Terronera PFS 2017
Terronera PFS 2017
Terronera PFS 2017
Qualified Persons:
Peter J. Smith, P.Eng.
Eugenio Iasillo, P.E.
Eugene Puritch, P.Eng., F.E.C.
Yungang Wu, P.Geo.
David Burga, P.Geo.
Jarita Barry, P.Geo.
James Pearson, P.Eng.
Benjamin Peacock, P.Eng.
Scott Fleming, P.E.
Prepared For:
Table of Contents
1.0 SUMMARY ......................................................................................................... 11
1.1 INTRODUCTION ............................................................................................................11
1.2 LOCATION AND PROPERTY DESCRIPTION ......................................................................12
1.3 OWNERSHIP ................................................................................................................12
1.4 HISTORY .....................................................................................................................13
1.5 GEOLOGY AND MINERALIZATION ...................................................................................14
1.6 EXPLORATION PROGRAM .............................................................................................14
1.7 2013 MINERAL RESOURCE ESTIMATE ...........................................................................16
1.8 2017 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES .....................................16
1.9 MINERAL PROCESSING AND METALLURGICAL TESTING ..................................................17
1.10 MINING METHODS .......................................................................................................18
1.11 RECOVERY METHODS ..................................................................................................18
1.12 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL IMPACT........................................19
1.13 CAPITAL AND OPERATING COSTS .................................................................................20
1.14 ECONOMIC ANALYSIS ..................................................................................................20
1.15 CONCLUSIONS AND RECOMMENDATIONS ......................................................................21
1.16 ENVIRONMENTAL .........................................................................................................23
1.17 FURTHER STUDIES ......................................................................................................23
2.0 INTRODUCTION ................................................................................................ 24
2.1 ISSUER AND PURPOSE OF REPORT ...............................................................................24
2.2 SOURCES OF INFORMATION AND DATA ..........................................................................24
2.3 QUALIFIED PERSONS ...................................................................................................25
2.4 UNITS AND CURRENCIES ..............................................................................................26
3.0 RELIANCE ON OTHER EXPERTS.................................................................... 28
4.0 PROPERTY DESCRIPTION AND LOCATION .................................................. 30
4.1 OWNERSHIP AND PROPERTY DESCRIPTION ...................................................................31
4.2 MEXICAN REGULATIONS FOR MINERAL CONCESSIONS ...................................................33
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND
PHYSIOGRAPHY ............................................................................................... 36
5.1 ACCESSIBILITY AND LOCAL RESOURCES .......................................................................36
5.2 PHYSIOGRAPHY AND CLIMATE ......................................................................................36
5.3 INFRASTRUCTURE .......................................................................................................37
6.0 HISTORY ........................................................................................................... 39
6.1 SAN SEBASTIAN DEL OESTE MINING DISTRICT ..............................................................39
6.2 HISTORICAL EXPLORATION AT TERRONERA ...................................................................39
6.3 PREVIOUS MINERAL RESOURCE ESTIMATES .................................................................41
6.4 PREVIOUS PRODUCTION ..............................................................................................42
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Tables
TABLE 1.1 SUMMARY OF THE TERRONERA MINERAL RESOURCE AT A CUT-OFF GRADE OF 150 G/T
AGEQ..................................................................................................................17
TABLE 1.2 SUMMARY OF THE MINERAL RESERVE AT A CUT-OFF GRADE OF 150 G/T AGEQ* ..........17
TABLE 2.2 LIST OF ABBREVIATIONS ............................................................................................26
TABLE 4.1 SUMMARY OF THE MINERAL CONCESSIONS OWNED BY ENDEAVOUR SILVER.................32
TABLE 4.2 SUMMARY OF ENDEAVOUR SILVER’S SURFACE ACCESS RIGHTS ..................................34
TABLE 6.1 SUMMARY OF HISTORIC EXPLORATION ON THE SAN SEBASTIAN PROPERTY ..................40
TABLE 9.1 TERRONERA SURFACE EXPLORATION SAMPLING PROGRAM – PEAK VALUES 2016 .......61
TABLE 10.1 TERRONERA SURFACE EXPLORATION DRILLING ACTIVITIES IN 2014 ...........................65
TABLE 10.2 2014 DRILL HOLE SUMMARY FOR THE TERRONERA SURFACE DIAMOND DRILLING
PROGRAM ...........................................................................................................65
TABLE 10.3 SURFACE DRILL HOLE SIGNIFICANT ASSAY SUMMARY FOR MINERAL INTERCEPTS IN THE
TERRONERA VEIN AREA .......................................................................................69
TABLE 10.4 TERRONERA SURFACE DRILLING ACTIVITIES IN 2015 ................................................74
TABLE 10.5 2015 DRILL HOLE SUMMARY FOR THE TERRONERA SURFACE DIAMOND DRILLING
PROGRAM ...........................................................................................................74
TABLE 10.6 SURFACE DRILL HOLE SIGNIFICANT ASSAY SUMMARY FOR MINERAL INTERCEPTS IN THE
TERRONERA VEIN AREA - 2015.............................................................................75
TABLE 10.7 TERRONERA SURFACE DRILLING ACTIVITIES IN 2016 .................................................78
TABLE 10.8 2016 DRILL HOLE SUMMARY FOR THE TERRONERA SURFACE DIAMOND DRILLING
PROGRAM ...........................................................................................................79
TABLE 10.9 SURFACE DRILL HOLE SIGNIFICANT ASSAY SUMMARY FOR MINERAL INTERCEPTS IN THE
TERRONERA VEIN AREA – 2016 ............................................................................79
TABLE 10.10 SURFACE DRILL HOLE SIGNIFICANT ASSAY SUMMARY FOR MINERAL INTERCEPTS IN
THE LA LUZ VEIN AREA - 2016 ..............................................................................80
TABLE 12.1 TERRONERA PROJECT QC SAMPLES ........................................................................89
TABLE 12.2 SUMMARY OF CRM SAMPLES USED IN TERRONERA SURFACE DIAMOND DRILLING
PROGRAM ...........................................................................................................90
TABLE 13.1 BASE CASE FLOTATION CYANIDATION OF CLEANER SCAVENGER TAIL ......................103
TABLE 13.2 HEAD ANALYSES OF COMPOSITE SAMPLE TR2015 - 1 ............................................105
TABLE 13.3 BASE CASE FLOW SHEET .....................................................................................106
TABLE 13.4 TEST NO. 1 CYANIDATION OF CLEANER SCAVENGER TAIL .......................................107
TABLE 13.5 TEST NO. 2 CYANIDATION OF CLEANER SCAVENGER TAIL .......................................107
TABLE 13.6 SAMPLES CHARACTERIZATION AND HEAD ASSAY, FIRE ASSAY, AND W HOLE ROCK
ANALYSIS (%) ....................................................................................................108
TABLE 13.7 BOND’S BALL MILL W ORK INDEX TEST RESULTS .....................................................109
TABLE 13.8 COMMINUTION TESTING RESULTS ..........................................................................110
TABLE 13.9 ROUGHER FLOTATION GRIND SIZE VS RECOVERY LOW – MEDIUM – HIGH GRADE
COMPOSITES .....................................................................................................111
TABLE 14.1 DRILL HOLE DATABASE SUMMARY .........................................................................115
TABLE 14.2 MODEL ROCK CODE DESCRIPTION AND VOLUME.....................................................117
TABLE 14.3 BASIC STATISTICS OF ALL CONSTRAINED ASSAYS AND SAMPLE LENGTHS ................118
TABLE 14.4 COMPOSITE SUMMARY STATISTICS ........................................................................119
TABLE 14.5 AG GRADE CAPPING VALUES .................................................................................120
TABLE 14.6 AU GRADE CAPPING VALUES .................................................................................120
TABLE 14.7 BLOCK MODEL DEFINITION ....................................................................................121
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Figures
FIGURE 4.1 TERRONERA PROJECT LOCATION MAP .....................................................................30
FIGURE 4.2 TERRONERA PROJECT CLAIM MAP ...........................................................................31
FIGURE 5.1 VIEW OF THE TOPOGRAPHY SURROUNDING THE TOWN OF SAN SEBASTIÁN ................37
FIGURE 5.2 VIEW OF THE TOWN OF SAN SEBASTIÁN DEL OESTE, JALISCO ....................................38
FIGURE 7.1 GEOLOGY OF THE SAN SEBASTIAN DEL OESTE AREA.................................................44
FIGURE 7.2 TERRONERA PROPERTY GEOLOGY SHOWING LOCATION OF THE MINERALIZED VEINS .45
FIGURE 8.1 ALTERATION AND MINERAL DISTRIBUTIONS WITHIN A LOW -SULPHIDATION EPITHERMAL
VEIN SYSTEM ......................................................................................................49
FIGURE 9.1 EXPLORATION TARGETS IN THE TERRONERA PROJECT AREA .....................................52
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FIGURE 9.2 SURFACE MAP SHOWING LA CASCADA MINE AND TRENCHES CONDUCTED IN THE AREA
...........................................................................................................................54
FIGURE 9.3 ENTRANCE TO THE LA CASCADA MINE ......................................................................54
FIGURE 9.4 SECONDARY VEINLETS AT THE TERRONERA VEIN, INSIDE THE LA CASCADA MINE ........55
FIGURE 9.5 AND FIGURE 9.6 PHOTOGRAPHS OF THE LA CASCADA MINE ........................................55
FIGURE 9.7 GEOLOGICAL MAP OF THE RESOYADERO MINE ..........................................................57
FIGURE 9.8 GEOLOGICAL MAP OF THE OTATES MINE ..................................................................58
FIGURE 9.9 GEOLOGICAL MAP OF THE COPALES MINE ................................................................58
FIGURE 9.10 AND FIGURE 9.11 PHOTOGRAPHS OF THE QUITERIA W EST VEIN.................................59
FIGURE 9.12 PHOTOGRAPH SHOWING LOS CABLES PIT ...............................................................59
FIGURE 9.13 PHOTOGRAPH SHOWING TRENCH IN THE QUITERIA W EST VEIN .................................59
FIGURE 9.14 MAP OF NEW VEINS DISCOVERED IN 2016 ..............................................................60
FIGURE 10.1 SURFACE MAP SHOWING COMPLETED DRILL HOLES (BLACK) IN THE TERRONERA AREA
...........................................................................................................................71
FIGURE 10.2 LONGITUDINAL SECTION (LOOKING NORTHEAST) SHOWING THE INTERSECTION POINTS
ON THE TERRONERA VEIN.....................................................................................72
FIGURES 10.3 & 10.4 CROSS-SECTIONS THROUGH HOLES TR07-1, TR07-2 & TR07-3 AND TR14-1,
TR14-2, TR14-3 & TR14-4 DRILLED TO TEST THE TERRONERA VEIN .....................72
FIGURES 10.5 & 10.6 CROSS-SECTIONS THROUGH HOLES TR15-1 & TR15-2 AND TR17-1, TR17-2 &
TR17-3 DRILLED TO TEST THE TERRONERA VEIN ...................................................73
FIGURES 10.7 & 10.8 CROSS-SECTIONS THROUGH HOLES TR20-1, TR20-2, TR20-3 & TR20-4 AND
TR22-1, TR22-2 & TR22-3 DRILLED TO TEST THE TERRONERA VEIN .....................73
FIGURE 10.9 SURFACE MAP SHOWING 2015 AND 2016 DRILL HOLES ..........................................82
FIGURE 10.10 DRILL INTERSECTIONS – LA LUZ VEIN ....................................................................83
FIGURE 11.1 FLOWSHEET FOR TERRONERA CORE SAMPLING, PREPARATION AND ANALYSIS .........86
FIGURE 12.1 TERRONERA DUE DILIGENCE SAMPLE RESULTS FOR GOLD: JUNE 2016 ...................88
FIGURE 12.2 TERRONERA DUE DILIGENCE SAMPLE RESULTS FOR SILVER: JUNE 2016 .................88
FIGURE 12.3 PERFORMANCE OF CDN-FSM-7 FOR GOLD ............................................................92
FIGURE 12.4 PERFORMANCE OF CDN-FSM-7 FOR SILVER ..........................................................92
FIGURE 12.5 PERFORMANCE OF CDN-ME-19 FOR GOLD ............................................................92
FIGURE 12.6 PERFORMANCE OF CDN-ME-19 FOR SILVER ..........................................................93
FIGURE 12.7 PERFORMANCE OF CDN-ME-1302 FOR GOLD ........................................................93
FIGURE 12.8 PERFORMANCE OF CDN-ME-1302 FOR SILVER ......................................................93
FIGURE 12.9 PERFORMANCE OF CDN-GS-2Q FOR GOLD ...........................................................94
FIGURE 12.10 PERFORMANCE OF CDN-GS-2Q FOR SILVER .......................................................94
FIGURE 12.11 PERFORMANCE OF CDN-ME-1408 FOR GOLD ......................................................94
FIGURE 12.12 PERFORMANCE OF CDN-ME-1408 FOR SILVER ....................................................95
FIGURE 12.13 PERFORMANCE OF CDN-ME-1307 FOR GOLD ......................................................95
FIGURE 12.14 PERFORMANCE OF CDN-ME-1307 FOR SILVER ....................................................95
FIGURE 12.15 PERFORMANCE OF BLANKS FOR GOLD .................................................................96
FIGURE 12.16 PERFORMANCE OF BLANKS FOR SILVER ...............................................................97
FIGURE 12.17 PERFORMANCE OF CRUSHED FIELD DUPLICATES FOR GOLD ..................................98
FIGURE 12.18 PERFORMANCE OF CRUSHED FIELD DUPLICATES FOR SILVER ................................99
FIGURE 12.19 PERFORMANCE OF INSPECTORATE CHECK ASSAYS FOR GOLD.............................100
FIGURE 12.20 PERFORMANCE OF INSPECTORATE CHECK ASSAYS FOR SILVER...........................101
FIGURE 14.1 AG GRADE SWATH PLOT ALONG STRIKE ...............................................................127
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FIGURE 14.2 AG GRADE AND TONNAGE COMPARISONS DERIVED FROM ID3 AND NN GRADE
INTERPOLATION .................................................................................................128
FIGURE 16.1 TERRONERA MINE 1380 HAULAGE DRIFT, COMPOSITE PLAN .................................136
FIGURE 16.2 TERRONERA 1380 HAULAGE DRIFT, GENERAL INFRASTRUCTURE ...........................137
FIGURE 16.3 TERRONERA PLAN VIEW , PORTAL BOXCUT ...........................................................138
FIGURE 16.4 TERRONERA MINE DESIGN, ISOMETRIC DRAWING..................................................139
FIGURE 16.5 TERRONERA MINE, HAULAGE DRIFT AND RAMP CROSS SECTION (5M X 5M) ............140
FIGURE 16.6 TERRONERA CROSS SECTIONAL PROJECTION, MINING BLOCK M2 ..........................141
FIGURE 16.7 TERRONERA CROSS SECTIONAL PROJECTION, MINING BLOCK M3 .........................142
FIGURE 16.8 TERRONERA CROSS SECTIONAL PROJECTION, MINING BLOCK M4 .........................143
FIGURE 16.9 TERRONERA MINE LEVEL DEVELOPMENT, CROSS SECTION (4.5M X 4.5M) ..............144
FIGURE 16.10 TERRONERA MINE, LONGITUDINAL PROJECTION ..................................................145
FIGURE 16.11 TYPICAL MINING METHOD, CUT AND FILL ............................................................147
FIGURE 16.12 TERRONERA MINE, REPRESENTATIVE LEVEL DESIGN ..........................................148
FIGURE 16.13 ‘TERRONERA MINE LONGITUDINAL PROJECTION, PILLARS, ROCK MASS QUALITY, FILL
.........................................................................................................................157
FIGURE 16.14 ‘TERRONERA MINE LONGITUDINAL PROJECTION, CRITICAL PATH DEVELOPMENT
SEQUENCE’ .......................................................................................................162
FIGURE 16.15 ‘TERRONERA MINE LONGITUDINAL PROJECTION, DEVELOPMENT SEQUENCE YEARS 1
TO 6’. ................................................................................................................163
FIGURE 16.16 ‘TERRONERA MINE LONGITUDINAL PROJECTION MINING SEQUENCE .....................169
FIGURE 16.17 ‘TERRONERA MINE LONGITUDIAL PROJECTION, VENTILATION FLOW SCHEMATIC’ ..172
FIGURE 16.18 TERRONERA MINE VENTILATION PHASE 2 AIR FLOW ............................................173
FIGURE 16.19 TERRONERA MINE VENTILATION PHASE 3 AIR FLOW ............................................173
FIGURE 16.20 TERRONERA MINE LONGITUDINAL PROJECTION, ELECTRICAL LOAD ......................174
FIGURE 17.1 OVERALL PROCESS FLOW SHEET.........................................................................177
FIGURE 20.1 AMEC FOSTER W HEELER 2017 MAP OF MINE SURFACE FACILITIES LAYOUT ...........189
FIGURE 20.2 ENVIRONMENTAL PERMITTING STEPS FOR MINING PROJECTS IN MEXICO ...............191
FIGURE 20.3 ENVIRONMENTAL PERMITS REQUIRED FOR THE TERRONERA PROJECT ...................192
FIGURE 20.4 RETURN PERIOD STORM EVENT PRECIPITATION ...................................................199
FIGURE 20.7 AMEC FOSTER W HEELER 2017 MAP OF THE MONDEÑO TAILINGS STORAGE AREA
MONITORING W ELL LOCATIONS ..........................................................................205
FIGURE 22.1 AFTER-TAX ANNUAL AND CUMULATIVE CASH FLOW...............................................233
FIGURE 22.2 AFTER-TAX NPV SENSITIVITY GRAPH...................................................................236
FIGURE 23.1 MINERA CIMARRON’S SANTA QUITERIA MINE IN THE SAN SEBASTIÁN DEL OESTE AREA
.........................................................................................................................237
FIGURE 24.1 TERRONERA DEVELOPMENT SCHEDULE................................................................240
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1.0 SUMMARY
1.1 Introduction
This report follows the format and guidelines of Form 43-101F1, Technical
Report for National Instrument 43-101, Standards of Disclosure for Mineral
Projects (NI 43-101), and its Companion Policy 43-101 CP, as amended by the
CSA and which came into force on June 30, 2011.
This report has an effective date of April 3, 2017. The Mineral Resource and
Mineral Reserve Estimates reported in this report comply with the Canadian
Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards and
definitions, as required under NI 43-101 regulations.
In this report, the term San Sebastián Property refers to the entire area covered
by the mineral concessions, while the term Terronera Project refers to the area
within the mineral concession and separate surface lands on which the current
exploration programs and proposed mining, processing, and tailings storage
will be conducted.
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The conclusions and recommendations in this report reflect the QPs best
independent judgment in light of the information available at the time of writing.
San Sebastián del Oeste (San Sebastián) is an historic silver and gold mining
district located in southwestern Jalisco State, approximately 155 km southwest
of Guadalajara and 40 km northeast of Puerto Vallarta, accessible by paved
and gravel roads. One small, high grade, underground silver-gold mine, La
Quiteria (130 tonnes per day - tpd), continues to operate in the district. The San
Sebastián Properties acquired by Endeavour Silver surround the La Quiteria
mine and represent a new, district-scale, silver-gold exploration opportunity for
the company.
1.3 Ownership
Endeavour Silver holds the Terronera Project through its 100% owned Mexican
subsidiary, Endeavour Gold Corporation S.A. de C.V. (Endeavour Gold).
Endeavour Gold holds the Project through its 100% owned subsidiary Minera
Plata Adelante S.A. de C.V. (Minera Plata).
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In 2012, Endeavour Silver also filed and received title for 2 concessions (San
Sebastián FR. 1 and FR. 2) totaling 2,078 ha. Additionally, in 2013, Endeavour
Silver filed a total of 7 concessions (San Sebastian 12, San Sebastian 13, San
Sebastian 14, San Sebastian 15, San Sebastian 16, San Sebastian 17 and San
Sebastian 18) totaling 4,163 ha. Titling of these concessions is still pending,
with the exception of San Sebastian 17 which is already titled (693 ha).
The annual 2016 concession tax for the San Sebastián Properties was
4,485,679 Mexican pesos (pesos), which is equal to US $224,283 at an
exchange rate of 20 pesos to US $1.00 dollar.
1.4 History
Although the San Sebastián silver and gold mines were first discovered in
1542, and there were several periods of small-scale mining over the last 450
years, the only significant modern exploration in the district was carried out by
IMMSA in the late 1980’s and early 1990’s.
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records for the San Sebastián mining district and only briefly mentions the
district and some of the more well-known veins.
As is the case with many mines in Mexico which were owned by individuals or
corporations, the historical production records have not survived the
revolutions, passing of the individual owners, closing of the mines, corporate
failure, or government seizure of assets. Therefore, the exact silver production
is unknown.
The San Sebastián Properties (5,466 ha) cover a classic, low sulphidation,
epithermal vein system in four mineralized vein sub-districts named Los Reyes,
Santiago de los Pinos, San Sebastián and Real de Oxtotipan. Each sub-district
consists of a cluster of quartz (calcite, barite) veins mineralized with sulphide
minerals (pyrite, argentite, galena and sphalerite). Each vein cluster spans
about 3 km by 3 km in area. In total, more than 50 small mines were developed
historically on at least 20 separate veins.
The San Sebastián veins tend to be large and can carry high grade silver-gold
mineralized deposits. For example, the La Quiteria vein ranges up to 15 m
thick, and the Santa Quiteria mine averages about 280 g/t silver and 0.5 g/t
gold over a 3 m to 4 m width. This high grade mineralized zone appears to
extend into the San Sebastián Properties both along strike and immediately
down dip.
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The field activities included detailed mapping and trenching, mainly focused to
the south and northern part of Terronera, and also the west part of Quiteria
West Vein.
Endeavour Silver spent US $1.55 million mainly on diamond drilling.
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The Mineral Resource Estimate discussed in the Technical Report Audit of the
Mineral Resource Estimate for the San Sebastian Project dated March 27,
2014 was estimated using the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM) Definition Standards for Mineral Resources and Mineral
Reserves prepared by the CIM Standing Committee on Reserve Definitions
and adopted by CIM Council on November 27, 2010. The effective date of this
Mineral Resources Estimate is December 31, 2013.
The Mineral Resource and Mineral Reserve Estimates presented in this PFS
were estimated using the CIM Definition Standards for Mineral Resources and
Mineral Reserves adopted by CIM Council on May 10, 2014. The effective date
of the Mineral Resource and Mineral Reserve Estimates is April 3, 2017.
The cut-off grade selected by Endeavour Silver for the Mineral Resource
Estimate and Mineral Reserve Estimate is 150 g/t silver equivalent (AgEq).
See Section 14.12 for AgEq cut-off details based on prices of US $18/oz silver
and US $1,250/oz gold,.
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A summary of the Mineral Resource at a cut-off grade of 150 g/t AgEq is given
in Table 1.1.
1. Mineral Resources which are not Mineral Reserves do not have demonstrated economic
viability. The estimate of Mineral Resources may be materially affected by environmental,
permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
2. The Inferred Mineral Resource in this estimate has a lower level of confidence than that
applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is
reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to
an Indicated Mineral Resource with continued exploration.
3. The Mineral Resources in this report were estimated using the CIM Definition Standards for
Mineral Resources and Mineral Reserves.
3. AgEq g/t = Ag g/t + (Au g/t x 70)
4. Historical mined areas were depleted from the Terronera Vein wireframe.
A summary of the Mineral Reserve at a cut-off grade of 150 g/t AgEq is given in
1.2.
Table 1.2 Summary of the Mineral Reserve at a Cut-off Grade of 150 g/t
AgEq*
Resource Development Inc. (RDi) conducted locked and open cycle flotation
testing for the Terronera Project at its metallurgical testing facility in Wheat
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Ridge, Colorado. The primary objectives of the test program were to develop
the levels of recovery and final concentrate characteristics.
The flow sheet developed for Terronera includes two stage crushing coupled
with closed circuit grinding to achieve a relatively coarse flotation feed grind
size of 80 percent passing 200 mesh (75 microns).
Further studies are recommended to upgrade the process plant feed, lower the
grinding costs, and increase process recoveries.
The principal mining method selected is mechanized cut and fill using trackless
underground equipment, including scooptrams, haulage trucks and electric-
hydraulic drill jumbos. The average mining width is estimated to be 4.4m and
stope lifts will be mined from the bottom up.
The mineral processing facility design throughput is 1,000 dry mtpd equivalent
to 342,000 dry mtpy for Years 1 and 2 and 2,000 dry mtpd equivalent to
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684,000 dry mtpy from Year 3. The life-of-mine (LOM) for the project is
estimated at 7 years.
Power will be provided by on-site generators in Year 1 and by CFE via a new
115kV power line beginning Year 2.
Fresh water will be pumped from the U/G mining operations to a fresh water
tank and fed by gravity to the process plant, fire water system, potable water
system, and water trucks.
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The Terronera Mine tailings storage facility (“TSF”) will be designed to store
filtered tailings, or “drystack” tailings, to minimize downstream contamination
risk and to maximize geotechnical stability in the seismically active coastal area
of western Mexico. The conceptual Terronera TSF design will accommodate
approximately 2.0 million m3 of compacted tailings which provides a storage
capacity, at process rates of 1,000tpd (Years 1 and 2) and 2,000tpd (Year 3
onwards), for the 7 years’ mine life plus 3 more years at 2,000tpd should the
mine life be extended.
The Terronera Project has an estimated initial capital cost of US$69.2 million.
The estimated capital cost to expand to 2,000tpd in Year 3 is US$35.4million.
Average operating costs over the LOM of US$42.8 per tonne for mining,
US$17.8 per tonne for processing, and US$6.9 per tonne for General and
Administration were developed and estimated from first principles using unit
labour and materials costs from Endeavour Silver’s current mine and process
plant operations in Mexico.
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An economic analysis utilizing a pre-tax and after-tax cash flow financial model
was prepared for the base case mine plan. The metal prices assumed in the
base case are US$18/oz silver and US$1,260/oz gold.
The Mexico tax policies for mining changed effective January 1, 2014. An
overriding royalty on gross revenues, after smelter deductions, of 0.5% applies
to precious metal mines (gold, silver and platinum). A new Special Mining Duty
of 7.5% is levied on earnings before income tax and depreciation allowance.
Corporate income taxes of 30% are applied to earnings after the usual
allowable deductions for depreciation, loss carry-forwards etc. The Special
Mining Duty and the over-riding royalty are also deductible for the purpose of
calculating corporate income tax. The financial model incorporates these taxes
in computing the after-tax cash flow amounts, NPV, and IRR.
The Terronera Project key financial indicators for the base case are as follows:
After-tax rate of return 21.2%
Project payback period 4.3 years
After-Tax Net Present Value (5% discount) of US$78,105,000
These key indicators describe a project whose base case is financially viable
and which has considerable upside potential should metal prices improve or
operating costs decrease.
The project is subject to technical, legal, environmental, and political risks that
are similar to the risks faced by Endeavour Silver on its current operations in
Mexico. The QPs consider these risks to be manageable and should not have
an adverse effect on the continued development of the Terronera Project.
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Based on a review of the Terronera Project and the encouraging results thus
far, it is recommended that Endeavour Silver:
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The groundwater pore pressure data from the vibrating wire piezometers
should be recorded and reviewed on a regular basis. Estimated cost
US$15,000
Update the domain definition, stability analyses, recommendations, and
groundwater inflow estimate to account for the results of the additional
data inputs and any changes to underground mine plan. Any significant
changes to the mine plan should be reviewed from a rock mechanics
perspective
Advance the current preliminary TSF area design, associated hauling
accessways, and tailings delivery infrastructure to construction design
level in conjunction with the feasibility level analysis.
Refer to Table 16.2 for preliminary ground support recommendations for
cut and fill stopes
1.16 Environmental
Given the risk-mitigating features of the Terronera Project and the positive
results of the economic analysis, the QPs consider the project is ready to
proceed to Feasibility Study.
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2.0 INTRODUCTION
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Sections 1, 2, 3, 4, 5,
Peter J. Smith Foster & Sept 11 & 12, 2014
P.Eng 6, 18, 19, 21, 22, 24,
Smith Associates Inc. and Nov 10, 2016
25, 26, 27
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Quantities are generally stated in Système International d’Unités (SI) units, the
standard Canadian and international practice, including metric tons (tonnes, t)
and kilograms (kg) for weight, kilometres (km) or metres (m) for distance,
hectares (ha) for area, grams (g) and grams per metric tonne (g/t) for gold and
silver grades (g/t Au, g/t Ag). Wherever applicable, any Imperial units of
measure encountered have been converted to SI units for reporting
consistency. Precious metal grades may be expressed in parts per million
(ppm) or parts per billion (ppb) and their quantities may also be reported in troy
ounces (oz), a common practice in the mining industry. Base metal grades may
be expressed as a percentage (%). Table 2.1 provides a list of the
abbreviations used throughout this report.
