Overview

Deposit type

• Vein / narrow vein
• Breccia pipe / Stockwork
• Epithermal

Summary:

The deposits within the Palmarejo Operations area are considered to be examples of epithermal deposits displaying both intermediate- and low-sulfidation features.

At Palmarejo the mineralization commonly takes the form of quartz–calcite veins or quartz vein breccias. Mineralization is typically zoned with silver dominant mineralization in the upper parts of the system transitioning to more gold dominant and eventually base metal dominant at depth.

The two main mining districts within the Project area are the Palmarejo and Guazapares districts.

Mineralization Palmarejo District
Mineralization in the district is largely blind with orebody tops 50–300 m below the current surface elevations. The major orebodies occur mainly at elevations of between 950–1300 m above sea level in the Guadalupe–Independencia area.

Mineralization within the Palmarejo district consists of epithermal, intermediate to low sulfidation, silver–gold vein and vein-breccia deposits that exhibit vertical and lateral zoning. Mineralization occurs along the principal northwest-trending faults and is largely confined to fault-hosted veins. The largest deposits occur on the faults that have the greatest displacement and strike length. Veins are polyphase and comprise generations of early quartz breccia with sphalerite-pyritegalena dominant sulfide and silver–gold phases as disseminations and bands. Later vein generations include iron oxide and calcite fillings that overprint quartz breccia vein phases.

Veins, in most cases, are late in the fault history and are best developed in ore-shoots at structural intersections where dilation is greatest.

Silver–gold deposits in the Palmarejo district are characterized by pervasive silicification, quartzfill expansion breccias, and sheeted veins. Multiple stages of mineralization produced several phases of silica, ranging from chalcedony to comb quartz, and typically two periods of silver–gold mineralization. This strongly-zoned mineralization is characterized by pyrite, sphalerite, galena, and argentite (acanthite) deposited within the quartz vein/breccias at lower elevations and highergrade precious-metals mineralization with fine grained, black, silver-rich sulfide bands or brecciainfill in the upper portions of the structures. There is a general sense across the Palmarejo Operations that higher gold values occur deeper in the original mineral system, while richer silver values were deposited in the upper levels of these systems.

Mineralization Guazapares District
The major structures that host the mineralized veins, stockworks, and breccias generally occur in propylitically altered andesite and to a lesser extent, in rhyodacitic volcanic tuffs and related hypabyssal intrusions of the Lower Volcanic Series. Contacts between andesitic and felsic sequences or within the more competent and brittle felsic sequences that allowed for development of through-going fractures are favorable locations. Dilational portions of the fault zones, such as flexures, link veins in fault jogs, and stockwork tension veins appear, at least locally, to preferentially accommodate development of higher-grade mineralized shoots.

Silver–gold mineralization, with variable but typically low amounts of lead and zinc, occurs within en echelon structural zones characterized by multi-phase quartz veining, quartz + carbonate + pyrite veinlet stockworks, silicified hydrothermal breccias, and quartz-filled expansion breccias.

Three distinct styles of mineralization are identified: high-grade vein systems, sheeted vein/stockwork/fracture complexes, and volcanic dome complexes:
• High-grade quartz + carbonate vein systems: trend north-northwest to northwest. These vein systems are typically silver-rich, with an Ag:Au ratio of 100:1. The principal sulfide minerals within the veins include sphalerite and argentite, with pyrite being less abundant. Gold-rich veins have pyrite and traces of chalcopyrite as the principal sulfide minerals, and often represent the deeper portions of the silver-rich vein systems:
• Sheeted vein/stockwork/fracture complexes: occur as wide zones with the potential for bulk mining. These broad zones include various thin quartz veins, quartz-veinlet stockworks, gouge/fault breccias, and fractures and also trend northwesterly. Silver and low levels of associated base metals tend to occur in the quartz veins at shallow depths, with potential for higher-grade gold mineralization at depth;
• Volcanic dome complexes are apparently controlled by the intersection of north-northwestand east–northeast-trending structures. Intrusive dacitic to andesitic bodies are common and may be related to the volcanic dome complexes. Mineralization occurs in broad zones along the margin of the domes, typically as disseminated, low-grade gold, with alteration, zoning, and mineralization suggestive of a separate and later mineralizing event.

