Vizsla Silver - Developing Mexico's Next Major Silver Producer

• Vizsla Silver is developing the Panuco Silver-Gold Project in Mexico, aiming for first silver production in 2027
• Recent PEA shows US$1.1B NPV (5%) with 86% IRR and 9-month payback, based on conservative metal prices
• Resource of 325M oz silver equivalent, with only 9% of known vein strike explored so far
• Project positioned to become one of world's largest primary silver producers at 15M oz/year (20M oz in early years)
• Well-funded with $100M cash, targeting feasibility study in summer 2025 followed by construction decision

Vizsla Silver (TSXV: VZLA & NYSE: VZLA) is positioning itself to become one of the world's largest primary silver producers through the development of its Panuco Silver-Gold Project in Mexico. With a substantial resource base, strong economics, and clear path to production, the company represents a significant opportunity in the silver mining sector at a time when silver demand is increasing, particularly from the renewable energy sector.

Project Overview & Economics

The Panuco project, located in Sinaloa, Mexico, approximately one hour from Mazatlan, boasts impressive economics according to its maiden Preliminary Economic Assessment (PEA) published in July 2023. The project demonstrates an after-tax NPV (5%) of US$1.1 billion and an IRR of 86%, with a remarkably quick payback period of nine months. These metrics are based on conservative metal prices and include substantial contingency allowances.

Mike Pettingell, Senior Vice President of Business Development and Strategy, emphasizes the project's robust economics:

"The NPV to capex ratio puts us into a league of our own here. Low cost, high yield. Over five times NPV to capex. You're challenged to find another group that's got that type of ratio."

The initial capital requirement of US$225 million includes $40 million in contingencies, reflecting a conservative approach to project development. The project is designed to process 3,300 tonnes per day using conventional mining methods and processing techniques, producing doré rather than concentrate.

All Known Questions Answered, with Mike Pettingell, Senior Vice President of Business Development & Strategy

Resource Base & Exploration Potential

The Panuco project currently hosts a resource of 325 million ounces silver equivalent, with only 162 million ounces included in the current mine plan. Significantly, this resource comes from exploring just 9% of the known vein strike in the district, suggesting substantial expansion potential.

As Pettingell notes:

"We've only mapped about 65%, 70% of this district. We're still uncovering historic workings, we're still finding old enlivenments that can lead to that structural preparation to find those new targets."

The company has recently tripled its land package through strategic acquisitions, including the Lagara district and San Enrique claims, both of which show geological similarities to the main Panuco project.

Production Profile & Operating Costs

The Panuco project is positioned to establish itself as a significant player in the global silver market, with its production profile placing it among the world's top silver producers. Based on the maiden PEA, the project is designed to produce approximately 15 million ounces of silver equivalent annually over a planned 10-year mine life. Notably, the early years of production are projected to yield even higher output of around 20 million ounces annually, driven by the high-grade nature of the Copala and Cristiano structures.

As Mike Pettingell emphasizes, this production scale would place Vizsla in an elite category:

"If we were in production right now, we would be a top five silver producer with bottom quartile ASIC full stop, right? At 15 million ounces and $9.40 all in sustaining cost... Fresnillo, the world's largest silver miner is the only group that's got assets with a greater production profile than what we do."

The project's cost structure is particularly compelling, with all-in sustaining costs (AISC) estimated at $9.40 per ounce, positioning Panuco in the bottom quartile of the global cost curve. This competitive cost position is driven by several key factors:

• Near-surface nature of the mineralization
• Limited development infrastructure requirements
• High-grade characteristics of the deposit
• Conventional mining methods (85% longhole mining)
• Simple processing flowsheet utilizing whole ore leach

The production split is approximately 60% silver and 40% gold, with the operation designed to produce doré rather than concentrate, simplifying the processing and marketing aspects. The processing facility is planned to operate at 3,300 tonnes per day, utilizing conventional crushing, grinding, and leaching processes followed by Merrill-Crowe processing to produce doré bars.

To minimize operational risks during the ramp-up phase, Vizsla plans to implement a strategic stockpiling program.

"We're hoping to have a million tons on surface by the time that mill is constructed and ready to be turned on," notes Pettingell.

This approach aims to provide a buffer against potential mining or processing challenges during the critical early production phase, demonstrating management's focus on de-risking the operation.

The current mine plan incorporates only 162 million ounces of the total 325 million ounce resource base, suggesting significant potential to extend both the mine life and potentially increase production rates through future resource conversion and exploration success. The company's ongoing infill drilling program, particularly around the high-grade Copala area, continues to return impressive results that could enhance the early years' production profile and economics.

Metallurgical test work has demonstrated strong recoveries in the mid to low 90s for both silver and gold, with a fourth round of optimization testing underway. This additional testing focuses on optimizing grind size and evaluating the potential addition of a flotation circuit in year four to potentially enhance metal recoveries further, demonstrating the company's commitment to continuous operational improvement even before production begins.

