EX-99.21 22 exhibit99-21.htm EXHIBIT 99.21 Americas Silver Corporation: Exhibit 99.21 - Filed by newsfilecorp.com

MINE DEVELOPMENT ASSOCIATES
MINE ENGINEERING SERVICES

Technical Report and Preliminary Feasibility Study
for the San Rafael Property,
Sinaloa, Mexico

View of the San Rafael deposit area, looking north

Prepared for

AMERICAS SILVER CORPORATION

Effective Date: March 18, 2016
Report Date: April 29, 2016

Thomas L. Dyer, P.E.
Edwin R. Peralta, P.E.
Paul Tietz, C. P. G.
Randy Powell, Q.P.M.

210 South Rock Blvd.
Reno, Nevada 89502
775-856-5700
FAX: 775-856-6053



Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page ii
   

C O N T E N T S

1.0 SUMMARY     1
  1.1 Introduction   1
  1.2 Location and Ownership 2
  1.3 History and Exploration   2
  1.4 Geology and Mineralization 3
  1.5 Metallurgical Testing   4
  1.6 San Rafael Mineral Resource Estimates 4
  1.7 Mineral Reserves Estimate 6
  1.8 Mining Method   7
  1.9 Capital and Operating Costs 8
  1.10 Economic Analysis   9
  1.11 Recommendations   11
           
2.0 INTRODUCTION AND TERMS OF REFERENCE 12
  2.1 Introduction   12
  2.2 Frequently Used Acronyms, Abbreviations, and Units of Measure 13
           
3.0 RELIANCE ON OTHER EXPERTS   15
           
4.0 PROPERTY DESCRIPTION AND LOCATION 16
  4.1 Location   16
  4.2 Land Area   18
  4.3 Agreements and Encumbrances 20
  4.4 Surface Rights   20
  4.5 Environmental Permitting 21
  4.6 Environmental Liability   22
           
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY 23
  5.1 Access     23
  5.2 Climate     23
  5.3 Local Resources and Infrastructure 23
  5.4 Physiography   24
           
6.0 HISTORY     25
  6.1 Exploration and Mining History 25
    6.1.1 San Rafael Area Prior to 2004 25
    6.1.2 San Rafael – El Cajón Area 2004 - 2010 27
      6.1.2.1 Drilling by Platte River Gold 27
      6.1.2.2 Geophysical Surveys by Platte River Gold 28
    6.1.3 Other Exploration and History 2008 - 2010 29
  6.2 Previous Resource Estimates 29
    6.2.1 San Rafael and El Cajón 29

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page iii
   

7.0 GEOLOGIC SETTING AND MINERALIZATION 32
  7.1 Geologic Setting   32
    7.1.1 Regional Geology 32
    7.1.2 Property Geology 32
     

7.1.2.1

San Rafael Area 32
  7.2 Mineralization   35
    7.2.1 San Rafael Mineralization 35
           
8.0 DEPOSIT TYPES   38
           
9.0 EXPLORATION   39
  9.1 San Rafael Area   39
           
10.0 DRILLING     40
  10.1 Historical Drilling, San Rafael Area Prior to Platte River Gold 40
  10.2 Drilling by Platte River Gold 41
    10.2.1 Reverse Circulation Drilling by Platte River Gold 42
    10.2.2 Core Drilling by Platte River Gold 42
    10.2.3 Drill-Hole Surveying by Platte River Gold 43
  10.3 Core Drilling by Americas 43
  10.4 San Rafael Core Recovery 44
           
11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY 45
  11.1 Sampling Methods at San Rafael 45
    11.1.1 RC Sampling by Platte River Gold 45
    11.1.2 Core Sampling by Platte River Gold 46
  11.2 San Rafael Core Sampling by Americas 46
  11.3 San Rafael Sample Preparation and Analysis 46
  11.4 Security   47
           
12.0 DATA VERIFICATION   48
  12.1 San Rafael Project Database 48
    12.1.1 Geochemical Database Audit 48
    12.1.2 Drill Collar Database Audit 49
    12.1.3 Down-Hole Survey Database Audit 50
  12.2 MDA Site Visits   51
    12.2.1 MDA Drill Collar Field Verification 52
    12.2.2 MDA Verification Core Sampling 53
    12.2.3 MDA Verification Surface Sampling 55
  12.3 Quality Assurance/Quality Control 55
    12.3.1 QA/QC by Platte River Gold 55
    12.3.2 QA/QC by Americas 69
    12.3.3 QA/QC Conclusions and Recommendations 72
           
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING 73
  13.1 2005 Metallurgical Testing 73
  13.2 January 2007 Metallurgical Testing 73
  13.3 Additional 2007-2008 Metallurgical Testing 74

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page iv
   

    13.3.1 2008 San Rafael Main Zone Sulfide Composite 75
    13.3.2 San Rafael Main Zone Sulfide Composite Locked-Cycle Test 75
    13.3.3 Zone 120 and 120-Main Overlap Zone Composite Batch Flotation Test 76
  13.4 2009 Metallurgical Work 76
  13.5 2009 – 2010 Metallurgical Testing by SGS Lakefield 78
  13.6 Scorpio 2011-2012 Metallurgical Testing 79
  13.7 2015 Americas Silver Metallurgical Testing 80
  13.8 Mineralogy 82
  13.9 Metallurgy Summary 83
  13.10 Production Metallurgical Performance 86
           
14.0 MINERAL RESOURCE ESTIMATES 87
  14.1 Resource Classification 87
  14.2 San Rafael Resource Estimate 89
    14.2.1 Procedures 90
    14.2.2 Geologic Background 90
    14.2.3 Geologic Model 92
    14.2.3.1 Oxidation Model 92
    14.2.3.2 Mineral Domain Models 92
    14.2.4 Sample Coding and Compositing 95
    14.2.5 Density   99
    14.2.6 Resource Model and Estimation 99
  14.3 San Rafael Mineral Resources 100
  14.4 Discussion, Risks, and Recommendations 111
  14.5 San Rafael Resources Exclusive of Reserves 111
           
15.0 MINERAL RESERVE ESTIMATES   113
  15.1 Mining Model 113
  15.2 Economic Parameters and Net Smelter Return (“NSR”) Calculation 113
  15.3 Underground Mine Design 117
    15.3.1 Production Locations - Cut-and-fill Design 117
    15.3.2 Underground Development 119
  15.4 Dilution and Ore Loss 121
  15.5 Mineral Reserves 121
  15.6 Discussion of Reserves and Comparison to Measured and Indicated Resources 124
           
16.0 MINING METHODS   126
  16.1 Mine Access and Development 127
  16.2 Cut-and-Fill Mining   129
    16.2.1 Back-fill Materials 130
    16.2.2 Panel Definition Drilling 130
  16.3 Utilities, Ventilation and Dewatering 130
    16.3.1 Utilities   130
    16.3.2 Ventilation 130
    16.3.3 Dewatering 131
  16.4 Mine Development and Production Schedule 131
  16.5 Mine Equipment Requirements 135
  16.6 Manpower Requirements 136

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page v
   

17.0 RECOVERY METHODS 138
         
18.0 PROJECT INFRASTRUCTURE 142
         
19.0 MARKET STUDIES AND CONTRACTS 145
         
20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY  
  IMPACT   146
  20.1 Environmental Studies 146
  20.2 Community Relations 146
         
21.0 CAPITAL AND OPERATING COSTS 147
  21.1 Operating Costs 147
    21.1.1 Mine Operating Costs 147
    21.1.2 Process Operating Costs 148
  21.2 Other Operating Costs 149
  21.3 Capital Costs 150
    21.3.1 Mining Capital 150
    21.3.2 Process Capital 151
    21.3.3 Other Capital Costs 152
         
22.0 ECONOMIC ANALYSIS 153
    22.1.1 Sensitivity Analysis 155
         
23.0 ADJACENT PROPERTIES 158
         
24.0 OTHER RELEVANT DATA AND INFORMATION 159
         
25.0 INTERPRETATION AND CONCLUSIONS 160
         
26.0 RECOMMENDATIONS 161
         
27.0 REFERENCES 162
         
28.0 DATE AND SIGNATURE PAGE 165
         
29.0 CERTIFICATES OF QUALIFIED PERSONS 166

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page vi
   

T A B L E S    
Table 1.1 Summary Table of San Rafael Resources Exclusive of Reserves 5
Table 1.2 San Rafael Proven and Probable Reserves 7
Table 1.3 Life of Mine Operating Costs 8
Table 1.4 Initial and Sustaining Capital Costs 9
Table 1.5 San Rafael Pre-Tax Economic Results 9
Table 1.6 Pre-Tax Sensitivity 10
Table 6.1 Previous Resource Estimates for the San Rafael and El Cajón Deposits 30
Table 6.2 2009 MDA Resource Estimate for San Rafael 31
Table 6.3 2013 MDA Reported Resource Estimate for San Rafael 31
Table 10.1 Summary of Drilling in the San Rafael Area 40
Table 12.1 MDA Core Sample Comparison of MDA versus PRG Results – San Rafael-El Cajón Project 54
Table 12.2 MDA Surface Sampling Results – San Rafael-El Cajón Project 55
Table 12.3 Descriptive Statistics of Platte River Same-Lab RC Rig Duplicates: Zn, Ag, and Pb 57
Table 12.4 Descriptive Statistics of Platte River Blanks 61
Table 12.5 Descriptive Statistics of Platte River Standards 66
Table 12.6 San Rafael Core/RC Twin Comparison 69
Table 13.1 Head Grades, San Rafael Composites 74
Table 13.2 Summary Flotation Test Result-San Rafael Main Zone Sulfide Composite 75
Table 13.3 Main Zone Sulfide Flotation Test, Sequential Lead-Zinc Rougher Flotation Test A, 77
Table 13.4 Main Zone Sulfide Flotation Test, Sequential Lead-Zinc Rougher Flotation Test B 77
Table 13.5 Composite Sample Analysis (from Lang, 2010) 78
Table 13.6 Reagent Consumption (from Lang, 2010) 79
Table 13.7 SGS 2009 – 2010 Float Concentrate Grade and Recovery 79
Table 13.8 San Rafael Master Composite 2015 Analysis and Source 80
Table 13.9 Summary Results 2015 Bench Float 81
Table 13.10 Summary Results 2015 Bench Float Concentrate Assay 81
Table 13.11 Summary of San Rafael Flotation Testing 85
Table 14.1 San Rafael Assay Populations 93
Table 14.2 Coding and Description of the San Rafael Geologic Model 93
Table 14.3 San Rafael Mineral Domain Assay Descriptive Statistics – Silver and Gold 96
Table 14.4 San Rafael Mineral Domain Assay Descriptive Statistics – Copper, Lead and Zinc 97
Table 14.5 San Rafael Mineral Domain Composite Descriptive Statistics 98
Table 14.6 List of Density Values Used in San Rafael Model 99
Table 14.7 San Rafael Main and Upper Zone: Estimation Parameters 100
Table 14.8 San Rafael Zone 120: Estimation Parameters 100
Table 14.9 Criteria for San Rafael Resource Classification 101
Table 14.10 San Rafael Reported Resource 102
Table 14.11 San Rafael Total Resource ZnEq Tabulation 103
Table 14.12 San Rafael Main and Upper Zones ZnEq Resource Tabulation 107
Table 14.13 San Rafael Zone 120 ZnEq Resource Tabulation 109
Table 14.14 San Rafael Zone 120 AgEq Resource Tabulation 110
Table 14.15 San Rafael Reported Resources Exclusive of Reserves 112
Table 15.1 Smelter Parameters 116
Table 15.2 Estimated San Rafael Operating Costs 117
Table 15.3 San Rafael Proven and Probable Reserves 123

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page vii
   

Table 15.4 Conversion of San Rafael Resources to Reserves 124
Table 16.1 Main Life of Mine Underground Infrastructure 128
Table 16.2 San Rafael Mining Regions Used in Mine Schedule 132
Table 16.3 Mine Development Schedule 133
Table 16.4 Mine Production Schedule 133
Table 16.5 Underground Mobile Equipment 135
Table 16.6 Supervision and Technical Services Personnel 136
Table 16.7 Operations Personnel 137
Table 17.1 Anticipated Consumption of Reagents – San Rafael Ore 141
Table 21.1 Life of Mine Operating Costs 147
Table 21.2 Yearly Mine Operating Cost Estimate 148
Table 21.3 Yearly Mine Operating Cost Estimate (in $/t mined) 148
Table 21.4 Yearly Process Cost Estimate 149
Table 21.5 Smelting Cost Estimates 149
Table 21.6 Other Operating Costs by Year 150
Table 21.7 Initial and Sustaining Capital Costs 150
Table 21.8 Yearly Estimated Mining Capital 150
Table 21.9 Yearly Underground Development Capital 151
Table 21.10 Estimated Process Capital Costs 152
Table 21.11 Estimated Other Capital Costs 152
Table 22.1 San Rafael Pre-Feasibility Economic Model Physicals 154
Table 22.2 Economic Model Cash Flow 155
Table 22.3 Results of San Rafael Sensitivity Analyses 156

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page viii
   

F I G U R E S    
Figure 1.1 Mine Layout in Section View 8
Figure 1.2 San Rafael Sensitivity Analysis 11
Figure 4.1 Location Map for Americas’ Cosalá Property Holdings 17
Figure 4.2 Concessions of Americas Silver in the Cosalá District 18
Figure 4.3 Detail of Americas Silver Concessions at San Rafael – El Cajón 19
Figure 7.1 General Geology of the San Rafael Area 33
Figure 7.2 Detailed Geology of the La Estrella - San Rafael - El Cajón Area 34
Figure 7.3 San Rafael Schematic Geologic Cross-Section with Mineralized Zones 37
Figure 10.1 2015 San Rafael Drill-Hole Location Map 41
Figure 12.1 Relative Difference Graph for Same Lab Rig Duplicates – Zinc 59
Figure 12.2 Absolute Relative Difference Graph for Same Lab Rig Duplicates - Zinc 59
Figure 12.3 PR2 Blank Sample Analyses – Zinc 62
Figure 12.4 Blank PR2 Zn versus Previous Sample Zn Grade 63
Figure 12.5 Blank PR2 Pb versus Previous Sample Pb Grade 63
Figure 12.6 Standard Analyses – Silver in Standard 689 67
Figure 13.1 Location Map Showing Drill Holes for Metallurgical Composites 2005 - 2015 84
Figure 14.1 Section 300 San Rafael Geologic Model with Zinc Domains 94
Figure 14.2 Section 625 San Rafael Geologic Model with Zinc Domains 95
Figure 14.3 Section 300 San Rafael Block Model: ZnEq Block Grades 105
Figure 14.4 Section 625 San Rafael Block Model: ZnEq Block Grades 106
Figure 15.1 Zones in the San Rafael Resource Block 113
Figure 15.2 Plan View of Cut-and-fill Stope at 54$/tonne NSR Cutoff (387 Level) 118
Figure 15.3 Mining Locations 119
Figure 15.4 Attack Ramps 119
Figure 15.5 Plan View of Production Locations and Development Designs 120
Figure 15.6 Conversion of Resources to Reserves by Tonnes 124
Figure 15.7 Conversion of Resources to Reserves by Contained Metal 125
Figure 16.1 Mine Layout in Section-View 126
Figure 16.2 Mine Layout in Plan-View 127
Figure 16.3 Plan-View of a Typical Sill Preparation (1st Cut) 129
Figure 16.4 Typical Mining Panels with Attack Ramp Access 129
Figure 16.5 San Rafael Ventilation Circuits at Full Production, Looking East 131
Figure 16.6 San Rafael Reserves - Mining Regions 132
Figure 16.7 Mine Development – Month 6 133
Figure 16.8 Mine Development – Month 12 134
Figure 16.9 Mine Development – Month 24 134
Figure 16.10 Mine Development – Month 36 135
Figure 17.1 Simplified San Rafael Flow Sheet 139
Figure 18.1 Access to the San Rafael Mine 142
Figure 18.2 View of Infrastructure Near the El Cajón Portal 143
Figure 22.1 San Rafael Sensitivity Analysis 157

A P P E N D I C E S
Appendix A List of Concessions Comprising Americas Silver Corporation’s Property

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April 29, 2016  



MINE DEVELOPMENT ASSOCIATES
MINE ENGINEERING SERVICES

1.0

SUMMARY

   
1.1

Introduction

Mine Development Associates (“MDA”) has prepared this Technical Report on the San Rafael silver-copper-gold-lead-zinc deposit in the Cosalá mining district, Sinaloa, Mexico at the request of Americas Silver Corporation (“Americas”). The purpose of this report is to provide a technical summary in support of an updated mineral resource estimate and a new mineral reserve calculation and Preliminary Feasibility Study (“PFS”) for the San Rafael deposit. MDA most recently reported estimated mineral resources for the San Rafael property in a report titled “Technical Report and Preliminary Economic Assessment Nuestra Señora, San Rafael, and El Cajón Deposits Sinaloa, Mexico” (Dyer et al., 2013). The current report and associated resource and reserve estimates have been prepared in compliance with the disclosure and reporting requirements set forth in the Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”), Companion Policy 43-101CP, and Form 43-101F1, as well as with the Canadian Institute of Mining, Metallurgy and Petroleum’s “CIM Definition Standards - For Mineral Resources and Reserves, Definitions and Guidelines” (“CIM Standards”) adopted by the CIM Council on May 10, 2014.

Americas has historically addressed disclosure relating to the San Rafael deposit together with the Nuestra Señora and El Cajón deposits as all are within Americas land holdings in the Cosalá mining district. Recent work programs, however, have been focused on the San Rafael area. Americas does not view the El Cajón deposit as material at this time and, as such, references in this report to the El Cajón deposit are provided only for historical completeness. It is expected that the San Rafael project will operate independently of the Nuestra Señora mine and is not expected to share infrastructure with Nuestra Señora except as discussed herein. Although a separate and distinct project, the operations of the Nuestra Señora mine provide Americas with insight into processing and mining operations in the district that will be relevant in operating the San Rafael mine and as such certain references to the Nuestra Señora mine have been used in this report for that purpose.

The effective date of the San Rafael database on which the resources and reserves described in this Technical Report are estimated is July 4, 2015. The effective date of the San Rafael resource estimate is October 15, 2015. The effective date of the San Rafael mineral reserve estimate and the PFS is December 8, 2015. The effective date of this report is March 18, 2016.

The current PFS evaluates two of San Rafael’s mineralized zones: the Main and the Upper. The Zone 120 is excluded from this economic evaluation. However, the Zone 120 is discussed in the resource section and in part presents upside potential which can be advanced with additional metallurgical and exploration work.

210 South Rock Blvd.
Reno, Nevada 89502
775-856-5700
FAX: 775-856-6053

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 2
   

San Rafael is an underground project utilizing a cut-and-fill mining method with conventional flotation to produce two concentrates, lead and zinc, with silver by-product. Projected recoveries are 83.8% zinc, 76.3% lead and 47.6% silver. Approximate average annual production, over a 5.24 -year life, is 800,000 ounces of silver, 41.1 million pounds of zinc, and 17.5 million pounds of lead. Cash cost is estimated to be $6.73 per silver equivalent ounce (“AgEq”) and a total pre-tax cost of $9.88 per AgEq ounce. The all-in sustaining cost is -$0.19 per ounce of silver using zinc and lead revenues as credits. The PFS estimates an undiscounted pre-tax cash flow of US$37.1 million, an internal rate of return (“IRR”) of 27%, and average pre-tax annual cash flow of $9.8 million (excluding pre-production).

The economic analysis utilizes metal prices of $16.00 per ounce silver, $0.85 per pound zinc, and $0.85 per pound lead. Metal price sensitivity was determined utilizing near spot values of $15.00 per ounce silver, $0.80 per pound zinc, and $0.80 per pound lead. An exchange rate of 17.0:1 (MXP:USD) is used in the analysis. Total estimated life of mine (“LOM”) capital is $59.1 million including 10% contingency for development and initial equipment capital.

San Rafael is scheduled to meet the expanded mill capacity in 15 months from the start of construction. Initially ore production will be stockpiled; the stockpile will then supplement mill feed when the mine reaches commercial production of 1,000 tonnes per day. Mine ramp up will continue until it can sustain 1,800 tonnes per day at which point the stockpile will be exhausted.

1.2

Location and Ownership

The Cosalá mining district is located in the east-central portion of the state of Sinaloa, Mexico. The town of Cosalá is about 240km by road north of Mazatlán. San Rafael is located about 12km north-northeast of the town of Cosalá. The district is accessible from the town of Cosalá via rural paved and dirt roads. All primary access roads can accommodate standard highway vehicles.

Americas’ property in the Cosalá mining district, on which the San Rafael deposit is located, consists of 73 mineral concessions that cover approximately 24,657ha. The concessions occur in two non-contiguous blocks, and within both blocks are a number of areas of land that Americas does not control. One such concession not controlled by Americas lies immediately adjacent to the southwest boundary of the San Rafael deposit. Other deposits within the Americas property are El Cajón, which adjoins San Rafael to the southwest, and Nuestra Señora, an active mine located approximately 12km to the southeast of San Rafael.

Americas owns the concessions through its wholly owned subsidiaries, Minera Cosalá, S.A. de C.V. (“Minera Cosalá) and Minera Platte River Gold, S. de R.L. de C.V. Although five of the 73 concessions are subject to a 1.25% net smelter return royalty, the San Rafael resources do not extend onto any of these five concessions.

1.3

History and Exploration

The Cosalá mining district, where polymetallic mineralization occurs as primarily skarn-related deposits, was discovered and locally worked by the Spanish approximately 400 years ago. At the turn of the 19th century, French engineers reportedly developed and worked the Nuestra Señora mine with a 10-stamp mill that produced 800 to 1,000kg of silver per month. In 1949, Asarco Mexicana (“Asarco”) purchased the Nuestra Señora mine and also mined material from the La Estrella mine, located one kilometer north of San Rafael. In addition, Asarco did some work at El Cajón, sending the material to the mill at La Estrella. In or about February 1965, Asarco ceased production and subsequently removed all of the mining equipment. Asarco let its concessions at Nuestra Señora lapse in 1980.

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 3
   

Since 1965, several small Mexican mining operators have worked the mines in the vicinity of San Rafael and El Cajón. Modern exploration was started by Industrias Peñoles, S.A. de C.V. (“Peñoles”) in the late 1970s into the 1980s and again in 1999. In 1995, Minas de Oro Hemlo, S.A. de C.V. (“Hemlo”) conducted mapping, sampling, and road building, and drilled 15 reverse circulation (“RC”) holes primarily within the San Rafael area exploring for precious metals. In early 2000, Noranda Exploraciones Mexico, S.A. de C.V. (“Noranda”) completed three IP-resistivity lines over the San Rafael zone in the area of the previous Hemlo drilling. Noranda drilled seven core holes at San Rafael totaling 1,348m in 2001.

Platte River Gold Inc. (“PRG”) became interested in the San Rafael-El Cajón-La Verde area in early 2004. On June 1, 2004, PRG, through their Mexican subsidiary, signed a four-year option agreement for 100% of the exploration and mining concessions along with all of the infrastructure and mining equipment used at the La Verde mine and project area, excluding the mill in Cosalá. PRG made the final payment and acquired the property in July 2008. During their tenure, PRG conducted induced polarization (“IP”), resistivity, and ground magnetic surveying; geological mapping; chip-channel sampling of outcrops and road cuts; and the drilling of 371 holes. They tested 15 different targets, but the focus of their work was on San Rafael and El Cajón.

Scorpio acquired PRG in 2010, thereby adding the San Rafael and El Cajón projects to their previously acquired Nuestra Señora project. On March 16, 2011, Scorpio acquired five mineral concessions from Grupo Industrial Minera Mexico S.A. de C.V. in the Cosalá district immediately adjacent to its existing concessions. From 2010 through July 20, 2012, Scorpio’s exploration in the San Rafael and El Cajón area has consisted of mapping and the drilling of 282 core holes totaling 35,296m. The focus of the work was on the San Rafael and El Cajón deposits. Scorpio also drilled four other targets including surface and underground drilling at the historic La Verde mine area. In 2010, Quantec Geoscience Ltd. completed a 48-line-kilometer Titan-24 DC/IP geophysical survey centered over the San Rafael area; results of subsequent drilling to test some of the anomalies were not encouraging.

In May, 2015 Scorpio changed its name to Americas Silver Corporation and has proceeded with the advancement of the San Rafael property.

1.4

Geology and Mineralization

The Cosalá mining district lies along the western edge of the Sierra Madre Occidental, an extensive Tertiary volcanic province covering approximately 800,000km2. Mineralization within the Cosalá mining district is related to granodioritic or granitic intrusions emplaced between 140 and 45 million years ago into Cretaceous sedimentary rocks that overlie older basement terranes.

The property lies within a sub-circular inlier of 33Cretaceous limestone approximately 10km in diameter situated in the eastern part of the 139 to 45 Ma-old Sinaloa Batholith. Contact metamorphism of the limestones created re-crystallized limestone, marble, and skarn. Initial skarn development in the area was contemporaneous with emplacement of the batholith; however, there were several pulses of magmatic and hydrothermal activity. Carbonate replacement-style mantos, veins, chimneys, chimney breccias, and mineralized exoskarn and endoskarn occur within limestone and felsic and lesser mafic intrusions. Pyrite, sphalerite, chalcopyrite, galena, and lesser tetrahedrite are the principal minerals.

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Technical Report and Preliminary Feasibility Study,  
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In the San Rafael-El Cajón area, Cretaceous limestone, commonly recrystallized and marbleized but only locally skarn-altered, is exposed within windows in Tertiary volcanic rocks. Massive sulfide Main Zone mineralization at San Rafael occurs primarily along the contact of dacite tuff with Cretaceous limestone, with additional mineralization within the dacite in the Upper Zone and within skarn-altered limestone in the Zone 120. The protolith at El Cajón is altered limestone, thought to be of Cretaceous age. San Rafael contains silver, lead, and zinc mineralization with minor gold and copper. The main minerals are pyrite, pyrrhotite, sphalerite, and galena with minor marcasite, chalcopyrite, and magnetite. The El Cajón-type of mineralization, also seen within the San Rafael deposit’s Zone 120, is related to skarn alteration of calcareous sediments and occurs as both mantos and chimneys. It consists of silver-copper-gold mineralization in the form of chalcopyrite and tetrahedrite with minor pyrite, galena, sphalerite, arsenopyrite, chalcocite, jalpaite, native silver, copper, and bismuth.

1.5

Metallurgical Testing

Metallurgical testing of material from San Rafael was conducted in seven main phases over a period of roughly ten years (2005 – 2015) on a variety of composites. Both bench-top and locked-cycle flotation testing conducted on the San Rafael Main Zone sulfide mineralization has shown this material can be successfully processed using a sequential flotation process to produce separate lead-silver and zinc concentrate products. Lead head grades ranged from 1.22% to 2.09% while zinc head grades ranged from 2.99% to 4.27% .

The test work confirmed a conventional process approach would serve adequately with crushing and grinding followed by lead rougher floatation, in turn followed by zinc flotation. It was confirmed that a primary grind a P80 of 100 to 110μm would be suitable for commercial operation and data was obtained on reagent dosage.

Given the above particle size target, the anticipated lead and zinc recoveries are expected to exceed 75% and 83%, respectively, with total silver recovery approximately 45% to 50%.

1.6

San Rafael Mineral Resource Estimates

The San Rafael resources reported here are based on Americas’ database as of July 4, 2015. The effective date of the San Rafael resource estimate is October 15, 2015. The San Rafael resource estimate is based on analytical measurements and geology from 327 drill holes and 14 surface trenches.

Upon completion of the database validation process, MDA modified the 2012 geologic cross-sections, which are evenly spaced on 25m intervals looking northwest at 330°. Individual sets of sections with unique mineral domains were created for zinc, lead, silver, copper, gold, and percent sulfide. The mineral domains represent distinct styles of mineralization with unique statistical characteristics. The cross-sectional domains were sliced to long section on 3m intervals to coincide with the center of each row of blocks in the model. After reinterpretation, the long-section domains were used to code the block model to percent of block in each mineral domain.

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Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 5
   

The cross-sectional mineral domains for the five metals were used to code the samples. Quantile plots were made to assess validity of these domains and to determine capping levels; MDA capped 26 samples (three zinc, six lead, eight silver, eight gold, and one copper). Compositing was done to 2m down-hole lengths, matching the model block size, honoring all material-type and mineral-domain boundaries. The sulfide domains were used by MDA to assign density values, ranging from 2.55g/cm 3 to 3.88g/cm 3, to the blocks.

The reported estimates were made using inverse distance to the third power; ordinary kriging and nearest neighbor estimates were used for comparison and validation. MDA classified the San Rafael resources by a combination of distance to the nearest sample and the number of samples, while at the same time taking into account reliability of underlying data and understanding and use of the geology.

The stated resource is volume-diluted to 2m by 3m by 2m blocks and is tabulated on a zinc-equivalent (“ZnEq”) cutoff grade of 2.5% ZnEq. Using the individual metal grades of each block, the ZnEq grade is calculated using the following formula:

%ZnEq = %Zn + (0.947368 * %Pb) + (0.024561 * g Ag/t) + (2.947368 * %Cu) + (1.842105 * g Au/t)

This formula is based on prices of US$0.95 per pound zinc, US$0.90 per pound lead, US$16.00 per ounce silver, US$2.80 per pound copper, and US$1,200.00 per ounce gold. Note that copper and gold prices are only used for the Mineral Resource estimates and are not included in the determination of Mineral Reserves. No metal recoveries are applied, as this is the in situ resource. The San Rafael resources are tabulated in Table 1.1 and are exclusive of reserves.

Table 1.1 Summary Table of San Rafael Resources Exclusive of Reserves

Measured and Indicated Resources (2.5%ZnEq cut-off) - Exclusive of Reserves

Class Tonnes Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
    (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
Measured 1,918,000    1.85    0.81 86.9 0.07 0.20 78,233,000 34,337,000 5,362,000 2,870,000 12,000    5.32
Indicated 4,736,000    1.30    0.56 91.3 0.17 0.17 135,940,000 58,421,000 13,897,000 17,935,000 26,000    4.90
M+I 6,654,000    1.46    0.63 90.0 0.14 0.18 214,173,000 92,758,000 19,258,000 20,805,000 39,000    5.02

Inferred Resource (2.5%ZnEq cut-off) - Exclusive of Reserves

Class Tonnes Zinc Lead Silver Copper Gold  Zinc Lead Silver Copper Gold ZnEq
    (%) (%) (g Ag/t) (%) (g Au/t)  (lbs) (lbs) (oz) (lbs) (oz) (%)
Inferred 1,045,000    0.27    1.24 110.6 0.12 0.30 6,283,000 28,600,000 3,718,000 2,766,000 10,000    5.07

The reported resources occur primarily within the Upper Zone and Zone 120, which were not considered for inclusion within the reserve study, and also include mine blocks within the Main Zone that did not make the $54/t NSR reserve cutoff.

The low zinc grade for the Inferred resource in Table 1.1 is a result of the Inferred resources occurring primarily within the silver-dominant Upper Zone and Zone 120. The use of a zinc equivalent cut-off has been done for convenience for combining resources from the different zones into a single table. Using a more appropriate silver equivalent cut-off for these resources would not change the total Inferred tonnes or metal content.

For the Main Zone of the San Rafael deposit, the most important observation that can be presented to the reader is the relatively even distribution of metals, primarily zinc, lead, and silver, within tabular zones that for the most part occur along the volcanic/limestone contact. The recent infill drilling provided increased confidence in the continuity of the mineralization. Additional infill drilling is not expected to materially change the currently defined Main Zone resource.

