Mineralization at Palmarejo is hosted in northwest-striking and west-dipping structures that cut through a volcano-sedimentary sequence of reworked volcaniclastic, massive and pyroclastic deposits. The volcaniclastic rocks include ash-rich mudstones and sandstones. The massive rocks include microcrystalline massive basalt, fine grained massive andesite and plagioclase crystal-rich massive andesite. The pyroclastic unit includes tuffaceous sandstone, lapillistone tuff and breccias (Galvan, 2007).

Palmarejo mineralization can be divided into three domains: the La Prieta and La Blanca vein domains, and the footwall and hangingwall stockwork domain developed along each of the two vein domains. The La Prieta vein domain consists of the La Prieta vein/breccia that dominated historic production from the area. The La Prieta footwall domain encompasses quartz stockwork mineralization and silicification within epiclastic rocks and andesitic tuffs. The La Prieta hangingwall domain consists of extensive sheeted-quartz-stockwork mineralization that is well exposed in the underground workings. The predominant geologic unit within this domain is an amygdaloidal andesite that lies between the La Prieta and La Blanca vein domains. The La Blanca vein domain consists of the La Blanca vein/breccia, which lies between porphyritic andesite on the hangingwall and amygdaloidal andesite and andesitic tuffs on the footwall. The La Blanca hangingwall domain includes quartz-stockwork mineralization within the porphyritic andesite.

The La Prieta structure extends for at least 3.5km, has a variable strike that averages about 115°, and dips to the southwest at 35° to 85°. The La Blanca structure strikes about 160°, has an average dip of about 50° to the southwest, and is thought to be a listric normal fault (Corbett, 2004) that parallels the trend of the regional faults in the SMO. Masterman et al. (2005) estimated up to 300m of throw on the La Blanca fault. Faults with similar orientations are the most commonly mineralized structures in the district.

A broad zone of mineralized quartz stockwork formed at the intersection of the La Blanca and La Prieta structures. North-trending splays from other north-northweststriking structures at Palmarejo may offset both the La Blanca and La Prieta faults (Beckton, 2004).

Gold-silver veins and vein/breccias occur within, and at the intersection of, the westnorthwest-striking La Prieta structure and the north-northwest-striking La Blanca structure. Multiple stages of hydrothermal activity and mineralization filled these structures with quartz veins and formed quartz stockwork mineralization within the wedge of rock formed by the intersection of the structures. Both the La Prieta and La Blanca veins have polymetallic silver-gold vein/breccias with an epithermal silver-gold overprint that forms high-grade shoots in the steeper-dipping portions of the listric normal faults (Corbett, 2004). Early mining focused on the La Prieta vein, where highgrade silver mineralization was present as bands of fine grained acanthite and galena within the vein.

The Palmarejo gold-silver complex located in the state of Chihuahua, Mexico, consisting of the Palmarejo processing facility, the Guadalupe deposit, located roughly eight kilometers southeast of the Palmarejo deposit; the Independencia deposit, located approximately 800 meters northeast of the Guadalupe deposit; the La Nación deposit, located adjacent to the Independencia deposit, and other nearby deposits and exploration targets.

Currently Palmarejo complex is fed by the Guadalupe, Independencia and La Nación underground mines.

Guadalupe Underground Mine
The Guadalupe mine is located south of the Palmarejo processing facilities via an 8km gravel road.

Access to the Guadalupe mine is from surface via two ramps: the Poniente Decline and Oriente Incline, located 700m north of the deposit in the hangingwall. The decline serves as the primary access and exhaust airway, while the incline provides access for secondary egress, fresh air, and mine services.

Standard ground support consists of pattern rock bolting using 2.4m and 1.8m length 39mm diameter split set friction bolts, which are also used to pin 4 x 4 inch welded wire mesh to the back and ribs. The mesh is installed within 1.7m of the drift floor. A 1.4m x 1.4m bolting pattern is used, which is modified to a tighter pattern when poor ground conditions are encountered.

Underground mining is employed two general categories of open stoping methods: transverse and longitudinal. In most cases, thinner areas of the orebody (less than 10 meters from hangingwall to footwall) are mined using the longitudinal retreat method, while thicker areas are mined using the transverse method with a primary/secondary stoping sequence.

In thinner areas of the orebody, longitudinal stoping is carried out used the Avoca mining method. This method reduces the requirements for waste development and cemented backfill, which reduces overall mining costs. Stopes are sequenced in a retreat manner, from the end of the mining block towards the level access, in a bottom up mining direction.

Broken ore and development waste is mucked using a LHD loader. Some of the LHD units are fitted with remote controls, which are used for stope mucking where the machine and operator are exposed to unsupported ground.

The LHD loads trucks with ore or waste from either a muckbay stockpile, or directly from the stope or development face. The trucks have a rated capacity of 45-tonnes and some of the units are fitted with telescopic dump systems.

The trucks haul waste to surface, where it is disposed of outside of the portal in a waste dump or stockpiled for use as backfill. The ore material is dumped on the portal pad in a designated area, and then loaded onto surface trucks where it is hauled to the crusher ROM pad at the process plant area.

All stopes and ore development are backfilled.

