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News & Media

Cerro de Pasco Resources Successfully Completes First Full Year of Production

CDPR Reports Fourth Quarter and Full Year Results and Provides 2023 Guidance

 

MONTRÉAL, QUÉBEC, CANADA / May 1, 2023/ Cerro de Pasco Resources Inc. (CSE: CDPR) (OTCPK: GPPRF) (Frankfurt: N8HP) (“CDPR,” or the “Company”) is pleased to announce selected financial information and production results for the fourth quarter and year ended December 31, 2022.  The Company’s consolidated financial statements for the year ended December 31, 2022, and Management Discussion and Analysis (“MD&A”) thereon can be viewed under the Company’s profile at www.sedar.com. Production results are from the Company’s wholly owned Santander Mine (“Santander”), located in Peru. All amounts are in U.S. dollars, unless otherwise noted.

2022 Highlights

Q4 2022 Highlights

Guy Goulet, CDPR’s CEO commented, “In the fourth quarter, we achieved our year-end goal to stabilize operations at the Santander mine by delivering strong operating performance and meeting our full year 2022 Guidance. Our committed investment in the operation has transformed Santander from an operation that was expected to wind-down in March of 2022, to a future multi-year operation.”

Jorge Lozano, CDPR's COO commented “In 2023, our focus is to continue to establish our operations track record, fast-track our cost optimization plans and construction of key infrastructure projects necessary for the Pipe project which we believe will unlock the full value of the Santander mine. Following the independent validation demonstrated in our PEA Study on the Santander Pipe, the Company is in advanced discussions with different institutions and is confident in its ability to finance the project.”

Summary of Operating Results at Santander

    Q1' 22 Q2' 22 Q3' 22 Q4' 22 Full Year
Production            
Ore Mined t 92,602 95,277 153,527 189,139 530,545
Ore Milled t 94,918 94,207 155,270 189,167 533,562
Zn Head Grade  % 4.30 3.30 3.70 3.11 3.53
Pb Head Grade  % 0.20 0.30 0.20 0.18 0.22
Ag Head Grade oz/t         0.56 0.50 0.44 0.49 0.48
Zn Recovery  % 95.30 94.80 94.00 94.50 94.59
Pb Recovery  % 75.10 71.10 70.70 61.43 68.84
Ag recovery  % 50.30 47.30 47.10 38.76 44.65
Zn Payable Production Mlbs 7.20 5.50 9.90 10.10 32.70
Pb Payable Production Mlbs 0.30 0.40 0.80 0.44 1.94
Ag Payable Production Moz 0.02 0.02 0.05 0.03 0.12
Zn Head Grade  % 48.70 48.40 47.70 47.15 47.87
Pb Head Grade  % 48.50 50.50 50.30 51.60 50.35
Sales            
Zn Payable sold Mlbs 7.50 4.90 9.70 9.60 31.70
Pb Payable sold Mlbs 0.20 0.40 0.80 0.18 1.58
Ag Payable sold Moz 0.02 0.02 0.05 0.03 0.12
             
Finance            
Revenues, net (000)s $ 14,581 6,891 9,221 9,898 40,591
Cost of Goods Sold (000)s $ -9,725 -8,327 -10,431 -12,562 -41,045
Gross Profit (000)s $ 4,856 -1,436 -1,210 -2,664 -454
Sales and Admin Expenses (000s) $ -584 -689 -638 -681 -2,592
Adjusted EBITDA(w) (000)s $ 4,272 -2,125 -1,848 -3,345 -3,046
Other income (expense)   -18 -898 -75 -5,459 -6,450
EBITDA (1) (000)s $ 4,254 -3,023 -1,923 -5,794 -6,486
Depreciation (000)s $ 262 265 542 493 1,562
EBIT (1) (000)s $ 4,516 -2,758 -1,381 -5,301 -4,924
             
    Q1' 22 Q2' 22 Q3' 22 Q4' 22 Full Year
Mine Operating Expenses (000)s $ 9,517 10,390 11,369 11,334 42,610
Smelting and refining (000)s $ 2,459 1,990 4,157 4,103 12,709
Distribution (000)s $ 217 180 315 304 1,016
Royalties (000)s $ 27 25 62 29 143
Less: By-product revenues (000)s $ -678 -717 -996 -991 -3,382
C1 total costs(4) (000)s $ 11,542 11,868 14,907 14,779 53,096
Sustaining CAPEX (000)s $ 198 1,235 2,533 2,155 6,121
Lease Payments (000)s $ 0 0 0 0 0
AISC total costs(5) (000)s $ 11,740 13,103 17,440 16,934 59,217
Pounds of zinc payable produced Mlbs 7.2 5.5 9.9 10.1 32.7
C1 Cash Cost (4) per pound $ 1.60 2.16 1.51 1.46 1.62
All-in Sustaining Cost per pound(5) $ 1.60 2.38 1.76 1.68 1.81

 