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The Zone 120 silver-copper-gold mineralization occurs within skarn-altered limestone as bedding horizons and irregular zones along intrusive contacts. The Zone 120 is more variable, both in geology and mineral grades, than the Main Zone mineralization. Additional drilling and more density measurements are recommended to bring greater confidence to the interpretation of this mineralization.

The Upper Zone is primarily silver-gold mineralization within a number of small tabular zones sub-parallel to and within the hanging wall of the Main Zone. The Upper Zone is more erratic than the Main Zone, though the recent drilling has provided greater confidence in the continuity of mineralization and the lithologic interpretation. Additional drilling is not expected to materially change the Upper Zone resource.

The depth of oxidation is generally shallow, though in the northeast portion of the deposit, oxidation can reach up to 200m down-dip. Zinc mineralization is strongly leached within the oxide zone, and there are uncertainties as to metallurgical recoveries and processing costs associated with the oxide mineralization. Further work is needed to better characterize the oxide material.

1.7

Mineral Reserves Estimate

The effective date of San Rafael reserves is December 8, 2015. Reserves were developed along CIM guidelines using Measured and Indicated resources. Appropriate modifying factors were used to include costs, recoveries, and dilution in estimating Mineral reserves.

Only non-oxide Main Zone and Upper Zone Measured and Indicated material was used to define reserves.

Reserves have been stated using a net smelter return (“NSR”) cutoff grade of $54.00/t. The NSR equations are provided in detail in Section 15.0. The NSR assumes that zinc and lead concentrates would be produced and sold through world markets. The reserves are based on $16.00 per ounce of silver, $0.85 per lb of zinc, and $0.85 per lb of lead.

The reserves estimate included dilution in the form of block dilution, internal dilution, and external dilution. Internal dilution contains metal grades for only material that is designated as Measured and Indicated resource.

Ore loss of 10% was assumed to account for pillars that would be left behind. Fully diluted Proven and Probable reserves are shown in Table 1.2.

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Table 1.2 San Rafael Proven and Probable Reserves

  Fully Diluted Mineral Reserves
  Proven Probable Proven & Probable
KT onnes 1,284 1,944 3,229
Zn % 4.32 4.22 4.26
K Lbs Zn 122,423 180,817 303,240
Pb % 1.94 1.69 1.79
K Lbs Pb 55,002 72,239 127,241
g Ag/t 122.57 102.15 110.28
K Oz Ag 5,062 6,386 11,448

Proven and Probable reserves are based on Measured and Indicated resources at a $54.00 NSR cutoff grade.
     
  Some apparent discrepancies are due to rounding.

1.8

Mining Method

Reserves have been based on a cut-and-fill mining method. Most of the fill material will be from development. It is not anticipated to use cement with the fill material since no mining against fill will be undertaken. To provide additional ground support pillars will be left in place as required. Cut-and-fill stopes were designed using Measured and Indicated blocks above a $54.00 NSR cutoff. Development designs were created to provide mining access to the different cut-and-fill stopes. The cut-and-fill stopes are based on panel sizes up to 50m long and 16m high. Figure 1.1 shows a section view of the mine development and production locations.

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1.9

Capital and Operating Costs

Americas has extensive experience with underground mining and processing at the nearby Nuestra Señora mine and Cosalá (Los Braceros) process plant. Costs have been estimated using a combination of real world experience at Nuestra Señora and the Los Braceros plant and first principle costing. Note that the cost for cut-and-fill mining is based on performance at Nuestra Señora, and reflects the use of development waste fill without addition of cement.

Operating costs estimates are shown in Table 1.3 and capital cost estimates are shown in Table 1.4.

Table 1.3 Life of Mine Operating Costs

  K USD $/t Processed
UG Mine Operations $ 68,295 $ 21.15
Plant Operations $ 44,125 $ 13.67
Technical Services $ 5,819 $ 1.80
Safety & Environmental $ 4,572 $ 1.42
Administration $ 15,021 $ 4.65
Total Operating Cost $ 137,833 $ 42.69

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Table 1.4 Initial and Sustaining Capital Costs

  Units Initial Sustaining Total LOM
Mine Development KUSD $ 6,072 $ 20,704 $ 26,776
UG Mining Capital KUSD $ 7,855 $ 14,678 $ 22,533
Process Capital KUSD $ 2,011 $ 1,777 $ 3,788
Other KUSD $ 340 $ 1,883 $ 2,223
Contingency 10% KUSD $ 1,021 $ 370 $ 1,391
Working Capital KUSD $ 4,154 $ (4,154) $ -
Total Capital KUSD $ 21,452 $ 35,259 $ 56,711

1.10

Economic Analysis

The San Rafael economic results are shown in Table 1.5. The economic model estimates $239.6 million in revenue will be generated over the mine life after payment of concentrate transportation and treatment charges. Corresponding operating costs are estimated to be $137.8 million, government duties and royalties total $8.0 million and capital is estimated to be $56.7 million. The pre-tax LOM free cash flow for San Rafael is estimated to be $37.1 million, showing that the reserves are economically viable and meet the definition of Proven and Probable reserves.

At 5%, the pre-tax net present value is estimated to be $24.7 million. The after-tax payback period is 3.4 years and provides a 27% IRR.

Table 1.5 San Rafael Pre-Tax Economic Results

IRR 27%  
NPV At 5% $ 24,744 K USD
NPV At 8% $ 19,080 K USD
NPV At 10% $ 15,865 K USD
Payback Period 3.4 Years

Pre-tax sensitivities to equivalent Ag price, operating, and capital costs were estimated. The results are tabulated in Table 1.6. The sensitivity results are shown graphically in Figure 1.2.

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Table 1.6 Pre-Tax Sensitivity

Pre-Tax Sensitivity - Equivalent Silver Price

  IRR NPV At 5%  NPV At 8% Payback
$ 14.00 0% $ (5,006) $ (7,465) NA
$ 14.50 7% $ 2,432 $ (829) 4.7
$ 15.00 14% $ 9,869 $ 5,808 4.2
$ 15.50 20% $ 17,307 $ 12,444 3.8
$ 16.00 27% $ 24,744 $ 19,080 3.4
$ 16.50 33% $ 32,181 $ 25,717 3.1
$ 17.00 40% $ 39,619 $ 32,353 2.7
$ 17.50 46% $ 46,807 $ 38,767 2.5
$ 18.00 52% $ 53,950 $ 45,142 2.3

Pre-Tax Sensitivity - Operating Costs

  IRR NPV At 5% NPV At 8% Payback
70% 28% $ 25,045 $ 19,507 3.3
80% 28% $ 24,945 $ 19,365 3.3
90% 27% $ 24,844 $ 19,222 3.4
100% 27% $ 24,744 $ 19,080 3.4
110% 26% $ 24,644 $ 18,938 3.4
120% 26% $ 24,543 $ 18,796 3.4
130% 25% $ 24,443 $ 18,653 3.5

Pre-Tax Sensitivity - Capital Costs

  IRR NPV At 5% NPV At 8% Payback
70% 55% $ 40,291 $ 33,840 2.2
80% 43% $ 35,109 $ 28,920 2.6
90% 34% $ 29,926 $ 24,000 3.0
100% 27% $ 24,744 $ 19,080 3.4
110% 21% $ 19,562 $ 14,160 3.8
120% 16% $ 14,379  $ 9,240 4.1
130% 11% $ 9,197 $ 4,320 4.4

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1.11

Recommendations

The San Rafael Pre-Feasibility study represents a complete technical report and produces a positive cash flow. However, it is recommended that work continue to complete a Feasibility study for this deposit to enhance the detail of certain aspects. The identified additional work is expected to cost $95,000 and should include:

  A revised geotechnical study;
     
  Completion of a hydrological model;
     
  Detailed ventilation design;
     
  Infrastructure construction plans;
     
  Detailed confirmation of the mine design; and
     
  Detailed closure plan.

Preliminary studies have been completed and shall be used to identify potential gaps that will provide a starting point for the proposed work.

The resource estimation has held up to several examinations indicating its validity. An expenditure of $400,000 over 2.5 years for additional exploration is recommended with the goal of advancing nearby Zn-Pb-Ag showings in the immediate area.

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2.0

INTRODUCTION AND TERMS OF REFERENCE

   
2.1

Introduction

Mine Development Associates (“MDA”) has prepared this Technical Report on the San Rafael deposit in Sinaloa, Mexico at the request of Americas Silver Corporation (“Americas”), a Canadian company which is listed on the Toronto Stock Exchange (TSX: USA). Americas was formerly known as Scorpio Mining Corporation (“Scorpio”), until May 20th, 2015 when Scorpio changed its name to Americas Silver Corporation. Americas owns the San Rafael and nearby Nuestra Señora and El Cajón deposits, which are located in the Cosalá mining district. Silver, lead, zinc, copper, and gold occur in a variety of deposit types within the district, including skarns, carbonate replacement deposits, breccia deposits, and massive sulfides.

Americas acquired its interest in San Rafael through Scorpio’s acquisition of Platte River Gold Inc. and its wholly owned subsidiary Minera Platte River Gold, S. de R.L. de C.V. (collectively referred to as “PRG”); PRG is now a wholly owned subsidiary of Americas. Americas currently operates the Nuestra Señora polymetallic mine and an approximately 1,500tpd-capacity flotation plant east of the town of Cosalá and about 10km southeast of the San Rafael deposit. Americas is currently mining approximately 1,500tpd of skarn-hosted silver-lead-zinc-copper mineralization from the Nuestra Señora mine.

The purpose of this report is to provide a technical summary of: (1) updated mineral resource estimates for the San Rafael deposit, (2) a new mineral reserve calculation for the San Rafael deposit, and (3) a Preliminary Feasibility (“PFS”) for San Rafael. The previous resource estimate for San Rafael was reported in a 2012 Technical Report by MDA (Ristorcelli et al., 2012), and was also included in the 2013 Technical Report and Preliminary Economic Assessment by MDA (Dyer et al., 2013). MDA has reviewed results of 21 holes drilled since completion of the 2012 resource estimate for the current, updated resource and reserve estimates reported herein. This report and the resource and reserve estimates have been prepared in compliance with the disclosure and reporting requirements set forth in the Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”), Companion Policy 43-101CP, and Form 43-101F1, as well as with the Canadian Institute of Mining, Metallurgy and Petroleum’s “CIM Definition Standards - For Mineral Resources and Reserves, Definitions and Guidelines” (“CIM Standards”) adopted by the CIM Council on May 10, 2014.

Because Americas was formerly named Scorpio, the operator of the San Rafael project has not changed and therefore the company name “Americas” is used throughout much of this report, even when describing events, work done, data and documentation attributable to Scorpio. The scope of this study included a review of pertinent technical reports and data provided to MDA by Americas relative to the general setting, geology, project history, exploration activities and results, methodology, quality assurance, interpretations, drilling programs, and metallurgy. MDA has relied on the data and information provided by Americas for the completion of this report, including the supporting data for the estimation of the mineral resources and reserves. In compiling the background information for this report, MDA relied on information provided by Americas and on other references as cited in Section 27.0 , including Technical Reports by MDA on the San Rafael and El Cajón resources (Ristorcelli et al., 2009) and on the Nuestra Señora deposit (Ristorcelli et al., 2012).

MDA has reviewed much of the available data, has made site visits, and has made judgments about the general reliability of the underlying data. Where deemed either inadequate or unreliable, the data were eliminated from use or procedures were modified to account for lack of confidence in that specific information.

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This report has been prepared by Edwin R. Peralta, P.E., Project Engineer for MDA; Paul Tietz, C. P. G., Senior Geologist with MDA; Randy Powell, Q.P.M., Metallurgist; and Thomas L. Dyer, P.E., Senior Engineer for MDA. The Mineral Reserve was calculated under the supervision of Mr. Peralta, who also supervised preparation of reserves and the PFS. The Mineral Resources were estimated and classified under the supervision of Mr. Tietz. Mr. Tietz is taking responsibility for the Quality Assurance – Quality Control work presented in Section 12.0. Mr. Powell supervised the preparation of Section 13.0 on Mineral Processing and Metallurgical Testing of the San Rafael deposit as well as Section 17.0 on Processing Methods and the processing costs portions of Section 21.0. Mr. Dyer is responsible for mining and other costs presented in Section 21.0 (Capital and Operating Costs), as well as Section 22.0 Economic Analysis.

Mr. Peralta, Mr. Tietz, Mr. Powell, and Mr. Dyer are qualified persons under NI 43-101. There is no affiliation between Americas and Mr. Peralta, Mr. Tietz, Mr. Powell, and Mr. Dyer except that of an independent consultant/client relationship.

The authors’ mandate required on-site inspections and the preparation of this independent Technical Report containing the authors’ observations, conclusions, and recommendations. MDA has made such independent investigations as deemed necessary in the professional judgment of the authors to be able to reasonably present the conclusions discussed herein.

For this and previous MDA reports, Mr. Tietz made site visits to San Rafael-El Cajón in January 29 through February 3, 2007, September 19 through September 21, 2007, and September 27 through October 1, 2011 to review drill programs, drilling, logging, and sampling procedures, pertinent geology, and data availability. Mr. Dyer reviewed the underground operations, process plant operations, mining and processing costs, and productivity at Nuestra Señora on June 4th to 5th, 2012. On June 22 – 23rd, 2015, Mr. Peralta visited the San Rafael project and reviewed preliminary mine designs and mine plans being developed by Americas’ on-site engineering staff.

The effective date of the San Rafael database on which the current resource was estimated is July 4, 2015. The effective date of the San Rafael resource estimate is October 15, 2015. The effective date of the San Rafael reserve and the PFS is December 8, 2015. The effective date of this report is March 18, 2016.

2.2

Frequently Used Acronyms, Abbreviations, and Units of Measure

In this report, measurements are generally reported in metric units. Unless otherwise indicated, all references to dollars ($) in this report refer to currency of the United States.

The following lists frequently used acronyms and abbreviations:

AA atomic absorption spectrometry
Ag silver
Au gold
Cu copper

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DC/IP high-resolution, direct-current, resistivity and induced polarization geophysical survey method
DTM digital topographic model
FA fire assay
FDH face-discharge hammer
g/t grams per tonne
ha hectare
ICP inductively coupled plasma analytical technique
ICP-AES inductively coupled plasma-atomic emission spectroscopy analytical technique
in inches
km kilometer
kV kilovolt
kW kilowatt
kWh kilowatt hour
lb pound (2000 lbs to 1 ton, 2204.6 lbs to 1 tonne)
m meters
Ma million years old
MDA Mine Development Associates, the authors of this technical report
MWh megawatt hour
MX$ Mexican pesos
NPV net present value
NSR net smelter return royalty
oz troy ounce
Pb lead
PEA Preliminary Economic Assessment
PRG Platte River Gold
RC reverse circulation drilling method
SAP systems, applications and products data processing software
ton short ton (Imperial)
t or tonne metric tonne
tpd tonnes per day
XRF X-ray fluorescence
Zn zinc

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3.0

RELIANCE ON OTHER EXPERTS

Section 4.0 of this report contains information relating to mineral concessions, mineral permits and licenses, environmental liabilities and permitting, regulatory matters, and legal agreements. While the authors have some understanding of these issues in the context of the mineral industry, they are not legal or regulatory professionals. For Section 4.0, MDA has relied entirely upon information provided by Americas and on other experts as cited and contracted by Americas. MDA expresses no opinion, professional or otherwise, concerning this information which is provided as required by NI 43-101.

MDA has relied entirely upon Americas to provide information on the land area, concessions, agreements, and surface rights described in Sections 4.2, 4.3, and 4.4.

MDA has relied entirely upon Americas to provide information on the permitting and environmental liability aspects of the project in Sections 4.5 and 4.6, respectively, and on environmental studies, permitting, and social or community impacts described in Section 20.0. The authors did not conduct any investigations of the environmental or social-economic issues associated with the San Rafael deposit, and the authors are not experts with respect to these issues.

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4.0

PROPERTY DESCRIPTION AND LOCATION

MDA and the authors are not experts with respect to land and legal matters. The information presented in this section is based on information provided to MDA by Americas and from additional references as cited. MDA presents this land information to fulfill reporting requirements of NI 43-101. MDA is not qualified to present an opinion on the validity of the concessions or any leases or agreements and has relied on the descriptions in Sections 4.2, 4.3 and 4.4 as provided by Americas and other sources, which MDA has no reason to believe are not reliable.

4.1

Location

Americas’ San Rafael deposit is located in the Cosalá mining district in the east-central portion of the state of Sinaloa, Mexico, near 106º 40’W longitude and 24º 29’N latitude; some of the concessions that form the property extend into adjacent Durango state (Figure 4.1) . The San Rafael deposit is about 240km by road from Mazatlán and 12km north-northeast of the town of Cosalá. Americas’ Nuestra Señora mine is located about 10km east of Cosalá and about 10km southeast of the San Rafael deposit which is the focus of this report (Figure 4.1) .

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4.2

Land Area

Americas’ land holdings in the Cosalá mining district, including the San Rafael, Nuestra Señora and El Cajón deposits consists of 73 mineral concessions that cover approximately 24,657 hectares as shown in Figure 4.2. A concession map showing detail in the vicinity of the San Rafael deposit is given in Figure 4.3. The list of concessions is presented in Appendix A. Americas owns the concessions listed in Appendix A through its wholly owned subsidiaries, Minera Cosalá, S.A. de C.V. (“Minera Cosalá) and Minera Platte River Gold, S. de R.L. de C.V. (“PRG”).

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In September of 2014, PRG signed an agreement to explore two small concessions well west of the main land holdings. These two concessions, Orion Fracc. A, and Orion Fracc. B are controlled by means of a lease with a term of eight years and an option to purchase. Subsequently, in December 2014, through its subsidiary Minera Cosalá, Americas signed an agreement for rights to explore (with an option to purchase) the 302 hectare Cosala 2 concession, which nearly surrounds the Nuestra Señora mine to the east south and west (Figure 4.2) . This lease has a term of ten years. With the exception of concessions Cosala 2, Orion Fracc. A, and Orion Fracc B, Americas owns the concessions listed in Appendix A through its wholly owned subsidiaries, Minera Cosalá, and PRG.

Within the concession blocks are a number of areas of land that Americas does not control. One of the concession blocks not under Americas’ control (Silvia Maria Title Number 147043; not the same concession also called Silvia Maria listed in Appendix A) lies immediately adjacent to the southwest boundary of the San Rafael resource.

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All concessions remain valid for 50 years from the date of title as long as the semiannual mining duties are paid and minimum annual work requirements are met. The mining duties are based on the number of years the concession has been held. Total, current, semiannual mining duties for the 70 concessions owned by Americas are approximately MX$8.712 million, payable to the Secretaría de Economía, Coordinación General de Minería, Dirección General de Minas. Americas reports that those payments are up to date. The current total minimum annual work commitment for all of Americas’ Cosalá district concessions is approximately MX$85.1 million. The Americas-owned concessions are grouped administratively so that the cost of work performed anywhere on the property can be credited towards these work commitments.

All of the mineral concessions have been legally surveyed by qualified and government-approved surveyors. The surveys have been registered with the titles at the Department of Mines in Mexico City and are in compliance with Mexican mining laws.

4.3

Agreements and Encumbrances

On March 16, 2011, Scorpio (now Americas) acquired five mineral concessions in the Cosalá district, immediately adjacent to its existing concessions, from Grupo Industrial Minera Mexico S.A. de C.V. (“IMMSA”), a subsidiary of Grupo Mexico. These concessions (El Cajón, El Cajón 2, El Magistral, La Escondida, and Simon) covering 1,387 ha are subject to a 1.25% net smelter return (“NSR”) royalty payable to IMMSA on future production. The San Rafael resources do not extend onto any of these five concessions.

4.4

Surface Rights

PRG purchased the surface rights to 426 hectares that overlie the main areas of mineralization at San Rafael. The cost of the surface rights was US$172,500 and was paid to the ejido Higuera Larga in 2011. Ejidos are registered communal organizations that own much of the surface rights to rural land in Mexico.

While the transfer of title for that land was being ratified, a Presidential decree changed the transfer process for all ejido lands in Mexico. The new process required the approval of Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) prior to title transfer of ejido lands. Following that decree, during 2011 SEMARNAT rejected the title transfer to PRG of the 253 hectares at San Rafael. Although a legal challenge to this rejection was available, Americas chose to negotiate an alternative land access agreement with the ejido to grant temporary use of the land for a period of 30 years and including the establishment of mining and processing operations. Negotiations successfully incorporated an additional 174.3 hectares from Higuera Larga and 49.4 hectares from the ejido Los Molinos immediately adjacent to the original area for an additional US$250,000. These land access agreements have been registered with the national agrarian authority (Registro Agrario Nacional).

In late 2006, Minera Cosalá’s employee Cesar Lemas purchased 118 hectares of surface lands 3km northwest of the Nuestra Señora mine (Figure 4.2) from the ejido of the Cosalá area, as a location for the processing plant facility and tailings pond,. In 2007, the ejido’s main assembly granted Mr. Lemas full domain over the lands. Mr. Lemas then granted to Minera Cosalá an irrevocable power of attorney allowing Minera Cosalá to act as Mr. Lemas’s designee to process the transfer of the land title. On January 26, 2009, the title to the surface lands was issued in the name of Cesar Lemas. The subsequent transfer of the title to these surface lands from Cesar Lemas to Triturados Noroeste S.A. de C.V. was completed in December 2009, and the lands were then immediately transferred to Minera Cosalá. These transactions were registered and confirmed with the government authorities on February 26, 2010.

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Figure 4.3 shows the area of surface rights at the San Rafael resource area.

4.5

Environmental Permitting

MDA did not conduct any investigation of the environmental or social-economic issues associated with the San Rafael deposit, and the authors are not experts with respect to these issues. For Sections 4.5 and 4.6, MDA has relied upon information provided by Americas. The information in the report concerning these matters is provided as required by Form 43 101F1 but is not an opinion, professional or otherwise, of the authors.

Americas’ activities at its San Rafael deposit is subject to regulation by SEMARNAT, the environmental protection agency of Mexico. Regulations require that an environmental impact statement, known in Mexico as a Manifesto Impacto Ambiental (“MIA”), be prepared by a third-party contractor for submittal to SEMARNAT. Required studies which have been completed to support the MIA include a detailed analysis of the following areas: soil, water, vegetation, wildlife, cultural resources and socio-economic impacts. Proof of local community support for a project must also be provided to gain final approval of the MIA.

Although managed by different departments within SEMARNAT, and as a pre-requisite to the approval of the MIA, separate approvals are also required whenever the surface is modified from its existing state and when activities interfere with water flows. The approval for “change of soil use” (Cambio de Uso de Suelo, “CUS”) is regulated by the Forestry Department, and water impacts are regulated by the Comision Nacional de Agua (“CONAGUA”).

During the evaluation process of each MIA, SEMARNAT may request further information required for its assessment or may deliver notice that it requires more than the stipulated review time to complete its evaluation. At the conclusion of this process, SEMARNAT issues a resolution that either rejects or approves the proposed project. In the case of rejection, a list of deficiencies will be detailed that would require correction in future MIAs. In the case of approval, the resolution will detail the compliance criteria and restrictions under which operations may proceed.

In accordance with the 2012 update of environmental laws regulating mining and exploration (NOM-120-SEMARNAT-2011), on December 14, 2012, an MIA was submitted to SEMARNAT for ongoing exploration activities at El Cajón. A request for additional information was received from SEMARNAT on January 25, 2013, and this information was submitted on March 4, 2013.

An MIA for the underground exploitation at El Cajón and San Rafael was submitted to SEMARNAT on November 26, 2012. A request for additional technical information was received from SEMARNAT on February 18, 2013, and this information was submitted on April 5, 2013.

On December 14, 2012, the Justifying Technical Studies (Estudio Técnico Justificativo, “ETJ”) for the change of land-use (Cambio de Uso de Suelo, “CUS”) permits for exploration and exploitation at El Cajón and San Rafael were submitted to SEMARNAT. Requests for additional technical information and clarification were received on January 31, 2013; such information was submitted to SEMARNAT on February 22, 2013. A revised ETJ was submitted in July, 2013 covering 4.6 hectares at the El Cajón mine. SEMARNAT granted the CUS for El Cajón in December, 2013.

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An ETJ in support of a CUS at San Rafael was submitted to SEMARNAT in June, 2015. Additional information was supplied to SEMARNAT in September, 2015. The CUS was granted in January 2016.

4.6

Environmental Liability

The following information has been taken from MDA’s 2009 Technical Report (Ristorcelli et al., 2009), which is still current, according to Americas. MDA has relied upon information provided by Americas. The information is provided as required by Form 43 101F1 but is not an opinion, professional or otherwise, of the authors.

Americas has not completed, either internally or through a third-party consultant, a complete review of the environmental hazards at San Rafael. The project area is typical of many strongly mineralized areas in Mexico, in which there are numerous prospects and small mines. These areas of historical disturbance contain small dumps (many sulfide-bearing), small pits (generally less than 25,000 tons), and a number of adits.

However, for the final closure plan for the El Cajón mine, Americas is considering a reforestation and slope stabilization program for the areas that were impacted by the change in land use. In early 2015 the estimated cost of implementing this program was approximately $342,000.

Within the concessions controlled by Americas, one significant abandoned historical mine site is present ~600m northwest of the San Rafael resource at the La Estrella mine (Figure 4.2) . The Las Estrella mine was operated by Asarco into the 1950s and later by a Mexican owner. A small open pit and unknown amounts of underground workings are present at the site. Most of the dumps have since been removed and processed. Tailings remain from the mill that was present at the site when the mine was in operation. The mill has also been removed.

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5.0

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY

   
5.1

Access

The San Rafael resource area is accessible from the town of Cosalá via a rural paved and then dirt road for a total of 15km. Both of these roads can accommodate standard highway vehicles. Another dirt road connects the town of Cosalá with the Los Braceros plant and tailing sites.

The Pacific coast highway is located 55km to the west of the project, and 18km further west are the toll highway and the railroad. The toll road connects Mazatlán with Los Mochis and with Nogales, situated at the Mexico/US border.

A small airport at the edge of Cosalá serves the mountain towns and large ranches of the Sierra Madre. Chartered flights are available to both Mazatlán and Culiacán. Daily buses run from Cosalá to the main coast highway, where connections can be made to reach all the major cities in Mexico.

5.2

Climate

The climate ranges from subtropical to high coastal arid, with rainfall averaging 18 inches per year. Rainfall occurs most commonly from mid-June to late October, usually as intense thunderstorms which last for several hours. Until the end of November, occasional tropical to hurricane-strength storms originating in the Pacific Ocean, or moving westerly over the Sierra Madre Mountains from the Caribbean, can cause severe flooding which may temporarily isolate the area.

The weather does not impact on Americas’ exploration, development and production activities, except that during severe thunderstorms operations may be suspended temporarily, usually less than a couple of hours, for safety reasons. The exception is for surface drill programs taking place within the canyon of the Habitas River, which is susceptible to flash flooding during the rainy season, and consequently for safety reasons, surface drilling within the canyon is suspended during times of heavy rain. The mining activities at Nuestra Señora and transporting of the ore to the plant site are not affected by the flooding, because the mine entrance and the bridge over the Habitas River connecting the mine portal to the access road are higher than the level of flooding.

5.3

Local Resources and Infrastructure

The town of Cosalá (population of over 17,000) supplies the project with a sufficient labor force to fulfill both its present needs and any requirements in the foreseeable future. Cosalá is the business, education, and governmental center for the region. Rural families subsist on small farms and ranches scattered throughout the area. Modern schools are present, teaching through Grade 12, and the University of Sinaloa campus in the town of Cosalá offers post-secondary education. The town has internet facilities, both as internet cafes and in private connections. Post offices and telephone services are available; cellular telephones are widely used. The Banamex Bank has a branch office providing banking and electronic services. A local hospital can treat minor trauma, although for more serious medical problems one must go to Mazatlán or Culiacán, both cities a two-hour drive from Cosalá.

The ports of Mazatlán, 160km to the southwest, and Los Mochis, 300km to the northwest, are both capable of handling bulk materials as well as containers. Americas currently transports zinc, lead and copper concentrates from the Nuestra Señora mine by road to Manzanillo for transport by sea freight. Several metal-trading companies now have significant infrastructure in Manzanillo to handle, store, and ship concentrates (de Corta, 2011). .

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Comisión Federal de Electricidad is the supplier of electricity for Mexico. There is a hydroelectric power plant at the Comedero reservoir with a rated capacity of 100 megawatts, which supplies electricity to Cosalá. A 34.5kV power line provides electricity from the power plant to the Los Braceros processing plant; this line was extended to the Nuestra Señora mine and was activated in January 2011.

The following information on water is taken from the 2011 Genivar Technical Report (de Corta, 2011). Water rights are controlled by the Comisión National del Agua. The Habitas River, which runs all year, is located in a steep-sided canyon approximately 200m deep which traverses the Nuestra Señora area. The Cosalá area is considered to have excess water supplies and has been designated a “Zona de Libre Alumbramiento” – a free water exploitation zone. No permits are required to drill wells for the extraction of water. However, according to the current legislation, individuals or companies must pay for the use of the national waters regardless of how the rights were obtained. These rates are determined by its availability and the method of extraction.

In 2004, Americas purchased the decommissioned San Manuel 1,500 tpd plant in Arizona from Phelps Dodge and, in late 2006, began to move it to Cosalá. Americas also purchased additional plant components, including a 500 tpd ball mill. Commercial production of the plant at Los Braceros began in January 2009.

5.4

Physiography

The San Rafael area lies within the western foothills of the Sierra Madre Occidental, and the project area topography is rugged and steep. The project elevation ranges from 350 to 1,000m above mean sea level with about 350m of relief within the immediate San Rafael area. The town of Cosalá lies at an elevation of about 325m above sea level.

Incised perennial drainages cut through the property, and stream flows are highly variable depending on time of year. Drainage channels are often used for local access, although during the rainy season, many drainages become impassable due to high water flow. The slopes are brush and tree covered making cross-country travel difficult, particularly during the rainy season.

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6.0

HISTORY

The Cosalá mining district’s mining and exploration history is summarized from an internal company report (PRG, 2006a) with additional information from Henriksen (2004), Spring and Breede (2008), and de Corta (2011). (Note, it is unclear if the “tpd” used by PRG (2006a) refers to metric tonnes or short tons per day).

6.1

Exploration and Mining History

The Cosalá district was discovered and locally worked by the Spanish approximately 400 years ago with production of enriched silver ore from the upper levels of the Nuestra Señora mine. However, no records of any kind remain from their activities. At the turn of the 19th century, French engineers through Negociación Minera La República reportedly developed and worked the Nuestra Señora mine with a 10-stamp mill that produced 800kg to 1,000kg of silver per month. Activities in the area may have been halted after the 1910 Mexican Revolution.

In 1949, Asarco Mexicana (“Asarco”) purchased the Nuestra Señora mine and property and carried out exploration and development, putting the property into production in 1954. Ore was mined from four nearby deposits (Nuestra Señora, Santo Domingo, Candelaria, and Santa Teresa), with most of the production coming from the Nuestra Señora mine down to the 8th level. The Ag-Zn-Pb-Cu-Au ore was processed in a 450tpd flotation plant. Asarco also mined similar material from the La Estrella mine north of San Rafael. In addition, Asarco did some work at El Cajón, sending the material to the mill at La Estrella.

In or about February 1965, Asarco ceased production from Nuestra Señora, presumably because of anticipated Mexican government policies (Spring and Breede, 2008). Asarco subsequently removed all of the mining equipment. Asarco let their concessions lapse in 1980.

