Hello, welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for our two-day Precious Metals and Critical Minerals Conference. The next presentation of the day is from Silverco Mining. Please note, you may submit questions for the presenter at any time. You can also view a company's availability for a one-on-one meeting by clicking Book a Meeting. At this point, I'm very pleased to welcome Tara Hassan, EVP of Corporate Development of Silverco Mining, which trades on the OTCQB Venture Market under the symbol SICOF and on the TSXV under the symbol SICO. Welcome back, Tara.
Thanks so much, Greg. Joining today, here to present Silverco Mining, which is an emerging multi-asset silver producer in Mexico and an exciting story that I've been a part of for about four months now. It's a new story for the market and for the team as this was listed just back in October 2026. Excited to discuss what we've done so far. As you'd expect, standard disclaimer here with the forward-looking statements. Why Silverco? We have a vision to create a 10 million ounce per year silver equivalent producer in the next three years. What I'll walk you through here today, showcases that with these two assets, we're well on our path to reach this goal. We have two projects. The first is a producing asset in Querétaro, Mexico, which is just north of Mexico City.
It is called the La Negra Mine, this is a project that we purchased earlier this year. The second is the Cusi Mine, which will be part of a restart in Q4 of this year. We'll be exiting 2026 with two producing assets, and increasing our production through 2027. Both of these assets are in great regions of Mexico with excellent infrastructure, access to skilled labor, and also in good regional security settings. In a short amount of time, we've built a really A-level team here, and I'll walk you through that on the next slide. Importantly, these assets are low capital intensity projects. As I mentioned, La Negra is operating, and while it will require some investments and for capital injections and operational improvements, the CapEx for that and for both the restart at Cusi is quite low.
Particularly in the market that we've seen of late, we believe we're undervalued relative to peers based off what our growth trajectory is over the next 12 months. On our team, we're very lucky to have leaders from top silver success stories that we would argue are some of the top five silver stories over the last decade. We also have extensive Mexico experience. As our President, CEO, and Director, Mark Ayranto has extensive background in operations, and a history in building and leading high-performing teams. Formerly was the COO of Victoria Gold. Sean Fallis, our CFO has been involved in numerous small to mid-cap companies, including some in Mexico. Myself, I joined in Q1 of this year, off the back of the sale of SilverCrest Metals, where I was SVP Corporate Development, and that was the sale to Coeur.
I spent extensive time down in Mexico when I was part of that build and put into production story there, and eventually the sale. Victoria Avila is SVP Corporate Affairs. She joins us from JDS Energy & Mining, which is a very successful contracting and consulting business here in British Columbia. She spent a lot of time in Mexico through that role and also through her time with Scotiabank. Nico Harvey is our VP Project Development, a mining engineer with extensive experience, open pit and underground. On the board, we have Gary Brown, who is the former CFO of Wheaton Precious Metals, obviously one of the largest silver royalty stories in the space. Gregg Bush, he's about 40+ years of experience, most of that spent in Mexico, including five mine builds and operations, a metallurgical engineer, and currently the COO of Heliostar.
Tim Sorensen, who is a director but also part of the founding group that brought Cusi and brought Silverco to market. George Paspalis is on as an advisor, and I'm sure many of you would know George from his time as CEO of MAG, which was recently sold to Pan American, and also his time at Aurizon Mines, which he was part of the sale there as well. Extensive experience in Mexico between MAG, SilverCrest, JDS, Helio, Capstone, and Minefinders, and also a lot of depth of expertise in the mining business. In terms of our corporate structure, we've managed to keep it incredibly tight. We're sitting with about 54.4 million shares outstanding on the back of the recent transaction that we'll get into.