2022 Santander Development and Exploration Highlights

Santander Mineral Resource Inventory

Magistral

The Mineral Resources Inventory for the Magistral Mine was declared in CDPR´s technical Report NI 43-101 by DRA Global in 2021. This report was updated in 2022 by DRA Global-Information Memorandum Report as of the 9th of September of 2022.:

Magistral Mineral Resources
Category Tonnage (kt) Zn (%) Pb (%) Ag (g/t) Cu (%)
Measured 666 4.29 0.33 19.5 0.05
Indicated 1,789 3.99 0.18 18.1 0.06
Measured + Indicated 2,454 4.07 0.22 18.5 0.06
Inferred 1,248 3.52 0.12 16.1 0.06
 
  1. All Mineral Resources have been estimated in accordance with the CIM Definition Standards. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
  2. The Magistral Underground Mine Mineral Resource estimate is reported based on a net smelter return cut-off grade of $40/tonne with metal prices of: $3,000/tonne for Zn, $2,200/tonne for Pb, and $ 25/Oz for Ag.
  3. For Magistral: NSR = (16.7 x %Zn) + (11.9 x %Pb) + (0.41 x g/tAg), assuming recoveries of 90% for Zn, 75% for Pb and 55% for Ag.
  4. The mine Geology Department has prepared the Santander Magistral Underground Mine Mineral Resource model. Qualified Person, Mr. Graeme Lyall (FAusIMM), DRA independent Resource geology consultant, has validated the resource with adjustments effective September 09, 2022.

Santander Pipe

The Mineral Resources Inventory for the Pipe Project effective date of the report declared in Preliminary Economic Assessment (DRA, 2023) as of the 31st of January of 2023:

Pipe Project Mineral Resources
Category Tonnage (kt) Zn (%) Pb (%) Ag (g/t) Cu (%)
Measured  -  -
Indicated 3,225 6.94 0.017 13.5 0.17
Measured + Indicated 3,225 6.94 0.017 13.5 0.17
Inferred 1,779 5.95 0.013 7.9 0.15
  1. All Mineral Resources have been estimated in accordance with the CIM Definition Standards. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
  2. The Santander Pipe Underground Deposit Mineral Resource estimate is reported based on net smelter return cut-off grade of $40/tonne with metal prices of $3,000/tonne for Zn, $2,200/tonne for Pb, $9,300/tonne for Cu, and $25/Oz for Ag.
  3. For Santander Pipe: NSR = (17.5 x %Zn) + (11.1 x %Pb) + (40.8 x %Cu) + (0.37 x g/tAg), assuming recoveries of 90% for Zn, 70% for Pb, 60% for Cu and 50% for Ag.
  4. The mine Geology Department has prepared the Santander Pipe Underground Deposit Mineral Resource Model. Qualified Person, Mr. Graeme Lyall (FAusIMM), DRA independent Resource geology consultant, has validated the resource with adjustments effective January 31, 2023.

2023 Production Guidance & Outlook

  Units Guidance 2023
Payable production of ZnEq* (000)s lbs 41,661 – 55,365
Payable production of Zinc (000)s lbs 39,182 – 52,071
Payable production of Lead (000)s lbs 1,284 – 1,707
Payable production of Silver (000)s oz 106 – 141
C1 Cost $/lb Zn 1.55 – 1.41
AISC Cost $/lb Zn 2.20 – 2.00
Concentrate Zinc dmt 39,926 – 50,494
  1. Cash Costs calculated on a by-product basis measured in zinc equivalent unit pounds. Zinc equivalent calculated by converting by-product lead and silver units equivalent to a Zinc unit by proportionally weighted unit value of by-product to the price value of each metal.
  2. AISC costs reflect the sustaining capex required at Santander, such as tailings expansion, pumping & power infrastructure, and development in preparation for Pipe production.
  3. Prices considered are $1.51/lb for zinc, $1.01/lb for lead and $23/oz for silver.

The Santander Advantage

The operating assets that Cerro de Pasco Resources owns at the Santander mine are held on the books for ​approximately $9.1M having been discounted when the former operator looked to close down the operation.  As the Company works to expand the mine life and resources at Santander, it will enjoy a significant production advantage due to the potential replacement value of its operating assets and therefore avoid capex associated with building a new mill.  The assets are in first-class condition and include a 2,500 tonne per day sulfide milling and flotation plant originally commissioned in 2013, as well as buildings, communications equipment, underground infrastructure, support facilities, furniture, fixtures and other equipment. Likewise, social licenses as well as operating permits are, for the most part, already in place for future brownfield expansions. 

Positive Preliminary Economic Assessment for the Santander Mine

Consolidated Mine Plan

 

(Sources CDPR Corporate Presentation March2023)

2023 Santander Outlook

Corporate objectives for 2023

Technical Information

Mr. Jorge Lozano, MMSAQP and Chief Operating Officer for CDPR, has reviewed and approved the scientific and technical information contained in this news release. Mr. Lozano is a Qualified Person for the purposes of reporting in compliance with NI 43-101.