6.1.1

San Rafael Area Prior to 2004

As mentioned above, Asarco operated the La Estrella mine north of San Rafael and did some work at El Cajón during its tenure on the property from 1949 to 1965. In 1965, the Gaitán family worked the La Estrella mine and developed a small open-pit operation around the area previously mined by Asarco. About 50 men were employed to produce 150tpd, and the material was trucked to an 80 to100tpd plant owned by Minera Reyna del Cobre (the Gaitán family) and located 100km from Cosalá at La Minita. The silver-lead and zinc concentrates were trucked to the Industrias Peñoles, S.A. de C.V (“Peñoles”) smelter in Torreon, Coahuila.

At about the same time, the small El Mamut and La Verde mines (both Ag-Cu-Au) were operated by Sres. Vicente Cortez, Alonzo Cortez, and Jaime Garriaga, using some of the Asarco infrastructure. The El Mamut mine, located in what is now the El Cajón mineralized area, had also apparently been tested by Asarco with three diamond drill core holes (“core”). The data on these core holes are not available to Americas or MDA. The Cortez and Garriaga families produced approximately 10 to 15tpd from the mines and shipped the ore to the Gaitán mill at La Minita.

During the summer of 1973, Duane Allen Cibula completed fieldwork in the district for his Master of Science Degree thesis in the Department of Geology at the University of Iowa. His thesis titled “The Geology and Ore Deposits of the Cosalá Mining District, Cosalá Municipality, Sinaloa, Mexico” was completed and published in 1975. The thesis emphasized the stratigraphy, structure, and mineralization in the district and was financed by Consejo de Recursos Minerales no Renovables.

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In the late 1970s or early 1980s, a subsidiary of Peñoles explored the area around the La Estrella mine and El Cajón area and reportedly completed some drilling around La Estrella. They subsequently abandoned their interest in the area. At the same time, Sr. Enrique Gaitán constructed a 100tpd plant near the La Estrella mine to process material from that deposit, as well as from La Profesora, a small mine about 0.5km to the southeast. In the early 1980s, Mr. Gaitán moved the plant to the town of Cosalá, supposedly due to his relationship with the ejido that owned the surface in the area and also to procure a more consistent water source.

In 1985, Sr. Jaime Guinea Gonzalez acquired the rights to the La Verde mine concession, from which he processed 50 to 80tpd of dump material and also signed an option to purchase the Gaitán plant in Cosalá. Sr. Guinea developed two new cross cuts to intercept the La Verde zone and increased production to about 190tpd.

Minerales para la Industria, S.A. de C.V. signed an exploration agreement in 1987 with Sr. Guinea and Minera Humaya S.A. de C.V. (“Humaya”), a company controlled by him, and completed mapping and sampling in the area around the La Verde mine and the El Cajón and La Estrella areas. The results of their work were not sufficient to continue in the district. Sr. Guinea subsequently completed 12 reverse circulation (“RC”) drill holes along the La Verde zone, and production over the ensuing years was increased to approximately 200tpd. He also acquired substantial additional concessions in the area at this time.

In mid-1995, Minas de Oro Hemlo, S.A de C.V. (“Hemlo”), subsidiary of Hemlo Gold Mines Inc., the first company to show interest in the San Rafael-Los Manueles areas located northwest of San Rafael, signed an exploration agreement with Sr. Guinea and Humaya. After six months of mapping and sampling in those zones, Hemlo decided to build a new road to explore a stockwork zone of Au-Ag mineralization hosted in the rhyolite that overlies the San Rafael base-metal mineralization. On the basis of encouraging rock-sample geochemistry, Hemlo drilled 15 RC holes in 1997 in the San Rafael area and encountered local Au-Ag mineralization in the rhyolite. Americas has copies of drill logs and assays, though none of the data is in digital form. Hemlo’s data were not used for the current resource estimate due to QA/QC concerns and a general lack of documentation. Hemlo’s drilling targeted the high-level gold and silver mineralization that overlies the massive-sulfide base-metal mineralization, though a number of holes were drilled deep enough to encounter the base-metal zone. Nine holes contained sample intervals assaying greater than 1% Pb and Zn, while three of these holes had 10m or greater drill intervals that assayed >40g Ag/t and over 1% Pb and Zn. The base-metal assay technique employed by Hemlo had an upper limit of 1%, and further analyses were not conducted on the samples whose results exceeded the upper limits. All of the Hemlo holes which encountered sulfide mineralization were later twinned by PRG. A few of the holes were drilled deep enough to discover the buried massive-sulfide base-metal mineralization that has been the focus of Americas’ drilling. However, because Hemlo was primarily interested in gold and silver, and also had unrelated legal issues, they did not continue work in the area.

Early in 1997, Sr. Guinea and Humaya signed an option agreement for the property in the San Rafael-El Cajón-La Verde area with Golden Panther, a Canadian junior company. This agreement included all of the claims staked by Humaya (~11,000 hectares), as well as the plant and the offices and houses located in Cosalá. Golden Panther carried out an induced polarization (“IP”)-resistivity geophysical program over the La Verde mineralization and completed three core holes, two of which attempted to intercept the mineralization beneath the deepest workings of the La Verde mine. A cross cut was developed to intercept another mineralized structure but was stopped short of the area of interest. Along with the exploration program, Golden Panther increased the capacity of the plant in Cosalá to 450tpd. Golden Panther abandoned the project the following year.

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In 1999, Peñoles signed a letter of intent with Sr. Guinea for the San Rafael-El Cajón-La Verde area. Peñoles conducted fieldwork on the project but did not continue with additional work.

In early 2000, Grupo Industrial Minera Mexico S.A. de C.V. (“IMMSA”) expressed interest in the San Rafael-El Cajón-La Verde property and made a verbal agreement with Minera Real de Cosalá S.A de C.V. (“MRC”), a new company controlled by Sr. Guinea’s wife and daughters. During this time, IMMSA staked three claims within the main claim block that had been allowed to lapse by MRC. After several months, IMMSA declined to pursue its interest in the area, but they kept their concessions. One of IMMSA’s concessions is located immediately northwest of the San Rafael mineralized area.

Noranda Exploraciones Mexico, S.A. de C.V. (“Noranda”) started negotiations and later signed two option agreements at the end of 2000 with Sr. Guinea and MRC. One agreement was for the La Verde mine area, and the second was for the La Estrella-San Rafael-El Cajón area. Three IP-resistivity lines were completed over the San Rafael zone in the area of the previous Hemlo drilling. A significant IP anomaly was identified that coincided with the base-metal mineralization encountered in several of the Hemlo holes. Noranda subsequently drilled seven vertical core holes totaling 1,348m in 2001. Americas has digital assay, collar, and summary geology data but no hard-copy data. The Noranda drilling targeted the base-metal mineralization encountered in the deeper Hemlo drill holes. Two of the more significant Noranda drill intercepts were 36.8m @ 43.8g Ag/t, 1.54% Pb, and 4.06% Zn (drill hole SR-01-01 from 48.7 to 85.4m) and 23.3m that averaged 45.0g Ag/t, 1.24% Pb, and 3.23% Zn (drill hole SR-01-03 from 116.5 to 139.8m) . The results of Noranda’s drilling confirmed the presence of the massive-sulfide mineralization, but the size potential was believed to be small, and Noranda abandoned their interest in the property in 2001. Five of the seven Noranda holes were subsequently twinned by PRG. As with the Hemlo data, the Noranda drilling was not used in MDA’s 2009 resource estimate for San Rafael and El Cajón because of QA/QC concerns and a general lack of documentation.

6.1.2

San Rafael – El Cajón Area 2004 - 2010

PRG became interested in the San Rafael-El Cajón-La Verde property in early 2004. On June 1, 2004, PRG, through its Mexican subsidiary, signed a four-year option agreement for 100% of the exploration and mining concessions owned by MRC, along with all of the infrastructure and mining equipment used at the La Verde mine and project area, but excluding the processing plant in Cosalá. PRG completed payments and acquired the property in 2008. PRG acquired an additional three concessions from MRC in 2006 and also filed an additional 19 concessions between 2005 and 2008. PRG’s exploration is described in Section 9.1. The previous work by Noranda and Hemlo guided PRG’s drill program, and many of the previously drilled mineralized holes were twinned by PRG.

6.1.2.1

Drilling by Platte River Gold

PRG initiated exploration in the vicinity of San Rafael and El Cajón in 2004 and conducted four phases of drilling through August 2008. Total PRG drill footage was 65,706m in 371 drill holes, which corresponds to the totals found in the database used by MDA to estimate the 2009 resource. Four additional drill holes (EC5a for 25.9m, EC11a for 15.2m, SR139 for 124.97m, and VE9 for 7.5m) were not entered into the database since they were abandoned or lost, not logged, and re-drilled with a new hole. No additional drilling was conducted by PRG prior to being acquired by Scorpio in August 2010.

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The first phase drill program began November 20, 2004, and concluded in June 2005. The Phase I drilling, which consisted of 56 RC holes for a total of 8,423m, tested 12 different targets throughout the San Rafael-El Cajón area that had been identified by surface mapping and sampling. The most significant results of this drilling were indications of continuity of massive-sulfide (silver-lead-zinc) mineralization that had been tested by Hemlo and Noranda at San Rafael. The drilling also discovered significant silver-copper mineralization peripheral to the mineralization exposed in old mine workings at El Cajón.

The second drill phase began October 17, 2005, and ended July 6, 2006. Phase II, which consisted of 91 RC and 37 core holes totaling 18,610m, focused on defining the limits of the San Rafael mineralization and also expanding and defining the El Cajón mineralization. Due to the rugged topography and difficulty in setting up drill pads, both vertical and angle holes were used to test the mineralized zones.

The third phase began in January 2007, and ended in August 2007. Phase III, which consisted of 80 RC and 51 core holes totaling 26,508m, focused on infilling and defining the limits of the El Cajón mineralization in preparation for a maiden, publicly reported resource estimate, and also infilling the San Rafael deposit for the purposes of resource classification upgrading. The Zone 120 was recognized while drilling hole SR120 at the San Rafael deposit during Phase III.

The fourth phase of drilling began in March 2008, and ended in August 2008. Phase IV, which consisted of 56 core holes totaling 12,165m, focused on upgrading and further expanding the Zone 120, defining the limited extents of the oxide mineralization, as well as minor step-out drilling at El Cajón.

At the conclusion of all phases of PRG’s exploration program through 2009, there were 194 drill holes and 14 surface trenches in the San Rafael deposit area, and 95 drill holes in the El Cajón deposit area.

6.1.2.2

Geophysical Surveys by Platte River Gold

Geophysical work by PRG, which is summarized by Ellis (2007), was completed in 2005 and 2006 by Quantec Geoscience Inc. of Reno, Nevada (USA). IP, resistivity, and ground magnetics data were collected. The IP and resistivity data were collected to map the distribution of pyrite and chalcopyrite, while the ground magnetics data were collected as a test to determine whether the skarn mineralization and intrusive rocks could be identified by their magnetic properties.

A total of five IP lines were acquired, four lines at El Habal (located west-southwest of El Cajón; see Figure 7.1), and 12 lines covering the San Rafael-El Cajón area for a total of 27.4 line-km of IP and resistivity. IP anomalies correlated with mineralization in all areas. Low-amplitude IP anomalies (<5.0 msec.) seem to correspond to the El Habal mineralization, while high-amplitude IP anomalies (reaching 20msec. or higher) correlated well with mineralization at San Rafael and El Cajón. This amplitude can indicate disseminated sulfide in the range of 3% to 5%. However, the percentage of sulfide can be much higher if the habit of the mineralization is more massive or if it consists of a lower IP-responding sulfide such as chalcopyrite (Ellis, 2007).

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Resistivity was not a good indicator of mineralization. Resistivity values varied between 100ohm-m and 500ohm-m. Lateral variations in resistivity probably reflect structure, lithology, or the overprint of alteration.

Ground magnetics data were acquired along two IP lines at El Cajón during the 2006 survey. A GEM system (GSM-19) proton precession magnetometer was used for the survey, and a total of 2.5 line-km of data were acquired and plotted in profile format. The results of the magnetic survey were inconclusive. No clear correlation of magnetic anomalies with mineralization was identified. However, the value of ground magnetics is often in its ability to map lithology, structure, and sometimes alteration and is difficult to assess with limited coverage (Ellis, 2007).

6.1.3

Other Exploration and History 2008 - 2010

In addition to drilling and geophysical surveys, PRG conducted geologic mapping and chip-channel sampling of outcrops and road cuts. Geochemical data from 14 trenches located on the eastern edge of the San Rafael deposit are in the database and were used in the current resource estimate.

Subsequent to August 2008, PRG conducted regional mapping and sampling outside of the resource areas.

A three-year option agreement with MRC was signed by PRG on July 1, 2008, through its Mexican subsidiary, to purchase MRC’s processing plant in Cosalá and associated infrastructure. That option was fully paid in May 2011.

On January 1, 2009, PRG signed a three-year option agreement with Contratista de Obras Mineras, S.A. de C.V. (“COMSA”), a Mexican contract-mining company, to sell the Cosalá processing plant. COMSA completed its option payments in June 2011.

As of 2006, the La Verde mine had produced about 1.5 million tonnes of ore, and for the 18 months through January 2006, the average grade had been 152g Ag/t and 0.53% Cu (Armbrust and Chlumsky, 2006). In January 2009, the operation of the La Verde mine was leased to COMSA. That lease agreement allowed COMSA to extract ore from the La Verde mine and process it at the processing plant in Cosalá. A royalty was paid to PRG on the concentrate sales. The La Verde mine operating lease was terminated in February 2011, by which time COMSA had excavated and processed 281,000 tonnes with grades of approximately 114g Ag/t, 0.46% Cu, and 0.10g Au/t. The La Verde portion of Americas’ property is not part of the resources described in Section 14.0.

Scorpio (now Americas) acquired all of the outstanding shares of PRG effective April 1, 2010, thereby acquiring the San Rafael-El Cajón-La Verde area concessions. America’s exploration in this area is described in Section 9.1, and their drilling is described in Section 10.0.

6.2

Previous Resource Estimates

   
6.2.1

San Rafael and El Cajón

Previous estimates of the mineral resources of the San Rafael-El Cajón deposits were made in-house by PRG and by independent consultants including MDA, whose work culminated in two draft technical reports in 2007 and 2008 (Ristorcelli and Tietz, 2007; 2008) that were never made public and a published technical report in 2009 (Ristorcelli et al., 2009). Previous estimates by both PRG and MDA are presented here as historical estimates in the interest of complete disclosure. Americas is not treating these previous estimates as current mineral resources. These previous estimates should not be relied upon and are superseded by the current mineral resource estimates for San Rafael reported in Section 14.0.

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PRG completed a number of polygonal resource estimates both during and at the completion of their 2005-2006 drill program (Table 6.1) . These preliminary resource estimates do not meet NI 43-101 reporting requirements but are included here for completeness and as historical information. The authors have not done sufficient work to classify these historical estimates as current mineral resources, and Americas is not treating these historic estimates as current mineral resources.

Preliminary polygonal resource estimates for the San Rafael mineralization were completed by PRG in December 2005 (Armbrust and Chlumsky, 2006) using cross sections created in Surpac Software’s XplorPac program (Table 6.1) . The number of drill holes used in the San Rafael estimate was not stated in the Armbrust and Chlumsky report. Mineral shells were created with material exceeding $20/tonne. PRG used a density of 4.0g/cm 3 for San Rafael mineralization.

Updated polygonal resource estimates were completed in May 2006 by PRG (Armbrust and Chlumsky, 2006) based on 41 San Rafael drill holes (Table 6.1) . The same specific gravities were used again, but the mineral shells were created with material exceeding $50/tonne.

In August 2006, at the end of the 2006 drill program, PRG completed a final polygonal, cross-section resource estimate for the San Rafael mineralization (Table 6.1) . The estimates were based on 101 drill holes at San Rafael, with a final drill spacing of 15 to 60m (PRG, 2006b). Shells created at $50/tonne material (based on $8.25/oz Ag, $0.49/lb Pb, $0.78/lb Zn, $2.01/lb Cu and $493/oz Au) were used.

The San Rafael estimate used a 4.0g/cm 3 density and included only the significant sulfide-bearing drill intercepts. Oxidized mineralization was not included in the August 2006 estimate. The resource was said to be open immediately to the southeast.

In November 25, 2009, MDA completed a Technical Report for PRG and Scorpio that included the first publically reported mineral resource estimates for San Rafael (Ristorcelli et al., 2009) (Table 6.2) .

Those estimates were based on PRG’s drilling through 2008. MDA updated the 2009 resource estimates in a 2013 Technical Report (Dyer et al., 2013) as shown in Table 6.3. The interested reader is referred to that report for details, but those estimates are superseded by the estimates described in Section 14.0 of this report.

Table 6.1 Previous Resource Estimates for the San Rafael and El Cajón Deposits by Platte River Gold
(As reported in Armbrust and Chlumsky, 2006 and PRG 2006b)

Date Area Tonnes g Ag/t g Au/t Zn % Pb % Cu %
December 2005 San Rafael 4,700,000 55   3.0 1.6  
El Cajón 1,900,000 165 0.33     0.59
May 2006 San Rafael 3,500,000 72   4.2 2.2  
El Cajón 2,100,000 239 0.43     0.79
August 2006 San Rafael 4,590,000 66.8 4.57 2.02  
El Cajón 1,630,000 246.1 0.45   0.82
               
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Table 6.2 2009 MDA Resource Estimate for San Rafael
(Ristorcelli et al., 2009)

Measured and Indicated

Cutoff Tonnes Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
1.50 15,741,000 1.78 0.80 66.0 0.08 0.11 617,219,000 276,417,000 33,416,000 29,258,000 56,000 4.28

Inferred Resource

Cutoff Tonnes Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs)  (oz)  (lbs) (oz) (%)
1.50    545,000 0.38 0.23 72.7 0.15 0.11 4,578,000 2,773,000 1,274,000 1,757,000  2,000 2.69

Table 6.3 2013 MDA Reported Resource Estimate for San Rafael
(Dyer et al., 2013)

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7.0

GEOLOGIC SETTING AND MINERALIZATION

   
7.1

Geologic Setting

   
7.1.1

Regional Geology

The Cosalá mining district lies along the western edge of the Sierra Madre Occidental, an extensive volcanic province covering approximately 800,000km2. The pre-volcanic basement consists of a variety of tectonic/stratigraphic terranes of Precambrian, Paleozoic, and Mesozoic rocks. In the Cretaceous, a thick sequence of sedimentary units, primarily limestone, pelitic rocks, and andesitic volcaniclastic units were deposited over the basement terranes. These marine sedimentary and volcanic rocks were intruded episodically from 140 million years ago to 45 million years ago by the composite, gabbroic to dominantly granodiorite and granitic intrusions of the Sinaloa Batholith, and host many of the carbonate replacement and skarn deposits in Mexico. The Cretaceous sedimentary rocks are unconformably overlain by Late Cretaceous and Tertiary volcanic rocks, which have been subdivided into a lower, largely andesitic sequence (70 to 40 Ma) and an upper, mostly rhyolitic sequence (40 to 20 Ma). Both volcanic sequences can range up to 1km or more in thickness. Within the western Sierra Madre Occidental, the Mesozoic rocks have been altered to recrystallized limestone and skarn in many locations.

An extensional, basin and range-type phase of faulting overprinted the western portion of the Sierra Madre Occidental during formation of the Gulf of California in Miocene time. In the Cosalá region this late-Tertiary faulting produced an extensive, northwest-trending graben and related, parallel fault system, along with later northeast-trending dextral faults.

Mineralization within the Cosalá mining district is related to granodioritic or granitic intrusions of the Sinaloa Batholith, a composite gabbroic to granodioritic complex that induced strong contact metamorphism in adjacent sedimentary and volcano-sedimentary units. Exposures of the sedimentary rocks and associated mineralization are small and surrounded by Tertiary volcanic rocks (Armbrust et al., 2006).

7.1.2

Property Geology

   
7.1.2.1

San Rafael Area

Much of the following information is taken from PRG (2006b and 2006c).

The geology of the San Rafael area is dominated by intrusive and extrusive volcanic rocks that make up much of the Sierra Madre Occidental (Figure 7.1) . Cretaceous limestone, commonly recrystallized and marbleized, but only locally skarn-altered, is exposed within windows in the Tertiary volcanic rocks and is the oldest unit identified to date in the San Rafael area. The basal Tertiary unit is a volcaniclastic arenite composed of heterolithic volcanic clasts that are variable in size, sub-angular to sub-rounded, and commonly porphyritic. Clast and grain size generally range from fine-grained sand to medium-sized boulders, and the unit commonly displays graded bedding. The arenite is a really extensive rock type on the property and is also the primary host for skarn alteration/mineralization at the original La Verde mine. The protolith at El Cajón was originally believed to be a fine-grained limestone sub-unit within the Tertiary volcaniclastic arenite, although the current interpretation is that the altered limestone is of Cretaceous age. Overlying the basal arenite are andesitic flows, andesitic tuffs and dacitic tuffs. At San Rafael, the basal arenite section is missing, and massive sulfide mineralization occurs primarily along the dacite tuff-Cretaceous limestone contact, with additional mineralization within the dacite in the Upper Zone, and skarn-altered limestone, which is the main host rock for the Zone 120. The youngest rock type is felsic rhyolite tuff. The rhyolite tuff contains quartz phenocrysts and small lithic fragments. Although there are silver-gold veinlets that crosscut the tuff, no strong silver-copper-gold or silver-lead-zinc mineralization has been identified in the rhyolite. Figure 7.1 and Figure 7.2 and Figure 7.3 show the geology of the San Rafael area.

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Figure 7.1 General Geology of the San Rafael Area
(Area shown in the dark outline is approximately that shown in Figure 4.2)

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Figure 7.2 Detailed Geology of the La Estrella - San Rafael - El Cajón Area

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Three types of intrusions are present in the San Rafael-El Cajón area. Medium- to coarse-grained granodiorite, which is part of the district-wide batholith, crops out in the western part of the project area and was also intersected at the bottom of a number of PRG drill holes in the El Cajón area. There are also large, local intrusions of diorite, often occurring as sills, that are interpreted to be related to the emplacement of the batholith. Andesitic dikes and sills, which are sometimes weakly magnetic, are also present.

The property-wide dioritic intrusions are often weakly magnetic and generally only weakly altered, although the dioritic intrusion(s) spatially associated with the El Cajón mineralization exhibit a pervasive skarn alteration assemblage consisting of albite, tourmaline, scapolite, epidote, calcite, titanite (sphene), and minor quartz. Though pervasively altered, the diorite contains only trace amounts of pyrite and chalcopyrite. The skarn-altered diorite was often logged by earlier geologists as quartz monzonite.

The skarn alteration in the vicinity of San Rafael covers a broad area of at least 20km2. Paragenetically, from earlier to later stage, typical skarn minerals are garnet (especially andradite and grossularite), pyroxene, wollastonite, and potassium feldspar, followed by calcite, chlorite, epidote, quartz, sericite and pyrite. Calcite and chlorite abundances increase near the mineralized zones. A quartz-sericite-pyrite assemblage is associated with the dominant, massive-textured, sulfide replacement mineralization at San Rafael.

7.2

Mineralization

Much of the following information on the San Rafael and El Cajón mineralization was taken from PRG (2006b), with the more detailed petrographic data from Larson (2005a, 2005b, 2006a, and 2006b).

7.2.1

San Rafael Mineralization

Three principal zones of sulfide mineralization have been identified within a broad area of skarn alteration in the vicinity of San Rafael and nearby El Cajón. The San Rafael Main Zone consists of masses of sulfide grains that occur as replacements at an unconformable contact between what is believed to be Tertiary dacite tuff and Cretaceous limestone. Although it can be difficult to determine the host rock when total sulfide content is 90 to 100%, most of the massive sulfide replacement mineralization appears to be hosted in the dacite tuff. It contains silver, lead, and zinc mineralization with lessor gold and copper. The main minerals are pyrite, pyrrhotite, sphalerite, and galena with minor marcasite, chalcopyrite, and magnetite. This mineralization in the San Rafael Main Zone is often associated with quartz-sericite-pyrite alteration that has been interpreted as more distal skarn alteration. It has also been suggested that the San Rafael Main Zone displays many similarities to volcanogenic massive-sulfide deposits, such as those found in the Guerrero Terrane in central Mexico.

Mineralization within the Main Zone at San Rafael is primarily massive, sulfide-replacement material, which can contain greater than 90% sulfides, dominantly pyrite and pyrrhotite. The sulfide body is discrete, tabular, and lies along the shallow-dipping dacite tuff - limestone contact (Figure 7.3) where it has been referred to as “massive-sulfide mineralization” in previous reports. The zinc, lead, and silver, for the most part, lies within the body of sulfide replacement and consists of sphalerite and galena. The contacts of all elemental zones generally overlap within the massive sulfide, but mineral-shell boundaries and their internal grade distribution are not necessarily coincident.

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The silver-gold “Upper Zone” lies within the Tertiary volcanic rocks about 50 to 100m above the Main Zone sulfide replacement of the San Rafael deposit. The Upper Zone is composed of irregular, sub-horizontal layers sub-parallel to the Main Zone. Mineralization consists of sulfides, but sulfide content is much less than in the Main Zone. Weak base-metal mineralization occurs with the silver.

The Zone 120 at San Rafael occurs not as a single horizon, but as multiple bedding- and intrusive-contact-related mineralized horizons. The Zone 120 mineralization is interpreted to occur along near-vertical contacts between diorite and skarn-altered limestone in the lower parts, and in quartz-sericite-pyrite-altered volcanic rocks in the upper parts. The Zone 120 mineralization extends upwards to overlap the Main Zone mineralization (Figure 7.3) . Mineralization is associated with generally 2 to 10% sulfides and is more irregular in shape and more variable in mineral character than the San Rafael Main Zone. It consists of silver-copper-gold mineralization in the form of chalcopyrite and tetrahedrite with minor pyrite, galena, sphalerite, arsenopyrite, chalcocite, jalpaite, native silver, copper, and bismuth. This mineralization accompanies pyroxene-garnet-calcite skarn alteration. A skarn-altered limestone is the host at El Cajón and is also believed to be one of the host units at the Zone 120. Both skarn alteration and sulfide mineralization are spatially associated with intermediate dikes, sills, and small stocks.

Minor oxide mineralization occurs throughout the San Rafael-El Cajón area. Significant gossan horizons are exposed along road cuts located up dip from the San Rafael sulfide mineralization, and a strong gossan surface trend occurs within the Los Manueles area just north of San Rafael. The exposed San Rafael oxide mineralization has been explored by shallow drill holes and surface trenches and has been sampled for metallurgical test work, but it contributes only incrementally to the current San Rafael resource.

In addition to the mineralization at San Rafael and El Cajón, mineralized material has been mined from the La Verde mine and has been drilled or identified at Magistral, La Bufa, San Antonio, and elsewhere in the neighboring area (Figure 7.1) .

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Figure 7.3 San Rafael Schematic Geologic Cross-Section with Mineralized Zones

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8.0

DEPOSIT TYPES

The Zone 120 in the eastern portion of the San Rafael deposit contains silver-copper-gold mineralization within garnet-pyroxene-calcite skarn. The strong metasomatic alteration and the close spatial relationship with a large dioritic intrusion suggest that the Zone 120 represents a proximal skarn deposit. Silver-lead-zinc mineralization, in the form of massive sulfide replacements in the Main Zone, and to a lesser extent in the Upper Zone, is associated with quartz-sericite-pyrite alteration. This alteration and mineralization type is believed to be a more distal phase of the skarn system.

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9.0

EXPLORATION

   
9.1

San Rafael Area

This section describes exploration of the San Rafael area by Americas and its predecessor Scorpio since the acquisition of PRG by Scorpio. All work completed by Scorpio before the corporate name change is attributed to Americas in the section.

Quantec Geoscience Ltd. completed a 48-line-kilometer Titan-24 DC/IP geophysical survey centered over the San Rafael area in 2010 (Izarra, 2010) at the request of Americas. The survey was initiated in June 2010 and covered a 3km x 3km area, using 100m dipole spacing with a 200m line spacing. Americas acquired the San Rafael and El Cajón properties in August 2010, and drilled seven exploration core holes at El Cajón between September and November 2010 to test some of the anomalies based on interpreted results of the Quantec DC/IP survey. A total of 2,555m was cored by Major Drilling, but the results were not encouraging and have not been followed up by additional drilling. These holes are not located within the San Rafael-El Cajón resource areas.

During 2011 through July 1, 2012, Americas drilled an additional 141 core holes at San Rafael totaling 13,578m. No drilling was conducted at San Rafael in 2013. During 2014 through July, 2015, Americas drilled 21 core holes totaling 2,463m. Details of Americas drilling in 2011 through July, 2015 is described in Section 10.3. Apart from the DC/IP survey and core drilling summarized above, Americas has conducted road building and limited mapping.

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10.0

DRILLING

As of July, 2015, 356 drill holes totaling 48,709m have been drilled in the San Rafael area (Table 10.1) . This total includes 194 drill holes completed by PRG between 2004 and 2008, and 162 drill holes completed by Scorpio/Americas in 2011, 2012, 2014 and 2015.

Figure 10.1 shows the drill-hole locations at San Rafael and the current resource outline.

Table 10.1 Summary of Drilling in the San Rafael Area

Property # of RC
Drill Holes
Length
(meters)
# of Core
Drill Holes
Length
(meters)
# RC-
Core
Drill
Holes
Length
(meters)
Platte River Gold (2004 thru 2008)
San Rafael 1241 18,881.8 43 7,554.1 27 6,018.4
PRG Totals 124 18,882 43 7,554 27 6,018
Scorpio/Americas (2010 thru 2012)
San Rafael     141 13,792    
Scorpio/Americas (2014 thru July 2015)
San Rafael     21 2,463    
             
Scorpio/Americas Totals   162 16,255    
           
Grand Total 124 18,882 205 23,809 27 6,018

1 Does not include one RC hole (SR139 totaling 125 meters) which was abandoned and is not in the current database.

10.1

Historical Drilling, San Rafael Area Prior to Platte River Gold

As discussed in Section 6.1, Asarco, Peñoles, Mr. Jaime Guinea Gonzalez, Hemlo, Golden Panther, and Noranda are known to have drilled in the vicinity of San Rafael and El Cajón during their tenure. None of these holes are included in the database, and none were used for the resource estimates of this report. MDA has no details about any of this drilling, contractors or type of rigs used, or down-hole surveying, although PRG has some hard-copy records of some of the historical drilling.

In 1997, Hemlo drilled 15 RC holes in the San Rafael area. Noranda drilled seven vertical core holes in the San Rafael area in 2001. PRG subsequently drilled twins of five of Noranda’s holes. Americas has PRG’s electronic archive which contains the assay data for six of Noranda’s drill holes.

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10.2

Drilling by Platte River Gold

PRG’s drilling took place in four phases from late 2004 to 2008. The details of each phase have been reported by Ristorcelli et al. (2012) and by Dyer et al. (2013). Phase I drill program in late 2004 to mid-2005 tested prospects throughout the San Rafael-El Cajón area. Phase II, drilled in late 2005 through mid-2006, focused on the San Rafael and El Cajón targets. Phase III, drilled in early to mid-July 2007, further delineated the San Rafael and El Cajón targets and also tested other exploration targets on the property. Phase IV drilling focused on upgrading and further expanding the Zone 120 and defining the limited extents of the oxide mineralization, as well as minor step-out drilling at El Cajón.

There were no abandonment procedures upon completion of the Phase I and II drill holes. The holes were left open, and the collar location marked by a large painted rock so as to be identified by the surveyor. The Phase III drill-hole collars have the drill-hole name and number marked on a metal plate attached to a buried rebar post. Phase IV utilized a short piece of PVC tubing with rebar placed in the top to hold the tubing near the top of the hole. The drill-hole locations soon become obscured due to both traffic and slope failures, and then the resulting road reconstruction, especially after the late summer rainy season.

