As documented by Lewis and Murahwi (2013) and Munroe (2014), the San Sebastián del Oeste silver-gold district comprises classic, high grade silvergold, epithermal vein deposits, characterized by low-sulphidation mineralization and adularia-sericite alteration. The veins are typical of most other epithermal silver-gold vein deposits in Mexico in that they are primarily hosted in volcanic flows, pyroclastic and epiclastic rocks, or sedimentary sequences of mainly shale and their metamorphic counterparts.

Low-sulphidation epithermal veins in Mexico typically have a well-defined, subhorizontal ore horizon about 300m to 500m in vertical extent where the bonanza grade mineralization shoots have been deposited due to boiling of the hydrothermal fluids. Neither the top nor the bottom of the mineralized horizons at the Terronera Project has yet been established precisely.

The silver-gold with associated base metal mineralization in the Terronera epithermal veins occurs in structurally controlled quartz and quartz breccia veins. The principal Terronera Vein has been traced by drilling for 1.5 km on strike and from surface to the maximum depth of drilling at 546 m. The Terronera Vein strikes at approximately 145° and dips 80° east. The true width of the principal Terronera Vein ranges from 1.5 m to 15 m and averages 3.9 m. In addition to the main Terronera Vein, there are additional hanging wall and footwall veins. The veins are primarily hosted in volcanic flows, pyroclastic and epiclastic rocks and associated shales and their metamorphic counterparts (Lewis and Mulahwi (2013), Munroe (2014)).

Metallic minerals include galena, argentite, and sphalerite associated with gangue constituents of quartz, calcite and pyrite. Munroe (2014) reports that elevated Ag and Au values from 2011 sampling of underground workings in the Terronera Vein were primarily obtained from crystalline quartz veins, drusy in places, with limonite and manganese oxides lining boxworks after sulphides and fine- grained disseminated pyrite and traces of dark grey sulphides, probably silver sulphides.

Geologic information and field observations indicate that the hydrothermal system at the Terronera vein is preserved over an elevation difference of 600m. Regionally, the known deposits contain polymetallic sulphide mineralization in wide vein structures. The veins at higher elevations may represent the tops of ore shoots containing significant silver and gold mineralization at depth.

The underground operations at Terronera and La Luz will both be accessed via a ramp. In the case of Terronera, the ramp access will connect to a main haulage drift near the M1 mining block and in the case of La Luz it will connect roughly centrally to the deposit near the bottom of the upper M7 block. The Terronera Deposit has a rail haulage system for transporting ore underground to the process plant area, whereas all material from the La Luz Deposit is envisioned to be hauled entirely by contractor truck. Both deposits use versions of cut-and-fill mining for their primary production. Terronera uses Drift-and-Fill (D&F) mining, and La Luz uses Resue cut-and-fill. Backfill in both areas will be a combination of cemented and uncemented rock fill. Cement contents will vary from 4% to 8% by mass as required.

Development at both deposits will begin at the same time (the first day of Q1 of Year -1). The La Luz Deposit will be mined as quickly as possible while the Terronera Deposit is being brought into production. Until the Terronera process plant is complete at the end of Q2 of Year 1, ore from the La Luz Deposit will be processed offsite at Endeavour Silver’s Bolañitos process plant. Production from La Luz will average roughly 200 tpd over its life, with the Terronera Deposit’s production ramping up to 1,500 tpd across the year spanning Year -1 Q4 until Year 1 Q4. Production will remain at a total 1,500 tpd across both deposits until Year 10 Q4, when it will gradually decline to roughly 580 tpd by the end of mine life at the end of Year 12.

