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Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option

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Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option Effective date: May 31, 2014 Prepared by Michael Steinmann, P. Geo Martin Wafforn, P. Eng. Americo Delgado, P. Eng. Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option - Technical Report 1 Summary ................................................................................................................................... 11 1.1 Introduction, property description, and ownership ..................................................... 11 1.2 Geology and mineralization .......................................................................................... 12 1.3 Status of exploration, development, and operations .................................................. 13 1.4 Mineral resource and reserve estimates ...................................................................... 14 1.5 Mining ........................................................................................................................... 15 1.5.1 Mining methods of the existing operation ................................................. 15 1.5.2 Mining methods of the proposed expanded operation ............................. 16 1.5.3 Life of mine plan of the existing operation ................................................ 16 1.5.4 Life of mine plan of the proposed expanded operation............................. 17 1.5.5 Infrastructure of the existing operation ..................................................... 17 1.5.6 Infrastructure of the proposed expanded operation ................................. 18 1.5.7 New power line........................................................................................... 18 1.6 Mineral processing and recovery methods .................................................................. 18 1.6.1 Current heap leaching method ................................................................... 18 1.6.2 Proposed pulp agglomeration method ...................................................... 19 1.7 Capital and operating costs and economic analyses .................................................... 21 1.7.1 Estimated capital, sustaining capital, and operating costs of the existing operation ....................................................................................... 22 1.7.2 Estimated capital, sustaining capital, and operating costs of the proposed expanded operation ................................................................... 23 1.7.3 Estimated financial metrics of the existing operation ................................ 23 1.7.4 Estimated financial metrics of the proposed expanded operation ............ 23 1.8 Environmental, social, and community impact ............................................................ 24 1.9 Conclusions and recommendations ............................................................................. 24 1.9.1 Existing operation ....................................................................................... 24 1.9.2 Proposed expanded operation ................................................................... 25 2 Introduction ............................................................................................................................... 30 3 Reliance on other experts ......................................................................................................... 33 4 Property description and location ............................................................................................. 34 4.1 Location, issuer’s interest, mineral tenure, and surface rights .................................... 34 4.2 Royalties, back-in rights, payments, agreements, and encumbrances ........................ 36 4.3 Environmental liabilities ............................................................................................... 36 4.4 Permits .......................................................................................................................... 36 4.5 Significant factors and risks .......................................................................................... 37 5 Accessibility, climate, local resources, infrastructure, and physiography ................................ 38 August 2014 2 of 171 Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option - Technical Report 5.1 Physiography and climate ............................................................................................ 38 5.2 Accessibility, local resources, population centres, and transport ................................ 38 5.3 Surface rights ................................................................................................................ 38 5.4 Power and water .......................................................................................................... 39 5.5 Infrastructure................................................................................................................ 39 6 History ....................................................................................................................................... 41 7 Geological setting and mineralization ....................................................................................... 42 7.1 Regional geology .......................................................................................................... 42 7.2 Local geology ................................................................................................................ 43 7.3 Property geology .......................................................................................................... 44 7.3.1 Lithostratigraphy ........................................................................................ 45 7.3.2 Intrusions .................................................................................................... 48 7.3.3 Structure ..................................................................................................... 49 7.3.4 Alteration .................................................................................................... 49 7.4 Mineralization............................................................................................................... 50 8 Deposit types ............................................................................................................................. 52 9 Exploration ................................................................................................................................ 54 9.1 Exploration by Minefinders from 1993 to 2012 ........................................................... 54 9.2 Exploration by Pan American from 2012 to present .................................................... 54 10 Drilling ....................................................................................................................................... 55 10.1 Drilling summary and database .................................................................................... 55 10.2 Drilling by Minefinders from 1996 to 2012 .................................................................. 57 10.3 Drilling by Pan American from 2012 to present ........................................................... 58 10.4 Material impact on the accuracy and reliability of drilling results ............................... 58 10.5 Conclusions and recommendations ............................................................................. 59 11 Sample preparation, analyses, and security ............................................................................. 60 11.1 Sampling by Minefinders from 1996 to 2012 ............................................................... 60 11.1.1 On-site sample preparation and security ................................................... 60 11.1.2 Laboratory sample preparation and analytical methods ........................... 60 11.1.3 Quality assurance and quality control ........................................................ 61 11.2 Sampling by Pan American from 2012 to present ........................................................ 61 11.2.1 On-site sample preparation and security ................................................... 61 11.2.2 Laboratory sample preparation and analytical methods ........................... 62 11.2.3 Quality assurance and quality control ........................................................ 62 11.3 Bulk density measurements ......................................................................................... 63 August 2014 3 of 171 Technical Report for the Dolores Property, Chihuahua, Mexico - Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option - Technical Report 11.4 Conclusions and recommendations ............................................................................. 64 12 Data verification ........................................................................................................................ 65 12.1 Data verification by the qualified persons ................................................................... 65 12.1.1 Geology data reviews ................................................................................. 65 12.1.2 Mine engineering data reviews .................................................................
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