Mineral deposits in the Las Chispas district are classified as gold and silver, low to intermediate sulphidation epithermal systems, typical of many deposits in northeastern Sonora, including the nearby Santa Elena Mine (operated by First Majestic Silver Corp.) and the Mercedes Mine (Premier Gold Mines Ltd.). Elsewhere in the Sierra Madre, additional examples include the Dolores Mine (Pan American Silver Corp.) and Piños Altos Mine (Agnico Eagle Mines Ltd.) in the State of Chihuahua.

Mineralization is interpreted to be a deeply emplaced, low to intermediate-sulphidation system, with mineralization hosted in hydrothermal veins, stockwork, and breccia. Emplacement of the mineralization is influenced by fractures and low-pressure conduits formed within the rocks during tectonic movements. Mineralization can be controlled lithologically along regional structures, local tension cracks, and faulted bedding planes.

Historical reports and work conducted by SilverCrest have further investigated the gold, silver, base metals, and gangue minerals associated with the mineralization. The mineralization is 0.10 m to 9.30 m in true width and typically encompasses a central quartz ± calcite mineralization corridor with narrow veinlets within the adjacent fault damage zone. Stockwork and breccia zones are centred on structurally controlled hydrothermal conduits.

Historical reporting has identified economic mineralization in the form of silver sulphides and sulfosalts as the primary silver mineral species, and in association with pyrite. Secondary silver enrichment is indicated by the gradation from chlorargyrite near the surface to pyrargyrite at depth.

Silver mineralization is dominant throughout the Project. Typical ratios of silver to gold using a COG of 150 gpt silver equivalent (AgEq) are approximately: Babicanora Main Vein at 90:1, Babi Vista Main Vein at 56:1, Babicanora Norte Main Vein at 117:1, Babicanora Sur Main Vein at 53:1, Granaditas Vein at 102:1, Las Chispas Vein at 142:1, Giovanni Vein at 172:1, and William Tell Vein at 140:1. Overall, a 1:100 gold to silver modal ratio is considered for the Project.

Stronger gold mineralization is noted within the Babicanora Area than within the Las Chispas Area. The modes of gold mineralization currently identified are threefold: 1) gold associated with pyrite and chalcopyrite; 2) gold emplacement with silver sulphides (typically argentite and electrum); and 3) native gold flakes in quartz.

Additional sulphide species identified are minor chalcopyrite, sphalerite and galena. The veins are low in base metal mineralization, except for the far south-eastern extensions of the Babicanora Norte, Babi Vista and Granaditas veins, in the south-eastern part of the district. In addition to the petrographic findings in Babicanora, samples of an early sphalerite phase were followed by a later galena phase of mineralization and visual inspection of the base metal mineralization showed galena and sphalerite emplaced at the same time within the same discrete vein. Multiple pulses of base metal-rich fluids of variable composition formed the mineralization at the Project. There seems to be an increasing base metal content to the southeast and at depth. Government geophysical maps show a large magnetic anomaly to the east of the Project area, which could be a buried intrusive and potentially the main source of the mineralization in the district.

The veins and stockwork within the Las Chispas Vein consist of fine- to medium-grained, subhedral to euhedral interlocking quartz with minor cavities lined by comb quartz (typically crystals are 5 to 10 mm in length). SilverCrest geologists have not observed any quartzpseudomorphed blades after platy carbonate or other textures that indicate a shallow environment. Vein emplacement and form are structurally and lithologically controlled. The rheology of the host rock plays an important role in structural preparation and emplacement of the mineralization. Within the fine- grained welded tuff, veining is narrow, typically with sharp narrow contacts, and chaotic. Veins and breccia emplacement in the more competent, medium-grained lapilli tuffs are wider commonly with parallel splays along the main structure, with denser veining in the adjacent fault damage zone.

Brecciated mineralization formed in two ways: 1) in zones of low pressure as hydrothermal breccia: and 2) as mechanical breccias.

