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Discovery Metals Corp
Symbol DSV
Shares Issued 306,896,465
Close 2021-01-19 C$ 1.77
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Discovery Metals plans 66,000 m of drilling in 2021

2021-01-19 11:14 ET - News Release

Mr. Taj Singh reports


Discovery Metals Corp. has outlined its 2021 work program and budget for its flagship Cordero project located in Chihuahua state, Mexico.

Taj Singh, president and chief executive officer, stated: "We anticipate 2021 will be a transformative year where we firmly establish Cordero as one of the few silver projects globally that offers margin, size and scaleability. Our focus is to both derisk the project by delivering a technically robust PEA [preliminary economic assessment] and to deliver resource growth by expanding known zones and making new discoveries. We plan to complete 66,000 metres of drilling outlined as follows.

"Other key project development milestones for 2021 include completion of social baseline assessment and progress on environmental baseline studies. Our planned work for metallurgy, processing, geotech and hydrology will go above and beyond what is typically included in a PEA study and will identify areas where we can accelerate prefeasibility work.

"Our current cash balance of approximately $82-million places us in a very strong position to fund our planned expenditures at Cordero this year of approximately $26-million. Recent investment in on-site infrastructure will allow us to maintain strict COVID-19 protocols and should ensure we can complete our proposed work program in a safe and efficient manner. We will continue to closely monitor the health and safety situation at site, and, if practicable, we will look to expand our drill program if it is deemed safe to do so."

2021 drill plans

The company plans on completing 66,000 metres of drilling in 2021 based on four drill rigs operating throughout the year. This program and the number of drill rigs may be expanded when the company is confident that the health and safety risks related to COVID-19 can be managed effectively.

Further details on the allocation of 2021 drill metres are provided in an attached table. Based on the excellent results from drilling in the South corridor, the company's phase 1 drill program has been expanded by 10,000 metres to 65,000 metres. The company's phase 1 drill program will be completed in Q2 2021 and will be immediately followed by the company's phase 2 drill program. The total amount and allocation of drill metres in the company's phase 2 drill program is still to be determined and will be based on a detailed review this quarter of all drill results to date.

Balance sheet

The company ended 2020 with a cash balance of approximately $82-million and no debt. The company's planned work program at Cordero in 2021 is budgeted at $26-million. Expenditures for the year reflect an accelerated approach to derisking the project while still allocating growth capital to resource expansion and propertywide exploration. The company has a significant cash balance beyond its proposed 2021 budget spend, which will allow it to expand its work program, if feasible within COVID-19 constraints, as well as to rapidly advance the project to a construction decision beyond 2021.

Resource estimate and preliminary economic assessment (PEA)

The company's objective is to deliver a technically robust PEA that demonstrates Cordero is a high-margin silver project with size and scaleability. The PEA will be focused on the bulk-tonnage domain and will be supported by more than 350 drill holes and 180,000 metres of drilling and two programs of detailed metallurgical test work. Key milestones include:

  • Phase 1 drill program: Based on the company's results to date, the company has expanded its phase 1 program to 65,000 metres (an increase of 10,000 metres). The company expects to complete the remaining 20,000 metres of this expanded phase 1 program in Q2 2021.
  • Metallurgical test work: Sampling for the metallurgical test work is based on both mining phase and lithology. The program will consist of comminution test work, flotation optimization, preconcentration test work and high-level environmental test work. Results are expected to be received in Q2 2021.
  • Resource estimate: The resource estimate will be focused on the bulk-tonnage domain only and will incorporate all historical data and data from phase 1 drilling. The resource update is expected to be completed in Q3 2021.
  • PEA: The base-case mine plan in the PEA will be based on a conservative silver price and will incorporate staged expansions of the throughput rate at the planned processing facility. Scheduling will prioritize higher grades early in the mine life to expedite payback. The study will be based on the updated resource model and all metallurgical test work and is expected to be completed in Q4 2021. To demonstrate the scaleability of Cordero, the company also anticipates including a blue-sky alternative as an addendum that looks at the impact of higher silver prices on project throughput and optimization.

High-grade veins:

  • Phase 1 drilling of the high-grade vein trends that transect the deposit has focused on testing the limits and continuity of the vein trends and has yielded highly encouraging results. In phase 2, the focus of vein drilling will transition to resource definition with the objective of publishing an initial resource estimate of the high-grade veins in 2022.

Prefeasibility study:

  • Phase 2 drill program: A key focus of the company's phase 2 drill program will be on upgrading any inferred mineral resources within the PEA mine plan to allow the inclusion of these ounces in the PFS mine plan. This infill drilling is expected to commence in Q3 2021 following a review of all phase 1 data.
  • Gap analysis: As part of its PEA, the company will be completing a gap analysis for metallurgy, processing, geotech and hydrology to identify the data gaps required to advance the project to a prefeasibility study (PFS) level. This analysis will allow the company, where appropriate, to commence PFS-level work for these items in the second half of 2021 in order to accelerate the delivery of a PFS for Cordero.

Corporate responsibility:

  • Health and safety: Managing health and safety during the COVID-19 pandemic will remain a key priority during the year. Risk mitigation measures include recent investment in on-site infrastructure to accommodate social distancing requirements, enhanced testing and travel restrictions.
  • Environment: CIMA Consultores Ambientales, a consulting firm based in Chihuahua, Mexico, was engaged in Q3 2020 to complete an environmental baseline study at Cordero. Fieldwork associated with the study has been delayed due to COVID-19 restrictions. The company anticipates commencing fieldwork in the first half of 2021 and completing the study in the first half of 2022.
  • Community relations: The company engaged Vinfidem Consultoria, a consulting firm based in Sonora, Mexico, in Q3 2020 to complete a social baseline study of the local municipalities associated with Cordero. The objective of the study is to identify and evaluate the potential social impact of the project. The study is expected to be completed in Q3 2021.

Propertywide exploration:

  • Target generation: The company has strengthened its exploration team in Mexico in order to rapidly advance a detailed field mapping and sampling program on the company's propertywide targets in 2021.
  • Reconnaissance drilling: Initial drill testing of propertywide targets is expected to commence in Q4 2021 following the completion of fieldwork on the company's high-priority targets.

About Discovery Metals Corp.

Discovery's flagship project is its 100-per-cent-owned Cordero silver project in Chihuahua state, Mexico. The company's drill results to date show that Cordero is developing all the attributes of a Tier 1 project -- grade, scale, significant organic growth opportunities and well located in one of Mexico's premier mining belts. The project is supported by an industry-leading balance sheet with over $80-million of cash allocated for aggressive exploration, resource expansion and future development.

Qualified person

Gernot Wober, PGeo, vice-president, exploration, of Discovery Metals, is the company's designated qualified person for this news release within the meaning of National Instrument 43-101, Standards of Disclosure for Mineral Projects, and has reviewed and validated that the information contained in this news release is accurate.

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