S-1

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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on October 1, 2020.

Registration No. 333-          

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

GATOS SILVER, INC.†
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 1040
(Primary Standard Industrial
Classification Code Number) 27-2654848
(I.R.S. Employer
Identification Number)

1660 Lincoln Street
Suite 2750
Denver, CO 80264
(303) 784-5350
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)

Stephen Orr
Chief Executive Officer and Director
Sunshine Silver Mining & Refining Corporation
1660 Lincoln Street, Suite 2750
Denver, CO 80264
(303) 784-5350
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:
Richard D. Truesdell, Jr. Derek Dostal Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000	Michael J. Zeidel Ryan J. Dzierniejko Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, NY 10001 (212) 735-3000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company ý Emerging growth company ý

           If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ý

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities To Be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.001 per share	$100,000,000	$10,910

(1)

Includes offering price of shares of common stock which the underwriters have the right to purchase pursuant to their over-allotment option.

(2)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

†

Immediately prior to the completion of the offering to which this Registration Statement relates, we intend to undertake a reorganization and to change our name from Sunshine Silver Mining & Refining Corporation to Gatos Silver, Inc.

The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED OCTOBER 1, 2020

PRELIMINARY PROSPECTUS

            SHARES

GATOS SILVER, INC.

COMMON STOCK

        We are selling            shares of common stock to the underwriters in a firm commitment offering.

        Prior to this offering, there has been no public market for our common stock. We currently estimate that the initial public offering price will be between $            and $            per share. We have applied to list our common stock on the New York Stock Exchange ("NYSE") and the Toronto Stock Exchange ("TSX") under the symbol "GATO."

        The underwriters have an option to purchase a maximum of                        additional shares of common stock from us to cover over-allotments. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

        We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and will therefore be subject to reduced reporting requirements.

Investing in our common stock involves risks. See "Risk Factors" beginning on page 28 of this prospectus.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions(1)	$	$
Proceeds, before expenses, to us	$	$

(1)

See "Underwriting and Plan of Distribution" for a description of compensation to be paid to the underwriters.

        Delivery of the shares of common stock will be made on or about                    , 2020 through the book-entry facilities of The Depositary Trust Company.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

BMO Capital Markets Goldman Sachs & Co. LLC RBC Capital Markets

The date of this prospectus is                                    , 2020.

TABLE OF CONTENTS

	Page
PROSPECTUS SUMMARY		1
THE OFFERING		23
SUMMARY CONSOLIDATED FINANCIAL DATA		26
RISK FACTORS		28
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		53
USE OF PROCEEDS		55
DIVIDEND POLICY		57
CAPITALIZATION		58
DILUTION		59
SELECTED CONSOLIDATED FINANCIAL DATA		61
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		63
SILVER INDUSTRY OVERVIEW		78
BUSINESS		85
MANAGEMENT		125
EXECUTIVE AND DIRECTOR COMPENSATION		133
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		144
PRINCIPAL SHAREHOLDERS		148
DESCRIPTION OF CAPITAL STOCK		151
U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK		155
CANADIAN FEDERAL INCOME TAX CONSEQUENCES FOR CANADIAN HOLDERS		158
SHARES ELIGIBLE FOR FUTURE SALE		162
UNDERWRITING AND PLAN OF DISTRIBUTION		164
LEGAL PROCEEDINGS		173
LEGAL MATTERS		173
EXPERTS		173
WHERE YOU CAN FIND MORE INFORMATION		174
GLOSSARY OF TECHNICAL TERMS		175
INDEX TO FINANCIAL STATEMENTS		F-1

        We and the underwriters have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance and make no representation as to the reliability of, any other information that others may give you. We are offering to sell and are seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

ABOUT THIS PROSPECTUS

        Immediately prior to the closing of this offering, we intend to effect a reorganization (the "Reorganization") in which (i) Silver Opportunity Partners LLC ("SOP") will convert into a Delaware corporation named Silver Opportunity Partners Corporation ("SOP Corporation"), (ii) each            shares of our common stock outstanding immediately prior to the Reorganization will be reclassified into (A)             shares of our common stock and (B)             shares of common stock of SOP

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Corporation and (iii) we will change our name from Sunshine Silver Mining & Refining Corporation to Gatos Silver, Inc. SOP currently holds our interest in the Sunshine Complex, which is located in the Coeur d'Alene Mining District in Idaho and is comprised of the Sunshine Mine and the Sunshine Big Creek Refinery. Through the Reorganization, we expect to distribute all of our equity interest in SOP to our shareholders immediately prior to the completion of this offering. See "Prospectus Summary—Corporate Information and Reorganization." As used in this prospectus, SOP refers to (i) SOP prior to the Reorganization and (ii) SOP Corporation from and after the Reorganization. Unless otherwise indicated, all information in this prospectus assumes the completion of the Reorganization.

        Where information relates to our company before the Reorganization and where the context otherwise requires, the "Company," "SSMRC," "we," "us" and "our" refer to Sunshine Silver Mining & Refining Corporation and its consolidated subsidiaries, and, unless the context otherwise requires, to its affiliate entities, Minera Plata Real S. de R.L. de C.V. ("MPR"), Operaciones San Jose de Plata S. de R.L. de C.V. ("OSJ") and Servicios San Jose de Plata S. de R.L. de C.V. ("SSJ"). We also refer to these entities collectively as the "Los Gatos Joint Venture" or "LGJV" where applicable. Where information relates to our company following the Reorganization and where the context otherwise requires, "Gatos," the "Company," "we," "us" and "our" refer to Gatos Silver, Inc. and its consolidated subsidiaries, and, unless the context otherwise requires, to its affiliate entities that are part of the Los Gatos Joint Venture. We own approximately 51.5% of the LGJV. Despite owning the majority interest in the LGJV, we do not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement (as defined herein) that currently require unanimous partner approval of all major operating decisions (such as certain approvals, the creation of security interests on property, any initial public offering of the joint venture, and litigation settlements). We intend to exercise our right to repurchase an 18.5% interest in the LGJV from Dowa, increasing our ownership to approximately 70.0%. Following this increase in our ownership interest in the LGJV, we will continue to not exercise control over the LGJV due to the provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions. See "Business—The Los Gatos District—Unanimous Omnibus Partner Agreement."

MARKET AND INDUSTRY DATA AND FORECASTS

        This prospectus includes market and industry data and forecasts that we have developed from independent research reports, publicly available information, various industry publications, other published industry sources or our internal data and estimates. Independent research reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Although we believe that the publications and reports are reliable, neither we nor the underwriters have independently verified the data. Our internal data, estimates and forecasts are based on information obtained from trade and business organizations and other contacts in the markets in which we operate and our management's understanding of industry conditions. Although we believe that such information is reliable, we have not had such information verified by any independent sources.

NOTICE REGARDING MINERAL DISCLOSURE

        In October 2018, the Securities and Exchange Commission (the "SEC") adopted amendments to its current disclosure rules to modernize the mineral property disclosure requirements for mining registrants. The amendments include the adoption of a new subpart 1300 of Regulation S-K, which will govern disclosure for mining registrants (the "SEC Mining Modernization Rules"). The SEC Mining Modernization Rules replace the historical property disclosure requirements for mining registrants that were included in the SEC's Industry Guide 7 and better align disclosure with international industry and

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regulatory practices, including the Canadian National Instrument 43-101—Standards of Disclosure for Mineral Projects ("NI 43-101"). Although compliance with the SEC Mining Modernization Rules is not required until January 1, 2021, we have chosen to voluntarily comply with the SEC Mining Modernization Rules in this prospectus.

        The technical report summary for our material properties, the Los Gatos District and the Cerro Los Gatos Mine, has been prepared in accordance with the SEC Mining Modernization Rules and NI 43-101 and is included as Exhibit 96.1 to the registration statement of which this prospectus forms a part.

        "Inferred mineral resources" are subject to uncertainty as to their existence and as to their economic and legal feasibility. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because we have elected to voluntarily comply with the SEC Mining Modernization Rules, the mineral property disclosure included in this prospectus may not be comparable to similar information provided by other issuers that have not elected to early adopt such rules. For the meanings of certain technical terms used in this prospectus, see "Glossary of Technical Terms."

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PROSPECTUS SUMMARY

This summary highlights the more detailed information and financial data and statements contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including the "Risk Factors" section and our consolidated financial statements and related notes included elsewhere in this prospectus.

As used herein, references to the "Los Gatos Technical Report" are to the "NI 43-101 Technical Report: Los Gatos Project, Chihuahua, Mexico," prepared by Tetra Tech Inc. ("Tetra Tech"), dated July 1, 2020, which was prepared in accordance with the requirements of the SEC Mining Modernization Rules and NI 43-101. The Los Gatos Technical Report is filed as Exhibit 96.1 to the registration statement of which this prospectus forms a part. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019 and have not been updated since that time. The mineral reserve estimates and the economic analysis contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and have not been updated since that time and exclude 655,746 tonnes of material that has been mined through June 30, 2020. See "Business—The Los Gatos District."

As used herein, references to "$" or "dollars" are to United States dollars.

All mineral reserves and mineral resources contained herein for the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit are presented on both a 100% basis as well as on a 51.5% basis to reflect our current ownership interest in the LGJV.

Our Company

        We are a U.S.-based precious metals production, development and exploration company with the objective of becoming a premier silver producer. We are currently focused on the production and continued development of the Cerro Los Gatos Mine and the further exploration and development of the Los Gatos District:

•

The Cerro Los Gatos Mine, located within the Los Gatos District, Chihuahua, Mexico, consists of a 2,500 tpd polymetallic mine and processing facility that commenced production on September 1, 2019. For the year ended December 31, 2019, at the Cerro Los Gatos Mine, 357,342 tonnes were mined and 269,853 tonnes were processed at average grades of 229 g/t silver, 0.52 g/t gold, 1.97% lead and 3.03% zinc, with metallurgical recovery of 82.1% silver, 63.5% gold, 83.4% lead and 72.3% zinc. For the six-months ended June 30, 2020, at the Cerro Los Gatos Mine, 288,882 tonnes were mined and 298,331 tonnes were processed at average grades of 195 g/t silver, 0.44 g/t gold, 2.22% lead and 3.41% zinc, with metallurgical recovery of 82.2% silver, 61.8% gold, 85.1% lead and 72.4% zinc. The Los Gatos Technical Report, which has an effective date of July 1, 2020, estimates that the deposit contains 9.6 million diluted tonnes of proven and probable mineral reserves (or 5.0 million diluted tonnes of proven and probable mineral reserves on a 51.5% basis), with 6.4 million diluted tonnes of proven mineral reserves (or 3.3 million diluted tonnes of proven mineral reserves on a 51.5% basis) and 3.3 million diluted tonnes of probable mineral reserves (or 1.7 million diluted tonnes of probable mineral reserves on a 51.5% basis). Average proven and probable mineral reserve grades are 306 g/t silver, 0.35 g/t gold, 2.76% lead and 5.65% zinc.

•

The Los Gatos District, located in Chihuahua, Mexico, is located approximately 120 kilometers south of Chihuahua City and is comprised of a 103,087-hectare land position, constituting a new mining district. The Los Gatos District consists of 14 mineralized zones, which include three identified silver-lead-zinc deposits that contain mineral resources—the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit—as well as 11 additional high-priority targets defined by high-grade drill intersections and over 150 kilometers of outcropping quartz and

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calcite veins. The area is characterized by predominant silver-lead-zinc epithermal mineralization. On September 1, 2019, the LGJV commenced production at the Cerro Los Gatos Mine. A core component of the LGJV's business plan is to explore the highly prospective, underexplored Los Gatos District with the objective of identifying additional mineral deposits that can be mined and processed, possibly utilizing the Cerro Los Gatos Mine plant infrastructure.

        Prior to our initial acquisition of exploration concession rights in April 2006, very limited historical prospecting and exploration activities had been conducted in the Los Gatos District. We were able to acquire concessions covering approximately 103,087 hectares and, through our exploration, discovered a virgin silver region containing high-grade epithermal vein-style mineralization throughout the Los Gatos District concession package.

        In 2008, we negotiated surface access rights with local ranch owners and obtained the necessary environmental permits for drilling and road construction. Through 2015, we purchased all the surface lands required for the Cerro Los Gatos Mine development. Environmental baseline data collection began in May 2010 and was completed in 2016 and approved in 2017 to prepare for the development of future environmental studies required for the Cerro Los Gatos Mine. In 2014, we partnered with Dowa Metals and Mining Co., Ltd. ("Dowa"), which manufactures and distributes metals products and owns Japan's largest zinc refinery, to finance and develop the Cerro Los Gatos Mine and to pursue exploration in the Los Gatos District. We and Dowa formed a Mexico-incorporated co-owned operating company, MPR, which owns certain surface and mineral rights associated with the Los Gatos District. In connection with the formation of the LGJV, we entered into the Unanimous Omnibus Partner Agreement with Dowa, MPR, OSJ, SSJ and Los Gatos Luxembourg S.a.r.l. on January 1, 2015 (as amended on April 10, 2017, June 30, 2017, March 10, 2018, May 20, 2019, April 29, 2020, May 25, 2020 and June 16, 2020, the "Unanimous Omnibus Partner Agreement"), which governs our and Dowa's respective rights over the LGJV. We own approximately 51.5% of the LGJV, with Dowa owning the remainder. Despite owning the majority interest in the LGJV, we do not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions (such as certain approvals, the creation of security interests on property, any initial public offering of the joint venture, and litigation settlements). We intend to exercise our right to repurchase an 18.5% interest in the LGJV from Dowa, increasing our ownership to approximately 70.0%. Following this increase in our ownership interest in the LGJV, we will continue to not exercise control over the LGJV due to the provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions. See "Business—The Los Gatos District—Unanimous Omnibus Partner Agreement."

        We believe that we have strong support from the local community, with over 130 employees from the local community working across multiple areas involving the continued underground development,

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construction of the surface facilities and operation of the Cerro Los Gatos Mine. Over 99% of the approximate 540 employees at the Cerro Los Gatos Mine hail from Mexico, highlighting our commitment to the local workforce.

        Our primary areas of focus have been constructing and commissioning the Cerro Los Gatos Mine and defining and expanding the mineral resources associated with the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit. As of July 1, 2020, 739 exploration drill holes have been completed in the Los Gatos District, totaling 259,060 meters. The Los Gatos Technical Report estimates that the Cerro Los Gatos Mine contains 10.4 million tonnes of measured and indicated resources (or 5.4 million tonnes of measured and indicated resources on a 51.5% basis) inclusive of mineral reserves, at average grades of 269 g/t silver, 2.7% lead, 5.5% zinc, 0.34 g/t gold and 0.11% copper, or 3.5 million tonnes of measured and indicated resources (or 1.8 million tonnes of measured and indicated resources on a 51.5% basis) exclusive of mineral reserves, at average grades of 154 g/t silver, 2.2% lead, 4.3% zinc and 0.29 g/t gold, and 3.7 million tonnes of inferred resources (or 1.9 million tonnes of inferred resources on a 51.5% basis), at average grades of 107 g/t silver, 2.8% lead, 4.0% zinc and 0.28 g/t gold. The mineral resource estimates for the Cerro Los Gatos Mine have an effective date of September 6, 2019 and have not been updated since that time. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery.

        The Los Gatos Technical Report estimates that the Esther deposit contains 0.46 million tonnes of indicated resources (or 0.24 million tonnes of indicated resources on a 51.5% basis) at average grades of 133 g/t silver, 0.04 g/t gold, 0.02% copper, 0.70% lead and 2.10% zinc, and 2.29 million tonnes of inferred resources (or 1.18 million tonnes of inferred resources on a 51.5% basis) at average grades of 98 g/t silver, 0.12 g/t gold, 0.05% copper, 1.60% lead and 3.00% zinc; and the Amapola deposit contains 0.25 million tonnes of indicated resources (or 0.13 million tonnes of indicated resources on a 51.5% basis) at average grades of 135 g/t silver, 0.10 g/t gold, 0.02% copper, 0.10% lead and 0.30% zinc, and 3.44 million tonnes of inferred resources (or 1.77 million tonnes of inferred resources on a 51.5% basis) at average grades of 140 g/t silver, 0.10 g/t gold, 0.03% copper, 0.20% lead and 0.30% zinc. The mineral resource estimates for the Esther and Amapola deposits have an effective date of December 21, 2012 and have not been updated since that time. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery.

        Since the acquisition of the Los Gatos District concession package, we, Dowa and the LGJV have invested approximately $500 million in the development of the Cerro Los Gatos Mine. The Cerro Los Gatos Mine is currently in production. The first lead concentrate was shipped on September 3, 2019, and the first zinc concentrate was shipped on September 4, 2019. We anticipate increasing production to the designed 2,500 tpd rate by the end of the first quarter of 2021.

        Our objectives at the Cerro Los Gatos Mine are to, among other things:

•

optimize the recently commissioned plant facilities and increase production to the designed 2,500 tpd rate;

•

produce and sell concentrate material containing zinc, lead, silver and gold metals to smelting facilities in Japan, Mexico and other locations;

•

initiate a feasibility study, prepared in accordance with the SEC Mining Modernization Rules and NI 43-101, on expanding the production rate from 2,500 to 3,000 tpd; and

•

perform additional in-fill and step-out drilling to further define mineral resources at the Cerro Los Gatos Mine.

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        Our objectives at the Los Gatos District are to, among other things:

•

perform additional in-fill and expansion drilling to further define and expand mineralization at the Esther and Amapola deposits;

•

conduct social, environmental and technical work on the property with the objective of completing a scoping study on the Esther and Amapola deposits;

•

expand the exploration drilling program on the Esther deposit, the Amapola deposit and the other 11 mineralized zones within the Los Gatos District; and

•

continue to expand the LGJV's interest in prospective mineral and surface rights.

        See "Business—Our Company—Our Principal Projects."

Silver Industry Overview

Overview

        Silver deposits occur naturally in their solid metallic state and are commonly associated with deposits of gold, copper, lead and zinc as a secondary metal. Silver is a precious metal and is widely used in the manufacturing of jewelry and silverware and as an investment. Silver is distinct from other precious metals in that it is both used in industrial applications and as an investment asset.

        Silver has a number of distinctive physical and chemical properties that make it an essential component in numerous industrial applications, including its strength, malleability, conductivity and ductility, its sensitivity to and high reflectance of light and its ability to endure extreme temperature ranges. These properties restrict its substitution in most applications. Silver is one of the world's best conductors of electricity and is used in electronic components of common items such as solar panel photovoltaic cells, computers, televisions and cell phones.

        Silver has also been used as a medium of exchange since earliest recorded history. While it is no longer widely used as circulating currency, silver is still widely sought by investors for its store of value attributes. In particular, silver is viewed as an attractive hedge against a decrease in the value of currency and inflation during times of economic uncertainty.

Demand

        The three principal drivers of silver demand are industrial applications, consumer use and investment. According to The Silver Institute's World Silver Survey 2020, demand for industrial applications is mainly driven by electrical and electronics uses, which accounted for 58.3% of industrial demand and 30.0% of total demand in 2019. Jewelry accounted for 20.3% of total demand and net physical investment represented 18.8% of total demand.

        Silver demand grew 0.4% in 2019 to a three-year high of 991.8 million ounces, from 988.3 million ounces the previous year, driven by a 12.3% surge in demand for net physical investment. This was offset by declines in silverware and other industrials. Silver remains difficult to substitute in many areas, and outside of a dip in 2009, demand for industrial applications has remained broadly flat since 2007. There was healthy photovoltaic demand in 2019, with support from structural changes in demand, such as vehicle electrification.

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World Physical Silver Demand in 2019 (%)

Source: The Silver Institute, World Silver Survey 2020

Supply

        Silver supply is primarily driven by mined silver production, which, according to The Silver Institute's World Silver Survey 2020, accounted for 81.7% of supply in 2019. Recycling largely accounted for the remainder of silver supply. Global silver supply increased 0.6% year-over-year in 2019 to 1,023 million ounces compared to 1,016.8 million ounces in 2018.

        Mine silver output in 2019 declined for the fourth consecutive year, falling 1.3% to 836.5 million ounces from 847.8 million ounces in 2018. These recent production declines follow 13 consecutive years of growth. The decrease in silver supply was largely driven by lower grades at primary silver mines, lower silver production from copper mines and losses from production disruptions. In Peru, Compañía de Minas Buenaventura's Uchucchacua Mine saw silver production decrease from a 27% decline in grades and experienced a 21-day strike; Hochschild Mining's Arcata Mine was placed into care and maintenance early in the year; and declining silver grades were a factor at large primary copper mines. In Mexico, Fresnillo plc achieved lower grades at several of its mines; First Majestic Silver Corp.'s San Martin Mine and Endeavour Silver's El Cubo Mine were placed on care and maintenance; and blockades resulted in Newmont Corporation's Peñasquito Mino being suspended for 90 days.

Pricing and Outlook

        A combination of a slightly higher demand and a slightly higher supply in 2019 compared to 2018 resulted in a surplus of 31.3 million ounces, or 3.1% of silver demand, according to The Silver Institute's World Silver Survey 2020. Net investment in exchange traded products of 81.7 million ounces helped to propel the net silver balance to a 50 million ounce deficit, or approximately 5% of demand.

        In 2019, the average London Bullion Market Association ("LBMA") silver price increased 3.4% year-over-year to $16.21/oz. In 2019, the price of silver reached a high of $19.31/oz, a low of $14.38/oz and ended the year at $18.05/oz. The largest contributor to silver price movements is believed to be the ongoing trade dispute between the U.S. and China, which has had the impact of strengthening the U.S.

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dollar and weighing on the price of silver and other precious metals. The U.S. Federal Reserve took a dovish stance through 2019, as it lowered the federal funds rate three times.

        The price of silver rallied strongly to multi-year highs in August 2020. As of August 31, 2020, the LBMA silver price has increased 52% compared to the year-end 2019 price. The recent silver price appreciation is believed to have been driven by accommodative monetary policy, aggressive stimulus measures and accelerating investment demand in the midst of the COVID-19 pandemic, as well as disrupted production and a recovery in industrial consumption. These factors have enhanced silver's appeal to investors seeking a hedge against inflation, a decrease in the value of the U.S. dollar and general economic and geopolitical uncertainty. Trading volumes at futures and options exchanges have increased significantly, and exchange-traded products ("ETPs") inflows have been strong. As of August 31, 2020, silver has a long-term research analyst average consensus price outlook of $18.75/oz.

        See "Silver Industry Overview."

Key Investment Highlights

High Quality and Long Life Assets

        Once fully operational, the Cerro Los Gatos Mine is expected to generate average life-of-mine ("LOM") unlevered, after-tax free cash flow of approximately $76 million per year on a 100% basis (or approximately $39 million per year on a 51.5% basis). Projected attributable net revenue and unlevered free cash flow, as set forth in the Los Gatos Technical Report, are presented below:

Projected Net Revenue (in millions)

Projected Unlevered Free Cash Flow (in millions)

Net revenue is defined as net smelter return (revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined), less royalties. Unlevered cash flow is defined as unlevered operating cash flow less capital expenditures and changes in working capital. See also Section 22 of the Los Gatos Technical Report. The Los Gatos Technical Report has an effective date of July 1, 2020. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral reserve estimates and the economic analysis contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "Business—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "Business—The Los Gatos District—Capital and Operating Costs." This information does not constitute guidance and you should not rely on it as an estimate or forecast of future performance. The Cerro Los Gatos net revenue and unlevered free cash flow are shown on a 51.5% ownership basis to reflect our current ownership interest in the LGJV. The 18.5% option represents our right to

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repurchase an 18.5% interest in the LGJV from Dowa. See "Business—Business Strategy." The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Inferred mineral resources are subject to uncertainty as to their existence and as to their economic legal feasibility.

Cerro Los Gatos Mine Successfully Commissioned with Significant Near-Term Production Growth

        The Cerro Los Gatos Mine is currently in production, with final construction completed in the second quarter of 2019. Commissioning was successful, having achieved a number of key milestones, including:

•

fully commissioned the run-of-mine stockpile;

•

fully commissioned the ore conveyance system;

•

fully commissioned the grinding circuit and flotation circuit;

•

fully commissioned the concentrate and tailings thickeners;

•

completed the storage and concentrate loadout area;

•

fully commissioned the tailings storage facility;

•

transitioned to the Mexican national power grid;

•

shipped the first lead and zinc concentrates;

•

successfully commissioned the first of three vertical column flotation cells to further reduce fluorine in the concentrates;

•

successfully recommissioned the mine after a 45-day temporary suspension of activities due to the COVID-19 pandemic; and

•

nationally recognized as a socially responsible company in Mexico.

Aerial View of the Cerro Los Gatos Mine

Concentrate production is currently achieving quality specifications and expected grades. The Cerro Los Gatos Mine is expected to produce, on average, 12.2 million payable silver equivalent ounces annually through the existing mine life (or 6.3 million payable silver equivalent ounces annually on a 51.5% basis), with an attractive, low-cost all-in sustaining cost ("AISC") profile. In addition to the goal of achieving the plant's 2,500 tpd design capacity, we intend to use a portion of the proceeds from this

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offering to complete a feasibility study, prepared in accordance with the SEC Mining Modernization Rules and NI 43-101, to expand the Cerro Los Gatos Mine production rate to 3,000 tpd. If feasible, we expect the LGJV to complete the expansion within the next three to four years.

        The below graphs show our estimated payable silver equivalent production levels at the Cerro Los Gatos Mine in the coming years:

2020—2031 Cerro Los Gatos Mine Payable AgEq Production Estimate (Moz) and AISC ($/oz AgEq) on a 100% Basis

2020—2031 Cerro Los Gatos Mine Payable AgEq Production Estimate (Moz) and AISC ($/oz AgEq) on a 51.5% Basis

Payable silver equivalent calculated using feasibility study LOM average prices of $18.99/oz silver, $1,472/oz gold, $0.87/lb lead and $1.09/lb zinc. AISC calculated as sum of total operating costs, treatment and refining charges, penalties, transportation and freight, royalties and capital costs for each year. See Section 22 of the Los Gatos Technical Report. The Los Gatos Technical Report has an effective date of July 1, 2020. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral reserve estimates and the economic analysis contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "Business—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "Business—The Los Gatos District—Capital and Operating Costs." Based on production to date, we believe that the Cerro Los Gatos Mine has the

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potential to produce up to 7.2 million ounces of silver equivalent on a 100% basis (3.7 million ounces of silver equivalent on a 51.5% basis) in fiscal year 2020.

        Estimated mineral reserves at the Cerro Los Gatos Mine are summarized below:

Cerro Los Gatos Mineral Reserve Estimates as of the Effective Date of the Los Gatos Technical Report

Zone	Category	Tonnes (millions; 100% basis)		Tonnes (millions; 51.5% basis)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)
Northwest Zone	Proven		2.6		1.3		359		0.43		3.09		5.88
	Probable		0.5		0.3		333		0.34		2.86		5.88
Central Zone	Proven		3.8		1.9		314		0.31		2.55		5.32
	Probable		1.8		0.9		299		0.44		2.32		5.82
Southeast Zone	Proven		0.0		0.0		148		0.16		3.69		7.23
	Probable		0.6		0.3		148		0.16		3.69		7.23
Southeast Zone Block 2	Probable		0.4		0.2		118		0.17		3.11		4.16
Total (Proven)			6.4		3.3		332		0.36		2.77		5.55
Total (Probable)			3.3		1.7		254		0.34		2.74		5.86
Total (Proven & Probable)			9.6		5.0		306		0.35		2.76		5.65

Reserves based on a $75 Net Smelter Return ("NSR") cut-off value. NSR is defined as revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined. The mineral reserve estimates for the Cerro Los Gatos Mine reflect diluted grades with adjustment for metallurgical recovery. The mineral reserve estimates contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral reserve estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine."

        Estimated mineral resources at the Cerro Los Gatos Mine are summarized below:

Cerro Los Gatos Mine Mineral Resource Estimates Inclusive of Mineral Reserves as of the Effective Date of the Los Gatos Technical Report

Category	Tonnes (millions; 100% basis)		Tonnes (millions; 51.5% basis)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)		Cu (%)
Measured		5.8		3.0		324		0.39		2.9		5.8		0.11
Indicated		4.6		2.4		202		0.28		2.5		5.2		0.11
Measured & Indicated		10.4		5.4		269		0.34		2.7		5.5		0.11
Inferred		3.7		1.9		107		0.28		2.8		4.0		0.14

Based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

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Cerro Los Gatos Mine Mineral Resource Estimates Exclusive of Mineral Reserves as of the Effective Date of the Los Gatos Technical Report

Category	Tonnes (million; 100% basis)		Tonnes (million; 51.5% basis)		AgEq (g/t)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)
Measured		1.3		0.7		442		181		0.39		2.4		4.5
Indicated		2.2		1.1		368		139		0.23		2.1		4.2
Measured & Indicated		3.5		1.8		395		154		0.29		2.2		4.3
Inferred		3.7		1.9		361		107		0.28		2.8		4.0

Resources based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Reserves based on a $75 NSR cut -off value. NSR is defined as revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined. The mineral reserve estimates for the Cerro Los Gatos Mine reflect diluted grades with adjustment for metallurgical recovery. The mineral reserve estimates contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

        The economic analysis contained in the Los Gatos Technical Report is presented on an unlevered, post-tax, present value basis and has an effective date of July 1, 2020. The results of the economic analysis are summarized below:

Economic Analysis Results

Mine Life	years	11
Ore Tonnage	kt	9,618

		Life-of-Mine Payable Production		Avg. Annual Payable Production
	Average Grade
			(51.5% basis)		(51.5% basis)
	Processed	(100% basis)		(100% basis)
Production Statistics
Silver	305 g/t	72.0 Moz	37.1 Moz	6.5 Moz	3.4 Moz
Zinc	5.7%	679 Mlb	350 Mlb	62 Mlb	32 Mlb
Lead	2.8%	442 Mlb	228 Mlb	40 Mlb	21 Mlb
Gold	0.35 g/t	45.5 Koz	23.4 Koz	4.1 Koz	2.1 Koz
Silver Equivalent	642 g/t	134.7 Moz	69.4 Moz	12.2 Moz	6.3 Moz
Life-of-Mine Cost Metrics
Total Sustaining Capital Costs	$ millions	$267
Operating Costs	$/t-milled	$83.58
TC / RC, Penalties and Freight Costs	$/mt	$51.90
Royalties	$/mt	$1.50
Life-of-Mine By-Product Costs
AISC	$/oz Ag	$5.47
Life-of-Mine Co-Product Costs
AISC	$/oz AgEq	$11.77
Project Economics
NPV (post-tax; 5.0%)	$ millions	$653

Silver equivalent and by-product credits calculated using LOM average prices of $18.99/oz silver, $1,472/oz gold, $0.87/lb lead and $1.09/lb zinc. The economic analysis contained in the Los Gatos Technical Report has an effective date of July 1, 2020 and

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excludes 655,746 tonnes of material that has been mined through June 30, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "Business—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "Business—The Los Gatos District—Capital and Operating Costs."

Cerro Los Gatos Mine Unlevered Free Cash Flow Profile on a 100% Basis (in millions)

Cerro Los Gatos Mine Unlevered Free Cash Flow Profile on a 51.5% Basis (in millions)

See Section 22 of the Los Gatos Technical Report. The economic analysis contained in the Los Gatos Technical Report has an effective date of July 1, 2020 and excludes 655,746 tonnes of material that has been mined through June 30, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "Business—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "Business—The Los Gatos District—Capital and Operating Costs."

Additional Resource Growth Potential from Exploration of the Los Gatos District

        In addition to the significant existing resources at the Cerro Los Gatos Mine, the Los Gatos District also contains the Esther and Amapola deposits and 11 other mineralized zones. With control of the concessions, the ability to develop the entire 103,087-hectare land position and more than 85% of the land position yet to be explored, we expect that we will stand to benefit from mineralization beyond those already identified in the 14 mineralized zones, which include the Cerro Los Gatos Mine, the

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Esther deposit and the Amapola deposit. The mineral resource estimates for the Esther and Amapola deposits are set forth below:

Esther and Amapola Deposit Mineral Resource Estimates as of the Effective Date of the Los Gatos Technical Report

	Category	Tonnes (millions; 100% basis)		Tonnes (millions; 51.5% basis)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)		Cu (%)
Esther Deposit	Indicated		0.46		0.24		133		0.04		0.70		2.10		0.02
	Inferred		2.29		1.18		98		0.12		1.60		3.00		0.05
Amapola Deposit	Indicated		0.25		0.13		135		0.10		0.10		0.30		0.02
	Inferred		3.44		1.77		140		0.10		0.20		0.30		0.03

Based on a cut-off grade of 100 grams silver equivalent/tonne using metal prices of $22.30/toz silver, $0.97/lb lead, and $0.91/lb zinc. The mineral resource estimates for the Esther and Amapola deposits have an effective date of December 21, 2012. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

Assets Located in Geopolitically Safe and Established Mining Regions

        The Los Gatos District is located in one of the world's premier silver mining regions: the Mexican Silver Belt, which was the world's largest silver producing region in 2019. Based on a survey published in 2019 by the Fraser Institute, an independent research organization, Mexico is highly ranked among silver mining jurisdictions worldwide in terms of the attractiveness of investment. Mexico also has a long history of successful mineral development and operations, which we believe makes it a desirable jurisdiction in which to conduct mining operations due to stable political, tax and regulatory policies.

        Mexico is the largest producer of silver in the world, in addition to being a top-10 producer of gold, lead and zinc, among other major commodities. According to the 2019 Fraser Institute survey, Mexico ranks ahead of many countries in terms of investment attractiveness for mining, but behind certain areas in the U.S., Canada and Australia. In the mining sector, foreign ownership of Mexican companies is not subject to significant restrictions. The Mexican government is focused on improving infrastructure, primarily in the power grid and road networks.

Mine Site Exploration Potential Provides Opportunity for Significant Resource Conversion Beyond Existing Mine Plan

        We believe that our properties have significant exploration upside with numerous opportunities to define additional mineral resources through continued exploration.

Los Gatos District

        The Los Gatos District is located in the Mexican Silver Belt, near several other silver assets owned by large public companies. The Mexican Silver Belt has experienced significant exploration success, and the Los Gatos District represents an underexplored property where there has been little historical workings or previous exploration.

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        The Los Gatos District contains numerous significant high-grade targets throughout. Previous work done has resulted in a 190% increase in measured and indicated silver equivalent resources from March 2014 to September 2019, with additional exploration planned using proceeds from this offering.

Cerro Los Gatos Mine Measured & Indicated Ore Tonnage (Mt) and Silver Grade (g/t) (100% Basis)

Mineral resource estimates presented include mineral reserves. Based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, including mineral resource estimates exclusive of mineral reserves, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

        The LGJV owns the surface rights to 5,479 hectares covering the Cerro Los Gatos Mine and the Esther and Amapola deposits and the Gavilana (Paula) and San Luis zones, and has been granted mineral concessions for all 103,087 hectares, with 17 contiguous concessions in the Los Gatos District. We have identified 14 mineralized zones within the concessions. Of the 14 mineralized zones, the LGJV has established mineral resource estimates only at the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit and has conducted drilling on only 15 kilometers out of a strike length of over 150 kilometers of quartz veining along the Los Gatos District.

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Location of the Cerro Los Gatos District

Mineralized Zones Grade Intercepts

Mineralized Zones	Length (m)		Ag (g/t)		Pb (%)		Zn (%)
Boca de Leon		2.2		90.6		5.0		0.8
Cieneguita		1.3		62.4		5.4		0.9
El Lince		4.0		62.2		0.0		0.1
El Rodeo		0.8		61.5		3.4		4.0
La Paula		4.0		180.0		0.1		0.1
Los Torunos		1.8		34.2		2.6		0.9
Mezcalera		2.0		59.4		0.1		0.1
San Agustin		1.3		148.0		1.2		2.3
San Luis		2.0		271.0		0.3		0.1

The table above does not include Ocelote and Wall-E/Ava zones, as they do not have sufficient drilling.

        The current resources are significant, but we believe that additional resource potential remains in the immediate area. Drill testing of other high-priority targets within the Los Gatos District has been relatively limited given our focus on delineation of reserves at, and construction of, the Cerro Los Gatos Mine. As a result, the highly prospective Los Gatos District remains underexplored. Drilling at the Esther deposit to date has demonstrated good grade continuity along the system and characteristics similar to that identified during preliminary work at the Cerro Los Gatos Mine. Following potentially positive results from infill drilling at the Esther and Amapola deposits, we expect to update the

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resources and perform a scoping study to determine if these two deposit areas could generate economic production, representing further upside potential for the broader Los Gatos District.

        We expect to perform additional definition drilling to expand the Southeast and Northwest zones of the Cerro Los Gatos Mine and to perform additional drilling to expand the Esther and Amapola deposits, which remain open to extensions at depth. In addition to the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit, we have identified 11 other mineralized zones defined by high-grade drill intersections in the Los Gatos District.

Other Exploration Opportunities

        In addition to the Los Gatos District, we have 100% control of the Santa Valeria property, located in Chihuahua, Mexico, which is comprised of 1,543 hectares and could provide further opportunities for resource growth.

Exposure to Rapidly Improving Silver Fundamentals

        The value of silver is driven by two main factors: first, silver has a number of distinctive physical and chemical properties that make it an essential and difficult-to-substitute component in several industrial applications; and second, in times of economic uncertainty, silver is viewed as an attractive hedge against inflation and a decrease in the value of the U.S. dollar.

        Industrial demand for silver continues to increase, driven by electrical and electronics applications as well as emerging applications such as solar energy, medical applications and water purification, which we believe enhance the strong supply and demand fundamentals of silver. Moreover, investment demand for silver exposure has strengthened, driven in part by accommodative monetary policy, aggressive stimulus measures and an uncertain economic environment in connection with the COVID-19 pandemic. In 2019, the silver market posted a net deficit (including the impact of exchange-traded products) representing approximately 5% of demand.

        Despite this strong investment and industrial demand, the universe of primary silver companies is small, which has created a scarcity of investor options for silver exposure. We believe we represent a highly attractive opportunity for investors to gain exposure to a primary silver company with a world-class asset.

Experienced Management Team and Board of Directors

        We have an experienced and growing management team with a track record of successfully identifying and developing mineral discoveries.

        Stephen Orr, Chief Executive Officer and Director, who joined the Company in 2011, has more than 40 years of experience in the mining industry, including international commercial experience at both executive and operational levels. Previously, Mr. Orr served as president, director and chief executive officer at Ventana Gold Corp., a Vancouver-based mineral exploration and development company, as director and chief executive officer at OceanaGold Corporation ("OceanaGold"), where under his leadership OceanaGold built and commissioned two new mines in New Zealand, as vice president of North American operations and then managing director of Australia and Africa operations at Barrick Gold Corporation and as president and chief executive officer at Homestake Canada Inc. Mr. Orr has notified the Board of Directors that he intends to retire as Chief Executive Officer within one to two years following the completion of this offering. Accordingly, the Board of Directors has initiated efforts to recruit an experienced executive as President, who will work closely with Mr. Orr and be considered to succeed Mr. Orr as Chief Executive Officer. We intend for Mr. Orr to continue to serve on our Board of Directors after his retirement as Chief Executive Officer.

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        Roger Johnson, Chief Financial Officer, who joined the Company in 2011, has more than 40 years of experience in financial management in the mining industry. Previously, Mr. Johnson served as vice president and chief accounting officer at Newmont Mining Corporation (now Newmont Corp.), as senior vice president, finance and administration at Pasminco Zinc, Inc., and as vice president, controller at Kennecott Utah Copper LLC and practiced public accounting with Coopers & Lybrand (now PricewaterhouseCoopers LLP).

        Philip Pyle, Vice President of Exploration and Chief Geologist, who joined the Company in 2011, has more than 40 years of experience in the mining industry. Previously, Mr. Pyle served as vice president—exploration at Los Gatos Ltd., as exploration manager at Linear Gold Corp. (now Fortune Bay Corp.), as exploration manager at MIM Exploration Pty Ltd., as exploration manager at BHP Minerals International Exploration Inc. and as a geologist at AMAX Exploration Inc.

        John Kinyon, Vice President of Operations, who joined the Company in 2012, has more than 40 years of U.S. and international operations and construction experience, including experience in various mining positions in the U.S., Canada, Tanzania, Australia, and New Zealand. Previously, Mr. Kinyon served as vice president and general manager at Coeur Mining Inc.'s Kensington Mine in Juneau, Alaska, as vice president of operations at OceanaGold, as general manager at Yukon Zinc Corporation ("Yukon Zinc") and as general manager at Eskay Creek at Barrick Gold Corporation.

        Luis Felipe Huerta, Project Director of the Cerro Los Gatos Mine, who joined the Company in 2015, has more than 20 years of project management experience in the mining industry. Previously, Mr. Huerta served as project manager at Continental Gold Inc., as project manager at Fortuna Silver Mines Inc., and as project superintendent at Compañía Minera Milpo.

        Adam Dubas, Chief Administrative Officer, who joined the Company in 2011, has more than 20 years of experience in financial management. Previously, Mr. Dubas served as our Corporate Controller, as a senior manager at KPMG LLP, where he focused on the energy industry, and as an international financial analyst at Sprint Corporation.

        Our Board of Directors is comprised of senior mining and financial executives who have broad domestic and international experience in mineral exploration, development and mining. Our Board of Directors has been established with individuals who have career backgrounds at notable mining companies. We believe that the specialized skills and knowledge of the management team and of the Board of Directors will significantly enhance our ability to explore and develop the Los Gatos District and to pursue other regional growth opportunities.

        Thomas S. Kaplan, Chairman of the Board of Directors, is chairman and chief executive officer of The Electrum Group LLC, a privately-held global natural resources investment management company. Dr. Kaplan has over 25 years of experience in the resources sector. Dr. Kaplan served as chairman of Leor Exploration & Production LLC, a natural gas exploration and development company, which he founded in 2003 and sold in 2007 to EnCana Corporation. Dr. Kaplan intends to resign from the Board of Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

        Janice Stairs, Lead Director, was general counsel and corporate secretary at Namibia Critical Metals Inc., general counsel at Endeavour Mining Corporation, and vice president and general counsel at Etruscan Resources Inc. Ms. Stairs has more than 30 years of experience in the resources sector, including service on the board of directors of Gabriel Resources Ltd., Trilogy Metals Inc., and Marathon Gold Corporation. Ms. Stairs will become the Chair of the Board of Directors immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

        Jeb Burns, Director, is the chief investment officer of the Municipal Employees' Retirement System of Michigan and serves on the investment committee of Western Michigan University Foundation, the board of directors of Pacific Pension & Investment Institute, the board of directors of

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the Michigan History Foundation, the board of trustees of Mackinac Associates, and the board of directors of Venture Michigan Fund. Mr. Burns has nearly 20 years of investment and asset management experience. Mr. Burns intends to resign from the Board of Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

        Ali Erfan, Director, is vice chairman of The Electrum Group LLC, a privately-held global natural resources investment management company. Mr. Erfan is a founding board member of Leor Energy. Mr. Erfan has more than 20 years of experience in senior roles in the venture capital and private equity industry.

        Igor Gonzales, Director, is the chief operating officer at Appian Capital Advisory, a leading investment advisor in the metals and mining industry. Mr. Gonzales has more than 30 years of experience in the mining industry.

        Karl Hanneman, Director, is chief executive officer of International Tower Hill Mines, Ltd., where he leads a team advancing a 10-million-ounce gold resource in Alaska through project optimization. Mr. Hanneman has more than 35 years of mining industry management and technical experience as an executive, manager, mining engineer, mine operator and entrepreneur.

        Charles Hansard, Director Nominee, has over 25 years of experience in corporate governance at the board of directors level, including as chairman of African Platinum Plc.

        Igor Levental, Director, is president of The Electrum Group LLC, a privately-held global natural resources investment management company. Mr. Levental has held senior executive positions with major mining companies, including Homestake Mining Company and International Corona Corp. Mr. Levental has more than 30 years of experience across a broad cross-section of the international mining industry.

        David Peat, Director, was vice president and chief financial officer at Frontera Copper Corporation, vice president and global controller at Newmont Mining Corporation and vice president of finance and chief financial officer at Homestake Mining Company. Mr. Peat has more than 30 years of experience in financial leadership in support of mining corporations.

Shareholder Support

        We were founded by The Electrum Group LLC and certain of its affiliates. We refer to The Electrum Group LLC and its affiliates in this prospectus, individually and collectively, as "Electrum." Electrum is an investment advisor whose team has historically focused on making strategic investments in precious metals resources and hydrocarbons. We believe that access to the specialized skills and knowledge within Electrum will significantly enhance our ability to execute our business strategy.

        The Municipal Employees' Retirement System of Michigan ("MERS") is an independent, professional retirement services company that was created to administer the retirement plans for Michigan's local units of government on a not-for-profit basis.

        Following the completion of this offering and after giving effect to the Reorganization, Electrum and MERS will beneficially own approximately        % and        % of our outstanding common stock, respectively, assuming the over-allotment option is not exercised by the underwriters, and Electrum will continue to have a presence on the Board of Directors.

        See "Business—Key Investment Highlights—Shareholder Support."

17

Business Strategy

        Our business strategy is focused on creating value for stakeholders through the ownership and advancement of two principal projects—the Cerro Los Gatos Mine and the Los Gatos District—and through the pursuit of similarly attractive silver-focused projects. The LGJV commenced production at the Cerro Los Gatos Mine in the third quarter of 2019. We intend to achieve these objectives through the following value-enhancing near-term and long-term initiatives:

•

Acquire or retire a portion of the Los Gatos Working Capital Facility:  The Los Gatos Working Capital Facility provided by Dowa to the LGJV carries an annual interest rate of LIBOR plus 3%. In addition, we are required to pay an arrangement fee on the borrowing, calculated as 15.0% per annum of 70.0% of the average daily principal amount outstanding during the relevant fiscal quarter. Acquiring or retiring a portion of the Los Gatos Working Capital Facility will reduce our borrowing costs.

•

Repurchase an 18.5% interest in the Los Gatos Joint Venture to increase our ownership to 70.0%: We intend to exercise our right to repurchase an 18.5% interest in the LGJV from Dowa, increasing our ownership to approximately 70.0%. The option expires in June 2021 and represents an attractive investment opportunity that we believe is immediately value-accretive. With increased ownership, we will further benefit from the ramp-up in production at the Cerro Los Gatos Mine, supported by the attractive cash flow generation profile and fully funded nature of the project. In addition to increasing our economic interest in the Cerro Los Gatos Mine, we expect that this repurchase will also provide us with greater exposure to potential upside from additional exploration within the Los Gatos District, in particular the Esther and Amapola deposits. Following this increase in our ownership interest in the LGJV, we will continue to not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions (such as certain approvals, the creation of security interests on property, any initial public offering of the joint venture, and litigation settlements). See "Business—The Los Gatos District—Unanimous Omnibus Partner Agreement" for more information.

•

Fund strategic capital infrastructure at Cerro Los Gatos:  We intend to fund our pro rata share of strategic capital infrastructure construction costs at the Cerro Los Gatos Mine. These costs include, but are not limited to, the construction of a paste plant, the expansion of an underground pumping well gallery, additional capacity construction of the tailings storage facility and other various strategic capital needs. At this time, we are not obligated or committed to making these expenditures.

•

Fund near-term LGJV debt service needs:  We intend to fund our pro rata share of near-term debt service costs related to the Dowa Term Loan (as defined herein).

•

Complete a feasibility study expanding the Cerro Los Gatos Mine production rate to 3,000 tpd: Our desktop study estimated that a production rate expansion from 2,500 to 3,000 tpd could significantly improve the economics of the Cerro Los Gatos Mine. Given the appealing potential return, we intend to conduct a feasibility study, prepared in accordance with the SEC Mining Modernization Rules and NI 43-101, for the possible Cerro Los Gatos Mine production rate increase.

•

Further exploration of the Los Gatos District:  We intend to fund our pro rata share of an exploration program to further define resources in the partially defined Esther deposit to confirm the multiple deposit potential of the Los Gatos District.

        See "Business—Business Strategy."

18

Recent Developments

Impact of the COVID-19 Pandemic

        In late March 2020, the Mexican government declared a national health emergency due to increasing infection rates from the COVID-19 pandemic. Pursuant to the health emergency declaration, the Mexican government ordered a temporary suspension of all "non-essential" operations nationwide in Mexico, including mining operations, in order to help combat the spread of COVID-19. In response to the order, the LGJV effected a 45-day temporary suspension of all non-essential activities at the Cerro Los Gatos Mine site, which reduced the number of employees and contractors at the site and the Chihuahua corporate office. During the temporary suspension, the LGJV implemented health protocols, allowed most administrative and technical services employees to work remotely, reduced mining and milling, completed project enhancements and finalized a mine plan upon reactivation of mining activities after the temporary suspension.

        In late May 2020, the Mexican government designated mining an essential service and allowed mines to resume production, subject to deploying COVID-19 prevention protocols. Our existing COVID-19 protocols exceeded those mandated by the Mexican government and, accordingly, the LGJV reactivated mine development and mining in late May 2020 and hired additional employees. Ore processing resumed in early June 2020. In order to maintain social distancing and best practice protocols, public areas, such as the residential camps' cafeterias, limited the number of personnel. Food service periods were extended with employees assigned specific times for meals. Face masks are required in offices and other public areas. Daily working shift times are staggered to limit the number of employees in changing areas and pre-shift work meetings. Two sterilization tunnels have been installed at the main entry gate and at the entrance to the cafeteria. All individuals entering the Cerro Los Gatos Mine site are subject to a rapid test to screen for COVID-19 and, if an individual tests positive on the rapid test and on a secondary molecular test, the individual will be subject to quarantine protocols and removed from the mine site. In the event of an outbreak of COVID-19 on site, we could determine that a full suspension of our operations is necessary for the safety and protection of the workers.

        The COVID-19 pandemic has temporarily affected our financial condition, in part due to the loss of revenue resulting from the 45-day temporary suspension of all non-essential activities at the LGJV's Cerro Los Gatos Mine site and the expenses associated with the development and implementation of COVID-19 protocols. In addition, as the LGJV reactivated mine development and mining, it implemented a scalable optimized plan with a lower employee complement and with reduced average monthly production rate at 1,750 tpd until September 2020, targeting higher ore grades. This may result in higher per tonne mining, processing and sustaining capital costs than previously anticipated. We intend to ramp up to the 2,500 tpd design capacity beginning in September 2020 with the goal of reaching the 2,500 tpd design capacity in January 2021.

        If the Mexican government were to reinstate the suspension order caused by the COVID-19 pandemic, or if all mining activities at the Cerro Los Gatos Mine site were suspended for an undefined period of time, there could be additional costs incurred, production and development delays, cost overruns and operational restart costs. In addition, given that our management travels regularly between Mexico City and the Cerro Los Gatos Mine site, any restrictions on travel within Mexico may adversely affect our management's ability to oversee ongoing mining activities at the Cerro Los Gatos Mine and our ability to achieve our business objectives and milestones. See "Risk Factors—Risks Related to Our Business and Industry—Our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic, in regions where we conduct our business operations."

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Risk Factors

        Before you invest in our common stock, you should carefully consider all the information in this prospectus, including matters set forth under the "Risk Factors" section. These risks represent challenges to the successful implementation of our strategy and future profitability of our business. These risks include:

•

we have a history of negative operating cash flows and net losses and we may never achieve or sustain profitability;

•

we are dependent on two principal projects for our future operations, the Cerro Los Gatos Mine and the Los Gatos District; the Los Gatos District (other than the Cerro Los Gatos Mine) does not currently have proven or probable mineral reserves;

•

mineral reserve and mineral resource calculations at the Cerro Los Gatos Mine and the Los Gatos District are only estimates;

•

actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated and there are no assurances that any future development activities will result in profitable mining operations;

•

the title to some of the mineral properties may be uncertain or defective, thus risking our investment in such properties;

•

the prices of silver, zinc and lead are subject to change and a substantial or extended decline in the prices of silver, zinc or lead could materially and adversely affect our revenues and the value of our mineral properties;

•

we may be subject to claims and legal proceedings that could materially and adversely impact our financial position, financial performance and results of operations;

•

we have debt and may incur further debt in the future, which could adversely affect our financial health, limit our ability to obtain financing in the future and pursue certain business opportunities and reduce the value of your investment;

•

our directors may have conflicts of interest as a result of their relationships with other mining companies;

•

our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic, in regions where we conduct our business operations;

•

our success depends on developing and maintaining relationships with local communities and stakeholders;

•

the Mexican government, as well as local governments, extensively regulate mining operations, which impose significant actual and potential costs on us, and future regulation could increase those costs, delay receipt of regulatory refunds or limit our ability to produce silver and other metals;

•

Electrum, MERS and their respective affiliates will continue to have a substantial degree of control over us after this offering, which could delay or prevent a change of corporate control or result in the entrenchment of our management and/or Board of Directors;

•

our relationship with SOP may strain our senior management resources and could potentially result in conflicts of interest; and

•

we are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

20

Implications of Becoming an Emerging Growth Company

        As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include:

•

we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act");

•

we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the "PCAOB") regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

•

we are not required to submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay," "say-on-frequency" and "say-on-golden parachutes"; and

•

we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.

        We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more; (ii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iii) the date on which we are deemed to be a "large accelerated filer," which will occur as of the end of any fiscal year in which we (x) have an aggregate market value of our common stock held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (y) have been required to file annual and quarterly reports under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), for a period of at least 12 months and (z) have filed at least one annual report pursuant to the Exchange Act. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company," which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements.

        We have elected to take advantage of some of the reduced disclosure obligations listed above in this prospectus and may elect to take advantage of other reduced reporting requirements in future filings. In particular, we have elected to adopt the reduced disclosure with respect to our executive compensation disclosure. As a result of this election, the information that we provide to shareholders may be different from that you might get from other public companies.

        The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies. The decision to opt out of the extended transition period under the JOBS Act is irrevocable.

        See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Jumpstart Our Business Startups Act of 2012."

21

Corporate Information and Reorganization

        We were formed on February 2, 2011, when our predecessor Precious Metals Opportunities LLC, which was formed in December 2009, converted to a Delaware corporation. On March 1, 2011, Los Gatos Ltd. merged with and into us to form Sunshine Silver Mines Corporation. In 2014, we changed our name to Sunshine Silver Mining & Refining Corporation.

        Immediately prior to the closing of this offering, we intend to effect the Reorganization in which (i) SOP will convert into a Delaware corporation named Silver Opportunity Partners Corporation, (ii) each            shares of our common stock outstanding immediately prior to the Reorganization will be reclassified into (A)              shares of our common stock and (B)             shares of common stock of SOP Corporation and (iii) we will change our name from Sunshine Silver Mining & Refining Corporation to Gatos Silver, Inc. SOP currently holds our interest in the Sunshine Complex, which is located in the Coeur d'Alene Mining District in Idaho and is comprised of the Sunshine Mine and the Sunshine Big Creek Refinery. Through the Reorganization, we expect to distribute all of our equity interest in SOP to our shareholders immediately prior to the completion of this offering.

        A chart of our project ownership structure after the Reorganization is set out below.

In this graphic, green rectangles represent legal entities and grey circles depict the mining operations owned by such legal entities.

(1)

Silver Opportunity Partners LLC holds less than 0.01% interest in Minera Luz de Sol, S. de R.L. de C.V. due to requirements of Mexican law.

        Our principal executive office is located at 1660 Lincoln Street, Suite 2750, Denver, Colorado 80264. Our telephone number is (303) 784-5350.

22

THE OFFERING

Common stock offered in firm commitment offering	shares.
Common stock to be outstanding after this offering	shares (or            shares if the underwriters exercise their over-allotment option in full).
Option to purchase additional shares of common stock	shares.
Use of proceeds	We estimate that the net proceeds to us from this offering will be approximately $             million, or $             million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $             per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
	We intend to use the net proceeds of this offering to acquire or retire a portion of the Los Gatos Working Capital Facility provided by Dowa, exercise our option to repurchase an 18.5% interest in the LGJV to increase our ownership to 70.0%, fund strategic capital infrastructure at the Cerro Los Gatos Mine, fund near-term debt service needs, fund a feasibility study for a 3,000 tpd production rate expansion at the Cerro Los Gatos Mine, for Los Gatos District exploration and for working capital and general corporate purposes.
	If the net proceeds from this offering exceed $             million, we intend to use a portion of the net proceeds to repay our outstanding convertible notes, in which case, such convertible notes will not convert to shares of common stock in connection with this offering.
	See "Use of Proceeds."
Voting rights	Holders of our common stock are entitled to one vote per share. See "Description of Capital Stock."
Dividend policy	We have never declared or paid any cash dividends on our capital stock. We do not intend to pay any dividends in the foreseeable future and currently intend to retain all future earnings to finance our business. See "Dividend Policy."
Risk factors	See "Risk Factors" for a discussion of factors you should carefully consider before deciding whether to invest in our common stock.

23

Directed share program

At our request, the underwriters have reserved up to            % of the shares of common stock offered by this prospectus, for sale, at the initial public offering price, to our employees and directors and to friends, professional contacts and family members of our employees and directors. If purchased by these persons, these shares will not be subject to a lock-up restriction, except in the case of shares purchased by any director or officer, which will be subject to a 180-day lock-up restriction described under "Underwriting." The number of shares available for sale to the general public will be reduced by the number of reserved shares sold to these individuals. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. See "Underwriting."

Common stock listing

We have applied to list our common stock on the NYSE and the TSX under the symbol "GATO."

        The number of shares of our common stock that will be outstanding after this offering is based on the number of shares of common stock outstanding as of June 30, 2020 after giving effect to the Reorganization. Unless otherwise indicated, all information in this prospectus, including the number of shares that will be outstanding after this offering and other share-related information, excludes:

•

             shares of common stock issuable upon the exercise of options granted through the date hereof, at a weighted average exercise price of $            ;

•

             shares of common stock issuable upon the conversion of deferred share units ("DSUs") granted to certain employees and to directors; and

•

additional shares of common stock reserved for future issuance under our Long Term Incentive Plan.

        See "Executive and Director Compensation—Stock Option Grants" and "Executive and Director Compensation—Director Compensation." See also "Description of Capital Stock."

        Unless otherwise indicated, all information in this prospectus assumes:

•

the Reorganization;

•

the filing and effectiveness of our Amended and Restated Certificate of Incorporation, which will occur immediately prior to the completion of this offering;

•

an initial public offering price of $        per share of common stock, which is the midpoint of the range set forth on the cover page of this prospectus;

•

no exercise of outstanding options and no conversion of DSUs described above;

•

the issuance of an aggregate of        shares of common stock to our executive officers in connection with this offering, as described under "Certain Relationships and Related Party Transactions—Grant to Certain Executive Officers in Connection with This Offering," based on an initial public offering price of $              per share of common stock, which is the midpoint of the range set forth on the cover page of this prospectus;

•

the conversion of our outstanding convertible notes into an aggregate of        shares of common stock in connection with this offering, as described under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—

24

Convertible Notes," based on an initial public offering price of $        per share of common stock, which is the midpoint of the range set forth on the cover page of this prospectus;

•

no exercise of the option to purchase additional shares of common stock by the underwriters; and

•

no purchase of common stock in this offering by directors, officers or existing shareholders.

25

SUMMARY CONSOLIDATED FINANCIAL DATA

        We prepared the summary consolidated financial data using our consolidated financial statements for each of the periods presented. The summary consolidated financial data for each fiscal year in the three-year period ended December 31, 2019 was derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The summary consolidated financial data as of and for the six months ended June 30, 2020 and for the six months ended June 30, 2019 was derived from our unaudited interim condensed consolidated financial statements appearing elsewhere in this prospectus. In the opinion of management, such unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations and financial position. Results as of and for the six months ended June 30, 2020 are not necessarily indicative of results that may be expected for the entire year, and historical results are not necessarily indicative of results that may be expected for any future period. You should read this financial data in conjunction with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and our consolidated financial statements and related notes included elsewhere in this prospectus.

	Year Ended December 31,							Six Months Ended June 30,
	2019		2018			2017		2020		2019
								(unaudited)
	(in thousands, except for share and per share amounts)
Statement of Loss Data:
Expenses:
Exploration	$	1,248	$	1,709		$	1,179	$	598	$	527
Pre-development		2,318		2,527			2,408		1,048		1,140
General and administrative		4,845		4,396			6,494		3,257		2,689
Amortization		2,370		2,307			2,483		1,203		1,238
Total expenses		10,781		10,939			12,564		6,106		5,594
Dilution loss on affiliates		11,231		—			—		—		11,231
Equity loss in affiliates(1)		12,865		464			160		21,516		311
Net other expense		2,941		264			87		2,343		886
Loss before income taxes		37,818		11,667			12,811		29,965		18,022
Income tax benefit		—		(3	)		—		—		—
Net Loss	$	37,818	$	11,664		$	12,811	$	29,965	$	18,022
Net loss per share	$	0.49	$	0.16		$	0.19	$	0.37	$	0.24
Weighted average shares outstanding to compute net loss per share		77,934,044		73,941,655			67,507,179		81,011,188		75,050,171
Pro forma net loss per share(2)	$							$
Weighted average shares outstanding to compute pro forma net loss per share(2)

(1)

Represents the 70.0% loss pickup under the equity method of accounting (i) from January 1, 2019 to May 29, 2019 for the year ended December 31, 2019, (ii) from January 1, 2019 to May 29, 2019 for the six months ended June 30, 2019 and (iii) for the years ended December 31, 2018 and 2017. Represents the 51.5% loss pickup under the equity method of accounting for (i) the six months ended June 30, 2020, (ii) from May 30, 2019 to December 31, 2019 for the year ended December 31, 2019 and (iii) from May 30, 2019 to June 30, 2019 for the six months ended June 30, 2019.

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(2)

The pro forma information gives effect to the following: (i) the Reorganization, (ii) the issuance of an aggregate of            shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering, as if each such event occurred on the first day of the period presented.

	Year Ended December 31,									Six Months Ended June 30,
	2019			2018			2017			2020			2019
										(unaudited)
	(in thousands)
Cash Flow Data:
Net cash used by operating activities	$	(12,295	)	$	(6,654	)	$	(8,204	)	$	(9,537	)	$	(4,273	)
Net cash used by investing activities		(21,905	)		(745	)		(28,555	)		(7,573	)		(19,576	)
Net cash provided by (used by) financing activities		39,828			(222	)		42,678			9,979			25,466

	June 30, 2020
	Actual		Pro Forma(1)	Pro Forma As Adjusted(2)
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	1,954	$	$
Total assets		136,147
Total liabilities		14,543
Total shareholders' equity		121,604

(1)

The pro forma information gives effect to the following: (i) Reorganization, (ii) the issuance of an aggregate of            shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering.

(2)

The pro forma as adjusted information gives effect to the pro forma adjustments described in footnote (1) above and to the issuance and sale of                 shares of common stock in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) as adjusted cash and cash equivalents, total assets and total shareholders' equity by $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A            share increase (decrease) in the number of shares of common stock offered by us would increase (decrease) as adjusted cash and cash equivalents, total assets and total shareholders' equity by $             million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

27

RISK FACTORS

You should carefully consider the following risk factors that may affect our business, future operating results and financial condition, as well as the other information set forth in this prospectus, before making a decision to invest in our common stock. If any of the following risks actually occurs, our business, financial condition or results of operations would likely be materially and adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment. The risks below are not the only ones we face. Additional risks not currently known to us or that we currently deem immaterial may also adversely affect us.

Risks Related to Our Business and Industry

We have a history of negative operating cash flows and net losses and we may never achieve or sustain profitability.

        We have a history of negative operating cash flows and net losses. We expect to continue to incur negative operating cash flows and net losses until such time as one or more of our mineral properties generates sufficient revenues to fund our continuing operations. For the years ended December 31, 2019 and 2018, our net loss was $37.8 million and $11.7 million, respectively, and for the six months ended June 30, 2020 and 2019, our net loss was $30.0 million and $18.0 million, respectively. For the six months ended June 30, 2019, on a pro forma basis after giving effect to the Reorganization, our net loss would have been $             million. Given our history of negative operating cash flows and net losses, and potential future negative operating cash flows and net losses, we may use the net proceeds from this offering to fund our continuing operations. See "Use of Proceeds."

        We may never achieve or sustain profitability. The Cerro Los Gatos Mine commenced production on September 1, 2019. To become and remain profitable, we must succeed in generating significant revenues at the Cerro Los Gatos Mine, which will require us to be successful in a range of challenging activities and is subject to numerous risks, including the risk factors set forth in this "Risk Factors" section. In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our revenues, expenses and profitability. Our failure to achieve or sustain profitability would depress our market value, could impair our ability to execute our business plan, raise capital or continue our operations and could cause our shareholders to lose all or part of their investment.

There is substantial doubt about our ability to continue as a going concern.

        Our recurring negative operating cash flows and net losses raise substantial doubt about our ability to continue as a going concern. Our ability to continue operating as a going concern is contingent upon our ability to secure sufficient financing, retire certain existing obligations and/or reduce spending to maintain operations. Based on our planned use of the net proceeds of this offering and our currently available resources, including existing cash and cash equivalents, we estimate that such funds will enable us to fund our projected operating expenses and capital expenditures for at least twelve months from the date of this prospectus. This estimate is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to continue as a going concern.

28

We are dependent on two principal projects for our future operations, the Cerro Los Gatos Mine and the Los Gatos District. The Los Gatos District (other than the Cerro Los Gatos Mine) does not currently have proven or probable mineral reserves.

        The Los Gatos District (other than the Cerro Los Gatos Mine) does not have identified proven and probable mineral reserves. Mineral exploration and development involves a high degree of risk that even a combination of careful evaluation, experience and knowledge cannot eliminate, and few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration programs at the Los Gatos District will establish the presence of any additional proven or probable mineral reserves. The failure to establish additional proven or probable mineral reserves would severely restrict our ability to implement our strategies for long-term growth.

Mineral reserve and mineral resource calculations at the Cerro Los Gatos Mine and the Los Gatos District are only estimates.

        Calculations of mineral reserves at the Cerro Los Gatos Mine and of the mineral resources at the Los Gatos District are only estimates and depend on geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis, which might prove to be materially inaccurate. There is a degree of uncertainty attributable to the calculation of mineral reserves and mineral resources. Until mineral reserves and mineral resources are actually mined and processed, the quantity of metal and grades must be considered as estimates only and no assurance can be given that the indicated levels of metals will be produced. In making determinations about whether to advance any of our projects to development, we must rely upon estimated calculations for the mineral reserves and mineral resources and grades of mineralization on our properties.

        The estimation of mineral reserves and mineral resources is a subjective process that is partially dependent upon the judgment of the persons preparing the estimates. The process relies on the quantity and quality of available data and is based on knowledge, mining experience, statistical analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available.

        Estimated mineral reserves and mineral resources may have to be recalculated based on changes in metal prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence mineral reserves and mineral resources estimates. The extent to which mineral resources may ultimately be reclassified as mineral reserves is dependent upon the demonstration of their profitable recovery. Any material changes in volume and grades of mineralization will affect the economic viability of placing a property into production and a property's return on capital. We cannot provide assurance that mineralization can be mined or processed profitably.

        Mineral reserve and mineral resource estimates have been determined and valued based on assumed future metal prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in the market price for silver, lead and zinc may render portions of our mineralization uneconomic and result in reduced reported volume and grades, which in turn could have a material adverse effect on our financial performance, financial position and results of operations.

        In addition, inferred mineral resources have a great amount of uncertainty as to their existence and their economic and legal feasibility. You should not assume that any part of an inferred mineral resource will be upgraded to a higher category or that any of the mineral resources not already classified as mineral reserves will be reclassified as mineral reserves.

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Our mineral exploration efforts are highly speculative in nature and may be unsuccessful.

        Mineral exploration is highly speculative in nature, involves many uncertainties and risks and is frequently unsuccessful. It is performed to demonstrate the dimensions, position and mineral characteristics of mineral deposits, estimate mineral resources, assess amenability of the deposit to mining and processing scenarios and estimate potential deposit value. Once mineralization is discovered, it may take a number of years from the initial exploration phases before production is possible, during which time the potential feasibility of the project may change adversely. Substantial expenditures are required to establish additional proven and probable mineral reserves, to determine processes to extract the metals and, if required, to construct mining and processing facilities and obtain the rights to the land and resources required to develop the mining activities.

        Development projects have no operating history upon which to base estimates of proven and probable mineral reserves and estimates of future operating costs. Estimates are, to a large extent, based upon the interpretation of geological data and modeling obtained from drill holes and other sampling techniques, feasibility studies that derive estimates of operating costs based upon anticipated tonnage and grades of material to be mined and processed, the configuration of the deposit, expected recovery rates of metal from the mill feed material, facility and equipment capital and operating costs, anticipated climatic conditions and other factors. As a result, actual operating costs and economic returns based upon development of proven and probable mineral reserves may differ significantly from those originally estimated. Moreover, significant decreases in actual or expected commodity prices may mean mineralization, once found, will be uneconomical to mine.

Our processing ability may be adversely impacted by certain circumstances.

        A number of factors could affect our ability to process the quantities of metals that we recover and our ability to efficiently handle certain quantities of processed materials, including, but not limited to, the presence of oversized material at the crushing stage; material showing breakage characteristics different than those planned; material with grades outside of planned grade range; the presence of deleterious materials in ratios different than expected; material drier or wetter than expected, due to natural or environmental effects; and materials having viscosity or density different than expected.

        The occurrence of one or more of the circumstances described above could affect our ability to process the number of tonnes planned, recover valuable materials, remove deleterious materials, and produce planned quantities of concentrates. In turn, this may result in lower throughput, lower recoveries, increased downtime or some combination of all of the foregoing. While issues of this nature are part of normal operations, there is no assurance that unexpected conditions may not materially and adversely affect our business, results of operations or financial condition.

Actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated and there are no assurances that any future development activities will result in profitable mining operations.

        The actual operating costs at the Cerro Los Gatos Mine will depend upon changes in the availability and prices of labor, equipment and infrastructure, variances in ore recovery and mining rates from those assumed in the mining plan, operational risks, changes in governmental regulation, including taxation, environmental, permitting and other regulations and other factors, many of which are beyond our control. Due to any of these or other factors, the operating costs at the Cerro Los Gatos Mine may be significantly higher than those set forth in the Los Gatos Technical Report. As a result of higher capital and operating costs, production and economic returns may differ significantly from those set forth in the Los Gatos Technical Report and there are no assurances that any future development activities will result in profitable mining operations.

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Land reclamation and mine closure may be burdensome and costly.

        Land reclamation and mine closure requirements are generally imposed on mineral exploration companies, such as ours, which require us, among other things, to minimize the effects of land disturbance. Such requirements may include controlling the discharge of potentially dangerous effluents from a site and restoring a site's landscape to its pre-exploration form. The actual costs of reclamation and mine closure are uncertain and planned expenditures may differ from the actual expenditures required. Therefore, the amount that we are required to spend could be materially higher than current estimates. Any additional amounts required to be spent on reclamation and mine closure may have a material adverse effect on our financial performance, financial position and results of operations and may cause us to alter our operations. In addition, we are required to maintain financial assurances, such as letters of credit, to secure reclamation obligations under certain laws and regulations. The failure to acquire, maintain or renew such financial assurances could subject us to fines and penalties or suspension of our operations. Letters of credit or other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation over the life of a mine's operation. Although we include liabilities for estimated reclamation and mine closure costs in our financial statements, it may be necessary to spend more than what is projected to fund required reclamation and mine closure activities.

The development of one or more of our mineral projects that have been, or may in the future be, found to be economically feasible will be subject to all of the risks associated with establishing new mining operations.

        The Los Gatos Technical Report indicates that the Cerro Los Gatos Mine is a profitable silver-zinc-lead project with an estimated 11-year mine life, at modeled metals' prices. If the development of one of our other mineral projects is found to be economically feasible, the development of such projects will require obtaining permits and financing, and the construction and operation of mines, processing plants and related infrastructure. As a result, we will be subject to certain risks associated with establishing new mining operations, including:

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the timing and cost, which can be considerable, of the construction of mining and processing facilities and related infrastructure;

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the availability and cost of skilled labor, mining equipment and principal supplies needed for operations, including explosives, fuels, chemical reagents, water, power, equipment parts and lubricants;

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the availability and cost of appropriate smelting and refining arrangements;

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the need to obtain necessary environmental and other governmental approvals and permits and the timing of the receipt of those approvals and permits;

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the availability of funds to finance construction and development activities;

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industrial accidents;

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mine failures, shaft failures or equipment failures;

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natural phenomena such as inclement weather conditions, floods, droughts, rock slides and seismic activity;

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unusual or unexpected geological and metallurgical conditions;

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exchange rate and commodity price fluctuations;

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high rates of inflation;

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health pandemics, including the COVID-19 pandemic;

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potential opposition from non-governmental organizations, environmental groups or local groups, which may delay or prevent development activities; and

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restrictions or regulations imposed by governmental or regulatory authorities, including with respect to environmental matters.

        The costs, timing and complexities of developing the projects may be greater than anticipated. Cost estimates may increase significantly as more detailed engineering work is completed on a project. It is common in mining operations to experience unexpected costs, problems and delays during construction, development and mine start-up. In addition, the cost of producing silver-bearing concentrates that are of acceptable quality to smelters may be significantly higher than expected. We may encounter higher than acceptable contaminants in our concentrates such as arsenic, antimony, mercury, copper, iron, selenium or other contaminants that, when present in high concentrations, can result in penalties or outright rejection of the metals concentrates by the smelters or offtakers. For example, due to the high fluorine content at the Cerro Los Gatos Mine, it was necessary to reduce the fluorine content of the concentrate produced at the Cerro Los Gatos Mine by providing additional cleaning stages. Accordingly, we cannot provide assurance that our activities will result in profitable mining operations at the mineral properties.

Our operations involve significant risks and hazards inherent to the mining industry.

        Our operations involve the operation of large machines, heavy mobile equipment and drilling equipment. Hazards such as adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground control problems, cave-ins, changes in the regulatory environment, metallurgical and other processing problems, mechanical equipment failure, facility performance problems, fire and natural phenomena such as inclement weather conditions, floods and earthquakes are inherent risks in our operations. Hazards inherent to the mining industry can cause injuries or death to employees, contractors or other persons at our mineral properties, severe damage to and destruction of our property, plant and equipment, and contamination of, or damage to, the environment, and can result in the suspension of our exploration activities and future development and production activities. While we aim to maintain best safety practices as part of its culture, safety measures implemented by us may not be successful in preventing or mitigating future accidents.

        In addition, from time to time we may be subject to governmental investigations and claims and litigation filed on behalf of persons who are harmed while at our properties or otherwise in connection with our operations. To the extent that we are subject to personal injury or other claims or lawsuits in the future, it may not be possible to predict the ultimate outcome of these claims and lawsuits due to the nature of personal injury litigation. Similarly, if we are subject to governmental investigations or proceedings, we may incur significant penalties and fines, and enforcement actions against us could result in the closing of certain of our mining operations. If claims and lawsuits or governmental investigations or proceedings are ultimately resolved against us, it could have a material adverse effect on our financial performance, financial position and results of operations. Also, if we mine on property without the appropriate licenses and approvals, we could incur liability or our operations could be suspended.

We may be materially and adversely affected by challenges relating to slope and stability of underground openings.

        Our underground mines get deeper and our waste and tailings deposits increase in size as we continue with and expand our mining activities, presenting certain geotechnical challenges, including the possibility of failure of underground openings. If we are required to reinforce such openings or take additional actions to prevent such a failure, we could incur additional expenses, and our operations and stated mineral reserves could be negatively affected. We have taken the actions we determined to be

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proper in order to maintain the stability of underground openings, but additional action may be required in the future. Unexpected failures or additional requirements to prevent such failures may adversely affect our costs and expose us to health and safety and other liabilities in the event of an accident, and in turn materially and adversely affect the results of our operations and financial condition, as well as potentially have the effect of diminishing our stated mineral reserves.

The mining industry is very competitive.

        The mining industry is very competitive. Much of our competition is from larger, established mining companies with greater liquidity, greater access to credit and other financial resources, newer or more efficient equipment, lower cost structures, more effective risk management policies and procedures and/or a greater ability than us to withstand losses. Our competitors may be able to respond more quickly to new laws or regulations or emerging technologies, or devote greater resources to the expansion or efficiency of their operations than we can. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties. Accordingly, it is possible that new competitors or alliances among current and new competitors may emerge and gain significant market share to our detriment. We may not be able to compete successfully against current and future competitors, and any failure to do so could have a material adverse effect on our business, financial condition or results of operations.

Deliveries under a sales agreement with Ocean Partners and other customer concentrate sales agreements may be suspended or cancelled by our customers in certain cases.

        Under a sales agreement with Ocean Partners USA Inc. ("Ocean Partners") and other customer concentrate sales agreements, our customers may suspend or cancel delivery of our products in some cases, such as force majeure. Events of force majeure under these agreements generally include, among others, acts of God, strikes, fires, floods, wars, government actions or other events that are beyond the control of the parties involved. Any suspension or cancellation by our customers of deliveries under our sales contracts that are not replaced by deliveries under new contracts would reduce our cash flow and could materially and adversely affect our financial condition and results of operations.

The title to some of the mineral properties may be uncertain or defective, thus risking our investment in such properties.

        Under the laws of Mexico, mineral resources belong to the state, and government concessions are required to explore for or exploit mineral reserves. Mineral rights derive from concessions granted, on a discretionary basis, by the Ministry of Economy, pursuant to the Mexican mining law and the regulations thereunder. While we and the LGJV hold title to the mineral properties in Mexico described in this prospectus, including the Cerro Los Gatos Mine, through these government concessions, there is no assurance that title to the concessions comprising the Cerro Los Gatos Mine or our or the LGJV's other properties will not be challenged or impaired. The Los Gatos concession is held by us subject to the terms of an agreement with the original holder of that concession. The Cerro Los Gatos Mine and our or the LGJV's other properties may be subject to prior unregistered agreements, interests or native land claims, and title may be affected by such undetected defects. A title defect on any of our mineral properties (or any portion thereof) could adversely affect our ability to mine the property and/or process the minerals that we mine.

        The mineral properties' mining concessions in Mexico may be terminated if the obligations to maintain the concessions in good standing are not satisfied, including obligations to explore or exploit the relevant concession, to pay any relevant fees, to comply with all environmental and safety standards, to provide information to the Mexican Ministry of Economy and to allow inspections by the Mexican Ministry of Economy. In addition to termination, failure to make timely concession maintenance

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payments and otherwise comply with applicable laws, regulations and local practices relating to mineral right applications and tenure could result in reduction or expropriation of entitlements.

        Title insurance is generally not available for mineral properties and our ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severely constrained. We rely on title information and/or representations and warranties provided by our grantors. Any challenge to our title could result in litigation, insurance claims and potential losses, delay the exploration and development of a property and ultimately result in the loss of some or all of our interest in the property. In addition, if we mine on property without the appropriate title, we could incur liability for such activities. While we have received a title opinion in relation to the Los Gatos District dated as of November 5, 2019, such opinion is not a guarantee of title and such title may be challenged.

We do not currently intend to enter into hedging arrangements with respect to silver and other minerals and our hedging activities, or our decision not to hedge, with respect to our expenses could expose us to losses. We are also subject to risks relating to fluctuations in the exchange rate of the Mexican peso to the U.S. dollar.

        We do not currently intend to enter into hedging arrangements with respect to silver and other minerals. As such, we will not be protected from a decline in the price of silver and other minerals. This strategy may have a material adverse effect upon our financial performance, financial position and results of operations.

        We report our financial statements in U.S. dollars. A portion of our costs and expenses are incurred in Mexican pesos. As a result, any significant and sustained appreciation of the Mexican peso against the U.S. dollar may materially increase our costs and expenses. Additionally, we are, and will be, exposed to the potentially adverse effects of fluctuations in input costs, such as diesel fuel, and if we borrow funds at floating interest rates. We may seek to enter into hedging arrangements to hedge some of our input costs, such as diesel fuel, and our currency exposure with respect to the portion of our costs and expenses incurred in Mexican pesos. In the future we may also seek to enter into interest rate hedge agreements in connection with future indebtedness we may incur that bears interest at a floating rate. We currently, however, have not entered into any such hedging arrangements, or made a decision to do so, and cannot assure you that we will be able to do so on acceptable terms, or at all. Even if we seek and are able to enter into hedging contracts, there is no assurance that such hedging program will be effective, and any hedging program would also prevent us from benefitting fully from applicable input cost or rate decreases. In addition, we may in the future experience losses if a counterparty fails to perform under a hedge arrangement.

Our insurance may not provide adequate coverage.

        Our business and operations are subject to a number of risks and hazards, including, but not limited to, adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground control problems, cave-ins, changes in the regulatory environment, metallurgical and other processing problems, mechanical equipment failure, facility performance problems, fires and natural phenomena such as inclement weather conditions, floods and earthquakes. These risks could result in damage to, or destruction of, our mineral properties or production facilities, personal injury or death, environmental damage, delays in exploration, mining or processing, increased production costs, asset write downs, monetary losses and legal liability.

        Our property and liability insurance may not provide sufficient coverage for losses related to these or other hazards. Insurance against certain risks, including those related to environmental matters or other hazards resulting from exploration and production, is generally not available to us or to other companies within the mining industry. Our current insurance coverage may not continue to be available at economically feasible premiums, or at all. In addition, our business interruption insurance relating to

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our properties has long waiting periods before coverage begins. Accordingly, delays in returning to any future production could produce near-term severe impact to our business. Any losses from these events may cause us to incur significant costs that could have a material adverse effect on our financial performance, financial position and results of operations.

Our business is sensitive to nature and climate conditions.

        A number of governments have introduced or are moving to introduce climate change legislation and treaties at the international, national, state/provincial and local levels. Regulations relating to emission levels (such as carbon taxes) and energy efficiency are becoming more stringent. If the current regulatory trend continues, this may result in increased costs at some or all of our business locations. In addition, the physical risks of climate change may also have an adverse effect on our operations. Extreme weather events have the potential to disrupt our exploration at our mines and may require us to make additional expenditures to mitigate the impact of such events.

Suitable infrastructure may not be available or damage to existing infrastructure may occur.

        Mining, processing, development and exploration activities depend on adequate infrastructure. Reliable roads, bridges, port and/or rail transportation, power sources, water supply and access to key consumables are important determinants for capital and operating costs. The lack of availability on acceptable terms or the delay in the availability of any one or more of these items could prevent or delay exploration, development or exploitation of our projects. If adequate infrastructure is not available in a timely manner, we cannot assure you that the exploitation or development of our projects will be commenced or completed on a timely basis, or at all, or that the resulting operations will achieve the anticipated production volume, or that the construction costs and operating costs associated with the exploitation and/or development of our projects will not be higher than anticipated. In addition, extreme weather phenomena, sabotage, vandalism, government, non-governmental organization and community or other interference in the maintenance or provision of such infrastructure could adversely affect our operations and profitability.

If we are unable to retain key members of management, our business might be harmed.

        Our exploration activities and any future development and construction or mining and processing activities depend to a significant extent on the continued service and performance of our senior management team, including our Chief Executive Officer. We depend on a relatively small number of key officers, and we currently do not, and do not intend to, have key-person insurance for these individuals. Departures by members of our senior management could have a negative impact on our business, as we may not be able to find suitable personnel to replace departing management on a timely basis, or at all. The loss of any member of our senior management team could impair our ability to execute our business plan and could, therefore, have a material adverse effect on our business, results of operations and financial condition. In addition, the international mining industry is very active and we are facing increased competition for personnel in all disciplines and areas of operation. There is no assurance that we will be able to attract and retain personnel to sufficiently staff our development and operating teams.

The prices of silver, zinc and lead are subject to change and a substantial or extended decline in the prices of silver, zinc or lead could materially and adversely affect our revenues and the value of our mineral properties.

        Our business and financial performance will be significantly affected by fluctuations in the prices of silver, zinc and lead. The prices of silver, zinc and lead are volatile, can fluctuate substantially and are affected by numerous factors that are beyond our control. Since January 1, 2019 to August 31, 2020, the LBMA silver price ranged from a low of $12.01 per ounce on March 19, 2020 to a high of $28.33 per ounce on August 7, 2020; the LME Official Settlement zinc price ranged from a low of $1,816 per

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tonne ($0.82 per pound) on March 24, 2020 to a high of $2,933 per tonne ($1.33 per pound) on April 1, 2019; the LME Official Settlement lead price ranged from a low of $1,586 per tonne ($0.72 per pound) on March 24, 2020 to a high of $2,265 per tonne ($1.03 per pound) on October 29, 2019. Prices are affected by numerous factors beyond our control, including:

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prevailing interest rates and returns on other asset classes;

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expectations regarding inflation, monetary policy and currency values;

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speculation;

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governmental and exchange decisions regarding the disposal of precious metals stockpiles, including the decision by the CME Group, the owner and operator of the futures exchange, to raise silver's initial margin requirements on futures contracts;

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political and economic conditions;

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available supplies of silver, zinc and lead from mine production, inventories and recycled metal;

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sales by holders and producers of silver, zinc and lead; and

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demand for products containing silver, zinc and lead.

        Additionally, the COVID-19 pandemic and efforts to contain it, including restrictions on travel and other advisories issued may have a significant effect on silver, zinc and lead prices as well as demand. Because we expect to derive the substantial majority of our revenues from sales of silver, zinc and lead, our results of operations and cash flows will fluctuate as the prices for these metals increase or decrease. A sustained period of declining prices would materially and adversely affect our financial performance, financial position and results of operations.

Changes in the future demand for the silver, zinc and lead we produce could adversely affect our future sales volume and revenues.

        Our future revenues will depend, in substantial part, on the volume of silver, zinc and lead we sell and the prices at which we sell, which in turn will depend on the level of industrial and consumer demand. Demand for silver is mostly driven by its general perception as a store of value as well as its uses in industrial processes and products, such as batteries, bearings, brazing and soldering, catalysts, electronics and photographic material, and its use by direct consumers, such as for jewelry, silverware and coins. See "Silver Industry Overview." An increase in the production of silver worldwide or changes in technology, industrial processes or consumer habits, including increased demand for substitute materials, may decrease the demand for silver. Increased demand for substitute materials may be either technologically induced, when technological improvements render alternative products more attractive for first-use or end-use than silver or allow for reduced application of silver, or price induced, when a sustained increase in the price of silver leads to partial substitution for silver by a less expensive product or reduced application of silver. Demand for zinc is primarily driven by the demand for galvanized steel, used in construction, automobile and other industrial applications. Demand for lead is primarily driven by the demand for batteries, used in vehicles, emergency systems and other industrial battery application. Any substitution of these materials may decrease the demand for the silver, zinc and lead we produce. A fall in demand, resulting from economic slow-downs or recessions or other factors, could also decrease the price and volume of silver, zinc and lead we sell and therefore materially and adversely impact our results of operations and financial condition.

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We may fail to identify attractive acquisition candidates or joint ventures with strategic partners or may fail to successfully integrate acquired mineral properties or successfully manage joint ventures.

        As part of our development strategy, we may acquire additional mineral properties or enter into joint ventures with strategic partners. However, there can be no assurance that we will be able to identify attractive acquisition or joint venture candidates in the future or that we will succeed at effectively managing their integration or operation. In particular, significant and increasing competition exists for mineral acquisition opportunities throughout the world. We face strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, metals as well as in entering into joint ventures with other parties. If the expected synergies from such transactions do not materialize or if we fail to integrate them successfully into our existing business or operate them successfully with our joint venture partners, or if there are unexpected liabilities, our results of operations could be adversely affected.

        Pursuant to the Unanimous Omnibus Partner Agreement, we and Dowa must jointly approve of certain major decisions involving the LGJV, including decisions relating to the merger, amalgamation or restructuring of the LGJV and key strategic decisions, including with respect to expansion, among others. If we are unable to obtain the consent of Dowa, we may be unable to make decisions relating to the LGJV that we believe are beneficial for its operations, which may materially and adversely impact our results of operations and financial condition.

        In connection with any future acquisitions or joint ventures, we may incur indebtedness or issue equity securities, resulting in increased interest expense or dilution of the percentage ownership of existing shareholders. Unprofitable acquisitions or joint ventures, or additional indebtedness or issuances of securities in connection with such acquisitions or joint ventures, may adversely affect the price of our common stock and negatively affect our results of operations.

Our information technology systems may be vulnerable to disruption, which could place our systems at risk from data loss, operational failure or compromise of confidential information.

        We rely on various information technology systems. These systems remain vulnerable to disruption, damage or failure from a variety of sources, including, but not limited to, errors by employees or contractors, computer viruses, cyberattacks, including phishing, ransomware, and similar malware, misappropriation of data by outside parties, and various other threats. Techniques used to obtain unauthorized access to or sabotage our systems are under continuous and rapid evolution, and we may be unable to detect efforts to disrupt our data and systems in advance. Breaches and unauthorized access carry the potential to cause losses of assets or production, operational delays, equipment failure that could cause other risks to be realized, inaccurate recordkeeping, or disclosure of confidential information, any of which could result in financial losses and regulatory or legal exposure, and could have a material adverse effect on our cash flows, financial condition or results of operations. Although to date we have not experienced any material losses relating to cyberattacks or other information security breaches, there can be no assurance that we will not incur such losses in the future. Our risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As such threats continue to evolve, we may be required to expend additional resources to modify or enhance any protective measures or to investigate and remediate any security vulnerabilities.

We may be subject to claims and legal proceedings that could materially and adversely impact our financial position, financial performance and results of operations.

        We may be subject to claims or legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. These matters may result in litigation or unfavorable

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resolution which could materially and adversely impact our financial performance, financial position and results of operations. See "Business—Legal Proceedings."

We are subject to the risk of labor disputes, which could adversely affect our business.

        Although we have not experienced any significant labor disputes in recent years, there can be no assurances that we will not experience labor disputes in the future, including protests, blockades and strikes, which could disrupt our business operations and have an adverse effect on our business and results of operation. Although we consider our relations with our employees to be good, there can be no assurance that we will be able to maintain a satisfactory working relationship with our employees in the future.

We have debt and may incur further debt in the future, which could adversely affect our financial health, limit our ability to obtain financing in the future and pursue certain business opportunities and reduce the value of your investment.

        The LGJV has debt service obligations pursuant to the agreements governing its outstanding debt. As of June 30, 2020, the LGJV had $222.8 million of debt outstanding under a term loan agreement with Dowa, dated July 11, 2017, as amended from time to time (the "Dowa Term Loan") and $60.0 million of debt outstanding under a working capital facility agreement with Dowa, dated May 30, 2019 (the "Los Gatos Working Capital Facility" and, together with the Dowa Term Loan, the "Dowa Debt Agreements"). In connection with entering into the Los Gatos Working Capital Facility, on April 16, 2019, we made a capital contribution to the LGJV of $18.2 million, which was used to repay a portion of another loan that the LGJV had with Dowa (the "MPR Loan") and Dowa agreed to convert the remaining balance under the MPR Loan in exchange for an approximate 18.5% of the equity interest of the LGJV, reducing our ownership in the LGJV to approximately 51.5%. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dowa Debt Agreements."

        The Dowa Debt Agreements contain certain covenants and restrictions relating to the LGJV's use of the borrowings under such facilities, including: requiring the LGJV to use a substantial portion of funds from operations to make required payments of principal and interest, to retain certain levels of funds in reserve accounts and to accelerate repayment of the Dowa Term Loan for 70% of excess cash flows, as defined in the Dowa Debt Agreements. These covenants and restrictions will reduce funds available for operations and capital expenditures, future business opportunities, future dividends to us and other purposes; make the LGJV more vulnerable to economic and industry downturns and reduce flexibility in responding to changing business and economic conditions; limit flexibility in planning for, or reacting to, changes in the business and the industry in which we operate; place us at a competitive disadvantage compared to our competitors that have less debt; limit our ability to borrow more money for operations and sustaining capital or to finance acquisitions in the future; or require us to make future capital contributions to the LGJV, if needed, in order to make required payments of interest and principal. If we, as a 70.0% guarantor of the Dowa Term Loan and the Los Gatos Working Capital Facility, or the LGJV are unable to meet debt service obligations in the future, our financial position, financial performance and results of operations may be materially and adversely affected.

Our success depends on developing and maintaining relationships with local communities and stakeholders.

        Our ongoing and future success depends on developing and maintaining productive relationships with the communities surrounding our operations, including local indigenous people who may have rights or may assert rights to certain of our properties, and other stakeholders in our operating locations. We believe our operations can provide valuable benefits to surrounding communities in terms of direct employment, training and skills development and other benefits associated with ongoing payment of taxes. In addition, we seek to maintain partnerships and relationships with local

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communities. Notwithstanding our ongoing efforts, local communities and stakeholders can become dissatisfied with our activities or the level of benefits provided, which may result in legal or administrative proceedings, civil unrest, protests, direct action or campaigns against us. Any such occurrence could materially and adversely affect our business, financial condition or results of operations.

Our directors may have conflicts of interest as a result of their relationships with other mining companies.

        Our directors are also directors, officers and shareholders of other companies that are similarly engaged in the business of developing and exploiting natural resource properties. Consequently, there is a possibility that our directors may be in a position of conflict in the future.

Our business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic, in regions where we conduct our business operations.

        Our business could be adversely affected by health epidemics. For example, the outbreak of COVID-19 in the United States, Mexico and elsewhere has created significant business disruption and may adversely affect our business and operations. The outbreak has resulted in governments implementing numerous measures to contain COVID-19, such as travel bans and restrictions, particularly quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns. These containment measures are subject to change and the respective government authorities may tighten the restrictions at any time.

        In late March 2020, the Mexican government declared a national health emergency due to increasing infection rates from the COVID-19 pandemic. Pursuant to the health emergency declaration, the Mexican government ordered a temporary suspension of all "non-essential" operations nationwide in Mexico, including mining operations, in order to help combat the spread of COVID-19. In response to the order, the LGJV effected a 45-day temporary suspension of all non-essential activities at the Cerro Los Gatos Mine site, which reduced the number of employees and contractors at the site and the Chihuahua corporate office. During the temporary suspension, the LGJV implemented health protocols, allowed most administrative and technical services employees to work remotely, reduced mining and milling, completed project enhancements and finalized a mine plan upon reactivation of mining activities after the temporary suspension.

        In late May 2020, the Mexican government designated mining an essential service and allowed mines to resume production, subject to deploying COVID-19 prevention protocols. Our existing COVID-19 protocols exceeded those mandated by the Mexican government and, accordingly, the LGJV reactivated mine development and mining in late May 2020 and hired additional employees. Ore processing resumed in early June 2020. In order to maintain social distancing and best practice protocols, public areas, such as the residential camps' cafeterias, limited the number of personnel. Food service periods were extended with employees assigned specific times for meals. Face masks are required in offices and other public areas. Daily working shift times are staggered to limit the number of employees in changing areas and pre-shift work meetings. Two sterilization tunnels have been installed at the main entry gate and at the entrance to the cafeteria. All individuals entering the Cerro Los Gatos Mine site are subject to a rapid test to screen for COVID-19 and, if an individual tests positive on the rapid test and on a secondary molecular test, the individual will be subject to quarantine protocols and removed from the mine site. In the event of an outbreak of COVID-19 on site, we could determine that a full suspension of our operations is necessary for the safety and protection of the workers.

        The COVID-19 pandemic has temporarily affected our financial condition, in part due to the loss of revenue resulting from the 45-day temporary suspension of all non-essential activities at the LGJV's Cerro Los Gatos Mine site and the expenses associated with the development and implementation of

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COVID-19 protocols. In addition, as the LGJV reactivated mine development and mining, it implemented a scalable optimized plan with a lower employee complement and with reduced average monthly production rate at 1,750 tpd until September 2020, targeting higher ore grades. This may result in higher per tonne mining, processing and sustaining capital costs than previously anticipated. We intend to ramp up to the 2,500 tpd design capacity beginning in September 2020 with the goal of reaching the 2,500 tpd design capacity in January 2021.

        If the Mexican government were to reinstate the suspension order caused by the COVID-19 pandemic, or if all mining activities at the Cerro Los Gatos Mine site were suspended for an undefined period of time, there could be additional costs incurred, production and development delays, cost overruns and operational restart costs. In addition, given that our management travels regularly between Mexico City and the Cerro Los Gatos Mine site, any restrictions on travel within Mexico may adversely affect our management's ability to oversee ongoing mining activities at the Cerro Los Gatos Mine and our ability to achieve our business objectives and milestones.

        We may take further actions as may be required by government authorities or as we determine are in the best interests of our employees and business partners. There is no guarantee that we will not experience significant disruptions to or additional closures of some or all of our operations in the future. Such modifications to our business practices may negatively impact productivity, divert resources away from or otherwise disrupt our or the LGJV's business operations and delay and disrupt exploration and production timelines. Any long term closures or suspensions may also result in the loss of personnel or the workforce in general as employees seek employment elsewhere.

        While the full impact of this pandemic is unknown at this time, we are closely monitoring the rapid developments of the outbreak and continually assessing the potential impact on our business. Any prolonged disruption of our or the LGJV's operations and closures of facilities would delay our current exploration and production timelines and negatively impact our business, financial condition and results of operations. There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change. However, the COVID-19 pandemic could have a material adverse effect on our business, financial condition and results of operations and heighten many of our known risks described in this "Risk Factors" section.

Risks Related to Government Regulations and International Operations

The Mexican government, as well as local governments, extensively regulate mining operations, which impose significant actual and potential costs on us, and future regulation could increase those costs, delay receipt of regulatory refunds or limit our ability to produce silver and other metals.

        The mining industry is subject to increasingly strict regulation by federal, state and local authorities in Mexico, including in relation to:

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limitations on land use;

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mine permitting and licensing requirements;

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reclamation and restoration of properties after mining is completed;

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management of materials generated by mining operations; and

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storage, treatment and disposal of wastes and hazardous materials.

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        The liabilities and requirements associated with the laws and regulations related to these and other matters, including with respect to air emissions, water discharges and other environmental matters, may be costly and time-consuming and may restrict, delay or prevent commencement or continuation of exploration or production operations. We cannot assure you that we have been or will be at all times in compliance with all applicable laws and regulations. Failure to comply with applicable laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of cleanup and site restoration costs and liens, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits or authorizations and other enforcement measures that could have the effect of limiting or preventing production from our operations. We may incur material costs and liabilities resulting from claims for damages to property or injury to persons arising from our operations. If we are pursued for sanctions, costs and liabilities in respect of these matters, our mining operations and, as a result, our financial performance, financial position and results of operations, could be materially and adversely affected. See "Business—Environmental, Health and Safety Matters."

        Any new legislation or administrative regulations or new judicial interpretations or administrative enforcement of existing laws and regulations that would further regulate and tax the mining industry may also require us to change operations significantly or incur increased costs. Such changes could have a material adverse effect on our financial performance, financial position and results of operations.

        The Mexican properties are subject to regulation by the Political Constitution of the Mexican United States, and are subject to various legislation in Mexico, including the Mining Law, the Federal Law of Waters, the Federal Labor Law, the Federal Law of Firearms and Explosives, the General Law on Ecological Balance and Environmental Protection and the Federal Law on Metrology Standards. Our operations at the Mexican properties also require us to obtain local authorizations and, under the Agrarian Law, to comply with the uses and customs of communities located within the properties. Mining, environmental and labor authorities may inspect our Mexican operations on a regular basis and issue various citations and orders when they believe a violation has occurred under the relevant statute.

        If inspections in Mexico result in an alleged violation, we may be subject to fines, penalties or sanctions, our mining operations could be subject to temporary or extended closures, and we may be required to incur capital expenditures to re-commence our operations. Any of these actions could have a material adverse effect on our financial performance, financial position and results of operations.

        In late March 2020, in response to the COVID-19 pandemic, the Mexican government ordered a temporary suspension of all "non-essential" operations nationwide in Mexico, including mining operations. In late May 2020, the Mexican government designated mining an essential service and allowed mines to resume production, subject to deploying COVID-19 prevention protocols. However, there is no certainty that the Mexican regulators will not require further limitations on, or even a full shut down of, the operations at the Cerro Los Gatos Mine in connection with COVID-19. The potential costs of complying with these COVID-19 requirements is unknown and could have a material adverse effect on us.

Our operations are subject to additional political, economic and other uncertainties not generally associated with U.S. operations.

        We currently have two properties in Mexico: the Los Gatos District, which the LGJV controls, and the Santa Valeria property, which we control. Our operations are subject to significant risks inherent in exploration and resource extraction by foreign companies in Mexico. Exploration, development, production and closure activities in Mexico are potentially subject to heightened political, economic, regulatory and social risks that are beyond our control. These risks include:

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the possible unilateral cancellation or forced re-negotiation of contracts and licenses;

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unfavorable changes in laws and regulations;

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royalty and tax increases;

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claims by governmental entities or indigenous communities;

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expropriation or nationalization of property;

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political instability;

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fluctuations in currency exchange rates;

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social and labor unrest, organized crime, hostage taking, terrorism and violent crime;

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uncertainty regarding the enforceability of contractual rights and judgments; and

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other risks arising out of foreign governmental sovereignty over areas in which our mineral properties are located.

        Local economic conditions also can increase costs and adversely affect the security of our operations and the availability of skilled workers and supplies. Higher incidences of criminal activity and violence in the area of some of our properties could adversely affect the LGJV's ability to operate in an optimal fashion or at all, and may impose greater risks of theft and higher costs, which would adversely affect results of operations and cash flows.

        Acts of civil disobedience are common in Mexico. In recent years, many mining companies have been targets of actions to restrict their legally-entitled access to mining concessions or property. Such acts of civil disobedience often occur with no warning and can result in significant direct and indirect costs. We cannot provide assurance that there will be no disruptions to site access in the future, which could adversely affect our business.

        The right to export silver-bearing concentrate and other metals may depend on obtaining certain licenses, which could be delayed or denied at the discretion of the relevant regulatory authorities, or meeting certain quotas. Furthermore, the United States has recently instituted or proposed other changes in trade policies that include the negotiation or termination of trade agreements, including free trade agreements, economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the United States and other countries. It may be time-consuming and expensive for us to alter our operations in order to adapt to or comply with any such changes. If the United States were to withdraw from or materially modify international trade agreements to which it is a party, or if other countries imposed or increased tariffs on the minerals we may extract in the future, the costs of such products could increase significantly. Any of these conditions could lead to lower productivity and higher costs, which would adversely affect our financial performance, financial position and results of operations. Generally, our operations may be affected in varying degrees by changing government regulations in the United States and/or Mexico with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, importation of products and supplies, income and other taxes, royalties, the repatriation of profits, expropriation of mineral property, foreign investment, maintenance of concessions, licenses, approvals and permit, environmental matters, land use, land claims of local indigenous people and workplace safety.

        Such developments could require us to curtail or terminate operations at our mineral properties in Mexico, incur significant costs to meet newly-imposed environmental or other standards, pay greater royalties or higher prices for labor or services and recognize higher taxes, which could materially and adversely affect our results of operations, cash flows and financial condition. Furthermore, failure to comply strictly with applicable laws, regulations and local practices could result in loss, reduction or expropriation of licenses, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.

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        We continue to monitor developments and policies in Mexico and assess the impact thereof on our operations; however, such developments cannot be accurately predicted and could have an adverse effect on our business, financial condition and results of operations.

We are required to obtain, maintain and renew environmental, construction and mining permits, which is often a costly and time-consuming process and may ultimately not be possible.

        Mining companies, including ours, need many environmental, construction and mining permits, each of which can be time-consuming and costly to obtain, maintain and renew. In connection with our current and future operations, we must obtain and maintain a number of permits that impose strict conditions, requirements and obligations, including those relating to various environmental and health and safety matters. To obtain, maintain and renew certain permits, we have been and may in the future be required to conduct environmental studies, and make associated presentations to governmental authorities, pertaining to the potential impact of our current and future operations upon the environment and to take steps to avoid or mitigate those impacts. Permit terms and conditions can impose restrictions on how we conduct our operations and limit our flexibility in developing our mineral properties. Many of our permits are subject to renewal from time to time, and applications for renewal may be denied or the renewed permits may contain more restrictive conditions than our existing permits, including those governing impacts on the environment. We may be required to obtain new permits to expand our operations, and the grant of such permits may be subject to an expansive governmental review of our operations. We may not be successful in obtaining such permits, which could prevent us from commencing, continuing or expanding operations or otherwise adversely affect our business. Renewal of existing permits or obtaining new permits may be more difficult if we are not able to comply with our existing permits. Applications for permits, permit area expansions and permit renewals can also be subject to challenge by interested parties, which can delay or prevent receipt of needed permits. The permitting process can vary by jurisdiction in terms of its complexity and likely outcomes. The applicable laws and regulations, and the related judicial interpretations and enforcement policies, change frequently, which can make it difficult for us to obtain and renew permits and to comply with applicable requirements. Accordingly, permits required for our operations may not be issued, maintained or renewed in a timely fashion or at all, may be issued or renewed upon conditions that restrict our ability to conduct our operations economically, or may be subsequently revoked. Any such failure to obtain, maintain or renew permits, or other permitting delays or conditions, including in connection with any environmental impact analyses, could have a material adverse effect on our business, results of operations and financial condition.

        In regard to the Cerro Los Gatos Mine, the Los Gatos District and other Mexican projects, Mexico has adopted laws and guidelines for environmental permitting that are similar to those in effect in the United States and South American countries. We are currently operating under permits regulating mining, processing, use of explosives, water use and discharge and surface disturbance in relation to the Los Gatos District and the Santa Valeria property. We will be required to apply for corresponding authorizations prior to any production at our other Mexican properties and there can be no certainty as to whether, or the terms under which, such authorizations will be granted or renewed. Any failure to obtain authorizations and permits, or other authorization or permitting delays or conditions, could have a material adverse effect on our business, results of operations and financial condition.

We are subject to environmental and health and safety laws, regulations and permits that may subject us to material costs, liabilities and obligations.

        We are subject to environmental laws, regulations and permits in the various jurisdictions in which we operate, including those relating to, among other things, the removal and extraction of natural resources, the emission and discharge of materials into the environment, including plant and wildlife

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protection, remediation of soil and groundwater contamination, reclamation and closure of properties, including tailings and waste storage facilities, groundwater quality and availability, and the handling, storage, transport and disposal of wastes and hazardous materials. Pursuant to such requirements, we may be subject to inspections or reviews by governmental authorities. Failure to comply with these environmental requirements may expose us to litigation, fines or other sanctions, including the revocation of permits and suspension of operations. We expect to continue to incur significant capital and other compliance costs related to such requirements. These laws, regulations and permits, and the enforcement and interpretation thereof, change frequently and generally have become more stringent over time. If our noncompliance with such regulations were to result in a release of hazardous materials into the environment, such as soil or groundwater, we could be required to remediate such contamination, which could be costly. Moreover, noncompliance could subject us to private claims for property damage or personal injury based on exposure to hazardous materials or unsafe working conditions. In addition, changes in applicable requirements or stricter interpretation of existing requirements may result in costly compliance requirements or otherwise subject us to future liabilities. The occurrence of any of the foregoing, as well as any new environmental, health and safety laws and regulations applicable to our business or stricter interpretation or enforcement of existing laws and regulations, could have a material adverse effect on our business, financial condition and results of operations.

        We could be liable for any environmental contamination at, under or released from our or our predecessors' currently or formerly owned or operated properties or third-party waste disposal sites. Certain environmental laws impose joint and several strict liability for releases of hazardous substances at such properties or sites, without regard to fault or the legality of the original conduct. A generator of waste can be held responsible for contamination resulting from the treatment or disposal of such waste at any off-site location (such as a landfill), regardless of whether the generator arranged for the treatment or disposal of the waste in compliance with applicable laws. Costs associated with liability for removal or remediation of contamination or damage to natural resources could be substantial and liability under these laws may attach without regard to whether the responsible party knew of, or was responsible for, the presence of the contaminants. Accordingly, we may be held responsible for more than our share of the contamination or other damages, up to and including the entire amount of such damages. In addition to potentially significant investigation and remediation costs, such matters can give rise to claims from governmental authorities and other third parties, including for orders, inspections, fines or penalties, natural resource damages, personal injury, property damage, toxic torts and other damages.

        Our costs, liabilities and obligations relating to environmental matters could have a material adverse effect on our financial performance, financial position and results of operations.

We may be responsible for anti-corruption and anti-bribery law violations.

        Our operations are governed by, and involve interactions with, various levels of government in foreign countries. We are required to comply with anti-corruption and anti-bribery laws, including the Corruption of Foreign Public Officials Act (Canada) and the U.S. Foreign Corrupt Practices Act (the "FCPA") and similar laws in Mexico. These laws generally prohibit companies and company employees from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. The FCPA also requires companies to maintain accurate books and records and internal controls. Because our interests are located in Mexico, there is a risk of potential FCPA violations.

        In recent years, there has been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting in greater scrutiny and punishment to companies convicted of violating anti-corruption and anti-bribery laws. A company may be found liable for violations by not only its employees, but also by its contractors and third-party agents. Our internal

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procedures and programs may not always be effective in ensuring that we, our employees, contractors or third-party agents will comply strictly with all such applicable laws. If we become subject to an enforcement action or we are found to be in violation of such laws, this may have a material adverse effect on our reputation and may possibly result in significant penalties or sanctions, and may have a material adverse effect on our cash flows, financial condition or results of operations.

We may be required by human rights laws to take actions that delay our operations or the advancement of our projects.

        Various international and national laws, codes, resolutions, conventions, guidelines and other materials relate to human rights (including rights with respect to health and safety and the environment surrounding our operations). Many of these materials impose obligations on government and companies to respect human rights. Some mandate that governments consult with communities surrounding our projects regarding government actions that may affect local stakeholders, including actions to approve or grant mining rights or permits. The obligations of government and private parties under the various international and national materials pertaining to human rights continue to evolve and be defined. One or more groups of people may oppose our current and future operations or further development or new development of our projects or operations. Such opposition may be directed through legal or administrative proceedings or expressed in manifestations such as protests, roadblocks or other forms of public expression against our activities, and may have a negative impact on our reputation. Opposition by such groups to our operations may require modification of, or preclude the operation or development of, our projects or may require us to enter into agreements with such groups or local governments with respect to our projects, in some cases causing considerable delays to the advancement of our projects.

Risks Related to This Offering and Our Common Stock

There is no existing market for our common stock and we do not know if one will develop. Even if a market does develop, the stock price in the market may not exceed the offering price.

        Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our Company will lead to the development of an active trading market on the NYSE, the TSX or otherwise, or how liquid that market may become. An active trading market for our common stock may not develop and even if it does develop, may not continue upon the completion of this offering and the market price of our common stock may decline below the initial public offering price. The initial public offering price for the common stock will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price you pay in this offering.

The market price of our common stock may be volatile, which could result in substantial losses for you.

        The initial public offering price for our common stock will be determined through negotiations between us and the representatives of the underwriters. This initial public offering price may vary from the market price of our common stock after this offering. Some of the factors that may cause the market price of our common stock to fluctuate include:

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failure to identify mineral reserves at our properties;

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failure to achieve production at our mineral properties;

•

actual or anticipated changes in the price of silver and base metal by-products;

•

fluctuations in our quarterly and annual financial results or the quarterly and annual financial results of companies perceived to be similar to us;

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•

changes in market valuations of similar companies;

•

success or failure of competitor mining companies;

•

changes in our capital structure, such as future issuances of securities or the incurrence of debt;

•

sales of large blocks of our common stock;

•

announcements by us or our competitors of significant developments, contracts, acquisitions or strategic alliances;

•

changes in regulatory requirements and the political climate in the United States, Mexico or both;

•

litigation involving our Company, our general industry or both;

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additions or departures of key personnel;

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investors' general perception of us, including any perception of misuse of sensitive information;

•

changes in general economic, industry and market conditions;

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accidents at mining properties, whether owned by us or otherwise;

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natural disasters, terrorist attacks and acts of war; and

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our ability to control our costs.

        If the market for stocks in our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.

        If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be both costly to defend against and a distraction to management.

Our anti-takeover defense provisions may cause our common stock to trade at market prices lower than it might absent such provisions.

        Our Board of Directors has the authority to issue blank check preferred stock. Additionally, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws that we will adopt prior to the closing of this offering will contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our Board of Directors. These include provisions setting forth advance notice procedures for shareholders' nominations of directors and proposals of topics for consideration at meetings of shareholders, provisions restricting shareholders from calling a special meeting of shareholders or requiring one to be called, provisions limiting the ability of shareholders to act by written consent and provisions requiring a 66.67% shareholder vote to amend our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws. These provisions may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock. In addition, these provisions may cause our common stock to trade at a market price lower than it might absent such provisions.

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You will suffer immediate and substantial dilution as a result of this offering.

        The initial public offering price per share of our common stock is substantially higher than our net tangible book value per share immediately after this offering. As a result, if you purchase shares in this offering, you will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities, and any additional financing in the future may cause further dilution to our existing shareholders and there can be no assurance that any future additional financing will be on terms that are favorable to us or our shareholders. At an offering price of $            per share, which is the midpoint of the range set forth on the front cover of this prospectus, you will incur immediate and substantial dilution of your investment in the amount of $            per share. See "Dilution."

Future sales of our common stock after the lock-up period has expired, or the perception that such sales may occur, could depress our common stock price.

        After this offering, we will have                        shares of common stock outstanding (or                        shares of common stock outstanding if the underwriters' over-allotment option is exercised in full). This includes the shares of common stock we are selling in this offering, which may generally be resold in the public market immediately after this offering. We expect that the remaining shares of common stock, representing        % of our total outstanding shares of common stock following this offering, will become available for resale in the public market as set forth under the heading "Shares Eligible for Future Sale." All of our directors and executive officers, and the holders of substantially all of our common stock, have signed lock-up agreements for a period of 180 days following the date of this prospectus, subject to extension in the case of an earnings release or material news or a material event relating to us. BMO Capital Markets Corp., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC may, in their sole discretion and without notice, release all or any portion of the common stock subject to lock-up agreements. There are no agreements, understandings or intentions, tacit or explicit, to release any of the common stock subject to lock-up agreements prior to the expiration of the lock-up period. As restrictions on resale end, the market price of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them, and we will enter into a registration rights agreement with substantially all our shareholders in connection with this offering. See "Certain Relationships and Related Party Transactions—Registration Rights Agreement." These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities.

        In addition, immediately following this offering, we intend to file a registration statement registering under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), the shares of common stock reserved for issuance in respect of incentive awards to our directors and certain of our employees. This would result in approximately                         shares of common stock underlying such awards becoming available for resale in the public markets, subject to any applicable lock-up agreements.

We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

        We have never declared or paid any cash dividend on our capital stock. We do not intend to pay any cash dividends on our common stock for the foreseeable future. We currently intend to retain all future earnings, if any, to finance our business. The payment of any future dividends, if any, will be determined by our Board of Directors in light of conditions then existing, including our earnings, financial condition and capital requirements, business conditions, corporate law requirements and other factors. See "Dividend Policy."

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Electrum, MERS and their respective affiliates will continue to have a substantial degree of control over us after this offering, which could delay or prevent a change of corporate control or result in the entrenchment of our management and/or Board of Directors.

        After this offering, Electrum will beneficially own, in the aggregate, approximately        % of our outstanding common stock (approximately        % if the underwriters' over-allotment option is exercised in full). In addition, following this offering and assuming no exercise by the underwriters of their over-allotment option, MERS will beneficially own, in the aggregate, approximately        % of our outstanding common stock (approximately        % if the underwriters' over-allotment option is exercised in full). In connection with this offering, we intend to enter into a shareholders agreement with Electrum and MERS pursuant to which Electrum and MERS will have certain director nomination rights. The shareholders agreement will also provide that Electrum approval must be obtained prior to us engaging in certain actions. See "Certain Relationships and Related Party Transactions—Shareholders Agreement." As a result, Electrum will have the ability to control our management and affairs and will have control over the outcome of matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets.

        Our concentration of ownership and shareholders agreement may harm the market price of our common stock by, among other things:

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delaying, deferring or preventing a change of control, even at a per share price that is in excess of the then-current price of our common stock;

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impeding a merger, consolidation, takeover or other business combination involving us, even at a per share price that is in excess of the then-current price of our common stock; or

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discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, even at a per share price that is in excess of the then current price of our common stock.

Our relationship with SOP may strain our senior management resources and could potentially result in conflicts of interest.

        Immediately prior to the closing of this offering, we intend to effect the Reorganization. See "Prospectus Summary—Corporate Information and Reorganization." In addition, we intend to enter into a Management Services Agreement with SOP, pursuant to which we will provide certain executive and managerial advisory services to SOP. See "Certain Relationships and Related Party Transactions—Reorganization and Management Services Agreement." SOP will reimburse us for costs representing the proportion of our advisory services allocated to it under the Management Services Agreement. However, providing such advisory services to SOP may strain our resources and divert management's attention from our principal projects and other business concerns, which would adversely affect our business and operating results. We anticipate that at least some of our directors will also be directors of SOP, which could create, or appear to create, conflicts of interest with respect to matters involving both us and SOP.

The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain executive management and qualified board members, which could make it difficult to manage our business, particularly after we are no longer an "emerging growth company."

        Following the completion of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the Securities and Exchange Commission (the "SEC"). Complying with these reporting and other regulatory requirements will be time-consuming and

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will result in increased costs to us and could have a negative effect on our business, financial condition and results of operations.

        As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, applicable Canadian securities laws and regulations, the listing requirements of the NYSE and the TSX and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an "emerging growth company." The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. In order to maintain and, if required, improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting to meet this standard, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join us and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management's attention from other business concerns, which could adversely affect our business and operating results.

        As an "emerging growth company" as defined in the JOBS Act, we intend to take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

        We will remain an "emerging growth company" until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more; (ii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iii) the date on which we are deemed to be a "large accelerated filer," which will occur as of the end of any fiscal year in which we (x) have an aggregate market value of our common stock held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (y) have been required to file annual and quarterly reports under the Exchange Act, for a period of at least 12 months and (z) have filed at least one annual report pursuant to the Exchange Act.

        We also expect that being a public company and complying with these rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation and nominating committee, and qualified executive officers.

        As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not

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result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

As a result of becoming a public company, we will be obligated to develop and maintain proper and effective internal controls over financial reporting. We may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

        We may be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal controls over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal controls over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on our internal controls over financial reporting.

        We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal controls over financial reporting, we will be unable to assert that our internal controls are effective.

        If we are unable to assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.

        We will be required to disclose changes made in our internal controls and procedures on a quarterly basis. However, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until the later of the year following our first annual report required to be filed with the SEC and the date we are no longer an "emerging growth company" as defined in the JOBS Act, if we take advantage of the exemptions contained in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Our remediation efforts may not enable us to avoid a material weakness in the future. We will remain an "emerging growth company" for up to five years. To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff.

We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

        We are an "emerging growth company," as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive if we rely on these exemptions. If

50

some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

        Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company," which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. We would also be exempt from the requirement to obtain an external audit on the effectiveness of internal control over financial reporting provided in Section 404(b) of the Sarbanes-Oxley Act. These exemptions and reduced disclosures in our SEC filings due to our status as a smaller reporting company mean our auditors do not review our internal control over financial reporting and may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock prices may be more volatile.

Our Amended and Restated Certificate of Incorporation and shareholders agreement will contain a provision renouncing our interest and expectancy in certain corporate opportunities.

        Our Amended and Restated Certificate of Incorporation and shareholders agreement will provide for the allocation of certain corporate opportunities between us and Electrum and MERS. Under these provisions, neither Electrum nor MERS, their affiliates and subsidiaries, nor any of their officers, directors, agents, stockholders, members or partners will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. For instance, a director of our Company who is not also our employee and also serves as a director, officer or employee of Electrum or MERS or any of their subsidiaries or affiliates may pursue certain acquisition or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our financial performance, financial position and results of operations if attractive corporate opportunities are allocated by Electrum or MERS to themselves or their subsidiaries or affiliates instead of to us. The terms of our Amended and Restated Certificate of Incorporation are more fully described in "Description of Capital Stock" and the terms of our shareholders agreement are more fully described in "Certain Relationships and Related Party Transactions—Shareholders Agreement."

Our Amended and Restated Certificate of Incorporation will provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

        Our Amended and Restated Certificate of Incorporation will provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

•

any derivative action or proceeding brought on our behalf;

•

any action asserting a breach of fiduciary duty;

•

any action asserting a claim against us arising under the Delaware General Corporation Law; and

•

any action asserting a claim against us that is governed by the internal affairs doctrine.

        This provision does not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the U.S. federal courts have exclusive

51

jurisdiction. Our Amended and Restated Certificate of Incorporation will further provide that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

        Our Amended and Restated Certificate of Incorporation will also provide that any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and to have consented to these choice of forum provisions. These exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers, and other employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

        While Delaware courts have determined that choice of forum provisions are facially valid, it is possible that a court of law in another jurisdiction could rule that the choice of forum provisions to be contained in our Amended and Restated Certificate of Incorporation are inapplicable or unenforceable if they are challenged in a proceeding or otherwise. If a court were to find the choice of forum provision in our Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

We will have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        We currently intend to use the net proceeds from this offering in the manner described in "Use of Proceeds." However, our Board of Directors and management will retain broad discretion in the application, and timing of the application, of the net proceeds from this offering and could spend the net proceeds in ways that do not improve our results of operations or enhance the value of our common stock. As such, we may use net proceeds of this offering in ways that an investor may not consider desirable, if our Board of Directors and management believe such use would be in our best interest. As a result, investors will be relying on the judgment of our Board of Directors and management for the application of the net proceeds from this offering. There can be no assurance regarding the results and the effectiveness of our use of the net proceeds from this offering. Our failure to apply these funds effectively could result in financial losses that could harm our business, cause the market price of our stock to decline, and delay the development of our operations. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our common stock and our trading volume could decline.

        The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our Company. If no or too few securities or industry analysts commence coverage of our Company, the trading price for our common stock would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline. In addition, if our operating results fail to meet the forecast of analysts, the price of our common stock would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause the price of our common stock and trading volume to decline.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains "forward-looking statements." Those statements include, but are not limited to, statements with respect to production from the Cerro Los Gatos Mine and further exploration of the Los Gatos District, including the repurchase of an 18.5% interest in the LGJV, a feasibility study to be completed at the Cerro Los Gatos Mine for a 3,000 tpd production rate expansion, estimated calculations of mineral reserves and resources at our properties, results of the economic analysis contained in the Los Gatos Technical Report, our business strategy, general administrative expenses, the completion of the Reorganization, the entry into the Management Service Agreement, payment of royalty payments, production and sale of concentrates, future strategic infrastructure development at the Cerro Los Gatos Mine, expected cost savings, projected attributable net revenue and unlevered free cash flow, estimates of tax liabilities, our prospects, plans and objectives, industry trends, our requirements for additional capital, expectations generally regarding the completion of the offering, the utilization of the net proceeds of the offering, treatment under applicable government regimes for permitting or attaining approvals, unanticipated reclamation expenses, government regulation, environmental risks, reclamation and rehabilitation expenses, title disputes or claims, synergies of potential future acquisitions, expected actions of third parties, limitations of insurance coverage, and our anticipated uses of the net proceeds from this offering. These statements may be under the captions "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Silver Industry Overview," "Business" and in other sections of this prospectus. In some cases, you can identify these statements by forward-looking words such as "may," "might," "could," "would," "achieve," "budget," "scheduled," "forecasts," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our industry.

        All forward-looking statements speak only as of the date on which they are made. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions concerning future events that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We believe that the factors that could cause our actual results to differ materially from those expressed or implied by forward-looking statements include the following:

•

our limited operating history on which to base an evaluation of our business and prospects;

•

our dependence on two principal projects for our future operations;

•

mineral reserve and mineral resource calculations at the Cerro Los Gatos Mine and the Los Gatos District are only estimates;

•

actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated;

•

the title to some of the mineral properties may be uncertain or defective;

•

changes in the prices of silver, zinc or lead;

•

claims and legal proceedings against us;

•

we have debt and may incur further debt in the future;

•

significant risk and hazards associated with mining operations;

•

our failure to identify attractive acquisition candidates or joint ventures with strategic partners or inability to successfully integrate acquired mineral properties or successfully manage joint ventures;

53

•

extensive regulation by the Mexican government as well as local governments;

•

the requirements that we obtain, maintain and renew environmental, construction and mining permits, which is often a costly and time-consuming process;

•

our Mexican operations are subject to additional political, economic and other uncertainties not generally associated with domestic operations;

•

exchange rate of the Mexican peso and the U.S. dollar;

•

the impact of the COVID-19 pandemic, including impacts to the availability of our workforce, government orders that may require temporary suspension of operations, and the global economy;

•

our relationship with SOP;

•

our relationship with Electrum, MERS and their respective affiliates having substantial control over us; and

•

our exposure to material costs, liabilities and obligations as a result of environmental laws and regulations (including changes thereto) and permits.

        These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in this prospectus. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events, except as required by law. Certain forward-looking statements are based on assumptions, qualifications and procedures which are set out only in the Los Gatos Technical Report. For a complete description of assumptions, qualifications and procedures associated with such information, reference should be made to the full text of the Los Gatos Technical Report.

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USE OF PROCEEDS

        We will receive net proceeds from this offering of approximately $             million, or approximately $             million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A            share increase (decrease) in the number of shares of common stock offered by us would increase (decrease) the net proceeds to us from this offering by $             million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        We intend to allocate the proceeds as follows:

	In millions
Acquire or retire a portion of the Los Gatos Working Capital Facility	$
Repurchase an 18.5% interest in the Los Gatos Joint Venture to increase our ownership to 70.0%
Fund strategic capital infrastructure at the Cerro Los Gatos Mine (our 70.0% contribution)
Fund near-term debt service needs (our 70.0% contribution)(1)
Feasibility Study for a 3,000 tpd production rate expansion at the Cerro Los Gatos Mine (our 70.0% contribution)
Los Gatos District exploration (our 70.0% contribution)
Working capital and general corporate purposes(2)
Total	$

(1)

Near-term debt service needs refer to the amount of the net proceeds from this offering that we intend to reserve for interest and principal payments under the Dowa Term Loan in case the LGJV's operating cash flow are insufficient to meet those debt service needs in full on the applicable payment dates. The Dowa Term Loan, under which $222.8 million was outstanding as of June 30, 2020, bears interest at LIBOR plus 2.35% and matures two business days prior to December 31, 2027. For more information on the Dowa Term Loan, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dowa Debt Agreements."

(2)

General corporate purposes could include, without limitation, general and administrative expenses, working capital funding, arrangement fees, additional exploration expense and other capital investment at our existing properties or through acquisitions.

        If the net proceeds from this offering exceed $             million, we intend to use $            of the net proceeds to repay our outstanding convertible notes, in which case, such convertible notes will not convert to shares of common stock in connection with this offering. The convertible notes bear interest at 5% per annum and matures on April 19, 2023, unless repaid earlier or converted into our common stock. For more information on the convertible notes, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Notes."

        We currently intend to use the net proceeds from this offering in the manner described above. However, our Board of Directors and management will retain broad discretion in the application, and timing of the application, of the net proceeds from this offering and could spend the net proceeds in ways that do not improve our results of operations or enhance the value of our common stock. As a result, investors will be relying on the judgment of our Board of Directors and management for the

55

application of the net proceeds from this offering. There can be no assurance regarding the results and the effectiveness of our use of the net proceeds from this offering. See "Risk Factors—Risks Related to This Offering and Our Common Stock—We will have broad discretion in the use of the net proceeds from this offering and may not use them effectively." In addition, we have a history of negative operating cash flows and net losses and may continue to have negative operating cash flows and net losses in the future. As a result, we may use the net proceeds from this offering to fund our continuing operations. See "Risk Factors—Risks Related to Our Business and Industry—We have a history of negative operating cash flows and net losses and we may never achieve or sustain profitability." Pending the use of the proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation instruments, including short-term, interest-bearing, investment-grade securities or short-term deposits. We cannot predict whether the proceeds invested will yield a favorable return.

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DIVIDEND POLICY

        We have never declared or paid any cash dividends on our capital stock. We do not intend to pay any dividends in the foreseeable future and currently intend to retain all future earnings to finance our business. Any determination to pay dividends to holders of our common stock in the future will be at the discretion of our Board of Directors and will depend upon such factors as our earnings levels, capital requirements, requirements under the DGCL and other factors as our Board of Directors deems relevant.

        Under the terms of the Los Gatos Working Capital Facility, we have established an escrow account and entered into an escrow agreement with Dowa in which the LGJV is required to deposit all dividends or distributions, other than management fees and partner expense reimbursements, until an aggregate amount equal to $20 million has been deposited into such account for the benefit of Dowa as a priority dividend. Following the payment of $20 million to Dowa, dividends from LGJV will be paid in accordance with the ownership percentage of the LGJV.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2020:

•

on an actual basis;

•

on a pro forma basis to reflect the following: (i) the Reorganization, (ii) the issuance of an aggregate of             shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering; and

•

on a pro forma as adjusted basis to further reflect the issuance and sale by us of            shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        This table should be read in conjunction with the "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and our consolidated financial statements and related notes included elsewhere in this prospectus. Unless otherwise stated, all dollar amounts expressed below are in thousands, except for per share amounts.

	June 30, 2020
	Actual			Pro Forma(1)	Pro Forma As Adjusted(2)
	(in thousands)
Cash and cash equivalents	$	1,954		$	$
Shareholders' equity
Common stock, $0.001 par value; 100,000,000 shares authorized; 80,646,832 shares outstanding, actual;            shares outstanding, pro forma;            shares outstanding, pro forma as adjusted		80
Paid-in capital		378,099
Accumulated deficit		(255,548	)
Treasury stock, at cost, 289,177 shares, actual;            shares, pro forma;            shares, pro forma as adjusted		(1,027	)
Total shareholders' equity		121,604
Total capitalization	$	121,604		$	$

(1)

Assumes the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering. If the net proceeds from this offering exceed $             million, we intend to repay our outstanding convertible notes instead, in which case, such convertible notes will not convert to shares of common stock. See "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Notes."

(2)

The pro forma as adjusted information is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) pro forma as adjusted cash and cash equivalents, total shareholders' equity and total capitalization by $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A            share increase (decrease) in the number of shares of common stock offered by us would increase (decrease) pro forma as adjusted cash and cash equivalents, total shareholders' equity and total capitalization by $             million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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DILUTION

        Our consolidated net tangible book value as of June 30, 2020 was $121.6 million or $1.51 per share of common stock. Consolidated net tangible book value per share represents consolidated tangible assets, less consolidated liabilities, divided by the aggregate number of shares of common stock outstanding.

        After giving effect to (i) the Reorganization, (ii) the issuance of an aggregate of              shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering, our pro forma consolidated net tangible book value as of June 30, 2020 was $             million or $            per share of common stock. Pro forma consolidated net tangible book value per share represents pro forma consolidated tangible assets, less pro forma consolidated liabilities, divided by the aggregate number of shares of common stock outstanding.

        After giving further effect to the issuance and sale by us of the shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted consolidated net tangible book value as of June 30, 2020 would have been $             million or $            per share of common stock. This represents an immediate increase in pro forma consolidated net tangible book value to existing shareholders of $            per share and an immediate dilution to new investors purchasing shares in this offering of $            per share. Dilution per share represents the difference between the price per share to be paid by new investors for the shares of common stock sold in this offering and the pro forma consolidated net tangible book value per share immediately after this offering.

        The following table illustrates this per share dilution:

Assumed initial public offering price			$
Consolidated net tangible book value per share as of June 30, 2020	$	1.51
Increase in consolidated net tangible book value per share attributable to pro forma adjustments
Pro forma consolidated net tangible book value per share as of June 30, 2020
Increase in consolidated pro forma net tangible book value per share attributable to new investors
Pro forma as adjusted consolidated net tangible book value per share as of June 30, 2020
Dilution per share to new investors			$

        The dilution information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) pro forma as adjusted consolidated net tangible book value per share by $            per share and dilution per share to new investors purchasing shares in this offering by $            per share, in each case assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A            share increase (decrease) in the number of shares of common stock offered by us would increase (decrease) pro forma as adjusted consolidated net tangible book value per share by $            per share and dilution per share to new investors purchasing shares in this offering by $            per share, in each case assuming the assumed initial public offering price remains the same and after

59

deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters' over-allotment option is exercised in full, our pro forma as adjusted consolidated net tangible book value per share would be $            , and the dilution per share to new investors purchasing shares in this offering would be $            .

        The following table sets forth, as of June 30, 2020, after giving effect to (i) the Reorganization, (ii) the issuance of an aggregate of            shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering, the number of shares of common stock purchased from us, the total consideration paid, or to be paid, to us and the average price per share paid, or to be paid, by existing shareholders and by new investors purchasing shares in this offering, at the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus:

	Shares Purchased				Total Consideration
	Number (in thousands)	Percent			Amount (in thousands)	Percent			Average Price Per Share
Existing shareholders				%	$			%	$
New investors									$
Total			100	%	$		100	%

        If the underwriters' over-allotment option is exercised in full, the number of shares of common stock held by existing shareholders would decrease to        % of the total number of shares of common stock outstanding after this offering, and the number of shares of common stock held by new investors would increase to        % of the total number of shares of common stock outstanding after this offering.

        To the extent that any outstanding options are exercised, new options are issued under our share-based compensation plans and are exercised, outstanding DSUs are converted to common stock, new DSUs are issued and are converted to common stock or we issue additional common stock in the future, there will be further dilution to new investors purchasing shares in this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

        We prepared the selected consolidated financial data using our consolidated financial statements for each of the periods presented. The selected consolidated financial data for each fiscal year in the three-year period ended December 31, 2019 and the balance sheet data as of December 31, 2019 and 2018 was derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The selected consolidated financial data as of and for the six months ended June 30, 2020 and for the six months ended June 30, 2019 was derived from our unaudited interim condensed consolidated financial statements appearing elsewhere in this prospectus. In the opinion of management, such unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations and financial position. Results as of and for the six months ended June 30, 2020 are not necessarily indicative of results that may be expected for the entire year, and historical results are not necessarily indicative of results that may be expected for any future period. You should read this financial data in conjunction with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and our consolidated financial statements and related notes included elsewhere in this prospectus.

	Year Ended December 31,							Six Months Ended June 30,
	2019		2018			2017		2020		2019
								(unaudited)
	(in thousands, except for share and per share amounts)
Statement of Loss Data:
Expenses:
Exploration	$	1,248	$	1,709		$	1,179	$	598	$	527
Pre-development		2,318		2,527			2,408		1,048		1,140
General and administrative		4,845		4,396			6,494		3,257		2,689
Amortization		2,370		2,307			2,483		1,203		1,238
Total expenses		10,781		10,939			12,564		6,106		5,594
Dilution loss on affiliates		11,231		—			—		—		11,231
Equity loss in affiliates(1)		12,865		464			160		21,516		311
Net other expense		2,941		264			87		2,343		886
Loss before income taxes		37,818		11,667			12,811		29,965		18,022
Income tax benefit		—		(3	)		—		—		—
Net Loss	$	37,818	$	11,664		$	12,811	$	29,965	$	18,022
Net loss per share	$	0.49	$	0.16		$	0.19	$	0.37	$	0.24
Weighted average shares outstanding to compute net loss per share		77,934,044		73,941,655			67,507,179		81,011,188		75,050,171
Pro forma net loss per share(2)	$							$
Weighted average shares outstanding to compute pro forma net loss per share(2)

(1)

Represents the 70.0% loss pickup under the equity method of accounting (i) from January 1, 2019 to May 29, 2019 for the year ended December 31, 2019, (ii) from January 1, 2019 to May 29, 2019 for the six months ended June 30, 2019 and (iii) for the years ended December 31, 2018 and 2017. Represents the 51.5% loss pickup under the equity method of accounting for (i) the six months ended June 30, 2020, (ii) from May 30, 2019 to December 31, 2019 for the year ended December 31, 2019 and (iii) from May 30, 2019 to June 30, 2019 for the six months ended June 30, 2019.

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(2)

The pro forma information gives effect to the following: (i) the Reorganization, (ii) the issuance of an aggregate of            shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering, as if each such event occurred on the first day of the period presented.

	Year Ended December 31,									Six Months Ended June 30,
	2019			2018			2017			2020			2019
										(unaudited)
	(in thousands)
Cash Flow Data:
Net cash used by operating activities	$	(12,295	)	$	(6,654	)	$	(8,204	)	$	(9,537	)	$	(4,273	)
Net cash used by investing activities		(21,905	)		(745	)		(28,555	)		(7,573	)		(19,576	)
Net cash provided by (used by) financing activities		39,828			(222	)		42,678			9,979			25,466

	December 31, 2019		December 31, 2018		June 30, 2020
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	9,085	$	3,457	$	1,954
Total assets		154,295		146,561		136,147
Total liabilities		4,904		3,509		14,543
Total shareholders' equity		149,391		143,052		121,604

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Our historical financial data discussed below reflects our historical financial condition and results of operations, which do not give effect to the Reorganization. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. These forward-looking statements involve risks and uncertainties. You should review "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.

Overview

        We are a U.S.-based precious metals production, development and exploration company with the objective of becoming a premier silver producer. We are currently focused on the production and continued development of the Cerro Los Gatos Mine and the further exploration and development of the Los Gatos District:

•

The Cerro Los Gatos Mine, located within the Los Gatos District, Chihuahua, Mexico, consists of a 2,500 tpd polymetallic mine and processing facility that commenced production on September 1, 2019. For the year ended December 31, 2019, at the Cerro Los Gatos Mine, 357,342 tonnes were mined and 269,853 tonnes were processed at average grades of 229 g/t silver, 0.52 g/t gold, 1.97% lead and 3.03% zinc, with metallurgical recovery of 82.1% silver, 63.5% gold, 83.4% lead and 72.3% zinc. For the six-months ended June 30, 2020, at the Cerro Los Gatos Mine, 288,882 tonnes were mined and 298,331 tonnes were processed at average grades of 195 g/t silver, 0.44 g/t gold, 2.22% lead and 3.41% zinc, with metallurgical recovery of 82.2% silver, 61.8% gold, 85.1% lead and 72.4% zinc. The Los Gatos Technical Report, which has an effective date of July 1, 2020, estimates that the deposit contains 9.6 million diluted tonnes of proven and probable mineral reserves (or 5.0 million diluted tonnes of proven and probable mineral reserves on a 51.5% basis), with 6.4 million diluted tonnes of proven mineral reserves (or 3.3 million diluted tonnes of proven mineral reserves on a 51.5% basis) and 3.3 million diluted tonnes of probable mineral reserves (or 1.7 million diluted tonnes of probable mineral reserves on a 51.5% basis). Average proven and probable mineral reserve grades are 306 g/t silver, 0.35 g/t gold, 2.76% lead and 5.65% zinc.

•

The Los Gatos District, located in Chihuahua, Mexico, is located approximately 120 kilometers south of Chihuahua City and is comprised of a 103,087-hectare land position, constituting a new mining district. The Los Gatos District consists of 14 mineralized zones, which include three identified silver-lead-zinc deposits that contain mineral resources—the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit—as well as 11 additional high-priority targets defined by high-grade drill intersections and over 150 kilometers of outcropping quartz and calcite veins. The area is characterized by predominant silver-lead-zinc epithermal mineralization. On September 1, 2019, the LGJV commenced production at the Cerro Los Gatos Mine. A core component of the LGJV's business plan is to explore the highly prospective, underexplored Los Gatos District with the objective of identifying additional mineral deposits that can be mined and processed, possibly utilizing the Cerro Los Gatos Mine plant infrastructure.

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Operating Expenses

Exploration Expenses

        We conduct exploration activities under mining concessions in Mexico. Historically, we also conducted exploration activities on patented and unpatented mining claims in the United States, which will be conducted in the future by SOP following the Reorganization. We expect exploration expenses to increase significantly as we continue to expand our exploration activities at the Los Gatos District and our other exploration properties. Our exploration expenses primarily consist of drilling costs, lease concession payments, assay costs and other geological and support costs at our exploration properties.

Pre-development Expenses

        Our pre-development expenses primarily relate to mining infrastructure improvements and scoping studies and care and maintenance activities at the Sunshine Complex. Our mining infrastructure improvement expenses include shaft repair, decline excavation and other underground development costs. Our care and maintenance expenses include facility and surface repair, utility costs and mine-dewatering costs. Pre-development activities at the Sunshine Complex will be conducted in the future by SOP following the Reorganization.

General and Administrative Expenses

        Our general and administrative expenses consist of salaries and benefits, stock compensation, professional and consultant fees, insurance and other general administration costs. Our general and administrative expenses are expected to increase significantly as we prepare to operate as a public company. We expect higher costs related to salaries, benefits, stock compensation, legal fees, compliance and corporate governance, accounting and audit expenses, stock exchange listing fees, transfer agent and other shareholder-related fees, directors' and officers' and other insurance costs, and other administrative costs. Immediately prior to the completion of this offering, we intend to enter into a Management Services Agreement with SOP, pursuant to which we will provide certain executive and managerial advisory services to SOP. SOP will reimburse us for costs of providing such services. See "Certain Relationships and Related Party Transactions—Reorganization and Management Services Agreement."

Equity Loss in Affiliates

        Our equity loss in affiliates relates to our proportional share of net income or loss incurred from the LGJV.

LGJV Arrangement Fee

        Our LGJV arrangement fee consists of arrangement fees related to the Dowa Term Loan and the Los Gatos Working Capital Facility. The arrangement fees are based on a fixed 2% and 15% interest rates for the Dowa Term Loan and the Los Gatos Working Capital Facility, respectively, and 70% of the outstanding principal of the respective facility. These arrangement fees are solely our responsibility.

Income Taxes

        As we have incurred substantial losses from our exploration and pre-development activities, we may receive further benefits in the form of deferred tax assets that can reduce our future income tax liabilities, if it is more likely than not that the benefit will be realized before expiration. Historically, we have not recognized these potential benefits in our financial statements and have fully reserved for such net deferred tax assets, as we believe it is more likely than not that the full benefit of these net deferred tax assets will not be realized before expiration. In connection with the Reorganization, we expect to use approximately $7,100 thousand of deferred tax assets to offset federal income tax liability.

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Royalties

        Exploration activities are conducted on the Los Gatos District mining concessions in Mexico. Historically, exploration activities were conducted on patented and unpatented mining claims in the United States, which will be conducted in the future by SOP following the Reorganization. Mineral and concession lease payments are required to be paid to various entities to secure the appropriate claims or surface rights. Certain of these agreements also have royalty payments that were triggered when we began producing and selling metal-bearing concentrate. See "Business—The Los Gatos District—Location of the Los Gatos District and Access" and Note 4 to our December 31, 2019 audited consolidated financial statements.

Results of Operations

        The following table presents certain information relating to our operating results for the six months ended June 30, 2020 and 2019 and the years ended December 31, 2019, 2018 and 2017. In accordance with generally accepted accounting principles in the United States ("U.S. GAAP"), these financial statements represent the consolidated financial position and results of operations of our Company and its subsidiaries (in thousands except for shares and per share data).

	Year Ended December 31,								Six Months Ended June 30,
	2019			2018			2017		2020		2019
									(unaudited)
Expenses:
Exploration	$	1,248		$	1,709		$	1,179	$	598	$	527
Pre-development		2,318			2,527			2,408		1,048		1,140
General and administrative		4,845			4,396			6,494		3,257		2,689
Amortization		2,370			2,307			2,483		1,203		1,238
Total expenses		10,781			10,939			12,564		6,106		5,594
Other (income) expense:
Dilution loss on affiliates		11,231			—			—		—		11,231
Equity loss in affiliates		12,865			464			160		21,516		311
LGJV arrangement fee		2,988			283			—		2,285		895
Other (income) expense		(47	)		(19	)		87		58		(9	)
Net other expense		27,037			728			247		23,859		12,428
Loss before income taxes		37,818			11,667			12,811		29,965		18,022
Income tax benefit		—			(3	)		—		—		—
Net loss		37,818			11,664			12,811		29,965		18,022
Other comprehensive (income) loss:
Unrealized (gain) loss on securities, net of tax		(32	)		(5	)		25		—		5
Comprehensive loss	$	37,786		$	11,659		$	12,836	$	29,965	$	18,027
Net loss per share: Basic and diluted	$	0.49		$	0.16		$	0.19	$	0.37	$	0.24
Weighted average shares outstanding:
Basic and diluted		77,934,044			73,941,655			67,507,179		81,011,188		75,050,171

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Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

        For the six months ended June 30, 2020, we experienced a net loss of $29,965 thousand compared to a net loss of $18,022 thousand for the six months ended June 30, 2019. The $11,943 thousand increase in net loss was primarily attributable to the following:

•

General and administrative expense increased to $3,257 thousand for the six months ended June 30, 2020, compared to $2,689 thousand for the six months ended June 30, 2019, primarily due to increased compensation costs, consulting expenses and stock-based compensation expense.

•

Other expense increased to $23,859 thousand for the six months ended June 30, 2020, compared to $12,428 thousand for the six months ended June 30, 2019, primarily due to the $21,205 thousand increase in equity loss in affiliates related to the LGJV and the $1,390 thousand increase in LGJV arrangement fees payable exclusively by us, partially offset by the $11,231 thousand decrease in dilution loss on affiliates.

        On a pro forma basis after giving effect to the Reorganization, for the six months ended June 30, 2020, exploration expenses would have been $382 thousand; general and administrative expenses would have been $2,380 thousand and other expense would have been $23,861 thousand. Our net loss would have been $26,640 thousand, and our net loss per share would have been $            .

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

        For the year ended December 31, 2019, we experienced a net loss of $37,818 thousand compared to a net loss of $11,664 thousand for the year ended December 31, 2018. The $26,154 thousand increase in net loss was primarily attributable to the following:

•

Exploration expense decreased to $1,248 thousand for the year ended December 31, 2019, compared to $1,709 thousand for the year ended December 31, 2018, due to reduced efforts on concessions outside of the LGJV district resulting in lower labor costs and Mexico concessions holding costs.

•

General and administrative expense increased to $4,845 thousand for the year ended December 31, 2019, compared to $4,396 thousand for the year ended December 31, 2018, primarily due to increased arrangement fees, partially offset by an increase in management fees charged to the LGJV for management services provided.

•

Other expense increased to $27,037 thousand for the year ended December 31, 2019, compared to $728 thousand for the year ended December 31, 2018, primarily due to the following events that occurred during 2019: the $11,231 thousand dilution loss from LGJV ownership reduction from 70% to 51.5%, the $12,401 thousand increase in equity loss in affiliates related to the LGJV and the $2,705 thousand increase in LGJV loan arrangement fees payable exclusively by us.

        On a pro forma basis after giving effect to the Reorganization, for the year ended December 31, 2019, exploration expenses would have been $923 thousand; general and administrative expenses would have been $2,865 thousand and other expense would have been $27,047 thousand. Our net loss would have been $30,869 thousand and our net loss per share would have been $            .

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Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

        For the year ended December 31, 2018, we experienced a net loss of $11,664 thousand compared to a net loss of $12,811 thousand for the year ended December 31, 2017. The $1,147 thousand decrease in net loss was primarily attributable to the following:

•

Exploration expense increased to $1,709 thousand for the year ended December 31, 2018, compared to $1,179 thousand for the year ended December 31, 2017, due to increases in mining claim activities and exploration personnel.

•

General and administrative expense decreased to $4,396 thousand for the year ended December 31, 2018, compared to $6,494 thousand for the year ended December 31, 2017, primarily due to higher management fees charged to the LGJV.

•

Other expense increased to $728 thousand for the year ended December 31, 2018, compared to $247 thousand for the year ended December 31, 2017, primarily due to an increase in the equity losses from affiliates related to LGJV operations and arrangement fees paid in connection with LGJV financing transactions in 2018.

Liquidity and Capital Resources

        As of June 30, 2020, and December 31, 2019, we had cash and cash equivalents of $1,954 thousand and $9,085 thousand, respectively, and working capital of $2,405 thousand and $14,990 thousand, respectively. The decrease in cash and cash equivalents and working capital was primarily due to increased investment in the LGJV, increased related-party receivables and other operation needs, partially offset by an increase in related-party convertible notes.

        For the six months ended June 30, 2020, we borrowed $10,000 thousand by issuing related-party convertible notes and the notes remain outstanding as of June 30, 2020. We did not have any related-party debt as of December 31, 2019. As of June 30, 2020, we could borrow an additional $5,000 thousand by issuing convertible notes under the Convertible Note Purchase Agreement (as defined herein).

        We did not have any related-party debt as of December 31, 2019. We have no outstanding lines of credit or other bank financing arrangements. We guarantee 70.0% of the Dowa Term Loan and the Los Gatos Working Capital Facility as of June 30, 2020. We have certain arrangement fee obligations related to the Cerro Los Gatos Mine as detailed in the "LGJV Arrangement Fee" above. In 2019, we received $40,465 thousand in equity proceeds from our shareholders. In May 2019, we contributed $18,200 thousand to an LGJV entity to provide funding for a partial repayment of principal and interest related to the MPR Loan. In late May 2019, the MPR Loan was fully extinguished with a cash payment of $18,200 thousand and the conversion of the remaining $50,737 thousand of principal and interest to Dowa equity. The conversion of the remaining principal and interest increased Dowa's ownership in the LGJV entities to 48.5%. As of June 30, 2020, the approximate ownership of the LGJV entities is 51.5% in favor of the Company and 48.5% in favor of Dowa. Due to the LGJV ownership dilution, we recognized a dilution loss on affiliates of $11,231 thousand in May 2019. We have an option to repurchase the approximate 18.5% equity interest in the LGJV from Dowa by June 30, 2021, and only after the Los Gatos Working Capital Facility is repaid, for a total consideration of approximately $51,100 thousand and all costs incurred by Dowa in connection with its ownership of such equity interest, including, but not limited to, legal and accounting fees, capital contributions and taxes.

        We believe that, upon the completion of this offering, we will have sufficient cash and resources to carry out our business plans for at least the next 12 months. We are focused on our forward-looking liquidity needs. We are evaluating our ongoing fixed cost structure as well as decisions related to project retention, advancement and development. We will likely be required to raise capital or take

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other measures to fund future exploration and development. Significant development activities, if warranted, will require that we arrange for financing in advance of planned expenditures. In addition, we expect to continue to increase our current financial resources with external financings as long as our long-term business needs require us to do so. We manage liquidity risk through the management of our capital structure.

        We may be required to provide funds to the LGJV to support operations at the Cerro Los Gatos Mine which, depending upon the circumstances, may be in the form of equity, various forms of debt, joint venture funding or some combination thereof. There can be no assurance that additional funds will be available to us on acceptable terms, or at all.

Dowa Debt Agreements

        On January 1, 2015, we entered into a joint venture with Dowa to develop the LGJV. Dowa initially acquired a 30% interest in the LGJV and the right to purchase future zinc-concentrate production at market rates.

Dowa Term Loan

        On July 11, 2017, we entered into a loan agreement (the "Dowa Term Loan") with Dowa whereby the LGJV could borrow up to $210,000 thousand to finance the development of the Los Gatos project. The principal amount of the Dowa Term Loan accrues interest daily at a rate of LIBOR plus 2.35%, and the interest was added to the amount borrowed until production commenced at the Los Gatos project. The LGJV is obligated to pay 14 consecutive semi-annual payments totaling the aggregate principal amount and capitalized interest beginning June 30, 2021, with payments made two business days prior to the end of each June and December. The maturity date for the Dowa Term Loan is two business days prior to December 31, 2027. The LGJV can prepay the loan from time to time, subject to a minimum amount. We guarantee 70.0% of the Dowa Term Loan. The Dowa Term Loan contains affirmative and negative covenants reasonably customary for similar facilities, with which the LGJV is in compliance in all material respects as of the date of this prospectus.

Los Gatos Working Capital Facility

        On April 16, 2019, we entered into a memorandum of understanding with the LGJV and Dowa, whereby we made a capital contribution to the LGJV in the amount of $18,200 thousand in consideration for partial repayment of a previously existing loan with Dowa of $65,678 thousand entered into with Dowa as of January 23, 2018 (the "MPR Loan"). Under the terms of the memorandum, Dowa agreed to convert the remaining balance of $42,937 thousand outstanding under the MPR Loan in exchange for approximately 18.5% of the equity interests in the LGJV. This diluted our ownership in the LGJV to approximately 51.5%, with Dowa owning the remaining approximate 48.5%. Furthermore, the LGJV will be required to contribute dividend payments to an escrow account until an aggregate amount equal to $20,000 thousand has been deposited into the account, which is payable to Dowa as a priority dividend, as described in a priority distribution agreement dated May 30, 2019 among us, MPR, OSJ and Dowa. See "Business—The Los Gatos District—Priority Distribution Agreement." Following payment of $20,000 thousand to Dowa, dividends will be paid in accordance with the ownership of the LGJV. Under this memorandum of understanding and the terms of an option agreement dated May 30, 2019 among us, MPR, OSJ and Dowa, Dowa granted us an option to repurchase the approximate 18.5% equity interest in the LGJV from Dowa by June 30, 2021, and only after the Los Gatos Working Capital Facility is repaid, for a total consideration of approximately $51,100 thousand and all costs incurred by Dowa in connection with its ownership of such equity interest, including, but not limited to, legal and accounting fees, capital contributions and taxes. See "Business—The Los Gatos District—Option Agreement." If we do not exercise our option by June 30, 2021, the option will expire and cease to have any further effect, after which Dowa may sell all or a

68

portion of the interest to a third party. As part of the memorandum of understanding, we entered into a working capital facility agreement dated May 30, 2019, with the LGJV and Dowa (the "Los Gatos Working Capital Facility"), under which Dowa agreed to provide a maximum of $60,000 thousand for the benefit of the LGJV. The interest under the Los Gatos Working Capital Facility is LIBOR plus 3%. We also guarantee 70% of this facility and are required to pay an arrangement fee on the borrowing, calculated as 15.0% per annum of 70.0% of the average daily principal amount outstanding during the relevant fiscal quarter. The Los Gatos Working Capital Facility contains affirmative and negative covenants reasonably customary for similar facilities, with which the LGJV is in compliance in all material respects as of the date of this prospectus. All principal amounts outstanding under the Los Gatos Working Capital Facility will be due on or before June 28, 2021. The full principal amount of the Los Gatos Working Capital Facility has been drawn down by the LGJV.

Convertible Notes

        On April 20, 2020, we entered into a Convertible Note Purchase Agreement with Electrum Silver US LLC (as amended, the "Convertible Note Purchase Agreement"). Pursuant to the Convertible Note Purchase Agreement, we may issue and sell to Electrum Silver US LLC from time to time, convertible notes on the same terms under the Convertible Note Purchase Agreement until the earlier of (i) such time as the aggregate principal amount of principal indebtedness evidenced by all convertible notes issued and sold under the Convertible Note Purchase Agreement equals $15,000 thousand and (ii) April 20, 2021. Upon the consummation of a sale of equity securities in a bona fide equity financing, including this offering, that results in gross proceeds to us of at least $10,000 thousand from investors not affiliated with Electrum, the convertible notes, including any accrued but unpaid interest, may, at our option, (i) convert into shares of such equity securities at a price per share equal to the lesser of (A) 80% of the price per share of such equity securities and (B) $7.50 per share of such equity securities, subject to adjustment for any stock split (including as part of the Reorganization), stock dividend, reverse stock split, recapitalization or similar transactions, or (ii) be repaid in full. The outstanding principal amount of the convertible notes and any accrued but unpaid interest is due and payable on April 19, 2023. However, any conversion of the convertible notes into equity securities as described above shall be deemed a repayment of the convertible notes so converted. The convertible notes bear interest at a rate of 5.00% per annum, compounding annually. As of the date of this prospectus, we have issued $             thousand aggregate principal amount of convertible notes and there is $             thousand in accrued but unpaid interest.

Cash Flows

        The following table presents our sources and uses of cash for the periods indicated:

	Year Ended December 31,									Six Months Ended June 30,
	2019			2018			2017			2020			2019
										(unaudited)
	(in thousands)
Net cash provided by (used by)
Operating activities	$	(12,295	)	$	(6,654	)	$	(8,204	)	$	(9,537	)	$	(4,273	)
Investing activities		(21,905	)		(745	)		(28,555	)		(7,573	)		(19,576	)
Financing activities		39,828			(222	)		42,678			9,979			25,466
Total change in cash	$	5,628		$	(7,621	)	$	5,919		$	(7,131	)	$	1,617

        Cash used by operating activities was $9,537 thousand and $4,273 thousand for the six months ended June 30, 2020 and 2019, respectively. The $5,264 thousand increase was primarily due to an increase in related party receivables from the LGJV and net loss, after non-cash adjustments for equity

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loss in affiliates and stock-based compensation expense. Cash used by operating activities was $12,295 thousand, $6,654 thousand and $8,204 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. The $5,641 thousand increase between December 31, 2019 and December 31, 2018 was primarily due to an increase in related party receivables from the LGJV. The $1,550 thousand decrease between December 31, 2018 and December 31, 2017 was primarily due to a decrease in net loss.

        Cash used by investing activities was $7,573 thousand and $19,576 thousand for the six months ended June 30, 2020 and 2019, respectively. The $12,003 thousand decrease was primarily due to the $18,200 investment in the LGJV in 2019, offset by the $7,573 thousand investment in the LGJV in 2020. Cash used by investing activities was $21,905 thousand, $745 thousand and $28,555 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. The $21,160 thousand increase between December 31, 2019 and December 31, 2018 was primarily due to the $21,371 thousand investment in the LGJV. The $27,810 thousand decrease between December 31, 2018 and December 31, 2017 primarily reflects the $28,225 thousand investment in the LGJV in 2017.

        Cash provided by financing activities was $9,979 thousand and $25,466 thousand for the six months ended June 30, 2020 and 2019, respectively. The $15,487 thousand decrease was primarily due to the $25,466 thousand sales of common stock in 2019, partially offset by the $10,000 thousand increase in convertible notes in 2020. Cash provided (used) by financing activities was $39,828 thousand, $(222) thousand and $42,678 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. Cash provided by financing activities primarily relates to sales of common stock and convertible notes. Cash used in financing activities primarily relates to treasury stock purchases.

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Results of LGJV Operations

        The following table presents certain information relating to LGJV's financial condition and operating results for the years ended December 31, 2019 and 2018 and for the three-year period ended December 31, 2019. In accordance with U.S. GAAP, these financial statements represent the combined financial position and results of the LGJV. As of December 31, 2018 and 2017, our ownership of the LGJV was 70.0%. In connection with the extinguishment of the MPR Loan on May 30, 2019, our current ownership of the LGJV is approximately 51.5%.

LOS GATOS JOINT VENTURE
COMBINED BALANCE SHEETS
(in thousands)

	As of December 31,
	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,302		$	11,231
Receivables		5,655			—
Inventories		11,374			1,886
VAT receivable		50,184			30,853
Restricted cash		—			2,219
Other current assets		1,672			6,747
Total current assets		70,187			52,936
Non-Current Assets
Mine development, net		182,602			99,994
Deferred financing costs		—			76
Property, plant and equipment, net		216,131			150,763
Total non-current assets		398,733			250,833
Total Assets	$	468,920		$	303,769
LIABILITIES AND OWNERS' CAPITAL
Current Liabilities
Accounts payable and other accrued liabilities	$	43,287		$	16,697
Dowa MPR Loan		—			65,670
Related party payable		6,875			1,377
Accrued interest		885			2,692
Equipment loans		6,948			5,227
Total current liabilities		57,995			91,663
Non-Current Liabilities
Dowa Term Loan		217,796			132,066
Working Capital Facility		60,000			—
Equipment loans		12,916			13,494
Reclamation obligations		11,314			10,524
Total non-current liabilities		302,026			156,084
Owners' Capital
Capital contributions		237,905			168,967
Paid-in capital		7,400			1,358
Accumulated deficit		(136,406	)		(114,303	)
Total owners' capital		108,899			56,022
Total Liabilities and Owners' Capital	$	468,920		$	303,769

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LOS GATOS JOINT VENTURE COMBINED
STATEMENTS OF LOSS
(in thousands)

	Year Ended December 31,
	2019		2018			2017
Sales	$	36,508	$	—		$	—
Operating expenses
Cost of sales		30,339		—			—
Royalties		184		—			—
Exploration		208		—			—
General and administrative		2,587		83			116
Accretion expense		789		9			17
Depreciation, depletion and amortization		15,460		—			—
Total operating expenses		49,567		92			133
Other expense
Interest expense, net of capitalization		5,107		—			—
Arrangement fee		3,524		—			—
Other expense (income)		239		(53	)		(11	)
Foreign exchange loss		174		623			112
Net other expense		9,044		570			101
Net loss	$	22,103	$	662		$	234

        At December 31, 2019 and 2018, the LGJV had current assets of $70,187 thousand and $52,936 thousand, respectively. The increase in total current assets was primarily due to an increase in value added tax and trade receivables, partially offset by decreases in cash and other current assets. At December 31, 2019 and 2018, the LGJV had noncurrent assets of $398,733 thousand and $250,833 thousand, respectively. The increase in noncurrent assets was primarily due to increased mine development assets and property, plant and equipment to develop new mining areas and complete site infrastructure, partially offset by accumulated depletion and depreciation that began in 2019.

        At December 31, 2019 and 2018, the LGJV had current liabilities of $57,995 thousand and $91,663 thousand, respectively. The decrease in current liabilities was primarily due to the extinguishment of the Dowa MPR Loan, partially offset by an increase in accounts payable and accrued liabilities. At December 31, 2019 and 2018, the LGJV had noncurrent liabilities of $302,026 thousand and $156,084 thousand, respectively. The increase in non-current liabilities was primarily due to an increase in borrowings under the Dowa Term Loan and the Working Capital Facility.

        For the year ended December 31, 2019, the LGJV had a $22,103 thousand net loss compared to a $662 thousand net loss for the year ended December 31, 2018. The increase in net loss was primarily due to the start and ramp up of production in 2019, as well as beginning to depreciate the assets placed in service and to expense interest and arrangement fees costs upon achieving production. Interest and arrangement fee costs were capitalized during the construction period. For the year ended December 31, 2018, the LGJV had a $662 thousand net loss compared to a $234 thousand net loss for the year ended December 31, 2017. The increase in net loss was primarily due to foreign exchange losses as the Mexican peso declined in value relative to the U.S. dollar reporting currency.

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Contractual Obligations

        As of December 31, 2019, we had the following contractual obligations:

	Payments due by period (in thousands)
	Total		Less than 1 year		1 - 3 years		4 - 5 years		More than 5 years
Reclamation and remediation obligations(1)	$	1,836	$	—	$	—	$	1,836	$	—
Mineral leases, concessions and agreements obligations(2)(3)		470		322		50		34		64
Total contractual obligations	$	2,306	$	322	$	50	$	1,870	$	64

(1)

These obligations pertain to the Sunshine Complex and will be assumed by SOP as part of the Reorganization.

(2)

Does not contain product and sale royalty payments.

(3)

The lease from Metropolitan Mines Corporation Ltd. relating to certain mining claims at the Sunshine Mine requires monthly payments of $1 thousand until ore is produced from the Metropolitan property. This obligation has not been included in the table above as the time for commencing production is unknown. This obligation will be assumed by SOP as part of the Reorganization.

        In addition, we entered into commitments with federal and state agencies to lease surface and mineral rights. These leases are renewable annually.

Stock-Based Compensation

        We recognize all employee and director stock-based compensation as a cost in our consolidated financial statements. Equity-classified awards are measured at the grant date fair value of the award. We estimate the grant date fair value using the Black-Scholes option-pricing model using estimated amounts for volatility of our stock, the expected life of the awards, the fair value of the underlying shares, the risk-free interest rate and the expected dividend yield. The related expense is included as a component of either exploration, pre-development or general and administrative expenses over the requisite service period of the award.

        Our stock-based compensation includes DSUs granted to certain employees and directors, and stock options granted to employees, directors and various individuals and entities.

        In 2018, we granted 10,000 stock options at a strike price of $4.50 per share. In 2019, we granted 1,203,000 stock options at a strike price of $6.00 per share. During the six months ended June 30, 2020, we granted 1,596,667 stock options at a strike price of $6.00 per share.

        The total stock-based compensation expense incurred for the years ended December 31, 2019, 2018 and 2017 was $3,219 thousand, $2,392 thousand and $1,981 thousand, respectively. The total stock-based compensation expense incurred for the six months ended June 30, 2020 was $2,118 thousand.

        The following table sets forth stock option grant information from January 1, 2017 through June 30, 2020:

Grant Date	Options Granted		Exercise Price
2017(1)(2)(3)		2,181,250	$	4.50
2018(4)		10,000	$	4.50
2019(5)		1,203,000	$	6.00
2020(6)(7)(8)		1,596,667	$	6.00

(1)

We granted 1,035,500 options on August 31, 2017 with an exercise price of $4.50.

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(2)

We granted 25,000 options on November 13, 2017 with an exercise price of $4.50.

(3)

We granted 1,120,750 options on December 16, 2017 with an exercise price of $4.50.

(4)

We granted 10,000 options on January 2, 2018 with an exercise price of $4.50.

(5)

We granted 1,203,000 options on May 3, 2019 with an exercise price of $6.00.

(6)

We granted 1,227,334 options on January 20, 2020 with an exercise price of $6.00.

(7)

We granted 328,000 options on January 30, 2020 with an exercise price of $6.00.

(8)

We granted 41,333 options on March 1, 2020 with an exercise price of $6.00.

Significant Factors, Assumptions and Methodologies used in Determining Fair Value of Share Based Payments

        Stock-based compensation expense for DSU awards is based on the estimated fair value of our common stock on the grant date.

        Stock-based compensation expense for options is based on the estimated fair value for each award on the grant date. We calculate the grant date fair value based on an option pricing model using estimated amounts for risk-free interest rate, dividend yield, estimated historical volatility of our common stock, the expected life of the awards and the estimated fair value of the underlying common stock. In addition to the assumptions used to calculate the fair value of the options, we are required to estimate the expected forfeiture rate of the option awards, and only recognize stock-based compensation expense for those option awards expected to vest. We recognize stock-based compensation expense as a component of either exploration, pre-development or general and administrative expense on a straight-line basis over the requisite service period of the award.

        The following assumptions were used to compute the fair value of the options granted:

	Grant Date
	Aug. 2017	Nov. 2017	Dec. 2017	Jan. 2018	May 2019	Jan. 2020	Mar. 2020
Risk-free interest rate	1.83%	2.18%	2.18%	2.18%	2.38%	1.63%	1.63%
Dividend yield	—	—	—	—	—	—	—
Estimated volatility	66.40%	65.90%	65.80%	65.80%	66.80%	62.20%	62.20%
Expected option life	6 years	6 years	6 years	6 years	6 years	6 years	6 years

        The following assumptions were used to compute the fair value of the options, that are required to be revalued each reporting period, as of the dates indicated:

	December 31,			June 30,
	2019	2018	2017	2020
Risk-free interest rate	1.76%	2.55%	2.26%	0.39%
Dividend yield	—	—	—	—
Estimated volatility	63.60%	65.90%	65.50%	66.60%
Expected option life	6 years	6 years	6 years	6 years

        The risk-free interest rate assumption was based on the U.S. treasury constant maturity yield at the date of the grant over the expected life of the option. No dividends are expected to be paid. We calculated the estimated volatility based on the historical volatility of a group of peer companies' common stock over the expected option life. The peer information was used because we were not publicly traded at the time of the grant, and therefore did not have the market trading history required to calculate a meaningful volatility factor. The computation of expected option life was determined based on a reasonable expectation of the option life prior to the option being exercised or forfeited. Based upon our expectation of forfeiture for these grants, we estimated a forfeiture rate of zero for our executive and director option grants, and a forfeiture rate of 10% for our employee option grants.

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        As of June 30, 2020, there was approximately $7,751 thousand of unrecognized stock-based compensation expense related to option awards that we expect to recognize over a weighted average vesting period of 2.1 years.

Common Stock Valuation

        We estimated the fair value of our common stock in 2017, 2018, 2019 and 2020 based on resource multiples, discounted cash flows, comparable property values, comparable public company equity values, changes in comparable public company equity values, and a discount for a lack of marketability. Based on this market data, the corresponding fair value of per share common stock was used in valuing the options and DSUs granted in 2017, 2018, 2019 and 2020.

Off Balance Sheet Arrangements

        Other than the advanced royalty payments included in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations" above, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our shareholders.

Critical Accounting Policies

        Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability or expense that is being reported.

Equity Method Investment

        We account for our investment in affiliates using the equity method of accounting whereby, after valuing the initial investment, we recognize our proportional share of results of operations of the affiliate in its consolidated financial statements. Equity method investments are reviewed periodically for other-than-temporary decline in value. Our investment in the LGJV is presented as investment in affiliates in the consolidated balance sheet. The difference between the carrying amount of the investment in affiliates and our equity in the LGJV's net assets is due to value of mineral resources at MPR. We incur certain costs on behalf of the LGJV, primarily related to a project development loan arrangement fee. Our proportional share of such costs are reported as an investment in affiliate and the residual costs, related to Dowa's proportional ownership, are reported in the statement of loss.

Mineral Properties and Carrying Value of Long-Lived Assets

        Mineral property acquisition costs are recorded at cost and are deferred until the viability of the property is determined. Exploration, mineral property evaluation, option payments, related acquisition costs for mineral properties acquired under option agreements, general overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. When proven and probable mineral reserves are determined for a property, subsequent development costs on the property are capitalized. If a project were to be put into production, capitalized development costs would be depleted on the units of production basis determined by the proven and probable mineral reserves for that project.

        Existing proven and probable mineral reserves and value beyond proven and probable mineral reserves, including mineralization other than proven and probable mineral reserves and other material that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term "recoverable minerals" refers to the estimated amount of silver or other

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commodities that will be obtained after taking into account losses during mining, mineral resources processing and treatment and ultimate sale. Estimates of recoverable minerals from such exploration-stage mineral interests are risk-adjusted based on management's relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected silver and other commodity prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on LOM plans. No impairment tests have been required during the periods presented.

        Various factors could impact our ability to achieve our forecasted production schedules from proven and probable mineral reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration-stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable mineral reserves have been identified, due to the lower level of confidence that the identified mineral resources could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.

Reclamation Obligations

        Reclamation obligations are recognized when incurred and are initially measured at fair value and subsequently adjusted for accretion expense and changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset's remaining useful life. Reclamation obligations are based on when the spending for an existing environmental disturbance will occur. We review, on at least an annual basis, the reclamation obligation at the Sunshine Mine in accordance with guidance for accounting for asset retirement obligations.

        Accounting for reclamation obligations requires management to make estimates unique to the Sunshine Mine relating to the future costs we will incur to complete the reclamation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation work required. Any such increases in future costs could materially impact the amounts charged to earnings for reclamation.

Income and Mining Taxes

        We recognize the expected future tax benefit from deferred tax assets when the tax benefit is considered to be more likely than not of being realized. Assessing the recoverability of deferred tax assets requires management to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecasted cash flows and the application of existing tax laws in the United States and Mexico. Refer above to "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Mineral Properties and Carrying Value of Long-Lived Assets" above for a discussion of the factors that could cause future cash flows to differ from estimates. To the extent that future cash flows and taxable income differ significantly from estimates, our ability to realize deferred tax assets recorded at the balance sheet date could be impacted. Additionally, future changes in tax laws in the jurisdictions in

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which we operate could limit our ability to obtain the future tax benefits represented by our deferred tax assets recorded at the reporting date.

        Our properties involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state and Mexico tax audits. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues, if any, in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If an estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Jumpstart Our Business Startups Act of 2012

        The JOBS Act permits us, as an "emerging growth company," to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies. The decision to opt out of the extended transition period under the JOBS Act is irrevocable.

Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

        We engage in the production of concentrates containing silver, lead, zinc and gold at the Cerro Los Gatos Mine and commenced production on September 1, 2019. Accordingly, we expect the principal source of future revenue at the LGJV to be the sale of concentrates containing silver, and to a lesser extent, lead and zinc. A significant and sustained decrease in the price of these metals from current levels could have a material and negative impact on our business, financial condition and results of operations.

Foreign Currency Risk

        Although most of our expenditures are in U.S. dollars, certain purchases of labor, operating supplies and capital assets are denominated in other currencies, primarily the Mexican peso. As a result, currency exchange fluctuations may impact the costs of our operations.

Concentration of Risk

        We have placed nearly all of our cash investments with a single, high-quality financial institution. All cash equivalents are invested in high-quality, short-term money market instruments, including government securities, bankers' acceptances, bank notes, certificates of deposit, commercial paper and repurchase agreements of domestic and foreign issuers. At no time have we had funds invested in asset-backed commercial paper. We have not experienced any losses on our cash investments.

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SILVER INDUSTRY OVERVIEW

The Silver Market

Overview

        Silver is one of the eight precious, or noble, metals; the others are gold and the six platinum-group metals. Silver occurs naturally in its solid metallic state and is commonly associated with deposits of gold, copper, lead and zinc as a secondary metal. Silver is distinct from other precious metals in that it is both used in industrial applications and as an investment asset.

        Silver has a number of distinctive physical and chemical properties that make it an essential component in numerous industrial applications, including its strength, malleability, conductivity and ductility, its sensitivity to and high reflectance of light and its ability to endure extreme temperature ranges. These properties restrict its substitution in most applications. Silver is one of the world's best conductors of electricity and is used in electronic components of common items such as solar panel photovoltaic cells, computers, televisions and cell phones.

        Silver has also been used as a medium of exchange since earliest recorded history. From the time of the Roman Empire until the 19^th century, most nations were on a silver standard with silver coins forming the main circulating currency. While it is no longer widely used as circulating currency, silver is still widely sought by investors for its store of value attributes. In particular, silver is viewed as an attractive hedge against a decrease in the value of currency and inflation during times of economic uncertainty.

Silver Demand

        The three principal drivers of silver demand are industrial applications, consumer use and investment. According to The Silver Institute's World Silver Survey 2020, demand for industrial applications is mainly driven by electrical and electronics uses, which accounted for 58.3% of industrial demand and 30.0% of total demand in 2019. Jewelry accounted for 20.3% of total demand and net physical investment represented 18.8% of total demand.

        Silver demand grew 0.4% in 2019 to a three-year high of 991.8 million ounces, from 988.3 million ounces the previous year, driven by a 12.3% surge in demand for net physical investment. This was offset by declines in silverware and other industrials. Silver remains difficult to substitute in many areas, and outside of a dip in 2009, demand for industrial applications has remained broadly flat since 2007. There was healthy photovoltaic demand in 2019, with support from structural changes in demand, such as vehicle electrification.

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World Physical Silver Demand in 2019 (%)

Source: The Silver Institute, World Silver Survey 2020

Industrial Applications

        Traditional industrial applications of silver include batteries, bearings, brazing and catalysts. Silver, which is the best conductor of electricity among all metals, is used in virtually all electronics. In addition to traditional industrial uses, increases in emerging applications for silver, such as in the electric powertrain and other applications that are increasingly featured in hybrid internal combustion engine cars and electric vehicles, as well as LCD and RFID technologies, are expected to continue to augment industrial demand. Emerging applications include the advent of flexible electronics in which silver batteries play a prominent role, utilizing silver's reflectivity as a component in solar cells to produce "green" electricity and utilizing silver's antimicrobial properties in medical applications and in the prevention of algae build-up in water purification systems.

        Global industrial demand, which represented 51.5% of total silver demand in 2019, totaled 511.5 million ounces, flat from 2018. A 6.7% increase in silver demand from the photovoltaic sector was offset by an annual decrease in the electronics and electrical sector. Combined, China, the United States and Japan accounted for 347.1 million ounces, representing 67.9% of total 2019 industrial demand.

        The electrical and electronics sector has consistently ranked as the largest source of industrial silver demand. Silver's electrical and thermal conductive properties make it ideal for multiple high-performance electronics and high voltage circuits, connectors and other electrical components, which are all integral parts of electronics. Such uses include switches, contacts, fuses, superconductors and printed circuit boards, which are contained in computers, mobile phones and other smart technologies. According to The Silver Institute's World Silver Survey 2020, silver demand from the electrical and electronics sector reached 297.6 million ounces in 2019. At 84.7 million ounces, Japan accounted for 28.5% of 2019 electrical and electronics demand, with China (23.3%) and the United States (21.0%) also accounting for significant demand.

        Historically, photographic uses represented a large source of silver demand, accounting for 74% of total silver demand in 1999. However, photographic use has since declined significantly, driven by the

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transition from silver halide to digital technology, especially in the area of consumer film. In 2019, photographic uses accounted for just 3.4% of total silver demand, according to The Silver Institute's World Silver Survey 2020.

        While photographic uses have declined, new technologies have emerged. For example, accelerated growth in the solar panel market has contributed to silver industrial demand in recent years. Silver is used both as a conductor in solar cells and as a reflector in mirrors used to concentrate solar energy. Demand for silver from photovoltaics accounted for 19.3% of industrial demand and 10.0% of total physical silver demand in 2019, according to The Silver Institute's World Silver Survey 2020.

Consumer Use

        Silver's luster, resistance to tarnishing and malleability are properties well suited for the fabrication of jewelry and silverware. For these uses, silver is often alloyed to a small proportion of other metals, such as copper, to harden it. Sterling silver, for example, is 92.5% silver and 7.5% copper and has been the standard in many countries for silver jewelry since the 14^th century.

        According to The Silver Institute's World Silver Survey 2020, in 2019, the jewelry sector accounted for 20.3% of total demand for silver, while silverware accounted for 6.0% of total demand. In 2019, demand for jewelry (201.3 million ounces) and silverware (59.8 million ounces) declined 0.9% and 8.6% year-on-year, respectively. Jewelry demand is driven primarily from South Asia and East, which accounted for 134.4 million ounces, or 66.8% of global demand in 2019. Since 2014, India has been the world's largest silver jewelry consumer; in 2019, demand from India fell 4.8% to 69.0 million ounces as an economic slowdown, erratic monsoons and the deepening liquidity crunch all negatively impacted demand. Other large global markets include Thailand and China (representing 14.2% and 11.3%, respectively, of 2019 global demand). India is also the world's largest consumer of silverware, accounting for 41.2 million ounces, or 68.9%, of 2019 global silverware demand in 2019.

Investment

        Silver has been a store of monetary value for over 4,000 years, and it continues to play an important part in investor portfolio diversification. Historically, the price of silver has shown at times a high correlation to the price of gold as a result of investment demand, and has been at times viewed as an attractive hedge against a decrease in the value of currency and inflation, attracting investors during times of uncertainty.

        Identifiable physical investment demand increased by 12.3% to 186.1 million ounces in 2019, the largest one-year increase since 2015. The Silver Institute attributes this rise to improved safe haven demand for precious metals from uncertainties stemming from the US-China trade dispute and a manufacturing slowdown in several industrialized countries.

        Investment demand for silver has represented a significant portion of total annual silver supply over the last decade. Over the last ten years, investment in coins and metals amounted to 1.1 billion ounces, which was one-tenth of total silver supply over that period. Silver investment demand flourished in the aftermath of the financial crisis and during the height of economic uncertainty in the Eurozone. Between 2013 and 2015, silver physical investment accounted for more than 22% of annual supply, with a peak of 28% recorded in 2015, according to GFMS, formerly known as Gold Fields Mineral Services ("GFMS"). In addition, silver ETP holding rose 13% to 729 million ounces, the largest year-over-year increase since 2010.

Silver Supply

        Silver supply is primarily driven by mined silver production, which, according to The Silver Institute's World Silver Survey 2020, accounted for 81.7% of supply in 2019. Recycling largely accounted

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for the remainder of silver supply. Global silver supply increased 0.6% year-over-year in 2019 to 1,023 million ounces compared to 1,016.8 million ounces in 2018.

        Mine silver output in 2019 declined for the fourth consecutive year, falling 1.3% to 836.5 million ounces from 847.8 million ounces in 2018. These recent production declines follow 13 consecutive years of growth. The decrease in silver supply was largely driven by lower grades at primary silver mines, lower silver production from copper mines and losses from production disruptions. In Peru, Compañía de Minas Buenaventura's Uchucchacua Mine saw silver production decrease from a 27% decline in grades and experienced a 21-day strike; Hochschild Mining's Arcata Mine was placed into care and maintenance early in the year; and declining silver grades were a factor at large primary copper mines. In Mexico, Fresnillo plc achieved lower grades at several of its mines; First Majestic Silver Corp.'s San Martin Mine and Endeavour Silver's El Cubo Mine were placed on care and maintenance; and blockades resulted in Newmont Corporation's Peñasquito Mino being suspended for 90 days.

        Mexico was the world's largest silver mining country in 2019 (190.3 million ounces, down 2.2% from 2018), followed by Peru (135.4 million ounces, down 7.6% from 2018) and China (110.7 million ounces, up 0.06% from 2018). The chart below illustrates global mined silver production from 2011 through 2019.

Global Mined Silver (Moz)

Source: The Silver Institute, World Silver Survey 2020

        In 2019, just 28.7% of silver produced globally (240.0 million ounces) was derived from primary silver mines, down 3.8% from 249.4 million ounces produced from primary silver mines in 2018. The remaining 71.3% of silver mined in 2019 was a by-product of lead/zinc, copper, gold and other operations. By-product silver production, which represents over two-thirds of global silver production, is typically inelastic with respect to the silver price.

        Global recycled silver supply also expanded slightly in 2019 by 1.3% to 169.9 million ounces. Industrial recycling is the largest source of recycled silver and rose for the fifth consecutive year. An increase in recycled supply was recorded across all regions, other than the Commonwealth of

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Independent States. Recycled supply from North America was the highest in 2019, representing 33.8% of the global total.

Silver Supply from Recycling (Moz)

Source: The Silver Institute, World Silver Survey 2020

        Historically, another source of supply has been government sales, which amounted to 44 million ounces in 2010, according to GFMS data. However, government sales of silver stocks were minimal in the early part of this decade, and GFMS estimates that no significant sales have occurred since 2013.

        A combination of a slightly higher demand and a slightly higher supply in 2019 compared to 2018 resulted in a surplus of 31.3 million ounces, or 3.1% of silver demand, according to The Silver Institute's World Silver Survey 2020. Net investment in exchange traded products of 81.7 million ounces helped to propel the net silver balance to a 50 million ounce deficit, or approximately 5% of demand.

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2011-2019 Global Silver Supply and Demand (Moz)

	2011			2012			2013			2014			2015			2016		2017		2018			2019
Supply
Mine Production		760.1			792.7			840.3			877.5			892.9			892.3		863.4		847.8			836.5
Recycling		232.9			216.0			192.7			174.9			166.5			164.4		167.7		167.7			169.9
Net Hedging Suplpy		11.9			—			—			10.7			2.2			—		—		—			15.7
Net Official Sector Sales		4.8			3.6			1.7			1.2			1.1			1.1		1.0		1.2			1.0
Total Supply		1,009.7			1,012.4			1,034.7			1,064.2			1,062.6			1,057.8		1,032.2		1,016.8			1,023.1
Demand
Industrial		508.1			450.5			460.8			449.6			456.2			490.3		517.2		511.5			510.9
...of which photovoltaics		68.4			55.0			50.5			48.4			54.1			93.7		101.8		92.5			98.7
Photography		61.6			52.5			45.8			43.6			41.2			37.8		35.1		34.2			33.7
Jewelry		162.2			159.2			187.1			193.5			202.6			189.2		196.3		203.1			201.3
Silverware		41.5			40.1			45.7			52.4			56.6			52.3		57.7		65.4			59.8
Net Physical Investment		272.0			240.8			300.1			282.6			310.4			213.9		156.2		165.7			186.1
Net Hedging Demand		—			40.4			29.3			—			—			12.0		2.1		8.4			—
Total Demand		1,045.4			983.5			1,068.9			1,021.6			1,067.0			995.5		964.7		988.3			991.8
Market Balance		(35.7	)		28.9			(34.2	)		42.6			(4.4	)		62.3		67.5		28.5			31.3
Net Investment in ETPs		(18.9	)		53.6			4.6			(0.5	)		(17.2	)		50.9		6.8		(22.3	)		81.7
Market Balance less ETPs		(16.9	)		(24.7	)		(38.8	)		43.1			12.8			11.3		60.7		50.8			(50.4	)

Source: The Silver Institute, World Silver Survey 2020

Markets and Outlook

        The price of silver has experienced significant volatility over the last 25 years. The price of silver averaged approximately $4.71/oz from 2000 through the end of 2003. Beginning in 2004, the price of silver began to appreciate considerably, reaching a high of $48.70/oz in April 2011. This significant ascent in the price of silver was driven in part by investors' heightened risk aversion amid concerns over the possible effects of quantitative easing measures introduced in the wake of the global financial crises of 2008 and 2009. Subsequent to April 2011, the silver price trended lower, with the average annual price declining for four consecutive years between 2012 and 2015, reaching a low of $13.65/oz in December 2015. Between January 1, 2016 and August 31, 2020, the price of silver traded within a range of $12.01 and $28.33/oz.

        In 2019, the average LBMA silver price increased 3.4% year-over-year to $16.21/oz. In 2019, the price of silver reached a high of $19.31/oz, a low of $14.38/oz and ended the year at $18.05/oz. The largest contributor to silver price movements is believed to be the ongoing trade dispute between the U.S. and China, which has had the impact of strengthening the U.S. dollar and weighing on the price of silver and other precious metals. The U.S. Federal Reserve took a dovish stance through 2019, as it lowered the federal funds rate three times.

        The price of silver rallied strongly to multi-year highs in August 2020. As of August 31, 2020, the LBMA silver price has increased 52% compared to the year-end 2019 price. The recent silver price appreciation is believed to have been driven by accommodative monetary policy, aggressive stimulus measures and accelerating investment demand in the midst of the COVID-19 pandemic, as well as disrupted production and a recovery in industrial consumption. These factors have enhanced silver's appeal to investors seeking a hedge against inflation, a decrease in the value of the U.S. dollar and general economic and geopolitical uncertainty. Trading volumes at futures and options exchanges have increased significantly, and ETPs inflows have been strong. As of August 31, 2020, silver has a long-term research analyst average consensus price outlook of $18.75/oz.

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        A chart indicating silver prices between January 1, 2000 and July 31, 2020 is set out below. As of August 31, 2020, the price of silver was $27.35/oz.

January 2000—August 2020 Silver Price (US$/oz Ag)

Source: S&P Capital IQ

        The following chart shows the comparative return of an investment in silver versus certain other investments:

Comparative Returns to August 31, 2020

	Percentage Change
	1-Year			5-Year			10-Year
Silver		53.2	%		92.4	%		45.3	%
Gold		29.4	%		73.4	%		57.8	%
Oil		(22.7	%)		(13.4	%)		(40.8	%)
S&P 500		19.6	%		77.5	%		233.6	%
FTSE		(17.3	%)		(4.6	%)		14.1	%
Nikkei		11.8	%		22.5	%		162.2	%
MSCI World Index		14.8	%		49.2	%		127.2	%
$/EUR		(8.0	%)		(6.1	%)		6.2	%

Source: Bloomberg

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BUSINESS

Our Company

        We are a U.S.-based precious metals production, development and exploration company with the objective of becoming a premier silver producer. We were formed on February 2, 2011, when our predecessor Precious Metals Opportunities LLC, which was formed in December 2009, converted to a Delaware corporation. On March 1, 2011, Los Gatos Ltd. merged with and into us to form Sunshine Silver Mines Corporation. In 2014, we changed our name to Sunshine Silver Mining & Refining Corporation. In connection with the Reorganization, we intend to change our name to Gatos Silver, Inc.

Our Principal Projects

        We are currently focused on the production and continued development of the Cerro Los Gatos Mine and the further exploration and development of the Los Gatos District:

•

The Cerro Los Gatos Mine, located within the Los Gatos District, Chihuahua, Mexico, consists of a 2,500 tpd polymetallic mine and processing facility that commenced production on September 1, 2019. For the year ended December 31, 2019, at the Cerro Los Gatos Mine, 357,342 tonnes were mined and 269,853 tonnes were processed at average grades of 229 g/t silver, 0.52 g/t gold, 1.97% lead and 3.03% zinc, with metallurgical recovery of 82.1% silver, 63.5% gold, 83.4% lead and 72.3% zinc. For the six-months ended June 30, 2020, at the Cerro Los Gatos Mine, 288,882 tonnes were mined and 298,331 tonnes were processed at average grades of 195 g/t silver, 0.44 g/t gold, 2.22% lead and 3.41% zinc, with metallurgical recovery of 82.2% silver, 61.8% gold, 85.1% lead and 72.4% zinc. The Los Gatos Technical Report, which has an effective date of July 1, 2020, estimates that the deposit contains 9.6 million diluted tonnes of proven and probable mineral reserves (or 5.0 million diluted tonnes of proven and probable mineral reserves on a 51.5% basis), with 6.4 million diluted tonnes of proven mineral reserves (or 3.3 million diluted tonnes of proven mineral reserves on a 51.5% basis) and 3.3 million diluted tonnes of probable mineral reserves (or 1.7 million diluted tonnes of probable mineral reserves on a 51.5% basis). Average proven and probable mineral reserve grades are 306 g/t silver, 0.35 g/t gold, 2.76% lead and 5.65% zinc.

•

The Los Gatos District, located in Chihuahua, Mexico, is located approximately 120 kilometers south of Chihuahua City and is comprised of a 103,087-hectare land position, constituting a new mining district. The Los Gatos District consists of 14 mineralized zones, which include three identified silver-lead-zinc deposits that contain mineral resources—the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit—as well as 11 additional high-priority targets defined by high-grade drill intersections and over 150 kilometers of outcropping quartz and calcite veins. The area is characterized by predominant silver-lead-zinc epithermal mineralization. On September 1, 2019, the LGJV commenced production at the Cerro Los Gatos Mine. A core component of the LGJV's business plan is to explore the highly prospective, underexplored Los Gatos District with the objective of identifying additional mineral deposits

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that can be mined and processed, possibly utilizing the Cerro Los Gatos Mine plant infrastructure.

        Prior to our initial acquisition of exploration concession rights in April 2006, very limited historical prospecting and exploration activities had been conducted in the Los Gatos District. We were able to acquire concessions covering approximately 103,087 hectares and, through our exploration, discovered a virgin silver region containing high-grade epithermal vein-style mineralization throughout the Los Gatos District concession package.

        In 2008, we negotiated surface access rights with local ranch owners and obtained the necessary environmental permits for drilling and road construction. Through 2015, we purchased all the surface lands required for the Cerro Los Gatos Mine development. Environmental baseline data collection began in May 2010 and was completed in 2016 and approved in 2017 to prepare for the development of future environmental studies required for the Cerro Los Gatos Mine. In 2014, we partnered with Dowa to finance and develop the Cerro Los Gatos Mine and pursue exploration in the Los Gatos District. We and Dowa formed a Mexico-incorporated co-owned operating company, MPR, which owns certain surface and mineral rights associated with the Los Gatos District. In connection with the formation of the LGJV, we entered into the Unanimous Omnibus Partner Agreement, which governs our and Dowa's respective rights over the LGJV. We own approximately 51.5% of the LGJV, with Dowa owning the remainder. Despite owning the majority interest in the LGJV, we do not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions (such as certain approvals, the creation of security interests on property, any initial public offering of the joint venture, and litigation settlements). We intend to exercise our right to repurchase an 18.5% interest in the LGJV from Dowa, increasing our ownership to approximately 70.0%. Following this increase in our ownership interest in the LGJV, we will continue to not exercise control over the LGJV due to the provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions. See "—The Los Gatos District—Unanimous Omnibus Partner Agreement."

        We believe that we have strong support from the local community, with over 130 employees from the local community working across multiple areas involving the continued underground development, construction of the surface facilities and operation of the Cerro Los Gatos Mine. Over 99% of the approximate 540 employees at the Cerro Los Gatos Mine hail from Mexico, highlighting our commitment to the local workforce.

        Our primary areas of focus have been constructing and commissioning the Cerro Los Gatos Mine and defining and expanding the mineral resources associated with the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit. As of July 1, 2020, 739 exploration drill holes have been completed in the Los Gatos District, totaling 259,060 meters. The Los Gatos Technical Report

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estimates that the Cerro Los Gatos Mine contains 10.4 million tonnes of measured and indicated resources (or 5.4 million tonnes of measured and indicated resources on a 51.5% basis) inclusive of mineral reserves, at average grades of 269 g/t silver, 2.7% lead, 5.5% zinc, 0.34 g/t gold and 0.11% copper, or 3.5 million tonnes of measured and indicated resources (or 1.8 million tonnes of measured and indicated resources on a 51.5% basis) exclusive of mineral reserves, at average grades of 154 g/t silver, 2.2% lead, 4.3% zinc and 0.29 g/t gold, and 3.7 million tonnes of inferred resources (or 1.9 million tonnes of inferred resources on a 51.5% basis), at average grades of 107 g/t silver, 2.8% lead, 4.0% zinc and 0.28 g/t gold. The mineral resource estimates for the Cerro Los Gatos Mine have an effective date of September 6, 2019 and have not been updated since that time. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery.

        The Los Gatos Technical Report estimates that the Esther deposit contains 0.46 million tonnes of indicated resources (or 0.24 million tonnes of indicated resources on a 51.5% basis) at average grades of 133 g/t silver, 0.04 g/t gold, 0.02% copper, 0.70% lead and 2.10% zinc, and 2.29 million tonnes of inferred resources (or 1.18 million tonnes of inferred resources on a 51.5% basis) at average grades of 98 g/t silver, 0.12 g/t gold, 0.05% copper, 1.60% lead and 3.00% zinc; and the Amapola deposit contains 0.25 million tonnes of indicated resources (or 0.13 million tonnes of indicated resources on a 51.5% basis) at average grades of 135 g/t silver, 0.10 g/t gold, 0.02% copper, 0.10% lead and 0.30% zinc, and 3.44 million tonnes of inferred resources (or 1.77 million tonnes of inferred resources on a 51.5% basis) at average grades of 140 g/t silver, 0.10 g/t gold, 0.03% copper, 0.20% lead and 0.30% zinc. The mineral resource estimates for the Esther and Amapola deposits have an effective date of December 21, 2012 and have not been updated since that time. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery.

        Since the acquisition of the Los Gatos District concession package, we, Dowa and the LGJV have invested approximately $500 million in the development of the Cerro Los Gatos Mine. The Cerro Los Gatos Mine is currently in production. The first lead concentrate was shipped on September 3, 2019, and the first zinc concentrate was shipped on September 4, 2019. We anticipate increasing production to the designed 2,500 tpd rate by the end of the first quarter of 2021.

        Our objectives at the Cerro Los Gatos Mine are to, among other things:

•

optimize the recently commissioned plant facilities and increase production to the designed 2,500 tpd rate;

•

produce and sell concentrate material containing zinc, lead, silver and gold metals to smelting facilities in Japan, Mexico and other locations;

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initiate a feasibility study, prepared in accordance with the SEC Mining Modernization Rules and NI 43-101, on expanding the production rate from 2,500 to 3,000 tpd; and

•

perform additional in-fill and step-out drilling to further define mineral resources at the Cerro Los Gatos Mine.

        Our objectives at the Los Gatos District are to, among other things:

•

perform additional in-fill and expansion drilling to further define and expand mineralization at the Esther and Amapola deposits;

•

conduct social, environmental and technical work on the property with the objective of completing a scoping study on the Esther and Amapola deposits;

•

expand the exploration drilling program on the Esther deposit, the Amapola deposit and the other 11 mineralized zones within the Los Gatos District; and

•

continue to expand the LGJV's interest in prospective mineral and surface rights.

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Ownership Structure

        A chart of our project ownership structure after the Reorganization is set out below.

In this graphic, green rectangles represent legal entities and grey circles depict the mining operations owned by such legal entities.

(1) Silver Opportunity Partners LLC holds less than 0.01% interest in Minera Luz de Sol, S. de R.L. de C.V. due to requirements of Mexican law.

Key Investment Highlights

High Quality and Long Life Assets

        Once fully operational, the Cerro Los Gatos Mine is expected to generate average LOM unlevered, after-tax free cash flow of approximately $76 million per year on a 100% basis (or approximately $39 million per year on a 51.5% basis). Projected attributable net revenue and free cash flow, as set forth in the Los Gatos Technical Report, are presented below:

Projected Net Revenue (in millions)

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Projected Unlevered Free Cash Flow (in millions)

Net revenue is defined as net smelter return (revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined), less royalties. Unlevered free cash flow is defined as unlevered operating cash flow less capital expenditures and changes in working capital. See also Section 22 of the Los Gatos Technical Report. The Los Gatos Technical Report has an effective date of July 1, 2020. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral reserve estimates and the economic analysis contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "Business—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "Business—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "Business—The Los Gatos District—Capital and Operating Costs." This information does not constitute guidance and you should not rely on it as an estimate or forecast of future performance. The Cerro Los Gatos net revenue and unlevered free cash flow are shown on a 51.5% ownership basis to reflect our current ownership interest in the LGJV. The 18.5% option represents our right to repurchase an 18.5% interest in the LGJV from Dowa. See "—Business Strategy." The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Inferred mineral resources are subject to uncertainty as to their existence and as to their economic legal feasibility.

Cerro Los Gatos Mine Successfully Commissioned with Significant Near-Term Production Growth

        The Cerro Los Gatos Mine is currently in production, with final construction completed in the second quarter of 2019. Commissioning was successful, having achieved a number of key milestones, including:

•

fully commissioned the run-of-mine stockpile;

•

fully commissioned the ore conveyance system;

•

fully commissioned the grinding circuit and flotation circuit;

•

fully commissioned the concentrate and tailings thickeners;

•

completed the storage and concentrate loadout area;

•

fully commissioned the tailings storage facility;

•

transitioned to the Mexican national power grid;

•

shipped the first lead and zinc concentrates;

•

successfully commissioned the first of three vertical column flotation cells to further reduce fluorine in the concentrates;

•

successfully recommissioned the mine after a 45-day temporary suspension of activities due to the COVID-19 pandemic; and

•

nationally recognized as a socially responsible company in Mexico.

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Mine Ramp-Up (tpd)

Process Plant Ramp-Up (tpd)

Metal Recoveries

Metal	Q2 2020 Actual Recovery			Q1 2020 Actual Recovery			Commissioning Forecast Recovery			Economic Analysis Recovery(1)
Silver		84.2	%		80.5	%		75.0	%		85.2	%
Gold		61.3	%		62.0	%		61.7	%		63.9	%
Zinc		77.0	%		69.4	%		64.1	%		73.2	%
Lead		87.1	%		83.9	%		81.9	%		85.2	%

(1)

Includes zinc concentrate and lead concentrate.

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Additional Resource Growth Potential from Exploration of the Los Gatos District

        In addition to the significant existing resources at the Cerro Los Gatos Mine, the Los Gatos District also contains the Esther and Amapola deposits and 11 other mineralized zones. With control of the concessions, the ability to develop the entire 103,087-hectare land position and more than 85% of the land position yet to be explored, we expect that we will stand to benefit from mineralization beyond those already identified in the 14 mineralized zones, which include the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit.

Assets Located in Geopolitically Safe and Established Mining Regions

        The Los Gatos District is located in one of the world's premier silver mining regions: the Mexican Silver Belt, which was the world's largest silver producing region in 2019. Based on a survey published in 2019 by the Fraser Institute, an independent research organization, Mexico is highly ranked among silver mining jurisdictions worldwide in terms of the attractiveness of investment. Mexico also has a long history of successful mineral development and operations, which we believe makes it a desirable jurisdiction in which to conduct mining operations due to stable political, tax and regulatory policies.

        Mexico is the largest producer of silver in the world, in addition to being a top-10 producer of gold, lead and zinc, among other major commodities. According to the 2019 Fraser Institute survey, Mexico ranks ahead of many countries in terms of investment attractiveness for mining, but behind certain areas in the U.S., Canada and Australia. In the mining sector, foreign ownership of Mexican companies is not subject to significant restrictions. The Mexican government is focused on improving infrastructure, primarily in the power grid and road networks.

Mine Site Exploration Potential Provides Opportunity for Significant Resource Conversion Beyond Existing Mine Plan

        We believe that our properties have significant exploration upside with numerous opportunities to define additional mineral resources through continued exploration.

        The Los Gatos District is located in the Mexican Silver Belt, near several other silver assets owned by large public companies. The Mexican Silver Belt has experienced significant exploration success, and the Los Gatos District represents an underexplored property where there has been little historical workings or previous exploration. The Los Gatos District contains numerous significant high-grade targets throughout. Previous work done has resulted in a 190% increase in measured and indicated silver equivalent resources from March 2014 to September 2019, with additional exploration planned using proceeds from this offering.

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Cerro Los Gatos Mine Measured & Indicated Ore Tonnage (Mt) and Silver Grade (g/t) (100% Basis)

Mineral resource estimates presented include mineral reserves. Based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, including mineral resource estimates exclusive of mineral reserves, see "—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

        The LGJV owns the surface rights to 5,479 hectares covering the Cerro Los Gatos Mine and the Esther and Amapola deposits and the Gavilana (Paula) and San Luis zones, and has been granted mineral concessions for all 103,087 hectares, with 17 contiguous concessions in the Los Gatos District. We have identified 14 mineralized zones within the concessions. Of the 14 mineralized zones, the LGJV has established mineral resource estimates only at the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit and has conducted drilling on only 15 kilometers out of a strike length of over 150 kilometers of quartz veining along the Los Gatos District.

Mineralized Zones Grade Intercepts

Mineralized Zones	Length (m)		Ag (g/t)		Pb (%)		Zn (%)
Boca de Leon		2.2		90.6		5.0		0.8
Cieneguita		1.3		62.4		5.4		0.9
El Lince		4.0		62.2		0.0		0.1
El Rodeo		0.8		61.5		3.4		4.0
La Paula		4.0		180.0		0.1		0.1
Los Torunos		1.8		34.2		2.6		0.9
Mezcalera		2.0		59.4		0.1		0.1
San Agustin		1.3		148.0		1.2		2.3
San Luis		2.0		271.0		0.3		0.1

The table above does not include Ocelote and Wall-E/Ava zones, as they do not have sufficient drilling.

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        The current resources are significant, but we believe that additional resource potential remains in the immediate area. Drill testing of other high-priority targets within the Los Gatos District has been relatively limited given our focus on delineation of reserves at, and construction of, the Cerro Los Gatos Mine. As a result, the highly prospective Los Gatos District remains underexplored. Drilling at the Esther deposit to date has demonstrated good grade continuity along the system and characteristics similar to that identified during preliminary work at the Cerro Los Gatos Mine. Following potentially positive results from infill drilling at the Esther and Amapola deposits, we expect to update the resources and perform a scoping study to determine if these two deposit areas could generate economic production, representing further upside potential for the broader Los Gatos District.

        We expect to perform additional definition drilling to expand the Southeast and Northwest zones of the Cerro Los Gatos Mine and to perform additional drilling to expand the Esther and Amapola deposits, which remain open to extensions at depth. In addition to the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit, we have identified 11 other mineralized zones defined by high-grade drill intersections in the Los Gatos District.

        In addition to the Los Gatos District, we have 100% control of the Santa Valeria property, located in Chihuahua, Mexico, which is comprised of 1,543 hectares and could provide further opportunities for resource growth.

Attractive Market Dynamics

        Investment demand for silver exposure remains strong, driven in part by volatility in the U.S. dollar, ongoing economic uncertainty in Europe and political unrest in the Middle East and elsewhere. Historically, silver has been viewed as an effective hedge against a decrease in the value of currency and inflation, attracting investors during times of uncertainty. In addition, industrial demand for silver continues to increase, driven by new emerging applications such as solar energy, medical applications and water purification, which we believe enhance the strong supply and demand fundamentals of silver.

        Despite this strong investment and industrial demand, the universe of primary silver companies is small, which has created a scarcity of investor options for silver exposure. We believe we represent a highly attractive opportunity for investors to gain exposure to a primary silver company with world-class assets.

Experienced Management Team and Board of Directors

        We have an experienced and growing management team with a track record of successfully identifying and developing mineral discoveries. Our Chief Executive Officer, Stephen Orr, has 43 years of experience in the minerals industry principally with Homestake Mining Company, where he ultimately served as president of Homestake Canada Inc.; Barrick Gold Corporation, where he was managing director of Australia & Africa operations; OceanaGold, where he served as chief executive officer; and Ventana Gold Corp., where he was president & chief executive officer. Our Chief Financial Officer, Roger Johnson, has 41 years of experience in financial management of the minerals industry with Coopers & Lybrand, as a public accountant; Kennecott Utah Copper LLC, as vice president, controller; Pasminco Zinc, Inc., as senior vice president, finance and administration; and Newmont Mining Corporation, where he was vice president, chief accounting officer. Our Vice President of Exploration and Chief Geologist, Philip Pyle, has 41 years of experience in the minerals industry with Linear Gold (now Fortune Bay Corp.), where he served as exploration manager, and at MIM Exploration Pty Ltd, BHP Minerals International Exploration and AMAX Exploration Inc. He served as vice president exploration at Los Gatos Ltd. since 2008. Our VP Operations, John Kinyon, has 40 years of experience in the minerals industry, including as vice president and general manager at Coeur Mining Inc.'s Kensington Mine, general manager of Yukon Zinc's Wolverine project, vice

93

president operations at OceanaGold's New Zealand operations and general manager of Eskay Creek at Barrick Gold Corporation.

        Our Board of Directors is comprised of senior mining and financial executives who have broad domestic and international experience in mineral exploration, development and mining. Our Board of Directors has been established with individuals who have career backgrounds at notable mining companies. We believe that the specialized skills and knowledge of the management team and of the Board of Directors will significantly enhance our ability to explore and develop the Los Gatos District and to pursue other regional growth opportunities.

        Mr. Pyle, Vice President of Exploration and Chief Geologist, and Mr. Huerta, Project Director at the Cerro Los Gatos Mine, are fluent in English and Spanish, have extensive experience with carrying out business activities in Mexico and are familiar with the culture and business practices in Mexico. Mr. Pyle, for example, has been travelling to Mexico on business for more than 30 years, 11 years of which were on a monthly basis. While our key management meetings are in English and our books and records are in English, all key local management members are fluent in English and Spanish, Dowa's upper management all speak English and our auditors operate in Spanish as needed. Further, our contracts that relate to our business operations in Mexico are prepared in both English and Spanish by lawyers who are fluent in both languages, with translations undertaken as needed.

        See "Management" for additional information.

Shareholder Support

        We were founded by The Electrum Group LLC and certain of its affiliates. Electrum is an investment advisor whose team, led by Dr. Thomas S. Kaplan, has historically focused on making strategic investments in precious metals resources and hydrocarbons. Electrum has a demonstrated track record of successful natural resource investments and more than 20 years of experience investing in the metals and mining sector. We believe that access to the specialized skills and knowledge within Electrum will significantly enhance our ability to execute our business strategy.

        Los Gatos Ltd. was founded by Electrum in April 2006. Prior to the merger of Los Gatos Ltd. with and into the Company in March 2011, Electrum principally funded the activities of Los Gatos Ltd. In addition, pursuant to a services agreement effective January 1, 2008, Tigris Financial (International) L.P. provided services consisting primarily of business and financial advice with respect to the strategic business development and corporate finance activities of Los Gatos Ltd. and its subsidiaries. This agreement was terminated on August 1, 2011.

        Precious Metals Opportunities LLC, our predecessor, was founded by Electrum in December 2009. Prior to the merger of Los Gatos Ltd. with and into the Company in March 2011, Electrum funded the activities of the Company. Prior to 2011, Electrum employees served as our officers and directors and were responsible for the management of all aspects of our business from March through June 2011. Thomas S. Kaplan, Chairman and Chief Executive Officer of Electrum, Igor Levental, President of Electrum, and Ali Erfan, Vice Chairman of Electrum, are members of the Company's Board of Directors.

        MERS is an independent, professional retirement services company that was created to administer the retirement plans for Michigan's local units of government on a not-for-profit basis. The team at MERS is made up of top industry experts who use fiscal best practices to give members peace of mind and security in their retirement. From July 2015 through July 2019, MERS acquired 19.5% of our common stock. Prior to MERS's purchase of our common stock, we had no business relationship with MERS.

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        The current shareholder structure, which does not give effect to the Reorganization, is depicted below:

        Following the completion of this offering and after giving effect to the Reorganization, Electrum and MERS are expected to beneficially own approximately        % and         % of our outstanding common stock, respectively, assuming the over-allotment option is not exercised by the underwriters, and Electrum will continue to have a presence on the Board of Directors.

Business Strategy

        Our business strategy is focused on creating value for stakeholders through the ownership and advancement of two principal projects—the Cerro Los Gatos Mine and the Los Gatos District—and through the pursuit of similarly attractive silver-focused projects. The LGJV commenced production at the Cerro Los Gatos Mine in the third quarter of 2019. We intend to achieve these objectives through the following value-enhancing near-term and long-term initiatives:

•

Acquire or retire a portion of the Los Gatos Working Capital Facility:  The Los Gatos Working Capital Facility provided by Dowa to the LGJV carries an annual interest rate of LIBOR plus 3%. In addition, we are required to pay an arrangement fee on the borrowing, calculated as 15.0% per annum of 70.0% of the average daily principal amount outstanding during the relevant fiscal quarter. Acquiring or retiring a portion of the Los Gatos Working Capital Facility will reduce our borrowing costs.

•

Repurchase an 18.5% interest in the Los Gatos Joint Venture to increase our ownership to 70.0%:  We intend to exercise our right to repurchase an 18.5% interest in the LGJV from Dowa, increasing our ownership to approximately 70.0%. The option expires in June 2021 and represents an attractive investment opportunity that we believe is immediately value-accretive. With increased ownership, we will further benefit from the ramp-up in production at the Cerro Los Gatos Mine, supported by the attractive cash flow generation profile and fully funded nature of the project. In addition to increasing our economic interest in the Cerro Los Gatos Mine, we expect that this repurchase will also provide us with greater exposure to potential upside from additional exploration within the Los Gatos District, in particular the Esther and Amapola deposits. Following this increase in our ownership interest in the LGJV, we will continue to not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of all major operating decisions (such as certain approvals, the creation of security interests on

95

property, any initial public offering of the joint venture, and litigation settlements). See "—The Los Gatos District—Unanimous Omnibus Partner Agreement" for more information.

•

Fund strategic capital infrastructure at Cerro Los Gatos:  We intend to fund our pro rata share of strategic capital infrastructure construction costs at the Cerro Los Gatos Mine. These costs include, but are not limited to, the construction of a paste plant, the expansion of an underground pumping well gallery, additional capacity construction of the tailings storage facility and other various strategic capital needs. At this time, we are not obligated or committed to making these expenditures.

•

Fund near-term LGJV debt service needs:  We intend to fund our pro rata share of near-term debt service costs related to the Dowa Term Loan.

•

Complete a feasibility study expanding the Cerro Los Gatos Mine production rate to 3,000 tpd: Our desktop study estimated that a production rate expansion from 2,500 to 3,000 tpd could significantly improve the economics of the Cerro Los Gatos Mine. Given the appealing potential return, we intend to conduct a feasibility study, prepared in accordance with the SEC Mining Modernization Rules and NI 43-101, for the possible Cerro Los Gatos Mine production rate increase.

•

Further exploration of the Los Gatos District:  We intend to fund our pro rata share of an exploration program to further define resources in the partially defined Esther deposit to confirm the multiple deposit potential of the Los Gatos District.

Summary of Mineral Resources and Mineral Reserves

        Below is a summary table of estimated mineral resources and reserves. Further information can be found in the following sections: "—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine."

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Summary Mineral Resources Inclusive of Mineral Reserves as of the Effective Date of the Los Gatos Technical Report

	Measured Mineral Resources						Indicated Mineral Resources						Measured & Indicated Mineral Resources						Inferred Mineral Resources
	Amount (100% basis)		Amount (51.5% basis)		Grade / Qualities		Amount (100% basis)		Amount (51.5% basis)		Grade / Qualities		Amount (100% basis)		Amount (51.5% basis)		Grade / Qualities		Amount (100% basis)		Amount (51.5% basis)		Grade / Qualities
	(in millions of tonnes)				(g/t Ag or Au) (% Pb, Zn or Cu)		(in millions of tonnes)				(g/t Ag or Au) (% Pb, Zn or Cu)		(in millions of tonnes)				(g/t Ag or Au) (% Pb, Zn or Cu)		(in millions of tonnes)				(g/t Ag or Au) (% Pb, Zn or Cu)
Ag:
Los Gatos District
Cerro Los Gatos Mine(1)		5.8		3.0		324		4.6		2.4		202		10.4		5.4		269		3.7		1.9		107
Esther Deposit(2)		—		—		—		0.46		0.24		133		0.46		0.24		133		2.29		1.18		98
Amapola Deposit(2)		—		—		—		0.25		0.13		135		0.25		0.13		135		3.44		1.77		140
Total		5.8		3.0		324		5.3		2.7		193		11.1		5.8		260		9.4		4.9		117
Au:
Los Gatos District
Cerro Los Gatos Mine(1)		5.8		3.0		0.39		4.6		2.4		0.28		10.4		5.4		0.34		3.7		1.9		0.28
Esther Deposit(2)		—		—		—		0.46		0.24		0.04		0.46		0.24		0.04		2.29		1.18		0.12
Amapola Deposit(2)		—		—		—		0.25		0.13		0.10		0.25		0.13		0.10		3.44		1.77		0.10
Total		5.8		3.0		0.39		5.3		2.7		0.25		11.1		5.8		0.32		9.4		4.9		0.18
Pb:
Los Gatos District
Cerro Los Gatos Mine(1)		5.8		3.0		2.90		4.6		2.4		2.50		10.4		5.4		2.70		3.7		1.9		2.80
Esther Deposit(2)		—		—		—		0.46		0.24		0.70		0.46		0.24		0.70		2.29		1.18		1.60
Amapola Deposit(2)		—		—		—		0.25		0.13		0.10		0.25		0.13		0.10		3.44		1.77		0.20
Total		5.8		3.0		2.90		5.3		2.7		2.2		11.1		5.8		2.6		9.4		4.9		1.6
Zn:
Los Gatos District
Cerro Los Gatos Mine(1)		5.8		3.0		5.80		4.6		2.4		5.2		10.4		5.4		5.5		3.7		1.9		4.00
Esther Deposit(2)		—		—		—		0.46		0.24		2.10		0.46		0.24		2.10		2.29		1.18		3.00
Amapola Deposit(2)		—		—		—		0.25		0.13		0.30		0.25		0.13		0.30		3.44		1.77		0.30
Total		5.8		3.0		5.8		5.3		2.7		4.7		11.1		5.8		5.2		9.4		4.9		2.4
Cu:
Los Gatos District
Cerro Los Gatos Mine(1)		5.8		3.0		0.11		4.6		2.4		0.11		10.4		5.4		0.11		3.7		1.9		0.14
Esther Deposit(2)		—		—		—		0.46		0.24		0.02		0.46		0.24		0.02		2.29		1.18		0.05
Amapola Deposit(2)		—		—		—		0.25		0.13		0.02		0.25		0.13		0.02		3.44		1.77		0.03
Total		5.8		3.0		0.11		5.3		2.7		0.10		11.1		5.8		0.10		9.4		4.9		0.08

(1)

Based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, including mineral resource estimates exclusive of mineral reserves, see "—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

(2)

Based on a cut-off grade of 100 grams silver equivalent/tonne using metal prices of $22.30/toz silver, $0.97/lb lead, and $0.91/lb zinc. The mineral resource estimates for the Esther and Amapola deposits have an effective date of December 21, 2012. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral resource estimates contained in the Los Gatos Technical Report, see "—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits."

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Summary Mineral Reserves as of the Effective Date of the Los Gatos Technical Report

	Proven Mineral Reserves						Probable Mineral Reserves						Total Mineral Reserves
	Amount (100% basis)		Amount (51.5% basis)		Grades / Qualities		Amount (100% basis)		Amount (51.5% basis)		Grades / Qualities		Amount (100% basis)		Amount (51.5% basis)		Grades / Qualities
	(in millions of tonnes)				(g/t Ag or Au) (% Pb or Zn)		(in millions of tonnes)				(g/t Ag or Au) (% Pb or Zn)		(in millions of tonnes)				(g/t Ag or Au) (% Pb or Zn)
Ag:
Los Gatos District
Cerro Los Gatos Mine		6.4		3.3		332		3.3		1.7		254		9.6		5.0		306
Total		6.4		3.3		332		3.3		1.7		254		9.6		5.0		306
Au:
Los Gatos District
Cerro Los Gatos Mine		6.4		3.3		0.36		3.3		1.7		0.34		9.6		5.0		0.35
Total		6.4		3.3		0.36		3.3		1.7		0.34		9.6		5.0		0.35
Pb:
Los Gatos District
Cerro Los Gatos Mine		6.4		3.3		2.77		3.3		1.7		2.74		9.6		5.0		2.76
Total		6.4		3.3		2.77		3.3		1.7		2.74		9.6		5.0		2.76
Zn:
Los Gatos District
Cerro Los Gatos Mine		6.4		3.3		5.55		3.3		1.7		5.86		9.6		5.0		5.65
Total		6.4		3.3		5.55		3.3		1.7		5.86		9.6		5.0		5.65

Reserves based on a $75 NSR cut-off value. NSR is defined as revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined. The mineral reserve estimates for the Cerro Los Gatos Mine reflect diluted grades with adjustment for metallurgical recovery. The mineral reserve estimates contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades. For a discussion of the mineral reserve estimates contained in the Los Gatos Technical Report, see "—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine."

The Los Gatos District

        The technical information appearing below and elsewhere in this prospectus concerning the Los Gatos District was derived from the Los Gatos Technical Report prepared by Tetra Tech. The Los Gatos Technical Report was prepared by the following qualified persons, each of whom is an employee of Tetra Tech: Guillermo Dante Ramírez Rodríguez, Leonel Lopez, Kira Johnson, Keith Thompson, Kenneth Smith, Luis Quirindongo and Max Johnson. None of the qualified persons who prepared the Los Gatos Technical Report is affiliated with us or any other entity that has an ownership, royalty or other interest in the Cerro Los Gatos Mine or the Los Gatos District.

Location of the Los Gatos District and Access

        The Los Gatos District, covers approximately 103,087 hectares in the south-central part of the State of Chihuahua in northern Mexico, within the municipality of Satevó. The Los Gatos District is roughly centered on Latitude 27° 34' 17" N, Longitude 106° 21' 33" W, near the town of San José del Sitio. The Los Gatos District is located approximately 120 kilometers south of the state capital of Chihuahua City and approximately 100 kilometers northwest of the mining city of Hidalgo del Parral.

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        San José del Sitio is accessible by a nearly 100% paved road from the turnoff of Federal Highway 24 at the 81 kilometer marker between the cities of Chihuahua and Hidalgo de Parral. The access road can be traveled by any motorized vehicle and has regular bus services to the surrounding communities. The Los Gatos District area is accessible by a large network of dirt and gravel roads that are used by local owners and lessees to access grazing areas for cattle and local ranches. Northern areas of the Los Gatos District are also accessible from several gravel roads connecting with Mexican Federal Highway 24 between the 60 kilometer to 81 kilometer markers. In more remote areas, the rolling topography permits easy access by foot into areas where roads do not exist.

        There are a limited number of qualified workers in San José del Sitio, but, technical workers (e.g., miners, electricians, mechanics, computer technicians, etc.), heavy equipment and specialized operators can be found in the surrounding area and at Parral, 88 kilometers southeast. Primary and secondary-level technical schools are available in Valle de Zaragoza, and all levels of schooling are available in Parral and/or Chihuahua, each 2.5 hours away by vehicle.

        See "Risk Factors—The title to some of the mineral properties may be uncertain or defective, thus risking our investment in such properties" for a discussion of factors or risks that may affect access or title or the right or ability to perform work on the property.

        See Section 4.1 of the Los Gatos Technical Report for further specific information of the location of the Los Gatos District.

Mining Concessions

        The Los Gatos District is made up of a series of claim titles covering approximately 103,087 hectares. The titled mining concessions are summarized below:

Los Gatos District—Titled Mining Concessions

Concession Name	Title Number		Date Granted mm/dd/yy	Hectares		Current Concessionaire
Los Gatos		231498	3/4/08		19,712	Minera Plata Real
Los Gatos 2		228950	2/22/07		10,720	Minera Plata Real
Los Gatos 3		231076	1/16/08		27	Minera Plata Real
Mezcalera		228249	10/17/06		4,992	Minera Plata Real
Mezcalera 2 Fracción I		228929	2/21/07		39	Minera Plata Real
Mezcalera 2 Fracción II		228930	2/21/07		26	Minera Plata Real
Mezcalera 2 Fracción III		228931	2/21/07		29	Minera Plata Real
Paula Adorada		223392	12/9/04		40	Minera Plata Real
La Gavilana		237137	11/19/10		10	Minera Plata Real
San Luis		236908	10/5/10		16	Minera Plata Real
La Gavilana Fracción I		237461	12/21/10		44	Minera Plata Real
Los Estados Fracción I		237694	4/25/11		9	Minera Plata Real
Los Estados Fracción II		237695	4/25/11		44	Minera Plata Real
Los Gatos 4		238511	9/23/11		52,597	Minera Plata Real
San Luis 2		238694	10/18/11		42	Minera Plata Real
Los Veranos		238573	9/23/11		14,740	Minera Plata Real
San Luis 3		240452	5/23/12		0.01	Minera Plata Real
Total					103,087

        In addition to the concessions listed in the table above, there are several small concessions within the Los Gatos District area that have been cancelled and not yet liberated by the Dirección General de

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Minas, which we intend to apply for once liberated. We have also arranged for permission to enter and perform exploration activities in a number of private land properties in the district area.

        These concessions are held by MPR. The concessions have a period of validity that ranges between 2054 and 2062. MPR holds the rights to the concessions of Los Gatos and Paula Adorada subject to the terms of an agreement with the original holder of the concession. These agreements have been duly recorded in the Méxican Public Registry of Mines. Details of these agreements are provided below.

Royalty and Agreement on Los Gatos Concession

        The Los Gatos concession (title 231498) is subject to the terms of an exploration, exploitation and unilateral promise of assignment of rights agreement made between La Cuesta International, S.A. de C.V. and MPR, dated May 4, 2006. Pursuant to this agreement, title to the Los Gatos concession was transferred to MPR and in connection with the transfer MPR is required to make semi-annual advanced royalty payments of $20,000 to La Cuesta International, S.A. de C.V. until the commencement of commercial production and thereafter is required to pay a 2% net smelter returns royalty on production from the Los Gatos concession and a 0.5% net smelter returns royalty from lands within a one-kilometer boundary of the Los Gatos concession, subject to a minimum royalty payment in the same amount as the advanced royalty payment. Once total royalty payments reach $10 million, the 2% net smelter returns royalty will decrease to 0.5% and once total payments have reached $15 million, the royalty will no longer be payable. MPR paid a royalty payment of $40 thousand per year during the preproduction period. Upon commencing production, payments under this agreement were deferred until March 31, 2021 with an annual interest rate of 4.5% applied to the outstanding balance. During the deferral period, MPR will pay an advance royalty payment of $100,000 per year until January 2021. As of June 30, 2020, $14,400 thousand remained for future royalty obligations. During the term of the agreement, MPR is required to comply with all mining, environmental and other applicable laws in order to maintain its right and title to the Los Gatos concession.

Agreement for Paula Adorada

        The Paula Adorada concession was acquired from Chihuahua-based company Grupo Factor through an option to purchase agreement in effect from 2008 to 2013. Once all obligations and payments were completed during the term of the agreement, the registered ownership of the Paula Adorada concession (title 223392) was transferred from Grupo Factor to MPR in 2014, with no remaining obligations or royalties.

Unanimous Omnibus Partner Agreement

        The Los Gatos District is owned and operated through the Unanimous Omnibus Partner Agreement. Pursuant to this agreement, the LGJV cannot make any "Major Decisions" without first having obtained Dowa's consent or without first having obtained the consent of holders of at least 90% of the interest in the LGJV, depending on the time such Major Decisions are made. Major Decisions, as defined in the agreement, include the significant operating decisions of the LGJV, such as, among other decisions, budgeting, development and exploitation approvals, loan and outside financing approvals, expansion of area of interest, surrendering claims, the creation of security interests on property, any initial public offering of the joint venture, and litigation settlements. Therefore, despite holding a majority equity interest in the LGJV, we do not exercise control over the LGJV.