In the hydrothermal breccia, mineralization is hosted in a siliceous matrix of hydrothermal quartz ± calcite and previously formed vein clasts that have been brecciated and re-cemented. Clasts are typically homolithic, angular, and show minimal signs of milling and rounding by hydrothermal processes. Although heterolithic breccias are present, they tend to be at the intersection points of the cross-cutting faults (striking 360°) to the main trend and at depth. Where breccia clasts are mineralization, mobilization of the clasts within conduits during multi- episodic pulse events is indicated. Gold values increase with increasing pyrite and chalcopyrite within the quartz matrix.

Re-cemented mechanical breccia generated by the reactivation of the fault hosting the mineralization is also present. These breccias consist of fault gouge, have a cataclasite texture, and are re-cemented with quartz and calcite. This reactivation mechanism also produces open space filling ores, including narrow stockwork quartz ± calcite ± adularia veins. Additional textures include banding, crustiform, comb, and chalcedonic silica-calcite veins. The matrix commonly has fine disseminated to coarse-grained banded sulphides associated with the cement.

Argentite is the principal silver mineral and has shown association with galena, pyrite ± marcasite and chalcopyrite. Gold and silver values have a strong correlation with each other and likely precipitated together during the crystallization of quartz. Base metals contents are low in veins. Minor zinc and lead are principally found in black sphalerite and galena as blebs and veinlets. Arsenic and mercury are conspicuously absent from the geochemistry. Minor antimony is present. Minor secondary copper minerals as chrysocolla and malachite occur underground in association with oxidized chalcopyrite, however, is rare.

Styles of mineralization present in the Project include laminated veins, stockworks, and quartz- calcite filled hydro-brecciated structures. The presence of epithermal textures, such as bladed calcite (replaced by quartz), miarolitic cavities, and chalcedony/crustiform banding mapped underground, suggest multiple phases of fluid pulses contributed to the formation of the mineral deposits.

The Las Chispas district is divided into the Las Chispas Area and the Babicanora Area, and currently of 45 epithermal separate veins have been identified. Mineral Resources are estimated for 21 veins, and Mineral Reserves for 15 veins.

The proposed mining approach will use variations of long-hole stoping and cut-and-fill mining methods via several access drifts and ramps. These methods are appropriate to the subvertical geometry of the veins that have thicknesses ranging from 0.5–10 m.

The long-hole stope mining methods will include long hole longitudinal retreat stoping and Avoca. These methods will be used in mining areas where vein thicknesses are >1.5 m, and when the good ground allow it. Avoca requires multiple accesses to the veins, whereas longhole longitudinal retreat typically requires only one access.

Variations of cut-and-fill mining methods will include cut-and-fill with uppers, cut-and-fill with breasting and resuing. Cut-and-fill with uppers will be used in mining areas with “Fair” ground conditions and where the vein thickness is >1.5 m. Cut-and-fill with breasting will be used in mining areas with adverse ground conditions, and where the vein thickness is >1.5 m. Resuing is used in mining areas where the vein thickness is <1.5 m, independent of ground conditions.

Mining operations will extract from 15 principal veins: Babicanora Main, Babicanora FW, Babicanora HW, Babicanora Sur, Babicanora Sur HW, Babicanora Norte, Babicanora Norte HW, Babi Vista, Babi Vista FW, Luigi, Luigi FW, William Tell, Giovanni, Gio Mini and Las Chispas. These veins are grouped into six (6) mining areas: Babicanora Main, Babicanora Sur, Babi Vista, Babicanora Norte, Babicanora Central and Las Chispas. Each of these mining areas will be serviced by supporting infrastructure including power distribution, compressed air distribution, water supply, ventilation, dewatering and communications.

The mine design was based on a production rate of 1,250 t/d and will be reached by maintaining a proper balance between productive and selective mining methods.

The underground access and infrastructure development were designed to support the mining method and sized based on mining equipment and production rate requirements.

Longitudinal Long-hole Retreat
The longitudinal long-hole retreat method will be used in mining areas where the vein thickness is >1.5 m and the rock quality is “Fair” to “Good”. A minimum mining width of 1.5 m was applied to stope optimization to allow the use of mechanized equipment. Longitudinal long-hole retreat was applied to mining areas with a single access.

