The deposits at Diablillos, are high-sulphidation epithermal silver-gold deposits, derived from activity of hydrothermal fluids in a relatively shallow environment, often associated with fumaroles and hot springs. The principal mineralizing process is by convective flow of meteoric waters driven by remnant heat from intrusive activity at depth, often related to copper porphyry systems. The term “high-sulphidation” refers to the conversion of magmatic SO2 in aqueous solution into H2SO4 and H2S resulting in a highly acidic environment responsible for the diagnostic assemblage of alteration facies typically seen in these deposits. Mineral occurrences are structurally and hydrostatically controlled, with deposition occurring as open space filling at or near the level at which boiling occurs. As such, they characteristically subtend a limited vertical range, except where cyclical healing and failure of fractures results in up and down migration of the boiling zone.

MINERALIZATION
There are several mesothermal, and epithermal precious and base metal occurrences situated along the trend of the Diablillos - Cerro Galán fault zone within the northern and central Puna, including Diablillos, Incahuasi, Cóndor Yacu, Inca Viejo, and Centenario. Many of the mineral occurrences are spatially, and probably genetically, related to small Tertiary stocks and extrusive domes that are usually hydrothermally altered with disseminated and vein-hosted lead, zinc, silver, and gold (± tin, antimony, copper, and molybdenum) mineralization (Coira et al., 1993, quoted in Wardrop, 2009 and RPA, 2018).

There are seven known mineralized zones on the Diablillos property, with the Oculto zone being the most important and best explored:
1. Oculto including the Zorro and Cerro Bayo subzones.
2. Fantasma.
3. Laderas.
4. Pedernales including the Pedernales Sur subzone (including Truchas and Saddle showings) and Pedernales Norte subzone (including Vicuña, Corderos, Suri, and Guanaco showings).
5. Cerro del Medi.
6. Cerro Viejo.
7. Cerro Viejo Este.

Oculto is the principal deposit on the property and is the locality of the bulk of the present Mineral Resource. It is a high-sulphidation epithermal silver-gold deposit derived from remnant hot springs activity following Tertiary-age local magmatic and volcanic activity. It is evidenced at surface by a broad zone of intense acid leaching located on the flank of Cerro Bayo, although the economic mineralization does not outcrop. Host rocks at surface are hornblende porphyritic andesite which have been intruded by a dacite porphyry body (or bodies) which are hypothesized to be the thermal driver(s) for the mineralization (Tate, 2018). The andesites overlie a basement assemblage of phyllites and granitic rocks. At the contact of the andesite with the basement, there is a paleo-surface occupied by a discontinuous conglomerate unit of widely ranging thickness.

The deposit is strongly oxidized down to depths in the order of 300 m to 400 m below surface. In the oxide zone, precious metal mineralization consists of native gold, chlorargyrite, comparatively less common iodargyrite, and locally common bismuthinite (Stein, 2001). These minerals occur as fine - grained fracture fillings and vug linings in association with quartz, jarosite, plumbojarosite, hematite, and goethite. Other accessory minerals include alunite, barite, native sulphur, and bismoclite.

Hypogene mineralization comprises vein and breccia-hosted sulphides and sulphosalts underlying the oxide zones. Primary sulphide and sulphosalt minerals include pyrite, galena, enargite, chalcopyrite, sphalerite, tennantite, and matildite. Accessory minerals include barite and alunite. Incipient supergene enrichment was observed by Stein (2001), with covellite partially replacing chalcopyrite and polybasite replacing tennantite. A review of early drill results, together with 2020 and 2021 drilling, demonstrates that high grade silver mineralisation is located in a zone between 100 and 150 meters below surface and extends beyond the steeply dipping feeder structures. This zone is considered to be a result of supergene enrichment.

The gold and silver mineralization throughout the deposit occurs as extremely fine grains along fractures and in breccias or coating the inside of vugs and weathered cavities. Mineral grains are very difficult to identity in core or hand specimen, and much of the identification of these minerals was done using electron microscope or microprobe. However, occasional visible native silver mineralisation occurs along fractures in the “supergene enrichment zone”.

Gold-silver mineralization is observed to occur in tabular silica veins, disseminations in bleached and altered wall rocks, and siliceous hydrothermal breccias, and has propagated laterally along the trend of the conglomerate and the Tertiary-Ordovician contact. This has imparted a complex geometry to the deposit, with a broadly north-easterly trend consisting of steeply dipping, structurally hosted zones along with more horizontal tabular bodies. The mineralization occurs within a vertical range of 3,965 MASL and 4,300 MASL, predominantly between elevations of 4,050 MASL and 4,250 MASL.

The core of the deposit is predominantly vuggy silica ± alunite surrounded by a zone of pervasive alunite and clay alteration, which in turn grades outwards into kaolinite with illite, smectite, and chlorite (Stein, 2001). Pervasive chlorite alteration underlies the mineralization in the southwest portion of the deposit. A steam-heated zone of alunite-clay-opal is preserved above 4,330 MASL and occurs in outcrop in the central portion of the deposit.

The proposed Diablillos Project consists of open pit mining at the Oculto deposit, which has 18 months pre-stripping and sixteen years of production at a strip ratio of 3.6. Total material moved will be 17 Mtpa during initial stripping decreasing to 3 Mtpa at the end of the mine life. The open pit is designed to feed the processing plant at 7,000 tpd.

The Oculto deposit is considered for open pit mining to be carried out by contractor as a conventional truck and shovel operation. Contract mining was considered over owner operations to accommodate variable annual material movement quantities and flexibility in mobile mining equipment fleet sizes. This option also reduces up-front capital expenditures associated with mobile mining equipment purchases.

It is contemplated that the mining contractor would undertake the following activities:
• Drilling performed by conventional hydraulic production drills.
• Blasting using a downhole delay initiation system.
• Loading and hauling performed with trucks and shovels.
• Production support using bulldozers, graders, and water trucks.

AbraSilver would supervise mining operations with its own employees including mining engineers, geologists, surveyors, and support staff. The rock mass at Oculto has been considered to require drilling and blasting. It should however be noted that unconsolidated scree will represent a material amount of early stripping material. As this will not require drilling and blasting, costs could be lower in practice (and represent an upside).

Mineralized material from Oculto will be hauled directly to the run-of-mine (ROM) stockpile. The process plant will feed material to the primary crusher from the stockpile as required using a front-end loader (FEL).

Waste rock for Oculto will be sent to a waste stockpile located directly south of the Oculto pit. This waste stockpile location will take advantage of the terrain and allow for downhill placement, resulting in shorter haul distances. The average ex-pit haulage distance for waste is approximately one kilometre.

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A conventional silver/gold processing plant flowsheet was developed from the latest test work results that incorporates crushing, grinding, cyanide leaching with oxygen addition, counter current decantation (“CCD”) washing thickeners and Merrill-Crowe precious metal recovery from solution followed by on-site smelting to doré bars. The leached and washed solids are detoxified, thickened and pumped to a tailings storage facility (“TSF”) for permanent disposal. The design basis for the process plant is 7,000 tonnes tpd, or 2.45 mtpa considering 350 days a year of operation.

The grinding circuit also has a centrifugal gravity recovery circuit included in the design to recover coarse precious metal particles that enter the grinding circuit. The minus 2 mm material will be fed directly into a centrifugal gravity concentrator to recover the coarse precious metals. The concentrate recovered from the centrifugal concentrator will be directed to an intensive leach reactor (“ILR”), wh ........