        We intend to exercise our right to repurchase an 18.5% interest in the LGJV from Dowa, increasing our ownership to approximately 70.0%. Following this increase in our ownership interest in the LGJV, we will continue to not exercise control over the LGJV due to certain provisions contained in the Unanimous Omnibus Partner Agreement that currently require unanimous partner approval of

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all major operating decisions (such as certain approvals, the creation of security interests on property, any initial public offering of the joint venture, and litigation settlements).

Option Agreement

        On May 30, 2019 and in connection with the memorandum of understanding dated April 16, 2019, we entered into an option agreement with MPR, OSJ and Dowa, pursuant to which Dowa granted us an option to repurchase the approximate 18.5% equity interest in the LGJV by June 30, 2021, and only after the Los Gatos Working Capital Facility is repaid, for a total consideration of approximately $51.1 million and all costs incurred by Dowa in connection with its ownership of such equity interest, including, but not limited to, legal and accounting fees, capital contributions and taxes.

Priority Distribution Agreement

        On May 30, 2019 and in connection with the memorandum of understanding dated April 16, 2019, we entered into a priority distribution agreement with MPR, OSJ and Dowa, pursuant to which we directed the LGJV to contribute dividend payments to an escrow account until an aggregate amount equal to $20 million has been deposited into the account, which is payable to Dowa as a priority dividend.

Sales Agreements

        OSJ (the "Seller"), an entity that forms part of the LGJV, entered into a delivery contract, dated April 14, 2019, with Metagri S.A. de C.V. ("Metagri"), whereby Metagri agreed to buy and accept delivery of, and the Seller agreed to sell and deliver to Metagri, all lead concentrate that will be produced from the Cerro Los Gatos Mine until December 31, 2021. The lead concentrate will ultimately be delivered to Metagri's warehouse in Manzanillo, Mexico.

        The Seller also entered into a delivery contract, dated July 15, 2019, with Ocean Partners, whereby Ocean Partners agreed to buy and accept delivery of, and Seller agreed to sell and deliver to Ocean Partners, all zinc concentrate that will be produced from the Cerro Los Gatos Mine until June 30, 2022. The zinc concentrate will ultimately be delivered to Dowa's zinc smelter in Akita, Japan, unless otherwise agreed to by Dowa. The Seller, from time to time, will enter into memoranda of agreement setting forth the terms and conditions for the sales of zinc concentrate.

        From time to time, the Seller may enter into certain spot sale contracts should impurities in lead and zinc concentrate exceed certain specifications. Since the commencement of production, the Seller has entered into spot sale contracts due to high fluorine content for some production.

Climate and Topography

        The Los Gatos District area is located in the Sierras y Llanuras del Norte Physiographic Province near the boundaries between the Gran Meseta, Cañones, the Sierras and Llanuras Tarahumara Sub Provinces. The general physiography of the Los Gatos District is characterized by low to middle rolling volcanic hills with local escarpments and flat valley floors. Altitudes vary with between 1,550 masl at the base of the Santo Toribio Creek and 1,780 masl at the top of the Los Gatos Hill, one of the highest peaks of the Los Gatos District area.

        Vegetation is characterized by a semi-desert landscape, with typical low brush vegetation in the slopes, including lechuguilla, sotol, yucca, sage, bear grass and other types of indigenous grasses. Larger brush and trees are common along the main watercourses, with the presence of oak, cypress, poplar, huizache and mesquite, among others.

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        The climate in the area is typical of desert areas of northwest Mexico, extreme semi-arid. Exploration and mining activities at the Los Gatos District are seldom interrupted by adverse weather conditions, with the exception of short-lived storms producing floods and damage to access roads.

Aerial View of the Cerro Los Gatos Mine

Geological Setting

        The Los Gatos District is located in the transition zone between the Sierra Madre Occidental volcanic province of western Mexico and the Mesozoic Chihuahua basin to the east. It is also located in the general contact zone between the Sierra Madre Occidental, Chihuahua and Parral tectonostratigraphic terranes.

        The area is largely characterized by a thick sequence of Tertiary volcanic rocks that are generally dissected by a strong north-northwest bearing fault system that divides the area into the plateau and barranca sections and are subdivided in two major units, the Lower Volcanic Group and Upper Volcanic Group. The area is one of the largest known epithermal, precious-metal metallogenic provinces and is host to several well-known gold-silver producing mining districts in Mexico, such as Concheño, Batopilas, San Dimas-Tayoltita and Ocampo.

        The dominant rocks of the Los Gatos District area are thick accumulations of intermediate tuffs and lavas, with lesser felsic rocks, and Upper Cretaceous (Cenomanian) to Lower Paleocene aged sandstones, shales and limestones correlative with the Mezcalera formation, locally metamorphosed to phyllites, quartzites and marbles near areas of igneous activity. Rocks of this oldest sedimentary sequence occur within a small horst block located to the northwest of the Cerro Los Gatos District, with prominent high-angle fault boundaries on the north and south, parallel to the regional trend of faulting. Intruding and deposited on the entire section are locally important rhyolite flows, flow domes and dikes, usually strongly silicified, that have all of the varied textures expected with the development of flow domes, including breccias, flow banding and intrusive/extrusive transitions. Each of the rocks in the section contains observable hydrothermal alteration that suggests that mineralization in the area probably occurred late in the history of the development of the volcanic section. It is important to stress, however, that economic grades of mineralization have only thus far been identified in the andesite and dacite sections.

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History of the Los Gatos District

        The Los Gatos District has been the subject of very limited historical prospecting and mineral exploration, including the development of shallow workings and preliminary exploration activities by Consejo de Recursos Minerales (now the Servicio Geológico Mexicano, the Mexican Geologic Survey) at the Esther, Gavilana (Paula) and San Luis zones with references to the occurrence of silver, lead and zinc. The construction and development work has not uncovered any evidence of past modern prospecting activities in the area. The Los Gatos District was initially recognized by reconnaissance activities by La Cuesta International Inc. in 2005 and later offered to Los Gatos Ltd. (original parent of MPR). An initial letter of agreement for exploration work on the Los Gatos District was negotiated and a final contract ratified in April 2006 between MPR and La Cuesta International S. A. de C.V. (the Mexican subsidiary of La Cuesta International Inc.). Only minor field work was conducted in 2006 and 2007 on the Los Gatos District during the waiting period for the initial concession to be titled, and formal exploration activities and drilling were conducted by MPR from and after 2008.

Exploration

        The Los Gatos District consists of three identified silver discoveries—the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit—and 11 other mineralized zones with over 150 kilometers of outcropping quartz and calcite veins are also located in the Los Gatos District.

        In 2007, MPR initiated its first phase of exploration in the Los Gatos District area with a program of surface geological mapping and rock sampling covering approximately 60% of the original Los Gatos concession within the core of the claim block. This work, conducted through a local Mexico-based consulting group, Grupo Azta, identified in excess of 100 kilometers of strike length of quartz and calcite veins, many of which contained lead, zinc and silver mineralization. Of the 1,217 rock samples taken from surface outcrops of vein and wall rocks, 200 samples contained values in excess of 10 grams of silver per tonne.

        From June 2008 to October 2008, environmental permits were obtained, proposed drill areas were re-mapped and re-sampled, surface access rights were negotiated with local ranches, and drill access roads were constructed. In January 2009 and September 2009, reports and corresponding notices of activity were submitted to the Secretary of Environment and Natural Resources to cover the development of access roads and drill sites to drill 50 holes, along with a request to increase the number of drill holes to 250. Based on a report filed on December 5, 2011, the number of drill holes permitted on the Los Gatos District was extended to 600 drill holes.

        Environmental baseline data collection began in May 2010 for the development of future environmental studies required for the project. Data on flora, fauna, water, air, climate, security and social impacts are generally collected on a routine basis for integration into future environmental studies required for the Los Gatos District.

        Detailed soil geochemistry programs have been conducted over the Esther deposit and the area between the Cerro Los Gatos Mine and Esther deposit. Results of the sampling identified new veins in the Esther deposit and revealed four separate structures between the Esther deposit and the Cerro Los Gatos Mine.

        Detailed topographic mapping has been created using Photosat, a Canadian contractor. The topography mapping was created at one meter, five meter, 10 meter and 50 meter contours from Geoeye® satellite coverage captured exclusively for the survey. Survey control points were established on the surface, with coordinates by total station in order to guarantee the accuracy of the survey.

        A detailed 3D Induced Polarization survey was conducted during July 2010 using SJ Geophysics, a contractor from Canada. Lines were initially spaced at 100 meters with stations every 25 meters, and later tightened to 50 meters by 25 meters. Results of the survey suggest a correlation between vein

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mineralization at the Cerro Los Gatos Mine and zones of high chargeability and low resistivity. In addition, the vein mineralization at the Esther deposit suggested a similar relationship of high chargeability and low resistivity. The first holes to test the trends of mineralization from these surveys successfully extended mineralization in both zones. As a result of the good correlation with mineralization, extensions of the surveys began in November 2010 at both the Cerro Los Gatos Mine and Esther deposit. Additionally, data was collected in the Amapola and San Agustin zones to determine the signature of mineralization in these areas for drilling.

Drilling

        As of July 1, 2020, 739 exploration drill holes have been completed in the Los Gatos District, totaling 259,060 meters.

        Drill sites are selected based on surface vein outcrops and geometric projections into the subsurface, as well as geochemical, geophysical and geological targets. Drilling is conducted using a wire line rig with diamond core capabilities. Holes begin with HQ size and are reduced, if necessary, to NQ and very rarely BQ, if difficult drilling conditions are encountered. Holes are surveyed with a Flexit EZ trac device at 50 meter intervals as the holes are completed. Surveys of drill hole-collar coordinates locations are completed by a local contract topographer using a Topcon Total Station GTS-236W. All information pertinent to the drilling is stored in a master database in Microsoft Access®. Additional drilling at the Cerro Los Gatos Mine is aimed at upgrading the confidence of the resource and identifying mineralized extensions along strike and down dip.

        In addition to the drilling conducted at the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit, MPR has conducted limited exploration drilling programs in other areas in the Los Gatos District which include Boca de Leon, Cieneguita, El Lince, El Rodeo, La Paula, Los Torunos Mezcalera, Ocelote, San Agustin, San Luis and Wall-E/Ava. While anomalous levels of mineralization have been identified in each of these zones other than Wall-E/Ava, drilling data is too limited to speculate as to the presence of economic quantities of mineralization. Additional drilling will be required in each area to delineate the mineralization identified.

Los Gatos District Mineralogy

        The Los Gatos District hosts a series of quartz, quartz-calcite and calcite veins in at least fifteen separate vein systems that are exposed along a strike length of approximately 30 kilometers and an outcrop belt width of approximately five kilometers. Vein width is generally in the order of one meter, but local wide zones up to eight meters in outcrop and true vein widths in excess of 30 meters have been identified by diamond drilling. Structurally, the veins form two sets, with north and northwest strikes and mostly steep dips. West/northwest trending fault and fracture zones probably reflect reactivated basement structures, whereas many of the north/northwest trending faults probably are associated with basin-and-range extension. Epithermal mineralization is associated with both phases of extension, so both trends have exploration potential; however, the basement architecture has overall control on the distribution of magmatic centers and hydrothermal systems.

        Mineralization at the Los Gatos District is characterized by silver, lead, zinc and copper sulphides and their oxides, along with fluorite, manganese, barite and traces of gold associated with quartz and calcite veins. The veins vary in orientation from west-northwest to northwest to north-northwest to north-northeast and vary in thickness from one meter to eight meters outcrop, but with much greater true width at depth based upon diamond drilling. Study of the veins in hand specimen and thin section suggests that they are epithermal in origin and are likely of intermediate sulfidation composition, showing vein textures and gangue mineralogy that indicate a relatively high-level hydrothermal system in the boiling environment. Breccia with clasts of vein quartz indicates a protracted hydrothermal system during multiple faulting events, a positive sign for economic epithermal veins. It has been

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interpreted that mineralized-ore shoots may extend relatively far down dip, possibly to at least 250 meters.

        The Cerro Los Gatos Mine vein system is persistent, with a general northwest trend dipping to the east, a mapped extension in the order of ten kilometers, and true widths of as much as 30 meters and local associated veining up to 50 meters wide. Banded quartz veins and breccias are cemented by quartz, calcite and abundant manganese oxides. A study based on geological characteristics and silver-lead-zinc (arsenic-antimony-mercury) anomalous sections of the vein resulted in the discovery of the Los Gatos listric-shaped mineralized horizon hosting the steeply to shallowly dipping mineralized-shoots at depth. Mineralization of interest is seen for approximately 2,500 meters in length and for an estimated average vertical extension in the order of 200 meters. The reported average drilled true width of the structure is in the order of 8.9 meters. It has been interpreted that the top of the mineralized horizon at Los Gatos is generally located at an elevation of 1,400 meters above sea level (masl).

        Original exploration activities at the Esther vein system indicated the presence of a narrow quartz vein, less than one meter, with minor veining and silicification and noticeable lack of calcite. However, the presence of a small high-grade mineralized-shoot, probably 60 meters deep, attracted interest in the area. Drilling of this area also resulted in the discovery of the Esther mineralized-shoot, which has a known length of 800 meters for the main mineralized-shoot, as well as up to 1,200 meters of additional mineralized vein. The height of the mineralized interval is indicated by two drill holes to be in the order of 100 meters; most mineral intersections range in the order of two meters to eight meters, with a probable average slightly over three meters. It has been interpreted that the top of the favorable horizon at Esther is generally located about 120 meters below the surface.

        The Amapola deposit contains several vein systems at varying degrees of strike and dip that are the target of exploration. Currently, four of these veins comprise adequate Ag grade and thickness to be considered as mineralized material and geologically modeled. The four veins include the Albita, Elizabeth, Cascajal and Julia. The mineral resources are principally present on the Albita and Elizabeth veins, which together comprise a "corridor" of mineralization up to approximately 50 meters thick.

Sampling, Analysis and Data Verification

        MPR has carried out sampling campaigns that have included surface, limited underground and core samples. Samples were taken by local crews under the supervision of either a geologist of MPR or one of their contractors. Sampling intervals were, in most cases, two meters, with local variations depending on vein geology, to a minimum of 0.8 meters where structures were found. Detailed sampling was carried out at intervals directed by geological criteria, with priority given to testing high-grade zones in the vein structures and attention also given to identifying possible mineralization in the wall rock and quartz stockwork veining.

        MPR established a sampling protocol, which was followed through the drilling campaign, that in summary includes: supervision by MPR personnel, with the verification of core handling, recovery, core accommodation and depth recording by the contractor; and core collection, measurement, core recovery, photographing, specific gravity, geotechnical information and sampling interval selection by MPR geologists.

        Detailed logging of the sample intervals is conducted once the core samples are sawed, with detailed descriptions and estimations of mineralogy and mineral content, hydrothermal alteration, veining and fracturing. Assay intervals are divided in two equal parts by diamond saw, with most sampling conducted on two meter intervals, except for specific vein intervals. Vein intervals are selected for more detailed sampling, with a minimum of 0.8 meters per interval in the sample and a maximum of two meters.

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        Samples are collected in standard plastic sample bags and tagged with a unique sample number recorded for each interval. Samples are grouped by drill hole and transported by pickup truck to the ALS Chemex laboratories sample receiving location in Chihuahua City, Mexico. From the time the core samples leave the drill site to the time the samples are delivered to ALS Chemex, they are escorted and under the supervision of personnel from MPR.

        Samples are dried, crushed and pulverized by ALS Chemex in Chihuahua City. Assay orders are delivered to the lab, and a copy of the receipt obtained is filed and registered in MPR's database. Sample pulps are then shipped by ALS Chemex to their laboratory in Vancouver, Canada for ICP analyses of silver, base metals and trace elements using a four-acid digestion technique. Gold assays are also completed using fire assay-AA preparation on 30-gram splits of the sample material.

        ALS Chemex has developed and implemented at each of its locations a Quality Management System (QMS) designed to ensure the production of consistently reliable data. As a result, the lab has received, including its sample preparation section in Guadalajara, the ISO 9001:2000 QMS registration from QMI. The ALS Laboratory Vancouver branch has also been accredited as conforming to requirements of Canadian regulations in this matter.

        MPR has set up a Quality Assurance/Quality Control (QA/QC) program to monitor the drilling program at the Los Gatos District, including the use of: (1) blanks (barren silica sand or barren andesitic flow material inserted wherever the geologist deems appropriate, but no less than one for every 40 samples focused on areas of higher metal values, which could lead to contamination); (2) standards are added every 20^th sample (MPR has purchased 12 different standards from Rocklabs Ltd.); and (3) duplicates are also analyzed every 50 samples (each batch) by placing two sample tickets in the same sample bag and having the lab generate two pulps of the same sample for analysis.

        It is believed that core sampling is representative of mineralized intersections, with minor variations due to irregularities in mineralization, and that the QA/QC programs established by MPR and the sampling process follow industry standards and support the estimation of mineral resource.

        A review was made of available information derived from previous exploration work. This information included geological and sampling reports, drill logs, as well as assay results. Verification consisted of a general review of geological characteristics of the main mineralized areas, shown by the MPR field checking of geological maps in all areas and of sampling procedures by MPR as well as a review of all vein intersections and discussions of detailed sample handling, sampling and security procedures established by MPR. The original locations of samples reviewed were located, although most require re-painting. Tetra Tech verified several drill hole location monuments with a handheld global positioning system.

        Tetra Tech has conducted sample verification to evaluate whether the samples selected by MPR for metallurgical and hardness testing were geologically representative of the material in the mine plan. The review found that: samples were well selected with respect to various grades, alterations and host rock; there was no apparent metal domaining or zoning in the deposit; and that most of the samples fall within the bulk of the grade distributions and sampling of the higher-grade material has been accounted.

Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits

        All blocks in this estimate have been delineated by appropriately spaced drilling. Grade and tonnage has been estimated within a digital three-dimensional block model using the Kriging method. Mineral resources have been estimated for three individual deposit areas: the Cerro Los Gatos Mine, Esther and Amapola deposits. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the

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Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery.

        For the Cerro Los Gatos Mine, a cut-off grade of 150 grams silver equivalent/tonne was estimated using generalized parameters, including the following: $40/tonne for mining costs; $20/tonne for processing costs; $4/tonne for general and administrative costs; 83% recovery at an assumed price of $18.00/oz silver; 92% recovery at an assumed price of $0.92/lb lead; and 77% recovery at an assumed price of $1.01/lb zinc. For the Esther deposit, a cut-off grade of 100 grams silver equivalent/tonne was estimated using generalized parameters, including the following: $40/tonne for mining costs; $20/tonne for processing costs; $3/tonne for general and administrative costs; 100% recovery at an assumed price of $22.30/oz silver; 95% recovery at an assumed price of $0.97/lb lead; and 88% recovery at an assumed price of $0.91/lb zinc. For the Amapola deposit, a cut-off grade of 100 grams silver equivalent/tonne was estimated using generalized parameters, including the following: $40/tonne for mining costs; $20/tonne for processing costs; $3/tonne for general and administrative costs; 100% recovery at an assumed price of $22.30/oz silver; 95% recovery at an assumed price of $0.97/lb lead; and 88% recovery at an assumed price of $0.91/lb zinc.

        Projected revenues from the sale of silver, zinc and lead are based upon long-term consensus prices that were the averages of long-term forecast prices that MPR obtained from various financial institutions as of the effective date of the respective mineral resource estimates. As of the effective date of the respective mineral resource estimates, the long-term consensus prices reflected the best estimate of the sales price that may be realized in the future from the mineral resources. Gold and copper, being part of the epithermal system, are included in the Mineral Resource estimate as comparisons, however they have not been considered for purposes of determining the Ag/Eq cut-off grade since copper in the final concentrates sold would not receive any payment and gold revenue is estimated at only 2.78% of the payable metal.

        The tonne and grade estimates in the block model are based on drill hole assay sample intervals. The vein widths are constrained by three-dimensional solids and have not been diluted.

        Sample intervals were composited to two meters, which is the mode sample length. Compositing was initiated and terminated at the top and bottom of continuous selected vein samples, resulting composites were permitted to be one to two meters in length and intervals less than one meter were rejected. As part of the Kriging process, composite influence was additionally weighted by interval length to provide further normalization. Compositing greater than two meters was determined not to be appropriate because three-meter composites would cause samples to be split and four-meter composites are too large to represent the vein across drip in some areas. At the Amapola deposit, ordinary Kriging was used. A single Kriging pass was made on each of the four veins and their secondary nearest neighbor. An inferred pass was only made for the Albita and Elizabeth veins. Similarly, at the Esther deposit, grade estimation was completed using ordinary Kriging. An initial Kriging pass was made on each of the three veins and followed by a secondary nearest inferred pass.

        Density of each block was determined from measured density samples within the mineralized zones and Kriged as a block attribute.

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        The table below summarizes the mineral resource estimates at the Cerro Los Gatos Mine and the Esther and Amapola deposits as of the effective date of the Los Gatos Technical Report.

Los Gatos District Mineral Resource Estimates Inclusive of Mineral Reserves as of the Effective Date of the Los Gatos Technical Report

	Category	Tonnes (million; 100% basis)		Tonnes (million; 51.5% basis)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)		Cu (%)
Cerro Los Gatos Mine(1)	Measured		5.8		3.0		324		0.39		2.9		5.8		0.11
	Indicated		4.6		2.4		202		0.28		2.5		5.2		0.11
	M&I		10.4		5.4		269		0.34		2.7		5.5		0.11
	Inferred		3.7		1.9		107		0.28		2.8		4.0		0.14
Esther Deposit(2)	Indicated		0.46		0.24		133		0.04		0.70		2.10		0.02
	Inferred		2.29		1.18		98		0.12		1.60		3.00		0.05
Amapola Deposit(2)	Indicated		0.25		0.13		135		0.10		0.10		0.30		0.02
	Inferred		3.44		1.77		140		0.10		0.20		0.30		0.03

(1)

Based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades.

(2)

Based on a cut-off grade of 100 grams silver equivalent/tonne using metal prices of $22.30/toz silver, $0.97/lb lead, and $0.91/lb zinc. The mineral resource estimates for the Esther and Amapola deposits have an effective date of December 21, 2012. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades.

        The table below summarizes the mineral resource estimates exclusive of reserves at the Cerro Los Gatos Mine as of the effective date of the Los Gatos Technical Report.

Cerro Los Gatos Mine Mineral Resource Estimates Exclusive of Mineral Reserves as of the Effective Date of the Los Gatos Technical Report

	Category	Tonnes (million; 100% basis)		Tonnes (million; 51.5% basis)		AgEq (g/t)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)		AgEq toz (millions)		Ag toz (millions)		Au toz (thousands)		Pb lbs (millions)		Zn lbs (millions)
Cerro Los Gatos Mine	Measured		1.3		0.7		442		181		0.39		2.4		4.5		19		8		16		71		131
	Indicated		2.2		1.1		368		139		0.23		2.1		4.2		26		10		17		101		205
	M&I		3.5		1.8		395		154		0.29		2.2		4.3		45		17		33		172		337
	Inferred		3.7		1.9		361		107		0.28		2.8		4.0		43		13		34		231		330

Resources based on a cut-off grade of 150 grams silver equivalent/tonne at assumed metal prices of $18.00/toz silver, $0.92/lb lead and $1.01/lb zinc; gold was not considered in silver equivalent calculation. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral resource estimates contained in the Los Gatos Technical Report are presented on an undiluted basis without adjustment for metallurgical recovery. Reserves based on a $75 NSR cut-off value. NSR is defined as revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined. The mineral reserve estimates for the Cerro Los Gatos Mine reflect diluted grades with adjustment for metallurgical recovery. The mineral reserve estimates contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades.

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        The material assumptions for the mineral resource estimates at the Cerro Los Gatos Mine include (i) resource estimation completed by Tetra Tech in MicroMine mining software using drill hole data provided by MPR, (ii) usage of histograms and probability plots to determine where high-grade distribution tails became unsupported or deviated from lognormal and application of upper limits for grade capping, (iii) compositing sample intervals to two meters to match the mode sample length, (iv) using geological modeling and vein modeling, (v) using specific gravity measurements and (vi) no dilution being accounted for in the mineral resource estimates. See Section 14.1 of the Los Gatos Technical Report. The material assumptions for the mineral resource estimates at the Amapola deposit include (i) resource estimation completed by Tetra Tech in MicroMine software technology using drill hole data provided by MPR, (ii) using ordinary Kriging, with a single Kriging pass being made on the four veins of the Amapola deposit and a secondary nearest neighbor inferred pass made only for two of the veins and (iii) using specific gravity measurements to estimate vein density. See Section 14.2 of the Los Gatos Technical Report. The material assumptions for the mineral resource estimates at the Esther deposit include (i) resource estimation completed by Tetra Tech in MicroMine software technology using drill hole data provided by MPR, (ii) using ordinary Kriging, with a single Kriging pass made on each of the three veins of the Esther deposit followed by a secondary nearest neighbor inferred pass and (iii) using specific gravity measurements to estimate vein density. See Section 14.3 of the Los Gatos Technical Report.

        We are unaware of any title, taxations, socio-economic, marketing, political or other relevant factors that could materially affect this mineral resources estimate.

Mineral Reserve Estimates—Cerro Los Gatos Mine

        The mineral reserve estimates include the portion of the measured and indicated resource that can be mined economically. Economic criteria and mining constraints (based on the selected mining methods) are applied to the resource blocks to define mineable blocks. Mineral reserves are determined after applying dilution and recovery factors to these mineable blocks.

        Mineral reserve estimates are calculated from the mine plan created from the September 2019 resource update. The mineral reserve estimates contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. The table below shows the reconciliation of mined tonnage and grades to the modeled reserve depletion for this time period, with differences resulting primarily from different sequencing of stopes and variances in ore tonnes:

	Tonnes		Au (g/t)		Ag (g/t)		Pb (%)		Zn (%)		NSR ($)
Production Statistics		655,746		0.45		253		2.62		3.67		161
Modelled Reserve Depletion		715,818		0.51		282		2.62		3.79		170

        A cut-off grade of $75/tonne NSR value was used to calculate reserves. Projected revenues from the sale of silver, gold, zinc and lead are based upon long-term consensus prices of $18.99/oz silver, $1,472/oz gold, $0.87/lb lead and $1.09/lb zinc. These prices were the averages of long-term forecast prices that MPR obtained from nine financial institutions. As of the effective date of the mineral reserve estimates, the long-term consensus prices reflected the best estimate of the sales price that may be realized in the future from the mineral reserves. See Section 21 of the Los Gatos Technical Report.

        We are unaware of any title, taxation, socio-economic, marketing, political or other relevant factors that could materially affect this mineral reserve estimate.

        The table below summarizes the mineral reserve estimate at the Cerro Los Gatos Mine, with an effective date of July 1, 2020, which includes dilution and recovery factors.

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Cerro Los Gatos Mineral Reserve Estimates as of the Effective Date of the Los Gatos Technical Report

Zone	Category	Tonnes (millions; 100% basis)		Tonnes (millions; 51.5% basis)		Ag (g/t)		Au (g/t)		Pb (%)		Zn (%)
Northwest Zone	Proven		2.6		1.3		359		0.43		3.09		5.88
	Probable		0.5		0.3		333		0.34		2.86		5.88
Central Zone	Proven		3.8		1.9		314		0.31		2.55		5.32
	Probable		1.8		0.9		299		0.44		2.32		5.82
Southeast Zone	Proven		0.0		0.0		148		0.16		3.69		7.23
	Probable		0.6		0.3		148		0.16		3.69		7.23
Southeast Zone Block 2	Probable		0.4		0.2		118		0.17		3.11		4.16
Total (Proven)			6.4		3.3		332		0.36		2.77		5.55
Total (Probable)			3.3		1.7		254		0.34		2.74		5.86
Total (Proven & Probable)			9.6		5.0		306		0.35		2.76		5.65

Reserves based on a $75 NSR cut-off value. NSR is defined as revenue per tonne mined less the sum of concentrate refining, treatment and transportation costs per tonne mined. The mineral reserve estimates for the Cerro Los Gatos Mine reflect diluted grades with adjustment for metallurgical recovery. The mineral reserve estimates contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. Mineral reserve estimates and mineral resource estimates contained in the Los Gatos Technical Report have different effective dates and are based on different dilution and recovery factors and cut-off grades.

        Proven reserves exceed measured resources as a result of the different dilution and recovery factors and cut-off grades being used for mineral reserve estimates compared to mineral resource estimates. Mineral reserve estimates have an effective date of July 1, 2020, account for dilution and recovery factors and are based on a cut-off grade of $75/tonne NSR. In contrast, mineral resource estimates for the Cerro Los Gatos Mine have an effective date of September 6, 2019, are presented on an undiluted basis without adjustment for metallurgical recovery and are based on a cut-off grade of 150 grams silver equivalent/tonne.

        The material assumptions for the mineral reserve estimates at the Cerro Los Gatos Mine include (i) assigning NSR values to the block model, (ii) using a dilution strategy developed by a geomechanical consultant, (iii) application of mining recovery factors, including stope recovery and drift-and-fill recovery and (iv) application of dilution and recovery factors to stope tonnage and using Deswik scheduling software to develop a LOM development and production schedule. See Section 15 of the Los Gatos Technical Report.

Mineral Processing and Metallurgical Testing

        The Cerro Los Gatos Mine is a silver-lead-zinc deposit with relatively complex mineralogy. Upon review of the metallurgical testing data, it was clear that the Cerro Los Gatos Mine mineralization responded well to a conventional sequential silver-lead-zinc flotation processing. Zinc rougher flotation tailings and zinc first cleaner scavenger tailings are combined to become the final tailings. Tailings thickener underflow (100%) is pumped to a cyanide destruction facility. Currently, all tailings are disposed of in the tailings storage facility. Once the backfill plant is in operation, and after detox, 40% of final tailings will be pumped to the backfill plant and the remaining 60% will be pumped to the tailings storage facility. Operational results have indicated that additional removal of fluorine will be required. Additional floatation cells have been added to the lead and zinc circuits, with a goal of reducing the fluorine in the final concentrates.

        The expected grades and recoveries for lead, zinc, and silver to individual flotation concentrates were further investigated by a pilot plant program at SGS Lakefield using a sample composed of a bulk sample accessed by an underground decline into the orebody. The results of that program are being

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finalized but preliminary indications generally support the study grade and recovery estimates provided herein.

        Positive lead and silver flotation results were achieved from the SGS Vancouver Metallurgical Lab. The final lead cleaner concentrates of the locked cycle tests averaged 60.9% lead at 5,404 g/t silver at average recoveries of 89% lead and 68.7% silver. The zinc cleaner concentrates averaged 54.2% at an average recovery of 66.0% due to the high willemite content.

Mining Operations

Cerro Los Gatos Mine Underground Development

        The underground mine design supports a steady-state production rate of 2,500 tpd of ore. Over the life of the mine, the mine is projected to produce 81 million ounces of silver, 69 thousand ounces of gold, 878 million pounds of zinc, and 499 million pounds of lead in concentrate. The sequence of mining began with the Central Zone, which had already been accessed via the existing decline developed down to the 1400 Level. The bulk of the Central Zone will be mined using the drift-and-fill method, as the dips, widths and thicknesses of the vein structures are amenable to this mining method.

        The Northwest Zone is being mined concurrently with the Central Zone via longhole stoping methods with sublevels developed at 20 meter vertical intervals. Portions of the Northwest Zone that are thicker than nine meters (footwall to hanging wall) will be mined using transverse longhole mining. Areas that are less than nine meters in width will be mined using longitudinal longhole mining. In the Central Zone, operations confirmed that backfill deficiencies caused unstable conditions on the hanging-wall zone, as it was experienced in stope 625, where the stability problems created blocks causing the support to yield. The predicted conditions in this zone have been accurate. In the Northwest Zone, the operating geotechnical conditions have been better than the anticipated conditions. This has allowed the excavation of bigger dimensions in the stope length (more than 12 meters), and the planned activities have considered excavating more in the vertical dimension of the stope (25 meters height). Some of the stability problems found in this zone are mainly due to drilling deficiencies, which have reached areas near the hanging-wall fault zone. The 3D modeling of the Southeast Zone did not identify any issues except for potential hanging wall failure.

        Modern trackless mobile equipment is being employed for most mining activities. Load-Haul-Dump ("LHD") trucks and dedicated underground trucks are used for ore/waste loading and transport from the underground workings through an internal ramp system and portal that connects all levels to surface. Ongoing waste development to sustain the 2,500 tpd production rate averages approximately 211 meters/month during the production period.

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        Based on the deposit geometry and anticipated geomechanical conditions, underground mining of the Cerro Los Gatos Mine resource will incorporate both longhole and drift-and-fill mining methods. The existing exploration decline from surface will be extended to provide primary access and delivery of services. The ramp will also be used for haulage of ore and waste from the underground operations.

Processing and Recovery Operations

        The processing facility is designed to treat 2,500 tpd of silver, lead and zinc material at an operational availability of 92%. The processing flow sheet for the project is a standard flow sheet commonly used in the mining industry, including conventional flotation recovery methods typical for lead-zinc material. The production plant has been constructed and adjustments will continue to optimize performance. Additional flotation cells have been installed to remove fluorine from the concentrates.

        Run-of-mine ("ROM") material is crushed in a primary jaw crusher located near the underground mine portal. It is then conveyed to the processing facilities where it is ground to 80% finer than 45 microns in a semi-autogenous grinding and ball milling circuit. The ore is further processed in a flotation circuit, consisting of lead flotation followed by zinc flotation. The majority of the silver will be recovered in the lead flotation circuit and some silver will also be collected in the zinc flotation circuit. Lead sulfide is recovered in a rougher flotation bank, producing a concentrate that is then upgraded to smelter specifications in three stages of cleaning. Tails from the lead flotation section is then conditioned for zinc sulfide flotation. The process scheme for zinc flotation also includes a rougher bank and five stages of cleaning to produce smelter-grade zinc concentrates. For both lead and zinc sections, the rougher flotation concentrates are reground to 80% finer than 25 microns prior to cleaner flotation to liberate the sulfides for further upgrading. An additional deep-froth flotation cell has been added to the zinc circuit, and one additional deep-froth flotation cell will be added to the zinc and lead circuits during 2020, to remove more fluorine, a deleterious mineral for sales. Both final lead and zinc concentrates are thickened, filtered and stored in concentrate storage facilities prior to being loaded in trucks for shipment.

Infrastructure, Permitting and Compliance Activities

        In addition to the recently constructed Cerro Los Gatos Mine processing plant and other facilities, we have a field camp located in nearby San José del Sitio, a community of approximately 264 persons, with electrical and water services, an elementary school and basic health services. Water resources in the region are mostly related to the Conchos River Basin, which includes the San Pedro, San Francisco de Borja and Satevó River Sub-Basins. Locally, there are significant amounts of water, with shallow groundwater recorded from most exploration drilling conducted by us.

        Underground development of the Cerro Los Gatos Mine commenced in 2015 and surface infrastructure development commenced in 2017. All significant surface infrastructure was completed in mid-2019 and the Cerro Los Gatos Mine commenced production of lead and zinc concentrates on September 1, 2019. The Cerro Los Gatos Mine processing plant is currently designed for 2,500 tpd capacity and the grinding circuit was engineered for expansion to 3,000 tpd in the future.

        The Cerro Los Gatos Mine is located in the Municipality of Satevó, Chihuahua, Mexico, approximately 160 kilometers southwest of the state capital of Chihuahua City and approximately 8 kilometers west of San José del Sitio, Chihuahua. The access road from Chihuahua, Mexico is newly paved. A portion of the road from San José del Sitio was rerouted to the mine site to minimize interference with the stream that runs near the mine property.

        Construction of required infrastructure has been completed, including administration offices, mine dry, fuel storage, mine maintenance shop, jaw crushing station, dome-covered crushed ore stockpile, process plant (including grinding circuit, flotation circuit, concentrate and tailing thickeners, concentrate

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loadout and tailings detoxification), tailing storage facility, electrical substation, 66 kilometers of power line connecting high voltage to the grid substation at San Francisco de Borja, assay lab, mill maintenance, dewatering wells and water cooling and distribution system, and residential camps and associated infrastructure.

        The camps consist of structural steel pre-engineered buildings capable of housing over 350 people. The camps include kitchen and cafeteria, laundry, infirmary, and other buildings required to maintain this facility. Emergency power is provided for in the camp to deliver 100% backup in the event of a power outage.

        The entire project is served by satellite-dish based internet and telephone communications.

        Power to the site is supplied via a 115 kV utility transmission line. This originates from the San Francisco de Borja substation in Satevó (Chihuahua), where a 115 kV connection has recently been installed.

        All raw water to meet potable and non-potable water demand is supplied by groundwater pumped from dewatering wells. The well water is cooled from 50°C to 40°C prior to use. Sewage water treatment systems were included to handle waste as required on the project.

        Storage and management of landfill disposal is housed in a single building, separated into two zones—one for non-hazardous waste and a second zone for hazardous waste. The hazardous waste is to be collected and disposal by a certified and authorized company per Mexican regulations.

        In 2008, we negotiated surface access rights with local ranch owners and obtained environmental permits for drilling. In April 2012, we entered into a mine and land access agreement with the local community, the Ejido La Esperanza (the "Ejido"), which provides annual land access with a renewal fee of $11,200. We also maintain an easement contract for 30 years with the Ejido for the access road to the mine.

        On December 12, 2016, MPR submitted an environmental impact statement to the Mexican Secretary of Environment and Natural Resources, which regulates the environmental aspects of mining projects and issued the permits once such statement is approved. The statement was approved in 2017. We also received approval for the permits for land use, authorization and approval for initiation of construction of mining workings and infrastructure and official alignment and number from the Municipality of Satevó, Chihuahua in June and July of 2018. In May 2019, we received approval for Environmental Unique License for the production of 2,500 tpd.

        On July 17, 2017, the Mexican Secretary of Environment and Natural Resources approved a mining exploitation project in Satevó, Chihuahua to develop work and activities (site preparation, construction, operation and others) needed to mine and explore the area. The authorized permit period is for 24 years ending July 17, 2041, with the possibility to extend for a similar period. Additionally, on September 4, 2017, we received the permitting to develop, construct and operate a project named Línea Eléctrica 115 KV Los Gatos, which consists of opening an 18-meter wide corridor over 58.0 kilometers. This project affects an area of 105 hectares to support the power lines in the municipalities of San Francisco de Borja and San Javier Satevó, Chihuahua. The authorized permit period is until September 4, 2037. We also received the relevant change of land use permitting to remove forest vegetation and fertile soil in an area of 390.6972 hectares to prepare the site and construct the infrastructure required for the mining exploitation of the Los Gatos project which expires November 1, 2020, with the option to extend.

        We are committed to safety at the Cerro Los Gatos Mine. The Cerro Los Gatos mine is built to higher environmental standards than required by Mexican law, with a fully-lined tailings impoundment facility and enclosure of the conveyors and ore storage dome. We also use state-of-the-art rescue

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capsules to hoist personnel to surface. Our cumulative injury frequency rate at the Cerro Los Gatos Mine has consistently been below the annual U.S. MSHA Lost Time Injury Frequency Rate.

Capital and Operating Costs

        All costs and economic results are presented in U.S. dollars. Quantities and values are presented using standard metric units unless otherwise specified. No escalation has been applied to capital or operating costs. No gearing is assumed in the analysis. Capital and operating cost estimates have an accuracy level of ±15%, and, given that the mine is currently in production, capital and operating cost estimates have a contingency of 0%. See Section 21.3 and Section 21.4 of the Los Gatos Technical Report.

        The economic analysis contained in the Los Gatos Technical Report is presented on an unlevered, post-tax, present value basis and has an effective date of July 1, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." Technical economic tables and figures presented in this prospectus require subsequent calculations to derive subtotals, totals, and weighted averages. Such calculations inherently involve a degree of rounding, which are not considered to be material.

        LOM sustaining capital cost requirements are estimated to be $267,000 thousand. Initial capital of $315,600 thousand was required to commence operations and construction was completed on time and on budget. Capital cost estimates used MPR-provided database information for mine and surface infrastructure, process plant and infrastructure, tailings storage facility, waste rock storage facility, water management, environmental, reclamation and owner's costs.

Description	Units		Sustaining Capital
Direct Costs
Mine & Surface Infrastructure	$	000s		266,398
Direct Costs	$	000s		266,398
Indirect Costs
Mine & Surface Infrastructure	$	000s		932
Indirect Costs	$	000s		932
Total Sustaining Capital	$	000s		267,330

        LOM operating costs are based on current operations and are summarized in the table below. The mine operating cost estimate includes all sill development, stope production, and drift-and-fill production and associated indirect costs. Operating costs include all labor, material, mobile and fixed equipment operating, and power consumption costs.

Description	Unit Cost ($/meter)		Unit Cost ($/t-milled)
Mine, Surface and G&A		26.47		83.58
LOM Operating		—		83.58

Economic Analysis

        The economic analysis contained in the Los Gatos Technical Report is presented on an unlevered, post-tax, present value basis and has an effective date of July 1, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see

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"—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "—The Los Gatos District—Capital and Operating Costs."

        The results of the economic analysis are summarized below:

Economic Analysis Results

Mine Life	years	11
Ore Tonnage	kt	9,618

			Life-of-Mine Payable Production
					Avg. Annual Payable Production (51.5% basis)
	Average Grade Processed	(100% basis)	(51.5% basis)	(100% basis)
Production Statistics
Silver	305 g/t	72.0 Moz	37.1 Moz	6.5 Moz	3.4 Moz
Zinc	5.7%	679 Mlb	350 Mlb	62 Mlb	32 Mlb
Lead	2.8%	442 Mlb	228 Mlb	40 Mlb	21 Mlb
Gold	0.35 g/t	45.5 Koz	23.4 Koz	4.1 Koz	2.1 Koz
Silver Equivalent	642 g/t	134.7 Moz	69.4 Moz	12.2 Moz	6.3 Moz
Life-of-Mine Cost Metrics
Total Sustaining Capital Costs	$ millions	$267
Operating Costs	$/t-milled	$83.58
TC / RC, Penalties and Freight Costs	$/mt	$51.90
Royalties	$/mt	$1.50
Life-of-Mine By-Product Costs
AISC	$/oz Ag	$5.47
Life-of-Mine Co-Product Costs
AISC	$/oz AgEq	$11.77
Project Economics
NPV (post-tax; 5.0%)	$ millions	$653

Silver equivalent and by-product credits calculated using LOM average prices of $18.99/oz silver, $1,472/oz gold, $0.87/lb lead and $1.09/lb zinc. The economic analysis contained in the Los Gatos Technical Report has an effective date of July 1, 2020 and excludes 655,746 tonnes of material that has been mined through June 30, 2020.

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Cerro Los Gatos Mine Unlevered Free Cash Flow Profile on a 100% Basis (in millions)

Cerro Los Gatos Mine Unlevered Free Cash Flow Profile on a 51.5% Basis (in millions)

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Cerro Los Gatos Mine LOM Revenue by Commodity(1)

See Section 22 of the Los Gatos Technical Report. The economic analysis contained in the Los Gatos Technical Report has an effective date of July 1, 2020 and excludes 655,746 tonnes of material that has been mined through June 30, 2020.

(1)

Cerro Los Gatos LOM revenue by commodity is calculated using LOM average prices of $18.99/oz silver, $1,472/oz gold, $0.87/lb lead and $1.09/lb zinc, and is shown on a 51.5% basis.

        The graphs below show the sensitivity analysis of the project economics and LOM revenue by commodity contained in the Los Gatos Technical Report at silver prices of $15.00/oz, $20.00/oz, $25.00/oz and $30.00/oz. The economic analysis contained in the Los Gatos Technical Report used long-term consensus silver price of $18.99/oz.

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Cerro Los Gatos Mine Net Present Value (Post Tax; 5.0%) Sensitivity Analysis on a 100% basis

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Cerro Los Gatos Mine LOM Revenue by Commodity Sensitivity Analysis

See Section 22 of the Los Gatos Technical Report. The economic analysis contained in the Los Gatos Technical Report has an effective date of July 1, 2020 and excludes 655,746 tonnes of material that has been mined through June 30, 2020.

Exploration, Development, and Production

        Concentrate production is currently achieving quality specifications and expected grades. The Cerro Los Gatos Mine is expected to produce, on average, 12.2 million payable silver equivalent ounces annually through the existing mine life (or 6.3 million payable silver equivalent ounces annually on a 51.5% basis), with an attractive, low-cost AISC profile. In addition to the goal of achieving the plant's 2,500 tpd design capacity, we intend to use a portion of the proceeds from this offering to complete a feasibility study, prepared in accordance with the SEC Mining Modernization Rules and NI 43-101, to expand the Cerro Los Gatos Mine production rate to 3,000 tpd. If feasible, we expect the LGJV to complete the expansion within the next three to four years.

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        The below graphs show our estimated payable silver equivalent production levels at the Cerro Los Gatos Mine in the coming years:

2020—2031 Cerro Los Gatos Mine Payable AgEq Production Estimate (Moz) and AISC ($/oz AgEq) on a 100% Basis

2020—2031 Cerro Los Gatos Mine Payable AgEq Production Estimate (Moz) and AISC ($/oz AgEq) on a 51.5% Basis

Payable silver equivalent calculated using feasibility study LOM average prices of $18.99/oz silver, $1,472/oz gold, $0.87/lb lead and $1.09/lb zinc. AISC calculated as sum of total operating costs, treatment and refining charges, penalties, transportation and freight, royalties and capital costs for each year. See Section 22 of the Los Gatos Technical Report. The Los Gatos Technical Report has an effective date of July 1, 2020. The mineral resource estimates contained in the Los Gatos Technical Report have an effective date of September 6, 2019. The mineral reserve estimates and the economic analysis contained in the Los Gatos Technical Report have an effective date of July 1, 2020 and exclude 655,746 tonnes of material that has been mined through June 30, 2020. For a discussion of the mineral resource estimates and mineral reserve estimates contained in the Los Gatos Technical Report, see "—The Los Gatos District—Mineral Resource Estimates—Cerro Los Gatos Mine, Esther and Amapola Deposits" and "—The Los Gatos District—Mineral Reserve Estimates—Cerro Los Gatos Mine." For a discussion of the assumed capital and operating costs in the Los Gatos Technical Report, see "—The Los Gatos District—Capital and Operating Costs." Based on production to date, we believe that the Cerro Los Gatos Mine has the potential to produce up to 7.2 million ounces of silver equivalent on a 100% basis (3.7 million ounces of silver equivalent on a 51.5% basis) in fiscal year 2020.

        We believe there is widespread mineralization potential beyond the Cerro Los Gatos Mine, the Esther and Amapola deposits and the 11 other mineralized zones, as more than 85% of the land position has yet to be drilled.

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Location of the Cerro Los Gatos District

        The current resources are significant, but we believe that additional resource potential remains in the immediate area. Drill testing of other high-priority targets within the Los Gatos District has been relatively limited given our focus on delineation of reserves at, and construction of, the Cerro Los Gatos Mine. As a result, the highly prospective Los Gatos District remains underexplored. Drilling at the Esther deposit to date has demonstrated good grade continuity along the system and characteristics similar to that identified during preliminary work at the Cerro Los Gatos Mine. Following potentially positive results from infill drilling at the Esther and Amapola deposits, we expect to update the resources and perform a scoping study to determine if these two deposit areas could generate economic production, representing further upside potential for the broader Los Gatos District.

        We expect to perform additional definition drilling to expand the Southeast and Northwest zones of the Cerro Los Gatos Mine and to perform additional drilling to expand the Esther and Amapola deposits, which remain open to extensions at depth. In addition to the Cerro Los Gatos Mine, the Esther deposit and the Amapola deposit, we have identified 11 other mineralized zones defined by

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high-grade drill intersections in the Los Gatos District. Grade intercepts from such mineralized zones are shown below.

Mineralized Zones Grade Intercepts

Mineralized Zones	Length (m)		Ag (g/t)		Pb (%)		Zn (%)
Boca de Leon		2.2		90.6		5.0		0.8
Cieneguita		1.3		62.4		5.4		0.9
El Lince		4.0		62.2		0.0		0.1
El Rodeo		0.8		61.5		3.4		4.0
La Paula		4.0		180.0		0.1		0.1
Los Torunos		1.8		34.2		2.6		0.9
Mezcalera		2.0		59.4		0.1		0.1
San Agustin		1.3		148.0		1.2		2.3
San Luis		2.0		271.0		0.3		0.1

The table above does not include Ocelote and Wall-E/Ava zones, as they do not have sufficient drilling.

        Subject to financing, our objectives at the Los Gatos District are to, among other things:

•

perform additional in-fill and expansion drilling to further define and expand mineralization at the Esther and Amapola deposits;

•

study the feasibility of expanding production at the Cerro Los Gatos Mine from 2,500 tpd to 3,000 tpd;

•

conduct social, environmental and technical work on the property with the objective of completing a scoping study on the Esther and Amapola deposits;

•

expand the exploration drilling program on the Esther deposit, the Amapola deposit and the other 11 mineralized zones within the Los Gatos District; and

•

continue to expand the LGJV's interest in prospective mineral and surface rights.

Internal Controls

        Quality assurance at the Cerro Los Gatos Mine and the Los Gatos District involves the use of standard practice procedures for sample collection and includes oversight by experienced geological staff during data collection. Certain quality control measures for sample analysis include in-stream sample submittal of standard reference material, blank material and field duplicate sampling. For data verification, staff members observed drill hole locations and orientations, inspected drill cores and compared to logs and analytical results, observed core intake, visited outcrops and discussed with on-site geologists, including reviewing working maps and cross-sections. Inherent risks in quality control include potential sample contamination, among others.

Competition

        There is aggressive competition within the precious metals industry. We compete in efforts to obtain financing to explore and develop its projects with other precious metals companies, such as Coeur Mining Inc., Pan American Silver Corp. and First Majestic Silver Corp., as well as other mineral miners. These companies currently have greater resources than we do. In the future, we may compete with such companies to acquire additional properties.

        In addition, we also encounter competition for the hiring of key personnel. The mining industry is currently facing a shortage of experienced mining professionals, particularly with respect to experienced

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mine construction and mine management personnel. This competition affects our operations. Larger regional companies can offer better employment terms as compared to smaller companies such as us.

        We also compete for mine service companies, such as project coordinators and drilling companies. Potential suppliers may choose to provide better terms and scheduling to larger companies in the industry due to the scale and scope of their operations.

Environmental, Health and Safety Matters

        We are subject to stringent and complex environmental laws, regulations and permits in the various jurisdictions in which it operates. These requirements are a significant consideration for us as our operations involve, or may in the future involve, among other things, the removal, extraction and processing of natural resources, emission and discharge of materials into the environment, remediation of soil and groundwater contamination, workplace health and safety, reclamation and closure of waste impoundments and other properties, and handling, storage, transport and disposal of wastes and hazardous materials. Compliance with these laws, regulations and permits can require substantial capital or operating costs or otherwise delay, limit or prohibit our development or future operation of our properties. These laws, regulations and permits, and the enforcement and interpretation thereof, change frequently and generally have become more stringent over time. If we violate these environmental requirements it may be subject to litigation, fines or other sanctions, including the revocation of permits and suspension of operations. Pursuant to such requirements, we also may be subject to inspections or reviews by governmental authorities.

Permits and Approvals

        To obtain, maintain and renew its environmental permits, we may be required to conduct environmental studies and collect and present to governmental authorities data pertaining to the potential impact that its current or future operations may have upon the environment. For example, in order to commence underground exploration activities at the Cerro Los Gatos Mine, we were required to submit an environmental analysis to the applicable governmental authorities. In May 2010, we began collecting the environmental baseline data for the Cerro Los Gatos Mine and received the permit in 2015.

Hazardous Substances and Waste Management

        We could be liable for environmental contamination at or from our or our predecessors' currently or formerly owned or operated properties or third-party waste disposal sites. Certain environmental laws impose joint and several strict liability for releases of hazardous substances at such properties or sites, without regard to fault or the legality of the original conduct. A generator of waste can be held responsible for contamination resulting from the treatment or disposal of such waste at any off-site location (such as a landfill), regardless of whether the generator arranged for the treatment or disposal of the waste in compliance with applicable laws. Costs associated with liability for removal or remediation of contamination or damage to natural resources could be substantial and liability under these laws may attach without regard to whether the responsible party knew of, or was responsible for, the presence of the contaminants. In addition to potentially significant investigation and remediation costs, such matters can give rise to claims from governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury and property damage.

Mine Health and Safety Laws

        Our Mexican properties are subject to regulation by the Political Constitution of the Mexican United States, and are subject to various legislation in Mexico, including the Mining Law, the Federal Law of Waters, the Federal Labor Law, the Federal Law of Firearms and Explosives, the General Law

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on Ecological Balance and Environmental Protection and the Federal Law on Metrology Standards. Mining, environmental and labor authorities may inspect our operations on a regular basis and issue various citations and orders when they believe a violation has occurred under the relevant statute. Regulations and the results of inspections, whether in the United States or Mexico, may have a significant effect on our operating costs.

        At this time, it is not possible to predict the full effect that the new or proposed statutes, regulations and policies will have on our operating costs, but it may increase its costs and those of its competitors.

Other Environmental Laws

        We are required to comply with numerous other environmental laws, regulations and permits in addition to those previously discussed. These additional requirements include, for example, various permits regulating road construction and drilling at the Mexican properties.

        We endeavor to conduct our mining operations in compliance with all applicable laws and regulations. However, because of extensive and comprehensive regulatory requirements, violations during mining operations occur from time to time in the industry.

Facilities and Employees

        We own and lease land at our other exploration properties in Mexico and at the Los Gatos District through our ownership interest in the LGJV.

        As of June 30, 2020, we had 10 full-time employees in the United States and 10 full-time employees in Mexico, and the LGJV had approximately 540 employees in Mexico. We believe that our employee relations are good and plan to continue to hire employees as our operations expand.

Legal Proceedings

        From time to time, we and our affiliates may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although we cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, we make a provision for potential liabilities when we deem them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments. See Note 10, "Commitments and Contingencies" in our consolidated financial statements included elsewhere in this prospectus for additional information regarding our assessment of contingencies related to legal matters.

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MANAGEMENT

Executive Officers and Directors

        The following table sets forth information regarding our executive officers and directors, as of June 30, 2020:

Name	Age	Position
Stephen Orr	65	Chief Executive Officer and Director
Philip Pyle	64	Vice President of Exploration and Chief Geologist
John Kinyon(1)	62	Executive Vice President of Operations
Roger Johnson	63	Chief Financial Officer
Luis Felipe Huerta(2)	50	Project Director, Cerro Los Gatos Mine
Adam Dubas	41	Chief Administrative Officer
Thomas S. Kaplan(3)	57	Chairman of the Board of Directors
Janice Stairs(3)	61	Lead Director
Jeb Burns(3)	55	Director
Ali Erfan	55	Director
Igor Gonzales	65	Director
Karl Hanneman	62	Director
Charles Hansard(4)	72	Director Nominee
Igor Levental	64	Director
David Peat	67	Director

(1)

Immediately prior to the completion of this offering, Mr. Kinyon's title will become Chief Operating Officer.

(2)

Immediately prior to the completion of this offering, Mr. Huerta's title will become Vice President, Mexico.

(3)

Dr. Kaplan and Mr. Burns intend to resign from the Board of Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. Upon Dr. Kaplan's resignation, Ms. Stairs will become the Chair of the Board of Directors.

(4)

We intend for Mr. Hansard to become a member of the Board of Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

Biographical Information

Stephen Orr, 65, has served as our Chief Executive Officer since June 2011 and has served on our Board of Directors since May 2011, including as our Executive Chairman from May 2011 to January 2020. Mr. Orr has more than 40 years of experience in the mining industry, including international commercial experience at both executive and operational levels. Previously, Mr. Orr served as president, director and chief executive officer at Ventana Gold Corp., a Vancouver-based mineral exploration and development company, as director and chief executive officer at OceanaGold, where under his leadership OceanaGold built and commissioned two new mines in New Zealand, as vice president of North American operations and then managing director of Australia and Africa operations at Barrick Gold Corporation and as president and chief executive officer at Homestake Canada Inc. Mr. Orr is a resident of Dallas, Texas. We believe that Mr. Orr's extensive experience in the international mining industry at both executive and operational levels makes him a valuable member of our Board of Directors.

Philip Pyle, 64, has served as our Vice President of Exploration since June 2011 and has served as our Chief Geologist since January 2020. Mr. Pyle has more than 40 years of experience in the mining industry. Previously, Mr. Pyle served as vice president—exploration at Los Gatos Ltd., as exploration manager at Linear Gold Corp. (now Fortune Bay Corp.), as exploration manager at MIM Exploration Pty Ltd., as exploration manager at BHP Minerals International Exploration Inc. and as a geologist at AMAX Exploration Inc. Mr. Pyle holds a B.A. in Earth Science from Dartmouth College and a

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Masters in Geological Science from the University of Texas. Mr. Pyle is a resident of Bozeman, Montana.

John Kinyon, 62, was appointed as our Executive Vice President of Operations in April 2016 and has served as our Vice President of Operations since 2012. Mr. Kinyon has more than 40 years of U.S. and international operations and construction experience, including experience in various mining positions in the U.S., Canada, Tanzania, Australia, and New Zealand. From April 2011 to March 2012, Mr. Kinyon served as vice president and general manager at Coeur Mining Inc.'s Kensington Mine in Juneau, Alaska. Previously, Mr. Kinyon served as vice president of operations at OceanaGold, as general manager at Yukon Zinc and as general manager at Eskay Creek at Barrick Gold Corporation. Mr. Kinyon holds a B.S. in Engineering and Business Science from South Dakota State University and Black Hills University. Mr. Kinyon is a resident of Coeur d'Alene, Idaho.

Roger Johnson, 63, has served as our Chief Financial Officer since March 2011. Mr. Johnson also serves as a Governor-appointed member of the Colorado PERA Board of Trustees. Mr. Johnson has more than 40 years of financial management experience in the mining industry. Previously, Mr. Johnson served as vice president and chief accounting officer at Newmont Mining Corporation, as senior vice president, finance and administration at Pasminco Zinc, Inc., as vice president, controller at Kennecott Utah Copper LLC and practiced public accounting with Coopers & Lybrand (now PricewaterhouseCoopers LLP). Mr. Johnson is a Certified Public Accountant. Mr. Johnson holds a B.S. in Accounting and a Master of Professional Accountancy degree from the University of Utah. Mr. Johnson is a resident of Denver, Colorado.

Luis Felipe Huerta, 50, has served as Project Director of the Cerro Los Gatos Mine since May 2015. Mr. Huerta has more than 20 years of project management experience in the mining industry. From 2012 to 2014, Mr. Huerta served as project manager at Continental Gold Inc. Previously, Mr. Huerta served as project manager at Fortuna Silver Mines Inc. and as project superintendent at Compañía Minera Milpo. Mr. Huerta holds a Bachelors in Engineering Science and a Masters in Project Management from ESAN Graduate School of Business. Mr. Huerta is a resident of Chihuahua, Mexico.

Adam Dubas, 41, has served as our Chief Administrative Officer since January 2019. Mr. Dubas has more than 20 years of experience in financial management. From 2011 to December 2018, Mr. Dubas served as our Corporate Controller. Previously, Mr. Dubas served as a senior manager at KPMG LLP, where he focused on the energy industry, and as an international financial analyst at Sprint Corporation. Mr. Dubas holds a B.S. in Business Administration, with highest distinction, from the University of Nebraska. Mr. Dubas is a resident of Denver, Colorado.

Thomas S. Kaplan, 57, has served as the Chairman of our Board of Directors since January 2020. In addition to our Board of Directors, Dr. Kaplan also serves on the board of directors of NOVAGOLD Resources Inc. Dr. Kaplan has over 25 years of experience in the resources sector. Since 2012, Dr. Kaplan has served as the chairman and chief executive officer of The Electrum Group LLC, a privately-held global natural resources investment management company. Previously, Dr. Kaplan served as chairman of Leor Exploration & Production LLC, a natural gas exploration and development company, which he founded in 2003 and sold in 2007 to EnCana Corporation. In addition, Dr. Kaplan has served as chairman of the board of directors of Electrum Special Acquisition Corporation and Trilogy Metals Inc. (formerly known as NovaCopper Inc.). A prominent preservationist of wildlife and cultural heritage, he is the founder and chairman of Panthera, a global leader in big cat conservation, and also serves as chairman of the International Alliance for the Protection of Heritage in Conflict Areas (ALIPH), a multilateral organization co-founded by the governments of France and the United Arab Emirates. Dr. Kaplan holds a B.A., M.A. and D.Phil. in modern history from Oxford University. Dr. Kaplan is a resident of New York, New York. Dr. Kaplan intends to resign from the Board of

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Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

Janice Stairs, 61, has served as a member of our Board of Directors since October 2019 and has served as Lead Director of our Board of Directors since January 2020. In addition to our Board of Directors, Ms. Stairs also serves on the board of directors of Gabriel Resources Ltd., Trilogy Metals Inc., and Marathon Gold Corporation. Ms. Stairs has more than 30 years of experience in the resources sector. From 2011 until 2019, Ms. Stairs served as general counsel and corporate secretary at Namibia Critical Metals Inc. Previously, Ms. Stairs served as general counsel at Endeavour Mining Corporation, as vice president and general counsel at Etruscan Resources Inc., and as partner at the law firm McInnes Cooper (formerly Patterson Palmer). In addition, Ms. Stairs has served on the board of directors of AuRico Gold Inc. and AuRico Metals Inc. Ms. Stairs holds a LL.B. from Dalhousie University and a M.B.A. from Queen's University. Ms. Stairs is a resident of Halifax, Nova Scotia. We believe that Ms. Stairs' academic training in law and business and her extensive experience in the resources sector make her a valuable addition to our Board of Directors. Ms. Stairs will become the Chair of the Board of Directors immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

Jeb Burns, 55, has served as a member of our Board of Directors since March 2018. In addition to our Board of Directors, Mr. Burns also serves on the investment committee of Western Michigan University Foundation, the board of directors of Pacific Pension & Investment Institute, the board of directors of the Michigan History Foundation, the board of trustees of Mackinac Associates, and the board of directors of Venture Michigan Fund. Mr. Burns has nearly 20 years of investment and asset management experience. Since February 2001, Mr. Burns has been the chief investment officer at Municipal Employees' Retirement System of Michigan. Previously, Mr. Burns held positions in public policy, communications, budget, and legislative affairs at the State of Michigan. Mr. Burns holds a B.A. in History and Political Science from Western Michigan University and a M.P.A. in Public Administration and Public Policy from Wayne State University. Mr. Burns is a resident of Lansing, Michigan. Mr. Burns intends to resign from the Board of Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

Ali Erfan, 55, has served as a member of our Board of Directors since May 2019. In addition to our Board of Directors, Mr. Erfan serves on the board of directors of Leor Energy, Electrum Ltd., TTI Inc., Augustus Ltd., Gabriel Resources Ltd. and Reebonz Holding Limited. Mr. Erfan has more than 20 years of experience in senior roles in the venture capital and private equity industry. Since 2007, Mr. Erfan has served as a director of The Electrum Group, a privately-held global natural resources investment management company, and since 2017, Mr. Erfan has served as vice chairman of The Electrum Group. Previously, Mr. Erfan served as a senior partner at 3i Group, Plc. Mr. Erfan founded the Cogito Scholarship Foundation, a U.K. charity. Mr. Erfan holds an M.B.A. from the London Business School and a B.A. and an M.A. in Politics, Philosophy and Economics from Oxford University. Mr. Erfan is a resident of Monaco. We believe that Mr. Erfan's extensive experience in finance and our industry makes him a valuable addition to our Board of Directors.

Igor Gonzales, 65, has served as a member of our Board of Directors since June 2020. In addition to our Board of Directors, Mr. Gonzales serves on the board of directors of Hudbay Minerals Inc. and Harte Gold Corp. Mr. Gonzales has more than 30 years of experience in the mining industry. Since June 2020, Mr. Gonzales has served as the chief operating officer at Appian Capital Advisory, a leading investment advisor in the metals and mining industry. From June 2017 to May 2020, Mr. Gonzales served as the president and chief executive officer at Sierra Metals Inc. From November 2014 to April 2017, Mr. Gonzales served as the chief operating officer at Companiade Minas Buenaventura. Previously, Mr. Gonzales served as the executive vice president and chief operating officer at Barrick Gold Corporation and in various roles with Southern Peru Copper Corporation. In addition,

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Mr. Gonzales has served on the board of directors of Compañia de Minas Buenaventura and Cia Minera El Brocal. Mr. Gonzales holds a B.S. in Chemical Engineering from the University of San Antonio Abad in Cusco, Peru, and an M.S. in Extractive Metallurgy from the New Mexico Institute of Mining and Technology, where he was a Fulbright Scholar. Mr. Gonzales is a resident of Lima, Peru. We believe that Mr. Gonzales' extensive experience in our industry makes him a valuable addition to our Board of Directors.

Karl Hanneman, 62, has served as a member of our Board of Directors since October 2019. In addition to our Board of Directors, Mr. Kanneman also serves on the board of directors of International Tower Hill Mines, Ltd., Usibelli Coal Mine, Inc. and Northrim BanCorp, Inc. Mr. Hanneman has more than 35 years of mining industry management and technical experience as an executive, manager, mining engineer, mine operator and entrepreneur. Since February 2017, Mr. Hanneman has served as chief executive officer of International Tower Hill Mines, Ltd., where he leads a team advancing a 10-million-ounce gold resource in Alaska through project optimization. From March 2015 to February 2017, Mr. Hanneman served as chief operating officer of International Tower Hill Mines, Ltd. Previously, Mr. Hanneman served as general manager and project manager of International Tower Hill Mines, Ltd. and as director, corporate affairs, Alaska and as Alaska regional manager at Teck Resources Ltd., including being responsible for overseeing the $350 million Pogo Gold project throughout the period of underground exploration, feasibility study, project design and permitting. Mr. Hanneman holds a B.S. in Mining Engineering, magna cum laude, from the University of Alaska. Mr. Hanneman is a resident of Fairbanks, Alaska. We believe that Mr. Hanneman's extensive experience in our industry makes him a valuable addition to our Board of Directors.

Charles Hansard, 72, will become a member of our Board of Directors contingent upon and effective immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. In addition to our Board of Directors, Mr. Hansard also serves on the board of directors of Baker Steel Resources Trust Limited, Electrum Limited and Moore Global Investments Limited. Mr. Hansard has more than 25 years of experience in corporate governance at the board of directors level. Mr. Hansard served as the chairman of African Platinum Plc, which he led through reorganization and feasibility prior to its acquisition by Impala Platinum Ltd., and has served on the board of directors of AIG Asset Management (Europe) Ltd., Apex Silver Mines Limited and Deutsche Global Liquidity PLC. Mr. Hansard holds a B.B.S. from Trinity College Dublin. Mr. Hansard is a resident of London, U.K. We believe that Mr. Hansard's extensive experience in corporate governance makes him a valuable addition to our Board of Directors.

Igor Levental, 64, has served as a member of our Board of Directors since April 2019. In addition to our Board of Directors, Mr. Levental serves on the board of directors of NOVAGOLD Resources Inc. Mr. Levental has more than 30 years of experience across a broad cross-section of the international mining industry. Since February 2010, Mr. Levental has served as president of The Electrum Group LLC, a privately-held global natural resources investment management company. Previously, Mr. Levental has held senior executive positions with major mining companies, including Homestake Mining Company and International Corona Corp. In addition, Mr. Levental has served on boards of directors of several other mineral explorers and developers, including Gabriel Resources Ltd. and NovaCopper Inc. (now Trilogy Metals Inc.). Mr. Levental is a professional engineer of the Province of Ontario. Mr. Levental holds a B.S. in Chemical Engineering and an M.B.A. from the University of Alberta. Mr. Levental is a resident of Denver, Colorado. We believe that Mr. Levental's extensive experience in finance and our industry makes him a valuable addition to our Board of Directors.

David Peat, 67, has served as a member of our Board of Directors since September 2011. In addition to our Board of Directors, Mr. Peat also serves on the board of directors of Gabriel Resources Ltd. Mr. Peat has more than 30 years of experience in financial leadership in support of mining corporations. Mr. Peat previously served as vice president and chief financial officer at Frontera Copper Corporation, as vice president and global controller at Newmont Mining Corporation and as

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vice president of finance and chief financial officer at Homestake Mining Company. In addition, Mr. Peat has served on the board of directors of Electrum Special Acquisition Corporation, AQM Copper Inc., Fortune Bay Corp. and Bigus Gold Corp. Mr. Peat is a member of the Institute of Chartered Professional Accountants of Ontario. Mr. Peat holds a B.Com., Honors in Business Administration from the University of Windsor and a B.A. in Economics from the University of Western Ontario. Mr. Peat is a resident of Fernandina Beach, Florida. We believe that Mr. Peat's academic training in business and economics and his extensive experience in corporate finance and accounting make him a valuable addition to our Board of Directors.

Board Composition

        Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will provide that our Board of Directors shall consist of not less than three directors and not more than 12 directors, and the number of directors may be changed only by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. Upon the conclusion of this offering, we will have eight directors: Janice Stairs, Ali Erfan, Igor Gonzales, Karl Hanneman, Charles Hansard, Igor Levental, Stephen Orr and David Peat.

        Our Board of Directors will consist of a single class of directors and directors will serve until a successor is duly elected and qualified or until a director's earlier death, removal or resignation. (other than directors that may be elected by holders of our preferred shares, if any). Following this offering and assuming no exercise by the underwriters of their over-allotment option, Electrum is expected to hold        % of our outstanding shares of common stock, and MERS is expected to hold        % of our outstanding common stock. Electrum and MERS will have certain director nomination rights pursuant to a shareholders agreement that we intend to enter into in connection with this offering, and Electrum will otherwise have control over the outcome of director elections due to its holding of        % of our outstanding shares of common stock following this offering. See "Certain Relationships and Related Party Transactions—Shareholders Agreement."

        We have determined that each of Janice Stairs, Igor Gonzales, Karl Hanneman, Charles Hansard, Igor Levental and David Peat is an independent director within the meaning of the applicable rules of the SEC and the NYSE and that each of Janice Stairs, Charles Hansard and David Peat is also an independent director under Rule 10A-3 under the Exchange Act for the purpose of Audit Committee membership. In addition, our board has determined that David Peat is a financial expert within the meaning of the applicable rules of the SEC and the NYSE. We have also determined that each of Janice Stairs, Igor Gonzales, Karl Hanneman, Charles Hansard and David Peat is an independent director within the meaning of the applicable rules of the TSX.

        Mr. Orr has notified the Board of Directors that he intends to retire as Chief Executive Officer within one to two years following the completion of this offering. Accordingly, the Board of Directors has initiated efforts to recruit an experienced executive as President, who will work closely with Mr. Orr and be considered to succeed Mr. Orr as Chief Executive Officer. We intend for Mr. Orr to continue to serve on our Board of Directors after his retirement as Chief Executive Officer.

Diversity

Board of Directors

        We have not adopted a formal policy with respect to the identification and nomination of women and of other diverse attributes on the Board of Directors. Establishing and implementing a policy regarding diversity and female representation on the Board of Directors will be an element that we will take into consideration going forward.

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        There is currently one woman on the Board of Directors (representing 11% of the current directors) and the Board of Directors is committed to increasing the level of women on the Board of Directors as board turnover occurs from time to time, taking into account the skills, background, experience and knowledge desired at a particular time by the Board of Directors and its committees. Accordingly, consideration of the number of women who are directors, along with consideration of whether other diverse attributes are sufficiently represented on the Board of Directors, will be an important component of the selection process for new members of the Board of Directors going forward.

        The Compensation and Nominating Committee will, within the purview of its mandate, have the responsibility to take diversity into consideration as part of the overall director selection and nomination processes and to make the identification of female candidates a search criterion. Gender diversity on the Board of Directors will be achieved by continuously monitoring the level of female representation and, where appropriate, recruiting qualified female candidates to fill positions, as the need arises, through vacancies, growth or otherwise.

        The Board of Directors has not adopted a target regarding the number of women on the Board of Directors as the Board of Directors has determined that a target would not be the most effective way of ensuring greater diversity. The Board of Directors will however consider the appropriateness of adopting such a target in the future.

Executive Officer Positions

        In appointing individuals to executive officer positions, we weigh a number of factors, including skills, experience and personal attributes required for the position along with the level of female representation within our senior management team. There are currently no women occupying an executive officer position within the Company (0% of the executive officers). We are, however, committed to increasing the gender diversity of our executive officers going forward.

        We have not adopted a target for the number of women in executive officer positions. The Board of Directors believes the most effective way to achieve greater diversity in our senior management team is to identify high-potential women within the organization and work with them to ensure they develop the skills, acquire the experience and have the opportunities necessary to eventually occupy executive officer positions. This includes taking action to build a culture of inclusion throughout the organization. The Board of Directors will, however, continue to evaluate the appropriateness of adopting targets in the future.

Board Committees

        The Executive Committee will consist of Janice Stairs (chair), Igor Levental and Stephen Orr. The Executive Committee will operate pursuant to a charter approved by the Board of Directors. The Executive Committee has and may exercise all of the powers and authority of the Board of Directors, subject to such limitations as the Board of Directors and/or applicable law may from time to time impose.

        The Audit Committee will consist of David Peat (chair), Charles Hansard and Janice Stairs, and will be comprised entirely of independent directors. The Audit Committee will operate pursuant to a charter approved by the Board of Directors. The Audit Committee will approve the engagement of our independent public auditor and the scope of the audit to be undertaken by such auditor. In connection with our Annual Report on Form 10-K, the Audit Committee shall also review with management and the independent auditor the financial information to be included therein. In addition, the Audit Committee will review all proposed related person transactions for the purpose of recommending to the disinterested members of the Board of Directors that the transaction should be ratified and approved. See "Certain Relationships and Related Party Transactions."

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        The Compensation and Nominating Committee will consist of Karl Hanneman (chair), Igor Levental and David Peat, and will be comprised entirely of independent directors. The Compensation and Nominating Committee will operate pursuant to a charter approved by the Board of Directors. The Compensation and Nominating Committee will recommend and advise the independent directors of the Board of Directors with respect to the compensation for the Chief Executive Officer. The Compensation and Nominating Committee will also recommend and advise the Board of Directors with respect to the compensation of directors and other executive officers. The Compensation and Nominating Committee will make recommendations to the Board of Directors regarding the establishment and terms of our employee equity-based incentive plans and will administer such plans. The Compensation and Nominating Committee will identify and nominate members for election to the Board of Directors and develop and recommend to the Board of Directors corporate governance principles applicable to us. The Compensation and Nominating Committee will also oversee the annual evaluation of the Board of Directors' performance.

        The Technical, Environmental, Health and Safety Committee will consist of Igor Gonzales (chair), Karl Hanneman and Stephen Orr. The Technical, Environmental, Health and Safety Committee will operate pursuant to a charter approved by the Board of Directors. The Technical, Environmental, Health and Safety Committee will be responsible for the review of our technical, environmental, health and safety performance, and mineral resources, resource and reserve reporting.

        The Finance Committee will consist of David Peat (chair), Ali Erfan and Igor Levental. The Finance Committee will operate pursuant to a charter approved by the Board of Directors. The Finance Committee will be responsible for assisting the Board of Directors in its oversight of our major investments and financial risk management programs, policies and processes.

Audit Fees

        We have been billed an aggregate amount of $450,000 and $88,000 in fees by our external auditors over the fiscal years ended December 31, 2019 and 2018, respectively, for audit services.

Audit Related Fees

        There were no audit related fees by our external auditors for the fiscal years ended December 31, 2019 and 2018.

Tax Fees

        We have been billed an aggregate amount of $78,000 and $92,000 in fees by our external auditors over the fiscal years ended December 31, 2019 and 2018, respectively, for professional services rendered relating to tax compliance, tax advice and tax planning. Such services included corporate income tax return preparation and consultation on foreign tax matters.

Other Fees

        We have not been billed any other fees by our external auditors for the fiscal years ended December 31, 2019 and 2018.

Compensation Committee Interlocks and Insider Participation

        None of our executive officers serves, or in the past year has served, as a member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee. No interlocking relationship exists between any member of the compensation committee (or other committee performing equivalent functions) and any executive, member of the board of directors or member of the compensation committee (or other committee performing equivalent functions) of any other company.

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Insider Trading Policy

        Prior to the closing of this offering, our Board of Directors will adopt an insider trading policy that will, subject to certain exceptions, prohibit our employees, directors and officers from trading in our securities while in possession of material nonpublic information.

Code of Business Conduct and Ethics

        Prior to the closing of this offering, our Board of Directors will adopt a code of business conduct and ethics applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance requirements of the NYSE. Any waiver of this code to an employee may be granted only by the Chief Executive Officer or the Chief Financial Officer. Only the Board of Directors or a designated committee of the Board of Directors may provide waivers involving any of our directors or executive officers. All waivers granted to our directors and executive officers will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance requirements of the NYSE. Our Corporate Governance Guidelines require our directors to act as fiduciaries of the Company, to disclose conflicts of interest to the other members of our Board of Directors and to abstain from taking any action in any matter in which the director has a conflict of interest.

Penalties or Sanctions

        None of our directors or executive officers, and to the best of our knowledge, no shareholder holding a sufficient number of securities to materially affect the control of the Company, has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Individual Bankruptcies

        None of our directors or executive officers, and to the best of our knowledge, no shareholder holding a sufficient number of securities to materially affect the control of the Company, has, within the 10 years prior to the date of this prospectus, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

Corporate Cease Trade Orders and Bankruptcies

        None of our directors or executive officers, and to the best of our knowledge, no shareholder holding a sufficient number of securities to materially affect the control of the Company is, as at the date of this prospectus, or has been within the 10 years before the date of this prospectus: (a) a director, chief executive officer or chief financial officer of any company that was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; (b) was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; or (c) a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. For the purposes of this paragraph, "order" means a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case, that was in effect for a period of more than 30 consecutive days.

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EXECUTIVE AND DIRECTOR COMPENSATION

        Our named executive officers ("NEOs"), which consist of our principal executive officer and the two other most highly compensated executive officers, are:

•

Stephen Orr, our Chief Executive Officer;

•

Philip Pyle, our Vice President of Exploration and Chief Geologist; and

•

John Kinyon, our Executive Vice President of Operations.

        The information in this section does not give effect to the Reorganization.

Summary Compensation Table

        The table below summarizes the total compensation earned by each NEO in fiscal years ending 2019.

2019 Summary Compensation Table

Name and Principal Position	Year		Salary ($)		Non-Equity Incentive Plan Compensation ($)(1)		Option Awards ($)(2)		All Other Compensation ($)(3)		Total ($)
Stephen Orr		2019		521,000		425,000		931,000		—		1,877,000
Chief Executive Officer
Philip Pyle		2019		350,000		197,000		580,000		19,000		1,146,000
Vice President of Exploration & Chief Geologist
John Kinyon		2019		350,000		175,000		580,000		15,500		1,120,500
Executive Vice President of Operations

(1)

Represents performance-based cash bonuses under the Annual Incentive Plan in respect of the fiscal year ended December 31, 2019, which were paid in March 2020.

(2)

Represents the grant date fair value of stock options granted to the NEOs in 2019, determined in accordance with FASB ASC Topic 718.

(3)

Represents our matching contribution to the NEO's 401(k) account.

Executive Employment Agreements

Employment Agreement with Mr. Orr

        We entered into an employment agreement with Mr. Orr, dated as of May 3, 2011. He commenced employment as our Executive Chairman effective as of May 4, 2011 and has been our Chief Executive Officer since June 2011.

        Base Salary.    Effective January 1, 2020, Mr. Orr receives an annual base salary of $619,000, which will be subject to review on an annual basis and may be adjusted in accordance with the procedures set forth by the Compensation and Nominating Committee.

        Annual Bonus.    Mr. Orr is eligible to participate in a bonus plan pursuant to which his current target bonus is 100% of his base salary upon achievement by him and the Company of certain targets determined by the Compensation and Nominating Committee. The amount of bonus attainment may range 0% to 100% of base salary in any given year as determined by the Compensation and Nominating Committee, and the amount of annual bonus actually paid (if any) will depend on the

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actual performance of the Company and Mr. Orr as determined by the Compensation and Nominating Committee.

        Stock Options.    Mr. Orr continues to be eligible to receive equity awards under our compensation programs. See "—Stock Option Grants."

        Benefits and Perquisites.    Mr. Orr is entitled to participate in the various employee benefits plans that are, from time to time, made generally available to our employees.

        Confidentiality and Non-Solicitation.    Mr. Orr has agreed to maintain the confidentiality of our information and not to use or allow or help another to use or access such information at any time during or after his employment with us. Mr. Orr has also agreed not to solicit any of our employees, consultants or service providers during his employment and for one year after termination of his employment.

        Termination and Change in Control.    Payments and benefits to which Mr. Orr will be entitled upon termination of his employment, whether or not in connection with a change in control, are discussed below under "—Potential Payments Upon Termination or Change in Control."

Employment Agreement with Mr. Pyle

        We entered into an employment agreement with Mr. Pyle, dated as of June 1, 2011, and he commenced employment as our Vice President of Exploration effective as of June 1, 2011.

        Base Salary.    Effective January 1, 2020, Mr. Pyle receives an annual base salary of $370,000, which will be subject to review on an annual basis and may be adjusted in accordance with the procedures set forth by the Compensation and Nominating Committee.

        Annual Bonus.    Mr. Pyle is eligible to participate in a bonus plan pursuant to which his current target bonus is 70% of his base salary upon achievement by him and the Company of certain targets determined by the Compensation and Nominating Committee. The amount of bonus attainment may range 0% to 100% of base salary in any given year as determined by the Compensation and Nominating Committee, and the amount of annual bonus actually paid (if any) will depend on the actual performance of the Company and Mr. Pyle as determined by the Compensation and Nominating Committee.

        Stock Options.    Mr. Pyle is eligible to receive equity awards under our compensation programs. See "—Stock Option Grants."

        Benefits and Perquisites.    Mr. Pyle is entitled to participate in the various employee benefits plans that are, from time to time, made generally available to our employees.

        Confidentiality and Non-Solicitation.    Mr. Pyle has agreed to maintain the confidentiality of our information and not to use or allow or help another to use or access such information at any time during or after his employment with us. Mr. Pyle has also agreed not to solicit any of our employees, consultants or service providers during his employment and for one year after termination of his employment.

        Termination and Change in Control.    Payments and benefits to which Mr. Pyle will be entitled upon termination of his employment, whether or not in connection with a change in control, are discussed below under "—Potential Payments Upon Termination or Change in Control."

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Employment Agreement with Mr. Kinyon

        We entered into an employment agreement with Mr. Kinyon, dated as of April 1, 2016, pursuant to which he commenced employment in his role as our Executive Vice President of Operations as of April 1, 2016.

        Base Salary.    Effective January 1, 2020, Mr. Kinyon receives an annual base salary of $370,000, which will be subject to review on an annual basis and may be adjusted in accordance with the procedures set forth by the Compensation and Nominating Committee.

        Annual Bonus.    Mr. Kinyon is eligible to participate in a bonus plan pursuant to which his current target bonus is 70% of his base salary upon achievement by him and the Company of certain targets determined by the Compensation and Nominating Committee. The amount of bonus attainment may range 0% to 100% of base salary in any given year as determined by the Compensation and Nominating Committee, and the amount of annual bonus actually paid (if any) will depend on the actual performance of the Company and Mr. Kinyon as determined by the Compensation and Nominating Committee.

        Stock Options.    Mr. Kinyon is eligible to receive options to purchase our common stock under our compensation programs. See "—Stock Option Grants."

        Benefits and Perquisites.    Mr. Kinyon is entitled to participate in the various employee benefits plans that are, from time to time, made generally available to our employees.

        Confidentiality and Non-Solicitation.    Mr. Kinyon has agreed to maintain the confidentiality of our information and not to use or allow or help another to use or access such information at any time during or after his employment with us. Mr. Kinyon has also agreed not to solicit any of our employees, consultants or service providers during his employment and for one year after termination of his employment.

        Termination and Change in Control.    Payments and benefits to which Mr. Kinyon will be entitled upon termination of his employment, whether or not in connection with a change in control, are discussed below under "—Potential Payments Upon Termination or Change in Control."

Stock Option Grants

        On May 3, 2019, we granted annual stock option awards in recognition of services performed in fiscal year 2019 to key employees, including our NEOs. The number of shares of our common stock underlying these options granted to our NEOs are detailed in the following table. These stock option awards vest ratably on December 14, 2018, December 14, 2019, December 14, 2020, December 14, 2021 and December 14, 2022. These stock option awards each have an exercise price of $6.00 per share.

NEO	Option Shares
Stephen Orr		252,000
Philip Pyle		157,000
John Kinyon		157,000

2019 Fiscal Year-End Outstanding Equity Awards

        The table below provides information on the equity awards (which are comprised of only stock options) held by the NEOs as of December 31, 2019.

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Outstanding Equity Awards at 2019 Fiscal Year-End

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable			Option Exercise Price ($)		Option Expiration Date
Stephen Orr		600,000		—			13.83	10/30/2022
		600,000		—			13.83	2/16/2023
		290,000		—			3.50	2/8/2025
		228,873		—			3.50	12/23/2025
		187,500		62,500	(1)		4.50	12/15/2026
		126,000		126,000	(2)		4.50	12/5/2027
		63,000		189,000	(3)		6.00	12/13/2028
Philip Pyle		102,000		—			13.83	10/30/2022
		102,000		—			13.83	2/16/2023
		110,000		—			3.50	2/8/2025
		116,667		—			3.50	12/23/2025
		116,250		38,750	(1)		4.50	12/15/2026
		78,500		78,500	(2)		4.50	12/5/2027
		39,250		117,750	(3)		6.00	12/13/2028
John Kinyon		45,000		—			13.83	10/30/2022
		45,000		—			13.83	2/16/2023
		80,000		—			3.50	2/8/2025
		63,137		—			3.50	12/23/2025
		26,250		8,750	(4)		3.50	3/18/2026
		67,875		22,625	(1)		4.50	12/15/2026
		78,500		78,500	(2)		4.50	12/5/2027
		39,250		117,750	(3)		6.00	12/13/2028

(1)

The options listed here were granted on August 31, 2017, and vest ratably on each of the first four anniversaries following the grant date.

(2)

The options listed here were granted on December 6, 2017, and vest ratably on each of the first four anniversaries following the grant date.

(3)

The options listed here were granted on May 3, 2019, and vest ratably on each of the first four anniversaries following December 14, 2018.

(4)

The options listed here were granted on March 18, 2016, and vest ratably on each of the first four anniversaries following the grant date.

Potential Payments Upon Termination or Change in Control

        Below we describe the payments and benefits to which each NEO will be entitled to under his employment agreement if his employment is terminated (i) by us without "cause" or by him for "good reason" (without a "change in control"), (ii) by us without cause or by him for good reason within one year of a change in control or (iii) due to death or "disability" (such terms as defined in the applicable employment agreement).

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Mr. Orr

        Termination without Cause or for Good Reason.    If we terminate Mr. Orr's employment without cause or Mr. Orr voluntarily terminates his employment for good reason, he will be entitled to: (i) 12 months of base salary, payable in lump sum, and (ii) if he timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), payment by us on his behalf of the portion of the monthly premiums for his group health insurance (including coverage of his dependents) that we paid immediately prior to his termination for the 12 months following his termination. Any unvested stock options will cease vesting and be forfeited, and any vested stock options will remain exercisable until the earlier of (i) 180 days following termination and (ii) the expiration of the original option term.

        Termination without Cause or for Good Reason in Connection with a Change in Control.    If there is a change in control and (a) within one year following the change in control Mr. Orr's employment is terminated without cause or Mr. Orr voluntarily terminates his employment for good reason or (b) within three months preceding the change in control we terminate Mr. Orr's employment without cause and such termination occurred in anticipation of such change in control, he will be entitled to: (i) 24 months of base salary, payable in lump sum, and (ii) if he timely elects continuation coverage under COBRA, payment by us on his behalf of the portion of the monthly premiums for his group health insurance (including coverage of his dependents) that we paid immediately prior to his termination, for the 18 months following his termination. Any unvested stock options will cease vesting and be forfeited, and any vested stock options will remain exercisable until the earlier of (i) 180 days following termination and (ii) the expiration of the original option term.

        Death or Disability.    If Mr. Orr's employment is terminated due to death or disability, he will not be entitled to any payments or benefits. Any unvested stock options will vest in full and remain exercisable until the earlier of (i) one year following termination and (ii) the expiration of the original option term.

Mr. Pyle

        Termination without Cause or for Good Reason.    If we terminate Mr. Pyle's employment without cause or Mr. Pyle voluntarily terminates his employment for good reason, he will be entitled to: (i) 12 months of base salary, payable in lump sum, (ii) a prorated annual bonus for the year of termination determined by multiplying the annual bonus that he otherwise would have earned by a fraction, the numerator of which is the number of days that elapsed between January 1 of the year of termination and his termination date, and the denominator of which is 365 (the "Pro Rata Annual Bonus"), to be paid at the same time as such bonuses are paid to our other executives, and (iii) if he timely elects continuation coverage under COBRA, payment by us on his behalf of the portion of the monthly premiums for his group health insurance (including coverage of his dependents) that we paid immediately prior to his termination, for the 12 months following his termination. Any unvested stock options will cease vesting and be forfeited, and any vested stock options will remain exercisable until the earlier of (i) 180 days following termination and (ii) the expiration of the original option term.

        Termination without Cause or for Good Reason in Connection with a Change in Control.    If there is a change in control and (a) within one year following the change in control Mr. Pyle's employment is terminated without cause or Mr. Pyle voluntarily terminates his employment for good reason or (b) within three months preceding the change in control we terminate Mr. Pyle's employment without cause and such termination occurred in anticipation of such change in control, he will be entitled to: (i) 24 months of base salary, payable in lump sum, and (ii) if he timely elects continuation coverage under COBRA, payment by us on his behalf of the portion of the monthly premiums for his group health insurance (including coverage of his dependents) that we paid immediately prior to his termination, for the 18 months following his termination. Any unvested stock options will cease vesting

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and be forfeited, and any vested stock options will remain exercisable until the earlier of (i) 180 days following termination and (ii) the expiration of the original option term.

        Death or Disability.    If Mr. Pyle's employment is terminated due to death or disability, he will be entitled to his Pro Rata Annual Bonus, to be paid at the same time as such bonuses are paid to our other executives. Any unvested stock options will vest in full and remain exercisable until the earlier of (i) one year following termination and (ii) the expiration of the original option term.

Mr. Kinyon

        Termination without Cause or for Good Reason.    If we terminate Mr. Kinyon's employment without cause or Mr. Kinyon voluntarily terminates his employment for good reason, he will be entitled to: (i) 12 months of base salary, payable in lump sum, (ii) a Pro Rata Annual Bonus, to be paid at the same time as such bonuses are paid to our other executives, and (iii) if he timely elects continuation coverage under COBRA, payment by us on his behalf of the portion of the monthly premiums for his group health insurance (including coverage of his dependents) that we paid immediately prior to his termination, for the 12 months following his termination. Any unvested stock options will cease vesting and be forfeited, and any vested stock options will remain exercisable until the earlier of (i) 180 days following termination and (ii) the expiration of the original option term.

        Termination without Cause or for Good Reason in Connection with a Change in Control.    If there is a change in control and (a) within one year following the change in control Mr. Kinyon's employment is terminated without cause or Mr. Kinyon voluntarily terminates his employment for good reason or (b) within three months preceding the change in control we terminate Mr. Kinyon's employment without cause and such termination occurred in anticipation of such change in control, he will be entitled to: (i) 24 months of base salary, payable in lump sum, and (ii) if he timely elects continuation coverage under COBRA, payment by us on his behalf of the portion of the monthly premiums for his group health insurance (including coverage of his dependents) that we paid immediately prior to his termination, for the 18 months following his termination. Any unvested stock options will cease vesting and be forfeited, and any vested stock options will remain exercisable until the earlier of (i) 180 days following termination and (ii) the expiration of the original option term.

        Death or Disability.    If Mr. Kinyon's employment is terminated due to death or disability, he will be entitled to his Pro Rata Annual Bonus, to be paid at the same time as such bonuses are paid to our other executives. Any unvested stock options will vest in full and remain exercisable until the earlier of (i) one year following termination and (ii) the expiration of the original option term.

Long Term Incentive Plan

        We have adopted the Long Term Incentive Plan ("LTIP"), which allows us to grant an array of equity-based awards to our NEOs, other employees, consultants and non-employee directors. The purpose of the LTIP is to recognize the contributions made by our employees, consultants and directors, and to provide these individuals with an additional incentive to use maximum efforts for the future success of the Company. All stock options granted to Messrs. Orr, Pyle and Kinyon, as disclosed above, were granted under the LTIP.

        Plan Term.    The LTIP expires in December 2021, unless prior to that date either the maximum number of shares available for issuance under the LTIP has been issued or our Board of Directors terminates the LTIP.

        Authorized Shares.    Subject to adjustment as described below, 12,000,000 shares of our common stock are available for awards to be granted under the LTIP. The number of shares that may be issued pursuant to stock options, stock appreciation rights and stock awards (i.e., awards in the form of shares of our common stock, including restricted stock, restricted stock units and DSUs) may not exceed

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12,000,000. If a stock option or stock appreciation right expires or otherwise terminates without having been exercised in full, or if any shares subject to a stock award are forfeited, the shares for which such stock option or stock appreciation right was not exercised or the shares so forfeited will again be available for issuance under the LTIP.

        Administration.    Our Board of Directors administers the LTIP and may also designate a committee composed of two or more non-employee directors to administer the LTIP. Any such committee so designated by our Board of Directors to administer the LTIP will comply with the legal requirements (if any) relating to the administration of the types of awards granted under the LTIP imposed by applicable corporate and securities laws, the Code and any stock exchange or national market system on which our common stock is then listed or traded. Our Board of Directors (or the designated committee) has authority to select individuals to whom awards are granted, determine the types of awards and terms and conditions of awards (including applicable vesting periods), and construe and interpret the LTIP and awards under it.

        Types of Awards.    The LTIP provides for grants of stock options, stock appreciation rights, stock awards, cash awards, deferred stock unit awards and performance awards.

•

Stock Options.  A stock option is a contractual right to purchase shares at a future date at a specified exercise price. Generally, the per share exercise price of a stock option will be determined by our Board of Directors (or the designated committee) but may not be less than the closing price of a share of our common stock on the grant date. No stock option will be exercisable more than ten years from the grant date. Stock options that are intended to qualify as "incentive stock options" must meet the requirements of Section 422 of the Code.

•

Stock Appreciation Rights.  A stock appreciation right is a contractual right to receive, in cash or shares, an amount equal to the appreciation of a specified number of shares of our common stock from the grant date. Any stock appreciation right will be granted subject to the same terms and conditions as apply to stock options, as described above.

•

Stock Awards.  A stock award is an award in the form of shares of our common stock, including restricted stock and share-settled restricted stock units (including deferred stock units). Our Board of Directors (or the designated committee) will determine the terms, conditions and limitations applicable to any stock award, including vesting or other restrictions.

•

Deferred Stock Unit Award.  A deferred stock unit award is a unit evidencing the right to receive at a future date one share of common stock. Payment in respect of a deferred stock unit award may be made in the form of cash or common stock or a combination thereof as determined by our Board of Directors (or the designated committee).

•

Cash Awards.  A cash award is an award denominated in cash.

•

Performance Awards.  A performance award is an award that is subject to the attainment of one or more performance goals, which will be set by our Board of Directors (or the designated committee). Our Board of Directors (or the designated committee) will also determine the terms, conditions and limitations applicable to any performance award.

        Eligibility.    Our employees, consultants and non-employee directors are eligible to receive awards under the LTIP, except that incentive stock options may only be granted to our employees.

        Adjustments.    In the event of any subdivision or consolidation of outstanding shares of our common stock, declaration of a dividend payable in shares of our common stock or other stock split, our Board of Directors (or the designated committee) will proportionately adjust the number of shares issuable under the LTIP and the terms of any outstanding awards (including the number of shares covered by outstanding awards, the exercise price and the appropriate fair market value determination).

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In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting our common stock or any distribution to holders of our common stock of securities or property (other than normal cash dividends or dividends payable in our common stock), our Board of Directors (or the designated committee) will proportionately adjust the number of shares issuable under the LTIP and the terms of any outstanding awards, but only to the extent necessary to maintain the proportionate interest of the award holders and preserve, without exceeding, the value of such awards. In addition, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, our Board of Directors (or the designated committee) may make such adjustments to awards or other provisions for the disposition of awards as it deems equitable, and will be authorized to provide for the substitution or assumption of awards, the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, awards, the cash-out of awards (with cancellation of any awards that are "out of the money"), or the cancellation of options and SARs with notice and opportunity to the holders thereof to exercise prior to such cancellation.

        Termination of Service and Change in Control.    Upon a participant's termination of service, any unexercised, unvested or unpaid awards will be treated as set forth in the applicable award agreement. In the event of a change in control (i) with respect to stock options and stock appreciation rights, if the stock options or stock appreciation rights are not continued, assumed or substituted by the Company (or surviving corporation or ultimate parent corporation in a change in control), unless otherwise provided in an applicable award agreement, our Board of Directors (or the designated committee) may provide for full or partial vesting or cash-out of any such stock options or stock appreciation rights and (ii) with respect to stock awards, our Board of Directors (or the designated committee) may provide in the applicable award agreement (or by unilateral amendment to the award agreement) the terms and conditions that relate to the lapse of any restrictions on shares subject to any stock awards in the event of a change in control.

        Amendment and Termination.    Our Board of Directors (or the designated committee) has the right to amend any participant's award agreement, subject to the participant's consent if such amendment is not favorable to the participant. Our Board of Directors may amend, suspend or terminate the LTIP, but no such amendment or termination may be made which would adversely affect any outstanding awards without the written consent of the affected participants. In addition, to the extent necessary to comply with Section 422 of the Code, Section 16b-3 of the Exchange Act, Section 613(i) of the Toronto Stock Exchange Company Manual or any other applicable law or regulation, including the requirements of any stock exchange or national market system on which our common stock is then listed, the Company will obtain shareholder approval of any plan amendment or termination.

Annual Incentive Plan

        We have adopted the Annual Incentive Plan ("AIP"), under which our NEOs and other employees are eligible to receive annual cash bonuses. The purpose of the plan is to incentivize our executives and other employees to attain annual performance objectives, thereby furthering our best interests and those of our shareholders.

        Eligibility.    Each of our employees is eligible to receive an annual cash bonus under the AIP for each fiscal year. Each employee who is employed for less than a full fiscal year will be eligible for a pro rata bonus for such partial year. In addition to the Executive Officer Bonuses as described more fully below, for each fiscal year, the Compensation and Nominating Committee may approve a bonus pool from which bonuses to employees other than our executive officers may be paid, with such bonuses to be determined by the chief executive officer.

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        Executive Officer Bonuses.    The Compensation and Nominating Committee may provide cash bonuses to our executive officers based on objective criteria established by the Compensation and Nominating Committee. For each fiscal year, the Compensation and Nominating Committee will:

•

identify each executive officer who is eligible for an annual cash bonus under the AIP;

•

establish objective criteria for determining the bonus payable to each executive officer based on his or her base salary, a specified target bonus percentage, specified key performance indicators, individual performance goals and/or any other objective criteria that the Compensation and Nominating Committee deems appropriate, including, without limitation, performance goals based on the performance measures enumerated in our LTIP and summarized above (see "—Long Term Incentive Plan"); and

•

approve the actual amount of the bonus payable to each executive officer based on the attainment of the applicable objective criteria, which amount the Compensation and Nominating Committee may increase or decrease based on such subjective criteria as the Compensation and Nominating Committee deems appropriate, including without limitation, such executive officer's individual performance.

        Maximum Annual Bonus.    The plan specifies that the maximum amount of annual cash bonus that can be paid under the plan to any eligible employee for a single fiscal year will not exceed $10 million.

        Amendment and Termination.    The Compensation and Nominating Committee may amend or terminate the plan at any time.

        Settlement of Bonus Awards.    The Compensation and Nominating Committee may, in its discretion, settle bonuses paid under the AIP in the form of equity under the LTIP.

        Clawback.    Any bonus paid under the AIP is subject to repayment in accordance with any of our policies relating to the recoupment of incentive compensation, as may be in effect from time to time or as required by federal law or regulation.

        With respect to the fiscal year ended December 31, 2019, each of our NEOs was eligible for an annual cash bonus under the AIP. The Compensation and Nominating Committee approved seven performance milestones related to safety, cost management, project completion and governmental and community relations, which would be used to determine bonus payouts to the NEOs. The level of achievement of the performance milestones, as well as an individual performance adjustment factor, were used by the Compensation and Nominating Committee to determine the actual bonus payouts as a percentage of the target bonus.

Non-Qualified Deferred Compensation Plan for Senior Executives and Outside Directors

        Effective January 1, 2019, we adopted the Deferred Compensation Plan for Senior Executives and Outside Directors (the "Deferred Compensation Plan"), under which (i) our senior executives are eligible to elect to defer receipt of any portion of cash compensation or equity compensation awards other than from the exercise of stock options and (ii) our non-employee directors are eligible to elect to defer receipt of any portion of annual retainers or meeting awards.

        Participants in the Deferred Compensation Plan are entitled to receive distribution of his or her deferred compensation account in either (i) a single lump sum distribution of cash or shares of our stock or (ii) annual installments of cash or shares of our stock over a period of not more than five (5) years after the date payment commences. All distributions under the Deferred Compensation Plan shall be made or shall commence, as the case may be, on the earlier of (i) the date designated in a participant's deferral election form and (ii) the date that is six months and one day after the occurrence of (x) the participant's termination of active service as a senior executive or non-employee

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director as applicable or (y) the date of the participant's death; provided, however, that if a participant is a "specified employee" within the meaning of Internal Revenue Code Section 409A ("409A"), payment of any benefits under the Deferred Compensation Plan shall not commence until six months following a participant's "separation from service" as such term is defined under 409A.

Director Compensation

        Pursuant to our director compensation policy, each director will receive an annual retainer of $35,000 for service on the Board of Directors. Directors will also receive $1,500 for each Board of Directors and committee meeting attended (whether in person or by telephone), provided that directors who must travel inter-continentally to attend a Board of Directors or committee meeting in person will receive an additional $2,500. Upon becoming a public entity, directors who chair the Audit Committee and Compensation and Nominating Committee will each receive an additional annual retainer of $14,000 and directors who chair any other standing committee of the Board of Directors will each receive an additional annual retainer of $7,000.

        All such compensation is currently paid in the form of immediately vested DSUs that settle upon the director's cessation of continuous service. Directors also receive annual grants of stock options. On May 3, 2019, we granted annual stock option awards with an aggregate value of $1,618,063 to our directors in recognition of services performed in fiscal year 2019.

        Following this offering, we may begin to pay a portion of each director's compensation in cash. We may permit directors to defer all or a portion of such compensation under the Deferred Compensation Plan, under which our directors will be able to defer their annual retainers and receive such deferred retainers in cash or in shares of our common stock. Beginning at the annual meeting of shareholders in 2021 and at each annual meeting of shareholders thereafter, each director will be granted an option under the LTIP to purchase a number of shares of our common stock with a Black-Scholes value of $100,000, which will vest ratably on a monthly basis over 12 months. The exercise price per share of such option will be the fair market value of our common stock on the date of grant.

        The director compensation policies described above do not apply to our employee directors, including Stephen Orr (whose compensation is set forth above in this "Executive and Director Compensation").

        The table below provides information on the director compensation earned in 2019:

2019 Director Compensation

Name(1)	Stock Awards ($)(2)(3)		Option Awards ($)(4)		Total ($)
Janice Stairs		8,750		—		8,750
Jeb Burns(5)		42,500		114,520		157,020
Ali Erfan		26,333		—		26,333
Karl Hanneman		39,500		114,520		154,020
Wayne Kirk(6)		44,000		114,520		158,520
Igor Levental		30,750		—		30,750
David Peat		44,000		114,520		158,520

(1)

Compensation for Stephen Orr, our Chief Executive Officer, is not reflected herein as such compensation is fully reflected in "—2019 Summary Compensation Table" above.

(2)

Represents the grant date fair value of DSUs granted to our non-employee directors in 2019, determined in accordance with FASB ASC Topic 718. DSUs were granted fully vested, and settle in shares of our common stock upon the director's cessation of continuous service with the Company.

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(3)

As of December 31, 2019, non-employee directors who were directors during that year held outstanding DSUs with respect to the following number of shares: Ms. Stairs: 1,458; Mr. Burns, 12,708; Mr. Erfan, 4,389; Mr. Hanneman, 7,555; Mr. Kirk, 74,699; Mr. Levental, 5,125; Mr. Peat 75,378. While all DSUs are fully vested on grant, such DSUs may not be settled until there is a cessation of the director's continuous service with the Company.

(4)

Represents the grant date fair value of stock options granted to our directors in 2019, determined in accordance with FASB ASC Topic 718.

(5)

The compensation was received by MERS for the service of its director designee, Jeb Burns.

(6)

Mr. Kirk served on our Board of Director until August 24, 2020.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        The following is a description of the transactions we have engaged in since January 1, 2017 or currently proposed with our directors and executive officers and beneficial owners of more than five percent of our voting securities and their affiliates (in addition to the employment agreements, equity awards and other compensation-related arrangements described in "Executive and Director Compensation"). The information in this section does not give effect to the Reorganization.

Services Agreements

        Effective January 1, 2015, in connection with the LGJV, we entered into a services agreement with MPR, OSJ and SSJ. Pursuant to the agreement, OSJ agreed to provide to the LGJV certain consulting and administrative services, including services necessary to explore, develop, construct and operate the LGJV and for business development activities. The agreement included indemnification provisions by MPR, SSJ in favor of OSJ and its indemnitees against all losses, damages, costs, expenses and charges incurred by OSJ arising as a result of any act or omission with respect to the provision of services pursuant to the agreement, except for willful misconduct or gross negligence.

        The LGJV paid $1.1 million and $3.5 million for the years ended December 31, 2019 and 2018, respectively, under this agreement. We had receivables in the amount of $4.1 million and $0.9 million as of December 31, 2019 and 2018, respectively, under this agreement.

Reorganization

        Immediately prior to the closing of this offering, we intend to effect the Reorganization in which (i) SOP will convert into a Delaware corporation named Silver Opportunity Partners Corporation, (ii) each            shares of our common stock outstanding immediately prior to the Reorganization will be reclassified into (A)             shares of our common stock and (B)             shares of common stock of SOP Corporation and (iii) we will change our name from Sunshine Silver Mining & Refining Corporation to Gatos Silver, Inc. SOP currently holds our interest in the Sunshine Complex, which is located in the Coeur d'Alene Mining District in Idaho and is comprised of the Sunshine Mine and the Sunshine Big Creek Refinery. Through the Reorganization, we expect to distribute all of our equity interest in SOP to our shareholders immediately prior to the completion of this offering. See "Prospectus Summary—Corporate Information and Reorganization."

Management Services Agreement

        In connection with the Reorganization, we intend to enter into a Management Services Agreement with SOP, pursuant to which we will provide certain executive and managerial advisory services to SOP. A form of the Management Services Agreement will be filed as an exhibit to the registration statement of which this prospectus forms a part.

Grant to Certain Executive Officers in Connection with This Offering

        Since April 2020, certain of our executive officers have deferred 20% of their salary. These executive officers will receive an aggregate of approximately            shares of common stock in connection with this offering. The value of the shares of common stock to be granted to each executive officer represents 125% of such executive officer's deferred salary. Each share of common stock is valued at $            , which is the midpoint of the range set forth on the cover page of this prospectus.

Shareholders Agreement

        Prior to the consummation of this offering, we will enter into a shareholders agreement with Electrum and MERS pursuant to which Electrum and MERS will have the right to nominate members

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of our Board of Directors. Upon the consummation of this offering, Electrum will have the right to nominate: (a) a majority of members of our Board of Directors so long as Electrum beneficially owns in the aggregate at least 35% of the then outstanding shares of our common stock and (b) one member of our Board of Directors so long as Electrum beneficially owns in the aggregate (x) less than 35% of the then outstanding shares of our common stock and (y) at least 5% of the then outstanding shares of our common stock. MERS will have the right to nominate one member of our Board of Directors for as long as it owns at least 5% of the then outstanding shares of our common stock. The nominees of Electrum and MERS will need to be approved by the Board of Directors and elected at the annual meeting of shareholders.

        The shareholders agreement will also provide that for so long as Electrum owns at least 35% of the then outstanding shares of our common stock, certain actions by us will require the approval of Electrum in addition to any other vote by our Board or shareholders. The actions requiring Electrum approval include:

•

change of control transactions,

•

the acquisition or sale of any asset or any joint venture investment in excess of $100 million,

•

the incurrence of indebtedness in excess of $100 million,

•

making any loan, advance or capital contribution in excess of $100 million,

•

equity issuances in excess of $100 million,

•

hiring or removing the chairman, chief executive officer, chief financial officer or chief operating officer,

•

liquidation, reorganization or bankruptcy proceedings involving us or our material subsidiaries, and

•

approval of the capital expenditure budget for any fiscal year.

        In addition, we will agree to indemnify Electrum and MERS from any losses arising directly or indirectly out of Electrum's and MERS's actual, alleged or deemed control or ability to influence control of us or the actual or alleged act or omission of Electrum's and MERS's director nominees, including any act or omission in connection with this offering. If, for any reason our agreement to indemnify Electrum and MERS is unavailable or unenforceable, we will agree to make the maximum contribution to the payment and satisfaction of the indemnified liabilities permissible under applicable law.

Registration Rights Agreement

        Prior to the consummation of this offering, we will enter into a registration rights agreement with Electrum, MERS and substantially all our other existing shareholders. Pursuant to the registration rights agreement, Electrum and MERS may require us to file a registration statement under the U.S. Securities Act, with respect to their shares following the expiration of the lock-up period described under "Shares Eligible for Future Shareholders—Lock-Up Agreements." We will not be obligated to effect more than three demand registrations within a 12-month period. All shareholders under the registration rights agreement will be entitled to piggyback registration rights with respect to any registration initiated by us or another shareholder or shareholders after the consummation of this offering and will continue to hold this right until they transfer their shares.

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Indemnity Agreements

        In connection with this offering, we intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person's services as a director or executive officer.

Sales of Shares of Common Stock

        In August, September and November 2017, we entered into subscription agreements with certain investors with respect to the issuance and sale of shares of our common stock. The following table sets forth the number of shares of our common stock issued and sold to our directors, executive officers or holders of more than 5% of our capital stock at the time of or as a result of such issuance, and any affiliate or immediate family member thereof, pursuant to such subscription agreements:

Name	Number of Shares of Common Stock Purchased		Aggregate Purchase Price
			(in thousands)
Electrum Silver US LLC		5,777,777	$	26,000
Municipal Employees' Retirement System of Michigan		2,777,778	$	12,500

        In May, June and July 2019, we entered into subscription agreements with certain investors with respect to the issuance and sale of shares of our common stock. The following table sets forth the number of shares of our common stock issued and sold to our directors, executive officers or holders of more than 5% of our capital stock at the time of or as a result of such issuance, and any affiliate or immediate family member thereof, pursuant to such subscription agreements:

Name	Number of Shares of Common Stock Purchased		Aggregate Purchase Price
			(in thousands)
Electrum Silver US LLC		4,166,667	$	25,000
Municipal Employees' Retirement System of Michigan		2,500,000	$	15,000
Stephen Orr(1)		45,000	$	270

(1)

Purchased by an affiliate of Stephen Orr, our Chief Executive Officer.

Sales of Convertible Notes

        On April 20, 2020, we entered into a Convertible Note Purchase Agreement with Electrum Silver US LLC. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Notes." From April 20, 2020 to the date hereof, we issued and sold to Electrum Silver US LLC $            million aggregate principal amount of convertible notes. We expect that the outstanding convertible notes, and accrued but unpaid interest on such convertible notes, will convert to shares of our common stock in connection with this offering, unless the net proceeds from this offering exceed $             million, in which case we intend to use $            of the net proceeds to repay our outstanding convertible notes. See "Use of Proceeds."

Statement of Policy on Related Party Transactions

        Prior to the closing of this offering, we will adopt a related party transaction policy designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to

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provide appropriate procedures for the disclosure, approval and resolution of any real or potential conflicts of interest that may exist from time to time. This policy will provide, among other things, that all related party transactions will be ratified and approved by disinterested members of our Board of Directors after receiving a recommendation from the Audit Committee that the transaction is fair, reasonable and within our policy. In making its recommendation, the Audit Committee will consider each related party transaction in light of all relevant factors, including without limitation the benefits of the transaction to us, the terms of the transaction and whether they are arm's length and in the ordinary course of our business, the direct or indirect nature of the related party's interest in the transaction, the size and expected term of the transaction, and other facts and circumstances that bear on the materiality of the related party transaction under applicable law and stock exchange standards.

Directed Share Program

        At our request, the underwriters have reserved up to        % of the shares of common stock offered by this prospectus, for sale, at the initial public offering price, to our employees and directors and to friends, professional contacts and family members of our employees and directors. We do not currently know the extent to which these related persons will participate in the directed share program, if at all.

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PRINCIPAL SHAREHOLDERS

        The following table sets forth information regarding beneficial ownership of our common stock as of                                    , 2020, after giving effect to (i) the Reorganization (ii) the issuance of an aggregate of            shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering, by:

•

each person whom we know to own beneficially more than 5% of our common stock;

•

each of our directors, director nominees and named executive officers individually; and

•

all of our directors, director nominees and executive officers as a group.

        In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes shares issuable pursuant to stock options that are exercisable within 60 days of                                    , 2020. Shares issuable pursuant to stock options are deemed outstanding for purposes of computing the percentage ownership of the person holding such options but are not outstanding for purposes of computing the percentage ownership of any other person. The percentage of beneficial ownership for the following table is based on                         shares of common stock outstanding as of                                    , 2020, and                        shares of common stock outstanding after the completion of this offering, assuming no exercise of the underwriters' over-allotment option. Unless otherwise indicated, the address for each listed shareholder is: c/o Sunshine Silver Mining & Refining Corporation, 1660 Lincoln Street, Suite 2750, Denver, CO, 80264. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable

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community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

		Percentage of Shares Beneficially Owned
Name of Beneficial Owner	Shares Beneficially Owned	Before This Offering	After This Offering
Executive Officers and Directors:
Stephen Orr(1)
Philip Pyle
John Kinyon
Roger Johnson
Luis Felipe Huerta
Adam Dubas
Thomas S. Kaplan(2)
Jeb Burns(3)
Ali Erfan(4)
Igor Gonzales
Karl Hanneman
Charles Hansard
Igor Levental(5)
David Peat
Janice Stairs
All executive officers, directors and director nominees as a group (15 persons)
Greater than 5% Shareholders:
Electrum(6):
Electrum Silver US LLC(7)
Tigris Financial Group Ltd.(8)
Grat Holdings, LLC(9)
Manul Capital Management LLC(10)
Total
Municipal Employees' Retirement System of Michigan(11)

*

Represents beneficial ownership of less than 1%.

(1)

Includes (i)                         shares of our common stock held by Cast Management 401k Trust, in which Mr. Orr is a beneficiary and (ii)                         shares of our common stock held by 49 North LLC, which is owned and controlled by Mr. Orr. The address of Cast Management 401k Trust is 30 N Gould St, Suite R, Sheridan, WY 82801. The address of 49 North LLC is Royal Palms Professional Building, 9053 Estate Thomas, Suite 101, St Thomas, the Virgin Islands 00802.

(2)

Dr. Kaplan disclaims beneficial ownership of shares of our common stock held by Electrum (as defined below) in which he does not have any pecuniary interest. See footnote (6).

(3)

Mr. Burns disclaims beneficial ownership of the shares of our common stock held by Municipal Employees' Retirement System of Michigan in which he does not have any pecuniary interest. See footnote (11).

(4)

Consists of                        shares of our common stock held by Ajami Associates Limited, which is owned and controlled by Mr. Erfan. The address of Ajami Associates Limited is c/o Sphere Management (Maritius) Limited, 6th Floor, Suite 619, Port Louis, Mauritius. Mr. Erfan disclaims beneficial ownership of shares of our common stock held by Electrum in which he does not have any pecuniary interest. See footnote (6).

(5)

Consist of                        shares of our common stock held by Levental Family Trust, in which Mr. Levental is a beneficiary. The address of Levental Family Trust is 400 South Steele Street, #39, Denver, CO 80209. Mr. Levental disclaims beneficial ownership of shares of our common stock held by Electrum in which he does not have any pecuniary interest. See footnote (6).

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(6)

Dr. Kaplan is the Chairman and Chief Executive Officer of The Electrum Group LLC, Mr. Levental is President of The Electrum Group LLC and Mr. Erfan is Vice Chairman of The Electrum Group LLC. Each of Electrum Silver US LLC, Tigris Financial Group Ltd., Grat Holdings, LLC and Manul Capital Management LLC (for the purposes of this section, collectively, "Electrum") is controlled by The Electrum Group LLC. Dr. Kaplan, Mr. Levental and Mr. Erfan may be deemed to possess voting and dispositive powers with respect to shares of our common stock held by Electrum. Dr. Kaplan, Mr. Levental and Mr. Erfan each disclaim beneficial ownership of the shares of our common stock held by Electrum in which he does not have any pecuniary interest. The address of The Electrum Group is 535 Madison Avenue, 11th Floor, New York, NY 10022.

(7)

Electrum Silver US LLC ("Electrum Silver") is managed by Electrum Strategic Management LLC ("Electrum Management"). Each of Electrum Silver and Electrum Management are principally owned and controlled by Electrum Global Holdings L.P. ("Global Holdings"). Global Holdings is controlled by its general partner, TEG Global GP Ltd. ("Global GP"). The Electrum Group LLC ("TEG Services") is the investment adviser to Global Holdings and possesses voting and investment discretion with respect to assets of Global Holdings, including indirect investment discretion with respect to the shares of common stock held by Electrum Silver. Global GP is principally owned and controlled indirectly by Grat Holdings, LLC ("Grat Holdings"). Grat Holdings is owned by trusts for the benefit of members of the family of Dr. Kaplan. Dr. Kaplan and his wife may be deemed to have beneficial ownership of shares of our common stock indirectly owned by Grat Holdings. The address for each of Electrum Silver, Electrum Management, Global Holdings, Global GP, Grat Holdings, TEG Services and Dr. Kaplan is c/o The Electrum Group LLC, 535 Madison Avenue, 11th Floor, New York, NY 10022.

(8)

Tigris Financial Group Ltd. is owned and controlled by Dr. Kaplan, who is deemed the beneficial owner of such shares of our common stock as a result of his indirect voting and dispositive powers over such shares. The address for Tigris Financial Group Ltd. is c/o The Electrum Group LLC, 535 Madison Avenue, 11th Floor, New York, NY 10022.

(9)

Grat Holdings, LLC is owned and controlled by Dr. Kaplan, who is deemed the beneficial owner of such shares of our common stock as a result of his indirect voting and dispositive powers over such shares. The address for Grat Holdings, LLC is c/o The Electrum Group LLC, 535 Madison Avenue, 11th Floor, New York, NY 10022.

(10)

Manul Capital Management LLC is owned and controlled by Dr. Kaplan, who is deemed the beneficial owner of such shares of our common stock as a result of his indirect voting and dispositive powers over such shares. The address for Manul Capital Management LLC is c/o The Electrum Group LLC, 535 Madison Avenue, 11th Floor, New York, NY 10022.

(11)

Municipal Employees' Retirement System of Michigan ("MERS") is an independent, professional retirement services company that administers the retirement plans for Michigan's local units of government. Mr. Burns is the Chief Investment Officer of MERS. Mr. Burns may be deemed to possess voting and dispositive powers with respect to shares of our common stock held by MERS. Mr. Burns disclaims beneficial ownership of the shares of our common stock held by MERS in which he does not have any pecuniary interest. The address of MERS is 1134 Municipal Way, Lansing, MI 48917.

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DESCRIPTION OF CAPITAL STOCK

        The following descriptions are summaries of the material terms of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws. Reference is made to the more detailed provisions of, and the descriptions are qualified in their entirety by reference to, the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part, and applicable law.

General

        Following this offering, our authorized capital stock will consist of                        shares of common stock, par value $0.001 per share, and                         shares of preferred stock, par value $0.01 per share.

Common Stock

        Common stock outstanding.    After giving effect to the Reorganization, as of June 30, 2020, there are                        shares of common stock outstanding which were held of record by                        shareholders. There will be                        shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option, no exercise of outstanding options and no conversion of outstanding DSUs, after giving effect to the sale of the shares of common stock offered hereby and the issuance of an aggregate of approximately            shares of common stock to our executive officers in connection with this offering, All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon the completion of this offering will be fully paid and non-assessable.

        Voting rights.    The holders of common stock are entitled to one vote per share on all matters to be voted upon by the shareholders, except on matters relating solely to terms of preferred stock.

        Dividend rights.    We do not intend to pay any dividends in the foreseeable future and currently intend to retain all future earnings to finance our business. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available therefor. See "Dividend Policy."

        Rights upon liquidation.    In the event of liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding.

        Other rights.    The holders of our common stock have no preemptive or conversion or exchange rights or other subscription rights. There are no redemption, retraction, purchase for cancellation, surrender or sinking or purchase fund provisions applicable to the common stock.

Preferred Stock

        Our Board of Directors has the authority to issue the preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the shareholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our Company without further action by the shareholders and may adversely affect the voting and other rights of the holders of common stock. At present, we have no plans to issue any of the preferred stock.

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Certain Amended and Restated Certificate of Incorporation and Bylaw Provisions

Requirements for Advance Notification of Shareholder Nominations and Proposals

        Our Amended and Restated Bylaws establish advance notice procedures with respect to shareholder proposals and nomination of candidates for election as directors.

Limits on Written Consents

        Any action required or permitted to be taken by the shareholders must be effected at a duly called annual or special meeting of shareholders and may not be effected by any consent in writing in lieu of a meeting of such shareholders, subject to the rights of the holders of any series of preferred stock.

Limits on Special Meetings

        Special meetings of the shareholders may be called at any time only by the secretary at the direction of our Board of Directors pursuant to a resolution adopted by the Board of Directors.

Choice of Forum

        Our Amended and Restated Certificate of Incorporation will provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us arising under the Delaware General Corporation Law; and (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. This provision does not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction. Our Amended and Restated Certificate of Incorporation will further provide that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

        Our Amended and Restated Certificate of Incorporation will also provide that any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and to have consented to these choice of forum provisions. These exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers, and other employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

        While Delaware courts have determined that choice of forum provisions are facially valid, it is possible that a court of law in another jurisdiction could rule that the choice of forum provisions to be contained in our Amended and Restated Certificate of Incorporation are inapplicable or unenforceable if they are challenged in a proceeding or otherwise. If a court were to find the choice of forum provision in our Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

Corporate Opportunities

        Our Amended and Restated Certificate of Incorporation provides that we renounce any interest in the business opportunities of Electrum and of our directors who are affiliated with Electrum, other than directors who are also our employees, and that neither our directors affiliated with Electrum, other than directors who are also our employees, nor Electrum have any obligation to offer us those opportunities. Electrum and any of our directors who are affiliated with them other than directors who

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are also our employees may, in the past, present or future, carry out and engage in any and all activities associated with any business, including, without limitation, any mining business.

Amendments to our Governing Documents

        Generally, the amendment of our Amended and Restated Certificate of Incorporation requires approval by our Board of Directors and the vote of holders of more than 66.67% of the votes entitled to be cast by the outstanding capital stock in the election of our Board of Directors. Any amendment to our Amended and Restated Bylaws requires the approval of either a majority of our Board of Directors or holders of more than 66.7% of the votes entitled to be cast by the outstanding capital stock in the election of our Board of Directors.

Board of Directors

        Our Board of Directors will consist of a single class of directors and directors will serve until a successor is duly elected and qualified or until a director's earlier death, removal or resignation (other than directors that may be elected by holders of our preferred shares, if any).

        Our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws provide that directors may be removed only for cause and only by the affirmative vote of the holders of 66.67% of our outstanding voting stock, voting together as a single class, unless approved by our Board of Directors, in which case such removal for cause shall require the affirmative vote of the holders of more than 50% of our outstanding voting stock, voting together as a single class. Our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws provide that any vacancy on our Board of Directors, including a vacancy resulting from an enlargement of our Board of Directors, may be filled by vote of a majority of our directors then in office. Furthermore, our Amended and Restated Certificate of Incorporation provides that the authorized number of directors may be changed only by resolution of our Board of Directors.

Delaware Business Combination Statute

        We will elect to be subject to Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions. Section 203 prevents an "interested stockholder," which is defined generally as a person owning 15% or more of a corporation's voting stock, or any affiliate or associate of that person, from engaging in a broad range of "business combinations" with the corporation for three years after becoming an interested stockholder unless:

•

the board of directors of the corporation had previously approved either the business combination or the transaction that resulted in the stockholder's becoming an interested stockholder;

•

upon completion of the transaction that resulted in the stockholder's becoming an interested stockholder, that person owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than statutorily excluded shares; or

•

following the transaction in which that person became an interested stockholder, the business combination is approved by the board of directors of the corporation and holders of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.

        Under Section 203, the restrictions described above also do not apply to specific business combinations proposed by an interested stockholder following the announcement or notification of designated extraordinary transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation's directors, if such extraordinary transaction is approved or not opposed by a majority of the directors who were directors prior to any person becoming an

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interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors.

        Section 203 may make it more difficult for a person who would be an interested stockholder to effect various business combinations with a corporation for a three-year period. Section 203 also may have the effect of preventing changes in our management and could make it more difficult to accomplish transactions which our stockholders may otherwise deem to be in their best interests.

Anti-Takeover Effects of Some Provisions

        Some provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws could make the following more difficult:

•

acquisition of control of us by means of a proxy contest or otherwise, or

•

removal of our incumbent officers and directors.

        These provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because negotiation of those proposals could result in an improvement of their terms.

Listing

        We have applied to list our common stock on the NYSE and TSX under the symbol "GATO."

Transfer Agent and Registrar

        The U.S. transfer agent and registrar for the common stock is EQ by Equiniti, located at 1110 Centre Pointe Curve, Suite 101, Mendota Heights, Minnesota 55120 and the Canadian transfer agent and registrar for the common stock is TSX Trust Company, located at 100 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 1S3.

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U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK

        The following are the material U.S. federal income and estate tax consequences of the ownership and disposition of our common stock acquired in this offering by a "Non-U.S. Holder" that does not own, and has not at any time owned, actually or constructively (as determined for purposes of the provisions of U.S. federal income tax law applicable to non-U.S. holders of shares of a USRPHC, as defined below), more than 5% of our common stock. Subject to the exceptions set forth below, you are a Non-U.S. Holder if for U.S. federal income tax purposes you are a beneficial owner of our common stock and you are:

•

a nonresident alien individual;

•

a foreign corporation; or

•

a foreign estate or trust.

        You are not a Non-U.S. Holder, however, if you are a nonresident alien individual who is present in the United States for 183 days or more in the taxable year in which you sell any of our common stock or if you are a former citizen or former resident of the United States, or an entity that has expatriated from the United States, for U.S. federal income tax purposes. If you are such a person, you should consult your tax adviser regarding the U.S. federal income tax consequences of the ownership and disposition of our common stock.

        If you are a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and your activities.

        This discussion is based on the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein, possibly with retroactive effect. This discussion does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances and does not address any aspect of state, local or non-U.S. taxation, or any taxes other than income and estate taxes. You should consult your tax adviser with regard to the application of the U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

Dividends

        As discussed under "Dividend Policy" above, we do not currently expect to make distributions on our common stock. In the event that we do make distributions of cash or other property, those distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed our current and accumulated earnings and profits, they will constitute a return of capital, which will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of our common stock, as described below under "—Gain on Disposition of Our Common Stock."

        Dividends paid to you generally will be subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty. In order to obtain a reduced rate of withholding (subject to the discussion below under "—FATCA"), you will be required to provide a properly executed applicable Internal Revenue Service ("IRS") Form W-8 certifying your entitlement to benefits under a treaty.

        If dividends paid to you are effectively connected with your conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by you in the United States), you will generally be taxed on the dividends in the same manner as a U.S. person. In this case, you will be exempt from the withholding tax

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discussed in the preceding paragraph, although you will be required to provide a properly executed IRS Form W-8ECI in order to claim an exemption from withholding. You should consult your tax adviser with respect to other U.S. tax consequences of the ownership of our common stock, including the possible imposition of a branch profits tax at a rate of 30% (or a lower treaty rate) if you are a corporation.

Gain on Disposition of Our Common Stock

        Subject to the discussion below under "—Information Reporting and Backup Withholding," you generally will not be subject to U.S. federal income or withholding tax on gain realized on a sale or other taxable disposition of our common stock unless:

•

the gain is effectively connected with your conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by you in the United States), or

•

we are or have been a "United States real property holding corporation" (a "USRPHC"), as described below, at any time within the five-year period preceding the disposition or your holding period, whichever period is shorter, and our common stock has ceased to be regularly traded on an established securities market prior to the beginning of the calendar year in which the sale or disposition occurs.

        We believe that we are not, and do not anticipate becoming, a USRPHC.

        If you recognize gain on a sale or other disposition of our common stock that is effectively connected with your conduct of a trade or business in the United States (and if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by you in the United States), you will generally be taxed on such gain in the same manner as a U.S. person. You should consult your tax adviser with respect to other U.S. tax consequences of the disposition of our common stock, including the possible imposition of a branch profits tax at a rate of 30% (or a lower treaty rate) if you are a corporation.

Information Reporting and Backup Withholding

        Information returns are required to be filed with the IRS in connection with payments of dividends on our common stock. Unless you comply with certification procedures to establish that you are not a U.S. person, information returns may also be filed with the IRS in connection with the proceeds from a sale or other disposition of our common stock. You may be subject to backup withholding on payments on our common stock or on the proceeds from a sale or other disposition of our common stock unless you comply with certification procedures to establish that you are not a U.S. person or otherwise establish an exemption. Your provision of a properly executed applicable IRS Form W-8 certifying your non-U.S. status will permit you to avoid backup withholding. Amounts withheld under the backup withholding rules are not additional taxes and may be refunded or credited against your U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

FATCA

        Provisions of the Code commonly referred to as "FATCA" require withholding of 30% on payments of dividends on our common stock to "foreign financial institutions" (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied or an exemption applies. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Proposed regulations provide that the FATCA tax will not apply to gross proceeds from the disposition of shares of U.S. corporations, such as our common

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stock, as otherwise would have been the case after December 31, 2018, and Treasury has stated that taxpayers may rely on the proposed regulations until final regulations are issued. If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally may obtain a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). You should consult your tax adviser regarding the effects of FATCA on your investment in our common stock.

Federal Estate Tax

        Individual Non-U.S. Holders and entities the property of which is potentially includible in such an individual's gross estate for U.S. federal estate tax purposes (for example, a trust funded by such an individual and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty exemption, our common stock will be treated as U.S.-situs property subject to U.S. federal estate tax.

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CANADIAN FEDERAL INCOME TAX CONSEQUENCES FOR CANADIAN HOLDERS

        The following summary describes the principal Canadian federal income tax considerations under the Income Tax Act (Canada) and the Income Tax Regulations or, collectively, the Tax Act, generally applicable to a purchaser who acquires as beneficial owner our common stock pursuant to this offering and who, at all relevant times, for purposes of the Tax Act, (i) is, or is deemed to be, resident in Canada; (ii) deals at arm's length with the Company and the underwriters; (iii) is not affiliated with the Company and the underwriters; (iv) is not in a relationship with us such that we would be considered a "foreign affiliate" of such purchaser; and (v) holds our common stock as capital property (a "Holder"). Generally, our common stock will be capital property to a Holder provided the Holder does not acquire or hold our common stock in the course of carrying on a business or as part of an adventure or concern in the nature of trade.

        This summary is not applicable to (i) a Holder an interest in which is a "tax shelter investment", (ii) a Holder that is a "financial institution" for purposes of certain rules referred to as the mark-to-market rules, (iii) a Holder that is a "specified financial institution", (iv) a Holder that is a partnership or exempt from tax under Part I of the Tax Act, (v) a Holder that reports its "Canadian tax results" in a currency other than Canadian currency, or (vi) a Holder that has entered or will enter into, in respect of our common stock, a "synthetic disposition arrangement" or a "derivative forward agreement", each as defined in the Tax Act. Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation that is, or becomes as part of a transaction or event or series of transactions or events that includes the acquisition of our common stock, controlled by a non-resident person or group of non-resident persons for the purposes of the foreign affiliate dumping rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors.

        This summary is based on the current provisions of the Tax Act, and an understanding of the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, or the Proposed Amendments, and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.

This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any prospective purchaser or holder of our common stock. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, prospective purchasers of our common stock should consult their own tax advisors having regard to their own particular circumstances.

Currency Conversion

        Generally, for purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of our common stock must be converted into Canadian dollars based on the exchange rates as determined in accordance with the Tax Act. The amount of dividends required to be included in the income of, and capital gains or capital losses realized by, a Holder may be affected by fluctuations in the Canadian / U.S. dollar exchange rate.

Dividends

        A Holder will be required to include in computing its income for a taxation year the amount of any dividends received on our common stock. In the case of a Holder that is an individual, such dividends will not be subject to the gross-up and dividend tax credit rules applicable to taxable

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dividends received from taxable Canadian corporations. A Holder that is a corporation will not be entitled to deduct the amount of such dividends in computing its taxable income. The full amount of the dividends, including amounts deducted for U.S. withholding tax, if any, in respect of the dividends must be included in income. To the extent U.S. withholding tax is paid in respect of dividends paid on our common stock, the amount of such tax generally will be eligible for foreign tax credit or deduction treatment subject to the detailed rules and limitations under the Tax Act.

        Holders are advised to consult their own tax advisors with respect to the availability of a credit or deduction to them having regard to their particular circumstances.

Dispositions

        Generally, on a disposition or deemed disposition of a share of our common stock, a Holder will realize a capital gain (or capital loss) equal to the amount, if any, by which the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Holder of the share immediately before the disposition or deemed disposition.

        The adjusted cost base to the Holder of a share of our common stock acquired pursuant to this offering will be determined by averaging the cost of such share with the adjusted cost base immediately before the time of acquisition of all other shares of our common stock owned by the Holder as capital property immediately before that time, if any.

        Generally, a Holder is required to include in computing its income for a taxation year one-half of the amount of any capital gain, or a taxable capital gain, realized in the year. Subject to and in accordance with the provisions of the Tax Act, a Holder is required to deduct one-half of the amount of any capital loss, or an allowable capital loss, realized in a taxation year from taxable capital gains realized by the Holder in the year and allowable capital losses in excess of taxable capital gains for the year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years. Capital gains realized by a Holder that is an individual or trust, other than certain specified trusts, may give rise to a liability for alternative minimum tax under the Tax Act.

        To the extent U.S. tax is paid in respect of capital gains realized on the disposition or deemed disposition of a share of our common stock, the amount of such tax generally will be eligible for foreign tax credit treatment subject to the detailed rules and limitations under the Tax Act. Holders are advised to consult their own tax advisors with respect to the availability of a credit to them having regard to their particular circumstances.

Eligibility for Investment

        On the date of issue, provided that our common stock is listed at that time on a designated stock exchange, (within the meaning of the Tax Act), which currently includes the NYSE and the TSX, shares of our common stock will be qualified investments under the Tax Act for trusts governed by registered retirement savings plans ("RRSPs"), registered retirement income funds ("RRIFs"), registered education savings plans ("RESPs"), deferred profit sharing plans, registered disability savings plans ("RDSPs") and tax-free savings accounts ("TFSAs"). Provided the holder of a TFSA or RDSP, the annuitant of an RRSP or RRIF, or the subscriber of an RESP, as the case may be, (i) does not have a "significant interest" (within the meaning of the Tax Act) in us, and (ii) deals at arm's length with us (within the meaning of the Tax Act), such shares will not be a prohibited investment under the Tax Act for such TFSA, RRSP, RRIF, RESP or RDSP. In addition, the shares of our common stock will generally not be a "prohibited investment" if such shares are "excluded property" (within the meaning of the Tax Act). Annuitants under an RRSP or RRIF, holders of a TFSA or RDSP, and subscribers of an RESP should consult their own tax advisors as to whether shares of our common stock will be a "prohibited investment" for such RRSP, RRIF, TFSA, RESP or RDSP in their particular circumstances.

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Offshore Investment Fund Property

        The Tax Act contains provisions (the "OIF Rules") which may, in certain circumstances, require a Holder to include an amount in income in each taxation year in respect of the acquisition and holding of our common stock, if (1) the value of such common stock may reasonably be considered to be derived, directly or indirectly, primarily from portfolio investments in: (i) shares of the capital stock of one or more corporations, (ii) indebtedness or annuities, (iii) interests in one or more corporations, trusts, partnerships, organizations, funds or entities, (iv) commodities, (v) real estate, (vi) Canadian or foreign resource properties, (vii) currency of a country other than Canada, (viii) rights or options to acquire or dispose of any of the foregoing, or (ix) any combination of the foregoing (collectively, "Investment Assets") and (2) it may reasonably be concluded that one of the main reasons for the Holder acquiring, holding or having shares of our common stock was to derive a benefit from portfolio investments in Investment Assets in such a manner that the taxes, if any, on the income, profits and gains from such Investment Assets for any particular year are significantly less than the tax that would have been applicable under Part I of the Tax Act if the income, profits and gains had been earned directly by the Holder.

        In making the determination under point (2) in the preceding paragraph, the OIF Rules provide that regard must be had to all of the circumstances, including (i) the nature, organization and operation of any non-resident entity, including the Company, and the form of, and the terms and conditions governing, the Holder's interest in, or connection with, any such non-resident entity, (ii) the extent to which any income, profit and gains that may reasonably be considered to be earned or accrued, whether directly or indirectly, for the benefit of any non-resident entity, including the Company, are subject to an income or profits tax that is significantly less than the income tax that would be applicable to such income, profits and gains if they were earned directly by the Holder, and (iii) the extent to which any income, profits and gains of any non-resident entity, including the Company, for any fiscal period are distributed in that or the immediately following fiscal period.

        If applicable, the OIF Rules generally require a Holder to include in the Holder's income for each taxation year in which such Holder owns our common stock the amount, if any, by which (i) the total of all amounts each of which is the product obtained when the Holder's "designated cost" (as defined in the Tax Act) of our common stock at the end of a month in the year is multiplied by ¹/12 of the aggregate of the prescribed rate of interest for the period including that month plus two percentage points exceeds (ii) any dividends or other amounts included in computing such Holder's income for the year (other than a capital gain) from our common stock determined without reference to the OIF Rules. Any amount required to be included in computing a Holder's income in respect of our common stock under these provisions will be added to the adjusted cost base and the designated cost of our common stock to the Holder.

        The CRA has taken the position that the term "portfolio investment" should be given a broad interpretation. Notwithstanding this interpretation, we do not believe that the value of shares of our common stock should be regarded as being derived, directly or indirectly, primarily from portfolio investments in Investment Assets, though the CRA may take a different view. However, if the term "portfolio investment" should be given a broad interpretation, and even if the value of shares of our common stock may reasonably be considered to be derived, directly or indirectly, primarily from portfolio investments in Investment Assets, the OIF Rules will apply to a Holder only if it is reasonable to conclude that one of the main reasons for the Holder acquiring, holding or having our common stock was to derive a benefit from Investment Assets in such a manner that the taxes, if any, on the income, profits and gains from such Investment Assets for any particular year are significantly less than the tax that would have been applicable under Part I of the Tax Act if the income, profits and gains had been earned directly by the Holder.

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These OIF Rules are complex and their application depends, in part, on the reasons for a Holder acquiring or holding our common stock. Holders are urged to consult their own tax advisors regarding the application and consequences of these rules in their own particular circumstances.

Additional Refundable Tax

        A Holder that is, throughout its taxation year, a "Canadian-controlled private corporation" (as defined in the Tax Act) may be subject to pay a refundable tax on its "aggregate investment income" (as defined in the Tax Act), including amounts in respect of net taxable capital gains and certain dividends.

Foreign Property Information Reporting

        In general, a Holder that is a "specified Canadian entity" for a taxation year or fiscal period and whose total cost amount of "specified foreign property" (as such terms are defined in the Tax Act) including our common stock at any time in the taxation year or fiscal period exceeds CAD $100,000 will be required to file an information return for the taxation year or fiscal period disclosing certain prescribed information. Subject to certain exceptions, a taxpayer resident in Canada will generally be a specified Canadian entity. Our common stock will come within the definition of "specified foreign property" for the purposes of the Tax Act. Penalties will apply where a Holder fails to file the required information return in respect of such Holder's "specified foreign property" on a timely basis in accordance with the Tax Act.

The reporting rules in the Tax Act are complex and this summary does not purport to explain all circumstances in which reporting may be required.

Holders should consult their own tax advisors regarding whether they must comply with these reporting requirements.

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SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no market for our common stock. Future sales of substantial amounts of our common stock in the public market could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions lapse. This may adversely affect the prevailing market price and our ability to raise equity capital in the future.

        Upon the completion of this offering, after giving effect to (i) the Reorganization, (ii) the issuance of an aggregate of            shares of common stock to our executive officers in connection with this offering and (iii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock in connection with this offering, we will have            shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option, no exercise of any options outstanding as of the date hereof and no conversion of any DSUs outstanding on the date hereof. All of the shares sold in this offering will be freely transferable without restriction or registration under the U.S. Securities Act, except for any shares purchased by one of our existing "affiliates," as that term is defined in Rule 144 under the U.S. Securities Act. See "Underwriting and Plan of Distribution." The remaining shares of common stock outstanding are "restricted shares" as defined in Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for the exemption from registration under Rules 144 or 701 under the U.S. Securities Act. As a result of the contractual 180-day lock-up period described below and the provisions of Rules 144 and 701, these shares will be available for sale in the public market as follows:

Number of Shares	Date
	On the date of this prospectus.
	After 90 days from the date of this prospectus.
	After 180 days from the date of this prospectus (subject, in some cases, to volume limitations).

Rule 144

        In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell such securities, provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three month period only a number of securities that does not exceed the greater of either of the following:

•

1% of the number of shares of our common stock then outstanding, which will equal approximately                        shares immediately after this offering, assuming no exercise of the underwriters' over-allotment option; or

•

the average weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must also comply with

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the manner of sale, current public information and notice provisions of Rule 144 to the extent applicable.

Rule 701

        In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering is entitled to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, without having to comply with the holding period requirements or certain other restrictions contained in Rule 701.

        The SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after the date of this prospectus. Securities issued in reliance on Rule 701 are restricted securities and, subject to the terms of any lock-up agreement described below, beginning 90 days after the date of this prospectus, may be sold by persons other than "affiliates," as defined in Rule 144, subject only to the manner of sale provisions of Rule 144, and by "affiliates" under Rule 144 without compliance with its one-year minimum holding period requirement.

Stock Options

        As of June 30, 2020, options to purchase a total of 8,699,028 shares of our common stock were outstanding, substantially all of which are subject to lock-up agreements. After this offering, an additional                        shares of our common stock will be available for future option grants under our Long Term Incentive Plan.

        Upon the completion of this offering, we intend to file a registration statement under the U.S. Securities Act covering all shares of common stock subject to outstanding options or issuable pursuant to our Long Term Incentive Plan. Shares registered under such registration statement will be available for sale in the open market, subject to Rule 144 volume limitations applicable to affiliates, vesting restrictions with us or the terms of any lock-up agreement described below.

Lock-up Agreements

        We, our executive officers and directors and the holders of substantially all of our outstanding shares of common stock have entered into lock-up agreements with the underwriters. Under these agreements, subject to certain exceptions, we and each of these persons may not, without the prior written approval of BMO Capital Markets Corp., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC, offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or hedge our common stock or securities convertible into or exchangeable or exercisable for our common stock. These restrictions will be in effect for a period of 180 days after the date of this prospectus, which period is subject to extension. At any time, BMO Capital Markets Corp., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC may, in their sole discretion, release some or all the securities from these lock-up agreements. There are no agreements, understandings or intentions, tacit or explicit, to release any of the common stock subject to lock-up agreements prior to the expiration of the lock-up period.

Registration Rights

        Prior to the consummation of this offering, we will enter into a registration rights agreement with certain of our shareholders pursuant to which we will grant certain of our shareholders and their affiliates certain registration rights with respect to our shares of common stock owned by them following the expiration of the lock-up period described above under "—Lock-up Agreements." See "Certain Relationships and Related Party Transactions—Registration Rights Agreement."

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UNDERWRITING AND PLAN OF DISTRIBUTION

        We are offering the shares of our common stock described in this prospectus through the underwriters named below. BMO Capital Markets Corp., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC are acting as joint book-running managers of this offering and as the representatives of the underwriters. We have entered into an underwriting agreement with the representatives. Subject to the terms and conditions of the underwriting agreement, each of the underwriters has severally agreed to purchase the number of shares of common stock listed next to its name in the following table.

Underwriters	Number of shares
BMO Capital Markets Corp.
Goldman Sachs & Co. LLC
RBC Capital Markets, LLC
Total

        The offering is being made concurrently in the United States and in each of the provinces in Canada, other than Québec. Our common stock will be offered in the United States through those underwriters who are registered to offer the common stock for the sale in the United States and such other registered dealers as may be designated by the underwriters. Our common stock will be offered in each of the provinces of Canada, other than Québec, through BMO Nesbitt Burns Inc., Goldman Sachs Canada Inc., RBC Dominion Securities Inc. and such other registered dealers as may be designated by the underwriters. Subject to applicable law, the underwriters, or such other registered dealers or other entities outside the United States and Canada that are affiliates of the underwriters as may be designated by the underwriters, may offer the common stock outside of the United States and Canada.

        The underwriting agreement provides for a firm commitment underwriting, and the underwriters must buy all of the shares if they buy any of them. However, the underwriters are not required to pay for the shares covered by the underwriters' over-allotment option described below. In Canada, the shares are to be taken up by the underwriters, if at all, on or before a date not later than 42 days after the date of this prospectus.

        Our common stock is offered subject to a number of conditions, including:

•

receipt and acceptance of our common stock by the underwriters; and

•

the underwriters' right to reject orders in whole or in part.

        The obligation of the underwriters under the underwriting agreement may also be terminated at their discretion upon the occurrence of certain stated events, including, without limitation: a material adverse change in our business that makes it impractical or inadvisable to proceed with the offering; a suspension or material limitation of trading generally on certain securities markets; a suspension or material limitation in trading in shares of our common stock on the NYSE or the TSX; a general moratorium on commercial banking activities or a material disruption in commercial banking or securities settlement services; and an outbreak or escalation of hostilities or acts of terrorism or any other calamity or crisis or any change in financial, political or economic conditions, in each case that makes it impractical or inadvisable to proceed with the offering.

        We have been advised by the representatives that the underwriters intend to make a market in our common stock but that they are not obligated to do so and may discontinue making a market at any time without notice.

        In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically.

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Over-Allotment Option

        We have granted the underwriters an option to buy up to an aggregate of                        additional shares of our common stock. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriters have 30 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional shares approximately in proportion to the amounts specified in the table above.

Commissions and Discounts

        Shares sold by the underwriters to the public will initially be offered at the initial offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $            per share from the initial public offering price. If all the shares are not sold after the underwriters have made a reasonable effort to sell the shares at the initial public offering price, the representatives may change the offering price and the other selling terms, provided that the price for the shares shall not exceed the public offering price and further provided that the compensation that is realized by the underwriters will be decreased by the amount that the aggregate price paid by the purchasers for the shares is less than the gross proceeds paid by the underwriters to us. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the shares at the prices and upon the terms stated therein. The representatives of the underwriters have informed us that they do not expect to sell more than an aggregate of five percent of the total number of shares of common stock offered by them to accounts over which such representatives exercise discretionary authority.

        The following table shows the per share and total underwriting discounts and commissions we will pay to the underwriters assuming both no exercise and full exercise of the underwriters' option to purchase up to                                    additional shares to cover over-allotments.

	No exercise	Full exercise
Per share	$	$
Total	$	$

        We estimate that the total expenses of the offering payable by us, not including the underwriting discounts and commissions, will be approximately $             million. We have agreed to reimburse the underwriters for expenses relating to the clearance of this offering with the Financial Industry Regulatory Authority up to $35,000.

No Sales of Similar Securities

        We, our executive officers and directors and the holders of substantially all of our outstanding shares of common stock have entered into lock-up agreements with the underwriters. Under these agreements, we and each of these persons may not, without the prior written approval of BMO Capital Markets Corp., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC, offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or hedge our common stock or securities convertible into or exchangeable or exercisable for our common stock. These restrictions will be in effect for a period of 180 days after the date of this prospectus. At any time, BMO Capital Markets Corp., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC may, in their sole discretion, release some or all the securities from these lock-up agreements.

        The lock-up agreement does not apply to the following transactions by us: (1) issuances of common stock upon the exercise of options (or granting or vesting of other equity incentive awards) or warrants, if any, disclosed as outstanding elsewhere in this prospectus; (2) the issuance of employee

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stock options (or other equity incentive awards) and subsequent issuances of common stock upon the exercise of options (or granting or vesting of other equity incentive awards) pursuant to equity incentive plans described elsewhere in this prospectus; (3) the filing of a registration statement on Form S-8 relating to the offering of securities in accordance with the terms of equity incentive plans described elsewhere in this prospectus; (4) the issuance of common stock in connection with one or more acquisitions by us, or joint ventures between the us and, another company, or pursuant to equipment leasing arrangements, debt financings or settlement agreements by us, provided that the aggregate number of shares of common stock that may be issued pursuant to clause (4) shall not exceed 10% of the total number of shares of common stock outstanding after the completion of this offering and each recipient of shares of common stock issued pursuant to clause (4) agrees to be bound by the terms of a lock-up agreement; (5) the distribution of all of our equity interest in SOP to its shareholders as described in this prospectus; (6) the conversion of our outstanding convertible notes into an aggregate of                        shares of common stock in connection with this offering as described in this prospectus; and (7) the distribution of an aggregate of                        share of common stock in connection with this offering to certain of our executive officers who deferred a portion of their salaries as described in this prospectus.

        The lock-up agreement does not apply to the following transactions by our executive officers, directors and holders of our common stock: (1) bona fide gifts; (2) dispositions to any trust for the direct or indirect benefit of the transferor or the transferor's immediate family; (3) transfers to a wholly-owned subsidiary of the transferor or to direct or indirect shareholders, members, partners or other affiliates of the transferor, provided that the transfer does not involve a disposition for value; (4) transfers by operation of law, such as the rules of intestate succession; (5) dispositions of common stock acquired in this offering (other than any issuer-directed shares purchased in this offering by our directors or officers) or in open-market transactions after the completion of this offering; (6) transfers to any corporation, partnership or other business entity with whom the transferor shares in common an investment manager or adviser; (7) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of common stock, provided that such plan does not permit the transfer or other disposition of common stock during the lock-up period; and (8) transfers pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction involving a change of control. In the case of clauses (1), (2), (3), (4) and (6) above, the transferee must also agree to be bound by the terms of a lock-up agreement.

Indemnification

        We have agreed to indemnify the several underwriters against certain liabilities, including certain liabilities under the U.S. Securities Act. If we are unable to provide this indemnification, we have agreed to contribute to payments the underwriters may be required to make in respect of those liabilities.

Exchanges

        We have applied to list our common stock on the NYSE and the TSX under the symbol "GATO." The listing will be subject to us fulfilling all of the listing requirements of the NYSE and the TSX.

Price Stabilization, Short Positions

        In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock during and after this offering, including:

•

stabilizing transactions;

•

short sales;

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•

purchases to cover positions created by short sales;

•

imposition of penalty bids; and

•

syndicate covering transactions.

        Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock. These transactions may also include making short sales of our common stock, which involve the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering. Short sales may be "covered short sales," which are short positions in an amount not greater than the underwriters' over-allotment option referred to above, or may be "naked short sales," which are short positions in excess of that amount.

        The underwriters may close out any covered short position by either exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

        The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchased in this offering. Any naked short position would form part of the underwriters' over-allocation position.

        The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of that underwriter in stabilizing or short covering transactions.

        As a result of these activities, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters at any time. The underwriters may carry out these transactions on the NYSE, the TSX, other stock exchanges, in the over-the-counter market or otherwise. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the shares.

Determination of Offering Price

        Prior to this offering, there was no public market for our common stock. The initial public offering price will be determined by negotiation by us and the representatives of the underwriters. The principal factors to be considered in determining the initial public offering price include:

•

the information set forth in this prospectus and otherwise available to the representatives;

•

our history and prospects and the history and prospects for the industry in which we compete;

•

our past and present financial performance and an assessment of our management;

•

our prospects for future earnings and the present state of our development;

•

the general condition of the securities market at the time of this offering;

•

the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

•

other factors deemed relevant by the underwriters and us.

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        The estimated public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market will develop for our common stock or that the common stock will trade in the public market at or above the initial public offering price.

Affiliations

        The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities.

        The underwriters and their affiliates may from time to time in the future engage with us and perform services for us in the ordinary course of their business for which they will receive customary fees and expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of us. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of these securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in these securities and instruments.

Directed Share Program

        At our request, the underwriters have reserved up to        % of the shares of common stock offered by this prospectus, for sale, at the initial public offering price, to our employees and directors and to friends, professional contacts and family members of our employees and directors. If purchased by these persons, these shares will not be subject to a lock-up restriction, except in the case of shares purchased by any director or officer, which will be subject to a 180-day lock-up restriction described above. The sales will be made at our direction by            through a directed share program. The number of shares available for sale to the general public will be reduced by the number of reserved shares sold to these individuals. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the sales of the shares reserved for the directed share program.

Notice to Investors

Notice to prospective investors in the European Economic Area and the United Kingdom

        In relation to each Member State of the European Economic Area (each a "Member State") and, until the expiry of the period during which the United Kingdom continues to be subject to European Union law without being a Member State (the "Transition Period"), the United Kingdom, no shares of our common stock have been offered or will be offered pursuant to the offering to the public in that Member State or the United Kingdom prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Member State or the United Kingdom or, where appropriate, approved in another Member State or the United Kingdom and notified to the competent authority in that Member State or the United Kingdom, all in accordance with the Prospectus Regulation), except that offers of shares may be made to the public in that Member State or the United Kingdom at any time under the following exemptions under the Prospectus Regulation:

(a)

to any legal entity which is a qualified investor as defined in the Prospectus Regulation;

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(b)

to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or



(c)

in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

        For the purposes of this provision, the expression an "offer to the public" in relation to any shares of our common stock in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129.

Notice to prospective investors in Australia

        No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

        Any offer in Australia of the shares of our common stock may only be made to persons, or to the Exempt Investors, who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares of our common stock without disclosure to investors under Chapter 6D of the Corporations Act.

        The shares of our common stock applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

        This prospectus contains general information only and does not take into account the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate for their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Notice to prospective investors in Hong Kong

        Our common stock may not be offered or sold in Hong Kong by means of this prospectus or any document other than (i) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, (ii) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong). No advertisement, invitation or document relating to our common stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere) which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong

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Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the common stock which is or is intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to prospective investors in Japan

        No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (the "FIEL") has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of our common stock.

        Accordingly, the shares of our common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.

For Qualified Institutional Investors ("QII")

        Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of our common stock constitutes either a "QII only private placement" or a "QII only secondary distribution" (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of our common stock. The shares of our common stock may only be transferred to QIIs.

For Non-QII Investors

        Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of our common stock constitutes either a "small number private placement" or a "small number private secondary distribution" (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of our common stock. The shares of our common stock may only be transferred en bloc without subdivision to a single investor.

Notice to prospective investors in Singapore

        This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Non-CIS Securities may not be circulated or distributed, nor may the Non-CIS Securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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        Where the Non-CIS Securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a)

a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)), the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or



(b)

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Non-CIS Securities pursuant to an offer made under Section 275 of the SFA except:



(i)

to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;



(ii)

where no consideration is or will be given for the transfer;



(iii)

where the transfer is by operation of law;



(iv)

as specified in Section 276(7) of the SFA; or



(v)

as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

        Singapore Securities and Futures Act Product Classification: Solely for the purposes of our obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the SFA, we have determined, and hereby notify all relevant persons (as defined in Section 309A of the SFA), that the shares of our common stock are "prescribed capital markets products" (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Notice to prospective investors in Switzerland

        This document is not intended to constitute an offer or solicitation to purchase or invest in the shares of our common stock described herein. The shares of our common stock may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading venue in Switzerland. Neither this document nor any other offering or marketing material relating to the shares of our common stock constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading venue in Switzerland, and neither this document nor any other offering or marketing material relating to the shares of our common stock may be publicly distributed or otherwise made publicly available in Switzerland.

Notice to prospective investors in the United Kingdom

        Each underwriter has represented and agreed that:

(a)

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 ("FSMA")) received by

171

it in connection with the issue or sale of our shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

(b)

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to our shares of our common stock in, from or otherwise involving the United Kingdom.

        After the expiry of the Transition Period, no shares of our common stock have been offered or will be offered pursuant to the offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the shares which has been approved by the Financial Conduct Authority in accordance with the FSMA, as amended), except that offers of shares may be made to the public in that Member State at any time under the following exemptions under the FSMA, as amended:

(a)

to any legal entity which is a qualified investor as defined under the FSMA;



(b)

to fewer than 150 natural or legal persons (other than qualified investors as defined under the FSMA), subject to obtaining the prior consent of the representatives for any such offer; or



(c)

in any other circumstances falling within Section 86 of the FSMA, as amended,

provided that no such offer of shares of our common stock shall require the company or the representative to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Section 87G of the FSMA.

        For the purposes of this provision, the expression an "offer to the public" in relation to any shares of our common stock in the United Kingdom the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase or subscribe for any shares of our common stock.

172

LEGAL PROCEEDINGS

        We are, from time to time, involved in legal proceedings of a nature considered normal to our business. We believe that none of the litigation in which we are currently involved, or have been involved since the beginning of our most recently completed financial year, individually or in the aggregate, is material to our consolidated financial condition, cash flows or results of operations. See Note 10, "Commitments and Contingencies" in our consolidated financial statements included elsewhere in this prospectus for additional information regarding our assessment of contingencies related to legal matters.

LEGAL MATTERS

        The validity of the issuance of the shares of common stock offered hereby will be passed upon for us by Davis Polk & Wardwell LLP, New York, New York and for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. Certain matters with respect to Canadian law will be passed upon for us by Fasken Martineau DuMoulin LLP and for the underwriters by Stikeman Elliott LLP.

EXPERTS

        The consolidated financial statements of Sunshine Silver Mining & Refining Corporation as of December 31, 2019 and 2018 and for each of the years in the three-year period ended December 31, 2019, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

        The combined financial statements of the Los Gatos Joint Venture as of December 31, 2019 and 2018 and for each of the years in the three-year period ended December 31, 2019, have been included herein in reliance upon the report of KPMG LLP, independent auditors, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

        The technical information appearing in this prospectus concerning the Cerro Los Gatos Mine and the Los Gatos District, including estimates of mineral resources and mineral reserves, was derived from the Los Gatos Technical Report prepared by Tetra Tech, Inc., independent mining consultants. As of the date hereof, Tetra Tech, Inc. beneficially owns none of our outstanding common stock.

173

WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the U.S. Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the Company and our common stock, reference is made to the registration statement and the exhibits and any schedules filed therewith.

        Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit to the registration statement reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference.

        As a result of the offering, we will be required to file periodic reports and other information with the SEC.

        The SEC maintains an Internet site that contains reports, proxy and information statements we have filed electronically with the SEC. The address of that site is www.sec.gov.

        We will also be subject to the informational requirements of the securities commissions in each of the provinces of Canada, other than Québec, subject to available exemptions. You are invited to read any reports, statements or other information, other than confidential filings, that we file with the Canadian provincial securities authorities. These filings are also electronically available from the Canadian System for Electronic Document Analysis and Retrieval ("SEDAR") (www.sedar.com), the Canadian equivalent of the SEC's Electronic Document Gathering and Retrieval System. Documents filed on SEDAR are not, and should not be considered, part of this prospectus.

174

GLOSSARY OF TECHNICAL TERMS

        Certain terms and abbreviations used in this prospectus are defined below:

"Ag" means the chemical symbol for the element silver.

"AISC" means all-in sustaining cost.

        "Au" means the chemical symbol for the element gold.

"By-Product" is a secondary metal or mineral product recovered in the milling process.

"Concentrate" is the product of physical concentration process, such as flotation or gravity concentration, which involves separating ore minerals from unwanted waste rock. Concentrates require subsequent processing (such as smelting or leaching) to break down or dissolve the ore minerals and obtain the desired elements, usually metals.

"Cu" means the chemical symbol for the element copper.

"Development" is work carried out for the purpose of accessing a mineral deposit. In an underground mine, this work includes shaft sinking, crosscutting, drifting and raising. In an open pit mine, development includes the removal of over burden.

"Dewatering" is the removal of water from a mine shaft or other pre-existing underground workings by pumping or drainage as a safety measure or as a preliminary step to resumption of development or operations in the area.

"Dilution" is an estimate of the amount of waste or low-grade mineralized rock which will be mined with the ore as part of normal mining practices in extracting an ore body.

"Drilling"

        Core:    with a hollow bit with a diamond cutting rim to produce a cylindrical core that is used for geological study and assays used in mineral exploration.

        In-fill:    is any method of drilling intervals between existing holes, used to provide greater geological detail and to help establish reserve estimates.

"Exploration" is prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.

"Feasibility Study" is a comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.

"Grade" means the concentration of each ore metal in a rock sample, usually given as weight percent. Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t) or ounces per ton (Oz/t), the grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from the deposit.

"g/t" means grams per tonne.

"Hectare" is a metric unit of area equal to 10,000 square meters (2.471 acres).

"Indicated Mineral Resources" or "Indicated Resources" is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The

175

estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

"Inferred Mineral Resources" or "Inferred Resources" is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

"Los Gatos Technical Report" means "NI 43-101 Technical Report: Los Gatos Project, Chihuahua, Mexico," prepared by Tetra Tech Inc., dated July 1, 2020, which was prepared in accordance with the requirements of the SEC Mining Modernization Rules and NI 43-101.

"masl" is meters above sea level.

"Mineral Reserves" means the economically mineable part of a Measured or Indicated Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.

"Mineral Resources" means a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.

"Measured Mineral Resources" is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

"Mill" is a processing facility where ore is finely ground and thereafter undergoes physical or chemical treatments to extract the valuable metals.

"M&I" means Measured Mineral Resources and Indicated Mineral Resources.

"NI 43-101" means National Instrument 43-101—Standards of Disclosure for Mineral Projects adopted by the Canadian Securities Administrators.

"NSR" means Net Smelter Return: the proceeds returned from the smelter and/or refinery to the mine owner less certain costs.

"Ore" is rock, generally containing metallic or non-metallic minerals, that can be mined and processed at a profit.

"Ore Body" is a sufficiently large amount of ore that can be mined economically.

"Ore Reserve" is the part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination.

"Pb" means the chemical symbol for the element lead.

176

"Probable Mineral Reserve" means the economically mineable part of an Indicated, and in some circumstances a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

"Proven Mineral Reserve" means the economically mineable part of a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This preliminary feasibility study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

"Reclamation" is the process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings, leach pads and other features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.

"Recovery Rate" is a term used in process metallurgy to indicate the proportion of valuable material physically recovered in the processing of ore. It is generally stated as a percentage of material recovered compared to the material originally present.

"Refining" is the final stage of metal production in which impurities are removed from the molten metal.

"Rehabilitation" is the restoration of an existing underground excavation to a safe condition for further exploration and development by removing obstructions, installing necessary ground support and repairing or replacing utility services such as compressed air lines, water lines, and electrical service.

"SEC Mining Modernization Rules" means subpart 1300 of Regulation S-K.

"Smelting" is an intermediate stage metallurgical process in which metal is separated from impurities by using thermal or chemical separation techniques.

"Tailings" is the material that remains after all economically and technically recovered precious metals have been removed from the ore during processing.

"Ton" means a short ton which is equivalent to 2,000 pounds, unless otherwise specified. We will also reference "Tonne," which is a metric ton or 2,204.6 pounds. "Tonne" is referenced under the "Grade" definition.

"toz" means a troy ounce.

"Waste" is rock which is not ore. Usually referred to that rock which has to be removed during the normal course of mining in order to get at the ore.

"Zn" means the chemical symbol for the element zinc.

177

INDEX TO FINANCIAL STATEMENTS

Sunshine Silver Mining & Refining Corporation Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-3
Consolidated Statements of Loss and Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017	F-4
Consolidated Statements of Shareholders' Equity (Deficit) for the years ended December 31, 2019, 2018 and 2017	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017	F-6
Notes to the Consolidated Financial Statements	F-7
The Los Gatos Joint Venture Combined Financial Statements
Independent Auditors' Report	F-27
Combined Balance Sheets as of December 31, 2019 and 2018	F-28
Combined Statements of Loss for the years ended December 31, 2019 and 2018	F-29
Combined Statements of Owner's Capital for the years ended December 31, 2019 and 2018	F-30
Combined Statements of Cash Flows for the years ended December 31, 2019 and 2018	F-31
Notes to the Combined Financial Statements	F-32
Sunshine Silver Mining & Refining Corporation Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2020 and 2019	F-45
Condensed Consolidated Statements of Loss and Comprehensive Loss for the six months ended June 30, 2020 and 2019	F-46
Condensed Consolidated Statements of Shareholders' Equity (Deficit) for the six months ended June 30, 2020 and 2019	F-47
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	F-48
Notes to the Condensed Consolidated Financial Statements	F-49

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Sunshine Silver Mining & Refining Corporation:

Opinion on the Consolidated Financial Statements

        We have audited the accompanying consolidated balance sheets of Sunshine Silver Mining & Refining Corporation and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of loss and comprehensive loss, shareholders' equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

        These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

        We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

	/s/ KPMG LLP
We have served as the Company's auditor since 2011. Denver, Colorado June 26, 2020

F-2

SUNSHINE SILVER MINING & REFINING CORPORATION

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31,

(In thousands, except for share and per share amounts)

	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	9,085		$	3,457
Materials and supplies inventory		103			174
Deferred financing costs		1,777			—
Related party receivables		6,422			1,345
Other current assets		1,068			1,133
Total current assets		18,455			6,109
Non-Current Assets
Investment in affiliates		105,396			108,172
Metals inventory		250			250
Property, plant and equipment, net		30,194			32,030
Total Assets	$	154,295		$	146,561
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other accrued liabilities	$	3,465		$	2,172
Non-Current Liabilities
Reclamation obligations		1,439			1,337
Shareholders' Equity
Common stock, $0.001 par value; 100,000,000 shares authorized; 80,646,832 and 73,902,522 shares outstanding as of December 31, 2019 and December 31, 2018		80			74
Paid-in capital		375,921			331,802
Accumulated deficit		(225,583	)		(187,765	)
Treasury stock, at cost, 289,177 shares as of December 31, 2019 and December 31, 2018		(1,027	)		(1,027	)
Unrealized loss on investments, net of tax		—			(32	)
Total shareholders' equity		149,391			143,052
Total Liabilities and Shareholders' Equity	$	154,295		$	146,561

See accompanying notes to the consolidated financial statements.

F-3

SUNSHINE SILVER MINING & REFINING CORPORATION

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands, except for share and per share amounts)

	2019			2018			2017
Expenses
Exploration	$	1,248		$	1,709		$	1,179
Pre-development		2,318			2,527			2,408
General and administrative		4,845			4,396			6,494
Amortization		2,370			2,307			2,483
Total expenses		10,781			10,939			12,564
Other expense (income)
Dilution loss in affiliates		11,231			—			—
Equity loss in affiliates		12,865			464			160
Arrangement fees		2,988			283			—
Other expense (income)		(47	)		(19	)		87
Net other expense		27,037			728			247
Loss before income taxes		37,818			11,667			12,811
Income tax benefit		—			(3	)		—
Net loss	$	37,818		$	11,664		$	12,811
Other comprehensive (income) loss
Unrealized (gain) loss on securities, net of tax		(32	)		(5	)		25
Comprehensive loss	$	37,786		$	11,659		$	12,836
Net loss per share:
Basic and diluted	$	0.49		$	0.16		$	0.19
Weighted average shares outstanding:
Basic and diluted		77,934,044			73,941,655			67,507,179

See accompanying notes to the consolidated financial statements.

F-4

SUNSHINE SILVER MINING & REFINING CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

(In thousands, except for share amounts)

	Number					Amount
	Common Stock			Treasury Stock		Common Stock		Treasury Stock			Paid-in Capital			Accumulated Deficit			Other Comprehensive Income (Loss)			Total Shareholders' Equity
Balance at December 31, 2016		64,414,211			216,845	$	64		(701	)	$	284,096		$	(163,290	)	$	(12	)	$	120,157
Stock-based compensation		—			—		—		—			1,946			—			—			1,946
Issuance of common stock		9,483,868			—		10		—			42,668			—			—			42,678
DSUs converted to common stock		53,775			—		—		—			—			—			—			—
Unrealized loss on investments		—			—		—		—			—			—			(25	)		(25	)
Deferred share unit compensation		—			—		—		—			422			—			—			422
Other		—			—		—		—			116			—			—			116
Net loss		—			—		—		—			—			(12,811	)		—			(12,811	)
Balance at December 31, 2017		73,951,854			216,845	$	74		(701	)	$	329,248		$	(176,101	)	$	(37	)	$	152,483
Stock-based compensation		—			—		—		—			2,367			—			—			2,367
Issuance of common stock		23,000			—		—		—			104			—			—			104
Unrealized gain on investments, net of tax		—			—		—		—			—			—			5			5
Repurchase of common stock		(72,332	)		72,332		—		(326	)		—			—			—			(326	)
Other		—			—		—		—			83			—			—			83
Net loss		—			—		—		—			—			(11,664	)		—			(11,664	)
Balance at December 31, 2018		73,902,522			289,177	$	74		(1,027	)	$	331,802		$	(187,765	)	$	(32	)	$	143,052
Stock-based compensation		—			—		—		—			3,219			—			—			3,219
Issuance of common stock		6,744,310			—		6		—			40,459			—			—			40,465
Unrealized gain on investments, net of tax		—			—		—		—			—			—			32			32
Deferred share unit compensation		—			—		—		—			491			—			—			491
Other		—			—		—		—			(50	)		—			—			(50	)
Net loss		—			—		—		—			—			(37,818	)		—			(37,818	)
Balance at December 31, 2019		80,646,832			289,177	$	80		(1,027	)	$	375,921		$	(225,583	)	$	—		$	149,391

See accompanying notes to the consolidated financial statements.

F-5

SUNSHINE SILVER MINING & REFINING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands)

	2019			2018			2017
OPERATING ACTIVITIES
Net loss	$	(37,818	)	$	(11,664	)	$	(12,811	)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization		2,370			2,290			2,483
Dilution loss in affiliates		11,231			—			—
Stock compensation expense		3,219			2,392			1,981
Equity loss in affiliates		12,865			464			160
Accretion expense		102			95			88
Other		63			18			—
Changes in operating assets and liabilities:
Receivables from related-party		(5,078	)		(145	)		(383	)
Accounts payable and other accrued liabilities		645			(105	)		186
Materials and supplies inventory		67			1			54
Other current assets		39			—			38
Net cash used by operating activities		(12,295	)		(6,654	)		(8,204	)
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(534	)		(83	)		(330	)
Investment in affiliates		(21,371	)		(662	)		(28,225	)
Net cash used by investing activities		(21,905	)		(745	)		(28,555	)
FINANCING ACTIVITIES
Issuance of common stock		40,465			104			42,678
Deferred financing costs		(637	)		—			—
Repurchase of common stock		—			(326	)		—
Net cash provided (used) by financing activities		39,828			(222	)		42,678
Net increase (decrease) in cash and cash equivalents		5,628			(7,621	)		5,919
Cash and cash equivalents, beginning of period		3,457			11,078			5,159
Cash and cash equivalents, end of period	$	9,085		$	3,457		$	11,078
Supplemental disclosure of noncash transactions:
Conversion of compensation into deferred share units	$	491		$	—		$	422
Property, plant and equipment included in accrued liabilties	$	—		$	(12	)	$	12
Deferred financing costs included in accrued liabilties	$	1,139		$	—		$	—

See accompanying notes to the consolidated financial statements.

F-6

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, option and stock unit amounts)

1. Description of Business and Basis of Preparation of Financial Statements

        These financial statements represent the consolidated financial position and results of operations of Sunshine Silver Mining & Refining Corporation and its subsidiaries ("Sunshine Silver" or "the Company"). Sunshine Silver specializes in investing in or acquiring, exploring, and developing assets in the mining industry.

United States—Sunshine Complex

        On May 11, 2010, the Company purchased the net assets of the Idaho Sunshine Mine. On October 10, 2013, the Company purchased the Sunshine Big Creek Refinery ("Refinery"). The Sunshine Mine and the Refinery comprise the vertically integrated, Sunshine Complex. The Company has conducted an advanced exploration drilling program and a program to improve certain mining infrastructure at the Sunshine Complex. The Sunshine Complex is currently on care and maintenance, with a continued but reduced program of infrastructure improvement. A Sunshine Complex preliminary economic assessment technical report was completed in December 2012, and subsequently updated in January 2020.

Mexico—Los Gatos Project

        The Company's primary Mexico efforts are focused on the operation of the Los Gatos Joint Venture ("LGJV") in Chihuahua Mexico with its joint venture partner, Dowa Metals and Mining Co., Ltd. ("Dowa"), which commenced production on September 1, 2019. As of December 31, 2019, the LGJV ownership is 51.5% SSMRC and 48.5% Dowa.

        On January 1, 2015, the Company entered into the LGJV to develop the Los Gatos project ("LGP") with Dowa. The LGJV operating entities consist of Minera Plata Real S. de R.L. de C.V ("MPR"), Operaciones San Jose del Plata S. de R.L. de C.V. and Servicios San Jose del Plata S. de R.L. de C.V. (collectively the "LGJV Entities"). The LGJV completed an advanced definitional drilling and decline development program in 2016 and completed a feasibility study in January 2017. Dowa completed its $50,000 funding requirement on April 1, 2016; thereby initially acquiring a 30% interest in the LGJV and the right to purchase future zinc-concentrate production at market rates.

        In July 2017, the LGJV entered into a loan agreement (the "Term Loan") with Dowa whereby the LGJV could borrow up to $210,000 for LGP development, with a maturity date of December 29, 2027. Interest on the Term Loan accrues daily at LIBOR plus 2.35%, but the interest is added to the amount borrowed for repayment monthly until December 29, 2019. During 2018, the LGJV paid Dowa a $4,200 closing fee. Commencing June 30, 2021, 14 consecutive semi-annual equal payments of the aggregate principal and capitalized interest begin. The Term Loan also requires additional principal payments equal to 70% of the LGJV excess cash flows (as defined). As of December 31, 2019, the LGJV had $221,900 outstanding, including $11,900 of interest, under the Term Loan. SSMRC is a 70% guarantor of the Term Loan should the LGJV not be able to meet its obligations under this loan agreement.

        In January 2018, the LGJV entered into a loan agreement (the "Dowa MPR Loan") with Dowa whereby the LGJV could borrow up to $65,700 to continue LGP development. Interest on this loan accrues daily at LIBOR plus 1.5% and is added to the amount borrowed. As of December 31, 2018, the LGJV had $67,800 outstanding, including $2,100 of interest, under the Dowa MPR Loan. In May 2019, the Company contributed $18,200 to the LGJV to provide funding for a partial repayment of

F-7

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

1. Description of Business and Basis of Preparation of Financial Statements (Continued)

principal and interest related to the Dowa MPR Loan. In May 2019, the Dowa MPR Loan was fully extinguished with a principal and interest payment of $18,200 and the conversion of the remaining principal and interest of $50,737 to additional Dowa ownership in the LGJV entities. Due to the LGJV ownership dilution, the Company recognized a dilution loss on affiliates of $11,231 in May 2019. Subsequent to this transaction the ownership of the LGJV entities is 51.5% SSMRC and 48.5% Dowa.

        As of December 31, 2019, the LGJV had $60,000 of principal and $8 of interest due under a working capital facility agreement ("WCF") entered into with Dowa in May 2019. The WCF bears interest at LIBOR plus 3.0% and matures June 28, 2021. The LGJV paid interest of $1,419 under this facility for the year ended December 31, 2019. SSMRC is a 70% guarantor of the WCF should the LGJV be unable to meet its obligations under this loan agreement.

        During 2019 and 2018, the LGJV entered into various equipment loan agreements, with repayment over four years at interest rates ranging from 5.76% to 8.67%, to finance a portion of mining equipment purchases. SSMRC has guaranteed the payment of all obligations, including accrued interest, under the equipment loan agreements.

Mexico—Exploration

        The Company's other regional Mexico exploration efforts are conducted through its wholly-owned subsidiary, Minera Luz del Sol S. de R.L. de C.V. ("MLS").

Liquidity

        The Company has a history of operating losses and cash outflows from operations which are both expected to continue. Based on the Company's current cash flow forecasts, there is an expected cash shortfall within one year of the issuance date of the financial statements. As a result, the Company received a financial support commitment for $18,000 from its primary shareholder, Electrum Silver US LLC, to ensure the Company is able to satisfy its obligations as a going concern through June 26, 2021. The Company will need to raise additional funds through the issuance of debt or equity to refinance or otherwise retire obligations, or to satisfy the guarantee of the LGJV WCF, as they come due after June 26, 2021. The ability to raise capital is dependent on certain matters that are outside of the Company's control, and it may not be successful in raising sufficient funds, which could lead to an event of default.

2. Summary of Significant Accounting Policies

Basis of consolidation and combination

        All Company subsidiaries are consolidated. All significant intercompany balances and transactions have been eliminated.

Equity method investment

        The Company accounts for its investment in affiliates using the equity method of accounting whereby, after valuing the initial investment, the Company recognizes its proportional share of results of operations of the affiliate in its consolidated financial statements. Equity method investments are

F-8

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

2. Summary of Significant Accounting Policies (Continued)

reviewed periodically for other-than-temporary decline in value. The Company's investment in the LGJV Entities is presented as Investment in affiliates in the consolidated balance sheet. The basis difference between the carrying amount of the investment in affiliates and the Company's equity in the LGJV Entities' net assets is due to value of the LGJV mineral resources. This basis difference is amortized on a units of production basis as the mineral resource is produced.

        The Company incurs certain costs on behalf of the LGJV, primarily related to a project development loan arrangement fee. The Company's proportional share of such costs are reported as an investment in affiliate and the residual costs, related to Dowa's proportional ownership, are reported in the statement of loss as arrangement fees.

Use of estimates

        The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include mineral properties; environmental reclamation and closure obligations; valuation of stock and stock options; valuation allowances for deferred tax assets; and the fair value of financial instruments.

Functional currency and translation of foreign currencies

        The U.S. dollar is the functional currency of the Company and its subsidiaries. Monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses reported in foreign exchange (gain) loss in the statement of net loss. Non-monetary assets and liabilities are translated at historical exchange rates. Expenses and income items denominated in foreign currencies are translated into U.S. dollars at historical exchange rates.

Cash and cash equivalents

        The Company considers all highly liquid short-term investments with a maturity of three months or less when purchased to be cash equivalents. Restricted cash, included in other current assets, consists of cash and investments held as collateral for a letter of credit and other extensions of credit.

Materials and supplies and metals inventories

        The Company's materials and supplies inventories are valued at the lower of cost or market. Cost is determined using the average cost method for all inventories. The Company routinely evaluates the forecasted usage of its material and supplies to recognize a provision for obsolete stock, as warranted.

        The Company's metals inventory is valued at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to a salable condition. Metals inventory that is not expected to be processed within the next 12 months is classified as a non-current asset.

F-9

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

2. Summary of Significant Accounting Policies (Continued)

Property, plant and equipment

        Mineral property acquisition costs are recorded at cost and are deferred until the viability of the property is determined. Exploration, mineral property evaluation, option payments, related acquisition costs for mineral properties acquired under an option agreement, general overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. When a mineral property is determined to have proven and probable reserves, subsequent development costs are capitalized to mineral properties. For acquired mineral properties the Company allocates the acquisition cost to proven and probable reserves and value beyond proven and probable reserves. When mineral properties are developed and operations commence, capitalized costs are charged to operations using the units-of-production method over proven and probable reserves. Upon abandonment or sale of a mineral property, all capitalized costs relating to the specific property are removed in the period abandoned or sold and a gain or loss is recognized.

        Property, plant and equipment are recorded at cost. Amortization of plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful lives of plant and equipment and buildings and improvements range from 10 to 20 years. The estimated useful lives of furniture, fixtures and computers range from three to 10 years.

Impairment of long-lived assets

        Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There were no impairments recognized for the three years ended 2019.

Asset retirement obligations

        The Company has asset retirement obligations ("ARO") arising from regulatory requirements to perform certain property and asset retirement activities at the end of the respective asset life. An ARO is recognized when incurred and is initially measured at fair value and subsequently adjusted for accretion expense and changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset's remaining useful life. The ARO is based on when spending for an existing environmental disturbance is expected to occur. The Company reviews, on at least an annual basis, the reclamation obligation at each property.

Stock-based compensation

        The Company recognizes all employee stock-based compensation as a cost in the consolidated financial statements. Equity-classified awards are measured at the grant date fair value of the award.

F-10

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

2. Summary of Significant Accounting Policies (Continued)

The Company estimates grant date fair value using the Black-Scholes option-pricing model using the grant date share price, estimated amounts for volatility of the Company's stock, the expected life of the awards, the fair value of the underlying shares, the risk-free interest rate and the expected dividend yield. The related expense is included as a component of either exploration, pre-development or general and administrative expense over the requisite service period of the award.

Net loss per share

        Basic and diluted loss per share are computed by dividing the net loss available to common stockholders by the weighted-average number of common stock shares outstanding, including director share units ("DiSUs"), for the respective period presented. For the years ended December 31, 2019, 2018 and 2017, stock options have been excluded from the dilutive earnings per share calculation as their effect would be anti-dilutive.

Income taxes

        Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Recently issued accounting standards

        In February 2016, the FASB issued ASU 2016-02, "Leases," which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company's fiscal year beginning January 1, 2022. The Company is still assessing the impact of the standard but does not expect there will be a material impact to the Company's financial statements.

        In August 2018, ASU No. 2018-13 was issued to modify and enhance the disclosure requirements for fair value measurements. This update is effective in fiscal years, including interim periods, beginning after December 15, 2019, and early adoption is permitted. The Company is evaluating the required disclosures of the standard and expects to modify disclosures for fair value measurements upon adoption.

        In December 2019, ASU No. 2019-12 was issued to simplify and enhance accounting for income taxes. This update is effective in fiscal years, beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company is

F-11

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

2. Summary of Significant Accounting Policies (Continued)

still assessing the impact of the standard but does not expect there will be a material impact to the Company's financial statements.

3. Other Current Assets

	December 31, 2019		December 31, 2018
Value added tax receivable	$	213	$	192
Restricted cash and certificate of deposit		466		466
Available for sale securities		—		28
Prepaid expenses		359		415
Deposits and other		30		32
Total other current assets	$	1,068	$	1,133

        At December 31, 2018, the cost basis of available for sale securities was $21.

4. Property, Plant and Equipment, net

	December 31, 2019			December 31, 2018
Mineral properties(1)	$	18,203		$	18,203
Plant and equipment		13,621			15,381
Land		1,814			1,575
Buildings, infrastructure and improvements		16,798			14,140
Furniture, fixtures and computers		1,565			2,168
Property, plant and equipment at cost		52,001			51,467
Less accumulated amortization		(21,807	)		(19,437	)
Property, plant and equipment, net	$	30,194		$	32,030

(1)

No amortization is currently being recognized on the Sunshine Mine mineral properties, as the Company has not established proven and probable reserves, and the mine has not yet been placed back in service.

Mineral Properties

        The Company conducts exploration activities on patented and unpatented mining claims in the United States and under mining concessions in Mexico.

        The Company is required to make mineral and concession lease payments to various entities to secure the appropriate claims or surface rights. Certain of these agreements also have royalty payments that are triggered when the Company produces and sells minerals. Since no Company assets are in production, the Company is not currently paying any royalty based on production and sales.

F-12

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

4. Property, Plant and Equipment, net (Continued)

Sunshine Complex

        The Company owns the Sunshine Complex, which includes patented and unpatented mining claims, surface access rights, and related infrastructure buildings and equipment. The property includes the mine, mill and all support buildings, including the shops, dry, assay office, mine office, warehouse, hoist house, compressor building and surface and underground equipment. The property also includes the Sunshine Refinery, ConSil Mine and mill and related infrastructure buildings and equipment.

        The Company is required to pay a net smelter return ("NSR") royalty of 0% (at a silver price less than $6.00 per ounce) to 7% (at a silver price of $10.00 and greater per ounce) under a settlement with the US government and the Coeur d'Alene Indian tribe. This royalty covers substantially all of the property comprising the Sunshine Mine and extends outward within a one-mile boundary of the property described in the settlement.

Chester Group of Mining Claims

        The Company leases nine patented mining claims and has a one-third interest in four other patented mining claims from the Chester Group that are adjacent to the mining claims of the Sunshine Mine. The 25-year lease term ends February 2029 and is renewable for an additional 25 years. The lease is subject to monthly advance royalty payments until such time as a royalty of 4% on NSR or a royalty of 20% of net profits is payable. The lease also provides Chester Group with the option to acquire a 20% working interest in all ores, concentrates, metals or other mineral substances produced from the property. Chester Group may exercise this option by releasing the Company from its obligation to pay the 20% net profits royalty and by tendering an amount of cash equal to 20% of the then-current working capital fund. The Chester Group lease also requires an annual payment of 50,000 shares of Sterling Mining Company common stock.

Silver Summit / Consil Mine Royalty

        The Company is required to pay a NSR of 2% (at a silver price below $5.00 per ounce) to 4% (at a silver price of $7.00 and greater per ounce) from production of commercial minerals from certain patented and unpatented mining claims. The patented and unpatented mining claims subject to this royalty surround the Silver Summit/Consil Mine.

Metropolitan Mines Mining Claims

        The Company leases two patented and 70 unpatented mining claims from the Metropolitan Mines Corporation group ("Metropolitan") that are located immediately to the south of the primary workings of the Sunshine Mine. The lease term is indefinite until cancelled by mutual agreement. The leases are subject to monthly advance royalty payments until such time as ore is produced from the Metropolitan property. Net proceeds, when ore is produced, are to be shared between Metropolitan (16% or 50%) and the Company (84% or 50%) depending upon the location of the production.

Mineral Mountain Mining Claims

        The Company leases the Mineral Mountain Mining and Milling Company group of four patented mining claims that are adjacent to the mining claims of the Sunshine Mine. The 25-year lease ends

F-13

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

4. Property, Plant and Equipment, net (Continued)

February 2029 and is renewable for an additional 25 years. The lease is subject to annual advance royalty payments until such time as net profits royalties of 3% are payable. The lease also provides the claim owner with the option to acquire a 3% working interest in all ores, concentrates, metals or other mineral substances produced from the property. The claim owner may exercise this option by releasing the Company from its obligation to pay the 3% net profits royalty and by tendering an amount of cash equal to 3% of the then-current working capital fund.

Rock Creek—Idaho

        The Company leases unpatented claims and a patented claim at Rock Creek, Idaho. The 25-year leases end in 2031. The leases are subject to monthly advance royalty payments and a 25% net profits royalty when operational. Contained within the lease is a $50 work commitment for every 5-year period. The Company is obligated to pay all future taxes relating to the leased property. The Company may cancel the lease with 30 days notification.

Mining Concessions and Agreement

        In Mexico, mineral concessions from the Mexican government can only be held by Mexican nationals or Mexican-incorporated companies. The concessions are valid for 50 years and are extendable provided the concessions are kept in good standing. For concessions to remain in good standing a semi-annual fee must be paid to the Mexican government and an annual report describing the work accomplished on the property must be filed. These concessions may be cancelled without penalty with prior notice to the Mexican government.

        MLS is the concession holder of a series of claims titles granted by the Mexican government. The rights to certain concessions are held through exploration agreements with purchase options or a finder's fee agreement, as discussed below:

Santa Valeria Concession

        The Company is required to make monthly payments through 2020 to continue exploration activities and obtain ownership of the Santa Valeria concessions, and is required to make a production royalty payment of 1% of the net smelter returns on production. The Company may terminate the agreement upon prior notice.

San Jose de Minas Finder's Fee Agreement

        The Company is required to make an annual production royalty payment of 1% net smelter return for any production from Company concessions covered by the San Jose de Minas Finder's Fee agreement; and, the Company is obligated to pay annually 5% of the exploration costs incurred by the Company, limited to a maximum $100 annual payment pertaining to the specified concessions. Once total payments under the agreement reach $1,000 the Company will have no other obligations under the agreement. No production has taken place since inception of the agreement. The agreement has no expiration date; however, the Company may terminate the agreement upon prior notice.

F-14

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

4. Property, Plant and Equipment, net (Continued)

        As of December 31, 2019, the Company's leases, concessions, and agreements are subject to minimum payments as summarized in the table below:

	Mineral Leases, Concessions and Agreements Obligations:
2020	$	322
2021		17
2022		17
2023		17
2024		17
Thereafter		80
Total	$	470

        The San Jose de Minas Finder's Fee Agreement requires an annual payment of 5% of the exploration costs incurred by the Company, limited to a maximum annual payment of $100. This obligation has not been included in the table above as the amount of future exploration costs is unknown. Additionally, the Metropolitan Mines claim requires monthly payments of $1 until ore is produced. This obligation is excluded from the table above as the time for commencing production is unknown.

        The Company made mineral lease and concession payments of $434, $434 and $437 for the years ended December 31, 2019, 2018 and 2017, respectively.

5. Accounts Payable and Other Accrued Liabilities

	December 31, 2019		December 31, 2018
Accounts payable	$	270	$	365
Accrued expenses		1,724		530
Accrued compensation		1,471		1,277
Total accounts payable and other accrued liabilities	$	3,465	$	2,172

6. Related-Party Transactions

Service Agreements

        The Company has a related-party agreement to provide certain consulting services to Electrum USA, LLC. The Company had a receivable related to this agreement of $1 and $10 as of December 31, 2019 and 2018, respectively. Pursuant to the service agreement, the Company received $9, $47 and $50 for the years ended December 31, 2019, 2018 and 2017, respectively

        The Company has a management agreement with the LGJV to provide certain consulting and administrative services. Pursuant to this service agreement, the LGJV paid $1,050, $3,501 and $1,378 to the Company for the years ended December 31, 2019, 2018 and 2017, respectively. The Company incurs

F-15

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

6. Related-Party Transactions (Continued)

certain LGJV costs that are subsequently reimbursed by the LGJV. The Company had a receivable related to this agreement of $4,050 and $900 as of December 31, 2019 and 2018, respectively.

7. Stockholders' Equity

Common Stock Transactions

        During May 2019, the Company issued 4,166,667 common stock shares at $6.00 per share raising $25,000 in a private placement. During June 2019, the Company issued 77,643 common stock shares at $6.00 per share raising $465 in a private placement. During July 2019, the Company issued 2,500,000 common stock shares at $6.00 per share raising $15,000 in a private placement.

        During March 2018, the Company issued 23,000 common stock shares at $4.50 per share raising $104 in a private placement.

        During August 2017, the Company issued 4,483,868 common stock shares at $4.50 per share raising $20,177 in a private placement. During September 2017, the Company issued 2,777,778 common stock shares at $4.50 per share raising $12,500 in a private placement. During November 2017, the Company issued 2,222,222 common stock shares at $4.50 per share raising $10,000 in a private placement.

Stock Option Transactions

        The Company's stock options have a contractual term of 10 years and entitle the holder to purchase one share of the Company's common stock. The options granted to employees have a requisite service period of four years. The options granted to non-employee directors have a requisite service period of one year.

        The following table summarizes the respective vesting start dates and number of options granted to employees and directors in 2019, 2018 and 2017:

Recipient	Options Granted		Vesting Start Date	Grant Date
Employees		25,000	November 13, 2017	November 13, 2017
Employees		965,750	December 6, 2017	December 6, 2017
Directors		155,000	December 6, 2017	December 6, 2017
Employees		10,000	January 2, 2018	January 2, 2018
Employees		1,017,000	December 14, 2018	May 3, 2019
Directors		186,000	December 14, 2018	May 3, 2019

        The following assumptions were used to compute the fair value of the options granted:

	Grant Date
	Nov 2017	Dec 2017	Jan 2018	May 2019
Risk free interest rate	2.18%	2.18%	2.18%	2.38%
Dividend yield	—	—	—	—
Estimated volatility	65.90%	65.80%	65.80%	66.80%
Expected option life	6 years	6 years	6 years	6 years

F-16

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

7. Stockholders' Equity (Continued)

        The following assumptions were used to compute the fair value of the LGJV Personnel options as of December 31, 2019, 2018 and 2017:

	December 31,
	2019	2018	2017
Risk free interest rate	1.76%	2.55%	2.26%
Dividend yield	—	—	—
Estimated volatility	63.60%	65.90%	65.50%
Expected option life	6 years	6 years	6 years

        The Company's estimated volatility computation was based on the historical volatility of a group of peer companies' common stock over the expected option life and included both exploration stage and development stage companies. The peer information was used because the Company is not publicly traded and therefore does not have the market trading history required to calculate a meaningful volatility factor. The computation of the expected option life was determined based on a reasonable expectation of the option life prior to being exercised or forfeited. The risk-free interest rate assumption was based on the U.S. Treasury constant maturity yield at the date of the grant over the expected life of the option.

        Total unrecognized compensation expense as of December 31, 2019 was $4,477, which is expected to be recognized over a weighted average period of 2.4 years. The weighted-average grant-date fair value, intrinsic value of options exercised, and total stock-based compensation expense for the years ended December 31, 2019, 2018 and 2017 are summarized as follows:

	December 31,
	2019		2018		2017
Weighted-average grant-date fair value	$	3.69	$	2.73	$	2.73
Intrinsic value of options exercised		—		—		—
Stock based compensation expense		3,219		2,392		1,981

        The following tables summarize the stock option activity for the years ended December 31, 2019:

Employee & Director Options	Shares		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Life (Years)
Outstanding at December 31, 2018		6,097,309	$	7.29	$	2,096		6.22
Granted		1,253,000	$	6.00
Exercised		—	$	—
Forfeited		247,948	$	3.41
Outstanding at December 31, 2019		7,102,361	$	7.20	$	7,532		5.96
Vested at December 31, 2019		5,646,611	$	7.69	$	6,484		5.35

F-17

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

7. Stockholders' Equity (Continued)

LGJV Personnel Options	Shares			Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Life (Years)
Outstanding at December 31, 2018		167,082		$	3.80	$	117		7.42
Granted		—		$	—
Exercised		—		$	—
Forfeited		(57,892	)	$	4.02
Outstanding at December 31, 2019		109,190		$	3.68	$	253		6.11
Vested at December 31, 2019		104,190		$	3.64	$	245		6.02

Director Share Unit Transactions

        DiSUs are awarded to Directors at the discretion of the Board of Directors. The DiSUs are fully vested on the grant date and each DiSU entitles the holder to receive one share of the Company's common stock upon departure from the Company. The DiSU fair value equaled the Company's common stock fair value on the grant date.

        On May 3, 2019, the Company granted 55,963 DiSUs to Directors as compensation for director fees from September 2017 through December 2018. In 2019, the Company incurred $9 related to these fees. The Company accrued $307 related to these fees in 2018 and 2017. On September 26, 2019, the Company granted 29,098 DiSUs to Directors as compensation for director fees from January 1, 2019 through September 30, 2019. During 2019, the Company incurred $236 related to director fees. At December 31, 2019 and 2018, there were 355,215 and 270,154 DiSUs outstanding, respectively.

8. Asset Retirement Obligations

        The Company recorded accretion expense related to the ARO of $102, $94 and 88 for the years ended December 31, 2019, 2018 and 2017, respectively. The following table summarizes activity in the Company's ARO:

	December 31, 2019		December 31, 2018
Balance, beginning of period	$	1,337	$	1,243
Accretion expense		102		94
Balance, end of period	$	1,439	$	1,337

        The Company is required to provide the applicable governmental agencies with financial assurances related to its closure and reclamation obligations. At December 31, 2019 and 2018, the Company had restricted cash in the form of a certificate of deposit totaling $275 as collateral for a letter of credit issued by a financial institution as security to a certain governmental agency for the Company's reclamation obligations.

F-18

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

9. Fair Value Measurements

        The Company establishes a framework for measuring the fair value of financial assets and liabilities and nonfinancial assets and liabilities which are measured at fair value on a recurring (annual) basis in the form of a fair value hierarchy that prioritizes the inputs into valuation techniques used to measure fair value into three broad levels. This hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs. Further, financial assets and liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

        Level 1:    Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

        Level 2:    Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

        Level 3:    Unobservable inputs due to the fact there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability.

Financial Assets and Liabilities

        At December 31, 2019 and 2018 the Company's other financial instruments consist of cash and cash equivalents, restricted cash, receivables, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate fair value due to their short maturities.

Non-Financial Assets and Liabilities

        The Company discloses and recognizes its non-financial assets and liabilities, such as ARO, at fair value on a non-recurring basis. The estimated fair value for these non-financial liabilities are classified as Level 3 of the fair value hierarchy, as the valuation was determined based on internally developed assumptions that market participants would use in the pricing of such assets without observable inputs and no market activity.

        The Company recorded its initial investment in affiliates at fair value. The estimated fair value for this non-financial asset is classified as Level 3 of the fair value hierarchy, as the valuation was determined based on internally developed assumptions with few observable inputs and no market activity.

10. Commitments and Contingencies

        In determining accruals and disclosures with respect to loss contingencies, the Company will charge to income an estimated loss if information available prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Legal expenses associated with the commitments and contingencies are expensed as incurred. If a loss contingency is not probable or reasonably

F-19

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

10. Commitments and Contingencies (Continued)

estimable, disclosure of the loss contingency is made in the combined financial statements when it is at least reasonably possible that a material loss could be incurred.

Environmental Contingencies

        The Company's mining and exploration activities are subject to various laws, regulations and permits governing the protection of the environment. These laws, regulations and permits are continually changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws, regulations and permits, but cannot predict the full amount of such future expenditures.

        The Company is from time to time involved in various legal proceedings related to its business. Management does not believe that adverse decisions in any pending or threatened proceeding or that amounts that may be required to be paid by reason thereof will have a material adverse effect of the Company's financial condition or results of operations.

11. Income Taxes

        The components of loss before income taxes were as follows:

	Year Ended December 31,
	2019			2018			2017
U.S.	$	(35,672	)	$	(9,701	)	$	(11,327	)
Mexico		(2,145	)		(1,964	)		(1,484	)
Total	$	(37,817	)	$	(11,665	)	$	(12,811	)

        The consolidated income tax benefit from continuing operations consisted of nil, $3 and nil for the years ended December 31, 2019, 2018 and 2017, respectively.

F-20

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

11. Income Taxes (Continued)

        A reconciliation of the actual income tax benefit and the tax computed by applying the applicable U.S. federal rate to the loss before income taxes is as follows:

	Year Ended December 31,
	2019			2018			2017
Tax benefit from continuing operations	$	7,491		$	2,037		$	3,965
State tax benefit from continuing operations		1,214			286			327
Nondeductible expenses		(3	)		(3	)		101
Change in valuation allowance		(5,472	)		(2,127	)		14,295
Effect of tax rate change		866			(851	)		(23,087	)
Effect of foreign tax rate differential		193			183			(56	)
Net operating loss inflation rate adjustment		26			7			16
Foreign branch tax benefit		451			427			389
Net operating loss true-up		37			(11	)		(11,471	)
Taxation election true-up		—			—			15,580
Exploration true-up		(4,904	)		—			—
Other		101			55			(59	)
Total income tax benefit	$	—		$	3		$	—

        The net operating loss inflation rate adjustment relates to historical net operating loss carryforwards in Mexico from 2008 to 2019. These historical carryforwards have been adjusted based upon an inflation factor published by the central bank of Mexico, to reflect changes to the Company's tax basis in the net operating losses carried forward.

F-21

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

11. Income Taxes (Continued)

        The components of the net deferred tax assets (liabilities) are summarized as follows:

	Year Ended December 31,
	2019			2018			2017
Current deferred tax assets
Accrued compensation	$	298		$	232		$	302
Deferred share unit awards		172			170			172
Other accrued liabilities		24			24			—
Charitable contributions		21			19			18
Total current deferred tax assets		515			445			492
Non-current deferred tax assets
Acquisition costs		104			115			131
Mineral properties		3,860			3,774			3,782
Asset retirement obligation		351			320			304
Property, plant and equipment		581			492			421
Exploration		2,515			7,874			8,500
Operating loss carryforward		29,680			26,671			25,003
Foreign branch tax benefit		8,736			2,095			1,454
Foreign exchange gain		17			16			16
Inventory		165			161			165
Stock options		7,089			6,228			5,765
Other		—			9			25
Total non-current deferred tax assets		53,098			47,756			45,566
Valuation allowances		(53,585	)		(48,109	)		(45,982	)
Total deferred tax assets		28			92			76
Deferred tax liabilities
OCI gain on available for sale securities		—			(3	)		—
Prepaid expenses		(28	)		(89	)		(76	)
Total deferred tax liabilities		(28	)		(92	)		(76	)
Net deferred income tax assets (liabilities)	$	—		$	—		$	—

        Based upon the level of taxable income (loss) and projections of future taxable income (loss) over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, and thus has provided a valuation allowance of $53,585, $48,109 and $45,982 against the net deferred tax assets as of December 31, 2019, 2018 and 2017, respectively. If the Company is profitable for a number of years, and the prospects for the realization of the deferred tax assets become more likely than not, the Company will then reverse all or a portion of the valuation allowance that could result in a reduction of future reported income tax expense.

        At December 31, 2019, the Company had $121,609 of net operating loss carryforwards in the United States, of which $102,331 expire at various dates through 2037, and $19,278 may be carried

F-22

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

11. Income Taxes (Continued)

forward indefinitely. There are also $3,635 of net operating loss carryforwards (net of inflation adjustments) in Mexico expiring at various dates through 2029. No assets have been recognized for net operating loss carryforwards where the Company believes it is more likely than not that the net operating losses will not be realized.

        The Company has adopted the provisions of ASC 740-10, Income Taxes. The Company files income tax returns in the U.S. and Mexico. The statute of limitations for tax returns filed in the U.S. and Mexico is three years and five years, respectively, from the date of filing. The Company's 2019, 2018, 2017 and 2016 U.S. tax returns are subject to examinations by U.S. tax authorities until 2023, 2022, 2021 and 2020, respectively. The Company is no longer subject to examinations by Mexico tax authorities for years prior to 2015.

        As of December 31, 2019, the Company has not recognized any increases or decreases in unrecognized tax benefits, as it is more likely than not that all tax positions will be upheld by the taxing authorities. The Company reports tax penalties in income tax expense. No such penalties were recognized during the periods presented.

        Effective January 1, 2017, the Company's Mexico assets and operations are owned by entities that have elected to be treated for United States tax purposes as corporations and, as a result, the taxable income or loss and other tax attributes of such entities are stated separately from the Company's United States assets and operations and are not included in the Company's United States federal consolidated income tax return. The Company's other foreign assets and operations are owned by entities that have elected to be treated for U.S. tax purposes as unincorporated branches of a U.S. holding company and, as a result, the taxable income or loss and other tax attributes of such entities are included in the Company's U.S. federal consolidated income tax return.

        On December 22, 2017, the United States enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Act"). The Act makes broad changes to the United States tax code for corporations, including, but not limited to, (1) reducing the United States federal corporate tax rate from 35% to 21%; (2) allowing immediate deductibility for 100% of expenditures for qualified property through bonus depreciation; (3) eliminating the alternative minimum tax; and (4) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

12. Segment Information

        The Company operates in a single industry as a corporation engaged in the acquisition, development and exploration of silver mineral properties. The Company has mineral property interests in the U.S. and Mexico. The Company's reportable segments are based on the Company's mineral interests and management structure, and include the U.S., Mexico, and Corporate segments. The U.S. segment is maintaining the Sunshine Complex infrastructure. The Mexico segment engages in the

F-23

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

12. Segment Information (Continued)

exploration on the Company's Mexican mineral properties and includes the Company's investment in its LGJV affiliate. Financial information relating to the Company's segments is as follows:

	Year Ended December 31, 2019
	U.S.			Mexico		Corporate			Total
Exploration	$	325		$	923	$	—		$	1,248
Pre-development		2,317			1		—			2,318
General and administrative		1,943			312		2,587			4,842
Amortization		2,336			3		34			2,373
Dilution loss in affiliates		—			—		11,231			11,231
Equity loss in affiliates		—			12,865		—			12,865
Arrangement fees		—			—		2,988			2,988
Net other (income) expense		(10	)		31		(68	)		(47	)
Capital expenditures		534			—		—			534
Total assets		31,475			55,372		67,448			154,295

	Year Ended December 31, 2018
	U.S.			Mexico		Corporate			Total
Exploration	$	794		$	915	$	—		$	1,709
Pre-development		2,527			—		—			2,527
General and administrative		1,775			54		2,567			4,396
Amortization		2,214			17		76			2,307
Equity loss in affiliates		—			464		—			464
Arrangement fees		—			—		283			283
Net other (income) expense		(5	)		16		(33	)		(22	)
Capital expenditures		71			—		—			71
Total assets		33,567			79,869		33,125			146,561

	Year Ended December 31, 2017
	U.S.		Mexico		Corporate			Total
Exploration	$	445	$	735	$	—		$	1,180
Pre-development		2,408		—		—			2,408
General and administrative		1,610		399		4,485			6,494
Amortization		2,334		—		149			2,483
Equity loss in affiliates		—		160		—			160
Net other (income) expense		64		37		(14	)		87
Capital expenditures		330		—		—			330
Total assets		35,961		108,436		11,618			156,015

13. Investment in Affiliates

        During the years ended December 31, 2019, 2018 and 2017 the Company recognized a $12,865, $464 and $160 loss, respectively, on its investment in the LGJV Entities, representing its ownership share of the LGJV Entities' operating results. The combined financial position and results of operations

F-24

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

13. Investment in Affiliates (Continued)

of the LGJV Entities as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017 are as follows:

LOS GATOS JOINT VENTURE
COMBINED BALANCE SHEETS
(in thousands)

	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,302		$	11,231
Receivables		5,655			—
Inventories		11,374			1,886
VAT receivable		50,184			30,853
Restricted cash		—			2,219
Other current assets		1,672			6,747
Total current assets		70,187			52,936
Non-Current Assets
Mine development, net		182,602			99,994
Deferred financing costs		—			76
Property, plant and equipment, net		216,131			150,763
Total non-current assets		398,733			250,833
Total Assets	$	468,920		$	303,769
LIABILITIES AND OWNERS' CAPITAL
Current Liabilities
Accounts payable and other accrued liabilities	$	43,287		$	16,697
Dowa MPR Loan		—			65,670
Related party payable		6,875			1,377
Accrued interest		885			2,692
Equipment loans		6,948			5,227
Total current liabilities		57,995			91,663
Non-Current Liabilities
Dowa Term Loan		217,796			132,066
Working Capital Facility		60,000			—
Equipment loans		12,916			13,494
Reclamation obligations		11,314			10,524
Total non-current liabilities		302,026			156,084
Owners' Capital
Capital contributions		237,905			168,967
Paid-in capital		7,400			1,358
Accumulated deficit		(136,406	)		(114,303	)
Total owners' capital		108,899			56,022
Total Liabilities and Owners' Capital	$	468,920		$	303,769

F-25

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option and stock unit amounts)

13. Investment in Affiliates (Continued)

LOS GATOS JOINT VENTURE
COMBINING STATEMENT OF LOSS
(in thousands)

	Twelve Months Ended December 31,
	2019			2018			2017
Sales	$	36,508		$	—		$	—
Operating expenses
Cost of sales		30,339			—			—
Royalties		184			—			—
Exploration		208			—			—
General and administrative		2,587			83			116
Accretion expense		789			9			17
Depreciation, depletion and amortization		15,460			—			—
Total operating expenses		49,567			92			133
Other expense (income)
Interest expense, net of capitalization		5,107			—			—
Arrangement fee		3,524			—			—
Other expense (income)		239			(53	)		(11	)
Foreign exchange (gain) loss		174			623			112
Total other expense (income)		9,044			570			101
Net loss	$	(22,103	)	$	(662	)	$	(234	)

        Prior to achievement of commercial production in September 2019, some expenses were capitalized to mine development.

14. Subsequent Events

        In March 2020, the Company contributed $2,574 to the LGJV in support of continued operations. In June 2020, the Company contributed and additional $2,574 to the LGJV in support of continued operations.

        On March 30, 2020, in response to the coronavirus pandemic, the Mexico government issued a temporary 30-day suspension of all non-essential activities, which was subsequently extended to May 31, 2020. Accordingly, the LGJV temporarily suspended non-essential activities. The LGJV resumed mining operations in late May 2020 as permitted by the Mexican Government.

        In April 2020, the Company received $567 from a forgivable loan, bearing 1% annual interest, related to the Paycheck Protection Program of the United States' Coronavirus Aid, Relief and Economic Security Act.

        The Company entered into a $15,000 convertible promissory note agreement with Electrum Silver US LLC, in 2020. The convertible promissory note incurs an annual interest of 5% and conversion provides a 20% discount to the next third-party financing share price. The convertible promissory note and any accrued but unpaid interest is due and payable on April 19, 2023, unless converted, exchanged or otherwise paid. As of June 26, 2020, the Company has received $10,000 under the convertible promissory note.

F-26

Independent Auditors' Report

The Board of Managers
Los Gatos Joint Venture:

        We have audited the accompanying combined financial statements of Los Gatos Joint Venture (the Company), which comprise the combined balance sheets as of December 31, 2019 and 2018, and the related combined statements of loss, combined statements of owners' capital, and cash flows for the years then ended, and the related notes to the combined financial statements.

Management's Responsibility for the Financial Statements

        Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

        Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.

        An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

        We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

        In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Los Gatos Joint Venture as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Denver, Colorado
April 1, 2020

F-27

LOS GATOS JOINT VENTURE

COMBINED BALANCE SHEETS

AS OF DECEMBER 31,

(In thousands)

	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,302		$	11,231
Receivables		5,655			—
Inventories		11,374			1,886
VAT receivable		50,184			30,853
Restricted cash		—			2,219
Other current assets		1,672			6,747
Total current assets		70,187			52,936
Non-Current Assets
Mine development, net		182,602			99,994
Deferred financing costs		—			76
Property, plant and equipment, net		216,131			150,763
Total non-current assets		398,733			250,833
Total Assets	$	468,920		$	303,769
LIABILITIES AND OWNERS' CAPITAL
Current Liabilities
Accounts payable and other accrued liabilities	$	43,287		$	16,697
Dowa MPR Loan		—			65,670
Related party payable		6,875			1,377
Accrued interest		885			2,692
Equipment loans		6,948			5,227
Total current liabilities		57,995			91,663
Non-Current Liabilities
Dowa Term Loan		217,796			132,066
Working Capital Facility		60,000			—
Equipment loans		12,916			13,494
Reclamation obligations		11,314			10,524
Total non-current liabilities		302,026			156,084
Owners' Capital
Capital contributions		237,905			168,967
Paid-in capital		7,400			1,358
Accumulated deficit		(136,406	)		(114,303	)
Total owners' capital		108,899			56,022
Total Liabilities and Owners' Capital	$	468,920		$	303,769

See accompanying notes to the combined financial statements.

F-28

LOS GATOS JOINT VENTURE

COMBINED STATEMENTS OF LOSS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands)

	2019			2018
Sales	$	36,508		$	—
Operating expenses
Cost of sales		30,339			—
Royalties		184			—
Exploration		208			—
General and administrative		2,587			83
Accretion expense		789			9
Depreciation, depletion and amortization		15,460			—
Total operating expenses		49,567			92
Other expense (income)
Interest expense, net of capitalization		5,107			—
Arrangement fee		3,524			—
Other expense (income)		239			(53	)
Foreign exchange (gain) loss		174			623
Total other expense (income)		9,044			570
Net loss	$	(22,103	)	$	(662	)

See accompanying notes to the combined financial statements.

F-29

LOS GATOS JOINT VENTURE

COMBINED STATEMENTS OF OWNERS' CAPITAL

(In thousands)

	Capital Contributions		Paid-in Capital			Accumulated Deficit			Total
Balance at December 31, 2017	$	168,967	$	329		$	(113,641	)	$	55,655
Contributions		—		—			—			—
Other		—		84			—			84
Costs paid by investor		—		945			—			945
Net loss		—		—			(662	)		(662	)
Balance at December 31, 2018	$	168,967	$	1,358		$	(114,303	)	$	56,022
Contributions		68,938		—			—			68,938
Other		—		(116	)		—			(116	)
Costs paid by investor		—		6,158			—			6,158
Net loss		—		—			(22,103	)		(22,103	)
Balance at December 31, 2019	$	237,905	$	7,400		$	(136,406	)	$	108,899

See accompanying notes to the combined financial statements.

F-30

LOS GATOS JOINT VENTURE

COMBINED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands)

	2019			2018
Cash flows from operating activities:
Net loss	$	(22,103	)	$	(662	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation, depletion and amortization		15,460			—
Arrangement fee		3,524			—
Accretion		789			9
Other		(116	)		83
Changes in operating assets and liabilities:
VAT receivable		(19,330	)		(27,369	)
Receivables		(5,655	)		—
Inventories		(7,027	)		—
Other current assets		(977	)		—
Accounts payable and other accrued liabilities		13,392			—
Payable to related-party		3,281			—
Accrued interest		2,745			—
Net cash used by operating activities		(16,017	)		(27,939	)
Cash flows from investing activities:
Deposits		1,005			(1,001	)
Other current assets		2,661			(5,684	)
Mine development		(74,630	)		(65,007	)
Purchase of property, plant and equipment		(53,811	)		(93,386	)
Accrued interest		(513	)		—
Restricted cash transfers		2,219			(2,219	)
Net cash used by investing activities		(123,069	)		(167,297	)
Cash flows from financing activities:
Capital contributions		18,200			—
Deferred financing costs		(222	)		(453	)
Equipment loan payments		(6,485	)		(1,486	)
Working Capital Facility borrowings		60,000			—
Dowa MPR Loan payment		(17,336	)		—
Dowa MPR Loan borrowings		—			65,678
Dowa Term Loan borrowings		75,000			135,000
Dowa Term Loan origination cost		—			(4,200	)
Net cash provided by financing activities		129,157			194,539
Net decrease in cash and cash equivalents		(9,929	)		(697	)
Cash and cash equivalents, beginning of period		11,231			11,928
Cash and cash equivalents, end of period	$	1,302		$	11,231
Interest paid	$	3,940		$	—
Supplemental dislosure of noncash transactions:
Accrued interest on debt included in mine development	$	4,213		$	1,858
Accrued interest on debt included in property, plant and equipment	$	4,322		$	2,584
Equipment loan borrowings	$	7,679		$	20,207
Conversion of Dowa MPR Loan to capital contributions	$	50,737		$	—
Conversion of related party accrued interest to outstanding loan balance	$	10,179		$	—
Depreciation expense included in mine development	$	4,589		$	2,266
Mine development costs included in accrued liabilities	$	10,720		$	5,481
Property, plant and equipment included in accrued liabilities	$	10,290		$	5,224
Equity method investee costs incurred by investor	$	2,634		$	945
Deferred financing costs included in PPE and mine development	$	495		$	—

See accompanying notes to the combined financial statements.

F-31

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

1. Description of Business and Basis of Preparation

        These combined financial statements represent the combined financial position and results of operations of the Los Gatos Joint Venture ("LGJV" or "the Company"). Unless the context otherwise requires, references to LGJV or the Company mean the Los Gatos Joint Venture.

        On January 1, 2015, the LGJV was established to develop the Los Gatos Project (LGP) in northern Mexico. The LGJV consists of Minera Plata Real S. de R.L. de C.V. ("MPR"), Operaciones San Jose de Plata S. de R.L. de C.V. and Servicios San Jose de Plata S. de R.L. de C.V. (collectively the "LGJV Entities"). Upon completion of their $50,000 funding to the LGJV, Dowa Metals & Mining, Ltd. ("Dowa") acquired a 30% interest in the LGJV Entities and the right to purchase future zinc-concentrate production at market rates. The remaining 70% interest in the LGJV entities was owned by Sunshine Silver Mining & Refining Corporation ("SSMRC"). The ownership of the LGJV Entities as of December 31, 2019 is 51.5% SSMRC and 48.5% Dowa, see footnote 9 for additional detail on LGJV Entities ownership changes.

        In 2016, the LGJV completed an advanced definition drilling program and began decline development to provide the necessary data to complete a feasibility study. Prior to completing the feasibility study, the Company was in the exploration stage. The January 12, 2017 feasibility study ("Feasibility Study") demonstrated the economic viability of the LGP, and during the first quarter of 2017, the Company commenced the $316,000 LGP development.

        On September 1, 2019, the LGP commenced commercial production of its two concentrate products; a lead concentrate and a zinc concentrate. The Company's lead and zinc concentrates are sold to third-party customers.

2. Summary of Significant Accounting Policies

Risks and uncertainties

        As a mining company, the Company's revenue, profitability and future rate of growth are substantially dependent on prevailing prices for silver, zinc, lead and gold. Historically, the commodity markets have been quite volatile, and there can be no assurance that commodity prices will not be subject to wide fluctuations in the future. A substantial or extended decline in commodity prices could have a material adverse effect on the Company's financial position, results of operations, cash flows, and the quantities of reserves the Company can economically produce. The carrying value of the Company's property, plant and equipment, mine development, inventories and stockpiles are particularly sensitive to the outlook for commodity prices. A substantial or extended decline in the Company's price outlook could result in material impairment charges related to these assets. Additionally, changes in other factors such as changes in mine plans, increases in costs, geotechnical failures, and changes in social, environmental or regulatory requirements can adversely affect the Company's ability to recover its investment in certain assets and result in impairment charges.

        The Company has considered and assessed the risk resulting from its concentrate sales arrangements with its customers. In the event that the Company's relationships with its customers are interrupted for any reason, the Company believes that it would be able to locate another customer to purchase its metals concentrates; however, any interruption could temporarily disrupt the Company's sale of its products and adversely affect operating results.

F-32

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

2. Summary of Significant Accounting Policies (Continued)

Use of estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable given the specific circumstances. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include receivables; inventories; mineral properties; reclamation and closure obligations; valuation allowances for deferred tax assets; depreciation, depletion and accretion and the fair value of financial instruments.

Functional currency and translation of foreign currencies

        The U.S. dollar is the LGJV's functional currency. Monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses reported in foreign exchange (gain) loss in the computation of net loss. Non-monetary assets and liabilities are translated into U.S. dollars at historical exchange rates. Expenses and other income and expense items in foreign currencies are translated into U.S. dollars at average or historical exchange rates.

Cash and cash equivalents

        The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Metal and Materials Inventories

        The Company's inventories include ore, concentrate and operating materials and supplies. The classification of ore and concentrate inventories is determined by the production stage of the ore. All inventories are stated at the lower of cost or net realizable value. Cost is determined using the average cost method for all inventories and includes applicable taxes and freight. Ore inventory represents stockpiled ore that is available for processing. Concentrate inventory represents stockpiled lead or zinc concentrate that is available for shipment or in transit to customers. Ore and concentrate inventories include applicable operating and overhead costs.

Mine development

        The Feasibility Study established LGP's proven and probable reserves in early January 2017. Accordingly, subsequent development costs were capitalized as mine development assets until September 1, 2019 when the LGP achieved production. Subsequent to September 1, 2019, costs incurred to develop the mine are capitalized to mine development assets. Upon the commencement of production, capitalized costs are charged to operations using the units-of-production method in the period the applicable metal reserves are processed over the estimated proven and probable reserve tons directly benefiting from the capital expenditures. The LGJV incurred $7,291 and nil for the years ended December 31, 2019 and 2018, respectively, in depletion expense.

F-33

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

2. Summary of Significant Accounting Policies (Continued)

        Upon abandonment or sale of a mineral property, any remaining capitalized mine development costs relating to such property will be removed from the balance sheet and a gain or loss recognized.

Property, plant and equipment

        Property, plant and equipment are recorded at cost and depreciation is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful lives of plant and equipment and infrastructure range between three years and the end of the proven and probable reserves mine life. The estimated useful lives of furniture, fixtures and computers range from three to ten years.

Impairment of long-lived assets

        Long-lived assets, such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There were no impairments recognized for 2019 or 2018.

Value added tax receivable and payable

        Value added taxes ("VAT") are assessed on purchases of materials, services and sales of products. The Company is entitled to recover the taxes they have paid related to purchases of materials and services. The Company collects VAT when certain products are sold to customers VAT receivables represent refundable value-added taxes paid to the Mexican government on certain transactions in Mexico. The Company records the VAT cash flows as operating activities in the combined statement of cash flows, given the short-term, refundable and operating characteristics of these cash flows.

Reclamation and remediation costs (asset retirement obligations)

        The Company has asset retirement obligations ("ARO") arising from regulatory requirements to perform certain property and asset reclamation activities at the end of the respective asset life. An ARO is recognized when incurred and is initially measured at fair value and subsequently adjusted for accretion expense and changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and amortized over the asset's remaining useful life. The ARO is based on timing of expected spending for an existing environmental disturbance. The Company reviews, on an annual basis, unless otherwise deemed necessary, its reclamation obligation.

F-34

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition

        The Company generates revenue by selling silver-bearing lead and zinc concentrates. Concentrate sales are initially recorded based on 100% of the provisional sales prices, net of estimated treatment and refining charges, when it satisfies the performance obligation of transferring control of the concentrate to the customer. Concentrate revenue is initially recorded on a provisional basis based on historical prices and provisional assays. Final settlement is based on the final assays and an applicable price as determined by a future quotational period at the time of sale. Market changes in the prices of metals between the delivery and final settlement dates will result in adjustments to revenues related to previously recorded sales of concentrate.

Income taxes

        The Company's income tax jurisdiction is Mexico. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company recognizes tax penalties in income tax expense.

Recently issued accounting standards

        In February 2016, the FASB issued ASU 2016-02, "Leases," which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company's fiscal year beginning January 1, 2021. The Company is still assessing the impact of the standard but does not expect there will be a material impact to the Combined Balance Sheet, Combined Statement of Income (Loss) or the Combined Statements of Cash Flows as a result of the adoption of ASU 2016-02. The Company is in the process of assessing the required disclosures of the new standard and expects to provide additional qualitative and quantitative disclosures related to its leasing arrangements upon adoption.

        In December 2019, ASU No. 2019-12 was issued to simplify and enhance accounting for income taxes. This update is effective in fiscal years, beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company is completing its assessment of the impact and anticipated adoption date of this guidance.

F-35

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

3. Sales

        The Company's sales by concentrate for the year ended December 31, are summarized below:

	2019		2018
Lead Concentrate	$	28,437	$	—
Zinc Concentrate		8,071		—
	$	36,508	$	—

4. Inventories

        The Company's inventories as of December 31, are summarized below:

	2019		2018
Ore inventory	$	4,863	$	691
Concentrate inventory		1,096		—
Material and supplies		5,415		1,195
	$	11,374	$	1,886

5. Other Current Assets

        The Company's other current assets as of December 31, are summarized below:

	2019		2018
Prepaid expenses	$	1,432	$	5,761
Deposits and other		240		986
	$	1,672	$	6,747

6. Property, Plant and Equipment, net

        The Company's property, plant and equipment as of December 31, are summarized below:

	2019			2018
Mineral properties	$	853		$	853
Infrastructure & equipment		216,759			138,373
Land		14,422			14,422
Furniture and fixtures		508			365
Property, plant and equipment at cost		232,542			154,012
Less accumulated depreciation		(16,411	)		(3,249	)
Property, plant and equipment, net	$	216,131		$	150,763

Mineral Properties

        The Company conducts exploration activities under mining concessions in Mexico.

