Panuco Feasibility Study Delivers $1.8B NPV and Exceptional Returns

Revolutionary Economics Position Panuco Among Elite Silver Development Projects

The global silver development landscape has fundamentally shifted toward projects that combine exceptional grade profiles with capital efficiency, positioning high-margin assets as the preferred targets for institutional investment. Within this selective environment, the Panuco feasibility study represents a transformational milestone that establishes new benchmarks for development economics in the precious metals sector.

Silver market dynamics have evolved beyond traditional monetary demand drivers, with industrial applications now representing the primary growth catalyst. Photovoltaic installations have expanded 21% annually since 2020, while electric vehicle infrastructure and semiconductor manufacturing add incremental consumption pressure across supply chains. Furthermore, this demand transformation occurs against a backdrop of declining mine supply, creating silver supply deficits that favour high-grade producers entering production during the 2027-2028 timeframe.

Exceptional Economics Deliver Premium Development Returns

The feasibility study economics demonstrate exceptional financial performance through multiple operational advantages. Reserve quality metrics indicate proven and probable reserves of 12.81 million tonnes grading 416 grams per tonne silver equivalent, representing 162 million ounces of contained silver equivalent. Consequently, this grade concentration translates directly into operational efficiencies that compound throughout the projected 9.4-year mine life.

Financial Performance Metrics:
• After-tax NPV: US$1.8 billion at 5% discount rate
• Internal rate of return: 111%
• Payback period: 7 months
• Average annual production: 17.4 million ounces AgEq
• Silver recovery rate: 92.3%
• Gold recovery rate: 93.8%

The conservative metal price assumptions of US$28.50 per ounce silver and US$2,300 per ounce gold provide substantial downside protection while demonstrating robust economics across commodity price scenarios. In addition, these assumptions exclude any value contribution from Inferred Mineral Resources, representing additional optionality for mine life extension beyond the base case projections.

Strategic mine design incorporates front-loaded production scheduling that maximises early cash flow generation. Initial processing capacity of 3,300 tonnes per day expands to 4,000 tpd by Year 4, supporting production profiles that exceed 20 million ounces annually during early operating years.

Cost Structure Delivers Bottom-Quartile Performance Globally

The projected all-in sustaining cost of US$10.61 per ounce silver equivalent positions Panuco firmly within the bottom quartile of global primary silver operations, creating sustainable margin protection across commodity price cycles. This cost advantage stems from geological characteristics and operational design decisions that optimise extraction efficiency while minimising processing complexity.

Industry benchmarking reveals substantial competitive advantages relative to existing producers. However, the 2024 average all-in sustaining cost among primary silver producers reached US$19.80 per ounce, indicating Panuco's 46% cost advantage over established operations. This differential reflects both grade quality and operational efficiency improvements achieved through modern mine design methodologies.

Cost Comparison Analysis:

Stress testing scenarios demonstrate remarkable economic resilience under adverse conditions. A 20% increase in all operating costs maintains an after-tax NPV exceeding US$1.689 billion and IRR of 105%, indicating substantial buffer capacity against cost inflation. Even under 50% lower metal prices (US$17.75/oz silver, US$1,550/oz gold), the project generates US$461 million after-tax NPV and 42.4% IRR.

Primary Cost Optimisation Drivers:
• Mining methodology: Long-hole stoping optimised for vein geometry
• Processing efficiency: Simplified whole-ore cyanide leaching flowsheet
• Administrative leverage: Fixed costs distributed across high-volume production
• Capital discipline: Strategic mine sequencing minimises sustaining investment

The cost structure benefits from the exceptional 416 g/t silver equivalent reserve grade, which provides natural processing advantages through reduced tonnage requirements per ounce of metal produced. Recovery rates of 92.3% for silver and 93.8% for gold minimise metal losses while simplifying operational complexity.

Processing infrastructure design emphasises operational simplicity through whole-ore cyanide leaching, producing doré bars containing both silver and gold. This approach eliminates complex flotation circuits while achieving industry-leading recovery rates, reducing both capital and operating cost exposure.