Development Timeline & Milestones

Vizsla Silver has established a clear and methodical path toward production at Panuco, backed by a strong financial position with over $100 million in cash and approximately $16 million in in-the-money warrants expiring in November. This robust treasury positions the company to advance through critical de-risking initiatives and reach the project financing stage without immediate need for additional capital. As Pettingell explains:

"It takes about seven years in Mexico to go from discovery to initial production. And you know, that's on average. Silvercrest followed that perfectly... We're following the timeline of seven years very well with our initial discovery made here at Napoleon in 2020. 2027 is our estimated first pour."

The company has already achieved several significant milestones in 2023-2024, including:

• Completion of maiden PEA in July 2023
• Resource update in January 2024 (325M oz silver equivalent)
• Expansion of land package, tripling the project area
• Completion of 60,000 meters of additional drilling since the resource update

The near-term development timeline includes several critical catalysts:

Q4 2024 Objectives:

• Completion of updated mineral resource estimate
• Target of 200 million ounces in Measured & Indicated categories
• Submission of MIA (environmental permit) application
• Initiation of bulk sample test mining program

2025 Key Milestones:

• Completion of feasibility study (targeted for summer 2025)
• Construction decision following feasibility study
• Advancement of project financing discussions

2026-2027:

• Two-year construction and commissioning period
• First silver production targeted for second half of 2027

The bulk sample test mining program represents a particularly significant de-risking initiative. "We're really only going to focus on Copala because that's where we're going to start mining. And again, that's going to drive the economics," notes Pettingell. "We're also really planning to have the permits in hand following this bulk sample. Therefore, we can just continue mining and stockpiling as we build and develop the mine."

The company is simultaneously advancing several parallel workstreams, including a fourth round of metallurgical testing focused on optimization. This testing aims to fine-tune the grinding parameters and evaluate the potential benefits of adding a flotation circuit in year four to enhance metal recoveries further.

The development strategy also incorporates significant exploration potential, with ongoing drilling at new targets that could enhance the project's resource base. However, management maintains a disciplined approach, focusing primarily on areas that could impact the initial mine plan or provide near-term value appreciation.

For investors, this timeline provides multiple potential catalysts over the next 12-18 months. The sequence of technical studies, permitting milestones, and development decisions offers regular opportunities for project de-risking and potential value creation. The company's well-funded position and methodical approach to development suggest a clear focus on maintaining momentum while managing execution risk.

This structured approach to development, combined with the company's strong financial position, provides investors with a clear roadmap to production and multiple catalysts for potential value appreciation along the way. The timeline aligns with industry standards for project development in Mexico while incorporating significant de-risking initiatives that could enhance the project's ultimate success.

Infrastructure & Location Advantages

The Panuco project benefits from an exceptionally advantageous location and robust existing infrastructure, making it highly accessible and logistically efficient. Situated just an hour's drive from Mazatlan, a coastal city of approximately one million people, the project enjoys easy access to significant transportation and shipping infrastructure.

The proximity to Mazatlan's international airport facilitates convenient access for personnel and equipment, while the nearby deep-sea port provides efficient shipping capabilities for future operations.

A comprehensive rail network running along the coast further enhances the project's connectivity. The site itself is served by two major highways that effectively frame the resource area, and perhaps most significantly, high-tension power lines cross directly over the property's veins, substantially reducing future power infrastructure requirements.

This existing infrastructure network has already proven invaluable during the exploration phase - notably, the company has completed nearly 400,000 meters of drilling without needing to construct a single new road, demonstrating the site's exceptional accessibility.

Management & Technical Expertise

Vizsla Silver has assembled a leadership team that brings together deep industry experience with specific expertise in Mexican mining operations. At the helm is Chief Executive Officer and Director Michael Konnert who founded the company with Craig Parry in 2018, establishing both Inventa Capital and Vizsla Resources on the same day. Parry, an industry veteran is Director of Skeena Resources, former CEO of IsoEnergy and Founding Director of NexGen Energy, also brings over a decade of experience as a development geologist with Rio Tinto.

The technical operations are strengthened by Chief Operating Officer Simon Cmrlec, who joined the team after serving as COO of Ausenco Engineering, where he oversaw the construction of 42 mines, including relevant projects like Silvercrest's Las Chispas in Mexico.

The company's geological expertise is anchored by Jesus Velador, who holds a PhD in epithermal systems - precisely the type of mineralization found at Panuco. Velador's experience with major Mexican mining companies, particularly First Majestic, adds valuable local knowledge.

The team is further enhanced by Eduardo Luna, a Mexican Mining Hall of Fame member and former president of the Mexican Mining Chamber, who joined the board in October. Luna's extensive experience in senior executive roles with companies like Peñoles, Goldcorp, Wheaton Precious Metals, and Alamos, particularly his involvement with First Majestic's flagship San Dimas asset, brings crucial insight to the development of Panuco.

Environmental & Social Considerations

Vizsla Silver has established a strong environmental and social governance framework at Panuco, exemplified by receiving the National Recognition of Sustainability award from the Mexican government for three consecutive years. The company's approach to community engagement is particularly notable in its relationships with the five local Ajido groups that hold surface rights in the project area.

"Although you can get your permit from the federal government, it's actually local Ejido groups that allow you to have access and to push your project forward. So that can't be understated, the importance of that social license," explains Pettingell.