About Cerro de Pasco Resources

Cerro de Pasco Resources Inc. is a mining and resource management company with unparalleled knowledge of the mineral endowment in the city of Cerro de Pasco and its surroundings. Initially, the Company will unlock the useful life of the mine and extend the concession areas in its Santander mining operation, applying the highest safety, environmental, social and governance standards. The key focus of the growth for the Company is on the development of the El Metalurgista mining concession, one of the world's largest surface mineralized resources, applying the latest techniques and innovative solutions to process tailings, extract metals and convert the remaining waste into green hydrogen and derivatives.

Contact Information

Cerro de Pasco Resources Inc.
Guy Goulet, CEO
Tel.: 579 476-7000
Email: ggoulet@pascoresources.com

Forward-Looking Statements and Disclaimer

Certain information contained herein may constitute “forward-looking information” or “forward-looking statements” under Canadian securities legislation. Generally, forward-looking information can be identified by words such as "pro forma", "plans", "expects", "may", "should", "could", "will", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", or variations including negative variations thereof of such words and phrases that refer to certain actions, events or results that may, occur or be taken or achieved. Such forward-looking statements, including but not limited to statements relating to the expected development and operations of the Company and H2-SPHERE, involve risks, uncertainties and other factors which may cause the actual results to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Such factors include, among others, risks related to the exploration, development and mining operations; impacts of macroeconomic developments as well as the impact of the COVID-19 pandemic; and any material adverse effect on the business, properties and assets of the Company or H2-SPHERE. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company will not update any forward-looking statements or forward-looking information included herein, except as required by applicable securities laws.

Cautionary Note Regarding Non-IFRS Financial Performance Measures

This MD&A refers to the following non-IFRS financial performance measures: Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Earnings before interest and taxes (“EBIT”), Adjusted EBITDA, Adjusted EBIT, Adjusted Earnings per Share, Net Debt, C1 Cash Cost and All-In Sustaining Cost (“AISC”).

These measures are not recognized under IFRS as they do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. CDPR uses these measures internally to evaluate the underlying operating performance of the Company for the reporting periods presented. The use of these measures enables the Company to assess performance trends and to evaluate the results of the underlying business. CDPR understands that certain investors, and others who follow the Company’s performance, also assess performance in this way.

The Company believes that these metrics measure our performance and are useful indicators of our expected performance in future periods. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

  1. EBITDA and EBIT

EBITDA provides insight into overall business performance. This measure assists readers in understanding the ongoing cash generating potential of the business including liquidity to fund working capital, service debt, and fund capital expenditures and investment opportunities. EBITDA is profit attributable to shareholders before net finance expense, income taxes and depreciation, depletion, and amortization. EBIT is EBITDA after depreciation, depletion, and amortization. Other companies may calculate EBIT and EBITDA differently.

  1. Adjusted EBITDA, Adjusted EBIT and Adjusted Earnings per Share

Adjusted EBITDA consists of EBITDA less the impact of impairments or reversals of impairment and other non-cash and non-recurring expenses and recoveries. Adjusted EBIT consists of EBIT less the impact of impairments or reversals of impairment and other non-cash and non-recurring expenses and recoveries. These expenses and recoveries are removed from the calculation of EBITDA and EBIT as the Company does not believe they are reflective of the Company's ability to generate liquidity and its core operating results.

Adjusted Earnings per Share consists of net income or loss in the period less the impact of impairments or reversals of impairment, settlement mark-to-market, fair value (gain) loss on financial instruments, (gain) loss on foreign exchange, restructuring expenses and other income or expenses.

  1. Mine Operating Cash Flow

Mine operating Cash Flow is net income from operations adding back the net effects of changes in impairment, tax provisions, tax accruals, depreciation and amortization, non-cash changes in working capital and changes due to non-cash purchase price allocation adjustments.

  1. C1 Cash Cost

This measures the estimated cash cost to produce a pound of payable zinc. This measure includes mine operating production expenses such as mining, processing, administration, indirect charges (including surface maintenance and camp), and smelting, refining and freight, distribution, royalties, and by-product metal revenues divided by pounds of payable zinc produced. C1 Cash Cost per pound of payable zinc produced does not include depreciation, depletion, and amortization, reclamation expenses, capital sustaining and exploration expenses.

  1.  AISC

This measures the estimated cash costs to produce a pound of payable zinc plus the estimated capital sustaining costs to maintain the mine and mill. This measure includes the C1 Cash Cost per pound and capital sustaining costs divided by pounds of payable zinc produced. All-In Sustaining Cost per pound of zinc payable produced does not include depreciation, depletion, and amortization, reclamation, and exploration expenses.

  1. Non-cash or one-time items

Non-cash or one-time items include depreciation, stock-based compensation, loss or gain on derivatives, change of fair value on contingent payments and other financial assets, losses on the dissolution of subsidiaries, provisions for contingent taxes, gain on the extinguishment of debt and presumed interest on convertible and promissory notes.

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