Resource Estimate and Preliminary Economic Assessment

Transcription

2014 Resource Estimate and Preliminary Economic Assessment San Felipe Project, Sonora, Mexico. 23rd October 2014
2014 Resource Estimate and Preliminary Economic Assessment San Felipe Project, Sonora, Mexico Prepared for Santacruz Silver Mining Ltd. Qualified Persons:
Hans Smit, B.Sc. (Hons), P.Geo.
Fletcher M. Bourke, M.Sc., P.Geo.
Gary Giroux, M.Sc., P.Eng.
Greg Blaylock, B.Sc., P.Eng.
Deepak Malhotra, Ph.D., SME-RM.
Mark E. Smith, M.Sc., M.SME, G.E., P.E.
1
Effective Date: September 4, 2014
Amendment Date: June 29 2016
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Table of Contents 1. Summary ..................................................................................................................................... 15 1.2. Introduction .......................................................................................................................... 16 1.3. Reliance on Other Experts .................................................................................................. 17 1.4. Property Description and Location ...................................................................................... 18 1.5. Accessibility, Climate, Local Resources, Infrastructure and Physiography ......................... 20 1.6. History ................................................................................................................................. 21 1.7. Geology ............................................................................................................................... 22 1.7.1. Regional Geology ........................................................................................................ 22 1.7.2. Property Geology ......................................................................................................... 22 1.7.3. Domain Summary ........................................................................................................ 23 1.8. Deposit Type ....................................................................................................................... 24 1.9. Exploration........................................................................................................................... 24 1.10. Drilling .............................................................................................................................. 25 1.11. Sample Preparation, Analysis and Security..................................................................... 25 1.11.1. QA/QC Analysis ........................................................................................................... 25 1.12. Data Verification .............................................................................................................. 26 1.13. Mineral Processing and Metallurgical Testing ................................................................. 27 1.14. Mineral Resource Estimates ............................................................................................ 27 1.15. Mineral Reserve Estimates .............................................................................................. 30 1.16. Mining Methods ............................................................................................................... 31 1.17. Recovery Methods ........................................................................................................... 31 1.18. Project Infrastructure and General Administration ........................................................... 32 1.19. Market Studies and Contracts ......................................................................................... 34 1.20. Environmental Studies, Permitting and Social or Community Impact.............................. 35 1.21. Capital and Operating Costs............................................................................................ 37 1.22. Economic Analysis........................................................................................................... 38 1.23. Adjacent Properties ......................................................................................................... 44 1.24. Other Relevant Data and Information .............................................................................. 44 1.25. Interpretation and Conclusions ........................................................................................ 45 1.26. Recommendations ........................................................................................................... 47 2. Introduction .................................................................................................................................. 50 2.1. Sources of Information ........................................................................................................ 52 2.2. Field Examination and Data Review by the Qualified Person ............................................. 54 2.3. Units of Measure ................................................................................................................. 55 3
3. Reliance on Other Experts .......................................................................................................... 56 4. Property Description and Location .............................................................................................. 57 4.1. Area and Location ............................................................................................................... 57 4.2. Title and Ownership............................................................................................................. 58 4.3. Surface Rights ..................................................................................................................... 62 4.4. Environmental Liability......................................................................................................... 63 4.5. Permits ................................................................................................................................ 63 5. Accessibility, Climate, Local Resources, Infrastructure and Physiography ................................. 65 5.1. Access ................................................................................................................................. 65 5.2. Climate ................................................................................................................................ 67 5.3. Physiography ....................................................................................................................... 67 5.4. Vegetation and Fauna ......................................................................................................... 68 5.5. Local Resources and Infrastructure..................................................................................... 68 6. History ......................................................................................................................................... 71 6.1. Prior Resource Estimates .................................................................................................... 72 6.1.1. Hochschild 2008 .......................................................................................................... 72 6.1.2. Santacruz 2012 ............................................................................................................ 74 7. Geological Setting and Mineralization ......................................................................................... 76 7.1. Regional Geology ................................................................................................................ 76 7.2. Property Geology................................................................................................................. 79 7.2.1. Lithology....................................................................................................................... 82 7.2.2. Structure ...................................................................................................................... 86 7.3. Mineralization ...................................................................................................................... 87 7.4. Geologic Model and Estimation Domains ........................................................................... 90 8. Deposit Type ............................................................................................................................... 93 9. Exploration .................................................................................................................................. 94 9.1. Surface Geochemistry ......................................................................................................... 94 9.2. Geophysics .......................................................................................................................... 98 9.3. Geologic Mapping................................................................................................................ 98 10. Drilling ......................................................................................................................................... 99 10.1. Boliden (1998-2000) ...................................................................................................... 100 10.2. Hochschild (2006-2008)................................................................................................. 100 10.3. Santacruz (2013-2014) .................................................................................................. 102 11. Sample Preparation, Analyses and Security ............................................................................. 113 11.1. Sample Preparation ....................................................................................................... 113 11.2. Sample Security............................................................................................................. 113 4
11.3. QA/QC Analysis ............................................................................................................. 114 11.4. Hochschild QA/QC......................................................................................................... 115 11.4.1. Blanks ........................................................................................................................ 115 11.4.2. Standards ................................................................................................................... 117 11.4.3. Duplicates .................................................................................................................. 120 11.5. Santacruz QA/QC .......................................................................................................... 123 11.5.1. Blanks ........................................................................................................................ 123 11.5.2. Standards ................................................................................................................... 124 11.5.3. Core Duplicates ......................................................................................................... 129 11.5.4. Check Assays ............................................................................................................ 132 11.5.5. Comparison of Drilling Results by Company ............................................................. 133 11.5.6. Twin Hole Comparison ............................................................................................... 135 11.6. Opinion on Adequacy .................................................................................................... 138 12. Data Verification ........................................................................................................................ 139 12.1. Site Visits ....................................................................................................................... 139 12.2. Independent Assays ...................................................................................................... 139 12.3. Validation of Data Base and Digital Data....................................................................... 140 12.4. Data Adequacy .............................................................................................................. 140 13. Mineral Processing and Metallurgical Testing ........................................................................... 141 13.1. Review of Metallurgical Testwork .................................................................................. 141 13.1.1. 13.2. Dawson Metallurgical Laboratory Report ................................................................... 141 Process Flowsheet and Projected Metallurgical Recoveries ......................................... 150 14. Mineral Resource Estimates ..................................................................................................... 152 14.1. Data Analysis ................................................................................................................. 152 14.1.1. Ventana Zone ............................................................................................................ 153 14.1.2. Las Lamas Zone ........................................................................................................ 159 14.1.3. San Felipe Structures ................................................................................................ 163 14.1.4. Transversales ............................................................................................................ 166 14.2. Composites .................................................................................................................... 168 14.3. Variography ................................................................................................................... 172 14.4. Block Models ................................................................................................................. 176 14.5. Bulk Density ................................................................................................................... 179 14.6. Grade Interpolation ........................................................................................................ 181 14.7. Classification.................................................................................................................. 185 15. Mineral Reserve Estimates ....................................................................................................... 199 16. Mining Methods ......................................................................................................................... 199 5
16.1. La Ventana Mining Methods .......................................................................................... 200 16.1.1. La Ventana Open Pit.................................................................................................. 200 16.1.2. La Ventana Underground........................................................................................... 202 16.2. San Felipe Mining Methods ........................................................................................... 210 16.2.1. San Felipe Open Pit ................................................................................................... 210 16.2.2. San Felipe Underground ............................................................................................ 210 16.3. Las Lamas Mining Method............................................................................................. 211 16.4. Transversales Mining Method........................................................................................ 211 16.5. Geotechnical parameters............................................................................................... 212 16.5.1. Underground .............................................................................................................. 212 16.5.2. Open pit ..................................................................................................................... 213 16.6. Hydrologic parameters................................................................................................... 213 16.7. Waste rock storage ........................................................................................................ 213 16.8. Required mining equipment ........................................................................................... 214 16.9. Mine CAPEX .................................................................................................................. 214 16.10. Mine OPEX .................................................................................................................... 215 17. Recovery Methods .................................................................................................................... 217 17.1. Flotation Mill................................................................................................................... 217 17.2. CAPEX........................................................................................................................... 221 17.3. OPEX ............................................................................................................................. 226 18. Project Infrastructure and General Administration .................................................................... 227 18.1. Tailings Storage Facility................................................................................................. 227 18.2. Power............................................................................................................................. 232 18.3. Water ............................................................................................................................. 234 18.4. Roads ............................................................................................................................ 235 18.5. Other Infrastructure........................................................................................................ 236 18.6. General and Administration ........................................................................................... 236 18.7. Reclamation and Closure .............................................................................................. 238 19. Market Studies and Contracts ................................................................................................... 239 20. Environmental Studies, Permitting and Social or Community Impact ....................................... 241 20.1. Environmental Studies ................................................................................................... 241 20.2. Permits........................................................................................................................... 246 20.3. Social and Community Impact ....................................................................................... 248 21. Capital and Operating Costs ..................................................................................................... 252 22. Economic Analysis .................................................................................................................... 253 22.1. Assumptions .................................................................................................................. 254 6
22.2. Taxes ............................................................................................................................. 254 22.2.1. IVA ............................................................................................................................. 254 22.2.2. Environmental Fee ..................................................................................................... 255 22.2.3. Mining Royalty ........................................................................................................... 255 22.2.4. Income Tax ................................................................................................................ 255 22.3. Economic Highlights ...................................................................................................... 255 22.4. Sensitivity Analysis ........................................................................................................ 262 23. Adjacent Properties ................................................................................................................... 264 24. Other Relevant Data and Information ........................................................................................ 264 25. Interpretation and Conclusions .................................................................................................. 265 25.1. Project Risks .................................................................................................................. 270 25.2. Project Opportunities ..................................................................................................... 272 25.3. PEA Sensitivities............................................................................................................ 272 26. Recommendations .................................................................................................................... 273 26.1. Resource ....................................................................................................................... 273 26.2. Metallurgy ...................................................................................................................... 274 26.3. Mining ............................................................................................................................ 275 26.4. Milling............................................................................................................................. 275 26.5. Infrastructure.................................................................................................................. 276 26.6. Environment and Permitting .......................................................................................... 277 26.7. Resource Expansion and Exploration............................................................................ 278 26.8. Budget ........................................................................................................................... 278 27. References ................................................................................................................................ 281 28. Appendix 1 – Drill Hole Location ............................................................................................... 283 29. Appendix 2 – Grade Tonnage Tables ....................................................................................... 290 30. Appendix 3 – Drill Intercepts ..................................................................................................... 294 31. Appendix 4 – Ag Variograms ..................................................................................................... 309 32. Appendix 5 – Certificate of Author Forms ................................................................................. 325 7
List of Figures Figure 1-1 Sensitivity Analysis ............................................................................................................ 44 Figure 4-1. San Felipe project location. .............................................................................................. 57 Figure 4-2 Santacruz Concession ...................................................................................................... 61 Figure 4-3 Area covered by the agreement with the San Felipe Ejido ............................................... 62 Figure 5-1 San Felipe Project location .............................................................................................. 66 Figure 5-2 Proposed power line to San Felipe. .................................................................................. 70 Figure 6-1 Mineralised wireframes of San Felipe zones. Hochschild 2008 resource estimate. ......... 73 Figure 7-1. Generalized map of the pre-Laramide basement in northwestern Mexico and the
southwestern United States. MSM-Mojave-Sonora megashear, Cb-Caborca terrane (modified from
Valencia-Moreno, 2001). .................................................................................................................... 77 Figure 7-2 Geology of San Felipe region (modified from Servicio Geologico Mexicano, 1999). ........ 78 Figure 7-3. Geology of the San Felipe Project. .................................................................................. 80 Figure 7-4. Resource area geology map (from Longo 2014). ............................................................ 81 Figure 7-5. Stratigraphic column, San Felipe Project. Modified from (Roldan, 1979). ....................... 82 Figure 7-6. Oligocene Volcanics – fragmental rhyolite tuff. ................................................................ 83 Figure 7-7. Fragmental rhyolite, note the fragments of Equigranular rhyolite and LMS. .................... 84 Figure 7-8. Equigranular rhyolite. ....................................................................................................... 84 Figure 7-9. San Felipe Porphyry, (a) outcrop showing amoeboid quartz eyes, (b) SF porphyry dyke
looking SW, Cornocopia mineralization along dyke footwall contact. Note the lack of mineralization at
ridge top. ............................................................................................................................................. 85 Figure 7-10. LMS: (a) thin section showing fine grained carbonate and coarser epidote (polarized
light 100x), (b) typical LMS outcrop – note SF dyke in center. ........................................................... 86 Figure 7-11. Vein orientation analysis. (a) Historgram of vein strike (b) histogram of vein dip. (c)
Stereonet showing vein orientations. (d) Structural model of district showing proposed conjugate
vein sets formed by E-W tectonic shortening (Nelson, 2007)............................................................. 87 Figure 7-12. Geology map of the San Felipe Resource area showing the four principle skarn vein
systems and the pattern of metal zonation in the district (Longo, 2014). ........................................... 89 Figure 7-13. (a) High temperature skarn (andradite-hedenbergite) (b) Low temperature skarn
(rhodonite and bustamite). (c) Low temperature skarn overprint (rhodonite). .................................... 90 Figure 7-14 Plan view of the geologic model used for the resource estimate. ................................... 92 Figure 9-1 Rock chip and stream sediment samples taken at San Felipe. Stream sediment samples
show sum of response ratios for Au, Ag, Cu, Pb, Zn.......................................................................... 96 Figure 9-2 Boliden 1998-1999 Soil Sample Program showing (a) Ag, (b) Pb, (c) Zn. ........................ 97 Figure 10-1. Drilling at San Felipe, (a) by company, (b) drill hole type............................................... 99 Figure 10-2. Drill plan La Ventana. ................................................................................................... 106 Figure 10-3. Drill plan - Transversales, San Felipe, Las Lamas, Cornocopia and Artemisa. ........... 107 Figure 10-4. Ventana long section showing intercept in true width. ................................................. 108 Figure 10-5. La Ventana drill section (looking west)......................................................................... 109 8
Figure 10-6. Transversales drill section (looking south west)........................................................... 110 Figure 10-7. San Felipe drill section (looking west). ......................................................................... 111 Figure 10-8. Las Lamas drill section (looking south west)................................................................ 112 Figure 11-1. Santacruz core shed. ................................................................................................... 114 Figure 11-2. Hochschild blanks (a) coarse blanks, (b) pulp blanks. (Red line shows 5 x detection limit
(5ppm)). ............................................................................................................................................ 116 Figure 11-3. Hochschild blanks Pb - Zn, (a) coarse blanks, (b) pulp blanks. ................................... 116 Figure 11-4. Medio standard (a) Groups based on Zn values (b) Ag distribution of Group A and B.
.......................................................................................................................................................... 118 Figure 11-5. Graph showing Ag value of Hochschild Bajo standard. ............................................... 119 Figure 11-6. Graph showing Ag value of Hochschild Medio (Group A) standard. ............................ 119 Figure 11-7. Graph showing Ag value of Hochschild Alto standard. ................................................ 120 Figure 11-8. (a) Hochschild core duplicate scatter plot (all data). (b) Hochschild Ag duplicates 5 to 50
ppm. .................................................................................................................................................. 121 Figure 11-9. Hochschild core duplicates (a) control chart, (b) cumulative frequency plot. ............... 122 Figure 11-10. Hochschild duplicates. (a) Re-assay scatter plot, (b) pulp duplicate scatter plot. ...... 122 Figure 11-11. Hochschild duplicate scatter plot. (a) Pb, (b) Zn. ....................................................... 123 Figure 11-12. Hochschild duplicates (a) absolute difference Pb-Zn, (b) Absolute relative % difference
plot Ag-Pb-Zn. .................................................................................................................................. 123 Figure 11-13. Graph showing Santacruz pulp blanks, (a) Ag, (b) Pb, Zn. ........................................ 124 Figure 11-14. Santacruz Au standard SL61. .................................................................................... 127 Figure 11-15. Santacruz Ag standard SL61. .................................................................................... 127 Figure 11-16. Santacruz Au standard SG66. ................................................................................... 128 Figure 11-17. Santacruz Ag standard STD-SP49. ........................................................................... 128 Figure 11-18. Santacruz standard SQ70. ......................................................................................... 129 Figure 11-19. Santacruz duplicate scatter plot. ................................................................................ 130 Figure 11-20. Santacruz duplicates, (a) Pb and (b) Zn, Scatterplot. ................................................ 131 Figure 11-21. Santacruz duplicates (a) Cumulative frequency Ag original vs. duplicate, (b)
Cumulative frequency Ag absolute difference, (c) Cumulative frequency Pb – Zn absolute difference,
(d) Absolute relative % difference plot, Ag, Pb, Zn. .......................................................................... 131 Figure 11-22 Scatter plot showing ALS vs. ACME analytical results. .............................................. 132 Figure 11-23. Lognormal cumulative frequency plot. Comparison of drilling by company at La
Ventana (Area A). ............................................................................................................................. 133 Figure 11-24. Lognormal cumulative frequency plot. Comparison of drilling by company at San
Felipe (Area B). ................................................................................................................................ 134 Figure 11-25. Lognormal cumulative frequency plot. Comparison of drilling by company at Las
Lamas (Area C). ............................................................................................................................... 134 Figure 11-26. La Ventana twins, SCLV-03 vs. SF9801, <5m separation. ........................................ 135 Figure 11-27. San Felipe twins, SCSF-02 vs. HFSF11, <12m separation. ...................................... 136 9
Figure 11-28. Las Lamas twins, SCLL-04 vs. HFLL09, <9m separation. ......................................... 137 Figure 13-1 Variable Testing Open Circuit Process Flowsheet ........................................................ 142 Figure 14-1 Drill hole plan view for the La Ventana Zone ................................................................ 154 Figure 14-2 Plan view for the La Ventana Zone showing HG solid in red, LG solid in green and
underground workings in purple. ...................................................................................................... 158 Figure 14-3 Isometric view looking NW showing HG solid in red, LG solid in green and underground
workings in purple. ............................................................................................................................ 158 Figure 14-4 Isometric view for the Las Lamas Zone looking NE showing the solid, drill hole traces
and Surface topography ................................................................................................................... 159 Figure 14-5 Isometric view looking SW showing the solid in red, drill hole traces in green and surface
topography in grey. ........................................................................................................................... 160 Figure 14-6 Isometric view looking NE showing Ventana blocks below topo in white, HG in red, LG
Envelope in Yellow, Underground workings in green and drill hole composites .............................. 176 Figure 14-7 Isometric view looking NE showing Lamas blocks below topo in white and drill hole
composites in magenta ..................................................................................................................... 177 Figure 14-8 San Felipe Zone block models ...................................................................................... 178 Figure 16-1 Relative locations of open pit targets ............................................................................ 200 Figure 16-2 La Ventana Pit Shells Comparison ............................................................................... 201 Figure 16-3 Section showing open pit and underground mining concepts, La Ventana .................. 203 Figure 16-4 Section showing start of underground mining, La Ventana........................................... 204 Figure 16-5 Section showing continuation of underground mining, La Ventana .............................. 205 Figure 16-6 Section showing continuation of underground mining with backfill introduced, La
Ventana ............................................................................................................................................ 206 Figure 16-7 Section showing underground mining advance, La Ventana ........................................ 207 Figure 16-8 Section 567652.5 vein geometry, La Ventana looking West......................................... 209 Figure 17-1 Proposed mine development ........................................................................................ 218 Figure 17-2 Diagram for 1.250 t/day mill by Santacruz – 2014 ........................................................ 220 Figure 18-1 Tailings storage facility proposed location. ................................................................... 228 Figure 18-2 Schematic section through proposed tailings storage facility........................................ 229 Figure 18-3 Proposed Power Line Location ..................................................................................... 234 Figure 20-1 Groundwater Elevation vs Ground Surface Elevation ................................................... 229 Figure 20-2 Water and Sediment Monitoring Sites........................................................................... 230 Figure 20-3 Federally Designated Bird Protection Areas. ................................................................ 235 Figure 20-4 San Felipe Project Conservation Area Federal Designation ......................................... 251 Figure 22-1 Sensitivity Analysis ........................................................................................................ 264 10
List of Tables Table 1-1 Estimated Metallurgical Recoveries ................................................................................... 27 Table 1-2 Recoveries for each metal.................................................................................................. 29 Table 1-3 Summary of Silver Equivalent Resource for all Zones sorted by potential mining method 30 Table 1-4 Estimated Capital Costs - $M ............................................................................................. 37 Table 1-5 Estimated Operating Costs Per tonne ................................................................................ 38 Table 1-6 San Felipe PEA Production Summary ............................................................................... 40 Table 1-7 Life of mine economics ....................................................................................................... 41 Table 1-8 San Felipe PEA NPV and IRR ........................................................................................... 42 Table 1-9 San Felipe Project Preliminary Economic Assessment 2014 - Sensitivities ...................... 43 Table 2-1 Table of abbreviations ........................................................................................................ 55 Table 4-1 Payment Schedule (US dollar x 1,000) .............................................................................. 60 Table 6-1 Production data from the San Felipe district by Serrana 1975 - 1991................................ 71 Table 6-2. Metal prices and recoveries used in the 2008 Hochschild resource. ................................ 73 Table 6-3 Resource summary table from Hoshchild 2008. (20$/t cut off shown). .............................. 74 Table 6-4. Gustavson search ellipsoid distances (in meters). ............................................................ 74 Table 6-5. Gustavson resource classification criteria (distance from block to nearest drill hole in
meters). .............................................................................................................................................. 75 Table 6-6. Metal prices and recoveries used by Gustavson............................................................... 75 Table 6-7. Gustavson 2012 resource table showing 150 g/t AgEq cuttoff.......................................... 75 Table 7-1 Domain orientation and average thickness. ....................................................................... 91 Table 9-1: Surface sample summary statistics. .................................................................................. 95 Table 9-2. Surface sample summary statistics by structure. All samples since 1997 (Ag-ppm, Pb-%,
Zn-%). ................................................................................................................................................. 97 Table 10-1. Summarized drilling for the San Felipe Project. .............................................................. 99 Table 10-2. Hochschild development holes...................................................................................... 102 Table 11-1 Summary of analytical quality control data. .................................................................... 114 Table 11-2 Summary statistics for Hochschild blanks (units in ppm). .............................................. 115 Table 11-3. Coarse blank failures..................................................................................................... 116 Table 11-4. Hochschild standard summary. ..................................................................................... 117 Table 11-5. Hochschild core duplicate data summary (Ag ppm). ..................................................... 121 Table 11-6. Hochschild core duplicate data summary (Pb ppm). ..................................................... 121 Table 11-7. Hochschild core duplicate data summary (Zn ppm). ..................................................... 121 Table 11-8 Descriptive statistics for Santacruz blanks (units in ppm). ............................................. 124 Table 11-9. Santacruz standard summary. ...................................................................................... 125 Table 11-10. Santacruz duplicate summary. .................................................................................... 130 11
Table 11-11 ALS vs. ACME summary statistics. .............................................................................. 132 Table 12-1. Check samples taken by authors vs. Santacruz results. ............................................... 140 Table 13-1 Summary of Mineralization Variability Lead Flotation Results ....................................... 144 Table 13-2 Summary of Mineralization Variability Zinc Flotation Results......................................... 145 Table 13-3 Summary of Mineralization Variability Test Work Zn Scavenger Tailings ...................... 146 Table 13-4 Typical Reagent Addition for Roughers and Cleaners in Pb/Zn Flotation Test .............. 147 Table 13-5 Open Circuit Lead and Zinc Rougher and Cleaner Flotation Tests for Lamas 1 Sample
.......................................................................................................................................................... 148 Table 13-6 Open Circuit Lead and Zinc Rougher and Cleaner Flotation Tests for Lamas 2 Sample
.......................................................................................................................................................... 148 Table 13-7 Open Circuit Lead and Zinc Rougher and Cleaner Flotation Tests for San Filipe Sample
.......................................................................................................................................................... 149 Table 13-8 Locked Cycle Test Results for Ventana (Test PFCC-2) ................................................. 149 Table 13-9 Simulated Test Results for Lamas 1 .............................................................................. 150 Table 13-10 Simulated Test Results for Lamas 2 ............................................................................ 151 Table 13-11 Simulated Results for San Felipe ................................................................................. 151 Table 13-12 Estimated Metallurgical recoveries............................................................................... 151 Table 14-1 Assay Statistics sorted by Domain ................................................................................. 156 Table 14-2 Cap levels and number capped for each variable .......................................................... 157 Table 14-3 Capped Assay Statistics sorted by Domain ................................................................... 158 Table 14-4 Assay Statistics sorted by Domain ................................................................................. 160 Table 14-5 Cap levels and number capped for each variable .......................................................... 161 Table 14-6 Capped Assay Statistics sorted by Domain ................................................................... 161 Table 14-7 Assay Statistics sorted by Domain ................................................................................. 164 Table 14-8 Cap levels and number capped for each variable .......................................................... 165 Table 14-9 Capped Assay Statistics sorted by Domain ................................................................... 166 Table 14-10 Assay Statistics sorted by Domain for Transversales .................................................. 167 Table 14-11 Cap levels and number capped for each variable ........................................................ 167 Table 14-12 Capped Assay Statistics sorted by Domain for Transversales..................................... 168 Table 14-13 Composite Statistics sorted by Domain........................................................................ 168 Table 14-14 Pearson correlation coefficients for Ventana................................................................ 170 Table 14-15 Pearson correlation coefficients for Las Lamas ........................................................... 170 Table 14-16 Pearson correlation coefficients for San Felipe ............................................................ 171 Table 14-17 Pearson correlation coefficients for Transversales ...................................................... 172 Table 14-18 Summary of Semivariogram Parameters for Ventana domains ................................... 173 Table 14-19 Summary of Semivariogram Parameters for Lamas Structures ................................... 174 Table 14-20 Summary of Semivariogram Parameters for San Felipe Structures ............................ 175 12
Table 14-21 Specific Gravity determinations Ventana ..................................................................... 179 Table 14-22 Specific Gravity determinations Lamas ........................................................................ 180 Table 14-23 Specific Gravity determinations San Felipe.................................................................. 181 Table 14-24 Specific Gravity determinations Transversales ............................................................ 181 Table 14-25 Kriging Parameters for Silver at Ventana ..................................................................... 182 Table 14-26 Kriging Parameters for Silver at Las Lamas ................................................................. 183 Table 14-27 Kriging Parameters for Silver at San Felipe Veins ....................................................... 184 Table 14-28 Kriging Parameters for Silver at Transversales ............................................................ 185 Table 14-29 Ventana Resource classed as Indicated within Mineralized Solids.............................. 189 Table 14-30 Ventana Resource classed as Inferred within Mineralized Solids ................................ 189 Table 14-31 Las Lamas Resource classed as Indicated within Mineralized Solid ........................... 190 Table 14-32 Las Lamas Resource classed as Inferred within Mineralized Solid ............................. 190 Table 14-33 San Felipe Resource classed as Indicated within Mineralized Solids .......................... 191 Table 14-34 San Felipe Resource classed as Inferred within Mineralized Solids ............................ 192 Table 14-35 Transversales Resource classed as Inferred within Mineralized Solid ........................ 193 Table 14-36 Recoveries for each metal............................................................................................ 193 Table 14-37 Ventana Resource classed as Indicated within Conceptual Open Pit.......................... 194 Table 14-38 Ventana Resource classed as Inferred within Conceptual Open Pit ............................ 194 Table 14-39 Ventana Resource classed as Indicated in potential Underground.............................. 195 Table 16-1 Summary of Contributions to mill feed by deposit and mining method .......................... 199 Table 16-2 Life of project estimated capital requirements ................................................................ 215 Table 17-1 Capital cost estimate for 750 mtpd plant ........................................................................ 222 Table 17-2 Additional Capital Cost for 1250 MTPD and 2000 MTPD Plants ................................... 224 Table 17-3 Estimated Operating Cost for Varying Feed Rate .......................................................... 225 Table 18-1 Tailings storage facility capacity ..................................................................................... 229 Table 18-2 Cost Estimate for TSF. All tailings go to TSF (no UG backfilling), Freeboard = 3m ....... 232 Table 18-3 G&A Costs ($US) ........................................................................................................... 237 Table 20-1 List of Authorizations and Plans Required for San Felipe .............................................. 247 Table 21-1 San Felipe PEA Estimated Capital Costs - $M .............................................................. 252 Table 21-2 San Felipe PEA Estimated Operating Costs Per tonne ................................................. 253 Table 22-1 San Felipe PEA Economic Model .................................................................................. 257 Table 22-2 San Felipe Pea Production Summary ............................................................................ 260 Table 22-3 San Felipe – Life of mine economics ............................................................................. 261 Table 22-4 San Felipe PEA NPV and IRR ....................................................................................... 262 Table 22-5 San Felipe Project Preliminary Economic Assessment 2014 - Sensitivities .................. 263 13
Table 25-1 Summary of Silver Equivalent Resource for all Zones sorted by potential mining method
.......................................................................................................................................................... 268 Table 25-2 Recoveries Used in Resource Estimation for Each Metal .............................................. 268 Table 25-3 Estimated Recoveries in PEA for Convential Flotation Mill ............................................ 269 Table 26-1 Estimates of FS/NI43-101 Work Scope for Tailings Storage Facility ............................. 277 Table 26-2 Recommended work program budget ............................................................................ 279 14
1.
Summary
This amended report addresses issues identified by the British Columbia Securities Commission
with the original report that has an effective date of Sept 4, 2014.
This amended report does not
include any new data or other inputs and there are no material changes to any interpretations,
results or conclusions. Specific items amended are:
Title Page
•
Mark Smith, P.E. added as a Qualified Person
Section 2.1
Clarification as to which author is responsible for each section of the report
•
Section 4.2
•
A note included regarding changes in the property payment schedule that occured after the
Effective Date of this report.
Section 14
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) 2014 Definition Standards for
•
mineral resources referenced instead of CIM 2005 Definition Standards.
•
Explanation for base-case cut-off grades added.
•
Estimated resources divided by material potentially mineable by open pit and underground
methods and reported as such.
Section 18.1
•
Various edits to grammer and clarifications by Mark Smith, P.E.
Sections 25.1, 25.2 and 26.1
•
Edits to clarify degree of uncertainty with respect to continuity of higher grade sections within
mineralized zones.
Certificates of Authors
•
Added details to the list of relevant experience for Hans Smit, P.Geo.
•
Clarification on which authors were responsible for sections 18, 21 and 24 through 27.
•
Mark Smith, P.E. added as an author responsible for Section 18.1 and Table 26-1.
Section 1
•
Summaries updated to reflect changes in related chapters.
•
A paragraph mistakenly copied from 1.4 and inserted in section 1.3 removed.
15
This section gives a short summary of each section of the report. In of itself, this summary does
not provide a complete description of the San Felipe project, the work undertaken or the resource
estimation and Preliminary Economic Assessment completed.
The reader is referred to the
subsequent sections to obtain a detailed assessment of the project.
1.2. Introduction
The purpose of this report is to provide an independent assessment of the San Felipe Project and,
in particular, to provide an independent mineral resource estimate and a preliminary economic
assessment (PEA) for the project.
San Felipe is a mineral exploration project located in
Sonora State, Mexico that is being explored for silver, lead, zinc and copper mineralization. The
project is owned by Impulsora Minera Santacruz, S.A. de C.V, a wholly owned subsidiary of
Santacruz Silver Mining Ltd (“Santacruz”), a public company trading on the TSX Venture exchange
under the symbol SCZ. This report includes information gathered by Santacruz as well as by
previous operators of the project, Minera Hochschild Mexico, S.A. de C.V. ("Hochschild") and
Boliden Mexico S.A. de C.V. (“Boliden”).
Santacruz commissioned Hans Smit, P. Geo. of Hans Smit, P. Geo. Inc. (“Smit”), and Fletcher
Bourke, P. Geo. of Kuu Exploration Ltd. (“Bourke”), to review the project, develop a geological
model for the area drilled, and facilitate completion of a resource estimate and a PEA. Santacruz
commissioned Gary Giroux, P. Eng. of Giroux Consulting Ltd. (“Giroux”), to estimate the resources
for the project based upon the geologic and mineralized domain model created by Smit and
Bourke. Deepak Malhotra, Registered SME Member and President of Resource Development
Inc., (“Malhotra”) was commissioned to complete the metallurgy and milling components of the
PEA. JDS Energy & Mining Inc, under the direction of Greg Blaylock, P. Eng. was commissioned
to complete the mine plan and mining parts of the PEA. Mark Smith, P.E. of RRD International
Corp was commissioned to do a prelimnary design and cost estimate for a tailings storage facility
and provide recommendations for further studies in regards to talings storage.
All the contributors made recommendations for further work, and helped prepare a Technical
Report in accordance with Canadian Securities Administrators National Instrument 43-101 (NI 43101).
Bourke, Smit, Giroux, Malhotra, Blaylock and Smith are Qualified Persons as defined by NI 43-101
and are independent of both Santacruz and the title holders, based on the tests outlined in NI 43101.
16
The effective date of this report is September 4, 2014, the date that the metal prices used in the
PEA economic calculation were set. The effective date of the mineral resource estimate included
in this report is 3rd April 2014; the date Giroux received the final assay data. Since that time, 6
holes have been drilled on the property for a total of 1,929 meters. The results of these holes will
not materially affect the resource and were not considered in the PEA.
Smit visited the San Felipe Project during the periods of June 18-19, 2013, July 13-22, 2013,
September 18-24, 2013, February 13-16, 2014 and April 3-6, 2014. Bourke visited the San Felipe
site during the periods of July 13-22, 2013, September 18-27, 2013, February 13-17, 2014, and
April 22 to May 1, 2014, May 20-27, 2014 and June 10-16, 2014. Blaylock visited the property on
May 8, June 11, August 20, and September 11, 2014 and examined existing La Ventana
underground workings, La Ventana core, sections of the La Ventana outcrop for sampling, San
Felipe and Transversales deposits, Las Lamas outcrop and existing underground workings,
proposed TSF sites and proposed process plant sites. Smith visited the property February 14-15,
2014 and examined potential tailings storage facility sites.
Giroux has not visited the project but has relied on the geological data and information verified by
Bourke and Smit.
Malhotra has not visited the project but has relied on information supplied by Smit and Bourke,
information supplied by Santacruz and information within reports by Hochschild.
1.3. Reliance on Other Experts
The majority of work in this report is based on data obtained from the authors’ site visits, digital
data supplied by Santacruz, digital data created by Hochschild and their consultants, data
available in Hochschild reports, and assay data obtained directly from ALS Minerals.
The
conclusions presented in this report are based on the work of Qualified Persons, as defined under
NI 43-101.
Information from other experts was used for some aspects of the work described by this report as
detailed in section 3.
Best professional judgment was utilized in the collection and interpretation of data discussed in this
report. However, users of this report are cautioned that the valuation methods used herein are
subject to inherent uncertainties and assumptions, over which the authors have no control. These
17
uncertainties and assumptions are stated herein. Users of this report are hereby advised to be
aware of and understand these uncertainties and assumptions.
1.4. Property Description and Location
The San Felipe Project is located in the Sonora River basin approximately 110km NNW of the city
of Hermosillo in the state of Sonora, Mexico. The village of San Felipe de Jesus is situated 6km
east of the resource area. The center of the current resource is located at UTM Zone 12, 567400E,
3305700N NAD27.
The San Felipe Project includes 14 mining concessions covering a total area of 16,265 hectares.
Santacruz’s rights to the concessions are held through its wholly owned Mexican subsidiary,
Impulsora Minera Santacruz S.A. de C.V., (the "Company"). The Company acquired exploration
rights with the right to purchase the project from Minera Hochschild Mexico, S.A. de C.V.
("Hochschild"). Pursuant to a mining exploration and promissory sale agreement dated August 3,
2011,
and
amended
December
9,
2011,
October 8, 2012,
August
13,
2013
and
September 3, 2014 (the "San Felipe Agreement"), the Company was granted an option to acquire
a 100% interest in the San Felipe project.
In addition to cash payments of $23,700,000 made to date and the issuance of 1,250,000
common shares previously completed by Santacruz, in order to maintain and exercise the
option, the Company is obligated to incur exploration expenditures of $3,000,000 by
October 31, 2015 and make additional payments as follows:
•
Annual surface right payments of 520,000 Mexican Pesos ($39,744) on or before
February 19 of each year until the project reaches commercial production;
•
$2,000,000 on or before December 1, 2014;
•
$5,000,000 on or before December 1, 2015; and,
•
$14,000,000 on or before December 15, 2016.
Under the agreement and amendments, the total payments will be $44,700,000 plus 1,250,000
Santacruz shares. Hochschild is also entitled to receive 30% of any capital increase of the
Company (Impulsora Minera) during the remaining life of the San Felipe Agreement as prepayment of any remaining payment obligations. The project is subject to a 1% NSR in favour of
Hochschild. The Company has the right at any time to buy back the NSR for a cash payment of
$3,000,000.
18
All of the $3,000,000 in exploration expenditures has been incurred.
Subsequent to the Effective Date of this report, Santacruz reported that on July 7, 2015, the
company entered into a further amending agreement (the "Third Amending Agreement") with
Hochschild pursuant to which the $5,000,000 payment due on or before December 1, 2015 was
deferred to December 1, 2016.
To the date of this amended report, Santacruz reports it has made aggregate cash payments
totaling $25,883,997, issued 1,250,000 common shares and incurred the full $3,000,000 in
expenditures. The author has not independently verified this information.The San Felipe property
is within the boundaries of a number of municipalities and ejidos (agrarian communities) including
San Felipe de Jesus, Aconchi, Rayon, Huepac and Banamichi. The part of the project area that
covers the resources and potential development is entirely within the Municipality of San Felipe de
Jesus and surface rights are owned by the San Felipe Ejido (agrarian community). On September
21, 2008, Hochschild signed a temporary occupation access agreement with the Ejido, allowing
the company access to conduct exploration, development work and exploitation in a 1,596.5 Ha
area. The agreement is valid until December 1, 2038, and includes a renewal clause. An annual
payment of $1.8M pesos is tied to inflation and is now 2.1 million pesos (US$160,000) per year.
This agreement was assigned to Santacruz on August 3, 2011.
There are a number of old mine workings including adits, stopes and small pits within the
San Felipe Project area from previous mining activity. Many of these workings are open and
present a safety hazard. No water discharge was observed from any of the workings, but surface
exposures of mineralized rock and waste dumps are rusty weathering and could result in minerals
being leached into surface waters. There is an old mill site located within the project area proximal
to the location of the proposed new mill. The buildings have been removed, but there are small
piles of mineralized material and some old tailings in the adjacent areas. Drilling activities by
Santacruz and previous operators have resulted in a significant number of drill roads and pads
being created. These should be stabilized to reduce the effects of surface erosion.
Santacruz has initiated a baseline environmental study for the project area.
Initial sampling
comprised 8 stream sediment samples and 5 water samples from wells which yielded one
anomalously high lead assay (130 ppm) in a sediment sample taken below the old tailings site. It
will be important to continue baseline sampling, including surface water samples, to establish the
condition of the streams before any potential project development is initiated.
19
As the amount of work authorized by a previous Informe Preventivo (exploration permit) has been
exceeded, a permit will be required before any additional exploration activities that result in land
disturbance are undertaken. The authors are not aware of any issues related to the project which
would prevent authorization of a new drilling permit.
Mine construction and operation activities require preparation and approval of a number of permits.
Details on these are given in Section 20.
1.5. Accessibility, Climate, Local Resources, Infrastructure and
Physiography
All current resources and potential development on the San Felipe project are within the
boundaries of the municipality of San Felipe de Jesus. 148 km of paved highway from Hermosillo,
the capital of Sonora, provide year-round access to the village of San Felipe. The access road to
the village of San Felipe from highway 17, while paved, crosses the Sonora River via a ford.
During the rainy season the river occasionally floods and it is not possible to drive across the ford
for a period of hours to rarely a few days. An elevated foot bridge allows access by walking during
these periods. The project area is accessed by gravel roads from the San Felipe village. It is
approximately 7 km along a flat stream valley to get to the proposed mill site.
Proposed
underground developments are within 2 km of this site. Road building will be relatively easy.
During the rainy season the local creeks experience flooding. Roads can be built above the
flooding level but no bridges are planned and there will be periods when creek crossings are not
passable.
Experience from the last few years suggests these periods will be infrequent and
generally only a few hours long.
San Felipe is located in a semi-arid region typical of the Sonoran desert. Average day time
temperatures vary from around 180C in the winter to 350C in the summer (June through August).
Night time averages vary from around 60C to 280C. Summer temperatures can be as hot as 500C.
Occasionally night temperatures in the winter can fall below zero. Snow is very rare.
Rainfall typically averages around 400 mm per year, with most rain falling in July, August and the
first part of September. Over the last 50 years, annual average rainfall has varied from a low of
279 mm to a high of 700 mm. The maximum estimated 100 year-return 24-hour rain event is 145
mm.
The San Felipe property is situated in moderately to locally rugged topography with elevations
ranging from to 610 to 1830 m. The areas where the resource and potential development are
20
located are characterized by moderate to steep hills with ephemeral creeks in the valleys. In the
area of the resource and potential development there is little land suitable for growing crops.
Cattle ranching is the main non-mining related use of the land.
The vegetation in the San Felipe area is classified as subtropical shrublands; spineless shrubs and
secondary vegetation usually found in semiarid areas. In preliminary surveys within the project site,
protected flora species, as established by NOM-059-SEMARNAT-2010, were not observed.
The village of San Felipe has an estimated population of 400 people. Santacruz has hired most of
the non-technical people employed in exploration from the community. There are only minimal
services available in San Felipe.
The communities in the vicinity of San Felipe along the Sonora River have an estimated total
population of 10,000 people, mostly engaged in agriculture and support industries. The main
source of industrial supplies and services is the city of Hermosillo located by a 2 to 2 ½ hour drive
from the project.
While some labour for mining could be sourced locally, it is likely that a
significant proportion of the labour force would have to be brought in from Hermosillo.
San Felipe is connected to the national power grid; however the existing line is too small to support
a major industrial operation. The closest high-tension power line is 40 km to the south. Power
may have to be brought from the town of Ures that has an existing substation which would entail
construction of a 75 to 80 km power line.
Santacruz has water rights and two wells located in the flat Sonora River valley. No production
tests have been done on these wells, but a number of wells are currently being used in the valley
for agriculture and there appears to be a productive aquifer within the valley gravels.
1.6. History
Mining on the San Felipe Property dates back to the turn of the last century. The main mining
area was centered around the current resource area with workings developed on the Artemisa,
Cornocopia, La Ventana, San Felipe and Lamas structures. The first known company to work in
the area was the Artemisa Mining Company which operated the Artemisa Mine from 1920 to 1944.
The property was then briefly owned by a number of small operators before being sold to Minera
Serrana (Serrana) in 1973. Serrana constructed a small flotation plant, processing ore from the
San Felipe district as well as from El Gachi and Moctezuma until 1991.
No production has
occurred from the property since 1991.
21
In 1996 Silver Eagle Resources Ltd., through its Mexican subsidiary Liximin, S.A. de C.V. (Liximin),
entered into an exploration agreement with Serrana.
Shortly after Liximin entered into an
agreement with Boliden Ltd. Boliden did not spend the total required money on the property and
ownership reverted 100% to Serrana after the four year period ended in 2000. Following this,
Hochschild entered into a joint venture with Serrana in 2006 and took 100% ownership of the
project in June 2008. Santacruz entered into a purchase agreement with Hochschild in 2011.
1.7. Geology
1.7.1. Regional Geology
The San Felipe Project is located in the San Felipe mining district within the southeast end of the
North American Block, northeastern Sonora, Mexico. The project is located at the junction of two
Proterozic basement provinces.
To the north lies the Mazatzal province which extends into
Arizona, while to the south lays the Caborca Terrane.
Mojave-Sonora Megashear.
The provinces are separated by the
The Matzatal province rocks are comprised of a series of
Precambrian metamorphic rocks that include metavolcanics and schists while the Caborca
Terrane rocks include a thick sequence of eugeoclinal deep water sediments and volcanic rocks.
Basement rocks are overlain by Upper Paleozoic quartzites and carbonates and Middle to Upper
Jurassic volcanic rocks. Overlying these are Upper Triassic rocks and include continental red
beds, conglomerates, and a series of shallow marine to fluvial sediments.
During the Triassic and Jurassic a period of plutonism and volcanism swept eastward across the
Sonora from the Paleozoic continental margin and flared up again in late Jurassic-early
Cretaceous. At San Felipe, three Laramide-age granitoids intrude the Lower Cretaceous rocks and
include; the late Cretaceous El Jaralito granodiorite, the early Eocene San Felipe rhyolite porphyry,
and the late Eocene two-mica granite from the Aconchi batholith.
1.7.2. Property Geology
The San Felipe district represents a cluster of deeply eroded late Mesozoic distal Pb-Zn-Ag skarn
vein deposits. The oldest rocks exposed in the San Felipe district belong to a Lower Cretaceous
metamorphic sequence that includes andesitic lavas and tuffs interbedded with siltstone and rare
limestone.
In the San Felipe project area these rocks are named the Lower Metamorphic
Sequence (LMS) and are metamorphosed siliceous hornfels, or altered to chlorite-albite-epidote,
and presumed the result of contact metamorphism. Small isolated dikes of the San Felipe
porphyry and sills of fragmental rhyolite porphyry intrude the LMS in the south part of the district;
22
whereas, a granite pluton dominates in the south part of the district. Oligocene volcanic and
sedimentary rocks in the San Felipe District include felsic pyroclastic rocks and andesitic flows
intercalated with polygenetic conglomerates. Overlying these are the clastic rocks of the Baucarit
Formation which are widespread in valleys of Central Sonora.
The San Felipe District contains a series of easterly-trending Pb-Zn-Ag-Mn skarn veins and pipes
that cut the Lower Metamorphic sequence and intrusive rocks. The district hosts five principal,
westerly-striking, vein systems that include Artemisa-Cornucopia, Las Lamas, San Felipe,
Transversales and La Ventana. Primary minerals include sphalerite, galena, pyrite, and magnetite
with lesser native silver, chalcopyrite, arsenopyrite, scheelite, and covelite within a gangue of
garnet, pyroxene, epidote, quartz, rhodonite, and carbonate.
1.7.3. Domain Summary
A three-dimensional geologic model was constructed for mineralized structures at San Felipe
using Leapfrog Geo software (leapfrog) based on detailed geologic logging of drill holes and
surface mapping in the project area.
Only mineralization that could be correlated between
drillholes over a significant area was considered for use in the resource estimate. Descriptions of
the geologic domains used are as follows:
•
La Ventana – Two domains were constructed at La Ventana (LV & LG). LV corresponds to
the main (high grade) mineralizing event - qtz-sphalerite-galena mineralization with epidote
and minor rhodonite. LG corresponds to a generally low grade, silica rich zone. This
domain is overprinted by and peripheral to the LV domain.
•
San Felipe – Three mineralized wireframes were constructed (HW-1, HW-2 and SF). SF
corresponds to the main structure that was historically mined while HW-1 and HW-2 are
mineralization structures in the hangwall.
•
Transversales – One domain (VT) was identified at Transversales. The domain
characteristics are similar to San Felipe.
•
Las Lamas – One mineralized wireframe was constructed (LL). Garnet (andradite) pyroxene (rhodonite) skarn alteration with disseminated sphalerite-galena-chalcopyrite
mineralization.
23
1.8.
Deposit Type
Mineralization at San Felipe can be classified as a zinc-lead skarn (Einaudi et al, 1981). These
skarn systems commonly occur in continental settings associated with either subduction or rifting.
They are sulphide rich with Zn + Pb commonly ranging from 10-20 % and Ag from 30-300 g/t.
Zinc-lead skarns are often transitional to massive-sulphide veins and often lack significant
calc-silicate alteration. The San Felipe district is characterized by a strong structural control on
hydrothermal fluid movement and resulting alteration / mineralization in the northern areas
(Ventana, Transversales and San Felipe) and a more disseminated style to the south (Lamas).
Calc-silicate alteration at San Felipe is Mn-rich including bustamite-rhodonite, piemontite, garnet
and pyroxene.
1.9. Exploration
Exploration by Boliden began in 1998 with a surface geochemical sampling program consisting of
763 soil and 52 stream sediment samples. Soil anomalies were detected over the now known
mineralized areas. Boliden noted that Au, Co and V increase in concentration to the south towards
Lamas, while Cu, Cd and Zn are higher in the northern areas. In general, the stream sediment
samples showed the base metals as being the best pathfinders, with only subdued silver values
detected in most samples.
Boliden completed an airborne magnetic geophysical program consisting of magnetics and very
low frequency magnetics (VLF) in May 1997. Problems caused by the operator resulted in the
survey being not reliable enough to use. A ground induced polarization (IP) and magnetometer
(MAG) survey was completed in 1998 over the Santa Rosa, La Ventana, San Felipe, Las Lamas
and Artemisa areas.
At Ventana, the magnetic responses were subdued and where present
showed a weak correlation with the mineralized structure. At Lamas and San Felipe, no significant
chargeability or magnetic response were found.
A total of 412 rock chip samples have been taken at San Felipe. Of these, 64 were taken by
Hochschild in 2008 and 2009, with the remainder of samples taken by Santacruz since 2011.
Geologic mapping was completed over approximately 10% of property (1,700 Ha) by Hochschild
from 2006 to 2007.
During 2014, Santacruz mapped approximately 30% of the property
(5,000 Ha) as part of an ongoing exploration program.
24
1.10. Drilling
A total of 317 holes have been drilled on the San Felipe property since 1998 for a total of 68,669
meters. Of these, Boliden drilled 5,187 meters in 27 holes; Hochschild drilled 42,452 meters in
199 holes; and Santacruz drilled 21,029 meters in 117 holes. Drilling has been successful in
outlining mineral resources at La Ventana, Transversales, San Felipe and Las Lamas.
1.11. Sample Preparation, Analysis and Security
For all drill campaigns, holes were drilled with HQ and NQ sized core with only select intervals
sampled. Core was sawn in half at site and one half sent to ALS (formerly Chemex and ALS
Chemex). Samples were prepared at the ALS facility in Hermosillo, Mexico. The pulps were then
shipped to Canada and analyzed at ALS in Vancouver. Samples were analyzed for 48 elements
using a four acid ICP-MS package (ME-MS61) and Au using a fire assay with and an AAS finish
(Au-AA23).
Details on sample security for Boliden and Hochschild are not known. Santacruz has a fulltime
caretaker and the core is kept in locked storage. The core from all operators is now kept in the
Santacruz core shed.
1.11.1.
QA/QC Analysis
QA/QC programs were undertaken by Santacruz and Hochschild. Approximately 13 percent of the
total number of drill core samples submitted for assaying (ratio of 1:8) are external quality control
samples. The drilling by Boliden did not employ a QA/QC program to monitor the core sampling
and analysis. However, this drilling represents only 6% of the total samples taken on the project
and all holes have been twinned or infilled by either Hochschild or Santacruz.
No major
differences in grade distributions were identified between Boliden and other operator holes.
The blanks for both Hochschild and Santacruz show no significant contamination problems at the
laboratory with only 3 samples above acceptable limits. The standards used show no systematic
problems with lab accuracy - only 4 sample results are deemed outside acceptable limits.
Duplicates show good precision and no bias in the data. The main limitations of the QA/QC data
relate to the lack of details on the standard types used by Hochschild and the use of a gold
standard instead of a silver standard for much of the Santacruz drilling. Though there are some
25
problems with the QA/QC data, the author is of the opinion that the analytical results from all drill
campaigns considered at San Felipe are adequate for mineral resource estimation.
1.12. Data Verification
Smit and Bourke spent approximately 87 man days at San Felipe from July 2013 to June 2014.
During these site visits the authors conducted the following verification procedures:
•
Visual site inspection of drill collar locations and orientations vs. digital data.
•
Historic workings were accessed in La Ventana, San Felipe and Las Lamas.
•
Geologic mapping was under taken by T. Longo C.P.G. and F. Bourke P.Geo. Over
approximately 30% of the property (5,000 Ha).
•
Detailed geologic re-logging of portions of approximately 250 drill holes by Boliden,
Hochschild and Santacruz (80% of total drill holes), and;
•
Verification of digital data versus original hard copies of data from Boliden, Hochschild and
Santacruz (collar orientation, location and geologic logging).
Bourke took three independent samples from core while re-logging. The amount of samples taken
is too small to allow meaningful statistical analysis; however the results confirm the presence of
high grade Ag, Pb and Zn.
A new independent drill hole data base was compiled by Bourke for use in the resource estimate.
The author was able to gain access to the original certificates directly from ALS for drilling
conducted since 2006 by Hochschild and Santacruz.
In total, 191 certificates (82% of all
certificates) were imported by Bourke into the new data base.
Drill hole collar location and down hole surveys supplied by Santacruz were checked against the
original hard copies of drill logs and of collar location survey reports for every drill hole.
An
independent surveyor was used to verify any discrepancies.
26
1.13. Mineral Processing and Metallurgical Testing
Sufficient amount of test work has been performed by several investigators for the San Felipe
prospect to support a PEA level study. In 2008, Hochschild contracted Dawson Metallurgical
Laboratories to undertake metallurgical test work. The primary objective of this phase of test work
was to determine lead and zinc flotation response on different mineralization type composites.
Seventeen composites, representing oxide, mixed and sulfide mineralization types were prepared
from 51 individual samples and scoping level flotation tests were performed. Material for the tests
was obtained from assay rejects from core drill holes on the Ventana vein.
Santacruz did
additional test work in 2013 and 2014 on 4 composites, one from Ventana, two from Las Lamas
and one from San Felipe.
Estimated metallurgical recoveries used on the PEA model are summarized below.
testing has not been able to produce a viable copper concentrate.
considered in the PEA.
To date,
Therefore, copper is not
Further test work to evaluate the potential for copper recovery is
recommended.
Table 1-1 Estimated Metallurgical Recoveries
Oxide Sulphide Ag 70% 80% Pb 70% 86% Zn 68% 87% 1.14. Mineral Resource Estimates
Giroux Consultants was contracted by Santacruz to complete a resource estimate for six separate
mineralized structures: the La Ventana, the Las Lamas, the San Felipe, two San Felipe HW
structures and Transversales. The San Felipe mineral resource estimate is supported by 55,050
metres of drilling in 260 drill holes with a total of 11,526 assays. The holes include those drilled by
Santacruz in 2013 and by prior operators in the period 1999 to 2000 and 2006 to 2008. The
mineral resources were defined to a maximum depth of approximately 450 metres below surface
with a total of 1,106 down-hole surveys utilized for control.
Geologic solids for each skarn vein system were built by Bourke defining the mineralized
structures. The geological model has six domains; two at La Ventana (HG, LG), Transversales
(VT), three at San Felipe (SF, HW-1, HW-2) and one at Las Lamas (LL).
27
Assays for each domain were examined and a top cap was applied to each variable within each
domain.
Uniform 2 m composites were formed for the domain envelopes.
Variography was
completed for all domains in the La Ventana and Las Lamas zones. Due to insufficient composites
in the VT, SF and HW-2 domains, variography from the HW-1 domain was used with the
orientation changed to fit the strike and dip of the structures.
Grades for all variables were
interpolated into blocks 5 x 2.5 x 5 m using ordinary kriging. For blocks with multiple domains
present, a weighted average was determined for the mineralized portion. A specific gravity was
established for each domain based on 472 measurements from drill core. Estimated blocks were
classified as indicated or inferred based on geologic and grade continuity.
Giroux Consultants Ltd. completed the mineral resource estimate on the San Felipe Project on six
separate mineralized structures drilled to date: the La Ventana, the Las Lamas, the San Felipe, the
two San Felipe hanging wall structures and the Transversales vein. The San Felipe vein and two
hanging wall structures are combined in resource tables. The new mineral resource estimate was
utilized in preparation of the PEA.
In addition to silver, lead and zinc, the veins contain low amounts of copper and anomalous gold.
Since test work has not been able to produce an economic copper concentrate and gold values
are too low to be significant, the values for these metals have not been considered at this time.
Since the veins contain different metals, a silver equivalent value cut-off is given in the resource
tables to better compare value. The metal prices used in the silver equivalent estimation are from
a 100 day moving average as of June 3, 2014, and are listed below. The metal prices and
recoveries used for the silver equivalents in the resource estimation vary somewhat from those
used in the PEA as the resource was done earlier and the PEA includes some new information.
Factor
Ag
-
US$ 20.06 per ounce
0.64 $/g
Pb
-
US$ 0.96 per pound
21.16 $/%
Zn
-
US$ 0.92 per pound
20.28 $/%
The recoveries used in the resource estimation for each metal within each vein are shown below.
28
Table 1-2 Recoveries for each metal
Zone Ag Rec. Pb Rec. Zn Rec. Ventana 70% 86% 87% Las Lamas 73% 82% 88% San Felipe & Transversales 69% 86% 79% The equation used to establish Ag Equivalent is:
𝐴𝑔𝐸𝑞 =
𝐴𝑔𝑝𝑝𝑚×0.64×𝐴𝑔 𝑅𝑒𝑐 % + 𝑃𝑏%×21.16×𝑃𝑏 𝑅𝑒𝑐 % + (𝑍𝑛%×20.28×𝑍𝑛 𝑅𝑒𝑐 %)
0.64×𝐴𝑔 𝑅𝑒𝑐 %
The silver equivalent resource for each mineralized structure is presented in the following Tables.
This resource contains no edge dilution. At this time, only a Preliminary Economic Assessment
has been completed and an economic cut-off is unknown. Based on asumptions made during the
PEA, a cut-off for possible open pit extraction would be 75 g/t Ag Equivalent based on $2.00 /t
mining costs, $19.00 /t milling costs and $18.00 smelter charges and the metal prices shown
above. For possible underground extraction the cut-off would be 150 g/t Ag Equivalent based on
assumed mining costs of $30 /t, milling costs of $19.00 /t and smelting charges of $28.00 /t. The
resources are presented broken down by mining method. For open pit resources only material
within the conceptual pits is reported while for underground resources the material within the
mineralized structures below the open pits is reported.
