EX-95.1 7 sodi_ex961.htm CERTIFICATION sodi_ex961.htm

EXHIBIT 96.1

 

S-K 1300 Technical Report Summary

Florida Canyon Zinc Project

 

Amazonas Department, Peru

 

Prepared for:

    

 

Solitario Zinc Corp

4251 Kipling Street Suite 390

Wheat Ridge, CO 80033

 

Effective Date: February 1, 2021

Report Date: March 15, 2022

 

Prepared by:

   

   

 200 Union Boulevard, Suite 440

Lakewood, CO 80228

 

Qualified Persons:

Donald E. Hulse, P.E., SME-RM

Sarah Milne, P.E., SME-RM

Additional Authors:

Christopher Emanuel, SME-RM

 

 

 

 

Company Name

i

Project Name

S-K 1300 Technical Report Summary

 

Table of Contents

 

1

 

 

Executive Summary

 

 

1

 

 

1.1

 

 

Property Summary and Ownership

 

 

1

 

 

1.2

 

 

Mineral Resource Statement

 

 

1

 

1.2.1

 

 

Mineral Resource Classification

 

 

2

 

1.2.2

 

 

Audit of Final Mineral Resource Estimate

 

 

3

 

1.2.3

 

 

Mineral Resource Tabulation

 

 

3

 

 

1.3

 

 

Geology and Mineralization

 

 

4

 

 

1.4

 

 

Exploration Status

 

 

4

 

 

1.5

 

 

Metallurgy and Mineral Processing

 

 

5

 

1.5.1

 

 

Recovery Methods

 

 

5

 

 

1.6

 

 

Mine Design, Optimization and Scheduling

 

 

5

 

 

1.7

 

 

Project Infrastructure

 

 

5

 

 

1.8

 

 

Material Development & Operations

 

 

6

 

 

1.9

 

 

Environment & Permitting

 

 

6

 

 

1.10

 

 

Capital Costs, Operating Costs and Financial Analysis

 

 

6

 

 

1.11

 

 

Conclusions

 

 

7

 

 

1.12

 

 

Recommendations

 

 

7

 

1.12.1

 

 

Metallurgy

 

 

7

 

1.12.2

 

 

Resource Conversion Drilling

 

 

8

 

1.12.3

 

 

Resource Expansion Drilling

 

 

8

 

2

 

 

Introduction

 

 

10

 

 

2.1

 

 

Terms of Reference and Purpose of the Report

 

 

10

 

 

2.2

 

 

Source of Data and Information

 

 

10

 

 

2.3

 

 

Details of Inspection

 

 

10

 

 

2.4

 

 

Previous Reports on Project

 

 

11

 

3

 

 

Property Description and Location

 

 

12

 

 

3.1

 

 

Location

 

 

12

 

 

3.2

 

 

Mineral Titles, Claims, Rights, Leases and Options

 

 

14

 

3.2.1

 

 

Mineral Rights in Peru

 

 

14

 

3.2.2

 

 

Mineral Titles

 

 

15

 

3.2.3

 

 

Nature and Extent of Issuer’s Interest

 

 

18

 

 

3.3

 

 

Sufficiency of Surface Rights

 

 

18

 

 

3.4

 

 

Environmental Impacts and Permitting

 

 

18

 

 

3.5

 

 

Other Significant Factors and Risks

 

 

19

 

 

3.6

 

 

Royalties, Taxes, and Agreements

 

 

19

 

 

 

 

Gustavson Associates, LLC

15 March 2022

 

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

     

3.6.1

 

 

Property Agreements

 

 

20

 

 

 

Accessibility, Climate, Local Resources, Infrastructure and Physiography

 

 

22

 

 

4.1

 

 

Topography, Elevation, and Vegetation

 

 

22

 

 

4.2

 

 

Accessibility and Transportation to the Property

 

 

22

 

 

4.3

 

 

Climate and Length of Operating Season

 

 

23

 

 

4.4

 

 

Infrastructure Availability and Sources

 

 

23

 

4.4.1

 

 

Existing Infrastructure

 

 

23

 

4.4.2

 

 

Proximity to Population Center

 

 

25

 

4.4.3

 

 

Power

 

 

25

 

4.4.4

 

 

Water

 

 

25

 

4.4.5

 

 

Personnel

 

 

26

 

5

 

 

History

 

 

27

 

 

5.1

 

 

Previous Operations

 

 

27

 

 

5.2

 

 

Historical Exploration & Development Results

 

 

27

 

 

5.3

 

 

Recent Work

 

 

28

 

 

5.4

 

 

Historical Mineral Resource Estimates

 

 

29

 

 

5.5

 

 

Historical Production

 

 

29

 

6

 

 

Geological Setting, Mineralization and Deposit

 

 

30

 

 

6.1

 

 

Regional Geology

 

 

30

 

 

6.2

 

 

Local Geology

 

 

35

 

6.2.1

 

 

Lithography & Stratigraphy

 

 

35

 

6.2.2

 

 

Structure

 

 

36

 

6.2.3

 

 

Alteration

 

 

37

 

6.2.4

 

 

Mineralization

 

 

38

 

 

6.3

 

 

Property Geology

 

 

38

 

 

6.4

 

 

Significant Mineralized Zone

 

 

40

 

 

6.5

 

 

Deposit Types

 

 

41

 

6.5.1

 

 

Mineral Deposit

 

 

41

 

7

 

 

Exploration

 

 

43

 

 

7.1

 

 

Surveys and Investigations

 

 

43

 

7.1.1

 

 

Relevant Exploration Work

 

 

43

 

7.1.2

 

 

Significant Results & Interpretation

 

 

43

 

 

7.2

 

 

Drilling Exploration

 

 

50

 

7.2.1

 

 

Procedures

 

 

52

 

7.2.2

 

 

Interpretation & Relevant Results

 

 

53

 

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

  

8

 

 

Sample Preparation, Analysis and Security

 

 

54

 

 

8.1

 

 

Sampling Methods

 

 

54

 

8.1.1

 

 

Sampling for Geochemical Analysis

 

 

56

 

8.1.2

 

 

Sampling for Density Measurement

 

 

56

 

 

8.2

 

 

Security Measures

 

 

59

 

 

8.3

 

 

Sample Preparation for Analysis

 

 

59

 

 

8.4

 

 

QA/QC Procedures

 

 

61

 

8.4.1

 

 

Standards

 

 

63

 

8.4.2

 

 

Blanks

 

 

64

 

8.4.3

 

 

Duplicates

 

 

65

 

 

8.5

 

 

Opinion on Adequacy

 

 

66

 

9

 

 

Data Verification

 

 

67

 

 

9.1

 

 

Procedures

 

 

67

 

 

9.2

 

 

Opinion on Data Adequacy

 

 

68

 

10 

 

 

Mineral Processing and Metallurgical Testing

 

 

69

 

 

10.1

 

 

Metallurgical Test Work, 2010-2014

 

 

69

 

11

 

 

Mineral Resource Estimate

 

 

71

 

 

11.1

 

 

Geologic Model

 

 

71

 

 

11.2

 

 

Exploratory Data Analysis

 

 

73

 

 

11.3

 

 

Domains for Resource Estimation

 

 

77

 

 

11.4

 

 

Capping and Compositing

 

 

77

 

 

11.5

 

 

Geostatistics

 

 

79

 

 

11.6

 

 

Block Model Parameters

 

 

80

 

 

11.7

 

 

Block Grade Estimation Methodology

 

 

81

 

 

11.8

 

 

Resource Classification

 

 

81

 

   

 

 

Gustavson Associates, LLC

15 March 2022

 

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

  

 

11.9

 

 

Cutoff Grade

 

 

82

 

 

11.10

 

 

Development of Economic Shells for Reporting

 

 

83

 

 

11.11

 

 

Specific Gravity/Density

 

 

85

 

 

11.12

 

 

Validation of Resource Estimate

 

 

85

 

 

11.13

 

 

Audit of Final Mineral Resource Estimate.

 

 

86

 

 

11.14

 

 

Mineral Resource Tabulation

 

 

87

 

12

 

 

Mineral Reserve Estimate

 

 

89

 

13

 

 

Mining Methods

 

 

90

 

14

 

 

Processing and Recovery Methods

 

 

91

 

15

 

 

Project Infrastructure

 

 

92

 

16

 

 

Market Studies

 

 

93

 

 

16.1

 

 

Contracts and Status

 

 

93

 

17

 

 

Environmental Studies, Permitting and Social or Community Impact

 

 

94

 

 

17.1

 

 

Required Permits and Status

 

 

94

 

17.1.1

 

 

Required Exploration Permits and Status

 

 

94

 

17.1.2

 

 

Required Mining Permits

 

 

97

 

 

17.2

 

 

Environmental Monitoring Results

 

 

97

 

 

17.3

 

 

Groundwater

 

 

99

 

 

17.4

 

 

Environmental Issues

 

 

99

 

 

17.5

 

 

Mine Closure

 

 

100

 

17.5.1

 

 

Post Mining Land Use

 

 

100

 

17.5.2

 

 

Portals and Vents

 

 

100

 

17.5.3

 

 

Buildings and Infrastructure

 

 

100

 

17.5.4

 

 

Roads and Miscellaneous Disturbance

 

 

101

 

17.5.5

 

 

Tailings Facility

 

 

101

 

 

17.6

 

 

Post Closure Plans

 

 

102

 

 

17.7

 

 

Reclamation and Closure Cost Estimate

 

 

102

 

 

17.8

 

 

Post-Performance or Reclamations Bonds

 

 

102

 

 

17.9

 

 

Social and Community

 

 

103

 

18

 

 

Capital and Operating Costs

 

 

105

 

19

 

 

Economic Analysis

 

 

106

 

20

 

 

Adjacent Properties

 

 

107

 

21

 

 

Other Relevant Data and Information

 

 

108

 

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

  

 

21.1

 

 

Mining Methods

 

 

108

 

21.1.1

 

 

Proposed Mining Methods

 

 

108

 

21.1.2

 

 

Optimization Parameters

 

 

109

 

21.1.3

 

 

Development Layout

 

 

111

 

21.1.4

 

 

Waste

 

 

112

 

21.1.5

 

 

Mine Production

 

 

113

 

 

21.2

 

 

Processing and Recovery Methods

 

 

113

 

21.2.1

 

 

Processing Projections and Methods

 

 

113

 

21.2.2

 

 

Consumables Requirement

 

 

113

 

 

21.3

 

 

Project Infrastructure

 

 

115

 

21.3.1

 

 

Infrastructure and Logistics Requirements

 

 

115

 

21.3.2

 

 

Project Logistics

 

 

120

 

21.3.3

 

 

Tailings Management

 

 

121

 

 

21.4

 

 

Capital and Operating Costs

 

 

121

 

21.4.1

 

 

Capital Cost Estimates

 

 

121

 

21.4.2

 

 

Operating Cost Estimates

 

 

125

 

 

21.5

 

 

Economic Analysis

 

 

126

 

21.5.1

 

 

External Factors

 

 

126

 

21.5.2

 

 

Main Assumptions

 

 

127

 

21.5.3

 

 

Taxes, Royalties and Other Interests

 

 

129

 

21.5.4

 

 

Results

 

 

129

 

22

 

 

Interpretation and Conclusions

 

 

134

 

 

22.1

 

 

Results & Comments

 

 

134

 

 

22.2

 

 

Significant Risks & Uncertainties

 

 

134

 

23

 

 

Recommendations

 

 

135

 

 

23.1

 

 

General Recommendations

 

 

135

 

23.1.1

 

 

Metallurgy

 

 

135

 

23.1.2

 

 

Drilling

 

 

136

 

23.1.3

 

 

Resource Conversion Drilling

 

 

136

 

23.1.4

 

 

Resource Expansion Drilling

 

 

137

 

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

  

24

 

 

References

 

 

139

 

25

 

 

Reliance on Information Provided by Registrant

 

 

140

 

26

 

 

Glossary

 

 

141

 

 

26.1

 

 

Mineral Resources

 

 

141

 

 

26.2

 

 

Mineral Reserves

 

 

141

 

 

26.3

 

 

Glossary

 

 

143

 

 

26.4

 

 

Definition of Terms

 

 

144

 

27

 

 

Appendix A: Drill Hole Collars

 

 

147

 

28

 

 

Appendix B: QA/QC 2019 Laboratory Results

 

 

161

 

 

28.1

 

 

Coarse Blank Results – ALS Laboratory

 

 

161

 

 

28.2

 

 

Duplicate Results – ALS Laboratory

 

 

165

 

 

28.3

 

 

Standards Results – ALS Laboratory

 

 

177

 

 

28.4

 

 

External Check Results – Cert vs ALS Laboratory

 

 

189

 

29

 

 

Appexdix C: Sample Cumulative Frequency Plots

 

 

192

 

30

 

 

Appendix D: Cap-Composite Cum. Frequency Plots

 

 

194

 

31

 

 

Appendix E: Mineral Resource

 

 

198

 

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

  

List of Tables

 

Table 1‑1 Mineral Resource Summary

 

 

3

 

Table 1‑2 Total Mineral Resource

 

 

3

 

Table 1‑3: Florida Canyon Mine Production Assumptions

 

 

6

 

Table 1‑4 Planned work program for 2021-2022

 

 

9

 

Table 3‑1 List of Minera Bongará Mineral Concessions

 

 

16

 

Table 3‑2 Marginal royalty rates for various operating margins

 

 

20

 

Table 5‑1 Campaign Summary - Florida Canyon

 

 

29

 

Table 7‑1 Summary of Total Surface Samples

 

 

46

 

Table 7‑2 Drilling Summary in Florida Canyon

 

 

50

 

Table 7‑3 Downhole Survey Data Point Spacing

 

 

52

 

Table 8‑1 Total number of Density Samples taken per year

 

 

57

 

Table 8‑2 Analytical Codes and Methods

 

 

59

 

Table 8‑3 Analyzed Elements and Method Detection Limits

 

 

61

 

Table 8‑4 QA/QC Insertion of Samples 2018-2019 Campaign

 

 

63

 

Table 8‑5 QA/QC Standard Bias % Results 2018-2019 Campaign

 

 

63

 

Table 8‑6 QA/QC Blanks Results 2018-2019 Campaign

 

 

64

 

Table 8‑7 QA/QC Duplicates Results 2018-2019 Campaign

 

 

65

 

Table 10‑1 Metallurgical Tests – Selected Results

 

 

70

 

Table 10‑2 Florida Canyon Metal Recoveries by Material Type

 

 

70

 

Table 11‑1 Deposit Stratigraphy

 

 

72

 

Table 11‑2 Description of Zone Codes for Statistics

 

 

74

 

Table 11‑3 Summary Statistics for Zinc by Zone (after Nexa)

 

 

75

 

Table 11‑4 Average Metal Grades by Area

 

 

76

 

Table 11‑5 Outlier Capping Values by Area (after Nexa)

 

 

78

 

Table 11‑6 Selected Variogram Parameters (after Nexa)

 

 

80

 

Table 11‑7 Block Model Parameters

 

 

80

 

Table 11‑8 Deswik Stope Parameters

 

 

84

 

Table 11‑9 Long term metal prices

 

 

84

 

Table 11‑10 Mineral Resource Summary

 

 

87

 

Table 11‑11 Florida Canyon Total Mineral Resources

 

 

87

 

Table 17‑1: Environmental Monitoring During Mining Exploration

 

 

98

 

Table 21‑1: Proposed Stope Dimensions

 

 

109

 

Table 21‑2: Expected Processing Recoveries

 

 

109

 

Table 21‑3: NSR Calculation Parameters for Stope Optimization

 

 

109

 

Table 21‑4: Operating Costs Used for Determining Potential Mining Shapes

 

 

110

 

Table 21‑5: Stope Optimization Parameters for Base Case Analysis

 

 

110

 

Table 21‑6: Mine Plan Resource Average Process Recovery

 

 

111

 

Table 21‑7: Development Design Assumptions

 

 

111

 

Table 21‑15: Florida Canyon Capital Estimate Summary

 

 

122

 

Table 21‑18: Florida Canyon Operating Costs Summary

 

