Document:

EX-4.10

 Exhibit 4.10 

NI 43-101 Technical Report on 

Resources and Reserves 
 Bolivar Mine 

Mexico 
 Effective Date: February 28, 2017

 Report Date: April 6, 2017 
 Report
Prepared for 
  

					
	Sierra Metals, Inc.	  	

	  	 
	79 Wellington Street West, Suite 2100	  	  
	P.O. Box 157	  	  
	Toronto, Ontario, M5K 1H1	  	  
	Canada	  	  

 Report Prepared by 
  

 
 SRK Consulting (U.S.), Inc. 

1125 Seventeenth Street, Suite 600 
 Denver, CO 80202 

SRK Project Number: 470200-160 

Signed by Qualified Persons: 
 Matthew Hastings, MSc
Geology, MAusIMM (CP), Senior Consultant (Resource Geology) Jon Larson, BS Mining Engineering, MBA, PE, MMSAQP, Principal Consultant (Mining Engineer) Jeff Osborn, BEng Mining, MMSAQP, Principal Consultant (Mining Engineer) Daniel H. Sepulveda,
B.Sc., Metallurgist, SME-RM John Tinucci, PhD, PE, President/Practice Leader/Principal Consultant (Geotechnical Engineer) Mark Willow, MSc, CEM, SME-RM, Principal
Environmental Scientist 
 Reviewed by: 
 Joanna Poeck,
BEng Mining, SME-RM, MMSAQP, Senior Consultant (Mining Engineer) Bart A. Stryhas, PhD, CPG, Principal Resource Geologist 

  

					
		  		  	

					
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	Table of Contents	  			
			
	1	 	Summary	  	 	1	 
				
		 	1.1	 	Property Description and Ownership	  	 	1	 
				
		 	1.2	 	Geology and Mineralization	  	 	1	 
				
		 	1.3	 	Status of Exploration, Development and Operations	  	 	1	 
				
		 	1.4	 	Mineral Processing and Metallurgical Testing	  	 	2	 
				
		 	1.5	 	Mineral Resource Estimate	  	 	2	 
				
		 	1.6	 	Mineral Reserve Estimate	  	 	3	 
				
		 	1.7	 	Mining Methods	  	 	4	 
				
		 	1.8	 	Recovery Methods	  	 	5	 
				
		 	1.9	 	Project Infrastructure	  	 	5	 
				
		 	1.10	 	Environmental Studies and Permitting	  	 	6	 
				
		 	1.11	 	Capital and Operating Costs	  	 	7	 
				
		 	1.12	 	Economic Analysis	  	 	7	 
				
		 	1.13	 	Conclusions and Recommendations	  	 	8	 
				
		 		 	1.13.1   Geology and Mineral Resources	  	 	8	 
				
		 		 	1.13.2   Mining and Reserves	  	 	9	 
				
		 		 	1.13.3   Recovery Methods	  	 	10	 
				
		 		 	1.13.4   Tailings Management	  	 	10	 
				
		 		 	1.13.5   Environmental and Permitting	  	 	10	 
			
	2	 	Introduction	  	 	11	 
				
		 	2.1	 	Terms of Reference and Purpose of the Report	  	 	11	 
				
		 	2.2	 	Qualifications of Consultants (SRK)	  	 	11	 
				
		 	2.3	 	Details of Inspection	  	 	12	 
				
		 	2.4	 	Sources of Information	  	 	12	 
				
		 	2.5	 	Effective Date	  	 	12	 
				
		 	2.6	 	Units of Measure	  	 	13	 
			
	3	 	Reliance on Other Experts	  	 	14	 
			
	4	 	Property Description and Location	  	 	15	 
				
		 	4.1	 	Property Location	  	 	15	 
				
		 	4.2	 	Mineral Titles	  	 	15	 
				
		 		 	 4.2.1  Nature and Extent of Issuer’s Interest
	  	 	18	 
				
		 	4.3	 	Royalties, Agreements and Encumbrances	  	 	18	 
				
		 		 	 4.3.1  Purchase Agreements
	  	 	18	 
				
		 		 	 4.3.2  Legal Contingencies
	  	 	19	 
				
		 	4.4	 	Environmental Liabilities and Permitting	  	 	20	 

  
  

					
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		 		 	4.4.1	  	Environmental Liabilities	  	20
					
		 		 	4.4.2	  	Required Permits and Status	  	20
				
		 	4.5	 	Other Significant Factors and Risks	  	20
			
	5	 	Accessibility, Climate, Local Resources, Infrastructure and Physiography	  	21
				
		 	5.1	 	Topography, Elevation and Vegetation	  	21
				
		 	5.2	 	Accessibility and Transportation to the Property	  	21
				
		 	5.3	 	Climate and Length of Operating Season	  	21
				
		 	5.4	 	Infrastructure Availability and Sources	  	21
					
		 		 	5.4.1	  	Power	  	21
					
		 		 	5.4.2	  	Water	  	21
					
		 		 	5.4.3	  	Mining Personnel	  	21
					
		 		 	5.4.4	  	Potential Tailings Storage Areas	  	22
					
		 		 	5.4.5	  	Potential Waste Rock Disposal Areas	  	22
					
		 		 	5.4.6	  	Potential Processing Plant Sites	  	22
			
	6	 	History	  	23
				
		 	6.1	 	Prior Ownership and Ownership Changes	  	23
				
		 	6.2	 	Exploration and Development Results of Previous Owners	  	23
				
		 	6.3	 	Historic Mineral Resource and Reserve Estimates	  	23
				
		 	6.4	 	Historic Production	  	23
			
	7	 	Geological Setting and Mineralization	  	25
				
		 	7.1	 	Regional Geology	  	25
				
		 	7.2	 	Local Geology	  	25
				
		 	7.3	 	Property Geology	  	27
					
		 		 	7.3.1	  	Skarn-hosting Sedimentary Rocks	  	27
					
		 		 	7.3.2	  	Intrusive Rocks	  	27
				
		 	7.4	 	Significant Mineralized Zones	  	29
			
	8	 	Deposit Type	  	31
				
		 	8.1	 	Mineral Deposit	  	31
				
		 	8.2	 	Geological Model	  	31
			
	9	 	Exploration	  	32
				
		 	9.1	 	Relevant Exploration Work	  	32
				
		 	9.2	 	Sampling Methods and Sample Quality	  	33
				
		 	9.3	 	Significant Results and Interpretation	  	33
			
	10	 	Drilling	  	34
				
		 	10.1	 	Type and Extent	  	34
				
		 	10.2	 	Procedures	  	35

  
  

					
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		 	10.3	 	Interpretation and Relevant Results	  	36
			
	11	 	Sample Preparation, Analysis and Security	  	37
				
		 	11.1	 	Security Measures	  	37
				
		 	11.2	 	Sample Preparation for Analysis	  	37
				
		 	11.3	 	Sample Analysis	  	37
				
		 	11.4	 	Quality Assurance/Quality Control (QA/QC) Procedures	  	37
					
		 		 	11.4.1	  	Certified Reference Materials	  	38
					
		 		 	11.4.2	  	Blanks	  	40
					
		 		 	11.4.3	  	Duplicates	  	40
					
		 		 	11.4.4	  	Results	  	41
					
		 		 	11.4.5	  	Actions	  	42
				
		 	11.5	 	Opinion on Adequacy	  	42
			
	12	 	Data Verification	  	43
				
		 	12.1	 	Procedures	  	43
				
		 	12.2	 	Limitations	  	43
				
		 	12.3	 	Opinion on Data Adequacy	  	43
			
	13	 	Mineral Processing and Metallurgical Testing	  	44
				
		 	13.1	 	Testing and Procedures	  	44
				
		 	13.2	 	Recovery Estimate Assumptions	  	44
			
	14	 	Mineral Resource Estimate	  	46
				
		 	14.1	 	Drillhole and Channel Sample Database	  	46
					
		 		 	14.1.1	  	Drilling Database	  	46
					
		 		 	14.1.2	  	Downhole Deviation	  	47
					
		 		 	14.1.3	  	Channel Sample Database	  	48
					
		 		 	14.1.4	  	Missing and Unsampled Intervals	  	49
				
		 	14.2	 	Geologic Model	  	49
					
		 		 	14.2.1	  	Project Area Regional Geology	  	49
					
		 		 	14.2.2	  	Bolivar Area Mineralization	  	51
				
		 	14.3	 	Assay Capping and Compositing	  	56
					
		 		 	14.3.1	  	Outliers	  	56
					
		 		 	14.3.2	  	Compositing	  	57
				
		 	14.4	 	Density	  	62
				
		 	14.5	 	Variogram Analysis and Modeling	  	63
					
		 		 	14.5.1	  	El Gallo Inferior (Bolivar Areas)	  	63
				
		 	14.6	 	Block Model	  	68
				
		 	14.7	 	Estimation Methodology	  	68
				
		 	14.8	 	Model Validation	  	71

  
  

					
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	 14.8.1 Visual Comparison
	  	 	71	 
	 14.8.2 Comparative Statistics
	  	 	72	 
	 14.8.3 Swath Plots
	  	 	73	 
	 14.9   Resource Classification
	  	 	76	 
	 14.10 Depletion for Mining
	  	 	77	 
	 14.11 Mineral Resource Statement
	  	 	78	 
	 14.12 Mineral Resource Sensitivity
	  	 	80	 
	 14.13 Relevant Factors
	  	 	82	 
	 15 Mineral Reserve Estimate
	  	 	83	 
	 15.1 Introduction
	  	 	83	 
	 15.2 Conversion Assumptions, Parameters and Methods
	  	 	85	 
	 15.2.1 Mining Recovery
	  	 	86	 
	 15.2.2 Dilution
	  	 	88	 
	 15.2.3 Net Smelter Return
	  	 	90	 
	 15.2.4 Cut-off Evaluation
	  	 	91	 
	 15.2.5 Mining Block Shapes
	  	 	92	 
	 15.3 Reserve Estimate
	  	 	92	 
	 15.4 Relevant Factors
	  	 	94	 
	 16 Mining Methods
	  	 	95	 
	 16.1 Current or Proposed Mining Methods
	  	 	95	 
	 16.1.1 Room and Pillar Mining
	  	 	98	 
	 16.1.2 Longhole Stoping
	  	 	111	 
	 16.1.3 Drilling, Blasting, Loading and Hauling
	  	 	113	 
	 16.1.4 Pillar Recovery Potential and Mining Method Alternatives
	  	 	115	 
	 16.2 Parameters Relevant to Mine or Pit Designs and Plans
	  	 	116	 
	 16.2.1 Geotechnical
	  	 	116	 
	 16.2.2 Hydrological
	  	 	120	 
	 16.3 Underground Stope Optimization
	  	 	120	 
	 16.3.1 Depletion
	  	 	121	 
	 16.3.2 Optimization Parameters and Process
	  	 	121	 
	 16.4 Mine Production Schedule
	  	 	121	 
	 16.5 Major Mining Equipment
	  	 	123	 
	 16.6 Ventilation
	  	 	124	 
	 17 Recovery Methods
	  	 	128	 
	 17.1 Plant Design and Equipment Characteristics
	  	 	130	 
	 18 Project Infrastructure
	  	 	132	 
	 18.1 Access and Local Communities
	  	 	133	 

  
  

					
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	 18.2 Service Roads
	  	 	133	 
	 18.3 Mine Operations and Support Facilities
	  	 	133	 
	 18.4 Process Support Facilities
	  	 	134	 
	 18.5 Energy
	  	 	135	 
	 18.5.1 Propane
	  	 	135	 
	 18.5.2 Power Supply and Distribution
	  	 	135	 
	 18.5.3 Fuel Storage
	  	 	136	 
	 18.6 Water Supply
	  	 	136	 
	 18.6.1 Potable Water
	  	 	136	 
	 18.6.2 Process Water
	  	 	136	 
	 18.7 Site Communications
	  	 	137	 
	 18.8 Site Security
	  	 	137	 
	 18.9 Logistics
	  	 	137	 
	 18.10 Waste Handling and Management
	  	 	138	 
	 18.10.1 Waste Management
	  	 	138	 
	 18.10.2 Waste Rock Storage
	  	 	138	 
	 18.11 Tailings Management
	  	 	138	 
	 18.11.1 Existing Tailings Facility
	  	 	138	 
	 18.11.2 Tailings Facility Expansion
	  	 	142	 
	 19 Market Studies and Contracts
	  	 	146	 
	 20 Environmental Studies, Permitting and Social or Community Impact
	  	 	147	 
	 20.1 Environmental Studies and Background Information
	  	 	147	 
	 20.2 Environmental Studies and Liabilities
	  	 	147	 
	 20.3 Environmental Management
	  	 	147	 
	 20.3.1 Tailings Disposal
	  	 	147	 
	 20.3.2 Geochemistry
	  	 	147	 
	 20.3.3 Emission and Waste Management
	  	 	148	 
	 20.4 Mexican Environmental Regulatory Framework
	  	 	149	 
	 20.4.1 Mining Law and Regulations
	  	 	149	 
	 20.4.2 General Environmental Laws and Regulations
	  	 	149	 
	 20.4.3 Other Laws and Regulations
	  	 	152	 
	 20.4.4 Expropriations
	  	 	153	 
	 20.4.5 NAFTA
	  	 	153	 
	 20.4.6 International Policy and Guidelines
	  	 	153	 
	 20.4.7 The Permitting Process
	  	 	154	 
	 20.4.8 Required Permits and Status
	  	 	158	 
	 20.4.9 MIA and CUS Authorizations
	  	 	160	 

  
  

					
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	  20.4.10 PROFEPA Inspection
	  	 	161	 
		
	 20.5 Social Management Planning and Community Relations
	  	 	161	 
		
	 20.6 Closure and Reclamation Plan
	  	 	161	 
		
	 21  Capital and Operating Costs
	  	 	163	 
		
	 21.1 Capital Costs
	  	 	163	 
		
	 21.2 Operating Costs
	  	 	164	 
		
	 22  Economic Analysis
	  	 	166	 
		
	 22.1 Assumptions External to Project
	  	 	166	 
		
	 22.2 Commercial Assumptions
	  	 	167	 
		
	 22.3 Taxes Depreciation and Royalties
	  	 	167	 
		
	 22.4 Production Assumptions
	  	 	167	 
		
	 22.5 Results
	  	 	169	 
		
	 22.6 Sensitivities
	  	 	172	 
		
	 23  Adjacent Properties
	  	 	175	 
		
	 24  Other Relevant Data and Information
	  	 	176	 
		
	 25  Interpretation and Conclusions
	  	 	177	 
		
	 25.1 Exploration
	  	 	177	 
		
	 25.2 Mineral Resource Estimate
	  	 	177	 
		
	 25.3 Mineral Reserve Estimate
	  	 	178	 
		
	 25.4 Metallurgy and Processing
	  	 	178	 
		
	 25.5 Projected Economic Outcomes
	  	 	178	 
		
	 26  Recommendations
	  	 	180	 
		
	 26.1 Recommended Work Programs and Costs
	  	 	180	 
		
	  26.1.1 Geology
	  	 	180	 
		
	  26.1.2 Mining and Reserves
	  	 	180	 
		
	  26.1.3 Tailings Management
	  	 	181	 
		
	  26.1.4 Environmental, Permitting and Social or Community Impact
	  	 	181	 
		
	  26.1.5 Costs
	  	 	182	 
		
	 27  References
	  	 	183	 
		
	 28  Glossary
	  	 	185	 
		
	 28.1 Mineral Resources
	  	 	185	 
		
	 28.2 Mineral Reserves
	  	 	185	 
		
	 28.3 Definition of Terms
	  	 	186	 
		
	 28.4 Abbreviations
	  	 	188	 

  
  

					
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	List of Tables	  			
		
	 Table 1-1: Consolidated Bolivar Mineral Resource Estimate
as of September 30, 2016 – SRK Consulting (U.S.), Inc.
	  	 	3	 
		
	 Table 1-2: Consolidated Bolivar Mineral Reserve Estimate
as of September 30, 2016 – SRK Consulting (U.S.), Inc.
	  	 	4	 
		
	 Table 1-3: Capital Cost Summary (US$)
	  	 	7	 
		
	 Table 1-4: Operating Cost Summary (US$)
	  	 	7	 
		
	 Table 1-5: Unit Operating Cost Summary (US$)
	  	 	7	 
		
	 Table 2-1: Site Visit Participants
	  	 	12	 
		
	 Table 4-1: Concessions for the Bolivar Mine
	  	 	18	 
		
	 Table 6-1: Ownership History and Acquisition Dates for
Claims at the Bolivar Property
	  	 	23	 
		
	 Table 6-2: 2011 to 2016 Bolivar Production
	  	 	24	 
		
	 Table 10-1: Summary of drilling by Dia Bras Exploration,
Inc. on the Bolivar property, 2003-2012
	  	 	34	 
		
	 Table 11-1: CRM Expected Means and Tolerances
	  	 	39	 
		
	 Table 11-2:
Inter-lab Duplicate Performance of Mean Values
	  	 	41	 
		
	 Table 14-1: Bolivar Drilling History
	  	 	46	 
		
	 Table 14-2: Drilling Types
	  	 	46	 
		
	 Table 14-3: Descriptive Statistics – All
Drilling
	  	 	47	 
		
	 Table 14-4: Example of drilling deviations
	  	 	48	 
		
	 Table 14-5: Descriptive Statistics – EGS Channel
Samples
	  	 	48	 
		
	 Table 14-6: Bolivar Resource Domains and Codes
	  	 	53	 
		
	 Table 14-7: Descriptive Drilling Statistics by Resource
Domain – Bolivar Area
	  	 	54	 
		
	 Table 14-8: El Gallo Capping Analysis – Cu
	  	 	57	 
		
	 Table 14-9: Composite Statistics – El Gallo
Area
	  	 	59	 
		
	 Table 14-10: Composite Statistics – Bolivar Northwest
Area
	  	 	60	 
		
	 Table 14-11: Composite Statistics – Chimeneas
Area
	  	 	61	 
		
	 Table 14-12: Composite Statistics – Bolivar
West
	  	 	61	 
		
	 Table 14-13: Composite Statistics – Increíble
Area
	  	 	62	 
		
	 Table 14-14: Densities by Lithology
	  	 	63	 
		
	 Table 14-15: EGI Variogram Models
	  	 	68	 
		
	 Table 14-16: Bolivar (EGI) Block Model Parameters
	  	 	68	 
		
	 Table 14-17: EGS Pillars Block Model Parameters
	  	 	68	 
		
	 Table 14-18: Estimation Parameters - EGI
	  	 	70	 
		
	 Table 14-19: Estimation Parameters – EGS
	  	 	70	 
		
	 Table 14-20: Estimation Parameters – Bolivar
NW
	  	 	70	 
		
	 Table 14-21: Estimation Parameters - CHIM
	  	 	70	 
		
	 Table 14-22: Estimation Parameters - BW
	  	 	71	 
		
	 Table 14-23: Estimation Parameters - INC
	  	 	71	 

  
  

					
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	 Table 14-24: Estimation Parameters - 1830
	  	 	71	 
	 Table 14-25: Consolidated Bolivar Mineral Resource
Estimate as of September 30, 2016– SRK Consulting (U.S.), Inc.
	  	 	79	 
	 Table 14-26: Detailed Bolivar Mineral Resources as of
September 30, 2016– SRK Consulting (U.S.), Inc.
	  	 	80	 
	 Table 15-1: Mining Recovery Factors
	  	 	88	 
	 Table 15-2: Dilution Factors
	  	 	90	 
	 Table 15-3: NSR Calculation Parameters
	  	 	91	 
	 Table 15-4: Operating Costs, 2014 through August
2016
	  	 	92	 
	 Table 15-5: Economic and Marginal Cut-offs by Mining Method
	  	 	92	 
	 Table 15-6: Consolidated Bolivar Mineral Reserve Estimate
as of September 30, 2016 – SRK Consulting (U.S.), Inc.
	  	 	93	 
	 Table 15-7: Detailed Bolivar Mineral Reserve Estimate as
of September 30, 2016 – SRK Consulting (U.S.), Inc.
	  	 	93	 
	 Table 16-1: Planned vs. Reported Production, Piedras
Verdes Mill, 2016
	  	 	98	 
	 Table 16-2: Reported Mine and Mill Production
	  	 	98	 
	 Table 16-3: Typical Ore Body Dip Values
	  	 	111	 
	 Table 16-4: Stope Optimization Parameters (Angelita,
Elissa, Escondida, Esperanza, and Zulma)
	  	 	121	 
	 Table 16-5: SRK Production Plan
	  	 	122	 
	 Table 16-6: Major Underground Mining Equipment
	  	 	123	 
	 Table 16-7: Planned Underground Mining Equipment
	  	 	123	 
	 Table 16-8: Ventilation Requirements for Equipment and
Personnel
	  	 	125	 
	 Table 16-9: Fan Airflow and Pressure for Bolivar Northwest
and El Gallo Inferior (East)
	  	 	126	 
	 Table 17-1: Piedras Verdes Monthly Average Performance -
2016
	  	 	129	 
	 Table 17-2: Piedras Verdes Major Process
Equipment
	  	 	131	 
	 Table 19-1: Metal Prices
	  	 	146	 
	 Table 20-1: Permit and Authorization Requirements for the
Bolivar Mine
	  	 	159	 
	 Table 20-2: Bolivar Project Concessions
	  	 	160	 
	 Table 20-3: Bolivar Mine Cost of Reclamation and Closure
of the Mine
	  	 	162	 
	 Table 21-1: Capital Cost Summary (US$)
	  	 	164	 
	 Table 21-2: Operating Cost Summary (US$)
	  	 	164	 
	 Table 21-3: Unit Operating Cost Summary (US$)
	  	 	164	 
	 Table 21-4: Mining Operation Cost by Functions
	  	 	165	 
	 Table 21-5: Processing Operation Cost by
Functions
	  	 	165	 
	 Table 22-1: Metal Prices
	  	 	166	 
	 Table 22-2: Bolivar Net Smelter Return Terms
	  	 	166	 
	 Table 22-3: Product Sale Cost
	  	 	167	 
	 Table 22-4: Mine Production Summary
	  	 	168	 
	 Table 22-5: Plant Feed Summary
	  	 	168	 

  
  

					
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	Table 22-6: Copper Concentrate Production Summary	  	168
	Table 22-7: Bolivar Indicative Economic Results (Dry Basis)	  	170
	Table 22-8: Bolivar Production Summary	  	171
	Table 22-9: Bolivar Cash Cost	  	172
	Table 22-10: Bolivar NPV Sensitivity (US$000’s)	  	174
	Table 26-1: Summary of Costs for Recommended Work	  	182
	Table 28-1: Definition of Terms	  	186
	Table 28-2: Abbreviations	  	188
		
	List of Figures	  	
		
	Figure 4-1: Map Showing the Location of the Bolivar Property in Chihuahua, Mexico	  	15
	Figure 4-2: Land Tenure Map showing Bolivar Concessions	  	16
	Figure 4-3: Map of the Bolivar Property	  	17
	Figure 7-1: Regional Geology Map showing the Locations of Various Mines in the Sierra Madre Occidental Precious	  	
	            Metals Belt	  	25
	Figure 7-2: Local Geology Map showing the Location of the Bolivar Property	  	26
	Figure 7-3: Stratigraphic Column of the Bolivar Property	  	28
	Figure 7-4: Geologic Map of the Bolivar Property	  	29
	Figure 10-1: Location Map of Drillhole Collars	  	35
	Figure 11-1: CRM Performance for MCL-01 – Cu	  	39
	Figure 11-2: Blank Performance – Cu	  	40
	Figure 11-3: Duplicate Scatter Plot - Cu	  	41
	Figure 13-1: Piedras Verdes Monthly Average Performance - 2016	  	44
	Figure 13-2: Recovery Relationship of Cu vs. Ag and Au	  	45
	Figure 14-1: Plan View of Bolivar Area Geology Map	  	50
	Figure 14-2: Perspective View of Mapped vs. Modeled Geology	  	51
	Figure 14-3: Plan View of Bolivar Mineralization Model	  	52
	Figure 14-4: Orthogonal View of Bolivar Mineralization Model	  	52
	Figure 14-5: Counts of Cu Samples by Resource Domain	  	53
	Figure 14-6: Cu Log Probability Plot – El Gallo Area	  	57
	Figure 14-7: Sample Length Histogram – Bolivar	  	58
	Figure 14-8: EGI Directional Variogram Model – Cu 110o Azimuth	  	64
	Figure 14-9: EGI Complete Variogram Models - Cu	  	65
	Figure 14-10: EGI Complete Variogram Models – Ag	  	66
	Figure 14-11: EGI Complete Variogram Models – Au	  	67
	Figure 14-12: Bolivar Visual Comparison	  	72
	Figure 14-13: Cu Histogram for El Gallo Area	  	73

  
  

					
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	 Figure 14-14: Mean Analysis by Zone
	  	 	73	 
	 Figure 14-15: Swath Plots – El Gallo Area
Cu
	  	 	75	 
	 Figure 14-16: Example of Indicated Classification
Methodology – Bolivar NW
	  	 	77	 
	 Figure 14-17: Plan View of Mined Areas Buffer
	  	 	78	 
	 Figure 14-18: Grade Tonnage Chart – Bolivar
Indicated Mineralization
	  	 	81	 
	 Figure 14-19: Grade Tonnage Chart – Bolivar
Inferred Mineralization
	  	 	82	 
	 Figure 15-1: Bolivar Overview
	  	 	84	 
	 Figure 15-2: Bolivar Mining Areas
	  	 	85	 
	 Figure 15-3: El Gallo Level 312 Asbuilt with
Pillars
	  	 	87	 
	 Figure 15-4: El Gallo Level 601 Asbuilt with
Pillars
	  	 	87	 
	 Figure 15-5: Vertical Section through Level 552, NW-6 Asbuilt
	  	 	89	 
	 Figure 16-1: Bolivar Ore Body Location Overview and
Mined Out Areas
	  	 	95	 
	 Figure 16-2: Rotated View Showing El Gallo
Inferior, Chimenea 1 and Chimenea 2 Ore Bodies with Mined- out Areas
	  	 	96	 
	 Figure 16-3: Rotated View Showing Bolivar NW
Zones
	  	 	96	 
	 Figure 16-4: Mined and Transported Ore, 2016
	  	 	97	 
	 Figure 16-5: Typical Section Showing Room and Pillar
Mining
	  	 	99	 
	 Figure 16-6: El Gallo Inferior Levels with Pillar Sizes
and Span
	  	 	100	 
	 Figure 16-7: Plan View of Rebaje 762 in El Gallo
Inferior
	  	 	101	 
	 Figure 16-8: Isometric View of Rebaje 762
	  	 	101	 
	 Figure 16-9: Profile View at 1766.7 m
Elevation
	  	 	102	 
	 Figure 16-10: Profile View at 1762.7 m
Elevation
	  	 	103	 
	 Figure 16-11: Profile View at 1758 m Elevation
	  	 	103	 
	 Figure 16-12: Profile View at 1750 m Elevation
	  	 	104	 
	 Figure 16-13: Profile View at 1746 m Elevation
	  	 	105	 
	 Figure 16-14: Overview of Mine Design for
Reserves
	  	 	106	 
	 Figure 16-15: Level Design in Bolivar West
	  	 	107	 
	 Figure 16-16: Plan View of El Gallo Inferior and
Chimenea Reserve Blocks and Development
	  	 	108	 
	 Figure 16-17: Plan View of Bolivar West Reserve Blocks
and Development
	  	 	108	 
	 Figure 16-18: Plan View of Bolivar NW4 Reserve Blocks
and Development
	  	 	109	 
	 Figure 16-19: Plan View of Bolivar NW1, Z2, 6 and 7
Reserve Blocks and Development
	  	 	110	 
	 Figure 16-20: Rotated View of Bolivar NW Reserve Blocks
and Development
	  	 	111	 
	 Figure 16-21: Typical Longhole Stoping Section
	  	 	112	 
	 Figure 16-22: Isometric View of Chimenea 1 and Chimenea
2, Looking NE
	  	 	112	 
	 Figure 16-23: Typical 4 m x 4 m Blast Pattern
1
	  	 	113	 
	 Figure 16-24: Typical 4 m x 4 m Blast Pattern
2
	  	 	114	 
	 Figure 16-25: Drill Jumbo Drilling a Pattern in an El
Gallo Inferior Production Stope
	  	 	114	 
	 Figure 16-26: Example of Pillar Stability Chart,
Level 762
	  	 	119	 

  
  

					
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	 Figure 16-27: Example Slender Pillar that Might be
Recovered
	  	 	120	 
	 Figure 16-28: Dia Bras Ventilation Model for Existing
Workings
	  	 	124	 
	 Figure 16-29: Bolivar West Ventilation Raise Location with
Depth to First Ventilation Drift
	  	 	126	 
	 Figure 16-30: Bolivar NW/El Gallo Inferior Key Ventilation
Development Layout
	  	 	127	 
	 Figure 17-1: Piedras Verdes Mill – Block Flow
Diagram
	  	 	128	 
	 Figure 17-2: Piedras Verdes – 2016 Daily
Performance
	  	 	130	 
	 Figure 18-1: Bolivar General Facilities Location
	  	 	132	 
	 Figure 18-2: Bolivar General Facilities Location
	  	 	134	 
	 Figure 18-3: Bolivar Aerial View of the Processing
Plant
	  	 	134	 
	 Figure 18-4: Project Processing Plant (looking
south)
	  	 	135	 
	 Figure 18-5: Monthly Power Consumption
	  	 	136	 
	 Figure 18-6: Piedras Verdes Reservoir
	  	 	137	 
	 Figure 18-7: Copper Concentrate Trucking Routes
	  	 	138	 
	 Figure 18-8: Active Tailing Area Location
	  	 	139	 
	 Figure 18-9: Active Tailing Operation
	  	 	140	 
	 Figure 18-10: Photograph of the Active Tailings
Area
	  	 	141	 
	 Figure 18-11: Existing Tailings Grade and Survey
	  	 	142	 
	 Figure 18-12: View of Burō Hidrōlogico
Consultoría Study Area
	  	 	143	 
	 Figure 18-13: Overview of TSF Expansion Locations and
Infrastructure
	  	 	144	 
	 Figure 20-1: Construction and Start-up Authorization for Industrial Facilities
	  	 	155	 
	 Figure 22-1: Bolivar
After-Tax Metrics
	  	 	169	 
	 Figure 22-2: Metal Contribution to Revenue
	  	 	171	 
	 Figure 22-3: Bolivar
After-Tax Cumulative NPV Price Sensitivity
	  	 	173	 
	 Figure 22-4: Bolivar
After-Tax NPV Hurdle Rate Sensitivity
	  	 	174	 
	 Figure 25-1: Metal Contribution to Revenue
	  	 	179	 
		
	 Appendices
	  			
		
	 Appendix A: Certificates of Qualified Persons
	  			
		
	 Appendix B: Capping Analyses
	  			
		
	 Appendix C: Swath Plots
	  			

  
  

					
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	1	Summary 

 The purpose of this Technical Report (Technical Report) is to present an
update on Resources and Reserves for Sierra Metals, Inc. (Sierra Metals or the Company) by SRK Consulting (U.S.), Inc. (SRK) on the Bolivar Mine, Mexico (Bolivar or the Project). Bolivar is an operating mine that has been in commercial production
since late 2011. This report was prepared in accordance with National Instrument 43-101 (NI 43-101). 

 

	1.1	Property Description and Ownership 

 The Bolivar property is owned by Sierra
Metals, formerly known as Dia Bras Exploration, Inc., through subsidiary companies Dia Bras Mexicana S.A. de C.V. and EXMIN S.A. de C.V. (collectively Dia Bras). The property consists of 14 mineral concessions (approximately 6,800 ha) in the
northern Mexican state of Chihuahua. The property is located in the Piedras Verdes mining district, 400 km south by road from the city of Chihuahua (population 4.8 million as of 2010) and roughly 10 km southwest of the town of Urique
(population 1,102 as of 2010). The property includes the Bolivar Mine, a historic Cu-Zn skarn deposit that has been actively mined by Dia Bras since November 2011, as well as a processing plant, which is
situated approximately 5.1 km by road from the mine. 
  

	1.2	Geology and Mineralization 

 The Bolivar deposit is a Cu-Zn skarn and is one of many precious and base metal deposits of the Sierra Madre belt, which trends north-northwest across the states of Chihuahua, Durango and Sonora in northwestern Mexico (Meinert, 2007). The
deposit is located within the Guerrero composite terrane, which makes up the bulk of western Mexico and is one of the largest accreted terranes in the North American Cordillera. The Guerrero terrane, proposed to have accreted to the margin of
nuclear Mexico in the Late Cretaceous, consists of submarine and lesser subaerial volcanic and sedimentary sequences ranging from Upper Jurassic to middle Upper Cretaceous in age. These sequences rest unconformably on deformed and partially
metamorphosed early Mesozoic oceanic sequences. 
 The Piedras Verdes district is made up of Cretaceous andesitic to basaltic flows and
tuffs intercalated with greywacke, limestone, and shale beds. Cu-Zn skarn mineralization is located in carbonate rocks adjacent to the Piedras Verde granodiorite. Mineralization exhibits strong stratigraphic
control and two stratigraphic horizons host the bulk of the mineralization: an upper calcic horizon, which predominantly hosts Zn-rich mineralization, and a lower dolomitic horizon, which predominantly hosts Cu-rich mineralization. In both cases, the highest grades are developed where structures and associated breccia zones cross these favorable horizons near skarn-marble contacts. 

 

	1.3	Status of Exploration, Development and Operations 

 The Bolivar Mine is currently
an operational project. In 2016, Bolivar processed 950,000 tonnes of ore producing 17.1 million lb Cu, 398,00 oz Ag, and 2,900 oz Au grading 1.00% Cu, 16.7 g/t Ag, and 0.19 g/t Au. Recovery rates were at 82% Cu, 78% Ag, and 51% Au. The mined
material is transported 5 km to 3,000 t/d Piedras Verdes Mill. 

  
  

					
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	1.4	Mineral Processing and Metallurgical Testing 

 Various development and test mining
has occurred at the Bolivar mine under Dia Bras ownership since 2005. Prior to late 2011, no processing facilities were available on site, and the ore was trucked to Cusi’s Malpaso mill located 270 km by road. Bolivar’s Piedras Verdes
processing facilities started operating in October 2011 at 1,000 tonnes per day of nominal throughput. The ore processing capacity was expanded to 2,000 tonnes per day in mid-2013. The current nominal
throughput capacity is 3,000 tonnes per day. Bolivar facilities include a metallurgical laboratory at site. Sampling and testing of samples are executed on an as-needed basis. 

 

	1.5	Mineral Resource Estimate 

 Mineral Resource Estimations have been conducted by
Matthew Hastings of SRK Consulting (U.S.) Inc., a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects, using Maptek VulcanTM and Leapfrog GeoTM
software. 
 SRK has worked with Dia Bras personnel to develop the geology models, grade estimations, and reporting criteria for
mineral resources at Bolivar. Geology models were developed by Dia Bras and were modified and reviewed by SRK. In all, there are seventeen individual mineralized bodies identified through drilling and mine development. These were used as hard
boundaries for the purposes of the estimation. Although the majority of the estimated resource is supported by drilling, limited channel samples support the estimation near the mined portions of the deposit. The block models were created by SRK, and
have been estimated using a combination of inverse distance and ordinary kriging methods. The mineral resources have been estimated and classified in conformity with generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves
Best Practices” guidelines. 
 SRK is of the opinion that the Mineral Resource estimations are suitable for public reporting and
are a fair representation of the in-situ contained metal for the Bolivar Mine. 
 The
September 30, 2016, consolidated Mineral Resource statement for the Bolivar Mine area is presented in Table 1-1. These resources are stated in undeveloped areas of the deposits as well as within remaining
surveyed pillars in the existing mined out areas. The pillar resources are reported using a lower COG to reflect the fact that they have been exposed through previous mining. 

  
  

					
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 Table 1-1: Consolidated
Bolivar Mineral Resource Estimate as of September 30, 2016 – SRK Consulting (U.S.), Inc. 
  

																	
	 	 	Category	  	
Tonnes  

(000’s)  
	  	
Ag  
 (g/t)  
	  	
Au  
 (g/t)  
	  	
Cu  
 (%)  
	  	
Ag  
 (koz)  
	  	
Au  
 (koz)  
	  	
Cu  
 (t)  

		 	 Indicated
	  	9,335	  	18.1	  	0.30	  	0.90	  	5,440	  	91	  	83,885
		 	
Inferred
	  	9,055	  	17.9	  	0.33	  	0.86	  	5,200	  	97	  	77,830

  

	 	(1)	Mineral resources are reported inclusive of ore reserves. Mineral resources are not ore reserves and do not have demonstrated economic viability. All figures rounded to reflect the relative accuracy of the estimates.
Copper, gold, and silver, assays were capped where appropriate. 

	 	(2)	Mineral resources are reported at variable metal value cut-off grades based on metal price assumptions*, metallurgical recovery assumptions**, mining/transport costs (US$13.59/t),
processing costs (US$10.00/t), and general and administrative costs (US$3.40/t). 

	 	(3)	The metal value cut-off grade for the unmined portions of the Bolivar Mine is US$27 and is US$20 for the remaining vertical pillars in the mined areas. The mineral resources
within the remaining vertical pillars comprise less than 1% of the Indicated Mineral Resources. No mineral resources are reported for the remaining crown or sill pillars. 

* Metal price assumptions considered for the calculation of metal value are: Copper (Cu): US$/lb 2.43, Silver (Ag): US$/oz 18.30, and Gold
(Au): US$/oz 1,283.00. 
 ** Metallurgical recovery assumptions are 81% Cu, 77% Ag, and 49% Au. 

The resources were estimated by SRK. Matthew Hastings, M.Sc., PGeo, MAusIMM #314693 of SRK, a Qualified Person, performed the resource
calculations for Bolivar. 
  

	1.6	Mineral Reserve Estimate 

 Bolivar is a currently operating underground mine with
production history under Dia Bras ownership of more than five years. A copper concentrate is produced containing payable copper, silver and minor amounts of payable gold. Various underground development activities, test mining, and smaller scale
milling has taken place under Dia Bras ownership since the early to 2000s. 
 The procedures and methods supporting the mineral reserve
estimation have been developed by SRK in conjunction with Dia Bras mine planning personnel. The reserve estimations presented herein have been conducted by independent consultants using supporting data generated by the site. In general each mining
area is evaluated using reasonable mining block shapes based on the mining method applicable to the zone. Mineral Reserves estimated by the independent consultants are categorized in a manner consistent with industry best practice. Data and
information supporting the mining recovery, mining dilution, metallurgical recoveries, consensus commodity pricing, and treatment and refining charges have been provided by Dia Bras and reviewed by SRK. These factors are used to calculate a Net
Smelter Return (NSR) for the blocks in the models. Historic and expected direct and indirect mining, processing and general and administrative costs were provided by Dia Bras. To be considered economic, the NSR value of the mining block must be
greater than the economic cutoff. Blocks below the economic cutoff but above the marginal cutoff are, in some cases, included in the reserve where they are in between or immediately adjacent to an economic block and it is reasonable to expect that
no significant additional development would be required to extract the marginal block. Isolated blocks, defined as blocks with no defined access or blocks that do not pay for the required development, have been excluded. Only material classified as
Measured and Indicated Resources contribute to the grade values in a mining block. Material inside the mine design and not classified as Measured or Indicated is assumed to have 0 grade. Mined out areas were provided by Dia Bras personnel, and
represent development and production up to September 30, 2016. 
 Mineral Reserve Estimations have been conducted by Jon Larson of
SRK Consulting (U.S.) Inc., a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects, 

  
  

					
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using Maptek VulcanTM and Minemax iGantt software. The consolidated mineral reserve statement for the Bolivar Mine is presented in Table 1-2. 

Table 1-2: Consolidated Bolivar Mineral Reserve Estimate as of
September 30, 2016 – SRK Consulting (U.S.), Inc. 
  

																	
	 	 	Category	  	Tonnes  
(000’s)  	  	
Ag  
 (g/t)  
	  	
Au  
 (g/t)  
	  	
Cu  
 (%)  
	  	
Ag  
 (koz)  
	  	
Au  
 (koz)  
	  	
Cu  
 (t)  

		 	 Proven
	  	-  	  	-  	  	-  	  	-  	  	-  	  	-  	  	-  
		 	 Probable
	  	4,327  	  	17.5  	  	0.31  	  	0.85  	  	2,441  	  	44  	  	36,586  
		 	
P+P
	  	4,327  	  	17.5  	  	0.31  	  	0.85  	  	2,441  	  	44  	  	36,586  

  

	 	(1)	All figures rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding. 

	 	(2)	Ore reserves are reported at NSR cut-offs (CoG) based on metal price assumptions*, metallurgical recovery assumptions**, mining costs, processing costs, general and administrative
(G&A) costs, and treatment and refining charges. 

 * Metal price assumptions considered for the calculation of NSR
are: Copper (Cu): US$/lb 2.43, Silver (Ag): US$/oz 18.30, and Gold (Au): US$/oz 1,283.00. 
 ** Metallurgical recovery assumptions are
81% Cu, 77% Ag, and 49% Au. 

	 	(3)	The NSR CoG is variable by mining method: 

	 	•	 	US$30.50 = Room and Pillar; and 

	 	•	 	US$32.50 = Longhole Stoping. 

	 	(4)	Ore reserves have been stated on the basis of a mine design, mine plan, and cash-flow model: 

	 	•	 	Mining recovery applied is 85%. 

	 	•	 	Mining dilution (internal and external), applied with a zero grade, ranges from 12% to 36% and averages 16%. 

Source: SRK, 2017 

The reserves estimated herein are contained in El Gallo Inferior, and zones called Chimenea 1, Chimenea 2, Bolivar West, and Bolivar
Northwest. The El Gallo Superior and Bolivar areas are considered mined out, though mineralized material remains in pillars. Any remaining pillar tonnes have not been included in the reserves at this time. The production schedule associated with
this reserves estimate results in mining until July 2021 at an average production of approximately 2,500 ore t/day. 
  

	1.7	Mining Methods 

 Ore production at Bolivar is primarily by means of underground
room and pillar mining. Ore is processed at the Piedras Verdes mill located south of the mine. Mining has occurred in several mostly shallow dipping zones in the immediate Bolivar area including Bolivar, El Gallo Superior, El Gallo Superior
Magnetita, and El Gallo Inferior. 
 Areas where room and pillar mining occurs are divided into levels measuring approximately 16 m
high. Each 16 m level is further divided into sublevels of approximately 4 m. A ramp is driven and access to the middle sublevel is established in the footwall, and the initial cut in ore is developed at this middle sublevel. The roof is then
drilled, blasted and mucked. The third cut is mined down to the lower sublevel floor. Ramps in ore are established whenever possible to minimize the mining of waste. The remaining 4 m of material is left as a sill pillar. 

Chimenea 1, Chimenea 2 and the steeply dipping areas of Bolivar West are suitable for mining using longhole stoping techniques. Longhole
stoping can provide for higher production and better recovery of the ore than the room and pillar method. However, there are currently limited zones in the Bolivar area where this mining method is applicable, and mining using this method accounts
for approximately 8% of the reserves stated herein. The site has some past experience using longhole techniques in the Chimenea areas. 

  
  

					
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 Current production is from the El Gallo Inferior body. January through September 2016
ore production reported by the mine averaged 2,440 t/day, and ore delivered to Piedras Verdes was 2,460 t/day. Ore is hauled to the surface using one of several adits or declines accessing the orebodies and dumped onto small pads outside the
portals. The ore is then loaded into rigid frame over-the-road trucks, typically 18 tonne capacity, and hauled on a gravel and dirt road approximately 5.1 km south to
the Piedras Verdes mill. 
  

	1.8	Recovery Methods 

 Dia Bras operates a conventional concentration plant consisting
of crushing, grinding, flotation, thickening and filtration of the final concentrate. Flotation tails are disposed of in a conventional tailings facility. Ore feed during year 2016 reached a total of 950,398 tonnes, equivalent to an average of
79,200 tonnes per month, or 2,600 tonnes per day. During 2016, production of copper concentrate has consistently ranged between approximately 2,000 and 2,700 tonnes per month, equivalent to roughly a 2.9% mass pull. The monthly average concentrate
production has consistently reached commercial quality with copper grade at 27% and credit metals averaging 369 g/t silver and 2.19 g/t gold in 2016. Metal recovery for copper, silver, and gold averaged 81.8%, 78.1% and 52.1%, respectively. 

 

	1.9	Project Infrastructure 

 The Project has fully developed infrastructure including
access roads, a man-camp capable of supporting 385 persons that includes a cafeteria, laundry facilities, maintenance facilities for the underground and surface mobile equipment, electrical shop, guard house,
fuel storage, laboratories, warehousing, storage yards, administrative offices, plant offices, truck scales, explosives storage, processing plant and associated facilities, tailings storage facility, and water storage reservoir and water tanks. 

The site has fully developed and functioning electric power from the Mexican power grid, backup diesel generators and heating from site
propane tanks. 
 The Project has developed waste handling and storage facilities. The site has minimal waste rock requirements but
does have a small permitted area to dispose of waste rock. The tailings management plan at the Bolivar mine includes placement of tails in a number of locations in and around the Tailings Storage Facility (TSF) that has been in operation since late
2011. The current TSF has five locations to store tailings (TSF1-5). The site will develop an expansion TSF to the west of the existing facilities for future tailings. 

Tailings consisting of approximately 40% solids will be placed in conventional tailings storage facilities until June 2017. The site is
installing an additional thickener and filter presses to allow additional water recovery. Thickened tails (60% solids) will be placed from June 2017 to February 2018. After the filter presses are constructed
dry-stack tails will be placed after February 2018. 
 The main TSF will be utilized until mid-2019. A new dry-stack TSF (New TSF) to be located just to the west of the existing facility will be utilized after mid-2019 and has
an expected life through 2023. 
 SRK notes that Dia Bras has allocated US$6.1 million in 2017 for the thickener, filter presses,
and TSF expansion civil works. 

  
  

					
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 The overall Project infrastructure is built out and functioning and adequate for the
purpose of the planned mine and mill. SRK notes that the current tailings facility will need to be expanded to support the continued operation of the processing plant. 
  

	1.10	Environmental Studies and Permitting 

 SRK’s environmental QP did not conduct
a site visit of the Bolivar Mine. As such, the following information is predicated on a review of limited data and documentation provided by the site and direct communications with legal representatives for the operator. 

The current tailings disposal facility has capacity until mid-2019. Dia Bras intends to build
additional tailings capacity concurrent with mine operations. The expansion will require additional permitting effort. 
 Geochemical
characterization results for 2014 and 2015, provided to SRK, indicate low metals leaching potential and either uncertain or non-acid generating potential. The 2016 ABA results (NP = 52.5 kg CaCO3/ton; AP = 141
kg CaCO3/ton), however, suggest that some of the more recent material may be potentially acid generating: NP/AP = 0.372. Additional investigation of the current materials being deposited into the tailings impoundment may be warranted; however, given
the dryness of the Chihuahuan Desert, this may not necessarily be a material issue for the project. 
 The required permits for
continued operation at the Bolivar Mine, including exploration of the site, have been obtained. SRK has not conducted an investigation as to the current status of all the required permits. At this time, SRK is not aware of any outstanding permits or
any non-compliance at the project or nearby exploration sites. 
 In 2009, SEMARNAT agreed that
an environmental impact assessment for the Bolivar Mine was not necessary since the area has been under exploration and exploitation since 1979, but that Dia Bras was still subject to the applicable environmental regulations. However, in the event
that modifications to the existing operation were proposed, SEMARNAT would need to be consulted to determine the appropriate procedures for authorization. 

In 2015, an authorization for the Unique Environmental License (Licencia Ambiental Unica [LAU]) was granted by SEMARNAT to EXMIN in order
to carry out mineral processing and other metallurgical activities (beneficiation) at the Bolivar mill site. The document establishes the environmental obligations to be met by the company. 

In 2014, the enforcement branch of SEMARNAT, PROFEPA, conducted an inspection of several streams and arroyos near the EXMIN property
(Bolivar Mine). SRK understands from the documentation provided that tailings from the beneficiation plant had spilled into these drainages during heavy rains in 2013. According to EXMIN, the cleanup was performed over a period of several months,
and any residual testing showed that the materials in the streams met with Mexican norms. No further action appears to have been ordered. 

In February 2017, Treviño Asociados Consultores presented to Dia Bras, S.A. de C.V. a work breakdown of the anticipated tasks for
closure and reclamation of the Bolivar Mine. The closure costs were estimated to be MX$9,259,318 (~US$453,888). SRK’s scope of work did not include an assessment of the veracity of this closure cost estimate, but, based on projects of similar
nature and size within Mexico, the estimate appears low in comparison. 

  
  

					
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	1.11	Capital and Operating Costs 

 Using an average mining rate of 2,985 t/d and a
processing rate of 2,450 t/d, the Bolivar reserves support the project until July 2021. 
 The yearly capital expenditure by area is
summarized in Table 1-3. 
 Table 1-3: Capital Cost
Summary (US$) 
  

																			
	 	 	Description	  	Total 
($000s) 	  	2016 
($000s) 	  	2017 
($000s) 	  	2018 
($000s) 	  	2019 
($000s) 	  	2020 
($000s) 	  	2021 
($000s) 	  	2022 
($000s) 
		 	 Mine Development
	  	10,221 	  	193 	  	1,989 	  	4,440 	  	2,602 	  	983 	  	14 	  	0 
		 	 Ventilation
	  	2,659 	  	0 	  	308 	  	1,278 	  	1,073 	  	0 	  	0 	  	0 
		 	 Equipment Sustaining
	  	14,699 	  	0 	  	5,515 	  	5,732 	  	3,254 	  	173 	  	25 	  	0 
		 	 Geological Exploration
	  	11,442 	  	0 	  	3,223 	  	2,444 	  	1,680 	  	2,005 	  	2,090 	  	0 
		 	 Plant Sustaining
	  	866 	  	0 	  	866 	  	0 	  	0 	  	0 	  	0 	  	0 
		 	 TSF Sustaining
	  	6,376 	  	0 	  	5,276 	  	514 	  	586 	  	0 	  	0 	  	0 
		 	 Closure
	  	453 	  	0 	  	0 	  	0 	  	0 	  	0 	  	0 	  	453 
		 	
Total Capital
	  	$46,715 	  	$193 	  	$17,177 	  	$14,407 	  	$9,195 	  	$3,161 	  	$2,129 	  	$453 

 Source: SRK, 2017 

The basis of the operating cost estimate is a first principles approach based on site specific data. Dia Bras’ technical team
provided SRK with historic costs on a monthly basis, which was used to derive future costs. 
 Table
1-4 and Table 1-5 show a summary of total operating costs and unit operating costs. 
 Table
1-4: Operating Cost Summary (US$) 
  

															
	Area	  	
Total 
 ($000s) 
	  	
2016 
 ($000s) 
	  	
2017 
 ($000s) 
	  	
2018 
 ($000s) 
	  	
2019 
 ($000s) 
	  	
2020 
 ($000s) 
	  	
2021 
 ($000s) 

	 Mine
	  	58,812 	  	3,101 	  	12,435 	  	12,684 	  	13,246 	  	13,146 	  	4,200 
	 Plant
	  	43,277 	  	2,282 	  	9,151 	  	9,334 	  	9,747 	  	9,674 	  	3,090 
	
G&A
	  	14,729 	  	777 	  	3,114 	  	3,177 	  	3,317 	  	3,292 	  	1,052 
	
Total
	  	$116,817 	  	$6,159 	  	$24,700 	  	$25,194 	  	$26,311 	  	$26,112 	  	$8,342 

 Source: SRK, 2017 

Table 1-5: Unit Operating Cost Summary (US$) 

 

															
	Area	 	LoM ($000s) 	 	Average ($/t) 	  	 	  	 	  	 	  	 	  	 
	 Mine
	 	58,812 	 	13.59 	  		  		  		  		  	
	 Plant
	 	43,277 	 	10.00 	  		  		  		  		  	
	 G&A
	 	14,729 	 	3.40 	  		  		  		  		  	
	 Total
	 	$116,817 	 	$26.99 	  		  		  		  		  	

 Source: SRK, 2017 
  

	1.12	Economic Analysis 

 The reserves stated in this report support a profitable
operation under the cost and market assumptions discussed in this report and indicate a free cash flow of US$10.4 million and a present value of US$7.1 million based on a discount rate of 8%. 

Economic projections of the base case metal prices scenario indicate that the project’s cumulative free cash flow will be negative
in 2017 and 2018 and recover in 2019. The project’s present value will 

  
  

					
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be negative between 2017 and 2019 and recover in 2020. This is related to two factors. The first is the high intensity of capital expenditure projected for these two years, and the second is a
small dip in the copper production for 2018. The breakeven copper price for Bolivar is US$2.25/lb; SRK notes the current spot price is approximately US$2.65/lb and a price of US$2.43 was used in this economic analysis. 

The current scenario presents Dia Bras with two years of relatively significant capital financing requirements considering the estimated
reserves. SRK recommends that the company should conduct the studies described herein to: 
  

	 	•	 	 Evaluate a pillar recovery program; 

 

	 	•	 	 Revise the mining method; and 

 

	 	•	 	 Utilize tailings as backfill. 

The potential improvements may allow the operation to revise its production schedule, revise the capital expenditure schedule, and allow
prioritization of further geological study and exploration to identify resources and reserves that will support a more favorable LoM plan. 
  

	1.13	Conclusions and Recommendations 

  

	1.13.1	  Geology and Mineral Resources 

 SRK has the following conclusions
regarding the exploration efforts and potential for the Bolivar and La Sidra areas. 
  

	 	•	 	 Several areas within the Bolivar Mine would benefit from additional drilling, as the current spacing is insufficient to
adequately define the continuity of mineralization for prospective mining. Areas that would benefit from additional drilling to improve confidence in the estimation include Bolivar NW, Bolivar W, and Increíble/Step Out. 

 

	 	•	 	 Other areas such as extensions of El Gallo Inferior and the Chimeneas orebodies are close to existing mining operations
and would benefit from additional drilling to expand known resources. 

  

	 	○ 	 	 SRK notes that areas such as Bolivar W, Step-Out, and Increíble would all
benefit from better positioning of drill stations, as some of the drilling orientations in the current database are getting very near to the same strike and dip as the mineralized bodies themselves. 

SRK is of the opinion that the Mineral Resource Estimate has been conducted in a manner consistent with industry best practices and that
the data and information supporting the stated Mineral Resources is sufficient for declaration of Indicated and Inferred classifications of resources. SRK has not classified any of the resources in the Measured category due to certain deficiencies
regarding the data supporting the Mineral Resource Estimate. 
 These deficiencies include: 

 

	 	•	 	 The lack of a historic QA/QC program, which has only been supported by a recent resampling and modern QA/QC program for
a limited number of holes. Measured resources generally are supported by high resolution drilling or sampling data that feature consistently implemented and monitored QA/QC. 

  
  

					
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	 	•	 	 The lack of consistently-implemented down-hole surveys in the historic drilling. Observations from the survey data which
has been done to date show potential for significant deviations from planned orientations as well as local down-hole deviations that may influence the exact position of mineralized intervals. 

 

	 	•	 	 The lack of industry-standard asbuilt data delineating mined out areas. SRK utilized multiple data types to define the
mined areas, and notes that none of them include well-defined 3D solids with measurable volumes. SRK has constructed 3-D solids by combining AutoCAD level plan survey lines, points, and as built triangulations
and generated distance buffers (3 m) to obtain volumes in areas that have been mined. There is still uncertainty associated with this practice, but SRK notes that this is likely balanced by the conservative nature of distance buffer approach, which
may actually flag some material that is to be mined in the near term as having been previously mined. 

  

	1.13.2	  Mining and Reserves 

 Recent production data was used as a primary
source of information to validate or derive, as necessary, the relevant modifying factors used to convert Mineral Resources into Mineral Reserves. SRK is of the opinion that the Mineral Reserve Estimate has been conducted in a manner consistent with
industry best practices and that the data and information supporting the stated mineral reserves is sufficient for declaration of Probable classifications of reserves. 

The production schedule associated with this reserves estimate results in mining until July 2021 at an average production of
approximately 2,500 ore t/day. The tailings storage facility will need to be expanded. Dia Bras is planning to install an additional thickener and filter presses and move to a dry stack method of tailings handling and storage. As a result the
overall tailings handling system will evolve over the next twelve months. Dia Bras has budgeted capital for these activities and is working with a number of external contractors to complete the various phases of the overall management plan. Delays
in these projects could impact the overall mine plan by delaying the processing of ore at Piedras Verdes beyond 2017. 
 SRK has the
following recommendations regarding mining and reserves at Bolivar: 
  

	 	•	 	 The planning of infill drilling and mine planning should emphasize the conversion of resources into reserves inventory
especially for the mid- and long-range planning horizons; 

  

	 	•	 	 Use updated 3D mine survey data and improved processes to: 

 

	 	○ 	 	 Regularly perform stope-by-stope planned to actual reconciliations, for both grade and tonnage mined, to continually
validate the mining recovery and dilution assumptions; and 

  

	 	○ 	 	 Develop an estimate of the tonnes and grade remaining in pillars; 

 

	 	•	 	 Initiate a mining methods trade-off study to plan for the safe extraction of
pillars and identify possible improvements to the mining methods used. This study should also include the analysis of utilizing tailings as backfill in the mine; 

 

	 	•	 	 Develop and annually update a 3D
life-of-mine (LoM) design and schedule; and 

  

	 	•	 	 Develop and implement a whole-of-mine
ventilation plan in order to implement and maintain a forced ventilation system over the life of the mine. 

  
  

					
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	1.13.3	  Recovery Methods 

 SRK notes a high level of month-to-month variability for both tonnes and head grade input to processing. Better integration between geology, mine planning and processing can significantly reduce this
variability. Additional work is also needed in the processing facilities to stabilize the operation. Improvements include the implementation of a preventive maintenance program and training programs to improve operators’ skill, with the
ultimate objective of improving metal recovery and lower operating cost, while maintaining or improving concentrate quality. 
  

	1.13.4	  Tailings Management 

 As part of the overall tailings management plan,
Bolivar is moving to filtered tailings. Expansion in the immediate area of the currently operating facility will occur as the site moves first to thickened tailings in mid-2017 and to filtered tailings in
early 2018. SRK recommends that the site continue its project efforts to complete the installation of the thickener, filter presses, and conveyor. The site must ensure that all required detailed designs are completed and permits are in place for
successful operation of the New TSF located to the west of the existing facility. An analysis of utilizing tailings as backfill in the mine should be carried out, and a trade-off study should be completed to
determine if the size of the New TSF can be reduced. 
  

	1.13.5	  Environmental and Permitting 

 SRK has the following recommendations
regarding environment, permitting, and social or community impact at Bolivar: 
  

	 	•	 	 SRK recommends that Dia Bras contract an independent review of the closure cost estimate, with an emphasis on
benchmarking against other projects in northern Mexico. This will require a site investigation and the preparation of a more comprehensive and detailed closure and reclamation plan before a closure specialist evaluates the overall closure approach
and costs. 

  

	 	•	 	 Based on the 2016 geochemical characterization data, a more robust and comprehensive testing program for the tailings
should be undertaken with an emphasis on closure of the existing facilities in such a manner as to not pose a risk to local groundwater resources. 

  
  

					
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	2	 Introduction 

  

	2.1	Terms of Reference and Purpose of the Report 

 The purpose of this Technical Report
(Technical Report) is to present an update on Resources and Reserves for Sierra Metals, Inc. (Sierra Metals or the Company) by SRK Consulting (U.S.), Inc. (SRK) on the Bolivar Mine, Mexico (Bolivar or the Project). Bolivar is an operating mine that
has been in commercial production since late 2011. This report was prepared in accordance with National Instrument 43-101 (NI 43-101). 

The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in SRK’s
services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Sierra Metals
subject to the terms and conditions of its contract with SRK and relevant securities legislation. The contract permits Sierra Metals to file this report as a Technical Report with Canadian securities regulatory authorities pursuant to NI 43-101, Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other uses of this report by any third party is at that party’s sole risk. The
responsibility for this disclosure remains with Sierra Metals. The user of this document should ensure that this is the most recent Technical Report for the property as it is not valid if a new Technical Report has been issued. 

This report provides Mineral Resource and Mineral Reserve estimates, and a classification of resources and reserves prepared in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines, May 10, 2014 (CIM, 2014). 

 

	2.2	Qualifications of Consultants (SRK) 

 The Consultants preparing this technical
report are specialists in the fields of geology, exploration, Mineral Resource and Mineral Reserve estimation and classification, underground mining, geotechnical, environmental, permitting, metallurgical testing, mineral processing, processing
design, capital and operating cost estimation, and mineral economics. 
 None of the Consultants or any associates employed in the
preparation of this report has any beneficial interest in Sierra Metals or its subsidiaries. The Consultants are not insiders, associates, or affiliates of Sierra Metals or its subsidiaries. The results of this Technical Report are not dependent
upon any prior agreements concerning the conclusions to be reached, nor are there any undisclosed understandings concerning any future business dealings between Sierra Metals and the Consultants. The Consultants are being paid a fee for their work
in accordance with normal professional consulting practice. 
 The following individuals, by virtue of their education, experience and
professional association, are considered Qualified Persons (QP) as defined in the NI 43-101 standard, for this report, and are members in good standing of appropriate professional institutions. QP certificates
of authors are provided in Appendix A. The QP’s are responsible for specific sections as follows: 

  
  

					
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	 	•	 	 Jon Larson, Principal Consultant (Mining Engineer) is the QP responsible for Reserves, Mining Methods, Market Studies
and Contracts, Capital and Operating Costs, Economic Analysis, Adjacent Properties, and Other Relevant Data and Information – Sections 2, 3, 15, 16.1, 16.3-16.8, 18.11, 19,
21-24, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	 	•	 	 Matthew Hastings, Senior Consultant (Resource Geology) is the QP responsible for the Geology and Resource - Sections 4, 5.1-5.3, 6-12, and 14, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	 	•	 	 Jeff Osborn, Principal Consultant (Mining Engineer) is the QP responsible for Project Infrastructure - Sections 5.4, 18.1-18.10, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	 	•	 	 Mark Willow, Principal Environmental Scientist is the QP responsible for Environmental Studies, Permitting and Social or
Community Impact - Section 20 and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	 	•	 	 Daniel Sepulveda, Associate Consultant (Metallurgy) is the QP responsible for Mineral Processing and Metallurgical
Testing and Recovery Methods - Sections 13, 17 and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	 	•	 	 John Tinucci, President/Practice Leader/Principal Consultant (Geotechnical Engineer) is the QP responsible for Mining
Methods - Section 16.2, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	2.3	Details of Inspection 

 Table 2-1: Site
Visit Participants 
  

									
	Personnel	 	Company	  	Expertise	 	Date(s) of Visit	 	Details of Inspection
	Jon Larson	 	SRK Consulting (U.S.) Inc.	  	Mining and Reserves	 	October 18-19, 2016	 	Tour of mine, mill, and surface facilities. Reviewed planning practices and mining methods.
	Daniel Sepulveda	 	SRK Consulting (U.S.) Inc.	  	Metallurgy and Process	 	March 12-14, 2015	 	Reviewed metallurgical test work and process plant.
	Matthew Hastings	 	SRK Consulting (U.S) Inc.	  	Geology and Resources	 	March 12-14, 2015	 	Reviewed geology, exploration practices, mine geology, sampling/QAQC, and resource estimation practices.

  

	2.4	Sources of Information 

 The sources of information include data and reports
supplied by Sierra Metals and Dia Bras personnel as well as documents cited throughout the report and referenced in Section 27. 
  

	2.5	Effective Date 

 The effective date of this report is December 31, 2016. Mined
out areas are as of September 30, 2016. 

  
  

					
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	2.6	Units of Measure 

 The metric system has been used throughout this report. Tonnes
(t) are metric of 1,000 kg, or 2,204.6 lb. All currency is in U.S. dollars (US$) unless otherwise stated. 

  
  

					
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	3	Reliance on Other Experts 

 The Consultant’s opinion contained herein is based
on information provided to the Consultants by Sierra Metals and Dia Bras throughout the course of the investigations. SRK has relied upon the work of other consultants, most notably Burō Hidrōlogico Consultoría, in selected project
areas in support of this Technical Report. 
 Burō Hidrōlogico Consultoría inspected the existing tailings storage
facility in 2016. Additionally, in June 2016, Burō Hidrōlogico Consultoría prepared an analysis of the watershed, including rainfall analysis, and completed a review of the geology in the area. 

The Consultants used their experience to determine if the information from previous reports was suitable for inclusion in this technical
report and adjusted information that required amending. This report includes technical information, which required subsequent calculations to derive subtotals, totals and weighted averages. Such calculations inherently involve a degree of rounding
and consequently introduce a margin of error. Where these occur, the Consultants do not consider them to be material. 
 SRK has relied
upon Sierra Metals for disclosure of accurate and factual information regarding the surface land ownership or agreements as well as the mineral titles and their validity. These items have not been independently reviewed by SRK and SRK did not seek
an independent legal opinion of these items. 

  
  

					
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	4	Property Description and Location 

  

	4.1	Property Location 

 The Bolivar property is located in Chihuahua, Mexico (Figure 4-1), in the municipality of Urique. The property is situated in the rugged, mountainous terrain of the Sierra Madre Occidental, approximately 250 km southwest of the city of Chihuahua and approximately 1,250 km
northwest of Mexico City. The geographic center of the property is 27°05’N Latitude and 107°59’W Longitude. It is roughly bounded to the northeast by the Copper Canyon mine (50 km from the Bolivar mine), to the south by the El
Fuerte river (18 km), to the north by the village of Piedras Verdes (5 km), and to the northwest by the town of Cieneguita (12.5 km). 
  

 
      Source: Dia Bras 

Figure 4-1: Map Showing the Location of the Bolivar Property in Chihuahua, Mexico 

 

	4.2	Mineral Titles 

 Dia Bras wholly holds mineral concession titles allowing
exploration and mining within 14 concessions (6,799.69 ha) that make up the project area. Locations of the concessions are shown in cyan in Figure 4-2. Other area concessions are shown in gray. A list of
the concessions is provided in Table 4-1. Production from the Bolivar Mine is not subject to any royalties; however, the concessions are subject to a federal tax that varies by concession. 

  
  

					
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   Source: SNL FINANCIAL LC, 2017 

Figure 4-2: Land Tenure Map showing Bolivar Concessions 

Figure 4-3 shows the concessions in the immediate Bolivar mine area with the Bolivar West,
Bolivar Northwest and La Sidra zones identified. 

  
  

					
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   Source: SNL FINANCIAL LC, 2017 

Figure 4-3: Map of the Bolivar Property 

  
  

					
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	     Table 4-1: Concessions for the Bolivar Mine

 

	Claim Name	  	 Surface  

Area (Ha)  
	  	 File  

Number  
	  	 Title  

Number  
	  	 Expiration  

Date  
	  	Claim Name	  	 Surface Area  

(ha)  
	  	File Number  
	 La Cascada
	  	1,944.33  	  	016/32259  	  	222720  	  	2054-08-26  	  	 La Cascada
	  	1,944.33  	  	016/32259  
	 Bolivar III
	  	48.00  	  	321.1/1-64  	  	180659  	  	2037-07-13  	  	 Bolivar III
	  	48.00  	  	321.1/1-64  
	 Bolivar IV
	  	50.00  	  	321.1/1-118  	  	195920  	  	2042-09-22  	  	 Bolivar IV
	  	50.00  	  	
321.1/  

1-118  

	 Piedras

Verdes
	  	92.47  	  	016/31958  	  	220925  	  	2053-10-27  	  	 Piedras Verdes
	  	92.47  	  	016/31958  
	 Mezquital
	  	2,475.41  	  	016/32157  	  	223019  	  	2054-10-04  	  	 Mezquital
	  	2,475.41  	  	016/32157  
	 Mezquital

Fracc. 1
	  	4.73  	  	016/32157  	  	223020  	  	2054-10-04  	  	 Mezquital Fracc. 1
	  	4.73  	  	016/32157  
	 Mezquital

Fracc. 2
	  	2.43  	  	016/32157  	  	223021  	  	2054-10-04  	  	 Mezquital Fracc. 2
	  	2.43  	  	016/32157  
	 Mezquital

Fracc. 3
	  	974.57  	  	016/32157  	  	223022  	  	2054-10-04  	  	 Mezquital Fracc. 3
	  	974.57  	  	016/32157  
	 El Gallo
	  	251.80  	  	016/32514  	  	224112  	  	2055-04-07  	  	 El Gallo
	  	251.80  	  	016/32514  
	 Bolivar
	  	63.56  	  	321.1/1-100  	  	192324  	  	2041-12-18  	  	 Bolivar
	  	63.56  	  	321.1/1-100  
	 La
Chaparrita
	  	10.00  	  	1/1.3/00882  	  	217751  	  	2052-08-12  	  	 La Chaparrita
	  	10.00  	  	1/1.3/00882  
	 La Mesa
	  	718.95  	  	016/32556  	  	223506  	  	2055-01-11  	  	 La Mesa
	  	718.95  	  	016/32556  
	 Moctezuma
	  	67.43  	  	1/1/01432  	  	226218  	  	2055-01-12  	  	 Moctezuma
	  	67.43  	  	1/1/01432  
	 San

Guillermo
	  	96.00  	  	099/02161  	  	196862  	  	In Process  	  	 San Guillermo
	  	96.00  	  	099/02161  
	
Total
	  	6,799.69  	  	 	  	 	  	 	  	Total	  	6,799.69  	  	 

 Source: Gustavson, 2013 
  

	4.2.1	Nature and Extent of Issuer’s Interest 

 Dia Bras holds an agreement for
surface rights (exploration and mining) with the Piedras Verdes Ejido, the village roughly 12 km from the property. Production from the Bolivar Mine is not subject to any royalties; however, the concessions are subject to a federal tax that varies
by concession. 
  

	4.3	Royalties, Agreements and Encumbrances 

  

	4.3.1	Purchase Agreements 

 The concessions listed in Table 4-1 are described in more detail as follows: 
  

	 	•	 	 La Cascada: In August 2004, Dia Bras entered into an Option to Purchase Agreement with Polo y Ron Minerales, S.A. de
C.V. to acquire the La Cascada claim for US$10,000. 

  

	 	•	 	 Bolivar III and Bolivar IV: In 2004, Dia Bras purchased 50% of all the rights of Bolívar III and IV from Minera
Senda de Plata, SA de CV. On October 2, 2007 the remaining 50% was purchased from Mr. Javier Octavio Bencomo Munoz and his wife Carmen Beatriz Chavez Marquez. 

 

	 	•	 	 Piedras Verdes: In December 2007, Dia Bras entered into an Option to Purchase Agreement with Mr. Raul Tarín
Melendez and Mrs. María Francisca Carrasco Valdez to purchase the Piedras Verdes concession for US$10,000. 

  

	 	•	 	 Mezquital, Mezquital Fracción 1 through 3, and El Gallo: On November 2005, Dia Bras entered into an Option to
Purchase Agreement with Polo y Ron Minerales, S.A. de C.V. to acquire the Mezquital, Mezquital Fracción 1, Mezquital Fracción 2, Mezquital Fracción 3, and El Gallo concessions for US$5,000. 

  
  

					
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	 	•	 	Bolivar: In January 2008, Dia Bras entered into a purchase agreement with Marina Fernandez regarding the Bolívar property for US$85,000 paid between 2008 and 2009. 

 

	 	•	 	La Chaparrita: In January 29, 2008, Dia Bras entered into an Option to Purchase Agreement with Mr. Jesús Fernández Loya on behalf of Minera Senda de Plata S.A. de C.V. to purchase the La
Chaparrita concession for US$85,000. 

  

	 	•	 	La Mesa: In January 2005, Dia Bras staked the La Mesa claim, at Dirección General de Minas, México. 

  

	 	•	 	Moctezuma: In November 2010, Dia Bras entered into an Option to Purchase Agreement with Mr. Juan Orduño García, Mr. Jesús Manuel Chávez González, and Mr. Armando Solano
Montes purchase the Moctezuma concession. The terms of the agreement included a total cash payment of MX$3,500,000 (Mexican Pesos). 

  

	 	•	 	San Guillermo: In October 2011, Dia Bras entered into a purchase agreement with Minera Potosi Silver, a sister company of Minera Piedras Verdes del Norte, S.A. de C.V., for the San Guillermo concession for MX$464,000.

  

	4.3.2	Legal Contingencies 

 In October 2009, Polo y Ron Minerals, S.A. de C.V. (P&R)
sued Sierra Metals and Dia Bras Mexicana S.A. de C.V. P&R and claimed damages for the cancelation of an option agreement regarding the San Jose properties in Chihuahua, Mexico (the “San Jose Properties”). The San Jose Properties are
not located in any areas where Dia Bras currently operates, nor are these properties included in any resource estimates of Sierra Metals. Sierra Metals believes that it has complied with all of its obligations pertaining to the Option Agreement. In
October 2011, the 8th Civil Court of the Judicial District of Morelos in Chihuahua issued a resolution that absolved Sierra Metals from the claims brought against it by P&R on the basis that P&R did not provide evidence to support any of its
claims. P&R appealed this resolution to the State Court, which overruled the previous resolution and ordered the Company to: 
  

	 	•	 	Transfer to P&R 17 mining concessions from the Company’s Bolivar project, including the mining concessions where both mine operations and mineral reserves are located; and 

 

	 	•	 	Pay US$423 to P&R. 

 Sierra Metals was not appropriately notified of this resolution.
In February 2013, a Federal Court in the State of Chihuahua granted Sierra Metals a temporary suspension of the adverse resolution issued by the State Court of Chihuahua, Mexico. In July 2014, a Federal Court in the State of Chihuahua ordered that
Sierra Metals was entitled to receive proper notice of the adverse resolution previously issued by the State Court of Chihuahua. This allows Sierra Metals to proceed with its appeal (writ of “amparo”) of the State Court’s previous
resolution. The adverse resolution has been temporarily suspended since March 2013, which suspension will remain in place pending the writ of amparo. The amparo is being heard in Federal Court and will challenge the State Court’s ruling. The
Federal Court’s verdict in the amparo will be final and not appealable. The Company continues to vigorously defend its position by applying the proper legal resources necessary to defend its position. On February 12, 2016, the 

Second Federal Collegiate Court of Civil and Labor Matters, of the Seventeenth circuit in the State of Chihuahua, (“the Federal
Court”) issued a new judgment ruling that the State Court lacked jurisdiction to rule on issues concerning mining titles, and that no previous rulings by the State Court 

  
  

					
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against the Sierra Metals shall stand. They ordered the cancellation of the previous adverse resolution by the state Court. The Company will continue to vigorously defend this claim. Sierra
Metals continues to believe that the original claim is without merit. 
 In 2009, a personal action was filed in Mexico against DBM by
an individual, Ambrosio Bencomo Muñoz as administrator of the intestate succession of Ambrosio Bencomo Casavantes y Jesus Jose Bencomo Muñoz, claiming the annulment and revocation of the purchase agreement of two mining concessions,
Bolívar III and IV between Minera Senda de Plata S.A. de C.V. and Ambrosio Bencomo Casavantes, and with this, the nullity of purchase agreement between DBM and Minera Senda de Plata S.A. de C.V. In June 2011, the Sixth Civil Court of
Chihuahua, Mexico, ruled that the claim was unfounded and dismissed the case, the plaintiff appealed to the State Court. On November 3rd, 2014, the Sixth Civil Court of Chihuahua ruled against the plaintiff, noting that the legal route by which the
plaintiff presented his claim was not admissible. On February 17, 2017 the State Court issued a ruling dismissing the arguments of the plaintiff and stating that, at the time that the suit was filed, the plaintiff’s right to file was
already expired. Sierra Metals will continue to vigorously defend this action and is confident that the claim is of no merit. 
  

	4.4	Environmental Liabilities and Permitting 

  

	4.4.1	Environmental Liabilities 

 Based on communications with representatives from Dia
Bras, it does not appear that there are currently any known environmental issues that could materially impact the extraction and beneficiation of mineral resources or reserves. From previous assessments (Gustavson, 2013), lesser known environmental
liabilities include unreclaimed exploration disturbances (i.e., roads, drill pads, etc.) and small residual waste rock piles from historical mining operations. As observed by SRK personnel during the site visit, dust emissions generated as a result
of ore haulage traffic from the mine to mill could become an issue in the future, but has not yet become an issue for SEMARNAT. 
  

	4.4.2	Required Permits and Status 

 Required permits and the status of those permits are
discussed in Section 20.4. 
  

	4.5	Other Significant Factors and Risks 

 There are no other factors or risks that
affect access, title or right or ability to perform work on the property other than those stated in the above sections which SRK would expect to have a material impact on the resource and reserves statement. 

  
  

					
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	5	Accessibility, Climate, Local Resources, 

	    	Infrastructure and Physiography 

  

	5.1	Topography, Elevation and Vegetation 

 The Bolivar property is located in the
rugged topography of the Sierra Madre Occidental mountain range. Elevation varies from 600 to 2,100 m above sea level. 
 Vegetative
cover in the region consists of oak and eucalyptus trees at low elevations and pine trees at higher elevations. The land surrounding the mine is used to raise cattle. Wildlife in the area includes various species of insects, lizards, snakes, birds,
and small mammals. 
  

	5.2	Accessibility and Transportation to the Property 

 From the city of Chihuahua, the
Bolivar property can be accessed via travel along paved (325 km) and unpaved roads (70 to 80 km) to the Piedras Verdes or Cieneguita villages, located 2 km and 7 km north of the Bolivar mine, respectively. Transportation from the villages to the
mineral concessions is via private and company vehicles. 
  

	5.3	Climate and Length of Operating Season 

 Climate in the project area is semi-arid,
with a mean annual temperature of 25°C and 758 mm of annual precipitation on average. The region experiences a rainy season from June to October, when monthly precipitation ranges from 83 to 188 mm; the rest of the year is relatively dry
(approximately 26 mm of monthly precipitation). In the past, the Bolivar mine has operated year-round and operations were not limited by climatic variations. 
  

	5.4	Infrastructure Availability and Sources 

  

	5.4.1     Power	

 Electricity is currently sourced from Mexico’s main grid system. Backup generators
are also located at the Bolivar mine site. 
  

	5.4.2     Water	

 Industrial water is sourced from the Piedras Verdes dam, a reservoir that is owned and
operated by Dia Bras. The reservoir drains to the El Fuerte River, 2 km south of the Bolivar mine. Water from the dam is sufficient to meet mine and mill operations and exploration needs. Potable water is available from local sources. 

 

	5.4.3     Mining Personnel	

 Two villages, Piedras Verdes and Cieneguita, are located within 10 km of the mineral
concessions. The combined population of these two villages is approximately 1,500 people, many of the mine employees live in these villages. 

  
  

					
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	5.4.4     Potential Tailings Storage Areas	

 The site has an existing tailings storage facility. The tailings management plan at the
Bolivar mine includes placement of tailings in a number of locations. The site is also installing infrastructure to recover additional process water and reduce the water content of the final tailings. A thickener, with a diameter of 36.6 m, is under
construction and is planned to be in operation in June 2017. Three filter presses have been purchased by Dia Bras. Installation of these filters is planned for completion in September 2017. Two of the three filters will operate at any given time
with the third filter on standby or under maintenance. 
 Tailings consisting of approximately 40% solids will be placed in
conventional tailings storage facilities until June 2017. Thickened tails (60% solids) will be placed from June 2017 to February 2018. Dry-stack tails will be placed after February 2018. Expansion around the
main TSF will be utilized until mid-2019 when dry stack tailings will be placed in a New TSF to be located just to the west of the existing facility. 

 

	5.4.5     Potential Waste Rock Disposal Areas	

 The site has existing permitted waste rock disposal areas. 

 

	5.4.6     Potential Processing Plant Sites	

 The site has an existing mineral processing site that has been in use since its
commissioning in 2011. 

  
  

					
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	6	History 

  

	6.1	Prior Ownership and Ownership Changes 

 Ownership history of the mineral
concessions at Bolivar are shown in Table 6-1, modified from a 2013 technical report completed by Gustavson Associates in Lakewood, Colorado USA. No earlier records of ownership are known to exist. 

Table 6-1: Ownership History and Acquisition Dates for Claims at the Bolivar Property 

 

									
	Claim Name	  	Previous Owner	 	Date Acquired	 	 	 
	La Cascada	  	Polo y Ron Minerales, S.A. de C.V.	 	 	August 10, 2004	 	 	
	Bolivar III	  	Javier Bencomo Munoz	 	 	September 14, 2004	 	 	
	Bolivar IV	  	Javier Bencomo Munoz	 	 	September 14, 2004	 	 	
	Piedras Verdes	  	Raul Tarin Melendez	 	 	December 11, 2007	 	 	
	Mezquital	  	Polo y Ron Minerales, S.A. de C.V.	 	 	November 11, 2005	 	 	
	Mezquital Fracc. 1	  	Polo y Ron Minerales, S.A. de C.V.	 	 	November 11, 2005	 	 	
	Mezquital Fracc. 2	  	Polo y Ron Minerales, S.A. de C.V.	 	 	November 11, 2005	 	 	
	Mezquital Fracc. 3	  	Polo y Ron Minerales, S.A. de C.V.	 	 	November 11, 2005	 	 	
	El Gallo	  	Polo y Ron Minerales, S.A. de C.V.	 	 	November 11, 2005	 	 	
	Bolivar	  	Minera Senda de Plata, S.A. de C.V.	 	 	January 29, 2008	 	 	
	La Chaparrita	  	Minera Senda de Plata, S.A. de C.V.	 	 	January 29, 2008	 	 	
	La Mesa	  	Direccion General de Minas	 	 	January 12, 2005	 	 	
	Moctezuma	  	Juan Orduno Garcia/Jesus Chavez Gonzalez / Armando Solano Montes	 	 	November 5, 2010	 	 	
	San Guillermo	  	Minera Piedras Verdes del Norte, S.A. de C.V.	 	 	October 4, 2011	 	 	

 Source: Gustavson, 2013 
  

	6.2	Exploration and Development Results of Previous Owners 

 Minera Frisco conducted a
mapping and exploratory drilling program from 1968 to 1970 targeting porphyry copper mineralization in the Piedras Verdes district. In 1992, the Consejo de Recursos Minerales (Mexican Geological Service) completed a single visit for Minera Senda de
Plata. No documentation for these historical exploration activities has been identified. 
  

	6.3	Historic Mineral Resource and Reserve Estimates 

 A qualified person has not done
sufficient work to classify the historical estimate as a current resource estimate or mineral reserve estimate and the issuer is not treating the historical estimate as a current resource estimate. 

 

	6.4	Historic Production 

 Historic mining and exploration for polymetallic deposits in
the Sierra Madres has been carried out sporadically since the Spanish colonial period. In 1632, a native silver vein was discovered at La Nevada near Batopilas. Thereafter, sporadic mining of silver deposits continued for almost one hundred years. A
second phase of mining started with the Carmen Mine near the end of 18th Century, but was halted due to the Mexican War of Independence from 1810 to 1821. A third phase of mining in the region occurred from 1862 to 1914, but was again halted due to
the Mexican Revolution in 1910. 