29
Zone Classification Cut-‐
off AgEq (g/t) Tonnes > Cut-‐off Grades > Cut-‐off Ag Pb (g/t) (%) (tonnes) Within Conceptual Open Pits 10,000 70.61 0.11 Ventana Indicated 75 San Felipe Total Ventana San Felipe Transversales Indicated Indicated Inferred Inferred Inferred 75 75 75 75 75 Total Inferred 75 Ventana San Felipe Las Lamas Indicated Indicated Indicated 150 150 150 Total Ventana San Felipe Las Lamas Indicated Inferred Inferred Inferred 150 150 150 150 1,017,000 1,201,000 712,000 383,000 75.32 59.67 56.33 95.27 Total Inferred 150 2,296,000 64.57 Zn (%) AgEQ (g/t) AgEq Ozs. 7.69 378.11 121,565 1.39 1.26 1.66 1.28 1.41 4.07 4.44 6.31 4.56 1.33 283.26 293.04 370.29 297.48 159.84 792,310 913,875 3,000,083 2,496,255 1,772,945 858,000 63.51 1.44 Below Pits Possible Underground 815,000 72.91 2.96 118,000 91.38 1.76 84,000 76.18 0.25 3.78 263.52 7,269,283 6.78 5.79 5.29 460.35 368.79 286.28 12,062,477 2.60 2.86 1.61 0.36 6.54 5.78 4.09 5.50 435.35 403.57 267.06 317.54 14,234,732 15,583,056 6,113,354 3,910,101 2.06 5.21 346.89 25,606,511 87,000 97,000 252,000 261,000 345,000 82.27 81.07 54.37 83.07 55.40 1,399,110 773,145 1.15. Mineral Reserve Estimates
There are no mineral reserve estimates for the San Felipe project.
30
1.16. Mining Methods
A variety of mining methods will be used at the San Felipe project including conventional open pit
and underground methods applied to the four deposits targeted for mining at this time. The La
Ventana deposit will be mined using a combination of open pit and underground methods, as will
the San Felipe deposit.
Las Lamas will be mined using underground methods only and
Transversales will be mined using open pit methods only.
At an average mining and processing rate of 1,250 tonnes per day the anticipated life of mine is
expected to be 7.5 years.
1.17. Recovery Methods
This Preliminary Economic Assessment is based on a conventional flotation mill that produces a
zinc and a lead concentrate. Silver will be recovered primarily within the lead concentrate. Silver
values within the zinc concentrate are too low to be payable.
A 1,250 mtpd (metric tonne per day) mill will be constructed in the first year of project development.
The mill will be located proximal to the old Artemisa mill site approximately 2 km southeast of the
Ventana vein. The run-of-mine (ROM) mineralized material will be trucked and dumped into a
hopper which will have aira grizzly. The mineralized material will be crushed in a three-stage
crushing system and stored in a fine mineralized material bin. The mineralized material will be fed
from the fine mineralized material bin to a ball mill in closed circuit with cyclones. The cyclone
overflow will be pumped to the lead rougher and scavenger flotation circuit.
The scavenger
concentrate will be recycled back to the rougher flotation feed. The rougher concentrate will be
subjected to counter-current two stage cleaner flotation. The lead concentrate will be thickened
and filtered and stored for shipment.
The lead rougher flotation tailing will be sent to the zinc rougher/ scavenger flotation circuit. The
zinc scavenger flotation tailing will be sent to the conventional tailing pond. The rougher zinc
concentrate will be subjected to two stages of counter-current cleaner flotation and the final
concentrate will be thickened and filtered.
31
1.18. Project Infrastructure and General Administration
The tailings storage facility (TSF) will be an important component of the infrastructure required for
a mine at San Felipe. In 2008, Hochschild identified a potential site for a TSF and contracted
various geotechnical studies. Work included digging 19 test pits, drilling 4 geotechnical holes in
the area of the proposed dam and establishing 2 monitoring wells. Santacruz contracted Mark
Smith, P.E. (M. Smith) to review the data and to do a comparison between the Hochschild site and
a site proposed and permitted by Santacruz. At this point the Hochschild site appears to be more
favorable, so the PEA model and descriptions below are all based on this site. If further evaluation
finds a significant problem with the Hochschild site, the alternative site will be evaluated as a backup.
M. Smith visited the Hochschild site on February 14 and 15, 2014. The following summarizes his
observations:
•
Good quality bedrock outcropping in both abutments and in various locations in the
impoundment;
•
Abundant borrow sources for soil and good quality rock;
•
Good abutment geometry and a good ratio of dam length (distance between abutments),
valley width and valley length, suggesting a reasonable storage efficiency (impoundment
volume divided by dam fill volume);
•
Ample room for increasing capacity well above 5,000,000 mt;
•
Existing geotechnical and hydrogeological field & lab investigations are probably
sufficient for a PFS-level design.
After the visit, M. Smith completed a PEA level design and cost estimate for a TSF.
The village of San Felipe is connected to the national power grid but the line is under-sized for the
power requirements of the proposed mill. The nearest high tension line from San Felipe is 40 km
south of the project. In very preliminary discussions with the government-owned power company,
Comision Federal de Electricidad (CFE), CFE representatives indicated that a new line would have
to come from Ures where there is an existing sub-station. This would require a 75 to 80 km long
power line. At this time, no engineering or permitting has been done for a power line and there
have been no detailed discussions with CFE.
32
Santacruz has authorization for two wells in the Sonora River floodplain located approximately 5
km from the mill site. There is sufficient water authorized to operate the project as modeled. No
pump tests have been done to see whether the wells can achieve the production rate they are
authorized for. There are a number of wells in the area that are used for agriculture and the
material in the flat river valley appears to host a good aquifer.
Approximately 8 km of road will require upgrading to provide access from the end of pavement at
the village of San Felipe to the proposed mill site. A further 7 km will be needed to connect the mill
site to the various mine workings. All roads will be gravel and road building will be straight forward.
All creek crossings are proposed to be fords, so continued road maintenance will be needed in the
rainy season and there will be occasional times that access is blocked by high water.
Other infrastructure required includes an office, warehouse and shop. These are planned to be
located proximal to the mill. No designs have been made for these structures, but simple buildings
or trailers are planned. A fuel depot will be placed within a lined containment.
This PEA model is based on Santacruz providing overall site management, technical support and
surface and mill personnel. Mining will be done by contractors and all mine personnel besides the
mine superintendent are included in mine costs.
No detailed reclamation and closure plan has been made for the project. There is insufficient test
work to model whether waste rock will be PAG and there is no characterization of the tailings.
Therefore, reclamation plans are very conceptual at this time.
33
1.19. Market Studies and Contracts
No market studies have been undertaken for the San Felipe project and there are no contracts for
any possible production. However, metallurgical studies indicate that marketable lead and zinc
concentrates can be produced from the resource material. Santacruz is currently selling similar
concentrates from their Rosario mine and it is reasonable to assume that concentrates from San
Felipe could be sold.
For the PEA model, general details of the contract Santacruz has with a concentrate trader for the
Rosario concentrate were used. Key points include:
Zinc concentrate payables:
Zinc - Pay for 85% of the final zinc content, subject to a minimum deduction of 8 units (percentage
points).
Silver - Deduct 3 ounces (93 gms) per tonne of concentrate and pay 70% of the balance of the
final silver content. The silver values in the zinc concentrate produced in test work for San Felipe
are too low to be payable under this condition.
Lead – No payment.
Lead Concentrate Payables:
Lead - Pay for 95% of the final lead content, subject to a minimum deduction of 3 units
(percentage points). .
Silver - Pay 95% of the final silver content subject to a minimum deduction of 50 grams per tonne.
Zinc – no payment, but no penalty.
34
1.20. Environmental Studies, Permitting and Social or Community
Impact
There are a number of environment-related regulatory standards (NOMs) that pertain to mining
developed by the Mexican Federal government. All development, operating and closure activities
must conform to these NOMs.
Baseline environmental studies have recently been initiated on the project by Santacruz. To date
these have been limited to a reconnaissance visit to the project area for a preliminary review of the
type of flora and the general environmental conditions at the project area and a first round of water
sampling. On May 20th, 2014, 5 wells were sampled and 8 samples of creek sediments collected.
At the time sampling was done, none of the creeks or the Sonora River had surface water. The
wells had some parameters that were variably elevated including fluorine, sulphur, aluminum and
manganese indicating high levels for these elements occurs naturally in the groundwater. Lead,
zinc and copper levels were low.
A high lead value in sediments (130 ppm) is likely due to
contamination from an old mill site.
Water sampling, including both surface and subsurface, will continue. Detailed flora and fauna
studies of the area that would be affected by any potential development are planned within the
next few months.
Tailings characterization and more detailed evaluation of the site will be required before any
construction of a tailings impoundment is initiated.
A comprehensive waste rock characterization program is required before any development is
initiated. To address the issue of acid rock drainage and metal leaching in this PEA, waste rock
dumps were modeled to be contained and engineered to hold rock that is potentially acid
generating (PAG).
An initial study did not identify any rare or endangered flora on the proposed mill or tailings pond
sites. More detailed studies of flora and fauna in the area potentially affected by development are
planned.
35
The main mine permits required for construction and operation activities are the:
•
Authorization to Impact the Environment which requires a submission of a Manifesto de
Impacto Ambiental (Environmental Impact Statement), known by its acronym as an MIA,
and;
•
Authorization to Change the Use of Forest Lands which requires the submission of an
Estudio Tecnico Justificativo (Technical Justification Study), known by its acronym ETJ.
Santacruz applied for and received a MIA and ETJ for a processing plant (1.39 Ha) and for a
tailings impoundment site (13.86 Ha) valid for 10 years in 2014. The processing plant area is in
the area of the mill site proposed in the PEA, but there may need to be modifications of the area to
meet new plans. The tailings site is not the one currently proposed as the site proposed by
Hochschild appears to be a better alternative. The permitted site provides a possible back-up if
detailed examination of the current proposed site finds some unknown problem with the
Hochschild site.
No authorizations were applied for the open pit portion of the PEA plan as this is a relatively new
concept. No authorizations have been applied for mine waste storage areas or power lines.
Under the MIA and ETJ authorizations already received, Santacruz is required to develop the
project according to the terms and obligations in the MIA and the ETJ and is obliged to develop
management and monitoring plans to ensure compliance. Santacruz is currently reviewing all
permitting requirements in relation to the development and operating scenario described in this
report and Santacruz plans to initiate the work necessary to obtain all permits and authorizations
required to undertake the proposed development.
Santacruz has signed an agreement to acquire water rights to two wells which could provide water
for potentiual operations. Filing of this agreement with Mexican authorities is still pending.
It is the author’s opinion that there are no issues with the project that will prevent obtaining the
permits and other authorizations required to build a mine, provided that Santacruz collects the
required information, designs project components so that environmental values and human safety
are protected, ensures that applications and reports are complete, and correctly responds to
concerns expressed by regulatory agencies.
the non-technical people employed in exploration from the community and has a cordial
relationship with the people in the community.
36
population of 10,000 people, mostly engaged in agriculture and support industries. While some
labor for mining could be sourced locally, it is likely that a significant proportion of the labor force
would have to be brought in from Hermosillo.
Provided that Santacruz puts effort into working with San Felipe and other area communities,
social and community concerns are unlikely to prevent a mine from being developed.
1.21. Capital and Operating Costs
A summary of estimated capital costs is given in Tables 1-4 and of estimated operating costs is
given in Table 1-5.
Table 1-4 Estimated Capital Costs - $M
Item Description Initial Sustaining Mining Open pit and underground contract mining $2.5 $26.3 1,250 mtpd mill $15.3 $0.0 Milling Infrastructure and General and Administration Tailings Dam $2.1 $3.4 Office, shop and warehouse $0.6 $0.1 Power to site $5.0 $1.0 Power on site $0.5 $0.5 Roads $0.9 General and Admin $3.4 Working Capital $6.0 -‐$6.0 Closure and Reclamation Reclamation $3.0 Salvage -‐$0.5 Subtotal $36.3 $27.8 Total Capital $64.1 37
Mining Table 1-5 Estimated Operating Costs Per tonne
Per tonne Open pit – mineralized material per tonne $2.80 Open pit – waste per tonne $2.20 $27.62 to $32.71 Average per tonne mineralized material $26.12 Milling Milling per tonne milled $19.34 Concentrate Costs Smelter per tonne milled $24.34 Shipping, assay, insurance per tonne milled $3.68 $28.02 Underground -‐ average per tonne mineralized material General and Administration General and Administration per tonne mineralized material $6.85 Total per tonne mineralized material $80.33 1.22. Economic Analysis
The PEA is based on a stand-alone project and evaluates the potential economics from the start of
construction. It does not incorporate costs before any production decision. These would include
costs for further technical studies, property payments and taxes. The cost for these items is in part
dependent upon when a potential project decision is made. Potential tax savings a company could
achieve by writing off other expenses and losses against the revenue derived from San Felipe are
also not considered.
The reader is advised that the PEA is preliminary in nature, that it 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 PEA will be realized. Mineral resources that are
not mineral reserves do not have demonstrated economic viability.
Assumptions included in the model are:
•
Metal Prices – a 100-day average price as of September 4, 2014 was used; $19.91/oz for Ag,
$0.99/lb for Pb and $1.00/lb for Zn
•
All $US
•
Exchange rate – US$1 = 13.16 Mexican pesos
38
•
Mining by contractor
•
No cost or revenue escalations over time.
The primary taxes that need to be considered for a mining project in Mexico are:
•
IVA – 16% goods and services tax
•
Environmental Fee – a 0.5% tax on gold and silver production
•
Mining Royalty – a 7.5% tax on mineral production
•
Income Tax
39
Table 1-6 San Felipe PEA Production Summary
San Felipe -‐ September 2014 PEA Results This PEA is preliminary in nature and there is no certainty that the results of the PEA will be realized.
The resources incorporated in this assessment are not mineral reserves and do not have demonstrated economic viability.
The first year of this assessment is based almost entirely on inferred resources and there is limited metallurgical information
and no geotechnical information to support the first year of the analysis.
The results of this study show that the project has potential to be economic and further work to determine economic viability
is warranted
This study is too preliminary to demonstrate economic viability.
San Felipe PEA Production Estimate Total Tonnes to Mill 3.4 Mt Average Milled per Day 1250 t/day Underground Tonnes to Mill 2.4 Mt Open Pit Tonnes to Mill 1.0 Mt Open Pit Tonnes Waste 7.1 Mt Open Pit Strip Ratio 7:1 Years Production 7.5 Ag Pb Zn Grade 63.5 g/t 1.7% 5.1% Metal Mined 7.0 Moz 126.5 Mlbs 385.9 Mlbs 80% 86% Metal Produced in Concentrate 5.5 Moz Metals Payable after Smelting 87% 107.3 Mlbs 328.7 Mlbs 5.2 Moz 100.9 Mlbs 279.4 Mlbs Metal Price $19.91/oz $0.99/lb $1.00/lb Smelter Credit ($US) $104.6 M $99.9 M $279.4 M $483.8 M Recovery – Sulphide (Oxide de-‐rated) 40
Table 1-7 Life of mine economics
San Felipe PEA Economics -‐ Life of Mine Smelter Credit Smelter Costs Concentrate Shipping Total Smelter and Concentrate Charges NSR (1%) Site Operating Costs Mining Milling G&A Total Site Operating $US '000 ($83,064) ($12,571) ($89,138) ($66,004) ($23,380) Net Operating Cash Flow Initial Capital Costs Mining Milling G&A and Infrastructure Working Capital (2,500) (15,300) (12,460) (6,000) Total Initial Capital (36,260) $US '000 $483,784 ($95,605) ($3,540) ($178,522) $206,118 Mining Milling Infrastructure ($26,265) $0 (5,025) Total Sustaining Capital ($31,290) Salvage Value Recoup of Working Capital Total Closure Capital Total Capital Reclamation 500 6,000 $6,500 (3,000) Net Cash Flow -‐ Pre Tax Environmental Fee Mining Royalty Income Tax Net Cash Flow -‐ After Tax ($24.38) ($3.68) ($26.24) ($19.34) ($6.85) ($61,050) (3,000) ($53,415) $88,653 Total cash cost (Opex, smelter, NSR and Sustaining Capital) $142,068 ($533) ($14,143) ($39,480) Per Tonne Mined Closure Sustaining Capital Costs ($28.02) ($1.04) ($52.32) $60.40 ($10.63) ($9.17) $1.90 ($90.54) ($12.72) per tonne per oz Ag Eq $141.78 ($17.89) ($0.88) $41.63 $25.98 41
Table 1-8 San Felipe PEA NPV and IRR
San Felipe NPV and IRR -‐ Base Case $USM Note:
Pre-‐Tax NPV After Tax NPV Discount Rate 0% 142.1 88.7 2% 125.0 76.4 5% 103.5 61.2 8% 86.1 48.9 10% 76.3 42.0 IRR 60.6 37.7 Payback (years) 1.6 2.3 These tables are in part based on inferred mineral resources which are considered too speculative
geologically to have the economic considerations applied to them that would enable them to be categorized as
mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
*The after tax calculation considers the new Mexican tax regime including a 0.5% environmental fee for
gold/silver/platinum, a 7.5% royalty and depreciation and amortization annually at a 10% rate.
Key economic inputs were examined by running cash flow sensitivities on:
•
Metal prices
•
Capital Costs
•
Operating Costs
Sensitivity over the base case was calculated for a range of -20% to +20% variations of the base
case parameters listed above. All were done with a 5% NPV. The sensitivities are shown on
Table 1-9.
The project is most sensitive to metal price. This is followed by the operating costs with the capital
cost being the least sensitive to the economics of the project.
42
Table 1-9 San Felipe Project Preliminary Economic Assessment 2014 - Sensitivities
Metal Prices -‐20% -‐10% Base +10% +20% Ag 15.93 17.92 19.91 21.90 23.89 Pb 0.79 0.89 0.99 1.09 1.19 Zn 0.80 0.90 1.00 1.10 1.20 pre-‐tax 28.7 66.1 103.5 140.9 178.3 NPV 5% $US M after-‐tax 11.8 36.5 61.2 85.8 110.5 IRR % pre-‐tax 22.3% 42.1% 60.6% 78.6% 96.4% after-‐tax 12.1% 25.5% 37.7% 49.4% 60.8% Operating Cost NPV 5% $US M +20% +10% Base -‐10% -‐20% pre-‐tax 75.8 89.6 103.5 117.3 131.2 after-‐tax 42.6 51.9 61.2 70.4 79.7 IRR % pre-‐tax 47.2% 54.0% 60.6% 67.3% 73.8% after-‐tax 28.6% 33.2% 37.7% 42.2% 46.6% Capital Cost NPV 5% $US M +20% +10% Base -‐10% -‐20% pre-‐tax 92.0 97.7 103.5 109.2 115.0 after-‐tax 51.6 56.4 61.2 65.6 70.7 IRR % pre-‐tax 47.4% 53.5% 60.6% 69.3% 80.0% after-‐tax 28.8% 32.9% 37.7% 43.5% 50.6% Note: This table is in part based on Inferred Mineral Resources which are considered too speculative geologically to
have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
43
Figure 1-1 Sensitivity Analysis
1.23. Adjacent Properties
There is no public information available regarding exploration on the claims adjacent to
Santacruz’s San Felipe property. The closest active mine is the Santa Elena deposit owned by
Silvercrest Mines Inc. The mine is located approximately 20 km to the NE of San Felipe.
1.24. Other Relevant Data and Information
The authors are not aware of any material information relevant to this report, or the resource
estimation and PEA described in this report, that is not included herewithin.
44
1.25. Interpretation and Conclusions
At a 75 g/t Ag equivalent cut-off, the new resource estimate for material that can be potentially
mined by open pit for all veins is:
•
Indicated – 0.1Mt at 81.07 g/t Ag, 1.3% Pb and 4.4%Zn = 293 g/t Ag equiv or 0.9 Moz Ag
equiv*
•
Inferred – 0.9Mt at 63.5 g/t Ag, 1.4% Pb and 3.8% Zn = 264 g/t Aq equiv or 7.3 Moz Ag
equiv*
At a 150 g/t Ag equivalent cut-off, the new resource estimate for material that can be potentially be
mined by underground methods for all veins is:
•
Indicated – 1.0Mt at 75.3 g/t Ag, 2.6% Pb and 6.5%Zn = 425 g/t Ag equiv or 14.2 Moz Ag
equiv*
•
Inferred – 2.3Mt at 64.6 g/t Ag, 2.1% Pb and 5.2% Zn = 347 g/t Aq equiv or 25.6 Moz Ag
equiv*
Highlights of the PEA, using a US $19.91 per ounce silver base case, include:
•
Pre-tax Net Present Value ("NPV") at a 5% discount rate of US $103.5 million and an
Internal Rate of Return ("IRR") of 60.6%;
•
After-tax NPV at a 5% discount rate of US $61.2 million and IRR of 37.7%;
•
Production of 24.3 million ounces of silver equivalent (after milling and smelting recoveries);
•
Average annual production of 3.2 million ounces of silver equivalent over a 7.5 year mine life;
•
Initial capital cost ("CAPEX") of US $36.3 million, including $6 million of working capital;
•
Estimated all-in cash costs of US $12.72/oz silver equivalent (including site operating costs,
smelter costs, sustaining capital and NSR payments); and
•
Pre-tax payback of 1.6 years after start-up, and 2.3 years after-tax payback.
considerations applied to them that would enable them to be categorized as mineral
45
reserves and there is no certainty that the PEA will be realized. Mineral resources that are
not mineral reserves do not have demonstrated economic viability.
*For the PEA, Silver Equivalent was calculated using prices of US$19.91/oz., US$0.99/lb. and
US$1.00/lb. for silver, lead and zinc, respectively. Metal prices and recoveries used for the resource
are different than those used in the PEA because the resource was completed earlier than the PEA.
The San Felipe project is subject to the usual risks that comparable mining projects face, including
decreases in metal prices, increases in costs and changes in mineral title law and taxation.
Mexico is considered a reasonably stable country and the San Felipe area has not experienced
any drug-cartel related violence. Recent changes in taxation are incorporated in the PEA model.
Santacruz has a good relationship with the community of San Felipe and has an agreement
regarding surface land-use with the local Ejido. There are no known reasons why permits and
other authorizations required to developing a mine cannot be acquired. The PEA is based in part
on inferred mineral resources which are too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as mineral reserves.
Geotechnical analysis of the rock mass indicates potentially difficult ground conditions.
The
continuity of higher-grades at a stope scale has not been determined to the level required to do
detailed mine planning.. If ground conditions require more ground support than currently modeled
or if higher-grades are less continuous than modeled, mining rates could be lower and costs could
be higher.
The first year of open pit production is modeled almost entirely on inferred resources and there is
limited metallurgical information and no geotechnical information to support the model.
The authors are not aware of any legal, environmental, permitting or technical reasons that a mine
could not be built at San Felipe.
Project opportunities include:
•
Higher metal prices – Increases in metal prices from those modeled results in significant
increases in NPV and IRR;
•
Higher grades – The grade of material mined may be higher if mineralization is more
continuous at a stope scale than currently modelled, resulting in decreased dilution and
increased mining recovery;
46
•
Increased resource in mine plan – Any combination of higher metal prices, lower costs,
higher recovery or decreased dilution will result in more of the current resource being
potentially economic;
•
Resource expansion – There is some potential to expand resources around the current
resources. A number of new parallel skarn vein systems have been identified from recent
surface exploration work to the east and northeast of Las Lamas (La Ventanita and Veta
Negra). These targets have yet to be drilled but surface work indicates alteration and
mineralization similar to Las Lamas.
•
Copper extraction – Copper grades average in the range of 0.3 to 0.4% for the material
considered in the PEA. If further test work can show that a copper concentrate is possible, it
could add to the project economics.
•
Use of used equipment – Santacruz can acquire a used ball mill, a crushing system and
some analytical laboratory equipment. This equipment has not been examined by the
authors. Potential capital costs savings by using this equipment were not considered in the
PEA.
1.26. Recommendations
This PEA indicates that the San Felipe project is potentially economic and there is good potential
to increase resources.
Therefore, additional work on the project is recommended.
Recommendations include:
•
Resume exploration development on the Ventana vein to examine the continuity of higher
grades and vein widths at a stoping scale and perform detailed sampling.
•
Drill the upper part of the Ventana and San Felipe structures to upgrade the resources in
these areas.
•
Drill the Ventana and San Felipe viens in places with complications in the geological model. .
•
Complete a new resource after the test mining, sampling and drilling work is completed.
•
Construct a rock-type model for the entire area encompassing the current resources.
•
Detailed surface mapping should continue around the resource areas.
•
Undertake additional metallurgical test work, including both open-cycle and locked-cycle
flotation tests with oxide, transition and sulphide mineralization.
47
•
Complete characterization work on the concentrates and tailings produced in the
metallurgical test work.
•
Conduct geotechnical mapping of the ramps and other underground developments during
the proposed field program.
•
Gather geotechnical data while logging drill core during the upper Ventana exploration
program.
•
Design and implement a geotechnical drill program for the proposed La Ventana and San
Felipe pits.
•
Develop geotechnical engineering domains to support geotechnical models for the deposits
intended for mining.
•
Using the updated resource model and geotechnical information mentioned above, re-run
Whittle™ optimizations and from those resultant shells design operational pits for La
Ventana and San Felipe to a PFS level of detail.
•
Using the updated resource model and new geotechnical information gathered during the
proposed field program, design the La Ventana underground mine to a PFS level of detail.
•
Using existing data and any new data on the San Felipe, Lamas and Transversales deposits,
design the San Felipe and Lamas underground mines and an operational pit for
Transversales to a PFS level of detail.
•
Revise mine plans, capital and operating costs estimates based on the continuity of
mineralization observed during the Ventana underground exploration program, operational
pit designs and PFS-level of detail underground mine designs for La Ventana, San Felipe
and Lamas as mentioned above.
•
Investigate the possibility of obtaining mill feed from other deposits located on IMS
concessions that are not included in this PEA.
•
Identify borrow sources for tailings dam construction materials.
•
Advance the tailings storage facility design to a PFS level of detail.
•
Confirm proposed mill location and dig test pits for geotechnical data collection; finalized civil
earthworks design for mill location.
•
Condemn all locations planned for major facilities including the mill site, TSF and proposed
waste rock storage areas to ensure these facilities are not located on geologically
prospective ground.
48
•
Advance the existing mill design to pre-feasibility level.
•
Used equipment available to Santacruz should be independently examined and if suitable
the cost for buying and refurbishing the equipment used in further analysis.
•
Bring the engineering of the powerline to site and the tailings storage facility to pre-feasibility
level engineering.
•
Continue the baseline study including water monitoring and flora and fauna studies.
•
Permitting for all proposed mine activities should be undertaken.
•
An ABA and metal leaching testing program should be developed and carried out.
•
Drill areas where the resource may be open and the new skarn vein systems identified at La
Ventanita and Veta Negra.
•
Surface exploration including mapping and sampling should continue throughout the
property.
•
A one-year budget of $8,260,000 is recommended to undertake the proposed work plan and
cover claim agreement payments, taxes and surface right payments for the period.
49
2.
Introduction
This amended report addresses issues identified by the British Columbia Securities Commission
with the original report that has an effective date of Sept 4, 2014.
This amended report does not
include any new data or other inputs and there are no material changes to any interpretations,
results or conclusions. Specific items amended are:
Title Page
•
Mark Smith, P.E. added as a Qualified Person
Section 2.1
Clarification as to which author is responsible for each section of the report
•
Section 4.2
•
A note included regarding changes in the property payment schedule that occured after the
Effective Date of this report.
Section 14
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) 2014 Definition Standards for
•
mineral resources referenced instead of CIM 2005 Definition Standards.
•
Explanation for base-case cut-of grades added.
•
Estimated resources divided by material potentially mineable by open pit and underground
methods and reported as such.
Section 18.1
•
Various edits to grammer and clarifications by Mark Smith, P.E.
Sections 25.1, 25.2 and 26.1
•
Edits to clarify degree of uncertainty with respect to continuity of higher grade sections within
mineralized zones.
Certificates of Authors
•
Added details to the list of relevant experience for Hans Smit, P.Geo.
•
Clarification on which authors were responsible for sections 18, 21 and 24 through 27
•
Mark Smith, P.E. added as an author responsible for Section 18.1 and Table 26-1.
Section 1
•
Summaries updated to reflect changes in related chapters.
•
A paragraph mistakenly copied from 1.4 and inserted in section 1.3 removed.
50
The purpose of this report is to provide an independent assessment of the San Felipe Project and,
in particular, to provide an independent mineral resource estimate and a preliminary economic
assessment (PEA) for the project. San Felipe is a mineral exploration project located in
Sonora State, Mexico that is being explored for silver, lead, zinc and copper mineralization. The
project is owned by Impulsora Minera Santacruz, S.A. de C.V, a wholly owned subsidiary of
Santacruz Silver Mining Ltd (“Santacruz”), a public company trading on the TSX Venture exchange
under the symbol SCZ. This report includes information gathered by Santacruz as well as by
previous operators of the project, Minera Hochschild Mexico, S.A. de C.V. ("Hochschild") and
Boliden Mexico S.A. de C.V. (“Boliden”).
Santacruz commissioned Hans Smit, P. Geo. of Hans Smit, P. Geo. Inc. (“Smit”), and Fletcher
Bourke, P. Geo. of Kuu Exploration Ltd. (“Bourke”), to review the project, develop a geological
model for the area drilled, and facilitate completion of a resource estimate and assessment PEA.
Santacruz commissioned Gary Giroux, P. Eng. of Giroux Consulting Ltd. (“Giroux”), to estimate the
resources for the project based upon the geologic and mineralized domain model created by Smit
and Bourke. Deepak Malhotra, Registered SME Member and President of Resource Development
Inc., (“Malhotra”) was commissioned to complete the metallurgy and milling components of the
PEA. JDS Energy & Mining Inc., under the direction of Greg Blaylock, P. Eng. (“Blaylock”) was
commissioned to complete the mine plan and mining parts of the PEA. Mark Smith, P.E. of RRD
International Corp. was commissioned to do a prelimnary design and cost estimate for a tailings
storage facility and provide recommendations for further studies in regards to talings storage.
All the contributors made recommendations for further work, and helped prepare a Technical
Report in accordance with Canadian Securities Administrators National Instrument 43-101 (NI 43101).
Bourke, Smit, Giroux, Malhotra, Blaylock and Smith are Qualified Persons as defined by NI 43-101
and are independent of both Santacruz and the title holders, based on the tests outlined in NI 43101.
This report is subsequent to a previous Technical Report authored by D.E. Hulse, P.E. of
Gustavson Associates titled, “Updated NI 43-101 Technical Report on Resources, San Felipe
Project, Sonora Mexico” dated December 19, 2012.
This report has been prepared pursuant to NI 43-101 standards.The effective date of this report is
September 4, 2014, the date that the metal prices used in the PEA economic calculation were set.
The effective date of the mineral resource estimate included in this report is 3rd April 2014; the day
51
Giroux received the final assay data. Since that time, 6 holes have been drilled on the property for
a total of 1,929 meters. The results of these holes will not materially affect the resource and were
not considered in the PEA.
2.1. Sources of Information
Information for this Technical Report includes independent observations by Smit, Bourke, Giroux,
Malhotra and Blaylock.
Smit and Bourke obtained assay data directly from the laboratory (ALS Minerals), geologic maps
and drill hole information from Santacruz. Information on pre-Santacruz work was obtained from
old reports and databases created by Hochschild and Boliden. Smit and Bourke examined core
stored on the San Felipe site as well as rock exposed at surface and underground.
Giroux used the information and geological model supplied by Smit and Bourke; then did
independent analysis and resource estimation.
Malhotra used information obtained directly from Santacruz and available in reports by Hochschild.
Blaylock used the geological model created by Smit and Bourke and the resource model created
by Giroux to create a preliminary mine model. For the mine (NSR) model all commodity prices,
metallurgical recoveries, smelting terms and conditions and other off-site costs were obtained from
the other authors of this report.
Details on mineral titles, taxes, surface access agreements and permitting were obtained from
Arturo Prestamo, President of Santacruz. Details on property agreements were obtained from
Santacruz and compared to audited financial statements. Environmental information was obtained
from Santacruz and reports by Hochschild.
The report also references reports as listed in
Section 27.
Descriptions of the regional and local geology and related figures are primarily the work of
geologist Anthony Longo.
Author Bourke worked directly with Longo at the project and is
responsible for the geological description in Section 7.
52
M. Smith, P. Eng. of RRD International Corp. completed the preliminary design and costing for the
proposed tailings impoundment presented in Section 18.1. He visited the site during the period of
February 14 and 15, 2014, and used work by Hochschild to support his conclusions. Jay Gow of
Gow Consulting Limited provided information in regards to the price paid for lead and zinc
concentrates and the smelter costs associated with the concentrates. Gow assists producing
companies in negotiating terms with smelters and concentrate traders.
Santacruz in relation to the Rosario Mine.
His clients include
Author Smit worked directly with Gow and is
responsible for Section 19, Market Studies and Contracts.
This Technical Report incorporates contributions by Bourke, Smit, Giroux, Malhotra, Blaylock and
Smith, all Qualified Persons as defined by NI 43-101. Smit was responsible for sections 1 through
5, 15, 18.6, 19, 20, 22, 24, 25, 26.1 and 26.6 to 26,8 Bourke was responsible for Sections 6
through 12, 23, and 27. Giroux was responsible for Section 14. Malhotra was responsible for
Sections 13 and 17, 18.2 to 18.5, 18.7, 21, excepting mining cost in Tables 21-1 and 21-2, 26.2,
26.4, and 26.5. Blaylock was responsible for Section 16 and 26.3 and the mining costs in Tables
21-1 and 21-2. Smith was responsible for sections 18.1 and Table 26-1. The work of all authors is
summarized in Section 1. Author Smit takes responsibility for this section.
53
2.2. Field Examination and Data Review by the Qualified Person
Smit visited the San Felipe Project during the periods of June 18-19, 2013, July 13-22, 2013,
September 18-24, 2013, February 13-16, 2014, and April 3-6, 2014.
During these periods,
approximately half of the intersections within the resource areas were re-logged, various old
underground workings were examined and sites for proposed infrastructure were reviewed.
Bourke visited the San Felipe site during the periods of July 13-22, 2013, September 18-27, 2013,
February 13-17, 2014, and April 22 to May 1, 2014, May 20-27, 2014, and June 10-16, 2014.
During this time, portions of 80% of all holes were re-logged with Smit, historic workings were
visited and drill hole collar locations were compared in the field to the digital data. In addition,
approximately 30% of the property was mapped in collaboration with geologist Anthony Longo.
More details of work undertaken while on site are given in Section 12.1.
Blaylock visited the property on May 8, June 11, August 20, and September 11, 2014,
and
examined existing La Ventana underground workings, La Ventana core, sections of the
La Ventana outcrop for sampling, San Felipe and Transversales deposits, Las Lamas outcrop and
existing underground workings, proposed TSF sites and proposed process plant sites.
Smith visited the property February 14-15, 2014 and examined potential tailings storage facility
sites.
Giroux has not visited the project but has relied on the geological data and information verified by
Bourke and Smit.
Malhotra has not visited the project but has relied on information supplied by Smit and Bourke,
information supplied by Santacruz and information within reports by Hochschild.
54
2.3. Units of Measure
Unless otherwise stated, all measurements used in the technical report are presented in metric
units and all references to dollars are in United States dollars.
Table 2-1 Table of abbreviations
Abbreviation AA Ag AgEq Au Cu Pb Zn az cm DDH g GPS ha HQ ICP ID2 kg km km2 m mm Mt NI 43-‐101 NQ NSR OK oz QA/QC ppm g/t % Term atomic absorption silver silver equivalent gold Copper Lead Zinc azimuth centimeters diamond drill gram(s) Global Positioning System hectare(s) HQ size core Inductively coupled plasma mass spectrometry inverse distance squared kilogram(s) Kilometre(s) square kilometer(s) metre(s) millimetre(s ) million tonnes National Instrument 43-‐101 NQ size core net smelter royalty return Ordinary Kriging Troy ounces quality assurance/quality control parts per million grams per tone Percent 55
3.
Reliance on Other Experts
The majority of work in this report is based on data obtained from the authors’ site visits, digital
data supplied by Santacruz, digital data created by Hochschild and their consultants, data
available in Hochschild reports, and assay data obtained directly from ALS Minerals.
The
conclusions presented in this report are based on the work of Qualified Persons, as defined under
NI 43-101.
An independent review of the mineral titles was performed by Mauricio Heiras Garibay (Heiras) a
lawyer based in Chihuahua, Mexico. The conclusion in Section 4 that Santacruz controls the
mineral titles that encompass the area of the resources described herein is based on an opinion by
Heiras dated June 18, 2014 with some clarification in an opinion dated October 23, 2014. Heiras
also did an independent review of the agreement between Santacruz and the San Felipe Ejido and
of the water rights held by Santacruz. Statements in Sections 4 and 18 on surface and water
rights are based on an opinion by Heiras dated October 23, 2014.
Copies of environmental permits received from Santacruz were reviewed by Patricia Aquayo, an
environmental consultant based in Hermosillo, Mexico.
The conclusions about permitting in
Section 20 are based on communications with Aquayo dated March 26, May 16 and August 1,
2014.
56
4.
Property Description and Location
4.1. Area and Location
The San Felipe Project is located in the Sonora River basin approximately 110km NNW of the city
of Hermosillo in the state of Sonora, Mexico. The village of San Felipe de Jesus is situated 6km
east of the resource area. The center of the current resource is located at UTM Zone 12, 567400E,
3305700N. All geographic coordinates in this report utilize North American Datum 27 (Mexico)
Zone 12 (NAD27).
Figure 4-1. San Felipe project location.
57
4.2. Title and Ownership
Mining and exploration rights in Mexico are controlled by the Federal Government. The mining
concessions are administered by the Direccion General de Minas (DGM), a sub secretariat of the
cabinet level Secretaria de Economia. To maintain concessions in legal standing, concession
holders are obligated to pay semi-annual tax payments and to annually file documentation of
exploration or development work on the concession. New mining concessions are valid for a
renewable 50 year period. Hochschild is also entitled to receive 30% of any capital increase of the
Company (Impulsora Minera) during the remaining life of the San Felipe Agreement as prepayment of any remaining payment obligations.
The San Felipe Project includes 14 mining concessions covering a total area of 16,265 hectares.
Santacruz’s rights to the concessions are held through its wholly owned Mexican Subsidiary,
Impulsora Minera Santacruz S.A. de C.V., (the "Company") Figure 4-2. The Company acquired
exploration rights with the right to purchase the project from Minera Hochschild Mexico, S.A. de
C.V. ("Hochschild").
Pursuant to a mining exploration and promissory sale agreement dated
August 3, 2011, and amended December 9, 2011, October 8, 2012, August 13, 2013 and
September 3, 2014 (the "San Felipe Agreement"), the Company was granted an option to acquire
a 100% interest in the San Felipe project.
In addition to cash payments of $23,700,000 made to date and the issuance of 1,250,000
common shares previously completed by Santacruz, in order to maintain and exercise the
option, the Company is obligated to incur exploration expenditures of $3,000,000 by
October 31, 2015 and make additional payments as follows:
•
Annual surface right payments of 520,000 Mexican Pesos ($39,744) on or before
February 19 of each year until the project reaches commercial production;
•
$2,000,000 on or before December 1, 2014;
•
$5,000,000 on or before December 1, 2015; and,
•
$14,000,000 on or before December 15, 2016.
Under the agreement and amendments, the total payments will be $44,700,000 plus 1,250,000
Santacruz shares.
Hochschild is also entitled to receive 30% of any capital increase of the
Company (Impulsora Minera) during the remaining life of the San Felipe Agreement as prepayment of any remaining payment obligations. The project is subject to a 1% NSR in favour of
58
Hochschild. Santacruz has the right at any time to buy back the NSR for a cash payment of
$3,000,000.
With respect to the exploration expenditures commitment, if the Company did not incur $3,000,000
of expenditures by October 31, 2015, it was obligated to reimburse the optionor for the difference
between $3,000,000 and the actual exploration expenditures incurred.
All $3,000,000 of
exploration expenditures have been incurred and there are no exploration obligations as of
March 31, 2014.
Any minerals extracted in commercially usable quantities remain the property of the optionor until
Santacruz has exercised its option and acquired the project.
The project is subject to a 1% NSR in favour of Hochschild. Santacruz has the right at any time to
buy back the NSR for a cash payment of $3,000,000. In the event commercial production has not
occurred by December 9, 2015, Santacruz must make an advance royalty payment of $500,000,
which payment will be deducted from the royalty.
Pursuant to the terms of the San Felipe Agreement, a change of control could accelerate payments
required under this agreement to acquire the rights. In the event the Company is unable to make
such payments within 15 days after a change of control, it could lose its rights to the San Felipe
project.
Subsequent to the Effective Date of this report, Santacruz reported that on July 7, 2015, the
company entered into a further amending agreement (the "Third Amending Agreement") with
Hochschild pursuant to which the $5,000,000 payment due on or before December 1, 2015 was
deferred to December 1, 2016.
To the date of this amended report, Santacruz reports it has made aggregate cash payments
totaling $25,883,997, issued 1,250,000 common shares and incurred the full $3,000,000 in
expenditures. The author has not independently verified this information.
On March 7, 2013, pursuant to the San Felipe Agreement, the Company obtained an option to
acquire a 100% interest in the 48,057.33 hectare El Gachi property located 30 kilometers from the
San Felipe project in Sonora State as part of the agreement. El Gachi is an exploration property
that in part covers old mine workings but has had limited modern exploration. The authors have
not visited El Gachi and this property does not form any part of the San Felipe resource, PEA or
exploration potential described in this report.
59
Details of the payment schedule are in Table 4-1.
Table 4-1 Payment Schedule (US dollar x 1,000)
Period Payment 2011 2012 2013 2014 2015 2016 Balance at 15 Sept 2014 On signing 1,000 1,000 On December 15, 2011 1,000 1,000 On October 9, 2012 4,000 4,000 On April 1, 2013 16,000 16,000 On August 13, 2013 700 700 On June 15, 2014 1,000 1,000 On December 1, 2014 2,000 2,000 2,000 On December 1, 2015 5,000 5,000 5,000 On December 15, 2016 4,000 14,000 14,000 44,700 2,000 4,000 16,700 3,000 5,000 14,000 21,000 Total Plus 1,250,000 SCZ Shares issued in August 2013 Note that subsequent to the effective date of this report, Santacruz reported that the payment due
on December 1, 2015 was delayed to December 1, 2016.
The author commissioned a title review of the San Felipe project mineral claims. The review
confirmed that these titles are valid as of the date of this report and that an agreement between
Hochschild and the Company has been registered. The review also confirmed that assessment
work has been filed for the claims and taxes have been paid up to the first semester of 2014. The
review noted a few clerical errors in the assessment and tax filings which Santacruz is addressing.
These errors do not jeopardize the validity of the claims. The authors have relied on statements
by Santacruz that the taxes payable on the mineral titles that comprise the San Felipe Project will
be approximately $184,000 for 2015.
Santacruz will have to continue to complete annual
assessment filings and pay mineral title taxes every 6 months in order to maintain the validity of
the claims.
The authors did not commission an independent legal review of the agreement between
Hochschild and the Company and have relied on statements by Santacruz personnel that the
Company is current with all obligations under the agreement. The payment details in Table 4-1
are consistent with the audited December 31, 2013 Santacruz financial statements.
60
Figure 4-2 Santacruz Concession
61
4.3. Surface Rights
The San Felipe property is within the boundaries of a number of municipalities and ejidos (agrarian
communities) including San Felipe de Jesus, Aconchi, Rayon, Huepac and Banamichi. The part of
the project area that covers the resources and potential development is all in the Municipality of
San Felipe de Jesus and surface rights are owned by the San Felipe Ejido (agrarian community)
(See figure 4-3). On September 21, 2008, Hochschild signed a temporary occupation access
agreement with the Ejido, allowing them access to conduct exploration, development work and
exploitation in a 1,596.5 Ha area. The agreement is valid until December 1, 2038 and includes a
renewal clause. An annual payment of $1.8M pesos is tied to inflation and is now 2.1 million
pesos (US$160,000) per year. This agreement was assigned to Santacruz on August 3, 2011.
The Agreement has not yet been filed with the Agrarian Registry.
Santacruz is currently
undertaking the necessary steps to complete this.
Figure 4-3 Area covered by the agreement with the San Felipe Ejido
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4.4. Environmental Liability
There are a number of old mine workings including adits, stopes and small pits within the San
Felipe Project area from previous mining activity. Many of these workings are open and present a
safety hazard. No water discharge was observed from any of the workings, but surface exposures
of mineralized rock and waste dumps are rusty weathering and could result in minerals being
leached into surface waters.
There is an old mill site located within the project area proximal to the location of the proposed new
mill. The buildings have been removed, but there are small piles of mineralized material and some
old tailings in the adjacent areas. A larger mill site and old tailings are located close to the village
of San Felipe. Some of these tailings are from material mined within the San Felipe project.
However, this area is owned by the Aconchi ejido.
Drilling activities by Santacruz and previous operators have resulted in creation of a significant
number of drill roads and pads.
These should be stabilized to reduce the effects of surface
erosion.
Santacruz has initiated a baseline environmental study for the project area.
Initial sampling
comprised 8 stream sediment samples and 5 water samples from wells, which yielded one
anomalously high lead assay (130 ppm) in a sediment sample taken below the old tailings site. It
will be important to continue baseline sampling, including surface water samples, to establish the
condition of the streams before any potential project development is initiated.
More detailed discussions on environmental considerations are given in Section 20.
4.5. Permits
Exploration and mining activities in Mexico are subject to control by the Secretaria Del Medio
Ambiente y Recursos Naturales (Secretary of the Environment and Natural Resources), known by
its acronym SEMARNAT, and regulated by the General Law of Ecological Equilibrium and
Environmental Protection (Ley General de Equilibrio Ecologico y Proteccion al Ambiente, or
LGEEPA).
For exploration activities, including mapping, geochemical sampling, geophysical
surveys, mechanized trenching, road building, and drilling, if each particular activity does not
exceed a defined threshold for surface disturbance, which varies by activity, and if in aggregate
these activities will affect less than 25% of the project surface area, LGEEPA allows for an
exemption from the requirement to prepare an Environmental Impact Statement (Manifiesto de
63
Impacto Ambiental) and instead allows the exploration activities to be regulated under Norma
Oficial Mexicana NOM-120-ECOL-2011.
In place of an Environmental Impact Statement, the
applicant must submit and obtain approval of an Informe Preventivo which describes the
exploration activities and the accompanying environmental mitigation and restoration procedures.
If the activities permitted under NOM-120-SEMARNAT-2011 and approved in the Informe
Preventivo require clearing of natural vegetation, then a Land Use Change authorization (Cambio
de Uso de Suelos, CUS) is required. A Land Use Change application consists of a Technical
Justification Study (Estudio Tecnico Justificativo) which describes in detail the areas to be cleared
and the types of vegetation affected.
The Land Use Change permit will be issued within 60
working days of submittal if it is approved.
If the permit is not issued within this period it is
considered as denied. NOM-120-SEMARNAT-2011 defines the impact mitigation procedures that
must be followed for each activity.
The San Felipe project is near, but not inside, a bird protection area (“Sistema de Sierras de la
Sierra Madre Occidental”) and is within a terrestrial region for conservation (with medium priority).
These designations do not restrict mining exploration or development. Therefore basic exploration
activities conducted to date are regulated under Norma Oficial Mexicana NOM-120-SEMARNAT2011.
Santacruz considered the drilling in 2013 and 2014 to be covered by notifications by Hochschild to
SEMARNAT in 2006. However, there have been many more holes drilled than were described in
the notifications and the time period of the notifications expired by August 2009. Therefore, a new
Informe Preventivo will be required before any additional exploration activities that result in land
disturbance are undertaken. The authors are not aware of any issues related to the project which
would prevent authorization for more drilling.
Mine construction and operation activities require preparation and approval of a number of
documents and various permits need to be obtained. Details on these are given in Section 20.
64
5.
Accessibility, Climate, Local Resources, Infrastructure and
Physiography
5.1. Access
All current resources and potential development on the San Felipe project are within the
boundaries of the municipality of San Felipe de Jesus. Access to the village of San Felipe is via
148 km of paved highway from Hermosillo, the capital of Sonora. The first 9 km are on the fourlane federal highway that connects Hermosillo to the American border. From there, 137 km along
secondary provincial highways 14 and 17 leads to the turnoff to San Felipe located an additional
2 km from the turnoff.
The highways provide year-round paved access to the project area. The access road to the village
of San Felipe from highway 17, while paved, crosses the Sonora River via a ford. During the rainy
season the river occasionally floods and it is not possible to drive across the ford for a period of
hours to rarely a few days. An elevated foot bridge allows access by walking during these periods.
The project area is accessed by gravel roads from the village. It is approximately 7 km along a flat
stream valley to get to the proposed mill site. Proposed underground developments are within 2
km of this site. Road building will be relatively easy. During the rainy season the local creeks
experience flooding. Roads can be built above the flooding level but no bridges are planned and
there will be periods when creek crossings are not passable. Experience from the last few years
suggests these periods will be infrequent and generally only a few hours long. Further analysis of
the creek crossings and the issue of high water making roads impassable are required.
65
Figure 5-1 San Felipe Project location
66
5.2. Climate
San Felipe is located in a semi-arid region typical of the Sonoran desert. Average day time
temperatures vary from around 180C in the winter to 350C in the summer (June through August).
Night time averages vary from around 60C to 280C. Summer temperatures can be as hot as 500C.
Occasionally night temperatures in the winter can fall below zero. Snow is very rare.
Rainfall typically averages around 400 mm per year, with most rain falling in July, August and the
first part of September. Over the last 50 years, annual average rainfall has varied from a low of
279 mm to a high of 700 mm. The maximum estimated 100 year-return 24-hour rain event is 145
mm.
The annual evaporation rate is considerably higher than the precipitation rate.
Exploration and activities can be undertaken any time of the year. Besides occasional times
when high water in creeks and the Sonora River prevent crossing, the local climate should not
preclude any proposed exploration or development activities.
5.3. Physiography
The San Felipe property is situated in moderately to locally rugged topography with elevations
ranging from to 610 to 1830 m. The higher parts of the property are on the north slopes of Sierra
de Aconchi.
The areas where the resource and potential development are located are
characterized by moderate to steep hills with ephemeral creeks in the valleys. Drainage is to the
flat bottomed Arroyo Lavadero valley which runs to the east into the Sonora River. Drill collar
elevations range from 700 to 900 m elevation. There are suitable sites for mine infrastructure, a
mill and tailings storage facilities.
The Sonora River valley is a relatively flat and fertile agriculture zone. However, in the area of the
resource and potential development there is little land suitable for growing crops. Cattle ranching
is the main non-mining related use of the land.
67
5.4. Vegetation and Fauna
The vegetation in the San Felipe area is classified as subtropical shrublands; spineless shrubs and
secondary vegetation usually found in semiarid areas. The vegetation type is consistent with the
flora species observed at the project site, including mesquite (Prosopis velutina), tree morning
glory
(Ipomoea
arborescens),
desert
hackberry
(Celtis
pallida),
mexican
evony
(Havardia mexicana), tree ocotillo (Fouquieria macdougallii), samota (Coursetia glandulosa),
organ pipe cactus (Stenocereus thurberi), among others.
In preliminary surveys within the project site, protected flora species, as established by
NOM-059-SEMARNAT-2010, were not observed.
The area is located in the herpetofaunistic province called Sierra Madre Occidental. The following
fauna species are included among the species that can be found at the project site: gray fox
(Urocyon cinereoargenteus), coyote (Canis latrans), white-tailed deer (Odocoileus virginianus),
bobcat (Linx rufus), wild boar (pecari tajacu), bat (Myotis sp), hawk (Accipiter cooperi), desert
cardinal (Cardinalis sinuatus), mourning dove (Zenaida macroura), western diamondback
rattlesnake (Crotalus atrox), desert tortoise (Gopherus agassizii), among others.
Protected fauna species found in the general area include desert tortoise (Gopherus agassizii) and
western diamondback rattlesnake (Crotalus atrox).
5.5. Local Resources and Infrastructure
the non-technical people employed in exploration from the community. There are only minimal
services available in San Felipe.
population of 10,000 people, mostly engaged in agriculture and support industries. Some supplies
are available in communities such as Aconchi, but the main source of material and supplies and
the closest source of heavy industrial and specialty supplies and services is the city of Hermosillo
located by a 2 to 2 ½ hour drive from the project. Hermosillo is a major city with an international
airport and a wide range of suppliers and contractors that cater to the mineral exploration and
mining industry. While some labour for mining could be sourced locally, it is likely that a significant
proportion of the labour force would have to be brought in from Hermosillo.
68
San Felipe is connected to the national power grid; however, the existing line is too small to
support a major industrial operation. The closest high-tension power line is 40 km to the south.
Power may have to be brought from the town of Ures that has an existing substation which would
entail construction of a 75 to 80 km power line (Figure 5-2).
Santacruz has water rights and two wells located in the flat Sonora River valley. No production
tests have been done on these wells, but a number of wells are currently being used in the valley
for agriculture and there appears to be a productive aquifer within the valley gravels.
69
Figure 5-2 Proposed power line to San Felipe.
70
6.
History
Mining on the San Felipe Property dates back to the turn of the last century. The main mining
area was centered around the current resource area with workings developed on the Artemisa,
Cornocopia, La Ventana, San Felipe and Lamas structures. The first known company to work in
the area was the Artemisa Mining Company which operated the Artemisa Mine from 1920 to 1944.
Sampling from the mine workings in 1932 by Schramm and Hammond (Turner, 1999) reported
grades of up to 16.21 oz/t silver, 21.7% lead, 29.5% zinc and 27.65% copper. No historical mine
production records are available from this period but average production is estimated at up to
100 tons/day (Turner, 1999). Mining was suspended in 1944 due to low metal prices.
Mining resumed again briefly from 1957 to 1959 when a small concentration plant was constructed
at La Cuchilla by Pablo Mesa (located adjacent to the Santacruz core shed in San Felipe de Jesus
village). In 1963, Mineral Metalurgica San Felipe resumed operations until 1968. No records exist
but total production from this time is estimated at around 100,000 tons of ore (Turner, 1999).
The property was then briefly owned by Metalurgica Penoles (Penoles) before being sold to
Minera Serrana (Serrana) in 1973. Serrana constructed a 100 ton/day flotation plant processing
ore from the San Felipe district as well as from El Gachi and Moctezuma until 1991.
Total
production from this time is shown in Table 6-1 (Turner, 1999). No production has occurred from
the property since 1991.
Table 6-1 Production data from the San Felipe district by Serrana 1975 - 1991.
Average Grades Mine Tonnage Zn % Pb % Cu % Ag g/t San Felipe 42,000 9.0 3.0 0.2 84.0 Santa Rosa 50,000 10.5 0.6 0.3 70.0 Artemisa 12,000 15.0 9.5 0.5 70.0 Total 104,000 10.4 2.6 0.3 75.7 71
In 1996 Silver Eagle Resources Ltd., through its Mexican subsidiary Liximin, S.A. de C.V. (Liximin),
entered into an exploration agreement with Serrana.
Shortly after Liximin entered into an
agreement with Boliden Ltd, it enabled Boliden to earn 51% of the property by spending a total of
USD$1,350,000 over four years. A summary of work completed on the property from 1996 to
present is given in Sections 9 and 10. No records are available, but it is presumed that Boliden did
not spend the total required money on the property and ownership reverted 100% to Serrana after
the four year period ended in 2000.
Following this, Hochschild entered into a joint venture with Serrana in 2006 and took 100%
ownership of the project on June 2008. In the period from 2006 to 2008 Hochschild completed a
substantial amount of work on the property including geological mapping, 42,452.6 m of drilling in
199 holes, preliminary metallurgy and various engineering studies. The company completed an
unpublished Scoping Study on the La Ventana structure targeting a production rate of 3,000 t/day
in February of 2008 (Hochschild, 2008) and started work towards a pre-feasibility study. Due to
the fact that the resource size at the time did not meet company expectations and falling metal
prices, Hochschild suspended the San Felipe project in October 2008.
Santacruz entered into a purchase agreement with Hochschild in 2011.
6.1. Prior Resource Estimates
6.1.1. Hochschild 2008
In 2008, as part of a scoping study on the project, Hochschild estimated resources for the
La Ventana, San Felipe and Las Lamas zones (Table 6-3). The estimate was reportedly prepared
to JORC standards with an effective date of December 2008 (Hochschild, 2008) but is not an
NI 43-101 compliant resource.
Wireframes were constructed using Minesite software of the
mineralized zones based on geologic logging of drill core as shown in Figure 6-1.
72
Figure 6-1 Mineralised wireframes of San Felipe zones. Hochschild 2008 resource estimate.
The resource was estimated using an inverse distance squared (ID2) methodology and ordinary
kriging (OK) - with block size varying by zone from 5x5x5m to 10x10x5m, recovery and metal
prices used are shown in Table 6-4.
Table 6-2. Metal prices and recoveries used in the 2008 Hochschild resource.
Metal Price Recovery Au $600/oz 84% Ag $10.5/oz 87% Cu $1.5/lb 85% Pb $0.435/lb 80% Zn $0.713/lb 72% Average density used for the resource was as follows:
•
La Ventana – 3.14 g/cm3
•
San Felipe - 2.89 g/cm3
•
Las Lamas – 2.99 g/cm3
The authors and QP’s have not reviewed the Hochschild resource estimate and the QP’s have not
done sufficient work to classify the historical estimate as current mineral resources. Santacruz is
not treating the historic estimate as a current estimate. There has been a substantial amount of
drilling since the estimate was made.
The Hochschild resource estimate is summarized in
Table 6-3 and is only included in this report for background information on the project and should
not be considered as indicative of the current resource on the property.
73
Table 6-3 Resource summary table from Hoshchild 2008. (20$/t cut off shown).