 

125

 

Table 21‑19: Florida Canyon Price Assumptions

 

 

127

 

Table 21‑20: Florida Canyon Net Smelter Return Terms

 

 

127

 

Table 21‑21: Florida Canyon Product Logistics Cost

 

 

127

 

Table 21‑22: Florida Canyon Mine Production Assumptions

 

 

128

 

Table 21‑23: Florida Canyon Mill Production Assumptions

 

 

128

 

Table 21‑24: Florida Canyon Royalty Rates

 

 

129

 

Table 21‑25: Florida Canyon Indicative Operating Costs (Dry Basis)

 

 

130

 

Table 21‑26: Florida Canyon LoM Annual Production and Revenues

 

 

132

 

Table 21‑27: Florida Canyon Cash Costs

 

 

133

 

Table 23‑1 Planned work program for 2021-2022

 

 

138

 

Table 26‑1 Glossary

 

 

143

 

Table 26‑2 Abbreviations

 

 

144

 

  

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Company Name

 

Project Name

S-K 1300 Technical Report Summary

  

List of Figures

 

Figure 3‑1 Project Location Map

 

 

13

 

Figure 3‑2 Map of Mineral Claims and Mineral Occurrences

 

 

17

 

Figure 3‑3 Access road to the Florida Canyon Project (in construction)

 

 

21

 

Figure 4‑1 Photograph of the Florida Canyon Project Area

 

 

22

 

Figure 4‑2 Drill Support Camp

 

 

24

 

Figure 4‑3 Shipsabamba Project Camp

 

 

24

 

Figure 6‑1 Regional Geologic Map

 

 

32

 

Figure 6‑2 Legend of Regional Geology Map

 

 

34

 

Figure 6‑3 Project Area Stratigraphic Column

 

 

35

 

Figure 6‑4 Florida Canyon Project Geologic Map

 

 

39

 

Figure 6‑5 Cross Section of the Project Geologic Model

 

 

40

 

Figure 6‑6 Mississippi Valley-Type Deposit Schematic Model

 

 

42

 

Figure 7‑1 Florida Canyon Area Prospect and Geochemistry Map

 

 

46

 

Figure 7‑2 Regional Geochemical Results

 

 

48

 

Figure 7‑3 Florida Canyon Area Simplified Geology, Resource and Drillhole Map

 

 

49

 

Figure 7‑4 Drillhole Location Map

 

 

51

 

Figure 8‑1 Diamond Core Sampling Process

 

 

55

 

Figure 8‑2 Density Sample Distribution

 

 

58

 

Figure 8‑3 ALS Lab - Zn Standards Results

 

 

64

 

Figure 8‑4 ALS Lab - Zn Blanks Results

 

 

65

 

Figure 8‑5 ALS Lab - Zn Duplicate Results

 

 

66

 

Figure 9‑1: Photograph of Project Core Lithology Reference Sample Library

 

 

67

 

Figure 11‑1 Schematic of Local Stratigraphy

 

 

72

 

Figure 11‑2 Distribution of Mineralized Bodies

 

 

73

 

Figure 11‑3 Cumulative Frequency Curve for Zinc (Nexa)

 

 

74

 

Figure 11‑4 Histogram of Zinc in Mineral Zones

 

 

76

 

Figure 11‑5 Histogram of Silver in Mineral Zones

 

 

77

 

Figure 11‑6 Histogram of Lead in Mineral Zones

 

 

77

 

Figure 11‑7 Example Zinc Variogram for Manto Zones (after Nexa)

 

 

79

 

Figure 11‑8 Example Zinc Variogram for Feeder Zones (after Nexa)

 

 

79

 

Figure 11‑9 Distribution of Resource Classes (Source Nexa)

 

 

82

 

Figure 11‑10 Oxidation state of the mineral zones (Source Nexa)

 

 

83

 

Figure 11‑11 - Example Deswik Stope Shapes

 

 

84

 

Figure 11‑12 - Review of Estimates vs. Composites for Zinc in KM6-1

 

 

85

 

Figure 11‑13 - Review of Estimates vs. Composites for Silver in KM6-1

 

 

86

 

Figure 17‑1 Florida Canyon Expanded Exploration Footprint

 

 

95

 

Figure 17‑2 Florida Canyon Proposed Exploration

 

 

96

 

Figure 17‑3 Florida Canyon Long Section

 

 

96

 

Figure 21‑1: Plan View of Mining Blocks and Development Layout

 

 

112

 

Figure 21‑2: Florida Canyon Proposed Process Flow Sheet

 

 

114

 

Figure 21‑3: Florida Canyon Existing and New Road Construction

 

 

116

 

Figure 21‑4: Florida Canyon Site General Arrangement

 

 

118

 

Figure 21‑5: Port and Smelter Locations

 

 

120

 

Figure 23‑1 Future drilling and current and future underground exploration locations

 

 

137

 

Figure 23‑2 Northwest-Southeast long section of area shown in Figure 23‑1

 

 

138

 

    

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

1 Executive Summary

  

Gustavson Associates, LLC (Gustavson) was commissioned by Solitario Zinc Corporation (Solitario) to prepare an updated Mineral Resource Estimate for the Florida Canyon project in the Amazonas Department of Peru. The report was filed on May 10, 2021. This Amended Technical Report on Resources has been modified to include additional information from the Preliminary Economic Assessment of the Florida Canyon Project dated in August of 2017. The effective date of this report remains February 1, 2021, and the new publication date will be 27 May 2021. Material from the 2017 report has been summarized and added to sections 15 through 22.

 

The technical report presents the estimate in accordance with U.S. 17 CFR Part 229.1300 (SK-1300). This report was initially prepared by Gustavson and presented to Solitario on 27 May 2021. Additional mineral resources identified since 2017 have changed the proportions of the ore types from the Mineral Resources identified in the PEA, though the Mineral Resource Estimate increased from the 2017 PEA, the mining and mineral processing parameters are not materially affected or adversely impacted by the updated mineral resource estimate. Gustavson has audited the mining and mineral processing information and we judge that it remains current and applicable to the project. Due to the increase in the mineral resource estimate, additional metallurgical testing is recommended prior to advancing the project.

 

1.1 Property Summary and Ownership

 

The Florida Canyon Zinc Project is in the Eastern Cordillera of Peru in the upper Amazon River Basin. It is 680 km north-northeast of Lima and 245 km northeast of Chiclayo, Peru, in the District of Shipasbamba, Bongará Province, Amazonas Department (Figure 4 1). The central coordinates of the Project are approximately 825,248 East and, 9,352,626 North (UTM Zone 17S, Datum WGS 84). Elevation ranges from 1,800 meters to approximately 3,200 meters. The climate is classified as high-altitude tropical jungle and the annual rainfall average exceeds 1 m with up to 2 m in the cloud forest at higher elevations.

 

The mineral resources at Florida Canyon are located on sixteen contiguous mining concessions covering approximately 12,600 ha (Table 4 1, Figure 4 2). The concession titles are in the name of the Peruvian company Minera Bongará S.A. and are subject of the Minera Bongará joint venture agreement between Solitario and Nexa Resources. All concession titles are current.

 

Nexa, who acts as Operator of the joint venture companies Minera Bongará and Minera Chambará, entered into a surface rights agreement with the local community of Shipasbamba which controls the surface rights of the portion of the Project affected by planned development. This agreement provides for annual payments and funding for mutually agreed upon social development programs in return for the right to perform exploration work including road building and drilling as described in 4.5.1.

 

1.2 Mineral Resource Statement

 

An updated Mineral Resources Estimate for Florida Canyon was completed by Nexa Resources based on a data base available in July of 2020. The database included 545 drill holes with a total drilled length of nearly 137 km. The estimate was audited by Donald E. Hulse of Gustavson Associates LLC with the audit completed on February 1, 2021. Work was completed in Datamine Studio RM, Leapfrog Geo, and Snowden Supervisor.

 

 

 

Gustavson Associates, LLC

15 March 2022

   

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

Florida Canyon is a Mississippi Valley type deposit, dominated by lead and zinc sulfides. The minerals are disseminated within stratigraphically controlled dolomitization within the Chambara Formation of the late Triassic/early Jurassic. The Florida Canyon deposit has the form of a dome at regional scale. This may be due to a regional anticline. This trend was incorporated into the geological model with the interpretation of 84 mineralized structures. (70 mantos and 14 feeders). The bodies are grouped into four areas, labeled as 1021, Karen Milagros, San Jorge, and Sam.

   

There are subtle local differences between the bodies, although most behave statistically well with coefficients of variation less than two. Capping was performed area by area based on the shape of the cumulative frequency curve. Composites were nominal 2 meters long with some variability due to the thickness of the zone, with 88% of the composites approximately 2 meters. Variography was completed on each zone with sufficient samples to calculate experimental variograms. If there were insufficient samples the models used were from nearby zones with similar grades and shapes and were classified as inferred resource. In general, the mantos are slightly lower grade that the feeders with longer variogram ranges.

 

The block model was estimated in Datamine software. The block size was 6x6x3m with a minimum sub-cell of 0.5m in each direction. Grades were estimated by Ordinary Kriging. The search distances were roughly ½ of the variogram range for Pass 1, the full variogram range for Pass 2, and a longer search was used for inferred to fill in between drill holes for the zone. A metallurgical recovery was assigned based on the oxidation state.

 

Density was calculated as a function of grade using an equation developed by SRK during the 2017 study. This relationship was not changed by Nexa during this study, and Gustavson judges that there was not sufficient additional data to change the equation.

    

1.2.1 Mineral Resource Classification

 

Mineral resource classification utilized criteria based on drill spacing and variogram ranges. Measured mineral resource required a spacing of 25x25m with at least 3 composites, indicated mineral resource, 50x50m with 3 composites, and inferred resource estimates required a spacing of 100x100m with at least 2 composites.

 

Using the estimated grade and recovery, economic stope shapes were developed using a “stope optimizer” tool in Deswik software. The limits for the stopes are summarized in Deswik Stope Parameters Table 14 8. The cutoff grade was established in net smelter return (NSR) for each mining method, Sublevel Stoping, Cut and Fill, and Room and Pillar. Only mineral resources within an economic stope shape were reported.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

1.2.2 Audit of Final Mineral Resource Estimate

 

Gustavson audited the Nexa model by examining it in 3-dimensions in the Leapfrog software and by comparing the statistics of the samples in each zone with the modeled grades. Gustavson feels that this is a good representation of the volume of the mineralized material.

 

The grades reported have an implicit cutoff as part of the stope optimizer analysis in addition to the explicit cutoff applied to the composite data. The stope optimizer tends to select only the best grade where it is sufficiently continuous to allow development of a stope. For the Florida Canyon study, the prices used were very near to the market prices in December of 2020 when the study was finalized. Gustavson compared the statistics of samples within the stope shells with the reported mineral resources with a good correlation.

 

The mineral resource estimate is tabulated in Table 1‑1. Gustavson judges that the reported Mineral Resource Estimate meets the standard for reporting under SK-1300 (2018).

   

1.2.3 Mineral Resource Tabulation

 

The Mineral Resource by zone is shown in Table 1‑1 and the total Mineral Resource is shown in Table 1‑2.

    

Table 1‑1 Mineral Resource Summary

 

Zone

Classification

Sum of Tonnes

Zn %

Ag g/t

Pb %

Fe %

Karen Milagros

Measured

 328,254

9.07

9.77

1.34

1.53

Indicated

 913,273

7.65

10.41

1.36

1.35

Measured + Indicated

 1,241,527

8.03

10.24

1.35

1.39

Inferred

 7,072,315

8.82

10.55

1.20

1.57

San Jorge

Measured

 478,691

12.85

19.29

1.42

3.07

Indicated

 721,429

13.61

20.52

1.25

3.35

Measured + Indicated

 1,200,120

13.31

20.03

1.32

3.24

Inferred

 3,895,089

13.09

11.34

0.68

2.41

1021

Inferred

 3,291,937

6.71

13.58

1.77

2.65

Sam

Inferred

 599,392

12.78

6.99

2.96

0.93

 

Table 1‑2 Total Mineral Resource

 

Classification

Sum of Tonnes

Zn %

Ag g/t

Pb %

Fe %

Measured

806,945

11.32

15.42

1.39

2.44

Indicated

1,634,702

10.28

14.87

1.31

2.23

Measured + Indicated

2,441,647

10.62

15.05

1.33

2.30

Inferred

14,858,733

9.63

11.28

1.26

2.00

 

Mineral Resources are not Mineral Reserves and have not been demonstrated to have economic viability. There is no certainty that the Mineral Resource will be converted to Mineral Reserves. The quantity and grade or quality is an estimate and is rounded to reflect the fact that it is an approximation. Quantities may not sum due to rounding.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

1.3 Geology and Mineralization

 

The Project is located within an extensive belt of Mesozoic carbonate rocks belonging to the Upper Triassic to Lower Jurassic Pucará Group and equivalents. This belt extends through the central and eastern extent of the Peruvian Andes for nearly 1000 km and is the host for many polymetallic and base metal vein and replacement deposits in the Peruvian Mineral Belt.

 

The Pucará Group is divided into 3 formations: Chambará (base), Aramachay (middle), and Condorsinga (top). The rocks of the Late Triassic-Early Jurassic Pucará Group that host the mineralized bodies were deposited along the coastal basin. The Chambará formation has an approximate thickness between 650 m and 750 m in the project area, and consists of crinoidal packstone, wackestones and rudstones. The bulk of known zinc mineralization is hosted in Chambará 2. The stratigraphy between the distinctive Coquina (CM) and Intact Bivalve (IBM) paleontological marker horizons in Chambará 2 define a sequence of permeable higher energy facies within the Chambará 2 that control much of the especially strong dolomitization within the sequence.

 

The structure at Florida Canyon is dominated by a N50º-60ºW trending domal anticline (or doubly plunging anticline). This domal anticline is cut on the west by the Sam Fault and to the east by the Tesoro-Florida Fault.

 

Because most of the work has concentrated further west on the San Jorge, Karen Milagros and Sam Fault areas there is little information on the Tesoro-Florida Fault. At both the Karen-Milagros and San Jorge areas, feeder structures have an important control on the mineralized mantos but also represent a significant portion of the resource as steeply dipping structural fillings and replacement. Pre-mineral karsting also played a role in controlling mineralization along with simple structural filling and passive replacement adjacent to conduits.

 

The zinc-lead-silver mineralization of the Florida Canyon deposit occurs as sulfides hosted in dolomitized zones of the Chambará 2 Formation. Dolomite paragenesis and later sulfide mineralization are controlled by a combination of porosity, permeability, and structural preparation. Metals occur in sphalerite and lesser galena, which contains silver. Minor mineralization is hosted in limestones, but the bulk of sphalerite and galena is hosted in dolomite.

 

1.4 Exploration Status

 

The Florida Canyon Project has identified and delineated mineral resources in the San Jorge, Sam, 1021, and Karen-Milagros areas. An extensive regional reconnaissance exploration program was also conducted over a large area throughout the Mesozoic carbonate belt to the north and south of the Property. Geochemical samples were collected of stream sediments, soils and rocks. During development of the San Jorge adit, Nexa completed geologic mapping and chip sampling of the underground workings.

 

The drill database includes 545 drillholes, with a total of 136,758.1 m drilled at the Florida Canyon Project (Table 10 1). All holes were diamond drilled, with 447 holes drilled from surface and 98 holes drilled from the San Jorge adit (underground). Drilling procedures meet industry best practice.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

Exploration strategy for MVT deposits at the Florida Canyon project has been strongly influenced by the interpreted favorability of specific units of the stratigraphy of the region. Numerous occurrences of alteration and mineralization occur throughout the Pucara Group, but economic deposits have only been thus far located within the Triassic Chambará formation

 

1.5 Metallurgy and Mineral Processing

 

Limited test work undertaken on the sulfide samples from 2010 to 2014 indicated that a conventional polymetallic process flowsheet using standard chemical reagents will produce a marketable-grade zinc concentration (>50% Zn) with a projected recovery of 93% for sulfide only ore.

