The deposits in the Los Filos Project area are considered to be typical of intrusionrelated gold– silver skarn deposits.

Mineralization is either hosted by or spatially associated with marble formed during contact metamorphism of the carbonates. Massive magnetite, hematite, goethite and jasperoidal silica, with minor associated pyrite, pyrrhotite, chalcopyrite and native gold typically occur in the veins and metasomatic replacement bodies that developed at the contacts between the carbonates and intrusive rocks.

The Los Filos Mine Complex comprises two active open pits (Los Filos Open Pit and Bermejal Open Pit), one active underground mine (Los Filos Underground Mine), one planned open pit mine (Guadalupe Open Pit), and one planned underground mine (Bermejal Underground Mine). Mining is scheduled to commence in Guadalupe Open Pit in Q1 2020. Development mining was underway in 2018 at Bermejal Underground Mine, and ore mining is expected to commence in Q4 2019 based on the current production schedule.

The Expansion Feasibility Study incorporates the potential for: development of the Bermejal underground mine, enlarging the Los Filos open pit mine, re-phasing of the Bermejal open pit into two distinct open pits (Bermejal and Guadalupe).

The site-wide LOM plan for the Los Filos mine complex has contributions from two high-grade underground mines and three large, lower-grade open pits.

Underground Mining

Bermejal Underground
Bermejal underground mine design and cost estimation was completed by SRK Consulting (Canada) Inc. A total of 11 kilometres (km) of horizontal and vertical development will be completed during the initial development period and a further 45 km of development over the life of mine. The mine life extends for nine years producing 6.4 million tonnes (Mt) at 6.57 grams per tonne (g/t) for contained gold of 1.348 Moz (Proven reserves of 0.4 Mt at 7.50 g/t for 0.095 Moz gold and Probable reserves of 6.0 Mt at 6.51 g/t for 1.253 Moz gold). Mining costs of $99 per tonne are based on contractor mining. The mining method is underhand drift and fill with cemented rock fill (CRF) used as backfill. Bermejal underground will have a dedicated CRF production plant. The production rate averages 2,000 tonnes per day (tpd) and peaks at 2,150 tpd. Bermejal underground contributes 31% of the contained gold in the LOM plan.

Los Filos Underground
The Los Filos underground mine is currently operating at over 1,800 tpd and in the LOM plan averages 1,700 tpd with mining costs of $73 per tonne based on owner and contract mining. Reduced operating costs, improved mining efficiencies and additional drilling have enabled the update of the Los Filos underground mine plan to extend to 2021. The reserves are 1.9 Mt at 5.50 g/t for a total of 0.338 Moz gold (Proven reserves of 0.8 Mt at 5.34 g/t for 0.144 Moz gold and Probable reserves of 1.1 Mt at 5.63 g/t for 0.194 Moz gold).

Open Pit Mining
Los Filos utilizes conventional open pit mining methods with an owner-operated fleet supplemented with rental of additional equipment during peak production periods. The average open pit mining costs are $1.41 per tonne mined.

Los Filos Open Pit
The expanded Los Filos open pit has a Proven and Probable reserve of 42.7 Mt at 0.57 g/t containing 0.776 Moz (including dilution and recovery; Proven reserves of 34.1 Mt at 0.59 g/t for 0.645 Moz gold and Probable reserves of 8.6 Mt at 0.47 g/t for 0.131 Moz gold). The mine life was extended seven years to 2027. The Los Filos open pit has an overall strip ratio of 4.0.

Bermejal and Guadalupe Open Pits
The Bermejal and Guadalupe open pits have been split into two open pits and rescheduled to mine the higher-grade Guadalupe ore earlier in the schedule which significantly improves the economics. Guadalupe has a Proven and Probable mineral reserve of 26.3 Mt at 1.55 g/t Au for 1.313 Moz (Proven reserves of 0.2 Mt at 0.35 g/t for 0.003 Moz gold and Probable reserves of 26.1 Mt at 1.56 g/t for 1.310 Moz gold). A pushback in 2020 will open this up as a separate open pit that has a 10-year life. The Guadalupe pit has an overall strip ratio of 8.0.

The Bermejal open pit extends for at least five years to 2025 based on the current reserves. Proven and Probable mineral reserves are 34.0 Mt at 0.54 g/t Au for 0.588 Moz (Proven reserves of 1.3 Mt at 0.47 g/t for 0.019 Moz gold and Probable reserves of 32.7 Mt at 0.54 g/t for 0.569 Moz gold). The overall strip ratio of the Bermejal open pit is 2.7.

The Bermejal underground mine utilizes the existing 1,330-metre exploration ramp as its main access ramp and includes an additional 11 km of development. The 15-month pre-commercial development period and the Expansion Feasibility Study assumes this commences in Q2 2019 and extends to Q3 2020 when the production rate sustains 1,100 tpd. Ore produced prior to start-up of the CIL plant will be sent to the heap leach facility.

The existing ramp extends from 1,428 metre elevation at the bottom of the mined-out portion of the Bermejal open pit to 1,238 metre elevation; mineralization extends to at least 770 metre elevation. The Expansion Feasibility Study contemplates sustaining development continuing to 2026 to provide access to all six mineralized areas. Over 75% of the ounces are from the central zone (zone 5) which has the highest grades and widest intervals of mineralization.

Ore is currently processed by conventional heap leaching methods to recover the contained gold and silver. In addition, installation of carbon-in-leach (CIL) cyanidation processing facilities to
recover gold and silver from higher grade ore sourced primarily from the future Bermejal
Underground mine is being investigated.

The Los Filos carbon-in-leach (CIL) plant design is based on a robust metallurgical flowsheet developed for optimum recovery while minimizing capital expenditure and operating costs. As the CIL plant is an addition to an existing operation, the existing site services (power, water, etc) will be used, where appropriate, to supply the new facilities and the existing (modified) ADR plant will be used for recovery of gold from the loaded carbon.

The flowsheet of the new CIL plant includes crushing, milling, carbon in leach, carbon regeneration and thickening and filtration of the CIL tailings for dry stack storage. The existing ADR pl ........