Mineral Deposit
Mineralization at the Cusi Mine has been variously described as a) low-sulfidation epithermal (Ciesielski, 2007), b) high-sulfidation epithermal (SGS, 2008) and linked epithermal-base metal system (Meinhert, 2006). Meinhert (2006) notes that although shallow (<100 m) historic mining is reported to have encountered grades exceeding 1,000 oz/ton Ag, the veins currently exposed are more base-metal rich than would be expected in an epithermal system. However, Sierra Metals geologists consider the abundance of base metals on the property to be primarily a function of depth of exposure and SRK agrees with this interpretation. Mineralization occurs along narrow fractures containing quartz, sphalerite and galena, and wall rock alteration consists primarily of silicification and the development of clays and iron oxides. The veins contain quartz with crustiform and banded textures typical of epithermal systems.

The current geologic model for the Cusi property is described as follows:

The country rock on the property consists primarily of felsic volcanics interpreted to represent a caldera with a resurgent dome. Magma is interpreted to have intruded along the Cusi fault, a regional NW-trending, right-lateral strike-slip fault, and a subsequent eruption produced the collapsed caldera and Upper Volcanic Series felsic tuffs. A resurgent dome then arose within the caldera on the western side of the Cusi fault. This dome was then dissected by numerous northeast-trending, left-lateral faults, which acted as conduits for hydrothermal fluids and now host mineralized veins.

Two of the vein sets at Cusi are relatively large and have been mapped along strike for nearly a kilometre each. These vein sets, dilatational areas and structural intersections have historically been found to be reliable targets for mineralization. The veins are composed of both wide, continuous areas of mineralization as well as zones of numerous smaller swarms of veins or stockwork veinlets. The mineralization is predominately Ag and Pb-rich with lesser amounts of Au, Zn and Cu present in some areas.

SRK is of the opinion that the geologic model developed by Sierra Metals, which focuses primarily on the interpretation of the discrete veins and their related splays/stockwork zones, is appropriate for the deposit type and mining method, and that this has been borne out by a history of production.

Mineralization and Alteration
Numerous epithermal mineralized veins exist on the property. Typically, these are moderately to steeply dipping to the southeast, southwest, and north, ranging from less than 0.5 m to 2 m thick, and extend 100 m to 200 m along strike and up to 400 m down-dip. Small open pits were typically developed at vein intersections.

The epithermal mineralization associated to structures, breccias and filling fractures ranging from less than 1 m to 10 m thick, with a polymetallic filling of Ag-Pb-Zn sulphides and minor contents of copper and variable contents of gold. Crustiform and banded epithermal textures are common, and there is pervasive silicification with some sericite and disseminated pyrite. Zones with argillic alteration are common at the borders of the pervasive silicification, including kaolinite and montmorillonite. Oxidation is characterized by hematite, limonite and manganese oxides.

Zones of micro-veinlets and dissemination associated to intense fracturing related to the main structures are observed in the area of Promontorio. In Eduwiges, veins and zones of “stockwork” of quartz with pyrite and silicification alteration of 60 m to 150 m width and 200 m to 250 m extension are observed (Geomaps, 2012).

Bench and fill mining method is currently used in the main areas of the mine and to a lesser extent, room and pillar mining is also used. The mining method used varies depending on geotechnical constraints, mineralization trends, dimensions, and mine production targets.

Using the updated Mineral Resource estimate, Sierra Metals performed an expansion analysis to determine how the Cusi mine could achieve higher sustainable production rates. The analysis indicated that higher production rates are achievable through the massification of the bench and fill mining method in the new production areas, which will allow the sustainability of the operation. A new configuration of the mining method will allow obtaining a greater recovery of mining resources and increasing productivity.

Current production at Cusi comes from the Promontorio and Santa Rosa de Lima mineralized zones. Mineralized material is currently hauled to the surface using one of several adits or declines accessing the mineralized zones, and is then dumped onto small pads outside of the portals.

