Andean Silver Cerro Bayo Resource Surges 230% to 136Moz AgEq

Andean Silver Delivers a 230% Surge in Indicated Resources, Advancing Cerro Bayo Toward Feasibility

Andean Silver Limited (ASX: ASL) has reported a major Mineral Resource Estimate (MRE) update for its 100%-owned Cerro Bayo Silver-Gold Project in southern Chile, with the standout result being a 230% increase in Indicated Resources to 60 million ounces of silver equivalent (Moz AgEq). According to the ASX announcement dated 30 June 2026, total project resources have increased to 136Moz AgEq at 211g/t AgEq across 20.0 million tonnes, strengthening the base for upcoming feasibility work and restart planning.

The updated resource matters because the Indicated category is the part of a resource inventory that carries enough drilling density and geological confidence to support technical studies in greater detail. In Andean Silver's case, management has framed this upgrade as a key step toward demonstrating Cerro Bayo's potential production profile and cashflow capacity.

"This result shows Cerro Bayo has genuine scale which will underpin feasibility studies, enabling us to demonstrate the project's production and cashflow potential while ongoing drilling continues to target further Resource growth," said Matthew Allen, Chief Executive Officer.

Resource Growth Puts Cerro Bayo Into a New Category

The updated MRE shows growth not just in headline ounces, but also in confidence and mining optionality. Total resources now stand at 20.0Mt at 211g/t AgEq for 136Moz AgEq, compared with the March 2025 estimate of 111Moz AgEq.

This includes:

• Indicated: 4.7Mt at 395g/t AgEq for 60Moz AgEq
• Inferred: 15.3Mt at 155g/t AgEq for 76Moz AgEq

The company also noted that Cerro Bayo has historically produced approximately 100Moz AgEq, based on production reconciliations from 2002 to 2017. That historical operating record adds important context to the current estimate, particularly as Andean advances restart planning.

How Has the Resource Grown Over Time?

This growth has been supported by extensive drilling since Andean acquired the project in 2024. Furthermore, the company has completed 206 holes for 61,822 metres, adding to a large historical database of approximately 811,000 metres drilled across the district since 1986.

Updated Resource Shows Both Grade and Scale

A key feature of the new resource is its mix of underground and open pit inventory. This is significant because it broadens the development scenarios that can be assessed in future studies.

Cerro Bayo Project Total Mineral Resource Estimate as at 15 June 2026

Underground and Open Pit Resource Split

The underground resource stands out on grade at 362g/t AgEq, which is high by silver-gold project standards and aligns with Cerro Bayo's history as an underground mining operation. The open pit component, however, adds tonnage and creates a wider set of study inputs for potential mine planning.

In addition, the announcement stated that the resource was reported using US$45/oz silver and US$3,500/oz gold price assumptions. Notably, those assumptions sit below the approximate spot prices cited in the release of US$63/oz silver and US$4,100/oz gold at the time of publishing.

What Drove the Sharp Rise in Indicated Resources?

According to the resource update, the increase in the higher-confidence category was driven by a combined effect of fresh drilling, revised geological modelling, and updated reporting assumptions.

Key contributors included:

1. 27,495 metres of additional drilling across the Laguna Verde district
2. Infill work at Coyita, Pegaso 7, Appaloosa, Delia SE and Temer
3. Reclassification of some areas into a combined open pit and underground development scenario
4. Updates to the Taitao model, including the recently drilled Appaloosa structure and halo mineralisation
5. Use of updated long-term metal price assumptions and revised mining cost inputs

The company confirmed the estimate was prepared under the JORC Code (2012). Furthermore, select models were externally reviewed by Cube Consulting Pty Ltd, while the Cristal and Pegaso estimates were reviewed by SRK Consulting.

For investors, that is relevant because resource quality is not only about the number of ounces reported. Confidence, classification, and external review standards affect how much of the resource can realistically feed into the next stage of study work.

Why Indicated Resources Matter in Mining Development

For non-specialist investors, resource categories can appear highly technical. They are, however, central to how mining projects move from exploration into study and development.

