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Los Filos Mine

Overview

The Los Filos mine consists of two open pit mines, Los Filos and Bermejal, an underground mine at Los Filos, and the opportunity to develop an underground mine at Bermejal as an expansion project, as shown on the following figure:

Location of the Los Filos Mining Areas and Mineral Deposits


The Los Filos mine is located 230 km south of Mexico City and is accessible by paved roads and a private airstrip.

The Los Filos open pit operation began commercial production in 2008. Gold is recovered from crushed and run-of-mine ore via a conventional, low-cost heap leach and ADR (adsorption-desorption-recovery) process.

Mineral Resources and Mineral Reserves

As of December 31, 2016, the Los Filos mine’s Measured and Indicated Mineral Resources total 422.5 Mt at 0.85 g/t containing 11.5 Moz gold and Inferred Mineral Resources of 162.7 Mt at 0.76 g/t containing 4.0 Moz gold as shown in the following table:

Los Filos: Mineral Resources1-5 by Principal Deposits and Mining Areas (Stantec, 2016)

Area Classification Tonnes
('000)
Au Grade
(g/t)
Au Oz
('000)
Bermejal Open Pit Measured 82,010 0.71 1,869
Indicated 275,505 0.80 7,062
Measured + Indicated 357,515 0.78 8,931
Inferred 156,771 0.63 3,180
Bermejal Underground Measured 0
Indicated 171 5.01 28
Measured + Indicated 171 5.01 28
Inferred 3,510 5.03 568
Los Filos Open Pit Measured 51,998 0.70 1,174
Indicated 8,226 0.62 164
Measured + Indicated 60,224 0.69 1,338
Inferred 1,436 0.44 21
Los Filos Underground Measured 1,539 8.25 408
Indicated 3,080 7.82 775
Measured + Indicated 4,618 7.97 1,183
Inferred 937 7.54 227
Total Los Filos Mine Measured 135,547 0.79 3,451
Indicated 286,982 0.87 8,028
Measured + Indicated 422,529 0.85 11,479
Inferred 162,653 0.76 3,995

Notes:
1. Effective date is December 31, 2016.
2. Mineral Resources are reported to a gold price of US$1,400/oz.
3. Mineral Resources are inclusive of Mineral Reserves.
4. Mineral Resources do not include recovery or dilution factors.
5. Tonnages are rounded to the nearest 1 kt, grades are rounded to two decimal places; rounding, as required by reporting guidelines, may result in apparent summation differences.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

The Proven and Probable Mineral Reserves total 40.7 Mt at 1.30 g/t containing 1.466 Moz Au as shown in the following table:

Los Filos: Mineral Reserves1-6 (Stantec, 2016)

Classification Tonnes
(kt)
Au Grade
(g/t)
Au Contained
Ounces (koz)
Ag Grade
(g/t)
Ag Contained
Ounces (koz)
Proven 23,877 0.75 575 5.37 4,120
Probable 16,831 1.65 890 10.37 5,614
Subtotal Proven + Probable 40,708 1.12 1,466 7.44 9,734

Notes:
1. Effective date is December 31, 2016.
2. Metal price assumption for gold was US$1,200/oz.
3. Underground Mineral Reserves are contained within stope designs that have a minimum horizontal continuity of 10 m, a height of 3 m, and supported by a mine plan that features variable stope mining width from 3 m to a design width depending on zone and cutoff optimization.; open pit Mineral Reserves are within pit designs and supported by a mine plan.
4. Cutoff grades vary by deposit, whether ore is ROM or crushed before leaching, and for underground ore whether development is required or not. Recoveries vary by ore type or geometallurgical domain and are 64% to 77% for crush-leach ore and from 49% to 59% for ROM ore at Los Filos Open Pit; recoveries at Bermejal Open Pit vary from 53% to 73%. A 5% silver recovery is assumed from all geometallurgical domains. All underground ore is crushed and assumed to have 80% gold recovery.
5. Rounding, as required by reporting guidelines, may result in apparent summation differences between tonnes, grade, and contained metal content. Tonnages are rounded to the nearest 1 kt, grades are rounded to two decimal places; rounding, as required by reporting guidelines, may result in apparent summation differences.
6. Tonnage and grade measurements are in metric units. Contained gold and silver ounces are reported as troy ounces.

In addition, there is a Leach Pad Reserve of 49,785 kt at 0.51 g/t, which contains 814 koz Au. The estimated recovery is 29.7% and, therefore, there are 242 koz of recoverable gold ounces included in the mine plan. The total Proven and Probable Mineral Reserves, including the recoverable ounces in the Leach Pad Reserve (Probable Mineral Reserve), is 1,707 koz gold.

Disclaimer

The authors of the “NI 43-101 Technical Report and Preliminary Economic Assessment, Los Filos Gold Mine, Guerrero State, Mexico” (the “Technical Report”), William A. Glover, P.Eng., Allan L. Schappert, CPG, and Dawn H. Garcia, PG, CPG of Stantec Consulting International LLC. (“Stantec”) and Alfred S. Hayden, P.Eng. of EHA Engineering Ltd., are each a “qualified person” as defined in NI 43-101 and independent of the Company, and have prepared or supervised the preparation of the technical information upon which this presentation is based.