Average annual production of 8 million ounces of silver, 44,788 tonnes of zinc (99 million lbs) in concentrate, 31,158 tonnes of lead (69 million lbs) in concentrate and 11,900 ounces of gold.
  • Economic analysis for the updated study are based on $20/oz silver, $1.30/lb zinc, $1.00 lead, and $1,300/ oz gold.
  • The updated mine plan for the updated 2018 PEA, which is scheduled over a 29 year mine life includes total mineralized material of 417.5 million tonnes at a 46.5 g/t silver equivalent, producing concentrates containing a total of 231 million ounces silver, 2,863 million pounds of zinc, 1,992 million pounds of lead, and 0.35 million ounces of gold.
  • The waste to mill feed tonnage ratio is 0.98:1 since the resource crops out at the surface. The resource has not been drill delineated on its perimeter, and the modeled strip ratio includes undrilled areas in the modeled open pit as waste. The modeled open pit for the PEA measures --2000 m long x 1300 m wide x 380 maximum depth.
  • Metallurgy is simple (side by side lead and zinc conventional floatation mills) with 88% overall recoveries after three rounds of bench-scale testing.
  • Capital costs estimated at $570 million for initial project capital including mine, plant, TSF, and Owners Costs, and $271 million for sustaining capital over the mine life.
  • Average annual after-tax cash flow of $77.4 million over 29 years.
  • Average operating mining cost of $2.34 per tonne of mill feed, a plant operating cost of $5.08 per tonne of mill feed, and a G&A cost of $1.12 per tonne of mill feed. Average annual cash operating costs are $193 million including royalties.
  • The base case economic estimate is an after tax net present value of $438 million, using a 7.5% discount rate, and an after-tax internal rate of return of 16.5% with a payback period of 4.8 years.
  • An upside silver price of $25/oz yields an after tax net present value of $713 million, using a 7.5% discount rate, and an after-tax internal rate of return of 21.9% with a payback period of 3.9 years.
  • Project infrastructure includes a good road network between Hidalgo del Parral and the mine site. Power transmission will require a 232 kV extension of 75 km to the mine site substation. Skilled mine labor is available from Hidalgo del Parral and other nearby communities in southern Chihuahua.
  • Levon owns all claims that cover the Cordero district, which total 37,000 hectares.
  • Please refer to "Non-GAAP Financial Measures" in this press release.

**A Preliminary Economic Assessment should not be considered to be a prefeasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Furthermore, there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The Technical Report: Cordero Project, Preliminary Economic Assessment was authored and approved by Herbert E. Welhener, MMSA-QPM, SME Registered Member #3434330RM who is the Qualified Person for purposes of this Preliminary Economic Assessment and the associated updated resource calculation.

The revised PEA is available for viewing here.

Expansion Potential

Plan View Of Discoveries And Claims Oct. 2014

Cordero hosts at least eight large-scale targets on two distinct porphyry belts and a third mineralized volcanic center. The current resource is open to expansion on strike and at depth beyond the 2.8km x 2km conceptual open pit.

Drill hole composited assays, drill maps, cross sections: Reported for all 24 holes (C13-251 through C14-274, Aida Claim)* Cordero Project, Chihuahua State, Mexico

Click to View

What's Next at Cordero?

Further improve the project's economics under the direction of M3 Engineering and Independent Mining Consultants:

  • Infill drilling *est 20-60 holes to upgrade Inferred mineralization to Measured and Indicated
  • Begin Pre-Feasibility study