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North American
Degrees Celsius °C NAD
Datum
Not
Digital elevation model DEM n.a.
available/applicable
Dirección General de
DGM Ordinary Kriging OK
Minas
Dollar(s), Canadian $, CDN $ Ounces (troy) oz
Endeavour
Endeavour Silver Corp Ounces per year oz/y
Silver
Endeavour Gold Endeavour
Parts per billion ppb
Corporation S.A de C.V. Gold
Estudio Tecnico Parts per million (=
ETJ ppm
Justificative g/t)
Potassium-Argon
Global Positioning
GPS (referring to age date K-Ar
System
technique)
Pounds per square
Gold Au psi
inch
Gram (1g = 0.001 kg) g Project management PM
Grams per metric tonne g/t Qualified Person QP
Quality
Greater than > Assurance/Quality QA/QC
Control
Robust relative
Hectare(s) ha RSD
standard deviation
Rock Quality
Horsepower hp RQD
Designation
Inches, 2.42 cm in or (") Second s
Secretaria de Medio
Internal rate of return IRR Ambiente y Recursos SEMARNAT
Naturales
Inverse Distance
IDW Silver Ag
Weighted
Kilogram(s) kg Specific gravity SG
Standard Reference
Kilometre(s) km Standard
Material
System for Electronic
Kilovolt-amps Kva Document Analysis SEDAR
and Retrieval
Système International
Lead Pb SI
d’Unités
Less than < Tonne (metric) t
Tonnes (metric) per
Litre(s) l t/d, tpd
day
Universal Transverse
Megawatt MW UTM
Mercator
Metalurgica Guanaceví Metalurgica
Zinc Zn
S.A. de C.V. Guanaceví
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This Technical Report relies on reports and statements from legal and technical
experts who are not Qualified Persons (QPs) as defined by NI 43-101. The QPs
responsible for the preparation of this report have reviewed the information and
conclusions provided and have determined that they conform to industry
standards, are professionally sound, and are acceptable for use in this report.
The QPs, while taking full responsibility for the contents of the report, recognize
the support of:
Scott Fleming, P.E., of Amec Foster Wheeler, has fully relied upon, and
disclaims responsibility for, the expert statements and representations
submitted to SEMARNAT by:
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The Trujillo study was submitted as MIA justification for the mine and process
plant and as Amec Foster Wheeler is involved in only the tailings storage
facility in the Mondeño area of the project, Amec Foster Wheeler did not
participate in the generation of or the environmental justification to regulatory
authorities of the Trujillo study. Amec Foster Wheeler requested and received
a copy of the Consultoría Forestal y Ambiental MIA report generated by Ing.
Roberto Trujillo for the mine and plant components of the project in April, 2017.
None of the authors of this report has researched or verified property title or
mineral or land access rights for the Terronera Property and the authors of this
report express no opinion as to the legal status of property ownership and rights
as disclosed in Section 4 of this report. However, the authors have received a
review of the mineral concession titles by the legal firm of Cereceres Estudio
Legal, S.C. of Chihuahua, Mexico dated February 23, 2017 which supports
Section 4.
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The core group of 10 concessions was owned by IMMSA, totaling 3,388 ha.
These concessions cover the main area of the known mining district. In 2013,
Endeavour Silver completed the acquisition of a 100% interest in the Terronera
Properties from IMMSA. IMMSA retains a 2% NSR royalty on mineral
production from the properties.
In 2012, Endeavour Silver has also filed and received title for 2 concessions
(San Sebastián FR. 1 and FR. 2) totaling 2,078 ha.
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The annual 2016 concession tax for the Terronera Properties was 4,485,679
Mexican pesos (pesos), which is equal to US $224,284 at an exchange rate of
20 pesos to US $1.00 dollar.
P&E has not independently reviewed Endeavour Silver’s land tenure. P&E is
reliant on information provided by the Company’s lawyers, including a copy of a
legal opinion on the Property.
In Mexico, exploitation concessions are valid for 50 years and are extendable
provided that the application is made within the five-year period prior to the
expiry of the concession and the bi-annual fee and work requirements are in
good standing. All new concessions must have their boundaries orientated
astronomically north-south and east-west and the lengths of the sides must be
one hundred metres or multiples thereof, except where these conditions cannot
be satisfied because they border on other mineral concessions. The locations
of the concessions are determined on the basis of a fixed point on the land,
called the starting point, which is either linked to the perimeter of the
concession or located thereupon. Prior to being granted a concession, the
company must present a topographic survey to the Dirección General de Minas
(DGM) within 60 days of staking. Once this is completed, the DGM will usually
grant the concession.
Prior to December 21, 2005, exploration concessions were granted for a period
of 6 years in Mexico and at the end of the 6 years they could be converted to
exploitation concessions. However, as of December 21, 2005 (by means of an
amendment made on April 28, 2005 to the Mexican mining law) there is now
only one type of mining concession. Therefore, as of the date of the
amendment (April, 2005), there is no distinction between exploration and
exploitation concessions on all new titles granted. All concessions are now
granted for a 50 year period provided that the concessions are kept in good
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standing. For the concessions to remain in good standing a bi-annual fee must
be paid (January and July) to the Mexican government and two reports must be
filed in January and May of each year which covers the production and work
accomplished on the property between January and December of the
preceding year.
In addition to the mineral rights, Endeavour Silver has agreements with various
private ranch owners and three local Ejidos (San Sebastián del Oeste, Santa
Ana and Santiago de los Pinos) that provide access for exploration purposes.
Table 4.2 summarizes the surface access rights as at September 30, 2014.
07/11/2013
Ejido Santiago de los Pinos 5 Years
- 2018
14/10/2010
Ejido Santa Ana 5 Years
- 2015
27/01/2011
Ejido San Sebastian 5 Years
- 2016
02/04/2011
Fernando Cervantes Gómez 5 Years
- 2016
Ejido Santiago de los Pinos (La 07/07/2014
25 Years
Terronera Mine Area) - 2039
Mine Operations (El Portezuelo 07/07/2014
25 Years
and El Mondeño) - 2039
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A MIA modification was issued February 23, 2017 for an amended 1,500tpd
project with drystack, or filtered tailings. An application for a 2,000tpd project is
currently pending submittal to SEMARNAT.
A permit will be solicited for the handling, storage and use of explosives at the
Terronera Project. SEDENA (Secretaria de Seguridad Nacional) is one of three
review/issuing agencies for these permits, which must comply with the Federal
Law for Firearms and Explosives. The other two reviewing agencies are the
State of Durango and the local municipality. There are two distinct permits
involved in these permissions:
1. Explosives
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The town of San Sebastián del Oeste is at an elevation of 1,480 m above sea
level. The surrounding area is mountainous and heavily forested, mainly with
pine trees. The surrounding valleys are occupied by cattle ranches, corn fields
and coffee plantations. Figure 5.1 and Figure 5.2 are views of the topography
surrounding Terronera.
The weather is predominantly humid in the winter and dry and warm during the
spring. The mean temperature is 18°C, with a maximum mean of 25.6°C and a
minimum mean of 11.7°C. The wettest months are June through September.
The Terronera project will operate continuously throughout the year.
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5.3 Infrastructure
Most of the labour required for the exploration programs can be found in the
Municipality of San Sebastián del Oeste. Supplies are usually purchased in
either Puerto Vallarta, Mascota, or Guadalajara.
Power supply to the Terronera Project is provided by the national grid operated
by the Comisión Federal de Electricidad (CFE).
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Figure 5.2 View of the Town of San Sebastián del Oeste, Jalisco
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6.0 HISTORY
The following section is summarized from Lewis and Murahwi (2013) and
Munroe (2014). San Sebastián del Oeste is a silver and gold mining town
founded in 1605 during the Spanish colonial period. By 1785, more than 25
mines and a number of foundries had been established in the district and,
during the peak mining period, the area was considered one of the principal
sources of gold, silver and copper for New Spain. The main mines in the district
included Real de Oxtotipan, Los Reyes, Santa Gertrudis, Terronera and La
Quiteria. As of 2013, the La Quiteria mine was still active and mined by Minera
Cimarrón S.A. de C.V., a private mining company.
San Sebastián del Oeste was declared a city in 1812 and reached a peak
population of more than 20,000 people by 1900. At one time, it was the
provincial capital and one of the gold and silver mining centres of Mexico. The
prosperity of the city declined after the revolution of 1910.
The mines were, in part, responsible for the founding of the city of Puerto
Vallarta that supplied the mines with salt. The salt was taken by mules to San
Sebastián del Oeste and other mines in the high sierras for use in the smelting
process. The silver and gold from the mines was sent, again by mule train,
through Guadalajara and Mexico City to Veracruz, where it was sent to Spain.
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As of December 15, 2012, the Mineral Resource Estimate for the San
Sebastian Project comprised Indicated Mineral Resources totaling 1,835,000 t
at a grade of 193 g/t Ag and 1.17 g/t Au and Inferred Resources of 3,095,000 t
at a grade of 196 g/t Ag and 1.39 g/t Au. The Terronerra Vein is the largest
component of the Mineral Resource Estimate and was determined to contain
Indicated Mineral Resources of 1,528,000 t at 192 g/t Ag and 1.30 g/t Au and
Inferred Mineral Resources of 2,741,000 t at 194 g/t Ag and 1.50 g/t Au.
Munroe (2014) updated the San Sebastian Project Mineral Resource Estimate
with additional drilling data. As of December 31, 2013, Munroe (2014)
estimated the San Sebastian Project including the Animas-Los Negros, El Tajo,
Real and Terronera Veins to contain Indicated Mineral Resources totaling
2,476,000 t at a grade of 229 g/t Ag and 1.08 g/t Au and Inferred Mineral
Resources of 2,376,000 t at a grade of 175 g/t Ag and 1.66 g/t Au. The
Terronerra Vein was estimated to contain Indicated Mineral Resources of
2,169,000 t at 233 g/t Ag and 1.16 g/t Au and Inferred Mineral Resources of
2,022,000 t at 169 g/t Ag and 1.86 g/t Au. Munroe’s parameters were similar to
those reported for Lewis and Murahwi, except that the sample capping values
were increased in the Terronera Vein to 2,070 g/t Ag and 7.96 g/t Au and the
cut-off grade of 100 g/t AuEq was based on metal prices of US$24.20/oz for Ag
and US$1,452/oz for Au.
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The reader is cautioned that P&E has not verified the Lewis and Murahwi
(2013) and Munroe (2014) Mineral Resource Estimates relating to the
Terronera Project (formerly known as the San Sebastian Project). Subsequent
to the 2013 Mineral Resource Estimate, Endeavour Silver drilled an additional
49 surface holes and the Mineral Resource Estimates reported in the PEA
issued April 30, 2015 incorporated these 49 surface holes.
There has reportedly been significant historical production from the San
Sebastian del Oeste region spanning the period from 1566 when the Villa de
San Sebastain was founded through to the early 20th century. The amount of
silver production, however, is unknown since historical production records have
not survived the revolutions, passing of the individual owners, closing of the
mines, corporate failure, or government seizure of assets (Lewis and Murahwi,
2013; Munroe, 2014).
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The following section is summarized from Lewis and Mulahwi (2013) and
Munroe (2014). The mining district of San Sebastián del Oeste is situated at
the southern end of the Sierra Madre Occidental metallogenic province, a
north-northwesterly trending volcanic belt of mainly Tertiary age. This volcanic
belt is more than 1,200 km long and 200 to 300 km wide, and hosts the majority
of Mexico’s gold and silver deposits. The volcanic belt is one of the world’s
largest epithermal precious metal terrains.
The oldest rocks in the southern part of the Sierra Madre Occidental are late-
Cretaceous to early-Tertiary calc-alkaline, granodiorite to granite batholiths that
intrude coeval volcano-sedimentary units of late Eocene to Miocene age.
The Terronera Project lies within the structurally and tectonically complex
Jalisco Block at the western end of the younger (early Miocene to late Pliocene)
Trans-Mexican Volcanic Belt. Country rocks within the Jalisco Block include
Cretaceous silicic ash flows and marine sedimentary rocks deposited between
45 and 115 Ma that are intruded by Cretaceous to Tertiary granite, diorite and
granodiorite of the Puerto Vallarta Batholith (Lewis and Murahwi 2013 and
references therein). The volcanic rocks of the San Sebastián cinder cone field,
are dated at 0.48 to 0.26 Ma, and are characterized by distinct, high potassium,
alkalic compositions and were extruded within the Tepic-Zacoalco Graben
which bounds the andesitic stratovolcanoes located to the north and northeast.
The area has been affected by a strong tectonic activity during the Cretaceous
to Recent. This activity has resulted in regional northwest-southeast striking
transcurrent faults associated with movements of the northern portion of the
Jalisco Block.
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The following section is summarized from Lewis and Mulahwi (2013) and
Munroe (2014). The San Sebastián del Oeste area and the Terronera Project
is underlain by an intermediate to felsic volcanic and volcaniclastic sequence
which is correlated with the middle to lower Cretaceous, Lower Volcanic Group
of the Sierra Madre Occidental geological province. This volcano-sedimentary
sequence consists of mainly shale, sandstone and narrow calcareous-clayey
interbeds overlain by tuffs, volcanic breccias and lava flows of mainly andesitic
composition. The volcano-sedimentary units outcrop in north-central part of the
district. Further to the north, granitic to granodioritic intrusives are present.
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The sedimentary basin most likely developed along with a volcanic arc which
was later intruded by granitic granodiorite intrusions. This magmatism gave rise
to andesite flows and pyroclastic eruptions followed by deposition of the rhyolite
flows, volcanic breccias, pyroclastic dacites, and basalt which are host to the
epithermal veins in the district. A later volcanic event, attributable to the
formation of the Trans Mexican Volcanic Belt, gave rise to volcanic rocks of
mafic alkaline composition.
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7.4 Structure
The more important mineralized veins in the San Sebastián del Oeste district
are controlled by west-northwest to northwest striking structures related to a
transcurrent fault system. An extensive, second order, east-west structural
trend is related to extension caused by sinistral movement on the primary
structures.
The following section is primarily summarized from Lewis and Mulahwi (2013)
and Munroe (2014). In the San Sebastián del Oeste district, silver and gold
mineralization represents the upper portion of an epithermal vein system. Illite,
sericite and adularia are characteristic alteration assemblages that typically
occur in the veins and in the vein wall rocks. In areas of higher elevation, where
limited mining has occurred, such as the El Hundido and Real de Oxtotipan
mines, the quartz is amorphous and milky white in colour indicative of a low
temperature environment.
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Geologic information and field observations indicate that the San Sebastián
hydrothermal system is preserved over an elevation difference of 1,200m. The
known mines contain polymetallic sulphide mineralization in wide vein
structures. The veins at higher elevations may represent the tops of ore shoots
containing significant silver and gold mineralization at depth.
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As documented by Lewis and Murahwi (2013) and Munroe (2104), the San
Sebastián del Oeste silver-gold district comprises classic, high grade silver-
gold, epithermal vein deposits, characterized by low-sulphidation mineralization
and adularia-sericite alteration. The veins are typical of most other epithermal
silver-gold vein deposits in Mexico in that they are primarily hosted in volcanic
flows, pyroclastic and epiclastic rocks, or sedimentary sequences of mainly
shale and their metamorphic counterparts.
Figure 8.1 illustrates the spatial distribution of the alteration and veining found
in a hypothetical low-sulphidation hydrothermal system.
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9.0 EXPLORATION
During 2010, surface mapping was completed on the Real Alto in the southern
part of the project. Several quartz veins were discovered on the surface in the
Real Alto area, most significantly the Real, Animas-Los Negros, El Tajo, and La
Escurana Veins.
A total of 1,004 rock and soil samples were collected in 2010, mainly from the
historic mines in the San Sebastián del Oeste district. A soil geochemistry
survey was conducted over the Real Alto zone to delineate potentially buried
veins in the area and to map and sample any veins exposed on surface. A total
of 735 soil samples were collected in the Real Alto area.
The Terronera Vein (Figure 9.1) is comprised of mainly white, opaque quartz
with calcite white clays and iron oxides. Banded textures and boxworks after
pyrite are locally present. The vein trends NW 60o up to NW 50o, dipping
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steeply to the northeast. The vein is up to 12m wide in the northwest and
pinches down to less than 1m in the southeast. At least two mineralizing events
were observed in the Terronera Mine with faulting being associated with both
mineralizing events.
The Terronera Vein has been mined in four separate underground workings:
the Salto mine to the northwest, the Santa Gertrudis and El Hundido mines to
the southeast, and the Terronera mine in the centre.
The El Hundido mine has a similar trend and dip as seen in the Terronera Vein
and the vein width reaches up to approximately 9m. Rock chips returned
significant assays up to 494 g/t Ag and 0.40 g/t Au over 1.1m.
Wall and roof samples were collected every 3m, depending on the presence of
quartz veins, in the La Terronera Mine. Rock chip samples from the Terronera
Mine returned assay values up to 1,720 g/t Ag and 2.09 g/t Au over 0.5m and
943 g/t Ag and 0.46 g/t Au over 0.8m.
In 2012, the primary exploration activity on the Terronera Project was surface
diamond drilling.
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mines. The structure hosted a 6-8m wide quartz vein with MnOx, mixed with
banded sulphides with red sulphosalts of silver and quartz druses and FeOx.
The Terronera Vein was traced near the La Esperanza Mine for approximately
60m.
The 2013 trenching program included 6 trenches and 25 samples taken from
Terronera, 5 trenches and 33 samples taken from Pabellon, and 13 trenches
and 71 samples taken from Zavala.
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Terronera North
During February and March, geological mapping, trenching, and sampling was
conducted in the Terronera North area. A total of 242 rock samples (including
samples collected on trenches) were collected and submitted for assays. There
were no significant assay values from the trenching program.
In this area rock exposures with significant quantities of quartz were mapped.
During this mapping, an old flooded working was located. A trench was made in
order to drain the tunnel. This working, around 100m long, belonged to the La
Cascada Mine (Figure 9.2), a shaft was also located in the area.
There are veinlets of <0.2m width, with FeOx + MnOx + visible gray sulphides,
in traces, disseminated and/or mm bands, which corresponds to subsequent
veinlets to the Terronera Vein and with mineral.
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Quiteria West
During January through April, geological mapping, trenching, and sampling was
conducted in the Quiteria West area. A total of 431 rock samples (including
samples collected on trenches) were collected and submitted for assays.
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The extension is greater than 500m long; there are zones with Quartz veins
with different directions: NW 75º/75º SW, NE 25º/80º NW, SE 65º/75º SW and
E-W/Vertical.
In the Quiteria West area, between the Point 1 and sample ESA1159, the width
of the structure is around 25m and consisted of Quartz and/or Hydrothremal
Breccia, with FeOx + MnOx and traces of sulphides.
Prospecting of the East part of the structure was also conducted, in the area
were some “catas” and 4 old workings were located which follows the trace of
the Quiteria Vein, some of them at the hanging wall and others at the footwall.
The preferential trend of the vein is NW 75º to E-W, dipping 60º to 85º S.
In the Resoyadero Mine (Figure 9.7), with 75m of strike length and > 15m
width, the structure is presented as a Quartz (crystalline-minor milky) Vein, with
FeOx + MnOx + live and in box work Pyrite; the sulphides are mainly Pb, which
are more visible in the Cross Cut E-E’; the trend of the structure is E-W/82ºS.
The structure ends in a strong Fault, with a Quartz Vein and a Quartz Vein /
Hydrothermal Breccia of 4m width, with similar characteristics to the previous
one. At the End of the mine there is a Stockwork, with FeOx + MnOx + live
Pyrite.
In the Otates Mine (Figure 9.8), the structure has a 25m strike length and >25m
width on surface. The structure consisted of a Quartz (crystalline to milky) Vein,
with FeOx + MnOx + live and box work Pyrite; with traces of gray Sulphides,
possible Ag; with a Fault in the entrance of the working, with a trend of E-
W/65ºS.
Other old workings were also located in the area. The smallest were 3-20m
deep but some, such as the Los Cables Pit, were around 22m deep (Figure
9.12).
The ZP3 mine (with a 5.3m length and a structure >25m) the structure is
presented as a Quartz (crystalline) Vein, with FeOx + MnOx (minor), no visible
sulphides, weak to moderate acidity, weak argillization.
In the Los Copales mine (Figure 9.9), with an approximate length of 18m and a
structure on surface >25m, the structure is presented as a Quartz (crystalline
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to milky) Vein, with FeOx + MnOx + Pyrite in box work, no visible sulphides,
moderate acidity, parts with blade texture. Local trend E-W/75ºS.
The zone of the La Zopilota Mine was also cleared; with a vein of Quartz
(crystalline), with iron and manganese oxides.
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Figure 9.10 and Figure 9.11 Photographs of the Quiteria West vein
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The only exploration done at Terronera in 2015 was the drilling summarized in
Section 10.
9.4 Exploration 2016
Source: www.edrsilver.com
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Sample
Vein Au (g/t) Ag (g/t) AgEq
No.
17540 6.41 2,880 3,329
17542 0.59 850 891
Las
Coloradas 17543 1.52 1,005 1,111
17555 0.13 294 303
17559 0.25 282 300
15808 0.10 585 592
15813 1.93 393 528
15814 0.99 562 631
Los Reyes 15875 1.42 630 729
17259 4.03 1,050 1,332
17264 0.73 743 794
17302 1.94 575 711
15261 0.13 398 407
15358 0.88 506 568
15359 0.48 387 421
La Ermita 15361 0.55 290 329
15367 0.37 423 449
15369 0.43 1,355 1,385
15470 0.13 342 351
14223 0.87 135 196
14061 10.10 148 855
14208 0.58 174 215
El Padre 14226 0.52 227 263
14229 1.97 315 376
14207 0.73 325 376
14221 0.66 358 404
12840 20.70 506 1,955
12832 5.31 555 927
14019 0.52 564 600
12836 6.82 567 1,044
12862 7.81 576 1,123
La Luz
12837 5.70 589 988
12838 26.70 763 2,632
12833 11.15 763 1,544
12808 8.09 818 1,384
12907 7.40 951 1,469
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10.0 DRILLING
The drill programs conducted by Endeavour Silver between 2011 and 2013 are
summarized below. Further details of these drill programs can be found in
Lewis and Murahwi (2012), Lewis and Murahwi (2013) and Munroe (2014).
Drilling identified the Animas-Los Negros vein in the Real el Alto area (Figure
10-1), which was found to be one vein, offset by faulting. The vein is principally
hosted in rhyolite and is comprised of quartz with abundant manganese oxides
(pyrolusite), minor pyrite and traces of disseminated dark grey and blue
sulphides. Highlights include 132 g/t Ag and 1.02 g/t Au over a 3.2m true width
in hole LN07-1, 144 g/t Ag and 1.21 g/t Au over a 3.6m true width in hole LN08-
1 and 258 g/t Ag and 0.61 g/t Au over a 4.5m true width was returned for hole
LN09-1.
The 2011 drill program also outlined new Mineral Resources on the El Tajo
Vein area. El Tajo is believed to be either a brecciated quartz +/- calcite vein or
a stockwork zone with weak to moderate veinlets and disseminations of fine
pyrite and traces of galena and possible silver sulphides (possibly argentite).
Drilling highlights in the El Tajo vein include 107 g/t Ag and 0.10 g/t Au over
1.6m true width within hole TA03-1 and 169 g/t Ag and 0.63 g/t Au over a 3.0m
true width in hole TA04-1.
New Mineral Resources were also outlined on the Real Vein, which is located
to the northeast of the Animas-Los Negros and El Tajo veins. The Real Vein is
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mainly comprised of white quartz which is intensely oxidized with both iron and
manganese oxides in places. Base metal sulphides and traces of dark grey
sulphides were observed locally. The Real vein is also characterized by
hydrothermal breccias and stockworks of narrow quartz veinlets in some
intercepts. The most significant intercept for the Real Vein was in hole RE04-1
which returned 320 g/t Ag and 0.74 g/t Au over a true width of 2.6m.
Drill holes were also advanced on the La Esurana Vein and in the La Luz area,
but did not return significant gold or silver mineralization.
The 2012 drill program discovered a new, high grade, silver-gold mineralized
zone in the Terronera Vein. The Terronera Vein mainly consists of brecciated
to massive quartz +/- calcite, locally banded and sugary-textured. Sulphide
content is typically <1% and predominately fine-grained pyrite. The vein is often
weak to moderately oxidized with mainly hematite and manganese oxides in
fractures. Minor faulting with clay and reworked vein and wall rock material is
also often associated with the Terronera Vein.
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Drilling highlights in the Terronera Vein include 1,489 g/t Ag and 0.85 g/t Au
over a 5.66m true width in hole TR02-1 and 500 g/t Ag and 1.15 g/t Au over an
11.48m true width in hole TR12-1. Hole TR09-1 yielded 650 g/t Ag and 1.17 g/t
Au over a 5.50m true width and 519 g/t Ag and 0.47 g/t Au over a 9.02m true
width.
Drilling highlights from the Terronera Vein include 122 g/t Ag and 2.00 g/t Au
over a 5.90m true width in hole TR02-5, 507 g/t Ag and 1.36 g/t Au over a
6.66m true width in hole TR03-1, 915 g/t Ag and 2.33 g/t Au over a 2.47m true
width in hole TR03-5 (including 5,580 g/t Ag and 15.85 g/t Au over a 0.27m true
width), 646 g/t Ag and 1.11 g/t Au over a 5.03m true width in hole TR07.5-1
(including 1,650 g/t Ag and 1.82 g/t Au over a 1.04m true width) and 583 g/t Ag
and 0.79 g/t Au over an 8.41m true width in hole TR08.5-1 (including 4,420 g/t
Ag and 2.46 g/t Au over a 0.47m true width).
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Number of Number of
Project Area Total Metres
Holes Samples Taken
Terronera 27 8,204.20 2,470
Early May, 2014, follow-up surface diamond drilling resumed on the Terronera
area, using two man-portable drill rigs and one skid mounted drill rig (CS14) all
provided by Energold. At the end of September, Endeavour Silver had
completed a total of 8,204.20m in 27 holes (Table 10.2 and Figure 10.1).
Table 10.2 2014 Drill Hole Summary for the Terronera Surface Diamond
Drilling Program
Total Depth
Hole Azimuth Dip Diameter Start Date Finish Date
(m)
TR20-1 230º -45º HQ/NQ 255.35 03/05/2014 09/05/2014
TR20-2 230º -60º HQ/NQ 329.40 10/05/2014 20/05/2014
TR20-3 230º -68º HQ/NQ 295.85 20/05/2014 29/05/2014
TR22-1 230º -67º HQ 216.55 30/05/2014 04/06/2014
TR22-2 230º -55º HQ 129.60 05/06/2014 07/06/2014
TR21-1 182º -45º HQ 97.60 07/06/2014 09/06/2014
TR23-1 283º -45º HQ 163.15 09/06/2014 13/06/2014
TR20-4 230° -45° HQ 94.75 13/06/2014 15/06/2014
TR17-2 237º -60º HQ/NQ 286.70 16/06/2014 24/06/2014
TR4S-1 230º -68 º HQ 317.60 14/06/2014 27/06/2014
TR17-3 237° -74° HQ 344.50 24/06/2014 07/07/2014
TR2S-1 228 º -45º HQ / NQ 318.15 28/06/2014 07/07/2014
TR39-1 230° -49° HQ 535.75 27/06/2014 10/07/2014
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Total 8,204.20
The 2014 exploration drilling program was conducted with the objective to
continue defining the high grade silver-gold mineralized body between sections
TR-4S through TR-41, primarily on the Central Part (between sections TR-07
through TR-23).
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Drilling highlights for Terronera Vein included 499 g/t Ag & 1.4 g/t Au over 2.6m
true width (including 1,660 g/t Ag & 1.3 g/t Au over 0.2m true width) in hole
TR07-3; 345 g/t Ag & 0.8 g/t Au over 6.3m true width (including 1,440 g/t Ag &
1.0 g/t Au over 0.5m true width) in hole TR14-3; 301 g/t Ag & 0.7 g/t Au over
6.7m true width (including 1,250 g/t Ag & 1.4 g/t Au over 0.4m true width) in
hole TR15-2; 788 g/t Ag & 0.8 g/t Au over 3.8m true width (including 3,620 g/t
Ag & 2.0 g/t Au over 0.7m true width) in hole TR17-2; 106 g/t Ag & 5.5 g/t Au
over 3.2m true width in hole TR20-1; 272 g/t Ag & 8.5 g/t Au over 3.0m true
width in hole TR20-2; 105 g/t Ag & 5.0 g/t Au over 2.6m
true width in hole TR21-1; 121 g/t Ag & 3.3 g/t Au over 16.0m true width in hole
TR23-1. Also significant results returned for HWTRV1 (101 g/t Ag & 4.3 g/t Au
over 8.2m true width in hole TR21-1; 114 g/t Ag & 3.9 g/t Au over 4.1m true
width in hole TR22-2; 107 g/t Ag & 1.9 g/t Au over 7.9 m true width in hole
TR23-1).
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Table 10.3 and the Terronera Vein intercepts are shown on the longitudinal
section in Figure 10.2.
Figures 10.3 through 10.8 depict typical cross-sections showing several of the
holes drilled to test the Terronera Vein structure in the Terronera Project.