We have a strong shareholder base with Eric Sprott sitting at 11%, and then institutional and high net worth investors. Most of this was done as private rounds, the most recent round that we did was a CAD 62.5 million raise back in the end of January, early February. We still have an opportunity here to attract institutional investors that are supporting some of our silver peers, but we're out of the gates with a very strong list and always happy to have new shareholders investing in our story here. As of the end of June, we were sitting with about a CAD 400 million market cap. Obviously, the market's changed a little bit in a short amount of time, again, we'll walk you through how we think we get that valuation back up in the short term. La Negra, as I mentioned, is in Querétaro.
This is a really interesting asset as it has been an active underground operation since the 1970s. Peñoles started this project, the foundation of the project is incredibly strong. Peñoles has operated it for about 30 years and then sold it to Aurcana. There was a short period of time where it was not producing, some Mexican operators purchased it, restarted it in 2024, that's who we purchased it from. The owners have joined our management team and are actively engrossed Silverco. They're excited about what we're bringing to market. I think that speaks volumes to the future for the company. Importantly, because it has this long history, it has a well-defined metallurgy.
The mill is currently operating at about 55% of its capacity of 2,500 tons per day. We'll walk through how we increase that capacity to get it up to its full potential. As mentioned, it's all very low capital investment improvements that we need to do. A total of about CAD 15 million-CAD 20 million through the first quarter of 2027. It's a combination of things that I'll walk through, opportunities that we think are fairly straightforward to execute on. Importantly, this has a very large and underexplored land package. It's on the Sierra Gorda silver belt. This is a belt that contains, as you can see from this map, significant silver operations and discoveries. Importantly, because it did bounce around hands over the last decade or so, there has been fairly limited modern exploration over the last couple of decades here.
Just to walk you through sort of a timeline of what we're doing here, as I mentioned, we acquired this asset in Q1. It was an all-share transaction with a deferred payment that we'll make in Q1 of 2027, a contingent payment. In total, we'll end up needing to pay out only half of that contingent payment, there'll be about CAD 15 million of deferred and contingent payments in Q1 of 2027. We close the transaction in Q2 and started immediately focusing on operational improvements around mining practices and equipment availability. Through Q3 and into Q1 2027, it's really just about carrying those efforts out into greater intensity. We'll continue to focus on the mining side. We'll also be bringing in some new equipment, some spare parts. The big step change will come from the installation of a dry stack tailings facility.
For the operation itself and the restart in 2024, the team down there did a great job advancing this project. One of the biggest challenges that they've run into was access to capital markets, that's where the opportunity presented itself for us is, the team has extensive experience with North American capital markets, given our balance sheet, we're able to go in and execute on this plan. It's really three-pronged. It's improving, investing, and exploring. One of the biggest challenges that they were experiencing was a preventative maintenance program. Going in and implementing that as well as getting to the point where we can invest in spare parts to allow that program to reach its full potential, focusing on improved mining practices. We'll also publish an updated reserve and resource and a mine plan later this year.
On the investing side, as I mentioned, the biggest areas will be some equipment for expanding the underground mining fleet and that dry stack tailings facility. The dry stack will come in Q1 of 2027, that will allow us to reach commercial production to really ramp that rate up from the current capacity of about 55%, to get it up towards the 90%, 95%. On the exploration side, we've just launched a 15,000-meter drill program that's underway. The resource is open in all directions. For us, the biggest opportunity is to increase silver grades close to existing workings. We've brought in some really skilled explorationists to take a look at the project. On our team, we have Carlos Beltran, who was involved in the discovery at Panuco with Vizsla. We think there's a potential for a great CRD system here.
As I mentioned, limited, less than 20,000 m have been drilled over the last decade. For us to go in and target some of these opportunities, we think based off historic production results and also just based off historic drilling, we think there are opportunities in some areas to increase the silver grade up to two to three times. That would obviously give us an opportunity to push production up. We will, as I mentioned, come out with a study here later this year, but the goal would be to be producing at La Negra in the range of two to 2.5 million ounces silver equivalent a year, in the sub CAD 30 AISC range when we are in production. Or, sorry, when we have reached commercial production. Moving on to the second asset here, we have the Cusi mine in Chihuahua.