  
  

					
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 The Urique District is characterized by gold-rich fissure veins hosted by andesitic
rocks. Since 1915, there have been sporadic attempts to develop mineral deposits in the area. Small scale mining of polymetallic deposits in this district started before 1910 by gambusinos (artisanal miners). Production records from 1929 are
reported as 2,891 tonnes of ore containing 2,686 kg of copper (Cu), 7,990 kg of lead (Pb), 1,061 kg of silver (Ag) and 44 kg of gold (Au), indicating an average grade of 0.09% Cu, 0.28% Pb, 367 g/t Ag and 15.22 g/t Au. Since 1915, some
300 million ounces of silver, are reported to have been produced from the Batopilas District. Other mining activities in the area include the Cieneguita de los Trejo gold deposit located at the outskirts of the village of Cieneguita, which is
situated about 1.5 km northwest of the northwestern corner of the El Cumbre Mineral License. In the 1990s, Glamis Gold Ltd. (Glamis) developed an open pit mine and produced gold by heap leaching method. The old leach pads are visible from the
Bolivar property. 
 From 1980 to 2000, some 300,000 tonnes of mineralized material were mined while the Bolivar Mine was under the
control of Bencomo Family. This included: 
  

	 	•	 	195,000 tonnes from the Fernandez trend; 

  

	 	•	 	90,000 tonnes from the Rosario Trend; and 

  

	 	•	 	15,000 tonnes from the Pozo del Agua Area. 

 Detailed production records for this period
are not available, but are reported to be in the order of 50 tonnes per day, and the average grade of the mineralized material is reported to be in the range from 5% to 6% Cu and 25% to 30% Zn. Production records from 2000 to 2007 were not available
to SRK. According to Sierra Metals, then known as Dia Bras Exploration Inc., production from 2008 to 2010 was as follows 
  

	 	•	 	2008: 126,500 tonnes processed at 1.65% copper grade and 8.00% zinc grade 

  

	 	•	 	2009: 89,600 tonnes processed at 1.81% copper grade, 10.06% zinc grade, and 49.5 g/t silver 

  

	 	•	 	2010: 104,800 tonnes processed at 1.45% copper grade, 8.59% zinc, and 31.6 g/t silver 

Commercial production was declared in November 2011. Table 6-2 lists the 2011 to 2016 production
as reported by Sierra Metals. 
 Table 6-2: 2011 to 2016 Bolivar Production 

 

													
	Year  	 	Plant  	 	 Tonnes Processed  

(dry)  
	 	Au  
(g/t)  	 	Ag
(g/t)	 	Cu
(%)	 	 
	 2011  
	 	Mal Paso*  	 	88,247  	 	 	 	46.62  	 	1.32  	 	
	 2012  
	 	Piedras Verdes  	 	312,952  	 	 	 	24.58  	 	1.17  	 	
	 2013  
	 	Piedras Verdes  	 	507,865  	 	0.05  	 	21.16  	 	1.25  	 	
	 2014  
	 	Piedras Verdes  	 	666,414  	 	0.29  	 	22.23  	 	1.20  	 	
	 2015  
	 	Piedras Verdes  	 	830,447  	 	0.25  	 	20.57  	 	1.15  	 	
	
2016  
	 	Piedras Verdes  	 	950,398  	 	0.19  	 	16.72  	 	1.00  	 	

 * Bolivar material was processed at the Mal Paso mill in 2011 until the Piedras Verdes mill was
commissioned in November 2011. 
 Source: Dia Bras, 2017 

  
  

					
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	7	Geological Setting and Mineralization 

  

	7.1	Regional Geology 

 The Bolivar property is located within the Guerrero composite
terrane, which makes up the bulk of western Mexico and is one of the largest accreted terranes in the North American Cordillera. The terrane is proposed to have accreted to the margin of Mexico in the Late Cretaceous, and consists of submarine and
lesser subaerial volcanic and sedimentary sequences ranging from Upper Jurassic to middle Upper Cretaceous in age. These sequences rest unconformably on deformed and partially metamorphosed early Mesozoic oceanic sequences. 

The Bolivar deposit is one of many precious and base metal occurrences in the Sierra Madre precious metals belt, which trends
north-northwest across the states of Chihuahua, Durango, and Sonora (Figure 7-1). 
  

 
   Source: Dia Bras, 2012 

 

	 	Figure	7-1: Regional Geology Map showing the Locations of Various Mines in the Sierra Madre 

	 	    	         Occidental Precious Metals Belt 

  

	7.2	Local Geology 

 The Piedras Verdes district shown in Figure 7-2 consists of Cretaceous andesitic to basaltic flows and tuffs intercalated with greywacke, limestone, and shale beds commonly referred to as the Lower Volcanic Series (LVS). This volcanic-sedimentary package has
been intruded by a number of Upper Cretaceous to Lower Cenozoic age intermediate to felsic composition plutonic bodies that range from 85 to 28.3 Ma. The LVS and intermediate to felsic intrusive bodies have in turn been overlain by 

  
  

					
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 a widespread cap of rhyolitic and dacitic ignimbrites and tuffs referred to as the
Upper Volcanic Series (UVS), that were deposited between 30 to 26 Ma; the UVS is one of the largest continuous ignimbrite provinces in the world. All known mineralization in this region formed during the time interval between the deposition of the
LVS and the deposition of the UVS (Meinert, 2007). 
 At the Bolivar property, the volcanic rocks strike northwest and dip gently to
moderately to the northeast. Assuming these volcanics are younger than the granodiorite, the stock must also be tilted to the northeast (Meinert, 2007). A number of outcrops exhibit tight, northeast trending folds. Three major sets of faults have
been recognized at the local scale, these include: a north-northwest trending set which dip steeply northeast or southwest, an east-southeast trending set, and a north- trending set. None of the faults on the property are described as having offsets
greater than 200 m (Meinert, 2007). 
  
  

 
 Source: Meinert, 2007 

Figure 7-2: Local Geology Map showing the Location of the Bolivar Property 

  
  

					
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	7.3	Property Geology 

  

	7.3.1	   Skarn-hosting Sedimentary Rocks 

  

	 	    	 Skarn alteration and mineralization at the Bolivar property is hosted primarily in a package of sedimentary rocks that
occur as a layer or lens within the LVS (Reynolds, 2008). All sedimentary units have undergone low grade metamorphism. The lowermost sedimentary horizon observed is a dolostone which ranges from 24 m to 40m in thickness. The lower part of the
dolostone horizon is interlayered with siltstone. To the south, progressively less of the sedimentary sequence is cut out by granodioritic intrusive rocks and the dolostone is observed to be underlain by a siltstone horizon. The lower siltstone
unconformably overlies the LVS. The dolostone is overlain by a discrete layer of siltstone. The average thickness of this siltstone unit is 12 to 30 m. Above the siltstone marker layer are horizons of argillaceous dolostone (50 m thick) and
argillaceous limestone (9 m thick). The uppermost sedimentary horizon is a limestone with local chert and argillaceous laminations. The vertical thickness of this horizon varies considerably in cross-section (108 to 173m) and this variation is
attributed to paleo-topographic relief. The upper contact of the limestone is an unconformity with the LVS. Figure 7-3 presents the stratigraphy of the property and Figure
7-4 is the geologic map. 

  

	7.3.2	   Intrusive Rocks 

  

	 	    	 The most important igneous rocks on the property are the Piedras Verde granodiorite and related dikes and sills. All are
slightly porphyritic but none are a true porphyry. The Piedras Verde granodiorite exhibits a range of textural variations and compositions. The average composition is very similar to plutons related to Cu skarns (Meinert, 2007). There is no
indication of an Au association. 

  

	 	    	 The dikes locally cut the granodiorite, have planar, chilled contacts, and are generally finely crystalline. Both their
texture and crosscutting relations suggest that the dikes are younger and shallower than the granodiorite. Both granodiorite and andesite dikes have alteration and locally skarn, along their contacts. In addition endoskarn affects both the
granodiorite and in rare cases, the andesite dikes. Thus, these rocks are older than or at best coeval with alteration/mineralization. The presence of skarn veins cutting an andesite dike is clear evidence that at least some skarn is later than at
least some of the andesite dikes. A closer association of granodiorite with skarn alteration and mineralization is suggested by local K-silicate veining of the granodiorite and the zonation of skarn relative
to this contact. 

  
  

					
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 Source: Dia Bras 

Figure 7-3: Stratigraphic Column of the Bolivar Property 

  
  

					
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 Source: Dia Bras 

Figure 7-4: Geologic Map of the Bolivar Property 

 

	7.4	Significant Mineralized Zones 

 Mineralization at the Bolivar property is hosted by
skarn alteration in carbonate rocks adjacent to the Piedras Verde granodiorite (Meinert, 2007). Orientations of the skarn vary dramatically, although the majority are gently-dipping. Thicknesses vary from 2 m to over 20 m. Skarn mineralization is
strongly zoned, with proximal Cu-rich garnet skarn in the South Bolivar area, close to igneous contacts, and more distal Zn-rich garnet+pyroxene skarn in the northern
Bolivar and southern skarn zones near El Val. The presence of chalcopyrite+bornite dominant skarn (lacking sphalerite) in the South Bolivar area, along with K-silicate veins in the adjacent granodiorite
suggests that this zone is close to a center of hydrothermal fluid activity. In contrast, the main Bolivar mine is characterized by Zn>Cu and more distal skarn mineralogy such as pyroxene>garnet and pale green and brown garnets. 

Alteration is zoned relative to fluid flow channels. From proximal to distal, the observed sequence is:
red-brown garnet to brown garnet with chalcopyrite ± bornite ± magnetite to green garnet ± pyroxene with chalcopyrite + sphalerite to massive sulfide (sphalerite ± chalcopyrite
± galena) to marble with stylolites and other fluid escape structures. 

  
  

					
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 Mineralization exhibits strong stratigraphic control and two stratigraphic horizons
host the majority: an upper calcic horizon, which predominantly hosts Zn-rich mineralization, and a lower dolomitic horizon, which predominantly hosts Cu-rich
mineralization. In both cases, the highest grade are developed where fault or vein structures and associated breccia zones cross these favorable horizons near skarn-marble contacts. Meinert (2007) suggested that hydrothermal fluids moved up
along the Piedras Verdes Granodiorite contact, forming skarn and periodically undergoing phase separation that caused brecciation. Zones of breccia follow faults like the Rosario, Fernandez, and Breccia Linda trends as well as nearly vertical
breccia pipes such as La Increíble. 

  
  

					
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	8	Deposit Type 

  

	8.1	Mineral Deposit 

 The Bolivar deposit is classified as a high-grade Cu-Zn skarn and exhibits many characteristics common to this deposit type (Meinert, 2007). The term skarn refers to coarse-grained calcium or magnesian silicate alteration formed at relatively high temperatures by
the replacement of the original rock, which is often carbonate-rich. The majority of the world’s economic skarn deposits formed by infiltration of magmatic-hydrothermal fluids, resulting in alteration that overprints the genetically related
intrusion as well as the adjacent sedimentary country rocks (Ray and Webster, 1991). While alteration commonly develops close to the related intrusion, fluids may also migrate considerable distances along structures, lithologic contacts, or bedding
planes. Based on the alteration assemblages present, skarn deposits are generally described as either calcic (garnet, clinopyroxene, and wollastonite) or magnesian (olivine, phlogopite, serpentine, spinel, magnesium- rich clinopyroxene). Both the
alteration and the mineralization in skarn deposits are considered to be magmatic-hydrothermal in origin. 
  

	8.2	Geological Model 

 The geological model descried above, for the Bolivar deposit is
well-understood and has been verified through multiple expert opinions as well as a history of mining. SRK is of the opinion that the model is appropriate and will serve Dia Bras going forward. 

  
  

					
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	9	Exploration 

  

	9.1	Relevant Exploration Work 

 The following information has been modified and updated
from a 2009 technical report prepared by SGS Geostat. 
 Exploration Conducted by Dia Bras Exploration, 2003-2012: 

 

	 	•	 	 2003 to 2005. During this period, Dia Bras carried out an exploration program of geological mapping, outcrop
sampling, topographic survey, 1:250 and 1:500 scale, including detailed 2 m x 2 m panel sampling perpendicular to the mineralized structures. Dia Bras completed semi-regional prospecting, reconnaissance and representative sampling in to the Bolivar
District at the La Montura and Narizona prospects. Pilot mining started at the Bolivar Mine. Development drifting conducted led to the Brecha Linda ore body discovery. 

	 	•	 	 2006. Dia Bras Exploration performed detailed 1:500 scale geologic mapping in the Bolivar and Bolivar South
areas, including 2 m x 2m panel sampling. Dia Bras Exploration did some prospecting in other mineralized area to the south, including El Gallo. This work was accompanied by a rock panel geochemical survey. The results of the El Gallo prospecting
supported the drilling program. 

	 	•	 	 2007. Detailed underground, 1:250 scale geological mapping was complete on the El Gallo and La Narizona areas,
including detailed 2 m x 2m panel sampling. This exploration identified two mineralized stratiform horizons in the El Gallo area, Gallo Superior and Gallo Inferior, similar to the stratiform ore body at La Narizona. Preliminary geologic mapping to
support the drilling was completed on three other mineralized areas to the south, La Montura, La Pequeña and El Val. 

	 	•	 	 2008. Detailed 1:500 scale surface geology mapping was done at the Bolivar North zone, including representative
chips sampling, yielding a geochemical anomaly consistent with the NW structural trend. Mining was mainly concentrated in the Titanic, Selena and San Francisco areas on and under level 6 (Rosario), Guadalupe, Rebeca and San Angel, which were high
grade, individual orebodies, geologically related to the calcareous upper stratigraphic favorable horizon. 

	 	•	 	 2009. Detailed 1:250 scale geologic mapping was done at San Francisco and Los Americanos North, including
detailed 2 m x 2m panel sampling. Regional 1:25,000 scale geology and detailed stream sediment sampling was done over the entire Bolivar Property, yielding the new targets of Los Americanos – Lilly Skarn
(Cu-Zn), La Cascada - Sidra (Au) and El Mezquite (Au). Underground 1:250 scale detailed mapping was done at San Francisco and La Increíble Mines, including detailed 2 m x 2m panel sampling. Mining was
mainly concentrated at the Bolivar Mine in the high grade ore bodies (Rosario, La Foto, Fernandez, Rosario Magnetita, and San Angel areas). Dia Bras Exploration announced the construction of the new Piedras Verdes Mill with capacity of 1,000 t/d.

	 	•	 	 2010. 1:1000 geologic mapping was done at La Cascada – La Sidra areas, including chips channel sampling; and
a TITAN IP Geophysical Survey (done by the contractor QUANTEC). A drilling program was completed, indicating low grade gold. Regional 1:25,000 scale geologic mapping was completed over the entire Bolivar Property, including lithology units, regional
faulting and dikes, and alteration, confirming the previous geochemical anomalies 

  
  

					
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	 	 on Los Americanos – Lilly Skarn (Cu-Zn), La Cascada - Sidra (Au) and El Mezquite (Au)
targets. Underground 1:250 scale detailed mapping, including detailed 2 m x 2m panel sampling was done at El Gallo, La Increíble and La Narizona Mines. Mining was mainly concentrated then at Narizona, El Gallo, and Rosario areas, while Dia
Bras continued with the construction of new Piedras Verdes Mill. 

	 	•	 	 2011. New geological interpretations indicated the continuity of El Gallo trends to southeast toward La Montura,
and northeast toward La Increíble, discovering the El Salto and El Gallo step out areas respectively. Underground development and production drifting allowed detailed, 1:250 scale mapping at Bolivar, El Gallo, and La Narizona Mines. Mining of
360 t/d was terminated during late October and the new Piedras Verdes Mill started with commercial production of 1,000 t/d operation, mainly from El Gallo mine. 

	 	•	 	 2012. Underground development and production drifting and detailed 1: 250 scale mapping was done at Bolivar, El
Gallo, and La Narizona Mines. Production of 1,000 t/d processing at Piedras Verdes Mill began by receiving ore principally from the upper stratigraphic horizon from El Gallo Mine. Exploration on the El Gallo step out and El Salto areas continued
using a drilling contractor. Preliminary drilling started at La Montura and La Pequeña areas, located in between El Gallo and Narizona mines. 

	 	•	 	 2013 to 2016. New geological interpretations were completed at Bolivar for the Bolivar W and Bolivar NW areas.
Ongoing underground production and development in El Gallo Superior (EGS) and El Gallo Inferior (EGI), with new development of the Chimeneas areas. Interpretation and drilling of the La Sidra vein to the west of the main Bolivar mine area. The La
Sidra vein yielded results from exploration drilling of mineralized intervals ranging from 0.3 to 2.1 m, with grades ranging from 0.01 to 9.1 g/t Au and 0.01 to 1,850 g/t Ag. 

 

	9.2	Sampling Methods and Sample Quality 

 Sampling supporting the Mineral Resource
estimation consists of drill core and underground channel types. SRK has not reviewed the methods or quality assurance protocol for the sampling but understands that the work has been done by trained geologists or geologic technicians. 

 

	9.3	Significant Results and Interpretation 

 The exploration results at Bolivar and in
the nearby area are used to develop detailed exploration plans and to support Mineral Resource estimation. 

  
  

					
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	10	Drilling 

  

	10.1	Type and Extent 

 Between 1968 and 1970, Minera Frisco drilled short, diamond
holes, but existing records do not provide a reliable register of the number of holes, meters drilled, or the results of drilling. 

Between 2003 and 2012, Dia Bras drilled 691 HQ and NQ diameter core holes totaling to 122,835 meters as listed in Table 10-1 and shown in Figure 10-1. The objective of drilling completed during this period was to explore for mapped and projected polymetallic sulfide mineralization in
calc-silicate rocks with moderate east-northeast dips. These efforts identified Cu-rich skarn mineralization within the Bolivar III, Bolivar IV, Piedres Verdes, and El Gallo concessions. 

Table 10-1: Summary of drilling by Dia Bras Exploration, Inc. on the Bolivar property,
2003-2012 
  

											
	Area	  	Number of Drillholes	 	  	Total Meters Drilled	 	  	 
	 Bolivar Alta
Ley
	  	 	117	 	  	 	21,787.42	 	  	
	 Bolivar
Noroeste
	  	 	21	 	  	 	3,422.83	 	  	
	 Bolivar
Norte
	  	 	12	 	  	 	3,262.10	 	  	
	
Bolivar Sur
	  	 	42	 	  	 	10,583.75	 	  	
	 Brecha Linda
	  	 	10	 	  	 	948.00	 	  	
	 Brecha Linda
Este
	  	 	2	 	  	 	336	 	  	
	 El Gallo
	  	 	84	 	  	 	20,152.17	 	  	
	
El Salto
	  	 	11	 	  	 	20,152.17	 	  	
	 El Val
	  	 	8	 	  	 	3,777.00	 	  	
	 Fernadez
	  	 	8	 	  	 	666.30	 	  	
	 Fernandez
	  	 	19	 	  	 	2,467.10	 	  	
	
Guadalupe
	  	 	57	 	  	 	7,682.55	 	  	
	 La Bota
	  	 	7	 	  	 	544.30	 	  	
	 La Herradura
	  	 	6	 	  	 	819.00	 	  	
	 La
Increíble
	  	 	29	 	  	 	9,418.14	 	  	
	
La Montura
	  	 	11	 	  	 	2,588.80	 	  	
	 La Narizona
	  	 	28	 	  	 	5,115.50	 	  	
	 La
Pequeña
	  	 	7	 	  	 	2,344.05	 	  	
	 Manto Gordo
	  	 	2	 	  	 	73.30	 	  	
	
Mina N01 CE 868E
	  	 	3	 	  	 	182.20	 	  	
	 Mina N01 CE
898N
	  	 	8	 	  	 	748.85	 	  	
	 Mina N01 R
9860S
	  	 	15	 	  	 	1,068.70	 	  	
	 Nivel 1
	  	 	4	 	  	 	402.00	 	  	
	
Nivel 6
	  	 	1	 	  	 	141.00	 	  	
	 Rebeca
	  	 	15	 	  	 	1764.00	 	  	
	 Rosario
	  	 	18	 	  	 	1,553.10	 	  	
	 San Angel
	  	 	37	 	  	 	4,808.90	 	  	
	
San Francisco
	  	 	34	 	  	 	4,548.00	 	  	
	 Selena
	  	 	30	 	  	 	2,966.60	 	  	
	 Selena 2
	  	 	1	 	  	 	90	 	  	
	 Titanic
	  	 	16	 	  	 	1,460.70	 	  	
	
Titanic 2
	  	 	28	 	  	 	3,167.00	 	  	
	
Total
	  	 	691	 	  	 	122,834.91	 	  	

         Source: Gustavson, 2013 

  
  

					
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 Figure 10-1: Location Map of Drillhole Collars 

 

	10.2 	Procedures 

 The Bolivar Mine uses a local coordinate grid which is based on meters
from a central control point. Nearby exploration is registered in a standard UTM coordinate grid, and thus it is necessary to consider the exploration data completely separate from the mine data. 

The primary drilling method at Bolivar has been diamond core. To date, 769 drillholes have been completed with an average length of
approximately 190 m. The drillholes have been drilled predominantly from surface and to a lesser degree, underground in a wide variety of orientations. In the vicinity of the mining operations, the average drillhole spacing ranges between 25 and 50
m. In the deeper or less explored areas, the average drillhole spacing ranges between 75 and 150 m. Overall, the majority of the drilling completed by Dia Bras has been relatively closely spaced and appears to have been directed at resource
definition. Only a small percentage of the drillholes have down-hole deviation surveys. A significant number of the drillholes are relatively long and their precise location is considered uncertain due to the lack of down-hole surveys. It is not
current practice to survey exploration drilling, which poses a significant risk as to the confidence that can be had in the location of the results and interpretation of recent exploration efforts. The current drilling intersects the mineralization
at a wide range of orientations and therefore drill intercept lengths do not necessarily reflect the true thickness of mineralization. 

The drilling has been conducted with Dia Bras-owned drills and outside contractors. All drill core has been logged by Dia Bras staff
geologists. Sample intervals are determined by the geologist and the core is then cut in half (hydraulic splitter) and bagged by Dia Bras technicians. SRK is of the opinion 

  
  

					
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 that the core processing area and logging facilities are all appropriately organized
and consistent with industry best practices. 
  

	10.3 	Interpretation and Relevant Results 

 The drilling results are used to guide
ongoing exploration efforts and to support the resource estimation. SRK notes that the majority of the individual deposits are drilling as perpendicular to the deposit as possible, but that some areas such as the Step Out and Increíble
deposits feature drilling that is very close to parallel the trend of mineralization. This has been accounted for in the mineral resource classification, and SRK strongly recommends drilling these areas from different positions to improve the angle
of intersection between the drilling and true thickness of mineralization. 

  
  

					
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	11	Sample Preparation, Analysis and Security 

  

	11.1	Security Measures 

 After logging and splitting, all exploration drilling samples
are laid out in order and recorded into a digital database prior to shipping. Samples are placed into larger plastic bags, and these bags are marked with the hole ID and sample numbers, then sealed with a security seal. All samples are kept behind
gated access-controlled areas on the Bolivar mine site, then transported by Dia Bras personnel to a shipping facilitator. Hard copies and electronic forms are kept for all sample transactions, detailing shipping, receipt, and types of analyses to be
conducted. 
  

	11.2	Sample Preparation for Analysis 

 All analyses for new exploration drilling or
resource expansion are currently performed by ALS Chemex (ALS), an ISO-certified independent commercial laboratory. Sample preparation is completed at the ALS Chemex Hermosillo, Mexico facility and final
analysis is conducted at the primary laboratory in North Vancouver, BC, Canada. Historically, samples have been prepared at Dia Bras facilities in either the Malpaso Mill or the Piedras Verdes Mill. This practice was discontinued at the end of 2014.

  

	11.3	Sample Analysis 

 The analytical history of Bolivar sampling is complex, and
includes various sources of analyses from the nearby Malpaso Mill Lab or Piedras Verdes Mill Lab and ALS. Previous reports have noted inconsistencies between the internal and external laboratories in terms of analytical precision and accuracy, with
the Malpaso Mill historically featuring relatively poor results from submitted QA/QC samples. SRK notes that a significant effort has been made over the past two years to improve the equipment and methodology for Dia Bras’ internal laboratory.
The results of the current QA/QC program indicate that performance has drastically improved and now meets industry standards. The QA/QC program includes check samples between the Piedras Verdes lab and ALS which show reasonable duplicate
performance. In addition, certified reference materials (CRM) analyzed by Piedras Verdes over the previous year show excellent performance. 

The current program is that all samples are analyzed internally initially at the PV Lab, and that selected intervals with identified
mineralization are re-submitted to ALS. This ensures that intervals identified to have material mineralization by the PV lab are sent for analysis at ALS, and that sample intervals with little chance of being
mineralized are not. This is done to reduce analytical costs. The duplicates are selected from coarse rejects from the initial preparation. The ALS results are incorporated into the database as the final analytical result for the duplicated
intervals. SRK notes that this is a reasonable practice, but that a study should be conducted to formally document and establish the validity of the internal assays. Results from 2016 suggest that the Piedras Verdes mill may now be suitable as a
primary lab, as long as monitoring of the performance continues. 
  

	11.4	Quality Assurance/Quality Control (QA/QC) Procedures 

 Samples supporting the
Mineral Resource estimation (MRE) were analyzed, almost exclusively, by the ALS Minerals laboratory (ALS) in Vancouver, BC. Canada. However, the preparation of samples 

  
  

					
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 has been completed at other facilities and historically conducted by the nearby Piedras
Verdes mill, with pulps provided to ALS for analysis. SRK notes that inconsistencies in the preparation methodology and the size-fraction of the received pulp have been noted over the history of the Project,
but that the results of recent duplicate comparisons show reasonable agreement between samples prepared entirely by ALS or by the Piedras Verdes lab. 

One purpose of a QA/QC program is to submit samples with known or expected values, in the sequence of normal analyses, to
“test” the internal or third party laboratory’s accuracy. These samples with known values are blind to the laboratory, so analyses that are not within expected tolerances represent failure criteria which are flagged upon receipt and
action is taken to rectify with the lab the potential source of the failure and take corrective action. 
 Prior to 2013, the drill
sampling QA/QC program only featured duplicate sampling which evaluates analytical precision. This program was not consistent with industry best practices and was modified to current industry standards. From 2013 to late 2015, a very basic QA/QC
program included continued submission of duplicate samples to ALS Chemex as well as insertion of Certified Reference Material (CRM). This program was not properly monitored and the results were not tracked in detail. The current QA/QC procedures
(established late 2015) include: insertion of CRMs, blanks, and duplicates, at rates consistent with industry best practices. The results are monitored and tracked by Dia Bras personnel. The results of the QA/QC show reasonable performance for the
laboratory and SRK is of the opinion that the current analytical methods and QA/QC are up to industry standards and will serve Bolivar well going forward. 

In order to provide additional support to the data used for Mineral Resource estimation, Dia Bras recently conducted a thorough review of
the historic sample data in the unmined areas which were analysed without modern QA/QC. They selected 315 (~307 m) samples from several areas and submitted these intervals for reanalysis with appropriate QA/QC measures to ALS. This serves to
validate some historic drilling (dating back to 2012), specifically in areas that are critical to the Mineral Resource statement, as well as test the historic performance of the Piedras Verdes Mill against the new ALS results. 

 

	11.4.1	Certified Reference Materials 

 Dia Bras currently inserts CRM into the sample
stream at a rate of about 1:20 samples, although the insertion rate is adjusted locally to account for particular observations in the core. Three CRM have been procured and certified via round robin analysis for the current exploration programs.
These CRM have been homogenized and packaged by Target Rocks Peru (S.A.) and the round robin conducted by Smee & Associates Consulting Ltd., a consultancy specializing in provision of CRM to clients in the mining industry. 

Each CRM undergoes a rigorous process of homogenization and analysis using aqua regia digestion and AA or ICP finish, from a random
selection of 10 packets of blended pulverized material. None of the CRM are certified for Au, a minor contributor to the mineral resources at Bolivar. The six laboratories participating in the round robin for the Target Rocks CRM are: 

 

	 	•	 	ALS Minerals, Lima; 

  

	 	•	 	Inspectorate, Lima; 

  

	 	•	 	Acme, Santiago; 

  

	 	•	 	Certimin, Lima; 

  
  

					
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	 	•	 	SGS, Lima; and 

  

	 	•	 	LAS, Peru. 

 The means and between lab standard deviations (SD) are calculated from the
received results of the round robin analysis, and the certified means and tolerances are provided in certificates from Smee and Associates. The certified means and expected tolerances are shown in Table 11-1.

 Table 11-1: CRM Expected Means and Tolerances 

 

																																			
	 	 	CRM	  	Certified Mean	 	  	Two Standard Deviations (between lab)	 
	 	 	Element	  	Ag (g/t)	 	  	Pb (%)	 	  	Cu (%)	 	  	Zn (%)	 	  	Ag (g/t)	 	  	Pb (%)	 	  	Cu (%)	 	  	Zn (%)	 
		 	
MCL-01
	  	 	26.4	 	  	 	0.326	 	  	 	0.896	 	  	 	0.988	 	  	 	1.90	 	  	 	0.03	 	  	 	0.05	 	  	 	0.07	 
		 	 MCL-02
	  	 	40.8	 	  	 	0.653	 	  	 	1.581	 	  	 	2.49	 	  	 	3.4	 	  	 	0.05	 	  	 	0.084	 	  	 	0.09	 
		 	
Mat. PLSUL N° 03
	  	 	192.00	 	  	 	3.094	 	  	 	1.033	 	  	 	3.15	 	  	 	4.00	 	  	 	0.084	 	  	 	0.036	 	  	 	0.13	 

 Source: Dia Bras, 2016 

QA/QC data provided to SRK includes 71 CRM (29 low-grade, 23 moderate-grade, and 19 high- grade) which were inserted into the sample
stream for 42 drillholes drilled between 2012 and 2016. The performance of the CRM is evaluated over time using a simple plot of the expected mean vs. the reported analysis, and a +/-3 SD failure criteria. This is consistent with industry best
practices, and SRK notes no failures for any of the CRMs submitted for the 2016 drilling or the resampling program. An example of the CRM performance for MCL-01: Cu is shown in Figure 11-1. Dia Bras tracks and generates plots such as this for each
element from each standard. SRK has noted zero failures for all of the CRM provided, across each of the elements certified. 
  

 
 Source: Dia Bras, 2016 

Figure 11-1: CRM Performance for MCL-01 – Cu 

     

  
  

					
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	11.4.2	Blanks 

 Blank material used in the QA/QC program consists of barren limestone
selected by Bolivar geologists. Results submitted to SRK included 50 samples which were inserted into the sample stream for 27 drillholes drilled between 2012 and 2016. The failure criteria for blanks is roughly +2SD of the mean of the blanks. SRK
reviewed the performance of the blank samples submitted and noted very limited failures for the blanks, occurring in 4 of the 50 samples, and only for Zn. An example of a successful blank performance chart is shown in Figure 11-2. 
  
 

 
 Source: Dia Bras, 2016 

Figure 11-2: Blank Performance – Cu 

 

	11.4.3	Duplicates 

 Prior to 2013, the drill sampling QA/QC featured duplicate sampling
only. The 2005 report by Roscoe Postle Associates notes that Dia Bras geologists collected field duplicate samples from split drill core after every tenth sample and submitted the samples to Chemex, in lieu of a standard QA/QC program. 

Currently, all duplicate samples are initially analyzed by Dia Bras’ internal Piedras Verdes lab, and selected mineralized intervals
are then re-submitted to ALS; these duplicates are selected from coarse rejects from the internal laboratory preparation. For 2016, this represents 942 samples which have been analyzed at both laboratories for
2016. 
 The performance of duplicate splits submitted to both the PV lab and ALS show excellent agreement of the mean values between
the two, as summarized in Table 11-2. As shown in Figure 11-3, the ALS values agree very well with the PV values across the range of analyses, with ALS actually
exhibiting a very slight bias at the very high grade ranges compared to PV. SRK noted the same for Zn and Ag. 

  
  

					
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 Table 11-2:
Inter-lab Duplicate Performance of Mean Values 
  

															
	 	 	Lab	 	Cu (%)	 	Zn (%)	 	Fe (%)	 	Pb (%)	 	Au (g/t)	 	Ag (g/t)
		 	PV	 	0.75	 	0.16	 	5.03	 	0.02	 	0.09	 	13.47
		 	ALS	 	0.75	 	0.16	 	5.03	 	0.02	 	0.09	 	13.49

 Note: from 942 coarse rejects submitted to both ALS and PV labs. 

Source: Dia Bras, 2016 
  

 
 Source: Dia Bras, 2016 

Figure 11-3: Duplicate Scatter Plot - Cu 

On the basis of individual duplication, the coarse reject splits perform poorly, with approximately 30% of the Cu samples differing by a
factor of more than 30% from the other. The split is essentially equal in terms of samples that are 30% high or 30% low, reflecting no consistent laboratory bias. The majority of these discrepancies occur at the lower grade ranges, which are
unlikely to materially affect the mineral resource estimation. These discrepancies are fairly common for the type of sample split utilized and the highly variable nature of the skarn mineralization. 

 

	11.4.4	Results 

 The results of the 2016 QA/QC show excellent performance of CRM and
blanks, with no evidence of meaningful bias or contamination. SRK notes that these results have been provided by Dia Bras. 
 SRK is of
the opinion that the results from the duplicate analysis suggest that the results from the PV lab compared to the ALS lab show excellent overall comparisons, and despite a relatively high 

  
  

					
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 percent difference on a sample by sample basis, that any bias between the two labs is
negligible in terms of resource estimation. 
  

	11.4.5	Actions 

 No actions have been taken on the basis of the results of the QA/QC,
given the lack of failures. SRK notes that the procedures and processes for definition of actions upon detection of failures are not well-documented, but have been described as follows: 

 

	 	•	 	Upon receipt of laboratory analytical reports QA/QC samples are copied and merged into a master spreadsheet which displays them on a graph, as well as designating whether they are a failure per the above criteria.

  

	 	•	 	In the event of a failure, the database technicians communicate internally with geologists to ensure that the correct sample was submitted. 

 

	 	•	 	If this is the case, the laboratory is notified and the batch is re-analyzed and re-reported. If no failures are noted, these analyses are
transferred into the QA/QC sheets and the final drilling database is updated with the non-QA/QC samples. 

  

	11.5	Opinion on Adequacy 

 Dia Bras has completed a very limited QA/QC program
consisting of field duplicate sampling during the first few years of its exploration drilling programs. SRK notes that previous technical reports deemed the level of QA/QC consistent with industry best practices and cautions that, based on
SRK’s extensive experience, this is not the case. 
 SRK is of the opinion that, given the recent QA/QC results and comparison to
the PV mill, as well as the fact that Bolivar is a producing mine with a robust production history, that the quality of the analytical data is sufficient to report mineral resources in the Indicated and Inferred categories. SRK strongly advises Dia
Bras to continue to support ongoing QA/QC monitoring and document the procedures and methods for actions to be taken in the event of failures. 

  
  

					
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	12	Data Verification 

  

	12.1	Procedures 

 SRK was provided with 441 analytical certificates from ALS Minerals
for the 23,000 analyses in the database. SRK reviewed and compared 89 (20%) of the certificates containing 9% of the assays. SRK notes that there were only four certificates that contained information that was inconsistent with the database, and
that these appear to have been reanalyzed and replaced in the database based on similar values between the electronic database and the assay certificate values. 

In addition Gustavson and RPA have conducted other means of data validation in previous reports and found the data to be sufficient in
terms of accuracy for use at those times. 
  

	12.2	Limitations 

 SRK did not review 100% of the analyses from the analytical
certificates as a part of this report. In addition, SRK reviewed analyses from certificates that are likely to have been reanalyzed either as a part of the recent resampling program or over the normal course of the previous 6 years of work. 

 

	12.3	Opinion on Data Adequacy 

 SRK is of the opinion that the data provided is adequate
for estimation of Mineral Resources and classification in the Indicated and Inferred categories. 

  
  

					
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	13	Mineral Processing and Metallurgical Testing 

  

	13.1	Testing and Procedures 

 Bolivar facilities include a metallurgical laboratory at
site. Sampling and testing of samples are executed on an as-needed basis. No testwork results were available at this time for the areas being mined currently or for the new prospects being explored. 

 

	13.2	Recovery Estimate Assumptions 

 Various development and test mining has occurred at
the Bolivar mine under Dia Bras ownership since 2005. Prior to late 2011, no processing facilities were available on site, and the ore was trucked to the Cusi Mine’s Malpaso mill located 270 km by road. Bolivar’s Piedras Verdes processing
facilities started operating in October 2011 at 1,000 tonnes per day of nominal throughput. The ore processing capacity was expanded to 2,000 tonnes per day in mid-2013. The mill has been upgraded since and
the current nominal throughput capacity is 3,000 tonnes per day. 
 Piedras Verdes’ monthly average metallurgical performance for
the last twelve month is shown in Figure 13-1. 
 During 2016 Piedras Verdes consistently
produced copper concentrate of commercial quality with copper grade ranging between 27 %Cu to 29 %Cu, silver content in concentrate ranging from 369 g/t to 538 g/t, and gold content in concentrate ranging from 2.2 g/t to 4/5 g/t. Metal recovery for
copper, silver, and gold averaged 81.8%, 78.1% and 52.1%, respectively. 
  
 

 
 Source: SRK 

Figure 13-1: Piedras Verdes Monthly Average Performance - 2016 

An analysis of the recovery relationship between copper and credit metals is shown in Figure
13-2. Silver and gold’s recovery shows a general positive correlation with copper; nevertheless, all metals 

  
  

					
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 show large variations in recovery. Copper recovery ranged from approximately 50% to 98%
with the vast majority of results in the 65% to 88% range. Silver recovery ranged from 50% to 100%, and gold ranged from about 5% up to 90% with a higher concentration of results around 55%. SRK recommends that Piedras Verdes analyze ways to
stabilize the recovery operations with the purpose of achieving consistent metallurgical performance. 
  

 
 Source: SRK 

Figure 13-2: Recovery Relationship of Cu vs. Ag and Au 

  
  

					
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	14	Mineral Resource Estimate 

 Matthew Hastings, M.Sc., C.P. AusIMM, has conducted the
mineral resource estimation (MRE) as described herein. Mr. Hastings has relied on the commentary and expertise of Dia Bras and Sierra Metals personnel over the course of the study. 

 

	14.1	  Drillhole and Channel Sample Database 

 Information supporting the MRE
is derived from databases of drilling information as well as underground channel sample information. 
  

	14.1.1	  Drilling Database 

 The drilling database contains 878 drillholes
totaling to 176,600 meters. Within this dataset, there are only 692 holes with assay data from 22,981 intervals with a total length of 25,638 m. Decisions regarding whether an interval is sampled is made by site geology personnel on the basis of
geologic logging. The drilling history (Table 14-1) of Bolivar has been documented since 2003, and features a number of different types of drilling (Table 14-2) and
various periods of activity. Drilling information for some older holes has been lost, or the type of drilling is unknown, and these holes have been removed from the database. 

The database is maintained in Microsoft Access and provided to SRK in Microsoft Excel format tables, with collar information, hole
orientation information, geology logging, analytical data, and geotechnical data (Table 14-3). 

Table 14-1: Bolivar Drilling History 

 

															
	Year  	  	Count	 	 	Meters	 	  	% of Total  	 	  	 
	2003	  	 	1	 	 	 	202	 	  	 	0  	 	  	
	2004	  	 	100	 	 	 	16,026	 	  	 	9  	 	  	
	2005	  	 	74	 	 	 	13,129	 	  	 	7  	 	  	
	2006	  	 	67	 	 	 	10,720	 	  	 	6  	 	  	
	2007	  	 	123	 	 	 	25,095	 	  	 	14  	 	  	
	2008	  	 	117	 	 	 	24,006	 	  	 	14  	 	  	
	2009	  	 	69	 	 	 	8,521	 	  	 	5  	 	  	
	2010	  	 	67	 	 	 	9,155	 	  	 	5  	 	  	
	2011	  	 	49	 	 	 	9,307	 	  	 	5  	 	  	
	2012	  	 	45	 	 	 	14,161	 	  	 	8  	 	  	
	2013	  	 	27	 	 	 	11,402	 	  	 	6  	 	  	
	2014	  	 	29	 	 	 	5,646	 	  	 	3  	 	  	
	2015	  	 	76	 	 	 	18,446	 	  	 	10  	 	  	
	2016	  	 	34	 	 	 	10,789	 	  	 	6  	 	  	

 Source: Dia Bras, 2016 

Table 14-2: Drilling Types 

 

									
	Hole Type  	  	Count  	  	Meters	 	  	 
	 Unknown
	  	45  	  	 	7,639	 	  	
	 NQ
	  	143  	  	 	28,327	 	  	
	 BTW
	  	23  	  	 	1,818	 	  	
	 HQ_NQ
	  	349  	  	 	102,193	 	  	
	 HQ
	  	6  	  	 	2,298	 	  	
	 BQ
	  	313  	  	 	34,472	 	  	

 Source: Dia Bras, 2016 

  
  

					
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 Table 14-3: Descriptive Statistics –
All Drilling 
  

																									
	Column  	  	Count  	  	Min  	  	Max	 	  	Mean	 	  	Variance	 	  	St Dev	 	  	CV	  	 
	 Length
	  	25,564  	  	0.002  	  	 	800.55	 	  	 	5.94	 	  	 	756.60	 	  	 	27.51	 	  	4.63	  	
	 Au
	  	19,610  	  	0.003  	  	 	14.60	 	  	 	0.11	 	  	 	0.19	 	  	 	0.43	 	  	4.08	  	
	 Ag
	  	20,999  	  	0.001  	  	 	4,720.00	 	  	 	12.83	 	  	 	3,504.00	 	  	 	59.19	 	  	4.61	  	
	 Cu
	  	20,762  	  	0.001  	  	 	42.07	 	  	 	0.48	 	  	 	2.10	 	  	 	1.45	 	  	3.03	  	
	 Pb
	  	19,825  	  	0.001  	  	 	8.05	 	  	 	0.02	 	  	 	0.01	 	  	 	0.12	 	  	6.16	  	
	 Zn
	  	20,998  	  	0.001  	  	 	52.09	 	  	 	1.12	 	  	 	20.02	 	  	 	4.47	 	  	4.01	  	

 Source: Dia Bras, 2016 
  

	14.1.2	Downhole Deviation 

 Only 41 of the 692 drillholes have downhole deviation
measurements. This has only been in practice for a selection of holes since the 2013 drilling campaign. Survey methods include gyro, Deviflex, and Reflex tooling. For these holes, the purpose of the survey is to assess deviation and determine
whether it is a factor for the accuracy of drilling information. In general, this has been done on 20 to 50 m intervals for the majority of holes, with much closer spacing on surveys for a selection of newer 2016 holes. In all cases, the surveys
show that the initial angle of the drill setup is frequently five or more degrees off on the intended azimuth, and that subsequent surveys taken down-hole vary significantly from the first indicating substantial deviation (Table 14-4). The survey deviations are not consistent within the measurement data and the results indicate that un-surveyed drillholes could be materially off of the planned azimuth
which is recorded into the database. SRK notes that this is resolved in newer 2016 drilling, with downhole surveys that closely approximate the planned azimuth taken at the drill collar. 

The average azimuth downhole deviation for these 41 surveyed holes is highly variable, with some holes exhibiting very little deviation
and others more than 15 degrees over the course of the hole. Thus, SRK is of the opinion that downhole surveys should be collected on a more regular basis and used as a matter of course during ongoing drilling, at intervals of no more than 50 m. The
uncertainty associated with the position of the majority of the drilling is a major contributor to the classification of the resource. 

  
  

					
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 Table 14-4: Example of drilling
deviations 
  

																					
	 	 	Hole Name  	  	Depth	 	  	Azimuth	 	  	Dip	 	  	Type	  	 	  	 
		 	DB15B491	  	 	0	 	  	 	75	 	  	 	-55	 	  	Reflex 	  		  	
		 	DB15B491	  	 	50	 	  	 	49.6	 	  	 	-55.3	 	  	Reflex	  		  	
	         
	 	DB15B491	  	 	100	 	  	 	49.8	 	  	 	-55.5	 	  	Reflex	  		  	
		 	DB15B491	  	 	150	 	  	 	49.9	 	  	 	-55.9	 	  	Reflex	  		  	
		 	DB15B491	  	 	250	 	  	 	50.6	 	  	 	-55.8	 	  	Reflex	  		  	
		 	DB15B494	  	 	0	 	  	 	75	 	  	 	-80	 	  	Reflex	  		  	
		 	DB15B494	  	 	50	 	  	 	66.3	 	  	 	-80.5	 	  	Reflex	  		  	
		 	DB15B494	  	 	100	 	  	 	63.9	 	  	 	-80.2	 	  	Reflex	  		  	
		 	DB15B494	  	 	150	 	  	 	66.3	 	  	 	-80.4	 	  	Reflex	  		  	
		 	DB15B494	  	 	200	 	  	 	66.2	 	  	 	-80	 	  	Reflex	  		  	
		 	DB15B494	  	 	250	 	  	 	67.1	 	  	 	-80.5	 	  	Reflex	  		  	
		 	DB15B494	  	 	290	 	  	 	67.1	 	  	 	-80.4	 	  	Reflex	  		  	
		 	DB15B495	  	 	0	 	  	 	75	 	  	 	-60	 	  	Reflex	  		  	
		 	DB15B495	  	 	50	 	  	 	59.4	 	  	 	-59.4	 	  	Reflex	  		  	
		 	DB15B495	  	 	100	 	  	 	59.6	 	  	 	-59.3	 	  	Reflex	  		  	
		 	DB15B495	  	 	150	 	  	 	59.6	 	  	 	-59.3	 	  	Reflex	  		  	
		 	DB15B495	  	 	200	 	  	 	58.8	 	  	 	-59	 	  	Reflex	  		  	
		 	DB15B495	  	 	240	 	  	 	58.8	 	  	 	-59.1	 	  	Reflex	  		  	

 Source: Dia Bras, 2016 
  

	14.1.3	Channel Sample Database 

 The channel sample database is kept in a series of
AutoCAD (CAD) files, either within embedded tables or as graphic information in the file itself. SRK was provided these AutoCAD files and extracted the information from the files to create an Excel database of points and values for the elements
analyzed. Coordinates for the points are taken from the approximate X,Y coordinate positions of the CAD files and the Z elevation is derived from the matching 3D asbuilt data provided for the levels. SRK located 1,278 channel samples using this
method, and notes that only 881 of these have analyses for Cu or other metals. It is presumed that the others were also analyzed, but that these values have been lost. 

SRK notes that not all elements were analyzed consistently within the channel samples, with Cu being the overwhelming majority, and
comparably fewer samples analyzed for Pb, Zn, Ag, and Au. The simple descriptive statistics for the El Gallo Superior (EGS) channel samples are shown in Table 14-5. 

Table 14-5: Descriptive Statistics – EGS Channel Samples 

 

																																	
	 	 	Column  	  	Count	 	  	Min	 	  	Max	 	  	Mean	 	  	Variance	 	  	St Dev	 	  	CV	 	  	 
		 	 Ag
	  	 	23	 	  	 	1.3	 	  	 	68.1	 	  	 	20.07	 	  	 	428.10	 	  	 	20.69	 	  	 	1.03	 	  	
		 	 Cu
	  	 	881	 	  	 	0.001	 	  	 	20.4	 	  	 	1.29	 	  	 	2.12	 	  	 	1.46	 	  	 	1.13	 	  	
	             
	 	 Pb
	  	 	139	 	  	 	0.001	 	  	 	1.36	 	  	 	0.03	 	  	 	0.01	 	  	 	0.12	 	  	 	3.55	 	  	
		 	 Zn
	  	 	881	 	  	 	0.001	 	  	 	25.68	 	  	 	1.07	 	  	 	9.05	 	  	 	3.01	 	  	 	2.8	 	  	

 Note: Au not assayed for in channel sample data. 

Source: Dia Bras, 2016 

At this time, the channel sample data only applies to the EGS orebody, and has only been used to estimate mineral resources into the
pillars from this area. Due to uncertainty associated with translating this data from AutoCAD spreadsheets in terms of precision of location in 3D, SRK judges it to be suitable only for support of Indicated and Inferred Mineral Resources. 

  
  

					
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	14.1.4	Missing and Unsampled Intervals 

 The handling of missing and unsampled intervals
for the Bolivar data is critical to the estimation. There are many cases where samples are not present in the database for significant thicknesses, or the entire drillholes. In most cases, this is because the geologist logging the drillhole did not
note mineralization or material of interest and did not deem the interval worth sampling. However, SRK notes that there were other factors that may have contributed to intervals not having assay results. Some assays have been lost or deemed of too
low confidence by Dia Bras to include in the MRE. Others are partial analyses, meaning that Cu was analyzed, but not Au. For example, there are about 1,000 less Au analyses in total than Cu, which is a function of the analytical capability of the
Piedras Verdes lab prior to installation of a fire assay circuit. All modern assays feature the complete elemental suite, and SRK is of the opinion that these incomplete, historic assays are not likely to materially affect the mineral resources in
areas yet to be mined. 
 In a select few obvious cases, SRK advised Dia Bras (prior to this work) that they should sample those
intervals that clearly should cross the mineralized body based on other nearby drilling or sampling. Dia Bras did this, and submitted modern QA/QC along with the selection of samples to effectively “infill” most of these areas. 

In general, SRK handled the missing or unsampled intervals as follows: 

 

	 	•	 	 Drillholes where the entire hole was missing assays were removed from the database used in estimation. They may have
still been used to drive the geology interpretation. These are predominantly in the oldest areas of the Bolivar mine area, or areas which are not included in the current resource estimation. 

	 	•	 	 If a drillhole had at least one sample interval, any remaining unsampled intervals are assigned a value of 0.001 (g/t or
%). 

	 	•	 	 If a sample has analyses for Cu, but missing other elements, these are also given a value of 0.001 (g/t or %).

	 	○ 	 	 SRK judges this to be conservative but notes that it accounts for the variations in data density, in which one cannot
assign the same level of confidence to an area using 25 samples for Cu, for example, with only five samples for Au. 

	 	○ 	 	 SRK notes that this effect is minimal and only affects some of the older drilling that is in the upper and mined out
areas of the deposits. 

  

	14.2	Geologic Model 

 Geology and mineralization models were constructed in 3D to serve
as limits and guides for interpolation of grades during the mineral resource estimation. 
  

	14.2.1	Project Area Regional Geology 

 SRK utilized surface mapping, interpreted cross
sections, underground exposure data, and drilling information to generate a model of the regional geology. This includes the major lithologies and structures in the area. This was used primarily to flag the block model with rock types that were used
to assign bulk densities, estimate rock quality, or estimate geochemical qualities for waste/ore. The support and results of this work are presented in Figures 4-1 and
14-2. 

  
  

					
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      Source: SRK, 2016 

    Figure 14-1: Plan View of Bolivar Area Geology Map 

  
  

					
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 Source: SRK, 2016 

Figure 14-2: Perspective View of Mapped vs. Modeled Geology 

 

	14.2.2	Bolivar Area Mineralization 

 The model for the mineralized bodies in the Bolivar
area was initially constructed by Dia Bras geologists using Leapfrog Geo software to implicitly model skarn contacts and volumes from the drilling information. SRK reviewed and revised the model as needed, collaborating with Dia Bras to ensure that
it is representative of the mineralization for the area. Three high angle normal faults are known to locally offset the mineralized orebodies where they cross, and have been incorporated into the model. A layout of the mineralized bodies is shown in
Figure 14-3 and Figure 14-4. 

  
  

					
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 Source: SRK, 2016 

Figure 14-3: Plan View of Bolivar Mineralization Model 

 
  
 

 
 Source: SRK, 2016 

Figure 14-4: Orthogonal View of Bolivar Mineralization Model 

  
  

					
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 In all, 18 mineralized bodies were modeled as resource domains for the Bolivar area, as
shown in Table 14-6. SRK notes that there are other mineralized bodies defined by Dia Bras geologists, but that the level of drilling was insufficient to define the orientation or extents of the
mineralization, and they were excluded from the grade estimation. The individual domain codes are used to describe these areas throughout this report, as well as in statistical and comparison tables as follows. After modeling of these domains, SRK
evaluated the sample density and statistical grade distribution for the four commodities of interest (Ag, Au, Cu, Pb, and Zn). As shown in Figure 14-5, the majority of samples are in the El Gallo area
(Superior and Inferior) as well as the Chimeneas areas. Descriptive statistics for the grades by domain are summarized in Table 14-7. 

Table 14-6: Bolivar Resource Domains and Codes 

 

					
	Area	  	Code	  	
	Chimenea 1	  	CH1	  	
	Chimenea 2	  	CH2	  	
	El Gallo Inferior	  	EGI	  	
	El Gallo Superior	  	EGS	  	
	1830	  	ET	  	
	Increíble	  	INC	  	
	Northwest Zinc 2	  	NW_ZN2	  	
	Northwest Zinc 3	  	NW_ZN3	  	
	Northwest 1	  	NW1	  	
	Northwest2	  	NW2	  	
	Northwest 3	  	NW3	  	
	Northwest 4	  	NW4	  	
	Northwest 6	  	NW6	  	
	Northwest 7	  	NW7	  	
	Northwest 8	  	NW8	  	
	Step Out	  	SO	  	
	West A	  	WA	  	
	West B	  	WB	  	
	    Source: SRK, 2016	  	

  
  

 
 Source: SRK, 2016 

Figure 14-5: Counts of Cu Samples by Resource Domain 

  
  

					
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 Table 14-7: Descriptive
Drilling Statistics by Resource Domain – Bolivar Area 
  

																									
	Column	  	Domain	  	Count  	  	Min	  	Max	  	Mean	  	Variance  	  	St Dev  	  	CV	  	25%	  	50%	  	75%	  	99%
	Au (g/t)	  	ALL	  	4,125  	  	0.001	  	11.85  	  	0.17  	  	0.40  	  	0.63  	  	3.62  	  	0.00  	  	0.02  	  	0.09  	  	2.48
	  	CH1	  	543  	  	0.001	  	0.70  	  	0.02  	  	0.00  	  	0.04  	  	2.27  	  	0.00  	  	0.00  	  	0.02  	  	0.12
	  	CH2	  	549  	  	0.001	  	2.27  	  	0.03  	  	0.03  	  	0.17  	  	5.17  	  	0.00  	  	0.00  	  	0.02  	  	0.61
	  	EGI	  	1,315  	  	0.001	  	11.85  	  	0.27  	  	0.49  	  	0.70  	  	2.65  	  	0.01  	  	0.06  	  	0.24  	  	3.16
	  	EGS	  	633  	  	0.001	  	10.35  	  	0.15  	  	0.61  	  	0.78  	  	5.16  	  	0.00  	  	0.02  	  	0.07  	  	2.03
	  	ET	  	17  	  	0.001	  	2.06  	  	0.77  	  	0.51  	  	0.71  	  	0.93  	  	0.03  	  	0.83  	  	1.12  	  	2.01
	  	INC	  	358  	  	0.003	  	4.60  	  	0.03  	  	0.06  	  	0.25  	  	9.26  	  	0.00  	  	0.01  	  	0.01  	  	0.16
	  	NW_ZN2  	  	58  	  	0.003	  	5.17  	  	0.35  	  	0.51  	  	0.71  	  	2.05  	  	0.03  	  	0.13  	  	0.38  	  	2.74
	  	NW_ZN3  	  	37  	  	0.003	  	1.24  	  	0.14  	  	0.08  	  	0.28  	  	2.09  	  	0.01  	  	0.02  	  	0.09  	  	1.20
	  	NW1	  	255  	  	0.001	  	10.00  	  	0.52  	  	0.87  	  	0.94  	  	1.80  	  	0.08  	  	0.24  	  	0.56  	  	5.45
	  	NW2	  	23  	  	0.003	  	1.28  	  	0.15  	  	0.06  	  	0.24  	  	1.57  	  	0.01  	  	0.05  	  	0.18  	  	0.99
	  	NW3	  	14  	  	0.033	  	2.80  	  	0.53  	  	0.60  	  	0.78  	  	1.47  	  	0.09  	  	0.23  	  	0.45  	  	2.61
	  	NW4	  	30  	  	0.003	  	4.62  	  	0.37  	  	0.96  	  	0.98  	  	2.66  	  	0.01  	  	0.10  	  	0.16  	  	3.82
	  	NW6	  	22  	  	0.001	  	8.64  	  	0.86  	  	3.94  	  	1.99  	  	2.30  	  	0.02  	  	0.31  	  	0.66  	  	7.36
	  	NW7	  	31  	  	0.041	  	4.71  	  	0.86  	  	1.12  	  	1.06  	  	1.23  	  	0.19  	  	0.32  	  	1.02  	  	4.36
	  	NW8	  	26  	  	0.012	  	3.18  	  	0.40  	  	0.49  	  	0.70  	  	1.77  	  	0.09  	  	0.19  	  	0.33  	  	3.10
	  	SO	  	48  	  	0.001	  	0.12  	  	0.02  	  	0.00  	  	0.03  	  	1.84  	  	0.00  	  	0.00  	  	0.01  	  	0.12
	  	WA	  	137  	  	0.001	  	1.74  	  	0.01  	  	0.01  	  	0.09  	  	7.69  	  	0.00  	  	0.00  	  	0.00  	  	0.13
	  	WB	  	29  	  	0.001	  	0.10  	  	0.00  	  	0.00  	  	0.02  	  	4.12  	  	0.00  	  	0.00  	  	0.00  	  	0.07
	 	  		  		  		  		  		  		  		  		  		  		  		  	
	Column	  	Domain	  	Count  	  	Min	  	Max	  	Mean	  	Variance  	  	St Dev  	  	CV	  	25%	  	50%	  	75%	  	99%
	 Ag (g/t)
	  	ALL	  	4,125  	  	0.000	  	4720.00  	  	23.20  	  	9417.00  	  	97.04  	  	4.18  	  	1.70  	  	7.00  	  	22.00  	  	247.97
	  	CH1	  	543  	  	0.000	  	582.00  	  	38.14  	  	5440.00  	  	73.76  	  	1.93  	  	1.86  	  	6.40  	  	38.04  	  	365.45
	  	CH2	  	549  	  	0.000	  	4720.00  	  	32.15  	  	53876.00  	  	232.11  	  	7.22  	  	1.20  	  	5.53  	  	15.97  	  	422.64
	  	EGI	  	1,315  	  	0.000	  	235.00  	  	15.29  	  	443.80  	  	21.07  	  	1.38  	  	2.60  	  	9.00  	  	20.00  	  	95.91
	  	EGS	  	633  	  	0.000	  	1850.00  	  	21.96  	  	5146.00  	  	71.74  	  	3.27  	  	0.00  	  	6.39  	  	27.90  	  	131.87
	  	ET	  	17  	  	0.000	  	158.00  	  	62.29  	  	2231.00  	  	47.24  	  	0.76  	  	20.89  	  	54.13  	  	85.26  	  	153.13
	  	INC	  	358  	  	0.100	  	580.00  	  	18.23  	  	1804.00  	  	42.47  	  	2.33  	  	1.70  	  	5.70  	  	16.90  	  	150.10
	  	NW_ZN2  	  	58  	  	0.100	  	291.00  	  	28.13  	  	2108.00  	  	45.92  	  	1.63  	  	3.12  	  	10.72  	  	29.00  	  	183.73
	  	NW_ZN3  	  	37  	  	0.100	  	59.70  	  	7.18  	  	183.10  	  	13.53  	  	1.89  	  	0.50  	  	1.34  	  	5.49  	  	56.57
	  	NW1	  	255  	  	0.000	  	90.00  	  	9.20  	  	135.20  	  	11.63  	  	1.26  	  	2.00  	  	4.75  	  	12.00  	  	49.60
	  	NW2	  	23  	  	0.700	  	95.00  	  	26.57  	  	644.00  	  	25.38  	  	0.96  	  	4.97  	  	20.21  	  	31.92  	  	89.94
	  	NW3	  	14  	  	3.700	  	76.00  	  	27.75  	  	459.50  	  	21.44  	  	0.77  	  	9.25  	  	24.00  	  	32.68  	  	73.38
	  	NW4	  	30  	  	1.000	  	119.00  	  	20.97  	  	690.60  	  	26.28  	  	1.25  	  	5.13  	  	9.26  	  	18.35  	  	107.18
	  	NW6	  	22  	  	0.000	  	374.00  	  	86.24  	  	9940.00  	  	99.70  	  	1.16  	  	2.05  	  	47.86  	  	131.04  	  	344.52
	  	NW7	  	31  	  	1.000	  	54.00  	  	14.23  	  	165.10  	  	12.85  	  	0.90  	  	4.23  	  	10.89  	  	16.55  	  	51.84
	  	NW8	  	26  	  	0.800	  	142.00  	  	17.24  	  	809.10  	  	28.44  	  	1.65  	  	4.09  	  	5.95  	  	15.22  	  	117.15
	  	SO	  	48  	  	0.000	  	68.00  	  	9.75  	  	240.50  	  	15.51  	  	1.59  	  	0.50  	  	3.43  	  	9.37  	  	60.21
	  	WA	  	137  	  	0.000	  	669.00  	  	37.76  	  	8320.00  	  	91.22  	  	2.42  	  	2.00  	  	13.00  	  	31.00  	  	540.13
	  	WB	  	29  	  	0.000	  	43.00  	  	10.26  	  	153.00  	  	12.37  	  	1.21  	  	0.69  	  	4.77  	  	14.70  	  	40.85

  
  

					
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	 Table 14-7 (continued)

	
Column
	  	 Domain
	  	Count  	  	Min	  	Max  	  	Mean  	  	Variance  	  	St Dev  	  	CV  	  	25%  	  	50%  	  	75%  	  	99%  
	Cu (%)	  	 ALL
	  	4,125  	  	0.000	  	27.50  	  	0.95  	  	2.81  	  	1.68  	  	1.77  	  	0.07  	  	0.44  	  	1.17  	  	7.58  
	  	 CH1
	  	543  	  	0.000	  	27.50  	  	1.68  	  	11.58  	  	3.40  	  	2.02  	  	0.09  	  	0.38  	  	1.56  	  	17.35  
	  	 CH2
	  	549  	  	0.000	  	19.90  	  	0.75  	  	1.21  	  	1.10  	  	1.46  	  	0.09  	  	0.42  	  	1.01  	  	4.54  
	  	 EGI
	  	1,315  	  	0.000	  	8.94  	  	0.86  	  	1.00  	  	1.00  	  	1.16  	  	0.14  	  	0.59  	  	1.21  	  	4.48  
	  	 EGS
	  	633  	  	0.000	  	12.70  	  	0.87  	  	1.94  	  	1.39  	  	1.59  	  	0.00  	  	0.22  	  	1.24  	  	5.89  
	  	 ET
	  	17  	  	0.000	  	7.13  	  	2.37  	  	3.35  	  	1.83  	  	0.77  	  	0.93  	  	2.17  	  	2.92  	  	6.78  
	  	 INC
	  	358  	  	0.000	  	11.75  	  	0.77  	  	2.06  	  	1.43  	  	1.87  	  	0.07  	  	0.27  	  	0.78  	  	7.18  
	  	 NW_ZN2 
	  	58  	  	0.001	  	3.29  	  	0.37  	  	0.38  	  	0.62  	  	1.67  	  	0.01  	  	0.06  	  	0.42  	  	2.57  
	  	 NW_ZN3 
	  	37  	  	0.001	  	0.74  	  	0.07  	  	0.03  	  	0.16  	  	2.43  	  	0.00  	  	0.01  	  	0.02  	  	0.71  
	  	 NW1
	  	255  	  	0.000	  	5.78  	  	0.76  	  	0.54  	  	0.73  	  	0.97  	  	0.25  	  	0.56  	  	1.12  	  	3.06  
	  	 NW2
	  	23  	  	0.037	  	2.97  	  	1.08  	  	0.70  	  	0.84  	  	0.77  	  	0.41  	  	0.75  	  	1.48  	  	2.94  
	  	 NW3
	  	14  	  	0.187	  	6.44  	  	1.70  	  	3.12  	  	1.77  	  	1.04  	  	0.33  	  	1.15  	  	1.81  	  	6.11  
	  	 NW4
	  	30  	  	0.035	  	2.73  	  	0.70  	  	0.34  	  	0.58  	  	0.82  	  	0.32  	  	0.59  	  	0.93  	  	2.46  
	  	 NW6
	  	22  	  	0.000	  	3.14  	  	1.19  	  	0.98  	  	0.99  	  	0.83  	  	0.18  	  	0.99  	  	1.95  	  	3.09  
	  	 NW7
	  	31  	  	0.083	  	3.18  	  	0.88  	  	0.36  	  	0.60  	  	0.68  	  	0.47  	  	0.85  	  	1.00  	  	2.88  
	  	 NW8
	  	26  	  	0.052	  	3.38  	  	0.85  	  	0.47  	  	0.68  	  	0.80  	  	0.39  	  	0.76  	  	0.96  	  	2.99  
	  	 SO
	  	48  	  	0.000	  	5.75  	  	0.42  	  	1.36  	  	1.17  	  	2.77  	  	0.01  	  	0.02  	  	0.16  	  	5.67  
	  	 WA
	  	137  	  	0.000	  	8.93  	  	1.14  	  	1.77  	  	1.33  	  	1.17  	  	0.22  	  	0.64  	  	1.70  	  	5.05  
	  	 WB
	  	29  	  	0.000	  	7.60  	  	0.92  	  	1.91  	  	1.38  	  	1.51  	  	0.05  	  	0.40  	  	1.17  	  	6.00  
	 	  		  		  		  		  		  		  		  		  		  		  		  	
	
Column
	  	 Domain
	  	Count  	  	Min	  	Max  	  	Mean  	  	Variance  	  	St Dev  	  	CV  	  	25%  	  	50%  	  	75%  	  	99%  
	 Pb (%)
	  	 ALL
	  	4,125  	  	0.000	  	3.93  	  	0.02  	  	0.01  	  	0.08  	  	4.01  	  	0.00  	  	0.00  	  	0.01  	  	0.28  
	  	 CH1
	  	543  	  	0.000	  	1.98  	  	0.04  	  	0.01  	  	0.10  	  	2.52  	  	0.00  	  	0.01  	  	0.04  	  	0.36  
	  	 CH2
	  	549  	  	0.000	  	3.02  	  	0.03  	  	0.01  	  	0.08  	  	2.97  	  	0.00  	  	0.01  	  	0.02  	  	0.29  
	  	 EGI
	  	1,315  	  	0.000	  	0.54  	  	0.01  	  	0.00  	  	0.04  	  	3.74  	  	0.00  	  	0.00  	  	0.00  	  	0.17  
	  	 EGS
	  	633  	  	0.000	  	0.61  	  	0.01  	  	0.00  	  	0.03  	  	2.69  	  	0.00  	  	0.00  	  	0.01  	  	0.09  
	  	 ET
	  	17  	  	0.000	  	0.05  	  	0.01  	  	0.00  	  	0.01  	  	1.18  	  	0.00  	  	0.01  	  	0.01  	  	0.04  
	  	 INC
	  	358  	  	0.000	  	0.53  	  	0.04  	  	0.00  	  	0.06  	  	1.60  	  	0.00  	  	0.01  	  	0.04  	  	0.27  
	  	 NW_ZN2 
	  	58  	  	0.001	  	3.93  	  	0.06  	  	0.16  	  	0.40  	  	6.73  	  	0.00  	  	0.01  	  	0.02  	  	0.48  
	  	 NW_ZN3 
	  	37  	  	0.000	  	0.04  	  	0.01  	  	0.00  	  	0.01  	  	1.20  	  	0.00  	  	0.00  	  	0.01  	  	0.03  
	  	 NW1
	  	255  	  	0.000	  	0.05  	  	0.00  	  	0.00  	  	0.01  	  	2.27  	  	0.00  	  	0.00  	  	0.00  	  	0.03  
	  	 NW2
	  	23  	  	0.000	  	0.13  	  	0.01  	  	0.00  	  	0.02  	  	2.85  	  	0.00  	  	0.00  	  	0.01  	  	0.09  
	  	 NW3
	  	14  	  	0.001	  	0.01  	  	0.00  	  	0.00  	  	0.00  	  	0.71  	  	0.00  	  	0.00  	  	0.01  	  	0.01  
	  	 NW4
	  	30  	  	0.000	  	0.03  	  	0.01  	  	0.00  	  	0.01  	  	1.26  	  	0.00  	  	0.00  	  	0.01  	  	0.03  
	  	 NW6
	  	22  	  	0.000	  	0.03  	  	0.00  	  	0.00  	  	0.01  	  	1.62  	  	0.00  	  	0.00  	  	0.00  	  	0.03  
	  	 NW7
	  	31  	  	0.000	  	0.01  	  	0.00  	  	0.00  	  	0.00  	  	0.96  	  	0.00  	  	0.00  	  	0.00  	  	0.01  
	  	 NW8
	  	26  	  	0.000	  	0.00  	  	0.00  	  	0.00  	  	0.00  	  	0.79  	  	0.00  	  	0.00  	  	0.00  	  	0.00  
	  	 SO
	  	48  	  	0.000	  	0.09  	  	0.02  	  	0.00  	  	0.02  	  	1.16  	  	0.00  	  	0.01  	  	0.03  	  	0.08  
	  	 WA
	  	137  	  	0.000	  	0.89  	  	0.04  	  	0.01  	  	0.11  	  	2.98  	  	0.00  	  	0.01  	  	0.01  	  	0.56  
	  	 WB
	  	29  	  	0.000	  	0.27  	  	0.02  	  	0.00  	  	0.06  	  	2.35  	  	0.00  	  	0.00  	  	0.01  	  	0.24  

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 56

  
  

																									
	 Table 14-7 (continued)

	
Column
	  	 Domain
	  	Count  	  	Min  	  	Max  	  	Mean  	  	Variance  	  	St Dev  	  	CV  	  	25%  	  	50%  	  	75%  	  	99%  
	Zn (%)	  	 ALL
	  	4,125  	  	0.000  	  	47.19  	  	0.34  	  	3.07  	  	1.75  	  	5.10  	  	0.01  	  	0.03  	  	0.14  	  	5.56  
	  	 CH1
	  	543  	  	0.000  	  	8.81  	  	0.22  	  	0.40  	  	0.63  	  	2.87  	  	0.01  	  	0.03  	  	0.14  	  	2.53  
	  	 CH2
	  	549  	  	0.000  	  	3.94  	  	0.07  	  	0.04  	  	0.20  	  	2.68  	  	0.01  	  	0.02  	  	0.06  	  	0.83  
	  	 EGI
	  	1,315  	  	0.000  	  	25.10  	  	0.18  	  	1.04  	  	1.02  	  	5.53  	  	0.01  	  	0.03  	  	0.10  	  	3.14  
	  	 EGS
	  	633  	  	0.000  	  	18.50  	  	0.28  	  	1.64  	  	1.28  	  	4.51  	  	0.00  	  	0.02  	  	0.07  	  	6.47  
	  	 ET
	  	17  	  	0.000  	  	0.60  	  	0.16  	  	0.03  	  	0.17  	  	1.06  	  	0.03  	  	0.08  	  	0.27  	  	0.56  
	  	 INC
	  	358  	  	0.004  	  	30.00  	  	0.58  	  	4.07  	  	2.02  	  	3.48  	  	0.03  	  	0.16  	  	0.45  	  	4.75  
	  	 NW_ZN2 
	  	58  	  	0.011  	  	10.55  	  	1.89  	  	5.97  	  	2.44  	  	1.29  	  	0.20  	  	0.81  	  	2.76  	  	9.59  
	  	 NW_ZN3 
	  	37  	  	0.004  	  	5.72  	  	1.03  	  	1.19  	  	1.09  	  	1.06  	  	0.09  	  	0.91  	  	1.38  	  	4.78  
	  	 NW1
	  	255  	  	0.000  	  	6.75  	  	0.23  	  	0.67  	  	0.82  	  	3.65  	  	0.01  	  	0.02  	  	0.06  	  	5.31  
	  	 NW2
	  	23  	  	0.003  	  	0.42  	  	0.05  	  	0.01  	  	0.08  	  	1.69  	  	0.01  	  	0.02  	  	0.04  	  	0.34  
	  	 NW3
	  	14  	  	0.029  	  	1.19  	  	0.27  	  	0.13  	  	0.36  	  	1.32  	  	0.04  	  	0.09  	  	0.24  	  	1.13  
	  	 NW4
	  	30  	  	0.004  	  	2.21  	  	0.19  	  	0.11  	  	0.33  	  	1.71  	  	0.03  	  	0.07  	  	0.10  	  	1.13  
	  	 NW6
	  	22  	  	0.000  	  	1.64  	  	0.21  	  	0.15  	  	0.39  	  	1.89  	  	0.01  	  	0.07  	  	0.16  	  	1.46  
	  	 NW7
	  	31  	  	0.002  	  	0.09  	  	0.01  	  	0.00  	  	0.02  	  	1.60  	  	0.00  	  	0.01  	  	0.01  	  	0.08  
	  	 NW8
	  	26  	  	0.005  	  	2.78  	  	0.17  	  	0.33  	  	0.58  	  	3.37  	  	0.01  	  	0.02  	  	0.03  	  	2.22  
	  	 SO
	  	48  	  	0.000  	  	47.19  	  	6.37  	  	131.20  	  	11.45  	  	1.80  	  	0.67  	  	1.58  	  	3.84  	  	45.98  
	  	 WA
	  	137  	  	0.000  	  	17.80  	  	0.57  	  	1.61  	  	1.27  	  	2.22  	  	0.03  	  	0.18  	  	0.61  	  	4.73  
	  	 WB
	  	29  	  	0.000  	  	3.34  	  	0.72  	  	0.83  	  	0.91  	  	1.27  	  	0.01  	  	0.40  	  	0.95  	  	3.13  

 Note: Statistics weighted by length, do not include channel samples for EGS. 

Source: SRK, 2016 
  

	14.3	Assay Capping and Compositing 

 SRK evaluated capping of outlier populations and
compositing of variable-length data to minimize variance prior to the estimation as well as obtain a more reasonable approximation of grades during the resource estimation. 
  

	14.3.1	Outliers 

 To assess the potential impact of outlier samples, SRK reviewed grade
distribution within mineralized areas consisting of grouped domains, to determine the impact of these samples on the estimates within the general resource areas. 

Bolivar 
 For the
Bolivar mineralized bodies, SRK evaluated areas of combined domains based on a particular type of mineralization, noting consistencies in form and source of mineralization for each. SRK reviewed the histograms and log probability plots of the data
populations from each area to determine outlier samples as those exhibiting a grade that is not consistent with the greater population or would disproportionately influence the estimation. In some cases, the populations were so low grade or
consistent that outlier capping was not deemed necessary, although this generally occurred only for Pb or Zn. 
 Examples of the
capping analysis for the El Gallo area (for Cu only) are shown in Figure 14-6 and Table 14-8. The same analysis was conducted for the other areas and elements, and is
presented in Appendix B. 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 57

  
  

 

 
 Source: SRK, 2016 

Figure 14-6: Cu Log Probability Plot – El Gallo Area 

Table 14-8: El Gallo Capping Analysis – Cu 

 

																																									
	Column	  	Cap	 	  	Capped
Samples	 	  	Percentile	 	 	Capped %	 	  	Lost %	 	  	CV %	 	  	Mean	 	  	Variance	 	  	CV	 	  	    	 
	 Cu
(%)
	  	 	10	 	  	 	2	 	  	 	99.90	% 	 	 	0.10	 	  	 	0.15	 	  	 	0.29	 	  	 	0.88	 	  	 	1.37	 	  	 	1.34	 	  			
	  	 	7.5	 	  	 	7	 	  	 	99.70	% 	 	 	0.40	 	  	 	0.60	 	  	 	1.70	 	  	 	0.87	 	  	 	1.32	 	  	 	1.32	 	  			
	  	 	5	 	  	 	28	 	  	 	98.90	% 	 	 	1.10	 	  	 	2.80	 	  	 	6.30	 	  	 	0.86	 	  	 	1.16	 	  	 	1.26	 	  			
	  	 	4	 	  	 	62	 	  	 	97.40	% 	 	 	2.60	 	  	 	5.10	 	  	 	10	 	  	 	0.84	 	  	 	1.02	 	  	 	1.21	 	  			
	  	 	3.5	 	  	 	90	 	  	 	96.10	% 	 	 	4.60	 	  	 	7	 	  	 	13	 	  	 	0.82	 	  	 	0.93	 	  	 	1.17	 	  			
	  	 	3	 	  	 	127	 	  	 	95	% 	 	 	6.50	 	  	 	9.80	 	  	 	16	 	  	 	0.80	 	  	 	0.81	 	  	 	1.13	 	  			
	  	 	2.73	 	  	 	156	 	  	 	93	% 	 	 	7.90	 	  	 	12	 	  	 	18	 	  	 	0.78	 	  	 	0.74	 	  	 	1.10	 	  			
	  	 	2.52	 	  	 	178	 	  	 	92	% 	 	 	9.10	 	  	 	14	 	  	 	20	 	  	 	0.76	 	  	 	0.68	 	  	 	1.08	 	  			
	  	 	2.3777	 	  	 	201	 	  	 	91	% 	 	 	10.20	 	  	 	15	 	  	 	21	 	  	 	0.75	 	  	 	0.64	 	  	 	1.06	 	  			
	  	 	2.2691	 	  	 	224	 	  	 	90	% 	 	 	11.40	 	  	 	16	 	  	 	22	 	  	 	0.74	 	  	 	0.61	 	  	 	1.05	 	  			
	  	 	cu > 5	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	6.70	 	  	 	2.28	 	  	 	0.23	 	  			
	  	 	cu <= 5	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	0.81	 	  	 	0.97	 	  	 	1.22	 	  			

 Source: SRK, 2016 

14.3.2 Compositing 
 SRK reviewed the sample
lengths for all the samples in the database and noted them to be relatively consistent in terms of distribution for the Bolivar deposits. Histograms of the sample lengths for each area are shown in Figure
14-7. Based on this review, SRK notes that a nominal 3 m composite length is an appropriate composite size, especially when considered in the context of minimum mining widths which will range from 3 to 6m
depending on the area and deposit type. 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 58

  
  

 Capping was conducted prior to compositing of samples. Short composites were retained,
and accounted for in the length-weighting of the statistics as well as the estimation. The channel sample data used in the EGS area has not been composited or capped, as the Cu grades were rather consistent and the contributions for Ag and Au were
minimal. The results of the compositing for both the Bolivar areas are presented in Table 14-9, Table 14-10, Table 14-11, Table 14-12, and Table 14-13. 

 
 

 
 Source: SRK, 2016 

Figure 14-7: Sample Length Histogram – Bolivar 

 
  

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 59

  
  

 Table 14-9: Composite
Statistics – El Gallo Area 
  

																																			
	Column  	  	Domain	 	Count	 	  	Min	 	  	Max	 	  	Mean	 	  	Variance	 	  	St Dev	 	  	CV	 	  	    	 
	
Au
	  	ALL	 	 	886	 	  	 	0.00	 	  	 	4.42	 	  	 	0.20	 	  	 	0.16	 	  	 	0.40	 	  	 	1.98	 	  			
	  	1830	 	 	6	 	  	 	0.01	 	  	 	1.44	 	  	 	0.77	 	  	 	0.31	 	  	 	0.55	 	  	 	0.72	 	  			
	  	EGI	 	 	536	 	  	 	0.00	 	  	 	2.69	 	  	 	0.24	 	  	 	0.15	 	  	 	0.38	 	  	 	1.56	 	  			
	  	EGS*	 	 	345	 	  	 	0.00	 	  	 	4.42	 	  	 	0.13	 	  	 	0.18	 	  	 	0.42	 	  	 	3.27	 	  			
	
Ag
	  	ALL	 	 	886	 	  	 	0.00	 	  	 	100.00	 	  	 	16.21	 	  	 	317.20	 	  	 	17.81	 	  	 	1.10	 	  			
	  	1830	 	 	6	 	  	 	4.49	 	  	 	94.45	 	  	 	56.02	 	  	 	1,220.00	 	  	 	34.93	 	  	 	0.62	 	  			
	  	EGI	 	 	536	 	  	 	0.00	 	  	 	100.00	 	  	 	14.28	 	  	 	191.90	 	  	 	13.85	 	  	 	0.97	 	  			
	  	EGS*	 	 	367	 	  	 	0.00	 	  	 	100.00	 	  	 	18.72	 	  	 	466.80	 	  	 	21.61	 	  	 	1.15	 	  			
	
Cu
	  	ALL	 	 	886	 	  	 	0.00	 	  	 	4.79	 	  	 	0.85	 	  	 	0.81	 	  	 	0.90	 	  	 	1.06	 	  			
	  	1830	 	 	6	 	  	 	0.66	 	  	 	4.68	 	  	 	2.22	 	  	 	1.30	 	  	 	1.14	 	  	 	0.51	 	  			
	  	EGI	 	 	536	 	  	 	0.00	 	  	 	4.24	 	  	 	0.82	 	  	 	0.56	 	  	 	0.75	 	  	 	0.91	 	  			
	  	EGS*	 	 	1,225	 	  	 	0.00	 	  	 	20.40	 	  	 	1.14	 	  	 	1.84	 	  	 	1.36	 	  	 	1.19	 	  			
	
Pb
	  	ALL	 	 	886	 	  	 	0.00	 	  	 	0.34	 	  	 	0.01	 	  	 	0.00	 	  	 	0.02	 	  	 	2.52	 	  			
	  	1830	 	 	6	 	  	 	0.00	 	  	 	0.02	 	  	 	0.01	 	  	 	0.00	 	  	 	0.00	 	  	 	0.59	 	  			
	  	EGI	 	 	536	 	  	 	0.00	 	  	 	0.34	 	  	 	0.01	 	  	 	0.00	 	  	 	0.03	 	  	 	2.93	 	  			
	  	EGS*	 	 	1,225	 	  	 	0.00	 	  	 	25.68	 	  	 	0.71	 	  	 	6.23	 	  	 	2.50	 	  	 	3.50	 	  			
	
Zn
	  	ALL	 	 	886	 	  	 	0.00	 	  	 	5.00	 	  	 	0.18	 	  	 	0.31	 	  	 	0.56	 	  	 	3.14	 	  			
	  	1830	 	 	6	 	  	 	0.04	 	  	 	0.33	 	  	 	0.16	 	  	 	0.01	 	  	 	0.11	 	  	 	0.69	 	  			
	  	EGI	 	 	536	 	  	 	0.00	 	  	 	4.45	 	  	 	0.15	 	  	 	0.19	 	  	 	0.44	 	  	 	3.00	 	  			
	  	EGS*	 	 	483	 	  	 	0.00	 	  	 	5.00	 	  	 	0.18	 	  	 	0.40	 	  	 	0.63	 	  	 	3.45	 	  			

 *EGS includes uncomposited channel sample data. 