Descriptions are provided for the deposits that have current mineral resource estimates:
Guadalupe
The Guadalupe deposits include the principal Guadalupe deposit and a number of associated zones, the economically most important being Zapata and La Patria.

The principal Guadalupe deposit comprises 18 domains with a known strike extent of 4.0 km and a vertical extent of 500 m. Individual domains are typically between 1-6 m wide, but mineralization locally reaches 25 m wide in areas of structural intersections. The Zapata zone is located in the immediate footwall of the Guadalupe deposit and comprises 14 domains with a known strike length of 1.4 km that is open to the northwest. The La Patria zone is approximately 2 km southwest of Guadalupe and is a sub-parallel structure comprising 12 domains with a known strike length of 2 km. The individual domains at the Zapata and La Patria zones are typically narrower than those of the Guadalupe deposit.

Independencia
The Independencia deposits include the Independencia deposit and a number of associated zones, the economically most important being Hidalgo and La Bavisa.

The principal Independencia deposit consists of 12 domains with a known strike extent of 1.5 km and a vertical extent 400 m. Individual domains are typically between 1–4 m wide, but mineralization locally reaches 15 m wide in areas of structural intersections.

Individual domains at the Hidalgo and La Bavisa zones are typically narrower than at Independencia. The Hidalgo zone is located immediately northwest of the Independencia deposit and comprises seven domains with a known strike length of 1.5 km, remaining open to the northwest. The La Bavisa zone is approximately 1 km northeast of Independencia and is a subparallel structure comprising five domains with a known strike length of 1 km.

The Independencia deposit extends off the Project area to the southeast and appears to die out to the northwest as major displacement seems to have been transferred to the Hidalgo fault. Hidalgo remains open to the northwest and most recent drilling discovered a high-grade shoot at the presently known northwestern extent.

La Nación
The La Nación deposits include the La Nación deposit and the Los Bancos zone

The La Nación deposit consists of six domains with a known strike extent of 1.5 km and a vertical extent of 250 m. Individual domains are typically between 1-4 m wide, but mineralization is locally 12 m wide in areas of structural intersections.

The Los Bancos zone is located to the approximately 400 m northwest of the La Nación deposit and comprises five domains with a known strike length of 400 m. The individual domains at the Los Bancos zones are much narrower than at La Nación.

Both La Nación and Los Bancos are considered to be well constrained by drilling in both dip and strike extents and only limited infill drill programs are planned.

Mining Methods

• Transverse stoping
• Longitudinal stoping
• Avoca
• Longhole open stoping
• Sub-level stoping

Summary:

The Guadalupe, Independencia and La Nación mines use conventional underground mining methods and conventional equipment. The overall production rate is approximately 165,000 t/month.

Primary access to the Guadalupe mine is from surface via two ramps. The West (Poniente) Decline and East (Oriente) Level are located 700 m north of the deposit in the hanging wall. A third portal for primary ventilation is the South Portal (Portal Sur) which is situated on the southern strike extent of the deposit footwall approximately 2,200 m south–southeast from the main access portals. The West Decline serves as the primary access for haulage, while the East provides both haulage and support access. Both main ramps are used for primary ventilation intake while the main fans at South Portal are in operation. When the South Portal fans are down for maintenance, a secondary system is engaged providing intake on the East and exhaust on the South and West. The South portal is used as a primary exhaust for the mine as well as secondary escapeway for extended work areas of Guadalupe and Animas.

Two accesses have been developed to connect the Guadalupe ramp system to the Zapata ramp system. First ore development from Zapata was in 2021. The Animas extension is located at the far south end of the Guadalupe mine and is accessed via a single ramp.

Mine access drifts were advanced through the ore structure and into the footwall where ramps were developed for vertical access to the level footwall drives. The access ramps are designed at 5.5 m high x 5.0 m wide and have been driven at 15% grades. Key input parameters to the mine design include mechanized diesel and electric drill, load, and haulage systems. A preliminary production rate of 150,000 t/month was increased to 165,000 t/month in 2021 with the development of new orebodies and accelerated development rates. The material handling system uses a load-haul-dump (LHD) and truck transport system of ore loading and hauling to an interim surface stockpile. Ore is separated at surface into stockpiles to support blending prior to transport to the plant run-of-mine stockpile. Waste from development is either directly transported from development to backfilling pockets in active stopes or stockpiled underground for later use as backfill.