Tonnes Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Measured 1,393,716 0.02 69 0.39 3.10 7.12 Indicated 1,354,261 0.06 82 0.31 2.73 6.14 M & I 2,747,977 0.04 76 0.35 2.92 6.64 Inferred 1,257,731 0.05 84 0.19 2.26 6.18 6.1.2. Santacruz 2012
In 2012 Santacruz commissioned Gustavson Associates LLC (Gustavson) to prepare an
independent technical report on the San Felipe Project and to estimate the mineral resources for
Ag, Cu, Pb and Zn. The report and resource were prepared to NI 43-101 standards. The report
authored by D.E. Hulse P.E., with an effective date of April 5, 2012 (Hulse, 2012), is filed on
SEDAR. Since this report, an additional 117 holes have been drilled by Santacruz as outlined in
Section 10. The Gustavson resource is not current. The author and QP of this report have not
done sufficient work to classify the Gustavson estimate as a current estimate.
Gustavson used indicator kriging (IK) to estimate Ag, Cu, Pb and Zn resources at the La Ventana,
San Felipe and Lamas areas - no geologic models or wireframes were used to constrain
mineralization. Samples with Ag >10 ppm were given an indicator value of 1 and were used to
represent the “vein material”. Variograms were calculated from 1 meter composites at La Ventana
for Ag, Cu, Pb and Zn. The San Felipe and Lamas zones had insufficient samples to calculate
variograms so those from La Ventana were used. The search ellipsoid distances are shown in
Table 6-4 and resource classification criteria in Table 6-5. Block size was 10x2x5m, and a density
of 2.84 g/cm3 for mineralized rock and 2.5 g/cm3 for waste was used. The metal prices used for
the silver equivalent calculations are shown in Table 6-6 and the total estimated resources in Table
6-7.
Table 6-4. Gustavson search ellipsoid distances (in meters).
st
nd
rd
1 Pass 2 Pass 3 Pass Primary 100 200 300 Secondary 100 200 300 Tertiary 10 20 30 74
Table 6-5. Gustavson resource classification criteria (distance from block to nearest drill hole in
meters).
Zone Measured Indicated Inferred La Ventana 42 69 299 San Felipe 59 90 297 Lamas 61 95 299 Table 6-6. Metal prices and recoveries used by Gustavson.
Metal Price Recovery Ag $26.28/oz 100% Cu $3.491/lb 100% Pb $0.9988/lb 100% Zn $0.9531/lb 100% Table 6-7. Gustavson 2012 resource table showing 150 g/t AgEq cuttoff.
Tonnes Ag (g/t) Cu (%) Pb (%) Zn (%) AgEq (g/t) AgEq (koz) Measured 1,524,000 92.21 0.38 3.4 6.52 385.95 18,913 Indicated 329,000 81.35 0.34 3.38 6.32 366.05 3,869 1,853,000 90.28 0.37 3.39 6.49 382.42 22,782 317,000 63.82 0.33 3.63 6.01 346.58 3,533 M & I Inferred The key differences between the Gustavson estimate and the current resource estimate are:
•
More drill hole data was used in the current estimate (including new Santacruz data - 117
holes, and additional prior operator data obtained from Hochschild – 34 holes).
•
A Geologic model was used to constrain grades in the current estimate. This generally
results in higher grade, lower tonnage estimates than an unconstrained model.
•
Variograms were calculated for each zone in the current estimate.
•
Based on the new variography and geological variability observed in vein exposures, the
current resource estimate has classified much of the resource in a lower category than the
Gustavson resource.
•
Metal recoveries were used in the silver equivalent equations in the current estimate.
75
7.
Geological Setting and Mineralization
7.1. Regional Geology
The San Felipe Project is located in the San Felipe mining district within the southeast end of the
North American Block, northeastern Sonora, Mexico.
The following section is summarized from Longo, 2014.
The trace of the Mojave-Sonora
Megashear (MSM), a Mid-Jurassic age left-lateral strike-slip fault zone, is proposed to pass
through the district and juxtaposes two distinct Proterozoic basement provinces (Figure 7-1).
Rocks of the Mazatzal province lie north of the MSM and extend northeast into Arizona and rocks
belonging to the Caborca Terrane lie south and extend northwest into Baja California (Silver and
Anderson, 1974; Valencia-Moreno et al., 2001; Molina-Garza and Iriondo, 2007; Gray et al., 2008).
Mazatzal province rocks belong to the North American Block and are comprised of a series of
Precambrian metamorphic rocks that includes metavolcanics and schists (1.72-1.62 Ga) that
extend into southern Arizona and New Mexico (Barra et al, 2005). Proterozoic rocks are overlain
by Upper Paleozoic quartzites and carbonates and Middle to Upper Jurassic volcanic rocks, all
intruded by coeval Jurassic granites. The Caborca Terrane represents a thick sequence (3.3 kmthick) of pre-Mid-Jurassic rocks that rest with disconformity atop the Proterozoic (1.8-1.7 Ga)
crystalline basement (Anderson, 2005).
Paleozoic rocks include eugeoclinal deep water
sediments with both siliciclastic and carbonate rocks, and lesser chert and volcanic rocks. Upper
Triassic rocks overlie the later with angular unconformity and include continental red beds,
conglomerates, and a series of shallow marine to fluvial sediments (Molina-Garza and Iriondo,
2007).
76
Figure 7-1. Generalized map of the pre-Laramide basement in northwestern Mexico and the
southwestern United States. MSM-Mojave-Sonora megashear, Cb-Caborca terrane (modified from
Valencia-Moreno, 2001).
77
Figure 7-2 Geology of San Felipe region (modified from Servicio Geologico Mexicano, 1999).
78
During the Triassic and Jurassic a period of plutonism and volcanism swept eastward across the
Sonora from the Paleozoic continental margin. These igneous rocks are characterized by granitic
to syenitic plutons (170-150 Ma.) with associated felsic volcanic flows, tuffs and interbedded
volcaniclastic sandstone and quartzite (180-170 Ma.). Tectonics changed, the subducted Farallon
Plate flattened, the arc migrated eastward, and the early andesitic island arc was accreted to the
new continental margin.
Early Mesozoic magmatism and subduction ended in late Jurassic.
Sonoran volcanism flared up again in late Jurassic-early Cretaceous with lavas of intermediate
compositions, and magmatism continued its eastward migration into northwestern Mexico. By late
Cretaceous-early Tertiary (~90 to 40 Ma) the large igneous complexes intruded Lower Cretaceous
rocks at San Felipe and included three Laramide-age granitoids (Roldan-Quintana, 1979;
Calmus et al., 1996; Valencia-Moleno et al., 2001); the late Cretaceous El Jaralito granodiorite
(69.6 – 51.8 Ma), the early Eocene San Felipe rhyolite porphyry (50.47 Ma), and the late Eocene
two-mica granite from the Aconchi batholith (36 Ma).
7.2. Property Geology
The San Felipe district represents a cluster of deeply eroded late Mesozoic distal Pb-Zn-Ag skarn
vein deposits. These deposits are hosted with the upper plate of the El Amol detachment fault,
hypothesized as a mid-crustal basal detachment associated with Miocene extensional tectonics. It
is proposed that the San Felipe deposits slid off the Aconchi batholith leaving their roots several
kilometers west (Calmus et al., 1996). The oldest rocks exposed in the San Felipe district belong
to a Lower Cretaceous metamorphic sequence that includes andesitic lavas and tuffs interbedded
with siltstone and rare lensoidal-shaped, discontinuous beds of mictritic limestone. These rocks
are similar to a package of Lower Cretaceous (Aptian-Albian) age rocks that contain well
preserved fossils 63 km northwest of San Felipe near Cucurpe. The rocks at San Felipe are
metamorphosed siliceous hornfels, or altered to chlorite-albite-epidote, and presumed the result of
contact metamorphism (Roldan-Quintana, 1979; Calmus et al., 1996), named the Lower
Metamorphic Sequence (LMS) in the project area. Small isolated dikes of the San Felipe porphyry
and sills of fragmental rhyolite porphyry intrude the Lower sequence in the south part of the
district; whereas, a granite pluton dominates in the south part of the district (Figure 7-3 and Figure
7-4).
79
Figure 7-3. Geology of the San Felipe Project.
Oligocene volcanic and sedimentary rocks in the San Felipe District include felsic pyroclastic rocks
and andesitic flows intercalated with polygenetic conglomerates. Overlying these are the clastic
rocks of the Baucarit Formation which are widespread in valleys of Central Sonora (27.7 – 14.1 Ma
based on stratigraphic relationships). Baucarit strata include basaltic-andesite lavas at the base
that decrease in abundance upward in the sequence and are interbedded with alternating
polygenetic conglomerates and sandstones.
These rocks filled grabens related to extension
tectonics of the Basin and Range Province. Overlying the Baucarit Formation are Pliocene-age
basaltic lava flows.
80
Figure 7-4. Resource area geology map (from Longo 2014).
81
7.2.1. Lithology
Figure 7-5. Stratigraphic column, San Felipe Project. Modified from (Roldan, 1979).
The stratigraphy of the San Felipe project (Figure 7-5) is divided from top to bottom into the
following units:
Quarternary Cover
Extensive alluvial conglomerates and sandstones cover most of the lower elevation valleys. These
are widespread in the Northern part of the property.
Baucarit Formation
Middle Miocene conglomerates, sandstones and clayey siltstones, and interbedded volcanic strata.
The formation as defined by King (1939) consists of slightly indurated, well-bedded sandstones,
conglomerates and some clays. The conglomerates contain rounded to subangular fragments of
older volcanic rocks. The lower and upper part of the formation contains interbedded basaltic
flows. The formation has been dated based on stratigraphic relationships and ranges from 27.7 to
14.1 Ma (Bartolini, 1994). The formation is widespread in the valleys of central Sonora and is a
product of graben filling within the Basin and Range Province.
82
There is only limited outcrop of the Baucarit Formation - exposed mainly in the Western and
Northern parts of the property. Outcrop is difficult to find and distinguish as it is overlain by the
extensive Quarternary conglomerates which cover most of the lower elevation valley floors.
Aconchi Granite
The Aconchi Granite is characterized by the association of two micas, biotite and muscovite which
has been dated at 36.5 and 32 Ma (cited in Calmus, 1996). The granite is exposed in the southwest part of the property.
Crosscutting the unit are N-S and NW-SE oriented pegmatite dykes ranging in width up to 4
meters. They are crosscut by numerous andesite dykes more abundant near the edge of the
batholith. The andesite dykes have been dated at 28.3 and 26.7 Ma (cited in Calmus, 1996) and
strike predominantly WNW and NW.
Oligocene Volcanics and Sediments
Composed predominantly of felsic pyroclastics and some andesitic flows, polygenic conglomerates
are intercalated in the unit. The unit outcrops in the western edge of the resource area and near
San Felipe Norte (Figure 7-6.
Figure 7-6. Oligocene Volcanics – fragmental rhyolite tuff.
83
Fragmental Rhyolite Porphyry
Light gray medium-grained fragment rich rhyolite porphyry (Figure 7-7). It contains up to 40%
fragments ranging in size from 0.5 to 30 cm. Fragments include: LMS, SF porphyry, equigranular
rhyolite and mineralized epidote skarnoids (in drilling near the resource area).
Figure 7-7. Fragmental rhyolite, note the fragments of Equigranular rhyolite and LMS.
El Jaralito Granitoid
A subduction related calc-alkaline granite to monzogranite. The unit has been dated between 69.6
and 51.8 Ma (cited in Calmus, 1996). There is only limited outcrop on the property, mainly in the
area to the west of the Aconchi granite (near Los Locos).
Equigranular Rhyolite
Light gray, medium-grained, granitic textured rhyolite (Figure 7-8). Typical mineral composition
(volume percent) is quartz 50%, plagioclase 15%, K-felpdspar 25%, and biotite 10%.
The
equigranular rhyolite is exposed predominantly to the north and west of the resource area.
Figure 7-8. Equigranular rhyolite.
84
San Felipe (SF) Porphyry
The SF porphyry contains characteristic amoeboid quartz-eye phenocrysts up to 1 cm in size in a
fine grained, commonly pink to cream, siliceous groundmass composed predominantly of quartz
and feldspar (Figure 7-9). The intrusion is dated at 50.47 Ma and contains alteration (quartzsericite) dated at 49.5 Ma (cited in Calmus, 1996).
The SF porphyry is interpreted as the
subvolcanic facies of the calc-alkaline magma of the El Jaralito granitoid. The porphyry commonly
strikes N, ENE and WNW, ranging from 1 to 150 meters thick.
Figure 7-9. San Felipe Porphyry, (a) outcrop showing amoeboid quartz eyes, (b) SF porphyry dyke
looking SW, Cornocopia mineralization along dyke footwall contact. Note the lack of mineralization at
ridge top.
Lower Metamorphic Sequence (LMS)
Meta-andesites and siliceous hornfels, altered to chlorite-albite-epidote (Figure 7-10). Typically
very fine grained with little discernible mineralogy in hand sample, interbedded with porphyritic
flows (feldspar phenocrysts 1-3 mm) and rare discontinuous beds of mictritic limestone . Model
mineralogy (volume percent) determined from petrographic study is epidote 60%, calcite 25%,
chlorite 10%, and quartz 5%.
85
Figure 7-10. LMS: (a) thin section showing fine grained carbonate and coarser epidote (polarized light
100x), (b) typical LMS outcrop – note SF dyke in center.
7.2.2. Structure
Structural relationships in the San Felipe district are complex.
The early Tertiary El Amol
detachment fault separates the mineralized Lower Metamorphic sequence in the San Felipe
district from the late Laramide-age Aconchi batholith (Calmus et al., 1996). Upper plate rocks
above the detachment fault host the San Felipe Pb-Zn-Ag skarn veins in Lower sequence rocks,
and the lower plate consists of unaltered two mica granites from the Aconchi batholith. Vein
systems in the upper sequence are hosted in steeply dipping and easterly striking fault zones
hypothesized as right lateral, oblique-slip normal faults as shown in Figure 7-11 (Nelson, 2007).
Veins are crosscut by N-S trending fracture zones and northwest-striking normal faults. Small lowangle faults cut the veins with little displacement (Nelson, 2007). The northwest-striking normal
faults are hypothesized as listric extensions from the detachment surface that displace all veins
and porphyry intrusions (Figure 7-11). Geologic estimates suggest that upper plate rocks
slide ~40 km east-northeast from the original location; however, the roots of the San Felipe vein
system have never been found and likely were eroded (Calmus et al., 1996; Rodriguez-Castaneda,
1999).
86
Figure 7-11. Vein orientation analysis. (a) Historgram of vein strike (b) histogram of vein dip. (c)
Stereonet showing vein orientations. (d) Structural model of district showing proposed conjugate vein
sets formed by E-W tectonic shortening (Nelson, 2007).
7.3. Mineralization
that cut the Lower Metamorphic sequence and intrusive rocks. The district hosts five principal,
westerly-striking, vein systems that include Artemisa-Cornucopia, Las Lamas, San Felipe,
Transversales and La Ventana (Figure 7-4). Primary minerals are sphalerite, galena, pyrite, and
magnetite with lesser native silver, chalcopyrite, arsenopyrite, scheelite, and covelite within a
gangue of garnet, pyroxene, epidote, quartz, rhodonite, and carbonate (Roldan-Quintana, 1979:
Calmus et al., 1996).
Three types of felsic intrusions are spatially associated with the deposits and include the
San Felipe rhyolite porphyry, a coarse grained quartz-feldspar porphyry with large amoeboidshaped quartz eyes (up to 1 cm-dia.) in a pink ground mass; the fragmental rhyolite porphyry, a
medium-grained rhyolite with fragments of Lower sequence including epidote skarnoid; and granite,
a medium-grained, equigranular plutonic rock with rhyolitic composition.
Skarn veins are late, structurally controlled, and crosscut all rock types. Hydrothermal fluid flow
paths followed the dike margins, and the same fractures and minor faults that controlled the
rhyolite porphyry intrusions.
Skarn-related calc-silicate minerals and sphalerite are useful indictors of system zonation and
temperatures. Those minerals with high Fe/Mn ratios formed at higher temperature closer to the
87
hydrothermal source, and minerals with decreased Fe/Mn ratios formed at lower temperatures
further from the source. The San Felipe skarns are distal expressions of a larger hydrothermal
system, and the skarn mineralogy and Ag-Pb-Zn-bearing sulfides display a metal zonation across
the district from high Zn, low Mn in the south to high Pb, high Mn in the north Figure 7-12.
Skarn in the south parts of the district at Las Lamas and Artemisa-Cornucopia contains Fe-rich,
dark brown garnets (andradite) and dark green pyroxenes (hedenbergite) with epidote, magnetite,
quartz, and carbonate associated with low Pb/Zn ratios, low Mn contents, and high Fe contents
(Figure 7-13). This sphalerite is dark brown to deep red with high Fe contents and indicates high
formation temperatures >300°C (Meinert, 2007).
In contrast, skarn in the north part of the district at La Ventana and San Felipe Este contain
Mn-rich pyroxenoids (pinkish-tan rhodonite and bustamite), Mn-rich epidote, and quartz with
increased Mn and Ag contents, increased Pb/Zn ratios, and decreased Fe contents.
This
sphalerite is honey-colored, an indication of decreased iron content, and the galena is
argentiferous, and both are consistent with decreased temperatures of crystallization. Grossular
garnet and wollastonite are common in areas with more abundant limestone (ie. Santa Rosa and
Las Lamas).
88
Figure 7-12. Geology map of the San Felipe Resource area showing the four principle skarn vein systems
and the pattern of metal zonation in the district (Longo, 2014).
89
Figure 7-13. (a) High temperature skarn (andradite-hedenbergite) (b) Low temperature skarn (rhodonite
and bustamite). (c) Low temperature skarn overprint (rhodonite).
7.4. Geologic Model and Estimation Domains
A three-dimensional geologic model was constructed for mineralized structures at San Felipe
using Leapfrog Geo software (leapfrog) based on detailed geologic logging of drill holes and
surface mapping in the project area. To reduce inconsistencies in rock type and alteration logging
by different geologists, the authors relogged the major mineralized intersections and surrounding
wallrock of approximately 80% of the holes drilled on the project (250 drillholes) during site visits in
2013 and 2014.
Table 7-1 shows the average thickness of each domain and the average
orientation. Only mineralization that could be correlated between drillholes over a significant area
was considered for use in the resource estimate as shown in Figure 7-14
No attempt was made to make a geological model of the rocks that host the vein structures. Host
rocks typically influence the geometry and grade of structures and a geological model of the entire
resource area would help to improve the resource estimation and possibly aid in exploration.
90
Table 7-1 Domain orientation and average thickness.
Domain Thickness (m) Strike/Dip LL 3.3 240º/90º HW-‐1 3.8 122º/63º HW-‐2 2.8 080º/70º SF 3.2 097º/76º VT 4.8 240º/72º LV 4.3 095º/72º LG 5.3 095º/72º Descriptions of the geologic domains used are as follows:
•
La Ventana – Two domains were constructed at La Ventana (LV & LG).
LV corresponds to the main mineralizing event - quartz-sphalerite-galena mineralization with
epidote and minor rhodonite, Zn+Pb contents are typically >10%. Sphalerite is generally
dark gray and Fe-poor (~<1% FeS). Skarn alteration is less common.
LG corresponds to a generally low grade, silica rich zone (retrograde alteration). This domain
is overprinted by and peripheral to the LV domain. Calc-silicate alteration is typical of the LG
domain with rhodonite peripheral to the mineralized LV domain grading into > quartz-epidotechlorite > epidote-chlorite. The domain is silica rich with variable amounts of silicified breccia.
In weathered rock Mn oxides are common.
•
Transversales – One domain (VT) was identified at Transversales. The domain
characteristics are similar to San Felipe.
•
San Felipe – Three mineralized wireframes were constructed (HW-1, HW-2 and SF). SF
corresponds to the main structure that was historically mined while HW-1 and HW-2 are
mineralization structures in the hangwall. The majority of the current resource is within the
HW-1 domain. This area has a strong structural control, similar to Transversales and La
Ventana.
•
Las Lamas – One mineralized wireframe was constructed (LL) which compriseds a zone of
garnet (andradite) - pyroxene (rhodonite) skarn alteration with disseminated sphaleritegalena-chalcopyrite mineralization - most of the pyroxene has been altered to amphibole.
Magnetoplumbite is common. The sphalerite at Lamas is relatively Fe-rich (~1% FeS) and
has a deep red colour.
91
Figure 7-14 Plan view of the geologic model used for the resource estimate.
92
8.
Deposit Type
Mineralization at San Felipe can be classified as a Zinc-Lead Skarn (Einaudi et al, 1981). These
skarn systems commonly occur in continental settings associated with either subduction or rifting.
They are sulphide rich with Zn + Pb commonly ranging from 10-20 % and Ag from 30-300 g/t.
Zinc-lead skarns are often transitional to massive-sulphide veins and often lack significant
calc-silicate alteration. Distinguishing features of this skarn type include:
•
Mn – Fe rich mineralogy.
•
Distal to intrusive source.
•
Occurrence along structural and lithologic contacts.
•
Absence of significant metamorphic aureoles.
•
Pyroxene as dominant calc-silicate mineral.
•
Retrograde mineralogy of Mn rich pyroxenoids, amphibole and chlorite common.
The San Felipe district is characterized by a strong structural control on hydrothermal fluid
movement and resulting alteration / mineralization in the northern areas (Ventana, Transversales
and San Felipe) and a more disseminated style to the south (Lamas). Calc-silicate alteration at
San Felipe is Mn-rich including bustamite-rhodonite, piemontite, garnet and pyroxene. Some of
the mineral compositions are unusual and all indicate distal alteration relative to the source of the
hydrothermal fluids. A number of samples at San Felipe were analysed by XRD and electron
microprobe by Meinert in 2007 as part of a site visit. Pyroxenoid at San Felipe varies from Rd
73-78 to Wo 15-20. The garnets found at Lamas are typical skarn andradite, while at Ventana are
more unusual in that they are spessartine and grossular rich (Sp 59-73, Gr 17-34), which reflect
the silicious Ca-poor system (Meinert 2007).
The San Felipe district has characteristics in common with other intrusion-related skarn districts in
North and South America. La Ventana and San Felipe are similar to the Japon and Manganesa
breccias in the Cananea district (Meinert, 1982). These breccias are all resistant knobs due to
silicification and are coated or cemented with Mn oxides.
Both the Japon and Manganesa
breccias overlie mineralized skarns at depth. The skarns are Zn-rich at surface and become more
Cu-rich at depth.
93
Other analogous districts are Uchucchacua in Peru (Bussell et al., 1990) and the Darwin Ag-Zn-Pb
skarn in California (Newberry et al., 1991). Uchucchacua is a large Pb-Zn-Ag district and one of
the largest Ag producers in Peru. Uchucchacua contains both vein and skarn mineralization. The
veins are zoned from sulfide-only at surface to increasing amounts of calc-silicate minerals such
as bustamite at depth. Darwin is a structurally-controlled Ag-Zn-Pb skarn similar to San Felipe.
Garnet-quartz-carbonate skarn veins and pipes contain Ag-Pb-Zn bearing sulfide and crosscut all
rock types including dacite porphyry.
Mineralization occurs in anastomosing steeply inclined
swarms of skarn veins up to 100 meters wide.
9.
Exploration
Exploration conducted prior to 1997 is discussed in Section 6 (History).
9.1. Surface Geochemistry
In 1998 and 1999, Boliden completed a surface geochemical sampling program consisting of 763
soil and 52 stream sediment samples.
Sampling procedure for the stream sediment samples involved collecting sand and gravel directly
from the dry creek beds. The material was then sieved to -2mm with a 1-2 kg sample sent to ALS
laboratories. The -80 mesh fraction of the samples was analyzed for Au by fire assay with an AA
finish and for 24 elements using ICP-AES.
The sampling protocol for the soil samples is
unknown - the analytical method used was the same as for the stream sediment samples.
Results from the stream sediment survey are shown in Figure 9-1. The samples were taken from
creeks draining the known mineralized areas. In general base metals were the best pathfinders
with only subdued silver values detected in the samples (Table 9-1 and Figure 9-1).
94
Table 9-1: Surface sample summary statistics.
Stream th
Soil th
th
Element Mean 75 95 Mean 75 th
95 Au 16.5 <5 25 11.2 10 40 Ag 2.9 1.4 4.8 5.8 4.8 17.8 Al 8.05 8.42 8.74 8.2 8.86 9.78 Ba 772.7 883 985 798.7 970 1259 Be 2.5 2.6 3.5 2.7 3 4.5 Bi 4.1 2 9 17.5 6 38 Ca 1.45 1.89 2.35 1.06 1.31 2.08 Cd 4.6 6 11.1 8.3 8.5 27 Co 17.8 23 29 20.6 25 42 Cr 15.1 16 47 14.1 17 33 Cu 148 131 410 346 244 1191 Fe 3.82 4.43 5.21 4.32 5.09 6.42 K 3.41 3.6 4.11 3.4 3.92 4.51 Mg 0.83 1.14 1.47 0.64 0.8 1.19 Mn 4566.5 5715 7672 4843.8 6425 >10000 Mo 12.5 10 30 12.6 14 45 Na 1.36 1.54 2.31 0.8 1.04 1.74 Ni 7.9 11 19 9.1 13 23 P 623.1 715 850 878.3 1040 1709 Pb 898.8 906 2214 2106 1175 6516 Sr 234.9 265 350 194 223 321 Ti 0.33 0.4 0.48 0.29 0.36 0.45 V 81.1 108 128 81.1 108 145 W 12.4 10 35 26.6 20 60 Zn 1094.5 1348 2555 2186.9 2270 6546 95
Figure 9-1 Rock chip and stream sediment samples taken at San Felipe. Stream sediment samples show
sum of response ratios for Au, Ag, Cu, Pb, Zn.
A total of 763 soil samples were taken by Boliden over known mineralized areas at the time
(Figure 9-2). Sumary statistics for the soil survey are shown Table 9-1. As can be seen from the
maps, soil sampling is an effective exploration tool in the district. Soil anomalies can be seen over
all of the known mineralized areas - although it should be noted that some of the soil anomalies
are related to contamination around old mine dumps. Boliden noted that Au, Co and V increase in
concentration to the south towards Lamas, while Cu, Cd and Zn are higher in the northern areas.
96
Figure 9-2 Boliden 1998-1999 Soil Sample Program showing (a) Ag, (b) Pb, (c) Zn.
A total of 412 rock chip samples have been taken at San Felipe (Figure 9-1), summary statistics
for each structure are given in Table 9-2. Of these, 64 were taken by Hochschild in 2008 and 2009,
with the remainder of samples taken by Santacruz since 2011.
It should be noted that the
statistics shown in Table 9-2 include 13 samples taken from within the old Las Lamas mine which
are responsible in part for the relatively higher grades shown in the table for Las Lamas.
Table 9-2. Surface sample summary statistics by structure. All samples since 1997 (Ag-ppm, Pb-%, Zn%).
Average Min Max Count Ag Pb Zn Ag Pb Zn Ag Pb Zn Santa Rosa 40 93.0 0.91 1.58 0.8 0.01 0.07 1190 6.8 6.2 Ventana 65 38.7 1.28 1.05 2.1 0.10 0.01 395 10.7 19.1 Transverales 22 27.9 1.13 0.13 1.2 0.09 0.01 84.2 4.3 0.5 San Felipe 35 13.8 1.10 0.50 0.2 0.01 0.01 65.6 9.2 11.3 Lamas 22 169.6 0.47 7.27 5.7 0.06 0.06 422 1.2 17.2 Ventanita 6 80.4 0.24 6.79 0.7 0.04 0.02 178 0.5 15.2 Veta Negra 5 91.6 0.27 4.53 8.0 0.01 0.40 240 0.5 12.6 Cornocopia 18 11.8 1.46 0.26 0.4 0.01 0.01 62.6 14.4 1.8 Artemisa 25 43.4 0.80 3.40 0.4 0.01 0.01 247 4.3 15.3 97
9.2. Geophysics
Boliden completed an orientation airborne magnetic geophysical program consisting of magnetics
and very low frequency magnetics (VLF) in May 1997. The orientation VLF survey consisted of
five lines over Artemisa, one over Lamas and three over Santa Rosa. The results of the survey
were sufficiently positive that a full airborne survey of the property was commissioned.
A
helicopter-borne geophysical survey of the property was conducted in October and November
1997 under the supervision of consultant geophysicist D.A. Smith.
Approximately 91 line
kilometers of magnetic and VLF electromagnetic surveying was completed over a 3km2 area.
Problems caused by the operator (Aerophysics Mexico) resulted in the survey being not reliable
enough to use (Turner, 1999).
A ground induced polarization (IP) and magnetometer (MAG) survey was completed in 1998 by
Lloyd Geophysics Inc over the Santa Rosa, La Ventana, San Felipe, Las Lamas and Artemisa
areas. In total 16.2 km of MAG and 14.2 km of IP surveys were completed. At Ventana in general
the magnetic responses were subdued and where present showed a weak correlation with the
mineralized structure. At Lamas and San Felipe no significant chargeability or magnetic response
were found.
9.3. Geologic Mapping
From 2006 to 2007, Hochschild completed reconnaissance geologic mapping (1:5,000 scale) over
approximately 1,690 Ha (~10% of the property), and 1:1,000 scale mapping over an additional 93
Ha (<1% of property). During 2014 Santacruz mapped approximately 5,000 Ha (~30% of the
property) as part of an ongoing exploration program.
98
10. Drilling
A total of 317 holes have been drilled on the San Felipe property as shown in Table 10-1 and
Figure 10-1). The drilling campaigns are discussed by company below.
Table 10-1. Summarized drilling for the San Felipe Project.
Company Year RC holes DDH holes Average Depth (m) Total Meters Boliden 1998-‐2000 0 27 192 5,187.24 Hochschild 2006-‐2008 26 173 213 42,452.6 Santacruz 2013-‐2014 0 105 180 20,127.65 Total 26 305 67,767.49 Figure 10-1. Drilling at San Felipe, (a) by company, (b) drill hole type
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10.1. Boliden (1998-2000)
Boliden drilled a total of 27 diamond drill holes (NQ size) from 1998 to 2000 for a total of 5,187.24
meters. Drilling was focused on the La Ventana structure with only nine holes drilled on the Santa
Rosa, San Felipe, Las Lamas and Artemisa zones. Drill hole location and orientation are given in
the Appendices and shown in Figure 10-2 and Figure 10-3. Collar locations were later resurveyed
by Hochschild by Precision GPS (the authorized Trimble™ dealer in Hermosillo). The re-surveyed
locations from Hochschild were used in the current resource estimate. Original geological drill logs,
assay certificates and cross sections are held by Santacruz on site. No down hole survey data is
available from the Boliden drilling.
The sample preparation and analysis is discussed in
Section 11.
The first drilling on the project was deemed a success by Boliden in that it had identified significant
mineralization at La Ventana (Turner, 1999). However, drilling at Santa Rosa failed to intersect
the mineralized structure at depth. No assays results are available for the 7 holes drilled at
San Felipe, Las Lams and Artemisa by Boliden. Drill Intercepts are shown in Appendices.
10.2. Hochschild (2006-2008)
Hochschild drilled 199 holes from surface for a total of 42,452.6 meters between 2006 and 2008.
The majority of the drilling was HQ sized core with 37,700.75 meters drilled in 173 holes. An
additional 4,751.85 meters were drilled in 26 reverse circulation holes. The drill contractors used
were; Major Drilling Group International Inc., Perforservice S.A. de C.V., GeoDrill, Landdrill
International Mexico, S.A. de C.V., and Globexplore Drilling S.A. de C.V.
Down hole surveys were taken by the drill contractors with a REFLEX instrument approximately
every 50 metres where possible. The precision of the instrument is 0.1º in azimuth and dip. All drill
hole collar locations were surveyed by Precision GPS to decimeter accuracy. Core was ½ split
with samples sent for preparation to ALS in Hermosillo and on to Vancouver for assaying. Sample
interval was based on visual inspection of the core by project geologists. Sample size ranged from
5 cm to 17.7 meters, with an average of 1.11 meters. Core recovery varies by location with an
average of 78.6% and a standard deviation of 24.5%. Samples with recoveries less than 2
standard deviations below the mean are considered unreliable by the authors and were not used in
the resource estimate (see Section 14 for more details).
100
Drilling by Hochschild was targeted at exploration of the veins and completing a resource estimate
as part of their Scoping Study on the project. As part of this, the following holes were completed:
La Ventana
•
HFLV01 to 74 – drilling was designed to test the continuity and grade of the La Ventana
structure. Drilling identified mineralization consistent with previous drilling by Boliden and
extended the strike and dip of the mineralized zone.
San Felipe
•
HFSF01 to 47 – drilling to test for mineralization on the San Felipe structure. Drilling by
Hochschild initially targeted the down dip extension of the historically mined San Felipe
structure (termed the SF domain by the authors). Mineralization at the SF zone was
shown to pinch out below the level of historic mining (drill hole HFSF24 was drilled to 764
meters with no significant intercepts at depth). Drilling along strike to the west of SF zone
similarly only encountered thin zones with lower grades. Drilling was successful however
in discovering a new hanging wall structure (termed HW-1 and HW-2 by authors).
•
INFSF01 to 18 – RC drilling at San Felipe. Assays for only eight of the RC holes have
been found by the authors.
Las Lamas
•
HFLL01 to 17 – were designed to test the Las Lamas structure. Drilling was successful in
extending mineralization down dip and approximately 150 meters along strike (to the
WSW) from the historic Las Lamas Mine. Drilling on the north east side of the creek
(HFLL01, 2, 16, & 17) adjacent to the mine entry only encountered weak mineralization.
The mineralized structure is interpreted by the authors to have a more ENE trend and
passes south of the drill holes (based on new mapping by Longo 2014).
•
INFLL01, 4 to 6 – four RC holes were drilled at Las Lamas, no assay data for these holes
were available to the authors.
Artemisa & Cornocopia
•
Hochschild only drilled one hole each at Artemisa and Cornocopia. Both holes failed to
intersect mineralization below the areas historically mined.
101
In addition to the drilling targeting mineralization, Hochschild drilled a number of holes for technical
evaluations as shown in Figure 10-1 and Table 10-2.
Table 10-2. Hochschild development holes.
Hole Name Type Number Holes Total Meters CT1 & 2 CPS1, CWF1 Condemnation 4 402 MGLV1 to 8, TW1, MGSF1 & 2 Geotech & Metallurgical 12 3,174 HG1 to 4 Hydrogeologic 4 802 PF1 to 6 Mine Plant 6 241 TSF1 to 4 Tailings Dam 4 325 SWBH1 to 3, WRSF1 & 2 Waste Rock 5 214 APF2 Plant Site 1 Unknown 10.3. Santacruz (2013-2014)
Santacruz drilled a total of 20,127.65 meters of HQ core (105 drill holes) between March 2013 and
June 2014. The drill contractor was AP Explore Drilling S.A. de C.V. of Oaxaca, Mexico. Drill hole
collars were surveyed by a Santacruz surveyor. A problem was detected by the authors with the
drill hole collar surveys at Lamas - caused by the use of an incorrect survey base point by the
Santacruz surveyor. To rectify the problem, an independent surveyor was used to resurvey the
drillholes at Lamas and San Felipe. Unfortunately, the results were not available in time for the
new resource estimation. However, in most cases the Santacruz drillholes were drilled from drill
pads used by Hochschild.
To mitigate the survey problem for the resource estimate, the
Santacurz collar locations were modified by the author at Las Lamas. The Santacruz holes were
adjusted to match the Hochschild drill holes which were correctly surveyed and used the same drill
pads. The results from the independent surveyor (after the resource estimate) showed an average
error of 3.4 meters easting and 2.7 meters northing at Las Lamas (collar location used in the
resource vs. corrected collar location). It is the author’s opinion that this error, although not ideal,
is not significant for an inferred resource at Las Lamas.
Down hole surveys were taken by the drill contractors with a REFLEX instrument approximately
every 50 metres where possible. Core was retrieved from the drill rig by Santacruz personnel and
brought to their central core shed in San Felipe village where it was washed and photographed
before geotechnical logging. The core was then logged by geologists for lithology type, alteration
and mineralization before being ½ split by diamond disk saw with samples sent for preparation to
102
ALS in Hermosillo and on to Vancouver for assaying. Sample interval was based on visual
inspection of the core by the geologist. Sample size ranged from 10 cm to 9.6 meters, with an
average of 1.01 meters. Core recovery varies by location with an average of 86% and a standard
deviation of 25%. Samples with recoveries less than 2 standard deviations below the mean are
considered unreliable by the authors and were not used in the resource estimate (see Section 14.1
for more details on recoveries).
The 2013 – 2014 drill program had a number of goals including:
1. Confirm drilling by previous operators.
2. Conduct exploration along strike and down dip of the known zones.
3. Drill test new structures (Transversales, Santa Rosa and Artemisa).
Results of the drilling are discussed by zone (from north to south):
Santa Rosa
A total of 4 holes (SCSR-01 to 4) were drilled at Santa Rosa (438 meters). Similar to the
drilling by Boliden, no holes intersected any mineralization. It appears that the mineralization
exposed at surface at Santa Rosa is within a thin lens of country rock overlying an intrusive
body.
La Ventana
A total of 6 holes (1,325.95 meters) were drilled at La Ventana (SCLV01 to 6) to verify drilling
by precious operators. Drill intercepts are given in Appendix 3, highlights include:
SCLV-01 - 141.8 g/t Ag, 8.0 % Pb and 13.0 % Zn over 7.05 meters (4.7 m true thickness)
Drilling by Santacruz confirmed the location and style of mineralization drilled by previous
operators at La Ventana. A more detailed comparison between drill holes is given in Section
11.
Transversales
The Transversales structure was drilled for the first time by Santacruz with 32 holes totalling
5,443.95 meters (SCVT-01 to 32). The structure was drill tested over a 300 meter strike
103
length to approximately 200 meters below surface. The structure was variably mineralized
with the best grades found in the northeastern area. Highlights include:
SCVT-02 – 143.3 g/t Ag, 0.8 % Pb and 0.7 % Zn over 7.65 meters (6.6 m true thickness)
SCLV-07 – 102.6 g/t Ag, 5.7 % Pb and 0.4 % Zn over 4.4 meters (3.8 m true thickness)
Mineralization is spatially associated with a northeast striking felsic dike (San Felipe rhyolite
porphyry) which forms the resistant ribs seen at surface.
San Felipe
Fifteen drill holes (SCSF-01 to 15) totalling 3,258.8 meters were drilled at San Felipe. Drilling
was focused on the western half of the San Felipe zone and was designed to infill and verify
holes drilled by Hochschild. Highlights of the drilling include:
SCSF-02 – 221.5 g/t Ag, 1.4 % Pb and 2.8 % Zn over 9.0 meters (7.0 m true thickness)
SCSF-08 – 58 g/t Ag, 5.4 % Pb and 5.1 % Zn over 4.95 meters (3.8 m true thickness)
SCSF-09 – 167 g/t Ag, 0.6 % Pb and 8.8 % Zn over 3.8 meters (1.8 m true thickness)
Santacruz drilling confirmed the location and style of mineralization drilled by Hochschild.
See Section 11 for more details drill hole comparisons.
Since the 2014 resource was estimated, 6 new holes were drilled at San Felipe for a total of
1,928.95 m (SCSF-16 to 21).
Las Lamas
Thirty two drill holes were drilled by Santacruz for a total of 5,720.6 meters (SCLL-01 to 32).
Drilling was designed to infill and confirm the drilling by Hochschild and to test the zone to
the east. Highlights include:
SCLL-03 – 110.3 g/t Ag, 0.3 % Pb and 10.1 % Zn over 5.9 meters (4.1 m true thickness)
SCLL-05 – 138.9 g/t Ag, 0.4 % Pb and 6.7 % Zn over 17.35 meters (12.1 m true thickness)
Mineralization is in the hanging wall contact of a roughly east – west trending 40 meter thick
felsic dike (San Felipe rhyolite porphyry). The footwall contact of the dyke has yet to be drill
tested.
104
Artemisa
Four holes were drilled at Artemisa (SCVA-01 to 3bis), for a total of 791.45 meters. Drilling
was targeted to test below the historic Artemisa mine workings where mineralization is
spatially associated with the hanging wall contact of an east – west striking felsic dike
(San Felipe rhyolite porphyry). This area was previously drilled by Boliden but no results are
available for the four Boliden holes drilled in this area. Of the Santacruz drillholes, only drill
hole SCVA-03bis intersected mineralization, as follows:
SCVA-03bis – 1970 g/t Ag, 4.0 % Pb and 0.01 % Zn over 1.05 meters (0.36 m true
thickness)
The footwall contact of the dike has not been drill tested to date.
Cornocopia
Six holes were drilled in the Cornocopia area (SCVC-01 to 6) for a total of 1,129.95 meters.
Drill holes were targeting the location of the structure based on mapping by Hochschild.
SCVC-1 and 04 intersected the structure with grades of:
SCVC-01 – 26.7 g/t Ag, 0.6 % Pb and 0.7 % Zn over 3.45 meters (1.2 m true thickness)
SCVC-04 – 29.8 g/t Ag, 1.2 % Pb and 1.5 % Zn over 1.6 meters (0.5 m true thickness)
Surface outcrop of mineralization is difficult to find in this area but recent mapping suggests
the structure may lie 70 meters to the north of the previous interpreted location (Longo,
2014) and would explain why SCVC-01 and 04 were the only holes to intersect the structure.
105
Figure 10-2. Drill plan La Ventana.
106
Figure 10-3. Drill plan - Transversales, San Felipe, Las Lamas, Cornocopia and Artemisa.
107
Figure 10-4. Ventana long section showing intercept in true width.
108
Figure 10-5. La Ventana drill section (looking west).
109
Figure 10-6. Transversales drill section (looking south west).
110
Figure 10-7. San Felipe drill section (looking west).
111
Figure 10-8. Las Lamas drill section (looking south west).
112
11. Sample Preparation, Analyses and Security
11.1. Sample Preparation
For all drill campaigns, holes were drilled with HQ and NQ sized core with only select intervals
sampled. Core was sawn in half at site and one half sent to ALS (formerly Chemex and ALS
Chemex), an independent and certified laboratory service - accredited by the International
Organization for Standardization (ISO). Samples were prepared at the ALS facility in Hermosillo,
Mexico, were they were crushed to 70% less than 2mm, then a 250g sample was split by riffle
splitter and crushed to better than 85% passing 75 microns. The pulps were then shipped to
Canada and analysed at ALS in Vancouver. Samples were analysed for 48 elements using a four
acid ICP-MS package (ME-MS61) and Au using a fire assay with and an AAS finish (Au-AA23).
Samples with high grade Au, Ag, Pb, or Zn were rerun by a HF-HN03-HCI03 digestion with HCI
leach and an ICP-AES or AAS finish (OG62).
11.2. Sample Security
Boliden
Core was cut on site by Boliden geologists with samples delivered to the ALS lab in Hermosillo.
Core was stored at the attendant’s house on the old San Felipe Mill site. Most of the core from
Boliden is now kept in the Santacruz core shed. Details on sample security during Boliden’s work
are not known.
Hochschild
Core was delivered from the drill rigs to the San Felipe core shed by Hochschild staff where it was
logged and cut. Samples were delivered to the ALS lab in Hermosillo with the remaining core kept
in storage in what is now the Santacruz core shed. Details on sample security during Hochschild’s
work are not known.
Santacruz
Core for sampling was delivered directly to the core-cutting area or secure storage area before
cutting. Lids were kept on boxes during transfer. Unauthorized personnel were not allowed in the
core storage, logging or cutting facilities during the core logging and sampling process.
113
Once cut, the samples were bagged and labeled and assembled into batch shipments. These
were stored in sealed sacks. The batches were delivered to the ALS lab in Hermosillo along with
sample submission forms by Santacruz staff. The remaining core is kept in locked storage under
supervision of a caretaker (Figure 11-1).
Figure 11-1. Santacruz core shed.
11.3. QA/QC Analysis
QA/QC programs were undertaken by Santacruz and by Hochschild. No QA/QC samples were
inserted by Boliden. Approximately 13 percent of the total number of drill core samples submitted
for assaying (ratio of 1:8) are external quality control samples (Table 11-1).
Results of the quality control data are discussed in the following sections by company.
Table 11-1 Summary of analytical quality control data.
Sample Count Boliden Hochschild Santacruz Blanks Hochschild Santacruz Reference material Hochschild Santacruz Duplicates Hochschild Santacruz Total QC Samples Hochschild Santacruz Samples % of Total 16,053 960 8,854 6,239 688 434 254 398 175 223 881 562 319 1976 1171 796 6% 55% 39% 4% 2% 2% 2% 1% 1% 6% 4% 2% 12% 7% 5% 114
11.4. Hochschild QA/QC
11.4.1.
Blanks
In total, 434 blanks were used by Hochschild (ratio of 1:20). Two types of blank material were used
(Hochschild, 2007):
•
Coarse Blanks – fresh unmineralized rock inserted after high grade samples.
•
Pulp blanks – pre crushed packaged blanks inserted directly after high grade samples.
Results for the 434 blanks are shown in Table 11-2, Figure 11-2 and Figure 11-3. The pulp blanks
show no contamination in the Ag results with all values below 5 x detection limit (detection limit
was 1 ppm). The coarse blanks show more variability with 3 assays deemed over acceptable limits.
One sample (56926) is within a mineralized zone. It is the author’s opinion however that this
sample was labeled incorrectly as a blank. The multi-element data for this sample are identical to
the next sample (56927) suggesting that the sample was probably a field duplicate and not a blank.
There is no information available on whether the Hochschild staff followed up on the 3 errors
identified. (Table 11-3)
The majority of the Pb and Zn analytical results for the pulp blanks are below 200 ppm as can be
seen in Figure 11-3 (a), with 2 samples having slightly higher values around 1000 ppm. The
coarse blanks show more variation as can be seen in Figure 11-3 (b) with 4 samples over 3000
ppm. The blanks used by Hochschild may not have been certified for Pb-Zn and this would explain
the higher variability seen in the analytical results for these metals. It is the author’s opinion
however that these small errors do not indicate any significant problems with contamination
affecting analytical results.
Table 11-2 Summary statistics for Hochschild blanks (units in ppm).
Pulp Blank Ag Pb Mean 0.132 23.7 Std dev 0.170 136.0 Coarse Blank Zn Ag Pb 34.5 0.527 105.9 Zn 303 92.0 2.942 595.0 2212.0 Min 0.1 1 1 0.005 1 2 Max 2.4 1980 1200 37.8 8030 31100 n 217 217 115
Table 11-3. Coarse blank failures.
Sample Hole Depth (m) Ag (ppm) 42007 HFLV65 12.6 11.3 1.3 56823 HFLV37 211.15 37.8 0.5 56926 HFSF38 134.65 18 3 Preceding Sample Ag (ppm) Figure 11-2. Hochschild blanks (a) coarse blanks, (b) pulp blanks. (Red line shows 5 x detection limit
(5ppm)).
Figure 11-3. Hochschild blanks Pb - Zn, (a) coarse blanks, (b) pulp blanks.
116
11.4.2.
Standards
In total 175 silver standards were used by Hochschild (ratio of 1:40). There is no information on
what type of standards they were or where they came from other than the label of the standards.
From the sample labels there are thought to have been four types of standards used:
•
Bajo (low) – Average Ag value of around 29 ppm
•
Medio A (medium) – Average Ag value of around 75 ppm
•
Medio B (medium) – Average Ag value of around 105 ppm
•
Alto (high) – Average Ag value of around 164 ppm
Table 11-4. Hochschild standard summary.
Type Bajo Medio -‐ A Medio -‐ B Alto Mean (Ag ppm) 28.70 75.25 104.60 164.04 Std dev (Ag ppm) 1.68 6.03 4.87 10.49 Min (Ag ppm) 24.9 62.8 97.6 108.0 Max (Ag ppm) 32.7 96.1 111.0 179.0 n 48 71 6 50 n > 2 std dev 3 4 0 1 n > 3 std dev 0 2 0 1 As there was no information on the certified standard values, the assay results of each standard
were compared to the average and standard deviation of all the results for that standard in the
Hochschild sample submissions. The standards labeled as “Medio” by Hochschild were subset by
the Author into two groups (A and B), as the Zn grades showed at least 2 distinct populations with
slightly different Ag values (shown in Figure 11-4).The results are shown in Table 11-4 and Figure
11-5 to Figure 11-7.
117
Figure 11-4. Medio standard (a) Groups based on Zn values (b) Ag distribution of Group A and B.
In total there were 3 standard failures - defined here as an assay value beyond the control limits (3
standard deviations from the mean (Shewhart, 1929)). Analytical results for the Bajo standard are
all within control limits. The results for the Medio standard (Group A) have 2 samples slightly
above the Upper Control Limit (UCL). The failed standards were all within unmineralized intervals.
Group B samples were all less than 2 std dev from the mean. The Alto standard had 1 sample
below the Lower Control Limit (LCL), (sample 38593) which was within an unmineralized interval.
There were 6 additional standards (4% of total) that did not fail, but were over 2 standard
deviations from the mean. All were within unmineralized intervals. Details of the standards are as
follows:
•
Bajo – HFLV45 (38083, 174m) unmineralized interval
•
Bajo – HFLV59 (39533, 50.5m) unmineralized interval
•
Bajo – HFLV60 (39623, 164.4m) unmineralized interval
•
Medio (Group A) – HFLV71 (48003, 137.35m) unmineralized interval
•
Medio (Group A) – HFSF08 (54603, 231.25m) unmineralized interval
•
Alto – HFLV51 (38593, 238m) unmineralized interval
There is no information on whether the anomalous standards were identified by Hochschild staff or
if there were any investigation into their failures. The failures identified in the standards are all
within un-mineralized intervals and do not indicate any systemic problem with the Hochschild
analytical data.
118
Figure 11-5. Graph showing Ag value of Hochschild Bajo standard.
Figure 11-6. Graph showing Ag value of Hochschild Medio (Group A) standard.
119
Figure 11-7. Graph showing Ag value of Hochschild Alto standard.
11.4.3.
Duplicates
A total of 562 duplicates were used by Hochschild (ratio 1:40). Three types of duplicates were
used:
•
Core Duplicate – ¼ split of core.
•
Duplicate Pulp – new sample split by lab from coarse reject.
•
Re-Assay – new sample split from original pulp.
The core duplicates show no bias and are evenly scattered around the x-y line as can be seen in
Figure 11-8. The lognormal cumulative frequency plots also show no bias with the grade
distribution curves overlapping (shown in Figure 11-9). As can be seen in Figure 11-9a, only 3
core duplicates show significant variation (< 2% of the duplicates). Of the three sample types the
core duplicate sample, as expected, shows the most variation. As can be seen in Figure 11-9b, the
grade of the samples are predominantly low (90% less than 20 ppm Ag) with only 7 samples over
50 ppm Ag. The duplicate pairs have very good correlation, with a Pearson correlation coefficient
of 0.95 for Ag, 0.99 for Pb and 0.97 for Zn. The duplicate pulp and re-assay both show no bias
with the analytical results tightly scattered around the x-y line as can be seen in Figure 11-10.
120
Table 11-5. Hochschild core duplicate data summary (Ag ppm).
Ag (ppm) Duplicate Duplicate Pulp Re-‐Assay Original Duplicate Original Duplicate Original Duplicate Mean 9.02 8.31 14.36 14.68 12.59 12.53 Std dev 26.28 21.26 66.19 70.08 30.76 30.56 Min 0.1 0.1 0.1 0.1 0.1 0.1 Max 226 186 844 898 225 220 n 183 191 188 Table 11-6. Hochschild core duplicate data summary (Pb ppm).
Pb (ppm) Duplicate Duplicate Pulp Re-‐Assay Original Duplicate Original Duplicate Original Duplicate Mean 4130 4331 6,398 6,911 6,672 6,534 Std dev 14,229 15,143 21,783 24,435 24,211 23,776 Min 8 6 4 4 1 5 Max 136,000 141,000 215,000 235,000 244,000 238,000 n 183 191 188 Table 11-7. Hochschild core duplicate data summary (Zn ppm).
Zn (ppm) Duplicate Duplicate Pulp Re-‐Assay Original Duplicate Original Duplicate Original Duplicate Mean 6,343 6,568 8,057 8,847 10,376 10,390 Std dev 18,480 20,568 20,622 23,673 31,765 31,410 Min 31 36 35 16 28 28 Max 185,000 190,000 166,000 162,500 279,000 271,000 n 183 191 188 Figure 11-8. (a) Hochschild core duplicate scatter plot (all data). (b) Hochschild Ag duplicates 5 to 50
ppm.
121
Figure 11-9. Hochschild core duplicates (a) control chart, (b) cumulative frequency plot.
Figure 11-10. Hochschild duplicates. (a) Re-assay scatter plot, (b) pulp duplicate scatter plot.
The Pb and Zn values for the Hochschild duplicates show a similar pattern as seen with the Ag
results. Overall the results are unbiased with an even spread around the x-y line (Figure 11-11) 90% of the duplicates show < 0.5% difference (Figure 11-12a). The overall low grade of the
duplicates enhances the variability when looking at the data in relative percent plot (Figure
11-12b).
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Figure 11-11. Hochschild duplicate scatter plot. (a) Pb, (b) Zn.
Figure 11-12. Hochschild duplicates (a) absolute difference Pb-Zn, (b) Absolute relative % difference plot
Ag-Pb-Zn.
The author is of the opinion that the variability seen in the duplicate sample data is the result of
normal variability within the rock and does not indicate any sampling problems. It is likely that the
duplicate samples were quarter splits of core and results show the importance of cutting the core
so that mineralized sections are divided as best as possible.
11.5. Santacruz QA/QC
11.5.1.
Blanks
In total 254 pulp blanks were used by Santacruz (ratio of 1:20). The blanks used were a certified
gold blank (AuBlank55) from Rocklabs in New Zealand, they are not certified for Ag. The blanks
were a pre-packaged, 50g sachet placed into the sample stream. All Ag values for the blanks are
below acceptable limits as can be seen in Table 11-8 and Figure 11-13. Although the results show
123
no contamination, it is recommended that a certified Ag and/or Zn coarse blanks be used in future.
The pulp blanks used are not useful for monitoring contamination within the sample preparation
area (the main purpose for using blanks).
Table 11-8 Descriptive statistics for Santacruz blanks (units in ppm).
Ag Pb Zn Mean 0.086 32.6 48.2 Std dev 0.122 40.9 54.7 Min 0.005 3 16 Max 1.3 522 773 n 254 Figure 11-13. Graph showing Santacruz pulp blanks, (a) Ag, (b) Pb, Zn.
11.5.2.
Standards
A total of 223 standards were inserted by Santacruz (ratio of approximately 1:20). Six standard
types were used, these are:
•
SL61 – 5.931 ppm Au, certified Au standard from Rocklabs.
•
SG66 – 1.086 ppm Au, certified Au standard from Rocklabs.
•
SP49 – 60.2 ppm Ag and 18.34 ppm Au, certified Ag and Au standard from Rocklabs.
•
SQ70 –159.5 ppm Ag and 39.62 ppm Au, certified Ag and Au standard from Rocklabs.
•
CDN-ME-1301 – 26.1 ppm Ag, certified (Au, Ag, Cu, Pb, Zn) standard from CDN
Laboratories Ltd.
•
CDN-ME-1302 – 418.9 ppm Ag, certified (Au, Ag, Cu, Pb, Zn) standard from CDN
Laboratories Ltd.
124
Standard pulps were inserted by Santacruz staff into the sample stream before delivery to the lab.
The standards were used to monitor the accuracy and precision of the lab. The gold standards are
unfortunately not useful for this purpose as gold values at San Felipe are generally low.
Approximately 55% of the standards used by Santacruz were Au standards. The results for all the
standards are discussed below.
Table 11-9. Santacruz standard summary.
SL61 (Au) SG66 (Au) SP49 SQ70 ME-‐1301 ME-‐1302 Mean (ppm) 5.71 1.07 62.2 159.6 436.7 Std dev (ppm) 0.47 0.03 3.66 5.32 10.82 90 31 25 70 1 6 Min (ppm) 2.91 0.99 55.3 147 421 Max (ppm) 6.18 1.14 67.6 175 451 n > 2 std dev 4 1 0 3 0 n > 3 std dev 3 0 0 0 0 5.931 1.086 60.2 159.5 26.1 418.9 -‐4 -‐1 3 0 4 Rocklabs Rocklabs CDN CDN n Certified Mean (ppm) ALS vs Mean (%) Manufacturer Rocklabs Rocklabs 125
A comparison of the average ALS assay results for the standards versus the certified mean vary
but overall show no bias (Table 11-9).
In total, 1% of the Santacruz standards failed. Standard failure is defined here as an assay value
beyond the control limits (3 standard deviations from the mean) (Shewhart, 1929). Standard SL61
has 3 failed Au standards. The Ag results from this standard are shown in Figure 11-14Figure
11-15 (uncertified). Although the Ag values are low for this standard (mean of 1.01 ppm) the failed
Au samples have Ag values within control limits. The failed samples are also all within weakly to
unmineralized drill intervals.
No remedial action was taken by Santacruz staff for the failed
standards. Results from standards SG66, SP49, SQ70, and ME-1301 & ME-1302 are all within the
control limits as can be seen in Figure 11-15 to Figure 11-18.
There were 5 additional standards (2% of total) that did not fail, but that were over 2 standard
deviations from the mean. Details of these are as follows:
•
SL61 - SCLV-05 (10871, 156.65m) HG domain
•
SG66 - SCLL-27 (12398, 225.8m) thin mineralized interval
•
SQ70 - SCSF-09 (14461, 88.75m) unmineralized interval
•
SQ70 - SCSF-09 (14473, 98.4m) unmineralized interval
•
SQ70 – SCSF-11 (14874, 156.6m) unmineralized interval
Overall, the performance of the Santacruz standards performed well with only 3 failures (1% of the
total) and the standards show no bias in the lab results. However, the standards used for most of
the QA/QC program were not appropriate. Au standards have little use in the project as values in
core are generally less than detection and very few Ag, Pb or Zn standards were used. A recent
change in standard types to match the metals at the project (Ag, Pb and Zn) will mitigate this
problem in future drilling. Standards should also be monitored more closely at the project with any
intervals with failed standards re-assayed.
126
Figure 11-14. Santacruz Au standard SL61.
Figure 11-15. Santacruz Ag standard SL61.
127
Figure 11-16. Santacruz Au standard SG66.
Figure 11-17. Santacruz Ag standard STD-SP49.
128
Figure 11-18. Santacruz standard SQ70.
