The Nieves project is a low sulfidation epithermal silver deposit hosted in three east-northeast trending, steeply south dipping vein systems with alteration and mineralization bearing strong similarities to the Fresnillo silver deposit.

The most economically significant mineralization occurs in anastomosing carbonate-quartzsulphide veins that have been defined over a total strike length of 3.8 kilometers by 54,814 meters of drilling in 187 holes. The system develops to a maximum true width of in excess of 200 meters and has a proven down dip extent of approximately 525 meters.

The carbonate-quartz-sulphide veins contain the best grades of silver, gold, lead and zinc. This vein type consists of calcite that is partially to totally replaced by grey to white, chalcedonic, fine-grained quartz veins and veinlets. Individual veins vary in size from a few centimetres in width with a few up to 1.5 m wide with up to 50% sulphide minerals. Sulphides include pyrite, stibnite, sphalerite, galena, chalcopyrite and the silver sulphosalts: proustite, pyrargyrite, jamesonite and scarce tetrahedrite.

The central and most important of the three vein systems is the Concordia-San Gregorio-Dolores system which includes both the La Quinta and Gregorio North zones. Mineralization along the Concordia-San Gregorio-Dolores vein has a known total strike length of 1,300 meters and a true width up to 100 meters. The mineralized zone in the Gregorio North area is approximately 1,200 meters long and up to 200 meters wide. The La Quinta and Gregorio North zones are the subject of the resource estimate in this report. Only the La Quinta zone has a designed open pit for the economic assessment.

The attitude and size of the mineralized zones along the Santa Rita zone to the south and California vein system to the north are not well understood at this stage of exploration. Drilling along the Santa Rita system suggests that the mineralized zone is at least 750 meters long and may be up to 340 meters wide. The mineralized zone along the California vein system is at least 550 meters long and may be up to 130 meters wide.

The Nieves silver deposit contains mineralization at or near the surface and is distributed in continuous veins that is ideal for open pit mining methods. The method of material transport evaluated for this study is open pit mining using two16.5-m3 front end shovels as the main loading units with a 12.2-m3 front end loader as a backup loading unit. The mineralized material will be loaded into 90-tonne haul trucks and transported to the primary jaw crusher, which will be set up at the toe of the waste dump. The plan assumes that the project operator owns, operates, and maintains all equipment.

Mineralized material production is planned at a nominal rate of 10,000 tonnes per day (tpd), equivalent to 3.65 million tonnes per annum with a 10 year mine life. Mining is planned on a 7 day per week schedule, with two 12 hour shifts per day. Other mining schedules may prove to be more effective, but are not expected to significantly change project economics. Peak mineralized material and waste production is estimated at 94,000 tpd during the first year and then slowing to an average rate of 62,000 tpd. The average life of mine stripping ratio is 5.36:1 waste-to-mineralized material, using a 21.3 g/t AgEq cutoff. Lower grade material is stockpiled using 30.5 g/t AgEq cutoff in order to improve project economics which results in a maximum low grade stockpile of 2.8 million tonnes. Other cutoff scenarios using 19.4, 21.3, 23.7, 26.7 and 30.5 g/t were evaluated during the study but the chosen scenario resulted in the best IRR and NPV.

The design basis for the processing facility is 10,000 dry metric tons per day (DTPD) or 3,650,000 dry metric tons per year (DTPY) on an operating basis of 91% availability.

Design mineralized material grade to the process plant is estimated to average 32.0 gpt of silver and 0.04 gpt gold. The process plant design allows for sustained metal recovery of silver and gold.

Run of Mine (ROM) mineralized material will be trucked from the mine to the primary crusher where it will be dumped directly into the crusher dump pocket that feeds a jaw crusher. If required, ROM mineralized material may be dumped in a stockpile ahead of the primary crusher. A front end loader will be used to feed the crusher if needed. The crusher feed pocket will be designed to contain two truckloads of material.

ROM mineralized material will discharge from the crusher dump hopper onto a vibrating grizzly feeder. The feeder will discharge oversize mineralized material directly into a jaw crusher. Jaw crusher product will discharge onto the discharge conveyor. Undersize material that passes through the vibrating grizzly feeder will be combined with the jaw crusher product on the discharge conveyor. The discharge conveyor will discharge to the stockpile feed conveyor. The conveyor will transport the mineralized material to a coarse material stockpile.