Source: SRK, 2016 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 60

  
  

 Table 14-10: Composite Statistics – Bolivar Northwest
Area 
  

																											
	Column	  	Domain	 	 	Count	 	 	 	Min	 	 	 	Max	 	 	Mean	 	 	Variance	 	 	 	St Dev	 	 	CV
	Au	  	ALL	 	 	211	 	 	 	0.00	 	 	 	3.13	 	 	0.45	 	 	0.35	 	 	 	0.59	 	 	1.30
	  	NW_ZN2	 	 	26	 	 	 	0.00	 	 	 	2.70	 	 	0.34	 	 	0.30	 	 	 	0.55	 	 	1.60
	  	NW_ZN3	 	 	17	 	 	 	0.00	 	 	 	0.51	 	 	0.14	 	 	0.03	 	 	 	0.16	 	 	1.19
	  	NW1	 	 	96	 	 	 	0.00	 	 	 	2.36	 	 	0.50	 	 	0.29	 	 	 	0.54	 	 	1.08
	  	NW2	 	 	15	 	 	 	0.00	 	 	 	0.54	 	 	0.13	 	 	0.02	 	 	 	0.15	 	 	1.14
	  	NW3	 	 	6	 	 	 	0.06	 	 	 	1.78	 	 	0.52	 	 	0.42	 	 	 	0.65	 	 	1.25
	  	NW4	 	 	12	 	 	 	0.01	 	 	 	2.34	 	 	0.37	 	 	0.52	 	 	 	0.72	 	 	1.94
	  	NW6	 	 	11	 	 	 	0.16	 	 	 	2.72	 	 	0.65	 	 	0.65	 	 	 	0.80	 	 	1.23
	  	NW7	 	 	16	 	 	 	0.16	 	 	 	3.13	 	 	0.86	 	 	0.71	 	 	 	0.84	 	 	0.98
	  	NW8	 	 	12	 	 	 	0.04	 	 	 	3.06	 	 	0.40	 	 	0.50	 	 	 	0.70	 	 	1.78
	Ag	  	ALL	 	 	211	 	 	 	0.00	 	 	 	166.35	 	 	17.12	 	 	493.70	 	 	 	22.22	 	 	1.30
	  	NW_ZN2	 	 	26	 	 	 	0.16	 	 	 	113.52	 	 	26.96	 	 	913.50	 	 	 	30.22	 	 	1.12
	  	NW_ZN3	 	 	17	 	 	 	0.18	 	 	 	30.37	 	 	7.18	 	 	84.53	 	 	 	9.19	 	 	1.28
	  	NW1	 	 	96	 	 	 	0.00	 	 	 	34.80	 	 	9.20	 	 	78.01	 	 	 	8.83	 	 	0.96
	  	NW2	 	 	15	 	 	 	0.00	 	 	 	59.69	 	 	22.95	 	 	294.60	 	 	 	17.16	 	 	0.75
	  	NW3	 	 	6	 	 	 	4.60	 	 	 	57.01	 	 	27.31	 	 	309.70	 	 	 	17.60	 	 	0.64
	  	NW4	 	 	12	 	 	 	3.24	 	 	 	72.16	 	 	20.97	 	 	390.80	 	 	 	19.77	 	 	0.94
	  	NW6	 	 	11	 	 	 	24.08	 	 	 	166.35	 	 	73.50	 	 	1,218.00	 	 	 	34.90	 	 	0.47
	  	NW7	 	 	16	 	 	 	1.73	 	 	 	54.00	 	 	14.23	 	 	99.70	 	 	 	9.99	 	 	0.70
	  	NW8	 	 	12	 	 	 	2.54	 	 	 	69.28	 	 	17.24	 	 	467.10	 	 	 	21.61	 	 	1.25
	Cu	  	ALL	 	 	211	 	 	 	0.00	 	 	 	2.78	 	 	0.71	 	 	0.31	 	 	 	0.56	 	 	0.79
	  	NW_ZN2	 	 	26	 	 	 	0.00	 	 	 	2.14	 	 	0.37	 	 	0.31	 	 	 	0.56	 	 	1.52
	  	NW_ZN3	 	 	17	 	 	 	0.00	 	 	 	0.28	 	 	0.07	 	 	0.01	 	 	 	0.09	 	 	1.41
	  	NW1	 	 	96	 	 	 	0.00	 	 	 	2.31	 	 	0.75	 	 	0.25	 	 	 	0.50	 	 	0.67
	  	NW2	 	 	15	 	 	 	0.00	 	 	 	1.59	 	 	0.93	 	 	0.32	 	 	 	0.57	 	 	0.61
	  	NW3	 	 	6	 	 	 	0.29	 	 	 	2.78	 	 	1.34	 	 	0.73	 	 	 	0.85	 	 	0.64
	  	NW4	 	 	12	 	 	 	0.18	 	 	 	1.63	 	 	0.71	 	 	0.16	 	 	 	0.40	 	 	0.56
	  	NW6	 	 	11	 	 	 	0.26	 	 	 	1.86	 	 	1.17	 	 	0.35	 	 	 	0.59	 	 	0.50
	  	NW7	 	 	16	 	 	 	0.39	 	 	 	2.36	 	 	0.87	 	 	0.18	 	 	 	0.43	 	 	0.49
	  	NW8	 	 	12	 	 	 	0.12	 	 	 	1.54	 	 	0.84	 	 	0.20	 	 	 	0.45	 	 	0.53
	Pb	  	ALL	 	 	211	 	 	 	0.00	 	 	 	0.27	 	 	0.01	 	 	0.00	 	 	 	0.02	 	 	3.41
	  	NW_ZN2	 	 	26	 	 	 	0.00	 	 	 	0.27	 	 	0.03	 	 	0.00	 	 	 	0.06	 	 	1.95
	  	NW_ZN3	 	 	17	 	 	 	0.00	 	 	 	0.02	 	 	0.01	 	 	0.00	 	 	 	0.01	 	 	0.74
	  	NW1	 	 	96	 	 	 	0.00	 	 	 	0.03	 	 	0.00	 	 	0.00	 	 	 	0.00	 	 	1.76
	  	NW2	 	 	15	 	 	 	0.00	 	 	 	0.06	 	 	0.01	 	 	0.00	 	 	 	0.01	 	 	1.97
	  	NW3	 	 	6	 	 	 	0.00	 	 	 	0.00	 	 	0.00	 	 	0.00	 	 	 	0.00	 	 	0.27
	  	NW4	 	 	12	 	 	 	0.00	 	 	 	0.02	 	 	0.01	 	 	0.00	 	 	 	0.00	 	 	0.85
	  	NW6	 	 	11	 	 	 	0.00	 	 	 	0.02	 	 	0.00	 	 	0.00	 	 	 	0.01	 	 	1.17
	  	NW7	 	 	16	 	 	 	0.00	 	 	 	0.01	 	 	0.00	 	 	0.00	 	 	 	0.00	 	 	0.84
	  	NW8	 	 	12	 	 	 	0.00	 	 	 	0.00	 	 	0.00	 	 	0.00	 	 	 	0.00	 	 	0.68
	Zn
	  	ALL	 	 	211	 	 	 	0.00	 	 	 	4.56	 	 	0.44	 	 	0.77	 	 	 	0.88	 	 	1.99
	  	NW_ZN2	 	 	26	 	 	 	0.02	 	 	 	4.56	 	 	1.68	 	 	2.14	 	 	 	1.46	 	 	0.87
	  	NW_ZN3	 	 	17	 	 	 	0.12	 	 	 	2.32	 	 	1.02	 	 	0.34	 	 	 	0.59	 	 	0.57
	  	NW1	 	 	96	 	 	 	0.00	 	 	 	3.40	 	 	0.22	 	 	0.38	 	 	 	0.62	 	 	2.83
	  	NW2	 	 	15	 	 	 	0.00	 	 	 	0.22	 	 	0.04	 	 	0.00	 	 	 	0.05	 	 	1.33
	  	NW3	 	 	6	 	 	 	0.04	 	 	 	0.65	 	 	0.28	 	 	0.08	 	 	 	0.28	 	 	1.03
	  	NW4	 	 	12	 	 	 	0.03	 	 	 	0.64	 	 	0.19	 	 	0.04	 	 	 	0.19	 	 	0.99
	  	NW6	 	 	11	 	 	 	0.01	 	 	 	1.26	 	 	0.21	 	 	0.09	 	 	 	0.30	 	 	1.43
	  	NW7	 	 	16	 	 	 	0.00	 	 	 	0.09	 	 	0.01	 	 	0.00	 	 	 	0.02	 	 	1.49
	  	NW8	 	 	12	 	 	 	0.01	 	 	 	1.47	 	 	0.17	 	 	0.18	 	 	 	0.42	 	 	2.49

 Source: SRK, 2016 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 61

  
  

 Table 14-11: Composite Statistics – Chimeneas Area

  

																											
	Column	  	Domain	  	 	Count	 	  	 	Min	 	  	 	Max	 	  	Mean	  	 	Variance	 	  	 	St Dev	 	  	CV
	Au	  	ALL	  	 	452	 	  	 	0.00	 	  	 	1.22	 	  	0.02	  	 	0.01	 	  	 	0.07	 	  	3.40
	  	CH1	  	 	232	 	  	 	0.00	 	  	 	0.22	 	  	0.02	  	 	0.00	 	  	 	0.02	 	  	1.63
	  	CH2	  	 	220	 	  	 	0.00	 	  	 	1.22	 	  	0.03	  	 	0.01	 	  	 	0.10	 	  	3.54
	Ag	  	ALL	  	 	452	 	  	 	0.00	 	  	 	298.40	 	  	27.67	  	 	2,383.00	 	  	 	48.81	 	  	1.76
	  	CH1	  	 	232	 	  	 	0.00	 	  	 	285.10	 	  	36.10	  	 	3,355.00	 	  	 	57.92	 	  	1.60
	  	CH2	  	 	220	 	  	 	0.00	 	  	 	298.40	 	  	18.86	  	 	1,223.00	 	  	 	34.97	 	  	1.85
	Cu	  	ALL	  	 	452	 	  	 	0.00	 	  	 	15.86	 	  	1.17	  	 	3.98	 	  	 	1.99	 	  	1.71
	  	CH1	  	 	232	 	  	 	0.00	 	  	 	15.86	 	  	1.59	  	 	7.03	 	  	 	2.65	 	  	1.67
	  	CH2	  	 	220	 	  	 	0.00	 	  	 	4.16	 	  	0.73	  	 	0.41	 	  	 	0.64	 	  	0.88
	Pb	  	ALL	  	 	452	 	  	 	0.00	 	  	 	0.76	 	  	0.03	  	 	0.00	 	  	 	0.07	 	  	1.92
	  	CH1	  	 	232	 	  	 	0.00	 	  	 	0.76	 	  	0.04	  	 	0.01	 	  	 	0.08	 	  	1.91
	  	CH2	  	 	220	 	  	 	0.00	 	  	 	0.34	 	  	0.03	  	 	0.00	 	  	 	0.05	 	  	1.76
	Zn	  	ALL	  	 	452	 	  	 	0.00	 	  	 	2.00	 	  	0.13	  	 	0.07	 	  	 	0.27	 	  	2.06
	  	CH1	  	 	232	 	  	 	0.00	 	  	 	2.00	 	  	0.19	  	 	0.12	 	  	 	0.35	 	  	1.87
	  	CH2	  	 	220	 	  	 	0.00	 	  	 	0.57	 	  	0.07	  	 	0.01	 	  	 	0.11	 	  	1.50

 Source: SRK, 2016 

Table 14-12: Composite Statistics – Bolivar West 

 

																									
	Column	  	Domain	  	 	Count	 	  	Min	  	 	Max	 	  	Mean	  	 	Variance	 	  	 	St Dev	 	  	CV
	Au	  	ALL	  	 	8	 	  	0.03	  	 	0.45	 	  	0.09	  	 	0.02	 	  	 	0.13	 	  	1.50
	  	WA	  	 	7	 	  	0.03	  	 	0.45	 	  	0.09	  	 	0.02	 	  	 	0.14	 	  	1.54
	  	WB	  	 	1	 	  	0.07	  	 	0.07	 	  	0.07	  	 	0.00	 	  	 	0.00	 	  	0.00
	Ag	  	ALL	  	 	69	 	  	0.53	  	 	188.40	 	  	28.86	  	 	1,206.00	 	  	 	34.72	 	  	1.20
	  	WA	  	 	57	 	  	0.53	  	 	188.40	 	  	31.85	  	 	1,360.00	 	  	 	36.88	 	  	1.16
	  	WB	  	 	12	 	  	0.69	  	 	28.85	 	  	12.67	  	 	85.28	 	  	 	9.24	 	  	0.73
	Cu	  	ALL	  	 	69	 	  	0.06	  	 	3.44	 	  	1.11	  	 	0.68	 	  	 	0.83	 	  	0.74
	  	WA	  	 	57	 	  	0.06	  	 	3.44	 	  	1.12	  	 	0.72	 	  	 	0.85	 	  	0.76
	  	WB	  	 	12	 	  	0.06	  	 	2.70	 	  	1.07	  	 	0.50	 	  	 	0.71	 	  	0.66
	Pb	  	ALL	  	 	69	 	  	0.00	  	 	0.30	 	  	0.04	  	 	0.00	 	  	 	0.07	 	  	1.90
	  	WA	  	 	57	 	  	0.00	  	 	0.30	 	  	0.04	  	 	0.00	 	  	 	0.07	 	  	1.91
	  	WB	  	 	12	 	  	0.00	  	 	0.19	 	  	0.03	  	 	0.00	 	  	 	0.06	 	  	1.88
	Zn	  	ALL	  	 	69	 	  	0.00	  	 	6.17	 	  	0.62	  	 	0.70	 	  	 	0.84	 	  	1.34
	  	WA	  	 	57	 	  	0.00	  	 	6.17	 	  	0.57	  	 	0.74	 	  	 	0.86	 	  	1.50
	  	WB	  	 	12	 	  	0.01	  	 	2.01	 	  	0.89	  	 	0.45	 	  	 	0.68	 	  	0.76

 Source: SRK, 2016 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 62

  
  

 Table 14-13: Composite Statistics – Increíble
Area 
  

																															
	Column	  	Domain	  	 	Count	 	  	 	Min	 	  	 	Max	 	  	 	Mean	 	  	 	Variance	 	  	 	St Dev	 	  	 	CV	 
	Au	  	ALL	  	 	168	 	  	 	0.00	 	  	 	1.57	 	  	 	0.02	 	  	 	0.02	 	  	 	0.13	 	  	 	5.86	 
	  	INC	  	 	129	 	  	 	0.00	 	  	 	1.57	 	  	 	0.03	 	  	 	0.02	 	  	 	0.14	 	  	 	5.62	 
	  	SO	  	 	39	 	  	 	0.00	 	  	 	0.09	 	  	 	0.01	 	  	 	0.00	 	  	 	0.02	 	  	 	2.29	 
	Ag	  	ALL	  	 	168	 	  	 	0.00	 	  	 	77.89	 	  	 	12.60	 	  	 	259.50	 	  	 	16.11	 	  	 	1.28	 
	  	INC	  	 	129	 	  	 	0.00	 	  	 	77.89	 	  	 	14.72	 	  	 	281.90	 	  	 	16.79	 	  	 	1.14	 
	  	SO	  	 	39	 	  	 	0.00	 	  	 	64.79	 	  	 	4.95	 	  	 	107.40	 	  	 	10.36	 	  	 	2.09	 
	Cu	  	ALL	  	 	168	 	  	 	0.00	 	  	 	3.95	 	  	 	0.57	 	  	 	0.56	 	  	 	0.75	 	  	 	1.32	 
	  	INC	  	 	129	 	  	 	0.00	 	  	 	3.55	 	  	 	0.67	 	  	 	0.54	 	  	 	0.74	 	  	 	1.10	 
	  	SO	  	 	39	 	  	 	0.00	 	  	 	3.95	 	  	 	0.20	 	  	 	0.48	 	  	 	0.69	 	  	 	3.44	 
	Pb	  	ALL	  	 	168	 	  	 	0.00	 	  	 	0.36	 	  	 	0.03	 	  	 	0.00	 	  	 	0.04	 	  	 	1.54	 
	  	INC	  	 	129	 	  	 	0.00	 	  	 	0.36	 	  	 	0.03	 	  	 	0.00	 	  	 	0.05	 	  	 	1.40	 
	  	SO	  	 	39	 	  	 	0.00	 	  	 	0.07	 	  	 	0.01	 	  	 	0.00	 	  	 	0.01	 	  	 	1.58	 
	Zn	  	ALL	  	 	168	 	  	 	0.00	 	  	 	9.99	 	  	 	0.74	 	  	 	2.28	 	  	 	1.51	 	  	 	2.04	 
	  	INC	  	 	129	 	  	 	0.00	 	  	 	6.74	 	  	 	0.48	 	  	 	0.72	 	  	 	0.85	 	  	 	1.78	 
	  	SO	  	 	39	 	  	 	0.00	 	  	 	9.99	 	  	 	1.70	 	  	 	6.89	 	  	 	2.63	 	  	 	1.55	 

 Source: SRK, 2016 
  

	14.4	Density 

 Density measurements have been taken at Bolivar from both drill core and
hand samples from the underground workings. 
 In the case of both, density has been assessed via the standard immersion method,
measuring the mass of the sample in air and then water, and taking the difference between the two. SRK notes that this method is reasonable. In addition, Bolivar has data from ongoing production supporting an average density of material through the
plant that generally fluctuates around 3.7 g/cm3. 
 The samples from drill core
do not feature corresponding lithologies or mineralized bodies that allow for correlation, but SRK has plotted them in the context of the geologic model. Unfortunately, the majority have been taken from areas in the older Bolivar mine areas, which
are not modeled for the purposes of this updated MRE. There are 343 samples from these areas, with an average density of 3.44 g/cm3. Considering only those samples where Cu >0.5%, the average density increases    to 3.64
g/cm3. Given this general agreement with the average 3.7 g/cm3 density determined by the plant, SRK finds it reasonable to assume that the mineralized areas in Bolivar share this density. SRK notes that the actual density is likely variable, as
densities from the drill core vary between 1.5 and 4.5 g/cm3. 
 For other
lithologies in the area, SRK does not have corresponding density measurements provided by Dia Bras. For the other areas, SRK has assigned densities based on published density measurements as well as SRK internal data for corresponding rock types
from similar projects. The density assigned to the various lithologies and mineralization types is summarized in Table 14-14. 

SRK notes that the absence of density data for the surrounding areas are significant considerations in the lack of a Measured
classification for the Bolivar Mineral Resources. 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 63

  
  

 Table 14-14: Densities by Lithology 

 

							
		 	  Lithology
	  	Density (g/cm3)  	  	    
	     
	 	  Granodiorite
	  	2.68  	  	
		 	  Andesite
	  	2.57  	  	
		 	  Hornfels
	  	2.80  	  	
		 	  Marble
	  	2.72  	  	
		 	  Skarn
	  	3.26  	  	
		 	  Mineralized Skarn
	  	3.70  	  	
		 	  Rhyolite
	  	2.20  	  	
		 	  Vein
	  	2.70  	  	

 Source: SRK, 2016 
  

	14.5	Variogram Analysis and Modeling 

 Using the capped and composited data, SRK
reviewed the sample continuity within the El Gallo orebodies as well as the La Sidra vein. Other orebodies did not feature sufficient samples or continuity to generate reasonable variograms for modeling continuity. In addition, many of the
mineralized areas feature high variances (even after capping and compositing) which made modeling of the variograms very difficult or impossible. 
  

	14.5.1	El Gallo Inferior (Bolivar Areas) 

 First, SRK modeled multiple directional
variograms in 10° increments to generate continuity models within horizontal, along strike, and dip plane continuities for Cu, Au, and Ag in the El Gallo Inferior (EGI) area and Au and Ag in the La Sidra area. Counts of modeled variogram points
below the sill for each variogram are used to flag the highest continuities in each direction by calculating a ratio of these points below the sill to the total number of points in the range of the variogram. After a direction of continuity in each
plane is modeled, a variogram for the down-hole samples is modeled to determine the nugget effect to be used on modeling the other variograms. Finally, the directional variograms are calculated and modeled, yielding three variograms with a
consistent continuity model. In the case of EGI, this model results in a flattened ellipsoid oriented roughly in the orientation of the orebody. The continuity model is shown in Figure 14-9. The same
methodology was applied for both Au and Ag, and Pb and Zn were not modeled, as continuities are assumed to be related to the Cu mineralization. 

Ranges for the Cu variograms are between about 150 m in the major orientation (along strike) to less than 20 m in the minor orientation
(hanging wall to footwall). Given that EGI is the only area within the Bolivar area with sufficient sample density to produce reasonable variograms, SRK elected to use ordinary kriging for this area only, but relied on the continuity models
calculated for this representative orebody to provide reasonable ranges of interpolation for the other Bolivar mineralized areas. 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 64

  
  

 

 
 Source: SRK, 2016 

Figure 14-8: EGI Directional Variogram Model – Cu 110o Azimuth 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
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 Source: SRK, 2016 

Note: Directional variogram models superimposed onto a single graph. 

Figure 14-9: EGI Complete Variogram Models - Cu 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 66

  
  

  
 

 
 Source: SRK, 2016 

Note: Directional variogram models superimposed onto a single graph. 

Figure 14-10: EGI Complete Variogram Models – Ag 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 67

  
  

  
 

 
 Source: SRK, 2016 

Note: Directional variogram models superimposed onto a single graph. 

Figure 14-11: EGI Complete Variogram Models – Au 

The results of the variogram analysis are used as inputs for the ordinary kriging algorithm used in the EGI grade estimation. Again, the
parameters for Cu have been utilized for the estimation of Pb and Zn as well, as the mineralization is spatially related and modeling of Pb and Zn variograms was not critical due to the limited importance of these elements to the economics of the
project. The variogram models and kriging parameters for Cu, Au, and Ag were used in the estimation for EGI in VulcanTM 3D Mining software, and are summarized in Table 14-15. 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 68

  
  

     Table 14-15: EGI
Variogram Models 
  

																																			
	Column  	  	Nugget	 	  	Str 1 Sill	 	 	Orientation  	 	Bearing	 	  	Dip	 	  	Str 1 Range (m)	 	  	Str 2 Sill	 	  	Str 2 Range (m)	 
	Cu (%)  	  	 	0.2	 	  	 	0.49	 	 	Major	 	 	110	 	  	 	0	 	  	X    	  	 	50	 	  	 	0.4	 	  	X    	  	 	153	 
	  	  	 	Semi-Major  	 	 	20	 	  	 	-20	 	  	Y    	  	 	75.5	 	  	  	Y    	  	 	101	 
	  	  	 	Minor	 	 	20	 	  	 	80	 	  	Z    	  	 	12	 	  	  	Z    	  	 	29	 
	Ag (g/t)  	  	 	0.31	 	  	 	0.54	 	 	Major	 	 	90	 	  	 	0	 	  	X    	  	 	55	 	  	 	0.15	 	  	X    	  	 	100	 
	  	  	 	Semi-Major  	 	 	0	 	  	 	-20	 	  	Y    	  	 	60	 	  	  	Y    	  	 	60	 
	  	  	 	Minor	 	 	0	 	  	 	70	 	  	Z    	  	 	10	 	  	  	Z    	  	 	20	 
	Au (g/t)  	  	 	0.2	 	  	 	0.49	 	 	Major	 	 	290	 	  	 	0	 	  	X    	  	 	54	 	  	 	0.31	 	  	X    	  	 	100	 
	  	  	 	Semi-Major  	 	 	20	 	  	 	-20	 	  	Y    	  	 	45	 	  	  	Y    	  	 	85	 
	  	  	 	Minor	 	 	20	 	  	 	70	 	  	Z    	  	 	5	 	  	  	Z    	  	 	10	 

           Source: SRK, 2016 

 

	14.6	Block Model 

 SRK constructed two block models for the Bolivar areas in
VulcanTM 3D Mining software. Sub- blocking was used to better define geologic contacts and eliminate the need for partial percent calculations in larger blocks. Blocks have been sub-blocked and flagged by lithologies and mineralized bodies, as well as topography and for mined out volumes. 

SRK built a separate block model for the EGS area to focus on reporting the resource from the pillars in that area. This model is
constructed of generally smaller block sizes to account for the presence of the closely-spaced channel sample data, as well as the dimensions of the pillars. 

A summary of the block models’ designs are shown in Table 14-16 and Table 14-17. 
 Table 14-16: Bolivar (EGI) Block Model
Parameters 

 
													
	Bolivar	  	X	 	  	Y	 	  	Z	 
	 Origin
	  	 	9100	 	  	 	9200	 	  	 	1330	 
	 Extents
	  	 	11140	 	  	 	10568	 	  	 	2194	 
	
Block Min (m)
	  	 	1	 	  	 	1	 	  	 	1	 
	
Block Max (m)
	  	 	24	 	  	 	24	 	  	 	12	 

 

     

 

	 	
    Note: Sub-blocks are limited to a maximum of 6 
m x 6 m x 6 m within the mineralized bodies.

    Source: SRK, 2016 

Table 14-17: EGS Pillars Block Model Parameters

 
													
	EGS Pillars	  	X	 	  	Y	 	  	Z	 
	 Origin
	  	 	10120	 	  	 	9270	 	  	 	1742	 
	 Extents
	  	 	10678	 	  	 	9588	 	  	 	1946	 
	
Block Min (m)
	  	 	1	 	  	 	1	 	  	 	1	 
	
Block Max (m)
	  	 	3	 	  	 	3	 	  	 	3	 

        Source: SRK, 2016

     

 

  

	14.7	Estimation Methodology 

 SRK used the capped and composited data within the
individual mineralized domains to interpolate grades for Ag, Au, Cu, Pb, and Zn into the block models. The individual mineralization domains listed above in Section 14.2.2 were used as hard boundaries, with the samples within each domain being used
to only estimate blocks within the same. With the exception of the EGI orebody, an inverse 

  
  

					
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distance squared (ID2) method was used to interpolate grade. EGI used an ordinary kriging (OK) method based on the variograms modeled in that area. 

A three-pass nested search was utilized for each area, with dimensions of the search ellipsoid increasing in each pass. Search ranges for
the ellipsoids are generally based on the EGI variogram ranges, and SRK notes that a nominal 75 m range in the second pass is consistent with approximately 50% of the maximum variogram range. The initial shorter range estimation pass is designed to
estimate blocks that may be considered as higher confidence resources if the quality of the supporting data and information could be improved. The search ellipsoid was oriented parallel to the strike and dip of the mineralization, and had a
flattened shape to approximate the tabular nature of mineralization. 
 In cases where the orientation or thicknesses of the
mineralized areas are variable, such as EGI, directional search anisotropy has been used in the estimate to vary the orientation of the search ellipsoid as a function of the orientation of hangingwall and footwall surfaces bounding mineralization.
Each block utilizes the distance of that block between the bounding surfaces, and varies the thickness of the ellipsoid and its orientation as a weighted average of the orientation of the surfaces closest to the block. The vertical thickness of the
ellipsoid is defined by the estimation parameters as a percentage of the total thickness between the two surfaces at any given point. This allows the estimation to be informed by the variable geometry of the mineralization solids, which is
reasonable and consistent with observations from the existing mining operations as well as common knowledge for this type of mineralization 

The effect is most pronounced in deposits where the location of the hanging wall or footwall is known to control the distribution of
grade, with higher grades locally being associated with a specific upper or lower contact in the mineralized body. Rather than truncating these grades by using a single ellipsoid (or even several) this method effectively “unfolds” these
contacts, allowing grades to be interpolated along them. 
 Exceptions to the general estimation methodology are as follows: 

 

	 	•	 	An additional, first estimation pass was utilized in EGS, using only the channel samples to estimate blocks within an approximate 5 m radius. This was done to better estimate the grade in the pillar areas where the
channel samples exist. Channel samples were not composited. Rather, a nominal 2 m length is assigned based on information from the CAD drawings. They also were left uncapped since analysis of the channels did not show that capping was required for
the Cu assays, and Au and Ag were generally not analyzed for the channel sample data. 

  

	 	•	 	Single ellipsoid orientations are adequate for the Bolivar Northwest (BNW) area, as the mineralized bodies are relatively consistent in thickness and orientation. 

The estimations were refined over an iterative process of evaluating the results, validating them, and modifying parameters to obtain a
model that accurately represents the mineralization and is statistically valid when compared to the input data supporting the estimation. The specific details for the estimation parameters for each area are summarized in Table 14-18 through Table 14-24. 

  
  

					
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 Table 14-18: Estimation Parameters - EGI

  

																																	
	 	 	EGI	  	Ordinary Kriging	  	  	 
	 	Pass	  	Bearing (Z)	  	Plunge (Y)*	  	Dip (X)*	  	Major	 	  	Semi-Major	 	  	Minor**	 	  	Min	 	  	Max	 	  	Max/DH	 
	 	
1  
	  		  		  		  	 	25	 	  	 	25	 	  	 	20%	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	
2  
	  	 NA
	  	 NA
	  	 NA
	  	 	75	 	  	 	75	 	  	 	20%	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	40%	 	  	 	3	 	  	 	10	 	  	 	2	 

       * Controlled by DA/unfolding using fault block-specific hangingwall
and footwall surfaces. 
       * Minor axis relative to the total distance btw hangingwall and footwall.

        Source: SRK, 2016 

Table 14-19: Estimation Parameters – EGS 

 

																																	
	 	 	EGS	  	ID2	  	  	 
	 	Pass	  	Bearing (Z)	  	Plunge (Y)*	  	Dip (X)*	  	Major	 	  	Semi-Major	 	  	Minor**	 	  	Min	 	  	Max	 	  	Max/DH	 
	 	 Local  
	  	 0  
	  	 -32  
	  	 0  
	  	 	5	 	  	 	5	 	  	 	2.5	 	  	 	1	 	  	 	10	 	  	 	NA	 
	 	
1  
	  		  		  		  	 	25	 	  	 	25	 	  	 	20%	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	
2  
	  	 NA
	  	 NA
	  	 NA
	  	 	75	 	  	 	75	 	  	 	20%	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	40%	 	  	 	3	 	  	 	10	 	  	 	2	 

       * Controlled by DA/unfolding using fault block-specific hangingwall
and footwall surfaces. 
       * Minor axis relative to the total distance btw hangingwall and footwall.

        Source: SRK, 2016 

Table 14-20: Estimation Parameters – Bolivar NW 

 

																																					
	 	 	BNW	  	ID2  	 	  	 	 
	 	 	Area	  	Pass  	 	  	Bearing (Z)  	  	Plunge (Y)  	  	Dip (X)  	  	Major	 	  	Semi-Major	 	  	Minor	 	  	Min	 	  	Max	 	  	Max/DH	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW1
	  	 	2	 	  	350  	  	-34  	  	-15  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW2
	  	 	2	 	  	338  	  	-16  	  	-20  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW3
	  	 	2	 	  	90  	  	0  	  	0  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW4
	  	 	2	 	  	45  	  	-41  	  	5  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW6
	  	 	2	 	  	20  	  	7  	  	15  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW7
	  	 	2	 	  	160  	  	14  	  	-10  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW8
	  	 	2	 	  	312  	  	-15  	  	-30  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW_ZN2
	  	 	2	 	  	356  	  	-25  	  	5  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	1	 	  	 	  	 	  	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 NW_ZN3
	  	 	2	 	  	43  	  	9  	  	-15  	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	  	 	3	 	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	20	 	  	 	3	 	  	 	10	 	  	 	2	 

     Source: SRK, 2016 

Table 14-21: Estimation Parameters - CHIM 

  
  

					
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	 	 	CHIM	  	ID2	  	  	 
	 	Pass	  	Bearing (Z)	  	Plunge (Y)	  	Dip (X)	  	Major	 	  	Semi-Major	 	  	Minor	 	  	Min	 	  	Max	 	  	Max/DH	 
	 	
1  
	  		  		  		  	 	25	 	  	 	25	 	  	 	25	 	  	 	5	 	  	 	10	 	  	 	2	 
	 	
2  
	  	 0        
	  	 0     
	  	 0      
	  	 	75	 	  	 	75	 	  	 	50	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	200	 	  	 	3	 	  	 	10	 	  	 	2	 

       Source: SRK, 2016 

Table 14-22: Estimation Parameters - BW 

 

																																	
	 	 	BW	  	ID2	  	  	 
	 	Pass	  	Bearing (Z)	  	Plunge (Y)*	  	Dip (X)*	  	Major	 	  	Semi-Major	 	  	Minor**	 	  	Min	 	  	Max	 	  	Max/DH	 
	 	
1  
	  		  		  		  	 	25	 	  	 	25	 	  	 	40%	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	
2  
	  	 NA
	  	 NA
	  	 NA
	  	 	75	 	  	 	75	 	  	 	40%	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	40%	 	  	 	1	 	  	 	10	 	  	 	NA	 

     * Controlled by DA/unfolding using fault block-specific hangingwall and footwall
surfaces. 
     * Minor axis relative to the total distance btw hangingwall and footwall. 

    Source: SRK, 2016 

Table 14-23: Estimation Parameters - INC 

 

																																			
	 	 	INC	 	ID2	  	  	  	  	 
	 	Area  	 	Pass  	  	Bearing (Z)	  	Plunge (Y)	  	Dip (X)	  	Major	 	  	Semi-Major	 	  	Minor	 	  	Min	 	  	Max	 	  	Max/DH	 
	 	 	 	
1  
	  	 	  		  		  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	 INC  
	 	
2  
	  	
214     
	  	 -53   
	  	 50    
	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
	 	 	 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	15	 	  	 	1	 	  	 	10	 	  	 	NA	 
		 	 	 	
1  
	  	 	  		  		  	 	25	 	  	 	25	 	  	 	25	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 SO  
	 	
2  
	  	
0     
	  	 0   
	  	 0    
	  	 	75	 	  	 	75	 	  	 	50	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	200	 	  	 	1	 	  	 	10	 	  	 	NA	 

     Source: SRK, 2016 

Table 14-24: Estimation Parameters - 1830 

 

																																			
	 	 	1830  	 	ID2  	  	 	  	  	 
	 	Area  	 	Pass  	  	Bearing (Z)	  	Plunge (Y)	  	Dip (X)	  	Major	 	  	Semi-Major	 	  	Minor	 	  	Min	 	  	Max	 	  	Max/DH	 
		 	 	 	
1  
	  	 	  		  		  	 	25	 	  	 	25	 	  	 	5	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 1830
	 	
2  
	  	
45      
	  	 -22   
	  	 0    
	  	 	75	 	  	 	75	 	  	 	10	 	  	 	3	 	  	 	10	 	  	 	2	 
		 	 	 	
3  
	  	 	  	 	  	 	  	 	200	 	  	 	200	 	  	 	15	 	  	 	1	 	  	 	10	 	  	 	NA	 

   Source: SRK, 2016 
  

	14.8	Model Validation 

 SRK validated the resulting block models and estimations using
three primary means; visual comparison, statistical comparison, and swath plots. 
  

	14.8.1	Visual Comparison 

 A visual comparison of the blocks to the composite grades for
the various elements was conducted to review the distribution of grade and assess geologic reasonableness of the model. This comparison was conducted both in section and level plan maps. SRK is of the opinion that the visual comparison for both the
Bolivar and La Sidra areas is reasonable and appropriate for the deposit types. Examples of this comparison are shown in Figure 14-12. 

  
  

					
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 Source: SRK 

Figure 14-12: Bolivar Visual Comparison 

 

	14.8.2	Comparative Statistics 

 SRK reviewed a comparison of the statistics of the
composites to the estimation to assess the potential for any bias in the estimation as well as the degree of smoothing in the estimate. A series of statistical comparisons were conducted including reviews of the histograms for each metal, mean
analysis between the blocks and composites, and the relationship between the estimation passes and the amount of data used for each. This was done for all five metals estimated into the blocks, for each area. Examples of this analysis for the EGI
orebody are shown in Figure 14-13 and Figure 14-14. The analyses completed for each area show that in all cases that the blocks approximate the grade distribution of the
composites. In addition, the mean analysis shows a reasonable agreement between the overall composite and block means for each area, with the estimate representing a reasonable declustered mean of the composites, and not exhibiting any consistent
bias that would result in over or under-estimation. 

  
  

					
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 Source: SRK, 2016 

Figure 14-13: Cu Histogram for El Gallo Area 

 
 

 
 Source: SRK, 2016 

Figure 14-14: Mean Analysis by Zone 

 

	14.8.3	Swath Plots 

 A more local comparison between the blocks to and the composites is
made using swath plots. These show both the varying means of the block and composites (declustered) along swaths or slices through the model, as well as the amount of data supporting the estimate in each swath. The swath plots show that there are no
significant local biases in the estimation that cannot be explained by composites along strike or dip that are influencing the estimation in areas where the drill spacing 

  
  

					
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 is very wide. As expected, the relative numbers of samples is low in these areas, which
coincidentally also feature fewer estimated blocks. Although the estimation could be restricted by distance in this area, SRK has left it as-is to capture potential for further resource definition with
drilling. The blocks in these areas are generally classified as Inferred. The swath plots generally show similar grade trends between the sample data and the estimated blocks, and it is clear that where the data is sufficiently dense that the
estimate is performing well. An example of the swath plots for the El Gallo Area is shown in Figure 14-15. The swath plots for all of the elements and areas are presented in Appendix C. 

SRK is of the opinion that the swath plots illustrate the reasonableness of the estimation for each area and support the validity of the
estimate. 

  
  

					
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 Source: SRK, 2016 

Figure 14-15: Swath Plots – El Gallo Area Cu 

  
  

					
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	14.9	Resource Classification 

 Mineral resource classification is a subjective concept,
and industry best practices suggest that resource classification should consider both the confidence in the geological continuity of the mineralized structures, the quality and quantity of exploration data supporting the estimates and the
geostatistical confidence in the tonnage and grade estimates. Appropriate classification criteria should aim at integrating all of these concepts to delineate regular areas of similar resource classification. 

SRK is satisfied that the geological modeling honors the current geological information and knowledge. The location of the samples and
the assay data are sufficiently reliable to support resource estimation. The sampling information was acquired primarily by core drilling. 

Significant factors affecting the classification include: 
  

	 	•	 	Lack of historic and consistent QA/QC program; 

	 	•	 	Lack of downhole surveys for most drillholes and measured deviations from planned and actual azimuths; 

	 	•	 	Spacing of drilling compared to observed geologic continuity; 

	 	•	 	Geostatistical factors suggesting ranges of reasonable influence between sampling; and 

	 	•	 	Bolivar is a producing mine with a successful operating history dating more than 10 years. 

In order to classify mineralization as an Indicated Mineral Resource, “the nature, quality, quantity and distribution of data”
must be “such as to allow confident interpretation of the geological framework and to reasonably assume the continuity” (CIM Definition Standards on Mineral Resources and Mineral Reserves, December 2005). SRK has based this classification
both on the continuity observed in well-drilled areas of the Project, as well as geologic continuity observed from underground exposures of the mineralization. The classification is generally based on the block estimation passes, using the amount of
data and ranges of interpolation from the nested passes to flag blocks, which are then considered to guide a manually digitized polygon to assign the final classification and eliminate local inconsistencies in the block-by-block classification of the estimation pass. An example of the classification results is shown in Figure 14-16. 

The general category for classification is as follows: 
  

	 	•	 	 Indicated: Blocks estimated by samples located at an average distance of 75 m, utilizing at least two drillholes and
generally located in areas supported by multiple holes which included modern analyses and QA/QC; and 

	 	•	 	 All estimated blocks not assigned to the Indicated category were assigned to the Inferred category.

  
  

					
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 Note: In the far left image, blocks are displayed which have been estimated in either the first or
second estimation pass, using more than 2 drill holes with an average distance of less than 75m. The central image shows a polygon which has been drawn in the plane of the mineralized body to generally encompass the blocks, but is modified to reduce
the jagged irregular nature of the blocks on the fringes. The image on the right shows the closed volume extrapolated from the polygon, which has been used to flag the final classification. 

Source: SRK, 2016 

Figure 14-16: Example of Indicated Classification Methodology – Bolivar
NW 
  

	14.10.	Depletion for Mining 

 Bolivar has been actively mined since 2007. The production
areas have not been surveyed using modern survey methods via 3D cavity monitoring systems (CMS). The asbuilt mined areas provided to SRK include multiple AutoCAD and PDF files which show a combination of survey points for stoped areas, polylines for
the various cuts of the stopes, and wireframes which roughly delineate development and production areas. SRK was not provided with detailed mined volumes that could be used to flag blocks as mined in the block model. In order to provide a reasonable
assessment of the mined areas in the allotted time frame for this study, SRK used the combined types of data provided to generate a 3m distance buffer of the mined areas and generate volumes that could be used in flagging the blocks as mined. SRK
notes that this method of defining the mined areas is likely conservative in areas of active mining, but also accounts for the local uncertainty associated with the multiple data types and lack of complete detailed 3D surveys. 

SRK notes that the mined areas are only located in the vicinities of El Gallo Inferior, El Gallo Superior, and Chimeneas. A plan view of
the 3m buffer around the mined areas is shown in Figure 14-17. 

  
  

					
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 Source: SRK, 2016 

Figure 14-17: Plan View of Mined Areas Buffer 

 

	14.11	Mineral Resource Statement 

 CIM Definition Standards for Mineral Resources and
Mineral Reserves (December 2005) defines a mineral resource as: 
 “A concentration or occurrence of diamonds, natural solid
inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge”. 

The “reasonable prospects for economic extraction” requirement generally implies that the quantity and grade estimates meet
certain economic thresholds and that the Mineral Resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recoveries. To assess this at Bolivar, SRK has
calculated an economic value for each block in terms of US dollars ($) based on the grade of contained metal in the block, multiplied by the assumed recovery for each metal, multiplied by pricing established by Sierra Metals for each commodity.
Costs for mining and processing are taken from data provided by Dia Bras for their current underground mining operation. 
 The
September 30, 2016, consolidated mineral resource statement for the Bolivar Mine area is presented in Table 14-25. These resources have been stated in undeveloped areas of the deposits as well as within
surveyed pillar shapes in the existing mined out areas, using a lower COG to reflect the fact that they have been exposed through previous mining. A detailed break-down of the mineral resources by mineralized area is presented in Table 14-26. 

  
  

					
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 Table 14-25: Consolidated Bolivar Mineral
Resource Estimate as of September 30, 2016– SRK 

                    Consulting
(U.S.), Inc. 
  

																	
	 Category  
	  	
Tonnes  

(000’s)  
	  	
Ag  
 (g/t)  
	  	
Au  
 (g/t)  
	  	
Cu  
 (%)  
	  	
Ag  
 (koz)  
	  	
Au  
 (koz)  
	  	
Cu  
 (t)  
	  	
	 Indicated  
	  	9,335  	  	18.1  	  	0.30  	  	0.90  	  	5,440  	  	91  	  	83,885  	  	
	 Inferred
	  	9,055  	  	17.9  	  	0.33  	  	0.86  	  	5,200  	  	97  	  	77,830  	  	

	 	(1)	 Mineral resources are reported inclusive of ore reserves. Mineral resources are not ore reserves and do not have
demonstrated economic viability. All figures rounded to reflect the relative accuracy of the estimates. Copper, gold, and silver assays were capped where appropriate. 

	 	(2)	 Mineral resources are reported at variable metal value cut-off grades based on
metal price assumptions*, metallurgical recovery assumptions, mining/transport costs (US$13.59/t), processing costs (US$10.00/t), and general and administrative costs (US$3.40/t). 

	 	(3)	 The metal value cut-off grade for the unmined portions of the Bolivar Mine is
US$27 and is US$20 for the remaining vertical pillars in the mined areas. The mineral resources within the remaining vertical pillars comprise less than 1% of the Indicated Mineral Resources. No mineral resources are reported for the remaining crown
or sill pillars. 

	 	*	 Metal price assumptions considered for the calculation of metal value are: Copper (Cu): US$/lb 2.43, Silver (Ag): US$/oz
18.30, and Gold (Au): US$/oz 1,283.00. 

	 	**	 Metallurgical recovery assumptions are 81% Cu, 77% Ag, and 49% Au. 

The resources were estimated by SRK. Matthew Hastings, M.Sc., PGeo, MAusIMM #314693 of SRK, a Qualified Person, performed the resource
calculations for Bolivar. 

  
  

					
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     Table 14-26: Detailed Bolivar
Mineral Resources as of September 30, 2016– SRK Consulting (U.S.), Inc. 
  

																																	
	Area	  	Category	 	  	Tonnes
(000’s)	 	  	Ag
(g/t)	 	  	Au
(g/t)	 	  	Cu
(%)	 	  	Ag
(Koz)	 	  	Au
(Koz)	 	  	 Cu

(t)
	 
	
Chimeneas 1
	  			 	  	 	142	 	  	 	51.5	 	  	 	0.02	 	  	 	2.21	 	  	 	234.3	 	  	 	0.1	 	  	 	3,128	 
	
Chimeneas 2
	  			 	  	 	262	 	  	 	22.6	 	  	 	0.04	 	  	 	0.97	 	  	 	190.2	 	  	 	0.3	 	  	 	2,543	 
	
El Gallo Inf.
	  			 	  	 	4,746	 	  	 	14.9	 	  	 	0.26	 	  	 	0.86	 	  	 	2,269.1	 	  	 	39.7	 	  	 	40,818	 
	
El Gallo Inf. Pillars
	  			 	  	 	26	 	  	 	22.6	 	  	 	0.22	 	  	 	1.05	 	  	 	19.0	 	  	 	0.2	 	  	 	275	 
	
El Gallo Superior Pillars
	  			 	  	 	99	 	  	 	25.7	 	  	 	0.15	 	  	 	1.43	 	  	 	81.8	 	  	 	0.5	 	  	 	1,421	 
	
Bolivar NW Zn2
	  			 	  	 	226	 	  	 	35.1	 	  	 	0.28	 	  	 	0.61	 	  	 	255.7	 	  	 	2.0	 	  	 	1,381	 
	
Bolivar NW 1
	  	 	Indicated	 	  	 	1,578	 	  	 	10.5	 	  	 	0.64	 	  	 	0.87	 	  	 	532.8	 	  	 	32.5	 	  	 	13,732	 
	
Bolivar NW 2
	  			 	  	 	95	 	  	 	25.1	 	  	 	0.22	 	  	 	0.92	 	  	 	76.7	 	  	 	0.7	 	  	 	874	 
	
Bolivar NW 4
	  			 	  	 	460	 	  	 	19.6	 	  	 	0.47	 	  	 	0.71	 	  	 	289.5	 	  	 	7.0	 	  	 	3,269	 
	
Bolivar NW 6
	  			 	  	 	166	 	  	 	69.4	 	  	 	0.76	 	  	 	1.05	 	  	 	371.1	 	  	 	4.1	 	  	 	1,747	 
	
Bolivar NW 7
	  			 	  	 	194	 	  	 	14.2	 	  	 	0.60	 	  	 	0.88	 	  	 	88.9	 	  	 	3.7	 	  	 	1,709	 
	
Bolivar W A
	  			 	  	 	1,175	 	  	 	26.0	 	  	 	-	 	  	 	0.93	 	  	 	981.1	 	  	 	-	 	  	 	10,932	 
	
Bolivar W B
	  	 	 	 	  	 	163	 	  	 	9.5	 	  	 	-	 	  	 	1.26	 	  	 	50.0	 	  	 	-	 	  	 	2,057	 
	
1830
	  	 	Inferred	 	  	 	98	 	  	 	53.6	 	  	 	0.78	 	  	 	2.02	 	  	 	169.2	 	  	 	2.5	 	  	 	1,984	 
	
Chimeneas 1
	  	  	 	39	 	  	 	6.1	 	  	 	-	 	  	 	0.98	 	  	 	7.6	 	  	 	-	 	  	 	385	 
	
Chimeneas 2
	  	  	 	202	 	  	 	18.0	 	  	 	-	 	  	 	0.86	 	  	 	117.1	 	  	 	-	 	  	 	1,738	 
	
El Gallo Inf.
	  	  	 	1,845	 	  	 	10.7	 	  	 	0.23	 	  	 	0.79	 	  	 	635.1	 	  	 	13.6	 	  	 	14,572	 
	
Increíble
	  	  	 	417	 	  	 	17.9	 	  	 	0.03	 	  	 	0.86	 	  	 	239.4	 	  	 	0.4	 	  	 	3,587	 
	
Bolivar NW Zn2
	  	  	 	155	 	  	 	44.6	 	  	 	0.93	 	  	 	0.62	 	  	 	221.5	 	  	 	4.6	 	  	 	958	 
	
Bolivar NW 1
	  	  	 	2,586	 	  	 	7.4	 	  	 	0.49	 	  	 	0.72	 	  	 	613.5	 	  	 	40.7	 	  	 	18,618	 
	
Bolivar NW 2
	  	  	 	383	 	  	 	17.1	 	  	 	0.04	 	  	 	0.69	 	  	 	210.6	 	  	 	0.5	 	  	 	2,642	 
	
Bolivar NW 3
	  	  	 	115	 	  	 	30.6	 	  	 	0.58	 	  	 	1.44	 	  	 	113.5	 	  	 	2.1	 	  	 	1,660	 
	
Bolivar NW 4
	  	  	 	373	 	  	 	20.2	 	  	 	0.44	 	  	 	0.71	 	  	 	242.7	 	  	 	5.3	 	  	 	2,651	 
	
Bolivar NW 6
	  	  	 	139	 	  	 	75.8	 	  	 	0.56	 	  	 	1.31	 	  	 	338.4	 	  	 	2.5	 	  	 	1,819	 
	
Bolivar NW 7
	  	  	 	524	 	  	 	12.3	 	  	 	0.88	 	  	 	0.82	 	  	 	207.4	 	  	 	14.8	 	  	 	4,298	 
	
Bolivar NW 8
	  	  	 	518	 	  	 	16.2	 	  	 	0.60	 	  	 	0.82	 	  	 	270.0	 	  	 	10.0	 	  	 	4,246	 
	
Step Out
	  	  	 	32	 	  	 	20.3	 	  	 	0.05	 	  	 	1.19	 	  	 	20.6	 	  	 	0.1	 	  	 	376	 
	
Bolivar W A
	  	  	 	1,470	 	  	 	36.4	 	  	 	-	 	  	 	1.12	 	  	 	1,721.3	 	  	 	-	 	  	 	16,464	 
	
Bolivar W B
	  	  	 	159	 	  	 	14.0	 	  	 	-	 	  	 	1.15	 	  	 	71.9	 	  	 	-	 	  	 	1,832	 

	 	(1)	 Mineral resources are reported inclusive of ore reserves. Mineral resources are not ore reserves and do not have
demonstrated economic viability. All figures rounded to reflect the relative accuracy of the estimates. Copper, gold, and silver assays were capped where appropriate. 

	 	(2)	 Mineral resources are reported at variable metal value cut-off grades based on
metal price assumptions*, metallurgical recovery assumptions**, mining/transport costs (US$13.59/t), processing costs (US$10.00/t), and general and administrative costs (US$3.40/t). 

	 	(3)	 The metal value cut-off grade for the unmined portions of the Bolivar Mine is
US$27 and is US$20 for the remaining vertical pillars in the mined areas. The mineral resources within the remaining vertical pillars comprise less than 1% of the Indicated Mineral Resources. No mineral resources are reported for the remaining crown
or sill pillars. 

 * Metal price assumptions considered for the calculation of metal value are: Copper (Cu): US$/lb
2.43, Silver (Ag): US$/oz 18.30, and Gold (Au): US$/oz 1,283.00. 
 ** Metallurgical recovery assumptions are 81% Cu, 77% Ag, and 49%
Au. 
 The resources were estimated by SRK. Matthew Hastings, M.Sc., PGeo, MAusIMM #314693 of SRK, a Qualified Person, performed the
resource calculations for Bolivar. 
  

	14.12	Mineral Resource Sensitivity 

 SRK has generated grade-tonnage charts which
illustrate the fluctuations of tonnage and copper equivalent (CuEq) grade as a function of the metal value cut-off. Equivalencies are calculated by dividing the MetVal by the unit value of 1% recovered Cu
(US$43.43). These charts are shown in Figure 14-18 and Figure 14-19. 

  
  

					
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 SRK notes that the project is relatively sensitive to the cut-off, in both Indicated and Inferred mineralization. 
  
 

 
 Note: Excludes pillars and is reported from unmined areas only. 

Figure 14-18: Grade Tonnage Chart – Bolivar Indicated Mineralization 

  
  

					
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 Note: Excludes pillars and is reported from unmined areas only. 

Figure 14-19: Grade Tonnage Chart – Bolivar Inferred Mineralization 

 

	14.13	Relevant Factors 

 There are no other factors pertinent to the mineral resource
statement other than those stated in the above sections which SRK would expect to have a material impact on the statement. 

  
  

					
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	15	Mineral Reserve Estimate 

  

	15.1	Introduction 

 Bolivar is a producing operation with ore production primarily by
means of underground room and pillar mining. Commercial production was declared by Sierra Metals in November 2011. The initial production decision was not based on a feasibility study of Mineral Reserves demonstrating economic viability. There is an
increased uncertainty and economic and technical risks of failure associated with this production decision. 
 Bolivar ore is processed
at the Piedras Verdes mill. The mill is located south of the mine and was commissioned in 2011. Various underground development activities, test mining, and smaller scale milling has taken place under Dia Bras ownership since the early to 2000s.
Underground mining has occurred in several zones in the immediate Bolivar area including Bolivar, El Gallo Superior, and El Gallo Superior Magnetita. 

Current production is from the El Gallo Inferior body. January through September 2016 ore production reported by the mine averaged 2,440
t/day, and ore delivered to Piedras Verdes was 2,460 t/day. Ore is hauled to the surface using one of several adits or declines accessing the orebodies and dumped onto small pads outside the portals. The ore is then loaded into rigid frame over-the-road trucks, typically 18 tonne capacity, and hauled on a gravel and dirt road approximately 5.1 km south to the Piedras Verdes mill. A copper concentrate is produced
containing payable copper, silver and minor amounts of payable gold. 
 The reserves estimated herein are contained in El Gallo
Inferior, and zones called Chimenea 1, Chimenea 2, Bolivar West, and Bolivar Northwest. The El Gallo Superior and Bolivar areas are considered mined out, though mineralized material remains in pillars. Any remaining pillar tonnes have not been
included in the reserves at this time. Figure 15-1 shows an overview of the Bolivar area including the mineralized zones, underground access, mine camp, Piedras Verdes processing facility, and other key
surface infrastructure and features. 

  
  

					
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 Source: SRK, 2017 

Figure 15-1: Bolivar Overview 

  
  

					
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 Figure 15-2 shows an overview of the mining
areas, asbuilts, and mine design supporting the reserves estimate. 
  
 

 
 Source: SRK, 2017 

Figure 15-2: Bolivar Mining Areas 

 

	15.2	Conversion Assumptions, Parameters and Methods 

 Indicated Mineral Resources were
converted to Probable Mineral Reserves by applying the appropriate modifying factors, as described herein, to potential mining block shapes created during the mine design process. No Measured Resources are estimated and, as a result, no Proven
Reserves are stated. 
 The production history of the operation forms the basis for the modifying factors used to convert resources to
reserves. Data made available to SRK includes historical costs, mining recovery and dilution factors, processing recovery, and the general layout and performance of the room and pillar mining method at the mine. 

The undiluted tonnes and grade of each potential mining block is based on the resource block model estimated by SRK as described in
Section 14 of this report. All Mineral Reserve tonnages are 

  
  

					
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 expressed as “dry” tonnes (i.e., no moisture) and are based on the density
values stored in the block model. While some mining blocks may consist entirely of Indicated Mineral Resources, other mining blocks may include Inferred Mineral Resources and unclassified material. Where Inferred and unclassified material has been
included in a mining block, such material has been assigned a grade of zero. Unplanned dilution, as defined in Section 15.2.2, has also been applied with a grade of zero. 

Reserve tonnes and grade are calculated using the following factors: 

 

	 	•	 	Mining Recovery: a factor resulting in ore loss (tonnage reduction) due to the mining method applied and the ore body geometry; and 

	 	•	 	Dilution: a factor resulting in a reduction of the overall average grade due to the mining of waste with the ore. 

The generalized formula for calculating the reserve tonnage in each mining block is: 

Treserve = Tmining block * Mining Recovery% * (1+Dilution%unplanned) 
 The generalized formula for calculating the reserve grade is: 

Greserve = Resource Grademining block / (1+Dilution%unplanned)

  

	15.2.1	Mining Recovery 

 A mining recovery factor of 85% for room and pillar mining at
Bolivar was provided by Dia Bras personnel and is based on historical production information. Detailed stope-by-stope production information corresponding to 3D asbuilt
data was not provided to SRK. While underground survey data is collected and mine asbuilts are updated, a cavity monitoring system (CMS) is not in use at the site. As a result, it can be difficult to obtain an accurate model of the mined out areas,
particularly in the roof of the stopes. Dia Bras is planning to complete a three-dimensional (3D) survey update for the mine. SRK supports this effort and recommends that the site should regularly perform stope-by- stope planned to actual reconciliations, for both grade and tonnage mined, to continually validate the mining recovery assumptions. The results of such analysis will become more important as new
areas in Bolivar West and Bolivar Northwest are mined. 
 Ore loss can be the result of: 

 

	 	•	 	Underbreak – the mineralized material is not blasted loose and remains in the stope walls; 

	 	•	 	 Mineralized material loss within stope – the blasted mineralized material is left in the stope due to poor access
for the loader, buried by falls of waste rock from walls, left on the floor, or material blasted but does not fall from flatter lying walls; and 

	 	•	 	 Mineralized material left in pillars – in the case of Bolivar, the ore loss due to leaving vertical pillars behind
has been accounted for using the mining recovery factor. Sill or crown pillars have been excluded as part of the design process. Pillars account for the greatest ore loss at Bolivar. 

To evaluate the reasonableness of the recovery factor provided by the mine, SRK analyzed the asbuilts from levels in El Gallo Inferior.
Two example levels are shown below. Figure 15-3 shows a plan view of the asbuilt on Nivel (Level) 312 with a floor elevation of approximately 1775. The blue outline represents the production outline of the
level, and the pillars are shown in purple. The area of the blue outline on this level is 11,068 m2. The total area of the pillars is 1739 m2.
Assuming the entire area within the production outline was ore, the recovery on this level was 84%. 

  
  

					
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 Source: SRK, 2017 

Figure 15-3: El Gallo Level 312 Asbuilt with Pillars 

Figure 15-4 shows the asbuilt on Level 601 with a floor elevation of approximately 1760.
The area within the production outline of the level is 7840 m2, and the area left in pillars is 629 m2. The recovery in this section of
Level 601 is 92%. 
 Considering additional allowances for the dip of the orebody, underbreak and other material loss, which can
range from 0% under tightly controlled blasting and mucking cycles to 10% or more in less ideal conditions, SRK views 85% as a reasonable recovery factor. 
  

 
 Source: SRK, 2017 

Figure 15-4: El Gallo Level 601 Asbuilt with Pillars 

  
  

					
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 Certain ore bodies in Bolivar West, and Chimenea 1 and Chimenea 2 are more steeply
dipping and are conducive to the application of a longhole mining technique. The site has some experience with longhole mining, but did not provide historical production information to SRK. The recovery applied to the steeply dipping ore in Bolivar
West, Chimenea 1 and Chimenea 2, which accounts for approximately 8% of the total reserve, is based on typical recovery factors for longhole mining and takes into account vertical pillars required for ground control. 

Table 15-1 lists the mining recovery factors applied to each ore body based on the mining method. 

Table 15-1: Mining Recovery Factors 

 

											
		 	Mining Method	  	 	Recovery	 	  	Ore Body	  	
		 	 Room & Pillar
	  	 	85%	 	  	 El Gallo Inferior, Bolivar West, Bolivar Northwest
	  	
	     
	 	 Longhole Stopes
	  	 	85%	 	  	 Chimenea 1, Chimenea 2, Bolivar West
	  	     

		 	Longhole Sill (Top and Bottom)    	  	 	85%	 	  	 Chimenea 1, Chimenea 2, Bolivar West
	  	
		 	 Room & Pillar
	  	 	85%	 	  	 El Gallo Inferior, Bolivar West, Bolivar Northwest
	  	

 Source: SRK, 2017 

As described above, mineral resources in sill pillars, crown pillars, and vertical pillars are not included in the reserves. These
pillars may contain value, but they are left in place to ensure the geotechnical stability of the stopes. Mining operations are often able to recover some portion of pillars after primary mining is complete in an area or at the end of the mine life
when pillars are no longer required, and Dia Bras is working on plans for pillar recovery. SRK notes that the program is in the initial stages, and considers pillar recovery as an opportunity to increase future reserve estimates. 

 

	15.2.2	Dilution 

 Dilution is defined as the ratio of waste to mineralized material. There
are two types of dilution that would be expected in the mine: internal, also called planned dilution; and external, also called unplanned dilution. 
  

	 	•	 	 Internal or planned dilution occurs when material less than a cut-off grade
falls within a designed stope boundary (i.e., it would be drilled and blasted within the stope during mining). 

Internal dilution is incorporated into the design when calculating the material contained within the designed stope. If the average
grade of the stope falls too low when this material is incorporated into the stope, the stope should be redesigned to exclude more of this low- grade material. Judgment must be exercised during the stope
design process to minimize dilution from this source, but practical mining considerations usually make the inclusion of internal dilution unavoidable. Internal dilution is straightforward to quantity in a mine plan using software to calculate tonnes
and grade above and below the Net Smelter Return (NSR) cut-off within the designed stope blocks. 
  

	 	•	 	 External or unplanned dilution is derived from low- or zero-grade material outside the stope design boundaries. This dilution is the result of over-break arising from poor drilling and blasting techniques, adverse geological structures, and failure within zones of weak
rock. External dilution is expected even under the best of circumstances, and an allowance is always made for it during the mine planning process. 

  
  

					
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 A dilution factor of 10% for room and pillar mining at Bolivar was provided by Dia Bras
personnel and is based on historical production information. SRK was unable to review previous mine designs and predicted grade models for specific mining areas. As is the case for the recovery factor used, SRK recommends that the site implement a
program to reconcile stope-by-stope tonnage and grade in order to compare the mine design planned values and production results. This will allow the validation and
calibration of the dilution factor. 
 To evaluate the validity of this parameter, SRK performed a sectional based analysis on mine
asbuilt information. Figure 15-5 shows an example of a section through the stope asbuilt on Level 552 (floor elevation of approximately 1,798 m) with the modeled mineralized zone contact and suspected
overbreak highlighted for clarity. The orientation of the section is N37E. 
  
  

 
 Source: SRK, 2017 

Figure 15-5: Vertical Section through Level 552,
NW-6 Asbuilt 
 The area of the blue designed cut is 243 m2, and the area of the overbreak is 22 m2. In this case, the unplanned dilution is approximately 9%. Considering the analysis described above and
factors used at other operations, it is SRK’s opinion that 10% unplanned dilution factor is reasonable. As previously described, the recommended reconciliation program and updated 3D mine survey may allow the site to develop and refine mining
practices that can reduce the dilution experienced at the mine. 
 The total dilution (planned + unplanned) subdivided by mining area
for the reserves estimate contained herein is listed Table 15-2. Total dilution ranges from 13% to 36% and averages 16%. The primary factors impacting the total dilution is the width and dip of the mineralized
zone, the distribution of grade within the mineralization, and the planned mining method. 

  
  

					
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 90

  
  

 Table 15-2: Dilution Factors 

 

							
	Zone	  	Total Dilution (%)	 	  	 
	 El Gallo Inferior
	  	 	16	 	  	
	 El Gallo Inferior
East
	  	 	19	 	  	
	 Chimenea 1
	  	 	17	 	  	
	 Chimenea 2
	  	 	13	 	  	
	 Bolivar West
	  	 	15	 	  	
	 Bolivar NW
1
	  	 	14	 	  	
	 Bolivar NW 2
	  	 	36	 	  	
	 Bolivar NW
Z2
	  	 	18	 	  	
	 Bolivar NW 4
	  	 	19	 	  	
	 Bolivar NW 6
	  	 	22	 	  	
	 Bolivar NW
7
	  	 	15	 	  	

 Source: SRK, 2017 

15.2.3      Net Smelter Return 

The mineral deposits at Bolivar are polymetallic with copper, silver and gold metals contributing to the total value of mineralized
material. Because the value of the mineralization is not based on one commodity, the reserves estimate contained herein utilizes a Net Smelter Return (NSR) approach. NSR is defined as the proceeds from the sale of mineral products after deducting off-site processing and distribution costs and is typically expressed on a dollar per tonne basis. An NSR approach is commonly used in the mining industry for polymetallic deposits and is considered best practice.

 The metal price assumptions have been derived from January 2017 BMO Capital Markets Street Consensus Commodity prices, and in
SRK’s opinion are reasonable for the statement of mineral resources and ore reserves. Metallurgical recoveries used in the NSR calculation are based on data provided by Dia Bras for 2016 (January through September). 

Dia Bras currently holds a contract for the sale of its concentrate. The contract documents were reviewed by SRK, and the terms are
reasonable and in line with the terms at similar operations. SRK reviewed concentrate shipment and concentrate assay test results for 2015 and 2016 and notes the following: 
  

	 	•	 	 The average grade of copper in the concentrate, as reported in the concentrate shipment log, was 26% in 2016. The
Piedras Verdes reports show an average copper grade in concentrate of 28%; and 

	 	•	 	 Bismuth in concentrate can result in a penalty element charge up to US$10 per tonne of concentrate but typically ranges
from US$3 to US$5 per tonne of concentrate. The concentrate shipping cost is included in the operation’s G&A costs and are not included in the NSR calculation. 

The parameters used in the NSR calculation are summarized in Table 15-3. An NSR value was
assigned to each block model block in Vulcan software. Blocks with a resource class of inferred or undefined have been assigned an NSR value of 0. 

  
  

					
	JL/SH	  		  	April 2017

					
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 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 91

  
  

 Table 15-3: NSR Calculation Parameters 

 

									
	 	 	Parameter	 	Unit	  	Value	 
		 	 Metal Prices
	
 

		 	 Cu price
	 	 US$ / lb Cu
	  	 	2.43	 
		 	 Ag price
	 	 US$ / oz Ag
	  	 	18.30	 
		 	 Au price
	 	 US$ / oz Au
	  	 	1,283	 
		 	 Recovery to Concentrate
	
 

		 	 Cu
	 	%	  	 	81.1	 
		 	 Ag
	 	%	  	 	76.8	 
		 	 Au
	 	%	  	 	48.7	 
		 	 Concentrate Grade
	
 

		 	 Cu
	 	%	  	 	26	 
		 	 Moisture content
	 	%	  	 	9	 
		 	 Smelter Payables
	
 

		 	 Cu payable
	 	%	  	 	96.5	 
		 	 Minimum Cu deduction
	 	 Min units %
	  	 	1.0	 
		 	 Ag payable
	 	%	  	 	90.0	 
		 	 Ag deduction
	 	 g/t in conc.
	  	 	0.0	 
		 	 Au
	 	%	  	 	90.0	 
		 	 Au deduction
	 	 g/t in conc.
	  	 	1.0	 
		 	 Treatment Charges/Refining Charges
	
 

		 	 Cu conc. treatment
	 	 US$/dmt conc.
	  	 	94.00	 
		 	 Cu refining charge
	 	 US$/lb payable Cu  
	  	 	0.094	 
		 	 Ag refining charge
	 	 US$/oz payable Ag  
	  	 	0.35	 
		 	 Au refining charge
	 	 US$/oz payable Au  
	  	 	6.00	 

 Source: SRK, 2017 

For a block with a mill feed grade of 0.94% copper, 21.2 g/t silver, and 0.17 g/t gold, the following factors for each element can be
used to estimate the NSR value per tonne: 
 NSR (US$/t) = US$37.76 x Cu (%) + US$0.38 x Ag (g/t) + US$12.05 x Au (g/t) = 45.62
(US$/t) 
 15.2.4    Cut-off Evaluation 

The NSR value of each potential mining block was calculated and evaluated against economic and marginal
cut-off values. The economic cut-off varies by mining method and includes direct and indirect mining costs, processing costs, concentrate shipping, and general and
administrative costs. Mining blocks with an average NSR value above the economic cut-off, that have defined access, and that are not isolated (i.e., mining blocks that do not pay for the development to those
blocks) are classified as economic and included in the reserves. In some cases, marginal blocks, defined as blocks below the economic cut-off but above the cost of direct mining and processing, are included in
the reserve if they are in between or immediately adjacent to economic blocks and it is reasonable to expect that no significant additional development would be required to extract the marginal block. Mining blocks not meeting the criteria described
above are classified as waste. 
 SRK reviewed operating costs for 2014, 2015 and January through August 2016. These costs are
summarized in Table 15-4. Dia Bras capitalizes its waste development, which has averaged approximately 10% of the material mined annually. Access to sublevels in the El Gallo Inferior room and pillar stopes is
typically driven in ore, and ramp development and main haulage accounts for a majority of waste mined. SRK recommends regular review of the classification of capital development and expensed waste as mine production moves into different zones and
additional preparation work on sublevels may be required. 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
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 Table 15-4: Operating Costs, 2014 through August 2016

  

																			
	 	 	Category	  	Units  	  	2014	 	  	2015	 	  	 2016

(January - August)
	 	  	 
		 	 Mining Costs - Bolivar Mine
	  	US$/t ore  	  	 	13.23	 	  	 	10.82	 	  	 	9.28	 	  	
		 	 Ore Transport - Mine to Piedras Verdes
	  	US$/t ore  	  	 	5.07	 	  	 	4.77	 	  	 	4.31	 	  	
		 	 Processing Costs - Piedras Verdes
	  	US$/t ore  	  	 	14.61	 	  	 	12.05	 	  	 	10.00	 	  	
		 	 Concentrate Shipping
	  	US$/t ore  	  	 	4.15	 	  	 	3.45	 	  	 	2.42	 	  	
		 	 General and Administrative
Expenses
	  	US$/t ore  	  	 	5.46	 	  	 	3.85	 	  	 	3.40	 	  	
		 	 Total
	  	US$/t ore  	  	 	$42.52	 	  	 	$34.95	 	  	 	$29.42	 	  	

 Source: SRK, 2017 

The economic and marginal cut-offs used in this report are provided in Table 15-5. More than 92% of reserves tonnes are planned for extraction using room and pillar mining. Chimenea 1, Chimenea 2, and an area in Bolivar West is favorable to a modified longhole stoping method. An additional
cost per tonne has been added to account for the slot raise, sill preparation and ground support. 
 Table
15-5: Economic and Marginal Cut-offs by Mining Method 
  

											
	Mining Method	  	
Economic Cut-off

(US$/t ore)
	 	  	
Marginal Cut-off

(US$/t ore)
	 	  	 
	Room and Pillar  	  	 	30.50	 	  	 	24.50	 	  	
	Longhole	  	 	32.50	 	  	 	26.50	 	  	

   Source: SRK, 2017 
  

	15.2.5	Mining Block Shapes 

 The mining method used in El Gallo Inferior is Room and
Pillar. Room and Pillar mining is also planned for shallow dipping ore in Bolivar West, and Bolivar Northwest. Steeper dipping ore bodies in Chimenea 1, Chimenea 2 and Bolivar West are planned for extraction using longhole stoping techniques.
Potential mining blocks were constructed using Maptek Vulcan software and its implementation of Stope Shape Optimizer produced by Alford Mining Systems. Additional information on the optimization parameters can be found in Section 16.3. The
stope blocks output from Stope Shape Optimizer were reviewed on a level-by-level basis and were manually refined so that they could be practically mined. Sill pillar
levels were identified and flagged for exclusion from the reserves. As previously described, SRK considers the recovery of portions of vertical and sill pillars as a potential to increase future reserves, but quantifying, planning and implementing a
pillar recovery program requires further study in order to be able to estimate a reserve for this material. 
 A mine design
incorporating the development required to access the mining blocks and a production schedule were created as described in Section 16. The production schedule results were input into a Technical Economic Model, described in Section 22, to
verify the economic viability of the reserves estimated for this report. 
  

	15.3	Reserve Estimate 

 Mineral Reserves were classified using the
2014 CIM Definition Standards. The QP for the estimate is Jon Larson, P.E., MMSA QP of SRK Consulting (U.S.), Inc. The consolidated mineral reserve statement for the Bolivar Mine area is presented in Table
15-6: Consolidated Bolivar Mineral Reserve Estimate as of September 30, 2016 – SRK Consulting (U.S.), Inc. 

  
  

					
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– Bolivar Mine, Mexico
	  	 Page
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	Category	 	 Tonnes

(000’s)
	 	 	 Ag

(g/t)
	 	 	 Au

(g/t)
	 	 	 Cu

(%)
	 	 	 Ag

(koz)
	 	 	 Au

(koz)
	 	 	 Cu

(t)
	 	 	 	 	 	 	 	 	 	 	 
	
Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 		 		 		 		 	
	
Probable
	 	 	4,327	 	 	 	17.5	 	 	 	0.31	 	 	 	0.85	 	 	 	2,441	 	 	 	44	 	 	 	36,586	 	 		 		 		 		 	
	 P+P
	 	 	4,327	 	 	 	17.5	 	 	 	0.31	 	 	 	0.85	 	 	 	2,441	 	 	 	44	 	 	 	36,586	 	 		 		 		 		 	

  

	 	(1)	All figures rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding. 

	 	(2)	 Ore reserves are reported at NSR cut-offs (CoG) based on metal price
assumptions*, metallurgical recovery assumptions**, mining costs, processing costs, general and administrative (G&A) costs, and treatment and refining charges. 

* Metal price assumptions considered for the calculation of NSR are: Copper (Cu): US$/lb 2.43, Silver (Ag): US$/oz 18.30, and Gold (Au):
US$/oz 1,283.00. 
 ** Metallurgical recovery assumptions are 81% Cu, 77% Ag, and 49% Au. 

	 	(3)	 The NSR CoG is variable by mining method: 

	 	•	 	 US$30.50 = Room and Pillar; and 

	 	•	 	 US$32.50 = Longhole Stoping. 

	 	(4)	 Ore reserves have been stated on the basis of a mine design, mine plan, and cash-flow model: 

	 	•	 	 Mining recovery applied is 85%. 

	 	•	 	 Mining dilution (internal and external), applied with a zero grade, ranges from 12% to 36% and averages 16%.

 Source: SRK, 2017 

Table 15-7. A detailed break-down of the mineral reserves by area in presented in Table 15-7. The reserves estimated herein are as of September 30, 2016. All values are estimated mill feed and include mining dilution and recovery. 

Table 15-6: Consolidated Bolivar Mineral Reserve Estimate as of September 30, 2016
– SRK Consulting (U.S.), Inc. 
  

																									
	Category	  	
Tonnes  

(000’s)  
	  	
Ag  
 (g/t)  
	  	
Au  
 (g/t)  
	  	
Cu  
 (%)  
	  	
Ag  
 (koz)  
	  	
Au  
 (koz)  
	  	
Cu  
 (t)  
	 	 	 	 	 	 	 	 	 	 
	
Proven
	  	-  	  	-  	  	-  	  	-  	  	-  	  	-  	  	-  	 		 		 		 		 	
	
Probable
	  	4,327  	  	17.5  	  	0.31  	  	0.85  	  	2,441  	  	44  	  	36,586  	 		 		 		 		 	
	 P+P
	  	4,327  	  	17.5  	  	0.31  	  	0.85  	  	2,441  	  	44  	  	36,586  	 		 		 		 		 	

	 	(5)	 All figures rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.

	 	(6)	 Ore reserves are reported at NSR cut-offs (CoG) based on metal price
assumptions*, metallurgical recovery assumptions**, mining costs, processing costs, general and administrative (G&A) costs, and treatment and refining charges. 

* Metal price assumptions considered for the calculation of NSR are: Copper (Cu): US$/lb 2.43, Silver (Ag): US$/oz 18.30, and Gold (Au):
US$/oz 1,283.00. 
 ** Metallurgical recovery assumptions are 81% Cu, 77% Ag, and 49% Au. 

	 	(7)	 The NSR CoG is variable by mining method: 

	 	•	 	 US$30.50 = Room and Pillar; and 

	 	•	 	 US$32.50 = Longhole Stoping. 

	 	(8)	 Ore reserves have been stated on the basis of a mine design, mine plan, and cash-flow model: 

	 	•	 	 Mining recovery applied is 85%. 

	 	•	 	 Mining dilution (internal and external), applied with a zero grade, ranges from 12% to 36% and averages 16%.

 Source: SRK, 2017 

Table 15-7: Detailed Bolivar Mineral Reserve Estimate as of September 30, 2016 –
SRK Consulting (U.S.), Inc. 
  

																																					
	Zone	 	Category	  	 Tonnes

(000’s)
	 	  	 Ag

(g/t)
	 	  	 Au

(g/t)
	 	  	 Cu

(%)
	 	  	 Ag

(koz)
	 	  	 Au

(koz)
	 	  	 Cu

(t)
	 	 	 	 	 	 	 
	El Gallo Inferior    	 	 Proven

Probable
 P+P
	  	 
 

	-
 2,051

2,051
	 
  

 
	  	 
 

	-
 14.2

14.2
	 
  

 
	  	 
 

	-
 0.24

0.24
	 
  

 
	  	 
 

	-
 0.82

0.82
	 
  

 
	  	 
 

	-
 938

938
	 
  

 
	  	 
 

	-
 16

16
	 
  

 
	  	 
 

	-
 16,787

16,787
	 
  

 
	 		 		 	
	Chimenea 1	 	 Proven

Probable
 P+P
	  	 
 

	-
 86

86
	 
  

 
	  	 
 

	-
 49.3

49.3
	 
  

 
	  	 
 

	-
 0.02

0.02
	 
  

 
	  	 
 

	-
 2.01

2.01
	 
  

 
	  	 
 

	-
 136

136
	 
  

 
	  	 
 

	-
 0

0
	 
  

 
	  	 
 

	-
 1,724

1,724
	 
  

 
	 		 		 	
	Chimenea 2	 	 Proven

Probable
 P+P
	  	 
 

	-
 87

87
	 

 
  
	  	 
 

	-
 20.6

20.6
	 

 
  
	  	 
 

	-
 0.02

0.02
	 

 
  
	  	 
 

	-
 0.85

0.85
	 

 
  
	  	 
 

	-
 57

57
	 

 
  
	  	 
 

	-
 0

0
	 

 
  
	  	 
 

	-
 735

735
	 

 
  
	 		 		 	

  
  

					
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– Bolivar Mine, Mexico
	  	 Page
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Bolivar NW 1
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	875	 	 	 	10.2	 	 	 	0.62	 	 	 	0.82	 	 	 	288	 	 	 	18	 	 	 	7,187	 	 	
	 	 	 P+P
	 	 	875	 	 	 	10.2	 	 	 	0.62	 	 	 	0.82	 	 	 	288	 	 	 	18	 	 	 	7,187	 	 	
	
Bolivar NW 2
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	34	 	 	 	19.6	 	 	 	0.19	 	 	 	0.82	 	 	 	22	 	 	 	0	 	 	 	281	 	 	
	 	 	 P+P
	 	 	34	 	 	 	19.6	 	 	 	0.19	 	 	 	0.82	 	 	 	22	 	 	 	0	 	 	 	281	 	 	
	
Bolivar NW 4
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	281	 	 	 	19.5	 	 	 	0.52	 	 	 	0.66	 	 	 	176	 	 	 	5	 	 	 	1,849	 	 	
	 	 	 P+P
	 	 	281	 	 	 	19.5	 	 	 	0.52	 	 	 	0.66	 	 	 	176	 	 	 	5	 	 	 	1,849	 	 	
	
Bolivar NW 6
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	138	 	 	 	55.6	 	 	 	0.62	 	 	 	0.83	 	 	 	247	 	 	 	3	 	 	 	1,146	 	 	
	 	 	 P+P
	 	 	138	 	 	 	55.6	 	 	 	0.62	 	 	 	0.83	 	 	 	247	 	 	 	3	 	 	 	1,146	 	 	
	
Bolivar NW 7
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	120	 	 	 	12.0	 	 	 	0.50	 	 	 	0.75	 	 	 	46	 	 	 	2	 	 	 	896	 	 	
	 	 	 P+P
	 	 	120	 	 	 	12.0	 	 	 	0.50	 	 	 	0.75	 	 	 	46	 	 	 	2	 	 	 	896	 	 	
	
Bolivar NW Z2
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	66	 	 	 	36.5	 	 	 	0.28	 	 	 	0.78	 	 	 	78	 	 	 	1	 	 	 	520	 	 	
	 	 	 P+P
	 	 	66	 	 	 	36.5	 	 	 	0.28	 	 	 	0.78	 	 	 	78	 	 	 	1	 	 	 	520	 	 	
	
Bolivar West
	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 	 	 Probable
	 	 	590	 	 	 	23.9	 	 	 	-	 	 	 	0.93	 	 	 	453	 	 	 	-	 	 	 	5,461	 	 	
	 	 	 P+P
	 	 	590	 	 	 	23.9	 	 	 	-	 	 	 	0.93	 	 	 	453	 	 	 	-	 	 	 	5,461	 	 	
	 	 	 Proven
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	
	 Total
	 	 Probable
	 	 	4,327	 	 	 	17.5	 	 	 	0.31	 	 	 	0.85	 	 	 	2,441	 	 	 	44	 	 	 	36,586	 	 	
	 	 	 P+P
	 	 	4,327	 	 	 	17.5	 	 	 	0.31	 	 	 	0.85	 	 	 	2,441	 	 	 	44	 	 	 	36,586	 	 	

  

	 	(1)	 All figures rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.

	 	(2)	 Ore reserves are reported at NSR cut-offs (CoG) based on metal price
assumptions*, metallurgical recovery assumptions**, mining costs, processing costs, general and administrative (G&A) costs, and treatment and refining charges. 

* Metal price assumptions considered for the calculation of NSR are: Copper (Cu): US$/lb 2.43, Silver (Ag): US$/oz 18.30, and Gold (Au):
US$/oz 1,283.00. 
 ** Metallurgical recovery assumptions are 81% Cu, 77% Ag, and 49% Au. 

	 	(3)	 The NSR CoG is variable by mining method: 

	 	•	 	 US$30.50 = Room and Pillar; and 

	 	•	 	 US$32.50 = Longhole Stoping. 

	 	(4)	 Ore reserves have been stated on the basis of a mine design, mine plan, and cash-flow model: 

	 	•	 	 Mining recovery applied is 85%. 

	 	•	 	 Mining dilution (internal and external), applied with a zero grade, ranges from 12% to 36% and averages 16%.

 Source: SRK, 2017 
  

	15.4	Relevant Factors 

 The production schedule associated with this reserves estimate
results in mining until July 2021 at approximately 2,500 ore t/day. The tailings storage facility will need to be expanded. Dia Bras is managing the TSF expansion as described in detail in Section 18.11. Dia Bras is planning to install an
additional thickener and filter presses and move to a dry stack method of tailings handling and storage. The overall tailings handling system will evolve over the next twelve months. Dia Bras has budgeted capital for these activities and is working
with a number of external contractors to complete the various phases of the overall management plan. Delays in these projects could impact the overall mine plan by delaying the processing of ore at Piedras Verdes beyond 2017. 

SRK knows of no other existing environmental, permitting, legal, socio-economic, marketing, political or other factors that might
materially affect the mineral reserve estimate contained herein. 

  
  

					
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– Bolivar Mine, Mexico
	  	 Page
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	16	Mining Methods 

  

	16.1	Current or Proposed Mining Methods 

 Current production at Bolivar comes from the
El Gallo Inferior ore body. Mining in El Gallo Inferior occurs below the El Gallo Superior ore body. Ore is hauled to the surface using one of several adits or declines accessing the orebodies and dumped onto small pads outside the portals. The ore
is then loaded into rigid frame over-the-road trucks, typically 18 tonne capacity, and hauled on a gravel and dirt road approximately 5.1 km south to the Piedras Verdes
mill. Future production will include ore from El Gallo Inferior, Chimenea 1, Chimenea 2, Bolivar West, and Bolivar Northwest (NW). Bolivar NW reserves are further broken down into Bolivar NW 1, NW 2, NW 4, NW 6, NW 7, and NW Z2. 