11.5.3.
Core Duplicates
A total of 319 core duplicates were taken by Santacruz (ratio 1:20). For these samples the core
was ¼ split creating an original and a duplicate sample. The average Ag difference between the
original and duplicate is -0.55 g/t Ag (). As can be seen in Figure 11-19 and Figure 11-20, the
duplicate data shows no bias between the original and duplicate Ag values with 90% of the data
showing less than 5 g/t difference (Figure 11-21b) and less than 0.25% Pb and Zn. When looking
at relative percent difference plots, (Figure 11-21d) the variability in the data is increased due to
the high proportion of duplicates with low grades with 60% of the data having less than 30%
difference. As can be seen in Figure 11-21a, 90% of the duplicate data has Ag grades of less than
17 ppm. The duplicate pairs have very good correlation, with a Pearson correlation coefficient of
0.95 for Ag, 0.99 for Pb and 0.98 for Zn.
The Santacruz core duplicates were spread over a wider range of Ag values and overall show
lower variability when compared with the duplicates assayed by Hochschild. The precision
demonstrated by the field duplicates is within normal limits caused by variability of mineralization
within the rock and the data indicates the sampling is reliable and adequate for resource
129
estimation purposed. However, it is recommended in future to obtain higher grade duplicate pairs
by selectively taking more samples from mineralized intervals.
Table 11-10. Santacruz duplicate summary.
Ag (ppm) Pb (%) Zn (%) Original Duplicate Original Duplicate Original Duplicate Mean 9.78 10.33 0.033 0.032 0.052 0.052 Std Dev 31.09 34.72 1.560 1.499 2.024 1.905 Minimum 0.09 0.07 <0.001 <0.001 <0.001 <0.001 Maximum 276 407 >20 >20 20.4 19.8 Figure 11-19. Santacruz duplicate scatter plot.
130
Figure 11-20. Santacruz duplicates, (a) Pb and (b) Zn, Scatterplot.
Figure 11-21. Santacruz duplicates (a) Cumulative frequency Ag original vs. duplicate, (b) Cumulative
frequency Ag absolute difference, (c) Cumulative frequency Pb – Zn absolute difference, (d) Absolute
relative % difference plot, Ag, Pb, Zn.
131
11.5.4.
Check Assays
A total of 98 sample pulps were sent directly from ALS to ACME lab for re-assaying. The results
correlate well between laboratories with the results tightly scattered around the 1:1 line as can be
seen in Figure 11-22. The average difference between the laboratories is shown in Table 11-11.
The results show very good correlation between labs, ALS is approximately 0.89 ppm higher (8%)
for Ag, 10 ppm lower (0.3%) for Pb and 65 (1%) ppm higher for Zn (when comparing the means).
Table 11-11 ALS vs. ACME summary statistics.
Mean Ag (ppm) ALS Pb (ppm) ACME Abs Diff Zn (ppm) ALS ACME Abs Diff ALS ACME Abs Diff 11.47 10.58 0.89 3,768 3,778 10 6,307 6,242 65 Std Dev 45.83 41.41 4.69 16,548 16,965 878.8 19,629 19,289 681.1 6 2 0 22 18 0 Min 0.07 0.15 0 Max 382 344 38 n 98 132,500 140,200 98 7,700 120,500 117,800 4,300 98 Figure 11-22 Scatter plot showing ALS vs. ACME analytical results.
132
11.5.5.
Comparison of Drilling Results by Company
To determine if any bias exists between the drilling results by company, the silver grade
distributions are compared in the following areas by company:
•
La Ventana (Area A) – 567500 to 567650 E and 3306200 to 3365025 N.
(Hochschild = 955, Santacruz = 266, Boliden = 290 assays)
•
San Felipe (Area B) – 566900 to 56750 E and 3305350 to 3305750 N.
(Hochschild = 1586, Santacruz = 1537 assays)
•
Las Lamas (Area C) – 566900 to 567150 E and 3305050 to 3305300 N.
(Hochschild = 373, Santacruz = 450 assays)
As can be seen in Figure 11-23 to Figure 11-25, the grade distributions between companies are
roughly parallel and show no bias. The slight deviations are well within normal variability.
Figure 11-23. Lognormal cumulative frequency plot. Comparison of drilling by company at La Ventana
(Area A).
133
Figure 11-24. Lognormal cumulative frequency plot. Comparison of drilling by company at San Felipe
(Area B).
Figure 11-25. Lognormal cumulative frequency plot. Comparison of drilling by company at Las Lamas
(Area C).
134
11.5.6.
Twin Hole Comparison
In order to analyse for bias between drilling by companies, 6 drill holes drilled less than 12 meters
apart are plotted in Figure 11-26 to Figure 11-28. The twins show similar results and the variations
lie within expected variation for this type of deposit.
Figure 11-26. La Ventana twins, SCLV-03 vs. SF9801, <5m separation.
135
Figure 11-27. San Felipe twins, SCSF-02 vs. HFSF11, <12m separation.
136
Figure 11-28. Las Lamas twins, SCLL-04 vs. HFLL09, <9m separation.
137
11.6. Opinion on Adequacy
The blanks for both Hochschild and Santacruz show no significant contamination problems at the
laboratory with only 3 samples above acceptable limits. The standards used show no systematic
problems with lab accuracy - only 4 sample results are deemed outside acceptable limits.
Duplicates show good precision and no bias in the data, with Pearson correlation coefficients of >
0.95 for Ag, Pb and Zn.
The main limitations of the QA/QC data relate to the lack of details on the standard types used by
Hochschild and the choice of standards and blanks used by Santacruz. It is also thought that some
of the variation seen in the duplicate data is caused by the high proportion of low grade samples
used as duplicates. (The Author recommends taking more pairs from within potential mineralized
intersections to alleviate this problem in future).
The drilling by Boliden did not employ a QA/QC program to monitor the core sampling and analysis.
However, this drilling represents only 6% of the total samples taken on the project and all holes have
been twinned or infilled by either Hochschild or Santacruz. No major differences in grade
distributions were identified between Boliden and other operator holes. The Author is of the opinion
that the addition of more sampling results in the resource estimate outweighs the lack of QA/QC
data thus justifies the use of the Boliden data in the current resource estimate.
Though there are some problems with the QA/QC data as explained above, the author is of the
opinion that the analytical results from all drill campaigns considered at San Felipe are adequate for
mineral resource estimation. Recommendations to improve the QA/QC regime in future drilling are
given in Section 26.
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12. Data Verification
12.1. Site Visits
Smit and Bourke spent approximately 87 man days at San Felipe from July 2013 to June 2014.
During these site visits they conducted the following verification procedures:
•
Visual site inspection of drill collar locations and orientations vs. digital data.
•
Historic workings were examined at La Ventana, San Felipe and Las Lamas.
•
Geologic mapping was under taken by T. Longo C.P.G. and F. Bourke P.Geo. over
approximately 30% of the property (5,000 Ha).
•
Detailed geologic re-logging of portions of approximately 250 drill holes by Boliden,
Hochschild and Santacruz (80% of total drill holes). Visual inspection of assay results vs.
drill core was done at the same time, confirming that the sample intervals with high metal
results coincided with the presence of alteration and/or veining.
•
Verification of digital data versus original hard copies of data from Boliden, Hochschild and
Santacruz (collar orientation, location and geologic logging).
12.2. Independent Assays
Bourke took three independent samples from core while re-logging, supervised the splitting of the
samples, and then placed the samples in sealed bags. The samples remained in Bourke’s control
and were personally delivered to ALS in Hermosillo City. Analysis was the same as used by
Santacruz and are shown in Table 12-1. The amount of samples taken is too small to allow
meaningful statistical analysis, however the results confirm the presence of high grade Ag, Pb and
Zn.
139
Table 12-1. Check samples taken by authors vs. Santacruz results.
Sample SC Sample SC Ag (g/t) Ag (g/t) SC Zn (%) Zn (%) SC Pb (%) Pb (%) 23091 11651 98 112.0 5.28 5.72 0.41 0.53 23092 10873 105 45.1 20.8 >30% 0.84 0.31 23093 10126 199 429.0 13.95 15.00 7.98 7.26 12.3. Validation of Data Base and Digital Data
A new independent drill hole data base was compiled by Bourke for use in the resource estimate.
The author was able to gain access to the original certificates directly from ALS for drilling
conducted since 2006 by Hochschild and Santacruz. In total, 191 certificates (82% of all
certificates) were imported by into the new data base; Assays for the remaining 18% were
imported from the Santacruz database. In addition to this, assay values were randomly spot
checked against the original pdf certificates from ALS to check that the data was correctly
transcribed.
Drill hole collar location and down hole surveys supplied by Santacruz were checked against the
original hard copies of drill logs and of collar location survey reports for every drill hole. An
independent surveyor was used to verify any discrepancies.
12.4. Data Adequacy
Based on the above verification procedures, it is the opinion of the author that the database is of
high quality, meets industry standards and is appropriate for use in resource estimation.
140
13. Mineral Processing and Metallurgical Testing
13.1. Review of Metallurgical Testwork
Sufficient amount of testwork has been performed by several investigators for the San Felipe
prospect to support a PEA level study.
The following reports were reviewed to confirm the
metallurgical process flowsheet and estimate the metallurgical recoveries for the project:
1. Final Report on Test Work on Samples from the San Felipe Project in Mexico, Dawson
Metallurgical Laboratories, Inc. October 8, 2008.
2. Optical Microscopy Scanning Electron Microscopic Analysis, DCM Sciences Laboratories,
Inc. June 27, 2008.
3. Petrographic/X-Ray Diffraction Scanning Electron Microscopy Analysis, DCM Sciences
Laboratories, Inc. September 29, 2008.
4. San Felipe Project Appendix 7.3.2 Process Flow Diagrams, Civil Drawings and General
Arrangements, Samuel Engineering Inc.
5. Proyecto San Felipe Informe General, Santacruz Silver Mining Ltd.
6. Calculo De Equipos Para Planta De Beneficio, Proyecto San Felipe Capacidad De
750TMPD, Santacruz Silver Mining Ltd.
A brief review of the metallurgical testwork is presented in the following sections.
13.1.1.
Dawson Metallurgical Laboratory Report
Hochschild contracted Dawson Metallurgical Laboratories in 2008 to undertake metallurgical
testwork. The primary objective of this phase of testwork was to determine lead and zinc flotation
response on different mineralization type composites. Seventeen composites, representing oxide,
mixed and sulfide mineralization types were prepared from 51 individual samples and scoping level
flotation tests were performed. Material for the tests was obtained from core assay rejects. It was
noted in the report that some of the samples showed signs of secondary copper mineralization on
particle surfaces.
Following several series of tests to optimize the type and dosage of collectors and depressants,
kinetic variability open-circuit rougher-scavenger lead and zinc flotation tests were performed on the
141
seventeen composite samples. The simplified test flowsheet is given in Figure 13.1. The reagent
suite consisted of adding zinc depressants ZnSO4, NaCN and metabisulfite to the mill and adding
collectors 3418A and AP242 and frother methyl iso butyl caranol (MIBC) to the lead circuit to float
lead minerals. Copper sulfate was added to lead rougher tailings to activate zinc and then pH
adjusted with lime to 10.5 and sodium isopropyl xanthate (SIPX) added to float zinc minerals.
Following several series of tests to optimize the type and dosage of collectors and depressants,
kinetic variability open-circuit rougher-scavenger lead and zinc flotation tests were performed on the
seventeen composite samples. The simplified test flowsheet is given in Figure 13.1.
Figure 13-1 Variable Testing Open Circuit Process Flowsheet
The test results, summarized in Tables 13-1 to 13-3, indicated the following:
•
Lead flotation results showed excellent lead recovery (> 90% in most cases) and concentrate
grade (± 30% Pb). Silver recovery into lead concentrate ranged from 50% to 87% while zinc
recovery into lead concentrate ranged from 13% to 40%. The lower recovery of silver was
for oxide mineralization.
However, significant amount of silver reported to the lead
scavenger concentrate (± 20%)
•
Zinc flotation was robust for all tests with 45% to 82% of zinc reporting to zinc concentrate.
The concentrate grades ranged from 34% to 54% Zn.
142
•
The Bond’s rod mill work index was 15.0 kwh/mt for mixed mineralization and 15.3 kwh/mt
for sulfide mineralization.
•
The Bond’s rod mill work index was 13.9 kwh/mt for oxide, 15.8 kwh/mt for mixed and 16.1
kwh/mt for sulfide mineralization.
143
Table 13-1 Summary of Mineralization Variability Lead Flotation Results
Test No. Type 1D Primary Grind, Mill pH Wt. % Assay, g/t or % Ag Pb Zn % Distribution Cu Ag Pb Zn Cu % -‐200 mesh P80 μm Oxide 76 81 6.4 6.7 386 25.2 25.0 1.59 60.7 60.5 21.8 38.9 2 Mixed (med) 70 89 6.7 13.0 322 26.1 21.0 3.19 81.2 93.5 40.3 87.4 3 Mixed (med) 73 85 6.8 15.4 376 29.9 17.0 6.63 75.6 85.0 31.7 88.0 4C Mixed (high) 66 95 6.4 8.9 755 38.1 17.1 3.74 58.9 68.9 13.8 49.8 5 Mixed (high) 73 85 6.7 11.1 710 27.1 22.5 3.63 87.3 94.2 25.8 85.5 6 Sulfide (high) 68 93 7.5 8.7 918 16.0 26.4 2.74 86.1 93.9 22.7 81.3 7 Sulfide (low) 74 84 7.4 7.1 375 29.1 12.8 5.55 85.4 95.1 22.2 86.1 8 Mixed (low) 75 82 7.7 7.5 298 29.1 12.5 2.22 77.0 93.0 26.8 69.8 9 Sulfide (low) 68 93 7.8 5.6 583 31.6 10 Mixed (low) 71 88 7.8 7.1 160 24.2 11.2 1.12 49.8 91.7 19.1 71.5 11 Sulfide (low) 71 88 7.7 4.6 390 25.9 12 Sulfide (low) 66 97 7.9 11.2 393 37.3 13.6 2.24 67.7 93.1 26.3 65.9 13A Sulfide (high) 65 96 7.4 21.3 573 35.1 19.6 4.10 81.7 95.8 29.0 85.0 14 Sulfide (low) 72 88 7.8 5.1 719 30.7 10.5 2.80 77.1 90.2 13.3 57.8 15 Sulfide (high) 68 92 7.5 22.1 351 41.1 16.2 4.65 74.1 95.4 30.3 86.3 16 Sulfide (low) 71 90 7.9 5.4 314 35.7 10.4 1.13 65.7 92.1 16.6 36.4 17 Sulfide (med) 63 102 7.9 8.4 484 39.6 13.6 3.39 82.5 97.2 21.9 78.3 8.1 8.9 1.81 85.4 95.8 18.6 72.7 1.63 72.2 93.0 17.2 69.7 Note: Targeted Grind = 70% - 200 mesh (75 micron) Pb Ro/Scav Concentrate: 8 Minutes Flotation Time (Natural pH = 6.4 - 7.9)
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Table 13-2 Summary of Mineralization Variability Zinc Flotation Results
Test No. Type Primary Grind, % -‐ 200 P80 mesh -‐ Total Ca(OH)2 added, g/t Total CuSO4, 7H2O Wt% (OH)4 7H2O added, g/t Assay, g/t or % % Distribution Ag Pb Zn Cu Ag Pb Zn Cu 1D Oxide 76 81 1200 500 11.6 103 5.33 36.8 1.01 27.9 22.1 55.4 42.9 2 Mixed (med) 70 89 900 450 7.7 44 0.56 39.8 0.31 6.5 1.2 44.9 4.9 3 Mixed (med) 73 85 1050 550 9.5 86 1.45 48.9 0.51 10.7 2.5 56.4 4.2 4C Mixed (high) 66 95 1000 700 18.9 180 6.42 44.7 1.18 29.7 24.6 76.4 33.3 5 Mixed (high) 73 85 1100 650 12.7 43 0.36 52.1 0.22 6.0 1.4 68.1 5.8 6 Sulfide (high) 68 93 800 650 15.1 55 0.22 50.4 0.18 9.0 2.2 75.1 9.5 7* Sulfide (low) 74 84 700 550 6.5 43 0.41 46.9 0.58 9.1 1.2 75.1 8.3 8* Mixed (low) 75 82 700 550 6.6 49 0.62 34.1 0.69 11.1 1.8 64.4 18.9 9* Sulfide (low) 68 93 650 650 5.0 40 0.32 38.1 0.40 5.2 0.9 78.4 14.6 10* Mixed (low) 71 88 750 600 7.5 60 0.47 42.6 0.26 19.9 1.9 77.4 17.9 11* Sulfide (low) 71 88 750 700 4.8 49 0.40 38.9 0.34 9.5 1.5 78.5 15.1 12* Sulfide (low) 66 97 750 650 9.0 125 0.87 44.5 0.99 17.5 1.8 70.0 23.5 13A Sulfide (high) 65 96 800 800 18.3 83 0.62 54.0 0.41 10.2 1.5 68.7 7.3 14* Sulfide (low) 72 88 900 700 7.7 73 0.48 42.7 0.96 11.8 2.1 82.1 29.9 15* Sulfide (high) 68 92 1300 1150 15.0 122 0.88 52.9 0.57 17.5 1.4 67.2 7.3 16* Sulfide (low) 71 90 650 700 6.8 77 0.71 39.1 1.30 20.6 2.3 79.5 53.3 17* Sulfide (med) 63 102 700 650 8.4 63 0.36 47.2 0.75 10.7 0.9 76.0 17.3 Note: Add CuSO4.5H2O at a dosage of 50 g/t per % Zn *had to stage add additional CuSO4.7H2O to activate the ZnS
Targeted Grind = 70% - 200 mesh (75 micron), Zn Ro/Scav Concentrate: 3 Minutes Flotation Time (pH = 10.5 - 10.8)
145
Table 13-3 Summary of Mineralization Variability Test Work Zn Scavenger Tailings
Test No. Type Primary Grind, Wt. % % -‐ 200 mesh P80 -‐ Assay, g/t or % Ag Pb Zn % Distribution Cu Ag Pb Zn Cu ID Oxide 76 81 81.6 6 0.60 2.16 0.06 11.4 17.4 22.8 18.3 2 Mixed (med) 70 89 79.3 8 0.25 1.27 0.05 12.3 14.8 7.7 3 Mixed (med) 73 85 75.1 14 0.90 1.31 0.12 13.8 12.4 11.9 7.8 4C Mixed (high) 66 95 72.2 18 0.44 1.51 0.16 11.4 6.5 9.9 16.9 5 Mixed (high) 73 85 76.2 8 0.18 0.78 0.05 6.7 4.3 6.1 8.7 6 Sulfide (high) 68 93 76.2 6 0.08 0.29 0.04 4.9 3.8 2.2 9.2 7* Sulfide (low) 74 84 86.4 2 0.09 0.13 0.03 5.6 3.6 2.7 5.6 8* Mixed (low) 75 82 85.9 4 0.14 0.36 0.03 11.8 5.2 8.8 11.3 9* Sulfide (low) 68 93 89.4 4 0.07 0.08 0.02 9.4 3.3 3.0 12.8 10* Mixed (low) 71 88 85.4 8 0.14 0.17 0.01 30.2 6.4 3.5 10.6 11* Sulfide (low) 71 88 90.7 5 0.08 0.11 0.02 18.4 5.5 4.3 15.2 12v Sulfide (low) 66 97 79.8 12 0.29 0.27 0.05 14.8 5.2 3.7 10.6 13A Sulfide (high) 65 96 60.4 20 0.35 0.56 0.13 8.1 2.7 2.4 7.7 14* Sulfide (low) 72 88 83.2 6 0.15 0.21 0.03 11.1 7.7 4.6 12.4 15* Sulfide (high) 68 92 62.9 14 0.49 0.47 0.12 8.4 3.2 2.5 6.4 16* Sulfide (low) 71 90 87.8 4 0.13 0.15 0.02 13.8 5.5 3.9 10.3 17* Sulfide (med) 63 102 83.2 4 0.08 0.14 0.02 2.0 2.2 4.3 13.1.2
6.8 5.3 DCM SCIENCES LABORATORIES, INC.
Bulk mineralogy was determined for the seventeen Hochschild composite samples. The study
indicated that sphalerite was present as coarse to fine particles with inclusions of chalcopyrite and
galena. Some coarse galena and arsenopyrite was also seen in the samples. There was no
mention of silver minerals in the study.
13.1.3
SANTACRUZ SILVER MINING LTD. DOCUMENTS
Santacruz personnel have undertaken additional testwork on four composites, one from Ventana,
two from Lamas and one from the San Felipe vein. Results are in a report dated April 4, 2014
titled Investigacion Metalurgical Proyecto San Felipe, Sonora. Composites were made from drill
core assay rejects. All were of sulphide material. Results for the open-circuit flotation test results
for the various composites are summarized in a Santacruz report. A locked-cycle test for Ventana
mineralization was performed by Minera Hochshild and was also reported in the Santacruz
146
document. The metallurgical balances and the typical reagent dosages determined by Santacruz
are summarized in Tables 13- 4 to 7 and the locked-cycle test results are in Table 13-8.
Table 13-4 Typical Reagent Addition for Roughers and Cleaners in Pb/Zn Flotation Test
Operation Mixture NH4 HSO3 238 3418-‐A TF 1035 X-‐343 Ca Cu SO4 (OH)2 211 pH Minutes Mill 500 100 30 1000 7.5 15 Pb Rougher 40 7 7.33 4 Pb Conditioner 30 1 1st Cleaner 100 5 7 3 2nd Cleaner 250 5 7 2 Conditioner Zn 1150 2000 50 10.41 15 Rougher Zn 14 100 4 Conditioner Zn 40 2 1st Cleaner 200 9.3 4 2nd Cleaner 100 8.33 3 Note: Mixture is 12:1 of ZnSO4 and NaCN
147
Table 13-5 Open Circuit Lead and Zinc Rougher and Cleaner Flotation Tests for Lamas 1 Sample
Product Grade % Pb % Zn 2.38 5697.38 21.59 Pb Concentrate g/t Au g/t Ag Distribution % % Fe Wt. 8.60 9.81 15.76 2.13 1.17 % Cu Ag Pb Zn Cu Fe 28.03 59.16 64.60 1.53 36.41 4.43 10.08 16.73 26.65 24.80 4.83 20.51 9.29 Pb Middlings 0.3 541.81 1.75 5.74 Zn Concentrate 0.2 51.33 0.18 52.52 0.72 11.72 19.36 21.43 4.85 4.90 84.90 24.31 29.98 Zn Middlings 0.3 60.39 0.27 3.35 0.30 7.65 10.74 17.84 3.17 4.08 3.01 5.62 Final Tailing 0.05 21.94 0.02 1.19 0.13 5.96 57.69 15.97 6.18 1.62 5.73 13.08 45.44 205.00 0.71 11.97 0.57 7.57 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Cal. Feed 0.18 6.98 Au 10.86 Table 13-6 Open Circuit Lead and Zinc Rougher and Cleaner Flotation Tests for Lamas 2 Sample
Product Grade g/t Au g/t % Pb % Zn Ag Distribution % % Cu % Fe Wt. Au Ag Pb Zn Cu Fe Pb Concentrate 0.6 4190.84 39.06 11.55 9.10 11.40 2.93 9.85 64.54 81.28 2.45 40.46 4.86 Pb Middlings 0.16 450.43 2.22 5.94 8.34 7.49 19.77 13.17 3.60 19.39 8.46 Zn Concentrate 0.4 51.33 0.18 53.28 0.72 10.72 22.40 50.27 6.05 2.87 86.67 24.51 34.95 Zn Middlings 0.3 60.39 0.27 3.35 0.30 7.65 9.83 16.54 3.12 1.89 2.39 4.48 Final Tailing 0.05 21.94 0.02 1.19 0.13 4.96 56.50 15.85 6.52 0.80 4.88 11.16 40.78 190.0 1.41 13.77 0.66 6.81 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Cal. Feed 0.18 1.53 6.97 10.94 148
Table 13-7 Open Circuit Lead and Zinc Rougher and Cleaner Flotation Tests for San Filipe Sample
Product Grade % Pb % Zn 5.38 4848.50 37.64 Pb Concentrate g/t Au g/t Distribution % % Fe Wt. 9.43 6.10 13.52 3.41 Ag % Cu Au Ag Pb 28.15 56.74 76.55 Zn Cu Fe 6.14 44.16 7.69 Pb Middlings 1.66 639.44 2.66 5.76 1.18 6.42 11.43 29.11 25.08 18.13 12.58 28.63 12.24 Zn Concentrate 0.6 89.93 0.29 50.59 0.65 9.54 7.62 7.01 2.35 1.32 73.65 10.51 12.12 Zn Middlings 0.55 169.26 0.47 2.28 0.36 8.43 8.42 7.10 4.89 2.36 3.67 6.43 Final Tailing 0.27 46.16 0.04 0.30 0.07 4.87 69.12 28.63 10.95 1.65 3.96 10.27 56.12 291 1.68 5.23 0.47 6.00 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Cal. Feed 0.65 11.83 Table 13-8 Locked Cycle Test Results for Ventana (Test PFCC-2)
Product Grade g/t Ag % Pb Distribution % % Zn % Cu Wt Ag Pb 70.06 86.45 Zn Cu 9.83 61.94 Lead Concentrate 1059 46.91 16.45 3.46 5.70 Zinc Concentrate 106 1.66 53.81 0.41 15.50 19.18 8.33 87.49 19.73 Final Tailing 12 0.21 0.33 0.07 78.80 5.23 2.69 Cal. Feed 85.7 3.09 9.53 0.318 100.0 100.0 100.0 100.0 100.0 10.7 18.33 Note: Locked-Cycle Test Performed by Minera Hochshild
149
13.2. Process Flowsheet and Projected Metallurgical Recoveries
The process flowsheet for the proposed process plant is given in Figure 17.1. The run-of-mine
(ROM) mineralized material will be trucked and dumped into the hopper which will have a grizzly.
The mineralized material will be crushed in a three-stage crushing system and stored in a fine
mineralized material bin. The mineralized material will be fed from the fine mineralized material
bin to a ball mill in closed circuit with cyclones. The cyclone overflow will be pumped to the lead
rougher and scavenger flotation circuit. The scavenger concentrate will be recycled back to the
rougher flotation feed. The rougher concentrate will be subjected to counter-current two stage
cleaner flotation. The lead concentrate will be thickened and filtered and stored for shipment.
Since only one locked-cycle test has been performed so far, it was used as the basis for
determining the metallurgical recoveries (Table 13-8).
The locked-cycle test, documented in
Santacruz Silver Mining Ltd.’s report, was performed on Ventana mineralized material which
constitutes the majority of the resources. The recoveries for the composites from other veins were
estimated from open-cycle tests (Tables 13-5 to 7) using the assumption that 50% of the metal
values reporting to the middlings (first-and second-cleaner tailings) will report to the concentrates
for both lead and zinc at the same grade as the concentrate in the tests. The simulated results for
these composites are reported in Tables 13-9 to 11. These results are reasonably close to the
results for the locked-cycle test for Ventana.
Table 13-9 Simulated Test Results for Lamas 1
Product Grade g/t Au g/t Ag Distribution % % % % Pb Zn Cu 8.6 10.6 Wt Au Ag Pb Zn Cu 2.5 36.4 72.5 77.0 1.8 46.7 Lead Concentrate 2.62 5945 21.6 Zinc Concentrate 0.32 135.3 0.46 52.52 0.93 19.85 34.5 13.1 13.1 87.1 32.3 Final Tailing 0.065 38.0 0.09 1.71 29.1 14.4 8.9 9.0 21.0 Cal. Feed 0.18 205 0.7 11.97 0.57 100.0 100.0 100.0 100.0 100.0 100.0 0.16 77.65 Note: Test Results estimated based on 50% of mids going to the concentrate at the same grade as concentrate
150
Table 13-10 Simulated Test Results for Lamas 2
Product Grade g/t Au g/t Ag Distribution % % Pb % Zn % Cu Wt Au Ag Pb Zn Cu Lead Concentrate 0.77 4459.3 39.06 11.55 10.43 3.17 13.6 74.4 87.9 2.7 50.1 Zinc Concentrate 0.47 104.3 0.44 53.28 0.91 22.95 60.4 12.6 7.1 88.8 31.6 Final Tailing 0.065 33.4 0.096 1.59 0.16 73.88 26.0 13.0 5.0 8.5 18.3 Cal. Feed 0.18 190 1.41 13.77 0.66 100.0 100.0 100.0 100.0 100.0 100.0 Note: Test Results estimated based on 50% of mids going to the concentrate at the same grade as concentrate
Table 13-11 Simulated Results for San Felipe
Product Grade g/t Au g/t Ag Distribution % % Pb % Zn % Cu Wt Au Ag Pb Zn Cu Lead Concentrate 7.27 5279 37.64 9.43 7.19 3.82 42.7 69.3 85.6 6.9 58.5 Zinc Concentrate 1.42 397.8 1.44 50.59 1.62 8.12 17.8 11.1 7.0 78.6 28.0 Final Tailing 0.29 64.8 0.14 0.87 0.07 88.06 39.5 19.6 7.4 14.5 13.5 Cal. Feed 0.65 291 1.68 5.23 0.47 100.0 100.0 100.0 100.0 100.0 100.0 Note: Test Results estimated based on 50% of mids going to the concentrate at the same grade as concentrate
Additional test work completed by Santacruz Silver indicated an average silver recovery of 80%
based on recent open-circuit tests and the same methodology applied to the open-circuit tests
discussed in this section.
Review of the limited oxide test work using the same methodology for metal recovery estimation
indicated 70% silver, 70% lead and 68% zinc recovery, most material in the resource is sulphide,
but the relative amount of oxide, mixed and sulphide material in the upper part of the veins is not
well known at this time. To account for lower recoveries due to oxidation, the open pit portion of
the Ventana vein was all considered to be oxide for the PEA. Estimated metallurgical recoveries
used on the PEA model are summarized in Table 13-12. To date, testing has not been able to
produce a viable copper concentrate. Therefore, copper is not considered in the PEA. Further
test work to evaluate the potential for copper recovery is recommended.
Table 13-12 Estimated Metallurgical recoveries.
Oxide Sulphide Ag 70% 80% Pb 70% 86% Zn 68% 87% 151
14. Mineral Resource Estimates
Giroux Consultants was contracted by SantaCruz Silver Mining Ltd. to complete a Resource
estimate for a number of separate veins on the San Felipe Project located 130 km North East of
Hermosillo Sonora State, Mexico. The resources were estimated by Gary Giroux, P.Eng. MASc.
who is a qualified person and independent of the both the issuer and the title holder, based on the
tests outlined in National Instrument 43-101.
The San Felipe Project is comprised of six separate mineralized structures: the La Ventana, the
Las Lamas, the San Felipe, two San Felipe HW structures and Transversales.
14.1. Data Analysis
The data supplied for the San Felipe Project consisted of:
Ventana – 96 drill hole collars, 387 down hole surveys and 5,239 assays for Au (g/t), Ag (g/t), Cu
(ppm), Pb (ppm) and Zn (ppm). Of the total holes 72 intersected the mineralized solid.
Las Lamas - 54 drill hole collars, 241 down hole surveys and 1,594 assays for Au (g/t), Ag (g/t),
Cu (ppm), Pb (ppm) and Zn (ppm). Nine drill holes had collars but no assays. A total of 38 holes
intersected the mineralized solid.
San Felipe and HW structures – 78 drill hole collars, 478 down hole surveys and 3469 assays for
Au (g/t), Ag (g/t), Cu (ppm), Pb (ppm) and Zn (ppm).
Transversales – 34 drill hole collars, 155 down hole surveys and 1,224 assays for Au (g/t), Ag (g/t),
Cu (ppm), Pb (ppm) and Zn (ppm). Of these holes 30 intersected the mineralized solid and were
used in the estimate.
Geologic solids for each vein system were built by Bourke defining the mineralized structures. The
solids were built from geologic logging using Leapfrog Geo software.
A list of drill holes is
provided as Appendix 1 with the holes that intersected the mineralized solids and were used for
the estimate, highlighted. The remaining holes were used to estimate the surrounding waste.
Gaps identified in each data set, in the from-to record had values of 0.01 g/t for Ag, 5 ppm for Zn,
Pb and Cu and 0.001 g/t for Au inserted. Each vein system is estimated separately.
152
14.1.1.
Ventana Zone
The data supplied for the Ventana Zone Resource Estimate consisted of 96 drill hole collars, 387
down hole surveys and 5,239 assays for Ag (g/t), Zn (ppm), Pb (ppm), Cu (ppm) and Au (g/t). See
Figure 14.1 for the drill hole locations.
Two geologic solids were built by Bourke defining a High Grade domain (HG) and a surrounding
lower grade envelope (LG).
The solids were built from geologic logging using Leapfrog Geo
software. Of the supplied 96 holes, 72 intersected the mineralized solids. A list of drill holes is
provided as Appendix 1 with the holes intersecting the mineralized solids highlighted.
The
remaining holes were used to estimate the surrounding waste.
A total of 720 gaps in the from-to record had values of 0.01 g/t for Ag, 5 ppm for Zn, Pb and Cu
and 0.001 g/t for Au inserted. Five of these gaps were in the Low Grade envelope while the rest
were in waste.
153
Figure 14-1 Drill hole plan view for the La Ventana Zone
154
Figure 14-2 Plan view for the La Ventana Zone showing HG solid in red, LG solid in green and
underground workings in purple.
Figure 14-3 Isometric view looking NW showing HG solid in red, LG solid in green and underground
workings in purple.
155
Drill holes were “passed through” the mineralized solids and all assays were back tagged with a
code if inside or outside the domains. Table 14-1 shows the simples statistics for assays inside
the Ventana high grade structure, inside the lower grade envelope or outside the solids in waste.
Table 14-1 Assay Statistics sorted by Domain
Domain Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Ventana Au (g/t) 496 0.017 0.031 0.003 0.32 1.78 High Grade Ag (g/t) 496 75.91 101.68 0.10 826.00 1.34 Cu (%) 496 0.47 0.70 0.001 4.72 1.51 Pb (%) 496 3.39 4.62 0.008 24.40 1.36 Zn (%) 496 7.42 8.28 0.014 39.20 1.12 Ventana Au (g/t) 487 0.018 0.07 0.001 0.96 3.64 Low Grade Ag (g/t) 487 13.61 22.71 0.01 160.0 1.67 Cu (%) 487 0.07 0.17 0.001 1.82 2.54 Pb (%) 487 0.74 1.78 0.001 19.75 2.41 Zn (%) 487 1.25 2.49 0.001 20.40 1.99 Au (g/t) 5,010 0.019 0.308 0.001 20.09 16.56 Ag (g/t) 5,010 5.97 24.18 0.01 911.00 4.05 Cu (%) 5,010 0.03 0.12 0.001 2.65 4.09 Pb (%) 5,010 0.41 1.39 0.001 24.60 3.43 Zn (%) 5,010 0.53 1.56 0.001 27.10 2.97 Structure (HG) Envelope (LG) Waste In order to determine if capping was required for each variable within each of the mineralized
domains, lognormal cumulative frequency plots were produced and evaluated.
Erratic outliers
were identified and capped as shown in the following Table.
156
Table 14-2 Cap levels and number capped for each variable
Domain Variable Cap Level Number Capped Ventana Au (g/t) 0.18 g/t 3 High Grade Ag (g/t) 490.0 g/t 5 Cu (%) 3.3 % 5 Pb (%) 23.0 % 1 Zn (%) 35.0 % 4 Ventana Au (g/t) 0.36 g/t 4 Low Grade Ag (g/t) 113.0 g/t 6 Cu (%) 0.9 % 3 Pb (%) 7.4 % 6 Zn (%) 17.0 % 1 Au (g/t) 0.21 g/t 23 Ag (g/t) 122.0 g/t 20 Cu (%) 0.66 % 35 Pb (%) 6.0 % 61 Zn (%) 8.4 % 44 Structure (HG) Envelope (LG) Waste The results, of capping these erratic outliers, are shown below in Table 14-3. Slight reductions in
mean grade, with significant drops in coefficient of variation, are produced in many cases.
157
Table 14-3 Capped Assay Statistics sorted by Domain
Domain Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Ventana Au (g/t) 496 0.016 0.025 0.003 0.18 1.52 High Grade Ag (g/t) 496 74.53 94.31 0.10 490.0 1.27 Cu (%) 496 0.46 0.66 0.001 3.3 1.45 Pb (%) 496 3.39 4.61 0.008 23.0 1.36 Zn (%) 496 7.40 8.21 0.014 35.0 1.11 Ventana Au (g/t) 487 0.016 0.04 0.001 0.36 2.59 Low Grade Ag (g/t) 487 13.33 21.27 0.01 113.0 1.60 Cu (%) 487 0.06 0.14 0.001 0.9 2.25 Pb (%) 487 0.67 1.24 0.001 7.4 1.86 Zn (%) 487 1.24 2.44 0.001 17.0 1.96 Au (g/t) 5,010 0.011 0.022 0.001 0.21 2.09 Ag (g/t) 5,010 5.34 13.63 0.01 122.0 2.56 Cu (%) 5,010 0.03 0.08 0.001 0.66 3.07 Pb (%) 5,010 0.35 0.93 0.001 6.0 2.66 Zn (%) 5,010 0.49 1.21 0.001 8.4 2.49 Structure (HG) Envelope (LG) Waste Drill hole core recovery data was available for drill holes HFLV-1 to 74 with core recoveries
estimated from 1.8% to 100% in assayed core intervals. The mean recovery percentage for 4,269
assays was 83.05% with a standard deviation of 19.64%.
A lower threshold of 2 standard
deviations below the mean was 43.77%. Assays in intervals with core recovery less than 43.8%
were considered unreliable. A total of 252 assays had core recovery less than 43.8 % representing
6 % of the assays with core recovery documented. These intervals were ignored when forming
composites assuming the gaps were simply missing data. The assumption was made that for these
assays with low recovery there was too much of the sample missing to consider these samples
representative. Of the assays with core recovery less than 43.8% only 50 or 5% were within the
HG or LG Envelope domains.
158
14.1.2.
Las Lamas Zone
The data supplied for the Lamas Zone Resource Estimate consisted of 54 drill hole collars, 241
down hole surveys and 1,594 assays for Au (g/t), Ag (g/t), Cu (ppm), Pb (ppm) and Zn (ppm).
A geologic solid was built by Bourke defining a mineralized structure striking 255o and dipping 86o.
The solid was built from geologic logging using Leapfrog Geo software. Of the supplied 54 holes,
38 were used to define the mineralized solid. Of these, 9 holes had no assays. A list of drill holes
is provided as Appendix 1 with the 29 holes that intersect the mineralized solid and were used for
the estimate, highlighted. The remaining holes were used to estimate the surrounding waste.
A total of 114 gaps in the from-to record and 84 gaps at the start or end of drill holes had values of
0.01 g/t for Ag, 5 ppm for Zn, Pb and Cu and 0.001 g/t for Au inserted. Five of these gaps were in
the Low Grade envelope while the rest were in waste.
Figure 14-4 Isometric view for the Las Lamas Zone looking NE showing the solid, drill hole traces and
surface topography.
159
Figure 14-5 Isometric view looking SW showing the solid in red, drill hole traces in green and surface
topography in grey.
Drill holes were “passed through” the mineralized solid and all assays were back tagged with a
code if inside or outside the domain. Table 14-4 shows the simple statistics for assays inside the
Lamas structure and outside the solid in waste.
Table 14-4 Assay Statistics sorted by Domain
Domain Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Lamas Au (g/t) 233 0.020 0.049 0.0001 0.49 2.50 Structure Ag (g/t) 233 63.75 114.73 0.01 1055.0 1.80 Cu (%) 233 0.11 0.17 0.001 1.0 1.48 Pb (%) 233 0.22 0.37 0.001 2.3 1.63 Zn (%) 233 3.73 6.02 0.001 30.0 1.61 Au (g/t) 1,559 0.010 0.025 0.0001 0.43 2.55 Ag (g/t) 1,559 4.07 17.25 0.01 247.0 4.23 Cu (%) 1,559 0.01 0.08 0.001 2.0 6.77 Pb (%) 1,559 0.04 0.43 0.001 16.0 10.49 Zn (%) 1,559 0.19 1.37 0.001 29.3 7.32 (LL) Waste 160
In order to determine if capping was required for each variable within each of the mineralized
domains, lognormal cumulative frequency plots were produced and evaluated.
Erratic outliers
were identified and capped as shown in the following Table.
Domain Variable Cap Level Number Capped Lamas Au (g/t) 0.28 1 Structure Ag (g/t) 450.0 2 Cu (%) 0.6 2 Pb (%) 1.8 2 Zn (%) 25.5 2 Au (g/t) 0.13 10 Ag (g/t) 102.0 13 Cu (%) 0.34 8 Pb (%) 0.7 7 Zn (%) 6.0 10 (LL) Waste The results, of capping these erratic outliers, are shown below in Table 14-6. Slight reductions in
mean grade, with significant drops in coefficient of variation, are produced in many cases.
Domain Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Lamas Au (g/t) 233 0.019 0.042 0.0001 0.28 2.24 Structure Ag (g/t) 233 60.72 95.80 0.01 450.0 1.58 Cu (%) 233 0.11 0.16 0.001 0.60 1.41 Pb (%) 233 0.22 0.35 0.001 1.8 1.57 Zn (%) 233 3.70 5.91 0.001 26.5 1.60 Au (g/t) 1,559 0.009 0.017 0.0001 0.13 1.95 Ag (g/t) 1,559 3.62 12.89 0.01 102.0 3.56 Cu (%) 1,559 0.01 0.03 0.001 0.34 3.79 Pb (%) 1,559 0.03 0.08 0.001 0.7 3.14 Zn (%) 1,559 0.13 0.61 0.001 6.0 4.85 (LL) Waste 161
Drill hole core recovery data was available for 16 HQ drill holes with core recoveries estimated
from 7.2% to 100% in assayed core intervals. The mean recovery percentage for 606 assays was
86.89% with a standard deviation of 17.77%. A lower threshold of 2 standard deviations below the
mean was 51.35%. Assays in intervals with core recovery less than 51.35% were considered
unreliable. A total of 42 assays had core recovery less than 51.4 % representing 6.9 % of the
assays with core recovery documented. Of the assays with core recovery less than 51.4% all
were in Waste.
162
14.1.3.
San Felipe Structures
For the San Felipe Structures a total of 78 drill holes, 478 down hole surveys and 3,469 assays for
Au (g/t), Ag (g/t), Cu (ppm), Pb (ppm) and Zn (ppm) were provided. A total of 238 gaps in the
from-to record were identified and values of 0.01 g/t for Ag, 5 ppm for Zn, Pb and Cu and 0.001 g/t
for Au were inserted.
Geologic solids were built by Bourke defining a San Felipe, and two HW veins. The solids were
built from geologic logging using Leapfrog Geo software. Of the supplied 78 holes, 65 were used
to define the three mineralized solids. Of these, 13 holes had no assays. A list of drill holes is
provided as Appendix 1 with the 52 holes that intersect the mineralized solid and had assays
highlighted.
code if inside or outside the domains. Table 14-7 shows the simple statistics for assays inside the
San Felipe structures and outside the solids in waste.
163
Domain San Felipe HW1 HW2 Waste Table 14-7 Assay Statistics sorted by Domain
Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Au (g/t) 169 0.07 0.32 0.003 3.0 4.48 Ag (g/t) 169 39.62 111.99 0.10 892.0 2.83 Cu (%) 169 0.08 0.14 0.001 0.8 1.81 Pb (%) 169 1.16 2.47 0.001 20.0 2.13 Zn (%) 169 1.74 3.27 0.002 21.4 1.89 Au (g/t) 188 0.13 0.72 0.003 9.6 5.76 Ag (g/t) 188 88.00 148.38 0.10 878.0 1.69 Cu (%) 188 0.11 0.21 0.001 1.6 1.92 Pb (%) 188 1.66 3.41 0.001 20.0 2.06 Zn (%) 188 4.77 7.56 0.001 38.2 1.58 Au (g/t) 53 0.06 0.17 0.003 1.1 3.15 Ag (g/t) 53 47.31 81.72 0.50 397.0 1.73 Cu (%) 53 0.13 0.26 0.002 1.4 2.08 Pb (%) 53 1.89 3.02 0.002 12.9 1.60 Zn (%) 53 3.06 4.42 0.007 15.1 1.44 Au (g/t) 3,297 0.01 0.05 0.001 1.5 3.71 Ag (g/t) 3,297 4.10 21.01 0.01 705.0 5.12 Cu (%) 3,297 0.01 0.06 0.001 2.6 5.25 Pb (%) 3,297 0.11 0.51 0.001 12.8 4.72 Zn (%) 3,297 0.21 0.89 0.001 22.3 4.27 The grade distributions were examined for each variable within each domain to identify erratic
outliers and cap them if necessary. Table 14-8 shows the capping strategy for each domain.
164
Domain San Felipe HW1 HW2 Waste Variable Cap Level Number Capped Au (g/t) 0.15 g/t 6 Ag (g/t) 230.0 g/t 6 Cu (%) 0.62 % 1 Pb (%) 7.5 % 2 Zn (%) 10.5 % 3 Au (g/t) 0.60 g/t 4 Ag (g/t) 500.0 g/t 6 Cu (%) 0.85 % 2 Pb (%) 11.0 % 4 Zn (%) 28.0 % 3 Au (g/t) 0.08 g/t 3 Ag (g/t) 80.0 g/t 6 Cu (%) 0.35 % 3 Pb (%) 5.0 % 6 Zn (%) 10.0 % 6 Au (g/t) 0.5 g/t 6 Ag (g/t) 100.0 g/t 13 Cu (%) 0.4 % 4 Pb (%) 5.6 % 6 Zn (%) 9.5 % 3 165
The results from capping are tabulated below.
Domain San Felipe HW1 HW2 Waste 14.1.4.
Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Au (g/t) 169 0.03 0.04 0.003 0.15 1.42 Ag (g/t) 169 29.14 56.14 0.10 230.0 1.93 Cu (%) 169 0.07 0.13 0.001 0.6 1.77 Pb (%) 169 1.05 1.86 0.001 7.5 1.77 Zn (%) 169 1.59 2.61 0.002 10.5 1.64 Au (g/t) 188 0.06 0.11 0.003 0.6 1.75 Ag (g/t) 188 82.44 126.33 0.10 500.0 1.53 Cu (%) 188 0.10 0.17 0.001 0.9 1.67 Pb (%) 188 1.50 2.71 0.001 11.0 1.81 Zn (%) 188 4.70 7.28 0.001 28.0 1.55 Au (g/t) 53 0.02 0.02 0.003 0.1 1.01 Ag (g/t) 53 29.69 27.84 0.50 80.0 0.94 Cu (%) 53 0.08 0.11 0.002 0.4 1.31 Pb (%) 53 1.41 1.83 0.002 5.0 1.30 Zn (%) 53 2.65 3.46 0.007 10.0 1.30 Au (g/t) 3,297 0.01 0.04 0.001 0.5 2.85 Ag (g/t) 3,297 3.47 10.44 0.01 100.0 3.01 Cu (%) 3,297 0.01 0.03 0.001 0.4 3.09 Pb (%) 3,297 0.10 0.42 0.001 5.6 4.12 Zn (%) 3,297 0.20 0.74 0.001 9.5 3.69 Transversales
Transversales had a total of 34 drill holes, 155 down hole surveys and 1,224 assays for Au (g/t),
Ag (g/t), Cu (ppm), Pb (ppm) and Zn (ppm). A total of 50 gaps in the from-to record were
identified and values of 0.01 g/t for Ag, 5 ppm for Zn, Pb and Cu and 0.001 g/t for Au were inserted.
A geologic solid, constraining the Transversales vein was built by Bourke from geologic logging
using Leapfrog Geo software. Of the supplied 34 holes, 29 intersected the mineralized solid. A list
of drill holes is provided as Appendix 1, with the 29 drill holes used to estimate the mineralized
solid, highlighted.
166
code if inside or outside the domains. Table 14-10 shows the simple statistics for assays inside
the San Felipe structures and outside the solids in waste.
Table 14-10 Assay Statistics sorted by Domain for Transversales
Domain Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Transversales Au (g/t) 216 0.030 0.068 0.001 0.94 2.28 Vein Ag (g/t) 216 31.53 59.85 0.01 485.0 1.90 Cu (%) 216 0.08 0.25 0.001 2.92 2.95 Pb (%) 216 1.20 2.50 0.001 20.00 2.09 Zn (%) 216 1.74 3.52 0.001 27.20 2.02 Au (g/t) 1,058 0.011 0.037 0.001 0.86 2.56 Ag (g/t) 1,058 4.32 11.05 0.01 118.0 2.56 Cu (%) 1,058 0.02 0.09 0.001 2.02 4.82 Pb (%) 1,058 0.23 0.83 0.001 13.25 3.65 Zn (%) 1,058 0.33 0.92 0.001 11.70 2.75 Waste The grade distributions for each variable within each domain were examined to identify erratic
outliers and cap them if necessary. Table 14-11 shows the capping strategy for each domain.
Domain Variable Cap Level Number Capped Transversales Au (g/t) 0.15 g/t 3 Vein Ag (g/t) 250.0 g/t 5 Cu (%) 0.70 % 4 Pb (%) 8.0 % 6 Zn (%) 12.5 % 5 Au (g/t) 0.2 g/t 6 Ag (g/t) 70.0 g/t 8 Cu (%) 0.25 % 7 Pb (%) 5.1 % 6 Zn (%) 5.0 % 9 Waste The results from capping are tabulated below with significant reductions in the coefficient of
variation.
167
Table 14-12 Capped Assay Statistics sorted by Domain for Transversales
Domain Variable Number Mean Standard Minimum Maximum Coef. Of Deviation Value Value Variation Transversales Au (g/t) 216 0.026 0.027 0.001 0.15 1.04 Vein Ag (g/t) 216 29.54 48.92 0.01 250.0 1.66 Cu (%) 216 0.07 0.14 0.001 0.70 2.04 Pb (%) 216 1.04 1.64 0.001 8.00 1.58 Zn (%) 216 1.56 2.58 0.001 12.50 1.65 Au (g/t) 1,058 0.010 0.022 0.001 0.20 2.17 Ag (g/t) 1,058 4.13 9.51 0.01 70.0 2.30 Cu (%) 1,058 0.01 0.03 0.001 0.25 2.22 Pb (%) 1,058 0.21 0.62 0.001 5.10 2.99 Zn (%) 1,058 0.31 0.71 0.001 5.00 2.28 Waste 14.2. Composites
Within each of the mineralized structures uniform down hole 2 m composites were produced that
honoured the boundaries of the mineralized solids. Intervals less than 1 m at the solid boundaries
were combined with the adjoining sample. In this manner a uniform support of 2 ± 1 m was
produced. Within waste 5 m composites were produced in a similar manner.
The statistics for 2
m and 5 m composites are tabulated below.
Table 14-13 Composite Statistics sorted by Domain
Domain Variable Number Mean Ventana Au (g/t) High Grade Ag (g/t) Structure Cu (%) 2 m Composites Pb (%) Zn (%) Ventana Au (g/t) Low Grade Ag (g/t) Envelope Cu (%) 2 m Composites Pb (%) Zn (%) Au (g/t) Ventana Ag (g/t) Waste Cu (%) 5 m Composites Pb (%) Zn (%) Las Lamas Au (g/t) Structure Ag (g/t) 240 240 240 240 240 262 262 262 262 262 3,100 3,100 3,100 3,100 3,100 109 109 0.016 71.10 0.43 2.96 6.91 0.013 12.49 0.06 0.56 1.16 0.004 1.36 0.01 0.09 0.12 0.017 47.47 Standard Minimum Maximum Coef. Of Deviation Value Value Variation 0.019 75.20 0.57 3.28 6.19 0.028 16.21 0.09 0.81 1.78 0.008 4.21 0.03 0.29 0.39 0.034 68.86 0.003 0.10 0.002 0.012 0.014 0.001 0.01 0.001 0.001 0.001 0.001 0.01 0.001 0.001 0.001 0.0001 0.01 0.15 424.7 3.1 16.5 27.6 0.35 97.9 0.6 5.6 14.9 0.13 71.1 0.54 4.7 6.2 0.22 355.6 1.20 1.06 1.32 1.11 0.90 2.09 1.30 1.72 1.44 1.54 2.11 3.09 3.68 3.36 3.16 1.95 1.45 168
Domain 2 m Composites Las Lamas Waste 5 m Composites San Felipe 2 m Composites San Felipe HW1 2 m Composites San Felipe HW2 2 m Composites San Felipe Waste 5 m Composites Transversales Vein 2 m Composites Transversales Waste 5 m Composites Variable Number Mean Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) 109 109 109 1037 1037 1037 1037 1037 86 86 86 86 86 94 94 94 94 94 32 32 32 32 32 1,430 1,430 1,430 1,430 1,430 102 102 102 102 102 1,095 1,095 1,095 1,095 1,095 0.09 0.19 3.00 0.002 0.78 0.002 0.01 0.03 0.02 28.18 0.07 0.94 1.52 0.06 70.74 0.08 1.15 3.84 0.02 25.68 0.06 1.23 2.19 0.006 1.59 0.005 0.04 0.09 0.025 25.68 0.06 0.90 1.37 0.003 0.73 0.003 0.031 0.054 Standard Minimum Maximum Coef. Of Deviation Value Value Variation 0.12 0.27 4.37 0.005 3.40 0.010 0.03 0.18 0.03 47.20 0.12 1.52 2.28 0.11 99.08 0.11 1.93 5.64 0.02 24.48 0.08 1.72 3.07 0.015 5.08 0.012 0.13 0.32 0.019 32.82 0.11 1.19 1.76 0.007 2.62 0.012 0.122 0.209 0.001 0.001 0.001 0.0001 0.01 0.001 0.001 0.001 0.002 0.10 0.001 0.001 0.004 0.001 0.01 0.001 0.001 0.001 0.001 0.01 0.001 0.001 0.001 0.001 0.01 0.001 0.001 0.001 0.002 0.43 0.001 0.006 0.01 0.001 0.01 0.001 0.001 0.001 0.4 1.6 20.4 0.05 40.9 0.2 0.5 3.3 0.15 211.3 0.5 6.8 10.5 0.6 446.0 0.5 9.3 28.0 0.1 80.0 0.3 5.0 10.0 0.2 77.6 0.2 2.8 5.3 0.11 197.3 0.6 6.9 10.0 0.12 37.4 0.15 1.3 4.0 1.35 1.45 1.46 2.64 4.37 4.29 4.12 6.35 1.36 1.68 1.56 1.63 1.50 1.82 1.40 1.40 1.67 1.47 0.99 0.95 1.42 1.40 1.40 2.39 3.19 2.51 3.42 3.61 0.77 1.28 1.74 1.33 1.29 2.47 3.56 3.60 3.98 3.89 169
Pearson Correlation coefficients were produced from composites, for each of the domains in each
of the structures.
Ventana
Table 14-14 Pearson correlation coefficients for Ventana
Domain Ag (g/t) Zn (%) Pb (%) Cu (%) Au (%) Ventana Ag 1.0000 HG Zn 0.8617 1.0000 Pb 0.7275 0.6853 1.0000 Cu 0.7895 0.6358 0.7728 1.0000 Au 0.5651 0.5364 0.5814 0.5444 1.0000 Ventana Ag 1.0000 LG Zn 0.9053 1.0000 Pb 0.8854 0.9174 1.0000 Cu 0.7952 0.8016 0.7581 1.0000 Au 0.4190 0.3462 0.3540 0.3081 1.0000 Within the HG domain there is excellent correlation between Ag-Zn, Ag-Pb, Ag-Cu and Pb-Cu.
There is reasonable correlation between all other variable combinations between Ag, Zn, Pb and
Cu. Gold is not well correlated with any of the other variables.
Within the LG domain there is excellent correlation between Ag, Zn, Pb and Cu. Gold is poorly
correlated with all other variables.
Las Lamas
Table 14-15 Pearson correlation coefficients for Las Lamas
Domain Ag (g/t) Zn (%) Pb (%) Cu (%) Au (%) Lamas Ag 1.0000 Zn 0.9512 1.0000 Pb 0.9186 0.9094 1.0000 Cu 0.9401 0.9378 0.8617 1.0000 Au 0.6878 0.6109 0.6521 0.5421 1.0000 170
Within the Lamas Structure there is excellent correlation between Ag, Zn, Pb and Cu. There is a
reasonable correlation between gold and all other variables.
San Felipe
Table 14-16 Pearson correlation coefficients for San Felipe
Domain Ag (g/t) Zn (%) Pb (%) Cu (%) Au (%) San Felipe SF Ag 1.0000 Zn 0.7378 1.0000 Pb 0.7459 0.8541 1.0000 Cu 0.8140 0.7683 0.7695 1.0000 Au 0.7003 0.3163 0.3291 0.4548 1.0000 San Felipe Ag 1.0000 HW1 Zn 0.9184 1.0000 Pb 0.7891 0.8763 1.0000 Cu 0.8257 0.8732 0.7753 1.0000 Au 0.7217 0.5494 0.5629 0.5379 1.0000 San Felipe Ag 1.0000 HW2 Zn 0.7984 1.0000 Pb 0.8232 0.9590 1.0000 Cu 0.7970 0.7541 0.7924 1.0000 Au 0.7949 0.6889 0.6464 0.6039 1.0000 Within the San Felipe structure there is good correlation between Ag and all other variables. Zn,
Pb and Cu all have good correlations with each other. Gold is weakly correlated with Zn, Pb and
Cu.
In the HW1 structure there is good to excellent correlation between Ag and all other variables.
Again there is good correlation between Zn, Pb and Cu. Gold has reasonable correlation with the
3 base metals.
In the HW2 structure there is good to excellent correlation between all variables.
171
Transversales
Table 14-17 Pearson correlation coefficients for Transversales
Domain Ag (g/t) Zn (%) Pb (%) Cu (%) Au (%) Transversales Ag 1.0000 Zn 0.6661 1.0000 Pb 0.6263 0.7127 1.0000 Cu 0.7102 0.5378 0.5200 1.0000 Au 0.6311 0.3310 0.4090 0.3235 1.0000 Within Transversales there is a good correlation between Ag and all other variables, between PbZn, Cu-Zn and Cu-Pb. There is a weak correlation between gold and Zn, Pb and Cu.