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10.2.1

Reverse Circulation Drilling by Platte River Gold

PRG’s Phase I RC drilling was done by Layne de Mexico, S.A. de C.V. (“Layne”), which is based out of Hermosillo, Sonora, Mexico. The drilling was completed using a truck-mounted Ingersol Rand TH-100 RC rig with a 900cfm and 350psi compressor. Due to the large volumes of water encountered in the drill holes, a secondary booster compressor was used in the spring of 2005 to improve the penetration rate and the ability to complete the holes to desired depth.

The Phase II, III, and IV RC drilling was done by Layne and Major Drilling de Mexico, S.A. de C.V. (“Major”). Layne utilized a Drill Systems MDP 1500 track-mounted drill with a 900cfm and 350psi compressor, and later a Foremost Prospector buggy rig with 750cfm air. No booster compressor was used by Layne in either the Phase II or III programs. Major utilized Phase a track-mounted UDR-650 drill with RC- and core-drilling capabilities for II, III, and IV RC drilling.

During the Phase I drilling, the general practice was to drill all holes using a 5.25in. -diameter face-discharge hammer (“FDH”) bit to minimize sample loss. However, the high volumes of water encountered in many drill holes exceeded the capacity of the FDH, and the bit was changed to a standard Mission hammer, which has the interchange sub 1.5m above the bit. Even using the Mission hammer, the high water volumes stopped completion of several holes above the desired depth. A tricone bit was attempted in a few holes, but the penetration rate was very slow, and the holes were terminated before the desired depth was reached. When the booster compressor arrived in early 2005, it allowed completion of most of the remaining Phase I holes to desired depth using a hammer bit, although high water flows continued to be a problem.

The Phase II, III, and IV RC drilling was completed using only FDH bits. The Layne RC drill rig was used primarily at San Rafael, where most drill holes were completed at shallow depths, and lower volumes of water were present.

In all phases of drilling, the RC holes were drilled using a 5 1/8in to 5 ½in drill bit. Samples were collected every 5ft or 1.5m depending on the drill rig. The sample bags were pre-numbered at the drill site, and chip trays were made as drilling progressed. A geologist logged the hole at the drill site as the hole progressed. A review of the drill logs by MDA indicates that most of the Phase I RC logs contain comments concerning drilling problems, groundwater depths and flows, and approximate sample recovery. Very few of the Phase II, III, or IV RC drill logs comment on these same drilling issues. However, a separate field notebook was kept with similar comments.

10.2.2

Core Drilling by Platte River Gold

Major’s core drilling was done with a track-mounted UDR-650 drill. Core recoveries were generally greater than 95%, although lower recoveries occurred when drilling in strongly fractured and cavernous recrystallized limestone. The drill runs were the standard 10ft (3.05m) length, and continuous 1m or greater sticks of core were common.

Core was put into wooden core boxes (3m/box) with wood blocks marking drill depth (in meters) between each run. The core was picked up twice per day by PRG personnel and transported to a secure, gated facility in Cosalá, where it was logged, photographed, and split for samples. The geologic logs are fairly comprehensive, with columns for rock quality data (RQD and core recovery) and various geologic characteristics, including lithology, alteration, comments, and most significantly for the project, both total sulfide percentage and individual sulfide-mineral percentages. The geologist marked the intervals to be sampled, and a technician photographed and then split the core. Only the core to be sampled was photographed. After being logged and sampled, the core was stored outside at the secure Cosalá facility, with no overhead cover to protect the core from the weather. In 2009, the core was moved to a covered storage area at the same Cosalá facility.

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10.2.3

Drill-Hole Surveying by Platte River Gold

Drill-hole collars were surveyed with a Trimble total station survey instrument by Servicio Topographic (now Terra Group) of Hermosillo. The surveyor was on-site every two to three months and surveyed the new drill holes and any other significant surface disturbance. Collar surveys are available on 331 of the total 371 drill holes within the San Rafael – El Cajón area and all 14 of the surface trenches used in the San Rafael resource estimate. The majority of drill holes without collar surveys are located away from the San Rafael and El Cajón resource areas. Within the current resource model, collar surveys are not available for one San Rafael drill hole.

The majority of RC holes in Phase II and Phase III were surveyed down-hole with a Reflex EZ-Shot survey tool giving digital readings. The RC hole surveys were taken inside the drill rods due to a concern over losing the survey instrument in the open hole. This procedure provides accurate dips but meaningless azimuth readings due to the magnetic effects of the drill rods. As a result of the unusable azimuth readings, all vertical RC holes remain as undeviating vertical holes in the database. For angle holes, the azimuth reading in the database is the estimated collar reading determined by the geologist using a Brunton compass. In Phase I and Phase II, the drill site was flagged with a predetermined azimuth, and after the rig was set up, there was usually no further reading on orientation. During Phase III and Phase IV, the rig orientation was routinely checked by the responsible geologist using a Brunton compass. Corrections to actual rig orientation were noted and changed on the drill log before being entered into the database. While in the field, MDA did not observe the down-hole survey procedures at either the RC drill rig or the core rig.

None of the Phase II core holes were surveyed down-the-hole. The Phase III, and IV core down-hole surveys were taken below the drill rods, and the azimuth and dip readings were used in the database. The magnetic nature of some of the project lithologies, especially the dioritic intrusions on the east side of San Rafael, resulted in a number of azimuth readings which had significant deviations from either the collar set-up orientation or from adjacent down-hole readings. To aid in determining the “accepted” survey values, the magnetic field data, as recorded by the driller for each survey reading, were analyzed with particular attention to spurious magnetic field values significantly different from the general magnetic field. This information was recorded and compared to the coincident azimuth values. The result showed a high correlation between spurious magnetic field readings and erratic azimuth values. As a result of this analysis, 13 individual survey readings out of a total of over 1,000 were removed from the database.

10.3

Core Drilling by Americas

As of July 2015, Americas has completed a total of 162 core holes for 16,255m in the San Rafael deposit. This drilling was primarily shallow (100m average depth), with vertical and angle holes targeting extensions of mineralization to the northwest and along the east edges of the San Rafael deposit. Infill holes were also drilled to test and upgrade the resource classification.

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Americas’ core drilling in the San Rafael resource area included 10 geotechnical core holes completed in 2012 and 8 metallurgical holes completed in 2015. The geology from the geotechnical holes was used to guide the geologic model, but assay data were not available to be used in the resource estimate. Assay data was available for the metallurgical holes and was used in the current resource estimate.

Americas began core drilling within the San Rafael mineralized area in the fall of 2011. MAZA Drilling out of Mazatlán was the operator, and the rigs were drilling HQ-size core. Americas also drilled four other areas in the vicinity, including surface and underground targets at the La Verde mine area, and seven core holes were drilled in the El Cajón area from September to November 2010 to test geophysical anomalies.

Americas reported that in the summer of 2012 at San Rafael they were using Forage Val d’Or 38 rigs, drilling HQ core and reducing to NQ when necessary. For Americas metallurgical drilling in 2015, MAZA Drilling was the operator, and the rig was drilling PQ-size core.

The core was collected from the rig once or twice per day and transported to Americas’ camp outside of Cosalá. Geotechnical and geologic logging and photography of the core were completed in Cosalá.

The 2011 and 2012 drill collars were located by total-station surveying provided by Hector Martinez, a licensed surveyor. The 2014 and 2015 drill collars were surveyed with a total station or triangulation by Americas’ Nuestra Señora mine personel. Down-hole survey information for all drill programs was collected using Reflex survey tools.

10.4

San Rafael Core Recovery

PRG and Americas collected and recorded core-recovery data for all but three of the San Rafael core drill holes. The recovery data were based on the drill-run lengths, which in optimal drilling conditions were usually a standard 3.05m or 3m length, respectively for the PRG and Scorpio drilling. Drill runs were often smaller in zones of broken ground. The recovery data, both the measured total core pieces and the calculated recovery in percent, were recorded on the drill log and then entered into a spreadsheet for analysis.

The average core recovery for the San Rafael holes, based on 8,383 drill runs with calculated recovery data, is 92.2% while the median value is 98%. Removed from this data set are the initial collar intervals (drill runs starting at <3m depth), which often have low recoveries due to surficial soil and/or highly broken ground. Approximately 20% of the core footage has recoveries less than 90% and only 3% of the San Rafael drill runs had calculated recoveries less than 50%. Core recovery from San Rafael is good to excellent and can be used to support the resource estimate.

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11.0

SAMPLE PREPARATION, ANALYSES, AND SECURITY

   
11.1

Sampling Methods at San Rafael

The following information refers only to the work of PRG and Americas. MDA has no information on sample preparation, analyses, or security used by prior operators, but none of their samples are used in the resource estimate.

11.1.1

RC Sampling by Platte River Gold

Samples were collected every 5ft or 1.5m depending on the drill rig. The samples were split at the drill rig with a mechanical splitter for the dry samples and a rotating splitter for the wet samples. A Gilson splitter was used at the UDR drill rig, while a Jones three-tiered splitter was used by the Layne rig. PRG stated that for Phase I and Phase II, a 12.5% split was generally collected for the dry samples, while the wet samples were usually a 16.6% split. During Phase III, PRG changed to larger sample bags that allowed for a 41.7% dry split and a 20.8% wet sample split. The sample splits were varied at times when sample return was very low to assure sufficient sample size (PRG, 2006d). The change in sample split occurred between samples and never within an individual sample. In areas of bad ground and resulting poor sample recovery, such as observed by MDA during their site visit, it was at times necessary to collect all of the sample returned to have a sufficient sample size for assaying. PRG noted the drilling conditions and significant changes in sample procedures for each hole.

The split dry samples were collected in 11x17in cloth sample bags in Phases I and II. During Phase III, PRG changed to 20x24in cloth bags that fit inside a 5-gallon bucket. The wet samples were collected in 5-gallon buckets, with the excess water allowed to overflow the bucket. There was some loss of sample due to the overflow, which could have been substantial when drilling in high-water zones. At the end of the sample interval, the bucket was removed and replaced with a clean bucket for the next sample. In Phases I and II, the complete sample was collected by decanting the water and filling an 11x17in cloth sample bag with the remaining solids. During MDA’s site visit in 2007, it was observed that there was a minor amount of spillage and sample loss when filling the sample bag. MDA suggested PRG use larger sample bags to both avoid any sample spillage and simplify the sample collection. During Phase III, PRG changed to 20x24in cloth sample bags. Sample collection was greatly improved using the larger sample bag and bucket combination for both wet and dry samples, and larger sample splits were collected for RC samples.

Duplicate samples were collected every 20th sample for submission to a second laboratory. At the geologist’s discretion, duplicate samples were also collected within the mineralized zones and sent to the primary lab for analysis. The mineralized duplicate samples were taken every time from the same side of the splitter and were given unique sample numbers to assure anonymity.

When the RC hole was completed, the samples to be submitted for analysis were selected, and appropriate blanks and standards were inserted blind into the sample sequence. In general, one blank and one standard were inserted for every 40 samples. The samples for analysis were placed into large rice sacks, sealed, and moved to PRG’s secure facility in Cosalá, where they were stored until they were shipped to the laboratory.

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11.1.2

Core Sampling by Platte River Gold

PRG’s core samples were split in half using a hydraulic splitter, a traditional splitter, or a simple hammer; the hardness of the rock made splitting very difficult. No core was sawed. Half the sample intercept was put into 11x17in sample bags, while the remaining half was left in the core box. Once the core hole was completely logged, split, and sampled, appropriate standards and blanks were added to the sample stream, and the samples then shipped to ALS Minerals (“ALS”) in Hermosillo, Sonora, Mexico. The remaining split core was stored in Cosalá at a secure site, but until 2009 was only covered with waterproof tar paper. In 2009, the core was moved to a covered storage area at the same Cosalá facility.

11.2

San Rafael Core Sampling by Americas

The following information is based on a site visit by MDA in fall 2011 (Tietz and Lindholm, 2011) and information provided by Americas.

After geotechnical and geologic logging at a secure core processing facility near Cosalá, the core was marked for sampling. The geologist determined sample intervals using geology as a guide, but only mineralized core (where sulfides are noted) was sampled as of September, 2011. Core was split using a hydraulic splitter, although at the time of MDA’s 2011 site visit, some select pieces were cut using a diamond saw to provide a smooth surface for viewing sulfide mineralization. The mineralized zones are not generally highly fractured, and the split core appeared to provide an adequate sample split. Half core was sampled and bagged in poly cloth bags with sample numbers written on bags; no sample tag was inserted into the bag. Sample numbers were based on a pre-determined scheme that allowed for insertion of standards, blanks, and duplicates. Blanks and standards were added to the sample stream in a random fashion, with an approximate average of one standard, one blank, and one duplicate in every 20 samples. Samples were bagged in rice bags and stored for shipment by truck, using an independent contractor, to the ALS lab in Hermosillo.

11.3

San Rafael Sample Preparation and Analysis

All of PRG’s primary RC and core samples were sent to ALS for sample preparation and analysis. Silver, copper, lead, and zinc were analyzed by four-acid (HF-HNO3-HClO4-HCl) digestion and inductively coupled plasma atomic-emission spectrometry (“ICP-AES”) and/or AA finish (ALS method OG62). Gold was analyzed by 30g fire assay with atomic absorption finish (“FA-AA”). Sample preparation took place in ALS’s Hermosillo laboratory, and coarse rejects were stored in Hermosillo in a PRG warehouse. Pulps were sent by ALS from Hermosillo to the ALS assay laboratory in North Vancouver, B.C., Canada, for analysis.

RC rig duplicates were regularly checked by a second lab during drilling Phases I through III. PRG used SGS de México S.A. de C.V. (“SGS”) for the Phase I and II (years 2005 and 2006) second-lab check assaying of the ALS results. SGS has a sample preparation facility in Durango City, Durango, Mexico, and the pulps were sent to Toronto, Canada for analysis. SGS used a similar multi-acid digestion and ICP-AES analysis (SGS method ICP90A), for the base-metal and silver, and a FA-AA process for the gold. PRG used International Plasma Labs Limited (“IPL”) for the Phase III (year 2007) second-lab check assaying of the ALS results. IPL had a sample preparation facility in Hermosillo, Sonora, Mexico, and the pulps were sent to Richmond, British Columbia, Canada for analysis. IPL used a similar multi-acid digestion for the base-metal and silver analysis, and a FA-AA process for the gold. No second-lab check samples were submitted from PRG’s Phase IV samples.

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For drilling in 2011 and 2012, samples were delivered to ALS’s preparation laboratory in either Hermosillo or Chihuahua for drying, crushing, and pulverizing. ALS then shipped the pulps by air-freight to ALS in North Vancouver for assaying. Gold was analyzed by FA-AA on a 30g sample (ALS method Au-AA23). Silver, lead, zinc, and copper were analyzed by HF-HNO3-HClO4 digestion with HCl leach and inductively-coupled plasmanatomic-emission spectrometry (“ICP-AES”) or AA finish (ALS method OG62). For Scorpio’s (now Americas) 2014-2015 drilling, the samples were analyzed for gold by 30g FA-AA, and for 33 major, minor and trace elements by ICP-AES following a 4-acid digestion (ALS method ME-ICP61). Overlimits were re-analyzed by atomic absorption (ALS method OG62) for silver, copper, lead and zinc.

The QA/QC program used by Americas included standards, blanks, and duplicate pulps sent to a second laboratory as described in Section 12.3.

11.4

Security

For Americas’ drilling, samples are kept within a guarded compound until shipping. Samples are delivered by a company driver and vehicle to a contract shipper, who ships the samples to the preparation laboratory. A signature is acquired from the representative of the contract shipper. On rare occasions, Americas’ driver will deliver samples directly to the laboratory.

As of MDA’s visit in September 2011, the pre-2011 San Rafael core drilled by PRG was stored at the Cosalá geology and mine office compound on the west side of Cosalá. The post-2011San Rafael drill core is stored at the Camp 3 facility just outside of Cosalá.

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12.0

DATA VERIFICATION

All work completed by Scorpio before the corporate name change is attributed to Americas in this section.

12.1

San Rafael Project Database

The San Rafael project database contains geochemical and geologic data on 356 drill holes and 14 surface trenches. The data verification for the 2009 Technical Report (Ristorcelli et al., 2009) addressed all of the holes drilled by PRG. Holes drilled by Americas in 2011 and 2012 were verified in 2012 (Ristorcelli et al. 2012) while the 21 Americas holes drilled in 2014 and 2015 were verified for this current report.

The database contains geochemical data for 18,070 drill-hole and trench sample intervals within the San Rafael deposit. Where there are no geochemical data, the geochemical database lists the sample-interval footage, though with no geochemical data entered into the columns. However, at the bottom of some of the drill holes, the last drill interval entered corresponds to the last sample interval containing geochemical data and not the last drill interval at the actual bottom of the hole. This situation is common in the San Rafael deposit, where the bottom of many holes ends in visually unmineralized limestone or marble that was not sampled and assayed.

For all assay campaigns, less-than-detection-limit geochemical results are entered as a value equal to one half the detection limit (i.e., 0.005% Zn for a <0.01% Zn analytical result).

The drill-hole geologic data are in digital form, and the database contains lithologic and alteration mineralogy, along with detailed sulfide percentages, both total sulfide and individual sulfide species, for each sample interval.

The Americas database used in the resource estimate includes all corrections noted below and is considered adequate for use in future modeling and resource work.

12.1.1

Geochemical Database Audit

2006-2008

MDA audited the San Rafael Phase I and II data in November 2006 in preparation for the initial San Rafael resource estimate. Another audit was completed in September 2007 on the San Rafael and El Cajón drill data, and PRG’s Phase IV drill-hole geochemical data were audited in September 2008.

For the November 2006 audit, a total of 481 intervals containing 1,635 individual assays (18% of the San Rafael data) were checked for errors against the hard copy assay certificates received from the lab. Thirty errors were noted, though only two were deemed significant. Two Ag assays in drill hole SR22 are duplicate samples that were listed in the database as unique assays; they have been removed from the database. The remaining errors all were less-than-detection Ag and Pb values that were listed in the database as the detection level, i.e., a <1 ppm Ag lab assay was in the database as 1 ppm. None of these minor errors would have any effect on the resource estimate.

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The September 2007 audit consisted of electronically comparing the total database against a compilation of all assay data provided in digital form by the analytical laboratories. This analysis specifically checked both for numeric errors in the assay data and for sample data currently in the database though not supported by laboratory results. This work did not check for analytical results missing from the database. To augment this wholesale audit, an additional 430 sample intervals from the San Rafael and El Cajón deposits were individually checked for errors against laboratory assay certificates. Seventeen errors arose from these audits, while 36 additional gold assays were added to the database. Nine of the errors are considered significant, though all nine were from the same drill hole (EC19) and resulted from a shift in the sample sequence. The 36 added values all were from one early San Rafael drill hole (SR7).

The September 2008 audit of the Phase IV geochemical data consisted of electronically comparing the total database against a compilation of all assay data provided in digital form by the analytical laboratories. This analysis specifically checked both for numeric errors in the assay data and for sample data currently in the database though not supported by laboratory results. This work did not check for analytical results missing from the database. No additional errors arose from this latest audit.

2012

For Americas’ 2011 and 2012 drilling, MDA first manually audited the database sample-interval data against the geologic log sample data for 22 drill holes (about 21% of the drill data). Six errors were noted and corrected in the database. MDA’s assay audit consisted of electronically comparing the 2012 database against a compilation of all assay data provided in digital form by ALS. The audit specifically checked for numeric errors in the existing assay data along with proper correlation between sample ID and database “from-to” sample intervals. This work did not check for analytical results missing from the database. The audit of the complete assay database resulted in corrections to the data within 183 sample intervals. The high number of corrections primarily reflects swapped lead and zinc values for nine drill holes (119 sample intervals). There were also 15 incorrect assay values likely due to isolated data entry errors. All of the above errors were considered significant, and all have been corrected. MDA noted and corrected errors in the conversion of less-than-detection silver and copper values; none of these errors are considered significant.

2014 - 2015

MDA electronically compared the 2014-2015 drill data against a compilation of all assay data provided in digital form by ALS. The audit specifically checked for numeric errors in the existing assay data along with proper correlation between sample ID and database “from-to” sample intervals. One insignificant error was found in the analytical data and one error was found in the sample ID designation. Both were corrected for use in the current resource estimate.

12.1.2

Drill Collar Database Audit

2009

The collar coordinates for all of PRG’s San Rafael drill holes were checked against digital files supplied to PRG by the contracted surveyor (Servicio Topographic of Hermosillo). MDA found no errors in the existing database coordinates, but five El Cajón holes and one San Rafael hole were missing survey data and were likely not surveyed.

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MDA checked the drill-hole final depths listed in the database with the depths noted on the drill logs. Errors were noted in five holes, and these data points were corrected. In four of the cases, the final depth was in error by 1.5m, while the fifth was off by 3m. These changes had minimal effect on the geologic model and subsequent resource estimate.

2012

The collar coordinates for all of Americas’ San Rafael drill holes were checked against digital files supplied to Scorpio by the contracted surveyor (Terra Group of Hermosillo). MDA audited all of the database collar coordinates against the original spreadsheet data and found no errors in the drill-hole location data.

The drill-hole locations were also viewed on-screen and checked against the current topography. One collar location (SR275) did not coincide with the topographic surface. Americas re-surveyed the collar location for this drill hole and the new, corrected coordinates were entered into the database.

MDA checked the total-depth data and found a number of minor discrepancies with the drill logs and/or drill reports for holes in the sequence between SR294 through SR320. MDA corrected the total-depth data; none of these changes are considered significant.

2014 - 2015

The collar coordinates for Americas’ 2014 and 2015 San Rafael drill holes were checked against digital files supplied by Americas. MDA audited all of the database collar coordinates against the original spreadsheet data and found no errors in the drill-hole location data.

12.1.3

Down-Hole Survey Database Audit

2006-2008

The database contains down-hole survey data for the majority of the PRG RC holes and the Phase III and IV core holes. MDA audited the down-hole data for just the San Rafael drill holes.

MDA’s November 2006 audit of the Phase I and II down-hole survey data indicated that of the 114 total RC holes, PRG had down-hole survey data for 83 RC holes. The survey readings were taken at approximate 30m down-hole intervals, with the bottom reading usually taken at a depth 5 to 10m above the drill-hole’s final drill depth. MDA found no significant discrepancies between the survey field notes, the geologic logs, and the database for the 83 holes.

MDA’s September 2007 audit of the Phase III San Rafael down-hole surveys found no significant discrepancies between the survey field notes, the geologic logs, and the database.

MDA’s September 2008 audit of the Phase IV San Rafael down-hole surveys found no significant discrepancies between the survey field notes and the database. Six core holes from 2008 were not surveyed down-hole; the database contains the collar set-up orientation for these six holes.

All of the Phase I, II, and III RC down-hole survey readings were taken inside the drill rods, due to a concern over losing the survey instrument in the open hole, and the azimuth readings were considered meaningless due to the magnetic effects of the drill rods. As a result of the unusable azimuth readings, all vertical holes remain as undeviating vertical holes in the database. The one exception within the PRG database was drill hole SR10, where the actual down-hole dip readings were used. This database input error makes the hole trend to the north (using the standard 0o azimuth reading) at a steep dip that ends with a -86o dip reading at the drill hole’s 121m final depth. The database has been changed by removing the actual dip readings and using the standard 0o azimuth and -90o dip values. For RC angle holes, the azimuth data are based on a Brunton compass reading taken by the field geologist. For the majority of drill holes, this reading is taken on a flagged orientation at the drill site, which is then used by the drill crew to set up and orient the drill rig.

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The Phase III and IV core down-hole survey data contained a number of erratic azimuth readings which were attributed to the magnetic nature of some of the project lithologies, especially the dioritic intrusions both on the east side of San Rafael and also within the center of the El Cajón deposit. To aid in determining the “accepted” survey values, the magnetic field data, as recorded by the driller for each survey reading, were analyzed with particular attention to spurious magnetic field values significantly different from the general magnetic field. This information was recorded and compared to the coincident azimuth values. The result showed a high correlation between spurious magnetic field readings and erratic azimuth values. As a result of this analysis, 18 individual survey readings, out of a total of over 1,150, were removed from the database.

2012

There were down-hole survey readings for 126 of the 141 Americas holes drilled at San Rafael prior to the 2012 database audit. The drill holes were surveyed down hole using a Reflex EZ-shot survey instrument providing digital readings. The majority of holes had multiple readings taken at approximately 25m down-hole intervals. For holes with just one survey reading, the down-hole reading was usually collected near the bottom of the hole. MDA audited all of the survey data against the original survey measurements provided by Americas. As a result, MDA added survey data to seven drill holes and made minor corrections to the data in two drill holes. Besides the azimuth and dip data, the down-hole survey readings included magnetic field data, and one survey reading was removed from the database due to anomalous magnetic readings. None of these changes are considered significant because the corrected data did not vary in a material amount from the original survey readings or drill-collar set-up orientation.

2015

MDA was provided the raw Reflex EZ-shot down-hole survey data for all 21 core holes drilled in 2014 and 2015. Each hole had multiple readings taken at approximately 40m to 50m down-hole intervals. After removing two survey readings due spurious azimuth readings, which coincided with anomalous magnetic readings, the data was loaded into the database.

12.2

MDA Site Visits

Mr. Tietz visited the San Rafael project site from January 29 through February 3, 2007 and again from September 19 through September 21, 2007. The purpose of MDA’s visits were to a) collect drill hole and surface verification samples, b) validate existing data, and c) develop greater insight into the Zone 120 geology.

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Mr. Tietz and Mr. Lindholm also visited San Rafael from September 27 through October 1, 2011. During that visit, they reviewed the active drill program, including an evaluation of drilling, logging, and sampling procedures, core storage, and deposit geology. MDA surveyed five Americas drill-hole collars using a hand-held GPS.

Mr. Dyer reviewed the underground operations, process plant operations, mining and processing costs, and productivity at Nuestra Señora on June 4th to 5th, 2012.

The core handling and sampling procedures at San Rafael were considered to be of good quality, and no significant issues were apparent that would negatively impact the resource models.

Mr. Ristorcelli of MDA visited the site on June 12, 2015, for the current 2015 resource estimation update. MDA reviewed the current drill program with Americas and surveyed 13 drill-hole collars using a hand-held GPS.

On June 22 – 23rd, 2015, Mr. Peralta visited the San Rafael project and reviewed preliminary mine designs and mine plans being developed by Americas’ on-site engineering staff.

12.2.1

MDA Drill Collar Field Verification

During the various site visits, an effort was made by MDA, using a handheld GPS unit with a station accuracy ranging from 3 to 6m, to verify the locations of exploration holes drilled from surface locations PRG Phase I and II drill holes were located during the January 2007 site visit. In comparing the GPS coordinates to the database, there was a difference in hole locations of between 2 and 7m, with the greatest difference coinciding with those hole locations which also had the least precision in GPS accuracy. During the September 2007 field visit, MDA confirmed the locations of a number of Phase III drill holes relative to the detail of the drill map (about 5m). MDA considers that this adequately verified the PRG drill-hole locations.

Five of Americas’ 2011 drill holes were field verified during the 2011 MDA site visit while an additional thirteen drill holes from 2012 through 2015 were verified during the 2015 site visit. No significant differences in survey location were noted with the database values.

During the initial January 2007 site visit, and in every site visit thereafter, MDA noted that many of the drill-hole collar locations were no longer visibly evident on the ground. Road traffic and road reconstruction, along with the significant amount of slope failures and washouts during the rainy season, soon obscured or covered many of the hole locations. Even along those access spur roads with no further road traffic or slope failures, there are still a few hole locations that cannot be located accurately without resurveying the hole location. All drill sites, and especially the more historical drilling, are subject to road-cut slumping and collapse due to the very steep ground and high run-off during the summer rainy season.

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12.2.2

MDA Verification Core Sampling

During the January 2007 site visit, MDA collected a total of 12 core samples from strongly mineralized intervals in four San Rafael holes and four El Cajón holes. The core samples consisted of the remaining half core from an existing sample interval (usually around 1.5m in length). The samples were shipped to ALS for analysis on February 3, 2007. The samples were analyzed for Au, Ag, Cu, Pb, and Zn using the same analytical techniques used by PRG for their San Rafael-El Cajón samples. Besides serving as independent verification of the San Rafael and El Cajón mineralization, the MDA samples are also a quality-control check on the initial assay results. The results of the core sampling analysis are shown in Table 12.1.

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Table 12.1 MDA Core Sample Comparison of MDA versus PRG Results – San Rafael-El Cajón Project

      MDA PRG   MDA PRG   MDA PRG   MDA PRG   MDA PRG  
      Ag Ag Diff Pb Pb Diff Zn Zn Diff Cu Cu Diff Au Au Diff
MDA ID Hole ID Intercept (m) ppm ppm % % % % % % % % % % ppm ppm %
LVPT-1 SR70 116.5-117.8 75 76 1% 2.38 2.4 1% 6.6 5.1 -23% 0.02 NA   0.329 NA*  
LVPT-2 SR70  126-127 100 89 -11% 4.08 3.4 -17% 8.97 9.3 4% 0.03 NA   0.086 NA  
LVPT-3 SR73 121.6-123.1 238 255 7% 6.22 7.5 21% 9.16 10.2 11% 0.82 NA   0.529 NA  
LVPT-4 SR75  75.3-76.8 57 73 28% 0.78 0.7 -10% 2.51 1.7 -32% 0.07 NA   0.114 NA  
LVPT-5 SR78  70.5-72.0 113 120 6% 4.35 5.1 17% 7.4 6.3 -15% 0.02 NA   0.047 NA  
LVPT-6 SR78  76.6-78.1 236 40 -83% 2.5 2.2 -12% 3.41 6.3 85% 0.01 NA   0.041 NA  
LVPT-7 EC42 143.9-145.5 1250 1750 40% 4.48 5.3 18% 2.51 2.4 -4% 1.74 2.2 26% 0.557 0.86 54%
LVPT-8 EC42  153-154 836 716 -14% 6.41 6.7 5% 0.3 0.2 -33% 1.89 1.2 -37% 0.073 0.08 10%
LVPT-9 EC15 190.8-192.3 260 263 1% 0.29 NA   0.09 NA   0.49 0.6 22% 0.292 0.29 -1%
LVPT-10 EC22 224.7-225.9 81 112 38% 0.04 NA   0.04 NA   0.3 0.4 33% 0.1 0.19 90%
LVPT-11 EC22 230.3-231.8 709 615 -13% 0.01 NA   0.23 NA   2.51 2.3 -8% 0.62 0.7 13%
LVPT-12 EC26 191.5-192.8 250 313 25% 0.02 NA   0.05 NA   0.64 0.8 25% 0.423 0.47 11%
                                   
    Average 350.42 368.50 2% 3.90 4.16 3% 5.11 5.19 -1% 1.26 1.25 10% 0.34 0.43 30%

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12.2.3

MDA Verification Surface Sampling

MDA collected six surface samples from the San Rafael-El Cajón project area during the January 2007 site visit. Four San Rafael surface samples were collected from strongly oxidized “gossan” outcrops which are exposed within road cuts along the northeast side of the San Rafael deposit. These exposures are believed to be the up-dip portion of the main massive-sulfide zone. The two El Cajón samples were collected from the historical El Cajón mine, a small mine located within the main drainage on the northwest side of the deposit. The samples were shipped with the MDA core samples to ALS for analysis on February 3, 2007. The results of the surface sample analysis are shown in Table 12.2.

