UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March
31, 2015
Commission File Number 001-34984
FIRST
MAJESTIC SILVER CORP.
(Translation of registrant's name into English)
925 West Georgia Street,
Suite 1805, Vancouver BC V6C 3L2
(Address of principal executive offices)
Indicate by check mark whether
the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Indicate by check mark if the
registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the
registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
SUBMITTED HEREWITH
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FIRST MAJESTIC SILVER CORP. |
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By: |
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/s/ Connie Lillico |
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Connie Lillico |
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Corporate Secretary |
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March 31, 2015 |
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Exhibit 99.1
FIRST MAJESTIC SILVER CORP.
Suite 1805
- 925 West Georgia Street
Vancouver, B.C., Canada V6C 3L2
Telephone: (604) 688-3033 Fax: (604) 639-8873
Toll Free: 1-866-529-2807
Web site: www.firstmajestic.com; E-mail: info@firstmajestic.com
NEWS RELEASE
New York - AG |
March 31, 2015 |
Toronto
- FR
Frankfurt
- FMV
Mexico - AG
Announces New
La Guitarra NI 43-101 Technical Report
FIRST MAJESTIC SILVER CORP. (the "Company"
or “First Majestic”) is pleased to provide a new NI 43-101 Technical Report and the initial Mineral Reserve and Resource
estimate for the La Guitarra Silver Mine located in the State of Mexico. All amounts are in U.S. dollars unless stated otherwise.
REPORTED HIGHLIGHTS
| • | Proven and Probable Reserves totalling 11.8 million ounces of silver equivalent ounces, including
9.4 million ounces of pure silver |
| • | Measured and Indicated Resources of 15.2 million ounces of silver equivalent ounces, including
11.7 million ounces of pure silver |
| • | Inferred Resources totalling 6.3 million silver equivalent ounces, including 4.7 million ounces
of pure silver |
| • | Average Reserve silver grade of 223 g/t; and an average gold grade of 1.06 g/t |
| • | Life of Mine (LOM) of 7.0 years producing an estimated total of 9.3 million ounce of silver and
45 thousand ounces of gold |
| • | LOM operating cost per tonne estimated at $48.31 per tonne, excluding G&A, sustaining costs
and exploration |
Keith Neumeyer, CEO and President, states: “since
purchasing the La Guitarra mine over two years ago, our geological and technical teams have been working diligently examining over
900 historical drill holes and drilling several additional holes in order to create what is now our new base line Reserve and Resource
estimate which now gives us a very good starting point to build on in the coming years. This large property has extremely exciting
geological potential and this first Technical Report prepared by our team points to the reason why we first decided to buy this
mine in 2012.”
The La Guitarra Silver Mine, located in historical
Temascaltepec mining district in the State of Mexico, consisting of 43 mining concessions covering 39,714 hectares (98,135 acres).
La Guitarra is comprised of two operating mines, La Guitarra and Coloso, and three past producing areas, the Nazareno, Mina de
Agua and El Rincón, which are now considered as exploration areas.
The new Mineral Resource and Mineral Reserve
estimates for La Guitarra are shown below and are classified in accordance with the CIM Definition Standards for Mineral Resources
and Mineral Reserves (May 10, 2014). Please note, First Majestic is reporting Mineral Resources inclusive of Mineral Reserves.
LA GUITARRA MINERAL RESERVES WITH AN EFFECTIVE DATE OF DECEMBER, 31, 2014 |
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Mine |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
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LA GUITARRA |
Proven (UG) |
Sulphides |
91 |
153 |
1.84 |
256 |
446 |
745 |
Probable (UG) |
Sulphides |
1,217 |
228 |
1.00 |
284 |
8,911 |
11,098 |
Total Proven and Probable (UG) |
Sulphides |
1,308 |
223 |
1.06 |
282 |
9,358 |
11,843 |
(1) Mineral Reserves have been classified in
accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference
into NI 43-101.
(2) Cut-off grade considered for sulphides was
200 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for silver
and 79% for gold.
(4) Metal payable used was 95% for silver and
95% for gold.
(5) Metal prices considered were $20 USD/oz Ag,
$1,200 USD/oz Au.
(6) Silver equivalent grade is estimated as:
Ag-Eq = Ag Grade + (Au Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of tonnes,
metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
LA GUITARRA MEASURED AND INDICATED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014 |
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Mine / Project |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
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LA GUITARRA |
Measured (UG) |
Sulphides |
121 |
170 |
2.37 |
305 |
660 |
1,185 |
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Indicated (UG) |
Sulphides |
1,029 |
335 |
1.56 |
424 |
11,078 |
14,029 |
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Total Measured and Indicated (UG) |
Sulphides |
1,150 |
318 |
1.65 |
412 |
11,738 |
15,214 |
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LA GUITARRA INFERRED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014 |
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Mine / Project |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
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LA GUITARRA |
Inferred Total (UG) |
Sulphides |
739 |
197 |
1.23 |
267 |
4,674 |
6,343 |
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(1) Mineral Resources have been classified in
accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference
into NI 43-101.
(2) Cut-off grade considered for sulphides was
180 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for silver
and 79% for gold.
(4) Metal payable used was 95% for silver and
95% for gold.
(5) Metal prices considered were $22 USD/oz Ag,
$1,350 USD/oz Au.
(6) Silver equivalent grade is estimated as:
Ag-Eq = Ag Grade + (Au Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of tonnes,
metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
(9) Measured an Indicated Mineral Resources are
reported inclusive or Mineral Reserves.
Since taking control of the property in July
2012, to the effective date of December 31, 2014 used for the Mineral Resources and Mineral Reserve estimates, First Majestic has
led an aggressive exploration program at La Guitarra which has included an extensive 35,575 metres of diamond drilling over 262
holes. The Company also commenced a plan to expand the operation from 200 tonnes per day (tpd) to 520 tpd in late 2012. This expansion
was completed in May 2013 following the installation of a spare ball mill from the La Parrilla Silver Mine and some spare flotation
tanks from the La Encantada Silver Mine.
The LOM plan is based on an annual processing
rate of 190,000 tonnes of plant feed, corresponding to approximately 520 tpd. Considering the Mineral Reserves presented above
it represents a mine life of 7 years producing an estimated 9.3 million ounces of silver plus 45 thousand ounces of gold.
LIFE OF MINE
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LOM Plan |
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La Guitarra Silver Mine |
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2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
Total |
ROM Mine Production |
kt |
187 |
190 |
190 |
190 |
190 |
190 |
171 |
1,308 |
Silver grade |
g/t Ag |
189 |
185 |
203 |
237 |
265 |
263 |
206 |
223 |
Gold grade |
g/t Au |
0.91 |
1.00 |
0.97 |
1.40 |
1.28 |
1.14 |
0.84 |
1.06 |
Silver-Equivalent grade |
g/t Ag-Eq |
239 |
241 |
257 |
315 |
336 |
327 |
253 |
282 |
Silver metal content |
M oz Ag |
1.13 |
1.13 |
1.24 |
1.45 |
1.62 |
1.61 |
1.14 |
9.31 |
Gold metal content |
k oz Au |
5.46 |
6.13 |
5.91 |
8.53 |
7.80 |
6.96 |
4.60 |
45.40 |
Silver-Equivalent metal content |
M oz Ag-Eq |
1.44 |
1.47 |
1.57 |
1.92 |
2.05 |
2.00 |
1.39 |
11.84 |
In late 2013, the Company started the development
of the Coloso mine incurring in expansionary capital expenditures in the areas of mine development, mine infrastructure and a 5
km power line. Sustaining capital expenditures throughout the projected life of mine are assumed to average $4.26 million per year,
including maintenance of the processing plant, equipment replacement in the mine, mine development, for tailings facility expansions
and infill exploration.
The sustaining capital budget includes an allocation
of an estimate of $1.0 million for the development of an 800 metre tunnel to connect the Coloso mine with the Nazareno area, in
addition, an estimate of $1.5 million for mine developing and preparation in Nazareno to bring this mine into production as a replacement
of the La Guitarra mine production after the depletion of current reserves in this area.
The Company’s
Qualified Persons recommend going forward with infill exploration works required for Nazareno and the permitting and exploration
works required for Mina de Agua in order to upgrade current resources and generate additional resources. The Company’s Qualified
Persons are of the opinion that La Guitarra property has the potential for hosting additional resources laterally at the Guitarra
vein, at depth at Coloso and laterally and at depth at, Nazareno, Mina de Agua and El Rincón. Further
exploration at Nazareno and Coloso areas may result in a near term increase in the recognized resources from this area.
Furthermore, the Mina de Agua and El Rincón
areas are highly prospective given the history of production from these areas. In the 18th century, the Mina de Agua mine and surrounding
areas were one of México's largest silver producers, generating approximately 10% of the country's total mineral wealth.
The Company’s Qualified Persons recommend the development of a 2 km tunnel from Mina de Agua to El Rincón plus a comprehensive
exploration program to develop the resources and potentially increase the delineation of resources and reserves in these areas.
In addition, a series of conceptual studies
have been conducted to investigate the potential of increasing the throughput capacity of the current La Guitarra processing plant
to 1,000 tpd. Preliminary estimates indicate a potential reduction of the operating costs driven by the economy of scale, mainly
in the processing and general and administration areas; however, the economics of the mine capacity expansion and the plant expansion
have not been completed. An increase in the annual throughput could reasonably be expected to increase the total costs but to reduce
unit operating costs. The Company’s Qualified Persons recommend continuing the conceptual studies and progressing to an internal
pre-feasibility level study to assess the economic viability of this expansion.
Mineral Resources
for the Coloso area have been estimated by Amec Foster Wheeler Americas Ltd. under the supervision of Greg Kulla, P.Geo. Mineral
Resources for La Guitarra, Nazareno and Mina de Agua areas have been estimated by First Majestic. Mineral Reserves for La Guitarra,
Coloso and Nazareno areas have been estimated by First Majestic under the supervision of Jesus M. Velador Beltran, PhD Geology.
Mineral Reserves for La Guitarra, Coloso and Nazareno areas have been estimated by First Majestic under the supervision of Ramon
Mendoza Reyes, P.Eng. Mr. Ramon Mendoza Reyes, Vice President Technical Services for First Majestic, is a "qualified person"
as such term is defined under National Instrument 43-101, and has reviewed and approved the technical information disclosed in
this news release.
First Majestic is a mining company focused on
silver production in México and is aggressively pursuing the development of its existing mineral property assets and the
pursuit through acquisition of additional mineral assets which contribute to the Company achieving its corporate growth objectives.
FOR FURTHER INFORMATION contact info@firstmajestic.com,
visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
“signed”
Keith Neumeyer, President & CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release includes certain "Forward-Looking
Statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”,
“expect”, “target”, “plan”, “forecast”, “may”, “schedule”
and similar words or expressions, identify forward-looking statements or information. These forward-looking statements or information
relate to, among other things: the price of silver and other metals; the accuracy of mineral reserve and resource estimates and
estimates of future production and costs of production at our properties; estimated production rates for silver and other payable
metals produced by us, the estimated cost of development of our development projects; the effects of laws, regulations and government
policies on our operations, including, without limitation, the laws in Mexico which currently have significant restrictions related
to mining; obtaining or maintaining necessary permits, licences and approvals from government authorities; and continued access
to necessary infrastructure, including, without limitation, access to power, land, water and roads to carry on activities as planned.
These statements reflect the Company’s
current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered
reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties
and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially
different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements
or information and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include,
without limitation: fluctuations in the spot and forward price of silver, gold, base metals or certain other commodities (such
as natural gas, fuel oil and electricity); fluctuations in the currency markets (such as the Canadian dollar and Mexican peso versus
the U.S. dollar); changes in national and local government, legislation, taxation, controls, regulations and political or economic
developments in Canada, Mexico; operating or technical difficulties in connection with mining or development activities; risks
and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures, cave-ins and flooding); risks relating to the credit worthiness or financial
condition of suppliers, refiners and other parties with whom the Company does business; inability to obtain adequate insurance
to cover risks and hazards; and the presence of laws and regulations that may impose restrictions on mining, including those currently
enacted in Mexico; employee relations; relationships with and claims by local communities and indigenous populations; availability
and increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, including
the risks of obtaining necessary licenses, permits and approvals from government authorities; diminishing quantities or grades
of mineral reserves as properties are mined; the Company’s title to properties; and the factors identified under the caption
“Risk Factors” in the Company’s Annual Information Form, under the caption “Risks Relating to First Majestic's
Business”.
Investors are cautioned against attributing
undue certainty to forward-looking statements or information. Although the Company has attempted to identify important factors
that could cause actual results to differ materially, there may be other factors that cause results not to be anticipated, estimated
or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information
to reflect changes in assumptions or changes in circumstances or any other events affecting such statements or information, other
than as required by applicable law.
Exhibit 99.2
First Majestic Silver Corp., La Guitarra
Silver Mine,
Temascaltepec, México, NI 43-101 Technical Report on
Mineral Resource and Mineral Reserve Update
Temascaltepec, Estado de México, México
UTM zone 14Q, 386,556 E and 2,107,470 N
Ramon Mendoza Reyes, P.Eng. |
Vice President Technical Services |
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First Majestic Silver Corp. |
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Maria E. Vazquez Jaimes, P.Geo. |
Geological Database Manager |
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First Majestic Silver Corp. |
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Jesus M. Velador Beltran, QP |
Regional Exploration Manager |
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First Majestic Silver Corp. |
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Gregory Kenneth Kulla, P.Geo. |
Principal Geologist |
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Amec Foster Wheeler Americas Limited |
Effective date: March 15th, 2015
CERTIFICATE OF QUALIFIED PERSON
Ramon Mendoza Reyes, P.Eng.
Vice President Technical Services
First Majestic Silver Corp.
925 West Georgia Street, Suite 1805
Vancouver, BC, Canada, V6C 3L2
Tel: +1 (604) 639-8850
rmendoza@firstmajestic.com
I, Ramon Mendoza Reyes, P.Eng., am employed
as Vice President Technical Services with First Majestic Silver Corp.
This certificate applies to the technical
report entitled “Technical Report for the La Guitarra Silver Mine, Temascaltepec, Mexico” that has an effective date
of 15 March 2015 (the “Technical Report”).
I graduated from the National Autonomous University
of Mexico with a Bachelor of Mining Engineering degree in 1989, and also obtained a Master of Science degree in Mining and Earth
Systems Engineering from the Colorado School of Mines in Golden, Colorado, in 2003.
I am a member of the Association of Professional
Engineers and Geoscientists of British Columbia, a member of the Canadian Institute of Mining, Metallurgy and Petroleum and a member
of the Association of Mining Engineers, Metallurgist and Geologists of Mexico.
I have practiced my profession continuously
since 1990 and have been involved in precious and base metal sulphide mine projects and operations in Mexico, Canada, United States,
Chile, Peru, and Argentina.
As a result of my education, qualifications
and past relevant work experience mainly in mine operations, mine planning, mine design and mineral reserves estimates, I am a
Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).
I have visited the La Guitarra Silver Mine
on several occasions during 2014. My most recent personal inspection of the property took place on 8-10 of January 2015.
I am responsible for preparation of sections
1, 2, 3, 5, 6, 13, 15, 16, 17, 18, 19, 20, 21, 22, and the Mining and Processing aspects of sections 24, 25, 26 and 27 of the Technical
Report.
By reason of my employment with First Majestic
Services Corp., the owner of the La Guitarra Silver Mine, I am not considered independent as described in Section 1.5 of NI 43–101.
I have been involved in the La Guitarra Silver
Mine as supervisor and coordinator of all disciplines preparing information for the integration into the Technical Report, including
geology, mining and metallurgy since April 2014.
I have read NI 43–101 and the Technical
Report. I confirm that those sections of the Technical Report which I am responsible for have been prepared in compliance with
that Instrument.
As of the effective date of the Technical
Report, to the best of my knowledge, information and belief, those sections of the Technical Report which I am responsible for
contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
“Signed and sealed”
Ramon Mendoza Reyes, P.Eng.
Dated: 31 March 2015
CERTIFICATE OF QUALIFIED PERSON
Maria Elena Vazquez Jaimes, P.Geo.
Geological Database Manager
First Majestic Silver Corp.
925 West Georgia Street, Suite 1805
Vancouver, BC, Canada, V6C 3L2
Tel: +1 (604) 639-8816
maria@firstmajestic.com
I, Maria Elena Vazquez Jaimes, P.Geo., am
employed as Geological Database Manager with First Majestic Silver Corp. since November 2013.
This certificate applies to the technical
report entitled “Technical Report for the La Guitarra Silver Mine, Temascaltepec, Mexico” that has an effective date
of 15 March 2015 (the “Technical Report”).
I graduated from the National Autonomous University
of Mexico with a Bachelor in Geological Engineering degree in 1995, and also obtained a Master of Science degree in Geology from
the Ensenada Scientific Research Center and High Education, Ensenada, BC, Mexico, in 2000.
I am a member of the Association of Professional
Engineers and Geoscientists of British Columbia and member of the Canadian Institute of Mining, Metallurgy and Petroleum.
I have practiced my profession continuously
since 1995. As a Geologist and Geological Database manager, I have been involved in precious and base metal sulphide mine projects
and operations in Canada, Mexico, Peru, Ecuador, and Argentina.
As a result of my education, qualifications
and past relevant work experience in geological database management, I am a Qualified Person as defined in National Instrument
43–101 Standards of Disclosure for Mineral Projects (NI 43–101).
I have visited the La Guitarra Silver Mine
on several occasions in 2013 and 2014. My most recent personal inspection of the property took place from 1-3 of December 2014.
I am responsible for preparation of sections
11 and 12 of the Technical Report.
By reason of my employment with First Majestic
Services Corp., the owner of the La Guitarra Silver Mine, I am not considered independent as described in Section 1.5 of NI 43–101.
I have been involved in the La Guitarra Silver
Mine as geological database manager for the resource estimation work and for the integration of sections 11 and 12 of Technical
Report since November 2013.
I have read NI 43–101 and the Technical
Report. I confirm that those sections of the Technical Report which I am responsible for have been prepared in compliance with
that Instrument.
As of the effective date of the Technical
Report, to the best of my knowledge, information and belief, those sections of the Technical Report which I am responsible for
contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
“Signed and sealed”
Maria Elena Vazquez Jaimes.
Dated: 31 March 2015
CERTIFICATE OF QUALIFIED PERSON
Jesus M. Velador Beltran, QP.
Regional Exploration Manager
First Majestic Silver Corp.
Fanny Anitua, 2700. Col. Los Angeles
Durango, Dgo. Mexico, 34076
Tel: +52 (618) 811-7704
jvelador@firstmajestic.com
I, Jesus M. Velador Beltran, QP, am employed
as Regional Exploration Manager with First Majestic Silver Corp.
This certificate applies to the technical
report entitled “Technical Report for the La Guitarra Silver Mine, Temascaltepec, Mexico” that has an effective date
of 15 March 2015 (the “Technical Report”).
I graduated from the Autonomous University
of Chihuahua with a Bachelor of Geological Engineering degree in 1998, obtained a Master of Science degree in Geology from the
University of Texas at El Paso, El Paso Texas in 2003 and obtained a Philosophical Doctor degree in Geology from the New Mexico
Institute of Mining and Technology, Socorro New Mexico, in 2010.
I am a member of the Mining and Metallurgical
Society of America with QP-Geology status, a member of the Society of Economic Geologists, and a member of the Association of Mining
Engineers, Metallurgist and Geologists of Mexico.
I have practiced my profession continuously
since 1999 and have been involved in exploration and evaluation of precious and base metal sulphide prospects, projects and operations
in Mexico.
As a result of my education, qualifications
and past relevant work experience mainly in exploration, geology and evaluation of mineral projects, I am a Qualified Person as
defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).
I have visited the La Guitarra Silver Mine
on several occasions during 2013 and 2014. My most recent personal inspection of the property took place on 9-12 of February 2015.
I am responsible for preparation of sections
4, 7, 8, 9, 10, 14 for La Guitarra, Nazareno and Mina de Agua areas, 23 and geology aspects of sections 24, 25, 26 and 27 of the
Technical Report.
By reason of my employment with First Majestic
Services Corp., the owner of the La Guitarra Silver Mine, I am not considered independent as described in Section 1.5 of NI 43–101.
I have been involved in the La Guitarra Silver
Mine as supervisor and coordinator of exploration and geology disciplines preparing information for the integration into the Technical
Report since April 2014.
I have read NI 43–101 and the Technical
Report. I confirm that those sections of the Technical Report which I am responsible for have been prepared in compliance with
that Instrument.
As of the effective date of the Technical
Report, to the best of my knowledge, information and belief, those sections of the Technical Report which I am responsible for
contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
“Signed and sealed”
Jesus M. Velador Beltran, QP.
Dated: 31 March 2015
CERTIFICATE OF QUALIFIED PERSON
Greg Kulla P.Geo.
Principal Geologist, Amec Foster Wheeler Americas
Limited
111 Dunsmuir Street, Suite 400
Vancouver, BC, Canada V6B 5W3
Tel: (604) 664-3229
greg.kulla@amec.com
I, Gregory Kenneth Kulla, P.Geo., am employed
as a Principal Geologist with Amec Foster Wheeler Americas Limited.
This certificate applies to the technical
report entitled Technical Report for the La Guitarra Silver Mine, Temascaltepec, Mexico” that has an effective date of 15
March 2015 (the “Technical Report”).
I am a member of the Association of Professional
Engineers and Geoscientists of British Columbia. I graduated from the University of British Columbia with a Bachelor of Science
in Geology degree in 1988.
I have practiced my profession continuously
since 1988 and have been involved in precious and base metal disseminated sulphide deposit assessments in Canada, United States,
Australia, Mexico, Chile, Peru, and India.
As a result of my experience and qualifications,
I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI
43–101).
I visited the La Guitarra Silver Mine between
the 15th and 19th September 2014
I am responsible for preparation of Sub-sections
2.4.2, 12.1.9, 12.3.2, 14.1, 25.1, and 26.1 of the Technical Report.
I am independent of First Majestic Services
Corp. as independence is described by NI 43–101.
I have no previous involvement with the La
Guitarra project.
I have read NI 43–101 and this report
has been prepared in compliance with that Instrument.
As of the date of this certificate, to the
best of my knowledge, information and belief, the Technical Report contains all scientific and technical information related to
the Coloso deposit that is required to be disclosed to make the technical report not misleading.
“Signed and sealed”
Greg Kulla, P.Geo.
Dated: 31 March 2015
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Contents
1. |
Summary |
1-1 |
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1.1. |
Property description and ownership |
1-1 |
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1.2. |
Geology and mineralization |
1-1 |
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1.3. |
Status of exploration, development, and operations |
1-2 |
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1.4. |
Mineral Resource and Mineral Reserve estimates |
1-2 |
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1.5. |
Conclusions and Recommendations |
1-4 |
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2. |
Introduction |
2-5 |
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2.1. |
Technical Report Issuer |
2-5 |
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2.2. |
Terms of Reference |
2-5 |
|
|
|
2.3. |
Sources of Information |
2-5 |
|
|
|
2.4. |
Qualified Persons and Site Visits |
2-6 |
|
|
|
|
2.4.1. |
First Majestic Employees Site Visits |
2-7 |
|
|
|
|
|
2.4.2. |
Amec Foster Wheeler Site Visits |
2-8 |
|
|
|
|
|
2.5. |
Units and Currency and Abbreviations |
2-8 |
|
|
|
3. |
Reliance on Other Experts |
3-10 |
|
|
|
4. |
Property Description and Location |
4-11 |
|
|
|
4.1. |
Property location |
4-11 |
|
|
|
4.2. |
Mining concessions |
4-12 |
|
|
|
4.3. |
Surface Rights |
4-13 |
|
|
|
4.4. |
Permits and other liabilities |
4-14 |
|
|
|
5. |
Accessibility, Climate, Local Resources, Infrastructure and Physiography |
5-16 |
|
|
|
5.1. |
Accessibility |
5-16 |
|
|
|
5.2. |
Climate |
5-16 |
|
|
|
5.3. |
Local Resources, Infrastructure |
5-16 |
|
|
|
5.4. |
Physiography |
5-17 |
|
|
|
6. |
History |
6-18 |
|
|
|
6.1. |
Mining in Temascaltepec through 1990 |
6-18 |
|
|
|
6.2. |
Modern Mining After 1990 |
6-18 |
|
|
|
6.3. |
Corporate History |
6-19 |
|
|
|
6.4. |
First Majestic Expansion |
6-19 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
6.5. |
Modern Mining Production Statistics |
6-20 |
|
|
|
7. |
Geological Setting and Mineralization |
7-21 |
|
|
|
7.1. |
Regional Geology |
7-21 |
|
|
|
7.2. |
Local Geology and Stratigraphy |
7-22 |
|
|
|
7.3. |
Structural Geology |
7-25 |
|
|
|
7.4. |
Mineralization |
7-28 |
|
|
|
|
7.4.1. |
Comales – Nazareno system |
7-31 |
|
|
|
|
|
7.4.2. |
Coloso system |
7-31 |
|
|
|
|
|
7.4.3. |
Guitarra vein system |
7-33 |
|
|
|
|
|
7.4.4. |
Mina de Agua and El Rincón systems |
7-35 |
|
|
|
7.5. |
Hydrothermal alteration |
7-35 |
|
|
|
8. |
Deposit Types |
8-37 |
|
|
|
9. |
Exploration |
9-40 |
|
|
|
10. |
Drilling |
10-41 |
|
|
|
10.1. |
Drilling campaigns |
10-41 |
|
|
|
10.2. |
Drilling categories |
10-42 |
|
|
|
10.3. |
Core handling and storage |
10-43 |
|
|
|
10.4. |
Data collection |
10-44 |
|
|
|
|
10.4.1. |
Collar survey |
10-44 |
|
|
|
|
|
10.4.2. |
Downhole survey |
10-44 |
|
|
|
|
|
10.4.3. |
Logging and sampling |
10-44 |
|
|
|
|
|
10.4.4. |
Specific Gravity |
10-45 |
|
|
|
|
|
10.4.5. |
Core Recovery and Geotechnical logging |
10-45 |
|
|
|
11. |
Sample Preparation, Analyses, and Security |
11-47 |
|
|
|
11.1. |
2008 Sample Preparation, Analysis and Security |
11-47 |
|
|
|
11.2. |
2011 and 2012 Sample Preparation, Analysis and Security |
11-48 |
|
|
|
11.3. |
2011-2012 Sample Analysis and Assays |
11-50 |
|
|
|
11.4. |
2011 and 2012 Sample Security |
11-52 |
|
|
|
11.5. |
2014 Sample Preparation, Analysis and Security |
11-53 |
|
|
|
12. |
Data verification |
12-57 |
|
|
|
12.1. |
Data Verification Coloso Area |
12-57 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
|
12.1.1. |
Historical Data Verification |
12-57 |
|
|
|
|
|
12.1.2. |
Drilling Data Verification 2014 |
12-58 |
|
|
|
|
|
12.1.3. |
The 2014 La Guitarra Resource Database – Coloso Area |
12-58 |
|
|
|
|
|
12.1.4. |
Database Structure Verification |
12-59 |
|
|
|
|
|
12.1.5. |
Verification for transcription Errors |
12-59 |
|
|
|
|
|
12.1.6. |
QA/QC Review |
12-66 |
|
|
|
|
|
12.1.7. |
Standard Reference Material Conclusions |
12-67 |
|
|
|
|
|
12.1.8. |
Contamination Conclusions |
12-68 |
|
|
|
|
|
12.1.9. |
Amec Foster Wheeler Verification Supporting Coloso Mineral Resources |
12-69 |
|
|
|
12.2. |
Data Verification – Nazareno Area |
12-69 |
|
|
|
|
12.2.1. |
Historical Data Verification |
12-70 |
|
|
|
|
|
12.2.2. |
Drilling Data Verification 2014 |
12-70 |
|
|
|
|
|
12.2.3. |
The 2014 La Guitarra Resource Database Nazareno Area |
12-70 |
|
|
|
|
|
12.2.4. |
Database Structure Verification |
12-71 |
|
|
|
|
|
12.2.5. |
Verification for transcription Errors |
12-71 |
|
|
|
|
|
12.2.6. |
QA/QC Review |
12-77 |
|
|
|
|
12.3. |
Site Visits |
12-80 |
|
|
|
|
|
12.3.1. |
First Majestic Site Visits |
12-80 |
|
|
|
|
|
12.3.2. |
Amec Site Visits |
12-80 |
|
|
|
13. |
Metallurgical Testing |
13-82 |
|
|
|
13.1. |
Mineralogical Investigations |
13-82 |
|
|
|
13.2. |
Monthly Composites Samples |
13-83 |
|
|
|
13.3. |
Short term mining samples |
13-84 |
|
|
|
13.4. |
Long term mining samples (drill-hole samples) |
13-84 |
|
|
|
13.5. |
Metallurgical investigation |
13-85 |
|
|
|
|
13.5.1. |
Sample preparation |
13-85 |
|
|
|
|
|
13.5.2. |
Grindability Testing |
13-85 |
|
|
|
|
|
13.5.3. |
Monthly Composites Samples Testing |
13-85 |
|
|
|
|
|
13.5.4. |
Short Term Mining Samples Testing |
13-86 |
|
|
|
|
|
13.5.5. |
Long Term Mining Samples Testing |
13-87 |
|
|
|
14. |
Mineral Resource Estimates |
14-88 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
14.1. |
Mineral Resource Estimates Coloso |
14-89 |
|
|
|
|
14.1.1. |
Wireframe Model |
14-89 |
|
|
|
|
|
14.1.2. |
Assay Data and Composites |
14-91 |
|
|
|
|
|
14.1.3. |
Capping |
14-92 |
|
|
|
|
|
14.1.4. |
Exploratory Data Analysis |
14-93 |
|
|
|
|
|
14.1.5. |
Block Model Dimensions |
14-95 |
|
|
|
|
|
14.1.6. |
Assignment of Domain and Specific Gravity to Blocks |
14-96 |
|
|
|
|
|
14.1.7. |
Block Model Grade Estimate |
14-97 |
|
|
|
|
|
14.1.8. |
Block Model Validation |
14-99 |
|
|
|
|
|
14.1.9. |
Mineral Resource Classification |
14-110 |
|
|
|
|
|
14.1.10. |
Reasonable Prospects for Eventual Economic Extraction |
14-112 |
|
|
|
|
|
14.1.11. |
Mineral Resource Statement |
14-113 |
|
|
|
|
|
14.1.12. |
QP Comment on Coloso Mineral Resource Estimate |
14-114 |
|
|
|
14.2. |
Mineral Resources La Guitarra, Nazareno and Mina de Agua Areas |
14-115 |
|
|
|
15. |
Mineral Reserves Estimates |
15-120 |
|
|
|
15.1. |
Conversion of Mineral Resources to Mineral Reserves |
15-120 |
|
|
|
|
15.1.1. |
Dilution |
15-120 |
|
|
|
|
|
15.1.2. |
Mining Recovery |
15-120 |
|
|
|
15.2. |
Cut-off Grade Estimate |
15-121 |
|
|
|
|
15.2.1. |
Metal Prices |
15-121 |
|
|
|
|
|
15.2.2. |
Metallurgical recoveries |
15-121 |
|
|
|
|
|
15.2.3. |
Smelting and refining terms |
15-123 |
|
|
|
|
|
15.2.4. |
Operating costs |
15-123 |
|
|
|
15.3. |
Economic Constraints |
15-123 |
|
|
|
15.4. |
Geometric Constraints |
15-124 |
|
|
|
15.5. |
Mineral Reserves Estimates |
15-126 |
|
|
|
16. |
Mining Methods |
16-128 |
|
|
|
16.1. |
Mining Methods |
16-128 |
|
|
|
16.2. |
Coloso Mine Design |
16-129 |
|
|
|
16.3. |
Life-of-Mine Plan |
16-134 |
|
|
|
16.4. |
Manpower and Mining Fleet |
16-136 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
16.5. |
Geotechnical Considerations |
16-136 |
|
|
|
|
16.5.1. |
Ground Support |
16-138 |
|
|
|
|
|
16.5.2. |
Stope Design |
16-138 |
|
|
|
17. |
Recovery Methods |
17-140 |
|
|
|
17.1. |
Processing Method |
17-140 |
|
|
|
|
17.1.1. |
Process Flowsheet |
17-140 |
|
|
|
17.2. |
Processing Plant Configuration |
17-141 |
|
|
|
|
17.2.1. |
Plant Feed |
17-141 |
|
|
|
|
|
17.2.2. |
Crushing |
17-141 |
|
|
|
|
|
17.2.3. |
Grinding |
17-141 |
|
|
|
|
|
17.2.4. |
Sampling |
17-142 |
|
|
|
|
|
17.2.5. |
Flotation |
17-142 |
|
|
|
|
|
17.2.6. |
Concentrate Handling |
17-143 |
|
|
|
|
|
17.2.7. |
Tailings Management |
17-143 |
|
|
|
18. |
Project Infrastructure |
18-145 |
|
|
|
18.1. |
General infrastructure |
18-145 |
|
|
|
18.2. |
Mine facilities |
18-146 |
|
|
|
18.3. |
Processing facilities |
18-147 |
|
|
|
18.4. |
Power and water |
18-148 |
|
|
|
19. |
Market Studies and Contracts |
19-149 |
|
|
|
20. |
Environmental Studies, Permitting and Social or Community Impact |
20-151 |
|
|
|
20.1. |
Environmental Compliance in Mexico |
20-151 |
|
|
|
20.2. |
Pre-existent Environmental Conditions |
20-152 |
|
|
|
20.3. |
Relevant Environmental Impact Aspects |
20-152 |
|
|
|
|
20.3.1. |
Discharge of waste water, La Guitarra mine |
20-152 |
|
|
|
|
|
20.3.2. |
Discharge of waste water, Coloso mine |
20-152 |
|
|
|
|
|
20.3.3. |
Current Tailings Impoundment |
20-152 |
|
|
|
|
|
20.3.4. |
New tailings impoundment |
20-153 |
|
|
|
|
|
20.3.5. |
Operation in Tlacotal |
20-153 |
|
|
|
20.4. |
Environmental Management Program |
20-153 |
|
|
|
20.5. |
Summary of relevant environmental obligations |
20-153 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
20.6. |
Permitting |
20-154 |
|
|
|
|
20.6.1. |
Current Permits |
20-154 |
|
|
|
|
|
20.6.2. |
Permits in Process |
20-154 |
|
|
|
20.7. |
Mine Closure Plan |
20-155 |
|
|
|
21. |
Capital and Operating Costs |
21-156 |
|
|
|
21.1. |
Capital Costs |
21-156 |
|
|
|
21.2. |
Operating Costs |
21-156 |
|
|
|
22. |
Economic Analysis |
22-158 |
|
|
|
23. |
Adjacent properties |
23-159 |
|
|
|
24. |
Other Relevant Data and Information |
24-160 |
|
|
|
25. |
Interpretation and Conclusions |
25-161 |
|
|
|
25.1. |
Coloso Mineral Resource Estimate |
25-161 |
|
|
|
25.2. |
La Guitarra, Nazareno and Mina de Agua areas Mineral Resource Estimate |
25-161 |
|
|
|
25.3. |
Mineral Reserve Estimates |
25-161 |
|
|
|
25.4. |
Risks |
25-161 |
|
|
|
26. |
Recommendations |
26-163 |
|
|
|
26.1. |
Coloso Mineral Resource Estimate |
26-163 |
|
|
|
26.2. |
La Guitarra, Nazareno and Mina de Agua areas Mineral Resource Estimate |
26-163 |
|
|
|
26.3. |
Exploration Potential |
26-163 |
|
|
|
|
26.3.1. |
Coloso Exploration Potential |
26-163 |
|
|
|
|
|
26.3.2. |
Nazareno Exploration Potential |
26-164 |
|
|
|
|
|
26.3.3. |
Mina de Agua and El Rincón Exploration Potential |
26-164 |
|
|
|
26.4. |
Throughput Expansion |
26-164 |
|
|
|
26.5. |
Alternative Refining Process |
26-165 |
|
|
|
27. |
References |
27-166 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
List of Tables
Table 1.1: La Guitarra Silver Mine Consolidated Mineral Resources, with an effective date of December 31, 2014. |
1-3 |
Table 1.2: La Guitarra Silver Mine Mineral Reserves, with an effective date of December 31, 2014. |
1-4 |
Table 2.1: List of Qualified Persons |
2-7 |
Table 4.1: List of Mining Concessions |
4-13 |
Table 6.1: La Guitarra Silver Mine production figures since 1993 |
6-20 |
Table 11.1: SGS 2014 Analytical Methods and Detection Limits |
11-55 |
Table 11.2: La Guitarra Laboratory 2014 Analytical Methods and Detection Limits |
11-56 |
Table 12.1: Tables of the 2014 La Guitarra Resource Database |
12-59 |
Table 12.2: Number of Drill-holes by Drilling Campaign |
12-60 |
Table 12.3: DHSurvey Data Entry Error Frequency |
12-61 |
Table 12.4: Lithology Data Entry Error Frequency |
12-62 |
Table 12.5: Veins Data Entry Error Frequency |
12-62 |
Table 12.6: Structure Data Entry Error Frequency |
12-63 |
Table 12.7: Alteration Data Entry Frequency |
12-63 |
Table 12.8: RQDs and Core Recovery Data Entry Error Frequency |
12-64 |
Table 12.9: Sample Data Entry Error Frequency |
12-64 |
Table 12.10: Summary of Precision, Duplicate Samples, ALS Laboratory |
12-67 |
Table 12.11: Summary of Standards |
12-68 |
Table 12.12: Summary of Bias Assessed with RMA Charts |
12-68 |
Table 12.13: 2015 Resource Database-Nazareno Area |
12-71 |
Table 12.14: Drillholes by Drilling Campaign |
12-71 |
Table 12.15: DHSurvey Data Entry Error Frequency |
12-72 |
Table 12.16: Lithology Data Entry Error Frequency |
12-73 |
Table 12.17: Veins Data Entry Error Frequency |
12-74 |
Table 12.18: Structure Data Entry Error Frequency |
12-74 |
Table 12.19: Alteration Data Entry Frequency |
12-75 |
Table 12.20: RQDs and Core Recovery Data Entry Error Frequency |
12-75 |
Table 12.21: Sample Data Entry Error Frequency |
12-76 |
Table 12.22: Quality Control Samples Insertion Rates. 2008, 2001-2012 Drilling Campaigns |
12-78 |
Table 12.23: Summary of Precision. Duplicate Samples. ALS Laboratory |
12-78 |
Table 12.24: Summary of Standards |
12-79 |
Table 12.25: Summary of Bias Assessed with RMA Charts |
12-80 |
Table 14.1: Comparison of Assay and Composite Length-Weighted Statistics |
14-91 |
Table 14.2: Impact of Grade Capping |
14-92 |
Table 14.3: Summary Statistics by Domains (assay values in g/t) |
14-93 |
Table 14.5: Jessica Block Model Dimensions |
14-96 |
Table 14.6: Joya Larga Model Dimensions |
14-96 |
Table 14.7: Block Model Grade Domain Coding |
14-96 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 14.8: Estimation Parameters for Jessica Block Model |
14-98 |
Table 14.9: Estimation Parameters for Joya Larga Block Model |
14-99 |
Table 14.10: Jessica Main Zone Global Grade Bias Check |
14-103 |
Table 14.11: Coloso Indicated Mineral Resource |
14-113 |
Table 14.12: Coloso Inferred Mineral Resource |
14-113 |
Table 14.13: Coloso Sensitivity of Estimated Mineral Resources to Ag-Eq cut-off |
14-114 |
Table 14.14: Mineral Resources for La Guitarra, Nazareno and Mina De Agua Areas |
14-118 |
Table 14.15: La Guitarra Silver Mine Consolidated Mineral Resources |
14-119 |
Table 15.1: La Guitarra Operating Costs Assumptions |
15-123 |
Table 15.2: La Guitarra Silver Mine Mineral Reserves with an effective date of December
31, 2014 |
15-127 |
Table 16.1: Planned Development for Coloso Mine |
16-132 |
Table 16.2: Life-of-Mine Plan |
16-135 |
Table 16.3: Mining Fleet |
16-136 |
Table 19.1: La Guitarra concentrates treatment charges and payable terms. |
19-149 |
Table 19.2: Operational contracts in La Guitarra |
19-150 |
Table 20.1: Major permits issued to La Guitarra |
20-154 |
Table 21.1: Estimated Annual Costs |
20-157 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
List of Figures
Figure 4-1: Location map of La Guitarra Silver Mine |
4-11 |
Figure 4-2: La Guitarra Compañía Mining Concessions |
4-12 |
Figure 4-3: Map of La Guitarra Compañía Surface Rights |
4-14 |
Figure 7-1: Regional Geology |
7-22 |
Figure 7-2: Geology map of the La Guitarra property |
7-24 |
Figure 7-3: Stratigraphic column of La Guitarra property |
7-25 |
Figure 7-4: Geological Terrains boundaries |
7-26 |
Figure 7-5: Aster imagery from La Guitarra property |
7-28 |
Figure 7-6: Cross section of the central portion of Guitarra vein |
7-29 |
Figure 7-7: Mineral textures from La Guitarra epithermal veins |
7-30 |
Figure 7-8: Cross section of Jessica and Joya Larga veins, and splays with main geologic features |
7-32 |
Figure 7-9: Cross section of Jessica and Joya Larga veins |
7-33 |
Figure 7-10: Cross section of Santa Lucia vein and splays interpreted based on underground mapping and underground drilling |
7-34 |
Figure 7-11: Cross section of Santa Lucia vein and splays |
7-35 |
Figure 8-1: Geologic model for Mexican epithermal veins adapted from Buchanan (1981) |
8-38 |
Figure 8-2: Genetic model for epithermal deposits (Hedenquist et al., 1998) |
8-39 |
Figure 10-1: Drilled areas by Silvermex and First Majestic during drilling campaigns 2011 to 2014 |
10-42 |
Figure 10-2: Diamond drilling classification applied by First Majestic |
10-43 |
Figure 13-1: Typical Distribution of Minerals in La Guitarra Ore |
13-83 |
Figure 13-2: Metallurgical Recovery Comparison between the Mill Performance and the Central Lab tests |
13-84 |
Figure 13-3: Grindability test results for different samples of La Guitarra Silver Mine |
13-85 |
Figure 13-4: Silver Recovery for Short Term Mining Samples |
13-86 |
Figure 13-5: Gold Recovery for Short Term Mining Samples |
13-87 |
Figure 14-1: Oblique Plan View Looking North East of Modeled High Grade Domains |
14-90 |
Figure 14-2: Oblique Plan View Looking North West of Modeled High Grade Domains |
14-90 |
Figure 14-3: Oblique Plan View Looking South East of Modeled High Grade Domains |
14-91 |
Figure 14-4: Jessica Main Ag g/t Histograms and Probability Plot: Declustered Capped Composites |
14-94 |
Figure 14-5: Joya Larga Main Ag g/t Histograms and Probability Plot: Declustered Capped Composites |
14-95 |
Figure 14-6: Jessica Block Model Plan Section |
14-100 |
Figure 14-7: Jessica Block Model Detailed Plan Section |
14-101 |
Figure 14-8: Jessica Block Model Cross-Section |
14-101 |
Figure 14-9: Joya Larga Block Model Plan Section |
14-102 |
Figure 14-10: Jessica Block Model Detailed Plan Section |
14-102 |
Figure 14-11: Joya Larga Block Model Cross-Section |
14-103 |
Figure 14-12: Swath Plot for Ag Jessica ID3 Model |
14-104 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-13: Swath Plot for Au Jessica ID3 Model |
14-105 |
Figure 14-14: Swath Plot for Ag Joya Larga ID3 Model |
14-105 |
Figure 14-15: Swath Plot for Au Joya Larga ID3 Model |
14-106 |
Figure 14-16: Herco Grade Tonnage Curves for Jessica Main Zone ID3 Model |
14-107 |
Figure 14-17: Herco Grade Tonnage Curves for Ag ID3 Joya Larga Main Zone ID3 Model |
14-108 |
Figure14-18: Joya Larga Main Zone Ag ID3 Block Grade versus Average Ag Composite Grade in Unfolded Space |
14-109 |
Figure 14-19: Jessica Main Zone Ag ID3 Block Grade versus Average Ag Composite Grade in Unfolded Space |
14-109 |
Figure 14-20: Jessica Mineral Resource Classification. Main Domain Long Section |
14-111 |
Figure 14-21: Joya Larga Mineral Resource Classification. Main Domain Long Section |
14-111 |
Figure 14-22: Longitudinal section of the Guitarra vein showing resource blocks |
14-116 |
Figure 14-23: Longitudinal section of La Tuna vein showing resource blocks |
14-116 |
Figure 14-24: Longitudinal section of Veta Rica vein showing resource blocks |
14-117 |
Figure 14-25: Longitudinal section of Nazareno vein showing resource blocks |
14-117 |
Figure 15-1: La Guitarra 2014 Mine Production by domain |
15-122 |
Figure 15-2: Metallurgical Recovery for Silver and Gold during 2014 |
15-122 |
Figure 15-3: Longitudinal Section of the Jessica vein in Coloso showing the constraining shapes for reserve estimation |
15-124 |
Figure 15-4: Longitudinal Section of the Jessica vein in Coloso showing the reserve blocks after considering pillars and access. |
15-125 |
Figure 15-5: Longitudinal Section of the Joya Larga vein in Coloso showing the constraining shapes for reserve estimation |
15-125 |
Figure 15-6: Longitudinal Section of the Joya Larga vein in Coloso showing the reserve blocks after considering pillars and access |
15-126 |
Figure 16-1: Schematic of the cut-and-fill mining method utilized in La Guitarra |
16-128 |
Figure 16-2: Transversal section view showing the main ramps to access the Joya Larga and Jessica veins in Coloso mine |
16-130 |
Figure 16-3: Longitudinal section view of the Coloso mine showing the as-mined and the planned development. |
16-130 |
Figure 16-4: Longitudinal section view of the Jessica vein showing planned development and minable blocks. |
16-133 |
Figure 16-5: Isometric view looking southwest of the Joya Larga vein showing planned development and minable blocks. |
16-133 |
Figure 16-6: Image of Joya Larga vein drill core. |
16-137 |
Figure 16-7: Argillized volcanic tuffs encasing brecciated quartz vein. |
16-138 |
Figure 16-8: Estimated support requirement for UG-1 and UG-2, adapted from Palmstrom and Broch (2006). |
16-139 |
Figure 17-1: La Guitarra Processing Plant Flowsheet |
17-140 |
Figure 18-1: La Guitarra general infrastructure arrangement |
18-145 |
Figure 18-2: Image of the San Rafael mine portal |
18-146 |
Figure 18-3: Detail of the La Guitarra infrastructure |
18-147 |
Figure 18-4: Image of La Guitarra processing facilities |
18-148 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
This Technical Report was prepared by First
Majestic Silver Corp. (First Majestic) in compliance with the disclosure requirements of National Instrument 43-101 – Standards
of Disclosure for Mineral Projects (“NI 43-101”) to release current technical information and updated estimates of
Mineral Resources and Mineral Reserves about the La Guitarra Silver Mine.
