Adventus and Salazar Announce Feasibility Study Results and Updated Mineral Resources for the Curipamba Copper-Gold Project

Highlights:

• The Curipamba feasibility study covers the first 10 years of mine life with an open-pit Mineral Reserve (“Feasibility Study”). An updated preliminary economic assessment on the separate underground mine optionality envisioned in years 10 to 14 is also outlined (“Underground PEA”)
• US$12M Feasibility Study resulted in an increase in the resource base, improved metallurgy leading to high quality copper and zinc concentrates, grading 28% copper and 56% zinc respectively, and strong project definition with detailed geotechnical and hydrogeological drilling programs completed
• Environmental, Social and Impact Assessment (“ESIA”) for open-pit mine and mill development shall be submitted to the Ecuadorian Ministry of Environment in November 2021, which references the highest standards with respect to tailings design, water and waste management, and discharge quality
• Adventus Mining has initiated a comprehensive review of all strategic development options, including concentrate off-take and project finance packages, as well as potential options for strategic investment or corporate transaction. Advanced discussions are underway for up to US$240M in non-equity financing
• Detailed engineering for Curipamba development is expected to begin in Q1 2022

• The tailings storage facility design has sufficient capacity for significant mineral reserve additions

• Adventus Mining will host a 2021 Feasibility Study Webinar on Wednesday, October 27, 2021, at 11 am ET. Please register at: https://www.amvestcapital.com/webinar-directory/adventus102721

Open Pit NI 43-101 Feasibility Study

• After-tax Feasibility Study IRR of 32% and NPV8% of US$259 million for initial open-pit development only
• 77% of life-of-mine revenues from payable copper and gold
• Production C1 cash cost of US$1.14/lb and AISC of US$1.26/lb copper equivalent
• Average annual production of 10,463 tpa copper and 21,390 tpa copper equivalent over the life-of-mine
• Proven and Probable Mineral Reserves of 6.5 M tonnes at 1.93% Cu, 2.49% Zn, 2.52 g/t Au, 45.7 g/t Ag, 0.25% Pb

Underground PEA Update ⁽¹⁾

• Underground mine plan based on Indicated and Inferred Resources, independent of those resources used in the open pit Feasibility Study
• After-tax NPV8% of US$49 million, assuming underground production starts after the completion of the open-pit mine plan in year 10, and discounted to the same time zero as the open-pit Feasibility Study (year -2)
• Additional Indicated and Inferred Mineral Resources of 1.9 million tonnes at 2.72% Cu, 2.38% Zn, 1.37 g/t Au, 31 g/t Ag, 0.14% Pb and 0.8 million tonnes at 2.31% Cu, 2.68% Zn, 1.74 g/t Au, 29 g/t Ag, 0.11% Pb, respectively
• Option to upgrade underground Mineral Resources to reserves by an infill drilling, test-work program and completion of a separate feasibility study estimated to cost approximately US$8M over 2.5 years

1 The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

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Toronto, October 26, 2021 – Adventus Mining Corporation (“Adventus”) (TSX-V: ADZN, OTCQX: ADVZF) and Salazar Resources Limited (“Salazar”) (TSX-V: SRL, OTCQB: SRLZF) (collectively the “Partners”) are pleased to announce the feasibility study results, the first estimate of Mineral Reserves, and updated Mineral Resources for the El Domo volcanogenic massive sulphide deposit, located within the 21,537-hectare Curipamba project in central Ecuador (“Curipamba” or “El Domo”). The Feasibility Study was commissioned by Adventus and led by DRA Americas Inc. (“DRA”) to further advance the engineering design and future construction of an open-pit mine and facilities to produce concentrates of copper, zinc, and lead with significant gold and silver credits. This work has been completed as part of Adventus’s option agreement with Salazar whereby Adventus may earn a 75% ownership interest in the Curipamba project with a preferential 95% payback of future cash flows until its investment has been fully repaid. The Feasibility Study results will be summarized in an independent National Instrument 43-101 Technical Report (“NI 43-101”) and filed on the companies’ SEDAR profiles within 45 days. After filing of the NI 43-101 Technical Report, Adventus will have then fulfilled the company’s earn-in requirements under the Curipamba option agreement with Salazar, having also spent more than the required US$25M (approximately US$38.9M up to June 30, 2021 since October 2017). The Partners will then enter into a joint venture agreement governed by a pre-agreed shareholders agreement.

President and CEO of Adventus, Christian Kargl-Simard stated:

“The completion of the Curipamba feasibility study is a major milestone for the Adventus Mining and Salazar partnership, with the results highlighting the project’s attractive economics, improvements since the 2019 PEA, and benefits to many stakeholders. Across valuation metrics and benchmarks – highlighted by its low capital intensity, lowest quartile production costs and forecast free cash flows – Curipamba is an exceptional copper-gold investment proposition not only within the Americas but also globally. The technical and economic results of the study also reinforce the viability of the Curipamba project to stakeholders in Ecuador as the government seeks to support direct investment in its rapidly growing mining sector. In addition to the formal completion of partnership earn-in requirements, we look forward to providing exciting news updates prior to the initiation of detailed engineering at the start of 2022. We also see meaningful value creation through expanding the underground resource and the potential of accelerating its development in earlier years with an expansion funded through future cash flows.”