Figure 16-1 shows a plan view of the Bolivar mine, the geology shapes, and the mined out areas. 

 
 

 
 Source: SRK, 2017 

Figure 16-1: Bolivar Ore Body Location Overview and Mined Out Areas 

Figure 16-2 shows a rotated view of the El Gallo Inferior area and also shows the Chimenea 1 and
Chimenea 2 ore bodies. 

  
  

					
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 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
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 Source: SRK, 2017 

Figure 16-2: Rotated View Showing El Gallo Inferior, Chimenea 1 and Chimenea 2 Ore Bodies

                     with Mined-out Areas 
 Figure 16-3 shows a rotated view,
looking southwest, of Bolivar Northwest 4, 1, 2, 6, 7, and Z2 as well as
 asbuilt shapes of previous mining. 
 

 
 Source: SRK, 2017 

Figure 16-3: Rotated View Showing Bolivar NW Zones 

  
  

					
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– Bolivar Mine, Mexico
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 Ore production for January through September 2016, as reported by the mine, was just
over 668,000 total tonnes. Waste mining totaled 74,500 tonnes, and for the same period, 673,600 tonnes were reported as transported to the Piedras Verdes mill. Figure 16-4 shows January through September 2016
waste and ore production as well as the tonnes transported to Piedras Verdes by month. 
  
  

 
 Source: SRK, 2017 

Figure 16-4: Mined and Transported Ore, 2016 

During SRK’s visit to site in October 2016, it was reported that approximately 67,000 tonnes of broken ore was in the mine in
stopes ready to be mucked out or in small underground stockpiles. A small amount of ore is stockpiled near the primary crusher at the mill site. Other broken ore is temporarily placed outside portal locations prior to being hauled to the mill. No
other long term or low grade ore stockpiles are in use. 
 Table 16-1 shows a comparison of
planned tonnes and grade vs. production as reported by the mill (dry tonnes). Considering the information contained in Figure 16-4 and Table 16-1, SRK notes the
following: 
  

	 	•	 	Monthly ore production from the mine is between 70,000 and 80,000 t/month and averaged 74,200 t/month. Waste mining averaged 8,275 t/month. 

 

	 	•	 	Ore processed for the period was approximately 10% below target. Head grades for copper, the primary value driver for the operation, were approximately 4.5% below plan. The planned mill feed grades do not vary by month.
Monthly estimates of planned grades may allow the operation to better prepare for variations in ore including the potential for blending from different levels or areas of the mine. 

  
  

					
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 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
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	 	•	 	 The operation’s ability to maintain short term stockpiles of ore in the mine, at the portal locations, and at the
mill helps mitigate temporary disruptions in the mining, ore transport and milling operations. 
	 

  

	 	•	 	 In the three months where tonnes processed by the mill was less than 70,000 t/month, Cu grades were 14.5% higher than
the average grades of the other months. It is not clear whether these are anomalies or were expected/planned due to zones of higher grade ore encountered in the mine. 
	 

 Table 16-1: Planned vs. Reported Production, Piedras Verdes Mill, 2016

  

																																			
	  	  	Planned	 	  	Reported Mill Processed	 	  	 
	Month	  	Tonnes
(dry t)	 	  	Cu
(%)	 	  	Ag
(g/t)	 	  	Au
(g/t)	 	  	Tonnes
(dry t)	 	  	Cu
(%)	 	  	Ag
(g/t)	 	  	Au
(g/t)	 	  	 
	January	  	 	89,571	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	82,965	 	  	 	0.96	 	  	 	18.9	 	  	 	0.29	 	  	
	February	  	 	83,600	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	67,076	 	  	 	1.18	 	  	 	18.1	 	  	 	0.22	 	  	
	March	  	 	88,611	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	68,845	 	  	 	1.06	 	  	 	18.0	 	  	 	0.28	 	  	 
	April	  	 	85,556	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	83,061	 	  	 	0.96	 	  	 	20.5	 	  	 	0.28	 	  	
	May	  	 	88,611	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	84,979	 	  	 	0.97	 	  	 	17.5	 	  	 	0.18	 	  	
	June	  	 	85,556	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	68,212	 	  	 	1.07	 	  	 	17.3	 	  	 	0.14	 	  	
	July	  	 	88,611	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	82,812	 	  	 	0.94	 	  	 	15.7	 	  	 	0.13	 	  	
	August	  	 	88,611	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	84,302	 	  	 	0.99	 	  	 	14.4	 	  	 	0.12	 	  	
	September	  	 	85,556	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	83,146	 	  	 	0.94	 	  	 	14.2	 	  	 	0.14	 	  	
	Total	  	 	784,283	 	  	 	1.05	 	  	 	22.0	 	  	 	0.30	 	  	 	705,398	 	  	 	1.00	 	  	 	17.1	 	  	 	0.20	 	  	

 Source: SRK, 2017 

Table 16-2 shows the average daily mine production for 2014, 2015 and 2016 (January through
September). 
 Table 16-2: Reported Mine and Mill Production 

 

									
	Category	  	2014  	  	2015  	  	
2016  

(January to September)  
	  	 
	Ore Mined (t/day)	  	1,644  	  	2,253  	  	2,438  	  	
	
Waste Mined (t/day)
	  	175  	  	281  	  	272  	  	
	 Total Mined
(t/day)
	  	1,818  	  	2,534  	  	2,710  	  	
	
Total Development (m/day)
	  	9.4  	  	14.2  	  	14.4  	  	

 Source: SRK, 2017 
  

	16.1.1	Room and Pillar Mining 

 Areas where room and pillar mining occurs are divided into
levels measuring approximately 16 m high. Each 16 m level is further divided into sublevels of approximately 4 m. A ramp is driven and access to the middle sublevel is established in the footwall, and the initial cut in ore is developed at this
middle sublevel. The roof is then drilled, blasted and mucked. The third cut is mined down to the lower sublevel floor. Ramps are established in ore whenever possible to minimize the mining of waste. The remaining 4 m of material is left as a sill
pillar. Figure 16-5 shows a typical section through two room and pillar levels. 

  
  

					
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 Source: SRK, 2017 

Figure 16-5: Typical Section Showing Room and Pillar Mining 

Figure 16-6 shows a plan view of three existing sublevels in El Gallo Inferior illustrating the
pillar size and span. The blue, green and orange levels have floor elevations of approximately 1,760 m, 1,775 m and 1,787 m, respectively. The inset image is labeled with distances in meters. Pillar dimensions on this level range from approximately
5.9 to 8.6 m with spans from 5.2 to 10.3 m. 

  
  

					
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 Source: SRK, 2017 

Figure 16-6: El Gallo Inferior Levels with Pillar Sizes and Span 

SRK notes that pillars are designed on a regular pattern. An opportunity exists to do a detailed design on a level-by-level basis in order to optimize pillar placement. Working with site personnel, a review of a mining area in El Gallo Inferior on level (rebaje) 762 was performed.
Figure 16-7 and Figure 16-8 show overviews of the area. Variation in colors signify groupings of cuts. Figure 16-9 through Figure
16-13 show a detailed design of this area with Figure 16-9 through Figure 16-13 showing profiles at the sublevel spacing from the
top to the bottom of the designed area. 
 The existing mined out material is shown in green; the mining on this sublevel defines the
pillar placement. Care should be taken to review the sublevels above and below to help optimize the pillar placement taking into account ore grades, room size and pillar size. Two pillars are established in the design. Field evaluation of the
geotechnical conditions of the ore, waste rock, and the overall stability of the openings is required to ensure safe extraction. 

  
  

					
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 Source: SRK, 2017 

Figure 16-7: Plan View of Rebaje 762 in El Gallo Inferior 

Figure 16-8 shows an isometric view of the area. 

 
 

 
 Source: SRK, 2017 

Figure 16-8: Isometric View of Rebaje 762 

  
  

					
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 Figure 16-9 shows the upper most sublevel in this design. A section through the block
model is shown colored by NSR values. The block model blocks range in size from 1 m x 1 m to 6 m x 6 m. Also shown is as an outline of the mining block on the level. The size and shape of the potential mining block on this level is in part
determined by the active mining on the level below shown in Figure 16-10. 
  

 
 Source: SRK, 2017 

Figure 16-9: Profile View at 1766.7 m Elevation 

Figure 16-10 shows the existing asbuilt. SRK notes that mining has occurred outside of what the
geology and resource models show as ore. As described in Section 14 of this report, maintaining a channel sample database using industry best practices will provide more detailed information for incorporation into the geology and resource
models and ensure ore is incorporated into the plan or waste is not mined as ore. 

  
  

					
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 Source: SRK, 2017 

Figure 16-10: Profile View at 1762.7 m Elevation 

Figure 16-11 shows the mining block, pillars and block model profile at the 1758 elevation. 

 
 

 
 Source: SRK, 2017 

Figure 16-11: Profile View at 1758 m Elevation 

  
  

					
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 Figure 16-12 shows the mining block, pillars
and block model profile at the 1750 elevation. The 1754 level is omitted as it is expected to be a sill pillar. 
  

 
 Source: SRK, 2017 

Figure 16-12: Profile View at 1750 m Elevation 

Figure 16-13 shows the mining block, pillars and block model profile at the 1746 elevation. 

  
  

					
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 Source: SRK, 2017 

Figure 16-13: Profile View at 1746 m Elevation 

SRK recommends that the design and the mining in this area should be used as a test for strategic placement of pillars and optimization
of the room and pillar size. 
 A room and pillar design was applied to El Gallo Inferior, Bolivar West and Bolivar Northwest. The El
Gallo Inferior design includes a pod to the east of the main area as illustrated in Figure 16-14. Development dimensions are 4 m x 4 m up to 5 m wide x 5 m high depending on the purpose, mining area and level.
Ramps are designed to a 12% maximum grade for rubber tire equipment. 

  
  

					
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 Source: SRK, 2017 

Figure 16-14: Overview of Mine Design for Reserves 

As described in Section15, the output from the stope optimization process was analyzed on a level-
by-level basis. Polygons were drawn on level sections with levels spaced 4 m apart. Using the stope optimizer blocks as a guide, practical mining constraints such as a minimum mining width of 4 m, a minimum
waste pillar width of 5 m, and reasonable access to the sublevel and mining block were considered in the design of the reserve block. Each 16 m level was divided into 4 m sublevels. Three of the sublevels will be mined with the fourth typically
left as a sill pillar. 
 Figure 16-15 shows a level section in Bolivar Northwest on the 1514
floor elevation. The ramp is designed in the footwall, and access to the level is via a crosscut. This example shows where mining through lower grade material can provide access to other minable blocks. Use of sampling and ore control practices will
allow the proper determination to be made whether or not to send the low grade material to the mill. 

  
  

					
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 Source: SRK, 2017 

Figure 16-15: Level Design in Bolivar West 

Figure 16-16 through Figure 16-19 show all of the mining
areas with the development required to access the areas. Labels are provided to identify key features. As shown in Figure 16-20, significant development is required in Bolivar Northwest to access the deeper
zones of those ore bodies. 

  
  

					
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 Source: SRK, 2017 

Figure 16-16: Plan View of El Gallo Inferior and Chimenea Reserve Blocks and Development

  
 

 
 Source: SRK, 2017 

Figure 16-17: Plan View of Bolivar West Reserve Blocks and Development 

  
  

					
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 Source: SRK, 2017 

Figure 16-18: Plan View of Bolivar NW4 Reserve Blocks and Development 

  
  

					
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 Source: SRK, 2017 

Figure 16-19: Plan View of Bolivar NW1, Z2, 6 and 7 Reserve Blocks and Development 

  
  

					
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 Source: SRK, 2017 

Figure 16-20: Rotated View of Bolivar NW Reserve Blocks and Development 

The dip of the ore bodies varies, and some areas are suitable for the application of longhole stoping techniques. Typical ore body dip
values are shown in Table 16-3. 
 Table 16-3:
Typical Ore Body Dip Values 
  

					
	Ore Body	 	Typical Dip  
(Degrees)  	 	 
	 El Gallo
Inferior
	 	30  	 	
	
Bolivar NW 1
	 	35  	 	
	 Bolivar NW 2
	 	25  	 	
	
Bolivar NW Z2
	 	18  	 	
	 Bolivar NW 4
	 	40  	 	
	
Bolivar NW 6
	 	21  	 	
	 Bolivar NW 7
	 	15  	 	
	
Bolivar W (Room and Pillar)
	 	34  	 	
	 Bolivar W
(Longhole)
	 	75  	 	
	 Chimenea 1
	 	73  	 	
	
Chimenea 2
	 	73  	 	

  Source: SRK, 2017 
  

	16.1.2	Longhole Stoping 

 Chimenea 1, Chimenea 2 and the steeply dipping areas of Bolivar
West are suitable for mining using longhole stoping techniques. Longhole stoping can provide for higher production and better recovery of the ore. However, there are currently limited zones in the Bolivar area where this mining method is applicable,
and mining using this method accounts for approximately 8% of the reserves stated 

  
  

					
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herein. The site has some past experience using longhole techniques in the Chimenea areas. A typical layout shown in Figure 16-21. Vertical pillars, though
not shown in this section, will need to be utilized. These pillars will be 7 m x 7 m with a 12 m span. 
  

 
 Source: SRK, 2017 

Figure 16-21: Typical Longhole Stoping Section 

Figure 16-22 shows the design for Chimenea 1 and Chimenea 2, looking northeast, and the
proximity to existing development and El Gallo Inferior. 
  
 

 
 Source: SRK, 2017 

Figure 16-22: Isometric View of Chimenea 1 and Chimenea 2, Looking NE 

  
  

					
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	16.1.3	Drilling, Blasting, Loading and Hauling 

 Jackleg drills are used for lateral
development and ramp development at Bolivar. Electric-hydraulic jumbos are used for production, lateral development and ramp development. Drill and blast design is carried out by the mine technical services group on site. Two pattern layouts for
typical 4m x 4m blast patterns are shown in Figure 16-23 and Figure 16-24. SRK notes that drill and blast is an area of emphasis in the mine planning process. A drill
jumbo is shown drilling a production blast in El Gallo Inferior in Figure 16-25. 
  

 
 Source: SRK, 2017 

Figure 16-23: Typical 4 m x 4 m Blast Pattern 1 

  
  

					
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 Source: SRK, 2017 

Figure 16-24: Typical 4 m x 4 m Blast Pattern 2 

 
 

 
 Source: SRK, 2017 

Figure 16-25: Drill Jumbo Drilling a Pattern in an El Gallo Inferior Production Stope 

  
  

					
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 The blastholes, typically 2.5 inch in diameter, are loaded with ANFO or Emulsion as
defined by the specific blast design, and initiated with non-electric detonators. 
 After
blasting, the face is mucked by scoops, and material is loaded into trucks and hauled to the ramp portal on surface. Historically, approximately 10% of total production is waste. This percentage will increase to 18% as the mine advances into areas
outside of El Gallo Inferior. Waste rock can be placed in the stopes underground, hauled to the surface and used as construction material; e.g. pads at the portal, or hauled to surface waste dumps. 

 

	16.1.4	Pillar Recovery Potential and Mining Method Alternatives 

 Dia Bras personnel has
indicated their intention to develop methods for the safe extraction of pillars as well as optimizing or modifying the current room and pillar mining method to improve the overall operation. SRK considers these initiatives as having potential for
increasing reserves and mine life in future resource and reserves updates. Pillar recovery is not considered in the reserves stated in this document. SRK makes the following recommendations. 

There is uncertainty in the tonnage and grade of material remaining in pillars. There are two primary causes for this uncertainty. First,
while mined out areas are surveyed on a regular basis, some of the mined out volume models are not updated with the latest information or are not in the correct position. This is especially true in El Gallo Superior where there is a low degree of
confidence in the accuracy of the asbuilt models. The second cause of uncertainty is in the grade of the material left in pillars. Channel samples have been collected, but much of the information is stored in 2D AutoCad drawings and are not in a
usable form for reserve estimation purposes. 
 Dia Bras is initiating a project to perform a whole mine survey using Light Detection
and Ranging (LiDAR) technology. It is expected that an updated mine survey will be available early in the second quarter of 2017. The site is also planning to evaluate their existing channel samples database and, where necessary, collect new samples
in order to increase the confidence in the grade estimation of the pillar material. 
 Improving the mine asbuilt model and the channel
samples database will allow the site to review, quantify, and prioritize pillar material for extraction. 
 The site must then develop
mine plans and safe mining practices in order to extract the pillar material. Several potential options exist for pillar extraction. SRK recommends a trade-off study to determine the feasibility of the
scenarios listed below. 
  

	 	•	 	Scenario 1: Pillar Recovery with no backfill 

  

	 	○ 	 	Focus on recovering pillars without additional support generated by backfilling mined out areas. 

  

	 	○ 	 	Requirements: 

  

	 	-	 	Site visit and geotechnical characterization of existing Pillars; 

  

	 	-	 	Pillar rating assessment; 

  

	 	-	 	Numerical modelling to characterize pillar stress conditions; 

  

	 	-	 	Pillar extraction sequence and impact on stability of other pillars; and 

  

	 	-	 	Assessment of pillar extraction. 

  
  

					
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	 	•	 	 Scenario 2: Post Pillar cut-and-fill
with rock fill 

  

	 	○ 	 	 Potentially utilize rock fill to provide additional ground support for pillar recovery. May result in updated pillar
dimensions for new areas. 

  

	 	○ 	 	 Requirements: 

  

	 	-	 	 All under Scenario 1; and 

  

	 	-	 	 Empirical pillar design criteria; 

 

	 	-	 	 Pillar design by mining levels including access (an update to the long term mine layout); 

 

	 	-	 	 Numerical simulation to assess impact of rock fill on pillar stability; 

 

	 	-	 	 Pillar optimization: grid location and orientation; and 

 

	 	-	 	 Numerical simulation of optimized pillars with rock fill. 

 

	 	•	 	 Scenario 3: Post pillar cut-and-fill
with compacted tailings 

  

	 	○ 	 	 Will result in confirmation or updates to pillar dimension recommendations, a back fill specification for the compacted
tailings, and an updated mine layout and sequence. 

  

	 	○ 	 	 Requirements: 

  

	 	-	 	 All under Scenario 1; and 

  

	 	-	 	 Compacted tailings specifications; 

 

	 	-	 	 Numerical simulation optimized pillars with tailing; and 

 

	 	-	 	 Mine sequence evaluation 

  

	 	•	 	 Scenario 4: Pillar-less cut-and-fill
mining with cemented paste fill 

  

	 	○ 	 	 A new mining method for the operation where
cut-and-fill mining occurs with ground support provided by cemented paste backfill. 

 

	 	○ 	 	 Requirements: 

  

	 	-	 	 All under Scenario 1; and 

  

	 	-	 	 Paste specifications; 

  

	 	-	 	 Numerical modelling of support; 

 

	 	-	 	 Trade-off for method implementation ; and 

 

	 	-	 	 Mine planning including new required infrastructure. 

The mine does not produce enough waste rock to backfill all areas previously mined and recover the remaining pillars. The ability to
utilize existing and future tailings as backfill may be an attractive option for both the handling of mine tailings and obtaining fill material for pillar recovery. Further study is required, however, to determine the feasibility of these options.

  

	16.2	Parameters Relevant to Mine or Pit Designs and Plans 

  

	16.2.1	Geotechnical 

 Skarn deposits are generally formed by infiltration of
magmatic-hydrothermal fluids, resulting in alteration that overprints the genetically related intrusion and adjacent sedimentary country rocks. While alteration commonly develops close to the related intrusion, fluids may migrate considerable
distances along structures, lithologic contacts, or bedding planes. These alteration structures typically form planes or zones of weakness in the underground workings. 

Based on the alteration assemblages present, skarn deposits are generally described as either calcic (gartnet, clinopyroxene, and
wollastinite) or magnesian (olivine, phlogopite, serpentine, spinel, magnesium-rich clinopyroxene). Both the alteration and the mineralization in skarn deposits are 

  
  

					
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 magmatic-hydrothermal in origin. These affects can lead to wide variations in the rock
mass strengths. 
 The geotechnical characteristics at El Gallo Superior (Superior) and El Gallo Inferior (Inferior) generally consists
of the following conditions: 
  

	 	•	 	General mineralized shape: Tabular; 

	 	•	 	Ore thickness: thick (20 to 30 m, but up to 70 m); 

	 	•	 	Ore plunge: intermediate (30° to 40°); 

	 	•	 	Overburden depths: shallow (25 to 260 m); 

	 	•	 	Rock Quality Designation (61±10); 

	 	•	 	Uniaxial compressive strength (127 MPa); 

	 	•	 	Joint spacing (60 to 100 mm); 

	 	•	 	Joint Conditions (Hard joint walls and slightly rough); 

	 	•	 	Ore rock mass conditions: competent RMR76 (50 to 60); and 

	 	•	 	Back conditions: very competent RMR76(65 to 75). 

 Currently, the El Gallo Superior and
Inferior deposits are being mined using a room and pillar method. The areas are mined in accordance with recommendations provided in the rock mechanics report by Engineers Ramos, Garcia and Nava (October 2012). The report proposed that roof bolts
and mesh be added to open faces. 
 The report also suggests that the pillar size should be greater than 7 m wide by 8 m long. The
safety factor calculated for these size pillars assumes the room to be 10 m wide. The dip of the deposit (i.e., average of 33°) combined with a variable ore thickness makes mining on dip difficult and results in the need for variable pillar
dimensions since pillar stability is a function of pillar width compared to its height. This led to the recommendation that horizontal room and pillar mining method be employed between levels with off-ore
decline and access ramps. Sublevels for a given level are ramped on-ore to the next sublevel. This room and pillar mining method is a well-established method that allows flexibility in both production
sequencing and ground support. 
 The mine currently uses the following geotechnical mine design parameters: 

 

	 	•	 	Stope width: 11 to 13 m; 

	 	•	 	Pillar Width: 7 m; and 

	 	•	 	Room Height: 6, 12 and 18 m. 

 SRK has reviewed pillar performance with these parameters
by comparing to the Lunder & Pakalnis, 1997 stability charts. Figure 16-26 shows an example of the pillar stability charts applied at Bolivar. The dot points represent individual pillar widths to high
ratios versus the ratio between average pillar stress to the UCS rock strength. The majority of the pillars represented in the figure are predicted to be stable. 

SRK notes that the Lunder & Pakalnis charts represent case histories for multi-pillar arrays while at Bolivar there is typically
a single row of pillars along strike of the orebody suggesting that the Bolivar pillars would be even more stable than predicted by the stability charts. SRK considers that there is a good opportunity to increase the span between pillars by
recovering some pillars and optimizing pillar design by reducing the dimensions. A pillar size reduction has not been included in the reserve 

  
  

					
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 estimate. However, SRK considers this adjustment to be an upside potential in reserve
recovery provided test areas confirm that pillars remain stable. 
 Similarly, there is an upside potential to recover 20% to 40% of
existing pillars in historically mined areas, depending on ground conditions and room span geometries. There may also be an upside opportunity to adjust the mining method to use cemented backfill in the new areas to avoid leaving pillars all
together. 
 SRK notes that pillar recovery operations are the most dangerous of all mining activities because of the potential for
sudden rockfall and adjacent pillar collapse when removing the pillars. The strategic use of artificial active or passive ground support (e.g., bolting, timber sets, grout cans, tight backfilling, etc.) can reduce the rock fall risk. SRK recommends
that if pillars are to be recovered that the engineering plan be thoroughly reviewed from a ground stability perspective. A formal stability analysis needs to be completed prior to any pillar recovery operations. Figure 16-27 shows an example of slender pillar that might be recovered because the pillar is not heavily loaded and the roof spans are short in this area of the mine. 

  
  

					
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 Source: SRK, 2017 

Figure 16-26: Example of Pillar Stability Chart, Level 762 

  
  

					
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 Source: SRK, 2017 

Figure 16-27: Example Slender Pillar that Might be Recovered 

 

	16.2.2	Hydrological 

 A hydrogeological review has not been undertaken by SRK. The mine is
currently dry and has been historically dry with periodic water inflows into the portals due to seasonal rains. Currently, the mine does not require any large scale dewatering. 

 

	16.3	Underground Stope Optimization 

 Potential mining blocks shapes were constructed
using Maptek Vulcan’s implementation of Alford Mining System’s Stope Shape Optimizer (Stope Optimizer). The mining method applicable to all areas in El Gallo Inferior, Bolivar Northwest and shallow dipping areas of Bolivar West is room and
pillar. Longhole stoping is planned for Chimenea 1, Chimenea 2 and steeply dipping area of Bolivar West. 

  
  

					
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	16.3.1	Depletion 

 Dia Bras personnel provided the mined out areas that were modeled as of
September 30, 2016. SRK is aware that not all mined out areas are modeled, and there is some uncertainty, as described in previous sections, in the accuracy of the existing asbuilt information. SRK collected the available information, used a
modeling technique to generate a 3 m distance buffer of the mined areas, and generated volumes that could be used in flagging the blocks as mined. 
  

	16.3.2	Optimization Parameters and Process 

 NSR values were calculated using the
parameters described in Section 15.2 for material classified as Measured or Indicated. All other blocks are assumed to be waste with NSR and grade values of zero. 

Stope optimization was used to construct initial minable shapes. Key parameters used for stope optimization are provided in Table 16-4. 
 Table 16-4: Stope Optimization Parameters
(Angelita, Elissa, Escondida, Esperanza, and Zulma) 
  

							
	 Mining
Method
	  	Room and Pillar  	  	Longhole  	  	
	 Minimum Stope Length (m)
	  	4  	  	5  	  	
	
Minimum Waste Pillar Width (m)  
	  	5  	  	5  	  	
	 Stope Height (m)
	  	4  	  	Sill: 4, Stope: 8  	  	
	 Stope Width (m)
	  	5  	  	5  	  	
	
Cut-off (NSR)
	  	30.50  	  	32.50  	  	
	 Stope
Orientation
	  	Perpendicular to Orebody  	  	Perpendicular to Orebody  	  	

 Source: SRK, 2017 

Tonnes and grade for each stope shape were further processed in spreadsheets to apply the mining recovery, external dilution (at 0
grade), and to calculate an NSR for the diluted and recovered material. Blocks were classified as economic, marginal or waste based on the NSR value of the mining block and cut-off for the area. The blocks
meeting the reserve criteria were visually inspected and isolated blocks were identified and removed from the reserves. An average development cost of US$705/meter was used to evaluate how much development a particular block could support. This
dollar amount was the average contractor and Dia Bras development mining cost used for the 2017 site budget. Marginal blocks immediately adjacent to economic blocks were considered and included in the reserves if it was reasonable to expect that no
significant additional development would be required to exploit the marginal block. 
  

	16.4	Mine Production Schedule 

 Bolivar is an operating mine with a production history
spanning more than five years. Site personnel produce an annual plan broken down by month. Additional years are planned at quarterly and annual resolution for a period of four additional years. SRK has reviewed the 2017 through 2021 plans and notes
the following: 
  

	 	•	 	 Operations and production personnel are supported by a geology and engineering groups; 

	 	•	 	 The geology and engineering groups work in close collaboration; 

	 	•	 	 Historical knowledge of the site is leveraged in the planning process; and 

  
  

					
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	 	•	 	 As is typical, sampling is performed in areas ahead of planned mining. However, the results are generally not used to
update the resource model used for long range planning. As a result, there is a disconnect between the short range site plan and the LOM reserves plans. The short range site plan typically includes additional material not included in the LOM
reserves. 

 SRK recommends that the planning of infill drilling, channel sampling, and mine planning should
emphasize converting resources into reserves inventory and efforts should be undertaken to minimize the differences of the short term site plans and the LOM reserves plans. 

To verify the economic viability of the reserves estimated for this report, SRK created a production plan incorporating only reserves
material as described in this report and the development required to access the mining blocks. Development access to ore was designed to be 4m wide by 4m high, while ramp development in new areas was design at 5 m wide by 5 m high. An additional
allowance length of 20% was added in the waste development to account for turnouts, laydowns, and ventilation development that will be required but was not designed in detail on each level. The resulting production plan is shown in Table 16-5 with ore quantities broken down by zone. The start date of this schedule is October 2016 as this is the month immediately following the cut-off date of the mine-out data used in this report. The first period of the schedule represents three months of production. A typical ore mining rate of 400 t/day to 1,000 t/day per active stope was used. Mining rates for ore and
waste as well as the rate of development (meters) used in the schedule are reasonable given the production history at the mine. 

Table 16-5: SRK Production Plan 

 

																															
	Item	 	Unit	 	 Months  

1-3  
	 	 	Year 1  	 	 	Year2  	 	 	Year 3  	 	 	Year 4  	 	 	Year 5  	 	 	Total 	 
	 Ore Mined
	 	t	 	 	228,159  	 	 	 	915,009  	 	 	 	933,307  	 	 	 	974,662  	 	 	 	967,298  	 	 	 	309,012  	 	 	 	4,327,449 	 
	 Waste Mined
	 	t	 	 	15,787  	 	 	 	171,220  	 	 	 	431,839  	 	 	 	238,053  	 	 	 	85,792  	 	 	 	1,140  	 	 	 	943,831 	 
	
Total Mined
	 	t	 	 	243,947  	 	 	 	1,086,229  	 	 	 	1,365,146  	 	 	 	1,212,715  	 	 	 	1,053,090  	 	 	 	310,152  	 	 	 	5,271,279 	 
	 Cu (mill
feed)
	 	%	 	 	0.954  	 	 	 	0.927  	 	 	 	0.814  	 	 	 	0.863  	 	 	 	0.767  	 	 	 	0.806  	 	 	 	0.845 	 
	
Cu (mill feed)
	 	t	 	 	2,177  	 	 	 	8,484  	 	 	 	7,597  	 	 	 	8,414  	 	 	 	7,422  	 	 	 	2,492  	 	 	 	36,586 	 
	 Ag (mill
feed)
	 	g/t	 	 	16.7  	 	 	 	18.5  	 	 	 	19.6  	 	 	 	22.2  	 	 	 	12.1  	 	 	 	11.5  	 	 	 	17.5 	 
	
Ag (mill feed)
	 	oz	 	 	122,322  	 	 	 	545,008  	 	 	 	587,115  	 	 	 	695,045  	 	 	 	377,292  	 	 	 	114,629  	 	 	 	2,441,411 	 
	 Au (mill
feed)
	 	g/t	 	 	0.285  	 	 	 	0.233  	 	 	 	0.231  	 	 	 	0.203  	 	 	 	0.517  	 	 	 	0.551  	 	 	 	0.315 	 
	
Au (mill feed)
	 	oz	 	 	2,093  	 	 	 	6,851  	 	 	 	6,930  	 	 	 	6,360  	 	 	 	16,090  	 	 	 	5,477  	 	 	 	43,800 	 
	 El Gallo Inferior
Ore
	 	t	 	 	228,159  	 	 	 	819,911  	 	 	 	356,216  	 	 	 	-  	 	 	 	-  	 	 	 	-  	 	 	 	1,404,286 	 
	
El Gallo Inferior Ore (E)1
	 	t	 	 	-  	 	 	 	-  	 	 	 	137,366  	 	 	 	220,032  	 	 	 	255,281  	 	 	 	33,943  	 	 	 	646,622 	 
	 Chimenea 1
Ore
	 	t	 	 	-  	 	 	 	63,864  	 	 	 	21,952  	 	 	 	-  	 	 	 	-  	 	 	 	-  	 	 	 	85,816 	 
	
Chimenea 2 Ore
	 	t	 	 	-  	 	 	 	31,235  	 	 	 	41,858  	 	 	 	13,701  	 	 	 	-  	 	 	 	-  	 	 	 	86,794 	 
	 Bolivar NW 7
Ore
	 	t	 	 	-  	 	 	 	-  	 	 	 	119,512  	 	 	 	-  	 	 	 	-  	 	 	 	-  	 	 	 	119,512 	 
	
Bolivar NW 6 Ore
	 	t	 	 	-  	 	 	 	-  	 	 	 	75,449  	 	 	 	62,620  	 	 	 	-  	 	 	 	-  	 	 	 	138,070 	 
	 Bolivar NW Z2
Ore
	 	t	 	 	-  	 	 	 	-  	 	 	 	34,627  	 	 	 	31,706  	 	 	 	-  	 	 	 	-  	 	 	 	66,333 	 
	
Bolivar NW 4 Ore
	 	t	 	 	-  	 	 	 	-  	 	 	 	-  	 	 	 	103,531  	 	 	 	177,272  	 	 	 	-  	 	 	 	280,803 	 
	 Bolivar NW 1
Ore
	 	t	 	 	-  	 	 	 	-  	 	 	 	-  	 	 	 	65,643  	 	 	 	534,612  	 	 	 	275,069  	 	 	 	875,324 	 
	
Bolivar NW 2 Ore
	 	t	 	 	-  	 	 	 	-  	 	 	 	-  	 	 	 	34,285  	 	 	 	-  	 	 	 	-  	 	 	 	34,285 	 
	 Bolivar W Ore
(LH)
	 	t	 	 	-  	 	 	 	-  	 	 	 	121,846  	 	 	 	55,487  	 	 	 	-  	 	 	 	-  	 	 	 	177,333 	 
	
Bolivar W Ore (R&P)
	 	t	 	 	-  	 	 	 	-  	 	 	 	24,480  	 	 	 	387,657  	 	 	 	134  	 	 	 	-  	 	 	 	412,271 	 
	 Ore Mined
	 	t/day	 	 	2,453  	 	 	 	2,500  	 	 	 	2,550  	 	 	 	2,663  	 	 	 	2,636  	 	 	 	1,451  	 	 			 
	 Waste Mined
	 	t/day	 	 	170  	 	 	 	468  	 	 	 	1,180  	 	 	 	650  	 	 	 	234  	 	 	 	5  	 	 			 
	 Total Mined
	 	t/day	 	 	2,623  	 	 	 	2,968  	 	 	 	3,730  	 	 	 	3,313  	 	 	 	2,869  	 	 	 	1,456  	 	 			 
	 Waste
Development
	 	m/day        	 	 	3.5  	 	 	 	7.3  	 	 	 	16.8  	 	 	 	10.1  	 	 	 	3.8  	 	 	 	0.1  	 	 			 
	
Ore + Waste Dev.
	 	m/day        	 	 	3.5  	 	 	 	11.0  	 	 	 	21.5  	 	 	 	11.1  	 	 	 	3.8  	 	 	 	0.1  	 	 	 	 	 

 1El Gallo Inferior, East Zone 

Source: SRK, 2017 

  
  

					
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 It is SRK’s opinion that the analysis of this representative production schedule,
which incorporates the development plan, the capital and operating costs described in Section 21, provides a reasonable test of the economic viability of the reserves. 
  

	16.5	Major Mining Equipment 

 A list of the major mining equipment used underground is
included in Table 16-6. The equipment appears to be of sufficient quantity and appropriate size for the operation. SRK notes that good maintenance practices, proper ventilation, and properly timed equipment
overhaul or replacement will be important as the mine progress deeper and further from the surface access. 
 Table 16-6: Major Underground Mining Equipment 
  

									
	Type    	  	Make	  	Model	  	Capacity  	  	 
	 Truck, Low
Profile
	  	JARVIS CLARK	  	JDT-413	  	12 t  	  	
	 Truck, Low
Profile
	  	JARVIS CLARK	  	JDT-413	  	12 t  	  	
	
Truck, Low Profile (Under Repair)    
	  	JARVIS CLARK	  	 	  	Under Repair  	  	
	 Truck, Low
Profile
	  	MTI	  	DTI804	  	18 t  	  	
	 Truck, Low
Profile
	  	MTI	  	DTI804	  	18 t  	  	
	 Truck, Low
Profile
	  	MTI	  	DTI804	  	18 t  	  	
	 Truck, Low
Profile
	  	JOY GLOBAL	  	16TM	  	16 t  	  	
	 Truck, Low
Profile
	  	MTI	  	DTI804	  	18 t  	  	
	
Truck, Low Profile
	  	ATLAS COPCO	  	MT-431B	  	30 t  	  	
	 Drill Jumbo
	  	ATLAS COPCO	  	BOOMER 235	  	12 foot  	  	
	 Drill Jumbo
	  	MTI	  	VEIN RUNNER2	  	12 foot  	  	
	 Drill Jumbo
	  	ATLAS COPCO	  	BOOMER S1D	  	14 foot  	  	
	 Drill Jumbo
	  	GETMAN 200	  	H226	  	12 foot  	  	
	 Drill Jumbo
	  	ATLAS COPCO	  	 	  	16 foot  	  	
	
Drill Jumbo
	  	BOART LONGYEAR    	  	STOPEMASTER XHD    	  	 	  	
	 Scoop Tram
	  	SANDVIK	  	EJC-180	  	5 yds  	  	
	 Scoop Tram
	  	ATLAS COPCO	  	ST-6C	  	6 yds  	  	
	 Scoop Tram
	  	ATLAS COPCO	  	ST-6C	  	6 yds  	  	
	 Scoop Tram
	  	MTI	  	LT-1050	  	6 yds  	  	
	 Scoop Tram
	  	ATLAS COPCO	  	ST-14	  	8 yds  	  	
	 Scoop Tram
	  	ATLAS COPCO	  	ST-3.5C	  	3.5 yds  	  	
	
Scoop Tram
	  	ATLAS COPCO	  	ST-3.5C	  	3.5 yds  	  	

 Source: SRK, 2017 

Dia Bras provided SRK with a list of planned equipment to meet the production requirements over the next three years as mining in
Bolivar West and Bolivar Northwest proceeds. 
 Table 16-7: Planned Underground Mining
Equipment 
  

							
	Type	  	Make	  	Number 
Planned 	  	Purpose
	
Drill Jumbo, Boomer 282  
	  	Atlas Copco  	  	4	  	Two planned for Bolivar West, two for Bolivar NW
	 Scoop Tram, ST-14
	  	Atlas Copco  	  	4	  	Two planned for Bolivar West, two for Bolivar NW
	
Truck, 18 t
	  	MACK	  	6	  	Three planned for Bolivar West, Three for Bolivar NW

 Source: SRK, 2017 

  
  

					
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	16.6	Ventilation 

 The Bolivar mine currently relies on natural ventilation, and as a
result airflow through the mine varies in quantity and direction as the atmospheric conditions on the surface change. Bolivar personnel have modeled the workings and airflow for the mine in Ventsim as illustrated in Figure 16-28. 
  
  

 
 Source: Dia Bras, 2016 

Figure 16-28: Dia Bras Ventilation Model for Existing Workings 

As the mine progresses into Bolivar West, Bolivar Northwest, and further east in El Gallo Inferior, a forced ventilation system will be
required. 
 Airflow requirements for a forced system were calculated based on the total equipment and personnel expected to be working
in each of the zones over the life of mine plan. Bolivar West is not connected to the rest of the mine, but El Gallo Inferior and Bolivar Northwest are and were modeled as a connected system. 

Table 16-8 shows the mine equipment used in determining the mine total airflow under the current
operating scenario. Airflow requirement assumptions of 100 cfm/bhp (0.06 m3/s per kW) for equipment, 55 cfm/person (0.026 m3/s per person) for
personnel, and an assumption of 60 people working underground with a total ore and waste production of 2,710 t/day was used. 

  
  

					
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	     Table 16-8: Ventilation Requirements for Equipment and
Personnel
  

	Item  	  	Count  	  	Total Diesel Engine  
Horsepower (hp)  	  	% Effective  
Utilization  	  	 Personnel  
Requirement  

(cfm)  
	  	 Equipment  
Requirement  

(cfm)/hp  
	  	Total  
(cfm)1  	  	Total  
(m3/s)  

	 Truck

Drill Jumbo

Scoop Tram

Personnel
	  	 8  

6  
 7  

60  
	  	 1840  

607  
 1639  
	  	 50  

15  
 45  

100  
	  	55  	  	 100  

100  
 100  
	  	92,000   9,105   73,755   3,300  	  	43.42   4.30   34.81   1.56  
	
Total
	  	 	  	 	  	 	  	 	  	 	  	178,160  	  	84.08  

 1 Total requirement at current production of
2,710 t/day 
 Source: SRK, 2017 

Using the production schedule, SRK generated a ventilation model for the state reserve mining areas. The maximum airflow through the
mine was calculated by summing the airflow requirements of the equipment and personnel working in each zone at peak production. An additional 10% was then added for contingency. It was assumed that all vehicles will be turned off when not in use for
extended periods. 
 Total airflow required in Bolivar West at peak production was calculated to be 87.31 m3/s. Maximum airflow required in the Bolivar NW 1, 2, Z2, 6 and 7 was calculated to be 68.90 m3/s. Bolivar NW 4 and El Gallo Inferior east was
calculated to be 33.52 m3/s and 34.26 m3/s respectively. Maximum airflow through the Bolivar NW and El Gallo Inferior system peaks at just over
94.39 m3/s for a few months in the production schedule. 
 In Bolivar West, a
forcing system delivers fresh air directly to the room and pillar and longhole stopes and levels. The airflow enters through the surface raise and is delivered to a mid-level where it splits to the two main
working sections. The air exhausts through the main ramp to surface. Levels are connected as required with ventilation raises. The fan pressure is closely linked to the raise diameters in the mine. The surface raise diameter of 4 m and an internal
raise diameter of 3 m is specified in order to reduce the pressure in the raises (which can be used as secondary egress) as well as accommodate a smaller, less costly fan. A fan located at the top of the ventilation raise shown in Figure 16-29 moving 91.1 m3/s with a fan pressure of 0.73 kilopascals (kPa) is appropriate for Bolivar West. 

  
  

					
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 Source: SRK, 2017 

Figure 16-29: Bolivar West Ventilation Raise Location with Depth to First
Ventilation Drift 
 Four fans are specified to be installed in the Bolivar Northwest and El Gallo Inferior (East) system. One is
located at the top of a 4 m diameter raise in Bolivar NW 1, and one is located at the top of a 4 m diameter raise in El Gallo Inferior East. The other two fans are located in Bolivar NW 4 and Bolivar NW 1. The forcing system induces fresh air flow
down the raises in Bolivar NW 1 and El Gallo Inferior. Air exhausts out of the Bolivar NW 4 raise and El Gallo Inferior portal. Table 16-9 shows the information for the four new fans. 

Table 16-9: Fan Airflow and Pressure for Bolivar Northwest and El Gallo
Inferior (East) 
  

									
	Fan  	 	Location  	 	Fan Airflow (m3/s)  	 	Fan Pressure (kPa)  	 	 
	
1

2

3

4
	 	 BNW 1 – Top of Main Raise  

BNW4  
 El Gallo Portal  

El Gallo Inf. – Top of Main Raise  
	 	 64.01  

40.00  
 85.32  

126.76  
	 	 1.000  

0.288  
 0.652  

0.600  
	 	

 Source: SRK, 2017 

  
  

					
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– Bolivar Mine, Mexico
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 Figure 16-30 shows the key ventilation
development required for the Bolivar Northwest and El Gallo Inferior system. 
  
  

 
 Source: SRK 

Figure 16-30: Bolivar NW/El Gallo Inferior Key Ventilation Development Layout 

SRK recommends that the site implement a whole-of-mine
ventilation plan. The main objectives of the plan would be to: 
  

	 	•	 	Develop a whole-of-mine ventilation strategy that will ultimately achieve best practice; 

 

	 	•	 	Provide additional data for the detailed design and construction of the forced ventilation system; 

  

	 	•	 	Identify areas of the mine that may need to be sealed in order for the ventilation system to function as designed; 

  

	 	•	 	Identify auxiliary ventilation requirements; and 

  

	 	•	 	Train personnel in the operation of the system as well as how the mine plan and operational practices can impact the performance of the system. 

  
  

					
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– Bolivar Mine, Mexico
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	17	Recovery Methods 

 Dia Bras operates a conventional concentration plant consisting
of crushing, grinding, flotation, thickening and filtration of the final concentrate. Flotation tails are disposed of in a conventional tailings facility. A block diagram is shown in Figure 17-1. 

Dump trucks of approximately 20 tonnes capacity deliver the ore from the mine to the primary crusher area. Trucks can dump directly to
the primary crusher or, alternatively, in one of multiple stockpiles. A front-end loader reclaims ore from the stockpiles and feeds the jaw crusher. 

The crushing circuit has been expanded recently. In its current configuration, the crushing plant consists of a jaw crusher in open
circuit, with its product feeding a vibrating screen. Material passing the vibrating screen opening becomes final product that is transferred to the feed silos. The vibrating screen’s oversize feeds a secondary crushing stage consisting of two
cone crushers. The cone crusher’s discharge joins the primary crusher’s discharge and feeds the vibrating screen. 
 The
grinding stage uses two conventional ball mills operating in parallel, each one in closed circuit with a hydrocyclone battery. Ore is fed to the ball mills from two silos using conveyor belts. The hydrocyclone overflow feed the flotation circuit.

 The flotation circuit operates three identical parallel flotation lines. Each flotation line includes a rougher stage where the
rougher concentrate feeds the cleaning stage, and the rougher’s tails feed the rougher-scavenger stage. The cleaning circuit consists of three consecutive cleaning stages, tailings from each cleaning stage along with the
rougher-scavenger’s concentrate are recirculated to the feed of the rougher stage. Tails from the rougher-scavenger become the plant’s final tails. 

The flotation concentrate is thickened before being dewatered using three vacuum filters. 

Final flotation tails are pumped to the tailings storage facility where they are classified using hydrocyclones. Process water is
reclaimed from the tailings water pond and reused in the process plant. 
  
 

 
 Source: SRK, 2017 

Figure 17-1: Piedras Verdes Mill – Block Flow Diagram 

Piedras Verdes’ monthly average performance for 2016 is shown in Table 17-1. 

  
  

					
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 Table 17-1: Piedras Verdes Monthly Average
Performance - 2016 
  

																																													
	Month	  	Mill feed,
t/month dry	 	  	 Concentrate

t/d dry
	 	  	 Head grade

Cu%
	 	  	 Head grade

Ag g/t
	 	  	 Head grade

Au g/t
	 	  	 Concentrate

Cu%
	 	  	 Concentrate

Ag g/t
	 	  	 Concentrate

Au g/t
	 	  	 Recovery

Cu%
	 	  	 Recovery

Ag%
	 	  	 Recovery

Au%
	 
	 1
	  	 	82,965	 	  	 	2,080	 	  	 	0.96%	 	  	 	18.9	 	  	 	0.28	 	  	 	29.3%	 	  	 	538	 	  	 	4.31	 	  	 	76.1%	 	  	 	71.3%	 	  	 	38.0%	 
	 2
	  	 	67,076	 	  	 	2,046	 	  	 	1.18%	 	  	 	18.1	 	  	 	0.22	 	  	 	28.9%	 	  	 	448	 	  	 	3.81	 	  	 	74.9%	 	  	 	75.7%	 	  	 	52.2%	 
	 3
	  	 	68,845	 	  	 	2,229	 	  	 	1.06%	 	  	 	18.0	 	  	 	0.28	 	  	 	27.0%	 	  	 	446	 	  	 	4.47	 	  	 	82.4%	 	  	 	80.3%	 	  	 	50.8%	 
	 4
	  	 	83,061	 	  	 	2,314	 	  	 	0.96%	 	  	 	20.5	 	  	 	0.28	 	  	 	28.4%	 	  	 	536	 	  	 	4.24	 	  	 	82.2%	 	  	 	72.9%	 	  	 	41.8%	 
	 5
	  	 	84,979	 	  	 	2,435	 	  	 	0.97%	 	  	 	17.5	 	  	 	0.18	 	  	 	27.8%	 	  	 	481	 	  	 	3.23	 	  	 	82.0%	 	  	 	78.7%	 	  	 	52.6%	 
	 6
	  	 	68,212	 	  	 	2,163	 	  	 	1.07%	 	  	 	17.3	 	  	 	0.14	 	  	 	28.2%	 	  	 	417	 	  	 	2.52	 	  	 	83.4%	 	  	 	76.2%	 	  	 	55.7%	 
	 7
	  	 	82,812	 	  	 	2,324	 	  	 	0.94%	 	  	 	15.7	 	  	 	0.13	 	  	 	27.9%	 	  	 	462	 	  	 	2.63	 	  	 	82.8%	 	  	 	82.4%	 	  	 	56.7%	 
	 8
	  	 	84,302	 	  	 	2,587	 	  	 	0.99%	 	  	 	14.4	 	  	 	0.12	 	  	 	27.3%	 	  	 	369	 	  	 	2.19	 	  	 	84.2%	 	  	 	78.6%	 	  	 	55.8%	 
	 9
	  	 	83,146	 	  	 	2,303	 	  	 	0.94%	 	  	 	14.2	 	  	 	0.14	 	  	 	28.2%	 	  	 	408	 	  	 	2.75	 	  	 	83.4%	 	  	 	79.8%	 	  	 	53.5%	 
	 10
	  	 	88,993	 	  	 	2,681	 	  	 	1.03%	 	  	 	16.2	 	  	 	0.21	 	  	 	28.2%	 	  	 	432	 	  	 	3.62	 	  	 	82.9%	 	  	 	80.1%	 	  	 	51.2%	 
	 11
	  	 	82,540	 	  	 	2,495	 	  	 	0.99%	 	  	 	16.3	 	  	 	0.17	 	  	 	27.4%	 	  	 	438	 	  	 	3.23	 	  	 	83.8%	 	  	 	81.1%	 	  	 	59.0%	 
	 12
	  	 	73,467	 	  	 	2,096	 	  	 	0.94%	 	  	 	13.8	 	  	 	0.16	 	  	 	27.4%	 	  	 	386	 	  	 	3.41	 	  	 	83.0%	 	  	 	80.0%	 	  	 	59.0%	 
	 Total
	  	 	950,398	 	  	 	27,753	 	  	 	1.00%	 	  	 	16.7	 	  	 	0.19	 	  	 	28.0%	 	  	 	446	 	  	 	3.35	 	  	 	81.8%	 	  	 	78.1%	 	  	 	52.1%	 
	 Min.
	  	 	67,076	 	  	 	2,046	 	  	 	0.94%	 	  	 	13.8	 	  	 	0.12	 	  	 	27.0%	 	  	 	369	 	  	 	2.19	 	  	 	74.9%	 	  	 	71.3%	 	  	 	38.0%	 
	
Max.
	  	 	88,993	 	  	 	2,681	 	  	 	1.18%	 	  	 	20.5	 	  	 	0.28	 	  	 	29.3%	 	  	 	538	 	  	 	4.47	 	  	 	84.2%	 	  	 	82.4%	 	  	 	59.0%	 

 Source: Dia Bras, 2017 

  
  

					
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 Ore feed during year 2016 reached a total of 950,398 tonnes, equivalent to an average
of 79,200 tonnes per month, or 2,600 tonnes per day. This suggests that the 3,000 t/d mill capacity is not being fully utilized. 

Figure 17-2 shows the daily mill feed in terms of tonnes and copper head grade. SRK notes a high
level of variability for both tonnes and head grade. Better integration between geology, mine planning and processing can significantly reduce the variability. Additional work is also needed in the processing facilities to stabilize the operation.
Improvements include the implementation of a preventive maintenance program and training programs to improve operators’ skill, with the ultimate objective of improving metal recovery and lower operating cost, while maintaining or improving
concentrate quality. 
  
  
 

 
 Source: SRK, 2017 

Figure 17-2: Piedras Verdes – 2016 Daily Performance 

Production of copper concentrate has consistently ranged between approximately 2,000 and 2,700 tonnes per month, equivalent to roughly a
2.9% mass pull. The monthly average has consistently reached commercial quality with copper at 27% and credit metals averaging 369 g/t silver and 2.19 g/t gold in 2016. 
  

	17.1	Plant Design and Equipment Characteristics 

 Bolivar uses a conventional copper
concentrator plant. The operation is completely manual with no automation or online monitoring being used in the processing circuit. The grinding product, or flotation feed particle size distribution is approximately P80=250 μm. Table 17.2 shows the Piedras Verdes mill’s major process equipment, its key characteristics, and power ratings. 

  
  

					
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 Table 17-2: Piedras Verdes Major Process
Equipment 
  

													
	Area	 	Equipment	 	 Quantity 	 	Manufacturer, Model	 	Motor (KW)	 	  	 
	 Crushing
	 	Apron feeder	 	1	 	Metso AF5-60MN-16.4	 	 	22	 	  	
	 Crushing
	 	Jaw crusher	 	1	 	Stedman	 	 	93	 	  	
	 Crushing
	 	Cone crusher	 	1	 	Sandvik H6800	 	 	336	 	  	
	 Crushing
	 	Cone crusher	 	1	 	Metso HP-300	 	 	224	 	  	
	 Crushing
	 	Vibrating screen	 	1	 	Terex Simplicity 6 ft x 16 ft	 	 	15	 	  	
	 Crushing
	 	Vibrating screen	 	1	 	Deister 6 ft x 1 ft’	 	 	20	 	  	
	 Grinding
	 	Ball mill	 	1	 	Dominion 9 ft-6 inch x 14 ft	 	 	447	 	  	
	 Grinding
	 	Ball mill	 	1	 	Dominion 9 ft-6 inch x 14 ft	 	 	447	 	  	
	 Flotation
	 	Conditioning tank	 	1	 	12 ft x 12 ft	 	 	37	 	  	
	 Flotation
	 	Rougher cell	 	3 x 3	 	DR 300, 300 ft3	 	 	22	 	  	
	 Flotation
	 	Rougher-scavenger cell	 	3 x 4	 	DR 300, 300 ft3	 	 	22	 	  	
	 Flotation
	 	Cleaning first	 	3 x 2	 	DR 300, 300 ft3	 	 	22	 	  	
	 Flotation
	 	Cleaning second	 	3 x 3	 	Sub-A 100 ft3	 	 	11	 	  	
	 Flotation
	 	Cleaning third	 	3 x 2	 	Sub-A 100 ft3	 	 	11	 	  	
	 Thickening
	 	Thickener	 	1	 	50 ft	 	 	15	 	  	
	 Thickening
	 	Thickener	 	1	 	40 ft	 	 	15	 	  	
	 Filtration
	 	Disc filter	 	1	 	Dorr Oliver 8 ft x 10 discs	 	 	na	 	  	
	 Filtration
	 	Disc filter	 	1	 	FLSmidth 8 ft X 10 Disc	 	 	7.5	 	  	
	 Filtration
	 	Drum filter	 	1	 	Eimco	 	 	na	 	  	

   Source: SRK, 2017 

  
  

					
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	18	Project Infrastructure 

 The Project has fully developed infrastructure including
access roads, a 385 person man-camp that includes a cafeteria, laundry facilities, maintenance facilities for the underground and surface mobile equipment, electrical shop, guard house, fuel storage,
laboratories, warehousing, storage yards, administrative offices, plant offices, truck scales, explosives storage, processing plant and associated facilities, tailings storage facility, and water storage reservoir and water tanks. The site has
electric power from the Mexican power grid, backup diesel generators, and heating from site propane tanks. The Project is fully functional and built out for the currently producing mine and mill. 

Figure 18-1 shows the general facilities location for the Project. 

 
  
 

 
 Source: SRK, 2017 

Figure 18-1: Bolivar General Facilities Location 

  
  

					
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	18.1	Access and Local Communities 

 Access to the Bolivar Mine is by paved road
approximately 305 km southwest from Chihuahua and then approximately 80 km by all-season gravel roads to the villages of Cieneguita and Piedras Verdes adjacent to the Project. 

The Project is located near several small communities namely Cieneguita Lluvia de Oro (population ~1,000), Pierdras Verdas (population
~500), and San José del Pinal. The Project is approximately 5 km southeast of the small Ejido community of Piedras Verdes with the offices and camp known as Loma Café located about 2 km to the southwest of Piedras Verdes. The community
of Piedras Verdes supports the mine by providing potable water, trash collection and disposal in the nearby Cieneguita landfill, and transportation for construction materials including sand and gravel. The water is supplied by two local springs.

 The camp supports the 385 workers and contractors. The majority of the project staff live outside the local area in regional cities
of Delicias, Parral, Chihuahua, Durango, San Luis Potosi, Creel, Torreon, and Sonora, and Mexico City. The company provides transportation in busses and vans from transfer locations in the City of Chihuahua, approximately seven hours northeast of
the project and from the community of Choix, Sinaloa approximately five hours to southwest. Crew changes occur on Tuesday and Wednesday each week. Personnel living in the region work six days with one day off, usually on Sunday. Personnel living
outside the region work 14 days followed by seven days off. Personnel are work one of two shifts per day, 7:00AM to 7:00PM or 7:00PM to 7:00AM. 

The camp is located 2.7 km from the Bolivar Mine, and at 8.4 km from the Piedras Verdes processing plant site. The company provides
transportation from the camp to the mine or mill in four busses. 
  

	18.2	Service Roads 

 The site has developed and functioning gravel service roads that
access the mine portals, water storage reservoir, camp, and process facilities. The roads between the mine and processing plant are used daily by the fleet of contract trucks that move the ore from the mine ore pads to the processing plant. 

 

	18.3	Mine Operations and Support Facilities 

 The mine is accessed through various
portals as described in Section 16. The mine operation is supported by the newer mine camp with rooms, change house facilities, and cafeteria. The mine office is located at the portal to the Bolivar mine. There are two mine related surface
maintenance facilities. The first is a mine maintenance facility at the portal of the Bolivar mine. An additional facility is located near the portal accessing the El Gallo Inferior ore body. A third additional facility to service surface equipment
and to provide storage is located at the mill area. The mine infrastructure includes a compressed air system, located at the main portal to the Bolivar Mine, with compressors and receiving tanks that supports the underground operations. Refuge
chambers are located in various sections of the underground mine. There are small functional shops underground to support minor equipment repairs and servicing. A medical building is located at the portal to the Bolivar mine. A photograph of the
mine maintenance shop is provided in Figure 18-2. Explosives storage for powder and primers is located in a controlled area located remotely from site. 

  
  

					
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 Source: SRK, 2017 

Figure 18-2: Bolivar General Facilities Location 

 

	18.4	Process Support Facilities 

 The processing area has a security shack,
administrative offices, truck scales, electrical shop, maintenance shop, fuel storage, smaller camp and cafeteria, and the processing facilities as described in Section 17. Figure 18-3 shows an aerial
view of the site. A photograph from the hill above the processing plant shows the location of the tailings storage area toward the right center of the picture (Figure 18-4). 

 
 

 
 Source: Google Maps, 2017 

Figure 18-3: Bolivar Aerial View of the Processing Plant 

  
  

					
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 Source: Dia Bras, 2017 

Figure 18-4: Project Processing Plant (looking south) 

 

	18.5	Energy 

  

	18.5.1	Propane 

 The site uses propane for general heating and heating of water in the
camp. A local supplier from Cuauhtémoc, Chihuahua provides the fuel. In 2016, the consumption was 10,000 liters per month. 
  

	18.5.2	Power Supply and Distribution 

 Power to the site is supplied by high voltage power
supplied through the Comisión Federal de la Electricidad (CFE), the state-owned utility through a 33kV power line. The Project has a substation that feeds the mine and processing plant through a secondary distribution line. The system
operates at a typical load of 2.5 MW. Backup generation is provided for the mine and processing plant with diesel powered generator sets. The backup generators are located at the processing plant location. The transmission line towers can be seen in
Figure 18-4. Figure 18-5 shows the monthly power consumption for September 2015 to September 2016 as a representation of the use. 

  
  

					
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 Source: Dia Bras, 2017 

Figure 18-5: Monthly Power Consumption 

 

	18.5.3	Fuel Storage 

 The site has diesel storage tanks on site that supply fuel for the
mine underground and surface equipment as well as the backup generators. The fuel is restocked by vendors. 
  

	18.6	Water Supply 

  

	18.6.1	Potable Water 

 Potable water for use at the camp is supplied by the community of
Piedras Verde from local springs through the local water utility piping. 
  

	18.6.2	Process Water 

 The supply water for the processing plant is supplied from a nearby
Pierdras Verdes dam, owned by Dia Bras. The reservoir has a capacity of 1.5 million m3 and can meet the plant makeup water requirement of approximately 123,000 m3/month (based on 2015 usage)
or 92,200 m3/month for nine months of 2016. The water is pumped from a pump house at the reservoir to an interim water tank located near the reservoir. The water tank then supplies water via a
pipeline to the processing plant storage tanks approximately 1,800 m to the south. A photograph of the reservoir is shown in Figure 18-6. 

  
  

					
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   Source: SRK, 2017 

Figure 18-6: Piedras Verdes Reservoir 

 

	18.7	Site Communications 

 The site is equipped with a satellite communications system,
including telephone and internet that allows communications between the plant and office facilities. A radio system is also in use. The mine has hard line telephone service. 
  

	18.8	Site Security 

 The site has a separate security force of approximately 12 people,
there are typically four people on each crew. Additionally, there is a Mexican Army base located in close proximity to the Project site. The mine site guard house is located at the entrance to the Bolivar Mine. The processing site guard house is
located near the scales at the processing plant. 
  

	18.9	Logistics 

 The copper concentrates are loaded in 18 ton trucks and shipped by road
to the port at Guaymas. The concentrate is sold FOB port. The Project produced 30,555 tonnes of concentrate in 2015 (approximately 2,500 tonnes/month). During the first nine months of 2016, concentrate totaled 22,652 tonnes. The 2016 average per
month is approximately 2,500 tonnes/month. 

  
  

					
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 The copper concentrate is sampled and placed in a shipping truck, weighed and then
covered by a tarpaulin and then shipped 530km, approximately 10 hours one way, through Bahuichivo to the port of Guaymas. Figure 18-7 shows the trucking routes to Guaymus. 

All other materials required for the Project are shipped to the site via the road system by truck. 

 
 

 
   Source: Google Maps, 2017 

Figure 18-7: Copper Concentrate Trucking Routes 

 

	18.10	Waste Handling and Management 

  

	18.10.1	Waste Management 

 The site has septic systems to handle wastewater and sewage.
Trash, as previously mentioned, is hauled to the landfill at Cieneguita. 
  

	18.10.2	Waste Rock Storage 

 The site has minimal waste rock storage needs as the majority
of the underground waste is stored underground. What little waste that comes to the surface is placed in the permitted storage areas. 
  

	18.11	Tailings Management 

  

	18.11.1	Existing Tailings Facility 

 The existing tailings facility has been in operation
since the Piedras Verdes mill was commissioned in late 2011. The existing tailings facility location (TSF 1 and TSF 2) can be seen in Figure 18-8 and Figure 18-13 along
with expansion areas, TSF 3-5, adjacent to the existing facility. 

  
  

					
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   Source: Dia Bras, 2017 

Figure 18-8: Active Tailing Area Location 

The tailings management plan at the Bolivar mine includes placement of tailings in a number of locations. The principal storage
facility, Tailings Area 1 (TSF1) in Figure 18-8, is the largest of the facilities operated to date. It has a remaining capacity of 862,000 tonnes, or one lift. Tailings are currently not being placed in TSF1.
The site is utilizing capacity in Tailings Storage Area 2 (TSF2). The remaining capacity in TSF1 as contingency capacity. The capacity of this TSF2, with no 

  
  

					
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 additional expansion, is approximately 78,000 tonnes and will be reached in April 2017.
At that point tailings will be placed in TSF 3, which has a capacity of 463,850 tonnes. TSF 3 has approximately six months of capacity and will support production through September/October 2017. TSF 4 will be ready to accept tailings in June 2017
and will be used after TSF 3 reaches capacity. The TSF 4 tailings placement will be modified with new equipment. The new system is discussed in Secion 18.11.2. 

In general, the existing tailings facility and TSF2 and TSF3 will be operated by moving the tailings from the processing plant via
pipelines to holding cells on the tailings area near the leading edge of the embankment. Water is drained to the back of the facility (closest to the plant). The multiple cells allow the tailings to drain while new tailings are placed in the next
cell. Once drained, the higher density material is moved to the front of the embankment to build the next lift embankment with mobile equipment (excavator and dozer). The construction method is known as “upstream construction.” The
sequence repeats from the front of the embankment across the tailings storage facility until the next lift is prepared to raise the TSF to the next level. A sump exists at the bottom of the tailing facility that captures any seep or runoff water and
is returned for use at the processing plant. Figure 18-9 shows the dewatering cells and the general shape of the TSF operational area. 
  

 
   Source: Dia Bras, 2017 

Figure 18-9: Active Tailing Operation 

The existing permitted facility had been inspected by Burō Hidrōlogico Consultoría in 2016 and recommendations were
made to modify the slopes to 30 degrees maximum and provide 4 meter benches. SRK has summarized the findings in this section and it does not take any design 

  
  

					
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 responsibility since SRK is not the “Engineer on Record” for the design or
inspection. Additional work suggested was to maintain a drainage channel to keep water off the edges of the TSF, clean up and reestablish the edges of the TSF on solid rock, address erosion, and add cover over a pipe under an access road. These
items have been addressed. Dia Bras provided survey data showing the slope corrections and these can be seen in the photograph in Figure 18-10. The design parameters and
as-built can be seen in Figure 18-11. 
  

 
   Source: SRK, 2017 

Figure 18-10: Photograph of the Active Tailings Area 

  
  

					
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   Source: Dia Bras, 2016 

Figure 18-11: Existing Tailings Grade and Survey 

 

	18.11.2	Tailings Facility Expansion 

 Dia Bras has contracted with Burō
Hidrōlogico Consultoría and JDF Construction Mineras SA de CV (JDF) for the geotechnical evaluation, design, costing and construction of a TSF expansion program that allows the processing of ore beyond the reserves stated in this report.
The current status and planned sequence of expansion is described in this section. 
 Burō Hidrōlogico Consultoría, in
June 2016, prepared an analysis of the watershed, including rainfall analysis, and completed a review of the geology in the area. Figure 18-12 shows the area under study by Burō Hidrōlogico
Consultoría. The existing TSF can be seen on the right. 

  
  

					
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   Source: Burō Hidrōlogico Consultoría, 2016 

Figure 18-12: View of Burō Hidrōlogico Consultoría Study Area 

Figure 18-13 shows the location of the TSF expansion areas, the location of a New TSF to the
west, and the location of additional infrastructure. 

  
  

					
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 As part of the overall management plan, the site is also installing infrastructure to
recover additional process water and reduce the water content of the final tailings. Current tailings are approxmiately 40% solids. 

A thickener, with a diameter of 36.6 m, is under construction and is planned to be in operation in June 2017. Process tailings will be
delivered from the plant to the new thickener via pipeline. The 60% solids tailings from the thickener will be placed, via pipeline, in TSF 4. 

Three filter presses have been purchased by Dia Bras. Installation of these filters is planned for completion in September 2017. Two of
the three filters will operate at any given time with the third filter on standby or under maintenance. Following the installation and commissioning of the thickener and filter presses, the final tailings from the Bolivar mine will consist of 85%
solids. This dry-stack material will be placed in the remainder of TSF 4 and TSF 5 via a conveyor after the conveyor is installed. The conveyor is planned for completion by February 2018. TSF 4 and TSF 5
will provide capacity to mid 2019. 
 Expansion beyond TSF 5 will consist of the construction of the New Tailings Facility (New TSF)
shown in Figure 18-13 located to the west of TSF 5. This facility, when complete, will provide capacity to July 2023. SRK notes that Dia Bras has calculated the July 2023 total TSF capacity assuming 4,000 ore
tonnes per day production from Piedras Verdes. 
 In summary, tailings consisting of approximately 40% solids will be placed in
conventional tailings storage facilities (TSF 1-TSF 3) until June 2017. Thickened tails (60% solids) will be placed from June 2017 to February 2018 in TSF 4.
Dry-stack tails will be placed after February 2018 in TSF 4 TSF 5. Expansion around the main TSF, inTSF 1-TSF 5, will be utilized until mid 2019 when dry stack tailings
will be placed in the New TSF to located just to the west of the existing facility. 
 All permits are in place for TSF 1 through TSF
5. Additional permitting will be required for the New TSF. SRK notes that Dia Bras has allocated US$6.1 million in 2017 for the thickener, filter presses, and TSF expansion civil works. 

SRK recommends that the site continue its project efforts to complete the installation of the thickener, filter presses, and conveyor.
The site must ensure that all required detailed designs are completed and permits are in place for successful operation of the New TSF located to the west of the existing facility. An analysis of utilizing tailings as backfill in the mine should be
carried out, and a trade-off study should be completed to determine if the size of the New TSF can be reduced. 

  
  

					
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	19	Market Studies and Contracts 

 Bolivar is an underground mining operation producing
commercial quality copper concentrate containing payable amounts of copper, silver and gold. Dia Bras currently holds a contract for the sale of its concentrate. The contract was reviewed by SRK and its terms were included in the technical economic
model. The terms appear reasonable and in line with similar operations SRK is familiar with. 
 The metals produced from the Bolivar
concentrate are traded on various metals exchanges. Metal prices were provided by Sierra Metals and have been derived from January 2017 BMO Capital Markets Street Consensus Commodity prices. In SRK’s opinion the prices used are reasonable for
the statement of mineral resources and ore reserves. The metal price assumption are presented in Table 19-1. 

Table 19-1: Metal Prices 

 

											
	Commodity	  	Value	 	  	Unit	 	  	 
	 Au
	  	 	1,283	 	  	$	/oz	 	  	
	 Ag
	  	 	18.30	 	  	$	/oz	 	  	
	
Cu
	  	 	2.43	 	  	$	/lb	 	  	

 Source: Sierra Metals, 2017 

  
  

					
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	20	Environmental Studies, Permitting and Social or Community Impact 

  

	20.1	Environmental Studies and Background Information 

 SRK’s environmental
specialist did not conduct a site visit of the Bolivar Mine. As such, the following information is predicated on a review of available documentation and direct communications with the operator. 

The Bolivar Mine consists of a 2,400 t/d underground Cu, Ag and Au mining operation. The mined material is transported 5 km to the 3,000
t/d Piedras Verdes Mill. The mine is located within 14 contiguous mineral concessions covering a total of 6,800 ha. The Bolivar Mine, Piedras Verdes Milling operation and the 14 concessions (the Project) are owned by Sierra Metals through its
ownership of the various operating entities. Until December 2012, Sierra Metals was formerly named DIA BRAS Exploration Inc. 
 Limited
data and documents were available for the project. Those that were provided for review have not been officially or completely translated, and SRK was obliged to employ electronic translation software to convert many of them from the native Spanish,
thus limiting the efficiency of the review. In addition, several of the documents were conceptual or only available in draft form and may not accurately reflect the final design conditions of the facility. 

 

	20.2	Environmental Studies and Liabilities 

 Detailed information regarding
environmental studies related to the Bolivar Mine was not made specifically available for this assessment. Based on communications with representatives from Dia Bras, it does not appear that there are currently any known environmental issues that
could materially impact the extraction and beneficiation of mineral resources or reserves. 
 From previous assessments (Gustavson,
2013), known environmental liabilities include unreclaimed exploration disturbances (i.e., roads, drill pads, etc.) and small residual waste rock piles from historical mining operations. 

As observed by SRK personnel during the site visit, dust emissions generated as a result of ore haulage traffic from the mine to mill
could become an issue with several adjacent landowners in the future. Development of a mitigation plan prior to any regulator involvement is recommended. 
  

	20.3	Environmental Management 

  

	20.3.1	Tailings Disposal 

 The current tailings disposal facility has capacity until mid-2019. Dia Bras intends to build additional tailings capacity concurrent with mine operations. The expansion will require additional permitting effort. 

 

	20.3.2	Geochemistry 

 Geochemical characterization of the Bolivar Mine tailings has been
conducted annually by a qualified third-party laboratory in Mexico as part of the monitoring and reporting requirements of NOM-141- SEMARNAT-2003. The testing includes
leach testing for metals and acid-base accounting (ABA). 

  
  

					
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 Acid-base accounting (ABA) testing is a static test procedure designed to measure the
long-term potential for waste rock and/or tailings to generate acid. 
 Net-neutralization
potential (NNP) consists of two measurements: (1) neutralization potential (NP) and (2) the acid-generating potential (AP). NNP is defined as the difference between these two measurements (NNP = NP – AP). The NP/AP ratio is also used
to describe the acid-producing potential of mine waste. ABA classifications for mine-waste samples are based on both NNP and NP/AP and are divided into three categories including acid-generating, uncertain, and
non-acid generating. 
 According to the Nevada Division of Environmental Protection report on
Waste Rock, Overburden, and Ore dated February 2014, if the ratio is less than 1.2:1, the material is considered potentially acid generating (PAG). If the ratio is greater than 1.2, no additional testing is required. 

The testing results for 2014 and 2015, provided to SRK, indicate low metals leaching potential and either uncertain or non-acid generating potential. The 2016 ABA results (NP = 52.5 kg CaCO3/ton; AP = 141 kg CaCO3/ton), however, suggest that some of the more recent material may be potentially acid generating: NP/AP = 0.372.
Additional investigation of the current materials being deposited into the tailings impoundment may be warranted; however, given the dryness of the Chihuahuan Desert, this may not necessarily be a material issue for the project. 

 

	20.3.3	Emission and Waste Management 

 In 2015, an authorization for the Unique
Environmental License (Licencia Ambiental Unica [LAU]) was granted by SEMARNAT to EXMIN in order to carry out mineral processing and other metallurgical activities (beneficiation) at the Bolivar mill site. 

The document establishes the environmental obligations to be met by the company. It establishes that EXMIN operations must adhere to the
authorizations provided by the LAU in the matter of atmospheric emissions and generation/management of hazardous wastes. 
 Several key
conditions of the LAU include: 
  

	 	•	 	EXMIN must submit its Annual Operating Card (Cédula de Operacion Anual) between March 1st and June 30th of each year; 

  

	 	•	 	Discharges of wastewater to natural water reservoirs or sewers, without CONAGUA approval, is prohibited; 

  

	 	•	 	The operation shall develop and maintain a contingency plan (not provided to SRK); 

  

	 	•	 	For point sources of atmospheric emissions (end of pipe), all emission sampling ports shall be installed and maintained in good conditions; 

 

	 	•	 	Emissions must meet the Maximum Permissible Limits (Limites Maximos Permisibles [MPL]) established by the NOM-085-SEMARNAT-2011 and NOM-043-SEMARNAT-1193; 

  

	 	•	 	Emissions of Volatile Organic Compounds (VOCs) should be kept to a minimum, since there is no any normative regulating emissions at this time; and 

 

	 	•	 	Records of the operation and maintenance of equipment that generates emissions shall be maintained. 

  

  
  

					
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	20.4	Mexican Environmental Regulatory Framework 

  

	20.4.1	Mining Law and Regulations 

 Mining in Mexico is regulated through the Mining Law,
approved on June 26, 1992 and amended by decree on December 24, 1996, Article 27 of the Mexican Constitution. 
 Article 6 of
the Mining Law states that mining exploration; exploitation and beneficiation are public utilities and have preference over any other use or utilization of the land, subject to compliance with laws and regulations. 

Article 19 specifies the right to obtain easements, the right to use the water flowing from the mine for both industrial and domestic
use, and the right to obtain a preferential right for a concession of the mine waters. 
 Articles 27, 37 and 39 rule that exploration;
exploitation and beneficiation activities must comply with environment laws and regulations and should incorporate technical standards in matters such as mine safety, ecological balance and environmental protection. 

The Mining Law Regulation of February 15, 1999 repealed the previous regulation of March 29, 1993. Article 62 of the regulation
requires mining projects to comply with the General Environmental Law, its regulations, and all applicable norms. 
  

	20.4.2	General Environmental Laws and Regulations 

 Mexico’s environmental protection
system is based on the General Environmental Law known as Ley General del Equilibrio Ecológico y la Protección al Ambiente - LGEEPA (General Law of Ecological Equilibrium and the Protection of the Environment), approved on
January 28, 1988 and updated December 13, 1996. 
 The Mexican federal authority over the environment is the
Secretaría de Medio Ambiente y Recursos Naturales - SEMARNAT (Secretariat of the Environment and Natural Resources). SEMARNAT, formerly known as SEDESOL, was formed in 1994, as the Secretaría de Medio Ambiente Recursos
Naturales y Pesca (Secretariat of the Environment and Natural Resources and Fisheries). On November 30th, 2000, the Federal Public Administration Law was amended giving rise to SEMARNAT. The
change in name corresponded to the movement of the fisheries subsector to the Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación - SAGARPA (Secretariat of Agriculture, Livestock, Rural
Development, Fisheries and Food), through which an increased emphasis was given to environmental protection and sustainable development. 

SEMARNAT is organized into a number of sub-secretariats and the following main divisions: 

 

	 	•	 	 INE – Instituto Nacional de Ecología (National Institute of Ecology), an entity responsible for planning,
research and development, conservation of national protection areas and approval of environmental standards and regulations. 

  

	 	•	 	PROFEPA - Procuraduría Federal de Protección al Ambiente (Federal Attorney General for the Protection of the Environment) responsible for law enforcement, public participation and environmental education.

  

	 	•	 	CONAGUA – Comisión Nacional del Agua (National Water Commission), responsible for assessing fees related to water use and discharges. 

 

	 	•	 	Mexican Institute of Water Technology. 

  
  

					
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	 	•	 	CONANP – Comisión Nacional de Areas Naturales Protegidas (National Commission of Natural Protected Areas). 

The federal delegation or state agencies of SEMARNAT are known as Consejo Estatal de Ecología – COEDE
(State Council of Ecology). 
 PROFEPA is the federal entity in charge of carrying out environmental inspections and negotiating
compliance agreements. Voluntary environmental audits, coordinated through PROFEPA, are encouraged under the LGEEPA. 
 Under LGEEPA, a
number of regulations and standards related to environmental impact assessment, air and water pollution, solid and hazardous waste management and noise have been issued. LGEEPA specifies compliance by the states and municipalities, and outlines the
corresponding duties. 
 Applicable regulations under LGEEPA include: 

 

	 	•	 	 Regulation to LGEEPA on the Matter of Environmental Impact Evaluations, May 30, 2000; 

 

	 	•	 	 Regulation to LGEEPA on the Matter of Prevention and Control of Atmospheric Contamination, November 25, 1988;

  

	 	•	 	 Regulation to LGEEPA on the Matter of Environmental Audits, November 29, 2000; 

 

	 	•	 	 Regulation to LGEEPA on Natural Protected Areas, November 20, 2000; 

 

	 	•	 	 Regulation to LGEEPA on Protection of the Environment Due to Noise Contamination, December 6, 1982; and

  

	 	•	 	 Regulation to LGEEPA on the Matter of Hazardous Waste, November 25, 1988. 

Mine tailings are listed in the Regulation to LGEEPA on the Matter of Hazardous Waste. Norms include: 

 

	 	•	 	 Norma Official Mexicana
(NOM)-CRP-001-ECOL, 1993, which establishes the characteristics of hazardous wastes, lists the wastes, and provides threshold
limits for determining its toxicity to the environment; 

  

	 	•	 	
NOM-CRP-002-ECOL, 1993
establishes the test procedure for determining if a waste is hazardous; 

  

	 	•	 	 On September 13, 2004, SEMARNAT published the final binding version of its new standard on mine tailings and mine
tailings dams, NOM-141-SEMARNAT-2003. The new rule has been renamed since the draft version was published in order to better reflect the scope of the new regulation.
This NOM sets out the procedure for characterizing tailings, as well as the specifications and criteria for characterizing, preparing, building, operating, and closing a mine tailings dam. This very long (over 50 pages) and detailed standard sets
out the new criteria for characterizing tailings as hazardous or non-hazardous, including new test methods. A series of technical annexes address everything from waste classification to construction of the
dams. The rule is applicable to all generators of non-radioactive tailings and to all dams constructed after this NOM goes into effect; and 

 

	 	•	 	 Existing tailings dams will have to comply with the new standards on post-closure. The NOM formally went into effect 60
days after its publication date. 

  
  

					
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 PROFEPA “Clean Industry” 

The Procuraduría Federal de Protección al Ambiente (the enforcement portion of Mexico’s Environmental Agency,
referred to as PROFEPA), administers a voluntary environmental audit program and certifies businesses with a “Clean Industry” designation if they successfully complete the audit process. The voluntary audit program was established by
legislative mandate in 1996 with a directive for businesses to be certified once they meet a list of requirements including the implementation of international best practices, applicable engineering and preventative corrective measures. 

In the Environmental Audit, firms contract third-party, PROFEPA-accredited auditors, considered experts in fields such as risk management
and water quality, to conduct the audit process. During this audit, called “Industrial Verification,” auditors determine if facilities are in compliance with applicable environmental laws and regulations. If a site passes, it receives
designation as a “Clean Industry” and is able to utilize the Clean Industry logo as a message to consumers and the community that it fulfills its legal responsibilities. If a site does not pass, the government can close part, or all of a
facility if it deems it necessary. However, PROFEPA wishes to avoid such extreme actions and instead prefers to work with the business to create an “Action Plan” to correct problem areas. 

The Action Plan is established between the government and the business based on suggestions of the auditor from the Industrial
Verification. It creates a time frame and specific actions a site needs to take in order to be in compliance and solve existing or potential problems. An agreement is then signed by both parties to complete the process. When a facility successfully
completes the Action Plan, it is then eligible to receive the Clean Industry designation. 
 PROFEPA believes this program fosters a
better relationship between regulators and industry, provides a green label for businesses to promote themselves and reduces insurance premiums for certified facilities. The most important aspect, however, is the assurance of legal compliance
through the use of the Action Plan, a guarantee that ISO 14001 and other Environmental Management Systems cannot make. 
 According to
Dia Bras, the company has initiated the PROFEPA “Clean Industry” application process for the Bolivar mill site. The site is currently preparing for the third-party, external audit, and anticipated obtaining the certification in 2017. 

SIGA 

Many companies in Mexico adopt the corporate policy, Sistema Integral de Gestión Ambiental (SIGA) (Integral System of
Environmental Management), for the protection of the environmental and prevention of adverse environmental impacts. SIGA emphasizes a commitment to environmental protection along with sustainable development, as well as a commitment to strict
adherence to environmental legislation and regulation and a process of continuous review and improvement of company policies and programs. The companies continue to improve their commitments to environmental stewardship through the use of the latest
technologies that are proven, available, and economically viable. 
 SRK is not aware if the Bolivar Mine participates in the SIGA
program at this time, but recommends that they do so. 

  
  

					
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 Other environmental/social industry programs that the mine could participate in
include: 
  

	 	•	 	Seeking accreditation under the voluntary self-management program for health and safety with the Mexican Department of Labor and Social Welfare (PASST); and 

 

	 	•	 	Strive to receive the Social Responsible Company (ESR) Distinctive, which is awarded by the Mexican Center of Philanthropy. 

  

	20.4.3	Other Laws and Regulations 

 Water Resources 

Water resources are regulated under the National Water Law, December 1, 1992 and its regulation, January 12, 1994 (amended by
decree, December 4, 1997). In Mexico, ecological criteria for water quality is set forth in the Regulation by which the Ecological Criteria for Water Quality are Established,
CE-CCA-001/89, dated December 2, 1989. These criteria are used to classify bodies of water for suitable uses including drinking water supply, recreational
activities, agricultural irrigation, livestock use, aquaculture use and for the development and preservation of aquatic life. The quality standards listed in the regulation indicate the maximum acceptable concentrations of chemical parameters and
are used to establish wastewater effluent limits. Ecological water quality standards defined for water used for drinking water, protection of aquatic life, agricultural irrigation and irrigation water and livestock watering are listed. 