| 1.1. | Property description and ownership |
This technical report refers to the La Guitarra
Silver Mine (the “Property” or “La Guitarra”), which consists of two underground silver-gold producing
mines: La Guitarra mine and Coloso mine located in the municipality of Temascaltepec, Estado de Mexico, Mexico. The Property is
comprised of 43 mining exploitation concessions covering 39,714 hectares (98,135 acres). The La Guitarra Silver Mine is owned and
operated by La Guitarra Compañía Minera S.A de C.V. (“La Guitarra Compañía”) which is an
indirect wholly owned subsidiary of First Majestic.
| 1.2. | Geology and mineralization |
The Property is located at the southern intersection
between the Sierra Madre Occidental and the Faja Volcanica Transmexicana (“FVTM”). The regional geology is dominated
by the Cretaceous age Guerrero Terrane volcanic sedimentary sequence, Eocene – Oligocene age volcanic rocks and intrusions
of the Sierra Madre Occidental and the Miocene – Recent age basalts and andesites of the FVTM.
The rocks of the Guerrero terrane have been
deformed by the compresional Laramide Orogeny which folded, thrust-faulted and metamorphosed the volcanic sedimentary sequence.
The Guerrero Terrane has been partially capped and intruded by volcanic rocks and intrusions of the Sierra Madre Occidental and
the FVTM. Following the Laramide Orogeny, three different extensional events reactivated mostly NW trending faults which favor
the emplacement of dikes, domes, stocks and epithermal veins.
La Guitarra property contains in excess of one
hundred epithermal veins which are either hosted by tuffs, breccias, granite, and metasedimentary rocks of the Guerrero Terrane.
The veins trend NW to E-W and are described as Intermediate Sulfidation Epithermal veins containing silver, gold and some lead
and zinc. Individual veins pinch and swell and vary in width from tens of centimetres to more than twenty metres whereas ore shoots
contained within veins have widths usually between 1 and 4 metres. Intersection of NW to E – W veins with NE and N –
S faults and fractures have been suggested as main controls for ore shoot localization.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 1.3. | Status of exploration, development, and operations |
Exploration at La Guitarra property employs
prospecting, surface and underground mapping, sampling and drilling (underground and surface). Between July 2012 and December 2014,
First Majestic drilled 35,575 metres in 262 diamond drill-holes. In 2014, First Majestic drilled 6,188 metres in 57 holes, 50 holes
were drilled from underground in La Guitarra mine and 7 holes were drilled from surface on the Guitarra NW. Most of the drilling
by First Majestic has been focused on infill and delineation of known mineralization.
Mining in the Temascaltepec area started and
has been ongoing since the 1550’s when the Spanish miners first arrived. In the 18th century, the Mina de Agua mine and surrounding
areas were one of México's largest silver producers, generating approximately 10% of the country's total mineral wealth.
Modern mining resumed in 1990 when the Compañía Minera Arauco conducted exploration and development works on the
Guitarra vein with an initial production rate of 30 tpd. In 1993, Luismin S.A. de C.V. (Luismin) acquired the property and began
consolidating the Temascaltepec District. Luismin expanded the reserve base in La Guitarra Silver Mine and increased the milling
capacity to 320 tpd.
In August of 2003, Genco Resources Ltd. (Genco)
purchased the entire Temascaltepec Mining District and the La Guitarra Silver Mine from Luismin. In 2010, Silvermex Resources Inc.
(“Silvermex”), gained control over all mineral concessions within the Temascaltepec District and on July 3, 2012, First
Majestic acquired all of the issued and outstanding shares of Silvermex, whose primary asset was the La Guitarra Silver Mine located
in Mexico State, México.
Since First Majestic became owner of the La
Guitarra Silver Mine, it commenced a plan to expand this operation from 350 tpd to 520 tpd. Construction of the foundations commenced
in the third quarter of 2012 and the expansion was completed in May 2013. In 2014, First Majestic processed a total of 186,881
tonnes of ore with average silver head grade of 127 g/t and produced a total 1,056,078 equivalent ounces of silver.
| 1.4. | Mineral Resource and Mineral Reserve estimates |
Mineral Resources from La Guitarra were classified
in order of increasing geological confidence into Inferred, Indicated and Measured categories as defined by the “CIM Definition
Standards – For Mineral Resources and Mineral Reserves” in 2014 whose definitions are incorporated by reference into
NI 43-101.
Mineral Resources for the Coloso area have been
estimated for First Majestic by Amec Foster Wheeler Americas Limited (Amec Foster Wheeler) under the supervision of Greg Kulla,
P.Geo. The estimates are based on exploration results from the 2008, 2011 and 2012 exploration campaigns and upon geologically
constrained block models. Mineral Resources for La Guitarra,
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Nazareno and Mina de Agua areas have been estimated
by First Majestic based on exploration results from 2006 to 2014 using the polygonal method to construct longitudinal sections
of the vein shoots.
Table 1.1 shows the consolidated Mineral Resources
for La Guitarra as at December 31, 2014. The tabulation includes material classified as measured, indicated, and inferred using
metal prices of $22 USD/oz for silver and $1,350 USD/oz for gold. The Mineral Resources reported herein have an effective date
of December 31, 2014. The Mineral Resources reported herein are inclusive of Mineral Reserves.
Table 1.1: La Guitarra Silver Mine Consolidated
Mineral Resources, with an effective date of December 31, 2014.
LA GUITARRA
MEASURED AND INDICATED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014
Mine
/ Project |
Category |
Mineral
Type |
k
tonnes |
Ag
(g/t) |
Au
(g/t) |
Ag-Eq
(g/t) |
Ag
(k Oz) |
Ag-Eq
(k Oz) |
|
Measured (UG) |
Sulphides |
121 |
170 |
2.37 |
305 |
660 |
1,185 |
LA GUITARRA |
Indicated
(UG) |
Sulphides |
1,029 |
335 |
1.56 |
424 |
11,078 |
14,029 |
|
Total
Measured and Indicated (UG) |
Sulphides |
1,150 |
318 |
1.65 |
412 |
11,738 |
15,214 |
LA GUITARRA
INFERRED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014
Mine
/ Project |
Category |
Mineral
Type |
k
tonnes |
Ag
(g/t) |
Au
(g/t) |
Ag-Eq
(g/t) |
Ag
(k Oz) |
Ag-Eq
(k Oz) |
|
|
|
|
|
|
|
|
|
LA
GUITARRA |
Inferred
Total (UG) |
Sulphides |
739 |
197 |
1.23 |
267 |
4,674 |
6,343 |
(1) Mineral
Resources have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose
definitions are incorporated by reference into NI 43-101.
(2) Cut-off grade considered for sulphides
was 180 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for
silver and 79% for gold.
(4) Metal payable used was 95% for silver and
95% for gold.
(5) Metal prices considered were $22 USD/oz
Ag, $1,350 USD/oz Au.
(6) Silver equivalent grade is estimated as:
Ag-Eq = Ag Grade + (Au
Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of tonnes,
metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
(9) Measured an Indicated Mineral Resources
are reported inclusive or Mineral Reserves.
(10) Mineral Resources include estimates for
the La Guitarra, Nazareno and Mina de Agua areas prepared under supervision of Jesus M. Velador Beltran, QP of First Majestic,
and estimates for the Coloso area prepared under supervision of Greg K. Kulla, P.Geo. of Amec Foster Wheeler.
La Guitarra Compañía has all necessary
permits for current mining and processing operations, including an operating license, a water use permit, an Environmental Impact
Authorization (“EIA”) for the La Guitarra and Coloso mines and exploration permits for Nazareno, Tlacotal, Trancas,
La Guitarra NW, Temascaltepec and San Simon projects.
Mineral Reserve is the economically mineable
portion of a Measured or Indicated Mineral Resource. Mineral reserves were calculated by First Majestic under the supervision and
review of Ramon Mendoza-Reyes P.Eng., Vice President, Technical Services of First Majestic, who is a qualified person as that term
is defined by NI 43-101.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Mineral Reserves are estimated after incorporating
modifying factors to the mineable blocks. The modifying factors considered in La Guitarra and Coloso mines include: dilution and
extraction factors, including mining losses, referred in this Technical Report as mining recovery. Mineral reserves for La Guitarra
as at December 31, 2014, comprising material classified as proven and probable reserves using metal prices of $20 USD/oz for silver
and $1,200 USD/oz for gold. Table 1.2 shows the mineral reserves for La Guitarra as at December 31, 2014.
Table 1.2: La Guitarra Silver Mine Mineral
Reserves, with an effective date of December 31, 2014.
LA GUITARRA
MINERAL RESERVES WITH AN EFFECTIVE DATE OF DECEMBER. 31, 2014
Mine |
Category |
Mineral
Type |
k
tonnes |
Ag
(g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag(kOz) |
Ag-Eq (k Oz) |
|
Proven (UG) |
Sulphides |
91 |
153 |
1.84 |
256 |
446 |
745 |
LA GUITARRA |
Probable (UG) |
Sulphides |
1,217 |
228 |
1.00 |
284 |
8,911 |
11,098 |
|
Total Proven and Probable (UG) |
Sulphides |
1,308 |
223 |
1.06 |
282 |
9,358 |
11,843 |
(1) Mineral Reserves have been classified in
accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference
into NI 43-101.
(2) Cut-off grade considered for sulphides
was 200 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for
silver and 79% for gold.
(4) Metal payable used was 95% for silver and
95% for gold.
(5) Metal prices considered were $20 USD/oz
Ag, $1,200 USD/oz Au.
(6) Silver equivalent grade is estimated as:
Ag-Eq = Ag Grade + (Au
Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of tonnes,
metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
| 1.5. | Conclusions and Recommendations |
First Majestic has been operating La Guitarra
since July 3, 2012, and currently processes 520 tpd. In 2014, the company processed a total of 186,881 tonnes of ore with average
silver head grade of 127 g/t and produced a total 1,056,078 equivalent ounces of silver.
Between July 2012 and December 2014, First Majestic
drilled 35,575 metres in 262 diamond drill-holes. In 2014, First Majestic drilled 6,188 metres in 57 holes. Most of the drilling
by First Majestic has been focused on infill and delineation of known mineralization.
Mineral Resources for the Coloso area have been estimated for First
Majestic by Amec Foster Wheeler under the supervision of Greg Kulla, P.Geo., upon geologically constrained block models. Mineral
Resources for La Guitarra, Nazareno and Mina de Agua areas have been estimated by First Majestic using polygonal methods.
La Guitarra Compañía has all necessary permits for
current mining and processing operations. The mineral resources reported herein are inclusive of mineral reserves. Mineral Reserves
were estimated after incorporating modifying factors, such as dilution and extraction factors, to the mineable blocks. Mineral
Reserves were calculated by First Majestic under the supervision and review of Ramon Mendoza-Reyes P.Eng. Mineral Resources and
Mineral Reserves reported herein have an effective date of December 31, 2014.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 2.1. | Technical Report Issuer |
The La Guitarra Silver Mine (“the Property”)
is owned and operated by La Guitarra Compañía Minera S.A de C.V. (“La Guitarra Compañía”)
which is an indirect wholly owned subsidiary of First Majestic Silver Corp. (“First Majestic”). First Majestic acquired
ownership of the La Guitarra Silver Mine through the acquisition of all of the issued and outstanding common shares of Silvermex
Resources Inc. (Silvermex) on July 3, 2012.
First Majestic is a publicly listed company
incorporated in Canada with limited liability under the legislation of the Province of British Columbia. The Company is in the
business of silver production, development, exploration, and acquisition of mineral properties with a focus on silver production
in Mexico. The Company’s shares trade on the Toronto Stock Exchange under the symbol “FR”, on the New York Stock
Exchange under the symbol “AG”, on the Frankfurt Stock Exchange under the symbol “FMV” and on the Mexican
Stock Exchange under the symbol “AG”.
The
La Guitarra Silver Mine comprises two operating mines, La Guitarra and Coloso, and three past producing areas, the Nazareno, Mina
de Agua and El Rincón, which are now considered as exploration areas.
This Technical Report was prepared by First
Majestic in compliance with the disclosure requirements of NI 43-101 to release technical information about the La Guitarra Silver
Mine, its current operating conditions and updated estimates of Mineral Resources and Mineral Reserves.
The effective date of this Technical Report
is March 15, 2015 which represents the cut-off date for the scientific and technical information used in the Report. The effective
date of the Mineral Resources and Mineral Reserves estimates included in this Technical Report is December 31, 2014.
| 2.3. | Sources of Information |
For the purposes of the Technical Report, all
information, data, and figures contained or used in its integration have been provided by First Majestic, unless otherwise stated.
See also Section 27 of this Technical Report for references.
The Mineral Resource estimates for the La Guitarra,
Nazareno and Mina de Agua areas of the La Guitarra Silver Mine were prepared by First Majestic. The Mineral Resource estimate for
the
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Coloso area of the La Guitarra Silver Mine was
prepared by Amec Foster. The Mineral Reserves estimates for all areas were prepared by First Majestic.
Previously filed technical reports and studies
on the Property include the following:
| · | La Guitarra Mine Technical Report, Temascaltepec, Mexico, dated January 29, 2010. Prepared
for Genco Resources Ltd. by Glenn R. Clark, P.Eng, Glenn R. Clark & Associates Ltd. and John C. Thornton, SAIIM, Thor Resources
LLC., (the “2010 Technical Report”) |
| · | La Guitarra Feasibility Study dated August 2009. Prepared for Genco Resources Ltd. by Kappes,
Cassiday and Associates. |
Note that in the previously filed technical
reports the management of First Majestic considered that the open pit mine plan contained in the 2010 Technical Report commissioned
by Silvermex for the Property was not the optimal development plan considering permitting and socio-economic issues that would
likely be involved. Consequently, the Mineral Resources and Mineral Reserves estimates contained in previous technical reports
on the La Guitarra Silver Mine have been re-assessed on the basis of underground mining methods only and the processing plant utilizing
only a flotation circuit. This review has resulted in a revised mine plan which is the basis of this Technical Report.
The Property’s infill and delineation
drilling program is ongoing as of the effective date of the Report. Where applicable, results received to date from this recent
drilling activity have generally corroborated the updated resource model.
| 2.4. | Qualified Persons and Site Visits |
This Technical Report has been prepared by employees
of First Majestic under the supervision of Ramon Mendoza Reyes, P.Eng., Vice President of Technical Services, Jesus M. Velador
Beltran, MMSA, Regional Exploration Manager, and Maria E. Vazquez Jaimes, P.Geo., Geological Database Manager. The Mineral Resource
estimate for the Coloso area of the Property was prepared by Amec Foster Wheeler under the supervision of Gregory Kenneth Kulla,
P.Geo.
Table 2.1 below shows the list of Qualified
Persons contributing to the listed sections of the Report, their affiliation and area of expertise and the dates of the relevant
site visits to the Property.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 2.1: List of Qualified Persons
Author |
|
Company |
|
Area
of Expertise |
|
Sections
Responsibility |
|
Site
Visits |
Ramon Mendoza Reyes |
|
First Majestic |
|
Mining, Reserve estimates |
|
Sections
1, 2, 3, 5, 6, 13, 15, 16, 17, 18, 19, 20, 21, 22, and the Mining and Processing aspects of sections 24, 25, 26 and
27 |
|
Several
occasions during 2014. Most recent inspection on 8th to 10th of January 2015 |
Jesus M. Velador Beltran |
|
First Majestic |
|
Geology Exploration |
|
Sections
4, 7, 8, 9, 10, 14 La Guitarra area, 23 and geology aspects of sections 24, 25, 26 and 27 |
|
Several occasions during 2013
and 2014. Most recent inspection on 9th to 12th of February 2015 |
Maria E. Vazquez Jaimes |
|
First Majestic |
|
Database Management |
|
Sections 11 and 12 |
|
Several
occasions during 2013 and 2014. Most recent inspection on 1st to 3rd of December 2014 |
Gregory K. Kulla |
|
Amec |
|
Resource modeling, Resource
estimates |
|
Section 14 of the Coloso area |
|
16th
to 19th of September 2014 |
| 2.4.1. | First Majestic Employees Site Visits |
Messrs. Mendoza Reyes, Velador Beltran, Vazquez
Jaimes and Kulla are qualified persons as that term is defined by NI 43-101, for the sections of the Report that they take responsibility.
Messrs. Mendoza Reyes, Velador Beltran and Vazquez
Jaimes are employees of First Majestic and as such are not independent as described in Section 1.5 of NI 43–101.
Mr. Ramon Mendoza visited the La Guitarra property
on several occasions during 2014 and during these visits, he coordinated the integration of information for Mineral Resource and
Mineral Reserves estimates. Information including but not limited to: mining methods, productivity, operating and capital costs
and metallurgical recoveries. During the most recent visit on the 8th to 10th of January, 2015, he supervised
the stope optimization process to constrain the Mineral Reserves of the Coloso area and reviewed the production depletion estimates
of La Guitarra and Coloso mines.
Mr. Jesus Velador visited La Guitarra property
on several occasions during 2013, 2014 and 2015, the most recent visits being between the 10th and 12th December,
2014 and the 9th and 12th February, 2015. Mr. Velador conducted field visits to the Nazareno and Rincón
areas, Coloso mine, La Guitarra mine, he inspected drill core from 11 holes from Coloso with special emphasis on mineralization,
alteration, structures and paragenesis, inspected the channel sampling procedure at Coloso mine and examined longitudinal sections
and plan views from Coloso and La Guitarra mines.
Ms. Maria Vazquez visited the site on several
occasions from December 2013 to December 2014 conducting database audits for the Coloso and Nazareno areas and observed exploration
practices to support mineral resource estimates. During the most recent visits, between the 1st
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
and 3rd of December, 2014 she conducted
training in Database Management to La Guitarra geological personnel.
| 2.4.2. | Amec Foster Wheeler Site Visits |
Mr. Greg Kulla visited the property between
the 15th and 19th September 2014. During this visit he reviewed drilling, logging, and sampling procedures,
and assay quality control procedures. While at site he also reviewed several drill core intersections of the Joya Larga and Jesicca
veins of the Coloso deposit. While at site another Amec Foster Wheeler employee completed an inspection of the Joya Larga underground
workings where he observed the vein mineralization.
| 2.5. | Units and Currency and Abbreviations |
Units of measurement are metric. All costs are
expressed in United States dollars unless otherwise noted. Only common and standard abbreviations were used wherever possible.
A list of abbreviations used is as follows:
Distances: |
mm – millimetre |
|
cm – centimetre |
|
m – metre |
|
km – kilometre |
|
masl – metres above sea level |
Areas: |
m2 – square metre |
|
ha – hectare |
|
km2 – square kilometre |
Weights: |
oz – troy ounces |
|
k oz – 1,000 troy ounces |
|
lb - pound |
|
g – grams |
|
kg – kilograms |
|
t – tonne (1,000 kg) |
|
kt – 1,000 tonnes |
|
Mt – 1,000,000 tonnes |
Time: |
min – minute |
|
hr – hour |
|
op hr – operating hour |
|
d – day |
|
yr – year |
Volume/Flow: |
m3– cubic metre |
|
m3/hr – cubic metres per hour |
|
cu yd – cubic yards |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Assay/Grade: |
g/t – grams per tonne |
|
g/L – grams per litre |
|
ppm – parts per million |
|
ppb - parts per billion |
Currency: |
$ - United States dollar |
Other: |
tpd – tonnes per day |
|
ktpd – 1,000 tonnes per day |
|
Mtpa - 1,000,000 tonnes per year |
|
kW – kilowatt |
|
MW – megawatt |
|
kVA – kilovolt-ampere |
|
MVA – Megavolt-ampere |
|
kWh – kilowatt hour |
|
MWh – megawatt hour |
|
°C – degrees Celsius |
|
Ag – silver |
|
Au – gold |
|
Pb – lead |
|
Zn – zinc |
|
Cu – copper |
|
Ag-Eq – silver equivalent |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 3. | Reliance on Other Experts |
First Majestic qualified persons’ opinion
contained herein is based on information provided to them by other First Majestic employees and consultants. The qualified persons
used their experience to guide and supervise the work performed for the integration of this information and to determine if the
information was suitable for inclusion in the Report. Portions of the general information and geology descriptions from previous
reports were suitable for inclusion in the Report. In general, information that required updating included most of the information
related to the mine plan, which is based on underground mining methods for extraction of the mineralized material and the flotation
process for the recovery of metals.
Greg Kulla of Amec Foster Wheeler has fully
relied upon, and disclaims responsibility for information regarding environmental, permitting, legal, title, taxation, socio-economic,
marketing and political factors provided through by First Majestic’s experts through the following documents:
| · | Email from Ramon Mendoza titled “Reliance” dated 31 March 2015 |
| · | Letter from Rafael Araujo Esquivel titled “Mining Concessions and Surface Agreements Status”
dated 31 March 2015 |
Information in these documents has been used
in Section 14 of the Report in consideration of factors that might materially affect the Coloso Mineral Resource estimate.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 4. | Property Description and Location |
The La Guitarra Silver Mine is a producing
mine located in the historic Temascaltepec mining district (the “Temascaltepec District”) in the municipality of Temascaltepec,
Estado de Mexico, Mexico, approximately 130 kilometres southwest of Mexico City (Figure 4.1). The Mine portal is located at approximately
100°04’39”W Longitude and 19°03’23”N Latitude, at an elevation of approximately 1,990 metres. The
processing plant is located at 100° 04' 42" W and 19° 03' 24" N or UTM zone 14Q, 386,556 E and 2,107,470 N at
an elevation of 1960 metres above sea level. The project site can be accessed by asphalt road from Temascaltepec (5 km), from Tejupilco
(30 km) and from the major metropolitan areas of Toluca (70 km) and Mexico D.F. (130 km). Travel time from the international airport
in Mexico City ranges from 2.5 hours to 4 hours depending on traffic.
Figure 4-1: Location map of La Guitarra
Silver Mine
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The Property is comprised of 43 exploitation
concessions covering 39,714 hectares (98,135 acres), which are operated and owned by La Guitarra Compañía. Most of
the mining concessions are located within the Municipality of Temascaltepec while some concessions extend to the municipalities
of Valle de Bravo and San Simón de Guerrero (Figure 4.2)
In Mexico, mining concessions are granted
by the Economy Ministry, and these are considered exploitation concessions with a 50-year term. Mining concessions have an annual
minimum investment to complete and an annual mining rights fee to be paid to keep the concessions effective. Valid mining concessions
can be renewed for an additional 50-year term as long as the mine is active. According to Mr. Rafael Araujo, legal and technical
representative for First Majestic (Perito Minero), all 43 concessions are currently in good standing. Of the La Guitarra
Compañía concessions, the oldest were granted in 1983 and the most recent in 2007. Table 4.1 shows a detailed list
of the concessions with covered surface and current expiration dates. There are no royalties in effect over First Majestic’s
concessions at La Guitarra.
Figure 4-2: La Guitarra Compañía
Mining Concessions
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 4.1: List of Mining Concessions
|
NAME |
TITLE |
HECTARES |
FROM |
TO |
1 |
EL REY |
172361 |
7.6746 |
15/12/1983 |
14/12/2033 |
2 |
LA CRUZ |
179607 |
3.7811 |
11/12/1986 |
01/12/2036 |
3 |
EL NUEVO REY |
180496 |
6.0000 |
13/07/1987 |
13/07/2037 |
4 |
VETA GRANDE No. DOS |
185878 |
8.0000 |
14/12/1989 |
14/12/2039 |
5 |
JESÚS
NAZARENO |
189684 |
6.0000 |
05/12/1990 |
14/12/2040 |
6 |
DEMASIAS DEL PROGRESO |
191124 |
3.3472 |
29/04/1991 |
28/04/2041 |
7 |
FRACC. II DE TERESA I |
191224 |
1.3325 |
19/12/1991 |
18/12/2041 |
8 |
TERESA II |
191225 |
1.6874 |
19/12/1991 |
18/12/2041 |
9 |
TERESA I |
191235 |
35.0969 |
19/12/1991 |
18/12/2041 |
10 |
AMPLIACION DEL PROGRESO |
191334 |
3.0171 |
19/12/1991 |
18/12/2041 |
11 |
GUADALUPE |
191482 |
43.0000 |
19/12/1991 |
18/12/2041 |
12 |
EL GUITARRON |
191488 |
138.4904 |
19/12/1991 |
18/12/2041 |
13 |
LA GUITARRILLA |
192325 |
7.5403 |
19/12/1991 |
18/12/2041 |
14 |
EL SALVADOR |
192797 |
7.3149 |
19/12/1991 |
18/12/2041 |
15 |
AMPLIACION DEL REY |
193970 |
0.3533 |
20/12/1991 |
19/12/2041 |
16 |
AMPL. DE LOS COMALES |
195409 |
151.4325 |
14/09/1992 |
29/12/2033 |
17 |
LA TOSCA |
196113 |
30.0000 |
23/09/1992 |
22/09/2042 |
18 |
LA ALBARRADA |
196548 |
1.5419 |
23/07/1993 |
22/07/2043 |
19 |
EL PROGRESO |
198404 |
2.5698 |
26/11/1993 |
25/11/2043 |
20 |
SAN
JOSÉ |
198961 |
35.0000 |
11/02/1994 |
10/02/2044 |
21 |
EL VIOLIN |
199934 |
10.0000 |
17/06/1994 |
16/06/2044 |
22 |
JESSICA |
203986 |
25.0000 |
26/11/1996 |
25/11/2046 |
23 |
EL CONTRABAJO |
206547 |
3.1967 |
23/01/1998 |
22/01/2048 |
24 |
NAZARENO DE ANECAS |
208817 |
279.8508 |
15/12/1998 |
14/12/2048 |
25 |
EL COLOSO III |
210464 |
154.7519 |
08/10/1999 |
07/10/2049 |
26 |
EL COLOSO II |
211448 |
157.9183 |
23/05/2000 |
22/05/2050 |
27 |
EL COLOSO IV |
212370 |
1.6048 |
04/10/2000 |
04/10/2050 |
28 |
SAN LUIS SUR 88 |
212556 |
1,538.9474 |
31/10/2000 |
30/10/2050 |
29 |
LA GUITARRILLA DOS FRAC.I |
215219 |
9.0992 |
14/02/2002 |
13/02/2052 |
30 |
LA GUITARRILLA DOS FRAC.II |
215220 |
20.4517 |
14/02/2002 |
13/02/2052 |
31 |
EL VIRREY |
216193 |
4.6048 |
12/04/2002 |
12/04/2052 |
32 |
EL NAZARENO SUR |
216635 |
17.1998 |
17/05/2002 |
16/05/2052 |
33 |
EL NAZARENO |
217506 |
897.3527 |
16/07/2002 |
16/07/2052 |
34 |
LOS TIMBRES |
217766 |
383.5042 |
13/08/2002 |
12/08/2052 |
35 |
EL
PEÑON FRAC. 1 |
217796 |
94.3021 |
23/08/2002 |
23/08/2052 |
36 |
EL
NUEVO RINCÓN |
217986 |
465.4087 |
18/09/2002 |
17/09/2052 |
37 |
EL
PEÑON |
218282 |
185.0801 |
17/10/2002 |
16/10/2052 |
38 |
MINA DE AGUA |
218797 |
2,239.4495 |
17/01/2003 |
16/01/2053 |
39 |
EL COLOSO |
221269 |
276.0000 |
14/01/2004 |
13/01/2054 |
40 |
JODY |
228902 |
100.0000 |
16/02/2007 |
15/02/2057 |
41 |
TERE |
228903 |
329.5814 |
16/02/2007 |
15/02/2057 |
42 |
LUCIA |
228904 |
327.5000 |
16/02/2007 |
15/02/2057 |
43 |
RENACIMIENTO |
229918 |
31,700.2962 |
28/06/2007 |
27/06/2057 |
|
TOTAL HECTARES |
|
39,714.2802 |
|
|
Surface rights in the area of the mining
concessions are held both privately and through group ownership either as communal lands, or Ejido lands.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
La Guitarra Compañía currently
leases surface rights covering 62 hectares from the community of La Albarrada under a Temporary Occupation Agreement in effect
for 15 years commencing January 1, 2012. The current areas of operations, the existing mill and the majority of the existing infrastructure
are located within these 62 hectares. La Guitarra Compañía holds 420 hectares of surface rights covering the Nazareno
area of the property. La Guitarra Compañía also owns 34 hectares of surface rights in the Municipality of San Simon
de Guerrero, which cover part of the Santa Ana Vein. Negotiations with the community of Mina de Agua are being conducted in order
to allow the Company to access the old Mina de Agua mine. Figure 4.3 shows the surface rights owned and leased by First Majestic.