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Table 10.3 Surface Drill Hole Significant Assay Summary for Mineral
Intercepts in the Terronera Vein Area
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Figure 10.1 Surface Map Showing Completed Drill Holes (black) in the
Terronera Area
(Source: edrsilver.com)
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(Source: edrsilver.com)
Figures 10.3 & 10.4 Cross-Sections through holes TR07-1, TR07-2 & TR07-3 and
TR14-1, TR14-2, TR14-3 & TR14-4 Drilled to test the Terronera Vein
(Source: edrsilver.com)
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Figures 10.5 & 10.6 Cross-Sections through holes TR15-1 & TR15-2 and
TR17-1, TR17-2 & TR17-3 Drilled to test the Terronera Vein
(Source: edrsilver.com)
Figures 10.7 & 10.8 Cross-Sections through holes TR20-1, TR20-2, TR20-
3 & TR20-4 and TR22-1, TR22-2 & TR22-3 Drilled to test the Terronera Vein
(Source: edrsilver.com)
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Table 10.4
Terronera Surface Drilling Activities in 2015
Number of Number of
Project Area Total Metres
Holes Samples Taken
Terronera 27 6,133 3,756
Drilling highlights for Terronera Vein included 1,371 g/t Ag and 1.10 g/t Au
(1,448 g/t AgEq) over 6.6m true width including 5,420 g/t Ag and 5.12 g/t Au
(5,778 g/t AgEq) over 0.3m true width in hole TR 10-4, 508 g/t Ag and 3.25 g/t
Au (735 g/t AgEq) over 8.2m true width, including 6,600 g/t Ag and 22.10 g/t Au
(8,147 g/t Ag Eq) over 0.23m true width in hole TR18-5.
Select drilling results are summarized in Table 10.6 and the Terronera Vein
intercepts are shown on the longitudinal section in Figure 10.2 and a surface
plan of drill hole locations is presented on Figure 10.9.
Table 10.5
2015 Drill Hole Summary for the Terronera Surface Diamond Drilling Program
Total Depth
Hole Azimuth Dip Start Date Finish Date
(m)
TR06-4 190.2 -60 335.5 19/11/2015 30/11/2015
TR08-4 230 -60 352.25 09/11/2015 20/11/2015
TR09-5 250 -60 394.95 29/11/2015 09/11/2015
TR13-5 208 -60 352.25 13/07/2015 21/07/2015
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Table 10.6 Surface Drill Hole Significant Assay Summary for Mineral Intercepts
in the Terronera Vein Area - 2015
From True Width
Hole Structure Au (g/t) Ag (g/t) AgEq (g/t)
(m) (m)
Terronera 263.75 6.58 1.10 1371 1448
TR10-4
Including 270.85 0.31 5.12 5420 5778
TR11-2 Hw Terronera 196.90 1.57 0.12 96 104
Including 197.75 0.35 0.21 239 253
Terronera 223.30 10.90 0.84 413 472
Including 234.90 0.31 9.14 4830 5470
TR15-3 Terronera 358.80 1.71 2.75 217 409
Including 359.75 0.31 6.84 150 629
TR16-4 Hw Terronera 125.05 1.56 0.58 363 403
Including 126.15 0.21 1.37 1295 1391
Terronera 134.35 1.58 2.08 24 170
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Number of Number of
Project Area Total Metres
Holes Samples Taken
Terronera 19 5,670 1,805
Drilling highlights for Terronera Vein included 717 g/t Ag and 2.94 g/t Au (923
g/t AgEq) over 6.56m true width, including 4,860 g/t Ag and 2.99 g/t Au (5,069
g/t AgEq) over 0.39m true width in hole TR10.5-1 and 226 g/t Ag and 5.0 g/t Au
(576 g/t AgEq) over 6.74m true width, including 527 g/t Ag and 169 g/t Au
(1,710 g/t AgEq) over 0.7m true width in hole TR09-06.
The 2016 infill drill holes are summarized in Table 10.8 and the Terronera Vein
intercepts are shown on the longitudinal section in Figure 10.2. A surface plan
of drill hole locations is presented on Figure 10.9 and select intersections are
summarized on Table 10.9.
Drilling on the La Luz Vein, which is outside of the current Mineral Resource
area, outlined a west plunging mineralized zone over 300m by 250m deep
starting approximately 100m below surface and still open to surface and to
depth. Highlights include 408 g/t Ag and 58.6 g/t Au (4,512 g/t AgEq) over
1.14m true width, including 1,365 g/t Ag and 238.0 g/t Au (18,025 g/t AgEq)
over 0.9m true width in hole LL-02. Select significant intersections are
presented on Table 10-10. Intersections on the La Luz Vein are shown on
Figure 10.10.
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Table 10.8 2016 Drill Hole Summary for the Terronera Surface Diamond
Drilling Program
Total Depth
Hole Azimuth Dip Start Date Finish Date
(m)
TR15-6 225 -50 161.15 20-Feb-16 29-Feb-16
TR16-9 50 -50 270.95 19-Mar-16 26-Mar-16
TR17-5 230 -60 136.5 01-Mar-16 06-Mar-16
TR18-6 250 -70 121.5 07-Mar-16 12-Mar-16
TR19-6 300 -55 152.35 12-Mar-16 18-Mar-16
TR20-7 65 -45 140.05 10-abr-16 15-abr-16
TR20-8 70 -20 106.1 15-abr-16 20-abr-16
TR21-5 45 30 103.85 20-abr-16 24-abr-16
TR24-2 230 -35 106.35 27-Mar-16 30-Mar-16
TR24-3 225 -75 138.25 30-Mar-16 04-abr-16
TR25-3 300 -55 156.5 04-abr-16 09-abr-16
TR17_5-1 255 -50 157.5 24-abr-16 29-abr-16
Table 10.9 Surface Drill Hole Significant Assay Summary for Mineral Intercepts
in the Terronera Vein Area – 2016
True
Hole Structure From (m) Au (g/t) Ag (g/t) AgEq (g/t)
Width (m)
TR10.5-1 Terronera 380.75 6.56 2.94 717 923
Including 386.9 0.39 2.99 4,860 5,069
TR12-6 Terronera 419.15 4.53 1.83 71 199
Including 423.35 0.34 3.90 206 479
Fw Terronera 436.5 1.59 0.35 243 268
Including 436.5 0.07 0.53 764 801
TR14-7 Terronera 363.9 4.78 3.91 109 383
Including 372.25 0.48 11.05 246 1020
TR15-6 Hw Terronera 126.7 2.10 1.22 737 823
Including 127.55 0.34 3.34 2,140 2,374
TR16-9 Terronera 212.2 2.67 2.18 72 225
Including 214.45 0.38 5.56 133 522
Hw Terronera 254.75 0.23 2.60 152 334
TR17-5 Terronera 83.35 1.80 0.43 216 246
Including 83.35 0.40 0.88 484 546
TR18-6 Hw Terronera 48.1 5.28 3.48 53 296
Including 52.75 0.20 23.8 90 1,756
TR19-6 Hw Terronera 57.85 1.74 0.35 179 204
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Table 10.10 Surface Drill Hole Significant Assay Summary for Mineral
Intercepts in the La Luz Vein Area - 2016
True
Hole Structure From (m) Au (g/t) Ag (g/t) AgEq (g/t)
Width (m)
LL-02 La Luz 207.45 1.14 58.63 408 4,512
Including 208.61 0.26 238.00 1365 18,025
LL-04 La Luz 244.10 1.17 4.05 194 478
Including 244.40 0.25 12.20 751 1,605
LL-06 La Luz 87.80 1.01 2.65 61 246
Including 87.80 0.39 0.44 102 133
LL-07 La Luz 113.90 1.43 3.07 202 418
Including 113.90 0.68 6.11 233 661
LL-08 La Luz 95.25 1.57 5.25 86 454
Including 95.65 0.41 2.58 152 333
Including 96.45 0.75 8.76 24 637
LL-10 La Luz 127.40 3.34 2.33 140 303
Including 130.45 0.45 5.60 176 568
LL-12 La Luz 176.10 1.79 0.56 244 283
Including 176.10 0.5 1.28 548 638
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Drilling highlights on the Terronera Vein include 230 g/t Ag and 1.8 g/t Au (359
g/t AgEq) over 16.3m true width, including 3,490 g/t Ag and 8.9 g/t Au (4,110
AgEq) over 0.3m true width in hole 11-3.
Drilling highlights on the La Luz Vein include 63 g/t Ag and 57 g/t Au (4,054 g/t
AgEq) over 2.2m true width, including 340 g/t Ag and 320 g/t Au (22,740 g/t
AgEq) over 0.3m true width in hole LL-21.
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Figure 10.9 Surface Map Showing 2015 and 2016 Drill Holes
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(Source: edrsilver.com)
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Prior to 2014, samples were taken by lithological and geological markers and
zones with different drill recoveries were mixed. In this way, if a zone with lower
recuperation had a higher grade and was mixed with a lower grade zone with
higher core recovery, the overall value of the sample would be diluted and not
representative of the zone. Likewise, the reverse could be true and a low grade
zone could be given a higher value due to recovery issues.
Since September, 2014 sampling has coincided with core recovery. In this way,
losses of drill core are considered at the sample level. This ensures that values
in areas with low drill core recovery do not artificially affect (either positively or
negatively) the gold and silver values of the zone. This project has core
recovery issues in certain spots. This was implemented in the newest round of
drilling from September, 2014 onwards, analyses, and security at the Terronera
Project from 2012 to 2017.
Depending on the competency of the core, it is either cut in half with a diamond
bladed saw or split with a pneumatic core splitter.
The core storage facilities at Terronera have been moved from the town of San
Sebastian to a permanent structure located on the property that is more
secluded and well protected.
All of Endeavour Silver’s samples of rock and drill core are bagged and tagged
at the Terronera Project warehouse and shipped to the ALS-Chemex (ALS)
preparation facility in Guadalajara, Mexico. After preparation, the samples are
shipped to the ALS laboratory in Vancouver, Canada, for analysis.
Upon arrival at the ALS preparation facility, all of the samples are logged into
the laboratory’s tracking system (LOG-22). Then the entire sample is weighed,
dried if necessary, and fine crushed to better than 70% passing 2 mm (-10
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mesh). The sample is then split through a riffle splitter and a 250 g sub-sample
is taken and pulverized to 85% passing 75 microns (-200 mesh).
The analytical procedure for the gold mineralization is fire assay followed by an
atomic adsorption (AA) analysis. A 30 g nominal pulp sample weight is used.
The detection range for the gold assay is 0.005 to 10 ppm.
The analytical procedure for the silver mineralization is an aqua regia digestion
followed by an ICP-AES analysis. The detection range for the silver assay is
0.2 ppm to 100 ppm.
These analytical methods are optimized for low detection limits. The assays for
evaluation of high-grade silver (+/- gold) mineralization have been optimized for
accuracy and precision at high concentrations (>20 ppm for silver). The
analytical procedure for high-grade gold and silver mineralization is fire assay
followed by a gravimetric finish. A 30 g nominal pulp sample weight is used.
The detection ranges are 0.5 to 1,000 ppm for the gold assay and 5 to 3,500
ppm for the silver assay.
The pulps from selected drill holes are also subjected to aqua regia digestion
and inductively coupled plasma (ICP) multi-element analysis (ME-ICP41).
ALS Minerals has developed and implemented at each of its locations a Quality
Management System (QMS) designed to ensure the production of consistently
reliable data. The system covers all laboratory activities and takes into
consideration the requirements of ISO standards.
The QMS operates under global and regional Quality Control (QC) teams
responsible for the execution and monitoring of the Quality Assurance (QA) and
Quality Control programs in each department, on a regular basis. Audited both
internally and by outside parties, these programs include, but are not limited to,
proficiency testing of a variety of parameters, ensuring that all key methods
have standard operating procedures (SOPs) that are in place and being
followed properly, and ensuring that quality control standards are producing
consistent results.
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The Terronera Project was visited by Mr. David Burga, P. Geo. on September
11, 2014, October 7, 2014 and June 14, 2016, for the purposes of completing
site visits and due diligence sampling. General data acquisition procedures,
core logging procedures, and quality assurance/quality control (QA/QC) were
discussed during the visit.
During the June, 2016 site visit Mr. Burga collected 12 samples from 11 drill
holes. A range of high, medium, and low-grade samples were selected from the
stored core samples. Samples were collected by taking a 1⁄4 split of the half
core remaining in the core box. Once the samples were 1⁄4 sawn they were
placed in a large polyurethane bag and brought back to Canada by Mr. Burga.
The samples were couriered from P&E’s office in Brampton to AGAT’s
Laboratory in Mississauga for preparation and analysis.
Samples at AGAT were analyzed for gold by fire assay with AAS finish and for
silver by 4-Acid digestion with an AAS finish.
Results of the site visit due diligence samples are presented in Figures 12.1
and 12.2. The results for gold were acceptable but all of the P&E analyses for
silver were under 110 ppm (and as low as 12% of the Endeavour Silver values).
These values are represented by the red line on Figure 12.2. Due to this
discrepancy, P&E obtained the pulps from AGAT for reanalysis purposes. P&E
personnel repackaged the pulps, placed them in new sample bags, gave them
new sample numbers, and submitted the samples back to AGAT for reanalysis.
The analysis of the pulp samples yielded values closer to the Endeavour Silver
samples than the first round of AGAT testing and no further action was taken.
The reanalysis samples are represented by the green line on Figure 12.2.
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Figure 12.1 Terronera Due Diligence Sample Results for Gold: June 2016
Figure 12.2 Terronera Due Diligence Sample Results for Silver: June 2016
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From 2014 through 2016, a total of 372 CRM samples were submitted at an
average frequency of 1 in 20 samples. The standards were ticketed with pre-
assigned numbers in order to avoid inadvertently using numbers that were
being used during logging.
Four different standards were submitted and analyzed for gold and silver as
summarized in Table 12.2.
Reference Reference
Standard Assays Standard Assays
Reference Reference Reference (Certificate) (Calculated)
Standard Number Source
Au (g/t) Ag (g/t) Au (g/t) Ag (g/t)
CDN Resource
EDR-32 CDN-FSM-7 0.90 65 0.89 67
Laboratories
CDN Resource
EDR-38 CDN-ME-19 0.62 103 0.63 99.1
Laboratories
CDN Resource
EDR-40 CDN-ME-1302 2.41 418.9 2.44 416.9
Laboratories
CDN Resource
EDR-41 CDN-GS-2Q 2.37 73.2 2.44 75.8
Laboratories
CDN Resource
EDR-42 CDN-ME-1408 2.94 396 2.94 387
Laboratories
CDN Resource
EDR-43 CDN-ME-1307 1.02 54.1 1.01 55.3
Laboratories
The Company was originally monitoring the standards by utilizing the certified
mean and standard deviation values resulting from the round robin assaying
undertaken during the certification process for each of the CRMs. In 2013,
Endeavour Silver decided to modify the protocol for monitoring the standards
by utilizing the available ALS laboratory data to improve the control limits for the
CRM’s.
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For each of the four standards used with greater than 25 sample results from
the primary lab (ALS) they recalibrated the mean and standard deviation using
available data. This is an acceptable practice implemented by some
Companies to strengthen the control limits (CL’s) utilized in an ongoing QC
program, with a larger dataset being more reliable than the smaller number of
round robin results used to calculate certified values.
Graphs of the results for each of the CRM’s are presented in Figures 12.3
through 12.14. The green line represents the mean and the red lines represent
+/-2 standard deviations from the mean.
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The tolerance limit used for the blank samples is 10 times the lower detection
limit for the corresponding assay method (gold = 0.05 ppm and silver = 2 ppm).
Graphs of the results for the blank samples are presented in Figures 12.15 and
12.16.
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Only one sample for gold (SDH16161) was above the set tolerance limit and
the sample was located in an area outside the mineralized zones and no further
action was considered necessary.
Crushed field duplicate samples were used to monitor the potential mixing up of
samples and precision of the data. Duplicate core samples were prepared by
Endeavour Silver personnel at the core storage facility at the Terronera Project.
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The original and duplicate samples were tagged with consecutive sample
numbers and sent to the laboratory as separate samples. Duplicate samples
were collected at a rate of 1 in 20 samples.
A total of 367 duplicate samples were taken, representing 4.7% of the total
samples.
The results of the duplicate sampling are shown graphically in Figures 12.17
and 12.18.
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Random pulps were selected from original core samples and sent to a second
laboratory to verify the original assays and monitor any possible deviation due
to sample handling and laboratory procedures.
A total of 361 pulp samples were sent to a third party laboratory (Inspectorate)
for check analyses, equating to approximately 4.7% of the total samples taken
during the drilling program.
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Correlation coefficients are high, at >0.98 for both gold and silver, showing
excellent overall agreement between the original ALS-Chemex assay and the
Inspectorate check assay.
The results of the check sampling program are shown by way of scatter
diagrams in Figures 12.19 and 12.20.
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Resource Development Inc. (RDi) conducted locked and open cycle flotation
testing for the Terronera project at its metallurgical testing facility in Wheat
Ridge, Colorado. The primary objectives of the test program were to develop
the levels of recovery and final concentrate characteristics.
Gold and silver recoveries were developed for materials originating from the
Terronera project. The metallurgical data developed was used to support this
PFS.
The flow sheet developed for Terronera includes a two stage crushing coupled
with closed circuit grinding to achieve a relatively coarse flotation feed grind
size of 80 percent passing 200 mesh (75 microns).
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Filter Plant
Dry Tailings Storage Facility (TSF)
Using the recommended flow sheet the marketable products for the project
include the following:
Second Cleaner Flotation Concentrate
Dore
The overall mass balance for this processing option is provided in Table 13.1.
The overall calculated recovery was 74.71 and 87.02 percent for gold and
silver, respectively.
The following assumptions were made in preparation of the mass balance:
The precious metal extracted into solution was recovered as Dore
Approximately 90 percent gold and silver dissolution was achieved in
cyanidation
Overall recovery is the sum of the precious metal reporting to the
final products in the flotation concentrate and Dore
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In addition, the samples under study were analyzed by ICP scan and metallic
gold as well as silver and cyanide soluble gold / silver.
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The feed grade was 1.12 g/t Au and 225 g/t Ag. Approximately 81.9% of the
gold and 89.3% of the silver present in the sample was cyanide soluble. The
total sulfur assayed 0.39% with slightly more than half of the total coming from
sulfide sulfur.
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Table 13.3 outlines the relevant flotation data developed for this processing
option.
The efficiency applied in the cyanide leach circuit corresponds to the levels of
extraction achieved on a cleaner scavenger tail flotation product. The levels of
precious metal extraction were determined in duplicate by the metallurgical
laboratory in Wheat Ridge, Colorado (RDi). The metallurgical data are
summarized in Tables 13.4 and 13.5.
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Reagents
Sample Distribution % Assay (g/t) Consumption
Metallurgical
Weight (kg/t)
Products
(grams)
Au Ag Au Ag NaCN Ca(OH)2
Pregnant Solution 89.60 89.30 1.56 324 4.69 7.11
CST Leached
247.5 10.40 10.70 0.39 81
Residue
Calculated Head 250.0 100.00 100.00 3.80 761
Reagents
Sample Distribution % Assay (g/t) Consumption
Metallurgical Weight (kg/t)
Products (grams)
Au Ag Au Ag NaCN Ca(OH)2
The levels of precious metal extraction are in a 90 percent range for both gold
and silver. The cyanide consumption averaged 4.7 kg per tonne. The lime used
as pH modifier was added as calcium hydroxide. For these tests, lime addition
represents the consumption at approximately 7 kg per tonne.
The metallurgical data developed indicate that leaching of the CST would be
required in order to enhance recovery of gold and silver.
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Cyanide leaching of the CST provided the highest levels of precious metal
recovery for Terronera. Production of a high grade precious metal bearing
concentrate product at Terronera coupled with transportation and off-site
cyanidation of the CST flotation product will provide an enhanced level of
precious metal recovery.
Additional leach test work conducted by Endeavour Silver indicated that lower
levels of precious metal extraction were obtained at Guanacevi’s leaching
operation metallurgical laboratory. Leaching parameters currently in practice at
Guanacevi were applied for the leach tests. The seemingly lower extractions
obtained may be attributed to the following factors:
Table 13.6 Samples Characterization and Head Assay, Fire Assay, and
Whole Rock Analysis (%)
Head Assays
Ore Grade Item Au Ag SiO2 CaO Fe2O3 Total S Sulfide
(g/t) (g/t) (%) (%) (%) (%) (%)
Low (LG) TR2016-03 0.967 115.7 89.2 4.60 1.08 0.45 0.18
Medium (MG) TR2016-01 2.014 241.4 84.8 5.60 1.13 0.24 0.05
High (HG) TR2016-02 3.734 881.3 92.0 1.13 1.49 0.99 0.57
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13.7 Mineralogy
The analytical and mineralogical data indicate that the rock matrix is comprised
mainly of quartz. The vein material tested had a specific gravity of 2.65. This
correlates well with the mineralogy results.
A Bond's Ball Mill Work Index was determined for four samples from various
areas of the deposit for variability testing. The samples were designated as
501, 502, 503 and n504. Each sample was tested at a closed size of 100 mesh.
In addition, the Bond's Ball mill work index was determined for the original
composite TR 2015-1 sample at a closed size of 100 and 200 mesh. The BWi
results are summarized in Table 13.7.
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Based on the results obtained the material would be classified as hard and
highly abrasive. These grindability test results correlate well with previous data
developed for materials from Terronera.
Test charges from each sample were ground in a laboratory rod mill at
60 percent solids to establish a correlation between grind time and particle
size distribution. Three targeted 80 percent passing particle size distributions
were specified 150, 200 and 270 mesh Tyler.
For all tests, the following flotation reagents and conditions were applied:
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Gold recovery is sensitive to grind size. Silver recovery does not appear to
be as sensitive to grind in the Medium and High Grade composites
Precious metals appear to be associated with sulfide mineralization
present. A higher precious metal content correlates well with higher iron
contents in the Rougher concentrates
The medium and higher grade composites showed a lower sensitivity for
silver recovery when compared to the low grade composite.
The Terronera Low, Medium and High grade composites evaluated had a
similar response to flotation results obtained in previous testing conducted
in 2014. Precious metals recoveries were similar. The low grade
composite exhibited lower silver recovery at coarser grinds.
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Small quantities of metallic gold and silver were indicated by metallic assay
conducted on the composite samples at various grades. Inclusion of a gravity
concentration circuit is not supported by the metallic assay data developed in
this evaluation. However, higher grade zones should be analyzed for metallic
gold and silver content to address the possibility of presence of coarse precious
metal in higher grade zones in the deposit.
In order to develop projected levels of precious metal recovery for the project a
metallurgical simulation model of the beneficiation plant was constructed. A
steady state mass balance was calculated for the entire process including the
flotation circuit. The following parameters and processing circuits were taken
into account in the development of the metallurgical model and mass balance
calculations.
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13.13 Conclusions
The benefits of a finer grind are offset by an increase in energy requirement for
grinding. Optimization of the grinding circuit configuration may be necessary in
order to achieve the fine grind required to enhance precious metal recovery.
The Terronera Low Medium and High grade composites evaluated had a
similar response to the flotation parameters evaluated. Precious metals
recoveries were similar
13.14 Recommendations
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14.1 Introduction
This report section is to update the Mineral Resource Estimate from the
Preliminary Economic Assessment Report for the Endeavour Silver Terronera
Project dated April 30, 2015. The Mineral Resource Estimate presented herein
is reported in accordance with the Canadian Securities Administrators’ National
Instrument 43-101 (“NI 43-101”) and has been estimated in conformity with
generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves
Best Practices” guidelines. Mineral Resources are not Mineral Reserves and do
not have demonstrated economic viability. There is no guarantee that all or any
part of the Mineral Resource will be converted into Mineral Reserve.
Confidence in the estimate of Inferred Mineral Resources is insufficient to allow
the meaningful application of technical and economic parameters or to enable
an evaluation of economic viability worthy of public disclosure. Mineral
Resources may be affected by further infill and exploration drilling that may
result in increases or decreases in subsequent Mineral Resource Estimates.
This Mineral Resource Estimate was undertaken by Yungang Wu, P.Geo., and
Eugene Puritch, P.Eng., FEC of P&E Mining Consultants Inc. of Brampton,
Ontario, both independent Qualified Persons in terms of NI 43-101, from
information and data supplied by Endeavor Silver. The effective date of this
Mineral Resource Estimate is April 3, 2017.
14.2 Database
All drilling and assay data were provided in the form of Excel data files by
Endeavour Silver. The Gems database for this Mineral Resource Estimate,
constructed by P&E, consisted of 138 core holes totaling 38,366.6 metres and
36 channel samples totaling 77.25m (Table 14.1). A drill hole plan is shown in
Appendix A.
Table 14.1 Drill Hole Database Summary
Drilling Year # Drill Holes Metres of Drilling # of Samples
2011-2014 79 24,268.05 6,511
2015-2016 59 12,347.50 6,440
Total 138 38,366.60 12,951
Channel 77.25 36
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All drillhole survey and assay values are expressed in metric units, while grid
coordinates are in the WGS84, Zone 13Q UTM geodetic reference system.
P&E carried out data verification for silver and gold assays contained within the
mineral resource wireframes against laboratory certificates that were obtained
directly from ALS Chemex laboratory in Hermosilla, Mexico. No errors were
found.
Endeavour Silver adjusted 1,091 raw Ag and Au assays for core recovery, of
which 257 assays were used for the Mineral Resource Estimate. If core
recovery was 92%, for example, Ag and Au assay values were reduced to 92%
of the original analytical value. The adjusted values are recorded in the
database as “Ag_R” and “Au_R” and these values were used for the Mineral
Resource estimation. No study was provided to support this practice. P&E’s site
visit confirmed that core recovery was generally very good, the vein was very
competent and recovery was over 90% for core examined. The oxidation level
was generally low and the mineralization appeared unleached. P&E agrees
with Endeavour Silver that the use of “recoverable” grades is a conservative
approach.
In addition to the data verification reported above, P&E reviewed the QAQC for
the Terronera Project laboratory analyses and concludes that the analyses are
acceptable. In P&E’s opinion the drill hole and assay/analytical databases may
be used for the estimation of Mineral Resources.
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A total of six (6) mineralization vein wireframes were generated during the
course of this Mineral Resource Estimate. The wireframes were created from
successive polylines on NW oriented vertical sections with 50m spacings. In
some cases, mineralization below the 150 g/t AgEq cut-off was included for the
purpose of maintaining zonal continuity. On each section, polyline
interpretations were digitized from drill hole to drill hole but not typically
extended more than 50 metres into untested territory. Minimum constrained
sample length for interpretation was 2.0 metres. The resulting domains were
used as hard boundaries during Mineral Resource estimation, for rock coding,
statistical analysis and compositing limits. The 3D domains are presented in
Appendix B.
Topographic surface and mined voids were provided by Endeavour Silver. The
topographic surface was created using satellite image which presented some
discrepancies with the surveyed drill hole collars. The influence on the Mineral
Resource Estimate by these discrepancies is minor, however, it is
recommended that Endeavour Silver survey the topography of the Terronera
Deposit in future with a differential GPS.
A unique rock model code was assigned for each mineralized domain in the
resource model. The codes applied for the models are tabulated in Table 14.2.
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14.6 Compositing
The basic statistics of all constrained assays and sample lengths are
presented in Table 14.3.
Table 14.3 Basic Statistics of all Constrained Assays and Sample Lengths
Length
Variable Au g/t Ag g/t
(m)
Number of Samples 1,710 1,710 1,710
Minimum Value 0.01 0.30 0.05
Maximum Value 36.50 15,532.50 4.00
Mean 2.10 305.61 0.72
Median 0.90 89.00 0.60
Variance 11.98 876,784.42 0.15
Standard Deviation 3.46 936.37 0.39
Coefficient of Variation 1.65 3.06 0.55
The compositing process was halted upon exit from the footwall of the
aforementioned constraint. Un-assayed intervals and detection limit assays
were set to 0.001 g/t or 0.001% for all elements. Any composites that were less
than 0.25m in length were discarded so as not to introduce any short sample
bias in the interpolation process. The constrained composite data were
extracted to point files for a capping study. The composite statistics are
summarized in Table 14.4.
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Number of
1,313 1,313 1,313 1,313
Samples
Minimum
0.001 0.001 0.001 0.001
Value g/t
Maximum
28.575 11,492.397 2,000 21.0
Value g/t
Geometric
0.794 88.988 87.486 0.793
Mean g/t
Standard
2.663 667.359 339.991 2.522
Deviation
Coefficient
1.442 2.594 1.612 1.381
of Variation
Grade capping was investigated on the 1.0m composite values in the database
within the constraining domains to ensure that the possible influence of erratic
high values did not bias the database. Ag and Au composite Log-normal
histograms were generated for each mineralized domain and the resulting
graphs are exhibited in Appendix C.
The Ag and Au grade capping values are detailed in Table 14.5 and 14.6
respectively. The capped composites were utilized to develop variograms and
for block model grade interpolation.
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14.8 Semi-Variography
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A total of 1,391 bulk density measurements from 75 drill holes were provided by
Endeavour Silver of which 556 measurements were from the mineralized veins
with an average bulk density of 2.56t/m3. Testing was by water displacement on
waxed drill core by Endeavour Silver.
David Burga, P. Geo of P&E collected 10 samples during his June, 2016 site
visit. The samples were tested in Agat Laboratories in Mississauga, Ontario
and had an average bulk density of 2.52 t/m 3.
The Terronera resource block model was constructed using Geovia Gems
V6.7.1 modeling software and the block model origin, rotation, and block size
and block numbers are tabulated in Table 14.7. The block model consists of
separate model attributes for estimated grade, rock type, percent, bulk density,
and classification attributes.
All blocks in the rock code block model were initially assigned a waste rock
code of 99, corresponding to the surrounding country rocks. All mineralized
domains were used to code all blocks within the rock type block model that
contain 1 % or greater volume within the domains. These blocks were assigned
their appropriate individual rock codes as indicated in Table 14.2. The
topographic surfaces were subsequently utilized to assign rock code 0 for air, to
all blocks 50 % or greater above the surface.