14.3. Variography
Pairwise relative semivariograms were produced for each of the five variables within each of the
domains. Nested spherical structures were identified in all cases. The semivariograms for silver
are shown in Appendix 4 and all variogram parameters are tabulated for each of the main
structures.
Ventana
The principal directions of anisotropy in each domain were along the strike of the structure at
azimuth 260o dip 0 and down dip along azimuth 170o dip -60o. For the High Grade Domain a rake
of -60o to the west was noted from the geology so the along strike direction for HG was adjusted to
azimuth 260o dip -60o. For silver, zinc, copper and gold this produced a longer range than along
dip 0o. For lead the longest along strike continuity was found along dip 0o.
172
Table 14-18 Summary of Semivariogram Parameters for Ventana domains
Domain High Grade Structure (HG) Variable Au Ag Cu Pb Zn Low Grade Envelope (LG) Ag Cu Pb Zn Au Waste Au Ag Cu Pb Zn Az / Dip 260 / -‐60 350 / -‐30 170 / -‐60 260 / -‐60 350 / -‐30 170 / -‐60 260 / -‐60 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / -‐60 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 260 / 0 350 / -‐30 170 / -‐60 C0 C1 C2 0.35 0.20 0.20 0.38 0.20 0.30 0.50 0.20 0.40 0.40 0.10 0.35 0.30 0.20 0.30 0.40 0.15 0.45 0.45 0.10 0.55 0.40 0.10 0.63 0.40 0.10 0.65 0.20 0.15 0.30 0.10 0.22 0.16 0.30 0.40 0.40 0.20 0.15 0.24 0.35 0.25 0.40 0.30 0.40 0.32 Short Range Long Range (m) (m) 50.0 12.0 20.0 40.0 12.0 20.0 50.0 15.0 20.0 20.0 15.0 20.0 40.0 15.0 30.0 20.0 30.0 15.0 20.0 20.0 15.0 20.0 15.0 20.0 20.0 15.0 15.0 20.0 10.0 15.0 10.0 12.0 12.0 15.0 15.0 20.0 18.0 10.0 30.0 15.0 12.0 20.0 12.0 15.0 20.0 160.0 15.0 50.0 120.0 16.0 40.0 150.0 20.0 60.0 80.0 30.0 40.0 60.0 20.0 80.0 120.0 50.0 60.0 120.0 40.0 50.0 100.0 40.0 80.0 60.0 40.0 76.0 80.0 30.0 40.0 20.0 42.0 40.0 60.0 90.0 120.0 40.0 70.0 90.0 40.0 80.0 100.0 40.0 80.0 100.0 173
Las Lamas
The principal directions of anisotropy in each domain were along the strike of the structure at
azimuth 255o dip 0 and down dip along azimuth 345o dip -86o.
For each variable in waste, an
isotropic model was fit to the data.
In each case nested spherical models were used. The semivariograms for silver are shown in
Appendix 4 and the parameters for all models are tabulated below.
Table 14-19 Summary of Semivariogram Parameters for Lamas Structures
Domain Variable Az / Dip C2 40.0 140.0 2.0 5.0 18.0 90.0 50.0 120.0 165 / -‐4 2.0 5.0 345 / -‐86 5.0 20.0 40.0 120.0 165 / -‐4 2.0 5.0 345 / -‐86 5.0 20.0 50.0 150.0 165 / -‐4 2.0 5.0 345 / -‐86 3.0 20.0 50.0 140.0 165 / -‐4 2.0 5.0 345 / -‐86 10.0 40.0 255 / 0 Structure 165 / -‐4 0.20 0.88 0.32 345 / -‐86 Ag 255 / 0 Cu 255 / 0 Pb 255 / 0 Zn Short Range Long Range (m) Au Waste C1 (m) Las Lamas (LL) C0 255 / 0 0.40 0.60 0.45 0.40 0.60 0.40 0.40 0.40 0.80 0.60 0.60 0.60 Au Omni Directional 0.30 0.10 0.35 15.0 40.0 Ag Omni Directional 0.35 0.20 0.28 20.0 40.0 Cu Omni Directional 0.12 0.10 0.09 30.0 60.0 Pb Omni Directional 0.20 0.20 0.07 30.0 46.0 Zn Omni Directional 0.30 0.20 0.18 30.0 40.0 174
San Felipe
Of the four vein solids; San Felipe, HW1, HW2 and Transversales only the HW1 had enough
composites to model. Since the strike and dip for the San Felipe, HW1 and HW2 structures was
similar the HW1 model was used to estimate each of the three veins.
For the Transversales the HW1 model was used but the orientation was changed to fit the strike
and dip of the Transversales structure. Pairwise relative semivariograms were produced for each
of the 5 variables within the HW1 structure in the along strike (Az. 281 Dip 0) and down dip (Az.
191 Dip -70) directions. For the across dip direction a small range was assumed as there were
insufficient pairs in this direction to model.
For waste Isotropic nested models were fit to each of the 5 variables. The model parameters are
summarized below.
Table 14-20 Summary of Semivariogram Parameters for San Felipe Structures
Domain San Felipe HW1 Variable Au Ag Cu Pb Zn Waste Au Ag Cu Pb Zn Az / Dip 281 / 0 191 / -‐70 11 / -‐20 281 / 0 191 / -‐70 11 / -‐20 281 / 0 191 / -‐70 11 / -‐20 281 / 0 191 / -‐70 11 / -‐20 281 / 0 191 / -‐70 11 / -‐20 Omni Directional Omni Directional Omni Directional Omni Directional Omni Directional C0 C1 C2 0.20 1.00 0.40 0.80 0.40 1.00 0.60 0.75 0.40 1.05 0.20 0.50 0.22 0.40 0.40 0.26 0.25 0.16 0.30 0.40 0.16 0.40 0.17 0.24 0.30 Short Range Long Range (m) (m) 20.0 12.0 20.0 15.0 15.0 50.0 80.0 10.0 72.0 60.0 10.0 60.0 80.0 10.0 50.0 40.0 10.0 76.0 60.0 10.0 60.0 40.0 60.0 60.0 80.0 175
14.4. Block Models
Block models with blocks 5 x 2.5 x 5 m were superimposed over the mineralized solids and
topography within each mineralized zone.
For each block the percentage below surface
topography and within the mineralized solid was recorded.
The origins of the bock models are as follows:
Ventana
Lower left corner
567260 East
Column size = 5 m
217 columns
3306265 North
Row size = 2.5 m
148 rows
Level size = 5 m
115 levels
Top of Model
1015 Elevation
No rotation.
Figure 14-6 Isometric view looking NE showing Ventana blocks below topo in white, HG in red, LG
Envelope in Yellow, Underground workings in green and drill hole composites
176
Las Lamas
Lower left corner
566960 East
Column size = 5 m
98 columns
3305115 North
Row size = 2.5 m
104 rows
Level size = 5 m
75 levels
Top of Model
805 Elevation
No rotation.
Figure 14-7 Isometric view looking NE showing Lamas blocks below topo in white and drill hole
composites in magenta
177
San Felipe
Lower left corner
566860 East
Column size = 5 m
174 columns
3305372.5 North
Row size = 2.5 m
248 rows
Top of Model
945 Elevation
Level size = 5 m
97 levels
No rotation.
Figure 14-8 San Felipe Zone block models
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14.5. Bulk Density
Ventana
The Ventana zone has had specific gravity determinations completed in three different programs.
A Hochschild data set contained 127 measurements from drill core but the hole numbers were not
available so as a result, grades could not be established to compare with the specific gravities.
There was a description of the sample, however, that allowed for determining if the sample was
mineralized or in waste. The average specific gravity from 59 mineralized samples was 3.41 while
the average specific gravity from 68 samples in waste was 2.74.
Santacruz took 63 specific gravity measurements using the Archimedes method, from drill holes
SCLV-01 to 06, within the La Ventana zone. Of these samples 6 were from the HG domain and
averaged 3.62. The remaining 57 samples were from waste and averaged 2.90.
The third data set was sent by Santcruz to ALS where the laboratory measured the specific gravity
of 61 samples using their SG-OA-GRA08b methodology. These samples and the 6 in the HG
domain from the Santacruz data set could be sorted by combined lead plus zinc grade as shown
below. The waste samples from Hochschild could be combined with the waste samples from the
Santacruz set and are shown as Waste.
Table 14-21 Specific Gravity determinations Ventana
Number of Combined Average Samples Pb + Zn % SG 24 < 1% 2.80 8 ≥ 1 < 5 % 2.90 13 ≥ 5 < 10 % 3.16 21 ≥ 10 % 3.30 125 Waste 2.81 The average for the samples from waste is nearly identical to the average for blocks with
combined Pb+Zn less than 1%. There are, however, mineralized intervals outside the HG and LG
solids that could not be joined up and as a result blocks in these areas should have an SG that
reflects the mineral content. For this resource estimation a specific gravity was assigned to all
blocks based on their combined estimated lead plus zinc grade. For blocks containing more than
179
one domain, a weighted average combined Pb+Zn grade was established and the appropriate SG
assigned.
Las Lamas
At Las Lamas there were a total of 197 specific gravity determinations reported using the
Archimedes method of weight in air – weight in water. The samples were subdivided into Lamas
structure or waste. Table 14-22 shows the results.
Table 14-22 Specific Gravity determinations Lamas
Domain Number of Minimum Maximum Average Samples SG SG SG LL Structure 32 2.47 3.82 3.14 Waste 165 2.12 4.32 2.81 Total 187 2.12 4.32 2.87 For this resource estimation a specific gravity was assigned to all blocks based on their domain
average. For blocks containing more than one domain, a weighted average specific gravity was
determined.
In future drill campaigns more specific gravities should be taken within the LL
structure to allow for a relationship between contained sulphides and density to be established.
This will allow for better tonnage factors to be determined that allow for higher sulphide content.
San Felipe
For the San Felipe zone only 8 specific gravity determinations were available (taken by
Hochschild) and there was no indication if these were in vein or waste rock material. As a result
the average of the eight samples was applied to all blocks.
More attention needs to be paid to specific gravity particularly within skarn-vein material to
establish the relationship between sulphide content and density.
180
Table 14-23 Specific Gravity determinations San Felipe
Hole Site Depth (m) Sample SG Density From To SCSF-‐01 San Filipe 22.2 22.3 D1 2.49 SCSF-‐01 San Filipe 39.15 39.25 D2 2.60 SCSF-‐01 San Filipe 96.9 97 D3 2.66 SCSF-‐01 San Filipe 120.4 120.5 D4 2.72 SCSF-‐01 San Filipe 152.6 152.7 D5 2.60 SCSF-‐01 San Filipe 170.75 170.85 D6 2.82 197.5 D7 2.49 SCSF-‐01 San Filipe 241.15 241.25 D8 2.88 Average 2.66 SCSF-‐01 San Filipe 197.4 Transversales
A total of 86 specific gravity determinations were available from the Transversales zone taken from
drill holes SCVT-2 to 17. Of these 26 were taken in un-assayed waste intervals and were not
useful in determining the specific gravity of the mineralized material. The correlation between SG
and combined Cu, Pb and Zn grades was 0.4014 and the regression equation was not considered
reliable. There is probably considerable iron in these samples that is not accounted for. As a
result the average specific gravity of 3.07 was applied to the Transversales mineralized material
while 2.84 was used for waste.
Table 14-24 Specific Gravity determinations Transversales
Domain Number Min Sg Max Sg Average Sg Vein 11 2.60 3.86 3.07 Waste 49 2.17 4.75 2.84 14.6. Grade Interpolation
For each of the mineralized zones, grades for Au, Ag, Cu, Pb and Zn were interpolated into each
block in the model in a series of passes by Ordinary Kriging (OK). In all kriging runs a minimum of
4 composites were required within the search ellipse with a maximum of 3 allowed from a single
hole. In this manner every block was estimated from a minimum of two drill holes. A maximum of
12 composites were allowed. The estimates were completed in a series of 4 passes with the
search ellipse tied to the range and orientation of the semivariogram, for the variable being
estimated. The first pass used a search ellipsoid with dimensions equal to ¼ of the semivariogram
181
range. For blocks not estimated in Pass 1, a second pass was completed using a search ellipsoid
with dimensions equal to ½ the semivariogram range. A third pass using the full range and a
fourth pass using twice the range completed the kriging exercise.
Ventana
The first kriging runs were completed for all blocks with some percentage within the high grade
solid using only HG composites. Each variable was estimated and stored in the block model. The
next set of kriging runs used LG composites and blocks with some percentage within the LG solid
were estimated. Finally blocks containing some percentage of waste, or material outside the two
mineralized solids, were estimated using composites from waste. For waste only three passes
were completed. A total grade for the block was a weighted average of these three estimates as
shown below for silver.
Total Ag = (HG_Ag * %HG) + (LG_Ag * %LG) + (Waste_Ag * % Waste)
% Below Topography
The kriging parameters for silver are tabulated below along with the number of blocks estimated in
each pass for each domain.
Table 14-25 Kriging Parameters for Silver at Ventana
Domain Variable Number Az / Dip Estimated High Grade Ag Structure (HG) Low Grade Ag Envelope (LG) Waste Ag Dist. Az / Dip (m) Dist. Az / Dip (m) Dist. (m) 204 260 / -‐60 30.0 350 / -‐30 4.0 170 / -‐60 10.0 3,993 260 / -‐60 60.0 350 / -‐30 8.0 170 / -‐60 20.0 10,949 260 / -‐60 120.0 350 / -‐30 16.0 170 / -‐60 40.0 8,186 260 / -‐60 240.0 350 / -‐30 32.0 170 / -‐60 80.0 806 260 / 0 30.0 350 / -‐30 12.5 170 / -‐60 15.0 11,315 260 / 0 60.0 350 / -‐30 25.0 170 / -‐60 30.0 13,395 260 / 0 120.0 350 / -‐30 50.0 170 / -‐60 60.0 4,875 260 / 0 240.0 350 / -‐30 100.0 170 / -‐60 120.0 67,280 260 / 0 15.0 350 / -‐30 22.5 170 / -‐60 30.0 316,583 260 / 0 30.0 350 / -‐30 45.0 170 / -‐60 60.0 491,790 260 / 0 60.0 350 / -‐30 90.0 170 / -‐60 120.0 182
Las Lamas
The first kriging runs were completed for all blocks with some percentage within the mineralized
Lamas solid using only Lamas composites. Each variable was estimated and stored in the block
model.
In the next run blocks containing some percentage of waste, or material outside the
mineralized solid, were estimated using composites from waste. A total grade for the block was a
weighted average of these two estimates as shown below for silver.
Total Ag = (LL_Ag * %LL) + (Waste_Ag * % Waste)
% Below Topography
Table 14-26 Kriging Parameters for Silver at Las Lamas
Domain Variable Number Az / Dip Estimated Las Lamas Ag Structure (LL) Waste Ag Dist. Az / Dip Dist. (m) (m) Az / Dip Dist. (m) 81 255 / 0 30.0 165 / -‐4 5.0 345 / -‐86 5.0 358 255 / 0 60.0 165 / -‐4 5.0 345 / -‐86 10.0 888 255 / 0 120.0 165 / -‐4 5.0 345 / -‐86 20.0 9,034 255 / 0 240.0 165 / -‐4 10.0 345 / -‐86 40.0 2,664 Omni Directional 10.0 19,804 Omni Directional 20.0 87,330 Omni Directional 40.0 180,882 Omni Directional 80.0 San Felipe
Each of the three structures, the San Felipe, HW1 and HW2 were estimated using only composites
from the particular vein being estimated, using Ordinary Kriging as described above.
The
surrounding waste was then estimated using composites outside the vein solids. A total block
grade was produced as a weighted average of these estimates as shown below for Ag.
Total Ag = (SF_Ag * %SF) + (HW1 Ag * %HW1) + (HW2 Ag * %HW2) + (Waste_Ag * % Waste)
% Below Topography
183
Table 14-27 Kriging Parameters for Silver at San Felipe Veins
Domain Variable Number Az / Dip Estimated San Felipe Ag Structure (SF) HW1 HW2 Waste Ag Ag Ag Dist. Az / Dip (m) Dist. Az / Dip Dist. (m) (m) 9 281 / 0 18.0 191 / -‐70 15.0 11 / -‐20 5.0 1,283 281 / 0 36.0 191 / -‐70 30.0 11 / -‐20 10.0 6,324 281 / 0 72.0 191 / -‐70 60.0 11 / -‐20 20.0 11,280 281 / 0 144.0 191 / -‐70 120.0 11 / -‐20 40.0 18 281 / 0 18.0 191 / -‐70 15.0 11 / -‐20 2,065 281 / 0 36.0 191 / -‐70 30.0 11 / -‐20 10.0 8,940 281 / 0 72.0 191 / -‐70 60.0 11 / -‐20 20.0 4,868 281 / 0 144.0 191 / -‐70 120.0 11 / -‐20 40.0 1 281 / 0 18.0 191 / -‐70 15.0 11 / -‐20 264 281 / 0 36.0 191 / -‐70 30.0 11 / -‐20 10.0 3,095 281 / 0 72.0 191 / -‐70 60.0 11 / -‐20 20.0 6,376 281 / 0 144.0 191 / -‐70 120.0 11 / -‐20 40.0 5.0 5.0 704 Omni Directional 10.0 11,963 Omni Directional 20.0 160,553 Omni Directional 40.0 491,910 Omni Directional 80.0 Transversales
Blocks containing some percentage of the Transversales domain (VT) were estimated for Au, Ag,
Cu, Pb and Zn by Ordinary Kriging, as described above, using only composites from the
Transversales structure. The surrounding waste was then estimated using composites outside the
mineralized solid. A total block grade was produced as a weighted average of these estimates as
shown below for Ag.
Total Ag = (VTAg * %VT) + (Waste_Ag * % Waste)
% Below Topography
184
Table 14-28 Kriging Parameters for Silver at Transversales
Domain Variable Number Az / Dip Estimated Transversales Ag Structure (VT) Waste Ag Dist. Az / Dip (m) Dist. Az / Dip (m) Dist. (m) 0 59 / 0 18.0 320 / -‐70 15.0 140 / -‐20 5.0 1,913 59 / 0 36.0 320 / -‐70 30.0 140 / -‐20 10.0 11,769 59 / 0 72.0 320 / -‐70 60.0 140 / -‐20 20.0 10,763 59 / 0 144.0 320 / -‐70 120.0 140 / -‐20 40.0 34 Omni Directional 10.0 495 Omni Directional 20.0 8,755 Omni Directional 40.0 8,106 Omni Directional 80.0 14.7. Classification
Based on the study herein reported, delineated mineralization of the San Felipe Deposit is
classified as a resource according to the following definitions from National Instrument 43-101 and
from CIM (2014):
“In this Instrument, the terms "Mineral Resource", "Inferred Mineral Resource", "Indicated
Mineral Resource" and "Measured Mineral Resource" have the meanings ascribed to those
terms by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Definition
Standards (May 2014) on Mineral Resources and Mineral Reserves adopted by CIM Council,
as those definitions may be amended.”
The terms Measured, Indicated and Inferred are defined by CIM (2014) as follows:
“A Mineral Resource is a concentration or occurrence of solid material of economic interest in
or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity, grade or quality, continuity
and other geological characteristics of a Mineral Resource are known, estimated or interpreted
from specific geological evidence and knowledge, including sampling.”
“The term Mineral Resource covers mineralisation and natural material of intrinsic economic
interest which has been identified and estimated through exploration and sampling and within
which Mineral Reserves may subsequently be defined by the consideration and application of
185
Modifying Factors.
The phrase ‘reasonable prospects for economic extraction’ implies a
judgement by the Qualified Person in respect of the technical and economic factors likely to
influence the prospect of economic extraction. The Qualified Person should consider and
clearly state the basis for determining that the material has reasonable prospects for eventual
economic extraction. Assumptions should include estimates of cut-off grade and geological
continuity at the selected cut-off, metallurgical recovery, smelter payments, commodity price or
product value, mining and processing method and mining, processing and general and
administrative costs. The Qualified Person should state if the assessment is based on any
direct evidence and testing. Interpretation of the word ‘eventual’ in this context may vary
depending on the commodity or mineral involved. For example, for some coal, iron, potash
deposits and other bulk minerals or commodities, it may be reasonable to envisage ‘eventual
economic extraction’ as covering time periods in excess of 50 years. However, for many gold
deposits, application of the concept would normally be restricted to perhaps 10 to 15 years,
and frequently to much shorter periods of time.”
Inferred Mineral Resource
“An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade
or quality are estimated on the basis of limited geological evidence and sampling. Geological
evidence is sufficient to imply but not verify geological and grade or quality continuity. An
Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated
Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected
that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral
Resources with continued exploration.”
“An ‘Inferred Mineral Resource’ is based on limited information and sampling gathered through
appropriate sampling techniques from locations such as outcrops, trenches, pits, workings and
drill holes. Inferred Mineral Resources must not be included in the economic analysis,
production schedules, or estimated mine life in publicly disclosed Pre-Feasibility or Feasibility
Studies, or in the Life of Mine plans and cash flow models of developed mines. Inferred
Mineral Resources can only be used in economic studies as provided under NI 43-101.”
“There may be circumstances, where appropriate sampling, testing, and other measurements
are sufficient to demonstrate data integrity, geological and grade/quality continuity of a
Measured or Indicated Mineral Resource, however, quality assurance and quality control, or
other information may not meet all industry norms for the disclosure of an Indicated or
Measured Mineral Resource. Under these circumstances, it may be reasonable for the
Qualified Person to report an Inferred Mineral Resource if the Qualified Person has taken
steps to verify the information meets the requirements of an Inferred Mineral Resource.”
186
Indicated Mineral Resource
“An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape and physical characteristics are estimated with sufficient confidence
to allow the application of Modifying Factors in sufficient detail to support mine planning and
evaluation of the economic viability of the deposit. Geological evidence is derived from
adequately detailed and reliable exploration, sampling and testing and is sufficient to assume
geological and grade or quality continuity between points of observation. An Indicated Mineral
Resource has a lower level of confidence than that applying to a Measured Mineral Resource
and may only be converted to a Probable Mineral Reserve.”
“Mineralisation may be classified as an Indicated Mineral Resource by the Qualified Person
when the nature, quality, quantity and distribution of data are such as to allow confident
interpretation of the geological framework and to reasonably assume the continuity of
mineralisation. The Qualified Person must recognise the importance of the Indicated Mineral
Resource category to the advancement of the feasibility of the project. An Indicated Mineral
Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can
serve as the basis for major development decisions.”
Measured Mineral Resource
“A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape, and physical characteristics are estimated with confidence sufficient
to allow the application of Modifying Factors to support detailed mine planning and final
evaluation of the economic viability of the deposit. Geological evidence is derived from
detailed and reliable exploration, sampling and testing and is sufficient to confirm geological
and grade or quality continuity between points of observation. A Measured Mineral Resource
has a higher level of confidence than that applying to either an Indicated Mineral Resource or
an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a
Probable Mineral Reserve.”
“Mineralisation or other natural material of economic interest may be classified as a Measured
Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of
data are such that the tonnage and grade or quality of the mineralisation can be estimated to
within close limits and that variation from the estimate would not significantly affect potential
economic viability of the deposit. This category requires a high level of confidence in, and
understanding of, the geology and controls of the mineral deposit.”
187
Modifying Factors
“Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves.
These include, but are not restricted to, mining, processing, metallurgical, infrastructure,
economic, marketing, legal, environmental, social and governmental factors.”
Geologic continuity has been established from surface and underground mapping and drill hole
interpretation. This has led to the geologic solid model which constrains the estimate. The grade
continuity has been established from the semivariogram analysis. The semivariogram orientations
and ranges have been used to align and dimension the search ellipsoids, used in the grade
interpolation.
Ventana
At Ventana blocks estimated in Pass 1 and 2 using up to ½ the semivariogram range are classified
as Indicated in the HG and LG domains. All other blocks in these domains and all blocks in waste
are classified as Inferred at this time.
Blocks containing some percentage of underground
workings had this percentage subtracted from the HG percentage if there was HG within the block.
If no HG was present it was subtracted from the LG percentage before the tonnage was
determined.
The resource is presented in grade-tonnage tables first for only the proportion of blocks within the
mineralized solids (Tables 14-29 & 30). This assumes one could mine to the limits of the solids
and take no external dilution.
Next the resource is presented for total blocks. This assumes one would mine a total 5 x 2.5 x 5 m
block and includes edge dilution (see Appendix 3).
188
Table 14-29 Ventana Resource classed as Indicated within Mineralized Solids
Cut-‐off Tonnes > Cut-‐off Ag (g/t) (tonnes) Grade > Cut-‐off Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 60.0 422,000 110.76 8.86 3.62 0.71 0.020 70.0 357,000 119.04 9.19 3.71 0.75 0.021 75.0 325,000 123.66 9.39 3.77 0.78 0.021 80.0 290,000 129.29 9.60 3.87 0.81 0.022 90.0 245,000 137.39 9.95 4.01 0.87 0.022 100.0 205,000 145.80 10.31 4.15 0.93 0.023 110.0 164,000 155.82 10.75 4.39 1.02 0.023 120.0 136,000 164.42 11.20 4.50 1.09 0.024 130.0 116,000 171.25 11.48 4.58 1.15 0.024 140.0 94,000 179.90 11.98 4.74 1.22 0.025 150.0 75,000 188.78 12.46 4.88 1.29 0.026 Table 14-30 Ventana Resource classed as Inferred within Mineralized Solids
Cut-‐off Tonnes > Cut-‐off Grade > Cut-‐off Ag (g/t) (tonnes) Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 60.0 672,000 88.42 8.07 3.17 0.58 0.020 70.0 528,000 94.92 8.42 3.20 0.62 0.020 75.0 444,000 99.12 8.57 3.29 0.63 0.021 80.0 378,000 102.97 8.70 3.37 0.64 0.021 90.0 251,000 112.35 9.12 3.64 0.65 0.023 100.0 177,000 119.91 9.52 3.95 0.67 0.025 110.0 112,000 128.78 9.99 4.45 0.69 0.028 120.0 60,000 140.79 10.19 4.97 0.78 0.028 130.0 34,000 152.60 10.16 5.31 0.84 0.027 140.0 20,300 165.08 9.64 5.26 0.92 0.025 150.0 13,800 175.06 9.24 5.19 0.96 0.024 Las Lamas
Blocks at Las Lamas were classified as Indicated if estimated in Pass 1 or Pass 2. All other blocks
are classified as Inferred at this time.
Tables 14-27 and 14-28 present the resource present within the mineralized solid. This assumes
one could mine to the limits of the solid boundaries and contains no edge dilution.
189
Table 14-31 Las Lamas Resource classed as Indicated within Mineralized Solid
Cut-‐off Tonnes > Cut-‐off Ag (g/t) (tonnes) Grade > Cut-‐off Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 60.0 43,000 108.75 6.05 0.36 0.20 0.012 70.0 40,000 112.76 6.25 0.38 0.20 0.012 75.0 38,000 114.73 6.27 0.39 0.21 0.012 80.0 33,000 119.74 6.27 0.41 0.21 0.012 90.0 25,000 130.73 5.79 0.44 0.22 0.011 100.0 21,000 137.53 6.02 0.46 0.23 0.012 110.0 12,800 158.67 6.72 0.56 0.25 0.014 120.0 11,400 163.50 6.79 0.59 0.26 0.014 130.0 9,700 170.32 7.15 0.64 0.27 0.015 140.0 8,700 174.51 7.33 0.67 0.27 0.016 150.0 8,100 176.72 7.46 0.68 0.28 0.016 Table 14-32 Las Lamas Resource classed as Inferred within Mineralized Solid
Cut-‐off Tonnes > Cut-‐off Grade > Cut-‐off Ag (g/t) (tonnes) Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 60.0 299,000 109.36 5.92 0.42 0.18 0.021 70.0 271,000 113.89 6.14 0.44 0.18 0.020 75.0 258,000 115.90 6.22 0.44 0.18 0.020 80.0 234,000 119.89 6.33 0.46 0.19 0.020 90.0 213,000 123.24 6.45 0.47 0.19 0.020 100.0 169,000 130.52 6.71 0.50 0.21 0.019 110.0 138,500 136.00 6.98 0.53 0.21 0.020 120.0 94,700 145.40 7.40 0.57 0.23 0.018 130.0 56,800 159.10 7.54 0.61 0.25 0.017 140.0 33,600 175.43 8.35 0.66 0.27 0.017 150.0 25,900 184.75 8.80 0.69 0.29 0.017 The resource presents within total 5 x 2.5 x 5 m blocks includes edge dilution and is shown in
Appendix 3.
190
San Felipe
For the three mineralized structures San Felipe, HW1 and HW2 blocks estimated during Pass 1 or
Pass 2, using search ellipses up to ½ the semivariogram range, were classified as Indicated. All
other blocks were classified as Inferred.
Tables 14-29 and 14-30 report the resource present within the mineralized solids. This assumes
one could mine to the limits of the solids with no edge dilution applies.
Table 14-33 San Felipe Resource classed as Indicated within Mineralized Solids
Cut-‐off Tonnes > Cut-‐off Grade > Cut-‐off Ag (g/t) (tonnes) Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 60.0 147,000 114.13 5.71 1.53 0.13 0.089 70.0 128,000 121.65 6.14 1.58 0.14 0.093 75.0 119,000 125.30 6.36 1.62 0.14 0.094 80.0 110,000 129.10 6.56 1.65 0.15 0.096 90.0 96,000 135.76 6.89 1.67 0.15 0.100 100.0 84,000 141.77 7.20 1.71 0.16 0.103 110.0 70,600 148.64 7.52 1.76 0.17 0.105 120.0 58,100 155.78 7.98 1.75 0.17 0.096 130.0 43,200 166.64 8.68 1.72 0.18 0.083 140.0 34,200 174.88 9.24 1.67 0.18 0.078 150.0 27,200 182.87 9.73 1.69 0.18 0.076 191
Table 14-34 San Felipe Resource classed as Inferred within Mineralized Solids
Cut-‐off Tonnes > Cut-‐off Ag (g/t) (tonnes) Grade > Cut-‐off Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 60.0 469,000 106.18 5.61 1.31 0.10 0.070 70.0 380,000 115.68 6.24 1.29 0.11 0.072 75.0 338,000 121.19 6.67 1.29 0.11 0.073 80.0 309,000 125.19 6.94 1.28 0.11 0.073 90.0 250,000 134.72 7.56 1.28 0.11 0.074 100.0 196,000 145.48 8.25 1.28 0.12 0.073 110.0 155,100 156.22 9.10 1.27 0.12 0.063 120.0 127,500 165.24 9.86 1.29 0.12 0.053 130.0 107,500 172.79 10.48 1.30 0.12 0.049 140.0 80,300 186.12 11.03 1.22 0.12 0.050 150.0 64,900 195.81 11.64 1.18 0.12 0.048 The resource present within total 5 x 2.5 x 5 m blocks which includes edge dilution is shown in
Appendix 3.
Transversales
Due to drill hole density and the inability to establish semivariogram models all estimated blocks on
the Transversales were classified as Inferred.
Table 14-31 reports the inferred resource present within the mineralized solid. This assumes one
could mine to the limits of the solid with no edge dilution applies. The inferred resource within total
5 x 2.5 x 5 m blocks which includes edge dilution is shown in Appendix 3.
192
Table 14-35 Transversales Resource classed as Inferred within Mineralized Solid
Cut-‐off Tonnes > Cut-‐off Ag (g/t) (tonnes) Grade > Cut-‐off Ag (g/t) Zn (%) Pb (%) Cu (%) Au (g/t) 40.0 453,000 61.74 1.83 1.39 0.15 0.036 45.0 374,000 65.91 1.81 1.50 0.17 0.036 50.0 322,000 68.89 1.80 1.56 0.17 0.036 55.0 270,000 72.05 1.81 1.59 0.18 0.037 60.0 213,000 75.97 1.86 1.57 0.17 0.037 70.0 112,000 86.79 1.62 1.73 0.19 0.039 75.0 89,000 90.55 1.52 1.67 0.18 0.039 80.0 69,000 94.27 1.42 1.61 0.17 0.039 90.0 47,000 98.98 1.21 1.59 0.17 0.040 100.0 17,000 104.86 0.87 1.48 0.15 0.040 Mineralization at San Felipe has multiple variables and as a result a silver equivalent value cut-off
would be a better way of presenting the resource. Metallurgical test work to date has not produced
a copper concentrate that is potentially economic. Gold values in the concentrates produced in
testing are lower than the minimum paid for under normal contracts. Therefore, copper and gold
were not included in the silver equivalent calculation The metal prices used in the silver equivalent
calculation are from a 100 day moving average and are listed below. The metal prices and
recoveries used for the silver equivalents in the resource estimation vary somewhat from those
used in the PEA as the resource was done earlier and the PEA includes some new information.
Factor
Ag
-
US$ 20.06 per ounce
0.64 $/gm
Pb
-
US$ 0.96 per pound
21.16 $/%
Zn
-
US$ 0.92 per pound
20.28 $/%
The recoveries for each metal within each zone are shown below. As the relative amounts of
oxide, mixed and sulphide material, and the effects of oxidation on recovery, are not well
established, the same recovery estimate was used for the entire vein.
Table 14-36 Recoveries for each metal
Zone Ag Rec. Pb Rec. Zn Rec. Ventana 70% 86% 87% Las Lamas 73% 82% 88% San Felipe & Transversales 69% 86% 79% 193
The equation to establish Ag Equivalent is then:
AgEq
(Pb% * 21.16 * Pb Rec%) + (Ag g/t * 0.64 * Ag Rec%) + (Zn% * 20.28 * Zn Rec%)
(0.64 * Ag Rec%)
The silver equivalent resource for each mineralized structure is presented in the following Tables.
Again this resource contains no edge dilution.
At this time, only a Preliminary Economic
Assessment has been completed and an economic cut-off is unknown. Based on asumptions
made during the PEA, a cut-off for possible open pit extraction would be 75 g/t Ag Equivalent
based on $2.00 /t mining costs, $19.00 /t milling costs and $18.00 smelter charges and the metal
prices shown above.
For possible underground extraction the cut-off would be 150 g/t Ag
Equivalent based on assumed mining costs of $30 /t, milling costs of $19.00 /t and smelting
charges of $28.00 /t.
The resources are presented for each deposit broken down by mining
method. For open pit resources only material within the conceptual pits is reported while for
underground resources the material within the mineralized structures below the open pits is
reported.
Table 14-37 Ventana Resource classed as Indicated within Conceptual Open Pit
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 10,000 70.61 0.11 7.69 378.11 121,565 60.0 10,000 70.61 0.11 7.69 378.11 121,565 65.0 10,000 70.61 0.11 7.69 378.11 121,565 70.0 10,000 70.61 0.11 7.69 378.11 121,565 75.0 10,000 70.61 0.11 7.69 378.11 121,565 80.0 10,000 70.61 0.11 7.69 378.11 121,565 90.0 10,000 70.61 0.11 7.69 378.11 121,565 Table 14-38 Ventana Resource classed as Inferred within Conceptual Open Pit
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 257,000 53.65 1.64 6.21 365.05 3,016,312 60.0 256,000 53.76 1.64 6.23 365.79 3,010,666 70.0 253,000 54.28 1.66 6.30 369.63 3,006,620 75.0 252,000 54.37 1.66 6.31 370.29 3,000,083 80.0 252,000 54.37 1.66 6.31 370.29 3,000,083 90.0 249,000 54.87 1.68 6.37 374.06 2,994,549 194
Table 14-39 Ventana Resource classed as Indicated in potential Underground
Cut-‐off Tonnes > Cut-‐off AgEq (g/t) (tonnes) Grades > Cut-‐off Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 1,447,000 46.82 1.97 4.26 294.63 13,706,805 75.0 1,097,000 58.40 2.42 5.39 369.33 13,026,026 100.0 972,000 64.03 2.65 5.94 405.51 12,672,391 125.0 880,000 68.94 2.83 6.41 436.23 12,342,097 150.0 815,000 72.91 2.96 6.78 460.35 12,062,477 175.0 752,000 77.26 3.10 7.16 485.03 11,726,737 200.0 709,000 80.53 3.19 7.44 503.09 11,467,867 Table 14-40 Ventana Resource classed as Inferred in potential Underground
Cut-‐off Tonnes > Cut-‐off AgEq (g/t) (tonnes) Grades > Cut-‐off Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 2,090,000 40.80 1.96 3.84 271.64 18,252,853 75.0 1,815,000 45.05 2.18 4.31 303.36 17,702,136 100.0 1,580,000 49.51 2.42 4.77 335.62 17,048,872 125.0 1,333,000 55.67 2.69 5.39 377.20 16,165,628 150.0 1,201,000 59.67 2.86 5.78 403.57 15,583,056 175.0 1,092,000 63.38 3.02 6.13 427.56 15,011,028 200.0 1,009,000 66.42 3.14 6.44 447.64 14,521,477 Table 14-41 Las Lamas Resource classed as Indicated in potential Underground
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 114,000 64.61 0.21 4.41 240.01 879,680 75.0 109,000 66.82 0.22 4.58 248.67 871,446 100.0 104,000 68.81 0.22 4.72 256.09 856,282 125.0 98,000 71.14 0.23 4.90 265.66 837,034 150.0 84,000 76.18 0.25 5.29 286.28 773,145 175.0 70,000 81.98 0.27 5.77 311.19 700,349 200.0 59,000 89.50 0.30 6.17 334.94 635,345 195
Table 14-42 Las Lamas Resource classed as Inferred in potential Underground
Cut-‐off Tonnes > Cut-‐off AgEq (g/t) (tonnes) Grades > Cut-‐off Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 546,000 75.14 0.31 4.25 247.86 4,351,007 75.0 461,000 84.34 0.32 4.91 282.56 4,187,958 100.0 429,000 88.65 0.33 5.17 297.13 4,098,213 125.0 402,000 92.72 0.35 5.36 309.24 3,996,800 150.0 383,000 95.27 0.36 5.50 317.54 3,910,101 175.0 356,000 98.63 0.37 5.71 329.13 3,767,109 200.0 322,000 103.55 0.39 5.96 344.41 3,565,516 Table 14-43 San Felipe Resource classed as Indicated within conceptual open pit
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 87,000 82.17 1.39 4.06 282.89 791,275 60.0 87,000 82.17 1.39 4.06 282.89 791,275 70.0 87,000 82.26 1.39 4.07 283.25 792,282 75.0 87,000 82.27 1.39 4.07 283.26 792,310 80.0 86,000 82.62 1.39 4.08 284.26 785,968 90.0 85,000 83.10 1.40 4.10 285.72 780,819 Table 14-44 San Felipe Resource classed as Inferred within conceptual open pit
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 262,000 82.66 1.28 4.54 295.99 2,493,269 60.0 261,000 82.94 1.28 4.56 297.04 2,492,563 70.0 261,000 82.98 1.28 4.56 297.18 2,493,738 75.0 261,000 83.07 1.28 4.56 297.48 2,496,255 80.0 261,000 83.12 1.28 4.57 297.63 2,497,514 90.0 260,000 83.36 1.29 4.58 298.33 2,493,797 Table 14-45 San Felipe Resource classed as Indicated in potential Underground
Cut-‐off Tonnes > Cut-‐off AgEq (g/t) (tonnes) Grades > Cut-‐off Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 212,000 61.21 1.25 3.75 245.20 1,671,272 75.0 180,000 69.55 1.40 4.28 278.57 1,612,121 100.0 148,000 79.56 1.56 4.96 319.12 1,518,471 125.0 130,000 86.51 1.68 5.46 348.67 1,457,299 150.0 118,000 91.38 1.76 5.79 368.79 1,399,110 175.0 108,000 96.27 1.84 6.12 388.73 1,349,779 200.0 99,000 100.89 1.91 6.42 406.74 1,294,622 196
Table 14-46 San Felipe Resource classed as Inferred in potential Underground
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 1,931,000 35.74 1.08 2.30 161.49 10,025,791 75.0 1,623,000 38.81 1.20 2.60 180.05 9,395,121 100.0 1,284,000 43.50 1.34 3.00 204.57 8,444,962 125.0 1,046,000 47.01 1.45 3.36 225.57 7,585,841 150.0 712,000 56.33 1.61 4.09 267.06 6,113,354 175.0 561,000 62.94 1.71 4.58 295.31 5,326,375 200.0 419,000 73.65 1.80 5.22 332.57 4,480,101 Table 14-47 Transversales Resource classed as Inferred in conceptual open pit
Cut-‐off Tonnes > Cut-‐off Grades > Cut-‐off AgEq (g/t) (tonnes) Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) AgEq Ozs. 50.0 345,000 55.40 1.41 1.33 159.84 1,772,945 60.0 345,000 55.40 1.41 1.33 159.84 1,772,945 70.0 345,000 55.40 1.41 1.33 159.84 1,772,945 75.0 345,000 55.40 1.41 1.33 159.84 1,772,945 80.0 344,000 55.45 1.41 1.33 159.97 1,769,244 90.0 343,000 55.51 1.41 1.33 160.13 1,765,865 The results for all zones are summarized below in Table 14-48 for the two mining methods.
197
off AgEq (g/t) Ventana San Felipe Total Ventana Indicated Indicated Indicated Inferred 75 75 75 75 10,000 87,000 97,000 252,000 70.61 82.27 81.07 54.37 San Felipe Transversales Total Inferred Inferred Inferred 75 75 75 261,000 345,000 83.07 55.40 Ventana Indicated 150 San Felipe Las Lamas Total Ventana San Felipe Indicated Indicated Indicated Inferred Inferred 150 150 150 150 150 Las Lamas Total Inferred Inferred 150 150 Tonnes > Cut-‐off Grades > Cut-‐off Ag Pb (g/t) (%) (tonnes) Within Conceptual Open Pits Zn (%) AgEQ (g/t) 0.11 1.39 1.26 1.66 7.69 4.07 4.44 6.31 378.11 283.26 293.04 370.29 121,565 792,310 913,875 3,000,083 1.28 1.41 4.56 1.33 297.48 159.84 2,496,255 1,772,945 858,000 63.51 1.44 Below Pits Possible Underground 815,000 72.91 2.96 3.78 263.52 7,269,283 6.78 460.35 12,062,477 AgEq Ozs. 118,000 84,000 91.38 76.18 1.76 0.25 5.79 5.29 368.79 286.28 1,399,110 773,145 1,017,000 1,201,000 712,000 75.32 59.67 56.33 2.60 2.86 1.61 6.54 5.78 4.09 435.35 403.57 267.06 14,234,732 15,583,056 6,113,354 383,000 95.27 0.36 5.50 317.54 3,910,101 2,296,000 64.57 2.06 5.21 346.89 25,606,511 198
15. Mineral Reserve Estimates
There are no mineral reserve estimates for the San Felipe project.
16. Mining Methods
For this PEA, it is postulated that a variety of mining methods will be used at the San Felipe project
including conventional open pit and underground methods applied to the four deposits targeted for
mining at this time. The La Ventana deposit will be mined using a combination of open pit and
underground methods, as will the San Felipe deposit. Las Lamas will be mined using underground
methods only and Transversales will be mined using open pit methods only.
Table 16-1 below summarizes mill feed contributions from each of these deposits.
Table 16-1 Summary of Contributions to mill feed by deposit and mining method
Deposit & Method
Ventana Open Pit
Ventana Underground
San Felipe Open Pit
San Felipe Underground
Transversales Open Pit
Lamas Underground
Mill Feed Waste Rock Tonnes
Tonnes
270,600
2,070,100
1,604,708
257,342
507,150
3,056,100
351,529
70,204
254,610
1,930,650
423,671
150,406
3,412,268
7,534,803
Ag gpt Zn%
51.42 6.09
58.56 5.50
62.35 3.40
83.56 4.96
49.19 5.82
83.55 4.92
63.53 5.13
Pb%
1.04
2.54
1.04
1.32
0.99
0.31
1.68
Note: The mill feed tonnes and grades shown are fully diluted with mining losses considered
At an average mining and processing rate of 1,250 tonnes per day the anticipated life of mine is
expected to be 7.5 years.
Underground development requirements for La Ventana, San Felipe and Las lamas total
approximately 8,100 meters and includes ramps, level accesses, and vertical developments such as
ventilation and service raises. Sill development in mineralized material is not included in this figure
because sill development costs are included in the overall underground mining costs for each
deposit planned for exploitation by underground methods.
199
Figure 16-1 shows relative locations of open pit targets as described above.
Figure 16-1 Relative locations of open pit targets
16.1. La Ventana Mining Methods
Initial mining of La Ventana will be by conventional open pit mining methods and will provide first mill
feed while La Ventana underground is being developed.
16.1.1.
La Ventana Open Pit
An open pit Whittle™ analysis was done for the La Ventana deposit and results showed that the
deposit would support a large pit if no underground mining were considered (unconstrained). The
resultant pit shell however was deemed an unreasonable solution due to high strip ratios, local
topography and anticipated difficulties finding adequate waste rock storage capacity for the large pit
scenario. Also, when the open pit/underground operating cost exercise using Whittle™ to determine
where underground mining is potentially more economic than continued open pit mining, the results
showed the majority of La Ventana mineralized material is more attractive economically using
underground mining methods. This results in a shallow pit shell where it is more attractive to take
near-surface mineralized material using open pit methods than trying to do so from underground.
200
See Figure 16-2 for a visual comparison of the smaller shell utilized in this plan and the larger shell
that while potentially economic to mine, is less attractive than the relative economics of mining
deeper resources using underground methods.
Figure 16-2 La Ventana Pit Shells Comparison
Choosing the small shell also provides flexibility in design between the pit bottom and top of
underground mining, as minor deepening of the shallow shell to accommodate a reasonable
transition to underground mining does not result in material being mined uneconomically from a
slightly deeper open pit. The design of this transition from surface to underground mining will be
finalized in the next phase of project advancement when more information is obtained from
continued exploration activities in the upper areas of La Ventana.
For La Ventana open pit mining a dilution factor of 10% at zero grade was assumed and no mining
losses were applied. This differs from the dilution and mining losses applied to the other two open
pits. This was done in the absence of metallurgical test work on upper La Ventana material where
the degree of oxidation is unknown as is the effect such oxidation might have on metallurgical
recoveries, so metallurgical recoveries for upper La Ventana were de-rated accordingly. Mining
losses were not applied in this instance because upon reviewing the resource model JDS realized
201
there is likely more potentially economic mill feed than shown in Table 16-1 that could be recovered
from the La Ventana open pit shell used in this analysis.
16.1.2.
La Ventana Underground
La Ventana underground mining will be a variation of longhole open stoping with rock backfill
provided from surface using waste rock reclaimed from Ventana open pit operations. During the first
year when the La Ventana pit is providing mill feed, the underground development of La Ventana will
begin on levels 800, 780 and 760 with completion of the sill drifts on these levels in year 1. Access
to the levels above 800 will be from the pit floor designed for this interface and transition. Refer to
Figure 16-3. Figures 16-4 through 16-7 serve to illustrate the proposed underground mining method
and sequence.
All underground development and stoping on the La Ventana deposit was designed to remain
entirely within the La Ventana mining concession boundary.
For La Ventana underground mining a dilution factor of 20% at zero grade was assumed and 20%
mining losses were applied.
202
Figure 16-3 Section showing open pit and underground mining concepts, La Ventana
203
Figure 16-4 Section showing start of underground mining, La Ventana
204
Figure 16-5 Section showing continuation of underground mining, La Ventana
205
Figure 16-6 Section showing continuation of underground mining with backfill introduced, La Ventana
206
Figure 16-7 Section showing underground mining advance, La Ventana
207
Waste rock from open pit mining will be stored east of La Ventana where topography is favorable for
waste rock storage. Much of this waste rock will be reclaimed at a later date for use as backfill for
underground operations. Waste rock selected for backfill will be introduced into the underground
from the east end of the pit and allowed to flow by gravity as shown in Figure 16-7. Note that the
above figures show mining cycles simplified for illustration purposes, when in fact multiple levels are
available for drilling uppers, blasting and mucking cycles. Drilling and blasting will be controlled and
limited to 3-4 drill rings per level so tight blasting against rock backfill is achieved, dilution is
minimized and there are no large spans left open. Backfilling from surface occurs more or less
continuously and by using select rock (no fines or oversize) the flow of rock backfill by gravity should
not be problematic to at least elevation 760. Above level 760 the Ventana vein is vertical with widths
exceeding 12 meters according to the current geologic interpretation and resource model. See
Figure 16-8. It is no surprise that the “unconstrained” version of the La Ventana open pit as shown
in figure 16-2 extends down to elevation 760, where modeled vein width starts to narrow.
There is a practical limitation to the depth which this method is expected to work and that elevation is
estimated to be the 680 level for purposes of this report. By the time mining advances to this
elevation the western extent of rock backfill in the above levels is close to the footwall ramp and is
thus accessible for drawdown, transport and placement as rock backfill in the lower levels.
Additional costs were assumed for this waste rock backfill rehandle underground on the lower levels.
According to the current resource model, grades increase beneath level 680 so this higher value
material at depth more than compensates for additional costs of rehandling backfill.
Levels shown in red on the above figures represent the extent of mill feed planned from underground
sources for the first two years. Sills on levels 800, 780 and 760 are planned for completion from the
underground ramp in year 1 while the Ventana pit provides mill feed at a sustained rate of 1250
tonnes per day. Sills on levels above 800 will be also be developed and accessed from the pit floor
in year 1, thus year 1 mill feed is comprised of a mix of open pit and underground sill development.
In year 2 the majority of mill feed comes from stoping between the pit floor and elevation 760 as
illustrated in figure 16-7, with development contributions from sills on levels 740, 720 and 700. In
year 3 sills are developed on levels 680, 660 and 640 but by year 3 La Ventana is unable to sustain
a mining rate of 1250 tonnes per day, so San Felipe open pit mining begins in year 3 to make up the
difference.
This plan is flexible in that open pit mining of San Felipe can start in year 2 should significant issues
be encountered in La Ventana underground. According to the current mine plan, year 2 is the only
208
period in which mill feed is provided from a single source; that source being from La Ventana
underground as described above.
Figure 16-8 Section 567652.5 vein geometry, La Ventana looking West
209
16.2. San Felipe Mining Methods
Initial mining of San Felipe will be by conventional open pit mining methods while San Felipe
underground is being developed. There are three mineralized structures in the San Felipe area that
the open pit encounters, but underground mining is limited to the HW-1 structure because it is the
only structure of the three with sufficient resources and grades identified at depth to support
underground mine development and operating costs.
16.2.1.
San Felipe Open Pit
An open pit Whittle™ analysis was done for the San Felipe deposit and results showed that the
deposit would support a large pit if no underground mining were considered (unconstrained). The
resultant pit shell however was deemed an unreasonable solution due to high strip ratios, local
topography and anticipated difficulties finding adequate waste rock storage capacity for the large pit
scenario. Also, when the open pit/underground operating cost exercise using Whittle™ to determine
where underground mining is potentially more economic than continued open pit mining, the results
showed much of the San Felipe mineralized material was more attractive economically using
underground mining methods. This results in a shallow pit shell where it is more attractive to take
near-surface mineralized material using open pit methods than trying to do so from underground.
For San Felipe open pit mining a dilution factor of 15% at zero grade was assumed, and mining
losses of 10% were also applied.
16.2.2.
San Felipe Underground
The HW-1 structure of the San Felipe deposit will be mined beyond what the pit takes out using
underground methods comprised principally of conventional longhole stoping techniques, starting at
the bottom of the deposit and working up so as to avoid the need to leave sill pillars or construct
structurally engineered sills. It is anticipated that Cemented Rock Fill (CRF) may be used during
longhole stoping operations, and the cost of placing this type of engineered backfill was applied to
30% of San Felipe tonnes planned for underground mining.
For San Felipe underground mining a dilution factor of 20% at zero grade was assumed and 10%
210
16.3. Las Lamas Mining Method
Las Lamas will be mined using only underground methods comprised principally of conventional
longhole stoping techniques, starting at the bottom of the deposit and working up so as to avoid the
need to leave sill pillars or construct structurally engineered sills. It is anticipated that Cemented
Rock Fill (CRF) may be used during longhole stoping operations, and the cost of placing this type of
engineered backfill was applied to 30% of Las Lamas tonnes planned for underground mining.
An open pit Whittle™ analysis was done for the Las Lamas deposit and results showed that the
deposit would support a large pit if no underground mining were considered. The resultant pit shell
however was deemed an unreasonable solution due to local topography and anticipated surface
water inflow issues. Also, when the open pit/underground operating cost exercise using Whittle™ to
determine where underground mining is potentially more economic than continued open pit mining,
the results showed virtually 100% of remaining Las Lamas mineralized material was more attractive
economically using underground mining methods.
For Las Lamas underground mining a dilution factor of 20% at zero grade was assumed and 10%
16.4. Transversales Mining Method
An open pit Whittle™ analysis was done for the Transversales deposit and results showed that the
deposit would support a pit with or without underground mining. The resultant pit shell without any
underground mining was deemed a reasonable solution.
Also, when the open pit/underground
operating cost exercise using Whittle™ to determine where underground mining is potentially more
economic than continued open pit mining was conducted, the results were that virtually 100% of the
Transversales resource is more attractive economically to take using open pit methods rather than
using underground mining methods. The amount of Transversales resource that showed up as
theoretically mineable using underground methods in this analysis was too small to support
underground development and operating costs.
For Transversales open pit mining a dilution factor of 15% at zero grade was assumed, and mining
losses of 10% were also applied.
It is important to note that the Whittle™ analyses described in this section do not take into
consideration relative capital costs of developing open pit vs. underground mines; it only considers
the difference in operating costs.
211
16.5. Geotechnical parameters
16.5.1.
Underground
CRUX engineering group (CEG) provided a report to Santacruz Silver Mining Limited regarding
geotechnical scoping study dated May 7, 2014. CEG (formerly Fisher & Strickler Rock Engineering,
Inc.) and Wyllie & Norrish Rock Engineers, Inc. (collectively the Wyllie & Norrish Team) completed a
geotechnical study for the project in 2008 on the behalf of the previous owners, Hochschild Mining
Mexico. This information, coupled with drill intercepts based on the project’s most recent block
model and core photographs provided by Santacruz, encompassed the data set available for the
updated evaluation provided by CEG.
CEG applied the data described above to the La Ventana and Las Lamas deposits for underground
ramp support requirements and open stope size limitations. The conclusion reached by CES is that
“the rock mass at La Ventana and Lamas is considered “Very Poor” based on the Rock Quality
Tunneling Index (Q-System)”.
Their conclusions and recommendations reflect this rock quality
assessment, and their recommendations for further work includes geotechnical mapping of the
ramps and other underground developments.
portion of the proposed field program.
This is included in the underground exploration
CEG also recommended that engineering domains be
developed to allow for better classification of geotechnical properties which ultimately would support
a geotechnical model. One of the doubts expressed by CEG regarding the data available is the
possibility that previous diamond drilling practices may have affected the quality of recovered rock,
and JDS shares those doubts.
JDS agrees in principle with most of the ground support methods recommended by CEG but did not
incorporate the bolting, screening and shotcreting to the extent CEG recommended for La Ventana
and Las Lamas underground mining. This difference between the CEG recommendations and what
JDS used for anticipated ground support requirements is explained by inspection of diamond drill
core and existing underground workings by experienced JDS mining personnel during various site
visits, concluding that ground conditions as observed likely do not require the extensive, ubiquitous
ground control measures as recommended by CEG. The effect of such extensive ground control
measures is reflected in development costs and more importantly, advance rates.
A very large part of the proposed field program is underground exploration which includes drifting on
levels 800 and 780 to investigate continuity of mineralization, actual geotechnical conditions and
ground support requirements.
212
16.5.2.
Open pit
In previous work done by others on the San Felipe project the open pit potential of the four deposits
included in this report was not investigated, so no geotechnical analyses have been performed in
this respect. For purposes of this PEA, the slopes of existing terrain where the proposed pits are
located were observed to be greater than 50°, so an overall pit slope of 50° was assumed as one of
the inputs to Whittle™. The proposed field program also includes geotechnical data collection for
the next phase of open pit mine designs.
16.6. Hydrologic parameters
Little is understood about the groundwater regime of the four deposits planned for development,
other than exploration logs that indicate where water was encountered and some monitoring wells
that were drilled and equipped with vibrating-wire piezometers. These monitoring wells and drill logs
provide static groundwater levels, but no pump tests, groundwater recharge or hydrologic gradients.
More advanced groundwater testing is included in the proposed field program.
Piezometer evidence suggests groundwater may be encountered at about elevation 780 in La
Ventana but inflow rates and water quality are unknowns at this time.
16.7. Waste rock storage
Table 16-1 shows the estimated waste rock that will be generated by surface and underground
mining activities envisioned for the project, over 90% of which comes from open pit mining.
Approximately half of the waste rock coming from La Ventana open pit operations is planned for use
as backfill for Ventana underground, and there is ample space east of the proposed Ventana open
pit for short-term storage of all Ventana waste rock and permanent storage for the waste rock that is
not used as backfill.
Waste rock from Ventana underground operations will either be stowed
underground as backfill or placed in a separate area on surface as shown in Figure 17-1.
The largest source of waste rock is expected to be from San Felipe open pit operations. Several
areas close to the San Felipe deposit have been identified as suitable locations for waste rock
storage.
These waste rock storage areas for the San Felipe open pit will likely be permanent
features and thus require reclamation. Development waste rock from San Felipe and Las Lamas
underground mining will either be stowed underground as backfill, stored in the same locations as
waste rock from open pit operations, or placed in the empty San Felipe pit.
213
Transversales is the last open pit to be mined according to the mine plan developed for this PEA,
and due to this timing and proximity to the San Felipe open pit the plan is to place all Transversales
waste rock in the empty San Felipe open pit.
Waste rock storage areas on surface are designed to remain stable by placing waste rock at angle
of repose in favorable topographic locations where there is little possibility for significant run-off of
stormwater onto or into the rock piles. These multiple locations also provide flexibility in segregating
waste rock types if certain types are deemed to be potentially acid generating. Limiting how much
water ends up flowing through the waste piles also limits the volume of potentially acidic drainage.
