2019 News

VANCOUVER, BRITISH COLUMBIA, MAY 2nd, 2019 - SALAZAR RESOURCES LIMITED (TSX‑V: SRL) (Frankfurt: CCG.F) (“Salazar” or the "Company") Mr. Fredy Salazar, President and CEO, is pleased to announce a new Mineral Resource estimate and results of a Preliminary Economic Assessment (“PEA”) for the El Domo volcanogenic massive sulphide deposit (“El Domo”), located within the Curipamba Project, Bolivar State, Ecuador which will be summarized in an independent National Instrument (“NI”) 43-101 Technical Report within 45 days. The Company has an option agreement with Adventus Zinc Corporation (“Adventus”) whereby Adventus is earning a 75% interest in the property and the Company retains a 25% interest.


Table 1: PEA Results Summary


PEA Base 

-10% Pricing

+10% Pricing


Spot Prices 
as of April 
30, 2019

After-Tax NPV ($M, 8% discount rate)(2)






After-Tax IRR (%)(2)






First 6 Years of After-Tax Cashflow ($M)






Initial Capital Cost ($M, incl. refundable VAT)(4)


Life of Mine ("LOM") Sustaining Capital Cost ($M)


Total Capital Cost ($M)


C1 Cost ($/lb CuEq, see production below)(5)






Payback Period (years)

Approximately 2 years

Nominal processing capacity (tpd)


LOM CuEq Head Grade over 15 years


Average annual payable production (Years 1 - 14)

Cu = 8,495 t
Au =24,433 oz
Zn = 10,831 t
Ag = 558,160 oz
Pb = 564 t
CuEq = ~19,000 t

Metal prices assumed

$3.15/lb Cu

$1,350/oz Au

$1.15/lb Zn

$18.00/oz Ag

$1.00/lb Pb

$2.84/lb Cu

$1,215/oz Au

$1.04/lb Zn

$16.20/oz Ag

$0.90/lb Pb

$3.47/lb Cu

$1,485/oz Au

$1.27/lb Zn

$19.80/oz Ag

$1.10/lb Pb

$3.38/lb Cu

$1,436/oz Au

$1.22/lb Zn

$19.80/oz Ag

$1.00/lb Pb

$2.91/lb Cu

$1,285/oz Au

$1.33/lb Zn

$14.91/oz Ag

$0.88/lb Pb



Unless otherwise noted in this news release, all currencies are reported in US dollars on a 100% basis


Assumes an 18-month construction period as the basis for the internal rate of return ("IRR") and net present value ("NPV") calculations


Long-term, consensus metal forecasting has been provided by RPA


Capital cost estimates used for the PEA are based off benchmarking and not engineering design


C1 Cost is net of direct operating costs and royalties

The economic analysis contained in this news release is based, in part, on Inferred Mineral Resources, and is preliminary in nature.  Inferred Mineral Resources are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves.  There is no certainty that economic forecasts on which this PEA is based will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

President and CEO of Salazar, Mr. Fredy Salazar, stated "The PEA announced today represents the most significant milestone in the Company’s development to date. From initial discovery by Salazar Resources geologists to the recent agreements with Adventus Zinc Corporation, this is the culmination of a long journey. The El Domo resource at 4.9% copper equivalent is almost an order of magnitude higher than average global copper grades, which is reflected in the compelling set of economics as defined in today’s PEA, and the project is located in an increasingly pro-mining jurisdiction, with good infrastructure.

The PEA shows that El Domo can be a low-cost supplier of copper gold and zinc, generates cash flows after taxation of US$449 million over the initial six years of production, and delivers an IRR of 40% with a payback of less than two years. I would like to thank the entire El Domo team, Salazar Resources employees, independent consultants and our partner Adventus Zinc Corporation, who have worked extremely hard to deliver this high-quality study. Salazar Resources is entering a new and exciting phase of its journey as a funded explorer, with a 25% stake in a great project advancing towards production.”