 

Historical test work completed was on oxide and mixed samples. The authors believe that the previous test work will need to be increased for the current mineral resource, however, based on the existing work, zinc recoveries are expected to be about 80% for partially oxidized material up to 93% for pure sulfide.

 

Therefore, a new metallurgical program has been proposed and is recommended for the sulfide samples acquired during the most recent drilling program to advance the project to the PFS level. No economic assessment of the project should be undertaken until this test work is completed.

   

1.5.1 Recovery Methods

 

The following material is summarized from the 2017 PEA prepared by SRK.

 

The Florida Canyon polymetallic zinc-lead-silver deposit can be processed using a conventional flotation plant consisting of three-stage crushing, grinding using ball mill, and differential flotation to produce two final products: a zinc concentrate, and a lead concentrate. Further metallurgical testing is proposed in this study to refine the parameters.

 

1.6 Mine Design, Optimization and Scheduling

 

The following material is summarized from the 2017 PEA prepared by SRK.

 

Depending upon the geometry of the mineralized zones, longhole stoping was selected for steeply dipping zones and mechanized drift-and-fill extraction methods in shallowly dipping mantos. Conventional room and pillar mining on a checkerboard pattern may be applicable to specific zones of the Florida Canyon project and should be considered in future trade-off studies at the prefeasibility level. Cemented paste backfill is planned for mined areas to increase mining recovery and to stabilize mined-out areas.

 

1.7 Project Infrastructure

 

The following material is summarized from the 2017 PEA prepared by SRK.

 

The Florida Canyon deposit is in steep terrain in a remote part of northern Peru with moderate to high rainfall. These geographic and climatic conditions pose challenges to both access and infrastructure development. A small hydroelectric plant is under construction near the site, offering a lower cost alternative to on-site power generation. Water supply for operations appears to be straight forward, with abundant surface water available for mineral processing and camp support. At this time tailings storage has been evaluated as a dry stack facility to maintain geotechnical stability and reduce the area requiring reclamation. Trade-off studies are warranted to optimize moisture content, binding characteristics, and placement and compaction methods during tailings placement.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

1.8 Material Development & Operations

 

Exploration will continue at Florida Canyon to further expand and upgrade the mineral resources. Relationships with the Shipsabamba community will continue. Small upgrades to infrastructure will proceed pending a decision to move the exploration status to preproduction.

 

1.9 Environment & Permitting

 

The Ministry of Environment (MINAM) is the environmental authority in Peru. Its administrative department oversees compliance of environmental regulations for mineral exploration activities. Depending on the level of environmental impacts of a proposed exploration program the proponent will be required to prepare an environmental study to support an operating plan according to the following criteria.

 

A fully detailed Environmental Impact Study (Estudio de Impacto Ambiental Detallado or EIAD) must be presented for mine construction. The Florida Canyon Project currently works under an approved EIAsd which has been modified four times. A fifth modification of the EIAsd is in preparation which will permit more than 100 additional drill sites and provide for expanded underground exploration previously permitted in earlier modifications. The fifth modification is planned for submission in 2021.

 

Thirteen authorizations, permits, and licenses will be required for future mining include. Based on the relationship with both the government and the community, there is no reason to expect that these cannot be acquired.

 

1.10 Capital Costs, Operating Costs and Financial Analysis

 

The following material is summarized from the 2017 PEA prepared by SRK. The financial results presented here are based on annual inputs from the production schedule prepared by SRK in 2017. All financial data is second quarter 2017 and currency is in U.S. dollars (US$), unless otherwise stated. Florida Canyon does not hold contracts for the provision of its products. Terms and conditions, payables and penalties are based on generic agreements and common practice.

 

It is currently planned that the project will produce two products, a lead concentrate and a zinc concentrate. It is expected that the concentrates will be sold to Nexa’s Cajamarquilla smelter near Lima.

 

The pre-production period was estimated to be two years. Mine production is based on an average assumed LoM mine material movement of 2,358 t-ore/d (365 days/yr basis). Table 1‑3 presents the LoM mine assumptions.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

Table 1‑3: Florida Canyon Mine Production Assumptions

 

Description

Value

Units

Mine Production

Underground Ore

11,187

kt

Total Material

11,187

kt

Avg. Daily Capacity

2,358

t per day

Stripping Ratio

N/A

w:o

RoM Grade

Silver

11.3

g/t

Lead

0.90%

%

Zinc

8.34%

%

Contained Metal

Silver

4,068

koz

Lead

222,347

klb

Zinc

2,057,796

klb

  

Source: SRK, 2017

 

The evaluation of the Florida Canyon Project as of 2017 economics, indicates that the Project has a potential present value of approximately US$198 million, with an Internal Rate of Return (IRR) of 25%, based on an 8% discount rate. The operation will have two years of negative free cash flow, as it has to be constructed in this period. Even with some of the capital spent in the first year of operation, it is projected that this year will have a positive free cash flow. This economic analysis indicates that the investment payback should occur 2.6 years from the start of the commercial production.

 

1.11 Conclusions

 

Florida canyon has long been recognized as a significant Mississippi Valley Type mineral resource for zinc. The work performed to complete this study demonstrates that Florida Canyon has sufficient zinc resources, with about 2.4 million tonnes of measured and indicated mineral resource and nearly 15 million tonnes of inferred, to warrant further work. These tonnages are representative of material that is both of sufficient grade, and sufficient continuity to form potential stope shapes, even though mineral resources are not mineral reserves.

 

A thorough understanding of the resource and the mineralogy will be needed. At least some of the mineralized material is in the form of carbonates or silicates which will require distinct treatment to recover the metal and produce a viable concentrate.

 

The project is in a remote area with challenging topography which will require upgrading of the local infrastructure for a commercial operation. Successful development and operation will require a strong commitment to the community to maintain the social license.

 

1.12 Recommendations

 

Gustavson has reviewed the technical studies completed by Nexa and its predecessor, Votorantim. Some of these studies have been sufficiently detailed to form the basis for feasibility investigations to support a production decision. To attain this level of project design detail, new studies will need to be completed based on current market conditions and mineral resource estimates to provide the foundation for future development. The following recommendations focus on the near-term recommendations for project development.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

1.12.1 Metallurgy

 

The focus of this report is to update, restate and refine the resource estimation. The newly restated resources define a larger inventory of ore with a different mineralogy than the mineral resource previously used in the PEA. The increased proportion of sulfide ore with less impurities of oxidized zinc and lead minerals provides a significant opportunity, in comparison to the PEA, for lower processing costs, higher recoveries and increased concentrate grades. These more favorable operating parameters should have a significant favorable impact on project economics, particularly combined with the larger global resources base. However, the currently available metallurgical studies are inadequate to support an optimization study of processing options.

 

Therefore, a redesigned program of metallurgy is recommended, starting with more representative sampling of the ore deposit with variability testing in mind. Future studies by a reputable metallurgical firm should prioritize work on the most abundant and most profitable ore type, sulfide ore. Upon completion of a new metallurgical study and combined with the newly increased resource base, a new economic assessment may be warranted.

 

1.12.2 Resource Conversion Drilling

 

Recent drilling was very successful in defining new resources within the previously defined footprint of the deposit. Further additions by discovery of new bodies within the existing resource are probable but the primary emphasis of drilling in the core of the deposit should shift to resource conversion core drilling since the ratio of Measured/Indicated to Inferred resource is low. Mine planning suitable for mineral reserves definition should be supported by a higher proportion of measured and indicated mineral resources.

 

Underground drilling is recommended because the surface topography is challenging for the development of drill stations and the surface drilling season is short. The relative closeness of individual ore shoots also supports underground drilling, the access for which can be developed even with the steep terrain. It is likely that subsurface drilling will identify new zones that are not feasible to be tested from surface drill sites.

 

Permits will provide for underground drilling in both the northern and southern parts of the deposit.

    

1.12.3 Resource Expansion Drilling

 

Permitting is in progress to test several exploration targets that have been identified on the Minera Bongará Property. There are also surface drill sites that are currently permitted that can be used to test known targets.

 

A proposed work program is detailed in Table 1‑4.

  

 

 

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Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

Table 1‑4 Planned work program for 2021-2022

 

Florida Canyon Prefeasibility Technical Work

Task

Description

Quantity

Unit Cost US$

Est. Budget

Metallurgy

 

 

 

 

 

 

Sampling

20

 

$10,000

Test Work

20

 

$250,000

Underground

 

 

 

 

 

 

North Adit Development

1000 m

$2,000

$2,000,000

South Adit Development

250 m

$2,000

$500,000

Drilling

 

 

 

 

 

 

Underground Resource

15,000 m

$250

$3,750,000

Surface Resource

10,000 m

$300

$3,000,000

Support Cost

Camp, Oversight

-

 

$1,500,000

Total

 

 

 

$11,010,000

 

**

Assumes Road Access Complete. (Does not include project fixed costs)

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

2 Introduction

 

2.1 Terms of Reference and Purpose of the Report

 

Gustavson Associates, LLC (Gustavson) was commissioned by Solitario Zinc Corporation, (Solitario) to prepare an updated Technical Report on Mineral Resources for the Florida Canyon Zinc project.

 

This report was prepared to comply with public reporting obligations for the US Securities Exchange Commission, in 17CFR Part 229.1300 (SK-1300). The mineral resource estimate and interpretations and conclusions reported here are based on technical data available prior to the effective date of this report, February 1, 2021.

 

2.2 Source of Data and Information

 

The information, opinions, conclusions, and estimates presented in this report are based on the following:

 

·

Information and technical data provided by Solitario.

·

Review and assessment of previous investigations.

·

Assumptions, conditions, and qualifications as set forth in the report; and

·

Review and assessment of data, reports, and conclusions from other consulting organizations and previous property owners.

 

These sources of information are presented throughout this report and in Item 27 – References. The qualified persons are unaware of any material technical data other than that presented by Solitario.

 

Previous reports were reviewed by Gustavson to determine if the information were suitable to be used in this report and edited where necessary. Except for section 14 there were no material changes.

   

2.3 Details of Inspection

 

Due to COVID-19 travel protocols, no site visit to Florida Canyon was possible. It is currently not possible to safely review the underground workings, and no drilling or other surface activities were taking place during the preparation of the report.

 

The geological logging and data capture procedures were reviewed. Information was recorded on a laptop or tablet using the software DH Logger which was configured to capture data in a controlled manner on rock type, texture, structure, fossil occurrence and mineral content. The sampling methodology was consistent with industry best practice. The laboratory analyses were introduced directly into the Nexa company database by the designated database manager and a data export designed to extract all the drill hole data files relevant to the Florida Canyon project in a secure, and consistent manner.

 

A review of the sample handling protocols applied by Nexa at Florida Canyon in the collection and transport of samples to the laboratory and the QAQC methodology shows that the standard procedures are thorough and within industry standard practices.

   

2.4 Previous Reports on Project

 

This report amends the NI 43-101 Technical Report on Resources Florida Canyon Zinc Project, prepared by Gustavson Associates, LLC Inc. Dated April 5, 2021, Effective Date February 1, 2021. For some chapters, text and figures have been summarized from the 2017 Preliminary Economic Assessment Florida Canyon Zinc Project, Amazonas Department, Peru with Effective Date: July 13, 2017 and Report Date: August 3, 2017. This 2021 Technical Report update does not have a negative impact on or otherwise adversely affect the mineral resource inventory that formed the basis of the 2017 PEA. Some results and conclusions of the 2017 PEA are still considered current and therefore have been carried over for this Report.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

3 Property Description and Location

 

3.1 Location

 

The Florida Canyon Zinc Project is in the Eastern Cordillera of Peru in the upper Amazon River Basin. It is 680 km north-northeast of Lima and 245 km northeast of Chiclayo, Peru, in the District of Shipasbamba, Bongará Province, Amazonas Department (Figure 3‑1). The Project area can be reached from the coastal city of Chiclayo by the paved Carretera Marginal highway. The central point coordinates of the Project are approximately 825,248 East and, 9,352,626 North (UTM Zone 17S, Datum WGS 84). Elevation ranges from 1,800 meters to approximately 3,200 meters. The climate is classified as high-altitude tropical jungle and the annual rainfall average exceeds 1 m with up to 2 m in the cloud forest at higher elevations.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

  

Figure 3‑1Project Location Map

  

 

 

Gustavson Associates, LLC

15 March 2022

 

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

3.2 Mineral Titles, Claims, Rights, Leases and Options

 

3.2.1 Mineral Rights in Peru

 

Mining in Peru is governed by the General Mining Law, which specifies that all mineral assets belong to the Peruvian State. Mining concessions are granted to individuals or other entities of national or foreign origin and authorize the title holder to perform all minerals-related activities from exploration to exploitation. Once titled, concessions are irrevocable for so long as the fees are paid to the federal government and legal obligations are performed on time. A claim can be granted only in multiples of a cuadrícula, which is a 100-ha plot, up to a maximum size of 1,000 ha. Boundaries of newly granted claims are oriented north-south or east-west. No monumentation of the claim boundary in the field is necessary.

 

Concessions are real assets and are subject to laws of private property. Foreign entities have the same rights as Peruvians to hold claims except for a zone within 50 km of international borders. Title holders have a right of access and development of minerals, but an access agreement is required with private property surface rights owners and formalized “Communities”. To ratify an agreement with a Community, a majority of all community members must vote in favor of the agreement as written. A recently issued law (as modified) also requires formal consultation with federally recognized indigenous communities in certain areas.

 

To maintain mining concessions in good standing the owner must:

 

 

·

Pay annual license fees (“derechos de vigencia”), currently USD$3/ha. Fees are reduced for qualified “small miners” who pay USD$1/ha. The small miner is an individual or company owning no more than 2000 ha of mineral rights in Peru. Failure to pay the applicable license fees for any two consecutive years results in the cancellation of mining concessions.

 

·

Starting in year 11 after originally acquiring the concession, the owner must either meet minimum production levels or minimum expenditure commitments. If the concession owner does not meet expenditure or production commitments, then the owner must also pay an annual penalty as follows.

 

 

·

Minimum annual production (MAP) must have a value of one UIT (Unidad Impositiva Tributaria), equal to 4,400 Peruvian soles (approximately US$1200 in 2021) per hectare of the property. If the MAP is not achieved, then a penalty must be paid on a sliding scale escalating from 2% to 10% annually of the MAP. If the property is not in production by year 30 then the mineral rights are forfeited.

 

·

Minimum annual expenditure is defined as a value of ten times the value of the penalty as defined above.

 

·

Failure to pay applicable penalties for two consecutive years results in the cancellation of mining concessions.

 

 

 

Gustavson Associates, LLC

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Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

3.2.2 Mineral Titles

 

The mineral resources at Florida Canyon are located on sixteen contiguous mining concessions covering approximately 12,600 ha (Table 3‑1, Figure 3‑2). The concession titles are in the name of the Peruvian company Minera Bongará S.A. and are subject of the Minera Bongará joint venture agreement between Solitario and Nexa Resources. All concession titles are current.

 

The Minera Bongará concessions are surrounded by a second group of forty-eight contiguous mining concessions, covering approximately 36,080 ha (Table 3‑1, Figure 3‑2). These concession titles are held in the name of Minera Chambará, a Peruvian company that is party to a separate joint venture agreement between Nexa and Solitario. Of the forty-eight concessions, nine titles are pending.

 

According to Peruvian law, concessions may be held indefinitely, subject to timely payment of annual fees to the government. At the time of issuance of this study, annual concession payments to the Peru Ministry of Mines were current for the Minera Bongará and Minera Chambará claims. Fees payable in 2021 for the Minera Bongará property will total approximately US $613,000 (Table 3‑1).

 

Nexa, who acts as Operator of the joint venture companies Minera Bongará and Minera Chambará, entered into a surface rights agreement with the local community of Shipasbamba which controls the surface rights of the portion of the Project affected by planned development. This agreement provides for annual payments and funding for mutually agreed upon social development programs in return for the right to perform exploration work including road building and drilling as described in 3.6.1.