Table 12.2 j MDA Surface Sampling Results – San Rafael-El Cajón Projectp

        Ag Pb Zn Cu Au
MDA Sample ID Easting Northing Area ppm % % % ppm
LVPT-13 333395 2708720 El Cajon 320 0.05 0.17 1.16 0.479
LVPT-14 333380 2708720 El Cajon 186 0.74 0.06 1.69 0.096
LVPT-15 333689 2709783 San Rafael 76 1.3 0.03 0.15 0.233
LVPT-16 333715 2709793 San Rafael 9 0.22 0.25 0.25 0.086
LVPT-17 333760 2709726 San Rafael 60 0.17 0.43 0.45 0.119
LVPT-18 333792 2709729 San Rafael 76 1.76 0.5 0.04 0.22

12.3

Quality Assurance/Quality Control

MDA has no evidence that any QA/QC work was performed on the historical RC drilling samples collected by Hemlo. Noranda used both blanks and standards for their core drilling program, although there is no evidence of any check analysis on the core samples, as either random assay checks, or specific check assays on mineralized intervals.

12.3.1

QA/QC by Platte River Gold

PRG undertook a QA/QC program on their exploration drilling. MDA analyzed the results post-drilling. The QA/QC data evaluated here comprise results from standards, rig duplicates, and blanks.

Taylor (2006a, 2006b) conducted two statistical analyses of the assay data from the El Cajón and San Rafael areas. Those results are superseded by, but are included in the analysis in the present report.

PRG used “blind” duplicates, standards, and blanks for QA/QC since the start of the drilling in Phase I. For the Phase I and II RC drilling, one duplicate sample was taken at the RC drill rig every 20 samples and was sent to SGS as a check on ALS’s results. For the Phase III drilling, one duplicate sample was taken at the RC drill rig every 10 samples and was sent to IPL as a check on ALS’s results. A variable number of additional duplicate samples, collected at the RC rig at the geologists’ discretion, were taken in strongly mineralized zones and sent to ALS. The mineralized duplicates were moved to the end of the sample sequence and were treated as additional samples. Except for a limited test of 20 duplicate pulps from one San Rafael RC hole, there was no systematic re-analysis of high-grade assays using coarse rejects or pulps. No duplicate check analyses were completed on any of the core samples.

One blank was inserted into the sample sequence every 40 samples, with the original sample being moved to the end of the sequence and re-numbered. Blanks were inserted in mineralized intervals to check for contamination in sample preparation. Unmineralized rock was collected on site and was lightly crushed to resemble RC chips to be used for blanks in the RC drill program while unmineralized core was used as blank material in the core drilling program.

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One “standard” reference material pulp was inserted into the sequence every 40 samples, with the original sample being moved to the end of the sequence and re-numbered. Low-grade and high-grade reference materials were used for the “standard”. They were prepared by McClelland Laboratories, Inc. (“McClelland”) from material collected from the La Verde mine. Each reference material was analyzed five times by five different laboratories.

Two PRG RC holes were twinned with core holes to provide an additional check on the RC assay results. Both RC-core twin pairs are within the San Rafael deposit.

RC Drill Rig Duplicate

Two sets of duplicate samples were taken, both at the RC drill rig. These rig-duplicate sample analyses test the reproducibility and bias for the entire sampling system, thereby showing total sampling variance. MDA believes rig-duplicate samples are the best type of QA/QC samples.

One set of duplicate checks, collected at variable intervals at the geologist’s discretion, was analyzed at the same laboratory as the primary sample (ALS). PRG collected a total of 179 same-lab duplicate samples. This total included 30 duplicate trench samples taken from two trenches along the up-dip exposure of the San Rafael deposit. The data from these trenches are included within the current MDA resource estimate. From the rig-duplicate comparative statistics in Table 12.3, it is evident that differences in same-lab duplicate grades are not high, especially in light of the fact that these are drill-rig duplicates, which incorporate all error in the sampling procedures (except down-hole error, which is never evaluated). There is not much difference between well-mineralized and weakly mineralized sample material reproducibility. Overall, variability between samples remains the same at between 10 and 20% at all grades, except for some outliers which are scattered throughout the grade ranges. Increased variability is seen in the gold data, though this could be a reflection of the small sample size and generally low values. No significant biases are apparent in the data. Examples of the lack of bias and relatively low variability are seen in the relative difference and absolute relative difference graphs, respectively, of zinc in Figure 12.1 and Figure 12.2.

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Table 12.3 Descriptive Statistics of Platte River Same-Lab RC Rig Duplicates: Zn, Ag, and Pb

All zinc values (%)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 138 138   138 138 138
Median 1.67 1.67 2% 1.71 0% 8%
Mean 2.36 2.37 -1% 2.36 2% 16%
Std. Dev. 2.64 2.61   2.71    
CV 1.12 1.10   1.15    
Minimum 0.01 0.01   0.01 -93% 0%
Maximum 14.65 13.10   16.20 150% 150%

Greater than 0.3 % Zn (mean value)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 100 100   100 100 100
Median 2.63 2.63 3% 2.72 0% 7%
Mean 3.21 3.22 -1% 3.20 0% 14%
Std. Dev. 2.65 2.60   2.74    
CV 0.82 0.81   0.86    
Minimum 0.32 0.27   0.31 -93% 0%
Maximum 14.65 13.10   16.20 74% 93%

CV = Standard Deviation / Mean

All lead values (%)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 137 137   137 137 137
Median 0.49 0.46 9% 0.50 0% 8%
Mean 0.86 0.87 -1% 0.85 4% 22%
Std. Dev. 1.04 1.05   1.03    
CV 1.21 1.21   1.21    
Minimum 0.01 0.01   0.01 -305% 0%
Maximum 6.90 6.60   7.19 300% 305%

Greater than 0.3 % Pb (mean value)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 81 81   81 81 81
Median 1.18 1.19 -5% 1.13 -1% 9%
Mean 1.38 1.39 -2% 1.36 -5% 18%
Std. Dev. 1.08 1.10   1.08    
CV 0.79 0.79   0.79    
Minimum 0.30 0.28   0.21 -305% 0%
Maximum 6.90 6.60   7.19 42% 305%

All silver values (ppm)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 144 144   144 144 144
Median 27.00 27.00 -2% 26.50 0% 10%
Mean 50.97 50.95 0% 51.00 -4% 21%
Std. Dev. 83.19 82.31   85.46    
CV 1.63 1.62   1.68    
Minimum 0.75 0.50   1.00 -200% 0%
Maximum 654.00 651.00   657.00 150% 200%

Greater than 6 ppm Ag (mean value)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 123 123   123 123 123
Median 34.50 32.00 9% 35.00 0% 9%
Mean 59.09 59.02 0% 59.16 -1% 17%
Std. Dev. 87.50 86.55   90.00    
CV 1.48 1.47   1.52    
Minimum 6.00 5.00   6.00 -182% 0%
Maximum 654.00 651.00   657.00 116% 182%

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Table 12.3 Descriptive Statistics of Platte River Same-Lab RC Rig Duplicates (continued): Cu and Au

All copper values (%)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 39 39   39 39 39
Median 0.05 0.04 25% 0.05 0% 12%
Mean 0.24 0.24 0% 0.24 10% 32%
Std. Dev. 0.42 0.43   0.41    
CV 1.75 1.82   1.73    
Minimum 0.00 0.00   0.00 -105% 0%
Maximum 1.80 1.86   1.73 200% 200%

Greater than 0.05% Cu (mean value)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 19 19   19 19 19
Median 0.22 0.22 0% 0.22 0% 10%
Mean 0.46 0.46 0% 0.46 5% 23%
Std. Dev. 0.51 0.54   0.50    
CV 1.10 1.16   1.08    
Minimum 0.06 0.06   0.05 -82% 0%
Maximum 1.80 1.86   1.73 158% 158%

CV = Standard Deviation / Mean

All gold values (ppm)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 30 30   30 30 30
Median 0.12 0.12 15% 0.13 -2% 15%
Mean 0.29 0.30 -3% 0.29 14% 37%
Std. Dev. 0.35 0.38   0.34    
CV 1.18 1.27   1.18    
Minimum 0.01 0.01   0.01 -87% 0%
Maximum 1.21 1.58   1.12 200% 200%

Greater than 0.1 ppm Au (mean value)

  Mean Original Difference Duplicate Rel Diff.(%) Abs. Diff.(%)
Count 17 17   17 17 17
Median 0.28 0.29 -3% 0.28 -5% 20%
Mean 0.49 0.50 -4% 0.48 2% 31%
Std. Dev. 0.36 0.40   0.36    
CV 0.74 0.81   0.75    
Minimum 0.11 0.08   0.11 -87% 0%
Maximum 1.21 1.58   1.12 133% 133%

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Different-lab rig duplicate samples were sent to SGS (95 samples) and IPL (114 samples). Similar comparative statistics and relative difference graphs as shown above were evaluated for the different-lab rig duplicate samples. The variability is slightly higher, and there are minor negative biases (<10%) for the zinc, lead, and silver pairs for both the SGS and IPL analyses. Both labs also show increased variability and higher negative biases for the copper and gold pairs, but the small sample populations above economic cutoff for these elements does not allow for any meaningful determinations as to the quality of the copper and gold duplicate data.

In conclusion, MDA believes that the sampling on PRG’s RC rigs was reliable even with the occasional sampling variability noted in the field. Duplicate sampling should continue during project development.

Blank Sample Results

PRG made five different blank samples – four to be used for the RC drilling and a fifth for the core drilling. The four RC blanks (Blank PR1, Blank PR2, Blank PR3, and Blank PR4) were used separately for each of PRG’s four drill phases, though Blank PR4 was only used once due to the limited amount of Phase IV RC drilling. For the RC sample blanks, PRG collected about 400kg of rock (volcanic arenite for PR1 and weathered diorite for PR2, PR3, and PR4) and ran it through a crusher to ¼in., giving it an appearance similar to RC cuttings. These blank RC samples were placed in RC bags and then into the sample sequence that was sent to the lab. For the core blank sample (Blank Di) used in all four drill phases, blank diorite that had been drilled in previous campaigns was split in a core splitter and placed into a bag as if it was a normal core sample.

Descriptive statistics of the round-robin analyses of PRG’s five blanks are given in Table 12.4. Sample analytical precision and varying detection limits between the round-robin analyses and the blanks analyzed during the course of drilling create uncertainty in the determination of blank “failures,” especially for the Blank PR1 and PR2 programs.

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Table 12.4 Descriptive Statistics of Platte River Blanks

Blank PR1

  Au Ag Cu Pb Zn
  (ppm) (ppm) % % %
Count 8 8 8 5 5
Mean 0.006 2.375 0.005 0.002 0.005
Std. Dev. 0.003 1.482 0.004 0.001 0.001
CV 0.587 0.624 0.769 0.498 0.101
Minimum 0.003 0.500 0.001 0.001 0.005
Maximum 0.012 4.000 0.010 0.004 0.006

Blank PR2

  Au Ag Cu Pb Zn
  (ppm) (ppm) % % %
Count 9 9 9 9 9
Mean 0.003 2.000 0.0005 0.002 0.010
Std. Dev. 0.001 1.323 0.0000 0.002 0.001
CV 0.300 0.661 0.0000 0.772 0.076
Minimum 0.003 1.000 0.0005 0.001 0.009
Maximum 0.005 5.000 0.0005 0.006 0.011

Blank PR3

  Au Ag Cu Pb Zn
  (ppm) (ppm) % % %
Count 12 13 13 13 13
Mean 0.007 0.577 0.005 0.005 0.010
Std. Dev. 0.005 0.313 0.000 0.000 0.000
CV 0.709 0.542 0.000 0.000 0.000
Minimum 0.003 0.250 0.005 0.005 0.010
Maximum 0.013 1.000 0.005 0.005 0.010

Blank PR4

  Au Ag Cu Pb Zn
  (ppm) (ppm) % % %
Count 8 8 8 8 8
Mean 0.003 0.438 0.004 0.008 0.011
Std. Dev. 0.000 0.259 0.003 0.003 0.001
CV 0.000 0.591 0.929 0.356 0.134
Minimum 0.003 0.250 0.001 0.005 0.010
Maximum 0.003 1.000 0.010 0.010 0.014

Blank Di

  Au Ag Cu Pb Zn
  (ppm) (ppm) % % %
Count 15 15 20 20 20
Mean 0.004 0.500 0.005 0.005 0.010
Std. Dev. 0.002 0.000 0.001 0.000 0.003
CV 0.436 0.000 0.301 0.000 0.281
Minimum 0.003 0.500 0.002 0.005 0.008
Maximum 0.008 0.500 0.010 0.005 0.020

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The blank test results all show some possible sample contamination, mostly in isolated failures. Though there are significant and consistent levels of elevated zinc and lead in the Blank PR2 samples analyzed in the first half of 2006, MDA questions whether this was a result of sample preparation contamination, analytical contamination, or if the blanks are, in fact, not barren of metal. Figure 12.3 shows the Blank PR2 zinc analyses. Similar graphs were created for all metals for all five blank samples.

Figure 12.3 PR2 Blank Sample Analyses – Zinc

To aid in determining the probable cause of the systemic failures, the PR2 results for zinc and lead were evaluated in relation to the grade of the previous primary sample in the sample stream (Figure 12.4 and Figure 12.5) . It is clear that all of the blank failures correlate with high-grade previous-sample values, indicating lab contamination. The presence of non-barren blanks would be indicated if there were blank failures across the range of previous-sample values, but this is not the case. A 1% contamination limit (noted in yellow) is noted on both figures. This limit marks the % Zn or % Pb value equal to 1% of the previous-sample value (noted in red). MDA has limited the contamination boundary to a value of 0.01% for the previous-sample grades below 1% Zn, since this is the detection limit used in the blank test analyses. It is clear that above 0.5% Zn, the blanks are consistently above the 1% contamination boundary as noted by the moving averages for the blank samples (noted as light blue line). For zinc, there are no blank test results at the “accepted” 0.01% value; all tests show some contamination. Statistics on the blank/previous-sample ratio indicate that above 1% Zn, the blanks show an average contamination of 4% with a median value of 2%.

This pattern of Blank PR2 failures correlating with high previous-sample values occurs in all metals, though the level and number of failures are not as high as for the Zn results. Similar analyses on the three other blanks (PR1, PR3 and Di) show the pattern of increased failures with high previous grades is still present, though there are many less failures.

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Figure 12.4 Blank PR2 Zn versus Previous Sample Zn Grade

Figure 12.5 Blank PR2 Pb versus Previous Sample Pb Grade

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Standard Sample Results

PRG made their “standard” reference material from San Rafael-El Cajón project site rock. Four “standards” were created: standards 688 and 689 were used in all four drill phases, while standards 690 and 691 were used only in the Phase IV drill program. The procedures for making “standards” are described below (PRG, 2007 and 2008, personal communication):

Mineralized rock from mine dumps on the property was collected and separated, based on visual inspection, into two groups. Group 1 was low-grade (Standards 688 and 691), and Group 2 was high-grade (Standards 689 and 690).

   
  The two bulk samples, each weighing approximately 50kg, were shipped to McClelland in Sparks, Nevada.
   
McClelland crushed and then pulverized the samples (McClelland, 2006, written communication via PRG):

  PHASE 1 Preparation Procedure    
  1) stage crush 50kg samples to -10 mesh
  2)

blend and split each sample (50kg) in entirety 3 times to obtain three 1kg splits for triplicate head assay to confirm desired grade range

  3) save -10M rejects (~50kg) for phase 2 prep
  4) blend and split 1kg splits from 2 above to obtain 250g for pulverizing
  5) save -10M rejects from 4 above (~750g) for recombining with rejects from 3 above for phase 2 prep
  6) ring & puck pulverize each 250g split from 4 above to just passing 200M (100% - 200M)
  7) roll blend each 250g split of -200M feed to obtain 100g for head assay (3, 100g assay splits for each sample)
  8) save -200M rejects from 7 above (3 splits at 150g each, or 450g of each assay standard) for recombine with initial 50kg assay standard sample for phase 2 prep
  9) place all 100g initial triplicate assay pulps into pulp bags and label with sample # and assay split (A, B, C)
  10)

submit initial assay splits to Chemex [ALS] for triplicate Au, Ag, Cu assay---Au and Ag assays, fire assay fusion with gravimetric finish

           
  Wait for above assay results before proceeding with phase 2 prep to ensure that desired grade ranges and reproducibility are met
           
  PHASE 2 Preparation Procedure  
    1) recombine all rejects from phase 1 prep with the initial 50kg assay standard sample (at -10 and -200M)
  2)

pulverize (ring & puck) the entire quantity of each assay standard sample (50kg each) to 100% -200M as in phase 1

  3) after each 50kg assay standard sample is at -200M, do the following:
          A) roll blend each 50kg standard, flatten, and quarter (or use rotary splitter)
          B) separate each quarter (~12.5kg)
       

C)

roll blend each quarter of each standard and quarter again (~3.1kg/quarter)


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  D)

roll blend each 3.1kg quarter and weigh out 31, 100g assay samples from each of the 3.1kg quarters and place into pulp bags

  E)

when A-D above is complete, there should be 500 assay pulp bags each containing 100g assay splits for each assay standard sample---each assay pulp bag should be labeled with the assay standard sample designation only

  F)

randomly select 15 assay pulps from each standard and submit 10 to Chemex [ALS] for Au, Ag, Cu assay, and save 5 assay pulps for the client---Chemex [ALS] used fire assay fusion/AA finish for Au assays, and 4 acid digestion and AA or ICP analyses for Ag and Cu analyses


  Pulps from the two now-pulverized samples were sent out to seven laboratories for round-robin analyses.

MDA reviewed the round-robin data and found the results to be unconvincing. Some problems of variable grade results were caused by varying detection limits for the different laboratories. Some differences in grade were caused by one laboratory using different digestion methods; others might be due to one lab using a different analytical procedure. The assays that resulted from these different procedures were excluded from the round-robin grade assigned to the standard by MDA. The round-robin results selected by MDA to be representative are given in Table 12.5. MDA believes that additional round-robin testing should have been done to verify these grades and develop a higher confidence in the standards. The precision is not what it should be, and only gross errors might be determined from these standards’ data.

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Table 12.5 Descriptive Statistics of Platte River Standards

Std 688

  Au Ag Cu Pb Zn
  (ppm) (ppm) (%) (%) (%)
Count 10 30 35 15 15
Mean 0.025 37 0.218 0.030 0.051
Std. Dev. 0.002 5 0.014 0.001 0.007
CV 0.080 0.128 0.064 0.019 0.141
Minimum 0.023 29 0.190 0.028 0.040
Maximum 0.031 46 0.248 0.030 0.063

Std 689

  Au Ag Cu Pb Zn
  (ppm) (ppm) (%) (%) (%)
Count 27 35 35 8 14
Mean 0.383 473 1.834 0.091 2.259
Std. Dev. 0.115 41 0.204 0.006 0.062
CV 0.300 0.088 0.111 0.062 0.028
Minimum 0.227 360 1.540 0.080 2.124
Maximum 0.647 523 2.340 0.100 2.370

Std 690

  Au Ag Cu Pb Zn
  (ppm) (ppm) (%) (%) (%)
Count 36 24 30 31 31
Mean 1.238 819 2.667 0.019 0.343
Std. Dev. 0.332 27 0.068 0.004 0.030
CV 0.268 0.033 0.026 0.218 0.088
Minimum 0.704 774 2.580 0.011 0.290
Maximum 2.120 880 2.869 0.026 0.390

Std 691

  Au Ag Cu Pb Zn
  (ppm) (ppm) (%) (%) (%)
Count 30 36 36 31 31
Mean 0.110 82 0.330 0.017 0.068
Std. Dev. 0.051 9 0.032 0.004 0.007
CV 0.466 0.112 0.097 0.226 0.102
Minimum 0.034 67 0.270 0.011 0.057
Maximum 0.221 104 0.400 0.021 0.088

The standard results, illustrated in the example control chart shown in Figure 12.6, are described briefly below:

Standard 688: Zinc and lead values have a mean grade that reproduces the accepted round-robin values though there are a number of minor high failures that possibly reflect the lab precision at these low grades. Both metals show two significant failures within the 2008 Phase IV results which could be a result of lab clerical error since these same two samples show failures in silver, copper and gold. Silver grades show a consistently high bias, and there is some doubt as to the round-robin silver standard grades. Minor high failures, most reflective of the high bias, occur in the first three drill phase while the two significant high failures, mentioned above, occur within the 2008 Phase IV drilling. Copper results are reasonable with just one minor high failure outside of the two 2008 failures. The standard 688 gold grades show a number of high failures in the late 2006 – early 2007 drilling, these are not critical at these low grades.


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Standard 689: Zinc has an apparent low bias in the 2006-2007 analyses with no bias in the 2008 values. There are a number of failures, almost all below the accepted range, which is reflective of the low bias. There is one significant low failure in 2008 which is also observed in copper value for this same sample. Lead grades show good results, with just three minor failures. Silver had reasonable results with a minor high bias and just two minor failures. The copper results show a small negative bias, but that might be because the Inspectorate samples in the round robin are biased high relative to the other labs’ values. Gold grades give highly variable though reasonable results; all samples are within the accepted range with just a few minor failures.

     

Standard 690: Only twelve standard 690 samples were submitted for analyses. One sample shows significant failures in all five metals which could be the result of a lab clerical error. For the other eleven standard samples, the zinc, lead and silver grades are reasonable while the copper appears biased high, and the gold, though highly variable, appears biased low. There is one minor high failure in gold.

     

Standard 691: Only seven samples were submitted for analyses. The results for all five metals are reasonable though there is one high failure in gold.

Figure 12.6 Standard Analyses – Silver in Standard 689

Overall, MDA deems these standards and the results from these standards to be adequate, but some improvement can be made.

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Overflow and Head-Screen Analysis Results

PRG conducted overflow tests on three San Rafael RC holes. The testing was done to ascertain whether allowing the excess water and a significant portion of the fine, suspended solids to overflow the sample bucket compromised the validity of the sample submitted for assay. In concert with the overflow tests, head-screen analysis was conducted on two mineralized samples from San Rafael to determine the distribution of the various metals by size fraction. A large percentage of the metal content within the smaller-size fractions would indicate potential problems with excess water overflow.

The overflow vs. non-overflow sampling tests and head-screen results were provided to MDA in summary form. MDA has not evaluated the sample procedures or validated the original laboratory assay results that form the basis for the following conclusions.

The overflow vs. non-overflow assay results for 18 mineralized sample intervals within two holes in the San Rafael deposit (SR13 and SR14) indicate that the non-overflow samples, on average, showed a 10% increase in Ag grade and an 18% increase in both Pb and Zn grades. Of the 54 total analyses, only three “non-overflow” assays showed a lower grade than the typical overflow sample. These results for San Rafael Main Zone massive-sulfide mineralization strongly suggest that though the loss is not great, there is a systematic loss of metals that occurs when excess drill water is allowed to overflow the sample bucket.

An additional two sample intervals within one San Rafael drill hole (SR9) were also tested. One sample was from a strongly mineralized interval, while the second was only weakly mineralized. Due to the overall low assay values in the latter sample, the observed difference between the overflow and non-overflow sample resulted in significant, but unrealistic percentage differences, and this sample was not used in MDA’s analysis. The assay results for the strongly mineralized sample interval showed little difference in the Ag and Pb values, but the non-overflow sample was slightly higher (6%) in Zn than the overflow sample.

High-grade and low-grade drill samples from San Rafael were submitted to McClelland in Reno for head-screen analysis. For each sample, weights and metal distribution percentages were determined for seven size fractions ranging from +1.7mm to -75µm. The results for the low-grade San Rafael sample (about 1% Zn equivalent) indicated that the metal distribution is fairly uniform, though the smallest size fraction does contain the single highest percentage of Ag, Pb, and Zn, at 22.5, 30.0 and 23.3%, respectively. Conversely, the high-grade San Rafael sample (about 5% Zn equivalent) has over 60% of the Ag, Pb, and Zn in the three largest size fractions (+420µm), with the smallest size fraction containing between 15 and 20% of the total metals. These preliminary results suggest that metal loss due to the overflow of water and fines would be most significant in the lower-grade mineralization.

RC vs. Core Twin Results

PRG drilled two core holes as twins for two RC holes drilled previously by PRG. Table 12.6 shows the metal content for the comparable mineral intervals within each drill pair. For the first pair (SR27 and SR76), the core hole has a higher grade in all metals, while in the second pair (SR22 and SR78), the RC hole is of a higher grade. The individual assays within these mineral intervals do show some differences, which are attributed to the internal, natural variability within the mineralized zone. These initial results do not show an obvious bias, though additional testing would be warranted.

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Table 12.6 San Rafael Core/RC Twin Comparison

San Rafael Core/RC Twin Comparison
Hole ID Mineral Interval
(meters)
Thickness
(meters)
Ag
ppm
Pb
%
Zn
%
SR27 - RC
SR76 - core
74 - 100
76 - 105
26
29
31.3
37.5
0.93
1.21
3.24
4.38
      20% 30% 35%
SR22 - RC
SR78 - core
55 - 76
56 - 78
21
22
60.2
45.7
1.93
1.62
5.09
4.2
      -24% -16% -17%

12.3.2

QA/QC by Americas

For Americas’ drilling at San Rafael, one blank and one standard were inserted into every batch of approximately 40 samples sent to ALS. The blank material is the same material (Blank Di) used by PRG in 2007 and 2008 and consists of drill core from unmineralized diorite intrusive intervals.

The standard materials used in the 2011 and 2012 drill program were the same two standards (standard 690 and standard 691) used by PRG in 2007 and 2008. For the 2014 and 2015 drill program, Americas used three standards (PR 123, PB 128, and PB 130) purchased from a commercial laboratory (WCM Minerals). For both drill campaigns, the standard materials were pulps inserted into the core sample stream so these standard samples were not blind to the laboratory and did not monitor crushing and pulverizing.

The 2011 and 2012 duplicate sampling program consisted of re-analyses at ALS of the initial sample pulp, a replicate pulp made from the coarse reject, and a half-core sample from select sample intervals. Original sample pulps were also sent to Inspectorate as a check on ALS.

The 2014 and 2015 duplicate sampling program consisted of analyses at ALS of half-core samples from select sample intervals. Original sample pulps and replicate pulps made from the coarse reject were also sent to Inspectorate as a check on ALS.

Blanks – 2011 and 2012

MDA’s 2012 review of the results for 116 blank samples from the 2011 and 2012 drill program indicated one failure (a value five times the detection limit) in both the gold and silver values with no errors noted in the copper data. The failures noted were both at low levels and not considered significant. The lead and zinc data show a number of low-grade failures (all failures are <0.1% Zn or <0.05% Pb) in the blank samples inserted into the sample stream for holes SR231 through SR279. A preliminary evaluation comparing the blanks with the preceding samples in the sample stream indicates probable low-level contamination in the lead and zinc blanks that follow strongly mineralized (>3%Pb or Zn) sample intervals. A similar issue was noted in the 2009 technical report on PRG’s blank samples. The observed contamination is not considered to have a significant effect on the resource estimate.

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Blanks – 2014 and 2015

MDA’s 2015 review of the results for 28 blank samples from the 2014 and 2015 drill program indicates one significant failure that appears to be a clerical error. This sample has been removed from the data set. Only one other low-grade failure was noted in the lead data. This failure is not considered significant.

Standards – 2011 and 2012

For their 2011 and 2012 drill program, Americas used two standards (standards 690 and 691) that were created by PRG from San Rafael and El Cajón drill core. As discussed in Section 12.3.1, MDA had reviewed the round-robin analyses for these standards in 2009 and believes that due to rounding issues, there are concerns about the precision of the control values. This concern over precision, combined with the low grades for both lead and zinc in the two standards, reduces the usefulness of the standards results in evaluating the lead and zinc results.

Notwithstanding these concerns, MDA did evaluate the 41 analyses of standard 690 and 72 analyses of standard 691 for San Rafael. Both standards show large errors for one or two samples that appear to be clerical errors. Removing these large errors result in just one minor over-limit failure (a value greater than three standard deviations from the mean) in lead for standard 690 and no failures for standard 691. The gold values for standard 690 do show a 17% low bias, versus the standard control grade (1.04 g Au/t versus 1.26g Au/t). These standards were assayed at ALS in February through May, 2012 and indicate a possible low bias in the gold data for this time period. No other significant issues were noted in the standard results.

Standards – 2014 and 2015

Americas used three standards (standards PB123, PB128, and PB130) for their 2014 and 2015 drill program. These reference materials were purchased as pulps from WCM Minerals, a commercial laboratory in British Columbia. WCM Minerals provided the three standards’ round-robin analyses plus statistical summary (mean, standard deviation, etc.) for four metals (Ag, Cu, Pb, and Zn); no data was provided for gold.

A total of 47 standard pulp samples were included in the original sample stream shipped to ALS while one sample of each standard type was analyzed at Inspectorate. One standard sample analyzed at ALS that showed a significant failure likely due to clerical error was removed from the data set. The ALS results for the fifteen PB123 analyses show a persistent 7% low bias in the copper, lead, and zinc analyses, with numerous and consistent under-limit failures. The PB128 ALS data (a total of 22 analyses) has the same 7% low bias for copper, with four under-limit failures, while the lead and zinc values are reasonable with no failures. The silver results for these two standards show no significant bias and no individual failures. The PB130 results on a limited data set of nine ALS analyses show a minor 4% high bias in the zinc values and a consistent 9% high bias, with seven over-limit failures, in the silver analyses.

Due to the high bias in the PB130 silver values, Americas had ALS re-run 65 original sample pulps that occur on either side of the standards within the original sample stream. The results show an average 3% decrease in silver grade for the pulp re-runs. This difference is not considered significant.

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In general, the ALS results indicate a minor low bias in the base metals which would lend a conservative aspect to the assay data and resource estimate. The data set though is limited and all conclusions should be considered preliminary at this time.

Duplicate Samples – 2011 and 2012

A total of 84 sample pulps, 84 coarse rejects, and 118 split-core samples from the San Rafael 2011 and 2012 drill program were sent to ALS for duplicate analysis. The initial 32 core duplicate samples, with blind sample numbers, were included in the original sample stream. The remaining samples were sent in batches to ALS after the receipt of the original assay results.

No significant differences were noted between the original and duplicate values. Disregarding the weakly mineralized samples at sub-economic grades, where relative-difference evaluations are not practical, no evidence of a systematic bias was noted in the pulp and coarse reject for any of the five metals (silver, copper, gold, lead, and zinc). The average relative difference values for all five metals were all under ±5% for both types of duplicate analyses. The core analyses did show a small negative bias with the duplicate samples averaging 5% lower than the original assays. The total variability between duplicate pairs, as measured by the absolute relative difference values, averaged less than 10% for the pulp duplicates, 55 to 15% for the coarse reject pairs, and 20% to 30% for the split-core duplicate samples. These differences are acceptable for the various duplicate analyses.

As a check on ALS, Americas sent 64 original pulps to a second lab (Inspectorate) for analyses. The results show extreme differences between labs within the very low grades, but no significant differences or bias within sample pairs just below or at economic grade ranges. Average relative difference values for the limited number of mineralized sample pairs range from -9% for zinc to +3% for silver and lead. Average total variability ranges from 5% to 20%.

Duplicate Samples – 2014 and 2015

Nine split-core samples from the San Rafael 2014 drill program were sent to ALS for duplicate analysis. The split-core duplicates were given blind sample numbers and inserted into the original sample stream. No significant differences were noted between the original and duplicate values. The average relative difference values for all five metals were all under ±5% while the total variability between duplicate pairs, as measured by the absolute relative difference values, averaged 10% to 17%. These differences are acceptable for the split-core duplicate analyses, although the usefulness of the results is limited due to the small sample size and the relatively low-grade nature of all nine samples.

Thirteen original sample pulps and 19 coarse rejects were sent to Inspectorate as a check on ALS. No material differences were noted although, as with the split-core program, the usefulness of the results is limited due to the small data sets and the low-grade nature of the majority of duplicate sample intervals.