Three draw points under the coarse material stockpile will provide mineralized material to three reclaim feeders, two operating and one standby, located in a tunnel. The reclaim feeders will discharge onto the SAG mill feed conveyor. Each feeder will be capable of feeding up to 500
tonnes per hour of mineralized material to the SAG mill feed conveyor. The feeders will be variable speed and controlled to maintain a set point feed rate to the grinding circuit. One, two, or three feeders may be operated at any time. The control signal will be provided by a belt scale mounted on the conveyor downstream of the feed points. A metal detector will be installed over the SAG mill feed conveyor to remove tramp metal.

The grinding circuit will be designed to process an average of 10,000 mtpd at 91% availability on a 24 hour per day, 365 days per year basis. Mineralized material will be ground to a final product size of 80% passing 104 microns in a semi-autogenous (SAG) primary and ball mill secondary grinding circuit.

SAG mill discharge screen oversize will report to a series of two belt conveyors that will transport the oversize back to the SAG mill feed. The pebbles may be discharged directly to the SAG mill feed or they may be diverted to a pebble pile. SAG mill screen undersize will flow by gravity to the cyclone feed sump where it is combined with ball mill discharge.

Secondary grinding will be performed in a 5.0 m diameter by 10.1 m (effective grinding length) long ball mill powered by a 5,100 kW motor operated in closed circuit with hydrocyclones. The ball mill will discharge over a trommel screen. Ball chips will be rejected out the end of the trommel into a tote bin. Ball mill discharge will be combined with SAG mill discharge screen undersize in a grinding sump and will be pumped to hydrocyclones for classification. Combined slurry will be pumped using variable speed horizontal centrifugal slurry pumps to the primary cyclone cluster. Hydrocyclone underflow will report to the ball mill. Hydrocyclone overflow (final grinding circuit product) will flow by gravity to the rougher conditioner tank. Cyclone overflow will be sampled prior to rougher flotation.

The flotation circuit will consist of one train of rougher cells and one train of cleaner cells.

The rougher circuit will consist of one train of eight 100 m3 tank type, forced air cells; with a drop between each cell and a conditioning tank ahead of the first cell. The eight cells will be used to float silver from the mineralized material. Rougher flotation is expected to occur at a natural pH.

The cleaner train will consist of: a regrind mill, regrind cyclones, a conditioning tank, and one train of fourteen flotation cells, seven first cleaner cells, four second cleaner cells, and three third cleaner cells.

Cyclone overflow at approximately 30% solids will flow by gravity from the primary grinding circuit to the rougher conditioning tank. Slurry from the conditioning tank will overflow by gravity to the first rougher flotation cell. Rougher flotation tailings from the final rougher cell will be pumped to a high-rate tailings thickener.

Rougher flotation concentrate will flow by gravity to the regrind cyclone feed pump box. The slurry will be pumped from the pump box using variable speed horizontal centrifugal pumps (one operating and one stand by) to the regrind mill hydrocyclone cluster, or may be bypassed directly to the cleaner conditioner tank. Underflow from the regrind cyclone cluster will be returned, by gravity, to the regrind mill. Cyclone overflow from the regrind mill cyclone cluster will flow by gravity to the cleaner conditioner tank via the cleaner feed sampler.

Rougher concentrate will be reground to a final product size of 80% passing 20 to 30 microns in the regrinding circuit. Reground or bypassed concentrate will flow by gravity from the cleaner conditioner tank to the first cleaner flotation cells. The first cleaner concentrate will be pumped using froth pumps (one operating and one standby) into the second cleaner flotation cells and the tailing will be pumped (one operating and one standby) back to the rougher circuit or may be bypassed directly to the tail thickener. The second cleaner concentrate will be pumped using froth pumps (one operating and one standby) to the third cleaner flotation cells. The third cleaner concentrate will be pumped using froth pumps (one operating and one standby) to a concentrate thickener. Cleaner flotation is expected to occur at an increased pH.

Concentrate from the third cleaner flotation cells will be pumped to a concentrate thickener. Concentrate thickener overflow from will be pumped to the cyclone feed sump for re-use in the process or may be bypassed to the process water pond. Concentrate thickener underflow will be pumped (one operating pump and one standby) to an agitated storage tank and then to a pressure filter. Flocculant will be added as needed to aid in solids settling in the thickener. There will be a single concentrate filter.

Filter cake from the concentrate filter will drop onto a discharge conveyor that will feed a concentrate bin feed conveyor. Concentrate from the discharge conveyor may be bypassed to a bulk concentrate storage area. Concentrate from the bin feed conveyor will discharge to a bagging system. Bagged concentrate will be loaded by fork lift in trucks for shipping.