PEA Contributors

The following companies have undertaken focused work programs since July 2018 that have been referenced in preparation of the PEA for El Domo:

  • RPA – Lead author and Independent Qualified Person (“IQP”), Mineral Resource estimation, open pit and underground mine design, mine plan, and mine layout
  • Klohn Crippen Berger – Tailings storage and waste rock facilities
  • Knight Piésold Ltd. – Social and environmental matters, access roads and power transmission line
  • Base Metallurgical Laboratory Ltd. – Metallurgical laboratory work
  • Independent Mining Consultants, Inc. – Open pit production throughput analysis

Geology and Updated Mineral Resource Estimate

El Domo, located within the Curipamba project, Bolivar and Los Rios Provinces, Ecuador is hosted in a juvenile volcanic-magmatic arc of the Paleocene-Eocene Macuchi Terrane that is known to host at least two other volcanogenic massive sulphide deposits. Sulphide mineralization at El Domo is principally located at the contact between a felsic volcanic dome and overlying volcaniclastic strata and is generally flat lying. It has been traced for approximately 800 m in a north-south direction and between 350 m and 500 m east-west. 

An update to the Mineral Resource estimate for El Domo has been completed as part of the PEA to include all recent infill drilling completed in 2018. The updated, open pit constrained, Mineral Resource estimate for El Domo has an effective date of May 2, 2019 and is supported on information provided from 309 core boreholes, totaling 60,449 metres, completed between 2007 and 2018. As seen in Tables 2a to 2c, Measured Mineral Resources for El Domo total 1.4 million tonnes grading 1.92% copper, 0.37% lead, 3.52% zinc, 3.75 g/t gold and 58 g/t silver. The Indicated Mineral Resources for El Domo total 7.5 million tonnes grading 2.02% copper, 0.26% lead, 2.81% zinc, 2.33g/t gold and 49 g/t silver. The Inferred Mineral Resources for El Domo total 1.3 million tonnes grading 1.52% copper, 0.20% lead, 2.25% zinc, 1.83 g/t gold and 42 g/t silver.

Table 2a.  Total Mineral Resource for El Domo




Contained Metal































































Table 2b.  Pit Constrained Mineral Resource for El Domo




Contained Metal































































Table 2c.  Underground Mineral Resource for El Domo


Tonnes (Mt)


Contained Metal






































Notes for Table 2a, 2b, and 2c:


Mineral Resources in these tables are effective as of as of May 2, 2019


CIM (2014) definitions were followed for Mineral Resources


A nominal minimum thickness of two metres was applied to the Mineral Resource wireframes


Bulk density assigned on a block per block basis using the correlation between measured density values and base metal grade


Mineral Resources are reported above a cut-off NSR value of US$25 per tonne for potential open-pit Mineral Resources and US$100 per tonne for potential underground Mineral Resources


NSR value is based on estimated metallurgical recoveries, assumed metal prices and smelter terms; which include payable factors treatment charges, penalties, and refining charges


Metal price assumptions were: US$3.15/lb Cu, US$1.00/lb Pb, US$1.15/lb Zn, US$1,350/oz Au and US$18/oz Ag


Metallurgical recoveries assumptions were based on three mineral types defined by the metal ratio Cu/(Pb+Zn):


Zinc Mineral (Cu/(Pb+Zn)<0.33): 84% Cu, 84% Pb, 95% Zn, 51% Au and 71% Ag

Mixed Cu/Zn Mineral (0.33≤Cu/(Pb+Zn)≤3.0): 88% Cu, 85% Pb, 96% Zn, 66% Au and 69% Ag

Copper Mineral (Cu/(Pb+Zn)>3.0): 88% Cu, 69% Pb, 73% Zn, 27% Au and 50% Ag


NSR factors were also based on the metal ratio Cu/(Zn+Pb):

Zinc Mineral (Cu/(Pb+Zn)<0.33): 29.94 US$/% Cu, 9.17 US$/% Pb, 11.52 US$/% Zn, 14.17 US$/g Au and 0.27 US$/g Ag

Mixed Cu/Zn Mineral (0.33≤Cu/(Pb+Zn)≤3.0): 44.20 US$/% Cu, 11.34 US$/% Zn, 22.90 US$/g Au and 0.27 US$/g Ag