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A volume percent block model was set up to accurately represent the volume
and subsequent tonnage that was occupied by each block inside the
constraining domains. As a result, the domain boundary was properly
represented by the volume percent model ability to measure individual infinitely
variable block inclusion percentages within that domain. The minimum inclusion
percentage of any mineralized block was set to 1%.
Ag and Au grade were interpolated with Inverse Distance Cubed (1/d 3), while
Cu, Pb, and Zn interpolated with Inverse Distance Squared (1/d 2) all using
capped composites. Multiple passes were executed for the grade interpolation
to progressively capture the sample points in order to avoid over smoothing and
preserve local grade variability. Search ranges were based on the variograms
and search directions which were aligned with the strike and dip directions of
each domain accordingly. Grade blocks were interpolated using the following
parameters in Table 14.8.
Dip Max # of
Strike Across Dip Min # Max #
Element Pass Range Samples
Range (m) Range (m) Samples Samples
(m) per Hole
I 27 30 6 2 5 12
Ag II 45 50 10 2 3 12
III 135 150 30 2 1 12
I 20 25 5 2 5 12
Au II 30 40 10 2 3 12
III 135 150 340 2 1 12
Selected vertical cross-sections and plans of the AgEq grade blocks are
presented in Appendix E.
The Ag equivalent blocks (AgEq) were determined using the formula AgEq g/t =
Ag g/t + (Au g/t x 70).
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In P&E's opinion, the drilling, assaying, and exploration work of the Terronera
Project supporting this Mineral Resource Estimate are sufficient to indicate a
reasonable potential for economic extraction and thus qualify it as a Mineral
Resource under the CIM definition standards. The Mineral Resources were
classified as Indicated and Inferred based on the geological interpretation,
semi-variogram performance and drill hole spacing. The Indicated Mineral
Resources were classified for the blocks interpolated by the grade interpolation
Pass I and II in Table 14.8, which used at least three composites from a
minimum of two holes; and Inferred Mineral Resources were categorized for all
remaining grade populated blocks within the mineralized domains. The
classifications have been adjusted on a longitudinal section to reasonably
reflect the distribution of each category. Selected classification block cross-
sections and plans are attached in Appendix F.
The Mineral Resource Estimate was derived from applying an AgEq cut-off
grade to the block model and reporting the resulting tonnes and grade for
potentially mineable areas. The following calculation demonstrates the rationale
supporting the AgEq cut-off grade that determines the underground potentially
economic portions of the constrained mineralization.
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Therefore, the AgEq cut-off grade for the underground resource estimate is
calculated as follows:
Mining, Processing, and G&A costs per ore tonne = ($40 + $23 + $10) =
$73/tonne
Table 14.9 Mineral Resource Estimate Statement at Cut-off 150g/t AgEq (1) (2) (3) (4) (5)
Au Au Ag Ag AgEq AgEq
Class k tonnes
g/t k oz g/t k oz g/t k oz
Indicated 3,959 2.18 277 232.4 29,530 384.8 48,920
Inferred 720 1.48 34 308.9 7,153 412.5 9,533
1) Mineral resources which are not mineral reserves do not have demonstrated
economic viability. The estimate of mineral resources may be materially affected
by environmental, permitting, legal, title, taxation, socio-political, marketing, or
other relevant issues.
2) The Inferred Mineral Resource in this estimate has a lower level of confidence
than that applied to an Indicated Mineral Resource and must not be converted
to a Mineral Reserve. It is reasonably expected that the majority of the Inferred
Mineral Resource could be upgraded to an Indicated Mineral Resource with
continued exploration.
3) The mineral resources in this report were estimated using the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources
and Reserves, Definitions and Guidelines prepared by the CIM Standing
Committee on Reserve Definitions and adopted by the CIM Council.
4) AgEq g/t = Ag g/t + (Au g/t x 70)
5) Historical mined areas were depleted from the Terronera Vein wireframe.
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Confirmation of Estimate
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Figure 14.2 Ag Grade and Tonnage Comparisons derived from ID3 and
NN Grade Interpolation
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The Mineral Resource considered for conversion to a Mineral Reserve, for the
Terronera underground mine plan, is summarized in Table 15.1. This Mineral
Resource was estimated at a 150 g/t AgEq cut-off grade.
Table 15.1 Summary of Mineral Resource Considered @ 150 AgEq g/t Cut-Off
Resource Area Level (El) Tonnes (t) Au (g/t) Ag (g/t) AgEq (g/t)
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Resource Area Level (El) Tonnes (t) Au (g/t) Ag (g/t) AgEq (g/t)
The Mineral Resource that was converted to a Mineral Reserve was estimated
at a 150 g/t AgEq cut-off grade which was based on the parameters presented
in Table 15.2.
Ag $/oz $18
Au $/oz $1,250
Ag Refining $/oz $1
Au Refining $/oz $10
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Mechanized cut and fill and longhole sill pillar recovery are the proposed mining
methods. Mine dilution is estimated to be 10%, represented by an approximate
15cm thick skin around the mining outline, plus dilution from backfill. Dilution
grades were estimated within this 15cm skin. The average vein thickness is
estimated to be 4.4m, which includes hanging wall and footwall dilution. A
summary of mining dilution and recovery estimates is presented in Table 15.3.
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Mine dilution and extraction was applied to stope tonnes only. A summary of
the mine diluted and recovered Probable Mineral Reserve, is presented in
Table 15.4.
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Ag Eq
Tonnes Ag Au Ag Eq Ag oz Au oz
Classification oz
(‘000’s) g/t g/t g/t (‘000’s) (‘000’s)
(‘000’s)
Probable 4,061 207 1.95 344 27,027 255 44,877
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The Terrronera mining site is located underneath mountainous terrain with local
topographic relief of 550m over an area of 3.7km2. The initial mining elevation
was selected to produce higher grades early in the mine life. Maintaining a
haulage drift is critical to the success of the mine material movement system.
The portal daylights slightly above a valley floor on the side of a mountain
which reduces the potential of any water washouts into the mine during rainy
periods. To further prevent water ingress, the portal is initiated with a +2%
gradient before ramping down once underground.
One goal of the material handling system is to reduce the haulage distance
from the stoping areas to the portal and subsequently to the process plant. To
accomplish this, stoping areas above 1380el are equipped with finger raises
connecting to an ore pass dropping material down to the 1380 haulage drift.
Once at the bottom of the ore pass, ore will be chute loaded onto a truck by a
scooptram and hauled to the portal and subsequently to the process plant.
The deposit characteristics were considered in selecting the elevation of the
haulage drift at 1380el. Refer to Figure 16.1 ‘Terronera Mine 1380 Haulage
Drift, Composite Plan’ and Figure 16.2 ‘Terronera 1380 Haulage Drift, General
Infrastructure’ for a plan and infrastructure details of the 1380 haulage drift
layout. The traditional overhand mechanized cut and fill mining method is a
bottom up method. Above 1380el there is higher grade and greater tonnage
than below. 0.5 million ore tonnes are expected to be extracted from below
1380el while 3.5 million ore tonnes would be extracted from above that
elevation. This decision maximizes the tonnage delivered to the 1380el via the
ore pass.
A goal of the material handling design is keeping the scoop tram hauling
distance less than 150m. Accordingly, the 1400m strike length of the deposit is
divided into five mining blocks of 300m strike length serviced by an
independent spiral ramp in the footwall of the middle of each mining block. The
maximum distance along strike from each side of the ramp access is 150m to
the end of the mining block.
Stoping areas have two means of egress for mining personnel. One path of
egress is walking from the production area to the mining block access ramp to
the haulage drift. The second way is a constructed ladder way egress in backfill
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at the far end of the mining block, which leads to the 1380 haulage drift. There
are two means of egress from the haulage drift, one at the NW end out the
portal and one at the SE end out a fresh air raise/egress near mining block five.
The Mineral Reserve extends from the 1,610m to 1,260m elevations, a vertical
distance of approximately 350m, and has a lateral extent of approximately
1,400m. A conceptualized mechanized cut and fill mining method plan has
been laid out to extract the deposit using trackless underground equipment,
including scooptrams, haulage trucks, and electric-hydraulic drill jumbos. A
small amount (7% of total Mineral Reserve) of mechanized long hole mining is
also required for the recovery of sill pillars.
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Primary access to the deposit will be via a 526m long -12% 5m by 5m trackless
haulage ramp, from the portal, at the 1469 m Level to the 1410m Level. Refer
to Figure 16.3 ‘Terronera Plan View, Portal Boxcut’ for details of the portal
excavation. The -12% haulage ramp will be driven an additional 283m to the
1380m Level haulage drift. The 1380m Level haulage drift will be driven at
+1% for an addition 892m, during the next 3 quarters of a year to the end of the
1380m Level haulage drift. Refer to Figure 16.4 ‘Terronera Mine Design,
Isometric Drawing’ for further details of the mine and stope development plan,
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and to Figure 16.5 ‘Terronera Mine, Haulage Drift and Ramp Cross Section (5m
x 5m)’ for the drift and ramp design layout.
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Figure 16.5 Terronera Mine, Haulage Drift and Ramp Cross Section (5m x 5m)
Access to the mining zones will be via a series of five +/-12% up-and-down
spiral ramps, access cross-cuts, and stope attack cross-cut ramps. This
development will have cross-sectional dimensions of 4.5m by 4.5m. Refer to
Figures 16.6, 16.7 and 16.8 ‘Terronera Cross Sectional Projection, Mining
Blocks M2, M3 and M4’ for details of the mine plan up-and-down spiral ramps,
access cross-cuts, and stope attack-crosscut ramps layout and Figure 16.9
‘Terronera Mine Level Development, Cross Section (4.5m x 4.5m)’ for the ramp
and cross-cut design layout.
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Figure 16.9 Terronera Mine Level Development, Cross Section (4.5m x 4.5m)
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There are a planned 31,955m of total life-of-mine (LOM) mine and stope
development. A summary of this development, by type and cost category, is
given in Table 16.1.
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The principal mining method envisaged is mechanized non-captive cut and fill
using trackless underground equipment, including scooptrams, haulage trucks
and electric-hydraulic drill jumbos. Refer to Figure 16.11 ‘Typical Mining
Method, Cut and Fill’. The average mining width is estimated to be 4.4m.
Initial access to the stope lifts will be via cross cut attack down slope ramps.
Refer to Figure 16.12 ‘Terronera Mine, Representative Level Design’ for a
typical layout of spiral ramp-to-stope access. The initial bottom cut and fill lift
will be excavated 4m high by the width of the mineralized domain (up to 6m
wide), as drift development. Stope lifts will be mined from the bottom up. The
backs of the attack ramps will be slashed to access higher lifts. Stope lift strike
lengths will be up to 300m in length and 150m in each direction from the attack
ramp access. Mining breasts will be drilled using horizontal blast holes.
Where more than one vein occurs in the same mining block, adjacent veins will
not be mined) simultaneously at the same elevation..
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The encountered rock masses at the Terronera Deposit were grouped into
geomechanical domains in order to simplify the stability analyses. Each domain
contains rock masses with similar engineering characteristics that are expected
to perform similarly during mining. Several possible domain definitions were
considered. The rock mass quality domains were ultimately defined by the
spatial domains identified from a review of the core photos and by the major
lithology groupings. The spatial domains are as follows:
Surface Effects Zone - Reduced rock mass quality was observed in the
upper 100 m of the northwest area of the deposit. The reduction in
rock mass quality is attributed to weathering.
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Transition Zone - A transition between the Arroyo Fault Zone and the
Main Zone.
Within these spatial domains, the rock mass quality varies by lithology, as
follows:
Vein - The Terronera Vein is of variable quality, and was subdivided into
three classes:
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Stope Dimensions – Stope dimensions for cut and fill mining were
evaluated. The following back spans are thought to be achievable under
standard 2.4 m long primary ground support:
o Vein Class 1: 6m
o Vein Class 2: 4.5m
o Vein Class 3 / Fault: 3m
o The quality of the Terronera Vein in the back of the stopes. The
properties of this unit have a significant impact on the ground
support recommendations
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Table 16.2 Preliminary Ground Support Recommendations for Cut and Fill
Stopes
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Review of Mine Plan - The mine design was reviewed from a rock
mechanics perspective. Several changes to the mine plan were
recommended and are understood to have been implemented by P&E;
an updated mine plan was not reviewed. Additional recommendations
were made for the next level of design.
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16.4.4 Recommendations
The recommendations, and the analyses on which they are based, are
appropriate for Pre-Feasibility level design. The design recommendations are
based upon the currently available geological, structural, geomechanical, and
hydrogeological data. The completed stability analyses suggest that the
recommendations are reasonable and appropriate. The recommendations
assume that controlled blasting and proactive geotechnical monitoring will be
undertaken along with an ongoing commitment to geomechanical and
hydrogeological data collection and analyses. Maintaining flexibility in the mine
plan will be important to accommodate any ground control issues.
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For preliminary ground support recommendations for cut and fill stopes refer to
Table 16.2 ‘Preliminary Ground Support Recommendations for Cut and Fill
Stopes’.
A longitudinal projection of the location of crown and sill pillars and rock mass
qualities is shown in Figure 16.13.
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16.5 Hydrogeology
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The rhyolite and andesite that host the Terronera Vein have a geometric
mean hydraulic conductivity of 1 x 10-7 m/s.
The Terronera Vein is highly fractured and is characterized by frequent zones
of broken rock or rubble and some faults. As a result, the hydraulic
conductivity of the Terronera Vein is expected to be relatively high, in the
order of 10-6 m/s.
Recharge to groundwater is expected to be primarily from precipitation but
may also be contributed from surface water where faults and fractured rock
zones are present.
The depth to water is approximately 100 mbgs near the central mining area,
and a steep downward hydraulic gradient is observed between the overlaying
host rock and the vein. This relatively strong vertical gradient suggests that
Terronera Vein or historical mine works are acting as a drain.
Pre-Development 10 15 40
Higher than estimated inflows may temporarily occur when highly fractured
zones associated with faults or water-filled historic workings are intersected.
Identifying water-bearing features in advance of mining and implementing
mitigation measures can help to manage water inflows. These mitigation
measures can include depressurization drill holes or pilot dewatering wells to
allow the features to be drained, or pressure grouting to seal the features off
from a source of recharge. Mitigation measures to manage water inflows may
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be necessary near the vicinity of the Arroyo Fault zone. Additional data
collection is recommended to reduce uncertainty in the groundwater flow
regime and inflow estimate.
16.6 Schedules
Many mine production rates were considered. Ultimately, the maximum mining
rate is decided by the size and shape of the deposit. The relationship is shown
using “Taylor’s Rule
The orebody size and shape determines the number of working areas it can
support. Further examination to determine cycle time and productivity from first
principles used in the study have provided guidance on the maximum
production rate possible. The mining schedule described in this section
produces the highest net present value (“NPV”). After analysis of various
possible scenarios, it was determined that mining at a high rate was not
advantageous early in mine life. The cost of pre-production development
required to develop the mine to produce at 2,000tpd early in the mine life is
detrimental to NPV. To achieve a 1,000tpd production rate, a minimal amount
of active mining areas is required early in mine life. Specifically MB1, MB2,
MB3, MB4 and MB5 mining zones are active from the haulage drift which is
1,702m long. This represents minimal pre-production development.
The strategy of using cash flow generated from the 1,000tpd early mine phase
to support pre-production development to a 2,000tpd rate reduces capital
requirements. To increase production to 2,000tpd in year three, nearly all the
available mining areas need to be active. The pre-production development
required is deferred until cash flow is available from production.
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The long-term goal of the second development crew will be to establish pre-
production access for the increase to 2,000tpd in Year 3. This includes mining
out the first few lifts above the temporary sill pillar and replacing the mined
material with consolidated fill.
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Portal Entrance 24 24
Portal Ramp 164 339 503
Ramp 1410 - 1380 0 283 284
1380 Haulage Drift 29 277 363 224 892
1380 Electrical
12 12 24
Substations
1380 Refuge Shelters 12 12 12 12 12 60
1380 Fuel and Lube 12 0 12
1380 Cap Mag 12 12
1380 Powder Mag 12 12
1380 Latrine 15 15 30
1380 Clean & Dirty
0 71 71
Sump
1380 RB Ore Pass 125 199 292 189 208 1,012
1380 Egress/Fresh
128 207 276 175 231 1,018
Air Raise
1,61
Ramp 0 403 403 403 403 403 403 403 403 4,841
4
Ramp Re-muck 0 20 20 20 20 20 20 20 20 80 240
1,27 1,01
Ramp 254 252 509 514 367 4,191
7 9
Ramp Re-muck 12 12 24 60 24 24 48 204
Ramp Sump 0 0 0 12 24 12 48
Ramp Level Access 45 65 45 45 20 0 20 65 60 80 120 140 146 120 971
Access Ore Pass 15 30 15 15 15 0 15 30 55 60 90 90 85 90 605
Access Egress/Fresh
20 40 20 20 20 0 20 40 60 80 120 120 100 120 780
Air Raise
Access BF Re-muck 15 30 15 15 15 0 15 30 45 60 90 105 90 90 615
Drainage Hole Cut-
6 12 6 6 6 0 6 12 12 24 36 36 30 36 228
out
Attack Ramp 263 263 263 263 263 263 263 263 263 1,841 1,578 1,841 1,578 1,578 10,783
OP Finger Raises 15 15 0 15 15 45 60 90 90 75 90 510
WP Finger Raises 15 15 0 15 15 45 60 90 90 75 90 510
Level Extensions 78 78
C&F Cross-cut to
91 91 91 91 91 91 0 180 180 800 679 69 425 81 2,964
lenses
Ore Pass 30 125 63 217
Fresh Air
30 125 63 217
Raise/Egress
Total (m) 188 375 729 1,609 1,822 1,478 1,322 778 1,148 893 1,260 1,823 6,308 3,817 3,039 3,707 1,659 31,955
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Mining Block #1 Mining Block #2 Mining Block #3 Mining Block #4 Mining Block #5
The sill pillar beneath the constructed sill mat is planned for extraction at
the end-of-mine life. Careful establishment and mining of the sill pillars
will be crucial to the success of the mine near the end-of-mine life. The
sill mat and associated consolidated waste rock backfill immediately
above must be designed to support the overlying unconsolidated backfill
material during this phase.
The temporary sill pillar will be removed using a long hole retreat mining
method. It is important that mining is completed above the constructed
sill pillar before removal of the sill pillar. The sequencing of the sill pillars
is to be in the following order:
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Removing sill pillars involves risk. It is important that during this phase of
the project potential risks are reassessed by on site personnel with the
assistance of recent geotechnical information gained during the mining
of Terronera. There is not enough information currently to make an
accurate decision about the mining of the sill pillars. Before commencing
the task, a full risk assessment should be performed. Actions to mitigate
potential risks include:
The longhole drills can drill the entire pattern before blasting
commences
The scoops can operated remotely when mucking beneath the
constructed sill pillar in the stope
Care should be taken nearby the brow of the retreating temporary
sill pillar. Cable bolt the brow and inclining production blast holes
forward will increase the strength of the brow
Removing operators from the brow is also possible either by pre-
loading brow holes with explosives or loading remotely
Geotechnical monitoring
Tonnes (t) 8,124 310,150 350,931 743,469 680,696 697,056 717,415 553,213 4,061,054
Au g/t 3.69 2.76 2.60 1.96 1.90 1.63 1.90 1.56 1.95
AgEq g/t 351 341 353 322 329 321 384 350 342
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The Terrenora Project has five mining areas, M1 through M5. The production
areas have a total of eleven active work faces, each workface requiring 50,000
cfm (25m3/s) of fresh air flow for providing effective ventilation for workplace
safety. Therefore, total airflow requirement for the mine life is 11x25 m 3/s = 275
m3/s or 550,000 cfm, and this input has been used for simulating airflow and
determining fan pressure and power input required. Refer to Figure 16.17
‘Terronera Mine Longitudial Projection, Ventilation Flow Schematic’.
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area, b) Phase 2: Intermediate stage with fresh air fans on surface, on top of
M1 and M2 areas installed, and Phase 3: All five areas (M1-M5) are fully
ventilated using surface mounted Fresh Air fans on respective Fresh Air Raises
(FAR).
All ramps and drifts were assumed at 5m x 5m and raises at 2.4m diameter.
Note: The return airflow velocity at the portal is 11.0 m/s and M1 and M2 areas
are in the range of 9-10m/s, which are high velocities and could cause dust
related hazards. Therefore, these areas with high air velocity should have dust
control measures.
Phase 2: It was assumed that the Portal has been developed beyond M2 area
and surface fans from the portal area could be mounted on top of the FARs on
surface M1 and one workface and M2 has three work faces. Therefore, in this
case Fresh Air requirement is 100m3/s, M1 area fan supplies 25 m3/s and M2
areas has two of the Portal area fans in parallel combination delivering 37.5
m3/s each. Each duty requirement is well below the rated power of 100kW.
Four auxiliary fans would be drawing approximately 160kW of power and total
ventilation related power allocation would be in the range of 400-500kW during
this phase. Refer to Figure 16.18 ‘Terronera Mine Ventilation Phase 2 Air
Flow’.
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Phase 3: This is the critical phase when all areas (M1-M5) are actively mined.
Total fresh air inflow is 275m3/s from all surface fan systems. Return air of
275m3/s exits from the portal area. Refer to Figure 16.19 ‘Terronera Mine
Ventilation Phase 3 Air Flow’. Fan arrangements are as follows:
Total power input required for supplying fresh air during this phase is 418kW
and the eleven auxiliary fans with 37 kW required need allocation of 407 kW.
Therefore, total power input allocation for mine ventilation is 825kW, which is
well below 900kW specified.
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17.1 Summary
The mineral processing facility design throughput is 1,000 dry tpd equivalent to
342,000 dry tpy for Years 1 and 2 and 2,000 dry tpd equivalent to 684,000 dry
tpy from Year 3. The life-of-mine (LOM) for the project is estimated at 7 years.
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The processing methodology selected for gold and silver recovery from
precious metal bearing materials originating from the Terronera Project
consists of the following processing circuits:
The run-of mine material will be transported to a coarse material storage patio
with haul trucks. The crushing circuit was designed to process 1,000 dry tpd in
10 hours of operation. The beneficiation plant will operate continuously 365
days per annum. The beneficiation plant availability was assumed to be 92
percent. The specific gravity of the run-of-mine material is 2.67 with average
moisture of 4 percent. The beneficiation plant will produce a precious metal
bearing high grade concentrate as final product.
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1. The crushing circuit is comprised of a dump ore pocket fitted with an apron
feeder. The Apron feeder sends the ore to a primary jaw crusher to reduce
the material to minus 150 mm. The oversize is broken with a hydraulic
breaker.
2. The crushed material is transported to subsequent stages of screening and
crushing in closed circuit to further reduce the material to minus 9 mm.
Conveyor belts are used to transport the intermediate and fine crushed
materials throughout the crushing circuit.
3. The crushing circuit design provides two weigh scales, crushed ore
sampling system, and magnetic separators to protect the cone crusher
from iron coming from underground mining operations. The finely crushed
product is transported to a fine ore bin with 1,000 tonne live capacity.
4. A variable speed belt feeder transports the crushed material from the fine
ore bin to the primary grinding mill. The material is ground to 80 percent
minus 200 mesh (75 microns) in closed circuit with a battery of cyclones.
5. Some flotation reagents will be added into the grinding mill to allow for
conditioning. Ground slurry (cyclone overflow) at approximately 30 percent
solids is sent to a trash screen for removal of debris produced in the
underground mining operation. After trash removal the clean slurry is
directed to a conditioning tank where flotation reagents are added for
conditioning prior to the flotation process.
6. The flotation circuit consists of banks of Rougher followed by Scavenger
cells to achieve maximum precious metal recovery. The Rougher
concentrate is sent to a two stage cleaning circuit to achieve the highest
possible gold and silver grade in the final concentrate. The first cleaner
tailing product and the scavenger concentrate are returned to the head of
flotation. The cleaner scavenger tails (CST) report to the thickener and
filtration area for dewatering.
7. The CST is filtered and the filter cake with a moisture ranging from 15% to
20% is stored and air dried in a warehouse prior to shipment.
8. The second cleaner concentrate reports to the concentrate thickener. The
second cleaner concentrate is filtered and the filter cake (final concentrate)
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with moisture ranging from 15% to 20% is stored and air dried in a
warehouse prior to shipment.
9. Each concentrate and CST shipment will be sampled and analyzed for
precious metal and moisture contents. Impurities present in the concentrate
will be quantified.
10. Flotation tails will be sent to a thickener and the higher density slurry
filtered at a dry tailings filter plant prior to conveying the solids to the dry
tailings storage facility (DTSF). A dry stack type of tailings storage has
been selected for the Terronera Project.
11. After sedimentation and filtration, the flotation tailings will be transported to
the dry tailings stacking area. The filtered tailing material will be placed in a
stockpile by a radial stacker. Front end loaders and compaction equipment
are ultimately used to spread and compact the tailing material as required.
12. Advantages of a dry stack tailings system include the following:
Power will be provided by on-site generators in Year 1 and by CFE via a new
115kV power line beginning Year 2. The electrical power distribution system
consists of a medium tension line with two substations to service the following
processing areas:
Crushing plant
Grinding – flotation – sedimentation
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Lower tension panels, motor control centers (MCC), harmonic filters, and
capacitors are included in the design. Transformers are included for lights
throughout the plant. MCC’s are intelligent type. Voltage is 480 V, three phase,
60 Hz. For lights and services, 220/127 voltages were included in the design.
Water from the mine will be pumped to a fresh water tank. Fresh water will be
fed by gravity to the following process areas:
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Reagent dosage optimization studies will allow for reduction of costs associated
with flotation and sedimentation of tailing and concentrate products.
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A public access road connects Puerto Vallarta with the local communities and
the Terronera project site area. The regional power needs are served by CFE
which has a 23kV power line that runs through the Terronera property. There is
no other existing infrastructure on the project site.
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The filter plant takes the flotation tailing product from the process plant and
puts it into sedimentation tanks. From there the sediment is filtered and
pressed into a dry tailings material which is conveyed to a stockpile. Trucks
then transport the dry tailings material to the dry tailings storage facility.
Excavated material from the process plant area and initial mine development
will generate 600,000m3 of material to be stored in a waste rock storage
stockpile close to the mine portal. All rock material will be transported to the
stockpile in 12m3 trucks, end-dumped, and pushed into place by bulldozers.
The rocks will be up to 30” to 40” in size and geotechnical studies determined
the maximum safe slope. Hydrological studies were used as a basis for
designing the stockpile drainage system. For the purposes of the PFS,
preliminary designs were prepared of the stockpile.
The stored waste rock will be reclaimed for use as backfill in the mine. In Years
1 and 2 the annual amount reclaimed will be 10,000m 3 to 15,000m3 but from
Years 3 to 7 the annual volume will be from 60,000m 3 to 130,000m3.
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The Terronera site is accessible by public road from Puerto Vallarta which lies
55 km to the west. The road is paved for 35km and the remainder is a well-
maintained gravel road.
The Terronera Project will include access that is developed both from existing
public roads and mine-site specific haul and access roads to be used only by
Terronera Project equipment and mine personnel. Access from existing public
roads will be utilized to connect the mine site to external access and to connect
the mine portal platform area to the process plant. These access ways will
accommodate light duty vehicles and heavy duty traffic including dump trucks,
semi-tractor trailers, and construction machinery. The proposed mine access is
shown on Figure 20.1.
Haul and access roads to transport personnel, equipment, rock and earth
material haulage, and tailings on the mine property between the process plant
and the TSF will be developed on land either owned or leased by Minera Plata
Adelante SA de CV. The conceptual alignment for this haul and access road is
also shown on Figures 20.1 and 20.5.
Electrical power in the region is provided by CFE which operates the national
grid in Mexico. An existing 23kV power line runs from the Tamarind substation
47km away in Ixtapa (near Puerto Vallarta) across the site of Terronera,
however, this line has no excess power available for Terronera.
Endeavour Silver has arranged with CFE for the construction of a new 115kV
power line to site together with a new substation. The permitting process for
these facilities was initiated in April, 2017 and is expected to take 12 months.
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Following permit approval, construction of the new power line and substation by
CFE is expected to take 18 months.
As the new 115kV supply will not be ready until Year 2 of the 1,000tpd
operations, leased generators will be installed on site to provide power during
construction and the first year of 1,000tpd operations.
A 1,000M3 fresh water tank situated near the process plant will collect and
store excess water from the mine. This tank water will be the main supply of
process make-up, fire, and potable water for the site.
A reclaim water tank will store water reclaimed from the process plant and filter
plant.
A separate fire water system and potable water system will be installed to
service the site.
A stormwater pond located below the dry tailings storage area will collect the
run-off water from the tailings site.
All surface water throughout the site will be collected, controlled, and
discharged as described in Section 20.
18.13 Communications
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The camp will continue to provide meals and accommodation when the mine is
operating.
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Endeavour Silver has a policy of neither hedging nor forward selling any of its
products. As of the date of issuing this report, the company has not conducted
any market studies, as gold and silver are commodities widely traded in world
markets.
Due to the size of the bullion market and the above-ground inventory of bullion,
Endeavour Silver's activities will not influence silver prices.
Table 19.1 summarizes the annual high, low, and average London PM gold and
silver price per ounce from 2000 to 2016.