 

 

 

Gustavson Associates, LLC

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Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

 

Table 3‑1 List of Minera Bongará Mineral Concessions

 

Concession Name

Number

Status

Hectares

Claim Date

2021 Holding Fees (US$)

District

BONGARA CINCUENTICINCO

10233396

Titled

1,000

8/7/1996

26,561.64

FLORIDA/SHIPASBAMBA

BONGARA CINCUENTICUATRO

10233296

Titled

600

8/7/1996

15,936.99

FLORIDA/SHIPASBAMBA

BONGARA VEINTISIETE

10783595

Titled

300

6/26/1995

7,968.49

SHIPASBAMBA

DEL PIERO UNO

10338505

Titled

1,000

11/2/2005

26,561.64

FLORIDA/SHIPASBAMBA

DEL PIERO DOS

10338405

Titled

600

11/2/2005

13,280.82

FLORIDA/SHIPASBAMBA

DEL PIERO TRES

10338605

Titled

700

11/2/2005

15,936.99

FLORIDA/SHIPASBAMBA

DEL PIERO CUATRO

10000206

Titled

500

1/3/2006

26,561.64

FLORIDA/SHIPASBAMBA

DEL PIERO CINCO

10000306

Titled

1,000

1/3/2006

18,593.15

SHIPASBAMBA

DEL PIERO SEIS

10204507

Titled

1,000

3/23/2007

26,561.64

CAJARURO/FLORIDA

VM 42

10190507

Titled

1,000

3/21/2007

26,561.64

CAJARURO/FLORIDA/ SHIPASBAMBA

VM 74

10193707

Titled

1,000

3/21/2007

26,561.64

SHIPASBAMBA

VM 75

10193807

Titled

1,000

3/21/2007

26,561.64

SHIPASBAMBA

VM 94

10045708

Titled

900

1/28/2008

2,700.00

FLORIDA/SHIPASBAMBA

VM 95

10045808

Titled

500

1/28/2008

13,280.82

FLORIDA

VM 97

10046008

Titled

1,000

1/28/2008

26,561.64

FLORIDA/SHIPASBAMBA

VM 98

10046108

Titled

500

1/28/2008

13,280.82

FLORIDA/SHIPASBAMBA

Total

 

 

 

 

$613,408.00

 

 

Source: Solitario, 2021

 

 

 

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S-K 1300 Technical Report Summary

  

  

Figure 3‑2 Map of Mineral Claims and Mineral Occurrences

  

 

 

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Florida Canyon

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3.2.3 Nature and Extent of Issuer’s Interest

 

Minera Bongará

 

Minera Bongará S.A. is a Peruvian company formed in 2006 in accordance with the terms of a joint venture agreement between Votorantim Metais-Cajamarquilla S.A. (now Nexa Resources) and Solitario. Nexa is the operating partner of Minera Bongará and is responsible for keeping the property in good standing. Current shareholding ownership of Minera Bongará is 39% Solitario, 61% Nexa. Nexa will earn a 70% interest in Minera Bongará by continuing to solely fund all project expenditures through the completion of a positive feasibility study. Nexa is required to offer a loan facility at market rates for Solitario’s portion of construction capital to build a mine. Solitario will repay the loan through 50% of its project cash flow.

 

3.3 Sufficiency of Surface Rights

 

The Project concession package provides legal basis for entry, exploration and mining. However, agreements are required with local surface rights owners prior to surface disturbing activities. Through the exploration period conducted to date, Nexa has signed periodic surface rights agreements with the community of Shipasbamba which controls virtually all land for which Minera Bongará controls mineral rights. Small inliers of private surface rights exist for which agreements with individual landowners are required from time to time. Minera Bongará has sufficient right for surface for the foreseen footprint of the operation.

 

3.4 Environmental Impacts and Permitting

 

The Ministry of Environment (MINAM) is the environmental authority in Peru. Its administrative department oversees compliance of environmental regulations for mineral exploration activities. Depending on the level of environmental impacts of a proposed exploration program the proponent will be required to prepare an environmental study to support an operating plan according to the following criteria.

 

An Environmental Technical Report (Ficha Técnica Ambiental or FTA) is a study prepared for approval of exploration activities with non-significant environmental impacts and the applicant is seeking permission to construct less than 20 drill platforms. The environmental authority has 10 working days to approve or make observations to the FTA.

 

An Environmental Impact Declaration (Declaración de Impacto Ambiental or DIA) must be presented for Category I level exploration activities which have a maximum of 40 drill platforms or disturbance of surface areas of up to 10 ha. The environmental authority has 45 working days to make observations.

 

A semi-detailed Environmental Impact Study (Estudio de Impacto Ambiental Semi-Detallado or EIAsd) is required for Category II exploration programs which have between 40–700 drill platforms or a surface disturbance of more than 10 ha. The environmental authority has 96 working days to make observations. The total process including preparation of the study by a registered environmental consulting company can take 6–12 months not including potential baseline studies.

 

 

 

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A fully detailed Environmental Impact Study (Estudio de Impacto Ambiental Detallado or EIAD) must be presented for mine construction. The preparation and authorization of such a study can take as long as two years after preparation of the mine plan has been finalized.

 

Specific authorizations, permits and licenses required for future mining include, at a minimum:

 

 

·

EIA (as modified during the mine life);

 

·

Mine Closure Plan and Final Mine Closure Plan within two years of end of operation;

 

·

Certificate of Nonexistence of Archaeological Remains;

 

·

Water Use License (groundwater and/or surface water);

 

·

Water construction authorization;

 

·

Sewage authorization;

 

·

Drinking water treatment facility license;

 

·

Explosives use license and explosives storage licenses;

 

·

Controlled chemicals certificate;

 

·

Beneficiation concession;

 

·

Mining authorization;

 

·

Closure bonding; and

 

·

Environmental Management Plan approval.

 

 

 

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The Florida Canyon Project currently works under an approved EIAd which has been modified four times. A fifth modification of the EIAd is in preparation which will permit over 100 additional drill sites and provide for expanded underground exploration previously permitted in earlier modifications. The fifth modification is planned for submission in 2021.

 

3.5 Other Significant Factors and Risks

 

There are no known significant factors or risks affecting access, title or right or ability to perform work on the property that are not discussed herein. Common risks of service rights, negotiations and permitting are not expected to be significant.

 

The project is in a remote area with challenging topography which will require upgrading of the local infrastructure for a commercial operation. Successful development and operation will require a strong commitment to the community to maintain the social license.

 

3.6 Royalties, Taxes, and Agreements

 

Peru imposes a net smelter return royalty (NSR) on all precious and base metal production at a rate determined by the Operating Margin of a mining property. Table 3‑2 shows the marginal royalty rate for various operating margins reported by the operator. The minimum rate is 1%.

 

 

 

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Table 3‑2 Marginal royalty rates for various operating margins

 

Royalty

Operating Margin

Marginal Rate

1

0%

10%

1.00%

2

10%

15%

1.75%

3

15%

20%

2.50%

4

20%

25%

3.25%

5

25%

30%

4.00%

6

30%

35%

4.75%

7

35%

40%

5.50%

8

40%

45%

6.25%

9

45%

50%

7.00%

10

50%

55%

7.75%

11

55%

60%

8.50%

12

60%

65%

9.25%

13

65%

70%

10.00%

14

70%

75%

10.75%

15

75%

80%

11.50%

16

>80%

12.00%

 

Corporate income tax in Peru is charged at a flat rate of 29.5%. However, mining companies must also pay an additional “Special Mining Tax” (SMT) varying from 2 to 8.4% of net operating profit. The tax rate for the SMT is determined by the reported operating profit corresponding to one of 17 published tax brackets.

 

A Value added Tax of 18% is applied to the purchase prices of goods and services. However, certain geographical economic zones are excluded from the levy of this tax.

 

Since 2014, mining title holders are required to pay a contribution to the agencies in charge of regulatory oversight of mining activities: OEFA (environment); and OSINERGMIN (health and safety). The amount of the contribution is payable monthly and is calculated based on monthly sales at rates of 0.10% to OEFA and OSINERGMIN.

   

 

 

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3.6.1 Property Agreements

 

The local community of Shipasbamba is the owner of the surface rights of the Minera Bongará Property. Nexa, the operator of the joint venture company Minera Bongará, entered into a three-year surface rights agreement in 2018 with the community of Shipasbamba. The agreement is in effect until the end of 2021. This agreement provides for annual payments to the community and funding for mutually agreed upon social development programs in return for Minera Bongará’s right to perform exploration work including road building, underground exploration, and drilling. Under this agreement Nexa has obligations in 2021 as follows.

 

 

·

Pay to the community US $80,000

 

·

Improve and maintain the existing forty-two-kilometer road from the town of Shipasbamba to the project area and local communities (See Figure 3‑3)

 

·

Assist the community by surveying community boundaries

 

·

Provide the services of a veterinarian and a professional agronomist to assist community members with community projects.

 

Figure 3‑3 Access road to the Florida Canyon Project (in construction)

  

 

 

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4 Accessibility, Climate, Local Resources, Infrastructure and Physiography

 

4.1 Topography, Elevation, and Vegetation

 

The Project area elevation ranges between 1,800 and 3,200 m, with areas of steep topography consisting of prominent escarpments and deep valleys. Dense jungle or forest vegetation covers most of the area, as shown in Figure 4‑1.

 

 

Figure 4‑1 Photograph of the Florida Canyon Project Area

 

Source: Solitario, 2021

 

 

 

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4.2 Accessibility and Transportation to the Property

 

Road access to the Bongará province of Amazonas is provided primarily by the Carretera Marginal paved highway connecting the port city of Chiclayo to Pedro Ruiz Gallo, the largest town immediately adjacent to the project property. The road distance from Chiclayo to Pedro Ruiz is approximately 300 km and takes, on average, 6 hours by car. Pedro Ruiz is a regional commerce center with hotels, restaurants, communication, and a population estimated to be 10,000. The immediate Project area is not populated but there are several small villages nearby including the district capital of the Shipasbamba. Important smaller towns near the project are Florida and Nueva Cumba. A graded gravel road is maintained from Pedro Ruiz to Shipasbamba. Nexa is constructing a road that extends from Shipasbamba to local villages and the Project as discussed in 3.6.1 and shown on Figure 3‑3.

 

4.3 Climate and Length of Operating Season

 

The climate at the Project is high-altitude tropical jungle. The annual temperature at elevations between 1,000 m and 2,000 m averages around 25°C. Most precipitation occurs during the rainy season, generally from November to April. The annual rainfall average exceeds 1 m with up to 2 m in cloud forest at higher elevations. Although exploration can continue year-round, surface exploration is more difficult during the rainy season when visibility hampers helicopter supported programs and muddy conditions hinder ground travel and field work.

 

4.4 Infrastructure Availability and Sources

 

4.4.1 Existing Infrastructure

 

The Project area has little existing infrastructure with only the access road (under construction), several primitive drill camps (Figure 4‑2) and a number of drill pads. Drill camps provide support for drilling and technical crews, providing temporary housing, food preparation, mess halls, field offices and staging facilities during active drilling.

 

Surface drilling has been accomplished using helicopter support from Shipasbamba which lies 10 km to the southeast of the resource area. The Project core shed, heliport, sample preparation and sample storage facility are Shipasbamba (Figure 4‑3). Office space and storage is also maintained in Pedro Ruiz.

 

 

 

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Figure 4‑2 Drill Support Camp

 

Source: Solitario, 2020

 

 

Figure 4‑3 Shipsabamba Project Camp

  

Source: Solitario, 2020

 

 

 

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4.4.2 Proximity to Population Center

 

No commercial services are currently available at the project site. The small communities of Florida and Nueva Cumba are 1 to 2 km south of the Roso drill camp on the foot trail from Tingo on the Utcubamba River to the Project. The Project Road under construction will connect Shipasbamba with the Roso camp and the villages of Florida and Nueva Cumba.

 

Shipasbamba is the nearest town to the Project with current road access. A graded gravel Provincial road provides access from Pedro Ruiz on the Carretera Marginal. Scheduled minibuses travel this route and public transportation is also provided by taxis and mototaxis.

 

Pedro Ruiz is the nearest town with commercial services including retail, hotels, restaurants and maintenance services. The nearest largest cities to Pedro Ruiz with regular air service are Chiclayo, a coastal port city, Jaen, a small city approximately three hours by road and Bagua Grande, two hours from Pedro Ruiz on the Carretera Marginal road.

 

The small population near the Project is supported by subsistence farming. Saleable crops include coffee, rocoto pepper, yucca, fruit and vegetables. Cedar trees are also harvested and used in local construction.

 

4.4.3 Power

 

There is currently no line power near the site. The 2017 Florida Canyon PEA assumed completion of a proposed hydropower generation and transmission development project located in close proximity to the mine (Figure 3‑3). This planned project has now progressed to the detailed engineering phase by Energoret, a Private company with access to a mixture of government and private funding for hydroelectric projects. This Tingo hydroelectric complex near Florida Canyon is planned to be comprised of three separate hydroelectric plants along the Utcubamba River which will generate 400 MW. Power will be distributed to the national power grid by high voltage distribution lines. The closest point to the grid is seven kilometers south of El Roso camp on the Utcubamba River where a substation is planned for power distribution to the Project (Figure 3‑3). Nexa has entered into a Letter of Intent agreement with Energoret committing to use between 5 and 10 MW of available power. Current projections of power needs for a 2500 to 3000 tpd project at Florida Canyon is 7 to 8 MW.

 

The business arrangement between Energoret and Minera Bongará will be structured so that power rates would include repayment of capital to construct the powerline and substation.

 

4.4.4 Water

 

The operation will require water for use for processing, mining, dust suppression and potable consumption. The processing facility will utilize a combination of recycled water generated by dewatering of tailings and stormwater captured on site for the majority of the processing needs. It is anticipated that ground water will be encountered in the mine and captured in sumps for mine water needs. Excess water will be released after residence in settling ponds. The very low pyrite content of the ore and waste and its high buffering capacity strongly suggests that water treatment of mine and other contact water will not be required.

 

 

 

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Any additional water that will be required could be supplied by water well(s) developed on site.

 

Tesoro Creek, a small local drainage, has been used for domestic water supply by nearby residents. Treated water from this creek may be used for domestic requirements. It will be piped by gravity from the creek to a small treatment plant and a water storage tank.

 

Permits will be required from the Autoridad Nacional del Agua for industrial use, domestic use and treatment.

 

4.4.5 Personnel

 

Many local workers have been employed at the project since its inception and have been trained in specialized tasks relating to minerals exploration. The majority reside in the local villages and in Pedro Ruiz. In addition, untrained labor is readily available from local communities where few formal employment opportunities currently exist. However, Peru is a mature mining country with a mobile workforce and abundant trained labor in specialized mining and industrial fields.

 

 

 

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Florida Canyon

S-K 1300 Technical Report Summary

  

5 History

 

5.1 Previous Operations

 

Prior to the discovery of mineral occurrences by Solitario in 1994, no mineral prospecting had been done on the Property and no concessions had been historically recorded. In 1995 and later, Solitario staked many of the current mineral concessions in the Project area.

 

In 1996, Cominco Ltd. (Cominco) formed a joint venture partnership (JV) with Solitario. This agreement was subsequently terminated in 2000 and Solitario retained ownership of the property.

 

In 2006, Solitario formed two JV’s with Nexa as described in Section 3.2.3, for the exploration and possible development of the properties.

 

5.2 Historical Exploration & Development Results

 

In 1993 through 1995, Solitario executed a program of pitting and drilling at the previously known Mina Grande and Mina Chica oxide zinc prospects located 18 km northeast of the Project area. Solitario subsequently identified the Crystal prospect nearby and other oxidized zinc occurrences in the general area of the Yambrasbamba community. The geological studies and exploration work at these zinc deposits provided insights into the local stratigraphy and style of mineralization in the area. Comparisons with zinc occurrences elsewhere in Peru lead to the decision to undertake a regional exploration program to identify new occurrences of zinc in potentially more favorable stratigraphy.

 

The Florida Canyon zinc deposit was located through follow-up of an anomaly generated during a regional geochemical program in 1994.

 

Following formation of a JV with Solitario, Cominco Ltd., in conjunction with Solitario’s workers, completed various programs of field work at Florida Canyon in 1997 to 2000 including geologic mapping, geophysical surveys, surface soil and rock sampling, and diamond drilling. The scope of these programs is summarized below.