Independencia Underground Mine
The Independencia deposit is located approximately 1,400m NE of the Guadalupe deposit. The entrance to the mine is via two portals located approximately 270m north of the Guadalupe mine portals.

The two declines provide access to the deposit and primary ventilation for the mine. The access ramps are designed at 5.5m high by 5.0m wide and are being driven at a negative gradient of -15%.

The Independencia deposit is mined with similar equipment, personnel and mining methods as the adjacent Guadalupe mine. The two operations also share some of the surface infrastructure, which has been constructed (or is planned) for the operations.

Palmarejo‘s processing flowsheet consists of a standard crushing and grinding circuit (Jaw crusher - SAG mill – ball mill).

Crushing
Ore is delivered from the underground and open pit mining activities either to a Run of Mine (ROM) stockpile located adjacent to the primary crusher area or directly to the primary crusher dump hopper. The dump hopper has a fixed grizzly on top with an approximate opening of 20 inches and an apron feeder at the discharge. The ROM is fed with a front end loader and oversize is broken with a backhoe fitted with a hammer. The installed jaw crusher is a Nordberg C-140 with an opening of approximately 1.1m by 1.4m capable of handling 350 tonne/hr at a 5? CSS (Close Side Setting).

Crushed ore is discharged from the jaw crusher onto a conveyor and delivered to a 1,250 tonnes capacity stockpile. Two variable vibrating feeders reclaim the crushed ore onto a belt conveyor to delivery to the Semi-Autogenous Grind (SAG) mill for further comminution.

Grinding
Crushed ore is directly fed to the grinding circuit from the crushed ore stockpile. The grinding circuit consists of a SAG mill and a Ball mill operating in a closed circuit with a battery of cyclones for classification. The cyclone battery consists of nine 80-inch Krebs cyclones with an apex opening of 4.25 inches and vortex opening of 6 inches. Cyclone operational pressure is maintained in a range from 14 to 16 psi. The cyclone battery underflow reports to the ball mill to maintain a recirculating load to have a better control on the flotation feed size, while the cyclone overflow reports to flotation.

Both mills are 6.7m in diameter and 7.5m. long. Grinding circuit feed and product is 80% passing sizes of 120,000 µm and 75 µm, respectively.

Palmarejo‘s processing flowsheet consists of a standard crushing and grinding circuit (Jaw crusher - SAG mill – ball mill), followed by flotation, where the flotation concentrate is subjected to an intensive cyanide leach and flotation tailing is treated in agitated cyanidation. Finally, a Merrill Crowe circuit is used to recover gold and silver from the leachates.

The plant is designed to achieve an overall recovery of approximately 94.0% of the gold and 91.0% of the silver as a doré.

The ball mill cyclone overflows at a nominal 80% minus 75 µm in size with a pulp density of 30% solids flows by gravity to the rougher conditioner tank, where the slurry is conditioned with Aero 404 and potassium amyl xanthate (PAX). The conditioner tank overflows to feed a bank of six 100m3 capacity tank cells. Rougher flotation occurs at the first bank of two tank cells, and scavenger flotation occurs sequentially down the bank. Frother and PAX are added to rougher feed and during the scavenging flotation.

Cleaner flotation tailings are recycled to the rougher flotation conditioner tank or alternatively to the 3rd or 5 th rougher cell for additional treatment.

Flotation tailings are transferred to the tailings thickener for dewatering, and tailings thickener overflow reports to the grinding circuit as recycled water. Thickener underflow, at approximately 60% solids, is transferred to the Float Tails agitated leach circuit for cyanide leaching and dissolution of residual gold and silver values.

The concentrate leaching circuit is located in the Leaching/Recovery Area of the mill facilities and is comprised of four agitated leach tanks, each with a nominal capacity of 200m3, providing a total leaching time of 48 hours.

Thickened flotation concentrate is pumped to the concentrate leach circuit. The slurry is then diluted to approximately 50% solids, and sodium cyanide solution is added to maintain a concentration of 10 g/L NaCN. Oxygen is injected to the concentrate leach tanks to enhance the silver dissolution process, and also enables cyanide solution strength reduction from 50 g/L to 10 g/L NaCN, resulting in a substantial reduction of cyanide consumption.

Leached slurry from the concentrate leach circuit is then pumped to a triple stage countercurrent decantation (CCD) circuit to recover the dissolved gold and silver values. Each stage consists of a high rate, 9.0m diameter thickener and an inter-stage mixing tank to enhance washing efficiency. Pregnant solution containing metal bearing overflows from the first CCD thickener is pumped to the pregnant solution tank for subsequent delivery to the Merrill Crowe circuit, located at the refinery building for further treatment. Thickened underflow from the final CCD thickener is pumped to an agitated leach circuit for additional leaching and potential recovery of residual metal values.

The flotation tailings leaching circuit is also located in the Leaching/Recovery Area of the mill facilities.

Pregnant solution from the flotation concentrate leach CCD first thickener overflow is pumped to one of three batch solution tanks, and then pumped to a Merrill Crowe system, at a flow rate ranging from 55 to 60m 3/hr.

The precipitate produced by Merrill Crowe is dried in two electrical dryer ovens before being smelted in a 600kg/hr capacity electric induction furnace and poured into 30kg dore ingots.

Dore ingots are shipped by armored truck to a refinery.