As with the nearby El Castillo property, the San Agustin Project does not fit entirely into an epithermal classification. The San Agustin deposit appears genetically and spatially related to a quartz monzonite stock with intense phyllic alteration and local tourmaline breccias. These factors may point towards a telescoped system associated with a deeper porphyry center. This is supported by broad zones of potassic alteration that are overlapped by pervasive phyllic alteration; however, locally on surface and in some drill holes boiling textures, suggestive of an epithermal system do occur. Mineralization is mainly associated with sulfides that fill fractures and occur in the matrix of hydrothermal breccias. These form an extensive system of sulfide stockworks dominated by pyrite with lesser percentages of sphalerite and galena. Mineralization is often contained within adularia haloes and can be associated with calcite veinlets.

The San Agustin deposit is an intermediate sulfidation style epithermal gold-silver system with vertical base-metal zonation associated with a dacite dome complex. Early potassic alteration could be associated to tourmaline breccias with a possible genetic connection to a porphyry that may be located either vertically or laterally to the deposit. Potassic alteration appears to be overprinted by the mineral system.

The host rocks for mineralization at San Agustin and El Castillo deposits are quartz monzonite-dacite bodies and the sedimentary sequence they intrude. Mineralization is emplaced through a strong and widespread system of sulfide rich veins, veinlets and fissure fillings that make the system similar to a disseminated deposit. These fracture systems follow two main project-scale fracture systems that run northeast and northwest. Locally mineralization can be observed following lithological controls in the sediments especially where they run parallel to the sediment-intrusive contact. Mineralization is also observed in the flow facies of the intrusive and is usually characterized by disseminated pyrite and in parallel veinlets. A component of the pyrite is thought to be pre-mineral and associated with early phyllic alteration. The mineral system has very little silica and is more related to sulfide fracture filling. Epithermal boiling textures have been observed locally such as bladed textures, coliform silica or drusy quartz. These epithermal textures are not common. Some structures with cryptocrystalline jasperoid have also been found in deeper drill intercepts within sulfide zones. Two late phases of mineralization have been identified with one carrying sphalerite and pyrite, and the other, galena and sphalerite.

The Main Fault, an important northwest striking and westerly dipping post-mineral fault bisects the resource area showing differences in mineralization on either side. On the hanging wall (west side) it is common to find structures rich in manganese and barite that are not observed in the footwall. The hanging wall block also presents higher values of silver and lead than the footwall block.

San Agustin Pit, was designed with five mining phases and contains 72.4M t of Indicated mineral resources at an average grade of 0.32 g/t Au and 10.6 g/t Ag. The life-of-mine strip ratio is 0.39:1. Pit resources were broken into two different material types designated for heap leach processing: high-grade and low-grade. At a 6M tpy production rate of high-grade material during the first year and then increasing to 10.8M tpy from the second year to the end of mine life, it is expected that the potential mine life will be 6.5 years. The production schedule targeted a consistent total mine tonnage of approximately 18M tpy, consisting of high-grade, low-grade, and waste material.

The dimensions of the San Agustin Pit are 1,500 m in the east-west and 1,100 m in the north-south directions. One primary waste dump was designed and located 500 m south of the San Agustin Pit. An overview of the San Agustin Pit and waste dump.

The San Agustin Project has been designed as an open pit mine with a heap leach operation utilizing a multiple-lift, single-use leach pad. Heap leaching was initiated during September 2017 at a rate of about 17,000 t/d. Planned increases in the second half of 2018 and in 2019 will result in production at a rate of about 30,000 t/d by the end of 2019. Leach-grade ore is crushed, stockpiled, reclaimed, and stacked on the leach pad with a conveyor stacking system. The stacked ore is leached with a lowgrade cyanide solution and the resulting PLS is processed in a carbon adsorption circuit to extract gold and silver. The loaded carbon is trucked to Argonaut’s La Colorada mine for processing through the company’s centralized gold recovery plant.