Importantly, this is one of the few rare true silver deposits. About 90% of revenue comes from silver. It is on the Sierra Madre Occidental belt. Many of you would be familiar with this belt. Again, lots of prolific deposits here in current operations. It is about 120 km west of Chihuahua, so again, access to that experienced labor pool, great infrastructure. It is a paved road, just so, connected to the grid. All the things that you want to see to keep costs in a great range. It has a 1,200 tons per day mill that is 40 km from the mine. Everything is permitted for a late 2026 restart.
On the Cusi side, we came out with a study earlier this year in April with a PEA that highlighted the opportunity base case silver price of about CAD 45 on average, it generated an NPV of CAD 104 million and an after-tax IRR of 95% and less than a year payback at an upside case of CAD 75 per ounce, which was more in line with where we were not too long ago, an NPV of CAD 312 million, an IRR of almost 190%, and a half a year payback. You can see the opportunity here, and we think that, beyond what was in the PEA, we have some pretty near-term opportunities to add value that I will touch on next. As I mentioned, this is one of the few projects that sits with a very high silver percentage.
Every CAD 10 per ounce of silver price movement increases the NPV by about CAD 70 million. Just looking at that base case to where we are today, you would have some upside there, and for silver to move higher and to be realizing those NPVs closer to where the upside case was. In terms of the Cusi restart, we spent the bulk of the end of 2025 and into the first part of 2026 dewatering the mine and doing underground rehabilitation. We have now brought in underground contractors. We have two local contractors, Mafresa and Renser, that have mobilized at the end of Q2 and are currently getting into beginning development mining at Promontorio and San Miguel, which are the two core areas that will form the basis of production. We are also continuing improvements at the Malpaso mill this quarter.
Q4 will produce our first concentrate, so we'll begin production mining at Promontorio and then produce that con. Throughout this period, we're carrying out a 30,000-meter 2026 exploration program that will focus on both infill and expansion. The goal would be to be hitting commercial production towards the end of the first half of 2027, so ramping those rates up to 1,200 tons per day capacity. In terms of opportunities for growth, we've had some recent news out on this program already, and it's pretty exciting. We have 30,000 meters total. It'll focus on three main areas, so Promontorio, which is where the news has been so far. We think there's some significant opportunities to add ounces within the planned mine footprint.
This is important because the PEA has already considered that capital development, and these ounces are within 25 m-50 m of existing development, which would mean the cost to bring them into mine plan would be very low and overall it's just helping your fixed costs and what your production profile can look like out of the gate. At San Miguel, we think that this is the highest potential target for growth. We get wide, high-grade zones. Importantly, this was never part of the historic Cusi project. This was some in-situ claims that we acquired after the acquisition of the project back in 2023. This is really a new target that I'll walk through, and talk about the importance of what this could mean for the project. The last would be new targets.
We're testing some new exploration concepts and some regional targets that we think have the potential to contribute ounces here as well. Just digging in on the San Miguel opportunity a little bit more. You'll see here on this map, the purple is a rhyolitic tuff, which is the main host of the mineralization. In the circles, you've got Promontorio and at Huisas, which was the site of historic mining from Cusi and that mining discontinued back in 2023 when metal prices were at a significantly different level where they are today, but did end in mineralization at Promontorio. As I mentioned, the San Miguel, which is down to the south here, that was never a part of those claims or historically, and never part of the production profile.
What you'll see is the rhyolitic tuff is thought to be cut off by the Cusi fault and historically, the view was that there was no mineralization to the east of that Cusi fault. What we've been able to demonstrate with recent drilling is that there is potential for mineralization there and potential for downthrown extensions that have been offset by that fault. At San Miguel, as I mentioned, this was never part of the historic claims. This was brought in last year when Mark was out marketing this. The view was this could get to 20 million ounces on an original resource. We put out our first resource, and it was 27 million ounces. We think that we could reach approaching double that this year and also outline potential for further growth beyond that.
