The Property is located along the margins of the Sierra Madre Oriental physiographic province. The regional geology is comprised of platform and basin sediments that were formed during the Mesozoic era on top of Paleozoic and Precambrian basement rocks. The region has undergone compression resulting in complex folding, faulting and uplift. Mantos and chimney style mineralization are associated with the Horizontes horizon within the La Negra member of the Lower Cretaceous Tamaulipas Formation. Pliocene age intrusions are emplaced into the stratigraphy on a local scale. Locally, the Carrizal mine contains six mineral zones and the El Monte Mine contains eight mineral zones that are hosted in limestone and calcareous shales of the Las Trancas, Tamaulipas, and Soyatal formations. The mineral zones are characterized as high temperature carbonate replacement deposits that consists of silver, lead, zinc and copper rich semi-massive and massive sulfide bodies that occur in proximity to quartz-monzonitic to monzonitic intrusions and monzonitic quartz-feldspar porphyry dikes. Argentite, galena, sphalerite, and chalcopyrite are the dominant economic minerals in the mineral zones.

Deposit Type
The general characteristics of mineralization at the Zimapan property are consistent with polymetallic replacement deposits as described by Morris (1986) and Cox (1986), published by Bray (1995). The mineral zones are further characterized as high temperature, chimney-style carbonate-replacement Zn-Pb-Ag±Cu±Au (“CRD”) deposits by Lang et al. (2000) in accordance with classification of Megaw et al. (1988) for similar deposits in Northern Mexico.

Locally, the Carrizal and El Monte mine areas occupy a stratigraphic section comprised of the Las Trancas Formation; overlain by thinly bedded limestone intercalated with chert of the Tamaulipas Formation; and overlain by yellow shales banded with marl and limestone of the Soyatal Formation. Quartz-monzonite to monzonite intrusions and quartz-feldspar porphyry dikes intrude the local stratigraphy at a subvertical orientation. Exoskarn (skarn developed in the host rock to the intrusion) and endoskarn (skarn developed within the intrusion) occur at the dike contact. Mineralization consists of disseminated sulfides, vein filled sulfides, and massive sulfide bodies.

All of the deposits on the Zimapan property are related to the alteration process that resulted from the emplacement of quartz-monzonite and monzonite plutons and dikes into the host limestones and marine clastic sediments, and the alteration and mineralization that resulted. The distribution of mineral deposits on the Zimapan property can be divided by geometry and degree of calc-silicate alteration:
a) Skarn Orebodies: either at a pluton or dike/sill contacts, with disseminated and fine veinlets, also massive sulfide pods.
b) Massive-Sulfide Mantos: parallel to stratigraphic contacts with minor to no calc-silicate alteration.
c) Massive Sulfide Chimneys: that cross-cut stratigraphy and contain no calc-silicate alteration.

Mineralized zones of the Carrizal and Monte mines
El Monte Mine
The El Monte mine includes the Concordia dike, La Escondida, CPO 385, 1400 dike, 1414 dike, 1493 dike, 1600 dike, and Manto Esperanza deposits. All of the deposits being exploited at El Monte are dike contact skarns that formed within intrusives and in strongly folded and fractured limestones immediately adjacent to intermediate, steeply dipping, variably oriented dikes 1 to 50 m in width. One feature of the El Monte Mine is the high density of dikes with different orientations. Two dominant orientations dominate; northwest trending dikes that roughly parallel the strike of the regional fold axis, and dikes that cross perpendicular to this regional fabric. The intersection of dikes or the point where dikes split appears to be a locus of much of the massive sulfide chimney mineralization.

Concordia
The Concordia mineral zone is mined from the lowermost four of six underground levels – Sublevel 10, 11, 12, and 13. The mineral zone formed adjacent to the Concordia dike, a northwest striking and steeply northeast dipping monzonite dike that is roughly 450 m long and averages 33 m in width (~325°/70°), It narrows bifurcates to the southeast splits into several smaller dikes that interfinger with zones of exoskarn alteration to the northeast. The Concordia dike is cross-cut by three northeast striking oblique normal faults ; two, including the Concordia and Guadalupe faults dip to the southeast (~065°/70°) and the third, the Central fault dips to the northeast (~245°/70°). Cumulative displacement along the dikes is estimated to 40 m of left lateral movement and 200 m the vertical drop to the north (Lang et al., 1999).

