Apollo Silver Delivers Positive PEA for Calico

Apollo Silver’s PEA projects US$737M NPV and 25% IRR for Calico, but execution risks remain high.

What the company is saying

Apollo Silver Corp. is presenting the Calico Silver Project as a robust, long-life U.S. silver asset, emphasizing a base case after-tax NPV5% of US$737 million and a 25% IRR at a US$55/oz silver price. The company frames the PEA as a major milestone, highlighting a 15-year mine life, average annual production of 5 million ounces, and a payback period of 3 years. Management, led by President and CEO Colin Sutherland, stresses that the Waterloo deposit alone underpins these economics, while additional upside exists from the Langtry and Waterloo gold domains, which are excluded from the current PEA. The narrative is confident but acknowledges the preliminary nature of the study, the inclusion of Inferred Mineral Resources, and the need for further de-risking through water, power, and capital input studies. The company positions the project’s location on private land with vested mining rights and the recent addition of silver to the U.S. Critical Minerals list as strategic advantages. The announcement is detailed, technical, and forward-looking, with a positive tone but explicit caveats about the speculative status of Inferred resources and the absence of Mineral Reserves.

What the data suggests

The PEA, prepared by SLR Consulting in line with NI 43-101 standards, models an open pit operation at Waterloo processing 8,000 tpd for 15 years, yielding 74.4 million ounces of recovered silver at an average grade of 84.8 g/t Ag and 65% recovery. At a US$55/oz silver price, the after-tax NPV5% is US$737 million, IRR is 25%, and payback is 3 years; pre-tax NPV5% is US$925 million and IRR is 29%. Initial capital is US$633 million (with a 25% contingency), and total capital is US$715 million. LOM cash costs are US$24.96/oz and AISC is US$26.07/oz. Sensitivity analysis shows after-tax NPV5% rises to US$1,113 million and IRR to 32% at US$65/oz silver. Measured and Indicated resources total 42.2 Mt at 85.1 g/t Ag for 115.6 Moz, with Inferred resources of 24.1 Mt at 66.3 g/t Ag for 51.4 Moz. Only 3% of mill feed is Inferred in the mine plan. The PEA excludes Langtry’s 49.1 Moz Inferred silver and Waterloo’s gold domain, which are flagged as future upside. All figures are modelled; no operational or financial results are realised. The study is comprehensive, but the economics are contingent on future permitting, financing, and technical studies.

Analysis

The announcement presents a detailed and technically robust Preliminary Economic Assessment (PEA) for the Calico Silver Project, with comprehensive resource and economic figures. However, all key economic outcomes—NPV, IRR, payback, production rates—are forward-looking projections based on the PEA, not realised results. The PEA itself is explicitly described as preliminary and includes a significant proportion of Inferred Mineral Resources, which are too speculative to be considered reserves or to guarantee economic viability. The project requires a large initial capital outlay (US$633 million), but there is no indication that financing is secured or that construction is imminent; benefits are projected over a 15-year mine life, placing execution firmly in the long-term category. While the technical disclosure is thorough and NI 43-101 compliant, the positive tone is somewhat inflated by the presentation of modelled outcomes as 'positive results', despite the inherent uncertainty and early stage of the project. The company does acknowledge the preliminary nature and risks, but the headline and summary language may overstate the immediacy and certainty of value creation.

Risk flags

• ●The PEA is preliminary and includes Inferred Mineral Resources, which are too speculative geologically to be considered reserves; there is no certainty that the projected economics will be realized. This introduces material risk to the reliability of the NPV and IRR figures.
• ●The project requires an initial capital investment of US$633 million and a total capital outlay of US$715 million, but there is no indication that financing is secured. Raising this amount for a single-asset developer is a significant hurdle and could dilute shareholders or delay development.
• ●Permitting and operational risks remain unresolved, including the need to secure water rights in the adjudicated Mojave Basin and to complete further studies on power and capital inputs. These are critical path items that could delay or prevent project advancement.
• ●The economics are highly sensitive to silver prices, with after-tax NPV5% ranging from US$347.96 million at US$45/oz to US$1,112.7 million at US$65/oz. Any sustained decline in silver prices could render the project uneconomic.
• ●The PEA mine plan does not include the Langtry deposit or the Waterloo gold domain, which are presented as future upside but lack defined development pathways or timelines. This means the headline figures do not reflect the full resource base, and future studies could materially alter the project scope or economics.