This understanding of local dynamics has helped Vizsla develop strong community relationships, essential for project advancement.

The company's brownfield development approach provides environmental advantages, as the project area has seen historical mining activity. This previously disturbed ground status typically streamlines permitting processes compared to greenfield developments, while the existing infrastructure minimizes the need for new environmental disturbance.

Market Position & Valuation

Vizsla Silver currently trades at an approximate valuation of US$550 million, representing a significant discount to its potential producer valuation. The company's analysis of sector transactions and valuations suggests substantial potential for share price appreciation as it transitions from developer to producer status.

"The average producer is 1.25x, a P/NAV, where the average developer is trading at below .4x. So that's over 230% increase in your P/NAV multiples as you get into production," Pettingell notes.

This valuation gap is further supported by recent transaction precedents:

• Core Mining's acquisition of SilverCrest at 1.7x P/NAV
• First Majestic's acquisition of Gatos Silver at over 2x P/NAV

Applied to Vizsla's project economics, these multiples suggest a potential future valuation range of $2-3 billion, compared to the current $550 million market capitalization. This potential rerating opportunity is supported by several factors:

• Strong insider alignment (15% management ownership)
• Clear path to production
• Bottom-quartile cost profile
• Significant resource growth potential
• Strategic position in primary silver production

The company's focused approach to development, combined with management's significant ownership position, suggests strong alignment with shareholder interests in achieving this value appreciation potential.

The Investment Thesis for Vizsla Silver

The investment case for Vizsla Silver centers around five key pillars that together present a compelling opportunity in the silver mining sector.

• Project Economics and Development Profile: The Panuco project demonstrates exceptional economics with a US$1.1 billion NPV (5%) and 86% IRR, supported by a rapid 9-month payback period. The initial capital requirement of US$225 million is modest relative to the project's scale, and the projected bottom quartile AISC of $9.40/oz positions the operation competitively within the global silver mining industry. With $100 million in cash, the company is well-funded to advance through feasibility study completion in summer 2025 and toward a production target in H2 2027. Investors should monitor key development milestones, particularly the upcoming resource update, permitting progress, and feasibility study completion.
• Resource Base and Exploration Upside: The current 325 million ounce silver equivalent resource has been defined by exploring only 9% of the known vein strike length, suggesting substantial expansion potential. The recently tripled land package and identification of 158+ drill-ready targets provide multiple avenues for resource growth. Investors should follow exploration results, particularly from the high-priority eastern targets that could represent standalone development opportunities.
• Strategic Position in Silver Market: Panuco is positioned to become one of the world's largest primary silver producers, with planned production of 15-20 million ounces annually. This scale is particularly significant given the growing industrial demand for silver and limited new primary silver projects globally. The project's location in Mexico, the world's largest primary silver producing country, provides strategic advantages in terms of infrastructure and mining expertise.
• Management Execution and Alignment: The experienced leadership team brings significant Mexican mining expertise and a track record of successful mine development. The 15% insider ownership demonstrates strong alignment with shareholders, while the conservative approach to project development and financing suggests disciplined capital management. Investors should monitor management execution against stated milestones and track insider transactions.
• Valuation and Rerating Potential: Currently valued at approximately US$550 million, Vizsla trades at a significant discount to producer valuations. Historical precedents suggest potential for substantial rerating as the company transitions from developer to producer status, with comparable producers trading at multiples of 1.25x P/NAV compared to developer multiples of 0.4x P/NAV. Recent sector transactions support potential future valuations of $2-3 billion.
• Investment Strategy: Investors considering Vizsla should view it as a high-quality silver development opportunity with significant leverage to both silver prices and successful project execution. The multiple catalysts expected over the next 12-18 months provide opportunities for value appreciation, while the strong balance sheet reduces financing risk. A staged investment approach, building positions around key milestone achievements, may be prudent given the natural risks associated with project development.

Macro Thematic Analysis

The silver market is experiencing a fundamental shift driven by increasing industrial demand, particularly from the renewable energy sector. Silver's unique properties make it essential for photovoltaic cells, with solar applications now accounting for approximately 15% of total silver demand. This industrial demand is occurring against a backdrop of limited new primary silver projects coming online globally.

As Pettingell emphasizes:

"Silver supply typically comes from big open pit deposits, largely in South America, as a byproduct. Well, these big open pit projects are becoming increasingly challenging to find, permit from an environmental perspective, but also the capital hurdle that's required to bring these online is in the billions."

The market has been running a deficit for four consecutive years, with limited new supply in the pipeline. Primary silver projects are particularly scarce, with most new silver production coming as a byproduct from base metal operations. Mexico, as the world's largest primary silver producer, remains the key jurisdiction for new project development.

The supply-demand dynamics are expected to become more pronounced as the global energy transition accelerates. Projections indicate silver will face one of the largest deficits among industrial metals by 2035, driven by renewable energy adoption and broader industrial applications. This structural shift in the market creates a compelling opportunity for new primary silver producers, particularly those with large-scale, high-grade projects like PANUCO.