Discharge limits have been established for particular industrial sources, although limits specific to mining projects have not been
developed. NOM-001-ECOL-1996, January 6, 1997, establishes maximum permissible limits of contaminants in wastewater discharges to surface water and national
“goods” (waters under the jurisdiction of the CONAGUA). 
 Daily and monthly effluent limits are listed for discharges to
rivers used for agricultural irrigation, urban public use and for protection of aquatic life; for discharges to natural and artificial reservoirs used for agricultural irrigation and urban public use; for discharges to coastal waters used for
recreation, fishing, navigation and other uses and to estuaries; and discharges to soils and to wetlands. Effluent limitations for discharges to rivers used for agricultural irrigation, for protection of aquatic life and for discharges to reservoirs
used for agricultural irrigation have also been established. 
 Ecological Resources 

In 2000, the National Commission of Natural Protected Areas (CONANP) (formerly CONABIO, the National Commission for Knowledge and Use of
Biodiversity) was created as a decentralized entity of SEMARNAT. As of November 2001, 127 land and marine Natural Protected Areas had been proclaimed, including biosphere reserves, national parks, national monuments, flora and fauna reserves, and
natural resource reserves. 
 Ecological resources are protected under the Ley General de Vida Silvestre (General Wildlife Law).
(NOM)-059-ECOL-2000 specifies protection of native flora and fauna of Mexico. It also includes conservation policy, measures and actions, and a generalized methodology
to determine the risk category of a species. 
 Other laws and regulations include: 

  
  

					
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	 	•	 	Forest Law, December 22, 1992, amended November 31, 2001, and the Forest Law Regulation, September 25, 1998; 

	 	•	 	Fisheries Law, June 25, 1992, and the Fisheries Law Regulations, September 29, 1999; and 

	 	•	 	Federal Ocean Law, January 8, 1986. 

 Regulations Specific to Mining
Projects 
 All aspects related to Mine Safety and Occupational Health are regulated in Mexico by NOM-023- STPS-2003 issued by the Secretariat of Labor. Appendix D of this regulation refers specifically to ventilation for underground mines, such as Bolivar Mine, and
establishes all the requirement underground mines should comply with, which are subject of regular inspections. 
 New tailings dams
are subject to the requirements of NOM-141-SEMARNAT-2003, Standard that Establishes the Requirements for the Design, Construction and Operation of Mine Tailings Dams.
Under this regulation, studies of hydrogeology, hydrology, geology and climate must be completed for sites considered for new tailings impoundments. If tailings are classified as hazardous under NOM-CRP-001-ECOL/93, the amount of seepage from the impoundment must be controlled if the facility has the potential to affect groundwater. Environmental monitoring of
groundwater and tailings pond water quality and revegetation requirements is specified in the regulations. 
 NOM-120-ECOL-1997, November 19, 1998 specifies environmental protection measures for mining explorations activities in temperate and dry climate zones that would affect
xerophytic brushwood (matorral xerofilo), tropical (caducifolio) forests, or conifer or oak (encinos) forests. The regulation applies to “direct” exploration projects defined as drilling, trenching, and underground excavations. A permit
from SEMARNAT is required prior to initiating activities and SEMARNAT must be notified when the activities have been completed. Development and implementation of a Supervision Program for environmental protection and consultation with CONAGUA is
required if aquifers may be affected. Environmental protection measures are specified in the regulations, including materials management, road construction, reclamation of disturbance and closure of drill holes. Limits on the areas of disturbance by
access roads, camps, equipment areas, drill pads, portals, trenches, etc. are specified. 
  

	20.4.4	Expropriations 

 Expropriation of ejido and communal properties is subject to the
provisions of agrarian laws. 
  

	20.4.5	NAFTA 

 Canada, the United States and Mexico participate in the North American Free
Trade Agreement (NAFTA). NAFTA addresses the issue of environmental protection, but each country is responsible for establishing its own environmental rules and regulations. However, the three countries must comply with the treaties between
themselves; and the countries must not reduce their environmental standards as a means of attracting trade. 
  

	20.4.6	International Policy and Guidelines 

 International policies and/or guidelines that
may be relevant to the Bolivar Mine include: 
  

	 	•	 	International Finance Corporation (Performance Standards) – social and environmental management planning; and 

  
  

					
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	 	•	 	World Bank Guidelines (Operational Policies and Environmental Guidelines). 

 These items
were not specifically identified and included in SRK’s environmental scope of work; however, given that Sierra Metals is a Canadian entity, general corporate policy tends to be in compliance with IFC, World Bank and Equator Principles. 

SRK recommends that a more comprehensive audit of the Bolivar Mine be conducted with respect to these guidelines and performance
standards. 
  

	20.4.7	The Permitting Process 

 Environmental permits are required from various federal
and state agencies. The general process for obtaining authorization to construct a new industrial facility is shown below (Figure 20-1). 

  
  

					
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 Figure 20-1: Construction and Start-up Authorization for Industrial Facilities 

  
  

					
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 Figure 20-1 (continued): Construction and Start-up Authorization for Industrial Facilities 

  
  

					
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 Figure 20-1 (continued): Construction and Start-up Authorization for Industrial Facilities 

  
  

					
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	20.4.8	Required Permits and Status 

 The required permits for continued operation at the
Bolivar Mine, including exploration of the site, have been obtained. SRK has not conducted an investigation as to the current status of all the required permits. At this time, SRK is not aware of any outstanding permits or any non-compliance at the project or nearby exploration sites. The following information regarding the exploration and mining permits was provided by Dia Bras. 

  
  

					
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 Table 20-1: Permit and Authorization Requirements for the
Bolivar Mine 
  

					
	Permit	 	Agency	 	 Approval Date

(or anticipated Approval Date)

	Mining Law Concession	 	President via the Minister of Commerce and Industrial and the General Directorate of Mines Promotion - Mexican Secretaría de
Economía	 	See Table 20-2
	 Manifestación de
Impacto Ambiental (MIA) -
 Environmental Impact Statement
	 	Secretaría de Medio Ambiente y Recursos Naturales (SEMARNAT) - Secretariat of the Environment and Natural Resources	 	 The operating mines of the Bolivar project are exempt from
having to apply for the MIA according to the document SG.IR.08-2009 / 191 from SEMARNAT dated May 2009 that recognizes the exception since Dia Bras proved that the mining concessions predated the 1988 law. Any
other concession will need a MIA or prove pre-existence.
 The new mines of the Bolivar Project have MIA authorization document SG.IR.08-2015 / 271 from SEMARNAT dated October, 2015.
 The plant site has a MIA, document
SG.IR.08-2010 / 106.
 The MIA for the power line and substation is the document number
SG.IR.08-2013 /004.

	Análisis de Riesgo - Risk Analysis Report	 	Dirección Estatal de Proteccion Civil Chihuahua (with assistance from external consultant)	 	 A risk analysis focusing on the security on the use of
explosives, was conducted and approved in D.O.
 901/2015.
 Additional studies have
recently been completed, but not yet submitted to SEMARNAT.

	Operating License (and Air Quality Permit)	 	SEMARNAT	 	The Bolivar mine area has no atmospheric emissions. The Bolivar plant area has a Licencia Unica Ambiental (unique environmental
license) dated October 14, 2015, and approved under SG. CA.08-2015/075.
	Cambio de Uso de Suelo - Land Use Change Permit	 	SEMARNAT	 	The operating concessions in the Bolivar Project are exempt from having to apply for the Cambio de Uso de Suelo, according to the
document SG.IR.08-2009 / 191 from SEMARNAT dated May 2009, since Dia Bras proved that the mining concessions existed prior to the 1988 law. For the proposed mines, Dia Bras has presented the studies and
solicitation, and is expecting a resolution in the next few weeks.
	Concession Title for Underground Water Extraction	 	 Comisión Nacional del Agua (CONAGUA) -

National Water Commission)
	 	Mine dewatering is regulated under the Mining Law and no permit is required to extract mine water.
	Authorization for Utilization of National Surface Water	 	CONAGUA	 	For decades, new water appropriations in the area have been under moratorium; which was recently lifted by CONAGUA. Dia Bras has applied
for new water appropriations and is expecting a response in April 2017.
	Wastewater Discharge Permit	 	CONAGUA	 	 For the Bolivar mine offices, there is a title permit BOO.906.01-1341 dated June 21, 2015.
 For the Bolivar plant, there are documents No
B00.E.22.4.-420 and No B00.906.01-1340 dated June 21, 2015.

	Hazardous Waste Registration	 	SEMARNAT	 	The last update to this registration is dated September 18, 2015. The site reviews annually to determine if additional updates are
necessary.
	
Explosives Use Permit
	 	Secretaría de la Defensa Nacional (SEDENA)	 	Permit Number 4042. This permit is reviewed and updated annually, with the last one issued on December 1, 2016.

  
  

					
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	Permit	 	Agency	 	 Approval Date

(or anticipated Approval Date)

	Archeological release letter	 	Instituto Nacional de Antropologia y Historia (INAH)	 	Updated in November 2013. No sites of interest for the INAH
	 Contract
for Land   Use
	 	Local Ejido	 	The original contract was updated January 28, 2015.

 Table 20-2: Bolivar Project Concessions 

 

															
	Holding Company	 	Name	 	Type	 	Area  	 	File No.  	 	Title No.  	 	Enrolled  	 	Expiry  
	Dia Bras Mexicana (DBM)	 	La Cascada	 	Exploration	 	1,944.33  	 	016/32259  	 	222720  	 	8/27/2004  	 	8/26/2054  
	 Javier Bencomo
Muñoz 50%, DBM
 50%
	 	Bolivar III	 	Exploitation	 	48.00  	 	321.1/1-64  	 	180659  	 	7/14/1987  	 	7/13/2037  
	 Javier Bencomo
Muñoz 50%, DBM
 50%
	 	Bolivar IV	 	Exploitation	 	50.00  	 	321.1/1-118  	 	195920  	 	9/23/1992  	 	9/22/2042  
	Dia Bras Mexicana	 	Piedras Verdes	 	Exploration	 	92.4698  	 	016/31958  	 	220925  	 	10/28/2003  	 	10/27/2053  
	Dia Bras Mexicana	 	Mezquital	 	Exploration	 	2,475.41  	 	016/32157  	 	223019  	 	10/5/2004  	 	10/4/2054  
	Dia Bras Mexicana	 	Mezquital Fracc. 1	 	Exploration	 	4.73  	 	016/32157  	 	223020  	 	10/5/2004  	 	04/10/2054  
	Dia Bras Mexicana	 	Mezquital Fracc. 2	 	Exploration	 	2.4338  	 	016/32157  	 	223021  	 	10/5/2004  	 	10/4/2054  
	Dia Bras Mexicana	 	Mezquital Fracc. 3	 	Exploration	 	974.5713  	 	016/32157  	 	223022  	 	10/5/2004  	 	10/4/2054  
	Dia Bras Mexicana	 	El Gallo	 	Exploration	 	251.7977  	 	016/32514  	 	224112  	 	4/8/2005  	 	4/7/2055  
	Dia Bras Mexicana	 	Bolivar	 	Exploitation	 	63.5633  	 	321.1/1-100  	 	192324  	 	12/19/1991  	 	12/18/2041  
	Dia Bras Mexicana	 	La Chaparrita	 	Exploitation	 	10.00  	 	1/1.3/00882  	 	217751  	 	8/13/2002  	 	8/12/2052  
	Dia Bras Mexicana	 	La Mesa	 	Exploration	 	718.95  	 	016/32556  	 	223506  	 	1/12/2005  	 	1/11/2055  
	 EXMIN,

S.A. DE C.V.
	 	Moctezuma	 	Exploitation	 	67.4364  	 	1/1/01432  	 	226218  	 	01/12/2005  	 	01/12/2055  
	 EXMIN,

S.A. DE C.V.
	 	San Guillermo  	 	Exploration	 	96.0000  	 	099/02161  	 	196862  	 	13/08/1993  	 	12/08/2043  

  

	20.4.9	MIA and CUS Authorizations 

 In 2009, SEMARNAT agreed that a MIA for the Bolivar
Mine was not necessary since the area has been under exploration and exploitation since 1979, but that DIA BRAS was still subject to the applicable environmental regulations according to article 29 of the LGEEPA. However, in the event 

  
  

					
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 that modifications to the existing operation were proposed, SEMARNAT would need to be
consulted to determine the appropriate procedures for authorization. 
 In a resolution between SEMARNAT Chihuahua (Brenda Ríos
Prieto) and DIA BRAS MEXICANA (Arturo Valles Chávez) dated October 2015, the agency conditionally authorizes the Bolivar Mine consisting of opening five (5) shafts for underground mines, 11 boreholes, waste dumps, material stock yard,
tailings dam, and infrastructure construction (roads, substation, dining room, electricity distribution line, two (2) powder kegs and temporary waste store; based on the information presented in the Environmental Impact Manifestation
(Manifestacion de Impacto Ambiental (MIA)) submitted in August 2015. 
 The area covered by the Land Use Change (Cambio de
Uso de Suelo (CUS)) is 9.7570 Hectares (24.11 acres) and the total construction area is 11.448 Hectares (28.28 acres). 
 The
resolution has a validity of 15 years and can be renewed through an advance request to SEMARNAT, accompanied by a verification issued by PROFEPA. 
  

	20.4.10	PROFEPA Inspection 

 In 2014, the enforcement branch of SEMARNAT, PROFEPA,
conducted an inspection of several streams and arroyos near the EXMIN property (Bolivar Mine). SRK understands from the documentation provided that tailings from the beneficiation plant had spilled into these drainages during heavy rains on
December 20 and 21, 2013. The affected streams included: 
  

	 	•	 	Arroyo Los Alisos (also known as Arroyo Agua Caliente or Arroyo Tubares). The affected area covers 12.9 km above the river bed by 2.5 m wide. In total, an area of 32,250 m2 was affected with tailings deposited on the
stream bed; and 

	 	•	 	Rio Fuerte (also known as Rio Urique, Rio Batopilas). Arroyo Los Alisos joins with this river, tailings were found in an area of 1,750 m2 over the river bed. 

Follow-up correspondence references a proposed remediation plan submitted by Arturo Valles
Chávez, legal representative of EXMIN, to SEMARNAT. SRK was not provided a copy of this plan for review. However, according to EXMIN, the cleanup was performed over a period of several months, and any residual testing showed that the
materials in the streams met with Mexican Norms. No further action appears to have been ordered by PROFEPA or SEMARNAT. 
  

	20.5	Social Management Planning and Community Relations 

 As part of the project review
by SEMARNAT, the MIA document was made available to the public for review and comment prior to the issuance of the conditional authorization. SRK is not aware of any other public consultation or stakeholder engagement activities on the part of Dia
Bras. 
  

	20.6	Closure and Reclamation Plan 

 Current regulations in México require that a
preliminary closure program be included in the MIA and a definite program be developed and submitted to the authorities during the operation of the mine (generally accepted as three years into the operation). These closure plans tend to be
conceptual and typically lack much of the detail necessary to develop an accurate closure cost estimate. However, Dia Bras has attempted to prescribe the necessary closure activities for the operation. 

  
  

					
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 In February 2017, Treviño Asociados Consultores presented to Dia Bras, S.A. de
C.V. a work breakdown of the anticipated tasks for closure and reclamation of the Bolivar Mine. 
 Table 20-3: Bolivar Mine Cost of Reclamation and Closure of the Mine 
  

					
	Closure Activity	    	 Cost
Estimate

MXN$
	 
	 Waste Rock Piles (regrading, soil preparation,
revegetation) (2 ha)
	    	 	$105,430	 
	 Exploration Drill Pads (remove contaminated
soils, soil preparation, revegetation, erosion control) (4Ha)
	    	 	$48,300	 
	 Roads (Border reconstruction, ditches, revegetation) (8
ha)
	    	 	$96,600	 
	 Building Demolition (camps, plant, mill –
dismantle, remove, soil remediation, soil preparation, revegetation)
	    	 	$7,653,250	 
	 Tailings Impoundment (regrading, soil cover and
preparation, revegetation) (6ha)
	    	 	$316,020	 
	 Power Line Corridor
(soil preparation, revegetation) (12 ha)
	    	 	$62,218	 
	 Power Line Removal (850 poles; 12.64 km cable)
	    	 	$977,500	 
	
Total (MXN)
	    	 	$9,259,318	 
	
Total (USD)*
	    	 	US$453,888	 

 * Based on exchange rate of USD$1 = MXN$20.4 (22Feb2017) 

SRK’s scope of work did not include an assessment of the veracity of this closure cost estimate, but, based on projects of similar
nature and size within Mexico, the estimate appears low in comparison. SRK recommends that Dia Bras conduct an outside review of this estimate, with an emphasis on benchmarking against other projects in northern Mexico. 

While Mexico requires the preparation of a reclamation and closure plan, as well as a commitment on the part of the operator to
implement the plan, no financial surety (bonding) has thus far been required of mining companies. Environmental damages, if not remediated by the owner/operator, can give rise to civil, administrative and criminal liability, depending on the action
or omission carried out. PROFEPA is responsible for the enforcement and recovery for those damages, or any other person or group of people with an interest in the matter. Also, recent reforms introduced class actions as a means to demand
environmental responsibility from damage to natural resources. 

  
  

					
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	21	Capital and Operating Costs 

 As part of the verification process to certify the
reserves presented in this report, SRK conducted an economic valuation of the Bolivar Project including only reserve material. This section outlines the capital and operating costs considered in this valuation. All costs presented in this section
are second semester 2016 US dollars, unless stated otherwise. 
  

	21.1	Capital Costs 

 Using an average mining rate of 2,985 and a processing rate of
2,450 t/d, the Bolivar reserves support the project until July 2021. 
 Considering this life of mine, the Project’s technical
team prepared an estimate of capital required to sustain the mining and processing operations. This capital estimate is broken down into the following main areas. 
  

	 	•	 	Mine Development; 

  

	 	•	 	Vent Raises; 

  

	 	•	 	Equipment Sustaining; 

  

	 	•	 	Geological Exploration; 

  

	 	•	 	Plant; 

  

	 	•	 	Tailings Storage Facility (TSF); and 

  

	 	•	 	Closure. 

 Mine development is related to any underground mine development that is
capitalized. The Project’s average development cost is based on actual numbers for the first three quarters of 2016 and projected numbers for the remainder months of this year. The cost considered is US$705/m, and is supported by the 2016 cost
numbers below. 
  

	 	•	 	A cost if US$617.53/m for 3,801 meters developed by the company; and 

  

	 	•	 	A cost of US$918.93/m for 1,562 meters developed by a contracted third party. 

 This
average cost combined with the amount of development meters modeled in the production schedule prepared by SRK compose the basis for the estimated LoM development cost. 

A meter estimate of ventilation raises that will be required to maintain production in the underground mining areas was created based on
the ventilation requirements in Section 16. The estimated unit cost for the vent raise is US$2,000/m. 
 Equipment sustaining cost
includes the capital to maintain and replace mine equipment, while plant and TSF sustaining capital accounts for the expansion of the tailings storage facility. 

Exploration capital will be used in the exploration of future mining opportunities within the company’s mining and exploration
concessions. 
 In addition to the capital requirements presented above, the evaluation also includes an estimate of working capital
requirements based on the following terms: 
  

	 	•	 	5 days delay of 90% of payment and 30 days delay of 10% of payment of product sales; 

  

	 	•	 	30 days delay in payables, excluding labor; and 

  

	 	•	 	60 days inventory of items associated with mining, processing and product transportation. 

  
  

					
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 As this is a currently operating/producing Project, SRK considered that the company
already has necessary working capital in place, estimated at US$459,000. 
 The yearly capital expenditure by area is summarized in
Table 21-1. 
 Table 21-1: Capital Cost Summary
(US$) 
  

																																			
	 	 	Description	  	Total
($000s)	 	  	2016
($000s)	 	  	2017
($000s)	 	  	2018
($000s)	 	  	2019
($000s)	 	  	2020
($000s)	 	  	2021
($000s)	 	  	2022
($000s)	 
	 	 Mine Development
	  	 	10,221	 	  	 	193	 	  	 	1,989	 	  	 	4,440	 	  	 	2,602	 	  	 	983	 	  	 	14	 	  	 	0	 
	 	 Ventilation
	  	 	2,659	 	  	 	0	 	  	 	308	 	  	 	1,278	 	  	 	1,073	 	  	 	0	 	  	 	0	 	  	 	0	 
	 	 Equipment Sustaining
	  	 	14,699	 	  	 	0	 	  	 	5,515	 	  	 	5,732	 	  	 	3,254	 	  	 	173	 	  	 	25	 	  	 	0	 
	 	 Geological Exploration
	  	 	11,442	 	  	 	0	 	  	 	3,223	 	  	 	2,444	 	  	 	1,680	 	  	 	2,005	 	  	 	2,090	 	  	 	0	 
	 	 Plant
	  	 	866	 	  	 	0	 	  	 	866	 	  	 	0	 	  	 	0	 	  	 	0	 	  	 	0	 	  	 	0	 
	 	 TSF Sustaining
	  	 	6,376	 	  	 	0	 	  	 	5,276	 	  	 	514	 	  	 	586	 	  	 	0	 	  	 	0	 	  	 	0	 
	 	 Closure
	  	 	453	 	  	 	0	 	  	 	0	 	  	 	0	 	  	 	0	 	  	 	0	 	  	 	0	 	  	 	453	 
	 	 Total Capital
	  	 	$46,715	 	  	 	$193	 	  	 	$17,177	 	  	 	$14,407	 	  	 	$9,195	 	  	 	$3,161	 	  	 	$2,129	 	  	 	$453	 

 Source: SRK, 2017 

SRK notes that sustaining capital estimates for the existing plant equipment has been included in the operating costs. The Plant
Sustaining and TSF Sustaining in Table 21-1 is for the TSF program described in Section 18.11.2. 
  

	21.2	Operating Costs 

 The basis of the operating cost estimate is a first principles
approach based on site specific data. Dia Bras’ technical team provided SRK with historic costs on a monthly basis, which were used to derive future costs. The costs were broken down into three main areas, as follows: 

 

	 	•	 	Mining; 

  

	 	•	 	Processing; and 

  

	 	•	 	G&A. 

 Table 21-2 and Table 21-3 show a summary of total operating costs and unit operating costs. 
 Table 21-2: Operating Cost Summary (US$) 
  

																															
	 	 	Area	  	Total
($000s)	 	  	2016
($000s)	 	  	2017
($000s)	 	  	2018
($000s)	 	  	2019
($000s)	 	  	2020
($000s)	 	  	2021
($000s)	 
	 	 Mine
	  	 	58,812	 	  	 	3,101	 	  	 	12,435	 	  	 	12,684	 	  	 	13,246	 	  	 	13,146	 	  	 	4,200	 
	 	 Plant
	  	 	43,277	 	  	 	2,282	 	  	 	9,151	 	  	 	9,334	 	  	 	9,747	 	  	 	9,674	 	  	 	3,090	 
	 	 G&A
	  	 	14,729	 	  	 	777	 	  	 	3,114	 	  	 	3,177	 	  	 	3,317	 	  	 	3,292	 	  	 	1,052	 
	 	 Total
	  	 	$116,817	 	  	 	$6,159	 	  	 	$24,700	 	  	 	$25,194	 	  	 	$26,311	 	  	 	$26,112	 	  	 	$8,342	 

 Source: SRK, 2017 

Table 21-3: Unit Operating Cost Summary (US$) 

 

													
	 	 	Area	  	LoM ($000s)	 	  	Average ($/t)	 	  	 
		 	 Mine
	  	 	58,812	 	  	 	13.59	 	  	
		 	 Plant
	  	 	43,277	 	  	 	10.00	 	  	
		 	 G&A
	  	 	14,729	 	  	 	3.40	 	  	
		 	
Total
	  	 	$116,817	 	  	 	$26.99	 	  	

 Source: SRK, 2017 

  
  

					
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 The mining cost was developed from the following eight individual functions that
comprise the mining operation. Table 21-4 presents each function and its associated unit cost. 

Table 21-4: Mining Operation Cost by Functions 

 

									
	 	 	Area	  	Cost (US$/t)	 	  	 
	 	 Labor
	  	 	2.17	 	  
	 	 Bonus
	  	 	0.06	 	  
	 	 Settlements
	  	 	0.05	 	  
	 	 Explosives
	  	 	1.15	 	  
	 	 Diesel
	  	 	0.84	 	  
	 	 Power
	  	 	0.33	 	  
	 	 Drilling Consumables
	  	 	0.25	 	  
	 	 Lubricants
	  	 	0.38	 	  
	 	 Tires
	  	 	0.20	 	  
	 	 Gasoline
	  	 	0.03	 	  
	 	 Spare Parts
	  	 	1.10	 	  
	 	 Employee Restaurant
	  	 	0.50	 	  
	 	 External Services
	  	 	0.47	 	  
	 	 Hauling out of Mine
	  	 	4.31	 	  
	 	 Other
	  	 	1.75	 	  
	 	
Total
	  	 	$13.59	 	  

 Source: Dia Bras, 2016 

The processing cost was developed from the following seven individual functions that compose the processing operation; Table 21-5 presents each function and its associated unit cost. 
 Table
21-5: Processing Operation Cost by Functions 
  

									
	 	 	Area	  	Cost (US$/t)	 	  	 
		 	 Labor
	  	 	2.16	 	  	
		 	 Bonus
	  	 	0.06	 	  	
		 	 Settlements
	  	 	0.04	 	  	
		 	 Reagents
	  	 	0.21	 	  	
		 	 Grinding Media
	  	 	0.42	 	  	
		 	 Power
	  	 	0.99	 	  	
		 	 Lubricants
	  	 	0.07	 	  	
		 	 Diesel
	  	 	0.12	 	  	
		 	 Tires
	  	 	0.03	 	  	
		 	 Gasoline
	  	 	0.02	 	  	
		 	 Spare Parts
	  	 	0.84	 	  	
		 	 Employee restaurant
	  	 	0.39	 	  	
		 	 External Services
	  	 	2.18	 	  	
		 	 Other
	  	 	2.49	 	  	
		 	Total	  	 	$10.00	 	  	

 Source: Dia Bras, 2016 

The G&A cost estimate is approximately US$3.40/t, based on the historic costs from 2016. 

  
  

					
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	22	Economic Analysis 

 Sierra Metals is a producing issuer as defined by
Section 1.1 of NI 43-101, and Bolivar is an operating mine with a significant production history. A technical economic model was prepared by SRK to evaluate the Project. This model is based on production
assumptions and the market conditions, cost estimates, sales deductions and costs and royalties and taxes provided by Sierra Metals and Dia Bras’ technical team and reviewed by SRK. This section discloses these assumptions and comments on the
profitability of the reserves. The economic model was prepared under the assumption of 100% equity. All financial data is real terms using second half 2016 dollars. Currency is in real term U.S. dollars (US$), unless otherwise stated. 

 

	22.1	Assumptions External to Project 

 This valuation is based on metal prices provided
by Sierra Metals and reviewed by SRK. Sierra Metals currently has a contract for the provision of its copper concentrate; SRK reviewed the details of the existing contract. The provided price curve has good adherence with recent and historic prices
and general consensus of market forecasters. The metal price assumption is presented in Table 22-1. 

Table 22-1: Metal Prices 

 

											
	 	  	Commodity  	  	Value	 	  	Unit	  	 
	  	 Au
	  	 	1,283	 	  	 US$/oz
	  	
	  	 Ag
	  	 	18.30	 	  	 US$/oz
	  	
	  	 Cu
	  	 	2.43	 	  	 US$/lb
	  	

 Source: Sierra Metals, 2017 

The existing concentrate sales contract defines net smelter return terms for the copper concentrate, these terms are summarized and
presented in Table 22-2. 
 Table 22-2: Bolivar Net
Smelter Return Terms 
  

											
	 	  	Item	  	Value	 	  	Unit	  	 
	  	 Au Minimum Deduction
	  	 	1.00	 	  	g/t	  	
	  	 Au Payability Factor
	  	 	90	 	  	%	  	
	  	 Au Refining Charge
	  	 	6.00	 	  	US$/oz	  	
	  	 Minimum Grade to Qualify for
Payment
	  	 	30.00	 	  	g/t	  	
	  	 Ag Payability Factor
	  	 	90	 	  	%	  	
	  	 Ag Refining Charge
	  	 	0.35	 	  	US$/oz	  	
	  	 Cu Minimum Deduction
	  	 	1.0%	 	  	% points	  	
	  	 Cu Payability Factor
	  	 	97	 	  	%	  	
	  	 Treatment Charge
	  	 	94	 	  	US$/t-conc.	  	
	  	 Cu Refining Charge
	  	 	0.094	 	  	US$/lb	  	

 Source: Dia Bras, 2016 

The projects depend on logistics solutions that are considered external to the project, the products are transported from the various
sites by truck to local smelters. The product also incurs impurity penalties, and the estimated charges used for the model contained herein are based on historic figures. In order to calculate transportation costs, an average moisture content of 8%
was assumed 

  
  

					
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 for the concentrate. The following are the considered the transportation costs and
impurities penalties estimated for the copper concentrate (Table 22-3). 
 Table 22-3: Product Sale Cost 
  

									
	
Description
	  	 	Value	 	  	Units	  	
	 Transportation
	  	 	76.22	 	  	US$/t-conc.  	  	
	 Transportation Surcharge (2016)*
	  	 	35.42	 	  	US$/t-conc.  	  	
	 Impurities
Penalties
	  	 	5.00	 	  	US$/t-conc.  	  	

 * Transportation surcharge expired at the end of 2016. 

Source: Dia Bras, 2016 
  

	22.2	Commercial Assumptions 

 Bolivar is a polymetallic operation that currently
produces a copper concentrate that is sold under an existing contract. This valuation was prepared using concentrate sales proceeds and revenue generated by the Bolivar operation alone. Specific price assumptions were calculated from the
aforementioned price curve and through the application of appropriate discounts and premiums based on the physical characteristics and qualities of each product. The product types from Bolivar is a copper concentrate also containing gold and silver.

  

	22.3	Taxes Depreciation and Royalties 

 The analysis of the Bolivar Project includes a
total of 30% of income taxes over taxable income. Losses carried forward are used when possible. 
 A depreciation schedule was
calculated by SRK, assuming that the Project is able to depreciate all of its assets by the end of the mine life, which occurs in 2021, based on the reserves disclosed in this report. The depreciation also considers that the Project currently holds
an amount of US$5.8 million of installed assets that are yet to be depreciated. 
 The Project includes payment of three types of
governmental royalties, the first is called an ordinary mining right, which is considered to be a payment of approximately US$220,000 on a yearly basis. An extraordinary mining right is directly associated to the Project’s precious metals gross
revenue and is 0.5% of such stream. The third is called a special mining tax and is 7.5% of the gross operating margin. The project also includes profit sharing with its employees. These costs are built into the modeled operating costs. 

An existing loss carried forward of US$16.8 million has been used as an opening balance for the losses carried forward. An inflation
index of 2.5% was used to inflate losses carried forward on a yearly basis. 
  

	22.4	Production Assumptions 

 The life of mine (LoM) mine production schedule estimates
that the mine will produce approximately 4.3 Mt of run of mine (RoM) at the following average metal grades: 
  

	 	•	 	Au: 0.31 g/t; 

  

	 	•	 	Ag: 17.5 g/t; and 

  

	 	•	 	Cu: 0.85%. 

  
  

					
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 The production scenario assumes that the start period is October 2016, and the details
of the life of mine RoM production are presented in Table 22-4. Note that only Probable reserve material is included in this economic analysis. Site personnel generate an alternate mine plan which includes
Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. 

Table 22-4: Mine Production Summary 

 

									
	Description	  	Value	 	 	Units  	  	 
	 Development
Waste
	  	 	14,115	 	 	m	  	
	 Sill Waste
	  	 	377	 	 	m	  	
	 Vent Raises
	  	 	1,329	 	 	m	  	
	 Mined Waste
	  	 	944	 	 	kt	  	
	 Mined Ore
	  	 	4,327	 	 	kt	  	
	
Daily Mining Rate
	  	 	2,985	 	 	t/d	  	
	 Gold Grade,
Mined
	  	 	0.31	 	 	g/t	  	
	 Silver Grade,
Mined
	  	 	17.5	 	 	g/t	  	
	
Copper Grade
	  	 	0.85	 	 	%	  	
	 Contained Gold,
Mined
	  	 	43.8	 	 	koz	  	
	 Contained Silver,
Mined
	  	 	2,441	 	 	koz	  	
	
Contained Copper, Mined
	  	 	80,660	 	 	klb	  	

   Source: SRK, 2017 

The RoM is fed as a single feed type to the plant, which is summarized in Table 22-5. 

Table 22-5: Plant Feed Summary 

 

									
	Description	  	Value	 	 	Units  	  	 
	 RoM Processed
	  	 	4,327	 	 	kt	  	
	 Average Processing
Rate
	  	 	2,450	 	 	t/d	  	
	 Milled Ore Gold Grade
	  	 	0.31	 	 	g/t	  	
	 Milled Ore Silver Grade
	  	 	17.5	 	 	g/t	  	
	 Milled Ore Copper
Grade
	  	 	0.85	 	 	%	  	
	 Milled Ore Gold Content
	  	 	43.8	 	 	koz	  	
	 Milled Ore Silver Content
	  	 	2,441	 	 	koz	  	
	 Milled Ore Copper
Content
	  	 	80,660	 	 	klb	  	

   Source: SRK, 2017 

Copper concentrate is produced from the beneficiation of the ore. The life of mine production of copper concentrate is presented in
Table 22-6. 
 Table 22-6: Copper Concentrate Production Summary

  

									
	Item	  	Value	 	 	Unit  	 	 
	 Copper
Concentrate
	  				 	 	 	
	 Concentrate Gold
Grade
	  	 	6.26	 	 	g/t	 	
	 Concentrate Silver
Grade
	  	 	550	 	 	g/t	 	
	
Concentrate Copper Grade
	  	 	28.0%	 	 	%	 	
	 Recovery
	  				 	 	 	
	 Gold
	  	 	48.7%	 	 	%	 	
	 Silver
	  	 	76.8%	 	 	%	 	
	 Copper
	  	 	81.1%	 	 	%	 	
	
Concentrate Yield
	  	 	106.0	 	 	kt (dry)	 	

   Source: SRK, 2017 

  
  

					
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	22.5	Results 

 Results of the Bolivar analysis indicate that the Project has a potential
present value of approximately US$7.1 million, based on an 8% discount rate. Figure 22-1 shows the project after- tax metrics. 
  

 
 

 
 Source: SRK, 2017 

Figure 22-1: Bolivar After-Tax Metrics 

  
  

					
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     Indicative economic results are presented in Table 22-7. 
     Table 22-7: Bolivar
Indicative Economic Results (Dry Basis) 
  

							
	 Description
	  	Value  	  	Units	  	
	 Market Prices
	  	 	  	 	  	
	 Gold
	  	1,283  	  	US$/oz	  	
	 Silver
	  	18.30  	  	US$/oz	  	
	 Copper
	  	2.43  	  	US$/lb	  	
	 Estimate of Cash Flow
	  	US($000s)  	  	US$/lb-Cu  	  	
	 Concentrate Net Return
	  	 	  	 	  	
	 Gold Sales
	  	$22,829  	  	$0.36  	  	
	 Silver Sales
	  	$30,881  	  	$0.49  	  	
	 Copper Sales
	  	$153,283  	  	$2.43  	  	
	 Total Revenue
	  	$206,994  	  	$3.28  	  	
	 Treatment Charges
	  	($9,961)  	  	($0.16)  	  	
	 Smelting and Refining Charges
	  	($6,627)  	  	($0.11)  	  	
	 Freight, Impurities & Third
Parties
	  	($9,598)  	  	($0.15)  	  	
	 Gross Revenue
	  	$180,808  	  	 	  	
	 Mining Rights
	  	($6,274)  	  	($0.10)  	  
	 Net Revenue
	  	$174,534  	  	 	  	
	 Operating Costs
	  	 	  	 	  	
	 Underground Mining
	  	($58,812)  	  	($0.93)  	  	
	 Process
	  	($43,277)  	  	($0.69)  	  	
	 G&A
	  	($14,729)  	  	($0.23)  	  	
	 Total Operating
	  	($116,817)  	  	($1.85)  	  	
	 Operating Margin (EBITDA)
	  	$57,717  	  	 	  	
	 Initial Capital
	  	$0  	  	 	  	
	 LoM Sustaining Capital
	  	($46,715)  	  	 	  	
	 Working Capital
	  	$459  	  	 	  	
	 Income Tax
	  	($1,085)  	  	 	  	
	 After Tax Free Cash Flow
	  	$10,376  	  	 	  	
	 NPV @: 8%
	  	$7,074  	  	 	  	

       Source: SRK, 2017 

Copper is the largest contributor to the project revenue and corresponds to approximately 74% of value. Gold and silver are considered by-products of the operation and each contribute 11% and 15%, respectively, to the mine’s revenue. Figure 22-2 shows a graphical representation of each metals
contribution to the Project’s revenue. 

  
  

					
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 Source: SRK, 2017 

Figure 22-2: Metal Contribution to Revenue 

Table 22-8 shows annual production and revenue forecasts for the life of the project. All
production forecasts, material grades, plant recoveries and other productivity measures were developed by SRK and Dia Bras. 

Table 22-8: Bolivar Production Summary 

 

											
	 Period
	  	 RoM  

(Mt)  
	  	
Plant Feed  

(Mt)  
	  	 Copper Conc.  

(kt)  
	  	Free Cash Flow   (US$ millions)  	  	
Discounted Cash Flow  

(US$ millions)  

	 1
	  	228  	  	228  	  	6.3  	  	3.07  	  	3.07  
	 2
	  	915  	  	915  	  	24.6  	  	(4.94)  	  	(4.58)  
	 3
	  	933  	  	933  	  	22.0  	  	(3.47)  	  	(2.97)  
	 4
	  	975  	  	975  	  	24.4  	  	3.49  	  	2.77  
	 5
	  	967  	  	967  	  	21.5  	  	8.61  	  	6.33  
	 6
	  	309  	  	309  	  	7.2  	  	3.44  	  	2.34  
	 7
	  	0  	  	0  	  	0.0  	  	0.17  	  	0.10  
	
Total
	  	4,327  	  	4,327  	  	106.0  	  	10.38  	  	7.07  

       Source: SRK, 2017 

  
  

					
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 Table 22-9 presents the composition of the
Bolivar cash costs. 
 Table 22-9: Bolivar Cash Cost 

 

											
	 Cash Costs
	  	 	US$000’s	 	  	 	US$/lb-Cu	 	  	
	
Direct Cash Cost
	  	 	 	 	  	 	 	 	  	
	
Underground Mining Cost
	  	 	$58,812	 	  	 	$0.93	 	  	
	
Process Cost
	  	 	$43,277	 	  	 	$0.69	 	  	
	
Site G&A Cost
	  	 	$14,729	 	  	 	$0.23	 	  	
	
Treatment Charges
	  	 	$9,961	 	  	 	$0.16	 	  	
	
Smelting & Refining Charges
	  	 	$6,627	 	  	 	$0.11	 	  	
	
Impurities Penalties
	  	 	$576	 	  	 	$0.01	 	  	
	
Third Party Participation
	  	 	$0	 	  	 	$0.00	 	  	
	
Freight
	  	 	$9,022	 	  	 	$0.14	 	  	
	
By-Product Credits
	  	 	($53,711)	 	  	 	($0.85)	 	  	
	
Direct Cash Costs
	  	 	$89,293	 	  	 	$1.42	 	  	
	
US$/lb-Cu
	  	 	$1.42	 	  	 	$1.42	 	  	
	
Indirect Cash Cost
	  	 	 	 	  	 	 	 	  	
	
Royalties
	  	 	$6,274	 	  	 	$0.10	 	  	
	
Indirect Cash Costs
	  	 	$6,274	 	  	 	$0.10	 	  	
	
US$/lb-Cu
	  	 	$0.10	 	  	 	$0.10	 	  	
	
Capital Cash Costs
	  	 	 	 	  	 	 	 	  	
	
Mine Development
	  	 	$10,221	 	  	 	$0.16	 	  	
	
Vent Raises
	  	 	$2,659	 	  	 	$0.04	 	  	
	
Equipment Sustaining
	  	 	$14,699	 	  	 	$0.23	 	  	
	
Geological Exploration
	  	 	$11,442	 	  	 	$0.18	 	  	
	
Plant Sustaining
	  	 	$866	 	  	 	$0.01	 	  	
	
TSF Sustaining
	  	 	$6,376	 	  	 	$0.10	 	  	
	
Capital Cash Costs
	  	 	$46,262	 	  	 	$0.73	 	  	
	
US$/Equivalent lb-Cu
	  	 	$0.73	 	  	 	$0.73	 	  	
	
Total Cash Costs
	  	 	$141,828	 	  	 	$2.25	 	  	
	
US$/Equivalent lb-Cu
	  	 	$2.25	 	  	 	$2.25	 	  	

 Source: SRK, 2017 
  

	22.6	Sensitivities 

 Sensitivity analysis on discount rates and different metal prices
scenarios were completed. 
 Figure 22-3 presents the behavior of the accumulated after-tax net present value, where: 
  

	 	•	 	Distressed metal prices are 20% lower than neutral prices; 

	 	•	 	Neutral metal prices as presented in this section; and 

	 	•	 	Robust metal prices are 20% higher than neutral prices. 

  
  

					
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Source: SRK, 2017 
 Figure 22-3: Bolivar After-Tax
Cumulative NPV Price Sensitivity 
 Figure 22-3 indicates that the project’s present
value will be negative between 2017 and 2019 and recover in 2020. It also shows that the mine would not support a reduction of 20% on metal prices, the breakeven copper price is effectively US$2.25/lb. 

Figure 22-4 presents the sensitivity of the after-tax net
present values to the hurdle rate. 

  
  

					
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 Source: SRK, 2017 

Figure 22-4: Bolivar After-Tax NPV Hurdle Rate
Sensitivity 
 A sensitivity analysis for key operating and economic parameters is shown in Table
22-10. 
 Table 22-10: Bolivar NPV Sensitivity
(US$000’s) 
  

																																													
	  NPV @ 5%	 	-25%	 	 	-20%	 	 	-15%	 	 	-10%	 	 	-5%	 	 	0%	 	 	5%	 	 	10%	 	 	15%	 	 	20%	 	 	25%	 
	
  Recovery
	 	 	(32,000	) 	 	 	(24,000	) 	 	 	(16,000	) 	 	 	(8,000	) 	 	 	0	 	 	 	7,000	 	 	 	13,000	 	 	 	18,000	 	 	 	24,000	 	 	 	29,000	 	 	 	35,000	 
	   Capital
Costs
	 	 	15,000	 	 	 	14,000	 	 	 	12,000	 	 	 	10,000	 	 	 	9,000	 	 	 	7,000	 	 	 	5,000	 	 	 	4,000	 	 	 	2,000	 	 	 	0	 	 	 	(2,000	) 
	
  Operating Costs  
	 	 	23,000	 	 	 	20,000	 	 	 	16,000	 	 	 	13,000	 	 	 	10,000	 	 	 	7,000	 	 	 	3,000	 	 	 	(1,000	) 	 	 	(5,000	) 	 	 	(10,000	) 	 	 	(14,000	) 

 Source: SRK, 2017 

  
  

					
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	23	Adjacent Properties 

 SRK is not aware of any adjacent properties to the Bolivar
mine as defined under NI 43-101. 

  
  

					
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	24	Other Relevant Data and Information 

 SRK knows of no other relevant data at this
time. 

  
  

					
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	25	Interpretation and Conclusions 

  

	25.1	Exploration 

 SRK has the following conclusions regarding the exploration efforts
and potential for the Bolivar and La Sidra areas. 
  

	 	•	 	 Several areas within Bolivar would benefit from additional drilling, as the current spacing is insufficient to
adequately define the continuity of mineralization for prospective mining. Areas that would benefit from additional drilling to improve confidence in the estimation include Bolivar NW, Bolivar W, and Increíble/Step Out. 

	 	•	 	 Other areas such as extensions of El Gallo Inferior and the Chimeneas orebodies are close to existing mining operations
and would benefit from additional drilling to expand known resources. 

	 	○ 	 	 SRK notes that areas such as Bolivar W, Step-Out, and Increíble would all
benefit from better positioning of drill stations, as some of the drilling orientation in the current model is getting very near to the same strike and dip as the mineralized bodies themselves. 

 

	25.2	 Mineral Resource Estimate 

SRK is of the opinion that the Mineral Resource Estimate has been conducted in a manner consistent with industry best practices and that
the data and information supporting the stated mineral resources is sufficient for declaration of Indicated and Inferred classifications of resources. SRK has not classified any of the resources in the Measured category due to some uncertainties
regarding the data supporting the Mineral Resource Estimate. 
 These deficiencies include: 

 

	 	•	 	 The lack of a historic QA/QC program, which has only been supported by a recent resampling and modern QA/QC program for
a limited number of holes. This will be required in order to achieve Measured resources which generally are supported by high resolution drilling or sampling data that feature consistently implemented and monitored QA/QC. 

	 	•	 	 The lack of consistently-implemented down-hole surveys in the historic drilling. Observations from the survey data which
has been done to date show significant deviations from planned orientations as well as local down-hole deviations that influence the exact position of mineralized intervals. 

	 	•	 	 The lack of industry-standard asbuilt data delineating mined areas. SRK has elected to combine the multiple data types
that define the mined areas, and notes that none of them include well-defined 3D solids with measurable volumes. Rather, SRK has taken the combined CAD lines, points, and triangulations and generated distance buffers (3 m) to obtain volumes in areas
that have been mined. There is still uncertainty associated with this practice, but SRK believes that this is likely balanced by the conservative nature of distance buffer approach, which may actually flag some material that is to be mined in the
near term as having been previously mined. 

  
  

					
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	25.3	Mineral Reserve Estimate 

 SRK is of the opinion that the Mineral Reserve Estimate
has been conducted in a manner consistent with industry best practices and that the data and information supporting the stated mineral reserves is sufficient for declaration of Probable classifications of reserves. 

The Bolivar mine is a producing operation. Recent production data was used as a primary source of information to validate or derive, as
necessary, the relevant modifying factors used to convert Mineral Resources into Mineral Reserves. The initial production decision was not based on a feasibility study of Mineral Reserves demonstrating economic viability. There is an increased
uncertainty and economic and technical risks of failure associated with this production decision. 
 The production schedule associated
with this reserves estimate results in mining until July 2019 at an average production of approximately 2,500 ore t/day. The tailings storage facility will need to be expanded. Dia Bras is managing the TSF expansion as described in detail in
Section 18.11. Dia Bras is planning to install an additional thickener and filter presses and move to a dry stack method of tailings handling and storage. As a result the overall tailings handling system will evolve over the next twelve months.
Dia Bras has budgeted capital for these activities and is working with a number of external contractors to complete the various phases of the overall management plan. Delays in these projects could impact the overall mine plan by delaying the
processing of ore at Piedras Verdes beyond 2017. 
  

	25.4	Metallurgy and Processing 

 Dia Bras operates a conventional concentration plant
consisting of crushing, grinding, flotation, thickening and filtration of the final concentrate. Flotation tails are disposed of in a conventional tailings facility. Ore feed during year 2016 reached a total of 950,398 tonnes, equivalent to an
average of 79,200 tonnes per month, or 2,600 tonnes per day. Production of copper concentrate has consistently ranged between approximately 2,000 and 2,700 tonnes per month, equivalent to roughly a 2.9% mass pull. The monthly average has
consistently reached commercial quality with copper at 27% and credit metals averaging 369 g/t silver and 2.19 g/t gold in 2016. 
 SRK
notes a high level of month-to-month variability for both tonnes and head grade. Better integration between geology, mine planning and processing can significantly
reduce the variability. Additional work is also needed in the processing facilities to stabilize the operation. Improvements include the implementation of a preventive maintenance program and training programs to improve operators’ skill, with
the ultimate objective of improving metal recovery and lower operating cost, while maintaining or improving concentrate quality. 
  

	25.5	Projected Economic Outcomes 

 Bolivar is a polymetallic mine that produces and
sells copper concentrate. Copper is the largest contributor to the project revenue and corresponds to approximately 74% of value. Gold and silver are considered by-products of the operation and each contribute
11% and 15%, respectively, to the mine’s revenue. Figure 25-1 shows a graphical representation of each metals contribution to the Project’s revenue. 

  
  

					
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 The reserves stated in this report support a profitable operation under the cost and
market assumptions discussed in this report and indicate a free cash flow of US$10.4 million and a present value of US$7.1 million based on a discount rate of 8%. 
  

 
 Source: SRK, 2016 

Figure 25-1: Metal Contribution to Revenue 

Economic projections of the base case metal prices scenario indicate that the project’s cumulative free cash flow will be negative
in 2017 and 2018 and recover in 2019. The project’s present value will be negative between 2017 and 2019 and recover in 2020. This is related to two factors. The first is the high intensity of capital expenditure projected for these two years,
and the second is a small dip in the copper production for 2018. The breakeven copper price for Bolivar is US$2.25/lb; SRK notes the current spot price is approximately US$2.65/lb. 

The current scenario presents Dia Bras with two years of relatively significant capital financing requirements considering the estimated
reserves. SRK recommends that the company should conduct the studies described herein to: 
  

	 	•	 	Evaluate a pillar recovery program; 

	 	•	 	Revise the mining method; and 

	 	•	 	Utilize tailings as backfill. 

 The potential improvements may allow the operation to
revise its production schedule, revise the capital expenditure schedule, and allow prioritization of further geological study and exploration to identify resources and reserves that will support a more favorable LoM plan. 

  
  

					
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	26	Recommendations 

  

	26.1	Recommended Work Programs and Costs 

  

	26.1.1	Geology 

 SRK recommends the following for work programs at Bolivar and La Sidra:

  

	 	•	 	 Institute a regular practice of downhole surveys for drilling, at intervals between 25 and 50 m as appropriate.

	 	•	 	 Continue the current QA/QC program, and monitor progress of the program over time to identify trends in the preparation
and analytical phases of sample analysis. 

	 	•	 	 Collect a representative selection of drill core from the mineralized areas of Bolivar and La Sidra for density testing.
These should be submitted to a third party independent laboratory such as ALS Minerals for testing using ASTM standards. The samples should be returned to the site for parallel testing using the current methods employed by Dia Bras and reviewed to
ensure that the performance is reasonable. 

	 	•	 	 Use a consistent 3D survey method to better define mined areas. Procedures and tools exist to survey mined areas safely,
and provide accurate information regarding stoped or developed areas. 

	 	•	 	 Generate a complete and verifiable database of channel samples, formatted similar to the drillhole database which is
consistent with industry best practices and mining software packages, to improve the quality and accuracy of the estimation in areas where mining is ongoing. 

	 	•	 	 Conduct additional drilling in the Bolivar NW, Bolivar W, Increíble, and Step Out areas. Drill hole spacing
should be on the order of 75m for delineation drilling and would preferentially be infilled to 25 m for pre-production. 

	 	○ 	 	 This will require establishment of underground drill stations in certain areas to achieve the type of spacing and
precision needed to have high confidence in the positions and orientations of the mineralized bodies. 

	 	•	 	 Conduct additional drilling in the La Sidra area. Spacing should be on the order of 50 m for delineation drilling and
would preferentially move to 25 m for infill drilling around areas of known higher grade mineralization. 

  

	26.1.2	Mining and Reserves 

 SRK has the following recommendations regarding mining and
reserves at Bolivar: 
  

	 	•	 	 The planning of infill drilling and mine planning should emphasize the conversion of resources into reserves inventory
especially for the mid and long-range planning horizons; 

	 	•	 	 Use updated 3D mine survey data and improved processes to: 

	 	○ 	 	 Regularly perform stope-by-stope planned
to actual reconciliations, for both grade and tonnage mined, to continually validate the mining recovery and dilution assumptions; and 

	 	○ 	 	 Develop an estimate of the tonnes and grade remaining in pillars. 

  
  

					
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	 	•	 	 Initiate a mining methods trade-off study to plan for the safe extraction of
pillars and identify possible improvements to the mining methods used. This study should also include the analysis of utilizing tailings as backfill in the mine. 

	 	•	 	 Develop and annually update a 3D
life-of-mine (LoM) design and schedule. 

	 	•	 	 Develop and implement a whole-of-mine
ventilation plan in order to implement and maintain a forced ventilation system over the life of the mine. 

	 	•	 	 An expansion of the existing tailings storage facility will need to occur. Dia Bras is managing the TSF expansion as
described in detail in Section 18.11. Dia Bras is planning to install an additional thickener and filter presses and move to a dry stack method of tailings handling and storage. As a result the overall tailings handling system will evolve over
the next twelve months. Dia Bras has budgeted capital for these activities and is working with a number of external contractors to complete the various phases of the overall management plan. Delays in these projects could impact the overall mine
plan by delaying the processing of ore at Piedras Verdes beyond 2017. 

  

	26.1.3	Tailings Management 

 SRK has the following recommendations regarding mining and
reserves at Bolivar: 
  

	 	•	 	 As part of the overall tailings management plan, Bolivar is moving to filtered tailings. Expansion in the immediate area
of the currently operating facility will occur as the site moves first to thickened tailings in mid-2017 and to filtered tailings in early 2018. SRK recommends that the site continue its project efforts to
complete the installation of the thickener, filter presses, and conveyor. The site must ensure that all required detailed designs are completed and permits are in place for successful operation of the New TSF located to the west of the existing
facility. An analysis of utilizing tailings as backfill in the mine should be carried out, and a trade-off study should be completed to determine if the size of the New TSF can be reduced.

  

	26.1.4	Environmental, Permitting and Social or Community Impact 

 SRK has the following
recommendations regarding environment, permitting, and social or community impact at Bolivar: 
  

	 	•	 	 SRK recommends that Dia Bras contract an independent, outside review of the closure cost estimate, with an emphasis on
benchmarking against other projects in northern Mexico. This may require and site investigation and the preparation of a more comprehensive and detailed closure and reclamation plan before a closure specialist evaluates the overall closure approach
and costs. 

	 	•	 	 Based on the 2016 geochemical characterization data, a more robust and comprehensive program for the tailings should be
undertaken with an emphasis on closure of the existing facilities in such a manner as to not pose a risk to local groundwater resources. 

  
  

					
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	26.1.5	Costs 

 Table 26-1 lists the estimated cost
for the recommended work described in Section 26. 
 Table 26-1: Summary of Costs for
Recommended Work 
  

											
	 Category	 	Work	  	Units	 	  	Cost US$	 
	  Geology and

 Resources
	 	 Updated 3D Mine Survey
	  	 	1	 	  	 	50,000	 
	  Mining and

 Reserves
	 	 Mining Methods Trade-off Study
and Utilization of Tailings as Backfill
	  	 	1	 	  	 	115,000	 
	  Mining and

 Reserves
	 	 Mine Ventilation Plan – Ventilation Survey and Study
	  	 	1	 	  	 	75,000	 
	  Total
	 	 	  	 	 	 	  	 	$240,000	 

 Note: Drilling costs assume US$100/m drilling costs. 

Source: SRK 

  
  

					
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	27	References 

 Burō Hidrōlogico Consultoría
(2016). Geological Survey of the Current Tailings Facility at Piedras Verdes, Chihuahua. (Reconocimiento Geológico en el Actual Depósito de Jales en Piedras Verdes, Chihuahua). Ing. Rubén Martínez Guerra, Ing. Yolanda
Dolores Inez and Ing. Alejandra B. Mayo Vera. May, 2016, 6pp. 
 Burō Hidrōlogico Consultoría
(2016). Final Report of the New Tailings Facility at Piedras Verdes, Chihuahua. (Informe Final del Nuevo Deposito de Jales en Piedras Verdes, Chihuahua). June 2016, 62pp. 

Burō Hidrōlogico Consultoría (2016). Report on Technical Visit to Monitor Work Progress at Piedras
Verdes, Chihuahua (Visita Técnica de Seguimiento de los Trabajos en Piedras Verdes, Chihuahua). Ing. Rubén Martínez Guerra, Samuel Colín López, Alejandro Rodríguez Pérez. September 2016, 15pp. 

CIM (2014). Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves:
Definitions and Guidelines, May 10, 2014. 
 Dia Bras, (2016, 2017). Multiple unpublished reports, tables, maps,
and figures. Provided by Sierra Metals and its subsidiaries. 
 Gustavson, (2013). NI
43-101 Technical Report Bolivar Mine, Chihuahua State, Mexico. Prepared for Sierra Metals Inc., by Gustavson Associates, Donald E. Hulse, Zachary Black, Karl D. Gurr, and Deepak Malhotra, Lakewood, Colorado,
USA, May 31, 2013, 188pp. 
 Lunder, P.J., and Pakalnis, R., 1997, “Determining the strength of hard rock
mine pillars,” Bull. Can. Inst. Min. Metall., Vol. 90. 
 Meinert L.D., (2007). Unpublished internal company
reports. Prepared by Lawrence D. Meinert, Department of Geology, Smith College, Northampton, MA, January 2007. 

Ray, G.E., and Webster, I.C.L., (1991). An Overview of Skarn Deposits, in McMillan, W.J. and others, eds., Ore
Deposits, Tectonics, and Metallogeny in the Canadian Cordillera: British Columbia Ministry of Energy, Mines, and Petroleum Resources paper 1991-4, p.213-252. 

Reynolds M, (2008). Stratigraphy, Mineralogy and Geochemistry of The Bolivar
Cu-Zn Skarn Deposit, Chihuahua, Mexico. Thesis submitted to the Department of Geology, Smith College. May, 2008. 115pp. 

Sierra Metals, (2016). Condensed Interim Consolidated Financial Statements for the three and nine months ended
September 30, 2016. Retrieved from 

http://www.sierrametals.com/investors/financial-information/financial-reports/default.aspx
. 
 Sierra Metals, (2016). Management Discussion and Analysis for
the three and nine months ended September 30, 2016. Retrieved from http://www.sierrametals.com/investors/financial-information/financial-reports/default.aspx. 
 Sierra Metals, (2011). Press Release: Dia Bras Reports Another Record
Production and Financial Results in the Third Quarter 2011 and Declares Commercial Production at Bolivar Mine. Retrieved from
http://www.sierrametals.com/investors/news-releases/2011/default.aspx. 

  
  

					
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 Sierra Metals, (2011). Management Discussion and Analysis for the
year ended December 31, 2010. Retrieved from http://www.sierrametals.com/investors/financial-information/financial-reports/default.aspx. 

Sierra Metals, (2010). Management Discussion and Analysis for the year ended December 31, 2009. Retrieved from http://www.sierrametals.com/investors/financial-information/financial-reports/default.aspx. 

SNL Financial LC, (2017). Bolivar area claim map. Retrieved from https://www.snl.com. 

  
  

					
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	28	Glossary 

 The Mineral Resources and Mineral Reserves have been classified
according to CIM (CIM, 2014). Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the Reserves have been classified as Proven, and Probable based on the Measured and Indicated Resources as defined below. 

 

	28.1	Mineral Resources 

 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.

  

	28.2	Mineral Reserves 

 A Mineral Reserve is the economically mineable part of a
Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or
Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. 

     

  
  

					
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 The reference point at which Mineral Reserves are defined, usually the point where the
ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed
as to what is being reported. The public disclosure of a Mineral Reserve must be demonstrated by a Pre-Feasibility Study or Feasibility Study. 

A Probable Mineral Reserve is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral
Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve. 

A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high
degree of confidence in the Modifying Factors. 
  

	28.3	Definition of Terms 

 The following general mining terms may be used in this
report. 
 Table 28-1: Definition of Terms 

 

			
	
Term
	  	Definition
	 Assay
	  	The chemical analysis of mineral samples to determine the metal content.
	
Capital Expenditure
	  	All other expenditures not classified as operating costs.
	 Composite
	  	Combining more than one sample result to give an average result over a larger distance.
	 Concentrate
	  	A metal-rich product resulting from a mineral enrichment process such as gravity concentration or flotation, in which most of the desired
mineral has been separated from the waste material in the ore.
	 Crushing
	  	Initial process of reducing ore particle size to render it more amenable for further processing.
	 Cut-off Grade (CoG)
	  	The grade of mineralized rock, which determines as to whether or not it is economic to recover its gold content by further
concentration.
	 Dilution
	  	Waste, which is unavoidably mined with ore.
	 Dip
	  	Angle of inclination of a geological feature/rock from the horizontal.
	 Fault
	  	The surface of a fracture along which movement has occurred.
	 Footwall
	  	The underlying side of an orebody or stope.
	 Gangue
	  	Non-valuable components of the ore.
	 Grade
	  	The measure of concentration of gold within mineralized rock.
	 Hangingwall
	  	The overlying side of an orebody or slope.
	 Haulage
	  	A horizontal underground excavation which is used to transport mined ore.
	
Hydrocyclone
	  	A process whereby material is graded according to size by exploiting centrifugal forces of particulate materials.
	 Igneous
	  	Primary crystalline rock formed by the solidification of magma.
	 Kriging
	  	An interpolation method of assigning values from samples to blocks that minimizes the estimation error.
	 Level
	  	Horizontal tunnel the primary purpose is the transportation of personnel and materials.
	
Lithological
	  	Geological description pertaining to different rock types.
	 LoM Plans
	  	Life-of-Mine plans.
	 LRP
	  	Long Range Plan.
	 Material
Properties
	  	Mine properties.
	 Milling
	  	A general term used to describe the process in which the ore is crushed and ground and subjected to physical or chemical treatment to
extract the valuable metals to a concentrate or finished product.
	
Mineral/Mining Lease  
	  	A lease area for which mineral rights are held.
	 Mining
Assets
	  	The Material Properties and Significant Exploration Properties.
	 Ongoing
Capital
	  	Capital estimates of a routine nature, which is necessary for sustaining operations.
	 Ore Reserve
	  	See Mineral Reserve.
	 Pillar
	  	Rock left behind to help support the excavations in an underground mine.

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 187

  
  

 
			
	 Term
	  	Definition
	
RoM
	  	Run-of-Mine.
	
Sedimentary
	  	Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks.
	
Shaft
	  	An opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and waste.
	
Sill
	  	A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection of
magma into planar zones of weakness.
	
Smelting
	  	A high temperature pyrometallurgical operation conducted in a furnace, in which the valuable metal is collected to a molten matte or
doré phase and separated from the gangue components that accumulate in a less dense molten slag phase.
	
Stope
	  	Underground void created by mining.
	
Stratigraphy
	  	The study of stratified rocks in terms of time and space.
	
Strike
	  	Direction of line formed by the intersection of strata surfaces with the horizontal plane, always perpendicular to the dip
direction.
	
Sulfide
	  	A sulfur bearing mineral.
	
Tailings
	  	Finely ground waste rock from which valuable minerals or metals have been extracted.
	
Thickening
	  	The process of concentrating solid particles in suspension.
	
Total Expenditure  
	  	All expenditures including those of an operating and capital nature.
	
Variogram
	  	A statistical representation of the characteristics (usually grade).

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 188

  
  

	28.4	Abbreviations 

 The following abbreviations may be used in this report. 

Table 28-2: Abbreviations 

 

			
	 Abbreviation
	  	Unit or Term
	
AA
	  	atomic absorption
	
Ag
	  	silver
	
Au
	  	gold
	
AuEq
	  	gold equivalent grade
	
bhp
	  	brake horsepower
	
°C
	  	degrees Centigrade
	
CoG
	  	cut-off grade
	
cm
	  	centimeter
	
cm2
	  	square centimeter
	
cm3
	  	cubic centimeter
	
cfm
	  	cubic feet per minute
	
°
	  	degree (degrees)
	
dia.
	  	diameter
	
EIS
	  	Environmental Impact Statement
	
EMP
	  	Environmental Management Plan
	
g
	  	gram
	
gal
	  	gallon
	
g/L
	  	gram per liter
	
g-mol
	  	gram-mole
	
gpm
	  	gallons per minute
	
g/t
	  	grams per tonne
	
ha
	  	hectares
	
HDPE
	  	Height Density Polyethylene
	
hp
	  	horsepower
	
ICP
	  	induced couple plasma
	
ID2
	  	inverse-distance squared
	
ID3
	  	inverse-distance cubed
	
kg
	  	kilograms
	
km
	  	kilometer
	
km2
	  	square kilometer
	
koz
	  	thousand troy ounce
	
kt
	  	thousand tonnes
	
kt/d
	  	thousand tonnes per day
	
kt/y
	  	thousand tonnes per year
	
kV
	  	kilovolt
	
kW
	  	kilowatt
	
kWh
	  	kilowatt-hour
	
kWh/t
	  	kilowatt-hour per metric tonne
	
L
	  	liter
	
L/sec
	  	liters per second
	
L/sec/m
	  	liters per second per meter
	
lb
	  	pound
	
m
	  	meter
	
m2
	  	square meter
	
m3
	  	cubic meter
	
masl
	  	meters above sea level
	
mg/L
	  	milligrams/liter
	
mm
	  	millimeter
	
mm2
	  	square millimeter
	
mm3
	  	cubic millimeter
	
Moz
	  	million troy ounces
	
Mt
	  	million tonnes
	
MW
	  	million watts

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	 Page
 189

  
  

 
			
	
Abbreviation
	  	Unit or Term
	 m.y.
	  	million years
	 NI 43-101
	  	Canadian National Instrument 43-101
	 OSC
	  	Ontario Securities Commission
	 oz
	  	troy ounce
	 %
	  	percent
	 ppb
	  	parts per billion
	 ppm
	  	parts per million
	 QA/QC
	  	Quality Assurance/Quality Control
	 RC
	  	rotary circulation drilling
	 RoM
	  	Run-of-Mine
	 RQD
	  	Rock Quality Description
	 SEC
	  	U.S. Securities & Exchange Commission
	 sec
	  	second
	 t
	  	tonne (metric ton) (2,204.6 pounds)
	 t/h
	  	tonnes per hour
	 t/d
	  	tonnes per day
	 t/y
	  	tonnes per year
	 TSF
	  	tailings storage facility
	 μm
	  	micron or microns
	 V
	  	volts
	 W
	  	watt
	 XRD
	  	x-ray diffraction
	 y
	  	year

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	Appendices

  

 

  
  

Appendices 
  

 
  
  

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	Appendices

  

 

  
  

Appendix A: Certificates of Qualified Persons 
  

 
  
  

  
  

					
	JL/SH	  		  	April 2017

			
	 

	 	 SRK Consulting (U.S.), Inc.

	 	Suite 600
	 	1125 Seventeenth Street
	 	Denver, CO 80202
	 	  
 T: 303.985.1333

	 	F: 303.985.9947
	 	  
 denver@srk.com

	 	www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Matthew Hastings, MSc Geology, MAusIMM (CP) do hereby certify that: 
  

	1.	I am Senior Consultant Resource Geologist of SRK Consulting (U.S.), Inc., 1125 Seventeenth Street, Suite 600, Denver, CO, USA, 80202. 

 

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources and Reserves, Bolivar Mine, Mexico” with an Effective Date of February
28, 2017 (the “Technical Report”). 

  

	3.	I graduated with a degree in B.S.-Geology from University of Georgia in 2005. In addition, I have obtained a M.S.-Geology from University of Nevada-Reno in 2007. I am a CP of the MAusIMM and Certified Professional
Geology, PGL-1343. I have worked as a Geologist for a total of 10 years since my graduation from university. My relevant experience includes working in exploration and mineral resource definition for precious
metals, base metals, iron ore, and rare earth element deposits worldwide. 

  

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I visited the Bolivar Mine property on March 12, 2015 for three days. 

  

	6.	I am responsible for the preparation of Sections 4, 5.1-5.3, 6-12 and 14, and portions of Sections 1, 25 and 26 summarized therefrom, of
this Technical Report. 

  

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have had prior involvement with the property that is the subject of the Technical Report. The nature of my prior involvement is from internal Sierra Metals technical reviews completed in 2015 and 2016 prior to
issuance of the technical report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

 Dated this 6th Day of April, 2017. 

					
	       “Signed and Sealed”
	 	
		
	   
	 	  

 Matthew Hastings, MSc Geology, MAusIMM (CP) 

 

													
	U.S. Offices:	 	    	Canadian Offices:	 	    	Group Offices:
	 Anchorage
	 	 	907.677.3520	 	    	Saskatoon	  	 	306.955.4778	 	    	Africa
	 Clovis
	 	 	559.452.0182	 	    	Sudbury	  	 	705.682.3270	 	    	Asia
	 Denver
	 	 	303.985.1333	 	    	Toronto	  	 	416.601.1445	 	    	Australia
	 Elko
	 	 	775.753.4151	 	    	Vancouver	  	 	604.681.4196	 	    	Europe
	 Fort Collins
	 	 	970.407.8302	 	    	Yellowknife	  	 	867.873.8670	 	    	North America
	 Reno
	 	 	775.828.6800	 	    		  				    	South America
	 Tucson
	 	 	520.544.3688	 	    		  				    	

					
	 

	 		  	 SRK Consulting (U.S.), Inc.

Suite 600
 1125 Seventeenth Street
 Denver, CO 80202

			
		 		  	 T: 303.985.1333

F: 303.985.9947

			
		 		  	 denver@srk.com

www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Jon Larson, BSc, MBA, MMSA-QP do hereby certify that: 

 

	1.	I am Principal Consultant of SRK Consulting (U.S.), Inc., 1125 Seventeenth Street, Suite 600, Denver, CO, USA, 80202. 

  

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources and Reserves, Bolivar Mine, Mexico” with an Effective Date of February
28, 2017 (the “Technical Report”). 

  

	3.	I graduated with a degree in Mining Engineering from South Dakota School of Mines and Technology in 1999. In addition, I am a QP member of the Mining & Metallurgical Society of America. I have worked as a
Mining Engineer for a total of 17 years since my graduation from university. My relevant experience includes underground and open pit mine design, mine scheduling, and mine optimization. 

 

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I visited the Bolivar Mine property on October 18, 2016 for two days. 

  

	6.	I am responsible for the preparation of Reserves, Mining Methods, Market Studies and Contracts, Capital and Operating Costs, Economic Analysis, Adjacent Properties, and Other Relevant Data and Information –
Sections 2, 3, 15, 16.1, 16.3-16.8, 18.11, 19, 21-24, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have not had prior involvement with the property that is the subject of the Technical Report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

  

					
	 Dated this 6th
Day of April, 2017.
              “Signed and
Sealed”
  
	 		 	
	 Jon Larson, BSc, MBA, MMSA-QP
	 		 	

  

															
		 		 		  	 U.S. Offices:
	  	 Canadian Offices:
	  	 Group Offices:

		 		 		  	 Anchorage

Clovis
 Denver
 Elko

Fort Collins
 Reno
 Tucson
	  	 907.677.3520

559.452.0182
 303.985.1333
 775.753.4151

970.407.8302
 775.828.6800
 520.544.3688
	  	 Saskatoon

Sudbury
 Toronto
 Vancouver

Yellowknife
	  	 306.955.4778

705.682.3270
 416.601.1445
 604.681.4196

867.873.8670
	  	 Africa

Asia
 Australia
 Europe

North America
 South America

					
	 

	 		  	 SRK Consulting (U.S.), Inc.

Suite 600
 1125 Seventeenth Street
 Denver, CO 80202

			
		 		  	 T: 303.985.1333

F: 303.985.9947

			
		 		  	 denver@srk.com

www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Jeff Osborn, BEng Mining, MMSAQP do hereby certify that: 
  

	1.	I am a Principal Consultant (Mining Engineer) of SRK Consulting (U.S.), Inc., 1125 Seventeenth, Suite 600, Denver, CO, USA, 80202. 

  

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources and Reserves, Bolivar Mine, Mexico” with an Effective Date of February
28, 2017 (the “Technical Report”). 

  

	3.	I graduated with a Bachelor of Science Mining Engineering degree from the Colorado School of Mines in 1986. I am a Qualified Professional (QP) Member of the Mining and Metallurgical Society of America. I have worked as
a Mining Engineer for a total of 29 years since my graduation from university. My relevant experience includes responsibilities in operations, maintenance, engineering, management, and construction activities. 

 

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I did not visit the Bolivar Mine property. 

  

	6.	I am responsible for the preparation of Project Infrastructure - Sections 5.4, 18.1-18.10, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report.

  

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have had prior involvement with the property that is the subject of the Technical Report. The nature of my prior involvement was in the preparation of a due diligence report on the property in 2013 for a third party..

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

  

					
	 Dated this 6th
Day of April, 2017.
              “Signed and
Sealed”
  
	 		 	
	 Jeff Osborn, BEng Mining, MMSAQP [01458QP]

Principal Consultant (Mining Engineer)
	 		 	

  

															
		 		 		  	 U.S. Offices:
	  	 Canadian Offices:
	  	 Group Offices:

		 		 		  	 Anchorage

Clovis
 Denver
 Elko

Fort Collins
 Reno
 Tucson
	  	 907.677.3520

559.452.0182
 303.985.1333
 775.753.4151

970.407.8302
 775.828.6800
 520.544.3688
	  	 Saskatoon

Sudbury
 Toronto
 Vancouver

Yellowknife
	  	 306.955.4778

705.682.3270
 416.601.1445
 604.681.4196

867.873.8670
	  	 Africa

Asia
 Australia
 Europe

North America
 South America

					
	 

	  	 SRK Consulting (U.S.), Inc.
 Suite
600
 1125 Seventeenth Street
 Denver, CO
80202
  
 T: 303.985.1333

F: 303.985.9947
  

denver@srk.com
 www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Daniel H. Sepulveda, B.Sc, SME-RM, do hereby certify that: 

 

	1.	I am Associate Consultant (Metallurgy) of SRK Consulting (U.S.), Inc., 1125 Seventeenth Street, Suite 600, Denver, CO, USA, 80202. 

 

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources and Reserves, Bolivar Mine, Mexico” with an Effective Date of February
28, 2017 (the “Technical Report”). 

  

	3.	I graduated with a degree in Extractive Metallurgy from University of Chile in 1992. I am a registered member of the Society of Mining, Metallurgy, and Exploration, Inc. (SME), member No 4206787RM. I have worked as a
Metallurgist for a total of 23 years since my graduation from university. My relevant experience includes: employee of several mining companies, engineering & construction companies, and as a consulting engineer. 

 

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I visited the Bolivar Mine property on March 12, 2015 for 2 days. 

  

	6.	I am responsible for Mineral Processing and Metallurgical Testing and Recovery Methods - Sections 13, 17 and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have not had prior involvement with the property that is the subject of the Technical Report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

 Dated this 6th Day
of April, 2017. 
 “Signed and Sealed” 

                         
                                         
   
 Daniel H. Sepulveda, B.Sc, SME-RM 

 

									
	 U.S. Offices:
	  		  	 Canadian Offices:
	  	 Group Offices:

	  
 Anchorage
	  	 907.677.3520
	  	 Saskatoon
	  	 306.955.4778
	  	 Africa

	  
 Clovis
	  	 559.452.0182
	  	 Sudbury
	  	 705.682.3270
	  	 Asia

	  
 Denver
	  	 303.985.1333
	  	 Toronto
	  	 416.601.1445
	  	 Australia

	  
 Elko
	  	 775.753.4151
	  	 Vancouver
	  	 604.681.4196
	  	 Europe

	  
 Fort Collins
	  	 970.407.8302
	  	 Yellowknife
	  	 867.873.8670
	  	 North America

	  
 Reno
	  	 775.828.6800
	  		  		  	 South America

	  
 Tucson
	  	 520.544.3688
	  		  		  	

					
	 

	  	 SRK Consulting (U.S.), Inc.
 Suite
600
 1125 Seventeenth Street
 Denver, CO
80202
  
 T: 303.985.1333

F: 303.985.9947
  

denver@srk.com
 www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, John Tinucci, Ph.D., P.E., ISRM, do hereby certify that: 
  

	1.	I am a Principal Geotechnical Mining Engineer of SRK Consulting (U.S.), Inc., 1125 Seventeenth Street, Suite 600, Denver, CO, USA, 80202. 

 

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources and Reserves, Bolivar Mine, Mexico” with an Effective Date of February
28, 2017 (the “Technical Report”). 

  

	3.	I graduated with a degree in B.S. in Civil Engineering from Colorado State University, in 1980. In addition, I have obtained a M.S. in Geotechnical Engineering from University of California, Berkeley, in 1983 and I have
obtained a Ph.D. in Geotechnical Engineering, Rock Mechanics from the University of California, Berkeley in 1985. I am member of the American Rock Mechanics Association, a member of the International Society of Rock Mechanics, a member of the ASCE
GeoInstitute, and a Registered Member of the Society for Mining, Metallurgy & Exploration. I have worked as a Mining and Geotechnical Engineer for a total of 31 years since my graduation from university. My relevant experience includes 34
years of professional experience. I have 15 years managerial experience leading project teams, managing P&L operations for 120 staff, and directed own company of 8 staff for 8 years. I have technical experience in mine design, prefeasibility
studies, feasibility studies, geomechanical assessments, rock mass characterization, project management, numerical analyses, underground mine stability, subsidence, tunneling, ground support, slope design and stabilization, excavation remediation,
induced seismicity and dynamic ground motion. 

  

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I did not visit the Bolivar Mine property. 

  

	6.	I am responsible for the preparation of Mining Methods - Section 16.2, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have not had prior involvement with the property that is the subject of the Technical Report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

 Dated this 6th Day
of April, 2017. 
 “Signed and Sealed” 

                         
                                        

John Tinucci, Ph.D., P.E. 
  

									
	 U.S. Offices:
	  		  	 Canadian Offices:
	  	 Group Offices:

	  
 Anchorage
	  	 907.677.3520
	  	 Saskatoon
	  	 306.955.4778
	  	 Africa

	  
 Clovis
	  	 559.452.0182
	  	 Sudbury
	  	 705.682.3270
	  	 Asia

	  
 Denver
	  	 303.985.1333
	  	 Toronto
	  	 416.601.1445
	  	 Australia

	  
 Elko
	  	 775.753.4151
	  	 Vancouver
	  	 604.681.4196
	  	 Europe

	  
 Fort Collins
	  	 970.407.8302
	  	 Yellowknife
	  	 867.873.8670
	  	 North America

	  
 Reno
	  	 775.828.6800
	  		  		  	 South America

	  
 Tucson
	  	 520.544.3688
	  		  		  	

					
	 

	  	  
 SRK Consulting (U.S.), Inc.

5250 Neil Road, Suite 300
 Reno.Nevada 89502

 
 T: (775) 828-6800 

F: (775) 828-6820
  

reno@srk.com
 www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Mark Allan Willow, SME-RM do hereby certify that: 

 

	1.	I am Practice Leader of SRK Consulting (U.S.), Inc., 5250 Neil Road, Reno, Nevada 89502. 

  

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources and Reserves, Bolivar Mine, Mexico” with an Effective Date of April 6,
2017 (the “Technical Report”). 

  

	3.	I graduated with Bachelor’s degree in Fisheries and Wildlife Management from the University of Missouri in 1987 and a Master’s degree in Environmental Science and Engineering from the Colorado School of Mines
in 1995. I have worked as Biologist/Environmental Scientist for a total of 22 years since my graduation from university. My relevant experience includes environmental due diligence/competent persons evaluations of developmental phase and operational
phase mines through the world, including small gold mining projects in Panama, Senegal, Peru, Ecuador, Philippines, and Colombia; open pit and underground coal mines in Russia; several large copper and iron mines and processing facilities in Mexico
and Brazil; bauxite operations in Jamaica; and a coal mine/coking operation in China. My Project Manager experience includes several site characterization and mine closure projects. I work closely with the U.S. Forest Service and U.S. Bureau of Land
Management on permitting and mine closure projects to develop uniquely successful and cost effective closure alternatives for the abandoned mining operations. Finally, I draw upon this diverse background for knowledge and experience as a human
health and ecological risk assessor with respect to potential environmental impacts associated with operating and closing mining properties, and have experienced in the development of Preliminary Remediation Goals and hazard/risk calculations for
site remedial action plans under CERCLA activities according to current U.S. EPA risk assessment guidance. 

  

	4.	I am a Certified Environmental Manager (CEM) in the State of Nevada (#1832) in accordance with Nevada Administrative Code NAC 459.970 through 459.9729. Before any person consults for a fee in matters concerning: the
management of hazardous waste; the investigation of a release or potential release of a hazardous substance; the sampling of any media to determine the release of a hazardous substance; the response to a release or cleanup of a hazardous substance;
or the remediation soil or water contaminated with a hazardous substance, they must be certified by the Nevada Division of Environmental Protection, Bureau of Corrective Action; 

 

	5.	I am a Registered Member (No. 4104492) of the Society for Mining, Metallurgy & Exploration Inc. (SME). 

  

	6.	I have read the definition of “qualifiedperson” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
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	7.	I did not visit the Bolivar Mine property. 

  

	8.	I am responsible for the preparation of Environmental Studies, Permitting and Social or Community Impact - Section 20 and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report.

  

	9.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	10.	I have not had prior involvement with the property that is the subject of the Technical Report. 