Table 19.1 Annual High, Low, and Average London PM Fix for Gold and
Silver from 2000 to 2016
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Over the period from 2000 to 2016, world silver and gold prices have increased
significantly. This had a favourable impact on revenue from production of most
of the world’s silver mines, including the three mines - Guanacevi, Bolanitos,
and El Cubo - operated by Endeavour Silver.
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Figure 20.1 illustrates the currently proposed project surface facilities layout and
the Terronera Project’s location relative to the nearby communities of Santiago
de Los Pinos and San Sebastian del Oeste.
Figure 20.1 Amec Foster Wheeler 2017 Map of Mine Surface Facilities
Layout
The drainage basin within which the Terronera filtered tailings deposit will be
constructed is known locally as the “Mondeño”.
20.2 Environmental Liability
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conditions at the Terronera Project than the regulations applicable to mines that
require cyanide process permits for their TSF entitlement requirements.
The flow chart for Mexico mine permitting is shown in Figure 20.2.
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The status of the Terronera project as of the effective date of this PFS per the
Federal, State, and Regional/Municipal governing bodies in Mexico is as listed
in Figure 20.3.
SEMARNAT /
Permit Issued to Minera Plata
Exploration NORMA de Ley Adelante for the Terronera
General vein exploration – Diligence
19 Jan.
Exploration ETJ ongoing for additional
2013
exploration permissions for
the La Luz and Espinos
veins.
Local
Municipality:
Will be requested from the
(Permit for
local municipality after the
Construction Disposal of Application Yes
precedent permits have been
Non-hazardous
granted.
Waste
Residues)
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SEMARNAT:
(Land use Application n/a
License)
Application and
SEDENA, Local Endorsement
The SEMARNAT Change of
Municipality and Letter – All
Land Use permit is issued
State submittals occur
Yes prior to presentation of
Governments: after
SEDENA (Federal), State,
(Explosives SEMARNAT
and Local applications.
Handling) authorizations
are issued.
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CONAGUA:
Permit to Dry tailings storages typically
Construct n/a n/a avoid the hydraulic structure
Hydraulic permit requirement
Infrastructure
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Risk Analysis
Study is typically The risk level of the
not required when project will be
cyanide (NaCN) is assessed when the
SEMARNAT:
Risk Analysis not used in the project is sufficiently
Risk Analysis
Study (ER) processing circuit. advanced. The Risk
Study
Terronera will be a Analysis Study will
flotation circuit thus be advanced if
excluding the use required.
of NaCN.
Provides an Environmental
MUNICIPIAL:
registration number for the
Sole Various
Operation Yes mine. Requested by Minera
Environmental Documents
Plata Adelante prior to the
License
time of mine startup.
Const. Phase
SEMARNAT: Included in Risk Analysis
Risk Analysis Included in
Accident Documentation (ER shown
Covers this ER
Prevention Plan above)
Requirement
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MUNICIPAL:
This document will register
Registration as
Various prior to mine start-up the use
Generator of Yes
Documents of certain chemicals, oils, and
Hazardous
slag materials.
Wastes
To provide a basis upon which to gauge the potential environment impact of the
proposed project, certain environmental baseline studies were performed prior
to the issuance of the Preliminary Economic Assessment which was issued in
April, 2015. The following baseline studies were performed by Endeavour
Silver’s two previously identified in-country permitting consultants:
Meteorology, air quality, and climatology
Soil erosion and contamination
Surface and subsurface hydrological conditions and hydraulic forces
on surface structures
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20.4.2 Topography
The climate type reported for the project site is subtropical with the rainy
season occurring from June to September, with July typically being the wettest
month. Data from the closest meteorological station (San Sebastián del
Oeste), show the average annual precipitation as 1.35 m. The maximum mean
air temperature is 25.6° C and the minimum mean is 11.7° C.
Prevailing winds in the area are from the southwest.
No existing data on air quality is available for the project area. Existing unpaved
road traffic may be the main source of dust but, in general, the area is
considered to have good air quality as a rural and relatively undeveloped area.
20.4.4 Soil
The predominant type of soil in the Mondeño is known as regosol per the
agricultural soils nomenclature. Soils of this type generally result from the
relatively recent formation of non-alluvial substrates and are located in areas
with strong erosion causing continuous soil creation from the weathering of the
host rock.
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The regosol soils in the Terronera area are of silt-clay texture of high plasticity
(USCS type CH), clayey sands (SC), highly compressible silts (MH) and silty
sands (SM) with a density range of 1,359 to 1,929 kg/m3 and an in-situ
moisture range of 6% to 37% within the sampling from the seventeen open pit
tests performed by Amec Foster Wheeler in the Mondeño basin.
20.4.6 Hydrology
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The communities in the project area have been organized since the early
1900’s into various ejidos, or community groups, which distribute and share
agricultural and other lands for the benefit of the ejido member families. The
Terronera Project has completed negotiations with various ejido members for
leased surface rights of certain parcels of land needed for the location of the
tailings and waste rock storage facilities. The aggregate limit of these parcels
is identified on Figure 20.1. as the dashed magenta line labeled as the TSF
surface area boundary.
The predominant use of land at the site project is forestry, pasture land, and
subsistence agriculture. The SEMARNAT default land use is known in Spanish
as “forestal”, or forest in English.
A network of unpaved roads exists for transportation between communities and
ranches. The Terronera Project has used these roads for exploration phase
access. A portion of the Terronera construction phase work includes improving
those portions of the main community road between Los Pinos and San
Sebastian which the mine will utilize during the operations phase of the project.
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Project. The results are included in the MIA report submitted to SEMARNAT in
February, 2017, for a 1,500tpd Terronera mine and process plant.
The Trujillo study identifies fauna and flora as a baseline condition for the
project area and recommends certain actions to minimize the environmental
impact of the proposed Terronera Project.
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Figure 20.5 Amec Foster Wheeler 2017 Map of the TSF Layout
The location of the TSF in relation to the overall project facilities is shown in
Figure 20.1. The TSF is located in a valley approximately 1km northwest of the
process plant. The current footprint of the TSF occupies a footprint area of
approximately 87,000 m2.
The TSF is designed to have an overall downstream slope of 2.5 to 1 with
interim benches of 5m width and slopes 10m in height at 2:1 slope. Below the
TSF to the northwest, there is a proposed storm water collection pond to
collect, treat, and release storm water from the TSF surface area and any
subgrade water that is not qualified to be released downstream.
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The proposed TSF will be constructed with filter tailings produced by a filter
press plant that is located at the TSF. Filter tailings will be transported to the
TSF area by either 12 m3 haul trucks that will transport the filtered tailings
approximately one-half km along a proposed newly constructed haul road or by
a conveyor system. A dry tailings staging area will feed the dry tailings haul
trucks or conveyor system at the filter plant site.
At the TSF, the tailings will be truck end-dumped or radial conveyor-placed,
spread, and compacted by a series of mid-size dozers, motor grader(s), and
vibratory roller compactors.
20.6.1 Substances and Residues Used and Produced by the Ore Processing
Operations
The reagents used in the process flotation operations are Cytec AP-3418,
Cytec A-241, Cytec AF-65, Copper Sulphate, and Foaming Agent PQM F-65.
The mine area will utilize a variety of oils, greases, and chemicals, and other
reagents that will be identified, quantified, classified, and submitted for
registration per NOM-052, 083, & 157 specific to the Mine Risk Analysis and
Application for the Generation of Hazardous Wastes.
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Figure 20.5 Amec Foster Wheeler 2017 Map of the Mondeño Tailings
Storage Area Monitoring Well Locations
The Amec Foster Wheeler design components for the Terronera tailings
management facilities are shown on Figure 20.5 and are listed as follows:
The filtered tailings storage, or TSF, with a capacity of approximately
four million tons of densified tailings material
A constructed haul road from the process plant to the filter plant. This
road also provides the alignment for the raw tailings and filter plant
extracted process water piping
A constructed haul road from the filtered tailings plant to the active TSF
platform
A platform above the TSF on which the filter plant will be located.
These features will interrupt natural drainage courses and will need to be
designed to accommodate both typical stormflows and the 50 year design
stormflows as stipulated in SEMARNAT NOM.141 Section 5.3.1. Because the
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Mine water will be pumped to the surface and utilized as process water. Any
process water excess will need to be water quality tested and can be
discharged downstream if compliant with SEMARNAT NOM157 Section
5.4.2.4.1 mine waste discharge contamination limits, and certain applicable
sections of NOM-001. If not compliant it will need to be stored, treated, and
tested to achieve compliant discharge.
The current process water demand estimate does not require the use of
groundwater from the project aquifer Mixtlán identified in Section 20.4.6.2.
Amec Foster Wheeler, as part of the permitting submittal to CONAGUA,
conducted 2-d water infiltration modeling through the tailings dry stack and the
native vadose zone that considered the tailings unsaturated pore water
properties, the effects of drystack height or geometry as it grows over time, and
the climatological conditions of the site (Amec Foster Wheeler, 2016). Based on
the available site data and the projected drystack properties, it is anticipated
that no liner would be required over the entire area of the TSF to prevent
infiltration into the native ground, however, the TSF design includes the
construction of a subdrain system in identified ephemeral and perennial spring
areas at the bottom of the existing valley and the inclusion of a geomembrane
both to prevent saturation of the overlying filtered tailings material and to
separate contact from non-contact water at the base of the TSF.
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The project is in the vicinity of the communities of San Sebastian del Oeste,
Santiago de Pinos, and Los Reyes. These three relatively typical Mexican
“pueblos” belong to the municipality of San Sebastian del Oeste, Jalisco. Per
the Federal Mexican census of 2010, this municipality has 5,755 inhabitants.
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20.10.1.2. Mine Runoff and TSF and Rock Storage Seepage Management
Any mine generated contact water seepage that does not qualify for
release into the downstream environment will need to be managed as
actively treated flows until such time as it can qualify for direct release per
the discharge limits criteria of SEMARNAT NOM-001 Contaminant
Discharge, NOM-157 Mine Discharge, and NOM-052 Hazardous Waste.
As is typical of contemporary mine closures, the final mine closure will
need to be a mine site with a condition of zero non-qualified release of
runoff.
All vent raises and portals that provide access to underground workings should
be properly sealed to prohibit access to underground workings. Subsurface
mine water that reaches the surface should be managed as surface runoff.
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Capital and operating cost estimates were developed to evaluate the economic
feasibility of the Terronera Project. The capital costs comprise initial capital
costs (incurred from the date of the project go-ahead to start-up of commercial
production) and sustaining capital costs (incurred from start-up of commercial
production to mine closure). The estimates are summarized in the following
tables:
Table 21.6 Summary of 1,000tpd Capital Costs
Table 21.9 Summary of Capital Costs for Expansion to 2,000tpd
Excluded from all capital costs are the sunk costs incurred prior to the project
go-ahead, including all costs associated with:
Property purchases
Drilling and exploration
Concession taxes and annual payments
Metallurgical testing
Geotechnical sampling and coring for TSF foundation assessment
Advice, studies and technical reports from third party professionals
including cost of outside consultants
Permitting fees
Endeavour Silver time and expenses in trips to site, meetings, and
discussions with authorities, contractors, and other parties
The operating costs comprise operating and maintenance costs from all areas
of Endeavour Silver’s Terronera operations and administration. The operating
costs are summarized in Section 21.7.
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The capital costs were estimated by engineers and construction managers with
recent experience on similar mining projects in Mexico and were based on the
following:
Topographic maps with 1m contours
Life of mine (LOM) production schedules derived from 3D block
models
Metallurgical test work by RDi, Wheat Ridge, Colorado
Material quantity take-offs for tailings facility, earthworks, and roads
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No allowance has been made for escalation and exchange rate fluctuations and
the cost estimates exclude working capital and the costs of project financing.
A contingency % was applied to each of the major capital cost items in Table
21.6 to cover costs which are expected to be incurred but which cannot be
quantified with the level of information available. The % varied with each item
depending on the amount of engineering completed for that item and the
source of the estimate. The result was a weighted average contingency of 13%
which was applied to all the direct and indirect capital costs, including the mine
development costs in Year -1, Year 1, and Year 2 and the tailings expansion
costs in Year 1 and Year 2.
Contingency does not cover out-of-scope items or events that may arise during
project execution, for example:
Labour strikes
Earthquakes, hurricanes, floods
Large increases in material prices (structural steel, cement, cabling)
Legislation changes
The mine capital costs for development in Year -1 are shown in Table 21.1.
Estimated Cost
Item
US$(‘000’s)
Construction
Construct Portal 500
Construct Refuge Shelters 300
Total Construction 800
Development Months 1-9
Portal entrance @ +2% 39.5
Portal Ramp @ -12% 845.4
Ramp 1410 - 1380 @ -12% 477.2
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Estimated Cost
Item
US$(‘000’s)
1380 Haulage Drift @ +2% 48.2
1380 Electrical Substation 40.3
1380 Refuge Shelter 40.3
1380 Fuel and Lube 20.1
1380 Day Cap Mag 20.1
1380 Day Powder Mag 20.1
1380 Latrine 25.2
1380 Raise Bore Ore Pass 276.3
1380 Egress/FAR 283.9
Ramp Level Access 64.6
Access Ore Pass 21.5
Access Egress/FAR 28.7
Access BF Re-muck 21.5
Drainage hole cut–out 8.6
Total Development Months 1-9 2,282
Development Waste Haulage 289
Equipment Power 163
Development Months 10-12
1380 Haulage Drift @ +2% 466.3
1380 Refuge 20.2
1380 Latrine 25.2
1380 Clean & Dirty Sump 119.1
1380 Raise Bore Ore Pass 441.9
1380 Egress/Fresh Air Raise 459.7
Ramp 364.1
Ramp Re-muck 17.2
Ramp Level Access 93.4
Access Ore Pass 43.1
Access Egress/Fresh Air Raise 57.5
Access Backfill Re-muck 43.1
Drainage Hole Cut-out 17.2
Ore Pass finger raise 7.7
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Estimated Cost
Item
US$(‘000’s)
Wastepass Finger Raises 7.7
Total Development Months 10-12 2,183
Development Waste Haulage 203
Labour
Warehouse Person 34.9
Clerk 20.2
Labourer / Nipper 20.2
Dry Man 20.2
Mine Superintendent /Mine Manager 54.2
Mine Engineer / Planner 86.5
Ventilation/Surveyor Technician 18.2
Mine Geologist 86.5
Geotechnical Engineer 18.1
Diamond Drill Foreman 9.1
Mine Safety /Trainer 27.1
Construction Leader 4.8
Construction Person 27.2
Mine Labourer / General Labourer 13.5
Contractor Admin. Indirect Labour 171.3
Total Labour 612
Total Mine Development Costs Year -1 6,532
The mine capital costs for equipment in Year -1 are shown in Table 21.2
Estimated Cost
Item
US$(‘000’s)
Single Boom Jumbo 83.2
Production 3.5m3 LHD 80.1
2.0m3 Scooptram 52.7
Scissor truck 95.3
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Estimated Cost
Item
US$(‘000’s)
Maintenance/Lube Truck 77.1
Shotcrete Truck 131.2
Shotcrete Delivery Truck 77.1
Ground Support Bolter 101.4
Personnel Carrier 37.5
Utility Tractor 5.3
U/G Pickup Truck 10.5
Grader 22.5
Jackleg Drills 37.5
Diamond Drill 300.0
U/G Fans 83.9
Surface Fans 250.2
U/G Face Pumps 125.0
Compressors 271.2
Electrical Sub-stations (UG) 220.0
Refuge Shelters 100.1
Total Equipment Costs Year -1 2,161.8
The power used on site during construction and all of the power required for the
first year of operations will be provided by generators leased from 3 rd parties. A
quote for supplying the power from generators was provided to Endeavour
Silver and is the basis for the generated power costs used in the cost estimates
in this report.
The total 5,100kW power demand in the first year of 1,000tpd operations
comprises:
o Mine Operations 1,632kW
o Process & Filter Plants 3,032kW
o Buildings, Camp, Water Supply 436kW
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The cost estimates for the 1,000tpd process and filter plants are detailed in
Table 21.3.
Table 21.3 1,000tpd Process & Filter Plants Cost Breakdown (US$)
Process Electrical Mechanical Mechanical
Structural
Description Equipment Equipment Civil Works Buildings Equipment Equipment Piping Electrical Instrumentation Total
Works
Supply Supply Fabrication Install
PROCESS PLANT
TOTAL $11,052,883 $1,536,212 $4,769,562 $2,995,877 $648,871 $2,299,894 $1,446,413 $827,551 $1,289,729 $533,008 $27,400,000
FILTER PLANT $1,440,000 $150,000 $422,000 $435,000 $20,000 $270,000 $270,000 $224,000 $184,000 $85,000 $3,500,000
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The cost estimate for the dry tailings storage facility is detailed in Table 21.4.
Estimated
Description Cost
US$ ('000's)
The cost estimate for the roads and pipelines is detailed in Table 21.5.
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The total capital costs for executing the 1,000tpd project include all the direct
and indirect costs from Endeavour Silver’s project go-ahead to the start of the
1,000tpd operations.
The capital costs are summarized in Table 21.6 Summary of 1,000tpd Capital
Costs.
Estimated
Item Costs
US$ ('000's)
Direct Costs
Site Preparation Process Plant 2,750
Site Preparation Filter Plant 1,820
Roads and Pipelines 2,130
Waste Rock Storage 700
Mine Development 6,530
Mine Equipment 2,160
Site Power 100
Water Supply 780
Buildings 2,100
Process Plant 27,400
Filter Plant 3,500
Dry Tailings Storage Facility 1,790
Total Direct Costs 51,760
Indirect Costs
Owner's Costs 1,390
Construction Camp 1,150
Engineering, Procurement, PM/CM 6,900
Total Indirect Costs 9,440
Sub-Total Direct + Indirect Costs 61,200
Contingency @ 13% 7,956
TOTAL CAPITAL COSTS 69,156
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Table 21.8 Process & Filter Plant Expansions Cost Breakdown (US$)
Process Electrical Mechanical Mechanical
Structural
Description Equipment Equipment Civil Works Buildings Equipment Equipment Piping Electrical Instrumentation Total
Works
Supply Supply Fabrication Install
PROCESS PLANT
TOTAL $4,096,576 $478,358 $855,964 $1,192,929 $0 $633,419 $822,741 $355,629 $585,641 $228,743 $9,250,000
FILTER PLANT $1,282,000 $127,000 $223,000 $228,000 $0 $168,000 $269,000 $7,000 $288,000 $158,000 $2,750,000
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The total capital costs for executing the expansion to 2,000tpd include all the
direct and indirect costs from the start of the 1,000tpd operations to the start of
the 2,000tpd operations. The total capital costs are summarized in Table 21.9.
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When the mine shuts down, the plant and buildings will be dismantled and
demolished. All waste will be taken to a disposal site and salvageable
equipment and steel will be set aside for sale. All the plant and tailings areas
will then be treated as described in Section 20.
The estimated capital costs of closing the mine are summarized in Table 21.10.
Estimated
Description Cost
US$ ('000's)
Reclamation of TSF & TSF Roads 2,250
Reclamation of Storage and Plant Areas 1,500
Dismantling & Demolition of Plants 800
Salvage Value (20% of All Mechanical and Electrical Process Equipment,
(6,490)
Structural, Mechanical, Buildings, Piping, & Spare Parts)
TOTAL CLOSURE COSTS (1,940)
The mine closure costs are included in the cash flow and economic analysis
described in Section 22.
The sustaining capital costs are the direct costs of mine development from the
start of 1,000tpd operations to the end of mine life.
Excluded from the sustaining capital costs are all costs incurred by Endeavour
Silver that are related to the cost of operating and maintaining the mine and
plant as detailed in Section 21.7 Operating Cost Estimates.
The sustaining mine development costs for Years 1 and 2 are summarized in
Table 21.11.
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The sustaining mine development costs from Year 3 onwards are summarized
in Table 21.12. The sustaining capital costs are included in the cash flow and
economic analysis described in Section 22.
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The average mine operating costs over the LOM are estimated to be US$43.33
per tonne. The mine operating costs were estimated by P&E on the basis of the
mining method, class of ground support, stope width, type of backfill, and
whether a constructed sill pillar is required.
The 30 tables detailing the breakdown of the operating costs are given in
Appendix H and the total mine operating costs are summarized in Table 21.8.
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Total /
Item Yr-1 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Average
Direct Labour 2.77 2.30 2.30 2.19 2.37 2.41 2.03 1.87 2.21
Indirect Labour 43.63 5.24 4.72 2.40 2.40 2.40 2.40 2.40 2.90
Contractor Admin Ind.
28.11 2.92 2.57 1.30 1.30 1.30 1.30 1.30 1.59
Labour
Direct Equipment
5.59 4.93 4.97 4.69 5.02 5.07 4.44 4.16 4.74
operating
U/G Equipment Leasing 51.65 13.30 14.30 6.83 0.98 3.77
Ind. Equip operating &
40.60 5.06 4.63 2.35 2.35 2.35 2.35 2.35 2.83
Ele. Power
Drill steel and bits 2.93 2.59 2.61 2.41 2.60 2.61 2.22 2.05 2.43
Explosives 3.08 2.77 2.78 2.59 2.76 2.76 2.40 2.25 2.60
Ground support 5.21 3.73 3.94 3.90 4.58 5.02 4.15 3.64 4.21
Backfill Placement &
3.72 3.40 2.65 2.52 2.49 2.00 1.69 1.31 2.20
Cement
Piping 0.84 0.67 0.68 0.61 0.68 0.69 0.55 0.50 0.62
Electrical Consumables 1.20 0.95 0.97 0.87 0.97 0.98 0.79 0.72 0.89
Ventilation
2.27 1.81 1.83 1.65 1.83 1.86 1.49 1.36 1.68
Consumables
Miscellaneous 0.15 0.12 0.12 0.11 0.12 0.12 0.10 0.09 0.11
Haulage 7.48 4.82 4.71 5.27 5.94 6.09 5.95 6.29 5.71
Stope Development 62.65 6.56 6.15 5.39 4.63 3.92 4.11 4.02 4.87
Total 261.8 61.14 59.93 45.10 41.02 39.60 35.98 34.32 43.33
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Table 21.9 Summary of Process & Filter Plants Operating Costs (US$)
The annual costs of operating and maintaining the dry tailings storage facility
are shown in Table 21.10.
Table 21.10 Dry Tailings Storage Facility O & M Costs
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22.1 Introduction
Silver and gold recoveries to a bulk flotation precious metal concentrate are
projected to be 87% silver and 74.7% gold based on metallurgical test work
with a target grind of 80% passing 200 mesh as detailed in Section 13 and the
recovery methods described in Section 17. Payments for silver and gold in
concentrate of 96.1% and 97.6%, respectively, are based on current
concentrate sales contracts for concentrates produced at Endeavour Silver’s
Bolañitos and El Cubo Mines.
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The average mine operating costs over the LOM are estimated to be US$69.8
per tonne. This estimate is based on: the mining method and LOM production
schedule shown in Section 16.0; productivities and quantities estimated by
P&E; and unit costs provided by P&E and Endeavour Silver.
The operating costs for the process and filter plants are based on Endeavour
Silver’s operating costs at its three similar-sized process plants and one filter
plant in Mexico. The current unit costs for labour, material, consumables, and
maintenance from these operations together with estimates of the quantities of
labour, reagents, power, and consumables required for Terronera were used to
estimate the operating costs. The electrical kWh costs were provided by CFE.
The G&A services and staffing required at Terronera for both the 1,000tpd and
2,000tpd operations were prepared with input from Endeavour Silver. Using
salaries and costs from Endeavour Silver’s other operations in Mexico, the total
annual cost at 1,000tpd was estimated to be $3.15 million which equals
US$9.00 per tonne. When the throughput is expanded to 2,000tpd, the total
annual costs rise to US$4.55 million and the unit cost drops to US$6.50 per
tonne.
Royalties are calculated directly from the modeled gross revenues, based on
application of the 0.5% royalty payable to the Mexico government and a 2% net
smelter royalty payable to Grupo Mexico, the original owner of the Terronera
Property.
A summary of the financial and technical assumptions used in the Base Case
analysis are presented in Table 22.1:
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The cash flow model after-tax financial results are summarized in Table 22.2.
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The projected pre-tax, after-tax and cumulative after-tax cash flows are
presented in Figure 22.1 and a more complete year by year summary is
presented in Table 22.3.
For the purposes of calculating the after-tax Net Present Value (NPV), a
discount rate of 5% is used, applied at the midpoint of each year of the project,
commencing in the first pre-production year of capital investment. Table 22.3
displays the discount factors applied through the life of the project.
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$150,000
$100,000
$50,000
US$ (000s)
-
Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
($50,000)
($100,000)
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Silver Grade (g/t) 207 207 147 170 185 196 207 252 242 -
Silver Recovery (%) 87.0% 87.0% 87.0% 87.0% 87.0% 87.0% 87.0% 87.0% 87.0% 87.0%
Silver Payable (%) 96.1% 96.1% 96.1% 96.1% 96.1% 96.1% 96.1% 96.1% 96.1% 96.1%
Payable Silver (koz) 22,555 - 1,254 1,607 3,483 3,594 3,881 4,745 3,991 -
Gold Grade (g/t) 1.95 1.95 2.78 2.60 1.96 1.90 1.63 1.90 1.60 -
Gold Recovery (%) 74.7% 74.7% 74.7% 74.7% 74.7% 74.7% 74.7% 74.7% 74.7% 74.7%
Gold Payable (%) 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6%
Payable Gold (koz) 185.3 - - 20.7 21.4 32.1 30.3 26.7 31.1 23.0 -
Revenue
Silver Price ($/oz) $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00
Gold Price ($/oz) $1,260 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260
Total Revenue ($000s) $639,517 - - $48,703 $55,913 $103,162 $102,839 $103,459 $124,630 $100,809 -
Costs
Total Costs ($000s) $292,252 - $2,128 $32,625 $33,272 $52,003 $45,946 $46,013 $44,820 $35,446 $0
Cash Costs
Total Costs ($000s) $292,252 - $2,128 $32,625 $33,272 $52,003 $45,946 $46,013 $44,820 $35,446 $0
Gold By-Product Credit ($000s) ($233,519) - - ($26,130) ($26,986) ($40,459) ($38,151) ($33,602) ($39,227) ($28,964) -
Total Cash Costs net of gold credits ($000s) $58,733 - $2,128 $6,495 $6,286 $11,544 $7,795 $12,411 $5,593 $6,482 $0
Total Cash Costs per oz Payable Silver ($/oz) $2.60 - - $5.18 $3.91 $3.31 $2.17 $3.20 $1.18 $1.62 -
2.509593708
Cash Flow
Pre-Tax Operating Cash Flow (EBITDA) ($000s) $347,265 - ($2,128) $16,078 $22,642 $51,159 $56,893 $57,446 $79,811 $65,363 ($0)
Less Depreciation ($000s) $133,920 - - $5,420 $7,784 $21,563 $22,650 $24,194 $25,524 $25,782 $1,004
Earnings before Taxes ($000s) $213,345 - ($2,128) $10,658 $14,858 $29,596 $34,244 $33,253 $54,287 $39,581 ($1,004)
Mine Development + Capex ($000s) ($133,918) - ($69,161) ($19,274) ($29,249) ($6,650) ($2,885) ($2,305) ($3,390) ($1,004)
Tax Depreciation ($000s) ($88,582) - ($3,689) ($4,146) ($13,059) ($13,266) ($13,404) ($13,529) ($13,677) ($13,811)
Earnings for Tax Purposes ($000s) $124,765 - ($74,977) ($7,342) ($19,666) $31,243 $40,604 $41,612 $62,743 $50,548 ($0)
Corporate Taxes ($000s) $71,599 - - - - $9,959 $12,868 $13,208 $19,592 $15,973 -
Mining Taxes ($000s) $18,361 - - - $447 $2,505 $3,217 $3,302 $4,898 $3,993 -
Total Taxes ($000s) $89,961 - - - $447 $12,464 $16,085 $16,510 $24,489 $19,966 -
Net Earnings ($000s) $123,384 - ($2,128) $10,658 $14,411 $17,132 $18,159 $16,743 $29,797 $19,615 ($1,004)
Add back depreciation ($000s) $133,920 - - $5,420 $7,784 $21,563 $22,650 $24,194 $25,524 $25,782 $1,004
Less Capex & Exploration ($000s) $131,978 - $69,161 $19,274 $29,249 $6,650 $2,885 $2,305 $3,390 $1,004 ($1,940)
Free Cash Flow ($000s) $125,326 - ($71,289) ($3,196) ($7,054) $32,045 $37,923 $38,632 $51,931 $44,393 $1,940
Cumulative Free cash Flow ($000s) - ($71,289) ($74,485) ($81,538) ($49,493) ($11,570) $27,062 $78,993 $123,386 $125,326
Discount Years 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5
Discount Factor 0.9759 0.9294 0.8852 0.8430 0.8029 0.7646 0.7282 0.6936 0.6605
Discounted Free Cash Flow ($000s) $78,105 - ($69,570) ($2,970) ($6,244) $27,015 $30,448 $29,539 $37,818 $30,789 $1,281
$215,287 - ($71,289) ($3,196) ($6,607) $44,509 $54,008 $55,141 $76,421 $64,359 $1,940
NPV ($000s) $78,105
IRR (After-Tax) 21.2%
Payback period (yrs) 4.3
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The Mexico tax policies for mining changed effective January 1, 2014. An
overriding royalty on gross revenues, after smelter deductions, of 0.5% applies
to precious metal mines (gold, silver and platinum). A new Special Mining Duty
of 7.5% is levied on earnings before income tax and depreciation allowance.
