New Pacific Metals Corp. reported the results of the Preliminary Economic Assessment (PEA) study of its 100% owned Silver Sand Project in Potosi Department, Bolivia. Highlights from the PEA, with a base case silver price of $22.50/oz are as: Pre-Tax NPV (5%) of $1.1 billion and an IRR of 52%, and a Post-Tax NPV (5%) of $726 million and an IRR of 39%; Using a +/- 20% sensitivity analysis for silver price, Post-Tax NPV (5%) of $1,054 million and 50% IRR at $27/oz silver and a Post-Tax NPV (5%) of $398 million and 26% IRR at $18/oz silver; 14-year mine life producing approximately 171 million ounces total payable silver metal; Initial capital costs of $308 million, which includes $52 million in contingency costs; Life-of-mine (LOM) sustaining capital costs total $20 million; Average LOM operating cash cost of $8.45/oz and total all-in sustaining cost of $10.42/oz silver; Annual payable metal production exceeds 15 million ounces of silver in years one through four, with LOM average annual payable metal production exceeding 12 million ounces of silver.

Mining: The Silver Sand Project comprises four open pit mining areas — the Main pit, two small northern satellite pits (NP1 & NP2), and one eastern satellite pit (EP1). Open pit mining entails conventional drilling and blasting, with loading by excavator and ore haulage by trucks to a crusher or to the run-of-mine (ROM) pad. Waste is hauled to external and in-pit waste rock dumps.

Open-pit mining is anticipated to commence in Year -1, with 18.5 million tonnes of pre-production mining. Peak open-pit production will be 18.9 Mt of total material in Year 1. A total of 55.4 Mt of mineralized rock is anticipated to be produced from open pit operations over the 14-year mine life. Processing & Metallurgy: A metallurgical program was completed at SGS Lima during 2020 to build on earlier testwork and to support the PEA.

Several process flowsheet options were evaluated for the PEA, including heap leaching, froth flotation and cyanidation. The selected PEA flowsheet consists of comminution by crushing followed by semi-autogenous and ball milling, leaching with cyanide over a period of 48 hours, counter current decantation and zinc precipitation (Merrill Crowe). Zinc precipitates from Merrill Crowe will be treated for copper removal, and then smelted to produce a silver doré product.

Tailings will be thickened and then filtered with pressure filters before being conveyed to the nearby dry stack tailings facility. The processing plant will operate year-round at a rate of approximately 4 million tonnes per annum and will achieve full throughput by Year 1. The average LOM feed grade is projected to be 107 g/t Ag. Process water will primarily be sourced from a surface water dam adjacent to the process plant, supplemented by runoff from the waste rock and tailings storage facility.

This PEA study confirms New Pacific's commitment to enhancing value at the Silver Sand Project through engineering studies and resource definition. It has highlighted several key areas that can provide significant key opportunities to further enhance the value of the Silver Sand Project. These opportunities include: Infill drilling to upgrade areas of high-grade mineralization within the current inferred resource area; Additional drilling around the current Mineral Resources, where the deposit remains open at depth; Detailed drilling of other known mineralized prospects beyond the areas with known Mineral Resources so as include these in future estimations; Further metallurgical studies to improve grinding, leaching and CCD parameters under variable operating conditions; Completing a dilution study in the next stage of study to ascertain the anticipated mining dilution and ore recovery in combination with the most appropriate mining fleet and associated costs; Further work to identify alternative dump locations with short hauls i.e., backfill in-pit dumps, and dump in a nearby gully.

Further work should be undertaken to develop a detailed waste and tailings disposal plan.