operations

Don Mario Reserves/Resources

Cautionary Notes to Investors - Mineral Reserves and Resources Estimates

In accordance with applicable Canadian securities regulatory requirements, all mineral reserve and mineral resource estimates of the Company disclosed in this news release have been prepared as at September 30, 2018 in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), classified in accordance with Canadian Institute of Mining Metallurgy and Petroleum's "CIM Standards on Mineral Resources and Reserves Definitions and Guidelines" (the "CIM Guidelines").

Pursuant to the CIM Guidelines, mineral resources have a higher degree of uncertainty than mineral Reserves as to their existence as well as their economic and legal feasibility. Inferred mineral resources, when compared with measured or indicated mineral resources, have the least certainty as to their existence, and it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration. Pursuant to NI 43-101, inferred mineral resources may not form the basis of any economic analysis, including any feasibility study. Accordingly, readers are cautioned not to assume that all or any part of a mineral resource exists, will ever be converted into a mineral Reserve, or is or will ever be economically or legally mineable or recovered.

In fiscal 2016, the Company engaged an independent engineering firm, DCGS Exploration and Mining Consulting (“DCGS”), to update the mineral resource and reserve estimates for Don Mario as at September 30, 2016, which was published in the “Technical Report on Done Mario Mine Operation” dated September 30, 2016 by Mr. Gino Zandonai, M.Sc. Mining, CP, Mining Engineer, who is a qualified person independent of the Company for the purposes of NI 43-101, and filed on January 27, 2017 (“Don Mario Mine 43-101 Report”).

The updated mineral resource and reserve estimates for Don Mario as at September 30, 2018 were prepared by Mr. Zandonai, an independent Qualified Person under NI 43-101. In respect of Cerro Felix, the tonnage reported as indicated resources as at September 30, 2018 was upgraded to probable reserves as at September 30, 2018 and production depletion during fiscal 2018 was accounted for.

The following tables summarize the in-situ mineral resources and reserves estimates:

In-situ Mineral Resources Inclusive of Mineral Reserves – September 30, 2018

Cerro Felix Mine & Las Tojas Prospect

Measured

Zone

Tonnage

Grade

Grade

Grade

Contained Metal

Contained Metal

Contained Metal

(000 t)

(g/t Au)

(% Cu)

(g/t Ag)

(000 oz Au)

(t Cu)

(000 oz Ag)

Las Tojas

451

1.05

0.18

2.36

15

812

34

Cerro Felix

320

2.11

0.04

1.42

22

123

15

Cerro Felix norte

22

1.22

0.79

16.57

1

175

12

Total

793

1.48

0.14

2.38

38

1,111

61

 

 

 

 

 

 

 

 

Indicated

Zone

Tonnage

Grade

Grade

Grade

Contained Metal

Contained Metal

Contained Metal

(000 t)

(g/t Au)

(% Cu)

(g/t Ag)

(000 oz Au)

(t Cu)

(000 oz Ag)

Las Tojas

630

1.05

0.18

2.38

21

1,134

48

Cerro Felix

405

2.01

0.03

1.43

26

132

19

Total

1,035

1.43

0.12

2.01

47

1,266

67

 

 

 

 

 

 

 

 

Measured + Indicated

Zone

Tonnage

Grade

Grade

Grade

Contained Metal

Contained Metal

Contained Metal

(000 t)

(g/t Au)

(% Cu)

(g/t Ag)

(000 oz Au)

(t Cu)

(000 oz Ag)

Las Tojas

1,081

1.05

0.18

2.37

36

1,946

82

Cerro Felix

725

2.05

0.04

1.43

48

256

33

Cerro Felix norte

22

1.22

0.79

16.57

1

175

12

Total

1,828

1.45

0.13

2.17

85

2,377

127

 

 

 

 

 

 

 

 

Inferred

Zone

Tonnage

Grade

Grade

Grade

Contained Metal

Contained Metal

Contained Metal

(000 t)

(g/t Au)

(% Cu)

(g/t Ag)

(000 oz Au)

(t Cu)

(000 oz Ag)

Las Tojas

511

1.08

0.21

2.49

18

1,073

41

Cerro Felix

103

1.41

0.04

1.57

4.68

36.63

5.22

Total

614

1.14

0.18

2.34

22.43

1,109.73

46.13

Notes:

1. CIM definitions were followed for Mineral Resources Cerro Felix and Las Tojas were prepared by Gino Zandonai a qualified person for the purposes of NI 43-101, who is an employee of DGCS SA and is independent of the Company.
2. Mineral Resources estimates for Cerro Felix using long term prices of US$ 1,250 per ounce gold and US$15.0 for silver.
3. For Las Tojas use gold equivalent grade was calculated using long term prices US$ 2.5 per lb copper, US$ 1250 per ounce gold and 15US per ounce silver, 93% recovery for gold, 90% for silver and 60% for copper.
4. Mineral Resources are inclusive of mineral reserves.