A Simple Guide to Resource Categories

The shift from Inferred to Indicated is important because a feasibility study relies heavily on resource areas with stronger geological confidence. In practical terms, more Indicated material gives engineers and financiers a firmer basis for testing mine designs, processing assumptions, and economic outcomes.

A large total resource can attract attention, but a larger Indicated Resource is often what moves a project closer to formal development studies. In Andean Silver's latest update, the Indicated inventory increased to 60Moz AgEq, creating a stronger base for feasibility-level assessment.

Key Technical Terms Explained

A few technical terms in the report are worth clarifying for broader audiences:

• AgEq (silver equivalent): A way of combining silver and gold into a single grade figure using a conversion ratio. At Cerro Bayo, Andean used AgEq (g/t) = Ag(g/t) + 83 x Au(g/t).
• NSR (Net Smelter Return): The estimated revenue per tonne of mined material after certain processing and sale-related costs.
• MSO (Mineable Shape Optimiser): Software used to define realistic underground mining shapes based on economics and mining dimensions.
• Whittle shell: A computer-generated pit outline used to estimate the limits of a potentially economic open pit.
• JORC Code: The reporting standard commonly used in Australia for exploration results, mineral resources and ore reserves.

These terms can appear complex, but they are essentially tools used to decide what portion of drilled mineralisation has a reasonable chance of being mined under assumed conditions.

The Next 12 Months Shift the Focus Toward Restart Planning

The announcement set out a busy work programme for the remainder of 2026 and into 2027. According to the company, the next phase will combine ongoing exploration with formal restart planning.

Planned Activity and Expected News Flow

Management stated that the drilling programme is intended to help deliver another MRE update and an initial Ore Reserve alongside the feasibility study. That goal is relevant because ore reserves represent the economically mineable portion of a resource and are often a major milestone in project development.

The company also highlighted that drilling is set to begin in the Cerro Bayo district, where no drilling has been conducted in nearly 20 years. That campaign will target the Marcela, Guanaco and Cerro Bayo resource corridors.

A separate growth pipeline is being developed at the Droughtmaster to Sinter Hill corridor, where permitting is continuing ahead of what the company described as an extensive greenfield drilling campaign expected to begin in CY2027.

Existing Infrastructure Adds Development Context

One of the practical advantages flagged in the ASX release is that Cerro Bayo is not a new discovery requiring every piece of infrastructure to be built from scratch. According to the announcement, the project includes:

• A 1,500 tonnes per day processing plant on care and maintenance
• A permitted tailings storage facility with approximately 1Mt of remaining capacity
• An approved environmental impact study covering 8,700 hectares
• Historical open pit and underground mining data from decades of operation

The project reportedly produced about 7.3Mt at 201g/t silver and 2.9g/t gold between 2002 and 2017, equivalent to roughly 100Moz AgEq. Historical production data can be useful because it provides reconciliation evidence between mine performance and geological models.

In addition, Andean stated it ended the March quarter with about $53.4 million in cash, which management said will support the Cerro Bayo restart strategy and the planned drilling campaigns.

Why Investors Are Watching This Resource Update Closely

The latest update changes the discussion around Cerro Bayo in two meaningful ways. First, the total resource has become considerably larger. Second, and more importantly for study work, the higher-confidence portion has expanded sharply.

From an investor perspective, the main points from the ASX announcement are:

• Indicated Resources increased 230% to 60Moz AgEq
• Total resources reached 136Moz AgEq at 211g/t AgEq
• Underground grade remains high at 362g/t AgEq
• Feasibility-level work is scheduled to begin in H2 2026
• A large 60,000m drilling programme is about to commence
• The company holds an existing plant and other established site infrastructure
• March quarter cash stood at approximately $53.4 million

What comes next will matter considerably. If the planned drilling converts more material into Measured and Indicated categories, and if feasibility work supports a viable restart case, Cerro Bayo may continue progressing from resource growth into mine planning. For now, the June 2026 MRE update marks a material step in that sequence, based on the figures and work programme outlined in the ASX announcement.

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