Another possibility that should be investigated is co-disposal of potentially acid generating rock with
tailings. Some acid base accounting (ABA) work was done by the previous owners on various rock
types and these results in conjunction with other testwork planned during the proposed field program
will better qualify and quantify potentially acid generating rock types as well as potentially
neutralizing rock types.
16.8. Required mining equipment
For the deposits included in this report JDS used contractor mining costs for all open pit and
underground mining. All required primary mining equipment is included in the contractor rates used
for estimating operating costs. Equipment provided by Santacruz includes ventilation fans, pumps,
communications, and other ancillary equipment.
16.9. Mine CAPEX
Pre-production mine capital is estimated to total $2.5mm and includes $0.5mm for open pit
contractor mobilization, $1.0mm for pioneering works to prepare la Ventana pit for production, and
$1.0mm for waste rock storage preparation and waste rock haul road construction.
Total capital estimated for year 1 is estimated to be $5.0mm and includes $1.0mm for underground
contractor mobilization, $1.0mm for capital equipment provided by Santacruz as summarized in the
preceding section, and $3.0mm in mine development done by contractor planned for the first year of
operations. Note that since the existing portal for La Ventana is planned for use there are no new
portaling costs included in pre-production or year 1 capital estimates.
Table 16-2 below summarizes estimated life-of-project mine capital.
For San Felipe and
Transversales open pits the pioneering work and waste rock storage area preparations are timed in
years 2 and 5, respectively, one year in advance of when mill feed is planned for release from these
214
pits.
In year 4 there is another $1.0mm slated for underground capital equipment provided by
Santcruz for initiating development of the San Felipe and Lamas underground mines, including new
portals for both of these deposits. According the current mine plan the majority of underground
capital development for La Ventana, including finishing the ramp as designed, is complete by the
end of year 3. This frees up the underground mining contractor to develop the San Felipe and
Lamas underground mines in year 4. The San Felipe and Lamas portals are located approximately
200 meters apart and by developing them at the same time there are certain synergies that can help
keep costs down.
By far the bulk of sustaining mining capital is required for continued capital
development done by contractor, with other minor sustaining capital expenditures required from
Santacruz.
JDS used an average of $2,500/meter for contractor development rates. This estimate was built
from first principles and is an all-inclusive cost for underground development in Mexico, including
contractor rates, materials, and mie services. Additionally, JDS does work for other clients in Mexico
who are developing underground mines in difficult ground conditions and their all-in ramp and
access development costs average $2,500/meter.
Table 16-2 Life of project estimated capital requirements
Mine Capital
Pre-‐prodn Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Underground costs i n $1000
U/G Capital Development
2,980
2,905
2,572
4,004
4,443
2,037
1,024
300
Underground Capital Infrastructure and Machinery
1,000
100
100
1,000
100
100
100
Mine Contractor mobilization (UG and OP)
500
1,000
Pioneering of pits
1,000
750
500
Mine Waste Dump Prep
1,000
750
500
2,500
4,980
4,505
2,672
5,004
5,543
2,137
1,124
300
Total
20,265
2,500
1,500
2,250
2,250
28,765
16.10. Mine OPEX
Mine operating costs are also based on a mix of contractor rates, materials, and mine services. For
open pit mining an average waste rock mining cost of $2.20/tonne was used. This cost is based on
work JDS is doing for other clients in Mexico with open pit projects and will be confirmed by
competitive bidding when the time comes. The mineralized material mining cost from open pits is
estimated to be $2.80/tonne and includes haulage to the plantsite using an average haul distance of
approximately 2km as shown in Figure 17-1. Note the haul profiles from all three open pit and
underground mines are downhill to the plantsite.
For underground mining the estimated operating costs vary depending on the deposit being mined.
For La Ventana the average operating costs was estimated to be $27.62/tonne, and this includes sill
215
development and waste rock backfilling. The extra cost of rehandling waste rock in the lower levels
of Ventana is also included in this average mining cost.
For San Felipe and Lamas underground mining the average operating costs was estimated to be
$32.71/tonne, and this includes sill development and backfilling costs. As mentioned previously in
this section an estimated 30% of mined voids in San Felipe and Lamas are planned for backfill using
an engineered cemented rock fill (CRF), with other backfill requirements met by using waste rock fill.
Both of these underground mines employ conventional longhole open stoping methods, and the
development timing as discussed in the capital section above is such that the planned ramps for
both of these deposits reach mine bottom before stoping mineralized material is scheduled, thus
eliminating the need to leave sill pillars in mineralized material or incur the cost of constructing an
engineered sill as is often required when longhole mining is started before reaching mine bottom.
216
17. Recovery Methods
17.1. Flotation Mill
This Preliminary Economic Assessment is based on a conventional flotation mill that produces zinc
and lead concentrate. Silver will be recovered primarily within the lead concentrate. Silver values
within the zinc concentrate are too low to be payable.
The mill will be located proximal to the old Artemisa mill site approximately 2 km southeast of the
Ventana vein.
(See Figure 17-1). To date, there has not been any detailed geotechnical
investigation of the site. As the site is located on the flat part of a seasonal drainage, investigation
of the maximum projected water level and methods to protect the site are required.
The process flowsheet for the plant is given in Figure 17-2. The run-of-mine (ROM) mineralized
material will be trucked and dumped into a hopper which will have a grizzly. The mineralized
material will be crushed in a three-stage crushing system and stored in a fine mineralized material
bin. The mineralized material will be fed from the fine mineralized material bin to a ball mill in
closed circuit with cyclones.
scavenger flotation circuit.
The cyclone overflow will be pumped to the lead rougher and
The scavenger concentrate will be recycled back to the rougher
flotation feed. The rougher concentrate will be subjected to counter-current two stage cleaner
flotation.
The lead concentrate will be thickened and filtered and stored for shipment.
217
Figure 17-1 Proposed mine development
218
A 1,250 mtpd (metric tonne per day) mill will be constructed in the first year of project development.
A diagram showing the mill components is given in Figure 17-2.
The power requirements for the mill were estimated to be 25kwh/mt. Power will be supplied by
grid power as described in Section 18. Tailings will be pumped to the tailings pond located 300 m
to the southwest. Details of the tailings impoundment are given in Section 18. Water will be
reclaimed from the tailings to the mill. An estimated 1,250 m3 per day of make-up water will be
required. Make-up water will be comprised of a combination of precipitation into the tailings pond
and water pumped from wells in the Sonora River valley.
219
Figure 17-2 Diagram for 1.250 t/day mill by Santacruz – 2014
220
17.2. CAPEX
Order-of-magnitude capital costs were determined by Santacruz for three mill sizes; an initial 750
mtpd and then increases to 1,250 and 2,000 mtpd. These costs were reviewed by the author and
are considered reasonable for the purpose of a PEA. The cost estimate is provided in Table 17-1
for 750 mtpd. Additional equipment requirements and costs for higher throughputs are given in
Table 17-2. As the estimated production rate in the PEA is 1,250 tonne per day, the costs for the
750 mtpd mill and up upgrade to 1,250 mtpd were used for the model and it was assumed the mill
will be built in one year.
The capital costs are estimated to be approximately $10.8 million for 750 mtpd plant,
approximately $15.3 million for 1250 mtpd and approximately $ 27.8 million for 2000 mtpd.
221
No
Table 17-1 Capital cost estimate for 750 mtpd plant
Item
Units
Equipment
Cost (USD) 1 Coarse mineralized material Bin 1 Civil
Works
108,500 Structural
2 Apron Feeder 30 ft. X 9 ft. 1 26,300 3 Jaw Crusher 24 in X 36 in 1 110,000 11,500 4 Electro Magnet 1 23,600 5 30 in Belt Conveyor 1 75,000 21,400 6 1 10,500 44,500 7 Double Deck Vibrating Screen 6 ft. X 16 ft. 4¼ Standard Cone Crusher 1 226,500 14,000 8 30 in Belt Conveyor 1 50,000 9,900 9 Return 30 in Belt Conveyor 1 50,000 9,900 10 Vibrating Screen 6 ft. X 16 ft. 1 10,500 44,500 11 4 ft. Short Head Cone Crusher 1 211,000 14,000 12 Fine mineralized material Bin 1 37,000 17,000 13 Vibrating Feeders 2 10,000 14 Crusher Building 234,000 15 24 in Belt Conveyor 1 24,000 9,900 16 10.5 ft. X 20 ft. Ball Mill W/motor 1 336,000 23,000 17 8 in X 6 in Pump 2 32,400 18 Cyclone D-‐20 2 12,500 19 Mill Building 198,000 20 10 ft. X 10 ft. Conditioning Tank 1 20,000 50,800 21 8 ft. X 8 ft. Bank Cells 3 480,000 22 2 ½ in X 48 in Pump 1 5,800 23 Bank Cells Sub-‐A # 30 2 76,800 24 Conditioning Tank 5 ft. X 5 ft. 1 15,000 25 Bank 4 cell 50 ft3 2 38,400 26 Pb Thickener 30 ft. X 10 ft. 1 245,000 92,300 27 Cu Thickener 20 ft. X 8 ft. 1 245,000 92,300 28 Concentrate Filters 6 ft. X 6 ft. 2 114,000 57,000 29 2 ½ in X 48 in Galigher Pumps 2 116,000 30 8 in X 6 in Warman Pump 2 32,500 31 4 in Duplex Pump 2 20,000 32 Nash Pump 2 102,000 33 Flotation Building 240,000 34 10 ft. X 10 ft. Conditioning Tank 1 20,000 50,000 35 8 ft. X 8 ft. Bank Cells 5 800,000 36 Bank Cells Sub A # 30 3 115,200 37 3 in X 48 in Galigher Pump 1 6,500 222
38 44 ft. X 10 ft. Thickener 1 275,000 92,000 39 8 ft. X 8 ft. Filter 2 113,000 58,000 40 8 in X 6 in Warman Pump 2 32,500 41 4 in Duplex Pump 1 12,500 42 Nash Pump 1 102,000 43 Submersible Pumps 4 64,000 44 Horizontal Water Pumps 2 17,000 45 2500 PCM Blower 2 60,400 46 Reagent Conditioning Tanks 4 10,500 20 62.5 47 Laboratory 1 153,000 50,000 48 Mobile Offices 4 100,000 49 Water Supply Pond 88,000 50 Recovered Water Pond 35,000 51 Wells 15,400 120,000 5,000 52 Floors 207,000 53 Plant Hydraulic Network 140,000 56,000 54 Electrical Substation 500,000 23,500 55 Piping Water, Tailings Pond etc. 350,000 148,000 56 Truck Scale 56,000 35,000 57 Equipment Assembly 750,000 58 Basic Engineering 100,000 59 Detailed Engineering 270,000 60 Top Soil Stripping 221,000 Sub-‐Total Per Column 6,718,800 1,918,000 795,500 Sub-‐Total Cost 9,432,300 Contingency (15%) 1,414,845 TOTAL 10,847,145 223
Table 17-2 Additional Capital Cost for 1250 MTPD and 2000 MTPD Plants
Units Cost, $ (U.S) 1250 MPTD 2000 MTPD Equipment Civil and Equipment Civil and Structural Works Structural Works GRINDING CIRCUIT 1. 24 in Belt Conveyor 1 24,000 24,000 2. 10 ft. X 9 ft. Ball Mill W/motor 1 1,034,000 10.5 ft. X 20 ft. Ball Mill 1 1,550,000 W/motor 3. 8 in X 6 in Warman Pump 2 32,400 32,400 4. Cyclones 2 12,500 12,500 Pb -‐ Cu FLOTATION CIRCUIT 5. 8 ft. X 8 ft. Bank Cells 4 640,000 640,000 6. 2 ½ in X 48 in Pump 1 5,820 5,820 7. Condition Tank 6 ft. X 6 ft. 1 15,000 15,000 10 ft. X 10 ft. 1 20,000 8. 100 ft3 Bank 2 Cells 2 35,200 35,200 9. 4 in X 3 in Warman Pump 2 19,000 Zn FLOTATION CIRCUIT 10. 8 ft. X 8 ft. Bank Cells 3 480,000 480,000 11. Nash Pump 1 103,000 12. 10 ft. X 10 ft. Condition Tank 1 20,000 13. Bank Cells 3 480,000 14. Warman Pump 4 in X 3 in 1 5,000 VARIOUS AREAS 15. Floors 35,000 100,000 16. Electrical Substation 17. Equipment Assembly/Civil and 462,000 955,000 6,490,000 Structural Works 18. Basic Engineering 20,000 20,000 19. Detailed Engineering 15,000 15,000 Sub-‐Total 2,878,920 990,000 3,373,920 6,590,000 Project Sub-‐Total 3,868,920 9,963,920 Contingency (15%) 580,338 1,494,588 TOTAL 4,449,258 11,458,508 No. Item 224
Table 17-3 Estimated Operating Cost for Varying Feed Rate
No Cost/Tonne (U.S $) 750 MTPD 1250 MTPD 2000 MTPD 1. SUPERVISION Assistant 1 0.13 0.08 0.01 Coordinators 4 0.27 0.16 0.09 2. LABOR FORCE Crusher Operators 6 0.13 0.08 0.05 Mill Operators 3 0.08 0.06 0.05 Flotation Operators 3 0.06 0.04 0.02 Filter Operators 2 0.39 0.23 0.15 Concentrate Handling 2 0.06 0.02 0.01 Equipment Operator 1 0.04 0.02 0.01 Relief Operators 3 0.10 0.04 0.02 General Labor 4 0.10 0.04 0.02 3. Maintenance (Mechanical & Electrical) Superintendent 1 0.27 0.16 0.10 Supervisor (Mechanical) 1 0.08 0.05 0.03 Supervisor (Electrical) 1 0.07 0.04 0.03 Welders 4 0.24 0.15 0.09 Electrical Helpers 2 0.07 0.07 0.05 Sub-‐total Personnel 2.36 1.40 0.83 Indirects (56%) 1.32 0.79 0.46 Total Personnel 3.64 2.19 1.29 4. Energy @ $0.11/kw 3.00 2.75 2.50 5. Steel Crushers 0.2kg/tonne @ $1/kg 0.20 0.20 0.20 Mill Liners 0.33 0.33 0.33 6. Balls 1kg/tonne @ $1/kg 1.00 1.00 1.00 7. Reagents NaCN 100 g/ton @ $8/kg 0.80 0.80 0.80 Lime 4kg/ton @ $1.10/kg 0.44 0.44 0.44 Aerophine 35 g/ton @ $8/kg 0.28 0.28 0.28 Promotor 30 g/ton @ $5.20/kg 0.16 0.16 0.16 Frother 60 g/ton @ $2.50/kg 0.15 0.15 0.15 ZnSO4 1500 g/ton @ $1.05/kg 1.58 1.58 1.58 CuSO4 1000 g/ton @ $2.30/kg 2.30 2.30 2.30 Ammonium Bisulfite 500 g/ton @ $3.20/kg 1.60 1.60 1.60 8. Repairs and Materials Crushers 0.76 0.76 0.76 Mill 0.54 0.54 0.54 Flotation 0.54 0.54 0.54 Thickeners 0.22 0.22 0.22 Filters 0.22 0.22 0.22 Pumps 0.11 0.11 0.11 9. Concentrate Bagging 0.21 0.21 0.21 10. Laboratory Analyses 0.90 0.90 0.90 11. Tailings Dam Equipment Operation 0.59 0.47 0.36 12. Water Storage, Make-‐up and Taxes 1.18 1.18 1.18 TOTAL 20.26 19.09 17.77 No. Item 225
17.3. OPEX
The basis used by Santacruz to prepare estimated operating costs for the plant was the actual
operating costs at the Rosario mill. These costs were reviewed by the author and are considered
reasonable for PEA purposes. The breakdown of the cost is given in Table 17-3 The process
plant operating cost is estimated to be $20.26 per tonne for 750 mtpd, $19.09 per tonne for 1250
mtpd, and $17.77 per tonne for 2000 mtpd. These costs are based on energy cost of $0.11/kw
which is assumed to be available from the utility company. For the PEA model, the estimated
operating cost for a 1,250 mtpd plant was used.
226
18. Project Infrastructure and General Administration
18.1. Tailings Storage Facility
The tailings storage facility (TSF) will be an important of the infrastructure required for a mine at
San Felipe. In 2008, Hochschild identified a potential site for a TSF and contracted Ausenco
Vector (Vector) to do various geotechnical studies.
Work included advancing, logging and
sampling 19 test pits and 4 geotechnical holes in the area of the proposed dam and establishing 2
wells. Data from this work is available to Santacruz and was revised as part of this study. The site
Hochschild proposed is well located in relation to the current proposed mill site.
Santacruz contracted Mark Smith, P.E. (M. Smith) to review the Vector data and to do a
comparison between the Hochschild site and a site later proposed and permitted by Santacruz.
At this point the Hochschild site appears to be more favourable, so the PEA model and
descriptions below are all based on this site. If further evaluation finds a significant problem with
the Hochschild site or a cost advantage to the Santacruz site, the alternative site will be evaluated.
M. Smith visited the Hochschild site on February 14 and 15, 2014 in company of Smit and Bourke.
A reconnaissance of the site was made by truck and on foot several of the geotechnical drill holes
and wells.
•
The following summarizes Smith’s observations:
Good quality bedrock outcropping in both abutments and in various locations in the
impoundment;
•
Abundant borrow sources for soil and good quality rock;
•
Good abutment geometry and a good ratio of dam length (distance between abutments),
valley width and valley length, suggesting a reasonable storage efficiency (impoundment
volume divided by dam fill volume);
•
Ample room for increasing capacity well above 5,000,000 mt, which is greater than the
resource size considered in this study;
•
Existing geotechnical and hydrogeological field & laboratory investigations are probably
sufficient for a PFS-level design.
After the visit, M. Smith completed a PEA level design and cost estimate for a TSF. The proposed
TSF will be created by constructing a rock-fill dam at the lower end of the valley (See site location
Figure 18-1). The proposed dam will be constructed of a combination of locally quarried rock from
within the TSF, and development rocks from the underground mine. The dam will be constructed
227
in annual increments using downstream construction methods, with the pre-operation starter dam
constructed to a crest elevation of 690 m (19 m high, measured toe-to-crest at the highest section).
Annual downstream raises will create crest lifts ranging from 2 to 5 m vertically as follows:
Figure 18-1 Tailings storage facility proposed location.
228
Figure 18-2 Schematic section through proposed tailings storage facility.
Table 18-1 Tailings storage facility capacity
Year Dam Crest Elevation, m Dam Height, m Tailings Capacity, mt Preproduction 690 19 Nil 1 694 24 609,000 2 697 27 1,113,000 3 699 29 1,449,000 4 704 34 2,121,000 5 706 36 3,129,000 6 706 36 3,129,000 The upstream face of the dam will include a two-layer filter system (gravel and geotextile) placed
over the rock shell, and a composite liner consisting of a 2-m thick layer of compacted clay and a
geomembrane (most likely 2.0 mm thick LLDPE). (See Figure 18-2). The clay and geomembrane
liner will be connected to competent bedrock via a combination of a clay-filled keyway and a cut-off
trench.
The rock shell has been assumed to be constructed with 90% locally quarried rock and 10% mine
development rock. Some of the mine development rock may be potentially acid generating (PAG).
However, rock placed immediately beneath the liner system will be isolated from the environment,
229
water from the TSF, and have limited access to oxygen and thus will not be a high risk to generate
acid. The 10% is likely a lower bound figure and is limited by the mining schedule rather than
available rock quiality.
Hydrologic issues include both the average annual (446 mm) and extreme precipitation (145 mm
for the 100-yr, 24-hr event). The catchment basin is 174 ha (per the Vector analysis). Thus, the
average annual rainfall will produce about 194,000 m3 in runoff (assuming 25% runoff), or 530
m3/day based on an annual average.
Allowing for lower bound evaporation, the net water
produced from precipitation will be about 273 m3/day. The tailings will consume over 500 m3/day
in the permanent uptake into their porosity. The peak storm event of 145 mm will be contained
within the 3.0 m freeboard. For these reasons no diversion works are planned around the basin
but rather the runoff will contribute to the mine and mill water supply.
The assumptions used in the conceptual design and resulting cost estimate include:
•
Freeboard between crest of dam and highest tailings or pool elevation of 3.0 m. A constant
freeboard was assumed for each stage of dam raise but it is likely that this can be reduced
slightly as the dam approaches its final elevation and the resulting available area for a pool is
at its greatest. This may result in smaller dam raises in production years 4 and 5;
•
Geologic containment of the basin, augmented with a face liner on the dam, will be sufficient
for environmental purposes. A small amount of “dental work” to seal exposed joints and
bedding in a few small areas of the impoundment may be prudent. This work may consist of
simply sequencing tailings deposition to ensure these areas have a thick layer of tailings
before any free water is allowed to accumulate;
•
An average settled dry density of the tailings of 1.20 (this is from the prior Vector studies)
was used for this study, which is consistent with experience at other projects with similar
tailings;
•
Temporary spillways are included in the early phases of embankment construction, and then
they will not be used as the impoundment capacity can be made to store the Probable
Maximum Flood (PMF). A final spillway has also been provided for in the cost estimates.
•
Tailings will be discharged along the face of the dam using spigots to create a beach and
hold the operating pool well away from the dam; and,
•
Reclaim water will be recovered using a floating barge pump (or pumps) at the far end of the
impoundment (removed from the dam).
230
There are several opportunities to optimize or reduce the costs of the TSF, which include:
•
Since the operating pool will be held well away from the dam, the geomembrane liner could
be omitted and the clay liner reduced in thickness above the elevation of about 699 m.
This
will have little effect on the cost of materials, but will simplify and speed construction;
•
Mine development rock could be increased from a nominal 10% of the total rock shell to
between 25% to as much as 40%, depending both on the availability of good quality rock and
the ability to locate it in the dam in such a way as to minimize the acid generating risk. This
would decrease the cost by $100,000 to $199,000 over the life of the dam construction; and,
•
Temporary spillways may be avoided if the dam elevation is advanced sufficiently quickly to
provide storage for at least the PMF at every elevation raise. For example, if each raise was
constructed one year earlier than shown in Table 18-1. This would save about $100,000 for
each phase where a temporary spillway is avoided, and would simplify construction. Further,
avoiding spillways also reduces the likelihood of an unpermitted discharge. Whether this is
feasible will depend on the total site construction commitments and the capacity of the
available contractors.
There are also risks for cost escalation, the most obvious of which being:
•
The cut-off between the dam and competent bedrock may be deeper or more complicated
than assumed;
•
There may be areas inside the impoundment that require localized treatment, beyond
selective tailings placement, to seal naturally porous or permeable zones; and,
•
Spillway construction could be more complex than assumed.
•
The cost to construct the dam as sequenced in Table 18-1 were estimated using estimated
quantities of materials required and the prevailing rates for construction and installation. The
results of this cost estimate are summarized in Table 18-2.
231
Table 18-2 Cost Estimate for TSF. All tailings go to TSF (no UG backfilling), Freeboard = 3m
Dam Tailings Production Tailings Impoundment Capacity 3
Costs, USD Year Crest Elev (m) Height (m) Increment (t) Cum (t) Increment (m3) Cum (m ) Cum (t) PP 690 19 0 0 0 1 694 24 220,000 220,000 507,000 507,000 609,000 605,000 $2,657,000 $4.37 2 697 27 585,000 805,000 420,000 927,000 1,113,000 444,000 $3,101,000 $2.79 3 699 29 585,000 1,390,000 280,000 1,207,000 1,449,000 285,000 $3,386,000 $2.34 4 704 34 585,000 1,975,000 560,000 1,767,000 2,121,000 846,000 $4,232,000 $2.00 5 706 36 585,000 2,560,000 840,000 2,607,000 3,129,000 955,000 $5,187,000 $1.66 6 706 36 585,000 3,145,000 0 2,607,000 3,129,000 0 $5,187,000 $1.66 Increment ($) Cumulative 2,052,000 $2,052,000 $/t of capacity na Since the PEA study began, the total estimated amount of material processed by the mill in the
PEA model was increased slightly to 3.4M tonnes, or 8.7% larger than shown in Tables 18-1 and
18-2. The site chosen has ample room to handle this increase, with an upper bound capacity
greater than 5M tonnes. Estimated costs were escalated from those shown in Table 18-2 to
account for the extra tonnage.
232
18.2. Power
The village of San Felipe is connected to the national power grid. An analysis of the amount of
power available from the grid has not been done, but the line is under-sized for the power
requirements of the proposed mill. The cost of grid power is estimated at US$0.11/Kw and for
diesel generated power the cost estimate is $0.30/Kw. Therefore, getting grid power to the site
has a significant impact on the operating costs.
A power line for the mill would have to be rated for 115Kv. The nearest high tension line from San
Felipe is 40 km south of the project. In very preliminary discussions with the government-owned
power company, Comision Federal de Electricidad (CFE), CFE representatives indicated that a
new line would have to come from Ures where there is an existing sub-station. This would require
a 75 to 80 km long line along the route shown in Figure 18-3.
At this time, no engineering or permitting has been done for a power line and there have been no
detailed discussions with CFE.
To distribute the power on site, power lines will be required from the millsite to the various mine
portals. As power requirements for mining are much less than the mill, the lines will be lower
capacity and there will need to be a step-down transformer at the mill. Transformers and switching
gear at each portal may also be required. The capital costs in the PEA for the power line to site
were estimated based on the costs for a power line recently built to service Santacruz’s Rosario
mine located in the state of San Luis Potosi. As some of the terrain that a power line to San Felipe
would need to cross is more rugged than at Rosario, a 10% cost escalation was included. Cost
was estimated to be $75,000 per km resulting in a total cost of $6.0M for an 80 km line (with $5.0M
in the construction year and $1.0M in the first year of production). Another $1.0M was estimated
for on-site power distribution costs (with $5.0M in the construction year and $1.0M in the first year
of production).
233
Figure 18-3 Proposed Power Line Location
18.3. Water
Santacruz is acquiring the rights to two wells located in the Sonora River floodplain located
approximately 5 km from the mill site. Each well is authorized for 215,000 m3 of water per year for
a total of 430,000 m3. Make-up water requirements for the mill are estimated at 1 m3 for each
tonne of mineralized material milled. At 1,250 t/day milling rate, this equates to 450,000 m3 of
water.
Since there will be some input from rainfall into the tailings storage facility, there is
sufficient water authorized to operate the project as modeled. No pump tests have been done to
see whether the wells can achieve the production rate they are authorized for.
There are a
number of wells in the area that are used for agriculture and the material in the flat river valley
appears to host a productive aquifer.
For the PEA, it was assumed water for mining purposes would come primarily from dewatering of
the workings. The elevation of the water table at Ventana is around 780 m, which is 20 m below
234
the level of the lowest current development on the structure. The water inflow rates that any lower
development would encounter are not known.
San Felipe is in the Rio Sonora aquifer which is in an availability zone 2. Costs for water to the
federal government are currently $7.2062 pesos per m3 ($0.55) in zone 2.
These costs are
included in the cost per tonne to mill mineralized material.
18.4. Roads
Approximately 8 km of road will require upgrading to provide access from the end of pavement at
the village of San Felipe to the proposed mill site. A further 7 km will be needed to connect the mill
site to the various mine workings.
The road from the village to the mill site is in a fairly flat gravel-filled valley and road building
should be easy. The road will be gravel and allow 2-way traffic for highway licensed vehicles.
There are a number of stream crossings which can be problematic during summer rain storms. All
crossings are proposed to be fords, so continued road maintenance will be needed in the rainy
season and there will be occasional times that access is blocked by high water.
Roads from the millsite to the various mine workings are in part on steeper ground, but no
significant problems with road building are expected. Primary access from the deposits planned
for mining and the plantsite will be roads constructed and maintained in valley bottoms, which are
dry for most of the year. In steeper areas, a separate road may be constructed for vehicles going
up and down the road and in the case of La Ventana an alternate access road is planned to
separate haul truck traffic from light vehicle traffic and provide all-weather access to and from La
Ventana during the entire year. As with the site access road to the mill, all crossings are proposed
to be fords, so continued road maintenance will be needed in the rainy season and there will be
occasional times that access is blocked by high water.
No engineering has been done for roads to date. Roads will more or less follow existing access
with the exception of the La Ventana alternate access road.
Estimated costs for upgrading
existing roads located in valley bottoms is $25,000 per km. A total of $900,000 was estimated for
road development including the access road, roads to the mine areas and haul roads to mine
waste storage areas.
235
18.5. Other Infrastructure
Other infrastructure required includes an office, warehouse and shop. These are planned to be
located proximal to the mill. No designs have been made for these structures, but simple buildings
or trailers are planned. A fuel depot will be placed within a lined containment. Estimated cost for
these structures is $725,000, with $600,000 in the construction year and the rest in the first year of
production.
18.6. General and Administration
This PEA model is based on Santacruz providing overall site management, technical support and
surface and mill personnel. Mining will be done by contractors and all mine personnel besides the
mine superintendent are included in mine costs. General and administration costs for Santacruz
will include:
•
General Management
•
Mine, mill and surface superintendents
•
Mine technical (engineers, geologists, surveyors, environmental and assistants)
•
Environmental management
•
Worker safety and security
•
Purchasing and warehouse
•
Surface work including road maintenance
•
Insurance
•
Mineral claim taxes
Estimated costs for General and Administration (G&A) costs are given in Table 18-3.
Costs
include room and board for senior personnel who will be housed in San Felipe during their work
shifts. The G&A costs total $2,840,400 per year.
236
Table 18-3 G&A Costs ($US)
General Management Wage (Annual) General Manger 1 120,000 54,000 Mine Superintendent 1 70,000 31,500 Mill Superintendent 1 70,000 31,500 Surface Superintendent 1 56,000 25,200 Accountant 1 42,000 18,900 Secretary 1 12,000 5,400 Payroll clerk 2 10,000 4,500 Supplies and support 1 Vehicles 2 Travel and Training 3 Item Number Sub-‐Total Wage (45% Load) Cost (per Unit) Total 20,000 101,500 101,500 81,200 60,900 17,400 29,000 20,000 12,000 24,000 10,000 30,000 639,500 Technical Services Mine engineer 2 70,000 31,500 Mine geologist 2 60,000 27,000 Technical Assistant 2 28,000 12,600 Environmental Monitor 1 42,000 18,900 Surveyor 2 36,000 16,200 Supplies and Support 1 Vehicle 2 Environmental Sampling 174,000 300 Travel and Training 5 Technical Consultants 4 Independent Environmental Sampling 3 Sub-‐Total 20,000 203,000 174,000 81,200 60,900 104,400 20,000 12,000 24,000 50 15,000 5,000 25,000 25,000 100,000 20,000 60,000 867,500 Worker Safety and Security Manager -‐ Security and Safety 1 42,000 18,900 Security Guards/First Aid 8 15,000 6,750 Supplies and Support 1 Vehicles 2 Supplies and Support 1 Safety Supplies 200 Training Costs 200 Safety audits 2 Sub-‐Total 20,000 60,900 174,000 20,000 12,000 24,000 20,000 20,000 250 50,000 100 20,000 5,000 10,000 378,900 Purchasing and Warehouse Manager -‐ Purchasing and Warehouse 1 42,000 18,900 Warehouse Clerk 2 12,000 5,400 Supplies and Support 1 20,000 60,900 34,800 20,000 237
Item Warehouse Operation Number Wage (Annual) 12 Sub-‐Total Wage (45% Load) Cost (per Unit) Total 2,000 139,700 Housing for Senior Staff Cook 2 12,000 5,400 Cook Helpers 4 10,000 4,500 Food and Supplies 12 House rental in San Felipe 3 Sub-‐Total 5,000 6,000 4 Office Maintenance 12 Supplies and Support 12 Vehicle 1 General Freight 12 Communication 12 Road maintenance 12 Power for Office and Houses 12 Sub-‐Total 10,000 4,500 1,000 Total ($2.8 M / year) 60,000 18,000 58,000 12,000 2,000 24,000 12,000 12,000 5,000 60,000 5,000 60,000 5,000 60,000 2,000 24,000 310,000 2
92,000
1
150,000
184,000 Sub-‐Total Sub-‐Total 58,000 Surface worker Insurance 34,800 170,800 Surface Costs Mineral Claim taxes 24,000 184,000 150,000 150,000 2,840,400 18.7. Reclamation and Closure
No detailed reclamation and closure plan has been made for the project. There is insufficient test
work to model whether waste rock will be PAG and there is no characterization of the tailings.
Therefore, reclamation plans are very conceptual at this time.
In the PEA mine plan, there will be 7.1 Mt of waste rock produced during open pit mining. Around
1 Mt will be back-filled into the underground workings, and the rest will remain in engineered waste
rock storage areas created by each open pit working (Ventana, San Felipe and Transversales).
The waste rock will be re-contoured for long-term stability at the end of mining for each pit.
Requirements for any additional work such as installing a cap to reduce water infiltration, addition
of lime or water treatment are dependent upon further analysis of the waste rock chemistry. The
238
Ventana and San Felipe open pits are planned early in the mine life, therefore reclamation can be
done on these well before mine closure.
All underground openings will be secured upon completion of mining. As development is by ramps
from surface which are above the water table, post-closure issues related to water draining out of
the workings should not be an issue.
The mill will be dismantled and the surface area reclaimed.
As there are currently piles of
mineralized material and a small area with old tailings, reclamation should result in improved
conditions from the current status.
The tailings dam will be designed for long-term stability. An engineered overflow will be installed in
the latter parts of the operation. After milling ceases, the tailings will be covered with soil salvaged
during construction and the area seeded and planted with native shrubs.
For the PEA model, an estimate of $3M was used for the cost of reclamation. Since some of the
mill equipment will still be useable by the end of the modeled project, $500,000 has been
incorporated as salvage value.
19. Market Studies and Contracts
No market studies have been undertaken for the San Felipe project and there are no contracts for
any possible production. However, metallurgical studies indicate that marketable lead and zinc
concentrates can be produced from the resource material. Santacruz is currently selling similar
concentrates from their Rosario mine and it is reasonable to assume that concentrates from San
Felipe could be sold.
For the PEA model, general details of the contract Santacruz has with a concentrate trader for the
Rosario concentrate were used. Key points include:
Zinc concentrate payables:
Zinc - Pay for 85% of the final zinc content, subject to a minimum deduction of 8 units (percentage
points). For example, if the zinc concentrate contains 54% zinc (or 1,080 lbs per ton), payment
would be for 0.85 x 1,080lbs = 918 lbs x price of zinc per lb for each ton of concentrate.
239
Silver - Deduct 3 ounces (93 gms) per tonne of concentrate and pay 70% of the balance of the
final silver content. The silver values in the zinc concentrate produced in test work for San Felipe
are too low to be payable under this condition.
Lead – No payment.
Lead Concentrate Payables:
Lead - Pay for 95% of the final lead content, subject to a minimum deduction of 3 units
(percentage points). Based on testwork, the result of this condition will be that 94% of the lead
content will be payable. This is because the estimated lead content of the concentrate at 47%
triggers the minimum deduction clause. The maximum payable is 44% of the lead content, so
payment would be 44/47 = 94% of the contained lead.
Silver - Pay 95% subject to a minimum deduction of 50 grams per tonne.
Zinc – no payment, but no penalty.
Concentrate fees have been dropping since the Rosario concentrate agreement was signed so
estimates based on some recent contract prices were used for the PEA. These were:
Zinc Concentrate - $190/tonne concentrate
Lead Concentrate - $220/tonne concentrate
Silver in the lead concentrate - $1.50 per payable ounce of silver.
No price escalation for the concentrate fees was used in the metal price sensitivity analysis in the
PEA model. Costs for concentrate shipping were estimated at $30/tonne based on trucking the
concentrate to the Port of Guaymas. Insurance and assaying costs of $3/tonne concentrate were
based on costs for Rosario concentrate.
240
20. Environmental Studies, Permitting and Social or Community
Impact
Environmental and permitting considerations that relate to exploration activities are discussed in
Section 4.
Environmental, permitting and social or community impact considerations for a
potential mines are discussed in this section.
20.1. Environmental Studies
There are a number of environment-related regulatory standards (NOMs) that pertain to mining
developed by the Mexican Federal government. All development, operating and closure activities
must conform to these NOMs.
Some of the main standards applicable to the San Felipe project are:
•
NOM-141-SEMARNAT-2003 - Establishes procedures for tailings characterization, as well
as specifications and criteria for characterization and site preparation, construction, operation
and post-operation of tailing dams.
There are a number of studies which need to be
performed including geotechnical, hydrology, acid base accounting (ABA) and metal leaching
of tailings. Construction, operation and closure plans and monitoring programs are also
required.
•
NOM-157-SEMARNAT- 2009 - Establishes criteria and procedures regarding mine waste
rock and includes the requirement for waste rock management plans.
ABA and metal
leachability testing of waste rock is required.
•
NOM-059-SEMARNAT-2001 – Concerns environmental protection and refers to Mexican
wild native flora and fauna species. This NOM establishes risk categories and specifications
for their inclusion, exclusion, or change and publishes the list of endangered species.
•
Amendment to NOM-127-SSA1-1994. Establishes the permissible quality and treatment
limits to which water must be subject to make it potable.
•
NOM-001-SEMARNAT-1996. Establishes the maximum permissible pollutant limits of waste
water discharges into national waters and properties.
241
In 2008 Hochschild initiated some environmental studies at San Felipe, but these were
discontinued at the end of the year when the company stopped work on the project.
Work
included:
•
Drilled and established 8 water monitoring wells and put vibrating wire piezometers in 6
geotechnical bore holes.
•
Collected preliminary environmental baseline data including sampling of surface water and
ground water.
•
Carried out pump tests on wells.
•
Did a preliminary vegetation analysis in the select areas.
•
Did 40 Acid Base Accounting (ABA) tests on samples comprised of core assay rejects.
Because work on the project stopped, results were never completely compiled but Santacruz has
the data from this work and will incorporate the results into new studies.
Groundwater elevation as determined by Hochschild from water depth in monitoring and
geotechnical holes is shown in Figure 20-1. A check by Smit on April 5, 2014, found seven of the
8 wells still open but the vibrating wire piezometers were no longer attached to the installations in
the geotech holes.
Water depths were similar to those reported by Hochschild from
measurements taken during the period from May through September 2008.
Baseline environmental studies have recently been initiated on the project by Santacruz. To date
these have been limited to a reconnaissance visit to the project area for a preliminary review of the
type of flora and the general environmental conditions at the project area and a first round of water
sampling. On May 20th, 2014, 5 wells were sampled and 8 samples of creek sediments collected.
At the time of the site visit, none of the creeks or the Sonora River had surface water. The wells
had some parameters that were variably elevated, including: fluorine, sulphur, aluminum and
manganese indicating that high levels for these elements occur naturally in the groundwater or are
conditions resulting from historic mining operations. Lead, zinc and copper levels were low. A
high lead value in sediments (130 ppm) is likely due to contamination from the tailings by an old
millsite.
242
Figure 20-1 Groundwater Elevation vs Ground Surface Elevation
Notes: Figure from Hochschild 2008 files. VW = vibrating wire piezometer Standpipe= monitoring well
243
Water sampling, including both surface and subsurface, will continue. Due to the arid conditions,
only seasonal surface water is anticipated. Figure 20-2 shows potential sample sites for sediment
and water sampling. The actual locations of surface water samples will be dependent upon where
surface water is present during sampling sessions. Detailed flora and fauna studies of the area that
would be affected by any potential development are planned within the next few months and a site
weather station will be installed.
At this time, Santacruz has not undertaken the tailings characterization work required under NOM141. Preliminary geotechnical evaluations, including test pitting and drilling, of the proposed tailings
site was done by Hochschild. Tailings characterization and more detailed evaluation of the site will
be required before any construction of a tailings impoundment is initiated.
244
Figure 20-2 Water and Sediment Monitoring Sites
245
There were 40 samples taken from core close to, but not in, the Ventana structure and analyzed for
ABA to characterize waste rock. Results were variable, with some rocks showing low acid potential
and others showing moderate to high potential.
The majority of the potential underground
development to access various levels is well away from the vein and there are no samples to
characterize the material that will be mined as part of development.
There are also very few
samples that characterize waste rock from any open pit development. As the sulphur content in
assay samples throughout the areas drilled is commonly greater than 1%, much of the waste rock
could be acid generating.
Therefore, a comprehensive waste rock characterization program is
required to guide waste management strategy. To address the issue of acid rock drainage and
metal leaching in this PEA, waste rock dumps were modeled to be contained and engineered to hold
rock that is potentially acid generating (PAG).
An initial study did not identify any rare or endangered flora on the proposed mill or tailings pond
sites. More detailed studies of flora and fauna in the area potentially affected by development are
planned.
20.2. Permits
The main mine permits required for construction and operation activities are the:
•
Authorization to Impact the Environment which requires a submission of a Manifesto de
Impacto Ambiental (Environmental Impact Statement), known by its acronym as an MIA,
and;
•
Authorization to Change the Use of Forest Lands which requires the submission of an
Estudio Tecnico Justificativo (Technical Justification Study), known by its acronym ETJ.
Properly prepared MIA and ETJ applications and mine operating permits for a project that does not
affect federally protected biospheres or ecological reserves can usually be approved within 12
months. The San Felipe project is near, but not inside, a bird protection area (“Sistema de Sierras
de la Sierra Madre Occidental”) and is within a terrestrial region for conservation (with medium
priority). (See Figures 20-3 and 20-4). These designations do not restrict mining exploration or
development. Therefore there are no special requirements required for these or other permits.
246
Table 20-1 List of Authorizations and Plans Required for San Felipe
Authorization or Plan English Translation Agency Permiso de exploración Exploration Permit SEMARNAT
1 Autorización en materia de impacto ambiental Authorization to Impact the Environment Environmental Risk Analysis Authorization to Change the Use of Forest Lands Licence to use SEMARNAT
1 SEMARNAT
1 SEMARNAT
1 Autorización en materia de riesgo ambiental Autorización para cambio de utilización de terrenos forestales Licencia de uso de suelo y/o construcción Permiso para disposición de residuos no peligrosos Permiso-‐concesión para uso de agua Permioso para descarga de agua de servicios sanitarios(fosas sépticas) Permiso para uso y manejo de explosives Carta de liberación arqueológica Aprobación del Plan de Manejo de Residuos Mineros (*) Aprobación del Plan de Abandono y Restauración (*) Registro como generador de residuos peligrosos (*) Licencia de Operación/Licencia Ambiental Única (*) Aprobación del Plan de Prevención de Accidentes (*) 1
Permit for Non-‐Toxic Waste Disposal Water Use Concession Permit for the Spetic System Explosive Use, Handling and Storage Permit Archaeological Release Letter Approval of the Mine Waste Management Plan Closure and Reclamation Plan Documents required to support permit H. Ayuntamiento de San Felipe de Jesús H. Ayuntamiento de San Felipe de Jesús 2
CONAGUA 2
CONAGUA 3
SEDENA , Ayuntamiento de San Felipe de Jesús, Gobierno del Estado de Sonora. 4
INAH Aviso de Exploración (After May 2012). Manifestación de Impacto Ambiental/estudios ambientales de línea base Estudio de Riesgo Ambiental Estudio Técnico Justificativo Carta solicitud de la Licencia de Uso de Suelo Carta solicitud del permiso Solicitud ante CONAGUA Solicitud ante CONAGUA Solicitud ante SEDENA Solicitud a INAH, reporte de visita de campo y dictamen del INAH Plan de Manejo de Residuos MIneros SEMARNAT
1 SEMARNAT
1 Plan de Abandono y Restauración Registration as Generator of Hazardous Waste Operation Licence SEMARNAT
1 Documentos de registro SEMARNAT
1 Formatos y reportes técnicos ingresados a SEMARNAT Accident Prevention Plan SEMARNAT
1 Plan de Prevención de Accidentes 2
3
SEMARNAT: Secretaría de Medio Ambiente y Recursos Naturales, CONAGUA: Comisión Nacional del Agua, SEDENA:
4
Secretaría de la Defensa Nacional , INAH: Instituto Nacional de Antropología e Historia,* Permisos necesarios en la etapa de
operación
247
Santacruz applied for and received a MIA and ETJ for a processing plant (1.39 Ha) and for a
tailings impoundment site (13.86 Ha) valid for 10 years starting in 2014. The location of the
approved areas is shown on in Figure 20-2. The processing plant area is in the area of the mill
site proposed in the PEA, but there may need to be modifications of the area to meet new plans.
The tailings site is not the one currently proposed. There has been only limited work completed on
this site, but a site proposed and studied by Hochschild appears to be a better alternative. It is
anticipated that additional studies will include review of the best alternative.
No authorizations were applied for the open pit portion of the PEA plan as this is a relatively new
concept. No authorizations have been applied for mine waste storage areas or powerlines.
Under the MIA and ETJ authorizations already received, Santacruz is required to develop the
project according to the terms and obligations in the MIA and the ETJ and is obliged to develop
management and monitoring plans to ensure compliance. Santacruz is currently reviewing all
permitting requirements in relation to the development and operating scenario described in this
report and plans to initiate the work necessary to obtain the permits and other authorizations
required to undertake the proposed development.
Santacruz has signed an agreement to acquire water rights to two wells which could provide water
for potential operations. Filing of this agreement with Mexican authorities is still pending. Each
well has an authorized volume of 215,000 m3 per year for a total of 430,000 m3.
In the author’s opinion that there are no issues with the project that will make obtaining the permits
and other authorizations required to build a mine difficult or impossible to obtain provided
Santacruz collects the required information, designs project components so that environmental
values and human safety are protected, ensures that applications and reports are complete, and
any properly responds to any concerns expressed by regulatory agencies.
20.3. Social and Community Impact
the non-technical people employed in exploration from the community and has a cordial
relationship with the people in the community.
population of 10,000 people, mostly engaged in agriculture and support industries. While some
248
labour for mining could be sourced locally, it is likely that a significant proportion of the labour force
would have to be brought in from Hermosillo.
To date, no labour availability analysis has been done for the area and it is not known how many
people are likely to be hired from local communities. If the project proceeds, it is likely most of the
technical people and a considerable number of the non-technical workers will be from Hermosillo
or other parts of Mexico. Over time, some may move into the local communities but a camp for
workers and housing for senior staff in San Felipe is envisioned at this point.
Santacruz will need to use the good relationship they have with the San Felipe community to work
out a strategy that addresses community needs and concerns to ensure that the impacts to the
community are mostly positive. Provided that Santacruz puts effort into working with San Felipe
and other area communities, social and community concerns are unlikely to prevent a mine from
being developed.
249
Figure 20-3 Federally Designated Bird Protection Areas.
250
Figure 20-4 San Felipe Project Conservation Area Federal Designation
251
21.
Capital and Operating Costs
Details on the PEA plan and how estimated capital and operating costs were derived are given in
Sections 16, 17, 18 and 19. For some cost items, estimates were made before the final production
plan was completed. For these instances, costs were scaled to match the new proposed mining and
milling rate. Working capital of $6M was added to the construction year of the project and was
recovered in the last year of the project.
Mine and milling operating costs were increased by 10% of the estimated cost per tonne in year 1 of
production to account for higher costs during start-up of the project. General and Administration
operating costs were estimated as an annual cost as they will not vary appreciably with tonnage
mined and milled. An extra $500,000 in included in the construction year and year 1 to cover owner
costs for engineering and construction management.
A summary of estimated capital costs is given in Tables 21-1 and of estimated operating costs is
given in Table 21-2. The operating costs include the higher costs estimates for year 1.
Table 21-1 San Felipe PEA Estimated Capital Costs - $M
Item Description Initial Sustaining Mining Open pit and underground contract mining $2.5 $26.3 1,250 mtpd mill $15.3 $0.0 Milling Infrastructure and General and Administration Tailings Dam $2.1 $3.4 Office, shop and warehouse $0.6 $0.1 Power to site $5.0 $1.0 Power on site $0.5 $0.5 Roads $0.9 General and Admin $3.4 Working Capital $6.0 -‐$6.0 Closure and Reclamation Reclamation $3.0 Salvage -‐$0.5 Subtotal Total Capital $36.3 $27.8 $64.10 252
Mining Table 21-2 San Felipe PEA Estimated Operating Costs Per tonne
Per tonne Open pit – mineralized material per tonne $2.80 Open pit – waste per tonne $2.20 $27.62 to $32.71 Average per tonne mineralized material $26.12 Milling Milling per tonne milled $19.34 Concentrate Costs Smelter per tonne milled $24.34 Shipping, assay, insurance per tonne milled $3.68 $28.02 Underground -‐ average per tonne mineralized material General and Administration General and Administration per tonne mineralized material Total per tonne mineralized material $6.85 $80.33 22. Economic Analysis
The estimated mining production tonnes and grades were combined with the mill and smelter
recoveries and the estimated capital and operating costs to develop a PEA economic model (Table
22-1). A summary of the production model is in Table 22-2, a summary of the economics is in Table
22-3 and a summary of the base case NPV and IRR calculations is in Table 22-4.
The PEA is based on a stand-alone project and evaluates the potential economics from the start of
construction. It does not incorporate costs before any production decision. These would include
costs for further technical studies, property payments and taxes. The cost for these items is in part
dependent upon when a potential project decision is made. Potential tax savings a company could
achieve by writing off other expenses and losses against the revenue derived from San Felipe are
also not considered.
considerations applied to them that would enable them to be categorized as mineral reserves
and there is no certainty that the PEA will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
253
22.1. Assumptions
Assumptions included in the model are:
• Metal Prices – a 100-day average price as of September 4, 2014 was used; $19.91/oz for Ag,
$0.99/lb for Pb and $1.00/lb for Zn. These prices vary from those used to estimate silver
equivalents in the resource calculation because the resource was completed before the PEA.
• All $US
• Exchange rate – US$1 = 13.16 Mexican pesos
• Mining by contractor
• No cost or revenue escalations over time.
22.2. Taxes
The primary taxes that need to be considered for a mining project in Mexico are:
•
•
•
•
Income Tax
22.2.1.
IVA
IVA is assessed on the sale of good s and services, leasing and imports. The rate of 16% is
imposed on all activities conducted within Mexico. IVA paid on purchases is refundable as long as
the expenses are business related and are deductible for income tax purposes. The economic
model assumes IVA is charged on 90% of the capital and operating costs and that 100% will be
refunded but that the refund will be 6 months after the cost was incurred.
For simplicity, any
remaining IVA is refunded in the model in the last year of the mine life.
254
22.2.2.
Environmental Fee
The environmental fee is a 0.5% royalty tax on the net smelter return for any gold and silver
production. The cost of this fee can be deducted for income tax purposes. A 62.5% portion of the fee
is intended to be for the use of the municipality in which the mine is located and a 37.5% portion goes
to the state government.
22.2.3.
Mining Royalty
A 7.5% tax is applicable on net revenues from the sales of minerals. Depreciation and interest costs
cannot be deducted when calculating this tax, but operating costs can be. The royalty payment can
be deducted for income tax purposes. A 62.5% portion of the royalty is intended to be for the use of
the municipality in which the mine is located and a 37.5% portion goes to the state government.
22.2.4.
Income Tax
A 30% Mexican income tax rate is included in the model. When calculating taxable income, operating
costs and environmental fee and mining royalty costs can be deducted from annual revenues. Capital
costs are depreciated at 10% per year and the depreciated amount can be deducted. Mine “earth
works” such as pre-stripping and underground development are not considered capital costs for
depreciation purposes and therefore can be deducted 100% in the year they are incurred.
Any
remaining capital costs can be fully depreciated in the last year of the mine, but no tax credit can be
claimed for this if a negative income tax calculation results. Losses in any year can be carried forward
to the next year.
In the model, mine development costs are given as capital costs as they are normally considered as
capital in Canada. They are not treated as depreciable capital in the model however and are written
off 100% in the year they are incurred as per the Mexican tax law.
22.3. Economic Highlights
Highlights of the PEA, using base case metal prices, include:
•
Pre-tax Net Present Value ("NPV") at a 5% discount rate of US $103.5 million and an Internal
Rate of Return ("IRR") of 60.6%;
255
•
•
•
•
•
•
256
Table 22-1 San Felipe PEA Economic Model
PP Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total 140,760 67,275 1,032,360 Open Pit Mineralized material 270,600 0 124,200 216,729 110,176 102,620 Waste 2,070,100 0 819,750 1,811,180 372,343 496,828 1,258,000 228,650 7,056,850 Underground Mineralized material 182,038 449,219 320,095 244,976 349,417 340,568 326,114 167,482 2,379,908 Tonnes milled 452,638 449,219 444,295 461,705 459,593 443,188 466,874 234,757 3,412,268 Grade Ag (g/t) 54.9 54.1 51.4 61.2 70.2 72.7 74.6 73.3 Pb (%) 1.6 2.3 1.8 2.2 2.1 1.5 0.7 0.8 Zn (%) 6.3 6.1 4.7 4 4.7 5.3 5.4 4.2 Ag (toz) 800 782 735 908 1,037 1,037 1,120 553 6,971 15,810 22,846 17,681 22,432 20,989 14,716 7,665 4,377 126,515 62,575 60,775 46,313 40,209 47,222 51,469 55,632 21,751 385,946 Metal Mined Pb lb Zn lb Site Metallurgical Recoveries Underground mineralized material Ag 80% 80% 80% 80% 80% 80% 80% 80% 80% Pb 86% 86% 86% 86% 86% 86% 86% 86% 86% Zn 87% 87% 87% 87% 87% 87% 87% 87% 87% Ag 70% 70% 80% 80% 80% 80% 80% 80% 80% Pb 70% 70% 86% 86% 86% 86% 86% 86% 86% Zn 68% 68% 87% 87% 87% 87% 87% 87% 87% Ag (toz) Pb con 592 626 588 727 830 829 896 442 5,529 Pb lb Pb con 12,085 19,647 15,205 19,291 18,050 12,655 6,592 3,764 107,291 Zn lb Zn con 47,332 52,874 40,292 34,982 41,083 44,778 48,400 18,924 328,665 95% Pb con 562 594 558 690 788 788 851 420 5,252 Pb lb 94% Pb con 11,360 18,468 14,293 18,134 16,967 11,896 6,196 3,538 100,853 Zn lb 85% Zn con Ventana Open pit mineralized material (oxidized) Site Recovered Payable from smelter Smelter Credit Ag (toz) Ag Pb 40,233 44,943 34,248 29,734 34,920 38,061 41,140 16,085 279,365 $19.91 11,195 11,831 11,120 13,742 15,690 15,687 16,942 8,368 104,575 $0.99 11,246 18,284 14,150 17,953 16,798 11,777 6,134 3,503 99,845 257
Zn $1.00 40,233 29,734 34,920 38,061 41,140 16,085 279,365 62,673 75,058 59,518 61,429 67,409 65,525 64,216 27,957 483,784 Smelter Cost -‐11,051 -‐13,435 -‐10,435 -‐10,745 -‐11,608 -‐11,020 -‐10,311 -‐4,428 -‐83,034 Concentrate Shipping, assay, insurance -‐1,718 -‐2,090 -‐1,598 -‐1,600 -‐1,729 -‐1,653 -‐1,541 -‐643 -‐12,571 Net Smelter Revenue 49,904 59,532 47,485 49,084 54,071 52,852 52,365 22,886 388,180 Net Revenue to Company 49,405 58,937 47,010 48,593 53,530 52,438 51,955 22,771 384,640 Mine Costs -‐4,980 -‐4,505 -‐2,672 -‐5,004 -‐5,543 -‐2,137 -‐1,124 -‐300 -‐28,765 -‐11,375 -‐12,409 -‐10,994 -‐11,396 -‐11,172 -‐11,792 -‐13,830 -‐6,170 -‐89,138 -‐15,300 -‐9,505 -‐8,576 -‐8,482 -‐8,814 -‐8,774 -‐8,460 -‐8,913 -‐4,482 -‐66,004 -‐400 -‐300 -‐900 -‐1,000 -‐200 -‐14,125 Mill Costs 34,248 Sub Total 44,943 Capital Opex -‐2,500 Capex -‐15,300 Opex Infrastructure Capex -‐9,100 -‐2,225 G&A Capex -‐3,360 Opex Working Capital Closure and Reclamation Total Capital Total Operating Costs Total Site Costs Net Cash Flow -‐ pre tax (with Capex) -‐3,360 -‐6,000 -‐3,360 -‐2,860 -‐2,860 -‐2,860 -‐2,860 -‐2,860 -‐2,860 -‐2,860 -‐23,380 6,000 -‐2,500 -‐36,260 -‐7,205 -‐4,505 -‐3,072 -‐5,304 -‐6,443 -‐3,137 -‐1,324 3,200 -‐64,050 -‐24,240 -‐23,845 -‐22,335 -‐23,070 -‐22,806 -‐23,113 -‐25,602 -‐13,512 -‐178,522 -‐36,260 -‐31,445 -‐28,350 -‐25,407 -‐28,374 -‐29,249 -‐26,250 -‐26,926 -‐10,312 -‐242,572 -‐36,260 17,961 30,587 21,603 20,219 24,282 26,188 25,029 12,459 142,068 Cumulative Cash Flow pre tax -‐36,260 -‐18,299 12,287 33,891 54,110 78,392 104,580 129,608 142,068 Pre Tax Cash flow -‐36,260 17,961 30,587 21,603 20,219 24,282 26,188 25,029 12,459 142,068 IVA IVA amounts (90% subject to IVA) 16% -‐5,221 -‐4,528 -‐4,082 -‐3,659 -‐4,086 -‐4,212 -‐3,780 -‐3,877 -‐1,485 -‐34,930 IVA return (6 month lag) 2,611 4,875 4,305 3,871 3,872 4,149 3,996 3,829 3,424 34,930 Net Cash Flow after IVA -‐38,871 18,307 30,810 21,815 20,006 24,219 26,404 24,980 14,398 142,068 Environmental Fee 0.5% on Silver Net Income subject to Royalty and Income Tax Mining Royalty Net minus royalty and fee Loss Carry Forward 0 -‐56 -‐59 -‐56 -‐69 -‐78 -‐78 -‐85 -‐42 -‐523 -‐2,500 21,130 30,628 22,048 21,451 25,203 27,210 25,244 5,918 176,330 -‐1,585 -‐2,297 -‐1,654 -‐1,609 -‐1,890 -‐2,041 -‐1,893 -‐444 -‐13,412 -‐2,500 19,545 28,331 20,394 19,842 23,313 25,169 23,351 5,474 162,918 -‐5,276 7.5% 258
Taxable Income Before Depr -‐2,500 19,545 28,331 20,394 19,842 23,313 25,169 23,351 5,474 162,918 Tax Depreciation -‐2,776 -‐3,099 -‐3,109 -‐3,159 -‐3,289 -‐3,389 -‐3,499 -‐3,529 -‐8,940 -‐34,785 Taxable Income -‐5,276 11,170 25,222 17,236 16,553 19,925 21,670 19,822 -‐3,466 122,857 Income Tax (30%) -‐3,351 -‐7,567 -‐5,171 -‐4,966 -‐5,977 -‐6,501 -‐5,947 -‐ -‐39,480 20,174 25,169 17,795 18,880 22,779 20,705 18,428 8,774 152,703 Net Of Income after Environmental Fee, Mining Royalty and Income Tax Net cash flow after tax (considering Capex and IVA) -‐38,871 13,316 20,887 14,935 13,362 16,273 17,784 17,055 13,912 88,653 Cumulative -‐38,871 -‐25,555 -‐4,668 10,267 23,629 39,902 57,685 74,741 88,653 259
Table 22-2 San Felipe Pea Production Summary
San Felipe -‐ September 2014 PEA Results This PEA is preliminary in nature and there is no certainty that the results of the PEA will be realized.
