La Preciosa Silver-Gold Project
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M3-PN130128 Effective Date: July 29, 2014 Issue Date: August 29, 2014 La Preciosa Silver-Gold Project NI 43-101 Technical Report Feasibility Study Durango, Mexico Daniel H. Neff, P.E. Conrad E. Huss, P.E. W. David Tyler, SME-RM Robert Bruce Kennedy, P.E. Erin Patterson, P.E. Tracy E. Barnes, P.E. Christopher L. Easton, MMSA-Q.P. Dana C. Willis, SME-RM Corolla Hoag, C.P.G., SME-RM Prepared For: LA PRECIOSA SILVER-GOLD PROJECT FORM 43-101F1 TECHNICAL REPORT DATE AND SIGNATURES PAGE This report is current as of 29 July 2014. (Signed) “Daniel H. Neff” August 29, 2014 Daniel H. Neff, P.E. Date (Signed) “Conrad E. Huss” August 29, 2014 Conrad E. Huss, P.E. Date (Signed) “David Tyler” August 29, 2014 David Tyler, SME-RM Date (Signed) “Robert Bruce Kennedy” August 29, 2014 Robert Bruce Kennedy, P.E. Date (Signed) “Erin L. Patterson” August 29, 2014 Erin L. Patterson, P.E. Date (Signed) “Tracy Edward Barnes” August 29, 2014 Tracy Edward Barnes, P.E. Date (Signed) “Christopher L. Easton” August 29, 2014 Christopher L. Easton, MMSA-Q.P. Date (Signed) “Dana C. Willis” August 29, 2014 Dana C. Willis, SME-RM Date (Signed) “Corolla Hoag” August 29, 2014 Corolla Hoag, C.P.G., SME-RM Date M3-PN130128 29 August 2014 i LA PRECIOSA SILVER-GOLD PROJECT FORM 43-101F1 TECHNICAL REPORT LA PRECIOSA SILVER-GOLD PROJECT FORM 43-101F1 TECHNICAL REPORT TABLE OF CONTENTS SECTION PAGE DATE AND SIGNATURES PAGE ............................................................................................................................................. I TABLE OF CONTENTS ............................................................................................................................................................ II LIST OF FIGURES AND ILLUSTRATIONS ............................................................................................................................ XI LIST OF TABLES .................................................................................................................................................................. XIV 1 SUMMARY .................................................................................................................................................................. 1 1.1 KEY DATA ..................................................................................................................................................... 1 1.2 PROPERTY DESCRIPTION .............................................................................................................................. 2 1.2.1 Location and Access ........................................................................................................ 2 1.2.2 History ................................................................................................................................. 4 1.3 GEOLOGY ...................................................................................................................................................... 4 1.4 SAMPLE COLLECTION AND DATA VERIFICATION ............................................................................................ 5 1.5 MINERAL RESOURCES AND MINERAL RESERVES .......................................................................................... 5 1.5.1 Methodology ...................................................................................................................... 6 1.5.2 Geological Database ......................................................................................................... 6 1.6 MINING METHODS .......................................................................................................................................... 8 1.6.1 Tailing Design .................................................................................................................. 11 1.6.2 Surface Geotechnical ..................................................................................................... 12 1.6.3 Geomechanical - Open Pit ............................................................................................. 13 1.7 MINERAL PROCESSING AND METALLURGICAL TESTING .............................................................................. 14 1.8 RECOVERY METHODS .................................................................................................................................. 16 1.9 PROJECT INFRASTRUCTURE ........................................................................................................................ 18 1.9.1 Water Balance .................................................................................................................. 19 1.10 PROJECT EXECUTION PLAN ........................................................................................................................ 19 1.11 CAPITAL COST ESTIMATE ............................................................................................................................ 20 1.12 OPERATING AND MAINTENANCE COST ESTIMATE ....................................................................................... 21 1.13 ECONOMIC ANALYSIS .................................................................................................................................. 21 1.14 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT .......................................... 22 1.15 LAND ACQUISITION AND STATUS ................................................................................................................. 24 1.15.1 Land and Surface Property Regulations ..................................................................... 24 1.15.2 Location and Mineral Tenure ......................................................................................... 24 1.15.3 Issuer’s Interest ............................................................................................................... 26 1.15.4 Royalties, Back-in Rights, Payments, Agreements, and Encumbrances ............... 26 M3-PN130128 29 August 2014 ii LA PRECIOSA SILVER-GOLD PROJECT FORM 43-101F1 TECHNICAL REPORT 1.15.5 Adjacent Properties ........................................................................................................ 27 1.16 MARKET CONSIDERATIONS ......................................................................................................................... 27 1.17 PROJECT RISKS AND OPPORTUNITIES ......................................................................................................... 27 1.17.1 Risks ................................................................................................................................. 27 1.17.2 Opportunities ................................................................................................................... 28 1.18 CONCLUSIONS AND RECOMMENDATIONS .................................................................................................... 29 2 INTRODUCTION ....................................................................................................................................................... 31 2.1 AUTHORS .................................................................................................................................................... 31 2.2 SOURCES OF INFORMATION ......................................................................................................................... 32 2.3 UNITS AND TERMS OF REFERENCE .............................................................................................................. 32 3 RELIANCE ON OTHER EXPERTS ......................................................................................................................... 35 4 PROPERTY DESCRIPTION AND LOCATION ...................................................................................................... 36 4.1 LOCATION AND MINERAL TENURE ............................................................................................................... 36 4.2 ISSUER’S INTEREST ..................................................................................................................................... 39 4.3 ROYALTIES, BACK-IN RIGHTS, PAYMENTS, AGREEMENTS, AND ENCUMBRANCES ...................................... 39 4.4 ENVIRONMENTAL LIABILITIES AND PERMITS ................................................................................................ 42 4.5 SIGNIFICANT FACTORS AND RISKS .............................................................................................................. 42 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ............... 43 5.1 LOCATION ACCESS...................................................................................................................................... 43 5.2 CLIMATE AND LENGTH OF OPERATING SEASON .......................................................................................... 44 5.3 PROXIMITY TO POPULATION CENTER AND TRANSPORT ............................................................................... 44 5.4 SURFACE RIGHTS, LAND AVAILABILITY, INFRASTRUCTURE, AND LOCAL RESOURCES ................................ 44 5.4.1 Surface Rights, Land Availability, and Mining Areas ................................................ 44 5.4.2 Ownership ........................................................................................................................ 46 5.4.3 Power, Infrastructure, and Water .................................................................................