Mineralization at Santa Elena occurs as a series of replacement veins, stockwork and hydrothermal breccias typical of other low-sulphidation epithermal deposits found in the Sierra Madre, and elsewhere in the world. Similar deposits include the La Colorada deposit in Sonora Mexico, Pinos Altos deposit in Chihuahua Mexico, El Pennon deposit in Chile, and those deposits occurring in the Midas and Oatman districts of Nevada and Arizona in the USA. These deposits form in predominantly sub-aerial felsic volcanic complexes in extensional and strikeslip structural regimes. Samples previously collected by various parties, including SilverCrest, show a geochemical signature consistent with a high calcium, high level, low-sulphidation system (Au-Ag-Sb-Pb-Zn-BaCa-Mn).

The Santa Elena deposit contains gold and silver (typically as electrum) with minor lead, zinc and copper. The structure consists of multiple banded quartz veins and stockwork with associated adularia, fluorite, calcite and minor sulphides. Bonanza ore shoots (greater than 500 gpt silver and 30 gpt gold) appear to be locally present (hole SE-12-106 with average uncapped grades of 35.94 gpt Au and 1,027 gpt Ag over 2.37 metres, not true width) but require more definition to determine their full extent.

The permeable nature of the fractured zones has allowed partial oxidation to locally occur to maximum depth of 400 metres below the surface in selective fractured zones. Minor disseminated sulphides and possibly rhodonite have been noted at approximately 530 vertical metres.

Metal zonation appears to exist with higher grades and thicker mineralized widths near the epithermal boiling zones, one of which daylights in the open pit area. A trend of higher grades and thicker veining is apparent with a plunge of approximately 25° to the east. Drill hole SE-12-74 intersected the vein at approximately 500 vertical metres depth with an average uncapped grade of 1.56 gpt Au and 133 gpt Ag over 7 metres (not calculated as true width) along this plunging trend from the current open pit operation.

Zonation also appears to correspond to northwest-trending structures that cross-cut the Main Mineralized Zone forming high grade shoots. Vertical zonation shows gold content consistent with depth and silver content increasing. At the surface, the silver to gold ratio is 20:1. At 500 m below surface, the ratio is approximately 100:1.

Minor sulphides have been observed in a few locations within the mineralized zone. The andesite in the hanging wall shows disseminated pyrite averaging 5%. Calcite is found in close proximity to pyrite and averages about the same. Select locations in the hanging wall show +30% finely disseminated pyrite spatially associated with +30% disseminated and veinlet calcite. Hydrothermal breccias exist in the hanging wall andesite proximal to the Main Zone with drill holes intersecting up to 200 m of breccia with a pyrite/calcite matrix. Selective sampling shows some anomalous lead, zinc and copper, suggesting a possible mineralized intrusive (porphyry) at depth.

Alteration within the deposit is widespread and pervasive with the most significant being silicification, kaolinization, and chloritization. Kaolin and alunite occur primarily along deeply weathered and oxidize structures and the fractured-andesite contact. Limonite within the oxide zone consists of a brick-red colour after pyrite, brown goethite and local yellow jarosite. Manganese occurs locally as pyrolusite and minor psilomelane near the surface.

Gangue minerals consist of quartz, calcite, adularia, chlorite and fluorite. Black calcite can be a significant gangue mineral found within the Main Mineralized Zone. Analyses shows calcite content of up to approximately 15% which has a direct metallurgical benefit for processing ore.

Avoca mining consists of an undercut level and an overcut level. The cross-cuts are in waste and connect the main transport drift to one end of the stope, after which ore development is completed along the length of the stope. The overcut level contains a backfill drift which goes to the opposite end of the stope. With Avoca Long Hole Stoping method, there is no limit to the length of the stope, and two tasks are occurring at once. First, ore is drilled by longhole and then drawn off in retreating vertical slices. Second, unconsolidated backfill is placed over the bench through the back of the stope from the drift in the footwall.

Where the mineralized zone is dipping at, or steeper than 55°, the stopes are designed at 25 metre vertical heights, with no sublevels. A sill pillar will beestablished on the 575 metre level. Long hole stoping has proceeded longitudinally and upwards along the defined mineralized zone. Stability within in the mining will be established during as-built development and stope by stope basis.

Where the dip of ore body results in stopes with a footwall inclination of less than 55°, long hole stoping will not be suitable due to the increased length of blastholes, potential blast hole inaccuracy and the potential for ore to hang up on the footwall. SilverCrest has thus considered mechanized cut and fill mining for these areas. The lower east portion of the reserve model has been assessed to have conditions conducive to cut and fill mining.

Once each cut is mined out, it will be filled with cemented rock fill, which can include tailings and waste rock from ongoing underground development. Dilution from hanging wall geotechnical failure will be minimal with cut and fill mining because there will be limited exposure to the hanging wall during mining. Support will be required for the exposed cut back (roof) of each cut during mining, for safety of personnel operating machinery and working in the stopes.

The ore will typically be mined in 5 m etre high cuts, with each cut silled out from hanging wall to footwall. Each cut will be accessed by attack ramps from the footwall development drifts. Once the cut has been filled all the way back into the attack ramp, the brow of the ramp is slashed into, and another cut can begin. This process will continue until the attack ramp grade becomes too steep for ore haulage. The orebody is then accessed from a higher footwall development.

Trucks will backhaul fill material from tailings and waste rock stockpiles on surface, when rock is not available from underground development. This material will be mixed with water and 5% cement to create a consolidated fill, and be placed in the stopes via scoop tram.

The ore from both underground and open pit resources will be processed by conventional milling and cyanide leaching technology. In addition partially leached material from the existing heap leach operations will be blended with open pit and underground ore at a variable rate and reprocessed through the same plant.

Santa Elena ore (Open Pit, Underground and Leach Pad) contains an estimated grade of 1.23 g/t Au and 78.4 g/t Ag and after crushing and grinding can be leached in cyanide to yield approximately 92% Au recovery and 67.5% Ag recovery. Because of the relatively high level of silver in the ore (and hence solutions) there are advantages and benefits to using traditional CCD and Merrill-Crowe for metal recovery rather than CIL/CIP. The partially leached heap ore yielded recoveries of approximately 60% Au and 30% Ag when crushed to 10 mm and processed on the heap leach (partial leach cycle to Q2 2014). On re-leaching after grinding in the new plant, the balance of the metals are recovered to the level expected from new ore from open pit and underground indicates as 92% for gold and 67.5% for Ag.

The process plant has been designed to treat a nominal 3000 tonne per day (tpd) of ore, a mixture of freshly mined material and partially leached heap leach residue. The plant has been designed to treat any proportion of these two types of feed.