Advanced Extraction Methods Maximise Resource Recovery

Technical mining parameters demonstrate sophisticated geological understanding applied through proven extraction methodologies. Long-hole stoping serves as the primary mining method across both Copala and Napoleon mining areas, optimising ore recovery while controlling dilution in narrow, steeply-dipping vein systems characteristic of the Panuco mineralisation.

Mining Configuration Specifications:
• Extraction method: Long-hole stoping optimised for vein geometry
• Mining areas: Dual-operation strategy (Copala and Napoleon mines)
• Dilution estimate: 38% incorporated into reserve calculations
• Backfill approach: Combination cemented and uncemented rock fill
• Recovery optimisation: Selective mining techniques for grade control

The dual-mine operational strategy allows independent production scheduling while sharing processing infrastructure, creating operational flexibility that enhances overall project economics. This approach provides redundancy in ore supply while optimising mill feed quality through selective mine sequencing.

Jesus Velador, VP of Exploration, emphasised the strategic focus on production-ready areas, noting that exploration efforts concentrated on reducing technical risk in areas destined for initial mining operations. This targeted approach delivered a substantial 43% increase in measured and indicated resources within the Copala area, establishing high-confidence reserves for early production phases.

Processing Infrastructure Design:
• Initial capacity: 3,300 tonnes per day processing throughput
• Expansion timeline: 4,000 tpd capacity by Year 4 operations
• Product output: Doré bars containing silver and gold
• Recovery methodology: Whole-ore cyanide leaching process
• Infrastructure sharing: Centralised processing for both mining areas

Long-hole stoping methodology provides specific advantages for the geological characteristics encountered at Panuco. For instance, this mining method maximises ore recovery in vein systems while minimising dilution through controlled extraction techniques. The 38% dilution estimate incorporates conservative assumptions while maintaining economic viability through high-grade ore concentration.

Test mining operations commenced in Q4 2024 under full permitting compliance, allowing technical validation of mining methods and metallurgical assumptions under operational conditions. This program provides empirical data supporting feasibility study projections while reducing execution risk ahead of construction decision timing.

Supply Deficit Fundamentals Support Premium Development Assets

Structural transformation in silver demand profiles creates favourable market conditions for high-grade producers entering production during the late 2020s timeframe. Industrial applications have fundamentally altered consumption patterns, with energy transition technologies representing the primary demand growth catalyst independent of traditional monetary or investment demand fluctuations.

Demand Growth Trajectory (2020-2024 Annual Rates):
• Photovoltaic installations: +21% annually
• Electric vehicle infrastructure: +15% annually
• Semiconductor manufacturing: +8% annually
• Grid modernisation projects: +12% annually

Supply constraints compound demand pressure through multiple structural factors affecting global silver production. Mine supply has declined 0.9% annually since 2020, driven by aging deposit characteristics and rising extraction costs across major producing regions. Consequently, this supply trajectory creates persistent deficits that support pricing stability for efficient producers.

Supply Constraint Factors:
• Deposit aging: Declining head grades across existing operations
• Cost inflation: Rising energy and labour costs impact margins
• Permitting delays: Extended approval timelines for new developments
• Capital allocation: Constrained investment in expansion projects

The convergence of demand growth and supply decline creates market conditions that particularly benefit high-grade, low-cost producers. Projects capable of generating substantial free cash flow across commodity price scenarios gain competitive advantages through operational flexibility and margin protection during silver market squeeze periods.

Silver's industrial demand profile demonstrates remarkable resilience compared to traditional precious metals consumption patterns. Furthermore, photovoltaic applications alone represent the largest growth segment, with solar panel manufacturing consuming increasing quantities of silver per gigawatt of installed capacity. This consumption occurs regardless of monetary policy conditions or investment sentiment fluctuations.

"The structural silver deficit, driven by industrial demand growth exceeding mine supply additions, creates a fundamental support floor for silver prices independent of financial market conditions."

Energy transition infrastructure requirements compound silver consumption through multiple pathways beyond photovoltaic applications. Electric vehicle charging networks, grid modernisation projects, and semiconductor manufacturing all require substantial silver inputs that grow proportionally with infrastructure development pace.