The resources incorporated in this assessment are not mineral reserves and do not have demonstrated economic viability.
The first year of this assessment is based almost entirely on inferred resources and there is limited metallurgical information
And no geotechnical information to support the first year of the analysis.
The results of this study show that the project has potential to be economic and further work to determine economic viability
is warranted
This study is too preliminary to demonstrate economic viability.
San Felipe PEA Production Estimate Total Tonnes to Mill 3.4 Mt Average Milled per Day 1250 t/day Underground Tonnes to Mill 2.4 Mt Open Pit Tonnes to Mill 1.0 Mt Open Pit Tonnes Waste 7.1 Mt Open Pit Strip Ratio 7:1 Years Production 7.5 Ag Pb Zn Grade 63.5 g/t 1.7% 5.1% Metal Mined 7.0 Moz 126.5 Mlbs 385.9 Mlbs 80% 86% Metal Produced in Concentrate 5.5 Moz Metals Payable after Smelting 87% 107.3 Mlbs 328.7 Mlbs 5.2 Moz 100.9 Mlbs 279.4 Mlbs Metal Price $19.91/oz $0.99/lb $1.00/lb Smelter Credit ($US) $104.6 M $99.9 M $279.4 M $483.8 M Recovery – Sulphide (Oxide de-‐rated) Note: This table is in part based on inferred mineral resources which are considered too speculative geologically to have
the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral
resources that are not mineral reserves do not have demonstrated economic viability.
260
Table 22-3 San Felipe – Life of mine economics
San Felipe PEA Economics -‐ Life of Mine Smelter Credit Smelter Costs Concentrate Shipping Total Smelter and Concentrate Charges NSR (1%) Site Operating Costs Mining Milling G&A Total Site Operating $US '000 ($83,064) ($12,571) ($89,138) ($66,004) ($23,380) Net Operating Cash Flow Initial Capital Costs Mining Milling G&A and Infrastructure Working Capital (2,500) (15,300) (12,460) (6,000) Total Initial Capital (36,260) $US '000 $483,784 ($95,605) ($3,540) ($178,522) $206,118 Mining Milling Infrastructure ($26,265) $0 (5,025) Total Sustaining Capital ($31,290) Salvage Value Recoup of Working Capital Total Closure Capital Total Capital Reclamation 500 6,000 $6,500 (3,000) Net Cash Flow -‐ Pre Tax Environmental Fee Mining Royalty Income Tax Net Cash Flow -‐ After Tax ($24.38) ($3.68) ($26.24) ($19.34) ($6.85) ($61,050) (3,000) ($53,415) $88,653 Total cash cost (Opex, smelter, NSR and Sustaining Capital) $142,068 ($533) ($14,143) ($39,480) Per Tonne Mined Closure Sustaining Capital Costs ($28.02) ($1.04) ($52.32) $60.40 ($10.63) ($9.17) $1.90 ($90.54) ($12.72) per tonne per oz Ag Eq $141.78 ($17.89) ($0.88) $41.63 $25.98 Note: This table is in part based on Inferred Mineral Resources which are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Mineral resources
that are not mineral reserves do not have demonstrated economic viability.
261
Table 22-4 San Felipe PEA NPV and IRR
San Felipe NPV and IRR -‐ Base Case $USM Pre-‐Tax NPV After Tax NPV Discount Rate 0% 142.1 88.7 2% 125.0 76.4 5% 103.5 61.2 8% 86.1 48.9 10% 76.3 42.0 IRR 60.6 37.7 Payback (years) 1.6 2.3 Note: This table is in part based on inferred mineral resources which are considered too speculative geologically to have
the economic considerations applied to them that would enable them to be categorized as mineral reserves.
22.4. Sensitivity Analysis
Key economic inputs were examined by running cash flow sensitivities on:
•
Metal prices
•
Capital Costs
•
Operating Costs
Sensitivity over the base case was calculated for a range of -20% to +20% variations of the base case
parameters listed above. All were done with a 5% NPV. The sensitivities are shown on Table 22-5.
The project is most sensitive to metal price. This is followed by the operating costs with the capital
cost being the least sensitive to the economics of the project.
262
Table 22-5 San Felipe Project Preliminary Economic Assessment 2014 - Sensitivities
Metal Prices -‐20% -‐10% Base +10% +20% Ag 15.93 17.92 19.91 21.90 23.89 Pb 0.79 0.89 0.99 1.09 1.19 Zn 0.80 0.90 1.00 1.10 1.20 pre-‐tax 28.7 66.1 103.5 140.9 178.3 NPV 5% $US M after-‐tax 11.8 36.5 61.2 85.8 110.5 IRR % pre-‐tax 22.3% 42.1% 60.6% 78.6% 96.4% after-‐tax 12.1% 25.5% 37.7% 49.4% 60.8% Operating Cost NPV 5% $US M +20% +10% Base -‐10% -‐20% pre-‐tax 75.8 89.6 103.5 117.3 131.2 after-‐tax 42.6 51.9 61.2 70.4 79.7 IRR % pre-‐tax 47.2% 54.0% 60.6% 67.3% 73.8% after-‐tax 28.6% 33.2% 37.7% 42.2% 46.6% Capital Cost NPV 5% $US M +20% +10% Base -‐10% -‐20% pre-‐tax 92.0 97.7 103.5 109.2 115.0 after-‐tax 51.6 56.4 61.2 65.6 70.7 IRR % pre-‐tax 47.4% 53.5% 60.6% 69.3% 80.0% after-‐tax 28.8% 32.9% 37.7% 43.5% 50.6% Note: This table is in part based on Inferred Mineral Resources which are considered too speculative geologically to have
the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Mineral
resources that are not mineral reserves do not have demonstrated economic viability.
263
Figure 22-1 Sensitivity Analysis
23. Adjacent Properties
There is no public information available regarding exploration on the claims adjacent to Santacruz’s
San Felipe property. There are no significant mine workings or disturbance from exploration visible in
the surrounding area.
The closest active mine is the Santa Elena deposit owned by Silvercrest Mines Inc. The mine is
located approximately 20 km to the NE of San Felipe and consists of low sulphidation epithermal Ag,
Au mineralization. Probable reserves include 8.2 million tonnes grading 74.9 g/t Ag and 1.24 g/t Au for
a total of 20 million ounces silver and 330 thousand ounces gold (from www.Silvercrestmines.com).
The mine has an estimated 8 year mine life with a cash cost of $11 per ounce (silver equivalent).
24. Other Relevant Data and Information
The authors are not aware of any material information relevant to this report, or the resource
estimation and PEA described in this report, that is not included herewithin.
264
25. Interpretation and Conclusions
Santacruz has the right to acquire 100% of the San Felipe project under an agreement with
Hochschild for a total purchase price of $44.7 million and 1,250,000 Santacruz shares, of which
$23.7 million and all the shares have been paid. (Note: subsequent to the Effective Date of this
report, Santacurz reports that payments now total $25.9M). Hochschild is also entitled to receive
30% of any capital increase of the Company (Impulsora Minera) during the remaining life of the
San Felipe Agreement as pre-payment of any remaining payment obligations. The agreement
covers 14 mineral titles totaling 16,265 Ha at San Felipe as well as claims covering the El Gachi
prospect. The El Gachi project is not described in this report. A 1% NSR payable to Hochschild if
production commences can be purchased for $3 million. Annual holding costs include taxes of
approximately $184,000.
Access to the project is favourable with 148 km of paved highways from the city of Hermosillo and
7 km of gravel roads in flat to moderate terrain. Santacruz has good relations with the local
community of San Felipe and has a surface access agreement with the San Felipe Ejido that
covers identified resources and potential development areas. The annual rental for the land is
currently $160,000. The economies of the village of San Felipe and other communities in the
surrounding area are primarily based on agriculture. Some workers and limited supplies can be
acquired locally. For a mine, many workers and most industrial supplies and services would likely
be sourced in Hermosillo which has an extensive network of mining-related services.
The project area covers a number of old mine workings.
Santacruz has initiated a baseline
environmental study and has dome preliminary flora and fauna studies. No rare or endangered
species have been found to date. Santacruz has secured permits for a mill area and a tailings
impoundment, but a different impoundment area is now proposed. Permit requests for the new
proposed tailings impoundment area, potential open pit mine sites and mine waste storage areas
need to be submitted. No impediments to acquiring these permits are known.
that cut andesitic volcanic and interbedded siltstone and younger felsic intrusive rocks. The district
hosts five principal, westerly-striking, skarn systems that include Artemisa-Cornucopia, Las Lamas,
San Felipe, Transversales and La Ventana. Primary minerals are sphalerite, galena, pyrite, and
magnetite with lesser native silver, chalcopyrite, arsenopyrite, schellite, and covelite within a
gangue of garnet, pyroxene, epidote, quartz, rhodonite, and carbonate.
265
Resources were calculated for four vein systems: La Ventana, San Felipe, Las Lamas and
Transversales.
At a 75 g/t Ag equivalent cut-off, the new resource estimate for material that can be potentially mined
by open pit for all veins is:
•
Indicated – 0.1Mt at 81.07 g/t Ag, 1.3% Pb and 4.4%Zn = 293 g/t Ag equiv or 0.9 Moz Ag equiv*
•
Inferred – 0.9Mt at 63.5 g/t Ag, 1.4% Pb and 3.8% Zn = 264 g/t Aq equiv or 7.3 Moz Ag equiv*
At a 150 g/t Ag equivalent cut-off, the new resource estimate for material that can be potentially be
mined by underground methods for all veins is:
•
Indicated – 1.0Mt at 75.3 g/t Ag, 2.6% Pb and 6.5%Zn = 425 g/t Ag equiv or 14.2 Moz Ag equiv*
•
Inferred – 2.3Mt at 64.6 g/t Ag, 2.1% Pb and 5.2% Zn = 347 g/t Aq equiv or 25.6 Moz Ag equiv*
The new mineral resource estimate is supported by 55,050 metres of drilling in 260 drill holes with
a total of 11,526 assays. The holes include those drilled by Santacruz in 2013 and by prior
operators in the period 1999 to 2000 and 2006 to 2008. The mineral resources were defined to a
maximum depth of approximately 450 metres below surface with a total of 1106 down-hole
surveys utilized for control.
Prior to estimating the resource, a detailed examination of the sample database and QA/QC was
completed. While deficiencies were noted, the information was considered suitable for resource
estimation purposes. The resource estimate utilized a new geological model that has six domains;
two at La Ventana (HG, LG), Transversales (VT), three at San Felipe (SF, HW-1, HW-2) and one
at Las Lamas (LL). Assays for each domain were examined and a top cap was applied to each
variable within each domain. Uniform 2 m composites were formed for the domain envelopes.
Variography was completed for all domains in the La Ventana and Las Lamas zones. Due to
insufficient composites in the VT, SF and HW-2 domains, variography from the HW-1 domain was
used with the orientation changed to fit the strike and dip of the structures. Grades for all variables
were interpolated into blocks 5 x 2.5 x 5 m using ordinary kriging.
For blocks with multiple
domains present, a weighted average was determined for the mineralized portion. A specific
gravity was established for each domain based on 472 measurements from drill core. Estimated
blocks were classified as Indicated or Inferred based on geologic and grade continuity.
266
A summary of the new resource at ditterent cut-offs based on potential mining methods is given in
the table below. The San Felipe vein and 2 hangingwall structures are combined in the table. In
addition to silver, lead and zinc, the veins contain low amounts of copper and anomalous gold.
Since testwork has not been able to produce an economic copper concentrate and gold values are
too low to be significant, the values for these metals have not been considered at this time.
267
off AgEq (g/t) Ventana San Felipe Total Indicated Indicated Indicated 75 75 75 Ventana San Felipe Transversales Total Inferred Inferred Inferred Inferred 75 75 75 75 Ventana San Felipe Las Lamas Total Indicated Indicated Indicated Indicated 150 150 150 150 Ventana San Felipe Las Lamas Total Inferred Inferred Inferred Inferred 150 150 150 150 Tonnes > Cut-‐off Grades > Cut-‐off Ag (g/t) Pb (%) Zn (%) AgEQ (g/t) 7.69 4.07 4.44 378.11 283.26 293.04 121,565 792,310 913,875 1.66 1.28 1.41 6.31 4.56 1.33 370.29 297.48 159.84 3,000,083 2,496,255 1,772,945 858,000 63.51 1.44 Below Pits Possible Underground 815,000 72.91 2.96 118,000 91.38 1.76 84,000 76.18 0.25 3.78 263.52 7,269,283 6.78 5.79 5.29 460.35 368.79 286.28 12,062,477 (tonnes) Within Conceptual Open Pits 10,000 70.61 0.11 87,000 82.27 1.39 97,000 81.07 1.26 252,000 261,000 345,000 54.37 83.07 55.40 AgEq Ozs. 1,399,110 773,145 1,017,000 1,201,000 712,000 383,000 75.32 59.67 56.33 95.27 2.60 2.86 1.61 0.36 6.54 5.78 4.09 5.50 435.35 403.57 267.06 317.54 14,234,732 15,583,056 6,113,354 3,910,101 2,296,000 64.57 2.06 5.21 346.89 25,606,511 Since the veins contain different metals, a silver equivalent value cut-off is given in the resource
tables to better compare value. The metal prices used in the silver equivalent estimation are from
a 100 day moving average as of June 3, 2014 and are listed below.
Factor
Ag
-
US$ 20.06 per ounce
0.64 $/gm
Pb
-
US$ 0.96 per pound
21.16 $/%
Zn
-
US$ 0.92 per pound
20.28 $/%
The recoveries used in the resource estimation for each metal within each vein are shown below.
As the relative amounts of oxide, mixed and sulphide material, and the effects of oxidation on
recovery, are not well established, the same recovery estimate was used for the entire vein.
Table 25-2 Recoveries Used in Resource Estimation for Each Metal
Vein Ag Rec. Pb Rec. Zn Rec. Ventana 70% 86% 87% Las Lamas 73% 82% 88% San Felipe & Transversales 69% 86% 79% 268
The equation used to establish Ag Equivalent is:
𝐴𝑔𝐸𝑞 =
𝐴𝑔𝑝𝑝𝑚×0.64×𝐴𝑔 𝑅𝑒𝑐 % + 𝑃𝑏%×21.16×𝑃𝑏 𝑅𝑒𝑐 % + (𝑍𝑛%×20.28×𝑍𝑛 𝑅𝑒𝑐 %)
0.64×𝐴𝑔 𝑅𝑒𝑐 %
The metal prices and recoveries used for the silver equivalents in the resource estimation vary
somewhat from those used in the PEA as the resource was done earlier and the PEA includes
some new information.
The resource is still open in some areas. There are a number of other skarn-veins known on the
property and there is a good chance to identify additional resources with continued exploration.
A Preliminary Economic Assessment based on the resource indicates that the San Felipe has
potential to be economic. The PEA envisions a combination of open pit and underground mines
on the skarn systems on which the resource estimate is based. Material will be trucked to a milling
complex that mills 1,250 tonnes per day. A total of 3.4 M tonnes of material are mined and milled
in the PEA model and an additional 7.3 M tonnes of waste rock mined.
Metallurgical recoveries in the PEA are based on testwork by Santacruz and Hochschild. More
testwork is recommended, but work to date is sufficient for a PEA level study. To date, testwork
has been able to produce viable zinc and lead concentrate, but not a viable copper concentrate.
Most silver reports to the lead concentrate.
Estimated recoveries used in the PEA for a
conventional flotation mill are given below.
Table 25-3 Estimated Recoveries in PEA for Convential Flotation Mill
Oxide Sulphide Ag 70% 80% Pb 70% 86% Zn 68% 87% Assumptions included in the PEA model are:
•
Metal Prices – a 100-day average price as of September 4, 2014 was used; $19.91/oz for Ag,
$0.99/lb for Pb and $1.00/lb for Zn
•
All $US
•
Exchange rate – US$1 = 13.16 Mexican pesos
•
Mining by contractor
•
No cost or revenue escalations over time.
269
The primary taxes that were considered are:
•
•
•
•
Income Tax
Highlights of the PEA, using base case metal prices, include:
•
Pre-tax Net Present Value ("NPV") at a 5% discount rate of US $103.5 million and an Internal
Rate of Return ("IRR") of 60.6%;
•
•
•
•
•
•
considerations applied to them that would enable them to be categorized as mineral reserves
and there is no certainty that the PEA will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
25.1. Project Risks
The San Felipe project is subject to the usual risks that comparable mining projects face, including
decreases in metal prices, increases in costs, and changes in mineral title law and taxation.
Mexico is considered a reasonably stable country and the San Felipe area has not experienced
any drug-cartel related violence. Recent changes in taxation are incorporated in the PEA model.
Santacruz has a good relationship with the community of San Felipe and has an agreement
regarding surface land-use with the local Ejido. There are no known reasons why permits and
other authorizations required to developing a mine cannot be acquired. The PEA is based in part
on inferred mineral resources which are too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as mineral reserves.
270
Geotechnical analysis of the rock mass indicates potentially difficult ground conditions.
The
continuity of higher-grades at a stope scale has not been determined to the level required to do
detailed mine planning.. If ground conditions require more ground support than currently modeled
or if higher-grades are less continuous than modeled, mining rates could be lower and costs could
be higher.
The first year of open pit production is modeled almost entirely on inferred resources and there is
limited metallurgical information and no geotechnical information to support the model.
271
25.2. Project Opportunities
Project opportunities include:
•
Higher metal prices – Increases in metal prices from those modeled results in significant
increases in NPV and IRR;
•
Higher grades – The grade of material mined may be higher if mineralization is more continuous
at a stope scale than currently modelled, resulting in decreased dilution and increased mining
recovery;
•
Increased resource in mine plan – Any combination of higher metal prices, lower costs, higher
recovery or decreased dilution will result in more of the current resource being potentially
economic;
•
Resource expansion – a number of new parallel skarn systems have been identified from recent
surface exploration work to the east and northeast of Las Lamas (La Ventanita and Veta Negra).
These targets have yet to be drilled but surface work indicates alteration and mineralization
similar to Las Lamas.
•
Copper extraction – Copper grades average in the range of 0.3 to 0.4% for the material
considered in the PEA. If further testwork can show that a copper concentrate is possible, it
could add to the project economics.
•
Use of used equipment – Santacruz can acquire a used ball mill, a crushing system and some
analytical laboratory equipment. This equipment has not been examined by the authors.
Potential capital costs savings by using this equipment were not considered in the PEA.
25.3. PEA Sensitivities
To evaluate the effect of changes in input parameters and the level of risk associated with various
project components, cash flow sensitivities were run on:
•
Metal prices
•
Capital Costs
•
Operating Costs
The economic model was calculated for a range of -20% to +20% variations of the base case
parameters listed above. All were done with a 5% NPV. The project is most sensitive to metal
272
price. This is followed by the operating costs with the capital cost being the least sensitive to the
economics of the project. A 20% negative change in any of the three parameters still results in a
potentially economic project.
26. Recommendations
A PEA indicates that the San Felipe project is potentially economic and there is good potential to
increase resources.
Therefore, additional work on the project is recommended.
Specific
recommendations and a budget are included in this section.
26.1. Resource
While geological and grade continuity is sufficient to categorize much of the resource as Indicated,
uncertainty remains as to how continuous some of thehigher grade and width portions of the
mineralized structures are at a stoping scale as this will affect mining methods and costs.. To
investigate this issue, development along the vein is recommended. Details of this development are
given in Section 26.3. The vein should be carefully mapped and sampled each round of
development. Sampling should be by cutting the vein with a rock saw, resulting in samples that are
similar size to half HQ core.
The proposed underground development and drilling will provide information on another key
uncertainty which is the stability of the rock mass and the need for ground control. Evaluation of this
issue will aid development of the next level of mine planning and cost estimates. The development
and drilling will also provide material for additional metallurgical testwork.
The upper part of the Ventana vein has very few drill holes and is categorized as Inferred resource.
As this area is the first to be mined in the PEA model, infill drilling is recommended. Some of the
holes should be close spaced to further evaluate the continuity of grade and zone width at a stoping
scale.
Some drilling in the middle part of the Ventana structure is also recommended to evaluate
areas where the current geological model shows complications. A total of 3,000m of drilling is
recommended for infill drilling on Ventana.
Infill drilling on the upper part of the San Felipe
structure is also recommended to upgrade the resource and to evaluate the continuity of grade and
width. A total of 1,500 m of drilling is recommended for this structure.
For QA/QC during drilling, three standards with differing silver values should be used and duplicates
should be concentrated in areas with mineralization. Standard, blank and duplicate data should be
273
analyzed each time results are received and appropriate steps taken if there are any indications of
analytical problems.
More density measurements of mineralized material from both core and underground sampling
should be taken.
When the recommended work is completed, a new resource estimate should be completed. With
more close-spaced data from in-fill drilling and underground sampling, the quality of the
semivariograms in the 0 to 50 m range should be improved. This may allow upgrading of the
resource category not just in the areas with more drilling but also in other areas.
Infill drilling on the rest of the resource to upgrade the category should wait until after the work
recommended above is completed and the results from underground exploration are known.
This
will enable a better evaluation of recommended drill intercept spacing.
Rock type likely has an influence on the morphology of the vein and on grades.
There is
mineralization peripheral to the veins, which appears to follow lithological contacts and could
possibly be put into a resource if it is modeled. Therefore, a rock-type model for the entire area
around the current resources should be constructed. The model could be constructed using the
existing drill database in conjunction with examination of core.
Detailed surface mapping should continue around the resource areas.
26.2. Metallurgy
Existing open-circuit metallurgical studies have established that a conventional Pb/Zn differential
flotation process will produce saleable Pb and Zn concentrates. No credit was given to copper.
Existing data is sufficient for a PEA, but additional testwork is required to determine product
recovery (i.e. Pb, Zn and Cu) and concentrate quality that can be achieved with samples of various
alterations and oxidation types. This will include both open-cycle and locked-cycle flotation tests
with oxide, transition and sulphide mineralized material.
It will be important to do characterization work on the concentrates and tails produced in the
testwork to determine what penalties may be payable for the concentrates and to model the
potential environmental effects associated with the tailings storage facility.
274
26.3. Mining
As part of the proposed field program, exploration drifting on levels 800 and 780 is planned with
vertical developments between these levels to investigate continuity of mineralization along strike
and dip. During this exploration activity geotechnical mapping of the ramps and other underground
developments will take place. Other sources of new geotechnical data include logging drill core
during the upper Ventana exploration program and designing a geotechnical drill program for the
proposed La Ventana and San Felipe pits. This data in conjunction with existing geotechnical
information should be used to develop geotechnical engineering domains to support geotechnical
models for the deposits intended for mining.
Using the updated resource model and geotechnical information mentioned above, re-run Whittle™
optimizations and from those resultant shells design operational pits for La Ventana and San Felipe
to a PFS level of detail and design the La Ventana underground mine to a PFS level of detail.
Using existing data and any new data on the San Felipe, Lamas and Transversales deposits, design
the San Felipe and Lamas underground mines and an operational pit for Transversales to a PFS
level of detail.
Revise mine plans, capital and operating costs estimates based on the continuity of mineralization
observed during the Ventana underground exploration program, operational pit designs and PFSlevel of detail underground mine designs for La Ventana, San Felipe and Lamas as mentioned
above. Other inputs to these revised cost estimates should include quotes from potential open pit
and underground contractors.
Investigate the possibility of obtaining mill feed from other deposits located on IMS concessions that
are not included in this PEA.
26.4. Milling
Once the metallurgical testwork is completed, the existing mill design should be brought up to prefeasibility level. The used equipment available to Santacruz should be independently examined and
if suitable the cost for buying and refurbishing the equipment used in cost estimates
275
26.5. Infrastructure
The two most significant infrastructure items are the powerline to site and the tailings storage
facility. Both these items should be brought to pre-feasibility level engineering. Further evaluation
of the powerline will require discussions with the power provider, CFE, and a more detailed analysis
of the line options.
Details for the work recommended for the Tailings Storage Facility are in Table 26-1.
276
Table 26-1 Estimates of FS/NI43-101 Work Scope for Tailings Storage Facility
Work Item Hochschild TSF Site Field Investigation Appears to be complete. Perform data gap analysis of MTB/Vector documents to verify. Laboratory Testing Flotation tailings: SG, classification, terminal density, consolidation, ABA, leach extraction; and, Clay from borrow source: classification, proctor, permeability, and strength, double sieve analysis (dispersion & erosion potential). Concept design Verify status of MTB/Vector analysis. Topographic mapping Verify accuracy of existing map, improve accuracy as needed with additional aerial or ground surveying. Hydrogeology, Update meteorology; calculate extreme events, wet/dry years; Determine peak run-‐off for sizing Hydrology & diversions, spillway, pond storage and freeboard (PMP, PMF, flow vs return interval); Update Hydraulics water balance; and, Diversion works & spillway: are these required and what are their sizes (including inlet control for spillway)? Containment Determine level of containment required from site conditions, tailings chemistry testing, and Patricia’s input; Estimate seepage quantities; and, Determine need for, extent and size of underdrain system and downstream collection system. Seismicity Determine probabilistic and deterministic seismic risks; Determine MCE & DBE for operating life & closure; and, Perform static & pseudo-‐static stability analyses (probably will not require displacement analysis). Deliverables to FS & NI 34-‐
101 standards Design drawings; Design report with executive summary for inclusion in NI 43-‐101; Material quantity take-‐offs; Key equipment list; and, Engineer’s cost estimates. 26.6. Environment and Permitting
The baseline study including water monitoring and flora and fauna studies should continue. It will
be important to work with SEMARNAT to quantify the degree of existing disturbance on site.
Permitting for all proposed mine activities should be undertaken as these can be long-lead items for
any potential development.
An ABA and metal leaching testing program should be developed and carried out.
277
26.7. Resource Expansion and Exploration
There is some potential to expand the resource on the existing veins and drilling the new skarn
systems identified at La Ventanita and Veta Negra holds potential to further expand resources. An
initial program of 35 holes totaling 4,500m is recommended on the structures with current resources
and newly identified structures in an effort to expand resources.
Surface exploration including
mapping and sampling should continue throughout the property. Exploration should target not just
skarn mineralization but should also consider the potential for bulk-mineable targets. A few holes
on some of the newly discovered targets will help determine their potential. Twenty holes totaling
2,000 m is recommended for this effort.
Additional drilling will be dependent upon the results from the recommended program.
26.8. Budget
A one-year budget of $8,260,000 is recommended for the San Felipe project and is presented in
Table 26-2.
Costs in addition to those required to do the recommended work include claim
payments due in the remainder of 2014 ($2 M), one year of claim taxes ($184,000) and one year of
surface access payments ($160,000).
Drilling costs are based on total payments to the contractor of $120 per metre drilled and $70 per
metre for assaying, geology and support costs for a total of $190 per metre.
278
Table 26-2 Recommended work program budget
Unit Amount Item Cost Cost metres 4,500 190 855,000 man-‐days 40 600 24,000 Item Resource Definition Surface Drilling Rock type model Analysis and estimation 50,000 Sub-‐Total 929,000 Metallurgy Recovery testwork Characterization Sub-‐Total Underground Development Program design Extra Drifting allowance (200 meters on sill development) Equipment rentals, miscellaneous Mining supervision & Engineering support Geotechnical Design Program Oriented Core drilling -‐ pit design Oriented Core drilling -‐ UG design Core Logging, televiewer Underground observations and analysis Calibration of existing data Report Sub-‐Total Infrastructure Powerline Evaluation TSF Engineering Sub-‐Total Environmental Water Sampling 896,000 496,000 100,000 530,000 2,082,000 15000 ABA and Metal Leaching -‐ initial samples 100 100 ABA and Metal Leaching -‐ follow-‐up samples 10 1000 man-‐days 300 600 Resource Expansion and Exploration Geology 40,000 15,000 8,000 5,000 8,000 118,000 205,000 4 Sub-‐Total 40,000 105,000 times Other Baseline 2,000 100,000 52,000 50,000 Planned drifting and test stope mining 2,000 5,000 Contractor Mobilize/Demobilize 50,000 5,000 Compilation of Bid Package Sub-‐Total 60,000 150,000 10,000 10,000 230,000 180,000 279
Unit Amount Item Cost Surface Sampling samples 1,000 50 50,000 Drilling metres 6,500 190 1,235,000 Support days 150 500 75,000 Item Sub-‐Total Project Management Cost 1,540,000 Senior Santacruz months 12 5,000 60,000 Surveying, drafting, data months 12 2,500 30,000 Accomodation and support months 12 5,000 60,000 days 300 1,200 360,000 Consultants Sub-‐Total Permitting Claim Payments Claim Taxes Surface Access Agreement Total 510,000 250,000 2,000,000 184,000 160,000 8,260,000 280
27. References
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Relations to the Mojave-Sonora megashear and its inferred northwestward extension: Geological
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Barra, F., Ruiz, J., Valencia, V. A., Ochoa-Landin, L., Chesley, J. T., & Zurcher, L. (2005). Laramide
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282
28. Appendix 1 – Drill Hole Location
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
Lamas
HFLL01
567294.27
3305191.09
691
144.2
347
-50
Lamas
HFLL02
567405.48
3305228.88
742.23
139.37
317
-50
Lamas
HFLL03
567062.516
3305298.907
703.508
214.01
174
-45
Lamas
HFLL04
567097.695
3305270.052
700.706
137.85
170
-45
Lamas
HFLL05
567097.901
3305268.84
700.747
188.4
170
-65
Lamas
HFLL06
567061.582
3305269.317
707.239
147
170
-45
Lamas
HFLL08
566976.329
3305215.2
764.105
213.5
160
-47
Lamas
HFLL09
567012.373
3305265.2
733.381
218.85
160
-45
Lamas
HFLL12
566842.304
3305032.745
720.644
189.5
160
-58
Lamas
HFLL11
566920.754
3304995.739
728.084
165.6
160
-47
Lamas
HFLL07
567065.296
3304965.49
751.934
323.6
340
-45
Lamas
HFLL15
567004
3305313
711
256.4
168
-47
Lamas
HFLL14
566957.013
3305262.4
739.799
236.8
160
-53
Lamas
HFLL13
566976.696
3305218.625
763.975
204.2
160
-60
Lamas
INFLL01
567028.982
3305219.968
740.035
100
158
-45
Lamas
INFLL04
567093.251
3305270.072
702.146
225.8
170
-58
Lamas
INFLL05
567082.189
3305323.488
703.692
320.05
170
-58
Lamas
HFLL16
567346.884
3305378.08
771.235
125
160
-45
Lamas
HFLL17
567318.047
3305424.93
770.736
180.5
160
-45
Lamas
INFLL06
567153.008
3305239.02
699.7
99.5
170
-45
Lamas
SF0021
567096
3305223
717.835
91.4
180
-50
Lamas
HFLL10
566916.338
3305205.963
779.182
276.95
160
-57
Lamas
SCLL-01
567132.903
3305245
698.855
96.1
169.8
-45.8
Lamas
SCLL-02
567101.387
3305265
700.492
150.9
169.6
-51.4
Lamas
SCLL-03
567063.77
3305271
706.868
145.35
172.2
-46.1
Lamas
SCLL-04
567017.686
3305261
731.86
199.7
160
-46.1
Lamas
SCLL-05
567017.474
3305262
731.838
291.3
163.4
-59.2
Lamas
SCLL-06
567064.228
3305025
785.581
115.7
334.5
-50.5
Lamas
SCLL-07
567318.102
3305247
721.391
96.9
331.7
-55.2
Lamas
SCLL-08
567317.882
3305249
721.416
162.5
356.5
-49.5
Lamas
SCLL-09
567393.138
3305311
756.546
187.5
332.2
-53.8
Lamas
SCLL-10
567000.043
3305176
760.871
124
153.5
-44.6
Lamas
SCLL-11
567401.912
3305278
744.993
147
331.7
-61.8
Lamas
SCLL-12
567325.888
3305318
747.402
54.3
149.6
-45.7
Lamas
SCLL-13
567038.675
3305213
738.702
108.85
161.1
-48.3
Lamas
SCLL-14
567304.306
3305353
736.208
127.2
149.8
-45.6
Lamas
SCLL-15
567009.394
3305302
711.669
297.2
167.6
-52
Lamas
SCLL-16
567303.796
3305353
736.343
190.5
151.3
-68.5
283
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
Lamas
SCLL-17
567252.646
3305314
710.769
150.55
149.1
-44.2
Lamas
SCLL-18
567251.847
3305315
710.72
112.75
154.1
-75.6
Lamas
SCLL-19
567354.354
3305386
769.7
110.15
155.7
-45.5
Lamas
SCLL-20
567008.478
3305313
711.504
305.2
163.5
-60.1
Lamas
SCLL-21
567239.218
3305338
715.832
182.5
152.2
-69.9
Lamas
SCLL-22
567354.07
3305387
769.668
167.5
154.9
-63
Lamas
SCLL-23
566986.927
3305215
762.039
221.05
161
-52
Lamas
SCLL-24
566986.605
3305216
762.126
234.8
163.5
-64.3
Lamas
SCLL-25
567327.825
3305430
769.371
230.3
151.8
-54.8
Lamas
SCLL-26
566965.942
3305261
737.908
230.5
158.6
-60.3
Lamas
SCLL-27
566965.74
3305261
737.952
254.85
163.9
-68.8
Lamas
SCLL-28
567005.3
3305097
784.714
207.05
142.4
-66.9
Lamas
SCLL-29
566984.622
3305125
786.485
176.8
141.6
-65
Lamas
SCLL-30
566941.294
3305200
781.276
260.6
160.8
-49.8
Lamas
SCLL-31
567432.118
3305553
805.306
190.2
161.6
-50.4
Lamas
SCLL-32
566967.279
3305146
781.556
190.8
141
-61.3
San Felipe
HFSF33
567051.79
3305661.606
795.547
225.9
45
-48
San Felipe
HFSF36
567047.427
3305405.065
713.222
360
10
-45
San Felipe
HFSF32
567519.077
3305442.74
771.909
309.15
10
-56
San Felipe
HFSF31
567361.716
3305361.09
775.287
424
10
-50
San Felipe
HFSF27
567375.042
3305445.22
798.092
204.05
10
-66
San Felipe
SF0019
567476
3305472
791.49
235.6
0
-50
San Felipe
SF0018
567319
3305518
757.929
284.6
0
-50
San Felipe
HFSF01
567477.17
3305421.04
784.64
329.75
0
-54
San Felipe
HFSF02
567231.49
3305420.53
728
260.7
0
-45
San Felipe
HFSF03
567573.24
3305481.33
795
222.1
350
-55
San Felipe
HFSF04
567499.82
3305355.42
767.29
225
10
-54
San Felipe
HFSF05
567500.62
3305358.25
767.39
459.6
10
-54
San Felipe
HFSF06
567707.18
3305404.4
776.75
170.65
10
-47
San Felipe
HFSF07
567232.13
3305519.33
767.81
237.7
10
-65
San Felipe
HFSF08
567427.7
3305440.65
819.39
291.45
10
-55
San Felipe
HFSF09
567632.02
3305460.84
794.18
160.1
10
-56
San Felipe
HFSF10
567341.42
3305534.02
765.75
179.3
10
-48
San Felipe
HFSF11
567133.11
3305588
796.33
103.1
10
-45
San Felipe
HFSF12
567427.64
3305440.96
819.36
289.55
10
-46
San Felipe
HFSF13
567237.46
3305571.55
798.2
90.3
10
-45
San Felipe
HFSF14
567132.82
3305586.43
796.17
218.6
10
-70
San Felipe
HFSF15
567233.007
3305516.66
767.43
143.8
10
-45
San Felipe
HFSF16
567624.35
3305410.64
773.52
147.45
10
-53
284
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
San Felipe
HFSF17
567296.92
3305521.55
763.88
172.3
0
-45
San Felipe
HFSF18
567197.75
3305564.33
795.58
183.7
10
-68
San Felipe
HFSF19
567088.47
3305518.4
779.5
187.2
0
-50
San Felipe
HFSF20
567375.18
3305445.55
798.1
275.5
10
-50
San Felipe
HFSF21
567197.48
3305562.89
795.5
127.9
10
-45
San Felipe
HFSF22
567574.69
3305440.63
776.94
50.25
0
-60
San Felipe
HFSF23
567088.58
3305518.4
779.5
190.8
0
-75
San Felipe
HFSF24
567161.02
3305416.46
764.04
762
10
-51
San Felipe
HFSF25
567572.07
3305442.12
776.96
219.35
10
-52
San Felipe
HFSF26
567047.72
3305554.24
768.93
272
10
-55
San Felipe
HFSF28
567214.58
3305391.99
728.38
313.2
10
-58
San Felipe
HFSF29
567133.191
3305456.15
757.439
353
10
-58
San Felipe
HFSF30
567083.801
3305354.699
712.803
409.5
10
-45
San Felipe
HFSF34
567151.876
3305319.182
711.647
398
10
-45
San Felipe
HFSF35
566989.348
3305475.16
722.984
315.4
10
-45
San Felipe
HFSF38
567087.568
3305476.86
756.086
236.5
10
-50
San Felipe
HFSF37
567153.491
3305368.188
738.245
343.5
10
-48
San Felipe
HFSF40
567057.532
3305582.646
783.859
183.4
10
-45
San Felipe
HFSF41
567087.513
3305476.32
756.01
194.6
10
-62
San Felipe
HFSF42
567035.457
3305529.311
758.385
279
10
-60
San Felipe
HFSF39
567015.237
3305554.37
775.076
218.4
10
-60
San Felipe
HFSF43
566929.492
3305497.498
726.112
252
10
-45
San Felipe
HFSF44
566932.367
3305558.884
766.715
395.75
10
-45
San Felipe
HFSF45
566902.042
3305581.857
771.542
156.2
10
-45
San Felipe
HFSF46
567019.049
3305596.58
791.199
111
10
-50
San Felipe
HFSF47
566910
3305776
819
149.9
28
-50
San Felipe
INFSF01
567548.034
3305492.935
796.429
145
8
-45
San Felipe
INFSF02
567187.043
3305443.937
757.734
264
9
-45
San Felipe
INFSF05
567473.965
3305272.018
747.669
475
10
-45
San Felipe
INFSF06
567480.967
3305436.993
787.495
287
9
-45
San Felipe
INFSF07
567336.04
3305450.976
783.197
157
10
-45
San Felipe
INFSF10
567130.016
3305495.003
775.976
174
10
-45
San Felipe
INFSF11
567262.036
3305434.026
754.829
190
9
-57
San Felipe
INFSF14
567171.982
3305592.99
799.365
80
10
-45
San Felipe
INFSF15
567163.03
3305546.02
781.172
129
10
-45
San Felipe
INFSF03
567102.986
3305616.011
800.802
65
10
-45
San Felipe
INFSF12
567253.89
3305384.093
729.411
309
9
-43
San Felipe
INFSF16
567240.015
3305300.007
710.856
240
9
-45
San Felipe
INFSF17
567437.994
3305315.987
744.913
282
9
-45
285
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
San Felipe
INFSF18
567556.004
3305375.019
747.176
133
8
-43
San Felipe
SCSF-01
567248.608
3305382.26
723.429
266.75
1.7
-44.3
San Felipe
SCSF-02
567137.041
3305581.34
795.048
115.5
16.7
-46.4
San Felipe
SCSF-03
567131.01
3305554.382
788.819
184.95
20.9
-62.5
San Felipe
SCSF-04
567070.626
3305602.988
798.087
167.05
20.7
-48.8
San Felipe
SCSF-05
567132
3305495
771
271.95
9.3
-58.4
San Felipe
SCSF-06
567131
3305450
760
301.35
10.6
-61.5
San Felipe
SCSF-07
567180
3305581
796
205
28.2
-49.7
San Felipe
SCSF-08
567033
3305526
756
150.8
22.9
-44.5
San Felipe
SCSF-09
567033
3305526
756
269.75
22.4
-69.6
San Felipe
SCSF-10
566984
3305624
777
131.65
17.3
-42.9
San Felipe
SCSF-11
567040
3305482
736
252.55
6.8
-66.8
San Felipe
SCSF-12
566997
3305594
776
219.95
16.9
-58.1
San Felipe
SCSF-13
566949
3305653
798
158
17.7
-50.3
San Felipe
SCSF-14
567013
3305550
772
120.2
0
-60
San Felipe
SCSF-15
566922
3305580
770
3.05
18
-55
Transversales
SCVT-01
567510.614
3305775.59
848.56
97.55
144
-56.6
Transversales
SCVT-02
567576.44
3305841.9
823.778
88.45
144.9
-61.8
Transversales
SCVT-03
567494.267
3305794.32
838.388
114.6
144.6
-61.9
Transversales
SCVT-04
567561.125
3305867.5
807.367
124.5
147.6
-63.1
Transversales
SCVT-05
567482.108
3305821.97
824.426
187.7
147.1
-66
Transversales
SCVT-06
567481.65
3305822.42
824.655
233.5
147
-78.5
Transversales
SCVT-07
567538.196
3305894.49
797.981
174.3
141.6
-65
Transversales
SCVT-08
567900.695
3305899.84
765.648
180
144.7
-59.9
Transversales
SCVT-09
567987.853
3305944.86
815.286
153.5
162.2
-49.8
Transversales
SCVT-10
567538.019
3305894.84
797.814
182.3
149.4
-74.7
Transversales
SCVT-11
567462.31
3305753.28
860.723
101.8
143.2
-54.7
Transversales
SCVT-12
567422.007
3305729.19
868.159
139.55
142.7
-53.3
Transversales
SCVT-13
567429.27
3305779.94
858.644
155.1
141.9
-54.2
Transversales
SCVT-14
567399.298
3305752.92
858.742
191.65
144.6
-57.5
Transversales
SCVT-15
567428.747
3305780.56
858.695
198.6
142.9
-72.7
Transversales
SCVT-16
567403.874
3305892.46
814.917
247.25
142.1
-55.3
Transversales
SCVT-17
567385.095
3305771.84
853.409
185.85
151.1
3
-64.7
Transversales
SCVT-18
567496.949
3305947.3
785.766
224.4
143.4
-60.5
Transversales
SCVT-19
567321.45
3305677.468
808.539
211.15
143.8
-51.8
Transversales
SCVT-20
567320.788
3305677.085
808.389
140.05
118
-60
Transversales
SCVT-21
567320.325
3305677.234
808.317
215.2
122.8
-74.9
Transversales
SCVT-22
567366.907
3305715.766
837.184
153.15
143.4
-50.8
Transversales
SCVT-23
567351.932
3305825.089
842.899
301.2
149.1
-58
286
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
Transversales
SCVT-24
567362.659
3305721.865
836.953
131.55
142.9
-68.1
Transversales
SCVT-25
567225.454
3305679.313
826.753
140.1
129.7
-48.6
Transversales
SCVT-26
567224.509
3305680.023
826.789
208.3
128.6
-74.3
Transversales
SCVT-27
567541.234
3305808.911
838.475
83.75
143
-61.5
Transversales
SCVT-28
567514.993
3305833.029
822.534
147.65
143
-61.2
Transversales
SCVT-29
567486.615
3305876.424
803.343
236.9
144.8
-51.8
Transversales
SCVT-30
567611.078
3305882.756
796.787
136.95
145.8
-53.6
Transversales
SCVT-31
567582.92
3305916.078
784.426
124.95
146.3
-49.6
Transversales
SCVT-32
567558.347
3305942.616
778.64
232.45
147.5
-57.4
Ventana
HFLV01
567594.21
3306236.01
825.906
285.6
0
-55
Ventana
HFLV02
567723.74
3306228.24
842.53
121.01
349
-45
Ventana
HFLV03
567723.53
3306228.93
842.57
276.01
349
-55
Ventana
HFLV04
567710.34
3306380.24
908.22
142.34
354
-65
Ventana
HFLV05
567552.03
3306396.79
864.739
162.03
0
-60
Ventana
HFLV06
567552.03
3306396.54
864.76
167.23
0
-70
Ventana
HFLV07
567494.17
3306195.78
780.837
249.2
0
-60
Ventana
HFLV08
567601.47
3306378.16
875.2
157.58
0
-45
Ventana
HFLV09
567601.47
3306378.16
875.2
185.01
0
-65
Ventana
HFLV10
567601.47
3306378.16
875.2
227.69
0
-75
Ventana
HFLV11
567641.786
3306378.62
889.466
111.86
0
-50
Ventana
HFLV12
567641.786
3306378.62
889.466
175.87
0
-65
Ventana
SF0023RL
567637.5
3306343.5
876.73
293.5
0
-75
Ventana
SF9910RL
567524.64
3306305.5
814.08
230.73
0
-45
Ventana
SF9910
567531.31
3306302.97
813.32
230.73
0
-45
Ventana
HFLV13
567706.18
3306380.76
908.23
98.62
0
-45
Ventana
HFLV14
567554.16
3306173.69
800.364
350.52
0
-58
Ventana
HFLV15
567695.37
3306329.3
885.3
200.25
0
-60
Ventana
HFLV16
567786.45
3306362.28
884.84
215.49
1
-68
Ventana
HFLV17
567494.17
3306195.78
780.813
307.7
0
-60
Ventana
HFLV18
567554.16
3306173.69
800.364
382.52
0
-65
Ventana
HFLV19
567786.45
3306362.81
884.81
166.73
1
-50
Ventana
HFLV20
567889.45
3306355.47
865.79
172.82
0
-50
Ventana
HFLV21
567554.16
3306173.69
800.364
393.19
0
-70
Ventana
HFLV22
567889.45
3306355.47
865.79
142.34
0
-73
Ventana
HFLV23
567792.84
3306298.33
852.73
273.3
0
-63
Ventana
HFLV24
567438.46
3306230.19
786.24
281.94
0
-60
Ventana
HFLV25
567634.97
3306190.14
819.56
317.65
0
-62
Ventana
HFLV26
567443.559
3306258.07
787.041
223
0
-65
Ventana
HFLV28
567641
3306345
875.735
59.75
0
-45
287
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
Ventana
HFLV29
567437.81
3306297.52
789.856
245.36
0
-64
Ventana
HFLV30
567387.846
3306326.659
807.147
186.35
0
-62
Ventana
HFLV31
567596.719
3306190.476
820.094
306.15
0
-65
Ventana
HFLV32
567489.017
3306202.959
782.085
329.18
0
-51
Ventana
HFLV33
567387.95
3306327.06
807.23
223.95
0
-77
Ventana
HFLV34
567641.641
3306347.056
875.735
149.75
0
-45
Ventana
HFLV35
567485.557
3306260.382
792.462
220.98
0
-54
Ventana
HFLV36
567692.853
3306326.685
885.904
204.35
0
-54
Ventana
HFLV37
567496.73
3306317.88
810.01
131.7
0
-49
Ventana
HFLV40
567689.44
3306170.02
818.57
298.1
0
-49
Ventana
HFLV41
567378.85
3306237.3
794.59
312.5
0
-68
Ventana
HFLV42
567950.76
3306306.79
854.33
230.75
20
-50
Ventana
HFLV43
568082.05
3306334.01
876.53
172.35
20
-45
Ventana
HFLV44
567850.05
3306254.95
836.85
261.85
0
-50
Ventana
HFLV45
567337.19
3306287.47
799.56
248.25
0
-60
Ventana
HFLV46
567725.538
3306228.774
843.38
330.25
7
-54
Ventana
HFLV47
567405.571
3306404.487
817.633
152.5
0
-45
Ventana
HFLV48
567394.263
3306372.574
814.545
149
0
-60
Ventana
HFLV49
567724.94
3306228.434
843.34
222.5
354
-61
Ventana
HFLV50
567385.664
3306324.919
807.269
217.7
13
-68
Ventana
HFLV51
567698.17
3306280.61
860.36
287.7
20
-52
Ventana
HFLV52
567553.74
3306397.6
864.98
231.7
25
-79
Ventana
HFLV53
567496.35
3306195.19
781.16
16
0
-58
Ventana
HFLV54
567338.48
3306288.43
799.27
203.65
3
-45
Ventana
HFLV55
567696.54
3306281.04
860.25
318.35
340
-69
Ventana
HFLV56
567785.84
3306361.14
885.71
220.75
20
-66
Ventana
HFLV57
567442.17
3306151.22
785.65
70.85
0
-55
Ventana
HFLV58
567697.31
3306280.43
860.28
338
7.5
-69.5
Ventana
HFLV59
567786.49
3306361.53
885.69
131.35
26
-53
Ventana
HFLV60
567531.51
