The Property is centrally located within the Central Mexican Silver Belt, which is defined by numerous Ag-Pb-Zn (±Au-±Cu) deposits that are classified as intermediate sulphidation epithermal deposits (Hedenquist et al., 2000). This includes the world class silver ore systems at Fresnillo, Zacatecas, and Guanajuato. These Mexican polymetallic silver deposits consist mainly of vein systems that occupy faults and major fractures affecting Mesozoic sedimentary and marine volcanic rocks and to a lesser degree unconformably overlying Tertiary volcaniclastics and pyroclastics.

Superficially, the Pitarrilla Ag-Pb-Zn mineralisation does not display features generally considered to be characteristic of intermediate sulphidation epithermal deposits, especially considering the occurrences of near surface oxide silver mineralisation. However, when the different forms of sulphide mineralisation found in the Lower Andesite Sill, Basal Conglomerate, and Basement Zones of the Pitarrilla deposit are examined, it is evident that these bodies of sulphide silver mineralisation, do in fact, share mineralogical features with the major polymetallic vein deposits in Mexico and elsewhere in the world. Specifically, the sulphide mineral suite of pyrite/marcasite-sphalerite-galena chalcopyrite-pyrrhotitearsenopyrite tetrahedrite (-freiburgite), that is found in all of the hypogene mineral zones at Pitarrilla, is fairly diagnostic of the intermediate sulphidation subclass of epithermal deposits (Hedenquist et al., 2000). The fact that the mineral resources and reserves at Pitarrilla are not defined on major veins, except perhaps for the C Zone within the Lower Andesite Sill, does not necessarily preclude the Pitarrilla deposit from being classified as an intermediate sulphidation type of epithermal deposit, since there are analogies of the Pitarrilla mineralised zones in a number of deposits within the Central Mexican Silver Belt. For example, the AgPb-Zn ore that was mined at the Real de Angeles open pit mine in Zacatecas State (Pearson et al., 1988) is quite similar, in terms of host rock and styles of mineralisation, to the mineralisation forming the resource domains (subzones) defined in the Basement Zone at Pitarrilla. As well, the replacement style sulphide mineralisation of the Basal Conglomerate (D) Zone is presumed to be comparable to the manto mineralisation that was historically mined at Fresnillo (Ruvalcaba-Ruiz and Thompson, 1988). Furthermore, while recognizing that hydrothermal phases such as quartz, calcite, barite, and fluorite, which form gangue minerals in most Mexican epithermal veins, are only minor to accessory components in the sulphide ores at Pitarrilla, it should be noted that unmineralised calcite, barite, and fluorite veins do exist on the Property, even proximal to zones of silver mineralisation. Thus, while not representing a “classic” example of an intermediate sulphidation epithermal mineral system, the zones of sulphide mineralisation at Pitarrilla do have a mineralogical signature that is consistent with these zones belonging to this subclass of epithermal deposit. Moreover, the overall geological setting at Pitarrilla and the perceived genetic association of the Ag-Pb Zn mineralisation with middle Tertiary felsic magmatism are again consistent with the deposit being classified as an intermediate sulphidation epithermal deposit.

Ag-Zn-Pb mineralisation at Pitarrilla occurs as a vertically stacked mineralised system centered on rhyolitic dykes and sills that constitute the feeder system for an early Oligocene volcanic centre manifest by a rhyolitic dome. Mineralisation is interpreted to have occurred during or shortly after emplacement of this dome. Ag-Zn-Pb mineralisation is rooted in the basement Cretaceous sediments where it is represented by an aerially restricted but vertically extensive zone of disseminated and veinlet Ag-Zn-Pb (-Cu As-Sb) sulphide-associated mineralisation. Overlying the Cretaceous basement, strata-bound massive replacement mineralisation occurs within a polymictic conglomerate at the Cretaceous-Eocene unconformity. The hypogene (fresh) or sulphide-associated mineralisation extends into the overlying Eocene to Oligocene, volcanic and volcaniclastic rocks as well as felsic and intermediate sills, where it grades into partly weathered, or transitional mineralisation, and a more laterally extensive zone of disseminated highly weathered, or oxide-associated, mineralisation.

Sulphide-associated mineralisation at Pitarilla was weathered under near surface oxidising conditions, resulting in the destruction of primary sulphide and sulphosalt minerals and liberation of ions into the weathering environment where they re-precipitated as secondary mineral phases. The destruction of pyrite resulted in the release of iron and sulphuric acid. The released iron was re precipitated as iron oxide species including limonite and goethite. Argentiferous galena was broken down as a result of weathering and silver was liberated to re-form in minerals such as acanthite and silver halides (chlorargyrite, iodargyrite, bromargyrite; LeCouteur, 2006) which deposited along with the iron (and manganese) oxides thus producing oxide-associated mineralisation.