In order to expand operations in other areas, First Majestic may need to purchase additional surface rights or negotiate additional
temporary occupation agreements.
Figure 4-3: Map of La Guitarra Compañía
Surface Rights
| 4.4. | Permits and other liabilities |
La Guitarra Compañía has
all necessary permits for current mining and processing operations, including an operating license, a water use permit, an Environmental
Impact Authorization (“EIA”) for the La Guitarra and Coloso mines and exploration permits for Nazareno, Tlacotal, Trancas,
La Guitarra NW, Temascaltepec and San Simon projects.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
An application to obtain an EIA for mining
operations in Mina de Agua is in the assessment stage at the Mexican environmental agency. A request to increase the authorized
volume of water use has also been submitted to the authorities.
Exposure to environmental liabilities
exists in the form of:
(1) discharge of acid drainage water
pumped from the underground mine workings. At present this flow is discharged after being passed through a retaining facility,
which is built into the drainage area below the portal and utilizes limestone-filled gabions to neutralize the acidic underground
mine water.
(2) an impoundment containing over one
million tonnes of tailings from the flotation processing plant. The tailings impoundment produces an acid seepage, which is also
passed through the limestone-filled gabions.
(3) a mine waste rock dump located near
the San Rafael mine portal. Some waste rock in the dump contain sulfides, which may produce acid mine drainage in the future although
current levels are within tolerance.
To the extent known, there are no environmental
or social issues that could materially impact the Company’s ability to conduct exploration and mining activities in the district;
on this respect, the Company relies on its relationship with the local communities, labour unions, and the government regulators,
which are presently businesslike and amicable.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 5. | Accessibility, Climate, Local Resources, Infrastructure and Physiography |
The Temascaltepec District and La Guitarra
Silver Mine are located approximately 130 kilometres southwest of México City and approximately 65 kilometres from Toluca,
México state’s capital. La Guitarra is at an elevation of approximately 1,990 metres. The nearest local town is Temascaltepec,
which is approximately 5 kilometres from La Guitarra Silver Mine.
International airports are located in
both México City and Toluca. Major population centres in the area include Temascaltepec, San Simon de Guerrero and Valle
de Bravo. There are paved roads throughout the Temascaltepec District. Current areas of operations are situated less than 2 kilometres
from paved roads and are easily accessible by two-wheel drive vehicles. As the Temascaltepec District has a long history of mining,
most areas of potential interest are located within a few hundred metres of gravel or paved roads.
The climate in the area is moderate in
temperature and relatively humid. The average annual temperature is about 18°C. The warm season registers an average of 26°C
with the month of May having an average high of 28°C; the cold season average is in the order of 8°C with the month of
January registering the average low of 4°C.
Average annual precipitation is 1,200
mm with a wet season in summer usually during the months of June through October (rainfall greater than 60 mm per month) and a
dry season usually during the months from November to May (less than 60 mm per month).
| 5.3. | Local Resources, Infrastructure |
The La Guitarra Silver Mine has good
access to local infrastructure and services within the local center of Temascaltepec, where there are schools, shops, markets,
banks, post offices, hotels, gas stations, and some professional services. Telephone and high speed internet connection at the
mine site are provided by a link to the town of Temascaltepec.
The local communities provide a large
labour pool and sufficient accommodation to support any current or anticipated levels of staffing. The national power grid crosses
the property within 700 metres of the existing mill and offices. All current and projected production centres are near natural
water sources. Medical clinics are located in the communities of Temascaltepec and San Simon de Guerrero, and hospitals are located
in Valle de Bravo and Toluca. Proximity to the major industrial centres of Toluca and México City provides access to a large
variety of suppliers. The lakeside resort of Valle de Bravo is located 14 km to the North and on weekends
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
caters to Mexico City residents. Valle
de Bravo traffic does not pass the project site, nor is the project site visible from Valle de Bravo.
The infrastructure at the mine site consists
of an analytical laboratory, drill core storage facilities, a flotation plant and mill, offices, repair shops, and warehouses.
The various buildings at the mine site are joined together and supported by a computer network. Water is supplied from the mine
workings and surface streams. The mine holds the right to take 192,000 cubic metres of water per annum from the Temascaltepec River.
The mine and the plant facilities at
La Guitarra are located in rough, hilly terrain. The elevation at the plant is approximately 1,990 metres. The topographic relief
in the area is 500 metres. Much of the area is forest covered with pine trees that are less than 260 centimetres in diameter. In
some areas, the underbrush is dense and difficult to pass through. The stream valleys have broad, relatively flat flood plains
that are used for agriculture.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 6.1. | Mining in Temascaltepec through 1990 |
Mining in the Temascaltepec area started
in the mid-1500s when the Spanish miners first arrived. Old tools, ancient buildings and antiquated mining shafts are found throughout
the area. Early Spanish operations were focused in an area 4 kilometres southeast of La Guitarra in an area called Mina de Agua,
where much softer rock made it easier to access the underlying silver and gold. Production in the Temascaltepec District has been
ongoing since the 1550s.
In the 18th century, the Mina de Agua
mine and surrounding areas were one of México's largest silver producers, generating approximately 10% of the country's
total mineral wealth. The mine was well known for its very high, or 'bonanza'-type, grades of silver and gold, and historical records
from the period refer to several kilograms of silver per tonne and several tens of grams of gold per tonne. Historical documents
indicate that the production was valued in excess of $100 per tonne, when prices were approximately $15 per ounce for gold and
$1 per ounce for silver. One of these areas at the Cinco Senores shaft was abandoned due to flooding while in the midst of mining
bonanza grade ore. Two efforts were made to finance the recovery of this mine; one in 1831 by London mine financiers and another
in 1907 by financiers from France. Both efforts were thwarted by financial crises in those respective countries and the mine remains
closed to this day.
Mining in the Temascaltepec District
came to a halt in the early 19th century for two primary reasons: technology was unable to handle the underground flooding that
occurred in several mining shafts and the 1810 War of Independence in México caused political upheaval in the Temascaltepec
District.
Temascaltepec remained more or less idle
from 1810 until the early 20th century when the American Rincón Mining Company began significant mining and smelting operations
at Rincón, in the southeast portion of the Temascaltepec District. This operation continued until the mid-1930s, when it
closed as a result of inadequate capital reinvestment. Over the life of the Rincón mine the Temascaltepec District was the
third largest silver producer in México.
| 6.2. | Modern Mining After 1990 |
Modern mining resumed in 1990 when the
Compañía Minera Arauco returned to where the Spaniards were purported to have begun, as early as 1555, conducting
exploration and development work on the Guitarra vein with an initial production rate of 30 tpd.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
In 1993, Luismin S.A. de C.V. (“Luismin”)
acquired the property and began consolidating the Temascaltepec District. Luismin expanded the reserve base in La Guitarra Silver
Mine and increased the milling capacity to 320 tpd.
In August of 2003, Genco Resources Ltd.
(“Genco”) purchased the entire Temascaltepec Mining District and the La Guitarra Silver Mine from Luismin. During the
last few years that Luismin operated the mine, insufficient reinvestment was made to maintain or increase the Reserve base and
thus the mining rate slowly began to decrease.
In 2003/2004, under Genco’s direction,
three surface drilling campaigns were conducted to expand reserves, test mineralization along the under-explored Nazareno vein,
and to test a previously unexplored section of the Guitarra vein. The drilling efforts led to the discovery of the San Rafael and
the San Rafael II zones. Underground mining was mainly sustained from these zones until 2013.
In 2010, Silvermex Resources Inc. (“Silvermex”),
a publicly traded company listed on the Toronto Stock Exchange (the “TSX”) gained control over all mineral concessions
within the Temascaltepec District.
On July 3, 2012, First Majestic completed
a plan of arrangement under which First Majestic acquired all of the issued and outstanding shares of Silvermex, whose primary
asset was the La Guitarra Silver Mine located in Mexico State, México. Shareholders of Silvermex received 0.0355 First Majestic
shares and C$0.0001 for each share of Silvermex, with First Majestic issuing a total of 9,451,654 First Majestic shares and paying
C$26,623 in cash. The transaction was implemented by way of a plan of arrangement under the Business Corporations Act (British
Columbia).
| 6.4. | First Majestic Expansion |
Since First Majestic became owner of
the La Guitarra Silver Mine, it commenced a plan to expand this operation from 350 tpd to 520 tpd. Underground development in late
2012 was expanded and a spare ball mill from La Parrilla Silver Mine and some spare flotation tanks from the La Encantada Silver
Mine were shipped to the La Guitarra Silver Mine. Construction of the foundations commenced in the third quarter of 2012 and all
equipment for this expansion arrived on site in the fourth quarter of 2012. This expansion was completed in May 2013.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 6.5. | Modern Mining Production Statistics |
Production figures since 1993 are presented
in Table 6.1.
Table 6.1: La Guitarra Silver Mine
production figures since 1993
Year |
Operator |
k
tonnes |
tonnes
per
day |
Ag
(g/t) |
Au
(g/t) |
1993 |
Luismin |
8 |
22 |
320 |
5.2 |
1994 |
Luismin |
25 |
69 |
256 |
3.6 |
1995 |
Luismin |
65 |
179 |
321 |
3.2 |
1996 |
Luismin |
94 |
259 |
286 |
3.6 |
1997 |
Luismin |
107 |
294 |
299 |
4.3 |
1998 |
Luismin |
107 |
292 |
331 |
3.9 |
1999 |
Luismin |
105 |
288 |
298 |
3.6 |
2000 |
Luismin |
114 |
312 |
255 |
3.3 |
2001 |
Luismin |
102 |
278 |
227 |
3.9 |
2002 |
Luismin |
80 |
218 |
209 |
3.6 |
2003 |
Luismin(1) |
41 |
113 |
252 |
3.1 |
2004 |
Genco |
42 |
115 |
273 |
3.6 |
2005 |
Genco |
46 |
126 |
327 |
5.5 |
2006 |
Genco |
54 |
148 |
341 |
3.1 |
2007 |
Genco |
59 |
163 |
192 |
3.2 |
2008 |
Genco |
68 |
185 |
176 |
1.5 |
2009 |
Genco |
- |
- |
- |
- |
2010 |
Silvermex(2,3) |
40 |
109 |
131 |
1.1 |
2011 |
Silvermex |
81 |
222 |
196 |
1.8 |
2012 |
First
Majestic(4) |
114 |
314 |
258 |
1.4 |
2013 |
First
Majestic |
172 |
470 |
152 |
1.4 |
2014 |
First
Majestic |
187 |
512 |
127 |
1.3 |
| (1) | Luismin handed operation of La Guitarra over to Genco effective August 1, 2003 |
| (2) | In 2010, Silvermex Resources gained contriol over Genco's mining concessions |
| (3) | Operations at La Guitarra resumed in May 2010 following a work stoppage started in 2009 |
| (4) | First Majestic acquired the La Guitarra Silver Mine through the acquisition of Silvermex on July 3, 2012 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 7. | Geological Setting and Mineralization |
The La Guitarra mine is located almost
at the intersection of the NW trending Sierra Madre Occidental province (“SMO”) and the southern edge of the E-W trending
Faja Volcanica Transmexicana (“FVTM”). The portion of the SMO located south of the FVTM is also referred to as the
Sierra Madre del Sur (“SMS”) and is considered to be a separate province by some authors due to a slightly different
subduction-tectonic history occurring after the Eocene and because the SMO is partially capped by the younger FVTM between the
latitudes 18°30’N and 21°30’N. Herein we will use SMO to refer to the igneous province that runs from the north
in Northern Chihuahua State to the south into Michoacán, Guerrero and Mexico states (Figure 7-1).
The SMO province formed as a result of
the subduction of the Farallon plate under North America and consists of five main igneous complexes: (1) Late Cretaceous to Paleocene
plutonic and volcanic rocks; (2) Eocene andesites and lesser rhyolites, traditionally grouped into the so-called Lower Volcanic
Complex; (3) silicic ignimbrites mainly emplaced during two pulses in the Oligocene (ca. 32–28 Ma) and Early Miocene (ca.
24–20 Ma), and grouped into the “Upper Volcanic Supergroup”; (4) transitional basaltic-andesitic lavas that erupted
toward the end of, and after, each ignimbrite pulse, which have been correlated with the Southern Cordillera Basaltic Andesite
Province of the southwestern United States; and (5) postsubduction volcanism consisting of alkaline basalts and ignimbrites emplaced
in the Late Miocene, Pliocene, and Pleistocene (Ferrari et al., 2007). The FVTM, located between the latitudes 18°30’N
and 21°30’N is a closely E-W trending volcanic arc related to the subduction of the Rivera and Cocos plates under North
America and consists of basalts and andesites with ages that span the Late Miocene to Recent (Figure 7-1). The basalt and andesite
flows were erupted from volcanic centers related to faulting such as the NE trending Temascaltepec fault which is one of the most
important structural features in the region. In the region, the SMO and the FVTM partially cap the Guerrero Terrane (“GT”).
The GT is a composite terrane that was accreted to western Mexico in the Late Cretaceous during the Laramide Orogeny; it is submarine
volcanic arc, characterized by submarine and rarely subaerial volcanic and sedimentary sequences that range in age from the Upper
Jurassic to the Middle – Upper Cretaceous.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-1: Map showing the Sierra Madre
Occidental (SMO), Faja Volcanica Transmexicana (FVTM) and Guerrero Terrane (GT) modified from Bryan et al. (2008) and Campa and
Coney (1983)
| 7.2. | Local Geology and Stratigraphy |
The stratigraphy exposed in the La Guitarra
property consists low grade metamorphic and sedimentary rocks (schist, slates, phyllites, black shales and siltstones) of the Taxco
Group, part of the Tierra Caliente Complex of the GT (Camprubí et al., 2001). For simplicity we will refer to these rocks
as GT. The GT in the Taxco region, located approximately 75 km to the SE, have yielded 206Pb/238U ages of
137.1 ± 0.9 Ma to 135.6 ± 1.4 Ma which constrains this part of the GT to the Early Cretaceous (Campa et al. 2012).
Outcrops of the GT in La Guitarra property occur to the southeast (SE; Mina de Agua - El Rincón areas) of the Temascaltepec
fault and GT rocks have been detected by diamond drilling at the northwest area (NW; Coloso area). The GT hosts many of the veins
southeast of Temascaltepec in the Mina de Agua and Rincón areas. The metamorphic and sedimentary rocks outcropping southeast
of the Temascaltepec fault are typically thin bedded and weathered to a tan or reddish (hematite - jarosite) color due to
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
oxidation of syngenetic pyrite. The bedding
is well defined in most outcrops but less so in areas where veining and hydrothermal alteration is more intense. Due to its tectonic
setting and history the GT not only hosts epithermal deposits such as La Guitarra, but also Volcanogenic Massive Sulfide (VMS)
and Sedimentary Exhalative (SedEx) deposits eg. Tizapa, a VMS deposit, is located only 16.5 km WSW from La Guitarra mine.
Resting on top of the GT it is the Balsas
Formation, a conglomerate that is correlative with other conglomerates in Mexico such as those in Guanajuato, Zacatecas and Fresnillo.
These conglomerates were deposited as a result of uplift and concomitant erosion during the Laramide orogeny. The Balsas Formation
was sparsely and discordantly deposited on top of the GT during the Eocene (Camprubí et al., 2001). The Balsas Formation
outcrops to the northwest of La Guitarra but it has not been recognized in the Mina de Agua and Rincón areas. Southeast
of the Temascaltepec fault the GT is partially capped and intruded by the volcanic rocks of the SMO, FVTM and a granitic stock
respectively. Northwest of the fault the GT and Balsas formations are almost totally covered by the volcanic rocks and intruded
by stocks, felsic dikes and subaerial domes (Figure 7.2). A biotite – K feldspar (orthoclase – anorthoclase) bearing
stock of granite-quartzmonzonite composition along with quartz bearing porphyritic dikes and domes intruded the older GT and Balsas
formation during the Eocene and Oligocene. This stock has a massive structure with coarse-equigranular texture and contains K feldspar,
quartz, plagioclase feldspar, biotite and hornblende in that order of abundance; some of the K feldspar and biotite in the rock
may be due to high temperature potassic alteration predating the vein type epithermal mineralization. This granite is the host
to the NW trending silver-gold bearing epithermal veins of La Guitarra area. Additionally, in some areas the granite is intruded
by the porphyritic dykes that often follow the same structures that host the veins. The intrusion has not been dated at La Guitarra
but an outcrop of presumably the same granite that is located 4.5 km SW from the mine yielded a K-Ar age (biotite) of 46.6 +/-
1.2 Ma (Chavez-Aguirre and Mendoza-Flores, 1998). Andesite flows and rhyolite ignimbrites, tuffs, lithic tuffs and volcanic breccias
of the SMO rest unconformably on top of the GT, the Balsas conglomerate and the granite-stock. Andesites representing the base
of the SMO are more clearly exposed SE of the Temascaltepec fault. Several veins nearby San Simon and Real de Arriba villages are
hosted or partially hosted by andesite. At the La Guitarra area, the andesite package has a maximum thickness of 300 metres, according
to García-Rodríguez (1982). Ignimbrites, tuffs, lithic tuffs and volcanic breccias of rhyolite composition lie on
top of the andesites. The thickness of the rhyolite package in area is estimated to be 350 metres. Tuffs and volcanic breccias
host mineralization at the Coloso and Nazareno areas. An outcrop of rhyolite tuff located nearby the Valle de Bravo Lake, 12 km
NW from the mine, was K-Ar dated at 33.6 +/- 0.9 Ma by Chavez-Aguirre and Mendoza-Flores (1998). Rhyolites from and around the
“El Peñon” dome, located 3.5 km west of the mine, were K-Ar dated at 31.6 +/- 0.8 Ma (Chavez-Aguirre and Mendoza-Flores,
1998) and 40Ar/39Ar dated at 34.87 +/- 0.15 Ma (Blatter et al., 2001). Since the domes and dikes in the
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
area both have rhyolite composition,
it is possible that they are coeval, and therefore that implies that the GT, the 46.6 Ma-granite and probably the basal andesites
of the SMO were intruded by the domes and dikes in the Oligocene between 34.87 and 31.6 Ma.
Miocene to Recent age basalts and andesites
of the FVTM are the youngest rocks in the region, no dates for these rocks are reported around the area. The volcanic rocks of
the FVTM partially cap all of the previous rocks and fill topographic depressions such as valleys and creeks. The basalts and andesites
were erupted from volcanic centers associated with N and NE trending faults such as the Temascaltepec fault. Locally the basalts
form two units; 1) a massive and relatively fresh flow unit and; 2) a mainly tuffaceous unit that is heavily weathered and forms
rounded buff to reddish tinged outcrops. This tuff unit is aerially the most extensive and appears to overlie the less-weathered
flow basalts.
Figure 7-2: Geology map of the La Guitarra
property, Faja Volcanica Transmexicana (FVTM) and Sierra Madre Occidental (SMO).
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-3: Stratigraphic column of La
Guitarra property, Sierra Madre Occidental (SMO), Faja Volcanica Transmexicana (FVTM) and Guerrero Terrane (GT). Refer to text
for absolute ages of some units.
Two models for the distribution of terrane
boundaries in Mexico have been proposed by Campa and Coney (1983) and by Sedlock et al. (1993). The Sedlock model is very useful
for outlining the tectonic evolution of the Mexican basement but the Campa and Coney model appears to tie in much more closely
with the structural data (Starling, 2005). A description of the tectonic evolution of Mexican basement is beyond the scope of this
report but can be reviewed in Sedlock et al. (1993) and Campa and Coney (1983). The Campa and Coney model suggests that the GT
was accreted to western Mexico in the Late Cretaceous due to ENE to NE compressional stresses related to the Laramide orogeny.
Additionally, the model proposes (based on mapping) a N-S trending terrane boundary, or suture, between the GT and the Mixteca
and Toliman terranes that is located approximately 40 km west of La Guitarra mine.
Recent passive seismic studies and gravity
studies have mapped the thickness of the crust and the geometry of the Rivera and Cocos tectonic plates (Ferrari et al, 2011).
According to Ferrari et al (2011), the geophysical studies resolved that west of longitude 100°30’ W, below the FVTM,
the crust is thicker (50 km in average) whereas east of the longitude 100°30’ W, the crust is thinner (40 km or less).
The unconformity resolved by the geophysical studies is located approximately 70 km west from the interpreted western terrane boundary
of the GT by Campa and Coney (1983) and approximately 40 km west from La Guitarra. A terrain boundary or suture
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
may be diffuse and have a width of tens
of kilometres; the surface expression may not necessarily match the geophysical signature 40 km below surface. Thus, La Guitarra
is located in between the geophysical unconformity proposed by Ferrari et al. (2011) and the interpreted terrain boundary of Campa
and Coney (1983) which has important exploration implications, since sutures or crustal scale faults control the localization of
important mineral deposits (Figure 7.4).
Figure 7-4: Map showing the terrain boundaries proposed by
Campa and Coney (1983) and the crustal thickness variations from Ferrari et al. (2011)
A structural and remote sensing analysis
carried out at La Guitarra by Starling in 2005, recognized five deformation events at La Guitarra area:
| 1. | Early Laramide ENE to NE compression (D1) resulting in the main stage of fold-thrust contractional
deformation affecting the GT; |
| 2. | Later Laramide NNE to N-S compression (D2) affecting the GT; |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 3. | Early post-Laramide N-S to NNE extension (D3) affecting the GT and granite; |
| 4. | Main stage early Basin and Range NE to ENE extension (D4) affecting the GT, granite and SMO volcanic
rocks, and |
| 5. | Recent (<12 Ma) to present day WNW extension (D5) associated with the dextral movement of the
San Andreas fault system and the drift of the Baja California peninsula to the NW and affecting the GT, granite, SMO rocks and
FVTM basalts and andesites. |
According to Starling (2005), the emplacement
and localization of intrusions in the region like the granite stock that occurs in the La Guitarra area may have been controlled
by D1 NW fault zones that during D2 deformation were reactivated as dextral transpressional structures with dilatant jogs. The
most important effect of the Laramide deformation in the La Guitarra granite was the development of a series of major WNW-trending
faults across the district. These structures are clearly evident from satellite imagery and were the main fluid channels for the
epithermal fluids that formed the veins at La Guitarra (Figure 7.5). The origin of these structures is unknown but may be related
to a basement fault zone, perhaps developed as dextral structures in tandem with sinistral NE structures as a conjugate pair in
response to D2 compression and thrusting (Starling, 2005).
The N-S to NNE extension D3 event is
present at La Guitarra and also controls several intermediate-sulphidation epithermal and Carbonate Replacement (CRD) deposits
in the Mexican Altiplano such as Fresnillo, Guanajuato, Velardeña and Naica. This phase of extension may have originated
as a phase of relaxation following late-Laramide N-S to NNE compression or as a late back-arc extensional component of D2 deformation
(Starling, 2005). This phase of extension developed the structures with open spaces that served as channels for Oligocene dikes
and quartz veins. The location of ore shoots is controlled by structural intersections developed in a NNW to WNW-trending system
of structures reactivated as a sinistral transtensional faults (i.e. left lateral strike-slip with a significant component of extension;
Starling, 2005). The Basin and Range type, D4 deformation event, is most likely post mineralization and is best represented by
the Temascaltepec fault which probably uplifted and exposed to deeper erosion levels the veins located at Mina de Agua and Rincón
areas (this hypothesis should be further tested with geochemical and fluid inclusions work). The recent D5 deformation event (post
mineralization) is evidenced in some exposures of the FVTM units that are locally tilted towards the east.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-5: Aster imagery showing NW
structures and the Temascaltepec Fault in the La Guitarra property.
Vein mineralization in the La Guitarra
property is classified as Intermediate Sulfidation (IS) epithermal (see Item 8 for more details on epithermal deposits). There
are in excess of one hundred epithermal veins within the property in five main vein systems: Comales–Nazareno, Coloso (Jessica
and Joya Larga veins), La Guitarra (NW, Central and SE zones), Mina de Agua and El Rincón. The vein systems at La Guitarra
property form a belt with an approximate width of 4 km that strikes NW – SE in excess of 15 km. Individual veins pinch and
swell and vary in width from tens of centimetres to more than twenty metres. Economic zones, widths usually between 1 and 4 metres,
are embedded in quartz (vein structure) having widths up to 20 metres (e.g. Guitarra vein). The ore shoots or economic zones can
either be localized in the hanging wall or the foot wall of the vein structure.
Gangue mineralogy consists of banded
quartz, amethyst quartz, colloform chalcedony, fine-grained crystalline quartz, calcite, fluorite, pyrite, marcasite, barite, anhydrite,
illite – smectite, adularia and alunite. Anhydrite and alunite veins are observed mostly filling narrow fractures. The ore
mineralogy consists of proustite – pyrargyrite solid solution, electrum, acanthite, polybasite, sphalerite, galena and chalcopyrite.
Secondary minerals such as malachite and smithsonite – hydrozincite (calamines) have been observed in some of the veins at
Mina de Agua. According to Camprubí et al. (2006), the vein stratigraphy of the La Guitarra deposit can
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
be grouped in three mineralization stages:
a) stage I is dominated by a base-metal sulfide association whereas stages II and III contain most of the precious-metal assemblages.
Relative mineral abundance in each mineralization stage shows an increase on the content of Ag–Au bearing phases with time
(Camprubí et al., 2006). Stage II is the most important in volume and contains the main mineralization. Base-metal sulfides
precipitated early in all mineralization stages, their relative content increases with depth at any stage (Camprubí et al.,
2006). Figure 7.6 shows a cross section of Guitarra vein consisting of a wide quartz vein with narrow shoots bearing gold and silver
mineralization.
Figure 7-6: Cross section of the central
portion of Guitarra vein, showing gold and silver shoots hosted by quartz vein. Notice the association of the Guitarra vein with
a dike, which is typical for La Guitarra.
The main textures observed in the veins
are coarse banding, fine banding, colloform, bladed quartz, and breccia textures. Fine banding, colloform banding (particularly
dark bands containing fine grain sulfides) and bladed quartz textures have been observed to correlate with higher silver and gold
concentrations. This association is not surprising since colloform banding
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
(chalcedony) and bladed textures are
commonly associated with boiling and boiling is an important mechanism for deposition of precious metals in the epithermal environment.
The breccias usually contain angular quartz clasts that range in size from a few millimetres to tens of centimetres and are supported
by a silicified matrix or cemented by quartz or quartz and marcasite. Figure 7-7 shows some of the textures and minerals occurring
in La Guitarra epithermal veins. Spatial association, orientation, mineralogy as well as gas chemistry and microthermometry analysis
suggest that the veins along the property may have had a common source and therefore could be cogenetic. Thus, the aforementioned
characteristic could apply to the five vein systems.
Figure 7-7: Mineral textures from La
Guitarra epithermal veins; A) Galena and acanthite vein cross cut by late stage quartz, B) Banded quartz and colloform chalcedony
textures with earlier breccia texture on the right, C) Bladded quartz textures, E) Banded quartz with thin band of acanthite and
other sulfides (galena, sphalerite, pyrite, etc.), and E) Breccia made up of quartz clasts with open vugs partially filled by late
stage marcasite.
Spatial association, orientation, mineralogy
as well as gas chemistry and microthermometry analysis suggest that the veins along the property may have had a common source and
therefore could be cogenetic. Thus, the aforementioned characteristic could apply to the five vein systems.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 7.4.1. | Comales – Nazareno system |
The Comales – Nazareno system is
located to the NW of the property and runs NW-SE for approximately 3.7 km. The system contains the Comales vein to the NW and the
Nazareno, Nazareno del Alto and three more vein splays to the SE; the structures are hosted by SMO tuffs, breccias and granite.
The vein and splays have been recognized with mapping sampling, diamond drilling and drifting by Luismin, Genco and Silvermex.
Drilling by Silvermex, in 2011 and 2012, was carried out only along 1 km of the Nazareno veins and splays.
The Jessica – Joya Larga veins
in the Coloso system, strike NW – SE and have a recognized length of approximately 2 km based on mapping and diamond drilling.
The vertical extent of mineralization is known to a depth of 420 metres. Both veins are hosted by SMO tuffs and volcanic breccias
although GT has been intercepted with deeper holes. Jessica dips to the SW and Joya Larga dips to the NE which indicates that both
veins should intercept at depth although this possibility has not been explored with drilling. Figures 7.8 and 7.9 show two cross
sections of Jessica and Joya Larga veins, these were interpreted based on drill-hole information; since the veins have opposite
dip directions they may intercept at depth. Several vein splays have been recognized in the system, being the most explored; Jessica
FW, Jessica HW and Joya Larga HW; usually the vein splays are narrower than the main veins (1 metre in average). Therefore the
possibility is open for additional splays and the exploration potential remains open laterally and at depth.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-8: Cross section of Jessica
and Joya Larga veins, and splays with main geologic features as interpreted from drill-hole information
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-9: Cross section of Jessica
and Joya Larga veins showing drill-hole intercepts and main geologic features.
| 7.4.3. | Guitarra vein system |
The Guitarra vein system consists of
the W – E trending Guitarra NW and the NW – SE trending Guitarra Centro and Guitarra SE. These veins dip at angles
between 70° and 90° to the SE. The Guitarra NW is recognized as a single vein in part due to soil coverage and little exploration,
whereas the Guitarra Central and Guitarra SE (La Cruz, Guitarra and San Rafael mines) consist of the main vein and several splays
at the hanging wall and the footwall; e.g. Santa Lucia vein. Figures 7.10 and 7.11 show cross section from Santa Lucia, these were
interpreted based on underground geologic mapping and drill-hole information. The entire system has a recognized length of approximately
3.5 km and several ore shoots have been mined along approximately 2.4 km, mostly at Guitarra Centro. La Guitarra SE, Guitarra Central
and the explored portion the Guitarra NW are hosted by granite. The known vertical extent of mineralization from surface to the
deepest diamond drill-hole intersection is 700 metres.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-10: Cross section of Santa Lucia
vein and splays interpreted based on underground mapping and underground drilling. Notice that the vein and splays are interpreted
to be bounded by faults.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 7-11; Cross section of Santa Lucia
vein and splays. Notice that the fault at the hanging wall shown on figure 7-10 probably merges with the fault at the foot wall
in this section suggesting that the faults and veins have different strike orientations
| 7.4.4. | Mina de Agua and El Rincón systems |
The Mina de Agua and El Rincón
systems located SE from the Temascaltepec fault are considered mid – long term exploration prospects. The main recognized
veins at Mina de Agua are Veta Rica, Santa Ana, Maravillas, Animas and Sayas and the main recognized veins at El Rincón
are Marmajas, San Luis and Nuevo Descubrimiento. The veins in the Mina de Agua and El Rincón systems have recognized lengths
of 100 metres to 800 metres and widths of tens of centimetres to two - three metres. The veins trend NW and dip either NE or SW
at angles between 70° and 90°. Mineralization at Mina de Agua and El Rincón is hosted by GT.
| 7.5. | Hydrothermal alteration |
The following descriptions of alteration
mineralogy and processes are mostly based on field and core observations done in the Guitarra and Coloso vein systems. In the La
Guitarra mine area many parts of the granite are altered, mainly comprising high-level silicification and argillic alteration.
Hydrothermal alteration at the Coloso mine has been mainly observed in drill core and underground developments. The host tuff and
breccia of the Jessica and Joya Larga veins
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
is usually strongly silicified for a few metres to tens of metres away
from the vein. Away from the silicified envelope the host rock bears argillic and advanced argillic alteration, evidenced by the
presence of smectite, illite-smectite, kaolinite, alunite and anhydrite. Alunite, kaolinite and anhydrite were observed filling
fractures mostly at shallow elevations in some of the drill-holes. The alunite, kaolinite and anhydrite veins are most likely related
to down-draping steam-heated meteoric waters which are common in many IS deposits in Mexico such as Fresnillo. Propylitic alteration
is the most distal alteration assemblage with respect to the vein and consists of chlorite alteration with disseminated pyrite
and calcite veining. Alteration within the veins is usually seen as strong silicification (particularly affecting rock clasts and
matrix in breccias) and illite, illite-smectite. Supergene alteration develops mainly jarosite, goethite, hematite and sulfur.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Vein deposits at La Guitarra have physiochemical
and mineralogical characteristics of the Intermediate Sulphidation (IS) epithermal type and fit the vein deposit model proposed
by Buchanan(1981) (Figure 8.1). Epithermal deposits form at shallow depths in volcanic-hydrothermal and geothermal environments.
They define a spectrum with two end members, low and high sulfidation (Hedenquist et al., 1998). Figure 8.2 shows the genetic model
for epithermal deposits proposed by Hedenquist et al., (1998). IS epithermal deposits form part of the epithermal spectrum and
their genesis is complex due to the involvement of fluids with meteoric or magmatic origin during their formation and to the fluid
evolution. According to several authors the fluids that formed the Mexican epithermal deposits represent a mixture of fluids with
diverse origins varying from meteoric to magmatic (Simmons et al., 1988; Benton, 1991; Norman et al., 1997; Simmons, 1991; Albinson
et al., 2001; Camprubí et al., 2006; Camprubí and Albinson, 2007; Velador, 2010). Camprubí et al. (2006) resolved
that magmatic, crustal meteoric and surficial meteoric fluids were involved in the formation of epithermal veins at La Guitarra.
Camprubi’s conclusion was based on gas chemistry data from fluid inclusion study combined with the study of oxygen and hydrogen
stable isotope data.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 8-1: Geologic model for Mexican epithermal
veins adapted from Buchanan (1981)
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 8-2: Genetic model for epithermal deposits
proposed by Hedenquist et al. (1998). Green ellipse represents the approximate environment for the La Guitarra veins.
The epithermal veins of La Guitarra are spatially
associated with the Oligocene age volcanic and subvolcanic rocks of the SMO. 40Ar/39Ar ages obtained from
adularia samples were 32.9 +/- 0.1 Ma and 33.3 +/- 0.1 Ma (Camprubí et al., 2003). These results indicate that epithermal
mineralization at La Guitarra is coeval with the “El Peñon” dome (31.6 +/- 0.8 Ma to 34.87 +/- 0.15 Ma), the
tuff NW from mine (33.6 +/- 0.9 Ma) and probably other domes and the rhyolite dikes of the SMO in the area. The temporal relation
between the mineralization and the domes suggests a genetic relation between the two. A genetic relationship between rhyolite domes
and epithermal mineralization has been suggested also at Fresnillo (Velador et al. 2010).
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Exploration at the La Guitarra property employs prospecting,
surface and underground (including abandoned mines and adits) mapping and sampling and drilling (underground and surface). Previous
Exploration works following the 2010 Technical Report were carried out in the property between January 2011 and June 2012 by Silvermex
and consisted of soil MMI (Mobile Metal Ions; 1,583 samples) geochemistry on the Comales-Nazareno, Coloso and Guitarra NW areas.
First Majestic has been carrying out exploration
activities such as prospecting, mapping and sampling in abandoned mines and at the Mina de Agua and Nazareno areas. Surface mapping
and prospecting have also been performed in the Guitarra area (Concha vein and Timbres), Nazareno and Mina de Agua.
Vein structures are recognized on surface on outcrops
and old pits that are very common in the property; mapping of old pits and outcrops helps defining lateral continuity of veins.
Outcropping quartz veins and/or silicified breccias are sometimes easily identified because they form linear outcrops that stand
out from the softer soil since they are more resistant to erosion; in fact some veins such as La Guitarra, La Concha and others
can be traced on the Light Detection and Ranging Digital Elevation model (“LiDar™”) due to the high resolution
of the images. Additionally, since the soil and vegetation cover is common, the identification and mapping of vein floats is commonly
employed to target new veins or lateral continuity of vein structures. Once the continuity of a vein is inferred or defined, trenching
is used to remove the soil cover and be able to sample the bedrock.
Hydrothermal alteration is not easily identified
on the wall rock since the vegetation cover is common. Therefore, veins, breccias and rhyolite dikes that are occasionally associated
with veins and fault structures show strong silicification and traces of quartz – alunite alteration. Supergene alteration
is commonly associated with vein structures in the form of iron oxides (hematite – goethite) jarosite, and sometimes traces
of copper oxides such as malachite – brochantite.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Between July 2006 and August 2008, Genco conducted
a large scale extensive exploration program within the La Guitarra property. Initial surface mapping and sampling was followed
by surface diamond and reverse circulation drilling. A total of 85,645 metres were drilled in 452 drill-holes, of these 289 were
diamond drill-holes and 163 were reverse circulation drill-holes. The RC drilling campaign was focused on, but not limited to,
testing the Creston target. The diamond drilling campaign was designed to explore Coloso, Nazareno, Santa Ana, La Guitarra and
part of the Creston target.