  

	11.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
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	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	Appendices

  

 

  
  

Appendix B: Capping Analyses 
  

 
  

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 1: Ag Log Probability Plot – El Gallo Area 

 

																			
	 Column 	  	 Cap 	  	 Capped 	  	 Percentile 	  	 Capped% 	  	 Lost 	  	 CV% 	  	 Mean 	  	 Variance 	  	 CV 
	ag	  	 	  	 	  	 	  	 	  	 	  	 	  	18.2269	  	2285	  	2.62
	ag	  	1000	  	1	  	99.90%	  	0.10%	  	2.10%	  	24%	  	17.8624	  	1254	  	1.98
	ag	  	500	  	2	  	99.90%	  	0.10%	  	3.40%	  	34%	  	17.6365	  	926.4	  	1.73
	ag	  	320	  	4	  	99.90%	  	0.20%	  	4.30%	  	39%	  	17.4493	  	779.7	  	1.6
	ag	  	150	  	14	  	99.30%	  	0.70%	  	7.10%	  	47%	  	16.8882	  	552.8	  	1.39
	ag	  	100	  	33	  	95%	  	1.70%	  	9.50%	  	51%	  	16.4137	  	452.3	  	1.3
	ag	  	57.6599	  	137	  	94%	  	7%	  	17%	  	56%	  	15.1011	  	297.4	  	1.14
	ag	  	53.3709	  	157	  	93%	  	8%	  	18%	  	57%	  	14.8272	  	275.1	  	1.12
	ag	  	50.4152	  	178	  	92%	  	9.10%	  	20%	  	58%	  	14.6026	  	258.3	  	1.1
	ag	  	47.936	  	200	  	91%	  	10.20%	  	21%	  	59%	  	14.3918	  	243.6	  	1.08
	ag	  	45.0295	  	224	  	90%	  	11.40%	  	22%	  	59%	  	14.1162	  	225.8	  	1.06
	ag	  	ag > 100	  	 	  	 	  	 	  	 	  	 	  	216.6679	  	87105	  	1.36
	ag	  	ag <= 100	  	 	  	 	  	 	  	 	  	 	  	15.0941	  	346.9	  	1.23

 Table 1: El Gallo Capping Analysis – Ag 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

  
 

 
 Figure 2: Au Log Probability Plot – El Gallo Area 

 

																			
	 Column 	  	 Cap 	  	 Capped 	  	 Percentile 	  	 Capped% 	  	 Lost 	  	 CV% 	  	 Mean 	  	 Variance 	  	 CV 
	au	  	 	  	 	  	 	  	 	  	 	  	 	  	0.223	  	0.54	  	3.29
	au	  	10	  	3	  	99.90%	  	0.20%	  	0.50%	  	1.60%	  	0.222	  	0.52	  	3.24
	au	  	7.5	  	6	  	99.70%	  	0.30%	  	3.20%	  	9.60%	  	0.2158	  	0.41	  	2.98
	au	  	5	  	11	  	99.50%	  	0.60%	  	7.60%	  	20%	  	0.2058	  	0.29	  	2.63
	au	  	3.5	  	19	  	99.20%	  	1%	  	12%	  	28%	  	0.1964	  	0.22	  	2.38
	au	  	3	  	22	  	99%	  	1.10%	  	14%	  	31%	  	0.1918	  	0.19	  	2.28
	au	  	2	  	36	  	98.50%	  	1.80%	  	20%	  	38%	  	0.1796	  	0.13	  	2.04
	au	  	1	  	102	  	95.30%	  	5.20%	  	32%	  	49%	  	0.1521	  	0.07	  	1.69
	au	  	0.75	  	135	  	93.80%	  	6.90%	  	38%	  	53%	  	0.1386	  	0.05	  	1.56
	au	  	0.545	  	195	  	91%	  	9.90%	  	45%	  	57%	  	0.1233	  	0.03	  	1.42
	au	  	0.5	  	224	  	90%	  	11.40%	  	47%	  	58%	  	0.119	  	0.03	  	1.39
	au	  	au > 5	  	 	  	 	  	 	  	 	  	 	  	8.4106	  	4.4	  	0.25
	au	  	au <= 5	  	 	  	 	  	 	  	 	  	 	  	0.1814	  	0.18	  	2.32

 Table 2: El Gallo Capping Analysis – Au 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

  
 

 
 Figure 3: Cu Log Probability Plot – El Gallo Area 

 

																			
	 Column 	  	 Cap 	  	 Capped 	  	 Percentile 	  	 Capped% 	  	 Lost 	  	 CV% 	  	 Mean 	  	 Variance 	  	 CV 
	cu	  	 	  	 	  	 	  	 	  	 	  	 	  	0.88	  	1.38	  	1.34
	cu	  	10	  	2	  	99.90%	  	0.10%	  	0.15%	  	0.29%	  	0.88	  	1.37	  	1.34
	cu	  	7.5	  	7	  	99.70%	  	0.40%	  	0.60%	  	1.70%	  	0.87	  	1.32	  	1.32
	cu	  	5	  	28	  	98.90%	  	1.10%	  	2.80%	  	6.30%	  	0.86	  	1.16	  	1.26
	cu	  	4	  	62	  	97.40%	  	2.60%	  	5.10%	  	10%	  	0.84	  	1.02	  	1.21
	cu	  	3.5	  	90	  	96.10%	  	4.60%	  	7%	  	13%	  	0.82	  	0.93	  	1.17
	cu	  	3	  	127	  	95%	  	6.50%	  	9.80%	  	16%	  	0.80	  	0.81	  	1.13
	cu	  	2.73	  	156	  	93%	  	7.90%	  	12%	  	18%	  	0.78	  	0.74	  	1.10
	cu	  	2.52	  	178	  	92%	  	9.10%	  	14%	  	20%	  	0.76	  	0.68	  	1.08
	cu	  	2.3777	  	201	  	91%	  	10.20%	  	15%	  	21%	  	0.75	  	0.64	  	1.06
	cu	  	2.2691	  	224	  	90%	  	11.40%	  	16%	  	22%	  	0.74	  	0.61	  	1.05
	cu	  	cu > 5	  	 	  	 	  	 	  	 	  	 	  	6.70	  	2.28	  	0.23
	cu	  	cu <= 5	  	 	  	 	  	 	  	 	  	 	  	0.81	  	0.97	  	1.22

 Table 3: El Gallo Capping Analysis – Cu 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 4: Pb Log Probability Plot – El Gallo Area 

 

																			
	 Column 	  	 Cap 	  	 Capped 	  	 Percentile 	  	 Capped% 	  	 Lost 	  	 CV% 	  	 Mean 	  	 Variance 	  	 CV 
	pb	  	 	  	 	  	 	  	 	  	 	  	 	  	0.01	  	0	  	3.36
	pb	  	0.1453	  	24	  	99%	  	1.20%	  	13%	  	28%	  	0.0087	  	0	  	2.42
	pb	  	0.0931	  	47	  	98%	  	2.40%	  	20%	  	37%	  	0.008	  	0	  	2.11
	pb	  	0.0604	  	70	  	97%	  	3.60%	  	29%	  	45%	  	0.0072	  	0	  	1.84
	pb	  	0.047	  	92	  	96%	  	4.70%	  	33%	  	49%	  	0.0067	  	0	  	1.7
	pb	  	0.0381	  	113	  	95%	  	5.80%	  	37%	  	52%	  	0.0063	  	0	  	1.6
	pb	  	0.033	  	135	  	94%	  	6.90%	  	40%	  	55%	  	0.006	  	0	  	1.53
	pb	  	0.0289	  	157	  	93%	  	8%	  	43%	  	56%	  	0.0057	  	0	  	1.46
	pb	  	0.026	  	171	  	92%	  	8.70%	  	45%	  	58%	  	0.0055	  	0	  	1.42
	pb	  	0.023	  	195	  	91%	  	9.90%	  	48%	  	60%	  	0.0053	  	0	  	1.36
	pb	  	0.02	  	220	  	90%	  	11.20%	  	51%	  	61%	  	0.005	  	0	  	1.3
	pb	  	pb > 0.02	  	 	  	 	  	 	  	 	  	 	  	0.0705	  	0.01	  	1.2
	pb	  	pb <= 0.02	  	 	  	 	  	 	  	 	  	 	  	0.0033	  	0	  	1.31

 Table 4: El Gallo Capping Analysis – Pb 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 5: Zn Log Probability Plot – El Gallo Area 

 

																			
	 Column 	  	Cap	  	 Capped 	  	 Percentile 	  	 Capped% 	  	Lost	  	CV%	  	Mean	  	 Variance 	  	CV
	zn	  	 	  	 	  	 	  	 	  	 	  	 	  	0.2236	  	1.26	  	5.01
	zn	  	10	  	6	  	99.70%	  	0.30%	  	6.70%	  	15%	  	0.2081	  	0.78	  	4.25
	zn	  	5	  	18	  	99%	  	0.90%	  	19%	  	29%	  	0.1816	  	0.42	  	3.56
	zn	  	2.5	  	37	  	97%	  	1.90%	  	33%	  	44%	  	0.145	  	0.17	  	2.8
	zn	  	0.7454	  	81	  	96%	  	4.10%	  	53%	  	64%	  	0.0981	  	0.03	  	1.81
	zn	  	0.5955	  	102	  	95%	  	5.20%	  	57%	  	66%	  	0.0913	  	0.02	  	1.68
	zn	  	0.4808	  	124	  	94%	  	6.30%	  	59%	  	69%	  	0.0849	  	0.02	  	1.57
	zn	  	0.403	  	144	  	93%	  	7.30%	  	62%	  	70%	  	0.0799	  	0.01	  	1.49
	zn	  	0.361	  	166	  	92%	  	8.40%	  	63%	  	71%	  	0.0767	  	0.01	  	1.44
	zn	  	0.3336	  	190	  	91%	  	9.70%	  	64%	  	72%	  	0.0744	  	0.01	  	1.41
	zn	  	0.299	  	211	  	90%	  	10.70%	  	66%	  	73%	  	0.0711	  	0.01	  	1.36
	zn	  	zn > 5	  	 	  	 	  	 	  	 	  	 	  	9.2154	  	27.24	  	0.57
	zn	  	zn <= 5	  	 	  	 	  	 	  	 	  	 	  	0.1331	  	0.18	  	3.23

 Table 5: El Gallo Capping Analysis – Zn 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 6: Ag Log Probability Plot – Bolivar NW Area 

 

																			
	Column	  	Cap	  	 Capped 	  	 Percentile 	  	 Capped% 	  	Lost	  	CV%	  	Mean	  	 Variance 	  	CV
	ag	  	 	  	 	  	 	  	 	  	 	  	 	  	17.9821	  	1228	  	1.95
	ag	  	180	  	6	  	99%	  	1.20%	  	3.80%	  	12%	  	17.2528	  	870.6	  	1.71
	ag	  	124.1608	  	11	  	98%	  	2.20%	  	9.30%	  	21%	  	16.3252	  	624.3	  	1.53
	ag	  	97.2954	  	16	  	97%	  	3.20%	  	13%	  	27%	  	15.648	  	497	  	1.42
	ag	  	80.8277	  	22	  	96%	  	4.40%	  	17%	  	31%	  	15.0326	  	406.5	  	1.34
	ag	  	67.3315	  	27	  	95%	  	5.40%	  	20%	  	35%	  	14.4088	  	332.6	  	1.27
	ag	  	58.6468	  	31	  	94%	  	6.30%	  	23%	  	38%	  	13.9233	  	285.2	  	1.21
	ag	  	53.3016	  	36	  	93%	  	7.30%	  	25%	  	40%	  	13.5773	  	256	  	1.18
	ag	  	51.7	  	39	  	92%	  	7.90%	  	26%	  	40%	  	13.4587	  	246.7	  	1.17
	ag	  	49.4695	  	45	  	91%	  	9.10%	  	27%	  	41%	  	13.2612	  	232	  	1.15
	ag	  	46.0575	  	50	  	90%	  	10.10%	  	29%	  	43%	  	12.9374	  	209.5	  	1.12
	ag	  	 	  	 	  	 	  	 	  	 	  	 	  	87.8452	  	2648	  	0.59
	ag	  	 	  	 	  	 	  	 	  	 	  	 	  	17.1437	  	1156	  	1.98

 Table 6: Bolivar NW Capping Analysis – Ag 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 7: Au Log Probability Plot – Bolivar NW Area 

 

																			
	Column	  	Cap	  	Capped	  	Percentile	  	Capped%	  	Lost	  	CV%	  	Mean	  	Variance	  	CV
	au	  	 	  	 	  	 	  	 	  	 	  	 	  	0.4752	  	0.88	  	1.98
	au	  	5	  	7	  	99%	  	1.40%	  	5.10%	  	12%	  	0.4551	  	0.63	  	1.75
	au	  	3.15	  	12	  	98%	  	2.40%	  	12%	  	23%	  	0.4249	  	0.42	  	1.52
	au	  	2.6694	  	18	  	97%	  	3.60%	  	15%	  	27%	  	0.4125	  	0.36	  	1.45
	au	  	2.3206	  	23	  	96%	  	4.60%	  	18%	  	30%	  	0.4006	  	0.31	  	1.38
	au	  	2.002	  	29	  	95%	  	5.80%	  	21%	  	34%	  	0.3855	  	0.25	  	1.31
	au	  	1.4747	  	33	  	94%	  	6.70%	  	27%	  	41%	  	0.3566	  	0.18	  	1.17
	au	  	1.2467	  	40	  	93%	  	8.10%	  	31%	  	44%	  	0.3419	  	0.15	  	1.12
	au	  	1.2047	  	44	  	92%	  	8.90%	  	31%	  	44%	  	0.3386	  	0.14	  	1.1
	au	  	1.1391	  	49	  	91%	  	9.90%	  	33%	  	45%	  	0.3329	  	0.13	  	1.08
	au	  	1.0921	  	54	  	90%	  	10.90%	  	34%	  	46%	  	0.3285	  	0.12	  	1.07
	au	  	 	  	 	  	 	  	 	  	 	  	 	  	2.7145	  	13.54	  	1.36
	au	  	 	  	 	  	 	  	 	  	 	  	 	  	0.4495	  	0.71	  	1.87

 Table 7: Bolivar NW Capping Analysis – Au 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 8: Cu log probability plot – Bolivar NW area 

 

																			
	Column	  	Cap	  	Capped	  	Percentile	  	Capped%	  	Lost	  	CV%	  	Mean	  	Variance	  	CV
	cu	  	 	  	 	  	 	  	 	  	 	  	 	  	0.7301	  	0.64	  	1.1
	cu	  	3.2833	  	7	  	99%	  	1.40%	  	2%	  	7%	  	0.7161	  	0.53	  	1.02
	cu	  	3	  	12	  	98%	  	2.40%	  	2.70%	  	8.30%	  	0.7117	  	0.51	  	1
	cu	  	2.7138	  	17	  	97%	  	3.40%	  	3.80%	  	10%	  	0.7041	  	0.48	  	0.98
	cu	  	2.3643	  	21	  	96%	  	4.20%	  	5.60%	  	13%	  	0.6915	  	0.43	  	0.95
	cu	  	2.2109	  	26	  	95%	  	5.20%	  	6.50%	  	15%	  	0.6847	  	0.41	  	0.94
	cu	  	2.1384	  	31	  	94%	  	6.30%	  	7.10%	  	15%	  	0.6806	  	0.4	  	0.93
	cu	  	1.97	  	37	  	93%	  	7.50%	  	8.60%	  	17%	  	0.6698	  	0.37	  	0.91
	cu	  	1.8341	  	42	  	92%	  	8.50%	  	10%	  	19%	  	0.6594	  	0.34	  	0.89
	cu	  	1.7335	  	48	  	91%	  	9.70%	  	11%	  	20%	  	0.6507	  	0.32	  	0.87
	cu	  	1.6608	  	52	  	90%	  	10.50%	  	12%	  	21%	  	0.6437	  	0.31	  	0.86
	cu	  	 	  	 	  	 	  	 	  	 	  	 	  	0.3737	  	0.39	  	1.67
	cu	  	 	  	 	  	 	  	 	  	 	  	 	  	0.7342	  	0.64	  	1.09
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 

 Table 8: Bolivar NW Capping Analysis – Cu 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 9: Pb Log Probability Plot – Bolivar NW Area 

 

																			
	Column	 	Cap	 	Capped 	 	Percentile 	 	Capped% 	 	Lost	 	CV%	 	Mean	 	Variance 	 	CV
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	0.0106	 	0.02	 	13.72
	pb	 	1	 	1	 	99%	 	0.20%	 	45%	 	56%	 	0.0066	 	0	 	6.03
	pb	 	0.036	 	10	 	98%	 	2%	 	67%	 	88%	 	0.0044	 	0	 	1.69
	pb	 	0.03	 	15	 	97%	 	3%	 	69%	 	88%	 	0.0043	 	0	 	1.61
	pb	 	0.026	 	20	 	96%	 	4%	 	70%	 	89%	 	0.0041	 	0	 	1.54
	pb	 	0.024	 	25	 	95%	 	5%	 	70%	 	89%	 	0.004	 	0	 	1.5
	pb	 	0.021	 	28	 	94%	 	5.60%	 	72%	 	90%	 	0.0039	 	0	 	1.42
	pb	 	0.017	 	33	 	93%	 	6.70%	 	74%	 	90%	 	0.0036	 	0	 	1.31
	pb	 	0.0131	 	38	 	92%	 	7.70%	 	76%	 	91%	 	0.0033	 	0	 	1.19
	pb	 	0.013	 	38	 	91%	 	7.70%	 	76%	 	91%	 	0.0033	 	0	 	1.18
	pb	 	0.012	 	46	 	90%	 	9.30%	 	77%	 	92%	 	0.0032	 	0	 	1.15
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	3.93	 	0	 	0
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	0.0053	 	0	 	3.04
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 Table 9: Bolivar NW Capping Analysis – Pb 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 10: Zn Log Probability Plot – Bolivar NW Area 

 

																			
	Column	 	Cap	 	Capped	 	Percentile 	 	Capped% 	 	Lost	 	CV%	 	Mean	 	Variance	 	CV
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	0.4741	 	1.56	 	2.63
	zn	 	6.0645	 	6	 	99%	 	1.20%	 	4.30%	 	6.40%	 	0.4526	 	1.24	 	2.46
	zn	 	5.5	 	11	 	98%	 	2.20%	 	6.30%	 	8.30%	 	0.4432	 	1.14	 	2.41
	zn	 	4.0192	 	16	 	97%	 	3.20%	 	15%	 	16%	 	0.4038	 	0.81	 	2.22
	zn	 	3.5136	 	21	 	96%	 	4.20%	 	19%	 	18%	 	0.3868	 	0.69	 	2.15
	zn	 	2.7063	 	26	 	95%	 	5.20%	 	26%	 	24%	 	0.3506	 	0.49	 	2
	zn	 	2.1034	 	31	 	94%	 	6.30%	 	34%	 	29%	 	0.3172	 	0.35	 	1.88
	zn	 	1.7084	 	36	 	93%	 	7.30%	 	39%	 	32%	 	0.2914	 	0.27	 	1.79
	zn	 	1.5105	 	40	 	92%	 	8.10%	 	42%	 	34%	 	0.2764	 	0.23	 	1.74
	zn	 	1.4155	 	45	 	91%	 	9.10%	 	44%	 	35%	 	0.2682	 	0.21	 	1.72
	zn	 	1.3317	 	49	 	90%	 	9.90%	 	46%	 	36%	 	0.2601	 	0.19	 	1.7
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	4.2446	 	4.8	 	0.52
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	0.1813	 	0.12	 	1.95

 Table 10: Bolivar NW Capping Analysis – Zn 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 11: Ag Log Probability Plot – Chimineas Area 

 

																			
	Column	 	Cap	 	Capped	 	Percentile 	 	Capped% 	 	Lost	 	CV%	 	Count	 	Total	 	CV
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	1092	 	44315	 	4.83
	ag	 	440	 	8	 	99.30%	 	0.70%	 	14%	 	54%	 	1092	 	37309	 	2.23
	ag	 	320	 	17	 	98.60%	 	1.60%	 	18%	 	57%	 	1092	 	35683	 	2.08
	ag	 	219.9326	 	37	 	97%	 	3.40%	 	24%	 	61%	 	1092	 	32836	 	1.88
	ag	 	186.8519	 	50	 	96%	 	4.60%	 	28%	 	63%	 	1092	 	31395	 	1.79
	ag	 	141.0087	 	62	 	95%	 	5.70%	 	34%	 	66%	 	1092	 	28801	 	1.64
	ag	 	128.9369	 	74	 	94%	 	6.80%	 	36%	 	67%	 	1092	 	27946	 	1.6
	ag	 	111.5273	 	87	 	93%	 	8%	 	39%	 	68%	 	1092	 	26530	 	1.53
	ag	 	98	 	99	 	92%	 	9.10%	 	42%	 	70%	 	1092	 	25242	 	1.47
	ag	 	82.8457	 	113	 	91%	 	10.30%	 	46%	 	71%	 	1092	 	23636	 	1.4
	ag	 	76.2494	 	123	 	90%	 	11.30%	 	48%	 	72%	 	1092	 	22848	 	1.36
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	17	 	14247	 	1.46
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	1075	 	30067	 	1.98

 Table 11: Chimineas Capping Analysis – Ag 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 12: Au Log Probability Plot – Chimineas Area 

 

																			
	Column	 	Cap	 	Capped	 	Percentile 	 	Capped% 	 	Lost	 	CV%	 	Mean	 	Variance	 	CV
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	0.0236	 	0.01	 	5.16
	au	 	1.5	 	5	 	99.70%	 	0.50%	 	6.80%	 	12%	 	0.0223	 	0.01	 	4.56
	au	 	1	 	6	 	99.60%	 	0.50%	 	16%	 	29%	 	0.0204	 	0.01	 	3.69
	au	 	0.75	 	6	 	99.60%	 	0.50%	 	21%	 	37%	 	0.0195	 	0	 	3.26
	au	 	0.2641	 	12	 	99.20%	 	1.10%	 	35%	 	59%	 	0.0164	 	0	 	2.1
	au	 	0.1417	 	24	 	98.40%	 	2.20%	 	41%	 	65%	 	0.0152	 	0	 	1.81
	au	 	0.1025	 	38	 	97.40%	 	3.50%	 	45%	 	68%	 	0.0144	 	0	 	1.67
	au	 	0.079	 	54	 	95.80%	 	4.90%	 	48%	 	69%	 	0.0136	 	0	 	1.58
	au	 	0.066	 	70	 	94.80%	 	6.40%	 	51%	 	71%	 	0.013	 	0	 	1.52
	au	 	0.057	 	91	 	92.90%	 	8.30%	 	53%	 	72%	 	0.0124	 	0	 	1.47
	au	 	0.0475	 	125	 	90%	 	11.40%	 	56%	 	73%	 	0.0116	 	0	 	1.41
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	1.8268	 	0.1	 	0.17
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	0.0166	 	0	 	2.67

 Table 12: Chimineas Capping Analysis – Au 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 13: Cu Log Probability Plot – Chimineas Area 

 

																			
	Column	 	Cap	 	Capped	 	Percentile 	 	Capped% 	 	Lost	 	CV%	 	Count	 	Total	 	CV
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	1092	 	1547	 	2.11
	cu	 	16	 	13	 	98.90%	 	1.20%	 	2.30%	 	6.20%	 	1092	 	1508	 	1.98
	cu	 	14	 	15	 	98.70%	 	1.40%	 	4.20%	 	10%	 	1092	 	1477	 	1.9
	cu	 	12	 	17	 	98.50%	 	1.60%	 	6.40%	 	14%	 	1092	 	1442	 	1.81
	cu	 	10	 	26	 	98.10%	 	2.40%	 	9.50%	 	19%	 	1092	 	1397	 	1.71
	cu	 	7.5	 	39	 	97.10%	 	3.60%	 	14%	 	26%	 	1092	 	1326	 	1.57
	cu	 	5	 	61	 	94%	 	5.60%	 	22%	 	34%	 	1092	 	1209	 	1.39
	cu	 	4.0385	 	89	 	93%	 	8.20%	 	27%	 	39%	 	1092	 	1137	 	1.3
	cu	 	3.6512	 	101	 	92%	 	9.20%	 	30%	 	41%	 	1092	 	1100	 	1.25
	cu	 	3.1902	 	115	 	91%	 	10.50%	 	33%	 	43%	 	1092	 	1051	 	1.2
	cu	 	2.9894	 	127	 	90%	 	11.60%	 	35%	 	45%	 	1092	 	1027	 	1.17
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	13	 	273.7	 	0.17
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	1079	 	1273	 	1.72

 Table 13: Chimineas Capping Analysis – Cu 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

  
 

 
 Figure 14: Pb Log Probability Plot – Chimineas Area 

 

																			
	Column	 	Cap	 	Capped 	 	Percentile 	 	Capped% 	 	Lost 	 	CV% 	 	Count 	 	Total 	 	CV 
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	1092	 	43.29	 	2.72
	pb	 	0.3157	 	17	 	99%	 	1.60%	 	17%	 	30%	 	1092	 	38.73	 	1.9
	pb	 	0.2821	 	27	 	98%	 	2.50%	 	18%	 	32%	 	1092	 	38.13	 	1.86
	pb	 	0.223	 	40	 	97%	 	3.70%	 	23%	 	36%	 	1092	 	36.26	 	1.74
	pb	 	0.189	 	50	 	96%	 	4.60%	 	26%	 	39%	 	1092	 	34.78	 	1.66
	pb	 	0.151	 	64	 	95%	 	5.90%	 	31%	 	43%	 	1092	 	32.69	 	1.56
	pb	 	0.131	 	75	 	94%	 	6.90%	 	34%	 	45%	 	1092	 	31.3	 	1.49
	pb	 	0.119	 	87	 	93%	 	8%	 	36%	 	47%	 	1092	 	30.3	 	1.45
	pb	 	0.106	 	101	 	92%	 	9.20%	 	39%	 	49%	 	1092	 	29.06	 	1.4
	pb	 	0.0975	 	112	 	91%	 	10.30%	 	41%	 	50%	 	1092	 	28.14	 	1.36
	pb	 	0.0863	 	123	 	90%	 	11.30%	 	44%	 	52%	 	1092	 	26.8	 	1.31
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	15	 	8.466	 	0.68
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	1077	 	34.82	 	1.84

 Table 14: Chimineas Capping Analysis – Pb 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 15: Zn Log Probability Plot – Chimineas Area 

 

																			
	Column	 	Cap 	 	Capped 	 	Percentile 	 	Capped% 	 	Lost 	 	CV% 	 	Count 	 	Total 	 	CV 
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	1092	 	188.4	 	3.21
	zn	 	2.0549	 	16	 	99%	 	1.50%	 	13%	 	25%	 	1092	 	168.2	 	2.4
	zn	 	1.41	 	25	 	98%	 	2.30%	 	20%	 	32%	 	1092	 	156	 	2.17
	zn	 	0.9513	 	40	 	97%	 	3.70%	 	28%	 	40%	 	1092	 	140.9	 	1.94
	zn	 	0.8634	 	52	 	96%	 	4.80%	 	30%	 	41%	 	1092	 	137	 	1.89
	zn	 	0.6844	 	64	 	95%	 	5.90%	 	36%	 	45%	 	1092	 	126.6	 	1.75
	zn	 	0.5989	 	76	 	94%	 	7%	 	39%	 	48%	 	1092	 	120.6	 	1.68
	zn	 	0.479	 	86	 	93%	 	7.90%	 	44%	 	51%	 	1092	 	110.9	 	1.57
	zn	 	0.429	 	96	 	92%	 	8.80%	 	47%	 	53%	 	1092	 	106.2	 	1.52
	zn	 	0.3733	 	107	 	91%	 	9.80%	 	50%	 	55%	 	1092	 	100.2	 	1.45
	zn	 	0.325	 	117	 	90%	 	10.70%	 	53%	 	57%	 	1092	 	94.44	 	1.39
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	16	 	46.99	 	0.58
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	1076	 	141.4	 	2.24

 Table 15: Chimineas Capping Analysis – Zn 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 16: Ag Log Probability Plot – Bolivar W Area 

 

																					
	Column	 	Cap	 	Capped	 	Percentile  	 	Capped%  	 	Lost	 	CV%	 	Count	 	Mean	 	Total	 	CV
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	166	 	32.6411	 	6401	 	2.55
	ag	 	500	 	2	 	98.90%	 	1.20%	 	4.10%	 	7.80%	 	166	 	31.2347	 	6125	 	2.35
	ag	 	300	 	4	 	97.90%	 	2.40%	 	15%	 	24%	 	166	 	27.842	 	5460	 	1.93
	ag	 	175	 	7	 	97%	 	4.20%	 	28%	 	39%	 	166	 	24.3086	 	4767	 	1.54
	ag	 	110	 	8	 	96.20%	 	4.80%	 	36%	 	48%	 	166	 	21.9221	 	4299	 	1.32
	ag	 	100	 	10	 	95%	 	6%	 	38%	 	50%	 	166	 	21.4402	 	4204	 	1.28
	ag	 	90	 	12	 	93.80%	 	7.20%	 	40%	 	51%	 	166	 	20.8451	 	4088	 	1.24
	ag	 	80	 	14	 	92.60%	 	8.40%	 	42%	 	53%	 	166	 	20.1525	 	3952	 	1.19
	ag	 	78	 	14	 	92%	 	8.40%	 	42%	 	53%	 	166	 	19.9991	 	3922	 	1.18
	ag	 	75	 	17	 	90.90%	 	10.20%	 	43%	 	54%	 	166	 	19.7359	 	3870	 	1.17
	ag	 	65	 	17	 	90.40%	 	10.20%	 	46%	 	57%	 	166	 	18.7568	 	3678	 	1.11
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 	526.7711	 	2186	 	0.26
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	162	 	21.9579	 	4215	 	1.65

 Table 16: Bolivar W Capping Analysis – Ag 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 17: Au Log Probability Plot – Bolivar W Area 

 

																					
	Column	 	Cap	 	Capped	 	Percentile  	 	Capped%  	 	Lost	 	CV%	 	Count	 	Mean	 	Total	 	CV
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	166	 	0.0089	 	1.741	 	8.76
	au	 	0.13	 	2	 	99%	 	1.20%	 	62%	 	57%	 	166	 	0.0056	 	1.1	 	3.8
	au	 	0.1	 	4	 	98%	 	2.40%	 	66%	 	58%	 	166	 	0.0052	 	1.013	 	3.65
	au	 	0.07	 	6	 	97%	 	3.60%	 	71%	 	61%	 	166	 	0.0043	 	0.847	 	3.42
	au	 	0.0295	 	8	 	96%	 	4.80%	 	82%	 	65%	 	166	 	0.0027	 	0.525	 	3.03
	au	 	0.025	 	8	 	95%	 	4.80%	 	83%	 	66%	 	166	 	0.0025	 	0.489	 	3.02
	au	 	0.025	 	8	 	94%	 	4.80%	 	83%	 	66%	 	166	 	0.0025	 	0.489	 	3.02
	au	 	0.025	 	8	 	93%	 	4.80%	 	83%	 	66%	 	166	 	0.0025	 	0.489	 	3.02
	au	 	0.025	 	8	 	92%	 	4.80%	 	83%	 	66%	 	166	 	0.0025	 	0.489	 	3.02
	au	 	0.025	 	8	 	91%	 	4.80%	 	83%	 	66%	 	166	 	0.0025	 	0.489	 	3.02
	au	 	0	 	21	 	90%	 	12.70%	 	100%	 	NaN%	 	166	 	0	 	0	 	NaN
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	2	 	0	 	0	 	NaN
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	164	 	0.009	 	1.741	 	8.71

 Table 17: Bolivar W Capping Analysis – Au 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 18: Cu Log Probability Plot – Bolivar W Area 

 

																					
	Column	 	Cap	 	Capped	 	Percentile  	 	Capped%  	 	Lost	 	CV%	 	Count	 	Mean	 	Total	 	CV
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	166	 	1.0989	 	215.5	 	1.22
	cu	 	6.4522	 	2	 	99.40%	 	1.20%	 	1.90%	 	4.20%	 	166	 	1.0841	 	212.6	 	1.17
	cu	 	5	 	3	 	98%	 	1.80%	 	3.50%	 	6.60%	 	166	 	1.0718	 	210.2	 	1.14
	cu	 	4.7118	 	7	 	97%	 	4.20%	 	4.50%	 	8%	 	166	 	1.0631	 	208.5	 	1.12
	cu	 	4.0173	 	9	 	96%	 	5.40%	 	7.40%	 	11%	 	166	 	1.0392	 	203.8	 	1.08
	cu	 	3.9152	 	11	 	95%	 	6.60%	 	7.90%	 	12%	 	166	 	1.0338	 	202.7	 	1.07
	cu	 	3.6722	 	12	 	94%	 	7.20%	 	9.40%	 	14%	 	166	 	1.02	 	200	 	1.05
	cu	 	3.3153	 	13	 	93%	 	7.80%	 	12%	 	16%	 	166	 	0.9952	 	195.2	 	1.02
	cu	 	3.2328	 	15	 	92%	 	9%	 	12%	 	17%	 	166	 	0.9888	 	193.9	 	1.01
	cu	 	3.0227	 	16	 	91%	 	9.60%	 	14%	 	19%	 	166	 	0.9699	 	190.2	 	0.99
	cu	 	2.6328	 	18	 	90%	 	10.80%	 	18%	 	22%	 	166	 	0.9326	 	182.9	 	0.94
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	3	 	7.0055	 	18.56	 	0.29
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	163	 	1.018	 	196.9	 	1.12

 Table 18: Bolivar W Capping Analysis – Cu 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 19: Pb Log Probability Plot – Bolivar WArea 

 

																					
	Column	 	Cap	 	Capped  	 	Percentile  	 	Capped%  	 	Lost	 	CV%	 	Count	 	Mean	 	Total	 	CV
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	166	 	0.0346	 	6.781	 	2.96
	pb	 	0.5261	 	2	 	99%	 	1.20%	 	7.40%	 	9.60%	 	166	 	0.0322	 	6.322	 	2.67
	pb	 	0.3806	 	4	 	98%	 	2.40%	 	15%	 	17%	 	166	 	0.0298	 	5.845	 	2.46
	pb	 	0.2663	 	6	 	97%	 	3.60%	 	25%	 	24%	 	166	 	0.0268	 	5.246	 	2.24
	pb	 	0.2089	 	8	 	96%	 	4.80%	 	31%	 	29%	 	166	 	0.0245	 	4.798	 	2.09
	pb	 	0.1574	 	9	 	95%	 	5.40%	 	38%	 	34%	 	166	 	0.0221	 	4.331	 	1.95
	pb	 	0.1502	 	10	 	94%	 	6%	 	39%	 	35%	 	166	 	0.0217	 	4.252	 	1.92
	pb	 	0.1459	 	12	 	93%	 	7.20%	 	40%	 	35%	 	166	 	0.0214	 	4.194	 	1.91
	pb	 	0.123	 	14	 	92%	 	8.40%	 	45%	 	39%	 	166	 	0.0195	 	3.832	 	1.8
	pb	 	0.0826	 	16	 	91%	 	9.60%	 	55%	 	46%	 	166	 	0.0161	 	3.155	 	1.59
	pb	 	0.0744	 	18	 	90%	 	10.80%	 	58%	 	48%	 	166	 	0.0153	 	2.999	 	1.54
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 	0.1389	 	0.389	 	0.81
	pb	 	 	 	 	 	 	 	 	 	 	 	 	 	162	 	0.0331	 	6.392	 	3.07

 Table 19: Bolivar W Capping Analysis – Pb 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 20: Zn Log Probability Plot – Bolivar W Area 

 

																					
	Column	 	Cap 	 	Capped 	 	Percentile 	 	Capped% 	 	Lost 	 	CV% 	 	Count 	 	Mean 	 	Total 	 	CV 
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	166	 	0.6003	 	117.7	 	2.02
	zn	 	4.4517	 	4	 	99%	 	2.40%	 	15%	 	22%	 	166	 	0.5585	 	109.5	 	1.56
	zn	 	3.7291	 	5	 	98%	 	3%	 	18%	 	25%	 	166	 	0.547	 	107.3	 	1.51
	zn	 	3.3678	 	7	 	97%	 	4.20%	 	20%	 	27%	 	166	 	0.5371	 	105.3	 	1.47
	zn	 	2.569	 	9	 	96%	 	5.40%	 	25%	 	33%	 	166	 	0.5064	 	99.3	 	1.35
	zn	 	2.3984	 	10	 	95%	 	6%	 	27%	 	34%	 	166	 	0.4979	 	97.65	 	1.33
	zn	 	2.2336	 	12	 	94%	 	7.20%	 	28%	 	36%	 	166	 	0.4883	 	95.76	 	1.3
	zn	 	2.0371	 	13	 	93%	 	7.80%	 	30%	 	38%	 	166	 	0.4751	 	93.16	 	1.26
	zn	 	1.6234	 	15	 	92%	 	9%	 	35%	 	42%	 	166	 	0.4428	 	86.83	 	1.17
	zn	 	1.5195	 	16	 	91%	 	9.60%	 	37%	 	43%	 	166	 	0.4335	 	85	 	1.15
	zn	 	1.3196	 	17	 	90%	 	10.20%	 	40%	 	45%	 	166	 	0.4138	 	81.14	 	1.1
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 	7.3823	 	20.67	 	0.67
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	162	 	0.5021	 	97.05	 	1.48

 Table 20: Bolivar W Capping Analysis – Zn 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 21: Ag Log Probability Plot – Increíble Area 

 

																					
	Column  	 	Cap	 	Capped	 	 Percentile  	 	 Capped%  	 	Lost	 	CV%	 	Count	 	Mean	 	 Variance  	 	    CV    
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	406	 	17.1418	 	1611	 	2.34
	ag	 	150	 	4	 	99%	 	1.00%	 	8%	 	26%	 	406	 	15.751	 	754.3	 	1.74
	ag	 	125	 	9	 	98%	 	2.20%	 	11%	 	29%	 	406	 	15.3539	 	658.2	 	1.67
	ag	 	100	 	14	 	97%	 	3.40%	 	15%	 	33%	 	406	 	14.6573	 	523.3	 	1.56
	ag	 	81.2762	 	17	 	96%	 	4.20%	 	19%	 	38%	 	406	 	13.9266	 	411.5	 	1.46
	ag	 	68.567	 	21	 	95%	 	5.20%	 	22%	 	41%	 	406	 	13.3381	 	339.4	 	1.38
	ag	 	57.8736	 	25	 	94%	 	6.20%	 	26%	 	44%	 	406	 	12.7304	 	278.3	 	1.31
	ag	 	52.4281	 	29	 	93%	 	7.10%	 	28%	 	46%	 	406	 	12.3615	 	246.8	 	1.27
	ag	 	48.2024	 	33	 	92%	 	8.10%	 	30%	 	47%	 	406	 	12.0456	 	222.7	 	1.24
	ag	 	46.7521	 	37	 	91%	 	9.10%	 	31%	 	48%	 	406	 	11.9203	 	213.8	 	1.23
	ag	 	40.5975	 	41	 	90%	 	10.10%	 	34%	 	50%	 	406	 	11.325	 	175.6	 	1.17
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	14	 	172.8571	 	15338	 	0.72
	ag	 	 	 	 	 	 	 	 	 	 	 	 	 	392	 	11.6443	 	274.9	 	1.42

 Table 21: Increíble Capping Analysis – Ag 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 22: Au Log Probability Plot – Increíble Area 

 

																					
	Column  	 	Cap	 	Capped	 	Percentile	 	Capped%	 	    Lost    	 	  CV%  	 	  Count  	 	Mean	 	Variance	 	    CV    
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	406	 	0.0251	 	0.05	 	9.12
	au	 	0.5	 	1	 	99.70%	 	0.20%	 	40%	 	70%	 	406	 	0.0151	 	0	 	2.73
	au	 	0.097	 	8	 	98%	 	2%	 	52%	 	83%	 	406	 	0.0123	 	0	 	1.58
	au	 	0.0852	 	12	 	97%	 	3%	 	53%	 	83%	 	406	 	0.012	 	0	 	1.51
	au	 	0.0701	 	16	 	96%	 	3.90%	 	55%	 	85%	 	406	 	0.0115	 	0	 	1.41
	au	 	0.0524	 	20	 	95%	 	4.90%	 	58%	 	86%	 	406	 	0.0106	 	0	 	1.25
	au	 	0.05	 	21	 	94%	 	5.20%	 	58%	 	87%	 	406	 	0.0105	 	0	 	1.23
	au	 	0.0414	 	28	 	93%	 	6.90%	 	61%	 	88%	 	406	 	0.0099	 	0	 	1.13
	au	 	0.0374	 	32	 	92%	 	7.90%	 	62%	 	88%	 	406	 	0.0096	 	0	 	1.08
	au	 	0.033	 	34	 	91%	 	8.40%	 	63%	 	89%	 	406	 	0.0093	 	0	 	1.02
	au	 	0.03	 	37	 	90%	 	9.10%	 	64%	 	89%	 	406	 	0.009	 	0	 	0.98
	au	 	 	 		 	 	 		 	 	 		 	1	 	4.6	 	0	 	0
	au	 	 	 	 	 	 	 	 	 	 	 	 	 	405	 	0.0139	 	0	 	2.42

 Table 22: Increíble Capping Analysis – Au 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 23: Cu Log Probability Plot – Increíble Area 

 

																					
	Column	 	Cap	 	Capped	 	Percentile	 	Capped%	 	Lost	 	CV%	 	Count	 	Mean	 	Variance	 	CV
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	406	 	0.7236	 	1.98	 	1.94
	cu	 	10	 	2	 	99.70%	 	0.50%	 	1.10%	 	3%	 	406	 	0.716	 	1.82	 	1.89
	cu	 	7	 	5	 	98.90%	 	1.20%	 	3.60%	 	8.30%	 	406	 	0.6977	 	1.54	 	1.78
	cu	 	6	 	7	 	98.30%	 	1.70%	 	5.90%	 	12%	 	406	 	0.6815	 	1.36	 	1.71
	cu	 	5	 	11	 	97.50%	 	2.70%	 	9%	 	17%	 	406	 	0.6588	 	1.14	 	1.62
	cu	 	4	 	13	 	96.90%	 	3.20%	 	13%	 	22%	 	406	 	0.6292	 	0.91	 	1.52
	cu	 	3	 	20	 	94%	 	4.90%	 	19%	 	28%	 	406	 	0.5895	 	0.68	 	1.4
	cu	 	2.4554	 	29	 	93%	 	7.10%	 	23%	 	32%	 	406	 	0.5567	 	0.54	 	1.32
	cu	 	2.2278	 	33	 	92%	 	8.10%	 	26%	 	34%	 	406	 	0.5396	 	0.48	 	1.29
	cu	 	2.075	 	37	 	91%	 	9.10%	 	27%	 	35%	 	406	 	0.5266	 	0.44	 	1.26
	cu	 	1.8801	 	41	 	90%	 	10.10%	 	30%	 	37%	 	406	 	0.5076	 	0.38	 	1.22
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	11	 	7.4105	 	4.97	 	0.3
	cu	 	 	 	 	 	 	 	 	 	 	 	 	 	395	 	0.5387	 	0.63	 	1.48

 Table 23: Increíble Capping Analysis – Cu 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

  
 

 
 Figure 24: Pb Log Probability Plot – Increíble Area 

 

																					
	Column	  	Cap	  	Capped	  	Percentile  	  	Capped%  	 	Lost	  	CV%	  	Count	  	Mean	  	Variance	  	CV
	pb	  	 	  	 	  	 	  	 	 	 	  	 	  	406	  	0.0332	  	0	  	1.63
	pb	  	0.2338	  	5	  	99%	  	1.20%	 	4.20%	  	12%	  	406	  	0.0318	  	0	  	1.43
	pb	  	0.2064	  	9	  	98%	  	2.20%	 	5.50%	  	14%	  	406	  	0.0314	  	0	  	1.4
	pb	  	0.1582	  	13	  	97%	  	3.20%	 	9.50%	  	20%	  	406	  	0.0301	  	0	  	1.3
	pb	  	0.142	  	16	  	96%	  	3.90%	 	11%	  	22%	  	406	  	0.0295	  	0	  	1.27
	pb	  	0.1289	  	21	  	95%	  	5.20%	 	13%	  	24%	  	406	  	0.0289	  	0	  	1.23
	pb	  	0.1188	  	25	  	94%	  	6.20%	 	15%	  	26%	  	406	  	0.0283	  	0	  	1.2
	pb	  	0.1038	  	29	  	93%	  	7.10%	 	18%	  	29%	  	406	  	0.0273	  	0	  	1.15
	pb	  	0.0982	  	33	  	92%	  	8.10%	 	19%	  	31%	  	406	  	0.0269	  	0	  	1.13
	pb	  	0.0891	  	37	  	91%	  	9.10%	 	21%	  	33%	  	406	  	0.0261	  	0	  	1.1
	pb	  	0.087	  	39	  	90%	  	9.60%	 	22%	  	33%	  	406	  	0.0259	  	0	  	1.09
	pb	  	 	  	 	  	 	  	 	 	 	  	 	  	5	  	0.3482	  	0.01	  	0.32
	
pb
	  	 	  	 	  	 	  	 	 	 	  	 	  	401	  	0.0293	  	0	  	1.36

 Table 24: Increíble Capping Analysis – Pb 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix B

  

 

 

 
 Figure 25: Zn Log Probability Plot – Increíble Area 

 

																					
	Column	 	Cap	 	Capped	 	Percentile  	 	Capped%  	 	Lost	 	CV%	 	Count	 	Mean	 	Variance	 	CV
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	406	 	1.3216	 	23.76	 	3.69
	zn	 	26.378	 	4	 	99%	 	1%	 	12%	 	15%	 	406	 	1.1696	 	13.4	 	3.13
	zn	 	16.0234	 	8	 	98%	 	2%	 	23%	 	28%	 	406	 	1.0169	 	7.39	 	2.67
	zn	 	10	 	12	 	97%	 	3%	 	34%	 	39%	 	406	 	0.8618	 	3.72	 	2.24
	zn	 	4.9489	 	15	 	96%	 	3.70%	 	48%	 	54%	 	406	 	0.6804	 	1.31	 	1.68
	zn	 	2.9693	 	19	 	95%	 	4.70%	 	55%	 	61%	 	406	 	0.5882	 	0.7	 	1.42
	zn	 	2.5483	 	23	 	94%	 	5.70%	 	56%	 	63%	 	406	 	0.565	 	0.6	 	1.37
	zn	 	2.48	 	26	 	93%	 	6.40%	 	57%	 	63%	 	406	 	0.5606	 	0.58	 	1.36
	zn	 	2.3623	 	31	 	92%	 	7.60%	 	57%	 	64%	 	406	 	0.5515	 	0.55	 	1.34
	zn	 	2.1725	 	35	 	91%	 	8.60%	 	58%	 	64%	 	406	 	0.535	 	0.49	 	1.31
	zn	 	2.0398	 	39	 	90%	 	9.60%	 	59%	 	65%	 	406	 	0.5224	 	0.45	 	1.29
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	12	 	24.3527	 	177.6	 	0.55
	zn	 	 	 	 	 	 	 	 	 	 	 	 	 	394	 	0.5594	 	0.98	 	1.77

 Table 25: Increíble Capping Analysis – Zn 

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical Report
– Bolivar Mine, Mexico
	  	Appendices

  

 

  
  

Appendix C: Swath Plots 
  

 
  
  

 

  
  

					
	JL/SH	  		  	April 2017

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 1: Swath Plots – Bolivar NW Ag 

 
  
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 2: Swatch Plots – Bolivar NW Au 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 3: Swath Plots – Bolivar NW Cu 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 4: Swath Plots – Bolivar Pb 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 5: Swath Plots – Bolivar Zn 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 6: Swath Plots – Bolivar W Ag 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 7: Swath Plots – Bolivar W Au 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 8: Swath Plots – Bolivar W Cu 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 9: Swath Plots – Bolivar W Pb 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 10: Swath Plots – Bolivar W Zn 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 11: Swath Plots – Chimineas Ag 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 12: Swath Plots – Chimineas Au 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 13: Swath Plots – Chinimeas Cu 

 
 

 
  

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 14: Swath Plots – Chimineas Pb 

 
 

 
  

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 15: Swath Plots – Chimineas Zn 

 
 

 
  

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 16: Swath Plots – El Gallo Ag 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 17: Swath Plots – El Gallo Au 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 18: Swath Plots – El Gallo Cu 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 19: Swath Plots – El Gallo Pb 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 20: Swath Plots – El Gallo Zn 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 21: Swath Plots – Increíble Ag 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 22: Swath Plots – Increíble Au 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 23: Swath Plot – Increíble Cu 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 24: Swath Plots – Increíble Pb 

 
 

 

  

					
		  		  	

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 25: Swath Plots – Increíble Zn 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 26: Swath Plots – La Sidra Ag 

 
 

 

					
	 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report

Bolivar Mine, Mexico
	  	Appendix C

  

 

 Figure 27: Swath Plots – La Sidra AuEX-4.11

 Exhibit 4.11 

NI 43-101 Technical Report on 

Resources 
 Cusi Mine 

Mexico 
 Effective Date: January 31, 2017 

Report Date: April 14, 2017 
 Report Prepared for 

 

			
	  Sierra Metals, Inc.
  

  79 Wellington Street West, Suite 2100
   P.O. Box 157

  Toronto, Ontario, M5K 1H1
   Canada
	  	

		
	 Report Prepared by
  

 SRK Consulting (U.S.), Inc.
 1125
Seventeenth Street, Suite 600
 Denver, CO 80202
  

SRK Project Number: 470200-150
	  	

 Contributors: 
 Aryn Hoge, MSc Geology 

Signed by Qualified Persons: 
 Matthew Hastings, MSc Geology, MAusIMM (CP)

 Daniel Sepulveda, BS Extractive Metallurgy Engineer 
 Mark Willow, MSc, CEM, SME-RM 
 Reviewed by: 
 Bart A. Stryhas,
PhD, CPG 
 Grant Malensek, MEng, PEng/PGeo 

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical
Report – Cusi Mine, Mexico
	  	Page ii

  

 

									
	Table of Contents	  			
			
	 1
	 	 Summary
	  	 	1	 
				
		 	1.1	 	Property Description and Ownership	  	 	1	 
				
		 	1.2	 	Geology and Mineralization	  	 	1	 
				
		 	1.3	 	Status of Exploration, Development and Operations	  	 	2	 
				
		 	1.4	 	Mineral Processing and Metallurgical Testing	  	 	2	 
				
		 	1.5	 	Mineral Resource Estimate	  	 	3	 
				
		 	1.6	 	Mineral Reserve Estimate	  	 	6	 
				
		 	1.7	 	Mining Methods	  	 	6	 
				
		 	1.8	 	Recovery Methods	  	 	6	 
				
		 	1.9	 	Project Infrastructure	  	 	6	 
				
		 	1.10	 	Environmental Studies and Permitting	  	 	6	 
				
		 	1.11	 	Capital and Operating Costs	  	 	6	 
				
		 	1.12	 	Economic Analysis	  	 	6	 
				
		 	1.13	 	Conclusions and Recommendations	  	 	6	 
				
		 		 	1.13.1   Geology and Mineral Resources	  	 	6	 
			
	 2
	 	 Introduction
	  	 	9	 
				
		 	2.1	 	Terms of Reference and Purpose of the Report	  	 	9	 
				
		 	2.2	 	Qualifications of Consultants (SRK)	  	 	9	 
				
		 	2.3	 	Details of Inspection	  	 	10	 
				
		 	2.4	 	Sources of Information	  	 	10	 
				
		 	2.5	 	Effective Date	  	 	10	 
				
		 	2.6	 	Units of Measure	  	 	10	 
			
	 3
	 	 Reliance on Other Experts
	  	 	11	 
			
	 4
	 	 Property Description and Location
	  	 	12	 
				
		 	4.1	 	Property Location	  	 	12	 
				
		 	4.2	 	Mineral Titles	  	 	12	 
				
		 		 	 4.2.1  Nature and Extent of Issuer’s Interest
	  	 	15	 
				
		 	4.3	 	Royalties, Agreements and Encumbrances	  	 	16	 
				
		 		 	 4.3.1  Purchase Agreement with Minera Cusi
	  	 	16	 
				
		 		 	 4.3.2  Purchase Agreement with Manuel Holguin
	  	 	16	 
				
		 		 	 4.3.3  Purchase Agreement with Martha Azucena Holguin
	  	 	16	 
				
		 		 	 4.3.4  Purchase Agreement with Hector Sanchez
	  	 	16	 
				
		 		 	 4.3.5  Agreement with Mexican Government
	  	 	17	 
				
		 	4.4	 	Environmental Liabilities and Permitting	  	 	17	 
				
		 		 	4.4.1   Environmental Liabilities	  	 	17	 

  
  

					
	JL/SH	  		  	April 14, 2017

					
	 SRK Consulting (U.S.), Inc.
 NI 43-101 Technical
Report – Cusi Mine, Mexico
	  	Page iii

  

 

									
		 		 	4.4.2	  	Required Permits and Status	  	17
				
		 	4.5	 	Other Significant Factors and Risks	  	17
			
	5	 	Accessibility, Climate, Local Resources, Infrastructure and Physiography	  	18
				
		 	5.1	 	Topography, Elevation and Vegetation	  	18
				
		 	5.2	 	Accessibility and Transportation to the Property	  	18
				
		 	5.3	 	Climate and Length of Operating Season	  	18
				
		 	5.4	 	Sufficiency of Surface Rights	  	18
				
		 	5.5	 	Infrastructure Availability and Sources	  	18
					
		 		 	5.5.1	  	Power	  	18
					
		 		 	5.5.2	  	Water	  	19
					
		 		 	5.5.3	  	Mining Personnel	  	19
					
		 		 	5.5.4	  	Potential Tailings Storage Areas	  	19
					
		 		 	5.5.5	  	Potential Waste Rock Disposal Areas	  	19
					
		 		 	5.5.6	  	Potential Processing Plant Sites	  	19
			
	6	 	History	  	20
				
		 	6.1	 	Prior Ownership and Ownership Changes	  	20
				
		 	6.2	 	Exploration and Development Results of Previous Owners	  	20
				
		 	6.3	 	Historic Mineral Resource and Reserve Estimates	  	20
				
		 	6.4	 	Historic Production	  	20
			
	7	 	Geological Setting and Mineralization	  	21
				
		 	7.1	 	Regional Geology	  	21
				
		 	7.2	 	Local Geology	  	23
				
		 	7.3	 	Property Geology	  	24
				
		 	7.4	 	Significant Mineralized Zones	  	25
			
	8	 	Deposit Type	  	27
				
		 	8.1	 	Mineral Deposit	  	27
				
		 	8.2	 	Geological Model	  	27
			
	9	 	Exploration	  	28
				
		 	9.1	 	Relevant Exploration Work	  	28
				
		 	9.2	 	Sampling Methods and Sample Quality	  	28
				
		 	9.3	 	Significant Results and Interpretation	  	29
			
	10	 	Drilling	  	30
				
		 	10.1	 	Type and Extent	  	30
				
		 	10.2	 	Procedures	  	30
					
		 		 	10.2.1	  	Downhole Deviation	  	31
					
		 		 	10.2.2	  	Core Recovery	  	31

  
  

					
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		 	10.3	 	Interpretation and Relevant Results	  	31
			
	 11
	 	 Sample Preparation, Analysis and Security
	  	 33

				
		 	11.1	 	Security Measures	  	33
				
		 	11.2	 	Sample Preparation for Analysis	  	33
				
		 	11.3	 	Sample Analysis	  	33
				
		 	11.4	 	Quality Assurance/Quality Control Procedures	  	35
					
		 		 	11.4.1	  	Standards	  	35
					
		 		 	11.4.2	  	Blanks	  	36
					
		 		 	11.4.3	  	Duplicates	  	38
					
		 		 	11.4.4	  	Actions	  	38
					
		 		 	11.4.5	  	Results	  	39
				
		 	11.5	 	Opinion on Adequacy	  	43
			
	 12
	 	 Data Verification
	  	 44

				
		 	12.1	 	Procedures	  	44
					
		 		 	12.1.1	  	Database Validation	  	44
				
		 	12.2	 	Limitations	  	44
				
		 	12.3	 	Opinion on Data Adequacy	  	45
			
	 13
	 	 Mineral Processing and Metallurgical Testing
	  	 46

				
		 	13.1	 	Testing and Procedures	  	46
				
		 	13.2	 	Recovery Estimate Assumptions	  	46
			
	 14
	 	 Mineral Resource Estimate
	  	 48

				
		 	14.1	 	Drillhole Database	  	48
				
		 	14.2	 	Geologic Model	  	49
					
		 		 	14.2.1	  	Domain Analysis	  	54
				
		 	14.3	 	Assay Capping and Compositing	  	55
					
		 		 	14.3.1	  	Outliers	  	55
					
		 		 	14.3.2	  	Compositing	  	57
				
		 	14.4	 	Density	  	58
				
		 	14.5	 	Variogram Analysis and Modeling	  	59
				
		 	14.6	 	Block Model	  	59
				
		 	14.7	 	Estimation Methodology	  	61
				
		 	14.8	 	Model Validation	  	63
					
		 		 	14.8.1	  	Visual Comparison	  	63
					
		 		 	14.8.2	  	Estimation Quality	  	64
					
		 		 	14.8.3	  	Comparative Statistics	  	66
				
		 	14.9	 	Resource Classification	  	75
				
		 	14.10	 	Depletion for Mining	  	78

  
  

					
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		 	14.11	 	Mineral Resource Statement	  	79
				
		 	14.12	 	Mineral Resource Sensitivity	  	81
				
		 	14.13	 	Relevant Factors	  	87
			
	 15
	 	 Mineral Reserve Estimate
	  	 88

			
	 16
	 	 Mining Methods
	  	 89

			
	 17
	 	 Recovery Methods
	  	 90

			
	 18
	 	 Project Infrastructure
	  	 91

			
	 19
	 	 Market Studies and Contracts
	  	 92

			
	 20
	 	 Environmental Studies, Permitting and Social or Community Impact
	  	 93

				
		 	20.1	 	Environmental Studies and Background Information	  	93
				
		 	20.2	 	Environmental Studies and Liabilities	  	93
				
		 	20.3	 	Environmental Management	  	93
					
		 		 	20.3.1	  	Tailings Management	  	93
					
		 		 	20.3.2	  	Waste Rock Management	  	93
					
		 		 	20.3.3	  	Geochemistry	  	94
				
		 	20.4	 	Mexican Environmental Regulatory Framework	  	94
					
		 		 	20.4.1	  	Mining Law and Regulations	  	94
					
		 		 	20.4.2	  	General Environmental Laws and Regulations	  	94
					
		 		 	20.4.3	  	Other Laws and Regulations	  	97
					
		 		 	20.4.4	  	Expropriations	  	98
					
		 		 	20.4.5	  	NAFTA	  	98
					
		 		 	20.4.6	  	International Policy and Guidelines	  	99
					
		 		 	20.4.7	  	Required Permits and Status	  	99
					
		 		 	20.4.8	  	MIA and CUS Authorizations	  	103
					
		 		 	20.4.9	  	Inspections	  	104
				
		 	20.5	 	Social Management Planning and Community Relations	  	104
				
		 	20.6	 	Closure and Reclamation Plan	  	104
			
	 21
	 	 Capital and Operating Costs
	  	 106

			
	 22
	 	 Economic Analysis
	  	 107

			
	 23
	 	 Adjacent Properties
	  	 108

			
	 24
	 	 Other Relevant Data and Information
	  	 109

			
	 25
	 	 Interpretation and Conclusions
	  	 110

				
		 	25.1	 	Exploration	  	110
				
		 	25.2	 	Mineral Resource Estimate	  	110
				
		 	25.3	 	Metallurgy and Mineral Processing	  	111
				
		 	25.4	 	Foreseeable Impacts of Risks	  	111

  
  

					
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	 26  Recommendations
	  	 	113	 
		
	 26.1  Recommended Work Programs and Costs
	  	 	113	 
		
	   26.1.1  Costs
	  	 	113	 
		
	 27  References
	  	 	115	 
		
	 28  Glossary
	  	 	116	 
		
	 28.1  Mineral Resources
	  	 	116	 
		
	 28.2  Mineral Reserves
	  	 	116	 
		
	 28.3  Definition of Terms
	  	 	117	 
		
	 28.4  Abbreviations
	  	 	118	 
		
	List of Tables	  			
		
	 Table 2-1: Site Visit Participants
	  	 	10	 
		
	 Table 4-1: Mineral Concessions at Cusi
	  	 	13	 
		
	 Table 9-1: Summary of Channel Sampling by Area
	  	 	29	 
		
	 Table 10-1: Drilling Summary by Type
	  	 	30	 
		
	 Table 10-2: Drilling Summary by Period
	  	 	30	 
		
	 Table 11-1: Analytical Methods and Reporting Limits for ALS
	  	 	34	 
		
	 Table 11-2: Analytical Methods and Reporting Limits for
Malpaso
	  	 	35	 
		
	 Table 11-3: Failure Statistics for Cusi Standards and
Blanks
	  	 	39	 
		
	 Table 13-1: Metallurgical Balance for Malpaso Mill –
2017
	  	 	47	 
		
	 Table 14-1: Summary of Sample Counts by Type
	  	 	48	 
		
	 Table 14-2: Summary of Project Areas and Relationships to Resource
Estimation Domains
	  	 	51	 
		
	 Table 14-3: Grade Means by Structure
	  	 	55	 
		
	 Table 14-4: Capping Limits Utilized for the Cusi MRE
	  	 	56	 
		
	 Table 14-5: Example Capping Analysis – Promontorio Ag
	  	 	57	 
		
	 Table 14-6: Results for Density Analyses
	  	 	59	 
		
	 Table 14-7: Block Model Details
	  	 	61	 
		
	 Table 14-8: Estimation Parameters
	  	 	62	 
		
	 Table 14-9: Cusi Mine Mineral Resource Estimate as of
January 31, 2017– SRK Consulting (U.S.), Inc.
	  	 	80	 
		
	 Table 20-1: Permit and Authorization Requirements for the Cusi Mine
and Malpaso Mill
	  	 	100	 
		
	 Table 20-2: Cusi Mine Concessions
	  	 	102	 
		
	 Table 20-3: Cusi Mine and Malpaso Mill Cost of Reclamation and
Closure of the Mine
	  	 	105	 
		
	 Table 26-1: Summary of Costs for Recommended Work
	  	 	114	 
		
	 Table 28-1: Definition of Terms
	  	 	117	 
		
	 Table 28-2: Abbreviations
	  	 	118	 

  
  

					
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	List of Figures	  			
		
	 Figure 1-1: Mill Feed and Head Grades – Malpaso Mill
	  	 	2	 
		
	 Figure 1-2: Pb/Zn Concentrate Grades – Malpaso Mill
	  	 	3	 
		
	 Figure 4-1: Location Map showing the Cusi Area (green box) and
Nearby Infrastructure
	  	 	12	 
		
	 Figure 4-2: Map Showing Locations of Cusi Mineral Concessions as of
2017
	  	 	15	 
		
	 Figure 7-1: 1:5000 Scale Map showing generalized lithologies and
locations of historic and active mining areas on the         property
	  	 	22	 
		
	 Figure 7-2: Northwest and Northeast-looking cross sections through
the Cusi area, 1:5000 scale
	  	 	23	 
		
	 Figure 7-3: Local Geology Map showing the location of mineralized
veins
	  	 	24	 
		
	 Figure 7-4: Aerial Photo of the Cusi property showing the locations
and orientations of mineralized structures
	  	 	25	 
		
	 Figure 11-1: Internally Prepared QA/QC Chart for Standard #2
Performance in 2014
	  	 	36	 
		
	 Figure 11-2: Blank Analysis Prepared by Sierra Metals for 2015
Blanks
	  	 	37	 
		
	 Figure 11-3: Scatter Plot prepared by Sierra Metals to compare
performance of duplicates at the internal Malpaso lab         and ALS Chemex
	  	 	38	 
		
	 Figure 11-4: Blank Analysis for Ag, Pb and Zn
	  	 	40	 
		
	 Figure 11-5: Scatterplot for Core Duplicates Analyzed at the Malpaso
Mill, 2014-2016
	  	 	41	 
		
	 Figure 11-6: Scatterplot for Coarse Duplicates Analyzed at the
Malpaso Mill, 2014-2016
	  	 	42	 
		
	 Figure 11-7: Scatterplot for Duplicates Analyzed at the Malpaso Mill
and by ALS Chemex
	  	 	42	 
		
	 Figure 13-1: Lead Concentrate Tonnes and Grades
	  	 	46	 
		
	 Figure 13-2: Zinc Concentrate Tonnes and Grades
	  	 	47	 
		
	 Figure 14-1: Plan View of Areas within Cusi District
	  	 	50	 
		
	 Figure 14-2: Oblique View of the Cusi Geologic Model
	  	 	52	 
		
	 Figure 14-3: Oblique View of the Cusi Geologic Model, looking
east
	  	 	53	 
		
	 Figure 14-4: Northeast Cross-section through the Cusi Geologic
Model, showing complex vein interactions
	  	 	54	 
		
	 Figure 14-5: Sample Count by Vein Domain
	  	 	54	 
		
	 Figure 14-6: Example Log Probability Plot – Promontorio
Ag
	  	 	56	 
		
	 Figure 14-7: Scatter Plot of Length vs. Ag
	  	 	57	 
		
	 Figure 14-8: Histogram of Sample Lengths
	  	 	58	 
		
	 Figure 14-9: Block Model Extents and Positions
	  	 	60	 
		
	 Figure 14-10: Example of Visual Validation – Promontorio
Area
	  	 	63	 
		
	 Figure 14-11: Example of Visual Validation – San Nicolas
Area
	  	 	64	 
		
	 Figure 14-12: Histogram of Number of Holes –
Promontorio
	  	 	65	 
		
	 Figure 14-13: Histogram of Number of Composites –
Promontorio
	  	 	65	 
		
	 Figure 14-14: Histogram of Average Distances –
Promontorio
	  	 	66	 
		
	 Figure 14-15: Mean Analysis by Domain – Promontorio Ag
	  	 	67	 
		
	 Figure 14-16: Mean Analysis by Vein Domain – Santa Eduwiges
Ag
	  	 	67	 
		
	 Figure 14-17: Mean Analysis by Vein Domain – San Nicolas/SRL
Ag
	  	 	68	 
		
	 Figure 14-18: Histogram of Block vs. Composites –
Promontorio
	  	 	69	 

  
  

					
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	Figure 14-19: Histogram of Block vs. Composite – Santa Eduwiges	  	 	70	 
		
	Figure 14-20: Histogram of Block vs. Composite – San Nicolas/SRL	  	 	71	 
		
	Figure 14-21: Histogram of Block vs. Composites – Minerva	  	 	72	 
		
	Figure 14-22: Histogram of Block vs. Composites – San Juan	  	 	73	 
		
	Figure 14-23: Histogram of Block vs. Composites – Candelaria	  	 	74	 
		
	Figure 14-24: Histogram of Block vs. Composites – Durana	  	 	75	 
		
	Figure 14-25: Classification Methods and Results – San Nicolas	  	 	77	 
		
	Figure 14-26: 3D As-built Shapes – Promontorio	  	 	78	 
		
	Figure 14-27: Example of Mined Polygons vs. 3D As-builts	  	 	79	 
		
	Figure 14-28: Grade-Tonnage Chart – Promontorio Area	  	 	81	 
		
	Figure 14-29: Grade-Tonnage Chart – Santa Eduwiges Area	  	 	82	 
		
	Figure 14-30: Grade Tonnage Chart – San Nicolas/SRL	  	 	83	 
		
	Figure 14-31: Grade Tonnage Chart – Minerva Area	  	 	84	 
		
	Figure 14-32: Grade Tonnage Chart – Candelaria	  	 	85	 
		
	Figure 14-33: Grade Tonnage Chart – Durana	  	 	86	 
		
	Figure 14-34: Grade Tonnage Chart – San Juan	  	 	87	 
		
	 Appendices
	  			
		
	 Appendix A: Certificates of Qualified Persons
	  			

  
  

					
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	1	Summary 

 This report was prepared as a National Instrument 43-101 (NI 43-101) Technical Report (Technical Report) on Resources for Sierra Metals, Inc. (Sierra Metals) by SRK Consulting (U.S.), Inc. (SRK) on the Cusi Mine, Mexico (Cusi
or The Mine). The purpose of this report is to present the methods and results of the current mineral resource estimate for the Cusi Mine. 
  

	1.1	Property Description and Ownership 

 The Cusi Mine property is held by Sierra
Metals, formerly known as Dia Bras Exploration, Inc., through subsidiary companies Dia Bras Mexicana S.A. de C.V. and EXMIN S.A. de C.V. (collectively Dia Bras). It is located within the Abasolo Mineral District in the municipality of
Cusihuiriachie, state of Chihuahua, Mexico. The property is 135 kilometers from Chihuahua city by car and consists of 73 mineral concessions (11,664.6 hectares) wholly owned by Sierra Metals. Included in these concessions are six historic Ag-Pb producers developed on several vein structures: the San Miguel mine, La Bamba open pit, La India mine, Santa Eduwiges mine, San Marina mine, and Promontorio mine, as well as exploration concessions around the
historic mine areas. 
 Sierra Metals holds surface rights to an area of 1,020 hectares located generally within the area where Sierra
Metals holds mineral concessions. Sierra Metals’ area of surface rights includes the access points to the Promontorio and Santa Eduwiges underground mines that are in operation, as well as surface rights over all resource areas delineated in
this report, with the exception of La India. 
  

	1.2	Geology and Mineralization 

 The property lies within a possible caldera that
contains a prominent rhyolite body interpreted as a resurgent dome. The rhyolite dome trends northwest-southeast with an exposure of roughly 7 km by 3 km and hosts mineralization. It is bounded (cut) on the east side by strands of the NW-trending Cusi fault and on the west by the Border fault. The Cusi fault is a regional fault that may have controlled the location of the caldera and resurgent dome. Continued movement on the Cusi and related
faults cut and brecciated the caldera and dome rocks and provided conduits for mineralizing fluids. 
 Numerous mineralized veins on
the property, typically moderately to steeply dipping to the southeast, southwest, and north, range from less than 0.5 to 2 m thick, extend 100 to 200 m along strike and up to 400 m down-dip. There are at
least seven major mineralized structures within the Cusi area, described below. Historically, small open pits were typically developed at vein intersections. Mineralization mainly occurs in faults, epithermal veins, breccias, and fractures ranging
from 1 to 10 meters thick. 
 Low-grade mineralized areas exist adjacent to major structures,
showing intense fracturing and are commonly laced with quartz veinlets forming a stockwork mineralized halo around more discrete structures. The country rock in these zones is variably silicified. Pyrite and other sulfide minerals are disseminated
in the silicified country rock and are also clustered in the quartz veinlets. A well-developed mineralized stockwork zone is in the Promontorio area, especially proximal to the Cusi fault. 

  
  

					
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	1.3	Status of Exploration, Development and Operations 

 The Cusi Mine is an operating
mine, with extensive supporting infrastructure and underground development. In addition to this, there are numerous satellite exploration targets which are the subject of drilling and exploration drifts. 

 

	1.4	Mineral Processing and Metallurgical Testing 

 Cusi’s Malpaso mill is a
conventional processing facility that has been long in operation. The performance statistics that SRK had access to for the 2015 January to 2016 August period show that Cusi operates at a throughput ranging from 500 tonnes per day to 600 tonnes per
day, or approximately 17,000 tonnes per month of fresh ore. Lead and zinc head grades are comparable and cover a wide range, with monthly average values for the 2016 period between 0.86% and 1.99%. Silver head grade range between 140 g/t to 200 g/t,
and gold head grade is approximately 0.25 g/t in the same period (Figure 1-1). 
  

 
 Source: Dia Bras, 2016 

Figure 1-1: Mill Feed and Head Grades – Malpaso Mill 

  
  

					
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 Historically, Cusi produced lead concentrate only, and since 2015 December it is also
producing zinc concentrate. Lead concentrate production for the first eight months in 2016 ranged approximately between 300 t/month to 800 t/month with lead grade ranging between 30% and 40% (Figure 1-2). 

 
 

 
 Source: Dia Bras, 2016 

Figure 1-2: Pb/Zn Concentrate Grades – Malpaso Mill 

Zinc concentrate production for the January to August 2016 period ranged approximately between 100 t/month and 300 t/month with zinc
grade ranging from 50% to 55% approximately. 
 Silver metals is preferably deported to lead concentrate reaching recovery ranging from
70% to 80%. For the period in question, silver grade in lead concentrate is ranging from approximately 3,000 g/t to 7,000 g/t. Average Ag recovery for 2016 is approximately 74%. 

Silver deportment to zinc concentrate is in the range of 1% to 3% and its grade reaches 300 g/t to 560 g/t, which is within commercially
payable range. 
  

	1.5	Mineral Resource Estimate 

 Matthew Hastings, Senior Consultant, SRK Consulting
(U.S.) Inc. conducted the resource estimation using a combination of software including Leapfrog GeoTM, Maptek VulcanTM, and statistical analysis software including Snowden SupervisorTM and X10 GeoTM. 

The basis for the mineral resource estimate is a digital database featuring details about geology, structure, and mineralization. The
final drillhole and channel assay database was provided to SRK by Dia Bras on December 23, 2016. It features both drilling and channel samples which are current to October of 2016. The final database contains over 60,000 assays from drilling
and over 36,000 from channel sampling. The two data sets have been merged for the purposes of geological modeling, statistical analysis, and estimation. 

Three-dimensional wireframe models for the Cusi veins were created by Dia Bras using Leapfrog GeoTM software. SRK was provided the
Leapfrog project files, which were reviewed and modified to include more detail on the structures as well as incorporate channel sample data where appropriate. 

  
  

					
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 The geology models are developed on a combination of geology codes and Ag grades, and
effectively are built using hanging wall and footwall surfaces derived through selection of these points in the drilling and channel sample database, with subsequent interpolation of the points into 3D surfaces and volumes. 

SRK considered each vein its own domain for the purposes of statistical analysis and estimation. SRK limited high grade outlier samples
by capping the maximum grades for each area, and limiting samples above the cap to the grade of the cap. In order to minimize the variance in the estimation due to inherent variability in grade distributions within domains and provide a more
homogenous data set for estimation, SRK used capping of high grades as well as compositing of sample lengths. Capping analysis was done on the raw sample data, evaluating each data set by relevant area. SRK evaluated the sample lengths within the
mineralized domains defined by the geological model. The mean sample length within the mineralized domains is 0.68 m, with a maximum sample length of 8.2 m. SRK notes that there are very few samples that would be affected by a compositing
length of 1.5 m that would in turn affect the estimation. SRK selected a nominal composite length of 1.5 m, retaining short samples for use in the estimation. 

Bulk density of vein material is assigned on the basis of the results of specific gravity samples analyzed by the Servicio Geologico
Mexicano (SGM) on behalf of Dia Bras. The average density of the samples is 2.73 g/cm3, and this density was flagged into the block model for use in the resource calculations. 

Seven block models were built in Maptek VulcanTM software and are designed to approximate the orientation of the strike for the major
structures contained in each model. SRK interpolated grades for Ag, Au, Pb, and Zn using an inverse distance squared estimation method. In general, a nested three-pass estimation was used with higher restrictions on sample selection criteria in the
initial smaller passes, to less restrictive criteria in the subsequent, larger ellipsoids. Ellipsoid orientations are controlled by the hanging wall and footwall surface of each structure. The variations in the distribution of samples and the issue
of clustering of high grade channel samples is dealt with using an octant restriction on the estimation. 
 SRK has validated the
estimation for each model using a variety of methods considered to be industry standard. These include a visual comparison of the blocks versus the composites, an assessment of the quality of the estimate, and comparative statistics of block vs.
composites. 
 SRK is satisfied that the geological modeling honors the current geological information and knowledge. The location of
the samples and the assay data are sufficiently reliable to support resource estimation. The sampling information was acquired primarily by core drilling and channel sampling from mine development. SRK classified the mineral resources in a manner
consistent with CIM Guidelines as Indicated and Inferred Mineral Resources. 
 Significant factors affecting the classification
include: 
  

	 	●	 	 Lack of historic and consistent QA/QC program; 

 

	 	●	 	 Lack of downhole surveys for most drillholes and measured deviations from planned and actual azimuths;

  

	 	●	 	 Spacing of drilling compared to observed geologic continuity; 

 

	 	●	 	 Cusi is a producing mine with a successful operating history dating more than 10 years. 

  
  

					
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 In order to classify mineralization as an Indicated Mineral Resource, “the nature,
quality, quantity and distribution of data” must be “such as to allow confident interpretation of the geological framework and to reasonably assume the continuity” (CIM Definition Standards on Mineral Resources and Mineral Reserves,
December 2005). SRK has based this classification both on the continuity observed in well-drilled areas of the Mine, as well as geologic continuity observed from underground exposures of the mineralization. 

SRK depleted the block models for previous mining prior to reporting. 

The “reasonable prospects for economic extraction” requirement generally implies that the quantity and grade estimates meet
certain economic thresholds and that the Mineral Resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recoveries. Costs for mining and processing are
taken from data provided by Dia Bras for their current underground mining operation. Costs are broken down as follows; Mining US$26.74/t, Processing US$16.63/t, and General and Administrative US$3.40/t. These costs aggregate to US$46.77. Assuming a
price for Ag of US$18.30/oz (US$0.59/g), and a nominal Ag recovery of 74%, this cost equates to a grade of about 110 g/t Ag. SRK has reported the mineral resource for the Cusi mine at this cut-off. 

The January 31, 2017, consolidated mineral resource statement for the Cusi Mine area is presented in Table 1. 

Table 1: Cusi Mine Mineral Resource Estimate as of January 31, 2017– SRK Consulting (U.S.), Inc. 

 

																																									
	Source	 	Class  	 	Ag (g/t)	 	 	Au (g/t)	 	 	Pb (%)	 	 	Zn (%)	 	 	Tonnes (000’s)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Promontorio
	 	

	 	 	223	 	 	 	0.08	 	 	 	0.32	 	 	 	0.38	 	 	 	692	 	 		 				 				 				 			
	
Eduwiges
	 	 	 	226	 	 	 	0.36	 	 	 	1.63	 	 	 	1.52	 	 	 	378	 	 		 				 				 				 			
	
SRL
	 	 	 	206	 	 	 	0.14	 	 	 	0.23	 	 	 	0.22	 	 	 	290	 	 		 				 				 				 			
	
San Nicolas
	 	 	 	300	 	 	 	0.11	 	 	 	0.32	 	 	 	0.36	 	 	 	344	 	 		 				 				 				 			
	
San Juan
	 	 	 	227	 	 	 	0.35	 	 	 	0.09	 	 	 	0.05	 	 	 	45	 	 		 				 				 				 			
	
Minerva
	 	 	 	202	 	 	 	0.14	 	 	 	0.21	 	 	 	0.22	 	 	 	106	 	 		 				 				 				 			
	
Candelaria
	 	 	 	376	 	 	 	0.14	 	 	 	0.18	 	 	 	0.29	 	 	 	44	 	 		 				 				 				 			
	
Durana
	 	 	 	226	 	 	 	0.06	 	 	 	0.05	 	 	 	0.02	 	 	 	91	 	 		 				 				 				 			
	
Total Indicated
	 	 	 	237	 	 	 	0.16	 	 	 	0.53	 	 	 	0.53	 	 	 	1,990	 	 		 				 				 				 			
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 				 				 				 			
	Source	 	Class  	 	Ag (g/t)	 	 	Au (g/t)	 	 	Pb (%)	 	 	Zn (%)	 	 	Tonnes (000’s)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Promontorio
	 	

	 	 	220	 	 	 	0.12	 	 	 	0.37	 	 	 	0.60	 	 	 	265	 	 		 				 				 				 			
	
Eduwiges
	 	 	 	171	 	 	 	0.22	 	 	 	2.03	 	 	 	1.68	 	 	 	45	 	 		 				 				 				 			
	
SRL
	 	 	 	269	 	 	 	0.15	 	 	 	0.28	 	 	 	0.31	 	 	 	189	 	 		 				 				 				 			
	
San Nicolas
	 	 	 	387	 	 	 	0.15	 	 	 	0.54	 	 	 	0.65	 	 	 	599	 	 		 				 				 				 			
	
San Juan
	 	 	 	153	 	 	 	0.03	 	 	 	0.08	 	 	 	0.06	 	 	 	4	 	 		 				 				 				 			
	
Minerva
	 	 	 	226	 	 	 	0.04	 	 	 	0.17	 	 	 	0.30	 	 	 	30	 	 		 				 				 				 			
	
Candelaria
	 	 	 	151	 	 	 	0.19	 	 	 	0.60	 	 	 	1.23	 	 	 	68	 	 		 				 				 				 			
	
Durana
	 	 	 	126	 	 	 	0.01	 	 	 	0.22	 	 	 	0.13	 	 	 	2	 	 		 				 				 				 			
	
Total Indicated
	 	 	 	305	 	 	 	0.14	 	 	 	0.51	 	 	 	0.64	 	 	 	1,200	 	 		 				 				 				 			

			
	 (1)
	  	 Mineral resources are reported inclusive of ore reserves. Mineral resources are not ore reserves and do not have demonstrated
economic viability. All figures rounded to reflect the relative accuracy of the estimates. Gold, silver, lead and zinc assays were capped where appropriate.

	 (2)
	  	 Mineral resources are reported at a single cut-off grade of 110 g/t Ag based on metal price
assumptions*, metallurgical recovery assumptions, mining costs (US$26.74/t), processing costs (US$16.63/t), and general and administrative costs (US$3.40/t).

	 * Metal price assumptions considered for the calculation of the
cut-off grade are: Silver (Ag): US$/oz 18.30.

	The resources were estimated by SRK. Matthew Hastings, M.Sc., PGeo, MAusIMM #314693 of SRK, a Qualified Person, performed the resource calculations for the Cusi Mine.

	 	

	 	

  
  

					
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	1.6	Mineral Reserve Estimate 

 SRK did not produce a reserve estimate or review
reserves stated by Sierra Metals. 
  

	1.7	Mining Methods 

 SRK did not conduct a detailed review of mining methods as a part
of this study. 
  

	1.8	Recovery Methods 

 SRK did not conduct a detailed review of recovery methods as a
part of this study. 
  

	1.9	Project Infrastructure 

 SRK did not conduct a detailed review of infrastructure as
a part of this study. 
  

	1.10	Environmental Studies and Permitting 

 Based on communications with representatives
from Sierra Metals, it does not appear that there are currently any known environmental issues that could materially impact the extraction and beneficiation of mineral resources. However, given the
pre-regulation vintage of the original tailings storage facilities (piles), the likelihood is high that these facilities are not underlain by low-permeability liners,
increasing the risk of a long-term liability of metals leaching and groundwater contamination. Sierra Metals intends to cover these facilities during decommissioning in order to minimize this risk. 

 

	1.11	Capital and Operating Costs 

 SRK did not conduct a detailed review of costs as a
part of this study. 
  

	1.12	Economic Analysis 

 SRK did not conduct a detailed review of costs as a part of
this study. 
  

	1.13	Conclusions and Recommendations 

  

	1.13.1	 Geology and Mineral Resources 

SRK is of the opinion that the exploration efforts at Cusi are sufficient for the definition of mineral resources. The primary
exploration method at Cusi has been diamond core drilling followed by limited underground development, which has been successful in delineating a system of discrete epithermal veins and related stockwork mineralization. The drilling appears to be
able to target and identify mineralized structures with reasonable efficacy, and the majority of drilling is oriented in a fashion designed to approximate true thicknesses of the veins. The exploration planning suffers from a lack of focus, and
should be designed to maximize conversion of higher grade Inferred areas with less dense drilling to Indicated, or extending mineralization away from known areas accessed through channel sampling. Efforts should be focused on a single structure or
perhaps two structures to continue to develop these areas along strike and down dip, rather than scattered around several veins with very limited drilling. 

  
  

					
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 Mine development is also used for exploration, as direct access of the veins along
underground drifts is an excellent and efficient way for Cusi to understand the mineralization on a more local basis. More effort should be made to improve underground survey data, channel sampling consistency, and 3D asbuilt data. 

SRK notes that recent efforts are improving the quality of the drilling and information through more complete and thorough survey data
(for drilling and underground development), as well as modern QAQC programs which are delivering reasonable results. This lends additional confidence to recently-defined resources or newly drilled portions of historic areas. 

SRK also notes that problems for the internal Malpaso Mill laboratory, identified in this document as well as previous technical reports,
appear to continue. These are related to significant differences in precision recognized between the values reported for identical samples between Malpaso and third-party laboratories. These issues, combined with historic deficiencies in downhole
surveying and QA/QC detract from the confidence in quality of the data. 
 The geologic model has been constructed by Dia Bras
geologists, and refined by SRK using Leapfrog GeoTM software. Drilling and channel sample data, as well as sectional interpretation was used in development of the 3D geology shapes, defining veins and stockwork zones. These are used as resource
domains to constrain and control the interpolation of grade during the estimation. 
 SRK built individual block models for the main
resource areas, which have been rotated and sub-blocked to better fit the geologic contacts in each area. Grade was interpolated from capped and composited sample data using an inverse distance squared
algorithm, with sample selection criteria designed to decluster the channel sample data compared to the drilling. A nested three-pass estimation was used, with decreasing data selection criteria. 

SRK is of the opinion that the Mineral Resource Estimate has been conducted in a manner consistent with industry best practices and that
the data and information supporting the stated mineral resources is sufficient for declaration of Indicated and Inferred classifications of resources. SRK has not classified any of the resources in the Measured category due to aforementioned
uncertainties regarding the data supporting the Mineral Resource Estimate. 
 These deficiencies include: 

 

	 	●	 	 The lack of a historic QA/QC program, which has only been supported by a recent resampling and modern QA/QC program for
a limited number of holes. This will be required in order to achieve Measured resources which generally are supported by high resolution drilling or sampling data that feature consistently implemented and monitored QA/QC. 

