The Taguas Property is host to a high-sulfidation epithermal gold-silver system hosted in altered tertiary age rhyolite volcaniclastic rocks. Supergene-oxidized gold-silver mineralization occurs on the south half of the Property. The oxide gold-silver mineralization consists of sub-vertical, northeast striking mineralized structures in an envelope of lower grade mineralization. The high grade zones consist of relatively continuous mineralization with gold grades ranging from 0.2 g/t Au to over 4.0 g/t Au and 10 g/t Ag to over 50 g/t Ag. Oxidation extends from surface to approximately 100m – 200m below surface.

Taguas consists of three gold-silver deposits:
• Leonor Vein at Cerro Silla Sur;
• Campamento Vein at Cerro Campamento;
• The gold-silver mineralization at Cerros Taguas.

The present PEA refers only to this oxidized gold-silver mineralization occurring near surface in Cerros Taguas.

Cerro Silla Sur
Cerro Silla Sur contains a northeast trending and steeply dipping (to the northwest) quartz-pyrite-enargite vein called Leonor. The central portion of the Leonor vein has returned grades of 7 to 42 g/t gold, up to 330 g/t silver and 0.1 to 5 % copper over drill intersections of less than 1 m to 7 m (Hedenquist, 2012). The mineralogical characteristics of the Leonor Vein are consistent with it being of the intermediatesulfidation type as evidenced by increasing amounts of chalcopyrite relative to enargite. Such intermediate-sulfidation veins typify the peripheral portions of high-sulfidation systems, and the elevated zinc and lead contents of Leonor lend support for cooler conditions of formation (Sillitoe, 2011).

Cerro Campamento
The mineralogical characteristics of the Campamento Vein are more consistent with it being of the high-sulfidation type as evidenced by the predominance of enargite over chalcopyrite. The Campamento vein has returned drill intersections 1-3m wide with 5- 35 g/t gold over a vertical interval of at least 100m (Hedenquist, 2012). The uppermost 100 meters of the Campamento vein usually contain only a few percent pyrite and enargite but often contain bonanza grade gold. Sillitoe (2011) proposed that the sulfide deficiency is a hypogene feature, and not the result of supergene oxidation. However, other geologists (e.g. Stewart, 2008; Kowalik, 2015 and 2017) believe that the sulfide and thereby copper deficiency but gold enrichment in the upper parts of the Campamento vein are due to supergene oxidation effects, depleting mobile copper and enriching less mobile gold. If so, the supergene zone should be transitional downwards into veins of massive sulfides, predominantly enargite with lesser pyrite. According to Hedenquist (2012), the amount of enargite in the Campamento vein does increase markedly with depth.

The mineralization in the upper 100 m to 200 m at Cerros Taguas, however, is markedly different from the mineralization at Campamento and Leonor. The mineralization at Cerros Taguas is not a single large vein like is mostly Leonor and Campamento but the product of very numerous small veins. Hedenquist (2012) proposed that Cerros Taguas may be a hydrothermal breccia bordering a felsic flow-dome intrusive. However, the purported intrusive flow dome contains rounded quartz eyes which may be more indicative of a tuff.

Cerros Taguas
The gold-silver mineralization intersected to date is hosted by lithic tuffs with higher grade zones controlled by northeast-trending siliceous structures. Based on underground mapping and sampling on the 4200 level at Cerro Taguas Norte and Cerro Taguas Sur, and drill intercepts, six high-grade domains were modelled as solid vein wireframes. An additional three high-grade domains, located beyond the underground exploration development, were interpreted based on drill intercepts.

The high-grade domains are sub-vertical and strike 230° to 250°. The true width of the high-grade domain’s ranges from 1.0 m to over 8.0 m and have lengths that range from 40 m to over 500 m and depths extending to 236 m below surface.

Mineralization at Taguas has the following characteristics that are consistent with the supergene-oxidized high-sulfidation deposit model:
• Near surface emplacement, hosted within Cenozoic aged volcanic units;
• Strong advanced argillic quartz-alunite alteration and saline fluid inclusions with high homogenization temperatures which indicates an acidic, magmatic fluid source
• Gold-silver mineralization in quartz-sulfide veins hosted in volcanic rocks and volcanic breccias
• The presence of jasperoids and clearly visible Fe-oxides at surface identify the supergene oxide zone.

A preliminary mine plan for the Cerros Taguas oxide material is focused on a main and secondary mine areas, mined through consecutive mining phases or pushbacks.

The mining method proposed for the Taguas Project is conventional truck and shovel open pit mining.

The mine plan will process 5.5 Mt/year with a peak total mining rate of 14.0 Mt/y in Years 2 to 4. The 6-month pre production period requires the mining of 2.4 Mt of total material to expose sufficient mineralized material to start commercial production in Year 1.