In August 2011, Silvermex resumed exploration activities
and completed a drill program of 7,645 metres in the Coloso and Nazareno areas. In 2012, Silvermex completed a diamond drill program
of 32,828 metres, 20,596 metres of these targeted Coloso and Nazareno and 12,232 metres were drilled underground at La Guitarra
mine. Silvermex drilling program consisted of a total of 262 diamond drill-holes for a total of 40,473 metres drilled between January
2011 and June 2012.
In 2014, First Majestic drilled 6,188 metres in 57
holes, 50 holes were drilled from underground in La Guitarra mine and 7 holes were drilled from surface on the Guitarra NW area.
Most of the drilling by First Majestic between July 2012 and December 2014 (27,536 metres) has been focused on infill and delineation
of known mineralization at the La Guitarra mine and some expansionary holes (8,039 metres) were drilled to explore the NW and SE
extensions of the La Guitarra vein (Figure 10.1). First Majestic has drilled 35,575 metres in 262 diamond drill-holes for the period
between July 2012 and December 2014.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 10-1: Map showing areas drilled by Silvermex
and First Majestic during drilling campaigns 2011 to 2014
First Majestic categorizes drill-holes into “delineation
holes” (used to guide and support the mine operation), “infill holes” (to improve quality of known resources)
and “exploration holes” (to add new resources). Figure 10.2 shows the classification of diamond drill-holes used by
First Majestic. The core diameters used for drilling at La Guitarra are 36.4 millimetres (“TT46”), 47.6 millimetres
(“NQ”) or 63.5 millimetres (“HQ”). The TT46 diameter is generally used only for delineation holes whereas
the bigger NQ and HQ diameters are used for infill and exploration holes. No reverse circulation (“RC”) drilling has
been carried out by First Majestic. First Majestic uses a contractor for most infill and exploration holes whereas delineation
holes utilize the Company’s own rigs and personnel.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 10-2: Diamond drilling classification applied
by First Majestic
| 10.3. | Core handling and storage |
The standard practice followed by First Majestic’s
drillers and contractors under First Majestic’s supervision is to extract the core every 3.05 metres (length of two drilling
rods, “the runs”), the core is extracted from the core barrel and placed onto a sample collection device, break the
core to make pieces that fit into the core box (when necessary), mark the core, using a coloured pencil, at the place where it
was broken, place the core into the core boxes and place a wooden block at the end of the run with the total depth and core length
recovered being noted. The core box, once full, is closed with a top lid and stacked for transportation, core boxes and lids used
by First Majestic are made of plastic.
Core boxes from underground drilling are transported
and delivered to the core shed by drillers every morning. The core boxes are properly closed and box lids are secured with raffia
fiber or rubber bands before transportation. The condition of the boxes and core is checked by one of the exploration geologists
at the core shed upon receiving them. In the case of surface drilling the exploration geologist collects the core boxes every morning
from the drilling station and transports them in a pickup truck to the core shed. In both cases, the core boxes are properly closed
and the box lids are secured with raffia fiber or rubber bands to prevent core from falling out of the box during transportation.
After the core has been logged and sampled the relevant boxes are placed on racks within the secure environment of the core shed.
Upon acquisition of La Guitarra, First Majestic rebuilt
and expanded the capacity of the old core shed in order to improve the core handling and storage practices.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Data collected at La Guitarra includes, but is not
limited to, collar surveys, downhole surveys, logging (lithology, alteration, mineralization, structure, RQD, sample intervals,
etc.), specific gravity (“SG”), and geotechnical information. The data collection practices employed by First Majestic
are consistent with standard exploration and operational practices. The data collection practices followed in the past by Genco
and Silvermex are also considered standard practices.
Since 2010, drill-hole collars are surveyed by the
engineering department at La Guitarra mine using a Leica total station. Prior to 2010, a Sokia total station was used by Genco.
Collected information includes X, Y, Z coordinates, azimuth and dip angle. Collar data is downloaded from the total station and
then uploaded into a mine server. A certificate is also prepared, stored and shared in the mine server since 2012.
Between 2008 and 2012 downhole surveying at La Guitarra
for the exploration of Jessica – Joya Larga and Comales – Nazareno was done by the drilling contractor at 50 metre
intervals or less using a Reflex tool. Downhole surveying from July 2012 to December 2013 was performed using a Reflex tool and
a PeeWee tool was used in 2014. Downhole surveys were collected at 50 metre intervals or less in infill and exploration holes between
July 2012 and December 2014. Downhole surveying was not done for short and small diameter delineation holes. The Reflex tool reports:
programed depth of reading in metres, azimuth in degrees, dip in degrees and magnetic field in nanoteslas. A six degrees correction
to the East is applied to every azimuth reading to compensate for magnetic declination. Between 2008 and February 2014, the downhole
surveys were reported handwritten in paper along with the daily drilling reports turned in by the drillers. Digital reporting was
implemented in March 2014.
| 10.4.3. | Logging and sampling |
Core logging takes place in a core shed facility
located close to the mine offices and consists of labelling depth intervals (from-to) on core boxes and lids, checking that the
wooden blocks annotated with depth information are not misplaced, estimating Rock Quality Designation (RQD), estimating core recovery,
describing geology (lithology, structures, mineralization, alteration, etc.), photographing core and sampling for chemical assays
and SG. Core logging is initially recorded by hand (paper copy) and then transcribed to electronic spread-sheet templates. Before
sampling the core is oriented and marked for assay and SG samples by the geologist. Afterwards, the core boxes with intervals selected
for assay or SG sampling are taken to the sampling facility located within the core shed where the samples are cut with an electrical-powered
diamond saw. In the case of assay samples, one half of the core is retained in the core
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
box for further consideration and the other half
is placed in a properly marked sample bag for shipment to the laboratory; sample number and intervals are also recorded in the
core box. The length of the assay samples ranges between 0.15 and 1.5 metres in mineralized or moderately to strongly hydrothermally
altered zones and between 1.0 and 3.0 metres in weakly altered or visibly barren zones. The length of SG samples ranges between
10 to 25 centimetres.
Traditionally, Genco and Silvermex used an SG of
2.5 for tonnage estimation at La Guitarra; according to the 2010 Technical Report, this SG was determined by a series of tests
performed. In May 2014, First Majestic implemented a SG determination procedure based on the water immersion method. Core fragments
measuring 10 to 25 centimetres are cut with the diamond saw, weighted in air (dry weight), then wrapped with plastic (kp; kleen
pack), weighted again in air (air kp) and finally weighted under water (kpH2O). The formula for calculation of SG is
as follows:
Additionally, First Majestic has recently implemented
a quality assurance and quality control (QA/QC) protocol for SG determination that consists of: SG determinations in duplicate,
weighing the sample again after removing the plastic (to ensure that water did not make it through the plastic), and the use of
piece of metal as standard. Sample checks are also shipped to SGS Lab for SG determination using the wax coating immersion method.
Correlations greater than 0.9 were observed for duplicate pairs and checks compared against primary samples using regression plots.
The SG data is collected on paper and then transcribed into spread-sheets. Specific gravities were determined for rock and vein
material from all the drill-holes of the Coloso area and for a selection of samples from the La Guitarra mine. All data were collected
in paper and then transcribed into electronic spread-sheets.
| 10.4.5. | Core Recovery and Geotechnical logging |
Core recoveries are estimated by geologists at the
core shack. The process consists on assembling or putting back together pieces of core, measuring the real core length recovered
and then capturing the recovered lengths per drill run on paper. After the recoveries are captured in paper, the information is
transcribed into an spread-sheet template were the percent recoveries are calculated by dividing the measured length of core recovered
over the length of the drill run. Typical core recoveries in host rock and quartz veins is over 95% whereas in brittle fault structures
the recoveries can be in the range of 20 to 50%.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Geotechnical core logging was implemented late in
2014 by First Majestic. All of the core from the Jessica and Joya Larga drill campaigns conducted by Genco and Silvermex was re-logged
for available geotechnical data at the end of 2014. Data collected includes RQD, quantitative and qualitative data on joints and
fractures and rock hardness. The data was initially recorded in hard copy format and then transcribed into electronic spread-sheets
for estimation of rock quality.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 11. | Sample Preparation, Analyses, and Security |
This section covers the sampling program from which
the data used in the 2014 Resource Estimation for the Coloso, La Guitarra, Nazareno and Mina de Agua (Veta Rica and La Tuna veins)
areas was derived. The sampling, handling and assaying methods used at La Guitarra during the 2008, 2011and 2012 drilling exploration
campaigns were generally consistent with industry standards. From 2009 to 2010 there was no exploration drilling program. The following
subsections describe the sample preparation procedures and analysis in each drilling campaign:
| 11.1. | 2008 Sample Preparation, Analysis and Security |
In 2008, Genco conducted the exploration program
at La Guitarra property. Diamond drill core samples and channel samples were used at La Guitarra for mining control as well as
for resource estimation.
Investigation of possible vein extensions, the search
for new veins and the delineation of the veins between mine levels was accomplished by various diamond drill campaigns. Drill core
was logged in La Guitarra’s facility at the mine site by the geologist, the core was oriented properly and marked before
sampling. All drill core intervals selected for sampling were cut in half using either a diamond saw, or a mechanical splitter,
by the designated core sampler. The mechanical splitter was used on samples where it was suspected that the cooling water for the
saw might wash out the mineralization. One half of the core was retained in the core box for further consideration and the other
was placed in properly marked sample bags for shipment to the laboratory. Collars of all diamond drill-holes were surveyed and
the holes were surveyed down the hole.
Drill core was sampled across the vein at various
lengths depending on the vein width; in general, 1.5 metre long samples were taken from mineralized structures such as veins, stockworks,
veinlets and disseminations with strong alteration. Some samples were less than one metre however when a change in the mineralization
was evident. Samples of 3 metres to 5 metres lengths were taken for that rock which exhibited neither alteration nor evident mineralization.
Chip samples were taken underground by a trained
sampler when new exposures of the veins were evident in the workings. Samples were taken by chipping with hammer and chisel across
the sample length in a channel fashion with lengths set so that the individual veins and the waste sections within the veins were
sampled separately. The samples were normally less than a metre in length. The wall rocks at the sides of the veins were sampled
separately from the veins. Samples were placed in appropriately marked bags and transported to the laboratory. The samples were
marked and located using the underground survey markers for control. Due to the normal production priorities not all of the stope
lifts were sampled.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Genco implemented a quality control system that included
the insertion of blanks, duplicates and reference material in the sample stream. To check the assay results, the La Guitarra laboratory
inserted 3% of laboratory check samples.
A program to send samples to external laboratories
for analysis checks was under the direction of La Guitarra’s Superintendent of Geology and included the following: one half
of the sawn core was sent to the mine site lab for preparation, after the initial preparation, crushed and pulverized samples were
split into two, one half sent to the mine lab and the other half to ALS Chemex (“ALS”), a commercial laboratory. The
check samples sent to ALS were either crushed lab’ rejects or ground pulp rejects. The samples were sent to Hermosillo where
they were pulverized in the ALS lab, and then the prepared pulps were sent to ALS lab in Vancouver to be fire assayed. All sample
rejects and pulps were returned to the mine for storage after analysis.
La Guitarra assay laboratory followed standard protocols
for sample preparation and assaying. At La Guitarra laboratory the samples were prepared as below:
| · | Crushed to 1/8 inch with a jaw and cone crusher |
| · | Riffle split to approximately a 200 gm sample |
| · | Pulverized in a disk pulverizer with 90-95% passing 200
mesh screens. |
| · | The pulverizer and crusher were cleaned by compressed
air after each sample. |
La Guitarra laboratory analyzed all samples by fire
assay with gravimetric finish. However, no documented analytical procedures are available from the time of this analysis.
ALS analysed all samples by 4-Acid ICP-AES. Samples
containing more than 10 g/t Au or more than 100 g/t Ag were re-analyzed using a fire assay with a gravimetric finish for both silver
and gold, or an acid digestion with an AA finish for silver.
All core samples from the 2008 drilling campaign
were kept and stored at La Guitarra core storage facility.
It is the author’s opinion that sample handling,
storage and shipping procedures carried out by Genco followed industry standards at that time. However, some of the earlier drill-hole
samples with analytical procedures that were not well documented have since been mined out.
| 11.2. | 2011 and 2012 Sample Preparation, Analysis and Security |
Sample Preparation
In 2011 and 2012, Silvermex conducted the exploration
program at La Guitarra property. Sample handling, storage and shipping procedures carried out by Silvermex, followed the current
industry protocols and standards. Diamond drill core samples and channel samples
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
were used by Silvermex for mining control as well
as for resource estimation. The drill core samples collected during the 2011 surface exploratory drilling campaign were prepared
and analysed by ALS. The drill core samples from the 2012 exploratory underground diamond drilling program were sent to Inspectorate
for preparation and analysis
The chip and channel samples that were collected
during the 2011 rock geochemical sampling work and other underground samples were prepared and analyzed at the La Guitarra mine
assay laboratory by La Guitarra personnel. The drill core samples from delineation holes were also prepared and analysed at the
on-site laboratory but the results from this sampling are not documented in this technical report.
La Guitarra personnel collected drill core samples
during the various phases of the 2011 and 2012 exploration programs.
The 2011 and 2012 drill cores were placed in wooden
boxes at each drill site and transported by either the drillers or the supervising geologist to the core logging facility at the
La Guitarra mine site. The core recovery lengths and percentages were calculated and lithology, structure, alteration and mineralization
were logged.
The core recovery percentages were determined following
which additional geotechnical data was obtained. The lithology, structure, alteration and mineralization of the drill core was
then logged. These observations were recorded as written notes on pre-prepared log sheets. During the geological logging the geologist
marked the drill core intervals that should be sampled, controlled by the recognition of lithological contacts, mineralization,
alteration and structural features. The drill core was cut in half lengthwise using a diamond rock saw for those sections deemed
worthy of sampling and analysis. One half of the sawn drill core was placed in a 6-mil sample bag and the other half of the drill
core was returned to its correct position in the core box. A unique sample assay tag was placed in each core sample bag before
the bag was securely sealed. The drill-hole number, drilling interval and sample assay tag number were recorded for later transcribing
to “Chain of Custody” documents that accompanied the samples to the assay laboratory. Quality control standard and
blank samples were scheduled to be inserted into the sample sequence at an average rate of 1 standard or 1 blank per 20 drill core
samples, representing approximately five percent of the total samples.
After the drill core had been logged the observations
recorded in hand-written drill logs were entered into a matrix-style spreadsheet. The core boxes were labelled with the drill-hole
number, box number and drilled interval contained in each box. The core boxes were stored in pre-constructed core racks. The sealed,
documented and bagged drill core samples were placed in larger poly sacks that were securely sealed and stored in the drill core
warehouse prior to shipping them to their respective preparation and assay laboratories. Shipping documents accompanied each drill
core sample shipment and any differences between the
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
shipping documents and that received by the laboratory
were to be reported immediately to the company.
The drill core samples collected during the 2011
surface diamond drilling program were sent to ALS’ sample preparation facilities in Guadalajara, Jalisco, Mexico where they
were prepared prior to being air-shipped to ALS’ assay laboratory in North Vancouver, British Columbia, for analysis.
Drill core samples from the early 2011 underground
exploratory diamond drilling program were sent to Activation Laboratories Ltd.’s sample preparation facilities in Zacatecas,
Zacatecas, Mexico. The samples were prepared and then air-shipped directly to Activation Laboratories’ assay laboratory in
Ancaster, Ontario, Canada, for analysis. Later, the underground exploratory drilling samples were sent to Inspectorate sample preparation
facilities in Hermosillo, Sonora, Mexico where they were prepared prior to being air-shipped to Inspectorate’s assay facilities
in Sparks, Nevada, U.S.A. for analysis.
The drill core samples from the 2012 exploratory
surface drilling program were sent to ALS laboratory at the Mexico and Canada facilities. Inspectorate laboratory in Nevada was
used as secondary lab for check samples.
Drill core samples from the underground diamond drilling
program were sent to ALS and Inspectorate laboratories for preparation and analysis.
| 11.3. | 2011-2012 Sample Analysis and Assays |
The 2011 and 2012 rock geochemical samples and the
drill cores from delineation diamond drilling were analysed by La Guitarra personnel at the La Guitarra mine assay laboratory.
The in-house rock geochemical and drill core samples were dried and then crushed to minus 1/8 inch with jaw and cone crushers.
The crushed material was then riffle split producing a 200-gram sub-sample which was pulverized to 90 to 95% passing the 200 mesh.
All the crushers and pulverizers were blown clean using compressed air after processing each sample. Normal fire assay digestion
and gravimetric procedures were employed for each sample using a 20-gram subsample. The resultant dore bead was weighed using a
micro balance, the silver was removed from the bead using nitric acid, and then the remaining gold prill was weighed to determine
grade. The on-site La Guitarra laboratory routinely re-assayed approximately 3% of all of the samples with additional check-assaying
of anomalous precious metal values. The program to check-assay samples at an independent laboratory was directed by the Superintendent
of Geology. The La Guitarra laboratory does not have ISO certification but follows industry standard sample preparation and assaying
protocols.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
La Guitarra personnel implemented a quality control
system for the in-house assaying procedures that included the insertion of blanks, duplicates and reference material into the sample
stream.
The drill core samples collected during the 2011
surface diamond drilling program were sent to ALS’ sample preparation facilities in Guadalajara, Jalisco, Mexico where they
were logged into ALS’ sample tracking database. Each sample was placed into a stainless steel tray and dried for approximately
4 to 8 hours, depending upon its moisture content. Then each sample was progressively crushed by primary and secondary crushers
until more than 70% of the crushed sample passed through a 2 mm (Tyler 10 mesh) screen. Standard crushing practices also included
repeatedly cleaning the crusher, prior to, during and after each sample batch using coarse quartz material, and air cleaning the
crushers after each sample. The sample material was then riffle split to obtain approximately 250 to 500 grams and the remaining
coarse reject material was returned to La Guitarra for storage in their warehouse for possible future use. The 250 to 500 gram
sample, size dependent upon requested analyses, was pulverized using a disk pulverizer until 85% of the pulverized material passed
through a 75 micron (Tyler 200 mesh) screen. Then 250 grams of finely pulverized material was transferred to a paper envelope.
The bagged sample pulps were later air-shipped directly to the ALS’ facilities in North Vancouver, Canada for analysis. All
of the sample pulps were initially analyzed for 33 elements using conventional ICP-AES analysis (ALS’ Procedure ME-ICP61).
This analytical procedure uses a mixture of four acids to digest the sample pulp. The elements and their concentration are determined
by inductively coupled plasma and atomic emission spectroscopy (‘ICPAES’). The determined elements are: Al, As, Ba,
Be, Bi, Ca, Cd, Co, Cr, Cu, Fe, Ga, K, La, Mg, Mn, Mo, Na, Ni, P, Pb, S, Sb, Sc, Sr, Th, Ti, Tl, U, V, W and Zn.
Gold values were determined using a combination of
fire assay fusion with atomic absorption spectroscopy analysis (ALS’ Procedures Au-AA23). The Au-AA23 fire assay/AA procedure
utilizes a 30-gram weight of sample pulp for analysis with 0.005 and 10 ppm as the lower and upper detection limits. The procedure
involves the fusion of a metal bead that is then digested in acids, cooled, diluted and analysed by atomic absorption spectroscopy
versus matrix-matched standards. Silver values were determined using ICP-AES and Fire Assay Gravimetric Finish methods. When the
analytical results exceeded over limits of 10 ppm for gold or 100 ppm for silver a re-analysis is automatically carried out using
gravimetric procedures (ME-GRA21) which is a fire assay of a 30-gram charge with a gravimetric finish.
The later 2011 and 2012 underground exploratory diamond
drill core samples that were sent to Inspectorate sample preparation facilities in Hermosillo, Sonora, Mexico were handled in much
the same way as those sent to ALS. Drill core samples were weighed, and dried prior to crushing to less the ½ inch diameter.
The primary crushed material was then further crushed in roll crushers to less than 10 mesh. A 300- to 400-gram portion of the
crushed material from
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
each sample was extracted using a Jones riffle. The
remaining ‘reject’ crushed rock was returned to its original plastic sample bag and packed in containers for return
to La Guitarra at periodic intervals. The split sample portion was then pulverized by a ring and puck pulveriser to 90 to 95 percent
less than 100 mesh, and a 30-gram portion was extracted to use as a sample aliquot. The bagged sub-samples were then air-shipped
to Inspectorate’s assay facilities in Sparks, Nevada, USA for analysis.
The underground drill core samples were analysed
for gold, silver, lead and zinc plus a suite of 30 elements using Inspectorate assay procedures Au-1AT-AA, Ag-4A-TR and GV, Zn-4A-OR-AA,
Pb-4S-OR-AA and 30- 4A-TR. The gold assays were obtained using a 30g sample, using standard fire assay fusion and digestion with
a mixture of 4 acids and analysing by atomic absorption finish procedures. Over-limit gold values resulted in the sample pulp being
re-assayed using fire assay fusion and gravimetric finish procedures. The silver values were initially determined by digesting
a sample with a mixture of four acids, doing a fire assay fusion and atomic absorption finish procedures. If a sample returned
an over-limit silver value then the sample pulp was re-assayed using fire assay fusion and gravimetric finish procedures.
Thirty trace elements were analysed using four acid
digestion and ICP finish procedures. Inspectorate routinely performs its own QA/QC procedures on approximately five per cent of
the total samples submitted for analysis.
There is no information related to the analytical
procedures by Activation Laboratories.
| 11.4. | 2011 and 2012 Sample Security |
The 2011 and 2012 drill core samples were stored
in the secure core processing and storage warehouse on the Property prior to their shipment via bonded courier to the sample processing
laboratories of either ALS in Guadalajara, Jalisco, Mexico or Inspectorate in Hermosillo, Sonora, Mexico. All of the samples were
securely sealed and Chain of Custody documents accompanied all shipments. The analytical results from these samples were received
by authorized Silvermex and La Guitarra personnel using secure digital transfer transmissions, and these results were restricted
to qualified Silvermex personnel prior to their publication.
Upon completion of the drilling program the diamond
drill core and assay sample rejects were catalogued and securely stored in the core storage facility at the La Guitarra mine site.
It is the author’s opinion that the sample
preparation, analysis and security of the 2011 and 2012 drilling campaign met the industry standard at the time and can support
the current mineral resource and mineral reserves.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 11.5. | 2014 Sample Preparation, Analysis and Security |
Underground drilling core samples and channel samples
were used for ore control at La Guitarra and Santa Lucia. Channel samples were used at Veta Rica and La Tuna in Mina de Agua areas.
Since 2014, the selection of primary and external laboratory, sample preparation and selection of analytical methods have been
reviewed by First Majestic internal QP’s.
Core logging takes place in the La Guitarra’s
core shed facility located close to the mine offices and consists of labelling of from-to (depth intervals) on core boxes, estimating
RQD (Rock Quality Designation), estimating core recovery, describing geology (lithology, structures, mineralization and alteration),
photographing core boxes and marking of assay and SG (specific gravity) samples. The core is oriented and marked for assay sampling
by the geologist. Afterwards, the core boxes with intervals selected for assay or SG sampling are taken to the sampling facility
located also within the core shed, where the samples are cut with a diamond saw. In the case of assay samples, one half of the
core is retained in the core box for further consideration and the other half is placed in a properly marked sample bag for shipment
to the laboratory. The length of the assay samples ranges between 0.15 and 1.50 meters in mineralized or moderately to strongly
hydrothermally altered zones and between 1.00 and 2.00 meters in weakly altered or visibly barren zones. The length of SG samples
ranges between 0.10 to 0.25 meters.
Channel samples are marked and collected underground
and sometimes at surface across veins by trained samplers. Channel samples are first marked with paint by samplers being supervised
by a geologist; sample limits should honor vein/wall rock contacts and/or textural/mineralogical variations. The sample lengths
applied are range from 0.15 to 1.50 meters within mineralized or hydrothermally altered material and from 1.00 to 1.50 meters in
weakly altered to visibly barren material. The channels are first cut with a handheld (1,300 watts) Hilti brand diamond saw and
afterwards, the sample is chipped with a hand held (2,300 watts) Hilti brand percussion hammer.
The channel samples are collected by chipping with
a hammer across the sample length in a channel like fashion. The sample lengths are set so that the individual veins and the waste
sections within the veins are sampled separately. Similar to channel sampling, the wall rocks at the sides of the veins are sampled
separately from the veins. Distinction between vein and wall rock is generally easy due to very sharp textural and mineralogical
differences between quartz vein and host rock (granite, volcanic rock, volcanic breccia, shales, etc).
During 2013 and 2014 a total of 4,3024 and 4,5470
samples from underground delineation holes and surface were sent to La Guitarra’s Lab. Underground samples include back and
wall channel samples and muck samples whereas surface samples include samples collected on outcrops, stock piles and plant. During
2013, 1057 blanks, 1052 field duplicates and 17
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
standards were inserted in the sample stream which
represents an insertion rate of quality controls of 5%. During 2014, 1607 blanks and 424 field duplicates were inserted in the
sample stream which represents an insertion rate of 4% in the sample stream. La Guitarra’s laboratory is not a certified
laboratory; however, it follows the standard protocols for sample preparation used by First Majestic’s Central Lab, which
is in the process of obtaining the ISO 9001 certification.
Underground core samples were sent to SGS laboratory
located in Durango Mexico. Channel samples were submitted to La Guitarra laboratory.
At SGS, samples are prepared as follow:
SGS analyzes a maximum of 60 samples per batch. Samples
at SGS are prepared using the PRP89 preparation method and WGH79 for sample weights. This method is described as follows:
| 1. | The entire sample is dried at temperature of 100°C from six to eight
hours or until the weight sample is constant. |
| 2. | The sample is weighted using method WGH79. The PRP89 method is applicable for all sample weights. |
| 3. | The entire sample is crushed to 75% passing to 2mm using a Rocklabs Boyd Crusher and a Terminator jaw crushers. |
| 4. | A 250g sub-sample of the crushed material is split using a riffle splitter. |
| 5. | The 250g sub-sample is pulverized to 85% passing 75 microns using a Labtech ESSA LM2 pulveriser. About 100g is used for analysis
and laboratory internal quality control. The remaining 150 g are stored in boxes for 90 days. After the pulps are returned to La
Guitarra Mine. |
All coarse reject and pulp reject material is stored
at SGS for 90 days. After this period, pulps and rejects are sent back to the La Guitarra mine. At the La Guitarra, the samples
are stored in a secured core-shack.
The analytical methods for the samples submitted
to SGS laboratory are listed in table 11.1.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 11.1: SGS 2014 Analytical Methods and Detection
Limits
Code |
|
Element |
|
Limits |
|
Description |
FAA313 |
|
Au |
|
0.01 g/t |
|
30 g, Fire Assay, AAS finish. |
AAS21E |
|
Ag |
|
0.5-300 g/t |
|
2 g, 3-Acid digest, AAS finish. Samples with over detection limits results are analyzed by FAG313. |
FAG313* |
|
Ag |
|
10-1000000 g/t |
|
30 g, Fire Assay Gravimetric Finish. Used only for AAS21E, Ag upper detection limits. |
ICP14B |
|
multi-element |
|
Range from 0.5-10000 ppm |
|
0.25 g, 2-Acid/Aqua Regia Digestion/ICP-AES Package. |
ICP90Q** |
|
Mn |
|
0.01% |
|
0.20 g, Sodium Peroxide Fusion/ICP-AES Package. Used only for ICP14B, Mn upper detection limits. |
|
Pb |
|
0.05% |
|
0.20 g, Sodium Peroxide Fusion/ICP-AES Package. Used only for ICP14B, Pb upper detection limits. |
|
Zn |
|
0.05% |
|
0.20 g, Sodium Peroxide Fusion/ICP-AES Package. Used only for ICP14B, Zn upper detection limits. |
* AAS21E over limit analysis; ** ICP14B over limit
analysis
All samples were analyzed by AAS21E and ICP14B. Over
limit AAS21E results were also analyzed by FAG313. Since April 2014 samples returning greater than 270 g/t Ag were analyzed by
FAA313 to ensure there is overlapping in reporting between the fire assay and the acid digestion methods.
Over limit ICP14B manganese, lead and zinc results
were also analyzed by ICP90Q.
At La Guitarra laboratory samples are prepared as
follow:
| 1. | The samples are weighted. Usually the lab received samples weighting between 1,000 and 3,000 grams. |
| 2. | Samples are dried for 8 hours at 105°C in an electric oven. |
| 3. | Once the samples have been dried, control blank samples are inserted every 20 samples in the sample batch. |
| 4. | Samples and blanks are then crushed using a Terminator crusher to 80% passing the 6 mesh (~3.3 millimeters). Sieve checks are
performed every 50 samples. After crushing, samples and blanks are homogenized, split and further reduced from 250 to 300 gram
samples using a Jones splitter. |
| 5. | The crushed samples and blanks are then pulverized to 80% passing the -150 mesh; sieve checks are performed every 50 samples. |
| 6. | The pulverized samples and blanks are homogenized, split and reduced to 80 – 100 grams pulp samples. The crusher, pulverizer,
splitter, trays, sieves and other materials |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
and utensils used during sample preparation are cleaned between
samples using compressed air.
The analytical methods and detection limits employed
by La Guitarra are shown in Table 11.2. Aqua Regia digestion with Atomic Absorption Spectroscopy (AAS) is used for lead, zinc,
copper, iron and arsenic, whereas Fire Assay methods with gravimetric finish are used for gold and silver for all the concentrations
of the precious metals.
Table 11.2: La Guitarra Laboratory 2014 Analytical
Methods and Detection Limits
METHOD |
|
DESCRIPTION |
|
DETECTION LIMITS |
AW-AA100 |
|
Aqua Regia Digestion |
|
Pb (0.002-2%) Zn(0.002-2%),Cu (0.002-2%), Fe (0.002-6%) As(0.02-4%) |
ASAG-12 |
|
Fire Assay Gravimetric Finish |
|
Ag (0.3-3 ppm) |
ASAG-13 |
|
Ag by Fire Assay Gravimetric Finish and Au by AAS finish |
|
Au (0.1-10ppm), Ag (0.3-3 ppm) |
ASAG14 |
|
Ag and Au by Fire Assay Gravimetric Finish |
|
Au (>10 ppm), Ag (0.3-3 ppm) |
ASAG-15 |
|
Au by Fire Assay Gravimetric Finish for Ag over limit |
|
Au (>10 ppm), Ag (>3 ppm) |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 12.1. | Data Verification Coloso Area |
The La Guitarra’s Coloso area sample database
has been verified on three occasions: in 2010 for the mineral resource estimation by Genco and Mintec, in 2011 for an exploration
report done by Minorex and GeoSpark consultants, and in 2014 by First Majestic for the December 31, 2014 resource estimation.
| 12.1.1. | Historical Data Verification |
The 2008 exploration data were reviewed and verified
by Genco and Mintec consultants using MineSight 3D™ modelling software. The review concluded that the assay database used
for La Guitarra mineral resource estimation was sufficiently free of error to be adequate for resource estimation. Genco performed
a check analysis by comparing assay results from the 2006 assay results with the 2008 results. Genco concluded that significantly
less drilling was done in 2008 than in 2006/2007, consequently there were less check assays done in 2008. The 2008 results were
comparable to the 2006 check sampling results, which provided confidence in the sampling and assaying procedures used.
In the 2010 Technical Report, Clark and Thorton compared
results between drill-holes that intersected high-grade veins at depth versus channel samples and the mill feed results. The report
stated that the comparison indicated no evident biases between the overall drill assays and those assays taken at the mill head
and from channel samples.
During 2006 and 2007 check samples from La Guitarra
laboratory were submitted to ALS. The results from the two laboratories were reported to be similar. The authors of the 2010 Technical
Report concluded that the nearly 86,000 metres of sample data taken over the Genco operational and exploration years used for modeling
the seven underground deposits and three open pit areas were fairly represented by the assay databases, and that the data were
properly assayed and reported.
The 2011-2012 drilling and sampling data were reviewed
and verified by Minorex and GeoSpark consultants in 2011. The electronic assay results were verified using the available original
certificates of assay, and drilling data were cross-checked with original drill logs. A verification of quality control data was
also conducted. The 2011 QA/QC data consisted of primary samples prepared and analyzed by ALS, field duplicates, standards, blanks
and check samples submitted to Inspectorate lab in Nevada as a secondary lab. The 2012 QA/QC data consisted of primary samples,
duplicate samples, standards and blanks; primary samples were prepared and analyzed by Inspectorate. Field duplicate samples and
repeat analyses have been reviewed in order to determine the precision of the primary sample results reported by ALS in 2011 and
by
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Inspectorate in 2012. Standard and blank samples
were reviewed to assess accuracy of the reported analytical results. Check assays were reviewed to monitor the bias in the original
sample results analyzed by ALS. Using Thompson-Howarth Precision versus Concentration (THPVC) and XY scatter plots, the authors
confirmed good precision with the repeat results and poor to moderate precision inferred through the duplicate sample review. The
poor to moderate precision for the duplicates was attributed to the distribution of the mineralization, which was reported to be
nugget prone. Notwithstanding this aspect the overall precision was considered satisfactory. Blank samples and standard materials
were reviewed for Au and Ag. Acceptable accuracy was inferred for both elements in this review. The authors recommended the use
of coarse certified blanks and to apply corrective actions for the standards out of compliancy.
The overall conclusions for the 2011 and 2012 data
verification were that the analytical results from the 2011 and 2012 primary sample results reported by ALS and Inspectorate can
be considered of sufficient quality to be used in support of mineral resource estimates in the Coloso, Nazareno, Comales, Joya
Larga and La Guitarra Projects.
| 12.1.2. | Drilling Data Verification 2014 |
First Majestic commenced the database verification
process for the Coloso area from the 2008, 2011 and 2012 surface drilling programs at the end of 2013 and continued during 2014.
The database verification consisted of 1) database integrity verification, 2) verification for transcription errors, 3) conducting
site visits to check core, sample security and location, 4) assay and QA/QC data review.
Electronic files from drill data, such as collar
information, sample data and assay certificates, were provided by La Guitarra personnel and compiled into a master database (The
2014 La Guitarra Resource Database).
| 12.1.3. | The 2014 La Guitarra Resource Database – Coloso Area |
La Guitarra Resource Database is in MS-Access format
and is located in the First Majestic Vancouver office. La Guitarra Resource Database contains drilling data from the 2008, 2011
and 2012 drilling campaigns from the Coloso area with the database closure dated as October 31, 2012 from last laboratory certificate.
Core logging data was initially recorded in hard copy and was, then transferred into electronic format spread-sheets. The core
logs are described in intervals for main lithology, veins, structures, minerals and alteration. RQD and core recovery data from
the 2011 and 2012 drill-holes were recorded in paper format and then transferred into electronic format spread-sheets. Only core
recovery was captured in the 2008 drill-holes. Paper copies of core logs, driller’s reports, sample tags and assay certificates
are filed at La Guitarra Silver Mine offices.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Electronic copies are available at the La Guitarra’s
local server as well as at First Majestic’s corporate servers in Durango. These copies are accessible through remote desktop
connections.
The resource database tables and number of records
are shown in Table 12.1.
Table 12.1: Tables of the 2014 La Guitarra Resource
Database
Table |
No. of
Records |
LG_TblCollar |
151 |
LG_TblDHSurvey |
894 |
LG_TblLithology |
9,321 |
LG_TblAlteration |
8,239 |
LG_TblDHMinerals |
4,185 |
LG_TblDHStruct |
2,188 |
LG_TblDHGeoTech |
16,011 |
LG_TblDHVeins |
1,617 |
LG_TblDHSamples |
9,595 |
LG_TblDHSG |
481 |
LG_TblQCSamples |
2,081 |
LG_TblAssay_Master_CO |
5,628 |
LG_TblAssay_Master_GDH |
6,190 |
LG_Tbl_Assay_Master_Inspectorate |
434 |
LG_TblDHSamp_Assays |
9,596 |
LG_tblQCSamples_Assays |
1,602 |
| 12.1.4. | Database Structure Verification |
First Majestic verified all records for the DHSurvey,
Lithology, GeoTech, Sample and Assay tables for overlapping intervals and depths that exceed the total depth reported in the collar
table. No overlaps or exceeded depths were identified. The drill-hole names and sample IDs were verified for consistency in all
tables to keep the integrity of the database.
| 12.1.5. | Verification for transcription Errors |
The number of drill-holes by drilling campaign is
shown in Table 12.2.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.2: Number of Drill-holes by Drilling
Campaign
Campaign |
|
No. of Drill-holes in
Database |
|
Exploration
Company |
|
Total
Length (m) |
2008 |
|
29 |
|
Genco |
|
10,340 |
2011 |
|
35 |
|
Silvermex |
|
6,005 |
2012 |
|
87 |
|
Silvermex |
|
15,640 |
Totals |
|
151 |
|
|
|
31,985 |
Collar Survey Verification
A total of 151 drill-hole collars, representing all
drill-holes from the 2008, 2011 and 2012 drilling campaigns, were checked for data entry errors by comparing collar locations reported
in the survey certificates issued by the First Majestic Engineering and Planning department. No errors were found in this check.
