New Pacific Metals Combined 18Moz/yr Potential on Two Economic Silver Projects in Bolivia

• New Pacific Metals has two world-class silver deposits in Bolivia with strong economics - the Silver Sand and Carangas projects. Combined, the projects have a net present value of $1.2-1.3 billion (at $24/oz silver) and would produce 18 million oz per year.
• Permitting is progressing well but takes patience, with community land lease agreements and environmental permits remaining.
• The company has $20 million in cash, spending $1.5 million per quarter, providing a long runway before needing to raise capital. This financial flexibility allows New Pacific to focus on advancing its projects without immediate funding pressures.
• The company's recent positive PFS and PEA results further bolstered analyst confidence to create value for shareholders as it advances these projects towards development and production in a supportive silver market environment.

New Pacific Metals is advancing two world-class silver deposits in Bolivia that represent a compelling investment opportunity for those bullish on silver. The Silver Sand and Carangas projects have the potential to establish New Pacific as a major silver producer, with strong economics even at conservative silver prices.

Combined Silver Projects Value

The Silver Sand and Carangas projects, located about 10 hours drive apart in Bolivia, have recently completed positive economic studies. A pre-feasibility study for Silver Sand outlined a net present value (NPV) of $740 million at $24 per ounce silver. The preliminary economic assessment for Carangas estimated a $500 million NPV at the same silver price.

On a combined basis, the projects have an NPV of $1.2-1.3 billion at $24 silver. At today's higher silver prices, CEO Andrew Williams estimates the NPV approaches $2 billion. This represents substantial value for New Pacific, which has a current market capitalization below $500 million.

Significant Silver Production Scale

Once in production, Silver Sand and Carangas would produce a combined 18 million ounces of silver annually based on the economic studies. According to Williams, this is "as much or more than most silver companies are producing today."

The projects have some differences - Silver Sand will produce silver doré bars through a Merrill-Crowe process, while Carangas will produce silver-lead and zinc concentrates. But having two mines will provide benefits in terms of tax optimization and the ability to share personnel and learnings between sites.

"Having our team that we can move around to a couple of different projects in the country, that's where we see a big part of the advantage," said Williams.

Permitting Progressing Takes Patience

Advancing projects in Bolivia requires patience but the process is well-defined, even if somewhat rusty given the lack of new mine builds in the past 10-15 years. Key steps include:

• Land lease agreements with local communities, since New Pacific owns the subsurface mineral rights but not surface rights
• Collecting environmental data and submitting environmental permits
• For Carangas, converting the exploration license to a mining license (already complete at Silver Sand)

"It's just that unfortunate phase in a company's development cycle where we don't have sexy drill results splashing over our press releases like we did 3-4 years ago. But this is really the time where we put our heads down and focus on delivering those community agreements and environmental permits that are really the key value driver for us now as a company."

Williams said the spread between New Pacific's intrinsic value and market cap is as wide as ever, but he's confident the gap will close as permitting milestones are achieved as he's seen it before.

Interview with Director & CEO Andrew Williams

Long Cash Runway

As of June 30, New Pacific had US$20 million in cash. With quarterly spending around US$1.5 million focused on permitting activities, the company has a long runway before needing to raise additional capital.

Once permitting milestones are achieved, the next step would be funding full feasibility studies for Silver Sand and Carangas at an estimated cost of US$5-10 million each. But the company won't commit to that spending until permitting is farther advanced and the share price reflects that progress, improving the cost of capital.

"We don't really commit to those next big funding milestones until we've got some positive news and our share price has reflected that," said Williams.

Positive Analyst Reaction

Analysts have reacted positively to the Silver Sand PFS and Carangas PEA results, seeing considerable upside for New Pacific shares. There are limited silver developers with the production scale New Pacific is targeting. Recent M&A in the silver sector, such as First Majestic's acquisition of Springpole, has also highlighted the value of silver development assets.

"It's just there's not very many silver developers out there with this kind of scale - 18 million ounces of silver combined at both projects. The analyst community generally reflects that view."

The Investment Thesis for New Pacific Metals

• Exposure to 18 million ounces per year of potential silver production from two projects in Bolivia
• Combined after-tax NPV of $1.2-1.3 billion at $24/oz silver, approaching $2 billion at spot prices
• Fully-funded to achieve key permitting milestones with $20 million in cash and low burn rate
• Significant potential re-rating catalyst as permitting milestones are achieved
• Analysts positive on the stock given silver production scale and recent M&A valuations
• Consider building a position now, before permitting milestones are achieved and the valuation gap closes

For investors bullish on silver, New Pacific Metals offers exposure to two highly economic development projects in a mining-friendly jurisdiction. Permitting is progressing, albeit slowly, and the company is well-funded to get through key milestones. Analysts see considerable upside in the stock. If silver prices cooperate, New Pacific appears poised to re-rate higher as it advances toward production and unlocks the value of its world-class silver assets.

Macro Thematic Analysis

The outlook for silver appears constructive, driven by recovering industrial demand, ongoing investment interest, and the global energy transition. Industrial demand, which accounts for over 50% of silver demand, is expected to improve as the world economy continues to rebound from the pandemic. The shift toward renewable energy and electric vehicles is also positive for silver, which is used in solar panels and EVs.

Meanwhile, investment demand for silver, which surged to an 8-year high in 2022, is likely to remain elevated given the macro backdrop of high inflation, geopolitical risks, and growing recession fears. Silver tends to perform well in volatile, risk-off environments.

On the supply side, global silver mine production remains below pre-pandemic levels and is not expected to show meaningful growth in the near-term. Many of the world's largest silver mines are aging and grades are declining. The lack of significant new projects in development also points to constrained supply.

This combination of recovering industrial demand, sticky investment demand, and lackluster supply growth suggests the silver market could be entering a period of structural deficits. Bank of America, for example, sees the market undersupplied by 29 million ounces in 2023. This should be supportive of higher prices and silver developers like New Pacific Metals are well-positioned to benefit. As CEO Andrew Williams stated:

"We're encouraged that the landscape is advantageous for silver developers with ounces in the ground like we have."

New Pacific Metals offers a unique investment proposition - exposure to not one but two highly economic silver development projects with scale. Permitting in Bolivia requires patience but the process is well-understood. The company has ample cash to achieve key milestones that could drive a re-rating. For investors constructive on silver prices, New Pacific is an attractive way to play the space with meaningful potential upside.