Corporate income taxes of 30% are applied to earnings after the usual
allowable deductions for depreciation, loss carry-forwards etc. The Special
Mining Duty and the over-riding royalty are also deductible for the purpose of
calculating corporate income tax.
The financial model for the Terronera PFS incorporates these taxes in the cash
flow model in computing the after-tax cash flow amounts, NPV and IRR. The
financial model is constructed on a 100% equity basis.
The after-tax cash flow model Net Present Value (at 5% discount) and IRR
were determined after varying the base case model values for Metal Prices,
Operating Costs and Initial Capital Costs to determine the project economic
sensitivity to these key parameters. In each case, the other project and model
assumptions were kept constant. Sensitivity analysis results are summarized in
Table 22.4 and Figure 22.2 below. Variances were run at ±10% and ±20% from
the base case.
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Table 22.4 Base Case After-Tax NPV (US$ millions) and IRR Sensitivities
Operating Costs Initial Capital Metal Prices
Variance NPV (5%) IRR NPV (5%) IRR NPV (5%) IRR
-20% $ 107.7 27.1% $ 91.6 26.4% $ 10.1 7.2%
-10% $ 93.0 24.2% $ 84.9 23.6% $ 44.3 14.4%
Base Case $ 78.1 21.2% $ 78.1 21.2% $ 78.1 21.2%
10% $ 61.3 17.7% $ 71.4 19.0% $ 109.0 26.9%
20% $ 44.5 14.2% $ 64.6 17.1% $ 140.0 32.2%
$160.0
$140.0
After-Tax NPV (5%) US$(millions)
$120.0
$100.0
$80.0
$60.0
$40.0
$20.0
$-
-20% -10% Base Case 10% 20%
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Figure 23.1 Minera Cimarron’s Santa Quiteria Mine in the San Sebastián
del Oeste Area
Drilling is done with jack-legs and mucking and hauling are done mainly with 2
and 3.5 yard LHDs. Ore grades are reportedly approximately 275 g/t silver and
0.4 g/t gold. The company is currently milling about 130 tpd with 70% recovery
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and this is done with the following equipment: 1 jaw crusher, 1 Symon’s 2 ft
cone crusher, 1 Hardinge 8’ x 48” 200 HP ball mill, followed by a series of
Wemco flotation cells. The concentrate is dewatered with an Eimco drum filter
and shipping on average, 25 t of concentrates to the Peñoles smelter in
Torreón, Coahuila per month.
Future plans for the mine include further development toward the northwest on
the vein structure, the continuation of an existing adit to shorten hauling
distances, driving a new adit to access the vein structure at greater depth and,
possibly, diamond drilling below the current levels to establish new resources.
Installations include an assay laboratory, a small repair shop for vehicles and
diesel equipment, and a warehouse for parts and materials. The mine currently
has about 35 workers. Most of the operating personnel come from Santiago de
los Pinos which is 4 km away. More qualified employees come from mining
districts throughout Mexico.
Accounting and purchasing are done in administrative offices in Guadalajara.
The mine has several rented houses in the small town of Santiago de los Pinos
and Minera Cimarron recently obtained a building permit for some living
quarters for its supervisors.
Also in the Municipality of San Sebastián del Oeste is the 5,080-ha Guijoso
Property. It is located about 25 km northeast of San Sebastián del Oeste and
approximately 5 km south of the town of San Felipe de Hijar. Intermittent small
scale exploitation of veins has occurred in San Felipe de Hijar, similar to that in
the San Sebastián del Oeste area.
The Guijoso Property is also located within the same belt of low sulphidation
epithermal deposits which hosts the San Sebastián Veins. All mineralization at
the Guijoso Project is associated with pervasive, vein and stockwork
silicification and adjacent argillic alteration within rhyolite tuffs. Silicification has
been recognized over an area approximately 6 km in length by 1.5 km in width.
Comments on Section 23
The QP has not verified the information regarding adjacent properties and has
not visited them or audited them. The values and the information on adjacent
properties presented do not have any direct bearing on the San Sebastián
Property and the reader should not infer or assume that the San Sebastián
Property will have similar results.
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Engineering
Procurement
115 kV Line Construction
Gas-Fired Generators
Pre Mine (Mine Method Testing)
Mine Development
Roads & Site Preparation
Buildings and Camps
Delivery of Equipment
Process Plant Construction
Filter Plant Construction
Tailings Facilities Construction
Commissioning
Start -Up x x
Operations 1,000TPD 2 ,0 0 0 T P D
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25.1 Interpretation
The initial production rate of 1,000tpd will expand to 2,000tpd in Year 3. Over
the 7 year mine life the plant will process 4.1 million tonnes grading 207 g/t
silver and 1.95 g/t gold. The process plant will recover 87% of the silver and
75% of the gold.
2. The mining methods
The principal cut-and-fill mining method planned in the study is used by
Endeavour Silver in its current mining operations. The planned 31,955m of total
life-of-mine (LOM) mine and stope development uses trackless underground
equipment similar to the equipment now operated by Endeavour Silver.
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6. Project-Specific Risks
The Terronera Project involves neither the storage of wet tailings nor the
leaching process and has no design or operational features which require
environmental treatment atypical for milled-flotation and filtered tailings storage
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facilities in Mexico. This limits project environmental risk to that which is typical
for this process and tailings storage methodology.
All the process equipment specified for Terronera is proven, reliable equipment
similar to equipment that Endeavour Silver uses on its three existing plants thus
removing risks associated with new process technologies.
7. Metal Prices
Given historical and current prices the base case prices assumed for silver
(US$18/oz) and gold (US$1,260/oz) are acceptable. Increases and decreases
in the base case prices and their impact on the project key indicators were
examined as part of the sensitivity analysis.
25.2 Conclusions
The QPs conclude that the economic analysis of the Terronera Project is based
on sound inputs and cost estimates that significantly reduce certain risks of the
project and provide a reliable basis for quantifying the key financial indicators of
the project and for examining the project’s most critical sensitivities.
The Terronera Project key financial indicators for the base case are as follows:
After-tax rate of return 21.2%
Project payback period 4.3 years
After-Tax Net Present Value (5% discount) of US$78,105,000
These key indicators describe a project whose base case is financially
profitable and which has considerable upside potential should metal prices
improve or operating costs decrease.
The main downside risks are that metal prices will decrease or operating costs
will increase.
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26.0 RECOMMENDATIONS
Investigate the inclusion of an HPGR crusher as the tertiary crusher to give the
lowest energy requirement for size reduction. Estimated cost US$25,000
Investigate the flotation of a bulk concentrate at a coarse grind using Hydrofloat
to increase recoveries, provide savings in grinding, and enhance the stability of
the TSF. Estimated cost US$45,000
Evaluate ore sorting techniques to upgrade the process plant feed. Estimated
cost eUS$5,000
Optimize the grinding circuit. Estimated cost US$35,000
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For preliminary ground support recommendations for cut and fill stopes, refer to
Table 16.2 ‘Preliminary Ground Support Recommendations for Cut and Fill
Stopes’.
26.4 Environmental
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27.0 REFERENCES
Lewis, W.J., Murahwi, C.Z., (2013), NI 43-101 Technical Report, Audit of the
Mineral Resource Estimate for the San Sebastian Project, Jalisco State,
Mexico, by Micon International Limited for Endeavour Silver Corp., March 6,
2013, 128 p.
Munroe, M.J., (2014), NI 43-101 Technical Report on the Resource Estimates
for the San Sebastian Project, Jalisco State, Mexico, by Michael J. Munroe for
Endeavour Silver Corp., March 27, 2014, 140 p
Amec Foster Wheeler, Hidrologia e Hidraulica de Mexico, (2016), Reporte del
Diseno del Deposito de Jales y de Tepetate Proyecto Terronera, Jalisco State,
Mexico, for Endeavour Silver Corp., October 31, 2016.
PhotoSat (2016), Proyecto de Mapeo de Elevacion Por Satelite San Sebastian
Project, Jalisco State, Mexico, by , PhotoSat Information Ltd., October, 2014.
Amec Foster Wheeler (2014 and 2016), Deterministic Seismic Hazard
Assessment, Mina Terronera, New Tailings Facility, Jalisco State, Mexico,
November, 2014, updated October, 2016.
Manifestacion de Impacto Ambiental Modalidad Particular (2013), Expolitacion
Minera Proyecto Terronera, Ing. Joazura Gonzalez, Jalisco State, Mexico, for
Endeavour Silver Corp and Minera Plata Adelante, December, 2013.
Modification of the Manifestacion de Impacto Ambiental Modalidad Particular
(2017), Expolitacion Minera Proyecto Terronera, Ing. Roberto Trujillo, Jalisco
State, Mexico, for Endeavour Silver Corp and Minera Plata Adelante, February,
2017.
Exploitacion Minera Terronera (2017), Estudio Tecnico Justificativo para
Cambio de Uso de Suelos en Terrenos Forestales, Proyecto Terronera, Ing.
Roberto Trujillo, Jalisco State, Mexico, for Endeavour Silver Corp and Minera
Plata Adelante, February, 2017.
Costos Estandares de Construccion en las Minas Activas de Endeavour Silver
(2017), Ing. Henry Cari, Gestor de Proyectos, Endeavour Silver, and Ing. Juan
Manuel Leon de Geoingenieria, February and March, 2017.
SEMARNAT NORMAS #001 (1996), #141 (2003), and #157 (2009), and
CONAGUA Delimitacion y Proteccion de Zonas Federales de Cauces y
Cuerpos de Agua (1972) y Ley de Aguas Nacionales (1994).
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28.0 CERTIFICATES
I, Peter J. Smith, P. Eng., residing at 951 Beachview Drive, North Vancouver, BC V7G 1P8, do
hereby certify that:
2. This certificate applies to the NI 43-101 technical report titled “Technical Report Preliminary
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”),
with an effective date of April 3, 2017.
3. I graduated with a Bachelor’s Degree in Applied Science (Civil Engineering) from the
University of British Columbia in 1968.
5. I have worked as a civil engineer, project manager, and senior engineering manager in
Canada and internationally since graduation from university. My summarized career
experience is as follows:
Engineer - Dept. of Fisheries & Oceans………………………….…….….1968-1969
Engineer – Gruner AG Consulting Engineers……………………….……1970-1974
Site Project Engineer – Alusuisse Engineering………………………..…1974-1979
Project and Construction Manager – Swan Wooster Engineering Ltd....1969-1985
Engineer and Co-Owner – Watson Smith Consultants Ltd…………...…1985-1986
Director, Engineering – Vancouver Port Corporation…………………….1986-1995
Managing Director, Ports & Infrastructure, Simons Consulting Ltd……..1995-2000
Senior VP, Industrial – UMA Engineering Ltd……………………………..2000-2006
Co-Owner & President – Axxent Engineering Ltd…………………..…….2006-2012
Co-Owner & President – Smith Foster Associates Inc………………..2012-Present
6. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-
101”) and hereby certify that by reason of my education, affiliation with a professional
association (as defined by NI 43-101), and past relevant work experience on mining projects,
I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
7. I am the qualified person responsible for Sections 1, 2, 3, 4, 5, 6, 18, 19, 21, 22, 23, 24, 25,
26, and 27 of the Technical Report.
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9. I visited the site of the project that is the subject of this Technical Report on September 11,
2014 and on November 10, 2016.
10. I have had prior involvement with the Property that is the subject of this Technical Report
with a previous technical report titled “NI 43-101 Technical Report Preliminary Economic
Assessment for the Terronera Project, Jalisco State, Mexico”, with an effective date of
March 25, 2015.
11. I have read NI 43-101 including Form 43-101F1 and the Technical Report. This Technical
Report has been prepared in compliance therewith.
12. At the effective date of the Technical Report, to the best of my knowledge, information, and
belief, the Technical Report contains all scientific and technical information that is required to
be disclosed to make the Technical Report not misleading.
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I, Eugenio Iasillo, P. E., residing at 3370 W. Crestone Court Tucson, Arizona 85742 do hereby
certify that:
3. Registrations:
Registered Professional Engineer - Arizona, U.S.
Arizona Certificate/Registration No. 28209
Chemical Engineering, Mexico
Professional Registration, CEDULA No. 486768
4. This certificate applies to the NI 43-101 technical report titled “Technical Report Preliminary
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”),
with an effective date of April 3, 2017.
5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-
101”) and certify that by reason of my education, affiliation with a professional association (as
defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101.
6. I have visited the Property that is the subject of this report on September 11, 2014.
7. I am responsible for Sections 13 and 17 of the Technical Report and co-authoring Sections 1,
25, and 26 of the Technical Report.
9. I have had prior involvement with the Property that is the subject of this Technical Report with
a previous technical report titled “NI 43-101 Technical Report Preliminary Economic
Assessment for the Terronera Project, Jalisco State, Mexico”, with an effective date of March
25, 2015.
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10. I have read NI 43-101 including Form 43-101F1 and the Technical Report. This Technical
Report has been prepared in compliance therewith.
11. At the Effective Date of the Technical Report, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is required to
be disclosed to make the Technical Report not misleading.
__________________________
Eugenio Iasillo, P.E.
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I, Eugene J. Puritch, P. Eng., residing at 44 Turtlecreek Blvd., Brampton, Ontario, L6W 3X7, do
hereby certify that:
1. I am an independent mining consultant and President of P&E Mining Consultants Inc.
2. This certificate applies to the technical report titled “NI 43-101 Technical Report Preliminary
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”)
with an effective date of April 3, 2017.
3. I am a graduate of The Haileybury School of Mines, with a Technologist Diploma in Mining,
as well as obtaining an additional year of undergraduate education in Mine Engineering at
Queen’s University. In addition I have also met the Professional Engineers of Ontario
Academic Requirement Committee’s Examination requirement for Bachelor’s Degree in
Engineering Equivalency. I am a mining consultant currently licensed by Professional
Engineers and Geoscientists New Brunswick (License No. 4778), Professional Engineers,
Geoscientists Newfoundland & Labrador (License No. 5998), Association of Professional
Engineers and Geoscientists Saskatchewan (License No. 16216), Ontario Association of
Certified Engineering Technicians and Technologists (License No. 45252) the Professional
Engineers of Ontario (License No. 100014010) and Association of Professional Engineers
and Geoscientists of British Columbia (License No. 42912). I am also a member of the
National Canadian Institute of Mining and Metallurgy.
4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-
101”) and certify that, by reason of my education, affiliation with a professional association
(as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101.
5. I have practiced my profession continuously since 1978. My summarized career experience is
as follows:
Mining Technologist - H.B.M.& S. and Inco Ltd., .................................. 1978-1980
Open Pit Mine Engineer – Cassiar Asbestos/Brinco Ltd., ..................... 1981-1983
Pit Engineer/Drill & Blast Supervisor – Detour Lake Mine, .................... 1984-1986
Self-Employed Mining Consultant – Timmins Area, .............................. 1987-1988
Mine Designer/Resource Estimator – Dynatec/CMD/Bharti, ................. 1989-1995
Self-Employed Mining Consultant/Resource-Reserve Estimator, ......... 1995-2004
President – P&E Mining Consultants Inc, ......................................... 2004-Present
6. I have visited the Property that is the subject of this report on September 11, 2014.
7. I am responsible for co-authoring Sections 1, 14, 15, 16, 21, 25 and 26 of the Technical
Report.
8. I am independent of the Issuer applying the test in Section 1.5 of NI 43-101.
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9. I have had prior involvement with the Property that is the subject of this Technical Report with
a previous technical report titled “NI 43-101 Technical Report Preliminary Economic
Assessment for the Terronera Project, Jalisco State, Mexico”, with an effective date of March
25, 2015.
10. I have read NI 43-101 and Form 43-101F1. This Technical Report has been prepared in
compliance therewith.
11. As of the effective date of this Technical Report, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is required to
be disclosed to make the Technical Report not misleading.
________________________
Eugene J. Puritch, P.Eng., FEC
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I, Jarita Barry, P.Geo., residing at 2485B Hwy 3A, Nelson, British Columbia, V1L 6K7, do hereby
certify that:
4. I have not visited the Property that is the subject of this Technical Report.
5. I am responsible for co-authoring Section 1, 11, 12, 25 and 26 of this Technical Report.
6. I am independent of the Issuer applying all of the tests in section 1.5 of National Instrument
43-101.
7. I have had prior involvement with the Property that is the subject of this Technical Report with
a previous technical report titled “NI 43-101 Technical Report Preliminary Economic
Assessment for the Terronera Project Jalisco State, Mexico”, with an effective date of March
25, 2015.
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8. I have read NI 43-101 and Form 43-101F1 and the Technical Report has been prepared in
compliance therewith.
9. As of the effective date of this Technical Report, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is required to
be disclosed to make the Technical Report not misleading.
________________________________
Jarita Barry, P.Geo.
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I, David Burga, P. Geo., residing at 3884 Freeman Terrace, Mississauga, Ontario, do hereby
certify that:
1. I am an independent geological consultant contracted by P & E Mining Consultants Inc.
2. This certificate applies to the technical report titled “NI 43-101 Technical Report Preliminary
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”)
with an effective date of April 3, 2017.
3. I am a graduate of the University of Toronto with a Bachelor of Science degree in Geological
Sciences (1997). I have worked as a geologist for 20 years since obtaining my B.Sc. degree.
I am a geological consultant currently licensed by the Association of Professional
Geoscientists of Ontario (License No 1836).
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-
101”) and certify that, by reason of my education, affiliation with a professional association
(as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101.
My relevant experience for the purpose of the Technical Report is:
...... Exploration Geologist, Cameco Gold 1997-1998
...... Field Geophysicist, Quantec Geoscience 1998-1999
...... Geological Consultant, Andeburg Consulting Ltd. 1999-2003
...... Geologist, Aeon Egmond Ltd. 2003-2005
...... Project Manager, Jacques Whitford 2005-2008
...... Exploration Manager – Chile, Red Metal Resources 2008-2009
...... Consulting Geologist 2009-Present
4. I have visited the Property that is the subject of this Technical Report on September 11,
2014, October 7, 2014 and June 14, 2016.
5. I am responsible for authoring Sections 7 to 10 and 23 and co-authoring Sections 1, 4, 11,
12, 25 and 26 of the Technical Report.
6. I am independent of the Issuer applying the test in Section 1.5 of NI 43-101.
7. I have had prior involvement with the Property that is the subject of this Technical Report
with a previous technical report titled “NI 43-101 Technical Report Preliminary Economic
Assessment for the Terronera Project, Jalisco State, Mexico”, with an effective date of March
25, 2015.
8. I have read NI 43-101 and Form 43-101F1 and this Technical Report has been prepared in
compliance therewith.
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9. As of the effective date of this Technical Report, to the best of my knowledge, information
and belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
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I, Yungang Wu, P. Geo., residing at 3246 Preserve Drive, Oakville, Ontario, L6M 0X3, do hereby
certify that:
2. This certificate applies to the technical report titled “NI 43-101Technical Report Preliminary
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”)
with an effective date of April 3, 2017.
3. I am a graduate of Jilin University, China with a Master Degree in Mineral Deposits (1992). I
am a geological consultant and a registered practising member of the Association of
Professional Geoscientist of Ontario (Registration No. 1681). I am also a member of the
Ontario Prospectors Association.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-
101”) and certify that, by reason of my education, affiliation with a professional association (as
defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101.
Geologist –Geology and Mineral Bureau, Liaoning Province, China1 ............... 1992-1993
Senior Geologist – Committee of Mineral Resources and Reserves of Liaoning, China
........................................................................................................................ 1993-1998
VP – Institute of Mineral Resources and Land Planning, Liaoning, China ......... 1998-2001
Project Geologist–Exploration Division, De Beers Canada ............................... 2003-2009
Mine Geologist – Victor Diamond Mine, De Beers Canada ............................... 2009-2011
Resource Geologist– Coffey Mining Canada .................................................... 2011-2012
Consulting Geologist ............................................................................................ Present
4. I have not visited the Property that is the subject of this Technical Report.
7. I have had no prior involvement with the Property that is the subject of this Technical Report.
8. I have read NI 43-101 and Form 43-101F1 and the Technical Report has been prepared in
compliance therewith.
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9. As of the effective date of this Technical Report, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is required to
be disclosed to make the Technical Report not misleading;
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I, James L. Pearson, P.Eng., residing at 105 Stornwood Court, Brampton, Ontario. Canada, L6W
4H6, do hereby certify that:
2. This certificate applies to the technical report titled “NI 43-101 Technical Report Preliminary
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”)
with an effective date of April 3, 2017.
I have read the definition of "qualified person" set out in National Instrument 43-101 (“NI 43-
101”) and certify that by reason of my education, affiliation with a professional association
(as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a
"qualified person" for the purposes of NI 43-101. My relevant experience for the purpose of
the Technical Report is:
4. I have not visited the Property that is the subject of this Technical Report.
5. I am responsible for coauthoring Sections 1, 15, 16, 21, 25 and 26 of the Technical Report.
6. I am independent of the issuer applying all of the tests in Section 1.5 of NI 43-101.
7. I have had prior involvement with the Property that is the subject of this Technical Report
with a previous technical report titled “NI 43-101 Technical Report Preliminary Economic
Assessment for the Terronera Project, Jalisco State, Mexico”, with an effective date of March
25, 2015.
8. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in
compliance with that Instrument and Form.
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9. As of the effective date of this Technical Report, to the best of my knowledge, information
and belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
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I, Scott Fleming P.E., residing at 7475 South Elm Ct, Centennial, Colorado, 80122,
USA, do hereby certify that:
14. This certificate applies to the NI 43-101 technical report titled “Technical Report
Preliminary Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the
“Technical Report”), with an effective date of April 3, 2017.
15. I graduated with two Bachelor’s Degrees in each Environmental Studies from the
University of California in 1973 and Civil Engineering from Colorado State University
in 2002.
16. I am a registered member in good standing of the Colorado State Board of Licensure
for Professional Engineers under License #37663.
17. I have worked as a civil engineer, project manager, and senior engineering manager
in the United States and Mexico and since graduation from university. My
summarized career experience is as follows:
General Contractor and Construction Manager……………..……..1978-1999
Civil Engineer – Goff Consulting Engineers…………..…………...2002-2004
Civil Engineer – Fleming Engineering Inc……………..…………...2004-2010
Civil Engineer – Amec Foster Wheeler…………..……………...2010-Present
18. I have read the definition of “qualified person” set out in National Instrument 43-101
(“NI 43-101”) and hereby certify that by reason of my education, affiliation with a
professional association (as defined by NI 43-101), and past relevant work
experience on mining projects, I fulfill the requirements to be a “qualified person” for
the purposes of NI 43-101.
19. I am the qualified person responsible for Section 20 of the Technical Report.
21. I visited the site of the project that is the subject of this Technical Report on
September 11, 2014 and on November 10, 2016.
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22. I have had prior involvement with the Property that is the subject of this Technical
Report with a previous technical report titled “NI 43-101 Technical Report
Preliminary Economic Assessment for the Terronera Project, Jalisco State,
Mexico”, with an effective date of March 25, 2015.
23. I have read NI 43-101 including Form 43-101F1 and the Technical Report. Section
#20 of this Technical Report has been prepared in compliance therewith.
24. At the effective date of the Technical Report, to the best of my knowledge,
information, and belief, the Technical Report contains all scientific and technical
information that is required to be disclosed to make the Technical Report not
misleading.
Scott Fleming, PE
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I, Benjamin D. Peacock, P. Eng., residing at 280 Ross Drive, North Bay, Ontario, P1A 0C3, do
hereby certify that:
14. I am a Senior Engineer employed by Knight Piésold Ltd.
15. This certificate applies to the technical report titled “NI 43-101 Technical Report Pre-
Feasibility Study for the Terronera Project, Jalisco State, Mexico” (the “Technical Report”)
with an effective date of April 3, 2017.
16. I am a graduate of the University of Waterloo, Waterloo, Ontario, Canada, in 2008 with a
Bachelor of Science degree in Civil Engineering. I am registered as a Professional Engineer
in the Province of Ontario (Reg. No. 100141409). I have been employed full-time by Knight
Piesold Ltd. since 2008 providing geomechanical design support for underground and open
pit mines and projects.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-
101”) and certify that, by reason of my education, affiliation with a professional association
(as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101.
17. I have visited the Property that is the subject of this report from September 7 to 10, 2016
and from November 30 to December 3, 2016.
18. I am responsible for co-authoring Section 16 of the Technical Report.
19. I am independent of the Issuer applying the test in Section 1.5 of NI 43-101.
20. I have not had prior involvement with the Property that is the subject of this Technical
Report.
21. I have read NI 43-101 and Form 43-101F1. This Technical Report has been prepared in
compliance therewith.
22. As of the effective date of this Technical Report, to the best of my knowledge, information
and belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
________________________
Benjamin D. Peacock, P.Eng.
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APPENDIX A - FIGURES
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APPENDIX B - 3D DOMAINS
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APPENDIX D - VARIOGRAMS
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REFERENCE LINE
1,700 EL
SURFACE
1,600 EL
1,500 EL
1,400 EL
1,300 EL
MINERALIZED DOMAINS
450 - 550 P&E Mining Consultants Inc.
350 - 450
PROJECTED TO SECTION
250 - 350
FW HW3 TERRONERA PROJECT
HW1 HW4 150 - 250
AgEq BLOCK MODEL SECTION 10 NW
HW2 TRV 0.01 - 150
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
CE
SURFA
1,600 EL
1,500 EL
1,400 EL
1,300 EL
MINERALIZED DOMAINS
450 - 550 P&E Mining Consultants Inc.
350 - 450
PROJECTED TO SECTION
250 - 350
FW HW3 TERRONERA PROJECT
HW1 HW4 150 - 250
AgEq BLOCK MODEL SECTION 16 NW
HW2 TRV 0.01 - 150
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
CE
SURFA
1,600 EL
1,500 EL
1,400 EL
1,300 EL
MINERALIZED DOMAINS
450 - 550 P&E Mining Consultants Inc.
350 - 450
PROJECTED TO SECTION
250 - 350
FW HW3 TERRONERA PROJECT
HW1 HW4 150 - 250
AgEq BLOCK MODEL SECTION 22 NW
HW2 TRV 0.01 - 150
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
SURFACE
1,600 EL
1,500 EL
1,400 EL
1,300 EL
MINERALIZED DOMAINS
450 - 550 P&E Mining Consultants Inc.
350 - 450
PROJECTED TO SECTION
250 - 350
FW HW3 TERRONERA PROJECT
HW1 HW4 150 - 250
AgEq BLOCK MODEL SECTION 27 NW
HW2 TRV 0.01 - 150
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
1,600 EL
SURFACE
1,500 EL
1,400 EL
1,300 EL
MINERALIZED DOMAINS
450 - 550 P&E Mining Consultants Inc.
350 - 450
PROJECTED TO SECTION
250 - 350
FW HW3 TERRONERA PROJECT
HW1 HW4 150 - 250
AgEq BLOCK MODEL SECTION 30 NW
HW2 TRV 0.01 - 150
Scale 1:3,500 May 2017
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
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REFERENCE LINE
1,700 EL
SURFACE
1,600 EL
1,500 EL
1,400 EL
1,300 EL
METRES
1,200 EL
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REFERENCE LINE
1,700 EL
CE
SURFA
1,600 EL
1,500 EL
1,400 EL
1,300 EL
METRES
1,200 EL
MINERALIZED DOMAINS
P&E Mining Consultants Inc.
PROJECTED TO SECTION
CLASS
FW HW3 TERRONERA PROJECT
HW1 HW4 INDICATED
CLASS BLOCK MODEL SECTION 16 NW
HW2 TRV INFERRED
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
CE
SURFA
1,600 EL
1,500 EL
1,400 EL
1,300 EL
METRES
1,200 EL
MINERALIZED DOMAINS
P&E Mining Consultants Inc.
PROJECTED TO SECTION
CLASS
FW HW3 TERRONERA PROJECT
HW1 HW4 INDICATED
CLASS BLOCK MODEL SECTION 22 NW
HW2 TRV INFERRED
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
SURFACE
1,600 EL
1,500 EL
1,400 EL
1,300 EL
METRES
1,200 EL
MINERALIZED DOMAINS
P&E Mining Consultants Inc.
PROJECTED TO SECTION
CLASS
FW HW3 TERRONERA PROJECT
HW1 HW4 INDICATED
CLASS BLOCK MODEL SECTION 27 NW
HW2 TRV INFERRED
Scale 1:3,500 May 2017
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REFERENCE LINE
1,700 EL
1,600 EL
SURFACE
1,500 EL
1,400 EL
1,300 EL
METRES
1,200 EL
MINERALIZED DOMAINS
P&E Mining Consultants Inc.
PROJECTED TO SECTION
CLASS
FW HW3 TERRONERA PROJECT
HW1 HW4 INDICATED
CLASS BLOCK MODEL SECTION 30 NW
HW2 TRV INFERRED
Scale 1:3,500 May 2017
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
METRES
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
METRES
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
METRES
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516,400 E
516,600 E
516,800 E
517,000 E
517,200 E
517,400 E
2,297,000 N
2,296,800 N
2,296,600 N
2,296,400 N
2,296,200 N
2,296,000 N
2,295,800 N
2,295,600 N
METRES
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Process Plant
General Arrangement
Filter Plant
Stockpile
Cross Section
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S.A.deC.V.
ompetent construction of the reinforced backfill sill pillar will be crucial to the success of the mine near the end-of-
mine life. The sill pillar beneath the constructed sill pillar is planned for extraction at the end-of-mine life. The
constructed sill pillar above must be designed to support the unconsolidated backfill material above during this
phase.