First Majestic carried out a comparison of the collar
elevations recorded in the database and the projected elevation of the drill collars on a topographic surface. The purpose of this
comparison was to confirm if the collar elevations reasonably reflect the topographic surface model. The topographic surface model
was prepared by McElhanney in 2011 from an aerial LiDar™ survey with a 1.0 m contour, vertical accuracy of 10 to 15 cm in
open terrain and from 0.5 to 1.0 m on vegetated surfaces. The topographic contours were imported into Surpac™ and converted
to a digital topographic model (DTM). Cross sections were built with collars and the DTM surface to check for elevation differences.
The comparison between the elevations from the surface projection of the drill-hole collars with the elevation stored in the collar
table shows that 88 of 151 collars had a difference less than 1 metre. Considering that the surface in La Guitarra vicinity is
moderately vegetated, these differences are within the expected tolerance of the topographic surface.
Manual GPS readings were taken by First Majestic
from drill-hole monuments from the 2008, 2011 and 2012 drilling campaigns. First Majestic was unable to locate eight drill-holes
from 2008 due to the actual surface changes. A difference of less than 2 metres was found in this comparison among all drill-holes.
Down-Hole Surveys Verification
A total of 62 records of the down-hole surveys for
the 2008, 2011 and 2012 drill campaigns were checked for data entry errors by comparing the Hole-ID, depth, azimuth and dip values
from the DhSurvey table and the original hardcopy reports. Those 62 records represent 7% of
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
the total records in the DHSurvey
table (Table 12.3). The original reports contain magnetic azimuths and were recorded in the Original_Azimuth field in the DHSurvey
table. The magnetic azimuths were converted to true-north azimuths by adding 6° to the magnetic azimuth. The true-north azimuths
were recorded in the Corrected_Azimuth field in the database. Magnetic azimuths from the 2008 were obtained using a Flex-It multi-shot
and for the 2011 and 2012 drill-holes a Reflex tool.
All down-hole survey records were
checked for anomalous measurements that could cause unusual kinks or bends in the drill-holes. Azimuths from the unusual kinks
were checked to confirm transcription errors. All transcriptions errors were corrected in the database.
Table 12.3: DHSurvey Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes in
Database |
No. of
Holes
Checked |
% Holes
Checked |
No. of
Records in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total
No. of
Entries
Checked |
No. Errors |
% Errors |
|
|
|
|
|
|
|
|
|
|
2008 |
29 |
6 |
20 |
203 |
7 |
3 |
28 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
35 |
9 |
25 |
190 |
13 |
7 |
52 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
87 |
35 |
43 |
501 |
42 |
8 |
168 |
1 |
<1 |
|
|
|
|
|
|
|
|
|
|
Totals |
151 |
50 |
33 |
894 |
62 |
7 |
248 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Lithology Verification
A random selection of 466 records
of the lithology table from 100 of the 151 drill-holes for the 2008, 2011 and 2012 drilling campaigns were checked for data entry
errors. The randomly selected records represent 5% of all lithology records. The check was completed by re-typing the interval
(from-to) and the lithology code from the original logs into a spread-sheet. Once typed, the data were compared with the data in
the lithology table.
A total of eight errors were found
in the lithology verification. Eight errors represent 2% of error rate. The total amount of records verified for transcription
errors and error rates are shown in Table 12.4. First Majestic verified and corrected the intervals associated with these errors.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.4: Lithology Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2008 |
29 |
29 |
100 |
6,768 |
336 |
5 |
1,864 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
35 |
14 |
40 |
488 |
27 |
5 |
108 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
87 |
57 |
66 |
2,065 |
103 |
5 |
412 |
8 |
2 |
|
|
|
|
|
|
|
|
|
|
Totals |
151 |
100 |
66 |
9,321 |
466 |
5 |
1,864 |
8 |
2 |
|
|
|
|
|
|
|
|
|
|
*Hole-ID, From-To, Lithology
Code
During 2014, First Majestic conducted
a field inspection and verified the lithology intervals with existing core boxes, core photographs and interpreted geological cross
sections. Some errors were found and corrections were made in the database.
Veins Verification
A random selection of 1,612 records
of the Veins table (LG_TblDHVein) from 80 of the 150 drill-holes for the 2008, 2011 and 2012 drill campaigns were checked for data
entry errors. The randomly selected records represent 10% of all vein records. The check was completed by typing the interval (from-to)
and the vein code from the original logs into electronic spread-sheets. Once typed, the data were compared with the data in the
veins table. No differences were found in the comparison between the records from the vein table and the veins reported in the
core logs. Drill-hole CO-127 did not intersect any veins. The total amount of records verified for transcription errors and error
rates is shown in Table 12.5.
Table 12.5: Veins Data Entry Error
Frequency
Drilling
Campaign |
No. of
Holes in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
2008 |
29 |
15 |
52% |
464 |
46 |
10% |
184 |
0 |
0 |
2011 |
35 |
18 |
51% |
248 |
30 |
12% |
120 |
0 |
0 |
2012 |
86 |
47 |
55% |
900 |
85 |
9% |
340 |
0 |
0 |
Totals |
150 |
80 |
53% |
1,612 |
161 |
10% |
644 |
0 |
0 |
*Hole-ID, From-To, vein code
Structures Verification
A random selection of 107 records
of the structures table (LG_TblDHStructures) from 60 drill-holes for the 2008, 2011 and 2012 drill campaigns were checked for data
entry errors. The randomly selected records represent 5% of all structure records. The check was completed by
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
typing the interval (from-to) and
the structure code from the original logs into an electronic spread-sheet. Once typed, the data was compared with the data in the
Structure table.
The total amount of records verified
for transcription errors and error rates are shown in Table 12.6. Only one error was found in the comparison between the database
and the core logs. The error was corrected in the database.
Table 12.6: Structure Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2008 |
29 |
21 |
72% |
898 |
47 |
5% |
188 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
35 |
10 |
29% |
357 |
16 |
4% |
64 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
86 |
29 |
34% |
892 |
44 |
5% |
176 |
1 |
<0 |
|
|
|
|
|
|
|
|
|
|
Totals |
150 |
60 |
40% |
2,147 |
107 |
5% |
428 |
1 |
<0 |
|
|
|
|
|
|
|
|
|
|
*Hole-ID, From-To, structure code
Alteration Verification
A random selection of 412 records
of the alteration table (LG_TblDHStructures) from 81 drill-holes for the 2008, 2011 and 2012 drill campaigns were checked for data
entry errors. The randomly selected records represent 5% of all alteration interval records. The check was completed by typing
the interval (from-to) and the main alteration code from the original logs into an electronic spread-sheet. Once typed the data
were compared with the data in the alteration table. A total of 6% of transcription errors related to the alteration code were
found in the database (Table 12.7). The errors in the alteration code will not affect the resource estimate.
Table 12.7: Alteration Data Entry
Frequency
Drilling
Campaign |
No. of Holes
in Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total
No.
Entries
Checked |
No.
Errors |
%
Errors |
2008 |
29 |
29 |
100% |
6,845 |
336 |
5% |
1,344 |
102 |
14 |
2011 |
35 |
17 |
49% |
448 |
24 |
5% |
96 |
1 |
0 |
2012 |
87 |
35 |
40% |
946 |
52 |
5% |
208 |
8 |
10 |
Totals |
151 |
81 |
54% |
8,239 |
412 |
5% |
1,648 |
111 |
6 |
*Hole-ID, From-To, alteration code
RQD and Core Recovery Verification
A random selection of 801 records
of the geotechnical table (LG_TblDHGeoTech) from 146 drill-holes from the 2008, 2011 and 2012 drill campaigns were checked for
data entry errors. The
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
randomly selected records represent
5% of all records. The check was completed by capturing into the interval (from-to) the recovery length and RQD from the original
logs. Once typed, the data were compared with the data in the GeoTech table.
No differences were found in the
comparison between the records from the Geotech table and the core recoveries and RQDs reported in the core logs. The total amount
of records verified for transcription errors and error rates are shown in Table 12.8.
Table 12.8: RQDs and Core Recovery
Data Entry Error Frequency
Drilling
Campaign |
No. of
Holes in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2008 |
29 |
29 |
100% |
7,684 |
364 |
5% |
1,456 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
35 |
34 |
97% |
2,701 |
142 |
5% |
568 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
87 |
83 |
95% |
5,626 |
295 |
5% |
1,180 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Totals |
151 |
146 |
97% |
16,011 |
801 |
5% |
3,204 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
*Hole-ID, From-To, Recovery
Length, RQD
Sample Interval Verification
All sample IDs and intervals from
the 2008 drilling campaign were verified for transcription errors by comparing the sample IDs and intervals recorded in the paper
core logs and laboratory certificates. Only one error was found in this comparison and the record was corrected in the database.
A random selection of 188 records from the 2011 and 2012 drilling campaigns were checked for data entry errors. The randomly selected
records represent 5% of all records. The check was completed by typing the interval into an electronic spread-sheet (from-to),
the sample ID and by comparing the values with the data recorded in the sample table in the database. No errors were found in this
comparison (Table 12.9).
Table 12.9: Sample Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
2008 |
29 |
29 |
100% |
5,770 |
288 |
5% |
864 |
1 |
<1 |
2011 |
35 |
27 |
77% |
1,071 |
57 |
5% |
171 |
0 |
0 |
2012 |
87 |
61 |
70% |
2,754 |
131 |
5% |
393 |
0 |
0 |
Totals |
151 |
117 |
77% |
9,595 |
476 |
5% |
1,428 |
0 |
0 |
*Hole-ID, From-To, Sample ID
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Assay Verification
All samples and assay results for
the elements Au, Ag, As, Pb, and Zn recorded in LG_tblDHSamp_Assay table were verified against electronic copies from ALS, Inspectorate
and SGS certificates, and against electronic spreadsheet files from La Guitarra laboratory.
Electronic copies of the ALS lab
results were compiled into a MS Access™ table to check transcription errors in the LG_tblDHSamp_Assay table. The values of
Au, Ag, As, Pb and Zn from analytical methods (Au-AA23, ME-GRA21, ME-ICP61, Pb-OG62, and Zn-OG62) were compared with the results
in LG_tblDHSamp_Assay table. No errors were found in this comparison.
Electronic copies of the lab certificates
re-submitted by SGS lab were compiled into a MS Access™ table (SGS_Orig_Cert) to check for transcription errors in LG_tblDHSamp_Assay.
SGS only analyzed Au and Ag by atomic absorption and gravimetric finish respectively. No transcription errors were found in this
comparison.
The electronic spread-sheet files
with results from la Guitarra laboratory were compiled into a single file to check for transcription errors in LG_tblDHSamp_Assay
table. No transcription errors were found in this comparison. However, the electronic spread-sheet files containing laboratory
results from la Guitarra laboratory used in this verification were not the original certificates issued by this laboratory.
Sample intervals and assay results
were verified with the vein intervals to detect errors during logging and sampling. Only 3% of the identified veins were not sampled.
Density Verification
In 2014, First Majestic completed
density measurements from the 2012 drill core of the Coloso Area. Densities were recorded directly in electronic spreadsheets.
To verify the density results, density control samples such as duplicates, checks, and standards readings were inserted. Density
sampling and density determination procedures are described in Section 10. All sample intervals and density determinations were
verified for transcription errors. Errors detected during the QA/QC procedures and verification for transcription errors were directly
corrected in the electronic spreadsheet tables and the data is free of errors.
Chanel Sample verification
Previous to 2013, La Guitarra mine
did not apply industry standard procedures for ore control. Starting in 2014 First Majestic has been implementing procedures following
best practices for channel sampling collection and a QA/QC program. During 2013 and 2014 field duplicates,
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
standard and blanks were inserted
in the sample stream, geology staff personnel carries out spot verifications of these results. A detailed data verification and
QA/QC analysis is in progress.
It is the author’s opinion
that channel sample collection in 2013 and 2014 followed the industry best practices and the assay data may be reliable for resource
estimation, completion of the detailed data verification and quality control analysis for the assay results is recommended.
First Majestic conducted a verification
of the quality control sample data and assay results from the 2008, 2011 and 2012 drilling campaigns. The review covered only the
data set provided by La Guitarra personnel during 2013 and 2014 and compiled in the 2014 resource estimation database for the Coloso
area.
During the 2008 drilling campaign
at the Coloso area mainly primary samples were submitted to ALS and SGS laboratories as described in Section 11. There were 64
repeat samples submitted to La Guitarra laboratory. All assay results from the repeats samples were verified against the original
certificates. No differences were found in this verification.
During 2011 and 2012, quality control
samples including pulp duplicates, coarse duplicates, standards, blanks and checks were inserted by the geologist at La Guitarra
in the sample submissions. In 2014 First Majestic was able to compile all control samples with analytical results except for 106
check samples. All assay results from all control samples results were verified against the original certificates. No errors found
in the database.
According to the 2010 Technical Report,
during the 2008 drilling campaign, Genco implemented a quality control system that includes the insertion of blanks, duplicates
including some checks and reference materials in the sample streams. Genco however did not generate QA/QC reports to show precision,
accuracy and contamination during the 2008 sampling program.
In 2012 GeoSpark Consulting performed
a QA/QC analysis of the 2011 and 2012 drilling data. The results and conclusions were reported in the Exploration Report on the
La Guitarra Mine Property (Blanchflower and Vallat, 2012). The report stated that the precision was inferred to be satisfactory
and the accuracy strong. Instrument contamination was not present and calibration issues were not found. The bias in results was
not significant enough to cause concern with the quality of results.
In 2014 First Majestic prepared control
charts with the assay data recorded in the 2014 resource estimation database. These charts are presented in detail in La Guitarra
Drilling Program, Drilling Period 2008, 2011, 2012, Quality Control Sample Results Report 2014.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Duplicate Precision Conclusion
Results from ALS have an acceptable
level of precision for coarse and pulp duplicate types for samples above 0.5 g/t Au using (method Au-AA-23).
Results are close to acceptable thresholds
for coarse and pulp duplicates. Precision is acceptable for values above 75 g/t Ag (Method Ag ME-GRA21).
Field duplicates did not meet an
acceptable precision for all Au and Ag grade ranges and may reflect natural sample heterogeneity. Table 12.10 summarizes the precision
for each element.
First Majestic will apply new sampling
protocols to improve precision for field duplicates.
Table 12.10: Summary of Precision,
Duplicate Samples, ALS Laboratory
|
Pulp Duplicates Cumulative
Frequency at 10% ARD |
Coarse Reject
Duplicates
Cumulative
Frequency at 20%
ARD |
Field Duplicates
Cumulative Frequency at
30% ARD |
|
(Au 1.3 ppm-Ag 75 ppm cut-off) |
(Au 1.3 ppm-Ag
75 ppm cut-off) |
All Data |
Au AA23 |
87% |
90% |
71% |
Ag MEGRA-21 |
90% |
86% |
64% |
| 12.1.7. | Standard Reference Material Conclusions |
Au AA23 biases range from minus 2.8%
to 9.1% with an average bias of 2.8%. Standards CND-ME-6 and CND-GS-2G show marginal biases. Ag ME-GRA21 and Ag ICP biases range
from-2.2% to 2.1% with the average bias of 0.7%. First Majestic concludes accuracy at ALS for the period 2011 and 2012 is acceptable
after removing outliers. Exceptions are standards Au CND ME-6 and Au CND-GS-2G with marginal biases. The marginal bias (9.1%) in
standard CND GS-2G indicates the standard could not be suitable for the type of deposit. The number of samples however is small
which impacts the ability to confirm the biases. A summary of the SRMS performance at ALS Laboratory is shown in Table 12.11.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.11: Summary of Standards
Laboratory |
Standard
ID |
Element |
Best
Value |
Mean |
Standard
Deviation |
Bias* |
Number
of
Outliers |
Number
of
Suspects |
Confirmed
swaps |
ALS |
ME-11 |
Au |
1.38 |
1.34 |
0.07 |
-2.8% |
0 |
0 |
0 |
ALS |
ME-11 |
Ag |
79.3 |
79.06 |
8.64 |
-0.3% |
0 |
0 |
0 |
ALS |
ME-15 |
Au |
1.386 |
1.37 |
0.06 |
-1.0% |
1 |
0 |
1 |
ALS |
ME-15 |
Ag |
34 |
34.7 |
2.55 |
2.1% |
2 |
0 |
1 |
ALS |
ME-5 |
Au |
1.07 |
1.09 |
0.19 |
1.9% |
0 |
0 |
0 |
ALS |
ME-5 |
Ag |
206 |
201.42 |
5.01 |
-2.2% |
3 |
0 |
0 |
ALS |
ME-6 |
Au |
0.27 |
0.28 |
0.021 |
5.3% |
3 |
0 |
1 |
ALS |
ME-6 |
Ag |
101 |
98.74 |
4.83 |
-2.2% |
1 |
0 |
0 |
ALS |
GS-1P5C |
Au |
1.56 |
1.62 |
0.038 |
4.4% |
0 |
0 |
0 |
ALS |
GS-2G |
Au |
2.26 |
2.46 |
0.06 |
9.1% |
0 |
0 |
0 |
*After
removing Outliers |
|
| 12.1.8. | Contamination Conclusions |
First Majestic concludes that contamination
from Au and Ag at ALS for coarse duplicates samples is acceptable. None of the charts show significant contamination trends. There
is a small amount of carry-over contamination related to increasing grades in the previous samples. The preceding samples added
an amount well below half of the economic cut-off grades. The 19% of samples returning Au and the number of the samples returning
7% Ag grades above the detection limit may indicate that the blank may not have been entirely free of Au and Ag.
Between-Procedure and Between-Laboratory
Bias Check Conclusion
RMA results are summarized in Table
12.12
Table 12.12: Summary of Bias Assessed
with RMA Charts
RMA Regression |
Bias |
No. of Exclusions |
1AT-AA (INSPECT) vs. AA23 (ALS) |
0.2% |
7 |
Ag 4A-TR (INSPECT) vs. Ag ME-GRA21(ALS) |
-5.6% |
9 |
Ag 4A-TR (INSPECT) vs. Ag ME-GRA21 (<500 ppm)(ALS) |
-2.8% |
10 |
Au FA GRAV (LG )vs. Au FAG323 (SGS) |
18% |
2 |
Ag FA-GRAV (LG) vs. Ag FAG323 (SGS) |
19% |
0 |
Ag FA-GRAV (LG) vs. Ag FAG323 (SGS) (>3 ppm) |
7.54% |
0 |
No significant bias is observed at
all ranges for Au results from ALS after removing outliers. Marginal bias was observed from all ranges of Ag results from all pairs.
Ag shows an acceptable
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
bias for ALS results less than 500
ppm after exclusion of outliers. This observation supports laboratory bias assessment of ALS.
There are insufficient sample results
from standard ME-15 to confirm the minus 5.6% marginal bias for Au from ALS. None of the control charts from check samples show
any significant contamination trends, all show results above the threshold limit (2 x LDL). All results are well below half of
the economic grade for Au and Ag.
The results from samples submitted
to LG lab in 2008 show an unacceptable bias for methods Au-FAG 323 and Ag FAG323. After removing lower detection limit results
from Ag FAG323, there is a marginal bias of minus 7.54%.
It is the author’s opinion
that the assay results from 2008, 2012 and 2012 drilling campaign at the Coloso area can be considered to be of sufficient quality
to be used in mineral resource estimation.
| 12.1.9. | Amec Foster Wheeler Verification Supporting Coloso Mineral Resources |
Mr. Greg Kulla visited the property
between the 15th and 19th September 2014. During this visit he reviewed drilling, logging, and sampling procedures, and assay quality
control procedures. While at site he also reviewed several drill core intersections of the Joya Larga and Jessica veins of the
Coloso deposit. Subsequent to the site visit Mr. Kulla reviewed the drill-hole database and assay quality control results. The
database is considered suitable to support the Coloso Mineral Resource estimation.
While at site another Amec Foster
Wheeler employee completed an inspection of the Joya Larga underground workings where he observed the vein mineralization, orientation,
and dimensions. Subsequent inspection of geologic cross sections and underground mapping plans provided by First Majestic confirmed
his observations.
Mr. Kulla concludes the drilling
logging and sampling procedures are appropriate for the style of mineralization at Coloso, that the assay data is reasonably accurate,
and that the database is reasonably free of errors.
| 12.2. | Data Verification – Nazareno Area |
The resource database for the Nazareno
area was verified in three occasions: In 2010 during the resource estimation carried out by Genco and Mintec, in 2011 for an exploration
report prepared by Minorex and GeoSpark consultants and in 2014 by First Majestic for the current resource estimates. There is
no evidence for data verification for the 2000 and 2003 drilling data. In 2007, Genco conducted re-logging of 15 drill-holes.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 12.2.1. | Historical Data Verification |
The 2008 exploration data from Nazareno
were reviewed and verified by Genco and reported in the 2010 Technical Report. The data verification applied to the Nazareno data
set followed the same procedure as described for the Coloso data set.
The 2011-2012 drilling and sampling
data from Nazareno was included in the Minorex and GeoSpark verification. The verification followed the same procedure as for the
Coloso data set.
The Nazareno data set verification
process concluded that the analytical results from the 2011 and 2012 primary sample results reported by ALS Chemex and Inspectorate
were considered with sufficient quality to represent the Nazareno project.
| 12.2.2. | Drilling Data Verification 2014 |
First Majestic commenced the database
verification process for the Nazareno area from the 2000, 2003, 2008, 2011 and 2012 surface drilling programs at the end of 2014.
The database verification consisted of 1) Database integrity verification, 2) verification for transcription errors, 3) conducting
site visits to check core and samples security and location, 4) Assay and QA/QC data review.
Electronic files from drilling data
such as collar information, sample data and an assay certificates were provided by La Guitarra personnel and imported to the First
Majestic DataShed Database.
| 12.2.3. | The 2014 La Guitarra Resource Database Nazareno Area |
La Guitarra resource database for
the Nazareno Area is in a MS SQL platform located in a terminal server in Monterrey, Mexico. La Guitarra resource database contains
drilling data from 2000, 2003, 2007 re-logging, 2008, 2011 and 2012 drilling campaigns from the Nazareno area as the database closure
date 18 October 2012 from last laboratory certificate. Core logging data was paper recorded by the geologists and transferred into
electronic spreadsheets. Subsequently, the data was imported into SQL using DataShed™. The paper core logs contain core intervals
for main lithology, veins, structures, minerals and alteration. RQD and core recovery data from the 2007 re-logging campaign, 2008,
2011 and 2012 drillholes were recorded in paper log within the lithology intervals. Core recovery and RQD data from the paper logs
were captured into electronic spreadsheets and transferred to SQL. Paper copies of core logs, driller’s reports, sample tags
and assay certificates are filed at La Guitarra mine.
Electronic copies are available at
La Guitarra server and corporate servers in Durango. These copies are accessible through remote desktop connections. The resource
database tables and number of records are shown in Table 12.13.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.13: 2015 Resource Database-Nazareno
Area
Table |
No.
of
Records |
tblDHCollar |
70 |
tblDHSurv |
237 |
tblDHLithology |
3,089 |
tblDHAlteration |
2,545 |
tblDHMinerals |
421 |
tblDHStructure |
1,
033 |
tblDHCoreRecoveryRun |
4,677 |
tblDHVeins |
549 |
tblDHSamples |
3,707 |
tblDHSG |
388 |
tblDHSampQC |
523 |
tblStandardSamp |
152 |
tblAssayFlat |
4,071 |
| 12.2.4. | Database Structure Verification |
First Majestic checked all records
in all for the DHSurvey, Lithology, GeoTech, Sample and Assay tables for overlapping intervals and depths that exceed the total
depth reported in the tblDHcollar table. No overlaps or exceed depths were identified. The drillhole names and samples IDs were
verified for consistency in all tables to keep the integrity of the database.
| 12.2.5. | Verification for transcription Errors |
Collar Survey Verification
The number of drillholes by drilling
campaign is shown in Table 12.14.
Table 12.14: Drillholes by Drilling
Campaign
Campaign |
No. of Drillholes in
Database |
Exploration
Company |
Total
Length
(m) |
|
|
|
|
2000-2003 |
16 |
Genco Resources Ltd. |
942 |
2008 |
15 |
Genco Resources Ltd. |
3,455 |
2011 |
10 |
SILVERMEX |
1,640 |
2012 |
29 |
SILVERMEX |
4,957 |
Totals |
70 |
|
10,994 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
A total of 70 drillhole collars,
representing all holes from the 2000, 2003, 2008, 2011 and 2012 drilling campaigns were checked for data entry errors by comparing
collar locations reported in the survey certificates issued by the First Majestic Engineering and Planning department. No errors
were found in this check.
Down-Hole Surveys Verification
No DHSurveys measurements were taken
in 2000 and 2003. A total of 24 records of the down-hole survey records for the 2008, 2011 and 2012 drill campaigns were checked
for data entry errors by comparing the Hole-ID, depth, azimuth and dip values from the DhSurvey table and the original DHsurvey
hardcopy reports. Twenty-four records represent 10% of the total records in the DHSurvey table (Table 12.15). The original reports
contain magnetic azimuths and were recorded in the Original_Azimuth field in the DHSurvey table. The magnetic azimuths were converted
to True North azimuths by adding 6° to the magnetic azimuth. The true north azimuths were recorded in the Corrected_Azimuth
field in the Database. Magnetic azimuths from the 2008 were obtained using a Flex-It multi-shot and for the 2011 and 2012 drillholes
a Reflex tool.
All down-hole survey records were
checked for anomalous measurements that could cause unusual kinks or bends in the drill holes. Azimuth from the unusual kinks were
checked to confirm transcription errors. Al transcriptions errors were corrected in the database.
Table 12.15: DHSurvey Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes
in
Database |
No. of
Holes
Checked |
% Holes
Checked |
No. of
Records
in Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2008 |
15 |
2 |
13 |
25 |
5 |
20 |
20 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
10 |
2 |
20 |
52 |
2 |
4 |
8 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
29 |
13 |
45 |
153 |
17 |
11 |
68 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Totals |
54 |
17 |
30 |
237 |
24 |
7 |
10 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Lithology Verification
A random selection of 309 records
from 56 of 61 drillholes for the 2000, 2007 re-logging (2003 drilling campaign), 2008, 2011 and 2012 drill campaigns from the lithology
table was checked for data entry errors. The randomly selected records represent 10% of all lithology records in the Lithology
table (tblDHLithology). The check was completed by capturing the interval (from-to)
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
and the lithology code from the original
logs into electronic spread-sheets. The data was compared with the data in the lithology table.
Only one error was found in the Lithology
verification. One error represents 0.32% of error rate. The total amount of records verified for transcription errors and error
rates are shown in Table 12.16. First Majestic verified and fixed the intervals associated with these errors.
During 2014, First Majestic conducted
a field inspection and verified the lithology intervals with existing core boxes, core photographs and interpreted geological cross
sections. Some errors were found and corrections were made in the database.
Table 12.16: Lithology Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes
in
Database |
No. of
Holes Checked |
% of
Holes
Checked |
No. of
Records in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2000-2003 |
7 |
1 |
14 |
52 |
1 |
2 |
4 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2008 |
15 |
14 |
90 |
2,389 |
238 |
5 |
952 |
1 |
<1 |
|
|
|
|
|
|
|
|
|
|
2011 |
10 |
7 |
70 |
100 |
9 |
5 |
36 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
29 |
24 |
80 |
548 |
61 |
5 |
244 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Totals |
61 |
46 |
75 |
3,089 |
466 |
5 |
1,236 |
1 |
<1 |
|
|
|
|
|
|
|
|
|
|
*Hole-ID, From, To, Lithology
Code
Veins Verification
A random selection of 55 records
from 29 of 58 drillholes for the 2003, 2008, 2011 and 2012 drilling campaigns from the Veins table (tblDHVeins) was checked for
data entry errors. The randomly selected records represent 10% of all veins records. The check was completed by capturing the interval
(from-to) and the vein code from the original logs into electronic spreadsheets. The data was compared with the data in the veins
table, no differences were found in the comparison between the records from the vein table and the veins reported in the core logs.
The total amount of records verified for transcription errors and error rates is shown in Table 12.17.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.17: Veins Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes
in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
2003 |
6 |
1 |
16 |
16 |
2 |
12 |
8 |
0 |
0 |
2008 |
13 |
3 |
23 |
136 |
9 |
6 |
36 |
0 |
0 |
2011 |
10 |
5 |
50 |
95 |
8 |
8 |
32 |
0 |
0 |
2012 |
20 |
20 |
100 |
302 |
36 |
10 |
144 |
0 |
0 |
Totals |
58 |
29 |
50 |
549 |
55 |
10 |
220 |
0 |
0 |
*Hole-ID, from-to, vein code
Structures Verification
A random selection of 104 records
from 38 drillholes for the 2000-2003, 2008, 2011 and 2012 drilling campaigns from the structures table (tblDHStructures) was checked
for data entry errors. The randomly selected records represent 10% of all Structure records. The check was completed by capturing
the interval (from-to) and the Structure code from the original logs into electronic spread-sheets. The data was compared with
the data in the Structure table.
The total amount of records verified
for transcription errors and error rates are shown in Table 12.18. No errors were found in the comparison between the database
and the core logs.
Table 12.18: Structure Data Entry
Error Frequency
Drilling
Campaign |
No. of
Holes
in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2000-2003 |
7 |
1 |
14 |
24 |
1 |
4 |
4 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2008 |
13 |
6 |
46 |
136 |
11 |
8 |
44 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
10 |
8 |
80 |
207 |
21 |
10 |
84 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2012 |
29 |
23 |
80 |
666 |
71 |
10 |
284 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
Totals |
59 |
38 |
64 |
1,033 |
104 |
10 |
416 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
*Hole-ID, From, To, structure code
Alteration Verification
A random selection of 255 records
from 49 drillholes for the 2000-2003, 2008, 2011 and 2012 drilling campaigns from the Alteration table (tblDHAlteration) was checked
for data entry errors. The randomly selected records represent 10% of all alteration interval records. The check was completed
by capturing the interval (from-to) and the main alteration code from the original logs
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
into electronic spread-sheets. The
data was compared with the data in the alteration table. One transcription error was found and the database was corrected (Table
12.19).
Table 12.19: Alteration Data
Entry Frequency
Drilling
Campaign |
No. of Holes
in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked |
No.
Errors |
%
Errors |
2000-2003 |
7 |
5 |
70 |
30 |
5 |
16 |
20 |
1 |
20 |
2008 |
15 |
15 |
100 |
2,015 |
203 |
10 |
812 |
0 |
0 |
2011 |
10 |
6 |
60 |
108 |
11 |
10 |
44 |
0 |
0 |
2012 |
29 |
23 |
80 |
392 |
36 |
9 |
144 |
0 |
0 |
Totals |
61 |
49 |
80 |
2,545 |
412 |
16 |
1,020 |
1 |
<0 |
*Hole-ID, From, To, alteration code
RQD and Core Recovery Verification
A random selection of 319 records
from 56 drillholes for the 2008, 2011 and 2012 drilling campaigns from the Core Recovery table (tblCoreRecoveryRun) was checked
for data entry errors. The randomly selected records represent 10% of all records. No records have been verified from the 2000
and 2003 drilling campaign. The check was completed by capturing into electronic spread-sheets the interval (from-to) the recovery
length and RQD from the original logs. The data then, was compared with the data in the Core Recovery table.
Four errors were found in the comparison
between the records from the Core Recovery table table and the core recoveries and RQDs reported in the core logs. The total amount
of records verified for transcription errors and error rates are shown in Table 12.20.
Table 12.20: RQDs and Core Recovery
Data Entry Error Frequency
Drilling
Campaign |
No. of
Holes
in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
|
|
|
|
|
|
|
|
|
|
2000-2003 |
10 |
0 |
0 |
299 |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2008 |
15 |
15 |
100 |
2,393 |
153 |
6 |
612 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
2011 |
10 |
10 |
100 |
543 |
39 |
7 |
156 |
1 |
2 |
|
|
|
|
|
|
|
|
|
|
2012 |
29 |
29 |
100 |
1,741 |
125 |
7 |
500 |
3 |
2 |
|
|
|
|
|
|
|
|
|
|
Totals |
151 |
54 |
36 |
4,677 |
317 |
7 |
1,268 |
4 |
1 |
|
|
|
|
|
|
|
|
|
|
*Hole-ID, From, To, Recovery
Length, RQD
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Sample Interval Verification
Only samples from the 2008, 2011
and 2012 drilling campaign were verified for the 2014 resource estimation. A random selection of 371 sample records were checked
for data entry errors. The randomly selected records represent 10% of all records. The check was completed by capturing into electronic
spread-sheets the interval (from-to) and sample ID and compare the values with the data recorded in the sample table in the database.
No errors were found in this comparison (Table 12.21).
Table 12.21: Sample Data Entry
Error Frequency
Drilling
Campaign |
No. of Holes
in
Database |
No. of
Holes
Checked |
% of
Holes
Checked |
No. of
Records
in
Database |
No. of
Records
Checked |
% of
Records
Checked |
Total No.
Entries
Checked* |
No.
Errors |
%
Errors |
2008 |
15 |
15 |
100 |
2,373 |
248 |
10 |
992 |
0 |
0 |
2011 |
10 |
10 |
100 |
361 |
32 |
9 |
128 |
0 |
0 |
2012 |
29 |
26 |
90 |
973 |
91 |
9 |
364 |
0 |
0 |
Totals |
54 |
51 |
94 |
3,707 |
371 |
10 |
1,484 |
0 |
0 |
*Hole-ID, From, To, Sample ID
Assay Verification
A random selection of 204 samples
with assay results from the 2008, 2011 and 2012 drilling campaigns were checked for data entry errors. The randomly selected records
represent 5% of all records. Five percent of samples with assay results above 75g/t Ag were also randomly selected to verify for
transcription errors. The selected samples and assay results from elements of Au, Ag, As, Pb, Cu, Fe, and Zn recorded in tblAssay
Flat table were checked against electronic copies from ALS, Inspectorate and SGS certificates. No errors were found in this comparison.
Sample intervals and assay results also were verified with the vein intervals to detect errors during logging and sampling. Only
3% of the identified veins were not sampled.
Density Verification
In 2014, First Majestic completed
density measurements from the 2012 core. Density measurements were obtained from 288 samples from 18 drillholes. Densities were
recorded directly in electronic spread-sheets. To verify the density results, density control samples such as duplicates, checks,
and standards readings were inserted. Density sampling and density determination procedures are described in section 10. All sample
intervals and density determinations were verified for transcription errors. Errors detected during the QA/QC procedures and verification
for transcription errors were directly corrected in the electronic spread-sheets tables and the data is free of errors.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
First Majestic conducted a verification
of the quality control sample data and assay results from the 2008, 2011 and 2012 drilling campaigns. This verification covered
the Nazareno data set provided by La Guitarra personnel during 2013 and 2014.
In the 2014 Nazareno database review,
only primary sample data was found from the 2008 drilling campaign. The samples were submitted to ALS and SGS laboratories and
analyzed as described in section 11.
According to the LG technical Report
for the 2010 resource estimate, during the 2008 drilling campaign, Genco implemented a quality control system that includes the
insertion of blanks, duplicates, some checks and reference materials in the sample streams. However, Genco did not reproduce QA/QC
reports to show precision, accuracy and contamination during the 2008 sampling program.
During 2011 and 2012, quality control
samples including pulp duplicates, coarse duplicates, standards, blanks and checks were inserted by geologists at La Guitarra in
the sample submissions. All assay results from all control samples were verified against the original certificates. No errors were
found in the database.
In 2012, GeoSpark consulting performed
a QA/QC analysis of the 2011 and 2012 drilling data. The results and conclusions were resumed and reported in the Exploration Report
on the La Guitarra Mine Property (Blanchflower and Vallat, 2012). The report stated that the precision was inferred to be satisfactory
and the accuracy strong. Instrument contamination was not present and calibration issues were not found. The bias in results was
not significant enough to cause concern with the quality of the results.
In 2014 First Majestic prepared quality
control charts with the assay data recorded in the 2014 Resource Estimation database. These charts are presented in detail in the
2014 La Guitarra Drilling Program - Nazareno Area, Drilling Period 2011 and 2012, Quality Control Sample Results Report.
Sample insertion rates are shown
in Table 12.22. Sample rates were calculated over the total amount of primary samples.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.22: Quality Control Samples
Insertion Rates. 2008, 2001-2012 Drilling Campaigns
Sample
Type |
2008 |
2011 |
2012 |
|
#
Samples |
%
Rate |
#
Samples |
%
Rate |
#
Samples |
%
Rate |
Primary |
2,076 |
100% |
361 |
100% |
973 |
100% |
DUPLICADO
(Field Duplicate) |
|
0% |
18 |
5% |
47 |
5% |
Coarse_Dup
(Coarse Duplicate) |
|
0% |
0 |
0% |
119 |
12% |
Pulp_Dup
(Pulp Duplicate) |
|
0% |
0 |
0% |
105 |
11% |
Standards: |
|
|
|
|
|
|
ME-11
(Au 1.38 g/t, Ag 79.3 g/t) |
|
0% |
0 |
0% |
5 |
<1% |
ME-15
(1.386 g/t, Ag 34 g/t) |
|
0% |
0 |
0% |
7 |
<1% |
ME-5
(Au 1.07 g/t, Ag 206.1 g/t) |
|
0% |
12 |
3% |
20 |
2% |
ME-6
(Au 0.270 g/t, Ag 101 g/t) |
|
0% |
9 |
2.5% |
21 |
2% |
BLANK |
|
0% |
22 |
6% |
55 |
5% |
Check* |
0 |
0% |
0 |
0% |
98 |
10% |
Lab
Check |
123 |
6% |
0 |
0% |
0 |
0% |
Grand
Total |
2,199 |
|
422 |
|
3,838 |
|
The conclusions of the quality control review are described
as follow:
Duplicate Precision Conclusion
Au-AA-23 results from ALS laboratory
have an acceptable level of precision for coarse and pulp duplicate types for samples above 0.25 g/t.