Market Positioning During the Silver Squeeze

Current market dynamics suggest increased investor interest in silver squeeze strategies as supply deficits become more pronounced. The structural imbalance between industrial demand growth and mine supply decline creates particularly favourable conditions for high-grade producers capable of rapid production commencement.

Strategic Capital Structure Minimises Shareholder Dilution

Financial positioning demonstrates exceptional strength relative to project capital requirements, providing substantial negotiating leverage for development financing arrangements. The company maintains US$200 million in cash plus in-the-money options as of November 2025, establishing a solid foundation for project advancement without immediate dilutive financing pressure.

Optimised Capital Stack Structure:
• Existing treasury: US$200 million cash position
• Project debt facility: US$220 million estimated capacity
• Additional equity buffer: US$30 million if required
• Total financing capacity: US$450 million available
• Net project requirement: US$173 million after pre-production revenue

The modest net capital requirement of US$173 million (after accounting for US$65.7 million in pre-production revenue) positions Panuco among the most capital-efficient silver developments globally. This efficiency derives from strategic mine design decisions that maximise early cash flow generation while minimising upfront infrastructure investment.

Chris Adams, former head of Mining Finance at Macquarie Group, serves as debt advisor for structuring the project financing facility. This expertise provides access to institutional debt markets and optimised financing terms that minimise overall cost of capital while preserving equity value for shareholders.

Risk Mitigation Through Financial Strength:
• Timing flexibility: Ability to optimise financing conditions relative to market cycles
• Construction buffer: Capital availability for cost overruns or schedule adjustments
• Market independence: Reduced pressure for disadvantageous equity raises during weakness
• Working capital: Operational funding availability for ramp-up phases

The substantial capital buffer above project requirements creates strategic options for accelerated development scenarios or value-enhancing modifications during detailed engineering phases. This financial flexibility supports construction decision timing optimisation based on market conditions rather than funding constraints.

Current valuation metrics indicate significant re-rating potential as the company progresses through development milestones. Trading at 0.56x price-to-net asset value compared to 1.59x for producing silver companies, Vizsla Silver delivers positive feasibility study results reflecting standard market treatment of development-stage assets with clear catalyst potential through construction decision and first production achievement.

Environmental Excellence Accelerates Permitting Progress

Comprehensive environmental planning and community engagement programs support project advancement while reducing permitting risk factors. The company has secured 30-year operating agreements with all five local Ejidos covering the project footprint, providing social licence certainty through the entire mine life and beyond closure requirements.

Permitting Timeline and Progress:
• Environmental Impact Assessment: Submitted Q1 2025 to SEMARNAT
• Review process status: Currently under regulatory evaluation
• Community agreements: Completed for 30-year operational term
• Water rights: Secured for operational requirements
• Land access: Comprehensive agreements covering full project footprint

Test mining operations commenced under full permitting compliance during Q4 2024, demonstrating regulatory confidence while providing technical validation parallel to final permitting activities. This dual-track approach reduces timeline risk by allowing operational preparation to advance concurrent with environmental approval processes.

Environmental Management Framework:
• Water systems: Treatment and recycling infrastructure for operational sustainability
• Tailings management: Engineered containment facility design
• Progressive rehabilitation: Concurrent restoration planning throughout operations
• Biodiversity protection: Offset programs where environmental impact occurs
• Air quality management: Monitoring and mitigation systems

The environmental management approach incorporates modern mining practices that exceed regulatory requirements while supporting long-term community relationships. Progressive rehabilitation planning ensures concurrent restoration activities throughout operations, reducing closure cost obligations and environmental impact duration.

Community engagement extends beyond regulatory compliance through economic participation agreements that provide long-term benefits for local stakeholders. These arrangements create aligned interests between project success and community prosperity, supporting operational continuity throughout the mine life.

Location advantages within the established San Dimas-Panuco mining corridor provide access to skilled labour, regional infrastructure, and established mining supply chains. This positioning reduces operational risk while providing cost advantages relative to greenfield developments in less established mining regions.