 

 

·

Geologic mapping at 1:1,000 scale covered 352 ha in the Project area. Mapping was conducted within Florida Canyon and its tributaries aided by hand-cut trails and clearing of vegetation-covered outcrops. This early mapping has been more recently validated in subsequent programs.

 

·

Mineralized outcrops identified in the Project area were cleaned of soil cover and sampled by chip channels for a total of total of 347 channel samples collected. This sampling consisted of individual samples of lengths of up to 2.0 m at non-regular spacing.

 

·

Stream sediment sampling of drainages was completed with consistent 500 m spacing along the gulches.

 

·

Soil samples were collected along topographic contour lines spaced vertically 50 m apart but with irregular lateral spacing. Part of this soil sampling followed the crests of hills, especially in the western part of Florida Canyon, mainly to identify mineralized linear structures. A total of 600 samples were collected.

 

·

An Induced Polarization (IP) geophysical survey in 3 lines covered 5.2 linear km. Two lines were located along the drainages A and B of the northern part of Florida Canyon with dipole-dipole spacing at 150 m, and a third line with dipole-dipole spacing a = 100 m along the southern sector of the Sam Fault target. Cominco also surveyed 6.5 km of radial lines from holes FC-41 and FC-47, drilled in 1999.

 

·

Diamond drilling between 1997 and 2000 totaled 82 holes and 24,781 m.

 

 

 

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Solitario continued field work at a reduced scale until forming the Minera Bongará and Minera Chambará JV’s in 2006 with a subsidiary of the private Brazilian mining company Votorantim Metais (now Nexa). Since that time Nexa increased the total number of exploration drill holes on the property to 545 comprising about 136,000 meters of core and completed about 700 meters of tunneling at the San Jorge deposit including 212 underground drill holes. Additionally, Nexa performed preliminary metallurgical work and various other engineering studies through 2017.

 

5.3 Recent Work

 

Since the issuance of the 2017 Florida Canyon PEA, drilling was conducted in 2018 and 2019 at the Florida Canyon Deposit, almost entirely within the known footprint of mineralization. This program consisted of 34 surface core holes totaling about 17,000 meters (Table 5‑1). The primary objective of this drilling was to increase sulfide-dominant zinc resources. Additionally, the global resource model was reexamined and refined as data was gathered from new drilling. These programs were designed to accomplish the following objectives.

 

 

a)

Verify the hypothesized steeply dipping replacement deposit, the 1021 (ten twenty-one) Zone in the northern part of Florida Canyon. This objective was successful and delineated the mineralized structure for a strike length of approximately 800 meters based on a 1st pass spacing of drill intercepts. This new zone added Inferred Resources to the project resource model.

 

b)

Extend the San Jorge Zone in the southern part of Florida Canyon along strike to the south. This zone was successfully enlarged, and additions increased Inferred Resources to the project resource.

 

c)

Test continuity of the known steeply dipping Sam replacement zone. New drilling at the Sam Zone limited the extent of mineralization where tested and resulted in a modest decrease in Inferred Resources.

 

d)

Test the inferred presence of a new Manto (zone SJ-1412) extending to the east of the San Jorge Zone which successfully added Inferred Resources.

 

e)

Expand several other minor Manto zones which with modest increases in resources.

 

f)

The program successfully increased sulfide resources as all the 2018-2019 drill intercepts were sulfide dominant. Drill targets for sulfides are, by nature, deeper due to the depth of oxidation induced by surface weathering. However, the desirability of sulfide ores is much higher due to more favorable metallurgical characteristics of the ore.

 

g)

The change in Inferred resources as a result of all drilling and net of adjustments to the resource model was an addition of 6,015,733 tons of Inferred Resources in comparison to the previously reported 43-101 Compliant Report.

 

 

 

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Florida Canyon

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Table 5‑1 Campaign Summary - Florida Canyon

 

Year

Drill Holes

Company

Meters

Type

Contractor

1997

34

Cominco

8,409.70

DDH

Boart Longyear

1998

8

Cominco

2,108.35

DDH

MDH Bradley

1999

9

Cominco

3,977.90

DDH

MDH Bradley

2000

31

Cominco

10,297.00

DDH

MDH Bradley

2006

26

Votorantim Metais

4,353.50

DDH

MDH Bradley

2007

33

Votorantim Metais

11,189.30

DDH

MDH Bradley

2008

54

Votorantim Metais

16,468.85

DDH

MDH Bradley

2009

13

Votorantim Metais

3,611.30

DDH

MDH Bradley

2010

42

Votorantim Metais

12,242.40

DDH

MDH Bradley

2011

44

Votorantim Metais

11,116.15

DDH

MDH Bradley

2012

110

Votorantim Metais

23,558.55

DDH

MDH Bradley

2013

102

Votorantim Metais

12,389.05

DDH

MDH Bradley

2018

5

Nexa Resources

2,202.90

DDH

Bretsa

2019

34

Nexa Resources

14,833.20

DDH

Bretsa

Total

545

 

136,758.15

 

 

  

5.4 Historical Mineral Resource Estimates

 

Two previous mineral resource estimates were completed for the property in 2014 and 2017 jointly by Votorantim and Solitario.

 

In 2014, SRK reported Measured and Indicated at 2.78 Mt of 12.77% Zn, 1.78% Pb, and 18.2g/t Ag and, Inferred at 9.07Mt of 10.87% Zn, 1.21% Pb and 12.2g/t Ag.

 

In 2017, SRK reported Measured and Indicated at 3.256 Mt of 12.2% Zn, 1.53% Pb, and 18.51g/t Ag, and Inferred at 8.843Mt of 10.15% Zn, 1.05% Pb and 13.21g/t Ag in an NI 43-101 compliant PEA. This study included stope optimization, development designs, ventilation layouts, life of mine scheduling, and economic analysis. The study concluded that underground operations would last for approximately 15 years with a positive net present value. Details of this work is shown in Section 21.

 

5.5 Historical Production

 

There has not been any commercial mining in the Project area. The only underground excavation has been 700 m of underground drifting by Nexa to provide drill platforms at the San Jorge area.

 

 

 

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6 Geological Setting, Mineralization and Deposit

 

Information presented herein is derived from material provided by Nexa and Solitario, including Cominco reports, supported by independent reports including a thesis by Isaac Robles Vega of the National University of Huancavelica, M&R Consultores, and by the Regional Government of Amazonas, prepared by Walter Castro Medina. The character of the mineralization in core was confirmed by Simon Mortimer, Principle QP Geologist at Atticus Consulting in Lima/Santiago, during a site visit in 2020.

 

The Project is located within an extensive belt of Mesozoic carbonate rocks belonging to the Upper Triassic to Lower Jurassic Pucará Group and equivalents. This belt extends through the central and eastern extent of the Peruvian Andes for nearly 1000 km and is the host for many polymetallic and base metal vein and replacement deposits in the Peruvian Mineral Belt. Among these is the San Vicente Mississippi Valley Type (MVT) zinc-lead deposit that has many similarities to the Florida Canyon deposit and other MVT occurrences in the Project area. A regional geologic map is shown in Table 5‑1.

 

6.1 Regional Geology

 

The Peruvian Andes are Northwest-Southeast trending. Reports by Megard (1979); Dalmayrac et al. (1988) and Benavides- Cáceres (1999) establish the regional geological studies related to the geological evolution of the Peruvian Andes. These include the basic tools that complement field data and geological context related to the occurrence of MVT mineralization.

 

The Marañón Complex of the Neoproterozoic Era forms the regional geological basement with a NW-SE orientation and consists of metasedimentary rocks (slate, quartzite, phyllite), schist, mica schist and gneiss. It outcrops in the Southwest sector of the quadrangle of Bagua and underlies the Mitu Group of the Permo-Triassic Period in an angular unconformity.

 

The Mitu Group is a typical molasse deposit (sandstones, shales, and conglomerates) of continental origin. It occurs in medium to thick layers and are differentiated by their reddish to pink colors. In the project area, it intercepts deep with drill holes V-46, V-36 and V37A. The most accessible outcrops are observed downstream of the Corontachaca bridge on the Utcubamba River (close to Pedro Ruiz). Along 10 km, there are red sandstone layers ranging from 0.30 m to 1 m in thickness. These layers are resistant to erosion and solidified the canyon morphology of the Utcubamba Valley. Overlying the Mitu Group outcrops the Upper Triassic to Lower Jurassic Pucará Group, which hosts the MVT mineralization of the Florida Canyon Project area.

 

The Pucará Group is divided into 3 formations: Chambará (base), Aramachay (middle), and Condorsinga (top). The rocks of the Late Triassic-Early Jurassic Pucará Group that host the mineralized bodies were deposited along the coast basin. Sedimentation was dominated by carbonate rocks along a coastal sabkha plain. Evaporites, primarily anhydrite, associated with the coastal sabkha plain, along with coarse marine anoxic silt-carbonated mudstone, provided most of the components needed to host the Florida Canyon zinc-lead ore bodies.

 

 

 

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1.

The Chambará Formation corresponds to a marine sedimentation developed in subtropical to tropical seas where terrigenous contribution was restricted. Due to its lithological and textural characteristics, the Chambará Formation represents lithofacies from the middle of the carbonated platform. In parts with shallow water features, such as coquina bioclastic limestone, the dolomitized levels are what host most of the MVT mineralization of Florida Canyon. In the Florida Canyon Project area, the Chambará Formation is composed of high energy carbonates of barrier environments with local reef development that are represented by floatstone, wackestone, packstone and rudstone textures. Dimond drilling confirms the presence of district continuity of biostratigraphic markers.

 

2.

The Aramachay formation is made up of a sequence of bituminous limestone with alternating silt and clay in thin layers, corresponding to basin levels, where rhythmic sedimentation predominates which resulted in flat, tabular and regular bedding in layers of 10-20 cm. These layers are dark gray to black in color and present an abundance of organic material with the presence of fossils.

 

3.

The Corontachaca Formation is made up of calcareous conglomerates and calcareous sedimentary breccias. The presence of the rock in this formation is limited in the project area. However, it outcrops on the high peaks of the Santa Catalina area near Shipasbamba and on the Corontachaca Bridge on the Utcubamba River. It is related to the uplift and intense erosion of the limestones of the Pucara Group that give rise to the accumulation of slope deposits which were cemented by their own calcium carbonate solutions.

 

 

 

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Figure 6‑1 Regional Geologic Map

 

Source: Solitario, 2020 (translated)

 

 

 

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Figure 6‑2 Legend of Regional Geology Map

 

Source: Solitario, 2020 (translated)

 

 

 

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6.2 Local Geology

 

6.2.1 Lithography & Stratigraphy

 

A schematic stratigraphic column developed by Cominco and refined by Nexa shows the major geologic rock units in the Project area (Figure 6‑3). The basement rocks are the Pre-Cambrian Marañón Complex consisting of gneisses, mica-schists, phyllites and quartzites. These are overlain by an angular unconformity with the overlying Permo -Triassic Mitu Group composed of a sequence of redbeds consisting of polymictic conglomerates interspersed with beds of fine-grained sandstones.

 

  

Figure 6‑3 Project Area Stratigraphic Column

 

Source: Nexa, 2013b, translated by Solitario

 

Overlying the Mitu Group is the Pucará Group of Triassic - lower Jurassic age, which hosts the zinc-lead-silver mineralization of the Florida Canyon Project. The Pucará Group is divided into the Chambará Formation at the base, the Aramachay Formation in the middle and the Condorsinga Formation on top.

 

 

 

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The Chambará formation has an approximate thickness between 650 m and 750 m in the project area, and consists of crinoidal packstone, wackstones and rudstones. It is divided into three members in the Florida Canyon vicinity; from bottom to top, they are Chambará 1, Chambará 2 and Chambará 3. The bulk of known zinc mineralization is hosted in Chambará 2. The stratigraphy between the distinctive Coquina (CM) and Intact Bivalve (IBM) paleontological marker horizons in Chambará 2 define a sequence of permeable higher energy facies within the Chambará 2 that control much of the especially strong dolomitization within the sequence.

 

The Aramachay formation lies conformably on the Chambará with a variable thickness between 150 m and 250 m, consisting of a monotonous sequence of black and limonitic shales and bitumen with thin interbedded nodular limestones. The Condorsinga Formation concordantly lies above, with restricted outcrop distribution due to erosion. It consists of calcareous gray mudstones with thicknesses varying between 150 m and 300 m.

 

The Corontochaca Formation of Upper Jurassic age lies unconformably on the Pucará Group. It outcrops in erosional remnants and is locally more than 300 m thick consisting of a package of monotonous oligomictic and polymictic fluvial calcareous sediments and colluvial limestone breccias with local fragments of Paleozoic or Precambrian fragments.

 

The Goyllarisquizga Formation occurs in angular unconformity over the Corontochaca and Pucará Group and is present mainly in the eastern and western sections of the Project area. It consists of poorly sorted yellowish to white sandstone deposited in coastal marine to fluvial-deltaic environments. It also contains some thin, lenticular intercalations of siltstones and mudstones whitish to reddish. The thickness ranges from 300 to 400 m.

 

6.2.2 Structure

 

The following discussion of structural geology in the Project area is adapted in part from an internal report by Cominco (2000).

 

The structure at Florida Canyon is dominated by a N50º-60ºW trending domal anticline (or doubly plunging anticline) as defined from the base of Chambará 2 formation. This domal anticline is cut on the west by the Sam Fault and to the east by the Tesoro-Florida Fault. The Sam Fault, which has been defined by drilling, has a north-south to northeast trend and a steep 80 to 85º westerly dip. The Sam Fault has an apparent scissor dip-slip displacement of >120 m in the north and <50 m in the south. To the south its trace is uncertain and complicated by northwest and possibly east-west structures. This appears to have been a long-lived structure, with its last strike-slip displacement being dextral. A facies change in the Chambará 2 from high energy to the east of the fault to low energy to the west many be due to original depositional features during growth fault formation that has important exploration implications.

 

At Florida Canyon there are also well-defined northwest and northeast fracture systems, which appear to have important controls on the location of mineralization. Mineralized structures occur in conjugate fractures, with N10º-50ºE trends present at a number of mineralized surface outcrops while trends of N50º-80ºW are identified at other showings. Mineralization of mantos within the Karen-Milagros area appears to be preferentially controlled by northeast feeder structures.

 

 

 

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The Tesoro-Florida Fault defining the eastern limits of most drilling to date is a N15º-30ºW trending structure, part of a regional lineament, and defined by an escarpment. It is interpreted to have a steep dip, with its sense of motion not having been defined, but with the east block being structurally lower than the west block, which results in significantly deeper drilling on the east fault block to reach the Chambará 2 stratigraphy. Because most of the work has concentrated further west on the San Jorge, Karen Milagros and Sam Fault areas there is little information on the Tesoro-Florida Fault, but it likely has similarly complex splays as the Sam Fault and may be, like the Sam fault, a controlling feeder for untested mineral potential in the eastern area.

 

At both the Karen-Milagros and San Jorge areas, feeder structures have an important control on the mineralized mantos but also represent a significant portion of the resource as steeply dipping structural fillings and replacement. The displacement along these structures is not large although the exact throw is often difficult to ascertain due to the strong alteration and later mineralization. The interpretation of displacement is further obscured by likely subtle variation in thickness and lithology of local stratigraphic units on either side of structures due to growth faulting.

 

Pre-mineral karsting also played a role in controlling mineralization along with simple structural filling and passive replacement adjacent to conduits. Replacement of karst fragments and cave sediments are commonly observed in larger structurally controlled mineralized bodies. The configuration of mineralized structures as they control and merge with manto replacements often take the form of Christmas–tree breakthrough structures and will likely be shown to represent a larger proportion of the resource as more horizontally oriented drilling from underground workings supplants the dominantly high angle surface drilling performed to date.

 

Post mineral structure and karsting overprints earlier structural trends and controls in part oxidized remobilized mineralization.