Copper Mineral (Cu/(Pb+Zn)>3.0): 46.27 US$/% Cu, 6.86 US$/g Au and 0.19 US$/g Ag


Numbers may not add due to rounding

The updated Mineral Resource estimate possesses a similar footprint to the previous Mineral Resource estimate announced by Adventus Zinc Corporation (see January 31, 2018 news release), but infill drilling in 2018 resulted in the upgrading of portions of the Mineral Resource from previously classified Indicated to Measured and Inferred to Indicated categories. The new Mineral Resource estimate has a total tonnage distribution of approximately 14%, 73%, and 13% classified in the Measured, Indicated and Inferred categories, respectively, which includes the Measured category for the first time. The increases in average grades in the Measured and Indicated Mineral Resource categories of approximately 24% for copper, 10% for gold, and 21% for zinc are the result of higher NSR cut-off values, the improved geological model and related grade estimation domains, and changes to capping levels.

Mining and Processing

The principal mining method proposed in the PEA is open-pit mining at 1,750 tonnes per day ("tpd") throughput at the mill that can be conventionally extracted using trucks, loaders and backhoes. The open pit mine design consists of a single pit with a mining sequence optimized through four main phases to maximize grade, reduce stripping ratios, and maintain the mill at optimum capacity for production of saleable concentrates of copper, zinc and possibly lead.

Mining is expected to begin with eighteen months of pre-production waste mining on steep terrain. Mining operations consist of four open pit phases and underground operation. Mining equipment in the open pit is expected to include 40-tonne haul trucks, 3.8 m3 backhoe loaders and 114 mm blasthole production drills.  Additional support heavy equipment is expected to include dozers, graders, and water trucks.

Underground mining operations would start in year 10 of the production schedule proposed in the PEA at a target rate of 1,000 tpd, using variations of room and pillar methods. Access to the mine would be from a single decline that will transport run of mine ("ROM") to the surface facilities. In conjunction with the owner's development team, it is conceived that a contractor would be engaged for the initial development of the mine. Mining equipment selection is based on production requirements and stope dimensions. Under the PEA mine plan, ventilation is expected to be established in phases as mine development progresses to facilitate mining through the various zones of mineralization.

Metallurgical test-work had been previously conducted between 2009 and 2014 on composite samples taken from both drill core and assay sample reject material. In 2018, Adventus funded a new metallurgical test-work program designed to provide indicative metallurgical performance that could be expected during the production of saleable concentrates.  

Conventional rougher and cleaner flotation testing was completed on the composites and the selected optimum metallurgical settings for the composites were taken to locked cycle tests, which simulates the metal recovery process. Locked cycle testing indicates the expected metallurgical performance from the test materials that could result in the production of commercial concentrate material. Details of the most recent metallurgical test results can be reviewed in the April 15, 2019 news release.

Net recoveries to copper, zinc, and lead concentrates total 80.7% for copper, 38.3% for lead, 78.5% for zinc, 57.5% for gold, and 69.0% for silver. The net recoveries only include metals that are payable in their respective concentrates.

The process plant is expected to ramp-up operations over a six-month period after completion of construction to a steady state throughput rate of 612,500 tonnes/year (1,750 tpd). The processing plant design includes a comminution circuit consisting of a crushing circuit followed by ball milling, and a sequential flotation circuit producing copper, zinc, and lead concentrates.

The tailings storage and waste rock facilities proposed for construction and development at El Domo are conventional in nature for the base case scenario and both facilities are located on owned concessions close to mine infrastructure. Klohn Crippen Berger completed an analysis of nine different tailings storage locations, with various designs and technologies in order to arrive at the preferred location. The tailings storage facility is designed for a 1 in 10,000-year earthquake event, with similar international design standards for storms and floods.

The PEA proposed open pit production totals 7.5 M tonnes, which has been estimated through the application of a $25/t NSR cut-off value to the open pit constrained Mineral Resource estimate and then allowing for a dilution factor, mining recovery and design losses. The open pit mine life, including pre-stripping, is estimated at approximately 16 years, with a total strip ratio of 6.3.

