Silvercorp Updates Condor Project Resource with Strategic Underground Mining Focus

Silvercorp Updates Resource Estimate at Condor Project: Strategic Pivot to Underground Mining

The Condor gold project represents a strategic asset for Silvercorp Metals Inc., situated in Ecuador's mineral-rich Zamora-Chinchipe Province. This multifaceted project features four distinct deposits with diverse mineralization styles—including both steeply dipping vein structures and broader disseminated zones—creating multiple extraction opportunities within a single project footprint.

Unlike many single-deposit operations, Condor's geological diversity provides Silvercorp with exceptional operational flexibility and potential for multiple revenue streams, enhancing the project's economic resilience across varying market conditions.

Evolution from Previous Development Stages

The Condor project has undergone a significant transformation since its initial assessment. Originally evaluated in a 2021 Preliminary Economic Assessment (PEA) by a previous operator, Silvercorp's recent work represents a fundamental strategic pivot toward higher-grade underground resources.

This shift from the original open-pit concept to a focus on underground mining demonstrates Silvercorp's commitment to quality over quantity—targeting deposits with superior economic potential rather than simply pursuing maximum tonnage. Industry analysts note this approach aligns with growing investor preference for projects with lower environmental footprints and higher margins rather than maximum production volume.

Updated Mineral Resource Estimate: Key Findings and Implications

The February 28, 2025 Mineral Resource Estimate (MRE), independently prepared by SRK Consulting (Canada) Inc., reveals substantial precious and base metal content within the Condor project. This updated assessment adheres to National Instrument 43-101 Standards and follows the 2014 CIM Definition Standards, ensuring reliability and transparency in resource classification guide.

The resource estimate shows particularly noteworthy results for the underground component:

Note: Underground resources calculated at a 2.2 g/t AuEq cutoff grade, using $1,800/oz Au, $22/oz Ag, and $1.20/lb Zn for equivalent calculations

The significant inferred resource presents both a challenge and an opportunity for Silvercorp. While requiring additional drilling for conversion to higher confidence categories, it also suggests substantial mineral exploration insights remain at the project.

Deposit-Specific Distribution

The updated underground resource estimate concentrates primarily on two key deposits:

• Camp deposit: Features higher-grade vein structures ideally suited for targeted underground mining methods, with exceptional metallurgical properties
• Los Cuyes deposit: Contains significant gold-silver-zinc mineralization accessible via underground methods, offering valuable polymetallic production potential

Additionally, the satellite deposits of Enma and Soledad are reported separately as potential open-pit resources. This dual approach provides Silvercorp with development optionality—potentially allowing for phased development starting with higher-grade underground zones while preserving open-pit options for future expansion phases.

Technical Methodology: How the Resource Estimate Was Developed

The updated MRE represents a comprehensive integration of historical and new data, drawing on exploration work spanning from 1993 through 2018. Silvercorp's technical team undertook extensive relogging and reinterpretation of previous drill results, applying modern geological understanding to historical data.

This meticulous approach to data validation enhances the resource estimate's reliability—a critical factor for investor confidence in development-stage mining projects.

Advanced Estimation Techniques

SRK Consulting employed sophisticated geostatistical methods tailored to each deposit's unique characteristics:

• Ordinary kriging: Applied to zones with high data density to maximize estimation accuracy
• Inverse distance squared: Utilized in areas with more sparse data distribution
• Domain-specific approaches: Customized estimation parameters for each geological domain

This methodological flexibility represents best practice in resource estimation, recognizing that a one-size-fits-all approach often fails to capture the geological complexity of multifaceted deposits like those at Condor.

Promising Metallurgical Indicators

Initial metallurgical testing has yielded encouraging recovery rates that bode well for future processing economics:

• Camp deposit: Laboratory testing achieved gold recoveries up to 96% using conventional cyanide leaching
• Los Cuyes deposit: Laboratory work demonstrated gold recoveries up to 88% using similar cyanide leaching processes

Important note: While these laboratory results are promising, it's typical for commercial-scale operations to achieve recoveries 5-10% lower than laboratory tests. Investors should anticipate actual recoveries in the 85-90% range for Camp and 75-83% range for Los Cuyes in future economic studies.

