The Property is in the Sierra Madre Occidental (SMO) mountain range of the North American Cordillera that extends for hundreds of kilometers from central to northern México in the Basin and Range province (Rossotti, Ferrari, Lopez-Martinez, & Rosas-Elguere, 2002). The SMO is a large continuous sequence of volcanicsthat spans in age from late Cretaceousto middle Tertiary (McDowell & McIntosh, 2012).

The mineralized zone is characterized by a low sulphide epithermal system containing silica stockwork veins. These zones are generally formed in felsic subaerial complexes in extensional strike slip structural settings. Low sulphidation gold deposits are associated with magmas where ore deposition occurs several kms above the intrusion, and display certain alteration assemblages (Cooke & Simmons, 2000). The intrusions are likely the result of tectonic activity, such as plate subduction and extension. Deep hydrothermal fluid flow systems comprised of meteoric water, as well as near surface systems such as hot springs, are the sites of mineralization. Mineral deposition takes place as the fluids undergo cooling by fluid mixing, boiling and decompression.

Mariposa-El Zapote-Tahonitas Trend
The Mariposa-El Zapote-Tahonitas structure strikes to the south-southeast and dips at approximately 50° to the southwest. Mariposa is the northernmost deposit along the mineralized trend and has a length of approximately 750 m. The structure at Mariposa is at the contact between andesite and granodiorite. This structure is exposed on surface intermittently along the road that provides access to the historic mine workings. Examination of the historic workings, which were developed on three levels, exploited an area of dilation along the structure that was 150 to 200 m in length (Lopez, 2009). Mineralization is associated with hydrothermal breccias.

San Miguel-Noche Buena Trend
The San Miguel West, East, and Noche Buena areas occur along a regional northwest – southeast striking structure that moderately dips between 50° and 60° to the south west . The San Miguel West and East deposits have a combined length of 1,450 m and a true width that varies from 9 m to 75 m. This trend shows evidence of previous workings, such as stopes, trenches, and adits. The host rock in the area andesites of the Lower Volcanic sequence that were subsequently intruded by an argillic altered feldspar-hornblende-biotite porphyry dike. The mineralized zone is associated with the brecciated zones proximal to the dike, as well as along the structure (Lopez, 2009).

Guadalupe Trend
The Guadalupe trend, which bifurcates to the east from the San Miguel West deposit, is subdivided into the Guadalupe East and Guadalupe West deposits that are separated by the “6 de Enero” claim. The trend, which has an east-west orientation, is strongly silicified and contains zones of silica stockworks. Guadalupe East and Guadalupe West have a cumulative length of 1,675 m and a true width that varies from 4 m to 68 m. The area was previously mined, with underground working that extend laterally by approximately 1 km and vertically to 400 m. The host rocks to mineralization are intermediate volcanics (typically andesitic flows and tuffs) of the Lower Volcanic sequence. This volcanic sequence gently dips to the eastward (Lopez, 2009).

The Guadalupe de los Reyes Project has been divided into East and West areas. The West area open pits are El Zapote North, El Zapote South, San Miguel North, San Miguel South, and Noche Buena. The proposed mining methods for the Guadalupe de los Reyes deposit is conventional open pit methods utilizing off-highway trucks and loaders. Mining is proposed to occur sequentially in five open pits.

The West area pit designs incorporate a 50 degree inter-ramp pit slope depending on rock type. Bench configuration is based on triple benching 5-meter benches with a dig-face angle of 70 degrees. The majority of benches were designed with five-meter-wide benches with 7- meter catch benches. Catch benches were designed at every third bench.

Haul roads were designed for a total width of 15 meters, which accommodates the main haul surface, berms, and ditches. All haul roads were designed not to exceed 10 percent gradients. This haul road width and grade will support the selected truck size.

The recovery method chosen for the Los Reyes is a conventional milling circuit with a gravity and carbon-in-leach (CIL) and heap leach process.