President and CEO of Salazar, Fredy Salazar stated:

“We want to thank our partner Adventus Mining for its leadership in advancing the Curipamba project, including the best- practice engineering work completed by the international technical team that will benefit many stakeholders in our home country of Ecuador. Salazar has been uniquely involved at Curipamba since the discovery of the El Domo deposit in 2007. We are proud of today’s milestone with maiden Mineral Reserves and now look forward to the execution path towards future construction and operations.”

Updated Mineral Resource Estimate

An update to the Mineral Resource estimate (Table 1a to 1c) for El Domo deposit at Curipamba has been completed as part of the Feasibility Study to include all recent infill drilling completed in 2020 and 2021. The updated Mineral Resource estimate has an effective date of October 26, 2021 and is disclosed in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects and prepared by SLR Consulting (Canada) Ltd. (“SLR”), formerly Roscoe Postle Associates.

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The updated Mineral Resource estimate is supported by information provided from 391 core boreholes, totaling 74,992 metres, completed between 2007 and 2021 and possesses a similar footprint to the previous Mineral Resource estimate (see May 2, 2019 news release). The infill drilling in 2020 and 2021 resulted in the upgrading of portions of the Mineral Resource from previously classified Indicated to Measured and Inferred to Indicated categories. Other highlights include copper grades increasing by 9%.

Table 1a. Total Mineral Resource for El Domo, Curipamba Project – October 26, 2021 (sum of table 1b and 1c)

Table 1b. Pit Constrained Mineral Resource for El Domo, Curipamba Project – October 26, 2021

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Table 1c. Underground Mineral Resource for El Domo, Curipamba Project – October 26, 2021

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Feasibility Study Mineral Reserves

The basis of the Curipamba Feasibility Study is on the maiden open-pit Mineral Reserves that were estimated from the updated open-pit Mineral Resources and on the mine design by DRA (Table 2).

Table 2: Open-Pit Mineral Reserves Statement

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Figure 1: Curipamba Open-Pit Feasibility Study – After-Tax Cash Flow Profile

Major changes in the 2021 Feasibility Study vs. the 2019 PEA

• Open-pit only – Due to the underground resource having significant inferred material, and insufficient geotechnical drilling, the Partners decided to base the Feasibility Study on the open-pit only, and completed a separate updated PEA on the underground resources, whereas the 2019 PEA was on a combined open-pit and underground scenario
• Infill drilling – 44-hole infill and step-out drill program was completed and allowed for significant conversion to Measured category of Mineral Resource, bringing the total number of core boreholes drilled to 391
• Process optimization – Addition of a lead concentrate circuit provides a third saleable product and allows for the production of higher value copper and zinc concentrates with minimal lead penalties. Process optimization work introduced new chemical reagents, a 125-micron primary grind size, and allowed improvement on concentrate grades and recoveries
• Mine optimization and mill throughput – Nameplate mill throughput was increased from 1,750 to 1,850 tpd, supported by an optimized mine plan that minimizes stockpiling. Significantly more rock waste was moved forward into preproduction from later in the mine life to provide sufficient materials to start the tailings storage facility construction (“TSF”)
• Site investigations – A LIDAR survey as well as geotechnical and hydrogeological drilling programs were completed which provide more accurate definition of surface and subsurface conditions, which were considered in the Feasibility Study designs
• Commodity prices – Notably much higher at present than they were in 2019, which provides a positive economic benefit to the project financials, but using the same long-term consensus price methodology
• Water usage – The project is now completely self-sufficient with respect to water requirements through the collection and use of rainfall/surface water on site. Water pumping from external river sources is no longer required
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Open-Pit Mining

The open-pit will be mined using a traditional truck and shovel operation with a contractor mining fleet consisting of drills, shovels, front end loaders, and 40-ton haul trucks. The open-pit will be developed in four phases and operate for approximately 10 years of production, with total material movement of 61.8 Mt (6.5 Mt ore and 55.3 Mt waste) at a strip ratio of 8.6 (including pre-stripping) and 6.02 without pre-stripping included. The open-pit mine design consists of a single pit with a mining sequence to maximize grade, but also provides suitable construction material for the project infrastructure and waste management facilities during construction. Mining of ore is expected to begin within 18 months of the start of pre-production waste movement.

Figure 2: Curipamba Open-Pit Mine Production Profile

Open-Pit Processing

Previously conducted metallurgical test-work programs in 2014 and 2019 were supplemented with further comminution, flotation, locked cycle, solid/liquid separation test-work programs and associated minerology and assays during 2020 and 2021. Samples consisted of remaining material from the 2019 test-work campaign and new composite samples taken from representative drill cores in 2020 and 2021. Results corresponded well with previously completed test-work with improvements in recoveries and grades incorporated in the Feasibility Study.