The ability to achieve these recovery rates using conventional processing technologies potentially reduces technical risk and capital requirements compared to deposits requiring more complex processing methods.

Strategic Implications for Silvercorp's Growth Trajectory

Silvercorp's updated MRE for the Condor project represents a strategic pivot with far-reaching implications for the company's future direction. By shifting focus to higher-grade underground resources, Silvercorp positions itself to potentially develop a project with:

• Reduced surface footprint: Underground mining typically disturbs less than 10% of the land area compared to equivalent open-pit operations
• Lower waste-to-ore ratios: Underground mining can reduce waste rock generation by 60-80% compared to open-pit methods
• Enhanced selectivity: Ability to target the highest-grade zones first, potentially improving early-year economics
• Potentially reduced capital intensity: While underground mines often have higher operating costs, their initial capital requirements can be 30-40% lower than open-pit operations of similar production capacity

This approach aligns with growing investor preference for mining projects emphasizing quality over quantity and minimizing environmental impacts while maintaining strong economic returns.

Portfolio Diversification Benefits

The Condor project significantly enhances Silvercorp's portfolio diversification across multiple dimensions:

• Geographic diversification: Expands beyond the company's core Chinese operations, which currently account for approximately 93% of Silvercorp's 2024 revenue
• Commodity diversification: Adds meaningful zinc exposure alongside precious metals, potentially insulating against single-commodity price volatility
• Operational diversification: Balances existing producing assets with development-stage projects, creating a more sustainable growth pipeline

This multi-faceted diversification strategy potentially reduces Silvercorp's risk profile while maintaining exposure to gold prices analysis upside—an approach increasingly favored by institutional investors seeking mining exposure with moderated volatility.

Navigating Challenges and Opportunities Ahead

Development Considerations

Several factors will influence the Condor project's advancement timeline and ultimate success:

• Resource conversion challenge: The significant inferred resource (12.1 Mt) will require approximately 50,000 meters of infill drilling for conversion to indicated or measured categories, based on industry standards of roughly 1,000 meters per million tonnes
• Metallurgical optimization opportunity: While initial recovery rates are promising, optimizing the processing flowsheet for multi-metal recovery presents both a challenge and opportunity to enhance project economics
• Infrastructure development needs: Ecuador's mining sector is still maturing, with the country ranking 98th globally in the World Bank's 2024 Logistics Performance Index, potentially presenting logistical challenges that will require careful planning

Analyst perspective: "Ecuador's improving regulatory environment for mining, following the 2023 reforms to its Mining Code, has significantly enhanced the country's attractiveness for foreign investment. However, infrastructure limitations remain a key consideration for project development timelines." – Ecuadorian Ministry of Energy and Mines, 2024 Investment Report

Market Timing Considerations

The Condor project's development timeline intersects with several favorable market factors:

• Gold price strength: Current and projected gold prices above $1,800/oz provide favorable economics for development decisions
• Zinc market outlook: Global zinc demand is projected to grow at 3.5% annually through 2030 (CRU Group, 2024), potentially enhancing the value of Condor's significant zinc content
• Increasing focus on jurisdictional diversity: Growing investor interest in gold projects outside traditional mining jurisdictions as geopolitical considerations influence capital allocation

These market factors create a potentially advantageous window for Silvercorp to advance the Condor project, particularly if the company can accelerate development timelines.

Next Steps: Toward Economic Assessment and Development Decision

Updated Preliminary Economic Assessment

Silvercorp has confirmed plans to develop an updated PEA based on the revised resource estimate. This assessment will:

• Incorporate underground mining methods: Replacing previous open-pit concepts with more targeted extraction approaches
• Update capital and operating cost estimates: Reflecting both the mining method change and current market conditions
• Revise production profiles: Likely focusing on higher-grade zones early in the mine life to accelerate payback
• Establish development timeline: Creating a roadmap toward potential construction decisions

Based on industry standards, this PEA process typically requires 6-12 months to complete, suggesting potential delivery in late 2025 or early 2026.