In-House Duplicate Samples – 2015

Although not considered an acceptable duplicate check sample under NI-43-101 guidelines, Americas submitted 205 pulps previously analyzed by ALS to their Cosalá mine laboratory. The primary purpose for these analyses was to test the implications of using the Cosalá laboratory for exploration samples. MDA evaluated the comparative data while at the site in June of 2015. There were significant differences within the lower-grade ranges, especially for silver and copper, that result from dissimilar detection limits and analytical precision at these low grade levels. When the low-grade samples were removed from the comparison, the average relative difference values for all four metals were all under ±5%, while the total variability between duplicate pairs, as measured by the absolute relative difference values, averaged less than 10%. For lead and zinc, the two labs compared quite well in the higher-grade range subsets with no material bias and total average variability less than 5%.

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12.3.3

QA/QC Conclusions and Recommendations

Overall PRG did a commendable job of demonstrating sample and analytical reliability for their San Rafael drill program. Although the QA/QC program could have been incrementally improved with the analysis of coarse reject and pulp duplicates, MDA concludes that the PRG data is suitable for use in the resource estimate.

Americas’ QA/QC program included blanks, standards, and pulp, coarse reject, and split-core duplicate samples. Some low-level contamination in the San Rafael lead and zinc values were noted, and there are minor concerns over the precision of the standard control values along with a minor low bias in the ALS base metal analyses. The duplicate program could be improved with the inclusion of more higher grade intervals, which would provide a better check on the potentially mineable material. None of these issues is considered significant, and MDA believes the Americas drill data for San Rafael are suitable for use in the resource estimate.

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13.0

MINERAL PROCESSING AND METALLURGICAL TESTING

The following information concerning metallurgical testing and mineral processing for the San Rafael Main Zone has been prepared by Mr. Randy Powell, Q.P.M., Metallurgist, of Randy Powell Consulting LLC (“Randy Powell”). The majority of the test work was conducted by SGS Lakefield Research Ltd. (“SGS Lakefield”) in Lakefield, Ontario, and by McClelland Laboratory Inc. (“McClelland”) in Sparks, Nevada.

Many parts of Section 13.0 are reproduced from previous reports. Randy Powell reviewed the information and edited it as needed. Much of the following text is taken from the Technical Report and Preliminary Economic Assessment Nuestra Señora, San Rafael, and El Cajón Deposits Sinaloa, Mexico by Dyer et al., (2013). It should be noted that the term “ore” appears in this metallurgical section. When used in this section, the word has no economic significance, but is used to describe well-mineralized rock being used as plant feed source.

As of late 2009, detailed flotation testing had been completed on the San Rafael Main Zone sulfide mineralization, using drill-hole composites located within the western portion of the San Rafael deposit. Only preliminary testing has been completed on three additional San Rafael metallurgical types, all located within the eastern portion of the deposit: oxide mineralization, Zone 120 sulfide mineralization (at depth beneath the Main Zone), and Main/Zone 120 overlap sulfide mineralization. The Main/Zone 120 overlap sulfide material type occurs where the near-surface, up-dip extension of the Main Zone massive sulfide is overprinted by the Zone 120 low-sulfide mineralization.

Pre-production metallurgical studies for various mineralized zones of the San Rafael Main Zone have included petrography, mineralogy, grindability determinations, batch-scale flotation and locked-cycle flotation tests. Although various consultants were engaged for specific investigations, the most recent series of processing test work was performed by SGS during August and September 2015. This test work included batch flotation testing and confirmation testing of a full sequential flow sheet through locked-cycle tests. Interim reports of these tests were delivered in September, 2015.

13.1

2005 Metallurgical Testing

The following information is taken from MDA’s 2012 Technical Report (Ristorcelli et al., 2012), with updated information provided by Jack McPartland, Q.P.M. McClelland completed all of PRG’s metallurgical testing. All samples were derived from either RC cuttings or from core samples, and all testing assumed processing by flotation.

In late 2005, McClelland tested flotation responses on composite mineralized samples from the San Rafael deposit. According to Armbrust and Chlumsky (2006), the flotation test on San Rafael indicated “that recoveries of about 85 percent for the lead and zinc are possible and that the silver recovery when combining the lead and zinc concentrates could be around 90 percent.”

13.2

January 2007 Metallurgical Testing

McClelland completed metallurgical test work on two composites of coarse rejects from RC drilling from San Rafael in early 2007 (McClelland, 2007). The following is a summary of this initial work. The main purpose for the tests was to develop a technique for selective flotation of lead-silver and zinc concentrates from the San Rafael sulfide ore type. The head assay for the two composites is shown in Table 13.1.

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Table 13.1 Head Grades, San Rafael Composites

Head Assays
Ore Composite Au g/t Ag g/t Cu % Pb % Zn % Fe %
San Rafael Oxide 0.275 122 0.23 0.54 0.38 15.8
San Rafael Sulfide 0.164 83 0.03 2.09 3.09 28.4

An initial bulk sulfide flotation test conducted on the San Rafael sulfide composite showed that the composite did not respond well to bulk sulfide flotation treatment. Although metal recoveries to the flotation concentrate were high, selectivity was very poor. Activation of contained gangue minerals (primarily iron sulfides) during flotation appears to have been a problem. Subsequent testing has been focused on development of a sequential flotation procedure and reagent scheme to allow for selective flotation of a precious metal-lead concentrate and a zinc concentrate. This testing includes over 20 sequential flotation tests. Overall, detailed testing on the San Rafael sulfide composite has shown that it is possible to selectively float a precious metal-lead concentrate that was less than 8% of the feed weight and contained over 75% of the total lead. Zinc flotation of the lead flotation rougher tailings showed that it was possible to generate a zinc concentrate that was less than 8% of the feed weight and contained over 75% of the total zinc. Silver values reporting to the lead and zinc rougher concentrates were equivalent to over 70% of the contained silver. Lead concentrate grades of as high as 52% Pb and 3,500 g Ag/t were achieved during cleaner flotation testing. Zinc concentrate grades of as high as 52% Zn were achieved. Results under optimum conditions showed that approximately 15% of the zinc, 25% of the lead, 30% of the silver, and 50% of the gold contained in the whole ore reported to the final tailings. Final (cleaner) concentrates containing 52% lead and 52% zinc were obtained. The cleaner lead concentrate under optimized conditions was approximately 3% of the feed weight, while the cleaner zinc concentrate was approximately 5% of the feed weight.

An initial bulk sulfide flotation test conducted on the San Rafael oxide composite indicated that the oxide ore did not respond particularly well to conventional flotation treatment at an 80% -106μm feed size. In general, metal recoveries and concentrate grades were low. These results were not altogether unexpected for an oxide ore. No further testing has been conducted on this composite. Additional testing will be required to determine if the oxide ore can be processed using flotation methods. Flotation processing of the oxidized ore is considered to be unlikely.

Follow-up flotation testing included further optimization of reagent additions and optimization of grind size. Finally, locked-cycle flotation testing was planned under the optimized conditions to confirm recoveries and to determine the effects of middlings (cleaner tailings) recycle.

13.3

Additional 2007-2008 Metallurgical Testing

McClelland completed additional metallurgical test work on three San Rafael drill-core composites during late 2007. One drill-core composite representing the San Rafael Main Zone sulfide mineralization type was initially prepared for testing. Sample intercepts from seven drill holes went into the composite. The San Rafael sulfide composite contained 1.8% Pb, 4.2% Zn, and 50 g Ag/t. Using this composite sample, extensive test work followed over a period of several years, as described below.

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Two additional composites representing Zone 120 sulfide and the Main/120 overlap sulfide mineralization were prepared later from drill core and drill-cuttings rejects for preliminary flotation testing. The Zone 120 sulfide composite contained 0.51g Au/t, 180g Ag/t, 0.61% Cu, 0.09% Pb, and 0.31% Zn, while the Main/120 overlap sulfide composite contained 0.29g Au/t, 108g Ag/t, 0.54% Cu, 0.26% Pb, and 6.07% Zn.

13.3.1

2008 San Rafael Main Zone Sulfide Composite

The following is taken from a preliminary report on the metallurgical testing by McClelland dated January 18, 2008 (McClelland, 2008). Sequential lead-zinc rougher cleaner flotation testing was conducted on the San Rafael Main Zone sulfide composite. The test used conditions optimized during earlier testing on a San Rafael Main Zone sulfide cuttings composite. The investigation was conducted to confirm response of the drill-core composite to flotation under the optimized conditions and to optimize grind size for flotation. Summary results from those tests are presented in Table 13.2.

Table 13.2 Summary Flotation Test Result-San Rafael Main Zone Sulfide Composite

  Weight Distribution Assays Recovery to Rougher Conc.
  Lead Concentrate Zinc Concentrate   % Pb g Ag/t % Zn % of Total
Test Cleaner Rougher Cleaner Rougher Ro. Tail Cl. Conc Ro. Tail Cl. Conc Ro. Tail Cl Conc Ro. Tail Pb Ag Zn
F6        2.4 6.6      5.0 7.0 86.4 55.88 0.38 689 32 44.42      1.85 80.3 35.4 56.3
F7        2.6 6.2      5.2 7.2 86.6 50.91 0.31 614 30 43.70      1.81 83.0 35.7 56.0
F13        2.7 5.9      6.8 8.3 85.8 50.84 0.27 550 25 43.65      1.16 85.2 31.8 71.2
F4        3.2 12.4      7.2 9.0 78.6 46.64 0.28 561 25 39.6*      0.78 87.3 45.2 71.7
F23        3.6 8.6      6.7 9.2 82.2 NA 0.20 509 25 NA      1.12 NA 42.8 NA
F5        3.3 12.0      5.9 9.1 78.9 40.45 0.26 511 27 46.5*      0.88 87.2 43.2 70.5

Results from batch flotation tests conducted on the San Rafael Main Zone sulfide composite confirmed amenability of the ore to flotation under the optimized conditions. Lead recoveries to the lead rougher concentrates of greater than 80% were achieved at grind sizes ranging from 80% -150 µm to 80% -45 µm. The ore was not particularly sensitive to grind size with respect to lead recovery. The lead cleaner concentrate grade tended to decrease with decreasing feed size, and ranged from 56% Pb at the 150 µm feed size to 40% Pb at the 53µm feed size, indicating some benefit to a coarser primary grind. The use of a coarser primary grind may require a regrinding stage ahead of the cleaning circuit. Silver recoveries to the same lead concentrates ranged from 35% at the 150 µm feed size, to 45% at the 53 µm grind size. Silver grade of the lead concentrate ranged from 689 g Ag/t to 509 g Ag/t and also tended to decrease with decreasing feed size. Zinc recoveries to the zinc rougher concentrate ranged from 56% at the 150 µm feed size, to 71% at the 75 µm and finer feed sizes. Grinding finer than 75µm in size did not significantly improve zinc recovery. Zinc cleaner concentrate grade ranged from 40% to 47% (calculated) and did not vary much with feed size.

13.3.2

San Rafael Main Zone Sulfide Composite Locked-Cycle Test

A locked-cycle flotation test series was conducted on the San Rafael Main Zone sulfide drill-core composite, at an 80% passing 53 µm feed size, to determine the effects of flotation cleaner tailings recycling. Conditions employed were the same as optimized during earlier batch flotation testing. The 53 µm grind size was selected to maximize silver recovery, and to a lesser degree zinc recovery. It should be noted that there was no apparent benefit to zinc recovery obtained by grinding finer than 75 µm during earlier batch flotation testing. The locked-cycle flotation test procedure consisted of a series of sequential batch flotation tests, where the flotation cleaner tailings (lead and zinc) from the preceding batch test were fed to the corresponding rougher flotation stage during the subsequent batch flotation test. Reclaim solution from the flotation rougher tailings was also recycled and used for grinding and lead rougher flotation during each subsequent batch flotation test. Results from the locked-cycle flotation test showed that, overall, lead and silver recoveries to the lead cleaner concentrate were slightly lower than the corresponding recoveries obtained in the rougher concentrates during batch flotation testing. The overall zinc recovery (63%) was significantly lower than that obtained during batch rougher flotation testing (71%). Zinc recovery to the zinc cleaner concentrates from the individual cycles during locked-cycle testing varied significantly, ranging from 52% to 72%. The cause for the large variations in zinc recovery from cycle to cycle is not understood at this time. Additional testing (discussed later in this section) was conducted to further optimize flotation of the San Rafael Main Zone sulfide ore type. At the time, it was expected that it should be possible to consistently obtain a zinc recovery of approximately 71% to the zinc cleaner concentrate. Follow-up batch flotation testing showed that it was possible to significantly improve zinc flotation from this ore type.

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13.3.3

Zone 120 and 120-Main Overlap Zone Composite Batch Flotation Test

A single batch flotation test was conducted on each of the Zone 120 composite and the Zone 120 mixed sulfide (Main/120 overlap) composite. Results from the Zone 120 composite flotation test showed higher than expected weight pulls of 23.4% to the rougher concentrate and 11.8% to the cleaner concentrate. The cleaner concentrate produced from the Zone 120 composite was 11.8% of the feed weight, assayed 1.53 g Au/t, 1,400 g Ag/t and 4.45% Cu, and represented gold, silver and copper recoveries of 70%, 81% and 86%, respectively.

Batch flotation test results showed that the Zone 120 mixed (Main/120 overlap) sulfide composite did not respond particularly well to the sequential lead-zinc flotation procedure optimized earlier for the San Rafael Main Zone composite. The Zone 120 mixed (Main/120 overlap) sulfide composite contained only 0.26% Pb, probably making production of a high-grade lead concentrate difficult. A substantial portion of the contained zinc (32% of total Zn) reported to the lead concentrates, limiting the zinc recovered in the zinc concentrate.

Further flotation-optimization testing was conducted at McClelland in 2008 on the same two composites and did not lead to a significant improvement in flotation response. The results indicated that additional testing is required to prove metals from Zone 120 can be recovered in a saleable concentrate. Additional testing of Main/120 overlap sulfide material containing a more representative lead content is also warranted.

13.4

2009 Metallurgical Work

McClelland completed additional flotation-optimization test work in early 2009 for the San Rafael Main Zone sulfide mineralization. The following discussion on results was issued by McClelland (2009):

Through continued optimization testing on the San Rafael Main Zone sulfide composite, McClelland determined that increasing copper sulfate addition (to 1.0 kg/t ore) during activation before zinc rougher flotation was effective in significantly increasing zinc recovery during flotation. Earlier testing on the San Rafael Main Zone sulfide cuttings composite had indicated the potential for generating a flotation cleaner concentrate with approximately 75% of the contained zinc. This earlier testing included optimization of the copper sulfate addition made for sphalerite activation before zinc rougher flotation.

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Results from those tests indicated no significant benefit to a copper sulfate addition of greater than 0.5kg/t ore. Subsequent testing conducted on the San Rafael Main Zone sulfide drill-core composite indicated that it was not possible to achieve a zinc recovery to a flotation rougher concentrate of greater than 70% when a 0.5 kg/t ore copper sulfate addition was employed. This work did not include re-optimization of the copper sulfate addition used before zinc rougher flotation to activate sphalerite. More recent follow-up testing focused on improving zinc recovery from the core composite during flotation showed that by increasing the copper sulfate addition used for zinc rougher flotation to 2.0 lb/ton ore, it is possible to generate a zinc cleaner concentrate with 81% of the total contained zinc, or a zinc rougher concentrate with 84% of the total contained zinc. These results indicate that, for the fresh drill-core composite, the higher copper sulfate addition was effective in significantly improving zinc recovery.

Results from two typical tests (distinguished here as test A and Test B) conducted during the optimization testing using 0.5 kg/t ore copper sulfate for activation are shown below in Table 13.3 and Table 13.4.

Table 13.3 Main Zone Sulfide Flotation Test, Sequential Lead-Zinc Rougher Flotation Test A, San Rafael Master Composite, P80 75µm Feed

  Weight Assay Metal Distribution, % of Total
Product % %Cu %Pb %Zn %Fe g Ag/t Pb Zn Ag
Pb Cl.Conc. 2.1 0.02 58.02 3.74 11.00 571 67.5 1.8 25.4
Pb Cl.Tail #2 0.4 0.02 5.21 5.17 30.10 73 1.2 0.5 0.6
Pb Cl.Tail #1 3.6 0.02 5.21 5.17 30.10 73 10.4 4.4 5.6
Zn Cl. Conc. 8.1 0.15 0.93 42.57 15.05 99 4.2 81.2 17.0
Zn Cl.Tail #2 0.4 0.13 1.29 5.77 30.20 105 0.3 0.5 0.9
Zn Cl.Tail #1 2.0 0.13 1.29 5.77 30.20 105 1.4 2.7 4.5
Ro. Tail 83.4 0.02 0.33 0.45 37.13 26 15.1 8.8 46.0
Composite 100.0 0.04 1.81 4.25 34.35 47 100.0 100.0 100.0

Table 13.4 Main Zone Sulfide Flotation Test, Sequential Lead-Zinc Rougher Flotation Test B San Rafael Master Composite, P80 75µm Feed

  Weight Assay Metal Distribution, % of Total
Product % %Cu %Pb %Zn %Fe g Ag/t Pb Zn Ag
Pb Cl.Conc. 2.1 0.03 53.64 4.35 12.10 732 67.9 2.1 29.1
Pb Cl.Tail #2 0.2 0.02 3.21 5.56 32.20 91 0.4 0.3 0.3
Pb Cl.Tail #1 5.4 0.02 3.21 5.56 32.20 91 10.5 7.0 9.3
Zn Cl. Conc. 9.0 0.13 0.65 38.50 16.50 117 3.5 81.1 19.9
Zn Cl.Tail #2 0.7 0.11 1.46 6.47 30.90 61 0.6 1.1 0.8
Zn Cl.Tail #1 2.1 0.11 1.46 6.47 30.90 61 1.8 3.2 2.4
Ro. Tail 80.5 0.03 0.31 0.28 36.43 25 15.2 5.3 38.1
Composite 100.0 0.04 1.66 4.27 33.74 53 100.0 100.0 100.0

These 2009 results indicate that a zinc cleaner concentrate could be produced, which would be approximately 9% of the feed weight, would assay approximately 40% Zn and would contain approximately 81% of the total zinc values. It is expected that through further cleaning of the zinc concentrate, higher concentrate grades (approaching 45% Zn) could be achieved.

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13.5

2009 – 2010 Metallurgical Testing by SGS Lakefield

SGS Lakefield received crushed material that had been previously prepared at McClelland as a composite from seven holes drilled in 2005 – 2007 (Lang, 2010). The composite samples were from hole numbers SR036, SR096, SR102, SR104, SR 170, SR172, and SR180. These drill holes lie near the middle of the Main Zone and the samples are from down-hole depths ranging from 41m to 136m. The sample intervals represent an aggregate thickness (not continuous) of about 10 to 11 meters. Refer to Figure 13.1 in Section 13.9 for a plan map depicting these and other metallurgical holes. The chemical composition of that composite is provided below in Table 13.5.

Table 13.5 Composite Sample Analysis (from Lang, 2010)

  Composite
Element SRComposite
Pb% 1.72
Cu% 0.02
Zn% 4.27
Aug/t 0.11
Agg/t 49.2
S% 35.0
Fe% 35.2

The 2009 – 2010 SGS Minerals testing further focused on developing and optimizing the bulk silver-lead and sequential-zinc style of flow sheet at the bench scale. The intention of that program was to improve silver recoveries and concentrate quality, specifically the zinc concentrate while maintaining or improving recovery. The information and flow sheet configuration developed in this 2009 study was intended to be used as part of an economic evaluation for processing of material.

Rougher flotation development work was the primary focus, with emphasis placed on improving lead and zinc selectivity, and improving silver units reporting into the lead concentrate. Once a suitable rougher reagent scheme was confirmed, additional batch cleaning tests were completed to explore the roles of reagent and pH on final concentrate grade and recovery relationships. Initial test work observed the effect of soda ash as a pH modifier with the attempt to improve silver recovery in the lead circuit. However, this was met with very high reagent consumption levels and poor concentrate qualities. Increasing the primary grind pH with lime from 8.0 to 9.1 with additional sodium cyanide (“NaCN”) significantly improved zinc concentrate quality (44% to ~55% Zn). Table 13.6 summarizes reagent consumptions for each circuit based on locked-cycle testing:

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Table 13.6 Reagent Consumption (from Lang, 2010)

Locked-cycle testing was completed by SGS to demonstrate circuit stability and provide metallurgical projections for the same San Rafael composite. The results illustrated in Table 13.7 below indicate separate lead and zinc concentrates can be produced with acceptable quality. The final lead concentrate assayed 58% Pb, and less than 5% Zn, at 78% recovery of lead. The final zinc concentrate assayed 51% Zn at 82% recovery and contained less than 1% Pb (Lang, 2010).

Table 13.7 SGS 2009 – 2010 Float Concentrate Grade and Recovery

In these tests the zinc mass recovery percentage was 6.4 to 8.1, while the lead cleaner concentrate mass recovery was 1.8% to 2.2% . Thus, these tests did follow up and confirm the 2009 results referred to above in Section 13.3.3.

One of the recommendations within the Lang (2010) report was to investigate the impacts to rougher flotation when using a coarser primary grind target. However, this would not be followed up until later test programs.

13.6

Scorpio 2011-2012 Metallurgical Testing

Additional testing was conducted by McClelland on another copper- and silver-bearing Zone 120 drill-core composite in 2011 and 2012 (Olson, 2013). Significant progress was made in reagent optimization and improvement in the flotation response of the Zone 120 material (Olson, 2013).

A total of 48 drill-core intervals from drill holes SR-197 and SR-202 were combined to make a Zone 120 master composite for flotation testing. Average head grades were 0.190g Au/t, 186g Ag/t, 0.58% Cu, 6.75% Fe, 0.09% Pb, and 0.17% Zn. Eighteen batch flotation tests were conducted to optimize conditions and reagents for producing a copper and silver concentrate. A locked-cycle flotation test series was also conducted, using the optimized conditions, to determine the effects of flotation product recycle.

McClelland drew the following conclusions (Olson, 2013):

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  The Zone 120 master composite responded well to flotation treatment using two different reagent schemes.
   
  Dominant copper and silver minerals present were chalcopyrite (CuFeS2) and miargyrite (AgSbS2).
   
  Indicated optimum primary grind size was 80% -150μm.
     
  Rougher concentrate regrinding to 80% -45μm significantly improved cleaner concentrate grade.

The locked-cycle flotation testing summarized above showed that it was possible to produce a final cleaner concentrate that was 2.1% of the feed weight, assayed 21.39% Cu and 5,978g Ag/t, and represented copper and silver recoveries of 84.7% and 72.1%, respectively.

13.7

2015 Americas Silver Metallurgical Testing

Additional core drilling was conducted in mid-year 2015, for the purposes of confirmation metallurgical testing. Eight core holes were drilled into the 400 South mineralized zone and mineralized intercepts were combined into a 2015 general composite for testing. The drill holes were SR-PMS-01 to SR-PMS-08 (see Figure 13.1) . Summary data for this composite is given in Table 13.8 below1:

Table 13.8 San Rafael Master Composite 2015 Analysis and Source
(data from Americas, 2015; g/t = gram per metric tonne)

The 2015 general composite was sent to the SGS laboratory for flotation test work. This test work began during the last week of July 2015, with the goals of confirming results obtained in 2010 testing, conducting locked-cycle testing, and confirming the flow sheet operating parameters.

Bench tests utilized a 2 kg sub-sample with a target primary grind of P80 equal to 50μm. The float scenario followed up on the previous work with similar reagents including lime, copper sulfate, Aero 3416, Aero 241, NaCN, and MIBC. As was the case in past testing, the lead was floated in the first stage, with zinc flotation of the ‘lead rougher’ tails. Both product streams underwent additional grinding and cleaning steps.

__________________________

1 E mail D. Dell to R. Powell, 9/11/15; Excel file ‘Compositos Sn Rafael Junio 2015’.

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General conditions for the initial lead float were:

  pH = 7.1;
     
  Rougher P80 = 50μm (with regrind =30μm);
     
  Reagents Lime, Aero 241 and NaCN; and
     
  Float time = 6 minutes (rougher).

General conditions for zinc flotation were:

  pH = 10.5
     
  P80 , regrind = 21μm
     
  Reagents Lime, Aero 241 and NaCN

As shown in Table 13.9 and Table 13.10, the initial test results included rougher and cleaner testing and did obtain similar results to those obtained in prior testing at SGS Lakefield in 2010.

Table 13.9 Summary Results 2015 Bench Float
(from Sarinas, 2015)

Table 13.10 Summary Results 2015 Bench Float Concentrate Assay
(from Sarinas, 2015)

After test F 5 was completed it was decided to run a locked-cycle test. This test ran through six cycles of nominal 2 kg charges feeding the ‘locked cycle’ process. After about three cycles, the recycled streams and flotation performance were in balance. In this case, the primary grind was 49μm. Aggregating finished product streams for cycles D, E, and F gave:

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  Head assays for lead and zinc respectively were 1.40% and 3.30%;
     
  Lead 2nd cleaner concentrate = 51.5% Pb with75.1% recovery in 2% mass pull;
     
  Zinc 3rd cleaner concentrate = 52.8% Zn with 86.3% recovery in 5.4% mass pull; and
     
  Silver recoveries were 28.4% in the lead concentrate and 19.2% in the zinc concentrate.

Following the successful locked-cycle test, it was decided to investigate a coarser primary grind. Using the 2015 master composite, the primary grind particle size was increased to a P80 of 101μm. Following this grinding, the sample was concentrated using the now standard procedure. The results from that test indicated very similar results to that listed above in Table 13.10:

  Rougher lead recovery = 84.4%;
     
  Rougher zinc recovery = 93.3%;
     
  Lead 2nd cleaner concentrate recovery = 72.6%;
     
  Zinc 3rd cleaner concentrate recovery = 76.3%; and
     
  Silver aggregate recovery in the aforementioned concentrates = 43.4%

Thus with this test it was confirmed that a coarser particle size (hence reduced energy use for grinding) had a minimal impact to rougher recovery and mass pull. It should be noted that the mineralogy work conducted in 2008, which suggested that a high liberation was achievable with less particle size reduction, was thus confirmed.

Subsequently a coarse grind locked-cycle test was conducted with encouraging results:

  Lead 2nd cleaner concentrate = 50.6% Pb with 74.7% recovery in 2.1% mass pull;
     
  Zinc 3rd cleaner concentrate = 52.5%, 85.0% recovery in 5.3% mass pull; and
     
  Silver recoveries were 28.0% in the lead concentrate and 20.4% in the zinc concentrate.

Independent from this flotation test work, a Bond Work index test was carried out in San Luis Potosi, Mexico at the Instituto de Metalurgia on the 2015 master composite, which had been shipped back from SGS Lakefield. The results of this test by Ojeda Escamilla (2015) indicated a Bond work index of 14.07 kWh/tonne.

13.8

Mineralogy

During the 2008 metallurgical testing program at McClelland, select ore and flotation product samples were submitted to Amtel Limited in London, Ontario, Canada, for mineralogical characterization. Included were representative subsamples from the 2008 San Rafael Main Zone sulfide drill-core composite. Select flotation middlings and concentrate products from the same samples were also submitted to aid in interpretation of flotation testing that was ongoing at the time. The samples submitted were subjected to general mineralogical analysis by scanning-electron microscopy, zinc and copper deportment analysis, and in the case of concentrate products, for concentrate diluents analysis.

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Zinc deportment in the San Rafael Main Zone sulfide composite was described as being principally sphalerite with lesser amounts of andradite. The sphalerite was described as being mostly liberated at a grind size of ~100μm. Estimated zinc recoveries by flotation at a nominal 75μm grind size were 88%-94%, with a weight pull of 5%-7%. These mineralogical observations indicated some upside potential for further optimization of zinc flotation conditions for the San Rafael Main Zone sulfide mineralization type.

Mineralogical work in 2010 in general confirmed the 2008 testing. Important points include the following comments:

Data from this work indicates fairly high liberation of sulfides, which could indicate an opportunity to operate at a coarser particle size than P80 of 53μm.

Sphalerite recovered into the lead concentrate was in general free and liberated (91%) with only 0.39% of the recovered sphalerite presenting as a binary with galena. As a result of such high levels of free sphalerite being recovered, it is indicative this is a result of pre-activation. Similarly a high proportion of sphalerite within the Zn rougher concentrate is free and liberated (84.7%) (Lang, 2010).

Zinc deportment in the Main/120 overlap sulfides (Zone 120 mixed sulfides) composite was described as also being mainly sphalerite, with a finer (~40μm) liberation size. Zinc recoveries by flotation predicted at that grind size (based on mineralogy) were 86%-95%. Flotation testing on the 2008 Main/120 overlap sulfides composite did not yield encouraging results (McClelland 2008).

Principal diluents adversely affecting zinc concentrate grades were noted as liberated iron sulfides, unliberated gangue, and liberated gangue. Lead activation of iron sulfides, probably by contained galena, was suggested as a possible cause for iron sulfide carry-over into the zinc concentrate products.

The Zone 120 sulfide composite was primarily a copper and silver ore sample, so the focus of analysis on that composite was copper deportment. Principal copper minerals were reported to be chalcopyrite and tetrahedrite, with trace amounts of bornite, covellite, and chalcocite noted. A copper recovery of ~86% with a mass pull of 3% - 4% was predicted for this ore type. That observation suggests the potential for a substantial improvement in flotation response for this ore type. Copper flotation testing on this composite to date has shown significant challenges with respect to concentrate dilution by gangue minerals. Further testing would be required to determine if the response predicted by mineralogical analysis could be achieved.

13.9

Metallurgy Summary

Metallurgical testing of material from San Rafael was conducted in seven main phases over a period of roughly ten years (2005 – 2015) on a total of nine composites of drill cuttings or drill-core at McClelland and SGS. For the 2015 testing eight new core holes were drilled in the San Rafael Main zone for a sulfide composite that was tested at SGS. The 2015 testing was focused exclusively on processing by flotation treatment. The seven phases of testing were:

  1.

2005 – 2007 testing on San Rafael oxide and sulfide RC drill-cuttings composites;

     
  2.

2007 – 2008 testing on San Rafael Main Zone sulfide mineralization drill-core composites;


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  3.

2008 testing on Zone 120 and Main/120 overlap sulfide drill core mineralization drill-core composites;

     
  4.

2008 – 2009 testing on San Rafael Main Zone sulfide mineralization drill-core composites;

     
  5.

Late 2009 and early 2010 testing on a Main Zone drill -core composite (drilled 2005 – 2007);

     
  6.

2011- 2012 Testing on the Zone 120 drill-core composite; and

     
  7.

2015 testing on San Rafael Main Zone sulfide using the 2015 drill-core composite.

Figure 13.1 illustrates the San Rafael mineral resource area and the metallurgical core holes that were the sources of the samples used for the various composites tested in 2005 through 2015.

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A summary table of all San Rafael flotation testing is provided in Table 13.11 below.