The mining area will be accessed by driving sill drifts below and above the stoping area using a single-boom jumbo and a 3 t scoop. Once the sills are developed to the extremity of the mining area, a drop raise will be developed between the two sill drifts to create sufficient open stope space to allow blasting. Down holes will be drilled by a narrow production drill between the two levels, loaded, and blasted. The stope will be mucked from the lower level before cemented rockfill is placed from the upper level to create a plug. Rockfill will be placed in the remainder of the stope. Subsequent stopes will be mined in the exact same cycle while retreating towards the access. Stopes will be sequenced in an overhand fashion.

Avoca
The Avoca method will be used in mining areas with “Fair” ground conditions where vein thicknesses are >1.5 m. A minimum mining width of 1.5 m was applied to stope optimization to allow the use of mechanized equipment. Avoca requires access from both extremities, allows increased productivities, and maintains better ground conditions.

The mining area will be accessed by driving sill drifts both below and above the stoping area using a single-boom jumbo and a 3 t scoop. Once the sills are developed with accesses at both extremities of the mining area, a drop raise will be developed between the two sill drifts to create sufficient open stope space to blast the first stope. Vertical blastholes will be drilled by a narrow production drill between the two levels, loaded, and blasted. The stope will be mucked from the lower level while the adjacent stope is being drilled from the upper level. Once the stope is mucked out, the adjacent stope will be blasted into the open stope created by the mined-out stope. Rockfill will be placed from the upper level at the opposite end. The cycle will be continued while mucking in a retreating fashion from one end and advancing with rockfill from the opposite end until the entire area is mined out. Stopes will be mined in an overhand fashion. The stope span will be kept at about 12 m between the rockfill and the intact rock. In the event that the dilution becomes too great, the stope span may be reduced, or the stope can be completely backfilled before restarting a new stope.

Cut-and-Fill Uppers
The cut-and-fill using uppers method will be applied in mining areas with “Fair” ground conditions where the vein thickness is >1.5 m. A minimum mining width of 1.5 m was applied to stope optimization to allow the use of mechanized equipment.

The mining area will be accessed by developing a pivot drive. An initial sill will be developed through the lower portion of the mining area with a single-boom jumbo and either a 1.2 t or 3 t scoop, depending on stope width. Once the sill has been developed to the extremity of the mining area, upper holes will be drilled with a single-boom jumbo, loaded, and blasted. The mineralized material will then be mucked. Subsequent rounds will be mined in the same cycle while retreating towards the access. Rockfill will be placed to create a new working floor for the next cut to be mined in an overhand fashion. The sill development was not included in the development metres but is included in the stope operating costs.

Cut-and-Fill Breasting
The cut-and-fill using breasting method will be applied in mining areas with adverse ground conditions where the vein thickness is >1.5 m. A minimum mining width of 1.5 m was applied to stope optimization to allow the use of mechanized equipment.

The mining area will be accessed by developing a pivot drive. An initial sill will be developed through the lower portion of the mining area with a single-boom jumbo and either a 1.2 t or 3 t scoop, depending on stope width. Once the sill has been developed to the extremity of the mining area, rockfill will be placed while allowing a 0.3 m gap to the sill back. The next cuts will be driven by slashing the breast holes rounds into this gap to enhance productivity. Rockfill will be placed to create a new working floor for the next cut to be mined in an overhand fashion. The sill development was not included in the development metres but is included in the stope operating costs.

Resue
Resuing will be used in mining areas where the vein thickness is <1.5 m and the rock quality is “Fair”. A minimum mining width of 1.0 m was applied to stope optimization to allow for proper blasting of the mineralization. This technique allows for the use of mechanized equipment in narrow veins while minimizing dilution, although productivity is somewhat hindered.

Crushing Area
A conventional jaw crusher was selected to reduce the feed material particle size to P80 of 63 mm, suitable for feeding a single stage SAG mill. The nominal feed throughput of the crushing circuit is approximately 74 t/hr, at 70% availability.

The crushing circuit major equipment will include:

• Static grizzly and hopper;
• Apron feeder;
• Jaw crusher (75 kW);
• Surge bin;
• Belt feeder to reclaim crushed material to feed the SAG mill;
• Emergency stockpile and reclaim; and,
• Associated material handling systems (conveyors, weightometers and tramp magnet).

