Mineral deposits at the Project and the surrounding area are classified as silver and gold, low to intermediate sulphidation, epithermal systems. These are typical of many local deposits in northeastern Sonora including the nearby Santa Elena Silver/Gold mine (First Majestic Silver Corp.), Las Chispas Silver/Gold mine (Silvercrest Mines) and the Mercedes mine (Equinox Gold Corp.). In the state of Chihuahua to the east, other low sulfidation epithermal deposits include the Dolores Silver/Gold mine (Pan American Silver) and the Pinos Altos Silver/Gold mine (AgnicoEagle Mines Ltd.).

These low sulfidation epithermal deposits form in predominantly brittle and/or porous subaerial felsic volcanic complexes in extensional and strike-slip structural regimes. Local groundwater dilutes and cools, mixing with upwelling magmatic-derived hydrothermal brines within extensional setting related to local rifts or detachment faulting related to evolving metamorphic complex formation. Mineralization is typically deposited as multi-zoned veins, stockwork and breccia due to episodic events. Deposit formation occurs in near-surface environments, typically between 200 and 600 m, and down to a one-kilometer depth from surface, within temperature gradients of 150°C and 300°C. Indicative textures of mid- to high-level deposits can include open quartz lined fractures, miarolitic cavities, comb structure, drusy/crustiform, or colloform banding, and platy/bladed calcite. Minerals with silver and gold tenure can precipitate as deposits within these conditions depending on the concentration of the metals in the brines, with sudden changes to local pressure gradients, and local pH conditions, as well as fluid flow dynamics.

Deposit alteration ranges from weak to pervasive from near-neutral pH of the hydrothermal fluids. Silicification is generally pervasive in proximity to mineralization followed by sericite illitekaolinite assemblages. Advanced argillic alteration (kaolinite-alunite) may form locally along the tops of mineralized zones. Propylitic alteration, including pyrite and epidote, are formed as alteration haloes laterally surrounding the veins at depth.

The Cerro Caliche deposits are considered a Low Sulfidation Epithermal Precious Metal mineral deposit type as are the nearby Mercedes (Burtner, 2013) and Cerro Prieto (Giroux, Bain, 2013) gold mines. A working field model adapted includes field identifiable vein textures in quartz veins which have been adapted to the model. Textures suggesting boiling include lattice and bladed, which developed in partial quartz replacement of carbonate minerals along cleavage planes showing an indication of boiling that produces local acidic conditions. Adularia is also tentatively identified by its pink colored vein material which is also indicative of boiling fluid deposition. Also present are numerous bands of coarse to fine quartz in near rhythmic wall parallel bands that also surround fragments in the vein. The veins of the western side of the property, located near to and west of the Zorillo veins, are formed of white glassy quartz that do not contain more than geochemically anomalous gold (less than 50 ppb Au).

Assumed open pit mining methods will use front-end loaders and/or hydraulic excavator to load haul trucks for waste and mineralized material haulage. Mining activities will include site clearing, removal of growth medium (topsoil), free-digging, drilling, blasting, loading, hauling, and mining support activities.

General Arrangements for Mining
The mining of the Cerro Caliche pits will generally be executed in 6 m benches, using 3 m flitches if and when needed. Whereas the block model has 6 m x 6 m x 6 m (height) dimensions, the mine planning work is based on mining full 6 m benches throughout. The option of using 3 m flitches operationally gives the flexibility of better selectivity as needed. Six (6) metre tall benches will be preferred where possible for improved productivity. Where drilling is required, 6 m benches will be drilled with 0.60 m subgrade.

Open Pit Optimization
The basis for the open pit designs are based upon an optimized pit shells. The execution of the Pit Optimisation exercise was carried out using Whittle Software. The software uses the LerchsGrossmann algorithm to generate the optimised pit shell/s according using the resource block model and the selected input parameters.

Open Pit Design Parameters
Based on pit design and preliminary evaluation template parameters, ramp widths were based on anticipated haul trucks of 78.3 t capacity and sized at 15 m in width. One-way traffic haul roads were used at the pit bottom at a width of 10 m. It is expected that the mining faces will be 6 m high and catch bench berms placed every vertical 6 m. Roads have a maximum gradient of 10% assigned to the shortest distance along the ramp, which prevents gradient rules being broken around corners. The inside circumference of a ramp may be greater than 8% if the gradient is applied to the ramp centreline or high wall.

Primary Crushing Circuit
The proposed primary crushing circuit will reduce the run of mine mineralized material from a nominal top size of 600 mm to a product of 80 % passing (P80) – ½-in (12.5 mm) for the conveyor loading to the heap leach pads. The crushing circuit includes, but is not limited to, the following equipment:
• ROM feed hopper c/w feeder and vibrating grizzly screen;
• Primary Jaw Crusher;
• Associated conveyor belts to feed and discharge to primary crushed mineralization stockpile;
• Belt Scale and Belt Magnet.

The jaw crusher, 1500 mm x 1070 mm (59-in x 42-in.) – 200 kw will process a nominal 400 t/hr of oversized material based on the utilization factor noted. The jaw crusher discharge will be conveyed to the crushed mineralization stockpile.

Primary Crushed Mineralized Material Stockpile and Reclaim
The stockpile will provide production surge capacity to ensure a steady rate to the secondary crushing circuit. The equipment in this area includes:
• Reclaim Vibrating Pan Feeders (4) – variable speed;
• Associated conveyor belt feed system with belt scale.

The pan feeders will discharge onto the secondary feed conveyor to feed crushed mineralization to the secondary screen unit. The feeders will reclaim the material from the stockpile and ensure a controlled feed rate to the secondary circuit t/hr. Feed control to the feeders will be ensured by the inline belt scale.

Secondary and Tertiary Crushing Circuit
The equipment in this area includes:
• Secondary Inclined Linear Screen – Double Deck;
• Secondary Cone Crusher – 600 kw installed power – Closed Side Setting – 44 mm;
• Tertiary Inclined Screens – two (2) units – parallel operation;
• Tertiary Cone Crushers – two (2) units – 600 kw installed power – Closed side setting – 15mm;
• Associated conveyor belt feed and discharge systems for recirculation and discharge to crushed mineralization stockpile.

The crushing circuit will be located upstream of the heap leach pad facility and process plant and ponds. The crushed material will be loaded and trucked to the pads approximately x km and loaded systemically onto the lined pads.

The plant design was based on a nominal 15,000 tpd of mineralized material more with average grades of 0.41 g/t Au and 4.05 g/t Ag. The process plant flowsheet design comprises of three (3) stage conventional crushing, material handling of crushed product and loading onto the lined heap pads. Solution ponds and pumping system will allow for irrigation of loaded mineralized material and subsequent collection of the pregnant solution. The pregnant solution will be pumped to two (2) trains of carbon in column tanks for loading of the gold and silver onto the carbon. Standard carbon in column processing will take place in terms of carbon advancement, carbon addition, carbon recovery, and bagging for shipment.

The Cerro Caliche Project does not plan currently to operate carbon stripping, electrowinning, and doré refinery at the plant. The loaded carbon will be shipped to North American carbon refiners were the gold and silver will be stripped and recovered for payment.