Table 13.11 Summary of San Rafael Flotation Testing

Metallurgical Summary - Scorpio Laboratory Flotation Testing
       Drill Holes for Particle Head Assay Rougher Recovery ConcGr,%  
Lab Date Composite ID Composite Size, P80 , Pb, Zn, Ag (%, Pb Zn Ag(cum.)  (Pb/Zn) Typeoftest
        micron %,g/t)          
M Late2005 'composite' Unk. Unk.   85 90 Unk. Unk. Scoping-bench
c                   float
C                    
l Early2007 'San Rafael 1DrillHole Unk. 2.09_3.09_83 75 75 70 52/52 Bench Flt.=20
e                    
l   Sulfide' RC Coarse Rejts.             Dev. Selectivity
l   San Rafael Oxide Unknown comp. 106 0.54_.38_122 'low' 'low' 'low' NA Bench scoping.
a     7CoreHoles;SR              
n

Late2007 San Rafael Main 36,96,102,104, 150-45 1.8_4.2_50 85.24 65.73 39.01 47.6/43.5 13BenchFlt.
    Zone Comp. 170,172,180              
  " " 75 1.8_4.2_50 73.81 84.45 36.60 50.4/39.1 Study opt. grind
L
a
b
  San Rafael 120 Z UNK. UNK. UNK. UNK. UNK. 81.00 NA 1BenchFlt.
    SR 120/Main UNK. UNK. UNK. UNK. UNK. UNK. NA I Bench Flt.
    Overlap                
      7CoreHoles;SR              
  2008 San Rafael Main 36,96,102,104, 53 1.8_4.2_50 <73 63 Unk. Unk. Locked Cycle Fl
    Zone Comp. 170,172,180              
    " "              
  Early2009 " " 75 1.81_4.25_47 77.9 83.90 52.50 58/42.6 2BenchFlt.:
    " " 75 1.66_4.27_53 78.4 84.30 62.20 53.6/38.5 AandB
      SR-197&SR-202;     Noreport.        
    San Rafael 120Z;               18 Benchfl.1
  2011-2012   48coresmpinto1 150  .09_.17_186 Curec= Unk. 72.10 NA  
    Cu mineralization.               Locked cycle.
      comp.     84.7        
                     
      7CoreHoles;SR             13BenchFlt.F1-
  Nov-Dec San Rafael Main 36,96,102,104, 42-77 1.72_4.27_49.2 86.5       F13.F23.Opt.
  2009 Zone 170,172,180       73.80 45.60 NA reagents
  Nov-Dec " " 55 " 77.6       Locked Cycle Fl
S 2009           81.80 47.80 57.6/51.1  
G
S
  2015Met SR_PMS-01to08. 5at50;1         51-75/50-  
  2015       1.22_2.99_40.4 86.2      87.4          50.3   6BenchFlt.
    Composite;8DH 400SouthZone at107         53  
    2015Met SR_PMS-01to08.              
  2015     51 " 75.1 86.30 48.60 51.7/52.8 Locked Cycle Fl#1
    Composite;8DH 400SouthZone              
    2015Met SR_PMS-01to08.              
  2015     106 " 74.7 85.00 48.40 50.6/52.5 Locked Cycle Fl#2
    Composite;8DH 400SouthZone              

As evidenced in the above table, bench top and locked-cycle testing conducted on the San Rafael Main Zone sulfide mineralization has shown this ore can be processed using a sequential flotation process to produce separate lead-silver and zinc concentrate products. The work included batch single-cycle float testing, reagent optimization, physical testing (Wi), and locked-cycle float testing.

Past testing on the Zone 120 and 120 Main Overlap Zone mineralization types was less successful than the work summarized above for the San Rafael Main Zone sulfide mineralization types. Early attempts at applying the flotation processing schemes optimized for the San Rafael mineralization types to the Zone 120 and Main/120 Overlap Zone mineralization types were not particularly successful. Significant progress was made in reagent optimization and improvement in the flotation response of the Zone 120 material during 2011-2012 testing of a Zone 120 composite. Locked-cycle flotation testing showed that it was possible to produce a final cleaner concentrate that was 2.1% of the feed weight, assayed 21.39% Cu and 5,978g Ag/t, and represented copper and silver recoveries of 84.7% and 72.1%, respectively.

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13.10

Production Metallurgical Performance

Given the above results, the following parameters are utilized for future planning and metal scheduling including cash flow modeling for the San Rafael Main Zone sulfide material:

  Primary grind, P80 : 100 – 110μm;
     
  Lead regrind target, P80 : 23 – 30μm;
     
  Zinc regrind target, P80 : 46 – 50μm;
     
  Recovery to lead concentrate: 76.3% Pb and 29.7% Ag;
     
  Recovery to zinc concentrate: 83.8% Zn and 17.9% Ag;
     
  Lead and Zinc concentrate grade: 51.9% Pb and 51.9% Zn, respectively;
     
  Rougher conditioning time, minutes: 5 – 7;
     
  Rougher float retention time, minutes: 6 – 10;
     
  Cleaner pre-float conditioning, minutes: 1 – 5; applicable to both Pb and Zn cleaning;
     
  Stages and minutes for cleaning Pb: 2; 3 – 5 minutes each stage;
     
  Stages and minutes for cleaning Zn: 3; 3 – 4 minutes each stage; and
     
  Reagent suite: as per SGS 2015 locked-cycle test # 1 and # 2.

It should be noted that actual recoveries may vary from those obtained in small scale laboratory testing. This variance can be attributed to a wide number of field variables that are not easily modeled in a laboratory setting.

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14.0

MINERAL RESOURCE ESTIMATES

This section describes the current resource estimate for the San Rafael deposit, which has been updated from those estimates reported by Ristorcelli et al. (2012) and Dyer et al. (2013).

14.1

Resource Classification

Although MDA is not an expert with respect to any of the following aspects of the project, MDA is not aware of any unusual environmental, permitting, legal, title, taxation, socio-economic, marketing, or political factors that may materially affect the San Rafael mineral resources as of the date of this report.

MDA classifies resources in order of increasing geological and quantitative confidence into Inferred, Indicated, and Measured categories to be in accordance with the “CIM Definition Standards - For Mineral Resources and Mineral Reserves” (2014) and therefore Canadian National Instrument 43-101. CIM mineral resource definitions are given below, with CIM’s explanatory material shown in italics:

Mineral Resource

Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource.

A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.

The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

Material of economic interest refers to diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals.

The term Mineral Resource covers mineralization and natural material of intrinsic economic interest which has been identified and estimated through exploration and sampling and within which Mineral Reserves may subsequently be defined by the consideration and application of Modifying Factors. The phrase ‘reasonable prospects for eventual economic extraction’ implies a judgment by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of economic extraction. The Qualified Person should consider and clearly state the basis for determining that the material has reasonable prospects for eventual economic extraction. Assumptions should include estimates of cutoff grade and geological continuity at the selected cut-off, metallurgical recovery, smelter payments, commodity price or product value, mining and processing method and mining, processing and general and administrative costs. The Qualified Person should state if the assessment is based on any direct evidence and testing.

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Interpretation of the word ‘eventual’ in this context may vary depending on the commodity or mineral involved. For example, for some coal, iron, potash deposits and other bulk minerals or commodities, it may be reasonable to envisage ‘eventual economic extraction’ as covering time periods in excess of 50 years. However, for many gold deposits, application of the concept would normally be restricted to perhaps 10 to 15 years, and frequently to much shorter periods of time.

Inferred Mineral Resource

An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.

An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

An Inferred Mineral Resource is based on limited information and sampling gathered through appropriate sampling techniques from locations such as outcrops, trenches, pits, workings and drill holes. Inferred Mineral Resources must not be included in the economic analysis, production schedules, or estimated mine life in publicly disclosed Pre-Feasibility or Feasibility Studies, or in the Life of Mine plans and cash flow models of developed mines. Inferred Mineral Resources can only be used in economic studies as provided under NI 43-101.

There may be circumstances, where appropriate sampling, testing, and other measurements are sufficient to demonstrate data integrity, geological and grade/quality continuity of a Measured or Indicated Mineral Resource, however, quality assurance and quality control, or other information may not meet all industry norms for the disclosure of an Indicated or Measured Mineral Resource. Under these circumstances, it may be reasonable for the Qualified Person to report an Inferred Mineral Resource if the Qualified Person has taken steps to verify the information meets the requirements of an Inferred Mineral Resource.

Indicated Mineral Resource

An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.

Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.

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An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.

Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Pre-Feasibility Study which can serve as the basis for major development decisions.

Measured Mineral Resource

A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.

Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.

A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.

Mineralization or other natural material of economic interest may be classified as a Measured Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such that the tonnage and grade or quality of the mineralization can be estimated to within close limits and that variation from the estimate would not significantly affect potential economic viability of the deposit. This category requires a high level of confidence in, and understanding of, the geology and controls of the mineral deposit.

Modifying Factors

Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

14.2

San Rafael Resource Estimate

The San Rafael drill-hole assay database was updated to include the 21 core holes drilled at San Rafael in 2014 and through July 1, 2015, since the 2012 MDA resource estimate. The current database contains 10,904 zinc assays, 10,904 silver assays, 10,372 lead assays, 7,583 copper assays, and 7,819 gold assays (listed in order of each metal’s economic importance) including data within the Silvia Maria concession.

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All of the San Rafael sample data were used in developing the San Rafael models, estimating the resource, and determining resource classification. However, the reported resource estimate for San Rafael specifically excludes the small fraction of the total deposit volume that lies within the Silvia Maria (title number 147043) concession, which Americas does not presently control.

For the previous resource estimates, MDA had audited the drill data, analyzed QA/QC data, made two site visits, and collected samples of drill core from the deposit. For the current 2015 estimation update, MDA audited the 2014-2015 Scorpio (now Americas) drill data (21 core holes), including an analysis of the QA/QC data, and a site visit was made in June, 2015 to review drilling and analytical procedures. No additional sampling was conducted by MDA because the 2014-2015 drill program did not target new geographic areas or encounter unique geologic features.

The work done by MDA for the 2015 resource estimate includes modifying the 2013 San Rafael geologic model and subsequent mineral-domain models. The zinc, lead, silver, copper, and gold mineral-domain models were largely defined by the geology in conjunction with assay grades and formed the basis of the resource models described and reported in this document.

The San Rafael resources reported here are based on Americas’ database as of July 4, 2015. The effective date of the San Rafael resource estimate is October 15, 2015.

14.2.1

Procedures

Upon completion of the database validation process, MDA modified the 2013 geologic cross-sections, which are evenly spaced on 25m intervals looking northwest at 330°. Individual sets of sections with unique mineral domains were created for zinc, lead, silver, copper, gold, and percent sulfide. The mineral domains represent distinct styles of mineralization with unique statistical characteristics. Lithology, oxidation, and the topographic surface were also plotted on the cross sections. The cross-sectional domains were sliced to long section on 3m intervals to coincide with the center of each row of blocks in the model. After reinterpretation, the long-section domains were used to code the block model to percent of block in each mineral domain.

The cross-sectional mineral domains for the five metals were used to code the samples. Quantile plots were made to assess validity of these domains and to determine capping levels; MDA capped 26 samples (4 zinc, 6 lead, 7 silver, 8 gold, and 1 copper). Compositing was done to 2m down-hole lengths, matching the model’s vertical block size, and honoring all material-type and mineral-domain boundaries. The sulfide domains were used by MDA to assign density values, ranging from 2.50g/cm 3 to 3.88g/cm 3, to the blocks.

The reported estimates were made using inverse distance to the third power. Ordinary kriging and nearest neighbor estimates were used for comparison and validation. MDA classified the San Rafael resources by a combination of distance to the nearest sample and the number of samples, while at the same time taking into account reliability of underlying data and understanding and use of the geology.

14.2.2

Geologic Background

The San Rafael deposit contains both distal and proximal skarn mineralization. The distal mineralization is represented by the Main Zone, a discrete, tabular, massive-sulfide body that is zinc, lead, and silver dominant. The Main Zone lies along the shallowly dipping volcanic/limestone contact, and though it does extend up-dip and crops out along the eastern edge of the deposit, it is most continuous and of highest grade at depth within the west half of the deposit. The proximal skarn mineralization is represented by the Zone 120 (named after the PRG discovery hole), where silver, copper, and gold mineralization is more common. The Zone 120 lies within the eastern portion of the San Rafael deposit and occurs primarily as irregular bedding and intrusive-contact-related bodies within skarn-altered limestone and the overlying volcanic units. The geologic and spatial relationships between the Main Zone and the Zone 120 indicate that Main Zone pre-dates the Zone 120 mineralization and is likely related to a different intrusive event.

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The Main Zone as currently defined has a 1,000m strike length, is 15 to 20m thick, and extends down dip continuously for 300m and discontinuously for up to 600m. The Main Zone deposit strikes 320o and dips variably between 10° and 30° towards the southwest. The Main Zone sulfide mineralization has been oxidized to a variable depth below surface, usually less than 30m, though in the northeast portion of the deposit oxidation can extend down dip for as much as 200m. Where oxidized, zinc grades are appreciably lower due to supergene leaching.

The great majority of the Main Zone zinc and lead mineralization consists of sphalerite and galena in the massive sulfide replacement, and the external contacts are usually coincident. Only occasionally do the limits of zinc and lead diverge from the massive sulfide. Besides zinc and lead, the Main Zone also contains appreciable silver but has apparently weak copper and gold mineralization. The actual extent and tenor of the copper and gold mineralization within the Main Zone are not well-defined, since many of the historical drill holes were not assayed for these elements. The silver, copper, and gold all occur primarily within the massive sulfide, but all three metals also extend in many instances outside the massive-sulfide limits.

The Zone 120 mineralization occurs not as a single horizon, but as multiple bedding- and intrusive-contact-related mineralized horizons. As currently defined, the Zone 120 mineralization occurs within a rock volume that is about 500m long, 250m wide, and extends to a depth of about 350m below the surface. The Zone 120 geologic setting and mineralogy are similar to the nearby El Cajón deposit in that the silver-copper-gold mineralization occurs primarily within weakly sulfide-bearing (<6% by volume) pyroxene skarn that is spatially and possibly genetically related to diorite intrusive sills and dikes.

The Zone 120 occurs primarily below the up-dip extension of the Main Zone zinc- and lead-rich massive sulfide, though both styles of mineralization do overlap in the near-surface. Below the massive sulfide, the Zone 120 mineralization occurs within moderately to strongly skarn-altered limestone. Near the surface, within and above the Main Zone, the Zone 120 mineralization occurs within weakly to moderately skarn-altered volcanic rocks. The Zone 120 skarn mineralization generally strikes 330°, and below the massive sulfide, the bedding-related mineralization dips steeply to the northeast at about 50°, reflecting the orientation of the host limestone formation and also the numerous sill-like dioritic intrusive bodies.

The Upper Zone mineralization occurs within the volcanic rocks about 50m to 100m stratigraphically above, and sub-parallel to, the up-dip extension of the Main Zone massive sulfide. The primary mineralized horizon within the Upper Zone is localized along bedding or possibly a sub-horizontal, bedding-parallel structure. The mineralized horizon can be up to 15m thick but often is about 5m thick. Within localized areas, multiple “stacked” mineralized horizons do occur, often spatially related to intrusive dikes, which cut through all rock types and extend to the topographic surface. Upper Zone mineralization is dominantly silver and gold, with decreased sulfide and base metal contents. The Upper Zone silver values are similar to those within the Zone 120, but the gold values are significantly higher than within the 120 or Main Zones. For assay coding and cross-sectional modeling, the Upper Zone has been included with the Zone 120 mineralization; both zones are within the eastern portion of the deposit. The Upper Zone’s genetic relationship to either the Main or Zone 120 is in question, but its metal content and spatial association with intrusive dikes suggest that the Upper Zone mineralization is an upper-level, distal expression of the Zone 120 mineralization.

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14.2.3

Geologic Model

The drill-hole information, including lithology, oxidation, metal grades, and percent sulfide, and the topographic surface were plotted on the northwest-looking cross sections. Individual sets of sections were modified for each of the five metals (zinc, lead, silver, copper, and gold) and percent sulfide.

14.2.3.1

Oxidation Model

The increased drill density within the eastern portion of the deposit has allowed for the modeling of an oxide surface that marks the transition between oxide- and sulfide-dominant mineralization. The oxide material is less dense than sulfide material, and there is more uncertainty as to the metallurgical characteristics and potential processing costs associated with the oxide mineralization. In general, the oxide surface is 20m-30m below topography, but in the central and northeast portions of the deposit, oxidation can occur up to 150-200m down-dip within the dominant southwest-dipping structures. Zinc is leached from the oxide material, so deep oxidation has a pronounced effect on zinc grades; there is a much less of an effect on the other four metals.

MDA modeled the oxide surface on the cross-sections then created an oxide solid used to code the block model on a block-in, block-out basis. The oxide coding is used to assign density to the model, and blocks coded as oxide are restricted to an Inferred-only resource classification.

14.2.3.2

Mineral Domain Models

Quantile plots of the five metals and percent sulfide were made to help define the natural populations of metal grades. The analytical population breaks indicated on the quantile plots were used to guide the creation of distinct mineral domains which controlled grade estimation and density.

The distribution plots of all five metals were first created using all deposit-wide assay data. Additional plots were then made after subdividing the assay data into west and east portions of the deposit, which correlate to the Main Zone mineralization in the west and to the Zone 120 and Upper Zone mineralization in the east. A review of the quantile plots, along with a consideration for the spatial location of the individual metal assays, resulted in the use of the deposit-wide populations of zinc and lead assays for further statistical analyses and sectional modeling. For silver, there was a statistical difference between the west and east assays, and two unique population sets were used in creating the silver mineral domains. Copper and gold mineralization occurs primarily within the eastern portion of the deposit, with limited data in the west, so the analytical breaks in the east assay populations were used in creating the deposit-wide copper and gold mineral domains. Table 14.1 shows the assay population grade ranges associated with each mineral domain while Table 14.2 provides general geologic descriptions for the mineral domains coded into the geologic model.

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Table 14.1 San Rafael Assay Populations

Metal Low-Grade Mid-Grade High-Grade VeryHigh-Grade
Zn(%) 0.4-2.6 2.6-9.0 >9.0 -
Pb(%) 0.18-1.0 1.0-4.0 4.0-10.0 >10.0
AgWest(g/t) 6-30 30-125 125-350 >350
AgEast(g/t) 15-60 60-145 145-500 >500
Cu(%) 0.035-0.135 0.135-0.37 0.37-1.40 >1.40
Au(g/t) 0.09-0.8 0.8-2.2 >2.2 -
sulfide(%) 6-50 >50 - -

Table 14.2 Coding and Description of the San Rafael Geologic Model

Mineral
Domain
Code
Description
100

Primarily low-grade zinc, lead, silver, gold, and copper and low sulfide; each element modeled independently. Associated with weak mineralization and alteration peripheral to the Main Zone massive sulfide and/or the Zone 120 intrusive-contact-related skarn.

200

Primarily high-sulfide and mid-grade, zinc, lead, silver, gold, and copper; each unique. Characterized by the more sulfide-rich Main Zone and moderate to strong skarn alteration within the Zone 120.

300

High-grade zinc, lead, silver, gold, and copper; each unique. Characterized by favorable horizons of increased base-metal sulfides within the Main Zone massive sulfide (sulfide domain 200) and strong intrusive- and bedding-related skarn alteration within the Zone 120.

400

Very high-grade lead and silver; each unique. Occurs as isolated zones primarily within the western area.

MDA used a combination of geology and logged sulfide percentages to model the percent sulfide domains. Zinc, lead, silver, copper, and gold, were each modeled separately using the geology and percent sulfide as a guide. The mineral domains as modeled and drawn on the cross sections are not strict grade shells, but are created using geologic information such as orientation, geometry, lithologic contacts, and continuity. Each of these domains represents a distinct style of mineralization with unique statistical characteristics. While all metals are spatially related in the deposit, they are not necessarily completely co-spatial, thereby requiring separate domains for each metal.

The cross sections were sliced to long section on 3m intervals to coincide with the center of each row of blocks in the model. The sliced sections were reinterpreted on those 3m intervals, and these interpretations were used to code the block model to percent of block in each mineral domain.

Typical cross sections of the San Rafael geologic model with the zinc mineral domains are given in Figure 14.1 and Figure 14.2.

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Figure 14.1 Section 300 San Rafael Geologic Model with Zinc Domains

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Figure 14.2 Section 625 San Rafael Geologic Model with Zinc Domains

14.2.4

Sample Coding and Compositing

The metal mineral-domain polygons were used to code drill and surface-trench samples. Quantile plots, along with domain statistics and spatial location of higher-grade samples, were made to assess validity of these domains and to determine capping levels for the individual mineral domain populations. After these analyses, MDA chose to cap 26 high-grade assays (4 zinc, 6 lead, 7 silver, 8 gold, and 1 copper) which MDA believe are not representative of their domain populations and which have a high probability of over-estimating local grade. The capped assays represent less than 0.2% of the assays used in the resource estimation. Assay descriptive statistics, including the capping levels and effects of capping on the assay statistics, are presented in Table 14.3 and Table 14.4.

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Table 14.3 San Rafael Mineral Domain Assay Descriptive Statistics – Silver and Gold

Ag West Assays - San Rafael

Silver     Mean Median     Min. Max.
  Assays Count     Std. Dev. CV*    
Domain     (g Ag/t) (g Ag/t)     (g Ag/t) (g Ag/t)
100 Ag 1234 14.7 12.0 9.9 0.67 0.25 70.0
  Ag Cap 1234 14.7 12.0 9.9 0.67 0.25 70.0
200 Ag 820 55.2 49.0 27.7 0.50 1.00 206.0
  Ag Cap 820 55.2 49.0 27.7 0.50 1.00 206.0
300 Ag 113 220.0 200.0 103.0 0.47 92.00 651.0
  Ag Cap 113 220.0 200.0 103.0 0.47 92.00 651.0
400 Ag 17 474.0 424.0 304.1 0.64 1.60 1060.0
  Ag Cap 17 474.0 424.0 304.1 0.64 1.60 1060.0
All Ag 2184 43.4 23.0 72.0 1.66 0.25 1060.0
  Ag Cap 2184 43.4 23.0 72.0 1.66 0.25 1060.0

Ag East Assays - San Rafael

Gold     Mean Median     Min. Max.
  Assays Count     Std. Dev. CV*    
Domain     (g Ag/t) (g Ag/t)     (g Ag/t) (g Ag/t)
100 Ag 1826 27.2 22.0 21.4 0.79 0.50 345.0
  Ag Cap 1826 27.2 22.0 20.7 0.76 0.50 225.0
200 Ag 515 91.7 87.0 45.6 0.50 1.00 411.0
  Ag Cap 515 91.5 87.0 44.6 0.49 1.00 350.0
300 Ag 346 279.6 237.0 152.2 0.54 8.00 1480.0
  Ag Cap 346 278.7 237.0 146.6 0.53 8.00 1000.0
400 Ag 52 1278.9 851.0 1266.6 0.99 134.00 8130.0
  Ag Cap 52 1161.5 851.0 824.1 0.71 134.00 3200.0
All Ag 2739 92.8 34.0 251.9 2.71 0.50 8130.0
  Ag Cap 2739 90.6 34.0 205.8 2.27 0.50 3200.0

Au Assays - San Rafael

Gold     Mean Median     Min. Max.
  Assays Count     Std. Dev. CV*    
Domain     (g Au/t) (g Au/t)     (g Au/t) (g Au/t)
100 Au 1815 0.230 0.164 0.201 0.870 0.003 2.250
  Au Cap 1815 0.228 0.164 0.187 0.820 0.003 1.200
200 Au 132 1.264 1.080 0.625 0.490 0.107 5.300
  Au Cap 132 1.243 1.080 0.518 0.420 0.107 3.000
300 Au 26 3.947 3.050 2.184 0.550 0.801 10.350
  Au Cap 26 3.947 3.050 2.184 0.550 0.801 10.350
All Au 1973 0.343 0.181 0.579 1.690 0.003 10.350
  Au Cap 1973 0.340 0.181 0.565 1.660 0.003 10.350

* Coefficient of Variation (Std.Dev. / Mean)

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Table 14.4 San Rafael Mineral Domain Assay Descriptive Statistics – Copper, Lead and Zinc

Cu Assays - San Rafael

Copper     Mean Median     Min. Max.
  Assays Count     Std. Dev. CV*    
Domain     (%Cu) (%Cu)     (%Cu) (%Cu)
100 Cu 1586 0.071 0.059 0.048 0.680 0.001 0.447
  Cu Cap 1586 0.071 0.059 0.048 0.680 0.001 0.447
200 Cu 391 0.229 0.209 0.108 0.470 0.015 0.733
  Cu Cap 391 0.229 0.209 0.108 0.470 0.015 0.733
300 Cu 313 0.892 0.613 1.145 1.280 0.029 12.750
  Cu Cap 313 0.871 0.613 0.958 1.100 0.029 8.000
All Cu 2290 0.203 0.083 0.494 2.430 0.001 12.750
  Cu Cap 2290 0.201 0.083 0.436 2.170 0.001 8.000

Pb Assays - San Rafael

Lead     Mean Median     Min. Max.
  Assays Count     Std. Dev. CV*    
Domain     (%Pb) (%Pb)     (%Pb) (%Pb)
100 Pb 2619 0.388 0.300 0.324 0.840 0.001 4.440
  Pb Cap 2619 0.388 0.300 0.324 0.840 0.001 4.440
200 Pb 877 1.800 1.540 1.041 0.580 0.020 11.750
  Pb Cap 877 1.794 1.540 0.999 0.560 0.020 7.500
300 Pb 84 6.760 5.990 2.689 0.400 2.420 17.250
  Pb Cap 84 6.716 5.990 2.567 0.380 2.420 12.500
400 Pb 13 12.491 12.500 8.407 0.670 0.165 30.000
  Pb Cap 13 12.491 12.500 8.407 0.670 0.165 30.000
All Pb 3593 0.906 0.428 1.542 1.700 0.001 30.000
  Pb Cap 3593 0.904 0.428 1.527 1.690 0.001 30.000

Zn Assays - San Rafael

Zinc     Mean Median     Min. Max.
  Assays Count     Std. Dev. CV*    
Domain     (%Zn) (%Zn)     (%Zn) (%Zn)
100 Zn 2862 0.790 0.560 0.714 0.900 0.008 9.380
  Zn Cap 2862 0.788 0.560 0.698 0.890 0.008 7.200
200 Zn 861 4.226 3.850 1.912 0.450 0.060 17.400
  Zn Cap 861 4.212 3.850 1.836 0.440 0.060 12.000
300 Zn 75 13.126 11.650 5.139 0.390 4.500 31.820
  Zn Cap 75 13.126 11.650 5.139 0.390 4.500 31.820
All Zn 3798 1.759 0.820 2.466 1.400 0.008 31.820
  Zn Cap 3798 1.755 0.820 2.447 1.390 0.008 31.820

* Coefficient of Variation (Std.Dev. / Mean)

Compositing was done to 2m down-hole lengths (the model’s vertical block size), honoring all material-type and mineral-domain boundaries. The volume inside each mineral domain was estimated using only composites from inside that domain. Composite descriptive statistics are presented in Table 14.5.

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Table 14.5 San Rafael Mineral Domain Composite Descriptive Statistics

Ag West Composites - San Rafael

Silver   Mean Median     Min. Max.
  Count     Std. Dev. CV*    
Domain   (g Ag/t) (g Ag/t)     (g Ag/t) (g Ag/t)
100 1007 14.8 13.0 8.70 0.588 0.5 65.0
200 682 55.3 49.4 23.70 0.420 4.7 164.0
300 113 225.1 197.0 106.30 0.445 98.0 651.0
400 17 459.3 424.0 301.20 0.652 1.8 1060.0
All 1819 47.2 24.7 76.90 1.627 0.5 1060.0

Ag East Composites - San Rafael

Silver   Mean Median     Min. Max.
  Count     Std. Dev. CV*    
Domain   (g Ag/t) (g Ag/t)     (g Ag/t) (g Ag/t)
100 1546 27.2 23.0 17.80 0.643 1.0 204.0
200 487 92.1 87.0 39.20 0.411 10.5 350.0
300 334 279.7 239.8 134.10 0.461 28.0 1000.0
400 47 1180.6 886.0 762.40 0.653 259.6 3197.0
All 2414 97.7 36.0 211.40 2.190 1.0 3197.0

Au Composites - San Rafael

Gold   Mean Median     Min. Max.
  Count     Std. Dev. CV*    
Domain   (g Au/t) (g Au/t)     (g Au/t) (g Au/t)
100 1553 0.229 0.174 0.168 0.733 0.003 1.200
200 137 1.247 1.080 0.488 0.389 0.182 3.000
300 26 4.104 3.048 2.300 0.542 2.230 10.350
All 1716 0.369 0.193 0.642 1.638 0.003 10.350

Cu Composites - San Rafael

Copper   Mean Median     Min. Max.
  Count     Std. Dev. CV*    
Domain   (%Cu) (%Cu)     (%Cu) (%Cu)
100 1314 0.070 0.060 0.040 0.573 0.000 0.350
200 367 0.230 0.220 0.090 0.392 0.030 0.640
300 274 0.860 0.630 0.850 1.016 0.120 7.930
All 1955 0.210 0.090 0.420 2.062 0.000 7.930

Pb Composites - San Rafael

Lead   Mean Median     Min. Max.
  Count     Std. Dev. CV*    
Domain   (%Pb) (%Pb)     (%Pb) (%Pb)
100 2148 0.390 0.310 0.280 0.713 0.000 3.600
200 753 1.800 1.580 0.890 0.493 0.180 7.500
300 82 6.930 6.220 2.640 0.363 2.420 12.500
400 12 12.460 13.210 9.190 0.689 0.190 30.000
All 2995 0.970 0.450 1.630 1.656 0.000 30.000

Zn Composites - San Rafael

Zinc   Mean Median     Min. Max.
  Count     Std. Dev. CV*    
Domain   (%Zn) (%Zn)     (%Zn) (%Zn)
100 2306 0.790 0.610 0.610 0.759 0.010 7.200
200 708 4.200 3.870 1.590 0.372 0.210 12.000
300 67 13.060 12.330 4.870 0.377 5.050 31.010
All 3081 1.840 0.900 2.490 1.354 0.010 31.010

* Coefficient of Variation (Std.Dev. / Mean)

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14.2.5

Density

The density values used in the updated resource estimate are based on 831 density measurements collected by PRG and Americas from diamond drill core in the San Rafael resource area. Approximately half (446 samples) of the density data was obtained in 2011, 2012, and 2015.

The majority of the San Rafael density measurements were taken on samples from drill holes located in the massive-sulfide Main Zone. Most of the PRG density samples were from the down-dip portion of the Main Zone, while Americas’ samples were from the down-dip and eastern up-dip portion where the Main Zone and Zone 120 over-lap. Americas also collected density samples from the up-dip portion of the Upper Zone and a limited number of density samples (39) from the oxidized portion of the deposit. Americas’ drilling did not target the deeper portions of the Zone 120, so the database contains only the 42 density samples collected by PRG. Additional density measurements for the oxide material and 120-Zone mineralization are recommended before an increase in resource classification should be considered.

MDA grouped the density data into high sulfide, low sulfide, outside sulfide, and oxide categories using the percent sulfide domains and the oxidation model. There is a separate “Outside Sulfide” (<6% sulfide) group for the Zone 120 due to the observed difference in density values between the Zone 120 and the Main and Upper Zone for this sulfide category. MDA reviewed all of the density data, and after eliminating 12 of these samples as being outliers or improbable, there were 819 samples used for the density analysis. Due to potential sample collection bias (the use of whole solid core versus fractured, possibly less-dense core), MDA reduced the mean values of each group by about 1% for use in the current resource estimate. The density values used in the estimate are shown in the “Model SG” column in Table 14.6.

Table 14.6 List of Density Values Used in San Rafael Model

Sulfide Zone Valid N Mean Median Std. Dev. Minimum Maximum Model SG
Oxide only 39 2.49 2.56 0.42 1.29 3.26 2.50
Outside Sulfide (<6%) 179 2.78 2.71 0.26 1.96 4.01 2.72
Outside Sulfide (<6%) 120 Zone 33 2.94 3.01 0.38 1.80 3.41 2.94
Low Sulfide (6% - 50%) 194 3.08 2.99 0.41 2.59 4.70 3.00
High Sulfide (>50%) 374 3.87 3.96 0.52 2.54 5.12 3.88
All Groups 819 3.34 3.19 0.67 1.29 5.12  

14.2.6

Resource Model and Estimation

The San Rafael resource block model replicates the relatively evenly distributed metal grades that are zoned within the generally tabular Main Zone and Upper Zone mineral domains. The block model also reflects the more variable metal grades and mineral-domain morphology within the Zone 120.