Exoskarn alteration form bodies form both in the hanging wall and footwall of the dike. In the hanging wall the exoskarn is thickest ranging up to 15 m in width. Endoskarn alteration parallels contacts of the dike and varies from a few centimeters to 2 m thick

The mineral body associated with the Concordia dike is a tabular body that overlies the Concordia dike in the retrograde exoskarn and within the intrusion as disseminated sulfides and along irregular fractures trending 315° and 055°. The width of the mineralization is 25 m, with 5 m corresponding to the exoskarn and 20 m corresponding with the endoskarn within the dike (Gonzalez-Villalvaso, 1990)

Mineralization consists of disseminated retrograde skarn mineralization thickens to tens of m on the northeast hanging wall of the dike and irregular massive sulfide pods along the outer margins of the exoskarn alteration. Mineralization extends down roughly 300 m where it wedges out against the dike.

Escondida
The Escondida mineral zone is mined from eight underground levels – Levels 216-726, 210-ESC, 207- 25, 205-725, 196-ESC, 192-573, 191-ESC, and 190-573. It consists of a stockwork of monzonite dikes that intrude intensely folded limestones. Some dikes run parallel to the northwest strike of regional folds, others cut oblique or perpendicular to the regional trend. The dikes are typically 1-5 m wide and run 10-250 m in length. Mineralization consists of stockworks or sheeted veins within exoskarn and endoskarn mineralization along dikes and as massive sulfide chimney bodies. Best mineralization occurs where dikes bifurcate or the intersections of dikes where the intersections continue vertically forming vertically elongate mineral bodies that average 2 m and expand to tens of m in thickness and extend over 240 m deep.

Carrizal Mine.
At the Carrizal mine, the Carrizal quartz-monzonite to monzonite intrusions and quartz-feldspar porphyry dikes intrude the local stratigraphy at a subvertical orientation. At its widest, the Carrizal monzonite intrusion measures approximately 450 m wide, trends northeast for approximately 1,400 m,. Narrow to irregularly shaped quartz-feldspar porphyry dikes, generally 0.5 to 5 m wide, can extend away from the monzonite intrusion for approximately 400 to 700 m. Exoskarn and endoskarn occur at the dike contact.

Underground open stope mining is the primary method used at the Carizzal and El Monte mines. Variations of this method includes cut-and-fill, long hole stoping, and sub-level stoping for sub-vertical to inclined bodies, and room and pillar mining for sub-horizontal bodies. Sub-level stoping are typically mined in 15.0 m to 20.0 m primary and secondary panels between the main levels. Cross-cuts from the underground workings are typically developed through the footwall waste rock. Material from development headings through waste rock is used to backfill exhausted stopes where required. Typical room and pillar height are approximately 5.0 m.

The dimensions of the access drifts and ramps are approximately 4.5 m high by 4.0 m wide while production drifts are similar or 3.5 m high by 3.0 m wide. Muck piles and waste rock piles are prepared by mechanized drilling and blasting methods and the material is removed from the active stopes by scooptram vehicles. Material is then loaded into 10 to 15-tonne haul trucks and transported to the El Monte plant through the Lomo de Toro access ramp. Mechanized equipment is powered by diesel.

The main workings and access are actively ventilated while cross cuts and stopes are passively ventilated by raises and vent shafts, and actively ventilation if necessary.

Mineralization extracted from the Carrizal and El Monte mines is combined at a 2:1 ratio and passed through a primary, secondary and tertiary crushing circuit that produces 3/8-inch sized mill feed at a rate of approximately 2,500 tonnes/day (“TPD”). The mill feed is then reduced by three ball mills operating at 38 to 41 tonnes per hour (“TPH”), 24 to 27 TPH and 45 to 50 TPH respectively.

Conventional sulfide flotation is the recovery method used at the El Monte plant. The ground material is mixed with water and collector chemicals and passed through two froth flotation circuits: a lead-copper bulk flotation circuit and a zinc selective flotation circuit. The slurry is then thickened and filtered to produce a lead, a zinc and a copper concentrate. The resulting lead and zinc concentrates are generally 10% in humidity while the copper concentrate is generally 11% in humidity. Approximately 90% of the water utilized in the process is recovered and reused. Tailings are gravity fed down gradient to the existing tailings pond. Overall, approximately 67% Ag, 64% Pb, 52% Cu and 70% Zn mineral is recovered from the three concentrates.