Ag ME-GRA21 and Ag ICP results are
close to acceptable thresholds for coarse and pulp duplicates. Precision is acceptable for values above 50 g/t.
Field duplicates did not meet an
acceptable precision for all Au and Ag grade ranges and may reflect normal sample heterogeneity. Table 12.23 summarizes the precision
for each element.
For the oncoming exploration stages
at La Guitarra, First Majestic is providing training in sampling methods to the geological staff and applying new sampling protocols
that follows the best exploration practices for mineral resources. Better Sampling practices and protocols will intend to improve
precision for field duplicates.
Table 12.23: Summary of Precision.
Duplicate Samples. ALS Laboratory
|
Pulp
Duplicates
Cumulative
Frequency at
10% ARD |
Coarse
Reject Duplicates
Cumulative Frequency at
20% ARD |
Field
Duplicates
Cumulative Frequency
at 30% ARD |
Au
AA23 (0.1- 2 g/t) |
90% |
70% |
71% |
Ag
MEGRA-21 ( 2.5-300 g/t) |
50% |
70% |
80% |
Ag
ICP (10-100g/t) |
80% |
80% |
70% |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Standard Reference Material Conclusions
Au AA23 biases range from minus 1%
to 2.96% with an average bias of 2 %. Standard CND ME-6 for Au shows four samples outside the bias safety limit lines. There are
is no evidence if the samples outside compliancy were sent to re-analyze to confirm results. The results out of limits could indicate
a transcription error in the sample labels or possible contamination during analyzes. After removing the outliers, the standard
has an acceptable bias of 3%. Ag ME-GRA21 and Ag ICP biases range from minus 3.4% to 5.1% with the average bias of 2%. First Majestic
concludes that accuracy at ALS for the period 2011 and 2012 is acceptable. A summary of the SRMS performance at ALS Laboratory
is shown in Table 12.24.
Table 12.24: Summary of Standards
Laboratory |
Standard ID |
Element |
Best
Value |
Mean |
Standard
Deviation |
Bias* |
Number
of
Outliers |
Number
of
Suspects |
Confirmed
swaps |
ALS |
ME-11 |
Au |
1.38 |
1.36 |
0.07 |
-1% |
0 |
0 |
0 |
ALS |
ME-11 |
Ag |
79.3 |
83.35 |
8.86 |
5.11% |
0 |
0 |
0 |
ALS |
ME-15 |
Au |
1.386 |
1.40 |
0.09 |
1.32% |
0 |
0 |
0 |
ALS |
ME-15 |
Ag |
34 |
34.6 |
3.3 |
1.74% |
1 |
0 |
0 |
ALS |
ME-5 |
Au |
1.07 |
1.07 |
0.27 |
0.22% |
4 |
16 |
0 |
ALS |
ME-5 |
Ag |
206.1 |
199 |
20.28 |
-3.43% |
1 |
1 |
0 |
ALS |
ME-6 |
Au |
0.27 |
0.28 |
0.0324 |
2.96% |
9 |
1 |
0 |
ALS |
ME-6 |
Ag |
101 |
105.64 |
24.64 |
4.6% |
4 |
4 |
0 |
*After removing Main Outliers
Contamination Conclusions
First Majestic concludes that contamination
from Au and Ag at ALS for coarse duplicates is acceptable. None of the charts shows significant contamination trends. There is
no indication of carry-over contamination related to increasing grades in the previous samples. A total of 50% Au results analyzed
by AA23 returned values above 2 times the laboratory detection limit. The 50% of the samples returning Au above the detection limit
may indicate the blank may not be entirely free of Au. All Ag ME-GRA-21 blank results are below the 2 times laboratory detection
limit.
Between-Procedure and Between-Laboratory
Bias Check Conclusion
RMA results are summarized in Table 12.25.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 12.25: Summary of Bias Assessed
with RMA Charts
RMA Regression |
Bias |
No. of Exclusions |
Au1AT-AA (INSPECT) vs. AA23 (ALS) |
5% |
4 |
Ag 4A-TR (INSPECT) vs. Ag ME-GRA21(ALS) |
-3% |
9 |
Ag 4A-TR (INSPECT) vs. Ag ME-GRA21 (50-500 ppm) |
-1% |
0 |
Ag 30-4A-TR (INSPECT) vs. Ag ME-ICP61 (ALS) |
-0.7% |
0 |
No significant bias observed at all
ranges for Au results from ALS after removing outliers. No bias was observed from all ranges Ag results from all pairs. Ag ME-GRA-21
results shows acceptable bias for ALS results less from 50 to 500 ppm. This observation supports laboratory bias assessment of
ALS. No control samples were submitted to Inspectorate Laboratory.
It is the author’s opinion
that the assay results from 2012 and 2012 drilling campaign at the Nazareno area can be considered to be of sufficient quality
to be used in mineral resource estimation. Early sampling from 2000 and 2008 was not supported by a quality control program, First
Majestic carried out data verification as reported in previous sections and it was concluded that assay results reported are free
of transcription errors.
| 12.3.1. | First Majestic Site Visits |
Ms. Maria Vazquez conducted three
site visits in 2014. The purpose of these visits was to collect and verify all data available for the Coloso and Nazareno area
as well as to do an inspection of the core kept from the 2008, 2011 and 2012 drill campaigns. During this inspection it was noted
that the core and reject samples were kept in a safe and protected area. Ms. Vazquez performed specific data verification, including
database construction, drill-hole location, downhole survey validation and density determinations.
Mr. Greg Kulla visited the property
between the 15th and 19th September 2014. During this visit he reviewed drilling, logging, and sampling procedures, and assay quality
control procedures. While at site he also reviewed several drill core intersections of the Joya Larga and Jesicca veins of the
Coloso deposit. Subsequent to the site visit Mr. Kulla reviewed the drill hole database and assay quality control results. The
database is considered suitable to support the Coloso Mineral Resource estimation.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
While at site another Amec Foster
Wheeler employee completed an inspection of the Joya Larga underground workings where he observed the vein mineralization, orientation,
and dimensions. Subsequent inspection of geologic cross sections and underground mapping plans provided by First Majestic confirmed
his observations.
Mr. Kulla concludes the drilling
logging and sampling procedures are appropriate for the style of mineralization at Coloso, that the assay data is reasonably accurate,
and that the database is reasonably free of errors.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Metallurgical testing at La Guitarra
Silver Mine is performed periodically and includes mineralogical investigation and metallurgical testing.
In order to determine the metallurgic
behaviour of the mineralized material fed into the processing plant three types of samples are taken:
| · | Monthly composites samples |
| · | Short term mining samples |
| · | Long term mining samples (drill-hole samples) |
The samples are sent to the La Parrilla
Central Lab for additional testing.
| 13.1. | Mineralogical Investigations |
In order to identify and estimate
the distribution of the different minerals in the plant feed, First Majestic has undertaken a series of mineralogical characterization
tests performed on polished thick sections. A total of 21 samples have been analysed in two institutions, five samples were analysed
by CM5 Consultores Metalurgicos in San Luis Potosi, Mexico between 2012 and 2013. CM5 utilised a petrographic microscope to analyse
the polished thick sections. The other 16 samples were analysed at the San Luis Potosi University’s Metallurgical Institute
in 2013; this Institute utilized a scanning electron microscope to analyse the polished samples.
The results indicate that the ore
minerals are predominantly composed of sulphides. The main mineralogical species that are found in the ore are listed as follows
in the order from major to minor in their relative proportion: Quartz (SiO2), Pyrite (FeS2), Marcasite (FeS2),
Pyrrhotite (FeS2), Sphalerite (ZnFeS), Hematite (Fe2O3), Galena (PbS), Chalcopyrite (CuFeS2),
Arsenopyrite (FeAsS), Covellite (CuS), Pyrargyrite (AgSbS3), Argentite (AgS), Native Silver (Ag) and Native Gold (Au).
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 13-1: Typical distribution
of minerals in La Guitarra ore.
| 13.2. | Monthly Composites Samples |
A sample is taken
from the material fed into the mills on a daily and on a per shift basis. A representative amount from each sample is taken based
on the milled tonnage of each shift and a monthly composite is accumulated.
The monthly composite sample is prepared
by the plant’s metallurgist, with the support of the La Guitarra laboratory staff, and is forwarded to the La Parrilla Central
Lab for metallurgical testing.
One of the objectives of this program
is the compilation of a database that will enable to assess the relationship between the results of the metallurgical tests in
the Central Lab and the actual performance of the industrial flotation plant of La Guitarra to be established. Figure 13-2 below
shows the correlation between the mill performance and the Central Lab monthly composites results in terms of metallurgical recovery
for silver and gold. Although slightly dispersed, the results show no significant bias; therefore the lab results are considered
representative.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 13-2: Metallurgical Recovery
comparison between the mill performance and the Central Lab tests.
| 13.3. | Short term mining samples |
Each month staff from the Geology
Department collect samples from those areas that are to be mined to supply feed to the processing plant in accordance with the
3-month rolling mining plan as prepared by the Planning Department personnel. These samples are denoted “Geometallurgical
Samples”, and are sent to the Central Lab each month for metallurgical testing.
With the results of these tests,
a database is established and analyses are performed to investigate the relationship between the metallurgical performance of the
samples grouped by the different geological domains identified in the mine. This information facilitates the projection of the
metallurgical behaviour of the mineralized material that will be fed to the plant in subsequent months.
| 13.4. | Long term mining samples (drill-hole samples) |
At the end of 2014 a sample testing
program was undertaken using coarse reject material from a group of exploration drill-holes from those different geological domains
into which the deposits in the Coloso mine had been divided. These domains were defined in accordance with their lithology and
mineralogy.
The samples were gathered by the
Exploration personnel and sent to the Central Lab for metallurgical tests. This information will facilitate the projection of the
metallurgical behaviour of the mineralized material that will be fed to the plant in the long term.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 13.5. | Metallurgical investigation |
| 13.5.1. | Sample preparation |
The following procedure is undertaken after arrival of
the samples to the Central Lab: sample reception, drying and preparation to minus 10 mesh. Subsequently grinding tests are carried
out.
| 13.5.2. | Grindability Testing |
Since December 2012, First Majestic
has been running tests to estimate the Bond Ball Work Index (“BWi”) for the samples that are received from La Guitarra,
monthly composites samples and short term mining samples are tested. Figure 13-3 shows the results of the gindability tests for
the period from December 2012 to February 2015. The average BWi for the monthly composites for this period was 15.8 kWh/t. Although
the short term samples denote a larger dispersion, the average BWi of the samples is 15.1 kWh/t. This dispersion is expected to
be mitigated after the compositing effect that blending production from different stopes has on the plant feed.
Figure 13-3: Grindability test results
for different samples of La Guitarra Silver Mine
| 13.5.3. | Monthly Composites Samples Testing |
Besides the analysis of repetitivity
for the metallurgical recovery of silver and gold, for each monthly composite, and depending on the problems or needs experienced
during the precedent months, a series of tests is developed that may include the following:
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| · | Standard flotation tests: under similar conditions to those in the plant (grinding size, addition
of reagents and flotation times) |
| · | Testing with different reagents |
| · | Testing with different grinding sizes |
Results are shared with the plant operation
personnel to facilitate continuous improvement iniciatives.
| 13.5.4. | Short Term Mining Samples Testing |
Figure 13- and Figure 13-4 shows the results
of short term mining sample tests for the period between September 2014 and February 2015. In general a similar behaviour is observed
in the recovery of silver between the actual mill performance and the short term mining samples, also known as geometallurgical
samples. Metallurgical recovery of gold appears more dispersed for values below 1.0 g/t Au and good correlation for values between
1.0 and 3.0 g/t Au.
Figure 13-4: Silver Recovery for Short Term
Mining Samples
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 13-5: Gold Recovery for Short Term
Mining Samples
| 13.5.5. | Long Term Mining Samples Testing |
The metallurgical performance of the ore
at depth was investigated with samples from coarse drill core rejects. Figure 13-3 and 13-4 show the series of samples identified
by the green triangles.
The metallurgical recovery of silver is
well aligned with the actual mill performance; the average recovery from the selected drill core samples at depth is 80% compared
with the average of the actual performance in the mill of 83% for the period January 2014 to February 2015.
The metallurgical recovery of gold is more
dispersed, nevertheless the average recovery obtained from the drill core samples is 76% compared with the average of the actual
performance in the mill of 79% for the period January 2014 to February 2015.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 14. | Mineral Resource Estimates |
Mineral Resources from La Guitarra, Nazareno,
Mina de Agua and Coloso areas were classified in order of increasing geological confidence into Inferred, Indicated and Measured
categories as defined by the “CIM Definition Standards – For Mineral Resources and Mineral Reserves” in May 10,
2014, in compliance with NI 43-101. CIM Mineral Resource definitions are given below:
Mineral Resources are sub-divided, in
order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a
lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level
of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource.
A Mineral Resource is a concentration or
occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity
that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and
other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and
knowledge, including sampling.
An Inferred Mineral Resource is that part
of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.
Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource
has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve.
It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with
continued exploration.
An Indicated Mineral Resource is that part
of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient
confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic
viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing
and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource
has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral
Reserve.
A Measured Mineral Resource is that part
of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence
sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic
viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient
to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level
of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to
a Proven Mineral Reserve or to a Probable Mineral Reserve.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 14.1. | Mineral Resource Estimates Coloso |
Three-dimensional wireframe models of the
Coloso silver and gold mineralization were constructed using lithological and assay information from 127 diamond drill holes. Collar,
survey, lithology, and assay files were exported from a Microsoft Access® database as comma-separated-values files (“csv
files”), then imported into Vulcan® and combined into a drill-hole assay file.
Block models for the mineral resource estimate
were constructed and initialized inside 3D wireframe interpretations of the mineralization. Block grades were estimated and validated.
Ag and Au grades were estimated using Ordinary
Kriging (OK), Inverse Distance to the power 2 (ID2) and power 3 (ID3) methods. ID3 was determined to provide the best estimate
and was used for reporting Mineral Resources.
Geological interpretations for Coloso were
provided by First Majestic in the form of 1:500 scale, cross sections. Geological underground mapping of developments was also
provided. Amec Foster Wheeler reviewed the geological interpretations and underground mapping and considered them appropriate as
a guide to wireframe modeling.
Amec Foster Wheeler prepared wireframes
of the Jessica and Joya Larga veins using logged intervals of vein material. These vein wireframes were subsequently used as a
guide while preparing grade shell wireframes. High grade wireframes were created at nominal 150 Ag-Eq g/t (Ag + Au * 57.03). Low
grade wireframes enclosing the high grade domains were prepared at a nominal 30 Ag-Eq g/t. Leapfrog® modelling software was
used to prepare the following grade shell wireframes:
| · | Jessica Upper High Grade |
| · | Jessica Splay High Grade |
| · | Joya Larga Main High Grade |
| · | Joya Larga Upper High Grade |
The high grade domains are shown in Figure
14-1 to Figure 14-3. Country rock lithologies were not wireframed as the host lithology appears to have little influence on mineralization.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-1:Oblique Plan View Looking North
East of Modeled High Grade Domains
Figure 14-2: Oblique Plan View Looking North
West of Modeled High Grade Domains
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-3: Oblique Plan View Looking South
East of Modeled High Grade Domains
| 14.1.2. | Assay Data and Composites |
Assay intervals for Ag and Au were composited
down the hole to a fixed length of 0.5 m. Pre and post compositing length-weighted statistics are summarized in Table 14.1.
| Table 14.1: | Comparison of Assay and Composite Length-Weighted
Statistics |
|
Jessica All |
|
Assays |
Composites |
|
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Ag |
227 |
277 |
2 |
5740 |
1.8 |
509 |
369 |
262 |
2 |
5168 |
1.8 |
479 |
Au |
227 |
1.731 |
0.003 |
17.400 |
1.7 |
2.888 |
369 |
1.626 |
0.003 |
17.400 |
1.6 |
2.673 |
|
Joya Larga All |
|
Assays |
Composites |
|
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Ag |
162 |
289 |
3 |
6200 |
2.2 |
637 |
274 |
287 |
3 |
4422 |
1.9 |
535 |
Au |
162 |
0.759 |
0.013 |
11.000 |
1.5 |
1.126 |
274 |
0.744 |
0.012 |
7.900 |
1.4 |
1.032 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Compositing has resulted in more composites
than assays and average composite grades 5% to 7% less than average assay grades. This is a result of splitting of assays greater
than 0.5m long during compositing. Split assays have an average grade less than non-split assays, a consequence of selectively
sampling of short, high grade intervals. The 0.5m composite interval was selected to reflect planned block size used for grade
estimation.
Outlier analysis determined that capping
was required to limit the influence of high grade Ag and Au outliers. The choice of capping value was based on visual inspection
of histograms, probability plots, correlation and coefficient plots, as well as decile analysis plots. The following capping was
applied to composites:
Capping applied to High Grade zones:
| · | Ag was capped at 2300 g/t |
Capping applied to Low Grade Zones:
| · | Ag was capped at 150 g/t |
The predicted metal reduction in composites
due to proposed capping limits ranges from of <1.0% to 7.5% for Ag and 0.0% to 4.0% for Au within the high grade domains. This
is a reasonable amount of metal reduction for the drill hole spacing and mineral deposit style. The impact of grade capping is
summarized in Table 14.2.
| Table 14.2: | Impact of Grade Capping |
Domain |
Ag |
Au |
Number
of
Samples |
Cap
Threshold
(g/t) |
Composites
Above
Threshold
(%) |
Metal
Removed
(%) |
Cap
Threshold
(g/t) |
Composites
Above
Threshold
(%) |
Metal
Removed
(%) |
All
High Grade Mineralization* |
643 |
2300 |
1.6 |
5 |
10 |
2.2 |
3 |
Jessica
Main |
257 |
2300 |
1.2 |
7.5 |
10 |
1.9 |
4 |
Joya
Larga Main |
239 |
2300 |
1.7 |
7 |
10 |
0 |
0 |
Splays |
147 |
2300 |
6.6 |
<1 |
10 |
16.7 |
3 |
Low
Grade Mineralization |
1881 |
150 |
1.1 |
14 |
2 |
1 |
7 |
*All High Grade Mineralization includes Jessica
and Joya Larga Main as well as Splays
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 14.1.4. | Exploratory Data Analysis |
Exploratory data analysis (EDA) was performed
on the declustered capped composites. Table 14.3 contains a summary of statistics for Ag and Au in the high grade domains. Figure
14-4 and Figure 14-5 show Ag arithmetic and log histograms and probability plots of the Jessica and Joya Larga Main domains.
| Table 14.3: | Summary Statistics by Domains (assay values in g/t) |
Jessica Main |
Joya Larga Main |
|
Declustered Composites |
Declustered Composites |
|
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Ag Cap |
257 |
215 |
3 |
2300 |
1.6 |
351 |
239 |
204 |
3 |
2300 |
1.6 |
327 |
Au Cap |
257 |
1.211 |
0.003 |
10 |
1.7 |
2.081 |
239 |
0.716 |
0.012 |
8 |
1.3 |
0.934 |
Jessica Upper Splay |
Joya Larga Upper Splay |
|
Declustered Composites |
Declustered Composites |
|
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Count |
Mean |
Min |
Max |
CV |
Std Dev |
Ag Cap |
58 |
213 |
2 |
1175 |
1.1 |
231 |
35 |
444 |
44 |
2300 |
1.2 |
548 |
Au Cap |
58 |
0.896 |
0.003 |
8 |
1.3 |
1.204 |
35 |
0.520 |
0.088 |
2 |
0.8 |
0.436 |
Jessica Splay 2 |
|
|
|
|
|
|
|
Declustered Composites |
|
|
Count |
Mean |
Min |
Max |
CV |
Std Dev |
|
|
|
|
|
|
Ag Cap |
54 |
398 |
43 |
2300 |
1.3 |
525 |
|
|
|
|
|
|
Au Cap |
54 |
3.927 |
0.011 |
10 |
1.0 |
3.769 |
|
|
|
|
|
|
CV is the Coefficient of Variation and is equal to the standard
deviation divided by mean.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-4: Jessica Main Ag g/t Histograms
and Probability Plot: Declustered Capped Composites
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-5: Joya Larga Main Ag g/t Histograms
and Probability Plot: Declustered Capped Composites
| 14.1.5. | Block Model Dimensions |
A block model was created for the Jessica
and for the Joya Larga systems. The models were rotated to match the average strike and dip of the Joya Larga and Jessica Main
domains. The block model parameters are listed in Tables 14.5 and 14.6.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 14.5: Jessica Block Model Dimensions
Jessica Block Model |
|
Y |
X |
Z |
Minimum Coordinates |
2109300 |
383635 |
2060 |
Maximum Coordinates |
2110900 |
383775 |
2560 |
Block Extents (m) |
1600 |
140 |
500 |
Block Size (m) |
2.5 |
0.25 |
2.5 |
Rotation (ZXY LRL) |
-32 |
0 |
120 |
Table 14.6: Joya Larga Model Dimensions
Joya Larga Block Model |
|
Y |
X |
Z |
Minimum Coordinates |
2109350 |
383750 |
2025 |
Maximum Coordinates |
2110950 |
383850 |
2475 |
Block Extents (m) |
1600 |
100 |
450 |
Block Size (m) |
2.5 |
0.25 |
2.5 |
Rotation (ZXY LRL) |
15 |
0 |
120 |
| 14.1.6. | Assignment of Domain and Specific Gravity to Blocks |
Blocks were coded by grade shell domains
(Table 14.7). A block was tagged with a particular domain code if at least 50% of the block was within the wireframe domain.
Table14.7: Block Model Grade Domain
Coding
Domain Name |
Block model |
Minzone Flag |
Jessica Main |
Jessica |
1 |
Jessica Upper |
Jessica |
3 |
Jessica Splay |
Jessica |
5 |
Joya Larga Main |
Joya Larga |
2 |
Joya Larga Upper |
Joya Larga |
4 |
Low Grade |
Jessica and Joya Larga |
0 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The volume of each mineralized wireframe
was then compared with the volume of the blocks inside a particular wireframe. The block model and corresponding domain wireframe
volumes compared within ±0.2%.
A specific gravity value of 2.44 was assigned
to all blocks in the block model. This represents the average of 45 vein and breccia drill core samples specific gravity measurements
from Coloso that were measured using water immersion methods. These results were supported by wax-coated water immersion measurements
by an independent laboratory.
| 14.1.7. | Block Model Grade Estimate |
Ag and Au grade estimation in the Main domains
were undertaken in unfolded space to remove the effect of the variable geometry of the mineralized domains. All other estimations
were conducted in normal space. Ordinary Kriged (OK), Inverse Distance Squared (ID2), and Inverse Distance Cubed (ID3) estimates
were prepared. ID3 was used for reporting Ag and Au.
A two-pass interpolation approach was used
for Ag and Au within the Jessica and Joya Larga Main domains. A three-pass interpolation approach was used for Jessica and Joya
Larga Upper and Jessica Splay domains. A four-pass interpolation approach was used within the Low Grade domain. Each successive
pass has greater search distances and smaller sample selection requirement.
A hard estimation boundary was used for
all domains, meaning that composites from outside domains were not used in the interpolation of grade within the domains. Estimation
was done separately within each domain.
Table 14.8 and Table 14.9 show the estimation
search parameters for Joya Larga and Jessica Block Models.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 14.8: Estimation Parameters
for Jessica Block Model
Domain |
Metal |
Estimation
Method |
Pass |
Search Ellipse |
Min. No. Comp |
Max. No. Comp |
Max.
Comp.
/Hole |
Rotation (°) (ZXY LRL) |
Ranges(m) |
Axis 1 (L) |
Axis 2 (R) |
Axis 3 (L) |
X |
Y |
Z |
Jessica Main |
Ag, Au |
ID3,
unfolded
space |
1 |
0 |
0 |
0 |
70 |
70 |
1.5 |
2 |
4 |
2 |
2 |
300 |
300 |
3 |
1 |
3 |
- |
Jessica Upper
Jessica Splay |
ID3,
normal
space |
1 |
120 |
0 |
-32 |
10 |
30 |
10 |
5 |
8 |
2 |
2 |
20 |
60 |
20 |
3 |
6 |
2 |
3 |
80 |
240 |
80 |
1 |
3 |
2 |
Low Grade |
ID3,
normal
space |
1** |
0.5 |
2.5 |
2.5 |
1 |
5 |
2 |
2 |
10 |
30 |
10 |
5 |
8 |
2 |
3 |
20 |
60 |
20 |
3 |
6 |
2 |
4 |
80 |
240 |
80 |
1 |
3 |
2 |
All Domains*** |
As, Pb, Zn |
ID2,
normal
space |
1 |
10 |
30 |
10 |
5 |
8 |
2 |
2 |
20 |
60 |
20 |
3 |
6 |
2 |
3 |
80 |
240 |
80 |
1 |
3 |
1 |
** Pass 1 in Low Grade domain is for outlier restriction.
***As, Pb, and Zn are potential penalty metals and are estimated
to determine if penalty thresholds are likely to be reached.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 14.9: Estimation Parameters
for Joya Larga Block Model
Domain |
Metal |
Estimation
Method |
Pass |
Search Ellipse |
Min. No. Comp |
Max. No. Comp |
Max.
Comp.
/Hole |
Rotation (°) (ZXY LRL) |
Ranges(m) |
Axis 1 (L) |
Axis
2 (R) |
Axis 3 (L) |
X |
Y |
Z |
Joya Larga Main |
Ag, Au |
ID3,
unfolded
space |
1 |
0 |
0 |
0 |
70 |
70 |
1.5 |
2 |
4 |
2 |
2 |
300 |
300 |
3 |
1 |
3 |
- |
Joya Larga Upper
Joya Larga Splay |
ID3,
normal
space |
1 |
120 |
0 |
15 |
10 |
30 |
10 |
5 |
8 |
2 |
2 |
20 |
60 |
20 |
3 |
6 |
2 |
3 |
80 |
240 |
80 |
1 |
3 |
2 |
Low Grade |
ID3,
normal
space |
1** |
0.5 |
2.5 |
2.5 |
1 |
5 |
2 |
2 |
10 |
30 |
10 |
5 |
8 |
2 |
3 |
20 |
60 |
20 |
3 |
6 |
2 |
4 |
80 |
240 |
80 |
1 |
3 |
2 |
All Domains*** |
|
ID2,
normal
space |
1 |
10 |
30 |
10 |
5 |
8 |
2 |
As, Pb, Zn |
2 |
20 |
60 |
20 |
3 |
6 |
2 |
|
3 |
80 |
240 |
80 |
1 |
3 |
2 |
** Pass 1 in Low Grade domain is for outlier restriction.
***As, Pb, and Zn are potential penalty metals and are estimated
to determine if penalty thresholds are likely to be reached.
| 14.1.8. | Block Model Validation |
The block model grades were validated by
visual inspection comparing composites to block grades in normal space on-screen, global and local grade bias checks, and model
selectivity checks. Transformation from unfolded to normal space was also checked.
| 14.1.8.1. | Visual Validation |
Visual validation comprised inspection of
composites and blocks in vertical sections and plan views. Figure 14-6 to Figure 14-11 show colour-coded Ag-Eq composites and corresponding
ID3 block models for Jessica and Joya Larga High grade domains on plan and in section. The
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
model honours the data well, and grade extrapolation
is well-controlled where sufficient data exist.
Figure 14-6: Jessica Block Model Plan Section:
Ag-Eq g/t Blocks and Composite points Displayed at 2340m Elevation.
See next Figure for detailed view of area
enclosed by red oval.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-7: Jessica Block Model Detailed
Plan Section: Ag-Eq g/t Blocks and Composite Points Displayed at 2340m Elevation.
Note: Block in upper right show Jessica
Upper zone estimated in normal space. Blocks in lower right show Jessica Main zone estimated in unfolded space.
Figure 14-8: Jessica Block Model Cross-Section:
Ag-Eq g/t Blocks and Composite Points Displayed at 383200m E. Inset Cross-Section Highlights Area Detailed.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-9: Joya Larga Block Model Plan
Section: Ag-Eq g/t Blocks and Composite Points Displayed at 2290m Elevation.
See next Figure for detailed plan view of
area enclosed by red oval.
Figure 14-10: Jessica Block Model Detailed
Plan Section: Ag-Eq g/t Blocks and Composite Points Displayed at 2290m Elevation.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-11: Joya Larga Block Model Cross-Section:
Ag-Eq g/t Blocks and Composite Points Displayed at 383220m E. Inset Cross-Section Highlights Area Detailed.
| 14.1.8.2. | Global Grade Bias Check |
Global grade bias was checked by comparing
the ID3 average block grade with nearest-neighbour (NN) average block grade. The NN estimator produces a globally unbiased estimate
of the average value when no cut-off grade is imposed and is considered a good basis for checking the performance of different
estimation methods. The global grade bias check results are summarized in Table 14.10.
Table 14.10: Jessica Main Zone Global
Grade Bias Check
Jessica |
ID3 Ag Block Grade Estimate |
Nearest Neighbour Ag Block Grade Estimate |
Ag Declustered Composites |
ID3 - NN Mean
Realative
Difference |
ID3 - Declustered
Composite Mean
Relative Difference |
|
Point/Block Count |
Mean |
CV |
Sample Count |
Mean |
CV |
Sample Count |
Mean |
CV |
|
|
Capped |
194,163 |
236.66 |
1.27 |
194,163 |
238.90 |
1.65 |
257 |
215.29 |
1.63 |
-1% |
10% |
Uncapped |
194,163 |
258.03 |
1.59 |
194,163 |
275.71 |
2.25 |
257 |
237.21 |
2.12 |
-6% |
9% |
|
|
|
|
|
|
|
|
|
|
|
|
Joya Larga |
ID3 Ag Block Grade Estimate |
Nearest Neighbour Ag Block Grade Estimate |
Ag Declustered Composites |
ID3 - NN Mean
Realative
Difference |
ID3 - Declustered
Composite Mean
Relative Difference |
|
Point/Block Count |
Mean |
CV |
Sample Count |
Mean |
CV |
Sample Count |
Mean |
CV |
|
|
Capped |
118,975 |
226.58 |
1.31 |
118,975 |
250.18 |
1.69 |
239 |
204.12 |
1.60 |
-9% |
11% |
Uncapped |
118,975 |
235.77 |
1.45 |
118,975 |
276.05 |
2.01 |
239 |
215.73 |
1.92 |
-15% |
9% |
Note: composites were cell-declustered in unfolded space.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The ID3 Ag estimate shows a slight to moderate
low bias relative to the NN model and a moderate high bias relative to declustered composite statistics. These two validation checks
for global grade bias provide inconclusive results but do not indicate a global bias is present.
| 14.1.8.3. | Local Grade Bias Check |
Local grade bias was checked using swath
plots comparing ID3 and NN block grade estimates and composite grades in east-west, north-south and vertical swaths. Swath plots
for Jessica and Joya Larga Main domains are shown in Figure 14-12 to Figure 14-15. Swath intervals are 50 m in the northerly
and easterly directions, and 10 m in elevation.
Figure 14-12: Swath Plot for Ag Jessica
ID3 Model
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-13: Swath Plot for Au Jessica
ID3 Model
Figure 14-14: Swath Plot for Ag Joya
Larga ID3 Model
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-15: Swath Plot for Au Joya
Larga ID3 Model
Swath plot checks show that there are minor
but acceptable local biases between ID3 and NN models for estimated Ag and Au within Jessica and Joya Larga Main Zones.
| 14.1.8.4. | Selectivity Check |
Selectivity analysis for Ag was completed
using the Discrete Gaussian Model for change of support from composite size to a selective mining unit (“SMU”) size.
This was done using in-house software (“Herco”). The aim of this analysis was to assess whether the estimated resource
reasonably represents the recoverable resources relative to the proposed mining method. The selectivity analysis assumed a 5 m
by 5 m by 0.5 m block as the smallest SMU size for Jessica and Joya Larga based on current mining practices.
The results of the Herco analysis are discussed
in terms of smoothness. An over-smoothed model may over-estimate the tonnes and under-estimate the grade. The model with an appropriate
amount of smoothing will follow the Herco grade and tonnage curves for values corresponding to different economic, or grade cut-offs.
The Herco analyses were undertaken using
only Indicated blocks. Inferred blocks are not recommended for use in this analysis. Herco grade–tonnage curves the Jessica
and Joya Larga Main Zone ID3 Ag models are shown in Figure 14-16 and Figure 14-17. The upward-trending
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
blue line in these plots represents the
ID3 model grades, while the paired magenta line represents the Herco model grades. The downward trending blue line represents the
ID3 model tonnage, while the paired magenta line represents the Herco model tonnes.
The Herco selectivity analyses show that
the Jessica Ag ID3 model has the appropriate level of smoothing at the proposed cut-off grade of 180 g/t. The Joya Larga Ag ID3
model is slightly smooth relative to the Herco target at the 180 g/t cut-off suggesting the model is calibrated for a slightly
larger SMU.
Figure 14-16: Herco Grade Tonnage Curves
for Jessica Main Zone ID3 Model
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-17: Herco Grade Tonnage Curves
for Ag ID3 Joya Larga Main Zone ID3 Model
| 14.1.8.5. | Unfolding Transformation Validation |
The transformation from unfolded space to
normal space was validated by comparing Ag ID3 block grades with the average grade of composites within the block in unfolded space
and in normal space (Figure 14-18 and Figure 14-19).
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure14-18: Joya Larga Main Zone Ag ID3
Block Grade versus Average Ag Composite Grade in Unfolded Space
Figure 14-19: Jessica Main Zone Ag ID3 Block
Grade versus Average Ag Composite Grade in Unfolded Space
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Both scatter plots are similar and exhibit
a high degree of correlation. The lower correlation seen in the normal space scatterplot is due to an averaging process used to
populate the blocks after transforming to normal space.
| 14.1.9. | Mineral Resource Classification |
The Mineral Resource is classified in accordance
with the CIM Definition Standards for Mineral Resources and Mineral Reserves (May 10, 2014). According to the Definition Standards,
Mineral Resources are required to be classified as Inferred, Indicated, and Measured, according to increasing confidence in geological
information, grade continuity, and other aspects impacting the resources.
In addition to criteria such as sufficient
geological continuity, grade continuity, and data integrity, the principle of confidence in the estimate to support mine planning
is included in the definitions of Measured and Indicated Mineral Resource. Amec Foster Wheeler uses an assessment of the drill
hole spacing that is sufficient to predict potential production of the mineral resource with reasonable probability of precision
over a selected period of time. A statistical drill hole spacing study conducted by Amec Foster Wheeler indicated 30 m sample spacing
may be required to support Indicated Mineral Resources. In developing final classification criteria consideration was also given
to observed continuity in the mineralized structure, comparison of expected results with actual results from development and production
at Coloso, the proposed mine plan for Coloso, and previous successful mining in the La Guitarra. The following criteria for classification
of the Coloso Mineral Resources were used:
Indicated Mineral Resources:
| · | Distance to the closest composite less than 47 m |
| · | Distance to the second closest composite less than 66 m |
This equates to an approximate sample spacing
of 60 m. All other estimated blocks were assigned an Inferred classification. No Measured Mineral Resources were classified.
Figure 14-20 and Figure 14-21 show examples
of the classified Mineral Resource in the Jessica and Joya Larga models respectively.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-20: Jessica Mineral Resource
Classification. Main Domain Long Section
Figure 14-21: Joya Larga Mineral Resource
Classification. Main Domain Long Section
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 14.1.10. | Reasonable Prospects for Eventual Economic Extraction |
The Mineral Resources have been assessed
for reasonable prospects for eventual economic extraction using assumptions based on mining and processing information from 2014
La Guitarra mine operations. Operating costs and metallurgical recovery assumptions are as follows:
· |
Mining cost |
$17.93/tonne |
· |
Processing and refining cost |
$15.84/tonne |
· |
G&A, Indirect, Sustaining Capital |
$46.12/tonne |
· |
Silver metallurgical recovery |
85% |
· |
Gold metallurgical recovery |
79% |
· |
Smelter payable silver and gold |
94.7% |
· |
Treatment and refining charges |
$4.43/oz |
An overhand cut-and-fill underground mining
method with a minimum selective minable shape approximately 0.5 m wide by 5 m long by 5 m high is assumed. First Majestic has successfully
used selective overhand cut-and-fill methods at the adjacent La Guitarra deposit which hosts similar style of mineralization. Development
of the Coloso deposit began in January 2014 and mining began in April 2014. Exposures indicate good rock conditions are expected.
The La Guitarra mine processes 520 tonnes
per day through conventional flotation producing a silver and gold bearing lead concentrate. It is assumed this process will continue
and that 95% of the production at the la Guitarra mine will eventually be derived from the Coloso deposit.
Metal prices of $22/oz Ag and $1,350/oz
Au are assumed.
These economic assumptions result in a Block
Unit Value cut-off of approximately $80/t or approximately 180g/t silver.
The tool “Stope Analyzer” from
Vulcan® was utilized to identify the blocks that exceed the cut-off value while complying with the aggregation constraint of
minimum stope size. This tool “floats” a stope with the specified dimensions and flags each block when the average
block unit value of the contained blocks within a stope exceeds the designated cut-off value.
