Although detailed petrologic studies of veins in the Velardeña property have not been completed, individual deposits within the nearby Santa María dome have been studied in some detail and found to correspond to both shallow epithermal and deeper-seated mesothermal styles of mineralization. Epithermal veins, often displaying banded and open-space-filling quartz, occur at the Industria Mine where they are clearly distal to the main intrusive mass. The higher-level veins at Velardeña appear to be of this type. Many veins, especially at deeper levels in the Santa Juana and Terneras mines, are dominated by high modal percentages of coarse and fine grained, polymetallic sulfides, have little silicate gangue, and occupy a position within and proximal to intrusions and their thermally metamorphosed aureoles.

True epithermal veins occur at Velardeña, but at depth the majority of veins, breccias, and massive sulfide replacements are mesothermal in character, commonly contain arsenopyrite, and may be related to a deeper intrusive source.

Two main vein systems are present on the Velardeña property. The first is the northwest striking system found in the Santa Juana deposit, while the second is the east-west trending vein array which includes the Terneras, San Juanes, Roca Negra and San Mateo deposits.

Mineralization consists primarily of calcite-quartz veins with minor calc-silicate hosted (“skarn”) and massive sulfide replacement bodies. All mineraliza ........

The Project is planned to be operated as an exclusively underground operation. The current mine plan includes only the sulfide material from the principal veins, which include veins CC, C1, A4, F1, G1, San Mateo, Roca Negra, Hiletas, Terneras, Chicago, and Escondida. The plan targets an annual maximum of 112,775 tonnes.

Tetra Tech has conceptually planned stopes for two scenarios to determine potentially mineable Resources, targeting a mill feed of 325 tonnes per day. Scenario 1 includes Measured, Indicated, and Inferred Resources, and Scenario 2, excluding the Inferred material. Scenario 1 contains a potentially Minable Resource totaling 1.24 Mt tonnes for mining over 11 years, from and stope development. Scenario 2 contains a potentially Mineable Resource of 443 kt for mining for 4 years.

An underground site visit was conducted on December 10, 2019. The past extraction methods observed during the visit were Mechanized Cut and Fill stoping and Mechanized Resuing Cut and Fill stoping. These two techniques are considered for the conceptual plan and are suitable for the steeply dipping veins found at the Project.

Resue mining methods considered a minimum width of 0.7 meters, which was demonstrated in recent test mining at the site. Main access ramps will be 4 meters high by 4 meters wide. Cross Cuts and footwall development were considered in the plan. The loss of Resources available to mining through mini ........

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