F-36

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

6. Property, Plant and Equipment, net (Continued)

        The Company is required to make mineral and concession lease payments to various entities to secure its claims or surface rights. One of these agreements also requires royalty payments based on the production and sale of minerals.

Mining Concessions and Agreement

        In Mexico, mineral concessions from the Mexican government can only be held by Mexican nationals or Mexican-incorporated companies. The concessions are valid for 50 years and are extendable provided the concessions are kept in good standing. For concessions to remain in good standing, a semi-annual fee must be paid to the Mexican government and a report must be filed each year which covers the work accomplished on the property during the previous year. These concessions may be cancelled without penalty with prior notice to the Mexican government.

        MPR is the concession holder of a series of mineral concessions granted by the Mexican government. The rights to certain concessions are held through exploration agreements with purchase options or a finder's fee agreement, as discussed below:

La Cuesta International S.A. de C.V. (La Cuesta)

        The Company is required to make quarterly advance royalty payments and is required to pay a production royalty of a) 2% net smelter return on production from the concession until all payments reach $10,000 and b) 0.5% net smelter return on production from the concession after total payments have reached $10,000 and c) 0.5% net smelter return on production from other property within a one-kilometer boundary of the Los Gatos concession. After total payments reach $15,000, the Los Gatos concession ownership will be transferred to the Company. During the pre-production phase, the Company is obligated to complete a minimum of $100 of exploration and development work annually on the concession. The agreement has no expiration date; however, the Company may terminate the agreement upon a 30-day notice. Under this agreement, the first royalty payment is due on or before March 31, 2021, net of advance royalty payments. The Company has remitted $535 in advance royalty payments under this contract through December 31, 2019.

        As of December 31, 2019, the Company's minimum La Cuesta obligation is summarized in the table below:

2020	$	100
2021		100
2022		100
2023		100
2024		100
Thereafter		13,965
Total	$	14,465

        The Company paid $45 and $40 for this obligation for the years ended December 31, 2019 and 2018, respectively.

F-37

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

7. Accounts Payable and Other Accrued Liabilities

        The Company's accounts payable and other accrued liabilities as of December 31, are summarized below:

	2019		2018
Accounts payable	$	29,669	$	5,520
Accrued expenses		12,580		10,951
Accrued payroll and taxes		1,038		226
Total accounts payable and accrued liabilities	$	43,287	$	16,697

8. Related-Party Transactions

        Effective January 1, 2015, the LGJV has a management services agreement with SSMRC whereby, SSMRC provides certain consulting and administrative services. The LGJV incurred $5,100 and $3,950 for the years ended December 31, 2019 and 2018, respectively, for these services. Certain expenses incurred by the owners on behalf of the LGJV are reimbursed.

9. Related Party Debt

        On July 11, 2017, the Company entered into a loan agreement ("Term Loan") with Dowa whereby the Company can borrow up to $210,000 for LGP development, with a maturity date of December 29, 2027. Interest on this loan accrues daily at LIBOR plus 2.35%, but the interest is added to the amount borrowed for repayment monthly until December 29, 2019. A $4,200 fee was paid to Dowa during 2018 upon the loan closing. Commencing June 30, 2021, 14 consecutive semi-annual equal payments of the aggregate principal plus accrued interest on the payment date begin. The Term Loan also requires accelerated principal payments equal to 70% of excess cash flows (as defined) from the LGP. As of December 31, 2019, the Company had $221,900 outstanding, including $11,900 of interest, under the Term Loan. In early 2019, the Company borrowed the remaining $75,000 available under the Term Loan. As of December 31, 2018, the Company had $137,300 outstanding, including $2,300 of interest, under the Term Loan. Prior to production commencing in September 2019, $7,100 of interest was capitalized to Mine Development or Property, Plant and Equipment. Subsequent to production, $3,400 of interest was expensed. During 2018, all interest was capitalized to Mine Development or Property, Plant and Equipment.

        On January 23, 2018, the Company entered into a loan agreement ("Dowa MPR Loan") whereby the Company could borrow up to $65,000 for LGP development. Interest on this loan accrues daily at LIBOR plus 1.5%. but the interest is added to the amount borrowed. All interest was capitalized to Mine Development or Property, Plant and Equipment. The amount borrowed, including accrued and unpaid interest, was due the earlier of June 30, 2019, or upon substantial completion of the LGP development. If the Dowa MPR Loan was not repaid by the maturity date, Dowa could elect to convert all or a portion of SSMRC's portion of the outstanding Dowa MPR Loan, including accrued interest, to additional equity in the LGJV Entities at 170% of SSMRC's portion of the outstanding balance ("Additional Equity"). If SSMRC's ownership in the LGJV Entities was diluted, for two years from the maturity date, SSMRC can repurchase the Additional Equity for 170% of such value plus all costs and expenses incurred by Dowa to acquire and hold the Additional Equity. In May 2019, SSMRC

F-38

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

9. Related Party Debt (Continued)

contributed $18,200 to OSJ to provide funding for a partial repayment of principal and interest related to the Dowa MPR Loan. In May 2019, the Dowa MPR Loan was fully extinguished with a principal and interest payment of $18,200 and the conversion of the remaining principal and interest of $50,737 to additional Dowa ownership in the LGJV entities. Subsequent to this transaction the ownership of the LGJV entities is 51.5% SSMRC and 48.5% Dowa.

        On May 30, 2019, the LGJV entered into a working capital facility agreement ("WCF") with Dowa whereby the LGJV could borrow up to $60,000 to fund the working capital and sustaining capital requirements of the LGP. Interest on the WCF accrues daily at LIBOR plus 3.0%. The maturity date of the WCF is June 28, 2021. As of December 31, 2019, the LGJV had $60,000 of principal and $8 of accrued interest outstanding under this facility. The Company paid interest of $1,419 under this facility for the year ended December 31, 2019.

        SSMRC incurs certain fees on behalf of the LGJV entities related to the Term Loan and WCF. Prior to production, these fees were capitalized, subsequent to production, these fees were expensed.

        Scheduled minimum debt repayments are as follows for the year ending December 31:

2020	$	6,948
2021		98,780
2022		37,337
2023		32,277
2024		31,826
Thereafter		95,478
	$	302,647

10. Owners' Capital

        During 2019, Dowa and SSMRC, contributed $50,737 and $18,200, respectively, as owners' capital to the LGJV as a result of the extinguishment of the Dowa MPR Loan. As of December 31, 2019, the ownership of the LGJV entities was 51.5% SSMRC and 48.5% Dowa. As of December 31, 2018, the ownership of the LGJV entities was 70% SSMRC and 30% Dowa.

11. Asset Retirement Obligations

        In 2015, the Company recognized an ARO related to the work performed at the LGP. The Company estimated the present value of the estimated future cash flows required to revegetate the disturbed areas and perform any required monitoring. The Company used a discount rate and interest rate of 9% and 1%, respectively, to calculate the present value of this obligation, related to the disturbance of land around the mine portal, waste rock dump and road to the explosives storage area.

        In 2018, the Company recognized an ARO related to the additional development work performed at the LGP. The Company estimated the present value of the estimated future cash flows required to reclaim the disturbed areas and perform any required monitoring. The Company used a discount rate and interest rate of 7.5% and 3%, respectively, to calculate the present value.

F-39

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

11. Asset Retirement Obligations (Continued)

        The Company recorded accretion expense related to the ARO of $790 and $9 for the years ended December 31, 2019 and 2018, respectively. The following table summarizes activity in the Company's ARO as of December 31:

	2019		2018
Balance, beginning of period	$	10,524	$	207
Accretion expense		790		9
ARO additions		—		10,308
Balance, end of period	$	11,314	$	10,524

12. Fair Value Measurements

        The Company establishes a framework for measuring the fair value of financial assets and liabilities and nonfinancial assets and liabilities which are measured at fair value on a recurring (annual) basis in the form of a fair value hierarchy that prioritizes the inputs into valuation techniques used to measure fair value into three broad levels. This hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs. Further, financial assets and liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

        Level 1:    Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

        Level 2:    Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

        Level 3:    Unobservable inputs due to the fact there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability.

Financial Assets and Liabilities

        At December 31, 2019 the Company's financial instruments consist of cash and cash equivalents, receivables, restricted cash, other current assets, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate fair value due to their short maturities.

        The following table details the fair value of the Company's debt obligations as of December 31, 2019 and 2018 and are included in Level 2 of the fair value hierarchy. The Term Loan is carried at amortized cost. The fair value of the WCF approximates carrying value as the liability is secured, has a variable interest rate, and lacks credit concerns. The carrying value of the equipment loans approximate fair value as the liability is secured by the underlying equipment, guaranteed by SSMRC, and lacks

F-40

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

12. Fair Value Measurements (Continued)

significant credit concerns. The fair value of the Term Loan was estimated using observable inputs directly related to the obligations. The following table summarizes the fair value as of December 31:

	2019		2018
Term Loan(1)	$	221,929	$	136,750
WCF		60,000		—
Equipment Loans		19,864		18,721
	$	301,793	$	155,471

(1)

Net of unamortized debt discount of $4,133 and $4,684 as of December 31, 2019 and 2018, respectively.

Non-Financial Assets and Liabilities

        The Company discloses and recognizes its non-financial assets and liabilities, such as ARO, at fair value on a non-recurring basis. The estimated fair value for these non-financial assets and liabilities are classified as Level 3 of the fair value hierarchy, as the valuation was determined based on internally developed assumptions that market participants would use in the pricing of such liabilities without observable inputs and no market activity.

13. Commitments and Contingencies

        In determining accruals and disclosures with respect to loss contingencies, the Company will charge to income an estimated loss if information available prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Legal expenses associated with the commitments and contingencies are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the combined financial statements when it is at least reasonably possible that a material loss could be incurred.

        The Company's mining, development and exploration activities are subject to various laws, regulations and permits governing the protection of the environment. These laws, regulations and permits are continually changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws, regulations and permits, but cannot predict the full amount of such future expenditures.

        From time to time, the Company may be involved in legal proceedings related to its business. Management does not believe that adverse decisions in any pending or threatened proceeding or that amounts that may be required to be paid by reason thereof will have a material adverse effect of the Company's combined financial condition or results of operations.

14. Equipment Loans

        During 2019 and 2018, the LGJV Entities entered into equipment loan agreements, with repayment over four years at interest rates ranging from 5.76% to 8.67%, to finance a portion of

F-41

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

14. Equipment Loans (Continued)

mining equipment purchases. As of December 31, 2019, and 2018, the Company had outstanding loans of $19,915 and $18,721, respectively, and incurred $1,647 and $607 of interest, respectively. Prior to production and during 2018 all interest was capitalized to Property, Plant and Equipment. Subsequent to production in September 2019, all interest on equipment was expensed. SSMRC has guaranteed the payment of all obligations, including accrued interest, under the equipment loan agreements.

15. Income Taxes

        The combined loss before income taxes in Mexico is $22,103 and $662 for the years ended December 31, 2019 and 2018, respectively. The combined current and deferred income tax expense for the years ended December 31, 2019 and 2018 was nil.

        A reconciliation of the actual income tax expense (benefit) and the tax computed by applying the Mexico federal rate (30%) to the loss before income taxes for the year ended December 31, is as follows:

	2019			2018
Tax benefit from continuing operations	$	(6,631	)	$	(199	)
Nondeductible Expenses		2,244			1,207
Change in Valuation Allowance		3,773			16,052
NOL inflation adjustment		41			(17,060	)
NOL expiration		574			—
Total income tax expense (benefit)	$	—		$	—

        The net operating loss (NOL) inflation rate adjustment relates to historical net operating loss carryforwards in Mexico from 2007 to 2019. These historical carryforwards have been inflation-adjusted based upon an inflation factor published by the central bank of Mexico, as any inflationary adjustment will impact the Company's basis in the net operating losses during the carryforward period.

F-42

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

15. Income Taxes (Continued)

        A summary of the components of the net deferred tax assets for the year ended December 31, is as follows:

	2019			2018
Deferred tax assets
Accrued Expenses	$	112		$	105
Exploration and Development		8,451			10,096
Operating loss carryforward		35,589			31,685
NOL, inflation adjustment		5,838			4,412
Valuation allowances		(49,567	)		(45,794	)
Total deferred tax assets		423			504
Deferred tax liabilities
Prepaid expenses		(103	)		(292	)
Fixed Assets		(320	)		(212	)
Deferred tax liabilities		(423	)		(504	)
Total deferred tax liability		(423	)		(504	)
Net deferred income tax assets (liabilities)	$	—		$	—

        Based upon the level of taxable income (loss) and projections of future taxable income (loss) over the periods which the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, and thus has recorded a valuation allowance against the net deferred tax asset balance of $49,567. If the Company is profitable for a number of years and prospects for the realization of the deferred tax assets are more likely than not, the Company will then reverse its valuation allowance and credit income tax expense.

        At December 31, 2019, the Company had $138,089 of net operating loss carryforwards in Mexico (including inflation adjustments) which expire at various dates through 2029. The statute of limitations for tax returns filed in Mexico is five years from the date of filing. The tax returns of the Company are no longer subject to examinations by Mexican tax authorities for years prior to 2015.

        As of December 31, 2019, the Company has not recorded any unrecognized tax benefits, as it is more likely than not that all tax positions have a high probability of being upheld by the taxing authorities. The Company recognizes penalties and accrued interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized.

16. Subsequent Events

        On March 30, 2020, in response to the coronavirus pandemic, the Mexico government issued a temporary 30-day suspension of all non-essential activities ("Mexico Advisory"). Accordingly, the Company will temporarily suspend the non-essential LGJV activities. The Company will be able to maintain essential activities during the suspension with its existing cash, receivables and, if necessary, additional owner capital contributions.

F-43

LOS GATOS JOINT VENTURE

NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share and option amounts, tonnes or as otherwise noted)

16. Subsequent Events (Continued)

        Due to the recent declines in the silver and zinc prices, the Company has developed an optimized mining and processing plan ("Optimized Plan") to be implemented in 2020. Should silver and zinc prices remain relatively low at the expiration of the Mexico Advisory, the Company expects to begin implementing the Optimized Plan. The Optimized Plan processes higher-grade ore, at a slightly lower throughput, to cover operating costs while metals prices remain low. The Optimized Plan provides flexibility to return to design production rates as metal prices improve.

        There are no other events or transactions requiring recognition in these combined financial statements, through April 1, 2020.

F-44

SUNSHINE SILVER MINING & REFINING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except for share and per share amounts)

	June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	1,954		$	9,085
Materials and supplies inventory		108			103
Deferred financing costs		2,514			1,777
Related party receivables		9,755			6,422
Other current assets		1,123			1,068
Total current assets		15,454			18,455
Non-Current Assets
Investment in affiliates		91,452			105,396
Metals inventory		250			250
Property, plant and equipment, net		28,991			30,194
Total Assets	$	136,147		$	154,295
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other accrued liabilities	$	3,049		$	3,465
Related-party convertible note		10,000			—
Non-Current Liabilities
Reclamation obligations		1,494			1,439
Shareholders' Equity
Common Stock, $0.001 par value; 100,000,000 shares authorized; 80,646,832 shares outstanding as of June 30, 2020 and December 31, 2019		80			80
Paid-in capital		378,099			375,921
Accumulated deficit		(255,548	)		(225,583	)
Treasury stock, at cost, 289,177 shares as of June 30, 2020 and December 31, 2019		(1,027	)		(1,027	)
Total shareholders' equity		121,604			149,391
Total Liabilities and Shareholders' Equity	$	136,147		$	154,295

See accompanying notes to the condensed consolidated financial statements.

F-45

SUNSHINE SILVER MINING & REFINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

(In thousands, except for share and per share amounts)

	Six Months Ended June 30,
	2020			2019
Expenses
Exploration	$	598		$	527
Pre-development		1,048			1,140
General and administrative		3,257			2,689
Amortization		1,203			1,238
Total expenses		6,106			5,594
Other expense (income)
Dilution loss on affiliates		—			11,231
Equity loss in affiliates		21,516			311
Arrangement fees		2,285			895
Interest expense		43			—
Other income		(9	)		(15	)
Foreign exchange loss		24			6
Net other expense		23,859			12,428
Net loss	$	29,965		$	18,022
Other comprehensive loss
Unrealized loss on securities, net of tax		—			5
Comprehensive loss	$	29,965		$	18,027
Net loss per share:
Basic and diluted	$	0.37		$	0.24
Weighted average shares outstanding:
Basic and diluted		81,011,188			75,050,171

See accompanying notes to the condensed consolidated financial statements.

F-46

SUNSHINE SILVER MINING & REFINING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands, except for share amounts)

	Number				Amount
	Common Stock		Treasury Stock		Common Stock		Treasury Stock			Paid-in Capital		Accumulated Deficit			Other Comprehensive Loss			Total
Balance at December 31, 2019		80,646,832		289,177	$	80	$	(1,027	)	$	375,921	$	(225,583	)	$	—		$	149,391
Stock-based compensation		—		—		—		—			2,117		—			—			2,117
Deferred share unit compensation		—		—		—		—			61		—			—			61
Net loss		—		—		—		—			—		(29,965	)		—			(29,965	)
Balance at June 30, 2020		80,646,832		289,177		80		(1,027	)		378,099		(255,548	)		—			121,604
Balance at December 31, 2018		73,902,522		289,177	$	74	$	(1,027	)	$	331,802	$	(187,765	)	$	(32	)		143,052
Issuance of common stock		4,244,310		—		4		—			25,462		—			—			25,466
Stock-based compensation		—		—		—		—			1,722		—			—			1,722
Deferred share unit compensation		—		—		—		—			316		—			—			316
Unrealized loss on investments, net of tax		—		—		—		—			—		—			(5	)		(5	)
Other		—		—		—		—			34		—			—			34
Net loss		—		—		—		—			—		(18,022	)		—			(18,022	)
Balance at June 30, 2019		78,146,832		289,177		78		(1,027	)		359,336		(205,787	)		(37	)		152,563

See accompanying notes to the condensed consolidated financial statements.

F-47

SUNSHINE SILVER MINING & REFINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Six Months Ended June 30,
	2020			2019
OPERATING ACTIVITIES
Net loss	$	(29,965	)	$	(18,022	)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization		1,203			1,176
Dilution loss on affiliate		—			11,231
Accretion expense		55			47
Stock-based compensation expense		2,117			1,722
Equity loss in affiliates		21,516			311
Other		—			7
Changes in operating assets and liabilities:
Other current assets		(55	)		167
Receivables from related-parties		(3,332	)		(395	)
Accounts payable and other accrued liabilities		(1,071	)		(516	)
Materials and supplies inventory		(5	)		(1	)
Net cash used by operating activities		(9,537	)		(4,273	)
]INVESTING ACTIVITIES
Purchase of property, plant and equipment		—			(427	)
Investment in affiliates		(7,573	)		(19,149	)
Net cash used by investing activities		(7,573	)		(19,576	)
FINANCING ACTIVITIES
Related-party convertible debt		10,000			—
Payroll Protection Program loan		567			—
Deferred financing costs		(588	)		—
Issuance of common stock		—			25,466
Net cash provided by financing activities		9,979			25,466
Net increase (decrease) in cash and cash equivalents		(7,131	)		1,617
Cash and cash equivalents, beginning of period		9,085			3,457
Cash and cash equivalents, end of period	$	1,954		$	5,074
Supplemental disclosure of noncash transactions:
Deferred financing costs included in accounts payable and accrued liabilities	$	149		$	—

See accompanying notes to the condensed consolidated financial statements.

F-48

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, option, and stock unit amounts)

1. Description of Business and Basis of Preparation of Financial Statements

        These financial statements represent the consolidated financial position and results of operations of Sunshine Silver Mining & Refining Corporation and its subsidiaries ("SSMRC" or "the Company"). Unless the context otherwise requires, references to Sunshine Silver or the Company mean the Sunshine Silver Mining & Refining Corporation and its consolidated subsidiaries.

United States—Sunshine Complex

        The Company has conducted an advanced exploration drilling program and a rehabilitation program to improve certain mining infrastructure at the Sunshine Mine. The Sunshine Complex, located in the Coeur d'Alene Mining District in Idaho, is comprised of the Sunshine Mine and the Sunshine Big Creek Refinery. The Sunshine Mine is currently on care and maintenance, with a continued but reduced program of infrastructure improvement. A Sunshine Mine preliminary economic assessment was completed in December 2012, and subsequently updated in January 2020. On October 10, 2013, the Company purchased the Sunshine Big Creek Refinery ("Refinery"). The Refinery is currently on care and maintenance.

Mexico—Los Gatos Project

        The Company's primary Mexico efforts are focused on the operation of the Los Gatos Joint Venture ("LGJV") in Chihuahua Mexico. On January 1, 2015, the Company entered into the LGJV to develop the Los Gatos project ("LGP") with Dowa Metals and Mining Co., Ltd. ("Dowa"). The LGJV operating entities consist of Minera Plata Real S. de R.L. de C.V ("MPR"), Operaciones San Jose del Plata S. de R.L. de C.V. ("OSJ") and Servicios San Jose del Plata S. de R.L. de C.V. (collectively the "LGJV Entities"). The LGJV completed an advanced definitional drilling and decline development program in 2016 and completed a feasibility study in January 2017. Dowa completed its $50,000 funding requirement on April 1, 2016; thereby acquiring an initial 30% interest in the LGJV and the right to purchase future zinc-concentrate production at market rates. In May 2019, Dowa increased its ownership interest to 48.5% through the conversion of the Dowa MPR Loan to equity, see Note 11 for further discussion. The LGJV ownership is currently 51.5% SSMRC and 48.5% Dowa.

        On September 1, 2019, the LGP commenced commercial production of its two concentrate products; a lead concentrate and a zinc concentrate. The LGP's lead concentrate is sold to customers within the country of Mexico while the LGP's zinc concentrate is sold to Dowa or sold to a customer within the country of Mexico.

        On March 30, 2020, in response to the coronavirus pandemic, the Mexican government issued a temporary 30-day suspension of all non-essential activities, which was subsequently extended to May 31, 2020. Accordingly, the LGJV temporarily suspended non-essential activities. The LGJV resumed mining operations in late May 2020 as permitted by the Mexican Government.

        The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a history of operating losses and cash outflows from operations, which are expected to continue through at least 2021. Management evaluates whether conditions or events raise substantial doubt about the Company's ability to continue as a going concern within one year after the date the consolidated interim financial statements are issued. In performing this assessment,

F-49

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

1. Description of Business and Basis of Preparation of Financial Statements (Continued)

management considered the risks associated with its ongoing ability to fund the Company's existing operations, specifically its holding costs at the Sunshine Complex, general and administrative expenses, and the Company's obligations related to the LGJV, which includes $45 million in capital contributions to the LJGV in June 2021. The Company has received a financial support commitment for $18,000 from Electrum its primary shareholder, which matures on June 25, 2021. Based on the Company's current cash flow forecasts, there is an expected cash shortfall within one year of the issuance date of the interim financial statements. As a result, the Company will need to raise additional funds through the issuance of debt or equity to refinance or otherwise retire obligations, in order to satisfy the guarantee of the LGJV Working Capital Facility (WCF) and LGJV Term Loan (Term Loan) and fund its operations. The Company is currently preparing for an IPO and expects the proceeds to be sufficient to meet its obligations through at least September 2021. However, the ability to raise capital is dependent on certain matters that are outside of the Company's control. Therefore, there is substantial doubt about the Company's ability to continue as a going concern through September 2021, and the Company may not be able to maintain its 51.5% LGJV ownership. The consolidated financial statements do not include any adjustments that might result from an outcome of this uncertainty.

Mexico—Exploration

        The Company's other regional Mexico exploration efforts are conducted through its wholly-owned subsidiary, Minera Luz del Sol S. de R.L. de C.V. ("MLS").

2. Summary of Significant Accounting Policies

        The accompanying condensed consolidated financial statements at June 30, 2020 and for the six-month periods ended June 30, 2020 and 2019 are unaudited, but include all adjustments, consisting of normal recurring entries, which we believe to be necessary for a fair presentation for the dates and periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2019.

        We disclosed in our consolidated financial statements for the year ended December 31, 2019, those accounting policies that we consider significant in determining our results of operations and financial position. There have been no material changes to, or in the application of, the accounting policies previously identified and described in our consolidated financial statements for the year ended December 31, 2019.

        There have been no accounting pronouncements during the six months ended June 30, 2020, which we expect to have a material impact on our financial statements.

F-50

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

3. Other Current Assets

	June 30, 2020		December 31, 2019
Value added tax receivable	$	238	$	213
Restricted cash		466		466
Prepaid expenses		390		359
Deposits and other		29		30
Total other current assets	$	1,123	$	1,068

4. Property, Plant and Equipment, net

	June 30, 2020			December 31, 2019
Mineral properties(1)	$	18,203		$	18,203
Plant and equipment		13,621			13,621
Land		1,814			1,814
Buildings, infrastructure and improvements		16,798			16,798
Furniture, fixtures and computers		1,565			1,565
Property, plant and equipment at cost		52,001			52,001
Less accumulated amortization		(23,010	)		(21,807	)
Property, plant and equipment, net	$	28,991		$	30,194

(1)

No amortization is currently being recognized on the Sunshine Mine mineral properties as the Company has not established proven and probable reserves, the mine has not yet been placed back in service, and there is no basis over which to amortize these costs.

Mineral Properties

        The Company conducts exploration activities on patented and unpatented mining claims in the United States and under mining concessions in Mexico.

        The Company is required to make mineral and concession lease payments to various entities to secure the appropriate claims or surface rights. Certain of these agreements also have royalty payments that are triggered when the Company produces and sells minerals. Since no Company assets are in production, the Company is not currently paying any royalties based on production or sales.

F-51

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

5. Accounts Payable and Other Current Liabilities

	June 30, 2020		December 31, 2019
Accounts payable	$	129	$	270
Accrued expenses		1,488		1,724
Paycheck Protection Program loan		567		—
Accrued compensation		865		1,471
Total accounts payable and other current liabilities	$	3,049	$	3,465

        In April 2020, the Company received $567 under a forgivable loan, bearing 1% annual interest, related to the Paycheck Protection Program ("PPP"). The PPP, established as part of the United States' Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), provides loans to qualifying businesses for amounts up to 2.5 times the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.

        The Company believes it used the loan proceeds for purposes consistent with the PPP. While the Company currently believes that its use of the loan proceeds has met the conditions for forgiveness of the loan, the Company cannot guarantee forgiveness of the loan, in whole or in part. Should the loan not be forgiven, the Company intends to repay the loan within one year.

6. Related-Party Convertible Notes

        The Company entered into convertible promissory note agreements with Electrum Silver US LLC, during the second quarter of 2020, to borrow up to $15,000. The convertible promissory notes bear a 5% annual interest rate. Upon the Company issuing common stock in a qualified financing, as defined, prior to April 19, 2023, the principal amount then outstanding and accrued but unpaid interest under the promissory notes will automatically convert into common stock of the Company at a price per share equal to the lesser of (A) 80% of the price per share of the shares that are issued and sold by the Company in the qualified financing or (B) $7.50 per share. The convertible promissory notes and any accrued but unpaid interest is due and payable on April 19, 2023, unless converted, exchanged or otherwise paid. As of June 30, 2020, the Company has borrowed $10,000 under the convertible promissory note agreements.

7. Related-Party Transactions

Service Agreement

        The Company has a management agreement with the LGJV to provide certain consulting and administrative services. The Company received $0 and $1,050 from the LGJV under this agreement for the six months ended June 30, 2020 and 2019, respectively. The Company had receivables from the LGJV under this agreement of $6,150 and $4,050 as of June 30, 2020 and December 31, 2019, respectively. The Company also incurs certain LGJV costs that are subsequently reimbursed by the LGJV.

F-52

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

8. Stockholders' Equity

Stock Option Transactions

        The Company's stock options have a contractual term of 10 years and entitle the holder to purchase shares of the Company's common stock. The options granted to employees and LGJV personnel have a requisite service period of four years. The options granted to non-employee directors have a requisite service period of one year.

        The Company granted 1,596,667 and 1,203,000 stock options during the six months ended June 30, 2020 and 2019, respectively.

        Total unrecognized stock-based compensation expense as of June 30, 2020 was $7,751, which is expected to be recognized over a weighted average period of 2.1 years. The weighted-average grant-date fair value and stock-based compensation expense for the six months ended June 30, 2020 and 2019 are summarized as follows:

	Six Months Ended June 30,
	2020		2019
Weighted-average grant-date fair value	$	3.31	$	3.50
Stock based compensation expense	$	2,118	$	1,729

        Stock option activity for the six months ended June 30, 2020 is summarized in the following tables:

Director and Employee Options	Shares		Weighted-Average Exercise Price
Outstanding at December 31, 2019		7,102,361	$	7.20
Granted		1,596,667	$	6.00
Exercised		—	$	—
Forfeited		—	$	—
Outstanding at June 30, 2020		8,699,028	$	6.98
Vested at June 30, 2020		5,842,395	$	7.63

LGJV Personnel Options	Shares		Weighted-Average Exercise Price
Outstanding at December 31, 2019		109,190	$	3.68
Granted		—	$	—
Exercised		—	$	—
Forfeited		—	$	—
Outstanding at June 30, 2020		109,190	$	3.68
Vested at June 30, 2020		104,190	$	3.64

F-53

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

8. Stockholders' Equity (Continued)

Director Share Unit Transactions

        DiSUs are awarded to Directors at the discretion of the Board of Directors. The DiSUs are fully vested on the grant date and each DiSU entitles the holder to receive one share of the Company's common stock upon departure from the Company. The DiSU fair value equaled the Company's common stock fair value on the grant date.

        At June 30, 2020, there were 365,421 DiSUs outstanding. The Company granted 10,206 and 55,963 DiSUs during the six months ended June 30, 2020 and 2019, respectively.

9. Asset Retirement Obligations

        The Company recorded accretion expense related to the asset retirement obligation ("ARO") of $55 and $47 for the six months ended June 30, 2020 and 2019, respectively. The following table summarizes activity in the Company's ARO:

	June 30, 2020		December 31, 2019
Balance, beginning of period	$	1,439	$	1,337
Accretion expense		55		102
Balance, end of period	$	1,494	$	1,439

        The Company is required to provide the applicable governmental agencies with financial assurances related to its closure and reclamation obligations. At June 30, 2020 and December 31, 2019, the Company had restricted cash in the form of a certificate of deposit totaling $275 as collateral for a letter of credit issued by a financial institution as security to a governmental agency for certain of the Company's reclamation obligations.

10. Fair Value Measurements

        The Company establishes a framework for measuring the fair value of financial assets and liabilities and nonfinancial assets and liabilities, which are measured at fair value on a recurring (annual) basis in the form of a fair value hierarchy that prioritizes the inputs into valuation techniques used to measure fair value into three broad levels. This hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs. Financial assets and liabilities are classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

        Level 1:    Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

        Level 2:    Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

F-54

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

10. Fair Value Measurements (Continued)

        Level 3:    Unobservable inputs due to the fact there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability.

Financial Assets and Liabilities

        At June 30, 2020 and December 31, 2019, the Company's financial instruments consist of cash and cash equivalents, restricted cash, receivables, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate fair value due to their short maturities.

Non-Financial Assets and Liabilities

        The Company discloses and recognizes its non-financial assets and liabilities, such as ARO, at fair value on a non-recurring basis. The estimated fair value for these non-financial liabilities are classified as Level 3 of the fair value hierarchy, as the valuation are determined based on internally developed assumptions that market participants would use in the pricing of such assets without observable inputs and no market activity.

        The Company recorded its initial investment in affiliates at fair value. The estimated fair value for this non-financial asset is classified as Level 3 of the fair value hierarchy, as the valuation was determined based on internally developed assumptions with few observable inputs and no market activity.

11. Commitments, Contingencies and Guarantees

        In determining its accruals and disclosures with respect to loss contingencies, the Company will charge to income an estimated loss if information available prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Legal expenses associated with the commitments and contingencies are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.

        The Company's mining and exploration activities are subject to various laws, regulations and permits governing the protection of the environment. These laws, regulations and permits are continually changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws, regulations and permits, but cannot predict the full amount of such future expenditures.

        In July 2017, the LGJV Entities entered into a loan agreement (the "Term Loan") with Dowa whereby the LGJV Entities could borrow up to $210,000 for LGP development, with a maturity date of December 29, 2027. Interest on the Term Loan accrues daily at LIBOR plus 2.35%, with the interest to be added to the amount borrowed until commencement of production. During 2018, the LGJV paid Dowa a $4,200 closing fee. Commencing June 30, 2021, 14 consecutive semi-annual equal payments of the aggregate principal and capitalized interest begin. The Company is required to pay an arrangement fee on the borrowing, calculated as 70%, of 1% of the outstanding principal balance, two business days prior to June 30 and December 31 each fiscal year until maturity, commencing after the initial

F-55

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

11. Commitments, Contingencies and Guarantees (Continued)

drawdown which occurred in July 2018. The Term Loan also requires additional principal payments equal to 70% of excess cash flows (as defined). As of June 30, 2020, the LGJV had $222,783 outstanding under the Term Loan.

        On January 23, 2018, the LGJV entered into a loan agreement (the "Dowa MPR Loan") with Dowa whereby the LGJV could borrow up to $65,700 to continue LGP development. Interest on this loan accrued daily at LIBOR plus 1.5% and was added to the amount borrowed. The amount borrowed plus accrued interest was due the earlier of June 30, 2019, or upon LGP's substantial completion. If the Company's 70% portion of the Dowa MPR Loan was not repaid in full on or before the due date, Dowa could elect to convert all or a portion of the principal amount into additional LGJV ownership at a favorable conversion rate.

        The Company contributed $18,200 to the LGJV in May 2019 to provide funding for a partial repayment of principal and interest related to the Dowa MPR Loan. In late May 2019, the Dowa MPR Loan was fully extinguished with a cash payment of $18,200 and the conversion of the remaining $50,737 of principal and interest. The conversion of the remaining principal and interest increased Dowa's ownership in the LGJV entities to 48.5%. At June 30, 2020, the ownership of the LGJV entities is 51.5% SSMRC and 48.5% Dowa. Due to the LGJV ownership dilution, the Company recognized a dilution loss on affiliates of $11,231 in May 2019. SSMRC has until June 30, 2021 to repurchase the 18.5% interest for SSMRC's unpaid portion of the Dowa MPR loan amount, plus a 70% penalty and any Dowa holding costs of this incremental interest.

        On May 30, 2019, the LGJV entered into a working capital facility agreement (the "WCF") with Dowa whereby the LGJV could borrow up to $60,000 to fund the working capital and sustaining capital requirements of the LGP. Interest on this loan accrues daily at LIBOR plus 3.0% and all outstanding principal and interest matures on June 28, 2021. The Company is required to pay an arrangement fee on the borrowing, calculated as 15.0% per annum of 70.0% of the average daily principal amount outstanding under the WCF during such fiscal quarter. As of June 30, 2020, the LGJV had $60,000 outstanding under the WCF.

        The Company has guaranteed 70% of the outstanding principal and accrued interest of the Term Loan and the WCF in the event of default by the LGJV. The Company has guaranteed the payment of all obligations, including accrued interest, under the LGJV equipment loan agreements

12. Segment Information

        The Company operates in a single industry as a corporation engaged in the acquisition, exploration and development of silver mineral properties. The Company has mineral property interests in the U.S. and Mexico. The Company's reportable segments are based on the Company's mineral interests and management structure, and include the U.S., Mexico, and Corporate segments. The U.S. segment is improving the mining infrastructure, maintaining the Sunshine Mine facilities, and maintaining the

F-56

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

12. Segment Information (Continued)

Sunshine Big Creek Refinery. The Mexico segment engages in the development and exploration on the Company's Mexican mineral properties.

	Six Months Ended June 30, 2020									Six Months Ended June 30, 2019
	U.S.			Mexico		Corporate		Total		U.S.			Mexico		Corporate			Total
Exploration	$	216		$	382	$	—	$	598	$	158		$	369	$	—		$	527
Pre-development		1,048			—		—		1,048		1,139			1		—			1,140
General and administrative		877			252		2,128		3,257		1,048			191		1,450			2,689
Amortization		1,186			—		17		1,203		1,158			62		18			1,238
Arrangement fees		—			—		2,285		2,285		—			—		895			895
Equity loss in affiliates		—			21,516		—		21,516		—			311		—			311
Dilution loss on affiliates		—			—		—		—		—			11,231		—			11,231
Net other loss (income)		(2	)		24		36		58		(4	)		4		(9	)		(9	)
Capital expenditures		—			—		—		—		427			—		—			427
Total assets		30,156			34,346		71,646		136,147		32,430			68,953		53,905			155,288

13. Investment in Affiliate

        During the six months ended June 30, 2020 and 2019, the Company recognized a $21,516 and $311 loss, respectively, on its investment in the LGJV Entities, representing its ownership share of the LGJV Entities' operational results. The combined financial position and results of operations of the LGJV

F-57

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

13. Investment in Affiliate (Continued)

Entities as of June 30, 2020, and December 31, 2019 and for the six months ended June 30, 2020 and 2019 are as follows:

LOS GATOS JOINT VENTURE
COMBINED BALANCE SHEETS (UNAUDITED)
(in thousands)

	June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	5,690		$	1,302
Receivables		4,443			5,655
Inventories		10,641			11,374
VAT receivable		45,576			50,184
Other current assets		4,141			1,672
Total current assets		70,492			70,187
Non-Current Assets
Mine development, net		188,896			182,601
Property, plant and equipment, net		204,619			216,131
Total non-current assets		393,515			398,732
Total Assets	$	464,007		$	468,919
LIABILITIES AND OWNERS' CAPITAL
Current Liabilities
Accounts payable and accrued liabilities	$	47,020		$	43,287
Related party payable		10,398			6,875
Accrued interest		45			885
Unearned revenue		5,172			—
Related party advance		18,904			—
Equipment loans		6,955			6,948
Total current liabilities		88,495			57,995
Non-Current Liabilities
Dowa Term Loan		219,087			217,796
Working Capital Facility		60,000			60,000
Equipment loans		9,445			12,916
Reclamation obligations		11,738			11,314
Total non-current liabilities		300,270			302,026
Owners' Capital
Capital contributions		237,905			237,905
Paid-in capital		12,108			7,400
Accumulated deficit		(174,771	)		(136,406	)
Total owners' capital		75,242			108,899
Total Liabilities and Owners' Capital	$	464,007		$	468,919

F-58

SUNSHINE SILVER MINING & REFINING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share, per share, option, and stock unit amounts)

13. Investment in Affiliate (Continued)

LOS GATOS JOINT VENTURE
COMBINING STATEMENT OF INCOME (LOSS) [UNAUDITED]
(in thousands)

	Six Months Ended June 30,
	2020			2019
Sales	$	37,160		$	—
Expenses
Cost of sales		28,272			—
Royalties		29			—
Exploration		408			—
General and administrative		4,650			34
Depreciation, depletion and amortization		21,260			—
Other		3,416			—
		58,035			34
Other (income) expense
Interest expense		6,943			—
Arrangement fee		4,709			—
Accretion expense		424			—
Other (income) expense		(108	)		562
Foreign exchange loss (gain)		5,522			(176	)
		17,490			386
Net income (loss)	$	(38,365	)	$	(420	)

        For the six months ended June 30, 2020, the Company and Dowa contributed $5,148 and $13,756, respectively in the form of advances to the LGJV to support limited operations during the temporary, government-mandated COVID-19 suspension. Effective July 14, 2020, the advances from SSMRC and Dowa were converted to LGJV capital contributions and $9,448 of LGJV payables to SSMRC were converted to SSMRC capital contributions to the LGJV in lieu of additional SSMRC pro-rata cash contributions.

14. Subsequent Events

        On August 10, 2020, SSMRC borrowed an additional $2,000 under the convertible promissory notes.

F-59

        Until                        , 2020, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

	Amount to be Paid
SEC registration fee	$	*
FINRA filing fee		*
NYSE listing fee		*
TSX listing fee		*
Transfer agents' fees		*
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue sky fees and expenses		*
Miscellaneous		*
Total	$	*

*

To be completed by amendment

        Each of the amounts set forth above, other than the SEC registration fee and the FINRA filing fee, is an estimate.

Item 14.    Indemnification of Directors and Officers.

        Section 145 of the Delaware General Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to such corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The Registrant's Amended and Restated Certificate of Incorporation provides for indemnification by the Registrant of its directors, officers and employees to the fullest extent permitted by the DGCL. The Registrant intends to enter into indemnification agreements with each of its directors and executive officers to provide these directors and officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant's Amended and Restated Certificate of Incorporation and to provide additional procedural protections. These agreements, among other things, will require the Registrant to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification for expenses such as attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of the Registrant, arising out of the person's services as a director or executive officer.

        Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any

II-1

transaction from which the director derived an improper personal benefit. The Registrant's Amended and Restated Certificate of Incorporation provides for such limitation of liability.

        The Registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.

        The proposed form of Underwriting Agreement (to be filed as Exhibit 1.1 to this Registration Statement) will provide for indemnification of directors and officers of the Registrant by the underwriters against certain liabilities.

Item 15.    Recent Sales of Unregistered Securities.

        During the past three years, we have issued and sold the securities described below without registering the securities under the U.S. Securities Act.

1.

On November 15, 2017, we issued and sold 2,222,222 shares of common stock to one or more private equity investment funds, institutional investors and other persons for $9,999,999.



2.

On March 15, 2018, we issued and sold 23,000 shares of common stock to certain of our directors and officers for $103,500.



3.

On May 24, 2019, we issued and sold 4,166,667 shares of common stock to one or more private equity investment funds, institutional investors and other persons for $25,000,002.



4.

From June 3, 2019 to June 19, 2019, we issued and sold an aggregate of 77,643 shares of common stock to certain of our directors and officers for $465,858.



5.

On July 16, 2019, we issued and sold 2,500,000 shares of common stock to one or more private equity investment funds, institutional investors and other persons for $15,000,000.



6.

From April 20, 2020 to August 10, 2020, we issued and sold $12,000,000 aggregate principal amount of convertible notes to one or more private equity investment funds, institutional investors and other persons.

        The offers, sales and issuances of the securities described in the preceding table were exempt from registration either (i) under Section 4(a)(2) of the U.S. Securities Act and the rules and regulations promulgated thereunder in that the transactions were between an issuer and sophisticated investors or members of its senior executive management and did not involve any public offering within the meaning of Section 4(a)(2), (ii) under Regulation S promulgated under the U.S. Securities Act in that offers, sales and issuances were not made to persons in the United States and no directed selling efforts were made in the United States, (iii) under Rule 144A under the U.S. Securities Act in that the shares were offered and sold by the initial purchasers to qualified institutional buyers or (iv) under Rule 701 promulgated under the U.S. Securities Act in that the transactions were under compensatory benefit plans and contracts relating to compensation.

Item 16.    Exhibits and Financial Statement Schedules.

        (a)   The list of exhibits set forth under "Exhibit Index" at the end of the is Registration Statement is incorporated by reference.

        (b)   No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or the notes thereto.

II-2

Item 17.    Undertakings.

        The undersigned Registrant hereby undertakes:

        (a)   Insofar as indemnification for liabilities arising under the U.S. Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions referenced in Item 14 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the U.S. Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the U.S. Securities Act and will be governed by the final adjudication of such issue.

        The undersigned Registrant hereby undertakes that:

        (a)   For purposes of determining any liability under the U.S. Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the U.S. Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

        (b)   For the purpose of determining any liability under the U.S. Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

EXHIBIT INDEX

Exhibit Number			Description
	1.1	*	Form of Underwriting Agreement
	3.1	*	Form of Amended and Restated Certificate of Incorporation, to be effective prior to or upon the closing of this offering
	3.2	*	Form of Amended and Restated By-Laws, to be effective prior to or upon the closing of this offering
	5.1	*	Opinion of Davis Polk & Wardwell LLP
	10.1.1		Term Loan Agreement dated as of July 11, 2017 among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V. as Borrowers and Dowa Metals & Mining Co., Ltd. as Lender and Sunshine Silver Mining and Refining Corporation and Los Gatos Luxembourg S.a.r.l.
	10.1.2		Amendment No. 1 to Term Loan Agreement, dated as of July 11, 2018 among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V., the Borrowers, Dowa Metals & Mining Co., Ltd., as Lender and Sunshine Silver Mining & Refining Corporation and Los Gatos Luxembourg S.a.r.l.
	10.1.3		Amendment No. 2 to Term Loan Agreement, dated as of November 30, 2018 among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V., the Borrowers, Dowa Metals & Mining Co., Ltd., as Lender and Sunshine Silver Mining & Refining Corporation and Los Gatos Luxembourg S.a.r.l.
	10.1.4		Amendment No. 3 to Term Loan Agreement, dated as of January 31, 2019 among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V., the Borrowers, Dowa Metals & Mining Co., Ltd., as Lender and Sunshine Silver Mining & Refining Corporation and Los Gatos Luxembourg S.a.r.l.
	10.2.1		Loan Agreement as of January 23, 2018 by and among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V., the Borrowers, Sunshine Silver Mining & Refining Corporation, as Guarantor and Dowa Metals & Mining Co., Ltd., as Lender
	10.3.1		Memorandum of Understanding as of April 16, 2019 by and among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V., the Borrowers, Dowa Metals & Mining Co., Ltd. and Sunshine Silver Mining & Refining Corporation
	10.4.1		Working Capital Facility Agreement as of May 30, 2019 by and among Minera Plata Real S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., and Servicios San Jose de Plata, S. de R.L. de C.V., the Borrowers, Dowa Metals & Mining Co., Ltd., as Lender, and Sunshine Silver Mining & Refining Corporation, as Guarantor
	10.5.1		Unanimous Omnibus Partner Agreement effective as of January 1, 2015 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Los Gatos Luxembourg S.a.r.l., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.

II-4

Exhibit Number			Description
	10.5.2		Agreement to Make Capital Contribution dated April 10, 2017, among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Los Gatos Luxembourg S.a.r.l., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.5.3		Amendment to Partner Agreement dated June 30, 2017, among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Los Gatos Luxembourg S.a.r.l., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.5.4		Amendment No. 3 to Partner Agreement dated March 30, 2018 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Los Gatos Luxembourg S.a.r.l., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.5.5		Amendment No. 4 to Partner Agreement dated March 30, 2019 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.5.6		Amendment No. 5 to Partner Agreement dated April 29, 2020 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.5.7		Amendment No. 6 to Partner Agreement dated May 25, 2020 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.5.8		Amendment No. 7 to Partner Agreement dated June 16, 2020 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Servicios San Jose de Plata, S. de R.L. de C.V., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.6.1		Option Agreement dated May 30, 2019 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.7.1		Priority Distribution Agreement dated May 30, 2019 among Minera Plata Real, S. de R.L. de C.V., Operaciones San Jose de Plata, S. de R.L. de C.V., Sunshine Silver Mining & Refining Corporation and Dowa Metals & Mining Co., Ltd.
	10.8.1		Exploration, Exploitation and Unilateral Promise to Sell Agreement dated May 4, 2006 between La Cuesta International, S.A. de C.V. and Minera Plata Real, S.A. de C.V.
	10.9.1	#	Agreement dated July 15, 2019, between Ocean Partners USA. Inc. and Operaciones San Jose de Plata, S. de R.L. de C.V.
	10.9.2	#	Memorandum of Agreement dated July 1, 2020, between Operaciones San Jose de Plata, S. de R.L. de C.V. and Dowa Metals & Mining Co., Ltd.
	10.10.1	#	Cerro Los Gatos Lead Concentrate Sales Agreement dated April 14, 2019 between Operaciones San Jose de Plata, S. de R.L. de C.V. and Metagri S.A. de C.V.

II-5

Exhibit Number			Description
	10.11.1		Convertible Note Purchase Agreement dated April 20, 2020 between Sunshine Silver Mining & Refining Corporation and Electrum Silver US LLC, as amended on June 23, 2020
	10.12.1	*	Long Term Incentive Plan
	10.12.2	*	Form of Executive Nonqualified Stock Option Agreement
	10.12.3	*	Form of Director Nonqualified Stock Option Agreement
	10.12.4	*	Form of DiSU Award Agreement
	10.12.5	*	Form of DSU Award Agreement
	10.13.1	*	Annual Incentive Plan
	10.14.1	*	Non-Qualified Deferred Compensation Plan
	10.15.1		Employment Agreement dated as of May 3, 2011 between Sunshine Silver Mining & Refining Corporation and Stephen Orr
	10.15.2		Employment Agreement dated as of April 1, 2016 between Sunshine Silver Mining & Refining Corporation and John Kinyon
	10.15.3		Employment Agreement dated as of June 1, 2011 between Sunshine Silver Mining & Refining Corporation and Philip Pyle
	10.16.1	*	Form of Management Services Agreement
	10.17.1	*	Form of Shareholders Agreement
	10.18.1	*	Form of Indemnification Agreement
	10.19.1	*	Form of Registration Rights Agreement
	21.1		Subsidiaries of the Registrant
	23.1		Consent of KPMG LLP—Sunshine Silver Mining & Refining Corporation
	23.2		Consent of KPMG LLP—Los Gatos Joint Venture
	23.3	*	Consent of Davis Polk & Wardwell LLP (included in Exhibit 5.1)
	23.4		Consent of Tetra Tech, Inc.
	23.5		Consent of Guillermo Dante Ramírez-Rodríguez
	23.6		Consent of Leonel López
	23.7		Consent of Kira Lyn Johnson
	23.8		Consent of Keith Thompson
	23.9		Consent of Kenneth E. Smith
	23.10		Consent of Luis Quirindongo
	23.11		Consent of Max Johnson
	24.1		Power of Attorney (included on signature page)
	96.1		NI 43-101 Technical Report: Los Gatos Project, Chihuahua, Mexico, dated July 1, 2020
	99.1		Consent of Charles Hansard to be named Director Nominee.

*

To be filed by amendment.

#

Portions of this exhibit have been omitted because they are both (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

II-6

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on the 1st day of October, 2020.

SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ STEPHEN ORR
	Name:	Stephen Orr
	Title:	Chief Executive Officer

II-7

        KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen Orr and Roger Johnson and each of them, their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for them and in their name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ STEPHEN ORR Stephen Orr	Chief Executive Officer and Director (principal executive officer)	October 1, 2020
/s/ ROGER JOHNSON Roger Johnson	Chief Financial Officer (principal financial officer and principal accounting officer)	October 1, 2020
/s/ THOMAS S. KAPLAN Thomas S. Kaplan	Chairman of the Board of Directors	October 1, 2020
/s/ JANICE STAIRS Janice Stairs	Lead Director	October 1, 2020
/s/ JEB BURNS Jeb Burns	Director	October 1, 2020
/s/ ALI ERFAN Ali Erfan	Director	October 1, 2020
/s/ IGOR GONZALES Igor Gonzales	Director	October 1, 2020
/s/ KARL HANNEMAN Karl Hanneman	Director	October 1, 2020

II-8

Signature	Title	Date
/s/ IGOR LEVENTAL Igor Levental	Director	October 1, 2020
/s/ DAVID PEAT David Peat	Director	October 1, 2020

II-9

EX-10.1.1

Exhibit 10.1.1

EXECUTION COPY

TERM LOAN AGREEMENT

dated as of July 11, 2017

among

MINERA PLATA REAL S. DE R.L. DE C.V.,

OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., and

SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V.

as Borrowers

and

DOWA METALS & MINING CO., LTD.

as Lender

and

SUNSHINE SILVER MINING AND REFINING CORPORATION

and

LOS GATOS LUXEMBOURG S.ar.L

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINITIONS; INTERPRETATION	1
1.1	Defined Terms	1
1.2	Other Definitional Provisions	13
1.3	Currency Matters	13
ARTICLE 2	LOANS	13
2.1	Loans	13
2.2	Interest	14
2.3	Interest Payment Dates	14
2.4	Prepayments	14
2.5	Repayment	15
2.6	Payment	15
2.7	Manner of Payment	16
2.8	Lender Tax Forms	16
2.9	FATCA Documentation	17
2.10	Capital Adequacy; Change in Law	17
2.11	Fees	17
ARTICLE 3	CONDITIONS PRECEDENT; CONDITIONS SUBSEQUENT	18
3.1	Conditions Precedent to the Initial Drawdown Under the Loans	18
3.2	Conditions Precedent to Subsequent Drawdowns	19
ARTICLE 4	REPRESENTATIONS AND WARRANTIES	20
4.1	Representations and Warranties	20
4.2	Survival of Representations and Warranties, etc.	24
ARTICLE 5	AFFIRMATIVE COVENANTS	24
5.1	Preservation of Existence and Similar Matters	24
5.2	Conduct of Business; Maintenance of Assets	24
5.3	Accounting Methods and Financial Records	25
5.4	Insurance	25
5.5	Payment of Taxes and Claims	25
5.6	Use of Proceeds	25
5.7	Indemnity	25
5.8	Further Assurances	26
5.9	Environmental Matters	26
5.10	OFAC	27
5.11	Payment of Indebtedness and Leasehold Obligations	27
5.12	Reserve Accounts	27
ARTICLE 6	INFORMATION COVENANTS	28
6.1	Annual Financial Statements and Information	28
6.2	Quarterly Financial Statements and Information	28
6.3	Performance Certificates	28
6.4	Copies of Other Reports	28
6.5	Notice of Litigation and Other Matters	28
6.6	Access and Inspections	29

i

TABLE OF CONTENTS

(continued)

		Page
ARTICLE 7	NEGATIVE COVENANTS	29
7.1	Indebtedness of the Borrowers	29
7.2	Limitation on Liens	29
7.3	Liquidation, Merger or Disposition of Assets	29
7.4	Limitation on Guarantees	29
7.5	Investments	29
7.6	Restricted Payments and Restricted Purchases	29
7.7	Affiliate Transactions	30
ARTICLE 8	EVENTS OF DEFAULT; REMEDIES	30
8.1	Events of Default	30
8.2	Remedies	31
8.3	Payments Subsequent to Declaration of Event of Default	32
ARTICLE 9	MISCELLANEOUS	33
9.1	Notices	33
9.2	Expenses	34
9.3	Waivers	34
9.4	Set-Off	34
9.5	Successors and Assigns	35
9.6	Counterparts	36
9.7	Governing Law	36
9.8	Severability	36
9.9	Interest	36
9.10	Table of Contents and Headings	37
9.11	Entire Agreement	37
9.12	Reliance on and Survival of Various Provisions	37
9.13	Confidentiality	37
9.14	Illegality	38
9.15	Joint and Several Liability	38
9.16	Amendments	38
ARTICLE 10	WAIVER OF JURY TRIAL	38
10.1	Waiver of Jury Trial; Waiver of Special, Exemplary, Punitive or Consequential Damages	38

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Annexes

Annex IPayment Information for Lender

Schedule

Schedule 1Corporate Information of the Borrowers

Schedule 2Security Documents

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TERM LOAN AGREEMENT

THIS TERM LOAN AGREEMENT (this “Agreement”) is entered into as of July 11, 2017, among MINERA PLATA REAL S. DE R.L. DE C.V., OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., and SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V. (collectively, the “Borrowers”), DOWA METALS & MINING CO., LTD., as lender (together with its respective successors and assigns, the “Lender”), and SUNSHINE SILVER MINING & REFINING CORPORATION (“SSMRC”) and LOS GATOS LUXEBOURG S.ar.L (“SSMRC Lux”).

WHEREAS, Lender, SSMRC and SSMRC Lux (collectively, the “Shareholders”) directly and indirectly own all of the Equity Interests of the Borrowers;

WHEREAS, the Borrowers require funding to develop the Los Gatos silver-zinc-lead project located in the state of Chihuahua, Mexico (the “Los Gatos Project”); and

WHEREAS, SSMRC, SSMRC Lux and the Borrowers have requested, and Lender has agreed, to fund a portion of the Los Gatos Project with the Loans provided for herein.

THEREFORE, subject to the terms and conditions set forth herein and for other good and valuable consideration, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS; INTERPRETATION.

1.1Defined Terms.

When used herein the following terms shall have the following meanings:

Acquisition shall mean (whether by purchase, exchange, issuance of stock or other equity or debt securities, merger, reorganization, amalgamation or any other method) any acquisition by any Borrowers or any of their respective Subsidiaries of any other Person or any substantial part of the assets of any other Person.

Affiliate shall mean, with respect to a Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such first Person. Without limiting the generality of the foregoing, a Person shall be deemed to be “controlled” by another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting powers for the election of directors, managing general partners or equivalent governing body of such Person.

Agreement shall mean this Term Loan Agreement, including, without limitation, all schedules, riders or other attachments, as amended, restated, supplemented, replaced or otherwise modified from time to time.

Amendment to Partner Agreement shall mean that certain amendment to Omnibus Partner Agreement between the parties dated as of even date herewith.

Applicable Law shall mean, in respect of any Person, all provisions of constitutions, statutes, rules, regulations and orders of any Governmental Entity applicable to such Person, including, without limiting the foregoing, all Environmental Laws and all orders, decisions, judgments and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a

party or by which it is bound. Notwithstanding the foregoing, Applicable Law shall not include any environmental laws not expressly described in the definition of Environmental Laws.

Applicable Margin shall mean a rate of interest equal to 2.35% per annum.

Arrangement Fee shall have the meaning ascribed thereto in Section 2.11(b) hereof.

Authorized Signatory with respect to any Person, shall mean any legal representative or attorney in fact, including any executive duly authorized and appointed in writing from time to time by such Person to execute documents, agreements, contracts and instruments on behalf of such Person.

Availability Period shall mean the period commencing on the Closing Date and ending on the Availability Termination Date.

Availability Termination Date shall mean the date that is the earliest of (i) the date on which Borrowers have drawn $210,000,000 under this Agreement, but in no event earlier than two (2) Business Days prior to December 31, 2019, (ii) two (2) Business Days prior to June 30, 2020 if the Borrowers have drawn less than $210,000,000 under this Agreement and have notified Lender that they will cease making any additional draws under this Agreement, or (iii) two (2) Business Days prior to December 31, 2020.

Bankruptcy Laws shall mean any of the Commercial Bankruptcy Law of Mexico (Ley de Concursos Mercantiles), as now and hereafter in effect, any successors to such statute and any other applicable insolvency or other similar law of any jurisdiction, including any law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it.

Borrowers have the meaning set forth in the preamble of this Agreement.

Breakage Costs shall mean the actual losses, if any, that Lender sustains or incurs as a correspondence of any payment or repayment of any Loan on a day other than the last day of the corresponding Interest Period.

Budget shall mean the Los Gatos Project budget, prepared and approved by the Shareholders in accordance with the Partner Agreement, as the same is amended from time to time pursuant to the Partner Agreement.

Business Day shall mean a day excluding Saturday, Sunday and any day that is a legal holiday under the laws of Chihuahua, Mexico, New York, New York, Denver, Colorado, or Tokyo, Japan or is a day on which banking institutions located in such jurisdictions are authorized or required by law or other governmental action to close.

Capital Expenditures shall mean, for any period and for any Borrower, the sum (without duplication) of all expenditures made by such Borrower during such period that are or are required to be treated as capital expenditures under GAAP.

Capital Lease shall mean, as to any Person, any lease of any interest in any kind of Property by that Person as lessee that is, should be or should have been recorded as a “capital lease” in accordance with GAAP.

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Capital Lease Obligations shall mean that portion of the obligations of any Person under Capital Leases, in each case taken at the amount thereof that is required to be capitalized for financial accounting purposes in accordance with GAAP.

Cash Equivalents shall mean, as at any date of determination, cash equivalents as determined in accordance with GAAP.

Change of Control shall mean the occurrence, without the prior written consent of Lender, of any event (whether in one or more transactions) that results in (a) the sale of all or substantially all of the assets of SSMRC, SSMRC Lux or any of the Borrowers, (b) any merger, consolidation or acquisition of SSMRC, SSMRC Lux or any of the Borrowers by any other Person, (c) any transfer or disposition, direct or indirect, of the ownership or control of more than 50% of SSMRC’s or SSMRC Lux’s Shares (as such term is defined in the Partner Agreement), or (d) SSMRC ceasing to have the power to direct or cause the direction of the management and policies of the Borrowers, in each case of clauses (c) and (d), other than in connection with a Permitted IPO or other equity issuance.

Closing Date shall mean five (5) Business Days following the date on which all conditions precedent under Section 3.1 have been satisfied or otherwise waived in writing by Lender.

Collateral shall mean any Property constituting collateral for the Obligations.

Code shall mean the Internal Revenue Code of 1986, as amended from time to time.

Control shall mean, with respect to a Person, possession by another Person, directly or indirectly, of the power to direct or cause the direction of the management or policies of such first Person, whether through the ownership of voting securities, by contract or otherwise. The words “Controlling” and “Controlled” have correlative meanings.

Debt Service Reserve Account shall have the meaning set forth in Section 5.12.

Default shall mean any event that with the passage of time or giving of notice, or both, would constitute an Event of Default.

Default Rate shall mean a per annum interest rate equal to the sum of the Interest Rate, plus two percent (2%).

Drawdown shall have the meaning ascribed thereto in Section 2.1 hereof.

Drawdown Date shall have the meaning ascribed thereto in Section 2.1 hereof.

EBITDA shall mean for any period with respect to Borrowers on a combined basis, the net income (or loss) for such period (excluding extraordinary gains and non-cash losses), plus, without duplication and to the extent deducted in determining such net income (or loss) for such period, without duplication, (a) each of the following items: (i) all interest expense for such period, (ii) all charges against income for such period for foreign, federal, state and local taxes for such period, (iii) depreciation and depletion expenses for such period, (iv) reclamation obligations and accretion on reclamation obligations, and (v) amortization expenses for such period.

Eligible Assignee shall mean Lender, any Affiliate of Lender (excluding for clarity, any of the Borrowers), SSMRC in the event SSMRC issues its common stock in a private placement or

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effects an initial public offering of its common stock by registration under the Securities Act of 1933, on terms and conditions to be negotiated in good faith by SSMRC and Lender, or any other Person consented to by the Borrowers, such consent not to be unreasonably withheld.

Environmental Claim shall mean any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Entity or any other Person, arising (a) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (b) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (c) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

Environmental Laws shall mean any and all current or future foreign or domestic, federal, national, state, provincial, municipal (or any subdivision of either of them), laws, treaties, statutes, ordinances, rules, regulations and Codes, together with all decrees, judgments, directives, orders or injunctions issued, governmental authorizations, or any other requirements of Governmental Entity relating to (a) environmental matters, including those relating to any Hazardous Materials Activity; (b) the generation, use, storage, transportation or disposal of Hazardous Materials; or (c) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to the Borrowers.

Equity Interests shall mean, with respect to any Person, any and all shares, general or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

Event of Default shall mean any of the events specified in Section 8.1 hereof, provided that any requirement for notice or lapse of time, or both, has been satisfied or expired.

Excess Cash Flow shall mean, for any period, EBITDA for such period, less interest expense paid or payable during such period, taxes paid during such period, scheduled payments of principal under this Agreement, and payments made to the Debt Service Reserve Account and to the Operating and Capital Cost Reserve Account during such period.

Excluded Taxes shall mean, with respect to the Lender or any Participant, (a) foreign, federal, state and local income or franchise taxes imposed on (or measured by) its net income, gross receipts or assets pursuant to the laws of the jurisdiction in which such recipient is organized, managed or controlled or in which the principal office or applicable lending office of such recipient is located, (b) any branch profits Taxes or any similar Tax imposed by any jurisdiction (foreign or domestic) described in clause (a) above, (c) any backup withholding Taxes that are imposed by the United States under Section 3406 of the Code or any similar Taxes imposed by the jurisdiction under the laws of which such recipient is organized or, in which its principal office or applicable lending office is located or in which it or its principal office or its applicable lending office is located or is otherwise doing business (other than a business that arises solely from such recipient having executed, delivered or performed its obligations or received payment under, or enforced its rights under this Agreement or any other Loan Document); (d) any United States federal withholding Tax imposed under FATCA or otherwise; and (e) Taxes or special assessments of any kind imposed by the jurisdiction (foreign or domestic) under the laws of

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which such recipient is organized, in which its principal office or its applicable lending office is located or in which it or its principal office or its applicable lending office is otherwise doing business, that are measured by or imposed as a result of the extent and nature of its activities, assets, liabilities, leverage, other exposures to risk, or other similar factors.

FATCA shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

Financial Guarantee shall mean a secondary back-to-back guarantee from a financial institution reasonably satisfactory to Lender of the SSMRC Guaranty, as amended, restated, supplemented or modified from time to time.

Fiscal Year shall mean the applicable fiscal year of each Borrower.

Foreign Lender shall mean a Lender that is not organized under the laws of the United States or any state thereof.

GAAP shall mean, for any Person, generally accepted accounting principles which are in effect from time to time in the United States.

Governmental Entity shall mean any (a) multinational, federal, national, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, ministry or agency and, in general, governmental authorities, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, self-regulatory, expropriation or taxing authority under or for the account of any of the foregoing.

Guarantor shall mean SSMRC and any other Person that guarantees the Obligations.

Guaranty, as applied to an obligation, shall mean and include (a) a guaranty, direct or indirect, in any manner, of all or any part of such obligation, and (b) any agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, any reimbursement obligations as to amounts drawn down by beneficiaries of outstanding letters of credit or capital call requirements; provided that endorsements of instruments for deposit or collection shall be excluded. The amount of any Guaranty hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding obligations in respect of which such Guaranty is made (or, if such Guaranty is limited by its terms to a lesser amount, such lesser amount) or, if not determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guarantying Person in good faith.

Hazardous Materials shall mean all explosive, radioactive, hazardous, or toxic substances, wastes or materials, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon, gas, any chemical, material or substance, and all other substances or wastes, the use of, generation of, or exposure to which, is prohibited, limited or regulated pursuant to Environmental Laws.

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Hazardous Materials Activity shall mean any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

Indebtedness of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, bankers’ acceptances, or with respect to deposits or advances of any kind (including all Indebtedness for Money Borrowed), (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Persons under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding trade accounts payable and accrued expenses incurred in the ordinary course of business) that in accordance with GAAP would be included as liabilities on the balance sheet of such Person, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, but, with respect to such Indebtedness that is non-recourse, only to the extent of the lesser of the amount of such Indebtedness or the fair market value of the property at the time of determination that is encumbered by such Lien, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) the then current amount of all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. Notwithstanding the foregoing, Indebtedness shall not include (i) deferred revenue, as determined in accordance with GAAP, arising in the ordinary course of business or (ii) preferred stock required to be treated as indebtedness under GAAP. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

Indebtedness for Money Borrowed shall mean, with respect to any Person, (a) Indebtedness for money borrowed and Indebtedness represented by notes payable and drafts accepted representing extensions of credit, (b) all obligations evidenced by bonds, debentures, notes or other similar instruments, (c) all Indebtedness upon which interest charges are customarily paid, (d) the principal component of all Capital Lease Obligations, (e) all actual outstanding and unpaid reimbursement obligations with respect to outstanding letters of credit (to the extent drawn), (f) all Indebtedness issued or assumed as full or partial payment for property or services (other than deferred revenue, as determined in accordance with GAAP, arising in the ordinary course of business, and trade payables and accrued expenses arising in the ordinary course of business), whether or not any such notes, drafts, obligations or Indebtedness represent Indebtedness for money borrowed, that in accordance with GAAP would be included as liabilities on the balance sheet of such Person, and (g) without duplication, Guaranties of any of the foregoing. For purposes of this definition, interest paid-in-kind or capitalized (including accreted amounts thereon) shall be deemed Indebtedness for Money Borrowed.

Indemnitee shall have the meaning ascribed thereto in Section 5.7 hereof.

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Interest Payment Date shall mean any day on which interest is payable in accordance with Section 2.3 hereof.

Interest Period shall mean the period commencing on the applicable Drawdown Date, or the first day after the expiration of an Interest Period, and ending on the numerically corresponding day in the calendar month that is six months thereafter; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the immediately succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period pertaining to a Loan that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (c) no Interest Period shall extend beyond the Maturity Date.

Interest Rate has the meaning set forth in Section 2.2(a).

Investment shall mean, with respect to any Borrower, any loan, advance or extension of credit (other than extensions of trade credit in the ordinary course of business) by such Borrower to, or any Guaranty or other contingent liability with respect to the Equity Interests, indebtedness or other obligations of, or any contributions to the capital of, any other Person, or any ownership, purchase or other acquisition by such Borrower of any interest in any Equity Interests, limited partnership interests, general partnership interest, or other securities of such other Person, other than an Acquisition.

Lender has the meaning set forth in the Preamble.

LIBOR shall mean, in relation to any Loan for any Interest Period, the rate published by ICE Benchmark Administration Limited (or any successor to, or substitute for, such service, providing rate quotations comparable to those currently provided by ICE Benchmark Administration Limited, as determined by the Lender from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, on the first day of such Interest Period and having a maturity equal to such Interest Period. In the event that no such rate is available to the Lender, the applicable LIBOR rate for the relevant Interest Period shall be the rate per annum reasonably determined by the Lender to be the rate at which deposits in Dollars, in the approximate amount of such Loan and for a period equal to such Interest Period, would be offered to the Lender by major banks in the London interbank market at approximately 11:00 a.m., London time, on the date that is the first day of such Interest Period.

Lien shall mean, with respect to any right, property or asset, any mortgage, deed of trust, fiduciary transfer, lien (statutory or other) or preferential arrangement (including a securitization) of any kind or nature, mortgage, usufruct, pledge, assignment, charge or deposit arrangement, security interest, title retention agreement, levy, attachment, garnishment or other encumbrance of any kind in respect of such right, property and/or asset, whether created by statute, contract, the common law or otherwise, and whether or not choate, vested or perfected.

Loan shall mean each advance made by the Lender to or for the benefit of the Borrowers pursuant to Article 2 hereof.

Loan Documents shall mean this Agreement, the SSMRC Guarantee, the Financial Guarantee (if any), the Promissory Note and any other documents and agreements executed or delivered by the

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Borrowers in connection with or contemplated by this Agreement, and any amendments, modifications or supplements thereto or waivers thereof.

Los Gatos Project has the meaning set forth in the recitals to this Agreement.

Material Adverse Change shall mean any material adverse change to any of the following: (a) the business, assets, liabilities, condition (financial or otherwise), results of operations, prospects or properties of the Borrowers and their Subsidiaries, taken as a whole, or (b) the binding nature, validity, or enforceability of this Agreement or the other Loan Documents, the Lender’s Liens on the Collateral, the ability of the Borrowers to perform the payment obligations or other material obligations under this Agreement or any other Loan Document or the rights and remedies of the Lender under this Agreement; in each case, whether resulting from any single act, omission, situation, status, event or undertaking, or taken together with other such acts, omissions, situations, statuses, events or undertakings.

Maturity Date shall mean the earlier of (i) the date that is two (2) Business Days prior to December 31, 2027 or (ii) such earlier date as payment of the Obligations in full shall be due (whether by acceleration or otherwise).

MPR shall mean Minera Plata Real S. de R.L. de C.V.

Necessary Authorizations shall mean any governmental or other regulatory authority, including but not limited to, the authorization of MIA (Manifestacion de Impacto Ambiental) by Semarnat and the change of land use application, and all other permits, approvals, licenses, filings and registrations necessary in order to enable the Borrowers to develop and operate the Los Gatos Project.

Net Proceeds (Asset Sales) shall mean, with respect to any sale or other disposition of assets, excluding all Net Proceeds (Insurance), by a Borrower, the difference between (a) the aggregate amount of cash or Cash Equivalents received therefrom by such Person, and (b) the sum of (i) all attorneys’, accountants’ and investment banking fees actually incurred in connection therewith, all legal, title and recording tax expenses, commissions and other fees and expenses and all federal, state, provincial, foreign and local taxes required to be paid or estimated in good faith to be payable or accrued as a liability as a consequence of such asset sale or other disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (ii) all payments made by such Person on any Indebtedness for Money Borrowed or other Indebtedness that is secured by the assets subject to such asset sale or other disposition in accordance with the terms of any Lien upon or with respect to such assets or which must by the terms of such Lien, or in order to obtain a necessary consent to such asset sale or other disposition or by Applicable Law, be repaid out of the proceeds from such asset sale or other disposition, and (iii) amounts held in escrow to be applied as part of the purchase price (provided, that such amounts shall be included as Net Proceeds (Asset Sales) at such time as such cash is released and delivered to such Borrower).

Net Proceeds (Insurance) shall mean, with respect to any insurance proceeds from a casualty and, in the case of a condemnation, expropriation or similar event, condemnation or expropriation awards, net proceeds as a result of eminent domain and lost or damaged assets or similar payments, the difference between (a) the aggregate amount of cash or Cash Equivalents received in the form of proceeds of insurance paid (other than proceeds received from business interruption insurance) with respect to lost or damaged assets, awards arising from condemnation or expropriation of assets or taking by eminent domain and including by way of sale or

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discounting of a note, installment receivable or other receivable, but excluding any consideration received in the form of assumption of Indebtedness for Money Borrowed or other obligations relating to such properties or assets or received in any other non-cash form) therefrom by such Person, and (b) all costs actually incurred in connection therewith, including, without limitation, all legal expenses, commissions and other fees and expenses, and all federal, state, provincial, foreign and local taxes required to be paid or estimated in good faith to be payable in connection therewith.

Obligations shall mean all payment and performance obligations of every kind, nature and description of the Borrowers, and any other obligors to the Lender, or any of them, arising under this Agreement and the other Loan Documents (including, without limitation, any interest, fees, expenses and other charges on the Loans or otherwise under the Loan Documents that would accrue but for the filing of a bankruptcy action with respect to a Borrower, whether or not such claim is allowed in such bankruptcy action) as they may be amended from time to time.

OFAC shall mean the United States Department of the Treasury’s Office of Foreign Assets Control or any successor thereto.

Operating and Capital Cost Reserve Account shall have the meaning ascribed thereto in Section 5.12.

Organizational Documents shall mean with respect to any Person all formation, organizational and governing documents, instruments and agreements, including (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended and (iv) with respect to any limited liability company, its certificate or articles of organization or formation, as amended, and its operating agreement, as amended.

Other Taxes shall mean any and all present and future stamp, court or documentary taxes or any other excise or property taxes, or charges, impost, duties, fees or similar taxes and/or levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to any Loan Document, excluding, however, Excluded Taxes.

Participant shall have the meaning assigned to such term in Section 9.5(d) hereof.

Partner Agreement shall mean the Unanimous Omnibus Partner Agreement, dated as of January 1, 2015, among the Borrowers and the Shareholders, as amended, restated, supplemented or modified from time to time.

Permitted Encumbrances shall mean, with respect to any Person, the following:

(a)liens for Taxes, assessments and other governmental charges not yet due or if due, the validity of which is being contested diligently and in good faith by appropriate proceedings by that Person and for which appropriate reserves in accordance with GAAP have been established;

(b)the Security;

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(c)Liens on real estate or other property for taxes, assessments, governmental charges or levies not yet delinquent or the non-payment of which is being contested in good faith by appropriate proceedings, so long as adequate reserves with respect thereto are set aside in accordance with GAAP, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto;

(d)Liens of carriers, warehousemen, landlords, mechanics, vendors, repairmen, laborers and materialmen (solely to the extent arising by operation of law) incurred in the ordinary course of business and not in connection with the borrowing of money, for sums not overdue for more than thirty (30) days or, if overdue, that are being diligently contested in good faith, so long as adequate reserves with respect thereto are set aside in accordance with GAAP, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto;

(e)Liens incurred in the ordinary course of business in connection with worker’s compensation and unemployment insurance and other types of social security obligations, assessments or government charges which are not overdue for more than thirty (30) days or, if overdue for more than thirty (30) days, are being contested in good faith by appropriate proceedings and for which adequate reserves with respect thereto are maintained in accordance with GAAP;

(f)easements, rights-of-way, zoning restrictions, licenses, reservations or restrictions on use, minor defects or irregularities in title, and other similar encumbrances on the use of real property which do not individually or in the aggregate materially interfere with the ordinary conduct of the business of such Person or the use of such property including encumbrances respecting minor encroachments by the property over neighboring lands and/or permitted under agreements with the owners of such other lands and minor encroachments over the property;

(g)Liens filed in respect of financed assets, leased assets or Capital Lease Obligations or purchase money Indebtedness incurred in the ordinary course of business of the Borrowers; provided, that (i) any such Lien attaches only to the property acquired with the proceeds of such Indebtedness and (ii) the principal amount of the Indebtedness secured thereby does not exceed the cost of such property;

(h)Liens consisting of rights of set-off of a customary nature or bankers’ Liens on amounts on deposit, whether arising by contract or operation of law, incurred in the ordinary course of business;

(i)any interest or title of a lessor under any lease that is not prohibited by this Agreement;

(j)leases or subleases granted to others with respect to a Borrower’s or any of their Subsidiaries’ properties not interfering in any material respect with respect to the business of the Borrowers and their Subsidiaries, taken as a whole;

(k)licenses and sublicenses granted to others not interfering in any material respect with the business of the Borrowers and their Subsidiaries taken as a whole;

(l)Liens filed in respect of true leases of a Borrower or any of their Subsidiaries and Liens arising from precautionary UCC financing statements regarding operating leases or

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consignment or bailee arrangements entered into in the ordinary course of business of the Borrowers;

(m)non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business; and

(n)Liens that are replacements of Liens permitted under the definition of “Permitted Encumbrances” in this Agreement.

Permitted IPO shall mean an initial public offering of the common stock of SSMRC pursuant to a registration statement under the Securities Act of 1933 in which the shares of SSMRC become publicly tradable instruments on a registered stock exchange; provided that such offering does not constitute a Material Adverse Change.

Person shall mean an individual, corporation, limited liability company, association, partnership, joint venture, trust or estate, an unincorporated organization, a government or any agency or political subdivision thereof, or any other entity.

Projections shall have the meaning ascribed thereto in Section 4.1(p) hereof.

Promissory Note shall mean a promissory note issued by the Borrowers and endorsed by the Guarantor under Mexican law (Ley General de Titulos y Operaciones de Credito — General Law of Negotiable Instruments and Credit Operations) evidencing the Term Loan.

Property shall mean all types of real, personal or mixed property and all types of tangible or intangible property.

Release shall mean any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater, all in violation of Environmental Laws.

Restricted Payment shall mean (a) any direct or indirect distribution, dividend or other payment to any Person (other than to a Borrower or any Subsidiary of a Borrower) on account of any Equity Interests in a Borrower or any of their Subsidiaries (other than dividends payable solely in stock of or other Equity Interests in such Person and stock splits), including, without limitation, any direct or indirect distribution, dividend or other payment to any Person (other than to a Borrower or any Subsidiary of a Borrower) on account of any warrants or other rights or options to acquire Equity Interests of a Borrower or any of their Subsidiaries, or (b) any payment of principal of, or interest on, or payment into a sinking fund for the retirement of, or any defeasance of Indebtedness subordinated to the Loans.

Restricted Purchase shall mean any payment (including, without limitation, any sinking fund payment, prepayment or installment payment) on account of the purchase, redemption, defeasance or other acquisition or retirement of any Equity Interest in a Borrower or any of their Subsidiaries, including, without limitation, any warrants or other rights or options to acquire shares of capital stock or other Equity Interests in a Borrower or any of their Subsidiaries.

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Sanctioned Country shall mean a country subject to the sanctions program identified on the list maintained by OFAC and available at the following website or as otherwise published from time to time: http://www.treas.gov/offices/enforcement/ofac/programs/.

Sanctioned Person shall mean (a) any Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html or as otherwise published from time to time, (b) any agency, authority, or subdivision of the government of a Sanctioned Country, or (c) any Person or organization controlled by a Sanctioned Country.

Sanctions shall mean the sanction programs identified on the list maintained by OFAC and available at the following website or as otherwise published from time to time: http://www.treas.gov/offices/enforcement/ofac/programs/.

Security shall mean the Encumbrances created by the Security Documents.

Security Documents shall mean the documents listed on Schedule 2 and any other agreement or instrument providing for collateral for the Obligations, whether now or hereafter in existence, and any filings, instruments, agreements and documents related thereto or to this Agreement that are executed to guarantee and/or govern and/or secure all or any part of the Loan, interest thereon and, in general, providing the Lender with Collateral for the Obligations (whether or not any such document also secured moneys from time to time owing pursuant to any other document or agreement).

Shareholders has the meaning ascribed thereto in the recitals of this Agreement.

Solvent shall mean, as to any Person as of the date of determination, that (a) the fair value of such Person’s Property is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities); (b) the present fair saleable value of the Property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its Property and pay its debts and other probable liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person has not incurred, does not intend to and does not believe that it will incur, debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature; and (e) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s Property would constitute unreasonably small capital.

SSMRC has the meaning set forth in the recitals of this Agreement.

SSMRC Guarantee shall mean the Guarantee, dated as of the date hereof, made by SSMRC in favor of Lender in respect of not less than 70% of the Obligations, as amended, restated, supplemented or modified from time to time.

SSMRC Lux has the meaning set forth in the recitals of this Agreement.

Subsidiary shall mean, as applied to any Person, (a) any corporation of which more than fifty percent (50%) of the outstanding stock having ordinary voting power to elect a majority of its board of directors, regardless of the existence at the time of a right of the holders of any class or classes of securities of such corporation to exercise such voting power by reason of the happening of any contingency, or any partnership or limited liability company of which more than fifty

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percent (50%) of the outstanding Equity Interests, is at the time owned directly or indirectly by such Person, or by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person, or (b) any other entity which is directly or indirectly Controlled by such Person, or by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person.

Taxes shall have the meaning ascribed thereto in Section 2.7(a) hereof.

Term Loan shall mean Loans advanced by the Lender to the Borrowers under this Agreement in the aggregate principal amount not to exceed $210,000,000.

to the knowledge of the Borrowers shall mean actually known by or reasonably should have been known (using reasonable diligence) by any executive officers of Borrowers, or any replacement of any such officer.

Up Front Fee shall have the meaning ascribed thereto in Section 2.11(a) hereof.

U.S. Dollars and the sign $ shall mean lawful money of the United States of America.

1.2Other Definitional Provisions.

All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. Unless the context clearly states otherwise, the use of “include” or “including” shall be by way of example rather than by limitation. The words “hereof,” “herein” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “continuing,” “continuation” or “continuance” means, in reference to any Default or Event of Default that has occurred, that such Default or Event of Default has not been either cured or waived in writing by the Lender. Unless otherwise specified, all Article and Section references pertain to this Agreement. All references in this Agreement to any agreement shall be deemed to mean and refer to such agreement as it may be amended, restated, modified or supplemented from time to time, except as otherwise expressly provided in such reference or otherwise expressly prohibited by the terms of this Agreement.

1.3Currency Matters.

Principal, interest, reimbursement obligations, fees, and all other amounts payable under this Agreement and the other Loan Documents to the Lender shall be payable in the currency in which such Obligations are denominated. All calculations, comparisons, measurements or determinations under this Agreement shall be made in U.S. Dollars.

ARTICLE 2

LOANS

2.1Loans

Subject to the terms and conditions of this Agreement, the Lender agrees to make the Term Loan to the Borrowers. During the Availability Period, the Term Loan may be advanced to a Borrower not more than once each calendar quarter (each such advance, a “Drawdown”), by written request of the Borrowers to the Lender not less than five (5) Business Days in advance of the date of any such advance (each, a “Drawdown Date”), provided, that each Drawdown must be in purpose and amount set forth in

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the Budget; provided further, that any undrawn amounts as of the end of the Availability Period will cease to be available to the Borrowers.

Loans shall be repaid by the Borrowers, on a joint and several basis, in U.S. Dollars, commencing two (2) Business Days prior to June 30, 2021, in fourteen (14) consecutive semi-annual installments, each in an amount equal to the sum of (i) one fourteenth (1/14) of the aggregate principal amount outstanding under this Agreement as of the Availability Termination Date, plus (ii) one fourteenth (1/14) of any capitalized interest accrued as of December 31, 2019, plus (iii) all accrued, unpaid interest payable in respect of the principal then outstanding, and shall be payable two (2) Business Days prior to each month end of June and December until the Maturity Date. No portion of principal paid may be re-borrowed after being repaid.

2.2Interest

(a)Subject to the remainder of this Section 2.2, the unpaid principal amount of the Loans shall bear interest from the applicable Drawdown Date thereof until paid in full, and Borrowers promise, on a joint and several basis, to pay interest on the unpaid principal amount of each Loan at a rate per annum equal to LIBOR plus the Applicable Margin (the “Interest Rate”).

(b)Immediately upon the occurrence, and during the continuance, of an Event of Default, the Default Rate shall apply to the outstanding principal balance of the Loans. Such interest shall accrue from the occurrence of such Event of Default until the earlier of (i) the date of cure by the Borrower of the applicable Event of Default, and (ii) payment in full of the Obligations.

2.3Interest Payment Dates

Interest shall accrue from day to day on the basis of a 360-day year, shall be calculated beginning on and including the date of the Drawdown to, but excluding, the date of any repayment thereof if paid prior to 3:00 p.m. (New York time) and shall be payable in arrears on the date that is two (2) Business Days prior of June 30 and December 31 of each year; provided, that until commencement of production by the Los Gatos Project, interest shall accrue and be capitalized on a monthly basis, with the first payment in cash on the day that is two (2) Business Days prior to December 31, 2019, or on a later date in the event of production delay, subject to Lender’s consent.

2.4Prepayments

(a)Voluntary Prepayments. Subject to Section 2.4(c), Borrowers may from time to time prepay the Loans in whole or in part, together with all accrued and unpaid interest in respect of the principal amount so prepaid without any premium or penalty. Any voluntary prepayment shall be in a principal amount of not less than $1,000,000 unless the Loan is being prepaid in full.

(b)Mandatory Prepayments.

(i)On the first Business Day following the receipt of (y) any Net Proceeds (Asset Sales) of Borrowers, or (z) any Net Proceeds (Insurance) of Borrowers, the Borrowers shall utilize one hundred percent (100%) of the amount of any cash receipts described in clauses (y) or (z) above, if any, to make a mandatory prepayment of the Loans, together with all accrued and unpaid interest in respect

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of the principal amount so prepaid; provided, however that, so long as no Event of Default shall have occurred and be continuing, the Borrowers may give written notice to Lender that they plan to reinvest all or any portion of such Net Proceeds (Asset Sales) or Net Proceeds (Insurance) for loss to property in assets used or useful in the Borrowers’ business in accordance with the terms of the Partner Agreement so long as within 90 days following receipt of such Net Proceeds (Asset Sales), such purchase shall have been consummated, or within 90 days of a Borrower’s receipt of Net Proceeds (Insurance), Borrowers commence and diligently pursue the restoration of the Property for which such Net Proceeds (Insurance) are being paid (as certified by the Borrowers in writing to the Lender).

(ii)After the occurrence of the Availability Termination Date, on the date that is two (2) Business Days prior to August 31 and February 28 (or 29 in any leap year), the Borrowers shall utilize 70% of Excess Cash Flow of the Borrowers, calculated for the previous six-month period ended June 30 or December 31, as applicable, to prepay the Loans, together with all accrued and unpaid interest in respect of the principal amount so prepaid, subject to adjustment based on year-end audited financials to the extent required by the Management Committee under the Partner Agreement.

(c)The Borrowers shall give the Lender written notice of any prepayment not later than five (5) Business Days prior to the date of such prepayment (which shall be a Business Day), specifying the aggregate principal amount of the Loan(s) to be prepaid and the date and amount of prepayment. If any repayment is remitted on a day other than an Interest Payment Date, the Borrowers shall pay all Breakage Costs suffered by the Lender in connection therewith.

(d)Prepayments made under this Section 2.4 shall be applied first to principal in inverse order of maturity. Any amounts prepaid under this Section 2.4 may not be re-borrowed.

2.5Repayment

The principal amount of the Loans, together with all accrued and unpaid interest or respect thereof, shall be repaid in full on the Maturity Date.

2.6Payment

(a)Making and Settlement of Payments. All payments of principal of, or interest on, the Loans, and of all fees and other amounts due hereunder or under any other Loan Document, shall be made by Borrowers to the Lender in immediately available funds as specified in Annex I (or such other location specified by the Lender in writing) not later than 3:30 p.m. New York time on the date due, and funds received after that hour shall be deemed to have been received on the following Business Day.

(b)Application of Certain Payments. All payments hereunder shall be applied (w) first, to any fees, costs or expenses owed by the Borrowers hereunder or under any other Loan Document, (x) second, to any accrued and unpaid interest, excluding capitalized interest, (y) third, to any principal amounts outstanding, including capitalized interest, and (z) fourth, without duplication, to any other amounts under the Loan Documents.

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(c)Payment Dates. If any payment of principal or interest with respect to any of the Loans or of any fees falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.

2.7Manner of Payment

(a)The Borrowers agree to pay principal, interest, fees and all other amounts due hereunder or under any other Loan Document without set-off or counterclaim or any deduction whatsoever and free and clear of all taxes and levies (other than withholding taxes), unless required by Applicable Law. If the Borrowers are required by Applicable Law to deduct any taxes other than Excluded Taxes (“Taxes”) from or in respect of any sum payable to the Lender hereunder, under any Note or under any other Loan Document: (i) the Borrowers shall increase the amount payable hereunder or thereunder, as applicable, to the extent necessary to provide that, after making all required deductions or withholdings for Taxes (including deductions applicable to additional sums payable under this Section 2.7(a)), the Lender receives an amount equal to the sum it would have received had no such deductions been made and sums payable under this Agreement shall be increased accordingly; (ii) the Borrowers shall make such deductions from such sums payable hereunder or thereunder, as applicable, and pay the amount so deducted to the relevant taxing authority as required by Applicable Law; and (iii) the Borrowers shall provide the Lender with evidence that such deducted amounts have been paid to the relevant taxing authority by delivery to the Lender on whose account such payment was made of the official tax receipts or copies of such receipts within thirty (30) days after payment for such tax or, to the extent such receipts are not available, such other evidence as may be reasonably satisfactory to the Lender. If the Borrowers fail to make any such payment when due, the Borrowers shall indemnify the Lender for any incremental Taxes, interest or penalties that may become payable by the Lender as a result of such failure.

(b)In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental Entity in accordance with Applicable Law.

(c)The Borrowers shall indemnify the Lender, promptly after written demand therefore, for the full amount of any Taxes (including Other Taxes) paid by the Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrowers or under any other Loan Document (including Taxes imposed or asserted on or attributable to amounts payable under this Section 2.7) and any penalties, interest and reasonable, documented, out-of-pocket expenses arising therefrom or with respect thereto, in each case whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Entity. A certificate as to the amount of such payment or liability delivered to the Borrowers by the Lender shall be conclusive absent manifest error.

2.8Lender Tax Forms

On or prior to the Closing Date, and prior to the date on which any Person becomes a Lender hereunder, and from time to time thereafter if required by Applicable Law due to a change in circumstances and as reasonably requested by the Borrowers (unless such Lender is legally unable to do so), each Foreign Lender shall provide the Borrowers with such properly completed documentation prescribed by Applicable Law as necessary to permit any all payments hereunder or under any Loan Document to be made without or with reduced US withholding tax. In the event that the Borrowers

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withhold a portion of any payment hereunder or under any Note or other Loan Document in accordance with this Section 2.8, the Borrowers shall provide evidence that such taxes of any nature whatsoever in respect of this Agreement, or other Loan Document shall have been paid to the appropriate taxing authorities by delivery to the Lender on whose account such payment was made of the official tax receipts or notarized copies of such receipts (or such other evidence of payment as shall be reasonably acceptable to Lender) within thirty (30) days after payment of such tax. If the Borrowers fail to make any such withholding payment when due, the Borrowers shall indemnify the Lender for any incremental taxes, interest or penalties that may become payable by the Lender as a direct result of any such failure.

2.9FATCA Documentation.

If a payment made to Lender under any Loan Document would be subject to US federal withholding Tax imposed under FATCA if Lender were to fail to comply with the applicable reporting requirements of FATCA, Lender shall deliver to the Borrowers at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers such documentation prescribed by applicable law and such additional documentation reasonably requested by the Borrowers as may be necessary for the Borrowers to comply with their obligations under FATCA and to determine that Lender has complied with Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 2.9, “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

2.10Capital Adequacy; Change in Law

If after the Closing Date, the adoption of any Applicable Law or guideline regarding capital adequacy, or any Change in Law or any change in the interpretation or administration thereof by any Governmental Entity, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any third party lender to Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such third party lender’s capital in respect of amounts advanced to Lender in order for Lender to make the Loans, to a level below that which it could have achieved but for such adoption, change or compliance (taking into consideration such third party lender’s policies with respect to capital adequacy immediately before such adoption, change or compliance) by an amount reasonably deemed by such third party lender, in good faith, to be material, and if Lender is obligated to pay such third party lender such additional amounts as shall be sufficient to compensate such third party lender for such reduced return, Borrower shall promptly reimburse on demand to the Lender such additional amounts. Notwithstanding the foregoing, the Borrowers shall only be obligated to compensate the Lender for any amount under this subsection arising or occurring at any time (i) in the case of each such request for compensation, during the period commencing not more than ninety (90) days prior to the date on which the Lender submits such request and (ii) during which, because of the unannounced retroactive application of such law, regulation, interpretation, request or directive, the third party lender could not have known that the resulting reduction in return might arise. A certificate of the Lender delivered to the Borrowers setting forth the amount to be paid to the Lender by the Borrowers as a result of any event referred to in this paragraph and supporting calculations in reasonable detail shall be presumptively correct absent manifest error.

2.11Fees

(a)On or prior to the Closing Date, Borrowers shall pay to Lender an up front fee equal to $4,200,000 (the “Up Front Fee”).

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(b)Commencing on the Closing Date, SSMRC shall pay to Lender an Arrangement Fee equal to 2.0% per annum (the “Arrangement Fee”). The Arrangement fee shall be paid in two (2) semi-annual installments, on that date which is two (2) Business Days prior to June 30 and December 31 each fiscal year until Maturity, and shall be calculated based upon 70% of the outstanding principal amount of Loans then outstanding on each semi-annual installment payment date. Such fee shall be earned when due. By way of example, if the outstanding principal balance of the Loans is $100,000,000 two (2) Business Days prior to June 30, the semi-annual installment of the Arrangement Fee shall be $700,000 ($100,000,000 times 70% times 1%), with the December 31 semi-annual installment calculated in a similar manner based upon the outstanding principal balance of the Loans two (2) Business Days prior to December 31.

ARTICLE 3

CONDITIONS PRECEDENT; CONDITIONS SUBSEQUENT

3.1Conditions Precedent to the Initial Drawdown Under the Loans

The obligation of the Lender to advance the initial Drawdown is subject to the prior or contemporaneous fulfillment of each of the following conditions on or prior to October 31, 2017, unless otherwise agreed by Lender:

(a)The Lender shall have received each of the following, each in form and substance satisfactory to the Lender:

(i)this Agreement and the Promissory Note duly executed and delivered by the Borrowers;

(ii)the SSMRC Guaranty duly executed and delivered by SSMRC;

(iii)a duly executed secretary’s certificate of the Borrowers, including a certificate of incumbency with respect to Authorized Signatories, together with the following items: (A) a true, correct and complete copy of each Organizational Document of the Borrowers as in effect on the Closing Date, (B) certificates of status for the Borrowers issued by the state of its formation and for each state in which such Borrowers are qualified to do business and (C) a true, complete and correct copy of the corporate resolutions of the Borrowers authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party;

(iv)a duly executed secretary’s certificate of each Borrower, including a certificate of incumbency with respect to Authorized Signatories, together with the following items: (A) a true, correct and complete copy of each Organizational Document of such Person as in effect on the Closing Date, (B) a certificates of status issued by the state of its formation and (C) a true, complete and correct copy of the corporate resolutions of such Person authorizing the execution, delivery and performance of the Loan Documents to which it is a party;

(v)a duly executed certificate of a senior financial officer of the Borrowers, certifying that (i) each of the representations and warranties in Article 4 hereof and in the other Loan Documents are true and correct in all material respects as of the date thereof and after giving effect to the initial Drawdown, (ii) no Default

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or Event of Default then exists or is continuing or will exist after giving effect to the initial Drawdown, (iii) no material litigation, (iv) that Borrowers are Solvent, and (v) there has been no Material Adverse Change since December 31, 2016.

(vi)legal opinions of counsel to the Borrowers addressed to the Lender, in each case in form and substance reasonably satisfactory to the Lender;

(vii)the Security Documents shall have been executed and delivered by the Borrowers; and

(viii)all registration, filing or recording documents necessary to preserve, protect or perfect the enforceability and first priority of the Security, subject in all events to the Permitted Encumbrances, shall have been completed all satisfactory in form and substance to the Lender, including but not limited to ratification of the Security Documents (apostilled and translated into Spanish) before a Mexican Notary Public and entry into applicable public registries;

(b)The Lender shall have received evidence that all Necessary Authorizations required for the execution, delivery and performance of this Agreement by the Borrowers have been obtained or made, are in full force and effect and are not subject to any pending or, to the actual knowledge of the Borrowers, threatened reversal or cancellation.

(c)The Borrowers shall have paid to the Lender all outstanding fees (including reasonable legal fees) to the extent then due and payable, including but not limited to the Up Front Fee and, if a Drawdown is made on the Closing Date, the Arrangement Fee.

(d)The Lender shall have received the Projections which shall be in form and substance satisfactory in all respects.

(e)The Shareholders shall have each executed and delivered the Amendment to Partner Agreement setting forth their agreement as to the funding of additional funds required for completion of the Los Gatos Project. The Remaining Required Capital Contributions (as defined in the Amendment to Partner Agreement) shall be made on a pro rata basis concurrent with each Loan advanced by Lender under this Agreement following the advance of $79.25 million in Loan proceeds.

(f)The Lender shall have received evidence to its reasonable satisfaction that SSMRC shall have raised proceeds from the issuance of its Equity Interests, which, subject to Lender having funded the Dowa MPR Loan, as defined in and in accordance with the Amendment to Partner Agreement, shall be in an amount sufficient for SSMRC to make capital contributions to Borrowers in an aggregate amount not less than $25 million less any capital contributions made by SSMRC and SSMRC Lux since July 1, 2017.

3.2Conditions Precedent to Subsequent Drawdowns

The obligation of the Lender to advance subsequent Drawdowns is subject to the prior or contemporaneous fulfillment of each of the following conditions:

(a)No Default or Event of Default shall have occurred and be continuing.

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(b)Each of the representations and warranties in Article 4 hereof and in the other Loan Documents are true and correct in all material respects as of the date thereof and after giving effect to such Drawdown.

Each request for a Loan by any Borrower hereunder shall constitute a representation and warranty by each Borrower as of the date of such Loan that the conditions contained in this subsection shall have been satisfied.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

4.1Representations and Warranties

Each Borrower hereby agrees, represents and warrants, upon the Closing Date and on each Drawdown Date, in favor of the Lender that:

(a)Name; Organization; Ownership; Power; Qualification. Such Person (i) has been duly and validly formed and is validly subsisting and in good standing as a commercial company under the laws of its jurisdiction of formation and (ii) is duly qualified to conduct the business in which it is currently engaged in each jurisdiction in which it or the nature of its business requires qualification, except to the extent failure to be so qualified would not cause a Material Adverse Change. The name of such Person as it appears in official filings in the state of its formation, the type of entity of such Person, organizational identification number issued by the state of formation of such Person or a statement that no such number has been issued by the state of formation or incorporation, the location of the chief executive office of such Person, principal place of business, and the locations of its books and records concerning its assets, in each case, as of the Closing Date, is set forth on Schedule 1 attached hereto.

(b)Authorization; Enforceability. Such Person has the corporate power and has taken all necessary corporate and organizational action to borrow hereunder, to execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms, and to consummate the transactions contemplated hereby and thereby. This Agreement and the other Loan Documents have been duly executed and delivered by such Person and each of the other Loan Documents to which such Person is a party is, a legal, valid and binding obligation of such Person, enforceable against such Person, in accordance with its terms, subject, as to enforcement of remedies, to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity.

(c)Compliance with Other Loan Documents and Contemplated Transactions. The execution, delivery and performance, in accordance with their respective terms, by the such Person of this Agreement and the other Loan Documents, as applicable, to which is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) require any consent or approval, governmental or otherwise, not already obtained, (ii) violate any Applicable Law respecting such Person, (iii) conflict with, result in a breach of, or constitute a default under the Organizational Documents of such Person, (iv) conflict with, result in a breach of, or constitute a default under any material indenture, agreement, or other instrument, to which such Person is a party or by which it or its properties may be bound, or (v) result in or require the creation or imposition of any

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Lien upon or with respect to any property now owned or hereafter acquired by such Person, other than Permitted Encumbrances.

(d)Business. The Borrowers are engaged solely in the business of development and operation of the Los Gatos Project.

(e)Necessary Authorizations. The Borrowers have secured all Necessary Authorizations for the execution and delivery of this Agreement and the Loan Documents to which it is a party, and none of the Necessary Authorizations are the subject of any pending or, to the best of such Person’s knowledge, threatened revocation, except where the failure to secure such Necessary Authorization or the failure of such Necessary Authorization to be in full force and effect could not reasonably be expected to be Material Adverse Change.

(f)Compliance with Law. The Borrowers are in compliance with all Applicable Law (excluding any Environmental Law which is the subject of (g), below).

(g)Environmental Laws. Neither any Borrower, their Subsidiaries nor any of their operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be expected to cause a Material Adverse Change. There are and, to Borrowers’ knowledge, have been, no conditions, occurrences, or Release in violation of any Environmental Law which could reasonably be expected to form the basis of an Environmental Claim against the Borrowers that, individually or in the aggregate, could reasonably be expected to be a Material Adverse Change. No Borrower has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any facility, and no such Person’s operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under Environmental Laws that, individually or in the aggregate, could reasonably be expected to cause a Material Adverse Change. To the knowledge of the Borrowers, no event or condition has occurred or is occurring with respect to Borrowers relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which individually or in the aggregate has had, or could reasonably be expected to be, a Material Adverse Change.

(h)Title to Assets. The Borrowers and each of their Subsidiaries have good and valid title to, or the right to use, their Property, free and clear of all Encumbrances except Permitted Encumbrances.

(i)Litigation. There are no actions, suits or proceedings pending or, to the knowledge of the Borrowers, threatened against or affecting a Borrower or any of their Subsidiaries as of the date hereof and as of each Drawdown Date, which purports to affect the legality or enforceability of the Agreement or any of the other Loan Documents, which seeks to enjoin the performance of any of the Loan Documents, or which could reasonably be expected to cause a Material Adverse Change.

(j)Taxes. All federal, state, provincial and other material income tax returns and material non-income tax returns of the Borrowers required by law to be filed have been duly filed and are true, complete and correct in all material respects, and all federal, state and other income taxes and material non-income taxes, including, without limitation, withholding taxes, assessments and other governmental charges or levies required to be withheld, remitted or paid by the Borrowers or imposed upon any Borrower or any of its properties,

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income, profits or assets, which are due and payable, have been properly withheld, remitted, or paid, except any such taxes (i) (x) the payment of which the Borrowers are diligently contesting in good faith by appropriate proceedings, (y) for which adequate reserves have been provided on the books of the Borrowers involved, and (z) as to which no Lien other than Permitted Encumbrances has attached and no foreclosure, distraint, sale or similar proceedings have been commenced, (ii) which may result from audits not yet conducted or (iii) the failure of which to pay could not reasonably be expected to cause a Material Adverse Change. The charges, accruals and reserves on the books of the Borrowers and each of its Subsidiaries in respect of taxes are, in the reasonable judgment of the Borrowers, adequate in accordance with GAAP.

(k)No Material Adverse Change. There has occurred no Material Adverse Change since December 31, 2016.

(l)Mexican Law Matters.

(i)The obligations of each Borrower under the Loan Documents are commercial in nature and are subject to civil and commercial law with respect thereto. The execution and performance of the Loan Documents by each Borrower constitute private and commercial acts and not government or public acts. Each Borrower and its Property are subject to legal actions regarding its Obligations and it is not entitled to immunity on the grounds of sovereignty or otherwise based on the jurisdiction of any court or based on any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) in connection therewith. If any Borrower or any of its Property should become entitled to any such right of immunity, such Borrower shall have effectively waived such right.

(ii)None of the employees of the Borrowers are on strike, nor has a strike been called, and none of the Borrowers are subject to labor or collective proceedings.

(iii)None of the Borrowers have or are subject to any agrarian, community or land ownership conflict.

(iv)All of the activities performed by the Borrowers are allowed and observant of Applicable Law and pursue only company purposes allowed by Applicable Law and in accordance with the object of the company. The resources Borrowers obtain from their activity are legal and the destination of the resources they shall obtain by virtue of the Loan and its accessories are and shall always be legal; and the Borrowers have implemented and maintain satisfactory internal procedures and control systems that, pursuant to Applicable Law and in accordance with the generally accepted guidelines, are required to enable the suitable knowledge of their clients and operations with the purpose of preventing that they be used as an instrument of third parties for money laundering, financing of terrorist activities, frauds or other manners of corruption or illegal activity.

(m)Governmental Regulation. The Borrowers are not required to obtain any consent, approval, authorization, permit or license which has not already been obtained from, or effect any filing or registration which has not already been effected with, any Governmental Entity in connection with the execution and delivery of this Agreement or any other Loan Document, or their performance thereunder, in accordance with the

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respective terms thereof, except for usual and customary filings that are necessary to perfect the Security under Applicable Law.

(n)No Default. No Default or Event of Default has occurred which is continuing.

(o)Accuracy and Completeness of Information. All information, reports, prospectuses and other papers and data relating to the Borrowers and furnished by the Borrowers to the Lender (other than the Projections, other financial projections, budgets, forward-looking statements and third-party generated industry data), taken as a whole, were, at the time furnished, true, complete and correct in all material respects (except as supplemented, updated or corrected by subsequent information, reports, prospectuses and other papers and data provided on or prior to the Closing Date), and all projections (the “Projections”), consisting of a combined projected cash flow statement, an income statement, and a balance sheet for the Borrowers (i) are based on estimates and assumptions that the Borrowers believe in good faith to be reasonable at the time such Projections were prepared; and (ii) reflect, as of the date prepared, the Borrowers’ good faith forecast of the results of operations and other information projected therein for the periods covered thereby. Notwithstanding the foregoing, any inaccuracy or breach in the representations and warranties set forth in this Section 4.1(p) shall not constitute a Default or an Event of Default in the event Lender had actual knowledge of such inaccuracy or breach prior to the Closing Date.

(p)Security. The Security constitutes a valid first priority security interest on such of the Property of the Borrowers as is expressed to be subject thereto, in favor of the Lender, subject only to Permitted Encumbrances.

(q)Indebtedness. As of the Closing Date, and after giving effect to the Loans hereunder on the Closing Date and the application of the proceeds thereof, Borrowers have no Indebtedness for Money Borrowed other than the Loans.

(r)Solvency. As of the Closing Date and after giving effect to the transactions contemplated by the Loan Documents on the Closing Date the Borrowers will be Solvent.

(s)Patents, Trademarks, Franchises, etc. The Borrowers and each of their Subsidiaries own, possess, or have (i) the right to use all necessary patents, trademarks, trademark rights, trade names, trade name rights, service marks, and copyrights currently used by such Person; and (ii) all rights with respect to franchises, and under licenses, and rights with respect thereof, reasonably necessary to conduct its respective business as now conducted without known conflict with any patent, trademark, trademark rights, trade name, trade name rights, service mark, franchise, license, or copyright of any other Person, and in each case, subject to no Lien except for Permitted Encumbrances. All such patents, trademarks, trademark rights, trade names, trade name rights, service marks, copyrights, franchises, and licenses that are registered, together with all state and/or federal application or registration numbers held by the Borrowers, are to the best of the Borrowers’ knowledge, valid, subsisting and enforceable, and the holder thereof is in compliance with all of the provisions thereof, and no such asset or agreement is subject to any pending or, to the best of the Borrowers’ knowledge, threatened attack or revocation.

(t)Use of Proceeds. The proceeds of any Loan will be used only for the purposes specified in Section 5.6 hereof.

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(u)Sanctioned Persons; Sanctioned Countries. None of the Borrowers or any of their Affiliates (a) is a Sanctioned Person or (b) does business in a Sanctioned Country or with a Sanctioned Person in violation of the economic sanctions of the United States administered by OFAC. Borrowers will not use the proceeds of any extension of credit hereunder to fund any operation in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Country.

(v)Stamp Duties. No stamp, registration or similar tax or charge is payable by Borrowers in connection with the entering into, and performance by Borrowers of their obligations under, any Loan Document to which Borrowers are a party, except for those which have already been paid or will be timely paid by Borrower.

(w)OFAC. No Borrower or any of their respective Affiliates or agents acting or benefiting in any capacity in connection with this Agreement is a “Specially Designated National” under the sanctions administered by the Office of Foreign Assets Control and shall not use the proceeds from the Loans in any transaction for the purpose of financing activities of any Person subject to any US sanctions administered by OFAC, including, without limitation, those implemented against India, the United Nations, the European Union or any other country by regulation codified in Subtitle B, Chapter V of Title 31, U.S. Code of Federal Regulations.

4.2Survival of Representations and Warranties, etc.

All representations and warranties made under this Agreement and any other Loan Document shall be deemed to be made, and shall be true and correct in all material respects (provided that if any representation or warranty already includes a materiality or material adverse change qualifier, such representation or warranty shall be true and correct in all respects) at and as of the Closing Date and on each Drawdown Date, except to the extent relating specifically to the Closing Date or any other particular date expressly set forth above. All representations and warranties made under this Agreement and the other Loan Documents shall survive, and not be waived by, the execution hereof by the Lender, any investigation or inquiry by the Lender or the making of any Loan under this Agreement.

ARTICLE 5

AFFIRMATIVE COVENANTS

So long as any of the Obligations is outstanding and unless the Lender shall otherwise consent in writing:

5.1Preservation of Existence and Similar Matters

Each Borrower will do all things necessary (i) to maintain its existence as a legally valid and subsisting limited liability company under the laws of its jurisdiction of organization, and (ii) to maintain all rights, privileges and franchises necessary in the normal conduct of its business.

5.2Conduct of Business; Maintenance of Assets

Each Borrower will (a) continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement); and (b) keep in full force and effect its existence and comply in all respects

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with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect.

5.3Accounting Methods and Financial Records

Each Borrower will maintain a system of accounting established and administered in accordance with GAAP, keep adequate records and books of account in which complete entries will be made and reflecting all transactions, in each case to the extent consistent with good business practice, and keep accurate and complete records of its respective properties and assets.

5.4Insurance

Borrowers will maintain with financially sound and reputable insurance companies liability, casualty, property and business interruption insurance (including, without limitation, insurance with respect to its tangible assets) in at least such amounts and against at least such risks as are usually and customarily insured against in the same general area by similar companies engaged in the same or a similar business; and furnish to Lender, upon the reasonable request of the Lender, full information as to the insurance carried.

5.5Payment of Taxes and Claims

Each Borrower will pay, discharge, withhold and remit all taxes when due, including, without limitation, withholding taxes, assessments and governmental charges or levies required to be paid, withheld or remitted by it or imposed upon it or its income or profits or upon any properties belonging to it, as required by Applicable Law, prior to the date on which penalties attach thereto, and all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien or charge upon any of its properties; except that no such tax, assessment, charge, levy or claim need be paid (i) which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside in accordance with GAAP on the appropriate books, but only so long as such tax, assessment, charge, levy or claim does not become a Lien or charge other than a Permitted Encumbrance, or (ii) if no foreclosure, distraint, sale or similar proceedings shall have been commenced with respect thereto. Borrowers will file all income and material non-income tax and information returns required by federal, provincial, state or local tax authorities.

5.6Use of Proceeds

On the date hereof and at all times thereafter, the Borrowers shall use the proceeds of the Term Loan only (i) to finance and manage the Los Gatos Project, the initial capital cost of which is projected to be $316,000,000, (ii) to pay the costs and expenses incurred in connection with the Term Loan, and (iii) to fund such other activities related to the development of the Los Gatos Project as permitted by the Partner Agreement.

5.7Indemnity

The Borrowers agree to indemnify and hold harmless the Lender and each of its respective Affiliates, employees, representatives, shareholders, officers, directors, trustees, agents and advisors (any of the foregoing shall be an “Indemnitee”) from and against any and all claims, liabilities, losses, damages, actions, reasonable out-of-pocket attorneys’ fees and expenses (as such fees and expenses are incurred and documented; provided that reimbursement of attorneys’ fees and expenses shall be limited to the reasonable fees and expenses of one counsel for all such Indemnitees (and, in the event of any conflict of interest, one counsel for each party subject to such conflict) in any relevant jurisdiction) and demands

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by any party, including the reasonable, documented, out-of-pocket costs of investigating and defending such claims, whether or not Borrowers or the Person seeking indemnification is the prevailing party (a) resulting from any breach or alleged breach by Borrowers of any representation or warranty made hereunder; (b) the use, handling, release, emission, discharge, transportation, storage, treatment or disposal of any Hazardous Materials in violation of Environmental Laws at any property owned or leased by Borrower; (c) any violation of, non-compliance with or any liability under any Environmental Laws with respect to conditions at any property owned or leased by Borrowers or the operations conducted thereon; (d) the investigation, cleanup or remediation of offsite locations at which Borrowers or their respective predecessors are alleged to have directly or indirectly disposed of Hazardous Materials in violation of Environmental Laws; (d) otherwise arising out of (i) the Loans or otherwise under this Agreement, any Loan Document or any transaction contemplated hereby or thereby, including, without limitation, the use of the proceeds of Loans hereunder in any fashion by the Borrowers or the performance of their respective obligations under the Loan Documents by Borrower, (ii) allegations of any participation by the Lender in the affairs of Borrower, or allegations that any of them has any joint liability with Borrowers for any reason, (iii) any claims against the Lender by Borrower, by any shareholder or other investor in or lender to Borrower, by any brokers or finders or investment advisers or investment bankers retained by Borrowers or by any other third party, arising out of the Loans or otherwise under this Agreement; or (e) in connection with taxes (other than Excluded Taxes), fees, and other charges payable by Borrowers in connection with the Loans, or the execution, delivery, and enforcement of this Agreement, the other Loan Documents, and any amendments thereto or waivers of any of the provisions thereof; provided, further that if and to the extent that the Person seeking indemnification hereunder is determined in such case to have acted with gross negligence or willful misconduct by a final, non-appealable judicial order of a court of competent jurisdiction, such Person shall not be entitled to indemnification of such losses, claims, damages, liabilities or related expenses. The obligations of Borrowers under this Section 5.7 are in addition to, and shall not otherwise limit, any liabilities which Borrowers might otherwise have in connection with any warranties or similar obligations of Borrowers in any other Loan Document. Notwithstanding any other provision of this Section 5.7, under no circumstances shall any claim for indemnification hereunder include any claim on any theory of liability or indemnification, for lost profits or for special, indirect, consequential or punitive damages (as opposed to direct or actual damages).

5.8Further Assurances.

At its cost and expense, upon request of the Lender, Borrowers shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Lender to carry out more effectually the provisions and purposes of this Agreement and the other Loan Documents.

5.9Environmental Matters.

Each Borrower will (i) comply in all respects with all applicable Environmental Laws; (ii) obtain and renew all environmental permits necessary for its operations and properties to comply with all applicable Environmental Laws and environmental permits; and (iii) conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to comply with all Environmental Laws; except, in each case for such non-compliance, failure to obtain or renew, or failure to conduct or undertake as could not, individually or in the aggregate, reasonably be expected to cause a Material Adverse Change; provided, however, that Borrowers shall not be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances.

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5.10OFAC

(a)The Borrowers acknowledge that the Sanctions may become applicable with respect to the Loans or Loan Documents, including to any documentary credits, guarantees issued or disbursements or payments made by the Lender pursuant to the Loan Documents. Sanctions may pertain inter alia to the purpose and end use of the Loans, goods manufactured in or originated from or through certain countries, shipment from, to, or using certain countries, ports, vessels, liners, or due to involvement of certain persons and entities (including correspondent banks). Consequently, disbursement, issuance, payment, or processing under the Loans by the Lender may become subjected to the Sanctions and the Lender shall have the unconditional right to refuse to process any transactions that violate, or may violate, any Sanctions.

(b)The Borrowers agree to ensure that the transactions entered into pursuant to the Loan Documents do not violate any Sanctions and that the Borrowers are not currently subject to any Sanctions. The Borrowers agree that it shall not avail of the Loans or use the proceeds of the Loans in any transaction with, or for the purpose of financing the activities of, any person currently subject to any Sanctions as aforementioned.

(c)Each Borrower hereby agrees to indemnify and hold harmless the Lender, to the fullest extent permitted by Applicable Law, for all losses and liabilities (including due to claims by a third party), incurred by the Lender as a result of any breach by it of its representations and undertakings contained herein pertaining to the Sanctions or due to any action taken by the Lender pursuant to the Sanctions. No action taken by the Lender pursuant to the Loan Documents, including grant of the Loans, issuance of any financial instruments thereunder or processing of any payments or transactions, nor any action taken by such Person in relation thereto, shall be deemed to be a waiver of any of the Lender’s rights under any provisions of the Loan Documents related to the Sanctions nor shall they act to relieve the Borrowers of their obligations or liabilities in relation thereto.

5.11Payment of Indebtedness and Leasehold Obligations.

Borrowers shall pay, discharge or otherwise satisfy (i) at or before maturity (subject, where applicable, to specified grace periods) all its Indebtedness, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect and (ii) when due its rental obligations under all leases under which it is a tenant, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect, and shall otherwise comply, in all material respects, with all other terms of such leases and use its commercially reasonable efforts to keep them in full force and effect.

5.12Reserve Accounts.

Borrowers shall maintain accounts funded in an amount sufficient to pay (i) one semi-annual payment of principal (the “Debt Service Reserve Account”), and (ii) the Borrowers’ operations for a three-month period as set forth in the Budget (the “Operating and Capital Reserve Cost Account”). Such accounts shall be maintained at a financial institution reasonably satisfactory to Lender and pledged to Lender as Collateral, and monthly statements shall be provided by the financial institution to Lender indicating the balances thereof. Borrowers will be permitted day-to-day access to such accounts so long as the minimum balances are at all times maintained and may draw on such balances solely for their stated purposes.

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ARTICLE 6

INFORMATION COVENANTS

So long as any of the Obligations are outstanding, the Borrowers will furnish or cause to be furnished to the Lender:

6.1Annual Financial Statements and Information

Within 90 days after the end of each Fiscal Year, a copy of the audited combined financial statements of the Borrowers, as at the end of and for such Fiscal Year, prepared in accordance with GAAP (which financial statements shall include, subject to such changes as shall be mandated by GAAP from time to time, an income statement, statements of cash flows and a balance sheet), and which financial statements shall be audited by the statutory auditor or then-current accounting firm (in all other cases), and setting forth in comparative form, the figure for the previous Fiscal Year.

6.2Quarterly Financial Statements and Information

Within 45 days after the end of each of the first three fiscal quarters of each Fiscal Year, balance sheet and statements of stockholders’ equity and cash flow of the Borrowers on a combined basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year-end adjustments that individually and in the aggregate are not material to Borrowers’ business operations and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.

6.3Performance Certificates

At the time the combined financial statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of the Borrowers executed on its behalf by an Authorized Signatory of the Borrowers as to its financial performance stating that no Default or Event of Default has occurred as at the end of such Fiscal Year or fiscal quarter, or, if a Default or Event of Default has occurred, disclosing each such Default or Event of Default and its nature, when it occurred, whether it is continuing and, in the case of a Default which has not yet become an Event of Default the steps being taken by the Borrowers with respect to such Default.

6.4Copies of Other Reports

From time to time and promptly upon each request such further information regarding the business, assets, liabilities, financial position, and results of operations of a Borrower or any of their Subsidiaries, as the Lender may reasonably request; and

6.5Notice of Litigation and Other Matters

Promptly notify the Lender on becoming aware of the occurrence of any litigation, dispute, arbitration, proceeding, investigation or similar circumstance the result of which could reasonably be expected to result in a Default, Event of Default or Material Adverse Change with respect to the Borrowers and from time to time provide the Lender with all reasonable information requested by the Lender concerning the status of any such proceeding.

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6.6Access and Inspections

Borrowers shall permit Lender, on reasonable advance notice and, unless and Event of Default has occurred and is continuing, at Lender’s sole cost and expense, access to the books and records of the Borrowers, and Lender may inspect the Borrowers’ premises and the Collateral. Any review or inspection conducted by or on behalf of Lender will be made during the Borrowers’ normal business hours and will not interfere with operations of the Borrowers.

ARTICLE 7

NEGATIVE COVENANTS

So long as any of the Obligations are outstanding and unless the Lender shall otherwise consent in writing:

7.1Indebtedness of the Borrowers

After the date hereof, the Borrowers shall not create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, any Indebtedness for Money Borrowed other than the Term Loan.

7.2Limitation on Liens

Borrowers shall not assume, incur or permit to exist or to be created, assumed, incurred or permitted to exist any Lien on any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Encumbrances.

7.3Liquidation, Merger or Disposition of Assets

(a)Disposition of Assets. Borrowers shall not, at any time sell, lease, abandon, transfer or otherwise dispose of any assets other than in the ordinary course of business.

(b)Liquidation, Dissolution or Merger. Borrowers shall not at any time liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up, or enter into any acquisition, amalgamation, merger or consolidation.

7.4Limitation on Guarantees

After the date hereof, Borrowers shall not, at any time Guaranty, assume, be obligated with respect to, or permit to be outstanding any Guaranty of any obligation of any other Person.

7.5Investments

The Borrowers shall not, directly or indirectly make any Investment, loan, advance or Capital Expenditures without the prior written consent of the Lender.

7.6Restricted Payments and Restricted Purchases

The Borrowers shall not, and shall not permit any of Borrower’s Subsidiaries to, directly or indirectly declare or make any Restricted Payment or Restricted Purchase except as permitted by the Partner Agreement.

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7.7Affiliate Transactions

The Borrowers shall not at any time engage in any transaction with an Affiliate, or make an assignment or other transfer of any of its properties or assets to any such Affiliate, other than as permitted pursuant to the Partner Agreement or on terms substantially as favorable as would be obtainable in a comparable arms-length transaction with a Person other than an Affiliate.

ARTICLE 8

EVENTS OF DEFAULT; REMEDIES.

8.1Events of Default

Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Entity or non-governmental body:

(a)(i) Borrowers shall fail to pay any interest, fees or other Obligations due under the Loan Documents within five (5) Business Days after the same becomes due and payable, or (ii) Borrowers have failed to pay principal when due under the Loan Documents; or

(b)Any representation or warranty made under this Agreement shall prove incorrect in any material respect when made or deemed to be made; or

(c)Borrowers shall default in the performance or observance of (i) any agreement or covenant set forth in Sections 5.5, 6.1, 6.2 or 6.3 or Article 7, or (ii) any other agreement or covenant contained in this Agreement or the other Loan Documents to which it is a party and such default under this clause (ii) shall continue for a period of thirty (30) days; or

(d)A court of competent jurisdiction shall enter a decree or order for relief in respect of any Borrowers in an involuntary case under Bankruptcy Laws or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed within sixty (60) days; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against a Borrower under Bankruptcy Laws or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, interim receiver, receiver and manager, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Borrower, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, receiver, receiver and manager, trustee or other custodian of such Borrower for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of such Borrower, and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or

(e)(i) a Borrower shall have an order for relief entered with respect to it or shall commence a voluntary case under Bankruptcy Laws or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a

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voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, interim receiver, receiver and manager, trustee or other custodian for all or a substantial part of its property; or a Borrower shall make any general assignment for the benefit of creditors; or (ii) a Borrower shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts generally as such debts become due; or the board of directors (or similar governing body) of Borrowers (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f), or (iii) shall commit an act of bankruptcy for the purposes of Bankruptcy Laws; or

(f)In the reasonable judgment of the Lender, there shall have occurred a Material Adverse Change; or

(g)If any Guaranty of the Obligations shall be terminated or cease to be enforceable; or

(h)If any Loan Document or Security Document shall be deemed illegal, invalid or unenforceable or the lender shall cease to have a perfected first priority security interest thereunder, subject only to Permitted Encumbrances; or

(i)Borrowers or the title and rights of Borrowers shall have become the subject matter of claim, litigation, suit or other proceeding which might, in the reasonable opinion of the Lender result in impairment or loss of the Security provided by this Agreement or the other Loan Documents and Borrowers are not diligently and in good faith defending any such claim, litigation, suit or other proceeding; or

(j)There is entered by any court or arbitration panel against a Borrower a monetary judgment in excess of $1,000,000, decree or award not covered by insurance or indemnification (where the indemnifying party has agreed to indemnify and is financially able to do so) and if, within forty-five (45) days after the entry, issue or levy thereof, such judgment shall not have been paid or discharged or stayed pending appeal or removed to bond, or if, after the expiration of any such stay, such judgment shall not have been paid or discharged or removed to bond; or

(k)Any Necessary Authorization applicable to Borrowers is revoked and not reinstated within sixty (60) days of the date of such revocation; or

(l)Either of SSMRC or SSMRC Lux defaults under the Amendment to Partner Agreement (after the expiration of all notice and cure periods); or

(m)the occurrence, whether in a single transaction or a series of transactions, of a Change of Control.

8.2Remedies

(a)Subject to Section 8.2(e) below, if an Event of Default specified in Section 8.1 hereof (other than an Event of Default under Section 8.1(d) or Section 8.1(e) hereof) shall have occurred and shall be continuing, the Lender may declare the principal of and interest on the Loans and all other amounts owed to the Lender under this Agreement and any other Loan Documents to be forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or any other Loan Document to the contrary notwithstanding.

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(b)Upon the occurrence and continuance of an Event of Default specified in Section 8.1(d) or Section 8.1(e) hereof all principal, interest and other amounts due hereunder and all other Obligations, shall thereupon and concurrently therewith automatically become due and payable and the principal amount of the Loans outstanding hereunder shall bear interest at the Default Rate, all without any action by the Lender and without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or in the other Loan Documents to the contrary notwithstanding.

(c)Upon acceleration of the Obligations, as provided in subsections (a) or (b) of this Section 8.2 above, the Lender shall have all of the post default rights granted to it under the Loan Documents and under Applicable Law.

(d)Upon acceleration of the Obligations, as provided in subsections (a) or (b) of this Section 8.2, the Lender, shall have the right to the appointment of a receiver for the properties and assets of the Borrowers, and the Borrowers hereby consent to such rights and such appointment and hereby waives any objection the Borrowers may have thereto or the right to have a bond or other security posted by the Lender, in connection therewith.

(e)If (i) Borrowers fail to make any payment when due under this Agreement or (ii) a non-payment Event of Default shall have occurred and is continuing, prior to acceleration of the Obligations under Section 8.2(a) above, if both (x) after three (3) Business Days’ notice of demand SSMRC fails to perform under the SSMRC Guarantee in respect of the payment then due under the foregoing clause (i), or all of the Obligations that would be due upon acceleration under the foregoing clause (ii), and (y) immediately upon demand by Lender the obligated party under the Financial Guarantee (if any) fails to perform under the Financial Guarantee in respect of such payment, then Lender may in its sole discretion make an irrevocable election upon notice to SSMRC either (x) to pursue its remedies under this Agreement or (y) to forgive or convert to equity such payment obligation, in which case each of the Shareholders’ Participating Interests shall be adjusted based on the ratio of (i) the amount of such payment that Lender has elected to forgive or convert multiplied by 1.4, over (ii) $210,000,000, which amount will be added to Lender’s then existing Interest. Upon exercise by Lender of its rights under clause (y) above, the subject default or Event of Default shall be deemed cured. Lender’s rights under clauses (x) and (y) shall apply to any subsequent payment default.

(f)Subject to Section (e) hereof, the rights and remedies of the Lender hereunder shall be cumulative, and not exclusive.

8.3Payments Subsequent to Declaration of Event of Default

Subsequent to the acceleration of the Obligations under Section 8.2 hereof, payments and prepayments under this Agreement made to the Lender shall be distributed as follows: first, to the Lender’s reasonable, documented, out-of-pocket costs and expenses, if any, incurred in connection with the collection of such payment or prepayment, including, without limitation, all amounts under Section 9.2 hereof; second, to the Lender for any fees hereunder or under any of the other Loan Documents then due and payable; third, to the Lender for any unpaid interest which may have accrued on the Obligations; fourth, to the Lender for the unpaid principal amount of the Loans then outstanding until all Loans have been paid in full; fifth, to the Lender for any unpaid amounts, to the payment of any other unpaid Obligations; and sixth, to the Borrowers or as otherwise required by law.

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ARTICLE 9

MISCELLANEOUS

9.1Notices

(a)Except as otherwise expressly provided herein, all notices and other communications under this Agreement and the other Loan Documents (unless otherwise specifically stated therein) shall be in writing and shall be deemed to have been given three (3) Business Days after deposit in the mail, designated as certified mail, return receipt requested, postage-prepaid, or one (1) Business Day after being entrusted to a reputable commercial overnight delivery service for next day delivery, or when sent on a Business Day prior to 5:00 p.m. (New York time) by electronic mail addressed to the party to which such notice is directed at its address determined as provided in this Section 9.1. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses:

(i)If to the Borrowers, to them at:

660 Lincoln Street, Suite 2750

Denver, Colorado 80264

Attn: Roger Johnson, CFO

Email: rjohnson@ssmines.com

with a copy to (which shall not constitute notice to Borrowers):

Snell & Wilmer L.L.P.

1200 Seventeenth Street, Suite 1900

Denver, Colorado 80202

Attn: Jeff Reeser

Email: jreeser@swlaw.com

(ii)If to the Lender, to it at:

Dowa Metals & Mining Co., Ltd.

14-1, Sotokanda 4-Chome

Chiyoda-ku, Tokyo 101-002 Japan

Attn: Toshiaki Suyama

Director, General Manager

Resource Development &

Raw Materials Department

suyamat@dowa.co.jp

with a copy to (which shall not constitute notice to the Lender):

Torys LLP

1114 Avenue of the Americas

23rd Floor

New York, NY 10036

Attn: Don Bell

dbell@torys.com

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The failure to provide copies shall not affect the validity of the notice given to the primary recipient.

(b)Any party hereto may change the address to which notices shall be directed under this Section 9.1 from time to time by giving ten (10) days’ prior written notice of such change to the other parties.

9.2Expenses

The Borrowers will promptly pay, or reimburse:

(a)all reasonable and documented out-of-pocket expenses of the Lender in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents, and the transactions contemplated hereunder and thereunder, including, but not limited to, the reasonable fees and disbursements of Torys LLP, special counsel for the Lender;

(b)all reasonable and documented out-of-pocket expenses of the Lender in connection with the restructuring and “work out” of the transactions contemplated in this Agreement and the preparation, negotiation, execution and delivery of any waiver, amendments, or consent by the Lender, or any of them, relating thereto whether or not executed, including, but not limited to, the reasonable fees and disbursements of any experts, agents or consultants and of counsel for the Lender; and

(c)all reasonable and documented out-of-pocket costs and expenses of the Lender of enforcement under this Agreement or the other Loan Documents and all reasonable out-of-pocket costs and expenses of collection if an Event of Default occurs in the payment of the Obligations, which in each case shall include reasonable fees and out of pocket expenses of counsel for the Lender.

9.3Waivers

The rights and remedies of the Lender under this Agreement and the other Loan Documents shall be cumulative and not exclusive of any rights or remedies which they would otherwise have. No failure or delay by the Lender in exercising any right, shall operate as a waiver of such right. Any waiver or indulgence granted by the Lender, shall not constitute a modification of this Agreement or any other Loan Document, except to the extent expressly provided in such waiver or indulgence, or constitute a course of dealing at variance with the terms of this Agreement or any other Loan Document such as to require further notice of their intent to require strict adherence to the terms of this Agreement or any other Loan Document in the future.

9.4Set-Off

In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon the occurrence of an Event of Default and during the continuation thereof, the Lender is hereby authorized by the Borrowers at any time or from time to time, without notice to the Borrowers or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, time or demand, including, but not limited to, Indebtedness evidenced by certificates of deposit, in each case whether matured or unmatured), and any other Indebtedness at any time held or owing by the Lender, to or for the credit or the account of the Borrowers, against and on account of the obligations and liabilities of the Borrowers to the Lender, including, but not limited to, all Obligations and any other claims of any nature or description arising out

34

of or connected with this Agreement or any other Loan Document, irrespective of whether (a) the Lender shall have made any demand hereunder or (b) the Lender shall have declared the principal of and interest on the Loans and other amounts due hereunder to be due and payable as permitted by Section 8.2 hereof and although such obligations and liabilities or any of them shall be contingent or unmatured.

9.5Successors and Assigns

(a)The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrowers may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender, and the Lender may not assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of clause (i) of this Section 9.5, or (ii) by way of participation in accordance with the provisions of clause (d) of this Section 9.5 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this Section 9.5 and, to the extent expressly contemplated hereby, the Affiliates of the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)The Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement; provided that:

(i)each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans assigned; and

(ii)If required by Applicable Law, the Lender shall, and shall cause each of its assignees to, provide to the Borrowers on or prior to the effective date of any assignment an appropriate form supporting the Lender’s or assignee’s position that no withholding by the Borrowers for income tax payable by the Lender or assignee in respect of amounts received by it hereunder is required.

(c)The Lender may at any time, without the consent of, or notice to, the Borrowers sell participations to any Person (other than a natural person or a Borrower or any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of the Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrowers shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that the Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement. The rights of any Participant only shall be derivative through the Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the Lender, Borrower, the Security, or otherwise in respect of the Loan. No Participant shall have the right to participate directly in the making of decisions by the Lender.

35

(d)A Participant shall not be entitled to receive any greater payment under Section 2.8 hereof than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent or at the Borrowers’ request and such Participant has complied with the terms of such provisions as if it were a Lender.

(e)Any assignment to an Eligible Assignee and any transaction with a Participant shall be carried out (i) at Lender’s sole cost and expense; (ii) without any cost or expense to Borrowers, and (iii) without any additional obligations being imposed on Borrowers.

A Lender may furnish any information concerning Borrowers in the possession of the Lender from time to time to assignees and participants (including prospective assignees and participants) subject, however, to and so long as the recipient agrees in writing to be bound by the provisions of Section 9.4 hereof.

9.6Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument.

9.7Governing Law

This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to any choice of law principles that impose or attempt to impose the law(s) of any other jurisdiction. If any action or proceeding shall be brought by any of the parties hereto hereunder or under any other Loan Document in order to enforce any right, each of the parties hereby consents to and will submit to the jurisdiction of any commonwealth or federal court of competent jurisdiction sitting within New York City, the State of New York on the date of this Agreement. Each of the parties hereto hereby agrees that, to the extent permitted by Applicable Law, service of the summons and complaint and all other process which may be served in any such suit, action or proceeding may be effected by mailing by registered mail a copy of such process to the offices of such Person at the address given in Section 9.1 hereof and that personal service of process shall not be required. Nothing herein shall be construed to prohibit service of process by any other method permitted by law, or the bringing of any suit, action or proceeding in any other jurisdiction. Each of the parties hereto agrees that final judgment in such suit, action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by Applicable Law.

9.8Severability

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

9.9Interest

In no event shall the amount of interest due or payable hereunder exceed the maximum rate of interest allowed by Applicable Law, and in the event any such payment is inadvertently made by the Borrowers or inadvertently received by the Lender, then such excess sum shall be credited as a payment

36

of principal. If the maximum lawful interest rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the maximum lawful rate divided by the number of days in the year in which such calculation is made. It is the express intent hereof that the Borrowers not pay and the Lender not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by the Borrowers under Applicable Law.

9.10Table of Contents and Headings

The Table of Contents and the headings of the various subdivisions used in this Agreement are for convenience only and shall not in any way modify or amend any of the terms or provisions hereof, nor be used in connection with the interpretation of any provision hereof.

9.11Entire Agreement

Except as otherwise expressly provided herein, this Agreement and the other documents described or contemplated herein will embody the entire agreement and understanding among the parties hereto and thereto and supersede all prior agreements and understandings relating to the subject matter hereof and thereof.

9.12Reliance on and Survival of Various Provisions

All covenants, agreements, statements, representations and warranties made herein or in any certificate delivered pursuant hereto (i) shall be deemed to have been relied upon by the Lender notwithstanding any investigation heretofore or hereafter made by them and (ii) shall survive so long as any Obligation is outstanding and unpaid. Any right to indemnification hereunder, shall survive the termination of this Agreement and the payment and performance of all Obligations.

9.13Confidentiality

The Lender agrees to keep confidential information obtained by it pursuant hereto and the other Loan Documents confidential in accordance with its customary practices and agrees that it will only use such information in connection with the transactions contemplated by this Agreement and not disclose any of such information other than (a) to the Lender’s employees, representatives, directors, attorneys, auditors, agents, professional advisors, trustees or affiliates who are advised of the confidential nature of such information or to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provision of this Section 9.14), (b) to the extent such information presently is or hereafter becomes available to the Lender on a non-confidential basis from any source of such information that is in the public domain at the time of disclosure, (c) to the extent disclosure is required by law (including applicable securities laws), regulation, subpoena or judicial order or process (provided that notice of such requirement or order shall be promptly furnished to the Borrowers unless such notice is legally prohibited) or requested or required by bank, securities, insurance or investment company regulators, examiners or auditors or any administrative entity or Governmental Entity to whose jurisdiction the Lender may be subject, (d) to any rating agency to the extent required in connection with any rating to be assigned to the Lender, (e) to assignees or participants or prospective assignees or participants who agree to be bound by the provisions of this Section 9.14, (f) to the extent required in connection with any litigation or in connection with any enforcement rights between any obligor and the Lender with respect to the Loans or this Agreement and the other Loan Documents, or (g) with the Borrower’s prior written consent.

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9.14Illegality

If, at any time, it is or will become unlawful in any applicable jurisdiction for the Lender to perform any of its obligations under this Agreement, or to fund any Loan:

(a)the Lender shall promptly notify the Borrowers upon becoming aware of such event;

(b)upon the Lender notifying the Borrowers, the obligation of the Lender to fund any advances will be immediately cancelled to the extent Lender determines it is unlawful for Lender to fund the Loan; and

(c)the Borrowers shall repay the total amount of principal and interest outstanding on the last day of the Interest Period for each Loan occurring after the Lender has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Borrower, provided, that the Lender may not specify a date earlier than the last day of any applicable grace period permitted by Applicable Law.

9.15Joint and Several Liability.

All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted by Lender to any Borrower, failure of Lender to give any Borrower notice of borrowing or any other notice, any failure of Lender to pursue or preserve its rights against any Borrower, the release by Lender of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Lender to the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each Borrower waives all suretyship defenses.

9.16Amendments.

This Agreement may not be amended or modified except by a written instrument describing such amendment or modification executed by each of the parties hereto.

ARTICLE 10

WAIVER OF JURY TRIAL

10.1Waiver of Jury Trial; Waiver of Special, Exemplary, Punitive or Consequential Damages

THE BORROWERS AND THE LENDER HEREBY AGREE, TO THE EXTENT PERMITTED BY LAW, TO WAIVE AND HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWERS, THE LENDER, OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN THIS SECTION 10.1. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS SECTION, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER

38

ANY REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCLOSED BY AND TO THE PARTIES AND SUCH PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

[signature pages follow]

39

The parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

BORROWERS:
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
SERVICES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer

[Loan Agreement]

SSMRC:
SUNSHINE SILVER MINING AND REFINING CORPORATION
By:	/s/ Stephen A. Orr
	Name: Stephen A. Orr
	Title:   Executive Chairman & CEO
SSMRC Lux:
LOS GATOS LUXEMBOURG S.ar.L
By:	/s/ Stephen A. Orr
	Name: Stephen A. Orr
	Title:   Category A Manager

[Loan Agreement]

LENDER:
DOWA METALS & MINING CO., LTD.
By:	/s/ Akira Sekiguchi
	Name: Akira Sekiguchi
	Title:   President

[Loan Agreement]

ANNEX I

Payment Information for Lender

ACCOUNT NAME	Dowa Metals & Mining Co., Ltd.
ADDRESS	14-1, Sotokanda 4-Chome, Chiyoda-ku, Tokyo 101-0021, Japan
ACCOUNT No.	0848368
BANK NAME	The Bank of Tokyo-Mitsubishi UFJ, Ltd.
	Head Office
SWIFT CODE	BOTKJPJT
BANK ADDRESS	7-1, Marunouchi 2-Chome, Chiyoda-Ku, Tokyo 100-8388, Japan

Schedule 1

Corporate Information of the Borrowers

MINERA PLATA REAL, S. DE R.L. DE C.V.

Valle Escondido No. 5500,

Complejo Industrial El Saucito,

Punto Alto E-2, Oficina 201,

C.P. 31125, Chihuahua, Mexico

OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.

Valle Escondido No. 5500,

Complejo Industrial El Saucito,

Punto Alto E-2, Oficina 201,

C.P. 31125, Chihuahua, Mexico

SERVICES SAN JOSE DE PLATA, S. DE R.L. DE C.V.

Valle Escondido No. 5500,

Complejo Industrial El Saucito,

Punto Alto E-2, Oficina 201,

C.P. 31125, Chihuahua, Mexico

Schedule 2

Security Documents

1.Contrato de Prenda — Maquinaria y Equipo

2.Garantía Corporativa

3.Contrato de Prenda de Partes Sociales

4.Garantía Hipotecaria Dowa

EX-10.1.2

Exhibit 10.1.2

AMENDMENT NO. 1 TO TERM LOAN AGREEMENT

THIS AMENDMENT NO. 1 TO TERM LOAN AGREEMENT (this “Amendment”), is dated as of July 11, 2018, among MINERA PLATA REAL S. DE R.L. DE C.V., OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., and SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V. (collectively, the “Borrowers”), DOWA METALS & MINING CO., LTD., as lender (together with its respective successors and assigns, the “Lender”), and SUNSHINE SILVER MINING & REFINING CORPORATION and LOS GATOS LUXEBOURG S.ar.L (together “SSMRC”).

WHEREAS, the Borrowers, Lender, SSMRC and SSMRC Lux are a party to the Term Loan Agreement, dated as of July 11, 2017 (the “Existing Loan Agreement”); and

WHEREAS, the Borrowers have requested, and the Lender has agreed, to amend the Loan Agreement as set forth herein (as amended pursuant hereto, the “Loan Agreement”).

THEREFORE, subject to the terms and conditions set forth herein and for other good and valuable consideration, the parties hereby agree as follows:

Section 1Defined Terms.

Any defined term used herein and not otherwise defined shall have the meaning ascribed thereto in the Loan Agreement.

Section 2Amendments.

2.1The definition of “Excess Cash Flow” as set forth in Section 1.1 of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

Excess Cash Flow shall mean, for any period, EBITDA for such period, less interest expense paid or payable during such period, taxes paid during such period, payments of principal made under Section 2.4(b)(i) of this Agreement, and payments made to the Debt Service Reserve Account and to the Operating and Capital Cost Reserve Account during such period.

2.2Section 3.1(a) of the Existing Loan Agreement is hereby amended by replacing the words “each Borrower” in clause (iv) with the word “Guarantor”.

2.3Section 5.12 of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

Borrowers shall maintain accounts funded in an amount sufficient to pay (i) one semi-annual payment of principal (the “Debt Service Reserve Account”), and (ii) the Borrowers’ operations for a three-month period as set forth in the Budget (the “Operating and Capital Reserve Cost Account”). Such accounts shall be funded in full no later than two (2) Business Days prior to June 30, 2020 and shall be maintained at a financial institution reasonably satisfactory to Lender and pledged to Lender as Collateral. Monthly statements shall be provided by the financial institution to Lender indicating the balances thereof. Borrowers will be permitted day-to-day access to such accounts so long as the minimum balances are at all times maintained and may draw on such balances solely for their stated purposes.

Section 3Miscellaneous

3.1Borrowers and SSMRC acknowledge and confirm to the Lender that the Loan Agreement and each of the other Loan Documents shall remain in full force and effect and shall continue to evidence, secure or otherwise guarantee and support the obligations owing by the Borrowers and SSMRC to the Lender pursuant thereto, and, after giving effect to this Amendment, each Borrower and SSMRC hereby ratifies and affirms each of the foregoing documents to which it is a party.

3.2Borrowers and SSMRC acknowledge and agree that, except as expressly set forth herein, Lender shall not have waived or be deemed to have waived any of its rights or remedies under the Loan Agreement or any of the other Loan Documents which documents shall remain in full force and effect in accordance with their terms as modified by this Amendment.

3.3This Amendment may be executed in any number of counterparts, including by telecopy, email or any other electronic means that reproduces an image of the actual executed signature page to this Amendment, and by the various parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

3.4This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to any choice of law principles that impose or attempt to impose the law(s) of any other jurisdiction.

[signature pages follow]

2

The parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

BORROWERS:
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
SERVICES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer

[A1 to Loan Agreement]

SSMRC:
SUNSHINE SILVER MINING AND REFINING CORPORATION
By:	/s/ Stephen Orr
	Name: Stephen Orr
	Title:   Executive Chairman & CEO
LOS GATOS LUXEMBOURG S.ar.L
By:	/s/ Stephen Orr
	Name: Stephen Orr
	Title:   Executive Chairman & CEO

[Loan Agreement]

LENDER:
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name: Toshiaki Suyama
	Title:   President

[A1 to Loan Agreement]

EX-10.1.3

Exhibit 10.1.3

EXECUTION VERSION

AMENDMENT NO. 2 TO TERM LOAN AGREEMENT

THIS AMENDMENT NO. 2 TO TERM LOAN AGREEMENT (this “Amendment”), is dated as of November 30, 2018, among MINERA PLATA REAL S. DE R.L. DE C.V., OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., and SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V. (collectively, the “Borrowers”), DOWA METALS & MINING CO., LTD., as lender (together with its respective successors and assigns, the “Lender”), and SUNSHINE SILVER MINING & REFINING CORPORATION (“SSMRC”) and LOS GATOS LUXEBOURG S.ar.L ( “SSMRC Lux”).

WHEREAS, the Borrowers, Lender, SSMRC and SSMRC Lux are a party to the Term Loan Agreement, dated as of July 11, 2017, as amended by Amendment No. 1 to Term Loan Agreement, dated as of July 11, 2017 (the “Existing Loan Agreement”);

WHEREAS, concurrently herewith SSMRC Lux is transferring all of its Equity Interests in the Borrowers to SSMRC through an Assignment and Assumption Agreement, dated as of November 30, 2018 (the “Assignment”); and

WHEREAS, the Borrowers have requested, and the Lender has agreed, to amend the Existing Loan Agreement to reflect the Assignment as set forth herein (as amended pursuant hereto, the “Loan Agreement”).

THEREFORE, subject to the terms and conditions set forth herein and for other good and valuable consideration, the parties hereby agree as follows:

Section 1Defined Terms.

Any defined term used herein and not otherwise defined shall have the meaning ascribed thereto in the Loan Agreement.

Section 2Amendments.

2.1The first paragraph of the preamble of the Existing Loan Agreement is hereby amended by deleting “and LOS GATOS LUXEMBOURG S.ar.L (“SSMRC Lux”)”.

2.2The first WHEREAS clause of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

WHEREAS, Lender and SSMRC (together, the “Shareholders”) directly and indirectly own all of the Equity Interests of the Borrowers;

2.3The third WHEREAS clause of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

WHEREAS, SSMRC and the Borrowers have requested, and Lender has agreed, to fund a portion of the Los Gatos Project with the Loans provided for herein.

2.4The definition of Change of Control set forth in Section 1.1 of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

Change of Control shall mean the occurrence, without the prior written consent of Lender, of any event (whether in one or more transactions) that results in (a) the sale of all or substantially all of

the assets of SSMRC or any of the Borrowers, (b) any merger, consolidation or acquisition of SSMRC or any of the Borrowers with or by any other Person, (c) any transfer or disposition, direct or indirect, of the ownership or control of more than 50% of SSMRC’s Shares (as such term is defined in the Partner Agreement), or (d) SSMRC ceasing to have the power to direct or cause the direction of the management and policies of the Borrowers, in each case of clauses (c) and (d), other than in connection with a Permitted IPO or other equity issuance.

2.5The definition of SSMRC Lux set forth in Section 1.1 of the Existing Loan Agreement is hereby deleted in its entirety.

2.6Section 3.1(f) of the Existing Loan Agreement is hereby amended by deleting the words “and SSMRC Lux”.

2.7Section 8.1(l) of the Existing Loan Agreement is hereby amended by deleting the words “Either of” and “or SSMRC Lux”.

Section 3Conditions Precedent.

The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions:

A.Borrower shall have delivered to the Lender a fully executed copy of this Amendment, and the amended documents required under Mexican law: the (i) Partnership Interests Pledge Agreement, (including registry in social books; certification from Attorney-In-Fact; and Certification of the Partnership Interest Registration Book in front of Notary Public) and (ii) the originals of the Promissory Notes that replace those previously signed.

B.Borrower shall have delivered to the Lender a fully executed copy of the Assignment Agreement.

C.Borrower shall have delivered such other documents, agreements and instruments reasonably requested by Lender.

D.No Default or Event of Default shall have occurred and is continuing under the Loan Agreement.

Section 4Miscellaneous

4.1Borrowers and SSMRC acknowledge and confirm to the Lender that the Loan Agreement and each of the other Loan Documents shall remain in full force and effect and shall continue to evidence, secure or otherwise guarantee and support the obligations owing by the Borrowers and SSMRC to the Lender pursuant thereto, and, after giving effect to this Amendment, each Borrower and SSMRC hereby ratifies and affirms each of the foregoing documents to which it is a party.

4.2Borrowers and SSMRC acknowledge and agree that, except as expressly set forth herein, Lender shall not have waived or be deemed to have waived any of its rights or remedies under the Loan Agreement or any of the other Loan Documents which documents shall remain in full force and effect in accordance with their terms as modified by this Amendment.

4.3This Amendment may be executed in any number of counterparts, including by telecopy, email or any other electronic means that reproduces an image of the actual executed signature page to this

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Amendment, and by the various parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

4.4This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to any choice of law principles that impose or attempt to impose the law(s) of any other jurisdiction.

[signature pages follow]

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The parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

BORROWERS:
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer

[Amendment No. 2 to Loan Agreement]

SSMRC:
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name: Stephen Orr
	Title:   Executive Chairman
LOS GATOS LUXEMBOURG S.ar.L
By:	/s/ Stephen Orr
	Name: Stephen Orr
	Title:   Category A Manager

[Amendment No. 2 to Loan Agreement]

LENDER:
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name: Toshiaki Suyama
	Title:   President

[Amendment No. 2 to Loan Agreement]

EX-10.1.4

Exhibit 10.1.4

AMENDMENT NO. 3 TO TERM LOAN AGREEMENT

THIS AMENDMENT NO. 3 TO TERM LOAN AGREEMENT (this “Amendment”), is dated as of January 31, 2019, among MINERA PLATA REAL S. DE R.L. DE C.V., OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., and SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V. (collectively, the “Borrowers”), DOWA METALS & MINING CO., LTD., as lender (together with its respective successors and assigns, the “Lender”), and SUNSHINE SILVER MINING & REFINING CORPORATION (“SSMRC”).

WHEREAS, the Borrowers, Lender, and SSMRC are a party to the Term Loan Agreement, dated as of July 11, 2017, as amended by Amendment No. 1 to Term Loan Agreement, dated as of July 11, 2017, and Amendment No. 2 to Term Loan Agreement, dated as of November 30, 2018 (the “Existing Loan Agreement”); and

WHEREAS, the Lender has requested, and the Borrowers and SSMRC have agreed, to amend the Existing Loan Agreement to add the defined term “Banking Day” and redefine the defined term “LIBOR” in the Existing Loan Agreement (as amended pursuant hereto, the “Loan Agreement”).

THEREFORE, subject to the terms and conditions set forth herein and for other good and valuable consideration, the parties hereby agree as follows:

Section 1Defined Terms.

Any defined term used herein and not otherwise defined shall have the meaning ascribed thereto in the Loan Agreement.

Section 2Amendments.

2.1Section 1.1 of the Existing Loan Agreement is hereby amended to add the following definition in the appropriate alphabetical order:

Banking Day shall mean any day (other than Saturday or Sunday) on which banks are generally open for business in Denver, Colorado, USA and Tokyo, Japan.

2.2The definition of LIBOR set forth in Section 1.1 of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

LIBOR shall mean, in relation to any Loan for any Interest Period, the rate published by ICE Benchmark Administration Limited (or any successor to, or substitute for, such service, providing rate quotations comparable to those currently provided by ICE Benchmark Administration Limited, as determined by the Lender from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 1:00 a.m., London time, two (2) Banking Days prior to the commencement of such Interest Period and having a maturity equal to such Interest Period. In the event that no such rate is available to the Lender, the applicable LIBOR rate for the relevant Interest Period shall be the rate per annum reasonably determined by the Lender to be the rate at which deposits in Dollars, in the approximate amount of such Loan and for a period equal to such Interest Period, would be offered to the Lender by major banks in the London interbank market at approximately 11:00 a.m., London time, on the date that is the first day of such Interest Period.

Section 3Miscellaneous

3.1Borrowers and SSMRC acknowledge and confirm to the Lender that the Loan Agreement and each of the other Loan Documents shall remain in full force and effect and shall continue to evidence, secure or otherwise guarantee and support the obligations owing by the Borrowers and SSMRC to the Lender pursuant thereto, and, after giving effect to this Amendment, each Borrower and SSMRC hereby ratifies and affirms each of the foregoing documents to which it is a party.

3.2Borrowers and SSMRC acknowledge and agree that, except as expressly set forth herein, Lender shall not have waived or be deemed to have waived any of its rights or remedies under the Loan Agreement or any of the other Loan Documents which documents shall remain in full force and effect in accordance with their terms as modified by this Amendment.

3.3This Amendment may be executed in any number of counterparts, including by telecopy, email or any other electronic means that reproduces an image of the actual executed signature page to this Amendment, and by the various parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

3.4This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to any choice of law principles that impose or attempt to impose the law(s) of any other jurisdiction.

The parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

BORROWERS:
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
SERVICES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer

SSMRC:
SUNSHINE SILVER MINING AND REFINING CORPORATION
By:	/s/ Steven A. Orr
	Name: Steven A. Orr
	Title:   Chief Executive Officer
LENDER:
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name: Toshiaki Suyama
	Title:   President

EX-10.2.1

Exhibit 10.2.1

LOAN AGREEMENT

This Loan Agreement (this “Agreement”) is made as of January 23, 2018, by and among (i) MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish ), and SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, (collectively, the “Borrowers”), (ii) SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (the “Guarantor” or “SSMRC”), and (iii) DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (the “Lender” or “Dowa”). In consideration of the mutual covenants and agreements contained herein the parties hereto agree as follows:

RECITALS:

A.The Lender and SSMRC are the direct and indirect shareholders of the Borrowers, as set forth in the Unanimous Omnibus Partner Agreement, dated as of January 1, 2015, among Borrowers, Lender and the other parties thereto, as amended, restated, supplemented or modified from time to time (the “Partner Agreement”).

B.Borrowers require additional funds to complete the current Approved Program, which are to be funded by Remaining Required Capital Contributions, and SSMRC has notified the Lender that it is unable to fund its portion thereof.

C.In accordance with Section 8 of the Partner Agreement Amendment, and after the completion of total actual Second Stage Contributions of $40,322,012.93, the Lender has agreed to advance an aggregate principal amount up to $65,677,987.07 to the Borrowers (the “Dowa MPR Loan”), representing all or a portion of the “Remaining SSMRC Capital” in the amount of $45,974,590.95 and the “Remaining Dowa Capital” in the amount of $19,703,396.12 under the Partner Agreement Amendment.

D.The Guarantor is willing to guaranty seventy percent (70%) of the Dowa MPR Loan on the terms and subject to the conditions described herein in accordance with Section 8(c) of the Partner Agreement.

E.The Borrowers, Guarantor and the Lender have agreed to evidence such loan by entering into this Loan Agreement.

ARTICLE 1

INTERPRETATION

1.1Definitions

Any capitalized term used herein that is not otherwise defined shall have the meaning ascribed thereto in the Partner Agreement. For the purposes of this Agreement:

“Agreement” means this agreement as amended, restated or modified from time to time.

“Applicable Interest Rate” means LIBOR plus one and a half percent (1.5%).

“Banking Day” means any day (other than Saturday or Sunday) on which banks are generally open for business in Denver, Colorado, USA and Tokyo, Japan.

“Capital Contribution Date” means the date on which SSMRC funds any Capital Contribution (as defined in the Partner Agreement) to the Borrowers.

“Default” means any event or condition which, upon notice, lapse of time, or both, would constitute an Event of Default.

“Dowa” has the meaning given in the recitals.

“Dowa MPR Loan” has the meaning given in the recitals.

“Event of Default” has the meaning attributed to such term in Section 3.1.

“Guarantor” has the meaning attributed to such term in the recitals.

“Guaranty” means the Limited Guaranty, dated as of the date hereof, made by the Guarantor in favor of the Lender, as amended, restated, supplemented or modified from time to time, pursuant to which the Guarantor shall have guaranteed seventy percent (70%) of the Obligations.

“LIBOR” means the interest rate per annum determined by the Lender by dividing (the resulting quotient rounded upwards, if necessary, to the nearest l/100th of 1% per annum) (a) the ninety (90) day (the “Interest Period”) LIBOR rate administered by ICE Benchmark Administration on the applicable Reuters screen page (or such other commercially available source providing such quotations of LIBOR as designated by the Lender from time to time), or the rate which is quoted by another source selected by Lender in good faith as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (a “LIBOR Alternate Source”), at approximately 1:00 a.m., London time, two (2) Banking Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Advance and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist an applicable Reuters screen page (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by the Lender at such time (which determination shall be conclusive absent manifest error)), by(b) a number equal to 1.00 minus the Reserve Percentage.

For the purpose of this definition of LIBOR, “Reserve Percentage” means as of any day the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding.

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“Loan Documents” means this Agreement, the Guaranty and any other agreements, instruments and documents delivered from time to time (both before and after the date of this Agreement) to the Lender by the Borrowers or Guarantor in connection with this Agreement, in each case as amended, supplemented, modified, restated or modified from time to time.

“Maturity Date” means the earlier of (i) June 30, 2019 or (ii) Substantial Completion (as defined in the Partner Agreement).

“MPR” has the meaning set forth in the recitals.

“Obligations” means all indebtedness, liabilities and other obligations of the Borrowers to the Lender hereunder or under any other Loan Document, whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter.

“Partner Agreement” has the meaning set forth in the recitals.

“Partner Agreement Amendment” means the Amendment to Partner Agreement, dated June 30, 2017, among the Borrowers, SSMRC and Lender, as amended, restated, supplemented or modified from time to time.

“Remaining Required Capital Contributions” has the meaning set forth in the Partner Agreement Amendment.

“SSMRC” has the meaning set forth in the recitals.

“TL Agreement” means the Term Loan Agreement, dated as of July 11, 2017, among the Borrowers, the Lender, SSMRC and Los Gatos Luxembourg S.a.r.l, as amended, restated, supplemented or modified from time to time.

1.2Invalidity, etc.

Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity, illegality or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof.

1.3Currency

All monetary amounts in this Agreement are stated in U.S. dollars.

1.4Governing Law

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING CHOICE OF LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

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1.5Waiver Of Jury Trial; Submission to Jurisdiction; Venue

1.5.1THE PARTIES HERETO EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

1.5.2EACH PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURTS LOCATED IN THE COUNTY OF NEW YORK FOR ANY LAWSUITS, ACTIONS, OR OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREES NOT TO COMMENCE ANY SUCH LAWSUIT, ACTION, OR OTHER PROCEEDING EXCEPT IN SUCH COURTS. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY LAWSUIT, ACTION, OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURTS LOCATED IN THE COUNTY OF NEW YORK, AND FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LAWSUIT, ACTION, OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

ARTICLE 2

PAYMENTS

2.1Advances

2.1.1Subject to the terms and conditions hereof, and so long as no Default or Event of Default has occurred and is continuing, the Lender agrees to make advances to Borrowers (each an “Advance” and, collectively, the “Advances”) as follows: (i) on January 30, 2018 in the principal amount of $25,000,000 (the “Initial Advance”), (ii) in late February, 2018 in the principal amount of $20,000,000, and (iii) in late March, 2018 in the amount of $20,677,987,07, provided that at no time shall the aggregate principal amount of all Advances exceed $ 65,677,987.07.

2.1.2Each Advance shall be paid to the Borrowers in accordance with written direction provided to the Lender at least five (5) Business Days prior to the requested Advance.

2.2Interest

2.2.1Interest shall accrue on the outstanding principal amount of each Advance at a rate per annum equal to the Applicable Interest Rate.

2.2.2Interest shall accrue from day to day, shall be calculated on the basis of the number of days elapsed and on the basis of a year of 360 days.

2.2.3All interest accrued under this Agreement shall be payable on the Maturity Date.

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2.3Evidence of Obligations

The Lender shall maintain an account evidencing the indebtedness and liabilities of the Borrowers hereunder and the amounts of principal, interest and other amounts owing and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account shall be conclusive evidence of the existence and amounts of the obligations of the Borrowers therein recorded, absent manifest error.

2.4Manner of Payment

All payments of principal, interest or other amounts payable hereunder by the Borrowers shall be made on the date specified herein (which if not a Banking Day, shall be the next following Banking Day). All payments with respect to this Agreement are to be made in lawful money of the United States of America in immediately available funds free and clear of, and without deduction for, certain present and future taxes, levies, imposts, duties, fees, assessments or other charges, and all interest, penalties and liabilities with respect thereto.

2.5Repayment

2.5.1The entire principal amount of the DOWA MPR Loan together with all accrued and unpaid interest thereon shall be fully due and payable on the Maturity Date.

2.5.2If the Borrowers fail to repay the Dowa MPR Loan together with all accrued and unpaid interest thereon on or before the Maturity Date, Lender may elect to convert all or a portion of the principal amount of the Dowa MPRLoan, together with all accrued and unpaid interest thereon, to equity in MPR in accordance with Section 10 to the Partner Agreement Amendment, at any time after the earlier of: (i) the date of MPR’s commencement of first commercial production; and (ii) date on which the Remaining Required Capital Contributions are spent or committed to be spent by MPR. Lender must provide at least ten (10) days’ prior written notice to SSMRC of its election to convert the Dowa MPR Loan under this Section 2.5.2.

2.6Prepayment

The Borrowers may repay all or part of any amounts payable under this Agreement, including interest, without premium or penalty at any time from time to time.

2.7Application of Payments

All amounts prepaid or repaid shall be applied firstly in reduction of the accrued and unpaid interest then outstanding in respect of the principal amount being prepaid or repaid and thereafter in reduction of the principal amount of the Dowa MPR Loan then outstanding.

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ARTICLE 3

REPRESENTATIONS AND COVENANTS; SECURITY

3.1Representations of Borrowers and Guarantor

Each Borrower and Guarantor represents and warrants to the Lender as follows:

(i)Such Person has full power, authority and legal right to enter into this Agreement and the other Loan Documents to which it is a party and to perform all its Obligations hereunder and thereunder.

(ii)This Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by such Person, and this Agreement and the other Loan Documents to which it is a party constitute the legal, valid and binding obligation of such Person enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.

(iii)The execution, delivery and performance of this Agreement and of the other Documents to which it is a party (A) are within such Person’s corporate or company powers, as applicable, have been duly authorized by all necessary corporate or company action, as applicable, are not in contravention of law or the terms of such Person’s Constating Documents, (B) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Authority, (C) will not require the Consent of any Governmental Authority or any other Person, and (D) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under the provisions of any agreement, instrument, or other document to which such Person is a party or by which it or its property is a party or by which it may be bound.

3.2Guaranty

Guarantor shall unconditionally guaranty, as a primary obligor and not merely as a surety, the due and punctual payment and performance of seventy percent (70%) of the Obligations pursuant to the terms of the Guaranty.

3.3Security

Each of the parties hereto acknowledges and agrees that this Agreement is a “Loan Document” under the TL Agreement, and that the Obligations under this Agreement are secured by the Security Documents (as defined therein). Any proceeds realized from the collateral pledged pursuant to the Security Documents shall be applied first to the “Obligations” under the TL Agreement, and second to the Obligations under this Agreement.

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ARTICLE 4

EVENTS OF DEFAULT AND REMEDIES

4.1Events of Default

The occurrence of any of the following events shall constitute an Event of Default:

4.1.1default by the Borrowers in payment when due of (i) the principal or interest on the Dowa MPR Loan or (ii) any other amounts owing under this Agreement and the expiration of five days after written notice of such default from Lender to Borrowers;

4.1.2default by the Borrowers in the performance or observance of any other covenant, condition or obligation contained in this Agreement or any other Loan Document and the expiration of 10 days after written notice of such default by Lender to Borrowers; provided that if such failure is not reasonably susceptible of cure within such 10 day period and Borrowers commence to cure such failure within such 10 day period and thereafter diligently pursue such cure Borrowers shall have an additional period, not to exceed 30 days, to complete such cure;

4.1.3

4.1.4a Borrower admits its inability to pay its debts generally as they become due or otherwise acknowledges its insolvency;

4.1.5either Borrower institutes any proceeding, or any proceeding is commenced against or involving such Borrower:

(a)seeking to adjudicate such Borrower bankrupt or insolvent,

(b)seeking liquidation, dissolution, winding up, reorganization, arrangement, protection or relief of it or any of its property or debt or making a proposal with respect to it under any law relating to bankruptcy, insolvency, compromise of debts or other similar laws; or

(c)seeking appointment of a receiver, trustee, agent, custodian or other similar official for such Borrower or for any part of such Borrower’s property and assets;

and such proceeding is not being contested in good faith by appropriate proceedings or, if so contested, remains outstanding, undismissed and unstayed more than 45 days from the institution of such first mentioned proceeding;

4.1.6any execution, distress or other enforcement process, whether by court order or otherwise, becomes enforceable against any material property and assets of a Borrower, which execution, distress or other enforcement is not paid, stayed, discharged, released or dismissed within 30 days from the date of entry ; or

4.1.7the occurrence of any Event of Default under the TL Agreement.

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4.2Remedies Upon Default

Upon the occurrence of any Event of Default, all Obligations shall be immediately due and payable, all without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonor or any other action. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law or by any of the Loan Documents.

4.3Overdue Amounts

All overdue amounts owing or deemed to be owing hereunder (“overdue amounts”), whether in respect of principal, interest, expenses or otherwise, both before and after judgment shall bear interest thereon at a rate per annum that is equal to the Applicable Interest Rate plus 2% per annum. Such interest on overdue amounts shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last Banking Day of each calendar month.

ARTICLE 5

GENERAL

5.1Indemnity and Expenses

5.1.1The Borrowers shall, jointly and severally, indemnify, pay and save harmless the Lender and each of its officers, directors, Affiliates, attorneys, employees and agents (each, an “Indemnified Party”) for all losses, costs, expenses, damages and liabilities which the Lender may sustain or incur under or in connection with this Agreement, in each case except to the extent that any of the foregoing arises out of the gross negligence or willful misconduct of the Indemnified Party.

5.1.2The Borrowers agree, jointly and severally, to pay all reasonable out-of-pocket expenses incurred by the Lender, including all reasonable attorneys’ fees in connection with the Dowa MPR Loan provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the Loan Documents or any amendments, modifications or waivers thereof.

5.2Amendment and Waiver

No amendment or waiver of any provision of this Agreement or consent to any departure by the Borrowers or Guarantor from any provision thereof is effective unless it is in writing and signed by the Lender. Such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

5.3Notices

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by e-mail or by hand-delivery as hereinafter provided. Any such notice shall be deemed to have been received at the time it is delivered to the applicable

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address noted below. Notice of change of address shall also be governed by this Section 5.3. Notices and other communications shall be addressed as follows:

5.3.1if to any Borrower or Guarantor:

Sunshine Silver Mining & Refining Corporation

1660 Lincoln Street, Suite 2750

Denver, Colorado 80264

USA

Attention: Roger Johnson

Telephone: 303 784 5334

Email: rjohnson@ssmines.com

with a copy to:

Snell & Wilmer LLP

1200 Latimer Street

Suite 1900

Denver, Colorado 80203

USA

Attention: Jeffrey Reeser

Email: jreeser@ssmines.com

5.3.2if to the Lender:

Dowa Metals & Mining Co., Ltd.

14-1, Sotokanda 4-chome

Chiyoda-Ku, Tokyo

101-0021, Japan

Attention: Toshiaki Suyama, Director, General Manager,

Resource Development & Raw Materials Department

Telephone: +81 3-6847-1201

Facsimile: +81 3-6847-1211

Email: suyamat@dowa.co.jp

with a copy to:

Torys LLP

1114 Avenue of the Americas, 23rd Floor

New York, NY 10036

USA

Attention: Don Bell

Telephone: +1 (212) 880-6118

Facsimile: +1 (212) 682-0200

Email: dbell@torys.com

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5.4Entire Agreement

This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes and replaces any prior understandings or arrangements pertaining to the loans made hereunder. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to herein. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement.

5.5Severability

In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

5.6Assignability

This Agreement shall not be assignable by any Borrower or Guarantor without the prior written consent of the Lender and any attempted assignment without such consent shall be null and void. This Agreement is not intended to confer any benefits upon or create any rights in favor of any person other than the parties hereto.

5.7Counterparts

This Agreement may be executed in counterparts, each of which when executed will be an original, and all of which, when taken together, will constitute one agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission will be as effective as delivery of a manually signed counterpart of this Agreement.

5.8Further Assurances

Whether before or after the happening of an Event of Default, the Borrowers shall at their own expense do, make, execute or deliver all such further acts, documents and things in connection with this Agreement and the Loan Documents as the Lender may reasonably require from time to time for the purpose of giving effect thereto, all promptly upon the request of the Lender.

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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their respective duly authorized Agreement as of the date set forth above.

Borrowers:
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer
SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
	Title:   Treasurer

Guarantor:
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name: Stephen Orr
	Title:   Chief Executive Officer

Lender:
DOWA METALS & MINING CO., LTD
By:	/s/ Akira Sekiguchi
	Name: Akira Sekiguchi
	Title:   President

EX-10.3.1

Exhibit 10.3.1

MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding (the “MOU”) is effective as of the 16th day of April, 2019,

AMONG:

MINERA PLATA REAL S. DE R.L. DE C.V. (“MPR”),

OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., and

SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V.

(collectively, the “LGJV” or the “Borrowers”)

AND:

DOWA METALS & MINING CO., LTD.

(“Dowa”)

AND:

SUNSHINE SILVER MINING & REFINING CORPORATION

(“SSMRC”)

(each of Dowa and SSMRC may be hereinafter referred to as a “Partner”, or together the “Partners”, and each of the Borrowers, Dowa and SSMRC may be hereinafter referred to as a “Party”, or collectively the “Parties”)

WHEREAS:

A.Dowa, SSMRC and the Borrowers previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into that certain Unanimous Omnibus Partner Agreement, dated January 1, 2015, by and among the Borrowers, Dowa and SSMRC, as amended (the “Partner Agreement”);

B.The Partners directly and indirectly own all of the equity interests of the LGJV, where Dowa owns 30% of the equity interests and SSMRC owns 70%;

C.Pursuant to the Partner Agreement, Dowa and SSMRC are required to make certain capital contributions proportional to each Partner’s equity interest in the LGJV;

D.To meet the ongoing capital needs of the Los Gatos Project, on January 23, 2018, the Borrowers, Dowa and SSMRC entered into that certain Loan Agreement, as amended (the “Dowa-MPR Loan”), pursuant to which Dowa advanced $65,677,987.07 to MPR to be repaid on or before June 30, 2019;

E.In addition to the Dowa-MPR Loan, Dowa has advanced US$210,000,000 to the Borrowers pursuant to the terms of a loan agreement dated as of July 11, 2017, as amended (the “Term Loan”); and

F.SSMRC has given notice to Dowa that it will be unable to fund its required capital contributions to the LGJV and, as a consequence, the LGJV is expected to default under the Dowa-MPR Loan and the Term Loan;

NOW THEREFORE in consideration of Dowa agreeing to forbear from enforcement of its rights upon default by MPR under the Dowa-MPR Loan, the Term Loan and its rights against SSMRC under the related security and the Partner Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows.

1.DEFINITIONS

1.1Unless the context otherwise requires, any capitalized term used herein and not defined will have the meanings ascribed to such terms in the Term Loan.

2.GENERAL TERMS

2.1SSMRC Capital Contribution. SSMRC will make a capital contribution to LGJV of $18,200,000 on or before May 31, 2019.

2.2Repayment of the Dowa-MPR Loan/Dowa Capital Contribution. Within one Business Day after SSMRC makes its capital contribution in accordance with Section 2.1, the Parties will cause MPR to use all of the proceeds thereof to make a partial repayment of the Dowa-MPR Loan in the amount of $18,200,000 to Dowa (the “Partial Repayment”). Immediately after receipt of the Partial Repayment, $7,800,000 of the Dowa-MPR Loan balance will be converted and deemed to be a capital contribution to LGJV by Dowa (the “Dowa Contribution”).

2.3Dilutive Contribution. After application of the Partial Repayment and conversion of the Dowa Contribution, the remaining balance of the Dowa-MPR Loan, including interest, will be approximately $42,945,000 (the “Remaining Balance”). The Remaining Balance will also be converted and deemed to be a capital contribution to LGJV by Dowa that dilutes SSMRC’s ownership interest in the LGJV (the “Dilutive Contribution”). Once the Dowa Contribution and the Dilutive Contribution are made, Dowa will own a 48.521% equity interest in the LGJV, and SSMRC will own a 51.479% equity interest in the LGJV. The Parties will cause the Partner Agreement to be amended to reflect such change in ownership interests in the LGJV.

2.4Working Capital Facility. Dowa agrees to advance a new working capital loan facility for the benefit of the LGJV for a maximum aggregate principal amount of $60,000,000 (the “Working Capital Facility”) on terms and conditions satisfactory to each of Dowa and the Borrowers, each in its sole discretion. Additional terms of the Working Capital Facility will include the following:

2.4.1Use of Proceeds of the Working Capital Facility. All amounts advanced to the LGJV under the Working Capital Facility will be used for the sole purpose of funding the working capital requirements of the LGJV, including for the purpose of funding to cover any delayed value added tax refunds. The timing of advances,

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repayments and whether any such advances can be readvanced, will be specified in the definitive Working Capital Facility agreement;

2.4.2Security Under the Working Capital Facility. The Working Capital Facility will be secured by all of the collateral pledged as security for the Term Loan including, without limitation, SSMRC’s interest in the LGJV, and cross-defaulted to the Term Loan;

2.4.3Guarantee Under the Working Capital Facility. SSMRC will guarantee 70% of the amounts owed under the Working Capital Facility;

2.4.4Payments Under the Working Capital Facility. Interest will accrue on the Working Capital Facility balance at a rate of six month LIBOR plus 3.0% and will be payable every six months; prepayments will be permitted and all principal amounts outstanding will be due on or before June 28, 2021;

2.4.5Arrangement Fee. SSMRC will pay an arrangement fee to Dowa within five Business Days after the last day of each fiscal quarter, calculated as: 15.0% per annum of 70.0% of the average daily principal amount outstanding under the Working Capital Facility during such fiscal quarter;

2.4.6Default. If a payment default under the Working Capital Facility or SSMRC’s arrangement fee is not remediated within seven Business Days, Dowa may, at its sole discretion, exercise all enforcement rights and remedies available to it; and

2.4.7Excess Cash. LGJV will be required to use any excess cash to pay down the outstanding balance of the Working Capital Facility. Excess cash will be calculated on a quarterly basis and defined as cash in excess of the LGJV’s reasonable working and sustaining capital requirements for the ensuing quarterly period based on budget and forecast projections.

2.5Priority Dividends to Dowa from LGJV. SSMRC will establish an escrow account in its name with reputable financial institution in the U.S. acceptable to Dowa, acting reasonably and:

2.5.1Dowa will be a party to the escrow agreement;

2.5.2SSMRC will provide irrevocable instruction and direction to the LGJV to deposit all dividends or other distributions other than management fees payable in the ordinary course to such escrow account until an aggregate amount equal to $20,000,000 has been deposited into such account; and

2.5.3SSMRC will provide irrevocable instruction and direction to the escrow agent to immediately release to Dowa any funds deposited into the escrow account.

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Following payment of the $20,000,000 described above to Dowa (“Priority Distribution”), dividends will be paid in accordance with the Partner Agreement, as amended.

2.6Dowa Grants Option to SSMRC to Repurchase Diluted Interest. Dowa will grant to SSMRC an option to buy the 18.521% of the equity interest in the LGJV acquired by Dowa pursuant to the dilution described in Section 2.3. The option may be exercised by notice in writing to Dowa at any time on or before June 30, 2021 after the Working Capital Facility is repaid in full and by making a payment to Dowa equal to the aggregate of: (1) 1.7 times the capital contribution of $30,062,000 that SSMRC was expected to make, but did not make, on or before June 30, 2019, being $51,105,400; plus (2) all costs incurred by Dowa in connection with its ownership of such 18.521% equity interest including, without limitation, any legal and accounting fees, capital contributions or taxes. If the option described above is not exercised and paid for in full on or before June 30, 2021, it will expire and cease to have any further effect. For certainty, Dowa has the absolute right to any dividends declared or paid on its interest in the LGJV and in the event that SSMRC exercises its option to buy the 18.521% interest described above, any dividends received by Dowa on such interest will not be deducted from price payable by SSMRC to acquire such interest. If SSMRC does not exercise its option and pay the option price on or before June 30, 2021, then Dowa will have the right to sell all or any portion of such 18.521% equity interest to any third party other than a Restricted Person (as defined in the Partner Agreement) (which, for greater certainty, will be deemed not to include any Japanese mining, smelting or trading company, regardless of whether such company is considered to be a competitor of LGJV or any of the Parties or their affiliates) without further consent from any Party, subject only to compliance with Section 18.5 of the Partner Agreement.

2.7Reserve Accounts. Dowa will agree to amend the provisions of Section 5.12 of the Term Loan to allow funding of the Debt Service Reserve Account and the Operating Capital Reserve Cost Account over time from LGJV’s excess cash, provided that: (1) after repayment of the Working Capital Facility, all excess cash will be allocated to fund such reserve accounts until they are fully funded; and (2) no dividends or other distributions will be permitted until such reserve accounts are fully funded.

2.8Costs. SSMRC will bear, and reimburse Dowa for, all of the costs of implementing the transactions contemplated by this MOU, including any fees payable in connection with registration of security.

2.9Financial Monitoring. In addition to its right under the Partner Agreement to appoint three engineers to assist with the LGJV’s Operations (as defined in the Partner Agreement), until the Working Capital Facility is repaid in full and Dowa has received the Priority Distribution, Dowa will have the right to designate one individual to be seconded to the LGJV for the purpose of monitoring the LGJV’s financial situation including, without limitation, accounting, tax and cashflow. Such individual will have full access to all information relating to LGJV’s Operations at both the mine site and the Chihuahua office. All costs associated with such individual’s secondment to the LGJV will be borne by the LGJV.

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3.CONDITIONS

3.1The transactions contemplated in this MOU and the rights and obligations of the Parties hereunder remain subject to: (1) approval of the transactions contemplated in this MOU by the boards of each of Dowa and SSMRC, in their sole discretion; (2) the completion of definitive agreements in form and substance acceptable to each of the Parties in their sole discretion which will include, without limitation, a Working Capital Facility loan agreement and related security documents, an option agreement, an amendment to the Term Loan and an escrow agreement; and (3) Dowa’s receipt of confirmation of registration of the security described in Section 2.4.2, above (together, the “Conditions”). If the Conditions are not satisfied or waived in writing on or before expiry of the Term, this MOU will terminate and cease to have any further effect, and Dowa will be free to exercise all rights and remedies available to it relating to the Partner Agreement, the Dowa MPR Loan and the Term Loan.

4.ACKNOWLEDGEMENTS

4.1SSMRC and LGJV hereby acknowledge that after issuance of the Working Capital Facility, any future defaults on behalf of SSMRC or LGJV may invoke immediate enforcement by Dowa of its rights through all available remedies. In addition to any other rights and remedies available to Dowa, upon the occurrence of a default by LGJV or SSMRC that is not cured within the applicable cure period, Dowa may, by notice in writing to SSMRC: (1) permanently terminate SSMRC’s role as service provider under the Partner Agreement (including, without limitation, its right to receive management fees), and either take over the role of Operator or service provider to the Operator itself, or appoint a third party of its choosing to act as Operator or service provider; and (2) appoint a majority of the three Managers (as defined in the Partner Agreement) for each LGJV entity. If LGJV defaults under the Term Loan or the Working Capital Facility or if SSMRC defaults in its obligation to pay the arrangement fee, SSMRC will be deemed to be a “Defaulting Partner” under the Partner Agreement while such default remains uncured. SSMRC will remain liable for any acts or omissions in its capacity as Operator up to the time of such termination. SSMRC expressly acknowledges that the transactions contemplated by this MOU constitute the last instance of Dowa agreeing to provide financial support to the LGJV that is disproportionate to its proportionate ownership interest in the LGJV.

5.ASSIGNMENT

5.1No Party may assign this MOU without the prior written consent of each of the other Parties. This MOU will enure to the benefit of and is binding upon the Parties and their respective successors and permitted assigns.

6.AMENDMENTS

6.1This MOU may not be amended, except pursuant to an instrument in writing signed by each of the Parties.

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7.GOVERNING LAW

7.1This MOU is entered into under the laws of the State of New York and the rights of all Parties and the construction and effect of each and every provision hereof will be subject to the exclusive jurisdiction and be construed and regulated only according to the laws of the State of New York (which will be the forum for the administration hereof) notwithstanding that any one or more of the Parties is incorporated or headquartered elsewhere than in the State of New York.

8.TERM

8.1This MOU will terminate on the earlier of: (1) satisfaction or waiver of the Conditions; and (2) May 31, 2019 (the “Term”).

9.MISCELLANEOUS

9.1This MOU may be executed in one or more counterparts, and by the Parties in separate counterparts, each of which when executed will be deemed to be an original, but all of which taken together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this MOU by telecopy or electronic scan will be effective as delivery of a manually executed counterpart of this MOU.

9.2This MOU constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes and replaces any prior understandings or arrangements. There are no warranties, conditions or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as expressly set forth or referred to herein. This MOU may not be amended except pursuant to an instrument in writing signed by all Parties.

9.3If any provision of this MOU is invalid or unenforceable, the invalidity or unenforceability of the provision will not affect the operation, construction or interpretation of any other provision of this MOU, with the intent that the invalid or unenforceable provision will be treated for all purposes as severed from this MOU.

9.4Each Party will do, execute and deliver all such further acts, documents and things in this MOU required to give effect to the transactions contemplated herein.

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IN WITNESS WHEREOF, the Parties have agreed to this MOU on the date first noted above.

MINERA PLATA REAL S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer

DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen A. Orr
	Name:	Stephen A. Orr
	Title:	Executive Chairman & CEO

EX-10.4.1

Exhibit 10.4.1

EXECUTION VERSION

WORKING CAPITAL FACILITY AGREEMENT

This Working Capital Facility Agreement (this “Agreement”) is made as of May 30, 2019, by and among (i) MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V., a Mexico variable capital company, and SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, (collectively, the “Borrowers”), (ii) SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (the “Guarantor” or “SSMRC”), and (iii) DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (the “Lender” or “Dowa”).

Background

A.Dowa, SSMRC and the Borrowers previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into a Unanimous Omnibus Partner Agreement dated January 1, 2015, as amended (the “Partner Agreement”);

B.Dowa and SSMRC directly and indirectly own all of the equity interests of the Borrowers, with Dowa owning 30% and SSMRC owning 70% of such equity interests;

C.Dowa has advanced US$210,000,000 to the Borrowers pursuant to the terms of a loan agreement dated as of July 11, 2017, as amended (the “TL Agreement”);

D.The Lender has agreed to advance an aggregate principal amount up to $60,000,000 to the Borrowers (the “Working Capital Facility”), subject to the terms and conditions set forth herein;

E.The Guarantor has agreed to guarantee 70% of the Working Capital Facility on the terms and subject to the conditions described herein; and

F.The Borrowers, Guarantor and the Lender have agreed to evidence the Working Capital Facility by entering into this Agreement.

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

1.1Definitions

Any capitalized term used herein that is not otherwise defined shall have the meaning ascribed thereto in the Partner Agreement. For the purposes of this Agreement:

“Agreement” means this agreement as amended, restated or modified from time to time.

“Applicable Interest Rate” means LIBOR plus three percent.

“Arrangement Fee” has the meaning set forth in Section 2.9.

“Banking Day” means any day (other than Saturday or Sunday) on which banks are generally open for business in Denver, Colorado, USA and Tokyo, Japan; provided, that for the purpose of calculating LIBOR, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollars on the London interbank market.

“Collateral” means any Property constituting collateral for the Obligations.

“Default” means any event or condition which, upon notice, lapse of time, or both, would constitute an Event of Default.

“Determination Date” means March 31, June 30, September 30 and December 31 of each year.

“Dowa” has the meaning given in the preamble.

“Excess Cash” means, as of any Determination Date, cash on hand of the Borrowers in excess of reasonable projected working capital and sustaining capital expenditures for the ensuing fiscal quarter calculated in accordance with the current Budget.

“Event of Default” has the meaning set forth in Section 4.1.

“Guarantor” has the meaning set forth in the preamble.

“Guarantee” means the Guarantee, dated as of the date hereof, made by the Guarantor in favor of the Lender, as amended, restated, supplemented or modified from time to time, pursuant to which the Guarantor shall have guaranteed 70% of the Obligations.

“Interest Payment Date” means, the last day of each June and December to occur while the Working Capital Facility is outstanding, and the Maturity Date.

“Interest Period” means (a) initially, the period commencing on the borrowing date with respect to each Advance and ending on the next Interest Payment Date to occur thereafter; and (b) thereafter, each period commencing on the last day of the next Interest Period and ending six months thereafter; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(a)if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

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(b)no Interest Period shall extend beyond the scheduled Maturity Date; and

(c)any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

“LIBOR” means, in relation to any Advance for any Interest Period, the rate published by ICE Benchmark Administration Limited (or any successor to, or substitute for, such service, providing rate quotations comparable to those currently provided by ICE Benchmark Administration Limited, as determined by the Lender from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, on the first day of such Interest Period and having a maturity equal to such Interest Period. In the event that no such rate is available to the Lender, the applicable LIBOR rate for the relevant Interest Period shall be the rate per annum reasonably determined by the Lender to be the rate at which deposits in U.S. dollars, in the approximate amount of such Advance and for a period equal to such Interest Period, would be offered to the Lender by leading banks in the London interbank market at approximately 11:00 a.m., London time, on the date that is the first day of such Interest Period.

“Loan Documents” means this Agreement, the Guarantee and any other agreements, instruments and documents executed and delivered from time to time (both before and after the date of this Agreement) to the Lender by the Borrowers or Guarantor in connection with this Agreement, in each case as amended, supplemented, modified, restated or modified from time to time.

“Los Gatos Project” has the meaning set forth in the recitals.

“Maturity Date” means June 28, 2021.

“MOU” means the Memorandum of Understanding entered into among the parties hereto and dated as of April 16, 2019.

“MPR” has the meaning set forth in the preamble.

“Obligations” means all indebtedness, liabilities and other obligations of the Borrowers to the Lender hereunder or under any other Loan Document, whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter.

“Partner Agreement” has the meaning set forth in the recitals, as it may be amended, restated, supplemented or modified from time to time.

“Property” means all types of real, personal or mixed property and all types of tangible or intangible property of the Borrowers.

“Security” means the encumbrances created by the Security Documents.

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“Security Documents” mean the documents listed on Schedule 1 and any other agreement or instrument providing for Collateral for the Obligations, whether now or hereafter in existence, and any filings, instruments, agreements and documents related thereto or to this Agreement that are executed to guarantee and/or govern and/or secure all or any part of the Working Capital Facility, interest thereon and, in general, providing the Lender with Collateral for the Obligations (whether or not any such document also secured moneys from time to time owing pursuant to any other document or agreement).

“SSMRC” has the meaning set forth in the preamble.

“TL Agreement” has the meaning set forth in the recitals, as it may be amended, restated, supplemented or modified from time to time.

“Working Capital Facility” has the meaning set forth in the recitals.

1.2Invalidity, etc.

Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity, illegality or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof.

1.3Currency

All monetary amounts in this Agreement are stated in U.S. dollars.

ARTICLE 2

ADVANCES; PAYMENTS

2.1Advances

2.1.1Subject to the terms and conditions hereof, and so long as no Default or Event of Default has occurred and is continuing, the Lender agrees to make advances to the Borrowers (each an “Advance” and, collectively, the “Advances”); provided that: (a) at no time shall the aggregate principal amount of all Advances exceed $60,000,000, and (b) the Lender will not be required to make more than one Advance in any two-month period; provided that, in the two-month period commencing on the date hereof, the Lender may make two Advances of $12,000,000 each, so long as all conditions precedent set out in Section 3.4.1 and 3.4.2 herein have been satisfied in respect of the second Advance.

2.1.2Subject to Section 2.1.3, each Advance shall be paid to the Borrowers in accordance with written direction provided to the Lender at least five Business Days prior to the requested Advance.

2.1.3The Borrowers will provide 60 days’ prior written notice for any re-borrowing of Advances that have been repaid.

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2.2Interest

2.2.1Interest shall accrue on the outstanding principal amount of each Advance at a rate per annum equal to the Applicable Interest Rate.

2.2.2Interest will accrue from day to day, and will be calculated on the basis of the number of days elapsed and on the basis of a year of 360 days.

2.2.3All interest accrued under this Agreement shall be payable on each Interest Payment Date.

2.3Evidence of Obligations

The Lender shall maintain an account evidencing the indebtedness and liabilities of the Borrowers hereunder and the amounts of principal, interest and other amounts owing and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account shall be conclusive evidence of the existence and amounts of the obligations of the Borrowers therein recorded, absent manifest error.

2.4Manner of Payment

All payments of principal, interest or other amounts payable hereunder by the Borrowers shall be made on the date specified herein (which if not a Banking Day, shall be the next following Banking Day). All payments with respect to this Agreement are to be made in lawful money of the United States of America in immediately available funds free and clear of, and without deduction for, certain present and future taxes, levies, imposts, duties, fees, assessments or other charges, and all interest, penalties and liabilities with respect thereto.

2.5Repayment

2.5.1The entire principal amount of the Working Capital Facility together with all accrued and unpaid interest thereon shall be fully due and payable on the Maturity Date.

2.6Prepayment

2.6.1The Borrowers may prepay all or part of any amounts payable under this Agreement, including interest, without premium or penalty at any time from time to time. Principal amounts prepaid may be re-borrowed.

2.6.2On the day that is five Business Days after each Determination Date, the Borrowers shall prepay all or any amounts payable under this Agreement with Excess Cash.

2.7Application of Payments

All amounts prepaid or repaid shall be applied firstly in reduction of the accrued and unpaid interest then outstanding in respect of the principal amount being prepaid or repaid and thereafter in reduction of the principal amount of the Working Capital Facility then outstanding.

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2.8Use of Proceeds

The Borrowers shall use all amounts advanced by the Lender under this Working Capital Facility for the sole purpose of funding the working capital and sustaining capital expenditures of the Los Gatos Project, including for the purpose of funding to cover any delayed value added tax refunds.

2.9Arrangement Fee

SSMRC will pay an arrangement fee to the Lender within five Business Days after the last date of each Determination Date, calculated as 15.0% per annum of 70.0% of the average daily principal amount outstanding under the Working Capital Facility during such fiscal quarter (the “Arrangement Fee”).

ARTICLE 3

REPRESENTATIONS AND COVENANTS; SECURITY

3.1Representations of Borrowers and Guarantor

Each Borrower and Guarantor represents and warrants to the Lender as follows:

(i)Such Person has full power, authority and legal right to enter into this Agreement and the other Loan Documents to which it is a party and to perform all its Obligations hereunder and thereunder.

(ii)This Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by such Person, and this Agreement and the other Loan Documents to which it is a party constitute the legal, valid and binding obligation of such Person enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and or similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity.

(iii)The execution, delivery and performance of this Agreement and of the other Loan Documents to which it is a party (A) are within such Person’s corporate or company powers, as applicable, have been duly authorized by all necessary corporate or company action, as applicable, are not in contravention of law or the terms of such Person’s Constating Documents, (B) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Authority, (C) will not require the Consent of any Governmental Authority or any other Person, and (D) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under the provisions of any agreement, instrument, or other document to which such Person is a party or by which it or its property is a party or by which it may be bound.

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3.2Guarantee

Guarantor shall unconditionally guaranty, as a primary obligor and not merely as a surety, the due and punctual payment and performance of 70% of the Obligations pursuant to the terms of the Guarantee.

3.3Security

3.3.1Each of the parties hereto acknowledges and agrees that this Agreement is a “Loan Document” under the TL Agreement. The Obligations under this Agreement are secured by the Security Documents (as defined therein) and any Event of Default under this Agreement shall be an Event of Default under the TL Agreement. Any proceeds realized from the collateral pledged pursuant to the Security Documents shall be applied first to the “Obligations” under the TL Agreement, and second to the Obligations under this Agreement.

3.3.2The Borrowers will grant additional Security to the Lender by executing and delivering the Security Documents to the Lender.

3.3.3The Security granted under the Security Documents constitutes a valid security interest on the Property ranking second in priority only to the Security (as defined in the TL Agreement), which constitutes a valid first priority security interest in favor of the Lender.

3.4Conditions Precedent

3.4.1The obligations of the Lender to provide the initial Advance up to $12,000,000 under this Agreement are subject to the prior or contemporaneous fulfillment of each of the following conditions, unless otherwise agreed in writing by Lender:

(a)The transactions contemplated under Sections 2.1, 2.2 and 2.3 of the MOU shall have been completed to the Lender’s satisfaction, acting reasonably; and

(b)The Lender shall have received duly executed copies of the Security Documents and the Guarantee.

(c)No Default or Event of Default will have occurred and be continuing.

3.4.2The obligations of the Lender to provide any subsequent Advance under this Agreement are subject to the prior or contemporaneous fulfillment of each of the following conditions, unless otherwise agreed in writing by Lender:

(a)The Lender shall have received legal opinions of counsel to the Borrowers addressed to the Lender, including opinions of enforceability and capacity;

(b)All registration, filing or recording documents necessary to preserve, protect or perfect the enforceability and second priority of the Security shall have been completed all satisfactory in form and substance to the Lender, including but

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not limited to ratification of the Security Documents (apostilled and translated into Spanish) before a Mexican Notary Public and entry into applicable public registries.

(c)The escrow account arrangements described in Section 2.5 of the MOU shall have been completed to the Lender’s satisfaction, acting reasonably.

(d)The Debt Service Reserve Account and the Operating Capital Reserve Account, each as defined in the TL Agreement, shall have been opened with a financial institution acceptable to the Lender, and such financial institution and the Lender shall have entered into a control agreement with respect to such accounts, in form and substance satisfactory to Lender.

(e)No Default or Event of Default will have occurred and be continuing.

ARTICLE 4

EVENTS OF DEFAULT AND REMEDIES

4.1Events of Default

The occurrence of any of the following events shall constitute an Event of Default:

4.1.1default by the Borrowers in payment when due of (i) the principal or interest or (ii) any other amounts owing under this Agreement, including but not limited to the Arrangement Fee, and the expiration of seven Business Days after written notice of such default from Lender to Borrowers;

4.1.2default by the Borrowers in the performance or observance of any other covenant, condition or obligation contained in this Agreement or any other Loan Document and the expiration of ten days after written notice of such default by Lender to Borrowers; provided that if such failure is not reasonably susceptible of cure within such ten day period and Borrowers commence to cure such failure within such ten day period and thereafter diligently pursue such cure Borrowers shall have an additional period, not to exceed 30 days, to complete such cure;

4.1.3a Borrower admits its inability to pay its debts generally as they become due or otherwise acknowledges its insolvency;

4.1.4any Borrower institutes any proceeding, or any proceeding is commenced against or involving such Borrower:

(a)seeking to adjudicate such Borrower bankrupt or insolvent,

(b)seeking liquidation, dissolution, winding up, reorganization, arrangement, protection or relief of it or any of its property or debt or making a proposal with respect to it under any law relating to bankruptcy, insolvency, compromise of debts or other similar laws; or

8

(c)seeking appointment of a receiver, trustee, agent, custodian or other similar official for such Borrower or for any part of such Borrower’s property and assets;

and such proceeding is not being contested in good faith by appropriate proceedings or, if so contested, remains outstanding, undismissed and unstayed more than 45 days from the institution of such first mentioned proceeding;

4.1.5any execution, distress or other enforcement process, whether by court order or otherwise, becomes enforceable against any material property and assets of a Borrower, which execution, distress or other enforcement is not paid, stayed, discharged, released or dismissed within 30 days from the date of entry; or

4.1.6the occurrence of any Event of Default (as defined in the TL Agreement) or Default (as defined in the Partner Agreement).

4.2Remedies Upon Default

Upon the occurrence of any Event of Default, all Obligations shall be immediately due and payable, all without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonor or any other action. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law or by any of the Loan Documents.

4.3Overdue Amounts

All overdue amounts owing or deemed to be owing hereunder, whether in respect of principal, interest, expenses or otherwise, both before and after judgment shall bear interest thereon at a rate per annum that is equal to the Applicable Interest Rate plus 2% per annum. Such interest on overdue amounts shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last Banking Day of each calendar month.

ARTICLE 5

GENERAL

5.1Indemnity and Expenses

5.1.1The Borrowers shall, jointly and severally, indemnify, pay and save harmless the Lender and each of its officers, directors, Affiliates, attorneys, employees and agents (each, an “Indemnified Party”) for all losses, costs, expenses, damages and liabilities which the Lender may sustain or incur under or in connection with this Agreement, in each case except to the extent that any of the foregoing arises out of the gross negligence or willful misconduct of the Indemnified Party.

5.1.2The Borrowers agree, jointly and severally, to pay all reasonable out-of-pocket expenses incurred by the Lender, including all reasonable attorneys’ fees in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the Loan Documents or any amendments, modifications or waivers thereof.

9

5.2Amendment and Waiver

No amendment or waiver of any provision of this Agreement or consent to any departure by the Borrowers or Guarantor from any provision thereof is effective unless it is in writing and signed by the Lender. Such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

5.3Notices

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by e-mail or by hand-delivery as hereinafter provided. Any such notice shall be deemed to have been received at the time it is delivered to the applicable address noted below. Notice of change of address shall also be governed by this Section 5.3. Notices and other communications shall be addressed as follows:

5.3.1if to any Borrower or Guarantor:

Sunshine Silver Mining & Refining Corporation

1660 Lincoln Street, Suite 2750

Denver, Colorado 80264

USA

Attention: Roger Johnson

Telephone: +1 (303) 784-5334

Email: rjohnson@ssmines.com

with a copy to:

Polsinelli PC

1401 Lawrence Street, Suite 2300

Denver, Colorado 80202

Attention: Jeffrey Reeser

Email: jreeser@polsinelli.com

Telephone: +1 (303) 256-2726

5.3.2if to the Lender:

Dowa Metals & Mining Co., Ltd.

14-1, Sotokanda 4-chome

Chiyoda-Ku, Tokyo

101-0021, Japan

Attention: Hideo Kudo

Director, General Manager

Resource Development & Raw Materials Department

Telephone: +81 3-6847-1201

Facsimile: +81 3-6847-1211

10

Email: kudoh@dowa.co.jp

with a copy to:

Torys LLP

1114 Avenue of the Americas, 23rd Floor

New York, NY 10036

USA

Attention: Don Bell

Telephone: +1 (212) 880-6118

Facsimile: +1 (212) 682-0200

Email: dbell@torys.com

5.4Entire Agreement

This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes and replaces any prior understandings or arrangements pertaining to the loans made hereunder. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to herein. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement.

5.5Severability

The determination that any provision of this Agreement is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances. Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

5.6Counterparts

This Agreement may be executed in counterparts, each of which when executed will be an original, and all of which, when taken together, will constitute one agreement.

5.7Governing Law

This Agreement and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

5.8Waiver Of Jury Trial; Submission to Jurisdiction; Venue

5.8.1The parties hereto each hereby knowingly, voluntarily and intentionally waive the right either of them may have to a trial by jury of, under or in connection with this Agreement.

5.8.2Each party irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the courts of the State of New York and of the United States

11

district courts located in the County of New York for any lawsuits, actions, or other proceedings arising out of or relating to this Agreement. The parties irrevocably and unconditionally waive any objection to the laying of venue of any lawsuit, action, or other proceeding arising out of or relating to this Agreement in the courts of the State of New York or the United States district courts located in the County of New York, and further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such lawsuit, action, or other proceeding brought in any such court has been brought in an inconvenient forum.

5.9Further Assurances

Whether before or after the happening of an Event of Default, the Borrowers shall at their own expense do, make, execute or deliver all such further acts, documents and things in connection with this Agreement and the Loan Documents as the Lender may reasonably require from time to time for the purpose of giving effect thereto, all promptly upon the request of the Lender.

5.10Amendments; Assignability

All amendments to this Agreement must be in writing and signed by the parties hereto. This Agreement shall not be assignable by any Borrower or Guarantor without the prior written consent of the Lender and any attempted assignment without such consent shall be null and void. This Agreement is not intended to confer any benefits upon or create any rights in favor of any person other than the parties hereto.

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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their respective duly authorized Agreement as of the date set forth above.

Borrowers:
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SERVICIOS SAN JOSE DE PLATA, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer

13

Guarantor:
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name:	Stephen Orr
	Title:	Chief Executive Officer

Lender:
DOWA METALS & MINING CO., LTD
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

SCHEDULE 1

1. Contrato de Prenda — Maquinaria y Equipo

2. Garantía Corporativa

3. Contrato de Prenda de Partes Sociales

4. Garantía Hipotecaria Dowa

EX-10.5.1

Exhibit 10.5.1

Execution Version

UNANIMOUS OMNIBUS PARTNER AGREEMENT

among

MINERA PLATA REAL, S. DE R.L. DE C.V.

and

OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.

and

SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.

and

LOS GATOS LUXEMBOURG S. AR. L.

and

SUNSHINE SILVER MINING & REFINING CORPORATION

and

DOWA METALS & MINING CO., LTD.

Effective as of January 1, 2015

TABLE OF CONTENTS

		Page
ARTICLE 1 — DEFINITIONS		2
1.1	Definitions	2
1.2	Exhibits	16
1.3	Schedules	17
1.4	Rules of Interpretation	17
ARTICLE 2 — SCOPE AND NATURE OF PARTNER RELATIONSHIP/BUSINESS		18
2.1	Scope of Agreement	18
2.2	Relationship	18
2.3	Separate Activities	18
2.4	Time and Attention	19
2.5	Shareholder Covenant	19
2.6	Notice by Joint Venture Entities	19
2.7	Endorsement on Securities	19
2.8	Business of the Joint Venture Entities	20
2.9	Offices	20
2.10	Representations and Warranties of Both Partners	20
2.11	Representations and Warranties of the Joint Venture Entities	21
2.12	Indemnification for Breaches of Representations and Warranties	30
2.13	Non-Reliance	32
2.14	Compliance with Global Anti-Corruption Laws	32
ARTICLE 3 — CONTRIBUTIONS		33
3.1	Initial Contributions	33
3.2	Withdrawal Rights; Consequences Thereof	34
3.3	Advances by Dowa	34
3.4	SSMRC Parent and SSMRC LuxCo Capital Contributions	34
3.5	Capital Calls	34
3.6	Capital Contributions Generally	36
3.7	Financing	36
3.8	Dowa Arranged Loan	36
3.9	Capital Contribution Allocation	36
ARTICLE 4 — INTERESTS OF PARTNERS		37
4.1	Initial Participating Interests	37
4.2	Grant of Security Interest	37
4.3	Subordination of Interests	37
4.3	Subordination of Interests	38
4.5	Buyout Right	38
4.6	Pledge of Interests	38
ARTICLE 5 — MANAGEMENT OF THE CORPORATION		38
5.1	Management Structure	38
5.2	Officers	38
5.4	Dowa Personnel	38
ARTICLE 6 — CORPORATION BOARD OF MANAGERS		39
6.1	Board	39
6.2	Chairman	39
6.3	Meetings of the Corporation Board	39
6.4	Major Decisions	41
6.5	Limitation of Authority	41
6.6	Delegation of Authority; Officers	41
6.7	Other Positions or Representations	41
6.8	Operations Committee	41

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TABLE OF CONTENTS
(continued)

		Page
6.9	No Restriction on Competition	42
ARTICLE 7 — MANAGEMENT OF OPCO		42
7.1	Management Structure	42
7.2	Officers	42
ARTICLE 8 — OPCO BOARD OF MANAGERS		42
8.1	Board	42
8.2	Chairman	43
8.3	Meetings of OpCo Board	43
8.4	Major Decisions	44
8.5	Limitation of Authority	44
8.6	Limitation of Authority; Officers	44
8.7	Other Positions or Representations	44
ARTICLE 9 — MANAGEMENT OF EMPLOYERCO		44
9.1	Management Structure	44
9.2	Officers	44
ARTICLE 10 — EMPLOYERCO BOARD OF MANAGERS		45
10.1	Board	45
10.2	Chairman	45
10.3	Meetings of EmployerCo Board	45
10.4	Major Decisions	46
10.5	Limitation of Authority	46
10.6	Delegation of Authority; Officers	46
10.7	Other Positions or Representations	46
ARTICLE 11 — PARTNER MEETINGS		47
11.1	Meetings of the Partners	47
ARTICLE 12 — DESIGNATION OF OPERATOR		48
12.1	Designation of Operator	48
ARTICLE 13 — OFFTAKE AGREEMENT		49
ARTICLE 14 — PROGRAMS AND BUDGETS		49
14.1	Initial Program and Budget	49
14.2	Operations Pursuant to Programs and Budgets	49
14.3	Presentation of Programs and Budgets	50
14.4	Review and Approval of Proposed Programs and Budgets	50
14.5	Feasibility Study Program and Budgets	51
14.6	Selection of Approved Alternatives	53
14.7	Budget Overruns; Program Changes	53
ARTICLE 15 — DIVIDENDS		53
15.1	Dividends by the Corporation	53
15.2	Dividends by OpCo or EmployerCo	54
ARTICLE 16 — ACCOUNTING/REPORTING		54
16.1	Fiscal Year	54
16.2	Location of Records	54
16.3	Financial Records	54
16.4	Audits	54
16.5	Monthly Statements	55

ii

TABLE OF CONTENTS
(continued)

		Page
ARTICLE 17 — INDEMNIFICATION AND INSURANCE		55
17.1	Indemnification by the Joint Venture Entities	55
17.2	Right of Partners to Contribution	56
17.3	Indemnification by the Partners	56
17.4	Insurance	57
ARTICLE 18 — TRANSFERS		57
18.1	Restrictions on Transfers	57
18.2	Right of First Refusal	57
18.3	Exceptions to Right of First Refusal	58
18.4	Affiliate Transfers	58
18.5	Requirements Applicable to New Partners	58
18.6	Prohibitions	60
18.7	Effect of Permitted Transfer	60
18.8	Effect of Prohibited Transfers	60
18.9	Outstanding Indebtedness	60
18.10	Shares of the Joint Venture Entities	61
ARTICLE 19 — DEFAULT		61
19.1	Defaulting Partner	61
19.2	Dividends and other Distributions to a Defaulting Partner	61
19.3	Effect of Default	61
ARTICLE 20 — TERMINATION AND DISSOLUTION		62
20.1	Term of Agreement	62
20.2	Automatic Dissolution	62
20.3	Winding-Up And Dissolution	62
ARTICLE 21 — DISPUTE RESOLUTION		63
21.1	Mutual Resolution	63
21.2	Arbitration	63
ARTICLE 22 — CONFIDENTIALITY AND DISCLOSURE OF INFORMATION		63
22.1	Business Information	63
22.2	Partner Information	64
22.3	Permitted Disclosure of Confidential Business Information	64
22.4	Disclosure Required By Law	64
22.5	Public Announcements	65
ARTICLE 23 — GENERAL		65
23.1	Effect Of Agreement	65
23.2	Earn-In Period Force Majeure Event	65
23.3	Notices	65
23.4	Further Assurances	67
23.5	Applicable Law	67
23.6	Rule Against Perpetuities	67
23.7	Counterparts	68
23.8	Headings	68
23.9	Waiver	68
23.10	Severability	68
23.11	Third Persons	68
23.12	Remedies	68
23.13	Calculation of Time Periods	68
23.14	Conflicts	69
23.15	Working Capital Distribution	69

iii

TABLE OF CONTENTS
(continued)

		Page
23.16	Acknowledgement of Prior Distribution	70
23.17	SSMRC Parent Guarantee	70

iv

UNANIMOUS OMNIBUS PARTNER AGREEMENT

THIS AGREEMENT is made as of January 1, 2015

AMONG:

Sunshine Silver Mining & Refining Corporation, a Delaware corporation, the address of which is 370 17th Street, Suite 3800, Denver, Colorado 80202, USA (“SSMRC Parent”);

- and —

Los Gatos Luxembourg S. ar. L., a Luxembourg limited liability company, the address of which is 13-15 Avenue De La Liberte, L-1931 Luxembourg (“SSMRC LuxCo”);

- and -

Dowa Metals & Mining Co., Ltd., a corporation incorporated under the Laws of Japan, with a business address located at 14-1, Sotokanda 4-Chome, Chiyoda-ku, Tokyo, Japan 101-0021 (“Dowa”)

- and -

Minera Plata Real, S. de R.L. de C.V., a Mexico variable capital company (a “sociedad responsabilidad limitada de capital variable” in Spanish) incorporated under the Laws of Mexico (the “Corporation”)

- and -

Opercaciones San Jose De Plata, S de R.L. de C.V., a Mexico variable capital company (a “sociedad responsabilidad limitada de capital variable” in Spanish) incorporated under the Laws of Mexico (“OpCo”)

- and -

Servicios San Jose De Plata, S de R.L. de C.V., a Mexico variable capital company (a “sociedad responsabilidad limitada de capital variable” in Spanish) incorporated under the Laws of Mexico (“EmployerCo”)

Background

A.SSMRC Parent, SSMRC LuxCo and Dowa wish to jointly explore, develop and operate a mine located in the State of Chihuahua, Mexico and known as the Los Gatos Project.

B.The Joint Venture Entities own or control 100% of the Los Gatos Project and certain assets ancillary to the Exploration, Development and Operation thereof.

C.Dowa and SSMRC Parent have incurred, and will continue to fund, certain expenses in connection with the assessment of the Los Gatos Project for the benefit of the Corporation.

D.The issued and outstanding Participating Interests of each of the Corporation, OpCo and EmployerCo as of the Effective Date are as follows:

					Participating
	Participating Interest		Participating		Interest in
Entity	in the Corporation		Interest in OpCo		EmployerCo
SSMRC Parent	0.0100	%	0.0100	%	0	%
SSMRC LuxCo	99.6002	%	99.6002	%	0.0100	%
Dowa	0.3898	%	0.3898	%	0	%
OpCo	0	%	0	%	99.9900	%

E.Contemporaneously with the execution of this Agreement and in order to more fully describe the services to be performed by OpCo as Operator, the Corporation, SSMRC Parent and OpCo will enter into the General Services Agreement.

F.Contemporaneously with the execution of this Agreement and in order to more fully describe the services to be performed by EmployerCo, OpCo and EmployerCo will enter into the Employment Services Agreement.

G.Prior to the date hereof, the Corporation has divested certain assets unrelated to the Los Gatos Project (the “Divestiture”).

H.The Parties have agreed to enter into this Agreement to define their rights and Obligations in respect of the Shares of each Joint Venture Entity, the management and control of each Joint Venture Entity and certain other matters as hereinafter set forth.

Agreements

In consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the Parties, the Parties hereby agree as follows:

ARTICLE 1 — DEFINITIONS

1.1Definitions

Unless otherwise required by context, for the purposes of this Agreement, including all Exhibits hereto, the following terms will have the respective meanings specified below:

“Accounting Firm Allocation” has the meaning set out in Section 23.15(c).

“Acquisition Rights” has the meaning set out in Section 2.11(h).

“Advances” has the meaning set out in Section 3.3.

“Affiliate” means, in respect of a Person, any corporation or entity that directly or indirectly or through one or more intermediaries or otherwise Controls, or any corporation or entity that directly or indirectly through one or more intermediaries or otherwise is Controlled by, or is under common Control with, such Person; provided, however, that with respect to the Joint Venture Entities and SSMRC Parent, “Affiliate” shall not include The Electrum Group LLC, Electrum Silver US LLC, Tigris Financial (International) L.P. and Tigris Financial Group Ltd. or any of their respective Affiliates (other than SSMRC Parent and its subsidiaries).

2

“Agreement”, “this Agreement”, “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions refer to this agreement including the exhibits and all amendments hereto, and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof.

“Applicable Law” means, from time to time and at any time, with respect to any Person, property or event:

(a)all Laws, ordinances, codes, rules, regulations, by-laws, orders, writs, injunctions, decrees, rulings, determinations, awards or standards of any Governmental Authority;

(b)the terms and conditions of all Governmental Authorizations;

(c)any requirements under or prescribed by applicable common law or civil code; and

(d)all agreements with Governmental Authorities.

“Approved Alternative” means a Development and Mining alternative selected by the Corporation Board from various Development and Mining alternatives analyzed in the Feasibility Studies.

“Approved Budget” has the meaning specified in Section 14.4.

“Approved Program” has the meaning specified in Section 14.4.

“Arbitration Panel” means a panel of arbitrators established pursuant to Section 21.2.

“Area of Interest” means the area described in Exhibit A.

“Arm’s Length” has the meaning given to that term in Applicable Law in respect of Taxes, as now in effect.

“Articles” means, with respect to each Joint Venture Entity, its Articles of Incorporation as from time to time may be amended or restated.

“Assets” means the Properties, Products, Business Information, and all other real and personal property, tangible and intangible, including existing or after-acquired properties and all contractual rights, relating to the Project.

“Auditors” means a firm of independent certified public accountants appointed from time to time by the Corporation Board as the auditors for each Joint Venture Entity.

“Available Cash” means, with respect to any period prior to the dissolution of the Corporation, all cash and cash equivalents of the Corporation on hand at the end of such period less the amount of any cash reserves established by the Corporation Board to provide for the proper conduct of the business of the Corporation, including reserves for: future maintenance capital expenditures; current, future or contingent liabilities; anticipated future credit needs of the Corporation; and debt service and repayments; provided, such reserves shall not equal less than the forthcoming six months of operating expenses as authorized in the Approved Budget nor more than the forthcoming six months of operating expenses, debt service and maintenance capital expenditures in the Approved Budget, without Requisite Partner Approval.

“Board” means the Corporation Board, OpCo Board or EmployerCo Board, as applicable.

“Budget” means a detailed estimate of all costs to be incurred and a schedule of cash advances to be made by each Joint Venture Entity with respect to a Program, both on an individual entity and consolidated basis.

3

“Budgeted Capital Call” has the meaning set out in Section 3.5(a).

“Business” has the meaning given to that term in Section 2.8.

“Business Day” means any day other than a Saturday, Sunday or any other day when banks in Mexico City, Mexico, Denver, Colorado, USA and Tokyo, Japan are not generally open for business.

“Business Information” means the terms of this Agreement, and any other agreement relating to any Joint Venture Entity, the Existing Data, and all information, data, knowledge and know-how, in whatever form and however communicated (including, without limitation, Confidential Information), developed, conceived, originated or obtained by any Partner in performing its Obligations under this Agreement. The term “Business Information” will not include any improvements, enhancements, refinements or incremental additions to Partner Information that are developed, conceived, originated or obtained by any Partner in performing its Obligations under this Agreement.

“By-laws” means, with respect to each Joint Venture Entity, its by-laws as from time to time amended or restated.

“Capital Call” means a call or request for a Capital Contribution in writing (which may include electronic mail) that is prepared by the Operator and issued by the Operator on behalf of the Corporation, specifying the amount of Capital Contribution to be contributed by each Partner receiving such notice in accordance with the terms of this Agreement.

“Capital Call Dispute Notice” has the meaning set out in Section 3.5(b).

“Capital Contribution” means the amount of money and the fair market value of any other property contributed to the capital of any of the Joint Venture Entities by a Partner.

“Capital Contribution Allocation” has the meaning given to that term in Section 3.9.

“Claim” means any claim, demand, lawsuit, proceeding, arbitration or governmental investigation, in each case, whether asserted, threatened, pending or existing.

“Common Shares” means, with respect to each Joint Venture Entity, partnership shares in the capital of such Joint Venture Entity.

“Confidential Information” means all information, data, knowledge and know-how (including, but not limited to, formulas, patterns, compilations, programs, devices, methods, techniques and processes) that derives independent economic value, actual or potential, as a result of not being generally known to, or readily ascertainable by, third parties and which is the subject of efforts to maintain its secrecy, including without limitation all analyses, interpretations, compilations, studies and evaluations of such information, data, knowledge and know-how generated or prepared by or on behalf of either of the Partners.

“Constating Documents” means (i) with respect to each Joint Venture Entity, the articles of formation, by-laws and similar documents necessary under Mexican law to establish a Sociedad de Responsabilidad Limitada de Capital Variable (ii) with respect to a corporation, the certificate and articles of incorporation, amendment, amalgamation or continuance, memorandum of association, letters patent, supplementary letters patent, by-laws, and all unanimous shareholder agreements, other shareholder agreements, voting trusts, pooling agreements and similar contracts, arrangements and understandings applicable to the corporation’s equity securities, (iii) with respect to a trust, its declaration of trust, trust agreement or similar instrument made by or with its trustee establishing such trust, and in each case as amended, supplemented, restated and replaced from time to time, and (iv) with respect to a partnership, the declaration of partnership and any partnership agreement, in each case as amended, supplemented, restated and replaced from time to time.

4

“Continuing Obligations” mean Obligations or responsibilities that are reasonably expected to continue or arise after Operations on a particular area of the Properties have ceased or are suspended, such as future monitoring, stabilization, or Environmental Compliance.

“Contract” means any agreement, indenture, contract, lease, deed of trust, license, option, instrument, arrangement, understanding or other commitment, whether written or oral.

“Control” of a corporation means:

(a)the right, contractual or otherwise, directly or indirectly, to vote or cause the voting of more than 50% of the voting shares of such corporation (in the capacity as owner of the shares, trustee, fund manager, agent or otherwise) or otherwise being able, directly or indirectly, to direct the business and affairs of such corporation; or

(b)the right, directly or indirectly, to elect or appoint a majority of the directors of such corporation or other Persons who have the right to manage or supervise the management of the business and affairs of such corporation;

and “Controlled” has a corresponding meaning.

“Corporation” has the meaning given to that term in the Recitals.

“Corporation Board” means the Board of Managers of the Corporation established under Section 6.1 of this Agreement.

“Corporation Managers” mean the individuals who are from time to time duly elected Corporation Managers of the Corporation Board, or their duly appointed alternates.

“Day” or “day” means a period of 24 consecutive hours, beginning and ending at 12:01 a.m. Mexico Time, provided that the reference date for any day will be the calendar date upon which the 24-hour period commenced.

“Deductible” has the meaning given to that term in Section 2.12(c).

“Default” has the meaning given to that term in Section 19.1.

“Default Notice” has the meaning given to that term in Section 19.1.

“Defaulting Partner” has the meaning given to that term in Section 19.1.

“Determination Date” has the meaning given to that term in Section 23.15(c).

“Development” means all preparation (other than Exploration) for the removal and recovery of Products, including construction and installation of a mill or any other improvements to be used for the Mining, handling, milling, processing, or other beneficiation of Products, and all related Environmental Compliance.

“Diluted Partner” has the meaning set out in Section 4.5.

“Dispute Notice” has the meaning given to that term in Section 23.15(c).

“Divestiture” has the meaning given to that term in the Recitals.

“Dowa” has the meaning given to that term in the Recitals.

5

“Dowa Arranged Loan” has the meaning given to that term in Section 3.7.

“Dowa Withdrawal Event” has the meaning set out in Section 3.2.

“Draft Computation” has the meaning given to that term in Section 23.15(b).

“Earn-in Fee” has the meaning given to that term in Section 3.1(a).

“Earn-in Period” has the meaning given to that term in Section 3.1(a).

“Effective Date” means the date set forth in the preamble to this Agreement.

“Electing Partner” has the meaning set out in Section 4.5.

“Emergency Capital Call” has the meaning set out in Section 3.5(a).

“Emergency or Unexpected Expenditures” means, in case of emergency, any reasonable expenditures required in connection with reasonable action taken by the Operator that it deems necessary, acting reasonably, to protect life or the Assets or to comply with Applicable Laws and, in the case of Unexpected Expenditures, reasonable expenditures taken by the Operator on behalf of any Joint Venture Entity for unexpected events that are beyond its reasonable control and which do not result from a breach by it of its standard of care.

“EmployerCo” has the meaning given to that term in the Recitals.

“EmployerCo Managers” mean the individuals who are from time to time duly elected EmployerCo Managers of the EmployerCo Board, or their duly appointed alternates.

“Employment Services Agreement” means a services agreement substantially in the form attached to this Agreement as Exhibit F.

“Encumbrance” or “Encumbrances” means mortgages, deeds of trust, security interests, pledges, liens, net profits interests, royalties or overriding royalty interests, other payments out of production, or other burdens of any nature.

“Enhancements” has the meaning set out in Section 22.2.

“Environmental Compliance” means actions performed during or after Operations to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Properties or other compliance with Environmental Laws.

“Environmental Laws” means Laws aimed at reclamation or restoration of the Properties forming the Project; abatement of pollution; protection of the environment; protection of wildlife, including endangered species; ensuring public safety from environmental hazards; protection of cultural or historic resources; management, storage or control of hazardous materials and substances; releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances as wastes into the environment, including without limitation, ambient air, surface water and groundwater; and all other Laws applicable in Mexico relating to the manufacturing, processing, distribution, use, treatment, storage, disposal, handling or transport of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes and that are applicable to the Project.

“Environmental Liabilities” means any and all Claims, actions, causes of action, damages, Losses, Liabilities, obligations, penalties, judgments, amounts paid in settlement, assessments, costs, disbursements, or expenses (including, without limitation, attorneys’ fees and costs, experts’ fees and costs, and consultants’ fees and costs) of any kind or of any nature whatsoever that are asserted against

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any Partner, by any Person or entity other than the other Partners, alleging liability (including, without limitation, liability for studies, testing or investigatory costs, cleanup costs, response costs, removal costs, remediation costs, containment costs, restoration costs, corrective action costs, closure costs, reclamation costs, natural resource damages, property damages, business Losses, personal injuries, penalties or fines) arising out of, based on or resulting from (i) the presence, release, threatened release, discharge or emission into the environment of any hazardous materials or substances existing or arising on, beneath or above the Properties and/or emanating or migrating and/or threatening to emanate or migrate from the Properties to off-site properties; (ii) physical disturbance of the environment; or (iii) the violation or alleged violation of any Environmental Laws.

“Escrow Agent” means U.S. Bank National Association.

“Escrow Agreement” means an escrow agreement in form and substance substantially similar to the draft attached as Exhibit H.

“Existing Data” means maps, drill logs and other drilling data, core tests, pulps, reports, surveys, assays, analyses, production reports, Operations, technical, accounting and financial records, and other material information developed in Operations on the Properties, or related to the Assets, prior to the Effective Date.

“Existing Dowa Contribution” has the meaning given to that term in Section 3.1(a).

“Existing Dowa Participating Interests” has the meaning given to that term in Section 3.1(b).

“Expansion” or “Modification” means (i) a material increase in Mining or production capacity; (ii) a material change in the recovery process; or (iii) a material change in waste or tailings disposal methods. An increase or change will be deemed “material” if it is anticipated to cost more than 10% of original capital costs attributable to the Development of the Mining or production capacity, recovery process or waste or tailings disposal facility to be expanded or modified.

“Expense Category” means the top line headings set forth in the Initial Program and Budget, and thereafter, any Approved Budget.

“Exploration” means all activities directed toward ascertaining the existence, location, quantity, quality or commercial value of deposits of Products, including but not limited to additional drilling required after discovery of potential commercial mineralization, and including related Environmental Compliance.