Future Exploration Potential

The substantial inferred resource component (1.38 Moz gold) indicates significant exploration upside remains. Future work programs may include:

• Infill drilling campaigns: Targeting the conversion of inferred resources to indicated or measured categories
• Step-out exploration: Testing potential deposit extensions, particularly at depth where high-grade zones often continue
• Regional exploration: Evaluating the broader property package for additional discoveries, leveraging improved geological understanding from recent work

Silvercorp's exploration approach will likely balance resource conversion with step-out work, ensuring both near-term development potential and long-term growth opportunities are advanced in parallel.

FAQ: Understanding Silvercorp's Condor Project Resource Update

How does the updated resource compare to previous estimates?

The updated MRE represents a strategic refocusing on higher-grade underground resources rather than a direct tonnage comparison. The new approach emphasizes quality over quantity, targeting material with superior economic potential through underground mining methods.

While the total contained ounces may appear lower than previous estimates that included low-grade open-pit material, the economic value per tonne has potentially increased significantly—a metric increasingly favored by investors over simple ounce counts.

What metals will be produced from the Condor Project?

The project contains economically significant quantities of gold, silver, and zinc. Gold represents the primary value driver, contributing approximately 85% of projected revenue based on current metal prices. Silver and zinc provide valuable by-product credits that enhance overall project economics and provide some insulation against silver market dynamics.

At current metal prices ($1,800/oz Au, $22/oz Ag, $1.20/lb Zn), the zinc content alone represents over $245 million in potential revenue from the indicated resources.

What is the significance of the metallurgical test results?

The preliminary metallurgical results showing gold recoveries of up to 96% at Camp and 88% at Los Cuyes using cyanide leaching indicate potentially favorable processing economics. These results suggest conventional processing methods may be applicable, potentially reducing technical risk and capital requirements.

However, investors should note that commercial-scale operations typically achieve recoveries 5-10% lower than laboratory results. Additionally, optimizing recovery of all three metals (gold, silver, and zinc) may require more complex processing circuits than tests focused solely on gold recovery.

When might production begin at the Condor Project?

While Silvercorp has not announced a specific production timeline, the typical development sequence suggests:

1. Completion of updated PEA (estimated 6-12 months)
2. Potential advancement to pre-feasibility or feasibility study (12-18 months)
3. Permitting process (typically 12-24 months in Ecuador)
4. Construction decision and execution (18-24 months)

This sequence suggests earliest production potential in 2029-2030, assuming no significant delays. For comparison, Lundin Gold's Fruta del Norte project in Ecuador required approximately 4 years from final permitting to commercial production.

Disclaimer: This projected timeline represents a reasonable estimate based on industry standards and comparable projects. Actual development timing will depend on numerous factors including permitting efficiency, capital availability, and Silvercorp's strategic priorities.

Mining projects in Ecuador benefit from the country's 2023 mining code reforms, which have streamlined permitting processes and clarified fiscal terms for foreign investors. However, community engagement remains a critical factor in successful project advancement and requires sustained, transparent communication throughout the mining industry evolution.

How might the zinc component impact project economics?

While gold remains the primary value driver, the zinc content represents a significant economic opportunity that distinguishes Condor from many pure gold projects. At current prices, the indicated underground resources contain approximately $59 million in zinc value (49.4 million pounds at $1.20/lb), with the larger inferred resource containing potential zinc value exceeding $245 million.

Global zinc demand is projected to grow at 3.5% annually through 2030, driven by infrastructure development, galvanized steel production, and growing use in renewable energy storage applications. This demand profile potentially provides a favorable market environment for Condor's zinc production when it eventually comes online.

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