Why this is an important zone is that you get very wide, good grade veins in this zone and multiple veins in areas. From a mining perspective, it allows you to build tonnage quickly and to lower your costs. I'll just show you that over this next slide. We'll get widths of 8 m- 20 m, and that just really opens up the opportunities from a mining perspective. We're really excited about what we can do at San Miguel, as well as with some of these other targets where we've had success. This is just to walk through sort of the concept of the down-throw and extensions, and that's something we'll be testing later this year with that program. In terms of catalysts, it's been an exceptionally busy period since we listed.
In 2025, we raised the money privately, we listed, we completed the 15,000-meter drill program at Cusi, dewatered Promontorio, and published our first resource. In the first half of this year, we did the raise, listed on the OTC, published our Cusi PEA and announced and closed the La Negra transaction, as well as advancing the work at Cusi to support the restart. For the remainder of the year, the focus really is on the ongoing restart programs at Cusi, the drill program, and ramping up the mine and mill. At La Negra, it's executing on these capital improvement projects, and the drill program, as well as publishing the updated resource and mine plan. 2027 onwards, it's cash flow growth, ongoing exploration, and execution of our growth strategy.
When we look at 2027, the goal would be to be exiting at a run rate of 4 million ounces - 5 million ounces silver equivalent at that sub 30 AISC. That, as I mentioned, puts us firmly on the path to get towards our 10 million- ounce goal. Within that time with these programs, we hope to be exploring opportunities for organic growth as well as considering other opportunities within the space. I don't think this would be a mining presentation if we weren't talking about how we were undervalued, especially in this market. A lot going on in this slide. Just to show that prior to the La Negra transaction, this is kind of where we would've been sitting. With La Negra, we've obviously brought on more ounces.
Our EV per ounce on a forecasted production basis sits significantly below where our peers in this 5 million- ounce per year producer status sits. We think there's an excellent re-rate opportunity for us there. Obviously, it's up to us to execute on that. Certainly think that, because we're a new story here, there's an opportunity to get in at this stage and participate in that re-rate. We look forward to delivering more news to showcase what we're able to do at both projects. That wraps it up. Here's sort of our contact info. We're always happy to take investor calls or investor emails and to chat more about Mexico. I will move over to Q&A now. The first question is, we've now closed the Nuevo La Negra deal and confirmed the mine is already cash flowing.
What are you seeing early on that the prior owner simply wasn't capturing? I think we've been pretty open about the opportunity here in respect to the just limited access to capital. I think there was opportunities that the other company or the other owners weren't able to pursue around investing in working capital, so getting spare parts, being able to get the equipment and some of the investments that we will be pursuing. That really came down to, this was a local management team that didn't have access to North American capital markets. They're business guys and lawyers who have done an excellent job managing a lot of the soft parts of the project. The government relations, the union, the community work, those are really important parts to have succeeded at. Having their involvement on a go forward is really important.
We're able to bring the mining expertise and also the capital, to help execute on these things. I don't think we've seen any surprises from when we did our due diligence or things that we've uncovered that we weren't aware of, which is always nice in these types of acquisitions. Okay, the next question, where do you see the biggest blue-sky potential from the 2026 drill program? I think at Cusi, we'll maybe touch on that first. I'd argue, and I think Mark and the team would as well, that San Miguel has the biggest opportunity to add ounces quickly. As I mentioned, because you got these wide zones of good grades of silver, it allows you to build tonnage quickly.
That over time could allow us to be using San Miguel as the main resource base and potentially consider opportunities for expansions if we can build tonnage to support the bulk of that 1,200 tonne per day mining rate just from San Miguel itself. At La Negra, I think when we went out and built our exploration program and asked the geologists for their list of targets and their wish list of budget, I think it was about double what we had in our budget. I think that really says a lot about the opportunity.