 

6.2.3 Alteration

 

The alteration and solution overprints in the Florida Canyon deposit include dolomitization, pseudo brecciation and karstification, mainly affecting the limestones of Chambará 2 and locally Chambará 1 and 3. Dolomitization and karstification occurred in multiple events spatially overlapping the structural corridors Sam, San Jorge and Karen-Milagros. Dolomitization was an important control on the movement of mineralizing fluids and has been studied and logged in detail throughout all of the drilling campaigns. It is also modeled in this study as a limiting constraint on mineralization.

 

The alteration halo is open along structure in all directions and is especially pervasive in the stratigraphic interval lying between the paleontological marker horizons CM (Coquina Marker) and IBM (Intact Bivalve Marker) of the Chambará 2 formation. The alteration halo is composed mostly of medium and coarse-grained crystalline dolomite replacing calcareous packstone, rudstones, floatstones and wackestones. Mostly the dolomitic rudstones, and locally the packstones, transform laterally when in proximity of faults and major fractures (Sam, San Jorge and Karen-Milagros) to mineralized pseudobreccias and karst structures.

 

 

 

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6.2.4 Mineralization

 

The zinc-lead-silver mineralization of the Florida Canyon deposit occurs as sulfides hosted in dolomitized zones of the Chambará 2 Formation. Dolomite paragenesis and later sulfide mineralization are controlled by a combination of porosity, permeability, and structural preparation. Metals occur in sphalerite and lesser galena, which contains silver. Minor mineralization is hosted in limestones, but the bulk of sphalerite and galena is hosted in dolomite.

 

In a number of core samples, the mineralization has very sharp contacts along the dolomitization boundary. Characteristic mineralization textures include massive and disseminated mantos, mineralization in dissolution breccias, collapse breccias and pseudobreccias. The different breccias and vein types are structurally controlled by faults of north-south and northeast-southwest direction.

 

The mineralization is characterized by the presence of sphalerite, galena and locally pyrite. Sulfide replacements occur in dolomitized limestone of variable grain sized and in solution breccias with white dolospar and lesser amounts of late generation calcite. Pyrite content is generally low, with percentages averaging less than 2% by volume. Sphalerite in mineralized sections has variable grain size from 0.1 to greater than 5 mm, with colors ranging from dark brown through reddish brown to light brown. It occurs as individual crystals or in massive form, sometimes displaying colloform textures with bands of slightly differing color zoning, indicators of polyphase hydrothermal deposition.

 

Early fine-grained sphalerite has evidence of later deformation and reactions to secondary mineralizing fluids. A second phase of more massive sphalerite mineralization is observed within the core of the deposit. These crystals are coarse-grained, regular, euhedral and show very little evidence of any post-depositional deformation. The sphalerite is contemporaneous with fine to coarse grained galena and is often overprinted with a later stage coarse-grained, euhedral galena.

 

The presence of zinc oxides, locally to considerable depths, is due to syngenetic oxidation, with later contributions of basin-derived connate water and movement of rainwater through fractures that leached the limestones and formed significant karst cavities.

 

6.3 Property Geology

 

The areas of current exploration interest are the Karen/Milagros, San Jorge and Sam Fault deposits. These mineralized zones are hosted in the dolomitized Chambará 2 sub-unit of the Pucará Group carbonates, bracketed by the Coquina and Intact Bivalve Marker beds. Geologic mapping and modeling include refining the extents of Chambará 2, and further defining the steeply dipping feeder structures to predict additional zinc-lead-silver mineralization. The outcrop geology of the deposit area is shown in Figure 6‑4, with emphasis on the Chambará Formation.

 

 

 

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Figure 6‑4 Florida Canyon Project Geologic Map

 

Source: Nexa, 2020 (translated)

 

 

 

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6.4 Significant Mineralized Zone

 

Local and regional geologic mapping, geologic drillhole logs, and the dome-shaped geometry of the deposit suggest the mineralization is hosted in a broad anticline structure. Florida Canyon is the collective name of the deposits in the Project area in Florida Canyon, and includes the Karen-Milagros, San Jorge, Sam Fault zones and similar mineralized strata between these areas.

 

Modeled manto zones are between 1 m and 9 m thick and occur over an area of about 1 km x 3 km and are open in all directions. Unmineralized gaps exist within the mineralized manto zones, as is typical for hydrothermal replacement deposits. Irregular steeply dipping replacement bodies also occur, frequently at the intersection of vein-like feeder structures and in karst-controlled mineralization.

 

Mineralization outcrops locally in a number of areas and has been drilled at depths of up to about 450 m below ground surface. Figure 6‑5 is a west-facing cross section of the geologic model in the mineralized zone. Zinc mineralization occurs as massive sphalerite (ZnS) and is locally oxidized to smithsonite (ZnCO3) and hemimorphite (Zn4Si2O7 (OH)2). Lead occurs in galena (PbS), cerussite (PbCO3) and anglesite (PbSO4).

 

 

Figure 6‑5 Cross Section of the Project Geologic Model

 

Source: Nexa, 2013b

 

6.5 Deposit Types

 

MVT deposits are hosted in carbonate rocks and show cavity-filling or replacement-style mineralization. The characteristic minerals are sphalerite, galena, fluorite, and barite which provide clean concentrates of Zn and Pb. The host rock may be silicified, and common alteration minerals include dolomite, calcite, jasperoid and silica. MVT deposits are typically spatially extensive but limited by the permeability of the host rock units. This control makes them appear stratabound. Chemical and structural preparation are the main controls on permeability, and therefore, the extent of fluid migration and metal precipitation (Guilbert and Park, 1986).

 

Pb-Zn deposits in South America are hosted in the Mesozoic Carbonate sequence of the Pucará Group in the central Andes. In Peru, this type of deposit is represented mainly by the San Vicente and Shalipayco deposits (located in central Peru), and Florida Canyon, located in the Bongará Region of northern Peru.

 

The Florida Canyon Deposit is in the Eastern Cordillera of Peru within the limit of the Shipasbamba community of the Amazonas Department.

 

6.5.1 Mineral Deposit

 

An area of 20 km x 100 km extending from Mina Grande to north to 80 km south of the Florida Canyon deposit has become the focus of what is an emerging Mississippi-Valley Type (MVT) zinc and lead province, with many surface occurrences and stream sediment anomalies distributed throughout the Pucará Group. The main host rock of zinc and lead occurrences in the mineral district and Project area is dolomitized limestone, which may show karst or collapse breccia textures.

 

 

 

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Figure 6‑6 Mississippi Valley-Type Deposit Schematic Model

 

Source: Nexa, 2014a

 

 

 

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7 Exploration

 

7.1 Surveys and Investigations

 

7.1.1 Relevant Exploration Work

 

The Florida Canyon Project has identified and delineated mineral resources in the San Jorge, Sam, 1021, and Karen-Milagros areas.

 

In previous years, Cominco and Nexa executed detailed surface mapping and rock sampling programs of the areas near the reported resource. Stream sediment and soil samples were collected and analyzed as described in Section 5.2.

 

An extensive regional reconnaissance exploration program was also conducted over a large area throughout the Mesozoic carbonate belt to the north and south of the Property. Geochemical samples were collected of stream sediments, soils and rocks.

 

During development of the San Jorge adit, Nexa completed geologic mapping and chip sampling of the underground workings. Results were applied to the Project geologic model in support of resource estimation and continued exploration drillhole planning.

 

Sampling of drill core is described in detail in Section 8Error! Reference source not found.. The regional stream sediment program collected sediments that were screened to -80 mesh, crushed and analyzed for a multielement suite by ICP. Soil samples collected were composites of B horizon soils and C horizon when accessible.

 

Rock sample methodology varied according to location. Grab samples were taken where outcrops were found that showed evidence of dolomitization of carbonate beds. Mineralized outcrops were cleared manually with machetes and shovels and systematically chip channeled. Channels were oriented perpendicular to bedding to most accurately represent stratigraphic thickness. Channel samples were limited to 2 m in length by Cominco and 1 m by Nexa. Most of the chip channel sampling of higher-grade mineralization has been conducted in the Karen Milagros zone and other areas in the central part of the Property where outcrops of mineralization are most common, as illustrated in Figure 7‑1.

 

7.1.2 Significant Results & Interpretation

 

Exploration strategy for MVT deposits at the Florida Canyon project has been strongly influenced by the interpreted favorability of specific units of the stratigraphy of the region. Numerous occurrences of alteration and mineralization occur throughout the Pucara Group, but economic deposits have only been thus far located within the Triassic Chambará formation (Figure 6‑2). More specifically the middle member of the Chambará Formation (Chambará 2) has been found to host the most persistent and highest grade manto deposits due to its higher permeability and susceptibility to altering and mineralizing fluids. Synsedimentary structures, formed during or slightly after sedimentation, controlled the flow of basinal brines that dolomitized and subsequently mineralized the carbonates. The mineral rich fluids migrated from these “feeders” laterally into the stratigraphic column to form mantos.

 

 

 

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Economic resources have been delineated in both the stratigraphically controlled mantos as well as the feeders, such as the San Jorge and Sam mineralized bodies. The higher angle structures have also been subject to karst formation that further enhanced fluid flow and are themselves often well mineralized with higher grade wider mineralization e.g. San Jorge.

 

Particularly prospective locations to explore for these high grade, high tonnage deposits exist along the northeast trending lineaments (drainages) immediately north and south of Karen Milagros where outcropping massive mineralization may be expressions of breakthrough structures. These locations have not been adequately tested to date due to the difficult access for helicopter supported drilling. The completion of road access will facilitate testing of these targets.

 

 

 

 

 

Figure 7‑1 Florida Canyon Area Prospect and Geochemistry Map

 

 

 

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These steeply dipping bodies occur over stratigraphic intervals that extend upwards into the Chambará 3, Aramachay and Condorsinga formations. The depth extent of mineralization in the feeders is currently unknown. These conduits enabled metal rich fluids to enrich the overlying stratigraphy and provide potentially important evidence for exploration.

 

Geochemical samples were collected at different stages during the life of the project. Information on sampling methods and results are scarce. Table 7‑1 is a summary table on the surface sampling in the Project area.

 

Table 7‑1 Summary of Total Surface Samples

 

Year

Company

Rocks

Soils

Stream Sediment

1996

Solitario

 

507

 

1997

Cominco

1,240

2,361

3,426

1998

Cominco

1,404

3,821

1,773

1999

Cominco

380

1,752

491

2000

Cominco

155

 

26

2008

Votorantim

5

123

12

2009

Votorantim

77

 

20

2011

Votorantim

2

 

 

2012

Votorantim

83

16

72

2019

Nexa

3

 

 

TOTAL

 

3,349

8,580

5,820

 

Geochemical prospecting is very effective in locating the leakage halos in overlying stratigraphy around these structures. Initially stream sediments were used to identify geochemically enriched drainages and were followed up with prospecting and soil surveys to pinpoint mineralized centers. Although no detailed mapping has been done over much of the property, geologists made observations of the stratigraphic location within areas of high geochemical response.

 

Figure 7‑2 shows the results of the regional geochemistry program. The area in the immediate vicinity of the Florida Canyon resource exhibits very high base metal content in stream sediment, soils and rocks. Only a small area of Chambará 2 crops out in this area as shown in orange color on the geologic map of the Florida/Tesoro vicinity (Figure 7‑3). Outcropping high grade mineralization in this window of Chambará led to the initial discovery of the known Florida Canyon deposits.

 

Nearby, there are significant soil anomalies in higher stratigraphy that warrant future exploration drilling. These anomalies occur in undrilled areas within the horst that hosts the current resources as well as to the west of the Sam Fault and East of the Tesoro Fault.

 

Further to the north two very large and strong soil anomalies have been defined by the regional geochemical sampling program (Figure 7‑2). The San Jose soil anomaly is of similar size and grade to that at Florida Canyon, however; it is untested with drilling. Based on the clear relationship between surface geochemistry and subsurface mineralization at Florida Canyon, drilling is warranted in the San Jose and Naranjitos areas.

 

 

 

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Figure 7‑2 Regional Geochemical Results

 

 

 

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Figure 7‑3 Florida Canyon Area Simplified Geology, Resource and Drillhole Map

  

 

 

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7.2 Drilling Exploration

 

The database used for modeling and estimation of mineral resources includes 545 drillholes, with a total of 136,758.1 m drilled at the Florida Canyon Project (Table 7‑2). The full collar database is listed in Appendix A. All of the holes were diamond drilling, with 447 holes drilled from surface and 98 holes drilled from the San Jorge adit (underground). Drilling began in 1997 by Cominco, followed by Votorantim between 2006 and 2013, and the last campaign was carried out by Nexa in 2018 and 2019. The drilling was completed by contracting companies Boart Longyear in 1997, MDH Bradley from 1998-2013, and Bresta from 2018-2019. Figure 7‑4 is a map of the drillhole locations at the project.

 

Table 7‑2 Drilling Summary in Florida Canyon

 

Surface

San Jorge Adit

Total

Year

Number

Meters

Type

Number

Meters

Type

Number

Meters

Type

1997

34

8,409.70

DTH

 

 

 

34

8,409.70

DDH

1998

8

2,108.35

DDH

 

 

 

8

2,108.35

DDH

1999

9

3,977.90

DDH

 

 

 

9

3,977.90

DDH

2000

31

10,297.00

DDH

 

 

 

31

10,297.00

DDH

2006

26

4,353.50

DDH

 

 

 

26

4,353.50

DDH

2007

33

11189.3

DDH

 

 

 

33

11,189.30

DDH

2008

54

16,468.85

DDH

 

 

 

54

16,468.85

DDH

2009

13

3,611.30

DDH

 

 

 

13

3,611.30

DDH

2010

42

12,242.40

DDH

 

 

 

42

12,242.40

DDH

2011

25

8,168.60

DDH

19

2,947.55

DDH

44

11,116.15

DDH

2012

59

14,163.00

DDH

51

9,395.55

DDH

110

23,558.55

DDH

2013

74

9,120.70

DDH

28

3,268.35

DDH

102

12,389.05

DDH

2018

5

2,202.90

DDH

 

 

 

5

2,202.90

DDH

2019

34

14,833.20

DDH

 

 

 

34

14,833.20

DDH

Total

447

121,146.70

 

98

15,611.45

 

545

136,758.15

 

 

 

 

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Figure 7‑4 Drillhole Location Map

 

Source: Nexa, 2020 (translated)

 

 

 

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7.2.1 Procedures

 

Drilling procedures were coordinated and supervised by Cominco and Nexa geologists and were approved by the Exploration Manager. Diamond drillhole targeting is prepared by the geologists. Coordinates and orientation of the drillhole collars are communicated to a surveying supervisor who positions the drill precisely which is then validated by the geologist.

 

Cominco surface drilling was executed with a helicopter-supported LD-250 diamond core rig operated by Bradley Bros. Limited. Sermin completed the underground development and also completed drilling from the San Jorge adit with a LM-70 electric diamond core rig.

 

Drilling was performed on two 12-hour shifts with full 24-hour geological supervision by a geologist. The rig geologist role included:

 

 

·

Coordination and communication between the drilling contractor and Nexa;

 

·

Monitoring drilling procedures and inspecting the core extraction for sample quality;

 

·

Boxing the core;

 

·

Measuring and recording core recovery and Rock Quality Designation (RQD); and

 

·

Completing a preliminary geological log.

 

Downhole surveys were completed with a Reflex EZ-Shot survey tool by the drillers at varying spacing, as summarized in Table 7‑3. The survey records are stored digitally at the core facility. Drillhole collar locations were surveyed by Nexa with a GPS-based instrument.

 

Table 7‑3 Downhole Survey Data Point Spacing

 

Drilling Program

(Year)

Survey Spacing

(m)

2010

100

2011

50

2012 to 2013

20

2018

25

2019

5

 

The identification of each drillhole was generated in a systematic and specific format which includes the camp, mining unit, year and sequential drillhole number. Basic drill information is entered into the database and archived within four days after the completion of the drillhole.

 

Drilling information was stored in a structured directory and was backed up to the central server in Brazil in the case of Nexa and in Vancouver for drilling conducted by Cominco. The information available in the drillhole database includes Collar, Survey, Assay and Lithology.