For constraining resources deemed to be
mined by underground methods, the use of this tool as an alternative to a conventional economic grade-shell provides an advantage
based on the ability to aggregate blocks into the minimum stope dimensions and the automatic elimination of outliers that do not
comply with this condition.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 14.1.11. | Mineral Resource Statement |
Table 14.11 and Table 14-12 show the estimated
Indicated and Inferred Mineral Resources of the Coloso deposit. There is no Measured Mineral Resource estimate at this time.
Table 14.11: Coloso Indicated Mineral
Resource; Effective Date 31 December 2014, Greg Kulla P.Geo
Domain
(Main &
Splays) |
Confidence
Category |
Tonnes
[1000's] |
Ag [g/t] |
Au [g/t] |
Ag-Eq
[g/t] |
Contained
Ag
[1000's of
oz] |
Contained
Au
[1000's of
oz] |
Contained
Ag-Eq
[1000's of
oz] |
|
|
|
Jessica |
Indicated |
564 |
369 |
2.03 |
485 |
6,696 |
36.8 |
8,790 |
|
Joya Larga |
Indicated |
203 |
393 |
1.00 |
450 |
2,563 |
6.5 |
2,940 |
|
Total |
Indicated |
767 |
376 |
1.76 |
476 |
9,259 |
43.3 |
11,730 |
|
Table 14.12: Coloso Inferred Mineral
Resource; Effective Date 31 December 2014, Greg Kulla P.Geo
Domain
(Main &
Splays) |
Confidence
Category |
Tonnes
[1000's] |
Ag [g/t] |
Au [g/t] |
Ag-Eq
[g/t] |
Contained
Ag
[1000's of
oz] |
Contained
Au
[1000's of
oz] |
Contained
Ag-Eq
[1000's of
oz] |
|
|
|
Jessica |
Inferred |
96 |
278 |
1.18 |
345 |
857 |
3.6 |
1,065 |
|
Joya Larga |
Inferred |
83 |
341 |
1.08 |
403 |
912 |
2.9 |
1,078 |
|
Total |
Inferred |
179 |
307 |
1.13 |
372 |
1,770 |
6.5 |
2,143 |
|
Notes for Tables 14.11 and 14.12:
| 1. | Assumptions include commodity prices of US$22/oz Ag, US$1,350/oz Au, process recoveries of 85%
for Ag and 79% for Au, US$17.93/tonne mining cost, US$15.84/tonne process cost, US$46.12/tonne G&A, Indirect cost and Sustaining
Capital cost, Payable Ag and Au 94.7%, Treatment and Refining US$4.43/oz |
| 2. | Formula for Ag metal equivalent is Ag-Eq (g/t) = Ag (g/t) + Au (g/t) x 57.032 (using metal prices
and metallurgical recoveries stated above) |
| 3. | Mineral resources are amenable to underground mining methods and are mined using a cut-and-fill
method with a minimum mining width of 0.5m |
| 4. | An economic cut-off was based on the estimated operating costs and selective mining method. The
cut-off grade is 180 g/t silver equivalent (which is equivalent to approximately US$80/t) |
| 5. | No allowances were made for mining losses or external dilution; planned internal dilution within
minable shapes is included |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 14-13 shows the sensitivity of the
Coloso Mineral Resource to Ag-Eq cut-off change. Sensitivity to variable Ag-Eq metal could represent metal price changes as well
as sensitivity to varying mining or processing costs, or varying metallurgical recoveries, or a combination of all of these factors.
Table 14-13: Coloso Sensitivity of
Estimated Mineral Resources to Ag-Eq Cut-off
AgEq [g/t]
Cut-off |
Confidence
Category |
Tonnes
[1000's] |
Ag [g/t] |
Au [g/t] |
Ag-Eq
[g/t] |
Contained
Ag
[1000's of oz] |
Contained
Au
[1000's of
oz] |
Contained
Ag-Eq
[1000's of
oz] |
|
|
|
120 |
Indicated |
1,076 |
299 |
1.43 |
380 |
10,327 |
49.4 |
13,147 |
|
Inferred |
297 |
233 |
0.93 |
285 |
2,220 |
8.9 |
2,726 |
|
140 |
Indicated |
969 |
320 |
1.52 |
407 |
9,977 |
47.4 |
12,682 |
|
Inferred |
261 |
250 |
0.98 |
306 |
2,093 |
8.2 |
2,561 |
|
160 |
Indicated |
855 |
348 |
1.64 |
441 |
9,556 |
45.0 |
12,125 |
|
Inferred |
220 |
274 |
1.04 |
333 |
1,937 |
7.4 |
2,358 |
|
180 |
Indicated |
767 |
376 |
1.76 |
476 |
9,259 |
43.3 |
11,727 |
|
Inferred |
179 |
307 |
1.13 |
372 |
1,770 |
6.5 |
2,143 |
|
200 |
Indicated |
712 |
390 |
1.81 |
493 |
8,934 |
41.3 |
11,292 |
|
Inferred |
148 |
339 |
1.23 |
409 |
1,607 |
5.8 |
1,940 |
|
220 |
Indicated |
654 |
411 |
1.88 |
518 |
8,634 |
39.6 |
10,891 |
|
Inferred |
122 |
373 |
1.33 |
449 |
1,462 |
5.2 |
1,759 |
|
240 |
Indicated |
606 |
429 |
1.95 |
541 |
8,364 |
38.1 |
10,535 |
|
Inferred |
107 |
397 |
1.40 |
477 |
1,371 |
4.8 |
1,646 |
|
Note: Base case is in bold.
| 14.1.12. | QP Comment on Coloso Mineral Resource Estimate |
Amec Foster Wheeler is not aware of any
environmental, permitting, legal, title, taxation, socio-economic or political factors that could materially affect the Coloso
Mineral Resource estimate. The Jessica and Joya Larga veins and mineralization have good continuity and visual observations and
initial production from underground are confirming the grade shell interpretation and grade estimations. First Majestic’s
drilling and sampling procedures and mine plan allow for variations in the actual location and grade typically encountered in narrow
vein underground mining operations.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 14.2. | Mineral Resources La Guitarra, Nazareno and Mina de Agua Areas |
Mineral Resources for La Guitarra, Nazareno
and Mina de Agua areas have been estimated by First Majestic based on chip and channel samples across mineralized veins, recent
diamond drill-holes and underground mapping. The polygonal method herein described was used to construct longitudinal sections
of the vein shoots. The Nazareno Mineral Resource estimate is based on the same polygonal method and uses drill-hole information
from the 2000, 2003, 2008, 2011 and 2012 drilling campaigns carried out by Genco and Silvermex. Mineral Resources for Veta Rica
and La Tuna veins in the Mina de Agua area were estimated based on channel sampling and underground mapping carried out by First
Majestic in 2014.
Cross and longitudinal sections are drawn
using drill-hole data, mine maps and channel samples. Polygons of Measured Resources are projected vertically (up and down) 12.5
metres or less away from mine levels that have channel sample lines. Indicated Resources are projected a maximum of 12.5 metres
away from mine levels with channel sample lines, from drill-hole intercepts or from the limit of the measured resources polygons
only if there is continuity of mineralization as indicated by drilling information or mine levels with sample lines reporting economic
grades at widths of 1.0 metre for Mina de Agua and Santa Lucia veins and 1.5 metres for Nazareno and Guitarra veins. Inferred resources
are projected 50 metres or less from drill-hole intercepts or polygons of indicated resources. In some cases in the Guitarra vein
polygons of inferred resources are projected up to 100 metres away from drill-hole intercepts or polygons of indicated resources
but only if there is potential for mineralization or if based on geologic information that there are possibilities for mineralization
to continue for more than 50 metres. The Guitarra vein, which is a massive quartz vein, has strong lateral and vertical continuity
containing ore shoots with vertical extents of up to 300 metres. Drill-hole spacing varies from 15 to 75 metres in zones of measured
and indicated resources. Channel sample lines are spaced between 1.5 and 3.0 metres in those mine levels with measured or indicated
resources.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-22: Longitudinal section of the
Guitarra vein showing resource blocks
Figure 14-23: Longitudinal section of La
Tuna vein showing resource blocks
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 14-24: Longitudinal section of Veta
Rica vein showing resource blocks
Figure 14-25: Longitudinal section of Nazareno
vein showing resource blocks
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Once the polygons for Measured, Indicated
and Inferred resources are drawn on longitudinal sections (using CAD software), the area, average width, volume and weighted mean
grade is calculated for every polygon using electronic spread-sheets. Capping of outlier grades is done before calculation of the
weighted mean grades. Capping grades are defined by analyzing cumulative frequency histograms, the grade at the 95% percentile
is selected and capping is done per sample before compositing by length of channel line of drill-hole intercept. Tonnage is calculated
using the calculated volume and an SG of 2.5 tonnes per cubic metre. An SG of 2.5 has been used for La Guitarra veins since 1993;
estimated SG for 29 mineralized samples from Coloso using the water immersion method reported minimum SG of 2.19, maximum SG of
2.97 and mean of 2.42. Once the tonnage is calculated, the metallic contents (measured in ounces) are calculated using the weighted
mean grades and the conversion factor of 31.1035 g/oz. Table 14.14 shows the summary of the estimated Mineral Resources for the
Nazareno, La Guitarra, Santa Lucia, Veta Rica and La Tuna veins.
Table 14.15 shows the consolidated Mineral
Resources for La Guitarra Silver Mine.
Table 14.14: Mineral Resources for La
Guitarra, Nazareno and Mina De Agua Areas
LA
GUITARRA, NAZARENO AND MINA DE AGUA AREA MEASURED
AND INDICATED MINERAL RESOURCES WITH AN
EFFECTIVE DATE OF DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
Mine / Project |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
LA
GUITARRA |
Measured
(UG) |
Sulphides |
121 |
170 |
2.37 |
305 |
660 |
1,185 |
|
Indicated
(UG) |
Sulphides |
262 |
216 |
1.00 |
273 |
1,820 |
2,302 |
|
Total
Measured and Indicated (UG) |
Sulphides |
383 |
201 |
1.44 |
283 |
2,480 |
3,487 |
|
|
|
|
|
|
|
|
|
LA GUITARRA
- NAZARENO INFERRED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014 |
|
|
|
|
|
|
|
|
|
Mine / Project |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
LA
GUITARRA
NAZARENO
MINA DE AGUA |
Inferred
Total (UG) |
Sulphides |
560 |
161 |
1.26 |
233 |
2,904 |
4,201 |
(1) Mineral
Resources have been classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”)
Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated
by reference into National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).
(2) Cut-off grade considered for sulphides
was 180 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for
silver and 79% for gold.
(4) Metal payable used was 95% for silver
and 95% for gold.
(5) Metal prices considered were $22 USD/oz
Ag, $1,350 USD/oz Au.
(6) Silver equivalent grade is estimated
as:
Ag-Eq = Ag Grade + (Au
Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of
tonnes, metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
(9) Measured an Indicated Mineral Resources
are reported inclusive or Mineral Reserves.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 14.15: La Guitarra Silver Mine
Consolidated Mineral Resources
LA
GUITARRA MEASURED AND INDICATED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
Mine / Project |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
LA
GUITARRA |
Measured
(UG) |
Sulphides |
121 |
170 |
2.37 |
305 |
660 |
1,185 |
NAZARENO |
Indicated
(UG) |
Sulphides |
1,029 |
335 |
1.56 |
424 |
11,078 |
14,029 |
MINA
DE AGUA |
Total
Measured and Indicated (UG) |
Sulphides |
1,150 |
318 |
1.65 |
412 |
11,738 |
15,214 |
|
|
|
|
|
|
|
|
|
LA GUITARRA INFERRED MINERAL RESOURCES WITH AN EFFECTIVE DATE OF DECEMBER 31, 2014 |
|
|
|
|
|
|
|
|
|
Mine / Project |
Category |
Mineral Type |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Ag-Eq (k Oz) |
LA
GUITARRA |
Inferred
Total (UG) |
Sulphides |
739 |
197 |
1.23 |
267 |
4,674 |
6,343 |
(1) Mineral
Resources have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose
definitions are incorporated by reference into NI 43-101.
(2) Cut-off grade considered for sulphides
was 180 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for
silver and 79% for gold.
(4) Metal payable used was 95% for silver
and 95% for gold.
(5) Metal prices considered were $22 USD/oz
Ag, $1,350 USD/oz Au.
(6) Silver equivalent grade is estimated
as:
Ag-Eq = Ag Grade + (Au
Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of
tonnes, metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
(9) Measured an Indicated Mineral Resources
are reported inclusive or Mineral Reserves.
To the extent known, there are no environmental,
permitting, legal, title, taxation, socio-economic, marketing, political, or other factors or risks that could materially affect
the development of the mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 15. | Mineral Reserves Estimates |
| 15.1. | Conversion of Mineral Resources to Mineral Reserves |
A Mineral Reserve is the economically mineable
portion of a Measured or Indicated Mineral Resource. To convert from Mineral Resources to Mineral Reserves the resource blocks
are interrogated by applying economic criteria as well as geometric constraints based on the mining method envisioned. Mineable
blocks are defined by following this process.
Mineral Reserves are estimated after incorporating
modifying factors to the mineable blocks. The modifying factors considered in La Guitarra and Coloso mines include dilution and
extraction factors, in addition to mining losses, referred to in this Technical Report as mining recovery.
Mined material that is extracted and delivered
to the processing plant is known as run-of-mine material (ROM). ROM material includes dilution ie. material below cut-off grade
or waste material which is involuntarily added to the mined mineralized material due to the mining width being greater than the
vein width, ground conditions, over-break of hanging-wall and foot-wall, over-digging of floors and/or misrouted loads.
Based on historical records and reconciliation
practices in La Guitarra mine, dilution in La Guitarra mine is estimated at 20%. Based on historical records, in La Guitarra mine
the grade of the diluting material is estimated at 10% of the grade of the corresponding minable block.
In the Coloso mine, the grade of the diluting
material is taken from the grade contained in the corresponding block of the estimated block model if it is contained in the main
zones or in the low grade zone; if the diluting material is taken from outside these zones, all metal grades are considered zero.
Dilution was estimated at 20% after applying a minimum width constraint of 1.5 metres.
Extraction factors are estimated by analyzing
the minable blocks and taking into consideration their geometry and position against the access ramp and the designed sublevels.
Most underground mining methods require the consideration of pillars between excavations to reduce the risk of ground collapse.
In La Guitarra and Coloso mines, the main mining method is overhand cut-and-fill which requires the consideration of horizontal
pillars between extraction levels, these are known as crown pillars. The height of the crown pillars in La Guitarra and Coloso
mines range between 2 to 4 metres depending on ground conditions and thickness of
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
the veins. This geometric consideration
is considered when estimating reserves for the minable blocks.
Mining losses occur when the geometry of
the stopes are unable to follow the orientation and dip of the mineralized portions of the veins or when operational conditions
preclude the recovery of the mineralized material contained in the minable blocks. Based on historical records at La Guitarra mine,
mining losses for La Guitarra and Coloso mines are estimated at 5% of the minable blocks of Measured or Indicated Mineral Resources
after consideration of the mining pillars.
| 15.2. | Cut-off Grade Estimate |
Cut-off grade estimates used for conversion
of resources to reserves incorporates the following main components:
| · | Metallurgical recoveries |
| · | Smelting and refining terms |
Metal prices considered for La Guitarra
Silver Mine’s Mineral Reserves estimates were: $20.00 per ounce of silver and $1,200.00 per ounce of gold.
The silver price used in this analysis is
conservative in comparison to the 3-year trailing average of approximately $25.00 per ounce of silver at the beginning of December
2014 when the cut-off grade estimates were prepared.
| 15.2.2. | Metallurgical recoveries |
ROM material from the Coloso mine has been
sent to the processing plant since January 2014. Starting in August, the Coloso mine has contributed approximately 50% of the plant
feed as shown in figure 15-1.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 15-1: La Guitarra 2014 Mine Production
by domain
Metallurgical recoveries used for cut-off
grade estimates were based on the plant performance for the period of August to November 2014. This period was selected after considering
that the plant will be processing a blend of ROM material from the La Guitarra mine and the Coloso mine. Metallurgical recovery
of silver was set to 85%, which is close to the average for the period of August to November 2014 as depicted in Figure 15-2. Metallurgical
recovery for gold was set to 79%, which is close to the average for the same period.
Figure 15-2: Metallurgical Recovery for
Silver and Gold during 2014
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 15.2.3. | Smelting and refining terms |
A Net Smelting Return (NSR) model was prepared
to estimate the net payment received for the silver and gold contents in the concentrate. In terms of silver-equivalent, the treatment
and refining charges, payable terms and transport and insurance costs add to $5.30 per ounce of silver contained in the concentrate.
Actual operating costs from January to October
2014 in association with the 2015 operating budget were used to derive the cut-off grade. Table 15.1 lists the cost utilized to
calculate the cut-off grade.
Table 15.1: La Guitarra Operating Costs
Assumptions
Area
/ Concept |
US$/t
milled |
Mining |
17.93 |
Milling |
15.84 |
Indirect |
14.54 |
G&A |
6.96 |
Subtotal |
55.27 |
Sustaining Plant & Infrastructure |
7.15 |
Sustaining Development |
13.61 |
Infill Exploration |
1.64 |
Closure
Cost Allocation |
2.22 |
Subtotal |
24.62 |
Total
Cost per Tonne |
79.89 |
| 15.3. | Economic Constraints |
The cut-off grade was derived from the
NSR model prepared with the parameters described above, for this purpose the grades of silver and gold were expressed in terms
of silver-equivalent. The silver equivalent formula used was:
Ag-Eq = Ag Grade + (Au Grade * Au Recovery
* Au Payable * Au Price) / (Ag Recovery * Ag Payable * Ag Price)
Ag-Eq = Ag Grade + (Au Grade * 0.79 * 0.95
* 1200) / (0.85 * 0.95 * 20)
The resulting cut-off grade for constraining
the Measured and Indicated Resources was 200 g/t Ag-Eq.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 15.4. | Geometric Constraints |
The geometric constraints used for the delineation
of practical mining shapes take into consideration the mining method employed at La Guitarra Silver Mine which is overhand cut-and-fill.
For the Coloso mine, practical mining shapes
were built using the Vulcan Stope Optimizer™ tool, the dimensions of each shape are a minimum of 1.5 metres wide, a minimum
of 5 metres long and 15 metres high.
The stope optimization tool generates 3D
triangulations bundling blocks from the block model that conform to the minimum geometric constraints while satisfying the economic
constraint of 200 g/t Ag-Eq of the Measured and Indicated Resource blocks.
Figure 15-3: Longitudinal Section of the
Jessica vein in Coloso showing the constraining shapes for reserve estimation
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 15-4: Longitudinal Section of the
Jessica vein in Coloso showing the reserve blocks after considering pillars and access.
Figure 15-5: Longitudinal Section of the
Joya Larga vein in Coloso showing the constraining shapes for reserve estimation
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 15-6: Longitudinal Section of the
Joya Larga vein in Coloso showing the reserve blocks after considering pillars and access.
For the La Guitarra mine plan, the blocks
of Measured and Indicated Resources were analyzed in longitudinal sections. The area was modified using CAD software taking into
account the accessibility and requirements for crown pillars. The resulting area was used to estimate the tonnage by applying the
average thickness and the average density of the block. Modifying factors for dilution and mining recovery were applied.
| 15.5. | Mineral Reserves Estimates |
An inventory of the minable material that
conforms to the minimum geometric constraints while satisfying the economic constraint of 200 g/t Ag-Eq was completed. This inventory
was modified by applying the modifying factors described above.
Table 15.2 shows the tabulation of Mineral
Reserves for the La Guitarra and Coloso mines as of December 31, 2014.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 15.2: La Guitarra Silver Mine
Mineral Reserves with an effective date of December 31, 2014
Mine |
Category |
k tonnes |
Ag (g/t) |
Au (g/t) |
Ag-Eq (g/t) |
Ag (k Oz) |
Au (k Oz) |
Ag-Eq (k Oz) |
LA GUITARRA
MINE |
|
|
|
|
|
|
|
|
Proven(UG) |
91 |
153 |
1.84 |
256 |
446 |
5.4 |
745 |
Probable (UG) |
269 |
182 |
0.84 |
228 |
1,568 |
7.2 |
1,971 |
Subtotal Proven and Probable (UG) |
359 |
174 |
1.09 |
235 |
2,014 |
12.6 |
2,716 |
|
|
|
|
|
|
|
|
|
COLOSO
MINE |
|
|
|
|
|
|
|
|
Proven (UG) |
- |
- |
- |
- |
- |
1.0 |
- |
Probable (UG) |
949 |
241 |
1.05 |
299 |
7,343 |
32.0 |
9,127 |
Subtotal Proven and Probable (UG) |
949 |
241 |
1.05 |
299 |
7,343 |
33.0 |
9,127 |
|
|
|
|
|
|
|
|
|
TOTAL
LA GUITARRA
SILVER MINE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proven (UG) |
91 |
153 |
1.84 |
256 |
446 |
6.4 |
745 |
Probable (UG) |
1,217 |
228 |
1.00 |
284 |
8,911 |
39.2 |
11,098 |
Total Proven and Probable (UG) |
1.308 |
223 |
1.06 |
282 |
9,358 |
45.6 |
11,843 |
|
|
|
|
|
|
|
|
|
(1) Mineral Reserves have been classified
in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by
reference into NI 43-101.
(2) Cut-off grade considered for sulphides
was 200 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for
silver and 79% for gold.
(4) Metal payable used was 95% for silver
and 95% for gold.
(5) Metal prices considered were $20 USD/oz
Ag, $1,200 USD/oz Au.
(6) Silver equivalent grade is estimated
as:
Ag-Eq = Ag Grade + (Au
Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of
tonnes, metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Given the narrow vein conditions, mining
in La Guitarra Silver Mine is undertaken using primarily the conventional overhand cut-and-fill mining method, with limited application
of longhole stoping in areas where the vein is found with thickness of 3 or more metres in width.
The cut-and-fill stoping cycle is started
with blast holes drilled using hand held jackleg drills followed by blasting using conventional mining explosives. After blasting,
LHD’s are used to muck the blasted ore. The cut and fill stopes are generally 100 m in length along strike and extend between
levels which are typically spaced 15 to 30 m apart vertically. Each cut is 2.5 to 3.0 m in height. Depending on ground conditions,
the blast holes are drilled either upward or horizontally. Waste and mineralized material below cut-off grade is blasted down and
used as backfill as needed. Figure 16-1 shows and schematic of the overhand cut-and fill mining method.
Figure 16-1: Schematic of the cut-and-fill
mining method utilized in La Guitarra
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The minimum mining width is 1.5 m and planned
dilution is included in the mine design, which varies according to the ground conditions, mining method, vein width, and the dip
of the vein. The dilution factors range from approximately 15% to 40%, with an average of approximately 20%. Mined areas are measured
to compare the width of the vein and the width of the cut on a regular basis as mining advances, this comparison is used as means
of reconciliation and to build the historical database of the dilution and mining recovery factors. Sills and access drifts are
excavated at 2.5 m wide by 3.0 m high, cross-cuts and access ramps to the stopes are excavated 3.0 m wide by 3.0 m high, main access
ramps are excavated 4.0 m wide by 4.5 m high.
Diesel haul trucks are used for haulage
of the ore to the ROM pad at the mine portal. Ore from the mine portal pads is hauled to the primary crusher pad using conventional
diesel haul trucks.
Employee and material movement in and out
of the mine is via the mine portals driven into the side of the mountains.
Access to the underground mine is through
a ramp driven from the Coloso portal located in fresh rock on a side of the mountain. The ramp is designed at -12%.
A single ramp layout was selected to access
the main blocks of Jessica and Joya Larga veins. The access ramp started on the footwall side of Joya Larga vein, intersecting
the vein from the southwest towards the northeast. Once production started in Joya Larga, ramps were driven to access Jessica vein
which was intersected on the highwall side (Figure 16-2).
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 16-2: Transversal section view showing
the main ramps to access the Joya Larga and Jessica veins in Coloso mine
Access ramps planned below the 2315 elevation
will be developed on the highwall side of both veins to reduce the length of crosscuts. Figure 16-3 is a longitudinal section of
Coloso showing actual and planned development. A summary of the planned development by level for the Coloso mine is shown in Table
16.1.
Figure 16-3: Longitudinal section view of
the Coloso mine showing the as-mined and the planned development.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Development in waste for access and preparation
totals approximately 15 kilometres over the life-of-mine (“LOM”). The mine plan accounts for a development rate of
approximately 2,500 metres per year. The excavated waste is retained inside the mine as backfill in the stopes. Waste encountered
while mining cut-and-fill stopes is blasted and left in the stope as backfill. No excess waste rock is anticipated.
Overall mine design is shown in Figures
16-4 and 16-5 for the Jessica and Joya Larga veins respectively. The design incorporates ancillary infrastructure for the operation
including, exhaust ventilation raises extends from the bottom of the mine to surface. It includes inclined raises that work as
ore passes, mucking bays, sumps and general underground infrastructure excavations.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 16.1: Planned Development for Coloso
Mine
Vein |
Development
Type |
Level |
Width |
Height |
Length |
|
Main Ramp 2350 |
2,350 |
4.0 |
4.5 |
690 |
|
Main Ramp 5450 |
2,300 |
3.0 |
3.0 |
295 |
JESSICA |
Access drifts |
|
2.5 |
3.0 |
142 |
|
Access Ramps |
|
3.0 |
3.0 |
100 |
|
Ore Pass Raises |
|
1.5 |
1.5 |
25 |
|
Cross-cuts |
|
3.0 |
3.0 |
60 |
|
Ventilation Raises |
|
3.0 |
3.0 |
70 |
|
Main Ramp 5330 |
2,330 |
4.0 |
4.5 |
1,521 |
JESSICA |
Access drifts |
|
2.5 |
3.0 |
525 |
|
Access Ramps |
|
3.0 |
3.0 |
350 |
|
Ore Pass Raises |
|
1.5 |
1.5 |
124 |
|
Cross-cuts |
|
3.0 |
3.0 |
160 |
|
Ventilation Raises |
|
3.0 |
3.0 |
160 |
|
Main Ramp 5050 |
2,300 |
3.0 |
3.0 |
535 |
JESSICA |
Access drifts |
|
2.5 |
3.0 |
596 |
JOYA LARGA |
Access drifts |
|
2.5 |
3.0 |
198 |
|
Access Ramps |
|
3.0 |
3.0 |
170 |
|
Ore Pass Raises |
|
1.5 |
1.5 |
80 |
|
Cross-cuts |
|
3.0 |
3.0 |
144 |
|
Ventilation Raises |
|
3.0 |
3.0 |
72 |
|
Main Ramp 4900 |
2,300 |
3.0 |
3.0 |
1,070 |
JESSICA |
Access drifts |
|
2.5 |
3.0 |
515 |
JOYA LARGA |
Access drifts |
|
2.5 |
3.0 |
500 |
|
Access Ramps |
|
3.0 |
3.0 |
375 |
|
Ore Pass Raises |
|
1.5 |
1.5 |
90 |
|
Cross-cuts |
|
3.0 |
3.0 |
294 |
|
Ventilation Raises |
|
3.0 |
3.0 |
164 |
|
Main Ramp 4650 |
2,260 |
3.0 |
3.0 |
610 |
JESSICA |
Access drifts |
|
2.5 |
3.0 |
435 |
|
Access Ramps |
|
3.0 |
3.0 |
200 |
|
Ore Pass Raises |
|
1.5 |
1.5 |
75 |
|
Cross-cuts |
|
3.0 |
3.0 |
145 |
|
Ventilation Raises |
|
3.0 |
3.0 |
160 |
|
Main Ramp 4500 |
2,300 |
3.0 |
3.0 |
452 |
JESSICA |
Access drifts |
|
2.5 |
3.0 |
153 |
|
Access Ramps |
|
3.0 |
3.0 |
150 |
|
Ore Pass Raises |
|
1.5 |
1.5 |
60 |
|
Cross-cuts |
|
3.0 |
3.0 |
146 |
|
Ventilation Raises |
|
3.0 |
3.0 |
203 |
|
Magazines |
|
4.0 |
4.5 |
45 |
|
Sumps |
|
4.0 |
4.5 |
150 |
|
General Infrastructure |
|
4.0 |
4.5 |
50 |
|
Main Ramp |
|
|
|
5,173 |
|
Access drifts |
|
|
|
3,064 |
|
Access Ramps |
|
|
|
1,345 |
Subtotals |
Ore Pass Raises |
|
|
|
454 |
|
Cross-cuts |
|
|
|
949 |
|
Ventilation Raises |
|
|
|
829 |
|
Other |
|
|
|
245 |
|
Total |
|
|
|
12,059 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 16-4: Longitudinal section view of
the Jessica vein showing planned development and minable blocks.
Figure 16-5: Isometric view looking southwest
of the Joya Larga vein showing planned development and minable blocks.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The LOM plan is based on an annual processing
rate of 190,000 tonnes of plant feed, corresponding to approximately 520 tonnes per day. Considering the Mineral Reserves presented
in Section 15.5 it represents a mine life of 7 years. Table 16.2 shows the LOM production schedule.
The top elevation of the estimated mineral
reserves for the Coloso area is 2380 metres above sea level (2380 level); current operation in the Joya Larga vein is at level
2325 and in the Jessica vein at level 2350. The life-of-mine plan is assumed to reach the 2185 level in both veins. The veins and
mineralized structures that have been mined on the Coloso mine do not appear to be significantly different in terms of grade and
width to the structures encountered in La Guitarra mine.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 16.2: Life-of-Mine Plan
La
Guitarra Silver Mine |
LOM Plan |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
Total |
ROM Mine Production |
kt |
187 |
190 |
190 |
190 |
190 |
190 |
171 |
1,308 |
Silver grade |
g/t Ag |
189 |
185 |
203 |
237 |
265 |
263 |
206 |
223 |
Gold grade |
g/t Au |
0.91 |
1.00 |
0.97 |
1.40 |
1.28 |
1.14 |
0.84 |
1.06 |
Silver-Equivalent grade |
g/t Ag-Eq |
239 |
241 |
257 |
315 |
336 |
327 |
253 |
282 |
Silver metal content |
M oz Ag |
1.13 |
1.13 |
1.24 |
1.45 |
1.62 |
1.61 |
1.14 |
9.31 |
Gold metal content |
k oz Au |
5.5 |
6.1 |
5.9 |
8.5 |
7.8 |
7.0 |
4.6 |
45.4 |
Silver-Equivalent metal content |
M oz Ag-Eq |
1.44 |
1.47 |
1.57 |
1.92 |
2.05 |
2.00 |
1.39 |
11.84 |
Guitarra SE |
kt |
5 |
12 |
18 |
18 |
15 |
- |
- |
68 |
Silver grade |
g/t Ag |
240 |
216 |
218 |
219 |
221 |
- |
- |
220 |
Gold grade |
g/t Au |
1.65 |
1.64 |
1.74 |
1.80 |
1.94 |
- |
- |
1.78 |
Silver-Equivalent grade |
g/t Ag-Eq |
332 |
307 |
315 |
319 |
329 |
- |
- |
319 |
Guitarra SE / Sta Lucia |
kt |
- |
9 |
14 |
14 |
12 |
- |
- |
48 |
Silver grade |
g/t Ag |
- |
232 |
232 |
232 |
232 |
- |
- |
232 |
Gold grade |
g/t Au |
- |
1.82 |
1.82 |
1.82 |
1.82 |
- |
- |
1.82 |
Silver-Equivalent grade |
g/t Ag-Eq |
- |
333 |
333 |
333 |
333 |
- |
- |
333 |
Guitarra Centro |
kt |
15 |
12 |
12 |
4 |
- |
- |
- |
44 |
Silver grade |
g/t Ag |
173 |
117 |
117 |
117 |
- |
- |
- |
137 |
Gold grade |
g/t Au |
1.29 |
1.34 |
1.34 |
1.84 |
- |
- |
- |
1.65 |
Silver-Equivalent grade |
g/t Ag-Eq |
245 |
220 |
220 |
220 |
- |
- |
- |
229 |
Guitarra NW / La Cruz |
kt |
4 |
5 |
- |
- |
- |
- |
- |
10 |
Silver grade |
g/t Ag |
216 |
79 |
- |
- |
- |
- |
- |
140 |
Gold grade |
g/t Au |
1.10 |
2.59 |
- |
- |
- |
- |
- |
1.93 |
Silver-Equivalent grade |
g/t Ag-Eq |
277 |
224 |
- |
- |
- |
- |
- |
247 |
Nazareno |
kt |
- |
- |
- |
18 |
24 |
48 |
72 |
162 |
Silver grade |
g/t Ag |
- |
- |
- |
169 |
169 |
169 |
169 |
169 |
Gold grade |
g/t Au |
- |
- |
- |
0.12 |
0.12 |
0.12 |
0.12 |
0.12 |
Silver-Equivalent grade |
g/t Ag-Eq |
- |
- |
- |
175 |
175 |
175 |
175 |
175 |
Veta Rica |
kt |
- |
- |
- |
- |
- |
- |
7 |
7 |
Silver grade |
g/t Ag |
- |
- |
- |
- |
- |
- |
209 |
209 |
Gold grade |
g/t Au |
- |
- |
- |
- |
- |
- |
0 |
0 |
Silver-Equivalent grade |
g/t Ag-Eq |
- |
- |
- |
- |
- |
- |
222 |
222 |
Coloso / Joya Larga Bajo |
kt |
13 |
18 |
34 |
39 |
44 |
6 |
- |
154 |
Silver grade |
g/t Ag |
176 |
154 |
219 |
330 |
424 |
401 |
- |
302 |
Gold grade |
g/t Au |
0.48 |
0.48 |
0.45 |
0.65 |
1.00 |
1.16 |
- |
0.69 |
Silver-Equivalent grade |
g/t Ag-Eq |
203 |
181 |
244 |
366 |
480 |
466 |
- |
341 |
Coloso / Joya Larga Alto |
kt |
5 |
12 |
5 |
3 |
- |
- |
- |
25 |
Silver grade |
g/t Ag |
149 |
163 |
279 |
170 |
- |
- |
- |
184 |
Gold grade |
g/t Au |
0.44 |
0.38 |
0.71 |
0.66 |
- |
- |
- |
0.50 |
Silver-Equivalent grade |
g/t Ag-Eq |
174 |
134 |
318 |
207 |
- |
- |
- |
212 |
Coloso / Jessica |
kt |
98 |
88 |
72 |
59 |
60 |
127 |
92 |
596 |
Silver grade |
g/t Ag |
204 |
204 |
206 |
250 |
254 |
298 |
236 |
239 |
Gold grade |
g/t Au |
0.92 |
0.86 |
0.77 |
2.36 |
1.91 |
1.54 |
1.44 |
1.35 |
Silver-Equivalent grade |
g/t Ag-Eq |
255 |
252 |
249 |
382 |
361 |
384 |
316 |
314 |
Development in Ore (Sills) |
kt |
46 |
35 |
35 |
35 |
35 |
9 |
- |
194 |
Silver grade |
g/t Ag |
163 |
178 |
178 |
178 |
178 |
173 |
- |
178 |
Gold grade |
g/t Au |
0.84 |
0.88 |
0.88 |
0.88 |
0.88 |
0.88 |
- |
0.88 |
Silver-Equivalent grade |
g/t Ag-Eq |
210 |
227 |
227 |
227 |
227 |
227 |
- |
227 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 16.4. | Manpower and Mining Fleet |
La Guitarra is and owner operated mine working
seven days a week, three shifts per day. Workforce is available in the surrounding communities hence standard rosters of 48 hours
per week are applied. Current workforce is comprised of 306 employees and 87 contractors.
The mining fleet currently in operation
at La Guitarra is listed in table 16.3. A sustaining capital allocation is in place to replace the equipment when it reaches the
end of its useful life.