Potential underground production totals 1.2 M tonnes, which has been estimated through the application of a $100/t NSR cut-off value to the underground constrained Mineral Resource estimate and then allowing for a dilution factor, and mining recovery design losses. The underground mine life is estimated at approximately 6 years, with additional time required for underground access development and infrastructure construction.

Initial Capital Costs

The initial capital expenditures for the project as estimated by RPA is 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 $33.0 M or 25% for the PEA (excluding VAT). Adventus believes that El Domo will benefit from established infrastructure in Ecuador, noting that El Domo is only 150 km by road to the major port city of Guayaquil.

Table 4: Initial Capital Cost Estimates


(Initial Capital, $M)

Contractor Mining








EPCM / Owners Cost / Indirect Costs


Contingency (25%)


VAT (12%, which is a credit against taxes once exporting)


Total (100% basis)




Totals do not necessarily equal the sum of the components due to rounding adjustments


Direct process plant capital costs are based on benchmarking and not from engineering design

Sustaining Capital Costs

RPA estimates the LOM sustaining capital for El Domo to be $105 M, which is expected to be funded by operating cash flows. The sustaining capital estimate is primarily for the expansion of the tailings storage facility, development of the underground mine, and reclamation and closure. Adventus has assumed $10 M at the end of LOM, and that has been credited against $34 M in closure and reclamation costs.

On Site Direct Operating Costs ("Opex")

The estimated Opex for El Domo is $54.80/t of mill feed – see Table 5. RPA has estimated the Opex based on industry benchmarking, proprietary information and its professional experience.

Table 5:  On Site Operating Cost for Base Case


Cost ($/t)


$3.15/tonne moved for the open pit and $71.50/tonne for processed underground mining


$21.80/tonne processed

G & A

$4.74/tonne processed


$54.80/tonne processed for the life of mine (blended open pit and underground mining cost)



Totals do not necessarily equal the sum of the components due to rounding adjustments

Off-Site Costs (Concentrate Transport, Treatment, and Refining Charges)

Projected Treatment Charges ("TCs") and transport charges for the copper, zinc and lead concentrates were developed by RPA based on their extensive experience on engineering projects in Latin America.  

Adventus anticipates that the copper, zinc, and lead concentrates are likely to be sold primarily to smelters in Asia. Off-site costs are comprised of freight charges (highway and ocean), port handling fees, and smelter treatment and refining charges – see Table 6.

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


Treatment Charges

Silver refining


Gold refining


Copper TCs


Copper RCs


Lead TCs


Zinc TCs



$98/t conc.

The concentrates are of good quality, with strong precious metals credits. A minor penalty for the zinc grade over 4% in the copper concentrate was assumed, at a rate of US$2 for every 1% over 4% zinc. Life-of-mine penalties for the copper concentrates are assumed at approximately US$3.3M, which could be decreased with future blending strategies.


Income and other taxes, and royalties that are presented in the PEA were based on Ecuadorian legislated tax rates and do not reflect any tax planning opportunities identified by Adventus, RPA, or third-party tax advisors. LOM royalties to the government are estimated to be $63M, value added taxes ("VAT") are estimated to be $34M, while additional profit sharing of $73M and income taxes of $83M project an estimated total of greater than $253M in royalties and taxes to the government of Ecuador over the 15 year mine life. A 2% NSR royalty is payable to Altius Minerals Corporation. The VAT is assumed as refundable if the concentrates are exported internationally.


