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 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.

The study identifies a new operating strategy which includes three large open pits, two highgrade underground mines, the addition of a CIL plant to process the higher-grade ore, and the continued heap leaching of the lower-grade open pit ore. Approximately 51% of the gold production in the life of mine plan is from the CIL plant and 49% is from the existing heap leach facility.

The CIL plant is expected to achieve higher recoveries (an average of 89.7%) and better financial returns than heap leach processing for the underground ore and the higher-grade portion of the open pit ores. The plant also provides the ability to process some ore types that were previously not included in reserves as they were not amenable to heap leach processing; this includes material with an elevated sulphur content which exhibits lower gold recoveries at the crush sizes typically used in crushing for heap leach processing. The plant is predicted to process a total of 12.4 Mt at an average grade of ore feed of 4.63 g/t gold with an average recovery of 89.7% to produce 1.658 Moz gold.

The Expansion Feasibility Study contemplates the existing heap leach facility continuing to operate throughout the full LOM plan. A total of 95.6 Mt of ore with an average grade of 0.79 g/t gold will be placed on the leach pads and have an average recovery of 61.9% to produce approximately 1.500 Moz gold.

Secondary recovery is expected to contribute an additional 0.111 Moz from surface re-leaching and re-handling of previously leached ore.

Contributions to the gold production in the LOM plan are 51% from the CIL plant, 46% from the heap leach and 3% from secondary recovery .

The potential for addition of a SART (sulphidization, acidification, recycling and thickening) circuit in the plant is currently being investigated. A SART circuit would provide an opportunity to reduce cyanide consumption and yield a copper by-product for certain ores with elevated copper levels.

The CIL plant has an 18-month construction period plus three months of initial detailed engineering and procurement of long lead-time equipment. The plant includes single stage crushing and SAG grinding prior to the CIL leaching process. As an opportunity to reduce capital costs, the plant utilizes modified facilities at the existing ADR (adsorption desorption recovery) processing plant including an acid wash and elution columns, eluate heating and handling equipment and gold room to recover gold and silver from the CIL-loaded carbon. New, larger, electrowinning cells and rectifiers will be added to handle the higher gold and silver loadings on the carbon.