 

	 	●	 	 The lack of consistently-implemented down-hole surveys in the historic drilling. Observations from the survey data which
has been done to date show significant down-hole deviations that influence the exact position of mineralized intervals. These discrepancies are confirmed by nearby workings that project the mineralized structures in a different position than that
defined by the un-surveyed holes. 

  

	 	●	 	 The lack of industry-standard 3D survey asbuilt data delineating mined areas. This has been defined using a combination
of the existing survey data, as well as polygons defining other areas thought to be mined. SRK believes these polygons to be conservative, as it is likely that pillar areas or other partially mined areas exist within the limits of the polygons, but
are being excluded by this rudimentary methodology. 

  
  

					
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 SRK has the following recommendations for additional work to be performed at the Cusi
mine: 
  

	 	●	 	 Identify areas that are dominantly supported by channel sample data and complete step out drilling. This should be done
at a regular spacing of approximately 25 m. 

  

	 	○ 	 	 Further to this, SRK notes opportunities where significant areas of veins have very few drillholes, but exhibit very
high grades, resulting in local high grade Inferred blocks that could theoretically be converted to Indicated with additional drilling. These should be prioritized. 

 

	 	●	 	 Continue the implementation of the current QA/QC program as documented by Dia Bras internal reports. This program is
robust and appropriate for the type of deposit. 

  

	 	●	 	 Abandon the practice of using the current internal blanks for QA/QC. A thoroughly washed silica sand is readily
available in Mexico and would be a reasonable alternative. The results of the current practices hint at either significant contamination issues during the preparation phase of sample analysis, or a contaminated blank material. In either case, this
should be resolved as soon as possible. Continue the use of newly acquired commercial standards for future QA/QC monitoring. 

  

	 	●	 	 All analyses supporting a mineral resource estimation should continue to be analyzed by an ISO-certified independent laboratory such as ALS Minerals. The intra-lab performance of check samples shows significant and unexpected deviations between ALS and the internal
Dia Bras lab. 

  

	 	●	 	 Every drillhole exceeding 50 m in length should be surveyed downhole via Reflex or other appropriate survey tool.

  

	 	●	 	 SRK strongly recommends implementing the practice of consistent use of a total station GPS for surveying of drillhole
collars and channel sample locations, as well as mine workings. Discrepancies between the precise locations of these three types of data occur regularly where they are closely spaced, and reduces confidence in the data as it impacts the Mineral
Resource estimate. 

  

	 	○ 	 	 A 3D mine survey could be accomplished relatively easily and for minimal cost, and could be conducted on a quarterly
basis to develop a better measurement of mined material to be used in reconciliation processes. 

  

	 	●	 	 Evaluate more refined resource estimation procedures incorporating other means of dealing with the highly clustered
data. 

  

	 	●	 	 Develop a simple method of reconciling the resource models to production, using stope shapes and grades derived from
channel sampling. 

  
  

					
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	2	Introduction 

  

	2.1	Terms of Reference and Purpose of the Report 

 This report was prepared as a
National Instrument 43-101 (NI 43-101) Technical Report (Technical Report) on Resources for Sierra Metals, Inc. (Sierra Metals) by SRK Consulting (U.S.), Inc. (SRK) on
the Cusi Mine, Mexico (Cusi or The Mine). The purpose of this report is to present the mineral resource estimate for the operating Cusi mine and surrounding exploration areas. 

The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in SRK’s
services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Sierra Metals
subject to the terms and conditions of its contract with SRK and relevant securities legislation. The contract permits Sierra Metals to file this report as a Technical Report with Canadian securities regulatory authorities pursuant to NI 43-101, Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other uses of this report by any third party is at that party’s sole risk. The
responsibility for this disclosure remains with Sierra Metals. The user of this document should ensure that this is the most recent Technical Report for the property as it is not valid if a new Technical Report has been issued. 

This report provides Mineral Resource and Mineral Reserve estimates, and a classification of resources and reserves prepared in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines, May 10, 2014 (CIM, 2014). 

 

	2.2	Qualifications of Consultants (SRK) 

 The Consultants preparing this technical
report are specialists in the fields of geology, exploration, Mineral Resource and Mineral Reserve estimation and classification, underground mining, geotechnical, environmental, permitting, metallurgical testing, mineral processing, processing
design, capital and operating cost estimation, and mineral economics. 
 None of the Consultants or any associates employed in the
preparation of this report has any beneficial interest in Sierra Metals. The Consultants are not insiders, associates, or affiliates of Sierra Metals. The results of this Technical Report are not dependent upon any prior agreements concerning the
conclusions to be reached, nor are there any undisclosed understandings concerning any future business dealings between Sierra Metals and the Consultants. The Consultants are being paid a fee for their work in accordance with normal professional
consulting practice. 
 The following individuals, by virtue of their education, experience and professional association, are
considered Qualified Persons (QP) as defined in the NI 43-101 standard, for this report, and are members in good standing of appropriate professional institutions. QP certificates of authors are provided in
Appendix A. The QP’s are responsible for specific sections as follows: 
  

	 	●	 	 Matthew Hastings, Senior Consultant is the QP responsible for Geology and Mineral Resources, Sections 4-12 and 14, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  
  

					
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	 	●	 	 Mark Willow, Principal Consultant is the QP responsible for Environmental Studies, Permitting and Social or Community
Impact Section 20, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	 	●	 	 Daniel Sepulveda, Associate Principal Consultant is the QP responsible for Mineral Processing and Metallurgical Testing
Section 13, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

  

	2.3	Details of Inspection 

 Table 2-1: Site
Visit Participants 
  

									
	Personnel	 	Company	 	Expertise	 	Date(s) of Visit	 	Details of Inspection
	
Matthew Hastings
	 	SRK Consulting (U.S.) Inc.	 	 Geology and

Mineral Resources
	 	March 11-16, 2015	 	Reviewed geologic interpretation, drilling and sampling, QA/QC, and underground geology.
	
Daniel Sepulveda
	 	 SRK Consulting

(U.S.) Inc.
	 	 Metallurgy and

Process
	 	October 19-20, 2016	 	Reviewed mill facility, process design and metallurgical balance.

  

	2.4	Sources of Information 

 The sources of information include data and reports
supplied by Dia Bras or Sierra Metals personnel as well as documents cited throughout the report and referenced in Section 27. 
  

	2.5	Effective Date 

 The effective date of this report is January 31, 2017. 

 

	2.6	Units of Measure 

 The metric system has been used throughout this report. Tonnes
are metric of 1,000 kg, or 2,204.6 lb. All currency is in U.S. dollars (US$) unless otherwise stated. 

  
  

					
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	3	Reliance on Other Experts 

 The Consultant’s opinion contained herein is based
on information provided to the Consultants by Sierra Metals or their subsidiary Dia Bras throughout the course of the investigations. Where noted, SRK has relied upon the work of other consultants in the project areas in support of this Technical
Report. 
 The Consultants used their experience to determine if the information from previous reports was suitable for inclusion in
this technical report and adjusted information that required amending. This report includes technical information, which required subsequent calculations to derive subtotals, totals and weighted averages. Such calculations inherently involve a
degree of rounding and consequently introduce a margin of error. Where these occur, the Consultants do not consider them to be material. 

These items have not been independently reviewed by SRK and SRK did not seek an independent legal opinion of these items. 

  
  

					
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	4	Property Description and Location 

  

	4.1	Property Location 

 The Cusi Mine property is held by Sierra Metals, formerly known
as Dia Bras Exploration, Inc., through subsidiary companies Dia Bras Mexicana S.A. de C.V. and EXMIN S.A. de C.V. (collectively Dia Bras). It is located within the Abasolo Mineral District in the municipality of Cusihuiriachie, state of Chihuahua,
Mexico. The property is 135 kilometers from Chihuahua city by car and consists of 73 mineral concessions wholly owned by Sierra Metals. Included in these concessions are six historic Ag-Pb producers developed
on several vein structures: the San Miguel mine, La Bamba open pit, La India mine, Santa Eduwiges mine, San Marina mine, and Promontorio mine, as well as exploration concessions around the historic mine areas. The shaft of the Promontorio mine is
located at Northing 3,125,854 meters and Easting 319,019 meters in the 13R UTM grid in WGS84 ellipsoid. 
  

 
 Source: Ciesieski, 2007 

Figure 4-1: Location Map showing the Cusi Area (green box) and Nearby Infrastructure 

 

	4.2	Mineral Titles 

 Sierra Metals wholly owns rights for exploration and mining for
the Cusi Property for 73 mineral concessions covering an area of 11,664.6 hectares (Figure 4-2). Locations of the concessions for the Cusi project and their expiry dates are listed in Table 4-1. Expiry dates are all represented as forward-looking dates (i.e., ’52 refers to 2052). 

  
  

					
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 Table 4-1: Mineral Concessions at Cusi

  

																									
	Holding Company	  	Name	  	Type	 	Area (ha)	 	 	File No.	 	 	Title No.	 	 	Enrolled	 	 	Expiry	 
	 Dia Bras Mexicana
	  	Base*	  	Exploration	 	 	23.8090	 	 	 	016/30975	 	 	 	217584	 	 	 	8/6/2002	 	 	 	8/5/1952	 
	 Dia Bras Mexicana
	  	Flor de Mayo*	  	Exploration	 	 	14.4104	 	 	 	016/32699	 	 	 	224700	 	 	 	5/31/2005	 	 	 	5/30/1955	 
	 Dia Bras Mexicana
	  	Base 1	  	Exploration	 	 	3.9276	 	 	 	016/33729	 	 	 	227657	 	 	 	7/28/2006	 	 	 	7/27/1956	 
	 Dia Bras Mexicana
	  	Santa Rita	  	Exploration	 	 	16.6574	 	 	 	016/34624	 	 	 	229081	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	Sayra I	  	Exploration	 	 	7.2195	 	 	 	016/34623	 	 	 	229064	 	 	 	2-3-20070	 	 	 	3/1/1957	 
	 Dia Bras Mexicana
	  	San Miguel	  	Exploration	 	 	96.2748	 	 	 	016/33730	 	 	 	229166	 	 	 	3/21/2007	 	 	 	3/20/1957	 
	 Dia Bras Mexicana
	  	San Miguel I	  	Exploration	 	 	98.6218	 	 	 	016/33731	 	 	 	228484	 	 	 	11/24/2006	 	 	 	11/23/1956	 
	 Dia Bras Mexicana
	  	San Miguel II	  	Exploration	 	 	100.00	 	 	 	016/33732	 	 	 	227363	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	San Miguel III	  	Exploration	 	 	100.00	 	 	 	016/33733	 	 	 	227364	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	San Miguel IV	  	Exploration	 	 	96.9850	 	 	 	016/33734	 	 	 	227485	 	 	 	6/27/2006	 	 	 	6/26/1956	 
	 Dia Bras Mexicana
	  	San Miguel VI	  	Exploration	 	 	98.9471	 	 	 	016/34642	 	 	 	228058	 	 	 	9/29/2006	 	 	 	9/28/1956	 
	 Dia Bras Mexicana
	  	San Miguel VII	  	Exploration	 	 	52.6440	 	 	 	016/34640	 	 	 	229084	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	Saira	  	Exploration	 	 	16.00	 	 	 	016/33735	 	 	 	227365	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	Manuel	  	Exploration	 	 	100.00	 	 	 	016/33714	 	 	 	227360	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	Santa Rita Fracc. I	  	Exploration	 	 	9.00	 	 	 	016/34624	 	 	 	229082	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	Santa Rita Fracc. II	  	Exploration	 	 	8.8141	 	 	 	016/34624	 	 	 	229083	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	San Miguel V	  	Exploration	 	 	6.5328	 	 	 	016/34641	 	 	 	227984	 	 	 	9/26/2006	 	 	 	9/25/1956	 
	 Dia Bras Mexicana
	  	San Juan	  	Exploration	 	 	12.3587	 	 	 	016/31500	 	 	 	218657	 	 	 	12/3/2002	 	 	 	12/2/1952	 
	 Dia Bras Mexicana
	  	San Juan Fracc. A	  	Exploration	 	 	0.1727	 	 	 	016/31500	 	 	 	218658	 	 	 	12/3/2002	 	 	 	12/2/1952	 
	 Dia Bras Mexicana
	  	San Juan
Fracc. B	  	Exploration	 	 	0.1469	 	 	 	016/31500	 	 	 	218659	 	 	 	12/3/2002	 	 	 	12/2/1952	 
	 Dia Bras Mexicana
	  	Norma	  	Exploration	 	 	12.2977	 	 	 	016/31700	 	 	 	218851	 	 	 	1/22/2003	 	 	 	1/21/1953	 
	 Dia Bras Mexicana
	  	Norma 2	  	Exploration	 	 	1.7561	 	 	 	016/31715	 	 	 	219283	 	 	 	2/25/2003	 	 	 	2/24/1953	 
	 Dia Bras Mexicana
	  	Cima	  	Exploration	 	 	9.9637	 	 	 	016/30957	 	 	 	217231	 	 	 	7/2/2002	 	 	 	7/1/1952	 
	 Dia Bras Mexicana
	  	Manuel 1 Fracc A	  	Exploration	 	 	1.1858	 	 	 	016/34849	 	 	 	229747	 	 	 	6/13/2007	 	 	 	6/12/1957	 
	 Dia Bras Mexicana
	  	Manuel 1 Fracc B	  	Exploration	 	 	1.3425	 	 	 	016/34849	 	 	 	229748	 	 	 	6/13/2007	 	 	 	6/12/1957	 
	 Dia Bras Mexicana
	  	Alma	  	Exploration	 	 	80.4612	 	 	 	Valid	 	 	 	227982	 	 	 	9/25/2006	 	 	 	9/25/1956	 
	 Dia Bras Mexicana
	  	San Bartolo	  	Exploitation	 	 	6.00	 	 	 	Valid	 	 	 	150395	 	 	 	9/30/1968	 	 	 	9/29/2018	 
	 Dia Bras Mexicana
	  	Marisa	  	Exploration	 	 	5.08	 	 	 	Valid	 	 	 	220146	 	 	 	6/17/2003	 	 	 	6/16/1953	 
	 Dia Bras Mexicana
	  	La India	  	Exploitation	 	 	15.76	 	 	 	Valid	 	 	 	150569	 	 	 	10/29/1968	 	 	 	10/27/2018	 
	 Dia Bras Mexicana
	  	Alma	  	Exploration	 	 	87.2041	 	 	 	Valid	 	 	 	227650	 	 	 	7/27/2006	 	 	 	7/27/1956	 
	 Dia Bras Mexicana
	  	Alma I	  	Exploration	 	 	106.00	 	 	 	Valid	 	 	 	226816	 	 	 	3/9/2006	 	 	 	3/9/1956	 
	 Dia Bras Mexicana
	  	Alma II	  	Exploration	 	 	91.00	 	 	 	Valid	 	 	 	227651	 	 	 	7/27/2006	 	 	 	7/27/1956	 
	 Dia Bras Mexicana
	  	Nueva Recompensa	  	Exploitation	 	 	21.00	 	 	 	Valid	 	 	 	195371	 	 	 	9/15/1992	 	 	 	9/13/1942	 
	 Dia Bras Mexicana
	  	Monterrey	  	Exploitation	 	 	5.4307	 	 	 	Valid	 	 	 	183820	 	 	 	11/22/1988	 	 	 	11/21/1938	 
	 Dia Bras Mexicana
	  	Nueva Santa Marina	  	Exploitation	 	 	16.00	 	 	 	Valid	 	 	 	182002	 	 	 	4/8/1988	 	 	 	4/7/1938	 
	 Dia Bras Mexicana
	  	San Ignacio	  	Exploitation	 	 	3.00	 	 	 	Valid	 	 	 	165662	 	 	 	11/28/1979	 	 	 	11/27/2029	 
	 Dia Bras Mexicana
	  	Promontorio	  	Exploitation	 	 	8.00	 	 	 	Valid	 	 	 	163582	 	 	 	10/30/1978	 	 	 	10/29/2028	 
	 Dia Bras Mexicana
	  	La Perla	  	Exploitation	 	 	15.00	 	 	 	Valid	 	 	 	165968	 	 	 	12/13/1979	 	 	 	12/12/2029	 
	 Dia Bras Mexicana
	  	La Perlita	  	Exploitation	 	 	10.00	 	 	 	Valid	 	 	 	163565	 	 	 	10/10/1978	 	 	 	10/9/2028	 
	 Dia Bras Mexicana
	  	Luís	  	Exploitation	 	 	3.1946	 	 	 	Valid	 	 	 	194225	 	 	 	12/19/1991	 	 	 	12/18/1941	 
	 Dia Bras Mexicana
	  	La Consolidada	  	Exploitation	 	 	22.00	 	 	 	Valid	 	 	 	165102	 	 	 	8/23/1979	 	 	 	8/22/2029	 
	 Dia Bras Mexicana
	  	La Doble Eufemia	  	Exploitation	 	 	9.00	 	 	 	Valid	 	 	 	188814	 	 	 	11/29/1990	 	 	 	11/28/1940	 
	 Dia Bras Mexicana
	  	La Gloria	  	Exploitation	 	 	10.00	 	 	 	Valid	 	 	 	179400	 	 	 	12/9/1986	 	 	 	12/8/1936	 
	 Dia Bras Mexicana
	  	La Indita	  	Exploration	 	 	9.9034	 	 	 	Valid	 	 	 	212891	 	 	 	2/13/2001	 	 	 	2/12/1949	 
	 Dia Bras Mexicana
	  	La Suerte	  	Exploration	 	 	10.5402	 	 	 	Valid	 	 	 	216711	 	 	 	5/28/2002	 	 	 	5/27/1952	 
	 Minera Cusi
	  	El Hueco	  	Exploitation	 	 	1.8379	 	 	 	Valid	 	 	 	172321	 	 	 	11/23/2003	 	 	 	11/23/1933	 
	 Dia Bras Mexicana
	  	El Presidente	  	Exploitation	 	 	8.1608	 	 	 	Valid	 	 	 	209802	 	 	 	8/9/1999	 	 	 	8/8/1949	 
	 Dia Bras Mexicana
	  	El Salvador	  	Exploitation	 	 	7.7448	 	 	 	Valid	 	 	 	190493	 	 	 	4/29/1991	 	 	 	4/28/1941	 
	 Dia Bras Mexicana
	  	Cusihuiriachic Dos	  	Exploitation	 	 	87.6748	 	 	 	Valid	 	 	 	220576	 	 	 	8/28/2003	 	 	 	8/27/1953	 
	 Dia Bras Mexicana
	  	La Bufa Chiquita	  	Exploitation	 	 	3.6024	 	 	 	Valid	 	 	 	220575	 	 	 	8/28/2003	 	 	 	8/27/1953	 
	 Dia Bras Mexicana
	  	Aguila	  	Exploration	 	 	4.2772	 	 	 	Valid	 	 	 	216262	 	 	 	4/23/2002	 	 	 	4/22/1952	 
	 Dia Bras Mexicana
	  	Año Nuevo	  	Exploration	 	 	12.00	 	 	 	Valid	 	 	 	192908	 	 	 	12/19/1991	 	 	 	12/18/1941	 
	 Dia Bras Mexicana
	  	Ampl. Nueva Josefina	  	Exploitation	 	 	18.2468	 	 	 	Valid	 	 	 	177597	 	 	 	4/2/1986	 	 	 	3/31/1936	 
	 Dia Bras Mexicana
	  	El Milagro	  	Exploitation	 	 	26.8259	 	 	 	Valid	 	 	 	166580	 	 	 	6/27/1980	 	 	 	6/26/1930	 

  
  

					
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	Holding Company	  	Name	 	Type	 	Area (ha)	 	 	File No.	 	 	Title No.	 	 	Enrolled	 	 	Expiry	 
	 Dia Bras Mexicana
	  	Los Pelones	 	Exploitation  	 	 	16.3018	 	 	 	Valid	 	 	 	166981	 	 	 	8/5/1980	 	 	 	8/4/1930	 
	 Dia Bras Mexicana
	  	La Ilusión	 	Exploitation	 	 	6.00	 	 	 	Valid	 	 	 	166611	 	 	 	6/27/1980	 	 	 	6/26/1930	 
	 Dia Bras Mexicana
	  	La Hermana de la India  	 	Exploitation	 	 	13.1412	 	 	 	Valid	 	 	 	180030	 	 	 	3/23/1987	 	 	 	3/22/1937	 
	 Dia Bras Mexicana
	  	La Rumorosa	 	Exploitation	 	 	20.00	 	 	 	Valid	 	 	 	166612	 	 	 	6/27/1980	 	 	 	6/26/1930	 
	 Dia Bras Mexicana
	  	La Nueva Josefina	 	Exploitation	 	 	10.00	 	 	 	Valid	 	 	 	181221	 	 	 	9/11/1987	 	 	 	9/10/1937	 
	 Dia Bras Mexicana
	  	Mina Vieja	 	Exploitation	 	 	8.25	 	 	 	Valid	 	 	 	165742	 	 	 	12/11/1979	 	 	 	12/10/2029	 
	 Dia Bras Mexicana
	  	Margarita	 	Exploitation	 	 	14.00	 	 	 	Valid	 	 	 	165969	 	 	 	12/13/1979	 	 	 	12/12/2029	 
	 Minera Cusi
	  	Cusihuiriachic	 	Exploration	 	 	472.2626	 	 	 	Valid	 	 	 	240976	 	 	 	11/16/2012	 	 	 	11/15/1962	 
	 Dia Bras Mexicana
	  	CUSI-DBM	 	Exploration	 	 	4,716.6621	 	 	 	Valid	 	 	 	229299	 	 	 	4/3/2007	 	 	 	4/2/1957	 
	 Dia Bras Mexicana
	  	CUSI-DBM 02	 	Exploration	 	 	4,695.1748	 	 	 	Valid	 	 	 	232028	 	 	 	6/10/2008	 	 	 	6/9/1958	 
	 Dia Bras Mexicana
	  	Bronco 1 A	 	Exploration	 	 	55.6309	 	 	 	Valid	 	 	 	240329	 	 	 	5/23/2012	 	 	 	5/22/1962	 
	 Dia Bras Mexicana
	  	Bronco 1 B	 	Exploration	 	 	0.8801	 	 	 	Valid	 	 	 	240330	 	 	 	5/23/2012	 	 	 	5/22/1962	 
	 Dia Bras Mexicana
	  	Bronco 2	 	Exploration	 	 	7.5296	 	 	 	Valid	 	 	 	239311	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Bronco 3	 	Exploration	 	 	8.1186	 	 	 	Valid	 	 	 	243011	 	 	 	5/30/2014	 	 	 	5/29/1964	 
	 Dia Bras Mexicana
	  	Bronco 4	 	Exploration	 	 	0.5224	 	 	 	Valid	 	 	 	239312	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Bronco 5	 	Exploration	 	 	6.7121	 	 	 	Valid	 	 	 	239335	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Bronco 6	 	Exploration	 	 	9.00	 	 	 	Valid	 	 	 	239321	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Zapopa	 	Exploration	 	 	8.3867	 	 	 	Valid	 	 	 	240189	 	 	 	4/13/2012	 	 	 	4/12/1962	 
	 Minera Cusi
	  	La Mexicana	 	Exploration	 	 	2.00	 	 	 	Valid	 	 	 	165883	 	 	 	12/12/1979	 	 	 	12/13/1982	 

 Source: Dia Bras, 2017 

  
  

					
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 Source: Dia Bras, 2017 

Figure 4-2: Map Showing Locations of Cusi Mineral Concessions as of 2017 

 

	4.2.1	Nature and Extent of Issuer’s Interest 

 Sierra Metals holds surface rights to
an area of 1,020 hectares located generally within the area where Sierra Metals holds mineral concessions. Sierra Metals’ area of surface rights includes the 

  
  

					
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 access points to the Promontorio and Santa Eduwiges underground mines that are in
operation, as well as surface rights over all resource areas delineated in this report, with the exception of La India. Sierra Metals has a working relationship with the local Santa Rita community, who views mining at the Promontorio mine and
associated jobs favorably. 
  

	4.3	Royalties, Agreements and Encumbrances 

 Production from the Cusi Project area is
subject to net smelter royalties ranging from 1.5% to 3%, depending on origin of the mined quantity with respect to the mineral concession area. 

Mineral concessions that make up the Cusi property were acquired from private entities and the Mexican federal government
(Dirección General de Minas). The terms associated for the claim blocks are described below. 
  

	4.3.1	Purchase Agreement with Minera Cusi 

 Mineral concessions were purchased from
Minera Cusi S.A. de C.V. under a purchase agreement dated April 15, 2008. A total of 31 mineral concessions for 862 hectares were acquired from Minera Cusi. Sierra Metals is subject to a net smelter royalty (NSR) on production from the Minera
Cusi concessions of 2% if the price of silver is less than US$11 per ounce; and a NSR of 3% if the price of silver is greater than US$11 per ounce. 
  

	4.3.2	Purchase Agreement with Manuel Holguin 

 The mineral concessions from Manuel
Holguin consisting of 27 concessions over an area of 976 hectares were acquired under three purchase agreements dated May 30, 2006, December 7, 2006, and November 15, 2007. Royalties under the original purchase agreements were
acquired under purchase agreements dated April 24, 2012 and November 23, 2012. These concessions are not currently subject to any royalties. 

Sierra Metals holds 100% interest in these concessions. 
  

	4.3.3	Purchase Agreement with Martha Azucena Holguin 

 The mineral concessions from
Martha Azucena Holguin consisting of 50% share of three concessions over an area of 293 hectares were acquired under a purchase agreement dated May 12, 2010. The remaining 50% share was acquired under purchase agreement with Manuel Holguin
May 30, 2006. These concessions are not subject to any royalties. Sierra Metals holds 100% interest in these concessions. 
  

	4.3.4	Purchase Agreement with Hector Sanchez 

 The mineral concessions consisting of two
concessions over an area of 21 hectares were purchased from Hector Sanchez Villalobos and Carmen Saenz Rodriguez under a purchase agreement dated May 2, 2006. These concessions are subject to a 1.5% NSR royalty from production on the two
concessions, to a maximum of US$1.5 million. Sierra Metals holds 100% interest in these concessions. 

  
  

					
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	4.3.5	Agreement with Mexican Government 

 The ten concessions over an area of 10,954
hectares were acquired from the Mexican federal government. Exploration and mining at the Cusi property are subject to semiannual payments to the Mexican federal government. Fees are paid to the federal government twice each year, in January and
July. Sierra Metals made a payment of 494,652.00 Mexican Pesos to the Mexican federal government in January 2014 covering the concessions for the Cusi Project for the period from January to June 2014. 

 

	4.4	Environmental Liabilities and Permitting 

  

	4.4.1	Environmental Liabilities 

 Previous technical reports noted that as part of
current mining operations, waste rock from mining at Promontorio and Santa Eduwiges is stored near the entrances of the respective mines. Management of these waste rock piles does not require permits. 

Tailings are stored in two tailings piles in the vicinity of the Malpaso Mill. Previous technical reports also noted that the tailings
pile at the Malpaso Mill may not be lined, and may constitute a potential environmental liability. 
  

	4.4.2	Required Permits and Status 

 According to the information provided to Gustavson,
as reported in previous technical reports Cusi mine and Malpaso mill are exempt from permit requirements because the operations predate the environmental laws. Sierra has received formal recognition of the permit exemption for Malpaso and is
awaiting documentation of recognition of the exemption for the Cusi mine. Requirements for environmental and land use change permits are managed by the Mexican federal government’s Secretary of Environment and Natural Resources (Secretaria de
Medio Ambiente y Recursos Naturales, or “SEMARNAT”) and local government. 
 Sierra Metals holds an explosives use permit
from the Mexican federal government’s Secretary of National Defense (Secretaria de la Defensa Nacional, or “SEDENA”). This permit is in good standing and is renewed annually. 

 

	4.5	Other Significant Factors and Risks 

 As Sierra Metals does not hold surface rights
for the La India area, it would be difficult to construct access or begin operations at La India at this time. Sierra Metals believes that it will be possible to secure these surface rights in a timely manner at a reasonable cost, but until such an
agreement is secured, that portion of the resource remains at risk. 
 While no permit is required for the tailings piles at the
Malpaso Mill, because the existing tailings deposit pre-dates permitting requirements, the tailings pile at the Malpaso Mill may not be lined, and may constitute a potential environmental liability. 

  
  

					
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	5	Accessibility, Climate, Local Resources, Infrastructure and Physiography 

  

	5.1	Topography, Elevation and Vegetation 

 The topography of the Cusi Project ranges
from approximately 2,000 to 2,500 above masl. 
 The Cusi Project is covered by vegetation consisting of deciduous forest in the
valleys and coniferous forest at higher altitudes. Land use around the Cusi property is agricultural, including crops and cattle ranching. Overburden thickness ranges from one to three meters and consists of unconsolidated conglomerate with pebbles
and boulders of volcanic rocks, sand, clay, and volcanic ash. Wildlife in and surrounding Cusi property includes insects, lizards, snakes, birds, and small mammals. 
  

	5.2	Accessibility and Transportation to the Property 

 The Cusi property is situated
within the municipality of Cusihuiriachic located in the central portion of Chihuahua State, Mexico, approximately 135 kilometers (km) by car west of the City of Chihuahua. Access to the village of Cusihuiriachic from the City of Chihuahua is 105 km
along Federal Highway No. 16 to Cuauhtémoc, then south for 22 km along a paved road to the village of Cusihuiriachic, where the Cusi Property is located. 
  

	5.3	Climate and Length of Operating Season 

 The climate at the Cusi Project is
described as semi-arid with average daily mean temperatures per month ranging from 7.5° to 21.7° Celsius, with hotter months occurring mid-year. Annual precipitation is approximately 448 millimeters,
with monthly precipitation ranging from 4.1 to 121 millimeters. The highest rainfalls during the year are recorded between July and September. Climate is conducive for year round mining operations. 

 

	5.4	Sufficiency of Surface Rights 

 Sierra Metals holds surface rights over most of the
main mining and resource areas discussed in this report. The main mine shaft of the Promontorio Mine is close to the surface rights boundary, and there is a second, currently unused shaft, (Tiro Consolidada) which is just outside the surface rights
area. Cusi does not currently control surface rights for the La India mine. Otherwise, surface rights are expected to be sufficient for mining. 
  

	5.5	Infrastructure Availability and Sources 

  

	5.5.1	 Power 

Electrical power at the Cusi Project and Malpaso Mill is provided by the Mexican Electricity Federal Commission (Comisión Federal
de Electricidad). At the Cusi mine, electricity is conveyed in 33,000-volt power lines. At the Malpaso Mill, electricity is delivered on a 1,290-kilowatt power line.
Existing electricity supply is expected to be adequate for foreseeable mining operations. 

  
  

					
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	5.5.2	Water 

 At the Cusi mine, Sierra Metals utilizes water recovered from the
underground workings for process water and support of mining operations. Water was generated from dewatering operations in the Promontorio and Santa Eduwiges Mines. Potable water is trucked in. 

 

	5.5.3	Mining Personnel 

 At the Cusi mine, approximately 100 persons are employed, and 67
persons are employed at the Malpaso Mill. 
  

	5.5.4	Potential Tailings Storage Areas 

 Two tailings dams are located in the vicinity of
the Malpaso Mill. Land position within the Malpaso Mill complex is expected to be adequate to support anticipated future milling operations. 
  

	5.5.5	Potential Waste Rock Disposal Areas 

 Tailings are stored in two tailings piles in
the vicinity of the Malpaso Mill. Previous technical reports (Gustavson, 2014) noted that the existing tailings pile at the Malpaso Mill may not be have been constructed using a low permeability under-liner (soil and/or geomembrane), and that this
lack of liner system could pose a risk to underlying groundwater resources and potential long-term environmental liability from the leaching of the tailings materials by meteoric precipitation. Given the extremely arid conditions at the site,
however, this would likely be a low to moderate risk. 
  

	5.5.6	Potential Processing Plant Sites 

 Ore from the Cusi Project is processed in the El
Triunfo circuit of the Malpaso Mill, which has a capacity of 650 tonnes per day, and is expected to be sufficient for expected future operations. 

  
  

					
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	6	History 

  

	6.1	Prior Ownership and Ownership Changes 

 Since discovery and initial production of
precious metals in the Cusi district in the late 1800’s, the ownership history is extensive and complex. This is summarized in Section 6.4. 
  

	6.2	Exploration and Development Results of Previous Owners 

 The extensive exploration
history of the Cusi district is not well-documented. From surface sampling and exploration drifting in historic times to modern diamond drilling, the exploration has always been focused on development of more accurate understanding of the
orientations and relationships of the many veins in the district. 
  

	6.3	Historic Mineral Resource and Reserve Estimates 

 As summarized in a previous
technical Report (RPA 2006), exploration activities were conducted by Slocan Development Corp., Minera Cusi, and Pacific Islands Gold. Slocan Development Corp. conducted mineralogical studies which were reported in 1975; these reports were not
available. Minera Cusi conducted surface and geochemical studies and reported results in 1988 and 1989; these reports were not available. Pacific Gold conducted geologic mapping, surface and underground chip sampling, and reverse circulation (RC)
drilling along the San Miguel vein; these results were not available. There are no reports of historic Mineral Resource or Reserve Estimations. 
  

	6.4	Historic Production 

 Gold and silver were first discovered and exploited in the
Cusi area within the San Miguel and La Candelaria zones by a Spaniard, Antonio Rodríguez, in 1687, and continued until the Mexican war of independence, which began in 1810. The amounts mined during the Spanish colonial time are not well
documented. 
 The Mexican war of independence occurred from 1810 to 1821. The actual operators and production history in the vicinity
of Cusi from 1821 to 1881 are not known. From 1881 to 1890, Don Enrique Mining Co. conducted mining operations. From 1896 to 1911, the Helena Mining Company purchased and conducted mining operations: during this period, the Santa Marina and San
Bartolo shafts were sunk to the 1,000 foot level. 
 In 1911, Cusi Mexicana Mining Co. purchased the property from Helena Mining
Company. During the period of the Mexican Revolution from 1910 to 1920, mining at the Cusi Project area occurred intermittently. Total tonnage mined from 1821 to 1920 is unknown. 

From the 1920s to 1937, concessions of the Cusi Project area were acquired by The Cusi Mining Company of American Capital. As reported by
Sierra Metals, one million tonnes were mined. As reported in RPA (2006), from 1924 to 1942, 504,048 tonnes were mined, producing 265,460 kilograms of silver; however, the specific locations of mined areas were not reported. From 1937 to the 1970s,
mining from the Cusi property was reportedly dormant. In the 1970s, mining occurred in several mines in the Cusi Project area: an estimated 3,000 tons of ore per month were being produced at an average silver grade of 12 to 18 ounces per ton silver.
As reported in RPA (2006), during the 1980s, Minera Cusi conducted limited mining: no quantities were reported. 

  
  

					
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	7	Geological Setting and Mineralization 

  

	7.1	Regional Geology 

 The Cusi Project is located within the Sierra Madre Occidental,
a 1,200 by 300 km northwest-trending mountain system featuring a long volcanic plateau within a broad anticlinal uplift. The region is dominated by large-volume rhyolitic ash flow tuffs related to Oligocene (35 to 27 Ma) calderas considered to be
the Upper Volcanic Series. These volcanic rocks comprise calc-alkalic rhyolitic ignimbrites with subordinate andesite, dacite, and basalt with a cumulative thickness of up to a kilometer. The Upper Volcanic series unconformably overlies rocks of the
slightly older Eocene (46 to 35 Ma) Lower Volcanic Series which predominantly comprises andesite with interlayered felsic ash flow tuffs (Figure 7-1). 

Deposition of the Lower Volcanic Series was accompanied by the intrusion of hornblende-bearing quartz diorite and granodiorite batholiths
and stocks. The Lower Volcanic Series hosts the majority of the epithermal and porphyry-related precious metals deposits in the Sierra Madre Occidental. Thin flows of basaltic to rhyodacitic composition of late Miocene and younger age cap many of
the plateaus in the region. The oldest structural episode is related to the Laramide orogeny which produced east-striking, steeply dipping strike-slip faults, generally with right-lateral sense of shear. Later transtensional tectonics resulted in
the development of N-S normal faults and NNW-SSE trending subvertical faults with right-lateral strike-slip and normal sense of shear. Structures developed in the Cusi
region are believed to have controlled emplacement of a series of north-northwest trending intrusions. Permeability associated with these and other faults and intrusive contacts formed conduits for hydrothermal fluids associated with mineralization
(Figure 7-2). 

  
  

					
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 Source: Gustavson, 2014 
  

	 	Figure 7-1:	 1:5000 Scale Map showing generalized lithologies and locations of historic and active mining areas on the property

  
  

					
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 Source: Gustavson, 2014 

Figure 7-2: Northwest and Northeast-looking cross sections through the Cusi area, 1:5000 scale

  

	7.2	Local Geology 

 As reported in Geomaps (2012), the geology of the Cusi region
ranges from andesitic volcanism of late Mesozoic to Eocene age to the issuance of rhyolitic tuffs and ignimbrites of Oligocene-Miocene age. 

The Oligocene Bufa Formation ignimbrite forms the dominant topographic feature in the Cusi area. Older andesites in the area are members
of the Loma del Toro Formation, located mostly to the north and northeast of the mineralized Bufa Formation. 
 Mapping by CRM suggests
that the property is hosted within a collapsed caldera (Geostat, 2008). The Cusi fault is a regional NW-trending fault that may have localized and then faulted the caldera. Within the caldera, adjacent to the
Cusi fault, a rhyolite dome has been identified which hosts much of the mineralization in the district. Hydrothermal mineralization at Cusi was episodic and accompanied by structural movement (Geostat, 2008). Galena, sphalerite, and chalcopyrite are
the predominant sulfides commonly ranging from 5% to 10% with occasional massive sulfide zones. Historical mining activity in the District exploited a series of planar veins that cut a lower andesitic volcanic unit and an upper rhyolitic unit. The
veins occur in northwest and northeast-striking faults that appear to define an overall transtensional regime. All veins contain quartz with a variety of crustiform and banded textures typical of the epithermal environment. Most historical mining
was 

  
  

					
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 shallow (<100 m) and appears to have concentrated on supergene-enriched ores
including Ag chlorides and native silver (Meinert, 2007) (Figure 7-3). 
  

 
 Source: Gustavson, 2014 

Figure 7-3: Local Geology Map showing the location of mineralized veins 

 

	7.3	Property Geology 

 The property lies within a possible caldera that contains a
prominent rhyolite body interpreted as a resurgent dome. The rhyolite dome trends northwest-southeast with an exposure of roughly 7 km by 3 km and hosts mineralization. It is bounded (cut) on the east side by strands of the NW-trending Cusi fault and on the west by the Border fault. The Cusi fault has both normal and right-lateral strike- 

  
  

					
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 slip senses of shear. Strands of the Cusi fault are intersected by NE-trending faults, some of which indicate left-lateral strike-slip shear. NE-trending veins associated with these faults dip steeply either NW or SE. High-grade and wide
alteration and mineralization zones exist in the areas of intersection of NW and NE structures (Figure 7-4). 

The property tectonically formed during dextral transtension associated with oblique subduction of the Farallon plate beneath the North
American plate. Strike-slip and normal faults related to this transtension controlled igneous and hydrothermal activity in the region. Regional NW-trending faults like Cusi are generally right-lateral
strike-slip faults with a normal slip component. NE-trending faults are commonly left-lateral strike slip faults which were antithetic Riedel shears in the overall dextral transtensional tectonic regime. 

The Cusi fault is a regional fault that may have controlled the location of the caldera and resurgent dome. Continued movement on the
Cusi and related faults cut and brecciated the caldera and dome rocks and provided conduits for mineralizing fluids. 
  

 
 Source: Dia Bras, 2016 
  

	 	Figure 7-4:	 Aerial Photo of the Cusi property showing the locations and orientations of mineralized structures

  

	7.4	Significant Mineralized Zones 

 Numerous mineralized veins on the property,
typically moderately to steeply dipping to the southeast, southwest, and north, range from less than 0.5 to 2 m thick, extend 100 to 200 m along 

  
  

					
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 strike and up to 400 m down-dip. There are at
least seven major mineralized structures within the Cusi area, described below. Small open pits were typically developed at vein intersections. Mineralization mainly occurs in faults, epithermal veins, breccias, and fractures ranging from 1 to 10
meters thick. 
 Low-grade mineralized areas exist adjacent to major structures, showing
intense fracturing and are commonly laced with quartz veinlets forming a stockwork mineralized halo around more discrete structures. The country rock in these zones is variably silicified. Pyrite and other sulfide minerals are disseminated in the
silicified country rock and are also clustered in the quartz veinlets. A well-developed mineralized stockwork zone is in the Promontorio area, especially proximal to the Cusi fault. 

  
  

					
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	8	Deposit Type 

  

	8.1	Mineral Deposit 

 Mineralization at Cusi has been variably described as a) low-sulfidation epithermal (Ciesielski, 2007), b) high-sulfidation epithermal (SGS, 2008) and linked epithermal-base metal system (Meinhert, 2006). Meinhert (2006) notes that although shallow (<100 m)
historic mining is reported to have encountered grades exceeding 1000 oz/ton Ag, the veins currently exposed are more base-metal rich than would be expected in an epithermal system. However, Sierra Metals geologists consider the abundance of base
metals on the property to be primarily a function of depth of exposure; SRK agrees with this interpretation. Mineralization occurs along narrow fractures containing quartz, sphalerite, and galena; wallrock alteration consists primarily of
silicification and the development of clays and iron oxides. Veins themselves contain quartz with crustiform and banded textures typical of epithermal systems. 
  

	8.2	Geological Model 

 The current geologic model for the Cusi property is as follows:

 The country rock on the property consists primarily of felsic volcanics interpreted to represent a caldera with a resurgent dome.
Magma is interpreted to have intruded along the Cusi fault, a regional NW-trending, right-lateral strike-slip fault; subsequent eruption produced the collapsed caldera and Upper Volcanic Series felsic tuffs. A
resurgent dome then arose within the caldera on the western side of the Cusi fault. This dome was then dissected by numerous northeast-trending, left-lateral faults, which acted as conduits for hydrothermal fluids and now host mineralized veins.

 Two of the vein sets at Cusi are relatively large and have been mapped along strike for nearly a kilometer each. Within these vein
sets, dilatational areas and structural intersections host the best mineralization. The veins are composed of both wide, continuous areas of mineralization and also of zone of numerous smaller swarms of veins. The mineralization is predominately Ag
and Pb-rich with lesser amounts of Au, Zn and Cu present in some areas. 
 SRK is of the
opinion that the geologic model developed by Dia Bras, which focuses primarily on interpretation of the discrete veins and their related splays/stockwork zones is appropriate for the deposit type and mining method, and that this has been borne out
by a history of successful production. 

  
  

					
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	9	Exploration 

 In addition to drilling, Sierra Metals has commissioned several
geologic studies, conducted several geologic mapping campaigns, and completed surface and underground sampling programs. 
  

	9.1	Relevant Exploration Work 

 Sierra Metals has commissioned several geologic studies
culminating in reports summarizing their findings: 
  

	 	●	 	 Cusi Epithermal Ag-Au District, Chihuahua, Mexico. Prepared by Eric R.
Braun for Dia Bras Exploration dated November 26, 2006. 

  

	 	●	 	 Geology and Geochemistry of Mineralized Zones. Prepared by Andre P. Ciesielski for Sierra Metals Exploration Inc.
dated December 2007. 

  

	 	●	 	 Observations on the Cusihuiriachic District. Prepared by Lawrence D. Meinert of Smith College for Sierra Metals
Exploration Inc. dated July 6, 2006. 

  

	 	●	 	 Mineralogy, Assay, and Fluid Inclusion Characteristics of Quartz-Sulfide Veins of the Cusihuiriachic District,
Chihuahua, Mexico. Prepared by Lawrence D. Meinert for Dia Bras Exploration, Inc., dated January 17, 2007. 

  

	 	●	 	 Mineralogy of High Grade Ag Zones in the Cusihuiriachic District. Prepared by Lawrence D. Meinert for Dia Bras
Exploration, Inc., dated April 13, 2007. 

 On behalf of Sierra Metals, Geomaps S.A. de C.V. has prepared
geologic maps showing surface lithology at 1:5,000 scale and 1:1,000 scale, two regional cross sections through the Cusi Project area and a stratigraphic column. Geomaps’ surface lithology maps also contained structural measurements of faults
and veins. 
  

	9.2	Sampling Methods and Sample Quality 

 On behalf of Sierra Metals, Geomaps conducted
surface rock sampling in the Promontorio area in an effort to identify the presence of disseminated mineralization. From November to December 2012, Sierra Metals collected 571 samples from rock outcrops in an area of approximately 0.1 square
kilometer (650 m by 200 m). Samples were collected in lines perpendicular to main structure and faults where quartz vein and fractures with oxidation were identified. Samples were assayed for gold, silver, lead, manganese, and zinc at Sierra
Metal’s internal laboratory in the Malpaso Mill. Sierra Metals reviewed these data and found silver grades ranged from non-detect (less than 20 grams per tonne) to 351 grams per tonne. From these results,
Sierra Metals concluded that disseminated mineralization near the surface within the Promontorio Viejo-San Ignacio- and San Nicolas zone are restricted to the intersections of main structures. Geomaps
continued to conduct surface sample work in 2013. Sampling has now been performed over the entire project area, totaling over 2300 samples. Surface sample data for La Gloria / Minerva, and Monaco / Milagro areas only were used for this resource
estimate. This set includes 116 surface channels at La Gloria/Minerva, and 67 surface channels at Milagro/Monaco. 
 Numerous mine
workings are present at the Cusi Project area. Sierra Metals has conducted extensive sampling within these mine workings, the results of which were described in a 2014 technical report by Gustavson and are summarized in Table 9-1. All samples were analyzed at Sierra 

  
  

					
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 Metals’ internal laboratory at Malpaso. The 2014 report by Gustavson does not
mention sample spacing or other factors that may have resulted in biases. 
 Table 9-1:
Summary of Channel Sampling by Area 
  

																	
	Mine	 	No. Samples	 	 	Avg. Ag Grade (g/t)	 	 	Avg. Pb Grade (%)	 	 	Avg. Zn Grade (%)	 
	 Santa
Eduwiges
	 	 	1,380	 	 	 	399	 	 	 	1.30	 	 	 	1.09	 
	 La India
	 	 	1,187	 	 	 	53.8	 	 	 	0.06	 	 	 	0.15	 
	 La
Gloria/Minerva
	 	 	450	 	 	 	77.6	 	 	 	0.07	 	 	 	0.04	 
	
Milagro (incl. Monaco)
	 	 	588	 	 	 	177	 	 	 	0.79	 	 	 	1.28	 

 Source: SRK, 2016 
  

	9.3	Significant Results and Interpretation 

 Surface mapping of structures has been
used where possible, but the majority of interpretation for the veins is taken from underground development and sampling, with diamond and reverse circulation drilling comprising the remainder. 

  
  

					
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	10	Drilling 

  

	10.1	Type and Extent 

 The primary exploration method at Cusi has been diamond core
drilling followed by limited underground development. To date, 1,015 drillholes have been completed with an average length of 175 m. This represents over 185,000 m of drilling. The drillholes have historically been drilled primarily from surface in
a wide variety of orientations, although recent drilling has been dominated (~65%) by underground drilling. In the areas of focused exploration, the average drillhole spacing ranges between 25 to 50 m. In the less explored areas, the average
drillhole spacing ranges between 75 and 150 m. Overall, the majority of the drilling completed by Sierra has been relatively closely spaced and not very deep. The closely spaced drilling has been designed to identify the base of historic mining and
also directed at resource definition. The wider spaced drilling has been designed to test down dip from surface vein exposures to attain vein orientation and mineralization grades. 

Table 10-1: Drilling Summary by Type 

 

																			
	Hole Type  	  	Count  	  	Meters  	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 NQ/BQ
	  	3  	  	244  	 		 		 		 		 		 		 	
	 NQ
	  	157  	  	36,597  	 		 		 		 		 		 		 	
	
HQ/BQ
	  	1  	  	406  	 		 		 		 		 		 		 	
	 HQ/NQ
	  	353  	  	74,559  	 		 		 		 		 		 		 	
	 HQ
	  	156  	  	36,788  	 		 		 		 		 		 		 	
	 BQ
	  	304  	  	35,117  	 		 		 		 		 		 		 	
	 TT-45
	  	37  	  	1,390  	 		 		 		 		 		 		 	
	 Total
	  	1,011  	  	185,101  	 		 		 		 		 		 		 	

 Note: Four holes are not accounted for in this table due to misnomenclature. 

Source: SRK, 2016 

Table 10-2: Drilling Summary by Period 

 

																					
	Year  	  	Count  	  	Meters  	  	% of Total  	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2006  	  	53  	  	10,177  	  	5%  	 		 		 		 		 		 		 	
	2007  	  	99  	  	22,358  	  	12%  	 		 		 		 		 		 		 	
	2008  	  	86  	  	13,245  	  	7%  	 		 		 		 		 		 		 	
	2009  	  	84  	  	8,206  	  	4%  	 		 		 		 		 		 		 	
	2010  	  	71  	  	10,055  	  	5%  	 		 		 		 		 		 		 	
	2011  	  	84  	  	19,623  	  	11%  	 		 		 		 		 		 		 	
	2012  	  	199  	  	37,827  	  	20%  	 		 		 		 		 		 		 	
	2013  	  	102  	  	24,130  	  	13%  	 		 		 		 		 		 		 	
	2014  	  	73  	  	10,543  	  	6%  	 		 		 		 		 		 		 	
	2015  	  	147  	  	27,158  	  	15%  	 		 		 		 		 		 		 	
	2016  	  	17  	  	2,432  	  	1%  	 		 		 		 		 		 		 	

 Source: SRK, 2016 
  

	10.2	Procedures 

 The drilling has been conducted with Sierra-owned drills and outside
contractors. 

  
  

					
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 All drill core is appropriate size (HQ/NQ/BQ) and has been logged by Sierra staff
geologists. Samples intervals are determined by the geologist and the core is then split in half and bagged by Sierra technicians. 

Collar locations are surveyed on surface using handheld GPS, and underground using total station. Collar surveys are accurate for both
types of drilling and underground drill stations generally correspond to clusters of underground drill collars. Core is transported by Dia Bras personnel to the logging facility near the mine offices. 

Core is logged by qualified Dia Bras geologists for lithology, alteration, structure, and mineralization, with sampling intervals
identified during logging to delineate mineralized areas. Sample intervals are marked in the boxes along with a line down the core axis for splitting. Samples are split via core saw, and separated into labeled bags. As of yet, no barcode or
automated tracking system has been implemented at Cusi or Malpaso for sampling. 
  

	10.2.1	Downhole Deviation 

 Only about 25% (246) of the drillholes have downhole deviation
surveys. Since 2014, when a survey tool was acquired by the mine, the majority of drillholes have been surveyed. Surveys are done using a Reflex deviation tool, at intervals ranging between 25 and 50 meters or as available due to drilling
conditions. Deviations in the bearing (for non-vertical holes) average only 0.33 degrees, but feature local significant deviations in excess of 15 degrees between intervals. Dip deviations range between -7 degrees and 13 degrees, with an average of 0.4 degrees between intervals. 
 A significant number
of the historic drillholes are relatively long and their precise location is considered uncertain due to the lack of downhole deviation surveys. This contributes significantly to the uncertainty in the geological model as well as the resource
estimation. SRK has noted a select few cases where a drillhole which is not surveyed crosses very close to surveyed mine workings, and the vein intercept is offset 5 to 10 m from the projection of the structure using the channel samples and mine
development. 
 Of the 769 drillholes which are not surveyed, the average length per hole is 179 m. This would indicate significant
potential for deviation of these holes over these distances based on observed deviations in the surveyed holes. SRK noted that there are areas where the drill stations have probably been over-used, rather than simply moving the drill to a new
station which would take advantage of closer proximity to the targets. There may be some advantages to efficiency, cost, and accuracy of drilling if the rig is moved more frequently to new drill stations. 

 

	10.2.2	Core Recovery 

 Core recovery is assessed prior to logging and sampling. This is
based on the percentage of an interval that is recovered into the core box compared to the expected length of the interval. Recoveries are generally very good at Cusi, and is more than 98% on average in mineralized intervals. 

 

	10.3	Interpretation and Relevant Results 

 SRK notes that the Cusi Mine is an advanced
property with active mining ongoing. 

  
  

					
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 Relationships between thicknesses of drilling intercepts and actual thicknesses in the
mineralized veins underground have been confirmed through ongoing production. SRK does note that Dia Bras generally attempts to intersect veins in a perpendicular fashion through drilling, but does not always accomplish this due to difficulty of
position rigs from surface or underground. Selected veins are sometimes drilled near the plane of the structure, which may exaggerate mineralized intercepts thicknesses. SRK is not reporting thicknesses or grades of any of these structures. 

  
  

					
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	11	Sample Preparation, Analysis and Security 

  

	11.1	Security Measures 

 Samples are collected by the logging technicians or geologists
after being marked and labeled in core boxes. These are grouped into larger batches of 10 samples per reinforced sack, with a weight of no more than 25 kilograms. Each sack is noted with the intervals contained, the hole ID, and the order number for
the laboratory. Samples are stored on site, behind access-controlled gates, until such a time as they are to be taken to the relevant laboratory. Historically, this has been the Malpaso Mill, a Dia Bras-owned mill facility, or ALS Chemex, an
independent and ISO-certified laboratory with processing facilities in Hermosillo and analytical facilities in Vancouver, Canada. Currently, samples are sent to ALS and ALS only, but historically this decision
was made after the sample was first sent to the Malpaso Mill for analysis, with any positive results of interest warranting confirmation by ALS, utilizing the coarse reject material from Malpaso. 

 

	11.2	Sample Preparation for Analysis 

 The analytical history of the Cusi sampling is
complex, and includes various generations of analyses between the nearby Malpaso Mill and ALS. For samples assayed at ALS in Vancouver, drill core samples were prepared at the ALS prep lab in Chihuahua, Mexico. Upon receipt of samples, ALS dries the
samples, records the received sample weight, and processes the samples as follows: 
  

	 	●	 	 Core is crushed to 70% passing rate of 2 millimeters; 

 

	 	●	 	 A 150 gram split is taken for pulp preparation; and 

 

	 	●	 	 The split sample is pulverized to a pulp at 85% passing rate at 75 micrometers. 

Upon receipt of samples from the mine or exploration team, the Malpaso Laboratory also dries, weighs, and catalogs the samples. Drying
times are 4 hours for channel samples and 8 hours for drill core. The current sample preparation procedures in practice at the Malpaso mill are as follows: 
  

	 	●	 	 Rock from core or channel is crushed to  3⁄4 inch, then is placed in a cone crusher with the sample passing rate of 2 millimeters. 

  

	 	●	 	 A split is taken from this crushed material for pulp preparation (200 g=mine samples; 400 g=core). Samples are
dried again for 30 minutes. 

  

	 	●	 	 Split samples are pulverized to a pulp at 90% passing rate 75 micrometers. 

Previous technical reports have noted that the sample preparation procedures at Malpaso differ from those at ALS. For samples
historically assayed at the Malpaso Mill, samples were crushed initially to 3.175-millimeter (1/8-inch) grain size, then further pulverized to 85% passing rate of 100
mesh (152-micrometer) or 150 mesh (104-micrometer). 

SRK is aware that The Malpaso lab is working to improve and adopt procedures such as those utilized by ALS. 

 

	11.3	Sample Analysis 

 Sample analyses have been performed variably at ALS Chemex and
Malpaso Mill. Historically, all samples have been analyzed at Malpaso, with periodic checks of analyses at ALS Chemex. This practice was deemed to be insufficient due to analytical and preparation inconsistencies in the 

  
  

					
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 Malpaso Mill. Thus, a series of campaigns were run with the analyses being entirely
duplicated at ALS, with the findings showed significant differences between the two labs. Currently, all drill core analysis supporting the mineral resource estimation is performed by ALS, although an initial analysis of the sample is done at
Malpaso to determine whether it is warranted to send to ALS or if the material is barren. The coarse reject from the initial crushing of the sample at Malpaso is retained in case the sample needs to be analyzed by ALS. If the sample is analyzed at
ALS, the coarse reject is submitted and the remainder of sample preparation is completed at the ALS Chemex Hermosillo, Mexico facility. Final analysis is conducted at the primary laboratory in North Vancouver, BC, Canada. 

SRK notes that the channel samples are still analyzed by the Malpaso internal laboratory as this laboratory has a considerably better
turnaround time on analyses than ALS, which is critical for timely production decisions. The analytical techniques are appropriate for the mineralization. The analytical methods appear to be similar, but the Malpaso laboratory has an extremely high
lower limit of detection (20 g/t Ag). Most modern laboratories (such as ALS) have significantly lower limits of detection in the 1 to 5 g/t Ag range for ore grades. While this likely does not affect the results of the resource estimation, it should
be noted that the methods used by Malpaso may not be the same as ALS, and may introduce a bias in comparisons made between labs. 
 At
the ALS lab in Vancouver, several analytical techniques are employed for different generations of data. For primary analysis, pulverized samples are digested by aqua regia, followed by analysis for three metals (silver, lead, and zinc, collectively
identified as “Limited Metals”) by inductively coupled plasma atomic emission spectroscopy (ICP-AES) under Method ICP41. A large portion of samples were analyzed for the entire suite of 35 metals by ICP-AES. A large portion of samples were also analyzed for gold by fire assay and atomic absorption (AA). For over-limit analysis, detections of silver, lead, and zinc that exceed the reporting limit of ICP41 are
reanalyzed by an ore grade (OG) ICP-AES method, AA, or fire assay gravimetric methods (Table 11-1). 

For samples analyzed at the Malpaso Mill, pulverized material is assayed for gold and silver by fire assay and base metals by plasma
atomic emission spectroscopy. Reporting limits for assays at Malpaso are summarized in Table 11-2. SRK notes that the reporting limits for the Malpaso lab are inconsistent with industry norms for analytical
precision for all known metals, and that this should be rectified in order to have better confidence in these analyses. The uncertainty associated with stating material that may sit in the ranges of the lower limits of detection for Malpaso allows
for the possibility of the expectation for completely unmineralized material to have grades of 0.5 g/t Au and 20 g/t Ag, which would seem to have significantly more value than the actuals 

Table 11-1: Analytical Methods and Reporting Limits for ALS 

 

											
	Metal  	  	Initial Assay	  	Over-Limit	  	 
	  	Analytical Method  	  	Reporting Limits (g/t)  	  	Analytical Method  	  	Reporting Limits (g/t)  	  	 
	Gold  	  	AA23	  	0.005-10  	  	GRA-21  	  	0.05-1000  	  	
	Silver  	  	MEICP-41	  	0.2-100  	  	OG-46  	  	1-1500  	  	
	 	  	  	  	GRA-21  	  	5-10000  	  	
	Lead  	  	MEICP-41	  	2-1000  	  	OG-46  	  	10-200000  	  	
	
Zinc  
	  	  	2-1000  	  	OG-46  	  	10-600000  	  	

 Source: ALS Minerals Fee Schedule, 2016-2017 

  
  

					
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 Table 11-2: Analytical Methods and Reporting
Limits for Malpaso 
  

															
	Metal	  	Analytical Method  	  	 Lower Limit of

Detection (g/t)
	 	 	 	 	 	 	 	 	 
	Gold	  	Fire Assay	  	 	0.5  	 	 		 		 		 	
	Silver	  	Fire Assay	  	 	20  	 	 		 		 		 	
	Lead	  	AES	  	 	8  	 	 		 		 		 	
	Zinc	  	AES	  	 	8  	 	 		 		 		 	

 Source: Dia Bras, 2017 
  

	11.4	Quality Assurance/Quality Control Procedures 

 In general, Sierra Metals has been
drilling for the past ten years and has only recently (2013) instituted an industry standard quality assurance/quality control (QA/QC) program. The QA/QC was abandoned for an extended period of time in 2014, resulting in a gap in the QA/QC
monitoring. This was done by Dia Bras management to save costs. 
 A typical QA/QC program includes blanks, standard reference material
and duplicates. The purpose is to submit sample with known values or properties which identifies sample mix ups, sample preparation contaminations, laboratory precision and accuracy and laboratory bias. Although there is no reason to assume the
analytical data for Cusi is problematic, the lack of a consistent QA/QC program does reduce the confidence in the precision and accuracy of the analytical data. 
  

	11.4.1	Standards 

 Prior to 2013, a total of 144 standards were inserted into the sample
stream at Cusi, in 2012. These standards were prepared internally by Sierra Metals. 
 Following the implementation of a more formal
QA/QC program in 2013, Sierra Metals began inserting standards (either high grade, medium grade, or low grade) into the sample stream regularly at a rate of one standard per twenty samples. The standards are internal standards prepared at the
Malpaso mill, from material chosen for its similarity (mineralogical and in terms of appearance) to the samples from the Cusi exploration program. 

SRK notes that these “standards” do not adhere to the international reporting criteria of what a standard or certified
reference material should be. As noted in Figure 11-1, the standard #2 is reported by Dia Bras to have a failure criteria of +/- 2 standard deviations, in this case representing a +/- of over 80 g/t Ag. This
is wholly inconsistent with other labs (and even other standards within Sierra Metals) which feature much tighter ranges of expected performance. 

  
  

					
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 Source: Dia Bras, 2016 

Figure 11-1: Internally Prepared QA/QC Chart for Standard #2 Performance in 2014 

 

	11.4.2	Blanks 

 Prior to 2013, 173 blank samples were inserted into the sample stream at
Cusi, also in 2012. The blank samples were prepared internally by Sierra Metals from pulverized andesite presumed to be unmineralized. Previous technical reports note that for gold, 97% of blank assays complied with acceptance criteria (values less
than or equal to 5-times the ALS reporting limit); however, silver and lead performed less well (67% and 68% compliance, respectively), and for zinc, all blank assays exceeded the acceptance criteria.
Gustavson (2014) concluded that unexpectedly high values for blank samples did not appear to be caused by carryover of the preceding sample, and suggested that the andesite was in fact mineralized. Based on this result, it was recommended that
Sierra purchase commercially prepared blank samples. 
 Since 2013, Sierra Metals has inserted blanks into the sample stream regularly,
at a rate of one blank per every 30 to 50 samples. Blanks continue to be prepared internally from pulverized andesite. 

  
  

					
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 Source: Dia Bras, 2016 

Figure 11-2: Blank Analysis Prepared by Sierra Metals for 2015 Blanks 

  
  

					
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	11.4.3	Duplicates 

 Prior to 2013, 208 duplicates were inserted into the sample stream at
Cusi, in 2008. Sierra Metals provided Gustavson with the results of the duplicate sample but was not able to provide information on the corresponding original, and so it was not possible to evaluate laboratory precision. 

Following the implementation of a more formal QA/QC program in 2013, Sierra Metals devised a system whereby three types of duplicates
(coarse duplicates, core duplicates, and external duplicates) are inserted into the sample stream every 30 to 50 samples. External duplicates are sent to ALS Chemex for comparison against the Malpaso Mill to ensure that the internal lab is
performing in a manner consistent with industry standards. 
  
 

 
 Note: Original assay is Malpaso and Duplicate is ALS. 

Source: Dia Bras, 2016 

Figure 11-3: Scatter Plot prepared by Sierra Metals to compare performance
of duplicates at the internal Malpaso lab and ALS Chemex 
  

	11.4.4	Actions 

 SRK conducted a thorough review of the QA/QC procedures and performance
at Cusi. The review process included auditing internal QA/QC charts prepared by Sierra Metals, as well as independent analyses using data provided by the company for all QAQC work completed since 2013. Although Sierra Metals maintains a QA/QC
database, tracks the performance of duplicate, blank, and standard samples, and is aware of poor performance in some cases, no formal failure criteria have been developed. SRK’s independent analyses therefore included developing of a set of
failure criteria for each type of QA/QC data and determining failure rates. 

  
  

					
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	11.4.5	Results 

 The results for the 2014-2016 QA/QC monitoring at Cusi show significant
failure rates or inconsistencies across all types of QA/QC, with these failures made all the more egregious by the fact that Dia Bras uses its own QA/QC materials for these tests, which feature standard deviations far in excess of industry-standard
QA/QC. A summary of the failures for the internal Dia Bras standards is shown in Table 11-3. SRK notes that new commercial standards have been acquired recently by Dia Bras. 

Table 11-3: Failure Statistics for Cusi Standards and Blanks 

 

															
	Failure Statistics - Ag	 	 	 	 	 	 
	  	 	Failure Criterion	 	 	Number of Failures  	 	% Failure	 	 	 	 	 	 
	 Standard 1
	 	 	± 3SD	   	 	1  	 	6%  	 		 		 	
	
Standard 2
	 	 	± 3SD	 	 	2  	 	1%  	 		 		 	
	 Standard 3
	 	 	± 3SD	 	 	0  	 	0  	 		 		 	
	
Standard 4
	 	 	± 3SD	 	 	4  	 	6%  	 		 		 	
	 Blanks
	 	 	>10x LLD	 	 	4  	 	1%  	 		 		 	
	Failure Statistics - PB	 	 	 	 	 	 
	  	 	Failure Criterion	 	 	Number of Failures  	 	% Failure	 	 	 	 	 	 
	 Standard 1
	 	 	± 3SD	 	 	0  	 	0%  	 		 		 	
	
Standard 2
	 	 	± 3SD	 	 	4  	 	3%  	 		 		 	
	 Standard 3
	 	 	± 3SD	 	 	1  	 	7%  	 		 		 	
	
Standard 4
	 	 	± 3SD	 	 	4  	 	6%  	 		 		 	
	 Blanks
	 	 	>10x LLD	 	 	235  	 	68%  	 		 		 	
	Failure Statistics - Zn	 	 	 	 	 	 
	  	 	Failure Criterion	 	 	Number of Failures  	 	% Failure	 	 	 	 	 	 
	 Standard 1
	 	 	± 3SD	 	 	0  	 	0%  	 		 		 	
	
Standard 2
	 	 	± 3SD	 	 	2  	 	1%  	 		 		 	
	 Standard 3
	 	 	± 3SD	 	 	1  	 	7%  	 		 		 	
	
Standard 4
	 	 	± 3SD	 	 	0  	 	0%  	 		 		 	
	
Blanks
	 	 	>10x LLD	 	 	139  	 	40%  	 		 		 	

 Source: SRK, 2017 

The results of SRK’s QA/QC review show generally poor performance for blank samples, particularly for Pb and Zn. Many blank samples
for these elements report values above 10x the lower limit of detection. Although the failure rate for Ag is 1%, the lower limit of detection for Ag at the Malpaso mill is 10 g/ton, significantly higher than at most commercial laboratories. SRK
notes that although Sierra Metals tracks the performance of blanks at the mill (Figure 11-4), their results are compared to the standard deviation of the entire dataset for each element as opposed to the lower
limit of detection for each element. The blanks dataset generally exhibits high standard deviation and it is SRK’s opinion the performance of blanks is exaggerated in Sierra Metals’ internal QA/QC review as a result. SRK agrees with
Gustavson’s (2014) conclusion that internally prepared “blank” material at Cusi may not be unmineralized. 

  
  

					
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 Source: SRK, 2017 

Figure 11-4: Blank Analysis for Ag, Pb and Zn 

Failure statistics for standards at Cusi are between 0% and 7% and are not consistent across all elements. SRK notes that the standard
deviations used to define the failure criteria for standards were derived from the standards dataset and are higher than industry standard. Samples of each standard have been sent to three independent laboratories to define certified values for Ag,
Pb, and Zn (ALS Chemex, SGM, and LIMSA); SRK notes that in most cases, the internally derived standard deviations are 2x to 3x higher than the standard deviations reported by external labs. This is not consistent with industry best practices for
acceptable intra-lab performance. 
 Although a failure rate was not determined for duplicate
samples, SRK’s review shows that internal duplicates generally exhibit poor performance. Figure 11-5, Figure 11-6, and Figure
11-7 show scatterplots for Ag duplicates from core, coarse reject, and external labs. The figures suggest that performance of the Malpaso mill is inconsistent, both internally and in comparison to commercial
laboratories; however, they also suggest that the precision of the internal lab is higher for coarse 

  
  

					
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 duplicates than for core duplicates. Sierra Metals has not developed failure criteria
for duplicates, but acknowledges poor performance. 
 SRK notes that the 2014-2016 intra-lab
check analyses show a general agreement, which is encouraging. This agreement is only when evaluating the assays >20g/t Ag, which is the Malpaso lower detection limit. In comparison of those assays above 20 g/t Ag, ALS reports average grades that
are slightly higher than Malpaso for all metals, but which generally agree. This would indicate that the Malpaso Mill may be under-reporting grades in general, which may not be easy to perceive given the elevated lower limit of detection. 

 
 

 
 Source: SRK, 2017 

Figure 11-5: Scatterplot for Core Duplicates Analyzed at the Malpaso Mill, 2014-2016 

  
  

					
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 Source: SRK, 2017 

Figure 11-6: Scatterplot for Coarse Duplicates Analyzed at the Malpaso Mill, 2014-2016

  
 

 
 Source: SRK, 2017 

Figure 11-7: Scatterplot for Duplicates Analyzed at the Malpaso Mill and by ALS Chemex

  
  

					
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	11.5	Opinion on Adequacy 

 The results of the QA/QC program shows that the performance
of the Malpaso lab as it pertains to the accuracy and precision of the analysis is sub-par and inconsistent with the reasonable performance obtained by ALS. Previous technical reports such as Gustavson, 2014
feature excellent analyses which support this conclusion, showing low failure rates of standards during the ALS periods of analysis, with notable increases in failures for the Malpaso lab. This trend has continued since these were noted and publicly
stated in 2014. SRK notes that the Malpaso lab procedures should be reviewed to confirm whether they are identical to ALS and ensure they can be used with the same confidence as ALS, as their analyses are now being incorporated into the estimation.

 The poor performance of the QA/QC at the Malpaso Mill and inconsistent performance of blanks, standards, and duplicates across
multiple grade ranges is a contributing factor to the lack of Measured Resource for the Cusi Mine. This reflects the uncertainty in the accuracy of the Malpaso Mill data, which continues to support a significant portion of the mineral resource. It
remains unclear as to the source of the factors influencing the poor QA/QC performance, but SRK suggests that they are related to different processes between industry standard labs and Malpaso, poorly-homogenized internal “standards”, and
the inherent local variability of the deposit. 
 SRK is of the opinion that the performance of the QA/QC is poor for a mine in
operation, and strongly recommends improvement to an industry-standard QA/QC program in the near future. SRK is aware that improvements to the Malpaso laboratory are pending, and that recent QAQC measures have been using commercially available
standards to improve the monitoring of analytical precision. 

  
  

					
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	12	Data Verification 

  

	12.1	Procedures 

 The data supporting the mineral resource estimation for Cusi has been
validated in a number of ways by previous workers as well as SRK. Detailed descriptions of these validations are found in Gustavson’s 2014 report, and are material to the consideration of the deposit as a whole. Since these validations were
performed, SRK notes that Cusi has implemented marked improvements in things like the location of drillholes and downhole surveys, which were issues in previous reports. 

SRK visited the mine in 2016 and was able to access the mine workings, reviewing estimated vein thicknesses and grades in the mine and
finding them appropriately stated. In addition, SRK witnessed the collection of channel samples as well as underground drilling at Cusi and noted these to be consistent with basic industry standards. 

 

	12.1.1	Database Validation 

 As a part of this mineral resource estimation, SRK also
reviewed the drilling database against ALS Minerals assay certificates. A selection of ALS analytical certificates was selected at random from the files provided to SRK by Dia Bras, and these were compared back to the drilling database. This
represented a total number of samples of 1,467, which only represents about 2.6% of the drilling database. SRK does note that all samples reviewed from the certificates matched the database exactly. 

Finally, and due to the historic performance of the QA/QC and the intra-lab data between ALS and
Malpaso, SRK recommended that a series of re-analyses were run in areas which are judged critical to the mineral resource and mine development. The purpose of this was to obtain a separate selection of
samples, taken from core or coarse reject material that could be submitted to ALS (and hadn’t been previously) along with appropriate QA/QC to support the mineral resource where previously the only support had been from Malpaso. In total, this
small program featured 233 samples from various areas of the Cusi Mine, across grades ranging from 0.2 g/t Ag to over 3,700 g/t Ag. Duplicates, blanks and standards were submitted with these samples, and show reasonable performance across all grade
ranges. 
 However, the intra-lab check samples do not show close agreement to expectations for
the analysis quality and data between labs. For this small subset of samples, Malpaso reports an average Ag of 142 g/t Ag compared to 111 g/t Ag from ALS. Although some of this is related to the Malpaso lab’s inability to report grades less
than 20 g/t Ag, there are several intervals where Malpaso reports very high grades, in excess of 500 g/t Ag, where ALS reports less than 20 g/t Ag. Although it is possible that this is related to the highly variable nature of the mineralization
at Cusi and its representation in split core halves, SRK would expect an average that is more similar between the two labs. SRK does note that, in general, the higher grade samples occurring in a sequence of similar samples are repeated between the
labs. 
  

	12.2	Limitations 

 No external auditor or consultancy, including SRK, has validated 100%
of the database to date with independent samples or third-party laboratory checks. 

  
  

					
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	12.3	Opinion on Data Adequacy 

 SRK notes that the database validation against provided
certificates shows excellent agreement, but that the results of the recent intra-lab comparison showed significant variation. This, combined with other factors such as the lack of consistent down hole
deviation make the data sufficient for reporting of Indicated and Inferred resources only, as Measured resources would need more precision and repeatability than what can be demonstrated at this time. 

  
  

					
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	13	Mineral Processing and Metallurgical Testing 

  

	13.1	Testing and Procedures 

 Cusi’s Malpaso mill facilities include a recently
upgraded metallurgical laboratory. Sampling and testing is executed on an as-needed basis to support the industrial scale operation. No detailed metallurgical testwork results were available at this time for
the areas being mined. 
  

	13.2	Recovery Estimate Assumptions 

 Metallurgical performance at Malpaso shows a steady
improvement in the 2015 January to 2016 August period. While initially producing lead concentrate only, Malpaso started a separating and producing zinc concentrate since 2015 December. 

Metal recoveries to lead concentrate (Figure 13-1) appear consistent with an upward trend for the
period in question as follows: 
  

	 	●	 	 Lead metal recovery initially in the 75% to 80% range has improve to values ranging from 80% to 88%. Lead grade in
concentrate has been improved over time, and is approaching 40% which is in the lower end of a typical commercial quality lead concentrate. 

  

	 	●	 	 Silver metal is preferably deported to lead concentrate reaching recovery ranging from 70% to 80%. For the period in
question, silver grade in lead concentrate is ranging from approximately 3,000 g/t to 7,000 g/t. 

  

	 	●	 	 Other metals in lead concentrate include gold with concentration ranging approximately between 4 g/t to 7 g/t which is
above the typical payable grade in lead concentrates. Since Cusi started producing zinc concentrate, zinc metal concentration in lead concentrate ranges between 6% and 10% which is possibly translating to a penalty. No deleterious metals are present
in concentrations high enough to translate into penalty payments. 

  
 

 
 Source: Dia Bras, 2016 

Figure 13-1: Lead Concentrate Tonnes and Grades 

  
  

					
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 Deportment of metals to zinc concentrate (Figure
13-2) shows zinc recovery ranging approximately from 30% to 50%, and reaching grade consistently above 50%. 

Silver deportment to zinc concentrate is in the range of 1% to 3% and its grade reaches 300 g/t to 560 g/t which is within commercially
payable range. 
  
 

 
 Source: Dia Bras, 2016 

Figure 13-2: Zinc Concentrate Tonnes and Grades 

Based on the performance of the Malpaso Mill in 2016, the projected production from the mill in 2017 is as summarized in Table 13-1. SRK notes that this information is provided by Dia Bras and is based on actual recoveries from the existing mine, projected using the expected tonnes and grades from their operational plan. SRK notes that the
head grade for Au is more than 2X less than the lower limit of detection for the Malpaso analytical laboratory. 
 Table 13-1: Metallurgical Balance for Malpaso Mill – 2017 
  

																																									
	Metallurgical Balance	 	  	Assays	 	  	Recovery %	 
	Type	  	Tonnes	 	  	%	 	  	Au (g/t)	 	  	Ag (g/t)	 	  	Pb (%)	 	  	Zn (%)	 	  	Au	 	  	Ag	 	  	Pb	 	  	Zn	 
	 Head
	  	 	221,000	 	  	 	100	 	  	 	0.18	 	  	 	184.3	 	  	 	0.89	 	  	 	1.04	 	  			 	  			 	  			 	  			 
	
Conc. Pb
	  	 	6,305	 	  	 	2.85	 	  	 	3.21	 	  	 	4,785.3	 	  	 	25.38	 	  	 	5.00	 	  	 	52.04	 	  	 	74.07	 	  	 	81.00	 	  			 
	 Conc.
Zn
	  	 	2,718	 	  	 	1.23	 	  	 	0.50	 	  	 	350.0	 	  	 	1.26	 	  	 	50.00	 	  			 	  			 	  			 	  	 	59.26	 
	
Final Tails
	  	 	211,977	 	  	 	95.92	 	  	 	0.08	 	  	 	45.3	 	  	 	0.16	 	  	 	0.29	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 

 Source: Dia Bras, 2017 

  
  

					
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	14	Mineral Resource Estimate 

 Matthew Hastings, Senior Consultant, SRK Consulting
(U.S.) Inc. conducted the resource estimation for the Promontorio veins, San Nicolas, Santa Rosa Lima, and San Juan veins. Bart Stryhas, Principal Consultant, SRK Consulting (U.S.) Inc., conducted the resource estimation for the Santa Eduwiges
veins, Candelaria veins, and Durana veins. This was done using a combination of mining software including Leapfrog GeoTM, Maptek VulcanTM, and statistical analysis software such as Snowden SupervisorTM and X10 GeoTM. 

 

	14.1	Drillhole Database 

 The drilling and channel sample databases are kept in separate
Microsoft Excel files with six tabs for drill collars, surveys, lithology, geotechnical parameters, geochemistry, and assays. The lithologies logged are used in combination with the assay data to identify mineralization for the geologic model.
Geotechnical parameters are recorded for drilling and features rock quality designation (RQD), and recovery. Both geochemistry and assays feature the analyses for the primary elements to be reported at Cusi (Ag, Au, Pb, Zn), but the assays feature
only these assays plus Cu, Fe, and Mn. The geochemistry table also features other elements that have been analyzed for a small percentage of samples for other purposes. 

The final drillhole and channel assay database was provided to SRK by Dia Bras on December 23, 2016. It features both drilling and
channel samples which are updated to October of 2016. The final database contains over 60,000 assays from drilling and over 36,000 from channel sampling. The two data sets have been merged for the purposes of statistical analysis and estimation. The
distribution of samples between types and elements is summarized in Table 14-1. 
 Table 14-1: Summary of Sample Counts by Type 
  

																									
	Element    	  	Drill Assays	 	  	Channel Assays	 	  	 	 	  	 	 	  	 	 	  	 	 
	Ag	  	 	61,920	 	  	 	36,250	 	  				  				  				  			
	Au	  	 	46,639	 	  	 	33,568	 	  				  				  				  			
	Pb	  	 	61,353	 	  	 	36,279	 	  				  				  				  			
	Zn	  	 	61,360	 	  	 	36,306	 	  				  				  				  			

 Source: SRK, 2016 

The database features variable incomplete analyses for Au compared to the other elements, which are all relatively consistent for all
intervals. The reason for the partial Au assays is unclear, but is likely related to older analyses or inability to transcribe from historic assay sheets. SRK assigned a value of 0.001 to any element with missing assays. Cu is also partially assayed
at Cusi, but features comparably fewer missing assays than the Au, and is generally quite low grade. Cu was not used in the estimation of the MRE for Cusi. 

SRK notes that the database contains several drillholes that have no assay intervals due to lost data or other doubts regarding data
accuracy. In some cases, Dia Bras has used these to guide the geology model, but they have been ignored for the purposes of the estimation. Any other missing or unsampled intervals in the drilling are given a value of 0 for all elements, on the
assumption that the geologists logging did not identify any mineralization or alteration of interest in the rock. SRK notes that, due to the aforementioned inaccuracy of some of the unsurveyed drilling, that these unsampled intervals may cut through
historic areas of production, and would artificially bias the grades low. 

  
  

					
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	14.2	Geologic Model 

 Three-dimensional wireframe models for the Cusi veins were created
by Dia Bras using Leapfrog GeoTM software. SRK was provided the Leapfrog project files, which were reviewed and modified to include more detail on the structures as well as incorporate channel sample data where appropriate. The geology models
are developed on a combination of geology codes and Ag grades, and effectively are built using hanging wall and footwall surfaces derived through selection of these points in the drilling and channel sample database, with subsequent interpolation of
the points into 3D surfaces and volumes. 
 There are five areas within the greater Cusi District (Figure 14-1), defined based on similarity of mineralization or orientation of structures. These areas were used to define capping limits, on the assumption that all mineralization within the area is related to the same
processes, based on the cross-cutting relationships of the veins. Within these areas, the geologic model defines 33 separate structures or stockwork zones (in the case of Azucarera), all of which are considered discrete domains for the purposes of
resource estimation. The volumes defined in the geologic model serve to constrain and guide the estimation. Descriptions of the areas, resource domains, and general geology are summarized in Table 14-2. 

Examples of the geology models are shown in Figure 14-2, Figure
14-3, and Figure 14-4. 
 SRK notes that the surveyed
channel samples play a critical role in modeling of the mineralized structures. Where an unsurveyed drillhole intercept does not align with the projection of the vein from nearby channel samples, the drillhole intercept is ignored in favor of the
geometry from the mine workings. Dia Bras and SRK agree the working are more accurate than the drilling in these cases. The net result of this is improved and valid vein geometries but locally includes samples within the vein that may not be within
the vein due to the deviation from the drillhole that was not measured. This generally occurs in the vicinity of previous production as all new drillholes are being surveyed and appear to track well with the projection of the veins from the mine
workings. 

