All mineralization at the Cozamin Mine occurs in veins. Mineralization at Cozamin is best described as zinc-rich epithermal mineralization overprinted by copper-rich mesothermal mineralization. The copper-dominant stage of mineralization appears to cut across earlier epithermal zinc-dominant mineralization, or is enveloped/telescoped by the earlier zinc-dominant mineralization. The epithermal veins display well banded quartz veins and open space fillings and quartz druse vug linings. The higher temperature veins have significantly fewer vugs, and the veins can be massive pyrrhotite-pyritechalcopyrite.

The dominant mineralized vein on the Cozamin Mine is the Mala Noche. This vein has been traced for 5.5 km on surface on the property. It strikes approximately east-west and dips on average at 60° to the North. There are several shafts that provide access to the historical workings at Cozamin. The largest mined area is the San Roberto mine which has a strike length of 1.4 km.

Moderate propyllitic wall rock alteration is generally limited to 3 m into the hangingwall and footwall. Gangue minerals in the Mala Noche vein consist of quartz, silica, calcite, chlorite, epidote and minor disseminated sericite. The quartz occurs as coarse grained druse crystalline masses, and a stockwork of quartz veinlets. Mineralization in the Mala Noche vein at the Cozamin Mine appears to have been episodic. Early epithermal mineralization and alteration (represented by sulphide pseudomorphs of carbonates and possibly barite and well-banded quartz veins and vug linings of quartz druse) have been overprinted by higher temperature pyrite-pyrrhotite-chalcopyrite dominant mineralization in a telescoped, intrusive related hydrothermal system.

Pyrite is the dominant vein sulphide and typically comprises approximately 15% of the Mala Noche vein in the San Roberto mine. It occurs as fine disseminations and veinlets, coarse crystalline replacements, and pseudomorphs of epithermal textured carbonate minerals and possible barite. Arsenopyrite typically occurs as minor, microscopic inclusions in pyrite.

Pyrrhotite is the second most common sulphide mineral but is present only in the intermediate and deeper levels of the San Roberto mine. It occurs as replacement masses, pseudomorphs of platey masses and acicular replacements probably after amphibole. Pyrrhotite commonly occurs as an envelope to, or intermixed with, strong chalcopyrite mineralization.

Chalcopyrite is the only copper sulphide recognized visually at the Cozamin Mine. Like pyrrhotite, it is more common at the intermediate and deeper levels of the mine. It occurs as disseminations, veinlets and replacement masses.

Sphalerite is the dominant economic sulphide in the upper levels in the San Roberto mine. Most of the sphalerite is marmatitic. It occurs as disseminations and coarse crystalline masses and is commonly marginal to the chalcopyrite-dominant portion of the vein.

The LOM plan forecasts mining 6.2 Mt from October 24, 2018 until early 2024. Only material identified as Mineral Reserves was included in the LOM plan.

Access to underground workings is obtained from two service and haulage ramps and a hoisting shaft. Ramps are 5 m wide and 5 m high. The mining method longitudinal longhole open stoping with loose waste rock backfill will be used exclusively for the extraction of the remaining current Cozamin ore reserves. Sublevels are 4 m wide by 4.5 m high and are usually mined to the extent of the ore. The mining width can vary between 2 m and 15 m, depending on the vein thickness. The average mill production is currently 2,500 to 3,000 tpd but is expected to rise to 3,780 tpd upon successful completion of the Crucero de San Rafael haulage strategy.

The active ore zones at the Cozamin mine are able to support underground mining operations. At the time of this Technical Report, only the Longitudinal Longhole Open-Stoping Method (“LHOS”) is actively practiced. Historically, a standard drift-and-fill method and a version of the Modified AVOCA mining method have been used, however these methods have fallen out of use in favor of the higher production and lower costs possible from the LHOS mining method. The LHOS mining method has proven to be a scalable method for use at the Cozamin mine, allowing production to steadily increase since Capstone ownership.

Longitudinal longhole stoping operates along or parallel to the strike of the vein. The orientation of the method means that the hangingwall and footwall of the vein will form the sidewalls of the stope and is used where rock mass quality of the hangingwall is competent enough to allow the development of a substantial opening in the hangingwall or footwall. Longitudinal longhole methods are well suited to retreat mining and can be planned such that much of the development necessary can be considered production as the cuts can be kept within the vein.

Cozamin backfills each stoping sublevel prior to mining the sublevel above. The backfill used is unconsolidated waste development rock from other areas of the mine.

The production schedule is based on a general rule set of mining dependencies. When downward ramp development reaches stoping levels, in-vein production development begins expanding from the access along strike in both directions. Each of the ~60 m levels consist of three sublevel production development drifts. When the top and bottom sublevel development drifts for the lowest stoping sublevel are completed, stoping proceeds from the outside (furthest from the access) back to center. Stoping is performed for up to 72 m along strike (this distance varies according to local geotechnical conditions), after which a vertical rib pillar is left in-situ. The stoping resumes after the rib pillar and this pattern continues until mining reaches the central access point.

After a sublevel is mined, loose backfill is place from the center outwards to the extremities from the top drift of the sublevel. This loose fill creates the floor of the stoping activities on the next level above. After three sublevels are mined in this bottom-up, outside-in sequence, a horizontal pillar is left separating the completely mined and filled level from the level above and below. The mining activities continue in the level above/below and the pattern is repeated. The sequence is constrained to vertical columns with a length of ~200 m along strike. The division of columns in this manner allow for parallel mining activities to occur at several locations along strike simultaneously.

Run of mine ore is stockpiled on surface and sent to the crushing plant. The crushed ore is stored in two ore bins that feed parallel conventional grinding circuits. The resulting product is sent to the copper-lead rougherflotation where a copperlead concentrate is produced. The tailings report to zinc conditioning tanks prior to zinc flotation, where reagents are added to activate zinc mineralization. The tailings go through zinc rougher and cleaning circuits to product a zinc concentrate. Separate copper and lead concentrates are produced from the copper-lead concentrate via selective flotation. The concentrates are thickened and filtered to produce product suitable for transport. The concentrates are trucked to Manzanillo, Colima, Mexico.