Bottom line

Apollo Silver’s PEA for the Calico Silver Project delivers strong modelled economics, with a US$737 million after-tax NPV5% and 25% IRR at US$55/oz silver, based on a 15-year open pit operation at the Waterloo deposit. The study is NI 43-101 compliant and provides detailed resource, cost, and sensitivity data, but all figures are projections and depend on successful permitting, financing, and technical de-risking. The project’s large initial capital requirement, reliance on Inferred resources, and unresolved water and power needs mean that execution risk is high and timelines are uncertain. The company’s narrative is credible and transparent about these risks, but investors should treat the headline economics as indicative rather than guaranteed. The most important takeaway is that Calico is a potentially significant U.S. silver project, but value realization will require overcoming substantial technical, financial, and permitting hurdles. The next key disclosures will be progress on prefeasibility studies, water rights, and project financing.

Announcement summary

(TSXV:APGO, OTCQB:APGOF, FRANKFURT:6ZF) Apollo Silver Corp. announced positive results from the Preliminary Economic Assessment (PEA) for its Calico Silver Project in San Bernardino County, California. The PEA and updated Mineral Resource Estimate (MRE) were prepared by SLR Consulting (Canada) Ltd. in accordance with NI 43-101 and CIM Definition Standards. The PEA outlines an open pit mining operation at the Waterloo deposit, feeding a conventional 8,000 tonne per day milling and cyanidation leach plant, with an initial planned processing life of approximately 15 years. At a base case silver price of US$55/oz, the project has an after-tax NPV5% of US$737 million, an after-tax IRR of 25%, and an after-tax payback period of 3 years. The pre-tax NPV5% is US$925 million and pre-tax IRR is 29%. Initial capital cost is US$633 million, including a 25% contingency. The project is expected to produce 74.4 million ounces of recovered silver over a 15-year life of mine, averaging approximately 5 million ounces per year. The average diluted mill feed grade is 84.8 g/t Ag, with a life-of-mine silver recovery of 65% and a strip ratio of 0.5:1. Life-of-mine cash costs are US$24.96 per payable ounce of silver, and all-in sustaining costs (AISC) are US$26.07 per payable ounce. Measured and Indicated Mineral Resources total 42.2 million tonnes at 85.1 g/t Ag for 115.6 million ounces, including 88.2 million ounces in the Measured category. Inferred Mineral Resources total 24.1 million tonnes at 66.3 g/t Ag for 51.4 million ounces across Waterloo and Langtry. The MRE has an effective date of October 1, 2026. Langtry’s 49.1 million ounces of Inferred silver and the Waterloo gold domain are not included in the PEA and represent opportunities for future study. The project covers 8,361 acres in three adjoining properties: Waterloo (1,645 acres), Langtry (1,166 acres), and Mule (5,550 acres). The majority of mineral resources at Waterloo and Langtry are located on private lands with county-recognized vested rights to surface mining. Water for the project is expected to be secured through acquisition or lease of water rights within the adjudicated Mojave Basin. The PEA assumes contract open pit mining at Waterloo, with mill feed processed at approximately 2.9 million tonnes per annum (8,000 tpd). The schedule prioritizes higher-grade feed in the first 10 years, averaging 100.8 g/t Ag. The PEA does not include the Langtry silver Mineral Resource or the Waterloo gold Mineral Resource. Sensitivity analysis indicates that at a high case silver price of US$65/oz, the after-tax NPV5% increases to US$1,113 million and after-tax IRR to approximately 32%. The updated MRE uses a silver price of US$50/oz, while the PEA base case uses US$55/oz. At Waterloo, Measured and Indicated silver Mineral Resources total 42.2 Mt at 85.1 g/t Ag for 115.6 Moz, and Inferred silver Mineral Resources total 1.1 Mt at 65.4 g/t Ag for 2.3 Moz. At Langtry, Inferred silver Mineral Resources total 23.0 Mt at 66.3 g/t Ag for 49.1 Moz. Inferred gold Mineral Resources in the Waterloo gold domain total 0.53 Mt at 0.80 g/t Au for 0.014 Moz. Reporting cut-off grades are 34 g/t Ag at Waterloo, 0.51 g/t Au in the Waterloo gold domain, and 35 g/t Ag at Langtry. Pit optimization inputs include a 2% NSR royalty, transportation, treatment and refining charges of US$2.16/oz silver and US$5.00/oz gold, a 45° pit slope angle, and mining costs of US$3.31/t (Waterloo) and US$3.86/t (Langtry). Processing costs are US$28.40/t and G&A costs are US$5.14/t, assuming a processing rate of 8,000 t/d. The Waterloo gold Mineral Resource is reported at a cut-off grade of 0.51 g/t Au, based on a gold price of US$3,000/oz, metallurgical recovery of 70%, payability of 99.9%, a 2% NSR royalty, and transportation, treatment and refining charges of US$5.00/oz gold. The PEA 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, and there is no certainty that the results of the PEA will be realized.

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