District-Scale Exploration Provides Exceptional Expansion Optionality

Land consolidation across over 40,000 hectares along the San Dimas-Panuco corridor creates substantial exploration optionality beyond current reserve calculations. The company has identified more than 150 vein targets across this land package while completing extensive drilling programs that have tested only approximately 30% of these identified targets.

Exploration Asset Inventory:
• Total land position: 40,000+ hectares consolidated
• Identified vein targets: 150+ mapped or discovered
• Drill-tested targets: Approximately 45 (30% of total)
• Untested high-priority targets: 100+ remaining
• Completed drilling: 390,000+ meters across district

Jesus Velador outlined the systematic exploration strategy focused on district-scale discovery potential, emphasising the geological evidence supporting additional mineralisation centres. The exploration approach prioritises discovering high-grade mineralisation centres that could support processing capacity expansion or satellite deposit development feeding central infrastructure.

Strategic Exploration Objectives:
• Additional mineralisation centres: High geological probability for discovery
• Satellite deposit development: Infrastructure leverage opportunities
• Processing capacity expansion: Supported by resource growth potential
• Mine life extension: Beyond base case 9.4-year projections

The Panuco feasibility study deliberately excludes all Inferred Mineral Resources from economic calculations, representing additional optionality for reserve conversion and mine life extension. Successful exploration discoveries could materially enhance project economics through increased processing throughput or extended operational timelines.

"Geological indicators across the district provide compelling evidence for discovering additional high-grade mineralisation centres similar to the established Copala-Napoleon resource concentration."

Exploration inventory represents significant asymmetric upside potential for investors evaluating long-term asset value. The systematic approach to target generation and testing provides multiple pathways for resource expansion beyond current reserve calculations, supporting potential processing capacity increases or operational timeline extensions.

Future Discovery Scenarios:
• Resource expansion: Conversion of inferred resources to reserves
• New discovery centres: Independent high-grade mineralisation areas
• Infrastructure optimisation: Leveraging processing capacity across discoveries
• Operational flexibility: Multiple ore sources supporting mill feed optimisation

The geological characteristics that created the Copala-Napoleon mineralisation extend throughout the broader land package, providing confidence in discovery potential beyond areas currently incorporated into mine planning. This exploration optionality creates value potential that extends well beyond initial production scenarios.

Precious Metals Market Context

Within the broader precious metals market analysis for 2025, silver development projects benefit from favourable investment flows driven by both industrial demand growth and portfolio diversification strategies seeking exposure to energy transition metals.

Valuation Metrics Indicate Substantial Re-Rating Potential

Current trading multiples reflect standard market treatment of development-stage assets while indicating significant re-rating potential as the company progresses through defined catalyst events. Trading at 0.56x price-to-net asset value versus 1.59x for producing silver companies demonstrates the valuation gap that typically closes through development milestone achievement.

Valuation Analysis Framework:

Development Milestone Catalyst Timeline:
• Environmental permit receipt: Expected 2025
• Construction decision: Subject to permit approval and financing completion
• Project financing completion: Advanced parallel with permitting progress
• Construction commencement: Following positive construction decision
• First production achievement: Targeted second half 2027

Historical analysis of silver developer valuation transitions demonstrates distinct re-rating phases through development progression. The most significant valuation expansion typically occurs during construction decision announcement and first production achievement, reflecting reduced execution risk and cash flow visibility.

Furthermore, current market conditions show heightened investor interest in gold-silver ratio insights as the ratio trades at historically elevated levels, potentially favouring silver exposure through development-stage projects with superior economics.

Investment Thesis Validation Factors:
• Economic superiority: 111% IRR and 7-month payback vs. peer developers
• Cost competitiveness: Bottom-quartile AISC positioning globally
• Capital efficiency: US$173 million net requirement minimises dilution risk
• Market timing: Entry into structurally tight silver market conditions
• Exploration optionality: District-scale discovery potential beyond base case

Market conditions favour high-grade, capital-efficient developers capable of generating substantial free cash flow upon production commencement. Panuco's economic characteristics align precisely with institutional investor preferences for projects that combine rapid capital recovery with long-term cash flow generation potential.