DRIFT-AND-FILL MINING
The Terronera Deposit is comprised of several veins of varying thicknesses, some of which exceed the maximum opening span for the rock class. To fully recover the ore from these areas, multiple parallel drifts will be required. As such, Drift- and-Fill mining will be used at Terronera. Where multiple parallel drifts are required, the first drift excavated will be backfilled with CRF to provide stable walls for adjacent mining operations, but not tight-filled to the roof. A small void (approximately 0.5-0.6 m) will be left to provide void for the level above to be blasted in to (removing the need for drilling a cut on the drift above). Span breaks (e.g. timbers or shotcrete) will be installed every 3 m during development to provide support to the material above. These breaks will be in a 1:1:1 ratio proportional to the height of the void between the fill and the roof.

Where an artificial sill pillar is required, all drifts in that level will be filled with 8% CRF until the required pillar thickness is reached, at which point normal filling practices (4% CRF for future lateral exposure, UCF for unexposed areas) will resume.

Each level is generally comprised of five “lifts” to create a nominal level spacing of 20 m, however, certain areas may have more, or fewer, lifts as required for mining operations. Drift widths are generally optimized for a 7-tonne class scoop and at least 3.0 m wide, however in certain areas where thin cuts are required, and a 3-tonne class scoop will be used in drifts as narrow as 2.1 m wide. Each lift will be 200-450 m long and will be accessed via an attack ramp from the main level area that will intersect centrally, subdividing the lift into two working areas extending 100-250 m along strike. The maximum gradient of the attack ramps will be ±20%. As each lift is exhausted, the roof of the attack ramp will be slashed out to provide access to the lift above, and the process will repeat until the level is exhausted, at which point mining operations will relocate to the level above. All drift-and- fill mining operations will progress within a level in an overhand fashion to limit the requirements for personnel to access areas underneath consolidated fill.

Resue Mining
The La Luz Deposit is comprised of a single narrow vein which rarely exceeds 1 m in width and is normally significantly narrower. The minimum mining width of the equipment in use at Terronera is 2.1 m, making the drift-and-fill method an inappropriate choice due to excessive dilution of the vein. Resue mining, where the ore from the lift above is mined from the lift below prior to mining the waste and filling the drift below, has therefore been selected to reduce dilution, utilize the same mining fleet between Terronera and La Luz, and reduce overall mining costs of the La Luz Vein.

Resue mining at La Luz will begin with the excavation of a main level, with an attack ramp at a maximum gradient of ±20% connecting to the centre of the lowest lift in a mining level, dividing the lift into two 150 m long sections. Normal drifting methods will be used on the lowest lift in each level to excavate a void for mining the next lift above. All material from this lift will be treated as ore and sent to the plant. Once the excavation is complete, the production drill jumbo will be used to drill upholes along the ore contact in the roof to blast the ore from the lift above down into the void in the excavated lift below. This material will then be excavated using a 4-tonne loader, after which the trench in the roof will be supported, and then the waste in the lift above (including the roof of the attack ramp) will be drilled and blasted down into the lift below in a similar manner to the ore. This waste will form the floor of the next lift, but may require additional fill tonnes to bring it to the required floor level of the next lift. After supporting the newly excavated lift, the process will repeat in an overhand fashion until the level is exhausted.

Where the mining level is going to become an artificial sill pillar, all waste from the resue will be excavated and replaced with CRF comprising 8% cement be mass to create the artificial pillar until the required thickness is reached.

A beneficiation plant utilizing Flash flotation was selected for recovery of precious metals present in the Terronera Deposit. A grind of 80 percent passing 150 mesh (Tyler) provides acceptable levels of gold and silver recovery. Precious metal values will be recovered into a flotation concentrate that may be sold in the open market.

The plan of operation of the mineral processing facility is to start up with an average 750 dry tpd of ore campaigned through the process plant for three months. The plant will achieve plant design capacity of 1,500 tpd for grinding and flotation circuits in the fourth month. At this design throughput The life-of-mine (LOM) for the project is estimated at 12 years.

A brief description of the processing circuits included in the design is provided in the following paragraphs.

• The crushing circuit is comprised of a (24 tonne) dump ore pocket fitted with a stationary Grizzly with a 10 inch by 10 inch opening. The Grizzly o ........