X
XX
X
X
X X X
XX X X
X X
X X XX X X
X
X
X X X X
APPROVED
PFS
W.L.L.10t
PFS
APPROVED
S.A.deC.V.
PFS
APPROVED
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All capital and operating costs are in US dollars, unless otherwise stipulated.
TABLE 0.1
SUMMARY OF MINE CAPITAL COSTS (US$M)
Year Total
Item
Yr-1 Yr+1 Yr+2 Yr+3 Yr+4 Yr+5 Yr+6 Yr+7
U/G Equipment 3.0 3.1 0.4 6.4
Development 4.5 6.9 4.9 5.1 1.8 1.4 2.3 26.9
Development. Haulage 0.5 0.1 0.6
Electric Power 0.2 0.2
Indirect Labour 0.6 0.6
Total 8.7 10.1 5.3 5.1 1.8 1.4 2.3 34.7
All capital expenditures during the first three quarters of Year -1 are categorized as pre-
production capital costs. The total estimated pre-production mine capital cost is US$4.2 M,
summarized in Table 1.2.
TABLE 0.2
SUMMARY OF PRE-PRODUCTION MINE CAPEX – US$(000’S)
ITEM UNITS / M $(000’S)
Company Underground Equipment / Construction CAPEX
Construct Portal 1 500
Refuge Shelters 3 300
Total Equipment / Construction 800
Contractor Development
Portal entrance @ +2% 24 39.5
Portal Ramp @ -12% 503 845.4
Ramp 1410 - 1380 @ -12% 284 477.2
1380 Haulage Drive @ +2% 29 48.2
1380 Electrical Substation 24 40.3
1380 Refuge Shelter 24 40.3
Appendix H - Page 1
TERRONERA PROJECT
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TABLE 0.2
SUMMARY OF PRE-PRODUCTION MINE CAPEX – US$(000’S)
ITEM UNITS / M $(000’S)
1380 Fuel and Lube 12 20.1
1380 Day Cap Mag 12 20.1
1380 Day Powder Mag 12 20.1
1380 Latrine 15 25.2
1380 Raise Bore Ore Pass 125 276.3
1380 Egress/FAR 128 283.9
Ramp Level Access 45 64.6
Access Ore Pass 15 21.5
Access Egress/FAR 20 28.7
Access BF Re-muck 15 21.5
Drainage hole cut–out 6 8.6
Subtotal 1,291m 2,282
Development Waste Haulage 289
Indirect Equipment Operating & Electric Power 163
Company Pre-production Indirect Labour
Warehouse Person 34.9
Clerk 20.2
Labourer / Nipper 20.2
Dry Man 20.2
Mine Superintendent /Mine Manager 54.2
Mine Engineer / Planner 86.5
Ventilation/Surveyor Technician 18.2
Mine Geologist 86.5
Geotechnical Engineer 18.1
Diamond Drill Foreman 9.1
Mine Safety /Trainer 27.1
Construction Leader 4.8
Construction Person 27.2
Mine Labourer / General Labourer 13.5
Contractor Admin. Indirect Labour 171.3
Subtotal 612
Appendix H - Page 2
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Commercial production period starts in the 4th quarter Year -1. Sustaining mine capital
expenditures includes company equipment, contractor mine development and development
waste haulage. All company equipment purchases / leases are completed by the end of Year
2. A summary of the number of units purchased / leased, by year, is presented in Table 1.3.
TABLE 0.3
SUMMARY OF SUSTAINING CAPEX COMPANY EQUIPMENT
PURCHASES / LEASES BY YEAR (UNITS)
EQUIPMENT YR-1 YR+1 YR+2 TOTAL
Single Boom Jumbo 1 4 5
Long Hole Drill 1 1
3
Production 3.5m LHD 1 2 1 4
2.0m3 Scooptram 1 2 3
Scissor Truck 1 1 1 3
Maintenance/Lube Truck 1 1
Shotcrete Truck 1 1 2
Shotcrete Delivery Truck 1 1 2
Ground Support Bolter 1 1 2
Personnel Carrier 1 1 2
Utility Tractor 1 1 1 3
U/G Pickup Truck 2 4 6
Grader 1 1
Jackleg drills 10 20 30
Diamond Drill 2 1 3
U/G Fans 6 2 2 10
Surface Fans 5 5
U/G Face Pumps 5 1 2 8
Main Pumps 4 1 5
Construct Main Sump 1 1
CRF Cement Applicator 1 1
CRF Backfill Plant 1 1
Compressors 2 2
Electrical sub-stations (UG) 2 1 3
Refuge Shelters 1 1 2
Appendix H - Page 3
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TABLE 0.4
SUMMARY OF SUSTAINING MINE DEVELOPMENT CAPEX(METRES)
HEADING YR-1 YR+1 YR+2 YR+3 YR+4 YR+5 YR+6 TOTAL
1380 Haulage Drive @ +2% 277 587 864
1380 Refuge Shelter 12 24 36
1380 Latrine 15 15
1380 Clean & Dirty Sump 71 71
1380 Raisebore Ore Pass 199 688 888
1380 Egress/FAR 207 683 890
Ramp (1) 1,614 1,614 1,614 4,841
Ramp (1) Muck Bays 80 80 80 240
Ramp (2) 254 761 1,277 514 367 1,019 4,191
Ramp (2) Muck Bays 12 36 60 24 24 48 204
Ramp Sump at Bottom 12 24 12 48
Ramp Level Access 65 110 225 120 140 146 120 926
Access Ore Pass 30 45 160 90 90 85 90 590
Access Egress/FAR 40 60 200 120 120 100 120 760
Access BF Re-muck 30 45 150 90 105 90 90 600
Drainage Hole Cut-out 12 18 54 36 36 30 36 222
Orepass Finger Raise 15 15 135 90 90 75 90 510
Wastepass Finger Raises 15 15 135 90 90 75 90 510
Level Extensions 78 78
Ore Pass 30 125 63 217
Fresh Air Raise/Egress 30 125 63 217
Appendix H - Page 4
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Appendix H - Page 5
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All cut-and-fill (C&F) and longhole sill pillar recovery (LH) mining will be completed by the
company. P&E estimated operating costs by the following: mining method; by 3 Classes of
ground support requirements; by stope width; by type of backfill, and whether or not a
constructed sill pillar is required. A summary of OPEX estimating parameters is presented in
Table 1.6.
TABLE 0.6
SUMMARY OF OPEX ESTIMATING PARAMETERS
MINING GROUND SUPPORT STOPE BACKFIL CONSTRUCT
METHOD CLASS WIDTH L SILL
Unconsolida
C&F Class 1 3.0m to 4.5m No
ted
Consolidate
C&F Class 1 3.0m to 4.5m Yes
d
Unconsolida
LH Class 1 3.0m to 4.5m No
ted
Unconsolida
C&F Class 1 4.5m to 6.0m No
ted
Consolidate
C&F Class 1 4.5m to 6.0m Yes
d
Unconsolida
LH Class 1 4.5m to 6.0m No
ted
Unconsolida
C&F Class 2 2.0m to 3.0m No
ted
Consolidate
C&F Class 2 2.0m to 3.0m Yes
d
Unconsolida
LH Class 2 2.0m to 3.0m No
ted
Consolidate
C&F Class 2 2.0m to 3.0m No
d
Consolidate
C&F Class 2 2.0m to 3.0m Yes
d
Consolidate
LH Class 2 2.0m to 3.0m No
d
Unconsolida
C&F Class 2 3.0m to 4.5m No
ted
Consolidate
C&F Class 2 3.0m to 4.5m Yes
d
Unconsolida
LH Class 2 3.0m to 4.5m No
ted
Appendix H - Page 6
TERRONERA PROJECT
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TABLE 0.6
SUMMARY OF OPEX ESTIMATING PARAMETERS
MINING GROUND SUPPORT STOPE BACKFIL CONSTRUCT
METHOD CLASS WIDTH L SILL
Unconsolida
LH Class 2 3.0m to 4.5m No
ted
Unconsolida
C&F Class 3 2.0m to 3.0m No
ted
Consolidate
C&F Class 3 2.0m to 3.0m Yes
d
Unconsolida
LH Class 3 2.0m to 3.0m No
ted
Consolidate
C&F Class 3 2.0m to 3.0m No
d
A summary of Mechanized Cut and Fill parameters, by mining width, is presented in Table
1.7.
TABLE 0.7
SUMMARY OF C&F MINING PARAMETERS
BREAST WIDTH
PARAMETER UNITS
2.0M TO 3.0M 3.0M TO 4.5M 4.5M TO 6.0M
Height 4.0 4.0 4.0 m
Average width 2.5 3.8 5.3 m
Arch factor 98% 98% 98% %
Arch radius 1.00 1.00 1.00 m
Face area 9.8 14.7 20.6 sq.m
Blast hole length 4.88 4.88 4.88 m
Bootleg length 0.12 0.12 0.12 m
Advance 4.75 4.75 4.75 m
Overbreak factor 7.0% 7.0% 7.0% %
Swell factor 35% 35% 35% %
Insitu density 2.52 2.52 2.52 t/ m3
Loose density 1.87 1.87 1.87 t/ m3
In-situ volume / breast 50 75 105 m3
Loose volume / breast 67 101 141 m3
Tonnes ore / breast 126 189 264 tonnes
Tonnes backfill / breast 93 140 196 tonnes
Tonnes / metre of breast 26 40 56 tonnes
Appendix H - Page 7
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.8
SUMMARY OF C&F STOPE DRILLING PARAMETERS
BREAST WIDTH
PARAMETER UNITS
2.0M TO 3.0M 3.0M TO 4.5M 4.5M TO 6.0M
Number of drills 1 1 1
Blast hole diameter 45 45 45 mm
Number of Holes:
Perimeter holes 12 14 16 holes
Other blast holes 8 12 16 holes
Total holes 20 26 32 holes
Total drilled metres 98 127 156 m
Drilling Productivity:
Penetration Rate - 45mm 1.3 1.5 1.3 m/min
Penetration Rate - 89mm 0.8 0.8 0.8 m/min
Reposition boom 0.8 0.8 0.8 min/hole
Cycle auxiliary 0.2 0.2 0.2 min/hole
Drilling time 78 85 125 min/rd
Repositioning time 15 20 24 min/rd
Auxiliary 4 5 6 min/rd
Change shank to ream/drill 10 10 10 min/rd
Travel/setup 30 30 30 min
Clean up and leave 10 10 10 min
Total drilling cycle 147 159 205 min
Drilling cycle (in 50 min hours) 2.9 3.2 4.1 hrs
A summary of Cut and Fill OPEX drilling cost estimates are presented in Table 1.9.
TABLE 0.9
SUMMARY OF C&F STOPE DRILLING COST ESTIMATES PER METRE OF BREASTING
Breast Width 2.0m to 3.0m 3.0m to 4.5m 4.5m to 6.0m Unit 2.0m to 3.0m 3.0m to 4.5m 4.5m to 6.0m
Price
Units/m Drilled. (US$) Cost / Meter of Breasting (US$)
Rockbolt Drilling
Steel 8 ft 0.10 0.11 0.12 133.98 $13.81 $14.29 $16.19
32mm Blade bit 0.29 0.30 0.34 35.32 $10.34 $10.70 $12.12
Jumbo Drilling
Rod 16' x FI38 x Hex x 35 x R32 0.04 0.05 0.07 373.93 $15.34 $19.94 $24.54
Bit 45mm x R32 0.21 0.27 0.33 66.99 $13.74 $17.86 $21.99
Appendix H - Page 8
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Shank Cop 1838 x T38 0.06 0.07 0.09 281.36 $16.03 $20.84 $25.65
Coupling T38 0.02 0.02 0.03 66.99 $1.15 $1.49 $1.83
Miscellaneous/waste @ 10% 10% $7.04 $8.51 $10.23
Total C&F Stoping Drilling Material Cost / m Breast $77.45 $93.63 $112.56
A summary of the Cut and Fill stope blasting productivities and powder factors is presented
in Table 1.10.
TABLE 0.10
SUMMARY OF C&F STOPE BLASTING PRODUCTIVITIES AND POWDER FACTORS
BREAST WIDTH
PARAMETER 2.0M TO 3.0M TO 4.5M TO UNITS
3.0M 4.5M 6.0M
Travelling time 15 15 15 min
Clean face, setup 15 15 15 min
Load time per hole 0.75 0.75 0.75 min
Tie-in and cap 0.50 0.50 0.50 min
Total loading time 25 33 40 min
Clean up and leave 10 10 10 min
Blasting cycle time 65 73 80 min
Blasting cycle time (in 50 min
1.3 1.5 1.6 hrs
hrs)
kg/tonn
0.52 0.49 0.48
Powder factor e
1.16 1.08 1.06 lb/tonne
A summary of Cut and Fill OPEX blasting cost estimates are presented in Table 1.11.
TABLE 0.11
SUMMARY OF C&F STOPE BLASTING COST ESTIMATES PER METRE OF
BREASTING
COST / M OF BREASTING
ITEM UNITS/BREAST
UNIT PRICE (US$)
BREAST WIDTH 2.0-3.0M 3.0-4.5M 4.5-6.0M 2.0-3.0M 3.0-4.5M 4.5-6.0M
Packaged ANFO (kg) 43 65 97 $1.23 $11.19 $16.78 $25.17
Geldyne 32x400 (kg) 8 11 13 $3.96 $6.85 $8.91 $10.96
Xactex 19x600 (kg) 14 17 17 $12.45 $37.62 $43.89 $43.89
Exel MS detonator 5m 20 26 32 $3.52 $14.80 $19.23 $23.67
Electric detonator 4.5m 2 2 2 $2.96 $1.25 $1.25 $1.25
B-Line (m) 20 20 20 $0.49 $2.05 $2.05 $2.05
Appendix H - Page 9
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.11
SUMMARY OF C&F STOPE BLASTING COST ESTIMATES PER METRE OF
BREASTING
COST / M OF BREASTING
ITEM UNITS/BREAST
UNIT PRICE (US$)
BREAST WIDTH 2.0-3.0M 3.0-4.5M 4.5-6.0M 2.0-3.0M 3.0-4.5M 4.5-6.0M
Connecting wire 50m 1 1 1 $1.79 $0.38 $0.38 $0.38
Miscellaneous/waste @ 10% $7.41 $9.25 $10.74
Total C&F Stoping Blasting Material Cost / m Breast $81.54 $101.74 $118.11
Air and water line; power and blasting cables, and ventilation ducting are required in all
stoping areas. The estimated time to install stope pipe, cable and ventilation duct services is
detailed in Table 1.12 below.
TABLE 0.12
SUMMARY OF C&F STOPE SERVICES INSTALLATION PRODUCTIVITIES
SERVICES ITEM PRODUCTIVITY UNITS
Piping
2" waterline installation time 1.5 min/m
Install 2" waterline 7.1 min
4" airline installation time 3.0 min/m
Install 4" airline 14.3 min
Total pipelines installation time 21.4 min
Electrical Cable
Cable installation time 1.0 min/m
Install power cables 4.8 min
Install blasting cables 4.8 min
Install miscellaneous lighting 4.8 min
Total cable installation time 14.3 min
Ventilation Duct
Vent duct installation time 2.0 min/m
Install ventilation duct 9.5 min
Messenger cable installation time 0.5 min/m
Install messenger cable 2.4 min
Total ventilation duct installation time 11.9 min
Appendix H - Page 10
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.12
SUMMARY OF C&F STOPE SERVICES INSTALLATION PRODUCTIVITIES
SERVICES ITEM PRODUCTIVITY UNITS
Travel/Setup for Service installation 30.0 min
A summary of the cost estimate for Cut and Fill stoping services are presented in Table 1.13.
TABLE 0.13
SUMMARY OF C&F STOPING SERVICES COST ESTIMATES PER METRE OF
BREASTING
SERVICES ITEM UNITS/M UNIT PRICE COST / M OF BREASTING
Piping
2" Water Pipe 1.00 $12.48 $12.48
4" Air Line 1.00 $32.50 $32.50
2" Couplings 0.08 $24.93 $2.04
4" Couplings 0.08 $46.30 $3.79
2" Water valve 0.01 $256.65 $1.28
4" Air valve 0.01 $393.72 $1.97
2" Tees 0.01 $45.33 $0.23
4" Tees 0.01 $94.22 $0.47
3/4" x 18" re-bar eyebolt 0.33 $8.18 $2.68
Pipe hangers 0.33 $4.52 $1.48
Coil proof chain 0.98 $1.64 $1.62
Miscellaneous @10% $6.06
Subtotal $66.61
66 % pipe in ore development recovered & reused
Total Pipe and Accessory Supplies / m Breast $22.20
Electrical Cable
Cable Electrical 35MM2 3 CORE 0.50 $33.17 $16.58
Power Board 230V 13A 50/60HZ 0.50 $5.06 $2.53
Connector Socket Elect 0.00 $453.09 $1.13
Connector Plug Elect 0.00 $461.81 $1.15
Cable Blasting 1.00 $1.13 $1.13
Misc Lighting 1.00 $5.00 $5.00
Cable Hangers 0.20 $6.08 $1.22
Miscellaneous @ 10% $2.88
Total Electrical Supplies / m Breast $31.63
Appendix H - Page 11
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.13
SUMMARY OF C&F STOPING SERVICES COST ESTIMATES PER METRE OF
BREASTING
SERVICES ITEM UNITS/M UNIT PRICE COST / M OF BREASTING
Ventilation Duct
Vent Duct 42" 50 feet 1.00 $15.03 $15.03
Hanger 0.20 $2.50 $0.50
3/4" x 18" rebar eyebolt 0.20 $8.18 $1.64
Messenger Cable 1.00 $1.20 $1.20
Miscellaneous @ 10% $1.84
Subtotal $20.20
70 % vent duct in ore development recovered & reused
Total Ventilation Supplies $6.06
TABLE 0.14
SUMMARY OF C&F STOPE GROUND SUPPORT INSTALLATION PRODUCTIVITIES
GROUND SUPPORT CLASS CLASS 1 CLASS 2 CLASS 3
3.0M TO 4.5M TO 2.0M TO 3.0M TO 2.0M TO UNITS
BREAST WIDTH
4.5M 6.0M 3.0M 4.5M 3.0M
Productivities
Travel/Setup 30 30 30 30 30 min
Scale face 1.0 1.0 1.0 1.0 1.0 min/sq.m
Scale back 1.0 1.0 1.0 1.0 1.0 min/sq.m
Scale walls 0.8 0.8 0.8 0.8 0.8 min/sq.m
Total scaling time 30.2 36.8 24.8 30.2 24.8 min
Bolting area - Back 17.5 24.5 11.6 17.5 11.6 sq.m
- Walls 23.3 23.3 28.0 28.0 28.0 sq.m
- Walls with Mesh 11.2 11.2 sq.m
Bolting Pattern (1.2mx1.2m) 1.44 1.44 1.44 1.44 1.44 sq.m/bolt
Number of bolts - Back 13 17 9 13 9
- Walls 17 17 20 20 20
Bolt length 2.4 2.4 2.4 2.4 2.4 m
Drilled metres 72 82 70 79 70 m
Penetration rate 0.8 0.8 0.8 0.8 0.8 m/min
Mark & collar holes 0.8 0.8 0.8 0.8 0.8 min/hole
Appendix H - Page 12
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.14
SUMMARY OF C&F STOPE GROUND SUPPORT INSTALLATION PRODUCTIVITIES
GROUND SUPPORT CLASS CLASS 1 CLASS 2 CLASS 3
3.0M TO 4.5M TO 2.0M TO 3.0M TO 2.0M TO UNITS
BREAST WIDTH
4.5M 6.0M 3.0M 4.5M 3.0M
Drilling time 60 68 58 66 58 min
Install bolts 2.0 2.0 2.0 2.0 2.0 min/bolt
Bolt installation time 30 34 29 33 29 min
Screen area (Bolted area) 31.7 38.7 39.6 45.4 39.6 m2
Time per screen 3.6 3.6 3.6 3.6 3.6 min/ m2
Total screening time 114 139 142 163 142 min
Shotcrete Area 39.6 45.4 49.2 .m2
Time per shotcrete 1.8 1.8 1.8 min/ m2
Total shotcrete time 35.5 40.8 88.2 min
Tear down & clean-up 15 15 15 15 15 min
Total ground support cycle time 279 323 334 378 387 min
Support cycle (in 50 min hours) 5.6 6.5 6.7 7.6 7.7 hrs
A summary of ground support cost estimate for Cut and Fill stoping are presented in Table
1.15.
TABLE 0.15
SUMMARY OF C&F STOPING GROUND SUPPORT MATERIAL COST ESTIMATES / M OF
BREASTING
UNITS/M ADVANCE COST /METRE OF BREASTING
ITEM
CLASS 1 CLASS 2 CLASS 3 UNIT PRICE CLASS 1 CLASS 2 CLASS 3
4.5-
BREAST WIDTH 3.0-4.5M 2.0-3.0M 3.0-4.5M 2.0- 3.0M 3.0-4.5M 4.5-6.0M 2.0-3.0M 3.0-4.5M 2.0-3.0M
6.0M
2.4 metre split set bolt 3.58 3.58 4.21 4.21 1.89 $6.92 $24.73 $24.73 $29.10 $29.10 $17.02
2.4 metre rebar bolt 2.73 3.58 1.89 2.73 4.21 $6.59 $18.01 $23.56 $12.47 $18.01 $29.10
5"X5" X 3/8" Plate 6.31 7.15 6.10 6.94 6.10 $1.40 $8.84 $10.02 $8.54 $9.72 $8.54
Fast resin cartridges 2.73 3.58 1.89 2.73 $1.96 $5.35 $7.00 $3.70 $5.35
Slow resin cartridges 5.47 7.15 3.79 5.47 $1.96 $10.70 $13.99 $7.41 $10.70
Welded wire mesh 1.11 1.36 1.39 1.59 1.39 $21.39 $23.76 $29.00 $29.69 $34.06 $29.69
Shotcrete 0.23 0.26 0.57 $150.00 $34.36 $39.41 $85.31
Misc. / waste @ 10% $9.14 $10.83 $12.53 $14.64 $16.97
Total C&F Stoping Ground Support Material Cost / m of Breasting $100.53 $119.12 $137.81 $161.00 $186.63
Appendix H - Page 13
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
A summary of Cut and Fill stoping direct labour costs are presented in Table 1.16.
TABLE 0.16
SUMMARY OF C&F STOPING DIRECT LABOUR COSTS / M OF BREASTING
Direct labour Hours / Breast Cost / Metre of Breasting
Item
Class 1 Class 2 Class 3 Rate/Hr Class 1 Class 2 Class 3
Breast Width 3.0-4.5m 4.5-6.0m 2.0-3.0m 3.0-4.5m 2.0-3.0m 3.0-4.5m 4.5-6.0m 2.0-3.0m 3.0-4.5m 2.0-3.0m
Drilling 8.49 10.95 7.84 9.39 7.84 $8.93 $15.94 $20.55 $14.72 $17.64 $14.72
Blasting 3.87 4.27 3.47 3.87 3.47 $8.93 $7.26 $8.01 $6.51 $7.26 $6.51
Ground support 14.88 17.20 17.84 20.16 20.65 $8.93 $27.93 $32.30 $33.49 $37.85 $38.77
Services 4.14 4.14 6.20 6.20 4.14 $6.39 $5.56 $5.56 $8.34 $8.34 $5.56
Mucking - Ore & Backfill 7.93 10.58 5.62 7.93 5.62 $8.61 $14.36 $19.15 $10.17 $14.36 $10.17
Total C&F Stoping Direct Labour Cost / m of Breasting $71.05 $85.57 $73.23 $85.44 $75.73
A summary of Cut and Fill equipment operating costs are presented in Table 1.17.
TABLE 0.17
SUMMARY OF C&F STOPING EQUIPMENT OPERATING COSTS / M OF BREASTING
HOURS OPERATING / BREAST COST / METRE OF BREASTING
ITEM
CLASS 1 CLASS 2 CLASS 3 RATE/HR CLASS 1 CLASS 2 CLASS 3
BREAST WIDTH 3.0-4.5M 4.5-6.0M 2.0-3.0M 3.0-4.5M 2.0-3.0M 3.0-4.5M 4.5-6.0M 2.0-3.0M 3.0-4.5M 2.0-3.0M
1-boom Jumbo 3.18 4.10 2.94 3.52 2.94 $65.12 $43.61 $56.22 $40.27 $48.24 $40.27
LHD Scooptram 5.95 7.93 4.21 5.95 4.21 $65.96 $82.50 $110.07 $58.47 $82.50 $58.47
ANFO Loader 0.95 1.10 0.80 0.95 0.80 $43.69 $8.73 $10.11 $7.35 $8.73 $7.35
Scissor Truck 1.55 1.55 1.55 1.55 1.55 $35.11 $11.45 $11.45 $11.45 $11.45 $11.45
Rockbolter 0.60 0.68 0.58 0.66 0.58 $67.99 $8.58 $9.72 $8.29 $9.44 $8.29
Auxiliary Fan 22.18 27.02 21.19 25.27 22.60 $0.89 $4.13 $5.03 $3.95 $4.71 $4.21
Water Pump 2.68 3.60 2.44 3.02 2.44 $0.26 $0.15 $0.20 $0.13 $0.17 $0.13
Compressor 1.20 1.36 1.16 1.32 1.16 $1.77 $0.45 $0.51 $0.43 $0.49 $0.43
Hoses & Fittings 2.98 3.98 2.72 3.38 2.72 $1.31 $0.82 $1.10 $0.75 $0.93 $0.75
Small Tools & Acc. 16.64 20.27 15.90 18.96 16.95 $5.00 $17.49 $21.31 $16.72 $19.93 $17.82
Total C&F Stoping Equipment Cost / m of Breasting $177.92 $225.72 $147.81 $186.59 $149.18
Appendix H - Page 14
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
A Summary of Cut and Fill direct stoping operating costs are presented in Table 1.18.
TABLE 0.18
SUMMARY OF CUT & FILL DIRECT STOPING OPERATING COSTS / M OF BREASTING
Cost/Meter Breast Cost/Tonne
Item
Class 1 Class 2 Class 3 Class 1 Class 2 Class 3
Breast Width 3.0-4.5m 4.5-6.0m 2.0-3.0m 3.0-4.5m 2.0-3.0m 3.0-4.5m 4.5-6.0m 2.0-3.0m 3.0-4.5m 2.0-3.0m
Direct labour $71.05 $85.57 $73.23 $85.44 $75.73 $1.79 $1.54 $2.77 $2.15 $2.86
Equipment cost $177.92 $225.72 $147.81 $186.59 $149.18 $4.49 $4.07 $5.59 $4.71 $5.64
Drill bits and steel $93.63 $112.56 $77.45 $96.38 $77.45 $2.36 $2.03 $2.93 $2.43 $2.93
Explosives $101.74 $118.11 $81.54 $101.74 $81.54 $2.57 $2.13 $3.08 $2.57 $3.08
Ground support $100.53 $119.12 $137.81 $161.00 $186.63 $2.54 $2.15 $5.21 $4.06 $7.06
Unconsolidated
$59.47 $83.26 $39.65 $59.47 $39.65 $1.50 $1.50 $1.50 $1.50 $1.50
backfill
Piping $22.20 $22.20 $22.20 $22.20 $22.20 $0.56 $0.40 $0.84 $0.56 $0.84
Electrical $31.63 $31.63 $31.63 $31.63 $31.63 $0.80 $0.57 $1.20 $0.80 $1.20
Ventilation $59.89 $59.89 $59.89 $59.89 $59.89 $1.51 $1.08 $2.27 $1.51 $2.27
Miscellaneous $3.92 $3.92 $3.92 $3.92 $3.92 $0.10 $0.07 $0.15 $0.10 $0.15
Total $721.98 $861.98 $675.14 $808.26 $727.83 $18.21 $15.53 $25.54 $20.39 $27.54
A summary of Long Hole Sill Pillar Recovery mining parameters is presented in Table 1.19.
TABLE 0.19
SUMMARY OF LH SILL PILLAR RECOVERY MINING PARAMETERS
PARAMETER VALUE UNIT
Average Height 14.0 m
Width 4.5 m
Arch Factor 98% %
Arch Radius 0.3 m
Face area 61.7 sq.m
Dip 90 deg.
Drill & Blast Strike length 4.8 m
Blast length 14.0 m
Load length 14.0 m
Bootleg length 0.7 m
Advance 13.3 m
Overbreak factor 10% %
Swell factor 35% %
Insitu Density 2.52 t/ m3
Appendix H - Page 15
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.19
SUMMARY OF LH SILL PILLAR RECOVERY MINING PARAMETERS
PARAMETER VALUE UNIT
In-situ volume per blast 323 m3
Loose volume per raise 436 m3
Tonnes per blast 814 tonnes
Tonnes per meter strike length 171 tonnes
A summary of the Sill Pillar Recovery drilling parameters and productivities, using a long
hole drill jumbo, is presented in Table 1.20.