The total mined waste considers two main destinations for the material, the main east waste storage area to the east of the pit and the west waste storage area to the west of the south pit. The mined leach material will be hauled to the primary crusher for direct tipping. Low grade material will be mined and hauled to a stockpile located between the pit and the plant area until Year 7. This material will be re-handled and will become part of the plant feed in the later years.

The mine is scheduled to operate seven days per week or 365 days per year. Each day will consist of two 12-hour shifts. Four mining crews will rotate to cover the operation.

Pit Design
The bench configuration used for the mine design:
Inter-ramp angle (IRA): 45°;
Bench angle: 65°;
Bench height: 5m;
Berm width: 3m;
Max slope height: 100m;
Catch berm: 10m;
Ramp width: 13m;
Ramp gradient: 10%.

The loading operation is envisaged using 5m benches with 5.2m3 excavators to improve selectivity. The best match between loading and hauling was considered, using 38 t conventional trucks as these are common with mining contractors and have low unit costs.

Mine design assumed 13m ramps at a 10% maximum gradient, allowing double traffic for this truck type and enough space for the drainage system and protection at the crest of the ramp.

The pit shell sequence was used as guide for the mining phase designs, providing interconnection between the phases. The final pit is the result of the phases designs. A total of 14 phases were designed. The sequence starts targeting the higher grade and lower strip ratio areas at the south-central and north of the main pit and an initial phase at the south area, followed by successive expansion to low grade areas and deeper resources.

The adopted mining operation strategy for this study corresponds to contract mining for the life of mine.

ROM material will be transported from the mine in 38-tonne surface haul trucks and dumped in the dump hopper or stockpiled in a ROM stockpile. Stockpiled material will be reclaimed by a front-end loader and fed to the dump hopper as needed. Oversized rocks or large lumps will be broken using a rock breaker.

Material will be fed from the ROM dump hopper to a vibrating grizzly feeder via an apron feeder. The grizzly oversize will be fed to the jaw crusher and the grizzly undersize will be recombined with the jaw crusher product on the primary crusher discharge conveyor. The primary crusher discharge conveyor transfers primary crushed material to the primary crushed material stockpile, where it will be reclaimed by belt feeders and fed to the secondary feed bin by the primary crushed product reclaim conveyor. A tramp metal electromagnet and metal detector will be installed on the primary crushed product reclaim conveyor to protect the secondary crusher.

Material from the secondary feed bin will be fed to the double deck vibrating secondary screen by a belt feeder with oversize material being fed to the secondary cone crusher and undersize being combined with the tertiary screen undersize onto the crushed product conveyor. Oversize material will be crushed by the secondary cone crusher which discharges onto the cone crusher product conveyor, where it will be combined with tertiary crushed material.

The tertiary crushing circuit includes the tertiary screen feed bin, three each screen feed belt feeders, three each double deck vibrating screens, and three each short head cone crushers and will be operated in a closed circuit. Material from the tertiary screen feed bin will be reclaimed and fed to the tertiary screens which will be operated in parallel. Oversize material from the screens will be fed to the cone crushers, where it is crushed and then combined with secondary crushed material onto the cone crusher product conveyor and undersize material will be combined with undersized material from the secondary screen on the crushed product conveyor. Material from cone crusher product conveyor will be recycled back to the tertiary screen feed bin using two each crushing recycle conveyors.

The secondary and tertiary screen undersize (crushed product) will be 100% passing 12.5 mm. Crushed product will be transferred to the product storage bin. The crushed product will be reclaimed from the storage bin using feeders and conveyed to the leach pad for stacking; lime will be added to the crushed material for pH control.

All of the conveyors will be interlocked so that if one conveyor trips out, all upstream conveyors and the vibrating grizzly feeder will also trip. This interlocking is designed to prevent large spills and equipment damage. Both of these features are considered necessary to meet the design utilization for the system.

Test work results indicate that the oxide portion of the Cerros Taguas mineral resource is amenable to heap leaching for the recovery of gold and silver values. Material will be crushed at a rate of 15,000 tpd to 100% passing 12.5 mm using a three-stage closed crushing circuit and conveyor stacked onto a leach pad in 10 m lifts. Lime will be added to the material for pH control before being stacked and leached with a dilute cyanide solution. Pregnant solution will flow by gravity to a pregnant solution pond before being pumped to a Merrill-Crowe plant for metal recovery. Gold and silver will be precipitated from the pregnant solution via zinc cementation. The precious metal precipitate will be dewatered using filters, dried in a mercury retort to recover mercury values, and smelted to produce the final doré product.

A Merrill-Crowe recovery plant was selected instead of a conventional carbon adsorption circuit due to the high recoverable silver values.

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