In-situ Mineral Reserves – September 30, 2018

Cerro Felix Mine

Proven

Zone

Tonnage
(000 t)

Grade
(g/t Au)

Grade
(%)

Grade
(g/t Ag)

Contained Metal
(000 oz Au)

Contained Metal
(t Cu)

Contained Metal
(000 oz Ag)

Cerro Felix

219

2.36

0.04

1.19

21.70

123.47

14.65

Cerro Felix norte

22

1.22

0.79

16.57

0.87

175.28

11.75

Total

241

2.25

0.11

2.59

22.57

298.74

26.40

 

 

 

 

 

 

 

 

Probable

Zone

Tonnage
(000 t)

Grade
(g/t Au)

Grade
(%Cu)

Grade
(g/t Ag)

Contained Metal
(000 oz Au)

Contained Metal
(t Cu)

Contained Metal
(000 oz Ag)

Cerro Felix

258

2.27

0.04

1.21

18.86

93.96

10.09

Total

258

2.27

0.04

1.21

18.86

93.96

10.09

 

 

 

 

 

 

 

 

Total Proven and Probable

Zone

Tonnage
(000 t)

Grade
(g/t Au)

Grade
(% Cu)

Grade
(g/t Ag)

Contained Metal
(000 oz Au)

Contained Metal
(t Cu)

Contained Metal
(000 oz Ag)

Proven

241

2.25

0.11

2.59

22.57

298.74

26.40

Probable

258

2.27

0.04

1.21

18.86

93.96

10.09

Proven and Probable

500

2.26

0.07

1.88

41.43

392.71

36.50

Notes:

1. CIM definitions were followed for Mineral Reserves and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
2. Mineral Reserves are estimated using Gold equivalent cut-off grade of 0.4 Au g/t equivalent cut-offs were calculated using operating results for recoveries, and on-site operating costs.
3. Mineral Reserves are estimated using average long-term prices of US$1,250 per ounce gold, US$2.50 per lb copper, and US$15.0 per ounce silver.
4. Numbers may not add due to rounding.
5. All mineral reserves have been based on processing by the CIL only.

Certain material mined was transported to the waste dump or various stockpile locations. Certain oxide, transitional and sulphide materials that were above the specified cut-off grades were classified as either stockpile mineral resources or stockpile mineral reserves. A summary of the mineral resources and reserves stockpile estimates completed as part of the Company’s annual mineral reserve and resource estimates update process is provided in the tables below.

Oxide Stockpile Mineral Resource - September 30, 2018

Don Mario

Measured

Location/Zone

 

Tonnage
(000 t)

Grade
(g/t Au)

Grade
(% Cu)

Grade
(g/t Ag)

Contained Metal
(000 oz Au)

Contained Metal
(t Cu)

Contained Metal
(000 oz Ag)

DM1 (Oxide)

 

492

2.24

1.74

54.44

35.4

8,560

861.0

DM2 (Oxide Pre-strip)

 

278

1.90

1.98

17.94

17.0

5,509

160.5

DM3 (Dolomite Oxide)

 

190

1.89

1.96

21.62

11.5

3,724

132.1

Plant Stockpile (oxide) **

515

1.61

1.57

57.82

26.7

8,108

958.3

DM4 Stock Talco*

 

495

1.65

2.44

64.99

26.2

12,067

1,033.2

DM5 (dolomite Oxide)

 

202

1.86

1.64

48.66

12.1

3,314

316.2

 

 

2,172

1.85

1.90

49.56

129.0

41,283

3,461.2

 

 

 

 

 

 

 

 

 

Oxide Stockpile Mineral Reserve - September 30, 2018

Don Mario

Proven

Location/Zone

 

Tonnage
(000 t)

Grade
(g/t Au)

Grade
(% Cu)

Grade
(g/t Ag)

Contained Metal
(000 oz Au)

Contained Metal
(t Cu)

Contained Metal
(000 oz Ag)

DM1 (Oxide)

 

467

2.24

1.74

54.44

33.7

8,132

818.0

DM2 (Oxide Pre-strip)

 

264

1.90

1.98

17.94

16.1

5,233

152.4

DM3 (Dolomite Oxide)

 

181

1.89

1.96

21.62

11.0

3,538

125.5

Plant Stockpile (oxide) **

490

1.61

1.57

57.82

25.4

7,703

910.3

DM4 Stock Talco*

 

470

1.65

2.44

64.99

24.9

11,464

981.6

DM5 (dolomite Oxide)

 

192

1.86

1.64

48.66

11.5

3,149

300.4

 

 

2,064

1.85

1.90

49.56

122.6

39,218

3,288.1

Notes:

1. CIM definitions were followed for Mineral Reserves and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
2. Mineral Reserves contained in stockpiles are estimated at a Cu equivalent cut-off grade of 0.85% CuEq.
3. Mineral resources are estimated using a long-term gold price of US$1,250 per ounce, copper price of US$3.00 per pound and a silver price of US$15 per ounce.
4. Mineral reserves contained in stockpiles are exclusive of In-situ Mineral Reserves. The UMZ Oxide Stockpile reserves are currently economically viable to process using SART (Sulphidization, Acidification, Recycling & Thichening) Process.
5. Numbers may not add due to rounding.
6. All stock UMZ pile were calculated using 95% due to extraction factor.

Stockpile Mineral Reserve (exclusive of in situ Cerro Félix) - September 30, 2018

Cerro Felix Mine

Proven

Location/Zone

Tonnage
(000 t)

Grade
(g/t Au)

Grade
(% Cu)

Grade
(g/t Ag)

Contained Metal
(000 oz Au)

Contained Metal
(t Cu)

Contained Metal
(000 oz Ag)

DPL1 (CERRO FELIX)

2

2.16

0.01

1.56

0.1

0.2

0.1

BROKEN MATERIAL (C FELIX)

2

1.10

0.01

1.81

0.1

0.2

0.1

DPL6 (LOW GRADE)

34

0.46

0.02

0.64

0.5

8.4

0.7

TOTAL

38

0.58

0.02

0.74

0.7

8.8

0.9

Notes:

1. CIM definitions were followed for Mineral Reserves and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
2. Mineral stock pile from Cerro Felix Reserves are estimated using Gold equivalent cut-off grade of 0.4 Au g/t equivalent cut-offs were calculated using operating results for recoveries, and on-site operating costs.
3. Mineral Reserves are estimated using average long-term prices of US$1,250 per ounce gold, US$2.50 per lb copper, and US$15.0 per ounce silver.
4. Numbers may not add due to rounding.
5. All mineral reserves have been based on processing by the CIL only.

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