The mining sequence through this method is of a descending type, that is, the upper levels are mined, while in the lower ones the necessary preparations are made to start mining once the mineralized material has been extracted from the upper stopes. Within a sublevel, mining is carried out in retreat, starting at the ends of the stope and retreating towards the entrance.

In Cusi, mining sublevels are vertically spaced 16 meters from floor to floor, with a 3.5 m sill pillar left in-situ.

The conceptual mine plan developed was based on the implementation of bench and fill throughout the Cusi mine. Sierra evaluated the relative advantages of using the bench and fill mining method and determined improved mine production could be achieved for the following mineralized zones: Santa Rosa de Lima, Santa Eduwiges, Promontorio, San Nicolas, San Juan, San Ignacio, La Gloria, La Durana and Candelaria.

The extracted mineral is taken to the Mal Paso processing plant located 36 km from the mine, where lead and zinc concentrates are produced.

A base case Life of Mine (LOM) production and development schedule was generated for the Cusi
mine based on 1,200 tpd (432,000 tonnes per year).

The start date of this schedule is January 2021. Typical mining rates of 1,200 t/day mineralized
material and 560 t/day waste were applied as these are the rates the mine has been reportedly
operating at in early 2020.

In veins less than 3 m wide, sublevels are vertically spaced 16 m, and the access drift is 4 m x 4 m. Blastholes are vertically drilled 8.5 m thus leaving a sill pillar of 3.5 m under the overlying stope. In veins wider than 3 m but less than 5, sublevels are vertically spaced 16 m, and the access drift is 4 m x 4 m. Blastholes are vertically drilled 8.5 m thus leaving a sill pillar of 3.5 m under the overlying stope. Where veins are wider than 5 m, levels are spaced every 16 m and mining is carried out using the room and pillar mining method. Pillars are 7 m x 7 m and square rooms span 7 m x 7 m. Stopes have access drifts of 4 m x 4 m. Fanned blastholes are drilled to develop the room with a maximum vertical height excavated to 12.5 m (as measured from floor) thus leaving a 3.5 m sill pillar under the overlying stope.

Waste from the Promontorio and Santa Eduwiges mines is stored near the portals and entry ramps of these mines. Waste is used as backfill for the mine, and thus requirements for waste storage are minimal. Waste disposal areas are expected to be sufficient for expected future operations.

The concentrator's processing facilities include a crushing circuit consisting of a 50 t bulk hopper, a Metso TK9-32-22V vibratory feeder, a C96 Metso jaw crusher, an HP300 secondary cone crusher, a tertiary cone crusher HP300, a 6’x 20’ Trio double-bed primary vibrating screen, a 6’x20’ Trio double-bed secondary vibrating screen and a 5’x14’ double-bed secondary vibrating screen. The material is crushed to 90% passing -5/16" and is then deposited into three fine hoppers with an aggregate storage capacity of 1000 t.

The grinding circuit consists of a 7’x 10’ ball mill with a 250 HP motor, an 8’x 7’ ball mill with a 250HP motor and an 8’x14’ ball mill with a 600HP motor, and the classification system consists of D20 hydrocyclones.

The Cusi processing facilities include two interconnected process plants, which are the Mal Paso mill purchased from Rio Tinto, and the El Triunfo (Triungo) mill. Both mills are conventional ball mill and flotation plants fed from a single crushing circuit. The flotation circuit has the ability to produce lead concentrate and zinc concentrate, although the Pb circuit represents a comparably higher percentage of concentrate production.

El Triunfo includes a cyanide leach plant that has been used to process legacy tailings and, at times, fresh tails from Mal Paso. The leach plant was idled in mid2012 with no indication that it is scheduled to restart.

Cusi’s Mal Paso processing facility consists of a conventional concentration plant including crushing, grinding, flotation, dewatering of final concentrate, and a tailings disposal facility.

The Triungo circuit, which has a capacity of 400 tpd, produces a copper concentrate and a zinc concentrate. The Mal ........