Net recoveries to copper, zinc, and lead concentrates total 87.5% for copper, 84.7% for zinc, 51.8% for gold, 63.6% for silver, and 30.3% for lead. The net recoveries only include metals that are payable in their respective concentrates.

The process plant is expected to ramp-up production over a three-month period following completion of construction to a steady state throughput rate of 666,000 tonnes/year (1,850 tpd). The processing plant design includes a comminution circuit consisting of a two-stage crushing circuit followed by ball milling, and sequential flotation circuits producing copper, zinc, and lead concentrates.

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Figure 3: Curipamba Open-Pit Annual Copper and Copper Equivalent Production Profile

Figure 4: Curipamba Open-Pit Revenue by Payable Metal

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Figure 5: Curipamba Open-Pit Life-of-Mine Payable Revenue Mix

Site Infrastructure

The major infrastructure items considered and costed in the Feasibility Study support a mining and milling operation that is expected to operate 24-hours per day, seven-days per week. The design of project infrastructure has prioritized environmental protection, workforce safety, and operating efficiency while minimizing community impacts. The project site will consist of the open-pit mine and mining related workshops, a processing plant, waste rock and conventional tailings facility, and support service infrastructure such as warehousing, offices and workshops.

The project site is water positive for which water capture, treatment and discharge infrastructure has been allowed for and designed. The project will draw water from within the property and contain chemical process water and tailings within the TSF. Water management and treatment has been allowed for to treat both open-pit dewatering and surface facilities run-off to required environmental discharge standards.

The site will be supported by electrical grid power which requires the construction of a 7.1 km 69kV power line. The power grid of Ecuador is supplied mostly by hydro-electric generation, which may offer future credits to the project. The mine and process operations are supported by functional maintenance and administration infrastructure located on site as well as off-site locations for non-critical administrative functions. Select local access roads will be upgraded and maintained throughout the mine life.

The proposed tailings storage is of conventional design containing both tailings and process water. Waste rock and over burden will be split by type and placed in suitably designed facilities that will ensure stability and containment and runoff treatment of any potentially acid generating waste rock. All facilities are located near the open-pit mine to maximize efficiencies and minimize impact. The TSF is suitably designed to international standards for earthquake events, storms and floods.

Initial Capital Costs and Sustaining Costs

The initial capital expenditures for the project as estimated by DRA are summarized in Table 4. Capital expenditures to be incurred after the start-up of operations are assigned to sustaining capital and are projected to be covered by operating cash flows. Project contingencies have been added where applicable, excluding capitalized operating costs, which results in an overall contingency of $21.9M or 10% (excluding VAT).

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The Curipamba project will benefit from established infrastructure in Ecuador, noting that the project is only 150 km by road to the major port city of Guayaquil. Local infrastructure owned by the Partners in the town of Las Naves will further support the project development. The estimated initial capital cost of $248M is inclusive of applicable VAT, with approximately $25 million expected to be refunded against VAT charged upon the commencement of concentrate sales.

Table 4: Initial Capital Cost Estimate

DRA estimates the life-of-mine sustaining capital for Curipamba to be $53M, which consists of $29M during mine operations and $34M in closure costs, offset by an estimated $10M in salvage value upon mine closure. Sustaining capital will be funded by operating cash flows.

Open Pit Operating Costs

The estimated operating costs for the Curipamba open-pit mine is $56.21/t of mill feed – see Table 5. DRA has estimated the operating cost based on in-country contractor and supplier quotations, industry benchmarking, proprietary information, and its professional experience.

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Table 5: On Site Operating Cost for the Open-Pit

Projected Treatment Charges (“TCs”) and transport charges for the copper, zinc and lead concentrates were developed by a global major off-taker based on their extensive mining projects experience in Latin America. Table 6 summarizes the key terms used in the Feasibility Study.

Table 6: Off Site Costs – Copper, Zinc and Lead concentrates

The concentrates are of good quality, with strong precious metals credits. A minor penalty for the combined zinc and lead grade in the copper concentrate was applied, at a rate of US$3.00 / dmt for every 1% over 4%. Life-of-mine penalties for the copper concentrates were calculated to be approximately US$4.7M, which could be decreased further with future blending strategies. Concentrates will be trucked approximately 275 km to the deep-water port at Posorja, southwest of Guayaquil, primarily on the Pan American highway, and shipped internationally.

Taxes and Royalties

Taxes and royalties that are presented in the Feasibility Study were based on Ecuadorian legislated tax rates and reviewed by an independent tax consultant. Improvements may be possible based on final terms agreed upon with the Ecuadorian government within the exploitation agreement. Based on long-term prices assumed in the Feasibility Study, life-of-mine royalties to the government are estimated to be $59M, value added taxes (“VAT”) are estimated to be $65M, while additional state taxes of $105M and income taxes of $147M – for an estimated total of $376M in taxes and royalties to the government of Ecuador over the 10 year mine life. An additional 2% NSR royalty is also payable to Altius Minerals Corporation. The VAT portion of the taxes are assumed to be refundable against exported concentrate revenues.

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