Risk Assessment Across Development and Operational Scenarios

Comprehensive risk evaluation encompasses technical, financial, and market factors that could impact project development timeline and execution probability. While feasibility study economics demonstrate robust performance across multiple stress scenarios, several risk categories warrant investor consideration in project evaluation.

Technical and Operational Risk Factors:
• Ground conditions: Managed through proven long-hole stoping methodologies
• Grade continuity: Validated through extensive drilling and geological modelling
• Metallurgical performance: Confirmed through comprehensive pilot testing programs
• Equipment availability: Standard mining equipment minimises supply chain risk

Processing and Recovery Risks:
• Recovery rate validation: Confirmed through detailed metallurgical studies
• Reagent consumption: Conservative estimates based on testwork results
• Throughput assumptions: Conservative capacity estimates with expansion flexibility
• Product quality standards: Doré bar production simplifies refining requirements

Market and financial risk assessment demonstrates project resilience under adverse scenarios. Commodity price sensitivity analysis reveals maintained profitability even at 50% lower metal prices, while cost inflation scenarios support robust economics with 20% operating cost increases.

Market and Financial Risk Mitigation:
• Commodity price exposure: Low-cost structure provides margin protection
• Currency risk management: USD-denominated costs and revenues minimise exposure
• Construction cost inflation: 20% buffer maintains strong economic returns
• Financing completion risk: Strong treasury position provides negotiating leverage

Development and Execution Risks:
• Permitting timeline: Environmental assessment under regulatory review
• Community relations: Strong foundation through comprehensive Ejido agreements
• Construction execution: Experienced contractor selection critical for timeline management
• Market timing: Production commencement aligned with favourable silver market fundamentals

Risk mitigation strategies address identified concerns through conservative assumptions, proven methodologies, and financial flexibility. The substantial capital buffer above project requirements provides contingency capacity for cost overruns or schedule adjustments without compromising project viability.

Operational risk management benefits from location within an established mining district with available skilled labour, regional infrastructure, and mining supply chain access. This positioning reduces execution risk relative to greenfield developments in less established regions.

Feasibility Study Completion Transforms Investment Landscape

The Panuco feasibility study represents a transformational milestone that establishes the project as a technically and economically viable mining operation, providing the foundation for institutional investment, project financing, and production planning. This achievement transforms the company from exploration-stage to near-term producer with defined cash flow visibility and execution pathway.

Investment Thesis Validation Elements:
• Technical certainty: Bankable feasibility study confirms operational viability
• Economic superiority: US$1.8 billion NPV and 111% IRR validate exceptional returns
• Capital efficiency: US$173 million net requirement enables streamlined financing
• Market positioning: Bottom-quartile costs provide competitive advantages
• Exploration upside: District-scale optionality beyond base case economics

Strategic positioning for silver market participation benefits from favourable supply-demand fundamentals that support high-margin producers entering production during 2027-2028. Industrial demand growth, particularly from energy transition technologies, creates structural consumption increases independent of traditional precious metals demand cycles.

Market Positioning Advantages:
• Cost leadership: Bottom-quartile AISC provides margin protection across cycles
• Grade superiority: High-grade reserves support sustainable production economics
• Infrastructure leverage: Strategic location utilises established regional advantages
• Community partnership: Long-term agreements support operational continuity
• Expansion optionality: Multiple pathways for value creation beyond initial production

The completion of bankable feasibility study establishes Panuco as a rare combination of scale, grade, and capital efficiency within the global silver development pipeline. With demonstrated economics delivering exceptional returns and rapid capital recovery, the project represents compelling exposure to tightening silver market conditions driven by industrial demand growth and constrained mine supply.

For investors seeking exposure to structural silver market evolution, the Panuco feasibility study provides confidence in execution capability while offering substantial re-rating potential through development milestone progression. The combination of superior economics, strong financial position, and clear production pathway creates a fundamentally supported investment opportunity in an increasingly selective development landscape.

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