The resource has been estimated using the assay data from 214 core holes, 113 RC holes, and 14 trenches. As described in Section 14.2.3.2, the silver assays and composites have been subdivided into west and east populations. Silver grade estimation in the west area uses only silver west composites, while the east area uses only east composites. The other four metal assay and composite data sets have not been subdivided.

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Mineral domains aid in controlling the grade distribution, and the estimation used inverse distance to the second power (“ID3”) to interpolate grades into the domains, as this technique was judged to provide results superior to those obtained by ordinary kriging. Ordinary kriging and nearest neighbor estimates were also made as checks on the ID3 estimate. To aid in determining search distances, variograms for each metal were made in numerous orientations and at various lag lengths. MDA attempted to develop variogram profiles for each domain but found that the data were too limited in number and spatially erratic to construct useable variogram models. When the mineral domains were combined, variograms could be sufficiently modeled to aid in determining search distances for each of the estimation passes.

The Zone 120 mineral domains have a significantly different orientation than the sub-parallel Main Zone and Upper Zone mineralization, and as a result, two separate estimations were completed at San Rafael; one for the Main and Upper Zones and a second for the Zone 120. Both estimations used three search passes. Within the Main Zone, the initial 20m pass incorporated the surface trench data, while the latter two estimation passes excluded the trench samples. The estimation parameters for the Main Zone and Upper Zone are shown in Table 14.7 and for the Zone 120 in Table 14.8.

Table 14.7 San Rafael Main and Upper Zone: Estimation Parameters

Description Parameter
SEARCH ELLIPSOID PARAMETERS: All Metals
Search Bearing/Plunge/Tilt (all searches) 330o / 0o / 20o
First Pass Search (m): major/semimajor/minor (includes trench samples) 20/ 20 /10
   First Pass Samples: minimum/maximum/maximum per hole 2/ 10 / 4
Second Pass Search (m): major/semimajor/minor 120/ 120/ 30
   First Pass Samples: minimum/maximum/maximum per hole 2/ 12 / 4
Third Pass Search (m): major/semimajor/minor 250/ 250 / 63
   Third Pass Samples: minimum/maximum/maximum per hole 1 / 16 / 4

Table 14.8 San Rafael Zone 120: Estimation Parameters

Description Parameter
SEARCH ELLIPSOID PARAMETERS: All Metals
Search Bearing/Plunge/Tilt (all searches) 330o / 0o / -50o
First Pass Search (m): major/semimajor/minor (includes trench samples) 12/ 12 /12
   First Pass Samples: minimum/maximum/maximum per hole 2/ 9 / 4
Second Pass Search (m): major/semimajor/minor 120/ 120/ 30
   First Pass Samples: minimum/maximum/maximum per hole 2/ 12 / 4
Third Pass Search (m): major/semimajor/minor 250/ 250 / 63
   Third Pass Samples: minimum/maximum/maximum per hole 1 / 16/ 4

14.3

San Rafael Mineral Resources

MDA classified the San Rafael resources by a combination of distance to the nearest sample and the number of samples, while at the same time taking into account reliability of underlying data and understanding and use of the geology. All of the San Rafael sample data, including the limited data within the Silvia Maria concession not controlled by Americas, were used in resource classification, although the stated resource discussed below specifically excludes the small fraction of total deposit mineralization that lies within the Silvia Maria concession. The samples used for the classification criteria stated above are independent of the modeled domains. The criteria for resource classification are given in Table 14.9.

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Table 14.9 Criteria for San Rafael Resource Classification

Main and Upper Zone   
Measured   
Minimum no. of samples /minimum no. of holes / maximum distance (m) 2 / 1 / 12
Indicated   
Minimum no. of samples /minimum no. of holes / maximum distance (m) 2 / 1 / 30 or 2 / 2 / 50
 
Zone 120   
No Measured Resource   
Indicated   
Minimum no. of samples /minimum no. of holes / maximum distance (m) 2 / 1 / 25 or 2 / 2 / 40
 
All material not classified above but lying within the modeled mineralized domains is Inferred
 
Oxide Resource – All Inferred   

There are no Measured resources within the Zone 120 at this time, primarily due to limited density data and some spatial uncertainty in the mineral domain shape and extents. The maximum distance criteria for Indicated resources within the Zone 120 are less than for the Main and Upper Zones due to the greater variability in domain morphology and metal grades. There are no Measured or Indicated resources in the oxidized portion of the deposit due to limited density data and uncertain metallurgy and processing economics. None of these issues detracts from the overall confidence in the global project resource estimate, but they do detract from confidence which MDA believes is required for Measured and Indicated in these specific areas. The resource classifications will likely rise when those issues listed above are resolved.

Because of the requirement that the resource exists “in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction,” MDA is reporting the resources at approximate economic cutoff grades that are reasonable for deposits of this nature that will likely be mined primarily by underground methods. As such, some economic considerations were used to determine cutoff grades at which the resource is presented. MDA considered reasonable metal prices and extraction costs and recoveries, and then factored those down to account for that material that would become economic using internal cutoffs.

The San Rafael reported resource is shown in Table 14.10 while the total San Rafael resources are tabulated at various cutoff grades in Table 14.11. The reported resources are inclusive of reserves, which are stated in Section 15.5.

The stated resource is fully diluted to 2m by 3m by 2m blocks and is tabulated on a zinc-equivalent (“ZnEq”) cutoff grade of 2.5% ZnEq. All material, regardless of which metal is present and which is absent, is tabulated. Because multiple metals exist, but do not on a local scale necessarily co-exist, the ZnEq grade is used for tabulation. Using the individual metal grades of each block, the ZnEq grade is calculated using the following formula:

%ZnEq = %Zn + (0.947368 * %Pb) + (0.024561 * g Ag/t) + (2.947368 * %Cu) + (1.842105 * g Au/t)

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This formula is based on prices of US$0.95 per pound zinc, US$0.90 per pound lead, US$16.00 per ounce silver, US$2.80 per pound copper, and US$1,200.00 per ounce gold. No metal recoveries are applied, as this is the in situ resource. Typical cross sections through the San Rafael block model showing ZnEq block grades are given in Figure 14.3 and Figure 14.4.

The economic analysis used to establish Mineral Reserves is based on an underground-only mining scenario limited to the Main Zone. The decision as to the appropriate mining method(s) for other areas within the San Rafael deposit awaits further evaluation, and there is the potential that a combination of open-pit and underground methods would be optimal. The 2m by 3m by 2m block size was used to provide the operator the ability to evaluate the deposit using underground mining methods, but this block size likely understates the dilution expected from standard open-pit mining methods. For evaluating open-pit methods, re-blocking to a more appropriate larger block size with resulting increased block dilution should be used. If open-pit mining methods are chosen for a portion of the deposit, the resource estimate used in the economic evaluation could be re-stated using a lower cutoff grade.

Table 14.11 provides the resource numbers at various ZnEq cutoff grades to be used in further optimization studies.

Table 14.10 San Rafael Reported Resource

Measured and Indicated Resources (2.5%ZnEq cut-off)

Class Tonnes Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
    (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
Measured 3,284,000 2.95 1.32 103.7 0.09 0.19 213,815,000 95,254,000 10,948,000 6,541,000 20,000 7.35
Indicated 6,812,000 2.24 0.92 95.6 0.15 0.16 336,179,000 138,354,000 20,934,000 23,108,000 35,000 6.21
M+I 10,096,000 2.47 1.05 98.2 0.13 0.17 549,994,000 233,608,000 31,882,000 29,648,000 54,000 6.58

Inferred Resource (2.5%ZnEq cut-off)

Class Tonnes Zinc Lead Silver Copper Gold  Zinc Lead Silver Copper Gold ZnEq
    (%) (%) (g Ag/t) (%) (g Au/t)  (lbs) (lbs) (oz) (lbs) (oz) (%)
Inferred 1,051,000 0.28 1.24 111.6 0.12 0.30 6,422,000 28,701,000 3,770,000 2,827,000 10,000 5.11

Due to the Zone 120’s unique geologic setting and mineralization style, MDA sub-divided the total San Rafael resources and report the Zone 120 and Main Zone resources separately. The Main Zone resources, which include the Upper Zone mineralization, are tabulated in Table 14.12 by ZnEq cutoffs. The Zone 120 resources are tabulated in Table 14.13 and Table 14.14 by ZnEq and silver-equivalent (“AgEq”) cutoffs, respectively.

The Main Zone resources (Table 14.12) and the Zone 120 resources tabulated by ZnEq cutoffs (Table 14.13) use the same fully diluted blocks (2m by 3m by 2m) and the same metal prices and %ZnEq formula as for the total San Rafael resource. Table 14.12 and Table 14.13 provide the resource estimates at various ZnEq cutoff grades to better assess grade-tonnage curves.

The Zone 120 resources are also tabulated using AgEq cutoff grades (Table 14.14), due to the dominance of silver grades over zinc grades within the Zone 120 proximal skarn. The same metal prices were used for this tabulation as for the total San Rafael deposit. Using the individual metal grades of each block, the AgEq grade is calculated using the following formula:

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g AgEq/t = g Ag/t + (40.714286 * %Zn) + (38.571429 * %Pb) + (120 * %Cu) + (75 * g Au/t)

The stated Zone 120 resource in Table 14.14 is tabulated using a 90g AgEq/t cutoff grade (comparable to a 2.5% ZnEq cutoff grade at reported prices). Table 14.14 provides the resource numbers at various AgEq cutoff grades to better assess grade-tonnage curves.

Table 14.11 San Rafael Total Resource ZnEq Tabulation

Measured Material:

Cutoff   Zinc Lead Silver Copper Gold Zinc  Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz)  (lbs) (oz) (%)
1.00 5,545,000 2.03 0.90 69.5 0.06 0.14 248,676,000 109,594,000 12,399,000 7,203,000 25,000 5.02
1.20 5,122,000 2.16 0.96 74.2 0.06 0.15 244,271,000 107,915,000 12,224,000 7,120,000 24,000 5.35
1.40 4,726,000 2.30 1.02 79.1 0.07 0.15 239,395,000 105,971,000 12,026,000 7,029,000 23,000 5.68
1.50 4,548,000 2.36 1.05 81.6 0.07 0.16 236,895,000 104,971,000 11,930,000 6,980,000 23,000 5.85
1.60 4,380,000 2.43 1.08 84.0 0.07 0.16 234,415,000 103,961,000 11,830,000 6,931,000 22,000 6.02
1.80 4,091,000 2.55 1.13 88.5 0.08 0.17 229,701,000 102,069,000 11,643,000 6,845,000 22,000 6.32
2.00 3,823,000 2.67 1.19 93.1 0.08 0.17 224,821,000 100,054,000 11,445,000 6,759,000 21,000 6.63
2.50 3,284,000 2.95 1.32 103.7 0.09 0.19 213,815,000 95,254,000 10,948,000 6,541,000 20,000 7.35
3.00 2,887,000 3.21 1.43 113.0 0.10 0.20 204,030,000 90,990,000 10,485,000 6,329,000 18,000 7.99
3.50 2,597,000 3.42 1.53 120.7 0.11 0.20 195,801,000 87,316,000 10,073,000 6,143,000 17,000 8.52
4.00 2,364,000 3.60 1.61 127.7 0.11 0.21 187,862,000 83,956,000 9,708,000 5,963,000 16,000 8.99
4.50 2,163,000 3.77 1.69 134.7 0.12 0.22 179,574,000 80,668,000 9,367,000 5,790,000 15,000 9.43
5.00 1,972,000 3.92 1.77 142.3 0.13 0.22 170,333,000 77,073,000 9,025,000 5,630,000 14,000 9.88
6.00 1,595,000 4.20 1.94 162.1 0.15 0.25 147,733,000 68,296,000 8,313,000 5,323,000 13,000 10.92
7.00 1,227,000 4.48 2.14 190.5 0.19 0.29 121,305,000 57,775,000 7,516,000 5,010,000 11,000 12.25
8.00 915,000 4.74 2.34 229.5 0.23 0.33 95,568,000 47,193,000 6,752,000 4,671,000 10,000 13.89
9.00 695,000 4.94 2.53 273.0 0.28 0.39 75,764,000 38,854,000 6,104,000 4,343,000 9,000 15.61
10.00 549,000 5.14 2.71 314.5 0.33 0.45 62,256,000 32,824,000 5,554,000 4,022,000 8,000 17.25

Indicated Material:

Cutoff   Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
1.00 15,126,000 1.31 0.53 56.1 0.10 0.10 438,288,000 178,326,000 27,266,000 32,060,000 50,000 3.67
1.20 13,291,000 1.45 0.59 61.1 0.10 0.11 425,770,000 174,281,000 26,091,000 30,318,000 48,000 4.03
1.40 11,880,000 1.57 0.65 65.9 0.11 0.12 412,327,000 169,452,000 25,179,000 28,917,000 46,000 4.35
1.50 11,223,000 1.64 0.67 68.5 0.11 0.12 404,976,000 166,825,000 24,732,000 28,199,000 44,000 4.52
1.60 10,573,000 1.70 0.70 71.4 0.12 0.13 396,939,000 163,948,000 24,273,000 27,461,000 43,000 4.7
1.80 9,470,000 1.83 0.76 77.1 0.13 0.14 381,225,000 157,980,000 23,460,000 26,283,000 41,000 5.06
2.00 8,510,000 1.95 0.81 82.9 0.13 0.14 366,083,000 151,549,000 22,673,000 25,217,000 39,000 5.41
2.50 6,812,000 2.24 0.92 95.6 0.15 0.16 336,179,000 138,354,000 20,934,000 23,108,000 35,000 6.21
3.00 5,714,000 2.50 1.02 105.7 0.17 0.17 315,356,000 128,724,000 19,417,000 21,187,000 31,000 6.87
3.50 4,879,000 2.78 1.12 114.3 0.18 0.18 298,542,000 120,858,000 17,927,000 19,258,000 28,000 7.5
4.00 4,287,000 3.00 1.21 121.5 0.19 0.18 283,330,000 114,404,000 16,742,000 17,799,000 25,000 8.02
4.50 3,823,000 3.18 1.28 128.4 0.20 0.19 268,231,000 108,134,000 15,784,000 16,572,000 23,000 8.48
5.00 3,443,000 3.33 1.35 135.0 0.21 0.19 252,929,000 102,537,000 14,944,000 15,559,000 22,000 8.89
6.00 2,791,000 3.55 1.46 149.9 0.23 0.21 218,713,000 90,134,000 13,448,000 14,029,000 19,000 9.69
7.00 2,026,000 3.73 1.57 178.1 0.28 0.25 166,612,000 70,039,000 11,601,000 12,506,000 16,000 10.88
8.00 1,270,000 3.81 1.66 234.9 0.39 0.33 106,635,000 46,481,000 9,592,000 10,965,000 14,000 12.91
9.00 913,000 4.00 1.77 279.7 0.47 0.40 80,539,000 35,685,000 8,214,000 9,484,000 12,000 14.67
10.00 701,000 4.40 1.93 312.1 0.52 0.44 68,061,000 29,877,000 7,037,000 8,011,000 10,000 16.24

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Table 14.11 San Rafael Total Resource ZnEq Tabulation (continued)

Measured and Indicated

Cutoff   Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
1.00 20,671,000 1.51 0.63 59.7 0.09 0.11 686,964,000 287,920,000 39,665,000 39,263,000 75,000 4.03
1.20 18,413,000 1.65 0.70 64.7 0.09 0.12 670,041,000 282,197,000 38,316,000 37,438,000 72,000 4.39
1.40 16,606,000 1.78 0.75 69.7 0.10 0.13 651,722,000 275,423,000 37,205,000 35,946,000 69,000 4.73
1.50 15,771,000 1.85 0.78 72.3 0.10 0.13 641,871,000 271,796,000 36,661,000 35,180,000 67,000 4.90
1.60 14,953,000 1.92 0.81 75.1 0.10 0.14 631,354,000 267,908,000 36,104,000 34,393,000 66,000 5.09
1.80 13,560,000 2.04 0.87 80.5 0.11 0.14 610,926,000 260,050,000 35,104,000 33,128,000 63,000 5.44
2.00 12,333,000 2.17 0.93 86.0 0.12 0.15 590,903,000 251,603,000 34,118,000 31,975,000 60,000 5.79
2.50 10,096,000 2.47 1.05 98.2 0.13 0.17 549,994,000 233,608,000 31,882,000 29,648,000 54,000 6.58
3.00 8,601,000 2.74 1.16 108.1 0.15 0.18 519,386,000 219,714,000 29,902,000 27,516,000 49,000 7.25
3.50 7,476,000 3.00 1.26 116.5 0.15 0.19 494,344,000 208,174,000 28,000,000 25,401,000 45,000 7.85
4.00 6,651,000 3.21 1.35 123.7 0.16 0.19 471,192,000 198,360,000 26,450,000 23,762,000 41,000 8.36
4.50 5,985,000 3.39 1.43 130.7 0.17 0.20 447,804,000 188,802,000 25,151,000 22,362,000 38,000 8.82
5.00 5,415,000 3.55 1.50 137.7 0.18 0.20 423,262,000 179,609,000 23,970,000 21,189,000 36,000 9.25
6.00 4,386,000 3.79 1.64 154.3 0.20 0.22 366,446,000 158,429,000 21,761,000 19,352,000 32,000 10.14
7.00 3,253,000 4.01 1.78 182.8 0.24 0.26 287,917,000 127,814,000 19,118,000 17,516,000 28,000 11.40
8.00 2,185,000 4.20 1.94 232.6 0.32 0.33 202,203,000 93,675,000 16,344,000 15,637,000 23,000 13.32
9.00 1,609,000 4.41 2.10 276.8 0.39 0.40 156,303,000 74,539,000 14,319,000 13,827,000 20,000 15.07
10.00 1,251,000 4.73 2.27 313.2 0.44 0.45 130,317,000 62,700,000 12,591,000 12,034,000 18,000 16.68

Inferred Material:

Cutoff   Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs)  (lbs)  (oz)  (lbs) (oz) (%)
1.00 3,613,000 0.16 0.59 54.2 0.07 0.17 12,610,000 47,318,000 6,301,000 5,672,000 20,000 2.58
1.20 2,985,000 0.18 0.69 60.3 0.08 0.20 11,995,000 45,176,000 5,782,000 5,068,000 19,000 2.9
1.40 2,440,000 0.21 0.79 67.1 0.08 0.22 11,413,000 42,704,000 5,266,000 4,410,000 17,000 3.26
1.50 2,250,000 0.22 0.83 70.6 0.09 0.23 11,065,000 41,287,000 5,105,000 4,239,000 16,000 3.41
1.60 2,078,000 0.23 0.87 74.2 0.09 0.23 10,703,000 39,788,000 4,955,000 4,100,000 15,000 3.57
1.80 1,785,000 0.25 0.94 81.4 0.10 0.24 9,977,000 37,093,000 4,674,000 3,821,000 14,000 3.87
2.00 1,536,000 0.27 1.01 89.6 0.11 0.25 9,029,000 34,349,000 4,426,000 3,569,000 12,000 4.19
2.50 1,051,000 0.28 1.24 111.6 0.12 0.30 6,422,000 28,701,000 3,770,000 2,827,000 10,000 5.11
3.00 761,000 0.30 1.47 133.7 0.14 0.34 5,032,000 24,714,000 3,274,000 2,322,000 8,000 6.01
3.50 586,000 0.31 1.68 154.6 0.16 0.37 3,961,000 21,718,000 2,913,000 2,034,000 7,000 6.85
4.00 469,000 0.31 1.86 174.4 0.18 0.40 3,232,000 19,201,000 2,631,000 1,876,000 6,000 7.62
4.50 383,000 0.33 2.02 194.1 0.21 0.42 2,809,000 17,046,000 2,390,000 1,742,000 5,000 8.38
5.00 329,000 0.34 2.15 210.3 0.22 0.42 2,493,000 15,582,000 2,224,000 1,630,000 4,000 8.99
6.00 254,000 0.34 2.39 239.5 0.25 0.44 1,896,000 13,365,000 1,956,000 1,421,000 4,000 10.04
7.00 209,000 0.33 2.57 260.1 0.27 0.46 1,537,000 11,856,000 1,751,000 1,259,000 3,000 10.8
8.00 160,000 0.36 3.00 281.3 0.28 0.49 1,285,000 10,553,000 1,445,000 971,000 3,000 11.82
9.00 122,000 0.40 3.50 301.3 0.27 0.51 1,073,000 9,411,000 1,182,000 738,000 2,000 12.86
10.00 94,000 0.43 4.03 320.6 0.27 0.52 902,000 8,375,000 972,000 558,000 2,000 13.87

Mine Development Associates  
April 29, 2016  



Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 105
   

Figure 14.3 Section 300 San Rafael Block Model: ZnEq Block Grades

Mine Development Associates  
April 29, 2016  



Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 106
   

Mine Development Associates  
April 29, 2016  



Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 107
   

Table 14.12 San Rafael Main and Upper Zones ZnEq Resource Tabulation

Measured Resource:

Cutoff   Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
1.00 5,546,000 2.03 0.90 69.6 0.06 0.138 248,714,000 109,602,000 12,401,000 7,204,000 25,000 5.02
1.20 5,122,000 2.16 0.96 74.2 0.06 0.145 244,311,000 107,923,000 12,226,000 7,121,000 24,000 5.35
1.40 4,727,000 2.30 1.02 79.1 0.07 0.152 239,434,000 105,979,000 12,027,000 7,030,000 23,000 5.68
1.50 4,549,000 2.36 1.05 81.6 0.07 0.156 236,936,000 104,980,000 11,931,000 6,982,000 23,000 5.85
1.60 4,381,000 2.43 1.08 84.0 0.07 0.159 234,455,000 103,969,000 11,832,000 6,932,000 22,000 6.02
1.80 4,091,000 2.55 1.13 88.5 0.08 0.165 229,741,000 102,078,000 11,644,000 6,846,000 22,000 6.32
2.00 3,823,000 2.67 1.19 93.1 0.08 0.171 224,859,000 100,063,000 11,446,000 6,760,000 21,000 6.63
2.50 3,285,000 2.95 1.32 103.7 0.09 0.185 213,855,000 95,264,000 10,950,000 6,541,000 20,000 7.35
3.00 2,887,000 3.21 1.43 113.0 0.10 0.196 204,075,000 91,002,000 10,487,000 6,330,000 18,000 7.99
3.50 2,597,000 3.42 1.53 120.7 0.11 0.203 195,838,000 87,325,000 10,075,000 6,144,000 17,000 8.52
4.00 2,364,000 3.60 1.61 127.7 0.11 0.209 187,879,000 83,957,000 9,709,000 5,963,000 16,000 8.99
4.50 2,163,000 3.77 1.69 134.7 0.12 0.215 179,601,000 80,676,000 9,368,000 5,791,000 15,000 9.43
5.00 1,973,000 3.92 1.77 142.3 0.13 0.223 170,366,000 77,080,000 9,027,000 5,631,000 14,000 9.88
6.00 1,596,000 4.20 1.94 162.1 0.15 0.247 147,771,000 68,309,000 8,314,000 5,324,000 13,000 10.92
7.00 1,228,000 4.48 2.14 190.5 0.19 0.285 121,335,000 57,784,000 7,517,000 5,011,000 11,000 12.25
8.00 915,000 4.74 2.34 229.5 0.23 0.334 95,609,000 47,211,000 6,754,000 4,674,000 10,000 13.89
9.00 696,000 4.94 2.53 273.0 0.28 0.393 75,793,000 38,862,000 6,106,000 4,347,000 9,000 15.60
10.00 549,000 5.14 2.71 314.5 0.33 0.451 62,279,000 32,833,000 5,554,000 4,023,000 8,000 17.24

Indicated Resource:

Cutoff   Zinc Lead Silver Copper Gold Zinc Lead Silver  Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
1.00 9,815,000 1.84 0.76 52.4 0.05 0.10 397,421,000 165,204,000 16,539,000 10,917,000 33,000 4.19
1.20 9,024,000 1.95 0.81 56.0 0.05 0.11 388,261,000 161,944,000 16,239,000 10,787,000 32,000 4.46
1.40 8,280,000 2.07 0.87 59.7 0.06 0.12 378,385,000 158,032,000 15,896,000 10,631,000 31,000 4.74
1.50 7,907,000 2.14 0.89 61.8 0.06 0.12 372,871,000 155,861,000 15,704,000 10,532,000 30,000 4.90
1.60 7,519,000 2.21 0.93 64.1 0.06 0.12 366,707,000 153,471,000 15,491,000 10,411,000 29,000 5.07
1.80 6,814,000 2.36 0.99 68.7 0.07 0.13 354,682,000 148,534,000 15,054,000 10,177,000 28,000 5.42
2.00 6,191,000 2.51 1.05 73.4 0.07 0.14 343,074,000 143,410,000 14,614,000 9,945,000 27,000 5.78
2.50 5,028,000 2.87 1.19 84.2 0.08 0.15 318,608,000 132,326,000 13,606,000 9,393,000 24,000 6.60
3.00 4,293,000 3.18 1.31 92.6 0.09 0.16 300,860,000 123,830,000 12,785,000 8,916,000 22,000 7.26
3.50 3,781,000 3.44 1.40 99.6 0.10 0.16 286,469,000 116,754,000 12,104,000 8,476,000 20,000 7.80
4.00 3,418,000 3.64 1.47 105.1 0.11 0.16 274,125,000 111,071,000 11,546,000 8,169,000 18,000 8.24
4.50 3,110,000 3.81 1.54 110.4 0.12 0.17 261,353,000 105,491,000 11,042,000 7,902,000 17,000 8.63
5.00 2,828,000 3.97 1.61 116.0 0.12 0.17 247,296,000 100,300,000 10,542,000 7,655,000 16,000 9.02
6.00 2,306,000 4.22 1.74 129.5 0.14 0.19 214,451,000 88,395,000 9,605,000 7,269,000 14,000 9.82
7.00 1,655,000 4.48 1.88 157.5 0.19 0.23 163,472,000 68,690,000 8,379,000 6,874,000 12,000 11.11
8.00 996,000 4.75 2.07 218.7 0.29 0.32 104,253,000 45,394,000 7,006,000 6,455,000 10,000 13.53
9.00 715,000 4.99 2.21 269.0 0.38 0.39 78,660,000 34,860,000 6,180,000 6,030,000 9,000 15.54
10.00 571,000 5.31 2.33 303.3 0.44 0.43 66,834,000 29,324,000 5,572,000 5,590,000 8,000 17.07

Mine Development Associates  
April 29, 2016  



Technical Report and Preliminary Feasibility Study,  
San Rafael Deposit, Sinaloa, Mexico – Americas Silver Corp. Page 108
   

Table 14.12 San Rafael Main and Upper Zone ZnEq Resource Tabulation (cont.)

Measured and Indicated

Cutoff   Zinc Lead Silver Copper Gold Zinc Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t) (lbs) (lbs) (oz) (lbs) (oz) (%)
1.00 15,361,000 1.91 0.81 58.6 0.05 0.12 646,135,000 274,806,000 28,940,000 18,121,000 57,000 4.49
1.20 14,146,000 2.03 0.87 62.6 0.06 0.12 632,572,000 269,868,000 28,465,000 17,908,000 56,000 4.78
1.40 13,006,000 2.15 0.92 66.8 0.06 0.13 617,819,000 264,011,000 27,924,000 17,661,000 54,000 5.08
1.50 12,456,000 2.22 0.95 69.0 0.06 0.13 609,807,000 260,841,000 27,635,000 17,514,000 53,000 5.25
1.60 11,900,000 2.29 0.98 71.4 0.07 0.13 601,162,000 257,440,000 27,323,000 17,343,000 52,000 5.42
1.80 10,906,000 2.43 1.04 76.1 0.07 0.14 584,423,000 250,612,000 26,699,000 17,023,000 50,000 5.76
2.00 10,014,000 2.57 1.10 80.9 0.08 0.15 567,932,000 243,473,000 26,060,000 16,704,000 48,000 6.10
2.50 8,313,000 2.91 1.24 91.9 0.09 0.16 532,464,000 227,591,000 24,555,000 15,934,000 44,000 6.90
3.00 7,181,000 3.19 1.36 100.8 0.10 0.17 504,935,000 214,832,000 23,272,000 15,246,000 40,000 7.55
3.50 6,378,000 3.43 1.45 108.2 0.10 0.18 482,307,000 204,079,000 22,178,000 14,621,000 36,000 8.10
4.00 5,782,000 3.62 1.53 114.3 0.11 0.18 462,003,000 195,027,000 21,255,000 14,132,000 34,000 8.54
4.50 5,273,000 3.79 1.60 120.4 0.12 0.19 440,955,000 186,166,000 20,410,000 13,693,000 32,000 8.96
5.00 4,801,000 3.95 1.68 126.8 0.13 0.19 417,662,000 177,379,000 19,568,000 13,286,000 30,000 9.38
6.00 3,902,000 4.21 1.82 142.8 0.15 0.21 362,223,000 156,705,000 17,919,000 12,593,000 27,000 10.27
7.00 2,882,000 4.48 1.99 171.5 0.19 0.25 284,807,000 126,473,000 15,897,000 11,885,000 23,000 11.60
8.00 1,912,000 4.74 2.20 223.9 0.26 0.33 199,862,000 92,606,000 13,759,000 11,130,000 20,000 13.70
9.00 1,410,000 4.97 2.37 271.0 0.33 0.39 154,452,000 73,722,000 12,287,000 10,377,000 18,000 15.57
10.00 1,121,000 5.23 2.52 308.8 0.39 0.44 129,113,000 62,157,000 11,126,000 9,614,000 16,000 17.15

Inferred Resource:

Cutoff   Zinc Lead Silver Copper Gold    Zinc Lead Silver Copper Gold ZnEq
  Tonnes                      
ZnEq%   (%) (%) (g Ag/t) (%) (g Au/t)    (lbs) (lbs) (oz) (lbs)  (oz) (%)
1.00 2,345,000 0.20 0.90 56.0 0.04 0.23 10,355,000 46,611,000 4,220,000 2,289,000 18,000 2.99
1.20 2,078,000 0.22 0.97 60.9 0.05 0.25 9,938,000 44,496,000 4,071,000 2,234,000 17,000 3.23
1.40 1,825,000 0.24 1.05 66.7 0.05 0.26 9,566,000 42,063,000 3,913,000 2,172,000 15,000 3.50
1.50 1,698,000 0.25 1.09 70.1 0.06 0.26 9,340,000 40,681,000 3,827,000 2,136,000 14,000 3.65
1.60 1,572,000 0.26 1.13 73.9 0.06 0.27 9,110,000 39,224,000 3,736,000 2,097,000 14,000 3.82
1.80 1,363,000 0.29 1.22 81.5 0.07 0.28 8,621,000 36,656,000 3,570,000 2,006,000 12,000 4.15
2.00 1,175,000 0.30 1.31 90.4 0.07 0.28 7,881,000 34,038,000 3,416,000 1,911,000 11,000 4.51
2.50 855,000 0.31 1.51 112.1 0.09 0.33 5,854,000 28,484,000 3,081,000 1,695,000 9,000 5.37
3.00 656,000 0.32 1.70 132.5 0.11 0.36 4,611,000 24,560,000 2,793,000 1,558,000 8,000 6.17
3.50 517,000 0.32 1.89 152.4 0.13 0.40 3,651,000 21,600,000 2,535,000 1,438,000 7,000 6.96
4.00 415,000 0.33 2.09 172.2 0.15 0.42 3,016,000 19,126,000 2,297,000 1,343,000 6,000 7.76
4.50 339,000 0.36 2.28 192.5 0.17 0.44 2,665,000 17,001,000 2,096,000 1,249,000 5,000 8.55