Pit Optimization
Overview
Pit Optimization
Blackberry’s immediate objective is to optimize the current silver/gold resource suitable for open pit mining described by M3 Engineering in their 2012 preliminary economic assessment (PEA) of Nieves and increase the size, grade and classification of the silver and gold resource through infill and step out drilling. This will support the production of 4,000,000 to 5,000,000 ounces of silver annually for a minimum of 10 years. Such a resource would be highly desirable to best-of-class silver miners seeking their next mineable silver resource. Achieving this objective would assure Blackberry members a positive return on their investment and de-risk the project’s future exploration. Our estimated fair valuation for this pit, after the optimization program, is $103,500,000 (in situ).
Image D
This 2012 image shows the eastern region of the Nieves property. The 2012 proposed pit is outlined in dark red.
Enlarged view of 2012 proposed pit. Red and blue dots show drilled holes.
Image E
Nieves Pit Optimization Study
Goals, Objectives, and Results of the IMC Pit Optimization Study
Goals and Objectives:
To determine if additional core drilling can provide an economic, open pit starter silver/gold mine.
To focus on the original open pit plan created by Caracol Creek in 2012.
To engage the best independent third-party mining engineering firm (IMC Corp) to re-analyze the 2012 43-101 data base to determine number and location of drill program(s).
To determine the possible extension life-of-mine (LOM) consistent with silver miners current resource acquisition criteria, >10 years.
To develop a mining plan capable of producing a minimum 10-year LOM (open pit) and with average silver equivalent production greater than 4 million ounces of silver per year.
To minimize both initial and sustaining costs of capital expenditures and silver equivalent cost per ounce to <$10 per ounce.
Results:
The all-in sustainable costs using the current known and assessed resource for a 6-year life-of-mine (LOM ) optimized pit are estimated at $13.30/ounce silver which decline to below $11.64 with the anticipated results from further planned infill and step-out drilling.
With additional infill and step-out drilling, the feasibility of a 13.4 mine life with sustainable average annual production of 4,300,000 ounces of silver.
With all-in sustainable costs estimated at less than $11.64/ounce silver equivalent.
High grade drill intercepts 800 meters west of the La Quinta Vein, part of the Concordia Vein System suggest continuity of the Concordia vein system with ore grades increasing to the west.
Pit Optimization Plan
Goals and Objectives of the Pit Optimization
Increase the average reported ore grade to 86 g/t within an optimum starter pit perimeter.
Increase the resource classifications from indicated and inferred to measured / indicated.
Increase the reported and assessed resource within the optimum pit perimeter to from 30,495,079 to >69,000,000 ounces silver.
Drilling Program No. 12 Step out and Infill
Third Party Resource Report
Secure an updated Form 43-101 PEA upon assessing the results of the Pit Optimization Drilling Program.
Budget
$5,000,000 fully burdened.
Timeline
12 months
Time Frame
January 1, 2020 – December 31, 2020
1785 Meter Length of the Concordia Vein
69 Million
Estimated 69 million ounces of silver (42 million tonnes at 5000 TPD)
10+ Years
Support a 10+ year Life of Starter Mine
Comparison of M3’s 2012 Preliminary Economic Assessment withIMC’s 2018 Pit Optimization Study
| Type | M3's 2012 Preliminary Economic Assessment | Optimization Study Post Infill and Step Out Drilling |
|---|---|---|
|
Date |
PEA: October 31,2012 |
PEA: October 31,2012 |
|
Mine Type |
Open Pit |
Open Pit |
|
Stripping Ratio |
5.4 to 1 |
5.4 to 1 |
|
Silver Ore |
35,400,000 tonnes |
26,100,000 tonnes |
|
Resource Classification |
Indicated and Inferred |
Measured and Indicated |
|
Ore Grade Average |
59.51 g/t |
86g/t |
|
Ounces of Silver Recovered |
55,500,000 |
69,000,000 |
|
Ounces of Gold Recovered |
41,000 |
50,973 |
|
Ounces of Silver Equivalent |
58,985,000 |
73,332,705 |
|
Cumulative Finding Costs |
$15,000,000 |
$23,000,000 |
|
Holes drilled |
187 |
308 |
|
Cost per Hole |
$80,214 |
$74,675 |
|
Ounces of Silver Found/Hole |
296,791 |
224,026 |
|
Meters Drilled |
54,814 |
89,770 |
|
Ounce Silver Found/Meter Drilled |
1,013 |
769 |
|
Annual Mine Rate |
3,500,000 tonnes |
1,800,000 tonnes |
|
Annual Silver Production |
5,550,000 Oz. |
4,360,763 oz. |
|
Recoveries |
86% |
86% |
|
Life of Mine (LOM) |
10 years |
13.4 years |
|
Fair Value Ounce Silver in Ground |
$2.00 |
$1.50 |
|
Fair Value Silver Resource |
$111,000,000 |
$103,500,000 |
|
Initial Capital Expenditure |
$231,600,000 |
$122,000,000 |
|
Sustaining Capital Costs |
$64,100,000 |
$33,000,000 |
|
LOM Operating Costs |
$14.98/oz. silver |
$11.41/oz. silver |
|
NPV 8% |
$77,100,000 |
$120,000,000 |
|
Base Silver Price |
$27/ounce |
$20/ounce silver |
|
Project Breakeven |
$21.37/ounce silver, after
payback $15.25 |
$16.59/oz. silver, after
payback: $11.64 |
|
After Tax Internal Rate of Return |
15.70% |
18% |
Value Proposition Pit Optimization
Value Proposition
| Expense | Cost in USD |
|---|---|
|
Funding Required for Pit Optimization (fully burdened): |
$ 5,000,000 |
|
Pit Resource Fair Valuation pre-optimization |
$ 45,742,646 |
|
Pit Resource Fair Valuation post-optimization |
$ 103,500,000 |
|
Uplift |
$ 52,757,355 |
Pit Optimization Timeline
12 months/12 months cumulative
Goals and Objectives of Pit optimization Plan
De-risk Nieves Pit Expansion and Further Exploration of the Nieves Silver Property.