“Feasibility Contractors” means one or more engineering firms approved by the Corporation Board for purposes of preparing or auditing any Feasibility Study.

“Feasibility Study” means one or more studies prepared to analyze alternative methods for Mining and Operations and such other information as described in Section 14.5.

“Feasibility Report” means the report to be prepared following completion of the Feasibility Study in accordance with Section 14.5. The Feasibility Report will be prepared in accordance with Canadian National Instrument 43-101 and in a form and of a scope generally acceptable to reputable financial institutions that provide financing to the Mining industry.

“Financial Statements” means unaudited balance sheets and income statements for the Corporation for its fiscal years ending December 31, 2012 and December 31, 2013.

“Financing” has the meaning given to that term in Section 3.7.

“Finder” means a broker, finder, agent, financial advisor, investment advisor or other Person engaged to find or act as agent on behalf of purchasers of or subscribers for, or proposed purchasers of

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or subscribers for, securities of the Joint Venture Entities or to otherwise identify potential investors in, or lenders to, or any other potential sources of debt, revenue or financial benefit (including, for greater certainty, off-take arrangements) for, the Joint Venture Entities in return for compensation including cash and/or securities of the Joint Venture Entities.

“Fiscal Year” has the meaning given to that term in Section 16.1.

“Force Majeure Event” means circumstances resulting from acts or events outside of a Party’s reasonable control, including, without limitation, (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), organized crime or terrorist threats or acts, riot or other civil unrest; (d) government order or Law; (e) actions, embargoes or blockades in effect on or after the date of this Agreement; (f) action by any Governmental Authority; (g) national or regional emergency; (h) strikes, labor stoppages or slowdowns or other industrial disturbances; (i) shortage of adequate power or transportation facilities and (j) severe disruptions in the global financial markets similar in scope to the 2008 financial crisis.

“Fundamental Representations” has the meaning given to that term in Section 2.12(a).

“GAAP” means United States generally accepted accounting principles, consistently applied and as in effect from time to time.

“General Services Agreement” means a services agreement in the form attached to this Agreement as Exhibit E.

“Global Anti-Corruption Laws” has the meaning specified in Section 2.14.

“Governmental Authority” any federal, state, provincial, or municipal government, parliament or legislature, or any regulatory authority, agency, tribunal, commission, ministry, board, department, institution or similar entity of any such government, parliament or legislature, or any court or other Law, regulation or rule-making entity, having jurisdiction in the relevant circumstances, and any Person acting under the authority of any such Governmental Authority.

“Governmental Authorization” means any authorization, consent, approval, license, ruling, permit, certification, grant, right, privilege, order, judgment, ruling, directive, ordinance, decree, exemption, exoneration, filing or registration issued or required by any Governmental Authority.

“Hazardous Substances” means any substance, material or waste defined, regulated, listed or prohibited by Environmental Laws, including pollutants, contaminants, chemicals, deleterious substances, dangerous goods, hazardous or industrial toxic wastes or substances, tailings, wasterock, radioactive materials, flammable substances, explosives, petroleum and petroleum products, polychlorinated biphenyls, chlorinated solvents and asbestos.

“IFRS” means generally accepted accounting principles for publicly accountable enterprises being International Financial Reporting Standards as approved by the International Accounting Standards Board, as those principles may be amended from time to time, consistently applied to the relevant financial statements or records.

“Indebtedness” means without duplication, means (a) all indebtedness (including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon) for borrowed money of each Joint Venture Entity; (b) indebtedness represented by bonds, debentures, notes or other securities, for the repayment of money borrowed, whether owing to banks, financial institutions, on equipment leases or otherwise; (c) all deferred indebtedness of each Joint Venture Entity for the payment of the purchase price of property or assets purchased; (d) all obligations of each Joint Venture Entity to pay rent or other payment amounts under a lease of real property or personal property which is required to be classified as a capital lease or a liability on the face of a balance sheet

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prepared in accordance with GAAP; (e) any outstanding reimbursement obligation of a Joint Venture Entity with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Joint Venture Entity; (f) any payment obligation of a Joint Venture Entity under any interest rate swap agreement, forward rate agreement, interest rate cap or collar agreement or other financial agreement or arrangement entered into for the purpose of limiting or managing interest rate risks; (f) all indebtedness for borrowed money secured by any Encumbrance existing on property owned by a Joint Venture Entity (other than those secured by Permitted Encumbrances); (g) all guarantees, endorsements, assumptions and other contingent obligations of any Joint Venture Entity in respect of, or to purchase or to otherwise acquire, indebtedness for borrowed money of others; and (h) all premiums, penalties and change of control payments required to be paid or offered in respect of any of the foregoing as a result of the consummation of the transaction contemplated by this Agreement regardless if any of such are actually paid.

“Indemnified Partner” has the meaning given to that term in Section 17.3(a).

“Indemnifying Partner” has the meaning given to that term in Section 17.3(a).

“Indemnitee” has the meaning given to that term in Section 17.1(a).

“Independent Accounting Firm” means mutually agreed upon independent accounting firm, which such the parties agree shall be an internationally recognized accounting firm in the United States.

“Initial Program” means the initial Program attached as Exhibit C.

“Initial Program and Budget” means the initial Program and the initial Budget attached as Exhibit C, which will include the concept of and timing for the Program and Budget for the Feasibility Study and will also include possibilities for alternatives which will form the basis of any Approved Alternatives.

“Insolvency Event” means, in respect of a Party, any one or more of the following:

(a)if a Party files a petition in bankruptcy or for reorganization or for an arrangement pursuant to any applicable Insolvency Laws now or hereafter in effect;

(b)if a Party is adjudged bankrupt by a court of competent jurisdiction, or becomes insolvent, makes an assignment for the benefit of its creditors, admits in writing its inability to pay its debts generally as they become due, is dissolved or suspends payment generally of its Obligations;

(c)if a petition is filed proposing the adjudication of a Party as bankrupt or its reorganization pursuant to any applicable Insolvency Law or any similar Applicable Law, now or hereafter in effect, and:

(i)the Party consents to that filing;

(ii)the petition is not discharged or denied within 60 days after that filing; or

(iii)the petition is not diligently defended against;

(d)if a receiver, trustee, liquidator, or other similar official is appointed to take charge of a Party or of all or substantially all of the business or assets of a Party, and:

(i)that Party consents to such appointment; or

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(ii)the appointment is not discharged or withdrawn or action is not taken by that Party to secure the discharge of that official within 60 days after the appointment.

“Insolvency Laws” means the bankruptcy, insolvency, creditor protection or similar Laws of the jurisdiction of incorporation of each Party, as applicable, or any successor Applicable Law, and the bankruptcy, insolvency, creditor protection or similar Applicable Law of any other jurisdiction (regardless of the jurisdiction of such application or competence of such Applicable Law).

“Intellectual Property” means all trademarks, trade names, business names, patents, inventions, know-how, copyrights, service marks, brand names, industrial designs and all other industrial or intellectual property owned or used by the Joint Venture Entities in carrying on the Business, and all applications therefor and all goodwill in connection therewith, including all licenses, registered user agreements and all like rights used by or granted to the Joint Venture Entities in connection with the Business and the Project.

“Joint Venture Entity” means each of the Corporation, OpCo and EmployerCo, and collectively, the “Joint Venture Entities”.

“Law” or “Laws” means all applicable federal, provincial, state and local laws (statutory or common), rules, ordinances, regulations, grants, concessions, franchises, licenses, orders, directives, judgments, decrees, and other governmental restrictions, including permits and other similar requirements, whether legislative, municipal, administrative or judicial in nature.

“LOI” means the letter of intent entered into between SSMRC Parent and Dowa dated December 2, 2013.

“Losses” means in respect of a Person and in relation to a matter, any and all losses, damages, costs, expenses, charges (including all penalties, assessments and fines) which that Person suffers, sustains, pays or incurs in connection with that matter and includes reasonable costs of external legal counsel and other professional advisors and consultants and reasonable costs of investigating and defending claims arising from the matter if those claims are sustained and also includes Taxes on a settlement payment or damage award in respect of that matter but does not include punitive, special, consequential or indirect losses or loss of profit.

“Major Decision” has the meaning given to that term in Exhibit B.

“Managers” means the Corporation Managers, OpCo Managers or EmployerCo Managers, as applicable.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is materially adverse to the business, results of operations, financial condition or assets of the Joint Venture Entities and their respective subsidiaries, taken as a whole, or the Project.

“Material Contract” means, any Contract to which any Joint Venture Entity is a party or by which the Assets are bound:

(a)that involves the potential expenditure of more than $1,000,000 in the aggregate or in excess of $200,000 in any calendar year;

(b)creating a joint venture, partnership, co-ownership or similar arrangement;

(c)with one or more of its shareholders, or as a shareholder of another Person, or relating to the voting of securities;

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(d)granting any royalty or other interest in the Properties or the Mineral Rights or the production or proceeds therefrom;

(e)granting options to acquire material assets from any of the Joint Venture Entities or granting an earn-in or farm-in;

(f)granting an option to acquire material assets, or any royalty, earn-in or farm-in to any of the Joint Venture Entities;

(g)with a Related Party of any of the Joint Venture Entities;

(h)guaranteeing, assuming or acting as a surety in respect of any liabilities or obligations of another Person;

(i)relating to Acquisition Rights or Repurchase Rights;

(j)relating to the supply of power or water;

(k)to obtain surface rights or any other interest in the Properties;

(l)with any Governmental Authority;

(m)containing change of control provisions;

(n)limiting the ability of any of the Joint Venture Entities to engage in any material line of business or to materially compete with any other Person;

(o)with a Finder;

(p)that contains a “most-favored nations” provision in favor of the other party;

(q)relating to any issuance or potential issuance of any securities of the Corporation;

(r)relating to contemplated business combinations, acquisitions, mergers or asset divestitures; or

(s)not entered into in the Ordinary Course of Business (other than those which are cancellable without penalty within 90 days and have no ongoing liabilities or obligations after termination).

“Material Loss” has the meaning given to that term in Section 17.3(a).

“Mineral Rights” means (i) the mining concessions located in the Municipality of Satevo, State of Chihuahua, Mexico and the related rights and interests, all set forth and described in Exhibit “A” attached hereto; and (ii) any substitute or successor mineral title or interest granted, obtained or issued to the Corporation in connection with or in place of any mining concession in (i).

“Mining” means the mining, extracting, producing, beneficiating, handling, milling or other processing of Products.

“Notice of Acceptance” has the meaning set out in Section 18.2(b).

“Obligations” of a Party means all of its covenants, agreements, obligations, duties, liabilities, representations and warranties under this Agreement, Applicable Law, or otherwise incurred in its

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capacity as a Partner, including any guarantees provided by a Partner of any obligations of any Joint Venture Entity.

“Offtake Agreement” means an agreement in form and substance substantially similar to the draft attached as Exhibit D, pursuant to which Dowa will have the right to purchase 100% of the zinc concentrate produced from the Project, at rates negotiated in good faith and agreed between Dowa and the Corporation taking into consideration the then prevailing market price based on bench mark terms as reported in industry publications such as Brook Hunt, CRU or Metal Bulletin of London, and to consume or resell or deliver such concentrates for processing by any Dowa Affiliate or third party.

“OpCo Managers” mean the individuals who are from time to time duly elected OpCo Managers of the OpCo Board, or their duly appointed alternates.

“OpCo” has the meaning specified in the Recitals.

“Operations” means the activities carried out under this Agreement including Exploration, Development and operation of the Project and the marketing and sale of Products.

“Operations Committee” has the meaning specified in Section 6.8.

“Operator” has the meaning set out in Section 12.1(a).

“Order” means any judgment, decision, decree, injunction, ruling, writ, assessment, determination or order of any Governmental Authority that is binding on any Person or its property under applicable Law.

“Ordinary Course of Business” means the ordinary course of the Business consistent with past practices.

“Outstanding Due Diligence Item” means any one or more of the following:

(a)Historical Share Transfers of the Corporation. The following historical transfers of shares in the capital of the Corporation:

(i)49,999 shares from Víctor Manuel García Palacios to Royal Silver Mines, Inc.;

(ii)49,999 shares from Royal Silver Mines, Inc. to Electron Resources LLC;

(iii)49,999 shares from Electron Resources LLC to Los Gatos Limited;

(iv)One share from Silvia Abad Ibarra to John Ryan;

(v)One share from John Ryan to Thomas S. Kaplan; and

(vi)One share from Thomas S. Kaplan to Jon Charles Gelvin Rice.

(b)Four parcels located near the town called San José del Sitio, Municipality of Satevo, Chihuahua, two of which report previous liens as of the date the Corporation purchased the parcels. Furthermore, all four parcels remain registered in the sellers’ names rather than the Corporation.

(i)Record 287 Folio 39 of Book 1576 of First Section (19-72-00 hectares) shows the following liens: secured working capital loan and mortgage in favor of Registro de Crédito Agricola (Agricultural Credit Register), as per Record 24 Folio 25 of Book

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3 Vol. XVII of Registro de Crédito Agricola of the Morelos District dated May 6, 1986 and notarized on June 25, 1986; and

(ii)Record 309 Folio 36 of Book 1578 of First Section (76-39-91 hectares) shows the following liens: secured working capital loan and mortgage in favor of Banrural, S.N.C., as per Record 24 Folio 25 of Book 3 Vol. XVIII of Registro de Crédito Agricola of the Morelos District dated May 6, 1986 and notarized on June 25, 1986;

(c)Settlement Agreements. Documentation relating to confirmation of court approval of settlement of the following legal proceeding brought against the Corporation by Luis Carlos Morales Baca and Esteban Morales Bustillos:

(i)Case 193/2013, relating to the plenary mercantile suit (mandatory compliance of contracts and payment of considerations unfulfilled) filed by the owners of a rural property called “Aguaje de Porras”, located in the Municipality of Satevo, Chihuahua, against the Corporation in the Eighth Civil Court of Chihuahua, Chihuahua. The suit implicated (x) a Right of Way Agreement pertaining to a fraction of the property (508-15-40.242 hectares) and (y) a Temporary Occupancy Agreement pertaining to a fraction of the property (1,971-44-70.120 hectares); and

(d)Cancellation of Temporary Occupancy of Land Agreement. Documentation evidencing termination of the Temporary Occupancy of Land Agreement dated July 14, 2011 and ratified on August 19, 2011, between the Corporation and Carlos Primitivo Flores.

“Participating Interest” of a Partner means, with respect to each Joint Venture Entity, the ratio of (i) the aggregate Capital Contributions made by such Partner to (ii) the aggregate Capital Contributions made by all Partners, expressed as a percentage. Participating Interests will be calculated to four decimal places and rounded to three decimal places as follows: Decimals of .0005 or more will be rounded up (e.g., 1.5186% rounded to 1.519%); decimals of less than .0005 will be rounded down (e.g., 1.5143% rounded to 1.514%). The initial Participating Interests of the Partners are set forth in Section 4.1 of the Agreement.

“Partner” or “Partners” means any Person who is a holder of Shares from time to time and its respective successors, assigns and legal representatives and where the context requires will mean one or more such Persons; provided that OpCo shall not be deemed a “Partner” hereunder as a result of its holding of Shares in EmployerCo.

“Partner Information” means all information, data, knowledge and know-how, in whatever form and however communicated (including, without limitation, Confidential Information but excluding the Existing Data), which, as shown by written records, was developed, conceived, originated or obtained by a Partner (a) prior to entering into this Agreement, or (b) independent of its performance under the terms of this Agreement.

“Party” means a party to this Agreement and “Parties” means all parties to this Agreement.

“Permit” means any permit, lease, license, claim, certificate, Order, grant, approval, consent, registration, closure plan or other authorization of or from any Governmental Authority and includes any permit necessary to explore for, exploit, develop, mine, produce or refine.

“Permitted Encumbrance” means any (a) statutory Encumbrances for current Taxes, assessments and other charges by Governmental Authorities that are not yet due and payable or that, although due and payable, are being contested in good faith by proper proceedings, but only to the extent appropriate reserves have been accrued as a current liability on the Financial Statements; (b) statutory

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Encumbrances of landlords, carriers, warehousemen, mechanics and materialmen incurred in the Ordinary Course of Business for sums not yet due; (c) Encumbrances incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations; (d) non-material irregularities of title which do not materially detract from the value or restrict the current use of the assets of the Project; (e) Royalty Interests; or (f) restrictions on transfer, if any, contained in the Constating Documents.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, association or other entity or a Governmental Authority.

“Pre-Participating Interest Period” shall mean the period prior to which Dowa shall have paid 50% of the Earn-In Fee; provided that the Pre-Participating Interest Period shall not extend beyond the Earn-In Period under any circumstances.

“Products” means all ores, minerals and mineral resources produced in connection with the Project from the Properties.

“Program” means a description in reasonable detail of Operations to be conducted and objectives to be accomplished by the Joint Venture Entities for a period determined by the Corporation Board.

“Project” means the silver, lead and zinc mine project known as the Los Gatos Project located approximately 120 kilometers south of the state capital of Chihuahua City, Mexico, comprised of concession rights and assets acquired and owned by the Joint Venture Entities covering approximately 103,083 hectares and certain surface access rights, as set forth on the map attached as Exhibit A.

“Project Financing” means any financing approved by the Corporation Board and obtained by the Corporation for the purpose of placing a mineral deposit situated on the Properties into commercial production, but will not include any such financing obtained individually by any Partner to finance payment or performance of its Obligations under the Agreement.

“Properties” means those interests in real property described in Exhibit A and all other interests in real property within the Area of Interest or relating to the Project that are acquired by the Corporation or any other Joint Venture Entity.

“Records” means all of the books, records and data, including books of account, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files, electronically stored data and other data, together with the tapes, disks, diskettes, drives and other data and software storage media of the Joint Venture Entities and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of the Joint Venture Entities with respect to the foregoing maintained with or by any other Person).

“Related Party” means an Affiliate of the Joint Venture Entities; provided that for the purposes of this definition only, an Affiliate shall include The Electrum Group LLC, Electrum Silver US LLC, Tigris Financial (International) L.P. and Tigris Financial Group Ltd. and of their respective Affiliates.

“Representative” has the meaning specified in Section 6.8.

“Repurchase Rights” has the meaning set out in Section 2.11(h).

“Requisite Partner Approval” means:

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(a)during the Pre-Participating Interest Period, the unanimous approval of Dowa and SSMRC Parent; and

(b)following the Pre-Participating Interest Period, approval of the Partners holding, in the aggregate, at least 90% of the Participating Interests in the Corporation and OpCo, provided that if, after earning a Participating Interest in the Corporation and OpCo of ten percent or more, Dowa’s Participating Interest in the Corporation and OpCo is diluted or otherwise reduced to less than ten percent, the unanimous approval of Dowa and SSMRC Parent will be required to make any of the Major Decisions described in items (b), (c), (n) and (w) of Exhibit B.

“Restricted Person” means any Person who, or any member of a group of Persons acting together, any one of which:

(a)is, or whose Affiliate is, then a party adverse in any pending or threatened (in writing or other reasonably satisfactory evidence of such threat) action, suit or proceeding in respect of any material matter relating to any Joint Venture Entity or any Partner or its Affiliate;

(b)is a direct competitor of any Joint Venture Entity or a Partner or its Affiliate;

(c)does not have the financial resources, experience and ability to perform the Obligations of a Partner; or

(d)has, directly or indirectly, its principal/controlling office in a country that is subject to any economic/political sanctions imposed by Japan or the United States for reasons other than its trade or economic policies.

“ROFR Interest” has the meaning given to that term in Section 18.2(a).

“ROFR Notice” has the meaning given to that term in Section 18.2(a).

“Royalty Interests” means the royalties described in Schedule 2.11(q)(iii).

“Services Agreement” means each of the General Services Agreement and Employment Services Agreement, and collectively, the “Services Agreements”.

“Shares” means, with respect to each Joint Venture Entity, shares in its capital of any class.

“SSMRC LuxCo” has the meaning given to that term in the Recitals.

“SSMRC Parent” has the meaning given to that term in the Recitals.

“Subscription Shares” means the Shares of each Joint Venture Entity to be issued by such Joint Venture Entity to Dowa pursuant to this Agreement.

“Tax Return” means any return, report, declaration, designation, election, notice, filing, form, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax.

“Taxes” includes all present and future taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues and other charges of any nature imposed by any Governmental Authority at a federal, local or municipal level, including production, income, capital, withholding,

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consumption, sales, use, transfer, goods and services, harmonized sales or other value-added, excise, customs, anti-dumping, countervail, net worth, stamp, registration, franchise, payroll, employment, health, social security, education, business, school, property, local improvement, development, education development and occupation taxes, together with all fines, interest, penalties on or in respect of, or in lieu of or for non-collection of, those taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues and other charges, or taxes of any kind for which the Corporation may have any liability whether disputed or not and all employment insurance premiums.

“Technical Report” means (NI) 43-101Technical Report: Mineral Resources of the Los Gatos Project, Chihuahua, Mexico, dated December 21, 2012.

“Transaction Document” means this Agreement, the Offtake Agreement and the Services Agreements.

“Transfer” means, when used as a verb, to sell, grant, assign, create an Encumbrance, pledge or otherwise convey, or dispose of or commit to do any of the foregoing, or to arrange for substitute performance by an Affiliate or third party (except as permitted under Section 18.4), either directly or indirectly; and, when used as a noun, means such a sale, grant, assignment, Encumbrance, pledge or other conveyance or disposition, or such an arrangement. The term “Transferred,” and other forms of the word “Transfer” will have the correlative meanings.

“Transferee” means any Person to whom a Partner has made or agreed (conditionally or otherwise) to make a Transfer.

“Transferor” means a Partner that has made or agreed (conditionally or otherwise) to make a Transfer.

“Transferring Partner” has the meaning given to that term in Section 18.2.

“Working Capital Amount” has the meaning given to that term in Section 23.15(a).

“Working Capital Principles” has the meaning given to that term in Section 23.15(b).

1.2Exhibits

The following Exhibits are attached to and form an integral part of this Agreement:

Exhibit A	Property and Assets of the Corporation
Exhibit B	Major Decisions
Exhibit C	Initial Program and Budget
Exhibit D	Form of Offtake Agreement
Exhibit E	Form of General Services Agreement
Exhibit F	Form of Employment Services Agreement
Exhibit G	Earn-In Fee Payment Schedule
Exhibit H	Escrow Agreement

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1.3Schedules

The following Schedules are attached to and form an integral part of this Agreement:

Schedule 2.11(d)	Chief Executive Office and Other Locations
Schedule 2.11(m)	Related Party Transactions
Schedule 2.11(n)	Restrictive Documents
Schedule 2.11(o)	Permits
Schedule 2.11(p)	Title to Real Property
Schedule 2.11(q)(i)	Mineral Rights — Mineral Interests, Mining Concessions, Mining Tenements or Other Mineral Rights
Schedule 2.11(q)(iii)	Mineral Rights — Permitted Encumbrances, Royalty Interests and Encumbrances
Schedule 2.11(q)(vi)	Mineral Rights — Persons with Future Interests in the Production or Profits from Mineral Rights
Schedule 2.11(t)	No Options, Etc.
Schedule 2.11(v)(i)	Consents and Approvals — Requirements Under Applicable Law
Schedule 2.11(v)(ii)	Consents and Approvals — Requirements Under Material Contracts
Schedule 2.11(v)(iii)	Consents and Approvals — Restrictions Under Constating Documents, Laws, Claims or Encumbrances
Schedule 2.11(x)	Material Contracts
Schedule 2.11(y)	Indebtedness
Schedule 2.11(z)	Litigation
Schedule 2.11(dd)(i)	Taxes
Schedule 2.11(ff)(i)	Employee Matters
Schedule 2.11(hh)	Environmental

1.4Rules of Interpretation

For all purposes of this Agreement, unless the context otherwise requires:

(a)references to the plural include the singular and references to the singular include the plural;

(b)references to one gender also refer to the other gender;

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(c)the words “include,” “includes” and “including” do not limit the preceding terms or words and will be deemed to be followed by the words “without limitation” and the word “or” will not be exclusive;

(d)the terms “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement;

(e)all accounting terms not otherwise defined in this Agreement have the meanings assigned to them by, and all computations to be made under this Agreement will be made in accordance with GAAP;

(f)the terms “day” and “days” mean and refer to calendar day(s) and the terms “year” and “years” mean and refer to calendar year(s);

(g)references to “$” or “dollar” refer to dollars of the United States of America;

(h)any document, instrument or agreement (including this Agreement): (i) includes and incorporates all exhibits, schedules and other attachments thereto; (ii) includes all documents, instruments or agreements issued or executed in replacement thereof; and (iii) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any given time;

(i)a particular Law means such Law as amended, modified, supplemented or succeeded, from time to time and in effect at any given time; and

(j)this Agreement will not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it.

ARTICLE 2 — SCOPE AND NATURE OF PARTNER RELATIONSHIP/BUSINESS

2.1Scope of Agreement

This Agreement will govern and define the respective rights, interests, powers and Obligations of each of the Partners to each other and to each Joint Venture Entity as legal and beneficial owners of Shares and provide for the management of the business of each Joint Venture Entity.

2.2Relationship

(a)The Partners disclaim any intention to create a partnership and nothing in this Agreement will constitute the Partners as partners or constitute any Partner as the agent of any other Partner.

(b)No Partner will:

(i)have, or represent that it has, the authority or power to act for or to undertake or create any obligation or responsibility, express or implied, on behalf of, or in the name of, any other Partner; or

(ii)be, or represent that it is, the agent or legal representative of any other Partner.

2.3Separate Activities

(a)Except as otherwise specifically provided in this Agreement or any other agreement executed by the Partners, each of the Partners will have the absolute right to continue,

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expand, diminish or cease to carry on its existing undertaking and business activities and to engage in undertakings and business activities separate and apart from the Joint Venture Entities.

(b)A Partner will not, by reason of this Agreement, have any interest in any other undertaking or property owned by any other Partner.

2.4Time and Attention

Each Partner will devote such time and attention to the Joint Venture Entities as will be reasonably necessary to permit the effective operation and management of the Joint Venture Entities in accordance with the terms of this Agreement, the General Services Agreement and the Employee Services Agreement, and to satisfy such Partner’s Obligations.

2.5Partner Covenant

Each of the Partners covenants and agrees that it will vote or cause to be voted the Shares beneficially owned by it to accomplish and give effect to the terms and conditions of this Agreement. In the event of any conflict between the provisions of this Agreement and the Articles or the By-laws of any Joint Venture Entity, the provisions of this Agreement will govern to the extent of the conflict. Each of the Partners agrees to vote or cause to be voted the Shares beneficially owned by it so as to cause the Articles or the By-laws of each Joint Venture Entity to be amended to resolve any such conflict in favor of the provisions of this Agreement.

2.6Notice by Joint Venture Entities

Each Joint Venture Entity by its execution hereof acknowledges that it has actual notice of the terms of this Agreement, consents hereto and hereby covenants with each of the Partners that it will at all times during the term of this Agreement be governed by the terms and provisions hereof in carrying out its business and affairs and, accordingly, will give or cause to be given such notices, execute or cause to be executed such documents and do or cause to be done all such acts, matters and things as may from time to time be necessary or required to carry out the terms and intent hereof.

Each Partner agrees that (i) any breach of this Section 2.6 will cause the other Partners irreparable harm and (ii) without prejudice to whatever rights and recourse the other Partners may have against the breaching Partner, the other Partners may enforce their rights under this Section 2.6 by way of injunction and will be entitled to specific performance and other injunctive relief, without the posting of a bond or other security as a remedy for any such breach or threatened breach, in order to enjoin or restrain any breach or threat of breach of any of the provisions of this Section 2.6 in addition to any other remedies the other Partners may have at law or in equity.

2.7Endorsement on Securities

All Shares will have endorsed thereon in bold type the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF AN OMNIBUS PARTNER AGREEMENT EFFECTIVE AS OF JANUARY 1, 2015 AND SUCH SECURITIES ARE NOT TRANSFERABLE ON THE BOOKS OF [THE APPLICABLE JOINT VENTURE ENTITY] EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF SUCH AGREEMENT.

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2.8Business of the Joint Venture Entities

Unless otherwise approved by Requisite Partner Approval, the business of the Joint Venture Entities (“Business”) will be limited to the ownership, Development and Operation of the Project including, without limitation:

(a)the conduct of all permitting studies, work and submissions to any Governmental Authority to allow the Properties to be explored, developed and, if appropriate, produced;

(b)the conduct of Exploration within the Area of Interest;

(c)the evaluation of the possible Development and Mining of the Properties, and, if approved by the Partners, such Development and Mining;

(d)the carrying out of Operations;

(e)the completion and satisfaction all Environmental Compliance Obligations and Continuing Obligations affecting the Properties; and

(f)the performance of any other activity necessary, appropriate, or incidental to any of the foregoing.

2.9Offices

The principal offices of each Joint Venture Entity will be at such place or places in Chihuahua, Mexico or such other place as the Board may from time to time determine. Written notice of, and any change to, such offices will be given to each Partner.

2.10Representations and Warranties of Both Partners

(a)Each Partner represents, warrants, covenants and agrees with each other Partner that:

(i)it is duly incorporated and organized, is validly existing, and is in good standing under the laws of the jurisdiction of its incorporation or formation;

(ii)it has, and will maintain, full corporate power and authority to execute and deliver this Agreement and to perform its Obligations;

(iii)this Agreement and any other documents contemplated herein, constitute its legal, valid and binding Obligations enforceable against it in accordance with its terms (except as may be limited by bankruptcy, insolvency or similar laws of general application and by the effect of general principles of equity, regardless of whether considered at law or in equity);

(iv)the authorization, execution, delivery, and performance of this Agreement does not and will not conflict with, or result in a breach, default or violation of (A) its constating documents or By-laws, (B) any material contract or agreement to which it is a party or is otherwise subject, or (C) any law, order, judgment, decree, writ, injunction or arbitral award to which it is subject; or require any Governmental Authorization; and

(v)it holds and will continue to hold its Shares beneficially and free and clear of all restrictions, mortgages, liens, charges, Encumbrances, security interests or agreements of any kind, except as expressly permitted under this Agreement or approved in writing by the Parties.

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(b)The representations, warranties and covenants made pursuant to this Section 2.10 will survive execution of this Agreement and each Partner covenants and agrees to ensure that the representations and warranties made by it in Sections 2.10(a)(i) — (iii), 2.10(a)(iv)(A) and (B) and 2.10(a)(v) shall remain true so long as such Partner remains a Partner.

2.11Representations and Warranties of the Joint Venture Entities

Each Joint Venture Entity hereby represents and warrants, severally and not jointly, to Dowa as follows and acknowledges that Dowa is relying on such representations and warranties in entering into this Agreement (other than such representations and warranties that speak to a particular Joint Venture Entity, in which case such representations and warranties are made solely by such relevant Joint Venture Entity) as of the date hereof and as of each date that Dowa pays a portion of the Earn-In Fee in accordance with Section 3.1(a):

(a)Organization. Such Joint Venture Entity has been duly incorporated or formed, as applicable, and is validly existing under the laws of its existence or incorporation. Such Joint Venture Entity has the corporate power and capacity to own and lease its property and to carry on its business as currently conducted. Such Joint Venture Entity is duly qualified, licensed or registered to do business in each jurisdiction in which the nature of its business, the Project or the property or assets owned or leased by it make such qualification necessary, except where such failure to be so qualified, licensed or registered would not have a Material Adverse Effect. Such Joint Venture Entity is up-to-date in all its corporate and other filings and is in good standing under applicable Laws except where such failure to be up-to-date would not have a Material Adverse Effect.

(b)Authorization. Such Joint Venture Entity has the requisite power and authority to enter into this Agreement and each other Transaction Document to which it is a party and to perform its obligations hereunder and thereunder. This Agreement and each other Transaction Document to which it is a party has been duly authorized, executed and delivered by such Joint Venture Entity and, assuming due authorization, execution and delivery by the other parties hereto and thereto, is a valid and binding agreement of such Joint Venture Entity enforceable against such Joint Venture Entity in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject to the qualification that equitable remedies may be granted in the discretion of a court of competent jurisdiction.

(c)Books and Records. The minute books and corporate records of such Joint Venture Entity are true and correct in all material respects and contain substantially all minutes of all meetings and all resolutions of the partners, members and managers (or any committee thereof) of such Joint Venture Entity.

(d)Chief Executive Office and Other Locations. The principal place of business and chief executive office or registered office, as applicable, of such Joint Venture Entity is set out in Schedule 2.11(d).

(e)Authorized and Issued Capital.

(i)The social capital of the Corporation will be represented by partnership shares that can be of unequal value, but in all cases will be with a value of $1.00 MexCy or multiples of $1.00 MexCy. Each Partner will have a partnership share that will represent the Partner’s contribution to the capital of the Corporation. Each Partner will have a partnership share that can be increased or decreased when its participation in the capital is increased or decreased. The Partner can accredit its character as a Partner, by means of the incorporation deed, the Partners minutes Meeting Book that authorized its admission, the Partnerships

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Shares’ Registry Book or the Share certificates duly issued by the Corporation. On the date hereof, SSMRC Parent, SSMRC LuxCo and Dowa are the registered owners of all the partnership shares of the Corporation, free and clear of all Encumbrances, other than Encumbrances granted pursuant to Sections 4.2 or 4.6. No partnership shares of the Corporation are issued and outstanding other than the partnership shares referred to in this Section.

(ii)The social capital of the OpCo will be represented by partnership shares that can be of unequal value, but in all cases will be with a value of $1.00 MexCy or multiples of $1.00 MexCy. Each Partner will have a partnership share that will represent the Partner’s contribution to the capital of OpCo. Each Partner will have a partnership share that can be increased or decreased when its participation in the capital is increased or decreased. The Partner can accredit its character as a Partner, by means of the incorporation deed, the Partners minutes Meeting Book that authorized its admission, the Partnerships Shares’ Registry Book or the Share certificates duly issued by OpCo. On the date hereof, SSMRC Parent, SSMRC LuxCo and Dowa are the registered owners of all the partnership shares of OpCo, free and clear of all Encumbrances, other than Encumbrances granted pursuant to Sections 4.2 or 4.6. No partnership shares of OpCo are issued and outstanding other than the partnership shares referred to in this Section.

(iii)The social capital of EmployerCo will be represented by partnership shares that can be of unequal value, but in all cases will be with a value of $1.00 MexCy or multiples of $1.00 MexCy. Each Partner will have a partnership share that will represent the Partner’s contribution to the capital of EmployerCo. Each Partner will have a partnership share that can be increased or decreased when its participation in the capital is increased or decreased. The Partner can accredit its character as a Partner, by means of the incorporation deed, the Partners minutes Meeting Book that authorized its admission, the Partnerships Shares’ Registry Book or the Share certificates duly issued by EmployerCo. On the date hereof, OpCo and SSMRC Luxco and Dowa are the registered owners of all the partnership shares of EmployerCo, free and clear of all Encumbrances, other than Encumbrances granted pursuant to Sections 4.2 or 4.6. No partnership shares of EmployerCo are issued and outstanding other than the partnership shares referred to in this Section.

(f)Partnership Terms. The rights, privileges, restrictions and conditions attached to the partnership shares of such Joint Venture Entity are a set out in the Constating Documents of such Joint Venture Entity. True, accurate, and complete copies of such Constating Documents have been made available to Dowa.

(g)Issuance of Shares. The Joint Venture Entity upon receipt of payment of the subscription price shall issue the corresponding Subscription Shares, free and clear of all Encumbrances, other than as may be imposed as a result of the application of any Applicable Laws, to Dowa.

(h)No Acquisition or Repurchase Rights. Except as contemplated by this Agreement, no Person has any option, warrant, right (pre-emptive, contractual or otherwise) or other security or conversion privilege issued or granted by such Joint Venture Entity that is exercisable or convertible into, or exchangeable for, or otherwise carries the right of the holder to purchase or otherwise acquire (whether or not subject to conditions) Participating Interests, partnership shares or other securities of such Joint Venture Entity, including pursuant to one or more multiple exercises, conversions and/or exchanges or other securities or rights (pre-emptive, contractual or otherwise) (collectively, “Acquisition Rights”) or to require such Joint Venture Entity to purchase, redeem or

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otherwise acquire any of its issued and outstanding Participating Interests (collectively, “Repurchase Rights”). No shareholder or other Person has any pre-emptive right or right of first refusal in respect of the allotment and issuance of any unissued Participating Interests or other securities of such Joint Venture Entity.

(i)Voting and Registration Rights. Other than pursuant to this Agreement, such Joint Venture Entity is not a party or subject to any agreement, arrangement or understanding, and to the knowledge of such Joint Venture Entity there is no agreement between any securityholders of such Joint Venture Entity, that affects or relates to the voting or giving of written consents with respect to, such Joint Venture Entity’s securities or that affects or relates to the conduct of the Business. Such Joint Venture Entity has not granted any registration rights or similar rights with respect to its securities to any Person.

(j)Technical Report. Dowa has been provided with a true and correct copy of the Technical Report. As of the date of this Agreement, and except for information acquired as a result of work performed pursuant to the LOI, none of SSMRC Parent, SSMRC Luxco or the Joint Venture Entities have knowledge that the mineral resources as disclosed in the Technical Report are inaccurate in any material respect.

(k)Dividends and Distributions. Such Joint Venture Entity has not, directly or indirectly, declared or paid any dividends or declared or made any other distributions on any of its shares of any class and has not agreed to do so other than pursuant to this Agreement.

(l)Subsidiaries. Such Joint Venture Entity has no subsidiaries, does not beneficially own any securities of any Person and has no agreements of any nature to acquire any securities of any Person or acquire or lease any other business operations, except that EmployerCo is a wholly owned subsidiary of OpCo.

(m)Related Party Transactions. Except as disclosed in Schedule 2.11(m), as of the date of this Agreement, such Joint Venture Entity has not: (i) made any payment or loan to, or borrowed any moneys from or otherwise been indebted to, any Related Party of any of the Joint Venture Entity; or (ii) been a party to any Contract with any Related Party of such Joint Venture Entity, other than independent contractor or indemnification agreements entered into with officers or directors of such Joint Venture Entity, copies of which have been provided to Dowa. Any transactions between any of the Joint Venture Entities and a Related Party of any of the Joint Venture Entities have been completed on reasonable commercial terms that, considered as a whole, are not less advantageous to the Joint Venture Entities than if the transaction was with a Person dealing at arm’s length with the Joint Venture Entities.

(n)Restrictive Documents. Other than as disclosed in Schedule 2.11(n), none of the Joint Venture Entities is subject to, or a party to, any restriction under its Constating Documents, any Laws, any Claim, any Material Contract or instrument, any Encumbrance or any other restriction of any kind or character which does or would prevent or restrict (i) the consummation of the transactions contemplated by this Agreement, (ii) the compliance by such Joint Venture Entity with the terms, conditions and provisions hereof; or (iii) the conduct of the Business of the Corporation in the scope so conducted as of the date of this Agreement.

(o)Permits. Schedule 2.11(o) describes each Permit held by or granted to such Joint Venture Entity as of the date of this Agreement, the applicable permit number, the dates of grant and of expiry and any applicable renewal rights. As of the date of this Agreement, Each Permit held by or granted to such Joint Venture Entity is validly subsisting and in good standing and such Joint Venture Entity is not in default or breach of any such Permit and no proceeding is pending or, to the knowledge of such Joint Venture Entity, threatened to revoke or limit any such Permit, except for non-material

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instances of non-compliance which are not adverse to the Business in any material respect. Such Joint Venture Entity has made available to Dowa a true and complete copy of each Permit held by or granted to such Joint Venture Entity and all amendments thereto.

(p)Title to Real Property. Schedule 2.11(p) sets out an accurate and complete description of each of the Properties. The Joint Venture Entities collectively have:

(i)valid and subsisting leasehold title or rights of access to all leases of real property and mineral concessions included within the Properties;

(ii)valid possessory and record title to all mineral concessions included within the Properties except for such concessions that are leased to the Corporation and are covered under part (i) of this paragraph;

(iii)good and marketable title to such other real property interests included within the Properties and not otherwise included under parts (i) and (ii) of this paragraph; and

(iv)good and valid title to or hold a valid leasehold interest in such properties and assets, which are not real property interests, and are included within the Properties.

(q)Mineral Rights.

(i)Schedule 2.11(q)(i) describes all mineral interests, mining concessions, mining tenements or other mineral rights owned by or subject to any license or similar agreement in favor of the Corporation within the Project area.

(ii)To the knowledge of SSMRC Parent and the Corporation, the Mineral Rights have been properly located and recorded in compliance with Applicable Laws and are comprised of valid and subsisting mineral claims.

(iii)The Corporation is the registered and beneficial owner or leaseholder of the Mineral Rights with good and marketable title thereto, free and clear of any title defect or Encumbrance other than Permitted Encumbrances and the Royalty Interests and Encumbrances set forth in Schedule 2.11(q)(iii).

(iv)The Mineral Rights constitute all of the right, title and interest necessary or appropriate to authorize and enable the Joint Venture Entities to conduct the Business.

(v)The Corporation has the exclusive right to deal with the Mineral Rights, and there are no restrictions on the ability of any of the Joint Venture Entities to use, transfer or exploit the Mineral Rights other than pursuant to Applicable Laws and the Royalty Interests.

(vi)Except as set forth on Schedule 2.11(q)(vi) or as arising pursuant to Applicable Law, no Person other than the Corporation has any interest in the production or profits to be obtained in the future from the Mineral Rights or any royalty in respect thereof or any right to acquire any such interest.

(vii)There are no farm-in or earn-in rights, rights of first refusal or similar rights or provisions which materially and adversely affect the Mineral Rights.

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(viii)The Corporation has not received any written notice from any Governmental Authority of any revocation or intention to revoke the interest of any of the Corporation in any Mineral Rights.

(ix)The Mineral Rights are in good standing under Applicable Laws; all work required to be performed has been performed and all Taxes, rentals, fees, expenditures and other payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.

(x)All mining operations and all exploration activities in respect of the Mineral Rights have been conducted in all material respects in accordance with all Applicable Laws and with good mining and engineering practices and all workers’ compensation and health and safety regulations have been complied with in all material respects.

(xi)As of the date of the Agreement, there are no material Claims that have been commenced, are pending or, to the knowledge of the Joint Venture Entity, are threatened, against any of the Joint Venture Entities, nor is there a state of facts or events that may give rise thereto, which affect the title to or right to explore or develop the Mineral Rights.

(r)Title to Personal and Other Property. The Joint Venture Entities have, good and marketable title to, or valid and enforceable leasehold interests in, all personal property used or held for use in the Business, in each case free and clear of all Encumbrances, other than Permitted Encumbrances. None of such personal property is owned by any Person other than the Joint Venture Entities without a valid and enforceable right of the Joint Venture Entities to use and possess such personal property.

(s)Expropriation. No property or asset (including the Properties and the Mineral Rights) of the Joint Venture Entities has been taken or expropriated by any Governmental Authority or Person nor has any written notice or proceeding in respect thereof been given or commenced nor, to the knowledge of SSMRC Parent or Joint Venture Entities, is there any proposal to give any such notice or commence any such proceeding.

(t)No Options, Etc. Except as set forth on Schedule 2.11(t) and the Offtake Agreement, no Person has any Contract (including an option) or any right or privilege capable of becoming a Contract to acquire (whether or not subject to conditions) from the Joint Venture Entities any of its material property or assets (including the Properties and the Mineral Rights) or any material interest therein, other than purchase orders for Product in the Ordinary Course of Business.

(u)Compliance with Laws. To the knowledge of SSMRC Parent and the Joint Venture Entities, as of the date of this Agreement none of the Joint Venture Entities is in material breach or violation of:

(i)any of the terms, conditions or provisions of its Constating Documents or any resolution of the shareholders, members or directors (or any committee thereof) of the Corporation;

(ii)any Permit; or

(iii)any Laws applicable to, or any Order of any Governmental Authority having jurisdiction over, the Business, the Project or such Joint Venture Entity, or its property or assets (including the Properties and the Mineral Rights).

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(v)Consents and Approvals. Other than as disclosed in Schedule 2.11(v)(i), as of the date of this Agreement there is no requirement under applicable Law for any of the Joint Venture Entities to make any filing, give any notice, obtain any Permit or take any proceeding as a condition to the lawful consummation of the transactions contemplated by this Agreement. Other than as set out in Schedule 2.11(v)(ii), as of the date of this Agreement, there is no requirement under any Material Contract of any of the Joint Venture Entities to give any notice to, or to obtain the consent or approval of, any party to such Contract in respect of the transactions contemplated hereunder. Other than as disclosed in Schedule 2.11(v)(iii), as of the date of this Agreement, none of the Joint Venture Entities is subject to, or a party to, any restriction under its Constating Documents, any Laws, any Claim, or any Encumbrance, other than any Permitted Encumbrance, which does or would prevent or restrict the consummation of the transactions contemplated hereunder.

(w)No Violation. The execution and delivery by SSMRC Parent, SSMRC LuxCo and the Joint Venture Entities of this Agreement and the issuance of the Subscription Shares to Dowa will not result in either:

(i)the breach or violation of any of the provisions of, or constitute a default under or conflict with or cause the acceleration of any obligation of the Joint Venture Entities under, or give any Person a right to terminate, cancel or modify in any material respect:

(A)any Material Contract in effect as of the date of this Agreement;

(B)any provision of the Constating Documents of the Joint Venture Entities or any resolution of the shareholders, members or directors (or any committee thereof) of the Corporation;

(C)any Applicable Laws in effect as of the date of this Agreement; or

(D)any material Permit in effect as of the date of this Agreement; or

(ii)the creation or imposition of any Encumbrance on the Subscription Shares or any property or assets (including the Properties and the Mineral Rights) of any of the Joint Venture Entities, other than a Permitted Encumbrance.

(x)Material Contracts. As of the date of this Agreement, all Material Contracts are set forth in Schedule 2.11(x) and true and complete copies thereof have been delivered to Dowa on or prior to the date hereof. To the knowledge of SSMRC Parent and the Joint Venture Entities, none of the Joint Venture Entities nor any counterparty thereto, is in default in in the observance or performance of any material term, covenant or obligation to be performed by such Joint Venture Entity or such other Person under any Material Contract to which any of the Joint Venture Entities is a party or by which it is otherwise bound and each such Material Contract is in good standing, constitutes a valid and binding agreement of each of the parties thereto, is in full force and effect and is enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject to the qualification that equitable remedies may be granted in the discretion of a court of competent jurisdiction. To the knowledge of SSMRC Parent and the Joint Venture Entities, no event has occurred which would constitute such a default by any of the Joint Venture Entities. None of SSMRC Parent or the Joint Venture Entities have knowledge of the invalidity of or grounds for rescission, avoidance or repudiation of any such Material Contract and none of SSMRC Parent or the Joint Venture Entities have received notice of any intention to terminate any such Material Contract.

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(y)Indebtedness. Other than as disclosed in Schedule 2.11(y), as of the date of this Agreement none of the Joint Venture Entities have any Indebtedness. As of the date of this Agreement, Schedule 2.11(y) lists each item of such Indebtedness identifying the creditor, including name, the type of instrument under which the Indebtedness is owed and the amount of the Indebtedness as of the close of business on the Business Day immediately prior to the date hereof. With respect to each item of Indebtedness, the applicable Joint Venture Entity is not in default, and no payments are past due under any item of Indebtedness. None of the Joint Venture Entities has received any written notice of a default, alleged failure to perform or any offset or counterclaim with respect to any item of Indebtedness that has not been fully remedied and withdrawn. None of the Joint Venture Entities is a guarantor or otherwise liable for any liability or obligation (including indebtedness) of any other Person.

(z)Litigation. As of the date of this Agreement there are no Orders which remain unsatisfied against any of the Joint Venture Entities or consent decrees or injunctions to which any of the Joint Venture Entities is subject. As of the date of this Agreement there are no material investigations, actions, suits or proceedings at Law or in equity or by or before any Governmental Authority now pending or, to the knowledge of SSMRC Parent or the Joint Venture Entities, threatened against any of the Joint Venture Entities (or their respective properties or assets). Except as disclosed in Schedule 2.11(z), as of the date of this Agreement there is no material claim, demand, suit, action, proceeding, litigation, complaint, investigation, inquiry, grievance, mediation or arbitration, including appeals and applications for review, in progress against, by or relating to any of the Joint Venture Entities, the Business or the Project, nor, to the knowledge of SSMRC Parent or the Joint Venture Entities, are any of the same pending or threatened.

(aa)Financial Statements. The Financial Statements present fairly, in all material respects, the financial condition of the Corporation for the periods then ended.

(bb)No Insolvency Proceedings. To the knowledge of SSMRC Parent and the Joint Venture Entities, there has not been any petition filed, or any judicial or administrative proceeding commenced which has not been discharged, by or against any of the Joint Venture Entities or with respect to any asset of any of the Joint Venture Entities under any Applicable Laws relating to bankruptcy, insolvency, reorganization, fraudulent transfer, compromise, arrangement of debt or creditors’ rights and no assignment has been made for the benefit of the creditors of any of the Joint Venture Entities. None of the Joint Venture Entities has authorized any action with respect to its bankruptcy, insolvency, liquidation, dissolution or winding-up.

(cc)No Material Adverse Effect. Since December 31, 2013 no event or circumstance has occurred that, individually or in aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

(dd)Taxes.

(i)Each of the Joint Venture Entities has duly filed on a timely basis all Tax Returns required to be filed by them and all such returns are true, correct and complete in all material respects. Each of the Joint Venture Entities has paid all Taxes which are due and payable by it, and all assessments, reassessments, governmental charges, penalties, interest and fines due and payable by them. Each of the Joint Venture Entities has made adequate provision for Taxes payable by them for the current period and any previous period for which Tax Returns are not yet required to be filed. Except as disclosed in Schedule 2.11(dd)(i), as of the date of this Agreement, there are no audits, actions, suits, proceedings, investigations or claims pending or, to the knowledge of SSMRC Parent or the Joint Venture Entities, threatened against any of the Joint Venture Entities in respect of Taxes,

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governmental charges or assessments, nor are any material matters under discussion with any Governmental Authority relating to Taxes, governmental charges or assessments asserted by any such authority. Each of the Joint Venture Entities has withheld from each payment made to any of its past or present employees, officers or directors, and to any non-resident of Mexico, the amount of all Taxes and other deductions required to be withheld therefrom and have paid the same to the proper taxing authority within the time required under any Applicable Laws. Each of the Joint Venture Entities has remitted to the appropriate tax authority when required by Law to do so all amounts collected by it on account of all applicable Taxes. The federal income tax liability of each of the Joint Venture Entities has been assessed by the Ministry of Finance and Public Credit in Mexico as concerns the Joint Venture Entities for all financial years up to and including the financial year ended 2013 and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any Tax Return by, or payment of any Tax, governmental charge or deficiency against, any of the Joint Venture Entities. Each of the Joint Venture Entities has provided to Dowa a true copy of all Tax Returns filed by the Joint Venture Entities in respect of the three last completed taxation years of each of the Joint Venture Entities.

(ii)To the knowledge of SSMRC Parent and the Joint Venture Entities, none of the Joint Venture Entities has, either directly or indirectly, transferred property to or acquired property from a person with whom it was not dealing at Arm’s Length for purposes of applicable Tax Law for consideration other than consideration equal to the fair market value of the property at the time of the disposition or acquisition thereof. To the knowledge of SSMRC Parent and the Joint Venture Entities, for all transactions between any of the Joint Venture Entities and any Person who is not resident in the United Mexican States for purposes of applicable Tax Law in such country with whom any of the Joint Venture Entities was not dealing at Arm’s Length for purposes of applicable Tax Law, the Joint Venture Entities has made or obtained records or documents that meet the requirements of Applicable Laws relating to Taxes in such country.

(ee)Foreign Corrupt Practices. None of the Joint Venture Entities, nor, to the knowledge of SSMRC Parent or the Joint Venture Entities, any director, officer, agent, employee or other Person acting on behalf of the any of the Joint Venture Entities has, in the course of its actions: (i) used, or authorized the use of, any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made, or authorized the making of, any direct or indirect unlawful payments to any foreign government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq. or any other applicable anti-corruption or anti-bribery law that any of the Joint Venture Entities is subject to; or (iv) made, or authorized the making of, any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

(ff)Employee Matters.

(i)Schedule 2.11(ff)(i) lists all individuals currently employed by the Joint Venture Entities as of the date of this Agreement. The Corporation is not aware of any breaches of any employment Contract to which any of the Joint Venture Entities is party. Except as listed in Schedule 2.11(ff)(i), as of the date of this Agreement none of the Joint Venture Entities has any employment Contract pursuant to which such services are provided.

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(ii)All accruals for unpaid vacation pay, premiums for employment insurance, health premiums, pension plan-related premiums, accrued wages, salaries and commissions, if any, have been accurately reflected in all material respects in the books and records of the Joint Venture Entities.

(iii)None of the Joint Venture Entities is bound by or a party to any collective bargaining agreement or any benefit plan including any pension plan, profit sharing plan, retirement plan, compensation deferral plan or other plan or arrangement of a similar nature maintained by or on behalf of any of the Joint Venture Entities for any of its employees.

(iv)As of the date of this Agreement, no labor dispute, work stoppage or labor strike with the employees of any of the Joint Venture Entities exists, is pending or imminent or, to the knowledge of the Corporation, is threatened or imminent, and to the knowledge of the Corporation, there is no existing, pending or imminent labor disturbance by the employees of any of principal suppliers, manufacturers, customers or contractors of any of the Joint Venture Entities.

(gg)Bargaining Rights. As of the date of this Agreement, no trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent:

(i)holds bargaining rights with respect to any of the employees of any of the Joint Venture Entities by way of certification, interim certification, voluntary recognition, designation or successor rights;

(ii)has applied to be certified as the bargaining agent of any of the employees of any of the Joint Venture Entities; or

(iii)has applied to have any of the Joint Venture Entities declared a related or common employer or successor employer pursuant to applicable labor or employment Laws.

(hh)Environmental.

(i)Except as set forth in Schedule 2.11(hh)(i), to the knowledge of SSMRC Parent and the Joint Venture Entities as of the date of this Agreement, each of the Joint Venture Entities, the Business, the Project, the Properties and the Mineral Rights and all operations related thereto have during the last two years been and currently are materially in compliance with Environmental Laws.

(ii)Except as set forth in Schedule 2.11(hh)(ii), as of the date of this Agreement none of the Joint Venture Entities has used or permitted to be used, except in material compliance with all Environmental Laws, any of the Properties to release, dispose, recycle, generate, manufacture, process, distribute, use, treat, store, transport or handle any Hazardous Substance.

(iii)Except as set forth in Schedule 2.11(hh)(iii), to the knowledge of SSMRC Parent and the Joint Venture Entities as of the date of this Agreement, there is no presence of any Hazardous Substance on, in or under any of the Properties or any formerly owned, leased, managed or otherwise controlled real property interests or rights.

(iv)As of the date of this Agreement, none of the Joint Venture Entities, the Business, the Project, the Properties nor the Mineral Rights is subject to any current, or, to the knowledge of SSMRC Parent or the Joint Venture Entities, any

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pending Claim or Order that relates to (i) violations of Environmental Laws or (ii) any Environmental Law respecting the use, storage, treatment, transportation, rehabilitation, reclamation, remediation or disposition of any Hazardous Substance (including without limitation tailings, waste rock, sediment from erosion, wastewater and surface water run-off) from the Business, the Project, the Properties or the Mineral Rights. Other than as disclosed on in Schedule 2.11(hh)(iv), during the three years prior to the date of this Agreement, no Joint Venture Entity has settled any allegation of non-compliance with Environmental Laws prior to prosecution.

(v)The Corporation has made available to Dowa a true and complete copy of each environmental audit, assessment, study or test of which it is aware relating to the Business, the Project, the Properties, the Mineral Rights or any of the Joint Venture Entities’ other property or assets, including any environmental and social impact assessment study reports.

(ii)Insurance. As of the date of this Agreement, the property and assets of the Joint Venture Entities and the Business are insured against loss or damage with insurers on a basis consistent with insurance obtained by reasonably prudent participants in comparable exploration businesses of similar size and current scope in the relevant jurisdictions, and such coverage is in full force and effect, and none of the Joint Venture Entities has breached the terms of any policies in respect thereof nor failed to promptly give any notice or present any material claim thereunder. There are no material claims by any of the Joint Venture Entities under any such policy as to which any insurance company is denying liability or defending under a reservation of rights clause.

(jj)Intellectual Property. As of the date of this Agreement, the Joint Venture Entities own or possess the right to use all Intellectual Property and the Joint Venture Entities are not aware of any claim to the contrary or any challenge by any other Person to the rights of the Joint Venture Entities with respect to the foregoing. As of the date of this Agreement, no Claim has been made against any of the Joint Venture Entities alleging the infringement by any of the Joint Venture Entities of any patent, trademark, service mark, trade name, copyright, trade secret, license in or other intellectual property right or franchise right of any Person.

(kk)No Finders. No Finder acted for any of the Joint Venture Entities in connection with this Agreement. None of the Joint Venture Entities is a party to any Contract with any Finder and none of the Joint Venture Entities owes any compensation, including by way of the issuance of securities, to any Finder in respect of this Agreement, or in respect of any potential future transaction(s) involving any of the Joint Venture Entities.

2.12Indemnification for Breaches of Representations and Warranties

(a)Subject to the limitations and other provisions of this Agreement, the representations and warranties contained in Section 2.11 shall survive the execution of this Agreement and shall remain in full force and effect for 12 months after such representation or warranty is made (being the Effective Date and each date on which Dowa pays a portion of the Earn-In Fee to the Corporation in accordance with Section 3.1(a)), except that: (i) representations and warranties with respect to Taxes in Section 2.11(dd) will remain in full force and effect for a period of 90 days after the later of: (A) the last date on which an assessment or reassessment for Taxes under Applicable Law imposing Taxes can be made against the relevant Joint Venture Entity in respect of the period up to the date of this Agreement; and (B) the date on which the period for an appeal in respect of an assessment, reassessment or other determination of the Taxes for which the relevant Joint Venture Entity is liable, or in respect of a decision of a court or other Governmental Authority in respect of such Taxes, expires without an appeal having been lodged; and (ii)

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representations and warranties in Sections 2.11(a), (b), (e), (g) and (h) (“Fundamental Representations”) will survive indefinitely.

(b)Subject to the other terms and conditions of this Section 2.12, SSMRC Parent shall indemnify Dowa against, and shall hold Dowa harmless from and against, any and all Losses incurred or sustained by, or imposed upon, Dowa to the extent based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any of the representations or warranties of the Joint Venture Entities contained in Section 2.11, or any Losses arising out of, with respect to, or by reason of the Outstanding Due Diligence Items.

(c)SSMRC Parent shall not be liable to Dowa for indemnification under this Section 2.12 until the aggregate amount of all Losses in respect of indemnification under this Section 2.12 exceeds an amount equal to 1.0% of the Earn-In Fee (the “Deductible”), in which event SSMRC Parent shall only be required to pay or be liable for Losses in excess of the Deductible. With respect to any claim as to which Dowa may be entitled to indemnification under this Section 2.12, SSMRC Parent shall not be liable for any individual or series of related Losses until the aggregate amount of such Losses exceeds $25,000. The limitations set forth in this Section 2.12(c) will not apply to Losses arising from a breach of Fundamental Representations or fraud or Losses arising out of, with respect to, or by reason of the Outstanding Due Diligence Items.

(d)The aggregate amount of all Losses for which SSMRC Parent shall be liable pursuant to this Section 2.12 as the case may be, shall not exceed an amount equal to 20% of the amount of the Earn-In Fee actually paid by Dowa, provided that such limitation will not apply to Losses arising from a breach of Fundamental Representations or fraud or Losses arising out of, with respect to, or by reason of the Outstanding Due Diligence Items; provided, further, that the maximum amount of liability that SSMRC Parent shall have pursuant to this Section 2.12 shall be the amount of the Earn-In Fee actually paid by Dowa.

(e)Payments by SSMRC Parent pursuant to this Section 2.12 in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received by Dowa in respect of any such claim. Dowa shall use its reasonable best efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Losses.

(f)Payments by SSMRC Parent pursuant to this Section 2.12 in respect of any Loss shall be reduced by an amount equal to any Tax benefit realized as a result of such Loss by Dowa. Upon request by SSMRC Parent, Dowa shall provide SSMRC Parent with information concerning the Tax impact on Dowa that has occurred or is expected to occur due to the Loss.

(g)In no event shall SSMRC Parent be liable to Dowa for in respect of any Claims arising out of this Section 2.12 for special, indirect, punitive, exemplary, speculative or other damages that are not reasonably foreseeable (unless such special, indirect, punitive, exemplary, speculative or other damages are actually paid to a third party pursuant to a third party Claim).

(h)Dowa shall take reasonable best efforts to mitigate any Loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that gives rise to such Loss.

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(i)SSMRC Parent shall not be liable under this Section 2.12 for any Losses based upon or arising out of any inaccuracy in or breach of any of the representations or warranties of the Joint Venture Entities contained in this Agreement if Dowa had knowledge of such inaccuracy or breach prior to the execution of this Agreement, provided that this limitation will not apply to Losses arising out of, with respect to, or by reason of the Outstanding Due Diligence Items.

(j)SSMRC Parent shall not be liable under this Section 2.12 for any Losses to the extent resulting from actions undertaken or omissions by Dowa or its Managers, including failure to provide consent to any proposed Major Decisions.

(k)Dowa acknowledges and agrees that its sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud on the part of the Joint Venture Entities in connection with the representations and warranties set forth in Section 2.11) for any breach of any representation or warranty set forth in Section 2.11 shall be pursuant to the indemnification provisions set forth in this Section 2.12. In furtherance of the foregoing, Dowa hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation or warranty set forth in this Section 2.12 it may have against SSMRC Parent and its Affiliates and representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Section 2.12.

2.13Non-Reliance

Except for the representations and warranties contained in Sections 2.10 and 2.11, no Party makes any other express or implied representation or warranty regarding the transactions contemplated hereby, and each Party expressly disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to the other (including any opinion, information, projection, or advice that may have been or may be provided to a Party or any of its subsidiaries or Affiliates by a Party, its subsidiaries or Affiliates). No Party has relied on any representation or warranty of any other Party other than the representations and warranties set forth in Section 2.10 and 2.11. Each Partner represents to the other that in negotiating and entering into this Agreement it has relied solely on its own appraisals and estimates as to the value of the Assets and upon its own geologic and engineering interpretations related thereto.

2.14Compliance with Global Anti-Corruption Laws

No Partner nor any Joint Venture Entity, their respective subcontractors, if any, nor any of their respective officers, directors, managers, employees or agents, shall make any payment or give anything of value, directly or indirectly, to any government official (including any director, employee or agent of any government department, agency or instrumentality, political party or candidate or government or state-owned or state-controlled enterprise) or official of any international organization or private party representative, to influence his, her or its decision in an improper manner, or to gain any other improper advantage for any Person in connection with this Agreement or such Party’s business activities. Without limiting the generality of the foregoing, the Parties specifically covenant and agree to strictly comply at all times with the provisions of the U.S. Foreign Corrupt Practices Act and the anti-corruptions Laws of Mexico and any other nation in which the Corporation does business (the “Global Anti-Corruption Laws”). In addition, each Partner and each Joint Venture Entity represent and warrant that it does not act as an agent or representative for, and is otherwise not affiliated with, any government, government official, political party, or government or government or state-owned or state-controlled enterprise, and shall advise the other Party promptly in writing prior to entering into any such relationship. Each Partners and each Joint Venture Entity, as applicable, shall immediately notify the other parties if it has any reason to believe that a violation of this Section 2.14 has occurred or may likely occur. Each Partner and each Joint Venture Entity, as applicable, shall cooperate fully in any investigation of any such potential violation.

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ARTICLE 3 — CONTRIBUTIONS

3.1Initial Contributions

(a)Dowa has contributed $649,661 to the Corporation and OpCo, with $649,531 to be allocated to the Corporation and $130 to be allocated to OpCo, as of the Effective Date (“Existing Dowa Contribution”), which amount includes credit for all amounts paid by Dowa pursuant to the LOI prior to the Effective Date. Dowa will continue to make payments to the Corporation and OpCo, which shall be allocated in accordance with the Capital Contribution Allocation, up to an aggregate amount equal to $50,000,000 (inclusive of the Existing Dowa Contribution) in exchange for an option to purchase Participating Interests pursuant to Section 3.1(d)(i) (“Earn-In Fee”). The Earn-in Fee will be used (i) to pay the Working Capital Amount as set forth in Section 23.15 and (ii) by the Joint Venture Entities to fund the Initial Program during the period beginning on the Effective Date and ending on the second anniversary of the Effective Date (the “Earn-In Period”). Dowa will make option payments in the form of the Earn-in Fee in quarterly installments in accordance with the schedule of payments attached as Exhibit G. The Earn-in Fee will be paid to the Escrow Agent and held by the Escrow Agent in accordance with the terms of the Escrow Agreement. The fees of the Escrow Agent shall be borne in full by the Corporation, notwithstanding anything in the Escrow Agreement to the contrary. Dowa shall be credited with payment of the Earn-In Fee immediately upon receipt thereof by the Corporation. After Dowa has made Earn-in Fee payments (including the Existing Dowa Contribution) equal or greater to $25,000,000 in the aggregate to all of the Joint Venture Entities, all such payments and all future payments on account of the Earn-in Fee, when received by the Corporation, will be deemed to be Capital Contributions made by Dowa and, upon receipt of such Capital Contributions by the Corporation (or, in the case of the Working Capital Amount, by SSMRC), the Parties will take all steps as may be required under Applicable Law, including the execution of partners’ meetings, to ratify and approve Dowa’s resulting increased Participating Interest. For the avoidance of doubt, payments of the Earn-In Fee shall be deemed to be payments in respect of an option for Dowa to acquire additional Participating Interests pursuant to this Section 3.1(a) until such time as Dowa has paid $25,000,000 on account of the Earn-In Fee.

(b)As consideration for Dowa’s payment of the Existing Dowa Contribution, Dowa will receive a Participating Interest of 0.3898% (the “Existing Dowa Participating Interests”) in (i) the Corporation and (ii) of OpCo. As consideration for Dowa’s payment of the Earn-In Fee or any portion thereof after Dowa has paid 50% of the Earn-in Fee, Dowa’s Participating Interest in each Joint Venture Entity shall be increased to reflect Dowa’s Capital Contributions made on account of the Earn-in Fee from time to time. For greater certainty, Dowa will receive a Participating Interest of 30% in the Corporation and OpCo, and 0.005% in EmployerCo for an aggregate Capital Contribution of $50,000,000, provided that Dowa will not receive any increase in its Participating Interest in any Joint Venture Entity above the Existing Dowa Participating Interests, until it has contributed 50% of the Earn-in Fee.

(c)Upon payment of 50% of the Earn-in Fee, Dowa will earn the right to buy all of the zinc concentrate produced by the Corporation in accordance with the terms of the Offtake Agreement.

(d)Upon payment in full of the Earn-in Fee by Dowa:

(i)Dowa’s Participating Interest in the Corporation and OpCo will be 30% and Dowa’s Participating Interest in EmployerCo will be 0.005%, representing Dowa’s $50,000,000 Capital Contribution;

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(ii)SSMRC LuxCo’s Participating Interest in the Corporation and OpCo will be 70% and SSMRC LuxCo’s Participating Interest in EmployerCo will be 0.005%, representing SSMRC LuxCo’s deemed Capital Contribution of $116,666,666.67; and

(iii)all further Capital Contributions to the Corporation and OpCo required pursuant to this Agreement will be made pro rata by each Partner based on its Participating Interest in such Joint Venture Entity, and shall be allocated in accordance with the Capital Contribution Allocation.

3.2Withdrawal Rights; Consequences Thereof

Dowa may withhold or stop making payment of the Earn-in Fee upon the occurrence of a Material Adverse Effect or Force Majeure Event. If Dowa withholds or stops making payments of the Earn-In Fee upon the occurrence of a Material Adverse Effect or Force Majeure Event (a “Dowa Withdrawal Event”), and at the time of such Dowa Withdrawal Event, Dowa has paid less than 50% of the Earn-In Fee, the Parties will act reasonably in discussing potential revisions to the Initial Program and Budget, and if the Parties are unable to reach a mutually acceptable agreement with respect to revision of the Initial Program and Budget within 90 days, then the Joint Venture Entities will repurchase the Existing Dowa Participating Interest for $1, and Dowa will receive no rights in respect of the Offtake Agreement. Upon the occurrence of a Dowa Withdrawal Event, if at the time of such Dowa Withdrawal Event Dowa has paid 50% or more of the Earn-In Fee, then Dowa’s Participating Interest in each Joint Venture Entity shall be subject to reduction based on Capital Contributions made by any other Partner, and the Offtake Agreement shall remain in full force and effect.

3.3Advances by Dowa

Subject to Section 3.1(a) and Section 3.2, if the Earn-In Fee is greater than the cost of the Initial Program, then Dowa will continue to fund costs of the Joint Venture Entities until the Earn-In Fee is paid in full, and shall pay any outstanding portion of the Earn-in Fee upon the expiration of the Earn-In Period. After completion of payment of the Earn-In Fee by Dowa, SSMRC LuxCo and Dowa will make pro-rata Capital Contributions in each Joint Venture Entity in accordance with the Capital Contribution Allocation, in cash, in accordance with their Participating Interests in such Joint Venture Entity for any further costs required to complete the Initial Program, provided that, if the Joint Venture Entities require additional funding to complete the Initial Program at such time in accordance with an Approved Budget, upon receipt of a written request from SSMRC LuxCo to fund all or a portion of the additional amounts required to complete the Initial Program, Dowa will advance 100% of such requested amounts required to complete the Initial Program and any such amounts paid by Dowa in excess of the Earn-In Fee will be treated as advances by Dowa to the Joint Venture Entities, to be applied to its future Capital Contribution Obligations (“Advances”), or repaid to Dowa in priority to other distributions to Partners. The detailed conditions of any such repayment will be discussed in good faith and agreed by the Parties prior to Dowa making such Advances.

3.4SSMRC Parent and SSMRC LuxCo Capital Contributions

Neither SSMRC Parent nor SSMRC LuxCo will be required to make any cash Capital Contributions until (i) the Earn-in Fee is fully paid by Dowa and (ii) the Dowa Advances described in Section 3.3, if any, are fully paid.

3.5Capital Calls

(a)Capital Calls shall be prepared by the Operator and, except as otherwise set forth below, shall be submitted to the Partners for Requisite Partner Approval pursuant to Section 11.1(h) (and such submission may be made by email). If the funding called by the Capital Call is consistent with the Approved Budget (or any deviations therefrom that are

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permitted pursuant to this Agreement) in effect at the time of such Capital Call (a “Budgeted Capital Call”), the Operator is expressly authorized to issue the Budgeted Capital Call without Requisite Partner Approval. In addition, the Operator is expressly authorized to issue a Capital Call (an “Emergency Capital Call”) without Requisite Partner Approval in respect of any event giving rise to any Emergency or Unexpected Expenditures, to the extent that the Joint Venture Entities do not have sufficient reserves to address the event giving rise to the Emergency or Unexpected Expenditures, and Operator will report to the Corporation Board as soon as practicable the nature of any such emergency or unexpected event that arises, the measures it is taking in respect of such event, and the estimated related Emergency or Unexpected Expenditures. In the event that the Operator issues an Emergency Capital Call, Dowa shall have a grace period of 90 days to fund its pro rata portion of such Emergency Capital Call without being deemed a Defaulting Partner hereunder. During such 90 day grace period, SSMRC LuxCo may advance Dowa’s portion of such Emergency Capital Call on behalf of Dowa, and in such event, Dowa shall repay SSMRC LuxCo for the amount so advanced on or prior to the expiration of such 90 day grace period, which shall be deemed to be a Capital Contribution made by Dowa to the Joint Venture Entities and allocated in accordance with the Capital Contribution Allocation. If Dowa fails to so reimburse SSMRC LuxCo for any amounts so advanced by SSMRC LuxCo prior to the expiration of such 90 day grace period and the 30 day cure period specified in Section 19.1(a)(ii), Dowa shall be deemed a Defaulting Partner hereunder in respect of such amounts.

(b)Not later than 15 days after the issuance of any Capital Call by the Operator that the Operator has designated as a Budgeted Capital Call, any Partner may, by delivering a written notice to the Corporation, the Operator and the other Partners (such notice, a “Capital Call Dispute Notice”), dispute whether such Capital Call was called for the funding of capital consistent with the capital requirements contemplated by the Approved Budget (or any deviations therefrom that are permitted pursuant to this Agreement) in effect at the time of such Capital Call. The Partners and Operator will work together in good faith to resolve any such dispute as promptly as practicable. If any such dispute is not resolved within five Business Days after receipt of the Capital Call Dispute Notice, then any such dispute shall, as promptly as practicable, be submitted to binding arbitration in a manner consistent with the process contemplated by Section 21.2 and the Arbitration Panel shall render its decision as to whether such Capital Call was called for the funding of capital consistent with the capital requirements contemplated by the applicable Approved Budget (or any deviations therefrom that are permitted pursuant to this Agreement) no later than five Business Days after the selection of the chairman of the Arbitration Panel. If the Arbitration Panel determines that such Capital Call (or a portion thereof) was made for such purpose, such Capital Call (or such portion thereof) will be considered a duly made Budgeted Capital Call for all purposes of this Agreement, shall automatically be deemed authorized, made and validly issued by the Operator in accordance with this Agreement, and shall be required to be funded in accordance with the other provisions of this Agreement. If the Arbitration Panel determines that such Capital Call (or a portion thereof) was not made for such purpose, such Capital Call (or such portion thereof) shall not be deemed authorized, made and validly issued by the Operator unless otherwise approved by the Partners. The Arbitration Panel shall have the power to extend the time periods set forth in this Agreement regarding the funding of Capital Calls to the extent necessary to permit the Arbitration Panel to render its decision and to allow the Partners not more than ten days after the rendering of such decision to fund any amounts that the Arbitration Panel determines were part of a Budgeted Capital Call.

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3.6Capital Contributions Generally

Subject to Sections 3.1 through 3.5, the Partners agree to make from time to time all additional cash Capital Contributions (other than Initial Capital Contributions), that are called pursuant to Section 3.5(a) on an as needed basis, and in proportion to their respective Participating Interests in the Corporation and OpCo as of the date of the applicable Capital Call, and all such Capital Contributions shall be allocated among such Joint Venture Entities in accordance with the Capital Contribution Allocation.

3.7Financing

Financing for the Project will be provided by the Partners in proportion to their respective Participating Interests in the Corporation and OpCo. However, if SSMRC Parent, at its sole discretion, completes an initial public offering of its common stock or similar private financing that results in receipt by SSMRC Parent of at least $250 million in net proceeds (a “Financing”), then SSMRC Parent will contribute up to 20% of the proceeds from any such Financing to SSMRC LuxCo, which will, in turn, contribute such amounts to the Corporation and OpCo in accordance with Budgeted Capital Calls and Emergency Capital Calls and the provisions of Section 3.5. If SSMRC Parent makes a final determination not to pursue the Financing or, after making a determination in accordance with Budgeted Capital Calls and Emergency Capital Calls and the provisions of Section 3.5 to proceed with the Financing, the Financing does not complete, it will provide written notice to Dowa of such fact as soon as practicable.

3.8Dowa Arranged Loan

Upon the request of SSMRC Parent, Dowa will use commercially reasonable efforts to arrange for a third party loan to be made directly to the Corporation through commercial banks, insurance companies and/or other financial institutions or funds, at Dowa’s sole discretion, on terms to be negotiated and agreed to by Dowa and SSMRC Parent with such financial institutions or funds in an amount reasonably anticipated to be necessary to fund all or a portion of the debt portion of the Corporation’s Development costs (the “Dowa Arranged Loan”) (but for greater certainty, not the Capital Contributions required to be contributed by each Partner pursuant to an Approved Budget). Requisite Partner Approval will be required for any Dowa Arranged Loan. The Dowa Arranged Loan may be secured by the Assets and each Partner’s Participating Interests pursuant to Partner guarantees if required by the lenders of the Dowa Arranged Loan with the consent of the Partners. If SSMRC Parent rejects the terms of any proposed Dowa Arranged Loan, then Dowa’s Obligations under this section in respect of the arrangement of third party loans will terminate. To the extent that Dowa is required by lenders, and agrees in its sole discretion, to provide security for the Dowa Arranged Loan, SSMRC Parent will provide appropriate back-up security as Dowa may reasonably request in respect of the portion of the Dowa Arranged Loan relating to SSMRC LuxCo’s pro-rata portion. For greater certainty, none of: (a) the failure to complete a Financing; (b) the failure to obtain or approve a Dowa Arranged Loan; or (c) the implementation of a Dowa Arranged Loan, will relieve SSMRC LuxCo from its Obligations under this Agreement in respect of Capital Contributions.

3.9Capital Contribution Allocation

Other than the initial Capital Contribution, any Capital Contribution made by a Partner hereunder shall be allocated 100% to the Corporation (such allocation, the “Capital Contribution Allocation”). The initial Capital Contribution shall be allocated as follows: (i) $100,000 shall be allocated to OpCo and (ii) the remaining amount shall be allocated to the Corporation. Following OpCo’s receipt of the $100,000 initial Capital Contribution, it shall contribute $50,000 to EmployerCo as a capital contribution.

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ARTICLE 4 — INTERESTS OF PARTNERS

4.1Initial Participating Interests

As of the Effective Date, the Partners have the following initial Participating Interest in each of the Corporation and OpCo:

Dowa0.3898%

SSMRC LuxCo99.6002%

SSMRC Parent0.0100%

As of the Effective Date, the entities have the following initial Participating Interest in EmployerCo:

Dowa0%

SSMRC LuxCo0.01%

OpCo99.99%

The Participating Interests in the Corporation and OpCo will be adjusted from time to time to reflect Capital Contributions made by the Parties. During the Earn-In Period, the Participating Interests in the Corporation and OpCo will be adjusted each time Dowa remits a payment on account of any Capital Contributions made, after it has made contributions to or for the benefit of the Joint Venture Entities equal to at least 50% of the Earn-in Fee. At the time that Dowa earns Participating Interests in the Joint Venture Entities as a result of the foregoing, SSMRC LuxCo shall transfer 50% of its Participating Interest in EmployerCo to Dowa such that the entities shall have the following Participating Interests in EmployerCo:

Dowa0.005%

SSMRC LuxCo0.005%

OpCo99.99%

4.2Grant of Security Interest

(a)Each Partner hereby grants to the other Partner a security interest in its Participating Interest to secure performance of its Obligations.

(b)Each Partner hereby agrees to take all action necessary to perfect such security interest and hereby appoints the other Partner its attorney-in-fact to execute, file and record all financing statements and other documents necessary to perfect or maintain such lien and security interest.

4.3Subordination of Interests

Each Partner will, from time to time, take all necessary actions, including execution of appropriate agreements, to pledge and subordinate its Participating Interests in the Joint Venture Entities, any liens it may hold which are created under this Agreement and any other right or interest it holds with respect to the Assets to any Project Financing.

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4.4[Reserved]

4.5Buyout Right

In the event that a Partner’s Participating Interest in either the Corporation or OpCo falls below 5.0% at any time following the Pre-Participating Interest Period (any such Partner, a “Diluted Partner”), the remaining Partner(s) shall have the right, but not the obligation, to purchase such Diluted Partner’s Participating Interest in all of the Joint Venture Entities by delivering the Diluted Partner written notice thereof (any Partner exercising such right, an “Electing Partner”); provided that for the purpose of this Section 4.5, a Partner’s Participating Interest shall be aggregated with Participating Interests held by any of its Affiliates, for purposes of determining whether it has fallen below the five percent (5%) threshold. The purchase price for such Participating Interest shall be the fair market value of such Participating Interests, determined as follows. Following receipt of the written notice described above, representatives from the Diluted Partner and each Electing Partner shall negotiate in good faith to determine the applicable fair market value. If the Diluted Partner and the Elected Partner(s) have been unable to agree on the fair market value of the subject Participating Interests within forty five (45) days, the matter shall be referred to an independent qualified business valuator approved by both Partners, acting reasonably, and such business valuator will be instructed to determine the value of the Participating Interest without applying a minority discount. The cost of such valuation will be borne by the Electing Partner. Following the determination of the fair market value in accordance with this Section 4.4, the Electing Partners shall have a period of forty five (45) days to consummate the acquisition of the subject Participating Interests from the Diluted Partner; provided, that such forty five (45) day period shall be extended to allow for the Electing Partners to obtain all approvals and consents from Governmental Authority and third Persons necessary for the consummation of such purchase.

4.6Pledge of Interests

A Partner may pledge its Participating Interest as security for financing required to make its equity investment in the Corporation with the prior written approval of the other Partner, which approval will not be unreasonably withheld, conditioned or delayed provided that: (a) such security is not granted to a Restricted Person; and (b) the pledge of security will not adversely impact in any material respect the ability of the Corporation to obtain project financing or the Dowa Arranged Loan.

ARTICLE 5 — MANAGEMENT OF THE CORPORATION

5.1Management Structure

The Corporation Board has exclusive authority to determine all matters related to overall management of the Business, subject to the provisions of Article 7 in respect of management of OpCo and Article 9 in respect of management of EmployerCo, and the explicit delegation of authority to OpCo and EmployerCo pursuant to the terms hereof and the Services Agreement. Except as specified in this Agreement, no Partner, Corporation Manager or officer of the Corporation will have authority to act for, or assume any obligation or responsibility on behalf of, the Corporation without the prior written approval of the Corporation Board.

5.2Officers

The Corporation Board may appoint such officers of the Corporation with such authorities, duties and responsibilities determined by the Corporation Board as it deems necessary from time to time.

5.3Dowa Personnel

At all times, Dowa will have the right to appoint three engineers to assist with the Operations. All costs associated with such engineers will be charged to EmployerCo.

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ARTICLE 6 — CORPORATION BOARD OF MANAGERS

6.1Board

(a)The Corporation Board will consist of up to three Corporation Managers. SSMRC LuxCo will be entitled to nominate two Corporation Managers and Dowa will be entitled to nominate one Corporation Manager. Each Partner will designate alternatives for its nominated Corporation Managers as required by Mexican Law. For greater certainty, during the Pre-Participating Interest Period, Dowa’s right to nominate one Corporation Manager is not conditional on Dowa having a Participating Interest. Each Partner will be entitled to remove and replace its nominees from time to time as provided in subsection 6.1(c) and each Partner will vote its Shares in the Corporation to appoint or elect Corporation Managers nominated in accordance with this Agreement.

(b)Any Partner entitled to nominate a Corporation Manager to the Corporation Board will give written notice to each of the other Partners stating the name of the nominee or nominees to serve as a Corporation Manager(s) proposed by such Partner.

(c)Any Partner entitled to nominate a Corporation Manager will be entitled to remove any such Corporation Manager by written notice to such Corporation Manager, the other Partners and to the Corporation. Any vacancy occurring on the Corporation Board by reason of the death, disqualification, inability to act, resignation or removal of any Corporation Manager will be filled only by a further nominee of the Partner whose nominee was so affected so as to maintain a Corporation Board consisting of the numbers specified in subsection 6.1(a).

6.2Chairman

The Chairman of the Corporation Board will be elected by a simple majority of the Corporation Board. Until the Earn-in Fee is paid in full, SSMRC LuxCo will appoint the Chairman. For the avoidance of doubt, the Chairman may also be an officer of the Corporation (including the President).

6.3Meetings of the Corporation Board

(a)Place of Meeting: Unless otherwise agreed to by all Corporation Managers and subject to Applicable Law, meetings of the Corporation Board will be held at the Los Gatos Project offices or at such other place as may be determined by the Corporation Board.

(b)Timing and Notice: A meeting of the Corporation Board may be called by the Chairman, the Secretary or any Corporation Manager. Notice of the time and place for the holding of any Corporation Board meeting and an agenda will be provided by the Chairman to all Corporation Managers at least 11 days prior to the date of such meetings or at such earlier time as the Corporation Board determines. The notice of a meeting of the Corporation Board will specify the nature of the business to be transacted at the meeting. Written minutes of all meetings will be prepared and distributed to the parties no later than 30 days after each meeting, which will be approved by the Corporation Board during the next Corporation Board meeting, and maintained and registered in accordance with Mexican Law. The Corporation Board may approve such procedural rules not inconsistent with the provisions of this Agreement as it determines to be necessary or appropriate. The Corporation Board will hold at least one meeting in each quarter of each Fiscal Year unless otherwise agreed by Requisite Partner Approval. Special meetings of the Corporation Board may be called by any Corporation Manager.

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(c)Waiver of Notice: Notice of any meeting of the Corporation Board or the time for the giving of any such notice or any irregularity in any meeting or in the notice thereof may be waived by any Corporation Manager in writing or by facsimile addressed to the Corporation or in any other manner, and any such waiver may be validly given either before or after the meeting to which such waiver relates. Attendance of a Corporation Manager at any meeting of the Corporation Board is a waiver of notice of such meeting, except when a Corporation Manager attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not properly called.

(d)Telephone/Video Conference Participation: A Corporation Manager may participate in a meeting of the Corporation Board by means of telephone or other communication facilities that permit all persons participating in the meeting to hear each other, and a Corporation Manager participating in a meeting by those means is deemed to be present at that meeting and will be counted in the quorum. Resolutions adopted under this section (d) shall ratified in writing by each Corporation Manager and shall transcribed into the Corporation Board of Managers Minutes Book.

(e)Quorum: At all duly noticed meetings of the Corporation Board, the presence of a Corporation Manager nominated by each Partner will constitute a quorum for the transaction of business. Participation by a Corporation Manager in a meeting in accordance with Section 6.3(d) will constitute presence in person at the meeting. If a quorum is not present at any meeting of the Corporation Board, the Corporation Managers present thereat may adjourn the meeting from time to time for a period not to exceed 60 days, until a quorum is present.

(f)Voting: Each Corporation Manager entitled to vote on a resolution or matter will have one vote on such resolution or matter, and unless otherwise expressly provided in this Agreement, all matters before the Corporation Board will be decided by majority vote of all Corporation Managers present and entitled to vote including at least one Corporation Manager nominated by each Partner, or by resolution approved in writing by a majority of voting Corporation Managers entitled to vote. In the case of an equality of votes the Chairman will not have a casting vote. No Corporation Manager will be entitled to vote in respect of any resolution or matter if the Partner that nominated such Corporation Manager is a Defaulting Partner.

(g)Action by Written Consent: Any matter to be voted on or resolution to be approved or passed by the Corporation Board may be approved or passed without prior written notice thereof, by written consent in lieu of a meeting if signed by all Corporation Managers.

(h)Expenses: The Corporation will reimburse Corporation Managers for their reasonable and necessary out-of-pocket travel and other expenses, and pay such other reasonable compensation to the Corporation Managers for their acting as such and for participating in meetings as the Corporation Board may determine from time to time.

(i)Observers: Each Partner will be entitled to appoint up to two observers to attend, but not participate in or vote at, meetings of the Corporation Board and no costs related to observers attending the meetings will be reimbursed.

(j)Operations Committee: The Corporation Board will solicit proposals and recommendations from the Operations Committee from time to time, and act reasonably in considering any proposals or recommendations received from the Operations Committee or any Representative.

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6.4Major Decisions

Unless otherwise agreed in writing by the Partners, the Corporation Board will not make any Major Decisions, or take any action, authorization or approval, or enter into any binding agreement with respect to any Major Decision, without having first obtained Requisite Partner Approval.

6.5Limitation of Authority

Neither the Corporation Board nor any other committee established by the Corporation Board will have authority to take any action inconsistent with the terms of this Agreement.

6.6Delegation of Authority; Officers

The Corporation Board shall have the power to elect, delegate authority to, and remove such officers, employees, agents and Representatives of the Corporation as the Corporation Board may from time to time deem appropriate. Any delegation of authority to take any action must be approved in the same manner as would be required for the Corporation Board to approve such action directly. Any delegation of authority to OpCo or EmployerCo shall only be to perform services and implement Major Decisions to the extent such delegated actions have received the Requisite Partner Approval.

6.7Other Positions or Representations

Any Corporation Manager or officer of the Corporation may also be a director or an officer or employee of a Partner or one or more Affiliates of a Partner.

6.8Operations Committee

The Corporation Board will establish an operations committee (“Operations Committee”) comprised of two individuals nominated by SSMRC LuxCo and two individuals nominated by Dowa or their respective alternates (each, a “Representative” and collectively, the “Representatives”), with such responsibility and authority as may be designated by the Corporation Board from time to time. Decisions of the Operations Committee will require unanimous approval of the Representatives, provided, however, that in the event the Operations Committee is unable to reach unanimous approval, each Representative may submit his own proposal or recommendations to the Corporation Board. The Representative of a Defaulting Partner will be excluded from a vote on such decision. Minutes of the Operations Committee will be prepared and distributed to the Representatives for approval by the Representatives during the next Operations Committee meeting. The Operations Committee will meet monthly until completion of the Feasibility Study, and thereafter at least twice during each quarter of each Fiscal Year, unless otherwise agreed by unanimous approval of the Representatives. Each Partner will be entitled to appoint up to two observers to attend, but not participate in or vote at, meetings of the Operations Committee and no costs related to the observers attending the meetings will be reimbursed. The Operations Committee will have access to all information relevant to Operations and the Project.

The Operations Committee will not have any decision-making authority that is not expressly granted to it by the Corporation Board and will be responsible for advising and making recommendations to the President and the Corporation Board on Operations. Unless otherwise agreed by Requisite Partner Approval, the Operations Committee’s mandate will include the following:

(a)providing advice to the Corporation Board and the Operator on Operations;

(b)recommending programs and methods to improve quality and increase productivity;

(c)reviewing plans, Programs and Budgets and making recommendations with respect to their approval or modification;

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(d)reviewing compliance with Approved Budgets;

(e)recommending the abandonment of Mining Claims; and

(f)such other functions as the Corporation Board may designate from time to time.

6.9No Restriction on Competition

None of the Partners or their Affiliates or their respective Corporation Managers or officers will be:

(a)restricted from engaging in or otherwise being involved with any business that is similar to or competitive with the Business;

(b)restricted from investing in any Person engaged in a business that is similar to or competitive with the Business; or

(c)required to bring any business opportunity to the Joint Venture Entities or any Partner and nothing herein confers upon the Joint Venture Entities or any Partner any right to participate in any such opportunity.

No action or omission permitted in accordance with the foregoing will be impugned or challenged on the basis of conflict interest or breach of fiduciary duty.

ARTICLE 7 — MANAGEMENT OF OPCO

7.1Management Structure

OpCo Board has exclusive authority to determine all matters related to management of OpCo, subject to the delegation described below in Section 8.6. Except as specified in this Agreement, no Partner, OpCo Manager or officer of OpCo will have authority to act for, or assume any obligation or responsibility on behalf of, OpCo without the prior written approval of OpCo Board.

7.2Officers

OpCo Board may appoint such officers of OpCo with such authorities, duties and responsibilities determined by OpCo Board as it deems necessary from time to time.

ARTICLE 8 — OPCO BOARD OF MANAGERS

8.1Board

(a)OpCo Board will consist of up to three OpCo Managers. SSMRC LuxCO will be entitled to nominate two OpCo Managers and Dowa will be entitled to nominate one OpCo Manager. Each Partner will designate alternatives for its nominated OpCo Managers as required by Mexican Law. Each Partner will be entitled to remove and replace its nominees from time to time as provided in subsection 8.1(c) and each Partner will vote its Shares in OpCo to appoint or elect OpCo Managers nominated in accordance with this Agreement.

(b)Any Partner entitled to nominate an OpCo Manager will give written notice to each of the other Partners stating the name of the nominee or nominees to serve as an OpCo Manager(s) proposed by such Partner.

(c)Any Partner entitled to nominate an OpCo Manager will be entitled to remove any such OpCo Manager by written notice to such OpCo Manager, the other Partners and to

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OpCo. Any vacancy occurring on OpCo Board by reason of the death, disqualification, inability to act, resignation or removal of any OpCo Manager will be filled only by a further nominee of the Partner whose nominee was so affected so as to maintain an OpCo Board consisting of the numbers specified in subsection 8.1(a).

8.2Chairman

The Chairman of OpCo Board will be elected by a simple majority of OpCo Board.

8.3Meetings of OpCo Board

(a)Place of Meeting: Unless otherwise agreed to by all OpCo Managers and subject to Applicable Law, meetings of OpCo Board will be held at the Los Gatos Project offices or at such other place as may be determined by OpCo Board.

(b)Timing and Notice: A meeting of OpCo Board may be called by the Chairman, the Secretary or any OpCo Manager. Notice of the time and place for the holding of any OpCo Board meeting and an agenda will be provided by the Chairman to all OpCo Managers at least 5 days prior to the date of such meetings or at such earlier time as OpCo Board determines. The notice of a meeting of OpCo Board will specify the nature of the business to be transacted at the meeting. Written minutes of all meetings will be prepared and distributed to the parties no later than 30 days after each meeting, which will be approved by OpCo Board during the next OpCo Board meeting, and maintained and registered in accordance with Mexican Law. OpCo Board may approve such procedural rules not inconsistent with the provisions of this Agreement as it determines to be necessary or appropriate. OpCo Board will hold at least one meeting in each quarter of each Fiscal Year unless otherwise agreed by SSMRC LuxCo. Special meetings of OpCo Board may be called by any OpCo Manager.

(c)Waiver of Notice: Notice of any meeting of OpCo Board or the time for the giving of any such notice or any irregularity in any meeting or in the notice thereof may be waived by any OpCo Manager in writing or by facsimile addressed to OpCo or in any other manner, and any such waiver may be validly given either before or after the meeting to which such waiver relates. Attendance of an OpCo Manager at any meeting of OpCo Board is a waiver of notice of such meeting, except when an OpCo Manager attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not properly called.

(d)Telephone/Video Conference Participation: An OpCo Manager may participate in a meeting of OpCo Board by means of telephone or other communication facilities that permit all persons participating in the meeting to hear each other, and an OpCo Manager participating in a meeting by those means is deemed to be present at that meeting and will be counted in the quorum. Resolutions adopted under this section (d) shall ratified in writing by each OpCo Manager and shall transcribed into the Opco Board of Managers Minutes Book.

(e)Quorum: At all duly noticed meetings of OpCo Board, the presence of a majority of OpCo Managers will constitute a quorum for the transaction of business. Participation by an OpCo Manager in a meeting in accordance with Section 6.3(d) will constitute presence in person at the meeting. If a quorum is not present at any meeting of OpCo Board, OpCo Managers present thereat may adjourn the meeting from time to time for a period not to exceed 60 days, until a quorum is present.

(f)Voting: Each OpCo Manager entitled to vote on a resolution or matter will have one vote on such resolution or matter, and unless otherwise expressly provided in this Agreement,

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all matters before OpCo Board will be decided by majority vote of all OpCo Managers present and entitled to vote, or by resolution approved in writing by a majority of voting OpCo Managers entitled to vote. In the case of an equality of votes the Chairman will not have a casting vote.

(g)Action by Written Consent: Any matter to be voted on or resolution to be approved or passed by OpCo Board may be approved or passed without prior written notice thereof, by written consent in lieu of a meeting if signed by all OpCo Managers.

(h)Expenses: OpCo will reimburse OpCo Managers for their reasonable and necessary out-of-pocket travel and other expenses, and pay such other reasonable compensation to OpCo Managers for their acting as such and for participating in meetings as OpCo Board may determine from time to time.

8.4Major Decisions

Unless otherwise agreed in writing by the Partners, the OpCo Board will not make any Major Decisions, or take any action, authorization or approval, or enter into any binding agreement with respect to any Major Decision, without having first obtained Requisite Partner Approval.

8.5Limitation of Authority

Neither OpCo Board nor any other committee established by OpCo Board will have authority to take any action inconsistent with the terms of this Agreement.

8.6Delegation of Authority; Officers

OpCo Board shall have the power to elect, delegate authority to, and remove such officers, employees, agents and representatives of OpCo as OpCo Board may from time to time deem appropriate. Any delegation of authority to take any action must be approved in the same manner as would be required for OpCo Board to approve such action directly. The Partners hereby agree and acknowledge that OpCo Board shall, to the maximum extent permitted by Law but subject to Section 8.4, delegate to the officers and employees of OpCo the power to determine all matters related to the management of OpCo.

8.7Other Positions or Representations

Any OpCo Manager or officer of OpCo may also be a director or an officer or employee of a Partner or one or more Affiliates of a Partner.

ARTICLE 9 — MANAGEMENT OF EMPLOYERCO

9.1Management Structure

EmployerCo Board has exclusive authority to determine all matters related to management of EmployerCo, subject to the delegation described below in Section 10.6. Except as specified in this Agreement, no Partner, EmployerCo Manager or officer of EmployerCo will have authority to act for, or assume any obligation or responsibility on behalf of, EmployerCo without the prior written approval of EmployerCo Board.

9.2Officers

EmployerCo Board may appoint such officers of EmployerCo with such authorities, duties and responsibilities determined by EmployerCo Board as it deems necessary from time to time.

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ARTICLE 10 — EMPLOYERCO BOARD OF MANAGERS

10.1Board

(a)EmployerCo Board will consist of up to three EmployerCo Managers. OpCo will be entitled to nominate each EmployerCo Manager. OpCo will designate alternatives for its nominated EmployerCo Managers as required by Mexican Law. OpCo will be entitled to remove and replace its nominees from time to time as provided in subsection 10.1(c).

(b)OpCo will give written notice to each of the Partners stating the name of the nominee or nominees to serve as a EmployerCo Manager(s) proposed by OpCo.

(c)OpCo will be entitled to remove any such EmployerCo Manager by written notice to such EmployerCo Manager, the Partners and to EmployerCo. Any vacancy occurring on EmployerCo Board by reason of the death, disqualification, inability to act, resignation or removal of any EmployerCo Manager will be filled by a further nominee of OpCo so as to maintain an EmployerCo Board consisting of the numbers specified in subsection 10.1(a).

10.2Chairman

The Chairman of EmployerCo Board will be elected by a simple majority of EmployerCo Board.

10.3Meetings of EmployerCo Board

(a)Place of Meeting: Unless otherwise agreed to by all EmployerCo Managers and subject to Applicable Law, meetings of EmployerCo Board will be held at the Los Gatos Project offices or at such other place as may be determined by EmployerCo Board.

(b)Timing and Notice: A meeting of EmployerCo Board may be called by the Chairman, the Secretary or any EmployerCo Manager. Notice of the time and place for the holding of any EmployerCo Board meeting and an agenda will be provided by the Chairman to all EmployerCo Managers at least 5 days prior to the date of such meetings or at such earlier time as EmployerCo Board determines. The notice of a meeting of EmployerCo Board will specify the nature of the business to be transacted at the meeting. Written minutes of all meetings will be prepared and distributed to the parties no later than 30 days after each meeting, which will be approved by EmployerCo Board during the next EmployerCo Board meeting, and maintained and registered in accordance with Mexican Law. EmployerCo Board may approve such procedural rules not inconsistent with the provisions of this Agreement as it determines to be necessary or appropriate. EmployerCo Board will hold at least one meeting in each quarter of each Fiscal Year unless otherwise agreed by OpCo. Special meetings of EmployerCo Board may be called by any EmployerCo Manager.

(c)Waiver of Notice: Notice of any meeting of EmployerCo Board or the time for the giving of any such notice or any irregularity in any meeting or in the notice thereof may be waived by any EmployerCo Manager in writing or by facsimile addressed to EmployerCo or in any other manner, and any such waiver may be validly given either before or after the meeting to which such waiver relates. Attendance of an EmployerCo Manager at any meeting of EmployerCo Board is a waiver of notice of such meeting, except when an EmployerCo Manager attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not properly called.

(d)Telephone/Video Conference Participation: An EmployerCo Manager may participate in a meeting of EmployerCo Board by means of telephone or other communication

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facilities that permit all persons participating in the meeting to hear each other, and an EmployerCo Manager participating in a meeting by those means is deemed to be present at that meeting and will be counted in the quorum. Resolutions adopted under this section (d) shall ratified in writing by each EmployerCo Manager and shall transcribed into the EmployerCo Board of Managers Minutes Book.

(e)Quorum: At all duly noticed meetings of EmployerCo Board, the presence of a majority of EmployerCo Managers will constitute a quorum for the transaction of business. Participation by an EmployerCo Manager in a meeting in accordance with Section 6.3(d) will constitute presence in person at the meeting. If a quorum is not present at any meeting of EmployerCo Board, EmployerCo Managers present thereat may adjourn the meeting from time to time for a period not to exceed 60 days, until a quorum is present.

(f)Voting: Each EmployerCo Manager entitled to vote on a resolution or matter will have one vote on such resolution or matter, and unless otherwise expressly provided in this Agreement, all matters before EmployerCo Board will be decided by majority vote of all EmployerCo Managers present and entitled to vote, or by resolution approved in writing by a majority of voting EmployerCo Managers entitled to vote. In the case of an equality of votes the Chairman will not have a casting vote.

(g)Action by Written Consent: Any matter to be voted on or resolution to be approved or passed by EmployerCo Board may be approved or passed without prior written notice thereof, by written consent in lieu of a meeting if signed by all EmployerCo Managers.

(h)Expenses: EmployerCo will reimburse EmployerCo Managers for their reasonable and necessary out-of-pocket travel and other expenses, and pay such other reasonable compensation to EmployerCo Managers for their acting as such and for participating in meetings as EmployerCo Board may determine from time to time.

10.4Major Decisions

Unless otherwise agreed in writing by the Partners, the EmployerCo Board will not make any Major Decisions, or take any action, authorization or approval, or enter into any binding agreement with respect to any Major Decision, without having first obtained Requisite Partner Approval.

10.5Limitation of Authority

Neither EmployerCo Board nor any other committee established by EmployerCo Board will have authority to take any action inconsistent with the terms of this Agreement.

10.6Delegation of Authority; Officers

EmployerCo Board shall have the power to elect, delegate authority to, and remove such officers, employees, agents and representatives of EmployerCo as EmployerCo Board may from time to time deem appropriate. Any delegation of authority to take any action must be approved in the same manner as would be required for EmployerCo Board to approve such action directly. The Partners hereby agree and acknowledge that EmployerCo Board shall, to the maximum extent permitted by Law but subject to Section 10.4, delegate to the officers and employees of EmployerCo the power to determine all matters related to the management of EmployerCo.

10.7Other Positions or Representations

Any EmployerCo Manager or officer of EmployerCo may also be a director or an officer or employee of a Partner or one or more Affiliates of a Partner.

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ARTICLE 11 — PARTNER MEETINGS

11.1Meetings of the Partners

(a)Place of Meeting: Unless otherwise agreed to by all Partners and subject to Applicable Law, meetings of the Partners will be held in Mexico City, Mexico, unless otherwise determined by Requisite Partner Approval.

(b)Timing and Notice: Notice of the time and place for the holding of a meeting of the Partners will be sent not less than 21 days before the meeting to each Partner entitled to vote at the meeting, to each Corporation Manager and to the auditor of the Joint Venture Entities. Notice of a meeting of Partners at which special business is to be transacted will state or be accompanied by a statement of the nature of that business in sufficient detail to permit the Partner to form a reasoned judgment thereon and the text of any special resolution or by-law to be submitted for approval at the meeting. The Partners will hold at least one meeting in each Fiscal Year unless otherwise agreed by Requisite Partner Approval.

(c)Waiver of Notice: A Partner and any other person entitled to attend a meeting of the Partners may in any manner waive notice of a meeting of the Partner, and attendance of a Partner or other person at a meeting of Partners is a waiver of notice of such meeting, except when the Partner or other person attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not properly called.

(d)Telephone/Video Conference Participation: If all the Partners entitled to vote at the meeting consent, then any Partner or any other person entitled to attend a meeting of Partner may participate in the meeting by means of telephone, video conference or other communication facilities that permit all persons participating in the meeting to communicate simultaneously and instantaneously. Resolutions adopted under this section (d) shall ratified in writing by each Partner and shall transcribed into the applicable Joint Venture Entity’s Minutes Book.

(e)Quorum: The necessary quorum for a meeting of the Partners will be established if there is representation, present in person or by proxy, from each Partner holding ten percent or more of the Participating Interests in each Joint Venture Entity entitled to vote at such meeting. The Partners will not transact business at a meeting of Partners unless a quorum is present and complies with all requirements of Applicable Law. If a quorum is not present within one-half hour after the time appointed for the start of the meeting, the meeting will be set over to the same time and place two Business Days later, at which time those Partners present in person or by proxy will constitute a quorum. Any business may be brought before or dealt with at the adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same. Each Share of a Joint Venture Entity will entitle the holder of it to one vote.

(f)Written Consent in Lieu of Meetings: Any matter to be voted on or resolution to be approved or passed by the Partners may be approved or passed without prior written notice thereof, by written consent in lieu of a meeting if signed by the Partners entitled to vote on the matter and having the requisite number of votes to approve the matter or pass the resolution.

(g)Voting: Every question submitted to a meeting of Partners will be decided by a show of hands (or the equivalent indication by voice in the case of participation in the meeting by telephone) unless: (i) otherwise required by this Agreement; or (ii) a poll is demanded by a Partner, in which case a poll will be taken and, in the case of an equality of votes, the chair will not have a casting vote and the resolution will be deemed to be defeated. On

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any vote at a meeting of Partners, a declaration of the chair made in good faith concerning the result of the vote will be prima facie proof of the result. Each Person present at the meeting will have one vote for each Share in respect of which he is shown on the securities register as the Partner and for each Share in respect of which he is the proxy holder or the representative of the Partner.

(h)Required Approvals: Any matter to be determined by the Partners will require approval of Partners holding a majority of the Shares of each Joint Venture Entity. Notwithstanding the foregoing, any Major Decision made by the Partners will require Requisite Partner Approval.

(i)Minutes: Minutes of meetings of the Partners will be prepared in accordance with Applicable Law and customary practice.

ARTICLE 12 — DESIGNATION OF OPERATOR

12.1Designation of Operator

(a)The Corporation and OpCo shall enter into the Services Agreement immediately after execution and delivery of this Agreement, pursuant to which the Corporation will designate OpCo as the initial “Operator” of the Corporation. Subject to any required Corporation Board or Partner approvals rights set forth in this Agreement, OpCo shall be responsible for, shall make all decisions regarding and shall have full power and authority to manage the day-to-day Operations of the Corporation’s business, including, the exploration, development, construction and operation of the Corporation’s facilities and business development activities and the performance of services provided to the Corporation by OpCo pursuant to the Services Agreement, which includes the day-to-day management and supervision of all employees of OpCo or and its Affiliates performing any such services. The appointment of OpCo as the Operator shall be exclusive to OpCo, except to the extent that OpCo elects to cause such duties to be provided by third parties. OpCo shall have the power and authority to execute contracts, and to take such other actions, and to direct the officers of the Corporation to do the foregoing, on behalf of the Corporation as may be necessary or appropriate to carry out the Corporation’s business in accordance with the Approved Budget.

(b)For the avoidance of doubt, subject to the terms and conditions of the General Services Agreement, the power and authority granted to OpCo as the Operator shall specifically include the ability and duty to perform (or cause to be performed) the services and activities set forth in the General Services Agreement (subject to compliance with any Board or Partner approval rights with respect to such services and activities required pursuant to this Agreement) in accordance with Approved Programs and Approved Budgets:

(c)SSMRC Parent, as consideration for the services that it provides under this Agreement to OpCo, shall receive the following management fee:

(i)From the Effective Date until the termination of the Earn-In Period, an amount equal to US$600,000 per year, which amount may be subject to adjustment only upon receipt of Requisite Partner Approval;

(ii)From the termination of the Earn-In Period until the completion of the Feasibility Study, if the Feasibility Study is not completed by the termination of the Earn-In Period, an amount equal to US$1,000,000 per year, subject to proration for any period less than a calendar year, which amount may be subject to adjustment only upon receipt of Requisite Partner Approval; and

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(iii)From and after the completion of the Feasibility Study, an amount equal to three percent (3%) per year of the aggregate budgeted development and operation expenditures for capital and operating costs contained in the applicable Approved Budget; provided, that the Partners may in good faith negotiate adjustments to the management fee so long as such adjustments do not result in the management fee being less than two percent (2%) or more than four percent (4%) per year of the aggregate budgeted development and operations expenditures for capital and operating costs contained in the applicable Approved Budget.

(d)The Operator may be removed and/or replaced by Requisite Partner Approval.

ARTICLE 13 — OFFTAKE AGREEMENT

13.1As provided in Section 3.1(c), Dowa will earn the right to buy all of the zinc concentrate produced by the Corporation upon payment of 50% of the Earn-in Fee, in accordance with the terms of the Offtake Agreement. The Parties will negotiate in good faith any remaining commercial terms to be incorporated in the Offtake Agreement, and cause the Offtake Agreement to be executed after completion of the Feasibility Study and determination of the typical assay of the zinc concentrate and initial annual production forecast. In the event that Dowa’s Participating Interest in each Joint Venture Entity falls below ten percent during the term of this Agreement as a result of a Transfer of its Participating Interest in such Joint Venture Entity to any Person that is not an Affiliate of Dowa in accordance with Article 18, then the Offtake Agreement shall automatically be terminated and of no further force and effect upon the occurrence of such Transfer. In the event that Dowa’s Participating Interest in each Joint Venture Entity falls below ten percent during the term of this Agreement as a result of Dowa’s failure to make Capital Contributions as required by this Agreement, then the Offtake Agreement shall automatically be deemed suspended until such time, if any, as Dowa’s Participating Interest in such Joint Venture Entity(ies) equals or exceeds ten percent; provided that if Dowa’s Participating Interests in any Joint Venture Entity falls below ten percent in accordance with this sentence for a period of more than 90 days, then SSMRC Parent shall have the right, but not the obligation, to cause the Corporation to terminate the Offtake Agreement.

13.2At any time during the term of this Agreement, Dowa may, upon written notice to SSMRC LuxCo, request to enter into an offtake agreement in respect of lead concentrate produced from the Project, which written request shall contain relevant terms and conditions for such offtake agreement. SSMRC LuxCo will consider such request in good faith, taking into account such factors as it deems relevant (including without limitation any existing commitments for the disposition of lead concentrates and the terms and conditions proposed by Dowa in its written notice), but shall be under no obligation to cause the Corporation to enter into an offtake agreement with Dowa in respect of lead concentrate. Any decision to enter any such offtake agreement with Dowa shall require Requisite Partner Approval.

ARTICLE 14 — PROGRAMS AND BUDGETS

14.1Initial Program and Budget

The Initial Program and Budget are attached as Exhibit C and hereby approved by the Partners.

14.2Operations Pursuant to Programs and Budgets

Operations will be conducted, expenses (other than Emergency or Unexpected Expenditures) will be incurred, and additional Assets will be acquired only pursuant to Approved Programs and Approved Budgets. Every Approved Program and Approved Budget will provide for accrual of reasonably

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anticipated Environmental Compliance expenses for all Operations contemplated under the Approved Program and Approved Budget.

14.3Presentation of Programs and Budgets

Proposed Programs and Budgets will be prepared by the Operator for a period of one year or such other period as may be approved by Requisite Partner Approval, and will be submitted to the Corporation Board for review and consideration with all reasonable supporting documentation and annual production and operating plans for the applicable period by no later than October 1st of the prior calendar year (with the exception of the Initial Program and Budget in Section 14.1 and the Program and Budget approved after the selection of the Approved Alternative in Section 14.6). For greater certainty, notwithstanding the approval described in Section 14.1, the Initial Program and Budget will be refined and updated as soon as reasonably practicable after execution of this Agreement for the first year of the Initial Program, and by no later than October 1, 2015 for the second year of the Initial Program, and each such updated Initial Program and Budget will be subject to further Requisite Partner Approval. Each Partner may, by written notice to the other Partner, request a review of the Initial Program and Budget at any time during the first year of the Initial Program, and upon receipt of such request, the Partners will act reasonably and in good faith in considering whether revision to the Initial Program and Budget is appropriate. All proposed Programs and Budgets may include Operations, Exploration, Development, Mining and Expansion or Modification components, or any combination thereof, and following input from the Partners in Section 14.4, will be reviewed and approved upon a vote of the Board in accordance with Section 6.4. Each Program and Budget approved by the Corporation Board, regardless of length, will be reviewed for approval at least once a year at a meeting of the Corporation Board. Upon receipt of a proposed Program and Budget, the Corporation Board will promptly deliver such proposed Program and Budget to each Partner.

14.4Review and Approval of Proposed Programs and Budgets

Within 30 days after receipt of a proposed Program and Budget, each Partner will submit in writing to the Board:

(a)notice that the Partner approves any or all of the components of the proposed Program and Budget;

(b)Modifications proposed by the Partner to the components of the proposed Program and Budget; or

(c)notice that the Partner rejects any or all of the components of the proposed Program and Budget.

If a Partner fails to give any of the foregoing responses within the allotted time, the failure will be deemed to be a vote by the Partner for approval of the proposed Program and Budget. If a Partner makes a timely submission to the Board pursuant to Sections 14.4(a), (b) or (c), then the Corporation working with the other Partner will seek for a period of time not to exceed 20 days to develop a complete Program and Budget acceptable to both Partners. Upon all Partners agreeing to a proposed Program and Budget, the Corporation will then call a Corporation Board meeting for purposes of reviewing and voting upon the proposed Program and Budget in accordance with Section 14.3. If no alternative proposed Program and Budget is approved by the Partners through Requisite Partner Approval, then, until a new Program and Budget is approved, the last approved Program and Budget will be used and deemed approved by the Corporation Board, subject to increases required as a result of Applicable Law, or indexing required to reflect inflation based on the consumer price index data for Mexico, or other appropriate indexing approved by Requisite Partner Approval. Any Program approved hereunder shall be referred to as an “Approved Program” and any Budget approved hereunder shall be referred to as an “Approved Budget”, and the Initial Program and Budget shall be deemed to be an Approved Program and an Approved Budget hereunder.

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14.5Feasibility Study Program and Budgets

(a)A Partner may propose to the Corporation Board that a Program and Budget with respect to a Feasibility Study be prepared, in addition to, or as a supplement to, the Feasibility Study included in the Initial Program and Budget. Such proposal will be made in writing to the other Partner, will reference the data upon which the proposing Partner bases its opinion that economically viable Mining Operations may be possible on the Properties that warrant a Feasibility Study, and will call a meeting of the Corporation Board pursuant to Section 6.3. If such proposal is approved by the Corporation Board, the Corporation will prepare or have prepared a Feasibility Study Program and Budget and will submit the same to the Corporation Board within 60 days following approval of the proposal.

(b)The Feasibility Study may be conducted by the Corporation, Feasibility Contractors, or both, or may be conducted by the Corporation and audited by Feasibility Contractors, as determined by the Corporation Board, and may include some or all of the following:

(i)analyses of various alternatives for Mining, processing and beneficiation of Products;

(ii)analyses of alternative Mining, milling, and production rates;

(iii)analyses of alternative sites for placement of facilities (i.e., water supply facilities, transport facilities, reagent storage, offices, shops, warehouses, stock yards, explosives storage, handling facilities, housing, public facilities);

(iv)analyses of alternatives for waste treatment and handling (including a description of each alternative of the method of tailings disposal and the location of the proposed disposal site);

(v)estimates of recoverable proven and probable reserves of Products and of related substances, in terms of technical and economic constraints (extraction and treatment of Products), including the effect of grade, Losses, and impurities, and the estimated mineral composition and content thereof, and review of Mining rates commensurate with such reserves;

(vi)analyses of environmental impacts of the various alternatives, including an analysis of the permitting, Environmental Liability and other Environmental Law implications of each alternative, and costs of Environmental Compliance for each alternative;

(vii)conduct of appropriate metallurgical tests to determine the efficiency of alternative extraction, recovery and processing techniques, including an estimate of water, power, and reagent consumption requirements;

(viii)conduct of hydrology and other studies related to any required dewatering;

(ix)conduct of other studies and analyses approved by the Corporation Board; and

(x)conduct of studies of experimental Mining of ore deposits.

(c)The Corporation will use commercially reasonable efforts to complete the Feasibility Study within 730 days of the approval of the proposed Feasibility Study Program and Budget by the Corporation Board and will provide an informal report of the initial findings of the Feasibility Study to the Board upon its completion. Following this report to the

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Corporation Board, the Corporation will begin preparation of the Feasibility Report, which will incorporate the following information and analysis:

(i)the results of the analyses of the alternatives and other matters evaluated in the conduct of the Feasibility Study programs;

(ii)reasonable estimates of capital costs for the Development and start-up of the mine, mill and other processing and ancillary facilities required by the Development and Mining alternatives evaluated (based on flow sheets, piping and instrumentation diagrams, and other major engineering diagrams), which cost estimates will include reasonable estimates of:

(A)pre-stripping expenditures, if an open pit or surface mine is proposed;

(B)mine development expenditures, if an underground mine is proposed;

(C)expenditures required to purchase, construct and install all machinery, equipment and other facilities and infrastructure (including contingencies) required to bring a mine into commercial production, including an analysis of costs of equipment or supply contracts in lieu of Development costs for each Development and Mining alternative evaluated;

(D)expenditures required to perform all other related work required to commence commercial production of Products and, if applicable, process Products (including reasonable estimates of working capital requirements); and

(E)all other direct and indirect costs and general and administrative expenses that may be required for a proper evaluation of the Development and Mining alternatives and annual production levels evaluated. The capital cost estimates will include a schedule of the timing of the estimated capital requirements for each alternative;

(iii)a reasonable estimate of the annual expenditures required for the first year of Operations after completion of the capital program described in Section 14.5(c)(ii) for each Development alternative evaluated, and for subsequent years of Operations, including estimates of annual mine development (if an underground mine), waste removal (if an open mine pit) production, processing, administrative, operating and maintenance expenditures, Taxes (other than income Taxes), working capital requirements, royalty and purchase obligations, equipment leasing or supply contract expenditures, work commitments, Environmental Compliance costs, post-Operations Environmental Compliance and Continuing Obligations funding requirements and all other anticipated costs of such Operations. This analysis will also include an estimate of the number of employees required to conduct such Operations for each alternative;

(iv)a review of the nature, extent and rated capacity of the mine, machinery, equipment and other facilities preliminarily estimated to be required for the purpose of producing and marketing Products under each Development and Mining alternative analyzed;

(v)an analysis (and sensitivity analyses reasonably requested by any Partner), based on various target rates of return and price assumptions requested by any Partner, of whether it is technically, environmentally, and economically feasible to place a prospective ore body or deposit within the Properties into commercial

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production for each of the Development and Mining alternatives analyzed (including a discounted cash flow rate of return investment analysis for each alternative and net present value estimate using various discount rates requested by any Partner); and

(vi)such other information as the Corporation Board deems appropriate.

(d)The Corporation will use commercially reasonable efforts to complete the Feasibility Report and deliver it to the Partners within 90 days following the report to the Board of the initial findings of the Feasibility Study.

14.6Selection of Approved Alternatives

(a)Within 30 days after delivery of the Feasibility Report to the Partners, a Corporation Board meeting will be convened for the purposes of reviewing the Feasibility Report and selecting one or more Approved Alternatives, if any.

(b)Within 30 days following the selection of an Approved Alternative, the Corporation will prepare and present to the Corporation Board in accordance with Section 14.4 a Program and a Budget for Mining and Operations based on the Approved Alternative.

14.7Budget Overruns; Program Changes

In respect of any Approved Program or Approved Budgets after the Earn-In Period and completion of the Initial Program and Budget, the Operator will promptly notify the Corporation Board of any material departure from an Approved Program or Approved Budget.

ARTICLE 15 — DIVIDENDS

15.1Dividends by the Corporation

(a)Available Cash shall be determined by the Operator on an annual basis within 45 days after the end of each Fiscal Year in a manner consistent with the definition of the term “Available Cash.” Subject to the remaining provisions of this Article 15, and other than upon a liquidation of the Corporation pursuant to Section 20.3, the Corporation shall, within such 45 day period, distribute such Available Cash to the Partners of record in accordance with their respective Participating Interests in the Corporation determined as of the end of the period to which such distribution relates.

(b)All amounts withheld pursuant to any provision of any foreign, state or local tax law or treaty with respect to any payment, distribution or allocation to the Corporation or the Partners shall be treated as amounts distributed to the Partners pursuant to this Article 15 for all purposes of this Agreement. Each of the Corporation Board and the Operator is authorized to withhold from distributions, or with respect to allocations, to the Partners and to pay over to any federal, foreign, state or local government any amounts required to be so withheld pursuant to any provision of any federal, foreign, state or local law or treaty and shall allocate such amounts to those Partners with respect to which such amounts were withheld.

(c)Except as provided in this Agreement, no Partner shall be entitled to any distribution of cash or other property from the Corporation. Notwithstanding any provision to the contrary contained in this Agreement, the Corporation shall not make a distribution to any Partner on account of its Participating Interest in the Corporation if such distribution would violate Applicable Law.

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15.2Dividends by OpCo or EmployerCo

No dividends will be made by either OpCo or EmployerCo without Requisite Partner Approval. Any such dividends so approved shall be paid to the Partners of record in each such Joint Venture Entity in accordance with their respective Participating Interest in each such Joint Venture Entity.

ARTICLE 16 — ACCOUNTING/REPORTING

16.1Fiscal Year

The fiscal year (“Fiscal Year”) of each Joint Venture Entity will be determined by Requisite Partner Approval in accordance with the requirements of the Applicable Laws as soon as reasonably practicable after execution and delivery of this Agreement.

16.2Location of Records

The books of account and Records for each Joint Venture Entity will be kept and maintained by such Joint Venture Entity at such place in the United Mexican States as the applicable Board will determine and will be kept by such Joint Venture Entity and made available to Partners during the term of this Agreement and for a period of seven years after termination of this Agreement.

16.3Financial Records

The financial records and other books and Records of each Joint Venture Entity will be maintained by such Joint Venture Entity on an accrual basis in accordance with GAAP and will show all items of income and expense and all Assets and liabilities in accordance with GAAP. In addition to the audited financial statements set forth in Section 16.4(a), the Joint Venture Entities shall deliver to the Partners, within 45 days after the end of each calendar quarter, unaudited quarterly financial statements in accordance with GAAP. Any Partner may require the preparation of quarterly financial statements in accordance with IFRS, provided that such Partner bears any incremental cost associated with the preparation of such financial statements.

16.4Audits

(a)Within 90 days after the end of each calendar year, an audit will be completed by certified public accountants selected by, and independent of, the Joint Venture Entities, at the cost of the Joint Venture Entities. The audit will be conducted in accordance with GAAP (and, if a Partner requests, will also be conducted in accordance with IFRS, if the requesting Partner bears any incremental cost associated with such preparation) and will cover all books and records maintained by the Joint Venture Entities pursuant to this Agreement, all Assets and Encumbrances, and all transactions and Operations conducted during such calendar year.

(b)Notwithstanding the annual audit conducted by certified public accountants selected by the Corporation, each Partner will have the right to have an independent audit of all corporate books, records and accounts of the Joint Venture Entities, no more than once per annum. This audit will review all issues raised by the requesting Partner, with all costs borne by the requesting Partner. The requesting Partner will give the other Partner 30 days prior written notice of such audit. Any audit conducted on behalf of any Partner will be made during the Joint Venture Entities’ normal business hours and will not interfere with Operations. All written exceptions to and Claims upon the Joint Venture Entities for discrepancies disclosed by such audit will be made not more than three months after completion and delivery of such audit, or they will be deemed waived.

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16.5Monthly Statements

The Corporation will be required to prepare and submit to each Partner a monthly report containing (i) consolidating monthly statements of account reflecting in reasonable detail the financial condition of the Joint Venture Entities including a balance sheet, profit and loss statement and cash flow statement and (ii) a summary of the Project’s Operations including technical data and activities), by no later than 10 Business Days after the end of each month.

ARTICLE 17 — INDEMNIFICATION AND INSURANCE

17.1Indemnification by the Joint Venture Entities

(a)Except with respect to breaches of the representations and warranties set forth in Section 2.11 and for which indemnification is provided under Section 2.12, each Joint Venture Entity will, to the maximum extent permitted by law, indemnify and hold harmless its Managers, officers, employees, agents and representatives and all other persons exercising delegated authority on behalf of such Joint Venture Entity (individually or collectively called an “Indemnitee”), from and against all Losses which the Indemnitee may suffer, sustain, pay or incur and all Claims which may be made or brought against the Indemnitee that arise, directly or indirectly, out of the management or conduct of the Business of such Joint Venture Entity or such Indemnitee’s activities with respect thereto, except to the extent arising from such Indemnitee’s gross negligence, fraud, willful misconduct or knowing violation of this Agreement or Applicable Law.

(b)In the event that any Indemnitee desires to assert its right to indemnification from any Joint Venture Entity pursuant to this Section 17.1, the Indemnitee will give such Joint Venture Entity prompt notice of any Claim giving rise thereto, and such Joint Venture Entity will be entitled to undertake the defense thereof other than as provided in subsections 17.1(e) and 17.1(f). The failure to promptly notify Joint Venture Entity will not relieve Joint Venture Entity of its Obligations hereunder, except and solely to the extent Joint Venture Entity is actually prejudiced by the failure.

(c)The right of any Indemnitee to the indemnification provided under this Section 17.1 will be cumulative of, and in addition to, any and all rights to which such Indemnitee may otherwise be entitled by contract or as a matter of law or equity and will extend to its or his heirs, successors, assigns and legal representatives.

(d)The applicable Board may (but will not be obligated to) obtain, at the expense of the applicable Joint Venture Entity, insurance against any Losses or Claims whether or not such Joint Venture Entity would, pursuant to this Section 17.1, be required to indemnify any Indemnitee in respect thereof.

(e)An Indemnitee will not settle or compromise any Claim without the written consent of the applicable Joint Venture Entity unless the Indemnitee agrees in writing to forego any and all Claims for indemnification from the applicable Joint Venture Entity with respect to such Claim. However, if the applicable Joint Venture Entity, within a reasonable time after notice of any such Claim, fails to defend such Claim, the Indemnitee will have the right to undertake the defense, compromise or settlement of such Claim on behalf of and for the account and risk of the applicable Joint Venture Entity, subject to the right of the applicable Joint Venture Entity to assume the defense of such Claim at any time prior to settlement, compromise or final determination thereof.

(f)If a Joint Venture Entity has undertaken the defense of a Claim and:

(i)there is a reasonable expectation that:

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(A)the Claim may materially and adversely affect the Indemnitee other than as a result of money damages or other money payments; or

(B)the Indemnitee may have legal defenses available to it that are different from or additional to the defenses available to the applicable Joint Venture Entity; or

(C)the applicable Joint Venture Entity will not have employed legal counsel that is satisfactory to the Indemnitee, acting reasonably,

then the Indemnitee will have the right, at its own cost and expense, to defend such Claim.

17.2Right of Partners to Contribution

Except with respect to breaches of the representations and warranties set forth in Section 2.11 and for which indemnification is provided under Section 2.12, if any Partner is held liable to a Person that is not a Partner or an Affiliate of a Partner for any Loss or Claim of any Joint Venture Entity, such Partner will be entitled to contribution from each other Partner of such other Partner’s pro rata share of such Loss or Claim (determined on the basis of Partners’ Participating Interests in such Joint Venture Entity as of the date on which the Loss or Claim arose), except to the extent that such Loss or Claim results from such Partner’s Default, fraud, gross negligence, willful misconduct or knowing violation of this Agreement or Applicable Law. The provisions of this Section 17.2 will survive termination of this Agreement, a Person ceasing to be a Partner or any purchase or Transfer made pursuant hereto with respect to any liability that accrues prior to such termination, withdrawal, purchase or Transfer.

17.3Indemnification by the Partners

(a)Each Partner will indemnify the other Partner, its Managers, officers, employees, agents and attorneys, or Affiliates (collectively “Indemnified Partner”) from and against the entire amount of any Material Loss. A “Material Loss” will mean all costs, expenses, damages or liabilities, including attorneys’ fees and other costs of litigation (either threatened or pending) arising out of or based on a breach by a Partner (“Indemnifying Partner”) of any representation, warranty or covenant contained in this Agreement, (except with respect to breaches of the representations and warranties set forth in Section 2.11 and for which indemnification is provided under Section 2.12), for:

(i)subject to Section 3.2, any failure by a Partner to make timely payment of agreed Capital Contributions;

(ii)any action taken for or obligation or responsibility assumed on behalf of the other Partner, its Managers, officers, employees, agents and attorneys, or Affiliates by a Partner, any of its Managers, officers, employees, agents and attorneys, or Affiliates, in violation of Section 2.2; and

(iii)failure of a Partner or its Affiliates to comply with the rights of first refusal in Section 18.2 and other pre-emptive rights under Article 18.

(b)No Partner, in any event, will be liable to the other Partner in respect of any Claims arising out of this Agreement for special, indirect, punitive, exemplary, speculative or other damages that are not reasonably foreseeable (unless such special, indirect, punitive, exemplary, speculative or other damages are actually paid to a third party pursuant to a third party Claim).

(c)If any Claim or demand is asserted against an Indemnified Partner in respect of which such Indemnified Partner may be entitled to indemnification under this Agreement, written

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notice of such Claim or demand will promptly be given to the Indemnifying Partner. The Indemnifying Partner will have the right, but not the obligation, by notifying the Indemnified Partner within 30 days after its receipt of the notice of the Claim or demand, to assume the entire control of (subject to the right of the Indemnified Partner to participate, at the Indemnified Partner’s expense and with counsel of the Indemnified Partner’s choice), the defense, compromise, or settlement of the matter, including, at the Indemnifying Partner’s expense, employment of counsel of the Indemnifying Partner’s choice. Any damages to the assets or business of the Indemnified Partner caused by a failure by the Indemnifying Partner to defend, compromise, or settle a Claim or demand in a reasonable and expeditious manner requested by the Indemnified Partner, after the Indemnifying Partner has given notice that it will assume control of the defense, compromise, or settlement of the matter, will be included in the damages for which the Indemnifying Partner will be obligated to indemnify the Indemnified Partner. Any settlement or compromise of a matter by the Indemnifying Partner will include a full release of Claims against the Indemnified Partner which has arisen out of the indemnified Claim or demand.

17.4Insurance

The applicable Board will determine all insurance limits, deductibles and other related matters required to be addressed in connection with insurance held by the applicable Joint Venture Entity in respect of such Joint Venture Entity, and its Managers and officers.

ARTICLE 18 — TRANSFERS

18.1Restrictions on Transfers

Except as expressly permitted in this Article 18, no Partner may Transfer any Share or Participating Interest in any Joint Venture Entity in whole or in part, and no Partner may Transfer less than its entire Shares and Participating Interests in all Joint Venture Entities.

18.2Right of First Refusal

Subject to Section 18.5, if a Partner (the “Transferring Partner”) wishes to Transfer its Shares and Participating Interests:

(a)the Transferring Partner will by written notice (the “ROFR Notice”) advise each other Partner (other than Defaulting Partners) of its intention to make the Transfer, including in such notice a description of the Shares and Participating Interest proposed to be Transferred (such Shares and Participating Interest being herein called the “ROFR Interest”), the identity of the proposed Transferee, the cash consideration for which it is prepared to make such Transfer, the proposed effective date and closing date of the Transfer and any other information respecting the Transfer which it reasonably believes would be material to the exercise of the other Partner’s rights under this Section 18.2;

(b)within 60 days from the giving of the ROFR Notice by the Transferring Partner, any other Partner (other than a Defaulting Partner) may give written notice (in this Article called a “Notice of Acceptance”) to the Transferring Partner that it elects to purchase the ROFR Interest for the applicable price and on the terms and conditions set forth in the ROFR Notice. A Notice of Acceptance will create a binding contractual obligation on the Transferring Partner and its Affiliates to sell and on the Partner giving the Notice of Acceptance and its Affiliates to purchase all of the ROFR Interest for the applicable price and on the terms and conditions set forth in the ROFR Notice, provided that if more than one Partner gives a Notice of Acceptance, the Partners who give Notices of Acceptance

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and their Affiliates will purchase the ROFR Interest in proportion to their Participating Interest in the Joint Venture Entities, as the case may be;

(c)if the ROFR Interest described in the ROFR Notice is not Transferred to one of the Partners or their Affiliates pursuant to paragraph (b), above, the Transferring Partner, subject to the limitations in Sections 18.1 and 18.5, may Transfer such ROFR Interest to the Transferee specified in the ROFR Notice at any time within 120 days from the issuance of such ROFR Notice, provided that such Transfer is not on terms that are materially more favorable to such Transferee than those offered in the ROFR Notice; and

(d)following a Transfer in accordance with Subsection 18.2(b) or 120 days from the issuance of a ROFR Notice pursuant to this Section 18.2 in respect of which a Transfer was not affected, the provisions of this Section 18.2 will once again apply to the ROFR Interest described in the ROFR Notice.

18.3Exceptions to Right of First Refusal

Subsection 18.2 will not apply to:

(a)any realization against a Share or Participating Interest in any Joint Venture Entity pursuant to security granted in connection with the Dowa Arranged Loan or any Project Financing or other security approved in accordance with this Agreement; or

(b)any Transfer by a Partner to its Affiliate pursuant to Section 18.4.

18.4Affiliate Transfers

Other than a Transfer of SSMRC Parent’s Shares and Participating Interests to SSMRC LuxCo, subject to the terms and conditions of Section 18.5, a Partner may Transfer all of its Shares and Participating Interest in all of the Joint Venture Entities to an Affiliate provided that any such Transfer will not be effective until the Transferor and the Transferee have entered into an agreement with the other Partner (which agreement will not constitute a novation without the specific agreement of the other Parties) whereby such Transferor and Transferee agree that:

(a)such Transferee assumes and is bound by all obligations of the Transferor under this Agreement and is subject to all restrictions to which the Transferor is subject under the terms of this Agreement; and

(b)such Transferee will re-Transfer the Shares and Participating Interest in all of the Joint Venture Entities to the Transferor or an Affiliate of the Transferor if the Transferee ceases to be an Affiliate of such Transferor;

and unless all Parties agree to release the Transferor from its Obligations under this Agreement, the Transferor will continue to be jointly and severally liable with the Transferee for such Obligations.

18.5Requirements Applicable to New Partners

A Person who is not a Partner may become a Partner by virtue of a Transfer only upon the following conditions:

(a)such admission is in compliance with all agreements to which the Joint Venture Entities are bound;

(b)such admission is in compliance with all Applicable Law;

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(c)such Person is not itself and interests in itself are not tax shelter investments for the purposes of Applicable Laws related to Taxes;

(d)such Person executes an agreement or other instrument by which such Person ratifies and agrees to be bound by this Agreement (including the provisions of this Article 18), and represents and warrants to all Partners that:

(i)if a corporation, it is duly incorporated, organized or formed;

(ii)it is validly existing, and (if applicable) in good standing under the Laws of the jurisdiction of its incorporation, organization or formation;

(iii)if required by Applicable Law, it is duly qualified and in good standing in the jurisdiction of its principal place of business, if different from its jurisdiction of incorporation, organization or formation;

(iv)it has, and will maintain, full power and authority to execute and deliver this Agreement and the document or instrument effecting the Transfer and to perform its Obligations under this Agreement;

(v)all necessary action by the Boards, President, Partners, trustees, beneficiaries, or other applicable Persons necessary for the due authorization, execution, delivery and performance of this Agreement and the document or instrument effecting the Transfer by such Person has been duly taken;

(vi)this Agreement and any other documents contemplated herein, constitute legal, valid and binding obligations of such Person enforceable against it in accordance with its terms (except as may be limited by bankruptcy, insolvency or similar Laws of general application and by the effect of general principles of equity, regardless of whether considered at Law or in equity);

(vii)the authorization, execution, delivery, and performance of this Agreement and the document or instrument effecting the Transfer does not and will not conflict with, or result in a breach, default or violation of (A) the constating documents or By-laws of such Person, (B) any material contract or agreement to which such Person is a party or is otherwise subject, or (C) any Law, order, judgment, decree, writ, injunction or arbitral award to which such Person is subject; or require any Governmental Authorization, unless such requirement has already been satisfied;

(viii)it holds and will continue to hold its Shares and Participating Interest beneficially and free and clear of all restrictions, mortgages, liens, charges, Encumbrances, security interests or agreements of any kind except as expressly permitted under this Agreement, and except for any restrictions, mortgages, liens, charges, Encumbrances, security interests or agreements of any kind granted as security for the Dowa Arranged Loan or any Project Financing;

(ix)such Person assumes by operation of Law or by agreement with the other Partners, all of the Obligations of the Transferor from the effective date of the Transfer to the extent of the Participating Interest Transferred; and

(x)in the event of a Transfer by SSMRC LuxCo of its Participating Interest, such Person acknowledges the existence and continuation of the Offtake Agreement.

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18.6Prohibitions

Notwithstanding any other provision of this Agreement, no Partner will be entitled to Transfer its Shares or Participating Interest in any Joint Venture Entity:

(a)if the Partner is a Defaulting Partner unless prior to or concurrent with such Transfer the Partner ceases to be a Defaulting Partner or unless the Transfer is pursuant to Section 18.4;

(b)without first obtaining the consent of the other Parties if such action would permit any other Person to accelerate or demand repayment of or otherwise result in a default with respect to any indebtedness of any Joint Venture Entity approved pursuant to this Agreement including, without limitation, the Dowa Arranged Loan or any Project Financing;

(c)if the conditions set out in Section 18.5 are not satisfied; or

(d)to a Restricted Person, unless otherwise approved in writing by all of the Partners.

18.7Effect of Permitted Transfer

Upon completion of any Transfer permitted pursuant to the terms of this Agreement, the Transferee will be a Partner in substitution for, or in the case of a partial Transfer, in addition to, the Transferring Partner, upon execution of a counterpart of this Agreement and compliance with the terms and conditions of this Article 18. Except as provided in this Article 18, no Transfer will give rise to a right in any Transferee to become a Partner. No Transfer will relieve the Transferring Partner of liability under this Agreement, Applicable Laws or otherwise in respect of the Transferred Participating Interest for matters arising or events occurring prior to the completion of, or in respect of, the Transferred Shares and Participating Interest. Upon the Transfer of a Partner’s entire Shares and Participating Interest (except a Transfer by mortgage, lien, pledge or other Encumbrance but including a Transfer resulting from a default in connection with such mortgage, lien, pledge or other Encumbrance), such Partner will have no further Shares or Participating Interest (other than those expressed as surviving such Transfer) except its rights and Obligations under Article 18 and Article 22 which will survive such Transfer.

18.8Effect of Prohibited Transfers

Any Transfer of a Share or Participating Interest in any Joint Venture Entity or any part thereof by a Partner in violation of the terms of this Agreement will be void and will not be recognized by the applicable Joint Venture Entity, provided, however, that nothing herein will be deemed to limit any right or remedy that the applicable Joint Venture Entity or any other Partner may have against such Partner.

18.9Outstanding Indebtedness

(a)If, on the date of closing of a permitted Transfer of a Share or Participating Interest (other than to an Affiliate), the Transferor is indebted to the Corporation or another Partner or their Affiliates, then the Transferee will be required to pay the purchase price payable by it for such Share and Participating Interest being Transferred to the Corporation at the time of closing, and the Corporation will apply the purchase price proceeds towards repayment of the indebtedness of the Transferor to the Corporation or other Partner or their Affiliates, as the case may be.

(b)If there are funds remaining after complying with paragraph (a), above, then the Corporation will pay the balance to the Transferor.

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18.10Shares of the Joint Venture Entities

The provisions of this Agreement relating to Shares of the Joint Venture Entities will apply mutatis mutandis to any shares or securities into which such Shares may be converted, changed, reclassified, redivided, redesignated, redeemed, subdivided or consolidated; to any securities that are received by a Partner as a stock dividend or Distribution payable in Shares or securities; and to any Shares or shares or securities of any successor or continuing company or corporation to the applicable Joint Venture Entity that may be received by the Partner on a reorganization, amalgamation, consolidation or merger, statutory or otherwise.

ARTICLE 19 — DEFAULT

19.1Defaulting Partner

A Partner will be a “Defaulting Partner” in the following circumstances:

(a)it commits a material breach of a term of this Agreement and that breach:

(i)is incapable of remedy; or

(ii)if capable of remedy, is not remedied within 30 days for a financial breach and 60 days for other breaches, of being notified in writing by another Party;

(b)an Insolvency Event occurs with respect to such Partner;

(c)any event which will make it unlawful for that Partner to remain a Partner of any Joint Venture Entity; or

(d)it disposes, or purports to dispose, of any Participating Interest in breach of this Agreement

in each circumstance (a “Default”) and the applicable Joint Venture Entity or any other Partner has given a notice to such Partner (a “Default Notice”) specifying particulars of the Default and the Partner has not cured the Default within any applicable cure period.

All Default Notices will be copied to the applicable Joint Venture Entity and all Partners. If a Partner is a Defaulting Partner and the event or circumstance that caused it to be a Defaulting Partner has been cured or ceased to exist, it will thereupon cease to be a Defaulting Partner.

19.2Dividends and other Distributions to a Defaulting Partner

If a Default has not been remedied within the cure period provided in subsection 19.1, the applicable Joint Venture Entity will, in good faith and as soon as reasonably practicable, determine the Losses to the applicable Joint Venture Entity or the other Partner, or both, resulting from such Default. The applicable Joint Venture Entity will notify each of the Partners of the amount so determined. All dividends or other Distributions otherwise payable by the applicable Joint Venture Entity to a Defaulting Partner will be applied by the applicable Joint Venture Entity as compensation to the applicable Joint Venture Entity or the other Partner, as the case may be, for such Losses until the applicable Joint Venture Entity or the other Partner, as the case may be, has fully recovered all such Losses, at which time the Default will have been cured and such Defaulting Partner will no longer be a Defaulting Partner hereunder

19.3Effect of Default

For so long as a Partner is a Defaulting Partner, it and its Managers’ rights as a Partner or Manager, respectively, including voting rights, will be suspended until such Partner ceases to be a

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Defaulting Partner, provided that the Defaulting Partner and its Managers will continue to be entitled to receive notices, financial statements and other information and to attend (but not vote at) meetings of Partners and Managers. A Defaulting Partner will remain obligated for all its liabilities as a Partner that accrue prior to and during the period of time such Partner is a Defaulting Partner, including any such liabilities maturing thereafter but originating from actions taken prior thereto. In the event that a Partner is a Defaulting Partner as a result of failure to make any Capital Contribution required to be made hereunder, then the other Partner may, in its sole discretion, elect to pay all of a portion of such Defaulting Partner’s Capital Contribution, and such Defaulting Partner’s Participating Interest in each Joint Venture Entity shall be reduced to reflect the amounts paid by the other Partner (and such amounts paid by the other Partner shall be deemed to be Capital Contributions made by the other Partner to each Joint Venture Entity hereunder), and upon such reduction, such Partner will cease to be a Defaulting Partner.

ARTICLE 20 — TERMINATION AND DISSOLUTION

20.1Term of Agreement

Subject to the other terms and conditions of this Agreement, including the provisions of Section 20.2, this Agreement and each Joint Venture Entity will continue in existence from the date hereof until:

(a)terminated by unanimous agreement of the Partners;

(b)following the Pre-Participating Interest Period, 100% of the Participating Interests of all Joint Venture Entities are held by a single Partner; or

(c)the Business is sold or completely decommissioned and all obligations and liabilities of each Joint Venture Entity have been satisfied and paid and all assets of the Joint Venture Entities liquidated and distributed to the Partners.

Except as otherwise specifically provided in this Agreement, no Partner will have the right to ask for dissolution or winding up of any Joint Venture Entity’s affairs or the Distribution of assets, without the prior written consent of all the other Partners.

20.2Automatic Dissolution

The Partners will cause a Joint Venture Entity to be wound up and dissolved forthwith upon the happening of any of the following events:

(a)the sale of all or substantially all of the Business of such Joint Venture Entity or the assets of such Joint Venture Entity or the abandonment and reclamation of all of such Joint Venture Entity’s assets;

(b)any event which will make it unlawful for the Business of such Joint Venture Entity to be carried on;

(c)any event which, under Applicable Law, requires or results in the dissolution or winding up of such Joint Venture Entity; or

(d)if all of the Partners agree.

20.3Winding-Up And Dissolution

(a)Upon the happening of any event requiring the dissolution of a Joint Venture Entity, the applicable Board will exercise its powers under this Agreement for the purpose of winding up the Business of such Joint Venture Entity, liquidating its assets in an orderly manner,

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paying the debts, liabilities and expenses of the Corporation, distributing any cash or other assets of such Joint Venture Entity to the Partners in proportion to their respective Participating Interests at the time of such Distribution, filing all notices of dissolution prescribed by Applicable Law, and filing all elections, determinations or designations required under the relevant tax Laws which may be necessary or desirable. Such Joint Venture Entity will engage in no new business during the period of such winding up and dissolution.

(b)The assets of the applicable Joint Venture Entity remaining after the payment, or provision for payment, of all the liabilities the applicable Joint Venture Entity will be distributed in accordance with the applicable Articles and By-laws.

(c)No winding-up, liquidation, termination or dissolution of a Joint Venture Entity or of the Business of such Joint Venture Party will relieve a Partner from any obligation accruing or accrued to the date of such winding-up, liquidation, termination or dissolution.

ARTICLE 21 — DISPUTE RESOLUTION

21.1Mutual Resolution

Any dispute among the Parties arising out of or in connection with this Agreement:

(a)will first be attempted to be resolved by the Parties through good faith negotiations and in connection therewith, any Party may request in writing that any other Party meet and commence such negotiations within a reasonable period of time (in any event no later than seven days) after the request;

(b)such negotiations will be between senior representatives of management of each such Party; and

(c)if within ten Business Days after commencement of the negotiations under paragraph (a), above, the dispute has not been resolved, any Party may refer the matter to dispute resolution in accordance with the provisions set out below.

21.2Arbitration

In the event of the Parties being unable to resolve any dispute under Section 21.1, any such dispute will be resolved: (a) in the case of a purely technical matter, by an expert agreed to by the Parties, acting reasonably; and (b) in the case of any other matter, by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and each Party hereby consents to any such disputes being so resolved. Each Party will have the right to nominate one arbitrator each and the arbitrators so nominated will jointly nominate an arbitrator to act as chairman. In the event of being unable to agree on such an arbitrator, the Parties will proceed to the American Arbitration Association for the nomination of this arbitrator. The arbitration proceedings will take place in New York, New York in the English language. The arbitrators will decide ex aequo et bono and in their award the extent to which the Parties will bear the arbitration costs. Judgment on the award rendered in any such arbitration may be entered in any court having jurisdiction.

ARTICLE 22 — CONFIDENTIALITY AND DISCLOSURE OF INFORMATION

22.1Business Information

All Business Information of each Joint Venture Entity will be owned by the applicable Joint Venture Entity. Both before and after the termination of a Joint Venture Entity, all Business Information may be used by any Partner for any purpose, without consulting with, or obligation to, the other Partner.

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Except as provided in Sections 22.3 and 22.4 or with the prior written consent of the other Partner, each Partner will keep confidential and not disclose to any third party or the public any portion of the Business Information that constitutes Confidential Information.

22.2Partner Information

In performing its Obligations under this Agreement, no Partner will be obligated to disclose any Partner Information. If a Partner elects to disclose Partner Information in performing its Obligations under this Agreement, such Partner Information, together with all improvements, enhancements, refinements and incremental additions to such Partner Information that are developed, conceived, originated or obtained by any Partner in performing its Obligations under this Agreement (“Enhancements”), will be owned exclusively by the Partner that originally developed, conceived, originated or obtained such Partner Information. Each Partner may use and enjoy the benefits of such Partner Information and Enhancements in the conduct of the Joint Venture Entities hereunder, but the Partner that did not originally develop, conceive, originate or obtain such Partner Information may not use such Partner Information and Enhancements for any other purpose. Except as provided in Section 22.4, or with the prior written consent of the other Partner, which consent may be withheld in such Partner’s sole discretion, each Partner will keep confidential and not disclose to any third party or the public any portion of Partner Information and Enhancements owned by the other Partner that constitutes Confidential Information.

22.3Permitted Disclosure of Confidential Business Information

(a)Any Partner may disclose Business Information that is Confidential Information: (i) to a Partner’s officers, Corporation Managers, partners, members, employees, Affiliates, shareholders, agents, attorneys, accountants, consultants, contractors, subcontractors or advisors, for the sole purpose of such Partner’s performance of its Obligations under this Agreement; (ii) to any party to whom the disclosing Partner contemplates a Transfer of all or any part of its Participating Interest, for the sole purpose of evaluating the proposed Transfer; (iii) to any actual or potential lender, underwriter or investor for the sole purpose of evaluating whether to make a loan to or investment in the disclosing Partner; and (iv) to the Ministry of Economy, Trade and Industry of Japan and, if SSMRC requests that Dowa try to arrange a Dowa Arranged Loan, to the Japan Oil, Gas and Metals National Corporation.

(b)The Partner disclosing Confidential Information pursuant to this Section 22.3, will disclose such Confidential Information to only those parties who have a bona fide need to have access to such Confidential Information for the purpose for which disclosure to such parties is permitted under this Section 22.3 and who have agreed in writing supplied to, and enforceable by, the other Partner to protect the Confidential Information from further disclosure, to use such Confidential Information solely for such purpose and to otherwise be bound by the provisions of this Article 22. Such writing will not preclude parties described in Section 22.3(a) from discussing and completing a Transfer with the other Partner. The Partner disclosing Confidential Information will be responsible and liable for any use or disclosure of the Confidential Information by such parties in violation of this Agreement and such other writing.

22.4Disclosure Required By Law

(a)Notwithstanding anything contained in this Article 22, a Partner may disclose any Confidential Information if, in the advice of the disclosing Partner’s legal counsel: (i) such disclosure is legally required to be made in a judicial, administrative or proceeding of any Governmental Authority pursuant to a valid subpoena or other applicable order; or (ii) such disclosure is legally required to be made pursuant to the rules or regulations of a stock exchange or similar trading market applicable to the disclosing Partner.

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(b)Prior to any disclosure of Confidential Information under this Section 22.4, the disclosing Partner will give the other Partner at least ten (10) days prior written notice (unless less time is permitted by such rules, regulations or proceeding) and, in making such disclosure, the disclosing Partner will disclose only that portion of Confidential Information required to be disclosed and will take all reasonable steps to preserve the confidentiality thereof, including, without limitation, obtaining protective orders and supporting the other Partner in intervention in any such proceeding.

22.5Public Announcements

Prior to making or issuing any press release or other public announcement or disclosure of Business Information that is not Confidential Information, a Partner will first consult with the other Partner as to the content and timing of such announcement or disclosure. If the other Partner from whom such approval is requested has not approved or has not reasonably refused such request within three Business Days of receiving such request, such other Partner will be deemed to have approved the press release or public announcement forming the subject matter of such request; provided that the foregoing shall not restrict any Partner from making any disclosure required by Applicable Law or the rules or regulations of a stock exchange or similar trading market applicable to the disclosing Partner.

ARTICLE 23 — GENERAL

23.1Effect Of Agreement

This Agreement, including the Exhibits hereto, reflects the whole and entire agreement among the Parties and supersedes all prior agreements among the Parties related to the subject matter hereof. This Agreement can be amended, restated or supplemented only by the written agreement of all Parties acting individually, provided, however, that any additional Partner may be admitted to a Joint Venture Entity in accordance with the provisions of Section 18.7.

23.2Earn-In Period Force Majeure Event

No Party will be liable or responsible to the other Party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement during the Earn-In Period, when and to the extent such failure or delay is caused by or results from a Force Majeure Event. The Party suffering a Force Majeure Event will give written notice to the other Party as soon as reasonably practicable after becoming aware of the Force Majeure Event, stating the period of time the occurrence is expected to continue and will use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. Such obligation to use diligent efforts will not require a Party to settle strikes, labor stoppages or slowdowns or other industrial disturbances except on terms that are acceptable to it, in its discretion.

23.3Notices

All notices or other documents authorized or required to be given pursuant hereto will be in writing, and will be delivered by hand or courier delivery or transmitted by facsimile or email:

If to SSMRC Parent, SSMRC LuxCo or any Joint Venture Entity:

Sunshine Silver Mining & Refining Corporation

370 17th Street, Suite 3800

Denver, Colorado 80202

USA

Attention:Jeffrey Reeser, General Counsel

Telephone:303-784-5350

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Facsimile:303-534-0471

Email:jeff.reeser@ssmines.com

With a Copy to:

Hogan Lovells US LLP

One Tabor Center

1200 17th St., Ste 1500

Denver, Colorado 80202

Attention:Paul Hilton

Kevin Burke

Telephone:303-454-2520

Facsimile:303-899-7333

Email:paul.hilton@hoganlovells.com

Kevin.burke@hoganlovells.com

And to:

Vazquez, Sierra & Garcia, S.C.

Av. Paseo De Las Palmas 755, Desp. 902

Col. Lomas De Chapultepec

11000, Mexico, D.F.

Attention:Alberto M. Vàzquez

Telephone:

Fax:

Email:

If to Dowa or any Joint Venture Entity:

Dowa Metals & Mining Co., Ltd.

14-1, Sotokanda 4-chome

Chiyoda-Ku, Tokyo

101-0021

Japan

Attention:Toshiaki Suyama, Director, General Manager, Resource

Development & Raw Materials Department

Telephone:+81-3-6847-1201

Facsimile:+81-3-6847-1211

Email:suyamat@dowa.co.jp

With a Copy to:

Dowa Metals & Mining Co., Ltd.

Mexico Office

Andres Bello 45, Piso 16-A

Col. Chapultepec Polanco, C.P.

11560

Mexico D.F., Mexico

Attention:Toshiaki Terao, Representative in Mexico

Telephone:+52-55-5280-4578

Fax:+52-55-5281-6689

Email:terao@dowamex.com.mx

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And to:

Torys LLP

1114 Avenue of the Americas, 23rd Floor

New York, New York 10036.7703 USA

Attention:Don Bell

Telephone:212-880-6118

Fax:212-682-0200

Email:dbell@torys.com

Any such notice or other document will be deemed to have been received:

(a)if delivered by hand or courier delivery, when given to a responsible person at the address of the Party to which the notice or document is directed, provided that if such time is not within the hours during which business is normally conducted by the recipient Party then such notice or document will be deemed received at the commencement of business on the next Business Day;

(b)if by facsimile, at the time successful transmission of such notice or document is reported by the sender’s facsimile machine, provided that if such time of deemed receipt is not within the hours during which business is normally conducted by the recipient Party then such notice or document will be deemed received at the commencement of business on the next Business Day. If the time of successful transmission is not so reported by the sender’s facsimile machine, such notice or document will be deemed not to have been given; and

(c)if by email, at the time of receipt at the address of the Party to which the notice or documented is directed.

Any Party may change its address for notice by giving notice to the other in the manner herein provided.

23.4Further Assurances

Each of the Partners agree to execute and deliver all such other and additional instruments and documents and to do such other acts and things as may be reasonably necessary more fully to effectuate this Agreement or which are considered by any Joint Venture Entity to be necessary to comply with Applicable Law for the continuation, operation or good standing of such Joint Venture Entity.

23.5Applicable Law

Except for matters of title to the Properties or their Transfer, which will be governed by the law of their situs, this Agreement (including all exhibits and schedules hereto) and any disputes or Claim, action, suit or legal proceeding (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, performance, non-performance, interpretation, termination or construction of this Agreement will be governed by and construed in accordance with the Laws of the State of Delaware without giving effect to the principles of conflict of Laws that would permit or require the application of the substantive Laws of any other jurisdiction.

23.6Rule Against Perpetuities

The Partners do not intend that there will be any violation of the Rule Against Perpetuities, the Rule Against Unreasonable Restraints on the Alienation of Property, or any similar rule. Accordingly, if any right or option to acquire any interest in the Properties, in a Participating Interest, in the Assets, or in any real property exists under this Agreement, such right or option must be exercised, if at all, so as to vest such interest within time periods permitted by applicable rules. If, however, any such violation

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should inadvertently occur, the Partners hereby agree that a court will reform that provision in such a way as to approximate most closely the intent of the Partners within the limits permissible under such rules.

23.7Counterparts

This Agreement may be executed in counterparts and delivered by electronic means (including counterparts provided for the execution by an additional Partner), each of which will be deemed an original, but all of which together will constitute one and the same instrument.

23.8Headings

The headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement.

23.9Waiver

No waiver by any Person of any default by any Partner or Partners in the performance of any provision, condition or requirement herein will be deemed to be a waiver of, or in any manner release the said Partner or Partners from performance of any other provision, condition or requirement herein; nor will such waiver be deemed to be a waiver of, or in any manner a release of, said Partner or Partners from future performance of the same provision, condition or requirement. Any delay or omission of any Partner to exercise any right hereunder will not impair the exercise of any such right, or any like right, accruing to it thereafter. No waiver of a right created by this Agreement by one or more Partners will constitute a waiver of such right by the other Partners except as may otherwise be required by law with respect to Persons not Parties. The failure of one or more Partners to perform its or their Obligations hereunder will not release the other Partners from the performance of such Obligations.

23.10Severability

Should any provision of this Agreement be deemed in contradiction with the Laws of any jurisdiction in which it is to be performed or otherwise be unenforceable for any reason, such provision will be deemed null and void, but this Agreement will remain in force in all other respects and in all other jurisdictions. Should any provision of this Agreement be or become ineffective because of changes in Applicable Law or the interpretations thereof, or should this Agreement fail to include a provision that is required as a matter of Law, the validity of the other provisions of this Agreement will not be affected thereby. If such circumstances arise, the Parties will negotiate in good faith appropriate modifications to this Agreement to reflect those changes that are required by Applicable Law.

23.11Third Persons

Except as expressly provided in this Agreement, nothing herein expressed or implied is intended or will be construed to confer upon or to give any Person not a party hereto any rights to remedies under or by reason of this Agreement.

23.12Remedies

All rights and remedies under this Agreement are cumulative and in addition to other rights or remedies under this Agreement or any Applicable Law.

23.13Calculation of Time Periods

When calculating the period of time within which, or following which, any act is to be done or step taken pursuant to this Agreement, the date which is the reference day in calculating such period will be excluded. If the last day of such period is not a Business Day, the period in question will end on the next following Business Day. Time will be of the essence of this Agreement.

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23.14Conflicts

If there is a conflict or inconsistency between any provision of the main body of this Agreement and any Exhibit to this Agreement, the provision contained in the main body of this Agreement will govern and prevail to the extent of the conflict or inconsistency.

23.15Working Capital Settlement

(a)Dowa hereby acknowledges that, as of the Effective Date the Corporation has positive net working capital that will benefit the Corporation. Exhibit A includes the listing the current assets and current liabilities line items of the Corporation. Following receipt delivery by the Corporation to Dowa and SSMRC Parent of a mandate (special instruction) to make such payment on the Corporation’s behalf, Dowa agrees to pay SSMRC Parent an amount equal to the current assets and surface access deposits (in an amount not to exceed $325,000), net of current liabilities (based on the line items listed in Exhibit A) determined in accordance with GAAP and in a manner consistent with past practice, in each case as of the Effective Date (the “Working Capital Amount”), in a separate settlement by March 31, 2015, unless extended by agreement or in accordance with Section 23.15(c). The Working Capital Amount paid to SSMRC Parent will be counted toward and deemed to be a payment on account of the Earn-In Fee, and Dowa will be credited with such payment immediately upon its payment to SSMRC.

(b)Draft Working Capital Statement. As soon as reasonably practicable following the Effective Date, and in any event within thirty (30) calendar days thereof, the Corporation shall prepare and deliver to Dowa a draft computation (the “Draft Computation”) of the Corporation’s calculation of the Working Capital Amount, in a form consistent with Exhibit A. The Draft Computation shall be prepared in accordance with GAAP and the past practices of the Corporation (so long as such practices are in accordance with GAAP) and shall also include any prepaid amounts that extend beyond one year from the date of this Agreement (the “Working Capital Principles”). From and after the Effective Date until the Determination Date (as defined below), the Corporation and its auditors will make available to Dowa and its auditors, as promptly as is commercially reasonable upon the request of Dowa, such employees and advisors that are directly relevant to the preparation of the calculations reflected in the Draft Computation and all records and work papers specifically referenced in the Draft Computation and such additional documents that are reasonably relevant thereto.

(c)Determination Procedures. Within thirty (30) calendar days after its receipt of the Draft Computation, Dowa may provide the Corporation and SSMRC Parent with a written notice of any disagreement with the Draft Computation setting forth in reasonable detail those items and amounts that Dowa disputes (the “Dispute Notice”); provided, however, that any Dispute Notice may only include objections based on Dowa’s belief that (x) the Draft Computation included assumptions or applied principles that conflict with the Working Capital Principles, this Section 23.15 or the applicable definitions in this Agreement or otherwise was not determined in accordance with the Working Capital Principles, Section 23.15 or the applicable definitions in this Agreement or (y) the Draft Computation contained mathematical errors. If Dowa delivers a Dispute Notice with respect to some, but not all, of the items or amounts included in the Draft Computation within such thirty (30) day period, then Dowa shall be deemed to have agreed with the Corporation’s calculations of all items and amounts set forth in the Draft Computation that were not disputed in such duly and timely delivered Dispute Notice. If no such Dispute Notice is received by the Corporation and SSMRC Parent on or prior to the close of business on the last day of such thirty (30) calendar day period, the Draft Computation and the calculation of Working Capital Amount set forth therein shall be deemed accepted by Dowa. If any such Dispute Notice is timely provided, the Corporation and Dowa shall use their commercially reasonable efforts for a period of thirty (30) days (or

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such longer period as they may mutually agree in writing) to resolve any disagreements with respect to the Draft Computation or the calculation of the Working Capital Amount. If, at the end of such period, they are unable to resolve such disagreements, then the Independent Accounting Firm shall resolve any remaining disagreements. The Corporation and Dowa shall use their commercially reasonable efforts to cause the Independent Accounting Firm to review those items or amounts remaining in dispute as promptly as practicable, but in any event within thirty (30) days of the date on which such Dispute Notice is referred to the Independent Accounting Firm. The Independent Accounting Firm will review only those items and amounts specifically set forth and objected to in the Dispute Notice and resolve the dispute with respect to each such specific item and amount in accordance with the Working Capital Principles. The scope of the disputes to be arbitrated by the Independent Accounting Firm is limited to whether the Draft Computation or the calculation of Working Capital Amount was prepared in a manner consistent with the Working Capital Principles and the applicable definitions in this Agreement, and whether there were mathematical errors in determining the Working Capital Amount, and the Independent Accounting Firm is not to make any other determination. The Independent Accounting Firm’s decision shall be based solely on the relevant work papers and books and records relating to the Corporation and its Subsidiaries and the written submissions by Dowa and the Corporation and their respective representatives and not by independent review. The Independent Accounting Firm may not assign a value greater than the greatest value for such item claimed by either party or smaller than the smallest value for such item claimed by either party. All negotiations pursuant to this Section 23.15 shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules of evidence, and all negotiations and submissions to the Accounting Firm shall be treated as confidential information. The Independent Accounting Firm shall be bound by a mutually agreeable confidentiality agreement. The fees, costs and expenses of the Independent Accounting Firm shall be allocated to SSMRC Parent based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party, as determined by the Independent Accounting Firm (the “Accounting Firm Allocation”). The Accounting Firm Allocation will be settled by SSMRC Parent and Dowa in a manner consistent with such allocation within ten (10) days after the Determination Date. The determination of the Independent Accounting Firm shall be set forth in a written statement delivered to Dowa, the Corporation and SSMRC Parent and shall be final, conclusive and binding on the parties, absent fraud or manifest error. The date on which the Draft Computation and the Working Capital Amount is finally determined in accordance with this Section 23.15 is hereinafter referred to as the “Determination Date.”

23.16Acknowledgement of Prior Distribution

Dowa hereby acknowledges that, prior to the Effective Date, the Corporation received cash proceeds pursuant to the Divestiture in an amount equal to $1,011,752, and subsequent thereto distributed such cash proceeds to SSMRC LuxCo. Dowa further acknowledges and agrees that it has no rights with respect to the cash so distributed.

23.17SSMRC Parent Guarantee

SSMRC Parent hereby absolutely, unconditionally and irrevocably guarantees the prompt and complete performance of all of the terms, covenants, conditions and provisions to be performed by SSMRC LuxCo pursuant to this Agreement, and shall perform such terms, covenants, conditions and provisions upon the default or non-performance thereof by SSMRC LuxCo.

[Signature page follows]

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IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written.

DOWA METALS & MINING CO., LTD.		SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Akira Sekiguchi	By:	/s/ Stephen Orr
	Akira Sekiguchi, President		Stephen Orr, Executive Chairman & CEO
LOS GATOS LUXEMBOURG S. AR. L.		MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Stephen Orr	By:	/s/ Philip Pyle
	Stephen Orr, Manager		Philip Pyle, Director General
OPERACIONES SAN JOSÉ DE PLATA
By:	/s/ Alberto M. Vazquez
	Alberto M. Vazquez, Manager
SERVICIOS SAN JOSÉ DE PLATA
By:	/s/ Alberto M. Vazquez
	Alberto M. Vazquez, Manager

[Signature Page to Unanimous Omnibus Partner Agreement]

EXHIBIT A.

PROPERTY AND ASSETS OF THE CORPORATION

[ATTACHED]

Exhibit A

Minera Plata Real Current Assets and Current Liabilities, Fixed Asset, and Concessions Listing

Current Assets:	As of 10/31/14 (USD)
Cash	360,832
Current asset	14,126
Prepaid expenses	208,000
VAT Receivable	425,511
VAT Receviable Pending	13,536
	1,022,005
Surface Access Deposits	321,740
Total Assets for Working Cap	1,343,745
Current Liabilities:
Accounts payable	(93,694	)
Salaries and wages payable	(21,821	)
Accrued bonus	(25,452	)
Total Liabilities for Working Cap	(140,967	)

Mineral Plata Real Fixed Assets

FF&E

MATERIAL PARA ANAQUELES

PP&E

Tanque Superficial de Concreto

Presa de Concreto

Cisterna Rotoplas

Presa de Concreto

Planta de luz

Vehicles

RAM 2500 ST 4X4 STD

RAM 2500 ST 4X4 AC

RAM 2500 CREW CAB SLT

Adiciones al Equipo

RAM 2500 Crew SLT 4x4

RAM 2500 SLT Regular Cab

RAM 2500 CREW 4X4 (Pick up)

Land Assets

Tierra Prieta Ranch

Las Amapolas Ranch

Santa Ana Ranch

El Rodeo Ranch

La Pila Ranch

La Cueva del Cobrestante Ranch

Bodega de Nucleos Ranch

El Peñasco Ranch

El Peñasco II Ranch

Las Amapolas Sur Ranch

(see supplement detail of owned and leased land/rights on pg 2.)

Minera Plata Real Concessions

	Lote	Title	Hectáreas	Expedición	Expiration
1	Los Gatos	231498	19,711.6889	4-Mar-08	3-Mar-58
2	Los Gatos 2	228950	10,719.5765	22-Feb-07	21-Feb-57
3	Los Gatos 3	231076	27.2846	16-Jan-08	15-Jan-58
4	Mezcalera	228249	4,991.6263	17-Oct-06	16-Oct-56
5	Mezcalera 2 Fracción I	228929	39.2621	21-Feb-07	20-Feb-57
6	Mezcalera 2 Fracción II	228930	26.1402	21-Feb-07	20-Feb-57
7	Mezcalera 2 Fracción III	228931	29.0859	21-Feb-07	20-Feb-57
8	Paula Adorada	223392	40.0000	9-Dec-04	8-Dec-54
9	Gavilana	237137	10.0000	19-Nov-10	18-Nov-60
10	San Luis	236908	16.0000	5-Oct-10	4-Dec-60
11	La Gavilana Fraccion I	237461	44.0000	21-Dec-10	20-Dec-60
12	Los Estados Fraccion I	237694	9.0000	25-Apr-11	25-Apr-61
13	Los Estados Fraccion II	237695	44.0000	25-Apr-11	25-Dec-61
14	Los Gatos 4	238511	52,596.9673	23-Sep-11	22-Sep-61
15	San Luis 2	238694	42.3904	18-Oct-11	17-Oct-61
16	Los Veranos	238573	14,739.8002	23-Sep-11	22-Sep-61
17	San Luis 3	240452	0.0111	23-May-12	22-May-62
			103,086.8335

Owned Properties:

1.La Cueva Ranch, property acquire in terms of the Public Deed Number 12,795, dated August 16, 2011, granted in front of the notary public number 2 of Jimenez District of Chihuahua State, Attorney at Law Leonel Pérez Hinojosa, with a total area 71-30-90 hectares, with a total price of S 22’041,012.00 pesos.

2.Santa Ana Ranch, property acquire in terms of the Public Deed Number 17,338, dated May 19, 2011, granted in front of the notary public number 5 of Hidalgo del Parral of Chihuahua State, Attorney at Law José Sergio Miller Mata, with a total area 301-35-53 hectares, with a total price of S 858’862.74 dollars.

3.El Rodeo Ranch, property acquire in terms of the Public Deed Number 17,389, dated June 6, 2011, granted in front of the notary public number 5 of Hidalgo del Parral of Chihuahua State, Attorney at Law José Sergio Miller Mata, with a total area 253,9300 hectares, with a total price of S 685,611.00 dollars.

4.La Cueva del Cobrestante Ranch, property acquire in terms of the Public Deed Number 12,800, dated August 17, 2011, granted in front of the notary public number 2 of Jimenez District of Chihuahua State, Attorney at Law Leonel Pérez Hinojosa, with a total area 1181-94-52.6280 hectares, with a total price of S 3’017,711.79 dollars.

5.Four parcels of rural properties located in the town called San José del Sitio, Municipality of Satevo, Chihuahua, acquire in terms of the Public Deed Number 16,291, dated June 3, 2010, granted in front of the notary public number 5 of Hidalgo District of Chihuahua State, Attorney at Law José Sergio Miller Mata, with a total area 253-85-29 hectares, with a total price of $ 7’615,587.00 pesos.

Leased Properties:

1.Contract celebrated on August 16, 2014, between MPR and María Esperanza Luevano Flores, for the use of the warehouse located at Industrias No. 6110, Colonia Nombre de Dios of the city of Chihuahua, Chihuahua, with a rent of $20,540.00 pesos plus V.A.T., less withholdings, each month. The term of the contract is for three years mandatory for both parties, counted as from August 15, 2014.

2.Contract celebrated on April 01, 2011, between MPR and Liborio Quezada Trillo, for the use of the house of Núcleos and kitchen of the unnumbered property located in known street of San José del Sitio, Municipality of Satevo, Chihuahua, with a rent of $1,500.00 pesos monthly. The term of the contract is for one year, with the possibility to be postponed for additional periods of one year, provided that payment of rents is up to date and the lessor is given a written notice of its intention to extend the term, at least 30 days in advance upon expiration of each of the terms in question.

3.Contract celebrated on April 01, 2011, between MPR and Sergio Alfonzo Quezada Ramirez, for the use of the house of offices of the unnumbered property located in known street of San José del Sitio, Municipality of Satevo, Chihuahua, with a rent of $2,000.00 pesos monthly. The term of the contract is for nine months, with the possibility to be postponed for additional periods of one year, provided that payment of rents is up to date and the lessor is given a written notice of its intention to extend the term, at least 30 days in advance upon expiration of each of the terms in question.

4.Contract celebrated on October 26, 2014 (sic), between MPR and Víctor Manuel Terrazas Quezada, for the use and enjoyment, as a warehouse of the house occupied as offices of the unnumbered property located in known street of San José del Sitio, Municipality of Satevo, Chihuahua, with a rent of $2,000.00 pesos monthly, counted as from May 26, 2014. The term of the contract is for one year, counted as from October 1, 2013, with the possibility to be postponed for additional periods of one year, provided that payment of rents is up to date and the lessor is given a written notice of its intention to extend the term, at least 30 days in advance upon expiration of each of the terms in question.

5.Contract celebrated on October 26, 2014 (sic), between MPR and Víctor Manuel Terrazas Quezada, for the use of the warehouse of the unnumbered property located in known street of San José del Sitio, Municipality of Satevo, Chihuahua, with a rent of $8,000.00 pesos monthly, counted as from May 26, 2014. The term of the contract is for one year, counted as from October 26, 2013, with the possibility to be postponed for additional periods of one year, provided that payment of rents is up to date and the lessor is given a written notice of its intention to extend the term, at least 30 days in advance upon expiration of each of the terms in question.

6.Contract celebrated on February 25, 2010, between MPR and Leopoldo García Carrillo, for the use of the unnumbered home site in the main street of San José del Sitio, Municipality of Satevo, Chihuahua, with a rent of $4,000.00 pesos monthly. The term of the contract is for six months. Upon expiration of the term, if the lessee continues residing in the leasehold property, the term of the lease will be voluntary and may be terminated by notice given to the other party 15 days in advance, if done by the lessor, and 30 days in advance, if done by the lessee.

Gratuitous Loan Agreements:

1.Contract celebrated on September 15, 2010, between MPR (lender) and David Mariñelarena Mariñelarena and Josefa Socorro Baca Quezada (Borrowers), granting on gratuitous loan a fraction of the rural property called Las Amapolas, located in the town of San José del Sitio of the Municipality of Satevo, State of Chihuahua (249-16- 36.087 hectares) for an indefinite term.

2.Contract celebrated on August 16, 2011, between MPR (lender) and Sergio Morales Armendariz and Rene Morales Armendariz (Borrowers), granting on gratuitous loan a fraction of the rural property of the Hacienda known as “La Cueva del Cobrestante”, located in the town called San José del Sitio, Municipality de Satevo, Chihuahua. (1,574-54-45.128 hectares) for an indefinite term.

3.Contract celebrated on June 3, 2010, between MPR (lender) and Estroberto Mariñelarena Mariñelarena and Lilia Trillo Martínez (Borrowers), granting on gratuitous loan four parcels of rural properties located in the town called San José del Sitio, Municipality of Satevo, Chihuahua, (with a total area 253-85-29 hectares,) for an indefinite term.

4.Contract celebrated on June 6, 2011, between MPR (lender) and Reynaldo Marinelareña Marinelareña and Elva Josefina Baca Quezada (Borrowers), granting on gratuitous loan of 253-93-00 hectares of the rural property called El Rodeo, in the Municipality of Satevo, Chihuahua, for an indefinite term.

5.Contract celebrated on May 19, 2011, between MPR (lender) and Jesús Enrique Sánchez Navarrete and Enrique Sánchez Esparza (Borrowers), and ratified in front of a Notary Public at the same date, granting on gratuitous loan of two fractions with 301- 35-53.478 hectares of total surface of the rural property located in “Santa Ana Ranch” in the Municipality of Satevo, Chihuahua, for a specified period of fifty years.

Temporary Occupancy of Land and Right of Way Agreements:

(a) Susana Baca Villa

1.Temporary Occupancy contract dated August 17, 2011 and ratified before a notary public on the same date. MPR is authorized to carry out mining works on a fraction of the rural property called “Aguaje de Parras”, located in the town of San José del Sitio, Municipality of Satevo, Chihuahua. (2,094-56-02.654 hectares).

2.Temporary Occupancy contract dated August 17, 2011 and ratified before a notary public on September 27, 2011. MPR is authorized to carry out mining works on a fraction of the rural property called “Aguaje de Parras”, located in the town of San José del Sitio, Municipality of Satevo, Chihuahua. (364-00-00 hectares)

3.Right of Way Agreement dated August 17, 2011 and ratified before a Notary Public on the same date. Constitute in favor of MPR a right of way for the establishment of hydraulic piping for water conveyance and laying of power lines, at a fraction of the rural property called Parras Aguaje, located in the Municipality of Satevo, Chihuahua (447-53-79 hectares).

The fourth clause of the temporary occupancy contracts and the third clause of the right of way (easement) contract are modified according with a legal agreement

submitted in front to the Seventh Civil Court of Chihuahua, Chihuahua, file 175/2013, in order to set forth that, as a minimum and on a mandatory basis, MPR shall pay, in reference to the fourth and fifth year of THE CONTRACTS in force, 25% of the value originally contracted, that is the amount of $83,822.66 dollars plus VAT no later than February 15, 2015 for the fourth year and the amount of $83,822.66 dollars plus VAT no later than January 5, 2016 for the fifth year of THE CONTRACTS in force, amounts which MPR must pay even if it does not carries out any exploration or exploitation mining activity on the land.

In the event that MPR desires to carry out mining exploration or exploitation activities that involve the use of machinery, it shall pay the unit prices originally established, which in no case may be lower than 50% of the original area of THE CONTRACTS, and the above referenced minimum payments will be considered as advances.

To guarantee the fulfillment of the pending considerations, MPR will open an account and maintain a sufficient balance in order to make the future payments, depositing in cash the amount of $167,645.31 dollars, which will remain invested in the account 958-9032176 of MPR at Banamex and will may only be withdrawed to effectuate the payments corresponding to the fourth and fifth years of the contracts in force, or else, by virtue of a court order due to default in the payments agreed, and in case that MPR pays directly to the owners the aforementioned amounts.

(b) Esteban Morales Bustillos y Romelia Rivero Chacón

1.Temporary Occupancy contract dated August 17, 2011 and ratified before a notary public on the same day. MPR is authorized to carry out mining works on a fraction of the rural property called “Aguaje de Parras”, located in the town of San José del Sitio, Municipality of Satevo, Chihuahua. (1,971-44-70.128 hectares).

2.Right of Way Agreement dated August 17, 2011 and ratified before a Notary Public on the same date, establishes right of way/easement (access of machinery, people and equipment for mining works, laying of aqueducts, power lines and carting of Minerals) over the rural property fraction called “AGUAJE DE PORRAS” located in San José del Sitio, Municipality of Satevo, Chihuahua (508-15-40.242 hectares)

The fourth clause of the temporary occupancy contracts and the third clause of the right of way (easement) contract are modified according with a legal agreement submitted in front to the Eighth Civil Court of Chihuahua, Chihuahua, file 193/2013, in order to set forth that, as a minimum and on a mandatory basis, MPR shall pay, in reference to the fourth and fifth year of THE CONTRACTS in force, 25% of the value originally contracted, that is the amount of $69,547.34 dollars plus VAT no later than February 15, 2015 for the fourth year and the amount of $69,547.34 dollars plus VAT no later than January 5, 2016 for the fifth year of THE CONTRACTS in force, amounts

which MPR must pay even if it does not carries out any exploration or exploitation mining activity on the land .

In the event that MPR desires to carry out mining exploration or exploitation activities that involve the use of machinery, it shall pay the unit prices originally established, which in no case may be lower than 50% of the original area of THE CONTRACTS, and the above referenced minimum payments will be considered as advances.

MPR undertakes to carry out the drilling of a water well within the owners’ land, in the place indicated by them, with a depth of at least 250 meters and a minimum diameter of four inches, by December 31, 2014 at the latest.

(c) Oscar Andrés Aragón López

1.Temporary Occupancy contract dated July 14, 2011 and ratified before a notary public on July 22, 2011, for twenty years from the date the contract was signed. Authorized MPR to carry out mining works on a fraction of the rural property called “Rancho La Pila”, Municipality of Satevo, Chihuahua (168-39-35 hectares), who agrees to pay the owner the amount of $ 21,049.19 US dollars per year.

(d) Carlos Primitivo Flores

1.Temporary Occupancy contract dated July 14, 2011 and ratified before a notary public on August 19, 2011, for twenty years from the date the contract was signed. Authorized MPR to carry out mining works in the rural property called “El Vallecillo de las Amapolas” in the town of San José del Sitio, Municipality of Satevo, Chihuahua, with an area of 600-22-27 hectares, who agrees to pay the owner the amount of $ 75,027.83 US dollars per year.

Usufruct of Land:

1.Usufruct of Communal Ejido Land agreement ratified in front of a Notary Public on April 13, 2012. MPR is authorized to carry out mining works over a total area of 463-01-36.24 hectares, composed of two parcels, one being communal use land with an area of 450-92-25.19 hectares and the other being collective exploitation land with an area of 12-09-11.05 hectares, both part of the Ejido called LA ESPERANZA, Municipality of Satevo, Chihuahua, for twenty years from the date the contract was signed, who agrees to pay the owner the amount of $ 57,876.70 US dollars per year.

EXHIBIT B.

MAJOR DECISIONS

The following are considered “Major Decisions”, which require Requisite Partner Approval; provided, however that if such Major Decision was included in any Approved Program or Approved Budget, there shall not be a separate requirement to obtain Requisite Partner Approval prior to taking action in respect thereto:

(a)approval of any Program or Budget or Approved Alternative and any decision to proceed with the Development and exploitation of the Project;

(b)termination of this Agreement or the Services Agreement;

(c)approval of the terms of the Dowa Arranged Loan, any Project Financing or any loan from the Partners and any subsequent amendment, supplement, restatement, modification or replacement thereof;

(d)the authorization of financing policies or loans, including the obtaining of credit of any kind (excluding export sales financing);

(e)the timing, nature and amount of Capital Contributions (other than Emergency Capital Calls or Budgeted Capital Calls in respect of Approved Budgets) to be made by the Partners to the Corporation;

(f)authorizing transactions between any Joint Venture Entity and a Partner or an Affiliate of a Partner other than the Services Agreements entered into on the date hereof, and the Offtake Agreement, but for greater certainty, authorizing any amendments to such agreements;

(g)any Expansion, Modification or increase to the Area of Interest;

(h)the establishment of any committee of the Corporation that reports to the Corporation Board or pursuant to which the Corporation Board has delegated any power or responsibility, and such committee’s composition, its powers and authority and its operating rules;

(i)the voluntary surrender or abandonment of the tenements, mineral Claims, licenses or other similar rights by any Joint Venture Entity;

(j)the selection of one or more Approved Alternatives;

(k)any amendment to the Articles or By-laws, including those that purport to: create a new class of securities; alter the voting rights of any existing class of securities; or modify the transfer restrictions applicable to such securities;

(l)any decision in relation to the merger, amalgamation or restructuring of any Joint Venture Entity with any other entity;

(m)the determination of any dividend other than as set forth in Article 15;

(n)the creation of any security interest over any assets of a Joint Venture Entity in favor of any Person other than in connection with the Dowa Approved Loan or in the Ordinary Course of Business to secure Obligations properly approved by the Corporation Board up to $1 million in aggregate;

(o)the appointment of a receiver, liquidator or administrator to any Joint Venture Entity, any proposal to wind up any Joint Venture Entity or make any composition or arrangement with creditors pursuant to Insolvency Laws;

(p)the appointment, removal or replacement of the Auditors of the Joint Venture Entity;

(q)costs, expenditure or commitment in excess of 10% per Expense Category contained in an Approved Budget;

(r)execution, termination, amendment, variation, novation, assignment, extension or waiver of rights under any contract (written or oral) to which the Corporation or any other subsidiary entity is a party:

(i)relating to the purchase and sale of minerals or concentrates;

(ii)with an annual contract value of more than $500,000; or

(iii)with a term of longer than three years;

(s)assumption of liabilities by any Joint Venture Entity, including any of such parties being liable under any guarantee or indemnity, or similar arrangement under which any of such parties may incur liability in respect of the financial obligation of any other Person other than in the Ordinary Course of Business of such Joint Venture Entity in excess of $10 million individually, or in aggregate in any Fiscal Year;

(t)the submission or termination of or a material amendment or variation to a Governmental Authorization by any Joint Venture Entity;

(u)any decision to commence an initial public offering or similar public markets transaction with respect to any Joint Venture Entity (but, for the avoidance of doubt, not SSMRC Parent);

(v)the sale, transfer, lease, assignment, disposal or acquisition of assets (including, without limitation, mining concessions) or any contract to do so by the Joint Venture Entities where the aggregate market value of such assets or the consideration in respect of the sale or acquisition of such assets is in excess of $500,000 individually, or in aggregate in any Fiscal Year;

(w)the commencement or settlement of any litigation, arbitration or other proceedings that will cause, or is likely to cause, the Corporation to incur liabilities, Losses, damages, costs or expenses (excluding legal costs) in excess of $500,000, in aggregate (other than with respect to a dispute among the Parties);

(x)the dissolution, liquidation or approval of an Insolvency Event with respect to any Joint Venture Entity;

(y)the sale of all or substantially all of the assets of any Joint Venture Entity;

(z)the admission of new Partners and the issuance of previously unissued Shares in any Joint Venture Entity from treasury other than as a result of a Transfer permitted pursuant to the terms of this Agreement;

(aa)any decision to suspend Operations for more than six months, or any final shut-down of Operations; and

2

(bb)any change to the Fiscal Year after the initial determination by the Corporation Board.

3

EXHIBIT C.

INITIAL PROGRAM AND BUDGET

[ATTACHED]

Exhibit C

Los Gatos Project

2015- 2016 Feasibility Study Budget

			2015 Fundings
	2014		Q1 2015		Q2 2015		Q3 2015		Q4 2015		2015
Definition Drilling	—		1,000,000		1,500,000		1,500,000		1,000,000		$	5,000,000
Exploration Studies	—		250,000		250,000		250,000		250,000		1,000,000
Ramp Construction	—		500,000		4,000,000		3,000,000		3,000,000		10,500,000
Contingency			81,500		652,000		489,000		489,000		1,711,500
Total Ramp Construction			581,500		4,652,000		3,489,000		3,489,000		12,211,500
Purchase of Rancho La Cueva	—		—		3,500,000		—		—		3,500,000
Studies and Permitting:
New Resource Study	—		—		—		—		—		—
Hydrogeological Studies	—		—		160,000		160,000		180,000		500,000
Geotechnical Studies	—		—		180,000		180,000		240,000		600,000
Metallurgical Studies	—		—		160,000		160,000		180,000		500,000
Environmental Studies	—		—		160,000		160,000		180,000		500,000
Power Line Permitting	—		—		100,000		100,000		200,000		400,000
Final Feasibility Study	—		—		—		—		400,000		400,000
Contingency			—		97,800		97,800		195,600		391,200
Studies and Permitting Total			—		857,800		857,800		1,575,600		3,291,200
General and Administrative
Concession Cost	—		100,000		—		100,000		—		200,000
Property Taxes	—		—		70,000		—		—		70,000
Surface Land Access	—		150,000		—		70,000		—		220,000
Labor, Camp, Admin	—		125,000		125,000		125,000		125,000		500,000
Legal Costs	—		37,500		37,500		37,500		37,500		150,000
Bookkeeping Costs	—		37,500		37,500		37,500		37,500		150,000
Additional Labor	—		45,000		145,000		145,000		145,000		480,000
Management Fee & Direct Charges	—		150,000		150,000		150,000		150,000		600,000
Dowa Employee Charges	—		50,000		50,000		75,000		100,000		275,000
Kornferry Recruitment Costs	—		100,000		—		—		—		100,000
Dowa CES Costs	649,661		—		—		—		—		—
Contingency			36,950		36,950		43,200		49,450		166,550
Total General and Administrative	649,661		831,950		651,950		783,200		644,450		2,911,550
Total Costs	649,661		2,663,450		11,411,750		6,880,000		6,959,050		27,914,250
Unallocated Contingency	—										—
Total Costs & Contingency	$	649,661	$	2,663,450	$	11,411,750	$	6,880,000	$	6,959,050	$	27,914,250

Note: Budget Catagories in Bold and Italics

Exhibit C

Los Gatos Project

2015- 2016 Feasibility Study Budget

	2016 Fundings												Contingency
	Q1 2016		Q2 2016		Q3 2016		Q4 2016		2016		Total		0.0%		16.3%	25.0%
Definition Drilling	—		—		—		—		$	—	$	5,000,000	$	—
Exploration Studies	250,000		250,000		250,000		250,000		1,000,000		2,000,000		—
Ramp Construction	4,000,000		4,000,000		2,500,000		—		10,500,000		21,000,000				3,423,000
Contingency	652,000		652,000		407,500		—		1,711,500		3,423,000
Total Ramp Construction	4,652,000		4,652,000		2,907,500		—		12,211,500		24,423,000
Purchase of Rancho La Cueva	—		—		—		—		—		3,500,000		—
Studies and Permitting:
New Resource Study	—		—		100,000		200,000		300,000		300,000		—
Hydrogeological Studies	180,000		160,000		160,000		—		500,000		1,000,000				163,000
Geotechnical Studies	100,000		50,000		50,000		—		200,000		800,000				130,400
Metallurgical Studies	200,000		300,000		500,000		—		1,000,000		1,500,000		—
Environmental Studies	180,000		160,000		160,000		—		500,000		1,000,000				163,000
Power Line Permitting	100,000		—		—		—		100,000		500,000				81,500
Final Feasibility Study	400,000		400,000		400,000		800,000		2,000,000		2,400,000				391,200
Contingency	156,480		125,510		125,510		130,400		537,900		929,100
Studies and Permitting Total	1,316,480		1,195,510		1,495,510		1,130,400		5,137,900		8,429,100		—		929,100	—
General and Administrative
Concession Cost	150,000		—		150,000		—		300,000		500,000		—
Property Taxes	—		70,000		—		—		70,000		140,000		—
Surface Land Access	150,000		—		70,000		—		220,000		440,000		—
Labor, Camp, Admin	125,000		125,000		125,000		125,000		500,000		1,000,000		—
Legal Costs	37,500		37,500		37,500		37,500		150,000		300,000		—
Bookkeeping Costs	37,500		37,500		37,500		37,500		150,000		300,000		—
Additional Labor	162,500		162,500		162,500		162,500		650,000		1,130,000		—
Management Fee & Direct Charges	150,000		150,000		150,000		150,000		600,000		1,200,000				195,600
Dowa Employee Charges	100,000		75,000		50,000		50,000		275,000		550,000					137,500
Kornferry Recruitment Costs	—		—		—		—		—		100,000		—
Dowa CES Costs	—		—		—		—		—		649,661		—
Contingency	49,450		43,200		36,950		36,950		166,550		333,100
Total General and Administrative	961,950		700,700		819,450		599,450		3,081,550		6,642,761		—		195,600	137,500
Total Costs	7,180,430		6,798,210		5,472,460		1,979,850		21,430,950		49,994,861		—		4,547,700	137,500
Unallocated Contingency									—		—
Total Costs & Contingency	$	7,180,430	$	6,798,210	$	5,472,460	$	1,979,850	$	21,430,950	$	49,994,861

Note: Budget Catagories in Bold and Italics

EXHIBIT D.

FORM OF OFFTAKE AGREEMENT

[ATTACHED]

Exhibit D

Form of Offtake Agreement

This Agreement is hereby agreed as of MM/DD/YY.

Between:	DOWA METALS & MINING CO., LTD.
	14-1, Sotokanda, 4-Chome
	Chiyoda-ku, Tokyo 101-0021
	JAPAN
	(hereinafter called “Buyer”)
	and
	MINERA PLATA REAL, S. DE R.L. DE C.V.
	(hereinafter called “Seller”)

Buyer agrees to buy, accept delivery of and pay for and Seller agrees to sell and deliver to Buyer Los Gatos Zinc Concentrates which will be produced from Los Gatos Mine, Chihuahua state, the United Mexican States under the following terms and conditions.

1.DEFINITIONS

(a)The terms “tonne” and “metric ton” mean 2,204.62 pounds or 1,000 kilograms, wet or dry basis as specifically stated herein.

(b)The term “unit” used in relation to any quantity of concentrates means 1% of the net dry weight thereof.

(c)The abbreviation “WMT” means wet metric ton(s).

(d)The abbreviation “DMT” means dry metric ton(s).

(e)Amounts of money stated in US$ and US￠ (Dollars and Cents) and references to the lawful currency to the United States of America.

(f)The terms “ounce” and “troy ounce” mean 31.1035 grams.

(g)The terms “kg” means kilogram.

(h)The terms “CIF” means CIF as defined in Incoterms published in 2010

(i)The terms “IMSBC” means the International Maritime Solid Bulk Cargoes Code for Safe Practice as amended from time to time.

(j)The terms “PPM” means parts per million.

(k)The terms “Calendar Year” means any year commencing January 1 and ending December 31.

(l)The terms “Date of Arrival” means the date of tender of the Notice of Readiness for discharge

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of the carrying vessel is tendered at the port of discharge.

(m)The terms “laytime” means the number of weather working days (or part thereof) in which Buyer has to discharge each shipment of concentrates from the carrying vessel and is to be calculated by dividing the number of wet tonnes of Bill of Lading discharged for each shipment by the discharge rate guaranteed by Buyer.

(n)The terms “demurrage” means the amount payable by Buyer to Seller for not discharging the carrying vessel within the laytime allowed.

(o)The terms “dispatch” means the amount payable by Seller to Buyer for discharging the carrying vessel prior to the termination of laytime.

(p)The terms “business day” means a calendar day excepting for Saturday, Sunday or holidays in Japan, Mexico and the USA.

(q)The term “smelter” means Buyer’s Iijima zinc smelter in Akita, Japan.

(r)The term “Partner Agreement” means that certain Unanimous Omnibus Partner Agreement by and among Buyer, Seller, [OpCo], [EmployerCo], Los Gatos Luxembourg S. ar. L. and Sunshine Silver Mining & Refining Corporation, dated as of [ ], 2014.

2.QUALITY

(a)In this Agreement the terms “Concentrates” shall mean Los Gatos zinc concentrates produced by Seller at its own Los Gatos Mine in Chihuahua, Mexico..

It is estimated that the typical analysis of Concentrates to be generally in accordance with Seller’s assays as follows; (Note: To be determined during Feasibility Study in 2015-2016)

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Zn	%
Au	gram/dmt
Ag	gram/dmt
Pb	%
Cu	%
Fe	%
S	%
As	%
F	PPM
Sb	%
Hg	PPM
Cd	%
Al2O3	%
Bi	%
MgO	%
SiO2	%
CaO	%
BaSO4	%
Sr	%
Insol.	%
Ni	PPM
Co	PPM

In the event that the composition of Concentrates sold hereunder departs from the composition described above, Buyer and Seller will negotiate in good faith with full disclosure to overcome any financial hardship or technical difficulty which Buyer may suffer as a result thereof.

(b)The moisture content of each shipment of Concentrates shall not exceed the transportable moisture limit provided in the “IMO” Bulk Cargo Code then in effect.

3.QUANTITY

(a)During the term of this Agreement, Seller shall sell and Buyer shall purchase all of the annual Concentrates production.

(b)To establish the quantity to be shipped pursuant to this Agreement during a given Calendar Year (hereinafter called a “Shipment Year”), Seller shall advise Buyer of the estimated Concentrates production for that Shipment Year by October 31 of the immediately preceding Calendar Year and Seller shall then declare the quantity of Concentrates (hereinafter called “Contractual Quantity”) to be shipped during such Shipment Year by November 30 of the immediately preceding Calendar Year. If there appears to be any substantial change in the estimated Concentrates production or the Contractual Quantity as declared in accordance

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with the above, Seller shall immediately give notice to Buyer of such change and both parties shall attempt in good faith to resolve any problems raised thereby.

(c)Notwithstanding the foregoing, all quantities of Concentrates declared pursuant to this Agreement shall be plus or minus 10% at Seller’s option.

4.DURATION / NEGOTIATION

(a)This Agreement shall be effective from the date hereof and shall remain in full force and effect until MM/DD/YY (the “Initial Period”). Thereafter it shall continue from year to year until Buyer gives a written notice of the termination of this Agreement to the other party not less than twelve (12) months by the end of the Initial Period or the then current Calendar year, as the case may be. Notwithstanding anything in this Agreement to the contrary this Agreement may be terminated pursuant to Section 13.1 of the Partner Agreement in accordance with the provisions set forth therein.

(b)Subject to the foregoing, the intention of both parties is for the contract to continue after the Initial Period as long as Concentrates are produced.

(c)Commercial terms, as provided in Clauses 9, 10, 11 and 12 shall be negotiated in good faith and agreed between Buyer and Seller taking into consideration the prevailing world market for zinc concentrate in which a shipment of Concentrates are scheduled, or such other time as may be agreed; provided, however, in the case of 20XX the applicable commercial terms shall be as set forth in Appendix A attached hereto. Both parties shall consider not only the prevailing international terms and conditions also those in contracts delivered to Japan.

(d)Notwithstanding the foregoing, Buyer and/or Seller may request additional commercial terms other than those referred to in Clauses 9, 10, 11 and 12 for negotiation together with them, if such new additional terms are justified as competitive International and Japanese market conditions for zinc concentrates with volumes, specifications and other terms and conditions similar to those in this Agreement.

5.SHIPMENT

(a)Seller shall arrange and pay for shipment in bulk of Concentrates, as specified in Clause 3, to the port of discharge nominated by Buyer for each shipment in accordance with Clause 6.

(b)Seller shall deliver Concentrates on a vessel which shall meet berth accommodation restrictions details in Appendix B attached hereto.

6.DELIVERY

(a)Each shipment of Concentrates shall be delivered in bulk by Seller to Buyer CIF FO (Free Out)

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Akita, Japan.

(b)Buyer shall be responsible for arranging and shall pay all costs of discharge of Concentrates from the carrying vessel’s hold(s).

(c)The carrying vessel used by Seller shall be classified highest Lloyd’s registration or equivalent and shall be no more than fifteen (15) years of age (provided, however, the age of the nominated vessel exceeds fifteen (15) years, Buyer will accept the vessel with her age of not more than twenty (20) years subject to the condition that any extra insurance on cargo by reason of age shall be for the Seller’s account), single deck, bulk carrier or flush-tween, otherwise suitable to discharge the Concentrates by grab having fully flat and unobstructed tank top without any protruding structures which might be hindrance for the performance of normal grab discharge and/or the use of payloaders in holds. Spout trimming must be observed at loading port, not leveling. No Concentrates to be stowed in bridge spaces, deep tanks or other spaces inaccessible to mechanical grabs for discharging. Any extra expenses incurred in discharging by reason of stowage in excepted places shall be for account of Seller and any time so lost and above the usual time required for grab discharge is not to count as laytime.

(d)Seller has responsibility to perform the delivery of the Concentrates to the port of discharge nominated by Buyer at Seller’s own costs, even in case of loss or damage to the Concentrates or expense if caused by insolvency or financial default of owners, managers, charterers, or operators of the carrying vessel.

(e)For discharge at Akita, Japan, Buyer guarantees a discharge rate of 2,500 wet tonnes per weather working day of 24 consecutive hours, Sundays, legal, local and customary holidays excepted unless used. If used, actual time used to count as laytime used. Laytime shall commence at 08:00 a.m. of the immediately next working day after the carrying vessel has tendered Notice of Readiness for discharge, unless sooner commenced, whether in berth or not, but only after free pratique is granted. Notice of Readiness is to be tendered during office hours only from 08:00 a.m. to 05:00 p.m., Monday through Friday, and 0:900 a.m. to 12:00 p.m. on Saturday that the performing vessel is ready in all respects to start discharging operations, whether in berth or not, after it has arrived at the port of discharge.

(f)Demurrage or dispatch money (as applicable) at the port of discharge shall be for Buyer’s account at those rates in Seller’s Charter Party for each shipment, provided that such rates are approved by Buyer, prior to each shipment.

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7.TITLE AND RISK

Title to the Concentrates shall pass from Seller to Buyer upon Seller’s receipt of the first provisional payment.

Risk of loss or damage to the Concentrates shall pass from Seller to Buyer when the Concentrate passes over the carrying vessel’s rail at the port of loading.

8.PRICE

The purchase price payable by Buyer to Seller for Concentrates sold and delivered hereunder, shall be the sum of the amounts payable for metal contained in Concentrates determined pursuant to Clauses 4(c), 9 and 11 of this Agreement, less the applicable deductions determined pursuant to Clauses 4(c) and 10 of this Agreement.

9.METAL PAYMENT

Metal payment and metal price to be applicable for the shipments in each Calendar Year shall be agreed between Buyer and Seller in accordance with Clause 4 of this Agreement.

10.DEDUCTIONS

TREATMENT CHARGE AND ESCALATORS / DE-ESCALATORS

The treatment charge and escalators/de-escalators to be applicable for the shipments in each Calendar Year shall be agreed between Buyer and Seller in accordance with Clause 4 of this Agreement.

PENALTIES

Penalties to be applicable for the shipments in each Calendar Year shall be agreed between Buyer and Seller in accordance with Clause 4 of this Agreement.

11.QUOTATIONAL PERIOD

The quotational period to be applicable for the shipments in each Calendar Year shall be agreed between Buyer and Seller in accordance with Clause 4 of this agreement.

12.SETTLEMENT PAYMENT

(a)All invoices shall be prepared and issued by Seller in US$. All payments shall be made by telegraphic transfer to such banks as Buyer and Seller, as the case may be, shall designate from time to time.

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(b)Seller shall present the following shipping documents to Buyer, not later than seven (7) business days after the date of each shipment of Concentrates at the port of loading:

(i)Full set of negotiable clean on board Bills of Lading showing fFreight Pre-paid, made out to the order of Buyer and endorsed in blank.

(ii)The original Certificate of Insurance duly endorsed by Seller to Buyer

(iii)Seller’s Weight and Assay Certificate

(iv)Seller’s Provisional Invoice based on shipped weight, Seller’s provisional assays and prices upon the last market day prior to the date of Bills of Lading.

The payment details to be applicable in each Calendar Year of shipments shall be agreed between Buyer and Seller in accordance with Clause 4 of this Agreement.

(c)For each shipment, payment of the balance due to Seller will be made three (3) business days after presentation of Seller’s final invoice based on actual weight determined in accordance with Clause 14, final assays determined in accordance with Clause 15 and final price determined in accordance with Clause 8, 9, 10 and 11. If the final price in Seller’s final invoice is lower than the provisional payment, Seller shall remit to Buyer by telegraphic transfer within three (3) business days after presentation of Seller’s final invoice, the excess of the provisional payment received by Seller.

(d)Total and Partial loss:

(i)Should a part of any shipment of Concentrates be lost or damaged after loading aboard the carrying vessel and before completion of weighing, sampling and determination of moisture in accordance with Clause 14, final settlement will be made as soon as all the necessary details are available based on Seller’s provisional invoice weight and the agreed assays as provided in Clause 15 on that part of the Concentrates which has been safely delivered and otherwise in accordance with the terms of this Agreement.

(ii)Should shipment of Concentrates be lost or damaged after the risk of loss or damage passes from Seller to Buyer, then final settlement will be made based on Seller’s provisional invoice weight and assays and the terms provided in Clause 8 hereof.

(iii)For the purpose of determination of the quotational period in case of total loss or damage to Concentrates, the carrying vessel will be deemed to have arrived at the port of discharge 30 days after the date of Bill of Loading.

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13.INSURANCE

(a)Seller at its own expense shall arrange and place marine insurance on each shipment with the internationally reputable and first-rate insurance company.

Such insurance shall:

(i)Be placed provisionally for the amount of 110% of the CIF value determined at the time of shipment subject to the adjustment at 110% of the final CIF value determined in accordance with Clauses 8, 9, 10, 11, 12, 14 and 15 of this Agreement.

(ii)Be in favour of Buyer, giving Buyer the right to claim and collect from the underwriters. Buyer’s obligation to pay for Concentrates pursuant to this Agreement shall not change or be affected by any insurance claim as long as the insurance is duly placed by Seller in accordance with this Clause of this Agreement.

(iii)Cover Concentrates against all risks of any physical loss or damage from any cause from the time when they shall have epassed the ships rail at the port of loading until the final destination of receiving smelter.

(iv)Include the following conditions:

Institute Cargo Clause (A) 1/1/82. War risks subject to Institute War Clauses (Cargo) 1/1/82, the risks of Strikes, Riots and Civil Commotions subject to Institute Strikes Clauses (Cargo) 1/1/82, also cover the risks of heat and spontaneous combustion howsoever caused, but exclude the claims for normal shortage in the ordinary course of transit.

(b)Vessels chartered by Seller shall comply with the London Institute Classification Clause.

14.WEIGHTING, SAMPLING AND DETERMINATION OF MOISTURE

(a)Weighing, sampling and determination of moisture of Concentrates shall be carried out immediately after discharge of from the carrying vessel at Buyer’s risk and expense.

(b)Weighing and sampling shall be carried out in lots of approximately 500 WMT each or as may be mutually agreed between Seller and Buyer and the moisture content of each lot shall be determined separately.

Each lot shall form a separate and complete delivery for the purpose of this Agreement.

Each sample shall be delivered into 6 parts — two each for Buyer and Seller, one for umpire analysis, and one to be held in reserve by Seller’s nominee.

(c)Seller shall have the right to be represented at the carrying vessel’s discharge, weighing, sampling and determination of moisture at its own expense.

15.ASSAYS

(a)From the samples taken from each lot in accordance with Clause 14, the assays of metal contents shall be determined independently by Buyer and Seller or their respective nominees in accordance with international practice.

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(b)Within 45 calendar days after completion of discharge at the port of Akita, Japan, Buyer and Seller notify each other that they are ready to exchange the results of their respective assays. Provided, however, that the contingency may keep Buyer or Seller from being ready to exchange the results within such 45 days, the party affected shall notify the other party of such case immediately and the parties shall discuss and agree newly the time of the exchange on the specific shipment.

The initiative to notify should be taken by either party immediately when its results are available.

(c)The assay results on the laboratory Certificate of Analysis shall then be exchanged between Buyer and Seller by registered crossing mail or as otherwise agreed.

(d)Should be the difference between Buyer’s and Seller’s results for a lot be not more than:

Cadmium	:	%
Iron	:	%
Arsenic	:	%
Mercury	:	PPM
Fluorine	:	PPM

then the exact mean of the 2 results shall be taken as the agreed assay and shall govern for all purpose herein.

If the difference between Buyer’s and Seller’s assay results for a lot is greater than the aforesaid limits, unless Buyer and Seller agree to average the said difference (in which event that assay shall be conclusive in respect of the relevant lot), the samples of material taken from the relative lot for Umpire analysis in accordance with Clause 14, shall be sent for Umpire analysis to:

SGS NETHERLAND B.V.

Malledjik 18

Postbus 200

3200 AE Spijkenissse

THE NETHERLANDS

or

Alfred H. Knight International Ltd.

Eccleston Grange

Prescot Road

St. Helens

Merseyside WA10 3BQ

England

or

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Alex Stewart International Corporation

21 Sefton Business Park

Netherton, Liverpool

Merseyside

L30 1RD

England

acting in rotation, or any mutually acceptable laboratory(ies).

(e)Should the umpire assay falls between the results of the two parties, the arithmetical mean of the umpire assay and the assay of the party whose results are nearer to the umpire’s shall be taken for final settlement. Should the umpire assay falls outside the exchanged results, the middle of the 3 (three) results shall be final. If the umpire assay coincides with the result of either of the two parties or is the exact mean of the exchanged result, the umpire assay shall be final.

The cost of the umpire assay shall be borne by the party whose result is farthestr from the umpire result. The cost of the umpire assay shall be borne equally by both parties when the umpire assay is the exact mean of the exchanged results.

16.WASTE DISPOSAL AND HEALTH AND SAFETY OF WORKERS

(a)Buyer shall be responsible for all costs and liabilities of waste disposal and worker health and safety related to Concentrate arising after arrival at the Port of Akita, Japan, and Buyer shall defend, indemnify and hold Seller harmless against any claims made against Seller and costs incurred by Seller as a result of any failure by Buyer to discharge that responsibility.

(b)Seller shall be responsible for all costs and liabilities of waste disposal and worker health and safety related to Concentrate arising before arrival at the Port of Akita, Japan, and Seller shall defend, indemnify and hold Buyer harmless against any claims made against Buyer, and costs incurred by Buyer as a result of any failure by Seller to discharge that responsibility.

17.FORCE MAJEURE

(a)Should Seller be prevented form making any shipment or delivery hereunder or Buyer be prevented from taking delivery of or from treating any cConcentrates as a result of any governmental acts, regulations or directions, refusal of any necessary export or import licenses: outbreak of a state of emergency, act of God, war, unrest, warlike hostilities, shortage of raw materials, breakdown of machinery, subcontractors or suppliers, inability to obtain necessary labor, engineering or parts, civil commotions embargoes, blockades, riots, epidemics, storms, fires, floods, earthquake, tempest, hurricane, typhoon, accident, delays en route, perils of the

10

sea or other natural or man-made catastrophes, strikes, lockouts or any other cause or causes (the “Force Majeure Event”) beyond the reasonable control of the party so prevented (the “Affected Party”), then provided the Affected Party:

(i)give prompt written notice to the other party of the nature of the Force Majeure Event; and

(ii)has taken all proper precautions, due care and reasonable alternative measures with the object of avoiding the effects of the Force Majeure Event and of carrying out its obligations hereunder (but nothing herein shall require the Affected Party to settle or compromise a labor dispute except on terms satisfactory to itself),

the shipment and/or deliveries which are or will be affected by the Force Majeure Event shall be suspended during the period in which the Force Majeure Event continues; provided that should a shipment be suspended in accordance with this clause for more than six (6) months either party may at its option cancel that shipment.

(b)Notwithstanding anything contained therein, in the event of Buyer’s declaring the Force Majeure Event, it will not apply to Concentrates in transit on board carrying vessel or which pricing has been established. However, in such event Seller and Buyer shall endeavor to resolve Buyer’s difficulties to perform its obligation under this Agreement.

18.ARBITRATION

Any disputes, controversy or claim arising out of or in connection with this Agreement or the breach, termination or validity thereof, which cannot be amicably resolved by the parties within 60 calendar days after receipt by one party of written notice from the other party that such a controversy or claim exists shall be settled by final and binding arbitration conducted in the English language in New York in accordance with the Rules of Concentration and Arbitration of the International Chamber of Commerce by three arbitrators appointed one by Seller, one by Buyer and the third by the first two arbitrators.

If either or both Seller or Buyer fails to appoint an arbitrator within 60 calendar days after receiving notice of the commencement or arbitration proceedings, or if the two arbitrators within 14 calendar days after they have been chosen failed to appoint the third arbitrator, the International Court of Arbitration of the International Chamber of Commerce shall, upon request of either or both of Buyer and Seller, appoint the arbitrator or arbitrators required to complete the arbitral tribunal.

The parties agree that the Arbitration Award of the arbitral tribunal shall be:

(i)conclusive, final and binding upon the parties; and

(ii)the sole and exclusive remedy between the parties regarding any and all claims and

11

counterclaims presented to the arbitral tribunal.

All notices to be given in connection with the arbitration shall be as provided in Clause 22 of this Agreement.

The Arbitration Award shall be made and shall be payable in US$ only. The Arbitration Award shall also include the fixing of the expense of the arbitration and the assessment of the same, as is appropriate in the parties hereto. Each party shall otherwise bear its cost of its respective legal fees, witnesses, depositions and other out-of —pocket expenses incurred in the course of arbitration.

In the event either party to this Agreement commences legal proceedings to enforce the Arbitration Award, the expense of such litigation (including reasonable attorney’s fees and costs of court) shall be borne by the party not prevailing therein.

19.SUSPENSION OF QUOTATIONS

If the event of the price quotations specified under this Agreement ceasing to exist, ceasing to be published by the “Metal Bulletin” and/or ceasing to be the representative basis on which majority of sales of zinc concentrates in Japan are made, both Buyer and Seller will immediately consult together to agree on a pricing basis acceptable to both parties in order to secure the continuance of this Agreement.

Failing such agreement the provision of Clause 18 shall apply and the arbitral tribunal shall determine a fair and reasonable price for Concentrates.

20.EXEMPTION FROM LIABILITY AND OBLIGATION

In case Buyer decides to withdraw from the zinc smelting business for any reason whatsoever, the liability and obligation of Buyer to take delivery of Concentrates under this Agreement shall be released and discharged, except for Concentrates in transit to discharging port. The liability and obligation of Seller to deliver Concentrates to Buyer under this Agreement shall be released and discharged when Seller decides to close permanently the Los Gatos Mine for any reason whatsoever.

Seller or Buyer who decides to close the Los Gatos Mine or to withdraw from the zinc smelting business, as the case may be, shall notify the other party of such effect at least six (6) months prior to such closure or withdrawal.

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21.TARIFFS, TAXES AND DUTIES

Any export tax or duty, whether existing or new, levied in the United Mexican States shall be borne by Seller. Any tariffs and duties, whether existing or new, on Concentrates and contained metal or on commercial documents relating thereto imposed in Japan shall be borne by Buyer.

22.GOVERNING LAW

This Agreement shall be governed by and constructed in all respects in accordance with the laws of the State of New York, U. S. A. (without giving effect to internal principles of conflicts of laws). The application of the United States Convention on Contracts for the International Sale of Goods is hereby excluded from this Agreement.

23.NOTICES

Any notice permitted or required to be given hereunder shall be validly given if in written and sent to the party to which the notice is directed at the address set out below:

Buyer

DOWA METALS & MINING CO., LTD.

14-1, Sotokanda, 4-Chome

Chiyoda-ku, Tokyo 101-0021

JAPAN

Seller

or, in either case, such other address as may be notified by the relevant party to the other. Notices given by first class mail shall be deemed to have been delivered when received. Notices sent by facsimile or electronic mail shall be deemed to have been received upon completion of successful transmission if sent during normal office hours at the place of receipt. Any facsimile or electronic mail transmitted outside of normal office hours at the place of receipt shall be deemed to have been received on the next Business Day.

24. ASSIGNMENT

No right or obligation or either party under this Agreement is assignable without the prior written consent of the other, and any purported assignment without such consent shall be void.

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25.GENERAL CLAUSES

(a)The provisions set out in this Agreement are exclusive and in lieu of all other warrantees, conditions, guarantees, representations and similar obligations, express or implied by fact or by law, including any statute ore regulation, by custom or trade usage, or by any course of dealing, including but not limited to any implied warranties or conditions of merchantability or fitness for purpose or for a particular purpose, all of which warranties, conditions, guarantees, representations and similar obligations are expressly disclaimed by Seller.

(b)The terms and conditions of this Agreement and the settlement information shall be kept confidential by both parties, except insofar as disclosure is required to royalty payees, by law or the rules of any stock exchange, in connection with any financing or issuance of securities by Seller or Buyer, or deemed appropriate in connection with communication to shareholders or securities analyst.

(c)No amendment to this Agreement is valid or binding upon the parties, unless it is in writing and executed by parties

(d)All provisions of this Agreement are severable and no provision is affected by the invalidity of any other provision, except to the extent that invalidity also renders that other provision invalid. If any provision is contrary to any law, the parties agree to observe and perform all the provisions of this Agreement as if that unlawful provision were not contained in this Agreement

(e)No approval, consent or waiver by either party to or of any breach by the other party in the performance or observance of its obligations under this Agreement is an approval, consent or waiver to or of any other breach or continuing breach. Failure by either party to complain of any breach by other party in the performance or observance of its obligations under this Agreement, irrespective of how long the breach continues, is not a waiver of the rights of either party under or relating to this Agreement. All approvals, consents, and waivers given by either party are not enforceable, unless in writing and signed by that party

(f)This Agreement inures to the benefits of, and is binding upon each of the parties and their respective successors

(g)This Agreement, together with the Partner Agreement, is the complete and entire agreement between the parties with respect to the purchase and sale of Concentrate. All representations, warranties, conditions, terms, agreements, understandings and communications given or made before the date of this Agreement and whether written or oral, are not of legal effect

(h)If a remedy for breach of this Agreement by either party is specified in this Agreement,

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that remedy is exclusive. Otherwise the rights and remedies available to a party under the law governing this Agreement are applicable

(i)The obligation to defend, indemnify and hold harmless a party under this Agreement includes the obligation to pay for all reasonable investigation costs and reasonable legal and expert fees and disbursements incurred by the indemnitor and the indemnitee in relation to the subject matter of the indemnification. The right of an indemnitee to be defended, indemnified and held harmless under any indemnity contained in this Agreement in respect of a claim made by a third person is subject to the conditions that:

(i)the indemnitee gives to the indemnitor prompt notice of the claim,

(ii)the indemnitor may select and instruct counsel in the defense of settlement of the claim and may manage the litigation in respect thereof,

(iii)the indemnitee shall give the indemnitor, and counsel selected by it, all documents and information in the possession of indemnitee that are relevant to the defense or settlement of the claim, and shall render to the indemnitor and that counsel reasonable assistance in relation to the defense or settlement of the claim, and

(iv)the indemnitee shall not make any admission of liability, or make any settlement, or do any act, that could reasonably be expected to be prejudicial to the successful defense or favorable settlement of the claim, without prior written consent of the indemnitor or counsel selected by it.

The indemnitor shall have the right to settle the claim on terms that require only the payment of money and that are not otherwise prejudicial to the indemnitee

(j)This Agreement may be executed in one or more counterparts, each of which shall be considered an original for all purposes. This Agreement shall be deemed to have been executed by all parties when each such party has executed this Agreement or a counterpart thereof and delivered said executed Agreement (or counterpart) to the other party

(k)Execution of this Agreement by a party may be evidenced by said party transmitting by facsimile to the other party a copy of the signature page showing execution by the transmitting party. In such event, transmission by facsimile shall be the equivalent of the delivery to the other party of a signed original of this Agreement

IN WITNESS WHEREOF, the parties here to have caused this Agreement to be signed by their respective duly authorized representatives in duplicate as of the day and year first above written.

15

SELLER: MINERA PLATA REAL, S. DE R.L. DE C.V.

BUYER: DOWA METALS & MINING CO., LTD.

16

APPENDIX A

Date:     , 20XX

MEMORANDUM OF AGREEMENT

Minera               , SELLER and Dowa Metals & Mining Co., Ltd., BUYER, hereby agree to the following 20XX terms and conditions for the sales and purchase of Los Gatos zinc concentrate.

1.Material: Flotation zinc concentrate produced by Minera              , in Mexico assaying typically as follows.

Zn	%
Au	g/dmt
Ag	g/dmt
Pb	%
Cu	%
Fe	%
S	%
As	%
F	ppm
Sb	%
Hg	ppm
Cd	%
Al2O3	%
Bi	%
MgO	%
SiO2	%
CaO	%
BaSO4	%
Sr	%
Insol.	%
Ni	ppm
Co	ppm
Ge	ppm

2.	Quantity:	dmt plus/minus 10% at Seller’s option
3.	Shipment:	Spread with XX shipments in approx. 5,500 wmt/shipment in 20XX
4.	Delivery:	CIF FO Akita
5.	Treatment charge:	US$ XXX.XX/dmt based on an applicable zinc price of US$ X,XXX/mt
6.	Scale:	US$ 0.XX/dmt for each US$ 1.00/mt increase in the zinc price over US$X,XXX/mt
		US$ 0.XX/dmt for each US$1.00/mt increase in the zinc price between US$X,XXX-X,XXX/mt

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		US$ 0.XX/dmt for each US$1.00/mt decrease in the zinc price below US$ X,XXX/mt
7.	Metal Payment:	Zn 85% with minimum deduction of 8 units at LME SHG settlement price published in London Metal Bulletin.
		AgDeduct X toz/mt and pay for XX% of the remaining silver content at London Silver price published in London Metal Bulletin.
8.	Penalty:	FeTo be discussed (Free if below 8.0%: reference purpose only)
		AsTo be discussed (US$3.00/0.1% above 0.1%: reference purpose only)
		FTo be discussed
9.	Quotational Period:	To be discussed
10.	Settlement:	90% provisional payment on the 3rd day after the arrival of vessel at Akita Port Final when all necessary data are known
11.	Other Terms and Conditions: To be discussed and agreed later.

MINERA                         .S.A.DE C.V.                                DOWA METALS & MINING CO., LTD.

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APPENDIX B

FACILITIES OF PORT OF DISCHARGE FOR CONCENTRATES

DISCHARGING PORT	SMELTER	BERTH CONDITIONS & ACCOMMODATION
Akita	Iijima			Gaikou Berth
		Draft	:	11.5 Meters Max.
		LOA	:	185 Meters Max.
		Beam	:	25 Meter Max.
		DWT	:	50,000 MT Max.

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EXHIBIT E.

FORM OF GENERAL SERVICES AGREEMENT

[ATTACHED]

EXECUTION VERSION

SERVICES AGREEMENT

This Services Agreement (this “Agreement”) is made effective as of [       ] (the “Effective Date”) by and among Minera Plata Real, S. de R.L. de C.V., a Mexico variable capital company (a “Sociedad De Responsabilidad Limitada De Capital Variable” in Spanish), incorporated under the laws of Mexico (“Corporation”), Operaciones San José de Plata, a S. de R.L. de C.V., a Mexico variable capital company (the “Operator”) and Sunshine Silver Mining & Refining Corporation, a Delaware corporation (“SSMRC”). Corporation, the Operator and SSMRC are herein individually referred to as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, the Operator has been designated as the Operator pursuant to the Unanimous Omnibus Partner Agreement, effective as of January 1, 2015, by and among SSMRC, Dowa Metals & Mining Co., Ltd, Los Gatos Luxembourg S. ar. L., the Corporation, Servicios San José de Plata S. de R.L. de C.V., a Mexico variable capital company (“EmployerCo”), and the Operator (the “Partner Agreement”);

WHEREAS, Corporation owns or holds rights to the Project;

WHEREAS, the Operator will provide to the Corporation all of the services necessary to explore, develop, construct and operate the Project and business development activities and the performance of services provided to Corporation set forth in this Agreement (the “Services”);

WHEREAS, Corporation intends to explore, develop, construct and operate the Project and Corporation desires to engage the Operator to perform the Services with respect to the Project;

WHEREAS, the Parties acknowledge and agree that all depreciable assets acquired in connection with the Services will be acquired and held in the name of the Operator.

AGREEMENT

NOW, THEREFORE, the Parties, in consideration of the mutual promises contained in this Agreement, agree as follows:

1.Definitions.

(a)Capitalized terms used herein but not defined shall have the meaning ascribed to such term in the Partner Agreement.

(b)The following terms shall have the meanings referenced below:

“First Party” has the meaning set forth in Section 18.

“GAAP” means generally accepted accounting principles in the United States, consistently applied.

“Operator” has the meaning set forth in the Preamble.

“Operator’s Information Recipients” has the meaning set forth in Section 20.

“Partner Agreement” has the meaning set forth in the Preamble.

“Permit” means any permit, franchise, license, authorization, order, certificate, registration, variance, settlement, compliance plan or other consent or approval granted by a Governmental Authority.

“Permitted Encumbrance” means, with respect to any Assets, (a) Encumbrances specifically approved by Requisite Partner Approval, (b) mechanic’s, materialmen’s or similar Encumbrances incurred in the ordinary course of business if payment of the secured obligation is not yet overdue or being contested in good faith, (c) Encumbrances for Taxes, assessments, concessions and land access payments and deposits, obligations under workers’ compensation or other social welfare legislation or other requirements, charges or levies of any Governmental Authority, in each case not yet overdue or being contested in good faith, (d) Encumbrances existing at the time of, or created concurrent with, the acquisition of the Assets, (e) easements, servitudes, rights-of-way and other rights, exceptions, reservations, conditions, limitations, covenants and other restrictions that do not materially interfere with, materially impair or materially impede the Business or Operations or the value or use of the Assets, (f) pledges and deposits to secure the performance of bids, tenders, trade or government contracts (other than for repayment of borrowed money), leases, licenses, statutory obligations, surety bonds, performance bonds, completion bonds and other similar obligations that are incurred in the ordinary course of Operations on the Assets, and (g) Encumbrances consisting of (i) rights reserved to or vested in any Governmental Authority to control or regulate the Assets, (ii) obligations or duties to any Governmental Authority with respect to any Permits and the rights reserved or vested in any Governmental Authority to terminate Permits or to condemn or expropriate property, and (iii) zoning or other land use or Environmental Laws of any Governmental Authority.

“Second Party” has the meaning set forth in Section 18.

“Services” has the meaning set forth in Preamble.

“Underlying Agreement” means any agreement, conveyance or instrument to which any of the Properties are subject and that contain unperformed, ongoing or surviving obligations or liabilities of any party.

(c)All references in this Agreement to Exhibits, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Section, subsection or other subdivision unless expressly so limited. The words “this Section” and “this subsection” and words of similar import, refer only to the Section or subsection hereof in which such words occur. The word “including” (in its various forms) means “including without limitation”. All references to “$” or “dollars” shall be deemed references to United States dollars. Each accounting term not defined herein will have the meaning given to it under GAAP as interpreted as of the date of this Agreement. Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Exhibits

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referred to herein are attached hereto and by this reference incorporated herein for all purposes. References to any law or agreement shall mean such law or agreement as it may be amended from time to time.

2.Services; Delegation; Independent Contractor.