TABLE 0.20
SUMMARY OF LH SILL PILLAR RECOVERY DRILLING PARAMETERS
PARAMETER VALUE UNITS
No. drills 1
Blast Hole dia. 64 mm
Relief Hole dia. 102 mm
Number of Holes:
Blast Holes 8 holes
Total Holes 8 holes
Drill & Blast Strike length 4.8 m
Total Drilled Metres - 64mm 67 m
Drilling Productivity:
Penetration Rate - 64mm 0.5 m/min
Penetration Rate - 102mm 0.4 m/min
Drilling time-64mm 133 min
Drilling time-102mm 0.000 min
Collar Hole 2 min/hole
Align and Level 3 min/hole
Reposition boom 5 min/hole
Add/Retact Rods 1 min/rod
Change Bits 2.5 min/bit
Cycle auxiliary 0.2 min/hole
Change shank 10 min/rd
Total auxiliary time 112 min/rd
Travel/Setup 25 min
Teardown/Demobilize 25 min
Total drilling cycle 295 min
Drilling cycle (in 50 min hours) 5.9 hrs
Appendix H - Page 16
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
A summary of Long Hole Sill Pillar Recovery OPEX drill cost estimates are presented in
Table 1.21.
TABLE 0.21
SUMMARY OF LH SILL PILLAR RECOVERY DRILLING COST ESTIMATES PER
METRE OF STRIKE LENGTH
LIFE UNITS/M STRIKE UNIT COST/M STRIKE
ITEM
(M/UNIT) LENGTH PRICE LENGTH
Coupling T38 1200 0.01 $34.00 $0.40
Rod 6ft x T38
300 0.06 $226.00 $13.71
MF
64mm Drop
100 0.14 $106.00 $14.84
center bit
Miscellaneous/ waste $3.54
Total Drilling Supplies $32.49
A summary of Long Hole Sill Pillar Recovery blasting productivities and powder factors is
presented in Table 1.22.
TABLE 0.22
SUMMARY OF LH SILL PILLAR RECOVERY BLASTING PRODUCTIVITIES AND
POWDER FACTORS
ITEM VALUE UNITS
Travel, clean face, setup 30 min
Clean hole 3 min/hole
Plug hole 3 min/hole
Insert primer 2 min/hole
Load hole 1 min
Load stemming 2 min/hole
Load time per hole 11 min
Tie-in and cap 2 min
Total loading time 104 min
Clean up and leave 10 min
Shoot and blow smoke 15 min
Blasting cycle (in 50 min hours) 3.0 hrs
0.44 kg/tonne
Powder factor
0.96 lb/tonne
A summary of Long Hole Sill Pillar Recovery OPEX blasting cost estimates are presented in
Table 1.23.
Appendix H - Page 17
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 1.23
SUMMARY OF LH SILL PILLAR RECOVERY BLASTING COST ESTIMATES PER
METRE OF STRIKE LENGTH
UNI UNITS/BLA UNITS/M STRIKE UNIT COST/M STRIKE
ITEM
T ST LENGTH PRICE LENGTH
Bulk ANFO kg 343 72 1.01 $72.75
Geldyne kg 13 3 5.53 $15.34
Exel MS detonator
each 8 2 3.26 $5.48
4m
B-Line m 20 4 0.49 $2.05
Connecting wire
spool 1 0 1.79 $0.38
50m
Miscellaneous/waste @10% $9.60
A summary of Long Hole Sill Pillar Recovery direct labour costs are presented in Table 1.24.
TABLE 0.24
SUMMARY OF LH SILL PILLAR RECOVERY DIRECT LABOUR COSTS / M OF
STRIKE LENGTH
Units/blast Units/m Strike Length Unit Price Cost/m Strike Length
Discipline
(hrs) (hrs) (US$/hr) (US$/m)
Drilling 15.76 3.31 $8.93 $29.58
Blasting 7.99 1.68 $6.70 $11.25
Mucking 11.49 2.42 $8.61 $20.80
Total Labour $61.63
Summary of Long Hole Sill Pillar Recovery equipment operating costs are presented in
Table 1.25
TABLE 0.25
SUMMARY OF LH SILL PILLAR RECOVERY EQUIPMENT OPERATING COSTS /
M OF STRIKE LENGTH
UNITS/BL UNITS/M OF STRIKE UNIT COST/M OF STRIKE
EQUIPMEN
AST LENGTH COST LENGTH
T
(HRS) (HRS) (US$/HR) (US$/M)
Longhole
5.91 1.24 $52.27 $64.94
Drill
Appendix H - Page 18
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 0.25
SUMMARY OF LH SILL PILLAR RECOVERY EQUIPMENT OPERATING COSTS /
M OF STRIKE LENGTH
UNITS/BL UNITS/M OF STRIKE UNIT COST/M OF STRIKE
EQUIPMEN
AST LENGTH COST LENGTH
T
(HRS) (HRS) (US$/HR) (US$/M)
LHD 8.62 1.81 $65.96 $119.55
ANFO
3.00 0.63 $43.69 $27.54
Loader
Water Pump 5.91 1.24 $0.26 $0.32
Hoses &
5.91 1.24 $1.31 $1.63
Fittings
Total Equipment Operating Cost $213.99
A summary of Long Hole Sill Pillar Recovery direct operating costs are presented in Table
1.26.
TABLE 1.26
SUMMARY OF LONG HOLE SILL PILLAR RECOVERY DIRECT OPERATING
COSTS / M OF STRIKE LENGTH
ITEM COST/M OF STRIKE LENGTH COST/TONNE
Labour $62 $0.36
Equipment cost $214 $1.25
Drill steel and bits $32 $0.19
Explosives $106 $0.62
Total $414 $2.42
1.2.3 Labour
TABLE 1.27
SUMMARY OF COMPANY STOPING DAILY LABOUR
YR-1 YR+1 YR+1 YR+1 YR+1 YR+2 YR+2 YR+2 YR+2
Crew / Period YR+3 YR+4 YR+5 YR+6 YR+7
(Q4) (Q1) (Q2) (Q3) (Q4) (Q1) (Q2) (Q3) (Q4)
Drilling 1 5 5 7 7 7 7 7 7 13 13 13 13 13
Blasting 0 2 2 3 3 3 3 3 3 6 6 6 6 6
Ground support 1 11 12 15 15 15 15 15 15 29 29 29 29 29
Services 0 3 3 4 4 4 4 4 4 8 8 8 8 8
Appendix H - Page 19
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
Mucking 0 4 4 5 5 5 5 5 5 11 11 11 11 11
Subtotal 3 25 27 33 33 33 33 33 33 67 67 67 67 67
Appendix H - Page 20
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 1.28
SUMMARY OF COMPANY INDIRECT DAILY LABOUR REQUIREMENTS
DESCRIPTION / YR- YR- YR- YR- YR+1( YR+1( YR+1( YR+1( YR+2( YR+2( YR+2( YR+2( YR YR YR YR YR
PERIOD 1(Q1) 1(Q2) 1(Q3) 1(Q4) Q1) Q2) Q3) Q4) Q1) Q2) Q3) Q4) +3 +4 +5 +6 +7
Mine Administration
Warehouse 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
Clerk 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Labourer 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Dry Man 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Subtotal 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
Mine Staff
Mine Super/Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Captain 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Shift Foreman 3 3 3 3 3 3 3 3 3 3 3 3 3 3
M. Eng./Planner 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Vent/Survr Tech 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Mine Geologist 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Sampler 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Geotech Eng 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Project Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Dia. Drill Foreman 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Maint. Super 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Safety /Trainer 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Subtotal 6 6 10 18 18 18 18 18 18 18 18 18 18 18 18 18 18
Service Crew
Lead Mechanic 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Mechanics 5 11 12 12 12 14 14 14 14 14 14 14 14 14
Lead Electrician 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Electrician 3 5 5 5 5 5 5 5 5 5 5 5 5 5
Services Leader 1 1 1 1 1 1 1 1 1 1 1 1 1
Grader Operator 1 1 1 1 1 1 1 1 1 1 1 1 1
TABLE 1.28
SUMMARY OF COMPANY INDIRECT DAILY LABOUR REQUIREMENTS
DESCRIPTION / YR- YR- YR- YR- YR+1( YR+1( YR+1( YR+1( YR+2( YR+2( YR+2( YR+2( YR YR YR YR YR
PERIOD 1(Q1) 1(Q2) 1(Q3) 1(Q4) Q1) Q2) Q3) Q4) Q1) Q2) Q3) Q4) +3 +4 +5 +6 +7
Pump Person 1 1 1 1 1 1 1 1 1 1 1 1 1
Construction. Leader 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Construction. Person 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6
Mine Labourer 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4
Service
2 3 3 3 3 3 3 3 3 3 3 3 3 3
EquipmentOperator
Subtotal 11 24 36 37 37 37 39 39 39 39 39 39 39 39 39
Grand Total 15 15 30 51 63 64 64 64 66 66 66 66 66 66 66 66 66
A summary of company and contractor indirect labour costs is presented in Table 1.29.
TABLE 1.29
SUMMARY OF COMPANY AND CONTRACTOR INDIRECT LABOUR COSTS – US$(000’S)
YR YR YR YR
DESCRIPTION / PERIOD YR-1(Q1) YR-1(Q2) YR-1(Q3) YR-1(Q4) YR+1(Q1) YR+1(Q2) YR+1(Q3) YR+1(Q4) YR+2(Q1) YR+2(Q2) YR+2(Q3) YR+2(Q4) YR+3
+4 +5 +6 +7
Mine Administration
Warehouse Person 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 46.5 46.5 46.5 46.5 39.4
Clerk 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 26.8 26.8 26.8 26.8 22.7
Labourer 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 26.8 26.8 26.8 26.8 22.7
Dry Man 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 26.8 26.8 26.8 26.8 22.7
Mine Staff
Mine Super 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 72.2 72.2 72.2 72.2 61.1
Captain. 11.9 11.9 11.9 11.9 11.9 11.9 11.9 11.9 11.9 47.5 47.5 47.5 47.5 40.2
Shift Boss 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 108 108 108 108 91.6
Mine Eng./Plan 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 115.3 115.3 115.3 115.3 97.6
Vent/Sur. Tech 18.2 18.2 18.2 18.2 18.2 18.2 18.2 18.2 18.2 18.2 72.7 72.7 72.7 72.7 61.6
Mine Geologist 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 115.3 115.3 115.3 115.3 97.6
Tech/Sampler 18.2 18.2 18.2 18.2 18.2 18.2 18.2 18.2 18.2 72.7 72.7 72.7 72.7 61.6
Geotech. Eng. 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 72.2 72.2 72.2 72.2 61.1
TABLE 1.29
SUMMARY OF COMPANY AND CONTRACTOR INDIRECT LABOUR COSTS – US$(000’S)
YR YR YR YR
DESCRIPTION / PERIOD YR-1(Q1) YR-1(Q2) YR-1(Q3) YR-1(Q4) YR+1(Q1) YR+1(Q2) YR+1(Q3) YR+1(Q4) YR+2(Q1) YR+2(Q2) YR+2(Q3) YR+2(Q4) YR+3
+4 +5 +6 +7
Proj. Engineer 14.4 14.4 14.4 14.4 14.4 14.4 14.4 14.4 14.4 57.6 57.6 57.6 57.6 48.8
Dia. Drill Boss 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 36.0 36.0 36.0 36.0 30.5
Maint. Super 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 18.0 72.2 72.2 72.2 72.2 61.1
Safety /Trainer 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 36.0 36.0 36.0 36.0 30.5
Service Crew
Lead Mechanic 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 37.5 37.5 37.5 37.5 31.8
Mechanics 24.9 49.7 52.0 52.0 52.0 56.5 56.5 56.5 56.5 253 253.1 253.1 253.1 214.3
Lead Electrician 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 18.7 18.7 18.7 18.7 15.9
Electrician 5.8 12.9 11.0 12.3 12.3 15.9 15.9 15.9 15.9 71.8 71.8 71.8 71.8 60.8
Services Leader 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 18.7 18.7 18.7 18.7 15.9
Grader Operator 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 15.5 15.5 15.5 15.5 13.1
Pump Person 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 13.4 13.4 13.4 13.4 11.4
Constr. Leader 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 19.0 19.0 19.0 19.0 16.1
Constr. Person 27.1 27.1 27.1 27.1 27.1 27.1 27.1 27.1 27.1 27.1 109 108.5 108.5 108.5 91.9
Mine Labourer 13.4 13.4 13.4 13.4 13.4 13.4 13.4 13.4 13.4 13.4 53.7 53.7 53.7 53.7 45.4
Ser. Equip. Oper. 7.8 11.6 11.6 11.6 11.6 11.6 11.6 11.6 11.6 46.5 46.5 46.5 46.5 39.4
Grand Total 116.5 116.5 207.0 349.0 396.8 397.1 398.4 398.4 406.6 406.6 406.6 406.6 1661 1,661 1,661 1,661 1,407
Total OPEX 349.0 396.8 397.1 398.4 398.4 406.6 406.6 406.6 406.6 1,661 1,661 1,661 1,661 1,407
OPEX - US$/t 42.96 6.17 5.61 4.55 4.55 4.65 4.65 4.65 4.65 2.37 2.37 2.37 2.37 2.37
Total CAPEX 116.5 116.5 207.0
Cont. Ind. Labour 57.1 57.1 57.1 228.3 228.3 228.3 228.3 228.3 228.3 228.3 228.3 228.3 913.4 913.4 913.4 913.4 773.5
Cont. Ind. Lab - US$/t 28.11 3.55 3.22 2.61 2.61 2.61 2.61 2.61 2.61 1.30 1.30 1.30 1.30 1.30
All major pieces of company underground equipment will be leased over a 3 year period. These costs do not include a 15% down
payment CAPEX cost. A summary of the leasing cost estimates are presented in Table 1.30.
TABLE 1.30
SUMMARY OF COMPANY LEASED UNDERGROUND EQUIPMENT – US$(000’S)
EQUIPMENT UNITS YR-1(Q4) YR+1(Q1) YR+1(Q2) YR+1(Q3) YR+1(Q4) YR+2(Q1) YR+2(Q2) YR+2(Q3) YR+2(Q4) YR+3 YR+4
Single boom jumbo 6 45.1 180.4 225.5 225.5 225.5 270.6 270.6 270.6 270.6 1,082.4 180.4
Long hole drill 1 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 220.0
Production 3.5m3 LHD 4 43.4 86.9 130.3 130.3 130.3 173.8 173.8 173.8 173.8 695.2 173.8
3
2.0m scooptram 3 28.6 85.8 85.8 85.8 85.8 85.8 85.8 85.8 85.8 314.6
Scissor truck 3 51.7 103.4 103.4 103.4 103.4 155.1 155.1 155.1 155.1 620.4 155.1
Maintenance/lub truck 1 41.8 41.8 41.8 41.8 41.8 41.8 41.8 41.8 41.8 125.4
Shotcrete truck 2 71.1 142.2 142.2 142.2 142.2 142.2 142.2 142.2 142.2 497.8
Shotcrete delivery truck 2 41.8 83.6 83.6 83.6 83.6 83.6 83.6 83.6 83.6 292.6
Ground support bolter 3 55.0 110.0 110.0 110.0 110.0 165.0 165.0 165.0 165.0 660.0 165.0
Personnel carrier 2 20.3 40.7 40.7 40.7 40.7 40.7 40.7 40.7 40.7 142.3
Utility tractor 3 2.9 5.8 5.8 5.8 5.8 8.6 8.6 8.6 8.6 34.6 8.6
U/G pickup truck 6 5.7 17.1 17.1 17.1 17.1 17.1 17.1 17.1 17.1 62.6
Grader 1 12.2 12.2 12.2 12.2 12.2 12.2 12.2 12.2 12.2 36.6
Total - US$(000's) 419.7 964.8 1,053.4 1,053.4 1,053.4 1,251.5 1,251.5 1,251.5 1,251.5 4,784.5 682.9
Total/t (US$/t) 51.65 15.00 14.87 12.04 12.04 14.30 14.30 14.30 14.30 6.83 0.98
TABLE 1.32 SUMMARY OF COMPANY INDIRECT EQUIPMENT OPERATING COST ESTIMATES – US$(000’S)
YR-1 YR-1 YR-1 YR-1 YR+1 YR+1 YR+1 YR+1( YR+2 YR+2 YR+2 YR+2
Equipment Units YR+3 YR+4 YR+5 YR+6 YR+7
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4) Q1 Q2 Q3 Q4
Lub truck 1 30.3 30.3 30.3 30.3 30.3 30.3 30.3 30.3 30.3 121.2 121.2 121.2 121.2 102.6
Pers. Carrier 2 16.4 32.8 32.8 32.8 32.8 32.8 32.8 32.8 32.8 131.4 131.4 131.4 131.4 111.2
Tractor 3 15.8 31.5 31.5 31.5 31.5 47.3 47.3 47.3 47.3 189.0 189.0 189.0 189.0 160.1
Pickup Truck 6 15.8 47.3 47.3 47.3 47.3 47.3 47.3 47.3 47.3 189.0 189.0 189.0 189.0 160.1
Grader 1 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 84.0 84.0 84.0 84.0 71.1
Dia. Drill 2 25.7 25.7 25.7 25.7 25.7 25.7 25.7 25.7 25.7 102.6 102.6 102.6 102.6 86.9
Surface Fans 5 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 37.6 37.6 37.6 37.6 31.8
Main Pumps 4 2.7 2.7 2.7 2.7 2.7 2.7 2.7 10.9 10.9 10.9 10.9 9.2
Refuge Sta. 5 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.4 0.4 0.4 0.4 0.4
Elec. Power 48.9 48.9 65.1 195.4 195.4 195.4 195.4 195.4 195.4 195.4 195.4 195.4 781.8 781.8 781.8 781.8 662.0
Total 48.9 48.9 65.1 329.8 393.5 396.2 396.2 396.2 412.0 412.0 412.0 412.0 1,648 1,648 1,648 1,648 1,396
OPEX Total/t (US$/t) 40.60 6.12 5.59 4.53 4.53 4.71 4.71 4.71 4.71 2.35 2.35 2.35 2.35 2.35
All ore, development waste and backfill haulage will be by a haulage contractor. It is
assumed that as mining progresses, and backfill is required at that time, development waste
will be hauled directly into the stopes as backfill, at no extra cost to the company. A
summary of estimated contractor haulage rates, per cubic metre, is presented in Table 1.33.
TABLE 1.33
SUMMARY OF CONTRACTOR ESTIMATED HAULAGE RATES
Haulage Route US$/m3
Development Waste to Portal Stockpile 7.78
Ore U/G to Plant 8.04
Plant Backfill to U/G 6.19
Portal Waste Stockpile to UG 5.13
TABLE 1.34
SUMMARY OF CONTRACTOR ESTIMATED HAULAGE SCHEDULE AND COSTS – (000’S)
Haulage Route YR-1 (Q1) YR-1 (Q2) YR-1 (Q3) YR-1 (Q4) YR1 (Q1) YR1 (Q2) YR1 (Q3) YR1 (Q4) YR2 (Q1) YR2 (Q2) YR2 (Q3) YR2 (Q4) YR3 YR4 YR5 YR6 YR7
Cubic Metres (000’s)
Ore U/G to Plant 4.4 34.5 37.9 46.9 46.9 46.9 46.9 46.9 46.9 375 375 375 375 318
Devel Waste To Portal Stockpile 6.5 13.0 17.5 29.4 11.4 2.8 9.7
Portal Waste Stockpile to UG 11.7 16.9 6.6 12.3 7.5 132 107 85 65 95
Plant Backfill to U/G 97 132 132 112
Cost – US$(000’s)
Ore U/G to Plant 35 277 305 377 377 377 377 377 377 3,014 3,014 3,014 3,014 2,552
Devel Waste To Portal Stockpile 51 101 137 229 88 22
Portal Waste Stockpile to UG 60 86 34 63 38 678 548 434 333 485
Plant Backfill to U/G 599 817 817 692
Total 51 101 137 264 365 327 437 463 410 440 415 377 3,692 4,161 4,266 4,164 3,729
Total CAPEX – US$(000’s) 51 101 137 203 79 19
Total OPEX 61 286 308 437 463 410 440 415 377 3,692 4,161 4,266 4,164 3,729
OPEX US$/t 7.48 4.45 4.34 4.99 5.29 4.69 5.03 4.74 4.31 5.27 5.94 6.09 5.95 6.29
Appendix H - Page 28
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
Two stope development headings are expensed. These are lift attack ramps and cross-cut development to mineral lenses. A summary
of expensed stope development schedule and OPEX cost estimates are presented in Table 1.35.
TABLE 1.35
SUMMARY OF EXPENSED STOPE DEVELOPMENT SCHEDULE AND COSTS – (000’S)
HEADING YR-1 (Q4) YR1 (Q1) YR1 (Q2) YR1 (Q3) YR1 (Q4) YR2 (Q1) YR2 (Q2) YR2 (Q3) YR2 (Q4) YR3 YR4 YR5 YR6 YR7
Development Metres
Lift attack ramps 263 263 263 263 263 263 263 263 263 1,841 1,578 1,841 1,578 1,578
Cross-cuts to lenses 91 91 91 91 91 91 0 180 180 800 679 69 425 81
Total 4.5mx4.5m Eq. 354 354 354 354 354 354 263 443 443 2,641 2,257 1,910 2,003 1,659
Cost @ 1,436.16/m – US$(000’s)
Lift attack ramps 378 378 378 378 378 378 378 378 378 2,644 2,266 2,644 2,266 2,266
Cross-cuts to lenses 131 131 131 131 131 131 0 259 259 1,149 976 99 611 117
Total – US$(000’s) 509 509 509 509 509 509 378 636 636 3,793 3,242 2,743 2,877 2,383
Total US$/t 62.65 7.91 7.19 5.82 5.82 5.82 4.32 7.27 7.27 5.42 4.63 3.92 4.11 4.02
Appendix H - Page 29
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
A total of twenty OPEX US$/t costs were estimated based on the following classifications:
Appendix H - Page 30
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 1.36
SUMMARY OF OPEX COST ESTIMATES
OPEX Classification
Gr Sup. Class 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 3 3 3 3
2.0-3.0m Wide Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
3.0-4.5m Wide Yes Yes Yes Yes Yes Yes Yes
4.5-6.0m Wide Yes Yes Yes
C&F Mining Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
LH 12m H Yes Yes Yes Yes Yes Yes
LH-16m H Yes
Sill Yes Yes Yes Yes Yes Yes
Uncon Backfill Yes Yes Yes Yes Yes
Cons Backfill Yes Yes Yes Yes Yes Yes Yes Yes
Mineable Resources by OPEX Classification
Tonnes (000’s) 701 59 44 543 77 85 371 26 23 371 26 23 569 23 22 10 870 94 70 51 4,061
Au (g/t) 3.08 3.18 4.11 1.03 1.20 1.55 2.09 1.79 1.46 2.09 1.79 1.46 1.14 0.69 1.02 2.13 1.90 1.59 2.35 3.88 1.95
Ag (g/t) 137 135 122 282 259 255 152 174 135 152 174 135 403 223 275 121 154 180 107 122 207
AgEq (g/t) 353 358 409 354 343 363 299 299 234 299 299 234 479 271 342 270 286 292 271 394 342
OPEX Details by OPEX Classification– US/t
Direct Labour 1.79 2.14 0.36 1.54 1.83 0.36 2.77 3.40 0.36 2.77 3.40 0.36 2.15 2.63 0.36 0.36 2.86 3.60 0.36 2.86 2.21
Ind. Labour 3.51 5.52 2.45 2.40 2.40 2.40 3.60 4.09 2.40 3.60 4.09 2.40 2.40 3.64 2.40 2.40 2.44 2.64 2.40 2.40 2.90
Contr. Admin 1.92 3.08 1.33 1.30 1.30 1.30 2.02 2.24 1.30 2.02 2.24 1.30 1.30 1.99 1.30 1.30 1.33 1.43 1.30 1.30 1.59
Dir Equip Op. 4.49 4.49 1.25 4.07 4.07 1.25 5.59 5.59 1.25 5.59 5.59 1.25 4.71 4.71 1.25 1.25 5.64 5.64 1.25 5.64 4.74
Equip Leasing 8.34 13.78 3.86 0.93 4.17 6.02 11.45 6.02 11.45 1.36 10.34 6.83 1.06 5.20 3.77
Ind Equip Op 3.42 5.33 2.40 2.35 2.35 2.35 3.50 3.99 2.35 3.50 3.99 2.35 2.35 3.55 2.35 2.35 2.39 2.59 2.35 2.35 2.83
Bits & Steel 2.36 2.36 0.19 2.03 2.03 0.19 2.93 2.93 0.19 2.93 2.93 0.19 2.43 2.43 0.19 0.19 2.93 2.93 0.19 2.93 2.43
Explosives 2.57 2.57 0.62 2.13 2.13 0.62 3.08 3.08 0.62 3.08 3.08 0.62 2.57 2.57 0.62 0.62 3.08 3.08 0.62 3.08 2.60
Ground Sup. 2.54 2.88 2.15 2.45 5.21 5.63 5.21 5.63 4.06 4.41 7.06 7.47 7.06 4.21
Backfill 1.50 5.94 1.50 5.94 1.50 5.94 5.94 5.94 1.50 5.94 1.50 5.94 5.94 2.20
Piping 0.56 0.56 0.40 0.40 0.84 0.84 0.84 0.84 0.56 0.56 0.84 0.84 0.84 0.62
Electrical 0.80 0.80 0.57 0.57 1.20 1.20 1.20 1.20 0.80 0.80 1.20 1.20 1.20 0.89
Ventilation 1.51 1.51 1.08 1.08 2.27 2.27 2.27 2.27 1.51 1.51 2.27 2.27 2.27 1.68
Appendix H - Page 31
TERRONERA PROJECT
PRELIMINARY FEASIBILITY STUDY
TABLE 1.36
SUMMARY OF OPEX COST ESTIMATES
Misc. 0.10 0.10 0.07 0.07 0.15 0.15 0.15 0.15 0.10 0.10 0.15 0.15 0.15 0.11
Haulage 5.23 4.66 5.57 5.97 5.58 6.10 5.54 5.01 6.12 5.54 5.01 6.12 5.96 5.06 5.27 6.29 5.96 5.47 6.19 5.95 5.71
Devel. Expensed 5.59 6.86 4.88 4.27 5.06 4.06 5.68 5.71 4.02 5.68 5.71 4.02 4.31 5.73 4.32 4.02 4.31 5.28 4.05 4.11 4.87
Total (US$/t) 46.21 62.58 22.92 32.76 41.44 18.63 51.91 63.52 18.62 56.36 63.52 18.62 38.07 55.95 24.90 18.79 45.02 55.74 18.71 48.10 43.33
Total (US$M) 32.4 3.7 1.0 17.8 3.2 1.6 19.3 1.7 0.4 20.9 1.7 0.4 21.7 1.3 0.6 0.2 39.2 5.2 1.3 2.5 176.0
Appendix H - Page 32
A summary of Terronera’s yearly OPEX costs is presented in Table 1.37.
TABLE 1.37
SUMMARY OF TERRONERA’S YEARLY OPEX COST ESTIMATES
Year Total /
Item Units
YR-1 YR+1 YR+2 YR+3 YR+4 YR+5 YR+6 YR+7 Avg.
t
Tonnes 8.1 310.2 350.9 743.5 680.7 697.1 717.4 553.2 4061.1
(000's)
Au g/t 3.69 2.76 2.60 1.96 1.90 1.63 1.90 1.56 1.95
Ag g/t 93 148 170 185 196 207 252 246 207
AgEq g/t 351 341 353 322 329 321 384 350 342
OPEX
Direct Labour US$/t 2.77 2.30 2.30 2.19 2.37 2.41 2.03 1.87 2.21
Indirect Labour US$/t 43.63 5.24 4.72 2.40 2.40 2.40 2.40 2.40 2.90
Contractor Admin Ind. Labour US$/t 28.11 2.92 2.57 1.30 1.30 1.30 1.30 1.30 1.59
Direct Equipment operating US$/t 5.59 4.93 4.97 4.69 5.02 5.07 4.44 4.16 4.74
U/G Equipment Leasing US$/t 51.65 13.30 14.30 6.83 0.98 3.77
Ind. Equip operating & Ele.
US$/t 40.60 5.06 4.63 2.35 2.35 2.35 2.35 2.35 2.83
Power
Drill steel and bits US$/t 2.93 2.59 2.61 2.41 2.60 2.61 2.22 2.05 2.43
Explosives US$/t 3.08 2.77 2.78 2.59 2.76 2.76 2.40 2.25 2.60
Ground support US$/t 5.21 3.73 3.94 3.90 4.58 5.02 4.15 3.64 4.21
Backfill Placement & Cement US$/t 3.72 3.40 2.65 2.52 2.49 2.00 1.69 1.31 2.20
Piping US$/t 0.84 0.67 0.68 0.61 0.68 0.69 0.55 0.50 0.62
Electrical Consumables US$/t 1.20 0.95 0.97 0.87 0.97 0.98 0.79 0.72 0.89
Ventilation Consumables US$/t 2.27 1.81 1.83 1.65 1.83 1.86 1.49 1.36 1.68
Miscellaneous US$/t 0.15 0.12 0.12 0.11 0.12 0.12 0.10 0.09 0.11
Haulage US$/t 7.48 4.82 4.71 5.27 5.94 6.09 5.95 6.29 5.71
Stope Development US$/t 62.65 6.56 6.15 5.39 4.63 3.92 4.11 4.02 4.87
Total OPEX/t US$/t 261.88 61.14 59.93 45.10 41.02 39.60 35.98 34.32 43.33
Total OPEX US$M 2.1 19.0 21.0 33.5 27.9 27.6 25.8 19.0 176.0