Veins in the Cerro Los Gatos deposit show textures and gangue mineralogy (local chalcedony and calcite, and quartz-replaced lattice texture calcite) that indicate a relatively high-level hydrothermal system in the boiling environment. Breccia with clasts of vein quartz indicates a protracted hydrothermal system during multiple faulting events, a positive sign for economic epithermal veins. It has been interpreted that mineralized-shoots may extend relatively far down dip, possibly to at least 250 m.

Mineralization at Cerro Los Gatos is characterized by, silver, lead, zinc, and copper sulfides and their corresponding oxides, along with fluorite, manganese, barite, and traces of gold associated with quartz and calcite veins. The veins vary in orientation from West-Northwest to Northwest to North-Northwest to North-Northeast and vary in thickness from 1 m to 8 m in outcrop but displaying much greater true thickness at depth. Study of the veins in hand specimens and thin sections suggest they are epithermal in origin and are likely of intermediate sulfidation composition .

Economic mineralized grades are not present at surface; however, epithermal alteration textures are present and aided in the discovery of the deposit. The general Northwest trending East dipping Cerro Los Gatos vein system is persistent with a mapped extension in the order of 10 km, true widths of as much as 30 m at depth as demonstrated by diamond drilling, and local associated veining up to 50 m wide. Banded quartz veins and breccias are cemented by quartz, calcite, and abundant manganese oxides.

A study based on geological characteristics and silver-lead-zinc (arsenic-antimony-mercury) anomalous sections of the vein resulted in the discovery of the Cerro Los Gatos listric-shaped mineralized horizon hosting steeply to shallowly dipping mineralized-shoots at depth. Mineralization of interest occurs for approximately 2,500 m in length, between an elevation varying roughly between 1,200 masl and 1,400 masl through a mineralized vertical extension of between 50 m and 250 m and an estimated average in the order of 200 m.

The top of the mineralized horizon at Cerro Los Gatos is generally located at an elevation of 1,400 masl. The surface is in the order of 1,570 masl ± 50 masl.

Mineralization of interest and high-grade mineralization have been identified in the different vein systems at the Los Gatos project. Lead, zinc, and silver have been identified from epithermal quartz veins at the surface and from drilling intersections, while smaller, but important quantities of gold and copper associated with the veins have been intersected. Anomalous values have, thus far, been identified in the Cerro Los Gatos, Esther, Amapola, Cieneguita, San Luis, Paula, , Rodeo, San Agustín, Boca de León, Lince and Mezcalera zones. Drilling has identified a continuous geometry of the mineralization in the Cerro Los Gatos, Esther and Amapola zones.

Lead mineralization occurs primarily as galena and lead oxide minerals of varying grain sizes that are disseminated in quartz vein material, as open-space filling in cavities, and as replacements in the andesitic and dacitic flow units.

Zinc mineralization occurs as sphalerite and zinc silicate minerals of variable grain sizes disseminated in quartz vein material, as open-space filling in cavities, and as replacements in the andesitic and dacitic flow units. Sphalerite ranges from yellow to brown in color and is deposited in a similar style but is not always associated with the galena mineralization.

Silver mineralization occurs as acanthite (argentite) and native silver and has been detected in thin sections as proustite as small inclusions within galena grains.

Copper mineralization occurs as chalcopyrite and occasional native copper disseminated within quartz veins. Gold mineral species have not been identified visually but are present in small quantities in assay results.

The veins themselves display variable gangue mineralization, depending on the depth of exposure within the epithermal environment. It is common to observe calcite or manganese oxide mineralization at high levels within the epithermal system, which transitions to barite, fluorite, and quartz at lower levels. Adularia, albite, and alunite have also been observed within the veins but only in small percentages and usually at high elevation levels. Within the mineralized portions of the veins, it is common to see quartz with minor fluorite and occasional minor calcite associated with lead, zinc, silver, copper, and gold mineralization. The veins are typically rhythmically banded on a scale of 1 mm to 10 mm per band, with repeated pulses of quartz carrying the metals and other gangue minerals. It is common to see multiple pulses of mineralization where small veins crosscut each other. It is also common to see various coloration of quartz in the multiple pulses, ranging from milky white to vitreous gray to amethystine purple (P. Pyle, 2010).

The underground mine design will support a steady-state production rate of 2,500 tpd of ore. The sequence of mining will begin with the Central Zone (CZ), which has already been accessed via the existing decline developed down to the 1400 Level. The bulk of the CZ will be mined using the drift- and-fill method, as the dips, widths, and thicknesses of the vein structures are amenable to this mining method.

The NorthWest Zone (NWZ) will be mined concurrently with the CZ via longhole stoping methods with sublevels developed at 20 m vertical intervals. Portions of the NWZ thicker than 9 m (footwall to hanging wall) will be mined using transverse longhole mining. Areas less than 9 m in width will be mined using longitudinal longhole mining.

Ore recovery from longhole stopes was based on the designed stope dimension of 12 m W × 20 m H × 12 m L (average), with the 5 m W x 5 m H access/drill drift volume removed. This yields a planned stope volume of 2,580 m3. Mucking complications, blasting limitations, and unplanned ore losses result in an overall mining recovery from longhole stopes of 96%.

The average drift-and-fill production heading is assumed to be 5 m H × 5 m W. Mining losses are expected to occur when rock cannot be removed from the floor. This typically happens when the floor is uneven and some of the rock settles to smooth the floor, or is lost into the underlying paste fill. Non-recoverable ore is assumed to be 0.1 m in depth. The resulting ore recovery for Drift- and-Fill mining is 98% of the planned excavation.

Modern trackless mobile equipment will be employed or most mining activities. LHDs and dedicated underground trucks will be used for ore/waste loading and transport from the underground workings through an internal ramp system and portal that connects all levels to surface.

Preproduction waste development is scheduled at approximately 250 m/month. This is required to establish the mine infrastructure and provide access to the initial stoping areas in the CZ and NWZ. Ongoing waste development to sustain the 2,500 tpd production rate averages approximately 180 m/month during the 11 years of full production.

Based on the deposit geometry and anticipated geomechanical conditions, underground mining of the Los Gatos resource will incorporate both longhole and drift-and-fill mining methods. The existing exploration decline from surface will be extended to provide primary access and delivery of services. The ramp will also be used for haulage of ore and waste from the underground operations.

The Project processing facility is designed to treat 2,500 tpd of lead, zinc and silver material at an operational availability of 92 percent. The processing flow sheet for the Project is a standard flow sheet that is commonly used in the mining industry, including conventional flotation recovery methods typical for lead-zinc material.

Run-of-mine (ROM) material will be crushed in a primary jaw crusher that is located adjacent to the underground mine portal. From there it will be conveyed to the processing facilities where it will be ground to 80 percent finer than 45 microns in a semi-autogenous grinding (SAG) and ball milling circuit.

The ore is further processed in a flotation circuit consisting of lead flotation followed by zinc flotation. The majority of the silver will be recovered in the lead flotation circuit and some silver will also be collected in the zinc flotation circuit.

Lead sulfide will be recovered in a rougher flotation bank, pro ........