(a)Upon and subject to the terms and conditions of this Agreement, Corporation engages the Operator to perform the services, actions, activities, obligations and other matters described in (x) this Agreement, and (y) in Section 3.5 and Articles 12, 14 and 15 of the Partner Agreement, which are hereby incorporated by reference into, and made a part of, this Agreement to the same extent as if expressly set forth herein. The Operator accepts such engagement and agrees to perform the Services in accordance with the terms and conditions set forth in this Agreement (including, without limitation, the provisions of the Partner Agreement that are incorporated by reference into, and made a part of, this Agreement as described above). Corporation grants, during the term of this Agreement and to the full extent permitted by applicable law, full authority to the Operator to do on behalf of the Corporation, in the name of the Corporation, all things which are necessary and proper to carry out the duties and responsibilities of the Operator under this Agreement, including the authority to execute for and on behalf of the Corporation such agreements and other documents, and to take such actions as may be necessary or appropriate in the Operator’s reasonable judgment for the performance of the Services. Notwithstanding anything to the contrary, any action or matter requiring Requisite Partner Approval pursuant to the Partner Agreement shall not be taken or performed by the Operator unless and until the Requisite Partner Approval shall have been obtained pursuant to the Partner Agreement.

(b)The Operator may delegate the authority granted by Corporation to the Operator pursuant to the Partner Agreement and this Agreement to its or its Affiliates’ employees, agents, consultants or independent contractors that are necessary or appropriate for the performance of the Services, including to EmployerCo for personnel services under the Personnel Services Agreement, dated as of the date hereof by and between Operator and EmployerCo (the “Personnel Services Agreement”), and may engage third parties for the performance of the Services, and in each case, the performance of such Service in accordance with the standards of this Agreement shall satisfy the Operator’s obligation in full with respect to such Service. For purposes of this Agreement, all such employees shall remain employees of the Operator, EmployerCo or such third party, as applicable.

(c)In the performance of the Services, the Operator conclusively shall be deemed an independent contractor, with the right and authority to direct and control all work being performed by the employees, contractors or agents of the Operator. Corporation shall have no right or authority to supervise or give instructions to the employees, contractors or agents of the Operator, and such employees, contractors or agents at all times shall be under the direct and sole supervision and control of the Operator. It is the understanding and intention of the Parties that no relationship of master and servant or principal and agent shall exist between Corporation and the employees or agents of the Operator.

3.Operator Duties. The Operator shall, subject to the Major Decisions requiring Requisite Partner Approval under the Partnership Agreement, have the following duties:

(a)Day to Day Operations. The Operator shall administer the day-to-day Operations of the Corporation and its Assets, and perform and supervise the performance of such

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other administrative functions necessary in the management of the Corporation, including collecting revenues and paying the Corporation’s debts and obligations maintaining appropriate computer services to perform such administrative functions;

(b)Monitoring and Reporting. The Operator shall monitor the operating performance of the Corporation and its Assets and provide periodic reports with respect thereto to the Corporation Board and the Partners, including comparative information with respect to such operating performance and budgeted or projected operating results;

(c)Retention of Advisors. The Operator shall assist the Corporation in retaining qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures and compliance procedures;

(d)Agreements and Contracts. The Operator shall negotiate, execute, amend and terminate the Corporation’s agreements, manage and administer the Corporation’s rights and obligations under all agreements to which the Corporation is a party or by which the Corporation is bound and monitor compliance by the Corporation and by such counterparties to such agreements with the terms and conditions thereof;

(e)Bank Accounts. The Operator shall establish and maintain the Corporation’s bank accounts and banking arrangements, and to the extent of funds available and subject to receipt of Corporation Board approval, shall reinvest the Corporation’s funds as the Operator may deem appropriate;

(f)Programs and Budgets. The Operator shall compile and propose the Budget for approval and manage, direct and control the Operations, Mining and Expansion or Modification in accordance with the Approved Budget (as may be amended pursuant to the terms of the Partner Agreement);

(g)Implementation. The Operator shall implement all Major Decisions, shall make from Corporation’s funds all expenditures necessary to carry out adopted Programs, and shall promptly advise the Board if Corporation lacks sufficient funds for the Operator to carry out its responsibilities under this Agreement;

(h)Capital Calls. The Operator shall make Capital Calls, including Budgeted Capital Calls and Emergency Capital Calls, as necessary, in accordance with and subject to the terms of the Partner Agreement;

(i)Available Cash. The Operator shall make a determination on an annual basis within forty-five (45) days after the end of each calendar year, of the Available Cash in accordance with the terms of the Partner Agreement;

(j)Procurement. The Operator shall (i) purchase or otherwise acquire all materials, supplies, equipment, water, utility and transportation services required for the Operations, such purchases and acquisitions to be made to the extent reasonably possible on the best terms available, taking into account all of the circumstances and (ii) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions;

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(k)Title; Encumbrances. The Operator shall conduct such title examinations and cure such title defects as may be advisable in the Operator’s reasonable judgment, and keep the Assets free and clear of Encumbrances, except for Permitted Encumbrances, and all depreciable Assets acquired by the Operator in connection with the provision of the Services shall be acquired by, and held in the name of, the Operator;

(l)Underlying Agreements/Taxes. The Operator shall (i) make or arrange for all payments required by any Underlying Agreements and (ii) pay all Taxes on Operations and Assets, except (A) Taxes determined or measured by a Partner’s revenue or net income and (B) Taxes on production of Products that are distributed in-kind to a Partner, if any; provided, that if the Operator shall have the right to contest the validity or amount of any Taxes the Partner deems to be unlawful, unjust, unequal or excessive, the Operator will undertake such other steps or proceedings as the Partner may reasonably request to secure a cancellation, reduction, readjustment or equalization of such Taxes before such Taxes are required to be paid, but the Operator shall not permit or allow title to the Assets to be lost as the result of the nonpayment of any such Taxes;

(m)Compliance with Laws. The Operator shall (i) comply with applicable Laws, (ii) promptly provide notice to the Board of any allegations of a material violation of Laws, and (iii) prepare and file all reports or notices required by any Governmental Authority for Operations. The Operator shall timely cure or dispose of any violation of Laws through performance, or payment of fines and penalties, or both, the cost of which shall be charged to Corporation;

(n)Litigation. The Operator shall initiate, prosecute and defend, and, if applicable, may settle all litigation, arbitrations or administrative proceedings arising out of Operations;

(o)Insurance. The Operator shall obtain insurance for the benefit of Corporation, the Partners, EmployerCo and the Operator as may otherwise be determined from time to time by the Board;

(p)Disposition of Assets. The Operator may dispose of Assets, whether by abandonment, surrender or Transfer in the ordinary course of business;

(q)Maintenance of Assets. The Operator shall perform all assessment and other work and pay all fees to Governmental Authorities required by Law in order to maintain the mining concessions and surface access rights included within the Properties. The Operator may perform the assessment work under a common plan of exploration, and continued actual occupancy of such claims and sites is not required. The Operator shall not be liable for any determination by any Governmental Authority that the work performed by the Operator did not constitute the required annual assessment work or occupancy to preserve or maintain ownership of the claims; provided that the work was performed in accordance with accepted industry standards and the Approved Program and Approved Budget. The Operator shall timely record with the appropriate county and file with the appropriate Governmental Authority, any required affidavits, notices of intent to hold and other documents in proper form attesting to the payment of fees to Governmental Authorities, the performance of assessment work or intent to hold the claims and sites, in each case in sufficient detail to reflect compliance with applicable requirements;

(r)Changes to Mineral Rights. The Operator may (i) locate or amend any mineral concessions or surface access rights within the Project Area, (ii) locate any fractions

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resulting from such amendment or refiling, (iii) apply for mining concessions, surface access rights or other forms of mineral or real property tenure within the Area of Interest, (iv) abandon any mining concessions or surface access rights for the purpose of acquiring rights of a different scope, size or duration on the ground covered thereby, and (vi) exchange with or convey to Mexico any of the Properties for the purpose of acquiring rights to the ground covered thereby or other adjacent ground.

(s)Accounting. The Operator shall, in accordance with the terms of Exhibit A hereto (as may be reviewed by the Board from time to time), (a) keep and maintain all required accounting and financial records and in accordance with customary cost accounting practices in the mining industry, (b) keep and maintain current balances of Capital Contributions, (c) keep and maintain an account of the Percentage Interests of the Partners in accordance with Section 4.1 of the Partner Agreement, and (d) keep all Corporation accounts separate and segregated from the individual accounts of the Operator;

(t)Reporting; Audits. The Operator shall (a) provide the reports to the Partners required under Section 16.5 of the Partner Agreement, (b) permit the audits, inspections and access rights under Section 16.4(b) of the Partner Agreement, and (c) obtain the independent audit required under Section 16.4(a) of the Partner Agreement;

(u)Environmental Compliance Plan. The Operator shall prepare a plan for the Environmental Compliance for all Operations consistent with the requirements of applicable Laws or contractual obligations and shall include in each proposed Program and Budget sufficient funding to implement the Environmental Compliance plan and to satisfy the financial assurance requirements of applicable Laws and contractual obligations pertaining to Environmental Compliance. To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of Properties disturbed by Operations;

(v)Continuing Obligations. The Operator shall undertake to perform Continuing Obligations when and as economic and appropriate, whether before or after termination of Operations. The Operator shall have the right to delegate performance of Continuing Obligations to Persons having demonstrated skill and experience in relevant disciplines. As part of each proposed Program and Budget, the Operator shall specify the measures to be taken for performance of Continuing Obligations and the cost of such measures. The Operator shall keep the Board reasonably informed about the Operator’s efforts to discharge Continuing Obligations. Authorized representatives of each Partner shall have the right from time to time to enter the Properties to inspect work directed toward satisfaction of Continuing Obligations, and to audit books, records, and accounts related thereto; and

(w)Other Activities. The Operator shall undertake all other activities reasonably necessary to fulfill the foregoing.

4.Standards of Care. Subject to Section 16, the Operator and SSMRC shall discharge their duties under this Agreement and conduct all Operations in a good, workmanlike and efficient manner, in accordance with sound Mining and other applicable industry standards and practices, and in accordance with the terms and provisions of all Underlying Agreements pertaining to the Project and the Partners Agreement.

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5.Satisfaction of Obligations. All obligations of the Operator incurred in the performance of the Services shall be satisfied solely from funds of the Corporation.

6.[Reserved].

7.Emergencies. Notwithstanding anything to the contrary, in cases of an Emergency or Unexpected Expenditures, the Operator shall promptly (a) make all notifications required under applicable Law to appropriate Governmental Authorities, (b) implement response and mitigation measures as are either required by applicable Law, industry practice or that, in the Operator’s good faith discretion, are otherwise advisable to respond to or mitigate the emergency, including to protect human health and the environment, and (c) commence any required remediation, maintenance or repair work necessary to keep the Project or other applicable Corporation facilities operating safely or to restore the Project or facilities to safe operating condition, as applicable, and in accordance with all applicable statutes, rules and regulations or otherwise to minimize damage, in each case without necessity of obtaining Corporation’s approval, but subject to the provisions of the Partner Agreement. The Operator shall notify Corporation and the Partners as promptly as reasonably practicable of such Emergency or Unexpected Expenditures, the mitigation, repair, restoration or remedial plans, and the status and nature of the Operator’s correspondence or discussions with Governmental Authorities in connection with such response, restoration, repair, remedial or restoration activities. Such notification shall be made by any method deemed appropriate by the Operator under the circumstances but, as soon as commercially practicable, shall also include notice pursuant to Section 21.

8.Corporation Funds to Pay Charges. The Operator shall not be obligated to incur any cost or expense, and shall have no liability in connection with a decision to not incur any cost or expense, beyond those authorized in Approved Budgets and Section 5.

9.Bank Accounts. All revenues and other funds of the Corporation will be deposited in its name in one or more bank accounts established by the Operator. All funds of the Corporation will be used solely for the business of Corporation. All interest and other benefits relating to such accounts shall belong to Corporation. All withdrawals from such accounts will be made only by the Operator or Person(s) designated by the Operator from time to time.

10.Taxes. Corporation shall be responsible for the funding of all sales, use, gross receipts and similar taxes attributable to the design, construction, installation, administration, operation and maintenance of the Project and other Assets and facilities. Corporation further agrees to fund any and all sales, use, gross receipts and similar taxes, penalties and interest imposed on the Operator based on the work performed pursuant to this Agreement.

11.Affiliate Transactions. Corporation shall not enter into any agreement or contract (including the payment of any fees or other compensation) with the Operator, any Affiliate of the Operator or any Partner, or any material modification or amendment to any such agreement or contract, except as specifically provided in this Agreement or in then-current Approved Program and Approved Budget; provided that the Partners acknowledge that the services to be performed by the Operator may be delegated to any Affiliate of the Operator and performed by such Affiliate.

12.Changes to Mining Law. The Partners are aware that the mining Laws of Mexico or the State of Chihuahua pertaining to mining concessions, surface access rights, mining royalties and taxes, or related activities may be amended or new Laws may be enacted. In that event, the

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Operator shall have the option (but not the obligation, except to the extent required under Underlying Agreements) of maintaining the rights and obligations of Corporation in and to the Properties and the lands covered thereby pursuant to those new or amended Laws, subject to this Agreement and to the extent allowable, including the right to convert owned concessions and any leased concessions to any new property rights that may be created, and all of the terms and conditions of this Agreement shall apply to such new property rights. The Partners agree to cooperate with the Operator in this regard.

13.Term. The initial term of this Agreement begins on the Effective Date and ends upon the earlier of the dissolution of Corporation or the appointment of a successor operator following the resignation or removal of the Operator pursuant to Section 14.

14.Resignation; Removal; Replacement.

(a)Voluntary Resignation. The Operator may voluntarily resign at any time upon six (6) months’ prior notice to the Corporation. Acceptance of such resignation shall not be necessary.

(b)Deemed Resignation. The Operator shall automatically be deemed to resign without the requirement of notice or other notice of any kind effective immediately upon the occurrence of an Insolvency Event of the Operator.

(c)Removal. The Operator may be removed by Requisite Partner Approval and upon notice to the Operator.

(d)Replacement. If the Operator resigns voluntarily under Section 14(a), a successor operator (who may be a Partner, an Affiliate of a Partner or a third party) shall be elected pursuant to the Partner Agreement. Any successor operator shall execute a joinder to this Agreement agreeing to be bound by the provisions of this Agreement that relate to the Operator. The appointment of a successor operator shall be deemed to pre-date any event causing a deemed resignation of the Operator under Section 14(b).

(e)Release. Any removal of or resignation by the Operator pursuant to this Section 14 will release the Operator from any liability for all duties, responsibilities and obligations under this Agreement arising after the effective date of removal or resignation. The foregoing, however, will not relieve the Operator from any liability it would otherwise have under this Agreement for acts or omissions which occurred on or before the effective date of removal or resignation or from compliance with Section 20.

15.Records and Audit. The Operator shall maintain true and accurate accounts of all expenses, disbursements, costs and liabilities chargeable to the Corporation, and all revenue accrued and invoiced, all of which shall be charged or credited to the Corporation, all in accordance with GAAP. At the request of any Partner, the Operator also shall provide financial statements in accordance with IFRS, at the expense of the requesting Partner. The Operator shall maintain such books of account at its principal place of business and such shall be open to inspection and examination at reasonable times by each Partner in accordance with Section 16.3 of the Partner Agreement. The Operator shall cause Corporation to maintain all such books, records and accounts that are reasonably necessary or appropriate to ensure Corporation’s compliance with the Partner Agreement.

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16.Exculpation. Notwithstanding any contrary provision of this Agreement, the Operator shall not be liable or responsible to Corporation or any Partner and shall not be in breach or default of its duties under this Agreement for any act or omission (a) that is not caused by or attributable to the Operator’s willful misconduct or gross negligence, (b) if the inability to perform results from (i) the failure of any Partner or its respective directors, officers, employees, agents, consultants, advisors (including legal, financial and accounting advisors), agents and contractors (collectively, “Representatives”) (other than the Operator, any Affiliate of the Operator, or any Representative designated by the Operator or any such Affiliate), to perform acts or to contribute amounts required under this Agreement, (ii) a lack of Corporation funds, to the extent the Operator and its Affiliates have made all Capital Contributions required to be made by them under this Agreement, or (iii) the failure to carry out or perform in accordance with a Program and Budget for any period, if a Program and Budget has not been approved for the period, or (c) taken in good faith reliance on an Approved Program and Approved Budget or information, opinions, reports or statements presented by any other Partner or Representative of any other Partner, or by any other Person as to matters the Operator reasonably believes are within the other Person’s professional or expert competence.

17.Indemnification of the Operator and its Indemnitees. Subject to the limitations of the applicable law, Corporation shall indemnify, defend and hold harmless the Operator and its Indemnitees from and against any Losses arising as a result of any act or omission of the Operator or its Indemnitees with respect to matters believed in good faith to be within the scope of authority conferred in accordance with this Agreement, except for willful misconduct or gross negligence.

(a)Contract Rights. The rights granted under this Section 17 are contract rights, and no amendment, modification or repeal of this Section 17 shall have the effect of limiting or denying any such rights with respect to actions taken, omissions, or proceedings arising before any such amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Section 17 could involve indemnification for negligence or strict liability. Notwithstanding the foregoing, Corporation’s indemnification of the Operator and its Indemnitees as to third party claims shall be only with respect to such Losses that are not otherwise compensated by insurance.

(b)Advancement of Expenses. The rights to indemnification conferred in this Section 17 shall include the right to be paid or reimbursed by Corporation the reasonable expenses incurred by any Person entitled to be indemnified who was, is or is threatened to be made a named defendant or respondent in an action, suit, proceeding or arbitration in advance of the final disposition of the action, suit, proceeding or arbitration and without any determination as to the Person’s ultimate entitlement to indemnification; provided, that the payment of such expenses in advance of the final disposition or award of an action, suit, proceeding or arbitration shall be made only upon delivery to Corporation of a written affirmation by such Person of his or its good faith belief that he or it has met the standard of conduct necessary for indemnification under this Section 17 and a written undertaking, by or on behalf of such Person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified Person is not entitled to be indemnified under this Section 17 or otherwise.

(c)Non-Exclusive Rights. The right to indemnification and the advancement and payment of expenses conferred in this Section 17 are not exclusive of any other right that any such indemnified Person may have or acquire under any Law, provision of this Agreement, vote of the Board or the Requisite Partner Approval or otherwise.

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(d)Invalidity. If this Section 17 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction or arbitration panel, then Corporation shall indemnify and hold harmless the Operator and its Indemnitees indemnified under this Section 17 as to the Losses to the full extent permitted by any portion of this Section 17 that has not been invalidated, and to the fullest extent permitted by applicable Law.

18.Disclaimer of Liability. AS BETWEEN THE PARTIES, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, A PARTY’S DAMAGES RESULTING FROM A BREACH OR VIOLATION OF ANY COVENANT, AGREEMENT OR CONDITION CONTAINED HEREIN OR ANY ACT OR OMISSION ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE LIMITED TO ACTUAL DIRECT DAMAGES AND SHALL NOT INCLUDE ANY OTHER DAMAGES INCLUDING ANY INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, AND EACH PARTY EXPRESSLY RELEASES THE OTHER FROM ALL SUCH CLAIMS FOR DAMAGES OTHER THAN ACTUAL DIRECT DAMAGES. IF A PARTY TO THIS AGREEMENT (THE “FIRST PARTY”) PAYS OR OWES TO ANY PERSON NOT A PARTY TO THIS AGREEMENT, ANY COSTS, EXPENSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY, PUNITIVE, ACTUAL, DIRECT AND OTHER DAMAGES, IN SETTLEMENT OR SATISFACTION OF CLAIMS, AND SUCH COSTS, EXPENSES OR DAMAGES ARE COVERED BY ANOTHER PARTY’S (THE “SECOND PARTY”) INDEMNITY TO THE FIRST PARTY UNDER THIS AGREEMENT, THEN THE FIRST PARTY MAY RECOVER SUCH COSTS, EXPENSES OR DAMAGES FROM THE SECOND PARTY.

19.Force Majeure. If either Party is rendered unable, wholly or in part, by a Force Majeure Event to carry out its obligations under this Agreement, other than to make payments then or thereafter due hereunder, then the obligations of the Party giving such notice, so far as they are affected by such Force Majeure Event, will be suspended during the continuance of any inability so caused but for no longer period, and such cause must as far as possible be remedied with all reasonable and diligent dispatch by the Party claiming such in order to put itself in a position to carry out its obligations under this Agreement as soon as reasonably practicable. Each Party affected by such Force Majeure Event shall act reasonably and with diligence to remedy the Force Majeure Event and resume performance with reasonable dispatch. It is understood and agreed that the settlement of strikes or lockouts is entirely within the discretion of the Party having the difficulty, and that the above requirements that any Force Majeure Event must be remedied with all reasonable dispatch will not require the settlement of strikes or lockouts by acceding to the demands of opposing party when such course is inadvisable in the discretion of the Party having the difficulty. The Party affected by Force Majeure Event shall provide the other Party with written notice of the Force Majeure Event, describing the Force Majeure Event in reasonable detail, as soon as commercially practicable after the affected Party learns of the occurrence of the Force Majeure Event. Any such notice delivered by the Operator to Corporation shall also be delivered to the Partners.

20.Confidential Information. The Operator acknowledges that it may receive information from or regarding the Corporation and its Affiliates that constitutes trade secrets or which, due to contractual obligations, business concerns, statutes, regulations, or other considerations, is otherwise confidential. The Operator shall hold in strict confidence any such information it receives regarding the Corporation, whether written, visual or oral, including without limitation, Confidential Information and may not disclose any Confidential Information to any person other than a Partner, except for disclosures (a) by the Operator to the Operator’s Affiliates or the

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Operator’s Affiliates’ directors, officers, managers, partners, members, employees, shareholders, agents, attorneys, accountants, consultants, contractors, subcontractors or advisors or prospective purchasers of interests in the Operator or its Affiliates (collectively, “Operator’s Information Recipients”) to the extent the Operator’s Information Recipients have a need to receive such Confidential Information and such disclosure is not prohibited by any law, statute or regulation, (b) compelled by law (but the Operator must notify Corporation and the Partners promptly of any request for that information, before disclosing it, if practicable and to the extent such notification is not, in the Operator’s reasonable judgment, prohibited by applicable law), (c) of information (i) which is or becomes part of the public domain through no fault of or breach of this Agreement by the Operator; (ii) which the Operator can reasonably demonstrate was in its possession or that of the Operator’s Information Recipients on a non-confidential basis at the time of disclosure under or in connection with this Agreement; (iii) independently developed for the Operator or its Affiliates by its employees or contractors or those of its Affiliates and which was not derived or obtained, in whole or in part, from the Confidential Information; or (iv) received by the Operator or its Affiliates from a third party without obligation of confidentiality or restriction on use, provided that the Operator, after reasonable inquiry, has no reason to believe that the third party obtained the information directly or indirectly under a then-existing requirement of confidentiality. Any breach by any of the Operator’s Information Recipients of any of the provisions of this Section 20 shall be, and be deemed to be, a breach thereof by the Operator. The Operator acknowledges that any breach of the provisions of this Section 20 may cause irreparable injury to Corporation for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Operator agrees that the provisions of this Section 20 may be enforced in addition to other available remedies, whether at law or equity, by specific performance. The terms of this Section 20 shall remain in full force and effect following the termination of this Agreement.

21.Notices. All notices required under this Agreement shall be deemed made when in writing and delivered by hand or courier delivery or transmitted by facsimile or email:(1)

To the Operator:

Operaciones San José de Plata, a S. de R.L. de C.V.

c/o Vazquez, Sierra & Garcia, S.C.

Av. Paseo De Las Palmas 755, Desp. 902

Col. Lomas de Chapultepec

11000, Mexico, D.F.

Attn: Alberto Vàzquez

Facsimile: +52 (55) 5540 3435

Email: avazquez@vsglegal.mx

To Corporation:

Minera Plata Real, S. de R.L. de C.V.

c/o Vazquez, Sierra & Garcia, S.C.

Av. Paseo De Las Palmas 755, Desp. 902

Col. Lomas de Chapultepec

11000, Mexico, D.F.

Attn: Alberto Vàzquez

(1) Note to Draft: Consider adding email notice.

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Facsimile: +52 (55) 5540 3435

Email: avazquez@vsglegal.mx

To SSMRC:

Sunshine Silver Mining & Refining Corporation

370 17th Street, Suite 3800

Denver, Colorado 80202

USA

Attention:Jeffrey Reeser, General Counsel

Telephone:303-784-5350

Facsimile:303-534-0471

email: jreeser@ssmines.com

With a Copy to:

Alberto M. Vàzquez

Vazquez, Sierra & Garcia, S.C.

Av. Paseo De Las Palmas 755, Desp. 902

Col. Lomas De Chapultepec

11000, Mexico, D.F.

Any Party may change its address shown above by notifying the other Party, in writing, of such change in accordance with the notice provisions of this Section 21.

22.Waiver. No waiver by a Party of any breach or default of any of the terms and conditions contained in this Agreement shall be construed as a waiver of any subsequent breach or default whether of a like or different character.

23.Assignment. This Agreement shall be binding and extend to the benefit of the Parties and their respective successors and assigns. No Party shall assign any of its rights or obligations described in this Agreement without the prior written consent of the other Parties. Any assignment of this Agreement in violation of this section shall be null and void.

24.Third Party Beneficiaries. Except as expressly provided in this Agreement, nothing herein expressed or implied is intended or will be construed to confer upon or to give any Person not a party hereto any rights to remedies under or by reason of this Agreement.

25.Entire Agreement. This Agreement (together with the provisions of the Partner Agreement incorporated by reference herein) constitutes the entire agreement and understanding of the Parties with respect to the Operator’s performance of the Services, and supersedes all other prior and contemporaneous agreements, whether written or oral, between the Parties. This Agreement may not be modified or amended except by an instrument signed by the Party to be bound.

26.Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such

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counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by facsimile or other electronic transmission shall be deemed an original signature hereto.

27.Captions or Headings. The headings appearing at the beginning of each section of this Agreement are all inserted and included solely for convenience and shall not be considered or given any effect in construing this Agreement, or any provision(s) hereof, or in connection with determining the duties, obligations or liabilities of the respective parties hereto or in ascertaining intent, if any question of intent should arise.

28.Conflicts. In the event of a conflict between a provision contained within the main body of this Agreement and a provision contained within any exhibits attached hereto, the provision in the main body shall control. In the event of a conflict between a provision contained within this Agreement and the Partner Agreement, the Partner Agreement shall control.

29.Choice of Laws. Except for matters of title to the Properties or their Transfer, which will be governed by the law of their situs, this Agreement (including all exhibits and schedules hereto) and any disputes or claim, action, suit or legal proceeding (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, performance, non-performance, interpretation, termination or construction of this Agreement will be governed by and construed in accordance with the Laws of the State of New York without giving effect to the principles of conflict of laws that would permit or require the application of the substantive Laws of any other jurisdiction.

30.Disputes.

(a)This Section 30 shall apply to all disputes between the Parties arising under this Agreement except for disputes pertaining to Claims for indemnification which arise in connection with or grow out of Claims asserted against either Party by a third party. Any dispute among the Parties arising out of or in connection with this Agreement:

(i)will first be attempted to be resolved by the Parties through good faith negotiations and in connection therewith, any Party may request in writing that any other Party meet and commence such negotiations within a reasonable period of time (in any event no later than seven days) after the request;

(ii)such negotiations will be between senior representatives of management of each such Party; and

(iii)if within ten Business Days after commencement of the negotiations under paragraph (i), above, the dispute has not been resolved, any Party may refer the matter to dispute resolution in accordance with the provisions set out below.

(b)In the event of the Parties being unable to resolve any dispute under Section 30(a), any such dispute will be resolved: (a) in the case of a purely technical matter, by an expert agreed to by the Parties, acting reasonably; and (b) in the case of any other matter, by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and each Party hereby consents to any such disputes being so resolved. Each Party will have the right to nominate one arbitrator each and the arbitrators so nominated will jointly nominate an arbitrator to act as chairman. In the event of being unable to agree on such an arbitrator,

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the Parties will proceed to the American Arbitration Association for the nomination of this arbitrator. The arbitration proceedings will take place in New York, New York in the English language. The arbitrators will decide ex aequo et bono and in their award the extent to which the Parties will bear the arbitration costs. Judgment on the award rendered in any such arbitration may be entered in any court having jurisdiction.

31.Construction. The language used in this Agreement will be deemed to be the language chosen by the joint action of the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party.

32.Severability. Should any provision of this Agreement be deemed in contradiction with the laws of any jurisdiction in which it is to be performed or otherwise be unenforceable for any reason, such provision will be deemed null and void, but this Agreement will remain in force in all other respects and in all other jurisdictions. Should any provision of this Agreement be or become ineffective because of changes in applicable Law or the interpretations thereof, or should this Agreement fail to include a provision that is required as a matter of law, the validity of the other provisions of this Agreement will not be affected thereby. If such circumstances arise, the Parties will negotiate in good faith appropriate modifications to this Agreement to reflect those changes that are required by applicable Law.

[signature page follows]

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Executed as of the Effective Date.

MINERA PLATA REAL, S. DE R.L. DE C.V.

By:

Printed Name:

Title:

OPERACIONES SAN JOSÉ DE PLATA, A S. DE R.L. DE C.V.

By:

Printed Name:

Title:

SUNSHINE SILVER MINING & REFINING CORPORATION

By:

Printed Name:

Title:

Signature Page to Services Agreement

EXHIBIT A

Accounting Procedures

1.INTERPRETATION

(a)Terms defined in this Exhibit shall have the same meanings as set forth in the Agreement. Capitalized terms used herein and not defined in the Agreement have the meanings ascribed to such term in the Partner Agreement. In this Appendix the following words, phrases and expressions shall have the following meanings:

(i)“Counts” means a physical inventory counts.

(ii)“Mine Office” means the office located at the Project and all ancillary facilities of that office.

(iii)“Joint Account” means the books of account maintained by the Operator to record all assets, liabilities, costs, expenses, credits and other transactions arising out of or in connection with the Project and which are based on the traditional chart of accounts maintained by the Project for the Project’s accounting.

(iv)“Material” means the personal property, equipment and supplies acquired or held by the Operator pursuant to Approved Budgets, for use in the Project.

2.DIRECT CHARGES

(a)The Operator shall charge the Joint Account with the following items:

(i)Operating and Maintenance Costs:

All costs directly relating to the Project including, but not limited to, equipment, materials and maintenance expenses from mine operations.

(ii)Labor Charges:

The obligations owing to EmployerCo pursuant to the personnel services agreement entered into between Operator and EmployerCo .

(iii)General and Administrative Charges:

All costs directly related to maintaining and operating the Mine Office.

(iv)Materials:

Materials purchased or furnished by the Operator.

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(v)Transportation Charges:

The cost of transporting Materials necessary for the Project as well as all freight charges incurred in the trucking, rail and ocean transportation incurred in the delivery of Products.

(vi)Service Charges:

(1)The cost of services and utilities procured from outside sources; and

(2)Use and service of equipment and facilities furnished by the Operator.

(vii)Damages and Losses to the Properties:

All costs necessary for the repair or replacement of Assets made necessary because of damages or losses by fire, flood, storms, theft, accident or other cause. If the damage or loss is estimated by the Operator to exceed applicable insurance deductible amounts, the Operator will provide the Board with written particulars of the damages or losses incurred as soon as practicable after the damage or loss has been discovered. The proceeds, if any, received on claims against any policies of insurance in respect of those damages or losses shall be credited to the Joint Account.

(viii)Legal Expense:

All costs of handling, investigating and settling litigation or recovering the Project on behalf of the Corporation, the Operator or EmployerCo, including, without limiting generality, attorney’s fees, court costs, costs of investigation or procuring evidence and amounts paid in settlement or satisfaction of any litigation or claims.

(ix)Audit Expense:

All costs associated with the Operator’s responsibility to order annual audits under Article 16.4 of the Partner Agreement including but not limited to audit fees and expenses paid to the independent audit firm and any costs incurred in preparing financial statements of the Project in accordance with IFRS rather than under GAAP.

(x)Taxes:

All taxes, duties or assessments of every kind and nature (except income taxes) assessed or levied upon or in connection with the Properties, the Project thereon, or the production therefrom, which have been paid by the Operator for the benefit of the Parties.

(xi)Insurance:

Net premiums paid for:

(1)such policies of insurance on or in connection with the Project as may be required to be carried by law;

(2)such other policies of insurance as the Operator may carry for the protection of the parties in accordance with the Agreement; and

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(3)the applicable deductibles in event of an insured loss.

(xii)Rentals:

Fees, rentals and other similar charges required to be paid for acquiring, recording and maintaining permits, mineral claims and mining leases and rentals and royalties which are paid as a consequence of the Project.

(xiii)Permits:

Permit costs, fees and other similar charges which are assessed by various governmental agencies.

(xiv)Exploration Expenditures:

All Exploration expenditures necessary to increase and expand mineral reserves of the Project as outlined in the Approved Budget.

(xv)Lease Payments:

Fees, rentals and other similar charges required to be paid for entering into equipment leases necessary to the Project as outlined in the Approved Budget.

(xvi)Interest and Loan Repayments:

Fees, interests and principal repayments to loans for equipment necessary to the Project.

(xvii)Other Expenditures:

Such other costs and expenses which are not covered or dealt with in the foregoing provisions of the Agreement, the OffTake Agreement or this Exhibit A as are incurred with the approval of the Board for the Project or as may be contemplated in the Agreement.

3.PURCHASE OF MATERIALS

(a)The Operator shall purchase all Materials and procure all services required in the Project.

(b)Materials purchased and services procured by the Operator directly for the Project shall be charged to the Joint Account at the price paid by the Operator less all discounts actually received.

(c)Notwithstanding the foregoing provisions of this Section 3, the Operator, after having obtained the prior approval of the Board, shall be entitled to supply for use in connection with the Project equipment and facilities which are owned by the Operator and to charge the Joint Account with such reasonable costs as are commensurate with the ownership and use thereof.

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4.DISPOSAL OF MATERIALS

(a)Any Partner may purchase from the Operator any Materials which may from time to time become surplus to the foreseeable need of the Project for such price and upon such terms and conditions as the Board may approve.

(b)The net revenues received from the sale of any Materials to third parties or to a Partner shall be credited to the Joint Account.

5.INVENTORIES

(a)The Operator shall maintain records of Materials in reasonable detail.

(b)The Operator shall perform Counts from time to time at reasonable intervals, and in any event at or near the end of each calendar year. The independent external auditor of the Operator shall be given reasonable notice of each Count, and shall be given the opportunity to attend the Count.

(c)Forthwith after performing a Count, the Operator shall reconcile the inventory with the Joint Account. The Operator shall not be held accountable for any shortages of inventory except such shortages as may have arisen due to a lack of diligence on the part of the Operator.

6.CAPITAL EXPENDITURES

The Operator shall manage capital expenditure projects on behalf of the Corporation as approved under any Approved Budget or otherwise by the Board. Management of capital expenditures shall include planning, engineering, securing quotations and procurement and implementation of capital projects. The Operator shall be entitled to charge the Joint Account for all capital expenditures made pursuant to an Approved Budget or as otherwise approved by the Board, and shall acquire assets in respect thereto in its name.

7.REPORTING

The Operator shall provide summary production statistics in accordance with Article 16.5 of the Partner Agreement on a monthly basis within ten (10) days of the end of the previous month. The Operator shall provide a quarterly report of net income and financial position in accordance with GAAP within forty five (45) days of the end of each quarter.

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EXHIBIT F.

FORM OF EMPLOYMENT SERVICES AGREEMENT

[ATTACHED]

EXECUTION VERSION

PERSONNEL SERVICES AGREEMENT

This Personnel Services Agreement (this “Agreement”) is made effective as of [      ] (the “Effective Date”) by and between Operaciones San José de Plata S. de R.L. de C.V., a Mexico variable capital company (the “Operator”) and Servicios San José de Plata S. de R.L. de C.V., a Mexico variable capital company (the “Employer”). The Operator and Employer are herein individually referred to as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, the Operator has been designated as the Operator pursuant to the Unanimous Omnibus Partner Agreement, effective as of January 1, 2015, by and among Sunshine Silver Mining & Refining Corporation, Dowa Metals and Mining Co., Ltd., Los Gatos Luxembourg S. ar. L., Minera Plata Real, S. de R.L. de C.V., a Mexico variable capital company (“Owner”), Operator and Employer (the “Partner Agreement”);

WHEREAS, Owner owns 100% of the mine concession and rights located in the state of Chihuahua, Mexico and known as the Los Gatos Project (the “Project”);

WHEREAS, pursuant to the Services Agreement, effective as of [       ], by and between the Operator and Owner (the “Services Agreement”) the Operator will provide to the Owner and its Subsidiaries (the “Owner Companies”) all of the services necessary to explore, develop, construct and operate the Project and business development activities and the performance of services provided to Owner set forth in this Agreement (the “Services”).

WHEREAS, Owner intends to explore, develop, construct and operate the Project and Owner desires to engage the Operator to perform the Services with respect to the Project.

WHEREAS, the Employer will provide the Operator with its employees to discharge its duties of the Operator under the Services Agreement and will provide the day-to-day management and supervision of all employees of the Employer or its Affiliates performing such services.

NOW, THEREFORE, the Parties, in consideration of the mutual promises contained in this Agreement, agree as follows:

1.Definitions.

(a)Capitalized terms used herein but not defined shall have the meaning ascribed to such term in the Partner Agreement.

(b)The following terms shall have the meanings referenced below:

“Employer’s Information Recipients” has the meaning set forth in Section 10.

“First Party” has the meaning set forth in Section 8.

“Second Party” has the meaning set forth in Section 8.

“Underlying Agreement” means any agreement, conveyance or instrument to which any of the Properties are subject and that contain unperformed, ongoing or surviving obligations or liabilities of any party.

(c)All references in this Agreement to Exhibits, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Section, subsection or other subdivision unless expressly so limited. The words “this Section” and “this subsection” and words of similar import, refer only to the Section or subsection hereof in which such words occur. The word “including” (in its various forms) means “including without limitation”. All references to “$” or “dollars” shall be deemed references to United States dollars. Each accounting term not defined herein will have the meaning given to it under GAAP as interpreted as of the date of this Agreement. Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Exhibits referred to herein are attached hereto and by this reference incorporated herein for all purposes. References to any law or agreement shall mean such law or agreement as it may be amended from time to time.

2.Personnel Services.

(a)Personnel Services. The Employer shall provide the Operator with its employees to discharge its duties of the Operator under the Services Agreement (the “Personnel Services”). The Employer acknowledges and agrees that the Personnel Services will be provided by its directors, officers, employees, agents, consultants, advisors (including legal, financial and accounting advisors), agents and contractors (collectively, “Representatives”) and that it will be solely and completely responsible for (a) directing and managing the day-to-day activities of the employees providing the Personnel Services, (b) payment of all compensation and benefits to, and employment and related taxes on behalf of, the employees providing such Personnel Services, and (c) complying with all statutes, laws, regulations, and ordinances related to the its employment of such employees and any damages arising from the its failure to do so.

(b)Personnel Procedures. The personnel providing the Personnel Services at the direction of the Employer (a) whose primary place of employment is within Chihuahua, Mexico and who have been assigned to perform duties with respect to the Project or (b) whose primary place of employment is outside of Chihuahua, Mexico and who have been assigned specific or project-based duties with respect to the Project, which duties are expected to be completed within a specified period of time, will be referred to as the “Designated Employer Employees.” For the avoidance of doubt, the Designated Employer Employees are not employees of Owner, any of its Subsidiaries or the Operator, but instead, the Designated Employer Employees are employees of the Employer and are simply performing Personnel Services for the Owner Companies and the Operator.

(c)Personnel Expenses. In exchange for the Personnel Services, the Operator shall reimburse the Employer for all costs and expenses incurred by the Employer after the Effective Date in connection with the provision of the Personnel Services during the preceding month or the

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bi-weekly pay periods ending in the preceding month, as applicable, related to, among other items, the following costs and expenses incurred by the Employer or its Affiliates for the Designated Employer Employees:

(i)compensation (including equity and equity-based compensation expenses), salary and wages (including payroll and withholding taxes associated therewith);

(ii)401(k) costs and any matching 401(k) contributions;

(iii)vacation and sick leave benefits;

(iv)medical and health insurance benefits;

(v)disability insurance (including benefits paid);

(vi)workers’ compensation (including benefits paid);

(vii)life insurance;

(viii)any other employee benefit for which the Operator incurs costs; and

(ix)an additional 10% of salary and wages of Designated Employer Employees.

The costs and expenses described in the immediately preceding sentence, including clauses (i) through (ix) of such sentence, are referred to as “Personnel Expenses.” The Employer agrees that prior to instituting any material increase in the Personnel Expenses, such proposed increase shall first be proposed to the Partners in a proposed budget. The Employer hereby represents that, as of the date hereof, it has no material liabilities with respect to workers’ compensation or disability claims.

(d)Personnel Expenses Reimbursement Procedures. Following the end of each month, the Employer shall send a reasonably detailed invoice to the Operator for the amount of the Personnel Expenses incurred during the preceding month or the bi-weekly pay periods ending in the preceding month, as applicable, which is to be itemized by each Designated Employer Employee with the calculation of how the Personnel Expenses were derived for each such Designated Employer Employee. The Operator shall pay such invoice within thirty (30) days of receipt.

(e)Acknowledgment and Insurance.

(i)The Employer acknowledges and agrees that the Designated Employer Employees are not employees of the Operator, Owner or its Subsidiaries and are not entitled to employment rights or benefits of the Operator, Owner or its Subsidiaries. The Employer waives and releases the Operator and the Owner Companies for all Claims the Designated Employer Employees (or any subcontractors used by the Employer to perform the Services) may have for any compensation, benefits or violations of any statute or regulation governing employee rights and benefits.

(ii)The Employer shall maintain insurance including workers compensation (which specifically names the Operator and the Owner Companies as

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insureds), automobile liability, and commercial general liability for injury of, or damages caused by all Designated Employer Employees (or any subcontractors used by the Employer to perform the Services) providing Personnel Services to the Operator, Owner or its Subsidiaries.

3.Term. The initial term of this Agreement begins on the Effective Date and ends upon the earlier of the dissolution of Operator or the appointment of a successor employer following the resignation or removal of the Employer pursuant to Section 4.

4.Resignation; Removal; Replacement.

(a)Voluntary Resignation. The Employer may voluntarily resign at any time upon six (6) months’ prior notice to the Operator. Acceptance of such resignation shall not be necessary.

(b)Deemed Resignation. The Employer shall automatically be deemed to resign without the requirement of notice of any kind effective immediately upon the occurrence of an Insolvency Event of the Employer.

(c)Removal. The Employer may be removed by Requisite Partner Approval and upon notice to the Employer.

(d)Release. Any removal of or resignation by the Employer pursuant to this Section 4(d) will release the Employer from any liability for all duties, responsibilities and obligations under this Agreement arising on or after the effective date of removal or resignation. The foregoing, however, will not relieve the Employer from any liability it would otherwise have under this Agreement for acts or omissions which occurred prior to the effective date of removal or resignation or from compliance with Section 10.

5.Records and Audit. The Employer shall maintain true and accurate accounts of all expenses, disbursements, costs and liabilities chargeable to the Operator, all in accordance with GAAP. The Employer shall maintain such books of account at its principal place of business and such shall be open to inspection and examination at reasonable times by the Operator or the Partners in accordance with Section 16.4 of the Partner Agreement.

6.Exculpation. Notwithstanding any contrary provision of this Agreement, the Employer shall not be liable or responsible to the Operator or any Partner and shall not be in breach or default of its duties under this Agreement for any act or omission (a) that is not caused by or attributable to the Employer’s willful misconduct or gross negligence, (b) if the inability to perform results from (i) the failure of the Operator or any Partner or Representatives (other than the Employer, any Affiliate of the Employer, or any Representative designated by the Employer or any such Affiliate), to perform acts or to contribute amounts required under this Agreement or (ii) a lack of funds, to the extent the Partners have made all Capital Contributions required to be made by them under the Partner Agreement, or (c) taken in good faith reliance on an Approved Program and Approved Budget or information, opinions, reports or statements presented by any other Partner or Representative of any other Partner, or by any other Person as to matters the Employer reasonably believes are within the other Person’s professional or expert competence.

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7.Indemnification of the Employer and Representatives. Subject to the limitations of applicable law, the Operator shall indemnify, defend and hold harmless the Employer and its Representatives from and against any Losses arising as a result of any act or omission of the Employer or its Representatives with respect to which the Employer believed in good faith to be within the scope of authority conferred in accordance with this Agreement, except for willful misconduct or gross negligence.

(a)Contract Rights. The rights granted under this Section 7 are contract rights, and no amendment, modification or repeal of this Section 7 shall have the effect of limiting or denying any such rights with respect to actions taken, omissions, or proceedings arising before any such amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Section 7 could involve indemnification for negligence or strict liability. Notwithstanding the foregoing, the Operator’s indemnification of the Employer and its Representatives as to third party claims shall be only with respect to such Losses that are not otherwise compensated by insurance.

(b)Advancement of Expenses. The rights to indemnification conferred in this Section 7 shall include the right to be paid or reimbursed by the Operator the reasonable expenses incurred by any Person entitled to be indemnified who was, is or is threatened to be made a named defendant or respondent in an action, suit, proceeding or arbitration in advance of the final disposition of the action, suit, proceeding or arbitration and without any determination as to the Person’s ultimate entitlement to indemnification; provided, that the payment of such expenses in advance of the final disposition or award of an action, suit, proceeding or arbitration shall be made only upon delivery to the Operator of a written affirmation by such Person of his or its good faith belief that he or it has met the standard of conduct necessary for indemnification under this Section 7 and a written undertaking, by or on behalf of such Person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified Person is not entitled to be indemnified under this Section 7 or otherwise.

(c)Non-Exclusive Rights. The right to indemnification and the advancement and payment of expenses conferred in this Section 7 are not exclusive of any other right that any such indemnified Person may have or acquire under any Law, provision of this Agreement, vote of the Board, Requisite Partner Approval or otherwise.

(d)Invalidity. If this Section 7 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction or arbitration panel, then the Operator shall indemnify and hold harmless the Employer or its Representatives indemnified under this Section 7 as to the Losses to the full extent permitted by any portion of this Section 7 that has not been invalidated, and to the fullest extent permitted by applicable Law.

8.Disclaimer of Liability. AS BETWEEN THE PARTIES, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, A PARTY’S DAMAGES RESULTING FROM A BREACH OR VIOLATION OF ANY COVENANT, AGREEMENT OR CONDITION CONTAINED HEREIN OR ANY ACT OR OMISSION ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE LIMITED TO ACTUAL DIRECT DAMAGES AND SHALL NOT INCLUDE ANY OTHER DAMAGES INCLUDING ANY INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, AND EACH PARTY EXPRESSLY RELEASES THE OTHER FROM ALL SUCH CLAIMS FOR DAMAGES OTHER THAN ACTUAL DIRECT DAMAGES. IF A PARTY TO THIS

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AGREEMENT (THE “FIRST PARTY”) PAYS OR OWES TO ANY PERSON NOT A PARTY TO THIS AGREEMENT, ANY COSTS, EXPENSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY, PUNITIVE, ACTUAL, DIRECT AND OTHER DAMAGES, IN SETTLEMENT OR SATISFACTION OF CLAIMS, AND SUCH COSTS, EXPENSES OR DAMAGES ARE COVERED BY ANOTHER PARTY’S (THE “SECOND PARTY”) INDEMNITY TO THE FIRST PARTY UNDER THIS AGREEMENT, THEN THE FIRST PARTY MAY RECOVER SUCH COSTS, EXPENSES OR DAMAGES FROM THE SECOND PARTY.

9.Force Majeure. If either Party is rendered unable, wholly or in part, by a Force Majeure Event to carry out its obligations under this Agreement, other than to make payments then or thereafter due hereunder, then the obligations of the Party giving such notice, so far as they are affected by such Force Majeure Event, will be suspended during the continuance of any inability so caused but for no longer period, and such cause must as far as possible be remedied with all reasonable and diligent dispatch by the Party claiming such in order to put itself in a position to carry out its obligations under this Agreement as soon as reasonably practicable. Each Party affected by such Force Majeure Event shall act reasonably and with diligence to remedy the Force Majeure Event and resume performance with reasonable dispatch. It is understood and agreed that the settlement of strikes or lockouts is entirely within the discretion of the Party having the difficulty, and that the above requirements that any Force Majeure Event must be remedied with all reasonable dispatch will not require the settlement of strikes or lockouts by acceding to the demands of opposing party when such course is inadvisable in the discretion of the Party having the difficulty. The Party affected by Force Majeure Event shall provide the other Party with written notice of the Force Majeure Event, describing the Force Majeure Event in reasonable detail, as soon as commercially practicable after the affected Party learns of the occurrence of the Force Majeure Event. Any such notice delivered by the Employer to the Operator shall also be delivered to the Partners.

10.Confidential Information. The Employer acknowledges that it may receive information from or regarding the Owner Companies and its Affiliates that constitutes trade secrets or which, due to contractual obligations, business concerns, statutes, regulations, or other considerations, is otherwise confidential. The Employer shall hold in strict confidence any such information it receives regarding Owner and its Affiliates, whether written, visual or oral, including without limitation, Confidential Information and may not disclose any Confidential Information to any person other than a Partner, except for disclosures (a) by the Employer to the Employer’s Affiliates or the Employer’s Affiliates’ directors, officers, managers, partners, members, employees, shareholders, agents, attorneys, accountants, consultants, contractors, subcontractors or advisors or prospective purchasers of interests in the Employer or its Affiliates (collectively, “Employer’s Information Recipients”) to the extent the Employer’s Information Recipients have a need to receive such Confidential Information and such disclosure is not prohibited by any law, statute or regulation, (b) compelled by law (but the Employer must notify the Operator promptly of any request for that information, before disclosing it, if practicable and to the extent such notification is not, in the Employer’s reasonable judgment, prohibited by applicable law), (c) of information (i) which is or becomes part of the public domain through no fault of or breach of this Agreement by the Employer; (ii) which the Employer can reasonably demonstrate was in its possession or that of the Employer’s Information Recipients on a non-confidential basis at the time of disclosure under or in connection with this Agreement; (iii) independently developed for the Employer or its Affiliates by its employees or contractors or those of its Affiliates and which was not derived or obtained, in whole or in part, from the Confidential Information; or (iv) received by the Employer or its Affiliates from a third party without obligation of confidentiality or restriction on use, provided that the Employer,

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after reasonable inquiry, has no reason to believe that the third party obtained the information directly or indirectly under a then-existing requirement of confidentiality. Any breach by any of the Employer’s Information Recipients of any of the provisions of this Section 10 shall be, and be deemed to be, a breach thereof by the Employer. The Employer acknowledges that any breach of the provisions of this Section 10 may cause irreparable injury to the Operator for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Employer agrees that the provisions of this Section 10 may be enforced in addition to other available remedies, whether at law or equity, by specific performance. The terms of this Section 10 shall remain in full force and effect following the termination of this Agreement.

11.Notices. All notices required under this Agreement shall be deemed made when in writing and delivered by hand or courier delivery or transmitted by facsimile or email:

To the Operator:

c/o Vazquez, Sierra & Garcia, S.C.

Av. Paseo De Las Palmas 755, Desp. 902

Col. Lomas de Chapultepec

11000, Mexico, D.F.

Attn: Alberto Vàzquez

Facsimile: +52 (55) 5540 3435

Email: avazquez@vsglegal.mx

With a copy to:

Sunshine Silver Mining & Refining

370 17th Street, Suite 3800

Denver, CO 80202

Attn: Jeff Reeser

Email: jeff.reeser@ssmines.com

To the Employer:

c/o Vazquez, Sierra & Garcia, S.C.

Av. Paseo De Las Palmas 755, Desp. 902

Col. Lomas de Chapultepec

11000, Mexico, D.F.

Attn: Alberto Vàzquez

Facsimile: +52 (55) 5540 3435

Email: avazquez@vsglegal.mx

With a copy to:

Sunshine Silver Mining & Refining

370 17th Street, Suite 3800

Denver, CO 80202

Attn: Jeff Reeser

Email: jeff.reeser@ssmines.com

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Any Party may change its address shown above by notifying the other Party, in writing, of such change in accordance with the notice provisions of this Section 11.

12.Waiver. No waiver by a Party of any breach or default of any of the terms and conditions contained in this Agreement shall be construed as a waiver of any subsequent breach or default whether of a like or different character.

13.Assignment. This Agreement shall be binding and extend to the benefit of the Parties and their respective successors and assigns. The Employer may freely assign or transfer this Agreement or its rights or obligations hereunder to an Affiliate. Except as set forth in the immediately preceding sentence, no Party shall assign any of its rights or obligations described in this Agreement without the prior written consent of the other Party. Any assignment of this Agreement in violation of this section shall be null and void.

14.Third Party Beneficiaries. Except as expressly provided in this Agreement, nothing herein expressed or implied is intended or will be construed to confer upon or to give any Person not a party hereto any rights to remedies under or by reason of this Agreement.

15.Entire Agreement. This Agreement (together with the provisions of the Partner Agreement incorporated by reference herein) constitutes the entire agreement and understanding of the Parties with respect to the Employer’s performance of the Services, and supersedes all other prior and contemporaneous agreements, whether written or oral, between the Parties. This Agreement may not be modified or amended except by an instrument signed by the Party to be bound.

16.Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by facsimile or other electronic transmission shall be deemed an original signature hereto.

17.Captions or Headings. The headings appearing at the beginning of each section of this Agreement are all inserted and included solely for convenience and shall not be considered or given any effect in construing this Agreement, or any provision(s) hereof, or in connection with determining the duties, obligations or liabilities of the respective Parties hereto or in ascertaining intent, if any question of intent should arise.

18.Conflicts. In the event of a conflict between a provision contained within the main body of this Agreement and a provision contained within any exhibits attached hereto, the provision in the main body shall control. In the event of a conflict between a provision contained within this Agreement and the Partner Agreement, the Partner Agreement shall control.

19.Choice of Laws. Except for matters of title to the Properties or their Transfer, which will be governed by the law of their situs, this Agreement (including all exhibits and schedules hereto) and any disputes or claim, action, suit or legal proceeding (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, performance, non-performance, interpretation, termination or construction of this Agreement will be governed by and construed in accordance with the Laws of the State of Delaware without giving effect to the principles of conflict of laws that would permit or require the application of the substantive Laws of any other jurisdiction.

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20.Disputes.

(a)This Section 20 shall apply to all disputes between the Parties arising under this Agreement except for disputes pertaining to Claims for indemnification which arise in connection with or grow out of Claims asserted against either Party by a third party. Any dispute among the Parties arising out of or in connection with this Agreement:

(i)will first be attempted to be resolved by the Parties through good faith negotiations and in connection therewith, any Party may request in writing that any other Party meet and commence such negotiations within a reasonable period of time (in any event no later than seven days) after the request;

(ii)such negotiations will be between senior representatives of management of each such Party; and

(iii)if within ten Business Days after commencement of the negotiations under paragraph (i), above, the dispute has not been resolved, any Party may refer the matter to dispute resolution in accordance with the provisions set out below.

(b)In the event of the Parties being unable to resolve any dispute under Section 20(a), any such dispute will be resolved: (a) in the case of a purely technical matter, by an expert agreed to by the Parties, acting reasonably; and (b) in the case of any other matter, by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and each Party hereby consents to any such disputes being so resolved. Each Party will have the right to nominate one arbitrator each and the arbitrators so nominated will jointly nominate an arbitrator to act as chairman. In the event of being unable to agree on such an arbitrator, the Parties will proceed to the American Arbitration Association for the nomination of this arbitrator. The arbitration proceedings will take place in New York, New York in the English language. The arbitrators will decide ex aequo et bono and in their award the extent to which the Parties will bear the arbitration costs. Judgment on the award rendered in any such arbitration may be entered in any court having jurisdiction.

21.Construction. The language used in this Agreement will be deemed to be the language chosen by the joint action of the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party.

22.Severability. Should any provision of this Agreement be deemed in contradiction with the laws of any jurisdiction in which it is to be performed or otherwise be unenforceable for any reason, such provision will be deemed null and void, but this Agreement will remain in force in all other respects and in all other jurisdictions. Should any provision of this Agreement be or become ineffective because of changes in applicable Law or the interpretations thereof, or should this Agreement fail to include a provision that is required as a matter of law, the validity of the other provisions of this Agreement will not be affected thereby. If such circumstances arise, the Parties will negotiate in good faith appropriate modifications to this Agreement to reflect those changes that are required by applicable Law.

[signature page follows]

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Executed as of the Effective Date.

OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.

By:

Printed Name:

Title:

SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.

By:

Printed Name:

Title:

Signature Page to Personnel Services Agreement

EXHIBIT G.

EARN-IN FEE PAYMENT SCHEDULE

[ATTACHED]

Exhibit G

Los Gatos Project Initial Budget/Funding

2015- 2016 Feasibility Study

			2015 Fundings
	2014		Q1 2015			Q2 2015		Q3 2015		Q4 2015		2015
Definition Drilling	$	—	$	1,000,000		$	1,500,000	$	1,500,000	$	1,000,000	$	5,000,000
Exploration Studies	—		250,000			250,000		250,000		250,000		1,000,000
Ramp Construction	—		581,500			4,652,000		3,489,000		3,489,000		12,211,500
Purchase of Rancho La Cueva	—		—			3,500,000		—		—		3,500,000
Studies and Permitting	—		—			857,800		857,800		1,575,600		3,291,200
General and Administrative	649,661		831,950			651,950		783,200		644,450		2,911,550
Total Costs & Contingency	$	649,661	$	2,663,450		$	11,411,750	$	6,880,000	$	6,959,050	$	27,914,250
Calculated Quarterly Funding			$	2,600,339		$	11,400,000	$	6,900,000	$	7,000,000
Working Capital Existing in MPR (estimate)			$	(1,200,000	)
Working Capital Settlement (estimate)						1,200,000
Buffer			$	8,000,000
Contractual Quarterly Dowa Funding	$	649,661	$	9,400,339		$	12,600,000	$	6,900,000	$	7,000,000
Cumulative Dowa Funding	$	649,661	$	10,050,000		$	22,650,000	$	29,550,000	$	36,550,000

Note: Existing MPR Working Capital reduces required funding in 2015 Q1. When this Existing Working Capital is Realized and Agreed by JV Partners, it will Be Remitted to Sunshine Silver Mining & Refining - estimated in 2015 Q2.

Exhibit G

Los Gatos Project Initial Budget/Funding

2015- 2016 Feasibility Study

	2016 Fundings
	Q1 2016		Q2 2016			Q3 2016			Q4 2016			2016		Total
Definition Drilling	$	—	$	—		$	—		$	—		$	—	$	5,000,000
Exploration Studies	250,000		250,000			250,000			250,000			1,000,000		2,000,000
Ramp Construction	4,652,000		4,652,000			2,907,500			—			12,211,500		24,423,000
Purchase of Rancho La Cueva	—		—			—			—			—		3,500,000
Studies and Permitting	1,316,480		1,195,510			1,495,510			1,130,400			5,137,900		8,429,100
General and Administrative	961,950		700,700			819,450			599,450			3,081,550		6,642,761
Total Costs & Contingency	$	7,180,430	$	6,798,210		$	5,472,460		$	1,979,850		$	21,430,950	$	49,994,861
Calculated Quarterly Funding	$	7,200,000	$	6,800,000		$	5,500,000		$	2,000,000
Working Capital Existing in MPR (estimate)
Working Capital Settlement (estimate)
Buffer			$	(550,000	)	$	(5,500,000	)	$	(2,000,000	)
Contractual Quarterly Dowa Funding	$	7,200,000	$	6,250,000		$	—		$	—
Cumulative Dowa Funding	$	43,750,000	$	50,000,000		$	50,000,000		$	50,000,000

EXHIBIT H.

ESCROW AGREEMENT

[ATTACHED]

Execution Version

ESCROW AGREEMENT

THIS ESCROW AGREEMENT, (“Escrow Agreement”) dated as of December 15, 2014 (the “Effective Date”), is by and among Dowa Metals & Mining Co., Ltd., a corporation incorporated under the Laws of Japan, with a business address located at 14-1, Sotokanda 4-Chome, Chiyoda-ku, Tokyo, Japan 101-0021 (“Depositor”); Minera Plata Real, S. de R.L. de C.V., a Mexico variable capital company incorporate under the Laws of Mexico (“Recipient”); and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as escrow agent hereunder (“Escrow Agent”).

BACKGROUND

A.Depositor and Recipient have entered into that certain Unanimous Omnibus Partner Agreement (as amended, and together with the other parties thereto, the “Underlying Agreement”), dated as of the date hereof, pursuant to which the Depositor and Recipient will conduct certain exploration and feasibility work to enable development and operation of one or more a mines located in the State of Chihuahua, Mexico known as the Los Gatos Project (the “Project”). The Underlying Agreement provides that Depositor shall deposit the Escrow Funds (defined below), Quarterly and in accordance with the schedule of payments attached as Exhibit I hereto (the “Payment Schedule”), in a segregated escrow account to be held by Escrow Agent to then be paid to the Recipient during the period commencing on the Effective Date through the second anniversary of the Effective Date (the “Earn-In Period”).

B.Escrow Agent has agreed to accept, hold, and disburse the funds deposited with it and the earnings thereon in accordance with the terms of this Escrow Agreement.

C.Depositor and Recipient have appointed the Representatives (as defined below) to represent them for all purposes in connection with the funds to be deposited with Escrow Agent and this Escrow Agreement.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

1.Definitions. The following terms shall have the following meanings when used herein:

“Depositor Representative” shall mean the person(s) so designated on Schedule C hereto or any other person designated in a writing signed by Depositor and delivered to Escrow Agent and the Recipient Representative in accordance with the notice provisions of this Escrow Agreement, to act as its representative under this Escrow Agreement.

“Development” shall have the meaning set forth in the Underlying Agreement.

“Escrow Funds” shall mean the funds deposited with Escrow Agent pursuant to Section 3 of this Agreement, together with any interest and other income thereon.

“Exploration” shall have the meaning set forth in the Underlying Agreement.

“Indemnified Party” shall have the meaning set forth in Section 11.

“Joint Venture Entities” shall have the meaning set forth in the Underlying Agreement.

“Joint Written Direction” shall mean a written direction executed by Depositor and Recipient and directing Escrow Agent to disburse a portion of the Escrow Funds or to take or refrain from taking any other action pursuant to this Escrow Agreement.

“Project” shall have the meaning set forth in the Underlying Agreement.

“Quarter” shall mean a fiscal quarter beginning January 1, April 1, July 1 or October 1 during any year.

“Quarterly Written Direction” shall mean a written direction executed by the Recipient and directing Escrow Agent to disburse a portion of the Escrow Funds pursuant to this Escrow Agreement.

“Representatives” shall mean the Depositor Representative and the Recipient Representative.

“Recipient Representative” shall mean the person(s) so designated on Schedule C hereto or any other person designated, in a writing signed by Recipient and delivered to Escrow Agent and the Depositor Representative in accordance with the notice provisions of this Escrow Agreement, to act as its representative under this Escrow Agreement.

2.Appointment of and Acceptance by Escrow Agent. Depositor and Recipient hereby appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent hereby accepts such appointment and, upon receipt by wire transfer of the Escrow Funds in accordance with Section 3 below, agrees to hold, invest and disburse the Escrow Funds in accordance with this Escrow Agreement.

3.Deposit of Escrow Funds. No later than January 7, 2015, Depositor, on behalf of recipient, will transfer $9,400,000 of Escrow Funds by wire transfer of immediately available funds, to an account designated in writing by the Escrow Agent no later than December 19, 2014 (such transfer, the “Effective Date Transfer”). Thereafter, no later than three days prior to the beginning of each Quarter beginning April 1, 2015 (the “Initial Distribution Date”), Depositor, on behalf of the Recipient, will in accordance with the Payment Schedule transfer the Escrow Funds in the amount set forth on the Payment Schedule by wire transfer of immediately available funds, to an account designated by Escrow Agent.

4.Disbursements of Escrow Funds.

(a)Subject to the terms of this Sections 4(a) and (c), Escrow Agent shall disburse all or a portion of the Escrow Funds in accordance with a Quarterly Written Direction. Each Quarterly Written Direction shall contain complete payment instructions, including wiring instructions. The Quarterly Written Direction will be prepared by Recipient, delivered to the Escrow Agent and the Depositor no later than 20 days prior to the end of each Quarter and will set out an amount requested for disbursement (the “Estimated Disbursement”). The Depositor

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shall notify the Recipient and the Escrow Agent in writing within ten days of receipt of the Estimated Disbursement (the “Review Period”) of any objections to the Estimated Disbursement. If the Depositor does not notify the Escrow Agent and the Recipient of any objection to the Estimated Disbursement during the Review Period, the Depositor shall be deemed to have agreed with the Estimated Disbursement and the Escrow Agent shall, on the first business day of the immediately following Quarter (the “Scheduled Payment Date”), distribute the total amount of the Estimated Disbursement to the Recipient in accordance with the Quarterly Written Direction. If, during the Review Period, the Depositor notifies the Escrow Agent and the Recipient in writing of an objection that the amounts to be distributed pursuant to an Estimated Disbursement are not consistent with the scope and actual progress of Exploration and/or Development of the Project pursuant to the Initial Program and Budget, or that such amounts do not reflect a reasonable estimate of the expected expenditures of the Joint Venture Entities pursuant to the Initial Program and Budget during the next Quarter (an “Objection”), the Depositor and the Recipient shall negotiate in good faith to resolve the Objection. If the Depositor and the Recipient resolve the Objection, they shall provide the Escrow Agent with a Joint Written Direction instructing the Escrow Agent to disburse Escrow Funds to the Recipient. If the Depositor and the Recipient are unable to do resolve the Objection, (i) the Escrow Agent shall disburse to the Recipient, on the Scheduled Payment Date, an amount of Escrow Funds equal to the difference between the Estimated Disbursement and the disputed amount and (ii) the disputed amount retained by the Escrow Agent shall be resolved in accordance with Article 21 of the Underlying Agreement and the arbitrator shall determine the correct amount of any disbursement. Any order of an arbitrator engaged pursuant to Article 21 of the Underlying Agreement shall be delivered to the Escrow Agent and the non-prevailing party as soon as reasonably practicable following the order by the prevailing party confirming that the order is final and non-appealable and instructing the Escrow Agent to disburse Escrow Funds as provided in the order. Notwithstanding the foregoing provisions of this Section 4(a), the Parties acknowledge and agree that the Escrow Agent shall disburse Escrow Funds constituting the Effective Date Transfer at any time upon the written request of the Recipient following the Depositor’s transfer to the Escrow Agent of such amount pursuant to Section 3.

(b)Contemporaneously with the Recipient’s delivery of an Estimated Disbursement, the Recipient shall deliver to the Depositor a certification, signed by the Chief Financial Officer of the Recipient, setting forth the actual amounts spent by the Recipient and the other Joint Venture Entities during the third month of the prior Quarter and the first two months of the then-current Quarter and a reasonable estimate of the expenses of the Joint Venture Entities to be paid for the third month of the then-current Quarter. The Recipient shall provide, as an attachment to the certificate, a reasonable summary of all expenditures made in the third month of the prior Quarter and the first two months of the then-current Quarter as of the date prior to the date of the certificate, including the starting balance of the Recipient’s bank accounts and any available bank statements, including those obtained electronically. Notwithstanding the foregoing provisions of this Section 4(b), the Parties acknowledge and agree that this Section 4(b) shall not apply to the disbursement of the Escrow Funds constituting the Effective Date Transfer.

(c)Upon notice in writing from Depositor of a Dowa Withdrawal Event (as defined in the Underlying Agreement) prior to the expiration of the Earn-In Period, and receipt by Escrow Agent from Depositor of complete payment instructions in writing, Escrow Agent shall distribute to Depositor, as promptly as practicable, the Escrow Funds. If a Dowa

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Withdrawal Event does not occur prior to the expiration of the Earn-In Period, upon the expiration of the Earn-In Period and receipt by Escrow Agent from Recipient of complete payment instructions in writing, Escrow Agent shall distribute to Recipient, as promptly as practicable, the Escrow Funds.

(d)Prior to any disbursement, Escrow Agent shall have received reasonable identifying information regarding the Recipient such that Escrow Agent may comply with its regulatory obligations and reasonable business practices, including without limitation a completed United States Internal Revenue Service (“IRS”) Form W-9 or original IRS Form W-8, as applicable. All disbursements of funds from the Escrow Funds shall be subject to the fees and claims of Escrow Agent and the Indemnified Parties pursuant to Section 11 and Section 12 below.

5.Suspension of Performance; Disbursement into Court. If, at any time, (i) there shall exist any dispute between Depositor, Recipient or the Representatives with respect to the holding or disposition of all or any portion of the Escrow Funds or any other obligations of Escrow Agent hereunder, (ii) Escrow Agent is unable to determine, to Escrow Agent’s sole satisfaction, the proper disposition of all or any portion of the Escrow Funds or Escrow Agent’s proper actions with respect to its obligations hereunder, or (iii) Depositor and Recipient have not, within 10 calendar days of the furnishing by Escrow Agent of a notice of resignation pursuant to Section 8 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent may, in its sole discretion, take either or both of the following actions:

(a)suspend the performance of any of its obligations (including without limitation any disbursement obligations) under this Escrow Agreement until such dispute or uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until a successor Escrow Agent shall have been appointed.

(b)petition (by means of an interpleader action or any other appropriate method) any court of competent jurisdiction, in any venue convenient to Escrow Agent, for instructions with respect to such dispute or uncertainty, and to the extent required or permitted by law, pay into such court, for holding and disposition in accordance with the instructions of such court, all Escrow Funds, after deduction and payment to Escrow Agent of all fees and expenses (including court costs and attorneys’ fees) payable to, incurred by, or expected to be incurred by Escrow Agent in connection with the performance of its duties and the exercise of its rights hereunder.

Escrow Agent shall have no liability to Depositor, Recipient or the Representatives, their respective owners, shareholders or members or any other person with respect to any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of the Escrow Funds or any delay in or with respect to any other action required or requested of Escrow Agent.

6.[reserved]

7.Investment of Funds. Based upon Depositor’s and Recipient’s prior review of investment alternatives, in the absence of further specific written direction to the contrary, the Escrow Agent is directed to initially invest and reinvest the Escrow Funds in the investment

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indicated on Schedule B hereto. Recipient may provide written instructions changing the investment of the Escrow Funds to the Escrow Agent; provided, however, that no investment or reinvestment may be made except in the following: (a) direct obligations of the United States of America or obligations the principal of and the interest on which are unconditionally guaranteed by the United State of America; (b) U.S. dollar denominated deposit accounts and certificates of deposits issued by any bank, bank and trust company, or national banking association (including Escrow Agent and its affiliates), which such deposits are either (i) insured by the Federal Deposit Insurance Corporation or a similar governmental agency, or (ii) with domestic commercial banks which have a rating on their short- term certificates of deposit on the date of purchase of “A-1” or “A-l+” by S&P or “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (c) repurchase agreements with any bank, trust company, or national banking association (including Escrow Agent and its affiliates); or (d) institutional money market funds, including funds managed by Escrow Agent or any of its affiliates; provided that the Escrow Agent will not be directed to invest in investments that the Escrow Agent in its sole discretion determines are not consistent with the Escrow Agent’s policy or practices. Depositor and Recipient acknowledge that the Escrow Agent does not have a duty nor will it undertake any duty to provide investment advice.

If Escrow Agent has not received a written instruction from Recipient at any time that an investment decision must be made, Escrow Agent is directed to invest the Escrow Funds, or such portion thereof as to which no written investment instruction has been received, in the investment indicated on Schedule B hereto. All investments shall be made in the name of Escrow Agent. Notwithstanding anything to the contrary contained herein, Escrow Agent may, without notice to Depositor and Recipient, sell or liquidate any of the foregoing investments at any time for any disbursement of Escrow Funds permitted or required hereunder. All investment earnings shall become part of the Escrow Funds and investment losses shall be charged against the Escrow Funds. Escrow Agent shall not be liable or responsible for loss in the value of any investment made pursuant to this Escrow Agreement, or for any loss, cost or penalty resulting from any sale or liquidation of the Escrow Funds. With respect to any Escrow Funds received by Escrow Agent after twelve o’clock, p.m., Central Standard Time, Escrow Agent shall not be required to invest such funds or to effect any investment instruction until the next day upon which banks in St. Paul, Minnesota and the New York Stock Exchange are open for business.

8.Resignation of Escrow Agent. Escrow Agent may resign and be discharged from the performance of its duties hereunder at any time by giving thirty (30) days prior written notice to the Depositor and Recipient specifying a date when such resignation shall take effect. Upon any such notice of resignation, Depositor and Recipient jointly shall appoint a successor Escrow Agent hereunder prior to the effective date of such resignation. If the Depositor and Recipient fail to appoint a successor Escrow Agent within such time, the Escrow Agent shall have the right to petition a court of competent jurisdiction to appoint a successor Escrow Agent, and all costs and expenses (including without limitation attorneys’ fees) related to such petition shall be paid jointly and severally by Depositor and Recipient. The retiring Escrow Agent shall transmit all records pertaining to the Escrow Funds and shall pay all Escrow Funds to the successor Escrow Agent, after making copies of such records as the retiring Escrow Agent deems advisable and after deduction and payment to the retiring Escrow Agent of all fees and expenses (including court costs and attorneys’ fees) payable to, incurred by, or expected to be incurred by the retiring Escrow Agent in connection with the performance of its duties and the exercise of its rights

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hereunder. After any retiring Escrow Agent’s resignation, the provisions of this Escrow Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Escrow Agent under this Escrow Agreement.

9.Binding Effect; Successors. This Escrow Agreement shall be binding upon the respective parties hereto and their heirs, executors, successors or assigns. If the Escrow Agent consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business (including the escrow contemplated by this Escrow Agreement) to another corporation, the successor or transferee corporation without any further act shall be the successor Escrow Agent.

10.Liability of Escrow Agent. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. The Escrow Agent has no fiduciary or discretionary duties of any kind. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement, including without limitation any other agreement between any or all of the parties hereto or any other persons even though reference thereto may be made herein. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the cause of any loss to the Depositor or Recipient. Escrow Agent’s sole responsibility shall be for the safekeeping and disbursement of the Escrow Funds in accordance with the terms of this Escrow Agreement. Escrow Agent shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. Escrow Agent may rely upon any notice, instruction, request or other instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which Escrow Agent shall believe to be genuine and to have been signed or presented by the person or parties purporting to sign the same. In no event shall Escrow Agent be liable for incidental, indirect, special, consequential or punitive damages or penalties (including, but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such damages or penalty and regardless of the form of action. Escrow Agent shall not be responsible for delays or failures in performance resulting from acts beyond its control, including without limitation acts of God, strikes, lockouts, riots, acts of war or terror, epidemics, governmental regulations, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters. Escrow Agent shall not be obligated to take any legal action or commence any proceeding in connection with the Escrow Funds, any account in which Escrow Funds are deposited, this Escrow Agreement or the Underlying Agreement, or to appear in, prosecute or defend any such legal action or proceeding. Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability and shall be fully indemnified from any liability whatsoever in acting in accordance with the advice of such counsel. Depositor and Recipient, jointly and severally, shall promptly pay, upon demand, the reasonable and documented out-of-pocket fees and expenses of any such counsel. Depositor and Recipient agree to perform or procure the performance of all further acts and things, and execute and deliver such further documents, as may be required by law or as Escrow Agent may reasonably request in connection with its duties hereunder.

The Escrow Agent is authorized, in its sole discretion, to comply with final orders issued or process entered by any court with respect to the Escrow Funds, without determination by the

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Escrow Agent of such court’s jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if the Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

11.Indemnification of Escrow Agent. From and at all times after the date of this Escrow Agreement, Depositor and Recipient, jointly and severally, shall, to the fullest extent permitted by law, indemnify and hold harmless Escrow Agent and each director, officer, employee, attorney, agent and affiliate of Escrow Agent (collectively, the “Indemnified Parties”) against any and all actions, claims (whether or not valid), losses, damages, liabilities, penalties, costs and expenses of any kind or nature (including without limitation reasonable attorneys’ fees, costs and expenses) incurred by or asserted against any of the Indemnified Parties, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including without limitation Depositor, Recipient and the Representatives, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance in connection with this Escrow Agreement or any transactions contemplated herein, whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for any liability finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted from the gross negligence or willful misconduct of such Indemnified Party. Depositor and Recipient further agree, jointly and severally, to indemnify each Indemnified Party for all costs, including without limitation reasonable and documented out-of-pocket attorney’s fees, incurred by such Indemnified Party in connection with the enforcement of Depositor’s and Recipient’s indemnification obligations hereunder. Each Indemnified Party shall, in its sole discretion, have the right to select and employ separate counsel with respect to any action or claim brought or asserted against it, and the reasonable and documented out-of-pocket fees of such counsel shall be paid upon demand by the Depositor and Recipient jointly and severally. The obligations of Depositor and Recipient under this Section 11 shall survive any termination of this Escrow Agreement and the resignation or removal of Escrow Agent.

The parties agree that neither the payment by Depositor or Recipient of any claim by Escrow Agent for indemnification hereunder nor the disbursement of any amounts to Escrow Agent from the Escrow Funds in respect of a claim by Escrow Agent for indemnification shall impair, limit, modify, or affect, as between Depositor and Recipient, the respective rights and obligations of Depositor and Recipient under the Underlying Agreement.

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12.Compensation of Escrow Agent

(a)Fees and Expenses. Depositor and Recipient agree, jointly and severally, to compensate Escrow Agent on demand for its services hereunder in accordance with Schedule A attached hereto. The obligations of Depositor and Recipient under this Section 12 shall survive any termination of this Escrow Agreement and the resignation or removal of Escrow Agent.

(b)Disbursements from Escrow Funds to Pay Escrow Agent. Escrow Agent is authorized to, and may disburse to itself from the Escrow Funds, from time to time, the amount of any compensation and reimbursement of out-of-pocket expenses due and payable hereunder (including any amount to which Escrow Agent or any Indemnified Party is entitled pursuant to Section 11). Escrow Agent shall notify Depositor and Recipient of any disbursement from the Escrow Funds to itself or any Indemnified Party in respect of any compensation or reimbursement hereunder and shall furnish Depositor and Recipient copies of related invoices and other statements.

(c)Security and Offset. Recipient, Depositor and the Representatives hereby grant to Escrow Agent and the Indemnified Parties a security interest in, lien upon and right of offset against the Escrow Funds with respect to any compensation or reimbursement due any of them hereunder (including any claim for indemnification hereunder). If for any reason the Escrow Funds are insufficient to cover such compensation and reimbursement, Depositor and Recipient shall promptly pay such amounts to Escrow Agent or any Indemnified Party upon receipt of an itemized invoice.

13.Representations and Warranties.

(a)Depositor and Recipient each respectively make the following representations and warranties to Escrow Agent:

i.it has full power and authority to execute and deliver this Escrow Agreement and to perform its obligations hereunder; and this Escrow Agreement has been duly approved by all necessary action and constitutes its valid and binding agreement enforceable in accordance with its terms; and

ii.each of the applicable persons designated on Schedule C attached hereto have been duly appointed to act as authorized representatives hereunder and individually have full power and authority to execute and deliver any Joint Written Direction, to amend, modify or waive any provision of this Escrow Agreement and to take any and all other actions as authorized representatives under this Escrow Agreement, all without further consent or direction from, or notice to, it or any other party, provided that any change in designation of such authorized representatives shall be provided by written notice delivered to each party to this Escrow Agreement.

(b)The Escrow Agent represents and warrants to the Depositor and Recipient that it has full power and authority to execute and deliver this Escrow Agreement and to perform its obligations hereunder; and this Escrow Agreement has been duly approved by all necessary action and constitutes its valid and binding agreement enforceable in accordance with its terms.

14.Identifying Information. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify,

8

and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust, or other legal entity, the Escrow Agent requires documentation to verify its formation and existence as a legal entity. The Escrow Agent may ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. The parties acknowledge that a portion of the identifying information set forth herein is being requested by the Escrow Agent in connection with the USA Patriot Act, Pub.L.107-56 (the “Act”), and each agrees to provide any additional information requested by the Escrow Agent in connection with the Act or any other legislation or regulation to which Escrow Agent is subject, in a timely manner.

15.Consent to Jurisdiction and Venue. In the event that any party hereto commences a lawsuit or other proceeding relating to or arising from this Escrow Agreement, the parties hereto agree to the personal jurisdiction by and venue in the state and federal courts in the State of Delaware and waive any objection to such jurisdiction or venue. The parties hereto consent to and agree to submit to the jurisdiction of any of the courts specified herein and agree to accept service of process to vest personal jurisdiction over them in any of these courts.

16.Notices. All notices, approvals, consents, requests, and other communications hereunder shall be in writing and shall be delivered (i) by personal delivery, or (ii) by national overnight courier service, or (iii) by certified or registered mail, return receipt requested, or (iv) via facsimile transmission, with confirmed receipt or (v) via email by way of a PDF attachment thereto of a manually executed document. Notice shall be effective upon receipt except for notice via email, which shall be effective only when the recipient, by return email or notice delivered by other method provided for in this Section 16, acknowledges having received that email (with an automatic “read receipt” or similar notice not constituting an acknowledgement of an email receipt for purposes of this Section 16.) Such notices shall be sent to the applicable party or parties at the address specified below:

If to Depositor or Depositor Representative at:

Dowa Metals & Mining Co., Ltd.

14-1, Sotokanda 4-chome

Chiyoda-Ku, Tokyo

101-0021

Japan

Attention:Toshiaki Suyama, Director, General Manager, Resource

Development & Raw Materials Department

Telephone:+81-3-6847-1201

Facsimile:+81-3-6847-1211

Email:suyamat@dowa.co.jp

With a Copy to:

Dowa Metals & Mining Co., Ltd.

Mexico Office

Andres Bello 45, Piso 16-A

Col. Chapultepec Polanco, C.P.

11560

9

Mexico D.F., Mexico

Attention:Toshiaki Terao, Representative in Mexico

Telephone:+52-55-5280-4578

Fax:+52-55-5281-6689

Email:terao@dowamex.com.mx

And to:

Torys LLP

1114 Avenue of the Americas, 23rd Floor

New York, New York 10036.7703 USA

Attention:Don Bell

Telephone:212-880-6118

Fax:212-682-0200

Email:dbell@torys.com

If to Recipient or Recipient Representative at:

c/o Sunshine Silver Mining & Refining Corporation

ATTN:Jeffrey Reeser, General Counsel

370 17th Street Suite 3800

Denver CO 80202

Telephone:303-784-5350

E-mail:jreeeser@ssmines.com

And to:

Hogan Lovells US LLP

One Tabor Center

1200 17th St., Suite 1500

Attention:Kevin Burke

Telephone:303-454-2520

Fax:303-899-7300

Email:kevin.burke@hoganlovells.com

If to the Escrow Agent at:U.S. Bank National Association, as Escrow Agent

ATTN:Kathleen Connelly

Address:950 17th Street, 12th Fl, Denver CO 80202

Telephone:303-585-4591

Facsimile:303-585-6865

E-mail:Kathleen.connelly@usbank.com

and to:

U.S. Bank National Association

ATTN:Susan Selser

Trust Finance Management

60 Livingston Ave

St. Paul MN 55107

10

Telephone:651-466-6090

Facsimile:866-691-4161

E-mail:susan.selser@ubank.com

or to such other address as each party may designate for itself by like notice and unless otherwise provided herein shall be deemed to have been given on the date received.

17.Optional Security Procedures. In the event funds transfer instructions, address changes or change in contact information are given (other than in writing at the time of execution of this Escrow Agreement), whether in writing, by facsimile or otherwise, the Escrow Agent is authorized but shall be under no duty to seek confirmation of such instructions by telephone call-back to the person or persons designated on Schedule C hereto, and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call-backs may be changed only in writing actually received and acknowledged by Escrow Agent and shall be effective only after Escrow Agent has a reasonable opportunity to act on such changes. If the Escrow Agent is unable to contact any of the designated representatives identified in Schedule C, the Escrow Agent is hereby authorized but shall be under no duty to seek confirmation of such instructions by telephone call-back to any one or more of Depositor’s or Recipient’s executive officers (“Executive Officers”), as the case may be, which shall include the titles of Chief Executive Officer, President and Vice President, as the Escrow Agent may select. Such Executive Officer shall deliver to the Escrow Agent a fully executed incumbency certificate, and the Escrow Agent may rely upon the confirmation of anyone purporting to be any such officer. Depositor and Recipient agree that the Escrow Agent may at its option record any telephone calls made pursuant to this Section. The Escrow Agent in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by Depositor or Recipient to identify (a) the beneficiary, (b) the beneficiary’s bank, or (c) an intermediary bank. The Escrow Agent may apply any of the Escrow Funds for any payment order it executes using any such identifying number, even when its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary’s bank or an intermediary bank designated. Depositor and Recipient acknowledge that these optional security procedures are commercially reasonable.

18.Amendment, Waiver and Assignment. None of the terms or conditions of this Escrow Agreement may be changed, waived, modified, discharged, terminated or varied in any manner whatsoever unless in writing duly signed by each party to this Escrow Agreement. No course of conduct shall constitute a waiver of any of the terms and conditions of this Escrow Agreement, unless such waiver is specified in writing, and then only to the extent so specified. A waiver of any of the terms and conditions of this Escrow Agreement on one occasion shall not constitute a waiver of the other terms of this Escrow Agreement, or of such terms and conditions on any other occasion. Except as provided in Section 9 hereof, this Escrow Agreement may not be assigned by any party without the written consent of the other parties.

19.Severability. To the extent any provision of this Escrow Agreement is prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Escrow Agreement.

11

20.Governing Law. This Escrow Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without giving effect to the conflict of laws principles thereof.

21.Entire Agreement, No Third Party Beneficiaries. This Escrow Agreement constitutes the entire agreement between the parties relating to the holding, investment and disbursement of the Escrow Funds and sets forth in their entirety the obligations and duties of Escrow Agent with respect to the Escrow Funds. Nothing in this Escrow Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Escrow Agreement.

22.Execution in Counterparts, Facsimiles. This Escrow Agreement and any Joint Written Direction may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement or direction. The delivery of copies of this Escrow Agreement and any Joint Written Instruction and their respective signature pages by PDF or facsimile transmission shall constitute effective execution and delivery as to the parties and may be used in lieu of originals for all purposes.

23.Termination. This Escrow Agreement shall terminate upon the later to occur of (i) the distribution of all the Escrow Funds pursuant to any applicable provision of this Escrow Agreement and (ii) the expiration of the Earn-In Period, and upon the termination Escrow Agent shall thereafter have no further obligation or liability whatsoever with respect to this Escrow Agreement or the Escrow Funds.

24.Dealings. The Escrow Agent and any stockholder, director, officer or employee of the Escrow Agent may buy, sell, and deal in any of the securities of the Depositor or Recipient and become pecuniarily interested in any transaction in which the Depositor or Recipient may be interested, and contract and lend money to the Depositor or Recipient and otherwise act as fully and freely as though it were not Escrow Agent under this Agreement. Nothing herein shall preclude the Escrow Agent from acting in any other capacity for the Depositor or Recipient or for any other entity.

25.Brokerage Confirmation Waiver. Depositor and Recipient acknowledge that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant either the right to receive brokerage confirmations for certain security transactions as they occur, Depositor and Recipient specifically waive receipt of such confirmations to the extent permitted by law. The Escrow Agent will furnish the Depositor and Recipient periodic cash transaction statements that include detail for all investment transactions made by the Escrow Agent.

26.Tax Reporting. Escrow Agent shall have no responsibility for the tax consequences of this Agreement and Depositor and Recipient shall consult with independent counsel concerning any and all tax matters. Depositor and Recipient shall provide Escrow Agent Form W-9 and an original Form W-8, as applicable, for each payee, together with any other documentation and information requested by Escrow Agent in connection with Escrow Agent’s reporting obligations under applicable IRS regulations. If such tax documentation is not so provided, Escrow Agent shall withhold taxes as required by the IRS. Recipient and Depositor have determined that any interest or income on Escrow Funds shall be reported on an accrual basis and deemed to be for the account of Recipient. Depositor and Recipient shall prepare and

12

file all required tax filings with the IRS and any other applicable taxing authority; provided that the parties further agree that:

(a)Escrow Agent IRS Reporting. Depositor shall accurately provide the Escrow Agent with all information requested by the Escrow Agent in connection with the preparation of all applicable Form 1099 and Form 1042-S documents with respect to all distributions as well as in the performance of Escrow Agent’s reporting obligations under the Foreign Account Tax Compliance Act and Foreign Investment in Real Property Tax Act or other applicable law or regulation.

(b)Withholding Requests and Indemnification. Depositor and Recipient jointly and severally agree to (i) assume all obligations imposed now or hereafter by any applicable tax law or regulation with respect to payments or performance under this Agreement, (ii) request the Escrow Agent in writing with respect to withholding and other taxes, assessments or other governmental charges, and advise Escrow Agent in writing with respect to any certifications and governmental reporting that may be required under any applicable laws or regulations, and (iii) indemnify and hold the Escrow Agent harmless pursuant to Section 11 hereof from any liability or obligation on account of taxes, assessments, additions for late payment, interest, penalties, expenses and other governmental charges that may be assessed or asserted against Escrow Agent.

(c)Imputed Interest. To the extent that IRS imputed interest regulations apply, Depositor and Recipient shall so inform Escrow Agent, provide Escrow Agent with all imputed interest calculations and direct Escrow Agent to disburse imputed interest amounts as Depositor and Recipient deem appropriate. Escrow Agent shall rely solely on such provided calculations and information and shall have no responsibility for the accuracy or completeness of any such calculations or information.

27.WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR (2) IN ANY WAY IN CONNECTION WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES TO THIS AGREEMENT OR IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF ANY SUCH PARTY’S RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES TO THIS AGREEMENT, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. EACH OF THE PARTIES HERETO HEREBY FURTHER ACKNOWLEDGES AND AGREES THAT EACH HAS REVIEWED OR HAD THE OPPORTUNITY TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A CONSENT BY ALL PARTIES TO A TRIAL BY THE COURT.

28.Publicity. No party will (a) use any other party’s proprietary indicia, trademarks, service marks, trade names, logos, symbols, or brand names, or (b) otherwise refer to or identify

13

any other party in advertising, publicity releases, or promotional or marketing publications, or correspondence to third parties without, in each case, securing the prior written consent of such other party.

[Remainder of Page is Intentionally Blank]

14

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed under seal as of the date first above written.

DOWA METALS & MINING CO., LTD.

By:

Name:

Title:

MINERA PLATA REAL, S. DE R.L. DE C.V.

By:

Name:

Title:

U.S. BANK NATIONAL ASSOCIATION

as Escrow Agent

By:

Name:

Title:

15

SCHEDULE A

Schedule of Fees for Services as

Escrow Agent

For

01010	Acceptance Fee	$ 500.00
	The acceptance fee includes the administrative review of documents, initial set-up of
	the account, and other reasonably required services up to and including the closing.
	This is a one-time fee, payable at closing.
	U.S. Bank Corporate Trust Services reserves the right to refer any or all escrow
	documents for legal review before execution. Legal fees (billed on an hourly basis)
	and expenses for this service will be billed to, and paid by, the customer. If
	appropriate and upon request by the customer, U.S. Bank Corporate Trust Services
	will provide advance estimates of these legal fees.
04460	Escrow Agent	$2,000.00
	Annual administration fee for performance of the routine duties of the escrow agent
	associated with the management of the account. Administration fees are payable in
	advance.
Direct Out of Pocket Expenses
	Reimbursement of expenses associated with the performance of our duties, including	At Cost
	but not limited to publications, legal counsel after the initial close, travel expenses and
	filing fees.
Extraordinary Services
	Extraordinary services are duties or responsibilities of an unusual nature, including
	termination, but not provided for in the governing documents or otherwise set forth in
	this schedule. A reasonable charge will be assessed based on the nature of the
	service and the responsibility involved. At our option, these charges will be billed at a
	flat fee or at our hourly rate then in effect.

Account approval is subject to review and qualification. Fees are subject to change at our discretion and upon written notice. Fees paid in advance will not be prorated. The fees set forth above and any subsequent modifications thereof are part of your agreement. Finalization of the transaction constitutes agreement to the above fee schedule, including agreement to any subsequent changes upon proper written notice. In the event your transaction is not finalized, any related out-of-pocket expenses will be billed to you directly. Payment of fees constitutes acceptance of the terms and conditions set forth.

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

For a non-individual person such as a business entity, a charity, a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity. We may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

Dated:

SCHEDULE B

U.S. BANK NATIONAL ASSOCIATION

MONEY MARKET ACCOUNT AUTHORIZATION FORM

DESCRIPTION AND TERMS

The U.S. Bank Money Market is a U.S. Bank National Association (“U.S. Bank”) interest-bearing money market deposit account designed to meet the needs of U.S. Bank’s Corporate Trust Services Escrow Group and other Corporate Trust customers of U.S. Bank. Selection of this investment includes authorization to place the funds on deposit and invest with U.S. Bank.

U.S. Bank uses the daily balance method to calculate interest on this account (actual/365 or 366). This method applies a daily periodic rate to the principal balance in the account each day. Interest is accrued daily and credited monthly to the account. Interest rates are determined at U.S. Bank’s discretion, and may be tiered by customer deposit amount.

The owner of the account is U.S. Bank as Agent for its trust customers. U.S. Bank’s trust department performs all account deposits and withdrawals. Deposit accounts are FDIC insured per depositor, as determined under FDIC Regulations, up to applicable FDIC limits.

AUTOMATIC AUTHORIZATION

In the absence of specific written direction to the contrary, U.S. Bank is hereby directed to invest and reinvest proceeds and other available moneys in the U.S. Bank Money Market Account. The U.S. Bank Money Market Account is a permitted investment under the operative documents and this authorization is the permanent direction for investment of the moneys until notified in writing of alternate instructions.

SCHEDULE C

Each of the following person(s) is a Depositor Representative authorized to execute documents and direct Escrow Agent as to all matters, including fund transfers, address changes and contact information changes, on Depositor’s behalf (only one signature required):

Name	Specimen signature	Telephone No.
Name	Specimen signature	Telephone No
Name	Specimen signature	Telephone No

(Note: if only one person is identified above, please add the following language:)

The following person not listed above is authorized for call-back confirmations:

[                           ]
Name	Telephone Number

Each of the following person(s) is a Recipient Representative authorized to execute documents and direct Escrow Agent as to all matters, including fund transfers, address changes and contact information changes, on Recipient’s behalf (only one signature required):

Name	Specimen signature	Telephone No
Name	Specimen signature	Telephone No
Name	Specimen signature	Telephone No

(Note: if only one person is identified above, please add the following language:)

The following person not listed above is authorized for call-back confirmations

[                           ]
Name	Telephone Number

EXHIBIT I

PAYMENT SCHEDULE

Date	Amount
No Later than January 7, 2015	$	9,400,339
At least three (3) days prior to April 1, 2015	$	11,400,000
At least three (3) days prior to July 1, 2015	$	6,900,000
At least three (3) days prior to October 1, 2015	$	7,000,000
At least three (3) days prior to January 1, 2016	$	7,200,000
At least three (3) days prior to April 1, 2016	$	6,250,000

Execution Version

DISCLOSURE SCHEDULES

to the

UNANIMOUS OMNIBUS PARTNER AGREEMENT

among

MINERA PLATA REAL, S. DE R.L. DE C.V.

and

OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.

and

SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.

and

LOS GATOS LUXEMBOURG S. AR. L.

and

SUNSHINE SILVER MINING & REFINING CORPORATION

and

DOWA METALS & MINING CO., LTD.

Effective as of January 1, 2015

SCHEDULE 2.11(d)

CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS

MINERA PLATA REAL, S. DE R.L. DE C.V

C/O VAZQUEZ, SIERRA & GARCIA, S.C.

AV. PASEO DE LAS PALMAS 755, DESP. 902

COL. LOMAS DE CHAPULTEPEC

11000, MEXICO, D.F.

OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V

C/O VAZQUEZ, SIERRA & GARCIA, S.C.

AV. PASEO DE LAS PALMAS 755, DESP. 902

COL. LOMAS DE CHAPULTEPEC

11000, MEXICO, D.F.

SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V

C/O VAZQUEZ, SIERRA & GARCIA, S.C.

AV. PASEO DE LAS PALMAS 755, DESP. 902

COL. LOMAS DE CHAPULTEPEC

11000, MEXICO, D.F.

SCHEDULE 2.11(m)

RELATED PARTY TRANSACTIONS

Transfer of non-Los Gatos concessions from MPR to Minera Luz del Sol S. de R.L. de C.V.

I.Transfer of Rights entered into by and between Minera Plata Real, S. de R.L. de C.V. (as Transferor) and Minera Luz del Sol, S. de R.L. de C.V. (as Transferee) of the following Concessions:

“Mina Grande”, “Pablito”, “El Arco”, “El Arco 2”, “ San José”, “San José de las Minas”, “San José de las Minas II”, “El Encino” and “Galeón” ;

II.Transfer of Rights entered into by and between Minera Plata Real, S. de R.L. de C.V. (as Transferor) and Minera Luz del Sol, S. de R.L. de C.V. (as Transferee) of the following Mining Exploration Agreements and Promise of Transfer of Rights:

a.Agreement entered into with Corporativo Minero, S.A. de C.V. regarding the following concessions:

“Sta. Valeria”, “Sta. Valeria I”, “Sta. Valeria II”, “Sta. Valeria III”, “Sta. Valeria IV”, “Sta. Valeria V”, “Sta. Valeria VI”, “Sta. Valeria VII”, “Sta. Valeria VIII”, “Sta. Valeria IX”, “Sta. Valeria X”, “Sta. Valeria XI”, “Sta. Valeria XII”, “Sta. Valeria XIII”, “Sta. Valeria XIV”, “Sta. Valeria XV”, “Sta. Valeria XVI” and “Sta. Valeria VII”.

b.Agreement subscribed with Mrs. Tomasa Acuña Jiménez de Ramos, Mr. Rubén Ramos Sánchez, Mr. Jaime Ramos García and Mr. Juan Manuel Ramos García, regarding the following concessions:

“Lalo”,”Lalo Frac I.”, “Lalo Frac II.”, “El Rey”, “El Hueco”, “Josefina Frac. I”, “Las Coloradas”, “El Cometa”, “El Cometa Fracción I”, “El Cometa Fracción”, “El Bajío”, “El As” and “Lucy”.

c.Agreement subscribed with Grupo Industrial Gamo, S. de R.L. de C.V., regarding the following concessions:

“Tilita”, “Tilita 2”, “Tilita 3”, “Tilita 4”, “Tilita 5”, “El Águila Mexicana”, “Águila 2” and “La Protección”.

d.Agreement with Carlos Coutiño regarding the following concessions:

“El As” and “La Morita”

III.Transfer of Rights entered into by and between Minera Plata Real, S. de R.L. de C.V. (as Transferor) and Minera Luz del Sol, S. de R.L. de C.V. (as Transferee) of the following applications of concessions:

“Atenas”, “El Presión”, “Cabañas”, “Florida” and “El Coronel”.

SCHEDULE 2.11(n)

RESTRICTIVE DOCUMENTS

None.

SCHEDULE 2.11(o)

PERMITS

1. MIA (Manifestacion Impacto ambiental) and ETJ (Estudio tecnico Justificado) for development of the ramp were submitted 14th of June 2012 and granted approval on 7th of August 2012. The cambio de uso de suelos (Change of land use) was granted by Semarnat on 6th November 2012.

2. sedena explosives permit

3. Nom 120 Activities Report for Cerro Los Gatos and Esther drilling

4. Nom 120 Activities Report for geotechnical drilling

5. An additional report of activities will be filed in early 2015 to report on the progress and planned work in 2015

SCHEDULE 2.11(p)

TITLE TO REAL PROPERTY

Santa Ana

Tierra Prieta

Las Pilas

Charcos I

Charcos II

Cerro Colorado

La Palma

Los Gatos

Amapola

Rodeo

All of the “Land Assets” described on Exhibit A.

SCHEDULE 2.11(q)(i)

MINERAL RIGHTS — MINERAL INTERESTS, MINING CONCESSIONS, MINING TENEMENTS OR OTHER MINERAL RIGHTS

	LOT	HOLDER	SURFACE (Hectares)	TITLE	TYPE OF CONCESSION	TERM	LOCATION
1	Los Gatos	MPR	19,711.6889	231498	Mining	March 3, 2058	Satevo, Chihuahua
2	Los Gatos 2	MPR	10,719.5765	228950	Mining	February 21, 2057	Satevo, Chihuahua
3	Los Gatos 3	MPR	27.2846	231076	Mining	January 15, 2058	Satevo, Chihuahua
4	Mezcalera	MPR	4,991.6263	228249	Mining	October 16, 2056	Satevo, Chihuahua
5	Mezcalera 2 Fracción I	MPR	39.2621	228929	Mining	February 20, 2057	Satevo, Chihuahua
6	Mezcalera 2 Fracción II	MPR	26.1402	228930	Mining	February 20, 2057	Satevo, Chihuahua
7	Mezcalera 2 Fracción III	MPR	29.0859	228931	Mining	February 20, 2057	Satevo, Chihuahua
8	La Gavilana	MPR	10.0000	237137	Mining	November 18, 2060	Satevo, Chihuahua
9	La Gavilana Fracción I	MPR	44.0000	237461	MINING	December 20, 2060	Satevo, Chihuahua
10	Paula Adorada	MPR	40.0000	223392	Mining	December 8, 2054	Satevo, Chihuahua
11	San Luis	MPR	16.0000	236908	Mining	October 4, 2060	Satevo, Chihuahua
12	Los Estados Fracc. 1	MPR	9.0000	237694	Mining	April 25, 2061	Satevo, Chihuahua
13	Los Estados Fracc. 2	MPR	44.0000	237695	Mining	April 25, 2061	Satevo, Chihuahua
14	San Luis 3	MPR	0.0111	240452	Mining	May 22, 2062	Satevo, Chihuahua
15	Los Gatos 4	MPR	52,596.9673	238511	Mining	September 22, 2061	Satevo, Chihuahua
16	San Luis 2	MPR	42.3904	238694	Mining	October 17, 2061	Satevo, Chihuahua
17	Los Veranos	MPR	14,739.8002	238573	Mining	September 22, 2061	Satevo, Chihuahua

SCHEDULE 2.11(q)(iii)

MINERAL RIGHTS — PERMITTED ENCUMBRANCES, ROYALTY INTERESTS AND ENCUMBRANCES

Contract of Assignment of Rights Executed, as ratified on December 5, 2014, on the one part by La Cuesta International, S.A. de C.V. and on the other part by Minera Plata Real, S. de R.L. de C.V., which guarantees the Royalty in favor of La Cuesta International, S.A. de C.V. under the Exploration, Exploitation and Unilateral Promise to Sell Agreement executed by and between La Cuesta International, S.A. de C.V. and Minera Plata Real, S. de R.L. de C.V. and that is attached to the Contract of Assignment of Rights as Exhibit I.

SCHEDULE 2.11(q)(vi)

MINERAL RIGHTS — PERSONS WITH FUTURE INTERESTS IN THE PRODUCTION OR PROFITS FROM MINERAL RIGHTS

Contract of Assignment of Rights Executed, as ratified on December 5, 2014, on the one part by La Cuesta International, S.A. de C.V. and on the other part by Minera Plata Real, S. de R.L. de C.V., which guarantees the Royalty in favor of La Cuesta International, S.A. de C.V. under the Exploration, Exploitation and Unilateral Promise to Sell Agreement executed by and between La Cuesta International, S.A. de C.V. and Minera Plata Real, S. de R.L. de C.V. and that is attached to the Contract of Assignment of Rights as Exhibit I.

SCHEDULE 2.11(t)

NO OPTIONS, ETC.

None.

SCHEDULE 2.11(v)(i)

CONSENTS AND APPROVALS — REQUIREMENTS UNDER APPLICABLE LAW

Upon initial contact, the Federal Competition Commission in Mexico has indicated that no notice of the transaction is necessary, but if the Federal Competition Commission subsequently determines that a notice must be delivered, the notice will be delivered. Likewise, notice will be submitted to the Ministry of Defense for purposes of explosives permit granted to Minera Plata REAL, S. de R.L. de C.V.

SCHEDULE 2.11(v)(ii)

CONSENTS AND APPROVALS — REQUIREMENTS UNDER MATERIAL CONTRACTS

None.

SCHEDULE 2.11(v)(iii)

CONSENTS AND APPROVALS — RESTRICTIONS UNDER CONSTATING DOCUMENTS, LAWS, CLAIMS OR ENCUMBRANCES

None.

SCHEDULE 2.11(x)

MATERIAL CONTRACTS

1.Exploration, Exploitation and Unilateral Promise to Sell Agreement dated May 6, 2006 between La Cuesta International, S. A. de C.V. and MPR

2.Contract of Assignment of Rights between La Cuesta International, S.A. de C.V. and MPR (pending)

3.Services Agreement dated January 1, 2008 between Los Gatos Ltd and Tigris Financial International LP (terminated)

4.Consulting Agreement dated June 1, 2010 between Los Gatos Limited and Larry Buchanan

5.Professional Services Agreement dated April 21, 2014, and Authorization for Additional Services dated November 12, 2014, between Stantec Consulting International LLC and Sunshine Silver Mines Corporation

6.Employment Agreement dated June 1, 2011 between Sunshine Silver Mines and Philip Pyle

7.Los Gatos Limited Independent Contractor Agreement, effective October 1, 2008, by and between Los Gatos Limited and Jon Gelvin.(1)

8.Exploration and Exploitation Agreement for mining concession 223392 entitled “Paula Adorada”, between Grupo Minero Factor, S.A. de C.V. and MPR, ratified and recorded on July 1, 2010, and Contract of Assignment of Rights for mining concession 223392 between the same parties.

9.Each of the land purchase agreements for Property referenced in Exhibit A

(1) Note to Draft: Gelvin Agreement to be assigned to an affiliate of SSMRC Parent following the Effective Date.

SCHEDULE 2.11(y)

INDEBTEDNESS

None.

SCHEDULE 2.11(z)

LITIGATION

None.

SCHEDULE 2.11(dd)(i)

TAXES

None.

SCHEDULE 2.11(ff)(i)

EMPLOYEE MATTERS

Minera Plata Real Employee Listing

Title	Employee
Project Chief	Arias Cabrera Rolando
Geologist Engineer	Martínez Armendariz Miguel Angel
Project Chief	Sáenz Rivera Julián Alfonso
Geologist Engineer	Pérez Soto Jesus Alberto
Geologist Engineer	Cruz Contreras José Ivan
Assistant	Cano Enriquez Jesús Miguel
Assistant	Enriquez Quezada Hector David
Assistant	Garcia Morales Javier
Assistant	Loya Contreras Javier Ivan
Assistant	Torres Flores Clemente
Assistant	Quezada Pérez Leonel
Assistant	Terrazas Quezada Jesus Elias
Assistant	Martinez Quezada Karla Daniela
Assistant	Morales Quezada José Aurelio
Assistant	Prieto Contreras Gonzálo
Assistant	Quezada Ramírez Francisco Javier
Assistant	Meraz Terrazas Sergio
Assistant	Baca Flores Maria Felix
Assistant	Salinas Prieto Gloria Isela
Assistant	Torres Flores Brisa
Geological Engineer	Jon Charles Gelvin Rice

Los Gatos Limited Independent Contractor Agreement, effective October 1, 2008, by and between Los Gatos Limited and Jon Gelvin.(2)

(2) Note to Draft: Gelvin Agreement to be assigned to an affiliate of SSMRC Parent following the Effective Date.

SCHEDULE 2.11(hh)(i)

ENVIRONMENTAL

See Schedule 2.11(hh)(iv)

SCHEDULE 2.11(hh)(ii)

ENVIRONMENTAL

None.

SCHEDULE 2.11(hh)(iii)

ENVIRONMENTAL

There are no Hazardous Substances stored at site at present due to the low level of activities undertaken in the past two years. The only exception to this is a small amount of fuel stored for generators, in an amount of less than 250 liters.

SCHEDULE 2.11(hh)(iv)

ENVIRONMENTAL

Work at Los Gatos began in 2008 in a manner which required environmental reporting

For the drilling and road construction activities during 2008-2014, a total of four activities reports were filed with the Federal Environmental agency Semarnat on January 15, 2009, September 9, 2009, February 10, 2011, and December 5, 2011. A response was filed by Semarnat on March 24, 2014 regarding the third activities report, seeking results of completed mining works. Since no mining works have been undertaken, no report could be filed.

A new report of activities was filed with Semarnat for upcoming geotechnical drilling associated with the construction of the exploration decline on December 2, 2014. As of the date of this Agreement, no observations or objections have been registered by the authorities.

Several field reviews of drill sites were undertaken by the regulatory agency PROFEPA during the period 2009-present. Upon one of the inspections in 2013, a resolution was delivered to Minera Plata Real by PROFEPA calling for a suspension of activities within a small zone of 6710 square meters due to lack of appropriate re-vegetation work. A fine was also levied of MXN 1,266.00. The fine was paid and the re-vegetation work was carried out. A report was filed with PROFEPA on May 6, 2014 detailing the re-vegetation work carried out and providing details of the ongoing activities. A resolution was issued by PROFEPA on August 6, 2014 removing the suspension over the specified area.

An additional inspection was carried out by PROFEPA on September 19, 2014 which verified all re-vegetation activities were being properly carried out. An additional report was requested by PROFEPA and was filed on September 26, 2014. No observations or objections have been made by PROFEPA to the report.

EX-10.5.2

Exhibit 10.5.2

AGREEMENT TO MAKE CAPITAL CONTRIBUTION

Reference is made to a unanimous omnibus partner agreement (“Partner Agreement”) entered into among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), and OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“OPCO”), SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad responsabilidad limitada de capital variable” in Spanish) (“EmployerCo”), LOS GATOS LUXEMBOURG S. AR. L., a Luxembourg limited liability company (“SSMRC Lux”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) effective as of January 1, 2015. Unless context otherwise requires, or unless expressly defined in this Agreement, capitalized terms used in this Agreement will have the meanings specified in the Partner Agreement.

Background

A.The Participating Interests in MPR as of the date hereof are as follows:

SSMRC Lux:        69.997%

SSMRC:                0.003%

Dowa                     30%

B.            The undersigned have agreed to make additional Capital Contributions to MPR in an aggregate amount equal to US$4,285,714.29, as follows:

SSMRC Lux         US$2,999,871.43

SSMRC:                US$128.57

Dowa:                    US$1,285,714.29

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.             Each of SSMRC Lux, SSMRC and Dowa agrees to make an additional Capital Contribution to MPR in the amount specified next to its name in Recital B, above, on or before April 14, 2017.

2.             Each of the undersigned agrees to execute and deliver all such other and additional instruments and documents and to do such other acts and things as may be reasonably necessary to effect the transactions contemplated by this Agreement or which are necessary to comply with Applicable Law.

IN WITNESS WHEREOF the undersigned have caused this Agreement to be executed by their respective duly authorized officers as of April 10, 2017.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
LOS GATOS LUXEMBOURG S. AR. L.
By:	/s/ Roger Johnson
	Name: Roger Johnson

2

SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name: Stephen Orr
DOWA METALS & MINING CO., LTD.
By:	/s/ Akira Sekiguchi
	Name: Akira Sekiguchi

3

EX-10.5.3

Exhibit 10.5.3

AMENDMENT TO PARTNER AGREEMENT

This Amendment to Partner Agreement (“Amending Agreement”) is made this 30th, day of June, 2017, and amends that certain Unanimous Omnibus Partner Agreement (“Partner Agreement”) entered into among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, LOS GATOS LUXEMBOURG S. AR. L., a Luxembourg limited liability company (“SSMRC Lux”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) effective as of January 1, 2015, as amended by agreement dated as of April 10, 2017.

Background

A.The Participating Interests in MPR as of the date hereof are as follows:

SSMRC Lux:69.997%

SSMRC:0.003%

Dowa30%

B.The aggregate Capital Contributions to MPR as of the date hereof are:

SSMRC LuxUS$119,661,538.10

SSMRC:US$5,128.57

Dowa:US$51,285,714.29

C.The outstanding balance of a bridge loan advance (“Dowa Bridge Loan”) by Dowa to MPR pursuant to a loan agreement (“Bridge Loan Agreement”) dated as of September 26, 2016 is US$5,714,285.28.

D.The estimated cost required to complete development of the Project as of the date hereof is US$316,000,000, which is expected to be funded as follows:

(a)Capital Contributions already made: US$4,285,714.29;

(b)additional Capital Contributions:

(i)by SSMRC/SSMRC Lux in an aggregate amount equal to US$71,200,000;

(ii)by Dowa in an aggregate amount equal to US$30,514,285.71;

(c)by a project finance term loan (“Term Loan”) of $210,000,000 to be advanced by Dowa pursuant to the terms and conditions of a credit agreement (“Credit Agreement”) in form and substance substantially similar to the draft attached hereto as Exhibit A.

E.SSMRC/SSMRC Lux have requested additional time to raise funds required to make its Capital Contributions.

F.The Parties have agreed to enter into this Amending Agreement to confirm in writing the timing for, and terms and conditions upon which they have agreed to make, additional Capital Contributions.

Agreement

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.Unless expressly defined in this Amending Agreement, capitalized terms used in this Amending Agreement will have the meanings specified in the Partner Agreement.

2.The Partners hereby confirm their unanimous approval of the amended Program and Budget attached hereto as Exhibit B, which are, effective immediately, the current Approved Program and Approved Budget.

3.The Partners confirm that the aggregate additional Capital Contributions required to be made pursuant to the Approved Budget are as follows:

(a)SSMRC/SSMRC Lux: US$71,200,000; and

(b)Dowa: US$30,514,285.71.

4.Before Dowa is required to make any additional Capital Contributions, SSMRC and SSMRC Lux will together make Capital Contributions in aggregate equal to US$13,333,333.32 (plus an additional amount corresponding to the accrued interest on the Bridge Loan at the time of contribution) (“Matching Contributions”). SSMRC and SSMRC Lux will make the Matching Contributions in one or more instalments beginning on or before July 31, 2017 as required pursuant to the Approved Program and Approved Budget to maintain the MPR development activities without interruption, and in any event SSMRC and SSMRC Lux will make 100% of the Matching Contributions on or before August 31, 2017.

5.Concurrent with each contribution of a Matching Contribution, a pro rata portion of the Dowa Bridge Loan of $5,714,285.28 will be converted to a Dowa Capital Contribution so as to maintain the Participating Interests in MPR at 70% (SSMRC/SSMRC Lux) and 30% (Dowa).

6.As soon as practicable after execution and delivery of this Amending Agreement, contribution of the Matching Contributions and conversion of the Bridge Loan to Dowa

2

Capital Contributions, and in any event before October 31, 2017, the Parties will make the following additional Capital Contributions:

(a)SSMRC/SSMRC Lux: US$11,666,666.68; and

(b)Dowa: US$5,000,000;

(together, “Second Stage Contribution”).

7.After contribution in full of the Matching Contributions, and conversion in full of the Dowa Bridge Loan to Dowa Capital Contributions, and contribution in full of the Second Stage Contributions, the remaining Capital Contributions required to be made by the Partners will be:

(a)SSMRC/SSMRC Lux:US$46,200,000 (“Remaining SSMRC Capital”)

(b)Dowa:US$19,800,000 (“Remaining Dowa Capital”)

(together “Remaining Required Capital Contributions”).

The Partners will contribute the Matching Contributions, the Second Stage Contributions and the Remaining Required Capital Contributions concurrently, on a pro rata basis, as required pursuant to the Approved Budget and without the requirement for any Capital Calls under section 3.5 of the Partner Agreement, and in any event the Partners will contribute the Remaining Required Capital Contributions on or before the earlier of: (i) June 30, 2019; and (ii) Substantial Completion of construction of the MPR mine. For purposes of this Amending Agreement, “Substantial Completion” shall mean that all mine and infrastructure development and construction work has been completed in accordance with the construction contract documents, permitting the operator to commence commissioning for operation of the mine for the intended purpose and at designed throughput levels.

8.If SSMRC or SSMRC Lux refuse or fail to contribute all or any part of the Remaining SSMRC Capital within the deadline set forth in Section 7 above, then Dowa may elect to fund all or any part of such amounts together with the corresponding pro rata portion of Remaining Dowa Capital, as loans to MPR (together, “Dowa MPR Loan”). The terms of the Dowa MPR Loan will include the following:

(a)interest will accrue at a rate equal to LIBOR plus 1.5% per annum upon that amount of such Dowa MPR Loan corresponding to Remaining SSMRC Capital;

(b)the loan will be due and payable in full on the Buyback Deadline;

(c)SSMRC will guarantee repayment of that portion of the Dowa MPR Loan corresponding to Remaining SSMRC Capital;

(d)Dowa may convert the Dowa MPR Loan plus an additional amount corresponding to the accrued interest on the Dowa MPR Loan to equity in MPR in accordance

3

with Section 10, below, at any time after the earlier of: (i) the date of MPR’s commencement of first commercial production; and (ii) date on which the Remaining Required Capital Contributions are spent or committed to be spent by MPR, and before receipt of repayment in full of the principal and all accrued interest on such Dowa MPR Loan at the time of conversion, by providing 10 days advance written notice to SSMRC.

9.At any time before the earlier of: (i) conversion of the Dowa MPR Loan to equity; and (ii) Substantial Completion of construction of the MPR mine, SSMRC and/or SSMRC Lux may contribute equity to MPR and MPR may use such equity to repay the Dowa MPR Loan and accrued interest.

10.If Dowa elects to convert its Dowa MPR Loan to equity, the Participating Interest of SSMRC and SSMRC Lux will be diluted with a dilution multiple of 1.7x based on the following formula:

Dowa’s Participating Interest: (US$50 million + Dowa’s Capital Contributions in excess of US$ 50,000,000 + (Remaining SSMRC Capital contributed by Dowa x 1.7 (which amount is deemed to include all accrued interest))) /(US$ 167,000,000 + total Capital Contributions in excess of initial $167,000,000).

and

SSMRC Lux’s Participating Interest: 100 – 0.005 – Dowa’s Participating Interest

and

SSMRC’s Participating Interest: 0.005%

11.If the Participating Interests of SSMRC and SSMRC Lux are diluted in accordance with Section 10, above (“Diluted Interest”), SSMRC and SSMRC Lux will have the right to buy back all or any portion of such Diluted Interest by delivering notice in writing to Dowa and making payment to Dowa, on or before the date that is two years after the earlier of: (i) June 30, 2019; and (ii) Substantial Completion (“Buyback Deadline”) of an amount equal to: the amount of Remaining SSMRC Capital funded by Dowa to acquire such Diluted Interest multiplied by 1.7 plus all costs and expenses incurred by Dowa to acquire and hold such Diluted Interest. By way of example, if Dowa contributed $46,200,000 of Remaining SSMRC Capital to acquire a Participating Interest in excess of 30%, then to buy back such Participating Interest, SSMRC and/or SSMRC Lux would be required to pay to Dowa $78,540,000 or 1.7 times the portion of the Participating Interest to be bought back to acquire and hold such Diluted Interest in the same percentage of Participating Interest.

12.If SSMRC and SSMRC Lux do not exercise their right to buy back the Diluted Interest in accordance with Section 11, above, on or before the Buyback Deadline, then Dowa will have the right to sell all or any portion of its Participating Interest corresponding to the Diluted Interest to any third party other than a Restricted Person (which, for greater certainty will be deemed not to include any Japanese mining, smelting or trading

4

company, regardless of whether such company is considered to be a competitor of any Joint Venture Entity, Partner or its Affiliate) without any further consent from any party hereto, subject only to compliance with section 18.5, of the Partner Agreement.

13.Dowa’s obligation to fund the Term Loan will be subject to the terms and conditions of the Credit Agreement, but, for greater certainty any advances made pursuant to the Credit Agreement will be made pro rata and concurrent with contribution of the Remaining Required Capital Contributions.

In the event that the Dowa MPR Loan and the Term Loan are outstanding at the same time, both loans will be secured by the same security, and the Term Loan will be repaid in priority to the Dowa MPR Loan.

14.If SSMRC/SSMRC Lux’s Participating Interest is diluted below 50.1%, then the Parties will act reasonably in further amending the Partners Agreement to provide that:

(a)in the event that the Participating Interests of SSMRC/SSMRC Lux and Dowa are equal, they will have equal rights with respect to the appointment of Managers; and

(b)in the event that SSMRC/SSMRC Lux’s Participating Interest is less than 50%, Dowa will have the right to appoint a majority of the Managers.

15.Subsection (i) of the defined term “Maturity Date” in the Bridge Loan Agreement is hereby revised to be the earlier of the date of contribution of the Matching Contributions and August 31, 2017.

16.All other terms and conditions of the Partner Agreement remain in full force and effect, unamended.

17.This Amending Agreement may be executed in counterparts and delivered by electronic means, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF the undersigned have caused this Amending Agreement to be executed by their respective duly authorized officers as of June 30, 2017.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson

5

OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name: Roger Johnson
LOS GATOS LUXEMBOURG S. AR. L.
By:	/s/ Roger Johnson
	Name: Roger Johnson
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name: Stephen Orr

6

DOWA METALS & MINING CO., LTD.
By:	/s/ Akira Sekiguchi
	Name: Akira Sekiguchi

7

EXHIBIT A

CREDIT AGREEMENT

8

Exhibit B

APPROVED PROGRAM – APPROVED BUDGET

Exhibit B APPROVED PROGRAIVi-APPROVED BUDGET Los Gatos Project Minera Plata Real CAPITAL COST SUMMARY 23544855.1

Los Gatos Joint Venture EXHIBITB APPROVED PROGRAM-APPROVED BUDGET Minera Plata Real s 1,635,000 I I 1,2--hlli] !June ').2017 Dowu Funding - -, 14 LGJV LG Pro jec t Fundino Jan lD.MAv June (Bridl!t!) i June Julv Aue:ust Seotember October November December Total SSMRC Matching & Second Sta1---e Co SSMRC Re:mainin .t Contribution ntribution 4,500 000 8.833.333 5.000.000 6.666.667 25.000,000 2,000.000 - 2.000.000 SSMRC Bridl!e Loan Int. Contribution 203.000 203.000 Dowa Second SllllJe ContributioiJ 2.142. 857 2.857.143 5.000.000 Dowa Remaining Contribution 857.143 . 857.14 3 $210M Term Loan Funding 9.090.909 . 9,090.909 VAT Refunds 100.000 100 000 150.000 100. 000 100.000 100.000 100.000 750.000 Total Fundines 100,000 4,600. 000 9,186.333 7.242.857 9,623.810 12,048,052 100,000 42.901.052 Jail ta_May Junc.{llridcc June Julv Aumt5t September October November December Total Dev. Spend 1 CDSll Full Year (Brid!(e & DSI) G&A l> 1.673.000 $ 326. 1 33 $ 326.133 l> 326.133 $ 444.133 $ 462,133 $ 46ry 1 33 l>462.133 $ 2.482.799 s 4,481,932 s 399,384 s44,300 s 3,801,367 s 2,913,661 s 6,903,782 s 7,053,023 s 1,599,840 s 668,000 s 250,000 s 890,000 s 1,399,896 s 900,000 Concessions 399,384 s 399.38-1 Pnvate Concess1ons 44.300 $ 44.300 NW & CZ Development 2.936.000 865.367 $ - NW & CZ Development-2nd Comract 438.616 971.220 971 220 532.605 $ 2.913.661 NW & CZ Develooment-3rd Contract 934.346 1.970.774 2.0ry7,888 1 .970,774 s 6,903.782 MPR Supplies I C'ema>tation Support) 325.882 721 ,596 721.596 1.000,924 1.443.193 1.396.638 1.443.193 s 7.053.023 Fuel 73.920 163.680 163.680 227.040 327.360 316,800 327,360 s1,599,840 Equi )ment P urchase.,c;/Rc:ntals 592.000 38.000 38.000 $ 668.000 PumpmWell 250.000 $ 250,000 Power U/G & Camp 150,000 125.000 125.000 180.000 155.000 155.000 $890,000 Vent Raise: 47.000 263.110 278.910 372.055 362,455 76.366 s 1.089.786 P rmits Chan 'e Use Soil 900,000 s 900.000 EPCM# I 80.000 165,000 215,000 265,000 300 000 310.000 300.000 $ 1.635.000 s4,000,000 s 260,000 s 2,050,000 s 900,000 s 700,000 s 800,000 s 4,200,000 s 1,373.000 P.O Lon 1 Lcac.l Items 1.000.000 1.000.000 1.000.000 1 ,000.000 $4,000,000 Geotechnical Studv TSF + Proc Plant 80,000 80,000 100.000 s 260,000 Canp Constructlon 250,000 500,000 600.000 700.000 $ 2.050,000 Easement Land Ncll.Otiation-Power Grid 150.000 150.000 150.000 150.000 150.000 150.000 s 900,000 Waste Rock Drainage/Sediment Pond 350.000 350,000 $ 700,000 Cantin 1ency 100.000 100.000 100.000 100.000 200.000 200.000 $800 000 $210M Term Loan Upfront Fee 4,:!00,000 $ 4 200,000 SSMRC' Fee M •mt-+ Dowa Expense 593.000 100.000 100,000 140.000 100 000 100.000 140.000 100.000 $ 680.000 Total $ 5.249,000 $ 1,554.610 $ 918,418 s 3,605,923 $ 4,264,685 $ 5.941.502 $ )),796,126 $ 7,046,460 $ 6,846,460 $ 40,419,573 $ 47,223,183

EX-10.5.4

Exhibit 10.5.4

AMENDMENT NO. 3 TO PARTNER AGREEMENT

THIS AMENDMENT NO. 3 TO THE PARTNER AGREEMENT (“Amending Agreement”) is made as of March 30, 2018, and amends that certain Unanimous Omnibus Partner Agreement dated effective as of January 1, 2015 (as amended by amending agreements dated as of April 10, 2017 and June 30, 2017, collectively with amending agreements the “Partner Agreement”), entered into among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, LOS GATOS LUXEMBOURG S. AR. L., a Luxembourg limited liability company (“SSMRC Lux”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”).

WHEREAS, the Parties have agreed to enter into this Amending Agreement to confirm in writing the terms and conditions upon which they have agreed to amend the Partner Agreement; and

WHEREAS, except as specifically amended by this Amending Agreement, the terms and conditions of the Partner Agreement shall remain in full force and effect.

NOW THEREFORE, subject to the terms and conditions set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

Section 1               Defined Terms.

Unless expressly defined in this Amending Agreement, capitalized terms used in this Amending Agreement will have the meanings specified in the Partner Agreement.

Section 2               Amendments.

Notwithstanding the terms of the Partner Agreement (including Exhibit B thereof), Requisite Partner Approval shall be required in accordance with, and in the circumstances described in, Exhibit “A” attached hereto, and all applicable provisions of the Partner Agreement shall be deemed to be revised and amended in order to give effect to Exhibit “A”.

Section 3               Major Decisions

All Major Decisions passed by Requisite Partner Approval up to and including the date hereof are hereby approved, ratified, confirmed and adopted for all purposes by the Partners.

Section 4               Miscellaneous.

This Amending Agreement may be executed in counterparts and delivered by electronic means, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF the undersigned have caused this Amendment No. 3 to Partner Agreement to be executed by their respective duly authorized officers as of the date first written above.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Philip Pyle
	Name: Philip Pyle
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Alberto M. Vazquez
	Name: Alberto M. Vazquez
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Alberto M. Vazquez
	Name: Alberto M. Vazquez
LOS GATOS LUXEMBOURG S. AR. L.
By:	/s/ Roger Johnson
	Name: Roger Johnson

Signature Page to Amendment No. 3 to Partner Agreement

SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name: Stephen Orr
DOWA METALS & MINING CO., LTD.
By:	/s/ Akira Sekiguchi
	Name: Akira Sekiguchi

EXHIBIT “A”

Exhibit “A” - Amendment No. 3 to Partner Agreement

Exhibit A

Unanimous Omnibus Partners Agreement — Requisite Partner Approval Requirements Protocol

Background

Appendix B to the Unanimous Omnibus Partners Agreement states:

“The following are considered “Major Decisions”, which require Requisite Partner Approval; provided, however that if such Major Decision was included in any Approved Program or Approved Budget, there shall not be a separate requirement to obtain Requisite Partner Approval prior to taking action in respect thereto….”

Accordingly, Requisite Partner Approval (RPA) is not required if the expenditures are consistent with the Approved Budget.

Appendix B also states, in part, Major Decisions include…

·“costs, expenditure or commitment in excess of 10% per Expense Category contained in an Approved Budget “.

·“execution, termination, amendment, ……. under any contract (written or oral) to which the Corporation or any other subsidiary entity is a party:

·      relating to the purchase and sale of minerals or concentrates;

·      with an annual contract value of more than $500,000; or

·      with a term of longer than three years”.

Protocol

For purposes of this protocol:

·      the Approved Budget means the most recent Forecast approved by the Board of Managers and

·      unless otherwise extended, is effective only through June 30, 2019.

To improve efficiencies, the partners agree the protocol to be followed by the managing partner under an Approved Budget shall be:

Expenditures less than $500,000 above the estimate in the Approved Budget

The managing partner may proceed with any expenditure in the Approved Budget that is to be committed for at an amount less than $500,000 greater than the estimated amount in the Approved Budget without obtaining RPA.

Expenditures more than $500,000 above the estimate in the Approved Budget

To make decisions in these circumstances, the managing partner must:

·Calculate the remaining project costs that are based on estimates (RPCBE). Estimates would exclude those costs already incurred, under contract or under purchase orders.

·Calculate the remaining contingency (RC) in the project. The RC will initially be the amount in the Approved Budget. However, the RC will change based on new commitments and information after Board of Managers’ Forecast approval.

If the RC divided by the RPCBE is greater than 10%, the managing partner may proceed, without RPA, with any item in the Approved Budget, provided the expenditure does not: a) cause the RC to drop to or below 10%, or b) cause an Approved Budget category (i.e. Crushing and Conveying, Development Contract #3, Pumping Wells,

etc.) to exceed 110% of that category’s approved budget total. Conversely, the managing partner must obtain RPA before proceeding with any expenditure greater than $500,000 above either of the two thresholds.

If the RC divided by the RPCBE is equal to or less than 10%, the managing partner must obtain RPA before proceeding with any expenditure expected to exceed its Approved Budget amount by more than $500,000.

Expenditures outside the scope of the Approved Budget

For expenditures greater than $500,000 that are not contemplated in the Approved Budget, the managing partner must obtain RPA.

Scenario Examples

Scenario	A		B		C		D		E		F
RPCBE	100,000,000		100,000,000		100,000,000		100,000,000		100,000,000		100,000,000
RC	12,000,000		12,000,000		12,000,000		8,000,000		8,000,000		8,000,000
RC%	12.0	%	12.0	%	12.0	%	8.0	%	8.0	%	8.0	%
Approved Budget Expenditure	2,000,000		2,000,000		2,000,000		2,000,000		2,000,000		2,000,000
Expenditure	2,000,000		4,000,000		5,000,000		2,000,000		3,000,000		2,300,000
RC% After Expenditure	12.2	%	10.4	%	9.5	%	8.2	%	7.2	%	7.9	%
Requisite Partner Approval?	No		No		Yes		No		Yes		No

Request for RPA

When RPA is required, at least five business days before commitments must made for the activities under the RPA, the managing partner will provide a memorandum describing the activities, cost and construction milestones for the expenditures compared to the Approved Budget. The impact on the RC will also be identified.

Exhibit B Other Provisions

All other Exhibit B provisions must be followed.

Project Spending, Forecasts and Additional Information

The managing partner will provide information to all partners to ensure spending activities and cost trends are transparent. Operations and Management Committee meetings will report on all projects in accordance with the projects established in the accounting system (ERP) which may differ slightly from the contractor (e.g. M3) information. Actual expenditures and cost-to-complete estimates are required to comply with this RPA protocol to ensure cost overruns are identified early and the contingency amount adjusted. Furthermore, RPA may be required for an expected overrun.

EX-10.5.5

Exhibit 10.5.5

AMENDMENT NO. 4 TO PARTNER AGREEMENT

This Amendment No. 4 to Partner Agreement (this “Amendment”) is dated as of May 30, 2019, and amends the Unanimous Omnibus Partner Agreement (“Partner Agreement”), among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Operaciones”), SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Servicios”) (MPR, Operaciones, and Servicios, collectively, the “LGJV”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) (Dowa and SSMRC, each a “Partner”, and together, the “Partners”) effective as of January 1, 2015, as previously amended.

Background

A.            Dowa, SSMRC and the LGJV previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into the Partner Agreement;

B.            The Partners directly and indirectly own all of the equity interests of the LGJV, with Dowa owning 30% and SSMRC owning 70% of such equity interests;

C.            Pursuant to the Partner Agreement, the Partners are required to make certain capital contributions proportional to each Partner’s equity interest in the LGJV;

D.            To meet the ongoing capital needs of the Los Gatos Project, on January 23, 2018, the LGJV and the Partners entered into a Loan Agreement, as amended (the “Dowa-MPR Loan”), pursuant to which Dowa advanced $65,677,987.07 to MPR to be repaid on or before June 30, 2019;

E.            In addition to the Dowa-MPR Loan, Dowa has advanced US$210,000,000 to the Borrowers pursuant to the terms of a Term Loan Agreement dated July 11, 2017, as amended;

F.             SSMRC will make a capital contribution to MPR of $18,200,000 on or before May 31, 2019 (the “SSMRC Capital Contribution”);

G.            Within one Business Day after SSMRC makes the SSMRC Capital Contribution, the Partners will cause MPR to use all of the proceeds thereof to make a partial repayment of the Dowa-MPR Loan in the amount of $18,200,000 to Dowa (the “Partial Repayment”).  Immediately after receipt of the Partial Repayment, $7,800,000 of the Dowa-MPR Loan balance will be converted and deemed to be a capital contribution to LGJV by Dowa (the “Dowa Contribution”);

H.            After application of the Partial Repayment and conversion of the Dowa Contribution, the remaining balance of the Dowa-MPR Loan, including interest, will be approximately $42,937,355.33 (the “Remaining Balance”).  The Remaining Balance will also be converted and deemed to be a capital contribution to LGJV by Dowa that dilutes SSMRC’s ownership interest in the LGJV (the “Dilutive Contribution”);

I.             Once the Dowa Contribution and the Dilutive Contribution are made, Dowa will own a 48.518% equity interest in the LGJV, and SSMRC will own a 51.482% equity interest in the LGJV; and

J.             The Parties wish to amend the Partner Agreement to reflect such change in ownership interests in the LGJV, and other changes stipulated by the Memorandum of Understanding dated April 16, 2019 among the LGJV and the Partners (“MOU”).

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

Section 1.  Amendments

1.1.Section 1.1 of the Partner Agreement is hereby amended to add the following new defined terms:

“Option Shares” shall have the meaning specified in the Option Agreement.

“Option Agreement” shall mean the Option Agreement dated May 30, 2019 among Dowa and SSMRC Parent, the Corporation and OpCo, as it may be amended, restated, supplemented or modified from time to time.

“Priority Distribution Agreement” shall mean the Priority Distribution Agreement dated May 30, 2019 among Dowa, SSMRC Parent, the Corporation and OpCo, as it may be amended, restated, supplemented or modified from time to time.

“SSMRC Guarantees” shall mean the SSMRC Guarantee (as defined by the Term Loan Agreement) and the Guarantee (as defined by the Working Capital Facility), as they may be amended, restated, supplemented or modified from time to time.

“Term Loan Agreement” shall mean the Term Loan Agreement, dated July 11, 2017, among Dowa, SSMRC Parent and the Joint Venture Entities, as amended, and as it may be further amended, restated, supplemented or modified from time to time.

“Working Capital Facility” shall mean the Working Capital Facility Agreement, dated May 30, 2019, among Dowa, SSMRC Parent, and the Joint Venture Entities, as it may be amended, restated, supplemented or modified from time to time.

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1.2.Section 4.1 is of the Partner Agreement is hereby amended by adding the following to the end thereof:

“As of May 30, 2019, the Partners have the following Participating Interests in each of the Corporation and OpCo:

Dowa	48.518%
SSMRC Parent	51.482%”

1.3.Section 5.3 of the Partner Agreement is hereby amended by adding the following Section 5.3(b) immediately following Section 5.3(a):

“(b)Dowa will have the right to designate one individual to be seconded to the Corporation for the purpose of monitoring the Los Gatos Project’s financial situation, including, without limitation, accounting, tax and cashflow, until the later of: (i) repayment in full of the Working Capital Facility; and (ii) receipt by Dowa of the Priority Distribution Payment (as defined in the Priority Distribution Agreement).  Such individual will have full access to all information relating to the Los Gatos Project’s operations at both the mine site and the Chihuahua office.  All costs associated with such individual’s secondment to the Corporation will be borne by the Los Gatos Project.”

1.4.Section 12.1 of the Partner Agreement is hereby amended by adding the following Section 12.1(e) immediately following Section 12.1(d):

“(e)Notwithstanding any provision of this Partner Agreement, including Sections 6.1, 6.8, 8.1 and 10.1, upon a default by SSMRC Parent, the Corporation, OpCo, or EmployerCo, under this Agreement or a default under the Term Loan Agreement, the Working Capital Facility or the SSMRC Guarantees, in each case that is not cured within the applicable cure period, if any, Dowa may, by notice in writing to SSMRC Parent: (i) permanently terminate SSMRC Parent’s rights to any future consideration under Section 12.1(c); (ii) become the new service provider to the Operator; (iii) permanently remove OpCo as the Operator and either: (1) become the new Operator; or (2) appoint a third party to act as Operator or service provider, at Dowa’s sole discretion; and/or (iv) appoint a majority of the three Managers for each of the Corporation, OpCo, and EmployerCo.  In the event that SSMRC Parent’s role as service provider to the Operator is terminated, it will remain liable for any acts or omissions up to the time of termination.”

1.5.Article 18 of the Partner Agreement is hereby amended by adding the following Section 18.11 immediately following Section 18.10:

“18.11 Right to Transfer

Notwithstanding any provision of this Partner Agreement, Dowa will have the absolute right to sell all or any portion of the Option Shares to any third party other than a Restricted Person (which, for greater certainty, will be deemed not to

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include any Japanese mining, smelting or trading company, regardless of whether such company is considered to be a competitor of the Joint Venture Entities or any of the Parties or their affiliates) without consent of any Party if SSMRC Parent does not exercise its option under the Option Agreement on or before June 30, 2021 and pay the Exercise Price (as defined in the Option Agreement) in accordance with the terms of the Option Agreement.”

1.6.Section 19.1 of the Partner Agreement is hereby amended by adding the following Section 19.1(e) immediately following Section 19.1(d):

“(e)with respect to SSMRC Parent, any of SSMRC Parent or the Joint Venture Entities defaults in its obligations under: (i) the Term Loan Agreement; (ii) the Working Capital Facility; or (iii) the SSMRC Guarantees, and such default is not cured within the applicable cure period under such agreements, if any.

Section 2.  Miscellaneous

2.1.Acknowledgement.  SSMRC hereby expressly acknowledges that the transactions contemplated by the MOU constitute the last instance of Dowa agreeing to provide financial support to the LGJV that is disproportionate to its Participating Interest.

2.2.Severability.  The determination that any provision of this Amendment is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

2.3.Counterparts.  This Amendment may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one agreement.

2.4.Governing Law.  This Amendment and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

2.5.Further Assurances.  Each party will at its own expense do, make, execute or deliver all such further acts, documents and things in connection with this Amendment as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

[Signature page immediately follows]

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IN WITNESS WHEREOF, each of the parties hereto, by their officers duly authorized, has executed this Amendment as of the date first above written.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name:	Stephen Orr
	Title:	Chief Executive Officer
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

EX-10.5.6

Exhibit 10.5.6

AMENDMENT NO. 5 TO PARTNER AGREEMENT

This Amendment No. 5 to Partner Agreement (this “Amendment”) is dated as of April 29, 2020, and amends the Unanimous Omnibus Partner Agreement (“Partner Agreement”), among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Operaciones”), SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Servicios”) (MPR, Operaciones, and Servicios, collectively, the “LGJV”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) (Dowa and SSMRC, each a “Partner”, and together, the “Partners”) effective as of January 1, 2015, as previously amended.

Background

A.            Dowa, SSMRC and the LGJV previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into the Partner Agreement;

B.            The Partners directly and indirectly own all of the equity interests of the LGJV, with Dowa currently owning 48.518% and SSMRC currently owning 51.482% of such equity interests;

C.            SSMRC advanced funds to Operaciones in the amount of US$2,574,000 on March 12, 2020, as evidenced by a demand promissory note dated as of March 12, 2020 (“SSMRC Advance”);

D.            Dowa advanced funds to Operaciones in the amount of: (a) US$2,425,805.75 on April 3, 2020 as evidenced by a demand promissory note dated as of April 1, 2020; and (b) $4,851,865.42 on April 29, 2020, evidenced by a demand promissory note dated as of April 23, 2020; (together, “Dowa Advances”);

E.            To meet the ongoing capital needs of the Los Gatos Project, subject to receipt by Dowa of approval from both its board of directors and its parent company (together, “Dowa Approvals”), the Partners intend to make a one-time capital contribution to the LGJV in the aggregate amount of US$15,000,000 made up of the following:

(a)conversion of each of the SSMRC Advance and the Dowa Advances to capital; and

(b)conversion of receivables owed by LGJV to SSMRC in the amount of $5,148,328.83 to capital (“SSMRC Receivable”).

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.Capital Contribution. Subject to receipt by Dowa of the Dowa Approvals, the Partners hereby agree to make capital contributions to LGJV in the following amounts (each, a “Capital Contribution”):

(a)SSMRC:                    US$7,722,328.83; and

(b)Dowa:                        US$7,277,671.17.

2.Payment. Subject to receipt by Dowa of the Dowa Approvals, SSMRC hereby agrees to convert the SSMRC Advance and the SSMRC Receivable to a Capital Contribution, and Dowa hereby agrees to convert the Dowa Advances to a Capital Contribution, all effective as of the second Business Day (as defined in the Partner Agreement) after receipt of the Dowa Approvals.

3.Dowa Approvals.  Dowa will provide notice to SSMRC upon receipt of the Dowa Approvals. The Partners acknowledge that the Capital Contributions contemplated by this Amendment are subject to receipt by Dowa of the Dowa Approvals, and that if Dowa does not receive such Dowa Approvals on or before June 30, 2020, the Partners’ respective obligations under this Amendment will terminate.

4.General Provisions.

(a)The determination that any provision of this Amendment is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

(b)This Amendment may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one agreement.

(c)This Amendment and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

(d)Each party will at its own expense do, make, execute or deliver all such further acts, documents and things in connection with this Amendment as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

[Signature page immediately follows]

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IN WITNESS WHEREOF, each of the parties hereto, by their officers duly authorized, has executed this Amendment as of the date first above written.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name:	Stephen Orr
	Title:	Chief Executive Officer
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

EX-10.5.7

Exhibit 10.5.7

AMENDMENT NO. 6 TO PARTNER AGREEMENT

This Amendment No. 6 to Partner Agreement (this “Amendment”) is dated as of May 25, 2020, and amends the Unanimous Omnibus Partner Agreement (“Partner Agreement”), among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Operaciones”), SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Servicios”) (MPR, Operaciones, and Servicios, collectively, the “LGJV”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) (Dowa and SSMRC, each a “Partner”, and together, the “Partners”) effective as of January 1, 2015, as previously amended.

Background

A.            Dowa, SSMRC and the LGJV previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into the Partner Agreement;

B.            The Partners directly and indirectly own all of the equity interests of the LGJV, with Dowa currently owning 48.518% and SSMRC currently owning 51.482% of such equity interests;

C.            The LGJV owes SSMRC the amount of US$4,300,000.00 for services provided by SSMRC to the Los Gatos Project (the “SSMRC Receivable”);

D.            To meet the ongoing capital needs of the Los Gatos Project, subject to receipt by Dowa of approval from both its board of directors and its parent company (together, “Dowa Approvals”), the Partners intend to make in a one-time capital contribution to the LGJV in the aggregate amount of US$8,352,401.41 as follows:

(a)conversion of the SSMRC Receivable to capital;

(b)conversion of an advance by Dowa in the amount of US$4,052,401.41, which is to be evidenced by a demand promissory note dated as of the date hereof, to capital (the “Dowa Advance”).

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.Capital Contribution. Subject to receipt by Dowa of the Dowa Approvals, the Partners hereby agree to make capital contributions to LGJV in the following amounts (each, a “Capital Contribution”):

(a)SSMRC:            US$ 4,300,000.00; and

(b)Dowa:                US$ 4,052,401.41.

2.Payment. Subject to receipt by Dowa of the Dowa Approvals, SSMRC hereby agrees to convert the SSMRC Receivable to a Capital Contribution, and Dowa hereby agrees to convert the Dowa Advances to a Capital Contribution, all effective as of the second Business Day (as defined in the Partner Agreement) after receipt of the Dowa Approvals.

3.Dowa Approvals.  Dowa will provide notice to SSMRC upon receipt of the Dowa Approvals. The Partners acknowledge that the Capital Contributions contemplated by this Amendment are subject to receipt by Dowa of the Dowa Approvals, and that if Dowa does not receive such Dowa Approvals on or before June 30, 2020, the Partners’ respective obligations under this Amendment will terminate.

4.General Provisions.

(a)The determination that any provision of this Amendment is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

(b)This Amendment may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one agreement.

(c)This Amendment and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

(d)Each party will at its own expense do, make, execute or deliver all such further acts, documents and things in connection with this Amendment as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

[Signature page immediately follows]

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IN WITNESS WHEREOF, each of the parties hereto, by their officers duly authorized, has executed this Amendment as of the date first above written.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name:	Stephen Orr
	Title:	Chief Executive Officer
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

EX-10.5.8

Exhibit 10.5.8

AMENDMENT NO. 7 TO PARTNER AGREEMENT

This Amendment No. 7 to Partner Agreement (this “Amendment”) is dated as of June 16, 2020, and amends the Unanimous Omnibus Partner Agreement (“Partner Agreement”), among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Operaciones”), SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Servicios”) (MPR, Operaciones, and Servicios, collectively, the “LGJV”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) (Dowa and SSMRC, each a “Partner”, and together, the “Partners”) effective as of January 1, 2015, as previously amended.

Background

A.            Dowa, SSMRC and the LGJV previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into the Partner Agreement;

B.            The Partners directly and indirectly own all of the equity interests of the LGJV, with Dowa currently owning 48.518% and SSMRC currently owning 51.482% of such equity interests;

C.            On April 29, 2020 and May 25, 2020, the Partners and the LGJV entered into Amendment No. 5 to Partner Agreement (“Amendment No. 5”) and Amendment No. 6 to Partner Agreement (“Amendment No. 6”), respectively, pursuant to which the Partners agreed to make one-time capital contributions to the LGJV in the aggregate amounts of US$15,000,000.00 and US$8,352,401.41, respectively, subject to receipt by Dowa of approval from both its board of directors and its parent company on or before June 30, 2020 (such date “Amendment No. 5 and No. 6 Dowa Approval Deadline”).

D.            The Partners intend to extend the Amendment No. 5 and No. 6 Dowa Approval Deadline from June 30, 2020 to July 31, 2020.

E.            To meet the ongoing capital needs of the Los Gatos Project, subject to receipt by Dowa  of approval from both its board of directors and its parent company (together, “Dowa Approvals”), the Partners intend to make two additional one-time capital contributions to the LGJV, the first of such one-time capital contributions being in the aggregate amount of US$5,000,000.00 to be contributed on or before June 19, 2020, and the second of such one-time capital contributions being up to an aggregate amount of US$6,646,599.00 to be contributed on or before June 25, 2020, as follows:

(a)On or before June 19, 2020:

(i)conversion of an advance by SSMRC in the amount of US$2,574,110.00, which is to be evidenced by a demand promissory note dated as of the date the amount is advanced, to capital (the “First SSMRC June Advance”);

(ii)conversion of an advance by Dowa in the amount of US$2,425,890.00, which is to be evidenced by a demand promissory note dated as of the date the amount is advanced, to capital (the “First Dowa June Advance”).

(b)On or before June 25, 2020:

(i)conversion of an advance by SSMRC made in an amount up to US$3,421,815.39, which is to be evidenced by a demand promissory note dated as of the date the amount is advanced, to capital (the “Second SSMRC June Advance”); and

(ii)conversion of an advance by Dowa made in an amount up to US$3,224,783.61, which is to be evidenced by a demand promissory note dated as of the date the amount is advanced, to capital (the “Second Dowa June Advance”).

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.Capital Contributions.  Subject to receipt by Dowa of the Dowa Approvals, the Partners hereby agree to make capital contributions to LGJV in the following amounts on or before the respective dates as indicated below (each, a “Capital Contribution”):

(a)On or before June 19, 2020:

(i)SSMRC:                    US$ 2,574,110.00; and

(ii)Dowa:                        US$ 2,425,890.00.

(b)On or before June 25, 2020:

(i)SSMRC:                    up to US$3,421,815.39; and

(ii)Dowa:                        up to US$3,224,783.61.

2.Payment.  Subject to receipt by Dowa of the Dowa Approvals, SSMRC hereby agrees to convert the First SSMRC June Advance and Second SSMRC June Advance to Capital Contributions, and Dowa hereby agrees to convert the First Dowa June Advance and Second Dowa June Advance to Capital Contributions, all effective as of the second Business Day (as defined in the Partner Agreement) after receipt of the Dowa Approvals.

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3.Dowa Approvals.  Dowa will provide notice to SSMRC upon receipt of the Dowa Approvals.  The Partners acknowledge that the Capital Contributions contemplated by this Amendment are subject to receipt by Dowa of the Dowa Approvals, and that if Dowa does not receive such Dowa Approvals on or before June 31, 2020, the Partners’ respective obligations under this Amendment will terminate.

4.Amendment No. 5 and No. 6 Dowa Approval Deadline.  The Parties hereby amend the Amendment No. 5 and No. 6 Dowa Approval Deadline in Amendment No. 5 and Amendment No. 6, respectively, to be July 31, 2020.

5.General Provisions.

(a)The determination that any provision of this Amendment is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

(b)This Amendment may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one agreement.

(c)This Amendment and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

(d)Each party will at its own expense do, make, execute or deliver all such further acts, documents and things in connection with this Amendment as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

[Signature page immediately follows]

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IN WITNESS WHEREOF, each of the parties hereto, by their officers duly authorized, has executed this Amendment as of the date first above written.

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen Orr
	Name:	Stephen Orr
	Title:	Chief Executive Officer
DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

EX-10.6.1

Exhibit 10.6.1

OPTION AGREEMENT

This Option Agreement (this “Agreement”) is made and effective as of May 30, 2019 among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Operaciones”) (MPR and Operaciones, collectively, “LGJV”) SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”).

Background

A.            Dowa and SSMRC entered into a Memorandum of Understanding dated as of April 16, 2019 (“MOU”).

B.            Pursuant to the terms of the MOU, Dowa made capital contributions to LGJV in excess of its Participating Interest (as defined in the Unanimous Omnibus Partner Agreement dated January 1, 2015 entered into among LGJV, SSMRC, Dowa and others (the “Partner Agreement”)), thereby diluting SSMRC’s Participating Interest by 18.518%.

C.            Dowa has agreed to grant to SSMRC an option to purchase social capital representing a Participating Interest of 18.518% in each of MPR and Operaciones (the “Option Shares”).

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.Option.  Dowa hereby grants to SSMRC the right to purchase the Option Shares (the “Purchase Option”), in whole, free and clear of any encumbrances, in accordance with the terms of this Agreement.  SSMRC may exercise the Purchase Option by providing notice in writing to Dowa at any time on or before June 30, 2021 after the Working Capital Facility (as defined below) is repaid in full, and paying the Exercise Price (as defined below) to Dowa.

2.Exercise Price.  The exercise price (“Exercise Price”) will be an amount equal to the aggregate of: (a) US$51,105,400; plus (b) all costs incurred by Dowa in connection with its ownership of the Option Shares including without limitation, any legal and accounting fees, capital contributions or taxes.  For greater certainty, the Exercise Price is intended to be net of any taxes payable by Dowa in Mexico in connection with the transfer of the Option Shares, and the Exercise Price will be grossed up to reflect any such taxes.

3.Term.  This Agreement will be effective as of the date hereof, and will terminate on June 30, 2021 (the “Termination Date”).  If the Purchase Option is not exercised on or before June 30, 2021, it will expire and cease to have any further effect.

4.LGJV Dividends.  Dowa has the absolute right to receive and retain any dividends declared or paid on its entire Participating Interest and, if SSMRC exercises the Purchase Option, any dividends received by Dowa on the Option Shares prior to the date of payment of the Exercise Price will not be deducted from the Exercise Price.

5.Procedure for Exercise of Purchase Option by SSMRC.

(a)           If SSMRC wishes to exercise the Purchase Option, SSMRC will deliver written notice (the “Purchase Option Notice”) to Dowa on or before the Termination Date.

(b)           Within ten business days after its receipt of the Purchase Option Notice, Dowa will deliver written notice of the Exercise Price to SSMRC (the “Exercise Price Notice”).

(c)           The closing for the exercise of the Purchase Option (“Closing”) will take place no later than five business days after the date of the Exercise Price Notice.  At Closing, SSMRC will pay the Exercise Price to Dowa, and Dowa will deliver a transfer form to assign the Option Shares to SSMRC.

(d)           Each party hereby expressly approves the transactions contemplated by this Agreement, and each party hereby agrees, at the expense of SSMRC, to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and the transactions contemplated hereby.

(e)           SSMRC will bear, and will reimburse Dowa for, all of the costs of implementing the transactions contemplated by this Agreement.

6.Notices.  All notices required or permitted hereunder will be in writing and will be deemed effectively given:

(i)upon personal delivery to the party to be notified;

(ii)five business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or

(iii)one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.

All communications will be sent as follows:

If to Dowa, to:                                     Dowa Metals & Mining Co., Ltd.
                                                                14-1, Sotokanda 4-Chome
                                                                Chiyoda-ku, Tokyo 101-0021 Japan
                                                                Attn: Hideo Kudo
                                                                Director, General Manager
                                                                Resource Development &

Raw Materials Department
                                                                kudoh@dowa.co.jp
                                                                Telephone: +81 3-6847-1201

with a copy to (which will not constitute notice to Dowa):

Torys LLP
1114 Avenue of the Americas
23rd Floor
New York, NY 10036
Attn: Don Bell
dbell@torys.com
Telephone: +1 (212) 880-6118

If to SSMRC, to:                                 1660 Lincoln Street, Suite 2750
                                                                Denver, Colorado 80264
                                                                Attn: Roger Johnson, CFO
                                                                Email: rjohnson@ssmines.com
                                                                Telephone: +1 (303) 784-5334

with a copy to (which will not constitute notice to SSMRC):

Polsinelli PC
1401 Lawrence Street, Suite 2300
Denver, Colorado 80202
Attention: Jeffrey Reeser
Email: jreeser@polsinelli.com
Telephone: +1 (303) 256-2726

7.Severability.  The determination that any provision of this Agreement is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

8.Counterparts.  This Agreement may be executed in counterparts, each of which when executed will be an original, and all of which, when taken together, will constitute one agreement.

9.Governing Law.  This Agreement and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

10.Further Assurances.  Each party will at its own expense do, make, execute or deliver all such further acts, documents and things in connection with this Agreement as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

11.Amendments, Assignments.  All amendments to this Agreement must be in writing and signed by the parties hereto.  No party may assign its rights hereunder, including but not limited to the Purchase Option, in whole or in part, without the consent of the other parties.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of the date first set forth above.

DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President

SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen A. Orr
	Name:	Stephen A. Orr
	Title:	Executive Chairman & Chief Executive Officer

MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer

OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer

EX-10.7.1

Exhibit 10.7.1

PRIORITY DISTRIBUTION AGREEMENT

This Priority Distribution Agreement (“Agreement”) is made and effective as of May 30, 2019, by and between Dowa Metals & Mining Co., Ltd., a corporation incorporated under the Laws of Japan (“Dowa”) and Sunshine Silver Mining & Refining Corporation, a corporation incorporated under the Laws of the State of Delaware (“SSMRC”), Minera Plata Real, S. de R.L. de C.V., a Mexico variable capital company incorporated under the Laws of Mexico (“MPR”), Operaciones San Jose de Plata, S. de R.L. de C.V., a Mexico variable capital company incorporated under the Laws of Mexico (“OpCo”, together with MPR, the “LGJV”).

Background

A.            Dowa, SSMRC, LGJV and Servicios San José de Plata S. de R.L. de C.V. entered into a Memorandum of Understanding dated April 16, 2019 (“MOU”);

B.            Pursuant to the terms of the MOU, SSMRC agreed to pay certain amounts to Dowa until such time as Dowa receives an aggregate amount equal to $20,000,000 from: (i) dividends and distributions payable to Dowa from the LGJV; and (ii) payments from SSMRC (such payments from SSMRC the “Priority Distribution Payments”); and

C.            The parties have agreed that the Priority Distribution Payments will be made in accordance with the terms of an escrow agreement (“Escrow Agreement”) entered into among Dowa, SSMRC and LGJV, dated as of May 30, 2019.

Agreements

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

1.             Definitions.  Unless otherwise specified, any term not defined herein will have the meaning set out under the Term Loan Agreement, dated July 11, 2017, among Dowa, SSMRC, the LGJV and Servicios, as amended (the “TL Agreement”).

2.             Payment.  SSMRC hereby agrees to make the Priority Distribution Payments to Dowa from dividends and distributions received from LGJV.

3.             Direction.  SSMRC hereby irrevocably directs LGJV to pay all dividends and distributions payable to SSMRC by LGJV to the Escrow Agent, to be disbursed to Dowa pursuant to the terms of the Escrow Agreement, and LGJV hereby accepts such direction, until such time as Dowa receives dividends and distributions from LGJV and Priority Distribution Payments, equal to $20,000,000 in aggregate.

4.             Costs.  SSMRC is responsible for all costs relating to the payment of the Priority Distribution Payments and the Escrow Agreement and hereby agrees to indemnify and hold Dowa harmless for any such costs including, without limitation, all costs, fees, liabilities or

expenses payable to the Escrow Agent and any withholding or other taxes payable in connection with the Priority Distribution Payments, other than Japanese corporate income taxes.

5.             Right to Dividends and Distributions.  SSMRC represents and warrants that it is entitled to receive the dividends and distributions, and has not made a prior agreement, pledge, transfer, or encumbrance of any of its right, title or interest in the dividends and distributions, except with respect to the security granted to Dowa under or in respect of the TL Agreement and Working Capital Facility.

6.             Severability.  The determination that any provision of this Agreement is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

7.             Counterparts.  This Agreement may be executed in counterparts, each of which when executed will be an original, and all of which, when taken together, will constitute one agreement.

8.             Governing Law.  This Agreement and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

9.             Further Assurances.  Each party will at its expense do, make, execute or deliver all such further acts, documents and things in connection with this Agreement as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

10.          Amendments, Assignments.  All amendments to this Agreement must be in writing and signed by the parties hereto.  No party may assign its rights hereunder, in whole or in part, without the consent of the other parties.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first mentioned above.

DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen A. Orr
	Name:	Stephen A. Orr
	Title:	Executive Chairman & Chief Executive Officer
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first mentioned above.

DOWA METALS & MINING CO., LTD.
By:	/s/ Toshiaki Suyama
	Name:	Toshiaki Suyama
	Title:	President
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Stephen A. Orr
	Name:	Stephen A. Orr
	Title:	Executive Chairman & CEO
MINERA PLATA REAL, S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer
OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Treasurer

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EX-10.8.1

Exhibit 10.8.1

(ENGLISH VERSION)

EXPLORATION, EXPLOITATION AND UNILATERAL PROMISE OF ASSIGNMENT OF RIGHTS AGREEMENT EXECUTED ON THE ONE PART BY LA CUESTA INTERNATIONAL, S. A. DE C. V. (HEREINAFTER CALLED “LA CUESTA”) REPRESENTED BY MR. WILLIAM PERRY DURNING AND ON THE OTHER PART BY MINERA PLATA REAL, S. A. DE C. V. (HEREINAFTER CALLED “PLATA REAL”), REPRESENTED BY MR. VICTOR GARCIA JIMENEZ, IN ACCORDANCE WITH FOLLOWING STATEMENTS AND CLAUSES:

S T A T E M E N T S

I. LA CUESTA states:

a)That it is a mining corporation legally incorporated according to the laws of the Mexican Republic, legally qualified to execute agreements and to be owner of mining concessions;

b)That its sole administrator, Mr. William Perry Durning is dully empowered to represent it and to execute this agreement;

c)That it is the legal titleholder of the rights derived from the application for mining concession filed over the mining lot (“THE LOT”), “LOS GATOS”, File N° 16/33429, with a surface of approximately 19,000 hectares, located in the Municipality of Satevo, State of Chihuahua, within the jurisdiction of the Mining Agency of Chihuahua, Chihuahua, as described in Schedule 1;

d)That in regard to the application for the mining concession existing over THE LOT, to date, it has fulfilled all the obligations imposed upon it by the Mining Law, its Regulations and all other applicable legal requirements and that therefore, it is expected that official title for the mining concession will be issued in the future and likewise, that the rights derived from said application are free and clear from any lien, encumbrance or limitation of dominion; and

e)That it is willing to grant PLATA REAL the right to explore and, when titled, to purchase and to exploit THE LOT in accordance with the terms and conditions stipulated in this agreement.

II. PLATA REAL states:

a)That it is a mining corporation legally incorporated according to the laws of the Mexican Republic, legally qualified to execute agreements and to be owner of mining concessions;

b)That its attorney, Mr. Victor Garcia-Jimenez is dully empowered to represent it and to execute this agreement; and

c)That it is willing to be granted the right to explore and, when titled, to purchase and exploit THE LOT, on the terms and conditions stipulated in this agreement.

In accordance with the former statements, the parties agree the following:

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C L A U S E S

FIRST. Right to explore, purchase and exploit THE LOT. Subject to that provided in Clause Third below, LA CUESTA hereby grants PLATA REAL the exclusive right to explore and, when titled, purchase and exploit THE LOT during the entire term for which the existing application for mining concession is valid and enforceable or a mining concession exists over THE LOT, and entitles PLATA REAL to execute during said term all exploration and exploitation works permitted to be executed by the concessionaires under the Mining Laws of Mexico, its Regulations and the titles of mining concessions.

SECOND. Right to terminate this agreement in advance. The term of this agreement will be compulsory for LA CUESTA and optional for PLATA REAL, who consequently will be able to terminate it on at least sixty days prior written notice to LA CUESTA to inform it of the date of termination.

Nevertheless, LA CUESTA will also have the right to terminate this agreement if PLATA REAL does not fulfill the work expenditures set out in the Fourth Clause, does not make the advance royalty payments as set out in the Sixth Clause, or if THE LOT is transferred back to LA CUESTA in connection with the Tenth Clause. La Cuesta should also have the right to terminate the Agreement in the event Plata Real incurs in any form of noncompliance, particularly, should Plata Real violate any mining, environmental, labor, tax or other legal provisions either in the course of the exploration or exploitation of the Los Gatos lot; or also in the course of its ordinary business operations not related to the Los Gatos lot, should in the latter instance the violation of those legal provisions by Plata Real affect or put in jeopardy the Los Gatos lot.

In the event of termination of this agreement, PLATA REAL will return THE LOT to LA CUESTA in good standing and free and clear from any encumbrances and will provide LA CUESTA within sixty days after termination copies of all assays, maps geological and geophysical reports and data, drilling reports, logs, technical reports and all other data relating to THE LOT and its evaluation.

THIRD. Unilateral promise to transfer THE LOT. LA CUESTA hereby unilaterally commits to transfer to PLATA REAL 100% (One Hundred Percent) of the title to THE LOT, as soon as the respective mining concession title is issued to LA CUESTA by the Mining Direction, for a purchase price of $15,000 United States Dollars (fifteen thousand United States dollars), an amount that has already been paid by PLATA REAL to LA CUESTA. This promise shall be valid and enforceable during the entire term of this agreement.

In view of the unilateral nature of this promise, it will be compulsory for LA CUESTA and optional for PLATA REAL, who therefore will have the right to decide to acquire or not the above-mentioned rights during the term of this agreement.

Upon the title to THE LOT being issued, LA CUESTA will immediately notify PLATA REAL and, upon such notification, PLATA REAL will confirm in writing that it wishes to continue with this agreement. If PLATA REAL agrees to continue with this agreement, LA CUESTA will transfer the title to THE LOT to PLATA REAL. In this case, both parties agree to do all things necessary to complete such transfer, including appearing before a Notary Public. If PLATA REAL decides not to continue with this agreement, the agreement will terminate and have no further force or effect.

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LA CUESTA estimates but does not guarantee that the mining concession title over THE LOT will be issued between April and December 2006 and, meanwhile, inasmuch as it is not at this time required to pay surface taxes nor to invest a minimum amount in exploration works, all amounts received from PLATA REAL for those purposes up to the date of signature of this agreement will be used toward the payment of the surface taxes of THE LOT that will be required upon the date of issuance of title.

When the title to THE LOT is issued to LA CUESTA, LA CUESTA will, as soon as practicable, transfer title to PLATA REAL and all clauses contained herein regarding investments, royalties, payments and other obligations of the parties will be reproduced in a definitive Contract of Transfer.

FOURTH. Minimum annual investment in exploration and development. To maintain this Agreement valid and in effect, PLATA REAL will have to spend the following minimum work expenditures on THE LOT to keep THE LOT in good standing during the following years:

a)	Year 2006:	US $	40,000
b)	Year 2007:	US $	80,000
c)	Year 2008:	US $	100,000
d)	Each Year Thereafter
	Until the End Date (described below)	US $	100,000

The “End Date” will be the earlier of December 31, 2016 or the date a feasibility study is prepared on THE LOT. Any amount expended in excess of the above mentioned limits in any give year can be applied to the future year(s) work commitments.

The exploration to be carried out by the PLATA REAL, whether directly or by means of contractors who render their services to them, comprise, among others, the works that allow the location, identification and determination of mineral substances existing in THE LOT, consisting of but not limited to road construction, site preparation, assaying, geological and geophysical investigations and examinations, including geological explorations, surveying, metallurgical studies, drillings of any kind and mining works such as drifts, crosscuts, pits, shafts and the like considered convenient, additionally to one or more Feasibility Studies to evaluate the viability of this project considering the possibility of establishing a new mining unit, in the opinion of a financing entity contracted by PLATA REAL.

Likewise, applicable minimum work expenditures includes each and all such other activities excluding land acquisition costs related with the exploration for the direct benefit of THE LOT allowed by the applicable legal provisions in the area of mining and mineral exploration, particularly those indicated in articles 28 and 29 of the Mining Law, and which may be used, to prove the mining works to which PLATA REAL is obligated, as titleholder of THE LOT.

All work done on the property will be conducted under the applicable environmental laws and regulation, where required appropriate permits will be acquired before work begins.

FIFTH. Royalties. Upon the transfer of title to THE LOT, PLATA REAL grants LA CUESTA a 2% royalty (the “2% Royalty”) on net smelter returns from all minerals obtained and sold from THE LOT, as long as PLATA REAL is producing and selling any minerals from THE LOT. In addition, PLATA REAL agrees to grant LA CUESTA a 0.5% royalty on net smelter returns from all minerals obtained and sold from all properties owned by third parties that PLATA REAL acquires within the boundaries of THE LOT and the Area

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of Influence as described in the Seventeenth Clause below (collectively the 2% Royalty and the 0.5% royalty are referred to as the “Royalty”). The terms of the Royalty are set out in Schedule 2.

PLATA REAL shall pay the Royalty to LA CUESTA, in check or wire transfer, within 30 days after the end of each calendar quarter in which there has been production and sales of minerals. PLATA REAL shall appoint a competent auditor acceptable to LA CUESTA to verify the calculation of the amounts to be paid as royalties.

It is expressly understood that, should PLATA REAL initiate commercial production, and should the Royalty referred to herein above be determined and same be less than the amount of the minimum Advance Royalty Payments described in Clause Six, PLATA REAL shall continue paying to LA CUESTA every six months, the amount of $20,000 United States dollars (twenty thousand United States dollars).

PLATA REAL will be entitled to transfer the rights to exploit THE LOTS, or sell them to third parties, provided, however, that it shall be a condition of such transfer that the transferee first execute and deliver to LA CUESTA and PLATA REAL an instrument pursuant to which the transferee agrees to be bound by all the terms of this agreement and to be bound to all liabilities and obligations in relation to the Royalty and Advance Royalty Payments required of PLATA REAL as if the transferee was an original party of this Agreement.

Once PLATA REAL pays to LA CUESTA the total amount of $10,000,000 United States dollars (ten million United States dollars), , in combined Advance Royalty and Royalty payments, the production Royalty payable to LA CUESTA shall be reduced from 2% (two percent) to 0.5% (one half percent). Once PLATA REAL pays to LA CUESTA the total amount of $15,000,000 United States dollars (fifteen million United States dollars), it shall have no obligation to make any additional payment in favor of LA CUESTA.

SIXTH. Advance Royalty Payments. As long as PLATA REAL and/or its successors or assigns has an interest in and/or is exploring THE LOT or other mineral interest within the Area of Influence of the Seventeenth Clause, it will pay LA CUESTA the following Advance Royalty Payments plus applicable Value Added Tax:

On signing this Agreement (already paid to LA CUESTA)	US $	7,500
On or before April 27, 2006	7,500
On or before October 27, 2006	12,500
On or before April 27, 2007	12,500
On or before October 27, 2007	15,000
On or before April 27, 2008	15,000
On or before October 27, 2008	20,000
Each 6 months thereafter	20,000

LA CUESTA accepts and recognizes that on February 1, 2006 PLATA REAL already made the first Advance Royalty Payment in the amount of $7,500 United States dollars (Seven thousand five hundred United States dollars).

The above mentioned Advance Royalty Payments would apply as long as PLATA REAL maintains any rights to THE LOT or any portion thereof, or any other mineral interest within the Area of Influence of Clause Seventeen and until commercial production commences on THE LOT. In the case where commercial production has commenced on THE LOT, but the calculated Royalty is less than the minimum Advance Royalty Payments as described above, then the Advance Royalty Payment would apply.

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All Advance Royalty Payments paid by PLATA REAL to LA CUESTA prior to production would be credited against the Royalty that becomes due as provided in the Fifth Clause.

SEVENTH. Fees, Taxes and Expenses. All the fees, taxes and expenses incurred on the granting and execution of this agreement and of the respective purchase agreement will be paid by PLATA REAL, except for those taxes imposed on the income obtained by LA CUESTA, which will be paid by them.

To all payment made by PLATA REAL to LA CUESTA, a Value Added Tax at the rate of 15% will be added, indicating separately in the invoice to be issued the amount of said Tax.

All amounts paid by PLATA REAL to LA CUESTA will be in dollars, currency of the United States of America.

EIGHTH. Labor responsibility. Each party acknowledges and agrees that no labor relations exist between the workers and contractors of such party and the other party, and expressly agrees that, with respect to its employees and contractors, such party or its contractors (as to their employees), will assume all labor responsibilities and will hold the other party harmless against any reclamation, claim, accusation or complaint which may be filed against the first party by its workers or employees, contractors or by applicable labor or administrative authorities.

NINTH. Additional obligations of LA CUESTA. In addition to the obligations assumed by LA CUESTA in the preceding clauses, until THE LOT is transferred to PLATA REAL, it will have also the following obligations:

a)To follow up, carry out any action required and, in its case, file any document required, in order for the title of mining concession for THE LOT to be issued.

b)Inform PLATA REAL on the issuance of the titles of mining concession which shall cover THE LOT, delivering copies of such title to PLATA REAL, within 10 (ten) calendar days counted from the date on which LA CUESTA receives such titles.

c)To maintain valid and in force the rights derived from the existing mining concessions or from those that would be issued over THE LOT and, likewise, to maintain them free and clear from any lien, encumbrance or limitation of dominion, fulfilling all obligations imposed to them by the Mining Law, its Regulations and all applicable legal provisions;

d)Permit PLATA REAL to carry out all kind of exploration or evaluation works and metallurgical tests in THE LOT as it may consider necessary, as well as to provide it with all the information they may have on THE LOT; and

e)Indemnify and hold harmless PLATA REAL from and against any liability, claim or responsibility that may arise from any acts or omission of LA CUESTA with respects to THE LOT.

TENTH. Additional obligations of PLATA REAL. In addition to the obligations assumed by PLATA REAL in the preceding clauses, until THE LOT is transferred to PLATA REAL, it also will have the following obligations:

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a)To carry out the exploration at THE LOT in the best possible manner in accordance with the most appropriate and rational mining practices and in accordance with all legal regulations regarding executing enough exploration work required to fulfill with the provisions of the law;

b)To help LA CUESTA fulfill in a timely manner the obligations to prepare and file the exploration assessment work and to pay the duties on mining concessions;

c)To maintain THE LOT in good shape and exploration condition, free of any liens or encumbrances; and

d)To permit LA CUESTA or their agents to inspect THE LOT and the work that will be carried out in them at any moment, but without LA CUESTA interfering in the proper execution of the exploration work.

In addition, during the term of this agreement, PLATA REAL will have the following obligations:

e)To punctually pay to LA CUESTA all considerations provided herein in this agreement; and

f)If THE LOT has been transferred to PLATA REAL and it decides to abandon or otherwise dispose of THE LOT or any portion thereof, LA CUESTA will have the right to acquire THE LOT or the proposed abandoned portion thereof back from PLATA REAL, at no cost and free of any liens or encumbrances, with PLATA REAL bearing all of the cost of transfer. In the case where PLATA REAL abandons all of THE LOT and retains no mineral interests within the Area of Influence in Clause 17, the full rights on THE LOT shall revert to LA CUESTA free of all charges, and the obligations under this agreement will terminate and LA CUESTA releases PLATA REAL from all obligations and liabilities connected to THE LOT or this agreement, whether past, present, future or contingent.

g)Comply with all mining, environmental and other legal provisions in the course of the exploration and exploitation of the Los Gatos lot, as well as to fulfill all applicable provisions and requirements under the labor, tax and other applicable laws in the course of its ordinary business operations, to the extent required in order for its rights and title to the Los Gatos lot not be affected or put in jeopardy because of any violation of or non compliance with those applicable laws.

If at any time during the term of this agreement PLATA REAL does not fulfill or breaches any of its obligations under this agreement, and especially those provided in this Clause, LA CUESTA will have the right to terminate this agreement under the terms of the Eleventh Clause herein below, and consequently the transfer of the rights deriving from the mining concession on the LOT shall be revoked and shall remain with no legal effects, and PLATA REAL undertakes to take at its own expense all and any legal steps which may be required, in order for all rights deriving from the said mining concession on THE LOT to be transferred to LA CUESTA at no cost and free of any liens or encumbrances, without prejudice of LA CUESTA being also entitled to seek indemnification from PLATA REAL for the damages and losses suffered by LA CUESTA.

ELEVENTH. Noncompliance. The noncompliance of any of the parties with the obligations they assume in this agreement will grant the other party the right to ask the immediate fulfillment of the non-fulfilled obligations. For said purpose, it will be required to ask, in writing, the party in default to fulfill said obligations and, if after a thirty days period from the date of delivering said petition, the noncompliance still exists and no reasonable effort to remedy it has been made, then the affected party will have the right, at its option, to seek arbitration as outlined in Clause Fifteenth, to remedy of the unfulfilled obligations or to terminate this agreement, and shall be entitled to seek indemnification for damages.

6

It is expressed understood that in case that, because of reasons of the exclusive responsibility of the LA CUESTA, the General Direction of Mines does not accept the applications and, therefore does not issue the title of mining exploration concession covering THE LOT, same shall be a cause of termination of this Contract, having LA CUESTA therefore, the obligation to reimburse to PLATA REAL all the amounts it had received from PLATA REAL.

TWELVETH. Force Majeure. The parties will not be considered in noncompliance with the agreement when such noncompliance is due to force majeure and they are unable to fulfill the obligations they assume under this agreement.

Force majeure is defined, including but not limited to: Acts of God, earthquakes, fires, floods, collapses, riots, rebellions, wars, strikes, revolutions, acts of authority and, in general, any other fact or act totally out of the will of the parties and of their control and which prevent them to fulfill, totally or partially, their obligations under this agreement.

Should any of the parties be affected by force majeure and therefore is unable to fulfill its obligations in accordance with this agreement, it shall notify the other party in writing, informing of the circumstances leading to the evoking of force majeure and regarding the estimated time said force majeure will prevent said party from fulfilling its obligations.

If after six months from the date in which such force majeure has occurred it continues and no reasonable efforts have been made to remedy the force majeure when such remedy is possible, then the other party will have the right to terminate this agreement.

THIRTEENTH. Total agreement of the parties. This agreement reflects the total agreement between the parties with respect to its purpose and, therefore, it cancels and renders without effects the Exploration, Exploitation and Unilateral Promise to Sell Agreement executed by the parties on April 13, 2006 and any other agreements, contracts or letters of intent, executed previously between them with respect to the same purpose.

This agreement will oblige under its terms and conditions to the heirs, assignees or beneficiaries of the parties.

The parties agree to ratify their signatures in this agreement before a Notary Public, and to register it with the Public Registry of Mining of Mexico in accordance with the provisions of the Mining Law and its Regulations of Mexico, should the mining concession title be issued and PLATA REAL notify in writing to LA CUESTA as provided in the third paragraph of Clause Third, PLATA REAL’s decision to continue with this agreement.

FOURTEENTH. Communications and notifications. All communications and notifications to be made among the parties pursuant to this Contract shall be in writing delivered at their domiciles; and, for such purpose, the parties designate the following addresses:

LA CUESTA	PLATA REAL
La Cuesta International, S. A. de C. V.	Minera Plata Real, S.A. de C.V.
Batopilas No. 250	San Francisco N° 656 - 601
Col. Cacho	Col. Del Valle, CP. 03100,
Tijuana, B.C., CP. 22320	Mexico, D.F.

7

If LA CUESTA or PLATA REAL has any change in its above mentioned address, such change shall be notified in writing to the other party.

FIFTEENTH. Arbitration, Applicable Laws and Courts. In the event of a dispute, controversy or claim under this agreement that is not resolved within thirty calendar days following the delivery of written notice of the dispute, controversy or claim, the matter shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules. The law applicable to this agreement and to the merits of the case shall be the Mexican laws, while the place of arbitration shall be the city of New York, N.Y and the language of the arbitration shall be the English language.

SEVENTEENTH. Area of Influence. During the term of this agreement, if PLATA REAL or its affiliates, acquire any mineral rights located, wholly or in part within the area extending one kilometer from the outermost boundary of THE LOT (as it exists on the date of this agreement), then such interest will be deemed to form part of THE LOT.

Having read this document, the parties ratify same in its entirety and sign it in four copies, LA CUESTA on 4 day of May, 2006, in the City of Tijuana BCN; and, PLATA REAL on 4 day of May, 2006, in the City of Tijuana BCN.

LA CUESTA	PLATA REAL
LA CUESTA INTERNATIONAL, S.A. DE C. V.	MINERA PLATA REAL, S. A. DE C. V.
/s/ William Perry Durning	/s/ Victor García-Jiménez
Mr. William Perry Durning	Mr. Victor García-Jiménez

8

SCHEDULE 1

Property Description

THE LOT is described as the Los Gatos Lot, file number 16/33429, located in the Municipality of Satevo, state of Chihuahua.

The Los Gatos Lot was registered on October 20th of 2005 at the Direction of Mines in Chihuahua City, Chihuahua, Mexico. The Trabajos Periciales [official lot survey document submitted by a register mineral surveyor] was submitted to the Direction of Mines in Chihuahua, December 21, 2005. The title is pending.

The Coordinates of the claim monument are as follows:

North (Y) = 3,050,465.7227 M

East (X) = 365,811.1408 M

The exterior boundaries of the claim starting at the claim monument (Punto de Partido) are as follows:

9

DATOS RELATIVOS AL PERIMETRO DEL LOTE:

LINEAS AUXILIARIES:

P.P. - A ESTE	1,200.000 mts.
A.-1 NORTE	1,500.000 mts.

LADOS	RUMBOS	DISTANCIA	COOLINDANCIAS
01-02	ESTE	2000.000	TERRENO LIBRE
02-03	SUR	2000.000	TERRENO LIBRE
03-04	ESTE	3000.000	TERRENO LIBRE
04-05	SUR	9000.000	TERRENO LIBRE
05-06	OESTE	5000.000	TERRENO LIBRE
06-07	NORTE	2000.000	TERRENO LIBRE
07-08	OESTE	3000.000	TERRENO LIBRE
08-09	NORTE	2000.000	TERRENO LIBRE
09-10	OESTE	3000.000	TERRENO LIBRE
10-11	NORTE	3000.000	TERRENO LIBRE
11-12	OESTE	5000.000	TERRENO LIBRE
12-13	NORTE	5000.000	TERRENO LIBRE
13-14	OESTE	3000.000	TERRENO LIBRE
14-15	NORTE	3000.000	TERRENO LIBRE
15-16	OESTE	3000.000	TERRENO LIBRE
16-17	NORTE	5000.000	TERRENO LIBRE
17-18	ESTE	8000.000	TERRENO LIBRE
18-19	SUR	5000.000	TERRENO LIBRE
19-20	ESTE	5000.000	TERRENO LIBRE
20-21	SUR	2000.000	TERRENO LIBRE
21-22	ESTE	4000.000	TERRENO LIBRE
22-01	SUR	2000.000	TERRENO LIBRE

SUPERFICIE	20 200.0000 Has
SUPERFICIE INTERNA 1	111.7743 Has
SUPERFICIE INTERNA 2	44.1992 Has
SUPERFICIE INTERNA 3	10.0000 Has
SUPERFICIE INTERNA 4	130.0000 Has
SUPERFICIE TOTAL	19 904.0265 Has

10

SCHEDULE 2

Net Smelter Return Royalty

NET SMELTER RETURN ROYALTY:

(a)Royalty: For the purposes of the agreement “Royalty” will mean the actual proceeds received from any independent custom smelter, mill, mint or other purchaser for the sale of all minerals, metals, dore or concentrates extracted and derived from the ore mined from THE LOT after deducting there from all charges and penalties for smelting and refining and the cost of transportation (to the mill or smelter and thereafter to the mint), insurance premiums, sampling and assaying charges incurred after the minerals, metals or concentrates have left THE LOT and all appropriate mint charges.

(b)Settlement: The Royalty is due and payable under the terms hereof upon the commercial production commencing on THE LOT. Settlement for the Royalty after commercial production, after having first applied and credited the payments shall be made on or before the last day of each calendar quarter, for all production for which payment has been received during the preceding three months, accompanied by a statement showing the factors used in determining the amount of the Royalty.

(c)Commercial production: Commercial production shall mean any period of time during which a mine within THE LOT is producing or selling minerals or ores, or intermediate products to one or more third party purchasers on a commercial basis or producing mineral product for PLATA REAL inventory.

(c)Access to Records, Audit and Inspection: Representatives of the LA CUESTA shall be afforded reasonable access once per calendar year to PLATA REAL’S accounts, records and supporting documents related to the Royalty payment calculations for audit and verification of costs and revenues for the determination of production payments hereunder by any certified public accountant; provided that LA CUESTA’S independent certified public accountant is well versed with accounting principals that are generally accepted in the mining industry. Said accountant shall at any and all reasonable times during the applicable calendar year be permitted to inspect Royalty books and settlement records relating to the sale of valuable minerals produced from THE LOT in order to determine whether or not the provisions of this agreement are being complied with and followed. In addition, from time to time, and with consent from the PLATA REAL (such consent will not be unreasonably withheld), LA CUESTA and its authorized agent(s) shall be allowed to enter upon THE LOT for the purpose of inspection at such reasonable times as not to interfere with the regular operation of THE LOT. All Royalty settlement statements presented to the LA CUESTA shall be conclusively presumed correct after the expiration of 60 (sixty) days from the date of such presentation, unless within that period LA CUESTA takes written exception thereto, specifying with particularity the items excepted and the grounds for such exception. Any exception or objection to the payments required above shall apply only to the methodology of calculation as presented to LA CUESTA and shall not preclude further examination of and challenges to the accuracy or adequacy of costs and receipts used in making the calculations. All inspections shall be conducted at the sole risk and expense of the LA CUESTA or its authorized agents. Audit adjustments will be remitted promptly (no later than 60 days) following notice to PLATA REAL, providing that PLATA REAL agrees with said adjustment.

(d)Binding Effect: The obligation to make Royalty payments shall be a permanent encumbrance of THE LOT, and shall be binding upon each and every successor in interest to PLATA REAL in THE LOT. This obligation of PLATA REAL to pay LA CUESTA the Royalty shall terminate upon LA CUESTA receiving consideration as provided in section 4 of the Fifth Clause.

11

EX-10.9.1

Exhibit 10.9.1

Certain confidential information contained in this document, marked by [***], has been omitted because Sunshine Silver Mining & Refining Corporation (the “Company”) has determined that the information (i) is not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

OPUSA CONTRACT REFERENCE: OPUS.ZP.70634

This Agreement (“Agreement”) is hereby executed as of July 15, 2019

Between:OCEAN PARTNERS USA, INC.

43 Danbury Road

Wilton, CT, USA, 06897

(hereinafter called “Buyer”)

and

OPERACIONES SAN JOSE DE PLATA, S. DE R.L. DE C.V.

Gabriel Mancera No. 1041 Del Valle

Mexico 03100

Benito Juarez, Distrito Federal Mexico

(hereinafter called “Seller”)

Buyer agrees to buy, accept delivery of and pay for and Seller agrees to sell and deliver to Buyer, Zinc Concentrates which will be produced from the Cerro Los Gatos (Los Gatos) Mine, Chihuahua state, the United Mexican States under the following terms and conditions.

1.DEFINITIONS

(a)The terms “tonne” and “metric ton” mean 2,204.62 pounds or 1,000 kilograms, wet or dry basis as specifically stated herein.

(b)The term “unit” used in relation to any quantity of concentrates means 1% of the net dry weight thereof.

(c)The abbreviation “WMT” means wet metric ton(s).

(d)The abbreviation “DMT” means dry metric ton(s).

(e)Amounts of money stated in US$ and US ₵ (Dollars and Cents) and references to the lawful currency to the United States of America.

(f)The terms “ounce” and “troy ounce” mean 31.1035 grams.

(g)The term “kg” means kilogram.

(h)The term “CIF” means CIF as defined in Incoterms published in 2010

(i)The term “IMSBC” means the International Maritime Solid Bulk Cargoes Code for Safe Practice as amended from time to time.

(j)The term “PPM” means parts per million.

(k)The term “Calendar Year” means any year commencing January 1 and ending December 31.

(l)The term “date of arrival” means the date the Notice of Readiness for discharge of the carrying vessel is tendered at the port of discharge.

(m)The term “laytime” means the number of weather working days (or part thereof) or Sundays, if used, or legal, local and customary holidays, if used, in which Buyer has to discharge each concentrate shipment from the carrying vessel and is calculated by dividing the Bill of Lading wet tonnes discharged for each shipment by the discharge rate guaranteed by Buyer.

(n)The term “demurrage” means the amount payable by Buyer to Seller for not discharging the carrying vessel within the laytime allowed.

(o)The term “despatch money” means the amount payable by Seller to Buyer for discharging the carrying vessel prior to the termination of laytime.

(p)The term “business day” means a calendar day, excepting for Saturday, Sunday or holidays in Japan, Mexico and the USA.

(q)The term “Smelter” means Buyer’s Iijima zinc smelter in Akita, Japan.

(r)The term “Partner Agreement” means that certain Unanimous Omnibus Partner Agreement by and among Buyer, Seller, and Sunshine Silver Mining & Refining Corporation, dated as of January 1, 2015, as amended.

2.QUALITY

(a)In this Agreement the terms “Concentrates” shall mean Los Gatos zinc concentrates produced by Seller at its Los Gatos Mine in Chihuahua, Mexico.

The typical analysis of Concentrates is expected to be in accordance with Seller’s assays as follows:

Au	g	[***]
Ag	g	[***]
Cu	%	[***]
Zn	%	[***]
Cd	%	[***]
Pb	%	[***]
Fe	%	[***]
As	%	[***]
S	%	[***]
Hg	ppm	[***]
Co	ppm	[***]
Ni	ppm	[***]
F	ppm	[***]
MgO	%	[***]
Ga	ppm	[***]
In	ppm	[***]
CaO	%	[***]
A12O3	%	[***]
Sb	ppm	[***]
Mn	%	[***]
Ge	ppm	[***]
Na	ppm	[***]
Sn	ppm	[***]
SiO2	%	[***]
BaSO4	%	[***]
Cl	ppm	[***]
K	ppm	[***]
Tl	ppm	[***]
Bi	ppm	[***]
Se	ppm	[***]

In the event the composition of Concentrates sold hereunder should not conform to the composition described above, Buyer and Seller will negotiate in good faith with full disclosure to overcome any financial hardship or technical difficulty which Buyer may suffer as a result thereof.

(b)The moisture content of each shipment of Concentrates shall not exceed the transportable moisture limit provided in the International Maritime Organization’s International Maritime Solid Bulk Cargoes (“IMSBC”) then in effect at the time of shipment.

3.QUANTITY

(a)During the term of this Agreement, Seller shall sell, and Buyer shall purchase all of the annual Concentrates produced.

(b)The Buyer shall deliver 100% of the Concentrates purchased from OSJ to Dowa Metals and Mining Co. Ltd.’s (“Dowa”) Smelter in Akita Japan unless otherwise agreed or advised by Dowa.

(c)To establish the quantity to be delivered pursuant to this Agreement during a given Calendar Year (hereinafter called a “Shipment Year”), Seller shall advise Dowa with copy to Buyer of the estimated Concentrate production for each Shipment Year by October 31 of the immediately preceding Calendar Year. Furthermore, Seller shall declare the quantity of Concentrates (hereinafter called “Contractual Quantity”) to be shipped during such Shipment Year by November 30 of the immediately preceding Calendar Year. If there appears to be any substantial change in the Concentrate production or the Contractual Quantity as declared in accordance with the above, Seller shall immediately give notice to Dowa with copy to Buyer of such change and both parties shall attempt in good faith to resolve any problems raised thereby.

4.DURATION / NEGOTIATION

(a)This Agreement shall be effective from the date hereof and shall remain in full force and effect until the completion of the last delivery before June 30, 2022 (the “Initial Period”). Any extension to the Initial Period must be mutually agreed.

Notwithstanding anything in this Agreement to the contrary this Agreement may be terminated pursuant to Section 13.1 of the Seller and Dowa’s Partner Agreement in accordance with the provisions set forth therein.

(b)Commercial terms, as provided in Clauses 9, 10, 11 and 12, shall be annually negotiated in good faith and agreed between Dowa and Seller (with copy to Buyer) taking into consideration the prevailing world markets, including 1) Bench Mark Terms as published by the Metal Bulletin of London and 2) the prevailing international terms and conditions governing delivery of zinc Concentrate to Japan, for zinc concentrates, for the period in which Concentrate shipments are scheduled, or such other time as may be agreed; provided, however, for 2019 commercial terms are set forth in Appendix A attached hereto, and provided that the intent of this paragraph (c) is to apply solely to renegotiation of commercial terms, and not legal terms under this Agreement, and neither party shall be liable to the other if they are unable to agree on any revisions to the commercial terms currently in effect.

(c)Notwithstanding the foregoing, Dowa and/or Seller (with copy to Buyer) may request additional commercial terms beyond those in Clauses 9, 10, 11 and 12 for negotiation, if such new additional commercial terms are justified as competitive International and/or Japanese market conditions for zinc concentrate with volumes, specifications and other terms and conditions similar to those in this Agreement. The Buyer and Seller must negotiate and agree such additional commercial terms.

5.SHIPMENT

(a)Seller shall arrange and pay for bulk Concentrate shipments, as specified in Clause 3, to be delivered to the Buyer’s TMC Warehouse in Manzanillo. The Seller shall allow the Buyer a freight credit equal to actual costs to deliver the Concentrate to CIF FO Akita Japan (the “Freight Credit”).

(b)Seller acknowledges that Buyer shall deliver Concentrates to Dowa on a vessel which shall meet berth accommodation restrictions as specified in Appendix B attached hereto.

6.DELIVERY

(a)Each bulk Concentrate shipment shall be delivered by Seller to Buyer FCA Hazesa Terminal, Manzanillo via the Buyer’s TMC warehouse in Manzanillo.

(b)For purposes of the Freight Credit, the Buyer is responsible for discharge of Concentrates from the carrying vessel’s hold(s) and shall arrange and shall pay for all costs associated with discharge.

(c)For purposes of the Freight Credit, the carrying vessel used by Buyer shall be classified highest Lloyd’s registration or equivalent and shall be no more than fifteen (15) years of age (provided, however, that if the age of the nominated vessel exceeds fifteen (15) years, Buyer will accept a vessel with an age of no more than twenty (20) years, provided that all additional cargo insurance caused by the age being above fifteen (15) years shall be for the Seller’s account), single deck, bulk carrier otherwise suitable to discharge the Concentrate by grab having fully flat and unobstructed tank top without any protruding structures which might be a hindrance for the performance of normal grab discharge and/or the use of payloaders in holds. Spout trimming must be observed at loading port, not leveling.

No Concentrate to be stowed in bridge spaces, deep tanks or other spaces inaccessible to mechanical grabs for discharging. Any extra expenses incurred in discharging by reason of stowage in excepted places shall be for account of Seller and any time so lost and above the usual time required for grab discharge is not to count as laytime used.

(d)For purposes of the Freight Credit, Buyer has responsibility to deliver Concentrate to the port of discharge nominated by Dowa at Buyer’s own costs, even in case of loss or damage to the Concentrate or expense, if caused by insolvency or financial default of owners, managers, charterers, or operators of the carrying vessel, unless such cause also constitutes a Force Majeure Event as defined herein.

(e)For purposes of the Freight Credit, for discharge at Akita, Japan, Dowa guarantees a discharge rate of 2,500 wet tonnes per weather working day of 24 consecutive hours, Sundays and legal, local and customary holidays excepted unless used, and if used, actual time used to count as laytime used. Laytime shall commence at 08:00 a.m. of the immediately next working day after the carrying vessel has tendered Notice of Readiness for discharge, unless sooner commenced, whether in berth or not, but only after free pratique is granted. Notice of Readiness is to be tendered during office hours only from 08:00 a.m. to 05:00 p.m., Monday through Friday, and 09:00a.m.-12:00p.m. on Saturday that the performing vessel is ready in all respects to start discharging operations, whether in berth or not, after it has arrived at the port of discharge.

(f)For purposes of the Freight Credit, demurrage or despatch money (as applicable) at the port of discharge shall be for Dowa’s account at those rates in Buyer’s Charter

Party for each shipment, provided that such rates are approved by Dowa, prior to each shipment.

(g)If another cargo is being discharged from the same vessel at the Akita port,

(i)In case of the Concentrate being discharged after the completion of discharge of such other cargo, laytime shall commence two (2) hours later after discharge completion of such cargo unless sooner commenced.

(ii)In the case of combined shipment with other cargoes, laytime shall be calculated based on the total quantity discharged at the Akita port and shall be proportionally allocated based on the Bill of Lading quantities.

7.TITLE AND RISK

Title to the Concentrates shall pass from Seller to Buyer upon Seller’s receipt of the first provisional payment.

Risk of loss or damage to the Concentrates shall pass from Seller to Buyer in accordance with the FCA, Incoterms (2010), when material is delivered to Hazesa terminal in Manzanillo.

8.PRICE

The purchase price payable by Buyer to Seller for Concentrate sold and delivered hereunder, shall be the sum of the amounts payable for metal contained in Concentrates determined pursuant to Clauses 4(b), 9 and 11 of this Agreement, less the applicable deductions determined pursuant to Clauses 4(b) and 10 of this Agreement.

9.METAL PAYMENT

Metal  payment and metal price to be applicable for the shipments in each Calendar Year shall be agreed between Dowa and Seller (with copy to Buyer) in accordance with Clause 4 of this Agreement.

10.DEDUCTIONS, TREATMENT CHARGES AND ESCALATORS / DE-ESCALATORS

The treatment charge and escalators/de-escalators to be applicable for the shipments in each Calendar Year shall be agreed between Dowa and Seller (with copy to Buyer) in accordance with Clause 4 of this Agreement.

PENALTIES

Penalties to be applicable for the shipments in each Calendar Year shall be agreed between Dowa and Seller (with copy to Buyer) in accordance with Clause 4 of this Agreement.

11.QUOTATIONAL PERIOD

The quotational period to be applicable for the shipments in each Calendar Year shall be agreed between Dowa and Seller (with copy to Buyer) in accordance with Clause 4 of this agreement.

12.SETTLEMENT

(a)All invoices shall be prepared and issued by Seller in US$. All payments shall be made by wire transfer to such banks as Buyer and Seller, as the case may be, shall designate from time to time.

(b)All payment terms to be agreed between Dowa and Seller (with copy to Buyer).

Seller at its sole option may request an accelerated provisional payment from Buyer, in minimum 500 wet metric tonne lots against following documents:

(i)Holding certificate in Buyer’s (or its nominated bank’s) name in a form acceptable to the Buyer

(ii)Seller’s Weight and Assay Certificate

(iii)Seller’s Provisional Invoice based on received weights at Buyer’s warehouse, Seller’s provisional assays and average prices for the last five business days prior to the date of the holding certificate

(iv)MSDS Sheet to be provided immediately upon signing of the Contract and renewed every 18 months.

Buyer shall charge Seller interest at [***] from the date of advanced provisional payment by Buyer until the date of receipt of payment from Dowa as per Appendix A or as adjusted from time to time between the Seller and Dowa.

(c)For each shipment, payment of the balance due to Seller will be made three (3) business days after presentation of Seller’s final invoice based on actual weight determined in accordance with Clause 14, final assays determined in accordance with Clause 15 and final price determined in accordance with Clause 8, 9, 10 and 11. If the amount on Seller’s final invoice is lower than the provisional payment, Seller shall remit to Buyer by wire transfer within three (3) business days after presentation of Seller’s final invoice, the excess of the provisional payment received by Seller.

(d)Total and Partial loss:

(i)Should a part of any delivery of Concentrate be lost or damaged after delivery and before completion of weighing, sampling and determination of moisture, final settlement will be made as soon as all the necessary details are available based on Seller’s provisional invoice wet weight and the agreed assays and the final moisture content as provided in Clause 14 and 15 on that part of the Concentrates which has been safely delivered and otherwise in accordance with the terms of this Agreement.

(ii)Should shipment of Concentrates be lost or damaged after the risk of loss or damage passes from Seller to Buyer, then final settlement will be made based on Seller’s provisional invoice weight and assays, moisture content and the terms provided in Clause 8 hereof.

(iii)For the purpose of determination of the quotational period, in case of total loss or damage to Concentrates, the carrying vessel will be deemed to have arrived at the port of discharge 30 days after the date of Bill of Lading.

13.INSURANCE

(a)Buyer at its own expense shall arrange and place marine insurance on each shipment with an international insurance company rated at least Lloyds A1.

Such insurance shall:

(i)Be placed provisionally for the amount of 110% of the CIF value determined at the time of shipment subject to the adjustment at 110% of the final CIF value determined in accordance with Clauses 8, 9, 10, 11, 12, 14 and 15 of this Agreement.

(ii)Name Dowa as an additional insured under the policy of insurance to preserve and protect their interest under the policy buyer’s obligation to pay for Concentrates pursuant to this Agreement shall not change or be affected by any insurance claim as long as the insurance is duly placed by Buyer in accordance with this Clause of this Agreement.

(iii)Cover Concentrates against All Risk of direct physical loss or damage from any insured peril, howsoever caused, from the time when they shall have been delivered to TMC warehouse in Manzanillo, until the port of discharge, Akita, Japan.

(iv)Include the following conditions:

Institute Cargo Clause (A) 1/1/82. War risks subject to Institute War Clauses (Cargo) 1/1/82, the risks of Strikes, Riots and Civil Commotions subject to Institute Strikes Clauses (Cargo) 1/1/82, also cover the risks of heat and

spontaneous combustion howsoever caused but exclude the claims for normal shortage in the ordinary course of transit.

(b)Vessels chartered by Buyer shall comply with the London Institute Classification Clause.

14.WEIGHING, SAMPLING AND DETERMINATION OF MOISTURE

(a)Weighing, sampling and determination of moisture of Concentrate shall be carried out immediately after discharge from the carrying vessel at Dowa’s risk and expense.

(b)Weighing and sampling shall be carried out in lots of approximately 500 WMT each or as may be agreed between Seller and Dowa (with copy to Buyer) and the moisture content of each lot shall be determined separately.

Each lot shall form a separate and complete delivery for the purpose of this Agreement. Each sample shall be delivered into 6 parts — two each for Dowa and Seller, one for umpire analysis, and one to be held in reserve by Seller’s nominee.

(c)Seller shall have the right to be represented at the carrying vessel’s discharge, weighing, sampling and determination of moisture at its own expense.

15.ASSAYS

(a)From the samples taken from each lot in accordance with Clause 14, the assays of metal and other materials contents shall be determined independently by Dowa and Seller or their respective nominees in accordance with international practice.

(b)Within 45 calendar days after completion of sampling at the smelter, Dowa and Seller shall notify each other that they are ready to exchange the results of their respective assays. The initiative to notify should be taken by either party immediately when its results are available.

(c)The assay results on the laboratory Certificate of Analysis shall then be exchanged between Dowa and Seller by email, registered crossing mail or as otherwise agreed.

(d)Should the difference between Dowa’s and Seller’s results for a lot be not more than:

Zn	%	[***]
Ag	g	[***]
Fe	%	[***]
As	%	[***]
F	ppm	[***]

the exact mean of the 2 results shall be taken as the agreed assay and shall govern for all purpose herein.

If the difference between Dowa’s and Seller’s assay results for a lot is greater than the aforesaid limits, unless Dowa and Seller agree to average the said difference (in which event that assay shall be conclusive in respect of the relevant lot), the samples of material taken from the relative lot for Umpire analysis in accordance with Clause 14, shall be sent for Umpire analysis to:

SGS Netherland B.V.

Malledjik 18

Postbus 200

3200 AE Spijkenissse

The Netherlands

or

The John Knight Laboratory

(Formerly, Alfred H. Knight International Ltd.)

Pegasus House

Kings Business Park

Prescot, Knowsley L34 1PJ

United Kingdom

or

Alex Stewart International Corporation

2b Sefton Park

Aintree, Liverpool

L30 1RD

United Kingdom

acting in rotation, or any mutually acceptable laboratory(ies).

(e)Should the umpire assay fall between the results of the two parties, the arithmetical mean of the umpire assay and the assay of the party whose results are nearer to the umpire’s shall be taken for final settlement. Should the umpire assay fall outside the exchanged results, the middle of the 3 (three) results shall be final. If the umpire assay coincides with the result of either of the two parties or is the exact mean of the exchanged result, the umpire assay shall be final.

The cost of the umpire assay shall be borne by the party whose result is farther from the umpire result. The cost of the umpire assay shall be borne equally by both parties when the umpire assay is the exact mean of the exchanged results.

16.WASTE DISPOSAL AND HEALTH AND SAFETY OF WORKERS

(a)Buyer shall be responsible for environmental protection and for all costs and liabilities of waste disposal and worker health and safety related to Concentrate arising after delivery to TMC warehouse in Manzanillo until arrival at the Port of Akita, Japan, and Buyer shall defend, indemnify and hold Seller harmless against any claims made against Seller and costs incurred by Seller as a result of any failure by Buyer to discharge that responsibility.

(b)Seller shall be responsible for all costs and liabilities of waste disposal and worker health and safety related to Concentrate arising before arrival at TMC warehouse in Manzanillo, and Seller shall defend, indemnify and hold Buyer harmless against any claims made against Buyer, and costs incurred by Buyer as a result of any failure by Seller to discharge that responsibility.

17.FORCE MAJEURE

(a)Should Seller be prevented from making any shipment or delivery hereunder or Buyer or Dowa be prevented from taking delivery of any Concentrates as a result of any governmental acts, regulations or directions, refusal of any necessary export or import licenses, outbreak of a state of emergency, act of God, war, unrest, warlike hostilities, shortage of raw materials, civil commotions or embargoes, blockades, riots, epidemics, fires, floods, earthquake, hurricane, typhoon, delays in route, perils of the sea or other natural or man-made catastrophes, strikes or lockouts (the “Force Majeure Event”) then provided the party so prevented (the “Affected Party”):

(i)give prompt written notice to the other party of the nature of the Force Majeure Event; and

(ii)has taken all proper precautions, due care and reasonable alternative measures with the object of avoiding the effects of the Force Majeure Event and of carrying out its obligations hereunder (but nothing herein shall require the Affected Party to settle or compromise a labor dispute except on terms satisfactory to itself),

the shipment and/or deliveries which are or will be affected by the Force Majeure Event shall be suspended during the period in which the Force Majeure Event continues; provided that:

Should shipments be suspended in accordance with this clause for more than

three (3) months, either party may at its option, cancel future shipments.

(b)Notwithstanding anything contained therein, in the event of Dowa or the Buyer’s declaring the Force Majeure Event, it will not apply to Concentrates in transit on board carrying vessel or which pricing has been established and Buyer must pay for such Concentrates and all Concentrates that have been delivered. However, in such event Seller and Buyer and Dowa shall endeavor to resolve Dowa and the Buyer’s difficulties to perform its obligation under this Agreement.

18.ARBITRATION

Any disputes, controversy or claim arising out of, or in connection with this Agreement or the breach, termination or validity thereof, which cannot be amicably resolved by the parties within 60 calendar days after receipt by one party of written notice from the other party, such a controversy or claim shall be settled by final and binding arbitration conducted in the English language in New York in accordance with the Rules of Concentration and Arbitration of the International Chamber of Commerce by three arbitrators appointed one by Seller, one by Buyer and the third by the first two arbitrators.

If either or both Seller or Buyer fails to appoint an arbitrator within 60 calendar days after receiving notice of the commencement or arbitration proceedings, or if the two arbitrators within 14 calendar days after they have been chosen failed to appoint the third arbitrator, the International Court of Arbitration of the International Chamber of Commerce shall, upon request of either or both of Buyer and Seller, appoint the arbitrator or arbitrators required to complete the arbitral tribunal.

The parties agree that the Arbitration Award of the arbitral tribunal shall be:

(i)conclusive, final and binding upon the parties; and

(ii)the sole and exclusive remedy between the parties regarding any and all claims and counterclaims presented to the arbitral tribunal.

All notices to be given in connection with the arbitration shall be as provided in Clause 23 of this Agreement.

The Arbitration Award shall be made and shall be payable in US$ only. The Arbitration Award shall also include the fixing of the expense of the arbitration and the assessment of the same, as is appropriate in the parties hereto. Each party shall otherwise bear its cost of its respective legal fees, witnesses, depositions and other out-of—pocket expenses incurred

in the course of arbitration.

In the event either party to this Agreement commences legal proceedings to enforce the Arbitration Award, the expense of such litigation (including reasonable attorney’s fees and costs of court) shall be borne by the party not prevailing therein.

19.SUSPENSION OF QUOTATIONS

If the event of the price quotations specified under this Agreement will cease to exist, cease to be published by the “Metal Bulletin” and/or cease to be the representative basis on which majority of sales of zinc concentrates in Japan are made, Dowa and Seller (with copy to Buyer) will immediately consult together to agree on a pricing basis acceptable to both parties in order to secure the continuance of this Agreement.

Failing such agreement, the provision of Clause 18 shall apply, and the arbitral tribunal shall determine a fair and reasonable price for Concentrates.

20.EXEMPTION FROM LIABILITY AND OBLIGATION

In case Dowa decides to withdraw from the zinc smelting business for any reason whatsoever, the liability and obligation of Dowa to take delivery of Concentrates under this Agreement shall be released and discharged, except for Concentrates in transit to discharging port. The liability and obligation of Seller to deliver Concentrates to Buyer under this Agreement shall be released and discharged when Seller decides to close permanently the Los Gatos Mine for any reason whatsoever.

Seller or Dowa who decides to close the Los Gatos Mine or to withdraw from the zinc smelting business, as the case may be, shall notify the other party (with copy to Buyer) of such effect at least six (6) months prior to such closure or withdrawal.

21.TARIFFS, TAXES AND DUTIES

Any export tax or duty, whether existing or new, levied in the United Mexican States shall be borne by Seller. Any tariffs and duties, whether existing or new, on Concentrates and contained metal or on commercial documents relating thereto imposed in Japan shall be borne by Buyer.

22.GOVERNING LAW

This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of New York, U. S. A. (without giving effect to internal principles of conflicts of laws). The application of the United States Convention on Contracts for the International Sale of Goods is hereby excluded from this Agreement.

23.NOTICES

Any notice permitted or required to be given hereunder shall be validly given if in written and sent to the party to which the notice is directed at the address set out below:

Buyer

OCEAN PARTNERS USA, INC.

43 Danbury Road

Wilton, CT, USA, 06897

Attention : Roberto Guerra

Telephone : +1 203 834 4444

Email Address : Roberto.guerra@oceanpartners.com

Seller

OPERACIONES SAN JOSE DE PLATA S. DE C.V

Gabriel Mancera No. 1041 Del Valle

Mexico 03100

Benito Juarez, Distrito Federal Mexico

Attention: Emir Toledo

Telephone: 52-614-220-1483

Email Address: etoledo@mprmex.com

With copies to:

Sunshine Silver Mining & Refining Corporation

1660 Lincoln Street

Suite 2750

Denver, Colorado, U.S.A.

Attention: Roger P. Johnson

Telephone: (303) 784-5334

Email Address: roger.johnson@ssmines.com]

or, in either case, such other address as may be notified by the relevant party to the other. Notices given by first class mail shall be deemed to have been delivered when received. Notices sent by facsimile or electronic mail shall be deemed to have been received upon completion of successful transmission if sent during normal office hours at the place of receipt. Any facsimile or electronic mail transmitted outside of normal office hours at the place of receipt shall be deemed to have been received on the next Business Day.

24.ASSIGNMENT

No right or obligation or either party under this Agreement is assignable without the prior written consent of the other, and any purported assignment without such consent shall be void.

25.GENERAL CLAUSES

(a)The provisions set out in this Agreement are exclusive and in lieu of all other warrantees, conditions, guarantees, representations and similar obligations, expressed or implied by fact or by law, including any statute ore regulation, by custom or trade usage, or by any course of dealing, including but not limited to any implied warranties or conditions of merchantability or fitness for purpose or for a particular purpose, all of which warranties, conditions, guarantees, representations and similar obligations are expressly disclaimed by Seller.

(b)The terms and conditions of this Agreement and the settlement information shall be kept confidential by both parties, except insofar as disclosure is required to royalty payees, by law or the rules of any stock exchange, in connection with any financing or issuance of securities by Seller or Buyer, or deemed appropriate in connection with communication to shareholders or securities analyst.

(c)No amendment to this Agreement is valid or binding upon the parties, unless it is in writing and executed by parties.

(d)All provisions of this Agreement are severable, and no provision is affected by the invalidity of any other provision, except to the extent that invalidity also renders that other provision invalid. If any provision is contrary to any law, the parties agree to observe and perform all the provisions of this Agreement as if that unlawful provision were not contained in this Agreement.

(e)No approval, consent or waiver by either party to or of any breach by the other party in the performance or observance of its obligations under this Agreement is an approval, consent or waiver to or of any other breach or continuing breach. Failure by either party to complain of any breach by other party in the performance or observance of its obligations under this Agreement, irrespective of how long the breach continues, is not a waiver of the rights of either party under or relating to this Agreement. All approvals, consents, and waivers given by either party are not enforceable, unless in writing and signed by that party.

(f)This Agreement inures to the benefits of and is binding upon each of the parties and their respective successors.

(g)This Agreement, together with the Partner Agreement, is the complete and entire agreement between the parties with respect to the purchase and sale of Concentrate. All representations, warranties, conditions, terms, agreements, understandings and communications given or made before the date of this Agreement and whether written or oral, are not of legal effect.

(h)If a remedy for breach of this Agreement by either party is specified in this Agreement, that remedy is exclusive. Otherwise the rights and remedies available to a party under the law governing this Agreement are applicable.

(i)The obligation to defend, indemnify and hold harmless a party under this Agreement includes the obligation to pay for all reasonable investigation costs and reasonable legal and expert fees and disbursements incurred by the indemnitor and the indemnitee in relation to the subject matter of the indemnification. The right of an indemnitee to be defended, indemnified and held harmless under any indemnity contained in this Agreement in respect of a claim made by a third person is subject to the conditions that:

(i)the indemnitee gives to the indemnitor prompt notice of the claim,

(ii)the indemnitor may select and instruct counsel in the defense of settlement of the claim and may manage the litigation in respect thereof so long as the indemnitor has agreed in writing to bear full responsibility for all such indemnification,

(iii)the indemnitee shall give the indemnitor, and counsel selected by it, all documents and information in the possession of indemnitee that are relevant to the defense or settlement of the claim, and shall render to the indemnitor and that counsel reasonable assistance in relation to the defense or settlement of the claim, and

(iv)the indemnitee shall not make any admission of liability, or make any settlement, or do any act, that could reasonably be expected to be prejudicial to the successful defense or favorable settlement of the claim, without prior written consent of the indemnitor or counsel selected by it.

The indemnitor shall have the right to settle the claim on terms that require only the payment of money and that are not otherwise prejudicial to the indemnitee.

(j)This Agreement may be executed in one or more counterparts, each of which shall be considered an original for all purposes. This Agreement shall be deemed to have been executed by all parties when each such party has executed this Agreement or a counterpart thereof and delivered said executed Agreement (or counterpart) to the other party.

(k)Execution of this Agreement by a party may be evidenced by said party transmitting by email or facsimile to the other party a copy of the signature page showing execution by the transmitting party. In such event, transmission by facsimile shall be the equivalent of the delivery to the other party of a signed original of this Agreement.

IN WITNESS WHEREOF, the parties here to have caused this Agreement to be signed by their respective duly authorized representatives in duplicate as of the day and year first above written.

/s/ Roger Johnson	/s/ Brent Omland	/s/ Al Paterson
Roger Johnson	Brent Omland	Al Paterson
SELLER: OPERACIONES SAN JOSE DE	BUYER: OCEAN PARTNERS USA, INC.
PLATA S. DE C.V.

APPENDIX A

Date:July 15, 2019

MEMORANDUM OF AGREEMENT

OPERACIONES SAN JOSE DE PLATA S. DE C.V., SELLER and DOWA Metals & Mining Co., Ltd., (and acknowledged by Buyer, Ocean Partners USA, Inc.) hereby agree to the following 2019 terms and conditions for the sales and purchase of Los Gatos zinc concentrate.

1.	Quantity	:	2019 production
2.	TC	:	$ [***] /dmt
3.	Scale	:	$[***]/dmt for each $1.00/mt increase in the zinc price over $[***]/mt
			$[***]/dmt for each $1.00/mt decrease in the zinc price below $[***]/mt
4.	Metal payment	:	Zn : [***] with minimum deduction of [***] units at LME SHG settlement price published in London Metal Bulletin Ag : Deduct [***]/dmt and pay for [***] of the remaining silver content at LBMA silver price published in London Metal Bulletin
5.	Penalty	:	Fe :$[***] / % over [***]%
			As :$[***] / 0.1% over [***]%
			F :
			[***]ppm	To	[***]ppm	US$[***]/dmt
			[***]ppm	To	[***]ppm	US$[***]/dmt
			[***]ppm	To	[***]ppm	US$[***]/dmt
			[***]ppm	Over		US$[***]/dmt
6.	Quotational Period	:	Third calendar month following the month of vessel arrival at the discharge port (3MAMA)
7.	Settlement	:	1st provisional payment : [***] value on 3rd business day after vessel arrival at Akita port
			2nd provisional payment : [***] value on 60th calendar days after vessel arrival at Akita port
			Final payment : when all necessary information referenced in Section 12(c) of the Agreement is provided

/s/ Roger Johnson	/s/ Brent Omland	/s/ Al Paterson
Roger Johnson
SELLER: OPERACIONES SAN JOSE DE	BUYER: OCEAN PARTNERS USA, INC.
PLATA S. DE C.V.

APPENDIX B

FACILITIES OF PORT OF DISCHARGE FOR CONCENTRATES

Discharging port	Smelter	Berth conditions
Akita in Japan	Iijima	Draft	:	11.8 meters Max.
		LOA	:	185 meters Max.
		Beam	:	25 meters Max.
		* Total cargo tonnage on board should be below 50,000t.

EX-10.9.2

Exhibit 10.9.2

Certain confidential information contained in this document, marked by [***], has been omitted because Sunshine Silver Mining & Refining Corporation (the “Company”) has determined that the information (i) is not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

July 1st, 2020

MEMORANDUM OF AGREEMENT

OPERACIONES SAN JOSE DE PLATA S. DE C.V., SELLER and DOWA Metals & Mining Co., Ltd., BUYER, hereby agree to the following 2020 terms and conditions for the sales and purchase of Los Gatos zinc concentrate.

1.	Quantity	:	2020 production
2.	TC	:	$[***]/dmt
3.	Scale	:	None
4.	Metal payment	:	Zn : [***] with minimum deduction of [***] units at LME SHG settlement price published in London Metal Bulletin Ag : Deduct [***]/dmt and pay for [***] of the remaining silver content at LBMA silver price published in London Metal Bulletin
5.	Penalty	:	Fe : $[***]/ % over [***]
			As : $[***]/ 0.1% over [***]
			F:
			[***]ppm	To	[***]ppm	US[***]/dmt
			[***]ppm	To	[***]ppm	US[***]/dmt
			[***]ppm	To	[***]ppm	US[***]/dmt
			[***]ppm	Over		US[***]/dmt
6.	Quotational Period	:	Third calendar month following the month of vessel arrival at the discharge port (3MAMA)
7.	Settlement	:	1st provisional payment : [***]% value on 3rd business day after vessel arrival at Akita port 2nd provisional payment : [***]% value on 60th calendar days after vessel arrival at Akita port Final payment : when all necessary information referenced in Section 12(c) of the Agreement is provided

/s/ Roger Johnson	/s/ Hideo Kudo
SELLER:   OPERACIONES SAN JOSE DE PLATA S. DE C.V.	BUYER:  DOWA METALS & MINING CO., LTD.

EX-10.10.1

Exhibit 10.10.1

Certain confidential information contained in this document, marked by [***], has been omitted because Sunshine Silver Mining & Refining Corporation (the “Company”) has determined that the information (i) is not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

CERRO LOS GATOS LEAD CONCENTRATE SALES AGREEMENT

This Cerro Los Gatos Lead Concentrate Sales Agreement (“Agreement”) is made basis the business confirmation dated April 14, 2019 and shall be effective as of July 11, 2019 between

Operaciones San Jose de Plata S. de C.V., (“Seller”), a joint venture between Sunshine Silver Mining and Refining Corporation, Denver, Colorado, U.S.A. and Dowa Metals & Mining Co., Ltd., Tokyo, Japan, a corporation under the laws of Mexico, having an office at Gabriel Mancera No. 1041 Del Valle, Mexico 03100, Benito Juarez Distrito Federal Mexico, Mexico,

and

Metagri S.A. de C.V. at Campos Eliseos 223 – Piso 8, Col. Polanco, C.P. 11560 Ciudad de Mexico, Tax-ID: MET 050609 SMA (“Buyer”).

Seller hereby agrees to sell and deliver to Buyer and Buyer hereby agrees to purchase, accept delivery of and pay for Lead Concentrate under the following terms and conditions.

1.Definitions:

(a) “Business Day” means a calendar day, other than Saturday, Sunday or a day observed as a bank or public holiday in the United States of America, or Mexico.

(b) “Concentrate” means lead concentrate produced at Seller’s Mine in Chihuahua, Mexico as defined in Clause 2 Concentrate Description.

(c) “Warehouse” means Buyer’s designated warehouse in Manzanillo, Mexico or any other location designated by Buyer as a warehouse or parity delivery location in Mexico, at Buyer’s option.

(d) “Delivery” means that Seller places the Concentrate at the disposal of the Buyer ready for unloading the Concentrate from trucks at the Warehouse, commonly known as “Delivered at Place, or DAP at the warehouse”.

(e) “Day” means a calendar day.

(f) “Month” means a calendar month.

(g) “Year” means a calendar year.

(h) “Mine” means Seller’s Cerro Los Gatos Mine in Chihuahua, Mexico.

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(i) Abbreviations. Abbreviations used in this Agreement have the meanings set out below:

·“metric tonne” means 2,204.62 pounds, or 1,000 kilograms avoirdupois.

·“dmt” means dry metric tonne of 1,000 kilograms dry weight.

·“wmt” means wet metric tonne of 1,000 kilograms wet weight.

·“ounce(s), oz.” means one troy ounce of 31.1035 grams.

·“ppm” means part per million.

·“Dollars” and “Cents” mean lawful currency of the United States of America.

·“LME” means London Metal Exchange.

·“LBMA” means London Bullion Market Association.

·“DAP” means Delivered At Place (according to INCOTERMS 2010).

(j) “Market Day” means any day during which price is established at the London Metal Exchange for lead and London Bullion Market for silver and gold.

(k) “Month and Date of Delivery” means in respect of any delivery of the Concentrate, the calendar day and the calendar month during which a Monthly Lot has been delivered at Buyer’s nominated Warehouse, as evidenced by the date of the Warehouse receipt.

(1) “Contractual Year” means the period commencing on January 1 of one calendar year and ending on December 31 of the same calendar year, excluded the year 2019, which commences on August 1, 2019 until December 31, 2019.

(m) “Warehouse Certificate” means the warehouse certificate substantially in the form attached to this Agreement as Appendix No. 1.

(n) “Monthly Lot” shall mean all Concentrate delivered by Seller to Buyer in one calendar month.

(o) “DAP” shall mean Delivered at Place according to Incoterms 2010.

2. Concentrate Description:

(a) The Concentrate produced at the Mine shall conform to the approximate analyses as follows. Buyer’s exclusive remedies for any failure of Concentrate to conform to the description are set forth in Section 2(b).

	Typical	High	Low
Pb	[***]
Zn	[***]
Cu	[***]
Cd	[***]

2

S	[***]
Fe	[***]
Al2O3	[***]
SiO2	[***]
CaO	[***]
MgO	[***]
Ni	[***]
Co	[***]
Sn	[***]
Mn	[***]
Hg	[***]	[***]	[***]
As	[***]	[***]	[***]
Sb	[***]	[***]	[***]
Bi	[***]	[***]	[***]
Se	[***]
Au	[***]	[***]	[***]
Ag	[***]	[***]	[***]

(b) The Concentrate to be shipped hereunder shall conform to International Maritime Solid Bulk Cargoes (“IMSBC”) Code.

(c) The Concentrate shall be free flowing, otherwise be free from deleterious impurities harmful to normal smelting / and or refining processes. The Concentrate shall also be produced from natural galena ore and using conventional flotation recovery processes, as produced from the Seller’s production facility which is currently under development by Seller. Except as provided in Section 2(d) below. Seller anticipates and agrees to use its best endeavors that the Concentrate sold to Buyer shall exhibit approximately the specifications in Section 2(a) above. Buyer acknowledges that the source of the Concentrate is a new mine and plant, as a result of which the composition of the Concentrate may vary from the anticipated specifications set out in Section 2(a), specifically, as agreed in Section 2(d) below. Buyer’s sole remedy for failure to meet such specifications shall be as set forth in this Agreement, specifically, as set out in Section 2(e) below.

(d) Buyer and Seller agree that due to the Seller’s processing plant’s initial commissioning, the Concentrate to be delivered during August 2019 and September 2019 can depart from the typical composition stated in Section 2 (a) above. Notwithstanding, Seller agrees to use its reasonable endeavors to deliver Concentrate that conforms to the typical composition stated in Section 2 (a) above for the August 2019 and September 2019 deliveries. Seller will notify Buyer of, the expected composition of the August 2019 and September 2019 deliveries at least 10 (ten) days prior the date of Delivery. Buyer shall confirm the expected composition is acceptable to be delivered promptly.