I think it's maybe a little bit too early on that one to talk about specific targets, as I mentioned, the biggest opportunity there is we have identified potential areas with grades of two to three times that are within a couple hundred meters of the existing mine workings, we'll test some bigger regional targets over time. The next question is, does the stronger balance sheet let you move faster on development plans? I guess our team would probably argue we've moved exceptionally fast. I don't know if we can move much faster without burning everyone out here. I think it certainly has allowed us at La Negra to capitalize on this opportunity.
I think at Cusi, even being able to move so quickly from PEA to restart, I think those are the opportunities. Now it's really, as I said, putting the pieces in place from an execution standpoint. Why do you think the market may still be underestimating Silverco's leverage to silver? I think this is a great question. The timing in which we have listed, as I mentioned, only listing in October, we came into that flurry of excitement into the end of 2025. Obviously, we've seen some big changes in the silver and the precious metals market over the last couple of months and more volatility than we had in 2025. We've done a lot of marketing.
I think we have got the name out there, because we are one of the newer silver names in a sea of many precious metals companies, I think there still is an opportunity for us to increase our awareness amongst both retail and institutional investors. That's something that we're focused on by participating in events like this, amongst other institutional conferences, non-deal roadshows, et cetera. That will be a big goal for us, is just to get people to understand. Because we have moved so quickly and we are a newly listed company, constantly getting surprises, people's surprise reactions of, "Oh, wow, this is a new silver company. You're going to be at that rate by the end of 2027." There's significant opportunity for investors to participate as we increase that awareness. What's the largest operational risk you're most focused on right now?
I think it's unlike some of these big CapEx builds that will have large single-item risks because one is a restart and the other was an operational project with improvements. We think that the risks of execution are generally lower, but obviously, this is mining, and you've got to have your eye on the ball. I think from the Cusi perspective, and La Negra as well, I think the biggest challenges that everyone's facing is access to skilled and experienced labor and getting tighter timelines for infrastructure and mining input. We're just seeing the delivery timelines on things expanding, so it's about being on top of what our needs are and having plans A, B, C, so that if we do end up with situations where we're getting delayed timeline delivery for key elements of infrastructure, that we can have some other opportunities to explore there. Sorry. Okay.
Next question is, how did the recent management additions strengthen the company's growth plan? I always feel a little bit strange speaking on this topic when I'm one of those additions to the team. When I joined, Victoria joined at a similar timeline to me, it was previously just Mark, Nico, and Sean running with this company, and they'd done an exceptional amount of catalyst in a short amount of time. I think just in terms of giving breadth of the management team and also being able to expand our experience in Mexico, and in the silver space, I think those were key additions. Certainly when George joined at the same time, his thought was very critical as well. What are the first milestones investors should watch at La Negra after the acquisition? Sorry.
I think we should have some news out over the next couple of months here around the operational improvements that we're putting in place. As I mentioned, we'll also have the resource and mine plan. That's important because there was just a project description in a previous PEA by [Axlon, who had tried to acquire the project historically. This will be the first opportunity for us to put real numbers to paper and to be able to talk to La Negra in a bit more concrete details, which until we have that document is a bit more challenging. I think those are the most important milestones related to the operation. Then I think getting the first drill results out, which will be probably into Q4, will be exciting as well to talk about the potential that's there.
The last question I think I'll have time for is, given the robust Cusi PEA sub-CAD 20 million restart, 95% IRR and under back, what stops you from accelerating that restart even further? I think we're moving as fast as we can here without slipping up on execution mistakes. I think taking this from PEA in Q1 to a restart in Q4 is an incredibly quick timeline here, and it's really just about putting the right work in place. It does take time to get contractors mobilized into place from an underground perspective, as well as doing that mine rehab. I think we're moving on. It's pretty efficient and fast here, and look forward to delivering more news on that over the next coming months here.