Run-of-mine (ROM) mineralized material will be trucked from the underground mine either to the ROM pad stockpile or directly onto the static grizzly hopper. ROM mineralized material from the stockpile will be reclaimed using front-end loaders and dumped into the static grizzly hopper. The jaw crusher will be a Metso C80 with a closed side setting (CSS) of 80 mm and will crush the ROM mineralized material from F80 of 159 mm to P80 of 63 mm. The crushed mineralized material will be conveyed to the surge bin via the primary crusher product conveyor. A tramp metal magnet will be installed at the head end of this conveyor to remove tramp. The tramp metal will be manually removed as needed.

The surge bin will have a live capacity of 10 minutes for 9.5 t of storage.

Surge bin overflow will be transferred to an emergency stockpile via the emergency stockpile conveyor and reclaimed from the stockpile using a front-end loader when required. The emergency stockpile will provide 16 hr of storage given a plant feed rate of 57 t/hr.

Crushed mineralized material will be reclaimed via a belt feeder beneath the surge bin and conveyed to the SAG mill feed chute by the SAG mill feed conveyor.

A freshwater line is available for dust suppression in the crushing area if required.

Grinding Circuit
A conventional SAG mill, arranged in closed circuit with a cyclone cluster, was selected to reduce the mineralized material from a F80 of 63 mm to P80 of 100 µm. The nominal feed throughput of the grinding circuit is approximately 57 t/hr, based on 91.3% availability.

The grinding circuit will include:

• One SAG mill, 6.1 m (20 ft) in diameter by 3.66 m (12 ft) in length, powered by a 2,000-kW variable speed drive motor;
• Two 55 kW slurry pumps to pump SAG mill discharge to cyclones, with one pump in operation and one in standby;
• One cyclone cluster with ten 250 mm cyclones, eight in operation and two in standby; and,
• Associated material handling and storage systems (sump pumps, pump boxes, bins).

Crushed mineralized material will be reclaimed from the surge bin onto the SAG mill feed conveyor and discharged into the feed chute of the SAG mill. The SAG mill will be a grate discharge type mill. The grate aperture will be 15 mm and will have no pebble ports, so there will be no recycle of pebbles. Provisions were made in the plant layout to allow the installation of a ball-mill, the retrofit of conveyors and a pebble crusher in a potential expansion case.

The SAG mill product will discharge onto a trommel screen. Trommel screen undersize will report to a cyclone feed pumpbox and the oversize to a scats bunker. Process water will be added to the SAG mill feed chute and cyclone feed pumpbox to maintain a target mill discharge slurry solids density of 70%. The cyclone cluster will be fed at a nominal rate of 228 t/hr to separate the coarse and fine particles in the SAG mill trommel screen undersize. The cyclone underflow will return to the SAG mill feed. The nominal circulating load is 400%. The cyclone overflow with a particle size of P80 of 100 µm will report to the bulk rougher flotation circuit after flowing through a trash screen.

A vertical cantilevered centrifugal sump pump will service the area. Grinding media for the SAG mill will be introduced by use of a dedicated kibble and a grinding building jib crane.

The overall flowsheet includes the following steps:
• Primary crushing;
• Grinding (single stage SAG mill circuit closed with cyclones for classification);
• Bulk rougher flotation;
• Cyanide leach of flotation concentrate;
• Flotation concentrate thickening;
• Flotation tails pre-leach thickening;
• Cyanide leach of flotation tails;
• Countercurrent decantation (CCD) washing and pre-clarification of pregnant solution;
• Clarification, de-aeration and zinc precipitation (Merrill-Crowe);
• Mercury removal using a retort;
• Smelting to produce doré;
• Cyanide destruction of tailings;
• Tailings thickening and filtration; and,
• Transferring tails to the FTSF.

Bulk Rougher Flotation
The bulk rougher flotation circuit was designed to generate a small amount of concentrate, about 2% mass pull, that will contain a significant portion of the gold and silver from the ore.

The flotation circuit will ........