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(e) In the event that the composition of the Concentrate departs materially from the typical composition, i.e. falls below or beyond the range of typical assays of the Concentrate as stated in Section 2 (a] above (off-spec Concentrate), Seller will advise Buyer prior to the shipping allocations from Seller’s processing plant being made. Seller and Buyer shall negotiate in good faith with full disclosure to overcome any significant hardship or technical difficulty which Buyer or the receiving smelter (if Buyer or the receiving smelter has not blended the Concentrate with other materials or lead concentrate from other sources) may suffer as a result hereof.

Buyer retains the right to reject off spec Concentrate and all costs to return the off-spec Concentrate to the Seller will be borne by Seller.

3. Quantity:

(a) Seller shall sell and deliver, and Buyer shall purchase, accept delivery of and pay for:

(i) For Contractual Year 2019: Full production of the Mine from August 1, 2019 to December 31, 2019, estimated to be [***] dmt of Concentrate, plus/minus [***] in Seller’s option, of Concentrate.

(ii) For Contractual Year 2020: Full production of the Mine from January 1, 2020 to December 31, 2020, estimated to be [***] dmt of Concentrate, plus/minus [***] ([***] percent) in Seller’s option. Seller shall inform Buyer of an updated estimation of the full production of the Mine for Contractual Year 2020 prior to September 30, 2019.

(iii) For Contractual Year 2021: Full production of the Mine from January 1, 2021 to December 31, 2021, estimated to be [***] dmt of Concentrate, plus/minus [***] in Seller’s option. Seller shall inform Buyer on an updated estimation of the full production of the Mine for Contractual Year 2021 prior to September 30, 2020.

Buyer shall have the option to declare that the terms (price, quotational period) agreed for Contractual Year 2020 shall be applied to Contractual Year 2021. Buyer shall declare this option prior to October 15, 2020. Otherwise, Buyer and Seller shall discuss and agree on the terms for Contractual Year 2021 prior to November 30, 2020 or on another mutually agreed date between Buyer and Seller.

4. Duration:

(a) This Agreement shall be effective from August 1, 2019 through December 31, 2021. Not later than one year prior to such termination, the Parties shall meet in good faith to discuss and undertake reasonable efforts to agree upon the terms of a further contract to cover the purchase and sale of Concentrate beyond such termination, provided that any failure by either Party to agree on the terms of any

4

new contract shall not give rise to any liability or affect the termination of this Agreement.

(b) However, upon termination of the Agreement, the terms and conditions of the Agreement that pertain to activities prior to termination shall remain in full force and effect until all obligations, including, but not limited to, financial obligations have been fulfilled by Buyer and Seller.

5. Delivery:

The Concentrate will be delivered DAP to the Warehouse, according to Incoterms 2010.

6. Shipment:

Seller shall deliver the Concentrate in bulk on trucks, in Monthly Lots to be delivered from August 1, 2019 until December 31, 2021.

7. Title, Risk of Loss or Damage and Insurance:

7.1 Risk of loss or damage to the Concentrate shall pass from Seller to Buyer upon Delivery of Concentrate at the Warehouse ready to be unloaded from Seller’s arriving means of transport in accordance with the INCOTERMS 2010, as defined in Section 1 (d) above.

7.2 Title to the Concentrate shall pass from Seller to Buyer upon first provisional payment made by Buyer to the Seller.

7.3 Insurance shall be covered by Seller until Delivery [as defined in Section 1 (d)].

8. Sale Price:

The Sale Price of the Concentrate shall be the sum of Payables less Deductions.

(a) Payables:

(i) Lead:

Buyer shall pay for [***]% of lead content of the Concentrate (subject to minimum deduction of [***] units) at the average of the LME Lead Cash Settlement prices as published on Fastmarkets MB (former “Metal Bulletin”) during the quotational period.

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(ii) Gold:

Buyer shall pay for [***]% of gold content of the Concentrate (subject to minimum deduction of [***] gram/dmt of Concentrate) at the average of daily mean of the Morning (AM) and Afternoon (PM) LBMA (London Bullion Market Association) fixing prices of gold as published on Fastmarkets MB (former “Metal Bulletin”) during the quotational period.

(iii) Silver:

Buyer shall pay for [***]% of silver content of the Concentrate (subject to minimum deduction of [***] grams/dmt of Concentrate) at the average of daily LBMA Cash Settlement silver price, as published on Fastmarkets MB (former Metal Bulletin), during the quotational period.

(b) Deductions:

(i)Treatment Charge (all in USD):

· For Contractual Year 2019: $[***]/dmt of Concentrate, DAP Buyer’s nominated Warehouse in Buyer’s option. This treatment charge is based on an applicable lead price of $[***]/mt, and subject to increase by $[***]/dmt of Concentrate for every $1 the applicable lead price exceeds $[***]/mt up to and including $[***]/mt. Thereafter, the treatment charge shall be increased by $[***]/dmt of Concentrate for every $l/mt the applicable lead price exceeds $[***]/mt.

There shall be no reduction of the $[***]/dmt of Concentrate for lead prices below $[***]/mt (no downscale shall be applicable).

· For Calendar Year 2020: $[***]/dmt of Concentrate, DAP Buyer’s nominated Warehouse in Buyer’s option. This treatment charge is based on an applicable lead price of $[***]/mt, and subject to increase by $[***]/dmt of Concentrate for every $1 the applicable lead price exceeds $[***]/mt up to and including $[***]/mt lead price. Thereafter the treatment charge shall be increased by $[***]/dmt of Concentrate for every $1 the applicable lead price exceeds $[***]/mt.

There shall be no reduction of the $[***]/dmt of Concentrate for lead prices below $[***]/mt (no downscale shall be applicable).

(ii)Refining Charges (all in USD):

·Gold Refining Charge for Contractual Years 2019 and 2020: $[***]/payable oz. of gold.

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·Silver Refining Charges:

·For Contractual Year 2019:

For the first [***] grams of payable silver: $[***]/payable oz. of silver.

For the silver content in excess of [***] grams of payable silver up to and including [***] grams of payable silver, $[***]/oz. of payable silver.

For the silver content in excess of [***] grams of payable silver, $[***]/payable oz. of silver.

This Silver Refining Charge is based on a silver metal price of $[***] per ounce and shall be:

·increased by $[***] for each $1.00 the final applicable silver metal price, as set out in Clause 9. Quotational Period below, exceeds $[***] per ounce of silver metal;

all fractions pro rata.

·For Contractual Year 2020:

For the first [***] grams of payable silver: $[***]/payable oz. of silver.

For the silver content in excess of [***] grams of payable silver up to and including [***] grams of payable silver: $[***]/oz. of payable silver.

For the silver content in excess of [***] grams of payable silver: $[***]/payable oz. of silver.

This Silver Refining Charge is based on a silver metal price of $[***] per ounce and shall be:

·increased by $[***] for each $1.00 the final applicable silver metal price, as set out in Clause 9. Quotational Period below, exceeds $[***]. per ounce of silver metal;

all fractions pro rata.

(iii)Penalties:

None, but Buyer and Seller shall negotiate in good faith in case the Concentrate contains deleterious elements materially out of the Specification set out in Section 2(a).

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(iv)Sale Price for Contractual Year 2021:

Buyer shall have the option to declare that the Sale Price agreed for Contractual Year 2020 shall be applied to Contractual Year 2021. Buyer shall declare this option prior to October 15, 2020. Otherwise, Buyer and Seller shall discuss and agree on the terms for Contractual Year during prior November 30, 2020 or on another mutually agreed date between Buyer and Seller.

9. Quotational Period:

(a) At Buyer’s option, the quotational period for all payable metals and price participation, to be declared separately for each metal, shall be the average of either the first calendar month following the month of each Monthly Lot’s Delivery (M+1) or the third calendar month following the month of each Monthly Lot’s Delivery (M+3) as evidenced by Warehouse certificate as per Appendix No. 1. Such option shall be declared by Buyer prior to the beginning of the quotational period.

(b) Seller and Buyer shall mutually agree the quantities of each metal that shall be priced, and any excess or deficit shall be priced basis 1 or 2 unknown future Market Days mutually agreed by Buyer and Seller after final weights and final assays are known, or otherwise as mutually agreed.

10. Payment / Settlement:

(a) Buyer shall make a provisional payment to Seller equal to [***] of Seller’s provisional invoice value based on Seller’s weight, assays and average metal prices during the month preceding the month of Concentrate Delivery, within seven days after Delivery of the Concentrate at the Warehouse, against presentation of the following documents to Buyer:

·Original Warehouse Certificate satisfactory to Buyer and Seller, putting the Concentrate conforming to this Agreement at Buyer’s disposal in the Warehouse without prejudice to the Seller’s delivery obligations and the Buyer’s payment obligations, as per Appendix No. 1.

·The Seller’s provisional invoice based on the Warehouse Certificate weight, the provisional assays certificate or Seller’s assays certificate if the assays certificate from Alfred H. Knight, Manzanillo, Mexico is not available, and the average metal prices during the month preceding the month of Delivery.

·Final Weight Certificate of the delivered Concentrate issued by the independent supervision company appointed jointly by Buyer and Seller.

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(b) Buyer shall make the second provisional payment to Seller against Seller’s provisional invoice bringing the total provisional payment to [***] of the provisional invoice within 60 days after Delivery of the Concentrate.

(c) Final settlement of accounts either by Buyer or Seller shall be made within 10 business days upon receipt of all relevant information for such purpose.

If on the final settlement date for the specific Concentrate being final settled, Seller is indebted to Buyer by reason of having received provisional payments in excess of the amount due pursuant to final settlement, then Seller will refund such excess amount to Buyer upon Buyer’s first request.

(d) All amounts due by Buyer to Seller or by Seller to Buyer under or in relation to this Agreement not paid when due shall bear interest at a rate per annum equal to the London Interbank Fixing (One Month) money rate as published in the London Financial Times under the column entitled “World Interest Rate”, plus [***] per annum calculated daily.

(e) All payments on account of the Sale Price must be made by wire transfer to the bank, branch and account number provided by Seller to Buyer in writing from time to time.

11. Weighing, Sampling and Moisture Determination:

(a) Concentrate shall be weighed, sampled and moisture determined upon arrival of the Concentrate at Buyer’s Warehouse under the inspection of an internationally recognized supervision company appointed by Seller and Buyer and in lot sizes of approximately 250 (two hundred and fifty) wmt in accordance with international practice. All sampling costs shall be shared equally between Buyer and Seller.

The final wet weight shall be the wet weight measured upon Delivery of the Concentrate at the Warehouse under the supervision of an internationally recognized supervision company less 0.35%. The moisture thus determined shall be final for settlement purposes.

(b) Sampling Procedure:

(i)For Moisture Determination:

Each trimmed truck of approximately 35 (thirty-five) wmt, will be sampled in 5 (five) positions, spread evenly across the surface of the truck, using a manual, twin-bladed posthole digger.

Each increment to be taken from the full depth of the concentrate incorporating Concentrate from the full vertical column. The 5 (five) increments to be combined to

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form a single sub-sample, used to represent the moisture content of the trimmed truck.

The sub-sample to be kept in a well closed plastic bag, impervious to moisture and processed as soon as possible. The complete moisture sample would be kept in a sealed cooler and sent to a lab jointly selected by Buyer and Seller at the end of the shift (when liberated by the Warehouse), the lab would then break the seal on the sample bag, quickly mix the sample on a steel table and then take duplicate 1 (one) kilogram samples using the increment method for moisture determination. These samples would be dried at 105 (one hundred and five) degrees Celsius for a minimum of 8 (eight) hours until constant weight is obtained. The average of the 2 (two) results obtained will be reported for moisture content. The moisture thus determined shall be final for settlement purposes.

(ii)For Quality:

·Each truck will be sampled once discharged and homogenized;

·The Concentrate will be extended with a pay loader;

·After extending the Concentrate, the bottom of the shovel of the pay loader will be used to break up any agglomeration formed due to moisture content and then the Concentrate will be scooped back into the pile. This process will be repeated until all the agglomerations appear to be broken up;

·The Concentrate will be formed into a bed between 30 (thirty) to 40 (forty) centimeters high;

·A grid will be then formed and 30/40 (thirty/ forty) increments will be taken by means of a sampling spear from the center of each square with sampling spear reaching the full depth of the Concentrate. A sample of about 80 (eighty) kilograms will be obtained per each truck and passed by mesh 1/8” (one eight inch). The sample will be spread out on an stainless steel panel, the Concentrate will be spread out until the Concentrate will be approximately 5 (five) centimeters in height which was divided in square sections of about 10 centimeters per side, from which will be taken increments with a JIS (Japanese Industrial Standards) 5 (five) shovel and placed into 4 (four) stainless steel drying tray filling the trays one by one until each tray contained approximately 1 (one) kilogram of Concentrate which will be dried to be prepared (pulverized) to 100% (one hundred percent) -140 (one hundred and forty) mesh;

·The unused Concentrate left over from the sample reduction will be returned to the stockpile.

(c) Buyer shall provide 8 (eight) complete sets of sealed samples from each lot for distribution as follows:

·2 complete sets of sealed samples for Seller.

·2 complete sets of sealed samples for Buyer.

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·2 complete sets of sealed samples for Buyer’s receiver.

·2 complete sets to be kept by independent supervision company for umpire purposes.

Each sample shall be prepared in the internationally acceptable manner with a minimum sample weight of 250 (two hundred and fifty) grams or as otherwise mutually agreed by the parties.

12. Assaying:

(a) Assays for lead, gold and silver contents shall be made independently by Seller and Buyer from the samples obtained in accordance with Section 11 above and results of such assays shall be exchanged simultaneously by airmail or courier or another mutually agreed manner within 60 (sixty) calendar days after arrival of the Concentrate at Buyer’s designated Warehouse. The assays for the Payables i.e. lead, silver and gold shall be exchanged on a lot-by-lot- basis and for Penalties (if any) on a composite basis. Determination for gold and silver assays shall be made in accordance with fire assay methods corrected for slag loss and cupel absorption and losses for evaporation.

(b) If the difference between Seller’s and Buyer’s assay results is not more than the following splitting limits, then the exact mean of the two results shall be taken as the agreed assay for final settlement:

Lead:	[***].
Gold:	[***]/dmt of Concentrate.
Silver:	[***]/dmt of Concentrate.

(c) If the difference is more than the above splitting limits, both parties shall consult in order to reach an acceptable settlement. In case no agreement has been reached between Seller and Buyer, an umpire assay shall be made by one of the following mutually agreed laboratories to be rotated on a lot-by-lot basis:

Alfred H Knight International Ltd.

Kings Business Park

Kings Drive

Prescot

Knowsley

L34 1PJ

UK

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Laboratory & All Deliveries

The John Knight Laboratory

Kings Business Park

Prescot

Knowsley

L34 1PJ

UK

or

ALS Inspection UK Ltd. (former Stewart Group)

1 A Caddick Road

Knowsley

Prescot, L34 9HP

England

or

Laboratory Services International BV

Pittsburghstraat 9

3047 BL, Rotterdam

THE NETHERLANDS

or

SGS NEDERLAND B.V.

Malledjik 18

Postbus 200

3200 AE Spijkenisse

THE NETHERLANDS

If the umpire assay falls between the assays of Seller and Buyer, or coincides with either, then the arithmetic mean of the umpire assay and that of the party whose assay result is nearer to that of umpire shall be taken as final for settlement purposes. Otherwise, the middle assay of the three assays shall be final for settlement.

(d) The costs of the umpire assay or assays shall be borne by the party whose assay result is further from the umpire’s assay. If the umpire assay is the exact mean of the assays of Seller and Buyer, the cost of the umpire shall be borne equally by Seller and Buyer.

13. Taxes and Fees:

All applicable taxes and fees in Mexico, including the Value Added Tax related to the sale of the Concentrate, shall be paid to Seller by a Mexican entity of the Buyer with

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each payment due as determined and paid in Section 11. All Concentrate sales with Seller will be settled within Mexico.

Seller confirms that all the necessary licenses and permits required to export, to countries outside of Mexico, the Concentrate contracted herein have been obtained. Buyer confirms that all the necessary licenses and permits required to import the Concentrate contracted herein have been obtained.

14. Force Majeure:

(a) If performance or observance by a party (the “Affected Party”) of all or any of its obligation under this Agreement, other than obligations for payment of money when due, is prevented, hindered or delayed by Force Majeure, as defined in Section 14(b) below, then the Affected Party is excused from performance or observance of those obligations to the extent and for the period that performance or observance is prevented, hindered or delayed by Force Majeure, and the other party is excused from the performance of obligations dependent thereon and the parties are not liable to each other for damages or otherwise to the extent that performance or observance of the obligations is excused under this Section 14(a). The Affected Party must give notice to the other party declaring the event of Force Majeure within 3 business days of the occurrence of the event of Force Majeure. Where such notice is not given within the time required, Force Majeure shall not justify the non-fulfillment of any obligations under this Agreement. The Affected Party shall keep the other party informed regularly of any material changes in anticipated effect of Force Majeure previously declared by the Affected Party, and when known to the Affected Party.

(b) “Force Majeure” means any cause beyond the reasonable control of either party, that prevents or interferes with the performance under this Agreement, whether or not similar to the causes enumerated below, including but not limited to any law, rule or regulation, , sanctions law including but not limited to prohibitions on export or import and/ or prohibitions applying to a nominated or carrying vessel, act of God, war fire, explosion, environmental limitation, flood or other natural disasters. Strike, lockout, civil disturbance or commotion, riot or armed conflict, or other action or inaction caused by a person not party, or affiliate of a party to this Agreement, but excluding lack of money and credit.

(c) Both parties agree to use their respective reasonable efforts to cure any event of Force Majeure to the extent that it is reasonably possible to do so, it being understood that the settlement of strikes, lockouts, and any other industrial disputes shall be within the sole discretion of the party asserting Force Majeure.

(d) Failure to deliver or accept delivery of the Concentrate which is excused by or results of an event of Force Majeure shall extend the term of this Agreement for a period equal to the period of such failure. If such a failure caused by an event of Force Majeure shall continue for more than 90 (ninety) calendar days, then the

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party not having declared Force Majeure shall have the right by written notice to cancel the affected quantity of the Concentrate with immediate effect.

(e) If Force Majeure or suspension declared by Buyer continues for more than 30 consecutive days, Seller may sell Concentrate otherwise deliverable to Buyer hereunder to third parties and that Concentrate thus sold shall be applied toward the minimum quantities Seller must deliver under this Agreement.

(f) If Force Majeure or suspension declared by Seller continues for more than 30 consecutive days, Buyer may purchase from third parties other lead concentrates not exceeding the quantity that would have been delivered hereunder, but for the Force Majeure or suspension.

(g) The Affected Party giving notice of Force Majeure must give notice to the other party of the termination of the Force Majeure or suspension promptly after termination occurs, and the party shall resume as promptly thereafter as is practicable the performance and observance of their obligations under this Agreement.

(h) Except by Buyer’s written agreement, the aforesaid shall not apply regarding Concentrate in respect of which the Quotational Period has been declared by Buyer. In this case, Buyer and Seller shall find a reasonable solution for both sides in a fair and equitable manner.

15. Governing Law and Arbitration:

(a) Governing Law:

This Agreement, including the arbitration Clause, shall be governed by, interpreted and construed in accordance with the substantive Mexican laws excluding the United Nations Convention on Contracts for the International Sales of Goods of 11 April 1980 (CISG). CISG shall not apply to this Agreement.

(b) Dispute Resolution and Arbitration:

Any dispute arising out of or in connection with this Agreement shall, at first instance, be attempted to resolve through negotiations between the nominated representative of each party, who shall have the authority to settle the same.

Any dispute arising in connection with the Agreement which cannot be resolved by mutual agreement shall be finally settled under the International Chamber of Commerce (ICC) Rules and its applicable procedures (the “Rules”). A Tribunal shall be formed consisting of 3 (three) arbitrators appointed in accordance with the Rules. The seat of arbitration shall be Mexico City. The arbitral proceedings shall be conducted in the Spanish language.

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Any arbitral award made shall be final and binding upon Seller and Buyer. Judgment upon the award rendered may be entered in any court having jurisdiction or application may be made to such court for a judicial acceptance of the award and an order of enforcement as the case may be.

Each party hereby irrevocably waives any and all right to a trial by jury in any legal proceeding arising out of or relating to this agreement or any other transaction document or the transactions contemplated hereby or thereby.

16. Assignment:

(a) Either party may assign this Agreement to a third person with the prior written consent of the other party. Such consent shall not be withheld or delayed unreasonably.

(b) No assignment of this Agreement releases the assignor of its obligations and liabilities to the other party under or in relation to this Agreement, unless otherwise agreed expressly in writing between the parties.

17. Notices:

Any notice given by either of the parties hereto to the other under this Agreement shall be in writing and shall be sent by registered mail or courier or delivered personally against signed receipt and shall be directed at the address and to the attention of the respective persons hereafter:

(a) If to Seller at:

Operaciones San Jose de Plata, S. de R.L. de C.V.

Gabriel Mancera No. 1041 Del Valle

Mexico 03100

Benito Juarez, Distrito Federal Mexico

Attention: Emir Toledo

Telephone: 52-614-220-1483

Email Address: etoledo@mprmex.com

With copies to:

Sunshine Silver Mining & Refining Corporation

1660 Lincoln Street

Suite 2750

Denver, Colorado, U.S.A.

Attention: Roger P. Johnson

Telephone: (303)784-5334

Email Address: roger.johnson@ssmines.com

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(b) If to Buyer at:

Metagri S.A. de C.V.

Campos Eliseos 223 — Piso 8

Col. Polanco V seccion

11560 Ciudad de Mexico

Attention: Mr. Erick Toxqui

(c) Addresses, and e-mail addresses for notices may be changed by subsequent notice between parties. Notices given personally shall be deemed delivered when received, In the case of registered mail or courier at the time of first service (pursuant to the delivery receipt).

18. Incoterms:

Unless otherwise specified herein INCOTERMS 2010 and/or any amendments or replacement thereof as of May 15, 2019 shall apply.

19. Total and Partial Loss:

(a) Total Loss/Damage:

In the event of total loss of and/or total damage to the Concentrate prior risk of Concentrate passes over from Seller to Buyer (as set out in clause 7.1), then no payments will be made by Buyer to Seller, and any payment made by Buyer to Seller will promptly be repaid by Seller to Buyer in USD by telegraphic transfer in accordance with Buyer’s instructions.

In the event of total loss to and/or total damage of the Concentrate after risk of the Concentrate has passed from Seller to Buyer (as set out in Clause 7.1), final settlement shall be made as soon as all the necessary details are available and in accordance with the terms of this Agreement. Final Payment shall be made by Buyer within 5 (five) business days after final settlement is made in accordance to this section.

(b) Partial Loss or Damage:

In the event of partial loss of and/or partial damage to the Concentrate prior to Delivery and transfer of risk of loss (as set out in clause 7.1), then no payments will be made by Buyer to Seller for the part of the Concentrate so lost or damaged, respectively any payment made by Buyer to Seller for such lost or damaged Concentrate will promptly be repaid by Seller to Buyer in USD by telegraphic transfer in accordance with Buyer’s instructions. Final settlement of the part of the Concentrate not lost or damaged shall be made as soon as all the necessary details are available, in accordance with the terms of this Agreement. Final Payment shall

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be made by Buyer within 5 (five) business days after final settlement is made in accordance to this section.

In the event of partial loss to and/or partial damage of the Concentrate after Delivery and transfer of risk of loss of Concentrate has passed over from Seller to Buyer (as set out in Clause 7.1), final settlement shall be made in accordance with the terms of this Agreement. Final Payment shall be made by Buyer within 5 (five) business days after final settlement is made in accordance to this section.

20. Suspension of Quotations:

The metal price quotations specified under this Agreement are the quotations currently in general use for the pricing of the metal contents of the Concentrate. In the event that any of these price quotations ceases to exist, ceases to be published or should no longer be internationally recognised as the basis of the settlement of the Concentrate under the Agreements, then upon the request of either party Buyer and Seller will promptly consult together with a view to agreeing on a new pricing basis and on the date for bringing such basis into effect. The basic objective will be to secure continuity of fair pricing.

21. Limitation of Liability and Warranties:

In no event shall either Party be liable for indirect, consequential or special damages (including loss of profits) resulting from its performance or non-performance of its obligations hereunder.

Buyer assumes all risks involved in the use or possession of the Concentrate after completion of Concentrate Delivery at the Warehouse.

Seller assumes all risks involved in the use or possession of the Concentrate prior completion of Concentrate Delivery at the Warehouse.

22. Compliance Clause:

Both parties warrant, represent and undertake to the other party that they will comply with all applicable laws, rules and regulations including without limitation to sanctions, anti-corruption, anti-money laundering and tax laws in performing this Agreement.

23. Sanctions Clause:

Each party represents and warrants to the other party that:

(a) neither it nor any of its subsidiaries or affiliates (collectively, the “Company”) or directors, senior executives or officers, or to the knowledge of the Company, any person on whose behalf the Company is acting in connection with the Agreement, is

17

an individual or entity (“Person”) that is, or is 50 % (fifty percent) or more owned or controlled by, a Person (or Persons) that is the subject of any economic or financial sanctions or trade embargoes administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Departments of State or Commerce, the United Nations Security Council (“UNSC”), the European Union (“EU”), Switzerland or other applicable sanctions authority (collectively “Sanctions”) or based, organized or resident in a country or territory that is the subject of comprehensive (i.e. country-wide or territory-wide) Sanctions (including as of the date of signature of this Agreement, Crimea, Cuba, Iran, North Korea and Syria) (a “Sanctioned Country”) (collectively a “Sanctioned Person”);

(b) no Sanctioned Person has any beneficial or other property interest in the Agreement nor will have any participation in or derive any other financial or economic benefit from the Agreement; and

(c) it will not use, or make available, the Concentrate or funds (as applicable) provided by Seller in terms of the Agreement to fund or facilitate any activities or business of, with or related to any Sanctioned Country or Sanctioned Person, or in any manner that would result in a violation of Sanctions.

If either party has sufficient evidence showing that the other party has breached this clause, it may (without incurring any liability of any nature to the other party whatsoever) terminate or suspend all or any part of the Agreement with immediate effect by notice to the other party or take any other action it deems necessary in order for the other party to comply with applicable sanctions. The defaulting party shall be liable for any and all costs, liabilities and expenses whatsoever incurred by the non-defaulting party due to them exercising their rights under this clause. Any exercise by the party of its right under this clause shall be without prejudice to any other rights or remedies of the other party under the Agreement.

24. The Seller hereby represents and warrants that:

(a) As of the date of this agreement, Minera Plata Real is the only holder of the Mining Concessions or mining leasehold interests as shown in Appendix No. 2 to this Agreement, as appearing in the Public Mining Registry, and therefore is entitled to all the rights derived from the same, in accordance with article 15 of the Mining Law

‘Ley Minera’ and other applicable provisions on the matter issued by Mexican authorities and such rights are free and clear of any encumbrances, mortgages, liens, rights of first refusal or third-party liabilities and/or any limitation and/or restriction under the law That would prevent Seller’s performance of its obligations under this Agreement.

(b) Minera Plata Real has the unconditional right to explore and exploit the Mining Concessions as shown in Appendix No.2 to this Agreement which is duly recorded in the Public Mining Registry.

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(c) The minerals/concentrates that are being sold by means of this Agreement are a product of the legal exploration and exploitation of Minera Plata Real as shown in Appendix No.2 to this Agreement.

(d) Seller will cooperate and support the Buyer by providing the required documentation and by performing any commercially reasonable acts in order for the Buyer to obtain the permits and/or authorizations that may be required by Mexican or any other authorities in order to commercialize, export, sell and/or distribute the Concentrates sold to the Buyer.

25. Liability in Case of Eviction:

The Seller hereby expressly agrees to accept liability in case of eviction as if it shall have acted in bad faith under the terms of articles 2119, 2121, and 2127 of the Mexican Federal Civil Code.

26. General Clause:

(a) The terms and conditions of this Agreement and the settlement information shall be kept confidential by both parties, except in so as disclosure is required to royalty payees, by law or the rules of any stock exchange, in connection with any financing or issuance of securities by Seller or Buyer, or deemed appropriate in connection with communication to shareholders or securities analyst.

(b) No amendment to this Agreement is valid or binding upon the parties, unless it is in writing and executed by the parties.

(c) All provisions of this Agreement are severable and no provision is affected by the invalidity of any other provision, except to the extent that invalidity also renders that other provision invalid. If any provision is contrary to any law, the parties agree to observe and perform all provisions of this Agreement as if that unlawful provision were not contained in this Agreement.

(d) No approval, consent or waiver by either party to or of any breach by the other party in the performance or observance of its obligations under this Agreement is an approval, consent or waiver to or of any other breach or continuing breach. Failure by either party to complain of any breach by other party in the performance or observance of its obligations under this Agreement, irrespective of how long the breach continues, is not a waiver of the rights of either party under or relating to this Agreement. All approvals, consents and waivers given by either party are not enforceable, unless in writing and signed by that party.

(e) This Agreement inures to the benefits of, and is binding upon each of the parties and their respective successors.

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(f) This Agreement is the complete and entire agreement between the parties with respect to the purchase and sale of Concentrate. All representations, warranties, conditions, terms, agreements, understandings and communications given or made before the date of this Agreement and whether written or oral, are not of legal effect.

(g) If a remedy for breach of this Agreement by either party is specified in this Agreement that remedy is exclusive. Otherwise, rights and remedies available to a party under the law governing this Agreement are applicable.

(h) This Agreement may be executed in one or more counterparts, each of which shall be considered an original for all purposes. This Agreement shall be deemed to have been executed by all parties when each such party has executed this Agreement or a counterpart thereof and delivered said executed Agreement (or counterpart) to the other party.

IN WITNESS WHEREOF the parties have executed this Agreement as of the day of the year first above written.

OPERACIONES SAN JOSE DE	METAGRI S.A. de C.V.
PLATA S. DE R.L. DE C.V.
/s/ Roger Johnson	/s/ Erick Toxqui
by: Roger Johnson	by: Erick Toxqui
	METAGRI
	S.A. DE C.V.

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Appendix No. 1 to CERRO LOS GATOS LEAD CONCENTRATE SALES AGREEMENT

WAREHOUSE CERTIFICATE

DATE

WAREHOUSE RECEIPT NUMBER

ADDRESS

This document contains the terms and conditions whereby TERMINAL DE SERVICIOS HAZESA, SA. DE C.V., hereinafter “HAZESA”, shall hold the goods deposited by _Operaciones San Jose de Plata S. de C.V.(hereinafter the “Depositor”) to be received by Metagri SA. de C.V. (hereinafter the “Receiver / Beneficial Owner”) as well as any document connected thereto; the goods shall be released by HAZESA as per instructions of and as requested by Depositor prior to the transfer of title and by the Receiver/Beneficial Owner after the transfer of title.

a)HAZESA hereby confirms that in accordance with instructions received by Depositor, HAZESA shall hold the following goods:

Description of the Generic Concentrate:

Quantity:

Lot size Identification:

Mine: Cerro Los Gatos

The foregoing description is for identification purposes; however, HAZESA cannot verify the quality and consistency of the composition of and characteristics of the concentrate, because this is not included in its corporate purpose, and because HAZESA has not taken part in the technical and scientific sampling process; therefore, said goods are only identified per gender in accordance with common characters as per Depositor’s statement.

b)The goods are placed at the warehouse located on Avenida del Trabajo Número 101, Colonia Tapeixtles, C.P. 28239, Manzanillo, Colima.

c)The goods shall be kept safe, secure, segregated from any other goods and in an area clearly marked and identifying the goods as Depositor’s property and in good condition.

d)Receiver/Beneficial Owner and/or any inspector assigned thereby are entitled to inspect the goods and take samples thereof at any time; therefore, HAZESA shall allow access upon request and all rights necessary for that purpose.

e)This receipt will expire as soon as HAZESA has received the certificate of release of goods.

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f)HAZESA shall ensure that the goods are not mortgaged, pledged, sold, or even removed, without authorization in writing from the Depositor prior the transfer of title and by Receiver/Beneficial Owner after the transfer of title.

g)HAZESA shall not release or dispose of the goods, except under express order by Depositor prior the transfer of title and by Receiver/Beneficial Owner after the transfer of title.

h)HAZESA shall hold the goods that are the subject matter hereof, as received and return them along with their documents, if any, upon request.

i)In the event of loss due to an unforeseen event or force majeure, HAZESA shall send timely notice to the Depositor and Receiver/Beneficial Owner prior the transfer of title and to the Receiver/Beneficial Owner after the transfer of title.

j)HAZESA states that at the time of issuing this document, there is no action intended to withhold the goods as lien with the purpose of guaranteeing another credit upon Depositor.

k)Should there be any controversy in connection with the contents hereof, this document shall be governed and construed under Mexican laws; therefore, any dispute shall be dealt with at the Federal Tribunals in Mexico City.

Authorized Signature

LIC. RAUL SANDOVAL LOPEZ

TERMINAL DE SERVICIOS HAZESA, S.A. DE C.V

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EX-10.11.1

Exhibit 10.11.1

SUNSHINE SILVER MINING & REFINING CORPORATION

CONVERTIBLE NOTE PURCHASE AGREEMENT

This CONVERTIBLE NOTE PURCHASE AGREEMENT (this “Agreement”), dated as of April 20, 2020, by and between Sunshine Silver Mining & Refining Corporation, a Delaware corporation (the “Company”), and Electrum Silver US LLC, a Delaware limited liability company (the “Purchaser”).

RECITALS

WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, one or more Convertible Notes (as defined below), on the terms and subject to the conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.             Certain Definitions.  As used in this Agreement, the following terms shall have  the following meanings.

“Convertible Note” means a convertible promissory note, in substantially the form of Exhibit A attached hereto, issued pursuant to this Agreement.

“Loan Agreements” means this Agreement and the Convertible Note.

“Securities” means the Convertible Note and the equity securities issuable upon conversion and/or exchange thereof.

“Securities Act” means the Securities Act of 1933, as amended.

2.             Purchase and Sale of Convertible Note.

2.1.         Sale and Issuance of Convertible Note.  On the terms and subject to the conditions of this Agreement, at each Closing (as defined below), the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, a Convertible Note, in the principal amount set forth on Schedule 1 attached hereto.  The purchase price of  each Convertible Note shall be equal to 100% of the principal amount of such Convertible Note.

2.2.         Closings; Deliverables.

(a)           The initial closing of the issuance and sale of Convertible Notes (the “Initial Closing,” and the date of the Initial Closing, the “Initial Closing

Date”) shall take place at the offices of the Company, 1660 Lincoln St., Ste 2750, Denver, CO 80202 (or remotely via the exchange of documents and signatures) on the date of this Agreement or at such other time or place as the Company and the Purchaser shall mutually agree.

(b)           Until the earlier of (i) such time as the aggregate amount of principal indebtedness evidenced by all of the Convertible Notes issued and sold pursuant to this Agreement equals an aggregate of $10,000,000 or (ii) the date that is one year from the Initial Closing Date, the Company may issue and sell additional Convertible Notes to the Purchaser if each party so desires.  All such sales made at any additional closings (each, an “Additional Closing,” and collectively with the Initial Closing, each a “Closing” and the date of each Additional Closing, an “Additional Closing Date,” and collectively with the Initial Closing Date, a “Closing Date”) shall be made on the terms and conditions set forth in this Agreement.  Each Additional Closing shall take place at the offices of the Company, 1660 Lincoln St., Ste 2750, Denver, CO 80202 (or remotely via the exchange of documents and signatures) at such time or other place as the Company and the Purchaser mutually agree.

(c)           At each Closing, (i) the Company shall deliver to the Purchaser a Convertible Note, in the principal amount set forth on Schedule 1 attached hereto, registered in the name of the Purchaser; and (ii) the Purchaser shall pay to the Company by wire transfer of immediately available funds, the amount of set forth opposite the Purchaser’s name on Schedule 1 attached hereto.  For the avoidance of doubt, Schedule 1 shall be updated in connection with each Additional Closing to reflect the issuance of additional Convertible Notes.

3.             Representations and Warranties of the Company.  The Company hereby  represents and warrants to the Purchaser that the statements contained in this Section 3 are true, complete and accurate as of the applicable Closing.

3.1.         Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company is qualified to do business as a foreign corporation in each jurisdiction where the failure to be so qualified could reasonably be expected to have a material adverse effect on the financial condition, assets, properties, operating results or business of the Company.  The Company has the requisite corporate power and authority to own and operate its properties and assets, to carry on its business as presently conducted.

3.2.         Authorization.  All corporate action on the part of the Company and its directors, officers and stockholders necessary for the authorization, execution and delivery of the Loan Agreements by the Company, the authorization, sale, issuance and delivery of the Convertible Note and the performance of all of the Company’s obligations under the Loan Agreements has been taken or will be taken prior to the applicable Closing.  The Loan Agreements, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except (a) as limited by laws of general application relating to bankruptcy,

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insolvency and the relief of debtors and (b) as limited by rules of law governing specific performance, injunctive relief or other equitable remedies and by general principles of equity.

3.3.         No Conflict.  The execution and delivery of the Loan Agreements by the Company, the performance by the Company of its obligations pursuant to the Loan Agreements and the issuance of the Convertible Note will not result in any violation of, or conflict with, or constitute a default under, the Company’s certificate of incorporation or bylaws, each as amended to date.

3.4.         Governmental Consents.  No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of the Loan Agreements, the offer, sale or issuance of the Convertible Note or the consummation of any other transaction contemplated by the Loan Agreements, except (a) the filing of such notices as may be required under the Securities Act and (b) such filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods therefor.

3.5.         Capitalization.  The authorized capital of the Company consists of, as of immediately prior to the Initial Closing, 100,000,000 shares of common stock, par value $0.001 per share, of which 80,646,832 shares are issued and outstanding.

4.             Representations and Warranties of the Purchaser.  The Purchaser hereby  represents and warrants to the Company that the statements contained in this Section 4 are true, complete and accurate as of the applicable Closing.

4.1.         No Registration.  The Purchaser understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein or otherwise made pursuant hereto.

4.2.         Investment Intent.  The Purchaser is acquiring the Securities for  investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same.  The Purchaser further represents that the Purchaser does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or entity or to any third person or entity with respect to the Securities.

4.3.         Investment Experience.  The Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that the Purchaser can protect the Purchaser’s own interests.  The Purchaser has such knowledge and experience in financial and

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business matters so that the Purchaser is capable of evaluating the merits and risks of its investment in the Company.

4.4.         Speculative Nature of Investment.  The Purchaser understands and acknowledges that an investment in the Company is highly speculative and involves substantial risks.  The Purchaser can bear the economic risk of the Purchaser’s investment and is able, without impairing the Purchaser’s financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Purchaser’s investment.

4.5.         Access to Data.  The Purchaser has had an opportunity to ask questions of, and receive answers from, the officers of the Company concerning the Loan Agreements and the transactions contemplated by the Loan Agreements, as well as the Company’s business, management and financial affairs, which questions were answered to its satisfaction.  The Purchaser believes that the Purchaser has received all the information the Purchaser considers necessary or appropriate for deciding whether to purchase the Securities.  The Purchaser acknowledges that any business plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results.  The Purchaser also acknowledges that it is relying solely on its own counsel and not on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by the Loan Agreements.

4.6.         Accredited Investor.  The Purchaser is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission under the Securities Act and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company.

4.7.         Rule 144.  The Purchaser acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.  The Purchaser is aware of the provisions of Rule 144 promulgated  under the Securities Act which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a “brokers’ transaction,” a transaction directly with a “market maker” or a “riskless principal transaction” (as those terms are defined in the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable.  The Purchaser understands that the current public information referred to above is not now available and the Company has no present plans to make such information available.  The Purchaser acknowledges and understands that the Company may not be satisfying the current public information requirement of Rule 144 at the time the Purchaser wishes to sell the

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Securities, and that, in such event, the Investor may be precluded from selling such securities under Rule 144, even if the other applicable requirements of Rule 144 have been satisfied.  The Purchaser acknowledges that, in the event the applicable requirements of Rule 144 are not met, registration under the Securities Act or an exemption from registration will be required for any disposition of the Securities.  The Purchaser understands  that, although Rule 144 is not exclusive, the Securities and Exchange Commission has expressed its opinion that persons proposing to sell restricted securities received in a private offering other than in a registered offering or pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk.

4.8.         No Public Market.  The Purchaser understands and acknowledges that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the securities issued by the Company.

4.9.         Authorization; No Conflict.  The Loan Agreements, when executed and delivered by the Purchaser, will constitute valid and legally binding obligations of the Purchaser, enforceable in accordance with their terms except: (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.  No consent, approval, authorization, order, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by the Purchaser in connection with the execution and delivery of the Loan Agreements by the Purchaser or the performance of the Purchaser’s obligations hereunder or thereunder.

5.             Conditions of the Obligations of the Purchaser at Each Closing.  The obligation of the Purchaser to purchase any Convertible Note under this Agreement at the applicable Closing is subject to the fulfillment, or waiver by the Purchaser, of each of the following conditions on or before such Closing:

5.1.         Representations and Warranties.  The representations and warranties of the Company contained in Section 3 shall be true and correct in all material respects on and as of the applicable Closing Date with the same effect as though such representations and warranties had been made on and as of the applicable Closing Date; provided, that the representation regarding capitalization shall be true as if made as of the Initial Closing Date.

5.2.         Performance.  The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in the Loan Agreements that are required to be performed or complied with by the Company prior to or at the applicable Closing.

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5.3.         Qualifications.  All authorizations, approvals or permits (if any) of any governmental authority that are required in connection with the lawful issuance and sale of any Convertible Note in accordance with this Agreement shall be obtained and effective as of the applicable Closing.

6.             Conditions of the Company’s Obligations at Closing.  The obligation of the Company to issue and sell any Convertible Note to the Purchaser under this Agreement at the applicable Closing is subject to the fulfillment, or waiver by the Company, of the following conditions on or before the applicable Closing:

6.1.         Representations and Warranties.  The representations and warranties of the Purchaser contained in Section 4 shall be true on and as of the applicable Closing Date with the same effect as though such representations and warranties had been made on and as of the such Closing Date.

6.2.         Performance.  The Purchaser shall have performed and complied with all covenants, agreements, obligations and conditions contained in the Loan Agreements that are required to be performed or complied with by the Purchaser prior to or at the applicable Closing.

6.3.         Qualifications.  All authorizations, approvals or permits (if any) of any governmental authority that are required in connection with the lawful issuance and sale of the Note in accordance with this Agreement shall be obtained and effective as of the applicable Closing.

7.             Further Assurances.  Each of the parties hereto shall execute and deliver such documents and other papers and take such further action as may be reasonably required or desirable to carry out the provisions of the Loan Agreements and the transactions contemplated hereby and thereby.  Each party shall use reasonable efforts to fulfill or obtain the fulfillment of the conditions to the applicable Closing as promptly as practicable.

8.             “Lock-Up” Agreement.  If requested by the Company or an underwriter of any securities of the Company, the Purchaser shall not offer, pledge, loan, sell, contract to sell or otherwise transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, of any securities of the Company held by the Purchaser (other than those included in the registration) during the 180 day period following the effective date of the registration statement for the Company’s initial public offering filed under the Securities Act (or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (a) the publication or other distribution of research reports and (b) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto).  The obligations described in this Section 8 shall  not apply to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future.  The

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Company may impose stop-transfer instructions with respect to the securities subject to the foregoing restriction until the end of such 180 day (or other) period.  The Purchaser agrees to execute a market standoff agreement with said underwriters in customary form consistent with the provisions of this Section 8.

9.             Miscellaneous.

9.1.         Amendment.  None of the Loan Agreements nor any term hereof  or thereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Purchaser.

9.2.         Notices.  All notices and other communications required or permitted under the Loan Agreements shall be in writing and shall be emailed or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand, messenger or courier service addressed:

(a)           if to the Company, to Sunshine Silver Mining & Refining Corporation, 1660 Lincoln St., Ste 2750, Denver, CO 80264, Attn: Roger Johnson, Email: roger.johnson@ssmines.com, or at such other current address as the Company shall have furnished to the Purchaser; and

(b)           if to the Purchaser, at the address set forth on the signature pages hereto or at such other current address the Purchaser shall have furnished to the Company.

All notices and other communications given to a party in accordance with the provisions of this Agreement shall be deemed to have been given (i) when delivered by hand or email (with evidence of sent email), if received prior to 5:00 p.m.  New York City time on a business day, otherwise on the next business day; (ii) one business day after the same are sent by a reliable overnight courier service, with acknowledgment of receipt requested and received; or (iii) if earlier, upon actual receipt by the party.

9.3.         Governing Law.  This Agreement shall be governed in all respects by the internal laws of the State of New York as applied to agreements entered into among New York residents to be performed entirely within New York, without regard to principles of conflicts of law.

9.4.         Brokers or Finders.  The Company shall indemnify and hold harmless the Purchaser from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission arising from the transactions contemplated hereby (and the costs and expenses of defending against such liability or asserted liability) for which the Company is responsible, and the Purchaser agrees to indemnify and hold harmless the Company from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission arising from the transactions contemplated hereby (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser is responsible.

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9.5.         Expenses.  The Company and the Purchaser shall each pay their own expenses in connection with the transactions contemplated by the Loan Agreements.

9.6.         Successors and Assigns.  The provisions of the Loan Agreements shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto

9.7.         Entire Agreement.  This Agreement, including the schedules and exhibits attached hereto, and the Convertible Note constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.  No party shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein or therein.

9.8.         Delays or Omissions.  Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to any Loan Agreement upon any breach or default of any other party under any Loan Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under any Loan Agreement, or any waiver on the part of any party of any provisions or conditions of any Loan Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement or by law or otherwise afforded to any party to any Loan Agreement, shall be cumulative and not alternative.

9.9.         Severability.  If any provision of this Agreement becomes or is declared  by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision.  The balance of this Agreement shall be enforceable in accordance with its terms.

9.10.       Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S.  federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

9.11.       Jurisdiction; Venue.  With respect to any disputes arising out of or related to any Loan Agreement, the parties consent to the exclusive jurisdiction of, and

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venue in, the state courts of the State of New York (or in the event of exclusive federal jurisdiction, the courts of the Southern District of New York located in New York County).

9.12.       Attorney’s Fees.  In the event that any suit or action is instituted to enforce any provisions in any Loan Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to any Loan Agreement, including without limitation, all fees, costs and expenses of appeals.

9.13.       Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO ANY LOAN AGREEMENT.

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, the undersigned has executed this Convertible Note Purchase Agreement as of the date first above written.

COMPANY:
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Chief Financial Officer

IN WITNESS WHEREOF, the undersigned has executed this Convertible Note Purchase Agreement as of the date first above written.

PURCHASER:
ELECTRUM SILVER US LLC
By:	Electrum Strategic Management LLC, its manager
By:		/s/ Andrew M. Shapiro
		Name:	Andrew M. Shapiro
		Title:	Managing Director

Address:
c/o The Electrum Group LLC
535 Madison Avenue, 12th Floor
New York, New York 10022
Attn: Andrew Shapiro, Esq.
Email: AShapiro@electrum-group.com

SCHEDULE 1

Purchaser Schedule

Name of Purchaser	Principal Amount of Convertible Note
Electrum Silver US LLC	$	3,000,000

EXHIBIT A

THIS CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISPOSITION THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

SUNSHINE SILVER MINING & REFINING CORPORATION

CONVERTIBLE PROMISSORY NOTE

$3,000,000.00 April 20, 2020

FOR VALUE RECEIVED, Sunshine Silver Mining & Refining Corporation, a Delaware corporation (the “Company”), hereby promises to pay to the order of Electrum Silver US LLC, a Delaware limited liability company (“Holder”), the principal sum of $3,000,000.00.  Interest shall accrue from the date of this Convertible Promissory Note (this “Note”) on the unpaid principal amount at a rate equal to five percent per annum, compounding annually.  Interest shall be calculated on the basis of the actual number of days elapsed over a year of 365 days.  This Note is being issued pursuant to the Convertible Note Purchase Agreement, dated as of April 20, 2020 (the “Purchase Agreement”), between the Company and Holder.

This Note is subject to the following terms and conditions:

1.             Definitions.  For purposes of this Note, the following terms shall have the meanings set forth in this Section 1.  Any other capitalized term used herein but not defined herein shall have the meanings ascribed to such term in the Purchase Agreement.

“Affiliate” means, with respect to any individual or entity, any other individual or entity directly or indirectly controlling, controlled by or under common control with such individual or entity.  For the purposes of this definition, “control” means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Common Stock” means the common stock of the Company.

“Electrum Global” means Electrum Global Holdings LP, a Cayman Islands exempted limited partnership.

“Indebtedness” means, without duplication, (a) all obligations of the Company, whether or not contingent, in respect of borrowed money, including all obligations

evidenced by a note, bond, debenture or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker’s acceptances, (b) all capital leases or synthetic lease obligations of the Company, (c) all liabilities of the Company arising under any (i) interest rate swap or other interest rate protection agreement or other similar interest rate agreement, (ii) conditional sale or title retention arrangements, (iii) the unpaid purchase price of any assets, (iv) overdrafts, (v) surety bonds or letters of credit or (vi) currency or commodity hedging agreements, (d) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien on property owned or acquired by the Company, whether or not the Indebtedness secured thereby has been assumed and (e) all indebtedness of others referred to in paragraph (a) through (c) above guaranteed by the Company.

“Next Equity Securities” means the type of equity securities of the Company issued in a financing.

“Qualified Financing” means the next sale by the Company of Next Equity Securities in a bona fide equity financing (including an initial public offering) following the date of this Agreement resulting in gross proceeds to the Company, in the aggregate, of at least $10,000,000 from investors that are not Affiliates of Electrum Global (not including, for purposes of such calculation, the conversion of this Note or any other convertible notes into Next Equity Securities).

“Valuation Cap Share Price” means $7.50 per share of Common Stock, subject to adjustment for any stock split, stock dividend, reverse stock split, recapitalization or the like occurring after the date of this Note.

2.             Maturity.  Unless converted, exchanged or otherwise paid pursuant to Section 3, the principal amount then outstanding and any accrued but unpaid interest under this Note shall be due and payable on April 19, 2023 (such, the “Maturity Date”).

3.             Conversion/Exchange.

(a)           Automatic Conversion.  Upon the consummation of a Qualified Financing prior to the Maturity Date, the principal amount then outstanding and any accrued but unpaid interest under this Note will automatically convert into shares of Next Equity Securities (i) at a price per share equal to the lesser of (A) 80% of the price per share of Next Equity Securities that are issued and sold by the Company in the Qualified Financing or (B) the Valuation Cap Share Price; and (ii) except as set forth in clause (i) above, with the same terms and conditions as the shares of Next Equity Securities that are issued and sold by the Company in the Qualified Financing.

(b)           Optional Conversion.  In the event the Company consummates, while this Note remains outstanding, an equity financing pursuant to which it sells Next Equity Securities in a transaction that does not constitute a Qualified Financing, then the Holder shall have the option to treat such equity financing as a Qualified Financing on the same terms set forth in Section 3(a).

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(c)           Mechanics of Conversion or Exchange.  No fractional shares of capital stock of the Company will be issued upon the conversion of this Note.  In lieu of any fractional share to which Holder would otherwise be entitled, the Company will pay to Holder, in cash, the amount of the unconverted principal amount and any accrued but unpaid interest then outstanding under this Note that would otherwise be converted into such fractional share.  Upon conversion of this Note pursuant to this Section 3, Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company.  At its expense, the Company will, as soon as practicable thereafter, issue and deliver to Holder a certificate or certificates for the number of shares to which Holder is entitled upon such conversion, together with any other securities and property to which Holder is entitled upon such conversion under the terms of this Note, including a check payable to Holder for any cash amounts payable as described herein.  Upon conversion or repayment of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount.

4.             Payment; Prepayment.

(a)           All payments under this Note shall be made in lawful money of the United States of America at such place as Holder may from time to time designate in writing to the Company.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to the principal amount.

(b)           The Company shall not be permitted to prepay this Note without the prior written consent of the Holder.

5.             No Senior Debt.  Prior to the earlier of (i) the occurrence of a Qualified Financing, (ii) the consummation of a conversion at the option of the Holder pursuant to Section 3(b) or (iii) the payment of this Note and all interest accrued hereunder in full, the Company shall not create, incur, assume, permit to exist or otherwise become liable for any Indebtedness that is senior in any respect in right of payment to this Note.

6.             Event of Default.  If there shall be any Event of Default (as defined below), at the option and upon the declaration of Holder and upon written notice to the Company, this Note shall accelerate and all principal and accrued interest shall become due and payable.  The occurrence of any one or more of the following shall constitute an “Event of Default”:

(a)           the Company fails to pay timely any of the principal amount or other amounts due under this Note on the date the same becomes due and payable;

(b)           (i) the Company fails to comply with any material provision of this Note (other than those set forth in Section 5 of this Note) or the Purchase Agreement, which failure is not cured within 30 days of Holder’s written notice of such failure or (ii) the Company shall fail to observe or perform the covenant contained in Section 5 of this Note;

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(c)           the Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; or

(d)           an involuntary petition is filed against the Company (unless such petition is dismissed or discharged within 60 days) under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company.

Upon the occurrence of an Event of Default, to the extent permitted by applicable law and notwithstanding anything to the contrary in this Note, the then-outstanding principal amount of this Note shall bear interest, from the date such Event of Default occurred until the date such Event of Default is cured or waived, at a rate equal to the lesser of 15.0% per annum or the maximum allowed by law.

7.             No Security.  This Note is a general unsecured obligation of the Company.

8.             Governing Law.  This Note shall be governed in all respects by the internal laws of the State of New York, without regard to principles of conflicts of law.

9.             Amendment.  Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Note and signed by the Company and Holder.

10.          Transferability.  This Note, and the rights and obligations of Holder hereunder, may not be assigned by Holder, without the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that Holder may assign this Note to an Affiliate without the consent of the Company.  The Company may not assign this Note or its rights or obligations under this Note.  The Company shall keep a register (the “Register”) in which it maintains a list of each Holder and the principal amount and interest due to each Holder.  No assignment shall be effective until recorded by the Company in the Register.

11.          Severability.  If any provision of this Note becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Note, and such court will replace such illegal, void or unenforceable provision of this Note with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision.  The balance of this Note shall be enforceable in accordance with its terms.

12.          Counterparts.  This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S.  federal ESIGN Act of

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2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

13.          Purchase Agreement.  This Note is being issued pursuant to the Purchase Agreement and is entitled to all of the benefits, and subject to all of the limitations, provided in the Purchase Agreement, which are hereby incorporated herein by reference as though set forth herein in their entirety.

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, the undersigned has caused this Convertible Promissory Note to be executed as of the date first above written.

COMPANY:
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Chief Financial Officer

June 23, 2020

Sunshine Silver Mining & Refining Corporation
1660 Lincoln St., Ste 2750
Denver, CO 80264
Attn: Roger Johnson

Dear Roger,

Reference is made to the Convertible Note Purchase Agreement (the “Purchase Agreement”), dated as of April 20, 2020, by and between Sunshine Silver Mining & Refining Corporation, a Delaware corporation (the “Company”), and Electrum Silver US LLC, a Delaware limited liability company (the “Purchaser”).

The Company and the Purchaser hereby agree that the reference to “$10,000,000” in Section 2.2(b) of the Purchase Agreement shall be amended to “$15,000,000”.

Other than as specifically set forth herein, all other terms and provisions of the Purchase Agreement shall remain unaffected by the terms of this letter agreement, and shall continue in full force and effect.

Please acknowledge your agreement to the foregoing by signing in the space provided below and returning a signed copy to me at your earliest convenience.

Very truly yours,
ELECTRUM SILVER US LLC
By:	Electrum Strategic Management LLC, its manager
By:	/s/ Andrew M. Shapiro
	Name:	Andrew M. Shapiro
	Title:	Managing Director

Acknowledged and Agreed:
SUNSHINE SILVER MINING & REFINING CORPORATION
By:	/s/ Roger Johnson
	Name:	Roger Johnson
	Title:	Chief Financial Officer

EX-10.15.1

Exhibit 10.15.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of May 3, 2011, is between SUNSHINE SILVER MINES CORPORATION (the “Company”) and STEPHEN ORR (the “Executive” and together with the Company, the “Parties”).

W I T N E S S E T H:

WHEREAS:

The Parties wish to enter into the arrangements set forth herein with respect to the terms and conditions of the Executive’s employment with the Company.

NOW, THEREFORE, in consideration of the promises and covenants contained herein, the Parties agree as follows:

AGREEMENT

1.Employment and Term.  The Company agrees to, and does hereby, employ the Executive, and the Executive agrees to, and does hereby accept, such employment, upon the terms and subject to the conditions set forth in this Agreement. The Executive’s employment will begin on May 4, 2011 (the “Start Date”) and continue at will, which means that the Executive or the Company may terminate the Executive’s employment at any time for any reason, or for no reason, with or without cause (the “Term”). If the Company terminates this Agreement and the Executive’s employment, the Company shall provide the Executive with notice and reason for the termination within ten (10) calendar days of the effective date of such termination.

2.Position and Duties.

(a) During the Term, the Company shall employ the Executive as Executive Chairman. The Executive shall perform the duties and have the responsibilities customarily associated with the position of Executive Chairman, which shall include, without limitation, overseeing meetings of the Board of Directors of the Company, working closely with the Company’s Chief Executive Officer and having ultimate responsibility for the performance by the Company’s management of their duties and responsibilities, leading the Company by applying his business acumen and strategic vision to improve its competitive standing, and rendering such other services, and assuming such other responsibilities, as may be directed to the Executive by the Board of Directors of the Company.

(b) The Executive shall devote his best efforts and his full business time and attention to the business and affairs of the Company. Notwithstanding the foregoing, the Executive may continue to serve as a director of GoldQuest Mining Corp. provided that his obligations in such capacity do not interfere with his obligations to the Company.

(c) The Executive acknowledges and agrees that (i) the Executive owes the Company a duty of loyalty as a fiduciary of the Company, and (ii) the obligations

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described in this Agreement are in addition to, and not in lieu of, the obligations the Executive owes the Company under the common law.

3.Base Salary, Purchase of Shares, Equity/Options, and Benefits.

(a) Base Salary.  During the Term, the Executive’s base salary shall be $500,000.00 per annum (“Base Salary”), which salary shall be payable in regular installments in accordance with the Company’s general payroll practices. The Base Salary will be subject to review on an annual basis and may be adjusted in accordance with the procedures set forth by the Company’s Compensation Committee.

(b) Purchase of Shares.  As of the date hereof, Ozorrus Investments Limited, a corporation under the laws of New Zealand (the “Purchaser”) and co-trustee of SOS HK ORS, an exempted Occupational Retirement Schemes Ordinance constituted under the laws of Hong Kong and the Company shall enter into the Subscription Agreement in the form attached hereto as Exhibit A (the “Subscription Agreement”). In addition, as of the Start Date, the Company, the Purchaser and certain stockholders of the Company shall enter into a Letter Agreement in the form attached hereto as Exhibit B.

(c) Options.

(i)Effective as of the Start Date, the Company shall grant to the Executive an option to purchase 125,000 shares of the Company’s common stock at $27.65 per share, and as of the earlier of May 1, 2012 and the initial public offering of the Company’s common stock (provided that the Executive is still employed by the Company as of the applicable date), the Company shall grant to the Executive an option to purchase an additional 125,000 shares of the Company’s common stock at a purchase price equal to the then current fair market value of the Company’s common stock or the initial public offering price (the “Stock Options”). The Stock Options will be subject to the adjustment provisions set forth in the Company’s Long-Term Incentive Plan (the “Plan”). The Executive may, with the consent of the Company, such consent not to be unreasonably withheld, assign the Stock Options for bona fide planning purposes to members of his immediate family, or to a trustee or trustees of a trust whose vested beneficiaries then include the Executive and/or any of the Executive’s immediate family, if (A) the persons who would control the Stock Options and the proposed arrangements for the control of the Stock Options are reasonably satisfactory to the Company, including, without limitation, that any Stock Options will remain subject to all of the forfeiture and transfer restrictions and conditions set forth in the applicable Stock Option Award Agreement and in the Plan, (B) the requirements of the Securities Act of 1933, as amended (the “Securities Act”) and any applicable state securities, blue sky or other laws are met, and the Executive and the transferee acknowledge that (x) the Executive remains responsible for any tax liabilities associated with the exercise of the Stock Options and (y) the Company will not take on any role or liability whatsoever with respect to any transferee other than the obligation to deliver shares of the Company’s common stock under the applicable Stock Option Award Agreement as if the Stock Options were still held by the Executive.

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(ii)The Stock Options shall vest in three equal annual installments on the first, second and third anniversaries of the applicable grant date (each, a “Vesting Date”), provided in each case that the Executive is employed by the Company on the applicable Vesting Date. The Stock Options shall have a ten-year term (subject to earlier termination upon termination of employment as described herein and in the applicable option agreement) and shall be subject to the terms and conditions of the Company’s Long-Term Incentive Plan and option agreements, all of which shall be consistent with the Executive’s rights set forth in this Section 3(c). The Executive may receive additional stock option or other equity compensation grants in the future in the sole discretion of the Company’s Compensation Committee.

(d) Employee Benefits.  During the Term, the Executive shall be entitled to participate in the Company’s various employee benefit plans that are, from time to time, made generally available to the Company’s employees, as such plans are established and pursuant to the terms and conditions of such plans. The Executive acknowledges that the Company is in the process of implementing employee benefit plans and that such plans, including the following, are expected to be available during May 2011 or shortly thereafter: group health, vision and dental plan; short-term and long-term disability plan; life insurance plan; and 401(k) plan.

(e) Vacation.  The Executive shall be entitled to four (4) weeks paid vacation time per calendar year, pro-rated for any partial year of employment, in accordance with the Company’s vacation time policy.

(f) Expense Reimbursement.  The Executive shall receive reimbursement for direct and reasonable out-of-pocket expenses incurred by him in connection with the performance of his duties hereunder, according to the policies of the Company. All requests for reimbursement of business-related expenses shall be subject to the Company’s travel policy and requirements with respect to reporting and documentation of expenses.

4.Compensation Upon Termination, Resignation, Disability or Death.

(a) Termination without Cause. If the Executive’s employment is terminated by the Company without Cause, the Company shall pay the Executive any Base Salary from the preceding calendar year to the extent accrued but unpaid as of the effective date of the Executive’s termination; accrued but unused vacation in accordance with Company policy; and all business expenses that were incurred and not reimbursed but eligible for reimbursement (collectively, the “Accrued Obligations”). In addition, subject to Section 19, the Company will pay the Executive an amount equal to twelve (12) months of the Executive’s Base Salary at the rate in effect on the date of termination, payable in a lump sum within sixty (60) calendar days of the date of termination. Provided the Executive timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall also pay, on the Executive’s behalf, the portion of monthly premiums for the Executive’s group health insurance, including coverage for the Executive’s dependents, that the Company paid immediately prior to the date of termination, during the twelve (12) month period

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following the date of termination, subject to the Executive’s continued eligibility for COBRA coverage. The Company will pay for such COBRA coverage for eligible dependents only for those dependents who were enrolled immediately prior to the date of termination. The Executive will continue to be required to pay that portion of the premium for the Executive’s health coverage, including coverage for the Executive’s eligible dependents, that the Executive was required to pay as an active employee immediately prior to the date of termination. Notwithstanding the foregoing, in the event that under applicable guidance the reimbursement of COBRA premiums causes the Company’s group health plan to violate any applicable nondiscrimination rule, the parties agree to negotiate in good faith a mutually agreeable alternative arrangement. Upon termination under this Section 4(a), (i) the Stock Options shall cease vesting and (ii) all vested Stock Options shall remain exercisable until the earlier of (x) the date one hundred eighty (180) calendar days following termination of employment or (y) the expiration of the original option term.

(b) Resignation for Good Reason.  If the Executive resigns for Good Reason, the Company shall pay the Executive the same sums and in the same manner, and his rights to the Stock Options shall be the same, as to which the Executive would be entitled if he had been terminated by the Company without Cause, as set forth in subsection (a) above. The Executive shall provide 30 days’ prior written notice to the Company of his decision to resign for Good Reason.

(c) Termination for Cause.  If the Executive’s employment is terminated by the Company for Cause, the Company shall pay the Executive the Accrued Obligations. Upon termination under this Section 4(c), any outstanding Stock Options shall cease to be exercisable and will be forfeited.

(d) Resignation without Good Reason.  If the Executive resigns without Good Reason, the Company shall pay the Executive the Accrued Obligations. The Executive shall provide 60 days’ prior written notice to the Company of his decision to resign without Good Reason. The Stock Options, to the extent exercisable at the Executive’s termination of employment, shall remain exercisable until the earlier of (i) the date thirty (30) calendar days following termination of employment under this Section 4(d) or (ii) the expiration of the original option term.

(e) Disability.  Subject to any state or federal law or regulation governing employees with disabilities, the Company may terminate the Executive’s employment upon the Disability of the Executive. In the event the Executive is terminated under this Section 4(e), the Company shall pay the Executive the Accrued Obligations. In addition, in such event, the Company shall cause Executive to fully vest in all Stock Options referred to in Section 3(c) of this Agreement, and such Stock Options shall remain exercisable until the earlier of (i) the date one (1) year following termination of employment under this Section4(e) or (ii) the expiration of the original option term.

(f) Death.  If the Executive’s employment is terminated due to the Executive’s death, the Company shall pay the Executive’s estate the Accrued Obligations. In addition, in such event, the Company shall cause Executive’s estate to fully vest in all Stock

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Options referred to in Section 3(c) of this Agreement, and such Stock Options shall remain exercisable until the earlier of (i) the date one (1) year following termination of employment under this Section 4(f) or (ii) the expiration of the original option term.

(g) For purposes of this Agreement:

(i)“Cause” means the Executive’s (a) conviction of, guilty plea to or confession of guilt of, or plea of nolo contendere to a felony, or an act involving moral turpitude which could have a material adverse effect on the Company; (b) willful dishonesty, fraud or conduct that constitutes a felony or an act involving moral turpitude or a breach of fiduciary duty or any material misrepresentation in connection with the Executive’s employment; (c) action that exposes the Company to a material risk of legal liability or public disgrace or disrepute including, without limitation, violation of any law, rule or regulation that could expose the Company to a material legal or monetary fine or penalty; (d) neglect of his duties or substantial failure to perform duties as reasonably directed by the Board of Directors; (e) gross negligence or willful misconduct with respect to Company affairs or the Executive’s obligations hereunder; or (f) any other material breach of this or any other agreement with the Company or any material Company policy, which breach is not cured within at least fifteen (15) calendar days after receipt by the Executive of written notice from the Company of such breach, but only if such breach is able to be cured during such fifteen (15) calendar day period.

(ii)“Good Reason” means: (a) a material diminution in the Executive’s Base Salary, except where such reduction occurs as part of an across-the-board reduction in salary affecting all senior executives of the Company; or (b) any other action or inaction by the Company that constitutes a material breach of this Agreement. The foregoing shall constitute Good Reason only if (i) the Executive provides written notice to the Company of any event(s) alleged to constitute Good Reason within ninety (90) calendar days of the initial occurrence of the event, with such notice providing a detailed description of the circumstances constituting Good Reason (a “Good Reason Notice”), (ii) any such breach is not remedied or cured within fifteen (15) calendar days after the Company’s receipt of a written Good Reason Notice from the Executive (the “Cure Period”) and (iii) the Executive actually terminates employment within thirty (30) calendar days following the expiration of the Cure Period.

(iii)“Disability” shall mean that the Executive is disabled within the meaning of the Company’s group long-term disability insurance policy. If no long term disability insurance is in place, then Disability shall mean that the Executive, due to illness, accident, or other physical or mental incapacity, has been substantially unable to perform his duties under this Agreement for a period of at least six (6) consecutive months during the Term as established by the written opinion of a licensed independent physician selected by the Company.

(h) Deemed Resignation.  Unless otherwise agreed to in writing by the Company and the Executive prior to the termination of the Executive’s employment, any termination of the Executive’s employment shall constitute an automatic resignation of the Executive as an officer of the Company and each affiliate of the Company, and an

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automatic resignation of the Executive from the board of directors or similar governing body of the Company or any affiliate of the Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any affiliate holds an equity interest and with respect to which board or similar governing body the Executive serves as the Company’s or such affiliate’s designee or other representative.

(i) Clawback.  The Executive agrees and acknowledges that any and all compensation the Executive receives pursuant to this Agreement shall be subject to clawback by the Company in the event of a financial restatement or in such other circumstances as may be required by applicable law or as may be provided in any clawback policy that is adopted by the Company and is generally applicable to senior executives of the Company.

5.Confidentiality and Non-Solicitation.

(a) For purposes of this Agreement, “Confidential Information” means (i) communications, data, formulae and related concepts, business plans (both current and under development), profit and loss statements, spreadsheets, contact or distribution lists, non-public personnel lists, promotion and marketing programs, trade secrets, or any other confidential or proprietary business information relating to development programs, costs, revenues, marketing, trading, investments, sales activities, promotions, credit and financial data, financing methods, research, plans or the business and affairs of the Company; (ii) any other information which is to be treated as confidential or non-public because of any duty of confidentiality owed by the Company to a third party; and (iii) any other information which the Company shall, in the ordinary course, use and not release externally, except subject to restrictions on use and disclosure. Notwithstanding the foregoing, Confidential Information does not include information that (A) is or becomes generally publicly available other than as a result, directly or indirectly, of the Executive’s disclosure or (B) is or becomes available to the Executive on a non-confidential basis from a source other than through the Company or its representatives, provided that such source is not bound by a confidentiality agreement with the Company or otherwise prohibited from transmitting the information to the Executive by a contractual or legal obligation.

(b) The Executive acknowledges the trade secret status of the Confidential Information and that the Confidential Information constitutes a protectable business interest of the Company. The Executive agrees (i) not to use or allow or help another to use or access (whether for compensation or not) any Confidential Information for himself or others (other than the Company); and (ii) not to take any Company material or reproductions (including but not limited to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof from the Company’s offices at any time during or after the Executive’s employment by the Company, except as required in the execution of the Executive’s duties to the Company and then conditioned upon the prompt return of all originals and reproductions thereof (in whatever form).

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(c) During the Term and for a period of one (1) year thereafter, the Executive shall not, directly or indirectly, on behalf of himself or any other person or entity, without the prior written consent of the Company solicit or induce any employee of or consultant or service provider to the Company (each, a “Service Provider”) to leave the employ of or cease performing services for the Company, or engage in any plan or coordinate with any Service Provider to leave the employ of or cease performing services for the Company, or hire, participate with or attempt to participate with in any venture for any purpose any Service Provider or any Service Provider who has left the employment of or ceased to perform services for the Company within one year of the termination of such Service Provider’s services for the Company.

(d) The Executive acknowledges that any breach of his obligations under this Section 5 cannot be adequately compensated by damages in an action at law and may cause the Company great and irreparable injury and damage. Accordingly, in the event that the Executive breaches or threatens to breach any provisions of this Section 5, then in addition to any other rights which the Company may have, the Company shall be entitled, without the necessity of (i) proving irreparable harm, (ii) establishing that monetary damages are inadequate or (iii) posting any bond or other security with respect thereto, to the remedies of injunction, specific performance and other equitable relief to redress any breach, and no proof of special damages shall be necessary for the enforcement of or for any action for breach of the Executive’s obligations. In the event that a proceeding is brought in equity to enforce the provisions of this Section 5, the Executive shall not urge as a defense that there is an adequate remedy at law nor shall the Company be prevented from seeking any other remedies which may be available. Nothing contained in this Section 5(d) shall be construed as a waiver by the Company of any other rights, including, without limitation, rights to damages or profits.

(e) The Executive agrees that the period during which the covenants contained in this Section 5 shall be effective shall be computed by excluding from such computation any time during which the Executive is in violation of any provision of this Section 5.

(f) The Company and the Executive agree that it was their intent to enter into a valid and enforceable agreement. The Executive and the Company thereby acknowledge the reasonableness of the restrictions set forth in this Section 5, including the reasonableness of the duration as to time and the scope of activity restrained. The Executive agrees that if any covenant contained in Section 5 of this Agreement is found by a court of competent jurisdiction to contain limitations as to time or scope of activity that are not reasonable and impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company, then the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and other business interests of the Company and to enforce the covenants as reformed.

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6.The Executive’s Representations.  The Executive represents to the Company that:

(a) the execution, delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound;

(b) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable against him in accordance with its terms;

(c) except for a Confidentiality Agreement between the Executive and GoldQuest Mining Corp., as of the Start Date, the Executive will not be a party to any agreement with any person, other than an agreement with the Company, restricting the use of another person’s confidential information or restricting the Executive from providing future employment, consulting or other service;

(d) no prior or pending litigation, arbitration, investigation or other proceeding of any kind will prevent or hinder the Executive from performing his duties under this Agreement; and

(e) the Executive has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

7.Change in Control.

(a) Definitions.

(i)For purposes of this Section 7, “Change in Control” means (I) any merger or consolidation of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than a controlling interest in the surviving entity immediately after such consolidation, merger or reorganization; (II) any transaction or series of related transactions in which control of the Company is acquired by a person or group of persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended or any successor provisions thereto; or (III) a sale or other disposition of all or substantially all of the assets of the Company; provided that in no event will a Change in Control include any of the following transactions: (A) any consolidation, merger or similar transaction effected exclusively to change the domicile of the Company; (B) any transaction or series of transactions in which voting securities of the Company are issued principally for bona fide financing purposes or any successor or indebtedness or equity securities of the Company are cancelled or converted or a combination thereof, including, without limitation, an initial public offering or other offering of the Company’s capital stock; (C) any acquisition of such voting power by an individual or entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company; or (D) any transaction where control of the

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Company, the surviving parent entity or the entity to which all or substantially all of the Company’s assets are transferred in the transaction or series of transactions is controlled directly or indirectly by one or more Kaplan Parties.

(ii)“Kaplan Party” means (a) Thomas S. Kaplan or Dafna Recanati Kaplan; (b) any spouse, parent, sibling or descendant (including by adoption) of either of the persons referred to in clause (a) above; (c) any trust created for the benefit of any of the persons described in clauses (a) or (b) above or any trust for the benefit of such trust; or (d) any person controlled by one or more of the persons referred to in clauses (a), (b) or (c) above.

(iii)“Control” (including its correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) means, with respect to any person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the beneficial ownership of voting securities, by contract or otherwise.

(b) Change in Control Severance Benefits.  If there is a Change in Control, and within one (1) year of such Change in Control, the Executive’s employment is terminated under the circumstances described in Sections 4(a) through 4(f) above, the Executive shall be entitled to the following: (I) if such termination is a termination by the Company without Cause pursuant to Section 4(a) or the Executive resigns for Good Reason pursuant to Section 4(b), the Company shall pay the Executive the Accrued Obligations and, in addition, subject to the provisions of Section 19, (A) an amount equal to twenty-four (24) months of the Executive’s Base Salary at the rate in effect on the date of termination or resignation, payable in a lump sum within sixty (60) calendar days of the date of termination or resignation; and (B) provided the Executive timely elects continuation coverage under COBRA, the Company shall also pay, on the Executive’s behalf, the portion of monthly premiums for the Executive’s group health insurance, including coverage for the Executive’s dependents, that the Company paid immediately prior to the date of termination or resignation, during the eighteen (18) month period following the date of termination or resignation, subject to the Executive’s continued eligibility for COBRA coverage. The Company will pay for such COBRA coverage for eligible dependents only for those dependents who were enrolled immediately prior to the date of termination or resignation. The Executive will continue to be required to pay that portion of the premium for the Executive’s health coverage, including coverage for the Executive’s eligible dependents, that the Executive was required to pay as an active employee immediately prior to the date of termination or resignation. Notwithstanding the foregoing, in the event that under applicable guidance the reimbursement of COBRA premiums causes the Company’s group health plan to violate any applicable nondiscrimination rule, the parties agree to negotiate in good faith a mutually agreeable alternative arrangement; and (II) if such termination is a termination or resignation under the circumstances described in Sections 4(c), 4(d), 4(e) or 4(f), the Executive shall be entitled to the compensation and benefits for which the Executive is eligible under such sections.

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(c) Termination Preceding Change in Control.  Notwithstanding the provisions of the above subsection 7(b), if the Executive’s employment with the Company is terminated by the Company without Cause within three (3) months preceding the occurrence of a Change in Control and such termination without Cause occurred in anticipation of a Change in Control at the request of the acquirer, the Executive shall be entitled to the payments and benefits described in the above subsection 7(b)(I).

8.Taxes.  The Company shall be entitled to withhold from any payment or benefit provided under this Agreement an amount sufficient to satisfy all federal, state and local income and employment tax withholding requirements.

9.Notices.  Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to the Executive:

Stephen Orr
[***]
[***]

Notices to the Company:

Sunshine Silver Mines Corporation
c/o Tigris Financial Group Ltd.
535 Madison Avenue, 11th Floor
New York, New York 10022
USA
Attention: Andrew M. Shapiro, Esq.

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

10.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any action in any other jurisdiction, but this Agreement shall be reformed construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.Complete Agreement.  This Agreement, together with the agreements referred to herein in Sections 3(b) and 3(c), contains the entire agreement of the Parties hereto with respect to the terms and conditions of the Executive’s employment with the Company and activities following termination. This Agreement supersedes any and all prior agreements and understandings, whether written or oral, between the Parties with respect

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to the terms and conditions of the Executive’s employment with the Company and activities following termination. This Agreement may not be changed or modified except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company.

12.Counterparts.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

13.Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, personal representatives, executors and administrators, successors and assigns, except that the Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.

14.Choice of Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York and the federal laws of the United States of America, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York and the federal laws of the United States of America.

15.Dispute Resolution and Arbitration. Subject to Section 5(d), the Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation. If the matter has not been resolved within thirty (30) calendar days of a Party’s request for negotiation, either Party may initiate proceedings or arbitration only as provided herein. Subject to Section 5(d), if any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado. The arbitrator selected must have an expertise in the matter(s) in dispute. Each party shall bear his/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and the Executive. The Parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages. The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration.

16.Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement shall affect the validity, binding

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effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

17.Survival.  In the event of the Executive’s termination of, or resignation from, employment, Sections 4, 5, 8, 9, 10, 13, 14, 15 and 16 shall survive and continue in full force to the extent necessary to enforce their terms.

18.Jobs Act Compliance.

(a) This Agreement is intended to provide payments that are exempt from or compliant with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and related regulations and Treasury pronouncements (“Section 409A”), and the Agreement shall be interpreted accordingly. Each payment under this Agreement is intended to be excepted from Section 409A, including, but not limited to, by compliance with the short-term deferral exception as specified in Treasury Regulation § 1.409A-1(b)(4), and the provisions of this Agreement will be administered, interpreted and construed accordingly (or disregarded to the extent such provision cannot be so administered, interpreted, or construed).

(b) All reimbursements or provision of in-kind benefits pursuant to this Agreement shall be made in accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) such that the reimbursement or provision will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event. Specifically, the amount reimbursed or in-kind benefits provided under this Agreement during the Executive’s taxable year may not affect the amounts reimbursed or provided in any other taxable year (except that total reimbursements may be limited by a lifetime maximum under a group health plan), the reimbursement of an eligible expense shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement or provision of in-kind benefit is not subject to liquidation or exchange for another benefit.

(c) For all purposes of this Agreement, the Executive shall be considered to have terminated employment with the Company when the Executive incurs a “separation from service” with the Company within the meaning of Code Section 409A(a)(2)(A)(i).

(d) Notwithstanding any provision of this Agreement to the contrary, the parties agree that any benefit or benefits under this Agreement that the Company determines are subject to the suspension period under Code Section 409A(a)(2)(B) shall not be paid or commence until the first business day next following the earlier of (i) the date that is six months and one day following the date of the Executive’s termination of employment, (ii) the date of the Executive’s death or (iii) such earlier date as complies with the requirements of Section 409A.

19.Release.  Any and all amounts payable and benefits or additional rights provided pursuant to Sections 4 and 7, other than (i) compensation accrued but unpaid as of the effective date of the Executive’s termination; (ii) accrued but unused vacation in accordance with Company policy; and (iii) all business expenses that were incurred but

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not reimbursed, shall only be payable if the Executive executes and delivers to the Company, within 60 days after termination of employment, in the Company’s standard form, a general release of all claims of the Executive up to the date of such release.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

SUNSHINE SILVER MINES CORPORATION
By:	/s/ Michael Williams
Name:	Michael Williams
Title:	President
/s/ Stephen Orr
STEPHEN ORR — the Executive

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EX-10.15.2

Exhibit 10.15.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of  April 1, 2016, is between SUNSHINE SILVER MINING & REFINING CORPORATION (the “Company”) and John Kinyon (the “Executive” and together with the Company, the “Parties”).

W I T N E S S E T H:

WHEREAS:

(A)The Company and the Executive entered into an employment letter agreement dated June 1, 2015 (the “2015 Letter”), pursuant to which the Executive has assumed certain roles and responsibilities related to the refurbishment, development and construction of the Company’s Sunshine mine property located near Kellogg, Idaho and assistance with the development of the Los Gatos Project in the state of Chihuahua, Mexico;

(B)The scope of the Executive’s duties and responsibilities has been expanded to include, responsibility for the Company’s development projects and operating mines.

(C)Accordingly, the Parties desire that the terms and conditions set forth herein shall in all respects replace and supersede those set forth in the 2015 Letter.

NOW, THEREFORE, in consideration of the promises and covenants contained herein, the Parties agree as follows:

AGREEMENT

1.Employment and Term.  The Parties hereby agree that the 2015 Letter shall be terminated with no further effect or obligation on either party, and this Agreement shall supersede and replace such 2015 Letter in all respects related to the Executive’s employment with the Company. The Company hereby employs the Executive, and the Executive hereby accepts such employment, upon the terms and subject to the conditions set forth in this Agreement.  The Executive’s employment under this Agreement will be deemed for all purposes to commence on March 9, 2012 (the “Executive Start Date”) and continue at will, which means that the Executive or the Company may terminate the Executive’s employment at any time for any reason, or for no reason, with or without cause (the “Term”).  If the Company terminates this Agreement and the Executive’s employment, the Company shall provide the Executive with notice and reason for the termination within ten (10) calendar days of the effective date of such termination.

2.Position and Duties.

(a)During the Term, the Company shall employ the Executive as Executive Vice President, Operations.  The Executive shall perform the duties and have the responsibilities customarily associated with the position of Executive Vice President, Operations, which shall include, without limitation, responsibilities for the refurbishment, development, construction and operation of the Company’s mines.  The Executive will work closely with the Company’s

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Chairman and Chief Executive Officer to execute corporate strategies while ensuring corporate governance, ethics, safety, environmental and operational performance achieve the highest standard.

(b)The Executive’s base for work can remain in Kellogg, Idaho.  However, the Executive will be required to work, as needed, at the various Company projects and offices.

(c)The Executive shall devote his best efforts and his full business time and attention to the business and affairs of the Company.

(d)The Executive acknowledges and agrees that (i) the Executive owes the Company a duty of loyalty as a fiduciary of the Company, and (ii) the obligations described in this Agreement are in addition to, and not in lieu of, the obligations the Executive owes the Company under the common law.

3.Base Salary, Bonus, Equity/Options, and Benefits.

(a)Base Salary.  During the Term, the Executive’s base salary began at $212,000 per annum and was later increased to $265,000 per annum (“Base Salary”), which salary shall be payable in regular installments in accordance with the Company’s general payroll practices.  The Base Salary will be subject to review on an annual basis and may be adjusted in accordance with the procedures set forth by the Company’s Compensation Committee.

(b)Annual Bonus.  During the Term, provided that the Executive is employed by the Company on December 31st of the applicable year, the Executive will be eligible to participate in a bonus plan pursuant to which at the end of each year of continuous service, he will be entitled to receive an annual target bonus in the amount of fifty percent (50%) of his Base Salary and up to one-hundred percent (100%) of Base Salary, pro-rated for any partial year, upon achievement by the Executive and the Company of certain targets as determined solely in the discretion of the Company’s Compensation Committee (the “Annual Bonus”). Annual bonuses will be paid in cash, restricted and/or unrestricted common stock or a combination thereof (not in options) at the discretion of the Board of Directors.  The Annual Bonus actually paid, if any, will depend on the actual performance of the Company and the Executive as determined by the Compensation Committee.  In all events the Annual Bonus, if earned, will be paid no later than March 15th following the applicable year for which it is earned.

(c)Options.  During the Term, provided that the Executive is employed by the Company on December 31st of the applicable year, the Executive will be eligible to participate in an executive stock option program, as may be determined solely in the discretion of the Company’s Compensation & Nominating Committee. The Stock Options will be subject to the adjustment provisions set forth in the Company’s Long-Term Incentive Plan and approved option agreements.  The Executive may receive such stock options or other equity compensation grants in the future in the sole discretion of the Company’s Compensation Committee.

(d)Employee Benefits.  During the Term, the Executive shall be entitled to participate in the Company’s various employee benefit plans that are, from time to time, made generally available to the Company’s employees, as such plans are established and pursuant to the terms and conditions of such plans.  These plans include group health, vision and dental plan;

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short-term and long-term disability plan; life insurance plan; and 401(k) plan.

(e)Vacation.  The Executive shall be entitled to four (4) weeks paid vacation time per calendar year, pro-rated for any partial year of employment, subject to the terms of the Company’s vacation time policy.

(f)Expense Reimbursement.  The Executive shall receive reimbursement for direct and reasonable out-of-pocket expenses incurred by him in connection with the performance of his duties hereunder, according to the policies of the Company. All requests for reimbursement of business-related expenses shall be subject to the Company’s travel policy and requirements with respect to reporting and documentation of expenses.

4.Compensation Upon Termination, Resignation, Disability or Death.

(a)Termination without Cause.  If the Executive’s employment is terminated by the Company without Cause, the Company shall pay the Executive any Base Salary and Annual Bonus from the preceding calendar year to the extent accrued but unpaid as of the effective date of the Executive’s termination; accrued but unused vacation in accordance with Company policy; and all business expenses that were incurred and not reimbursed but eligible for reimbursement (collectively, the “Accrued Obligations”).  In addition, the Executive will be entitled to a prorated amount of the current calendar year Annual Bonus, with payment of such prorated Annual Bonus to be made at the same time as annual bonuses are made to other executives of the Company in the ordinary course (but in no event later than March 15th of the calendar year following the calendar year in which the termination occurs (the “Pro Rata Bonus”).  In addition, subject to Section 19, the Company will pay the Executive an amount equal to twelve (12) months of the Executive’s Base Salary at the rate in effect on the date of termination, payable in a lump sum within sixty (60) calendar days of the date of termination.  Provided the Executive timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall also pay, on the Executive’s behalf, the portion of monthly premiums for the Executive’s group health insurance, including coverage for the Executive’s dependents, that the Company paid immediately prior to the date of termination, during the twelve (12) month period following the date of termination, subject to the Executive’s continued eligibility for COBRA coverage.  The Company will pay for such COBRA coverage for eligible dependents only for those dependents who were enrolled immediately prior to the date of termination.  The Executive will continue to be required to pay that portion of the premium for the Executive’s health coverage, including coverage for the Executive’s eligible dependents, that the Executive was required to pay as an active employee immediately prior to the date of termination.  Notwithstanding the foregoing, in the event that under applicable guidance the reimbursement of COBRA premiums causes the Company’s group health plan to violate any applicable nondiscrimination rule, the parties agree to negotiate in good faith a mutually agreeable alternative arrangement.  Upon termination under this Section 4(a), (i) the Stock Options shall cease vesting and (ii) all vested Stock Options shall remain exercisable until the earlier of (x) the date one hundred eighty (180) calendar days following termination of employment or (y) the expiration of the original option term.

(b)Resignation for Good Reason.  If the Executive resigns for Good Reason, the Company shall pay the Executive the same sums and in the same manner, and his rights to the

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Stock Options shall be the same, as to which the Executive would be entitled if he had been terminated by the Company without Cause, as set forth in subsection (a) above.  The Executive shall provide 30 days’ prior written notice to the Company of his decision to resign for Good Reason.

(c)Termination for Cause.  If the Executive’s employment is terminated by the Company for Cause, the Company shall pay the Executive the Accrued Obligations.  Upon termination under this Section 4(c), any outstanding Stock Options shall cease to be exercisable and will be forfeited.

(d)Resignation without Good Reason.  If the Executive resigns without Good Reason, the Company shall pay the Executive the Accrued Obligations.  The Executive shall provide 60 days’ prior written notice to the Company of his decision to resign without Good Reason.  The Stock Options, to the extent exercisable at the Executive’s termination of employment, shall remain exercisable until the earlier of (i) the date thirty (30) calendar days following termination of employment under this Section 4(d) or (ii) the expiration of the original option term.

(e)Disability.  Subject to any state or federal law or regulation governing employees with disabilities, the Company may terminate the Executive’s employment upon the Disability of the Executive.  In the event the Executive is terminated under this Section 4(e), the Company shall pay the Executive the Accrued Obligations and the Pro Rata Bonus.  In addition, in such event, the Company shall cause Executive to fully vest in the Stock Options, and the Stock Options shall remain exercisable until the earlier of (i) the date one (1) year following termination of employment under this Section 4(e) or (ii) the expiration of the original option term.

(f)Death.  If the Executive’s employment is terminated due to the Executive’s death, the Company shall pay the Executive’s estate the Accrued Obligations and the Pro Rata Bonus.  In addition, in such event, the Company shall cause Executive’s estate to fully vest in all Stock Options referred to in Section 3(c) of this Agreement, and such Stock Options shall remain exercisable until the earlier of (i) the date one (1) year following termination of employment under this Section 4(f) or (ii) the expiration of the original option term.

(g)For purposes of this Agreement:

(i)“Cause” means the Executive’s (a) conviction of, guilty plea to or confession of guilt of, or plea of nolo contendere to a felony, or an act involving moral turpitude which could have a material adverse effect on the Company; (b) willful dishonesty, fraud or conduct that constitutes a felony or an act involving moral turpitude or a breach of fiduciary duty or any material misrepresentation in connection with the Executive’s employment; (c) action that exposes the Company to a material risk of legal liability or public disgrace or disrepute including, without limitation, violation of any law, rule or regulation that could expose the Company to a material legal or monetary fine or penalty; (d) neglect of his duties or substantial failure to perform duties as reasonably directed by the Board of Directors; (e) gross negligence or willful misconduct with respect to Company affairs or the Executive’s obligations hereunder; or (f) any other

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material breach of this or any other agreement with the Company or any material Company policy, which breach is not cured within at least fifteen (15) calendar days after receipt by the Executive of written notice from the Company of such breach, but only if such breach is able to be cured during such fifteen (15) calendar day period.

(ii)“Good Reason” means:  (a) a material diminution in the Executive’s Base Salary, except where such reduction occurs as part of an across-the-board reduction in salary affecting all senior executives of the Company; or (b) any other action or inaction by the Company that constitutes a material breach of this Agreement.  The foregoing shall constitute Good Reason only if (i) the Executive provides written notice to the Company of any event(s) alleged to constitute Good Reason within ninety (90) calendar days of the initial occurrence of the event, with such notice providing a detailed description of the circumstances constituting Good Reason (a “Good Reason Notice”), (ii) any such breach is not remedied or cured within fifteen (15) calendar days after the Company’s receipt of a written Good Reason Notice from the Executive (the “Cure Period”) and (iii) the Executive actually terminates employment within thirty (30) calendar days following the expiration of the Cure Period.

(iii)“Disability” means that the Executive is disabled within the meaning of the Company’s group long-term disability insurance policy.  If no long term disability insurance is in place, then Disability shall mean that the Executive, due to illness, accident, or other physical or mental incapacity, has been substantially unable to perform his duties under this Agreement for a period of at least six (6) consecutive months during the Term as established by the written opinion of a licensed independent physician selected by the Company.

(h)Deemed Resignation.  Unless otherwise agreed to in writing by the Company and the Executive prior to the termination of the Executive’s employment, any termination of the Executive’s employment shall constitute an automatic resignation of the Executive as an officer of the Company and each affiliate of the Company, and an automatic resignation of the Executive from the board of directors or similar governing body of the Company or any affiliate of the Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any affiliate holds an equity interest and with respect to which board or similar governing body the Executive serves as the Company’s or such affiliate’s designee or other representative.

(i)Clawback.  The Executive agrees and acknowledges that any and all compensation the Executive receives pursuant to this Agreement shall be subject to clawback by the Company in the event of a financial restatement or in such other circumstances as may be required by applicable law or as may be provided in any clawback policy that is adopted by the Company and is generally applicable to senior executives of the Company.

5.Confidentiality and Non-Solicitation.

(a)For purposes of this Agreement, “Confidential Information” means (i) communications, data, formulae and related concepts, business plans (both current and under development), profit and loss statements, spreadsheets, contact or distribution lists, non-public

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personnel lists, promotion and marketing programs, trade secrets, or any other confidential or proprietary business information relating to development programs, costs, revenues, marketing, trading, investments, sales activities, promotions, credit and financial data, financing methods, research, plans or the business and affairs of the Company; (ii) any other information which is to be treated as confidential or non-public because of any duty of confidentiality owed by the Company to a third party; and (iii) any other information which the Company shall, in the ordinary course, use and not release externally, except subject to restrictions on use and disclosure.  Notwithstanding the foregoing, Confidential Information does not include information that (A) is or becomes generally publicly available other than as a result, directly or indirectly, of the Executive’s disclosure or (B) is or becomes available to the Executive on a non-confidential basis from a source other than through the Company or its representatives, provided that such source is not bound by a confidentiality agreement with the Company or otherwise prohibited from transmitting the information to the Executive by a contractual or legal obligation.

(b)The Executive acknowledges the trade secret status of the Confidential Information and that the Confidential Information constitutes a protectable business interest of the Company.  The Executive agrees (i) not to use or allow or help another to use or access (whether for compensation or not) any Confidential Information for himself or others (other than the Company); and (ii) not to take any Company material or reproductions (including but not limited to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof from the Company’s offices at any time during or after the Executive’s employment by the Company, except as required in the execution of the Executive’s duties to the Company and then conditioned upon the prompt return of all originals and reproductions thereof (in whatever form).

(c)During the Term and for a period of one (1) year thereafter, the Executive shall not, directly or indirectly, on behalf of himself or any other person or entity, without the prior written consent of the Company solicit or induce any employee of or consultant or service provider to the Company (each, a “Service Provider”) to leave the employ of or cease performing services for the Company, or engage in any plan or coordinate with any Service Provider to leave the employ of or cease performing services for the Company, or hire, participate with or attempt to participate with in any venture for any purpose any Service Provider or any Service Provider who has left the employment of or ceased to perform services for the Company within one year of the termination of such Service Provider’s services for the Company.

(d)The Executive acknowledges that any breach of his obligations under this Section 5 cannot be adequately compensated by damages in an action at law and may cause the Company great and irreparable injury and damage.  Accordingly, in the event that the Executive breaches or threatens to breach any provisions of this Section 5, then in addition to any other rights which the Company may have, the Company shall be entitled, without the necessity of (i) proving irreparable harm, (ii) establishing that monetary damages are inadequate or (iii) posting any bond or other security with respect thereto, to the remedies of injunction, specific performance and other equitable relief to redress any breach, and no proof of special damages shall be necessary for the enforcement of or for any action for breach of the Executive’s obligations.  In the event that a proceeding is brought in equity to enforce the provisions of this

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Section 5, the Executive shall not urge as a defense that there is an adequate remedy at law nor shall the Company be prevented from seeking any other remedies that may be available.  Nothing contained in this Section 5(d) shall be construed as a waiver by the Company of any other rights, including, without limitation, rights to damages or profits.

(e)The Executive agrees that the period during which the covenants contained in this Section 5 shall be effective shall be computed by excluding from such computation any time during which the Executive is in violation of any provision of this Section 5.

(f)The Company and the Executive agree that it was their intent to enter into a valid and enforceable agreement.  The Executive and the Company thereby acknowledge the reasonableness of the restrictions set forth in this Section 5, including the reasonableness of the duration as to time and the scope of activity restrained.  The Executive agrees that if any covenant contained in Section 5 of this Agreement is found by a court of competent jurisdiction to contain limitations as to time or scope of activity that are not reasonable and impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company, then the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and other business interests of the Company and to enforce the covenants as reformed.

(g)If the Executive’s employment with the Company is terminated for any reason, the Executive agrees to advise the Company of the name of the Executive’s new employer.  The Executive further agrees that the Company may notify any person or entity employing the Executive or evidencing an intention of employing the Executive of the existence and provisions of this Agreement.

6.The Executive’s Representations.  The Executive represents to the Company that:

(a)the execution, delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound;

(b)upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable against him  in accordance with its terms;

(c)as of the Start Date, the Executive will not be a party to any agreement with any person, other than an agreement with the Company, restricting the use of another person’s confidential information or restricting the Executive from providing future employment, consulting or other service;

(d)no prior or pending litigation, arbitration, investigation or other proceeding of any kind will prevent or hinder the Executive from performing his duties under this Agreement; and

(e)the Executive has consulted with independent legal counsel regarding his

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rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

7.Change in Control.

(a)Definitions.

(i)For purposes of this Section 7, “Change in Control” means (I) any merger or consolidation of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than a controlling interest in the surviving entity immediately after such consolidation, merger or reorganization; (II) any transaction or series of related transactions in which control of the Company is acquired by a person or group of persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended or any successor provisions thereto; or (III) a sale or other disposition of all or substantially all of the assets of the Company; provided that in no event will a Change in Control include any of the following transactions:  (A) any consolidation, merger or similar transaction effected exclusively to change the domicile of the Company; (B) any transaction or series of transactions in which voting securities of the Company are issued principally for bona fide financing purposes or any successor or indebtedness or equity securities of the Company are cancelled or converted or a combination thereof, including, without limitation, an initial public offering or other offering of the Company’s capital stock; (C) any acquisition of such voting power by an individual or entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company; or (D) any transaction where control of the Company, the surviving parent entity or the entity to which all or substantially all of the Company’s assets are transferred in the transaction or series of transactions is controlled directly or indirectly by one or more Kaplan Parties.

(ii)“Kaplan Party” means (a) Thomas S. Kaplan or Dafna Recanati Kaplan; (b) any spouse, parent, sibling or descendant (including by adoption) of either of the persons referred to in clause (a) above; (c) any trust created for the benefit of any of the persons described in clauses (a) or (b) above or any trust for the benefit of such trust; or (d) any person controlled by one or more of the persons referred to in clauses (a), (b) or (c) above.

(iii)“Control” (including its correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) means, with respect to any person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the beneficial ownership of voting securities, by contract or otherwise.

(b)Change in Control Severance Benefits.  If there is a Change in Control, and within one (1) year of such Change in Control, the Executive’s employment is terminated under the circumstances described in Sections 4(a) through 4(f) above, the Executive shall be entitled to the following:  (I) if such termination is a termination by the Company without Cause pursuant

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to Section 4(a) or the Executive resigns for Good Reason pursuant to Section 4(b), the Company shall pay the Executive the Accrued Obligations and, in addition, subject to the provisions of Section 19, (A) an amount equal to twenty-four (24) months of the Executive’s Base Salary at the rate in effect on the date of termination or resignation, payable in a lump sum within sixty (60) calendar days of the date of termination or resignation; and (B) provided the Executive timely elects continuation coverage under COBRA, the Company shall also pay, on the Executive’s behalf, the portion of monthly premiums for the Executive’s group health insurance, including coverage for the Executive’s dependents, that the Company paid immediately prior to the date of termination or resignation, during the eighteen (18) month period following the date of termination or resignation, subject to the Executive’s continued eligibility for COBRA coverage.  The Company will pay for such COBRA coverage for eligible dependents only for those dependents who were enrolled immediately prior to the date of termination or resignation.  The Executive will continue to be required to pay that portion of the premium for the Executive’s health coverage, including coverage for the Executive’s eligible dependents, that the Executive was required to pay as an active employee immediately prior to the date of termination or resignation.  Notwithstanding the foregoing, in the event that under applicable guidance the reimbursement of COBRA premiums causes the Company’s group health plan to violate any applicable nondiscrimination rule, the parties agree to negotiate in good faith a mutually agreeable alternative arrangement; and (II) if such termination is a termination or resignation under the circumstances described in Sections 4(c), 4(d), 4(e) or 4(f), the Executive shall be entitled to the compensation and benefits for which the Executive is eligible under such sections.

(c)Termination Preceding Change in Control.  Notwithstanding the provisions of the above subsection 7(b), if the Executive’s employment with the Company is terminated by the Company without Cause within three (3) months preceding the occurrence of a Change in Control and such termination without Cause occurred in anticipation of a Change in Control at the request of the acquirer, the Executive shall be entitled to the payments and benefits described in the above subsection 7(b)(I).

8.Taxes.  The Company shall be entitled to withhold from any payment or benefit provided under this Agreement an amount sufficient to satisfy all federal, state and local income and employment tax withholding requirements.

9.Notices.  Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

to the Executive:

John Kinyon

[***]

[***]

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to the Company:

Sunshine Silver Mining & Refining Corporation

1660 Lincoln Street, Suite 2650

Denver, CO 80264

Attention:  Roger Johnson

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.  Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

10.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any action in any other jurisdiction, but this Agreement shall be reformed construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.Complete Agreement. This Agreement, together with the agreements referred to herein in Section 3(c), contains the entire agreement of the Parties hereto with respect to the terms and conditions of the Executive’s employment with the Company and activities following termination.  This Agreement supersedes any and all prior agreements and understandings, whether written or oral, between the Parties with respect to the terms and conditions of the Executive’s employment with the Company and activities following termination.  This Agreement may not be changed or modified except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company.

12.Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

13.Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, personal representatives, executors and administrators, successors and assigns, except that the Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.

14.Choice of Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York and the federal laws of the United States of America, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York and the federal laws of the United States of America.

15.Dispute Resolution and Arbitration.  Subject to Section 5(d), the Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation.  If the matter has not been resolved within thirty (30) calendar days of a Party’s

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request for negotiation, either Party may initiate proceedings or arbitration only as provided herein.  Subject to Section 5(d), if any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado.  The arbitrator selected must have an expertise in the matter(s) in dispute.  Each party shall bear her/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and the Executive.  The Parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction.  Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages.  The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration.

16.Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

17.Survival.  In the event of the Executive’s termination of, or resignation from, employment, Sections 4, 5, 7, 8, 9, 12, 13, 14 and 15 shall survive and continue in full force to the extent necessary to enforce their terms.

18.Section 409A  Compliance.

(a)This Agreement is intended to provide payments that are exempt from or compliant with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and related regulations and Treasury pronouncements (“Section 409A”), and the Agreement shall be interpreted accordingly.  Each payment under this Agreement is intended to be excepted from Section 409A, including, but not limited to, by compliance with the short-term deferral exception as specified in Treasury Regulation § 1.409A-1(b)(4), and the provisions of this Agreement will be administered, interpreted and construed accordingly (or disregarded to the extent such provision cannot be so administered, interpreted, or construed).

(b)All reimbursements or provision of in-kind benefits pursuant to this Agreement shall be made in accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) such that the reimbursement or provision will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event.  Specifically, the amount reimbursed or in-kind benefits provided under this Agreement during the Executive’s taxable year may not affect the amounts reimbursed or provided in any other taxable year (except that total reimbursements may be limited by a lifetime maximum under a group health plan), the reimbursement of an eligible expense shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement or provision of in-kind benefit is not subject to liquidation or exchange for another benefit.

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(c)For all purposes of this Agreement, the Executive shall be considered to have terminated employment with the Company when the Executive incurs a “separation from service” with the Company within the meaning of Code Section 409A(a)(2)(A)(i).

(d)Notwithstanding any provision of this Agreement to the contrary, the parties agree that any benefit or benefits under this Agreement that the Company determines are subject to the suspension period under Code Section 409A(a)(2)(B) shall not be paid or commence until the first business day next following the earlier of (i) the date that is six months and one day following the date of the Executive’s termination of employment, (ii) the date of the Executive’s death or (iii) such earlier date as complies with the requirements of Section 409A.

19.Release.  Any and all amounts payable and benefits or additional rights provided pursuant to Section 4, other than (i) compensation accrued but unpaid as of the effective date of the Executive’s termination; (ii) accrued but unused vacation in accordance with Company policy; and (iii) all business expenses that were incurred but not reimbursed, shall only be payable if the Executive executes and delivers to the Company, within 60 days after termination of employment, in the Company’s standard form, a general release of all claims of the Executive up to the date of such release.

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

SUNSHINE SILVER MINING & REFINING CORPORATION

By:	/s/ Roger Johnson
Name:	Roger Johnson
Title:	CFO
/s/ John Kinyon
JOHN KINYON — the Executive

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EX-10.15.3

Exhibit 10.15.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 1, 2011, is between SUNSHINE SILVER MINES CORPORATION (the “Company”) and Philip Pyle (the “Executive” and together with the Company, the “Parties”).

WITNESSETH:

WHEREAS:

The Parties wish to enter into the arrangements set forth herein with respect to the terms and conditions of the Executive’s employment with the Company.

NOW, THEREFORE, in consideration of the promises and covenants contained herein, the Parties agree as follows:

AGREEMENT

1.Employment and Term.  The Company agrees to, and does hereby, employ the Executive, and the Executive agrees to, and does hereby accept, such employment, upon the terms and subject to the conditions set forth in this Agreement.  The Executive’s employment will begin on June 1, 2011 (the “Start Date”) and continue at will, which means that the Executive or the Company may terminate the Executive’s employment at any time for any reason, or for no reason, with or without cause (the “Term”).  If the Company terminates this Agreement and the Executive’s employment, the Company shall provide the Executive with notice and reason for the termination within ten (10) calendar days of the effective date of such termination.

2.Position and Duties.

(a)During the Term, the Company shall employ the Executive as Vice President Exploration.  The Executive shall perform the duties and have the responsibilities customarily associated with the position of Vice President Exploration, which shall include, without limitation, overseeing all exploration activities by the Company, working closely with the Company’s Chief Executive Officer and having ultimate responsibility for the strategic design, implementation and management of an effective exploration function.

(b)The Executive will be based in Houston Texas but required to work, as needed, at the various Company exploration projects and in the Company’s corporate office in Denver Colorado.

(c)The Executive shall devote his best efforts and his full business time and attention to the business and affairs of the Company.

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(d)The Executive acknowledges and agrees that (i) the Executive owes the Company a duty of loyalty as a fiduciary of the Company, and (ii) the obligations described in this Agreement are in addition to, and not in lieu of, the obligations the Executive owes the Company under the common law.

3.Base Salary, Bonus, Equity/Options, and Benefits.

(a)Base Salary.  During the Term, the Executive’s base salary shall be $200,000.00 per annum (“Base Salary”), which salary shall be payable in regular installments in accordance with the Company’s general payroll practices.  The Base Salary will be subject to review on an annual basis and may be adjusted in accordance with the procedures set forth by the Company’s Compensation Committee.

(b)Annual Bonus.  During the Term, provided that the Executive is employed by the Company on December 31st of the applicable year, the Executive will be eligible to participate in a bonus plan pursuant to which (i) at the end of 2011, he will be entitled to receive an annual target bonus in the amount of fifty percent (50%) of his Base Salary and up to one-hundred percent (100%) of Base Salary upon achievement by the Executive and the Company of certain targets as determined solely in the discretion of the Company’s Compensation Committee, (the “Annual Bonus”).  The Annual Bonus actually paid, if any, will depend on the actual performance of the Company and the Executive as determined by the Compensation Committee.  In all events the Annual Bonus, if earned, will be paid no later than March 15th following the applicable year for which it is earned.

(c)Options.

(i)Stock Option grants shall vest in three equal annual installments on the first, second and third anniversaries of the applicable grant date (each, a “Vesting Date”), provided in each case that the Executive is employed by the Company on the applicable Vesting Date.  The Stock Options shall have a ten-year term (subject to earlier termination upon termination of employment as described herein and in the applicable option agreement) and shall be subject to the terms and conditions of the Company’s Long-Term Incentive Plan and option agreements, all of which shall be consistent with the Executive’s rights set forth in this Section 3(c).  The Executive may receive additional stock option or other equity compensation grants in the future in the sole discretion of the Company’s Compensation Committee.

(d)Employee Benefits.  During the Term, the Executive shall be entitled to participate in the Company’s various employee benefit plans that are, from time to time, made generally available to the Company’s employees, as such plans are established and pursuant to the terms and conditions of such plans.  The Executive acknowledges that the Company is in the process of implementing employee benefit plans and that such plans, including the following, are expected to be available during May 2011 or shortly thereafter: group health, vision and dental plan; short-term and long-term disability plan; life insurance plan; and 401(k) plan.

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(e)Vacation.  The Executive shall be entitled to four (4) weeks paid vacation time per calendar year, pro-rated for any partial year of employment.  Recognizing that during 2011 the Executive has been working in a similar function as a consultant, the Company will convey the entire four (4) week entitlement in accordance with the Company’s vacation time policy.

(f)Expense Reimbursement.  The Executive shall receive reimbursement for direct and reasonable out-of-pocket expenses incurred by him in connection with the performance of his duties hereunder, according to the policies of the Company.  All requests for reimbursement of business-related expenses shall be subject to the Company’s travel policy and requirements with respect to reporting and documentation of expenses.

4.Compensation Upon Termination, Resignation, Disability or Death.

(a)Termination without Cause.  If the Executive’s employment is terminated by the Company without Cause, the Company shall pay the Executive any Base Salary and Annual Bonus from the preceding calendar year to the extent accrued but unpaid as of the effective date of the Executive’s termination; accrued but unused vacation in accordance with Company policy; and all business expenses that were incurred and not reimbursed but eligible for reimbursement (collectively, the “‘Accrued Obligations”).  In addition, the Executive will be entitled to a prorated amount of the current calendar year Annual Bonus, with payment of such prorated Annual Bonus to be made at the same time as annual bonuses are made to other executives of the Company in the ordinary course (but in no event later than March 15th of the calendar year following the calendar year in which the termination occurs (the “Pro Rata Bonus”).  In addition, subject to Section 19, the Company will pay the Executive an amount equal to twelve (12) months of the Executive’s Base Salary at the rate in effect on the date of termination, payable in a lump sum within sixty (60) calendar days of the date of termination.  Provided the Executive timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall also pay, on the Executive’s behalf, the portion of monthly premiums for the Executive’s group health insurance, including coverage for the Executive’s dependents, that the Company paid immediately prior to the date of termination, during the twelve (12) month period following the date of termination, subject to the Executive’s continued eligibility for COBRA coverage.  The Company will pay for such COBRA coverage for eligible dependents only for those dependents who were enrolled immediately prior to the date of termination.  The Executive will continue to be required to pay that portion of the premium for the Executive’s health coverage, including coverage for the Executive’s eligible dependents, that the Executive was required to pay as an active employee immediately prior to the date of termination.  Notwithstanding the foregoing, in the event that under applicable guidance the reimbursement of COBRA premiums causes the Company’s group health plan to violate any applicable nondiscrimination rule, the parties agree to negotiate in good faith a mutually agreeable alternative arrangement.  Upon termination under this Section 4(a), (i) the Stock Options shall cease vesting and (ii) all vested Stock Options shall remain exercisable until the earlier of (x) the date one hundred

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eighty (180) calendar days following termination of employment or (y) the expiration of the original option term.

(b)Resignation for Good Reason.  If the Executive resigns for Good Reason, the Company shall pay the Executive the same sums and in the same manner, and his rights to the Stock Options shall be the same, as to which the Executive would be entitled if he had been terminated by the Company without Cause, as set forth in subsection (a) above.  The Executive shall provide 30 days’ prior written notice to the Company of his decision to resign for Good Reason.

(c)Termination for Cause.  If the Executive’s employment is terminated by the Company for Cause, the Company shall pay the Executive the Accrued Obligations.  Upon termination under this Section 4(c), any outstanding Stock Options shall cease to be exercisable and will be forfeited.

(d)Resignation without Good Reason.  If the Executive resigns without Good Reason, the Company shall pay the Executive the Accrued Obligations.  The Executive shall provide 60 days’ prior written notice to the Company of his decision to resign without Good Reason.  The Stock Options, to the extent exercisable at the Executive’s termination of employment, shall remain exercisable until the earlier of (i) the date thirty (30) calendar days following termination of employment under this Section 4(d) or (ii) the expiration of the original option term.

(e)Disability.  Subject to any state or federal law or regulation governing employees with disabilities, the Company may terminate the Executive’s employment upon the Disability of the Executive.  In the event the Executive is terminated under this Section 4(e), the Company shall pay the Executive the Accrued Obligations and the Pro Rata Bonus.  In addition, in such event, the Company shall cause Executive to fully vest in all Stock Options referred to in Section 3(c) of this Agreement, and such Stock Options shall remain exercisable until the earlier of (i) the date one (I) year following termination of employment under this Section 4(e) or (ii) the expiration of the original option term.

(f)Death.  If the Executive’s employment is terminated due to the Executive’s death, the Company shall pay the Executive’s estate the Accrued Obligations and the Pro Rata Bonus.  In addition, in such event, the Company shall cause Executive’s estate to fully vest in all Stock Options referred to in Section 3(c) of this Agreement, and such Stock Options shall remain exercisable until the earlier of (i) the date one (I) year following termination of employment under this Section 4(f) or (ii) the expiration of the original option term.

(g)For purposes of this Agreement:

(i)“Cause” means the Executive’s (a) conviction of, guilty plea to or confession of guilt of, or plea of nolo contendere to a felony, or an act involving moral turpitude which could have a material adverse effect on the Company; (b) willful dishonesty, fraud or conduct that constitutes a felony or an act involving moral turpitude or a breach of fiduciary duty or any material misrepresentation in connection with the

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Executive’s employment; (c) action that exposes the Company to a material risk of legal liability or public disgrace or disrepute including, without limitation, violation of any law, rule or regulation that could expose the Company to a material legal or monetary fine or penalty; (d) neglect of his duties or substantial failure to perform duties as reasonably directed by the Board of Directors; (e) gross negligence or willful misconduct with respect to Company affairs or the Executive’s obligations hereunder; or (f) any other material breach of this or any other agreement with the Company or any material Company policy, which breach is not cured within at least fifteen (15) calendar days after receipt by the Executive of written notice from the Company of such breach, but only if such breach is able to be cured during such fifteen (15) calendar day period.

(ii)“Good Reason” means: (a) a material diminution in the Executive’s Base Salary, except where such reduction occurs as part of an across-the-board reduction in salary affecting all senior executives of the Company; or (b) any other action or inaction by the Company that constitutes a material breach of this Agreement.  The foregoing shall constitute Good Reason only if (i) the Executive provides written notice to the Company of any event(s) alleged to constitute Good Reason within ninety (90) calendar days of the initial occurrence of the event, with such notice providing a detailed description of the circumstances constituting Good Reason (a “Good Reason Notice”), (ii) any such breach is not remedied or cured within fifteen (15) calendar days after the Company’s receipt of a written Good Reason Notice from the Executive (the “Cure Period”) and (iii) the Executive actually terminates employment within thirty (30) calendar days following the expiration of the Cure Period.

(iii)“Disability” shall mean that the Executive is disabled within the meaning of the Company’s group long-term disability insurance policy.  If no long term disability insurance is in place, then Disability shall mean that the Executive, due to illness, accident, or other physical or mental incapacity, has been substantially unable to perform his duties under this Agreement for a period of at least six (6) consecutive months during the Term as established by the written opinion of a licensed independent physician selected by the Company.

(h)Deemed Resignation.  Unless otherwise agreed to in writing by the Company and the Executive prior to the termination of the Executive’s employment, any termination of the Executive’s employment shall constitute an automatic resignation of the Executive as an officer of the Company and each affiliate of the Company, and an automatic resignation of the Executive from the board of directors or similar governing body of the Company or any affiliate of the Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any affiliate holds an equity interest and with respect to which board or similar governing body the Executive serves as the Company’s or such affiliate’s designee or other representative.

(i)Clawback.  The Executive agrees and acknowledges that any and all compensation the Executive receives pursuant to this Agreement shall be subject to clawback by the Company in the event of a financial restatement or in such other circumstances as may be required by applicable law or as may be provided in any

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clawback policy that is adopted by the Company and is generally applicable to senior executives of the Company.

5.Confidentiality and Non-Solicitation.

(a)For purposes of this Agreement, “Confidential Information” means (i) communications, data, formulae and related concepts, business plans (both current and under development), profit and loss statements, spreadsheets, contact or distribution lists, non-public personnel lists, promotion and marketing programs, trade secrets, or any other confidential or proprietary business information relating to development programs, costs, revenues, marketing, trading, investments, sales activities, promotions, credit and financial data, financing methods, research, plans or the business and affairs of the Company; (ii) any other information which is to be treated as confidential or non-public because of any duty of confidentiality owed by the Company to a third party; and (iii) any other information which the Company shall, in the ordinary course, use and not release externally, except subject to restrictions on use and disclosure.  Notwithstanding the foregoing, Confidential Information does not include information that (A) is or becomes generally publicly available other than as a result, directly or indirectly, of the Executive’s disclosure or (B) is or becomes available to the Executive on a non-confidential basis from a source other than through the Company or its representatives, provided that such source is not bound by a confidentiality agreement with the Company or otherwise prohibited from transmitting the information to the Executive by a contractual or legal obligation.

(b)The Executive acknowledges the trade secret status of the Confidential Information and that the Confidential Information constitutes a protectable business interest of the Company.  The Executive agrees (i) not to use or allow or help another to use or access (whether for compensation or not) any Confidential Information for himself or others (other than the Company); and (ii) not to take any Company material or reproductions (including but not limited to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof from the Company’s offices at any time during or after the Executive’s employment by the Company, except as required in the execution of the Executive’s duties to the Company and then conditioned upon the prompt return of all originals and reproductions thereof (in whatever form).

(c)During the Term and for a period of one (1) year thereafter, the Executive shall not, directly or indirectly, on behalf of himself or any other person or entity, without the prior written consent of the Company solicit or induce any employee of or consultant or service provider to the Company (each, a “Service Provider”) to leave the employ of or cease performing services for the Company, or engage in any plan or coordinate with any Service Provider to leave the employ of or cease performing services for the Company, or hire, participate with or attempt to participate with in any venture for any purpose any Service Provider or any Service Provider who has left the employment of or ceased to perform services for the Company within one year of the termination of such Service Provider’s services for the Company.

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(d)The Executive acknowledges that any breach of his obligations under this Section 5 cannot be adequately compensated by damages in an action at law and may cause the Company great and irreparable injury and damage.  Accordingly, in the event that the Executive breaches or threatens to breach any provisions of this Section 5, then in addition to any other rights which the Company may have, the Company shall be entitled, without the necessity of (i) proving irreparable harm, (ii) establishing that monetary damages are inadequate or (iii) posting any bond or other security with respect thereto, to the remedies of injunction, specific performance and other equitable relief to redress any breach, and no proof of special damages shall be necessary for the enforcement of or for any action for breach of the Executive’s obligations.  In the event that a proceeding is brought in equity to enforce the provisions of this Section 5, the Executive shall not urge as a defense that there is an adequate remedy at law nor shall the Company be prevented from seeking any other remedies which may be available.  Nothing contained in this Section 5(d) shall be construed as a waiver by the Company of any other rights, including, without limitation, rights to damages or profits.

(e)The Executive agrees that the period during which the covenants contained in this Section 5 shall be effective shall be computed by excluding from such computation any time during which the Executive is in violation of any provision of this Section 5.

(f)The Company and the Executive agree that it was their intent to enter into a valid and enforceable agreement.  The Executive and the Company thereby acknowledge the reasonableness of the restrictions set forth in this Section 5, including the reasonableness of the duration as to time and the scope of activity restrained.  The Executive agrees that if any covenant contained in Section 5 of this Agreement is found by a court of competent jurisdiction to contain limitations as to time or scope of activity that are not reasonable and impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company, then the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and other business interests of the Company and to enforce the covenants as reformed.

(g)If the Executive’s employment with the Company is terminated for any reason, the Executive agrees to advise the Company of the name of the Executive’s new employer.  The Executive further agrees that the Company may notify any person or entity employing the Executive or evidencing an intention of employing the Executive of the existence and provisions of this Agreement.

6.The Executive’s Representations.  The Executive represents to the Company that:

(a)the execution, delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound;

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(b)upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable against him in accordance with its terms;

(c)as of the Start Date, the Executive will not be a party to any agreement with any person, other than an agreement with the Company, restricting the use of another person’s confidential information or restricting the Executive from providing future employment, consulting or other service;

(d)no prior or pending litigation, arbitration, investigation or other proceeding of any kind will prevent or hinder the Executive from performing his duties under this Agreement; and

(e)the Executive has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

7.Change in Control.

(a)Definitions.

(i)For purposes of this Section 7, “Change in Control” means (I) any merger or consolidation of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than a controlling interest in the surviving entity immediately after such consolidation, merger or reorganization; (II) any transaction or series of related transactions in which control of the Company is acquired by a person or group of persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended or any successor provisions thereto; or (III) a sale or other disposition of all or substantially all of the assets of the Company; provided that in no event will a Change in Control include any of the following transactions: (A) any consolidation, merger or similar transaction effected exclusively to change the domicile of the Company; (B) any transaction or series of transactions in which voting securities of the Company are issued principally for bona fide financing purposes or any successor or indebtedness or equity securities of the Company are cancelled or converted or a combination thereof, including, without limitation, an initial public offering or other offering of the Company’s capital stock; (C) any acquisition of such voting power by an individual or entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company; or (D) any transaction where control of the Company, the surviving parent entity or the entity to which all or substantially all of the Company’s assets are transferred in the transaction or series of transactions is controlled directly or indirectly by one or more Kaplan Parties.

(ii)“Kaplan Party” means (a) Thomas S. Kaplan or Dafna Recanati Kaplan; (b) any spouse, parent, sibling or descendant (including by adoption) of either of the persons referred to in clause (a) above; (c) any trust created for the benefit of any of

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the persons described in clauses (a) or (b) above or any trust for the benefit of such trust; or (d) any person controlled by one or more of the persons referred to in clauses (a), (b) or (c)above.

(iii)“Control” (including its correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) means, with respect to any person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the beneficial ownership of voting securities, by contract or otherwise.

(b)Change in Control Severance Benefits.  If there is a Change in Control, and within one (1) year of such Change in Control, the Executive’s employment is terminated under the circumstances described in Sections 4(a) through 4(f) above, the Executive shall be entitled to the following: (I) if such termination is a termination by the Company without Cause pursuant to Section 4(a) or the Executive resigns for Good Reason pursuant to Section 4(b), the Company shall pay the Executive the Accrued Obligations and the Pro Rata Bonus and, in addition, subject to the provisions of Section 19, (A) an amount equal to twenty-four (24) months of the Executive’s Base Salary at the rate in effect on the date of termination or resignation, payable in a lump sum within sixty (60) calendar days of the date of termination or resignation; and (B) provided the Executive timely elects continuation coverage under COBRA, the Company shall also pay, on the Executive’s behalf, the portion of monthly premiums for the Executive’s group health insurance, including coverage for the Executive’s dependents, that the Company paid immediately prior to the date of termination or resignation, during the eighteen (18) month period following the date of termination or resignation, subject to the Executive’s continued eligibility for COBRA coverage.  The Company will pay for such COBRA coverage for eligible dependents only for those dependents who were enrolled immediately prior to the date of termination or resignation.  The Executive will continue to be required to pay that portion of the premium for the Executive’s health coverage, including coverage for the Executive’s eligible dependents, that the Executive was required to pay as an active employee immediately prior to the date of termination or resignation.  Notwithstanding the foregoing, in the event that under applicable guidance the reimbursement of COBRA premiums causes the Company’s group health plan to violate any applicable nondiscrimination rule, the parties agree to negotiate in good faith a mutually agreeable alternative arrangement; and (]I) if such termination is a termination or resignation under the circumstances described in Sections 4(c), 4(d), 4(e) or 4(f), the Executive shall be entitled to the compensation and benefits for which the Executive is eligible under such sections.

(c)Termination Preceding Change in Control.  Notwithstanding the provisions of the above subsection 7(b), if the Executive’s employment with the Company is terminated by the Company without Cause within three (3) months preceding the occurrence of a Change in Control and such termination without Cause occurred in anticipation of a Change in Control at the request of the acquirer, the Executive shall be entitled to the payments and benefits described in the above subsection 7(b)(I).

9

8.Taxes.  Tue Company shall be entitled to withhold from any payment or benefit provided under this Agreement an amount sufficient to satisfy all federal, state and local income and employment tax withholding requirements.

9.Notices.  Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to the Executive:

Philip Pyle
[***]
[***]

Notices to the Company:

Sunshine Silver Mines Corporation
370 17th Street, Suite 3800
Denver, CO 80202
USA
Attention: Roger Johnson

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.  Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

10.Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any action in any other jurisdiction, but this Agreement shall be reformed construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.Complete Agreement.  This Agreement, together with the agreements referred to herein in Section 3(c), contains the entire agreement of the Parties hereto with respect to the terms and conditions of the Executive’s employment with the Company and activities following termination.  This Agreement supersedes any and all prior agreements and understandings, whether written or oral, between the Parties with respect to the terms and conditions of the Executive’s employment with the Company and activities following termination.  This Agreement may not be changed or modified except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company.

12.Counterparts.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

10

13.Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, personal representatives, executors and administrators, successors and assigns, except that the Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.

14.Choice of Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New Yok and the federal laws of the United States of America, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York and the federal laws of the United States of America.

15.Dispute Resolution and Arbitration.  Subject to Section 5(d), the Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation.  If the matter has not been resolved within thirty (30) calendar days of a Party’s request for negotiation, either Party may initiate proceedings or arbitration only as provided herein.  Subject to Section 5(d), if any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado.  The arbitrator selected must have an expertise in the matter(s) in dispute.  Each party shall bear his/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and the Executive.  The Parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction.  Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages.  The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration.

16.Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

17.Survival.  In the event of the Executive’s termination of, or resignation from, employment, Sections 4, 5, 8, 9, 10, 13, 14, 15 and 16 shall survive and continue in full force to the extent necessary to enforce their terms.

18.Jobs Act Compliance.

(a)This Agreement is intended to provide payments that are exempt from or compliant with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and related regulations and Treasury pronouncements (“Section 409A”), and the Agreement shall be interpreted accordingly.  Each payment under this

11

Agreement is intended to be excepted from Section 409A, including, but not limited to, by compliance with the short-term deferral exception as specified in Treasury Regulation § l.409A-l(b)(4), and the provisions of this Agreement will be administered, interpreted and construed accordingly (or disregarded to the extent such provision cannot be so administered, interpreted, or construed).

(b)All reimbursements or provision of in-kind benefits pursuant to this Agreement shall be made in accordance with Treasury Regulation§ l.409A-3(i)(I)(iv) such that the reimbursement or provision will be deemed payable at a specified time or on a fixed schedule relative to a _permissible payment event.  Specifically, the amount reimbursed or in-kind benefits provided under this Agreement during the Executive’s taxable year may not affect the amounts reimbursed or provided in any other taxable year (except that total reimbursements may be limited by a lifetime maximum under a group health plan), the reimbursement of an eligible expense shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement or provision of in-kind benefit is not subject to liquidation or exchange for another benefit.

(c)For all purposes of this Agreement, the Executive shall be considered to have terminated employment with the Company when the Executive incurs a “separation from service” with the Company within the meaning of Code Section 409A(a)(2XA)(i).

(d)Notwithstanding any provision of this Agreement to the contrary, the parties agree that any benefit or benefits under this Agreement that the Company determines are subject to the suspension period under Code Section 409A(a)(2)(B) shall not be paid or commence until the first business day next following the earlier of (i) the date that is six months and one day following the date of the Executive’s termination of employment, (ii) the date of the Executive’s death or (iii) such earlier date as complies with the requirements of Section 409A.

19.Release.  Any and all amounts payable and benefits or additional rights provided pursuant to Sections 4 and 7, other than (i) compensation accrued but unpaid as of the effective date of the Executive’s termination; (ii) accrued but unused vacation in accordance with Company policy; and (iii) all business expenses that were incurred but not reimbursed, shall only be payable if the Executive executes and delivers to the Company, within 60 days after termination of employment, in the Company’s standard form, a general release of all claims of the Executive up to the date of such release.

12

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

SUNSHINE SILVER MINES CORPORATION
By:	/s/ Stephen A. Orr
	Name:	Stephen A. Orr
	Title:	Executive Chairman

/s/ Philip Pyle

Philip Pyle — the Executive

13

EX-21.1

Exhibit 21.1

List of Subsidiaries

Subsidiary	Jurisdiction of Incorporation
Minera Luz del Sol, S. de R.L. de C.V.	Mexico

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Sunshine Silver Mining & Refining Corporation:

We consent to the use of our report dated June 26, 2020, with respect to the consolidated balance sheets of Sunshine Silver Mining & Refining Corporation as of December 31, 2019 and 2018, the related consolidated statements of loss and comprehensive loss, shareholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, included herein and to the reference to our firm under the heading “Experts” in the prospectus.

/s/ KPMG LLP

Denver, Colorado
October 1, 2020

EX-23.2

Exhibit 23.2

Consent of Independent Auditors

The Board of Directors
Sunshine Silver Mining & Refining Corporation:

We consent to the use of our report dated June 26, 2020, with respect to the combined balance sheets of Los Gatos Joint Venture as of December 31, 2019 and 2018, the related combined statements of loss, owners’ capital, and cash flows for the periods then ended, and the related notes, included herein and to the reference to our firm under the heading “Experts” in the prospectus.

/s/ KPMG LLP

Denver, Colorado
October 1, 2020

EX-23.4

Exhibit 23.4

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

Tetra Tech, Inc. (“Tetra Tech”), in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consents to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to our name, including our status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by us, that we supervised the preparation of and/or that was reviewed and approved by us, that is included or incorporated by reference in the Registration Statement.

Tetra Tech is responsible for authoring, and this consent pertains to, the Technical Report. Tetra Tech certifies that it has read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which it is responsible.

Dated: October 1, 2020

Tetra Tech, Inc.
By:	/s/ Guillermo Dante Ramírez-Rodríguez
	Name: Guillermo Dante Ramírez-Rodríguez
	Title: Principal Mining Engineer

EX-23.5

Exhibit 23.5

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Guillermo Dante Ramírez-Rodríguez of Tetra Tech, Inc., in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, the Sections 16, 19, and 22 of the Technical Report as well as portions of Sections 1, 2, 15, 21, 25, 26, and 27 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Guillermo Dante Ramírez-Rodríguez
	Name:	Guillermo Dante Ramírez-Rodríguez
	Title:	Principal Mining Engineer

EX-23.6

Exhibit 23.6

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Leonel López of Tetra Tech, Inc., in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, the Sections 20 and 23 of the Technical Report as well as portions of Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 25, 26, and 27 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Leonel López
	Name:	Leonel López
	Title:	Associate Principal Geologist

EX-23.7

Exhibit 23.7

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:          Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Kira Lyn Johnson of Tetra Tech, Inc., in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, the Section 14 of the Technical Report as well as portions of Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 25, 26 and 27 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Kira Lyn Johnson
	Name:  Kira Lyn Johnson
	Title:    Senior Geological Engineer

EX-23.8

Exhibit 23.8

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:          Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Keith Thompson of Tetra Tech, Inc., in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, portions of Sections 1, 24, 25, 26 and 27 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Keith Thompson
	Name:   Keith Thompson
	Title:     Professional Geologist

EX-23.9

Exhibit 23.9

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:          Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Kenneth E. Smith of Tetra Tech, Inc., in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, the Sections 13, 17 and 18 of the Technical Report as well as portions of Sections 1, 11, 21, 25, 26 and 27 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Kenneth E. Smith
	Name:   Kenneth E. Smith
	Title:     Mineral Processing Engineer and Consultant

EX-23.10

Exhibit 23.10

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:          Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Luis Quirindongo of Global Resource Engineering, in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 (the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, portions of Sections 1, 24, 25, 26 and 27 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Luis Quirindongo
	Name:   Luis Quirindongo
	Title:     Geological Engineer

EX-23.11

Exhibit 23.11

CONSENT OF QUALIFIED PERSON

To:U.S. Securities and Exchange Commission

Ontario Securities Commission, as Principal Regulator

British Columbia Securities Commission

Alberta Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

The Manitoba Securities Commission

Nova Scotia Securities Commission

Financial and Consumer Services Commission, New Brunswick

Office of the Superintendent of Securities, Prince Edward Island

Office of the Superintendent of Securities Service Newfoundland and Labrador

Re:          Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation (the “Company”) and Preliminary Base PREP Prospectus of the Company

I, Max Johnson of Tetra Tech, Inc., in connection with the Company’s Registration Statement on Form S-1 (and any amendments or supplements and/or exhibits thereto, the “Registration Statement”) and the Company’s preliminary base PREP prospectus dated October 1, 2020 ( the “Preliminary Prospectus”), consent to:

·the public filing by the Company and use of the technical report titled “Los Gatos Project, Chihuahua, Mexico” (the “Technical Report”), with an effective date of July 1, 2020 and that was prepared in accordance with Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission and National Instrument 43-101 — Standards of Disclosure for Mineral Project, as an exhibit to and referenced in the Registration Statement and as referenced in the Preliminary Prospectus;

·the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission), in connection with the Registration Statement and any such Technical Report; and

·any extracts from or a summary of the Technical Report in the Preliminary Prospectus and the use of any information derived, summarized, quoted or referenced from the Technical Report, or portions thereof, that was prepared by me, that I supervised the preparation of and/or that was reviewed and approved by me, that is included or incorporated by reference in the Registration Statement.

I am responsible for authoring, and this consent pertains to, portions of Sections 1, 24 and 26 of the Technical Report. I certify that I have read the Registration Statement and the Preliminary Prospectus and that both fairly and accurately represent the information in the sections of the Technical Report for which I am responsible.

Dated: October 1, 2020

By:	/s/ Max Johnson
	Name:   Max Johnson
	Title:     Senior Civil Engineer

EX-96.1

Exhibit 96.1

MINERA PLATA REAL, S. DE R.L. DE CV

JOINT VENTURE OF SUNSHINE SILVER MINING & REFINING CORPORATION (51.5%) AND
DOWA METALS & MINING CO., LTD. (48.5%)

VALLE ESCONDIDO NO. 5500
COMPLEJO INDUSTRIAL EL SAUCITO

PUNTO ALTO E-2, SUITE 404 CP, 31125

CHIHUAHUA, MEXICO

Los Gatos Project

Chihuahua, Mexico

Project No.:  117-8302008

Effective Date:	July 1, 2020
Issue Date:	July 2020

Prepared by:	Guillermo Dante Ramírez-Rodríguez, PhD, MMSAQP
	Leonel Lopez, SME-QP
	Kira Johnson, MMSAQP
	Keith Thompson, C.P.G.
	Kenneth Smith, SME-QP
	Luis Quirindongo, SME-QP
	Max Johnson, P.E.

350 Indiana Street, Suite 500 | Golden, CO 80401

303.217.5700 | tetratech.com

TABLE OF CONTENTS

1.0 SUMMARY	1
1.1 Introduction	1
1.1.1 Property Description, Location and Infrastructure	1
1.2 History	2
1.3 Geology and Mineralization	3
1.4 Drilling	3
1.5 Mineral Resource Estimates	4
1.6 Mineable Reserve Estimate	6
1.7 Metallurgical Testing	7
1.8 Mining Methods	8
1.9 Recovery Methods	8
1.10 Infrastructure	11
1.11 Marketing Studies and Contracts	11
1.12 Environmental Studies, Permitting, and Social or Community Impact	12
1.13 Capital and Operating Costs	14
1.13.1 LOM Capital Costs	14
1.13.2 LOM Operating Costs	14
1.14 Economic Analysis	15
1.15 Conclusions and Recommendations	16
1.15.1 Geology and Resources	16
1.15.2 Mineral Reserves	17
1.15.3 Mine Planning	17
1.15.4 Mineral Processing and Metallurgy	18
1.15.5 Economics	18
2.0 INTRODUCTION	19
2.1 Terms of Reference	19
2.2 Scope of Work	19
2.3 Units of Measure	19
2.4 Detailed Personal Inspections	19
3.0 RELIANCE ON OTHER EXPERTS	20
4.0 PROPERTY DESCRIPTION AND LOCATION	21
4.1 Location	22
4.1.1 Mining Concession	22
4.1.2 Los Gatos and Paula Adorada Concessions	24
4.1.3 Internal Concessions not held by MPR	25
4.2 Surface Rights	26
4.3 Environmental Permitting	27
4.4 Environmental Liabilities	28

TETRA TECH July 2020

i

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY	29
5.1 Accessibility	29
5.2 Climate, Vegetation, Soils, and Land Use	29
5.3 Personnel	30
5.4 Infrastructure	30
5.5 Population Centers	30
6.0 HISTORY	31
6.1 Historic Resource Estimates	31
7.0 GEOLOGICAL SETTING AND MINERALIZATION	32
7.1 Regional Geological Setting	32
7.2 Property Geological Setting	35
7.3 Mineralized Zones	38
8.0 DEPOSIT TYPES	42
9.0 EXPLORATION	45
9.1 Historic Exploration	45
9.2 Recent Exploration	45
9.3 Decline and Bulk Sample	47
10.0 DRILLING	51
11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY	54
11.1 Sample Preparation	54
11.2 Security	55
11.3 Analyses	55
11.4 Quality Assurance and Quality Control for Sample Analysis	57
11.4.1 Quality Control Sample Performance	57
12.0 DATA VERIFICATION	58
12.1 Check Sampling	58
12.2 Database Verification	60
12.3 Metallurgical Sampling	60
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING	62
13.1 Samples	62
13.2 Mineralogy	63
13.3 Comminution	65
13.4 Flotation Testing	65
13.4.1 Effect of Primary Grind Size on Flotation	66
13.4.2 Effect of Depressant Addition on Lead and Silver Flotation	70
13.4.3 Effect of Longer Flotation and Higher Collector Addition on Pb/Ag Flotation	73
13.4.4 Effect of CuSO4 Dosage on Zinc Flotation and Pyrite Flotation	74
13.4.5 Effect of Na2SiO3 on Zinc Flotation	75
13.4.6 Effect of pH on Zinc Flotation	76
13.4.7 Zinc Oxide Mineral Flotation	77

ii

13.4.8 Locked Cycle Flotation Testing	78
13.4.9 Product Characterization	81
13.5 Variability Composite Flotation	83
13.5.1 Silver Flotation	84
13.5.2 Lead Flotation	84
13.5.3 Zinc Flotation	85
13.6 Cyanide Destruction	85
13.7 Fluorine Control	85
14.0 MINERAL RESOURCE ESTIMATES	89
14.1 Cerro Los Gatos Deposit	89
14.1.1 Input Data	92
14.1.2 Grade Capping	92
14.1.3 Compositing	95
14.1.4 Geologic Modeling	95
14.1.5 Vein Modeling	96
14.1.6 Estimation Methods and Parameters	103
14.1.7 Mineral Resource Classification	110
14.1.8 Dilution	111
14.1.9 Cutoff Grade and Reasonable Prospects for Economic Extraction	111
14.1.10 Statement of Mineral Resources	112
14.1.11 Model Verification	114
14.1.12 Relevant Factors	121
14.2 Amapola Zone	122
14.2.1 Amapola Drill Hole Database	122
14.2.2 Amapola Geologic Modeling	122
14.2.3 Amapola Assays and Composting	125
14.2.4 Amapola Variography and Search Orientation	126
14.2.5 Amapola Resources Estimation and Categorization	127
14.2.6 Amapola Specific Gravity	128
14.2.7 Cutoff Grade and Reasonable Prospects for Economic Extraction	129
14.2.8 Amapola Deposit Resource Estimate	130
14.3 Esther Zone	132
14.3.1 Esther Drill Hole Database	132
14.3.2 Esther Geologic Modeling	132
14.3.3 Esther Assays and Composting	135
14.3.4 Esther Variography and Search Orientation	136
14.3.5 Esther Resources Estimation and Categorization	136
14.3.6 Esther Specific Gravity	137
14.3.7 Cutoff Grade and Reasonable Prospects for Economic Extraction	138
14.3.8 Esther Deposit Resource Estimate	139
14.4 Relevant Factors	141
14.5 Conclusions and Recommendations	141
14.5.1 Geology and Resources	141
14.6 Recommendations	143
14.6.1 Standards	143
14.6.2 Blanks	144
14.6.3 Duplicates	145
14.6.4 Umpire Sampling	145

iii

15.0 MINERAL RESERVE ESTIMATES	146
15.1 Net Smelter Return	146
15.2 Ore Body Description	148
15.3 Mining Method	151
15.4 Dilution and Recovery Estimates	152
15.4.1 Dilution	152
15.4.2 Mining Recovery	154
15.4.3 Drift-and-Fill Recovery	155
15.5 Mineral Reserves	156
15.6 Conclusions and Recommendations	159
15.6.1 Conclusions	159
15.6.2 Recommendations	159
16.0 MINING METHODS	160
16.1 Geotechnical	160
16.1.1 Geomechanical Investigation	160
16.1.2 Analysis and Design	164
16.1.3 Stope Design Criteria	166
16.1.4 Development	168
16.2 Mine Access Design	172
16.2.1 Mine Access	172
16.2.2 Access Ramps	172
16.2.3 Mining Sublevels	173
16.2.4 Ventilation Raises	175
16.2.5 Secondary Egress	175
16.3 Mining Methods and Sequence	175
16.3.1 Drift-and-Fill Mining	175
16.3.2 Transverse Longhole Stoping	178
16.3.3 Longitudinal Longhole Stoping	183
16.3.4 Backfilling	184
16.3.5 Transverse Longhole Stopes	184
16.3.6 Longitudinal Stopes	185
16.3.7 Drift-and-Fill Stopes	185
16.3.8 Production Rate	185
16.3.9 Stope Design Parameters	186
16.4 Development and Production Schedules	187
16.4.1 Development Productivity Rates	187
16.4.2 Development Schedule	187
16.4.3 Production Planning Criteria	189
16.4.4 Production Schedule	189
16.5 Mine Equipment	191
16.5.1 Underground Mobile Equipment	191
16.5.2 Surface Mobile Equipment	194
16.5.3 Fixed Equipment	195
16.6 Ventilation	198
16.6.1 Ventilation Method and Design Criteria	199
16.6.2 Airflow Requirements	200
16.6.3 Mine Air Cooling	202

iv

16.7 Backfill	205
16.7.1 Distribution	206
16.8 Conclusions and Recommendations	206
16.8.1 Conclusions	206
16.8.2 Recommendations	207
17.0 RECOVERY METHODS	208
17.1 Primary Crushing	210
17.2 Crushed Ore Conveying, Transport and Storage	210
17.3 Grinding	210
17.4 Lead Flotation and Regrind	211
17.5 Zinc Flotation and Regrind	212
17.6 Lead Concentrate Dewatering	212
17.7 Zinc Concentrate Dewatering	213
17.8 Tailing Dewatering	213
17.9 Cyanide Destruction (SO2/Air Process)	213
17.10 Reagent	213
17.11 Water System	213
17.11.1 Fresh Water	213
17.11.2 Process Water	214
18.0 PROJECT INFRASTRUCTURE	215
18.1 Existing Infrastructure and Services	215
18.1.1 Location	215
18.1.2 Site Access Roads	215
18.1.3 Buildings	215
18.1.4 Communications	216
18.1.5 Personnel	217
18.1.6 Power Supply	217
18.1.7 Power Distribution	217
18.2 Site Development	219
18.2.1 Mine Surface Facilities	219
18.3 Water Source	220
18.3.1 Potable Water Supply	220
18.3.2 Raw Water Distribution System	220
18.3.3 Process Water Supply	221
18.3.4 Sewage Waste Water Treatment	221
18.4 Waste Disposal	221
18.5 Underground Infrastructure	221
18.5.1 Mine Dewatering	221
18.5.2 Materials Handling	224
18.5.3 Electrical Power and Distribution	224
18.5.4 Compressed Air	225
18.5.5 Service Water	225
18.5.6 Service Bay	227
18.5.7 Fuels and Lubricants	229
18.5.8 Communications	229

v

18.5.9 Refuge Stations	230
18.5.10 Sanitary Facilities	230
19.0 MARKET STUDIES AND CONTRACTS	231
20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT	234
20.1 Introduction	234
20.2 Regulations	234
20.3 Baseline Studies	235
20.4 Environmental Setting	237
20.4.1 Climate and Precipitation	237
20.4.2 Air Quality and Atmosphere	238
20.4.3 Geology	238
20.4.4 Soils	238
20.4.5 Regional and Site Hydrology	238
20.4.6 Flora	240
20.4.7 Fauna	240
20.4.8 Socioeconomic	240
20.5 Identification, Description, and Assessment of Environmental Impacts	241
20.6 Preventive and Mitigation Measures for the Environmental Impacts	243
20.7 Environmental Forecast	244
20.7.1 Atmosphere	244
20.7.2 Soil	244
20.7.3 Water	244
20.7.4 Geology and Geomorphology	244
20.7.5 Flora	244
20.7.6 Fauna	244
20.7.7 Ecosystem	244
20.7.8 Socioeconomic	245
20.8 Closure Plan	245
20.8.1 Tailings Storage Facility	247
20.8.2 Temporary Rock Storage	248
20.8.3 Underground Mine and Openings	248
20.8.4 Process and Ancillary Facilities	248
20.8.5 Borrow Areas and Exploration Camp	248
20.8.6 Seepage, Stormwater, Sedimentation and Cooling Basins	248
20.8.7 Road and Conveyor Corridors	248
20.8.8 Utility and Pipeline Corridor	249
20.8.9 Well Abandonment	249
21.0 CAPITAL AND OPERATING COSTS	250
21.1 Principal Assumptions	250
21.2 Life of Mine	252
21.2.1 Underground Mining	252
21.2.2 Processing	253
21.3 Capital Costs	253
21.4 Operating Costs	254
21.5 Taxes and Royalties	255
21.5.1 Royalties	255

vi

21.5.2 Taxes	255
22.0 ECONOMIC ANALYSIS	256
22.1 Net Smelting Return	256
22.2 Economic Results	257
22.3 Sensitivity	258
23.0 ADJACENT PROPERTIES	261
24.0 OTHER RELEVANT DATA AND INFORMATION	262
24.1 Hydrogeology and Mine Dewatering	262
24.1.1 Hydrogeology	262
24.1.2 Groundwater Modeling	266
24.1.3 Production Dewatering	279
24.1.4 Conclusions and Recommendations	281
24.2 Geochemistry	282
24.2.1 Waste Rock Characterization	282
24.2.2 Tailings Characterization	282
24.3 Surface Water Hydrology	283
24.3.1 Methodology	284
24.4 Site-Wide Water Balance	298
24.4.1 Introduction and Discussion	298
24.4.2 Model Components	299
24.4.3 Results	302
24.5 Tailings Management	304
24.5.1 Topography	307
24.5.2 Site Seismicity	307
24.5.3 Surface Water Hydrology	308
24.5.4 Site Investigation & Site Conditions	309
24.5.5 Borrow Material	309
24.5.6 Tailings Dam Design	309
24.5.7 Staged Construction	310
24.5.8 Liner Design	310
24.5.9 Tailings Delivery System	311
24.5.10 TSF Water Collection System	311
24.5.11 Underdrain System	311
24.5.12 Blanket Drain System	311
24.6 Surface Water Management	311
24.6.1 Monitoring	312
25.0 INTERPRETATION AND CONCLUSIONS	316
25.1 Geology and Resources	316
25.1.1 Data Verification	316
25.2 Mineral Reserve and Mine Plan	317
25.2.1 Mineral Reserve	317
25.2.2 Geotechnical Conclusion	317
25.2.3 Mine Plan	317
25.3 Mineral Processing and Metallurgy	317
25.4 Infrastructure	318

vii

25.5 Environmental and Social Impacts	318
25.6 Mine Reclamation	320
25.7 Economic Analysis	320
25.8 Groundwater Hydrology/Dewatering	320
25.9 Surface Hydrology	321
25.10 Tailings Management	321
26.0 RECOMMENDATIONS	322
26.1 Engineering, Procurement, and Construction Management	322
26.2 Geology and Resources	322
26.2.1 Standards	322
26.2.2 Blanks	323
26.2.3 Duplicates	324
26.2.4 Umpire Sampling	324
26.3 Mineral Reserve and Mine Planning	324
26.3.1 Mineral Reserve Estimate	324
26.3.2 Mining	325
26.3.3 Mine Planning	325
26.4 Metallurgy and Recovery Methods	325
26.5 Environmental, Permitting, and Reclamation	326
26.6 Geochemistry	326
26.7 Tailings Management	326
26.8 Surface Water Hydrology	327
26.9 Groundwater Hydrology/Dewatering	327
26.10 Water Balance	327
26.11 Reclamation and Closure	328
26.12 Additional Work	329
27.0 REFERENCES	330
28.0 DATE AND SIGNATURE PAGE	335

viii

LIST OF TABLES

Table 1-1: Drill Hole Count by Purpose	4
Table 1-2: Mineral Resource Estimate	4
Table 1-3: Estimated Mineral Resources Indicated and Inferred for Amapola and Esther	6
Table 1-4: Mineral Reserve	7
Table 1-5: Payable Metal Price Forecasts for Los Gatos	12
Table 1-6: LOM Capital Costs	14
Table 1-7: LOM Operating Costs	14
Table 1-8: TEM Results	15
Table 4-1: Los Gatos Project Titled Mining Concessions	22
Table 4-2: Internal Concessions	25
Table 9-1: Mineralized Grade Intercepts	47
Table 9-2: Bulk Sample and Block Model Comparison	49
Table 10-1: Drill Hole Count by Purpose	51
Table 12-1: Collar Verification by Handheld GPS	60
Table 13-1: Weights of Master Composite and Variability Composites	62
Table 13-2: Head Assays of Flotation Composites	63
Table 13-3: Comminution Test Results Summary	65
Table 13-4: Summary Conditions of LCTs	78
Table 13-5: Summary Results of Locked Cycle Test	79
Table 13-6: ICPSCAN and WRA Analysis	81
Table 13-7: Summary Conditions of CND Test	87
Table 13-8: Summary Results of CND Test	88
Table 14-1: Mineral Resource Estimate	89
Table 14-2: Drill Hole and Sample Count	92
Table 14-3: Grade Capping Statistics	93
Table 14-4: Vein Transformations	101
Table 14-5: Specific Gravity Measurements and Regressions	102
Table 14-6: Modeled Variograms for Ag	103
Table 14-7: Modeled Variograms for Pb, Zn, Au, Cu	104
Table 14-8: Block Model Setup Parameters	107
Table 14-9: Pass Parameters	107
Table 14-10: Mineral Resource Classification	110
Table 14-11: Cutoff Grade Parameters	111
Table 14-12: Mineral Resource Estimate	112
Table 14-13: Mineral Resource Estimate by Fault Block	113
Table 14-14: Alternative Estimate Difference Percent, Measured and Indicated Blocks	119
Table 14-15: Assay Statistics In Modeled Veins — Amapola	125
Table 14-16: Assay Capping — Amapola	126
Table 14-17: Cutoff Grade Parameters	129

ix

Table 14-18: Estimated Indicated Resources — Amapola	130
Table 14-19: Estimated Inferred Resources — Amapola	131
Table 14-20: Assay Statistics in Modeled Veins — Esther	135
Table 14-21: Assay Capping — Esther	135
Table 14-22: Cutoff Grade Parameters	138
Table 14-23: Estimated Indicated Resources — Esther	139
9Table 14-24: Estimated Inferred Resources — Esther	140
Table 15-1: Dilution by Mining Method	154
Table 15-2: Recovery by Mining Method	155
Table 15-3: Mineral Reserve	156
Table 15-4: Resources exclusive of Reserves	158
Table 16-1: Rock Mass Rating	160
Table 16-2: Point Load Test Compilation Results for All Mineralized Zones	161
Table 16-3: Joint Set Mean Orientation	161
Table 16-4: Comparison of UCS Lab Results to Point Load Testing Results	162
Table 16-5: Adjusted Rock Mass Properties used for Numerical Modeling per Lab Results	163
Table 16-6: In Situ Stress Tensors	163
Table 16-7: Parameters used to Establish Hr and N	167
Table 16-8: Ground Support Class Description for 5 m Wide × 5.5 m High Drift	169
Table 16-9: Support System for Spans Greater than 5 m	168
Table 16-10: Q Value for Los Gatos Selected Rock Unit	170
Table 16-11: Stope Design Parameters	186
Table 16-12: LOM Development Schedule	188
Table 16-13: Productivity Rates	189
Table 16-14: LOM Production Schedule	190
Table 16-15: Underground Mobile Equipment — Maximum Units on Site	191
Table 16-16: Surface Mobile Equipment — Maximum Units on Site	194
Table 16-17: Ventilation Design Criteria	199
Table 16-18: Full Production Airflow Determinations	202
Table 16-19: Cooling Design Criteria and Assumptions	203
Table 18-1: Mine Power Requirements by Area	217
Table 18-2: Mine Compressed Air Demand	225
Table 18-3: Underground Process Water Requirements	226
Table 19-1: Indicative Smelting and Refining Terms for Zinc Concentrate	231
Table 19-2: Indicative Smelting and Refining Terms for Lead Concentrate	232
Table 19-3: Payable Metal Price Forecasts for Los Gatos	232
Table 20-1: Summary of Closure and Reclamation Costs	249
Table 21-1: TEM Principal Assumptions	250
Table 21-2: LOM Production from July 1, 2020	252
Table 21-3: LOM Mill Feed from July 1, 2019	253
Table 21-4: LOM Capital Costs	254
Table 21-5: Mining Operating Costs	254

x

Table 22-1: NSR	256
Table 22-2: TEM Results	257
Table 24-1: Hydrogeologic Units Represented in the Model	265
Table 24-2: Faults Represented as Barriers to Flow in the Model	266
Table 24-3: Summary of Dewatering Simulation Results	270
Table 24-4: Water pumped from dewatering wells January-May 2020	280
Table 24-5: CONAGUA Design Storm Requirements for Impoundments	284
Table 24-6: TR-55 Hydrologic Soil Groups	287
Table 24-7: NOM-011-CNA-2000 Hydrologic Soil Type and K Values as a Function of Soil Use	287
Table 24-8: Basin Areas	289
Table 24-9: Lag Times	290
Table 24-10: Design Storms	290
Table 24-11: Minimum, Average and Maximum Total Monthly Rainfall for Los Gatos Site	291
Table 24-12: Average Annual Runoff Volume	293
Table 24-13: Source of Basis of Design	294
Table 24-14: Estimated Stormwater Conveyance Structure Dimensions, Capacity Analysis	295
Table 24-15: Channel Slopes and Velocities, Stability Analysis	295
Table 24-16: Freeboard Criteria	296
Table 24-17: Model Parameters and Source	298
Table 24-18: TSF Embankment Raise Schedule	302
Table 24-19: TSF Capacity	309
Table 24-20: TSF Spillway & Channel Dimensions	311
LIST OF FIGURES
Figure 1-1: Vein Solids 3D View	5
Figure 1-2: Process Plant Overall Flowsheet	10
Figure 4-1: Los Gatos General Location Map	21
Figure 4-2: Concessions Map for the Los Gatos Concessions	24
Figure 4-3: Surface Rights and Exploration Permissions (MPR)	26
Figure 7-1: Geologic Provinces Map Showing the SMO, Tectono-Stratigraphic Terranes (SGM, Campa and Coney, 1987; USGS, Hammarstrom et al, 2010)	32
Figure 7-2: Regional Geologic Map (SGM, 1:250,000 Original Scale) Property Structural Setting	34
Figure 7-3: Stratigraphic column of Los Gatos	36
Figure 7-4: Geological Map of the Cerro Los Gatos Deposit Area	38
Figure 7-5: Cross-Section 29 AgEq	40
Figure 8-1: Epithermal Textures in Drill Core	43
Figure 8-2: Idealized Section of a Bonanza Epithermal Deposit (Buchanan L.J., 1981)	44
Figure 9-1: Decline Entrance (Mine Portal)	48
Figure 9-2: Decline and Bulk Sample Area Cross-Section Looking Northwest (+/- 200 m)	48
Figure 9-3: 3D Clipped View of Bulk Sample and Block Model AgEq Grades	50

xi

Figure 10-1: Drill Hole Collar Monument	52
Figure 10-2: Drill Hole Location Map	53
Figure 11-1: Sampled Drill Core	54
Figure 11-2: Sample Analysis Flow Diagram	56
Figure 12-1: Check Sample Scatter Plot	58
Figure 12-2: Check Sample Scatter Plot	59
Figure 13-1: Cumulative Grain Size Distribution (Graph from SGS)	64
Figure 13-2: Effect of Grind Size on Lead Flotation in Rougher Tests	66
Figure 13-3: Effect of Grind Size on Silver Flotation in Rougher Tests	67
Figure 13-4: Primary Grind Size on Lead and Silver Flotation in Cleaner Tests	68
Figure 13-5: Effect of Grind Size on Zinc Flotation in Rougher Tests	69
Figure 13-6: Effect of Depressant on Lead Rougher Flotation	70
Figure 13-7: Effect of Depressant on Silver Flotation	71
Figure 13-8: Effect of ZnCN on Lead and Silver Flotation	72
Figure 13-9: Lead Cleaner Tests — Grade and Recovery Curves	73
Figure 13-10: Effect of CuSO4 Dosage on Zinc Rougher Flotation	74
Figure 13-11: Effect of Sodium Silicate on Zinc Flotation	75
Figure 13-12: Effect of pH on Zinc Rougher Flotation	76
Figure 13-13: Effect of pH on Zinc Cleaner Flotation	77
Figure 13-14: Silver Flotation Results of Variability Composites	83
Figure 13-15: Lead Flotation Results of Variability Composites	83
Figure 13-16: Zn Flotation Results of Variability Composites	84
Figure 14-1: Vein Solids 3D View	90
Figure 14-2: Estimated AgEq Block Grades within Grade-Shell 3D View	91
Figure 14-3: Block Resource Classification 3D View	91
Figure 14-4: Drill Hole Plan and Cross-Section Index	92
Figure 14-5: Histogram for Capping Analysis Ag	93
Figure 14-6: Histogram for Capping Analysis Pb	93
Figure 14-7: Histogram for Capping Analysis Zn	94
Figure 14-8: Histogram for Capping Analysis Au	95
Figure 14-9: Histogram for Capping Analysis Cu	95
Figure 14-10: Geologic Model Solids 3D View	95
Figure 14-11: Geologic Model Cross-Section 27 Looking NW	96
Figure 14-12: Vein Solids 3D View	97
Figure 14-13: Long-Section Vein Intervals Assignments	98
Figure 14-14: Long-Section AgEq Grade of Vein Intervals	98
Figure 14-15: Long-Section Ag Grade of Vein Intervals within Grade-Shell	98
Figure 14-16: Long-Section Pb Grade of Vein Intervals within Grade-Shell	99
Figure 14-17: Long-Section Zn Grade of Vein Intervals within Grade-Shell	99
Figure 14-18: Long-Section Au Grade of Vein Intervals within Grade-Shell	99
Figure 14-19: Long-Section Cu Grade of Vein Intervals within Grade-Shell	100

xii

Figure 14-20: Long-Section Thickness of Vein Intervals within Grade-Shell	100
Figure 14-21: SG Regression within Vein Interpretation	102
Figure 14-22: Experimental and Modeled Variography Ag	104
Figure 14-23: Experimental and Modeled Variography Pb	105
Figure 14-24: Experimental and Modeled Variography Zn	105
Figure 14-25: Experimental and Modeled Variography Au	106
Figure 14-26: Experimental and Modeled Variography Cu	106
Figure 14-27: Estimated AgEq Block Grades within Grade-Shell 3D View	108
Figure 14-28: Estimated Ag Block Grades within Grade-Shell 3D View	108
Figure 14-29: Estimated Pb Block Grades within Grade-Shell 3D View	108
Figure 14-30: Estimated Zn Block Grades within Grade-Shell 3D View	109
Figure 14-31: Estimated Au Block Grades within Grade-Shell 3D View	109
Figure 14-32: Estimated Cu Block Grades within Grade-Shell 3D View	109
Figure 14-33: Mineral Resource Classification 3D View	110
Figure 14-34: Stacked Histogram of Nearest Composite Sample to Classified Blocks	111
Figure 14-35: Grade Tonnage Curve Measured and Indicated Resources	113
Figure 14-36: Grade Tonnage Curve Inferred Resources	114
Figure 14-37: Cross-Section 13 AgEq	115
Figure 14-38: Cross-Section 13 Ag	116
Figure 14-39: Cross-Section 13 Pb	117
Figure 14-40: Cross-Section 13 Zn	118
Figure 14-41: Alternative Estimate Comparison Tonnage Curve	119
Figure 14-42: Alternative Estimate Comparison AgEq Grade Curve	120
Figure 14-43: Alternative Estimate Comparison Ag Grade Curve	120
Figure 14-44: Alternative Estimate Comparison Pb Grade Curve	120
Figure 14-45: Alternative Estimate Comparison Zn Grade Curve	121
Figure 14-46: Plan view of the Amapola Veins	124
Figure 14-47: Amapola Vein Wireframe Solids Looking Northwest	125
Figure 14-48: Amapola Vein Block Classification Looking West	128
Figure 14-49: Grade Tonnage Curve Indicated Amapola Deposit	130
Figure 14-50: Grade Tonnage Curve Inferred Amapola Deposit	131
Figure 14-51: Esther Zone Wireframes Looking Northwest	134
Figure 14-52: Esther Zone Wireframes Looking North	135
Figure 14-53: Esther Zone Block Classification Looking North	137
Figure 14-54: Grade Tonnage Curve Indicated Esther Deposit	139
Figure 14-55: Grade Tonnage Curve Inferred Esther Deposit	140
Figure 14-56: Additional drilling and total AgEq oz per estimate	142
Figure 15-1: NSR Value / Tonnage Plot	147
Figure 15-2: Orthogonal View showing Flattening Veins	148
Figure 15-3: Plan View of Mineralized Veins	149
Figure 15-4: Block Model Section	150

xiii

Figure 15-5: NWZ Longhole Stope Dilution	152
Figure 15-6: Drift-and-Fill Overbreak	153
Figure 15-7: Drift-and-Fill Dilution	153
Figure 15-8: Isometric View of Stope	154
Figure 15-9: Recovery Profile (Drift-and-Fill)	155
Figure 15-10: LOM plan showing mining, development, and the 2019 Resource model, with Measured blocks in red and Indicated blocks in green	157
Figure 16-1: Most Favorable Azimuth for Underground Excavation	162
Figure 16-2: Geometry Used in the 3D Model Looking towards the Hanging Wall	164
Figure 16-3: Raise Wall Stability	171
Figure 16-4: Raise Face Stability	172
Figure 16-5: Typical Level Development Northwest Zone	173
Figure 16-6: Typical Level Development CZ and SEZs	174
Figure 16-7: Typical Waste Development Drill Patterns	174
Figure 16-8: Typical Drift-and-Fill Stope Schematic	176
Figure 16-9 : Typical Ore Development Drill Patterns	177
Figure 16-10: Typical Transverse Stope Schematic View	179
Figure 16-11: Transverse Stope Dimensions and Drilling	180
Figure 16-12: Typical Slot Raise	180
Figure 16-13: Slot Ring Drilling	181
Figure 16-14: Production Ring and Slash Drilling	181
Figure 16-15: Slot Complete and Undercut Started	182
Figure 16-16: Production Blasting Retreat	182
Figure 16-17: Typical Paste Backfilling	183
Figure 16-18: Longitudinal Stope Dimensions and Drilling	184
Figure 16-19: Design Span for Drift-and-Fill	186
Figure 16-20: Early Production Ventilation Arrangement	200
Figure 16-21: Full Production Ventilation Arrangement	201
Figure 16-22: Heat Model Equipment Locations	204
Figure 16-23: Heat Simulation Results	205
Figure 17-1: Process Plant Overall Flowsheet	209
Figure 18-1: Borehole Sump	222
Figure 18-2: Level Dewatering Sump	223
Figure 18-3: Main Dewatering Sump	223
Figure 18-4: Service Bay Location	227
Figure 18-5: Service Bay Layout	228
Figure 22-1: Sensitivity Analysis for Silver Price	258
Figure 22-2: Sensitivity to Gold Price	258
Figure 22-3: Sensitivity to Zinc Price	259
Figure 22-4: Sensitivity to Lead Price	259
Figure 22-5: Technical Economic Model	260

xiv

Figure 24-1. Hydraulic Conductivity Summary	264
Figure 24-2: Groundwater Model Location	267
Figure 24-3. Simulated Mine Drains and Dewatering Wells	269
Figure 24-4. Predicted Mine Inflow and Dewatering Well Pumpage for All Simulated Scenarios	271
Figure 24-5: Predicted Mine Inflows and Dewatering Well Pumping Rates for All Dewatering Scenarios	273
Figure 24-6: Predicted Drawdown at Pozos 5 and 6	274
Figure 24-7: Predicted Drawdown at Pozos 11 and 12	275
Figure 24-8: Maximum Predicted Drawdown	276
Figure 24-9. Drawdown at End of Mining	277
Figure 24-10: Pumping wells in relation to the overall mine plan	279
Figure 24-11: Water pumped at the Los Gatos site, blue line represents mine infiltration and orange represents the dewatering wells	280
Figure 24-12: Soils Map of the Project Area	286
Figure 24-13: Site Photo Showing Vegetative Cover	289
Figure 24-14: Type II Temporal Distribution (excerpt from Urban Hydrology of Small Watersheds)	292
Figure 24-15: TSF Stage Storage	294
Figure 24-16: Channel Section Views	297
Figure 24-17: Well and Mine Working Dewatering	300
Figure 24-18: TSF Embankment Raise Schedule	302
Figure 24-19: Well Water, Use and Discharge	303
Figure 24-20: Tailing Storage Facility Plan View	305
Figure 24-21: Tailing Storage Facility Section View	306
Figure 24-22: Seismic Regions of Mexico	308
Figure 24-23: Hydrologic Zones of Mexico	308
Figure 24-24: TSF capacity curve	310
Figure 24-25: Underdrain for Stage 1, Phase 1	313
Figure 24-26: Tailing Deposition Plan — Stage 1, Phase 2 (Part 1)	314
Figure 24-27: Tailing Deposition Plan — Stage 1, Phase 2 (Part 2)	315

xv

ACRONYMS AND ABBREVIATIONS

Acronym	Definition
ABA	Acid Base Accounting
ABCC	Acid Buffering Characteristic Curve
ANFO	Ammonium Nitrate/Fuel Oil
AP	Area of influence of the Project
ARD	Acid Rock Drainage
ASI	Asesores en Impacto Ambiental y Seguridad
BBWI	Bond Ball Mill Work Index
bgs	Below Ground Surface
BMP	Best Management Practice
BRWI	Bond Rod Mill Work Index
CCTV	Close Circuit Television
CDN	CDN Resource Laboratories
Ce	Runoff Coefficient
CFE	Comisión Federal de Electricidad
CIM	Canadian Institute of Mining, Metallurgy and Petroleum
CO2	Carbon Dioxide
CONABIO	Comisión Nacional para el Conocimiento y Uso de la Biodiversidad
CONAGUA	Comisión Nacional del Agua
CPU	Computer Processing Unit
CRF	Cemented Rock Fill
CRP	Closure and Reclamation Plan
EHS	Environmental Health & Safety
EIS	Environmental Impact Study
EMS	Environmental Management System
ES	Environmental System
FICA	Federal Insurance Contributions Tax
FoS	Factor of Safety
FUI	Federal Unemployment Tax
G&A	General and Administration
GSI	Geological Strength Index
HDPE	High-density polyethylene
Hr	Hydraulic Radius
IES	Illumination Engineering Society
IFC	International Finance Corporation
INEGI	National Institute of Statistics and Geography (Mexico)

xvi

Acronym	Definition
LGEEPA	Ley General del Equilibrio Ecológico y la Protección al Ambiente
LOM	Life of Mine
Ltd.	Limited
Ma	Million Years Ago
masl	Meters Above Sea Level
MIA	Manifestación de Impacto Ambiental
ML	Metal Leachate
MPL	Maximum Permissible Limits
MPR	Minera Plata Real, S. de R. L. de C.V.
MSO	Maptek Stope Optimizer
N	Stability Number
NA	Not Applicable
NAF	Non Acid Forming
NAG	Net Acid Generation Potential
NOM	Norma Oficial Mexicana
NOMs	Normas Oficiales Mexicanas
NSR	Net Smelter Return
OD	Outside Diameter
OEM	Original Equipment Manufacturer
PA	Project Area
PAF	Potential Acid Forming
PAF-LC	Potential Acid Forming-Low Capacity
PAG	Potentially Acid Generating
PGA	Peak Ground Acceleration
PGM	Plant Growth Medium
PLC	Programmable Logic Controller
PMLU	Post Mining Land Use
PMP	Probable Maximum Precipitation
PN	Neutralization Potential
PNN	Potential of Net Neutralization
PPE	Personal Protective Equipment
PROFEPA	Procuraduría Federal Protección al Ambiente
QA	Quality Assurance
QC	Quality Control
REIA	Regulation on Environmental Impact Assessment
REPDA	Republic Register of Water Rights
RFQ	Request for Quote

xvii

Acronym	Definition
RMR	Rock Mass Rating
ROM	Run of Mine
SAG	Semi-Autogenous Grinding
SCADA	Supervisory Control and Data Acquisition System
SCS	Soil Conservation Service
SEMARNAT	Secretaría de Medio Ambiente y Recursos Naturales
SG	Specific Gravity
SGM	Servicio Geológico Mexicano
SMC	SAG Mill Comminution
SPI	SAG Power Index
SSMRC	Sunshine Silver Mining & Refining Corporation
SUI	State Unemployment Insurance
TEM	Technical-Economic Model
tc	Time of Concentration
tlag	Time of Lag
TRS	Temporary Rock Storage
TSF	Tailings Storage Facility
Tt	Tetra Tech, Inc.
UCS	Unconfined Compressive Strength
UPS	Uninterruptable Power Supply
Ve	Average Annual Runoff Volume
Vp	Average Annual Rainfall Volume
WAD	Weak Acid Dissociable

xviii

LIST OF UNITS

Abbreviation	Definition	Abbreviation	Definition
µm	Micrometer	lb	Pound
AgEq g/t	Grams per Tonne Silver Equivalent	m	Meters
BCM	Banked Cubic Meter	M	Million
C	Degrees Centigrade	m/d	Meters per Day
Cm	Centimeters	m/s	Meters per Second
DC	Direct Current	m3	Cubic Meters
g	Gram	m3/s	Cubic Meters per Second
g/cm3	Grams per Cubic Centimeter	mg/kg	Milligram per Kilogram
g/t	Grams per Tonne	mg/L	Milligram per Liter
Ha	Hectares	mm	Millimeter
hm3	Hectare-meter	Mpa	Mega Pascals
HP	Horse Power	Mt	Millions Tonnes
Hr	Hour	MVA	Mega Volt Amp
Kcfm	Thousand cubic feet per minute	MW	MegaWatt
K	Thousand	pH	Hydrogen Ion Concentration
Kg	Kilogram	Oz	Ounce
KIL	Kilo Pound	ppm	Parts per Million
Km	Kilometers	S.U.	Standard Units
km2	Square Kilometers	t/m3	Tonnes per Cubic Meter
kN/m3	Kilonewton per Cubic Meter	toz	Troy Ounce
Koz	Kilo Ounce	tpd	Tonnes per Day
kV	Kilovolt	usgpm	US Gallons per Minute
kVA	Kilovolt Amp	V	Volt
kW	Kilowatt	VAC	Volts Alternating Current
kWh/t	Kilowatt Hour per Tonne	W/mC	Thermal Conductivity
L	Liter
L/s	Liters per Second

xix

ABBREVIATIONS OF THE PERIODIC TABLE

actinium = Ac	aluminum = Al	americium = Am	antimony = Sb	argon = Ar
arsenic = As	astatine = At	barium = Ba	berkelium = Bk	beryllium = Be
bismuth = Bi	bohrium = Bh	boron = B	bromine = Br	cadmium = Cd
calcium = Ca	californium = Cf	carbon = C	cerium = Ce	cesium = Cs
chlorine = Cl	chromium = Cr	cobalt = Co	copper = Cu	curium = Cm
dubnium = Db	dysprosium = Dy	einsteinium = Es	erbium = Er	europium = Eu
fermium = Fm	fluorine = F	francium = Fr	gadolinium = Gd	gallium = Ga
germanium = Ge	gold = Au	hafnium = Hf	hahnium = Hn	helium = He
holmium = Ho	hydrogen = H	indium = In	iodine = I	iridium = Ir
iron = Fe	juliotium = Jl	krypton = Kr	lanthanum = La	lawrencium = Lr
lead = Pb	lithium = Li	lutetium = Lu	magnesium = Mg	manganese = Mn
meltnerium = Mt	mendelevium = Md	mercury = Hg	molybdenum = Mo	neodymium = Nd
neon = Ne	neptunium = Np	nickel = Ni	niobium = Nb	nitrogen = N
nobelium = No	osmium = Os	oxygen = O	palladium = Pd	phosphorus = P
platinum = Pt	plutonium = Pu	polonium = Po	potassium = K	prasodymium = Pr
promethium = Pm	protactinium = Pa	radium = Ra	radon = Rn	rhodium = Rh
rubidium = Rb	ruthenium = Ru	rutherfordium = Rf	rhenium = Re	samarium = Sm
scandium = Sc	selenium = Se	silicon = Si	silver = Ag	sodium = Na
strontium = Sr	sulphur = S	technetium = Tc	tantalum = Ta	tellurium = Te
terbium = Tb	thallium = Tl	thorium = Th	thulium = Tm	tin = Sn
titanium = Ti	tungsten = W	uranium = U	vanadium = V	xenon = Xe
ytterbium = Yb	yttrium = Y	zinc = Zn	zirconium = Zr

xx

UNITS OF MEASURE

All dollars are presented in U.S. dollars unless otherwise noted. Common units of measure and conversion factors used in this report include:

Weight:

1 oz (troy) = 31.1035 g

Analytical Values:

	percent	grams per metric ton
1%	1%	10,000
1 g/t	0.0001%	1.0

xxi

1.0  SUMMARY

1.1  Introduction

Minera Plata Real, S. de R.L. de C.V. (MPR) commissioned Tetra Tech, Inc. (Tetra Tech) of Golden, Colorado to produce an independent Mineral Resource estimate to update the project resource with drilling completed since the release of the project Feasibility Study (FS) and Technical Report (TR) for the Los Gatos Project in 2017.  This Resource estimate includes infill drilling from both surface and underground to define mineralization and to upgrade the mineral classification where possible.  Drilling has been performed in the Central Zone, but most of the program was focused on the North West zone and its possible extension to the north.  Reserves have been calculated from the new mine plan, which was based on the updated Resource (September 2019) information included in this report.

Tetra Tech has adopted certain provisions from previous TR’s by Tetra Tech and Behre Dolbear as appropriate.  Where content from previous TR’s has been included, the authors have not relied upon previous authors and are taking responsibility for the sections indicated in the certificate of qualified persons of this TR.

1.1.1  Property Description, Location and Infrastructure

The Cerro Los Gatos Deposit is located in Northern Mexico in the South-central part of the State of Chihuahua, within the Municipality of Satevó.  It is roughly centered on Latitude 27° 34’ 17” N, Longitude 106° 21’ 33” W.  The mining concessions cover 103,086.83 hectares (ha) within a block of 17 continuous with 16 grouped mineral concessions in addition to one concession (Paula Adorada) that has been subsequently purchased within the area Northwest of the town of San José del Sitio.  Other mineral deposits (Amapola and Esther) have been identified within the Company’s properties with limited exploration and drilling showing geologic potential for further exploration and development.

The project is approximately 120 km South of the state capital of Chihuahua City, and approximately 100 km North/Northwest of the historic mining city of Hidalgo del Parral.  The site can be reached via Federal Highway 24 from either city in about two hours.

The Cerro Los Gatos deposit is part of the Los Gatos project owned by MPR (a joint venture company of Sunshine Silver Mining & Refining Corporation (51.5%) and Dowa Metals & Mining Co., Ltd. (48.5%).  A camp has been constructed onsite for housing and feeding workers for the mining operations.  Water resources in the region are mostly related to the Conchos River Basin, which includes the San Pedro, San Francisco de Borja, and Satevó River Sub-Basins.  Locally, there are significant amounts of water, with shallow groundwater recorded from most exploration drilling conducted by MPR.

Power to the Cerro Los Gatos site is supplied via a 115-kV utility transmission line.  This originates from the ‘San Francisco de Borja’ substation in Satevó (Chihuahua), where a new 115 kV connection has recently been installed.

MPR is the concession owner of a series of titled concessions encompassing 103,086.83 ha.  Titled Mining concessions are summarized in Table 4-1.  MPR also holds the rights to the Paula Adorada concession (Table 4-1) through exploration agreements with purchase options that have been duly executed and recorded in the Mexican Public Registry of Mines.  A detailed account of MPR’s obligations for the purchase of Los Gatos and Paula Adorada concessions is included in Section 4.2 .

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Regarding the mining concessions, MPR has provided copies of the titles of the concessions, as well as a copy of the Legal Opinion regarding MPR Concessions, by VHG Servicios Legales, S.C., related to titles documentation, tax payments, and assessment works, presented on November 5, 2019 to MPR.  This legal opinion stated that all claims are in full force and effect.  MPR’s Los Gatos group of concessions have a period of validity that reaches to March 3, 2058 which is the period corresponding to the oldest concession and title for the group of 16 concessions, independent of the Paula Adorada additional concession.  According to the Mexican Law the validity of the concessions is subsequently renewable in periods of 50 years.  MPR’s information indicates that all concessions have complied with their obligations as of the report effective date, and mining duties have been paid.

MPR has arranged permission to enter and perform exploration activities in several private ranch and community owned (ejido) properties in the project area.  MPR has purchased surface lands covering the Cerro Los Gatos, Esther, Amapola, and Rodeo zones covering 5,478.9 ha.  All current and planned development activities for the Cerro Los Gatos deposit are located within surface lands owned by or where access is controlled by MPR.

In 2008, MPR obtained environmental permits for drilling, road construction, and surface access rights to local ranches.  Subsequently, in January 2009 and September 2009, MPR submitted the corresponding notice of activities to SEMARNAT to cover the development of access roads and drill sites required to drill 50 holes and proposed a request to increase the number of drill holes to 250, following the Regulation NOM-120-SEMARNAT-1997.  A new report filed on December 5, 2011 expanded the permit to 600 drill holes.  A further study for Change of Land Use — Technical Justification Study (Cambio de Uso de Suelos — Estudio Técnico Justificativo) was completed in 2014 and permission received in early 2015 for underground development activities associated with the construction of an exploration decline to intersect the mineralization of the Cerro Los Gatos deposit.  Copies of these reports and filing documents can be found in MPR’s files.  Environmental baseline data collection began in May 2010, to prepare for the development of future environmental studies (EIS) required for the project.  The Environmental Impact Study (Manifestación de Impacto Ambiental) for the development of the Cerro Los Gatos project was filed with the Mexican Environmental Regulatory authorities (SEMARNAT) on December 12, 2016 and was approved in 2017.

1.2  History

The Los Gatos project has been the subject of limited historical prospecting and mineral exploration, including the development of shallow workings, limited production, and preliminary exploration activities by Consejo de Recursos Minerales, now Servicio Geológico Mexicano (SGM) at the Esther, Amapola, Gavilana (Paula), and San Luis zones with references to the occurrence of silver, lead, and zinc.

The project was initially identified by La Cuesta International Inc. reconnaissance activities in 2005, and later offered to Los Gatos Ltd. (parent of MPR).  An initial letter of agreement for exploration work on the project was negotiated and a final contract was ratified in April 2006 between MPR (initially a Mexican subsidiary of Los Gatos Limited) and La Cuesta International S.A. de C.V. (Mexican subsidiary of La Cuesta International Inc.).  Only minor field work was conducted during 2006-2007 on the Los Gatos project during the waiting period for the initial concessions to be titled, and formal exploration activities and drilling were conducted by MPR from 2008.

2

1.3  Geology and Mineralization

The Cerro Los Gatos deposit is located in the contact zone between the Sierra Madre Occidental volcanic province of western Mexico and the Mesozoic Chihuahua basin, largely sedimentary, to the East.  It is also located in the general contact zone between the Sierra Madre Occidental (SMO), Chihuahua, and Parral Tectonostratigraphic Terranes.

The area is largely characterized by a thick sequence of Tertiary volcanic rocks that are generally dissected by a strong North-Northwest bearing fault system that divides the area into the plateau and barranca sections.  This sequence is subdivided in two major units, the Lower Volcanic Group and the Upper Volcanic Group.  The area is one of the largest known epithermal, precious-metal metallogenic provinces and is host to well-known gold-silver producing mining districts, including:  Concheño, Ocampo, Batopilas, San Dimas-Tayoltita, Topia, Guanaceví, Bacís, San Francisco, Santa Bárbara, Velardeña, San José del Oro, Cosalá, Mulatos, La Ciénega, El Sauzal, Pinos Altos and Candameña Mining Districts currently in operation and/or exploration, known since the 1600’s, and other projects and old mining areas such as the Guadalupe Los Reyes, Cordero and Lluvia de Oro.

The oldest rocks of the area are Mesozoic (Cretaceous) age sedimentary rocks belonging to the Chihuahua Platform/Mesozoic Mexican Sea (open basin environment) with predominant silver-lead-zinc mineralization which characterizes this region, and is commonly related to skarn, limestone replacement and Mississippi Valley type deposits such as Naica, Santa Eulalia, Bismark, San Pedro Corralitos, Parral-La Prieta and Sierra Mojada.

The dominant rocks of the Cerro Los Gatos Project area are thick accumulations of intermediate tuffs and lavas, with lesser felsic rocks, with an age of deposition from 39-35.5 Ma; and Upper Cretaceous (Cenomanian) to Lower Paleocene age sandstones, shales, and limestones correlative with the Mezcalera formation, locally metamorphosed to phyllites, quartzites, and marbles near areas of igneous activity.  Rocks of this oldest sedimentary sequence occur within a small horst block located to the Southwest of the Cerro Los Gatos Deposit, with prominent high-angle fault boundaries on the North and South, parallel to the regional trend of faulting.  Intruding and deposited on the entire section are locally important rhyolite flows, flow domes, and dikes, usually strongly silicified, that have all the varied textures expected with the development of flow domes, including breccia zones, flow banding, and intrusive/extrusive transitions.  Each of the rocks in the section contains observable hydrothermal alteration, suggesting that mineralization in the area probably occurred late in the history of the development of the volcanic section.  It is important to stress, however, that economic grades of mineralization have only thus far been identified in the andesite and dacite sections (Behre Dolbear, 2011)

1.4  Drilling

As of July 2019, 484 drill holes relevant to the Cerro Los Gatos Deposit had been completed by MPR, for a total of 150,842 m.  The project database contains drilling on other prospects that are not applicable to this report, and it shows drilling associated with the Cerro Los Gatos deposit.  Table 1-1 tabulates the drilling by purpose.

3

Table 1-1:  Drill Hole Count by Purpose

Purpose	Count	Length (m)
Surface Exploration	399	137,220
Underground Exploration	32	3,567
Exploration and Metallurgical testing	6	1,733
Underground Bulk Sample Targeting	4	415
Metallurgical Testing	5	1,693
Geotechnical	18	4,134
Tailings Geotechnical	14	280
Hydrologic Study	6	1,800
Total	484	150,842

Drilling was initiated at the Cerro Los Gatos project in October 2008 and continued until 2012.  Drilling recommenced in 2015 following the joint venture agreement with DOWA and has continued through 2019.

An additional 255 drillholes have been completed within the Los Gatos project, but outside of Cerro Los Gatos deposit.  This comprises an additional 108,218 meters of drilling, which are not included in the Resource estimate that is the subject of this report.  The totals of the entire project are 739 holes for 259,060 meters.

1.5  Mineral Resource Estimates

Mineral resources have been estimated for the epithermal veins of the Cerro Los Gatos deposit by multi-pass Ordinary Kriging (OK) of capped and composited drill hole samples.  The Cerro Los Gatos deposit is currently the main deposit, and the subject of the 2017 FS and current mine development.  Estimated Measured, Indicated and Inferred Mineral Resources for the Cerro Los Gatos deposit, effective September 6, 2019, are shown in Table 1-2 at a 150 AgEq g/t cutoff grade.  Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.

Table 1-2:  Mineral Resource Estimate

Classification	Tonnes	AgEq g/t	Ag g/t	Pb %	Zn %	Au g/t	Cu %	AgEq toz M	Ag toz M	Pb lbs M	Zn lbs M	Au toz K	Cu lbs M
Measured	5,774,314	652	324	2.9	5.8	0.39	0.11	121	60	375	744	72	13
Indicated	4,586,507	489	202	2.5	5.2	0.28	0.11	72	30	251	528	42	12
Measured and Indicated	10,360,822	576	269	2.7	5.5	0.34	0.11	193	90	626	1,272	114	25
Inferred	3,717,063	361	107	2.8	4.0	0.28	0.14	43	13	231	330	34	12

NOTES:

1) 150 AgEq g/t cutoff grade has been calculated using $18/toz Ag, $0.92/lbs Pb, and $1.01/lbs Zn,
2) Columns may not total due to rounding,
3) Mineral Resources are stated as undiluted, and are inclusive of Mineral Reserves.
4) One troy ounce (toz) is equal to 31.1035 grams (g) and one Tonne is equal to 2,204.62 lbs.

4

Mineral Resources were estimated from 2,356 samples intersecting modeled veins, sourced from 426 diamond drill holes.  Capping was analyzed for each metal estimated using histograms and probability plots to determine where high-grade distribution tails deviated from lognormal.  Sampled intervals were composited to 2 m.  Composite intervals initiated and terminated at the top and bottom of the vein contacts.

Vein model solids were constructed in MicroMine™ modeling software; the resulting solids are shown in Figure 1-1, below.  Grade-shells were used to further isolate +150 AgEq g/t grade population for estimation.

Figure 1-1:  Vein Solids 3D View

Blocks and composites from each vein and post mineral fault block domain were independently transformed, realigned and made relative to the footwall and hanging-wall for estimation.  Realignment allowed for estimation to occur across post-mineral fault blocks approximating pre-fault orientation of the veins.  Estimations relative to footwall and hanging-wall position allowed for better data honoring across the dip of the vein.

Only composites within the same vein were permitted to estimate blocks of a given vein domain; because of the transformation and realignment estimation was permitted across post mineral fault block areas with the same vein code.

In addition to the Cerro Los Gatos deposit, exploration targets with favorable results include the Amapola and Esther deposits.  These deposits were included in Tetra Tech’s August 2012 estimates and additional information has not been produced for these deposits since this time.  These estimates should be considered project resources, and therefore have been brought forward in this report and are reported below.

5

Table 1-3 shows estimated, Indicated and Inferred Mineral Resources for the Amapola and Esther deposits, based on 100 grams/tonne cutoff grade, located along the Los Gatos mineral trend has only been partially investigated by drilling.  The effective date of this estimate is December 21, 2012.

Table 1-3:  Estimated Mineral Resources Indicated and Inferred for Amapola and Esther.

Cutoff, AgEq g/t	Tonnes	Ag Eq g/t	Ag, g/t	Ag Ounces	Au, g/t	Pb, %	Zn, %	Cu, %
Deposit	Amapola — Indicated Resources
100	250,000	154	135	1,100,000	0.10	0.10	0.30	0.02
Deposit	Amapola — Inferred Resources
100	3,440,000	164	140	15,500,000	0.10	0.20	0.30	0.03
Deposit	Esther — Indicated Resources
100	460,000	217	133	2,000,000	0.04	0.70	2.10	0.02
Deposit	Esther — Inferred Resources
100	2,290,000	243	98	7,200,000	0.12	1.60	3.00	0.05

Reference: Tetra Tech Technical Report Los Gatos Final-2012, 1221.

Note 1.- Figures may not total due to rounding of significant figures.

Note 2.- Inferred Resources are not defined or recognized by US SEC Industry Guide 7 but are acceptable in proposed new Guidelines.

Original exploration activities at the Esther vein system indicated the presence of a narrow quartz vein, less than 1 m, with minor veining and silicification and noticeable lack of calcite.  However, the presence of a small high-grade mineralized-shoot, probably 60 m deep, attracted interest in the area.  Drilling of this area also resulted in the discovery of the Esther mineral-concentration, which has a known length of 800 m for the main mineralized-shoot, as well as up to 1,200 meters of additional mineralized vein.  The height of the mineralized interval is indicated by drill holes ES-06 and ES-07 to be in the order of 100 m; most mineral intersections range in the order of 2 m to 8 m, with a probable average slightly over 3 m.  It has been interpreted the top of the favorable horizon at Esther is generally located about 120 m below the surface.

Geological, exploration, and drilling information has identified a Mineral Resource in three of the targets explored, namely Cerro Los Gatos, Amapola and Esther.

Other vein systems detected during the early exploration stages included Mezcalera, Cieneguita, San Luis, Paula, Boca de León, El Lince, El Rodeo, Los Torunos and San Agustín, all of which host results of interest.  The only area drilled with variable results of interest was Ocelote.

1.6  Mineable Reserve Estimate

Updated Mineral Reserves were estimated for this project report.  Information can be found on mining in the Mining Methods section of this report.

The Mineral Reserve for the Cerro Los Gatos deposit is the economically mineable portion of the Measured and Indicated Mineral Resource from September 2019 that can justify economic extraction.  The Mineral Reserve defined herein includes the application of mining factors determined in this report

6

for stope design criteria, dilution and recovery factors.  The Mineral Reserve is supported by a mine plan based on detailed stope layouts.

The Mineral Reserve, effective July 1, 2020, for Los Gatos is presented in Table 1-4.  Reserves are calculated at an NSR cutoff of $75 and exclude Resources that have been mined through the end of June 2020.

Table 1-4:  Mineral Reserve

Zone	Classification	Tonnes	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)
NWZ	Proven	2,587,684	359	0.43	3.09	5.88
	Probable	492,892	333	0.34	2.86	5.88
CZ	Proven	3,767,456	314	0.31	2.55	5.32
	Probable	1,772,921	299	0.44	2.32	5.82
SEZ	Proven	5,751	148	0.16	3.69	7.23
	Probable	569,380	148	0.16	3.69	7.23
SEZ2	Probable	421,547	118	0.17	3.11	4.16
Total	Proven	6,360,890	332	0.36	2.77	5.55
Total	Probable	3,256,740	254	0.34	2.74	5.86
Total	Proven + Probable	9,617,631	306	0.35	2.76	5.65

1.7  Metallurgical Testing

The Cerro Los Gatos deposit is a lead-zinc-silver deposit with relatively complex mineralogy.  Upon review of the metallurgical testing data, Los Gatos mineralization responded well to conventional sequential lead-silver-zinc flotation processing.

Zinc rougher flotation tailing and zinc 1st cleaner scavenger tailing is combined to become the final tailing. Tailing thickener underflow (100%) is pumped to a cyanide destruction facility.  Currently all tailings are disposed of in the tailings storage facility.  Once the backfill plant is in operation, and after detox, forty percent (40%) of final tailings will be pumped to backfill plant and the remaining (60%) will be pumped to the tailings storage facility.  Operational results have indicated that additional removal of fluorine will be required.  Additional floatation cells have been added to the lead and zinc circuits, with a goal of reducing the fluorine in the final concentrates.

JK-drop weight and SMC test results show the samples are softer when compared to JKTech database while the SPI test results categorize the samples from moderately soft to moderately hard per SGS database.  The Ai and BWI tests results describe the samples as from abrasive to very abrasive and from moderately hard to hard.

Very good lead and silver flotation results have been achieved from SGS Vancouver Metallurgical Lab.  The final lead cleaner concentrates of the LCTs averaged 60.9% Pb at 5,404 g/t Ag at average recoveries of 89% lead and 68.7% silver.  The zinc cleaner concentrates averaged 54.2% Zn at an average recovery of 66% due to the high willemite content.

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1.8  Mining Methods

The underground mine design has been created to support a steady-state production rate of 2,500 tpd of ore.  The sequence of mining has been planned to begin with the Central Zone (CZ), which has already been accessed via the existing decline developed down to the 1400 Level.  The mine plan includes using cut and fill methods for the entirety of the CZ, in a top down sequence, starting in the central portion.

The NorthWest Zone (NWZ) has been planned to be mined concurrently with the CZ via longhole stoping methods with sublevels developed at 20 m vertical intervals.  Portions of the NWZ thicker than 9 m (footwall to hanging wall) will be mined using transverse longhole mining.  Areas less than 9 m in width will be mined using longitudinal longhole mining.

Production has started at the Los Gatos Project.  A combined overhand and underhand approach have been chosen in order to optimize the mining sequence based on the existing excavation extents in order to meet the production and grade requirements of the mine.  A mix of overhand and underhand mining has been implemented, starting on the 1390 Levels in both the NWZ and the CZ.

Limited production began in November 2018 and has been able to continue at a constant ramp-up through to the present time.  Due to the underhand approach, sill pillars are designed at necessary intervals in both cut-and-fill (CAF) and longhole stoping (LHS) blocks.  The underhand longhole stoping areas require re-mining or undercutting of the bottom sill drifts compared to the overhand approach.

Modern trackless mobile equipment is being utilized for most mining activities.  LHDs and dedicated underground trucks are used for ore/waste loading and transport from the underground workings through an internal ramp system and portal that connects all levels to surface.

Based on the deposit geometry and anticipated geomechanical conditions, underground mining of the Los Gatos Resource incorporates both longhole and drift-and-fill mining methods.  The existing exploration decline from surface has been extended to provide primary access and delivery of services.  The ramp is also used for haulage of ore and waste from the underground operations.

1.9  Recovery Methods

The expected grades and recoveries for lead, zinc, and silver to individual flotation concentrates were further investigated by a pilot plant program at SGS Lakefield using a sample composed of a bulk sample accessed by an underground decline into the orebody.  The results of that program are being finalized but preliminary indications generally support the study grade and recovery estimates provided herein.

The Project processing facility is designed to treat 2,500 tpd of lead, zinc and silver material at an operational availability of 92 percent.  The processing flow sheet for the Project is a standard flow sheet that is commonly used in the mining industry, including conventional flotation recovery methods typical for lead-zinc material.  Figure 1-2 below is the overall process plant flowsheet.  M3 engineering, has revised and updated the process design based on the results of 2016 SGS Vancouver metallurgical testing programs, and MPR’s input.

Run-of-mine (ROM) material is crushed in a primary jaw crusher located adjacent to the underground mine portal.  From there it is conveyed to the processing facilities where and is ground to 80 percent finer than 45 microns in a semi-autogenous grinding (SAG) and ball milling circuit.

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The ore is further processed in a flotation circuit consisting of lead flotation followed by zinc flotation.  The majority of the silver is recovered in the lead flotation circuit and some silver is also collected in the zinc flotation circuit.

Lead sulfide is recovered in a rougher flotation bank, producing a concentrate that is upgraded to smelter specifications in three stages of cleaning.  Tails from the lead flotation section are then be conditioned for zinc sulfide flotation.  The process scheme for zinc flotation also includes a rougher bank and five stages of cleaning to produce smelter-grade zinc concentrates.  For both lead and zinc sections, the rougher flotation concentrates are reground to 80 percent finer than 25 microns prior to cleaner flotation to liberate the sulfides for further upgrading.  The plant is currently operating without re-grinding, final primary grind is currently achieving the final desired grind size, during start-up.  Re-grind will be implemented as necessary when the plant reaches full design capacity and a greater load is fed to the primary grinding circuit.

An additional deep-froth flotation cell has been added to the zinc circuit, and one additional deep-froth flotation cell will be added to the zinc and lead circuits during 2020, to remove more fluorine, a deleterious mineral for sales.  Both final lead and zinc concentrates are thickened, filtered, and stored in concentrate storage facilities prior to loading in trucks for shipment.

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1.10  Infrastructure

Los Gatos Project is located in the Municipality of Satevó, Chihuahua, Mexico, approximately 160 kilometers, southwest of the state capital of Chihuahua City and about 8 kilometers west of San José del Sitio, Chihuahua.

The access road from Chihuahua, Chihuahua, México is newly paved.  A portion of the road from San José del Sitio has been rerouted to the mine site to minimize interference with the river that runs by the mine property.

The camp consists of a structural steel pre-engineered building capable of housing 350 people.  The camp includes a kitchen and cafeteria, laundry, infirmary, and other buildings required to maintain this facility.  Emergency power is designed for the camp to provide 100% backup in the event of a power outage.

The camp is currently serviced by a satellite dish-based internet and TV connection.  Mobile phone service at the mine site has been improved.  This upgraded system provides communication capabilities for surface and underground personnel.

Power to the site is supplied via a 115 kV utility transmission line.  This line originates from the San Francisco de Borja substation and is approximately 66 km long.  Based on the process and mine equipment, a total electrical load of approximately 24 MW is required for the project.  The diesel generators used during power line construction remain on site for back-up power as required.

Raw water to meet potable and non-potable water demand is supplied by groundwater pumped from dewatering wells.  The well water is cooled from 50°C to 40°C prior to use.  Groundwater from an existing well is suitable quality for potable and non-potable uses.

Sewage water treatment systems were designed to handle waste as required on the project.

Storage and management of landfill disposal is in a building and separated into two zones, one for non-hazardous waste and a second zone for hazardous waste.  The hazardous waste is collected and disposed by a certified and authorized company per Mexican regulations.

1.11  Marketing Studies and Contracts

MPR has secured contracts and agreements for the following for the development of the project:

·Minera Plata Real, S. de R.L. de C.V. (MPR), along with Operaciones San Jose de Plata S. de R.L. de C.V. and Servicios San Jose de Plata S. de R.L. de C.V., form the Los Gatos Joint Venture, owned by Sunshine Silver Mining & Refining Corporation (51.5%) and Dowa Metals & Mining Co., Ltd. (48.5%).

·Royalty agreement with La Cuesta International S.A. de C.V. under the terms of the document, Contrato de Exploración, Explotación y Promesa — La Cuesta International, S.A. de C.V. and Minera Plata Real, S.A. de C.V., dated April 2006.  Under the terms, MPR pays a royalty payment of US $40,000 per year during the preproduction period.  When production was initiated a net smelter return (NSR) royalty began at 2% on production from the Los Gatos concession.  This is reduced to 0.5% upon all payments reaching $10 million.  The maximum royalty payment for this agreement is set at US $15 million.

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·MPR holds the rights to 17 mining concessions totaling 103,086.8 ha.  These have been duly executed and recorded in the Mexican Public Registry of Mines (Vazquez, Sierra, and García, S.C) for the mining concessions title in register number 231498 dated March 4, 2008, and updated Title Opinion by VHG Servicios Legales, S.C. dated on November 5, 2019, Minera Plata Real Concessions.

·Mine and land access agreement with the Ejido La Esperanza, Contrato de Usufructo dated April 13, 2012 with an annual cost of US$ 11,200.

·MPR has an easement contract for the access road on land owned by Ejido San José.  This easement contract is for 30 years.

Indicative smelting and refining terms have been prepared for the zinc and lead concentrates and were used in the economic analysis.  Details can be found in Section 19.

MPR has obtained metal price forecasts for the four payable metals from Los Gatos from nine financial institutions:  Table 1-5 contains the average long-term forecast that were used in the economic analysis.

Table 1-5:  Payable Metal Price Forecasts for Los Gatos

Metal	Units	Consensus Long-Term Price
Gold	$/Ozs	1,472
Silver	$/Ozs	18.99
Lead	$/lb	0.87
Zinc	$/lb	1.09

MPR has no lease agreements for the Los Gatos project.

1.12  Environmental Studies, Permitting, and Social or Community Impact

According to the environmental system inventory, no relevant or critical areas were found, nor were protected natural areas or conservation areas established by National Commission for the Knowledge and Use of Biodiversity (Comisión Nacional para el Conocimiento y Uso de la Biodiversidad — CONABIO) identified, except for the Priority Hydrological Region 39, identified as the Upper Conchos River Basin.  The basin could be directly affected by the Project because the runoff may be affected by the construction of mining infrastructure, by the forest removal, and the modification of the original structure of the soil.

On December 12th, 2016 the Environmental Impact Statement (EIS or MIA) was submitted to the Secretary of Environment and Natural Resources (SEMARNAT).  The SEMARNAT regulates the environmental aspects of mining projects and issues the permits once the EIS is approved, according to Art. 28, Frac. III, VII and X of the General Law of the Ecologic Equilibrium and Environmental Protection, and by the Art- 5 Section L), Frac. I and III, Section O) Frac. I and Section R), Frac. I of the Regulations for Environmental Impact Statement.  The MIA was approved in 2017.

The project is in the municipality of Satevó, in the state of Chihuahua, with a population of 452 people, according to the official record of year 2010.  The current land uses are livestock, agriculture and recently mining due to the execution of the Los Gatos mining exploration and production that has been carried out since 2009.

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The following Federal, State and Municipal Permits issued for the Cerro Los Gatos Mining Operation have been applied for and issued by Federal, State and Municipal authorities as required for exploration, preparation, development and operations during the 2018 and 2019, have been obtained by Minera Plata Real:

·SEMARNAT — Environmental Impact Statement (Manifestación de Impacto Ambiental — Modalidad Regional) (MIA-R) issued on 2017, No. SGPA/DGIRA/DG/05121-2017.

·SEMARNAT 1st.  Modification to increase Impacted area from 211.0841 ha to 268.8450 ha and from 95 to 99 mine workings, No. SGPA/DGIRA/DG/01914, March 15, 2018.

·SEMARNAT 2nd.  Modification to increase Impacted area from 268.8450 ha to 325.0860 ha and from 99 to 133 mine workings, No. SGPA/DGIRA/DG/09272, November 28, 2018.

·SEMARNAT — Exemption to present MIA for Extension of Road from San José to Los Gatos mine. No. SG.IR.08-2018/097, May 4, 2018.

·SEMARNAT — Modification of trajectory for “Power Line 115 KV Los Gatos”.  No. SG.IR.08-2018/093, May 4, 2018.

·SEMARNAT — Authorization of Preventive Report for Direct Mining Exploration, diamond Drilling in Los Gatos NW-CE-SE, Cascabel Fault and El Valle Vein”.  No. SG.IR.08-2019/070, May 7, 2019.

·CONAGUA — Residual waters discharge from Los Gatos into Santo Toribio Creek, 8.0 l/s. No. 06CHI141265/24FADL16, August 31, 2018.

·CONAGUA — Authorization for residual waters discharge from Los Gatos into Santo Toribio Creek, 8.0 l/s. No. 06CHI141265/24FADL16, August 31, 2018.

·CONAGUA — Authorization for increment of residual waters discharge and change of point from Los Gatos into Santo Toribio Creek, 8.0 l/s to 120 l./s. No. 06CHI141265/24FADL16, July 16, 2019.

·CONAGUA — GASIR — Authorization for construction and operation of Tailings Storage Facilities No. 1 with capacity for 7.6 Mm3 to be built is four stages and a period of 9 years for construction. No. 4494, January 18, 2019.

·SEMARNAT — Approval of Environmental Unique License (Licencia Ambiental Unica, LAU), for production of 2,500 tpd for MPR, No. LAU-CHIH-001-2019, May 27, 2019.

·DGGIMAR — SEMARNAT — Approval of Registry for Management of Dangerous Residues for production of 144.642 tonnes/year, No. 08-PMG-I-3405-2019, March 26, 2019.

·Secretaría de Desarrollo Urbano y Ecología (SEDUE) Chihuahua — Approval of Registry and Generating Corporation with Plan of Management for Residues with Special Handling, approval for production of 468.747 tonnes/year, April 9 and 11, 2019.

·During the months of June and July 2018, permits and approvals by the Municipality of Satevó, Chihuahua of included the following permits:

·Permit for the Use of Land;

·Authorization and approval for initiation of mining construction workings and infrastructure; and

·Official alignment and number.

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1.13  Capital and Operating Costs

These costs are presented as a summary, refer to Section 21 for detailed estimates.

All costs and economic results are presented in 2020 U.S. dollars.  Quantities and values are presented using standard metric units unless otherwise specified.  No escalation has been applied to capital or operating costs.  No gearing is assumed in the analysis.

Technical economic tables and figures presented in this report require subsequent calculations to derive subtotals, totals, and weighted averages.  Such calculations inherently involve a degree of rounding.  Where these occur, they are not considered to be material.

1.13.1  LOM Capital Costs

These costs are presented as a summary.  LOM capital cost requirements are estimated at $267 million, including sustaining capital, as summarized in Table 21-4.  The Initial capital of $316 million was required to commence operations and construction was completed on time and on budget.

Table 1-6:  LOM Capital Costs

Description	Units	Sustaining Capital
Direct Costs
Mine & Surface Infrastructure	$000s	266,398
Direct Costs	$000s	266,398
Indirect Costs
Mine & Surface Infrastructure	$000s	932
Indirect Costs	$000s	932
Total Sustaining Capital	$000s	267,330

1.13.2  LOM Operating Costs

LOM operating costs are summarized in Table 1-7.  These costs are based on the current operations.

Table 1-7:  LOM Operating Costs

Description	Unit Cost ($/meter)	Unit Cost ($/t-milled)
Mine, Surface and G&A	26.47	83.58
LOM Operating	—	83.58

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1.14  Economic Analysis

The economic analysis is presented on an unlevered, post-tax, present value (PV) basis.   Valuation estimates presented in this technical report should be adjusted for existing LGJV current liabilities, receivables and long-term indebtedness.  Economic results are summarized in Table 22-2.  The analysis suggests the following conclusions, assuming no gearing:

·Mine Life: 11 years;

·Pre-tax present value (PV5.0%): $764 million;

·Post-tax present value (PV5.0%): $653 million;

·Taxes Paid: $148 million; and

·Sustaining project capital of $267 million

Table 1-8:  TEM Results

Description	Unit Cost ($/t-milled)			LOM Value ($000s)
Net Smelting Return	$	214.04		2,058,579
La Cuesta Royalty as of June 2020	$	(1.50	)	(14,415	)
Net Revenue	$	212.54		2,044,164
Operating Costs
Mine, Surface, and G&A	$	(83.58	)	(803,835	)
Operating Costs	$	(83.58	)	(803,835	)
Operating Margin	$	128.96		1,240,329
Capital Costs
Sustaining Capital Costs	—			(267,330	)
Capital Costs	—			(267,330	)
Pre-Tax Cash Flow
Cash Flow	—			978,867
PV5.0%	—			764,690
Post-Tax Cash Flow
Cash Flow	—			830,653
PV5.0%	—			653,166

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1.15  Conclusions and Recommendations

A new tradeoff study should be undertaken to evaluate the possibility of expansion to 3,000 tpd.  The crushing and grinding circuits were designed with the capacity of 3,000 tpd, and additional Resources have been identified.  This new study should evaluate the additional cost for mine and flotation expansion.

1.15.1  Geology and Resources

1.15.1.1  Conclusions

Project geologic and drill hole data for the Los Gatos project has been collected and analyzed by MPR using industry standard methods and practices and is sufficient to characterize grade and thicknesses of the deposit and to support the estimation of Measured, Indicated and Inferred Mineral Resources.  Although the deposit has been densely drilled, Resource expansion potential and project upside exist in the immediate deposit area, as well as other identified prospects throughout the land package.

1.15.1.2  Recommendations

It is recommended that:

·Additional drilling is conducted to further convert Inferred Resources and expand Resources at the Cerro Los Gatos deposit.  The current Resources are significant but additional Resource potential remains in the immediate area.  Drilling is specifically recommended:

·Down-dip and along strike to the southeast in the SE Zone;

·In the detached blocks in the hanging wall of the NW block that are currently classified as Inferred;

·Additional definition of the plunging shoot in the SE3 block and potential down-dip extent of mineralization of the SE3 block; and

·Down-dip in the Central block following up on high-grade encountered in GA-55, GA-66, and GA-243 to determine if the system continues in some other form.

·Additional infill drilling is conducted at Amapola and Esther to delineate mineralized shoots and assess full Resource potential;

·Following potentially positive results from infill drilling at Amapola and Esther, the Resources should be updated, and a scoping study conducted to determine if the two deposit areas could contribute to the economics of the Cerro Los Gatos project;

·Surface mapping and sampling is conducted in greater detail to refine and prioritize prospects in the project area; and

·Geophysical surveys are conducted following prospect prioritization, but before exploration drilling.

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1.15.2  Mineral Reserves

1.15.2.1  Conclusions

Mineral Reserves were calculated for the updated mine plan, based on the September 2019 Resource update.

1.15.2.2  Recommendations

It is recommended to continually review and update the Reserves throughout the mine life.  Increased Resource will most likely increase the life of the mine and a new mine plan should consider potential Resources discovered in the future.  It should also consider updated geotechnical information to define the pillar size requirements.

1.15.3  Mine Planning

1.15.3.1  Conclusions

Based on the deposit geometry and anticipated geomechanical conditions, as well as currently observed field conditions, the economic extraction of the Los Gatos Resource will continue to incorporate both longhole mining and drift-and-fill mining methods.  Modern trackless mobile equipment is being utilized for all development and mining activities.  The exploration decline from surface has been extended to provide primary access and delivery of services.  The ramp is also used for haulage of ore and waste from the underground operations.

Ongoing waste development to sustain the 2,500 tpd production rate averages approximately 211 m/month during the production period.

The life of mine is scheduled at approximately 2,500 tpd for a total of 11 years, with steady-state ore production reached in the second quarter of 2021.  Along with the Inferred Resources, there are indications of additional Resources along strike that, with additional drilling, may increase the mining Resource.

1.15.3.2  Recommendations

The following recommendations were made for Mine Planning:

·Refine the detailed mine design and schedule for the first five years of the project.  Look for opportunities to improve the average grade by selectively targeting higher-grade areas.

·Review the exploration development necessary to increase the Mineral inventory and incorporate it into the mine plan.

·Complete additional hydrological studies to predict ground water inflows more accurately.  Hot water inflows not only impact the dewatering system detail design, but they also increase ventilation and cooling requirements.

·An operational solution to manage/stop hot water inflows through ungrouted diamond drill holes is required.

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1.15.4  Mineral Processing and Metallurgy

The Cerro Los Gatos deposit is a silver, lead, and zinc Resource.  Lead and zinc occur primarily as galena and sphalerite, respectively.  Significant amount of willemite is identified in all tested samples.  Lead oxide minerals are also identified in some of the samples, especially from South East zone samples.  The existence of lead and zinc oxide minerals impacted their flotation performance.

JK-drop weight and SMC test results show the samples are softer when compared to JKTech database while the SPI test results categorize the samples from moderately soft to moderately hard per SGS database.  The Ai and BWI tests results describe the samples as from abrasive to very abrasive and from moderately hard to hard.

Very good lead and silver flotation results have been achieved.  The final lead cleaner concentrates of the LCTs averaged 60.9% Pb at 5,404 g/t Ag at average recoveries of 89% lead and 68.7% silver.  The zinc cleaner concentrates averaged 54.2% Zn at an average recovery of 66% due to the high willemite content.

The expected grades and recoveries for lead, zinc, and silver to individual flotation concentrates utilized in this report were further investigated by a pilot plant program using material composed of a bulk sample accessed by an underground decline into the orebody.  The results of that program indicate the grade and recovery estimates provided herein.  The production plant is currently in operation.

1.15.4.1  Recommendations

During operations, it has become evident that additional removal of fluorine is necessary.  The Cerro Los Gatos Mine has reduced the fluorite content of the concentrate by providing additional cleaning stages, four and six stages in the lead and zinc floatation sections (from three and five).  This is done to minimize the recovery of the fluorite by entrainment/achieve the targeted fluorite rejection.

1.15.5  Economics

Economics have been updated for this report considering the updated Resources and Reserves.  The results of the new estimate have improved due to higher grades, additional tonnes, and actual costs.

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2.0  INTRODUCTION

Minera Plata Real, S. de R.L. de C.V. (MPR) is a Joint Venture Company owned by Sunshine Silver Mining & Refining Corporation (51.5%) and Dowa Metals & Mining Co., Ltd. (48.5%).  Tetra Tech, Inc. (Tetra Tech) has been contracted to prepare this report update for the Los Gatos Project in Chihuahua, Mexico.  This updated report contains new information on the September 2019 Resource update and Reserves based on a mine plan produced from the updated Resources.  Economics have been updated based on the new Resource and Reserve calculations.

2.1  Terms of Reference

This report has been prepared as a Technical Report for MPR by Tetra Tech.  The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in consultants’ services, based on:  i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report.

2.2  Scope of Work

The scope of work conducted by Tetra Tech per the request of MPR is the development of a report update to include a Resource update based on drilling that has been completed since the FS was finished in 2017.  The new Resource has been utilized in the creation of an updated mine plan, which has been used to calculate updated Reserves.  Information was brought forward from the 2017 FS as appropriate, with relevant changes detailed where they have occurred in the other sections.

2.3  Units of Measure

The Metric system has been used throughout this report.  All currency is in US dollars ($) unless otherwise stated.

2.4  Detailed Personal Inspections

1)Guillermo Dante Ramírez-Rodríguez, PhD, MMSAQP, inspected the site from September 30—October 1, 2015, January 17, 2017 and August 20-21, 2019.

2)Leonel López, CPG, SME-RM visited the site on November 29-30, 2018 and August 20-21, 2019.

3)Kenneth Smith, SME QP visited the site January 17, 2017 and August 20-21, 2019.

4)Kira Johnson, MMSAQP visited the site July 17-18, 2012 and August 20-21, 2019.

5)Keith Thompson, P.G. visited the site February 23-28, 2015; July 10-14, 2015; December 12-15, 2015; January 29—February 2, 2016; and September 17-21, 2018.

6)Luis Quirindongo, SME QP visited the site June 25-26, 2015.

7)Max Johnson, P.E. has not visited the site.

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3.0  RELIANCE ON OTHER EXPERTS

Regarding the mining concessions, the author has been provided with a title opinion by the law firm VHG Servicios Legales, S.C. that related to titles documentation, tax payments, and assessment works, presented November 5, 2019 to MPR, the opinion stated that all claims are in full force and effect.  According to Title Opinion, all the Los Gatos mining concessions are grouped, except for the Paula Adorada concession.

The author has relied on the title opinion and statements by MPR that the claims and agreements are in good standing.

The mine plan has been generated by MPR staff and verified by Tetra Tech for the calculation of Reserves.

Tetra Tech has also relied on MPR’s input regarding information for economics, processing, and operations.

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4.0  PROPERTY DESCRIPTION AND LOCATION

The Los Gatos project is located in the South-central part of Mexican State of Chihuahua, within the Municipality of Satevó (Figure 4-1).  Chihuahua borders the neighboring states of Coahuila, Durango, Sinaloa and Sonora, and shares a common border with the United States of America.

Chihuahua has a long mining history with substantial production of silver, gold, lead and zinc from deposit districts such as Santa Eulalia, Naica, Santa Bárbara, San Francisco del Oro, Bismark, and new deposits such as El Sauzal, Palmarejo, and Dolores.

Figure 4-1:  Los Gatos General Location Map

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4.1  Location

The Cerro Los Gatos Deposit is approximately centered on Latitude 27° 34’ 17” N, Longitude 106° 21’ 33” W, near the town of San José de Sitio.  It is approximately 120 km South of the state capital of Chihuahua City and approximately 100 km North/Northwest of the historic mining city of Hidalgo del Parral.  The project is accessible by automobile from Mexican Federal Highway 24 to kilometer 81 and then turning West on a newly paved road for 40 km West to the community of San José de Sitio, which is situated near the Southeast end of the concession block.  Travel time by automobile is approximately two hours, either from Chihuahua City from the North or Hidalgo del Parral from the South.  The city of Valle de Zaragoza, located on federal highway 24, 35 km to the South of the turnoff to San José del Sitio is the nearest significant commercial center.

4.1.1  Mining Concession

MPR is the owner of mineral rights held by 16 titled concessions grouped under Los Gatos Group concession in addition to the concession Paula Adorada, covering 103,086.83 ha. Titled mining concessions are summarized in Table 4-1.

Table 4-1:  Los Gatos Project Titled Mining Concessions

	Lot	Holder	Surface (Hectares)	Title	Type of Concession	Term	Location
1	Los Gatos	MPR	19,711.6889	231498	Mining	March 3, 2058	Satevó, Chihuahua
2	Los Gatos 2	MPR	10,719.5765	228950	Mining	February 21, 2057	Satevó, Chihuahua
3	Los Gatos 3	MPR	27.2846	231076	Mining	January 15, 2058	Satevó, Chihuahua
4	Los Gatos 4	MPR	52,596.9673	238511	Mining	September 22, 2061	Satevó, Chihuahua
5	Mezcalera	MPR	4,991.6263	228249	Mining	October 16, 2056	Satevó, Chihuahua
6	Mezcalera 2 Fracción I	MPR	39.2621	228929	Mining	February 20, 2057	Satevó, Chihuahua
7	Mezcalera 2 Fracción II	MPR	26.1402	228930	Mining	February 20, 2057	Satevó, Chihuahua
8	Mezcalera 2 Fracción III	MPR	29.0859	228931	Mining	February 20, 2057	Satevó, Chihuahua
9	La Gavilana	MPR	10.0000	237137	Mining	November 18, 2060	Satevó, Chihuahua
10	La Gavilana Fracción I	MPR	44.0000	237461	MINING	December 20, 2060	Satevó, Chihuahua
11	Paula Adorada	MPR	40.0000	223392	Mining	December 8, 2054	Satevó, Chihuahua
12	San Luis	MPR	16.0000	236908	Mining	October 4, 2060	Satevó, Chihuahua

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	Lot	Holder	Surface (Hectares)	Title	Type of Concession	Term	Location
13	Los Estados Fracc. 1	MPR	9.0000	237694	Mining	April 25, 2061	Satevó, Chihuahua
14	Los Estados Fracc. 2	MPR	44.0000	237695	Mining	April 25, 2061	Satevó, Chihuahua
15	San Luis 3	MPR	0.0111	240452	Mining	May 22, 2062	Satevó, Chihuahua
16	San Luis 2	MPR	42.3904	238694	Mining	October 17, 2061	Satevó, Chihuahua
17	Los Veranos	MPR	14,739.8002	238573	Mining	September 22, 2061	Satevó, Chihuahua

The Cerro Los Gatos Joint Venture holds these concessions through its 100%-owned Mexican subsidiary company, Minera Plata Real S. de R.L. de C.V. (MPR).  The Los Gatos Joint Venture is 51.5% owned by Sunshine Silver Mining & Refining Corporation and 48.5% owned by Dowa Metals & Mining Co., Ltd.  MPR holds the rights to the concession of Paula Adorada through an exploration agreement with purchase option, which has been duly executed and recorded in the Mexican Public Registry of Mines (VHG Servicios Legales, S.C.).  The Los Gatos concession (Title 231498) is held subject to a royalty provision to La Cuesta International, Inc.

Ownership of the Los Gatos Joint venture partnership has been established and is registered under the following agreements:

·According to Legal Opinion issued by VHG Servicios Legales, S.C. dated on November 5, 2019, ownership of the concessions mineral rights is under “Non-possessory Pledge Agreement entered into by and between MPR and Dowa Metals & Mining Co. LTD.  Recorded on May 21, 2018, under book 129, number 137 and volume 41 of the Book of Mining Acts and Contracts”.

·Another second “Non-possessory Pledge Agreement entered into by and between MPR and Dowa Metals & Mining Co. LTD., ratified on July 31, 2019 in process of being recorded”.

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Figure 4-2 shows the Los Gatos Concessions Map.

Figure 4-2:  Concessions Map for the Los Gatos Concessions

The details of the two contracts follow, as provided by MPR.

4.1.2  Los Gatos and Paula Adorada Concessions

On the Los Gatos concession, MPR is required to make semi-annual advance royalty payments, and is required to make a production royalty payment of 2% net smelter return on production from the Los Gatos concession (reduces to 0.5% upon all payments reaching $10 million) and 0.5% net smelter return from lands within a one kilometer boundary of the Los Gatos concession to La Cuesta International S.A de C.V..  Under the terms, MPR paid a royalty payment of US $40,000 per year during the preproduction period.  When production was initiated a 2% net smelter return (NSR) royalty was to begin on production from the Los Gatos concession.  This is reduced to 0.5% upon all payments reaching $10 million) and 0.5% net smelter return from lands within a one-kilometer boundary of the Los Gatos concession.  Upon commencing production, payments under the royalty agreement were deferred until March 31, 2021 with an annual interest rate of 4.5% applied to the outstanding balance.  During the deferral period, MPR pays a royalty of $100,000 per year until January 2021.  The agreement has no expiration date; however, the

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Company may terminate the agreement upon 30-day official termination notification.  The registered ownership of the Los Gatos concession (title 231498) was transferred from La Cuesta to MPR in 2015.

The Paula Adorada concession was acquired from the Chihuahua based company Grupo Factor through an option to purchase agreement in effect from 2008-2013.  Once all obligations and payments were completed during the term of the agreement, the registered ownership of the Paula Adorada concession (title 223392) was transferred from Grupo Factor to MPR in 2014 with no remaining obligations or royalties.

4.1.3  Internal Concessions not held by MPR

There are nine small concessions within the Los Gatos project area that are not held by MPR.  MPR plans to apply for the canceled concessions when they are formally liberated.  Tetra Tech notes if there is more than one application at the moment the claim is declared free by the Chihuahua’s DGM Agency for the new concession, the winner by lottery held by the Mining Agency will be assigned the new rights.

Table 4-2:  Internal Concessions

Concession Name	Title	Surface Area	Owner	Status
Ampl. Este de San Luis	187436	42.4019	Mario Humberto Ayub Touché	Canceled
Ampliación Oeste de San Luis	187432	53.3725	Mario Humberto Ayub Touché	Current
La Calesa	187433	4.1992	Fidencio Chávez Soto	Canceled
La Concepcion	188161	10.0000	Minas de Satevó, S.A. de C.V.	Canceled
San Brígido	191780	80.0000	José Luis Chávez Cobos	Current
Ampl. de San Brígido	195307	50.0000	Fidencio Chávez Soto	Current
La Cieneguita	204861	21.0000	Minas de Satevó, S.A. de C.V.	Canceled
Margarita	171530	70.8550	Cía. Minera La Perla, S.A.	Current
El Tren	172158	54.7700	Cía. Minera La Perla, S.A.	Current

Under Mexican Mining Legislation, titled concessions must have submitted the required Surveying and Assessment Works to define their precise location and rights against any pre-existing mining claim.  Once titled, concession owners have the obligation to submit annual Assessment of Work Reports for each concession or group of concessions based on minimum investment amounts.  Tetra Tech notes all the Los Gatos concessions are grouped for legal compliance with requirements by Mexican Mining Law, except for the Paula Adorada claim, which was acquired later.

A second obligation that titled mining concessions must meet is the bi-annual payment of mining duties.  Tetra Tech notes that in Title Opinion dated November 5, 2019 by VHG Servicios Legales, S.C. for the Los Gatos Project, MPR has complied with the payment of mining duties up to the second semester of 2019.

According to the Title Opinion issued by the law firm of VHG Servicios Legales, S.C. dated November 5, 2019 for the Los Gatos Project, MPR has complied with their obligations and mining duties have been paid, including the second semester of 2019; therefore, MPR concessions are in good standing.

Titled mining concessions, following the amendments made to the Mining Law in 2005, have an effective period of 50 years counted from their registration in the Public Registry of Mines and can be renewed for

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equal periods provided there are no grounds for cancellation; therefore, MPR’s concessions have a period of validity through March 3, 2058, which corresponds to the oldest concession within the Group, Los Gatos concession, and is assigned to the Los Gatos Group, and independently to 2054 for the Paula Adorada concession, which may be also incorporated to the group upon application by MPR. (Table 4-1).

4.2  Surface Rights

MPR has arranged permissions to enter and perform exploration activities on several land properties in the project area.  Figure 4-3 shows the distribution of communal land and private property where permissions have been obtained and those under negotiation against the boundaries of mining concessions.  MPR has purchased surface lands covering the known extents of the Cerro Los Gatos, Esther and Amapola Resource areas totaling 5,478.9 ha as shown in light blue in Figure 4-3.

