The Feasibility Study also updates the cost and operating parameters of throughput expansion from the current 3500 tonnes per day (tpd) to 4500 tpd. (Amounts all listed in U.S. Dollars)


  • Measured and Indicated mineral resources total 433.9 million silver ounces at an average grade of 346 grams per tonne (g/t), reflecting an 18 percent increase in Measured and Indicated silver ounces as compared to the January 2012 mineral resource estimate.
  • Inferred mineral resources total 9.3 million silver ounces at an average grade of 224 g/t.
  • Proven and Probable mineral reserves of 31.4 million tonnes at an average silver grade of 347 g/t for 350.5 million silver ounces contained in the mine plan.
  • Average annual production of 19.1 million silver ounces and 22.4 million silver equivalent ounces over the first 10 years of the mine life.
  • As of July 1, 2014, the remaining capital costs to expand the production rate from 3500 to 4500 tpd are estimated at $24.3 million. All expansion capital is expected to be funded by existing cash balance and projected future cash flow.

Chief Executive Officer and Vice Chairman Kevin McArthur said, "The primary purpose of this Feasibility Study was to provide support for the mineral reserve estimate and the details of the life of mine plan."

"Escobal achieved commercial production in January, and our goal is to produce 20 million ounces of silver in this first year of production. Escobal forms a strong economic foundation for the future growth of the Company," added Mr. McArthur.

Updated Mineral Resource Estimate
The Escobal mineral resources encompass an area of approximately 2,400 metres along strike and 1,200 metres vertically. The mineral resource estimate was updated by Mine Development Associates (MDA) incorporating data from nearly 59,000 samples collected from 842 surface and underground drill holes totaling 231,326 metres.

The Measured and Indicated mineral resource estimate for the Escobal deposit contains 433.9 million silver ounces, representing an 18 percent increase from the Indicated silver ounces reported in the May 2012 Preliminary Economic Assessment (PEA). There were no Measured mineral resources previously reported for the Escobal deposit. Inferred silver mineral resources currently stand at 9.3 million ounces.

MDA incorporated the new geologic and analytical data; refined the geologic model; evaluated the statistics of the drill data; interpreted mineral domains on cross sections and level plans; statistically analyzed the sample and geologic data to establish estimation parameters; and estimated silver, gold, lead, and zinc grades into a three-dimensional block model using inverse distance cubed. MDA also audited the project database and carried out verification procedures of the project data used in the model.

MDA tabulated the Escobal resource using a silver-equivalent cutoff grade of 130 g/t with the silver-equivalent value calculated using metal prices of $22.00 per ounce silver, $1,325.00 per ounce gold, $1.00 per pound lead and $0.95 per pound zinc.

Proven and Probable Mineral Reserves
The Escobal mineral reserves were estimated by Blattman Brothers Consulting, LLC (Blattman) who completed a mine design and schedule from the Measured and Indicated mineral resources based on the mining and development methodology currently in use at the Escobal mine. Proven and Probable mineral reserves for the Escobal mine include internal and external mining dilution, paste backfill dilution and mining losses.

The Escobal deposit Proven and Probable mineral reserves total 31.4 million tonnes at an average silver grade of 347 g/t and contain 350 million ounces of silver.

Proven and Probable mineral reserves include 9.3 million tonnes of waste material at average grades of 0.35 g/t silver, 0.11 g/t gold, 0.22 percent lead, 0.39 percent zinc and 0.6 million tonnes of paste fill dilution at zero grade for all metals. External dilution averages 8 percent of the total mined tonnes in the transverse stopes and 16 percent in the longitudinal stopes. Paste fill dilution includes 0.5 metres of over break into the adjacent backfill. Internal dilution is the sub-economic material internal to the stopes and accounts for an additional 23 percent of the total mined tonnes in the transverse stopes and 6 percent in the longitudinal stopes.

Cut-off grades to define the mineral reserves were calculated from the Net Smelter Return (NSR) value of the ore minus the production cost to account for variability in mining method and metallurgical response. NSR value was determined using metal prices of $22.50 per ounce silver, $1,300.00 per ounce gold, $0.95 per pound lead and $0.90 per pound zinc. Actual mining and processing costs, metallurgical performance, and smelter contracts from the Escobal mine and engineering first principles were used to derive operating costs and revenue.

The Escobal mineral reserve estimate is consistent with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral Reserves; is based on Measured and Indicated Resources; and does not include Inferred Resources.

Current Operation
Escobal is an intermediate-sulfidation silver-gold-lead-zinc deposit which the company is currently mining by underground longhole stoping methods. Differential flotation is employed to produce precious metal-rich lead and zinc concentrates. Approximately 50 percent of the tailing are filtered and returned underground in the form of paste backfill to support the underground excavations with the remainder deposited in a dry stack tailing facility. Production at the Escobal mine commenced in the fourth quarter of 2013 and reached commercial production in January 2014. Production from Escobal in the first half of 2014 totaled 9.9 million ounces of silver in concentrate. The Feasibility Study provides economic parameters for the Escobal mine from July 1, 2014 forward.

Feasibility Study Results
The Net Present Value (NPV) of the Escobal mine is represented in the following table at a variety of discount rates and silver prices. NPV is in billions of U.S. dollars and assumes byproduct metal prices of $1,300.00 per ounce gold, $0.95 per pound lead, and $0.90 per pound zinc.

Mine and mill production is currently exceeding the 3500 tpd design rate. The Company expects construction and development to support the 4500 tpd throughput rate will be completed by the middle of 2015 and production to reach this level by the end of 2015.

Capital requirements to expand the facilities from 3500 tpd to 4500 tpd include costs for underground equipment to support a higher number of active development and production headings; improvements to the paste backfill plant; an additional tailing filter; and modifications and upgrades to pumps, piping and motors in the process plant.