The major infrastructure items considered and costed in the PEA 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. Major infrastructure items include, but are not limited to the following:

  • Power Supply: It is assumed that El Domo will connect to the Ecuadorian power grid along existing road access and a new mine access road based on work completed by Knight Piésold in early 2019. RPA has benchmarked and estimated the cost for power at $0.11/kWh
  • Road Access: Access to the project site is planned to use both new and existing road networks based off work completed by Knight Piésold in 2019.  A new 12.5 km access road is expected to connect the project site to the existing road network. Secondary access roads to El Domo will also be maintained
  • Mine haul road access for waste and feed to the mill that can accommodate 40-tonne trucks
  • Mine facilities including but not limited to buildings for maintenance, warehousing, administration, laboratories, security, first aid, explosive storage, and fuel storage
  • Mill and process plant including crushing, grinding, and flotation based on detailed metallurgical work done by Base Metallurgical Laboratories Ltd. under the direction of RPA
  • Water supply and management systems
  • Lined tailings storage facility and waste rock storage pads leveraging off studies completed by Klohn Crippen Berger in early 2019

Environmental and Community Matters

Knight Piésold has reviewed the work completed at El Domo to date and concluded that the ongoing environmental monitoring and community engagement programs have provided appropriate support to the project. All exploration permits with the Ecuadorian Ministry of Environment are in good standing. 

Knight Piésold has subsequently been contracted to prepare a study plan to complete the Environmental Impact Assessment and environmental permitting to Ecuadorian and international standards. Baseline studies are underway and include geosciences, climate and water, terrestrial biota, the human environment, and natural and cultural heritage. An enhanced program to support mine development will commence in the second quarter of 2019.

Opportunities and Future Work

RPA and the Company have identified several areas and opportunities that may provide significant costs savings and improved economics for the project. Post-PEA the Company will embark on additional technical work and trade-off engineering studies to better position and further de-risk the project, including but not limited to the following:


  • Optimization of the production schedule, including transition between the open-pit and the underground mining operations
  • Optimization of the open-pit and underground designs through collection of additional geomechanical information
  • Further work to increase confidence in the Mineral Resource and lead to the definition of a Mineral Reserve
  • Detailed equipment costing to determine potential discounts to list price for all major components, as well as review purchase versus leasing options for mining heavy equipment
  • Back-filling of waste rock into the open pit

Milling and Metallurgy

  • Additional metallurgical work to optimize results from the mixed and copper geometallurgical domains and continue research on the optimum grind size, analyze recoveries of the various metals and the effects of the higher grade coming from the mineral sorters on metal recoveries
  • Complete metallurgical test-work on the zinc geometallurgical domain through more detailed test-work and optimization
  • Optimize reagents to reduce costs and improve metallurgy
  • Investigate the potential for a gold recovery circuit from a pyrite concentrate not currently in the PEA
  • Investigate ore blending as an option to simplify the three geometallurgical domains and find efficiencies in process design

Tailings Storage and Waste Rock Facilities

  • Detailed analysis of tailings storage and waste rock storage facilities for an integrated waste management plan and design to reduce overall costs


  • Construction camp location, and a trade-off study between at site accommodation versus daily commutes to the project from local communities
  • Investigate regional quarry sites and quality of quarry material for construction purposes, notably the tailing storage facility
  • Water supply for the project site, and a trade-off study between a constructed reservoir with project infrastructure or a water pipeline from a local source
  • Power sources for the project site, including a trade-off study between diesel generators as part of the project infrastructure or a power transmission line that links to the Ecuadorian power grid

As a requirement of the earn-in agreement with Salazar, Adventus aims to commission and commence a detailed Feasibility Study later in 2019 (see September 14, 2017 news release). There is no assurance that the results of a Feasibility Study will recommend proceeding with a development project on El Domo, and any recommendation to proceed with development may differ significantly from the scope and design recommended in this PEA.

Changes to the mine plan and mine design that may be recommended in the Feasibility Study, if approved and implemented, could impact the construction schedule, capital and operating costs, profitability and cash flows and timeline to production, the impact of which cannot be quantified at this time. As a result, there are additional uncertainties with respect to the size and grade of the Mineral Resources that may become Mineral Reserves and that will serve as the basis for the Feasibility Study, the extent of capital and operating costs, mineral recoveries and financial viability.

In addition, Adventus will continue to conduct exploration activities with Salazar within the 21,500-hectare Curipamba project which encompasses El Domo. The objective of continuing regional exploration is to develop and assess targets that could further maximize Adventus' flexibility with respect to future development decisions on the El Domo, Curipamba project.

