Gold-silver mineralization on the Mercedes property is hosted within epithermal, low-sulphidation (adularia-sericite) veins, stockwork, and breccia zones. These deposits form on predominately felsic subaerial volcanic complexes in extensional and strike-slip structural regimes. Near-surface hydrothermal systems, including surface hot springs and deeper hydrothermal fluid-flow zones, are the sites of mineralization. Mineral deposition takes place as the fluids undergo cooling by fluid mixing, boiling and decompression.

The geology of the Mercedes area is dominated by two northwest trending arches, cut by numerous northwest trending high-angle structures, which have exposed older marine sediments and overlying interbedded volcaniclastic sediments and lithic to quartz crystal lithic tuff units.

Over 16.5 km of veins have been identified within or marginal to the andesite-filled basins, which constitute a primary exploration target on the property. Major veins typically trend N30º-70ºW at 60º to 90º dips following the major regional structural pattern. Veins typically dip at greater than 60º, but locally range as low as 25º.A total of 16 low-sulphidation, epithermal vein/stockwork/breccia zones, have been identified on the Mercedes property and have been divided into three sub-district areas.

Mercedes Area (Mercedes-Barrancas)
The Mercedes vein system is the most prominent and continuous mineralized zone identified on the property, consisting ........

The Mine consists of seven separate underground mines:
1. Mercedes Mine area composed of Corona de Oro (no current reserves), Casa Blanca, Brecha Hill, Brecha Hill Norte, Aida, and Aida Norte;
2. Barrancas-Lagunas mine area composed of the Lagunas, Barrancas Centro, Barrancas Norte, Marianas, and Gap zone;
3. Lupita & Lupita Extension mine area;
4. Diluvio & Diluvio West mine areas;
5. Klondike mine area composed of the Rey de Oro and Rey de Oro Superior (Klondike deposit has no current reserves);
6. San Martin mine area.

While each of these deposits has ore remaining, Mercedes and Barrancas-Lagunas are nearing depletion with mostly remnant mining taking place. The bulk of the tonnage for the LOM is expected to be mined from Lupita, Diluvio, and Rey de Oro.

Each of the deposits are accessed through surface portals with some underground connections between deposits where possible.

Underground ramps connecting levels and nearby deposits are used as haulage routes for the 16 t haul trucks utilized at the Mine. These haul trucks are responsible for hauling from underground at each respective deposit and dumping at the ore stockpile located at the Mercedes section of the mine site.

The Mine currently plans the majority of mining to be completed using the mechanized cut & fill mining method. In Diluvio and Diluvio West the Mine utilizes a longitudinal longhole open stoping mining method where the ground condi ........

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A transfer chute, belt feeder and additional conveyor were added in 2020 to provide an option to bypass the fine ore bin and feed directly to the grinding (ball) mill.

The plant is capable of processing approximately 2,000 tpd and is comprised of:
- Three-stage crushing;
- Single stage grinding and classification with cyclones;
- Gravity concentration (available but not normally required or used);
- Agitated cyanide leaching;
- Counter-current decantation (CCD) thickener wash circuit;
- Merrill-Crowe precious metal recovery circuit;
- Cyanide detoxification of tailings;
- Refinery.

Gravity Concentration
Approximately 25% of the hydrocyclone underflow is directed to a 762 mm diameter bowl style gravity concentrator when it is in use. Tailings from the gravity concentrator are returned to the ball mill circuit. Gravity concentrate flows by gravity to a magnetic separator and shaking table circuit. Non-magnetic concentrate ........