Figure 4-3:  Surface Rights and Exploration Permissions (MPR)

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MPR has negotiated and ratified access agreements with the two blocks of communally owned land belonging to the Ejidos of La Esperanza shown in purple on Figure 4-3 and San José del Sitio shown in light green on Figure 4-3.  These agreements allow access through the surface land holdings of both communities and are registered with the federal land registry.  MPR has worked together with both communities since the inception of the exploration project and has enjoyed strong support from the community leaders and general assemblies.

MPR has established a multi-disciplinary team to communicate the progress of the project to both La Esperanza and San José del Sitio, as well as the surrounding communities and municipalities.

4.3  Environmental Permitting

On December 12, 2016 MPR filed a MIA to SEMARNAT, the environmental authority in Mexico.  According to the Mexican regulations, the Project “Los Gatos” contemplates the execution of activities considered risky, which must be in compliance with the provisions of Article 147 of the Ley General del Equilibrio Ecológico y la Protección al Ambiente (LGEEPA) (General Law of Ecological Equilibrium and Environmental Protection).  To comply with this regulation, an environmental risk study has been filed along with the MIA.  The Environmental Unique License was approved May 27, 2019.

On July 17, 2017 SEMARNAT approved the MIA-Regional with document No. SGPA/DGIRA/DG/05121-2017 for mining exploitation project in Satevó, Chihuahua to develop work and activities (site preparation, construction, operation and others) needed to develop mining exploitation.  The approved area to be directly impacted by works and activities is 211.084 hectares.  The authorized permit period is for 24 years (from July 17, 2017 to July 17, 2041) starting the day of notification of this resolution, with the possibility to extend for a period similar to the authorized.

On September 4, 2017 SEMARNAT approved the MIA-Particular with document No. SG.IR.08-2017/251 to develop work and activities to construct and operate the project named Línea Eléctrica 115 KV Los Gatos, which consists of the opening of an 18-m wide corridor and 58.0 kilometers, which affects an area of 105 hectares to collocate 249 posts to support the power lines in the municipalities of San Francisco de Borja and San Javier Satevó, Chihuahua.  The authorized permit period is for 20 years (from September 4, 2017 to September 4, 2037) starting the day of notification of this resolution.

According to article 28, section VII of the LGEEPA, land use changes in forested areas as well as in jungles and arid zones are subject to the environmental impact assessment.  The construction of mining and support infrastructure required by the Mining Project “Los Gatos”, implies a CUSTF (Change of Land Use) in an area of 390.37 ha covered by desert microphyllous scrubland, according to Article 14 of the environmental impact assessment regulations, and the information on land use change is included in the MIA.

On November 1, 2017 the SEMARNAT approved the Estudio Técnico Justificativo para Ejecutar el Cambio de Uso de Suelo de Terrenos Forestales with document No. SG.CU.08-2017/310 to remove forest vegetation and fertile soil in an area of 390.6972 hectares to prepare the site and construct the infrastructure required for the mining exploitation of Los Gatos project.  The authorized permit period is for 36 months (from November 1, 2017 to November 1, 2020) with the possibility to extend the permit period.

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4.4  Environmental Liabilities

The author is not aware of any environmental liabilities to which the property is subject.

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5.0  ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1  Accessibility

San José del Sitio is accessible by an improved gravel road from the turnoff of Federal Highway 24 at the KM 81 marker between the cities of Chihuahua and Hidalgo del Parral.

The access road from Chihuahua, Chihuahua, Mexico has been recently paved.  A portion of the road from San José del Sitio has been rerouted to the mine site to minimize interference with the drainage that runs in the valley where the Cerro Los Gatos deposit is located.

5.2  Climate, Vegetation, Soils, and Land Use

The project area is in the Sierras y Llanuras del Norte Physiographic Province near the boundaries between the Gran Meseta, Cañones, and Sierras, and Llanura Tarahumara Sub Provinces.  The general physiography of the Los Gatos area is characterized by low to middle rolling volcanic hills with local escarpments and flat valley floors.  Altitudes vary with between 1,550 masl at the base of the Santo Toribio Creek and 1,780 masl at the top of the Los Gatos Hill, one of the highest peaks of the project area.

The climate of the Los Gatos project is typical of desert areas of Northwest Mexico, extreme semi-arid, with a maximum temperature in the order of 41.7°C and a minimum recorded at minus 14°C; annual average temperature is 18.3°C.  Annual rainfall averages 363.9 millimeters (mm) over an average of 61 days, mostly during the rainy season of June through September, and relative humidity is 50%, with a dominant Northeastward wind.  There is abundant sunshine and little cloud cover during most of the year.  Snow is a rare occurrence in Southern Chihuahua but has been recorded on occasion.  Exploration and mining activities are seldom interrupted by adverse weather conditions, except for short-lived storms producing floods and damage to access roads.

Vegetation is characterized by a semi-desert landscape, with typical low brush vegetation in the slopes including lechuguilla, ocotillo, sotol, yucca, sage, bear grass, and other types of indigenous grasses.  Larger brush and trees are common along the main watercourses, with the presence of oak, cypress, cottonwood, poplar, huizache, and mesquite, among others.

The soils of the area are sandy to rocky and are composed of detrital material from the local volcanic and sedimentary rocks classified as lithosols and yermosols.  The lack of flat areas with regular water sources and good soils results in only small areas useful for crops, but there is sufficient growth of native grasses and desert plant life to support the principal economic activity of the region, cattle grazing.  Land tenure in the municipality of Satevó is 25% communal (Ejido); and 52% private property, with predominantly cattle grazing and other agricultural use.

Locally, the surface lands are mostly owned by private individuals as small cattle ranches, with average sizes of 1,000 to 2,000 hectares.  Many of these ranches are unimproved grazing lands with no structures; however, a few ranch houses exist in the scattered areas.  Some landowners live locally in the community of San José del Sitio or surrounding communities, while others live in the surrounding cities of Zaragoza, Parral, and Chihuahua.

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Two communities hold parcels of surface lands as agrarian communes or “Ejidos.”  These are the communities of La Esperanza and San José del Sitio, which have corporate ownership of their respective surface lands (Behre Dolbear, 2011).

5.3  Personnel

As a part of the company’s commitment to adding value to the local communities and building capacity in Mexico, over 99% of the operations workforce is from Mexico.  Most of the workforce is being sourced from local towns, with skilled labor from the nearby cities of Chihuahua and Hidalgo del Parral.

5.4  Infrastructure

Water Resources in the region are mostly related to the Conchos River Basin, including the San Pedro, San Francisco de Borja, and Satevó River Sub-Basins.  A larger supply of surface water is associated with the Conchos River, located 7 km to the South of the main exploration areas.  The Conchos River is dammed in several locations, including La Boquilla, a major hydro power plant in the region.  Scattered ranch houses within the project area are normally serviced by generators and small wells or capture ponds from surface runoff waters.

Locally, there are significant groundwater deposits.  Water from dewatering and mine inflows are being cooled and used for onsite purposes.  Water is reclaimed from the tailings storage facility for use in the process facility.  MPR has conducted detailed hydrogeologic studies over the entire area.

Power to the Cerro Los Gatos Mining project site is supplied via a 115-kV utility transmission line.  This originates from the ‘San Francisco de Borja’ substation in Satevó (Chihuahua), where a 115-kV connection has recently been installed.

A camp and supporting facilities have been constructed onsite for workers and contractors.

5.5  Population Centers

The mine is located nearby San José del Sitio, categorized as a Municipal Section of the Satevó Municipality.  It is a community of approximately 264 persons, with electrical and water services, elementary school, and basic health services available.  Regular daily bus services connect the town with the capital city of Chihuahua.  The city of Valle de Zaragoza, 45 km to the East-Southeast of San José del Sitio, located on Federal Highway 24, 35 km to the South of the turnoff to San José del Sitio, is the nearest significant commercial center.

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6.0  HISTORY

The Los Gatos project area is considered an underexplored region with only small showings of precious and base metals mineralization.  It has been the subject of only very limited historical prospecting and mineral exploration.  Various maps from the Servicio Geológico Mexicano (SGM — Mexican Geologic Survey) and its predecessors show prospect locations at the Esther, Gavilana (Paula), and San Luis zones with references to the occurrence of silver, lead, and zinc.  Reports in the archives of the SGM reference field review of the Tren and Margarita prospects (Baca Carreón, 1964) in the Northwest part of the Los Gatos concession as well the Santa Rita prospect (Ramírez, 1976), located to the East of San José del Sitio outside the Southeastern limit of MPR’s concessions block.

There are small prospect pits and minor workings in the Esther, San Luis, Tren/Margarita, and Paula zones.  Local verbal accounts suggest that most of this development occurred in the period of 1920-1950, although there is reference to minor work at the Esther zone as recently as the 1960’s.  From the limited development observed in each of these zones, it is unlikely that there was ever any record keeping of production.  Surface work by MPR has not uncovered any evidence of modern prospecting activities in the area such as drill hole collars, survey points, or earlier sample locations.

The project was initially recognized by reconnaissance activities by Perry Durning and Frank Hillemeyer of La Cuesta International Inc. (La Cuesta) in 2005 while under contract with Silver Standard Resources. La Cuesta applied for the original Los Gatos concession in 2005 and recommended the target to Silver Standard for acquisition.  Silver Standard geologists visited the project in 2005 but rejected further work and freed La Cuesta to promote their project to other entities.

Los Gatos Ltd. (LGL) (then parent of MPR prior to the merger into Sunshine Silver Mines Corporation in 2011) was contacted later in 2005 and the project was visited by LGL representative Jon Gelvin.  An initial letter of agreement for exploration work on the project was negotiated between La Cuesta and Los Gatos Ltd. in 2006, and a final contract was ratified in April 2006 between MPR and La Cuesta.  Only minor field work was conducted during 2006-2007 on the Los Gatos project during the waiting period for the initial concession to be titled (P. Pyle, 2010).

Considering the lack of important mine workings and previous drilling or any other direct exploration, there are no other records of historical Mineral Resource and Mineral Reserve estimates.  Any silver, lead, and zinc production that might have been carried out from the Esther, Gavilana (Paula), San Luis, Tren, and Margarita prospects was probably limited to a few hundreds of tonnes with irregular silver and lead-zinc concentrations (Behre Dolbear, 2011).

6.1  Historic Resource Estimates

No historic Resource estimates were completed before MPR’s involvement with the project.

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7.0  GEOLOGICAL SETTING AND MINERALIZATION

7.1  Regional Geological Setting

The Los Gatos project is located in the transition zone between the Sierra Madre Occidental volcanic province of Western Mexico and the Mesozoic Chihuahua basin, largely sedimentary, to the East.  It is also located in the general contact zone of the Sierra Madre Occidental (SMO), Chihuahua, and Parral Tectonostratigraphic Terranes Figure 7-1.

Figure 7-1:  Geologic Provinces Map Showing the SMO, Tectono-Stratigraphic Terranes
(SGM, Campa and Coney, 1987; USGS, Hammarstrom et al, 2010)

The zone extends from the younger Trans-Mexican volcanic belt in the state of Jalisco in central Mexico Northward through the states of Durango, Sinaloa, Chihuahua, and Sonora and partially into the Southwestern United States.  It is largely characterized by a thick sequence of Tertiary volcanic rocks that are generally dissected by a strong North-Northwest bearing fault system that divides the area into the plateau and barranca sections.  The sequence of volcanic rocks is subdivided in two major units, the Lower Volcanic Group and the Upper Volcanic Group.

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Lower Volcanic Group (LVG): Characterized by a predominant pile of andesitic volcanoclastic rocks that characteristically outcrop at the bottom of the deep barrancas.  The group is generally massive in nature and shows extensive propylitic alteration, commonly due to the alteration effects of coarse-grained to porphyritic intrusive rocks.  Even though the volcanism is predominantly andesitic, the upper parts, toward the contact with overlying volcanic, tend to become more felsic, and thick beds of rhyodacite and rhyolite and are found intercalated with andesite and dacite.

Upper Volcanic Group (UVG): Characterized by a thick sequence of felsic volcanoclastic rocks, predominantly ignimbrites, that shows well-defined bedding and tuffaceous horizons.  These rocks form most of the high scarps and cliffs that characterize this province.  Normal extension faulting creates a series of large, gently dipping blocks with almost no signs of alteration.  Volcanism in this area started 30 to 32 million years ago with the beginning of a sudden bimodal, calcalkalic event.

The SMO Province is one of the largest known epithermal, precious-metal metallogenic provinces and is host to well-known gold-silver producing mining districts, including Concheño, Ocampo, Batopilas, San Dimas-Tayoltita, Topia, Guanaceví, and Bacís and recent discoveries such as Mulatos, La Ciénega, El Sauzal, and Pinos Altos.  It has been well established that most of these districts are enclosed within the LVG sequence, although few of them show mineralization transecting up to the base of the UVG, as evidenced at La Ciénega and Ocampo.

The oldest rocks of the area are Mesozoic (Cretaceous) aged sedimentary rocks belonging to the Chihuahua Platform.  Predominant silver-lead-zinc mineralization characterizes this region, and mineralization is commonly related to skarn, limestone replacement, and Mississippi Valley type deposits. Some of the best examples include Santa Eulalia, Naica, Bismark, San Martín, Velardeña, La Negra, La Encantada, Concepción del Oro, Charcas, and many others.

Volcanic rocks of the SMO volcanic province were erupted upon an irregularly folded and faulted surface of these older sedimentary rocks.

Pre-volcanism compression (80-40 Ma) recorded in the underlying sedimentary sequence was followed by North-Northeast extension (<29 Ma) in the region (Ferrari, et al., 2007).  Ferrari, Valencia-Moreno, and Bryan (2007) state that the “Sierra Madre Occidental consists of five main igneous complexes:  (1) Late Cretaceous to Paleocene plutonic and volcanic rocks; (2) Eocene andesites and lesser rhyolites, traditionally grouped into the Lower Volcanic Complex; (3) silicic ignimbrites mainly emplaced during two pulses in the Oligocene (ca. 32-28 Ma) and Early Miocene; (4) basaltic-andesitic lavas that erupted toward the end of, and after, each ignimbrite pulse, which have been correlated with the Southern Cordillera Basaltic Andesite Province of the Southwestern United States; and (5) post-subduction volcanism consisting of alkaline basalts and ignimbrites emplaced in the late Miocene, Pliocene, and Pleistocene, directly related to the separation of Baja California from the Mexican mainland” (P. Pyle, 2010).

The regional geology in the area of the Los Gatos project is shown in Figure 7-2.  The dominant rocks of the Los Gatos project area would be classified as belonging to the Lower Volcanic Group placing the ages of deposition from 39-35.5 Ma (P. Pyle, 2010).

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Figure 7-2:  Regional Geologic Map (SGM, 1:250,000 Original Scale) Property Structural Setting

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7.2  Property Geological Setting

The oldest rocks of the project area are Upper Cretaceous (Cenomanian) to Lower Paleocene aged sandstones, shales, and limestones correlative with the Mezcalera formation, deposited in the limits between the Aldama (limestone) Platform and the Mesozoic Mexican Sea (open basin environment).  These rocks have been locally metamorphosed to phyllites, quartzites, and marbles near areas of igneous activity, including at the Santa Rita skarn area East of San José del Sitio adjacent to the Southeast of the Los Gatos claim block. Rocks of this oldest sedimentary sequence occur within a small horst block located to the Southwest of the Cerro Los Gatos deposit, with prominent high-angle fault boundaries on the North and South, parallel to the regional trend of faulting (Figure 7-2).

A stratigraphic column representing the regional geology is shown in Figure 7-3. Rocks of the series locally referred to as the “Lower Volcanic Series” (Units Tv2, Tv3, and Tv4 from McDowell 2007) dominate the geology of the Los Gatos project area.  The oldest of these units are composed of andesitic lava flows and pyroclastic breccias (Unit Tv2) that were deposited on irregular topographic surfaces and have variable thicknesses.  The general orientation is relatively flat, with a low regional dip to the Southeast of approximately 8 degrees.  There are many exceptions to this orientation in outcrop, however, due to the irregular topography onto which the flows were deposited.  Overlying and interbedded with the older andesitic flows are flows and tuffs of dacitic composition (Tv3).  Volcanoclastic sandstones and sedimentary breccias occur in the Northeastern portions of the Los Gatos project area in fault contact with the andesitic and dacitic flow rocks.  It is possible that these rocks are correlative with the Ts unit of McDowell 2007, which is described as “coarse, generally lithified clastic deposits, associated with Northwest trending linear basins.  These rocks are derived from the andesitic and dacitic local terrain and occasionally contain fragments of hydrothermally altered material and vein fragments.

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Figure 7-3: Stratigraphic column of Los Gatos

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Intruding and deposited on the entire section are locally important rhyolite flows, flow domes, and dikes that are likely correlative with unit Tv4 of McDowell 2007.  These rocks are usually strongly silicified and have all the varied textures expected with the development of flow domes, including breccias, flow banding, and intrusive/extrusive transitions.

Each of the rocks in the section contains observable hydrothermal alteration, suggesting that mineralization in the area probably occurred late in the history of the development of the volcanic section.  It is important to stress, however, that economic grades of mineralization have only thus far been identified in the andesite and dacite sections (Tv2 and Tv3) (P. Pyle, 2010).

The Los Gatos District hosts a series of quartz, quartz-calcite, and calcite veins in at least fifteen separate vein systems that are exposed along a strike length of approximately 30 km and an outcrop belt width of approximately 5 km.  Vein width is generally in the order of 1 m with local wide zones up to 8 m.

Structurally, the veins form two sets with North and Northwest strikes and mostly steep dips, consistent with formation as oblique-slip normal faults.  Slicken line rakes indicate dominant normal faulting but with some significant dextral-slip components.  A structural model is proposed in which veins formed in dextral-normal faults, with North-striking veins predicted to be thicker with dominant normal slip kinematics and Northwest-striking veins predicted to have oblique-slip kinematics.  A dextral component is consistent with horsetail structures (e.g., Mezcalera Vein) and dilatant bends and jogs (cymoid loops; e.g., San Luis system).  District-scale East dip of volcanic units suggests a master normal fault to the East hidden below conglomeratic cover and a potential exploration target; geophysical techniques may be useful in such exploration (E.P. Nelson, 2007).

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On a regional scale, both West-Northwest and North-Northwest trending structures are very common.  The West-Northwest trending fault and fracture zones probably reflect reactivated basement structures, whereas many of the North-Northwest trending faults probably are associated with basin-and-range extension. In the region, epithermal mineralization is associated with both phases of extension, so both trends have exploration potential; however, the basement architecture has overall control on the distribution of magmatic centers and hydrothermal systems.  This can be seen in the deflection of later basin-and-range faults and Laramide fold-thrust structures into the pre-existing West-Northwest structural corridors. Because of this, the main West-Northwest trending fault zones are considered to be higher-priority targets (T. Starling, 2010).

7.3  Mineralized Zones

Mineralization at the Cerro Los Gatos deposit is associated with a series of West-Northwest trending veins hosted in volcanic rocks on the footwall side of a listric normal fault contact.  The hanging wall of the fault is comprised of epi-clastic sediments.  Figure 7-4 is a surficial geologic map of the deposit.

Figure 7-4:  Geological Map of the Cerro Los Gatos Deposit Area

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Economic mineralized grades are not present at surface; however, epithermal alteration textures are present and aided in the discovery of the deposit.  The general Northwest trending East dipping Cerro Los Gatos vein system is persistent with a mapped extension in the order of 10 km, true widths of as much as 30 m at depth as demonstrated by diamond drilling, and local associated veining up to 50 m wide.  Banded quartz veins and breccias are cemented by quartz, calcite, and abundant manganese oxides.

A study based on geological characteristics and silver-lead-zinc (arsenic-antimony-mercury) anomalous sections of the vein resulted in the discovery of the Cerro Los Gatos listric-shaped mineralized horizon hosting steeply to shallowly dipping mineralized-shoots at depth.  Mineralization of interest occurs for approximately 2,500 m in length, between an elevation varying roughly between 1,200 masl and 1,400 masl through a mineralized vertical extension of between 50 m and 250 m and an estimated average in the order of 200 m.  The reported average drilled width of the structure is in the order of 8.9 m.  It is noted that some sections of the vein required deeper drilling and some holes intersected mineralization of interest.

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Figure 7-5 is a cross section through the center of the deposit, section line 29, showing Ag equivalent (AgEq) in the drill hole traces and the block model.

Figure 7-5:  Cross-Section 29 AgEq

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The top of the mineralized horizon at Cerro Los Gatos is generally located at an elevation of 1,400 masl.  The surface is in the order of 1,570 masl ± 50 masl.

Mineralization of interest and high-grade mineralization have been identified in the different vein systems at the Los Gatos project.  Lead, zinc, and silver have been identified from epithermal quartz veins at the surface and from drilling intersections, while smaller, but important quantities of gold and copper associated with the veins have been intersected.  Anomalous values have, thus far, been identified in the Cerro Los Gatos, Esther, Amapola, Cieneguita, San Luis, Paula, Rodeo, San Agustín, Boca de León, Lince and Mezcalera zones.  Drilling has identified a continuous geometry of the mineralization in the Cerro Los Gatos, Esther, and Amapola zones.

Lead mineralization occurs primarily as galena and lead oxide minerals of varying grain sizes that are disseminated in quartz vein material, as open-space filling in cavities, and as replacements in the andesitic and dacitic flow units.

Zinc mineralization occurs as sphalerite and zinc silicate minerals of variable grain sizes disseminated in quartz vein material, as open-space filling in cavities, and as replacements in the andesitic and dacitic flow units.  Sphalerite ranges from yellow to brown in color and is deposited in a similar style but is not always associated with the galena mineralization.

Silver mineralization occurs as acanthite (argentite) and native silver and has been detected in thin sections as proustite as small inclusions within galena grains.

Copper mineralization occurs as chalcopyrite and occasional native copper disseminated within quartz veins.  Gold mineral species have not been identified visually but are present in small quantities in assay results.

The veins themselves display variable gangue mineralization, depending on the depth of exposure within the epithermal environment.  It is common to observe calcite or manganese oxide mineralization at high levels within the epithermal system, which transitions to barite, fluorite, and quartz at lower levels.  Adularia, albite, and alunite have also been observed within the veins but only in small percentages and usually at high elevation levels.  Within the mineralized portions of the veins, it is common to see quartz with minor fluorite and occasional minor calcite associated with lead, zinc, silver, copper, and gold mineralization.  The veins are typically rhythmically banded on a scale of 1 mm to 10 mm per band, with repeated pulses of quartz carrying the metals and other gangue minerals.  It is common to see multiple pulses of mineralization where small veins crosscut each other.  It is also common to see various coloration of quartz in the multiple pulses, ranging from milky white to vitreous gray to amethystine purple (P. Pyle, 2010).

It is apparent that most of the economic mineral values are associated with sulfide mineralization.  Oxide mineralization is limited at depth, and is commonly related to fracture, breccia zones, and open spaces within the veins.

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8.0  DEPOSIT TYPES

Veins in the Cerro Los Gatos deposit show textures and gangue mineralogy (local chalcedony and calcite, and quartz-replaced lattice texture calcite) that indicate a relatively high-level hydrothermal system in the boiling environment.  Breccia with clasts of vein quartz indicates a protracted hydrothermal system during multiple faulting events, a positive sign for economic epithermal veins.  It has been interpreted that mineralized-ore shoots may extend relatively far down dip, possibly to at least 250 m.

Mineralization at Cerro Los Gatos is characterized by, silver, lead, zinc, and copper sulfides and their corresponding oxides, along with fluorite, manganese, barite, and traces of gold associated with quartz and calcite veins.  The veins vary in orientation from West-Northwest to Northwest to North-Northwest to North-Northeast and vary in thickness from 1 m to 8 m in outcrop but displaying much greater true thickness at depth.  Study of the veins in hand specimens and thin sections suggest they are epithermal in origin and are likely of intermediate sulfidation composition.

The exploration model for these types of veins was put forward in a landmark paper by Dr. Larry J. Buchanan (1981) that set the basis for the understanding and interpretation of epithermal deposits that has been widely used in exploration, Figure 8-2 below.  Dr. Buchanan now serves as a special consultant to SSMRC and has been instrumental in the recognition of the importance of the mineralogy of the veins and the expected transitions of the veins in the sub-surface.

Exploration of epithermal veins at Los Gatos is mainly focused on the interpretation of geological, structural, mineralogical, and alteration features in order to identify those areas within where mineral deposition was most likely to occur due to paleo-boiling surfaces at depth.  These specific levels within the veins are where economic concentrations of lead, zinc, silver, copper, and gold-particularly bonanza-grade mineralization can be expected.  Additional exploration is being targeted to other areas where mineralization can be concentrated, such as in the hanging wall fracture zones to the veins, the flanks of the flow domes, and structural intersections within the vein trends.

Other deposit types in the region suggest that higher-temperature mineralization can also occur, such as the skarn setting identified at the Santa Rita prospect located to the Southeast of the concession block.  These higher-temperature analogues have not yet been identified within the concession block (P. Pyle, 2010).

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Figure 8-1 shows epi-thermal textures encountered in drill hole GA-132 at 392 m down the hole on the left, and GA-175 at 273 m down the hole on the right.

Figure 8-1:  Epithermal Textures in Drill Core

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Figure 8-2:  Idealized Section of a Bonanza Epithermal Deposit (Buchanan L.J., 1981)

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9.0  EXPLORATION

9.1  Historic Exploration

Apart from small pits and workings in the Gavilana (Paula), San Luis, Tren/Margarita, and Esther zones, there has been little to no previous exploration work within the Los Gatos project area.  No evidence of systematic prospecting, sampling, or drilling has thus far been identified.  The only record of historic sample collection is from Baca Carreón, 1964, where 16 samples along the Tren/Margarita zone were taken.

9.2  Recent Exploration

MPR began its first phase of exploration at the Cerro Los Gatos deposit in 2007 with a program of surface geologic mapping and rock sampling covering approximately 60% of the original Los Gatos concession within the core of the claim block.  This work was conducted by a local Mexico-based consulting group, Grupo Azta, and is detailed in a report by J. Islas (2008).

Work by Grupo Azta identified more than 100 km of strike length of quartz and calcite veins, many of which contained anomalous lead, zinc, and silver mineralization.  Grupo Azta collected 1,217 rock samples from surface outcrops of vein and wall rocks.  Of the 1,217 samples, 200 samples contained values in excess of 10 grams of silver per tonne.

As the mapping by Grupo Azta progressed, it became clear that there were several orientations of prospective veins within the Los Gatos project area.  Consultant Eric Nelson was brought in to review the structural geology of the area and make recommendations on the more prospective trends.  The results of his work, contained in Nelson (2007), suggested that the most favorable vein trend was North-Northwest, and an initial program of drilling was proposed (J. Islas, 2008).

MPR expanded its program at the Los Gatos project in June 2008, employing its own local technical staff, under the supervision of Philip Pyle, Jon Gelvin, and Dr. Larry J. Buchanan.  During the months from June 2008 to October 2008, environmental permits were obtained, proposed drill areas were re-mapped and re-sampled, surface access rights were negotiated with local ranches, and drill access roads were constructed.

Drilling began with one rig in October 2008, at the Paula zone, and transitioned in early 2009 to the Cerro Los Gatos zone.  The initial significant identification of silver was from hole GA-04 in April 2009, where 73.6 g/t silver was found over 4 m from 152 m to 156 m depth.  This was quickly followed by significant intercepts in hole GA-06 and then GA-09, which contained 34 m of 414 g/t silver, 2.0% lead, and 4.85% zinc.  At this point in the drilling program, the geometry and the preferred level for mineral deposition was identified, and a series of holes were drilled that Indicated a continuous mineralized body of apparent high grade mineralization with lead, zinc, and silver mineralization over a strike length in excess of 2.5 km, a dip extent in excess of 250 m, and an average thickness of 8.9 m, within the Cerro Los Gatos banded vein complex.

Also, in early 2009, drilling in the Esther zone commenced, with one rig moving back and forth between the Cerro Los Gatos and Esther zones.  Significant mineralization was identified in hole ESO4, with 14 m containing 79.8 g/t silver from 102 m to 116 m depth.  This was followed with significant offsets in

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mineralization holes ES05 and ES06, proving a continuous geometry of mineralization for over 1 km of strike length, with an average thickness of more than 3.4 m and a minimum down dip extent of 200 m.

A decision was made to replace the original drilling rig in June 2009 with one of larger capacity, followed quickly by the addition of a second and third drilling rig during the summer of 2009.

Drilling resumed in connection with underground development at Cerro Los Gatos in August-December 2018 from designed chambers within the underground workings.  The drilling was conducted by Major Drilling with NQ size drilled from the footwall side of the mineralized zone.

Drilling shifted back to the surface in January -July 2019 using Major 5000 rigs from Major Drilling Company.  This work focused on improving confidence in the Resources of the NW and Central zones in areas where underground development had not yet reached.  As in previous surface drilling programs, holes were pre-collared with a tri-cone bit and core collected using HQ size, reducing to NQ size if poor drilling conditions were encountered.

Detailed soil geochemistry programs were conducted over the Esther zone and the area between the Cerro Los Gatos and Esther zones.  Results of the sampling identified new veins in the Esther zone and revealed four separate structures between the Esther and Cerro Los Gatos zones.

Detailed topographic mapping was created using Photosat, a Canadian contractor.  The topography was created at 1 m, 5 m, 10 m, and 50 m contours from Geoeye® satellite coverage captured exclusively for the survey.  Survey control points were established on the surface, with coordinates by total station in order to guarantee the accuracy of the survey.

A detailed 3D IP survey was conducted during July 2010 using SJ Geophysics, a contractor from Canada.  Lines were initially spaced at 100 m with stations every 25 m and later tightened to 50 m by 25 m.  Data from the survey was processed using the UBC inversion algorithms, and the results suggest a correlation between vein mineralization at the Cerro Los Gatos zone and zones of high chargeability and low resistivity.  In addition, the vein mineralization at the Esther zone suggests a similar relationship of high chargeability and low resistivity.  The first holes to test the trends of mineralization from these surveys have successfully extended mineralization in both zones.  As a result of the good correlation with mineralization, extensions of the surveys were begun in November 2010 in both the Cerro Los Gatos and Esther zones.  Additionally, data were collected in the Amapola and San Agustín zones to determine the signature of mineralization in these areas for drilling.

Detailed geologic mapping has been conducted over approximately 60% of the Los Gatos concession utilizing both local staff from MPR and independent contractors.  Regional-scale mapping has taken place on the remaining 40%.

A second review of structural geology of the Los Gatos and surrounding areas was prepared in March 2010 by consultant Tony Starling of Telluris Consulting.  His work suggests a relationship between mineralization and the presence of the younger dome rocks and identifies the younger Northeast trending cross faults as a potentially important conduit for fluid flow during the mineralization phase.  In the report (Starling, 2010) also identifies several other favorable zones from Geoeye, Spot, and Aster imagery, which may serve as loci for mineralization, that are not well exposed in outcrop.

A detailed study of the local geology in the San Agustin zone was prepared during October 2010 and detailed in a report by Byington (2010).  This work suggests a strong preference for North-Northeast trending veins, and a series of drilling recommendations were made.  A test of the drill proposals was made with mostly negative results.

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Geological, exploration, and drilling information has identified a Mineral Resource in three of the targets explored, Amapola, Cerro Los Gatos, and Esther.  MPR produced preliminary Resource estimates internally and through Rowearth Consulting of the Esther and Cerro Los Gatos zones (Behre Dolbear, 2011).

It is the author’s opinion that the samples collected for exploration purposes are representative of project area.  Soils and surface rock chip samples were assayed and used for location purposes only and were not incorporated in Mineral Resource estimates.  Assayed drill core was the only source of grade and thickness data incorporated in the Mineral Resource estimate.

In addition to the Cerro Los Gatos deposit, the Esther deposit and the Amapola deposit, SSMRC has identified nine other mineralized zones defined by high-grade drill intersections in the Los Gatos District.  Grade intercepts from such mineralized zones are shown Table 9-1 below.

Table 9-1:  Mineralized Grade Intercepts

Mineralized Zones	Length(m)	Ag(g/t)	Pb(%)	Zn(%)
Boca de León	2.2	90.6	5.0	0.8
Cieneguita	1.3	62.4	5.4	0.9
El Lince	4.0	62.2	0.0	0.1
El Rodeo	0.8	61.5	3.4	4.0
Los Torunos	1.8	34.2	2.6	0.9
Mezcalera	2.0	59.4	0.1	0.1
La Paula	4.0	180.0	0.1	0.1
San Agustín	1.3	148.0	1.2	2.3
San Luis	2.0	271.0	0.3	0.1

NOTE:  Does not include Ocelote and Wall-E/Ava zones, as sufficient drilling has not been completed at these zones.

9.3  Decline and Bulk Sample

Driving of a 1.3 km decline at a 15 percent grade commenced in July of 2015 and reached the upper extent vein in the Central block in September of 2016.  Figure 9-1 is a photo of the entrance of the decline taken in August of 2015.

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Figure 9-1:  Decline Entrance (Mine Portal)

A 1,215 tonne bulk sample was mined on the 1,400 m level from five vein drift blast rounds each with 4m advance along the strike of the lower vein.  The material was blended and 50 tonnes were sent to SGS in Lakefield, Ontario, Canada for pilot plant metallurgical testing.

Figure 9-2 is a cross-section showing the path of the decline and the location of the bulk sample.  Four drill holes pierced the vein prior to the advance of the decline, samples were collected from the blast rounds.

Figure 9-2:  Decline and Bulk Sample Area Cross-Section Looking Northwest (+/- 200 m)

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Table 9-2 compares the planned grade and tonnage of six drift 4 m rounds on the vein and the round average and the assumed tonnage of five rounds.  The additional drilling and bulk sample suggest that locally the upper extent of the vein is richer in Ag, Pb and Zn than estimated in the model and lower in tonnage.  The vein was encountered where it was modeled and expected.  Drilling from the decline demonstrated Resource grade material exists outside of the model up-dip to the Northwest.  The drill holes and bulk sample data have not been included in the block model and could potentially expand the tonnage and improve the grade in the up-dip area of the Central block if included.

Table 9-2:  Bulk Sample and Block Model Comparison

	Ag g/t	Pb %	Zn %	AgEq g/t	Mass
Model	314	1.70	3.29	500	2,216	(1)
Round 1	1,083	10.97	11.82	1,922
Round 2	739	11.4	11.22	1,571
Round 4	571	5.95	6.86	1,044
Round 5	309	3.41	5.55	642
Round 6	473	4.64	4.73	817
Round Average	635	7.27	8.04	1,199	1,215	(2)
Comparison % Round Average/Model	202	429	244	240	69	(3)

NOTES1: Planned for 6 rounds with 4 m advances;
   2: Bulk sample grades only contain 5 rounds.
   3: Model mass corrected for 5, 243 tonne rounds instead of 6.

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Figure 9-3 shows the bulk sample drilling as well as the blast round AgEq grades compared to the model AgEq grade within the high-grade +150 AgEq g/t shell.

Figure 9-3:  3D Clipped View of Bulk Sample and Block Model AgEq Grades

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10.0  DRILLING

As of July 2019, 484 drill holes relevant to the Cerro Los Gatos Deposit had been completed by MPR, for a total of 150,842 m.  The project database contains drilling on other prospects that are not applicable to this report.  Table 10-1 shows drilling associated with the Cerro Los Gatos deposit and tabulates the drilling by purpose.

Table 10-1:  Drill Hole Count by Purpose

Purpose	Count	Length (m)
Surface Exploration	399	137,220
Underground Exploration	32	3,567
Exploration and Metallurgical testing	6	1,733
Underground Bulk Sample Targeting	4	415
Metallurgical Testing	5	1,693
Geotechnical	18	4,134
Tailings Geotechnical	14	280
Hydrologic Study	6	1,800
Total	484	150,842

Drilling was initiated at the Cerro Los Gatos project in October 2008 and continued until 2012.  Drilling recommenced in 2015 following the joint venture agreement with DOWA, with four rigs simultaneously drilling until February 2016.  Drilling began with a Mexican contractor, Minera Gavilán, but most of the drilling has been completed by Major Drilling Company with Major 5000 rigs.  Drilling is conducted using a wire line rig with diamond core capabilities.  Holes begin with HQ size and are reduced, if necessary, to NQ and very rarely to BQ, if difficult drilling conditions are encountered.  Drilling from the 2015-2016 program were pre-collared with tri-cone bit.

Drilling resumed in connection with underground development in August-December 2018 from designed chambers within the underground workings.  The drilling was conducted by Major Drilling with NQ size drilled from the footwall side of the mineralized zone.

Drilling shifted back to the surface in January -July 2019 using Major 5000 rigs from Major Drilling Company.  This work focused on improving confidence in the Resources of the NW and Central zones in areas where underground development had not yet reached.  As in previous surface drilling programs, holes were pre-collared with a tri-cone bit and core collected using HQ size, reducing to NQ size if poor drilling conditions were encountered.

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Holes are surveyed with a Flexit EZ trac device at 50 m intervals, as the holes are completed.  Accuracy of the Flexit EZ trac is reported by its manufacturer to be 0.25 degrees in calculation of both the azimuth and inclination.  Surveys of hole collar coordinates are completed by a local contract topographer using a Topcon Total Station GTS-236W.  All collar and survey information are stored in a master database in Microsoft Access® (Behre Dolbear, 2011).  Most collars have been cemented and annotated with the drill hole name, Figure 10-1 few monuments have been inadvertently destroyed by vehicles.

Figure 10-1:  Drill Hole Collar Monument

Early on drill holes were positioned to intersect the vein at nearest to perpendicular to strike and dip as possible however, recent infill drilling has utilized shared drilling pads to limit surface disturbance and preparation.  Figure 10-2 shows the location of drill holes.

An additional 255 drillholes have been completed within the Los Gatos project, but outside of Cerro Los Gatos deposit.  This comprises an additional 108,218 meters of drilling, which are not included in the Resource estimate that is the subject of this report.  The totals of the entire project are 739 holes for 259,060 meters.

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Figure 10-2:  Drill Hole Location Map

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11.0  SAMPLE PREPARATION, ANALYSES AND SECURITY

Data summarized in this section and utilized for Resource estimation has been collected by MPR. The sample preparation, analyses and security procedures implemented by MPR meet standard practices in most cases.  Refinements to several protocols are required to achieve the best possible quality control (QC) of sampling.  The data collected is of adequate quality and reliability to support the estimation of Mineral Resources.

No historic sampling by previous operators has been utilized by MPR and has not been described in this section.  Descriptions and quantities of samples are limited to drilling within the immediate Cerro Los Gatos deposit Resource area (project ID “GA” in the database); various surface sampling and drilling outside of deposit area are not considered relevant to this section.

11.1  Sample Preparation

Diamond drill core is transported from the rig to the core preparation site in the town of San José del Sitio, by truck.  Following geotechnical logging by field assistants, geologists log the core and select sample intervals.  Sample intervals are selected only where the geologist anticipates mineralization to exist. In practice, the core is extensively sampled above the hanging wall and below footwall on either side of the mineralized zone.  Samples are constrained to a minimum length of 80 cm and maximum of 10 m.  The mode sample length is 2 m, 79% of samples are 2 m in length, 0.5% are greater than 2 m and 20.5% are less than 2 m.

During the process of sample selection, the geologist draws a centerline to guide the core cutter.  A sample sheet is provided to the core cutter containing sample numbers and from, to intervals.  In addition to a cut sheet, a sample tag booklet system is used.  The booklet contains two removable tags, one is stapled to the plastic corrugated core box and the other is placed in the sample bag along with the sample, the book is retained.  The sample ID is also transcribed on the white plastic core box using a red marker as shown in Figure 11-1.  Sample numbering begins where the previous sample batch left off.

Figure 11-1:  Sampled Drill Core

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11.2  Security

Core preparation is completed in a converted residential double lot in the town of San José del Sitio.  The buildings and fence gates are locked at night.  Sample batches waiting to be transported to Chihuahua City are stored in a secure building adjacent to the core logging area.  When each hole is completed, samples are transported to Chihuahua City, typically three times a week, where they are immediately delivered to ALS Chemex’s preparation facility in Chihuahua City (ALS Chihuahua).  A Chain of Custody form is used to track the samples once they leave the security of the core facility in San José del Sitio.  Only project level staff are involved with the selection, preparation and delivery of samples to the laboratory.

11.3  Analyses

Samples are prepared by drying, crushing, splitting, and pulverizing at ALS Chihuahua and pulps are shipped to Vancouver, British Columbia, Canada (ALS Vancouver) for analysis. ALS Chemex is independent of Sunshine and MPR and is ISO 17025 accredited, the accreditation of ALS Vancouver encompasses preparation processes completed at ALS Chihuahua.

Samples are initially analyzed for Ag, Pb, Zn, Cu, and 37 additional elements using aqua regia inductively coupled plasma — atomic emission spectroscopy (ICP41) with re-run for values exceeding 100 g/t Ag, and 1% Pb, Zn, Cu analyzed by ore grade aqua regia inductively coupled plasma — atomic emission spectroscopy (OG62).  Values further exceeding 1,500 g/t Ag are re-run using fire assay with gravimetric finish (GRA21)

Samples are also initially analyzed for Au using fire assay with atomic absorption spectroscopy finish (AA23) with a re-run for values exceeding 10 g/t Au using fire assay with gravimetric finish (GRA21).

Analysis flow is further shown in graphic form in Figure 11-2.

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Figure 11-2:  Sample Analysis Flow Diagram

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11.4  Quality Assurance and Quality Control for Sample Analysis

MPR’s quality assurance (QA) measures involve the use of standard practice procedures for sample collection as described above; and include oversight by experienced geologic staff during data collection.  QC measures implemented by MPR include in-stream sample submittal of standard reference material, blank material and field duplicate sampling.

11.4.1  Quality Control Sample Performance

QC sample performance is tracked by a dedicated-on site database manager by visually comparing results returned from the lab to control samples in an established work order.  In few instances, issues were cited and re-run by the laboratory.  QC sample performance trends over time are not reviewed on site but is recommended that they be graphically tracked on a continual basis for Ag as well as Pb, Zn, Cu and Au.

QC performance reviewed as part of this report indicate:

·     Standard performance is good, with most initial failures attributable to clerical errors and true failures from certified values near the detection limit.  Clerical errors once discovered should be corrected as soon as possible;

·     Blank performance for Ag is good, but poor performance for Pb, Zn, and Cu should be investigated.  Disparities between Ag performance and the poor performance of Pb, Zn, and Cu is related to the proportion of the detection limit to relevant Resource grade.  Uncertified blanks could contain base levels of Pb, Zn and Cu several times greater than the detection limit, or samples are possibly being contaminated during preparation or analysis and can further complicate investigation.  The use of non-certified blanks has been discontinued.  Observed levels of possible contamination are too low to have a material effect on the estimation of Resources.  This is supported by good performance seen for standards, significant contamination would likely have biased standard analyses as well, and this was not observed; and

·     Field duplicate performance is reasonable, but protocols should be altered to test intervals within the high-grade portions of the mineralized zone more often.

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12.0  DATA VERIFICATION

The following describes steps taken by the qualified person, Tetra Tech personnel, and previous authors to verify data provided by MPR.  The author visited the site November 29-30, 2018, and August 20-21, 2019.  A Tetra Tech staff member audited the project database and visited ALS Chemex Vancouver on August 29, 2012.

Data verification conducted during the 2015 site visit included:  observations of drill hole collar locations and orientations, inspection of drill core compared to logs and analytical results, observations of the drill rig and core collection, observations core intake, visits to outcrops, discussions with MPR geologist including reviews of working maps and cross-sections.  Data verification by the qualified person indicates the data collected by MPR meets industry standard practice and is enough to support the estimation of Mineral Resources.

12.1  Check Sampling

Confirmatory sampling of drill core was completed by Tetra Tech during a site visit in July 2012.  Thirty-four previously sampled half cores were quartered and bagged under the supervision of Tetra Tech and sent to ALS Chemex to undergo the sample analysis regiment used by MPR.  Seven check samples collected by Behre Dolbear in 2009 as part of their data verification efforts were added to this comparison.  Figure 12-1 compares the original sample database values and the check samples in a box and whiskers plot.

Figure 12-1:  Check Sample Scatter Plot

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The box and whisker plots show the means, medians, and population distributions are reasonably similar for Ag, Pb, Zn, Cu and Au.  Additionally, the 41 samples are compared in Figure 12-2 as a scatter plot, with the original sample database values on the x-axis and the check samples on the y-axis.  The scatter plot shows reasonable reproducibility but does contain large differences for a handful of samples which is typical of duplicate sampling.  Both figures demonstrate the original and check data are suitably similar for the purposes of independent qualified person verification.  This spot check verification is not a substitute for umpire sampling recommended in Section 11.0 of this report, which should be made part of MPR QA/QC process.

Figure 12-2:  Check Sample Scatter Plot

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12.2  Database Verification

Verification of the database involved the following:

·Drill hole database validation checked for from and to overlaps, excessive drill hole deviations, missing intervals, and missing holes from drill hole interval files;

·Comparison of the section interpretations to the geologic logs;

·A comparison of the collar elevation to the topographic surface;

·Comparison of standard reference material to the normal intervals to determine if any mislabeled standards were present in the database;

·Spot checks of the assay certificates to the database conducted in 2012 database audit; and

·Collar location spot checks by handheld GPS, Table 12-1.

Table 12-1:  Collar Verification by Handheld GPS

Hole ID	Easting	Northing	Check Easting GPS	Check Northing GPS	Absolute Difference (m)
GA-23	368,554	3,047,578	368,549	3,047,582	6.8
GA-150	368,553	3,047,578	368,549	3,047,582	5.2
GA-154	368,553	3,047,578	368,549	3,047,582	5.2
GA-263	368,551	3,047,578	368,549	3,047,582	3.9
GA-167	369,439	3,047,228	369,431	3,047,233	9.9
GA-170	369,439	3,047,229	369,431	3,047,233	9.8
GA-140	368,638	3,047,548	368,630	3,047,556	11.1
GA-142	368,638	3,047,548	368,630	3,047,556	10.9
GA-145	368,638	3,047,549	368,630	3,047,556	10.8
GA-76	368,618	3,047,562	368,614	3,047,563	4.4
GA-183	368,642	3,047,596	368,635	3,047,597	6.4
GA-185	368,642	3,047,597	368,635	3,047,597	6.5
GA-180	368,642	3,047,596	368,635	3,047,597	6.2

12.3  Metallurgical Sampling

In April of 2016, SGS received a list of 21 variability samples selected by Sunshine Silver Mining & Refining Corporation that had been submitted to the SGS lab in Vancouver for metallurgical and hardness testing.  A review of the samples selected was completed by Amanda Landriault, P.Geo. to evaluate how geologically representative the samples were compared to the material in the mine plan.  The goal of the sample selection review was to identify any gaps or fatal flaws in the samples that were sent for analysis.  This review did not include a review of the number of, or types of tests completed on the samples.

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The conclusions and recommendations of the study illustrate that samples were well selected to respect various grades, alterations, and host rock.  No apparent metal domaining or zoning exists in the deposit to date.  Most of the samples fall within the bulk of the grade distributions and sampling of the higher-grade material has been accounted for.

SGS is of the opinion that some of the material just above the AgEq 150 ppm cut-off, for example two samples with AgEq values between 175-200 ppm, should be included in future metallurgical sampling.

The compositing recipe instructions were provided to SGS by DOWA and did not systematically include dilution material at the sample limits.  Five of the 21 samples contain sufficient dilution that could provide an idea of the metallurgical behavior of material containing wall rock.  It is critical to include wall rock surrounding the mineralized zones to study how the host rock behaves during processing and how it could affect metal extraction.  Additionally, the wall rock surrounding mineralized structures contains alteration and possibly low-grade ore which influence the comminution and flotation.  A selective mining unit (SMU) must also be considered due to the variable thickness of the veins; specifically, the smallest reasonable unit of measurement possible during the blasting and excavation process.  Proximal veins could be mined together depending on the SMU, in which case additional country rock will invariably be included.  Dilution will be refined throughout the mine life based on the mining conditions and methods.

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13.0  MINERAL PROCESSING AND METALLURGICAL TESTING

This section summarizes testwork completed by SGS Vancouver Metallurgy on 2015 test program samples originating from Los Gatos Project, Mexico.  The objective of this program was to support the feasibility study.

13.1  Samples

In total, 21 variability composites were assembled per instructions provided by MPR.  A master composite was prepared from the first 13 variability composites (Var 1-Var 13) by a 75% split-out.  The 75% splits were combined as master composite.  The remaining 25% split of Var 1-Var 13 and the 100% of Var 14-Var 21 were blended separately.  The weights of master composites and variability composites for metallurgical testwork are summarized in Table 13-1.  A total of 467 kg of master composite was prepared.

Table 13-1:  Weights of Master Composite and Variability Composites

CompName	Start Weight,kg	Master CompositeSplit 75%,kg	VariabilityComposite Split, kg
Vari 1	25.9	19.4	6.5
Vari 2	106.8	80.1	26.7
Vari 3	26.1	19.6	6.5
Vari 4	79.4	59.6	19.9
Vari 5	21.6	16.2	5.4
Vari 6	13.2	9.9	3.3
Vari 7	34.2	25.6	8.5
Vari 8	25.2	18.9	6.3
Vari 9	100.9	75.7	25.2
Vari 10	50.4	37.8	12.6
Vari 11	31.0	23.2	7.7
Vari 12	35.5	26.6	8.9
Vari 13	72.9	54.7	18.2
Vari 14	89.4		89.4
Vari 15	57.9		57.9
Vari 16	21.3		21.3
Vari 17	21.7		21.7
Vari 18	26.4		26.4
Vari 19	13.5		13.5
Vari 20	12.1		12.1
Vari 21	23.4		23.4
Master Composite		467.3

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The head assay results are summarized in Table 13-2.  The master composite assayed 0.1% Cu, 2.38% Pb, 5.27% Zn, 275 g/t Ag, 3.48% S and 2.86% F.  Silica is the primary gangue mineral ranging from 48.1% to 77.6%.

Table 13-2:  Head Assays of Flotation Composites

AnalyteUnit	Cu%	Pb%	Zn%	Fe%	Aug/t	Agg/t	S%	F%
Vari 1	0.07	5.38	3.47	2.79	0.52	206	3.26	2.45
Vari 2	0.14	1.95	5.12	2.95	0.60	566	3.35	3.14
Vari 3	0.12	1.90	6.99	2.92	0.47	163	4.11	2.02
Vari 4	0.11	1.09	2.65	2.54	0.41	235	1.59	2.87
Vari 5	0.05	2.38	2.72	2.14	0.20	88	3.06	3.48
Vari 6	0.15	2.28	5.00	5.07	0.13	128	4.97	1.43
Vari 7	0.06	1.63	3.74	1.90	0.14	133	2.05	3.04
Vari 8	0.07	1.16	3.90	2.79	0.26	67	2.51	2.03
Vari 9	0.13	2.94	7.65	4.89	0.18	311	3.85	3.74
Vari 10	0.12	4.73	9.50	3.66	0.25	310	7.26	4.29
Vari 11	0.15	3.70	6.79	3.08	0.20	185	4.52	4.25
Vari 12	0.07	1.54	5.03	3.32	0.51	161	3.91	3.02
Vari 13	0.05	1.61	3.71	2.95	0.46	83	3.19	3.10
Vari 14	0.10	1.11	4.81	4.18	0.12	90	3.58	0.70
Vari 15	0.10	3.66	6.28	4.99	0.26	183	5.14	1.38
Vari 16	0.13	6.42	9.37	3.72	0.57	1100	6.69	1.51
Vari 17	0.09	0.97	3.33	3.12	0.49	620	2.74	1.71
Vari 18	0.11	2.19	5.75	4.55	0.10	100	4.02	2.18
Vari 19	0.12	2.58	7.43	7.35	0.23	109	4.40	3.92
Vari 20	0.08	1.43	2.10	3.14	0.10	58	1.01	4.45
Vari 21	0.10	3.73	2.93	4.11	0.16	113	1.63	5.94
Master	0.10	2.38	5.27	3.56	0.51	275	3.48	2.86

13.2  Mineralogy

The identified recoverable minerals are silver minerals, galena, and sphalerite; the pyrite content varies from 0.34-4.45% with an average of 1.78%.

Quartz has been identified as the primary gangue mineral, ranging from 47.9 to 71.7%.  The samples also contain significant amount of feldspar (0.87-22.9%), mica (0.6-6.19%), chlorite (1-11%) and fluorite (1.9-11.2%).

Lead is present mainly as galena and lead oxide minerals are also identified in some of the samples; elevated oxide levels are contained in samples received from the Southeast zone.

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Zinc is present primarily as sphalerite with significant occurrences of willemite (Zn2SiO4) and other zinc silicates (as alteration phases) in all samples.  The combined amount of willemite and other zinc minerals ranges from 0.6-7.24%, but some samples contain as much as 6.93% of willemite and other zinc silicates (Var 9).  Zinc deportment should be studied and understood well as this parameter could influence the mine production plan and may impact cash flow models.

According to the SGS dataset, generated using QEMSCAN technology as displayed in Figure 13-1, galena and sphalerite are both very finely grained.  Fine primary and regrind sizes would be anticipated to facilitate separation of the two minerals into clean flotation concentrates.

Figure 13-1:  Cumulative Grain Size Distribution (Graph from SGS)

QEMSCAN analysis was performed on the master composite and 21 variability samples.  Process mineralogy was also conducted on the flotation and gravity products.  This section summarizes the QEMSCAN results.  The detailed results are presented in “A Feasibility Level Metallurgical Study of the Los Gatos PJ Project.”

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13.3  Comminution

A summary of the grindability results is provided in Table 13-3.  The number of samples tested per zone is also provided.  The following tests were performed on Los Gatos samples:

·JK Drop-weight

·SAG Mill Comminution, SMC

·SAG Power Index, SPI

·Bond Rod Mill Work Index, BRWI

·Bond Ball Mill Work Index, BBWI

·Abrasion Index

Table 13-3:  Comminution Test Results Summary

		JK Parameters						SPI		BWI	BondAi
	Relative Density (2)	A x b (1)	ta (1)	SCSE (1)(kWh/t)	A x b (2)	ta (2)	SCSE (2)(kWh/t)	CEETCi	SPI(min)	BWI(kWh/t)	Ai(g)
Average	2.79	62.4	0.51	8.30	53.6	0.50	8.87	8.7	73.2	17.4	0.661
Std. Dev.	0.09	—	—	—	7.8	0.06	0.44	3.4	14.6	1.5	0.065
Rel. Std. Dev.	3	—	—	—	15	13	5	39	20	8	10
Minimum	2.68	—	—	—	77.6	0.70	7.66	16.0	46.7	15.3	0.598
10th Percentile	2.70	—	—	—	61.6	0.56	8.40	12.6	59.0	15.4	0.604
25th Percentile	2.71	—	—	—	57.4	0.54	8.55	11.5	62.9	16.1	0.609
Median	2.77	—	—	—	51.2	0.47	9.02	7.8	71.3	17.5	0.630
75th Percentile	2.87	—	—	—	47.7	0.45	9.25	5.7	82.2	18.4	0.719
90th Percentile	2.92	—	—	—	45.8	0.43	9.32	5.4	96.0	18.9	0.741
Maximum	2.93	—	—	—	45.0	0.43	9.36	4.5	102.1	20.6	0.775

(1) from DWT

(2) from SMC; the ta value reported as part of the SMC procedure is an estimate

* Minimum and Maximum refer to softest and harder for the grindability tests, respectively

Based on these results, the ore appears to be softer per JKTech database of Drop-weight test and SMC test; the ore also appears to be of moderately soft to moderately hard per SGS database with respect to SAG milling and appears to be of moderately hard to hard with respect to ball milling.  Based on the Ai, the ore is categorized the samples from abrasive to very abrasive.

13.4  Flotation Testing

Flotation tests were performed on the master composite and 21 variability composites.

Due to the improved marketability of the separate lead and/or zinc concentrates over a bulk concentrate; a sequential flowsheet was used for the design of the plant.  The following subsections refer to the development of that sequential flowsheet.

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A total of 44 flotation tests including five locked cycle tests were completed on the master composite.  The conditions developed in 2014 program were used as a baseline.  A number of factors including primary grind size, reagent dosage and flotation time were investigated in this test program.

13.4.1  Effect of Primary Grind Size on Flotation

13.4.1.1  Lead and Silver Flotation

Six lead and zinc rougher flotation tests were performed at varying primary grinds and the results of lead recovery and zinc misplacement are presented in Figure 13-2.

Figure 13-2:  Effect of Grind Size on Lead Flotation in Rougher Tests

F1, F2 and F3:  These three tests were performed at a k80 of 73, 102 and 125 microns, respectively.  No significant difference between these selected size distributions was observed. The lead rougher recoveries were high at 89.7-90.4% at a zinc misplacement of 13.9-15.4%.

F4 and F5:  The two tests were performed at a k80 of 169 and 205 microns, respectively.  The lead recoveries were approximately 2% lower when compared to the tests F1-F3 with a zinc misplacement of 14.5-15.5%.

F11:  The test was conducted at a k80 of 46 microns and produced the best lead flotation results.  Finer primary grind produced higher lead recovery.

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The relationship between silver recovery and rougher concentrate mass pull is presented in Figure 13-3.  There was a good correlation between silver recovery and primary grind size.  Higher silver recovery was obtained at finer grind sizes and the 46-micron grind produced the highest silver recovery under tested conditions.

Figure 13-3:  Effect of Grind Size on Silver Flotation in Rougher Tests

The primary grind size on lead and silver flotation was further confirmed by cleaner tests as shown in Figure 13-3.  Those tests were performed at same ZnCN addition level (500 g/t in rougher and 230 g/t in cleaner).  Apparently, primary grind size plays a critical role in lead and silver recovery.

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F22 and F27 were conducted at a k80 of 45 microns and the best lead and silver flotation results were achieved (top two curves in Figure 13-4).

F32 was performed at a k80 of 67 microns.  While the lead recovery was high at this size distribution, the silver recovery dropped to 62.1% from 68.9-71.8% compared to F22 and F27.

The lead and silver recovery dropped further as the size became coarser as shown in F6, F20, F8, F9, and F14, especially silver recovery which was significantly impacted.

Figure 13-4:  Primary Grind Size on Lead and Silver Flotation in Cleaner Tests

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13.4.1.2  Zinc Flotation

The effect of primary grind size on zinc rougher recovery is presented in Figure 13-5.  The zinc rougher recoveries vary between 58.9-62.7% and the overall zinc recoveries (zinc rougher recovery plus zinc in lead rougher concentrate) are 74.5-77%.  Higher overall zinc recoveries were obtained at finer primary grind sizes with the highest overall zinc recovery achieved from test F11, which was conducted at a k80 of 46 microns and resulted in an overall zinc recovery of 77%.

Figure 13-5:  Effect of Grind Size on Zinc Flotation in Rougher Tests

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13.4.2  Effect of Depressant Addition on Lead and Silver Flotation

Four lead rougher flotation tests were completed to investigate the effect of depressant addition on lead and silver flotation.  The results are presented in Figure 13-6 and Figure 13-7.

The final lead rougher recoveries were close regardless of the depressant added, but better lead and zinc separation was obtained from F28 in which ZnCN was used.  The zinc misplacement was the lowest at 20.4% in this test.  However, the ZnCN addition negatively impacted silver recovery as shown in Figure 13-6.  The silver recovery was much lower when compared to the other three tests, F29-F31.

Figure 13-6:  Effect of Depressant on Lead Rougher Flotation

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Figure 13-7:  Effect of Depressant on Silver Flotation

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The impact of ZnCN addition on lead and silver flotation was further confirmed by cleaner flotation as shown in Figure 13-8.

F35 and F37 were completed without any depressant addition, while ZnCN was added in the cleaner only (F21 and F36) or in rougher and cleaner (F39).  The silver recovery was significantly lower with the ZnCN addition (F12, F36 and F38) when compared to non-depressant addition tests (F35 and F37).

Figure 13-8:  Effect of ZnCN on Lead and Silver Flotation

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13.4.3  Effect of Longer Flotation and Higher Collector Addition on Pb/Ag Flotation

Finer primary grind of 45 microns produced the highest silver recovery as discussed earlier.  The lead recovery was high at a 76-micron grind but the silver recovery was lower when compared to a 45 micron grind.  F34 was completed at a 76-micron grind while one more lead rougher stage was added to extend the flotation time.  The collector dosage was also increased in rougher in that test.  The idea was to investigate if the longer flotation time and increased collector dosage could improve the silver recovery at 76 microns of grind.  The results are presented in Figure 13-9 and compared to F20 and F22.

The results clearly showed that the silver recovery improved significantly with the extended flotation time and higher collector addition level.

Figure 13-9:  Lead Cleaner Tests — Grade and Recovery Curves

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13.4.4  Effect of CuSO4 Dosage on Zinc Flotation and Pyrite Flotation

The CuSO4 addition level on zinc rougher flotation was investigated in F15, F16 and F17.  Pyrite flotation was also performed following the two stages of zinc rougher flotation by overdosing the collector addition.  The zinc flotation results are presented in Figure 13-10.

Higher CuSO4 addition level did improve the zinc rougher recovery.  Good zinc recovery was obtained at the lower CuSO4 addition level of 250 g/t.

Figure 13-10:  Effect of CuSO4 Dosage on Zinc Rougher Flotation

Pyrite flotation was conducted following zinc flotation by adding 250 g/t of SIPX with 8 minutes of flotation.  Only 1.1-2.2% of S was recovered into the pyrite concentrate.  Pyrite content in the master composite was low and most of the pyrite was already recovered into lead and zinc rougher concentrates during flotation.

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13.4.5  Effect of Na2SiO3 on Zinc Flotation

Sodium silicate was added in zinc flotation to investigate if it could improve the selectivity of zinc flotation and concentrate grade.  The results are compared to F7 and presented in Figure 13-11.  No improvement was observed on zinc flotation with the addition of sodium silicate.

Figure 13-11:  Effect of Sodium Silicate on Zinc Flotation

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13.4.6  Effect of pH on Zinc Flotation

The effect of pH on zinc rougher flotation was tested and the results are presented in Figure 13-12.  The three tests were completed under the same conditions except pH levels were 7.5, 9.0, and 11.0.  The overall zinc recovery (Zn rougher plus Zn in lead rougher) was 76.3%, 75.3% and 76.2% respectively for the three tests, F1, F12 and F13.

The pH had no significant effect on zinc rougher flotation, and this was further confirmed by cleaner tests as shown in Figure 13-13.  Good zinc flotation results were achieved at natural pH of 7-7.8.

Figure 13-12:  Effect of pH on Zinc Rougher Flotation

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Figure 13-13:  Effect of pH on Zinc Cleaner Flotation

13.4.7  Zinc Oxide Mineral Flotation

The Var 9 sample contained significant amount of zinc oxide minerals and the zinc recovery was relatively low by sulfide flotation.  Oxide flotation tests were conducted to investigate the potential of improving zinc flotation.  The following tests were completed:

·F18:  Na2S was added following zinc rougher flotation

·F19:  6493 was added following zinc rougher flotation

·F23-F26:  Na2S was added in primary grind mill

However, the oxide flotation was unsuccessful and there was no improvement of zinc recovery.

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13.4.8  Locked Cycle Flotation Testing

Five locked cycle tests were completed to confirm the batch cleaner test conditions and project the metallurgy.  The flotation conditions are summarized in Table 13-4.

LCT1, LCT2 and LCT3 were conducted to test the effect of primary grind size on flotation.  The grind sizes were conducted at k80’s of 46, 76 and 102 microns, respectively with all other conditions unchanged.  Three stages of lead cleaning and five staged of zinc cleaning were employed in those three tests.

LCT10 was conducted at a 45 microns grind size with 4 stages of lead and zinc cleaning and LCT11 was carried out at an 80 microns grind size with extended lead rougher flotation time and higher collector addition level.  The results are summarized in Table 13-5.

Table 13-4:  Summary Conditions of LCTs

Stage	Flotation Conditions	LCT-1	LCT-2	LCT-3	LCT-10	LCT-11
Primary Grind	Size, µm (K80)	46	76	102	45	80
	NaCN/ZnSO4, g/t	125/375	125/375	125/375	125/375	125/375
	pH	7.7	7.5	7.2	7.6	7.5
Pb Roughing	Stage	3	3	3	3	4
	3418A, g/t	30	30	30	30	80
	pH	7.6-7.7	7.5-7.6	7.2-7.4	7.6-7.7	7.5-7.6
	Float Time (min.)	7	7	7	7	11
Pb Regrind	Size, µm (K80)	17	17	19	17	19
	NaCN/ZnSO4, g/t	25/75	25/75	25/75	25/75	25/75
	pH	7	6.8	6.9	7	7.2
Pb Cleaning	Stage	3	3	3	4	4
	NaCN/ZnSO4, g/t	32.5/97.5	32.5/97.5	32.5/97.5	32.5/97.5	32.5/97.5
	3418A, g/t	12.5	12.5	12.5	13.5	15
	pH	6.8-7.1	6.7-6.9	6.7-6.9	6.7-7	6.9-7.3
	Float Time (min.)	11	11	11	14	14
Zn Roughing	Stage	2	2	2	2	2
	CuSO4	250	250	250	250	250
	SIPX	180	180	180	180	180
	pH	7-7.6	6.8-7.4	6.7-7.3	7-7.5	6.8-7.4
	Float Time (min.)	16	16	16	16	16
Zn Regrind	Size, µm (K80)	21	22	22	20	15
	CuSO4	100	100	100	100	100
	pH	6.9	6.8	6.8	7	6.7
Zn Cleaning	Stage	5	5	5	4	5
	SIPX	37	37	37	35	37
	pH	6.9-7.9	6.9-7.6	6.9-7.4	7.1-7.6	7-7.3
	Float Time (min.)	27	27	27	22	27

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Table 13-5:  Summary Results of Locked Cycle Test

Grade		LCT1,46 µm	LCT2,76 µm	LCT3,102µm	LCT10,45 µm	LCT11,80 µm
Feed (calc.)	Au, g/t	0.36	0.35	0.35	0.35	0.39
	Ag, g/t	281	276	291	281	289
	Cu, %	0.12	0.11	0.12	0.12	0.12
	Pb, %	2.35	2.39	2.43	2.42	2.52
	Zn, %	5.23	5.25	5.27	5.29	5.05
	Fe, %	3.55	3.44	3.40	3.60	3.27
	S, %	3.38	3.40	3.35	3.45	2.97
	F, %	3.64	3.56	3.60	3.22	3.23
Pb Cln Conc	Au, g/t	5.9	4.7	4.7	6.9	5.8
	Ag, g/t	5884	4816	4995	6054	5271
	Cu, %	1.62	1.35	1.33	1.64	1.57
	Pb, %	60.7	61.8	61.4	64.1	56.3
	Zn, %	8.98	8.60	8.73	8.01	11.2
	Fe, %	3.15	3.31	3.29	2.80	3.79
	S, %	15.7	16.0	15.9	14.8	16.6
	F, %	0.21	0.21	0.18	0.15	0.24
Zn Cln Conc	Au, g/t	0.52	0.70	0.69	0.65	0.8
	Ag, g/t	531	866	874	631	552
	Cu, %	0.59	0.69	0.69	0.58	0.56
	Pb, %	1.19	1.30	1.36	2.14	0.95
	Zn, %	56.9	55.2	54.7	52.5	51.8
	Fe, %	6.39	7.37	7.37	7.55	9.20
	S, %	33.0	31.7	30.0	32.9	30.3
	F, %	0.05	0.08	0.09	0.13	0.12

Distribution		LCT1,46 µm	LCT2,76 µm	LCT3,102µm	LCT10,45 µm	LCT11,80 µm
Pb Cln Conc	Au,%	60.6	50.3	49.9	62.2	60.2
	Ag, %	73.3	62.7	62.1	70.5	74.8
	Cu, %	48.3	41.4	39.4	48.4	53.3
	Pb, %	89.7	89.4	88.4	86.4	91.5
	Zn, %	5.98	5.73	5.73	4.89	9.05
	Fe, %	3.15	3.51	3.54	2.56	4.74
	S, %	16.7	17.7	18.4	14.2	22.9
	F, %	0.20	0.20	0.18	0.15	0.31

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Distribution		LCT1,46 µm	LCT2,76 µm	LCT3,102µm	LCT10,45 µm	LCT11,80 µm
Zn Cln Conc	Au,%	9.29	13.4	13.7	12.3	12.1
	Ag, %	11.6	20.4	20.3	15.5	11.6
	Cu, %	30.9	38.3	38.1	36.1	28.2
	Pb, %	3.08	3.40	3.66	6.10	2.28
	Zn, %	66.5	66.8	67.1	67.7	62.1
	Fe, %	11.2	14.2	14.8	14.5	17.0
	S, %	61.7	63.7	64.8	66.8	61.7
	F, %	0.09	0.14	0.15	0.27	0.22

Very good and consistent results were obtained.  The results further confirmed the findings in batch tests:

·Finer primary grinding improved gold and silver recovery in lead cleaner concentrate.  The gold and silver recoveries were 60.6% and 73.3% respectively in LCT1 which was carried out at 46 microns of grind size, while the gold and silver recoveries decreased to approximately 50% and 62% in LCT2 and LCT3 which were completed at 76 and 102 microns of grind size.

·The lead and silver grades improved with the addition of one more lead cleaner stage, but both the lead and silver recoveries decreased by approximately 3% when comparing LCT10 and LCT1.  The zinc grade decreased to 52.5% from 56.9% with the four stages of cleaning instead of five while the zinc recovery improved by 1% (67.7% in LCT10 vs. 66.5% in LCT1).  The four stages of zinc cleaning also resulted in higher fluorine grade in final zinc cleaner concentrate.  The fluorine grade increased to 0.129% F in LCT10 from 0.054% F in LCT1.

·Extended flotation time and higher collector dosage in the lead rougher improved lead, silver and gold recoveries even at a coarser primary grind size.  LCT11 was completed at 80 microns of grind with extended lead rougher flotation time and increased collector dosage.  The lead, silver and gold recoveries increased to 91.5%, 74.8% and 60.2% respectively, compared to 89.4%, 62.7% and 50.3% in LCT2 which was carried out at a grind of 76 microns.  However, the longer flotation time and increased collector addition in lead rougher resulted in lower final zinc recovery due to more zinc appearing in the lead cleaner concentrate.  The final zinc recovery in LCT11 was 62.1% compared to 66.8% in LCT2.  The zinc recovery could improve by optimizing conditions to bring down the zinc misplacement in lead cleaner concentrate, 9.1% in LCT11 vs. 5.7% in LCT2.

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13.4.9  Product Characterization

ICPSCAN and whole rock analysis were conducted on selected lead and zinc cleaner concentrates.  Hg, Cl and Se were also assayed.  The results are summarized in Table 13-6.

Table 13-6:  ICPSCAN and WRA Analysis

Analyte	Unit	LCT-1-5 PbCln3 Conc	LCT-1-5 ZnCln5 Conc	LCT-2-5 PbCln3 Conc	LCT-2-5 ZnCln5 Conc	LCT-3-5 PbCln3 Conc	LCT-3-5 ZnCln5 Conc
Al	%	0.14	0.04	0.15	0.06	0.14	0.06
Ba	ppm	220	40	210	50	180	60
Be	ppm	<5	<5	<5	<5	<5	<5
Ca	%	0.2	<0.1	0.1	<0.1	0.1	<0.1
Cr	ppm	40	50	40	80	70	90
Fe	%	3.22	6.26	3.06	7.34	3.22	7.66
K	%	<0.1	<0.1	<0.1	<0.1	<0.1	<0.1
Li	ppm	<10	<10	<10	<10	<10	<10
Mg	%	0.02	<0.01	0.02	<0.01	0.02	<0.01
Mn	ppm	180	1370	160	1340	170	1300
Ni	ppm	6	8	6	12	15	11
P	%	<0.01	<0.01	<0.01	<0.01	<0.01	<0.01
Sc	ppm	<5	<5	<5	<5	<5	<5
Sr	ppm	10	<10	10	<10	10	<10
Ti	%	0.01	<0.01	0.01	<0.01	0.01	<0.01
V	ppm	62	21	56	24	54	24
As	ppm	1680	1160	1500	1900	1660	2150
Bi	ppm	83.5	2.2	87.4	2.7	81.6	3.2
Cd	ppm	4520	5560	3530	5710	4130	5710
Ce	ppm	1.1	0.4	1.1	0.4	1.1	0.4
Co	ppm	17.3	97	15.6	96.5	17.3	98.1
Cs	ppm	0.7	0.4	0.7	0.6	0.6	0.7
Dy	ppm	0.17	0.08	0.15	0.08	0.14	0.08
Er	ppm	0.11	<0.05	0.07	<0.05	0.09	0.06
Eu	ppm	0.09	<0.05	0.09	<0.05	0.08	<0.05
Ga	ppm	3	10	3	9	3	10
Gd	ppm	0.14	0.07	0.12	0.05	0.14	0.06
Ge	ppm	5	1	4	1	4	1
Hf	ppm	<1	<1	<1	<1	<1	<1
Ho	ppm	<0.05	<0.05	<0.05	<0.05	<0.05	<0.05
In	ppm	<0.2	<0.2	<0.2	<0.2	<0.2	0.2
La	ppm	0.7	0.2	0.6	0.2	0.6	0.2
Lu	ppm	<0.05	<0.05	<0.05	<0.05	<0.05	<0.05
Mo	ppm	11	4	8	8	9	8
Nb	ppm	<1	<1	<1	<1	<1	<1
Nd	ppm	0.6	0.2	0.6	0.3	0.6	0.2
Pr	ppm	0.15	<0.05	0.15	0.06	0.13	0.06
Rb	ppm	3.1	0.8	3.1	1.1	2.6	1.2
Sb	ppm	1430	167	1540	172	1490	182
Sm	ppm	1	0.1	0.9	0.1	0.8	0.2
Sn	ppm	<1	<1	<1	<1	<1	<1
Ta	ppm	<0.5	<0.5	<0.5	<0.5	<0.5	<0.5
Tb	ppm	<0.05	<0.05	<0.05	<0.05	<0.05	<0.05
Th	ppm	0.2	<0.1	0.2	<0.1	0.2	0.1
Tl	ppm	1.4	<0.5	1.5	<0.5	1.5	<0.5
Tm	ppm	<0.05	<0.05	<0.05	<0.05	<0.05	<0.05
U	ppm	1.89	0.61	1.82	0.73	1.56	0.78
W	ppm	18	5	17	6	16	6
Y	ppm	0.9	<0.5	0.8	<0.5	0.7	<0.5
Yb	ppm	<0.1	<0.1	<0.1	<0.1	<0.1	<0.1
Zr	ppm	6.2	2.3	5.3	3.4	5.5	5

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Analyte	Unit	LCT-1-5 PbCln3 Conc	LCT-1-5 ZnCln5 Conc	LCT-2-5 PbCln3 Conc	LCT-2-5 ZnCln5 Conc	LCT-3-5 PbCln3 Conc	LCT-3-5 ZnCln5 Conc
Al2O3	%	0.27	0.08	0.3	0.1	0.26	0.11
Ba	%	0.021	0.003	0.02	0.004	0.016	0.005
CaO	%	0.35	0.12	0.33	0.13	0.29	0.14
Cr2O3	%	<0.01	<0.01	<0.01	0.01	<0.01	0.01
K2O	%	0.07	0.02	0.08	0.03	0.06	0.03
MgO	%	0.03	<0.01	0.04	0.01	0.03	0.01
MnO	%	0.02	0.16	0.02	0.16	0.02	0.16
Na2O	%	<0.01	0.01	0.02	0.01	0.03	0.02
Nb	%	<0.001	<0.001	<0.001	<0.001	<0.001	<0.001
P2O5	%	<0.01	0.03	<0.01	0.06	0.02	0.03
SiO2	%	5.19	1.29	4.74	1.53	4.46	1.68
Sr	%	<0.001	<0.001	<0.001	<0.001	<0.001	<0.001
TiO2	%	0.02	<0.01	0.02	<0.01	0.02	<0.01
Y	%	<0.001	<0.001	<0.001	<0.001	<0.001	<0.001
Zr	%	<0.001	<0.001	<0.001	<0.001	<0.001	<0.001
LOI	%	7.2	15.8	7.03	16.2	7.15	16
Hg	ppm	59.2	29.5	52.1	29.9	49.2	29.1
Se	ppm	316	65	311	67	305	67
Cl	ppm	<50	<50	<50	50	<50	<50

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13.5  Variability Composite Flotation

One cleaner flotation test was conducted on each of the 21 variability composites by employing the standard flotation conditions (LCT2 conditions).  The results are compared to master composite (LCT2) and plotted in Figure 13-14, Figure 13-15 and Figure 13-16.

Figure 13-14:  Silver Flotation Results of Variability Composites

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Figure 13-15:  Lead Flotation Results of Variability Composites

Figure 13-16:  Zn Flotation Results of Variability Composites

13.5.1  Silver Flotation

Silver recoveries in final lead cleaner concentrates ranged from 34.5 to 81.4% at 1280 to 24,017 g/t silver grade.  The average recovery of the 21 composites was 58.5% at a grade of 4,872 g/t silver, compared to 62.2% of silver recovery and 4,818 g/t of silver grade obtained from master composite (LCT2).  The variability tests were conducted in open circuit and the average silver recovery will be higher in locked cycle circuit.

Low silver recovery of 34.5% was obtained from Var 20.  The sample was from Southeast zone, which had a higher lead deportment percentage to Pb-Mn (Ba) Oxides.  Generally, the four composites (Var18-Var21) from Southeast zone had higher lead oxide minerals when compared to composites (Var14-Var17) from Northwest zone per QEMSCAN analyses.

13.5.2  Lead Flotation

Lead recoveries in final cleaner concentrates ranged from 34.5 to 96.7% at 44 to 80.8% of lead grade.  The average lead recovery of the 21 composites was 81.7% at a grade of 65.1% Pb, compared to 89.4% of lead recovery and 61.8% of lead grade obtained from master composite (LCT2).  The lead recovery will be higher in locked cycle circuit.

It should be noted that LCT1 data (lead recovery of 89.7% in lead concentrate and lead recovery of 3.08% in zinc concentrate were used in the economic analysis.

Lead recoveries of the composites (Var18-Var21) from Southeast zone were also impacted by occurrence of the lead oxide minerals.

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13.5.3  Zinc Flotation

Zinc recoveries in final cleaner concentrates ranged from 36.6 to 79.9% at 38.3 to 60.2% of zinc grade.  The average zinc recovery of the 21 composites was 61.9% at a grade of 55.2% Zn, compared to 66.8% of zinc recovery and 55.2% of zinc grade obtained from master composite (LCT2).  The zinc final recovery will be higher in locked cycle circuit.

It should be noted that LCT1 data (zinc recovery of 5.98% in lead concentrate and zinc recovery of 66.5% in zinc concentrate were used in the economic analysis.

Lower zinc recoveries were also obtained from two Southwest composites (Var20 and Var21), which had a high willemite content of 51.6% and 35.5% respectively.  Zinc misplacement of Var 6 and Var 17 in lead circuit was high and optimization is required to improve zinc recovery.  There was a good correlation between zinc recovery and sphalerite content.

13.6  Cyanide Destruction

The slurries used for the cyanide destruction (CND) testwork were the zinc tailings from LCT12 and LCT13 (zinc first cleaner tail and zinc rougher tail combined).  The target primary grind size of the two tests was 74 and 46 microns respectively.  Cyanide was added during flotation and the cyanide concentration (CNWAD) was 10.4 mg/L before destruction.  The objective of the testwork was to investigate the amenability of the samples to detoxification using SO2/air and to produce a treated product containing <1 mg/L residual CNWAD for filtration testwork.

One batch test and one continuous test were completed on each of the two tailings pulp generated from LCT12 and LCT13.  The test conditions and results are summarized in Table 13-7 and Table 13-8.  All reagent consumption was calculated on pure basis.

13.7  Fluorine Control

During operations, it has become evident that additional removal of fluorine is necessary.  The key reason for the high fluorine content in the lead and zinc concentrates is the high fluorite (CaF2) content in the orebody, head grade ranges in two categories from 25,000 to 40,000 F ppm to 40,000 to 60,000 F ppm.  The fluorine content in the fluorite is 48.7% by weight.  In general, the higher the fluorite in the plant feed, the higher the fluorine content in the concentrates.  The fluorine content at the mine is approximately 40,000 ppm, this means to achieve the target fluorine content of less than 1,500 ppm in the lead concentrate and less than 500 ppm in the zinc concentrate, a fluorite rejection of 99.91 and 99.95 is needed, which is a challenging task.  Due to the challenging nature, there is a need to study the liberation status of the fluorine carrier minerals on a size-by-size basis to know if there are liberation restrictions to achieve the required targets.

The Cerro Los Gatos Mine has reduced the fluorite content of the concentrate by providing additional cleaning stages, four and six stages in the lead and zinc floatation sections (from three and five).  This is done to minimize the recovery of the fluorite by entrainment/achieve the targeted fluorite rejection.  The problem is exacerbated in the lead concentrate due to the smaller particle size P80 10 µm vs 20 µm in the zinc concentrate.  The finer the particle size the higher the unselective mineral recovery by entrainment.  At this stage, the processing plant metallurgy team has focused on implementing best practice tools to minimize the entrainment, such as:  running a stable operation, increasing the number of cleaning stages,

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adding dilution water and froth washing in the cleaning circuit, good air control, deep frothers (60 cm), and having a less tenacious frother by using a MIBC (methyl isobutyl carbinol) based frother.  There are further opportunities to reduce fluorine by reducing the process variability.

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Table 13-7:  Summary Conditions of CND Test

		Pulp	Reactor	Test	Retention		g/g CN WAD			g/L Feed Pulp
		Density	Vol	Duration	Time		SO2			SO2
Test No\Feed	Process	%	L	Min	Min	pH	Equiv.	Lime	Cu	Equiv.	Lime	Cu
CND-1/LCT12	SO2/Air	34	6	385	19	8.5	17.67	11.59	0.70	0.15	0.10	0.0059
CND-2/LCT13	SO2/Air	23	6	280	14	8.5	17.10	12.03	0.81	0.15	0.11	0.0073

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Table 13-8:  Summary Results of CND Test

Analyte	Unit	CND1Feed	CND2Feed	CND1Final	CND2Final
Total NaCN	mg/L	10.6	10.4	0.02	0.02
Free NaCN	mg/L	<3.5	<3.5	<0.01	<0.01
Cyanide WAD	mg/L	10.4	10.4	<0.01	<0.01
Thiocyanate	mg/L	4	4.5	4.1	4.3
Ag	mg/L	<0.08	<0.08	<0.08	<0.08
Al	mg/L	<0.2	<0.2	<0.2	<0.2
As	mg/L	<3	<3	<3	<3
Ba	mg/L	0.054	0.065	0.053	0.068
Be	mg/L	<0.002	<0.002	<0.002	<0.002
Bi	mg/L	<1	<1	<1	<1
Ca	mg/L	38.3	34.6	122	138
Cd	mg/L	<0.09	<0.09	<0.09	<0.09
Co	mg/L	<0.3	<0.3	<0.3	<0.3
Cr	mg/L	<0.1	<0.1	<0.1	<0.1
Cu	mg/L	14.3	13.9	0.54	0.74
Fe	mg/L	0.60	0.70	0.60	0.80
K	mg/L	17	19	17	22
Li	mg/L	<2	<2	<2	<2
Mg	mg/L	1.8	3.09	4.38	5.51
Mn	mg/L	0.75	0.99	0.68	0.62
Mo	mg/L	<0.6	<0.6	<0.6	<0.6
Na	mg/L	834	588	227	186
Ni	mg/L	<0.6	<0.6	<0.6	<0.6
P	mg/L	10	11	10	10
Pb	mg/L	<2	<2	<2	<2
Sb	mg/L	<1	<1	<1	<1
Se	mg/L	<3	<3	<3	<3
Sn	mg/L	<2	<2	<2	<2
Sr	mg/L	0.60	0.55	1.02	1.05
Ti	mg/L	<0.02	<0.02	<0.02	<0.02
Tl	mg/L	<3	<3	<3	<3
V	mg/L	<0.2	<0.2	<0.2	<0.2
Y	mg/L	<0.02	<0.02	<0.02	<0.02
Zn	mg/L	<0.7	1	<0.7	<0.7

The cyanide destruction tests turned out to be very successful.  The cyanide WAD concentration was reduced to 0.2 mg/L from 10.4 mg/L after 14-19 minutes of retention time during the continuous testing.

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14.0  MINERAL RESOURCE ESTIMATES

This Resource estimate is an update and includes drilling that has been completed since the 2017 feasibility study.  This includes infill drilling from both surface and from underground to define mineralization and to upgrade the mineral classification where possible.  Drilling has been performed in the Central Zone, but most of the program focused on the North West zone and its possible extension to the north (Drilling 2019).  Mineral Resources have been estimated for the epi-thermal veins of the Cerro Los Gatos deposit by multi-pass Ordinary Kriging (OK) of capped and composited drill hole samples.

Resources were estimated for the Amapola and Esther zones in August 2012.  No additional information has been produced for these two areas since the 2012 estimate, and therefore, the Resources have been brought forward and included in this report for completeness of the Resource of the project.

14.1  Cerro Los Gatos Deposit

Estimated Measured, Indicated and Inferred Mineral Resources for the Cerro Los Gatos deposit, effective September 6, 2019, are shown in Table 14-1 at a 150 AgEq g/t cutoff grade.

Table 14-1:  Mineral Resource Estimate

Classification	Tonnes	AgEq  g/t	Ag  g/t	Pb %	Zn  %	Au  g/t	Cu  %	AgEq toz M	Ag toz M	Pb lbs M	Zn lbs M	Au toz K	Cu lbs M
Measured	5,774,314	652	324	2.9	5.8	0.39	0.11	121	60	375	744	72	13
Indicated	4,586,507	489	202	2.5	5.2	0.28	0.11	72	30	251	528	42	12
Measured & Indicated	10,360,822	576	269	2.7	5.5	0.34	0.11	193	90	626	1,272	114	25
Inferred	3,717,063	361	107	2.8	4.0	0.28	0.14	43	13	231	330	34	12

NOTES:

1) 150 AgEq g/t cutoff grade has been calculated using $18/toz Ag, $0.92/lbs Pb, and $1.01/lbs Zn,

2) Columns may not total due to rounding,

3) Mineral Resources are stated as undiluted, inclusive of Mineral Reserves.

4) One troy ounce (toz) is equal to 31.1035 grams (g) and one Tonne is equal to 2,204.62 lbs.

Mineral Resources were estimated from 2,356 samples intersecting modeled veins, sourced from 426 diamond drill holes.  Capping was analyzed for each metal estimated using histograms and probability plots to determine where high-grade distribution tails deviated from lognormal.  Sampled intervals were composited to 2 m.  Composite intervals initiated a terminated at the top and bottom of the vein contacts.

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Vein model solids were constructed in MicroMine™ modeling software; the resulting solids are shown in Figure 14-1, below.  Grade-shells were used to further isolate +150 AgEq g/t grade population for estimation.

Figure 14-1:  Vein Solids 3D View

Blocks and composites from each vein and post mineral fault block domain were independently transformed, realigned and made relative to the footwall and hanging-wall for estimation.  Realignment allowed for estimation to occur across post-mineral fault blocks approximating pre-fault orientation of the veins.  Estimations relative to footwall and hanging-wall position allowed for better data honoring across the dip of the vein.

Only composites within the same vein were permitted to estimate blocks of a given vein domain; because of the transformation and realignment estimation was permitted across post mineral fault block areas with the same vein code.  Resulting block AgEq g/t grades are shown in Figure 14-2, and the Mineral Resource classifications are shown in Figure 14-3.

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Figure 14-2:  Estimated AgEq Block Grades within Grade-Shell 3D View

Figure 14-3:  Block Resource Classification 3D View

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14.1.1  Input Data

Drill hole data was provided by MPR in Microsoft Access format finalized as of August 5, 2019.  Table 14-2 shows the drill hole and sample counts for the project and the samples used to support the vein model.  Figure 14-4 shows the cross-section lines in red and drill holes in green.

Table 14-2:  Drill Hole and Sample Count

	Drill Hole Count	Sample Count
Cerro Los Gatos Project Area	484	15,486
Resource Area	426	6,483
Vein Domain (100-20000)	368	2,356
High-Grade Domain	296	1,896

Figure 14-4:  Drill Hole Plan and Cross-Section Index

14.1.2  Grade Capping

Grade populations for Ag, Pb, Zn, Au, and Cu within the vein interpretation and the +150 AgEq g/t grade-shell were analyzed using histograms and probability plots to determine where high-grade distribution tails became unsupported or deviate from lognormal.  Upper limits were applied to intervals before compositing.  Table 14-3 details the upper thresholds chosen as well as the number of samples capped and the mean before and after capping.  Figure 14-5 to Figure 14-9 are histograms showing the uncapped grade populations as well as the upper limits chosen.

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Table 14-3:  Grade Capping Statistics

Element	Unit	Uncapped Mean	Cap	Number Capped	Capped Mean
Ag	g/t	304	2,700	36	283
Pb	%	2.6	15	38	2.5
Zn	%	5.4	23	34	5.2
Au	g/t	0.37	4	13	0.34
Cu	%	0.11	0.7	11	0.10

Figure 14-5:  Histogram for Capping Analysis Ag

Figure 14-6:  Histogram for Capping Analysis Pb

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Figure 14-7:  Histogram for Capping Analysis Zn

Figure 14-8:  Histogram for Capping Analysis Au

Figure 14-9:  Histogram for Capping Analysis Cu

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14.1.3  Compositing

Sample intervals were composited to 2 m, which is the mode sample length.  Compositing initiated and terminated at the top and bottom of continuous selected vein samples, resulting composites were permitted to be 1-2 m in length, intervals less than 1 m were rejected.  As part of the Kriging process, composite influence was additionally weighted by interval length to provide further normalization.  Compositing greater than 2 m is not appropriate because 3 m composites would cause samples to be split and 4 m composites are too large to represent the vein across dip in some areas.

14.1.4  Geologic Modeling

A wireframe solid geologic model was generated for each of the fault block zones.  Data was integrated from: surface mapping completed by MPR, 2D cross-section completed by MPR, and the downhole geologic logging, to create the model.

The model was divided into four geological domains:

·Epiclastic erosional volcanic sediments above the rhyolite and andesite;

·Rhyolite intruding the epiclastic and andesite from the southeast;

·Undifferentiated andesitic volcanic, the primary vein host, situated in the footwall of the Los Gatos fault; and,

·Dacite/volcanic tuff within the andesite, which comprises the immediate footwall of the mineralization and occasional host.

Figure 14-10 shows the geologic model in 3d looking southwest from above.  Figure 14-11 is a cross-section of the solids in the Central zone showing the relationship of the veins as well as the downhole logging.

Figure 14-10:  Geologic Model Solids 3D View

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Figure 14-11:  Geologic Model Cross-Section 27 Looking NW

14.1.5  Vein Modeling

Drill hole intervals were sub-divided into three veins and five fault blocks.  Each interval interpreted to be with the vein model was coded with a vein and fault block code.  Fault blocks include from the northwest to the southeast include: Northwest (NW or 1), Central (CN or 2), Southeast (SE or 3), Southeast 2 (S2 or 4), and Southeast 3 (S3 or 5).  The use of numeric codes for fault blocks is exclusively for the block model export necessitated by software datatype restrictions.

Vein horizons include 100, 1000, 10000, 200, 2000, 20000 and 300, vein 300 is only recognized and used in the Central fault block and veins greater than or equal to 1000 are only used in the NW fault block.  Vein intervals were selected in cross-section as well as 3D and reviewed in 3D, level-plan, inclined level-plan, and vein plane space.

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Figure 14-12:  Vein Solids 3D View

Following vein assignments, intervals belonging to each vein and fault block were composited across the entire coded vein thickness.  For instance, in the Central block, three single interval composites were generated, one for 100, 200, and 300.

The single thickness intervals from each vein and fault block were included into two domains, low-grade and high-grade.  The high-grade domain represents the area or grade-shell of +150 AgEq g/t.  The grade-shell boundary was constructed at half the distance between single-interval composites less than 150 AgEq g/t and greater than or equal to 150 AgEq g/t.

Following the construction of the boundary, the initial vein solids were clipped by the boundary.  Extrapolation is most significantly limited by this process as shown below.  The boundaries were constructed and updated during each drill campaign.

Figure 14-13 to Figure 14-20 are 3D longitudinal views showing vein assignments, block assignments, single interval composite grades (AgEq, Ag, Pb, Zn, Au, Cu), and interval apparent thickness.

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Figure 14-13:  Long-Section Vein Intervals Assignments

Figure 14-14:  Long-Section AgEq Grade of Vein Intervals

Figure 14-15:  Long-Section Ag Grade of Vein Intervals within Grade-Shell

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Figure 14-16:  Long-Section Pb Grade of Vein Intervals within Grade-Shell

Figure 14-17:  Long-Section Zn Grade of Vein Intervals within Grade-Shell

Figure 14-18:  Long-Section Au Grade of Vein Intervals within Grade-Shell

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Figure 14-19:  Long-Section Cu Grade of Vein Intervals within Grade-Shell

Figure 14-20:  Long-Section Thickness of Vein Intervals within Grade-Shell

Following the construction of vein and grade-shell solids, dilution halo solids were constructed for each fault block.  Dilution solids were constructed to encompass the entire vein system and initiated and terminated along dip were any grade of AgEq greater than 0 was observed.

To correct for post mineral faulting as well as down-drop faulting in the NW fault block, each vein was first tilted and then rotated to a flat best fit vein space and then realigned and rotated to the interpreted orientation prior to faulting.

As discussed above, single interval composites from each vein and block were rotated and tilted around a fixed point to flattened best fit vein space.  Once in flat vein space single interval composites from each vein and block were rotated and shifted into estimation space Table 14-4 details the transformation for each vein and block.

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Table 14-4:  Vein Transformations

Vein	Block	Vein Strike	Vein Dip	Vein Space Rotation	Vein Space Tilt	Estimate Space Rotation Point X	Estimate Space Rotation Point Y	Estimate Space Rotation	Estimate Space Shift X	Estimate Space Shift Y	Estimate Space Separation Y
100	NW	310	75	-40	-75	368,426	3,048,249	-6	0	0	0
200	NW	310	75	-40	-75			-6	0	0	1100
1000	NW	310	35	-40	-35			3	-10	-50	0
2000	NW	310	35	-40	-35			1	-95	-60	1100
10000	NW	310	35	-40	-35			0	15	70	0
20000	NW	310	35	-40	-35			-4.5	25	125	1100
100	CN	300	40	-30	-40	368,417	3,048,211	10	40	6	0
200	CN	300	40	-30	-40			10	40	6	1100
300	CN	300	40	-30	-40			10	40	6	2200
100	SE	300	40	-30	-40	369,074	3,047,955	7	38	47	0
200	SE	300	40	-30	-40			7	66	47	1100
100	S2	300	40	-30	-40	369,162	3,047,952	7	30	-62	0
200	S2	300	40	-30	-40			7	60	-62	1100
100	S3	305	75	-35	-75	369,275	3,048,064	7	110	-87	0
200	S3	314	77	-44	-77	369,332	3,047,168	8	160	-147	1100

In the NW fault block veins in the hanging-wall are interpreted to be stacked as a result of additional down-drop faulting oriented in the same direction as the vein strike.  Conceptually, the NW fault block faulted down along strike in two events of detachment, where the up-dip portions of the vein continued to drop down when the down-dip portions of the vein had ceased to drop down.  The 10000 vein is considered the down-dip portion of the 1000 vein but is above the 1000 vein in real space.  Vein 1000 is considered the down-dip portion of the 100 vein but it is above the 100 vein in real space.

Veins 100, 1000, and 10000 have been modeled as a continuous vein horizon.  The reorganization of the NW veins to account for the faulting as well as alignment of all five fault blocks along strike.

The location of composites and blocks across dip, or z in estimation space, were also made relative to the hanging-wall and footwall of each vein.  This allowed for tracking of the vein shape for estimation.  Other techniques, such as fixed search ellipse orientation or block by block orientation, fell short where hanging-wall and footwall relative z coordinates were able to best capture hanging-wall and footwall grade biases that can be frequently observed.

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14.1.5.1  Specific Gravity Determination

Specific gravity (SG) measurements in g/cm3 were made on core by MPR geologist using epoxy coating and the water immersion technique.  Measurements have been divided into three categories; inside the vein interpretations, outside of interpretation but within the dilution halo, and outside of the grade estimation area.  The grade of Pb plus Zn and the Measured SG were used to develop regressions for inside the vein interpretation and outside but within the dilution halo.  The regressions were manually fit to observations and compared to the theoretical SG at the deposit’s average grade assuming constituent minerals quartz, galena, and sphalerite.  SG values for rock units outside of the estimation area were derived from the average SG of measurements within the modeled lithologic domains and outside of the dilution halo and vein domains. Table 14-5 details the measurements and regressions within the various areas.

Table 14-5:  Specific Gravity Measurements and Regressions

Area	Outlier Definition	SG Average w/o Outliers	Regression Equation
Within Vein	SG>3.9 and Pb+Zn>300,000 or SG>4.2	2.86	2.63+(Pb+Zn)*0.0000023
Outside Vein and Within Dilution Halo	SG>2.9 or Pb+Zn>20,000	2.58	2.55+(Pb+Zn)*0.0000043
Andesite	SG>2.83	2.52	NA
Dacite	SG>2.67	2.53
Rhyolite	NA	2.44
Epiclastic	SG>2.5	1.91

Figure 14-21 shows the regression equation compared to the measurements within the interpreted veins.

Figure 14-21:  SG Regression within Vein Interpretation

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14.1.6  Estimation Methods and Parameters

Resources have been estimated for five fault block areas and three vein horizons using hanging-wall and footwall relative multi-pass ordinary kriging of 2 m composites.

14.1.6.1  Variography and Search

Log-normal experimental variograms were generated for Ag, Pb, Zn, Au, and Cu in vein-relative estimation space for 2 m composites within the +150 AgEq g/t grade-shell.  Primary plunge of the central zone has an azimuth of 300° and a dip of 10° as measured in true space, which equate to 100° in transformed estimation space.

Table 14-6 and Table 14-7 detail the components of the modeled variograms used for estimation  In Figure 14-22 to Figure 14-26 the primary direction is shown in red, secondary in green, and tertiary in blue.

Table 14-6:  Modeled Variograms for Ag

Direction	Orientation	Azimuth (Estimation Space)	Geologic Basis	Nugget	Nugget % of Total Sill	C1 Partial	C1 Range m	C2 Partial Sill	C2 Range m	Total Sill
Along Plunge	Primary	100	Observed plunge, 10° from strike	0.5	36	0.6	40	0.3	100	1.4
Perpendicular to Plunge	Secondary	190	Perpendicular to plunge, 10° from dip	0.5	36	0.6	15	0.3	50	1.4
Across-vein	Tertiary	190	Aligned to vein thickness	0.5	36	0.6	5	0.3	10	1.4

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Table 14-7:  Modeled Variograms for Pb, Zn, Au, Cu

Element	Orientation	Azimuth (Estimation Space)	Nugget	Nugget % of Total Sill	C1 Partial	C1 Range m	C2 Partial Sill	C2 Range m	Total Sill
Pb	Primary	90	0.55	42	0.65	30	0.1	75	1.3
Pb	Secondary	180	0.55	42	0.65	15	0.1	40	1.3
Pb	Tertiary	180	0.55	42	0.65	7	0.1	10	1.3
Zn	Primary	100	0.4	38	0.2	30	0.45	85	1.05
Zn	Secondary	190	0.4	38	0.2	20	0.45	60	1.05
Zn	Tertiary	190	0.4	38	0.2	4	0.45	8	1.05
Au	Primary	100	0.4	44	0.5	55	—	—	0.9
Au	Secondary	190	0.4	44	0.5	40	—	—	0.9
Au	Tertiary	190	0.4	44	0.5	8	—	—	0.9
Cu	Primary	100	0.4	49	0.2	40	0.22	90	0.82
Cu	Secondary	190	0.4	49	0.2	25	0.22	40	0.82
Cu	Tertiary	190	0.4	49	0.2	4	0.22	10	0.82

Figure 14-22:  Experimental and Modeled Variography Ag

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Figure 14-23:  Experimental and Modeled Variography Pb

Figure 14-24:  Experimental and Modeled Variography Zn

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Figure 14-25:  Experimental and Modeled Variography Au

Figure 14-26:  Experimental and Modeled Variography Cu

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A sub-blocked model was fit to the extents of the dilution halo and sub-blocked to the modeled vein solids with the parameters shown in Table 14-8.

Table 14-8:  Block Model Setup Parameters

Direction	Origin (Corner)	Parent Block Size m	Parent Blocks	Length m	Block Divisions	Smallest Child Block Size m	Rotation About Axis (Clockwise)
X	367,000	10	274	3,200	2	5	0
Y	3,047,700	5	144	905	2	2.5	0
Z	900	5	150	750	2	2.5	30

Blocks and 2 m composites were transformed to estimation space as described above.  Table 14-9 details the search ellipse sizes, and orientations along with sample selection criteria for each pass.  The search ellipse was rotated to align with the principal plunge of mineralization, but tilting was not required because the composites and blocks were transformed and made relative to the hanging wall and footwall before estimation.

Table 14-9:  Pass Parameters

Pass	Method	Max Search m	Primary Search Azi	Ratio to Max 1st:2nd:3rd	Sectors	Comp Per Sector Max	DH Min	DH Max	Comp per DH Max	Comp Min	Comp Max
1	Ordinary Kriging	40	100	1:0.5:0.25	4	4	3	8	2	3	16
2	Ordinary Kriging	70	100	1:0.7:0.25	1	12	2	6	2	1	12
3	Ordinary Kriging	90	100	1:0.7:0.25	1	12	1	6	2	1	12
4	Ordinary Kriging	125	100	1:0.7:0.25	1	8	1	4	2	1	8
5	Ordinary Kriging	190	100	1:0.7:0.25	1	6	1	3	2	1	6

Figure 14-27 shows the resulting estimated block AgEq g/t grades in 3D view.  Figure 14-28 to Figure 14-32 show AgEq, Ag, Pb, Zn, Au, and Cu in 3D view.

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Figure 14-27:  Estimated AgEq Block Grades within Grade-Shell 3D View

Figure 14-28:  Estimated Ag Block Grades within Grade-Shell 3D View

Figure 14-29:  Estimated Pb Block Grades within Grade-Shell 3D View

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Figure 14-30:  Estimated Zn Block Grades within Grade-Shell 3D View

Figure 14-31:  Estimated Au Block Grades within Grade-Shell 3D View

Figure 14-32:  Estimated Cu Block Grades within Grade-Shell 3D View

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14.1.7  Mineral Resource Classification

Resource classification was assessed primarily by 3D drill hole (sample) spacing followed by manual evaluation and polishing using regions but also considered:  pass (including maximum search, sectors, drill hole and sample requirements), and nearest sample.

Block classification criteria related to the estimation pass are shown in Table 14-10 below, block classification is shown in 3D in Figure 14-33, looking northwest from above.

Table 14-10:  Mineral Resource Classification

Classification	Pass	Search Max (m)	Drill Hole Min	Drill Hole Spacing
Measured	1, 2	40, 70	3, 2	<25
Indicated	1, 2, 3	40, 70, 90	2, 1	<50
Inferred	2, 3, 4, 5	70, 90, 125, 190	1	All

Figure 14-33:  Mineral Resource Classification 3D View

Figure 14-34 is a stacked histogram of the resulting block classifications and their nearest composite sample, demonstrating that blocks classified as measured are on average about 15 m from the nearest composite and the majority are less than 25 m.  Blocks classified as Indicated are on average about 25 m from the nearest composite and the majority are less than 50 m.

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Figure 14-34:  Stacked Histogram of Nearest Composite Sample to Classified Blocks

14.1.8  Dilution

No dilution has been accounted for in Mineral Resource estimation or in the statement of Mineral Resources.

14.1.9  Cutoff Grade and Reasonable Prospects for Economic Extraction

Cutoff grade has been estimated using generalized parameters prior to detailed analysis by mining study (see Table 14-11).  The base case cutoff grade of 150 AgEq g/t accounts for typical costs to mine and process the Measured and Indicated Mineral Resources for 8-10 years and is adequate to approximate reasonable prospects for economic extraction.  AgEq is calculated for each block in the model using $18/toz Ag, $0.92/lb Pb, and $1.01/lb Zn.

Table 14-11:  Cutoff Grade Parameters

	Value	Unit
Mining Cost	40	$/Tonne
Processing Cost	20	$/Tonne
G&A	4	$/Tonne
Ag Recovery	83	%
Ag Price	18	$/toz
Pb Recovery	92	%
Pb Price	0.92	$/lbs
Zn Recovery	77	%
Zn Price	1.01	$/lbs
Cutoff Grade	150	AgEq g/T

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Gold and copper, being part of the epithermal system, are included in the Mineral Resource estimate as comparisons, however they have not been considered for purposes of determining the Ag/Eq cut-off grade since copper in the final concentrates sold would not receive any payment and gold revenue is estimated at only 2.78% of the payable metal.  Preparing a mine plan that excluded gold from the AgEq calculations had little or no bearing on estimates of ore that will be mined.  The cash flow estimates include the estimated gold revenue from the mine plan.  The incremental ore that could be processed from including the approximately 0.8 ounces AgEq from the calculation is immaterial and conservative.

Subsequent studies could materially alter any or all the parameters used to approximate a reasonably informed cutoff grade.

14.1.10  Statement of Mineral Resources

Estimated Measured, Indicated, and Inferred Mineral Resources, effective September 6, 2019, for the Cerro Los Gatos deposit at a 150 AgEq g/t cutoff grade are shown in Table 14-12, and Mineral Resources by fault block are shown in Table 14-13.  Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.

Table 14-12:  Mineral Resource Estimate

Classification	Tonnes	AgEq g/t	Ag g/t	Pb %	Zn %	Au g/t	Cu %	AgEq  toz M	Ag toz M	Pb lbs M	Zn lbs M	Au toz K	Cu lbs M
Measured	5,774,314	652	324	2.9	5.8	0.39	0.11	121	60	375	744	72	13
Indicated	4,586,507	489	202	2.5	5.2	0.28	0.11	72	30	251	528	42	12
Measured and Indicated	10,360,822	576	269	2.7	5.5	0.34	0.11	193	90	626	1,272	114	25
Inferred	3,717,063	361	107	2.8	4.0	0.28	0.14	43	13	231	330	34	12

NOTES:

1) 150 AgEq g/t cutoff grade has been calculated using $18/toz Ag, $0.92/lbs Pb, and $1.01/lbs Zn,

2) Columns may not total due to rounding,

3) Mineral Resources are stated as undiluted, and are inclusive of Mineral Reserves.

4) One troy ounce (toz) is equal to 31.1035 grams (g) and one Tonne is equal to 2,204.62 lbs. 3,717,063

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Table 14-13:  Mineral Resource Estimate by Fault Block

Fault Block	Classification	Tonnes M	AgEq g/t	Ag g/t	Pb %	Zn %	Au g/t	Cu %
NW	Measured	2.4	710	345	3.4	6.4	0.47	0.11
NW	Indicated	0.9	528	223	2.5	5.6	0.27	0.10
NW	Measured and Indicated	3.3	660	312	3.2	6.2	0.42	0.11
NW	Inferred	1.6	299	95	2.1	3.4	0.25	0.13
CN	Measured	3.4	613	311	2.6	5.5	0.33	0.10
CN	Indicated	2.2	525	251	2.1	5.2	0.37	0.11
CN	Measured and Indicated	5.6	578	287	2.4	5.4	0.35	0.10
CN	Inferred	0.2	351	199	1.3	2.8	0.36	0.05
SE	Indicated	0.2	383	113	2.3	5.0	0.18	0.11
SE	Inferred	—	—	—	—	—	—	—
S2	Indicated	0.6	534	136	3.7	7.0	0.15	0.17
S2	Inferred	0.1	377	109	3.2	4.0	0.16	0.21
S3	Indicated	0.7	328	102	2.7	3.4	0.16	0.10
S3	Inferred	1.7	402	106	3.5	4.5	0.30	0.15

NOTES:

1) 150 AgEq g/t cutoff grade has been calculated using $18/toz Ag, $0.92/lb Pb, and $1.01/lb Zn,
2) Columns may not total due to rounding, and
3) Mineral Resources are stated as undiluted and are inclusive of Mineral Reserves,

Grade tonnage curves for Measured and Indicated Mineral Resources are shown in Figure 14-35, and Inferred Mineral Resources are shown in Figure 14-36.

Figure 14-35:  Grade Tonnage Curve Measured and Indicated Resources

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Figure 14-36:  Grade Tonnage Curve Inferred Resources

14.1.11  Model Verification

Mineral Resource estimations have been verified by visual review, internal peer review, population analysis, alternative estimate methodology, and progressive testing by way of interim modeling throughout the 2018-2019 Resource definition drilling campaign.

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Figure 14-37 to Figure 14-40 compare drill holes and resulting blocks in cross-section for AgEq, Ag, Pb, and Zn.

Figure 14-37:  Cross-Section 13 AgEq

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Figure 14-38:  Cross-Section 13 Ag

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Figure 14-39:  Cross-Section 13 Pb

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Figure 14-40:  Cross-Section 13 Zn

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Alternative estimates were used to validate the OK estimation method ultimately selected for Mineral Resource reporting.  Using the same search and selection parameters, blocks were estimated for Ag, Pb, and Zn using inverse distance to the power of two (ID2), multiple indicator Kriging (MIK), and nearest neighbor (NN).  Table 14-14 shows the tonnage and grade percent differences compared to the OK estimate at a 150 AgEq g/t cutoff grade for Measured and Indicated blocks.  Difference percent was calculated by dividing the alternative estimate by the OK estimate, multiplying by 100 and subtracting 100.  The results show the tonnage estimated by ID2 and MIK are very similar to OK.  MIK produced differences in Pb and Zn grade, but the differences are within a reasonable range and do not affect the estimated tonnage above cutoff.  Differences between OK and NN are as expected and indicate 7% less AgEq contained metal is estimated by NN than OK.

Table 14-14:  Alternative Estimate Difference Percent, Measured and Indicated Blocks

Method	Tonnes	AgEq g/t	Ag g/t	Pb %	Zn %	AgEq toz	Ag toz	Pb lbs	Zn lbs
OK	0	0	0	0	0	0	0	0	0
ID2	-4	-1	2	-3	-2	-4	-3	-6	-6
NN	-15	14	16	10	9	-7	-2	-10	-11
MIK	-3	-7	-1	-11	-12	-9	-4	-13	-14

Figure 14-41 to Figure 14-45 compare the tonnage and grade of OK to the alternative estimates at a range of cutoff grades for Measured and Indicated Mineral Resources.

Figure 14-41:  Alternative Estimate Comparison Tonnage Curve

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Figure 14-42:  Alternative Estimate Comparison AgEq Grade Curve

Figure 14-43:  Alternative Estimate Comparison Ag Grade Curve

Figure 14-44:  Alternative Estimate Comparison Pb Grade Curve

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Figure 14-45:  Alternative Estimate Comparison Zn Grade Curve

In addition to alternative estimations, the OK estimate was compared to the capped Ag, Pb, and Zn assay intervals and volume within the +150 AgEq g/t grade-shell.  Tonnage was derived from wireframe volume multiplied by the density measurements within the +150 AgEq g/t grade-shell.

14.1.12  Relevant Factors

Estimation domains have been constructed using AgEq grades that include Ag, Pb, and Zn.  Significant changes in any or all the three metal values could materially affect the boundary of a +150 AgEq g/t grade-shell across vein thickness and in the plane of the vein.  The grade tonnage curves of Measured and Indicated Mineral Resources shown in Figure 14-35 shows that blocks within the grade-shell are relatively insensitive to a cutoff increases up to 200 AgEq g/t; however, sensitivity analysis has not been performed with grade-shells constructed at various cutoffs.

Recent startup of mining and is showing that the 150 ppm cutoff grade is a reasonable cutoff.  Recent startup of production should provide additional data to refine the cutoff grade parameters in the future, as needed.

There are no additional environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that the author of this report is aware of that could materially affect the Mineral Resource estimate.

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14.2  Amapola Zone

The Amapola Zone was included in the Resource report produced by Tetra Tech in August 2012.  No additional exploration has been completed in this area.  For completeness of the Resource estimate in this update, the August 2012 estimate has been brought forward to be included in this report.

14.2.1  Amapola Drill Hole Database

Tetra Tech queried the database only for data identified in the drill hole collar file as belonging to the Amapola Zone and created a subset used for this Resource estimation.  At the time of the current estimate, there were 79 drill holes that had the prefix of “AM” all of which contain assay data.

The Amapola assay database contains 6,655 assays for 12,704.6 m of sampling with an average length of 1.9 m with the majority of sampling at 2 m.  All samples have been assayed by multi-element ICP analysis for 36 elements by ALS Chemex of Vancouver, as described in Section 11.0 of the 2011 Behre Dolbear Report.  Tetra Tech concludes the database provided by MPR is free of recognized errors and of excellent quality and organization.

14.2.2  Amapola Geologic Modeling

The Amapola Zone contains several vein systems at varying degrees of strike and dip that are the target of MPR exploration.  Currently four of these veins comprise adequate Ag grade and thickness to be considered as mineralized material and geologically modeled.  The four veins include the Albita, Elizabeth, Cascajal, and Julia.

The Resource is principally focused on the Albita and Elizabeth veins which together comprise a “corridor” of mineralization up to ~50 m thick.  The Albita and Elizabeth Mineral corridor is a general zone of alteration, where distinctions between the Albita and Elizabeth veins are difficult to make without the assistance of chemical assay and 3D review in advanced mining software.  The remaining veins were, for the purposes of this interpretation, considered with a lower level of geologic confidence.  The interpretation of the Cascajal and Julia veins are based on fewer data points and are in general thinner and of lower average grade.

Tetra Tech’s geologic understanding of the Amapola veins are based on review of drill hole data, drill core and most importantly discussions with MPR exploration staff regarding their interpretation of the mineralizing systems and controls at the Amapola Zone.  Geologic interpretation began with MPR’s preparation of surface geologic maps showing structural trends and alteration patterns which guided the drill hole program.  General trends established by the surface mapping are supported at depth by data collected from the 79 drill holes used in Tetra Tech’s geologic interpretation.

Planar relationships between drill hole intercepts of anomalous values of Ag, Pb, Zn were used as the main indicators defining the various veins.  Ag is the principal element for defining mineralized downhole intercepts at Amapola.  Despite a positive correlation, unlike the Cerro Los Gatos Zone, the Amapola Zone has disproportionately low base metal content.  Lack of base metal grade negated the use of metal price equivalency at the geologic interpretation stage, but is considered in the final calculation of Resources.

Ca and Ba have also been identified by MPR staff to be indicators of high-grade mineralization and have a correlation with Ag relative to elevation at the highest values of Ag; these variables assisted in defining

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the separation between the Albita and Elizabeth veins.  Unique to Amapola, Ca concentrations trend inversely and Ba trends directly with change in elevation.

Following identification of mineralized downhole intervals of Ag and assigning those intervals to corresponding planar veins, hanging wall and foot wall coordinates for each downhole interval were determined.  Hanging wall and foot wall distinctions for the Albita and Elizabeth veins were based on the general assumption that the Albita and Elizabeth mineral corridor has a strike of 351 degrees and a west dip of 88 degrees.  In places the dip is vertical or “overturned”, however hanging wall and foot wall distinctions are kept consistent with the foot wall as the east boundary and the hanging wall the west boundary.

Using the hanging wall and foot wall points, interpolated point grids were produced using MapInfo® GIS software.  One hanging wall and one-foot wall point grid was produced for each vein using a minimum curvature algorithm, which is analogous to a 3D spline fit.  The algorithm is a good estimation of the hanging wall and foot wall surface; however, the original hanging wall and foot wall points are not honored exactly.  The interpolated grid points are removed where true data points are present.  The corrected interpolated point grid for each hanging wall and foot wall is then used to create a triangulated surface using MicroMine®.

The resultant hanging wall and foot wall surface for each of the four veins were then clipped by a series of shapes.  The clipping shapes are long-section perimeters based on criteria including thickness, distance from nearest sample.

The thickness criteria are satisfied only where the difference between the hanging wall and foot wall surfaces is greater than or equal to 1 m.  Thickness was considered simultaneously with vein interval selections so internally the veins are generally greater than 1 m and are only clipped on the outside edge of the vein limiting the extent of the vein away from observed data points.

The distance from the sample clipping perimeter is determined by a perimeter extending approximately 100 m from the furthest sample on the vein plane up and down dip and along strike.  Internal distances between samples were permitted to be greater than 100 m.

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Figure 14-46:  Plan view of the Amapola Veins

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Figure 14-47:  Amapola Vein Wireframe Solids Looking Northwest

14.2.3  Amapola Assays and Composting

A total of 235 assays were identified within vein intervals for the Cerro Los Gatos zone, Table 14-15 details the assay statistics.

Table 14-15:  Assay Statistics In Modeled Veins — Amapola

Metal	Number of Samples	Mean	Minimum	Maximum
Ag	235	91.8 g/t	0.5 g/t	1450 g/t
Au	235	0.08 g/t	0.005 g/t	0.61 g/t
Pb	235	0.20%	0.001%	13.7%
Zn	235	0.38%	0.001%	19.4%
Cu	235	0.025%	0.0007%	0.8%

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Assays intervals with the vein zones were reviewed using probability plots and log normal histograms and capping values were determined, Table 14-16 details capping values and samples capped.

Table 14-16:  Assay Capping — Amapola

Metal	Capping Value	Number of Samples Capped
Ag	743 g/t	2
Au	0.51 g/t	2
Pb	0.88%	5
Zn	2.4%	6
Cu	0.24%	2

Following capping, raw assays were composited to a length of 2 m across interpreted vein intervals only.  Samples outside the interpreted veins or intervals less than 1 m after compositing were not used for estimation.

14.2.4  Amapola Variography and Search Orientation

Geostatistical modeling of spatial relationships of the Ag assay data was completed by indicator variogram analysis.  Indicator variograms were calculated on assays from within the Albita and Elizabeth mineralized corridor, encompassing the high grade within the modeled veins but also with lower grade assays present within the corridor.  Incorporating the lower grades was essential for the reliability and usefulness of the variograms.  Individual variograms were generated along strike, down dip, and down hole of the Albita and Elizabeth mineral corridor and were applied to the subordinate veins which contain limited data.

The down hole variogram in conjunction with along strike and down dip indicator variograms were used to establish a relativized nugget at 45% of the sill, using a spherical model.  The indicator variogram Indicated a sill at 130 m.  The range was limited to 100 m for the Cascajal and Julia veins.

Indicator variograms calculated for Ag were applied to the additional metals estimated in this Resource; separate variograms were not calculated for Au, Cu, Pb and Zn.

Search orientation and anisotropy ratios were determined by the author using the physical properties of the mineralized body.  Anisotropy of the search ellipse was 130:78, the third axis was the same dimension as the primary access to correct for undulations in the mostly planar veins.  The search ellipse was orientated along an azimuth of 350, with a plunge of -16 along the main axis, and a plunge of -74 along the secondary axis.  A large third axis was permissible because the estimate was contained by a vein solid in the third axis direction and the number of samples per drill hole was limited to two.

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14.2.5  Amapola Resources Estimation and Categorization

Grade estimation of the Amapola Zone Resource was completed with MicroMine® using ordinary Kriging.  A single Kriging pass was made on each of the four veins and secondary nearest neighbor Inferred pass was made only for the Albita and Elizabeth veins.

A total of four individual block models were generated from a parent model of the Amapola zone with a block size of 5x10x10.  Each block in the parent model was queried for its portion that resided within each vein solid.  Each block was indexed by column, row, level, and vein.

Each of the four models was estimated separately.  Samples only with the same vein identifier as the block model being estimated were used in the estimate for that model.

A maximum of two composite values per drill hole per block estimate were permitted, along with an absolute maximum of ten points for each block estimate.

Within the first pass all samples estimated were initially assigned to the Inferred class.  Then any block that was estimated from the first pass from samples derived from at least two drill holes and had a relative Kriging error of less than 1.04 was then assigned to the Indicated class.  Only blocks within the Albita and Elizabeth solids were eligible to be classified as Indicated.

A second nearest neighbor pass with a spherical range of 50 m used the block values estimated in the first pass cut to the 90th percentile as its source data.  Capping values from the blocks were used to prevent high-grade influencing from within the higher-grade core of the deposit and provide a more moderated estimate on the extents of the modeled veins.  Both passes were constrained inside of the 3D mineralized solids, therefor the nearest neighbor pass was subject to the 100 m down-dip and along strike extension of the solids.

The first and second pass routines were then preformed on the remaining metals (Au, Cu, Pb and Zn) in the same manner as with Ag.

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Figure 14-48 shows all vein models combined, green blocks are classified as Indicated and blue blocks are classified as Inferred.

Figure 14-48:  Amapola Vein Block Classification Looking West

14.2.6  Amapola Specific Gravity

Specific gravity measurements, which were collected on site by MPR staffing using an epoxy dip air weight/water weight specific gravity method, were provided by MPR with the project database.  Samples are taken by MPR with consideration of mineralized zones and provide good coverage to estimate the density of the veins of the Amapola Zone.

The samples that fall inside the mineralized zone were then flagged.  The flagged samples were then used for multi element statistical evaluation.  A linear fit regression was performed to determine which of the elements contributed to the specific gravity of the sample.  For Amapola, the contributing metals for specific gravity were Silver and Zinc.  The other metals did not show a statistically significant contribution to the specific gravity for this zone.  For Amapola, the regression factor for Silver is 0.0003209 and 0.0000050 for Zinc.  The base specific gravity was 2.4870111.  These values were then used to determine a specific gravity value for each composite.  The specific gravity values were then Kriged along with the other elements in the model.

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14.2.7  Cutoff Grade and Reasonable Prospects for Economic Extraction

Cutoff grade has been estimated using generalized parameters prior to detailed analysis by mining study (see Table 14-17).  The base case cutoff grade of 100 AgEq g/t accounts for typical costs to mine and process Mineral Resources and is adequate to approximate reasonable prospects for economic extraction.  Metallurgical recoveries were not changed from the 2012 estimate, when they were estimated from preliminary testwork, as additional testwork has not been completed for this deposit.  AgEq is calculated for each block in the model using $22.30/toz Ag, $0.97/lb Pb, and $0.91/lb Zn.

Table 14-17:  Cutoff Grade Parameters

	Value	Unit
Mining Cost	40	$/Tonne
Processing Cost	20	$/Tonne
G&A	3	$/Tonne
Ag Recovery	100	%
Ag Price	22.30	$/toz
Pb Recovery	95	%
Pb Price	0.97	$/lbs
Zn Recovery	88	%
Zn Price	0.91	$/lbs
Cutoff Grade	100	AgEq g/T

Gold and copper, being part of the epithermal system, are included in the Mineral Resource estimate as comparisons, however they have not been considered for purposes of determining the Ag/Eq cut-off grade since copper in the final concentrates sold would not receive any payment and gold revenue is estimated at only 2.78% of the payable metal.  Preparing a mine plan that excluded gold from the AgEq calculations had little or no bearing on estimates of ore that will be mined.  The cash flow estimates include the estimated gold revenue from the mine plan.  The incremental ore that could be processed from including the approximately 0.8 ounces AgEq from the calculation is immaterial and conservative.

Subsequent studies could materially alter any or all the parameters used to approximate a reasonably informed cutoff grade.  It is recommended that the cutoff grade is refined following the completion of a detailed project study for this deposit, including costs, metal prices, and metallurgical recovery.

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14.2.8  Amapola Deposit Resource Estimate

The Amapola Deposit Indicated Resources, effective December 21, 2012, at a base case cutoff grade of 50 g/t EqAg include 480,000 tonnes at 101 g/t Ag for 1,600,000 ounces of Ag.  Table 14-18 lists the Amapola Deposit Indicated Resources from 50 to 100 g/t EqAg cutoffs.  The Amapola Deposit Indicated Resources are shown in Figure 14-49 as grade and tonnage curves at various cutoff grades.  Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.

Table 14-18:  Estimated Indicated Resources — Amapola

Cutoff EqAg g/t	Tonnes	EqAg g/t	Ag g/t	Ag Ounces	Au g/t	Pb %	Zn %	Cu %
50	480,000	116	101	1,600,000	0.08	0.1	0.2	0.02
60	440,000	121	106	1,500,000	0.08	0.1	0.2	0.02
75	370,000	132	116	1,400,000	0.09	0.1	0.2	0.02
100	250,000	154	135	1,100,000	0.1	0.1	0.3	0.02

Note 1:  Based on a cut-off grade of 100 g/t silver equivalent using metal prices of $22.30/toz silver, $0.97/lb lead, and $0.91/lb zinc, metallurgical recoveries were not considered.

Note 2:  Figures may not total due to rounding of significant figures.

Note 3:  Indicated Resources are equivalent to US SEC Industry Guide 7 “Mineralized Material”.

Figure 14-49:  Grade Tonnage Curve Indicated Amapola Deposit

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The Amapola Deposit Inferred Resources, effective December 21, 2012, at a base case cutoff grade of 50 g/t EqAg include 5,980,000 Tonnes at 106 g/t Ag for 20,300,000 ounces of Ag.  Table 14-19 lists the Amapola Deposit Inferred Resources from 50 to 100 g/t EqAg cutoffs.  The Amapola Deposit Inferred Resources are shown in Figure 14-50 as grade and tonnage curves at various cutoff grades.

Table 14-19:  Estimated Inferred Resources — Amapola

Cutoff EqAg g/t	Tonnes	EqAg g/t	Ag g/t	Ag Ounces	Au g/t	Pb %	Zn %	Cu %
50	5,980,000	125	106	20,300,000	0.09	0.1	0.3	0.02
60	5,410,000	133	112	19,500,000	0.09	0.2	0.3	0.03
75	4,450,000	147	125	17,900,000	0.1	0.2	0.3	0.03
100	3,440,000	164	140	15,500,000	0.1	0.2	0.3	0.03

Note 1:  Figures may not total due to rounding of significant figures.

Figure 14-50:  Grade Tonnage Curve Inferred Amapola Deposit

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14.3  Esther Zone

14.3.1  Esther Drill Hole Database

Tetra Tech queried the database only for data identified in the drill hole collar file as belonging to the Esther Zone and this data was used for the Resource estimation.  At the time of this estimate there were 42 drill holes with the prefix of “ES” all of which contain assay data.  Drill hole ES-42 is the cut off for this report.

The Esther assay database contains 4,959 assays for 9,715.07 m of sampling with an average length of 1.9 m with the majority of sampling at 2 m.  All samples have been assayed by multi-element ICP analysis for 36 elements by ALS Chemex of Vancouver, as described in Section 11.0 of the report.  Tetra Tech concludes the database provided by MPR is free of recognized errors and of excellent quality and organization.

14.3.2  Esther Geologic Modeling

The Esther Zone contains several vein systems at varying degrees of strike and dip that are the target of MPR exploration.  Tetra Tech modeled one main vein, as well as two secondary veins that appear to be associated with the main vein.  The main vein was modeled with higher confidence than the two secondary veins.  The main vein is approximately 1 to 10 m thick.  Wireframes are shown below in Figure 14-51 and Figure 14-52.

Tetra Tech’s geologic understanding of the Esther vein is based on review of drill hole data, drill core and most importantly discussions with MPR exploration staff regarding their interpretation of the mineralizing systems and controls at the Esther Zone.  Geologic interpretation began with MPR’s preparation of surface geologic maps showing structural trends and alteration patterns which guided the drill hole program.  General trends established by the surface mapping are supported at depth by the drilling data collected and used for Tetra Tech’s geologic interpretation.

Following identification of mineralized downhole intervals of Ag and assigning those intervals to corresponding planar veins, hanging wall and foot wall coordinates for each downhole interval were determined.  Hanging wall and foot wall distinctions for the Esther zone were based on the general assumption that the Esther mineral corridor has a strike of 110 degrees and a southwest dip of -57 degrees.

Using the hanging wall and foot wall points, interpolated point grids were produced using MapInfo® GIS software.  One hanging wall and one-foot wall point grid was produced for each vein using a minimum curvature algorithm.  The algorithm is a good estimation of the hanging wall and foot wall surface; however, the original hanging wall and foot wall points are not honored exactly.  The interpolated grid points are removed where true data points are present.  The corrected interpolated point grid for each hanging wall and foot wall is then used to create a triangulated surface using MicroMine®.

The resultant hanging wall and foot wall surface for each of the three veins were then clipped by a series of shapes.  The clipping shapes are long-section perimeters based on criteria including thickness and distance from nearest sample.

The thickness criteria is satisfied only where the difference between the hanging wall and foot wall surfaces is greater than or equal to 1 m.  Thickness was considered simultaneously with vein interval

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selections so internally the veins are generally greater than 1 m and are only clipped on the outside edge of the vein limiting the extent of the vein away from observed data points.  The thickness criteria was relaxed in areas of the Esther Offset and Esther Footwall veins, these vein were permitted to be a minimum of 0.5 m thick in some areas as a result all blocks from these veins were restricted to Inferred.

The distance from the sample clipping perimeter is determined by a perimeter extending approximately 100 m from the furthest sample on the vein plane up and down dip and along strike.  Internal distances between samples were permitted to be greater than 100 m.

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Figure 14-51:  Esther Zone Wireframes Looking Northwest

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Figure 14-52:  Esther Zone Wireframes Looking North

14.3.3  Esther Assays and Composting

A total of 88 assays were identified within vein intervals for the Esther Deposit, Table 14-20 details the assay statistics.

Table 14-20:  Assay Statistics in Modeled Veins — Esther

Metal	Number of Samples	Mean	Minimum	Maximum
Ag	88	94.8 g/t	1 g/t	857 g/t
Au	74	0.10 g/t	0.005 g/t	0.93 g/t
Pb	88	1.0%	0.031%	7.7%
Zn	88	2.2%	0.031%	17.4%
Cu	88	0.037%	0.0006%	0.63%

Assays intervals with the vein zones were reviewed using probability plots and log normal histograms and capping values were determined, Table 14-21 details capping values and samples capped.

Table 14-21:  Assay Capping — Esther

Metal	Capping Value	Number of Samples Capped
Ag	480 g/t	2
Au	1.0 g/t	0
Pb	5.0%	5
Zn	7.8%	4
Cu	0.22%	1

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Following capping, raw assays were composited to a length of 2 m across interpreted vein intervals only.  Samples outside the interpreted veins or intervals less than 1 m after compositing were not used for estimation.

14.3.4  Esther Variography and Search Orientation

Geostatistical modeling of spatial relationships of the Ag assay data was completed by indicator variogram analysis.  Indicator variograms were calculated on assays from within the three main veins and the mineralized corridor, encompassing the high grade within the modeled veins but also with lower grade assays present within the corridor.  Individual variograms were generated along strike, down dip, and down hole of the mineral corridor.

The down hole variogram in conjunction with along strike and down dip indicator variograms were used to establish a relativized nugget at 37% of the sill, using a spherical model.  The indicator variogram Indicated a sill at 130 m.

Indicator variograms calculated for Ag were applied to the additional metals estimated in this Resource; separate variograms were not calculated for Au, Cu, Pb and Zn.

Search orientation and anisotropy ratios were determined by the author using the physical properties of the mineralized body.  Anisotropy of the search ellipse was 130:65:26.  The search ellipse was orientated along an azimuth of 110, with a plunge of 8 along the main axis, and a plunge of -64 along the secondary axis.

14.3.5  Esther Resources Estimation and Categorization

Grade estimation of the Esther Zone Resource was completed with MicroMine® using ordinary Kriging.  An initial Kriging pass was made on each of the three veins and followed by secondary nearest neighbor Inferred pass.

A total of three individual block models were generated from a parent model of the Esther zone with a block size of 10x5x10.  Each block in the parent model was queried for its portion that resided within each vein solid.  Each block was indexed by column, row, level, and vein.

Each of the three models was estimated separately.  Samples only with the same vein identifier as the block model being estimated were used in the estimate for that model.

A maximum of two composite values per drill hole per block estimate were permitted, along with an absolute maximum of ten points for each block estimate.

Within the first pass all samples estimated were initially assigned to the Inferred class.  Then any block that was estimated from the first pass from samples derived from at least two drill holes and had a relative Kriging error of less than 1.25 was then assigned to the Indicated class.  Only blocks within the main vein solid were eligible to be classified as Indicated.

A second nearest neighbor pass with a spherical range of 50 m used the block values estimated in the first pass cut to the 90th percentile as its source data.  Cut values from the blocks were used to prevent high-grade influence from within the higher-grade core of the deposit and provide a more moderated estimate on the extents of the modeled veins.  Both passes were constrained inside of the 3D mineralized solids, therefor the nearest neighbor pass was subject to the 100 m down-dip and along strike extension of the solids.

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The first and second pass routines were then preformed on the remaining metals (Au, Cu, Pb and Zn) in the same manner as with Ag.

Figure 14-53 shows all vein models combined, green blocks are classified as Indicated and blue blocks are classified as Inferred.

Figure 14-53:  Esther Zone Block Classification Looking North

14.3.6  Esther Specific Gravity

Specific gravity measurements, which were collected on site by MPR staffing using an epoxy dip air weight/water weight specific gravity method, were provided by MPR with the project database.  Samples are taken by MPR with consideration of mineralized zones and provide good coverage to estimate the density of the veins of the Esther Zone.

The samples that fall inside the mineralized zone were then flagged.  The flagged samples were then used for multi element statistical evaluation.  A linear fit regression was performed to determine which of the elements contributed to the specific gravity of the sample.  For Esther, the contributing metal for specific gravity was and Zinc.  The other metals did not show a statistically significant contribution to the specific gravity for this zone.  For Esther, the regression factor 0.00000244 for Zinc.  The base specific gravity was 2.53515226.  These values were then used to determine a specific gravity value for each composite.  The specific gravity values were then Kriged along with the other elements in the model.

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14.3.7  Cutoff Grade and Reasonable Prospects for Economic Extraction

Cutoff grade has been estimated using generalized parameters prior to detailed analysis by mining study (see Table 14-22).  The base case cutoff grade of 100 AgEq g/t accounts for typical costs to mine and process Mineral Resources and is adequate to approximate reasonable prospects for economic extraction.  Metallurgical recoveries were not changed from the 2012 estimate, when they were estimated from preliminary testwork, as additional testwork has not been completed for this deposit.  AgEq is calculated for each block in the model using $22.30/toz Ag, $0.97/lb Pb, and $0.91/lb Zn.

Table 14-22:  Cutoff Grade Parameters

	Value	Unit
Mining Cost	40	$/Tonne
Processing Cost	20	$/Tonne
G&A	3	$/Tonne
Ag Recovery	100	%
Ag Price	22.30	$/toz
Pb Recovery	95	%
Pb Price	0.97	$/lbs
Zn Recovery	88	%
Zn Price	0.91	$/lbs
Cutoff Grade	100	AgEq g/T

Gold and copper, being part of the epithermal system, are included in the Mineral Resource estimate as comparisons, however they have not been considered for purposes of determining the Ag/Eq cut-off grade since copper in the final concentrates sold would not receive any payment and gold revenue is estimated at only 2.78% of the payable metal.  Preparing a mine plan that excluded gold from the AgEq calculations had little or no bearing on estimates of ore that will be mined.  The cash flow estimates include the estimated gold revenue from the mine plan.  The incremental ore that could be processed from including the approximately 0.8 ounces AgEq from the calculation is immaterial and conservative.

Subsequent studies could materially alter any or all the parameters used to approximate a reasonably informed cutoff grade.  It is recommended that the cutoff grade is refined following the completion of a detailed project study for this deposit, including costs, metal prices, and metallurgical recovery.

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14.3.8  Esther Deposit Resource Estimate

The Esther Deposit Indicated Resources, effective December 21, 2012, at a base case cutoff grade of 50 g/t EqAg include 620,000 tonnes at 113 g/t Ag for 2,300,000 ounces of Ag.  Table 14-23 lists the Esther Deposit Indicated Resources from 50 to 100 g/t EqAg cutoffs.  The Esther Deposit Indicated Resources are shown in Figure 14-54 as grade and tonnage curves at various cutoff grades.  Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.

Table 14-23:  Estimated Indicated Resources — Esther

Cutoff EqAg g/t	Tonnes	EqAg g/t	Ag g/t	Ag Ounces	Au g/t	Pb %	Zn %	Cu %
50	620,000	181	113	2,300,000	0.04	0.6	1.7	0.02
60	600,000	185	116	2,200,000	0.04	0.6	1.7	0.02
75	580,000	191	119	2,200,000	0.04	0.6	1.8	0.02
100	460,000	217	133	2,000,000	0.04	0.7	2.1	0.02

Note 1:  Based on a cut-off grade of 100 g/t silver equivalent using metal prices of $22.30/toz silver, $0.97/lb lead, and $0.91/lb zinc.  Metallurgical recoveries were not considered.

Note 2:  Figures may not total due to rounding of significant figures.

Note 3:  Indicated Resources are equivalent to US SEC Industry Guide 7 “Mineralized Material”.

Figure 14-54:  Grade Tonnage Curve Indicated Esther Deposit

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The Esther Deposit Inferred Resources, effective December 21, 2012, at a base case cutoff grade of 50 g/t EqAg include 2,940,000 Tonnes at 87 g/t Ag for 8,200,000 ounces of Ag.  Table 14-24 lists the Esther Deposit Inferred Resources from 50 to 100 g/t EqAg cutoffs.  The Esther Deposit Inferred Resources are shown in Figure 14-55 as grade and tonnage curves at various cutoff grades.

Table 14-24:  Estimated Inferred Resources — Esther

Cutoff EqAg g/t	Tonnes	EqAg g/t	Ag g/t	Ag Ounces	Au g/t	Pb %	Zn %	Cu %
50	2,940,000	205	87	8,200,000	0.1	1.3	2.5	0.04
60	2,720,000	218	93	8,100,000	0.11	1.4	2.6	0.05
75	2,600,000	225	95	7,900,000	0.11	1.4	2.7	0.05
100	2,290,000	243	98	7,200,000	0.12	1.6	3	0.05

Note 1:  Figures may not total due to rounding of significant figures.

Note 2:  Inferred Resources are not defined or recognized by US SEC Industry Guide 7.  Acceptable in proposed New Guidelines.

Figure 14-55:  Grade Tonnage Curve Inferred Esther Deposit

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14.4  Relevant Factors

For Los Gatos deposits estimation domains have been constructed using AgEq grades that include Ag, Pb, and Zn.  Significant changes in any or all the three metals values could materially affect the boundary of a +150 AgEq g/t grade-shell across vein thickness and in the plane of the vein.  The grade tonnage curves of Measured and Indicated Mineral Resources indicate that blocks within the grade-shell are relatively insensitive to cutoff increases up to 200 AgEq g/t, however sensitivity analysis has not been performed with grade-shells constructed at various cutoffs.

Additional factors that could materially affect the Mineral Resources are cutoff grade parameters that have not been developed in detail with an optimized mining plan.  Subsequent mining studies could materially alter any or all of the parameters used to estimate a reasonably informed cutoff grade.

There are no additional environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that the author of this report is aware of that could materially affect the Mineral Resource estimate.

14.5  Conclusions and Recommendations

14.5.1  Geology and Resources

Project geologic and drill hole data has been collected and analyzed by MPR using industry standard methods and practices and is sufficient to characterize grade and thicknesses of the deposit and to support the estimation of Measured, Indicated and Inferred Mineral Resources.  Although the deposit has been densely drilled, Resource expansion potential and project upside exist in the immediate deposit area as well as at other identified prospects such as the Amapola and Esther, which have been preliminarily investigated with drilling showing Indicated and Inferred Mineral Resources, and other prospects throughout the land package.

Drilling at the site has proven to be productive.  Additional Resources have been identified in each drilling campaign.  The drilling for each of the latest Resource Estimates vs the AgEq Oz are shown in Figure 14-56, below.  Based on these positive results, Tetra Tech recommends exploration at the site continues.

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Figure 14-56:  Additional drilling and total AgEq oz per estimate

14.5.1.1  Data Verification

The current QA/QC program is adequate and supports the conclusion that data collected, and the monitoring of QC data is reliable for the purposes of estimating Resources; however, additional improvements are required for the QA/QC program to align with industry best practice and facilitate more meaningful QC.

Clerical corrections and optimization of standard reference material is necessary to assess laboratory analytical performance.  Standard performance for Ag, Pb, Zn, Au, and Cu are good, with few results outside of +/-2 standard deviations of the certified value.  To leverage the use of standards, material should be sourced closer to the range of the deposits average grade for Ag, Pb and Zn.  Most of the standards used are too low-grade Ag, Pb, and Zn.

Field duplicate testing has shown good reproducibility; however, current protocols do not adequately test the variability of the deposit within the likely mining areas.  Field duplicates contain too few ore-grade samples chosen from within the vein.  The field duplicates that have been analyzed and are above 100 g/t Ag show a similar range of variability as the sample pairs below 100 g/t Ag.  Collecting more field duplicates from within the expected mining area will help to evaluate the variability that could be encountered.

In-stream blank material analysis for Ag has demonstrated acceptable sample preparation and laboratory performance for Ag; the performance for Pb, Zn, and Cu show many samples with values several times the detection limit, and exceedances are not significant in relation to the average deposit grade.

Exceedances could be a result of background levels of Pb, Zn, and Cu in the blank material or a result of contamination from sample preparation or analysis.  Because the Ag blank testing has shown few failures, it is possible that the blank material contains base amounts of Pb, Zn, and Cu; however, the blank failures often visually correlate with preceding samples of higher-grade.

Umpire (third party) sampling should be conducted to meet industry standard practices to confirm the analyses performed at ALS Chemex.

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14.6  Recommendations

Tetra Tech recommends the following to continue exploration and possible expansion of the Los Gatos Mineral Resource base within the property, as follows:

·Recognizance and in-fill drilling to test the following areas:

·Down-dip and along strike to the Northeast of the NW Block;

·Up-dip of the Central Block extending the high-grade mineralized zone along strike of the bulk sample area;

·At the hanging-wall detached blocks currently classified as Inferred Resources of the NW block;

·At the plunging mineralized concentration of the SE3 Block with additional potential of the Block’s extension; and

·Down-dip of the Central Block along the high-grade zone intercepted by drill holes GA-55, GA-66, and GA-243 to determine possible continuity;

·Additional infill drilling is recommended at the Amapola and Esther zones to delineate the possible extension of the identified Mineral Resources and assess full Resource potential.  If the results are positive, the identified Mineral Resources should be updated with a Scoping Study to determine if they may contribute to the Los Gatos economics;

·Complete detailed surface mapping and sampling in the area to define and prioritize other probable prospects within the project’s area;

·Geophysical surveys should complement the prospects prioritization prior to perform drilling exploration.

14.6.1  Standards

The following recommendations are to improve the current QA/QC protocols:

·Check sample standards relative to Ag, Pb, Zn, Cu, and Au. Correct assay records and database when errors are recognized;

·Clerical errors rather than actual analysis failure are the most frequent issue.  This can be corrected by comparing all five payable elements.  Spikes are visually observed when standard assays issues are encountered; and

·Keep records of sample results in the database for a quick review to confirm possible clerical errors.

·Submit with more frequency ore-grade standards from the mineralized zone:

·Identify on the sample submittal sheet the ore-grade standards to be tested directly using the assay methods OG62 or GRA21.  This action will avoid falling short of the 30-grams required for re-runs by the ME-ICP61 and 50 grams required to complete the assays; and

·Include additional sulfide standards that are as close as possible to grades of 250 g/t Ag, 2.5% Pb and 6% Zn, while assays for Au and Cu are of secondary importance and should only be evaluated after the economic metals when selecting ideal standards.

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·Generate several custom standards from material collected from the area of the bulk sample, 500, 50-gram standards could be made from 25 kilograms of material. Internationally certified laboratories offer custom standard services.

14.6.2  Blanks

Tetra Tech recommends improve blank samples use by:

·Inserting blanks more frequently after assaying high-grade samples to ensure the sample preparation equipment has been cleaned properly;

·Review geologic cross-sections to optimize the insertion of blanks within the vein intersections;

·Currently, the intersected veins show approximately 1,400 2 m intervals; while the insertion of blank samples represents about 20% (280 samples) of the sampling population.

·Investigate the use of a coarser certified blank so that crushing, splitting, and pulverizing equipment at the preparation facility are operating in a similar condition to a normal interval core sample;

·Submit blank samples directly for re-run testing to test OG62 or GRA21 equipment.  Present protocols do not test potential contamination of OG62 or GRA21 equipment because the first test never triggers re-runs;

·Record the sample ID of the sample tested before each of the blanks.  This will enable assessment of blanks in the context of possible contamination from the sample preparation and the sample analyzed before the blanks.  Any poor blank performance following high-grade samples should trigger re-runs of several samples following the high-grade sample;

·Source certified or self-certify blank material;

·Blanks obtained from core are best because the lab is blind to the control sample and both the laboratory preparation and analysis are checked.  Blanks could be sourced from splits of andesite that have been tested and returned detection limit results for Ag, Pb, Zn, Au, and Cu.  If blank core cannot be sourced andesite outcroppings should be considered;

·Untested “barren” full core should not be used as blank material because of the risk that it contains low background levels of Pb, Zn, and Cu as seen in the current blanks; and

·If certifiable blank core is limited, blanks can be submitted as reduced weight (not the equivalent of a 2 m core split), with only enough material to produce a coarse reject and pulp.

·Ensure the blank material is stored away from the core preparation area and the blank material sample bagging is completed in a clean environment; and

·Request the laboratory’s internal blank control sample to potentially evaluate or rule out contamination.

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14.6.3  Duplicates

To improve duplicate use for QA/QC Tetra Tech recommends:

·Insert instream field duplicates in areas that visually appear to be high-grade.  Doing so will test the prep lab’s ability to homogenize and provide data to evaluate the nugget effect; and

·Insert an empty bag with a sample ID tag and instruct the lab to generate a pulp split (pulp duplicate).  Analyzing pulp duplicates will provide data to evaluate the reproducibility of the sample analysis and suggest an error range of analysis.

14.6.4  Umpire Sampling

It is industry best practice to have 5% of sample pulps tested at a third-party lab.  Aside from limited re-sampling completed as part of past NI 43-101 reports, it is not apparent that umpire sampling has been performed.

As discussed, a small percentage of the total drill hole database encounters the area of interest, because of this umpire sampling should be focused on resampling most of the pulps within the expected mining areas.  Re-analyzing half of the pulps from all vein samples would account for approximately 750 samples and provide additional confidence in the database.

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15.0  MINERAL RESERVE ESTIMATES

The Mineral Reserve estimate, effective July 2020, includes the portion of the Measured and Indicated Resource that can be mined economically.  Economic criteria and mining constraints (based on the selected mining methods) are applied to the Resource blocks to define mineable blocks.  Mineral Reserves are determined after applying dilution and recovery factors to these mineable blocks.

The Mineral Reserve presented has been calculated from the mine plan created from the September 2019 Resource update.  The Reserve estimate herein is consistent with the Canadian Institute of Mining Standards on Mineral Resources and Mineral Reserves.

15.1  Net Smelter Return

The parameters used in the calculation of NSR in the block model (including metal values, recovery factors, transportation costs, etc.) were provided by SSMRC and reviewed by Tetra Tech.

NSR = rev – (ref + treat + trans)

Where

rev = dollar revenue per tonne mined

ref = concentrate refining cost per tonne mined

treat = concentrate treatment cost per tonne mined

trans = concentrate transportation cost per tonne mined

NSR has been calculated from the revenue/cost variables and recoveries presented in Section 21.  The primary parameter used to determine stopes was a $75 NSR cutoff.  Projected revenues from the sale of silver, gold, zinc, and lead are based upon long term consensus prices of $18.99/oz Ag, $1,1472/oz Au, $1.09/lb Zn, and $0.87/lb Pb respectively.

A script was used to assign NSR values to the block model as a new variable.  The script was written so that NSR values were assigned only to Measured and Indicated Resource blocks.  All other blocks in the model were assigned a zero-dollar value.  Figure 15-1 presents a grade tonnage curve including all blocks in the model with an NSR value greater than zero.

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Figure 15-1:  NSR Value / Tonnage Plot

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15.2  Ore Body Description

Mineralization is confined to a series of veins that run parallel to a group of faults that run Northwest to Southeast across the property.  The veins lie, for the most part, on the footwall side of these faults.  The primary fault is the Los Gatos Fault.  The veins are steep in the Northwest Zone (NWZ) at 70°–85°.  In the Central Zone (CZ), Southeast Zone (SEZ), and Southeast Zone 2 (SEZ 2), the veins are 60° near surface, flattening to 45° at depth.  Figure 15-2 is an orthogonal view showing the vein orientation and flattening with depth.

Figure 15-2:  Orthogonal View showing Flattening Veins

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The veins and main Los Gatos Fault are offset by several younger cross-cutting faults that break the mineralized veins into five distinct zones.  The faulting involves both lateral offsets and relative rotation of each of the blocks.  This resulted in each block being reviewed separately for mining method, recovery factors, and dilution parameters.  Figure 15-3 is a plan view showing the mineralized veins and faulted offsets.

Figure 15-3:  Plan View of Mineralized Veins

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For this study, the zones marked “Southeast Zone” and “Southeast 2 Zone” in Figure 15-3 were combined and developed as a single entity called the SEZ because of their proximity to each other.  The more distal “Southeast 3 Zone” has been planned and developed separately as SEZ 2.

Figure 15-4 presents a cross-section through the block model showing blocks colored by NSR value.  Also shown is a typical diamond drilling section, wireframe shapes for the mineralized veins, and the Los Gatos Fault.

Figure 15-4:  Block Model Section

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15.3  Mining Method

Each of the mineralized areas has been reviewed separately, and a combination of safety, vein orientation, economic, and geomechanical considerations are used to select the most appropriate mining method for each.  In the NWZ, the mineralized veins are steeply dipping and offset from the Los Gatos fault zone.  This, combined with local rock conditions, allowed for the selection of longhole.  Blocks of stopes that are thicker than 9 m (hanging wall to footwall) are scheduled to be mined transversely.  Thinner areas (less than 9 m) are planned to be mined longitudinally.

A mix of overhand and underhand mining has been implemented, starting on the 1390 Levels in both the NWZ and the CZ.  Due to the underhand approach, sill pillars are designed at necessary intervals in both cut-and-fill (CAF) and longhole stoping (LHS) blocks.  The underhand longhole stoping areas require re-mining or undercutting of the bottom sill drifts compared to the overhand approach.  This method will be reviewed by the mine planning team throughout the mine life and evaluated with current conditions in the mine.

The stopes within each of the mining zones were created using the Maptek Stope Optimizer (MSO) from Alford Mining Systems.  The software was run with Vulcan to generate stopes according to a set of parameters specific for each mining area.

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15.4  Dilution and Recovery Estimates

15.4.1  Dilution

The dilution strategy was developed by Stantec’s geomechanical consultant.  Per the resulting recommendations, 2 m of hanging wall dilution was added to each transverse and longitudinal stope in the NWZ (see Figure 15-5).  This dilution was considered sufficient to cover the combination of hanging wall and footwall dilution expected in NWZ stopes.  The original stope geometries were used to create a 2 m slice to query the block model for the grade of the resulting dilution.  The in-situ tonnes and grade of the stope were combined with the tonnes and grade of the 2 m slice to calculate the diluted tonnes and grade for the stope.  A recovery factor was then applied (as detailed in Section 15.4.2 ) to yield diluted and recovered tonnes and grade for the stope.

Figure 15-5:  NWZ Longhole Stope Dilution

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A different dilution strategy was applied to the drift-and-fill stopes in the CZ, SEZ, and SEZ 2.  The stopes will be mined longitudinally along strike and were divided into two groups: stopes less than 9 m wide (which can be mined in a single pass), and stopes greater than 9 m wide, which require two or more drifts. In the case of the narrower stopes, 0.2 m of wall and a portion of the 0.15 m of back dilution were added to the in-situ stope tonnes (see Figure 15-6).  The grade of the slices on the walls and back were queried using shape files and the block model on a stope-by-stope basis.  If the stope was vertically below a planned stope, then the back dilution was removed from the planned stope above.  Stopes wider than 9 m will be mined in multiple passes (primary/secondary sequence), with only a portion of back and outside wall dilution applied to the “outside” stopes (see Figure 15-7).  A total of 4.7% of the final diluted stope volume was added to all the planned drift-and-fill stopes for overbreak in rock, with an additional 2.4% with a reduced density of 2.12 t/m3 and a zero grade to represent paste mucked during mining.

Figure 15-6:  Drift-and-Fill Overbreak

Figure 15-7:  Drift-and-Fill Dilution

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Dilution by mining method is summarized in Table 15-1.

Table 15-1:  Dilution by Mining Method

Mining Type	Dilution
Transverse Longhole	17.3	%
Longitudinal Retreat Longhole	28.5	%
Drift-and-Fill	7.1	%

Dilution will be refined through the addition of mine experience as the workings progress.  The addition of infill drilling will also allow for a better estimation of dilution for the short term mine plan going forward at the site.  It is recommended to continue to evaluate the dilution on a regular basis and adjust it as necessary for future mine plans.

15.4.2  Mining Recovery

15.4.2.1  Stope Recovery

Ore recovery estimates for longhole stopes have been based on the designed stope dimension of 12 m W × 20 m H × 12 m L (average), with the 5 m W x 5 m H access/drill drift volume removed.  This yields a planned stope volume of 2,580 m3.

Several factors influence recovery, including line of sight from the remote mucking stand, distance to the muck pile, and blasting issues.  Line of sight and maneuverability may prevent the LHDs from accessing muck from the front corners of the stope.  It is assumed that the maximum angle the LHD can operate from the drawpoint is be approximately 45°.  Also, cleanup at the back of the stope can be difficult to gauge and results in additional loss of ore.  Summing these yields a volume of 34 m3 due to mucking losses.  Comparing this to the stope design volume of 2,580 m3 produces a mining design recovery of 98.7%.

Production blasting in large excavations presents issues that affect ore recovery, such as oversized rock and un-blasted rock left on the walls.  These factors represent an average ore loss of 2.7%. See Figure 15-8 for a visual presentation of ore losses in a stope.

Figure 15-8:  Isometric View of Stope

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Mucking complications, blasting limitations, and unplanned ore losses result in an overall mining recovery from longhole stopes of 96%.

Mining recovery should be evaluated on a continual basis with data from the mine and incorporated into the new mine plans going forward.

15.4.3  Drift-and-Fill Recovery

The average drift-and-fill production heading has been assumed to be 5 m H × 5 m W.  Mining losses are expected to occur when rock cannot be removed from the floor.  This typically happens when the floor is uneven and some of the rock settles to smooth the floor or is lost into the underlying paste fill.  Non-recoverable ore is assumed to be 0.1 m in depth (see Figure 15-9).  The resulting ore recovery for Drift-and- Fill mining is 98% of the planned excavation.

Figure 15-9:  Recovery Profile (Drift-and-Fill)

Recovery by mining method is summarized in Table 15-2.

Table 15-2:  Recovery by Mining Method

Mining Type	Recovery
Transverse Longhole	96	%
Longitudinal Retreat Longhole	96	%
Drift-and-Fill	98	%

Mining recovery should be evaluated on a continual basis with data from the mine and incorporated into the new mine plans going forward.

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15.5  Mineral Reserves

The mining parameters as defined above are applied to the Resources to convert them into Reserves. After application of mining dilution and recovery factors to the stope tonnage, the data was transferred from Vulcan to Deswik scheduling software to develop a life-of- mine (LOM) development and production schedule.  Figure 15-10 below shows the mine plan with the 2019 Resource model Measured and Indicated blocks.  The material mined through June 2020 has been removed.  Reserves are the economically extractable portion of the Resource.  During the scheduling process, a small amount of additional dilution was added as development drifts were mined through individual stopes.  Typically, this is material from the hanging wall side of the ore zone as cross-cutting drifts pass through the ore.

Table 15-3 presents the total Mineral Reserve, effective July 1, 2020, for Los Gatos, which includes dilution and recovery factors.  The Reserves have been calculated at an NSR cutoff of $75 and exclude material mined at the project since mining started in November 2018.  The NSR cutoff is representative of the site operating conditions. It is noted that the Proven Reserves exceed the reported Measured Resources, this is due to the mining dilution exceeding the mineralized material lost due to the mining recovery factor, and the difference in cutoff parameters used in the Resource and Reserve estimates. The Resource estimate was reported at a cutoff of 150 g/t AgEq in September 2019. The Reserves, produced in July 2020, were reported at a $75 NSR cutoff, to represent current site operating conditions and updated metal prices. The $75 NSR cutoff allows for the economic extraction of additional mineralized material from the Resource that were estimated at a cutoff of 150 g/t AgEq.

Table 15-3:  Mineral Reserve

Zone	Classification	Tonnes	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)
NWZ	Proven	2,587,684	359	0.43	3.09	5.88
	Probable	492,892	333	0.34	2.86	5.88
CZ	Proven	3,767,456	314	0.31	2.55	5.32
	Probable	1,772,921	299	0.44	2.32	5.82
SEZ	Proven	5,751	148	0.16	3.69	7.23
	Probable	569,380	148	0.16	3.69	7.23
SEZ2	Probable	421,547	118	0.17	3.11	4.16
Total	Proven	6,360,890	332	0.36	2.77	5.55
Total	Probable	3,256,740	254	0.34	2.74	5.86
Total	Proven + Probable	9,617,631	306	0.35	2.76	5.65

Figure 15-10 shows the mine plan with the Resource model blocks. Measured blocks are shown in red and Indicated blocks in green. In general, approximately 66% of the Resources were converted to Reserves.

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Figure 15-10:  LOM plan showing mining, development, and the 2019 Resource model, with Measured blocks in red and Indicated blocks in green.

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Blocks in the September 2019 Resource model were flagged within the mine plan shapes used for calculating the July 2020 Reserves. These tonnes were excluded from the Resources, and the remaining undiluted Resources are reported in Table 15-4.

There are several factors to note when evaluating these numbers. The cutoff for reporting these Resources is 150 g/t AgEg and are undiluted. Reserves were reported at a $75 NSR cutoff and include recoveries and dilution.

Table 15-4: Resources exclusive of Reserves

Classification	Tonnes	AgEq g/t	Ag g/t	Pb %	Zn %	Au g/t	AgEq toz M	Ag toz M	Pb lbs M	Zn lbs M	Au toz K
Measured	1,319,893	442	181	2.4	4.5	0.39	19	8	71	131	16
Indicated	2,200,669	368	139	2.1	4.2	0.23	26	10	101	205	17
Measured & Indicated	3,520,562	395	154	2.2	4.3	0.29	45	17	172	337	33
Inferred	3,717,063	361	107	2.8	4.0	0.28	43	13	231	330	34

NOTES:

1) 150 AgEq g/t cutoff grade has been calculated using $18/toz Ag, $0.92/lbs Pb, and $1.01/lbs Zn,

2) Columns may not total due to rounding,

3) Mineral Resources are stated as undiluted.

4) One troy ounce (toz) is equal to 31.1035 grams (g) and one Tonne is equal to 2,204.62 lbs.

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15.6  Conclusions and Recommendations

15.6.1  Conclusions

The Reserves have been calculated from the September 2019 Resource update and excludes material that has been mined since the Resource update.  The general mining plan is currently a mix of overhand and underhand mining, with the CZ being mined completely from the top down.

15.6.2  Recommendations

It is recommended to re-estimate the project Reserves when additional Resources are estimated.  A new short term mine plan should be completed regularly with the updated Resources and additional information obtained during mining.  Dilution should be adjusted as additional mining data is obtained from the working areas of the mine and evaluated on a continual basis throughout the mine life.

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16.0  MINING METHODS

Mining methods have been determined for the site and are currently being utilized for production at the mine.

16.1  Geotechnical

16.1.1  Geomechanical Investigation

Available geotechnical holes were reviewed and processed to extract pertinent geomechanical information.  The information was then grouped by mineralized zone and rock type.  The information obtained included Q’, Rock Mass Rating (RMR), and point load test data converted to unconfined compressive strength (UCS).  From the RMR, Geological Strength Index (GSI) values were estimated and rock mass properties were obtained (Stantec, September 2015).  The geomechanical hole information was supplemented by processing the underground mapping performed by SSMRC geologists to complete a wedge analysis.  Furthermore, laboratory testing and in-situ stress measurements were completed on core in order to adjust in-situ rock properties and parameters used for numerical modeling.

16.1.1.1  Geomechanical Holes Compilation

The NWZ has 23 geotechnical holes available for analysis.  The CZ has 68 geotechnical holes available for analysis.  The SEZ has 25 geotechnical holes available for analysis.  Table 16-1 presents the values obtained for Q’ and RMR for each zone.

Table 16-1:  Rock Mass Rating

Rock	Northwest Zone		Central Zone		Southeast Zone
Type	Q’	RMR	Q’	RMR	Q’	RMR
Andesite	9.62	46.86	13.47	42.99	9.51	10.67
Mineralized Andesite	21.88	38.74	20.71	50.39	13.60	12.27
Fault Breccia	—	—	21.71	43.92	—	—
Dacite	—	—	10.28	41.89	—	—
Epiclastic	—	—	21.14	38.79	17.63	7.92
Rhyolite	16.57	43.94	27.87	49.37	16.70	12.16
Tuff	7.78	41.17	13.48	44.39	8.81	12.91

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Point load testing was completed on a total of 117 holes.  Point load test data was compiled for all the Los Gatos mineralized zones.  Table 16-2 presents the UCS values obtained from the point load test results.

Table 16-2:  Point Load Test Compilation Results for All Mineralized Zones

Rock	Point Load (UCS MPa)
Type	No. of Points	Mean	Std. Dev.	Min.	Max.
Andesite	1,008	24.29	24.01	0.000100	221.99
Mineralized Andesite	64	31.42	35.12	0.009000	189.50
Fault Breccia	8	14.60	23.78	0.000580	61.00
Epiclastic	1,085	4.49	19.45	0.000035	556.56
Rhyolite	304	29.57	38.46	0.002000	221.99
Tuff	405	30.02	25.65	0.001000	148.56

16.1.1.2  Field Data Compilation

To supplement geomechanical hole information, a total of 1,184 joints and faults were mapped by SSMRC geologists in the andesite portion of the ramp.  This allowed Stantec to complete a stereo-net and wedge analysis.  The stereo-net analysis identified four joint sets, as listed in Table 16-3.  Joint set number 1 is the most prominent.  A case could be made that joint set number 2 and number 3 represent only one joint set.  Therefore, the rock mass ranges from only three joint sets to three joints sets plus random (Barton Q joint set number of 9 to 12), which confirms the Jn values used for Barton geomechanical Q’ evaluation from the geomechanical core logging.

Table 16-3:  Joint Set Mean Orientation

Joint Set	Dip	Dip Direction
1	68°	248
2	74°	323
3	76°	351
4	66°	73

A wedge analysis was performed to confirm that the selected ground support stabilizes potential wedges from the roof or the walls of the ramp, as observed during site visits (Stantec, September 2015).  Four combinations of joint sets were analyzed for potential unstable wedges.  The two main azimuths of the ramp (235° and 25°) were used for the analysis.  A friction angle of 30° and no cohesion were assumed for all joint sets.

For joint set combination 1, a large roof wedge with an apex height of 40.59 m and weight of 1,692 tonnes was generated by the software.  This size of wedge is unlikely to be unstable considering horizontal clamping force.  Therefore, the apex height was reduced to 10 m (twice the ramp width).  With the combination of Swellex and shotcrete, the wedge was stable with a safety factor greater than 1 for both ramp azimuths.

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The wedge analysis allowed Stantec to establish the most favorable excavation azimuth with respect to wedge weight.  The most favorable azimuth for underground excavation in footwall andesite with respect to potential wedges formed by the mapped joint sets are 100° to 145° (280° to 325°) and 155° to 210° (335° to 30°), as illustrated in Figure 16-1.

Figure 16-1:  Most Favorable Azimuth for Underground Excavation

16.1.1.3  Modeling Parameters

Laboratory testing from the core was performed.  The laboratory results and previous point load testing results are summarized in Table 16-4.  The point load testing underestimated the strength of the rock units (except for the Los Gatos Fault Zone) when compared to the laboratory results.  Because samples sent to the lab are usually the strongest (such that they can handle transportation and preparation), it was judged appropriate to multiply the point load results for the footwall and the mineralized andesite by two to obtain strength values aligned with the lab results.  No adjustment was made for the hanging wall fault zone results since lab results and point load values are aligned.  Table 16-5 provides the adjusted rock mass properties used in the updated numerical model.

Table 16-4:  Comparison of UCS Lab Results to Point Load Testing Results

RockType	Hanging Wall Andesite (Los Gatos Fault)	Host Andesite(between ore vein)	Mineralization	FootwallAndesite	Tuff Dacite
Average UCS (MPa) Lab Results	14.70 (5 tests)	68.39 (5 tests)	74.65 (5 tests)	69.91 (3 tests)	55.79 (3 tests)
Standard Deviation UCS (MPa) Lab Results	8.98	34.79	22.65	15.21	17.82
Average Point Load UCS (MPa)	14.59	24.80	31.42	24.80	30.02
Standard Deviation Point Load UCS (MPa)	23.78	24.01	35.12	24.01	25.65

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Table 16-5:  Adjusted Rock Mass Properties used for Numerical Modeling per Lab Results

RockType	MineralizedAndesite	FWAndesite	HW Andesite(Fault)
Avg. Q’	20.7	13.60	21.71
RMR	57	54	37
GSI	57	54	37
UCS (MPa)	62.84	48.6	14.7
Hoek mi Number	25	25	25
Young Modulus Intact (GPa)	25.14	19.43	5.88
Hoek mb Number	5.383	4.836	2.635
Hoek s Number	0.0084	0.006	0.0009
Hoek a Number	0.504	0.504	0.514
Cohesion (MPa)	4.53	3.363	0.801
Friction Angle	40.55	39.65	34.5
Rock Mass Tensile Strength (MPa)	-0.098	-0.061	-0.005
Rock mass UCS (MPa)	5.67	3.689	3.045
Rock Mass Modulus (GPa)	11.37	7.52	0.76

In situ stress tensors (see Table 16-6) obtained from the Acoustic Emission Method (Villaescusa and Hogan, 2016) were used to complete the updated numerical model.

Table 16-6:  In Situ Stress Tensors

Stress TensorComponent	Value(MPa)	Orientation	Plunge
Major Principal Stress	3 + 0.0532*D	116°	9°
Intermediate Principal Stress	1 + 0.0422*D	25.5°	1°
Minor Principal Stress	0.0273*D	298°	82°

Note:  D is the depth below surface in meters.

The deposit is shallow with weak rock strength.  The rock mass is generally characterized as fair to poor. As a result, the most likely mode of failure for the rock mass is associated with gravity failure (unraveling) due to a loss of confinement, which allows blocks or wedges to move freely along existing weakness planes such as joints and faults.  The best indicator of loss of confinement is a low or negative minor principal stress.  Therefore, to evaluate the stability of the rock mass with 3D numerical modeling, the minor principal stress was used.

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16.1.2  Analysis and Design

16.1.2.1  Numerical Modeling

To achieve the optimum production mining rate, concurrent extraction of ore from three mineralized zones may be required.  In addition, sill pillars may be created within individual zones by production mining starting on two levels concurrently (Stantec, April 2016).

Numerical modeling was completed to meet the following objectives:

·Ensure that concurrent extraction of all three zones will not adversely impact regional stability of the Los Gatos deposit.

·Verify that the creation of a sill pillar within a zone is possible.

·Evaluate the impact of the Los Gatos Fault on hanging wall stability.

The modeling was performed in 2D and 3D using Rocscience’s Phase2 code and MAP3D code, respectively.

The 2D modeling was completed to increase the understanding of the impact of bulk mining in the Central Zone and, more specifically, to observe the impact on the hanging wall and the Los Gatos Fault behavior.  The 2D modeling results indicated that yielding extends along the fault beyond the excavated stopes and that hanging wall failure is expected, which is directly linked to the shallow dip of the deposit.

All 3D models were linear.  The model geometry is illustrated in Figure 16-2.  Backfill was not used in the model.

Figure 16-2:  Geometry Used in the 3D Model Looking towards the Hanging Wall

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The combination of competent footwall rock and ore with the major principal stress parallel to the strike of the ore body creates favorable mining conditions for the Cerro Los Gatos ore body.  The 3D numerical model did not indicate any significant negative impact from mining all three zones concurrently.  However, there is a small West extension to the CZ (the CZ West Extension) that may have some negative impact on the hanging wall pillar of the Northwest Zone.  In stopes of level 1410 unstable zones have been identified due to the proximity to the fault.

For all three zones, the Los Gatos Fault is affected by mining-induced stress changes, especially in the CZ, due to the shallow dip of the deposit.  The amount of influence of mine-induced stress on the Los Gatos Fault is dependent on the buffer zone between open stopes and the fault zone.  Where the buffer is thin (less than 5 m), there is more potential for failure and unraveling.  This implies a possible hanging wall instability problem that may cause excessive dilution or unraveling, especially if a bulk mining method is used.  Therefore, ore pillars are required where the fault is within 5 m of the hanging wall ore contact to mitigate potential fault failure.  Operational data has indicated that ground stability is reached with ore pillars of approximately 2 meters.  In some places the geomechanical conditions are favorable enough to mine all the ore of the vein until the contact with the fault.  Some areas where the ground is less stable, a pillar of 1.0 m is left to avoid unstable conditions during operations.

Central Zone

The 3D modeling of the Central Zone also indicates that waste pillars between veins will yield, causing potential instability problems in the hanging wall of individual veins.  The extraction sequence of the veins is important in that the veins closest to the fault should be mined first.  The likelihood of hanging wall instability problems occurring are reduced by mining with cut-and-fill methods.  This is due to the smaller excavation size and more effective installation of support in the hanging wall.  The sill pillar in the CZ is expected to yield, resulting in adverse ground conditions four to five cuts below the upper sill.  Operations in this zone have confirmed backfill deficiencies have caused unstable conditions on the hanging-wall zone, as it was experienced in stope 625, where the stability problems created blocks to cause the support to yield.  The predicted conditions in this zone have been accurate.

Northwest Zone

The 3D modeling of the NWZ indicates that the sill pillar should yield progressively as the lower mining front approaches the sill pillar.  This confirms that the primary/secondary chevron extraction sequence is sound.  Shifting of blast holes or unraveling may occur when drilling takes place in the yielded sill pillar.  Extraction of the NWZ has less impact on the Los Gatos Fault than the extraction of the CZ due to the steep dip of the Northwest Zone.  Instability issues with the hanging wall of the NWZ are expected to be less critical compared to the Central Zone.

Mining of the CZ West Extension has an impact on the Los Gatos Fault according to the numerical model.  As mining progresses in the NWZ, the pillar between the NWZ and the CZ West Extension is affected.  This may lead to stability problems and greater dilution of the hanging wall of the NWZ adjacent to the CZ West Extension.

The operating geotechnical conditions, however, have been better than the anticipated conditions.  This has allowed to excavate bigger dimensions in the stope length (more than 12 m), and the planned activities have considered excavating more in the vertical dimension of the stope (25 m height).  Some of the stability problems found in this zone are mainly due to drilling deficiencies, which have reached areas near the hanging-wall fault zone.

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Southeast Zone

The 3D modeling of the Southeast Zone did not identify any issues except for potential hanging wall failure.  Current operations have not developed any work in this zone at the time of generating this report.

16.1.2.2  Modeling Results

Stantec makes the following recommendations based on the numerical modeling results.

·All three zones may be mined concurrently.

·Bulk mining methods (Longhole Mining) may be used in the NWZ.

·A primary/secondary chevron extraction sequence for pillars is recommended for the NWZ.

·Cut-and-fill mining methods are recommended for the CZ and SEZ.

·Timely backfilling is required to minimize stability issues.

·Ore pillars are required where the fault is within 5 m of the hanging wall ore contact to mitigate potential fault failure.

In general terms, this model has had good results.  Some of the differences to this model and the actual operations are that the ground conditions are better than the estimated by the model.  Other differences to this model are more evident due to the presence of water, which has been more abundant than the predicted amount.

16.1.3  Stope Design Criteria

The geometry of the CZ, as well as the risk of water inflows from ungrouted diamond drill holes, dictates a cut-and-fill mining method.  The geometry of the NWZ, combined with the lower risk of water inflows, makes this portion of the ore body amenable to Bulk (Longhole) Mining (Stantec, December 2015).

16.1.3.1  Cut-and-Fill Mining

From the Rock Mass Ratings (RMR) (Bieniawsky, 1989) presented in Stantec’s report Geomechanical Hole Compilation and Future Data Requirements, the empirical unsupported span design curve was used to determine the span of excavation allowable for the CZ.  An RMR of 40 to 60 was used, which is one standard deviation (10) above and below the average RMR value of 50 for the mineralized andesite.  The results indicated that with ground support, a maximum drift span of 9 m is recommended.  For ore widths greater than 9 m, two or more drifts (drift-and-fill) are used to extract the ore.  When more than two drifts are planned, consideration must be given to installing additional support, such as shotcrete posts in the first drift, to support the effective span created by driving the adjacent drifts.  The cut height was fixed at 5 m.

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16.1.3.2  Bulk Mining

The Stability Graph Method (Potvin, 1988) was used to evaluate bulk stope dimensions and dilution potential (Clark and Pakalnis, 1997).  This method consists of comparing the hydraulic radius (Hr) of a stope surface (back, end wall, footwall, or hanging wall) to a stability number (N).  Table 16-7 lists the values used to determine Hr and N.

Table 16-7:  Parameters used to Establish Hr and N

Surface	Length orHeight(m)	Width orStrike Length(m)	Q’ Avg.	UCS (MPa)	InducedStress(MPa)	A	B	C	N
Stope Back	12	21	21.9	31.4	19	0.10	0.31	2	1.35
Stope End Wall A	20, 25, 30	21	21.9	31.4	15	0.10	0.51	4	1.45
Stope End Wall B	20, 25, 30	21	21.9	31.4	15	0.10	0.51	4	1.45
Stope Hanging Wall	20, 25, 30	12	9.6	24.3	15	0.10	0.20	5	0.96
Stope Footwall	20, 25, 30	12	9.6	24.3	15	0.10	0.20	5	0.96

The 20 m and 25 m high stopes plot in the Unsupported Transition Zone, and 30 m high stopes are on the limit between the Unsupported Transition Zone and the Stable with Support Zone for a stope width (along strike) of 12 m.  Back and end walls for all the stope dimensions studied fall within the Unsupported Transition Zone.

The recommended stope size is 20 m high (floor to floor) × 12 m wide (along strike) and 21 m long (hanging wall to footwall).  Hanging wall equivalent linear slough dilution is expected to be 2 m.  Additional measures could be used to minimize dilution, such as cable bolting the hanging wall, using pre-splitting blasting techniques along the hanging wall, backfilling stopes within three weeks from the first blast, and reducing the stope width (along strike).  If additional information from bulk sampling and exploration drilling proves positive, consideration may be given to increasing stope height to 25 m.

16.1.3.3  Cut-and-Fill Support

The temporary nature of the cut-and-fill stopes allows the use of mechanical bolts or PM12 Swellex with 7-gauge welded wire mesh.  Bolt length and pattern are a function of the drift span.  As mining progresses from the bottom up, a large failure zone could be generated in the back of the ore body from the hanging wall to the footwall, and considerations must be given to longer ground support length.  The length of the ground support required beyond the third cut has been established through a monitoring program of the stope back with either ground movement monitors and/or extensometers installed in the back central drifts of a given cut.  The minimum length of the instrument must be at least twice the length of the initial 2.4 m long ground support.  Instrumentation must be installed on every cut.

Proposed support for cut-and-fill stopes is as follows (Stantec, December 2015).

·7–9 m span:  2.4 m long mechanical bolts on a 1.0 m × 1.3 m staggered pattern or

·2.4 m PM12 Swellex on a 1.0 m × 1.0 m staggered pattern with 7-gauge welded wire mesh.

·5–7 m span:  1.8 m long mechanical bolts on a 1.0 m × 1.4 m staggered pattern or 1.8 m PM12 Swellex on a 1.0 m × 1.1 m staggered pattern with 7-gauge welded wire mesh.

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·4–5 m span:  1.5 m long mechanical bolts on a 1.0 m × 1.6 m staggered pattern or

·1.5 m PM12 Swellex on a 1.0 m × 1.6 m staggered pattern with 7-gauge welded wire mesh.

16.1.3.4  Bulk Mining Support

Top sills and bottom sills for Bulk Mining operations are subjected to blast damage and large mine-induced stress change.  Therefore, the ground support must be able to sustain the additional demand caused by the Bulk Mining operation.  Furthermore, the sills are usually open for more than 6 months, especially with a bottom- up sequence where the top sill is also used as a bottom sill.  A stiff support is usually recommended, such as fully grouted rebar (Swellex could be used in weak rock mass) and/or fully grouted cable bolts for wide spans.  Additional support consideration must be given to the brow of a stope where mucking takes place.

Proposed support for Bulk Mining stopes is as follows (Stantec, December 2015):

·5-6 m span:  1.8 m long fully grouted rebar on a 1.0 m × 1.5 m staggered pattern or 2.4 m PM12 Swellex on a 1.0 m × 1.5 m staggered pattern with 6-gauge welded wire mesh.

·6-8 m:  2.4 m long fully grouted rebar or 3 m long PM12 Swellex on the same pattern as described above for the 5–6 m wide span.  Any span greater than 8 m requires longer support, depending on the effective span of the excavation.

A 5–6 cm thick coat of shotcrete may be used in some instances to minimize damage to existing support, especially above the open stope.  Brow support may require a 6–8 cm coat of shotcrete or shotcrete arches.

16.1.4  Development

From the numerical modeling results, all major infrastructure and main access should be at a standoff distance of 20 m from the ore body footwall contact to minimize issues due to mine-induced stress.

16.1.4.1  Lateral Development Support

Empirical and deterministic design were used to establish ground support guidelines for footwall waste development (Stantec, December 2015).  The deterministic analysis was based on a dead weight approach. It is anticipated that due to the shallow depth of the proposed mine, the main mode of failure will be gravity failure where confinement is lost (relaxed zone around an excavation).

Two-dimensional numerical modeling was completed for a range of drift spans to establish the depth of failure to be used in the dead weight analysis.  Rocscience Phase2 software was used for this analysis.  The expected depth of failure was used to determine required bolt lengths considering 30 cm of anchorage for grouted rebar and 110 cm for Swellex.  The final selected pattern is a function of the required safety factor for the excavation of 1.5 for a permanent excavation.

All bolting must be completed through 6-gauge, galvanized, welded wire mesh with a 10 cm × 10 cm square pattern or through fiber-reinforced shotcrete.  The mesh must cover the roof, shoulder, and walls down to a minimum of 2 m from the floor.  Where shotcrete is required, shotcrete must cover the entire excavation down to the floor.

For the walls, 1.8 m long tendons (galvanized friction sets, grouted rebar, or Swellex) may be used.  If Swellex bolts are used, they must be coated to provide protection against corrosion.

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The support classes shown in Table 16-8 were established for the following four geomechanical domains:

·Support Class 1 for Domain 1:  Q > 10 (indicating good rock)

·Support Class 2 for Domain 2:  4 < Q > 10 (indicating fair rock)

·Support Class 3 for Domain 3:  0.1 < Q < 4 (indicating very poor and poor rock)

·Support Class 4 for Domain 4:  Q < 0.1 (indicating extremely poor rock)

Table 16-8:  Ground Support Class Description for 5 m Wide × 5.5 m High Drift

	Back Support		Wall Support
Support Class	20 mm Rebar2 m long	PM16 Swellex2.4 m long(1)	35 mm Friction Stabilizer1.8 m long(2)	SurfaceSupport
1	1.2 m × 1.4 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern) down to within 1 m of the floor	No. 6 gauge, galvanized, welded wire mesh with 10 cm × 10 cm squares within 1 m of the floor or 5 cm of fiber- reinforced shotcrete down to the floor
2	1.2 m × 1.4 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern) down to within 1 m of the floor	5 cm of fiber-reinforced shotcrete down to the floor
3	1.2 m × 1.4 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern) down to within 1 m of the floor	7 cm of fiber-reinforced shotcrete down to the floor
4	1.2 m × 1.4 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern)	1.2 m × 1.5 m staggered pattern (dice pattern) down to within 1 m of the floor	10 cm of fiber-reinforced shotcrete down to the floor

(1)The minimum Swellex required are PM16. PM24 may be substituted for PM16 since it has a greater capacity than PM16.

(2)The minimum requirement for the walls is 35 mm friction stabilizers; the same bolts used for the back may be substituted for friction stabilizers since they have a greater capacity.

Table 16-9 lists the requirements for wider drift spans.  Wedge analysis indicates that the current support system used in for footwall development is adequate to stabilize wedges (Stantec, July 2016).

Table 16-9:  Support System for Spans Greater than 5 m

	Bolt Length (m)			Bolting Pattern (m)
Span(m)	Rebar	Swellex	Cable Bolts	Rebar	PM16	PM24	CableBolts
5.1 to 6.5	2.4	3.2	4.5	1.2 m × 1.2 m pattern	1.2 m × 1.5 m pattern	1.6m × 1.6 m pattern	1.6m × 1.6 m pattern
6.6 to 7.3	3.0	3.2	4.5	1.1 m × 1.2 m pattern	1.2 m × 1.3 m pattern	1.5 m × 1.5 m pattern	1.5 m × 1.5 m pattern
7.4 to 9.1	3.3	4.1	4.5	1.0 m × 1.0 m pattern	1.0 m × 1.1 m pattern	1.3m × 1.3 m pattern	1.5 m × 1.5 m pattern

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16.1.4.2  Vertical Development

The vertical development consists of ventilation raises with raise bore machines.  At this stage of the design, ore passes are not planned.  Four ventilation raises have been completed at the time of writing this report.

To evaluate the potential stability of raise bored openings, an empirical method developed by McCracken and Stacey (1989) was used.  Table 16-10 provides the Q values used for selected Los Gatos rock unit that may be bored from underground through surface.  Figure 16-3 and Figure 16-4 illustrate different raise diameters and wall and face stability with respect to the selected rock unit.  As shown, depending on the Q value encountered, raises may or may not be stable.  Referring to the first 100 m of the decline below surface, a portion of raises near surface require support such as 5-7 cm of fiber-reinforced shotcrete.  Therefore, it is recommended to drill a pilot hole at selected raise location to evaluate the rock mass quality as a function of depth to better plan requirements for support (if any).

Table 16-10:  Q Value for Los Gatos Selected Rock Unit

Rock	Q Value
Type	Minimum	Average
Andesite	0.007	15.69
Rhyolite	0.040	27.55
Tuff	0.042	12.83

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Figure 16-3:  Raise Wall Stability

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Figure 16-4:  Raise Face Stability

16.2  Mine Access Design

16.2.1  Mine Access

The upper portion of the CZ (the bulk sample area on the 1400 Level) is currently accessible via the existing portal and main access decline.  Three internal ramps will be developed throughout the mine life, one for the NWZ, one for the CZ, and one for the SEZ and SEZ2.

16.2.2  Access Ramps

The main access decline connects the main surface portal to the Northwest and Central internal ramps at the 1420 Level near the bulk sample location.  Where possible, ramps are designed to maximize straight runs for safety and haulage efficiency, as well as to minimize wear on mobile equipment.

The Southeast ramp, which will service the SEZ and SEZ2, is an extension of the Central ramp and will not be required until midway through the mine life.

For ease of entry and exit, ramps have been designed at a 15% gradient, reducing to 13% in the turns, and leveling out to 4% at main intersections.  Curves have been designed with a minimum 25 m radius, passing bays are incorporated where required, and safety bays are included at 30 m spacing.

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16.2.3  Mining Sublevels

Sublevels in the NWZ are accessed from the NWZ access ramp on 20 m vertical intervals, which is the planned longhole stoping height.  For geomechanical stability, footwall drifts are set back a minimum of 20 m from ore contact.  The level entrance from the ramp are set back approximately 30 m from ore contact.  Stope access cross-cuts are planned for each individual transverse or longitudinal longhole stoping block.

Drift-and-fill stoping will be used in the CZ and SEZs.  Sublevels in these areas are accessed from the access ramps on 25 m vertical intervals, which is the cut-and fill stope height based on accessing five 5 m cuts from each sublevel.  Stope access cross-cuts (attack ramps) in the drift-and-fill areas are developed on a 200 m horizontal spacing along strike.

Level development follows the general strike of the various ore zones and typically includes excavations for sumps, electrical substations, remuck bays, paste fill lines, and raise accesses.

Sublevels in both the NWZ and CZ generally terminate at ventilation raises at both ends, one fresh air and one exhaust, permitting the intake of fresh air and the exhaust of contaminated air on each level.

Figure 16-5 illustrates typical level development requirements in the NWZ longhole area of the mine.

Figure 16-5:  Typical Level Development Northwest Zone

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Figure 16-6 illustrates typical level development requirements in the drift-and-fill areas of the CZ and SEZs.

Figure 16-6:  Typical Level Development CZ and SEZs

Development drilling is completed using electric/hydraulic jumbos.  The holes are loaded with an ANFO-based emulsion and the round is initiated with NONEL blasting caps.

Figure 16-7 presents two examples of drill patterns for typical development headings at Los Gatos.

Figure 16-7:  Typical Waste Development Drill Patterns

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16.2.4  Ventilation Raises

The following four raise bored ventilation raises were planned between the underground and surface and have been completed:

·North — 4 m Diameter Return Air Raise

·Central — 4 m Diameter Fresh Air Raise

·South — 4 m Diameter Fresh Air Raise

·Southeast — 4 m Diameter Return Air Raise

Two additional raises have been planned and include:

·North-a second raise is planned to start in the second half of 2020

·Southeast- a second raise is planned to be constructed in this zone midway through the mine life

The ventilation raises are lined with shotcrete.

During development of the mine ramps, a series of 2.5 m × 2.5 m drop raises are excavated between each level access with ramp advance.  These raises serve as exhaust air raises during ramp development.  The drop raises in the NWZ and CZ are being used for secondary egress, while the drop raises in the SEZ and SEZ2 will be required as exhaust air raises during the production phase of these mining zones.

16.2.5  Secondary Egress

Four raise bored egress raises have been completed between the underground and surface.

The egress raises do not require a shotcrete liner due to their small diameter and lack of installed services.  The raises will provide an escape route for evacuating personnel out of the mine in the event the main access decline from surface becomes blocked.  A man cage (or “bullet”) will be lowered from surface into the mine through the raise using a truck-mounted hoist.  The ventilation department is evaluating the option of adding two more Secondary Egress raises along the SEZ and SEZ2.

Drop raises located on all ramps are equipped with ladders to provide secondary egress in case the ramp becomes blocked.

16.3  Mining Methods and Sequence

The mining methods at Los Gatos includes two bulk stoping methods, transverse longhole and longitudinal longhole, as well as a more selective drift-and-fill method.  Based on geomechanical recommendations, the sublevel intervals in the longhole stopes are fixed at 20 m.  The drift-and-fill method is used for the CZ and will be used for the SEZs, while the NWZ is mined using transverse longhole and longitudinal longhole.

16.3.1  Drift-and-Fill Mining

Drift-and-fill mining is a flexible mining method that allows near-complete recovery of ore.  Mining of ore is completed with the same equipment used for mine development, and dilution from waste external to the ore zone is minimal.  Negatively, productivity is lower than longhole stoping due to the small blast sizes

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and sequencing of backfill.  Good control of drilling and blasting is also necessary to minimize backfill dilution.

Drift-and-fill mining uses a two-boom jumbo for face drilling.  Main haulage drifts are developed laterally in the footwall, on 25 m vertical centers, and offset approximately 100 m from the vein.  The veins are accessed from cross-cuts at approximately 200 m centers horizontally along strike (see Figure 16-8).  From the cross-cuts, attack ramps are driven initially at a -15% gradient to intercept the vein(s) at the bottom floor of that stope block.  Subsequent floors are mined in 5 m cuts, with a total of five cuts being taken from each attack ramp.  Once the vein is intersected, headings are driven in both directions to provide two working faces on each vein.  In the CZ, this is repeated on two active main levels to achieve the daily production rate.

Drift-and-fill mining typically consists of parallel drifts mined in a primary-secondary sequence across the width of the vein or deposit.  Once the first (primary) drift is mined, it is tight-filled with cemented backfill (paste or cemented rock fill).  This allows another drift (secondary) to be developed immediately adjacent to the backfilled drift.  Successive cuts are then mined with the backfill from the lower cut serving as the floor for the next 5 m cut. See Figure 16-8 for an example of drift-and-fill mining.

Figure 16-8:  Typical Drift-and-Fill Stope Schematic

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Figure 16-9 presents two examples of typical ore development (drift-and-fill) drill patterns.  The pattern on the left is a full-drift pattern and could range from 4 m to 6 m in width.  The pattern on the right is for “breasting,” where the rock below has been removed and subsequently backfilled, leaving a narrow void between the cut and the floor below.  “Burn cut” and lifter holes are not required when breasting.

Figure 16-9 :  Typical Ore Development Drill Patterns

After blasting, the broken ore is mucked from the face using a 7.5 m3 LHD to the remuck bays or directly to trucks for haulage to surface.  Once mucking is complete, the back and walls of the headings are scaled and suitable ground support is installed.  After the drift is mined to the predefined boundary of the stope, it is backfilled with cemented paste fill.

Average advance for the development headings is estimated at 3.85 m/d for single headings, 5.01 m/d for double headings, and 6.16 m/d for multiple headings.

Drift-and-fill is the selected mining method for the CZ and SEZs for the following reasons:

·Drift-and-fill is a “person-entry” mining system where personnel have full access to the excavation in case the drift intersects a water-bearing drill hole or structure (therefore, water control measures can be implemented).  This is not the case with a longhole stope.

·The geometry of the veins, specifically the relatively shallow dip, is more amenable to drift-and-fill than longhole stoping.

·The poor quality of the hanging wall in close proximity to the ore source inevitably results in higher dilution with longhole stoping (compared to drift-and-fill).

·Drift-and-fill is a selective mining method, allowing close geological control of mining.  This control typically results in higher ore grades and less dilution.

·Less definition drilling is typically required with a method that essentially follows the vein.

·Mining multiple veins would result in sufficient production from drift-and-fill stoping to meet ore tonnage requirements.

·Specialty equipment is not required, and training/skill requirements are reduced.

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16.3.2  Transverse Longhole Stoping

Transverse longhole stoping is a bulk mining method in which the long axis of the stope and access drifts are perpendicular to the strike of the mineralized zone.

Access levels are developed subparallel to the strike of the ore zones in the footwall of the deposit.  Access drifts for drilling and mucking are then developed from the levels to the top and bottom of each stope.

The mine design assumes a stope width of 12 m and height of 20 m for all transverse longhole stopes. Stope lengths vary depending on the thickness of the ore zone; however, the maximum stope length is restricted to 21 m by the hydraulic radius, while the minimum length has been determined to be 9 m.  (longhole stoping areas 9 m or less in length will be mined longitudinally).  The drilling level at the top of the stope and the mucking level at the stope bottom are driven 5 m wide × 5 m high with arched backs.  Stopes have been designed with a minimum hanging wall and footwall angle of 55°.

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Figure 16-10 illustrates the concept for a typical development and extraction sequence for a transverse stoping block, while Figure 16-11 shows the typical transverse longhole stope dimensions.

Figure 16-10:  Typical Transverse Stope Schematic View

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Figure 16-11:  Transverse Stope Dimensions and Drilling

Transverse longhole stoping is considered a bottom-up method whereby the lowest stopes are removed first.  The stope sequence is primary-secondary.  In primary stopes, the drill drift and mucking drift is driven perpendicular to the strike of the ore body.  Access to the secondary stopes consists of a “Y” drift developed from the primary access drift.

After completion of the development, longhole drilling is started.  All drilling is completed before blasting starts.  To start stope extraction, a slot is created at the far end of the stope.  This slot creates a void for the ensuing stope blasts.

To begin the slot sequence, a drop raise is required.  The raise is approximately 2.5 m high × 2.5 m wide × 15 m long (see Figure 16-12).  The drop raise is blasted in two lifts, with the first being half of the length of the drilled raise.

Figure 16-12:  Typical Slot Raise

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The drop raise is then expanded to form the slot (see Figure 16-13).  The first three stope rings are blasted into the drop raise to form a slot the width of the stope.  The slot provides a large enough void to begin stope production ring blasting, which is typically completed in increments of two to three over the length of the stope.

Figure 16-13:  Slot Ring Drilling

The transverse longhole stope mucking drift is slashed to the full 12 m stope design width immediately in advance of each stope blast.  Walls are slashed using a jumbo drill (see Figure 16-14).  After the slot is complete, the slashing of the mucking drift starts and retreats ahead of the production blasting (see Figure 16-15).  Once the slash is taken, personnel are not permitted in the area since it does not include entry-quality ground support.

Figure 16-14:  Production Ring and Slash Drilling

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Figure 16-15:  Slot Complete and Undercut Started

The remainder of the stope is drilled and blasted on retreat from the initial slot rings to the stope entrance (see Figure 16-16).

Figure 16-16:  Production Blasting Retreat

Stopes above the bottom stopes only require a drill drift since the mucking drift is now the drill drift from the stope below.

Secondary transverse longhole stopes are mined similar to primary stopes.  However, secondary stopes require the primary stopes on both sides be mined out and backfilled (and the backfill-cured) prior to blasting.

After the stope is mined, it is backfilled with paste except when waste rock is available for inclusion in the secondary stope backfill mix.  Until paste fill is available, cemented rock fill (CRF) is used for backfill.

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During the backfill portion of the stope cycle, a bulkhead is initially constructed at the stope entrance of the mucking drift.  Paste fill is then poured from the drill drift into the open stope (see Figure 16-17).  Once the paste filling is complete, it requires a cure time of 28 days prior to blasting adjacent stopes.  Other activities such as development and drilling in the adjacent stopes may continue during the backfilling and curing cycle.

Figure 16-17:  Typical Paste Backfilling

In general, transverse longhole stoping is used where the rock mass quality of the hanging wall limits the length of the open mining span.  This method requires more footwall waste development (footwall drifting, cross-cuts and drawpoints); however, since each stope has an independent access it has more flexibility with regards to sequencing and scheduling.

16.3.3  Longitudinal Longhole Stoping

Longitudinal longhole stopes are up to 9 m wide (from footwall to hanging wall).  In the NWZ, ore zones (or veins) that are wider than 9 m are mined using transverse longhole stoping.

Similar to transverse stoping, longitudinal stoping consists of a drill drift at the top of the stope and a mucking drift at the bottom.  These drifts are driven in the ore parallel to the strike of the ore body and developed 5 m wide.

This method requires the ore drifts be driven to either a defined boundary, a change in mining method (transverse), or the end of the mineralization.  Then, the stopes are mined in sequence from the end of the drift to the access (i.e., retreat mining).  Similar in process to transverse longhole stoping, each stope has a drop raise as a beginning point for the extraction retreat to the access crosscut.  In accordance with geomechanical design parameters, should the stope length be greater than 12 m along strike, it is necessary to stop, backfill, and re-establish a new drop raise before restarting the stoping sequence (see Figure 16-18).  Upon completion, all voids are typically paste filled and supplemented with development waste rock when applicable.

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Figure 16-18:  Longitudinal Stope Dimensions and Drilling

16.3.4  Backfilling

A CRF plant has been constructed during the pre-production period to ensure a source of cemented backfill for primary stopes during pre-production (mining ore to build up a stockpile) and early in the production period (until the paste plant is built).  The underground haulage trucks are equipped with ejector-style boxes and backhaul the CRF material from the surface plant to the underground stopes.  The paste plant is currently scheduled to be constructed in June 2021.

Secondary stopes are less demanding for structural backfill.  A combination of lower-strength (lower binder content) paste and development waste is used in secondary stopes.  When secondary stopes are available, it is intended that most or all waste development rock is used for backfilling to avoid hauling waste to surface.

16.3.5  Transverse Longhole Stopes

All primary transverse longhole stopes are backfilled with CRF until the paste plant is operational.  Dump blocks are required when trucks are dumping CRF into longhole stopes and must be advanced as the stope is filled.

A barricade is required on the lower access drift when backfilling.  Typically, a waste muck pile is adequate for CRF.  In the case of paste, it may be necessary to construct a shotcrete bulkhead.

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Paste fill is transferred into the stope by extending the steel delivery line with HDPE pipe to the edge of the stope.  As the pour continues the pipe can be advanced if required.

As an initial paste pour, a “plug” of paste deep enough to cover the lower entrance to the stope is poured and allowed to cure for two or three days.  Following that, the stope is filled and allowed to cure up to 28 days before mining occurs above or immediately adjacent to the filled stope.

16.3.6  Longitudinal Stopes

Filling of longitudinal stopes is similar to filling transverse stopes, but because there is no primary-secondary sequence, the fill requirements differ slightly.

When using CRF, only a portion the stope must be filled with a cemented product.  Once the stope is approximately 60% filled, the remaining unfilled back end of the stope can be filled with unconsolidated waste.  All that is necessary is to have a solid backfill face in place to blast against when re-slotting for the next stope.  The last fill in the stope can be 100% rock fill or low-strength paste.

When pouring paste in longitudinal stopes, the procedure is the same as that in transverse stopes.

16.3.7  Drift-and-Fill Stopes

CRF has been used initially in the primary drift-and-fill stopes.  Although the ejector-equipped trucks can dump in the stope without raising the box, it is necessary to have an LHD available (preferably equipped with a “rammer jammer”) to push up the CRF to ensure tight filling.

Paste filling in the drift-and-fill stopes is a relatively easy procedure.  An HDPE paste line is extended to the stope face, and a waste rock barricade is built at the entrance to the stope cut.  As the paste is poured, the line is intentionally broken, or pulled back, to ensure tight fill for the length of the stope.

Secondary drift-and-fill stopes can be filled with development waste and/or low-strength paste.

16.3.8  Production Rate

The production rate is 2,500 tpd from the second quarter of 2021 forward.  Year 2020 will include a reduced production rate, due to shut down through the global pandemic in spring 2020, with full production being reached at the end of the first quarter of 2021.

The Los Gatos Resource is split between the CZ (56.2%), NWZ (31.3%), and SEZs (12.5%), each of which are planned to be operated somewhat independently.

Mining of the SEZs is scheduled to start in 2025.  These zones typically have lower NSR values and consist of comparatively narrow veins and lower tonnes per vertical meter than the CZ and NWZ.  As a result, the SEZs are scheduled later in the mine life (starting in 2025) and are meant to replace ore production from the CZ as production in that zone drops off.

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16.3.9  Stope Design Parameters

Table 16-11 presents the stope design parameters used for the project.  Figure 16-19 presents the design span curves used for the drift-and-fill mining.

Table 16-11:  Stope Design Parameters

Parameter	Unit	Drift-and-Fill	Longitudinal Longhole	Transverse Longhole
Maximum Mining Width	m	9 m	9 m	12 m
Drift Height	m	5 m	5 m	5 m
Maximum Stope Length	m	200 m	12 m	21 m
Maximum Strike Length	m	n/a	12 m	12 m
Stope Height	m	5 m	20 m	20 m
Access Drift Gradients	%	-15% to +15%	flat	flat
NSR Cutoff Value	$US	$170	$170	$170
Dilution	%	7.1	28.5	17.3
Recovery	%	98	96	96

Figure 16-19:  Design Span for Drift-and-Fill

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16.4  Development and Production Schedules

16.4.1  Development Productivity Rates

Development crews drive multiple headings whenever possible, thus increasing utilization of crews and equipment.  Double-heading estimates are prepared based on a 30% increase over the single-heading rate for the same drift size.

Vertical development, such as internal vent raises and manway raises, uses several techniques (including drop raises, raise bores, and raise climbers) to achieve the most cost-effective development.  Vertical advance rates include ground support/lining and mobilization/demobilization of equipment and crews. As mining progresses, detailed information from the mine should be included into future planning.

16.4.2  Development Schedule

The LOM development schedule is presented in Table 16-12.  It is recommended that the schedule continues to be updated with the most current Resource and an updated mine plan as the mine life progresses.

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Table 16-12:  LOM Development Schedule

Waste Type	2H 2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030	2031	TOTAL
Lateral WasteMeters	2,145	4,680	5,100	5,100	4,599	2,393	654	828	556	411	817	383	27,666
Vertical WasteMeters	728	467	350	103	580	468							2,697
Total WasteMeters	2,873	5,147	5,450	5,203	5,180	2,861	654	828	556	411	817	383	30,363

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16.4.3  Production Planning Criteria

The Mineral Reserve estimate includes detail by mining method for each ore zone.  These detailed estimates were used to determine production sequencing.  The following general planning criteria were applied to determine priorities for initial production.

·Highest Grade

·Highest Productivity

·Lowest Mining Cost

Productivities were generated and added to the Deswik development and production schedule.  Stope productivities are based on a typical total stope cycle, including cable bolting, drop raising, long hole drilling, production blasting, remote mucking, fill fencing, backfilling, and delay for curing.  Table 16-13 lists the productivity rate for each mining method.

Table 16-13:  Productivity Rates

MiningMethod	Finished Size(m)	Productivity Rate (tonnes/day/stope)
Drift-and-Fill	6× 5	363.3
Longhole — Transverse	12 W x 14 L x 20 H	191.5
Longhole — Longitudinal	9 W x 12 L x 20 H	127.5

The LOM schedule has been generated using a series of software suites.  Stope shapes created with Vulcan and MSO were used as a starting point to design the underground workings.  Additionally, Vulcan was used to assign attributes to the design strings and solids that were carried forward into the scheduling suite (Deswik).

16.4.4  Production Schedule

The LOM production schedule is presented in Table 16-14.  As additional information is gathered from mining and exploration programs, the production schedule should be continuously updated throughout the mine life.  The schedule starts in July 2020.

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Table 16-14:  LOM Production Schedule

Item	2H 2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030	2031	TOTAL
Total Ore Tonnes	320,990	862,000	900,000	900,000	900,000	900,000	900,000	900,000	900,000	900,000	900,000	334,642	9,617,631
Diluted NSR ($)	201	218	244	227	231	195	180	158	170	182	159	151	195
Diluted Ag (g/t)	331	368	423	384	374	298	266	214	239	274	240	221	305
Diluted Pb (%)	2.23	2.70	2.97	2.69	2.86	2.85	3.02	2.97	2.77	2.79	2.41	2.12	2.76
Diluted Zn (%)	4.27	5.46	5.73	5.86	6.72	6.17	5.66	5.41	6.00	5.76	4.53	4.92	5.65
Diluted Au (g/t)	0.50	0.41	0.39	0.39	0.38	0.30	0.30	0.30	0.29	0.30	0.40	0.38	0.35

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16.5  Mine Equipment

16.5.1  Underground Mobile Equipment

Mobile equipment required for lateral development includes drill jumbos, LHDs, haul trucks, and ground support equipment.

Operating mobile equipment requirements are estimated for the projected LOM production and development schedules.

The mobile equipment required has been determined by the following criteria.

·      Where a fleet of equipment (e.g., jumbo drills, underground loaders, haul trucks) is required, additional units have been purchased to provide standby coverage associated with expected availability.  Mechanical availability of 80% was assumed for all mobile equipment.  For utility vehicles, where one unit or less is required, one unit has been purchased.

·      Geometry of the ore body may sometimes increase equipment requirements.  In this case, the Cerro Los Gatos deposit is more than 2,000 m along strike, which can place unreasonable demands on slower-moving equipment such as jumbo drills.

Table 16-15 provides a list of the underground equipment with maximum units required on site for the LOM.  The quantities exclude replacement equipment.  The overall operating quantities fluctuate over the LOM to match the production and development schedule requirements at any given time.

Table 16-15:  Underground Mobile Equipment — Maximum Units on Site

Mobile Equipment	Max Units
Electric/Hydraulic (E/H) Jumbo Drill Rig	6
E/H Bolter Drill Rig	5
E/H Production Longhole Drill	3
Air Utility Longhole Drill	1
5.7 m3 LHD	6
3.1 m3 LHD	2
40-tonne Capacity Haul Truck	7
Grader	1
Emulsion Charger	3
Boom Truck	4
Fuel and Lube Truck	1
Scissor Lift	2
Personnel Carrier	2
Shotcrete Sprayer	2
Transmixer	3
Telehandler	3
Total	50

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16.5.1.1  Electric/Hydraulic Jumbo Drill Rigs

During steady-state operations, development advance in waste and ore (including the drift-and-fill stopes) is expected to average approximately 9,000 m/yr.  Based on estimated advance rates, as well as the potential travel requirements with a Resource more than 2 km long, it was determined that three operating units plus one spare are required.

16.5.1.2  Electric/Hydraulic Bolter Drill Rig

Based on geomechanical recommendations, pattern bolting, and occasional screening is required in development headings and in the drift-and-fill areas.  Bolting mainly consists of 2.4 m long Swellex-type friction bolts. Bolters should also be equipped for the installation of rebar (or DYWIDAG) bolts.  At steady-state production, four operating bolters plus one spare are required.

16.5.1.3  Electric/Hydraulic Production Longhole Drill

Production drilling in the longhole stopes is completed with appropriately sized, rubber-tire-mounted, top-hammer drill rigs.  One operating plus one spare machine are required.

16.5.1.4  Air Utility Longhole Drill

Drilling of service and drain holes, and possibly slot raises, are completed using a small, air-operated, top-hammer longhole drill rig.

16.5.1.5  Diesel 14-tonne LHDs

Based on development and production requirements in the schedule, four 14-tonne LHDs plus one spare are required.

16.5.1.6  Diesel Haulage Trucks

Truck haulage to surface is required for the scheduled ore production rate of 2,500 tpd plus a portion of the waste from development.  It has been assumed that, whenever possible, waste is delivered to secondary stopes underground for disposal as backfill.

Seven operating 40-tonne capacity trucks, plus one spare, are required during steady-state operations.  The trucks are equipped with ejector boxes for transport of CRF from surface as well as moving development waste for backfill into drift-and-fill secondary stopes.

16.5.1.7  Graders

One low-profile grader is required to maintain underground roadways.

16.5.1.8  Explosives (Emulsion) Chargers

Two emulsion chargers (plus one spare) are required for loading the waste development headings, longhole stopes, and drift-and-fill ore rounds.  There is a single explosives magazine on site, approximately 1 km from the portal, and no other magazines are expected to be permitted.  Emulsion is picked up at the magazine and brought underground, as needed, by the same vehicles used for charging the blastholes at the working faces.  The chargers are equipped with a boom and man basket for loading horizontal blastholes of mining faces up to 6 m high.  The base emulsion and sensitizer are combined at the face

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while being pumped into each blasthole.  Detonators and ancillary explosives are transported to the working faces using explosives utility vehicles.  Any unused explosives, ancillary explosives, or detonators must be returned to the magazine at the end of each shift.

16.5.1.9  Boom Trucks

Essentially a flat deck with a crane, boom trucks are used to delivery heavy loads (e.g., pipe, shotcrete bags, rock bolts, or lumber) as well as for construction and maintenance activities.

16.5.1.10  Fuel and Lube Truck

A fuel and lube truck is required to fuel and service all equipment unable to return to the SatStat fueling areas at frequent intervals.  This equipment typically includes jumbos, bolters, and longhole drills.

16.5.1.11  Scissor Lifts

Scissor lifts are required to install pipe, ventilation ducting, hanging fans, power cables, and other service activities.  With an average development advance of seven rounds per day throughout the production period, two scissor lift trucks are required.

16.5.1.12  Personnel Carriers

Personnel carriers are required for the approximately 50 personnel traveling underground per shift. Some personnel typically travel underground in tractors or light vehicles.  The listed carrier can accommodate up to 28 passengers; therefore, two units are required.

16.5.1.13  Shotcrete Sprayer

Based on geomechanical recommendations, it is estimated that 20% of all lateral development, 60% of ramp development, and all infrastructure excavations require shotcrete.  In addition, shotcrete is required for miscellaneous construction items such as backfill barricades.  Two units provide adequate capacity and redundancy for this critical activity.

16.5.1.14  Transmixers

Shotcrete is mixed in the existing surface batch plant and delivered underground using transmixers.  Two operating plus one spare unit have been included in the estimate.

16.5.1.15  Telescopic Handler (Telehandler)

A telehandler is essentially a forklift with a telescopic boom that can extend forward and upward from the vehicle.  These machines are the primary movers of supplies underground.  Three units have been included in the estimate.

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16.5.2  Surface Mobile Equipment

Table 16-16 provides a list of surface equipment with maximum units required on site for the LOM.  The quantities exclude replacement equipment.

Table 16-16:  Surface Mobile Equipment — Maximum Units on Site

Mobile Equipment	Max Units
Utility Vehicle/Pickup/Tractor	8	*
Surface Loader	1
Dozer	1
HDPE Pipe Fusion Machine	1
Total	11

* Included in surface equipment but suitable for underground use.

16.5.2.1  Utility Vehicles

Tractors are used to transport some personnel during shift changes and for nipping materials and general transport throughout the mine.  All tractors are equipped with a cargo/man—carrying compartment in the back.  Some tractors are also equipped with man lifts for facilitating services installations, constructing bulkhead, surveying, geological mapping, loading of development rounds, etc.

Utility vehicles are used by personnel for quick transport between headings and are the preferred mode of transport for supervision and technical support staff.

The following crews have been issued tractors and/or utility vehicles for use during the shifts.

·Development blasters

·Backfill crew

·Mechanics

·Electricians

·Production blasters

·Warehouse

·Managers/shifters and technical support staff

16.5.2.2  Surface Loader

The surface loader is used to load crushed waste rock into the CRF plant aggregate feed hopper, move surface skid-mounted equipment, and clean spills on surface roads.

16.5.2.3  Excavator

A mini excavator is used for excavating trenches for mechanical and electrical services.

16.5.2.4  Forklift

The forklift is required to transfer materials on surface between the surface facilities and to load materials onto the utility vehicles for transport into the mine.

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16.5.2.5  Scissor Lift

A scissor lift is used for servicing equipment located above the reach of maintenance personnel.  Examples of this are overhead crane, hose reels, interior lights in the maintenance facility and warehouse, and yard lights.

16.5.3  Fixed Equipment

A list of major fixed equipment by category is presented below.  Detailed scope for each facility is outlined in Section 18.0 .

16.5.3.1  Surface Fixed Equipment

Surface infrastructure supporting the underground mine and associated equipment are as follows:

·Cemented Rock Fill Plant

·Aggregate feed hopper

·Aggregate feed hopper discharge conveyor

·Aggregate transfer conveyor

·Cement silo

·Twin shaft continuous mixer

·Cement silo discharge screw conveyor

·Cement weigh hopper

·Cement weigh hopper discharge screw conveyor

·Super wash pump

·Super wash oscillator

·Plant water feed pump

·Air compressor

·Aggregate feed hopper vibrator

·Cement silo dust collector

·Super wash water tank

·Plant water tank

·Plant air receiver

·Instrument air dryer

·Admix system and pump

·Building dust collection system

·Dust collection screw conveyor

·Cement silo rotary air lock valve

·Dust collection rotary air lock valve

·Overhead bridge crane

·Cemented paste fill plant

·Air compressor

·Plant air receiver

·Instrument air dryer

·Instrument air receiver

·Tailings surge tank

·Tailings surge tank mixer

·Tailings surge tank pump

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·Vacuum disc filter

·Vacuum disc filter discharge conveyor

·Paste mixer (pug mixer)

·Paste hopper

·Paste pump

·Flush pump

·Cement silo

·Cement silo rotary valve

·Cement silo weight belt feeder

·Cement silo discharge screw conveyor

·Fresh water tank

·Fresh water tank pump

·Waste tank

·Waste tank pump

·Floor sump pump

·Vacuum pump

·Filtrate receiver

·Filtrate receiver pump

·Surface ventilation fans

·Inlet bell and screen

·Discharge cones

·Motor

·Discharge silencer and transition

·Fan brake

·Ultrasonic flow monitor

·Static pressure sensor

·Ductwork package (including the following)

·Expansion joints

·Transition ducting

·Ducting components

·Raise plate and elbow connection

·Refrigeration chillers and plant

·Refrigeration machine

·Cooling towers

·Water pumps and piping

·Air coolers

·Fans

·Gearboxes

·Drive shafts

·Motors

·Torque tubes

·Oil/lubrication pump and pipe

·Vibration accelerometer

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·Office/dry building

·Air handler

·Heating and cooling (HVAC)

·Hot water tank

·Water pumps

·Sprinkler distribution system

·Surface maintenance shop with wash and welding bay

·Oil pumps

·Eye wash stations

·Foam generator

·Retractable hose reel and drum pumps

·Shop roll-up door

·Tools for main shop

·25t, 10t, 5t bridge cranes

·5t monorail crane

·Separator tank / oil skimmer

·Pressure washer

·Surface fuel station

·Oil pumps

·Eye wash stations

·Fuel/oil piping

·40,000 l double-wall, skid-mounted fuel tanks

·Retractable hose reel and drum pumps

16.5.3.2  Underground Fixed Equipment

Underground infrastructure and associated equipment are as follows:

·Mine dewatering

·Dewatering pumps — primary

·Dewatering pumps — secondary

·Portable dewatering pumps

·Underground mine ventilation

·Facility and auxiliary fans

·Development and production ventilation fans

·Substation ventilation fans

·Fire doors

·Regulators

·Underground satellite shop

·Oil pumps

·Eye wash stations

·Fuel/oil piping

·Retractable hose reel and drum pumps

·Shop roll-up door

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·Tools for main shop

·Jib cranes

·Pressure washer

·Safety and miscellaneous

·Refuge chambers

·Secondary egress raise

·Electrical equipment

·Ventilation substation electrical equipment

·Dewatering substation electrical equipment

·Ventilation raise fans electrical equipment

·North, South, and Central refrigeration plants

·North, South, and Central development and production mine load centers (MLCs)

·Shop, wash bay, and fuel bay electrical

·Miscellaneous lighting and auxiliary panels

16.6  Ventilation

The purpose of the mine ventilation system is to provide air in sufficient quantity and quality to ventilate the underground workings, and most importantly, to maintain working conditions at an acceptable level and in accordance with mine regulations.

The design principles that have been incorporated for the Los Gatos project are proven and internationally recognized.  The prime objective is to provide a safe and healthy environment in all underground workings and to comply with the regulations of the Mexican standard NOM-023-STPS-2012 Underground Mines and Open-Air Mines — Occupational Health and Safety Conditions.

The Los Gatos project is a trackless underground mining operation. It is highly mechanized with LHDs, trucks, drill rigs, personnel carriers, etc.  Ore transport is via trucks to surface.  Development of the main accesses and sublevels is through drill-and-blast operations utilizing LHDs, trucks, and drill rigs.  For this reason, the ventilation system design base case is based on requirements for the mobile equipment fleet and has been adjusted for heat load calculations and required refrigeration.  As a pull system arrangement, fresh air is downcast via the main ramp and fresh air raises and exhausted through the main exhaust raises.

The mine development and production plan, along with schedules and equipment, have been reviewed to determine the airflow requirements for the various stages of the mine life.

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16.6.1  Ventilation Method and Design Criteria

The ventilation system is designed as a push system.  The two main intake raises (Central and South) provide fresh air into the mine, while the air is exhausted via the North Vent Raise, Southeast Vent Raise, and the main access decline.  Fresh air is distributed into the mine workings through a series of ramps and haulage levels.  Regulators are used to direct air to the active mining levels.  Where possible, exhaust and intake raises have been placed at the ends of the mining sublevels to provide flow-through ventilation.

Air quantities are based on a diesel emission dilution of 2.13 m3/min/hp (Mexican regulations) and additional flow for mine-cooling purposes.  The diesel engine horsepower ratings are based on technical specifications for the selected major equipment.

To address the health and safety of personnel, and as a general guideline in design, air velocities are designed to be between 0.25 m/s and 6.5 m/s.  A 20% leakage factor is also included.

The design criteria for preparing the ventilation models for Stages 1 through 3 are listed in Table 16-17.

Table 16-17:  Ventilation Design Criteria

Item	Design Value
All surface vent raises	4 m Ø
Internal vent raises	3 m Ø
Ramp dimension	5 m × 5.5 m
Footwall drift dimension	5 m × 5 m
Ventilation duct	1,220 mm Ø (48 in.)
Average drift friction factor	0.016 kg/m3
Raise bore friction factor	0.005 kg/m3
Steel duct friction factor	0.0037 kg/m3
Airflow requirement for diesel-powered units	2.13 m3/min/hp
Maximum velocity in drifts	7.6 m/s
Surface elevation mean sea level	1,550 m

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16.6.2  Airflow Requirements

16.6.2.1  Early Production

The installation of the first refrigeration plant is currently in progress, as well as the first of the permanent fan installations.  The anticipated required ventilation flowrate is ~500,000 cfm during the first phase of full production for elevations above the 1350 Level.  Two exhaust fans operating at 94.4 m3/s (200 kcfm) and 0.5 kPa each provide the required flow for this stage.  Both fans are located on surface at the Central Vent Raise and operate in a bifurcated orientation to achieve a total flow of 188.8 m3/s (400 kcfm).  See Figure 16-20 for the ventilation arrangement for this stage.

Figure 16-20:  Early Production Ventilation Arrangement

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16.6.2.2  Stage 3:  Full Production-LOM

The full production ventilation stage was modeled with active production crews in each mining area.  Fresh air is delivered to these areas via the Central Vent Raise with two surface fans and the South Vent Raise, also with two fans.  Air is exhausted via the portal/decline, Northwest Vent Raise, and Southeast Vent Raise.  The two fans on the Central Vent Raise operate in parallel with an operating point of 94.4 m3/s (200 kcfm) and 0.9 kPa per fan.  The surface fans on the South Vent Raise supply air to the central and Southern portion of the mine and have an operating point of 141.6 m3/s (300 kcfm) and 2.5 kPa each.  See Figure 16-21 for the ventilation arrangement for this stage.  The ventilation requirements are based on the diesel-powered equipment fleet for both production and development mobile equipment.

Figure 16-21:  Full Production Ventilation Arrangement

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This equipment list is summarized in Table 16-18.  Brand names have been included for reference only.

Table 16-18:  Full Production Airflow Determinations

Item	Total Units	Unit hp	Required m3/s	Required cfm
Jumbo — Atlas Copco 282	4	160	22.7	48,000
Bolter — Atlas Copco MD Boltec	5	160	28.3	60,000
Longhole Drill — Atlas Copco Simba M4	2	160	11.3	24,000
LHD — Cat R1700	5	353	62.5	132,375
LHD — Cat R1300	1	165	5.8	12,375
Haul Truck — Cat AD45	7	589	145.9	309,225
Grader — Cat M12	1	145	5.1	10,875
Emulsion Charger — Marcotte M40	3	193	20.5	43,425
Boom Truck — Marcotte M40	2	193	13.7	28,950
Fuel/Lube Truck — Marcotte M40	1	193	6.8	14,475
Scissor Lift — Marcotte M40 RL4000	2	193	13.7	28,950
Personnel Carrier — Marcotte M40	2	193	13.7	28,950
Shotcrete Sprayer — Normet Spraymec 6050WP	2	120	8.5	18,000
Transmixer — Normet MF500	3	161	17.1	36,225
Telehandler — Gehl FS12-42	3	115	12.2	25,875
Subtotal			387.8	821,700
Leakage (20% allowance)			77.6	164,340
Total			465 m3/s	986,040

16.6.3  Mine Air Cooling

The cooling design for the Los Gatos project is based on achieving an average stope and development reject WB (wet bulb) temperature of 28.5°C, using a surface intake air temperature of the high month average of 24.5°C and 33°C (WB and DB [dry bulb], respectively).  This section relates to the in-mine heat loads and the associated cooling requirements.  Primary heat load components are as follows:

·Virgin rock temperature (VRT) and related thermal gradient.

·Artificial heat loads (e.g., trackless equipment, fissure water, broken rock, pumps, auxiliary fans, personnel, lighting).

·Ambient summer fresh air intake temperatures.

·Mining depth and auto-compression.

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Each system (or combination thereof) contributes either positively or negatively towards a mine’s heat load and related cooling and refrigeration needs.  Taking into consideration the geographic location of the project and the trackless mining system, primary heat load contributors are as follows:

·VRT:  Gradient = 2.5°C/100 m with a surface starting temperature of 25.0°C and the deepest mining level (1175 masl) rock temperature range between 33°C and 37°C.  Heat load contribution is approximately 0.4 MW.

·Trackless Equipment:  Overall vehicle duties were calculated to be approximately 8.6 MW, and the related heat load in conjunction with the utilization of the equipment was calculated to be approximately 4.1 MW.

·Auto-compression Heat Load:  Surface to shaft depth related to approximately 1.1 MW.

·Other In-Mine Heat Loads:  Approximately 0.7 MW from auxiliary fans and pumping systems.

·Fissure Water Heat Load Contribution:  An estimated 0.7 MW of heat could be applied to the underground mine environment.  This assumes an inflow of 20 l/s at 54°C and leaves the mine via the dewatering system at 44°C.

·Backfill and Other Heat Loads (personnel, lighting, etc.):  Approximately 0.1 MW.

The calculated overall heat load is approximately 6.5 MW, including auto-compression.  The fresh air cooling capacity calculated is 1.7 MW.  As a result, the mechanical cooling required to maintain the reject temperature of 28.5 °C is 4.8 MW.  Including provisions for 20% energy loss, the refrigeration plant design capacity will be nominally 6.0 MW.  Although not included in the calculations, a precooling tower may be required for the underground service water to ensure it does not constitute an additional heat load on the underground environment.  Mine cooling design criteria and assumptions are summarized in Table 16-19.

Table 16-19:  Cooling Design Criteria and Assumptions

Criteria/Assumption	Value
Average Monthly High	33 °C
Average Relative Humidity	47%
Average Monthly High WB Temperature	24.5 °C
Max Allowable WB Temperature	28.5 °C
Surface Rock Temperature	25 °C
Geothermal Gradient	2.5 °C/100 m
Rock Thermal Conductivity	3 W/mC
Rock Wetness Fraction	0.25
LHDs	5
Haul Trucks	7

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The average monthly high and relative humidity come from statistical data and the Q451-02-010 Los Gatos Design Criteria from previous work.  The surface rock temperature comes from measured values from the diamond drill chamber; an accurate gradient was not available, so a standard geothermal gradient of 2.5°C/100 m was used.

The major pieces of diesel equipment (five LHDs and seven haul trucks) were placed in the model as point sources.  These point sources of heat were distributed into the different mining zones.  Figure 16-22 identifies the location of diesel equipment for the simulation.

Figure 16-22:  Heat Model Equipment Locations

Using 28.5°C as the design reject WB temperature, the simulation results show areas in which the WB temperatures exceeds the allowable threshold, supporting the calculations.  This indicates that cooling is required during the hotter months of the year.

To reduce the amount of equipment and infrastructure underground, a single 6 MW cooling plant is currently under construction on the surface near the South Vent Raise.  This cooling plant will chill water and send it to bulk air coolers (BACs) on the Central Vent Raise and the South Vent Raise.  These BACs will be located on the intake air stream of the Central and South Vent Raises and chill the air using a direct-contact spray of chilled water from the cooling plant.

The 6MW cooling plant supplies 2 MW of cooling capacity via a BAC to the Northwest Zone and 4 MW to the Central Zone and South Zone.

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These locations are shown in Figure 16-23.

Figure 16-23:  Heat Simulation Results

The model inputs will be updated as additional data on the rock temperature and water sources becomes available throughout the mine life.

16.7  Backfill

There are three main backfill products at Los Gatos, as follows.

·Cemented Rock Fill (CRF)

·Cemented Paste Fill (CPF)

·Waste Rock

CRF is essentially a concrete mix with a comparatively large rock particle size.  Crushed waste rock (-75 mm in size) is mixed with cement and water in a batch process.  The resulting mix is transferred underground to the mining areas via production mine trucks equipped with ejector boxes.

CPF is made by combining a portion of the mill tailings with binders (cement and fly ash) and a controlled amount of water to achieve a thick, mud-like (toothpaste) consistency.  The resulting product is transferred underground via boreholes and distributed to the stopes through heavy-wall pipe.  Pumping is typically required for paste delivery when the stopes being filled are outside a 45° cone (from the surface delivery point) and gravity is not sufficient to “push” the paste.