Additional Considerations Related to the PEA

Approximately 5% of the tonnage from the open-pit constrained Mineral Resource and 24% of the tonnage from the underground constrained Mineral Resource that forms the basis of the PEA is derived from Inferred Mineral Resources. The estimated costs in this PEA are subject to an estimated margin of error of plus or minus 30-35%.

Investors should be cautioned that there is no guarantee that the future construction and development of El Domo will be completed in accordance with the 2019 PEA results set forward in this news release. There is no certainty that production will begin, or that operating capital, or that financial results will be consistent with the 2019 PEA.

Technical Information and Quality Control & Quality Assurance ("QAQC")

The Curipamba project work program is being managed and reviewed by Vice President Exploration, Jason Dunning, M.Sc., P.Geo., a Qualified Person within the meaning of NI 43-101. Salazar staff collect and process samples that are securely sealed and shipped to Bureau Veritas ("BV") in Quito for sample preparation that includes crushing and milling to prepare pulps that are then split for shipment to their facility in Lima, Peru for analysis.

All assay data have undergone internal validation of QAQC; noting there is an established sampling control program with blind insertion of assay blanks, certified industry standards and sample duplicates for the Curipamba project. A QAQC program is also in place at BV and includes insertion of blanks, standards and duplicate reanalysis of selected samples. BV's quality system complies with the requirements for the International Standards ISO 9001:2000 and ISO 17025: 1999. At BV, gold is analyzed by classical fire assay techniques with an ICP-AES finish, and both silver and base metals are analyzed by a 44-element aqua regia ICP-AES technique. Overlimit protocols are in place for gold, silver, copper, lead, and zinc.

Qualified Persons

The following IQPs will co-author the technical report that will be based on the PEA. These IQPs have approved the information in this news release that pertain to the sections of the PEA technical report that they are responsible for.

  • Geology: David Ross, P.Geo., RPA
  • Metallurgy and Processing: Avakash Patel, P.Eng., RPA
  • Mineral Resource: Dorota El Rassi, P.Eng., RPA
  • Mining: Hugo Miranda, P.Eng., RPA
  • Infrastructure and Economic Evaluation: Torben Jensen, P.Eng., RPA
  • Environmental & Community: Ken Embree, P.Eng., Knight Piésold


Each of the individuals above are IQPs for the purposes of NI 43-101. All scientific and technical information in this press release in respect of El Domo and or the PEA is based on information prepared by or under the supervision of those individuals. The Mineral Resource estimate in this news release has been classified in accordance with CIM Definition Standards – For Mineral Resources and Mineral Reserves (May 14, 2014). 

In accordance with NI 43-101, a Technical Report will be filed on SEDAR within 45 days of the disclosure of this news release. The technical and scientific information of this news release has been reviewed and approved as accurate by Mr. Jason Dunning, M.Sc., P.Geo., Vice President Exploration for Adventus, a non-Independent Qualified Person, as defined by NI 43-101.


" Fredy Salazar "

Fredy Salazar , 
President & CEO

Fredy Salazar
Salazar Resources (Chief Executive Officer)
Tel: +593 (0) 99 733 6152

Merlin Marr-Johnson
Salazar Resources (VP Corporate Development)
Tel: +44 (0) 7803 712 280

Salazar Resources
Investor Relations

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

This press release contains "forward-looking information" within the meaning of applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as "believes", "anticipates", "expects", "is expected", "scheduled", "estimates", "pending", "intends", "plans", "forecasts", "targets", or "hopes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "will", "should" "might", "will be taken", or "occur" and similar expressions) are not statements of historical fact and may be forward-looking information.

Forward-looking information herein includes, but is not limited to, statements that address activities, events or developments that Salazar expect or anticipate will or may occur in the future, such as the expected timing of the feasibility study for the Curipamba VMS discovery. Although Salazar has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Salazar does not undertake to update any forward-looking information except in accordance with applicable securities laws.

Sign up for updates

©2024Salazar Resources Ltd.
All rights reserved.

Subscribe to our Email List