Mining methods used at Guadalupe include both transverse and longitudinal sublevel stoping. The operation has changed from principally transverse longhole stoping from startup in 2014 where veins were wider to narrow vein longitudinal stoping in 2021. Access to transverse stoping areas is via footwall drives developed parallel to the orebody strike. Drawpoints are developed perpendicular to the footwall sublevels to access the stopes. A sequence of primary and secondary stopes is developed and extracted in sequence along strike of the vein. The primary stopes (roughly 10 m of strike) are excavated and backfilled with cemented backfill providing pillar support for the extraction of the secondary. The secondaries are then backfilled with waste to support ramping up to the next level. Access to longitudinal stopes is along and within the ore zones where drifts are driven along strike within the vein and extraction is in sequence from level to level in 15–20 m increments depending on ground conditions. The open stope is backfilled, and the extraction continues in sequence. Level or stope heights in Guadalupe are generally 20 m.

Independencia mine - the North and South declines provide access to the deposit and provide secondary intake (south) and primary exhaust ventilation (north) for the mine. The access ramps are designed at 5.5 m high x 5.0 m wide and have been driven at a grade of -15%. Primary ventilation intake is from a vertical surface raise and fan system constructed in the La Nación Mine and connected via dual ramps to the La Nación orebody on the 1140 and 1260 levels.

Mine access drifts were advanced through the ore structure and into the footwall where ramps were developed for vertical access to the level footwall drives. The access ramps were designed at 5.5 m high x 5.0 m wide and were driven at 15% grade. Starting in 2021, ramps and accesses were reduced to 5.3 x 5.0 m to provide support for increased development rates and reduced unit costs.

Mining methods used at Independencia include both transverse and longitudinal sublevel stoping. The operation transitioned from principally transverse longhole stoping from startup in 2016 where veins were wider to narrow vein longitudinal stoping in 2021. Due to the sinusoidal nature of the mineralized zones, reduced orebody thickness, and generally poorer ground conditions, productive longhole stoping has been achieved, but at higher costs due to slower development and mining rates and increased support requirements. Stope and level heights in Independencia are 20 m.

La Nación mine can be accessed from two levels, one from the south decline ramp access on the 1140 level from Independencia, and the other from the footwall drive at the 1260 level. The two drifts provide access to the deposit along with primary intake and exhaust ventilation for both the La Nación and Independencia mines. The access ramps are designed at 5.5 m high x 5.0 m wide with a gradient of 2%. The access ramps from Independencia are connected via a spiral ramp developed in the footwall of the La Nación orebody to connect the lower and upper part of the orebody and access to the sublevels.

The La Nación deposit is mined using similar equipment, personnel, and mining methods as the adjacent Independencia and Guadalupe mines. Much of the ore mining will be completed using longitudinal sublevel stoping due to the narrow width of the vein. Mine level and stope heights were increased to 25 m following a rock mechanics study supporting increasing the stope heights.

Backfill
Primary stopes as extracted using transverse sublevel method are filled with cemented rock fill once the ore is drilled, blasted, and extracted. The cemented rock fill is produced on surface directly from a 3000 t/d mixing plant and hauled underground to the stope location. The majority of cemented backfill is used specifically for this method with secondary placement required for sill pillars and curtains where longitudinal retreat extraction method is applied. Sill pillars require the backfill of cemented fill along the entire length of the sublevel. All three active mines have completed sill pillars within the vertical profile of the orebody. Curtains are designed and backfilled in those areas where longitudinal retreat mining requires the installation of a curtain to allow backfilling of the stope prior to continuing stope extraction. This curtain is required every 15–25 m depending on the design span distance as determined from a calculated hydraulic radius. In areas where the Avoca method is applied, cemented backfill is limited or not required.

Waste rock backfill from development mining is the principal backfill for secondary transverse stopes and for longitudinal stopes. In most cases, the rock fill is loaded on to trucks from waste development headers outside the orebody and delivered directly to the stope. Extra material is stored underground on previously-mined levels to be used later where needed.

Comminution

Crushers and Mills

Summary:

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 vertically from the jaw crusher onto a conveyor and delivered to a 1,250-t capacity interim coarse ore stockpile. Two variable vibrating feeders reclaim the crushed ore through a vertical feed onto a belt conveyor for delivery to the SAG mill for grinding.

