Feasibility Study Highlights

Highlights of the Feasibility Study and update include (all figures are in US dollars):

  • The planned development of Santa Ana by 2012 is an important step towards Bear Creek becoming a 20 million ounce a year silver producer with the addition of production from the planned Corani deposit in 2014.
  • Proven and Probable Mineral Reserves containing 63.2 million ounces of silver at Santa Ana bringing the Company's total reserves to over 321 million ounces.
  • Santa Ana Project pre-tax NPV of $107 million at a 5% discount rate and IRR of 29.9% at $14.50 per ounce silver. After tax net present value of $80.2 million and IRR 24.9%.
    • Santa Ana Project pre-tax NPV of $515 million at a 5% discount rate and IRR of 98% at $27.00 per ounce silver. After tax net present value of $344 million and IRR 71%.
  • 11 year mine life producing 47.4 million ounces of silver.
  • Average annual saleable silver production of 5.0 million ounces per year for the first 6 years.
  • Cash cost of $8.72 per ounce silver for the 11 years LOM.
  • Capital costs of $70.8 million with Capital Payback in 3.0 years at $14.50/ oz Ag.
  • Numerous upside opportunities being explored including reductions in cash costs, and an extended mine life plan to include an additional 35.7 million ounces silver. The Santa Ana deposit remains open, mainly at depth and to the north where the northernmost holes contain up to 22 meters @ 124 g/t Ag from surface.

Project Summary (after update to crushing assumption and increased silver recoveries)

The project has a pre-tax internal rate of return ("IRR") of 29.9%, a net present value of $106.9 million at a 5% discount rate and earnings before interest, taxes, depreciation and amortization ("EBITDA") of $173 million over the 11 year life based upon $14.50 per ounce silver. Recovered silver production in the first six years now averages 5.0 million ounces per year and the project is expected to produce an average of 4.3 million payable ounces of silver per year over the 11 year mine-life. The deposit remains open laterally to the north, northwest, and at depth. Pre-production capital investment in the project is estimated to be $70.8 million and sustaining capital expenditures are estimated at an average $1.4 million per year over the 11-year life of the mine. Based upon a $14.50 silver price, the project achieves payback of capital in approximately 3.0 years and at the spot silver price of $29.22 per ounce, the payback is 1.1 year. The Feasibility Study has been prepared using cost bids and estimates and production forecasts provided by qualified engineering consulting groups.

Project Upside

Preliminary mine plans show that the mine life could be extended on the order of 50%, potentially adding 35.7 million contained silver ounces (30MT @ 37g/t Measured + Indicated Resources) to the current 63 million contained silver ounces of reserve.