 

Surface drilling normally began with a HQ-diameter core (65mm) and is reduced to a NQ-diameter (45mm) hole if poor ground conditions necessitated.

 

 

 

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After a drillhole is completed, the boxes were taken to a logging room where a logging and sampling was performed by a company or a contracted geologist. A photo was taken of each box for all holes and is stored on the server. Geologic logging was performed according to Cominco or Nexa Resources standards using geological, lithological, mineralogical and alteration terms. Logging was recorded digitally using the software DH Logger, which is imported directly into Fusion Data Management Software. Fusion Software manages the database and automatically incorporates core and sample logging. The database administrator is responsible for verifying and validating the data and combining it into a series CSV files to later import into geological modeling software programs.

 

7.2.2 Interpretation & Relevant Results

 

The geologic logging and analytical data were added to the Project database after validation and applied to modeling and resource estimation. The modeling and resource estimation are discussed in detail in Section 14 (Mineral Resources). The true thickness of the mineralized intercepts varies from 80 to 100% of the drilled length and varies with the orientation of the drillhole.

 

Nexa’s documentation of drilling procedures indicate that there is little or negligible sampling bias introduced during drilling. Nexa specifically analyzed the data for bias and the results are very appropriate with very low bias.

 

Gustavson considers the drilling and sample handling procedures to be appropriate for the geology, conducted according to industry best practice and standards, and the relevant results are sufficient for use in resource estimation.

 

 

 

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8 Sample Preparation, Analysis and Security

 

8.1 Sampling Methods

 

Sampling procedures at the Florida Canyon Project are preformed according to the Nexa Procedure (PS-EXP-GTO-009-PT9).

 

Geologic core sampling was carried out from 0.3 m to 2.0 m, except when encountering mineralogical, structural, or lithological contacts. For these cases, one sample was taken per domain, either lithological, structural, or mineralogical. All massive sulfides were sampled, and additional “support” samples were taken on both sides of the core box that are within the surrounding carbonate rocks to ensure that the entire mineralized zone is sampled.

 

Sampling was done under the supervision of the lead geologist who defined the length of the sample and cut line. Core was sampled by sawing. If a sample was severely fractured, 50% of the fragmented material was taken as a sample, stored in a prelabeled bag, and sent to ALS laboratory, while the remaining sample is kept as back up. Figure 8‑1 shows the process for core sampling.

 

 

 

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Figure 8‑1 Diamond Core Sampling Process

 

Source: Nexa, 2020 (translated)

 

 

 

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8.1.1 Sampling for Geochemical Analysis

 

After photographing the core and completing geotechnical and geologic logging, a geologist marked the core for sample intervals that averaged 100 cm long. Samples had a minimum length of 30 cm and a maximum of 150 cm but were defined so that 100 cm samples were maintained as much as possible. Cut lines parallel to the core axis were drawn by the logging geologist, to ensure nearly symmetrical halves and minimal sampling bias relative to any visible mineralization. The core was cut on a rock saw with a 40 cm blade, under supervision of a Project geologist. After the core was cut, both halves were replaced in the core box.

 

Samples were always taken from the left side of the saw-cut core, double bagged and marked with sample numbers in two places. These were transported in larger bags containing seven samples each by Mobiltours freight company to the ALS Minerals laboratory in Trujillo or Lima, operated by ALS Minerals. Prior to 2012, analysis was completed in Trujillo. Since then, it was done in Lima.

 

Cominco also split the core samples and sampled half for geochemical analysis. Sample breaks were determined by geologic criteria. Cominco core samples were analyzed by Acme Labs, in Lima, Peru.

 

8.1.2 Sampling for Density Measurement

 

Specific gravity (SG) measurements were completed on site by Nexa on every sample obtained from the 2018-2019 core. SG measurements were completed on all mineralized intervals. Three SG measurement methods were used:

 

·

Volume displacement;

·

Hydrostatic; and

·

A mesh method for broken material.

 

These techniques were designed and implemented by Inspectorate Services Peru SAC. A group of samples was also sent to an external lab to validate the results in the field. Table 8‑1 shows the number of density samples taken per year by different campaigns. Figure 8‑2 is a map displaying the distribution of the density samples.

 

 

 

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Table 8‑1 Total number of Density Samples taken per year

 

Campaign

Type of Sample

No. Samples

CO1997

Drill Holes

194

CO1998

Drill Holes

8

CO1999

Drill Holes

10

CO2000

Drill Holes

44

VM2006

Drill Holes

124

VM2007

Drill Holes

233

VM2008

Drill Holes

258

VM2009

Drill Holes

177

VM2010

Drill Holes

264

VM2011

Drill Holes

792

VM2012

Drill Holes

2,024

VM2013

Drill Holes

4,077

NEXA2018

Drill Holes

111

NEXA2019

Drill Holes

879

Total

 

9,195

 

 

 

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Figure 8‑2 Density Sample Distribution

 

Source: Nexa, 2020 (translated)

 

 

 

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8.2 Security Measures

 

During the site visit, the observed sample storage was secure, and provided adequate protection from rainfall. Sample security and chain of custody were maintained while the samples were transported from the core shed in Shipasbamba to Lima. Assay certificates are retained in the Nexa office in Lima. Analytical data is loaded directly from the laboratory results files to the drillhole database, to minimize the risk of accidental or intentional edits.

 

8.3 Sample Preparation for Analysis

 

ALS Minerals (ALS) in Trujillo or Lima, Peru, completed sample preparation and analysis for all Nexa core samples. ALS is an independent, global analytical company with ISO certifications in Peru, Brazil, Chile and Argentina (ALS Minerals, 2014a).

 

Upon delivery at the lab, bar coded sample identification labels were scanned, and the samples were registered to the Laboratory Information Management System (LIMS). Samples were weighed, and then air-dried in ambient conditions. Excessively wet samples were dried in an oven at a maximum 120°C. The sample preparation and analysis procedures used are summarized in Table 8‑2. Specific analytical procedures and method detection limits for elements in the suite are reported in Table 8‑3.

 

After analysis was complete, the remaining coarse reject and pulp samples were returned to the Florida Canyon core shed for storage.

 

Cominco analyzed samples with visible zinc or lead mineralization by atomic absorption spectrophotometry. All samples containing greater than 10,000 ppm zinc and lead were then analyzed by wet chemistry and the latter results were recorded in the data base.

 

Table 8‑2 Analytical Codes and Methods

 

Procedure Code

Description

Sample Prep

CRU-31

Crush to 70% less than 2 mm.

SPL-21

Riffle split off 1kg and retain the coarse reject.

PUL-32

Pulverize split to better than 85% passing 75 microns.

Multi-Element Methods

ME-ICP61, -a

Multi-element Inductively Coupled Plasma method with Atomic Emission Spectroscopy analysis. Includes 4-acid, “near-total” digestion of 0.5 g sample.

(+)-AA62

HF, HNO3, HClO4 digestion, HCl leach and Atomic Absorption Spectroscopy analysis.

(+)-VOL70

Volumetric titration for very high-grade samples.

XRF10

X-Ray fluorescence on fused pellet, 5 g sample.

Element-Specific Methods

Au-AA23

Gold by fire assay and Atomic Absorption Spectrometry, 30 g sample.

Au-AA25

Ore-grade gold by fire assay and Atomic Absorption Spectrometry, 30 g sample.

Au-GRA21

Gold by fire assay and gravimetric finish, 30 g sample.

Hg-CV41

Trace level mercury by aqua regia and cold vapor/AAS.

Hg-ICP42

High grade mercury by aqua regia and ICP-AES.

In-MS61

Multi-element Inductively Coupled Plasma method with Mass Spectrometry detection.

Includes 4-acid, “near-total” digestion of 0.5 g sample.

S-IR08

Total sulfur by Leco furnace.

 

Source: ALS Minerals, 2014b,

 

 

 

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Table 8‑3 Analyzed Elements and Method Detection Limits

 

Element

Symbol

Method

Unit

Lower MDL

Upper MDL

Overlimit Method

Unit

Lower MDL

Upper MDL

Overlimit Method

Unit

Lower MDL

Upper MDL

Silver

Ag

ME-ICP61

ppm

0.5

100

Ag-AA62

ppm

1

1,500

 

 

 

 

Aluminum

Al

ME-ICP61

%

0.01

50

 

 

 

 

 

 

 

 

Arsenic

As

ME-ICP61

ppm

5

10,000

 

 

 

 

 

 

 

 

Barium

Ba

ME-ICP61

ppm

10

10,000

ME-ICP61a

ppm

50

50,000

XRF10

%

0.01

50

Beryllium

Be

ME-ICP61

ppm

0.5

1,000

 

 

 

 

 

 

 

 

Bismuth

Bi

ME-ICP61

ppm

2

10,000

 

 

 

 

 

 

 

 

Calcium

Ca

ME-ICP61

%

0.01

50

 

 

 

 

 

 

 

 

Cadmium

Cd

ME-ICP61

ppm

0.5

1,000

Cd-AA62

%

0.0005

10

 

 

 

 

Cobalt

Co

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Chromium

Cr

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Copper

Cu

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Iron

Fe

ME-ICP61

%

0.01

50

 

 

 

 

 

 

 

 

Gallium

Ga

ME-ICP61

ppm

10

10,000

 

 

 

 

 

 

 

 

Potassium

K

ME-ICP61

%

0.01

10

 

 

 

 

 

 

 

 

Lanthanum

La

ME-ICP61

ppm

10

10,000

 

 

 

 

 

 

 

 

Magnesium

Mg

ME-ICP61

%

0.01

50

 

 

 

 

 

 

 

 

Manganese

Mn

ME-ICP61

ppm

5

100,000

 

 

 

 

 

 

 

 

Molybdenum

Mo

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Sodium

Na

ME-ICP61

%

0.01

10

 

 

 

 

 

 

 

 

Nickel

Ni

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Phosphate

P

ME-ICP61

ppm

10

10,000

 

 

 

 

 

 

 

 

Lead

Pb

ME-ICP61

ppm

2

10,000

Pb-AA62

%

0.001

20

Pb-VOL70

%

0.01

100

Sulfur

S

ME-ICP61

%

0.01

10

S-IR08

%

0.01

50

 

 

 

 

Antimony

Sb

ME-ICP61

ppm

5

10,000

 

 

 

 

 

 

 

 

Scandium

Sc

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Strontium

Sr

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Thorium

Th

ME-ICP61

ppm

20

10,000

 

 

 

 

 

 

 

 

Titanium

Ti

ME-ICP61

%

0.01

10

 

 

 

 

 

 

 

 

Thallium

Tl

ME-ICP61

ppm

10

10,000

 

 

 

 

 

 

 

 

Uranium

U

ME-ICP61

ppm

10

10,000

 

 

 

 

 

 

 

 

Vanadium

V

ME-ICP61

ppm

1

10,000

 

 

 

 

 

 

 

 

Tungsten

W

ME-ICP61

ppm

10

10,000

 

 

 

 

 

 

 

 

Zinc

Zn

ME-ICP61

ppm

2

10,000

Pb-AA62

%

0.001

30

Zn-VOL70

%

0.01

100

Gold

Au

Au-AA23

ppm

0.005

10

Au-AA25

ppm

0.01

100

Au-GRA21

ppm

0.05

1,000

Indium

In

In-MS61

ppm

0.005

500

 

 

 

 

 

 

 

 

Mercury

Hg

Hg-CV41

ppm

0.01

100

Hg-ICP42

%

0.1

10

 

 

 

 

 

Source: Nexa (2014b),

 

8.4 QA/QC Procedures

 

Nexa has a well-established QA\QC protocol established in 2007 for core samples from operating mines and brownfield/greenfield projects. Nexa uses a corporate database (GDMS Fusion) from Datamine, linked with several laboratory packages, specific for different Business Units (ore deposit types/countries) with pre-defined preparation and assay methods, reporting units and over-limit methods. All assay dispatches follow the same protocols for each medium type (core, rock, soil, stream sediment samples). All written protocols are in a corporate internal system that requires revision and update every three years.

 

 

 

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Nexa’s Quality Control includes three types of duplicates (pulp, coarse rejects and ½ core duplicates), blank controls and certified standards. Inter-laboratory checks are also carried out in annual basis at certified laboratories. Each mine and advanced project provides a detailed QA\QC report at least once a year and they are appended into Mineral Resource update Technical Reports.

 

For assay report import procedures into the GDMS Fusion database there is a well-defined policy established by Nexa using the available lab import profile tools from Fusion. There are customized lab import profiles for each laboratory used by Nexa. These templates account for standardized unit definition for each metal (g/t, ppm, %) and automatic built in overlimit assay methods. Assay imports into Fusion are carried out by a designated Qualified Person.

 

The 2018-2019 quality assurance/quality control (QA/QC) program at the Florida Canyon Project and its processes complies with current industry best practices. A total of 1,177 greenfield exploration samples were analyzed at an ALS laboratory (Appendix B). 187 control samples were inserted, making up 15.9% of the total samples analyzed. The results of the processing and evaluation of QC data are as follows:

 

 

·

Coarse blanks show no evidence of contamination during the laboratory sample preparation and analysis process. ALS performed ICP MS analysis for all samples.

 

·

Twinned samples indicate an acceptable error rate (<10%).

 

·

Coarse and fine duplicates indicate an acceptable error rate (<10%). Apart from coarse duplicate (RG) in Zn, 2 out of 11 samples failed in low grades.

 

·

The standards show acceptable accuracy in all of the elements evaluated (Ag, Cu, Pb, Zn).

 

·

The external check validated the accuracy between the secondary laboratory (Certimin) and the primary laboratory (ALS) (<5.0% variation).

 

Overall, coarse blanks, duplicates, and standards results are considered acceptable and valid. A summary of the results is in Table 8‑4.

 

 

 

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Table 8‑4 QA/QC Insertion of Samples 2018-2019 Campaign

 

Control Type

No. Samples

Insertion Ratio

Blanks

Coarse

23

1.95%

Standards

Low Grade (SPY-01)

19

1.61%

Medium Grade (SPY-02)

19

1.61%

High Grade (SPY-03)

20

1.70%

Duplicates

Coarse Duplicate (RG)

11

0.93%

Twin Duplicate (RP)

11

0.93%

Fine Duplicate (DP)

58

4.93%

External Check (DC)

26

2.21%

TOTAL

1,177

15.89%

 

8.4.1 Standards

 

Summaries of the Standard Reference Material (SRM) certified values and analytical results for silver, copper, lead and zinc are shown in Table 8‑5. The certified Standard Reference Material, ST800044B. Other, lower-grade reference materials made from Florida Canyon core were also included. Example lab results for Zn Standards are shown in Figure 8‑3.

 

Table 8‑5 QA/QC Standard Bias % Results 2018-2019 Campaign

 

Lab

Element

SPY-01

SPY-02

SPY-03

Comments

n

Bias %

n

Bias %

n

Bias %

 

ALS

Ag ppm

19

-1.69

19

2.53

20

6.25

 

Cu %

19

-9.5

19

-3.6

20

-2.19

Very low Cu grade in standard SPY-01

Pb %

19

2.2

19

-0.96

20

0.36

 

Zn %

19

-1.41

19

0.83

20

-0.82

 

0 - 5% bias

Excellent

>10% bias

Reject

5 - 10% bias

Attention

STD Bias % = (average/certified value) - 1

 

 

 

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Figure 8‑3 ALS Lab - Zn Standards Results

 

8.4.2 Blanks

 

There were no contamination issues with blanks (Table 8‑6). Example lab results for Zn Blanks are shown in Figure 8‑4.

 

Table 8‑6 QA/QC Blanks Results 2018-2019 Campaign

 

Lab

Element

HILBG

Comments

n

Failure %

ALS

Ag ppm

23

0

 

Cu %

23

0

 

Pb %

23

0

 

Zn %

23

0

 

Limit 5% failure

Blank Failure = (failed/total samples)

 

 

 

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Figure 8‑4 ALS Lab - Zn Blanks Results

 

8.4.3 Duplicates

 

Duplicate samples were evaluated with the hyperbolic method and the results were good. A summary of all duplicate sample pairs is shown in Table 8‑7Error! Reference source not found.. Example lab results for Zn Duplicates are shown in Figure 8‑5.