Grinding
Coarse ore from the primary crusher is directly fed to the grinding circuit from the interim crushed ore stockpile. The grinding circuit consists of a SAG mill and a ball mill operating in a circuit with a series of cyclones for classification and passing to flotation or return to grind. Both mills are 6.7 m in diameter and 7.5 m long equipped with 2,500 kW motors. The grinding circuit feed and product is controlled and varied depending on ore type and blend from the mines.

The cyclone battery consists of nine 203 cm Krebs cyclones with an apex opening of 10.8 cm and vortex opening of 15.2 cm. Cyclone operational pressure is maintained in a range from 96–110 kPa. The cyclone battery underflow reports to the ball mill to maintain a recirculating load to have better control of the flotation feed size, while the cyclone overflow reports to flotation.

Processing

• Electric furnace
• Smelting
• Crush & Screen plant
• Flotation
• Agitated tank (VAT) leaching
• Counter current decantation (CCD)
• Concentrate leach
• Carbon in leach (CIL)
• Carbon adsorption-desorption-recovery (ADR)
• Elution
• Merrill–Crowe
• Dewatering
• Cyanide (reagent)

Summary:

The processing plant is located immediately south and overlooks the village of Palmarejo at an elevation of approximately 880 m. The plant is designed to operate 365 days per year at 91.3% availability. The plant design mill throughput is 6,000 t/day of ore with upgrades providing a nominal throughput up to 7,000 t/day.

The flow sheet consists of a standard crushing and grinding circuit (jaw crusher, semi-autogenous grind (SAG) mill and ball mill), followed by flotation circuit, where the flotation concentrate is directed to a sequence of clarification tanks then to agitated cyanidation tanks. Floatation tailings are directed to and treated in agitated cyanidation tanks. A Merrill Crowe circuit is used to recover gold and silver from the leachates of concentrate and tailings solutions through a carbon in leach (CIL)- absorption, desorption, recovery (ADR) system.

Flotation
The ball mill cyclone overflows at a nominal P80 minus 75 µm in size with a pulp density of 30% solids flows by gravity to the rougher flotation conditioner tank, where the slurry is conditioned with Aero 404 and potassium amyl xanthate (PAX). The conditioner tank overflows to feed a bank of five 100 m3 capacity rougher flotation 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.

Rougher flotation concentrates report either to the cleaner concentrate tank, where they are combined with the cleaner concentrate, or to the scavenger concentrate tank, where they are combined with the scavenger concentrate. Scavenger concentrate reports to a bank of two 17 m3 capacity cells where the first cleaner stage is provided. The first cleaner concentrate reports to a conditioning tank for additional reagents adjustment, and then flows to a bank of three 17 m3 capacity cells, where the final cleaner flotation is obtained. The final cleaner concentrate is pumped to the concentrate thickener for dewatering. The concentrate thickener overflow reports to the grinding circuit as recycled water. The thickener underflow, at approximately 65% solids, is pumped to the concentrate leach circuit for intense cyanide mixing and agitation. The blended solution is passed to the clarifiers for final processing.

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

Flotation underflow is transferred to a thickener for dewatering with the fluid overflow reporting back to the grinding circuit as recycled water. Thickener underflow, at approximately 60% solids, is transferred to an agitated leach circuit for cyanide leaching and dissolution of residual gold and silver values to be recovered in the ADR circuit.

Flotation Concentrate Leaching
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 200 m3, providing a total average leaching time of roughly 48 hours.

Thickened flotation concentrate is diluted from 65% solids to approximately 50% solids and sodium cyanide solution is added to maintain a concentration of 10 g/L NaCN. The plant switched from air injection using compressors prior to 2019 to liquid oxygen which is injected into the concentrate solution to enhance the silver-CN bonding process at lower cyanidation rates resulting in lower cyanide consumption and reduced power.

The mixed concentrate is pumped from the concentrate leach circuit to a triple stage counter-current clarification (CCD) circuit to recover the gold and silver bonded to the cyanide in solution. Each stage consists of a high-rate, 9.0 m diameter clarifier-thickener and an inter-stage mixing tank to enhance washing efficiency. Pregnant solution containing the recoverable metal is collected from the overflow at the first CCD thickener. This solution is pumped to the pregnant solution tank for delivery to the Merrill Crowe circuit at the refinery building for metal extraction. Thickened underflow from the final CCD thickener is pumped to an agitated leach circuit with the flotation underflow for additional leaching and potential recovery of residual metal values.