Unconsolidated waste rock will be used to backfill portions of the secondary transverse longhole stopes, drift-and-fill stopes, and longitudinal longhole stopes.

CPF typically provides a better final engineered product compared to CRF.  There is little or no product segregation during delivery and it is easier to tight fill in the drift-and-fill areas.  When mucking in the drift-and-fill areas, the paste tends to serve as a better marker for the floor (smoother and more visual compared to waste rock), which tends to reduce floor dilution.  A better backfill product also tends to reduce dilution when blasting up against backfill when mining secondary stopes.

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CRF will be used until the CPF is constructed.  Once the paste fill plant becomes operational, CPF will become the primary backfill product; however, the CRF plant will remain as a backup for the life of the mine.  Development waste rock will be used to displace the other two backfill products whenever possible.

16.7.1  Distribution

16.7.1.1  Cemented Rock Fill

Haulage trucks equipped with ejector boxes is loaded with CRF at the CRF plant on surface and transports the material into the mine.  Dedicated LHDs with rammers are required full time to push fill in the drift-and-fill stopes.  Dump blocks have been installed for the trucks during backfilling of the longhole stopes.

16.7.1.2  Cemented Paste Fill

Paste backfill is pumped from the paste plant on surface into the paste boreholes to the paste bay in the mine.  The paste bay is located by the Central Ventilation Raise on 1390 Level.  From the paste bay, paste is distributed throughout the mine in 150 mm diameter Schedule 80 pipes that transitions to 150 mm diameter HDPE pipe at the discharge locations.  Costing for heavy-wall pipe (for paste distribution) has been included in all internal ramp development.  An opportunity exists to reduce costs by transferring paste level to level using boreholes.

16.8  Conclusions and Recommendations

16.8.1  Conclusions

The mining operations at Los Gatos are being carried out through various methods, including cut and fill, and long hole stoping.  In the recently started mine development differences in water inflows and temperatures were noted from the FS.  Due to the unexpected water inflows and heat, the mine experienced significant challenges for continuing to excavate below the 1390 MSL level.  Production has started underground at Los Gatos.  Mining is being performed in the CZ and NWZ areas, starting at the 1390 level.  Due to the lack of development progress through the wet zones, a combined overhand and underhand approach has been chosen in order to optimize the mining sequence based on the existing excavation extents in order to meet the production and grade requirements of the mine.  Mining is currently focused on high grade zones that were near current development.  The CZ zone is producing mineralized material using cut and fill methods and will continue downward, as well as north and south from the current mining area in the upper center of the zone.

Due to the underhand approach, sill pillars are designed at necessary intervals in both cut-and-fill and longhole stoping blocks.  The underhand longhole stoping areas require re-mining or undercutting of the bottom sill drifts compared to the overhand approach.  This approach will be evaluated throughout the mine life to identify opportunities to implement overhand mining methods, for optimization of underground waste placement.

The equipment necessary for ventilation and mine cooling is currently being constructed.  The refrigeration plant is currently under construction.

Backfill will continue to be complemented with waste rock from the underground advances, as well as CRF.

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16.8.2  Recommendations

Continue to update the mine plan throughout the mine life and evaluate mining methods to ensure they are appropriate.

Continue to monitor the ventilation requirements and performance throughout the mine life, including temperature.

It should also consider updated geotechnical information to define the pillar size requirements.

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17.0  RECOVERY METHODS

This section summarizes the process plant design to be applied to the crushing, grinding, flotation, and dewatering facilities and the cyanide destruction installation for a 2,500 tonnes per day, lead, zinc and silver ore processing facility located in Chihuahua, Mexico.

The crushing plant is processing the run-of-mine (ROM) ore by using a primary jaw crusher to reduce the ore from a nominal 24 inches to a P100 of minus 175 mm.

The grinding circuit is a semi-autogenous (SAG) mill-ball-mill grinding circuit with subsequent processing in a flotation circuit.  The SAG mill operates in closed circuit with a vibrating screen.  The ball mill operates in closed circuit with hydrocyclones.

Cyclone overflow, the grinding circuit product, is fed to the flotation plant.  The flotation plant consists of lead and zinc flotation circuits.  The lead flotation circuit consists of rougher flotation and three-stage cleaner flotation.  The zinc flotation circuit consists of rougher flotation and five-stage cleaner flotation.

High levels of fluorine have been encountered in the ore from the mine since the original feasibility study was completed and since initial construction of the mill was completed.  The fluorine removal has required alterations to the milling process and an additional deep-froth flotation cell has been added to the zinc circuit, and one additional deep-froth flotation cell will be added to the zinc and lead circuits during 2020, to remove more fluorine, a deleterious mineral for sales.  The addition of this equipment should allow for the production of penalty free concentrate in the future.

Both final lead and zinc concentrates are thickened, filtered, and stored in concentrate storage facilities prior to loading in trucks for shipment.

Zinc rougher flotation tailings and zinc 1st cleaner scavenger tailings are combined to become the final tailing.  Tailings thickener underflow (100%) is pumped to a cyanide destruction facility.  After detox, forty percent (40%) of final tailings are pumped to backfill plant and the remaining (60%) are pumped to the tailings storage facility.

Plant water stream types include lead process water, zinc process water, fresh water, and potable water.

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The overall flowsheet is shown in Figure 17-1.

Figure 17-1:  Process Plant Overall Flowsheet

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17.1  Primary Crushing

Run-of-mine (ROM) ore is transported to the crushing plant area by rear-dump trucks and dumped into an open stockpile for manual metal removal.

The primary crushing line consists of a dump hopper, grizzly screen, rock breakers, crusher and associated dust collection and transfer equipment.  Run of Mine (ROM) ore is dumped into the dump hopper using a front-end loader.  The grizzly screen oversize feeds the jaw crusher.  Two mobile rock breakers are available, one to service the crusher or screen and another one to service ROM area stockpile.  The crusher reduces the size of run-of-mine ore from maximum 610 mm to approximately 100% passing 175 mm.  Crushed ore drops onto a belt conveyor that transports the crushed ore to a covered crushed ore stockpile.

Crushing production rate is monitored by belt scale mounted on the conveyor.  Tramp iron is removed using a magnet is located at the discharge of the primary crusher discharge conveyor.  A metal detector has been installed over conveyor.  Dust is controlled in the dump pocket with water sprays and dust collector vents positioned at the conveyor transfer points.  An air compressor and instrument air dryer have been installed for operation and maintenance.  A mobile crane is used for maintenance of the primary crusher.

17.2  Crushed Ore Conveying, Transport and Storage

Primary crushed ore is stockpiled in a covered dome.  A reclaim tunnel has been installed beneath the stockpile.  The stockpile contains approximately 3,000 tonnes of “live” ore storage and a total of 18,000 tonnes of storage.  When required, ore is moved from the “dead” storage area to the “live” storage area by front-end loader or bulldozer.

Ore is withdrawn from the coarse ore reclaim stockpile by variable speed belt feeders.  The feeders discharge to the transfer conveyor belt.  The transfer conveyor discharges to the SAG mill in the grinding circuit.  The ore reclaim rate is monitored by a belt scale mounted on the conveyor.

Dust control in the stockpile area is performed by the wet type dust collector systems.  There are two dust collector systems, one to control dust at the discharge of the stockpile feed conveyer, and another to control dust in the ore reclaim tunnel.

17.3  Grinding

Ore is ground to rougher flotation feed size in a semi-autogenous (SAG) mill primary grinding circuit and a ball mill secondary grinding circuit.

The SAG mill operates in closed circuit with a vibrating screen.  Water is added to the SAG mill to produce a slurry and the ore feed size is reduced as it traverses the SAG mill.  The SAG mill discharges onto a double deck screen with 6.35 mm bottom openings.  Screen oversize is recirculated to the SAG mill feed chute by a series of conveyors.  Screen undersize flows by gravity to the cyclone feed pump box.  A belt scale mounted on the recycle conveyor monitors the SAG mill recycle rate.  The target SAG grind is 80% passing 1,381 microns.

Secondary grinding is performed in a ball mill.  The ball mill operates in closed circuit with hydrocyclones.  Ball mill discharge is combined with vibrating screen undersize in the cyclone feed pump box and is

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pumped to hydrocyclone clusters.  Combined slurry is pumped using variable speed horizontal centrifugal slurry pumps (one operating and one standby) to the cyclone clusters.  Hydrocyclone underflow flows by gravity to the ball mill.  Hydrocyclone overflow (final grinding circuit product at 80% minus 45 microns) flows by gravity to the tramp oversize screen positioned prior to flotation circuit.

Cyclone overflow is sampled by primary samplers and analyzed by the lead and zinc on-stream analyzer for metallurgical control prior to flotation.  Cyclone overflow from cyclone cluster is also monitored for particle size distribution by a particle size monitor.

Zinc sulfate (ZnSO4) and sodium cyanide (NaCN) is added into the ball mill.

Grinding balls are added to the SAG mill and ball mill by ball loading systems.  Air compressors and an instrument air dryer provide service and instrument air for operations and maintenance.  An overhead crane has been installed for maintenance of the grinding mills.

17.4  Lead Flotation and Regrind

Hydrocyclone overflow flows by gravity to the lead flotation circuit.  The lead flotation circuit consists of one row of rougher cells and one row of cleaner cells.  The rougher row consists of five (5) 70 m3 tank type rougher flotation cells with a drop between each cell.  The lead rougher concentrate is sampled by a rougher concentrate primary sampler and pumped (one operating pump and one spare) to the lead regrind mill circuit.  Reground lead rougher concentrate flows by gravity from the lead cleaner conditioning tank to the lead first cleaner flotation cells.  The lead cleaner row consists of 10 flotation cells; three 10 m3 forced air first cleaner cell, two 10 m3 forced air first cleaner scavenger cell, three 10 m3 forced air second cleaner cells, and two 10 m3 forced air third cleaner cells.  The lead first cleaner concentrate is pumped (one operating pump and one spare) into the second cleaner flotation cells and the lead first cleaner scavenger concentrate is pumped (one operating pump and one spare) to the lead first cleaner conditioning tank.  Lead rougher tailings and lead first cleaner scavenger tailings flows by gravity into the zinc rougher conditioning tank.  The lead second cleaner concentrate is pumped to the lead third cleaner flotation cells.  The lead third cleaner concentrate flows by gravity to the lead concentrate thickener.

The concentrate samples cut by the samplers are analyzed for process control by the lead and zinc on-stream analyzer.  Tailings from rougher flotation cells and first cleaner scavenger cells are combined and sampled with primary samplers and analyzed by the lead and zinc on-stream analyzer.

Lead rougher concentrate is pumped to the lead regrind cyclone feed pump box and combined with the regrind mill discharge.  The combined slurry is pumped using fixed speed horizontal centrifugal slurry pumps (one operating and one spare) to a hydrocyclone cluster.  Overflow from the regrind cyclone cluster (final regrind circuit product) is sampled for particle size distribution analysis by the lead regrind cyclone particle size monitor, analyzed by the lead and zinc on-stream analyzer and flows by gravity to the lead cleaner conditioning tank and cyclone underflows by gravity to the lead regrind mill.  Product from the regrind mill reports to the lead regrind cyclone feed pump box.

Air compressors, air receivers, and instrument air dryer have been installed for general plant operation and maintenance.

A bridge crane has been installed for maintenance of the flotation and regrind equipment.

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17.5  Zinc Flotation and Regrind

Lead rougher tailings and lead first cleaner scavenger tailings flow by gravity to zinc rougher conditioning tank.  The zinc flotation circuit consists of one row of rougher cells and one row of cleaner cells.  The rougher row consists of five 70 m3 tank type rougher flotation cells.  The zinc rougher concentrate is sampled by the zinc rougher concentrate primary sampler and pumped (one operating pump and one spare) to the zinc regrind mill circuit.  The zinc cleaner row consists of 16 flotation cells; one bank of four 10 m3 forced air first cleaner flotation cells, two 10 m3 forced air first cleaner scavenger flotation cells, three 10 m3 forced air second cleaner flotation cells, three 10 m3 forced air third cleaner flotation cells, two 10 m3 forced air fourth cleaner flotation cells and two 10 m3 forced air fifth cleaner flotation cells.  Tailings from the zinc rougher cells is combined with zinc first cleaner scavenger tailings in a zinc tailings box and flows by gravity to the tailings sample box, then to the tailings thickener.

Reground zinc rougher concentrate flows by gravity from the zinc cleaner conditioning tank to the zinc first cleaner flotation cells.  The zinc first cleaner concentrate is pumped (one operating pump and one spare) into the zinc second cleaner flotation cell while the zinc first cleaner scavenger concentrate is pumped to zinc first cleaner conditioning tank.  The zinc second cleaner concentrate is pumped to the zinc third cleaner flotation cell.  The zinc third cleaner concentrate is pumped to the zinc fourth cleaner flotation cell.  The zinc fifth cleaner concentrate is pumped to the zinc fourth cleaner flotation cell.  The zinc fifth cleaner flotation concentrate is pumped to the zinc concentrate thickener.

The concentrate samples cut by the samplers are analyzed for process control by the lead and zinc on-stream analyzer.  Tailings from rougher flotation cells and first cleaner scavenger cells are combined and sampled with primary samplers and analyzed by the lead and zinc on-stream analyzer.

Zinc rougher concentrate is pumped to a zinc regrind hydrocyclone feed pump box and combined with the zinc regrind mill discharge.  The combined slurry is pumped using fixed speed horizontal centrifugal slurry pumps (one operating and one spare) to the zinc regrind hydrocyclone cluster.  Overflow from the zinc regrind cyclone cluster is sampled by sampler for particle size distribution analysis by the zinc regrind cyclone particle size monitor, analyzed by the lead and zinc on-stream analyzer and flow by gravity to the zinc cleaner conditioning tank and underflows by gravity to the zinc regrind mill.  Product from the regrind mill reports to the zinc regrind cyclone feed pump box.

17.6  Lead Concentrate Dewatering

Concentrate from the lead third cleaner flotation cells is pumped to a lead concentrate thickener.  The concentrate thickener overflow is pumped back to the thickener feed for dilution and thickener spray bar to control froth, or to the lead process water tank.  The concentrate thickener underflow is pumped (one operating pump and one spare) to an agitated storage tank, (with24 hours of retention capability) and then to a pressure filter.  Filter cake is discharged to a covered stockpile.

Concentrates, both lead and zinc, are reclaimed by front-end loader onto highway haulage trucks.  A truck scale is located near the concentrate loadout area.

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17.7  Zinc Concentrate Dewatering

Concentrate from the zinc fifth cleaner flotation cell is pumped to a zinc concentrate thickener.  The concentrate thickener overflow is pumped back to the thickener feed for dilution and thickener spray bar to control froth or to the zinc process water tank.  The concentrate thickener underflow is pumped to an agitated storage tank, (with24 hours of retention capability) and then to a pressure filter.  Filter cake is discharged to a covered stockpile.

17.8  Tailing Dewatering

Tailings from the zinc rougher flotation row and tailings from the zinc first cleaner scavenger flotation row flow to a high rate tailings thickener.  Thickener overflow is pumped from the tailings thickener overflow tank to the lead process water tank.  Thickener underflow from the tailing thickener is pumped by variable speed horizontal centrifugal slurry pumps (one operating and one stand-by) to the tailing dam (60%) and backfill plant (40%).

17.9  Cyanide Destruction (SO2/Air Process)

Cyanide in the tailing thickener underflow is neutralized by the cyanide destruction circuit.  Then the detoxed tailings are pumped to the backfill plant facility.

17.10  Reagent

Reagents requiring receiving, handling, mixing, and distribution systems include:

·Sodium Cyanide (NaCN)

·Zinc Sulfate (ZnSO4·7H2O)

·Aerophine 3418A (Promoter)

·Copper Sulfate (CuSO4·5H2O)

·Sodium Isopropyl Xanthate (SIPX)

·Methyl Isobutyl Carbinol (MIBC, frother)

·Flocculant

·Sodium Metabisulfite, Na2S2O5 (MBS)

·Lime

17.11  Water System

17.11.1  Fresh Water

Fresh water is supplied from four to five wells, plus one backup well located on the property, as well as mine dewatering.  Fresh Water from the wells is pumped to a fresh/fire water tank.  The fresh water distribution system provides fresh water for process requirements such as process water makeup, reagent mixing and gland water.  There are onsite three (3) dedicated water tanks, one each for Gland water, Mill water, and the third potable water.  Controls have been installed to ensure flow to the process water system when the raw water system is operating.  From the fresh water tank, low pressure process water flows to the systems that do not require high pressure.  Booster pumps have been installed to provide

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high pressure water to the systems that require it including pump gland water.  Gland water is provided for sealing each pump without return.  Pumps and a control system have been installed at the fresh water tank to provide pressure to the fire water system.

17.11.2  Process Water

17.11.2.1  Process Water — Lead Circuit

The lead process water tank receives overflow from the lead concentrate thickener, tailing thickener and water reclaimed from the tailing dam.  The lead process water is used as makeup water in the primary cyclone feed sump.  Fresh water can be added to the lead process water tank if necessary.  This lead process water is not suitable for general distribution throughout the process plant.  Water is reclaimed from the tailing dam using reclaim water pumps.

17.11.2.2  Process Water — Zinc Circuit

Overflow from the zinc concentrate thickener and lead process water excess overflow is recycled to the zinc process water tank and used as makeup water in the zinc flotation circuit.  Fresh water can be added to the zinc process water tank.

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18.0  PROJECT INFRASTRUCTURE

18.1  Existing Infrastructure and Services

18.1.1  Location

The Los Gatos Project is located in the Municipality of Satevó, Chihuahua, Mexico, approximately 160 kilometers Southwest of the state capital of Chihuahua City and about 8 km West of San José del Sitio, Chihuahua.

18.1.2  Site Access Roads

The access road from Chihuahua, Chihuahua, Mexico is newly paved.  A portion of the road from San José del Sitio has been rerouted to the mine site to minimize interference with the river that runs by the mine property.

There is one bridge crossing of the Santo Toribio creek, with the purpose of minimizing risks due to crossing.

18.1.3  Buildings

MPR has already established the following facilities:

·Exploration camp with cafeteria onsite for 60 people;

·Exploration sample preparation and core/sample storage facility in San José del Sitio;

·Concrete batch plant that is currently in use for the mine underground requirements;

·Small vehicle maintenance shop;

·Emergency generators for the mine underground facility;

·Exploration waste dump;

·Explosive magazine; and

·Several preliminary access roads to the project facilities.

·Processing facilities for grinding, floatation, reagents, concentrate storage, and flocculant storage.

·Process buildings for truck scale, truck wash and truck sampling

·Assay laboratory

·Mill area change house

·Maintenance shop

·Process area office

·Mill area administration & engineering building

·Multipurpose room

·Training room

·Infirmary

·Warehouse

·Hazardous storage

·Security guard gates

·Lunch room

·Owner’s camp for 350 people

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The site buildings are pre-engineered structural steel construction.  The buildings have R38 insulation in the roof and R19 in the walls.  The steel has a primer and special paint coating to prevent rust.  The roof and wall panels are standard 24-gauge steel.  The buildings include overhead and manway doors.  The buildings meet the local requirements for the project.  For processing, major equipment is supported on concrete piers or pedestals as required to minimize vibration.  The building foundations are on separate foundations to minimize vibration transfer into the building structure.

The Owners camp consists of 192 men’s staff rooms with two beds in each, 64 women’s staff rooms with two beds in each, 48 supervisor rooms and 56 manager/visitor rooms.  The manager and supervisor rooms have only one person per room and include a bathroom in each room.  The men’s staff rooms have six group bathrooms and the women’s staff rooms have four group bathrooms.

In addition, the camp includes the following buildings: multipurpose room, kitchen and cafeteria, laundry, infirmary, store to sell employees small items, and maintenance building.

The camp has 100% backup emergency power in the event of a power outage and includes fresh and potable water.

18.1.4  Communications

The site is currently serviced by a satellite dish-based internet and TV connection.  Upgrades have been made to the communication services.

Communication for the surface facilities are provided via handheld radios at the same frequency as the mine leaky feeder.  This system provides communication capabilities with both the surface and underground personnel.

To provide communication for control systems, CCTV, telephone, power monitoring, and data to all the surface facilities of the mine, a 48-strand, single-mode, fiber-optic cable backbone ring has been installed from the controls alarms room in the office / dry facility.  This included fiber junction boxes at the following surface locations:

·Office / dry facility

·Maintenance facility

·Southeast raise ventilation plant

·Central raise ventilation plant

·Cemented paste fill plant

·Cement rock fill plant

·Cooling plant

·Fuel facility

·Compressor plant

To provide communication for fire systems, a separate 6-strand, single-mode, fiber-optic cable backbone ring connects the controls alarms room in the office / dry facility.  This includes fiber junction boxes at the same surface locations listed above.

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18.1.5  Personnel

As a part of the company’s commitment to adding value to the local communities and building capacity in Mexico, over 99% of the operations workforce is from Mexico.  Most of the workforce is being sourced from local towns, with skilled labor from the nearby cities of Chihuahua and Hidalgo del Parral.

18.1.6  Power Supply

Power to the Cerro Los Gatos Mining project site is supplied via a 115-kV utility transmission line.  This originates from the ‘San Francisco de Borja’ substation in Satevó (Chihuahua), where a new 115 kV connection has recently been installed.

This connection includes a 115-kV switch and feeder, a 7.5 MVAR capacitor bank with circuit protection, and substation area modifications for installing new equipment.  The 115-kV utility transmission line is approximately 66 km long.  The connection was completed with minor changes to the original layout, due to land negotiations.

A 115-kV loop has been installed near the Cerro Los Gatos main substation.  This loop includes 115kV disconnects, high voltage connections to the 115 kV — 13.8 kV substation type transformers, and utility metering.  Power distribution on site is monitored and metered at respective facilities for power management.

18.1.7  Power Distribution

Upon review of the proposed equipment list, a total electrical load of approximately 24 MW was determined.  This electrical load comprises of about 12 MW for the process plant and water management, 8.6 MW for the underground mine and surface facilities, 0.9 MW for the camp, and 2.7 MW contingency for motor starting capability and future additions.  The electrical load is summarized in Table 18-1.

Table 18-1:  Mine Power Requirements by Area

Area	Electrical Load MW
Underground Mine	5.0
Mine Surface Facilities	3.6
Crushing	0.4
Grinding	5.5
Flotation + Reagents	2.8
Filtration	0.8
Tails + Cyanide Destruction + Lime + Flocculant	0.7
Water (Dewatering wells + cooling)	1.4
Ancillary Buildings	0.2
Camp	0.9
Contingency (Future addition)	1.7
Reserve Capacity for motor starting	1.0
Total	24.0

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The utility power (115 kV) entering the mine site has been stepped down to 13.8 kV at the mine main substation, via two 15/20 MVA, 3-phase, 60 Hz transformers.  These transformers provide power to a 13.8 kV switchgear, consisting of two main circuit breakers and a tie breaker feeding two buses for distributing power.  One bus provides power via duct-bank to the SAG mill and ball mill.  An overhead power distribution system to the primary crushing, mine surface facilities, ancillary buildings, water management and camp has also been provided.  The other bus provides power via duct-bank to the process plant electrical rooms and overhead power line to the underground mine disconnect.  The main substation switchgear has individual feeder circuit breakers designated for the above-mentioned loads, thereby maintaining isolation between the mine, the mills, the process plant, the camp and other surface facilities to avoid voltage drops due to motor starting or power supply interference due to maintenance shutdowns.

On site power distribution voltage is rated 13.8 kV (13800V).  The power distribution within facilities is rated for medium voltage distribution at 4.16 kV (4160V) and low voltage distribution at 480V.  The process plant is the most significant load and, for that reason, the distribution switchgear for the process plant is located near the main substation that distributes power to the process plant electrical rooms housing motor control for respective process loads.  The distribution switchgear includes two 7.5 MVA transformers, stepping down 13.8 kV to 4.16 kV.  One transformer is designated for the SAG and ball mills, whereas the other transformer provides power to the mill building electrical room and filter building electrical room.  All other areas have their individual distribution switchgear stepping down from 13.8 kV to 4.16 kV or 480V.

The process plant includes two electrical rooms, one in the mill building and the other in the filter building.  The mill building electrical room provides power and control to stockpile, grinding, flotation and reagents.  The filter building electrical room provides power and control for filtration, thickening, and ancillary buildings near the process plant.  The water management system includes dewatering wells (19 new + 1 existing), cooling tower and water supply pumps to the process plant and camp.

All project facilities have power at 13.8 kV delivered to them, via overhead power lines or at 4.16 kV via underground duct-bank.  Depending on the load, the medium voltage of 4.16 KV is utilized directly for feeding motors greater than 300 HP and it is further stepped down to a 480 VAC, 3-phase, 3-wire system for feeding motors below 300 HP.  The 480 VAC systems are further stepped down to 208Y/120VAC to feed lighting loads and general office equipment (receptacles, computers, printers, etc.) or 24VDC to feed instrumentation control requirements.  Power distribution design follows the federal, state and local standards.

The mine site has been provided with a grounding grid to which all building steel, equipment, etc. are connected for safety.  This grounding grid consists of a #4/0 AWG bare copper conductor buried below ground connecting all electrical equipment.  All above-ground connections except connections to building steel are mechanical type connections so that equipment can be removed or replaced easily.  All underground connections including those to building steel are of the thermo-weld type.  A test well is provided for periodically measuring / testing the resistance of the ground grid.  Lightning protection is installed on overhead pole lines, building structures, etc. and grounded separately from equipment grounding.  Grounding design follows the federal, state and local standards.

Lighting is of the high intensity discharge type.  High pressure sodium type light fixtures or LED are utilized for exterior areas and high bay interior applications.  Metal halide lighting fixtures are utilized indoors for low bay application and where color rendition is a factor.  Fluorescent lighting fixtures are used in interior applications such as office lighting, electrical rooms, etc.  All areas are equipped with emergency light

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fixtures utilizing battery packs which provide a minimum of 90 minutes of illumination.  Lighting levels are designated by the Illumination Engineering Society (IES) published guidelines.

A computer-based data gathering system, supervisory control and data acquisition system (SCADA), have been incorporated in the control and monitoring of all process operations.  The SCADA system uses remote termination devices to channel appropriate control and monitoring signals from field locations back to the central processing unit (CPU) computer where an operator can physically operate equipment from his computer workstation.  The configuration of the SCADA is based on the latest industrial standards.  A programmable logic controller (PLC) system has been installed in respective areas, gathering information from the input and output signals from instruments and motor control equipment installed for monitoring, control and safety.  The SCADA processes and records all communications with respective PLCs.  An uninterruptable power supply (UPS) provides power to each PLC.

Standby diesel generators have been provided to handle emergency situations at the process plant, water management system, and camp.  These standby generators are rated 480V, 1500 kW each and are connected via automatic transfer switch at respective locations.  Depending on the switchgear voltage, a step-up transformer has been installed for 13.8 kV or 4.16 kV connections, as needed.  The standby power is provided to critical equipment like flotation cells, thickeners, select pumps and other equipment that may affect the process production line should they stop operating.  The UPS provides backup power to the control system and emergency light fixtures utilize battery packs, in case of power supply fails.

18.2  Site Development

The Project to date includes development at the following major locations:

·The mining areas

·The mine surface facilities, including the fuel facility, office/dry facility, explosives magazine, Compressor plant, ventilation and cooling, cemented rock fill plant, cemented paste fill plant, and service water

·The crushing plant area

·The overland conveyor and primary crush stockpile

·Mill area

·Filter area

·Thickener area

·Cyanide destruction area

·Overland pipelines

·Fresh water pumping, storage and distribution

·Access and internal roads

·Power line tie into the local utility

18.2.1  Mine Surface Facilities

Surface facilities that have been completed or are under construction include:

·Maintenance facility

·Fuel facility

·Office / dry facility

·Explosive magazine

·Compressor plant

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·Ventilation and cooling

·Cemented rock fill plant

·Cemented paste fill plant (June 2021)

·Service water

·Electrical

·Communications

18.3  Water Source

Raw water to meet potable and non-potable water demand is supplied by groundwater pumped from dewatering wells.  The well water is directed to a cooling tower to lower the temperature from the expected 50 to 60°C to 40°C prior to use.  Analyses of groundwater from existing dewatering indicates the water quality is suitable for the proposed potable and non-potable uses.

The total raw water demand is estimated to be approximately 2,605,600 liters per day, including approximately 100,000 liters per day for potable use (see Section 18.3.1 ), and approximately 1,209,600 liters per day for process water and 1,296,000 liters per day for drill cooling and underground activities.  The mill process water demand accounts for approximately 660,000 liters per day of reclaim water obtained from the tailings storage facility being recycled back into process.  The 2,605,600 liters per day of water would be supplied from the dewatering wells.  Additional information regarding the dewatering wells is provided in Section 24.0 .

18.3.1  Potable Water Supply

Potable water is used for drinking water, cleaning, change rooms, laboratory water and safety showers.  Potable water is not required for the process requirements.

The majority of the potable water is required at the Owners camp and the mine and mill change rooms.  The potable water required at the camp is provided by a modular potable water system.

The water requirements for specific areas of the project are noted below:

·Camp site area 350 people — 70,000 liters / day

·Mine portal area change room — 15,000 liters / day

·Mill portal area change room — 15,000 liters / day

·The potable water storage tank is sized for 100,000 liters storage or 24 hours retention time.

18.3.2  Raw Water Distribution System

Based on the water balance study and hydrological assessment, there is adequate raw water available from the mine dewatering pumps.  The water coming up from underground is piped to the cooling tower location.  The water from underground is 50°C and is cooled to 40°C prior to being pumped into the raw water tank near the well sites.  Construction included a raw water storage and distribution system for the project that transports water to the mine portal, owner’s and contractor’s camp, surface mine facilities, crusher area, mill area, and paste plant area.

In order to minimize the number of services, fire water is provided via the raw water system.  There is sufficient elevation and tanks have been located such that fire water supply is available by gravity.  This

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provides sufficient pressure to provide a secure fire service.  A minimum volume of water is held in the raw water tanks at all times.

18.3.3  Process Water Supply

Process water is prepared at the process plant and is recycled to the extent possible.  Makeup water is kept to a minimum.  Process water quality is monitored and used for process plan makeup, process plant sprays, and process plant washdown.

18.3.4  Sewage Waste Water Treatment

Sewage water treatment systems were included to handle waste from the kitchen, bathroom and shower facilities.  Four separate systems were included for the owner’s camp, mine portal area, primary crusher area, and mill area.

18.4  Waste Disposal

For storage and management of landfill disposal, a building has been constructed with a zone for non-hazardous waste and a second zone for hazardous waste; these zones are adjacent.  Waste disposal facilities have been constructed in accordance with the Mexican Regulations landfill requirements.

The storage and management of this area is per Environmental Area of MPR and must coordinate with the Construction Area and Operation Area.

The hazardous waste is collected and disposed of by a certified and authorized company under the Mexican Regulations.

18.5  Underground Infrastructure

The underground infrastructure includes the following items:

·Mine dewatering

·Materials handling

·Electrical power and distribution

·Compressed air

·Service water

·Service bay

·Fuels and lubricants

·Refuge stations

·Sanitary facilities

·Communications

18.5.1  Mine Dewatering

During mine production, dirty water is collected in sumps located on each level of the NWZ, CZ, SEZ, and SEZ2.  The dirty water in the mine originates from the following sources:

·Drill water

·Mine service water

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·Fissure (ground) water

·Backfill seepage

·Backfill flush water

The above sources of dirty water total 30 l/s (475 USgpm) from three areas (the NWZ, CZ, and SEZs) for a total 90 l/s (1,427 USgpm).

All mine roadways are driven on a gradient and include a ditch system to allow dirty water to flow to a series of collection sumps.  Decline ramp headings require face pumps to transfer water from the face to the sumps.

Two types of sumps have been planned for the mine, borehole sumps and level dewatering sumps, in addition to the main dewatering sump.  The main sump has been completed to the FS specifications.  A solids separation system is included.  In addition to the original four sumps planned, an additional sump has been installed in the area intended as the Preventative Maintenance shop.  This temporary sump is being utilized to handle dewatering that exceeds the main sump’s designed capacity.  It will continue providing backup capacity for the main sump as needed.  These sumps are described in the following subsections.

18.5.1.1  Borehole Sumps

Borehole sumps collect water from the level and from borehole sumps on levels above and transfer the water via gravity flow to a lower sump through a pair of 150 mm boreholes located at the entrance to the sump.  This is illustrated in Figure 18-1.

Figure 18-1:  Borehole Sump

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18.5.1.2  Level Dewatering Sumps

Level dewatering sumps consist of a tank, agitator, and a pump mounted on a skid.  Level dewatering sumps are strategically placed to collect water from the borehole sumps and other level dewatering sumps and pump it to the main dewatering sump located off the decline ramp at 1390 Level.  A typical level dewatering sump is shown in Figure 18-2.

Figure 18-2:  Level Dewatering Sump

18.5.1.3  Main Dewatering Sump

The main dewatering sump (shown in Figure 18-3) consists of a reinforced concrete dam, two agitators, and two pumps capable of pumping a combined maximum of 130 l/s (2,061 US gpm) of dirty water from 1390 Level to surface through a 250 mm diameter pipe.  Provisions have been made for adding a third pump in the future.  The mine dewatering system is designed to maintain fines (slimes) in suspension throughout the system and pump water and fines to surface.  A solids separation system, known as a MudWizard, was included in the installation of the main sump.

Figure 18-3:  Main Dewatering Sump

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18.5.2  Materials Handling

Materials to support development and production (bolts, screens, drilling rods, etc.) are transported into the mine using a boom truck with a flat deck.  Maintenance materials for the pumps and underground equipment are hauled into the mine via maintenance service trucks.

Explosive trucks (the same vehicles used for charging the blastholes at the working faces) deliver the explosives from the surface magazine to the working faces in the mine.  Explosive utility vehicles transport the detonators and ancillary explosives from the surface magazine to the working faces.

18.5.3  Electrical Power and Distribution

Two 13.8 kV feeders provide power to the main switchgear located near the main dewatering sump on the 1390 Level.  One feeder delivers permanent power from surface through a borehole, and the other feeder delivers 13.8 kV power from the backup generators on surface through the decline.

Power for underground distribution from the main switchgear is via four feeders.  One feeder is for the main dewatering sump, booster fan, and service bay.  The remaining three feeders feed 13.8 kV to each of the mining zones:  NWZ, CZ, and SEZs.  A 15 kV tap box with 200 A load-break elbow is installed on each level of the three mining zones.

18.5.3.1  Main Dewatering Sump, Booster Fan and Service Bay

The main dewatering sump and service bay switchgear is 800 A / 4.16 kV and is designed to feed the two 261 kW main dewatering sump pumps, the 125-kW booster fan, and the service bay distribution transformer at 4.16 kV.  Medium voltage starters for the pumps and fan are in the switchgear, and the shop transformer is fed from a fused disconnect switch.

The transformer in the service bay transforms the voltage from 4.16 kV to 480/277 V, which feeds a 600 A / 480 V motor control center (MCC).  This MCC feeds additional main dewatering sump equipment, the refuge chamber, and the service bay.

18.5.3.2  Level Dewatering Sumps

The electrical distribution system follows the mining zones:  NWZ, CZ, and SEZs. For each zone, a 15-kV tap box is located on each level.  The tap box is designed for use with 200 A load-break elbows and up to four connections per tap box.

Levels with a level dewatering sump have a 200 A fused load-break switch, 225 kVA, 13.8 kV-480/277 V transformer and a 400 A distribution panel installed close to the sump.  The 200 A load-break switch is fed from the 15-kV tap box located on that level.

18.5.3.3  Development Mine Load Centers

Development MLCs are required in all mining zones.  The MLCs consist of a 15-kV fused load-break switch, 750 kVA, 13.8 kV-480/277 V, and distribution.  The distribution is for a production drill, jumbo, bolter, and development fans.  The MLCs are fed from the 15-kV tap box located on that level.

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18.5.4  Compressed Air

The compressed air system at Los Gatos consists of mine-wide distribution from the main surface facility.  There is an existing permanent surface air compressor plant consisting of two compressors, each with a capacity of 488 cfm (for a total of 976 cfm).  The expected compressed air demand from the mine is outlined in Table 18-2.

Table 18-2:  Mine Compressed Air Demand

Item	Quantity	Demand (cfm)	Utilization (%)		Actual Demand (cfm)
Jackleg Drills	2	186	5	%	19
Shotcrete Machine	1	777	81	%	631
Air Tuggers	2	155	25	%	78
Vent Doors	3	52	20	%	31
Refuge Stations*	2	31	100	%	62
Maintenance Shop	3	83	81	%	202
Total	—	1,284	—		1,023

* Air required in combination lunchroom/refuge stations only.

An additional 488 cfm compressor has been added to the surface plant, increasing the capacity to 1,551 cfm and providing backup for the existing two units.

Compressed air is distributed throughout the mine via 150 mm diameter pipe on the decline/ramps and branches off with 100 mm and 50 mm diameter pipe throughout the mining levels.  Mobile drilling equipment (e.g., jumbos, cable bolters, production drills) have on-board compressors to provide the primary compressed air requirements.

18.5.5  Service Water

The underground water consumption estimate is based on the amount of water anticipated to be used by equipment and underground processes.  The equipment and underground processes are outlined below:

·Jumbo drills

·Bolters

·Shotcrete sprayers

·Longhole drills

·Diamond drills

·Raise bores

·Jackleg drills

·Hose and nozzle (dust control and cleanup)

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A summary of the underground water consumption estimates is outlined in Table 18-3.

Table 18-3:  Underground Process Water Requirements

Facility Description	Average Flow l/s (US gpm)		Peak Flow l/s (US gpm)
Development Crew #1	2.0 (32.1	)	5.3 (84.1	)
Development Crew #2	2.0 (32.1	)	5.3 (84.1	)
Production Crew #1 (Development)	2.0 (31.5	)	5.9 (94.1	)
Production Crew #2 (Development)	2.0 (31.5	)	5.9 (94.1	)
Production Crew #3 (Blasthole)	2.3 (35.8	)	5.4 (86	)
Production Crew #4 (Blasthole)	2.1 (33.6	)	5.4 (86	)
Raise Crew	0.6 (9.1	)	4.2 (66	)
Diamond Drilling	0.2 (2.7	)	0.5 (8	)
Raise bore Drilling	0.3 (5.0	)	0.6 (10	)
Construction Crews	0.1 (1.3	)	0.9 (15	)
Underground Infrastructure (Misc.)	0.2 (3.3	)	1.3 (20	)
Leakage	1.3 (21.6	)	3.3 (53	)
Total	15.1 (239.6	)	36.6 (580	)*

* Peak flows for the various facilities occur at different times in a 12-hour shift.  The water balance in Section 24 identifies Hour 3 of the 12-hour shift as having the peak flow of
36.6 L/s (580 US gpm).

A 150 mm diameter process water line has been included in the design from the mine portal to supply the underground mine via the ramp.  As required, each mining zone is equipped with pressure reducing valve (PRV) stations to limit the line pressure supplying the local levels.

All PRV stations include a full-time, in-line duty PRV; a bypass line with a full-time spare PRV; and isolation valves.  This configuration ensures that water supply can be maintained with minimal interruption.  Large face diameter pressure gauges are provided on upstream and downstream sides of all PRV stations for visual confirmation of the operating condition of the PRV and setting valves.  A pressure safety valve (PSV) is included at each PRV assembly to ensure that over-pressure conditions do not occur in level distribution.  Air bleed connections are provided on the assemblies to allow air removal during the pipeline filling process.

One booster pump station is required in the NWZ and SEZ to allow for adequate water pressure at the face in the upper levels.  The booster pump stations are standalone units mounted on a common steel skid.  A process water booster pump station generally consists of the following:

·Pumps (one operating, one standby)

·Steel water reservoir

·Piping

·Controls

·Electrics

·Instrumentation

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18.5.6  Service Bay

A service bay has been constructed close to the base of the Central Raise, as shown in Figure 18-4.  This service bay is used to complete minor repairs and oil changes on mobile equipment that does not typically travel to surface (e.g., jumbos, bolters, and longhole drills).  This saves time by not requiring equipment be taken to the surface maintenance shop for these minor maintenance activities.

Figure 18-4:  Service Bay Location

Mexican mining regulations require maintenance facilities to have two independent exits, be constructed with noncombustible coating or fire-resistant materials, and have adequate ventilation.  Fire doors (including fused-link activation) have been installed at the entrance to the service bay, and a second means of egress is provided in the ventilation bulkhead at the rear of the service bay.  The bulkhead contains a man door to provide escape into the exhaust air and also has an air regulator to control the airflow through the service bay.

The service bay is equipped with the following services and equipment:

·Compressed air

·Lighting

·Telephone

·Concrete floor

·Jib cranes

·Work benches

·Parts storage

·Lubricant storage

·Hose reels

·Waste fluid storage

·Fire suppression

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A layout of the service bay is shown in Figure 18-5.

Figure 18-5: Service Bay Layout

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18.5.7  Fuels and Lubricants

Los Gatos is a trackless mining operation.  All mobile equipment is diesel driven and has Tier 4 engines operating on diesel fuel with sulfur content less than 15 ppm.  The quantity of fuel stored underground is not to exceed 72 hours of consumption.

Diesel is transported underground via a SatStat storage and handling system.  Fuel stations have been strategically placed in exhaust air drifts to support development and production.  The locations may change as development and production activities advance.  A total of three SatStats have been budgeted for the mine.

Forklift handling pockets are built into the units, as well as pick points for handling ease.  SatStat systems have various options for combined or individual storage and dispensing, and all systems are equipped with fire suppression.  Dispensing systems, including SatStat, are equipped with Wiggins-type coupling connections, and mobile equipment have corresponding coupling connections.  These types of connections limit contamination, spillage, and fire hazards.

Lube and fuel vehicles service fixed, and mobile equipment normally stationed at the working face or vehicles that do not typically travel to surface (e.g., jumbos, bolters, and longhole drills).

18.5.8  Communications

Communication throughout the mine are provided via leaky feeder radio and a voice over internet protocol (VOIP) telephone as a secondary system.  An allowance for an emergency dispatch system is provided to allow one-way, mine-wide emergency communication from surface to all cap lamps equipped with the personnel emergency dispatch system pager.  An allowance for a basic vehicle dispatch system is also included.

To provide communication for control systems, closed-circuit television (CCTV), telephones, power monitoring, and data collection for equipment in the mine, a pair of 48-strand, single-mode, fiber-optic backbone cables have been routed from surface throughout the underground to connect various pieces of mechanical and electrical equipment in the mine.  The pair of fiber-optic cables have been routed back to the controls alarm room in the office/dry facility on surface.

A separate 6-strand, single-mode, fiber-optic cable backbone has been provided from the controls alarm room in the office/dry facility to the booster fan in the mine to provide communication for the fire system.

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18.5.9  Refuge Stations

Underground portable and permanent refuge stations are required to house personnel in a secure, hazard-free location during emergency conditions.  The maximum distance for personnel to walk to a refuge station is 750 m.  There is currently one portable refuge station on site, and four more 16-person portable refuge stations plus two permanent refuge stations have been budgeted.  Permanent refuge stations, which also serve as lunchrooms, are located in the NWZ and the CZ

Refuge stations have been designed to meet Official Mexican Standard NOM-023-STPS-2012, Underground Mines and Open Pit Mines — Occupational Health and Safety Conditions.  The stations have 96 hours of autonomy and include the following:

·Uninterruptible power supply of up to 96 hours (without reliance on mine power)

·Breathable air (oxygen) supply

·Self-rescuers (quantity equal to the capacity of the station)

·Emergency food and water rations

·Carbon dioxide and carbon monoxide scrubbers

·Communications equipment

·Didactic materials to be used during confinement

·Air conditioning equipment

·Gas monitoring for inside and outside environment

·Toilet

·Lighting

·Blast rating to 5 psi

·Signs prohibiting smoking

·Simple to operate under emergency conditions

·First aid equipment (per MHSA Regulation No. 24.1.1)

·Lifting lugs, skid base, and forklift slots for portability

There are two means of warning underground mine personnel in the event of an emergency:

·Stench gas (ethyl mercaptan) will be introduced into the compressed air line and mine ventilation air so that it quickly travels throughout the mine.  Miners are trained to stop working and report to the nearest refuge station (or, in some cases, exit to surface) once the distinctive odor is detected.

·Another warning signal device is included in underground cap lamps that will be activated, signaling all personnel to stop work and proceed to the nearest refuge station as detailed in the area’s ventilation and rescue plan.

Self-contained rescue packs are issued to all employees working underground.  The employees are trained in the use of the self-rescuers.  The self-rescuers are serviced and checked every 12 months and replaced after 10 years in service.

18.5.10  Sanitary Facilities

Costs are included for four latrines and a mobile service vehicle for cleaning the units.  One latrine is located in each of the mining zones.

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19.0  MARKET STUDIES AND CONTRACTS

The Los Gatos project is a Joint Venture holding rights to 16 concessions (see Table 4-1) through its 100%-owned Mexican subsidiary company, Minera Plata Real S. de R.L. de C.V. (MPR).  The Los Gatos Joint Venture is 51.5% owned by Sunshine Silver Mining & Refining Corporation and 48.5% owned by Dowa Metals & Mining Co., Ltd.  MPR holds the rights to the concessions of Los Gatos and Paula Adorada through exploration agreements with purchase options.  These have been duly executed and recorded in the Mexican Public Registry of Mines (Vazquez, Sierra, and García, S.C) for the mining concessions title number 231498 dated March 4, 2008.

MPR has a royalty agreement with La Cuesta International S.A. de C.V. under the terms of the document, Contrato de Exploración, Explotación y Promesa — La Cuesta International, S.A. de C.V. and Minera Plata Real, S.A. de C.V., dated April 2006.  Under the terms, MPR paid a royalty payment of US $40,000 per year during the preproduction period.  When production is initiated a net smelter return (NSR) royalty would start at 2% on production from the Los Gatos concession.  This is reduced to 0.5% upon all payments reaching $10 million) and 0.5% net smelter return from lands within a one-kilometer boundary of the Los Gatos concession.  Upon commencing production, payments under the royalty agreement were deferred until March 31, 2021 with an annual interest rate of 4.5% applied to the outstanding balance.  During the deferral period, MPR pays a royalty payment of $100,000 per year until January 2021.  The agreement has no expiration date; however, the Company may terminate the agreement upon 30-day official termination notification.

Indicative smelting and refining terms have been prepared for the zinc and lead concentrates from Los Gatos.  These terms are summarized in Table 19-1 and Table 19-2 below.

Table 19-1:  Indicative Smelting and Refining Terms for Zinc Concentrate

Description	Treatment Charges
Base Rate	$299.75/tonne of zinc concentrate (dry)

Elements	Payable Terms
Payable Metals
Zinc	8% deduct; maximum pay for of 85.0%
Silver	If greater than 93.3 g/t, then 93.3 g/t deduct; maximum pay for 70%.
Penalties
Arsenic	If %As is greater than 0.1%As, a penalty of $3.00 per tonne of concentrate for every 0.1%As greater than 0.1%As.
Fluorine	If F ppm is greater than 500 ppm, a penalty of $12.00 per tonne of concentrate, if 300-500 ppm, a penalty of $9.00 per tonne of concentrate, if 200-300 ppm, then a penalty of $6.00 per tonne of concentrate, if 100-200 ppm, then a penalty of $3.00 per tonne of concentrate.

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Table 19-2:  Indicative Smelting and Refining Terms for Lead Concentrate

Description	Treatment/Refining Charges
Base Rate — Concentrate	$175/tonne of lead concentrate (dry)
Scale Rate — Concentrate	None
Gold — Refining (base rate)	$20.00/ounce of payable gold
Gold — Refining (scale rate)	None
Silver — Refining (base rate)	$1.50/ounce of payable silver

Elements	Payable Terms
Payable Metals
Lead	Pay lower of 3% deduction or 95%
Silver	Pay lower of 50 gm/tonne of concentrate deduction or 95%
Gold	Pay lower of 1.0 gram per tonne of concentrate deduction or 95%
Penalties
Fluorine	If less than 4,000 ppm, $1.50 per tonne concentrate, per 100 ppm, if greater than 4,000 pm, $50/tonne of concentrate

MPR has obtained metal price forecasts for the four payable metals from Los Gatos to include:

·Zinc

·Lead

·Silver

·Gold

The metal price forecasts were obtained from the following analysts:

·Barclays (Gold, Silver, Zinc: 16-Apr-20, n.a. for lead)

·Royal Bank of Canada (RBC) (Gold, Silver, Lead: 15-May-20, Zinc: 15-April-20)

·Macquarie Research (18-May-20)*

·United Bank of Switzerland (UBS) (18-May-20)*

·Cantor Fitzgerald (Gold: 12-May-20, Silver, Zinc, Lead: 8-May-20)

·Bank of Montreal (BMO) (29-May-20)

·Canaccord Genuity (20-May-20)

·Morgan Stanley (18-May-20)*

·TD Securities (Gold, Silver: 23-April-20, Zinc, Lead: 10-Jan-2020)

*Supplied by a third-party provider Energy & Metals Consensus.

Table 19-3 contains the average metal price forecasts for the payable metals for 2021 and the long-term forecast.

Table 19-3:  Payable Metal Price Forecasts for Los Gatos

Metal	Units	Consensus Long-Term Price
Gold	Ozs	1,472
Silver	Ozs	18.99
Lead	lb	0.87
Zinc	lb	1.09

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These metal prices were used in calculating the metal revenues in the economic analysis.

MPR has no lease agreements for the Los Gatos project.  Smelting and refining terms assumptions used in the Technical-Economic Model (TEM) are indicative of current rates and have been provided to Tetra Tech by MPR.

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20.0  ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

20.1  Introduction

MPR retained ASI (Asesores en Impacto Ambiental y Seguridad, S.C.) to develop all the necessary studies to comply with the Mexican regulations related to the completion of a Manifestación de Impacto Ambiental (MIA — Environmental Impact Statement) and a Risk Study.  Tetra Tech has been involved in the process and provided technical support to ASI for the completion of this report.

The mining and processing operations at the Los Gatos Project are located approximately 120 km South of the state capital of Chihuahua City, and approximately 100 km North/Northwest of the historic mining city of Hidalgo del Parral.  The Project has been developed over an area of 390.7 Hectares, all located within surface lands owned or controlled by MPR.  This area includes mine operations, a processing plant, a tailings storage facility, and infrastructure to support the mine.  The purpose of the facility is to mine and process ore, with the final products being lead and zinc concentrates, as well as silver as a byproduct.

This Project is intended to be an ore and concentrate producer.  The ore will be mined from an orebody by underground mining methods over a period of 11 years (with an additional two years planned for onsite construction).  The ore mined from underground is processed onsite at a processing plant.

The processing plant has been designed to process 2,500 tonnes of sulfide ore per day, which is 912,500 tonnes per year.  Pb and Zn concentrates are produced, as well as a silver byproduct.  The tailings material from the plant is treated via the Inco cyanide destruction process, and then used for either cemented paste for backfill, or be transported to the tailings storage facility.

Waste rock from the mine is moved to a 4-hectare area authorized by the environmental authorities for this purpose.  A portion of the waste rock produced by mining operations is used for mine backfilling as a concrete rock fill (CRF).  The remaining waste rock is stockpiled on the surface before being used as construction material.

Necessary infrastructure will be built in the 390.37 hectares project area.

20.2  Regulations

The Secretary of Environment and Natural Resources (SEMARNAT) regulates the environmental aspects of mining projects, and issues permits once the EIS is approved, according to Art. 28, Frac. III, VII and X of the General Law of the Ecologic Equilibrium and Environmental Protection, and by the Art-5 Section L), Frac. I and III, Section O) Frac. I and Section R), Frac. I of the Regulations for Environmental Impact Assessment.

The Project is also regulated by the following regulations and legal orders:

·Political Constitution of the Mexican United States

·National Development Plan 2013-2018

·State Development Plan 2010-2016

·Satevó Municipality Development Plan 2013-2016

·General Territorial Ecology Program

·Important Hydrological Regions

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·General Law of the Ecologic Equilibrium and Environmental Protection (LGEEPA)

·Regulations to the LGEEPA for Environmental Impact Assessment

·Regulations to the LGEEPA for Prevention and Control of Atmospheric Contamination

·Regulations to the LGEEPA for Register of Emissions and Transfer of Contaminants

·General Law for Sustainable Forest Development

·Regulations to the General Law for Sustainable Forest Development

·General Law for the Wild Life

·General Law for Prevention and Integral Management of Residues

·Regulations to the General Law for Prevention and Integral Management of Residues

·Law of National Waters

·Regulations to the Law of National Waters

·Mining Law

·General Law of Climate Change

·Law of the National Bureau for Industrial Security and Environmental Protection of the Hydrocarbon Sector

Additionally, there are several Mexican Official Norms (NOMs) that apply to the Project:

·NOM-059-SEMARNAT-2010

·NOM-045- SEMARNAT-1996

·NOM-043-SEMARNAT-1993

·NOM-080-SEMARNAT-1994

·NOM-081-SEMARNAT-1994

·NOM-052-SEMARNAT-2005

·NOM-054-SEMARNAT-1993

·NOM-141-SEMARNAT-2003

·NOM-161-SEMARNAT-2011

·NOM-087-SEMARNAT-1995

·NOM-001-SEMARNAT-1996

·NOM-003-SEMARNAT-1997

·NOM-004-CNA-1996

·NOM-011-CNA-2000

·NOM-035-SEMARNAT-1993

·NOM-138-SEMARNAT/SS-2003

The Project, as designed, complies with these regulations and official norms related to environmental matters.

20.3  Baseline Studies

Before the start of a project, an environmental baseline has been established.  The purpose of baseline analysis is to characterize the components, deterioration processes and state of conservation under current, pre-operational conditions to serve as a basis for the identification of environmental impacts.  This allows for the establishment impact prevention and mitigation measures, and for generating a predictive model of future scenarios.

Additionally, with the environmental diagnosis, it is intended to identify any environmental problems in the area of influence of the project (AP).

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The Environmental System (ES) of the project has been defined by the micro basin of the San José river for reference, which covers an area of 20,225.98 ha (202,2598 km2).  The ES land categorization approach allows the analysis of components within a territorial system (Gómez Orea, 1999), associated with human activities, their distribution in space, and the regulation of their behavior.

Subsequent Permits and Modifications have been obtained by Los Gatos from SEMARNAT and other Federal, State and Municipal Authorities to maintain updated environmental permits (2018-2019) as follows:

SEMARNAT issued a modification to the authorized MIA-R approved under document SGPA/DGIRA/DG/05121-2017 for Cerro Los Gatos project mining exploitation in Satevó, Chihuahua, under official notification SGPA/DGIRA/DG/01914 dated on March 15, 2018 for approval of the environmental modification to the impacted area for execution of the project including 211.0841 ha to 268.8450 ha, as well as an increment from 95 to 99 mine workings areas.  This authorization expires on July 17, 2041.

Subsequently, on November 28, 2018, SEMARNAT issued a second modification authorization for the mining project in environmental matters through document SGPA/DGIRA/DG/09272, in which the impacted environmental area is incremented from 268.8450 ha to 325.086 ha, and the number of mine working areas is modified from 99 to 133.  This authorization expires on July 17, 2041.

SEMARNAT approved resolution for the exemption of presentation of MIA for the workings related to the expansion of the “Compacted dirt road San José del Sitio — Mina Los Gatos,” which was authorized under document No. SG.IR.08-2018/097.

SEMARNAT also issued on May 04, 2018 a resolution for modification of the trajectory for the “Power Line 115 KV Los Gatos,” which included detour within a distance of approximately 2 km (1.24 miles) from the original trajectory of the line, by resolution document No. SG.IR.08-2018/093.  This authorization expires on September 4, 2037.

A Preventive Report for Direct Mining Exploration including diamond drilling for the nominated zones “Los Gatos NW-CE-SE, Cascabel Fault and El Valle Vein” was approved by SEMARNAT on May 7, 2019 through document No. SG.IR.08-2019/070.  This permit does not have a set expiration date but will be concluded when the ecological conditions evaluated and stated in the study change.

CONAGUA issued concession N. 06CHI141265/24FADL16 for discharge of residual waters from the mine’s ramp, stopes and underground mine workings for deepening of the “Cerro Los Gatos” mine into the Santo Toribio creek.  This concession dated on August 31, 2018 by CONAGUA approves discharge of residual water including a volume of 8.0 liters per second.  This authorization expires on March 9, 2026.

CONAGUA issues resolutive document on July 16, 2019 for the application presented for modification of the concession No. 06CHI141265/24FADL16, which is based on the increment of the volume discharged to the Santo Toribio creek, from 8.0 to 120 l/s, and including the change of site for discharge to 500 m down drain from the original authorized point of discharge of the mentioned concession.  This authorization expires on March 9, 2026.

Cerro Los Gatos obtains from the Department “Gerencia de Aguas Superficiales e Ingeniería de Ríos, (GASIR)” which depends of CONAGUA the permit No. 4494 and dated on January 18, 2019, which authorizes the construction and operation of Tailings Storage Facility No. 1, which is projected for holding 7.6 Mm3 of mining tailings.  This permit includes approval for construction of the TSF in four stages, with a period for construction of 9 years.  This authorization expires on January 18, 2028.

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SEMARNAT issued on May 27, 2019 to the Los Gatos mining operation approval of the “Licencia Unica Ambiental (LAU)” (Unique Environmental License) under document No. LAU-CHIH-001-2019, which encompasses and approves installation and operation of the Los Gatos mining operation, with indefinite time limit considering an operating capacity of 2,500 tonnes per day.  This permit is unique for the authorized operating capacity and for the legal operator.  This authorization does not have a set expiration date, if the metallurgical process is not changed or the 2,500 tpd production capacity is not increased.

Los Gatos obtains authorization for the “Plan de Manejo de Residuos Peligrosos” (Management Plan for Handling Dangerous Residues) from the “Dirección de Gestión Integral de Materiales y Actividades Riesgosas” (DGGIMAR) a SEMARNAT agency, under document No.08-PMG-I-3405-2019, which registry validates and approves a total annual production of 144.642 tonnes of dangerous residues within the installations.  This permit does not have a set expiration date as long as the hazardous waste declared (144.642 tpy) is not increased.

Los Gatos obtained the registry as generating enterprise, as well as the Plan for Handling Residues for Special Handling on April 9 and 11, 2019 from the Secretaría de Desarrollo Urbano y Ecología (SEDUE) (Secretary of Urban Development and Ecology) from the State of Chihuahua.  This registry validates and approves that Los Gatos mining operation will generate 468.747 tonnes of residues annually, which require special management.  This permit does not have a set expiration date as long as the hazardous waste declared (468.747 tpy) is not increased.

During the months of June and July 2018 Los Gatos applied for and obtained from the “H. Ayuntamiento Municipal Constitucional de San Francisco Javier Satevó” (Municipality of Satevó) the following permits and approvals:

·Land use permit, which expires July 23, 2023;

·Authorization and approval for the initiation of construction of mining workings and infrastructure, which is indefinite; and

·Official alignment and number, which is indefinite.

20.4  Environmental Setting

The Project is located approximately 120 km South of the state capital of Chihuahua City.  The Project is located within the Sierra Madre Occidental Physiographic Province, particularly within the Sub-provinces of the Great Plateau and Canyons of Chihuahua, and Sierras and Plains of Durango, which cover the greater part of the ES.

20.4.1  Climate and Precipitation

Within the ES defined by the micro basin of the San José river, the present climate group is defined as the dry climates “B” and semi-dry climates “BS1”, and the climatic subtypes semi-arid semi-warm and mild semidry.  The area has an average temperature of 17.5°C and an average rainfall of 433.2 mm according to the nearby climatological stations.

The project climate is relevant, as prior to the execution of the project, and area of 390.37 hectares occupied by desert scrub microphyll was cleared.  This clearing, together with the emission of suspended particles and greenhouse gases, can contribute to the impact of the micro-climate of the environmental system where the project is located.

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20.4.2  Air Quality and Atmosphere

Within the ES, no fixed sources of pollutant emissions were identified.  This system belongs to the municipality of Satevó and is considered as rural according to the municipal classification and the size of its villages.  San José del Sitio, with a population of 264 inhabitants, is the most important population for the ES.  Due to the low number of inhabitants, the presence of mobile sources of emissions are quite limited.

According to the National Institute of Statistics and Geography in Mexico (INEGI), most of the area is covered by natural grass shrub vegetation; however, according to observations made in the field, there is also the presence of introduced grass for cattle grazing.  Livestock is the preponderant activity within the ES.

Raising livestock is a greenhouse gas producing activity, mainly for nitrous oxide, methane and carbon dioxide, and is considered that the ES does not present an optimal state of conservation.

Dust is produced by vehicles and machinery on access roads and internal roads of the Project.  Ore crushing, dismantling and stripping, and hauling of borrow material for the construction of the mining infrastructure, including the tailings storage facility, contributes to site-wide dust.  This may affect the atmospheric quality of the environmental system.

20.4.3  Geology

Geologically, the ES is composed of a range of seven surficial lithological units plus soils, although only five of them cover 92.05% of the total surface area of the ES and the other two lithological units together cover only the 0.89%, the remaining component is alluvial that cover 7.06%.  The most important are the conglomerates, andesite, acid rhyolite-tuff and sandstone-conglomerate intercalations plus granodiorite.

20.4.4  Soils

Edaphically, the ES is represented by different soil types such as Leptosols, Chernozem, Luvisol, Fluvisol, Kastañozem and Regosol; however, according to the fieldwork carried out, it was found that the natural grassland has been affected by the establishment of introduced grass for cattle breeding that is carried out extensively.

Cattle grazing generates soil compaction and eventually soil erosion.  According to the estimates made, the ES has an average erosion of 10.05979 t/hectares/year, which is considered light, although there are areas with moderate erosion.  While the area of the project an average erosion of 7 t/hectares/year was estimated, and it is also considered light.

20.4.5  Regional and Site Hydrology

20.4.5.1  Hydrology

The ES is part of the Bravo-Conchos RH-24, located particularly within the Conchos-Presa de la Boquilla basin and the Río Conchos-Valley sub-basin of Zaragoza, with the Rio Conchos basin contributing International waters, which gives this component of the ES a special importance.

Within the ES, there are series of intermittent water runoffs that originate the Santo Toribio, El Yeso and El Salto streams, indicated as permanent streams in the INEGI cartography.  However, these streams are

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typically dry during the dry season due to the reduced volume of precipitation in the area and the geology, which favors infiltration.

According to the estimates, the following parameters are included in the ES a precipitation volume of 100,651 m3/year, with an evapotranspiration of 81,551 hm3/year, and a drained volume of 13,531 hm3/year, which means an infiltration of 5,564 hm3/year.

The discharge of industrial effluents (that could contribute to high levels of contaminants to the surface water) were not identified within the ES, since this is a rural area where irrigation agriculture is very limited, and the discharge of municipal waters is limited to the discharge of the drainage of the locality of San José del Sitio, located near the limits of the micro basin of the San José river.

The potential impact generated by the Project refers to the risk of water pollution derived from Project actions, without the application of mitigation measures; the modification of the runoff in the area of influence of the project, mainly by the construction of the TSF, and the alteration of the runoff and infiltration patterns of the rainwater by the installation of the mining infrastructure.

20.4.5.2  Hydrogeology

The ES is part of the aquifers identified as San Pedro High River and San Felipe de Jesús, which covers most of the ES area.  According to CONAGUA, the San Felipe de Jesús aquifer presents a deficit of -0.045088 Mm3 of water per year.

According to studies conducted on site, a large amount of groundwater resource has been found to be at two levels:  perched zones, which are isolated and disconnected from the main aquifer, normally appear from 3 m deep, and the “San Felipe de Jesús” aquifer located starting at depths between 67 and 245 m.

The San Felipe de Jesús aquifer is not classified as vulnerable to contamination based on the Norm Annex 2 of NOM-141-SEMARNAT-2003, which describes the method to evaluate the vulnerability of an aquifer to pollution.

Based on chemical analysis of water samples from dewatering and monitoring wells in the area, groundwater quality does not exceed any of the standards established for water use or water discharge, with the exception of total coliforms in samples from most wells, fecal coliforms in samples from two wells, and total trihalomethanes in samples from three wells.  The water has neutral pH, low to moderate total dissolved solids, and does not exceed any of the other regulated compounds.

According to the database “Public Register of Water Rights” (REPDA) of the National Water Commission (CONAGUA 2016), the nearest uses identified by the REPDA that were located in the micro basin are one for groundwater approximately 3 km from the project area and one for surface water, just upstream of the project area.

The planned impacts to this resource refer to the extraction of groundwater by pumping of groundwater intercepted in the mine and mine dewatering wells to allow for mining activities, which is sent to the tailing storage facility.  Part of this water is used for processing, which is recirculated in closed circuit and some is used in camps and offices.

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20.4.6  Flora

The biotic environment of the ES, according to INEGI (2015), is made up of three components. 93.93% of the area is covered by a primary natural pasture and secondary shrub vegetation, 4.48% is covered by agricultural and livestock activities and only 1.59% of the total area is covered by a secondary shrub vegetation of oak forest.

According to the field work, the presence of a microphytic desert scrubland was found within the Project area (PA), and the corresponding inventory was made both for the area affected by the Project and in the ecosystem located within the ES.

According to the inventory, 95 species of flora within the ES and 84 species in the PA were identified, being that the microphyllous desert scrubland has a great similarity between the ES and the PA, especially since in the two areas only one species was listed in the NOM-059-SEMARNAT-2010, under the category of threatened, being the walnut Juglans major.

Modifications to the vegetation is one of the areas where potential environmental impacts have been identified.  An area of 390.37 hectares will be modified, which is currently covered by a microphyllous desert shrubs and will be affected by the construction of the mining infrastructure and mining and Mineral processing and/or other activities.

Regarding the state of conservation of the PA, the vegetation generally does not correspond to pristine ecosystems due to extensive livestock activity and for the establishment of more productive introduced grasses to support cattle production.

20.4.7  Fauna

Inventories of fauna within the PA and ES were conducted. Based on these inventories, 14 species of herpetofauna; 99 species of avifauna; 36 species of mammal fauna; and 9 species of ichthyofaunal were observed in the ES, 21 species of which are listed in the NOM-059-SEMARNAT-2010, while in the PA 88 species were identified: 10 of herpetofauna, 46 of avifauna, 26 of mammal fauna and 6 of ichthyofauna.

The wildlife is another component of the ES, which has some environmental impacts.  The project will affect an area of 390.37 hectares covered by a microphyllous desert scrubland.  This could cause the migration of fauna to more protected sites and could cause loss of habitat.  To minimize this potential impact, mitigation efforts will be directed towards this resource.

20.4.8  Socioeconomic

The ES is located totally within the municipality of Satevó, state of Chihuahua, finding that within the ES there are 16 small villages.

It has identified a population of 452 people within the ES, noting that the data provided are approximate, since the mobility of the population is constant and the most recent official records available are from the year 2010.

The activities carried out within the ES are the breeding of livestock, agriculture and recently mining due to the execution of the mining exploration project that has been carried out since 2009 by the company Minera Plata Real, S. de R.L. of C.V., identified as “Los Gatos”.

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20.5  Identification, Description, and Assessment of Environmental Impacts

It is estimated that the Project will generally generate a series of potential project-environment interactions of a negative and positive nature based on data obtained from the environmental studies, the opinion of experts, and the various environmental impact assessment techniques used.

Of the 589 interactions identified, 359 correspond to negative impacts, which means 60.95% of the total, while 230 were identified as positive interactions, representing 39.05%.

Of the negative interactions, it was found that most of the components 102 (28.41%), were related to the atmosphere, 71 (19.78%) socioeconomics, 65 (18.11%) water, and 37 (10.31%) soil and ecosystem factors.  The other negative interactions (23.39%) are found in geomorphology, flora and fauna.

In relation to the project stages, it was found that of the 359 negative interactions, 153 (42.62%) will occur during the construction stage; 100 (27.86%) in the operation stage; 73 (20.33%) in the preparation stage of the site; and 33 (9.19%) in the closure or post-operation stage of the project.

Regarding the positive impacts, the majority of the 168 (73.04%) are related to the socio-economic factor, and the remaining 26.96% in other components of the ecosystem.

As for the project stages, of the 230 positive interactions, 20 (8.70%) will occur during the site preparation stage; 52 (22.61%) during the construction stage; 53 (23.04%) during the operation stage; and 105 (45.65%) in the closure or post-operation stage.

Of the 589 interactions found in the matrix of identification of potential project-environment interactions, the list was narrowed down to 42 potential impacts based on the Project and its interactions with the environment.  Of the 42 potential environmental impacts, 24 correspond to negative impacts and 18 to positive impacts.

Examining the results of the analyses, the environmental impacts were identified, determining which are significant or relevant without the application of mitigation measures.  The impacts identified correspond to water pollution and the loss of individuals of flora and fauna in conservation status.  These impacts can be prevented and mitigated, making the Project, in environmental terms, viable in all of its stages.

The project complies with the provisions of Article 35 of the LGEEPA according to the identification and evaluation of impacts presented.  The evaluation shows the possible effects of the project activities will not put the structure and function of the micro basin of the San José River delimited as the PA or the ES at risk.  This is based on the analysis of possible interactions that the Project might have with environmental components and processes of the environmental system at different geographic scales.

In this context, it was analyzed and concluded that:

·There are processes whose occurrence is greater than the ES delimited by the micro basin of the San José River and are named supra-regional, such as the climate, the geological structure and the hydrological cycle.  Consequently, the project does not generate effects that could alter these macro processes.

·Several components with a certain degree of importance from an environmental perspective were identified, such as water and vegetation cover with species of flora and fauna listed in NOM-059-SEMARNAT-2010.  Although the vegetation of the impacted area has some ecological importance, this type of vegetation is not protected by any specific norm.  The project does not affect the existence of such vegetation or the integrity of the ecosystem,

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since no species are compromised because the areas of distribution is greater than the surface required by the Project and the ES itself.  In addition, the individual species of concern will be relocated and/or replaced as appropriate.

·Interactions between project activities and environmental components and processes were identified as potential environmental impacts.  In particular, the lowering of the ecosystem quality, the loss of natural components of the ecosystem, soil impermeability, and alteration of water runoff and infiltration patterns were recognized as impacts with a high incidence rate, but were not considered relevant, since the impacts above are only represented on 1.93% of the surface of the ES.

The impact assessment is compliant with the approach requested by the LGEEPA and the REIA as detailed below:

·Qualify the effect of impacts on the ecosystems, with regards to the relevance of possible effects on their functionality (Article 44, section II of the REIA).

·Develop this qualification in context of an ES and an area of influence of the project (Article 12, section IV of the REIA), so that the evaluation refers to both the ES and the PA where the project is intended to be located.

It was found, by the regulations established by the REIA, the ES integrated by the micro basin of the San José River will generate a non-relevant impact for the removal of 390.37 hectares of vegetation.  In comparison to the surface area of the ES, these areas represent only 1.93% of the total area, showing the impact is not significant.  This ensures the function or continuity of ecosystem processes in the environmental system is not affected.

The approach to maintaining the integrity of the ecosystems present in the ES during and following mining and Mineral processing is to reduce and avoid impacts that eliminate habitats and/or species and preserve the conditions that allow the mobility and the viability of species.  By understanding the load capacity of an ecosystem, such as the capacity to be used or managed without compromising its basic structure and operation, the design of the project ensures these two conditions.

By understanding the capacity of an ecosystem to tolerate or adapt to stressors, such as the capacity to be used or managed without compromising its basic structure and operation, the design of the Project ensures these two conditions are satisfied.

The conclusions of the environmental impact assessment indicate that the functional integrity of the ecosystems is respected, since the relevant environmental components will not be significantly affected.  In the case of species under some category of risk, their areas of distribution are greater than the ES.  For water pollution, considered as a relevant impact, it is not planned to discharge process or mining water to natural effluents, even though it is considered to implement water treatment practices to be discharged to the tailings dam, which is built with liner and geo membranes; plus, the recirculation of process water.

The level of conservation of regional biodiversity demonstrates that the project will not cause any species to be declared as threatened or endangered, and the habitat of individuals of flora and fauna will not affect the species, according to Article 35-III, subsection b) of the LGEEPA.

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Finally, as a result of the above conclusions the project will not generate significant and/or relevant effects to the ES, such as:

·Ecological imbalances;

·Damage to public health;

·Irreversible effects to the ecosystems of the ES.

20.6  Preventive and Mitigation Measures for the Environmental Impacts

The set of measures designed for the prevention and mitigation of environmental impacts is included within the Environmental Management System (EMS), as part of the company’s commitments to prevent and mitigate the environmental impacts of the Project.

The objective of the EMS is to provide the basis for monitoring and adopt control mechanisms to ensure the Project’s development and associated activities, as well as prevention and mitigation, are in compliance with the criteria of sustainability and environmental protection as indicated in the environmental norm.

The program, considered to be a guiding instrument for the company, includes the descriptive information necessary to guide the work of the supervision team assigned to the Project.

Therefore, the EMS for the Project allows the company to execute an integrated approach to address and mitigate negative effects of the Project to the environment meeting the following central objectives:

·Implement the impact management measures to prevent and mitigate the possible effects derived from the potential environmental impacts expected in each stage of the Project in compliance with the precepts established in Article 30 of the LGEEPA and 12, section VI of the REIA.

·Propose technically and economically feasible actions, in a way that the implementation can be monitored through an environmental monitoring program.

·Implement actions that allow attention and strict compliance with the terms and conditions established by SEMARNAT in the REIA.

·Identify and implement monitoring methods capable of illuminating impact mechanisms and indicators and evaluating, verifying and documenting compliance with and effectiveness of the adopted environmental measures.

·Ensure that, in relation to the environment, each activity during the Project life is carried out according to the plans and approaches authorized by the SEMARNAT.

·Determine the effectiveness of the environmental protection measures that have been proposed and, if necessary, correct them.

·Properly apply the methods of registering and documenting actions to validate compliance.

·Identify, report, adjust, and correct any deviations in Project development or implementation of environmental measures.

·Manage, in a timely manner, the necessary financial resources for the implementation of environmental measures and ensure their timely availability.

To comply with the guidelines established in article 30 of the LGEEPA, the following specific objectives are presented.

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20.7  Environmental Forecast

The environmental forecast for the micro basin of the San José River delimited as an ES for the Project, is the result of the application of the KSIM Environmental Quality Change Simulation Model and is described below.

20.7.1  Atmosphere

The air quality in the ES is predicted not to vary significantly for a period of 25 years, considering the deterioration trends without the Project compared to the insertion of the Project and mitigation measures.

20.7.2  Soil

The soil is an environmental component that is altered within the ES, mainly by the change of land use in forest lands, for the construction of mining infrastructure.  However, the proposed mitigation measures are effective to minimize the impact.

20.7.3  Water

Water is an indispensable element for the development of a mining project, and an important component of the ES that is affected by the execution of the Project, however, according to the Simulation Model KSIM, the proposed mitigation measures reduce the level of impact.

20.7.4  Geology and Geomorphology

Ore extraction, construction of the tailing storage facility and borrow material areas have a direct effect to the ES, even with the application of the proposed mitigation measures.  According to the simulation, the negative impact is low, and the mitigation measures contribute to reduce modifications to the ES.

20.7.5  Flora

With regard to vegetation, the project focuses on areas of native vegetation, particularly on a microphyllous desert scrubland, so according to the KSIM Simulation Model, it indicates the existence of partial modifications on this component, nevertheless, its tendency and environmental quality and its effects are controllable through the practice of minimizing the affected area or increasing forestation areas.

20.7.6  Fauna

A series of potential negative interactions were identified involving fauna.  The proposed mitigation measures allow a minimum impact to fauna, and therefore does not require additional measures to those proposed within the EMS.

20.7.7  Ecosystem

The impact on the ecosystem is negative, but it has a great similarity with the evolution of their natural characteristics or attributes, where the actions of the evaluated project do not produce substantial

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modifications at the level of ES.  Therefore, no additional measures of attenuation to the environmental are expected.

20.7.8  Socioeconomic

This component has both potentially negative and positive interactions due to the demand for goods and services, generation of jobs, and a change in the use of the territory.

In summary, it is expected that the implementation of the project will have no significant negative impact in the ES delimited by the San José River basin, but with the execution of the project, the positive impacts will support the development of mining in the state of Chihuahua.

20.8  Closure Plan

The Los Gatos Project (Project) is subject to laws and regulatory requirements related, either directly or indirectly, to the closure and reclamation of mines in Mexico, as well as the use and protection of land, and water and wildlife resources.  Closure of the Project and reclamation of surface disturbances attributed to the Project must be consistent with the provisions of the Mining Rights of Public Lands Under Article 27 of the Mexican Constitution (i.e., the government may establish compulsory measures for the preservation and restoration of land and ecological equilibrium), Article 98 (i.e., land reclamation should consider all the necessary actions to prevent land degradation), and Article 35 (i.e., reclamation conditions defined in the approved Manifestación de Impacto Ambiental — MIA, or Environmental Impact Statement, are binding) and the General Law of Ecological Equilibrium and the Protection of the Environment.  These laws establish that holders of mining concessions in Mexico are subject to compliance with all Mexican general regulations and Normas Oficiales Mexicanas (NOMs) that relate to ecological equilibrium and environmental protection, in particular the NOMs for wastewater discharge into national waters and resources (i.e., NOM-001-SEMARNAT {Secretaría de Medio Ambiente y Recursos Naturales}-1996), remediation of hydrocarbon-contaminated soils (i.e., NOM-138-SEMARNAT/SSA-2003), solid waste and landfills (i.e., NOM-083-SEMARNAT-2003), and tailings and mine waste management and closure (i.e., NOM-141-SEMARNAT-2003 and 157-SEMARNAT-2009, respectively).

The primary governmental agencies with direct or indirect regulatory authority over mine closure and reclamation include:

·Procuraduría Federal de Protección al Ambiente (PROFEPA, Office of the Federal Attorney General for Environmental Protection)

·SEMARNAT (Secretariat of Environment and Natural Resources)

·Comisión Nacional del Agua (CONAGUA, National Water Commission)

Water regulation, including the use of the nation’s water or the right to discharge wastewater, is carried out by CONAGUA.  Whereas land use is handled by local agencies in charge of the zoning and registration of land ownership, as well as SEMARNAT delegations, responsible for issuing land-use change permits for projects that will involve alteration of forested areas.  PROFEPA is the agency responsible for enforcing SEMARNAT regulations.  PROFEPA’s main activity is to deal with complaints, conduct inspections and, in general, verify compliance with all federal environmental laws and regulations.  It imposes penalties for violations of environmental laws and regulation and monitors compliance with any preventive and mitigating measures issued by it.  PROFEPA also conducts environmental audits.  To our knowledge MPR has not experienced significant conflicts with these agencies listed above as it related to Project

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development, environmental permitting and compliance, and mine closure and reclamation planning and design.

Pursuant to Chapter VIII of the Ley General del Equilibrio Ecológico y la Protección al Ambiente (LGEEPA) regulations, insurance and bonds are considered (but not specifically required) for closure and reclamation activities.  However, in recent mine closure reviews, LGEEPA authorities have been more diligent regarding bond requirements for mining companies (Tetra Tech, 2015).

Tetra Tech was retained by MPR, to develop a Feasibility Closure and Reclamation Plan (CRP) and closure cost estimate for the Project in support of this Feasibility Study NI 43-101 Technical Report (FS) for mining operations.  Tetra Tech also prepared a conceptual closure and reclamation plan for the MIA or Environmental Impact Statement for the Project.  Tetra Tech is not aware of other published closure and reclamation plans for the Project.

The CRP includes approaches and plans to address the closure and reclamation of Project-related disturbance in accordance with regulatory requirements discussed above and sound scientific and engineering practices, and industry-standard practices for mine closure and reclamation.  The CRP was developed by Tetra Tech based on input, designs, and analyses from key technical experts and design teams involved with the planning and design of mining, process, waste and fluids management, and operating systems for the FS and MIA.

The closure and reclamation activities described in the CRP are anticipated to be modified as more information becomes available.  As such, mine closure and reclamation planning will be dynamic and adapted as mine plans and site conditions change through the mine pre-production and production periods.  Closure and reclamation activities are planned to be completed following to cessation of mining and ore processing; however, opportunities may arise during the production period to concurrently reclaim facilities that are no longer necessary for mining (e.g., borrow areas, temporary camp, temporary rock storage).

Prior to the initiation of mining activities, existing vegetation was cleared and soils that are suitable for reclamation that can be practicably salvaged using heavy equipment have been salvaged from planned surface disturbance and stockpiled.

In general, grading has been completed to blend disturbed areas (with the exception of the TSF) into the surrounding topography and to generally re-establish the previous or natural drainage patterns to convey surface water towards the Northeast and the Santo Toribio Arroyo.  The site has been regraded to the degree practicable using storm water drainage controls constructed and maintained during the pre-production and production period.  At closure, most culverts will be removed or buried, and drainage re-established.  Riprap or other armoring methods are anticipated to be necessary to limit scour and head cutting along portions of re-established drainages.

Prior to and throughout the duration of disturbance activities, erosion and sediment control Best Management Practices (BMPs) will be installed, monitored and maintained.  These BMPS may include but are not limited to: chemical soil stabilizers, wind fences, tillage furrows, mulch, silt fences, erosion control blanket, check dams, coir log, etc.  The effectiveness of these BMPs have been evaluated on areas reclaimed on an interim and concurrent basis (if any).  In addition, the proliferation of noxious and invasive weeds is controlled.

Post-closure monitoring and maintenance will provide assurance that the reclaimed Project-related disturbance meet the Project closure and reclamation goals.

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The planned closure and reclamation activities for major Project facilities are briefly described below.

20.8.1  Tailings Storage Facility

At closure, residual process water, process circuit rinsate, rinsate from tank decontamination and contact water in the TSF seepage collection basins will be pumped to the TSF and drain to its supernatant pond.  The mine dewatering pumping and cooling system is anticipated to continue operation until underground equipment, fuels and chemicals stored underground are removed, which is anticipated to be completed in the first year of the closure period.  Therefore, during this time mine water is anticipated to be pumped to the TSF as well.  As such, the TSF supernatant pond following the production period is anticipated to be a combination of the following: mine water; tailings slurry and seepage collected in over- and under- drains; dilute and mixtures of reagents and chemicals potentially remaining within the process circuit following cyanide destruction; rinse solution produced from the decontamination of processing equipment and tanks; and rainwater and runoff from the limited catchment area below the TSF diversions.  At this time, it is anticipated the water quality of the TSF supernatant pond following the production and closure periods will not meet applicable NOM-001 standards for discharge of wastewater into national waters and resources.

Following termination of tailings and mine water deposition in the TSF, the mine water, tailings and reclaim pumps, pipelines, spigots and barge will be removed and salvaged or disposed.  The run-on diversion above the TSF will remain in place to protect the TSF from the PMP and lesser events.  The downstream slope of the TSF embankment will be armored with durable rock to limit erosion of the embankment.  The application of plant growth medium to and revegetation of the impounded surface of the TSF is anticipated to occur through the closure and post-closure period as the supernatant pond passively evaporates and tailings consolidate, allowing equipment access.  Passive evaporation of most of the supernatant pond is anticipated to take 30 to 40 years following termination of tailings and mine water deposition in the TSF.

Surface drainage features are anticipated to be constructed on the impounded surface of the TSF (if necessary) to control runoff conveyance towards the Southeastern side of TSF.  A spillway channel will be constructed for the TSF at or following the closure period.  Following reclamation of the TSF, a pond may persist or temporarily form on the impounded surface of the reclaimed TSF following storm events.

Salts and other constituents dissolved in the TSF supernatant pond will deposit on the tailings surface and concentrate in pond water as evaporation occurs, while rain incident to the impounded surface of the TSF and runoff from the limited catchment area below the TSF diversion will dilute the supernatant pond.  If necessary, mitigation measures to address the ingestion of supernatant pond water by livestock and wildlife and control the capillary rise of salts into the plant growth medium covering the TSF will be developed and executed.

The TSF seepage will be collected in the seepage collection system and pumped back into the TSF supernatant pond.  The TSF seepage collection and pumping system will be sealed (if appropriate), decommission and removed and reclaimed when seepage volumes are de minimus or seepage quality is demonstrated to meet applicable NOM-001 standards for the discharge of wastewater into national waters and resources.  The TSF seepage collection and pumping system is assumed to remain through the closure and post-closure periods for approximately 35 years following termination of the tailings and mine water deposition.

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20.8.2  Temporary Rock Storage

Following removal of mine rock, the Temporary Rock Storage (TRS) will be graded to blend into the surrounding topography.  The area will be graded to promote surface water drainage towards engineered armored channels designed to convey the 100-year peak storm flow.  Plant growth medium (PGM) will be applied to the surface and the area will be revegetated.

20.8.3  Underground Mine and Openings

Underground equipment, fuels and chemicals stored underground will be removed from the mine prior to closure of the decline and ventilation shafts. Inert debris from the demolition of site-wide facilities (see below) that is not salvaged as scrap will be used to backfill the decline to above the predicted steady-state groundwater elevation in the decline following closure.  The portal will be sealed to prevent access.  Plant growth medium will be applied to the portal area and the area will revegetated.

Closure of the ventilation shafts is anticipated to include a reinforced concrete slab with a minimum of 3 meters of backfill on top of the slab, followed by application of PGM and implementation of revegetation activities.

20.8.4  Process and Ancillary Facilities

Process and ancillary buildings and facilities will be decommissioned, demolished and disposed of onsite in the decline and primary crusher area or in off-site solid waste landfills.  Some ancillary buildings and facilities are anticipated to remain open for four to five years following cessation of mining activities to support final closure and reclamation activities on the site.  Some of the processing and ancillary facilities and buildings may remain to support an industrial PMLU, if viable.  Following facility decommissioning, demolition and removal, concrete foundations will be broken up and covered in place.  Building and facility yards will be graded to blend into the surrounding topography and to generally re-establish the existing drainage patterns, which conveys surface water towards the Northeast.  PGM will be applied to the surface of the regraded process and ancillary facilities and the area will be revegetated.

20.8.5  Borrow Areas and Exploration Camp

Closure and reclamation of the borrow areas and the exploration camp and associated infrastructure is anticipated to occur following the production period, however, opportunities may exist to close and reclaim these facilities during the production period.

20.8.6  Seepage, Stormwater, Sedimentation and Cooling Basins

When final reclamation and water quality criteria are satisfied, accumulated sediments in the bottom of seepage (contact water) collection, stormwater, sedimentation and cooling basins will be removed, if necessary, and the basin area will be reclaimed.

20.8.7  Road and Conveyor Corridors

Most of the Project road and conveyor corridors within the Project area will be reclaimed during the closure period unless needed to support an industrial PMLU, if viable.  Select ancillary roads will be needed for site monitoring and maintenance until final reclamation standards are achieved.

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Road and conveyor corridors that will be reclaimed will be deep ripped to reduce compaction.  Grading will be limited to the main access road and where regrading may be needed to re-established drainages.

20.8.8  Utility and Pipeline Corridor

The surface disturbance associated with the installation of utilities (e.g., electric, natural gas, water and sewer) will be reclaimed on an interim basis during the production period.  Electrical utilities (i.e., substations and powerlines) are assumed to be valuable to the local community following the closure period and will therefore be de-energized and remain in place.  Surface and large shallow pipes or culverts will be removed and disposed.  At closure power and pipeline corridors will be deep-ripped and revegetated.

20.8.9  Well Abandonment

Monitoring and mine dewatering wells will be abandoned in accordance with applicable rules and regulations when no longer needed to prevent cross contamination between aquifers, and the required shallow seal will be placed to prevent contamination by surface access.

The estimated cost for closure and reclamation of the Project-related surface disturbance and facilities is presented with a 6% contingency in Table 20-1.

Table 20-1:  Summary of Closure and Reclamation Costs

Cost Category	Cost Estimate (USD)
Earthworks and Recontouring	$	2,920,000
Revegetation and Stabilization	$	1,222,000
Detoxification/Water Treatment and Disposal of Waste	$	2,240,000
Structure, Equipment and Facility Removal, and Miscellaneous Cost	$	4,915,000
Monitoring and Maintenance	$	358,000
Construction Management and Support	$	596,000
Indirect Costs	$	2,631,000
Total	$	14,884,000

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21.0  CAPITAL AND OPERATING COSTS

Project economics are based primarily on inputs developed by MPR, Tetra Tech, SGS, and Stantec, as well as current operating conditions.  All costs and economic results are presented in constant 2020 U.S. dollars.  Project economics using conventional pro forma cash flow are presented in this report indicate the following results, assuming no gearing (100% equity): Mine Life: 11 years;

·Pre-tax present value (PV5.0%): $764.7 million;

·Post-tax present value (PV5.0%): $653.2 million;

·Taxes Paid: $148.2 million;

·Sustaining project capital is $267.3 million; and

·Initial project capital was $315.7 million.

Quantities and values are presented using standard metric units unless otherwise specified.  No escalation has been applied metal prices, to capital or operating costs.  No gearing is assumed in the analysis.   Cash flows are discounted on an end-of-year basis.

Technical economic tables and figures presented require subsequent calculations to derive subtotals, totals, and weighted averages.  Such calculations inherently involve a degree of rounding.  Where these occur, they are not considered to be material.

21.1  Principal Assumptions

Parameters used in the analysis are shown in Table 21-1.  These parameters are based upon current market conditions, quotes, and benchmarks against similar existing projects.  The construction schedule accounts for 30 months of pre-production activities.  All pre-production tasks have been executed on time, and the cost is included in the current Technical-Economic Model (TEM) to keep the same economic parameters from the original FS.  The Los Gatos Project (the Project) operations are planned to operate at a sustained rate of 2,500 tonnes of ore per day (tpd) after first quarter 2021.  Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.

Table 21-1:  TEM Principal Assumptions

Description	Parameter	Unit
General Assumptions
Mine Life	11	years
Operating Days	360	days/yr
Ore Production	2,500	tpd
Payable Metals (Life of Mine)
Zinc Concentrate
Zinc	678,737	klb
Silver	7,032	koz
Gold	0	koz
Lead Concentrate
Lead	441,755	klb
Silver	64,930	koz
Gold	46	koz

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Description	Parameter	Unit
Metal Assumptions (Long-Term)
Silver Price	$18.99	$/oz
Gold Price	$1,472	$/oz
Zinc Price	$1.09	$/lb
Lead Price	$0.87	$/lb
Financial Assumptions
Royalty	2.0% / 0.5%
Federal Tax	30%
Mining Tax	7.5%
Gearing	None
Technical Assumptions
Diesel	MXN16.81	MXN/L
Gasoline	MXN16.06	MXN/L
Power	MXN2.14	MXN/kWh
Process Recoveries
Zinc Concentrate
Silver	12.7%
Gold	10.2%
Zinc	66.6%
Lead	5.6%
Lead Concentrate
Silver	72.5%
Gold	53.7%
Zinc	6.6%
Lead	79.6%

Projected revenues from the sale of silver, gold, zinc, and lead are based upon long term consensus prices of $18.99/oz Ag, $1,472/oz Au, $1.09/lb Zn, and $0.87/lb Pb respectively.  Smelter assumptions used in the TEM are indicative of current rates and have been provided to Tetra Tech by MPR and are detailed in Section 19.

Treatment (smelting) and refining charges are $299.75/tonne-concentrate and $175/tonne-concentrate for zinc and lead concentrate, respectively.  Smelter charges also include penalties for fluorine, averaging $12/tonne concentrate for zinc and $50/tonne concentrate for lead.  Freight and insurance costs to the smelting plants average $11.04/tonne concentrate and $2.90/tonne concentrate for zinc and lead concentrate, respectively.

The Project is subject to a:

·30% federal tax;

·7.5% Mexican special mining tax; and

·The La Cuesta Royalty which is generally paid at increments of $40 thousand per year during pre-production, 2.0% up to $10 million, and 0.5% up to $15 million ($14.415 million is the remaining balance as of June 30, 2020).

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The following exchange rates are used for the Project:

·22.74 Mexican Pesos to 1 United States Dollar (USD);

·1.36 Canadian Dollars to 1 USD;

·0.89 Euros to 1 USD; and

·107 Japanese Yen to 1 USD.

Metallurgical test work supports the process recovery rates presented in Table 21-1.

21.2  Life of Mine

21.2.1  Underground Mining

Underground production will have a 11-year life of mine (LOM), generating 9,618 kt-ore.  Production over the LOM is summarized in Table 21-2.  Details describing the underground operations are in Section 16.

Table 21-2:  LOM Production from July 1, 2020

Description	Value	Unit
Development
Lateral Development	27,666	m
Vertical Development	2,697	m
Waste
Waste tonnes	1,446	kt
Ore
Development Ore	339	kt
Production Ore	9,279	kt
Total Ore	9,618	kt
Grade
Silver	305	g/t
Gold	0.35	g/t
Zinc	5.7%	%
Lead	2.8%	%
Contained Metal
Silver	94,461	koz
Gold	108	koz
Zinc	1,198,959	klb
Lead	585,343	klb

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21.2.2  Processing

The Project process facility has been designed to treat a nominal 2,500 tpd of ore.  The LOM mill feed is shown in Table 21-3.  Over the project life, 80 million ounces of silver, 69 thousand ounces of gold, 878 million pounds of zinc, and 499 million pounds of lead are produced in the concentrate.  Details describing the process operations are in Section 13.

Table 21-3:  LOM Mill Feed from July 1, 2019

Description	Value	Unit
ROM Feed	9,618	kt
Contained Metal
Silver	94,461	koz
Gold	98	koz
Zinc	1,198,959	klb
Lead	585,343	klb
Concentrate Produced
Zinc	650	kt-dry
Lead	346	kt-dry
Concentrate Grade Produced
Zinc	55.7%	—
Lead	61.0%	—
Metals in Concentrate (LOM)
Silver	80,481	koz
Gold	69	koz
Zinc	877,638	klb
Lead	498,713	klb

21.3  Capital Costs

LOM capital cost (including sustaining capital) requirements are estimated at $267 million as summarized in Table 21-4.  Initial capital of $316 million, was spent to construct the project and commence operations. The Project construction was completed on time and on budget.

The overall cost estimate includes sustaining capital and mine development costs.  Capital cost estimates utilized MPR-provided database information for:

·Mine and Surface Infrastructure

·Process Plant and Infrastructure

·Tailings Storage Facility

·Waste Rock Storage Facility

·Water Management

·Environmental

·Reclamation

·Owner’s Costs

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Table 21-4:  LOM Capital Costs

Description	Units		Sustaining Capital
Direct Costs
Mine & Surface Infrastructure	$	000s	266,398
Direct Costs	$	000s	266,398
Indirect Costs
Mine & Surface Infrastructure	$	000s	932
Indirect Costs	$	000s	932
Total Sustaining Capital	$	000s	267,330

Based on the available information used in the report, under Association for the Advancement of Cost Engineering (AACE) guidelines, the current study is considered a Class 2 estimate.  The accuracy is estimated to be (±15%), and for the mine in production, 0% contingency was included in the estimate.

21.4  Operating Costs

Operating costs are presented as a summary.  LOM operating costs were developed from current operating conditions and are summarized in Table 21-5.  Operating costs are estimated to be $83.58/t-milled over the LOM.

Table 21-5:  Mining Operating Costs

Description	Unit Cost ($/t-ore mined)	Unit Cost ($/t-milled)
Mining Operating	83.58	83.58

The mine operating cost estimate includes all sill development, stope production, and drift-and-fill production and associated indirects.  The owner performed all preproduction and production ore operating work.  Operating costs include all labor, material, mobile and fixed equipment operating, and power consumption costs.  The accuracy of these operating costs is estimated to be within +/- 15%.

Costs have been calculated by year, based on the development and production schedule and the surface and underground infrastructure designs.

The operating costs were combined for inclusion in the TEM and include:

·Processing Plant and Infrastructure

·Tailings Storage Facility

·Waste Rock Facility

·Water Management

·Environmental

·Reclamation

·General and Administration Costs

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21.5  Taxes and Royalties

21.5.1  Royalties

MPR has a royalty agreement with La Cuesta International, S.A. de C.V. and Minera Plata Real, S.A. de C.V., dated April 2006.  Under the terms, MPR paid a royalty payment of US $40,000 per year during the preproduction period.  Upon production, a 2% net smelter return (NSR) royalty from the Los Gatos concession and 0.5% NSR royalty from lands within a one-kilometer boundary of the Los Gatos concession began.  The royalty is reduced to 0.5% upon all payments reaching $10 million.  Upon commencing production, payments under the royalty agreement were deferred until March 31, 2021 with an annual interest rate of 4.5% applied to the outstanding balance.  During the deferral period, MPR pays a royalty payment of $100,000 per year until January 2021.  The agreement has no expiration date; however, the Company may terminate the agreement upon 30-day official termination notification.

The maximum royalty payment for this agreement is set at $15 million.  As of June 30, 2020, $14.4 million remained for future royalty obligations.

21.5.2  Taxes

21.5.2.1  Mexican Federal Tax

Corporate Mexican federal income tax is applied at a rate of 30%.  An operating loss carryforward is used to offset taxable income, thereby reducing taxes owed.

21.5.2.2  Mexican Special Mining Tax (SMT)

The SMT is assessed at 7.5% to pre-tax income (revenue minus operating costs and depreciation).

21.5.2.3  Mexican Precious Metals Tax

MPR does not sell precious metals as a product for revenue, but instead develops the underground mine to provide and sells access to the ore.  Accordingly, and as supported by its tax advisors, the Mexican precious metals tax is not applicable to the project economics.

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22.0  ECONOMIC ANALYSIS

Projected cash flows and economics are based on amounts for the calendar years beginning July 1, 2020 through the end of mine life in 2031.  The level of accuracy of the estimate is considered ±10%.  The following economic analysis includes Measured and Indicated Mineral Resources, which have been converted into Mineral Reserves.  The economic model is presented on an unlevered, post-tax, present value (PV) basis.  Valuation estimates presented in this technical report should be adjusted for existing LGJV current liabilities, receivables and long-term indebtedness.

22.1  Net Smelting Return

The estimate of the net smelting return (NSR) is summarized in Table 22-1.  Technical parameters supporting these estimates are shown in Section 2.0.

Table 22-1:  NSR

Description	Unit		Value
Zinc Concentrate
Payables
Zinc	$	000s	739,823
Silver	$	000s	133,538
Gold	$	000s	—
Subtotal	$	000s	873,361
Treatment Charges	$	000s	(194,917	)
Refining Charges	$	000s	—
Penalties	$	000s	(4,131	)
Freight	$	000s	(106,226	)
Zinc NSR	$	000s	568,088
Lead Concentrate
Payables
Lead	$	000s	384,327
Silver	$	000s	1,233,017
Gold	$	000s	67,025
Subtotal	$	000s	1,684,370
Treatment Charges	$	000s	(60,510	)
Refining Charges	$	000s	(98,305	)
Penalties	$	000s	(7,195	)
Freight	$	000s	(27,868	)
Lead NSR	$	000s	1,490,491
Net Smelting Return	$	000s	2,058,579

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22.2  Economic Results

The economic model is presented on an unlevered, post-tax, present value (PV) basis.  Valuation estimates presented in this technical report should be adjusted for existing LGJV current liabilities, receivables and long-term indebtedness.  Economic results are summarized in Table 22-2.  The analysis suggests the following conclusions, assuming no gearing:

·Mine Life: 11 years;

·Pre-tax present value (PV5.0%): $764 million;

·Post-tax present value (PV5.0%): $653 million;

·Taxes Paid: $148 million;

·Sustaining project capital of $267 million; and

·Initial project capital of $316 million (completed 2019).

Table 22-2:  TEM Results

Description	Unit Cost ($/t-milled)			LOM Value ($000s)
Net Smelting Return	$	214.04		2,058,579
La Cuesta Royalty as of June 2020	$	(1.50	)	(14,415	)
Net Revenue	$	212.54		2,044,164
Operating Costs
Mine & Surface Infrastructure	$	(83.58	)	(803,835	)
Operating Costs	$	(83.58	)	(803,835	)
Operating Margin	$	128.96		1,240,329
Capital Costs
Sustaining Capital Costs	—			(267,330	)
Capital Costs	—			(267,330	)
Pre-Tax Cash Flow
Cash Flow	—			978,867
PV5.0%	—			764,690
Post-Tax Cash Flow
Cash Flow	—			830,653
PV5.0%	—			653,166

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22.3  Sensitivity

Project sensitivity at a post-tax unlevered present value basis is shown in Figure 22-1 to Figure 22-4.  As shown below, the Project is most sensitive to silver price.

Figure 22-1:  Sensitivity Analysis for Silver Price

Figure 22-2:  Sensitivity to Gold Price

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Figure 22-3:  Sensitivity to Zinc Price

Figure 22-4:  Sensitivity to Lead Price

259

								END PROD<<
Description	Qty		Unit Cost		units	Total or Avg.		2020 1		2021 2		2022 3		2023 4		2024 5		2025 6		2026 7		2027 8		2028 9		2029 10		2030 11		2031 12
Market Prices
Silver	—		1		$/oz	18.99		18.99		18.99		18.99		18.99		18.99		18.99		18.99		18.99		18.99		18.99		18.99		18.99
Gold	—		1		$/oz	1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00		1,472.00
Zinc	—		1		$/lb	1.09		1.09		1.09		1.09		1.09		1.09		1.09		1.09		1.09		1.09		1.09		1.09		1.09
Lead	—		1		$/lb	0.87		0.87		0.87		0.87		0.87		0.87		0.87		0.87		0.87		0.87		0.87		0.87		0.87
Production
Mill Ore	—		—		kt	9,618		321		862		900		900		900		900		900		900		900		900		900		335
Silver	—		—		koz	80,481		2,914		8,680		10,423		9,468		9,225		7,341		6,556		5,278		5,886		6,764		5,925		2,022
Gold	—		—		koz	69		3		7		7		7		7		5		5		5		5		5		7		3
Zinc	—		—		klb	877,638		22,124		75,888		83,244		85,156		97,664		89,620		82,180		78,569		87,149		83,625		65,858		26,561
Lead	—		—		klb	498,713		13,425		43,770		50,246		45,490		48,301		48,103		51,100		50,219		46,879		47,203		40,682		13,295
Cash Flow
Gross Revenue
Silver	—		—		USD000s	1,528,328		55,332		164,826		197,924		179,795		175,181		139,414		124,496		100,231		111,773		128,444		112,521		38,393
Gold	—		—		USD000s	101,570		4,874		10,719		10,593		10,630		10,315		7,833		7,950		8,038		7,794		8,079		10,897		3,849
Zinc	—		—		USD000s	956,625		24,115		82,718		90,736		92,820		106,454		97,686		89,576		85,640		94,992		91,151		71,785		28,952
Lead	—		—		USD000s	433,880		11,679		38,080		43,714		39,577		42,022		41,849		44,457		43,691		40,785		41,067		35,393		11,566
Gross Revenue	—		—		USD000s	3,020,404		96,000		296,343		342,967		322,822		333,972		286,782		266,479		237,600		255,344		268,741		230,595		82,760
Net Smelting Return
Lead Concentrate	—		—		USD000s	756,744		51,857		183,233		165,023		127,045		115,153		114,434		0		0		0		0		0		0
Zinc Concentrate	—		—		USD000s	285,012		15,850		59,431		63,776		51,274		52,261		42,420		0		0		0		0		0		0
Net Smelting Return	—		—		USD000s	1,041,757		67,708		242,664		228,798		178,319		167,4149		156,854		0		0		0		0		0		0
Royalties
La Cuesta Royalty	—		—		USD000s	(14,415	)	(1,354	)	(4,150	)	(4,853	)	(1,127	)	(1,144	)	(963	)	(822	)	0		0		0		0		0
Royalties	—		—		USD000s	(14,415	)	(1,354	)	(4,150	)	(4,853	)	(1,127	)	(1,144	)	(963	)	(822	)	0		0		0		0		0
Net Revenue	—		—		USD000s	1,027,342		66,353		238,514		223,945		177,191		166,270		155,891		(822	)	0		0		0		0		0
Operating Costs
10 — Mining	—		1.0		USD000s	(803,835	)	(29,178	)	(73,874	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(29,342	)
Operating Costs			1.0		USD000s	(803,835	)	(29,178	)	(73,874	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(29,342	)
Operating Margin	—		—		USD000s	223,507		37,175		164,639		149,340		102,587		91,665		81,286		(75,427	)	(74,605	)	(74,605	)	(74,605	)	(74,605	)	(29,342	)
Capital Costs
10 — Mine & Surface Infrastructure	—		1.0		USD000s	(267,330	)	(28,581	)	(62,705	)	(38,302	)	(40,720	)	(29,375	)	(18,645	)	(13,545	)	(11,280	)	(9,495	)	(6,130	)	(5,345	)	(3,207	)
Capital Costs			1.0		USD000s	(267,330	)	(28,581	)	(62,705	)	(38,302	)	(40,720	)	(29,375	)	(18,645	)	(13,545	)	(11,280	)	(9,495	)	(6,130	)	(5,345	)	(3,207	)
Working Capital
Beginning Balance	—		—		USD000s	(149,063	)	0		(14,775	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	0
Ending Balance	—		20	%	USD000s	(160,767	)	(5,836	)	(14,775	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(14,921	)	(5,868	)
Change	—		—		USD000s	11,704		5,836		0		0		0		0		0		0		0		0		0		0		5,868
Cash Available for Debt Service
Operating Margin	—		1,090,868		USD000s	1,240,329		37,175		129,497		163,207		149,730		153,050		117,121		102,892		81,061		92,809		105,707		82,250		25,831
Project Capital (Equity)	—		—		USD000s	(267,330	)	(28,581	)	(62,705	)	(38,302	)	(40,720	)	(29,375	)	(18,645	)	(13,545	)	(11,280	)	(9,495	)	(6,130	)	(5,345	)	(3,207	)
Income Tax	—		—		USD000s	(148,214	)	(1,175	)	(2,579	)	(3,150	)	(21,878	)	(27,334	)	(16,203	)	(15,411	)	(8,787	)	(15,898	)	(19,657	)	(12,593	)	(3,549	)
Working Capital	—		—		USD000s	5,868		5,836		8,939		146		0		(0	)	0		(0	)	(0	)	0		0		(0	)	(9,053	)
Pre-Tax Cash Flow	—		—		USD000s	978,867		14,430		75,731		125,051		109,010		123,675		98,476		89,347		69,781		83,314		99,577		76,905		13,571
Cumulative	—		—		USD000s	—		14,430		75,731		125,051		109,010		123,675		98,476		89,347		69,781		83,314		99,577		76,905		13,571
Present Value	5.0	%	—		USD000s	764,690
Post-Tax Cash Flow	—		—		USD000s	830,653		13,255		73,152		121,901		87,132		96,341		82,273		73,935		60,994		67,416		79,920		64,311		10,023
Cumulative	—		—		USD000s	—		13,255		73,152		121,901		87,132		96,341		82,273		73,935		60,994		67,416		79,920		64,311		10,023
Present Value	5.0	%	—		USD000s	653,166

Figure 22-5: Technical Economic Model

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23.0  ADJACENT PROPERTIES

The only exploration program in the immediate area surrounding the Los Gatos project was conducted by VVC Exploration on the Santa Valeria project.  The Santa Valeria project is now owned by SSMRC, which is a different entity than MPR.  The Santa Valeria project located adjacent to the Southeast side of the Los Gatos project concession block and is considered as separate project.  Previously published accounts by VVC Exploration indicate that they have conducted mapping, sampling and have completed a 7-hole drill program.  The highlight of the drilling was a 1.5 m apparent thickness interval containing 145 grams of silver per tonne.  Since the sale of the project to SSMRC, the details of VVC Exploration’s work at the Santa Valeria project are no longer publicly available.

As the current owner, SSMRC is the source of this data.

The author has been unable to verify the information relating to the Santa Valeria project and the information provided is not necessarily indicative of the mineralization on the property that is the subject of this technical report.

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24.0  OTHER RELEVANT DATA AND INFORMATION

24.1  Hydrogeology and Mine Dewatering

Because much of the proposed underground mine would be developed at elevations below the regional water table elevation, a regional numerical groundwater flow model was developed to evaluate mine dewatering scenarios and potential impacts to local water resources.  The numerical model was based on a compilation of regional, local and project-specific geologic and hydrologic data.  Primary data sources included regional geologic mapping by the Mexican Geological Service (Servicio Geológico Mexicano [SGM] 2000; SGM 2014); exploration borehole lithologic logs and core photographs by MPR; project-specific geologic maps, cross sections, and three-dimensional structural geologic interpretations generated by Tetra Tech (Elson 2016) for resource estimation, by Rowearth (2016) for geologic evaluation of the project area, and by MPR during mineral exploration activities; on-site testing of wells, piezometers and boreholes (Tetra Tech 2015; Tetra Tech 2016); and geologic and hydrologic data and reports prepared for the Los Gatos Project (Hernández Bedolla 2015, López Ortega 2010, Schlumberger Water Services undated).  Tetra Tech updated the model in 2019 with additional site data collected since the 2016 model.

24.1.1  Hydrogeology

Groundwater in the Los Gatos model area is believed to originate from precipitation, underflow into and out of the model area and, potentially, heat-driven upward flow from beneath the model.

·Infiltration providing recharge to the groundwater system has been estimated at 5.94% of annual precipitation (Hernández Bedolla 2015).  Average annual precipitation totals about 498 mm, and average annual recharge totals about 30 mm.  The proportion of total recharge infiltrating into the subsurface is a function of soil and rock permeability, with more infiltration occurring in the areas with higher permeability.  Although some precipitation infiltrates into the subsurface in the upland areas, most precipitation reportedly moves as runoff into the valleys and infiltrates into the alluvium.  The drainages in the area only have surface flow immediately after a rain event, when they carry the runoff.  However, groundwater is normally found in the alluvium along the major drainages.  Recharge to the groundwater system was therefore conceptualized as occurring primarily in the lower areas underlain by alluvium along the arroyo Santo Toribio and to a lesser degree in the uplands.  Recharge sources other than precipitation include infiltration of a portion of water flowing from the Cieneguitas wells into the arroyo Santo Toribio about three kilometers upstream of the mine portal and water pumped from the dewatering wells and the mine that is discharged to the arroyo Santo Toribio about 500 meters east of the mine portal.  This infiltration likely adds water to the perched alluvial aquifer and contributes recharge to the deeper groundwater system.

·Underflow into and out of the model area is expected, since the model area represents part of a larger drainage basin.  The drainage basin extends approximately 10 km to the northwest of the model boundary and 2 km to the southeast of the model boundary.

·The relatively high groundwater temperatures in the project area, which increase with depth, are very likely due to intrusive rock bodies far beneath the model.  For purposes of modeling, areas identified as rhyolite domes were assumed to represent areas where heat-driven flow would be more prevalent, since the cooling intrusive bodies would presumably be closer to the surface there.

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Groundwater flow in the project area is generally from northwest to southeast, with a strong downward gradient. However, faults appear to play a key role in the hydrogeology of the Los Gatos model area.  Some faults act as barriers, some as conduits, and some as both barriers and conduits.  The following summarizes primary faults and their hydraulic properties, based on borehole log descriptions, anecdotal evidence provided by site geologists, observations of groundwater inflow to the mine, and hydraulic head data.  While not all faults could be included in the numerical model, the major faults and lineaments listed below were represented as realistically as possible in the model, given the model grid spacing and limitations governing mathematical convergence of the model.

·Los Gatos fault and Lineament 4 — The Los Gatos fault acts as both a barrier and a conduit to groundwater flow.  Infilling and gouge along the fault result in the hanging wall side (north side) having a lower hydraulic conductivity (K).  A damage zone observed on the footwall side (south side) has a higher K.  Lineament 4 appears to be related to the Los Gatos fault, so it was assigned a similar configuration of damage zone and gouge/infilling.

·Anti-Gatos and East faults — These faults are believed to serve primarily as conduits due to the presence of incohesive breccia but little to no gouge (Rowearth 2016).  However, north of the Los Gatos fault, the East fault may also serve as a barrier.

·West fault — The West fault may serve as both a barrier and a conduit, based on observations of both incohesive and cohesive breccia (Rowearth 2016).

·Cieneguitas fault — Hydraulic data indicate that the cross-fault near the Cieneguitas area is a barrier to flow, since hydraulic heads just west of it are above ground surface and have an upward gradient, whereas hydraulic heads east of it are below ground surface and have a downward gradient.

·Southeast fault and Lineaments 1, 2, 3, and 5 — Because the groundwater system in the Los Gatos area appears to be highly compartmentalized, these faults were represented as barriers to groundwater flow in a similar manner to the Cieneguitas fault.  Anecdotal evidence from drilling in the vicinity of Lineament 3 indicates that it is gouge-filled, and borehole lithologic logs for the Southeast fault area similarly indicate the presence of clayey gouge.

In general, the Los Gatos area has a strong downward hydraulic gradient east of the Cieneguitas fault. Just west of the Cieneguitas fault, an upward gradient is observed; this suggests that the Cieneguitas fault forms a competent barrier to west-east flow.  Interestingly, the downward gradient near the Los Gatos mine site appears to be diminishing over the period of observation.  In other words, during the period of record for manual and transducer water level monitoring, the heads appear to be equalizing somewhat between the depth intervals monitored.  This phenomenon is believed to be due to the practice in past years of leaving exploration boreholes open.  Thus, the open boreholes can form conduits that provide vertical connection between shallow and deep units.  In the model, the areas with large numbers of older exploration borings were given a higher vertical K and called “drilled areas”.

Numerous short-term single-boring or single-well pumping or slug tests and one long-term (93-day) aquifer test have been performed at the project site between 2010 and 2016.  Although many of the tests were conducted on borings or wells that were open to more than one lithologic unit, the majority could be associated with one lithology or a small number of similar lithologies.  Figure 24-1 provides a statistical summary of the results and shows the 90% upper and lower confidence limits (UCL and LCL, respectively), the geometric mean and the number of tests (n) for the four primary rock types that were subjected to testing.

263

Figure 24-1. Hydraulic Conductivity Summary

Because the majority of these tests were single-well or single-boring tests and a primary influence on drawdown during the long-term pumping test was drainage through historical exploration borings, no site-specific estimates of storage coefficients could be made in 2016.  Since mine inflow measurements are now available and dewatering wells have been extracting groundwater since 2016, the storage parameters were varied during the 2019 model calibration to match longer-term drawdown and flow data.

The 93-day aquifer test conducted at Pozo 1 (formerly PW-15-01) has been retained for the 2019 model update as a pumping stress and a recovery period of 22 days.  In the 2016 model calibration, it was evident that two monitoring wells did not respond during this 93-day test (OW15-01-245m and GAGT-06) and continued to exhibit decreasing water-level elevations after the test was completed.  This trend of decreasing water levels continued at the same rate since 2016, showing little to no change in trend after dewatering commenced.  Both wells are located in very low permeability formations, based on slug testing, so very likely the water levels are still recovering from initial drilling and well installation activities.  Consistent with the 2016 calibration, the observed water levels at these two wells were not included in the 2019 model calibration.

Between the completion of the 93-day aquifer test in 2016 and early 2019, nine additional dewatering wells (Pozo 2 through Pozo 9 and Pozo 8A) have been installed at the site and pumped to remove groundwater from entering the underground mine workings.  Measurement of pumping rates from the dewatering wells and from the mine, combined with measurement of water levels in monitoring wells in the area, provided a substantial database for recalibration of the groundwater model.

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Table 24-1 summarizes hydraulic conductivity (K) values for the hydrogeologic units included in the groundwater model, including the faults represented as having a conductive damage zone.  Table 24-2 provides details on the simulated hydraulic conductivities of various faults in the model domain.  The hydraulic conductivity values in both tables were determined during calibration of the groundwater model.

Table 24-1:  Hydrogeologic Units Represented in the Model

Hydrogeologic Unit	Model K zone	Horizontal K (Kh, meters/day)	Vertical K (Kv, meters/day)
Alluvium	8	4.0E+00	4.0E-01
Terrace Deposits	5	2.1E+00	2.1E-01
Epiclastics	2	4.8E-01	5.0E-04
Lapilli Tuff	4	3.1E-01	3.1E-03
Ignimbrite	6	5.4E-02	5.4E-04
Rhyolite Dikes/Domes	7	1.2E-02	2.4E-04
Dacite	3	1.0E+00	7.0E-03
Andesite	1	5.0E-01	2.3E-03
Anti-Gatos Fault	9	1.0E+00	8.0E-01
East Fault	10	1.0E+00	8.0E-01
West Fault	11	1.0E+00	8.0E-01
Los Gatos Fault and Lineament 1
Epiclastics - Low Kv	15, 16	1.3E-01	7.8E-03
Epiclastics - High Kh and Kv	17	1.2E+00	5.0E-04
Rhyolite - Low Kv	18	1.2E-02	7.8E-03
Rhyolite - High Kh and Kv	19	1.2E+00	2.4E-04
Dacite - High Kh and Kv	20	2.0E+00	7.0E-03
Andesite - Low Kv	13	1.2E-01	7.8E-03
Andesite - High Kh and Kv	14	1.2E+00	2.3E-03
Drilled Areas
Epiclastics	22	4.8E-01	1.1E-03
Rhyolite	24	1.2E-02	1.5E-01
Dacite	23	1.0E+00	6.2E-01
Andesite	21	5.0E-01	1.6E-02
Deep Bedrock (Layers 28-30)	25	1.0E-04	1.0E-06
Deep Bedrock (Layers 31-33)	26	1.0E-05	1.0E-07

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Table 24-2:  Faults Represented as Barriers to Flow in the Model

Horizontal Flow Barriers (HFBs)	Model HFB Zone	Hydraulic Conductivity (meters/day)
Los Gatos Fault	0	7.8E-03
Southeast Fault	2	7.8E-03
East Fault	3	1.1E-01
West Fault - north side	7	8.4E-03
West Fault - south side	8	7.4E-03
Cieneguitas Fault - north side	13	8.9E-06
Cieneguitas Fault - south side	14	3.8E-05
Lineament 1 - north side	11	1.6E-01
Lineament 1 - south side	12	1.6E-01
Lineament 2 - north side	9	1.6E-01
Lineament 2 - south side	10	1.0E-04
Lineament 3 - north side	5	1.6E-01
Lineament 3 - south side	6	1.6E-03
Lineament 4	1	8.6E-05
Lineament 5	20	1.0E-01

24.1.2  Groundwater Modeling

Tetra Tech simulated the groundwater flow system in the vicinity of the Los Gatos mine by updating the three-dimensional, finite-difference groundwater model (model) constructed in 2016.  The model was constructed using the MODFLOW-SURFACT code and calibrated to groundwater elevation data, drawdown data from aquifer testing and mine dewatering, and mine inflow data obtained from measurements and tests conducted at the project site.  Additional details can be found in Tetra Tech’s Los Gatos Groundwater Flow and Dewatering Model 2019 Revision.

266

24.1.2.1  Groundwater Model Setup and Calibration

The groundwater flow model was constructed using the Groundwater Vistas pre- and post-processing software, version 7.20 (Environmental Simulations Incorporated 2017).  The model domain is approximately 10 kilometers long by approximately six kilometers wide and covers approximately 60 square kilometers (Figure 24-2).  The horizontal extent of the domain was selected to incorporate enough of the drainage basin surrounding the proposed mine area that mine dewatering flows and drawdown from mine dewatering were unlikely to be significantly impacted by the boundaries at the model perimeter.  The extent of the model domain was not changed in the 2019 model.

Figure 24-2:  Groundwater Model Location

267

The hydraulic conductivity distribution in the model was based on the three-dimensional geologic models of the mine area and on regional geologic mapping.  Initial values for the various lithologies were assigned based on results of on-site hydraulic tests.  Various MODFLOW and MODFLOW-SURFACT packages were used to represent boundary conditions and stresses, including general head boundaries to represent groundwater flow into our out of the model on the Northwest and Southeast sides and at the bottom of the model, no-flow boundaries to represent groundwater divides on the Southwest and Northeast sides, recharge to represent precipitation-derived, aerially-distributed recharge to the groundwater system, horizontal flow barrier boundaries to represent low-permeability faults, fracture wells to represent pumping or flowing wells, and drains to represent dewatering of the mine during predictive simulations.

The model was calibrated in steady-state mode to water-level elevations in 17 wells and in transient mode to drawdowns observed during a long-term aquifer test in the mine area.  During calibration, adjustments were made to horizontal and vertical hydraulic conductivities, specific storage and specific yield, the spatial distribution of recharge, heads and hydraulic conductivities in the general head boundary cells, and the hydraulic conductivities of the horizontal flow barriers.  Although the dewatering well pumping rates were incorporated into the model calibration, the measured water levels in the dewatering wells were not included and cannot be relied upon for model calibration.  Water levels in pumped wells do not represent water levels in the aquifer outside the well, because well efficiency and other head losses affect the measured water levels in pumped wells, usually resulting in lower water levels in the well than in the aquifer outside the well.  The well water levels could not be modeled because the dewatering wells have not been tested to determine well efficiencies and head loss parameter values.

Based on the recent drawdown and mine inflow data, adjustments were made to parameters that were most sensitive to drawdown and mine inflows.  During calibration, adjustments were made to the following model parameters:

·Horizontal and vertical hydraulic conductivity;

·Specific storage;

·Specific yield;

·Recharge;

·Drain conductance; and

·HFB hydraulic characteristics.

The hydraulic conductivity (K) values in the 2016 and 2019 models were determined during calibration of the models using the data available at the time.  The 2016 model calibration relied on K estimates from short-term, single-well tests and water-level change data from monitoring of observation wells during the test pumping of PW15-01.  Some of the important limitations of the data from the PW15-01 test were that, in terms of the groundwater model, the test well represented a single point in only one lithology (whereas the mine penetrates many different lithologies), and the test data spanned only about three months.  The 2019 model calibration used the data from the 2016 model calibration but, more importantly, incorporated the inflows to the mine that were measured during more than two years of actual mine development, as well as water levels measured in monitoring wells during that time.  Inclusion of the measured mine inflows was the main factor that resulted in the increases in the K values in the 2019 model compared to the 2016 model.

268

24.1.2.2  Mine Plan and Dewatering

The Los Gatos mine employs stoping and drifting methods to remove ore from zones in four areas along the south (footwall) side of the Los Gatos fault over a period of approximately 12 years under a mine plan and schedule developed by MPR (2018).  The mine layout is shown in plan view on Figure 24-3.

Figure 24-3. Simulated Mine Drains and Dewatering Wells

The mine is divided into three areas called, for the purposes of this report, the Northwest, Central, and Southeast areas. Proposed mining elevations are between approximately 1190 masl and 1450 masl.  A ramp (decline) provides primary entry to the mine and access to the upper part of the ore in the Central zone.  A branch ramp to the Northwest area, with access currently to the 1370 and 1390 levels, a spiral ramp with access to the 1390 level, and a segment of the spiral ramp down to the 1350 level, have been constructed.  A branch ramp to the eastern part of the Central area also has been constructed and will eventually extend to the Southeast area.  In each area, horizontal tunnels will be constructed to provide access to the drifts and stopes from which ore will be mined.  The Central and Northwest areas will be mined earliest in the mine life, followed by the Southeast area.  The existing portions of the Northwest area and Central area ramps below the water table are experiencing inflows of groundwater.  Dewatering is by a combination of pumping from internal sumps within the mine and from a series of ten (as of this report date) dewatering wells outside the mine.  It is expected that all the mine areas below the water table will continue to experience groundwater inflow and require dewatering.

269

Tetra Tech used the groundwater model to evaluate the current and three potential mine dewatering scenarios as part of efforts to identify an effective water management strategy for the existing and future mine operations.  Four scenarios were simulated; in each of the four scenarios inflow to the mine would continue to be removed by pumping from strategically located sumps within the mine:

·Base-Case — This scenario simulated groundwater inflow to the mine under the operational scenario in which the existing dewatering wells except Pozo 1 would continue to operate at their current rates without the addition of any other wells.

·Scenario 1 — Simulated the operation of four currently planned dewatering wells provided by mine site personnel in addition to the existing dewatering network.  The four new wells were each simulated as pumping at 14 l/s, which was the average rate achieved in the existing dewatering wells.

·Scenario 2 — The same network of existing and proposed dewatering wells from Scenario 1 was simulated.  However, five of the wells were simulated with increased pumping rates of 30 l/s to represent the use of larger pumps.

·Scenario 3 — The network of wells from Scenario 2 was supplemented by 9 new wells located as close as possible to mine workings.  All new wells were assumed to pump at only 14 l/s to distinguish the effects of new dewatering wells from the effects of higher pumping rates tested by Scenario 2.

The intent of the dewatering wells is to intercept groundwater before it reaches the mine and thereby reduce the amount of water that enters the mine and needs to be pumped out, treated, and either reused or disposed.  The setup of the groundwater flow model for simulating mining and mine dewatering is described below.  Figure 24-3 shows the locations of wells and drains used for each of the four scenarios. The additional wells simulated by Tetra Tech are labeled Pozo 21 through Pozo 29.

24.1.2.3  Groundwater Modeling Results

The reduction of predicted cumulative inflow to the mine ranged from 11% - 29% percent when compared to the base-case scenario with the currently existing, planned, and proposed dewatering wells (Table 24-3 and Figure 24-4).

Table 24-3:  Summary of Dewatering Simulation Results

Scenario Number	Wells Included	Cumulative  Mine Inflow  (Mm3)	Cumulative  Well  Pumpage  (Mm3)	Total  Cumulative Water Removed  (Mm3)	Reduction  in Mine Inflow Over  Base Case
Base Case	Pozos 2 through 8, 8A, and 9	104.2	55.5	159.7	—
1	Pozos 2 through 8, 8A, 9, 11, 12, 17, and 18	92.7	71.6	164.3	11	%
2	Pozos 2 through 8, 8A, 9, 11, 12, 17, and 18	78.9	96.1	175.0	24	%
3	Pozos 2 through 8, 8A, 9, 11, 12, 17, 18, 21 through 29	73.6	100.3	174.0	29	%

Mm3 = Millions of cubic meters

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Figure 24-4. Predicted Mine Inflow and Dewatering Well Pumpage for All Simulated Scenarios

Figure 24-5 graphically summarizes the predicted rates of groundwater inflow to the mine for the base case and three dewatering scenarios, and the modeled aggregate pumping rates for the dewatering wells for the dewatering scenarios.  The peak rates of inflow to the mine ranged from about 560 l/s for the Base Case with only the current dewatering wells operating, to about 400 l/s for Scenario 3, with an additional 9 dewatering wells each pumping at 14 l/s.  The reduction of predicted rates of groundwater inflow to the mine varied throughout the mine life in all scenarios, depending on the number of dewatering wells and simulated pumping rates.  The modeled aggregate pumping rates for the dewatering wells (Figure 24-5) increased until approximately 2029 as more dewatering wells were activated.  No wells were assumed to shut down during the life of the mine.

Predicted water-level drawdown was monitored at the locations of the dewatering wells during the simulation. Figure 24-6 and Figure 24-7 present a time series of predicted drawdowns at four of the dewatering wells under Scenario 2.  The graphs cover the modeled time period, starting February 1, 2016 and ending at the end of the mine life.  The drawdown displayed for the various model layers is limited by the layer-bottom elevations at the well because, although the model cell represented in the graph may become dry, the drawdown cannot go below the layer bottom.  Consequently, the drawdown in the aquifer near the wells is best represented by the drawdown for the deepest layer shown on the graph.

The maximum predicted drawdown at each well location occurred about two-thirds to three-quarters of the way through the mine life.  Maximum drawdown was approximately 200 meters at Pozo 5 and about 160 meters at Pozos 6, 11, and 12.  The predicted water-level elevations at the time of maximum drawdown were about 20 meters above the lowest nearby mining level at Pozo 5, about 55 to 60 meters above the lowest nearby mining level at Pozos 6 and 11, and about 5 meters above the lowest nearby mining level at Pozo 12.

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Figure 24-8 and Figure 24-9 show the horizontal extent of drawdowns predicted, respectively, at the time of maximum extent approximately two-thirds through the life of mine and at the end of mining.  At the time of maximum extent, predicted drawdown was about 200 meters near the Northwest spiral ramp and about 180 m near the deepest levels in the north part of the Central Zone.  By the end of mining, water levels had begun to recover.

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Figure 24-5:  Predicted Mine Inflows and Dewatering Well Pumping Rates for All Dewatering Scenarios

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Figure 24-6:  Predicted Drawdown at Pozos 5 and 6

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Figure 24-7:  Predicted Drawdown at Pozos 11 and 12

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Figure 24-8:  Maximum Predicted Drawdown

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Figure 24-9. Drawdown at End of Mining

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24.1.2.4  Groundwater Model Limitations

The Los Gatos numerical groundwater flow model was developed as a tool for quantitative estimation of potential inflows to the proposed underground mine and to provide data for mine dewatering designs.  The mine inflow estimates represent conceptual dewatering scenarios based on currently available geologic and hydrogeologic data for the project area and surrounding region, as well as the mine plans and schedule provided to Tetra Tech in September 2018.

The regional-scale flow model used to simulate the groundwater system has inherent limitations due to the simplifications necessary to represent complex natural systems. Model grid size and available data constrain the resolution and accuracy of the predictions.  Nonetheless, the predictions are useful for assessing the potential range of mine inflows, dewatering well locations, and pumping rates.

In general, monitoring of groundwater inflow to mines in fairly low-permeability rocks with relatively low fracture density and interconnectivity has shown that fractures can initially yield substantial rates of inflow that decrease rapidly over time.  The degree to which this occurs depends on how well-connected the fracture network is over large areas.  The equivalent porous media conceptual flow model used for the Los Gatos numerical model assumes that the fracture network is sufficiently connected to be simulated as a porous medium at the regional scale.  This conceptual model has been shown to be applicable on a regional scale.  However, as the scale becomes more local, small-scale fracturing and geologic structures play an increasingly significant role in groundwater inflow to the mine, and the equivalent porous media assumption can become less appropriate.  Difficulties encountered during the model calibration indicated that the degree of natural contrast in hydraulic conductivity between the faults and the surrounding geologic units may be greater than what can be simulated as an equivalent porous media.  It appears that the Los Gatos hydrogeological system is stretching the limits of the conditions that can be efficiently simulated using this type of model (finite-difference method, with the assumption of an equivalent porous medium).  The inflows predicted by this model are therefore averages that do not account for extreme high or low flows due to faults, fractures, other local-scale geologic features, or potential flow pathways such as unsealed or incompletely sealed boreholes.

The regional scale and equivalent porous media assumptions inherent in the numerical groundwater model, as well as unknowns regarding geologic structures and their hydraulic properties, may contribute to over- or under-estimation of the long-term groundwater inflow to the mine and dewatering wells and may result in predictions of drawdown different from those that will actually occur.  Uncertainty remains in quantitative estimation of the mine inflows and resulting drawdown.  As with many proposed mine operations, this uncertainty will remain until additional observations made during mine development are compiled, analyzed and incorporated into the model.

The model was constructed based on present-day conditions, but natural and anthropogenic changes may occur over the simulation period.  No attempt has been made to simulate possible future changes that could alter the groundwater system.  As predictive simulations extend further in time, the potential error associated with the predictions increases.

The factors described above limit the precision and accuracy of the model predictions.  However, the results presented here represent Tetra Tech’s current best estimates of groundwater inflows to the proposed mine and groundwater dewatering well operations associated with the project.  A limited sensitivity and uncertainty analysis were performed as part of this scope.  The uncertainty in these predictions could be further evaluated as part of a more detailed sensitivity analysis.  The uncertainty could be reduced by incorporating observations made during future mine development into the model, just as the uncertainty with mine inflows was decreased by incorporating inflow data collected since 2016.

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24.1.3  Production Dewatering

Development and mining underground started at the site in 2018.  Ground water removal is being tracked and this will allow for additional future planning for dewatering.  As planned, there are two components to the mine dewatering, which include pumping wells, and removal of water that has infiltrated the mine.  There are currently 13 dewatering wells, pumping from the surface, to try to prevent mine inflows.  The wells are shown in Figure 24-10 in relation to the mine plan.

Figure 24-10:  Pumping wells in relation to the overall mine plan.

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Water that infiltrates the mine is removed through a series of mobile units, which pump the water from the working faces, to a main sump for the mine.  Water is pumped from the main sump to the surface.  Water pumping data is being recorded, and more water has been encountered than estimated in the previous models.  Average rates pumped from the mine by area, are 98.4 l/s for the NWZ, 20 l/s for the Central Zone. Table 24-4 in March was due to the mining encountering a fissure, which lead to the temporary flooding of the mining level, which was then pumped out.

Table 24-4:  Water pumped from dewatering wells January-May 2020

	January L/S	February L/S	March L/S	April L/S	May L/S
1	0.0	0.0	0.0	0.0	0.0
2	0.0	0.0	0.0	0.0	0.0
3	20.0	0.0	20.0	0.0	63.1
4	15.3	9.5	15.2	15.2	0.0
5	78.2	78.8	79.6	79.1	76.1
6	20.0	18.3	20.0	16.7	75.3
7	63.1	56.8	56.8	56.8	53.6
8	14.2	13.1	13.9	14.0	13.8
8A	75.7	75.7	69.4	78.0	75.0
9	17.7	17.2	15.8	14.3	16.7
11	21.0	21.7	21.7	21.9	21.0
12	20.0	20.0	20.0	20.0	18.3
17	20.2	20.8	19.8	19.5	17.9
Total	365.4	331.9	352.1	335.4	430.8

The current pumping rates will need to be increased to give enough drawn down to mine the lower levels of the mine.  Currently, as can be seen in Figure 24-11, the pumping rates are approximately 550 l/s, which combines the dewatering wells, and mine infiltration.

Figure 24-11:  Water pumped at the Los Gatos site, blue line represents mine infiltration and orange represents the dewatering wells.

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24.1.4  Conclusions and Recommendations

24.1.4.1  Conclusions

The modeling results suggest that adding dewatering wells at the modeled locations and pumping rates will intercept a portion of groundwater inflow to the mine before it reaches the underground workings.  Three scenarios were considered.

Production has started at the mine and groundwater data is being collected.  To date, more water has been extracted than was planned based on 2019 ground water model.  Water temperatures also exceed the predicated temperatures.

Significant flows into the mine are expected to continue and will require continued in-mine dewatering.  However, adding wells or increasing the pumping rates at existing and already-planned wells will result in decreased flow into the mine.

Water pumped from the dewatering wells is used to meet on-site demand such as consumptive use in the mine, man camp domestic use, and process water makeup.  The excess water from the dewatering wells requires only cooling prior to discharge to the surface.  Water pumped directly from the mine requires treatment to reduce the suspended solids and possible hydrocarbons content prior to discharge. Consequently, limiting flow into the mine reduces treatment requirements.

24.1.4.2  Recommendations

Tetra Tech recommends an active dewatering strategy to reduce groundwater inflows into the underground workings.  This strategy is composed of the following depressurization/dewatering methods:

·Install future dewatering wells as close as possible to the underground workings.  The farther the well is away from the workings, the less effective it will be in reducing inflows.

·Install future dewatering wells to depths approximately 20 meters below the deepest mine depth, to allow pump placement below the mine floor elevations.

·Perform capacity tests on selected wells to better identify potential pumping rates.  A standard protocol for such capacity testing should be developed.

·Install larger capacity pumps in dewatering wells to reduce mine inflows.

·Continue to use dewatering well design similar to the recently installed wells.

·When discrete water-bearing zones are intersected during mining or during drilling inside the mine, install horizontal or inclined coreholes for depressurization.  To limit the volume of water requiring treatment before discharge, water from depressurization coreholes could be handled separately from the general mine inflow.  The cost of separate handling should be reviewed to determine whether it would provide an economic benefit.

Because cooling and discharge would be technologically simpler, more reliable, and potentially less expensive than treating to remove suspended solids and possibly other components, a combination of increasing pumping rates and adding new wells could be used to further reduce mine inflows.

The yields of the proposed dewatering wells are based on the typical pumping rates achieved at existing dewatering wells.  Tetra Tech recommends that the finally selected locations of the dewatering wells first be core-drilled from the shallowest practical depth to the total depth.  The core should be photographed and logged using methods consistent with the standard protocol for exploration core holes drilled for this

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project.  Detailed logging would allow the dewatering wells to be designed with total depth and screen placement based on the location-specific geology.

A new hydrological study is recommended to detail a plan for the remainder of the mine life.  This study will be essential to further water management, and the management of water in the lower levels of the mine.

24.2  Geochemistry

24.2.1  Waste Rock Characterization

A total of 21 waste rock samples and one ore sample were analyzed by static and kinetic testing methods.  Total elemental concentrations exceeded Maximum Permissible Limits (MPLs) for antimony, arsenic, barium, cadmium, and lead.  However, these were not leachable.  Acid Base Accounting (ABA) indicates that a portion of the waste rock is Potentially Acid Generating (PAG), leading to kinetic testing with the Kinetic Net Acid Generation (NAG) test.  This testing indicated a low capacity to generate acid.

The material currently being stockpiled at the site has low capacity to generate an acidic leachate, although some material within this storage facility can potentially generate acid.  The proportion of material that can generate acid is low and there is a general lag time before acid is generated.  As the material is being stored in a climate with distinct wet and dry rainfall periods, the armoring of pyrite is common in these environments, reducing oxidation potential.  There is also some, if limited, acid neutralizing potential, that will reduce the generation of acid leachate.

The potential to generate acid from any given waste unit does appear to have a finite length of acid generation and is not considered to be a long-term closure issue.  However, as there is a small percentage of material that can generate acid, it is recommended that a surface water monitoring station be established below the waste rock storage facility.  The production of leachate should be monitored, and water samples be collected at the beginning and end of the wet season to evaluate leachate generation at the field scale, and to determine whether management is required.  Given the location of the waste rock within a drainage, and proximity to the tailings storage facility, collection and disposal of any acidic drainage via pumping to the tailings storage facility, will likely be the most appropriate management strategy, if required.

From a closure perspective, the results indicate that long-term acid generation is unlikely.  Collection of surface water samples, as described above, will be used to evaluate this condition.  Given the low likelihood of acid generation, a soil and vegetative cover should suffice at closure.

24.2.2  Tailings Characterization

Tailings material to be placed within the designated tailings storage facility (TSF) are processed via the INCO process that involves the addition of sulfide dioxide and air, with a copper catalyst, for cyanide destruction.  A variety of samples of pre- and post-cyanide destruction material was analyzed by static and kinetic testing methods.

Total elemental concentrations exceeded MPLs for antimony, arsenic, barium, and lead.  However, these were not leachable.  ABA indicates that a portion of the waste rock is Potentially Acid Generating (PAG), leading to kinetic testing with the Kinetic Net Acid Generation (NAG) test.  This testing indicated a low capacity to generate acid.

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Kinetic testing supports the low capacity to generate acid, with leachate pH circum-neutral to alkaline.  Static and kinetic data indicates that metal leachate generation also appears to be low.  Although TCLP testing indicates the potential for some lead leachate generation, the kinetic data indicates that lead leachate above MPL will not occur during operation and closure.  Kinetic data does indicate the potential for cadmium discharge at closure once draindown has been completed.  However, on balance with all the available data, this is considered to be low probability and risk.

24.3  Surface Water Hydrology

The objective of this report is to provide the surface water hydrology and water management basis of design for the Tailings Storage Facility (TSF) at MPR’s Los Gatos Project.  This study was developed using site geotechnical investigations and weather data from adjacent meteorological station 8057(1).  Water management has been designed in accordance with NOM-141-SEMARNAT-2003 (Procedure for Characterizing Mine Tailings and Criteria for the Characterization and Preparation of the Site, Project, Construction, Operation, and Post Operation of Mine Tailings Dams), NOM-011-CNA-2000 (Water Resource Conservation-Que) and the dam safety standards set forth by CONAGUA.  Additional guidance was provided by Joel Hernandez-Bedolla, who authored Estudio Hidrológico Superficial, Subterráneo e Hidráulico “Los Gatos” Satevó, Chihuahua.

(1)  Located 5-kilometers East of Los Gatos, 32-year period of record

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24.3.1  Methodology

Design hydrology for the Los Gatos site was evaluated using the SCS curve number method to model losses to soils and specify unit hydrograph transformation.  The SCS method relies on basin characteristics, design storm rainfall depths and temporal distribution to calculate volumetric flow rates.  The Los Gatos Project site is situated in the Humid Hydrologic Zone, exhibiting sloped to mountainous topography.  The Probable Maximum Precipitation (PMP) event was used as a basis of design for the TSF spillway and diversions and the 1,000-year event was used as a design basis for the Mill channel(2).  The TSF ultimate embankment height would measure up to 39-meters, resulting in a categorization as High (“Mayor” — reference Table 24-5, below) dam size classification(3).  As such, the spillway has been designed based on a storm equal to or greater than the 10,000-year storm.  For the purposes of this study, the PMP has been used.  Hydrology for the site was computed using HEC-HMS software and applying input parameters discussed herein.

Table 24-5:  CONAGUA Design Storm Requirements for Impoundments

Source:  CONAGUA Manual para el Control de Inundaciones Table 4

(2)  Personal communication with Joel Hernandez-Bedolla September 15, 2016.

(3)  CONAGUA Manual para el Control de Inundaciones Table 4

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24.3.1.1  Basin Characteristics

Soils

Site soils were categorized using the Soil Conservation Service (SCS) and NOM-011-CNA-2000 methods.  The SCS method relies on a curve number, whereas NOM-011-CNA-2000 relies on a runoff coefficient, Ce.  Each parameter is indicative of infiltration capability and resulting runoff but is applied differently.

Geotechnical samples collected within and above TSF indicate exposed, weathered bedrock mixed with higher infiltrative (higher porosity) soil groups.  Dominant soil types are shown in Figure 24-12.

The dominant soil type and resulting hydrologic soil group as described for use in the SCS runoff method is shown for each region below.

·TSF North Region.  Well graded sands with exposed and weathered bedrock.  Overall Hydrologic Soil Group D.

·TSF Paleo Channels Region.  Sand with silt and gravel (Hydrologic Soil Group A/B)

·TSF South Region.  Silty gravel with sand and bedrock (Hydrologic Soil Group C/D)

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Figure 24-12:  Soils Map of the Project Area

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The hydrologic soil group describes the runoff potential for a particular soil type and is defined below by the SCS in USDA Technical Release 55.

Table 24-6:  TR-55 Hydrologic Soil Groups

Hydrologic Soil Groups

Group A is sand, loamy sand or sandy loam types of soils.  It has low runoff potential and high infiltration rates even when thoroughly wetted.  They consist chiefly of deep, well to excessively drained sands or gravels and have a high rate of water transmission.

Group B is silt loam or loam.  It has a moderate infiltration rate when thoroughly wetted and consists chiefly or moderately deep to deep, moderately well to well drained soils with moderately fine to moderately coarse textures.

Group C soils are sandy clay loam.  They have low infiltration rates when thoroughly wetted and consist chiefly of soils with a layer that impedes downward movement of water and soils with moderately fine to fine structure.

Group D soils are clay loam, silty clay loam, sandy clay, silty clay or clay.  This HSG has the highest runoff potential.  They have very low infiltration rates when thoroughly wetted and consist chiefly of clay soils with a high swelling potential, soils with a permanent high-water table, soils with a claypan or clay layer at or near the surface and shallow soils over nearly impervious material.

Source:  USDA Technical Release 55

Upland soils of the TSF are assumed to be similar in character to the samples collected within the TSF footprint.  Given the dominant C/D and D soils types, and considering the Los Gatos site is a desert landscape, an SCS curve number of 86 was assigned to the TSF uplands.  These curve numbers have been used within calculations discussed in Section 24.3.1.3 .

NOM-011-CNA-2000 sub-divides soils into one of three hydrologic types, similar to the table presented above.  The NOM-011-CNA-2000 table is presented below.

Table 24-7:  NOM-011-CNA-2000 Hydrologic Soil Type and K Values as a Function of Soil Use

Soil Type	Characteristics
A	Permeable soils such as sands or loess
B	Moderately permeable soils, more compact than Soil Type A
C	Nearly impermeable soils, such as a thin layer of sand or loess underlain by an impermeable layer or clay

Soil	Soil Type
Use	A	B	C
Fallow, uncultivated or bare	0.26	0.28	0.3
Cultivated
Row crops	0.24	0.27	0.3
Rotated crops	0.24	0.27	0.3
Grains	0.24	0.27	0.3
Pastures
Minor	0.14	0.2	0.28
Regular	0.2	0.24	0.3
Excessive	0.24	0.28	0.3

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Soil	Soil Type
Use	A	B	C
Forest
Greater than 75 Percent Cover	0.07	0.16	0.24
50 to 75 Percent Cover	0.12	0.22	0.26
25 to 50 Percent Cover	0.17	0.26	0.28
Less than 25 Percent Cover	0.22	0.28	0.3
Urban	0.26	0.29	0.32
Roads	0.27	0.3	0.33
Permanent Pasture	0.18	0.24	0.3

Source:  NOM-011-CNA-2000 Table 1

Overall, the upland areas above the TSF has been classified as soil type C.  Given the land use has been categorized as fallow, uncultivated and/or bare, the resulting K value would be 0.30.  For K values greater than 0.15, the rainfall-runoff coefficient, Ce, is calculated as follows:

Ce = K*(P-250)/2000 + (K-0.15)/1.5 Equation 1

Where

Ce = runoff coefficient

K = soil coefficient

P = annual precipitation (mm)

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Vegetative Cover

Vegetation is characterized by a semi-desert landscape, with typical low brush vegetation in the slopes including lechuguilla, sotol, ocotillo, yucca, sage, bear grass, and other types of indigenous grasses.  Larger brush and trees are common along the main watercourses, with the presence of oak, cypress, poplar, cottonwood, huizache, and mesquite, among others.  Vegetative cover is low to moderate, with sparser occurrence in the vicinity of the TSF, as shown in Figure 24-13.  The presence of vegetation serves to reduce the curve number by interception of rainfall, either by interception on the canopy (leaf surfaces) or plant litter on the ground.

Figure 24-13:  Site Photo Showing Vegetative Cover

Contributing Areas

Basin areas contributing to the TSF were delineated within AutoCAD Civil 3D and are summarized in Table 24-8.

Table 24-8:  Basin Areas

Basin	Contributing Area (km2)
TSF Diverted Uplands	1.15
TSF Un-diverted Uplands	0.38
TSF	0.65
Mill Diverted Uplands	0.21

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Lag Time

Time of concentration(4) was calculated for the uplands above, and within, TSF.  Transformation of excess precipitation to direct runoff using the SCS unit hydrograph method requires calculation of lag time(5).  For ungauged basins, lag time (tlag) is computed as a function of the time of concentration (tc), as follows:

tlag = 0.6tc Equation 2

Lag times are summarized below.  Short times of concentration and associated lag times result in more rapid conveyance of storm runoff to diversion channels and spillways.  Given steep terrain and short flow paths, lag times associated with and natural areas occurring above the Mill were all set to 3.6 minutes (the minimum recommended value).

Table 24-9:  Lag Times

Basin	Lag Time (minutes)
TSF Diversion	6.1
Mill Diversion	3.6
TSF Un-diverted	9.9

24.3.1.2  Design Storms, Typical Rainfall and General Meteorology

Design storms have been calculated previously within the Hidrológico Botadero report and by statistical evaluation of the 8057 meteorological gauge.  The 8057 gauge is maintained by CONAGUA and was selected due to its favorable proximity to the site; it is located 5-kilometers to the East.  Additionally, the period of record for the gauge spans 32 years and the data are of good quality.  The design storm rainfall depths are summarized in Table 24-10.

Table 24-10:  Design Storms

Return Period (year)	Precipitation Duration (hour)	Total Precipitation (mm)
2	24	40
5	24	49
10	24	55
25(6)	24	61
50	24	67
100	24	72
500	24	83
1,000	24	88
PMP(7)	24	216

(4)  The time required for rainfall occurrence at the most hydrologically remote point in the basin to report to the outlet

(5)  Defined as the delay between peak precipitation and peak discharge

(6)  Calculated by Tetra Tech using Gamma, Log Pearson III and Extreme Value I methods

(7)  Calculated by Tetra Tech using Hershfield method

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Additionally, the Probable Maximum Precipitation (PMP) of 216 mm was calculated using the Hershfield (1965) method.

The minimum, average and maximum monthly total rainfall(8) is presented in Table 24-11, for reference.  The greatest observed rainfall occurring over a 24-hour period during the period of record was 61 mm, occurring August 23, 1965.

Table 24-11:  Minimum, Average and Maximum Total Monthly Rainfall for Los Gatos Site

Month	Minimum Monthly Precipitation (mm)	Average Monthly Precipitation (mm)	Maximum Monthly Precipitation (mm)
Jan	0	9	38
Feb	0	9	38
Mar	0	5	45
Apr	0	5	33
May	0	11	66
Jun	0	42	171
Jul	30	110	230
Aug	20	123	237
Sep	8	94	246
Oct	0	25	106
Nov	0	10	42
Dec	0	12	79
Total	58	454	1331

With the exception of precipitation, meteorological data have been collected on site from January 2012 to present.  Throughout the year, the general wind direction is West to Southwest.  Wind velocities are highest in April and May, at 2.0 and 2.1 m/s, respectively.  Given the nearest populated area is located approximately 6 kilometers to the Southeast; fugitive dust is not expected.

(8)  Pivot table on data from Estaciones Climatologicas meteorological station 8057

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24.3.1.3  Design Storm Runoff

The SCS curve number method was used to determine the runoff that would occur from the 1,000-year, 24-hour design storm of 88 mm and from the PMP storm of 216 mm.  A curve number of 86 was selected for the TSF uplands, assuming fair coverage of desert scrub overlaying soil hydrologic groups C and D and for consistency with the Hidrológico Botadero report.

A curve number of 86 was selected to model the natural upland areas.

The SCS method uses the curve number to compute the initial soil retention capability when the storm begins, and then calculates direct runoff (Q) as follows:

S = 1000/CN – 10 Equation 3

Where

S = maximum soil retention after runoff begins (in)

CN = curve number (unitless)

Equation 4

Where

Q = direct runoff (in)

P = precipitation (in)

0.2S = the initial abstraction, or amount of initial storage in the soil prior to runoff being initiated.

Temporal Distribution

The 1,000-year and PMP storms were modeled using an SCS Type II temporal distribution, wherein the greatest rainfall intensity occurs during the middle of the storm, as shown in Figure 24-14.

Figure 24-14:  Type II Temporal Distribution
(excerpt from Urban Hydrology of Small Watersheds)

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HEC-HMS software was used to account for losses to soil and transform the design storms by applying the appropriate unit hydrographs and temporal distributions described herein.  Excess runoff was then applied to basin areas to determine total storm volume and flow rate.

Average Annual Runoff Volume

In addition to 24-hour design storm runoff rates and volumes, which were calculated using the SCS curve number method, the average annual runoff volume was calculated using the equation from NOM-011-CNA-2000:

Ve = Ce*Vp Equation 5

Where

Ve = average annual runoff volume

Ce = runoff coefficient (defined in section 0)

Vp = average annual rainfall volume

An annual rainfall depth of 454 mm would result in a runoff coefficient of 0.14, using Equation 1.  The rainfall and coefficient were applied to the basin areas summarized in Table 24-12 resulting in the following annual runoff volumes:

Table 24-12:  Average Annual Runoff Volume

Basin	Average Annual Runoff Volume (1,000 m3)
TSF Diverted Uplands	73
TSF Un-diverted Uplands	23
TSF	41
Mill Diverted Uplands	13

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24.3.1.4  TSF Stage-Storage-Area

Stage-storage relationships for the TSF is presented in Figure 24-15 graphically; all surface area within each dam is assumed to be water.  The PMP was modeled as a storm event occurring onto diverted and un-diverted uplands, and onto the TSF pond surface(9).  At the time of the storm, a freeboard of 2-meters was assumed between the TSF embankment crest and the pool water surface elevation.  An emergency spillway for the TSF was modeled with a sill elevation equal to the pool water surface.  The majority of the PMP was accommodated by the 2-meter freeboard, prior to activation of the emergency spillway.  Given the large pond surface areas, depth of flow within the emergency spillway was noted to be minor.  Results of the hydrologic analysis are presented in greater detail within the following section.

Figure 24-15:  TSF Stage Storage

24.3.1.5  Stormwater Conveyance Structures Basis of Design

HEC-HMS results are summarized in Table 24-13.

Table 24-13:  Source of Basis of Design

Water Management  Structure	Design Storm	Storm Volume (1,000 m3)	Storm Discharge (m3/s)	Guidance for Design Storm Selection
TSF South Diversion	PMP	199.2	76	Personal communication with Asesores en Impacto Ambiental y Seguridad (ASI); NOM-141-SEMARNAT-2003
Mill Diversion	1000-year	11.1	4.9	Personal communication with ASI
TSF Emergency Spillway	PMP	28.6	0.5	NOM-141-SEMARNAT-2003, (Comisión Nacional del Agua (CONAGUA)
TSF East Diversion	PMP	210.3	80.9	Personal communication with ASI; NOM-141-SEMARNAT-2003

(9)  Conservatively, the ultimate condition was modeled

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Additionally, 2 meters of freeboard must be maintained from the TSF embankment crest over water(10).

24.3.1.6  Results

The peak flow rates were input into FlowMaster, a hydraulic calculation package, to estimate channel dimensions (refer to Table 24-14) and evaluate channel stability (refer to Table 24-15).  Diversion channels and spillways are assumed to be earthen lined and armored as needed using riprap or similar lining, with the addition of energy dissipaters or other erosion controls in steeper segments exhibiting velocities greater than 1 m/s.  For the capacity and stability calculations, a robust 12-inch D50 riprap lining (roughness equal to 0.078) was assumed throughout.

Table 24-14:  Estimated Stormwater Conveyance Structure Dimensions, Capacity Analysis

Water Management Structure	Description	Bottom Width (m)	Depth(11) (m)	Length (m)	Excavation Volume (1,000 m3)
TSF South Diversion	trapezoidal channel	4	3.5	2,206	135.4
Mill	trapezoidal channel	2	1.4	678	9.8
TSF Emergency Spillway	trapezoidal channel	2	0.4	176	0.8
TSF East Diversion	trapezoidal channel	4	2.6	646	28.2

Table 24-15:  Channel Slopes and Velocities, Stability Analysis

Water Management Structure	Minimum Slope (%)	Minimum Velocity (m/s)	Maximum Slope (%)	Maximum Velocity (m/s)
TSF South Diversion	1	2.0	1	2.0
Mill Diversion	2	1.68	17	2.9
TSF Emergency Spillway	2	0.83	18.5	1.8
TSF East Canal de Desvío	4	3.42	22	6.4

(10)  Per table 5.6.13 of NOM-141-SEMARNAT-2003

(11)  Does not include 30-centimeters of freeboard

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The freeboard assigned to each channel is a function of the discharge it conveys; freeboard criteria are shown below.

Table 24-16:  Freeboard Criteria

Discharge (m3/s)	Freeboard (cm)
0 - 0.5	15
0.5 - 1	20
1 - 3	25
3 - 10	30
10 - 20	35
20 - 40	40
40 - 60	50
60 - 100	60

The diversion channels were constructed for the ultimate TSF footprint.  Preliminary modeling shows the TSF emergency spillway conveys minimal flows during the PMP event for a starting water surface elevation of 1638, or 2-meters below the crest of the dam.  This elevation was also assigned to the spillway sill. However, a 2-meter wide emergency spillway is assumed for conservatism.  Channels have been constructed by excavation and windrowing and include energy dissipaters as needed to mitigate erosion and discourage high velocities.

The longitudinal profiles for each channel were evaluated for stability.  For channels constructed in sandy regions, segments exhibiting a maximum velocity greater than 1 m/s have been designed to include drop structures, riprap lining or other energy dissipation to reduce erosion potential.  Channels constructed in weathered bedrock dominated zones have been evaluated on a case-by-case basis.

Refer to Figure 24-16 for typical channel section views.  The freeboard shown for each channel is consistent with freeboard criteria presented in Table 24-16; dimensions are based on the capacity and stability evaluation.

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Figure 24-16:  Channel Section Views

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24.4  Site-Wide Water Balance

24.4.1  Introduction and Discussion

Tetra Tech prepared a site wide water balance model for the Minera Plata Real (MPR) Los Gatos project for a life of mine (LOM) of approximately 11 years.

Model parameters were developed from information and data obtained from project mine planners, process engineers, geotechnical engineers, hydrologists and hydrogeologists.  Source values used for model parameters and their sources are summarized below in Table 24-17.

Table 24-17:  Model Parameters and Source

Parameter	Value	Source
Production (tonne/day)	2,500	Stantec
Tailings to TSF/paste	60/40	Minera Plata Real
Specific gravity of tailings solids	2.69	SGS: process mass balance dated 19Sept2016
Percent slurry solids by weight	55%	TGI: Design Criteria
Deposited tailings specific weight (kN/m(3))	15.4	rheology test results
Deposited tailings dry density (tonne/m(3))	1.5	rheology test results
Pan evaporation coefficient	0.7	typical value for region
Ultimate Embankment crest elevation (m, MSL)	1639	Tetra Tech
Embankment Freeboard Over Water (m)	2	NOM-141-SEMARNAT-2003 (humid hydrologic zone)
TSF Ultimate Footprint (m(2))	651,360	Tetra Tech
Plant Availability	92%	SGS: Design Criteria
Target Mill Feed (tonne/hr)	113.2	SGS: process mass balance dated 19Sept2016
Target Reclaim from TSF (m3/hr)	27.47	SGS: process mass balance dated 19Sept2016
Target Raw Water Demand (m3/hr)	50.32	SGS: process mass balance dated 19Sept2016
Mine Water and Well Water (L/s)	Time series	Tetra Tech groundwater model with amplified stress periods
Potable/domestic demand (L/person/day)	80	International Finance Corporation paper on Mine Worker Accommodation
Personnel Construction Phase; Personnel Mining Operations Phase	600; 400	Estimate provided by SGS
Precipitation and Evaporation Data	Time series	CONAGUA Gauge 8057
Runoff Coefficient	0.138	Calculated per NOM-011-CNA-2000

The updated water balance model used the production start date of July 1, 2019 with respect to mining and processing operations.  The assumed production end date is August 15, 2029 for a duration of 10.2 years.  After August 15, 2029, the water balance assumes an additional 1.3 years to account for mine dewatering required during the mine closure period, allowing for equipment and infrastructure associated with the underground workings to be dismantled and removed.  Including this closure requirement, the

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total model simulation period is 11.5 years.  The model uses stochastic processes to simulate multiple variations of project variables on a daily time step for 300 realizations, or equally likely scenarios.  This process produces statistically valid results of model predictions.

24.4.2  Model Components

The water balance tracks inputs and outputs from reservoirs, to calculate change in storage.  The reservoir elements within the Los Gatos model include the TSF pond, the process facility, and the mine workings dewatering settling pond.  The interceptor well field is not modeled as a reservoir; however, inflows and outflows are tracked over time.

Water and solids are tracked separately within the TSF.  Solids and pore water associated with the slurry accumulated over time and are assigned no pathway for removal during operations.  Water is allowed to enter and exit the TSF, such that the following simple water balance equation would be satisfied:

Equation 1.

Inflows, outflows and storage are presented in greater detail below.

24.4.2.1  Meteorology

CONAGUA gauge 8057 was used as a basis for model rainfall and evaporation.  Daily rainfall was determined by a random, year-based lookup from the 8057 gauge time series.  Given that the 8057 gauge only collected evaporation data for one-year, daily evaporation rates were identical for every year modeled.  Pan evaporation data were converted for use by applying a factor of 0.7, which is an accepted correction factor.  Net positive rainfall is calculated prior to runoff calculations as follows:

Equation 2.

Net rainfall (and resulting runoff) is set to zero for days where evaporation exceeded rainfall.

24.4.2.2  Tailings Storage Facility

For the 2016 Feasibility Study, the TSF was designed as a water dam with the intention to hold large amounts of water along with tailings.  As a result, the 2016 water balance model treated the TSF as a water dam with solids and liquids being accounted for together.  The design and construction have since changed to resemble a conventional TSF with plans to directly discharge water offsite which originally was intended to be stored in the TSF.  The 2019 water balance model was updated to reflect this change and the TSF supernatant pond is now modeled separately from the deposited solids and pore water.

24.4.2.2.1  TSF Supernatant Pond

The TSF supernatant pond is modeled so that its geometry, stage and capacity were constantly evolving as more tailings are deposited in the TSF and as the embankment lifts are constructed.  Seventy-five percent of the slurry water was assumed to report to the supernatant pond upon tailings deposition.  The remaining 25% of slurry water is assumed to be locked in the tailings for the entirety of the model period.

24.4.2.2.2  TSF Supernatant Pond Inflows

Water inflows to the TSF include precipitation directly onto pond surfaces, minor un-diverted runoff from upland basins, and 75% of the water associated with the slurry.

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The percentage of rainfall that becomes runoff was calculated using NOM-011-CNA-2000 by applying a runoff coefficient of 0.138.  Development of the runoff coefficient for the Los Gatos site is discussed in greater detail within the Hydrology Report.  Runoff from un-diverted upland basins and precipitation occurring directly onto the TSF pond surface contribute to inflows.

60 percent of the total slurry is delivered to the TSF while the remaining 40 percent is assumed in the model to be placed underground as paste backfill.  Slurry water enters the TSF at a rate of 13.5 l/s, and slurry solids enter at a volumetric rate of 11 l/s.

24.4.2.2.3  TSF Supernatant Pond Outflows

Water exits the TSF as evaporation and reclaim.  Water is reclaimed to the mill at an approximate rate of 7.6 l/s and is delivered to the zinc circuit only.

The TSF is modeled as a lined facility.  Seepage loss from the TSF into the overdrains is not modeled as part of this study.

24.4.2.3  Well and Mine Dewatering

The well and mine workings dewatering flowrates are shown in Figure 24-17.  The mine working dewatering daily outputs were averaged over three months to smooth large fluctuations between steps of the 2019 Tetra Tech Groundwater Model discussed in Section 24.1.  The extracted water typically exhibits a temperature between 50 and 65 degrees Celsius and must be cooled to 40 degrees Celsius prior to use or discharging to the Santo Toribio River.

Figure 24-17:  Well and Mine Working Dewatering

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24.4.2.4  Well and Domestic Water

Well water has exhibited acceptable water quality(12) and would only require cooling prior to use.  It would therefore serve as a good source for process makeup water (14.6 l/s, typical), underground usage (15 l/s, typical) and domestic water demand (0.4 l/s, typical).  Any water in excess of these demands would be released once it has cooled to within discharge limits.

Domestic wastewater is assumed to be treated by a package plant prior to release.  Ninety percent of the domestic water demand is assumed to be converted to wastewater that must be treated prior to discharge to the environment.

(12)  Compiled lab reports provided by Tetra Tech Groundwater Team on September 27, 2016.

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24.4.3  Results

24.4.3.1  TSF Results

The embankment raise schedule is presented in Figure 24-18, assuming a starter phase 1 dam crest of 1,618.5 masl.  The schedule is also shown below in Table 24-18.  The TSF supernatant pond reaches an elevation of 1632 masl at the end of the LOM.

Table 24-18:  TSF Embankment Raise Schedule

Date	Height (m, MASL)
Starter Phase 1	1618.6
8/1/2020	1625.6
12/31/2021	1629.0
06/21/2024	1632.5
08/06/2026	1639.0

Figure 24-18:  TSF Embankment Raise Schedule

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24.4.3.2  Dewatering and Discharge Results

Over the life of the mine 9.9 Mm(3) of cooled well and workings dewatering water would be used on site and 145 Mm(3) would be discharged.  Refer to Figure 24-19 for well extraction, use (includes process freshwater makeup, underground use and domestic) and discharge rates over the life of the mine.  No freshwater deficiency is expected for the site.

Figure 24-19:  Well Water, Use and Discharge

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24.5  Tailings Management

This report utilizes the conventional slurry tailings storage facility (TSF) method, which involves the deposition of slurry tailings from the process plant.  The slurry is deposited using a pump and tailings distribution pipeline along the crest of the TSF.  The pipelines are pressure rated high-density polyethylene (HDPE).  The TSF facility has been designed considering the following:

·The TSF facility site provides the best location to hold the required storage capacity.

·The use of rockfill during the construction of the facility.

·The storage of additional water from the underground mine operations.

The design of the TSF allows for a life of mine (LOM) of 11 years, and a storage capacity of approximately 9.3 Mm(3), while maintaining a 2-meter freeboard on the facility.

The ultimate TSF would be constructed in four stages using downstream construction methods as shown in Figure 24-20 and Figure 24-21.  These stages will be constructed with upstream slopes of 2H:1V and downstream of 2.5H:1V (horizontal: vertical).  A maximum crest width of 15-m with a maximum crest elevation of 1,639 masl.

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Figure 24-20:  Tailing Storage Facility Plan View

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Figure 24-21: Tailing Storage Facility Section View

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Tailings containment has been achieved using a combination of factors and engineering controls such as the incorporation of a 1.5 mm (60mil) high-density polyethylene (HDPE) geomembrane liner over the impoundment area.  This liner has been combined with a series of underdrains to help manage water under the liner system.  The water collected from these systems is collected in a series of collection ponds located downstream of the TSF.  Additional to the drain systems, water is managed with the incorporation of surface water diversion channels and a spillway, which are discussed in Sections 24.3 and 24.4 of this report.

In general, the liner shall extend along the base of the impoundment as well as the upstream slope of the embankment and shall be anchored along the edges of the current construction stage.  The impoundment configuration of the TSF consists of (from top to bottom):

·Tailings and water;

·1.5 mm HDPE geomembrane liner;

·Geosynthetic clay line (GCL);

·On the embankments, 3-m thick filter zone (zone A);

·1.5-m thick transition zone (Zone B),

·Rock fill (Zone C);

·Underdrain system and blanket drain.

24.5.1  Topography

Per NOM-141-SERMANAT-2003, “Table 2” any slope grade steeper than approximately 18% is considered Mountainous Land.  The topography of the site can be classified as “Mountainous Land” as some of the steepest slopes for the TSF were 18 % and 23%.

24.5.2  Site Seismicity

The Mexican Servicio Sismológico Nacional has divided the republic into four seismic zones (http://www.ssn.unam.mx/website/jsp/region_sismica_mx.jsp) based on the catalog of earthquakes that occurred during the last century, great earthquakes mentioned in historical records, and ground motion records of some of the larger events of this century.  The resulting seismic hazard map for Mexico places the Project site within Zone B, an intermediate zone where infrequent earthquakes have been recorded but peak ground accelerations do not exceed 70% of the acceleration of the soil.  Zone B is called the “Penesísmica” region, with a peak ground acceleration (PGA) range of 0.8 to 1.6 m/s2 (approximately 0.08g to 0.16g) for 10 percent probability of exceedance in 50 years.  The site is located on the border of Seismic Zones A and B; in order to be conservative for the purposes of this design, it is assumed that the site is located in Seismic Zone B (Figure 24-22).

For structures, such as the TSF, which present a significant hazard for damage to the environment, the structure should be capable of tolerating displacements from a maximum credible earthquake (MCE) without catastrophic loss of tailings or supernatant, although limited damage to the structure may take place.  This approach is consistent with current International Commission of Large Dams (ICOLD) (Wieland, 2005) and Federal Emergency Management Agency (FEMA) (2005) guidelines for seismic stability, which indicates that “significant structural damage is accepted” for maximum earthquake ground motions although no uncontrolled release from the reservoir shall occur.  The deterministic seismic hazard evaluation for the project indicates a maximum site PGA of 0.18 acceleration due to the earth’s gravity (g) for stiff soil/soft rock conditions at the site for the assumed background event MCE of moment magnitude

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(Mw) of 6.5 at a source-to-site distance of 12 km.  Relative to published results of probabilistic ground motion estimates, this represents a conservative level of ground motion with a recurrence interval much greater than 10,000 years.

Figure 24-22:  Seismic Regions of Mexico

24.5.3  Surface Water Hydrology

Based on Per NOM-141-SERMANAT-2003, the Project site is situated in the Humid Hydrologic Zone (Figure 24-23) and exhibits mountainous topography.  For the design, the hydrology of the TSF area was evaluated using the (Soil Conservation Service) SCS curve number method to model losses to soils and specify unit hydrograph transformation.  The SCS method relies on basin characteristics, design storm rainfall depths and temporal distribution to calculate volumetric flow rates.  Additional information on surface water hydrology calculations can be found in Sections 24.3 and 24.4 .

Figure 24-23:  Hydrologic Zones of Mexico

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24.5.4  Site Investigation & Site Conditions

Two geotechnical investigation programs took place for the project.  The first geotechnical investigation performed by Tetra Tech for the TSF location was based on a siting study performed between June 24 and 26, 2016.  Upon completion of the siting study, the investigation was geared towards two main sites and the identification of potential borrow areas.  The second investigation was performed by Tierra Group International (TGI) between August 13 to August 18, 2017 and October 30 to December 7, 2017.

24.5.4.1  Surface and Subsurface Conditions

In general, the TSF soil profile can be described as shallow.  In areas where soil is present, it typically consisted of 0.5 to 2.0 meters of silty sand (SM) and clayey sand with gravel (SC).  Upstream of the TSF, silty gravel with sand (GM) and sand with clayey sand (SP-SC & SW-SP) was encountered.  At the North end of the TSF, approximately 100 meters from the embankment toe, silty sand (SM) with gravel was encountered up to 19 meters in depth.  This deeper soil deposit may be attributed to the proximity of the Los Gatos fault line.  In areas along the foundation of the TSF, areas of exposed slightly weathered bedrock were visible with little or no topsoil.  Below the soil horizon, slightly weathered and highly fractured rock was encountered.  Typically, this layer is approximately one meter to 10 meters thick, depending on the location area.  Below this layer, fresh bedrock was encountered.  This rock is generally described as Andesite and Rhyolite.  Per TGI’s investigation, the permeability of the bedrock ranges from 1.24x10-6 to 1.53x10-8.  In addition, some boreholes Northwest and Southeast of the TSF encountered a potential shear zone consisting of moderately weathered rock with clay infilling.

24.5.5  Borrow Material

The borrow areas for investigation were identified by MPR.  They are located North of the proposed TSF embankment across the Santo Toribio River in areas of epiclastic sedimentary deposits.  Test pits in the potential borrow areas encountered silty gravel to clayey gravel to clayey sand with gravel (GC-GM & SC-GM).  The typical depth of soils in the test pits were approximately two meters.  Weathered bedrock was encountered below the soils.  The material is suitable for the purposes of construction, but additional investigation to confirm is required.  The location of the investigated areas can be found in Los Gatos Project Tailings Storage Facility & Waste Rock Facility Feasibility Design Report.

24.5.6  Tailings Dam Design

The TSF is designed to accommodate tailings, mine water, and tailings slurry water.  The capacity of the TSF is presented in Table 24-19.  The average dry density of the tailings is 1.55 tonnes/cubic meter (t/m3).  Based on this design, the TSF is estimated to hold approximately 7.8 Mt of dry tailings.

Table 24-19:  TSF Capacity

Description	Crest Elevation (masl)	Total Capacity (Mm3)
TSF	1,639	9.3

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Note: Volumes in the figure represent storage capacity to the indicated elevations (Tailings + Water + IDF + Freeboard).

These values should be updated during each stage of operation using a water balance model.

Figure 24-24:  TSF capacity curve

24.5.7  Staged Construction

The footprint of the TSF was stripped, grubbed and graded to the to the design grades and lines as shown in Figure 24-25, Figure 24-26, and Figure 24-27.  The ultimate TSF will be built in four stages using downstream construction methods.  These stages will be constructed with upstream slopes of 2H:1V and downstream of 2.5H:1V (horizontal: vertical).  Stage 1 Phase 1 has been completed.  A 13.8-m wide bench was constructed on the crest of Stage 1 and a final crest width of 15-m and a maximum crest elevation of 1,639 m, and a maximum capacity of 9.3 Mm3, considering a 2-meter freeboard.  Stage 1 (starter) was constructed to an elevation of 1618.6-m primarily from rock fill (Zone C), 1.5-m thick transition zone (Zone B), and 3-m thick filter zone (zone A).

24.5.8  Liner Design

The TSF impoundment has been designed with a 1.5 mm (60mil) high-density polyethylene (HDPE) geomembrane liner.  The liner shall extend along the base of the impoundment as well as the upstream slope of the embankment and shall be anchored along the edges of the current construction stage.  The liner is underlined by Geosynthetic Clay Line (GCL).  From top to bottom, the impoundment of the TSF consists of:

·HDPE geomembrane liner; and

·GCL

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24.5.9  Tailings Delivery System

Tailings from the process plant is pumped to a tailings distribution pipeline along the crest of the TSF through pressure rated high-density polyethylene (HDPE) pipelines ranging from 15 to 20 cm, at a nominal solids content of 54.7% by weight.  The tailings distribution system consists of a header and manifold system with controlled discharge of tailings through multiple spigots connected to a peripheral tailings distribution header pipeline.  The extent and location of the supernatant pond within the impoundment shall be controlled by selective operation of the spigots such that the pond location is constrained to the South-central area of the impoundment away from the embankment faces at all times during operation.

24.5.10  TSF Water Collection System

The collection system for the TSF impoundment consists of a network of underdrains for collecting subsurface water within the TSF footprint.  The various drainage features comprising the collection system are discussed further in the following sections.

24.5.11  Underdrain System

A network of drains was installed underneath the geomembrane liner to collect and convey subsurface water emanating from seeps and springs within the TSF footprint.  The underdrains were installed along predetermined channels generated during the subgrade grading of the TSF footprint.  The drainage network consists of 8-inch [200 mm] nominal diameter solid and or perforated pipe with drain gravel and geotextile wrap.  Flows are collected in the underdrain collection pond located on the East side of TSF.  The water quality of the flow collected in the underdrain collection pond is monitored regularly and the water is discharged directly to natural drainages.

24.5.12  Blanket Drain System

The incorporation of the blanket drain helped improve the stability of the embankment in the event of liner failure.  The blanket drain consists of a 1.0 m thick layer of drain material.

24.6  Surface Water Management

Based on the hydrology data and analysis described in the NI 43-101 report sections 24.3 and 24.4, HEC-HMS results are summarized below.  The peak flow rates were used to estimate channel dimensions, which are also presented below.  The diversion channels were designed as earthen lined for the TSF, with localized armoring of steep segments exhibiting high velocities.  The spillway structure is armored with rip rap.  Dimensions are provided in Table 24-20.

Table 24-20:  TSF Spillway & Channel Dimensions

Water Management Structure	Description	Bottom Width (m)	Depth (m)	Length (m)
TSF South Diversion	trapezoidal channel	4	3.5	2206
Mill Diversion	trapezoidal channel	2	1.4	678
TSF Emergency Spillway	trapezoidal channel	2	4	176
TSF East Diversion	trapezoidal channel	4	2.6	646

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24.6.1  Monitoring

A tailings facility operating manual and a monitoring and surveillance plan should be developed.  The monitoring plan should include measurements to confirm the condition of the embankment and foundation and the performance of the containment system.  Standpipe piezometers and survey monuments will be installed at each stage for ongoing monitoring of the stability and hydraulic conditions of the TSF.  Inclinometers and/or other monitoring instrumentation can be installed if severe movement occurs, as visually observed or by survey monument detection.

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Figure 24-25:  Underdrain for Stage 1, Phase 1

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Figure 24-26:  Tailing Deposition Plan — Stage 1, Phase 2 (Part 1)

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Figure 24-27:  Tailing Deposition Plan — Stage 1, Phase 2 (Part 2)

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25.0  INTERPRETATION AND CONCLUSIONS

25.1  Geology and Resources

Project geologic and drill hole data has been collected and analyzed by MPR using industry standard methods and practices and is sufficient to characterize grade and thicknesses of the deposit and to support the estimation of Measured, Indicated and Inferred Mineral Resources.  Although the deposit has been densely drilled, Resource expansion potential and project upside exist in the immediate deposit area as well as at other identified prospects such as the Amapola and Esther, which have been preliminarily investigated with drilling showing Indicated and Inferred Mineral Resources, and other prospects throughout the land package.

25.1.1  Data Verification

The current QA/QC program is adequate and supports the conclusion that data collected, and the monitoring of QC data is reliable for the purposes of estimating Resources; however, additional improvements are required for the QA/QC program to align with industry best practice and facilitate more meaningful QC.

Clerical corrections and optimization of standard reference material is necessary to assess laboratory analytical performance.  Standard performance for Ag, Pb, Zn, Au, and Cu are good, with few results outside of +/-2 standard deviations of the certified value.  To leverage the use of standards, material should be sourced closer to the range of the deposits average grade for Ag, Pb and Zn.  Most of the standards used are too low-grade Ag, Pb, and Zn.

Field duplicate testing has shown good reproducibility; however, current protocols do not adequately test the variability of the deposit within the likely mining areas.  Field duplicates contain too few ore-grade samples chosen from within the vein.  The field duplicates that have been analyzed and are above 100 g/t Ag show a similar range of variability as the sample pairs below 100 g/t Ag.  Collecting more field duplicates from within the expected mining area will help to evaluate the variability that could be encountered.

In-stream blank material analysis for Ag has demonstrated acceptable sample preparation and laboratory performance for Ag; the performance for Pb, Zn, and Cu show many samples with values several times the detection limit, and exceedances are not significant in relation to the average deposit grade.

Exceedances could be a result of background levels of Pb, Zn, and Cu in the blank material or a result of contamination from sample preparation or analysis.  Because the Ag blank testing has shown few failures, it is possible that the blank material contains base amounts of Pb, Zn, and Cu; however, the blank failures often visually correlate with preceding samples of higher-grade.

Umpire (third party) sampling should be conducted to meet industry standard practices to confirm the analyses performed at ALS Chemex.

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25.2  Mineral Reserve and Mine Plan

25.2.1  Mineral Reserve

The Mineral Reserve for Los Gatos is the economically mineable portion of the Measured and Indicated Mineral Resource that can justify economic extraction.  The Mineral Reserve defined herein includes the application of mining factors defined in this report for stope design criteria and dilution and recovery factors.  The Mineral Reserve is then supported by a mine plan that is based on detailed stope layouts.

25.2.2  Geotechnical Conclusion

The footwall rock and the ore being of fair to good qualities indicate little issue from a geomechanical point of view.  Proper planning and tactical measure such as perimeter blasting, respecting recommended stope size, minimizing capital development excavation size, and installing proposed ground support mitigates any issues encountered during the development and extraction of the Mineral Reserves.  The higher geomechanical risk comes from the presence of the Los Gatos fault in the hanging wall, creating a weak rock mass.  The weak hanging wall implies potential for dilution or uncontrolled failure of the stopes.  This can be mitigated with proper planning, control of the opening size, timely backfilling, and leaving protective pillars between the fault zone and the open stope (as required).

Operational data has indicated that ground stability is reached with ore pillars of approximately 2 meters.  In some places the geomechanical conditions are favorable enough to mine all the ore of the vein until the contact with the fault.  Some areas where the ground is less stable, a pillar of 1.0 m is left to avoid unstable conditions during operations.

25.2.3  Mine Plan

Based on the deposit geometry and anticipated geomechanical conditions, economic extraction of the Los Gatos Resource incorporates both longhole mining and drift-and-fill mining methods.  Modern trackless mobile equipment is being used for all development and mining activities.  The exploration decline from surface was extended to provide primary access and delivery of services.  The ramp is also used for haulage of the Mineral Reserves and waste from the underground operations.

Preproduction development has been completed and production has started underground.  Ramp up of mining continues to support the 2,500 tpd production rate.  Ongoing waste development to sustain the 2,500 tpd production rate averages approximately 211 m/month during the production period.

The life of mine has been scheduled at approximately 2,500 tpd for a total of 11 years.  Along with the Inferred Resources, there are indications of additional Resources along strike that, with additional drilling, may increase the Mineral Resources.

25.3  Mineral Processing and Metallurgy

The Cerro Los Gatos deposit is a silver, lead, and zinc resource concentration.  Lead and zinc occur primarily as galena and sphalerite, respectively.  Significant amount of willemite is identified in all tested samples.  Lead oxide minerals are also identified in some of the samples, especially from South East zone samples.  The existence of lead and zinc oxide minerals impacted their flotation performance.

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JK-drop weight and SMC test results show the samples are softer when compared to JKTech database while the SPI test results categorize the samples from moderately soft to moderately hard per SGS database.  The Ai and BWI tests results describe the samples as from abrasive to very abrasive and from moderately hard to hard.

Very good lead and silver flotation results have been achieved.  The final lead cleaner concentrates of the LCTs averaged 60.9% Pb at 5,404 g/t Ag at average recoveries 89% lead and 68.7% silver.  The zinc cleaner concentrates averaged 54.2% Zn at an average recovery of 66% due to the high willemite content.

The production plant has been constructed and adjustments will continue to optimize performance.  Additional floatation cells have been installed to remove fluorine from the concentrates.

25.4  Infrastructure

The power line installation to the Cerro Los Gatos Mining project site has been completed.  Power is supplied via a 115-kV utility transmission line.  This originates from the ‘San Francisco de Borja’ substation in Satevó (Chihuahua), where a 115-kV connection has recently been installed.  The generators used for power before the completion of the line remain onsite to provide backup power.

Site access roads were upgraded, and the river crossing has also been completed.  Buildings and facilities to support the mine operations have been completed, including offices, change areas, maintenance shops, and camp facilities to feed and house the staff.  The processing facility and its associated buildings are constructed and being utilized to produce concentrate.

The water supply is being sourced from the groundwater being pumped from the dewatering wells, which is then cooled and used on site.  Additional water is available from wells onsite.

25.5  Environmental and Social Impacts

The impact assessment conducted for the Project is compliant with the approach requested by the LGEEPA and the REIA as detailed below:

·Qualify the effect of impacts on the ecosystems, with regards to the relevance of possible effects on their functionality (Article 44, section II of the REIA).

·Develop this qualification in context of an ES and an area of influence of the project (Article 12, section IV of the REIA), so that the evaluation refers to both the ES and the PA where the project is intended to be located.

It was found, by the regulations established by the REIA, the ES integrated by the micro basin of the San José River will generate a non-relevant impact for the removal of 390.37 ha of vegetation.  In comparison to the surface area of the ES, these areas represent only 1.93% of the total area, showing the impact is not significant.  This ensures the function or continuity of ecosystem processes in the environmental system is not affected.

The conclusions of the environmental impact assessment indicate the functional integrity of the ecosystems is respected, since the relevant environmental components will not be significantly affected.  In the case of species under some category of risk, their areas of distribution are greater than the ES.  For water pollution, considered as a relevant impact, it is not planned to discharge process or mining water

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to natural effluents, even though it is considered to implement water treatment practices to be discharged to the tailings dam, which was built with liner and geo membranes; plus, recirculation of process water.

The level of conservation of regional biodiversity demonstrates the project will not cause any species to be declared as threatened or endangered, and the habitat of individuals of flora and fauna will not affect the species, according to Article 35-III, subsection b) of the LGEEPA.

Finally, as a result of the above conclusions the project will not generate significant and/or relevant effects to the ES, such as:

·Ecological imbalances;

·Damage to public health; and

·Irreversible effects to the ecosystems of the ES.

In addition, a set of measures designed for the prevention and mitigation of environmental impacts is included within the Environmental Management System (EMS) as part of the company’s commitments to prevent and mitigate the environmental impacts of the Project.

The following Federal, State and Municipal Permits issued for the Los Gatos Mining Operation have been applied for and issued by Federal, State and Municipal authorities as required for exploration, preparation, development and operations during the 2018 and 2019, have been obtained by Minera Plata Real:

·SEMARNAT — Environmental Impact Statement (Manifestación de Impacto Ambiental — Modalidad Regional) (MIA-R) issued in 2017, No. SGPA/DGIRA/DG/05121-2017.

·SEMARNAT 1st.  Modification to increase Impacted area from 211.0841 ha to 268.8450 ha and from 95 to 99 mine workings, No. SGPA/DGIRA/DG/01914, March 15, 2018.

·SEMARNAT 2nd.  Modification to increase Impacted area from 268.8450 ha to 325.0860 ha and from 99 to 133 mine workings, No. SGPA/DGIRA/DG/09272, November 28, 2018.

·SEMARNAT — Exemption to present MIA for Extension of Road from San José to Los Gatos mine.  No. SG.IR.08-2018/097, May 4, 2018.

·SEMARNAT — Modification of trajectory for “Power Line 115 KV Los Gatos”.  No. SG.IR.08-2018/093, May 4, 2018.

·SEMARNAT — Authorization of Preventive Report for Direct Mining Exploration, diamond Drilling in Los Gatos NW-CE-SE, Cascabel Fault and El Valle Vein”.  No. SG.IR.08-2019/070, May 7, 2019.

·CONAGUA — Residual waters discharge from Los Gatos into Santo Toribio Creek, 8.0 l/s. No. 06CHI141265/24FADL16, August 31, 2018.

·CONAGUA — Authorization for residual waters discharge from Los Gatos into Santo Toribio Creek, 8.0 l/s.  No. 06CHI141265/24FADL16, August 31, 2018.

·CONAGUA — Authorization for increment of residual waters discharge and change of point from Cerro Los Gatos into Santo Toribio Creek, 8.0 l/s to 120 l./s.  No. 06CHI141265/ 24FADL16, July 16, 2019.

·CONAGUA — GASIR — Authorization for construction and operation of tailings storage facilities No. 1 with capacity for 7.6 Mm3 to be built in four stages and a period of 9 years for construction.  No. 4494, January 18, 2019.

·SEMARNAT — Approval of Environmental Unique License (Licencia Ambiental Unica, LAU), for production of 2,500 tpd for MPR, No.  LAU-CHIH-001-2019, May 27, 2019.

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·DGGIMAR — SEMARNAT — Approval of Registry for Management of Dangerous Residues for production of 144.642 tonnes/year, No. 08-PMG-I-3405-2019, March 26, 2019.

·Secretaría de Desarrollo Urbano y Ecología (SEDUE) Chihuahua — Approval of Registry and Generating Corporation with Plan of Management for Residues with Special Handling, approval for production of 468.747 tonnes/year, April 9 and 11, 2019.

·Permits and Approvals by the Municipality of Satevó, Chihuahua, during the months of June and July 2018, of the following permits:

·Land use permit;

·Authorization and approval for the initiation of construction of mining workings and infrastructure; and

·Official alignment and number.

25.6  Mine Reclamation

A Closure and Reclamation Plan (CRP) for the Project was developed for mining operations.  The CRP includes approaches and plans to address the closure and reclamation of Project-related disturbance in accordance with regulatory requirements as discussed in Section 20, with sound scientific and engineering practices, and industry-standard practices for mine closure and reclamation.  The CRP also serves as the basis for estimating the cost of closing and reclaiming Project facilities and disturbed areas.

25.7  Economic Analysis

The economic model is presented on an unlevered, post-tax, present value (PV) basis.  Valuation estimates presented in this technical report should be adjusted for existing LGJV current liabilities, receivables and long-term indebtedness.  Economic results are summarized in Table 22-2.  The analysis suggests the following conclusions, assuming no gearing:

·Mine Life: 11 years;

·Pre-tax present value (PV5.0%): $764 million;

·Post-tax present value (PV5.0%): $653 million;

·Taxes Paid: $148 million;

·Sustaining project capital of $267 million; and

·Initial project capital of $316 million (completed 2019)..

25.8  Groundwater Hydrology/Dewatering

The modeling results suggest that adding dewatering wells at the modeled locations and pumping rates will intercept a portion of groundwater inflow to the mine before it reaches the underground workings.

Significant flows into the mine are expected to continue and will require continued in-mine dewatering.  However, adding wells or increasing the pumping rates at existing and already-planned wells will result in decreased flow into the mine.

Water pumped from the dewatering wells is used to meet on-site demand such as consumptive use in the mine, man camp domestic use, and process water makeup.  The excess water from the dewatering wells

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requires only cooling prior to discharge to the surface.  Water pumped directly from the mine requires treatment to reduce the suspended solids and possible hydrocarbons content prior to discharge.  Consequently, limiting flow into the mine reduces treatment requirements.

25.9  Surface Hydrology

Average annual runoff volumes were estimated for the TSF by applying a runoff coefficient of 0.14 to the average annual rainfall for each basin.

25.10  Tailings Management

The TSF design has been operated following the guidelines of the host country Mexico and other guidelines widely accepted by the mining industry such as the Canadian Dam Association and the International Large Dam Committee.

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26.0  RECOMMENDATIONS

26.1  Engineering, Procurement, and Construction Management

Detailed engineering has been completed.  Production has started at the mine and facilities have been completed to support the mine.  The plant is now constructed and in start-up mode.  Ramp up of mining and processing will continue until the target of 2,500 tpd is reached in Q2 2021.

26.2  Geology and Resources

Tetra Tech recommends the following to continue exploration and possible expansion of the Los Gatos Mineral Resource base within the property, as follows:

·Recognizance and in-fill drilling to test the following areas:

·Down-dip and along strike to the Northeast of the NW Block;

·Up-dip of the Central Block extending the high-grade mineralized zone along strike of the bulk sample area;

·At the hanging-wall detached blocks currently classified as Inferred Resources of the NW block;

·At the plunging mineralized concentration of the SE3 Block with additional potential of the Block’s extension; and

·Down-dip of the Central Block along the high-grade zone intercepted by drill holes GA-55, GA-66, and GA-243 to determine possible continuity;

·Additional infill drilling is recommended at the Amapola and Esther zones to delineate the possible extension of the identified Mineral Resources and assess full Resource potential.  If the results are positive, the identified Mineral Resources should be updated with a Scoping Study to determine if they may contribute to the Los Gatos economics;

·Complete detailed surface mapping and sampling in the area to define and prioritize other probable prospects within the project’s area;

·Geophysical surveys should complement the prospects prioritization prior to perform drilling exploration.

26.2.1  Standards

The following recommendations are to improve the current QA/QC protocols:

·Check sample standards relative to Ag, Pb, Zn, Cu, and Au. Correct assay records and database when errors are recognized;

·Clerical errors rather than actual analysis failure are the most frequent issue.  This can be corrected by comparing all five payable elements.  Spikes are visually observed when standard assays issues are encountered; and

·Keep records of sample results in the database for a quick review to confirm possible clerical errors.

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·Submit with more frequency ore-grade standards from the mineralized zone:

·Identify on the sample submittal sheet the ore-grade standards to be tested directly using the assay methods OG62 or GRA21.  This action will avoid falling short of the 30-grams required for re-runs by the ME-ICP61 and 50 grams required to complete the assays; and

·Include additional sulfide standards that are as close as possible to grades of 250 g/t Ag, 2.5% Pb and 6% Zn, while assays for Au and Cu are of secondary importance and should only be evaluated after the economic metals when selecting ideal standards.

·Generate several custom standards from material collected from the area of the bulk sample, 500, 50-gram standards could be made from 25 kilograms of material. Internationally certified laboratories offer custom standard services.

26.2.2  Blanks

Tetra Tech recommends improve blank samples use by:

·Inserting blanks more frequently after assaying high-grade samples to ensure the sample preparation equipment has been cleaned properly;

·Review geologic cross-sections to optimize the insertion of blanks within the vein intersections;

·Currently, the intersected veins show approximately 1,400 2 m intervals; while the insertion of blank samples represents about 20% (280 samples) of the sampling population.

·Investigate the use of a coarser certified blank so that crushing, splitting, and pulverizing equipment at the preparation facility are operating in a similar condition to a normal interval core sample;

·Submit blank samples directly for re-run testing to test OG62 or GRA21 equipment.  Present protocols do not test potential contamination of OG62 or GRA21 equipment because the first test never triggers re-runs;

·Record the sample ID of the sample tested before each of the blanks.  This will enable assessment of blanks in the context of possible contamination from the sample preparation and the sample analyzed before the blanks.  Any poor blank performance following high-grade samples should trigger re-runs of several samples following the high-grade sample;

·Source certified or self-certify blank material;

·Blanks obtained from core are best because the lab is blind to the control sample and both the laboratory preparation and analysis are checked.  Blanks could be sourced from splits of andesite that have been tested and returned detection limit results for Ag, Pb, Zn, Au, and Cu.  If blank core cannot be sourced andesite outcroppings should be considered;

·Untested “barren” full core should not be used as blank material because of the risk that it contains low background levels of Pb, Zn, and Cu as seen in the current blanks; and

·If certifiable blank core is limited, blanks can be submitted as reduced weight (not the equivalent of a 2 m core split), with only enough material to produce a coarse reject and pulp.

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·Ensure the blank material is stored away from the core preparation area and the blank material sample bagging is completed in a clean environment; and

·Request the laboratory’s internal blank control sample to potentially evaluate or rule out contamination.

26.2.3  Duplicates

To improve duplicate use for QA/QC Tetra Tech recommends:

·Insert instream field duplicates in areas that visually appear to be high-grade.  Doing so will test the prep lab’s ability to homogenize and provide data to evaluate the nugget effect; and

·Insert an empty bag with a sample ID tag and instruct the lab to generate a pulp split (pulp duplicate).  Analyzing pulp duplicates will provide data to evaluate the reproducibility of the sample analysis and suggest an error range of analysis.

26.2.4  Umpire Sampling

It is industry best practice to have 5% of sample pulps tested at a third-party lab.  Aside from limited re-sampling completed as part of past NI 43-101 reports, it is not apparent that umpire sampling has been performed.

As discussed, a small percentage of the total drill hole database encounters the area of interest, because of this umpire sampling should be focused on resampling most of the pulps within the expected mining areas.  Re-analyzing half of the pulps from all vein samples would account for approximately 750 samples and provide additional confidence in the database.

26.3  Mineral Reserve and Mine Planning

26.3.1  Mineral Reserve Estimate

The Los Gatos deposit, particularly in the CZ, consists of multiple sub-parallel veins, sometimes quite close to each other, resulting in both mine scheduling and geomechanical complexity.  Definition diamond drilling and close attention to extraction scheduling will help minimize dilution and the loss of Resources.

There is potential to increase mined grades through careful attention to scheduling, blasting, and backfilling practices to reduce dilution.

Increases to the Reserve, with resulting increases to the life of mine, may be achieved by the following.

·The conversion of Inferred Resources into Reserves through definition diamond drilling.

·The addition of new Resources through exploration diamond drilling.

·Mine production from areas not included in Reserves.

The Mineral Reserve estimate is based on assumptions concerning ground conditions, mining methods and recoveries, and economic parameters, (e.g., capital costs, operating costs, and metal prices).  Changes in any of these assumptions will have an impact on the Mineral Reserve.  It is recommended to revise the Mineral Reserves with the recent exploration results and throughout the mine life.

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26.3.2  Mining

The following key mining risks and mining opportunities have been noted.

·NSR values were assigned only to Measured and Indicated Resource blocks.  All other blocks in the model were assigned a zero-dollar value.  Stopes that include mining of Inferred Resources may see an increase in grade.

·Proximity to the Los Gatos fault, particularly in the CZ, may negatively impact ore recoveries or dilution.  A conservative approach has been taken, with no mining occurring within a 5 m offset from the fault zone.  Definition diamond drilling during level development will demonstrate if this approach is valid.  Additional geomechanical studies are recommended to better define ground control requirements.

·When more than two drifts are planned, consideration must be given to installing additional ground support, such as shotcrete posts in the first drift, to support the effective span created by driving the adjacent drifts.

·The recommended stope size is 20 m high (floor to floor) × 12 m wide (along strike) and 21 m long (hanging wall to footwall).  Hanging wall equivalent linear slough dilution is expected to be 2 m.  Additional measures could be used to minimize dilution, such as cable bolting the hanging wall, using pre-splitting blasting techniques along the hanging wall, backfilling stopes within 3 weeks from the first blast, and reducing the stope width (along strike).  If additional information from bulk sampling and exploration drilling proves positive, consideration may be given to increasing stope height to 25 m.

26.3.3  Mine Planning

The following recommendations are for mine planning:

·Complete a detailed mine design and schedule for the first 5 years of the project.  Look for opportunities to improve the average grade by selectively targeting higher-grade areas.  Include the recent exploration results into the mine plan.

·Review the exploration development necessary to increase the mineral inventory and incorporate it into the mine plan.

26.4  Metallurgy and Recovery Methods

The expected grades and recoveries for lead, zinc, and silver to individual flotation concentrates utilized in this report were further investigated by a pilot plant program using a sample composed of a bulk sample accessed by an underground decline into the orebody.  The full process plant is now in operation/startup mode.  Any adjustments to the plant design and operations conditions will be monitored and adjusted as required.  Additional floatation cells have been added to remove fluorine, and this aspect should continue to be carefully monitored and adjusted as needed.

In the current operations, no re-grinding is required (probably due to the lower than design thru put/ ramp-up operations) as the plant ramps up re-grind of rougher concentrates will occur.  The need or percentage of rougher concentrates requiring re-grind will be monitored.

It is recommended that a tradeoff study be completed to evaluate the feasibility of expanding production to 3,000 tpd.

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26.5  Environmental, Permitting, and Reclamation

Tetra Tech recommends updating the CRP and develop concurrent reclamation programs throughout the project life.

26.6  Geochemistry

A surface water monitoring station is recommended to be established below the waste rock storage facility.  The production of leachate should be monitored, and water samples be collected at the beginning and end of the wet season to evaluate leachate generation at the field scale, and to determine whether management is required.  The samples should be analyzed for pH, electrical conductivity, dissolved metals (antimony, arsenic, barium, beryllium, cadmium, chrome, copper, lead, mercury, nickel, selenium, silver).  Results should be compared to Maximum Permissible Limits for Contaminants in the Discharge of Wastewaters into National Waters and Resources, NOM-001-SEMARNAT-1996.

During operations, regular sampling of the tailings is recommended to be at a rate of 1 sample for every 1,000,000 tonnes.  Samples are to be analyzed for total and extractable metals (antimony, arsenic, barium, beryllium, cadmium, chrome, mercury, silver, lead, selenium) and for acid base accounting and results compared to Maximum Permissible Limits for Toxic Constituents as Total Elemental and Extractable Elemental Concentration, §5.4.2.3 and §5.4.2.4, NOM-157-SEMARNAT-2009, and Limits for Determining the Hazard Potential for Generating Acid, §5.4.2.6, NOM-157-SEMARNAT-2009.

Additionally, samples from the underdrains are recommended to be sampled quarterly for pH, electrical conductivity, dissolved metals (antimony, arsenic, barium, beryllium, cadmium, chrome, copper, lead, mercury, nickel, selenium, silver), with results to be compared to Maximum Permissible Limits for Contaminants in the Discharge of Wastewaters into National Waters and Resources, NOM-001-SEMARNAT-1996.

26.7  Tailings Management

Tetra Tech recommends the following for the next stage of the TSF construction:

·A seismic refraction investigation on the footprint of the TSF.

·Ongoing monitoring of wells for groundwater contamination;

·Development of a TSF operating manual and a monitoring and surveillance plan; and

·Consideration for additional monitoring evaluation such as vibrating wire piezometers and inclinometers.

·The performance of the TSF facility should be closely monitored during the initial production years.  The monitoring plan includes measurement of the quantity and quality of seepage emanating from the TSF facility.  If the results of the monitoring program are evaluated and the design requirements are met, no further modifications shall be taken.  However, if the monitoring produces information that may affect the intent of the design, the design shall be evaluated and modified accordingly.

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26.8  Surface Water Hydrology

MPR maintains a meteorological station at the Los Gatos site.  However, precipitation was not a measured parameter.  Precipitation monitoring should occur on site by placement of a tipping bucket or similar rain gauge.  Installation of a totalizer coupled with a temperature probe is recommended at the cooling tower outfall to ensure compliance throughout the through the operational and closure phases of the project.  Placing a staff gauge fitted with a high-water indicator within the Rio Santo Toribio is also recommended.

Minera Plata Real should maintain a database of the meteorological, stream flow and groundwater data collected on site.  Project models should be periodically updated as measured data accrue.

Given the level of uncertainty associated with the runoff coefficients, it is recommended that the runoff volumes presented in Table 24-13 be verified by installation and evaluation of a site streamflow gauge.  A greater emphasis should be placed on the design storm criteria, presented below.

26.9  Groundwater Hydrology/Dewatering

Tetra Tech recommends an active dewatering strategy to reduce groundwater inflows into the underground workings.  This strategy is composed of the following depressurization/dewatering methods:

·Install future dewatering wells as close as possible to the underground workings.  The farther the well is away from the workings, the less effective it will be in reducing inflows.

·Install future dewatering wells to depths approximately 20 meters below the deepest mine depth, to allow pump placement below the mine floor elevations.

·Perform capacity tests on selected wells to better identify potential pumping rates.  A standard protocol for such capacity testing should be developed.

·Install larger capacity pumps in dewatering wells to reduce mine inflows.

·Continue to use dewatering well design similar to the recently installed wells.

·When discrete water-bearing zones are intersected during mining or during drilling inside the mine, install horizontal or inclined coreholes for depressurization.  To limit the volume of water requiring treatment before discharge, water from depressurization coreholes could be handled separately from the general mine inflow.  The cost of separate handling should be reviewed to determine whether it would provide an economic benefit.

Because cooling and discharge would be technologically simpler, more reliable, and potentially less expensive than treating to remove suspended solids and possibly other components, a combination of increasing pumping rates and adding new wells could be used to further reduce mine inflows.  A detailed study of the groundwater should be completed for the life of mine.

26.10  Water Balance

It is recommended that the site-wide water balance be periodically updated as hydrologic data becomes available during mine development and initial production.  Actual mine inflows and pumping rates from the mine should be measured, as well as water consumption components.  Water quality data should be collected from water pumped from the mine for dewatering purposes.

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26.11  Reclamation and Closure

Recommendations to address information gaps and advance closure and reclamation planning, design, budgeting and implementation are as follows:

·Regularly collect mine rock samples (i.e., mine rock gobbed underground and brought to the surface) that are representative of the lithologic unit mined during advanced Project design and the production period and subject the samples to static and kinetic geochemical testing to assess the potential to degrade the quality of water in contact with waste rock (contact water) and potential mitigation measures (if needed).

·Regularly monitor TSF seepage and mine water discharge rates during advanced Project design and the production period.

·Regularly collect samples of TSF seepage and supernatant pond water and mine water during advanced Project design and the production period and analyze the samples for and compare the analytical results to the regulated contaminants in Tables 2 and 3 of NOM-001 to assess compliance the wastewater discharge standards.

·Predict TSF draindown quantity and quality following termination of tailings and mine water deposition.

·Identify, characterize and quantify of PGM borrow areas or substitute PGM sources to address the anticipated PGM deficit of approximately 27,000 BCM.

·Investigate the feasibility, efficacy and cost of installing an enhance evaporation system on or adjacent to the impounded surface of the TSF to hasten supernatant pond water elimination, tailings consolidation, and equipment access to the impounded surface of the TSF at closure.

·Investigate the type and quality of salt accumulation on the impounded surface of the TSF tailings surface following evaporation of the supernatant pond and the cover type and thickness that will be needed to successfully reclaim the impounded surface of the TSF given the potential for the capillary rise of soluble salt into the PGM.

·Revegetation test plots should be installed on cut or fill slopes where practical.  The test plots and concurrently reclaimed areas (if any) of the Project should be monitored to evaluate and confirm the performance of grading, stormwater drainage and erosion controls, and revegetation treatments.

·Conduct stability analyses of the TSF for the purposes of closure.

·The soil unit identified as Unit 22 in the soil survey may also be potential borrow material.  Two areas have already been identified, although more may be present.  A more detailed mapping of the upper portion of the Southern portion of the site may identify more such areas.

Results from the bulleted items immediately above should be used to update and calibrate the Feasibility Study GoldSim water balance model, estimates of waste rock and tailings contact, seepage and mine water quantity and quality, and the closure and reclamation strategies, plans and cost estimated provided in the CRP.

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26.12  Additional Work

It is recommended to continue exploration of the properties for additional Resources through drilling, surface mapping, and geophysical surveys.  Infill drilling should also be completed for the conversion of Resource to higher classification level.  If drilling results are favorable, it is recommended to complete a Resource update on the Amapola and Esther deposits.

It is recommended that an updated FS be completed for the Los Gatos site.  This study would include a tradeoff study of an expansion of production to 3,000 tpd.  The crushing and grinding circuits were designed with the capacity of 3,000 tpd, and additional Resources have been identified.  This new study should evaluate the additional cost for mine and flotation expansion.

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Federal Emergency Management Agency (FEMA), 2005; “Federal Guidelines for Dam Safety — Earthquake Analysis and Design of Dams”, U.S. Department of Homeland Security, dated May 2005.

Ferrari, Luca, Valencia-Moreno, Martin and Bryan, Scott (2005), Magmatismo y tectónica en la Sierra Madre Occidental y su relación con la evolución de la margen occidental de Norteamérica, Boletín de la Sociedad Geológica Mexicana Volumen Conmemorativo del Centenario Temas Selectos de la Geología Mexicana Tomo LVII, Núm. 3, 2005, P. 343-378

Goff, J.A., Bergman, E.A. and Solomon, S.C., 1987; “Earthquake Source Mechanisms and Transform Fault Tectonics in the Gulf of California.”  Journal of Geophysical Research, Vol. 92, No. B10, pp 10,485-10,510.

Hammarstrom, J.M, et al., 2010, Global mineral resource assessment—porphyry copper assessment of Mexico: U.S. Geological Survey Scientific Investigations Report 2010-5090-A, 176 p.

Hernández Bedolla, Joel. 2015. Estudio hidrológico superficial, subterráneo e hidráulico “Los Gatos” Satevó, Chihuahua. September.

Hernández-Bedolla, M.C. Joel. 2015. Surface and Groundwater Hydrology and Hydraulic Study for “Los Gatos” Satevó , Chihuahua. September 2015.

Hershfield, D.M. (1961). “Estimating the Probable Maximum Precipitation.” Journal of the Hydraulics Division, Proceedings of the American Society of Civil Engineers, 87, 99-106.

Hershfield, D.M. (1965). “Method for Estimating Probable Maximum Precipitation.” Journal of the American Waterworks Association, 57, 965-972.

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Islas, Jorge (2007), Proyecto Los Gatos Internal Company Report

Keller, Jason. Milczarek, Michael. Zhan, Guosheng. 2015. Water Balance Modeling of Preferential Flow in Waste Rock Materials. Proceedings from 10th International Conference on Acid Rock Drainage & IMWA Annual Conference.

La Cuesta Contract, “Contrato de Exploración, Explotación y Promesa — La Cuesta International, S.A. de C.V. and Minera Plata Real, S.A. de C.V.,” April 2006, 12 pp.

M3 Engineering & Technology Corporation, “Los Gatos Scoping Study, Chihuahua, Mexico, M3-PN145015 Los Gatos Final Report 2014-08-08,” prepared for Sunshine Silver Mines Corporation, August 8, 2008, 512 pp.

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McDowell, Fred W. (2007), Geologic Transect Across the Northern Sierra Madre Occidental Volcanic Field, Chihuahua and Sonora, Mexico, The Geological Society of America Digital Map and Chart Series 6

Minster, J.B. and Jordan, T.H., 1978; “Present-Day Plate Motions.”  Journal of Geophysical Research, Vol. 83, No. B11, pp 5331-5354.

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28.0  DATE AND SIGNATURE PAGE

CERTIFICATE OF AUTHOR

Guillermo Dante Ramírez-Rodríguez, PhD, MMSAQP

Principal Mining Engineer of Tetra Tech

350 Indiana Street, Suite 500

Golden, Colorado 80401

Telephone: (303) 217-5700

I, Guillermo Dante Ramírez-Rodríguez, PhD, MMSAQP, of Golden, Colorado do hereby certify:

a)I am a Principle Mining Engineer with Tetra Tech, Inc. with a business address of 350 Indiana St., Suite 500, Golden, CO 80401.

b)This certificate applies to the Technical Report titled “Los Gatos Project — Chihuahua, Mexico”, effective July 1, 2020 and issued July 2020.

c)I have a bachelor’s degree in Mining and Metallurgical Engineering from the University of Zacatecas School of Mines in Mexico, and a Master and Doctorate degrees in Mining and Earth Systems Engineering from the Colorado School of Mines, in the United States of America.  I am a QP member for the Mining and Metallurgical Society of America (Member No. 01372QP).  I have over 32 years of professional experience since my graduation in 1987 working for the mining industry in underground and opencast operations, and as a consultant.  During these years I have worked for major and mid-tier mining companies in different positions as supervisor, mine planning chief, and manager in hard rock mining operations.  As a consultant I have also provided consulting services to all varieties of mining operations including hard rock mining, ferrous and non-ferrous operations, precious metals, base metals and industrial minerals.  I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

d)I visited the property September 30-October 1, 2015, January 17, 2017 and August 20-21, 2019.

e)I am responsible for Sections 16, 19, and 22, as well as portions of Sections 1, 2, 15, 21, 25, 26, and 27.

f)I satisfy all the requirements of independence according to NI 43-101.

g)I have read NI 43-101, Form 43-101 F1, and the Companion Policy to NI 43-101 (43-101 CP) and this Technical Report has been prepared in compliance with NI 43-101, Form 43-101 F1, and 43-101 CP.

h)As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

i)I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated July 30, 2020

“Guillermo Dante Ramírez-Rodríguez PhD, MMSAQP” - Signed

Signature of Qualified Person

Guillermo Dante Ramírez-Rodríguez PhD, MMSAQP

Print name of Qualified Person

335

CERTIFICATE OF AUTHOR

Leonel López C.P.G., Associate Principal Geologist of Tetra Tech

Principal Mining Consultant of Tetra Tech

350 Indiana Street, Suite 500

Golden, Colorado 80401

Telephone: (303) 217-5700

I, Leonel López, CPG, SME-RM, of Golden, Colorado do hereby certify:

a)I am currently employed as an Associate of Tetra Tech located at 350 Indiana Street, Suite 500, Golden, Colorado 80401.

b)This certificate applies to the Technical Report titled “Los Gatos Project — Chihuahua, Mexico”, effective July 1, 2020 and issued July 2020.

c)I am a Professional Geologist (PG-2407) in the State of Wyoming, USA, a Certified Professional Geologist (CPG-08359) in the American Institute of Professional Geologists, an SME Founding Registered Member (#1943910), a registered Geological Engineer (Cédula Professional #1191) in the Universidad Nacional Autónoma de México, a member of the Society of Economic Geologists, and a member of the Geological Society of America.  I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

d)I graduated from the Universidad Nacional Autónoma de México with the title of Ingeniero Geólogo in 1966 and have taken numerous short courses in Economic Evaluation and Investment Decision Methods at Colorado School of Mines, and other technical subjects in related professional seminars.  I have practiced my profession continuously for over 50 years. My related experience includes: Georges Ordoñez Consultants, (1965-72)  re-discovery of historical Silver/Gold mining districts, including Hostotipaquillo, Jalisco: Mololoa, Monte del Favor and La Trini) and Meztli, Sonora; explorations for Frisco Mining, Co. in the San Francisco del Oro and Parral mining districts, and Piedras Verdes, Chihuahua; as Division Manager N Zone Exploration for Peñoles (1972-85) including explorations and technical support in operations such as Fresnillo (largest silver mine in the World), La Encantada, La Ciénega, Topia, Naica, La Negra; as Independent, Minera Staleón (1986-1988) Soyopa, Sonora, Tahuehueto, Durango, Guadalupe Los Reyes, Sinaloa and San Pedro Corralitos, Chihuahua; in Pincock, Allen & Holt (PAH), consultant (1988-1993) COMIBOL, evaluated all Bolivia mining properties and projects including the Potosí silver mine for the World Bank; INMINE — Nicaragua evaluated La Libertad, El Limón, Bonanza and other silver/gold properties; Luismin — Tayoltita-San Dimas mining district; Western Silver, El Peñasquito, Zacatecas; for First Majestic Silver, Managed and prepared NI 43-101 Technical Reports for all operations during a period of 5 years including: La Parrilla, La Encantada, Del Toro, Minera El Pilón, Jalisco; and acted as Expert Witness and Project Manager in Vancouver Court for Legal suit regarding the Bolaños mine, Jalisco which was ruled in favor of First Majestic Silver; and I have participated in numerous other TR for most commodities around the World, including Fe, Cu, Mo, Mn, Co, Ni, Li, Mineral Sand Deposit in India and Africa; Geoambiente Mining, co-founder (1993 — 2003) consulting and developing properties, Oro Uno, Venezuela, other properties in Perú, Lucma, Río Chicama; PAH-Runge (2003 — 2014), participated in technical evaluations around the World including major deposits in Perú (Minera Poderosa, Cobriza), Argentina (Bajo de la Alumbrera, Pirquitas and other mines), Brazil (Most Vale’s Fe, Ni, Co, Mn deposits), Canada Arcellor Mittal Fe deposits), USA (Arcellor Mittal Fe deposits), Australia (Novo Resources, etc.; Cardno, consulting (2015- 2016) and Tetra Tech (2016 to date) has participated in TR NI 43-101 preparation including: Bacís, Durango; Lluvia de Oro, Durango; Novo Resources, Australia; Los Reyes, Sinaloa, and others.

e)I visited the property November 29-30, 2018 and August 20-21, 2019.

f)I am responsible for Sections 20 and 23, as well as portions of Sections 1-12, 25, 26, and 27.

g)I satisfy all the requirements of independence according to NI 43-101.

h)I have read NI 43-101, Form 43-101 F1, and the Companion Policy to NI 43-101 (43-101 CP) and this Technical Report has been prepared in compliance with NI 43-101, Form 43-101 F1, and 43-101 CP.

336

i)As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

j)I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated July 30, 2020

“Leonel López, CPG, SME-RM” - Signed

Signature of Qualified Person

Leonel López, CPG, SME-RM

Print name of Qualified Person

337

CERTIFICATE OF AUTHOR

Kira Lyn Johnson, MMSAQP

Senior Geological Engineer of Tetra Tech

350 Indiana Street, Suite 500

Golden, Colorado 80401

Telephone: (303) 217-5700

I, Kira Lyn Johnson, MMSAQP, of Golden, Colorado do hereby certify:

a)I am a Senior Geological Engineer with Tetra Tech, Inc. with a business address of 350 Indiana St., Suite 500, Golden, CO 80401.

b)This certificate applies to the Technical Report titled “Los Gatos Project — Chihuahua, Mexico”, effective July 1, 2020 and issued July 2020.

c)I have a bachelor’s degree in Geological Engineering from South Dakota School of Mines and Technology.  I am a QP member for the Mining and Metallurgical Society of America (Member No.  01539).  I have worked on Resource Estimations since my graduation from the South Dakota School of Mines in 2007.  This includes a variety of commodities, including gold, silver, nickel, taconite, oil sands, coal, potash, phosphates, aggregates, and other industrial minerals.  I have over 12 years of professional experience, including nearly 8 years of consulting in the mining industry for Tetra Tech.  I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

d)I have inspected the property July 17-18, 2012 and August 20-21, 2019.

e)I am responsible for Sections 14, as well as portions of Sections 1-12, 15, 25, 26, and 27.

f)I satisfy all the requirements of independence according to NI 43-101.

g)I have read NI 43-101, Form 43-101 F1, and the Companion Policy to NI 43-101 (43-101 CP) and this Technical Report has been prepared in compliance with NI 43-101, Form 43-101 F1, and 43-101 CP.

h)As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

i)I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated July 30, 2020

“Kira Lyn Johnson, MMSAQP” - Signed

Signature of Qualified Person

Kira Lyn Johnson, MMSAQP

Print name of Qualified Person

338

CERTIFICATE OF AUTHOR

Keith Thompson, CPG

Professional Geologist of Tetra Tech

1100 McCaslin Boulevard, Suite 150

Superior, Colorado 80027

Telephone:  (303) 664-4630

I, Keith Thompson, C.P.G, of Greeley, Colorado do hereby certify:

a)I am an Senior Hydrologist with Tetra Tech, Inc. with a business address of 1100 McCaslin Boulevard, Suite 150, Superior, CO 80027 USA.

b)This certificate applies to the Technical Report titled “Los Gatos Project — Chihuahua, Mexico”, effective July 1, 2020 and issued July 2020.

c)I am a graduate of Youngstown State University, where I earned a Bachelor of Science degree in Geology in 1975, and of the University of Wyoming, where I earned a Master of Science degree in Geology, with specialization in Hydrogeology, in 1979. I have worked as a hydrogeologist for forty-one years since my graduation from university, in the capacity of consulting hydrogeologist with engineering firms and as a research associate professor with the Montana College of Mineral Science and Technology, Montana Bureau of Mines and Geology (now Montana Tech of the University of Montana). I have worked with Tetra Tech for more than 25 years. My work throughout my career has consistently included mining projects. It has covered characterization of baseline hydrologic conditions, mine dewatering and water management studies, design of dewatering systems, prediction and evaluation of hydrologic impacts of mining projects, mine-closure hydrology; and optimization reviews for historical mine-site remediation projects. I am an active member of the American Institute of Professional Geologists and am a certified professional geologist  (C.P.G. #6005).  I have read the definition of “qualified person” set out in National Instrument 43-101 Standards of Disclosure for Mineral Projects (the “Instrument”) and certify that by reason of my education, affiliation with a professional association (as defined in the instrument), and past relevant work experience I am a “Qualified Person” for purposes of the Instrument.

d)I inspected the property on February 23-28, 2015; July 10-14, 2015, December 12-15, 2015; January 29 — February 2, 2016, and September 17-21, 2018.

e)I am responsible for portions of Sections 1, 24, 25, 26, and 27.

f)I satisfy all the requirements of independence according to NI 43-101.

g)I have read NI 43-101, Form 43-101 F1, and the Companion Policy to NI 43-101 (43-101 CP) and this Technical Report has been prepared in compliance with NI 43-101, Form 43-101 F1, and 43-101 CP.

h)As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

i)I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated July 30, 2020.

“Keith Thompson, CPG” - Signed

Signature of Qualified Person

Keith Thompson, CPG

Print name of Qualified Person

339

CERTIFICATE OF AUTHOR

Kenneth E. Smith, RMQP

Mineral Processing Engineer/Consultant of Tetra Tech

350 Indiana Street, Suite 500

Golden, Colorado 80401

Telephone: (303) 217-5700

I, Kenneth E. Smith, RMQP., of Golden, Colorado., do hereby certify:

a)I am a Mineral Processing Engineer / consultant with Tetra Tech with a business address of 350 Indiana Street, Suite 500, Golden, CO.80401.

b)This certificate applies to the Technical Report titled “Los Gatos Project — Chihuahua, Mexico”, effective July 1, 2020 and issued July 2020.

c)I graduated with a degree of Bachelor of Science in Environmental Engineering / with a Chemistry minor from Colorado State University in 1980.  I have worked as a metallurgical engineer for a total of 40 years since my graduation.  My work experience includes Goldstrike Mine, Western States Minerals for 8 years, Nevada Goldfields for 3 years, Canyon Resources for 4 years, while concurrently working on various International and North American consulting projects.  After 20 years of field experience, I began working for EPCM companies for an additional 20+ years, for all phases of project infrastructure, design, commissioning, and startup.  Including polymetallics, leaching operations, uranium projects and operations, as well as waste water treatment plants.  I am a certified MSHA/Hazmat instructor for 30+ years.

d)I am a registered member (Q.P) of the Society of Mining, Metallurgy, and Exploration, Inc. (SME #3004100).  I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

e)I visited the property on January 17, 2017 and August 20-21, 2019

f)I have read the Instrument, and the parts of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.

g)I am responsible for Sections 13, 17, 18, and portions of 1, 11, 21, 25, 26, and 27 of the Technical Report and I am the Qualified Person for matters relating to ore crushing, process plant design, infrastructure requirements and the capital and operating costs associated with these project components.

h)I satisfy all the requirements of independence according to NI 43-101.

i)As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

j)I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their websites assessable by the public.

Dated July 30, 2020.

“Kenneth E. Smith, RMQP” - Signed

Signature of Qualified Person

Kenneth E. Smith, RMQP

Print name of Qualified Person

340

CERTIFICATE OF AUTHOR

Luis Quirindongo, QP

Geological Engineer of Global Resource Engineering

600 Grant St. Suite 975,

Denver, Colorado 80203

Telephone: (303) 547-6587

I, Luis Quirindongo of Denver, Colorado, do hereby certify:

a)I am a Geological Engineer with Global Resource Engineering, with a business address of 600 Grant St., Suite 975, Denver, Colorado, 80203.

b)This certificate applies to the technical report entitled “Los Gatos Project — Chihuahua, Mexico”, effective on July 1, 2020 and issued July 2020.

c)I graduated with from the University of Puerto Rico — Mayagüez, PR with a Bachelors in Geological Science (1999) and from the Missouri University of Science and Technology — Rolla, MO with a Master of Science in Geological Engineering (2004).  I have been working as a Geological Engineer in the area of geotechnical evaluations for the last 18 years, including many international projects.  During this time, I have worked on projects related to the evaluation and design of mine waste management such as tailings management, heap leach pads, and development rock storage areas as a consultant with large consulting firms such as Golder Associates and Tetra Tech.  I am a Registered Member of the Society for Mining, Metallurgy, and Exploration (SME) (#4208172RM).  Based on the above, I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

d)I inspected the property on June 25 and 26, 2015.

e)I am responsible for portions of Section 1, 24, 25, 26, and 27 of the Technical Report.

f)I satisfy all the requirements of independence according to NI 43-101.

g)I conducted and supervised the geotechnical investigation performed during the feasibility design work.  Additionally, I authored the Feasibility Level Design Report for the facility.

h)I have read NI 43-101, Form 43-101 F1, and the Companion Policy to NI 43-101 (43-101 CP) and this Technical Report has been prepared in compliance with NI 43-101, Form 43-101 F1, and 43-101 CP.

i)As of the date of this certificate, to the best of my knowledge, information and belief, the parts of the Technical Report that I am responsible for contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

j)I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated July 30, 2020

“Luis Quirindongo, QP” - Signed

Signature of Qualified Person

Luis Quirindongo, QP

Print name of Qualified Person

341

CERTIFICATE OF AUTHOR

Max Johnson, PE

Senior Civil Engineer of Tetra Tech

350 Indiana Street, Suite 500

Golden, Colorado 80401

Telephone: (303) 217-5700

I, Max Christian Johnson, PE, of Golden, Colorado do hereby certify:

a)I am a Senior Civil Engineer with Tetra Tech, Inc. with a business address of 350 Indiana St., Suite 500, Golden, CO 80401.

b)This certificate applies to the Technical Report titled “Los Gatos Project Chihuahua, Mexico”, effective July 1, 2020 and issued July 2020.

c)I graduated with a bachelor’s degree in Civil Engineering from Colorado State University in Fort Collins, Colorado. My work immediately after college was focused in mine water management including site-wide and facility-specific water balances, hydrology, meteorological monitoring, and mine reclamation. I received my water resource focused Professional Engineer license (PE.0051790) in 2016 from the State of Colorado in the United States of America. I have over 8 years of professional experience. I have reviewed the definition of a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”), and meet the requirements based on my education, work experience, and affiliation with a professional association.

d)I have not inspected the property.  I have not had any prior involvement with this property.

e)I am responsible for portions of Sections 1, 24, and 26.

f)I satisfy all the requirements of independence according to NI 43-101.

g)I have read NI 43-101, Form 43-101 F1, and the Companion Policy to NI 43-101 (43-101 CP) and this Technical Report has been prepared in compliance with NI 43-101, Form 43-101 F1, and 43-101 CP.

h)As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

i)I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated July 30, 2020.

“Max Johnson, PE” - Signed

Signature of Qualified Person

Max Christian Johnson, PE

Print name of Qualified Person

342

EX-99.1

Exhibit 99.1

CONSENT OF DIRECTOR NOMINEE

I, Charles Hansard, in connection with the Registration Statement on Form S-1 of Sunshine Silver Mining & Refining Corporation, and any amendments or supplements and/or exhibits thereto (collectively, the “Registration Statement”), consent, pursuant to Rule 438 of the Securities Act of 1933, as amended, to being named as a nominee to the board of directors of Sunshine Silver Mining & Refining Corporation in the Registration Statement. I also consent to the filing of this consent as an exhibit to the Registration Statement.

By:	/s/ Charles Hansard
	Name:   Charles Hansard
	Title:     Director Nominee

Date: October 1, 2020