 

Table 8‑7 QA/QC Duplicates Results 2018-2019 Campaign

 

Lab

Element

DP - Pulp duplicates

RG - Coarse Rejects

RP - Core duplicate

Comments

n

Failure %

n

Failure %

n

Failure %

 

ALS

Ag ppm

58

0

11

0

10

0

 

Cu %

58

0

11

0

10

0

 

Pb %

58

0

11

0

10

0

 

Zn %

58

0

11

18.18

10

0

2 failed in RG, low grade in Zn

Limit 10% failure

 Duplicates Failure % - (failed/total samples)

 

 

 

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Figure 8‑5 ALS Lab - Zn Duplicate Results

 

8.5 Opinion on Adequacy

 

The assay QC database is organized well and has an extremely low error rate. Nexa maintains the assay QC data well and analyzes it in real time to address any issues promptly. There were no systematic issues apparent in the results available to review.

 

Gustavson considers the sample preparation and analysis procedures to comply with industry best practice. The QA/QC methods and results adequately verify the analytical database as sufficient for use in resource estimation.

 

 

 

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9 Data Verification

 

9.1 Procedures

 

All analytical data is checked by the on-site and Lima-based geologists before it is added to the database. This includes review of standard, blank and duplicate sample results for outliers, and requesting re-analysis if necessary. Final analytical data is appended to the database by the Sao Paulo office staff after additional verification. The checking procedures are well documented and conform to best industry practice.

 

During the site visit, the geologic database was checked for its consistency to a) logged core, b) logging sheets and sample records and c) database provided. All aspects of the data capture and storage were seen to be in good order. The core sample library in the core shed (Figure 9‑1) helps to make the logged geology consistent and for the purposes of developing a consistent geological model.

 

  

Figure 9‑1: Photograph of Project Core Lithology Reference Sample Library

 

Source: SRK, 2014

 

Drillhole collar locations are verified against topography and compared with the survey reports. Downhole survey data are reviewed by an on-site geologist to verify the results.

 

 

 

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9.2 Opinion on Data Adequacy

 

Nexa geologists have an extensive quality control program, including not only standard check samples, but numerical checks of sample bias for each metal. The data controls are complete and compliant with industry best practice.

 

The Project geologists and support staff were diligent about data verification and the quality of the drillhole database. Database validation in preparation for resource estimation has been done by Nexa. Gustavson has reviewed their internal audit trail. We believe the degree of organization of the data base and the measures in place to minimize errors in data that the database is adequate for mineral resource estimation.

 

 

 

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10 Mineral Processing and Metallurgical Testing

 

A 43-101 PEA report was written in 2017 for the Florida Canyon Zinc Project. The report summarized the metallurgical studies performed on the samples from the prospect undertaken in 2010, 2011 and 2014. Since then, additional drilling has resulted in expansion of the sulfide resource which is the primary objective of this technical report.

 

10.1 Metallurgical Test Work, 2010-2014

 

Smallvill S.A.C. of Lima, Peru (Smallvill) performed metallurgical studies on Florida Canyon mineralization types in 2010, 2011 and 2014. The drilling completed in 2018 and 2019 has increased the proportion of mineral resources to be dominated by sulfide lead-zinc material. This changes the character of the proposed mineral processing.

 

Since no metallurgical studies have been performed on the recent drilling samples a summary of historical work is presented here for reference:

 

 

·

Most earlier metallurgical studies were performed on oxide and mixed ores. Limited test work has been completed on sulfide samples.

 

·

Some of the composite samples classified as sulfides should have been designated as mixed ore because of presence of significant amounts of oxide zinc (Table 10‑1).

 

·

The Bond’s crusher work index (Wi of 8.54 kwh/t) indicates that the sulfide ore is soft.

 

·

The conventional flotation scheme for polymetallic ores and reagents employed in the test work did produce marketable-grade zinc concentrate (±50% Zn).

 

·

The selected test results, reported by SRK in the 2017 PEA, indicates zinc recovery of 80% to 90.1% for samples with a variable proportion of oxide minerals. For pure sulfides, the results project a maximum recovery of 93%. The concentrates produced are at a concentrate grade of 50% to 55% Zn.

 

·

Some of the results reported in Table 10‑1 are not correct. For example, San Jorge sample assayed 0.41% ZnOx and 7.63 ZnTotal. Hence, it contained 5.4% of zinc as oxide. The recoveries reported in zinc concentrate are 90.1% for ZnTotal and 83.5% for ZnS. Even if all the oxide was recovered, the ZnS recovery should be 84.7%.

 

·

The early logging of core from the project estimated visually the content of oxidized zinc minerals. Later, Nexa reanalyzed the mineralized core for zinc contained in sulfides vs. oxidized species. The visually estimated ratio of sulfide/oxide zinc was adjusted upward based on this study and current data reflects this adjustment.

 

·

SRK projected recovery of metals by material type in the 2017 PEA (Table 10‑2). Zinc recovery was projected to be 93% for the sulfide ores. The authors agree with the projection based on their extensive experience in polymetallic processing and the test work completed to date.

 

 

 

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Drilling completed in 2019-20 has verified that the sulfide ore component of the deposit is greater than previously assumed.

 

Table 10‑1 Metallurgical Tests – Selected Results

 

Report

Sample

Sample Type

Head Grade

Date

Zn Total

ZnOx

ZnS

ZnOx/

ZnT

Pb Total

Pb S

Pb Ox

Ag g/t

2010 Apr

Core composite

Sulfide

7.52%

1.40%

6.10%

0.19

1.72%

1.26%

0.46%

11.6

2011 Jul

Core composite

Oxide

18.36%

18.40%

0.00%

1

2011 Aug

Core composite

Mixed

31.25%

13.20%

18.10%

0.42

2.38%

26.5

2011 Aug

Core composite

Sulfide

31.68%

0.98%

30.70%

0.03

3.88%

56.19

2011 Aug

Core composite

Mixed

31.25%

13.20%

18.10%

0.42

2.38%

26.5

2014 Feb

San Jorge

Sulfide

7.63%

0.41%

7.22%

0.05

0.65%

2014 Feb

Karen Milagros

Sulfide

5.70%

0.00%

5.70%

0

1.12%

  

Source: SRK, 2017

 

Table 10‑2 Florida Canyon Metal Recoveries by Material Type

 

Parameter

Material Type

Sulfide

Mixed

Oxide

ZnOx/ZnT Ratio

<=0.2

0.2 to 0.8

>=0.8

Zn Recovery

93%

(-0.8833 (ZnOx/ZnT) + 1.1067) * 100

40%

Pb Recovery

84%

(-0.7333 (ZnOx/ZnT) + 0.9867) * 100

40%

Ag Recovery

56%

(-0.4 (ZnOx/ZnT) + 0.64) * 100

32%

 

 

 

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11 Mineral Resource Estimate

 

An updated Mineral Resources Estimate for Florida Canyon was completed by Nexa Resources based on a data base available in July of 2020. The database included 545 drill holes with a total drilled length of nearly 137 km.

 

The estimate was audited by Donald E. Hulse of Gustavson Associates LLC with the audit completed on February 1, 2021. Work was completed in Datamine Studio RM, Leapfrog Geo, and Snowden Supervisor. The models were reviewed by Gustavson using Leapfrog Geo for 3-dimensional geological models, Micro Model software for statistics and geostatistics, and Datamine RM for validation of the estimate. The Nexa database was reviewed, and statistical analysis was completed to validate the Nexa QA/QC results. Gustavson supports the use of the database for mineral resource estimation.

 

Geological modeling in Leapfrog utilized geological sections developed based on lithology, alteration, and mineralization to interpret a 3-dimensional geological model with 73 unique mineralized structures. Each of these structures was analyzed with classical statistics and geostatistics to estimate grades for zinc, lead, silver, and iron. Mineral resource classification utilized criteria based on drill spacing and variogram ranges. Measured mineral resource required a spacing of 25x25m with at least 3 composites, indicated mineral resource, 50x50m with 3 composites, and inferred resource estimates required a spacing of 100x100m with at least 2 composites. In addition, estimation required the demonstration of geological continuity within the Florida horizon as well as dolomitic alteration.

 

11.1 Geologic Model

 

Florida Canyon is considered to be a Mississippi Valley type deposit, dominated by lead and zinc sulfides. The minerals are disseminated within stratigraphically controlled dolomites within the Chambara Formation of the late Triassic/early Jurassic. The deposit is in karstic terrane and due to the local percolation of meteoric water, shallow mineralization has locally oxidized into silicates and carbonates (smithsonite, hemimorphite, and cerussite) collectively referred to as “oxides”.

 

The mineralization occurs in both sub horizontal “mantos”, and steeply dipping feeders. The mantos are stratigraphically controlled within the Florida horizon of the Chambara formation. The stratigraphy in the area is composed of the layers shown in Table 11‑1. Within the Florida, the Coquina and IBM fossil beds were used as markers in the logging.

 

A schematic of the local stratigraphy is shown in Figure 11‑1. The high grade Pb-Zn mineralization occurs in dolomitized material within the calcites of the Florida horizon.

 

 

 

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Table 11‑1 Deposit Stratigraphy

 

Soils

Aramachay Formation

CMWCH Horizon

Florida Horizon

CDMWS Horizon

Mitu Group

 

 

Figure 11‑1 Schematic of Local Stratigraphy

 

The Florida Canyon deposit has the form of a dome at regional scale. This may be due to a regional anticline. This trend was incorporated into the geological model with the interpretation of 84 mineralized structures. (70 mantos and 14 feeders). The distribution of the mineral bodies is shown in Figure 11‑2. The bodies are grouped into four areas, labeled as 1021, Karen Milagros, San Jorge, and Sam. The Sam bodies are associated with the Sam fault to the south west of the area. The extent of these bodies is currently limited by drill data.

 

 

 

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Figure 11‑2 Distribution of Mineralized Bodies

 

11.2 Exploratory Data Analysis

 

The database consists of 545 drill holes, measuring a total of 136,758.15m. The Exploratory Data Analysis (EDA) was performed on raw data (drill samples), composites, and capped values. Histograms and cumulative frequency diagrams were created for Zn, Pb, Ag and Fe. Summary examples of raw data, composite and capped cumulative frequency diagrams are in Appendix C and D.

 

For grade estimation, only samples within the solids defining the mantos and feeders were utilized. All drill and composite intervals were coded with the appropriate geological code. An example cumulative frequency curve is shown in Figure 11‑3.

 

 

 

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Figure 11‑3 Cumulative Frequency Curve for Zinc (Nexa)

 

The statistics were analyzed for each of the 74 bodies. The domains are referenced in the included Table 11‑2 by a three-part code. The first part is the area, the second part defines if it is a manto or a feeder zone, and the third part is a unique sequence number to identify separate zones in each area.

 

Table 11‑2 Description of Zone Codes for Statistics

 

Areas

Code

Description

 

D21

1021

 

KM

Karen Milagros

 

SJ

San Jorge

 

Sam

Sam

 

 

 

Type

F

Feeder

 

M

Manto

 

There are subtle local differences between the bodies, although most behave statistically well with coefficients of variation less than two. This indicates that the distributions are not highly skewed. Since there is insufficient drilling to connect all bodies, the spatial separation led to estimating each body as a separate zone. Summary zinc statistics for the principal zones are shown in Table 11‑3.

 

 

 

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Table 11‑3 Summary Statistics for Zinc by Zone (after Nexa)

 

Zone Code

Zone

N-Samp

Min

Max

Mean

CV

1107

d21m1

12

0.06

29.2

5.34

1.35

1108

d21m2

34

0.04

49.58

8.23

1.55

1109

d21m3

17

0.04

9.53

2.39

1.26

1110

d21m4

12

0.01

13.6

1.5

2.08

1111

d21m7

17

0

36.58

9.77

1.15

1204

km3_10

33

0

39.24

7.97

1.36

1206

km1

48

0.01

37.66

6.66

1.32

1207

km2_1

56

0.01

42.6

8.83

1.29

1208

km2_3

13

0.96

40.49

14.01

1.04

1209

km3_1

27

0.09

40.31

8.8

1.28

1211

km3_4

22

0

30

8.2

1.24

1212

km3_5

72

0.01

44.41

7.9

1.37

1213

km3_7

32

0.02

39.37

5.03

1.93

1214

km3_8

16

0.26

34.64

10.21

1.21

1215

km3_9

4

1.27

39.76

13.62

1.27

1216

km3_2

144

0

46.63

6.54

1.56

1217

km4_1

27

0.08

28.91

3.22

1.8

1218

km4_2

16

0.08

41.39

7.43

1.45

1219

km4_3

134

0

45.48

5.88

1.63

1220

km4_5

15

0.02

11.4

2.42

1.13

1221

km4_7

41

0.47

32.7

6.87

1.33

1223

km6_2

30

0.15

32.99

6.77

1.31

1224

km6_3

14

0.34

39.64

4.77

1.52

1225

km6_5

36

0.02

40.24

11.51

1.13

1226

km6_6

9

1.23

39.27

13.46

1.04

1227

km6_9

76

0

41.58

8.17

1.29

1228

km7_1

89

0.18

49.06

9.31

0.97

1229

km7_2

16

0.01

15.45

3.54

1.19

1230

km7_3

4

0.25

1.59

0.83

0.7

1231

km10

42

0

39.31

6.26

1.57

1232

km13

29

0.1

35.15

5.65

1.51

1233

km15

22

0

35.01

9.54

1.24

1234

km6_4

56

0.22

36.05

12.19

0.84

1405

sjm1

21

0.07

25.7

7.25

1.3

1406

sjm2

42

0.01

40.68

6.27

1.72

1407

sjm3

40

0.01

44.09

9.07

1.33

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

Although there are differences in the grade from zone to zone, the overall behavior of the different areas is shown in Table 11‑4

 

Table 11‑4 Average Metal Grades by Area

 

Samples

Avg Zn

Avg Ag

Avg Pb

Karen Milagros

Mantos

711

8.190

11.952

1.320

Karen Milagros

Feeders

98

11.351

18.866

2.590

San Jorge

Mantos

249

7.459

8.007

0.410

San Jorge

Feeders

306

10.607

16.154

0.724

1021

Mantos

25

5.066

9.542

0.709

1021

Feeders

117

6.378

13.646

1.373

Sam

Mantos

95

5.584

6.198

1.257

 

The overall distribution of the metal grades in the deposit is shown in the histograms in Figure 11‑4, Figure 11‑5 and Figure 11‑6. Although the distributions for zinc and silver are slightly skewed, reflecting a log normal population, the overall behavior is good. This presents evidence that if the infill drilling connects these bodies, that the mineralization may develop as local zoning within a large continuous mineralized body. This is common in other MVT deposits, including the namesake deposits in the central USA.

 

  

Figure 11‑4 Histogram of Zinc in Mineral Zones

  

 

 

Gustavson Associates, LLC

15 March 2022

      

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

   

Figure 11‑5 Histogram of Silver in Mineral Zones

 

    

Figure 11‑6 Histogram of Lead in Mineral Zones

 

11.3 Domains for Resource Estimation

 

The domains or zones were defined in the EDA step of the study. Further drilling will support if these are unique pods of mineralization, or parts of a larger body. Due to the changing orientation identified in the Leapfrog model and the overall anticlinal shape, each zone was estimated with unique search parameters.

 

11.4 Capping and Compositing

 

Capping was performed area by area based on the shape of the cumulative frequency curve. Composites were nominal 2 meters long with some variability due to the thickness of the zone, with 88% of the composites approximately 2 meters. Capping values for key areas are shown in Table 11‑5.

 

 

 

Gustavson Associates, LLC

15 March 2022

  

 

 

 

Solitaro Zinc

 

Florida Canyon

S-K 1300 Technical Report Summary

  

Table 11‑5 Outlier Capping Values by Area (after Nexa)

 

Area

COD_OB

Zn Cap

Pb Cap

Fe Cap

Ag Cap

d21f1

2101

32

6

22

50

d21f2

2102

42

30

22

160

d21f3

2103