Flotation Tailings Leaching
The flotation tailings leaching circuit is also located in the leaching/recovery area of the mill facilities. The leach circuit comprises a total of eight leach tanks. The tanks each have different capacities, ranging from 2,000 m3 to 1,162 m3 for tanks No. 1 and No. 8, respectively, providing an overall retention time of 24 hours.

Activated carbon is introduced to the last four tanks of the circuit (tanks 4 to 8) with the main objective of capture dissolved gold and silver values content in solution before it is transferred to the final tailing thickener. The loaded carbon is washed, bagged, and shipped to an outside refinery facility for processing.

Carbon Desorption and Regeneration
This circuit was re-introduced the second quarter of 2018. Prior to this the carbon was shipped to external refineries from 2016–2018. The circuit was upgraded with an ADR stripping circuit to support recovery improvement efforts on the flotation tailings circuit.

As part of the carbon desorption and ADR project in 2018, a carbon regeneration furnace was added to reduce carbon consumption by reactivating stripped carbon. This system was active through 2021.

Merrill Crowe and Refining
Pregnant solution from the flotation concentrate leach CCD first thickener overflow is pumped to one of three batch solution tanks, and then pumped to the primary Merrill Crowe system. The primary Merrill Crowe circuit capacity is 83 m3/hr. A secondary Merrill Crowe unit handles low-grade pregnant solution from the floatation tailings leach circuit. The final tailings thickener overflow is the source of this low-grade pregnant solution, which is pumped throughout the secondary Merrill Crowe circuit. The secondary Merrill Crowe circuit has a capacity of 175 m3/hr. The secondary Merrill Crowe system was designed to handle higher grade pregnant solution from the flotation concentrate leach CCD circuit.

In the Merrill Crowe process, total suspended solids are first removed from the pregnant solution using a series of clarification filters. The clarified pregnant solution is routed to a deaeration tower to impact a bed of high-surface area plastic tower packing. As the solution travels down the packing, dissolved oxygen is removed from the solution and routed through the vacuum system piping to the vacuum pump, and then to the atmosphere. The dissolved oxygen is removed to a concentration of approximately to <0.7 ppm. Once the pregnant solution has been clarified and de-aerated, it is ready for precious metal precipitation by zinc cementation. The precipitated gold and silver resulting from the zinc cementation reactions are routed to the precipitate filters. The spent solution is pumped back to different points of the flotation tailings leaching circuit and/or the concentrate leach circuit for slurry washing and dilution.

The precipitate produced by Merrill Crowe is dried in two electrical dryer ovens before being smelted in a 600 kg/hr capacity electric induction furnace and poured into 30 kg doré ingots. Dore ingots are shipped directly to an offsite refinery.

Water Supply

Summary:

The processing circuit uses approximately 6,650 m3 of water daily; this consists of approximately 650 m3 of fresh water from a local dam and the remaining 6,000 m3 being water reclaimed from the tailings storage facility (TSF) and reused in the mill.

Water for the process facilities is obtained from a variety of sources. Reclaimed water from the wet tailings including underflow collection is recycled back to the plant from the TSF. When needed, additional make-up water is pumped from the underground mines, additional subsurface sources from areas wells, limited permit options from the freshwater diversion dam, and a pump station located at the Chínipas River.

Domestic use water is purchased from local municipalities or is trucked to site from various stations that hold water sourced from the Chínipas River. All gray water is stored and blended for use in the process cycle at the plant.

Production

Operational metrics

Personnel

Job Title	Name	Profile	Ref. Date
Environmental Superintendent	Oscar Gòmez		Mar 7, 2024
Health & Safety Manager	Hugo Lopez		Mar 7, 2024
Maintenance Manager	José Gregorio Cardona Villafaña		Mar 7, 2024
Mine Maintenance Superintendent	Jorge Alberto Duarte Reza		Mar 7, 2024
Technical Services Manager	Cesar Ricardo Trejo Moran		Mar 7, 2024
Underground Mine Manager	Sergio Sotelo		Mar 7, 2024