Assure project development feasibility at current silver prices.
Increase the resource classifications from indicated and inferred to measured, indicated and inferred.
Assure marketability and desirability of the Nieves to silver miners
Increase the average ore grade from 40.1 g/t to 85.05 g/t through high-grading, redrawing the pit shale perimeters to include only the higher grade intercepts.
Increase the size of the reported high graded pit silver ore body contained with in the new perimeters of the optimized pit from 10,165,032 tonnes to 23,000,000 tonnes
Increase the size of the silver resource contained within the new perimeters of the optimized pit by >2-fold from 30,495,097 ounces to 69,000,000 ounces
Use of Funds
| Expense | Cost in USD |
|---|---|
|
Drill and core the 101 holes pursuant to Pit Optimization Plan |
$ 3,000,000 |
|
Retire short term debt |
$ 600,000 |
|
Sustain Blackberry and Nieves through to Pit Optimization Phase |
$ 500,000 |
|
Update the Form 43-101 PEA post pit optimization program |
$ 250,000 |
|
Contingency |
$ 150,000 |
|
Total |
$ 5,000,000 |
Anticipated Fair Value of the Nieves Pit Resource Post Optimization
Assume a found, reported, and assessed resource of 69,000,000 ounces of silver equivalent, $15 average price of silver over life-of-mine (LOM), $1.50 estimated value of an ounce of mineable silver resource in the ground for a fair valuation of $103,500,000.
| Current Pit Resource Optimized by Study by High Grading | Current Optimized Pit Resource Enhanced by Infill and Stepout Drilling - Internal | |
|---|---|---|
|
|
Actual |
Estimated End of 2020 |
|
Timeframe to Execute |
6 months |
≤ 12 months |
|
Tonnes silver ore |
10,165,032 |
23,000,000 |
|
Grade |
85.05 g/t |
85.05 g/t |
|
Ounces of Silver |
30,049,097 |
69,000,000 |
|
Category |
Indicated and inferred |
Measured, indicated, and inferred |
|
Cumulative finding costs |
$18,000,000 |
$23,000,000 |
|
|
|
|
|
Holes drilled |
208 |
309 |
|
Cost per Hole |
$86,538 fully burdened |
$74,434 fully burdened 223,301 |
|
Ounces of silver per hole |
144,467 |
223,301 |
|
Finding costs per ounce silver |
$0.60 |
$0.33 |
|
|
|
|
|
Meters drilled |
62,500 |
89,750 |
|
Ounces silver per meter drilled |
481 |
769 |
|
|
|
|
|
Annual silver production |
~5,000,000 ounces |
~5,000,000 ounces |
|
Life of mine |
6 years |
13.8 years |
|
Value per ounce of silver in situ Resource Fair Value |
$1.80 |
$2.50 |
|
Ounces silver per meter drilled |
$54,088,375 |
$172,500,000 |
*Note: The optimized pit created by redrawing the pit shell perimeters to maximize average ore yields (85 g/t plus) comprises approximately 25% of the Nieves reported and assessed 120 million ounces of silver equivalent resource.
Strategy
Pit Resource Expansion
We are currently working towards the goals and objectives of our Pit Resource Expansion Pan. BBV is presently expanding our drilling program by drilling core holes averaging 270 meters in depth. The expansion is based on using geophysical data with drilling data and analysis to show potential vein targets. The timeline for this expansion plan is an estimated 18 months.
Further Exploration
To achieve our goals, a comprehensive exploration program will be conducted at Nieves. The program will involve a series of surveys, including magnetic, geological, and geochemical surveys, to identify potential drill targets. The data collected from these surveys will be analyzed to determine the location of the intrusive source of mineralization and other magnetic anomalies that may indicate the presence of undiscovered veins.
Exit Strategy
We are currently in development of an exit plan. Blackberry Ventures LLC’s business plan calls for finding, delineating, and assessing a plus-billion ounces silver resource, demonstrating the economic feasibility of mining the resource, and exiting through a sale, joint venture or exploration option (“farmout”) to a best-in-class mining group while Nieves is still in development.