Three principal zones of sulfide mineralization have been identified within a broad area of skarn alteration in the vicinity of San Rafael and nearby El Cajón. The San Rafael Main Zone consists of masses of sulfide grains that occur as replacements at an unconformable contact between what is believed to be Tertiary dacite tuff and Cretaceous limestone. Although it can be difficult to determine the host rock when total sulfide content is 90 to 100%, most of the massive sulfide replacement mineralization appears to be hosted in the dacite tuff. It contains silver, lead, and zinc mineralization with lessor gold and copper. The main minerals are pyrite, pyrrhotite, sphalerite, and galena with minor marcasite, chalcopyrite, and magnetite. This mineralization in the San Rafael Main Zone is often associated with quartz-sericite-pyrite alteration that has been interpreted as more distal skarn alteration. It has also been suggested that the San Rafael Main Zone displays many similarities to volcanogenic massive-sulfide deposits, such as those found in the Guerrero Terrane in central Mexico.

Mineralization within the Main Zone at San Rafael is primarily massive, sulfide-replacement material, which can contain greater than 90% sulfides, dominantly pyrite and pyrrhotite. The sulfide body is discrete, tabular, and lies along the shallow-dipping dacite tuff - limestone contact (Figure 7.3) where it has been referred to as “massive-sulfide mineralization” in previous reports. The zinc, lead, and silver, for the most part, lies within the body of sulfide replacement and consists of sphalerite and galena. The contacts of all elemental zones generally overlap within the massive sulfide, but mineral-shell boundaries and their internal grade distribution are not necessarily coincident.

The silver-gold “Upper Zone” lies within the Tertiary volcanic rocks about 50 to 100m above the Main Zone sulfide replacement of the San Rafael deposit. The Upper Zone is composed of irregular, subhorizontal layers sub-parallel to the Main Zone. Mineralization consists of sulfides, but sulfide content is much less than in the Main Zone. Weak base-metal mineralization occurs with the silver.

The Zone 120 at San Rafael occurs not as a single horizon, but as multiple bedding- and intrusivecontact-related mineralized horizons. The Zone 120 mineralization is interpreted to occur along nearvertical contacts between diorite and skarn-altered limestone in the lower parts, and in quartz-sericitepyrite-altered volcanic rocks in the upper parts. The Zone 120 mineralization extends upwards to overlap the Main Zone mineralization (Figure 7.3). Mineralization is associated with generally 2 to 10% sulfides and is more irregular in shape and more variable in mineral character than the San Rafael Main Zone. It consists of silver-copper-gold mineralization in the form of chalcopyrite and tetrahedrite with minor pyrite, galena, sphalerite, arsenopyrite, chalcocite, jalpaite, native silver, copper, and bismuth. This mineralization accompanies pyroxene-garnet-calcite skarn alteration. A skarn-altered limestone is the host at El Cajón and is also believed to be one of the host units at the Zone 120. Both skarn alteration and sulfide mineralization are spatially associated with intermediate dikes, sills, and small stocks.

The Zone 120 in the eastern portion of the San Rafael deposit contains silver-copper-gold mineralization within garnet-pyroxene-calcite skarn. The strong metasomatic alteration and the close spatial relationship with a large dioritic intrusion suggest that the Zone 120 represents a proximal skarn deposit. Silver-lead-zinc mineralization, in the form of massive sulfide replacements in the Main Zone, and to a lesser extent in the Upper Zone, is associated with quartz-sericite-pyrite alteration. This alteration and mineralization type is believed to be a more distal phase of the skarn system.

The San Rafael mine started project construction activities in September 2016 and has been in commercial production since December 2017. The Mineral Reserves support a mine life of five years. The underground mine is accessed by a decline that portals at surface near the southern portion of the deposit where the surface infrastructure is located. A series of ramp systems from the main decline provides access to the various stoping areas of the deposit.

The main decline has reached the bottom of the defined Mineral Reserves in the Main Zone and ramp development to access the Upper Zone has commenced. Due to the depth, shallow-dipping angle and variable thickness of the mineralization, the mining method used at San Rafael is postpillar cut and fill. Stopes are accessed from a primary stope access driven at a -15% decline. After mining of each successive 5m high cut of ore, the stope is backfilled and the access “backslashed” to allow for mining of the next cut. This sequence is repeated up to five times until the stope access reaches an incline of +15%. Access to the next cut is then provided by a -15% stope access driven from a higher elevation.

The LOM plan anticipates that the post-pillar cut and fill stopes will be backfilled with unconsolidated development waste and waste generated from a waste quarry. Given the use of unconsolidated backfill, the mining sequence is typically from the bottom up.

Primary mine ventilation is provided via two vertical bored raises and the main decline. A main exhaust fan is located underground at the northern end of the deposit and fresh air is pulled through a central intake bored raise and the main decline. Fresh air is provided to the working development faces and stoping areas by use of secondary fans and ducting.

The primary mining method at the San Rafael mine is post-pillar cut and fill.

The mining method at San Rafael (post-pillar cut and fill) relies on leaving continuous vertical insitu pillars to provide additional support in areas where the ore zone is wider than 8m in width. These pillars are nominally 6m by 6m in dimension. Placement of these pillars is initially planned for low grade areas of the deposit but due to the need of vertical continuity, they will potentially be placed in areas with higher grades.

San Rafael ore has been the exclusive feed for the Los Braceros plant since November 2017. The Los Braceros process plant is a conventional polymetallic concentrator currently configured to produce zinc and lead concentrates. Throughput has recently been approximately 1,750 tonnes per operating day.

The San Rafael mine currently produces two concentrate products, a lead-silver concentrate and a zinc-silver concentrate.

Key processing equipment currently installed at the Los Braceros plant includes:
• Three-stage crushing plant; 0.76m x 1.07m jaw crusher, 1.67m standard cone crusher, 1.67m shorthead cone crusher;
• 800 tonne fine ore bin;
• Primary grinding mills: two each, 3.0m x 3.2m, 600kW;
• Concentrate regrind mill; one VXP500 vertical mill;
• Wemco 300ft3 rougher trough cells (lead and zinc);
• Wemco 10m3 rougher tank cells (zinc);
• Galigher Agitair 54C x 40 and Denver Sub-A cleaner cells (lead and zinc);
• Four each 2.44m diameter x 3.65m drum filters;
• Bins and hoppers;
• Related support equipment – tanks, pumps, blowers, feeders, and instrumentation; and
• Engineered tailing storage facility.