Typically, the oxide-associated mineralisation is accompanied by pervasive argillization of the originally feldspathic intrusive and volcanic host rocks. The felsic intrusive rocks and near surface dacitic volcaniclastics that make up the bulk of the mineralised rocks in the zones of oxide-associated silver mineralisation show evidence of moderate to strong acid-leaching and consequent mass reduction. Acid-leaching is inferred to have affected these rocks on the basis of their highly depleted levels of calcium, sodium, and magnesium as well as their highly porous and commonly ‘vuggy’ textures. The leaching is believed to have resulted from the acidification of weakly acidic oxidised meteoric waters as the weathering of pyrite resulted in the production of sulphuric acid.

Weathering of the host rocks and mineralisation was gradational, in places remnant sulphide species remained surrounded by minerals precipitated as a result of the oxidation process. Mixed oxide and sulphide mineral species form a material type that is called transitional mineralisation.

In summary, for metallurgical treatment purposes three main silver bearing material types are recognised at the Pitarrilla Ag-Pb-Zn deposit, these are called Oxide, Transitional, and Sulphide mineralisation.

The total extent of the oxide-associated mineralisation is considerable, about 1.9 km in the NNW-SSE direction and 2.9 km in the NE-SW direction. The six zones of oxide-associated mineralisation are, in chronological order of discovery, Cordon Colorado, Peña Dyke, Javelina Creek, Breccia Ridge, South Ridge and South Ridge East.

The Pitarrilla Project will use standard truck and shovel open-pit mining methods. The expected mining life is 20 years, including three pre-production years. The pit will be mined in five phases, starting with Breccia Ridge and Cordon Colorado. Over the life of the Pitarrilla Project, a fleet of trucks is expected to haul approximately 1.1 billion tonnes of material and 157 million tonnes of ore, at a strip ratio of 5.96:1. After mining is completed, the plant will continue to mill ore from stockpiles for an additional 12 years.

The potential to mine Mineral Resources located below the open pit was not evaluated in the Pitarrilla Feasibility Study (M3, 2012), but may be evaluated later in the Pitarrilla Project’s life.

The Pitarrilla Feasibility Study (M3, 2012) calls for the mining of 157 Mt of silver ore and 933 Mt of waste via open cut mining methods from a single, large, semi-conical pit. The total waste tonnes include additional waste for potentially acid generating (“PAG”) neutralizing material to be sourced outside the main pit. The ore and some of the waste is planned to be mined on 7.5m high benches and where there are suitable areas without ore, these are planned to be mined on 15m high benches (47% of tonnage).

The mine excavation is planned to be completed in 20 years (including three pre-production years), leaving 12 years of processing the low grade stockpiles. A total of approximately 60 Mt of low grade ore is planned to be stockpiled and processed after pit mining ceases.

The waste dumps are planned to surround the pit and completed in a formation that are amenable to rehabilitation to 3H:1V (horizontal: vertical) slopes. Some control of PAG rock may be required through the mining of carbonate rich rocks from the Manto Rico formation and mixing this within the waste, as it is produced.

The Pitarrilla Project will consist of an open pit mine, ore processing facility, and miscellaneous infrastructure and support facilities.

After crushing and milling, one of two processing types will be applied to the ore:
• Highly-oxidised ore will be direct leached and then silver will be extracted via the Merrill-Crowe process to produce doré. For the purposes of this report, this ore will be referred to as either “oxide” ore or “direct leach” ore.
• Less-oxidised ore (transitional) through to un-weathered sulphide ore will be processed by sequential flotation to extract lead and zinc minerals into separate lead and zinc mineral concentrates. The tailings from these flotation processes will then proceed to the cyanide leach circuit to produce doré. For the purposes of this report, this ore will be referred to as either “sulphide” ore or “flotation/leach” ore.

The design basis for the ore processing facility is 16,000 tpd of sulphide ore (equivalent to 5,840,000 t/a) and 12,000 tpd of oxide ore (equivalent to 4,380,000 t/a), using the same crushing and grinding plant circuit. Sufficient ore is available for 30 years of milling at these rates.

Run-of-mine ore will be discharged to the primary crusher dump and fed to the gyratory primary crusher to reduce rock from 900 mm to 150 mm sizing. Primary crushed ore product then discharges onto the apron feeder, which loads onto the stockpile feed conveyor where the crushed ore will be transported to either of the two coarse ore stockpiles (one for each of oxide or sulphide ore).

The grinding circuit, consisting of a primary SAG mill and a secondary ball mill, will grind the crushed oxide ore to a final product size of 106µm.