3306307.61
815.15
249.85
0
-69
Ventana
HFLV61
567889.4
3306354.29
867.06
251.6
26
-81
Ventana
HFLV62
567780.79
3306303.57
854.85
248.05
357.5
-54
Ventana
HFLV63
567848.56
3306349.39
869.35
193.35
0
-62
Ventana
HFLV64
567592.52
3306235.91
826.11
306.1
9
-58
Ventana
HFLV65
567442.15
3306149.79
785.71
383.5
0
-55
Ventana
HFLV66
567641.79
3306378.62
889.47
158.7
31
-54
Ventana
HFLV67
567379.26
3306237.84
795.75
362.35
345
-61
Ventana
HFLV68
567592.37
3306236.42
826.07
309.15
350
-62
Ventana
HFLV69
567597.51
3306188.43
820.17
351.45
0
-60
288
Area
Hole
Easting
Northing
Elevation
Total
Depth
Az
DIP
Ventana
HFLV70
567380.24
3306237.77
794.2
369.55
4
-76
Ventana
HFLV71
567495.808
3306315.31
810.018
208
0
-45
Ventana
HFLV72
567757.952
3306357.791
888.771
201.15
0
-60
Ventana
HFLV73
567379.413
3306237.564
794.383
334.95
11
-65
Ventana
HFLV74
567343.218
3306396.709
831.402
251.2
5
-70
Ventana
SF0022RL
567637.5
3306343.5
876.73
211.5
0
-60
Ventana
SF9801
567756.83
3306357.21
887.88
138.99
0
-45
Ventana
SF9802
568139
3306311
868
180.4
0
-45
Ventana
SF9803
567939
3306436
928.1
84.73
0
-45
Ventana
SF9804
567841.74
3306350.48
869.5
159.72
0
-45
Ventana
SF9805
567439.62
3306375.6
797.26
69.5
30
-45
Ventana
SF9908
567848.41
3306347.95
868.73
242
0
-70
Ventana
SF9909
567750.17
3306359.74
888.6435
240.74
0
-70
Ventana
SF9911
567939
3306340
873.1
121.01
0
-45
Ventana
SF9912
567531.31
3306302.97
814.07
241.79
0
-60
Ventana
SF9913
567449.88
3306366.84
796.51
217.9
0
-50
Ventana
SF9914
567449.88
3306366.84
796.51
216.2
0
-70
Ventana
SF9915
567531.31
3306302.97
814.07
270.36
0
-75
Ventana
SF9912RL
567524.64
3306305.5
814.08
241.79
0
-60
Ventana
HFLV38
567696.48
3306280.93
860.44
241.4
10
-50
Ventana
HFLV39
567496.81
3306317.86
809.95
218.4
10
-60
Ventana
SCLV-01
567575.03
3306236.84
825.744
300.25
4.6
-54.3
Ventana
SCLV-02
567574.615
3306236.312
826.147
305.05
352.9
-57.2
Ventana
SCLV-03
567763.965
3306368.871
886.008
184.3
357.9
-49.3
Ventana
SCLV-04
567619.541
3306383.58
889.769
119.5
5.1
-54.7
Ventana
SCLV-05
567764.004
3306368.326
885.912
203
356
-67.1
Ventana
SCLV-06
567585.628
3306377.4
877.332
213.85
359.8
-71.8
289
29. Appendix 2 – Grade Tonnage Tables
Ventana Total Blocks including edge dilution
Ventana Resource classed as Indicated within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
Ag
(g/t)
(tonnes)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
60.0
385,000
105.83
8.32
3.37
0.66
0.020
70.0
315,000
114.87
8.74
3.50
0.71
0.020
75.0
286,000
119.21
8.93
3.57
0.74
0.021
80.0
255,000
124.23
9.13
3.67
0.77
0.021
90.0
213,000
132.01
9.48
3.81
0.83
0.022
100.0
170,000
141.32
9.91
3.98
0.90
0.022
110.0
136,000
150.45
10.30
4.17
0.97
0.023
120.0
109,000
159.37
10.74
4.30
1.04
0.024
130.0
88,000
167.40
11.09
4.41
1.11
0.024
140.0
71,000
175.62
11.63
4.58
1.18
0.025
150.0
53,000
185.67
12.25
4.76
1.25
0.026
Ventana Resource classed as Inferred within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
Ag
(g/t)
(tonnes)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
60.0
516,000
83.65
7.50
3.03
0.54
0.019
70.0
353,000
92.41
7.99
3.21
0.57
0.020
75.0
283,000
97.29
8.19
3.32
0.58
0.021
80.0
235,000
101.42
8.31
3.44
0.59
0.021
90.0
149,000
110.97
8.81
3.71
0.62
0.024
100.0
98,000
119.73
9.35
4.07
0.64
0.026
110.0
62,000
128.02
9.68
4.43
0.66
0.029
120.0
31,000
141.10
9.68
4.99
0.73
0.028
130.0
18,000
152.72
9.41
5.20
0.78
0.028
140.0
11,000
165.07
8.53
4.95
0.88
0.025
150.0
8,200
171.93
8.30
4.98
0.89
0.024
290
Las Lamas Total Blocks including edge dilution
Las Lamas Resource classed as Indicated within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
Ag
(g/t)
(tonnes)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
60.0
39,000
102.86
5.63
0.35
0.18
0.012
70.0
33,000
109.03
5.88
0.37
0.19
0.012
75.0
31,000
112.02
5.86
0.38
0.20
0.012
80.0
27,000
117.07
5.90
0.40
0.20
0.012
90.0
20,000
127.03
5.35
0.43
0.21
0.011
100.0
16,000
135.15
5.84
0.46
0.22
0.012
110.0
10,000
154.32
6.50
0.56
0.24
0.014
120.0
9,000
158.25
6.58
0.58
0.25
0.014
130.0
7,600
164.20
6.84
0.62
0.26
0.014
140.0
6,600
168.82
7.12
0.65
0.27
0.015
150.0
5,700
172.59
7.59
0.68
0.28
0.017
Las Lamas Resource classed as Inferred within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
(tonnes)
Ag
(g/t)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
60.0
227,000
103.31
5.57
0.39
0.17
0.017
70.0
195,000
109.66
5.92
0.42
0.17
0.017
75.0
177,000
113.32
6.09
0.43
0.18
0.017
80.0
158,000
117.75
6.24
0.45
0.19
0.017
90.0
136,000
123.04
6.53
0.47
0.19
0.017
100.0
110,000
129.68
6.85
0.50
0.21
0.017
110.0
84,700
137.00
7.30
0.53
0.22
0.017
120.0
57,000
147.72
7.83
0.57
0.24
0.014
130.0
35,200
161.71
8.16
0.61
0.26
0.014
140.0
23,900
174.18
8.80
0.64
0.28
0.015
150.0
18,800
182.33
9.17
0.67
0.29
0.015
291
San Felipe Total Blocks including edge dilution
San Felipe Resource classed as Indicated within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
(tonnes)
Ag
(g/t)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
60.0
142,000
107.89
5.43
1.42
0.13
0.083
70.0
118,000
116.44
5.91
1.47
0.14
0.086
75.0
110,000
119.57
6.08
1.49
0.14
0.088
80.0
99,000
124.54
6.35
1.53
0.14
0.089
90.0
84,000
131.31
6.70
1.57
0.15
0.091
100.0
72,000
137.51
7.01
1.59
0.16
0.093
110.0
57,700
145.59
7.43
1.63
0.16
0.095
120.0
44,700
154.42
7.91
1.61
0.17
0.087
130.0
32,100
166.16
8.63
1.58
0.18
0.078
140.0
24,600
175.56
9.23
1.57
0.18
0.073
150.0
20,300
182.07
9.60
1.54
0.18
0.074
San Felipe Resource classed as Inferred within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
(tonnes)
Ag
(g/t)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
60.0
379,000
99.70
5.44
1.11
0.09
0.063
70.0
294,000
109.76
6.12
1.12
0.10
0.066
75.0
257,000
115.19
6.51
1.13
0.10
0.067
80.0
227,000
120.12
6.83
1.15
0.10
0.068
90.0
176,000
130.32
7.46
1.17
0.11
0.067
100.0
138,000
140.09
8.11
1.18
0.11
0.065
110.0
105,400
150.97
8.94
1.22
0.11
0.057
120.0
83,800
160.37
9.65
1.23
0.12
0.051
130.0
66,700
169.50
10.26
1.23
0.12
0.049
140.0
50,100
181.31
10.83
1.22
0.12
0.050
150.0
38,100
192.69
11.64
1.20
0.12
0.048
292
Transversales Total Blocks including edge dilution
Transversales Resource classed as Inferred within Total Blocks Cut-off
Ag
(g/t)
Grade > Cut-off
Tonnes > Cut-off
(tonnes)
Ag
(g/t)
Zn (%)
Pb
(%)
Cu
(%)
Au (g/t)
40.0
312,000
60.84
1.41
1.40
0.14
0.032
45.0
254,000
65.12
1.41
1.48
0.15
0.033
50.0
210,000
68.82
1.39
1.53
0.16
0.034
55.0
168,000
72.91
1.36
1.56
0.16
0.035
60.0
131,000
77.28
1.33
1.57
0.15
0.036
70.0
77,000
86.15
1.32
1.59
0.17
0.037
75.0
61,000
89.85
1.28
1.59
0.17
0.037
80.0
46,000
93.72
1.15
1.54
0.16
0.038
90.0
30,000
98.85
0.99
1.50
0.16
0.039
100.0
11,000
105.40
0.87
1.46
0.15
0.040
293
30. Appendix 3 – Drill Intercepts
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFLL03
48.05
124.18
76.13
45.0
4.5
0.172
0.143
HFLL03
124.18
126.90
2.72
1.6
69.7
0.241
0.275
HFLL03
126.90
136.93
10.03
6.1
20.3
0.039
0.927
HFLL03
142.75
147.68
4.93
3.0
73.7
0.128
4.841
HFLL03
171.06
171.56
0.50
0.3
1.9
0.019
0.058
HFLL03
172.23
173.04
0.81
0.5
141.5
0.238
13.267
HFLL03
187.97
203.80
15.83
9.8
2.9
0.058
0.214
HFLL04
44.18
44.50
0.32
0.2
2.4
0.009
0.015
HFLL04
84.40
93.18
8.78
5.4
80.7
0.269
4.884
HFLL04
93.18
93.76
0.58
0.4
4.8
0.027
0.169
HFLL04
122.60
122.87
0.27
0.2
111.0
0.293
4.230
HFLL04
129.78
130.55
0.77
0.5
7.8
0.010
0.261
HFLL05
35.85
92.90
57.05
14.4
1.3
0.006
0.054
HFLL05
94.80
95.05
0.25
0.1
7.2
0.081
0.311
HFLL05
95.05
131.80
36.75
9.1
1.8
0.014
0.056
HFLL05
131.80
132.25
0.45
0.1
182.0
1.640
8.150
HFLL05
132.25
168.05
35.80
8.8
3.5
0.074
0.134
HFLL06
28.90
112.90
84.00
47.9
3.8
0.021
0.170
HFLL06
113.85
126.00
12.15
7.0
68.2
0.216
4.505
HFLL06
144.90
145.90
1.00
0.6
11.9
0.061
0.141
HFLL07
303.70
311.10
7.40
5.8
0.4
0.003
0.014
HFLL08
75.10
76.54
1.44
0.7
11.2
0.452
0.364
HFLL08
113.05
116.05
3.00
1.4
35.6
0.086
5.747
HFLL09
61.20
113.40
52.20
25.6
13.7
0.047
0.120
HFLL09
113.40
124.90
11.50
5.4
43.7
0.132
2.522
HFLV01
106.10
189.50
83.40
58.7
6.0
0.659
0.584
HFLV01
189.50
191.11
1.61
1.1
39.3
4.385
5.477
HFLV01
191.11
241.80
50.69
35.7
2.6
0.258
0.341
HFLV01
241.80
255.12
13.32
9.5
229.0
2.252
7.446
HFLV04
1.80
102.21
100.41
57.4
8.4
0.452
0.204
HFLV04
102.21
124.05
21.84
12.3
44.5
2.118
6.985
LV
HFLV04
124.05
129.05
5.00
2.8
21.1
0.395
3.641
LG
HFLV04
129.05
142.34
13.29
7.5
7.4
0.871
0.953
LL
LL
LL
LL
LL
LL
LL
LVu
LV
294
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFLV05
14.45
112.20
97.75
61.8
5.5
0.429
0.486
HFLV05
112.20
128.20
16.00
9.7
17.9
1.772
3.064
LV
HFLV05
128.20
135.00
6.80
4.1
22.0
0.299
0.578
LG
HFLV06
19.60
118.90
99.30
48.9
3.3
0.183
0.448
HFLV06
118.90
120.80
1.90
0.9
10.8
1.435
1.717
LV
HFLV06
120.80
140.15
19.35
9.2
3.6
0.234
0.385
LG
HFLV06
140.15
162.10
21.95
10.5
3.1
0.380
0.377
HFLV08
10.30
99.25
88.95
72.8
3.6
0.186
0.384
HFLV08
99.25
109.80
10.55
8.5
19.0
1.141
5.290
LV
HFLV08
109.80
138.45
28.65
23.2
13.1
0.334
1.136
LG
HFLV09
33.82
153.00
119.18
65.9
9.4
0.234
0.289
HFLV09
153.00
155.65
2.65
1.4
93.6
2.426
5.517
LV
HFLV09
155.65
175.87
20.22
11.0
3.1
0.143
0.312
LG
HFLV10
53.35
190.95
137.60
53.2
2.8
0.285
0.676
HFLV10
190.95
200.15
9.20
3.4
120.3
11.543
15.142
HFLV10
200.15
201.65
1.50
0.6
2.7
0.208
0.171
HFLV11
38.71
91.56
52.85
40.4
6.0
0.590
1.379
HFLV11
91.56
103.80
12.24
9.4
138.9
1.649
9.751
HFLV11
103.80
106.81
3.01
2.3
7.9
0.168
0.374
HFLV12
26.08
150.00
123.92
70.3
2.1
0.151
0.222
HFLV12
150.00
166.65
16.65
8.9
45.2
2.043
4.694
HFLV12
166.65
175.87
9.22
4.9
6.8
0.559
0.621
HFLV13
27.80
64.90
37.10
29.7
12.0
1.119
1.748
HFLV13
64.90
69.40
4.50
3.5
77.6
5.305
10.922
LV
HFLV13
69.40
73.60
4.20
3.3
3.7
0.104
0.223
LG
HFLV14
43.17
314.13
270.96
184.2
3.5
0.424
0.516
HFLV14
314.13
316.33
2.20
1.5
16.3
1.366
1.945
HFLV14
316.33
326.70
10.37
7.1
3.7
0.145
0.259
HFLV15
33.20
180.55
147.35
92.8
1.7
0.108
0.477
HFLV15
180.55
200.25
19.70
11.6
9.6
1.621
1.592
HFLV16
21.10
156.90
135.80
71.2
7.1
0.395
0.557
HFLV16
156.90
170.35
13.45
6.6
117.2
3.566
10.279
LV
HFLV16
170.35
184.85
14.50
7.0
34.5
0.388
2.506
LG
HFLV17
272.45
296.27
23.82
15.3
3.2
0.270
0.355
HFLV17
296.27
305.75
9.48
6.1
9.1
1.172
1.084
HFLV18
27.70
311.66
283.96
163.5
6.7
0.548
0.654
HFLV18
349.50
350.52
1.02
0.6
12.3
0.314
0.158
HFLV19
15.80
80.30
64.50
49.5
5.6
0.378
0.408
HFLV19
80.30
83.90
3.60
2.8
91.9
5.396
6.767
LV
LV
LV
LV
LG
LG
LV
LV
295
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFLV19
83.90
166.53
82.63
63.6
2.7
0.119
0.300
HFLV20
47.45
55.90
8.45
6.3
87.4
1.987
7.170
HFLV20
55.90
166.75
110.85
82.4
5.4
0.293
0.708
HFLV23
65.10
249.60
184.50
103.2
8.1
0.672
0.885
HFLV23
249.60
252.25
2.65
1.5
31.0
0.240
0.209
HFLV23
252.25
254.15
1.90
1.1
7.7
0.165
0.181
HFLV23
254.15
259.00
4.85
2.7
29.7
0.864
3.103
HFLV23
259.00
261.00
2.00
1.1
7.6
0.173
0.698
HFLV24
47.90
239.25
191.35
124.6
5.4
0.386
0.512
HFLV24
239.25
239.65
0.40
0.2
45.9
3.550
3.160
LG
HFLV24
239.65
248.00
8.35
5.2
61.2
6.064
7.232
LV
HFLV24
248.00
254.50
6.50
4.0
7.9
0.110
0.051
LG
HFLV24
254.50
278.90
24.40
15.0
2.8
0.074
0.076
HFLV25
17.30
291.97
274.67
169.5
23.9
1.288
1.783
HFLV29
62.48
170.69
108.21
65.9
4.1
0.524
0.929
HFLV29
170.69
178.85
8.16
4.9
7.0
0.598
0.685
LG
HFLV29
178.85
187.45
8.60
5.2
24.7
1.722
1.657
LV
HFLV29
187.45
195.07
7.62
4.6
6.2
0.506
0.567
LG
HFLV29
195.07
223.65
28.58
17.3
6.3
0.271
0.514
HFLV30
97.90
149.31
51.41
30.4
5.9
0.212
0.305
HFLV30
149.31
159.00
9.69
5.8
2.7
0.175
0.181
HFLV32
81.45
244.61
163.16
120.7
2.8
0.294
0.399
HFLV32
244.61
256.03
11.42
8.3
13.9
1.297
1.389
HFLV32
256.03
324.61
68.58
49.6
2.0
0.116
0.088
HFLV33
74.27
195.76
121.49
46.1
3.1
0.314
0.435
HFLV33
195.76
202.60
6.84
2.5
11.1
0.845
0.671
LG
HFLV33
202.60
207.23
4.63
1.7
93.6
4.529
6.946
LV
HFLV33
207.23
220.20
12.97
4.8
2.2
0.030
0.065
HFLV34
115.80
117.30
1.50
1.2
2.5
0.183
0.959
HFLV34
117.30
142.10
24.80
20.1
103.4
3.985
9.394
HFLV34
142.10
146.40
4.30
3.5
2.9
0.204
0.388
HFLV35
73.30
200.13
126.83
89.9
3.1
0.498
0.219
HFLV35
200.13
208.79
8.66
6.0
14.5
1.079
1.122
LV
HFLV35
208.79
214.00
5.21
3.6
0.2
0.006
0.008
LG
HFLV36
77.85
169.55
91.70
61.2
9.1
0.730
0.929
HFLV36
169.55
200.66
31.11
20.8
9.7
1.033
1.360
HFLV38
136.07
233.78
97.71
71.4
4.3
0.360
0.396
HFLV41
247.31
288.22
40.91
19.5
11.4
0.523
0.547
LG
HFLV41
288.22
293.74
5.52
2.6
111.4
8.435
11.151
LV
LV
EV
LV
LG
LG
LV
LG
296
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFLV41
293.74
309.45
15.71
7.5
2.0
0.038
0.057
HFLV42
37.90
144.43
106.53
78.5
2.4
0.168
0.454
HFLV42
144.43
145.73
1.30
1.0
30.7
0.337
3.369
HFLV42
145.73
204.29
58.56
42.8
4.7
0.176
0.299
HFLV43
68.76
90.02
21.26
16.8
0.8
0.017
0.265
HFLV43
92.33
94.93
2.60
2.1
4.6
0.322
0.208
HFLV43
96.67
157.50
60.83
48.5
0.9
0.027
0.111
HFLV44
12.20
246.65
234.45
179.8
3.5
0.134
0.191
HFLV44
246.65
251.55
4.90
3.6
21.7
1.637
1.372
HFLV44
251.55
253.65
2.10
1.6
6.1
0.310
0.240
HFLV45
21.40
165.15
143.75
90.9
1.7
0.098
0.106
HFLV45
165.15
181.05
15.90
9.7
3.3
0.366
0.331
HFLV45
184.75
187.35
2.60
1.6
9.0
0.826
0.307
HFLV45
187.35
200.30
12.95
7.8
2.4
0.205
0.170
HFLV45
200.30
245.20
44.90
27.0
2.1
0.176
0.225
HFLV46
191.85
245.45
53.60
36.7
6.3
0.209
0.284
HFLV46
277.40
290.35
12.95
8.7
2.3
0.091
0.113
HFLV46
290.35
290.85
0.50
0.3
7.4
0.134
0.599
HFLV47
22.60
50.25
27.65
22.7
3.3
0.033
0.396
HFLV47
50.25
52.40
2.15
1.8
13.9
1.440
1.388
HFLV47
52.40
138.80
86.40
71.0
4.1
0.417
0.364
HFLV48
25.20
83.75
58.55
37.6
18.7
0.398
0.820
HFLV48
92.80
98.75
5.95
3.9
16.5
0.897
1.820
HFLV48
101.30
132.25
30.95
20.3
6.5
0.285
0.323
HFLV50
36.50
148.05
111.55
58.4
9.7
0.478
0.327
HFLV50
158.50
163.55
5.05
2.6
6.8
0.452
0.455
HFLV50
163.55
180.80
17.25
8.9
2.4
0.136
0.172
HFLV51
28.45
250.00
221.55
157.3
4.9
0.334
0.326
HFLV51
250.00
255.50
5.50
3.8
0.5
0.022
0.017
LV
HFLV51
255.50
258.25
2.75
1.9
6.1
0.196
0.130
LG
HFLV51
258.25
263.00
4.75
3.3
5.1
0.087
0.098
HFLV52
26.85
198.20
171.35
54.8
4.2
0.360
0.531
HFLV52
198.20
206.10
7.90
2.2
55.5
2.428
3.636
HFLV52
206.10
223.90
17.80
5.0
3.1
0.141
0.166
HFLV54
63.70
133.50
69.80
57.1
1.8
0.077
0.141
HFLV54
141.35
152.90
11.55
9.5
14.9
0.755
1.196
HFLV54
152.90
179.80
26.90
22.0
6.7
0.638
0.721
HFLV54
179.80
181.15
1.35
1.1
21.4
3.390
3.047
LG
HFLV54
181.15
184.90
3.75
3.1
57.5
2.921
3.056
LV
LG
LG
LG
LG
LG
LG
LG
LV
LG
297
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFLV55
25.85
292.00
266.15
132.3
9.2
0.867
0.921
HFLV55
292.00
296.70
4.70
2.2
65.0
2.125
3.255
HFLV55
296.70
302.85
6.15
2.8
7.4
0.141
0.130
HFLV56
12.25
16.90
4.65
2.5
4.3
0.401
0.137
HFLV56
21.75
28.35
6.60
3.4
35.0
0.793
0.109
HFLV56
28.35
145.40
117.05
60.7
1.1
0.068
0.247
HFLV56
145.40
161.10
15.70
8.2
65.6
0.490
7.598
LV
HFLV56
161.10
171.50
10.40
5.4
10.7
0.248
0.419
LG
HFLV56
171.50
208.80
37.30
19.4
3.9
0.399
0.354
HFLV58
22.10
306.30
284.20
138.9
4.0
0.193
0.296
HFLV58
306.30
322.40
16.10
7.3
24.8
0.789
1.833
LV
HFLV58
322.40
324.40
2.00
0.9
0.4
0.006
0.009
LG
HFLV59
9.85
20.50
10.65
7.1
18.4
1.640
0.098
HFLV59
20.50
23.20
2.70
1.8
11.6
1.621
0.258
HFLV59
23.20
94.90
71.70
48.1
3.5
0.126
0.401
HFLV59
94.90
101.55
6.65
4.5
82.4
4.157
9.001
HFLV59
101.55
119.65
18.10
12.1
7.3
0.332
0.982
HFLV60
27.25
204.10
176.85
91.9
3.4
0.188
0.303
HFLV60
204.10
213.30
9.20
4.9
63.1
1.425
3.394
HFLV60
213.30
227.00
13.70
7.3
5.3
0.051
0.093
HFLV62
52.85
80.90
28.05
20.2
19.8
2.357
3.208
HFLV62
80.90
81.70
0.80
0.6
1.5
0.133
0.586
HFLV62
81.70
179.15
97.45
69.2
2.0
0.126
0.191
HFLV62
179.15
183.30
4.15
2.9
17.0
1.661
4.034
HFLV62
183.30
191.60
8.30
5.8
1.9
0.090
0.116
HFLV62
191.60
205.80
14.20
10.0
8.8
0.178
0.417
HFLV62
205.80
240.00
34.20
24.0
2.2
0.091
0.110
HFLV63
58.80
108.75
49.95
30.8
5.5
0.124
0.607
HFLV63
108.75
133.60
24.85
15.3
90.5
3.074
11.650
LV
HFLV63
133.60
143.70
10.10
6.2
26.1
0.423
2.466
LG
HFLV63
143.70
190.30
46.60
28.7
2.9
0.084
0.176
HFLV64
17.45
262.65
245.20
163.6
3.8
0.343
0.423
HFLV64
262.65
268.50
5.85
4.1
40.4
1.061
2.300
HFLV64
268.50
290.20
21.70
15.1
0.5
0.019
0.046
HFLV65
5.00
304.60
299.60
211.8
2.0
0.085
0.108
HFLV65
304.60
305.20
0.60
0.4
22.5
2.510
2.620
HFLV65
305.20
337.40
32.20
22.8
2.4
0.105
0.159
HFLV66
5.35
99.65
94.30
60.0
4.9
0.517
0.141
HFLV66
99.65
118.15
18.50
11.8
25.4
2.642
4.009
LV
LV
LV
LV
LG
LV
LV
LV
298
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFLV66
118.15
123.00
4.85
3.1
49.7
0.700
3.998
LG
HFLV66
123.00
150.85
27.85
17.7
8.0
0.582
0.751
HFLV67
7.40
242.50
235.10
143.9
0.9
0.046
0.046
HFLV67
242.50
251.50
9.00
5.2
12.0
0.812
0.762
HFLV67
251.50
264.60
13.10
7.5
14.8
0.960
0.940
LV
HFLV67
264.60
294.60
30.00
17.2
6.0
0.428
0.301
LG
HFLV67
294.60
347.15
52.55
30.3
1.4
0.083
0.095
HFLV68
103.15
261.70
158.55
100.7
14.9
0.709
0.815
HFLV68
261.70
263.40
1.70
1.1
164.2
6.411
9.600
HFLV68
263.40
284.00
20.60
13.7
3.2
0.122
0.132
HFLV69
30.20
324.95
294.75
192.1
8.2
0.820
0.988
HFLV69
324.95
336.50
11.55
7.4
13.5
0.220
0.598
HFLV69
336.50
338.15
1.65
1.1
5.2
0.082
0.210
HFLV70
22.66
317.00
294.34
116.7
2.7
0.105
0.127
HFLV70
317.00
325.25
8.25
3.0
1.5
0.032
0.098
LG
HFLV70
325.25
325.95
0.70
0.3
6.5
0.293
0.358
LV
HFLV70
325.95
327.80
1.85
0.7
0.2
0.008
0.008
HFLV71
25.00
131.55
106.55
88.3
12.4
0.372
0.616
HFLV71
131.55
159.20
27.65
23.1
9.8
0.781
1.210
HFLV71
159.20
164.00
4.80
4.0
1.0
0.022
0.053
HFLV72
17.70
120.85
103.15
66.3
5.3
0.394
0.355
HFLV72
120.85
133.45
12.60
8.1
71.3
2.181
7.789
HFLV72
133.45
187.95
54.50
35.0
14.2
1.320
1.098
HFLV73
13.20
230.80
217.60
122.7
1.7
0.090
0.108
HFLV73
230.80
265.50
34.70
18.5
10.5
0.217
0.272
LG
HFLV73
265.50
288.00
22.50
11.9
33.7
2.193
2.723
LV
HFLV73
288.00
305.05
17.05
9.0
1.5
0.042
0.048
HFLV74
21.00
83.45
62.45
30.6
1.8
0.030
0.066
HFLV74
83.45
92.60
9.15
4.3
11.2
0.414
0.906
HFLV74
95.65
232.90
137.25
64.5
4.2
0.268
0.303
HFSF01
174.50
176.05
1.55
1.1
7.8
2.350
2.440
HFSF02
25.15
89.40
64.25
53.0
2.4
0.015
0.096
HFSF02
89.40
97.20
7.80
6.5
105.4
0.551
6.792
HFSF02
97.20
100.35
3.15
2.6
4.9
0.033
0.072
HFSF02
100.35
106.70
6.35
5.3
24.6
0.281
0.564
HFSF02
106.70
201.60
94.90
78.7
4.2
0.105
0.113
HFSF02
201.60
202.55
0.95
0.8
107.0
0.207
20.500
HFSF02
202.55
254.50
51.95
43.4
3.8
0.039
0.170
HFSF03
102.15
171.00
68.85
47.4
1.5
0.017
0.033
LG
LV
LG
LG
LV
LG
HW-1
HW-2
SF
299
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFSF03
171.00
179.40
8.40
5.7
36.0
2.331
3.208
SF
HFSF03
179.40
188.55
9.15
6.2
0.5
0.011
0.017
HFSF05
201.60
369.10
167.50
106.7
1.1
0.139
0.154
HFSF05
369.10
371.25
2.15
1.3
9.0
0.784
1.039
HFSF05
371.25
459.60
88.35
54.1
0.8
0.059
0.069
HFSF06
36.15
75.00
38.85
30.6
1.5
0.014
0.123
HFSF06
75.00
89.22
14.22
11.2
1.2
0.028
0.734
HFSF07
9.70
45.70
36.00
20.4
1.2
0.009
0.155
HFSF07
45.70
49.60
3.90
2.2
18.7
2.672
4.108
HFSF07
49.60
150.70
101.10
57.3
1.2
0.166
0.223
HFSF07
150.70
152.85
2.15
1.2
0.1
0.001
0.007
HFSF07
152.85
224.10
71.25
40.4
0.7
0.007
0.055
HFSF08
57.25
262.93
205.68
140.1
1.1
0.027
0.033
HFSF08
262.93
263.75
0.82
0.5
80.0
4.540
7.310
HFSF08
263.75
268.20
4.45
2.9
1.2
0.019
0.047
HFSF08
268.20
269.10
0.90
0.6
192.7
-9.212
4.983
HFSF08
269.10
288.05
18.95
12.4
1.0
0.023
0.049
HFSF09
22.90
74.85
51.95
35.6
0.4
0.003
0.019
HFSF09
74.85
77.10
2.25
1.5
2.8
0.119
0.520
HFSF09
77.10
96.05
18.95
12.9
1.9
0.032
0.104
HFSF10
9.00
15.05
6.05
4.7
1.6
0.013
0.021
HFSF10
15.05
20.25
5.20
4.0
127.1
0.062
0.173
HFSF10
20.25
93.30
73.05
56.8
0.7
0.010
0.081
HFSF10
93.30
97.20
3.90
3.0
0.1
0.001
0.005
HFSF10
97.20
118.30
21.10
16.2
0.3
0.002
0.016
HFSF11
17.10
60.60
43.50
34.9
5.2
0.003
0.040
HFSF11
60.60
68.30
7.70
6.2
200.1
0.253
0.431
HFSF11
68.30
73.45
5.15
4.1
2.0
0.020
0.041
HFSF12
10.60
136.73
126.13
100.6
6.6
0.086
0.048
HFSF12
136.73
137.33
0.60
0.5
52.7
0.183
0.148
HFSF12
137.33
216.45
79.12
61.2
0.5
0.018
0.025
HFSF12
216.45
224.92
8.47
6.5
0.6
0.019
0.024
HFSF12
224.92
267.45
42.53
32.4
3.7
0.023
0.030
HFSF14
26.92
40.10
13.18
6.5
1.2
0.006
0.121
HFSF14
40.10
47.87
7.77
3.8
84.2
0.336
0.277
HFSF14
47.87
64.93
17.06
8.4
3.3
0.058
0.106
HFSF14
79.10
81.10
2.00
1.0
1.0
0.158
0.185
HFSF14
81.10
184.10
103.00
51.0
2.4
0.173
0.236
HFSF15
1.20
27.90
26.70
21.6
1.9
0.037
0.157
SF
HW-3
HW-2
SF
SF
SF
HW-3
HW-2
SF
SF
HW-2
SF
HW-1
SF
300
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFSF15
27.90
29.20
1.30
1.0
19.6
0.971
6.350
HW-2
HFSF15
29.20
113.50
84.30
67.5
3.6
0.249
0.974
HFSF15
113.50
116.80
3.30
2.6
6.2
0.817
0.929
HFSF15
118.30
126.20
7.90
6.2
0.7
0.030
0.037
HFSF17
9.45
10.30
0.85
0.7
1.4
0.007
0.266
HFSF17
10.30
12.50
2.20
1.8
24.9
0.258
0.594
HFSF17
15.70
100.10
84.40
68.6
1.2
0.042
0.173
HFSF17
103.75
106.30
2.55
2.0
0.4
0.012
0.035
HFSF17
106.30
112.30
6.00
4.8
0.6
0.002
0.006
HFSF18
13.70
120.30
106.60
56.5
1.5
0.074
0.388
HFSF18
120.30
124.20
3.90
2.0
18.6
1.317
1.961
HFSF18
124.20
161.71
37.51
19.0
0.4
0.010
0.018
HFSF19
48.80
101.00
52.20
42.0
10.6
0.051
0.149
HFSF19
101.00
103.00
2.00
1.6
52.9
8.378
7.539
HFSF19
103.00
154.40
51.40
40.7
1.5
0.068
0.080
HFSF19
154.40
154.80
0.40
0.3
2.6
0.003
1.030
HFSF19
154.80
157.25
2.45
2.0
0.7
0.008
0.044
HFSF20
66.60
117.11
50.51
36.0
1.8
0.017
0.271
HFSF20
117.11
119.05
1.94
1.4
25.5
0.119
0.266
HFSF20
119.05
234.70
115.65
81.5
1.5
0.006
0.130
HFSF20
234.70
235.10
0.40
0.3
192.0
0.000
0.162
HFSF20
235.10
242.05
6.95
4.7
1.7
0.075
0.073
HFSF21
18.08
46.90
28.82
23.3
2.4
0.091
1.165
HFSF21
46.90
51.69
4.79
3.9
4.0
0.451
5.036
HFSF21
51.69
115.90
64.21
51.7
1.0
0.029
0.453
HFSF23
51.90
109.35
57.45
35.5
26.4
0.651
0.810
HFSF23
109.35
112.70
3.35
2.0
47.2
9.106
9.371
HFSF23
112.70
148.90
36.20
22.0
5.7
0.189
0.269
HFSF24
78.50
152.00
73.50
53.0
0.7
0.013
0.020
HFSF24
152.00
239.92
87.92
63.2
0.5
0.004
0.010
HFSF25
14.40
197.80
183.40
134.6
1.8
0.073
0.068
HFSF25
197.80
202.10
4.30
3.3
1.2
0.028
0.018
HFSF25
202.10
213.40
11.30
8.6
6.1
0.060
0.060
HFSF26
28.40
94.15
65.75
45.8
2.2
0.022
0.026
HFSF26
94.15
100.90
6.75
4.6
9.1
0.691
0.591
HFSF26
100.90
117.95
17.05
11.7
6.6
0.084
0.064
HFSF26
117.95
196.50
78.55
53.5
0.2
0.016
0.016
HFSF26
196.50
205.60
9.10
6.1
9.9
0.053
0.412
HFSF28
6.50
130.60
124.10
82.0
5.0
0.066
0.262
SF
HW-2
SF
SF
HW-1
SF
HW-2
SF
SF
HW-1
HW-1
SF
HW-1
SF
301
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFSF28
130.60
132.50
1.90
1.3
0.5
0.004
0.008
HW-1
HFSF28
132.50
241.00
108.50
74.6
1.3
0.033
0.020
HFSF29
17.32
126.52
109.20
73.3
1.6
0.016
0.024
HFSF29
126.52
128.95
2.43
1.7
41.5
0.645
4.272
HFSF30
10.10
218.30
208.20
168.3
2.4
0.038
0.052
HFSF30
218.30
225.90
7.60
6.1
3.6
0.187
0.239
HFSF30
225.90
227.90
2.00
1.6
8.6
0.107
0.087
HFSF31
42.40
211.55
169.15
126.2
1.3
0.023
0.150
HFSF31
211.55
212.20
0.65
0.5
65.0
10.650
6.190
HFSF31
212.20
410.20
198.00
145.7
1.7
0.104
0.110
HFSF32
16.35
107.25
90.90
61.8
3.8
0.147
0.330
HFSF32
107.25
109.10
1.85
1.2
37.1
1.619
3.541
HFSF32
109.10
144.15
35.05
23.2
6.1
0.292
0.343
HFSF32
144.15
145.00
0.85
0.6
79.3
1.920
0.749
HFSF32
145.00
268.15
123.15
81.5
3.8
0.095
0.089
HFSF32
268.15
271.70
3.55
2.3
1.2
0.025
0.067
HFSF32
271.70
299.70
28.00
18.1
4.9
0.054
0.117
HFSF34
60.00
197.40
137.40
113.1
2.6
0.159
0.187
HFSF34
197.40
199.60
2.20
1.8
10.9
0.068
0.087
HFSF34
199.60
255.40
55.80
46.5
3.3
0.076
0.060
HFSF34
255.40
259.35
3.95
3.4
30.3
1.098
2.030
HFSF34
259.35
328.40
69.05
58.9
3.8
0.295
0.120
HFSF35
38.05
150.40
112.35
89.7
4.5
0.121
0.250
HFSF35
150.40
151.66
1.26
1.0
20.6
0.202
0.149
HFSF35
151.66
226.26
74.60
59.7
4.8
0.166
0.192
HFSF35
226.26
227.95
1.69
1.4
3.0
0.187
0.181
HFSF35
227.95
300.40
72.45
58.4
4.9
0.181
0.276
HFSF36
30.60
190.75
160.15
131.1
1.4
0.045
0.054
HFSF36
190.75
196.50
5.75
4.7
6.3
0.031
0.169
HFSF36
196.50
345.00
148.50
122.1
1.6
0.087
0.132
HFSF37
35.00
184.10
149.10
113.7
8.5
0.139
0.279
HFSF37
184.10
191.20
7.10
5.3
5.2
0.097
0.157
HFSF37
191.20
238.85
47.65
35.7
2.8
0.080
0.149
HFSF37
238.85
241.15
2.30
1.7
27.9
1.387
1.710
HFSF37
241.15
333.80
92.65
68.9
1.9
0.047
0.077
HFSF38
38.45
121.00
82.55
61.6
3.4
0.020
0.045
HFSF38
121.00
132.55
11.55
8.5
199.9
0.246
4.837
HFSF38
132.55
218.70
86.15
63.0
2.7
0.089
0.154
HFSF39
49.15
92.45
43.30
26.9
1.2
0.013
0.016
HW-1
HW-1
HW-2
HW-3
HW-2
SF
HW-1
SF
HW-1
SF
HW-1
HW-1
SF
HW-1
302
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
HFSF39
92.45
95.25
2.80
1.7
50.1
1.525
1.797
HW-1
HFSF39
95.25
175.30
80.05
48.6
9.7
0.213
0.278
HFSF39
175.30
180.70
5.40
3.2
55.6
6.189
6.900
HFSF39
180.70
182.85
2.15
1.3
1.0
0.121
0.103
HFSF43
181.90
194.35
12.45
9.9
1.5
0.013
0.027
HFSF43
194.35
195.40
1.05
0.8
21.6
0.948
1.250
HFSF43
195.40
250.25
54.85
43.6
1.4
0.039
0.051
INFSF01
79.00
90.00
11.00
8.4
29.4
3.277
4.627
INFSF01
90.00
102.00
12.00
9.1
23.8
3.937
7.279
INFSF02
92.00
93.00
1.00
0.8
64.4
0.119
0.131
INFSF02
93.00
102.00
9.00
7.1
313.3
2.128
5.704
INFSF02
102.00
103.00
1.00
0.8
35.5
0.178
3.270
INFSF03
23.00
24.00
1.00
0.8
1.4
0.031
0.171
INFSF03
24.00
27.00
3.00
2.3
4.1
0.084
0.067
INFSF03
27.00
32.00
5.00
3.8
0.8
0.007
0.243
INFSF03
32.00
45.00
13.00
9.8
4.2
0.315
0.458
INFSF03
45.00
46.00
1.00
0.7
1.2
0.007
0.020
INFSF07
89.00
91.00
2.00
1.6
24.4
0.126
0.921
INFSF07
91.00
96.00
5.00
4.0
41.0
0.201
1.094
INFSF07
96.00
108.00
12.00
9.5
1.8
0.013
0.272
INFSF10
90.00
92.00
2.00
1.6
7.8
0.059
0.327
INFSF10
92.00
100.00
8.00
6.2
203.7
0.249
10.677
INFSF10
100.00
101.00
1.00
0.8
6.8
0.011
0.397
INFSF11
74.00
75.00
1.00
0.6
77.6
0.163
3.790
INFSF11
75.00
77.00
2.00
1.3
317.1
0.374
15.125
INFSF11
77.00
78.00
1.00
0.6
28.1
0.047
1.390
INFSF14
0.00
40.00
40.00
1.8
0.016
0.056
INFSF14
40.00
49.00
9.00
7.2
31.0
2.799
3.390
INFSF15
33.00
34.00
1.00
0.8
49.4
0.156
2.660
INFSF15
34.00
45.00
11.00
8.5
123.6
1.721
6.735
SCLL-01
16.35
44.70
28.35
15.6
2.6
0.025
0.157
SCLL-01
44.70
46.15
1.45
0.8
156.2
0.660
12.040
LL
SCLL-01
46.15
47.50
1.35
0.7
41.2
0.070
2.076
FW
SCLL-01
47.50
53.75
6.25
3.5
7.0
0.068
0.249
SCLL-02
31.55
88.50
56.95
26.8
1.6
0.013
0.037
SCLL-02
88.50
94.45
5.95
2.8
28.8
0.105
2.281
SCLL-02
94.45
127.50
33.05
15.4
3.3
0.010
0.090
SCLL-03
103.75
108.25
4.50
2.4
2.9
0.043
0.074
SCLL-03
108.25
118.55
10.30
5.4
77.5
0.198
7.156
SF
SF
HW-2
HW-1
HW-1
SF
HW-2
HW-1
HW-1
SF
HW-1
LL
LL
303
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
SCLL-03
118.55
123.80
5.25
2.7
5.6
0.009
0.091
SCLL-04
100.25
109.05
8.80
4.2
9.4
0.030
0.134
SCLL-04
109.05
121.70
12.65
6.1
88.6
0.254
4.351
SCLL-04
121.70
141.35
19.65
9.3
2.6
0.016
0.128
SCLL-04
141.35
141.80
0.45
0.2
135.0
0.125
12.200
SCLL-04
141.80
170.70
28.90
13.4
2.9
0.017
0.125
SCLL-04
170.70
175.05
4.35
2.0
81.7
0.280
8.558
SCLL-04
175.05
178.70
3.65
1.6
0.7
0.004
0.023
SCLL-05
150.45
161.55
11.10
3.4
3.0
0.015
0.237
SCLL-05
161.55
178.90
17.35
5.3
138.9
0.372
6.710
SCLL-05
178.90
287.70
108.80
32.6
3.4
0.022
0.230
SCLL-07
52.45
91.35
38.90
25.0
0.3
0.006
0.009
SCLL-08
35.60
48.90
13.30
10.3
0.5
0.009
0.017
SCLL-08
48.90
62.60
13.70
10.6
0.2
0.003
0.007
SCLL-08
62.60
142.55
79.95
61.5
0.9
0.023
0.044
SCLL-09
32.80
41.85
9.05
6.0
1.6
0.010
0.035
SCLL-09
41.85
50.00
8.15
5.4
1.2
0.030
0.215
SCLL-09
50.00
185.50
135.50
89.3
1.1
0.011
0.027
SCLL-10
69.85
114.90
45.05
23.1
3.4
0.011
0.028
SCLL-12
7.40
25.75
18.35
8.6
15.7
0.101
0.058
SCLL-12
25.75
32.90
7.15
3.4
43.4
0.514
0.975
SCLL-12
32.90
41.20
8.30
3.9
0.9
0.012
0.211
SCLL-13
30.45
35.20
4.75
2.3
1.7
0.031
0.068
SCLL-13
35.20
37.55
2.35
1.2
13.0
0.018
0.246
SCLL-13
37.55
70.45
32.90
16.2
1.9
0.006
0.017
SCLL-13
70.45
71.40
0.95
0.5
247.0
0.661
3.700
SCLL-13
71.40
92.55
21.15
10.5
9.8
0.031
0.108
SCLL-14
67.25
80.40
13.15
6.2
6.2
0.091
0.268
SCLL-14
80.40
84.25
3.85
1.8
12.1
0.189
0.342
SCLL-14
84.25
119.00
34.75
16.3
3.9
0.168
0.218
SCLL-15
53.90
187.05
133.15
61.0
2.5
0.078
0.047
SCLL-15
188.00
200.45
12.45
6.3
74.1
0.213
6.291
SCLL-15
200.45
206.55
6.10
3.1
1.8
0.014
0.041
SCLL-16
42.00
159.65
117.65
18.5
1.4
0.017
0.062
SCLL-16
159.65
166.20
6.55
0.9
1.4
0.115
0.360
SCLL-16
166.20
170.70
4.50
0.6
0.3
0.028
0.029
SCLL-17
20.30
23.85
3.55
1.7
6.4
0.020
0.126
SCLL-17
23.85
27.40
3.55
1.7
21.5
0.150
0.405
SCLL-17
27.40
141.55
114.15
55.7
1.1
0.014
0.031
Domain
LL
LL
LL
LL
LL
LL
LL
LL
LL
LL
304
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
SCLL-18
67.10
83.35
16.25
0.9
1.7
0.024
0.059
SCLL-18
83.35
87.40
4.05
0.2
2.6
0.111
0.201
SCLL-18
87.40
95.60
8.20
0.4
2.9
0.084
0.095
SCLL-19
67.75
78.70
10.95
5.6
1.5
0.046
0.065
SCLL-19
78.70
90.40
11.70
6.0
9.3
0.320
0.675
SCLL-19
90.40
91.65
1.25
0.6
3.9
0.044
0.150
SCLL-20
279.05
282.05
3.00
1.0
8.2
0.004
0.011
SCLL-20
282.05
285.00
2.95
1.0
30.7
0.222
2.371
SCLL-20
285.00
288.05
3.05
1.0
1.1
0.014
0.065
SCLL-21
4.50
121.35
116.85
16.0
4.0
0.019
0.191
SCLL-21
121.35
132.80
11.45
1.7
1.3
0.007
0.012
SCLL-22
120.90
126.75
5.85
1.5
0.7
0.019
0.033
SCLL-22
126.75
130.15
3.40
0.9
15.4
0.135
0.221
SCLL-22
130.15
133.70
3.55
0.9
0.4
0.011
0.016
SCLL-23
108.45
115.70
7.25
3.3
5.1
0.022
0.043
SCLL-23
115.70
117.50
1.80
0.8
383.1
1.120
3.777
SCLL-23
117.50
139.10
21.60
10.0
14.5
0.080
0.179
SCLL-24
37.55
158.65
121.10
30.8
1.1
0.013
0.022
SCLL-24
158.65
171.05
12.40
3.5
49.3
0.080
2.761
SCLL-24
171.05
192.30
21.25
6.2
1.1
0.007
0.048
SCLL-25
63.00
133.30
70.30
25.5
16.8
0.198
0.820
SCLL-26
0.00
161.95
161.95
9.4
0.310
1.411
SCLL-26
213.90
218.15
4.25
1.5
2.3
0.007
0.047
SCLL-27
146.60
224.15
77.55
13.1
7.9
0.008
0.024
SCLL-27
224.15
226.50
2.35
0.4
52.4
0.505
0.789
SCLL-27
226.50
227.55
1.05
0.2
1.3
0.006
0.013
SCLV-01
103.45
250.90
147.45
102.8
10.7
1.018
1.085
SCLV-01
250.90
257.95
7.05
4.7
141.8
8.036
13.012
SCLV-01
257.95
291.70
33.75
22.4
1.8
0.116
0.154
SCLV-02
110.95
208.45
97.50
64.9
8.1
0.761
0.838
SCLV-02
208.45
220.00
11.55
7.6
77.5
3.252
3.862
SCLV-02
220.00
257.95
37.95
25.1
2.3
0.220
0.303
SCLV-02
257.95
265.45
7.50
5.0
26.8
1.584
2.182
SCLV-02
265.45
277.35
11.90
7.9
4.7
0.499
0.392
SCLV-03
13.20
88.20
75.00
58.0
6.1
0.464
0.359
SCLV-03
88.20
91.15
2.95
2.3
14.7
1.209
1.526
SCLV-03
91.15
151.75
60.60
46.5
2.3
0.126
0.319
SCLV-04
70.50
105.80
35.30
25.0
2.4
0.236
1.341
SCLV-04
105.80
110.30
4.50
3.2
214.9
4.925
11.046
Domain
LL
LL
LL
LL
LL
LL
LL
LL
LL
LV
LV
LV
LV
305
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
SCLV-04
110.30
114.20
3.90
2.7
7.4
0.122
0.394
SCLV-05
18.40
142.15
123.75
67.1
7.2
0.514
0.738
SCLV-05
142.15
154.80
12.65
6.7
40.2
0.933
5.026
LG
SCLV-05
154.80
161.95
7.15
3.8
90.6
1.314
11.769
LV
SCLV-05
161.95
187.25
25.30
13.3
12.2
0.867
0.913
SCLV-06
31.25
178.05
146.80
69.4
3.7
0.059
0.299
SCLV-06
178.05
185.00
6.95
3.0
53.0
1.432
6.171
SCLV-06
185.00
210.15
25.15
10.9
11.7
0.728
0.929
SCSF-01
95.75
97.70
1.95
1.6
4.5
0.338
0.405
SCSF-01
149.90
154.30
4.40
3.6
98.4
1.370
2.528
SCSF-01
154.30
177.60
23.30
19.1
3.1
0.084
0.133
SCSF-02
1.50
49.50
48.00
37.3
4.9
0.003
0.068
SCSF-02
49.50
58.50
9.00
7.0
221.5
1.440
2.802
SCSF-02
58.50
115.50
57.00
44.3
4.5
0.124
0.129
SCSF-03
21.45
49.05
27.60
16.0
1.1
0.020
0.078
SCSF-03
49.05
62.30
13.25
7.7
92.9
3.077
3.871
SCSF-03
62.30
88.70
26.40
15.2
1.1
0.062
0.150
SCSF-03
88.70
92.85
4.15
2.4
4.0
0.400
0.316
SCSF-03
92.85
143.85
51.00
29.0
1.1
0.026
0.037
SCSF-04
21.75
61.55
39.80
29.4
1.9
0.015
0.018
SCSF-04
61.55
61.95
0.40
0.3
35.5
1.520
1.815
SCSF-04
61.95
63.85
1.90
1.4
2.8
0.175
0.206
SCSF-04
63.85
69.20
5.35
3.9
22.9
1.195
1.617
SCSF-04
69.20
120.40
51.20
37.7
6.2
0.061
0.065
SCSF-05
19.55
100.20
80.65
53.0
1.3
0.016
0.031
SCSF-05
100.20
121.75
21.55
14.2
21.5
0.420
0.903
SCSF-05
121.75
163.40
41.65
27.7
3.4
0.065
0.061
SCSF-05
163.40
165.90
2.50
1.7
40.0
2.373
2.527
SCSF-05
165.90
242.90
77.00
51.7
2.3
0.158
0.183
SCSF-06
58.30
142.95
84.65
52.0
2.4
0.049
0.053
SCSF-06
142.95
154.85
11.90
7.1
17.2
1.027
1.569
SCSF-06
154.85
225.55
70.70
42.5
0.9
0.031
0.042
SCSF-06
225.55
228.30
2.75
1.7
22.1
1.984
2.781
SCSF-06
228.30
273.10
44.80
27.2
4.2
0.215
0.294
SCSF-07
45.10
46.15
1.05
0.7
0.6
0.006
0.531
SCSF-07
46.15
58.80
12.65
8.8
2.6
0.098
0.995
SCSF-07
58.80
181.90
123.10
85.3
2.4
0.069
0.451
SCSF-08
12.45
93.20
80.75
62.1
5.0
0.108
0.138
SCSF-08
93.20
98.15
4.95
3.8
58.0
5.438
5.059
LV
HW-2
SF
HW-1
SF
HW-1
SF
HW-1
SF
HW-1
SF
SF
HW-1
306
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
SCSF-08
98.15
104.30
6.15
4.7
10.3
0.969
0.856
SCSF-08
104.30
107.35
3.05
2.3
25.6
1.131
0.429
SCSF-08
107.35
127.40
20.05
15.3
1.2
0.055
0.060
SCSF-09
12.20
126.55
114.35
54.9
1.7
0.011
0.018
SCSF-09
126.55
130.00
3.45
1.6
86.4
1.252
3.479
SCSF-09
130.00
171.05
41.05
19.5
19.2
0.509
1.085
SCSF-09
171.05
174.85
3.80
1.8
167.0
0.564
8.839
SCSF-09
174.85
223.00
48.15
22.7
4.2
0.076
0.139
SCSF-09
223.00
226.75
3.75
1.8
8.0
0.510
0.478
SCSF-09
226.75
235.45
8.70
4.1
5.0
0.483
0.467
SCSF-10
8.95
51.40
42.45
34.3
1.1
0.026
0.040
SCSF-10
51.40
52.10
0.70
0.6
0.5
0.009
0.014
SCSF-10
52.10
73.75
21.65
17.5
3.2
0.020
0.038
SCVT-02
1.50
38.85
37.35
8.5
15.0
0.043
0.047
SCVT-02
38.85
46.50
7.65
1.7
143.3
0.777
0.703
SCVT-02
46.50
88.45
41.95
9.6
7.9
0.370
0.315
SCVT-04
57.50
66.90
9.40
2.1
2.7
0.083
0.389
SCVT-04
66.90
79.15
12.25
2.7
8.6
0.815
1.360
SCVT-04
79.15
85.20
6.05
1.3
4.1
0.026
0.504
SCVT-17
31.10
142.65
111.55
22.9
2.1
0.066
0.154
SCVT-17
142.65
153.95
11.30
2.4
38.0
0.423
3.358
SCVT-17
153.95
155.10
1.15
0.2
2.6
0.088
0.097
SCVT-19
74.80
166.20
91.40
32.7
2.7
0.212
0.407
SCVT-19
166.20
167.20
1.00
0.4
0.8
0.007
0.014
SCVT-19
167.20
169.50
2.30
0.9
7.7
0.286
0.499
SF0022RL
180.30
181.60
1.30
0.8
12.5
0.975
1.100
SF0022RL
181.60
195.86
14.26
9.2
143.4
3.898
7.283
SF0022RL
195.86
196.60
0.74
0.5
1.8
0.085
0.105
SF0023RL
193.66
198.73
5.07
2.1
88.0
10.989
12.304
SF0023RL
245.50
247.25
1.75
0.7
131.7
4.067
10.525
SF0023RL
247.25
248.90
1.65
0.7
1.9
0.059
0.351
SF9801
3.10
97.70
94.60
77.5
2.5
0.114
0.394
SF9801
97.70
101.60
3.90
3.2
113.3
5.345
11.950
SF9801
101.60
138.99
37.39
30.6
13.4
0.718
1.118
SF9802
14.00
100.60
86.60
70.9
1.3
0.097
0.147
SF9802
100.60
103.90
3.30
2.7
34.2
2.533
0.446
SF9802
103.90
180.40
76.50
62.7
2.7
0.070
0.191
SF9803
3.10
25.50
22.40
18.3
3.4
0.073
0.293
SF9803
25.50
33.70
8.20
6.7
4.3
0.237
0.344
Domain
HW-1
HW-1
SF
SF
VT
VT
VT
VT
LV
LV
LV
307
Hole_ID
From
To
Interval
True
Thickness
Ag g/t
Pb %
Zn %
Domain
SF9803
33.70
84.73
51.03
41.8
0.8
0.108
0.194
SF9804
18.10
77.30
59.20
48.5
2.3
0.092
0.870
SF9804
77.30
97.80
20.50
16.8
53.6
0.575
9.164
SF9804
97.80
138.20
40.40
33.1
3.4
0.258
0.345
SF9908
28.72
192.28
163.56
81.8
1.8
0.080
0.131
SF9908
192.28
205.22
12.94
6.5
2.6
0.136
0.348
SF9908
205.22
242.00
36.78
18.4
7.2
0.105
0.150
SF9909
47.85
191.60
143.75
71.9
3.1
0.373
0.475
SF9909
191.60
199.40
7.80
3.9
37.4
0.332
6.285
LV
SF9909
199.40
213.20
13.80
6.9
50.8
1.167
6.399
LG
SF9909
213.20
233.05
19.85
9.9
2.6
0.130
0.170
SF9910
59.10
166.26
107.16
87.8
2.7
0.264
0.407
SF9910
166.26
172.95
6.69
5.5
29.1
5.103
4.735
SF9910
172.95
229.07
56.12
46.0
2.4
0.334
0.315
SF9910RL
166.26
172.95
6.69
5.5
28.8
4.822
4.263
SF9911
27.43
77.28
49.85
40.8
2.1
0.084
0.150
SF9911
77.28
78.33
1.05
0.9
10.8
0.131
0.033
SF9911
78.33
121.01
42.68
35.0
1.0
0.032
0.069
SF9912
43.75
186.75
143.00
91.9
3.4
0.273
0.373
SF9912
186.75
193.41
6.66
4.3
270.9
6.362
19.209
SF9912
193.41
227.38
33.97
21.8
4.9
0.143
0.165
SF9912RL
186.75
193.41
6.66
4.3
312.2
5.605
11.325
SF9913
9.14
96.93
87.79
67.3
3.7
0.287
0.429
SF9913
96.93
104.20
7.27
5.6
17.9
2.226
3.192
SF9913
104.20
209.60
105.40
80.7
3.5
0.303
0.379
SF9914
47.90
127.28
79.38
39.7
5.7
0.480
0.480
SF9914
127.28
133.70
6.42
3.2
39.4
2.457
2.362
SF9914
133.70
174.30
40.60
20.3
22.8
0.985
1.145
SF9915
72.90
245.90
173.00
73.1
3.2
0.327
0.404
SF9915
245.90
256.50
10.60
4.5
77.0
5.361
5.714
SF9915
256.50
261.90
5.40
2.3
2.9
0.171
0.822
LV
LG
LV
LV
LV
LV
LG
LG
LV
308
31. Appendix 4 – Ag Variograms
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
32. Appendix 5 – Certificate of Author Forms
HANS SMIT, P.GEO.
I, Hans Q. Smit, P.Geo., Consulting Geologist, do hereby certify that:
1.
I am a Professional Geologist with a residence and business address at 10084 Hislop
Road, Telkwa, British Columbia, V0J 2X1.
2.
I am a graduate of the University of British Columbia (1984) with a Bachelor of Science
(Honours) in Geology.
3.
I am a Registered Professional Geoscientist in good standing with the Association of
Professional Engineers and Geoscientists of the Province of British Columbia.
4.
I have worked in the mineral exploration and development industry since 1981 and have
worked in the industry for a total of 30 years since my graduation from university. I have
been involved in various mineral resource estimates and economic assessments
including managing resource estimates and a Preliminary Economic Assessment for the
La India project in Sonora, Mexico (2008 - 2010), managing a resource estimate for the
Gavilanes project in Durango, Mexico (2014), managing a Feasibility Study and
resource estimate on the Dublin Gulch project in Yukon, Canada (1996 - 1997),
manager for the resource estimate and Pre-Feasibility study for the Swamp Point
Aggregate Project, British Columbia, Canada (2005) and assistant manager for the
exploration, resource definition and feasibility level work at the Red Mountain project in
British Columbia, Canada (1994-1995)
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 and
certify that by reason of education, experience, independence and affiliation with a
professional association, I meet the requirements of an Independent Qualified Person as
defined in National Instrument 43-101.
6.
This report titled “2014 Mineral Resource Estimate and Preliminary Economic
Assessment, San Felipe Project, Sonora Mexico” dated effective September 4, 2014
and amended on June ,29, 2016, (the "Technical Report"), is based on a study of the
data and literature available on the San Felipe Project. I am responsible for sections 1
through 5, 15, 18.6, 19, 20, 22, 24, 25, 26.1 and 26.6 through 26.8 of the report.
7.
My most recent personal inspection of the San Felipe property was from April 3 to 6,
2014.
8.
I have not had any prior involvement with the San Felipe project.
9.
As of the effective date of the Technical Report, to the best of my knowledge,
information and belief, the Technical Report contains all scientific and technical
information that is required to be disclosed to make the Technical Report not misleading.
10.
I am independent of the issuer applying all of the tests in section 1.5 of National
Instrument 43-101.
11.
I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report
has been prepared in compliance with that instrument and form.
325
Dated this 29 day of June, 2016
{Original Signed and Sealed}
“H.Smit”
H. Q. Smit, P.Geo., BSc(Hons).
326
FLETCHER BOURKE, P.GEO.
I, Fletcher M. Bourke, P.Geo., Consulting Geologist, do hereby certify that:
1.
I am a consulting geologist with a business address of 4-11 13-Chome, Miyanomori 1Jyo, Sapporo, Japan.
2.
I am a graduate of University of Canterbury (2002) with a Master of Science in
Engineering Geology.
3.
I am a Registered Professional Geoscientist in good standing with the Association of
Professional Engineers and Geoscientists of the Province of British Columbia (#38499).
4.
I have worked in the mineral exploration and development industry since 2002 and have
worked as a geologist for a total of 12 years since my graduation from university. I have
been involved in various mineral resource estimates including the La India and Tarachi
projects in Sonora, and the Gavilanes project in Durango, Mexico.
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 and
certify that by reason of education, experience, independence and affiliation with a
professional association, I meet the requirements of an Independent Qualified Person as
defined in National Instrument 43-101.
6.
This report titled “2014 Mineral Resource Estimate and Preliminary Economic
Assessment, San Felipe Project, Sonora Mexico” dated effective September 4, 2014
and amended on June 29, 2016, (the "Technical Report"), is based on a study of the
data and literature available on the San Felipe Project. I am responsible for sections 6
through 12, 23, 27, and Appendix 1 and 3.
7.
I visited the San Felipe property 6 times during the period from July 2013 through June
2014. My most recent personal inspection of the San Felipe property was from June
10th to 16th, 2014.
8.
I have not had any prior involvement with the San Felipe project.
9.
As of the effective date of the Technical Report, to the best of my knowledge,
information and belief, the Technical Report contains all scientific and technical
information that is required to be disclosed to make the Technical Report not misleading.
10.
I am independent of the issuer applying all of the tests in section 1.5 of National
Instrument 43-101.
11.
I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report
has been prepared in compliance with that instrument and form.
“F.Bourke”
F.M.Bourke, P.Geo., MSc.
327
CERTIFICATE G.H. Giroux, P.Eng.
I, G.H. Giroux, of 982 Broadview Drive, North Vancouver, British Columbia, do hereby certify that:
1)
I am a consulting geological engineer
Drive, North Vancouver, British Columbia.
with
an
office
at
982
Broadview
2)
I am a graduate of the University of British Columbia in 1970 with a B.A. Sc. and in 1984 with a
M.A. Sc., both in Geological Engineering.
3)
I am a member in good standing of the Association of Professional Engineers and Geoscientists
of the Province of British Columbia.
4)
I have practiced my profession continuously since 1970. I have had over 30 years’ experience
estimating mineral resources. I have previously completed resource estimations on a wide
variety of precious metal vein deposits around the world, including Monterde, Efemcukuru and
El Bronce.
5)
I have read the definition of “qualified person” set out in National Instrument 43-101 and certify
that by reason of education, experience, independence and affiliation with a professional
association, I meet the requirements of an Independent Qualified Person as defined in National
Instrument 43-101.
6)
This report titled “2014 Mineral Resource Estimate and Preliminary Economic Assessment
San Felipe Project, Sonora Mexico” dated effective September 4, 2014 and amended on June
29, 2016, (the “Technical Report”), is based on a study of the data and literature available on the
San Felipe Project. I am responsible for Section 14 and Appendices 2 and 4 of the Technical
Report completed in Vancouver during 2014. I have not visited the property.
7)
I have not previously worked on this deposit.
8)
As of the effective date of the Technical Report, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is required to be
disclosed to make the Technical Report not misleading.
9)
I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43101.
10)
I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been
prepared in compliance with that instrument and form.
“G. Giroux”
G. H. Giroux, P.Eng., MASc.
328
329
MARK E. SMITH, P.E.
I, Mark E. Smith, P.E., geotechnical engineer, do hereby certify that:
1.
This certificate applies to the Technical Report entitled “2014 Mineral Resource Estimate and
Preliminary Economic Assessment, San Felipe Project, Sonora Mexico” dated effective
September 4, 2014 and amended on June 29, 2016, (the "Technical Report"). I am responsible
for Section 18.1 and Table 26-1 of the Technical Report.
2.
I am a professional engineer and the chief executive with RRD International with residence and
business address at 759 Eagle Drive, Incline Village, Nevada, USA.
3.
I have practiced my profession continuously since 1979. I have 37 years of experience in
geotechnical engineering and tailings management.
4.
I graduated from the University of Nevada, Reno (M.Sc. Civil Eng.) in 1986, and the University
of California, Davis (B.Sc. Civil Eng.) in 1979. I also studied geological engineering,
groundwater hydrology and rock mechanics at the University of Utah, Salt Lake City (19791980).
5.
I am a registered civil and geotechnical engineer in California (#CE35469 and #G2082), a
registered professional engineer (civil) and water rights surveyor in Nevada (#6546 and #701), a
registered professional engineer (civil and structural) in Idaho and Utah, and a registered
professional engineer (civil) in Texas and South Dakota. I am a Registered Member of the
Society for Mining, Metallurgy & Exploration (#3005800). I am a member of the Advisory Board
for the College of Engineering, University of Nevada, Reno. I am the qualifying officer for
contractor’s licenses for general building and engineering construction in California (#968419).
6.
I visited the property on February 14 -15, 2014. I have no prior involvement with the San Felipe
project. I am independent of the Issuer and related companies applying all of the tests in Section
1.5 of NI43-101.
7.
As of the date of this certificate, to the best of my knowledge, information and belief, the
Technical Report contains all scientific and technical information that is required to be disclosed
to make the technical not misleading.
8.
I have read the definition of “Qualified Person” set out in National Instrument 43-101 (NI43-101)
and certify that by reason of my education, affiliation with professional associations, and past
relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of
NI43-101.
9.
I have read NI43-101 and the Technical Report has been prepared in compliance with NI43-101
and Form 43-101.
Dated this 29th day of June, 2016.
“Mark E. Smith”
Mark E. Smith, P.E.
330
331

Resource Estimate and Preliminary Economic Assessment

Transcription

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