Table 16.3: Mining Fleet
# |
TYPE |
MODEL |
BRAND |
CAPACITY |
MANUFACTURED |
ST # 11 |
Scoop Tram |
LT-410 |
MTI |
3.5 cu yd |
2000 |
ST # 20 |
Scoop Tram |
LT-410 |
MTI |
3.5 cu yd |
2012 |
ST # 21 |
Scoop Tram |
LT-270 |
MTI |
1.7 cu yd |
2012 |
ST # 22 |
Scoop Tram |
LT-270 |
MTI |
1.7 cu yd |
2012 |
ST # 24 |
Scoop Tram |
LH-307 |
SANDVIK |
3.5 cu yd |
2012 |
ST # 27 |
Scoop Tram |
LH-307 |
SANDVIK |
3.5 cu yd |
2014 |
ST # 28 |
Scoop Tram |
LH-307 |
SANDVIK |
3.5 cu yd |
2014 |
ST # 29 |
Scoop Tram |
LH-307 |
SANDVIK |
3.5 cu yd |
2014 |
ST # 30 |
Scoop Tram |
LH-203 |
SANDVIK |
2.0 cu yd |
2010 |
ST # 31 |
Scoop Tram |
LH-100 |
SANDVIK |
0.5 cu yd |
|
ST # 32 |
Scoop Tram |
LH-203 |
SANDVIK |
2.0 cu yd |
2011 |
ST # 33 |
Scoop Tram |
LH-203 |
SANDVIK |
2.0 cu yd |
2011 |
CEP #
4 |
Low Profile Truck |
D-10 |
ELMAC |
10 t |
1990 |
CBP # 5 |
Low Profile Truck |
D-10 |
ELMAC |
10 t |
1990 |
CBP # 6 |
Low Profile Truck |
JCI-1504 |
ELMAC |
15 t |
2000 |
CBP # 7 |
Low Profile Truck |
EJC-417 |
SANDVIK |
15 t |
2010 |
J # 3 |
Jumbo |
DD-210 |
SANDVIK |
14 foot |
2010 |
J # 4 |
Jumbo |
DD-210 |
SANDVIK |
14 foot |
2010 |
J # 5 |
Jumbo |
AXERA-5 |
SANDVIK |
16 foot |
2010 |
L # 2 |
Front End Loader |
WA-200-6 |
KOMATSU |
3.0 cu yd |
2007 |
D # 1 |
Dozer |
D65-EX |
KOMATSU |
|
2007 |
EX # 1 |
Excavator |
PC-220-LC |
KOMATSU |
2 t |
2007 |
L # 4 |
Mini Skid |
SK-820 |
KOMATSU |
0.5 t |
2001 |
U # 2 |
Telehandler |
IR |
IR |
3 metres |
90 |
U # 3 |
Compactor |
|
DINAPAC |
|
2005 |
U # 4 |
Compactor |
|
CATERPILLAR |
|
2005 |
EX # 2 |
Excavator |
430-D 4X4 |
CATERPILLAR |
1.51 |
2003 |
| 16.5. | Geotechnical Considerations |
A geotechnical analysis of the Coloso mine
was carried out to investigate the ground conditions of the Jessica and Joya Larga veins. The objective was to establish the geo-mechanical
bases for the design, construction and development of mining excavations and to provide design guidance for ground support.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Geological information from the Coloso mine
was compiled by mapping portions of the general ramp and the 2080 drift, as well as by the integration of the logged geotechnical
information from the 2011 and 2012 campaigns drill-holes. The quality of the rock mass was determined utilizing the Q-System method
(Barton et al. 1974) (“Q-System”). Based on the Q-system of classification, different geotechnical units were defined,
as well as the type and quantity of support estimated for each of the geotechnical units. Two main geotechnical units for the Coloso
mine were defined referred below as units UG1 and UG2.
UG-1: This unit corresponds to the quartz
veins at Joya Larga ad Jessica, the texture is brecciated containing clasts of volcanic tuffs and lithic volcanic tuffs, mineralized
material is supported in a quartz matrix. The veins are encased in lithic volcanic tuffs that show a moderate to strong silicification.
Q Values obtained for this geotechnical unit go from 2 to 33, therefore classifying the quality of the rock as fair to good. Image
16-5 below shows lithic volcanic tuffs encasing the brecciated quartz vein.
Figure 16-6: Image of Joya Larga vein drill
core.
UG-2: This geotechnical unit is formed by
lithic volcanic tuffs presenting weak zones with a slight argillite alteration. Q values were estimated within the range of 0.35
to 8, classifying the quality of the rock as poor to fair.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 16-7: Argillized volcanic tuffs encasing
brecciated quartz vein.
A ground support standard was prepared for
the designed mining excavations. Considering that development of the access ramps and cross-cuts will be typically carried out
in rocks represented by UG-1 and UG-2 units.
Support requirements were estimated applying
empirical techniques for excavations of a nominal width of 3 m. The estimations were based on the tunnelling quality index Q (Grimstad
and Barton, 1993). The estimated support requirement include systematic bolting spaced 1.5 m to 2.0 m mostly without the need of
shotcrete, with some shotcrete required when the Q index falls below 4 for the geotechnical unit UG-1. Support requirements for
geotechnical unit UG-2 include systematic bolting spaced 1.5 m to 2.0 m mostly with reinforced shotcrete when the Q index is below
2, and bolting without shotcrete when the rock’s Q index is above 2. Results are shown in figure 16-7.
Empirical techniques offer a good reference
for the selection of the ground support, but these should only be utilized as a guide, as the design must always be subject to
the local conditions of each area.
For a cut-and-fill application, the critical
span is considered the dimension of the hangingwall face along the stope. An estimation of the critical dimension was performed
using empirical methods. For geotechnical unit UG-1, the critical span is not reached when mining stope heights of 2 m to 3 m and
stope lengths of 200 m to 300 metres. For geotechnical unit UG-2, the critical span resulted in the range of 40 m to 200 m long
for stope heights of 2 m to 3 metres.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 16-8: Estimated support requirement
for UG-1 and UG-2, adapted from Palmstrom and Broch (2006).
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The mill at
the La Guitarra flotation plant processes a silver and gold–bearing mineral through a flotation method producing a
bulk Au/Ag concentrate. The installed plant capacity
of the processing plant is 520 tonnes per day.
The processing plant flowsheet consists
of two-stage crushing, ball mill grinding, and a bulk flotation of the ore to concentrates, followed by thickening and filtering
of the concentrates.
Figure 17-1: La Guitarra Processing Plant
Flowsheet
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 17.2. | Processing Plant Configuration |
ROM material delivered from the mine is
dumped into a masonry coarse ore bin of a 100 tonnes capacity. The coarse ore bin is equipped with a steel rails grizzly in its
upper part. The grizzly has openings of 10” x 10”; oversize material is reduced in size using a hydraulic hammer.
The coarse ore bin has a lower discharge
chute that discharges into a vibrating feeder 24” wide, 24” high by 98” long. The minus 10” material is
fed into a 24” x 36” primary jaw crusher and it is reduced to a minus 2-½”
to 3”. This product is transported by conveyor-1, a 24” wide belt conveyor, to the vibrating screens. Conveyor-1 also
receives the discharge from conveyor-3 (width 24”), which transports the undersize product from the short head secondary
cone crusher, size.
The products from both crushers are fed
to a 4’ x 10’ double mesh vibrating screen. This screen has 2 sieves,: the upper
one with an aperture of ¾” x 2-¾” and the lower one with an aperture of 5/8” x 5/8”. The
lower discharge of the screen contains material from 80% to 90% minus 3/8” (9525 µm).
The upper discharge of the vibrating screen
(rejects from both meshes), flows into conveyor-2 (width 24”) which feeds this material to the 4-¼’ secondary
short head cone crusher which reduces the size to minus 3/8”. Product from this secondary crusher discharges in Conveyor-1.
The lower discharge of the vibrating screen
is transported through conveyor-4 (width 18”) and discharged into the fine ore bin, constructed
of steel plates with a 200 tonnes capacity. The fine ore material is considered 80% to 90% minus 3/8” with average moisture
of 5%.
The grinding section is comprised of four
independent milling circuits. The dimensions and sizes of the equipment that form the 4 milling circuits are listed below:
| · | 5’ x 9’ Marcy Mill (100 HP), 10” cyclone, SRL Denver 3”x3” 15 HP
pumps |
| · | 8’ x 6’ Allis Chalmers Mill (300 HP), 15” cyclone, SRL Denver 5”x4”
20 HP pumps |
| · | 6’ x 6’ Marcy Mill (100 HP), 10” cyclone, SRL Denver 3”x3” 15 HP
pumps |
| · | 7’ x 10’ Chinese manufacture mill, 15” cyclone, Goulds 5”x4” 25 HP
pumps |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The fine ore is discharged through three
chutes into conveyor-5 (width 24”) which is equipped with a Ramsey Micro-Tech load cell used to record the mill feed tonnage.
Conveyor-5 feeds three of the four ball mills: the 5’x9’; 8’x6’ y 6’x6’. Conveyor-9 feeds ball
mill 7’x10’.
Each ball mill is equipped with a cyclone
classification system and a pair of pumps (one in operation the second on stand-by). All four mills use 3” diameter steel
mill balls.
The average percentage of solids that are
handled at each point of the circuit are as follows: mill discharge 75%, coarse ore cyclone 78% and fine ore cyclone 25%. The final
milled product is approximately 60% at minus 200 mesh, equivalent to a P80 of 115 µm. The product of the four grinding circuits
is fed into an 8’ x 8’ conditioning tank.
Sample cutting is carried out of material
in conveyor-5 with a sample cut every 20 minutes. A sample is composited for every 8-hour shift. The samples are prepared and assayed
in the La Guitarra laboratory. With this information a daily balance is calculated, this balance shows the silver grade, the gold
grades and the metal contents of the material fed to the plant, the final concentrate as well as the tailings.
The following reagents and dosage are added
to the grinding product in the conditioning tank: Aeropromoter 404 Cytec (40 to 50 g/ton), Aerofloat 31Cytec (10 to 20 g/ton),
Aeropromoter 3473 Cytec (60 to 80 g/ton), additionally a foaming reagent is added to the conditioning discharge.
The discharge from the conditioning tank
flows by gravity towards two Wemco primary rougher flotation cells, each cell has a capacity of 300 ft3 and is powered
by 30 HP motors. The concentrate of both cells is considered a final concentrate and is sent directly to the concentrate thickener
via a Goulds 2”x2” pump.
The tailings from both rougher cells are
pumped into the next flotation step (Scavenger #1) by a Goulds 5”x4” pump. This stage consists of an unbranded 150
ft3 cell. The concentrate of this cell is considered final and is mixed with concentrates from the two primary rougher
cells and pumped into the final concentrate thickener.
Tailings from the scavenger #1 cell are
sent to a third stage (Scavenger #2) by a Goulds 5”X4” pump. Scavenger #2 is made up of 2 Wemco cells 300 ft3,
each equipped with 30 HP motors. The concentrate from both cells is pumped into a cleaning stage.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
The tailings from the scavenger #2 bank
are considered final and are pumped to the tailings impoundment by a Goulds 4”x3” centrifuge pump.
The concentrate of the scavenger #2 cell
bank is sent to a 150 ft3 Wemco cleaning cell. The concentrate of the cleaning cell is pumped into the final concentrate
thickener together with the 2 primary cells concentrate.
Samples are taken in the flotation circuit
using in-house constructed pneumatic samplers, plant feed, final concentrates and tailings
are sampled with cuts taken every 10 minutes. Samples are sent to the La Guitarra laboratory to be analyzed for: Ag, Au, Pb, Zn,
Fe, Cu and As. The production balance is calculated solely with the Au and Ag tests.
| 17.2.6. | Concentrate Handling |
The final concentrate, composed of the primary
concentrate composite, Scavenger #1 plus the concentrate from the cleaner, is pumped into a 25’ thickener tank with a thickening
area of 490 ft2. The concentrate pulp is typically 13% solids having a specific gravity of
3.4, although it can vary depending of the grade of the final concentrate.
According to laboratory tests the capacity
of the thickener is 40 dry tonnes per day, therefore the capacity of the tank is sufficient for the 520 tonnes per day feed. Considering
a relative concentration ratio equal or higher than 20 to 25 tonnes of concentrate are produced daily.
The density of the thickener tank discharge
is 48% solids. The thickened material is sent to an Ertel Alsop filter press with 35 plates of 1m x 1m each. The filter press cycle
varies from 50 to 60 minutes and has a capacity of 1.1 dry tonnes per cycle. Therefore, the filter’s capacity is approximately
26 tonnes per day. Humidity of the filtered concentrate is approximately 10%.
Water overflow from the thickener is recovered
and falls into a general water recovery pool situated between the plant and the tailings impoundment. The water recovered in the
filter returns to the concentrate thickener to be recovered by its overflow.
The filtered concentrate is stored in a
pad located at the bottom of the filter. The concentrate is shipped in 30 to 25 tonnes trucks to the client’s storage facility
located in the port of Manzanillo, Colima, Mexico. Weekly shipments consist of 4 to 5 batches.
Each truck is sampled independently.
| 17.2.7. | Tailings Management |
Tailings are pumped to the impoundment located
1.3 km away, through a 5” diameter duct. A conical strainer acts as a collector to gather
the clarified water from the shallow part of the impoundment. The water also drains to the bottom of the impoundment and flows
through a
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
piping network spilling into a general pool
situated between the impoundment and the plant. In this pool recovered water converges with water recovered from the concentrate
thickener and is recycled to the process.
The tailings facilities are continually
reviewed and expansions are engineered and constructed to ensure geotechnical stability by First Majestic’s independent consultants,
Recycled water accounts for 92% of the plant
requirements and only 8% is made up from fresh water. All the fresh water that feeds the plant comes from mine dewatering stations.
Water usage in the mill is estimated at 3.6 m3/t, this is made up of 3.3 m3/t of recycled water and 0.3 m3/t
of fresh water pumped from the underground dewatering stations. Recycled water is pumped back to the plant, from the recycled water
pond, using a Crane Deming D50 pump with a pumping capacity of 90 m3/hour, the recycled water is received in a storage
tank for its distribution to the mills and the general mine operation.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 18. | Project Infrastructure |
| 18.1. | General infrastructure |
Access to La Guitarra is by a 3 kilometre
gravel road which starts from the paved highway connecting the town of Temascaltepec with the city of Zacazonapan. Temascaltepec,
the nearest town, has a population of approximately 3,000 people. Most of the La Guitarra employees and contractors are habitants
of the Temascaltepec municipality which has a population of approximately 33,000 people. Commute to La Guitarra is done via company
sponsored buses, company vehicles, or privately owned vehicles. Materials, fuel, consumables and produced metal concentrates are
transported to their destinations by road. La Guitarra Silver Mine surface infrastructure is shown in Figure 18-1.
Figure 18-1: La Guitarra general infrastructure
arrangement
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
There are two main portals to access the
mines: The San Rafael mine portal to access La Guitarra mine and the Coloso portal to access the Coloso mine. Figure 18-2 shows
an image of the San Rafael mine portal. The existing infrastructure includes workshops, analytical laboratory, storage facilities,
offices, drill core and logging sheds, water ponds, power substations and power lines. Figure 18-3 shows a detail of the mine and
mill infrastructure.
Figure 18-2: Image of the San Rafael mine
portal
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 18-3: Detail of the La Guitarra infrastructure
| 18.3. | Processing facilities |
The process plant consists of crushing,
grinding, flotation, thickening, filtration, and concentrate storage areas. The building also includes offices and a reagent preparation
area. Figure 18-4 shows a general view of the processing facilities.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Figure 18-4: Image of the La Guitarra processing
facilities
Other processing facilities include the
tailings impoundment facility, an analytical and metallurgical lab, a building for general administrative offices, a recycled water
pond for industrial use, and a sewage water treatment plant.
The primary source of power for the mine
is from the Mexican national power grid, administered by Comision Federal de Electricidad (CFE), the Mexican utility entity. The
power consumption is approximately 1.1 million kilowatt hours per month. The mine and mill operation consume up to 400 cubic metres
of fresh water per day.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 19. | Market Studies and Contracts |
The main product obtained from the flotation
process at La Guitarra is a silver-gold concentrate, which is sold under annual contracts to arm’s length concentrate traders.
La Guitarra concentrates are hauled to the delivery point in Manzanillo, a port on the Pacific coast of México.
Typical freight, insurance costs, treatment
charges and payable terms for La Guitarra are summarized in Table 19-1.
Table 19.1: La Guitarra concentrates
treatment charges and payable terms.
Concept |
Units |
Value |
Transport Land |
$/t concentrate |
71.75 |
Insurance |
$/t concentrate |
2.45 |
Concentrate Treatment Charge |
$/t concentrate |
239.00 |
Silver Refining Charge |
$/oz Ag |
1.50 |
Silver Payable |
% |
95.00 |
Silver Minimum Deduction |
g/t |
50.00 |
Gold Refining Charge |
$/oz Au |
20.00 |
Gold Payable |
% |
95.00 |
Gold Minimum Deduction |
g/t |
1.00 |
Penalty SiO2 |
$/t concentrate |
88.20 |
The silver-gold concentrate is expected
to contain about 3.6 kilograms of silver per tonne and about 26 grams of gold per tonne. Based on past performance and the characteristics
of the ore, the silver-gold concentrates will carry impurities in the form of silicate oxides (SiO2) that could be regularly
penalized at the smelter. The arsenic content has been recorded at a range between 0.6 and 0.9 percent; the threshold for penalization
is 1.0 percent. No other relevant impurities have been recorded.
La Guitarra receives payment for an agreed
upon percentage of the silver and gold contained in the concentrates it sells after deduction of smelting and refining costs, based
on average spot prices over defined 1-month periods.
Silver-gold concentrates are considered
a product with high liquidity, therefore securing contracts for the sale of the concentrates produced in the future is likely,
however, there can be no certainty that La Guitarra will always be able to do so or what terms will be available at the time.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Ramon Mendoza Reyes, P.Eng., Vice President
Technical Services of First Majestic Silver Corp. and Qualified Person responsible for this section of the report has reviewed
the commercial terms of the La Guitarra concentrate sales contract, as well as the performance of the concentrate quality for the
shipments in 2014, period during which the material mined from the Coloso area was incorporated into the plant feed. The information
reviewed is considered sufficient to support the assumptions utilized in this Technical Report.
Table 19-2 below lists the current relevant
contracts that La Guitarra Compañía has in place with third parties to carry out relevant operational activities.
In the opinion of the Company’s Qualified Person, the terms of the contracts and rates charged are within industry customs.
Table 19.2: Operational contracts in
La Guitarra
Contract Activity |
Contractor |
Ore haulage |
Jose C. Hernandez Alvarez |
Drilling |
Hidroperforaciones CEVAL, S.A. de C.V. |
Civil works, Construction |
Alejandro Almanza Perez |
Civil works, Construction |
Sergio Montero Lopez |
Housekeeping, Catering |
Lucero Caballero Aviles |
Security |
Seguridad Privada para la Industria Minera, S.A. de C.V. |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 20. | Environmental Studies, Permitting and Social or Community Impact |
| 20.1. | Environmental Compliance in Mexico |
Mining in Mexico is primarily regulated
by Federal laws, although some areas require State or local approval. The principal agency promulgating environmental standards
and regulating environmental matters in Mexico is the Secretariat of Environment and Natural Resources (“SEMARNAT”).
There are Federal delegations or State agencies of SEMARNAT.
An Environmental Impact Manifest (“MIA”)
must be prepared and submitted to SEMARNAT before applying for a license for a mining operation. The MIA must include an analysis
of local climate, air quality, water, soil, vegetation, wildlife and cultural resources in the project area as well as a socioeconomic
impact assessment. The Unique Environmental License (“LAU”) is based on an approved MIA and is required before the
start of an industrial operation.
A permit must be obtained from SEMERNAT
for Risk Analysis (“RA”). A study must be conducted to identify and assess any potential environmental discharges and
risks and develop a plan to prevent and mitigate these risks, as well as to respond to potential environmental emergencies. A strong
emphasis is placed on the storage and handling of hazardous materials such as chemical reagents, fuel and tailings.
The Federal Prosecutor’s office for
the Protection of the Environment (“PROFEPA”) is the responsible body for enforcement, public participation and environmental
education. After receiving an operation license, an agreement is setup between the operating company and the PROFEPA as a way to
follow-up obligations, commitments and monitoring preventative activities.
A division of SEMARNAT, the National Water
Commission (“CONAGUA”) is the authority over all water related matters including activities which may impact surface
water supply or quality, including water use permits and fees, diversion of surface waters, constructions in significant drainages
or water discharge.
In Mexico, all land has a designated use.
The majority of the land covering La Guitarra Silver Mine’s mining claims is designated as agricultural or forest land. A
Change of Land Use (“CUS”) permit is required for all areas of production and potentially areas of expanded production.
The CUS study is based on federal forestry laws and regulations, and requires an in depth analysis of the current use of the land,
native flora and fauna, and an evaluation of the current and proposed uses of the land and their impact on the environment. The
study requires that agreements exist with all affected surface rights holders and that an acceptable reclamation and restoration
plan is in place.
The National Commission for the Protected
Natural Areas (“CONANP”) is the agency responsible for planning, research, development and conservation of the national
protected
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
areas. If an industrial activity is planned
close to one of the protected areas, an assessment and a permit from the CONANP is required.
An Accident Prevention Program (“PPA”)
is a study based on the risk analysis and is a compendium of general and specific protocols tailored to the operations, aimed at
the prevention and response to hazardous conditions.
Mexican regulations require that prior to
construction the National Institute of Anthropology and History (“INAH”) review the project plans and inspect the project
area for historic and archeological resources.
| 20.2. | Pre-existent Environmental Conditions |
The Temascaltepec District is an area that
has registered mining activity since colonial times. This is evident in the surrounding area where some of the old mining works
can be identified. In June 1990 the first authorization from an environmental impact point of view was issued for the exploitation
and the processing of minerals by the mining company: “Minera Arauco, S.A. de C.V. which in 2003, became La Guitarra Compañía
Minera, S.A. de C.V.
| 20.3. | Relevant Environmental Impact Aspects |
| 20.3.1. | Discharge of waste water, La Guitarra mine |
Control and treatment of the present water
discharge is paramount to continue to maintain the particular conditions established in the concession title granted by CONAGUA.
This is an aspect which to date is controlled and is positive. To guarantee the continuity of the operations, the company requires
authorization to increase the volume of water discharged, an application to achieve this is now being processed.
| 20.3.2. | Discharge of waste water, Coloso mine |
The discharge of waste water running under
the mine could impact sensitive property zones used for tourist, agricultural and grazing activities. The application for the water
discharge has been submitted and the authorization from CONAGUA for the discharge of process water is pending resolution.
| 20.3.3. | Current Tailings Impoundment |
The potential failure of the retaining curtain
or a tailings landslide, is a risk which may have a serious environmental impact to the basin or water bodies such as the El Cajón
stream. To mitigate this risk, measures are being taken such as, structural improvements are in progress and improvements to the
recovery procedure of water coming in from the cyclone, also the contact between the decanted water and the slope of the tailings
impoundment has been minimized.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 20.3.4. | New tailings impoundment |
The design of a new tailings impoundment
is in process with special attention given to the possible presence of historic mining infrastructure that may physically impinge
on the new operations. The time that it may take to design and to produce the environmental impact and technical studies required
to justify the change of land use application, is a key factor. It is estimated that this process could take 12 to 14 months; consequently
it has a high priority due to the projected life span of the present tailings impoundment of approximately 16 months.
| 20.3.5. | Operation in Tlacotal |
Tlacotal is the community where the Mina
de Agua exploration and exploitation mining project is located. To date, there is no current permit for change of use of land or
environmental impact assessment. Tlacotal is part of a long term project to substitute the production in La Guitarra and Coloso
mines. The relevant studies are in progress.
| 20.4. | Environmental Management Program |
In order to have an adequate Environmental
Management Program, the mining unit of La Guitarra is in the development and implementation phase of an Environmental Administration
System, which is based on the international norm ISO 14001:2004 and the requirements to obtain the Clean Industry Certification,
issued by SEMANART through PROFEPA.
| 20.5. | Summary of relevant environmental obligations |
The following is a description of the principal
obligations relating to environmental matters for La Guitarra Silver Mine.
| · | Yearly operation licence (COA). Report presented annually and contains environmental information
on the operation of the mine: water, air, waste discharge, materials, and production. |
| · | Dangerous waste declaration. Official document that controls the operation of dangerous waste from
the mining installation to the site where it will be disposed (final disposal site). |
| · | Quarterly payment for water use. |
| · | Quarterly payment for water disposal. |
| · | Monitoring plan for water, air, waste discharge and noise. Done in accordance with the different
authorizations and conditions of the Official Mexican Norms. |
| · | Those established in the authorizations obtained and/or Official Mexican Norms. |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
La Guitarra is an operating mine, as such
it already holds all major environmental permits and licenses required by the Mexican authorities to carry out mineral extracting
activities. Table 20.1 contains a list of the major permits issued to La Guitarra.
Table 20.1 - Major permits issued to
La Guitarra
Permit |
Number |
Authority |
Status |
Date
Granted |
Validity
Period |
Environmental License |
DFMARNAT/
SGPARN/
F0530/3897/03 |
SEMARNAT |
Current |
Jun. 2003 |
Indefinite |
Environmental Impact Authorization for Mining and Metallurgical activities, including Tailings Management Facilities and Waste Rock Management Facilities for the La Guitarra Silver Mine site |
DFMARNAT/
3124/2012 |
SEMARNAT |
Current |
Aug. 2012 |
20 years operation |
Environmental Impact Authorization for the Extension of Infrastructure to the Coloso Area |
DFMARNAT/
5289/2012 |
SEMARNAT |
Current |
Dec. 2012 |
10 years for construction and operation |
Authorization for industrial land use in La Guitarra |
DFMARNAT/
3990/2012 |
SEMARNAT |
Current |
Oct. 2012 |
5 years |
Authorization for industrial land use in Coloso |
DFMARNAT/
5286/2012 |
SEMARNAT |
Current |
Dec. 2012 |
5 years |
Authorization for Exploration Activities in La Guitarra NW Area |
DFMARNAT/
2215/2014 |
SEMARNAT |
Current |
May 2014 |
2 years |
Authorization of Land Use in Federal Zones |
04MEX109110/
18EDDL12 |
CONAGUA |
Current |
Dec. 2012 |
10 years |
Concession title for water rights |
5MEX101984/
18FNGE97 |
CONAGUA |
Current |
Mar. 1997 |
10 years renewals
Mar. 2017 |
Concession title for water discharge |
04MEX150031/
18FDDL11 |
CONAGUA |
Current |
Jul. 2011 |
10 years |
Authorization for Purchase, Use and Storage of Explosives for Mining Activities |
3840-Mexico |
SEDENA |
Current |
Yearly renewals
Jan. 2014 |
Yearly renewals Dec. 2014 |
| 20.6.2. | Permits in Process |
The following is a list of the permits in
process for La Guitarra Silver Mine.
| · | Environmental Impact Assessment and Land Change Use for the expansion of mining infrastructure
in Tlacotal. This document is currently being evaluated by SEMARNAT. |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| · | Recently, a request form to increase the authorized volume of water discharged (from 426,685 m3
to 520,340 m3 of water from the mine) was submitted to SEMARNAT. A resolution is expected by May 2015. |
The plan for Restoration and Closure of
the mining unit of La Guitarra is based on the policies and terms documented in the commitments established in the Asset Retirement
Obligations (ARO). The Restoration plan has as an objective the calculation of the investment that will be applied in the support
and execution of those works and activities that will return the land to a predetermined state once any and all activities associated
with the mining project have ceased.
The estimated closure cost as of December
2014 is $2.0 million dollars and is based on the following considerations:
| · | Underground mines and associated installations |
| · | Processing plant and above ground associated installations |
| · | Ancillary service buildings (offices, general service infrastructure, shops) |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 21. | Capital and Operating Costs |
The La Guitarra Silver Mine has been in
operation continuously since 2010 when Silvermex acquired the property from Genco. Subsequently, First Majestic secured indirect
ownership of the La Guitarra on July 3, 2012 when it acquired all of the issued and outstanding common shares of Silvermex. Right
after the acquisition, First Majestic started an expansion project to increase the throughput capacity from 350 to 520 tpd. After
finishing this expansion in May 2013, the Company has been incurring sustaining capital expenditures in three main areas: maintenance
of the processing plant, mine development and infill exploration.
In late 2013, the Company started the development
of the Coloso mine incurring some expansionary capital expenditures in the areas of mine development, mine infrastructure and a
5 km power line. Any further expansionary capital expenditures are considered on hold due to the current silver market conditions.
Sustaining capital expenditures throughout
the projected life of mine are assumed to average $4.26 million per year, including maintenance of the processing plant, equipment
replacement in the mine, mine development, for tailings facility expansions and infill exploration.
The sustaining capital budget includes an
allocation of an estimate of $1.0 million for the development of an 800 metre tunnel to connect the Coloso mine with the Nazareno
area, in addition, an estimate of $1.5 million for mine developing and preparation in Nazareno to bring this mine into production
as replacement of the La Guitarra mine production after the depletion of reserves in this area.
The assumptions for the operating costs
for mining and processing are based on the actual operating costs and considerations to the approved operating budget. These assumptions
are supported by the consideration of a constant throughput of 190,000 tonnes per year.
The long term assumptions for operating
costs are based on the breakdown shown in Table 15.1. The annual cost projection is shown in Table 21.1 below.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
Table 21.1: Estimated Annual Costs
Area / Concept |
Estimated Unit Costs |
Estimated Annual Costs |
|
US$/t milled |
millions US$/year |
Mining |
17.93 |
3.41 |
Milling |
15.84 |
3.01 |
Indirect |
14.54 |
2.76 |
G&A |
6.96 |
1.32 |
Subtotal |
55.27 |
10.50 |
Sustaining Plant & Infrastructure |
7.15 |
1.36 |
Sustaining Development |
13.61 |
2.59 |
Infill Exploration |
1.64 |
0.31 |
Subtotal |
22.40 |
4.26 |
Total Cost |
77.67 |
14.76 |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
According to NI 43-101, in reference to
Item 22: Economic Analysis:
“Producing issuers may exclude the
information required under Item 22 for technical reports on properties currently in production unless the technical report includes
a material expansion of current production.”
Since La Guitarra Silver Mine is a producing
operation and there is no ongoing material expansion of the production capacity and the assumptions of this Technical Report are
based on current production capacity and current operating practices, there is thus no requirement to disclose information related
to Item 22.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
There are no adjacent properties from which
exploration and or mining activities would provide a better understanding of the Coloso, Nazareno, La Guitarra, or Mina de Agua
areas.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 24. | Other Relevant Data and Information |
There is no other relevant data or information
to be contained in the Technical Report.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 25. | Interpretation and Conclusions |
| 25.1. | Coloso Mineral Resource Estimate |
Estimating the Coloso Main domains in unfolded
space resulted in increased Ag and Au grade continuity relative to estimation in normal space. Grade continuity observed in current
underground vein exposures through mapping and sampling suggests the actual grade continuity is less than that estimated in unfolded
space and more than that estimated in normal space. Preliminary comparison of the estimated model with production from Joya Larga,
and to a lesser amount Jessica, shows reasonable agreement in contained metal. The actual location of the veins locally differs
from the interpreted model by a few metres. The model has been successfully used to guide drilling to locate off-sets and splays.
Infill drilling to improve understanding of local grade continuity and establish the location of the vein with better accuracy
would be required to support Measured Mineral Resources.
First Majestic has been successful in developing
mine plans based on current drill spacing and development work. In-fill drilling in advance of mine planning may be beneficial
in identifying areas where variations or higher complexity of the vein system may exist.
| 25.2. | La Guitarra, Nazareno and Mina de Agua areas Mineral Resource Estimate |
The resource estimates for La Guitarra,
Nazareno and Mina de Agua areas were carried out using a polygonal method based on drill-hole and channel samples information.
| 25.3. | Mineral Reserve Estimates |
There are several aspects that could increase
the life of the mine while maintaining current production levels: the conversion of inferred resources into reserves and the production
from areas not included in reserves. The historic conversion factor of inferred mineral resources into mineral reserves has been
registered in approximately 50%. The production of material from areas not in reserves accounts for approximately 30% in the last
two years. Provided that the exploration programs are maintained at current levels and the development of adjacent undrilled areas
with economic potential is maintained, there is a possibility that the mine life can be extended.
Mineral resource and mineral reserve estimates
are based on assumptions that included mining, metallurgical, and economic parameters including operating costs, taxation and metal
prices; other considerations include the ability to continue utilizing the existing infrastructure and the preservation of the
permit to operate, the availability of labour and the business-like relationship with the union and neighboring surface owners.
In the best of the Company’s Qualified Persons, there are no known environmental, permitting, legal, title, taxation, socio-
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
economic, marketing, political, or other
factors or risks that could materially affect the ability to extract the mineral resources and mineral reserves at La Guitarra.
Increasing dilution, increasing costs, reduced
mining recovery, reduced metallurgical recovery, presence of deleterious elements and taxation and lower metal prices will have
a negative impact on the quantity of estimated mineral resources and mineral reserves. Nevertheless, other than the typical fluctuations
in the metal prices, there are no other known factors that may have a material impact on the estimate of mineral resources and
mineral reserves at La Guitarra.
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
| 26.1. | Coloso Mineral Resource Estimate |
The vein and grade shell model should be
updated quarterly and annually incorporating underground mapping and drilling results. Consideration should be given to estimating
the Joya Larga Upper and Jessica Upper and the Jessica Splay domains in unfolded space. The estimated model and mine production
should be reconciled annually to assist in model validation and improvements. These programs could be completed with data collected
through the normal course of operations and are not expected to require additional funding to complete.
| 26.2. | La Guitarra, Nazareno and Mina de Agua areas Mineral Resource Estimate |
Since 2013 First Majestic has been implementing
best industry practices in data collection procedures (geologic core logging, SG determination, etc.), as well as QA/QC protocols
and data verification practices. The Company’s Qualified Persons recommend that these improved exploration practices are
maintained in future drilling campaigns. Additionally, other practices such as geotechnical and geometallurgical classifications
should be improved.
| 26.3. | Exploration Potential |
The Company’s Qualified Persons are
of the opinion that La Guitarra property has the potential for hosting additional resources laterally at the Guitarra vein, at
depth at Coloso and laterally and at depth at Nazareno, Mina de Agua and El Rincón. The mineral potential at depth in La
Guitarra mine may be restricted to some ore shoots in Guitarra NW and Guitarra SE. Additionally, the Comales – Nazareno,
Coloso, and Guitarra systems appear to occur in anastomosing fault structures (based on all the parallel structures associated
with them) and therefore they could have the potential for additional subsidiary veins on both the hanging wall or the footwall.
These potential structures at the hanging wall and the footwall should be explored with diamond drill-holes or cross cuts. Further
exploration at Nazareno and Coloso areas may result in a near term increase in the recognized resources from this area.
| 26.3.1. | Coloso Exploration Potential |
Coloso’s Jessica and Joya Larga veins
are open to depth. A study of the resource potential below the 2200 level and the economics of mining this potential considering
the necessary development and infrastructure (including ventilation and pumping) has not yet been conducted. The Company’s
Qualified Persons recommend continuing the exploration of these areas to assess the potential extensions. The estimated cost of
an exploration program is estimated at $3,000,000, this estimate includes the following items:
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
· |
development and preparation |
$ 350,000 |
· |
drilling and sampling |
$2,500,000 |
· |
geological modeling and engineering |
$ 150,000 |
| 26.3.2. | Nazareno Exploration Potential |
The Company’s Qualified Persons recommend
going forward with exploration works required for Nazareno and the permitting works required for Mina de Agua in order to facilitate
the upgrading of current resources and potentially generate additional resources. A program of $1,000,000 is estimated, including:
· |
4000 metres of diamond drilling for |
$500,000 |
· |
200 m of exploration development |
$300,000 |
· |
geological modeling and engineering |
$200,000 |
| 26.3.3. | Mina de Agua and El Rincón Exploration Potential |
The Mina de Agua and El Rincón are
highly prospective given the history of production from these areas. The Company’s Qualified Persons recommend going forward
with exploration works required for Mina de Agua and El Rincon, and the permitting and exploration works required for Mina de Agua
in order to work in the upgrading of current resources and potentially generate additional resources.
The Company’s Qualified Persons recommend
the development of a 2 km tunnel from Mina de Agua to El Rincón plus a comprehensive exploration program to develop the
resources and potentially increase the delineation of resources and reserves in these areas. The estimated cost for an exploration
program at Mina de Agua and El Rincón is estimated at $10,000,000, including the following elements:
· |
surface rights for exploration and development |
$ 600,000 |
· |
environmental studies and permitting |
$ 400,000 |
· |
access tunnels and development |
$ 2,500,000 |
· |
dewatering of old workings |
$ 500,000 |
· |
exploration, drilling and sampling |
$ 6,000,000. |
| 26.4. | Throughput Expansion |
A series of conceptual studies have been
conducted to investigate the potential of increasing the throughput capacity of the processing plant to 1,000 tpd. Preliminary
estimates indicate a potential reduction of the operating costs driven by the economy of scale, mainly in the processing and general
and administration areas; however, the economics of the mine capacity expansion and the plant expansion have not been completed.
An increase in the annual throughput could reasonably be expected to increase the total costs but to reduce unit operating
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
costs. The Company’s Qualified Persons
recommend continuing the conceptual studies and progressing to an internal pre-feasibility level study to assess the economic
viability of this expansion. The cost of a pre-feasibility analysis of an expansion to 1,000 tpd of La Guitarra capacity is estimated
at $500,000, including de following elements:
· |
sampling |
$100,000 |
· |
crushing and grinding testwork |
$150,000 |
· |
engineering studies and designs for |
$250,000. |
| 26.5. | Alternative Refining Process |
The Company has initiated an intensive leaching
optimization testwork for the La Guitarra concentrate. The purpose of the work is to investigate the leachability of the concentrates
using an intensive leaching circuit to recover silver and gold and the suitability to precipitate and produce Dore. The cost of
the preliminary optimization testwork is estimated at $80,000. If the leaching testwork results are positive in terms of increasing
the net smelting terms of the La Guitarra concentrate, then the Company’s Qualified Persons recommend continuing the testwork
to advance this project to a pre-feasibility stage.
An intensive leaching process could generate
potential savings in the following areas, reduction of the transportation cost of the concentrates from the mine to the smelter,
reduction on the smelter and refining costs and an increase in the net recovery of metals in the concentrates. Capital investment
will be required for a leaching reactor, electrowinning infrastructure and cyanide detoxification infrastructure.
A pre-feasibility study will facilitate
estimating the capital and operating costs and to assess the economic merit of this option. The cost of a pre-feasibility analysis
of an intensive leaching process for the La Guitarra operation is estimated at $350,000, including the following items:
· |
sampling |
$100,000 |
· |
metallurgical testwork |
$120,000 |
· |
engineering studies and designs |
$130,000. |
La Guitarra Silver Mine Temascaltepec, Edo. Mexico, Mexico NI 43-101 Technical Report | |
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