The trash screen underflow will report to the high rate pre-leach thickener. Flocculant and dilution water will be added to the thickener feed to aid in settling. The withdrawal rate of the settled solids will be controlled by variable-speed, pre-leach thickener underflow pumps (one operating, one standby) to maintain either thickener underflow density or thickener solids loading. The thickener underflow will be pumped to the leach tank feed box. The thickener overflow will flow via pre-leach thickener overflow pumps (one operating, one standby) to the barren solution distribution tank. Thickener underflow will be sampled by a leach feed sampler before entering the leach tank feed box. Here, slurry will be distributed to two parallel circuits of six leach tanks that operate in series and are arranged such that the slurry can advance from leach tank to leach tank by gravity flow and finally be collected in the leach tank general discharge box. The leach tanks (16.7 m diameter, 16.7 m height) will provide 41 hours of total plug flow retention time, at 40% solids with 3,570 m3 total working volume.

The leached slurry will gravity flow from the leach tank general discharge box to the CCD thickeners and then to the two cyanide recovery thickeners that all operate in series. The slurry advances upstream with variable speed horizontal centrifugal slurry pumps, CCD thickenerunderflow pumps (one operating, one standby per thickener) and cyanide recovery thickener underflow pumps (one operating, one standby per thickener), all operating at 50% solids. The final cyanide recovery thickener underflow pump will be sampled via a sampler before going to the oxidation feed box for the tailings detoxification circuit.

Silver will be recovered from pregnant solution by zinc precipitation of metal ions using zinc dust, and then smelting the collected silver precipitate into doré bars.

The process of recovering silver by the Merrill-Crowe process includes:
• Clarification and filtering of pregnant solution to remove suspended solids;
• De-aeration of pregnant solution to reduce dissolved oxygen;
• Precipitation of silver metal by addition of zinc dust;
• Filtering and drying of precipitate, and smelting the precious metal precipitate, in a crucible furnace to produce doré bars.

Sulphide or Flotation - Leach Ore Process. Flotation reagents will be added to the slurry in the lead rougher conditioner tank before flowing by gravity to the lead rougher flotation circuit. Rougher flotation will consist of six lead rougher flotation cells with a level controlling drop-box between each cell. Lead rougher concentrate will gravity flow to the regrind mill cyclone feed sump. Lead rougher tailings will gravity flow to the lead rougher tailings sump where the lead rougher tailings pumps (one operating, one standby) will pump the lead rougher tailings to the zinc rougher conditioner tank. The lead rougher concentrate will be sampled by the lead rougher concentrate sampler, while lead rougher tailings will be sampled by the lead rougher tailings sampler. Slurry in the lead regrind mill cyclone feed sump will feed the lead regrind circuit. The lead regrind mill will operate in closed circuit with the lead regrind cyclone cluster. This cyclone cluster is fed by the lead regrind mill cyclone feed pumps (one operating, one standby) from the lead regrind mill cyclone feed sump. The lead regrind cyclone underflow will report to the lead regrind mill, while the lead regrind cyclone overflow will report to the lead cleaner conditioner tank. The lead regrind mill will grind to 30 µm final grind size. Alternately, the lead regrind mill cyclone feed pump can bypass the lead regrind cyclone and be pumped directly to the lead cleaner conditioner tank. Flotation reagents will be added to the lead cleaner conditioner tank before gravity flowing to the lead-first cleaner flotation cells. Lead-first cleaner flotation has four cells per level controlling drop-box. The tailings will gravity feed the lead-first cleaner flotation tailings sump. Concentrates will gravity feed the lead-first cleaner concentrate sump.

Slurry in the lead-first cleaner flotation tailings sump will be pumped with lead-first cleaner flotation tailings pumps (one operating, one standby) to the zinc rougher conditioner tank for the zinc rougher flotation circuit. Slurry in the lead-first cleaner concentrate sump will be pumped to the lead second cleaner concentrate flotation cells with the lead-first cleaner concentrate pumps (one operating, one standby). Lead-second cleaner flotation cells will have three cells per level controlling drop-box. The tailings will gravity flow to the lead first cleaner, to mix with the feed from the lead cleaner conditioner tank. Concentrates will gravity flow to the lead second cleaner concentrate sump. A lead collector will be added to the feed box of the lead-second cleaner flotation cells. Lead concentrate in the lead-second cleaner concentrate sump will gravity flow to the lead concentrate thickener.

The zinc rougher conditioner tanks (two operating in series) will receive the lead rougher tailings and the lead first cleaner tailings where the zinc flotation reagents are introduced. The first conditioner tank gravity feeds the second conditioner tank which feeds the zinc rougher flotation cells. The zinc rougher flotation cells have one cell per level controlling drop-box. The tailings will gravity feed the zinc rougher tailings sump. Concentrate gravity feeds the zinc regrind mill cyclone feed sump.