  
  

					
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 Source: SRK 

Figure 14-1: Plan View of Areas within Cusi District 

  
  

					
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 Table 14-2: Summary of Project Areas and
Relationships to Resource Estimation Domains 
  

					
	
Area
	 	Veins	 	Description
	Promontorio 	 	Alto El Gallo	 	Anastomosing sequence of NE-trending steeply dipping veins, locally appearing stacked or
sheeted. Numerous crossings and truncations within the sequence. Locally featuring extraneous stockwork zones or splay structures, which may not be defined in drilling. The Azucarera domain is a stockwork zone which has been accessed by workings and
appears to be related to the intersection of multiple structures. Truncated to the north and south by the Santa Rosa Lima and San Nicolas structures respectively. Explored extensively through drilling and exploration/development drifts. Primary
production source.
	 	Bajo L	 
	 	El Gallo	 
	 	El Gallo Bajo	 
	 	H	 
	 	J	 
	 	K	 
	 	K’	 
	 	L	 
	 	L’	 
	 	Promontorio	 
	 	V1	 
	 	V2	 
	 	VBP	 
	 	Azucarera	 
	 	San Juan	 
	Eduwiges	 	San Antonio	 	Series of moderately to steeply dipping veins with variable strike trends. Thicknesses vary
dramatically. The majority trend NE similar to Promontorio, but local cross structures are orthogonal. Some structures appear to be related to the trend of the San Nicolas vein, while others are perpendicular and appear to cross San Nicolas. All
appear truncated by the Santa Rosa Lima structure to the north. Extensively explored through drilling and exploration/development drifts. Primary production source.
	 	San Bartolo	 
	 	Santa Marina	 
	 	Mexicana	 
	 	Milagros	 
	 	Milagros Ramal 1	 
	 	Moctezuma	 
	 	  
 Portilla
	 
	San Nicolas	 	San Nicolas	 	Two anastomosing NW/SE trending, steeply-dipping structures with the
	 	Santa Rosa Lima	 	most significant strike length of the modeled veins. Appear to truncate most structures, although others have been demonstrated to cross San
Nicolas with small (5-10m) offsets. Significant potential for exploration and addition of resources. Features drilling and limited channel sampling along development drifts. Primary production
source.
	La India	 	Candelaria 1	 	Two sets of variable thickness and orientation veins with NW/SE trends (Durana) and NE/SW trends (Candelaria) to the extreme
south of the project. Although generally lower grade, there are selected areas of very high grade mineralization noted. Exploration is not as extensive as other areas, and is based almost exclusively on drilling. No production of note.
	 	Candelaria 2	 
	 	Durana	 
	 	Durana Ramal 1	 
	 	Durana Ramal 2	 
	 	  
 20 de Noviembre
	 
	La Gloria	 	Minerva	 	Anasotomosing NE/SW trending steeply-dipping vein to the south of the San Nicolas vein. Dominantly explored
via exploration drift. Limited production.

 Source: SRK, 2017 

  
  

					
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 Source: SRK 

Figure 14-2: Oblique View of the Cusi Geologic Model 

  
  

					
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 Source: SRK 

Figure 14-3: Oblique View of the Cusi Geologic Model, looking east 

  
  

					
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 Source: SRK 

Figure 14-4: Northeast Cross-section through the Cusi Geologic Model,
showing complex vein interactions 
  

	14.2.1	Domain Analysis 

 SRK considered each vein its own domain for the purposes of
statistical analysis and estimation. As shown in Figure 14-5, the amount of samples per vein domain are highly variable, influenced largely by the amount of channel sampling in development along structures.

  
 

 
 Source: SRK, 2016 

Figure 14-5: Sample Count by Vein Domain 

  
  

					
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 The individual resource domains also feature a wide range of grade distributions. The
mean grades for each element by vein are shown in Table 14-3. As shown, Ag is the obvious and most dominant contributor to the economic value of the mineralization. Veins in the Eduwiges area commonly feature
more base metals than others. 
 Table 14-3: Grade Means by Structure 

 

																																																																																																	
	Name	 	Mean Ag	 	 	Mean Au	 	 	Mean Pb	 	 	Mean Zn	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
All
	 	 	233.1	 	 	 	0.30	 	 	 	0.81	 	 	 	0.86	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 Alto El
Gallo
	 	 	125.0	 	 	 	0.02	 	 	 	0.13	 	 	 	0.22	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 San
Antonio
	 	 	229.3	 	 	 	0.20	 	 	 	1.58	 	 	 	1.92	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Azucarera
	 	 	286.0	 	 	 	0.07	 	 	 	0.27	 	 	 	0.29	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 Bajo
L
	 	 	134.7	 	 	 	0.05	 	 	 	0.19	 	 	 	0.23	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
San Bartolo
	 	 	271.4	 	 	 	0.32	 	 	 	1.56	 	 	 	1.06	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Candelaria 1
	 	 	123.4	 	 	 	0.06	 	 	 	0.25	 	 	 	0.38	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Candelaria 2
	 	 	153.6	 	 	 	0.19	 	 	 	0.58	 	 	 	1.07	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Durana
	 	 	63.7	 	 	 	0.04	 	 	 	0.15	 	 	 	0.16	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 Durana
Ramal 1
	 	 	132.3	 	 	 	0.07	 	 	 	0.02	 	 	 	0.01	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Durana Ramal 2
	 	 	156.8	 	 	 	0.06	 	 	 	0.05	 	 	 	0.02	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 El
Gallo
	 	 	270.1	 	 	 	0.50	 	 	 	0.34	 	 	 	0.40	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 El Gallo
Bajo
	 	 	269.2	 	 	 	0.17	 	 	 	0.29	 	 	 	0.35	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 H
	 	 	204.0	 	 	 	0.10	 	 	 	0.29	 	 	 	0.29	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 J
	 	 	177.0	 	 	 	0.04	 	 	 	0.20	 	 	 	0.27	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
San Juan
	 	 	152.2	 	 	 	0.35	 	 	 	0.11	 	 	 	0.13	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 K
	 	 	276.9	 	 	 	0.09	 	 	 	0.42	 	 	 	0.42	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
K’
	 	 	195.6	 	 	 	0.08	 	 	 	0.21	 	 	 	0.22	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 L
	 	 	371.5	 	 	 	0.12	 	 	 	0.32	 	 	 	0.34	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
L’
	 	 	145.0	 	 	 	0.07	 	 	 	0.26	 	 	 	0.32	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Santa Marina
	 	 	201.2	 	 	 	0.31	 	 	 	1.29	 	 	 	1.06	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Mexicana
	 	 	160.1	 	 	 	0.36	 	 	 	1.16	 	 	 	1.77	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Milagros
	 	 	220.9	 	 	 	1.62	 	 	 	1.28	 	 	 	1.67	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 Milagros
Ramal 1
	 	 	133.0	 	 	 	0.52	 	 	 	0.85	 	 	 	1.30	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Minerva
	 	 	93.9	 	 	 	0.22	 	 	 	0.08	 	 	 	0.04	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Moctezuma
	 	 	150.3	 	 	 	0.22	 	 	 	3.05	 	 	 	2.93	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 San
Nicolas
	 	 	231.2	 	 	 	0.21	 	 	 	0.36	 	 	 	0.39	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 20 de
Noviembre
	 	 	45.3	 	 	 	0.02	 	 	 	0.22	 	 	 	0.27	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Portilla
	 	 	301.4	 	 	 	0.33	 	 	 	1.72	 	 	 	1.37	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
Promontorio
	 	 	224.3	 	 	 	0.07	 	 	 	0.34	 	 	 	0.31	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 Santa Rosa
Lima
	 	 	258.2	 	 	 	0.11	 	 	 	0.47	 	 	 	0.63	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 V1
	 	 	165.4	 	 	 	0.03	 	 	 	0.28	 	 	 	0.29	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	 V2
	 	 	136.2	 	 	 	0.08	 	 	 	0.47	 	 	 	0.48	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			
	
VBP
	 	 	130.4	 	 	 	0.05	 	 	 	0.30	 	 	 	0.37	 	 		 		 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 				 			

 Source: SRK, 2017 
  

	14.3	Assay Capping and Compositing 

 In order to minimize the variance in the estimation
due to inherent variability in grade distributions within domains and provide a more homogenous data set for estimation, SRK used capping of high grades as well as compositing of sample lengths. 

 

	14.3.1	Outliers 

 SRK limited high grade outlier samples by capping the maximum grades for
each area, and limiting samples above the cap to the grade of the cap. Capping analysis was done on the raw sample data, evaluating each data set by relevant area of mineralization. Capping was not reviewed for every

  
  

					
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individual vein, as the paucity of sampling for many of the veins did not yield appropriate populations for statistical analysis. Thus, areas of the model were selected for similarity in
mineralization style, orientation, and other parameters that would suggest that the grouped veins were related to a single mineralizing event. 

After the data was grouped by these areas, SRK generated log probability plots (to assess the frequency at various grade ranges and
evaluate continuity, changes in slope, and other factors that would indicate high grade sub-populations within the domained assay data. As these were identified, sample plots were generated within the domained
areas to determine if any high grade continuity could be developed and modeled. In the case of Cusi, the veins are simply highly variable and no significant high grade chutes or zones within the structures were modeled separately. Using the
probability plots and statistics of the capping (i.e. percentages of data capped, impact of capping on CV/Mean, total metal lost to capping, etc.) SRK selected appropriate capping limits for each of the areas, as shown in Table 14-4. 
 Examples of the capping analysis can be seen in Figure
14-6 and Table 14-5. 
 Table 14-4: Capping Limits Utilized for the Cusi MRE 
  

																																																																					
	Area	  	Capping Limit	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
	  	Au (g/t)	 	  	Ag (g/t)	 	  	Pb (%)	 	  	Zn (%)	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
	 Promontorio
	  	 	3.25	 	  	 	4000	 	  	 	7	 	  	 	6	 	  				  				  				  				  				  				  				  				  				  				  				  				  			
	 Santa
Eduwiges
	  	 	15	 	  	 	4000	 	  	 	18.5	 	  	 	19	 	  				  				  				  				  				  				  				  				  				  				  				  				  			
	 San
Nicolas/SRL
	  	 	3.5	 	  	 	2000	 	  	 	5	 	  	 	5	 	  				  				  				  				  				  				  				  				  				  				  				  				  			
	 La India
	  	 	0.5	 	  	 	750	 	  	 	3	 	  	 	4	 	  				  				  				  				  				  				  				  				  				  				  				  				  			
	
La Gloria
	  	 	2.3	 	  	 	500	 	  	 	0.42	 	  	 	0.31	 	  				  				  				  				  				  				  				  				  				  				  				  				  			

 Source: SRK, 2017 
  

 
 Source: SRK, 2017 

Figure 14-6: Example Log Probability Plot – Promontorio Ag 

  
  

					
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 Table 14-5: Example Capping Analysis –
Promontorio Ag 
  

																																							
	Cap	 	 	Capped	 	 	Percentile	 	 	Capped %	 	 	Lost %	 	 	CV %	 	 	Count	 	 	Max	 	 	Mean	 	 	CV	 
	 	NA		 	 	NA	 	 	 	100	% 	 	 	0.00	% 	 	 	NA	 	 	 	NA	 	 	 	9,923	 	 	 	26,931.60	 	 	 	261.86	 	 	 	2.75	 
	 	10000	 	 	 	7	 	 	 	99.9	% 	 	 	0.07	% 	 	 	2%	 	 	 	13%	 	 	 	 	10,000	 	 	 	257.72	 	 	 	2.41	 
	 	7000	 	 	 	20	 	 	 	99.8	% 	 	 	0.20	% 	 	 	3%	 	 	 	18%	 	 	 	 	7,000	 	 	 	254.39	 	 	 	2.26	 
	 	6000	 	 	 	26	 	 	 	99.8	% 	 	 	0.30	% 	 	 	4%	 	 	 	20%	 	 	 	 	6,000	 	 	 	252.54	 	 	 	2.2	 
	 	5000	 	 	 	41	 	 	 	99.7	% 	 	 	0.40	% 	 	 	5%	 	 	 	23%	 	 	 	 	5,000	 	 	 	249.88	 	 	 	2.12	 
	 	4000	 	 	 	70	 	 	 	99.5	% 	 	 	0.70	% 	 	 	7%	 	 	 	27%	 	 	 	 	4,000	 	 	 	245.75	 	 	 	2.02	 
	 	3000	 	 	 	121	 	 	 	99.1	% 	 	 	1.20	% 	 	 	10%	 	 	 	32%	 	 	 	 	3,000	 	 	 	238.75	 	 	 	1.88	 
	 	2500	 	 	 	158	 	 	 	98.8	% 	 	 	1.60	% 	 	 	12%	 	 	 	35%	 	 	 	 	2,500	 	 	 	233.47	 	 	 	1.79	 
	 	2000	 	 	 	234	 	 	 	98.2	% 	 	 	2.40	% 	 	 	15%	 	 	 	39%	 	 	 	 	2,000	 	 	 	226.23	 	 	 	1.69	 
	 	1500	 	 	 	369	 	 	 	97.1	% 	 	 	3.70	% 	 	 	20%	 	 	 	44%	 	 	 	 	1,500	 	 	 	214.73	 	 	 	1.55	 
	 	1000	 	 	 	662	 	 	 	90.0	% 	 	 	6.70	% 	 	 	28%	 	 	 	50%	 	 	 	 	1,000	 	 	 	195.12	 	 	 	1.36	 
	 	Ag > 4000	 	 			 	 			 	 			 	 			 	 			 	 	 	70	 	 	 	26931.60	 	 	 	7048.23	 	 	 	0.63	 
	 	Ag <= 4000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	9853	 	 	 	3888.56	 	 	 	225.79	 	 	 	1.84	 

 Source: SRK, 2017 
  

	14.3.2	 Compositing 

SRK evaluated the sample lengths within the mineralized domains defined by the geological model. The mean sample length within the
mineralized domains is 0.68 m, with a maximum sample length of 8.2 m. The mean sample length above the 97.5% percentile is 1.5 m. SRK examined the relationship between sample length and Ag grade to determine if there were significant
populations of high grade samples that were greater than 1.5 m. The overwhelming majority of samples with significant grade are in samples where the length is less than 1.5 m as shown in Figure 14-7.
SRK notes that there are very few samples that would be affected by a compositing length of 1.5 m that would in turn affect the estimation. 

A histogram distribution of sample lengths (Figure 14-8) within the mineralized domains shows
that the relative percentages of sample lengths above the 1.5 m composite length is very small. SRK selected a nominal composite length of 1.5 m, retaining short samples for use in the estimation. Any bias due to short samples is handled using
length-weighting during the estimation. 
  
 

 
 Source: SRK, 2017 

Figure 14-7: Scatter Plot of Length vs. Ag 

  
  

					
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 Source: SRK, 2017 

Figure 14-8: Histogram of Sample Lengths 

 

	14.4	Density 

 Bulk densities are assigned on the basis of the results of specific
gravity samples analyzed by the Servicio Geologico Mexicano (SGM) on behalf of Dia Bras. The 11 samples were taken from various areas throughout the Promontorio and Santa Eduwiges areas, but are considered by Dia Bras geologists to be representative
of the material types in mineralized areas of all of the Cusi veins. Samples were ground to 100% passing -100 mesh (150 microns) and were analyzed via the use of a pycnometer using ethanol as a solution.
Distilled water is used as a reference (0.99712 g/cm3) in the evaluations. The results of this analysis are presented in Table 14-6. 

The average density of the samples is 2.73 g/cm3, and this density was flagged into the block model for use in the resource calculations.

  
  

					
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 Table 14-6: Results for Density Analyses

  

															
	Sample ID  	 	Stope	  	Area	 	Vein	 	Level Elevation	 	 	Density (g/cm3)	 
	1	 	REB 668	  	Promontorio	 	San Nicolas	 	 	8 1850	 	 	 	2.71	 
	2	 	REB 9461	  	Sta. Eduwiges	 	Moctezuma	 	 	13A 1801	 	 	 	2.98	 
	3	 	REB 9400	  	Sta. Eduwiges	 	Veta B	 	 	13 1839	 	 	 	2.69	 
	4	 	REB 9315	  	Sta. Eduwiges	 	San Antonio	 	 	15 1769	 	 	 	2.99	 
	5	 	REB 627	  	Promontorio	 	El Gallo	 	 	8 1865	 	 	 	2.66	 
	6	 	REB 9306	  	Sta. Eduwiges	 	Sta. Marina	 	 	13 1817	 	 	 	2.78	 
	7	 	REB 786	  	Promontorio	 	Promontorio	 	 	6 1910	 	 	 	2.68	 
	8	 	REB 9400	  	Sta. Eduwiges	 	Riodacita	 	 	12 1839	 	 	 	2.57	 
	9	 	REB 652	  	Promontorio	 	Gallo Back	 	 	6 1930	 	 	 	2.63	 
	10	 	REB 1024	  	Promontorio	 	Promontorio	 	 	10 1910	 	 	 	2.68	 
	11	 	REB 1024	  	Promontorio	 	Promontorio	 	 	10 1910	 	 	 	2.67	 
	 	 	 	  	 	 	 	 	 	Average	 	 	 	2.73	 

 Source: Dia Bras, 2017 
  

	14.5	Variogram Analysis and Modeling 

 SRK did not conduct any variogram analysis for
this MRE. Previous efforts have noted issues with production of good variograms sufficient for informing kriging equations, and SRK’s efforts produced similar results. As has been described previously, the inherent local variability in the
mineralization and the relationships between the veins make assessing continuity through the use of geostatistics very difficult. In addition, the level of domaining that has resulted in the definition of the individual veins means that there are
fewer samples within each vein to use for spatial statistical analysis. 
 SRK is of the opinion that the orientations of continuity
are established through the mapped or logged interpretation of the veins, and that the ranges of the estimation should be dependent on the drill spacing, ensuring selection of multiple holes/channel samples from different areas to interpolate grade
between these points. 
  

	14.6	Block Model 

 Seven block models were built in Maptek VulcanTM software and are
designed to approximate the orientation of the strike for the major structures contained in each model. The models are rotated about the Z axis (and only the Z axis) and limited to the footprint of the structures contained in each model. The model
extents are shown in Figure 14-9. The models are sub-blocked along the mineralized domain margins. Details regarding the block models and their parameters are shown in
Table 14-7. All models have been sub-blocked to a minimum of 1 m x 1 m x 1 m with the exception of San Nicolas and Santa Rosa Lima, which are sub-blocked to a minimum of 0.5 m x 0.5 m x 0.5 m. 

  
  

					
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 Source: SRK, 2017 

Figure 14-9: Block Model Extents and Positions 

  
  

					
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 Table 14-7: Block Model Details 

 

																	
	Model	 	Origin	 	  Bearing  	 	Extents (m)	  	Numbers of Blocks
	 	X  	 	Y  	 	Z  	 	 	X  	 	Y  	 	Z  	  
	 Promontorio
	 	9800  	 	9700  	 	1380  	 	50  	 	500  	 	350  	 	1000  	  	1,629,411  
	 Eduwiges
	 	10320  	 	8610  	 	1380  	 	50  	 	1000  	 	500  	 	1000  	  	1,065,127  
	
San Nicolas/SRL  
	 	9210  	 	10170  	 	1380  	 	130  	 	2100  	 	700  	 	1000  	  	2,050,942  
	 Minerva
	 	9814  	 	8995  	 	1380  	 	15  	 	900  	 	250  	 	1000  	  	156,997  
	 Durana
	 	10430  	 	7370  	 	1380  	 	160  	 	800  	 	250  	 	1000  	  	149,178  
	 Candelaria
	 	10863  	 	6776  	 	1380  	 	40  	 	800  	 	250  	 	1000  	  	365,489  
	
San Juan
	 	8820  	 	10060  	 	1380  	 	60  	 	500  	 	250  	 	1000  	  	102,640  

 Source: SRK, 2017 
  

	14.7	Estimation Methodology 

 SRK interpolated grades for Ag, Au, Pb, and Zn using an
inverse distance squared estimation method. In general, a nested three-pass estimation was used with higher restrictions on sample selection criteria in the initial shorter search passes, to less restrictive criteria in the subsequent, larger
ellipsoids. Ellipsoid orientations are controlled by the hanging wall and footwall surface of each structure. A flattened “pancake” ellipsoid shape is used to mirror the vein anisotropy, with the orientations varying as a function of the
bearing, dip, and plunge of the structure. These three parameters are estimated in to the block model from the hanging wall and footwall surfaces of each vein, using the varying local anisotropy tool in Vulcan. They ultimately control the
orientation of the search ellipsoid at each block in the model. Maximum numbers of samples per hole in combination with sample minimums of 3 ensure that all estimates in the first and second passes must use more than one hole. 

The variations in the distribution of samples and the issue of clustering of high grade channel samples is dealt with using an octant
restriction on the estimation. This permits a maximum number of samples to be selected from one octant, working with the sample selection criteria to force a minimum number of octants to be used in the estimate. In this way, the amount of data used
to estimate from a single area is limited, and other samples must be used from areas that may not be as clustered. SRK implemented this methodology for the estimation on every domain. 

SRK varied parameters like the minor ellipsoid ranges, sample selection criteria, and octant restrictions based on performance of the
estimation during review of the validation, but notes that the parameters selected are very similar between the individual structures and seem to work well given the wide variety of data spacing. The estimation parameters used for each area are
summarized in Table 14-8. 

  
  

					
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 Table 14-8: Estimation Parameters 

 

																																									
	Promontorio/San Juan	  	ID2	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 
	Pass	  	Bearing (Z)	 	  	Plunge (Y)*	 	  	Dip (X)*	 	 	Major	 	 	Semi-Major	 	 	Minor	 	 	Min	 	 	Max	 	  	Max/DH	 	 	Max/Octant	 
	
1
	  			 	  			 	  			 	 	 	25	 	 	 	25	 	 	 	5	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
2
	  	 	NA	 	  	 	NA	 	  	 	NA	 	 	 	50	 	 	 	50	 	 	 	10	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
3
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	75	 	 	 	75	 	 	 	20	 	 	 	1	 	 	 	16	 	  	 	2	 	 	 	NA	 
		  				  				  				 				 				 				 				 				  				 			
	Eduwiges	  	ID2	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 
	Pass	  	Bearing (Z)	 	  	Plunge (Y)*	 	  	Dip (X)*	 	 	Major	 	 	Semi-Major	 	 	Minor	 	 	Min	 	 	Max	 	  	Max/DH	 	 	Max/Octant	 
	
1
	  			 	  			 	  			 	 	 	25	 	 	 	25	 	 	 	10	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
2
	  	 	NA	 	  	 	NA	 	  	 	NA	 	 	 	50	 	 	 	50	 	 	 	20	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
3
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	75	 	 	 	75	 	 	 	30	 	 	 	1	 	 	 	16	 	  	 	2	 	 	 	NA	 
		  				  				  				 				 				 				 				 				  				 			
	San Nicolas/SRL	  	ID2	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 
	Pass	  	Bearing (Z)	 	  	Plunge (Y)*	 	  	Dip (X)*	 	 	Major	 	 	Semi-Major	 	 	Minor	 	 	Min	 	 	Max	 	  	Max/DH	 	 	Max/Octant	 
	
1
	  			 	  			 	  			 	 	 	25	 	 	 	25	 	 	 	5	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
2
	  	 	NA	 	  	 	NA	 	  	 	NA	 	 	 	50	 	 	 	50	 	 	 	10	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
3
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	100	 	 	 	100	 	 	 	20	 	 	 	1	 	 	 	16	 	  	 	2	 	 	 	NA	 
		  				  				  				 				 				 				 				 				  				 			
	Azucarera	  	ID2	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 
	Pass	  	Bearing (Z)	 	  	Plunge (Y)	 	  	Dip (X)*	 	 	Major	 	 	Semi-Major	 	 	Minor	 	 	Min	 	 	Max	 	  	Max/DH	 	 	Max/Octant	 
	
1
	  			 	  			 	  			 	 	 	25	 	 	 	25	 	 	 	5	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
2
	  	 	315	 	  	 	-60	 	  	 	0	 	 	 	50	 	 	 	50	 	 	 	10	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
3
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	75	 	 	 	75	 	 	 	20	 	 	 	1	 	 	 	16	 	  	 	2	 	 	 	NA	 
		  				  				  				 				 				 				 				 				  				 			
	Candelaria Durana	  	ID2	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 
	Pass	  	Bearing (Z)	 	  	Plunge (Y)*	 	  	Dip (X)*	 	 	Major	 	 	Semi-Major	 	 	Minor	 	 	Min	 	 	Max	 	  	Max/DH	 	 	Max/Octant	 
	
1
	  			 	  			 	  			 	 	 	25	 	 	 	25	 	 	 	10	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
2
	  	 	NA	 	  	 	NA	 	  	 	NA	 	 	 	50	 	 	 	50	 	 	 	20	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
3
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	75	 	 	 	75	 	 	 	30	 	 	 	1	 	 	 	16	 	  	 	2	 	 	 	NA	 
		  				  				  				 				 				 				 				 				  				 			
	Minerva	  	ID2	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 
	Pass	  	Bearing (Z)	 	  	Plunge (Y)*	 	  	Dip (X)*	 	 	Major	 	 	Semi-Major	 	 	Minor	 	 	Min	 	 	Max	 	  	Max/DH	 	 	Max/Octant	 
	
1
	  			 	  			 	  			 	 	 	25	 	 	 	25	 	 	 	10	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
2
	  	 	NA	 	  	 	NA	 	  	 	NA	 	 	 	50	 	 	 	50	 	 	 	20	 	 	 	3	 	 	 	16	 	  	 	2	 	 	 	2	 
	
3
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	75	 	 	 	75	 	 	 	30	 	 	 	1	 	 	 	16	 	  	 	2	 	 	 	2	 

 * Controlled by VLA unfolding using fault block-specific hangingwall and footwall surfaces. 

Source: SRK, 2017 

  
  

					
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	14.8	Model Validation 

 SRK has validated the estimation for each model using a variety
of methods considered to be industry standard. These include a visual comparison of the blocks versus the composites, an assessment of the quality of the estimate, and comparative statistics of block vs. composites. As Ag is the primary commodity by
far at the Cusi Mine, validation is focused primarily on this rather than the other elements. Cursory validation of the other elements was performed to ensure no material overestimation. 

 

	14.8.1	Visual Comparison 

 SRK reviewed the block estimation visually in comparison with
the composite grades to determine any potential for obvious bias. In general, the objective is to identify areas where the composites do not closely approximate the blocks. SRK reviewed all models in this context and noted that they all seem to
match the drilling well. Examples are shown in Figure 14-10 and Figure 14-11. 
  

 
 Source: SRK, 2017 

Figure 14-10: Example of Visual Validation – Promontorio Area 

  
  

					
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 Source: SRK, 2017 

Figure 14-11: Example of Visual Validation – San Nicolas Area 

 

	14.8.2	Estimation Quality 

 SRK reviews the quality of the estimation using a combination
of statistical comparisons of the number of holes, samples, and average distances per estimation pass. As the estimation passes are used to help assign confidence to the estimate, it is helpful to understand how much data is being used in the passes
to have confidence that the passes are ensuring high quality estimates in passes 1 and 2 and complete estimation of the blocks in the ranges in the third pass. 

The example histograms shown in Figure 14-12, Figure
14-13, and Figure 14-14 illustrate that the Promontorio estimation passes are using more data in the first and second passes, at closer spacing than the third pass.
Importantly, the first and second passes are always using more than one hole to estimate, and for the most part are using three to six holes with three to eight composites. Average distances for all estimation passes are only about 26 m, with the
majority of blocks in the first and second passes estimated between 5 and 30 m. 
 SRK is satisfied from this analysis that the
estimations are appropriate for each model. 

  
  

					
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 Source: SRK, 2017 

Figure 14-12: Histogram of Number of Holes - Promontorio 

 
 

 
 Source: SRK, 2017 

Figure 14-13: Histogram of Number of Composites - Promontorio 

  
  

					
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 Source: SRK, 2017 

Figure 14-14: Histogram of Average Distances - Promontorio 

 

	14.8.3	Comparative Statistics 

 SRK compared the estimated block grades to the composite
grades on a vein by vein basis as well as a global basis, assessing for local and global biases which may indicate over-estimation. Means are compared against the raw composite data as well as a nearest neighbor estimate (the theoretical declustered
composite mean). In the case of many of the Cusi veins, the composite grades tend to be biased high due to the concentration of channel samples which are collected predominantly in the mineralized areas. The degree of bias depends on a number of
factors including the relative number of channel samples and the percentage of these samples taken in high grade areas (tends to be higher). Thus, SRK reviewed the estimates in areas featuring higher number of channel samples using a
nearest-neighbor declustered mean to assess the degree of impact of the clustered channel samples on the estimate. 
 An example of a
simple mean comparison at Promontorio is shown in Figure 14-15. This shows that the block estimates (blue) are generally comparing well against the composite means (red). Nearest-neighbor means are shown in
green, and are generally approximating the grades of the ID2 estimate. However, in some cases such as the El Gallo Bajo (EGB) vein, there is a clear bias in the composites due to highly clustered channel samples (more samples, less blocks) vs. a
smaller number of drillholes (less samples, more blocks) that is reflected in both the ID2 estimate and the nearest-neighbor estimate. In other cases, SRK notes slight over-estimations in the structures such as the VBP vein, where a condition may
exist that features a small percentage of higher grade samples influencing a larger amount of blocks, perhaps on the margins of the vein. SRK is of the opinion that this is acceptable, as these blocks are likely estimated in the third pass of
estimation, and would be classified as Inferred. Other multi-vein comparisons are shown in Figure 14-16 and Figure 14-17. 

  
  

					
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 Source: SRK, 2017 

Figure 14-15: Mean Analysis by Domain – Promontorio Ag 

 
 

 
 Source: SRK, 2017 

Figure 14-16: Mean Analysis by Vein Domain – Santa Eduwiges Ag 

  
  

					
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 Source: SRK, 2017 

Figure 14-17: Mean Analysis by Vein Domain – San Nicolas/SRL Ag 

Global comparisons were also conducted for the models against the composites and the nearest neighbor estimations. These were done by
examining histogram distributions as well as global statistics for each model. SRK notes that the comparison to the global sample mean is somewhat misleading due to the number of higher grade channel samples compared to drillholes. Thus, the
comparison is somewhat more meaningful against the nearest neighbor estimate. SRK notes that the bias due to channel sampling is reduced by almost 50% in the declustered nearest neighbor estimate, which closely approximates the mean of the ID2
estimate. These comparisons have been conducted for each area and each metal, and the plots for Ag are shown in Figure 14-18, Figure 14-19, Figure 14-20, Figure 14-21, Figure 14-22, Figure 14-23, and Figure
14-24. 

  
  

					
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 Source: SRK, 2017 

Figure 14-18: Histogram of Block vs. Composites - Promontorio 

  
  

					
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 Source: SRK, 2017 

Figure 14-19: Histogram of Block vs. Composite – Santa Eduwiges 

  
  

					
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 Source: SRK, 2017 

Figure 14-20: Histogram of Block vs. Composite – San Nicolas/SRL 

  
  

					
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 Source: SRK, 2017 

Figure 14-21: Histogram of Block vs. Composites – Minerva 

  
  

					
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 Source: SRK, 2017 

Figure 14-22: Histogram of Block vs. Composites – San Juan 

  
  

					
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 Source: SRK, 2017 

Figure 14-23: Histogram of Block vs. Composites - Candelaria 

  
  

					
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 Source: SRK, 2017 

Figure 14-24: Histogram of Block vs. Composites – Durana 

Overall, SRK is satisfied with the estimations on a vein by vein basis as well as the global basis, although it is noted that there are
opportunities to improve the estimate in selected veins by employing more restrictions on sample selection or using other means to deal with the highly variable data spacing. This is most obvious for the Durana veins, which show a slight
overestimation. 
  

	14.9	Resource Classification 

 Mineral resource classification is a subjective concept,
and industry best practices suggest that resource classification should consider both the confidence in the geological continuity of the mineralized structures, the quality and quantity of exploration data supporting the estimates and the
geostatistical confidence in the tonnage and grade estimates. Appropriate classification criteria should aim at integrating all of these concepts to delineate regular areas of similar resource classification. 

SRK is satisfied that the geological modeling honors the current geological information and knowledge. The location of the samples and
the assay data are sufficiently reliable to support 

  
  

					
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 resource estimation. The sampling information was acquired primarily by core drilling
and channel sampling from mine development. 
 Significant factors affecting the classification include: 

 

	 	●	 	 Lack of historic and consistent QA/QC program; 

 

	 	●	 	 Lack of downhole surveys for most drillholes and measured deviations from planned and actual azimuths;

  

	 	●	 	 Spacing of drilling compared to observed geologic continuity; and 

 

	 	●	 	 Cusi is a producing mine with a successful operating history dating more than 10 years. 

In order to classify mineralization as an Indicated Mineral Resource, “the nature, quality, quantity and distribution of data”
must be “such as to allow confident interpretation of the geological framework and to reasonably assume the continuity” (CIM Definition Standards on Mineral Resources and Mineral Reserves, December 2005). SRK has based this classification
both on the continuity observed in well-drilled areas of the Project, as well as geologic continuity observed from underground exposures of the mineralization. The classification is generally based on the block estimation passes, using the amount of
data and ranges of interpolation from the nested passes to flag blocks, which are then considered to guide a manually digitized polygon to assign the final classification and eliminate local inconsistencies in the block-by-block classification of the estimation pass. In the cases of Promontorio, San Nicolas, and San Juan, a secondary script was employed to better approximate the continuity for classification. An
example of the classification results from San Nicolas is shown in Figure 14-25. 
 The general
category for classification is as follows: 
  

	 	●	 	 Indicated: Blocks estimated in the first or second pass, with continuity along strike between more than two holes.

  

	 	○ 	 	 For Promontorio veins, San Nicolas, and San Juan, a script flagging blocks where the average distance is less than 50 m
and the number of drillholes was more than 2 was used to flag Indicated blocks. 

  

	 	○ 	 	 For the Azucarera area, a script flagging blocks where the average distance is less than 15 m and number of holes
greater than 3 was used to flag Indicated blocks. 

  

	 	●	 	 Indicated blocks are based on the estimation passes or scripts, but are manually flagged using extruded polygons to
eliminate small areas of Inferred within otherwise continuous Indicated mineralization and vice versa. 

  

	 	●	 	 All estimated blocks not assigned to the Indicated category were assigned to the Inferred category.

  
  

					
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 Source: SRK, 2017 

Figure 14-25: Classification Methods and Results – San Nicolas 

  
  

					
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	14.10	Depletion for Mining 

 SRK depleted the block models for previous mining prior to
reporting. A variable called “mined” is coded into all models that contain any areas with existing mine workings. The variable is coded between 0-1, with 0 being completely available for mining and 1
being completely mined out. This variable is used in Vulcan’s reporting tools to eliminate mined tonnes from the resource reporting. 

Two methods have been employed to account for mined areas. First, the 3D asbuilt mine workings were provided to SRK by Dia Bras for all
surveyed areas. SRK noted that these are locally reasonable and well-surveyed, but are also inaccurate in other areas, where the channel samples do not plot inside of the surveyed workings. It is suspected that poor survey practices are to blame for
these discrepancies. Regardless, the 3D solids were used to complete an initial pass at depleting the models. An example of the surveyed 3D workings for the Promontorio area is shown in Figure 14-26. 

 
 

 
 Source: SRK, 2017 

Figure 14-26: 3D As-built Shapes - Promontorio

 In addition to the surveyed workings, Dia Bras also provided polygons projected onto long sections of each vein, which
delineate areas where mining has occurred that have not been consistently surveyed. Many of these are historical. The differences between the surveyed workings and the provided polygons are dramatic, as noted in Figure
14-27. These polygons were made into extruded 3D solids, and the veins were flagged as mined = 1 within the extruded polygons. 

All mined solids and polygon projections are actualized to January 31, 2017. 

  
  

					
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 Note: Green shapes are surveyed 3D as-builts. Red areas are
blocks mined using extruded 3D polygons. 
 Source: SRK, 2017 

Figure 14-27: Example of Mined Polygons vs. 3D
As-builts 
  

	14.11	Mineral Resource Statement 

 CIM Definition Standards for Mineral Resources and
Mineral Reserves (December 2005) defines a mineral resource as: 
 “A concentration or occurrence of diamonds, natural solid
inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable

  
  

					
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prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological
evidence and knowledge”. 
 The “reasonable prospects for economic extraction” requirement generally implies that
the quantity and grade estimates meet certain economic thresholds and that the Mineral Resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recoveries.
Costs for mining and processing are taken from data provided by Dia Bras for their current underground mining operation. Costs are broken down as follows; Mining US$26.74/t, Processing US$16.63/t, and General and Administrative US$3.40/t. These
costs aggregate to US$46.77. Assuming a price for Ag of US$18.30/oz (US$0.59/g), and an average Ag recovery of 74%, this cost equates to a grade of about 110 g/t Ag. SRK has reported the mineral resource for the Cusi mine at this cut-off. 
 The January 31, 2017, consolidated mineral resource statement for the Cusi Mine area
is presented in Table 14-9. 
 Table
14-9: Cusi Mine Mineral Resource Estimate as of January 31, 2017– SRK Consulting (U.S.), Inc. 
  

													
	Source	  	Class  	 	Ag (g/t)  	 	Au (g/t)  	 	Pb (%)  	 	Zn (%)  	 	Tonnes (000’s)  
	
Promontorio
	  	

	 	223  	 	0.08  	 	0.32  	 	0.38  	 	692  
	
Eduwiges
	  	 	226  	 	0.36  	 	1.63  	 	1.52  	 	378  
	
SRL
	  	 	206  	 	0.14  	 	0.23  	 	0.22  	 	290  
	
San Nicolas
	  	 	300  	 	0.11  	 	0.32  	 	0.36  	 	344  
	
San Juan
	  	 	227  	 	0.35  	 	0.09  	 	0.05  	 	45  
	
Minerva
	  	 	202  	 	0.14  	 	0.21  	 	0.22  	 	106  
	
Candelaria
	  	 	376  	 	0.14  	 	0.18  	 	0.29  	 	44  
	
Durana
	  	 	226  	 	0.06  	 	0.05  	 	0.02  	 	91  
	 Total
Indicated
	  	 	237  	 	0.16  	 	0.53  	 	0.53  	 	1,990  
	 	  	 	 	 	 	 	 	 	 	 	 	 
	Source	  	Class  	 	Ag (g/t)  	 	Au (g/t)  	 	Pb (%)  	 	Zn (%)  	 	Tonnes (000’s)  
	
Promontorio
	  	

	 	220  	 	0.12  	 	0.37  	 	0.60  	 	265  
	
Eduwiges
	  	 	171  	 	0.22  	 	2.03  	 	1.68  	 	45  
	
SRL
	  	 	269  	 	0.15  	 	0.28  	 	0.31  	 	189  
	
San Nicolas
	  	 	387  	 	0.15  	 	0.54  	 	0.65  	 	599  
	
San Juan
	  	 	153  	 	0.03  	 	0.08  	 	0.06  	 	4  
	
Minerva
	  	 	226  	 	0.04  	 	0.17  	 	0.30  	 	30  
	
Candelaria
	  	 	151  	 	0.19  	 	0.60  	 	1.23  	 	68  
	
Durana
	  	 	126  	 	0.01  	 	0.22  	 	0.13  	 	2  
	
Total Indicated
	  	 	305  	 	0.14  	 	0.51  	 	0.64  	 	1,200  

			
	 (1)
	  	 Mineral resources are reported inclusive of ore reserves. Mineral resources are not ore reserves and do not have demonstrated
economic viability. All figures rounded to reflect the relative accuracy of the estimates. Gold, silver, lead and zinc assays were capped where appropriate.

	 (2)
	  	 Mineral resources are reported at a single cut-off grade of 110 g/t Ag based on metal price
assumptions*, metallurgical recovery assumptions, mining costs (US$26.74/t), processing costs (US$16.63/t), and general and administrative costs (US$3.40/t).

	 * Metal price assumptions considered for the calculation of the cut-off grade are: Silver (Ag): US$/oz 18.30.

	 The resources were estimated by SRK. Matthew Hastings, M.Sc., PGeo, MAusIMM #314693 of SRK, a Qualified Person,
performed the resource calculations for Bolivar.

  
  

					
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	14.12	Mineral Resource Sensitivity 

 SRK has generated grade-tonnage charts which
illustrate the fluctuations of tonnage and Ag grade as a function of the cut-off. These charts are shown in Figure 14-28, Figure
14-29, Figure 14-30, Figure 14-31, Figure 14-32, Figure
14-33 and Figure 14-34. 
 SRK notes that the Cusi Mine
is very sensitive to the cut-off, in both Indicated and Inferred mineralization. 
  

 
 Source: SRK, 2017 

Figure 14-28: Grade-Tonnage Chart – Promontorio Area 

  
  

					
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 Source: SRK, 2017 

Figure 14-29: Grade-Tonnage Chart – Santa Eduwiges Area 

  
  

					
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 Source: SRK, 2017 

Figure 14-30: Grade Tonnage Chart – San Nicolas/SRL 

  
  

					
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 Source: SRK, 2017 

Figure 14-31: Grade Tonnage Chart – Minerva Area 

  
  

					
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 Source: SRK, 2017 

Figure 14-32: Grade Tonnage Chart – Candelaria 

  
  

					
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 Source: SRK, 2017 

Figure 14-33: Grade Tonnage Chart – Durana 

  
  

					
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 Source: SRK, 2017 

Figure 14-34: Grade Tonnage Chart – San Juan 

 

	14.13	Relevant Factors 

 SRK is not aware of any additional relevant factors that would
impact the statement of mineral resources at this time. 

  
  

					
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	15	Mineral Reserve Estimate 

 SRK has not estimated mineral reserves as a part of this
study. 

  
  

					
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	16	Mining Methods 

 SRK has not conducted any work regarding mining methods for this
study. 

  
  

					
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	17	Recovery Methods 

 SRK has not assessed any part of the recovery methods beyond
those stated in Section 11 as a part of this study. 

  
  

					
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	18	Project Infrastructure 

 SRK has not reviewed the project infrastructure as a part
of this study. 

  
  

					
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	19	Market Studies and Contracts 

 SRK has not conducted any market studies or reviews
of purchase/sale contracts as a part of this study. 

  
  

					
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	20	Environmental Studies, Permitting and Social or Community Impact 

  

	20.1	Environmental Studies and Background Information 

 SRK’s environmental
specialist did not conduct a site visit of the Cusi Mine or Malpaso Mill operations. As such, the following information is predicated on a review of available documentation and direct communications with the operator. 

 

	20.2	Environmental Studies and Liabilities 

 The Cusi Project area is located within the
municipality of Cusihuiriachic in the central portion of Chihuahua State, Mexico, approximately 135 km from the City of Chihuahua. The Project area encompasses 11,657 hectares over a range of elevation of 1,950 to 2,460 meters above sea level (masl)
in the Sierra Madre Occidental Mountain Range. Details of environmental studies completed for these operations was not available for this review. 

Based on communications with representatives from Sierra Metals, it does not appear that there are currently any known environmental
issues that could materially impact the extraction and beneficiation of mineral resources or reserves. However, given the pre-regulation vintage of the original tailings storage facilities (piles), the
likelihood is high that these facilities are not underlain by low-permeability liners, increasing the risk of a long-term liability of metals leaching and groundwater contamination. Sierra Metals intends to
cover these facilities during decommissioning in order to minimize this risk. (Gustavson, 2014) 
  

	20.3	Environmental Management 

  

	20.3.1	 Tailings Management 

Tailings generated from the milling operations are stored in two tailings piles in the vicinity of the Malpaso Mill. SRK is uncertain if
these older disposal areas are underlain by low-permeability liner material, as the Malpaso Mill has been in operation since the 1970s, prior to the promulgation of environmental laws governing extractive
mineral wastes. At the current time, no environmental permit is necessary for operation of the Malpaso Mill. At closure, it is Sierra Metals’ intent to cover these tailings piles. 

In 2015, Sierra Metals initiated construction of a new tailings storage facility. The new impoundment is located immediately adjacent to
the former tailings pile(s). SRK understands that the expanded capacity of the new impoundment should allow an additional four years of operational capacity at the current processing rates. In the dry climate of the Chihuahuan desert, the need for
additional water resources has led Sierra Metals to consider dry-stack tailings disposal in this new facility. This new impoundment required permitting under the current regulatory regime, including
environmental impact analyses. 
  

	20.3.2	Waste Rock Management 

 Waste rock generated from the underground workings at
Promontorio and Santa Eduwiges is deposited near the entrances of the respective mines. Management of these waste rock piles does not require permits. 

  
  

					
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	20.3.3	Geochemistry 

 Geochemical characterization data for the waste, ore and tailings
generated at the Cusi Mine and Malpaso Mill, respectively, were not available for this review. 
  

	20.4	Mexican Environmental Regulatory Framework 

  

	20.4.1	Mining Law and Regulations 

 Mining in Mexico is regulated through the Mining Law,
approved on June 26, 1992 and amended by decree on December 24, 1996, Article 27 of the Mexican Constitution. 
 Article 6 of
the Mining Law states that mining exploration; exploitation and beneficiation are public utilities and have preference over any other use or utilization of the land, subject to compliance with laws and regulations. 

Article 19 specifies the right to obtain easements, the right to use the water flowing from the mine for both industrial and domestic
use, and the right to obtain a preferential right for a concession of the mine waters. 
 Articles 27, 37 and 39 rule that exploration;
exploitation and beneficiation activities must comply with environment laws and regulations and should incorporate technical standards in matters such as mine safety, ecological balance and environmental protection. 

The Mining Law Regulation of February 15, 1999 repealed the previous regulation of March 29, 1993. Article 62 of the regulation
requires mining projects to comply with the General Environmental Law, its regulations, and all applicable norms. 
  

	20.4.2	General Environmental Laws and Regulations 

 Mexico’s environmental protection
system is based on the General Environmental Law known as Ley General del Equilibrio Ecológico y la Protección al Ambiente - LGEEPA (General Law of Ecological Equilibrium and the Protection of the Environment), approved on
January 28, 1988 and updated December 13, 1996. 
 The Mexican federal authority over the environment is the
Secretaría de Medio Ambiente y Recursos Naturales - SEMARNAT (Secretariat of the Environment and Natural Resources). SEMARNAT, formerly known as SEDESOL, was formed in 1994, as the Secretaría de Medio Ambiente Recursos
Naturales y Pesca (Secretariat of the Environment and Natural Resources and Fisheries). On November 30th, 2000, the Federal Public Administration Law was amended giving rise to SEMARNAT. The
change in name corresponded to the movement of the fisheries subsector to the Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación - SAGARPA (Secretariat of Agriculture, Livestock, Rural
Development, Fisheries and Food), through which an increased emphasis was given to environmental protection and sustainable development. 

SEMARNAT is organized into a number of sub-secretariats and the following main divisions: 

 

	 	●	 	 INE – Instituto Nacional de Ecología (National Institute of Ecology), an entity responsible for planning,
research and development, conservation of national protection areas and approval of environmental standards and regulations. 

  
  

					
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	 	●	 	 PROFEPA - Procuraduría Federal de Protección al Ambiente (Federal Attorney General for the Protection of
the Environment) responsible for law enforcement, public participation and environmental education. 

  

	 	●	 	 CONAGUA – Comisión Nacional del Agua (National Water Commission), responsible for assessing fees related to
water use and discharges. 

  

	 	●	 	 Mexican Institute of Water Technology. 

 

	 	●	 	 CONANP – Comisión Nacional de Areas Naturales Protegidas (National Commission of Natural Protected Areas).

 The federal delegation or state agencies of SEMARNAT are known as Consejo Estatal de Ecología –
COEDE (State Council of Ecology). 
 PROFEPA is the federal entity in charge of carrying out environmental inspections and negotiating
compliance agreements. Voluntary environmental audits, coordinated through PROFEPA, are encouraged under the LGEEPA. 
 Under LGEEPA, a
number of regulations and standards related to environmental impact assessment, air and water pollution, solid and hazardous waste management and noise have been issued. LGEEPA specifies compliance by the states and municipalities, and outlines the
corresponding duties. 
 Applicable regulations under LGEEPA include: 

 

	 	●	 	 Regulation to LGEEPA on the Matter of Environmental Impact Evaluations, May 30, 2000; 

 

	 	●	 	 Regulation to LGEEPA on the Matter of Prevention and Control of Atmospheric Contamination, November 25, 1988;

  

	 	●	 	 Regulation to LGEEPA on the Matter of Environmental Audits, November 29, 2000; 

 

	 	●	 	 Regulation to LGEEPA on Natural Protected Areas, November 20, 2000; 

 

	 	●	 	 Regulation to LGEEPA on Protection of the Environment Due to Noise Contamination, December 6, 1982;

  

	 	●	 	 Regulation to LGEEPA on the Matter of Hazardous Waste, November 25, 1988. 

Mine tailings are listed in the Regulation to LGEEPA on the Matter of Hazardous Waste. Norms include: 

 

	 	●	 	 Norma Oficial Mexicana
(NOM)-CRP-001-ECOL, 1993, which establishes the characteristics of hazardous wastes, lists the wastes, and provides threshold
limits for determining its toxicity to the environment. 

  

	 	●	 	
NOM-CRP-002-ECOL, 1993
establishes the test procedure for determining if a waste is hazardous. 

  

	 	●	 	 On September 13, 2004, SEMARNAT published the final binding version of its new standard on mine tailings and mine
tailings dams, NOM-141-SEMARNAT-2003. The new rule has been renamed since the draft version was published in order to better reflect the scope of the new regulation.
This NOM sets out the procedure for characterizing tailings, as well as the specifications and criteria for characterizing, preparing, building, operating, and closing a mine tailings dam. This very long (over 50 pages) and detailed standard sets
out the new criteria for characterizing tailings as hazardous or non-hazardous, including new test methods. A series of technical annexes address everything from waste classification to

  
  

					
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construction of the dams. The rule is applicable to all generators of non-radioactive tailings and to all dams constructed after this NOM goes into effect.

  

	 	●	 	 Existing tailings dams will have to comply with the new standards on post-closure. The NOM formally went into effect
sixty (60) days after its publication date. 

 PROFEPA “Clean Industry”

 The Procuraduría Federal de Protección al Ambiente (the enforcement portion of Mexico’s Environmental
Agency, referred to as PROFEPA), administers a voluntary environmental audit program and certifies businesses with a “Clean Industry” designation if they successfully complete the audit process. The voluntary audit program was established
by legislative mandate in 1996 with a directive for businesses to be certified once they meet a list of requirements including the implementation of international best practices, applicable engineering and preventative corrective measures. 

In the Environmental Audit, firms contract third-party PROFEPA-accredited auditors, considered to be experts in fields such as risk
management and water quality, to conduct the audit process. During this audit, called “Industrial Verification,” auditors determine if facilities are in compliance with applicable environmental laws and regulations. If a site passes, it
receives designation as a “Clean Industry” and is able to utilize the Clean Industry logo as a message to consumers and the community that it fulfills its legal responsibilities. If a site does not pass, the government can close part, or
all of a facility if it deems it necessary. However, PROFEPA wishes to avoid such extreme actions and instead prefers to work with the business to create an “Action Plan” to correct problem areas. 

The Action Plan is established between the government and the business based on suggestions of the auditor from the Industrial
Verification. It creates a time frame and specific actions a site needs to take in order to be in compliance and solve existing or potential problems. An agreement is then signed by both parties to complete the process. When a facility successfully
completes the Action Plan, it is then eligible to receive the Clean Industry designation. 
 PROFEPA believes this program fosters a
better relationship between regulators and industry, provides a green label for businesses to promote themselves and reduces insurance premiums for certified facilities. The most important aspect, however, is the assurance of legal compliance
through the use of the Action Plan, a guarantee that ISO 14001 and other Environmental Management Systems cannot make. 
 According
to Sierra Metals, the company has initiated the PROFEPA “Clean Industry” application process for the Malpaso Mill. The site is currently preparing for the third-party external audit, and anticipated obtaining the certification in 2017.

 SIGA 

Many companies in Mexico adopt the corporate policy, Sistema Integral de Gestión Ambiental (SIGA) (Integral System of
Environmental Management), for the protection of the environmental and prevention of adverse environmental impacts. SIGA emphasizes a commitment to environmental protection along with sustainable development, as well as a commitment to strict
adherence to environmental legislation and regulation and a process of continuous review and improvement of company policies and programs. The companies continue to improve their commitments to 

  
  

					
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environmental stewardship through the use of the latest technologies that are proven, available, and economically viable. 

SRK is not aware if the Cusi operations participate in the SIGA program at this time, but recommends that they do so. 

Other environmental/social industry programs that the mine could participate in include: 

 

	 	●	 	 Seeking accreditation under the voluntary self-management program for health and safety with the Mexican Department of
Labor and Social Welfare (PASST); and 

  

	 	●	 	 Strive to receive the Social Responsible Company (ESR) Distinctive, which is awarded by the Mexican Center of
Philanthropy. 

  

	20.4.3	Other Laws and Regulations 

 Water Resources 

Water resources are regulated under the National Water Law, December 1, 1992 and its regulation, January 12, 1994 (amended by
decree, December 4, 1997). In Mexico, ecological criteria for water quality is set forth in the Regulation by which the Ecological Criteria for Water Quality are Established,
CE-CCA-001/89, dated December 2, 1989. These criteria are used to classify bodies of water for suitable uses including drinking water supply, recreational
activities, agricultural irrigation, livestock use, aquaculture use and for the development and preservation of aquatic life. The quality standards listed in the regulation indicate the maximum acceptable concentrations of chemical parameters and
are used to establish wastewater effluent limits. Ecological water quality standards defined for water used for drinking water, protection of aquatic life, agricultural irrigation and irrigation water and livestock watering are listed. 

Discharge limits have been established for particular industrial sources, although limits specific to mining projects have not been
developed. NOM-001-ECOL-1996, January 6, 1997, establishes maximum permissible limits of contaminants in wastewater discharges to surface water and national
“goods” (waters under the jurisdiction of the CONAGUA). 
 Daily and monthly effluent limits are listed for discharges to
rivers used for agricultural irrigation, urban public use and for protection of aquatic life; for discharges to natural and artificial reservoirs used for agricultural irrigation and urban public use; for discharges to coastal waters used for
recreation, fishing, navigation and other uses and to estuaries; and discharges to soils and to wetlands. Effluent limitations for discharges to rivers used for agricultural irrigation, for protection of aquatic life and for discharges to reservoirs
used for agricultural irrigation have also been established. 
 The Cusi operations currently consume water recovered from the
underground workings for process water and support of surface operations. Fresh make-up water is sourced from a well located approximately two kilometers away on private property. A contract with the landowner
allows Cusi to pump water to a surface storage tank, and subsequently to the plant site for use. Make-up water consumption is approximately 1.0
m3/t of ore. Potable water is trucked in from off site. 

Ecological Resources 

In 2000, the National Commission of Natural Protected Areas (CONANP) (formerly CONABIO, the National Commission for Knowledge and Use of
Biodiversity) was created as a decentralized entity 

  
  

					
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of SEMARNAT. As of November 2001, 127 land and marine Natural Protected Areas had been proclaimed, including biosphere reserves, national parks, national monuments, flora and fauna reserves, and
natural resource reserves. 
 Ecological resources are protected under the Ley General de Vida Silvestre (General Wildlife Law).
(NOM)-059-ECOL-2000 specifies protection of native flora and fauna of Mexico. It also includes conservation policy, measures and actions, and a generalized methodology
to determine the risk category of a species. 
 Other ecological laws and regulations that may affect the Cusi operations include: 

 

	 	●	 	 Forest Law, December 22, 1992, amended November 31, 2001, and the Forest Law Regulation, September 25,
1998. 

  

	 	●	 	 Fisheries Law, June 25, 1992, and the Fisheries Law Regulations, September 29, 1999. 

 

	 	●	 	 Federal Ocean Law, January 8, 1986 

Regulations Specific to Mining Projects 

All aspects related to Mine Safety and Occupational Health are regulated in Mexico by NOM-023-STPS-2003 issued by the Secretariat of Labor. Appendix D of this regulation refers specifically to ventilation for underground mines, such as Bolívar
Mine, and establishes all the requirement underground mines should comply with, which are subject of regular inspections. 
 New
tailings dams are subject to the requirements of NOM-141-SEMARNAT-2003, Standard that Establishes the Requirements for the Design, Construction and Operation of Mine
Tailings Dams. Under this regulation, studies of hydrogeology, hydrology, geology and climate must be completed for sites considered for new tailings impoundments. If tailings are classified as hazardous under NOM-CRP-001-ECOL/93, the amount of seepage from the impoundment must be controlled if the facility has the potential to affect groundwater. Environmental monitoring of
groundwater and tailings pond water quality and revegetation requirements is specified in the regulations. 
 NOM-120-ECOL-1997, November 19, 1998 specifies environmental protection measures for mining explorations activities in temperate and dry climate zones that would affect
xerophytic brushwood (matorral xerofilo), tropical (caducifolio) forests, or conifer or oak (encinos) forests. The regulation applies to “direct” exploration projects defined as drilling, trenching, and underground
excavations. A permit from SEMARNAT is required prior to initiating activities and SEMARNAT must be notified when the activities have been completed. Development and implementation of a Supervision Program for environmental protection and
consultation with CONAGUA is required if aquifers may be affected. Environmental protection measures are specified in the regulations, including materials management, road construction, reclamation of disturbance and closure of drillholes. Limits on
the areas of disturbance by access roads, camps, equipment areas, drill pads, portals, trenches, etc. are specified. 
  

	20.4.4	Expropriations 

 Expropriation of ejido and communal properties is subject to the
provisions of agrarian laws. 
  

	20.4.5	NAFTA 

 Canada, the United States and Mexico participate in the North American Free
Trade Agreement (NAFTA). NAFTA addresses the issue of environmental protection, but each country is responsible 

  
  

					
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for establishing its own environmental rules and regulations. However, the three countries must comply with the treaties between themselves; and the countries must not reduce their environmental
standards as a means of attracting trade. At this time, SRK is not aware of any impacts to the Cusi operations from the requirements of NAFTA. 
  

	20.4.6	International Policy and Guidelines 

 International policies and/or guidelines that
may be relevant to the Bolívar Mine include: 
  

	 	●	 	 International Finance Corporation (Performance Standards) – social and environmental management planning; and

  

	 	●	 	 World Bank Guidelines (Operational Policies and Environmental Guidelines). 

These items were not specifically identified and included in SRK’s environmental scope of work; however, given that Sierra Metals is
a Canadian entity, general corporate policy tends to be in compliance with IFC, World Bank and Equator Principles. 
 SRK recommends
that a more comprehensive audit of the Cusi Mine be conducted with respect to these guidelines and performance standards. 
  

	20.4.7	Required Permits and Status 

 According to Sierra Metals, the Cusi Mine and Malpaso
Mill are exempt from a number of permit requirements since the operations predate the environmental laws. Sierra has received formal recognition from SEMARNAT of the permit exemption for the Malpaso Mill and the Cusi Mine operations. 

The required permits for continued operation at the Cusi Mine and Malpaso Mill, including exploration of the site, have been obtained.
SRK has not independently verified the current status of all the site permits. At this time, SRK has not been made aware of any outstanding permits or any non-compliance issues that would affect the ability of
the operator to extract rock, process ore, and/or disposal of tailings. The following information regarding the permits was provided by Sierra Metals. 

  
  

					
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 Table 20-1: Permit and Authorization Requirements for the
Cusi Mine and Malpaso Mill 
  

															
	Permit	 	  	 	  	 	Agency	 	  	 	  	 	 Approval Date
 (or
anticipated Approval Date)
	 	  
	 Mining Law

Concession
	 	 	 	 	 	 President via the Minister
 of
Commerce and
 Industrial and the General
 Directorate of Mines

Promotion - Mexican
 Secretaría de Economía
	 	 	 	 	 	See Table 20-2	 	 
	 Manifestación de

Impacto Ambiental
 (MIA) -

Environmental
 Impact Statement
	 	 	 	 	 	 Secretaría de Medio

Ambiente y Recursos
 Naturales (SEMARNAT) -

Secretariat of the
 Environment and Natural

Resources
	 	 	 	 	 	 The following concessions are exempt from having to apply for the

MIA, according to the document SG.IR.08-20141 / 93 from

SEMARNAT dated May 2014 that recognizes the exception
 because Dia Bras proved that the
mining concessions operated
 prior to the 1988 regulations. Any other concession will need a MIA

or prove operation prior to this date:

• San Bartolo (Title 150395),

• La India (Title 150569),

• Promontorio (Title 163582),

• La Consolidada (Title 165102),

• La Perla (Title 165968),

• El Milagro (Title 163580),

• La Ilusión (Title 166611),

• La Rumorosa (Title 163512),

• Los Pelones (Title 166981),

• La Hermana de la India (Title 180030),

• Nueva Santa María (Title 182002),

• La Gloria (Title 179400),

• La Perlita (Title 163565).
	 	 
	 Análisis de Riesgo -

Risk Analysis Report
	 	 	 	 	 	Dirección Estatal de Proteccion Civil Chihuahua (with assistance from external consultant)	 	 	 	 	 	 A risk analysis is in process by La dirección de Protección Civil de

Gobierno del estado de Chihuahua. It is focused on the security in
 the mine and
the use of explosives. Resolution is expected in the
 coming weeks;
 In August 2013,
an external consultant (Rodrigo de la Garza
 Aguillar) presented a geohydrological and geotechnical study on the

San Bartolo Mine; and
 In December 2016 an external constant (Ing. Alfredo
Rodriguez)
 presented a Geo-hydrological study for the San Bartolo and Santa

Eduwiges mines.
	 	 
	 Operating License

(and Air Quality
 Permit)
	 	 	 	 	 	SEMARNAT	 	 	 	 	 	 In the Cusihuiriachi mines, there are no atmospheric emissions. At

the Malpaso mill, SEMARNAT issued a Licencia Unica Ambiental
 (unique
environmental license) dated August 2013.
	 	 
	 Cambio de Uso de

Suelo - Land Use
 Change Permit
	 	 	 	 	 	SEMARNAT	 	 	 	 	 	 The following concessions are exempt from having to apply for the

Cambio de Uso de Suelo, according to the document SG.IR.08-

20141 / 93 from SEMARNAT dated May 2014 that recognizes the
 exception because Dia Bras
proved that the mining concessions
 operated prior to the 1988 regulations. Any other concession will

need the Cambio de Uso de Suelo permit or prove that it was in
 operation prior
to that year:
 • San Bartolo (Title 150395),

• La India (Title 150569),

• Promontorio (Title 163582),

• La Consolidada (Title 165102),

• La Perla (Title 165968),

• El Milagro (Title 163580),

• La Ilusión (Title 166611),

• La Rumorosa (Title 163512),

• Los Pelones (Title 166981),

• La Hermana de la India (Title 180030),

• Nueva Santa María (Title 182002),

• La Gloria (Title 179400),

• La Perlita (Title 163565).
	 	 
	 Concession Title for

Underground Water
 Extraction
	 	 	 	 	 	 Comisión Nacional del

Agua (CONAGUA) -
 National Water

Commission)
	 	 	 	 	 	 Mine dewatering is regulated under the Mining Law and no permit is

required to extract mine water.
	 	 
	 Wastewater

Discharge Permit
	 	 	 	 	 	CONAGUA	 	 	 	 	 	 For the Malpaso plant, a discharge permit

(02CHI141178/34EMDL15) was issued in August 2015.
	 	 

  
  

					
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	Permit	 	  	 	  	 	Agency	 	  	 	  	 	Approval Date
(or anticipated Approval Date)	 	  
	 	 	 	 	 	 	 	 	 	 	 	 	For the Cusi mines, CONAGUA documents No B00.E.22.4.-420 and No B00.E.22.4.-419, dated November 12, 2014,
exempt Dia Bras from requiring discharge permits, as the water does not contain contaminants or is used in industrial processes.	 	 
	Hazardous Waste Registration	 	 	 	 	 	SEMARNAT	 	 	 	 	 	The last update to this registration was November 04, 2016.	 	 
	Explosives Use Permit	 	 	 	 	 	Secretaría de la
Defensa
Nacional
(SEDENA)	 	 	 	 	 	Permit Number 4599 – last updated December 1, 2016. Expires in 1 year.	 	 

 Source: Permit information provided by Sierra Metals, and not independently verified by SRK 

  
  

					
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 Table 20-2: Cusi Mine Concessions 

 

																									
	Holding Company	  	Name	 	Type	 	Area (ha)	 	 	File No.	 	 	Title No.	 	 	Enrolled	 	 	Expiry	 
	 Dia Bras Mexicana
	  	Base*	 	Exploration    	 	 	23.8090	 	 	 	016/30975	 	 	 	217584	 	 	 	8/6/2002	 	 	 	8/5/1952	 
	 Dia Bras Mexicana
	  	Flor de Mayo*	 	Exploration	 	 	14.4104	 	 	 	016/32699	 	 	 	224700	 	 	 	5/31/2005	 	 	 	5/30/1955	 
	 Dia Bras Mexicana
	  	Base 1	 	Exploration	 	 	3.9276	 	 	 	016/33729	 	 	 	227657	 	 	 	7/28/2006	 	 	 	7/27/1956	 
	 Dia Bras Mexicana
	  	Santa Rita	 	Exploration	 	 	16.6574	 	 	 	016/34624	 	 	 	229081	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	Sayra I	 	Exploration	 	 	7.2195	 	 	 	016/34623	 	 	 	229064	 	 	 	2-3-20070	 	 	 	3/1/1957	 
	 Dia Bras Mexicana
	  	San Miguel	 	Exploration	 	 	96.2748	 	 	 	016/33730	 	 	 	229166	 	 	 	3/21/2007	 	 	 	3/20/1957	 
	 Dia Bras Mexicana
	  	San Miguel I	 	Exploration	 	 	98.6218	 	 	 	016/33731	 	 	 	228484	 	 	 	11/24/2006	 	 	 	11/23/1956	 
	 Dia Bras Mexicana
	  	San Miguel II	 	Exploration	 	 	100.00	 	 	 	016/33732	 	 	 	227363	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	San Miguel III	 	Exploration	 	 	100.00	 	 	 	016/33733	 	 	 	227364	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	San Miguel IV	 	Exploration	 	 	96.9850	 	 	 	016/33734	 	 	 	227485	 	 	 	6/27/2006	 	 	 	6/26/1956	 
	 Dia Bras Mexicana
	  	San Miguel VI	 	Exploration	 	 	98.9471	 	 	 	016/34642	 	 	 	228058	 	 	 	9/29/2006	 	 	 	9/28/1956	 
	 Dia Bras Mexicana
	  	San Miguel VII	 	Exploration	 	 	52.6440	 	 	 	016/34640	 	 	 	229084	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	Saira	 	Exploration	 	 	16.00	 	 	 	016/33735	 	 	 	227365	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	Manuel	 	Exploration	 	 	100.00	 	 	 	016/33714	 	 	 	227360	 	 	 	6/14/2006	 	 	 	6/13/1956	 
	 Dia Bras Mexicana
	  	Santa Rita Fracc. I	 	Exploration	 	 	9.00	 	 	 	016/34624	 	 	 	229082	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	Santa Rita Fracc. II	 	Exploration	 	 	8.8141	 	 	 	016/34624	 	 	 	229083	 	 	 	3/6/2007	 	 	 	3/5/1957	 
	 Dia Bras Mexicana
	  	San Miguel V	 	Exploration	 	 	6.5328	 	 	 	016/34641	 	 	 	227984	 	 	 	9/26/2006	 	 	 	9/25/1956	 
	 Dia Bras Mexicana
	  	San Juan	 	Exploration	 	 	12.3587	 	 	 	016/31500	 	 	 	218657	 	 	 	12/3/2002	 	 	 	12/2/1952	 
	 Dia Bras Mexicana
	  	San Juan Fracc. A	 	Exploration	 	 	0.1727	 	 	 	016/31500	 	 	 	218658	 	 	 	12/3/2002	 	 	 	12/2/1952	 
	 Dia Bras Mexicana
	  	San Juan Fracc. B	 	Exploration	 	 	0.1469	 	 	 	016/31500	 	 	 	218659	 	 	 	12/3/2002	 	 	 	12/2/1952	 
	 Dia Bras Mexicana
	  	Norma	 	Exploration	 	 	12.2977	 	 	 	016/31700	 	 	 	218851	 	 	 	1/22/2003	 	 	 	1/21/1953	 
	 Dia Bras Mexicana
	  	Norma 2	 	Exploration	 	 	1.7561	 	 	 	016/31715	 	 	 	219283	 	 	 	2/25/2003	 	 	 	2/24/1953	 
	 Dia Bras Mexicana
	  	Cima	 	Exploration	 	 	9.9637	 	 	 	016/30957	 	 	 	217231	 	 	 	7/2/2002	 	 	 	7/1/1952	 
	 Dia Bras Mexicana
	  	Manuel 1 Fracc A	 	Exploration	 	 	1.1858	 	 	 	016/34849	 	 	 	229747	 	 	 	6/13/2007	 	 	 	6/12/1957	 
	 Dia Bras Mexicana
	  	Manuel 1 Fracc B	 	Exploration	 	 	1.3425	 	 	 	016/34849	 	 	 	229748	 	 	 	6/13/2007	 	 	 	6/12/1957	 
	 Dia Bras Mexicana
	  	Alma	 	Exploration	 	 	80.4612	 	 	 	Valid	 	 	 	227982	 	 	 	9/25/2006	 	 	 	9/25/1956	 
	 Dia Bras Mexicana
	  	San Bartolo	 	Exploitation	 	 	6.00	 	 	 	Valid	 	 	 	150395	 	 	 	9/30/1968	 	 	 	9/29/2018	 
	 Dia Bras Mexicana
	  	Marisa	 	Exploration	 	 	5.08	 	 	 	Valid	 	 	 	220146	 	 	 	6/17/2003	 	 	 	6/16/1953	 
	 Dia Bras Mexicana
	  	La India	 	Exploitation	 	 	15.76	 	 	 	Valid	 	 	 	150569	 	 	 	10/29/1968	 	 	 	10/27/2018	 
	 Dia Bras Mexicana
	  	Alma	 	Exploration	 	 	87.2041	 	 	 	Valid	 	 	 	227650	 	 	 	7/27/2006	 	 	 	7/27/1956	 
	 Dia Bras Mexicana
	  	Alma I	 	Exploration	 	 	106.00	 	 	 	Valid	 	 	 	226816	 	 	 	3/9/2006	 	 	 	3/9/1956	 
	 Dia Bras Mexicana
	  	Alma II	 	Exploration	 	 	91.00	 	 	 	Valid	 	 	 	227651	 	 	 	7/27/2006	 	 	 	7/27/1956	 
	 Dia Bras Mexicana
	  	Nueva Recompensa	 	Exploitation	 	 	21.00	 	 	 	Valid	 	 	 	195371	 	 	 	9/15/1992	 	 	 	9/13/1942	 
	 Dia Bras Mexicana
	  	Monterrey	 	Exploitation	 	 	5.4307	 	 	 	Valid	 	 	 	183820	 	 	 	11/22/1988	 	 	 	11/21/1938	 
	 Dia Bras Mexicana
	  	Nueva Santa Marina	 	Exploitation	 	 	16.00	 	 	 	Valid	 	 	 	182002	 	 	 	4/8/1988	 	 	 	4/7/1938	 
	 Dia Bras Mexicana
	  	San Ignacio	 	Exploitation	 	 	3.00	 	 	 	Valid	 	 	 	165662	 	 	 	11/28/1979	 	 	 	11/27/2029	 
	 Dia Bras Mexicana
	  	Promontorio	 	Exploitation	 	 	8.00	 	 	 	Valid	 	 	 	163582	 	 	 	10/30/1978	 	 	 	10/29/2028	 
	 Dia Bras Mexicana
	  	La Perla	 	Exploitation	 	 	15.00	 	 	 	Valid	 	 	 	165968	 	 	 	12/13/1979	 	 	 	12/12/2029	 
	 Dia Bras Mexicana
	  	La Perlita	 	Exploitation	 	 	10.00	 	 	 	Valid	 	 	 	163565	 	 	 	10/10/1978	 	 	 	10/9/2028	 
	 Dia Bras Mexicana
	  	Luís	 	Exploitation	 	 	3.1946	 	 	 	Valid	 	 	 	194225	 	 	 	12/19/1991	 	 	 	12/18/1941	 
	 Dia Bras Mexicana
	  	La Consolidada	 	Exploitation	 	 	22.00	 	 	 	Valid	 	 	 	165102	 	 	 	8/23/1979	 	 	 	8/22/2029	 
	 Dia Bras Mexicana
	  	La Doble Eufemia	 	Exploitation	 	 	9.00	 	 	 	Valid	 	 	 	188814	 	 	 	11/29/1990	 	 	 	11/28/1940	 
	 Dia Bras Mexicana
	  	La Gloria	 	Exploitation	 	 	10.00	 	 	 	Valid	 	 	 	179400	 	 	 	12/9/1986	 	 	 	12/8/1936	 
	 Dia Bras Mexicana
	  	La Indita	 	Exploration	 	 	9.9034	 	 	 	Valid	 	 	 	212891	 	 	 	2/13/2001	 	 	 	2/12/1949	 
	 Dia Bras Mexicana
	  	La Suerte	 	Exploration	 	 	10.5402	 	 	 	Valid	 	 	 	216711	 	 	 	5/28/2002	 	 	 	5/27/1952	 
	 Minera Cusi
	  	El Hueco	 	Exploitation	 	 	1.8379	 	 	 	Valid	 	 	 	172321	 	 	 	11/23/2003	 	 	 	11/23/1933	 
	 Dia Bras Mexicana
	  	El Presidente	 	Exploitation	 	 	8.1608	 	 	 	Valid	 	 	 	209802	 	 	 	8/9/1999	 	 	 	8/8/1949	 
	 Dia Bras Mexicana
	  	El Salvador	 	Exploitation	 	 	7.7448	 	 	 	Valid	 	 	 	190493	 	 	 	4/29/1991	 	 	 	4/28/1941	 
	 Dia Bras Mexicana
	  	Cusihuiriachic Dos	 	Exploitation	 	 	87.6748	 	 	 	Valid	 	 	 	220576	 	 	 	8/28/2003	 	 	 	8/27/1953	 
	 Dia Bras Mexicana
	  	La Bufa Chiquita	 	Exploitation	 	 	3.6024	 	 	 	Valid	 	 	 	220575	 	 	 	8/28/2003	 	 	 	8/27/1953	 
	 Dia Bras Mexicana
	  	Aguila	 	Exploration	 	 	4.2772	 	 	 	Valid	 	 	 	216262	 	 	 	4/23/2002	 	 	 	4/22/1952	 
	 Dia Bras Mexicana
	  	Año Nuevo	 	Exploration	 	 	12.00	 	 	 	Valid	 	 	 	192908	 	 	 	12/19/1991	 	 	 	12/18/1941	 
	 Dia Bras Mexicana
	  	Ampl. Nueva Josefina  	 	Exploitation	 	 	18.2468	 	 	 	Valid	 	 	 	177597	 	 	 	4/2/1986	 	 	 	3/31/1936	 
	 Dia Bras Mexicana
	  	El Milagro	 	Exploitation	 	 	26.8259	 	 	 	Valid	 	 	 	166580	 	 	 	6/27/1980	 	 	 	6/26/1930	 

  
  

					
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	Holding Company	  	Name	 	Type	 	Area (ha)	 	 	File No.	 	 	Title No.	 	 	Enrolled	 	 	Expiry	 
	 Dia Bras Mexicana
	  	Los Pelones	 	Exploitation    	 	 	16.3018	 	 	 	Valid	 	 	 	166981	 	 	 	8/5/1980	 	 	 	8/4/1930	 
	 Dia Bras Mexicana
	  	La Ilusión	 	Exploitation	 	 	6.00	 	 	 	Valid	 	 	 	166611	 	 	 	6/27/1980	 	 	 	6/26/1930	 
	 Dia Bras Mexicana
	  	La Hermana de la India  	 	Exploitation	 	 	13.1412	 	 	 	Valid	 	 	 	180030	 	 	 	3/23/1987	 	 	 	3/22/1937	 
	 Dia Bras Mexicana
	  	La Rumorosa	 	Exploitation	 	 	20.00	 	 	 	Valid	 	 	 	166612	 	 	 	6/27/1980	 	 	 	6/26/1930	 
	 Dia Bras Mexicana
	  	La Nueva Josefina	 	Exploitation	 	 	10.00	 	 	 	Valid	 	 	 	181221	 	 	 	9/11/1987	 	 	 	9/10/1937	 
	 Dia Bras Mexicana
	  	Mina Vieja	 	Exploitation	 	 	8.25	 	 	 	Valid	 	 	 	165742	 	 	 	12/11/1979	 	 	 	12/10/2029	 
	 Dia Bras Mexicana
	  	Margarita	 	Exploitation	 	 	14.00	 	 	 	Valid	 	 	 	165969	 	 	 	12/13/1979	 	 	 	12/12/2029	 
	 Minera Cusi
	  	Cusihuiriachic	 	Exploration	 	 	472.2626	 	 	 	Valid	 	 	 	240976	 	 	 	11/16/2012	 	 	 	11/15/1962	 
	 Dia Bras Mexicana
	  	CUSI-DBM	 	Exploration	 	 	4,716.6621	 	 	 	Valid	 	 	 	229299	 	 	 	4/3/2007	 	 	 	4/2/1957	 
	 Dia Bras Mexicana
	  	CUSI-DBM 02	 	Exploration	 	 	4,695.1748	 	 	 	Valid	 	 	 	232028	 	 	 	6/10/2008	 	 	 	6/9/1958	 
	 Dia Bras Mexicana
	  	Bronco 1 A	 	Exploration	 	 	55.6309	 	 	 	Valid	 	 	 	240329	 	 	 	5/23/2012	 	 	 	5/22/1962	 
	 Dia Bras Mexicana
	  	Bronco 1 B	 	Exploration	 	 	0.8801	 	 	 	Valid	 	 	 	240330	 	 	 	5/23/2012	 	 	 	5/22/1962	 
	 Dia Bras Mexicana
	  	Bronco 2	 	Exploration	 	 	7.5296	 	 	 	Valid	 	 	 	239311	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Bronco 3	 	Exploration	 	 	8.1186	 	 	 	Valid	 	 	 	243011	 	 	 	5/30/2014	 	 	 	5/29/1964	 
	 Dia Bras Mexicana
	  	Bronco 4	 	Exploration	 	 	0.5224	 	 	 	Valid	 	 	 	239312	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Bronco 5	 	Exploration	 	 	6.7121	 	 	 	Valid	 	 	 	239335	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Bronco 6	 	Exploration	 	 	9.00	 	 	 	Valid	 	 	 	239321	 	 	 	12/13/2011	 	 	 	12/13/1961	 
	 Dia Bras Mexicana
	  	Zapopa	 	Exploration	 	 	8.3867	 	 	 	Valid	 	 	 	240189	 	 	 	4/13/2012	 	 	 	4/12/1962	 
	 Minera Cusi
	  	La Mexicana	 	Exploration	 	 	2.00	 	 	 	Valid	 	 	 	165883	 	 	 	12/12/1979	 	 	 	12/13/1982	 

 Source: Concession information provided by Sierra Metals, and not independently verified by SRK.

 According to Sierra Metals, Dia Bras is the identified owner of the La India concession title (No. 150569); however, there is
currently no contract in place with the San Bernabe Ejido, the owner of the surface land, for access and occupation. In the past, the Ejido has allowed Dia Bras to explore on this concession, and is apparently willing to sign a contract with the
operations to allow for additional exploration (and possible exploitation) in the future. No documentation to this effect was made available for this review. 
  

	20.4.8	MIA and CUS Authorizations 

 In April 2014, SEMARNAT conducted an inspection of the
Dias Bras Cusi operations. During this site visit, the inspectors met with security and mine planning personnel, who were asked to provide a copy of the Environmental Impact Assessment (MIA) to legally support, in terms of environmental impact, the
work being carried out by the company. However, the MIA could not be provided by the company’s employees. Since the MIA authorization could not be produced, SEMARNAT issued a notice of violation against the company. 

The following month, in a letter addressed to Arturo Valles Chávez, legal representative of Dia Bras Mexicana SA de CV, SEMARNAT
acknowledges that Dia Bras is the legitimate holder of the following concessions in the municipality of Cusihuiriaci, Chihuahua: San Bartolo, Promontorio, La Consolidad, La Perla, El Milagro, La Ilusión, La Rumurosa, Los Pelones, La Hermana
de la India, Nueva Santa Marina, La Gloria, and La Perlita, and that these concessions pre-date the General Law for Sustainable Forest Development, as well as the General Law on Ecological Equilibrium and
Environmental Protection, regarding to Environmental Impact Assessment. As such, SEMARNAT agreed the existing operations (and minor alteration thereto), should not be subject to the Environmental Impact Assessment procedure. However, SEMARNAT did
stipulate that, in case of disturbance and/or removal of vegetation, Dia Bras must comply with the regulations regarding to land use change before the Federal delegation, as well as the proper management of waste generated during mining and
processing (i.e., tailings). 

  
  

					
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 SEMARNAT officially dismissed the notice of violation on May 14, 2015 in
Administrative Record No. PFPA/15.212C.27.1/0055-14. 
  

	20.4.9	Inspections 

 In April 2014, during the same inspection by SEMARNAT of the Cusi
operations, the agency found no irregularities in the emission of pollutants to the environment. There was also no mention of any irregularities regarding the process of mineral extraction and storage disposal. 

On November 17, 2015, Chihuahua State regulators, through the Secretary of Urban Development and Ecology, inspected Promotorio Mine
and found that the water discharged by Dia Bras complies with the parameters established by NOM-001/SEMARNAT 2015. At the same time, Dia Bras presented the argument that a special waste water discharge permit
from CONAGUA is not required to discharge water from mining activities developed in Promontorio and San Bartolo mines. 
  

	20.5	Social Management Planning and Community Relations 

 SRK was not provided with any
information regarding public consultation or stakeholder engagement activities on the part of Dia Bras for the Cusi operations. 
  

	20.6	Closure and Reclamation Plan 

 Current regulations in México require that a
preliminary closure program be included in the MIA and a definite program be developed and submitted to the authorities during the operation of the mine (generally accepted as three years into the operation). These closure plans tend to be
conceptual and typically lack much of the detail necessary to develop an accurate closure cost estimate. However, Sierra Metals has attempted to prescribe the necessary closure activities for the operation. 

In February 2017, Treviño Asociados Consultores presented to DIABRAS, S.A. de C.V. a work breakdown of the anticipated
tasks for closure and reclamation of the Cusi Mine and Malpaso Mill. This breakdown, and the associated costs, is summarized in Table 20-3. 

  
  

					
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 Table 20-3: Cusi Mine and Malpaso Mill Cost
of Reclamation and Closure of the Mine 
  

					
	Closure Activity	  	Cost
Estimate
MXN$	 
	 Cusi
	  			 
	
Waste Rock Piles (regrading, soil preparation, revegetation) (5Ha)
	  	 	$231,650	 
	
Exploration Drill Pads (remove contaminated soils, soil preparation, revegetation, erosion control) (4Ha)
	  	 	$42,000	 
	
Roads (Border reconstruction, ditches, revegetation) (5Ha)
	  	 	$52,500	 
	
Building Demolition (Dismantling buildings and removing equipment and machinery)
	  	 	$594,000	 
	
Sub-Total Cusi Reclamation and Closure Costs
	  	 	$920,150	 
	
Malpaso
	  			 
	Tailings Impoundment (regrading, soil cover and preparation, revegetation) (14Ha = 2×7Ha)	  	 	$1,901,200	 
	
Stream Restoration (gabion installation) (500m)
	  	 	$1,750,000	 
	
Roads (Border reconstruction, ditches, revegetation) (3Ha)
	  	 	$31,500	 
	Facilities and Buildings (offices, laboratory, warehouses – dismantle and remove, remediate spills,
restore soil and revegetation)	  	 	$2,035,000	 
	
Sub-Total Malpaso Reclamation and Closure Costs
	  	 	$5,717,700	 
	
Total (MXN)
	  	 	$6,637,850	 
	
Total (US$)*
	  	 	$325,385	 

 *Based on exchange rate of US$1 = MXN$20.4 (22Feb2017) 

Source: Dia Bras, 2017 

SRK’s scope of work did not include an assessment of the veracity of this closure cost estimate, but, based on projects of similar
nature and size within Mexico, the estimate appears low in comparison. SRK recommends that Sierra Metals conduct an outside review of this estimate, with an emphasis on benchmarking against other projects in northern Mexico. 

While Mexico requires the preparation of a reclamation and closure plan, as well as a commitment on the part of the operator to implement
the plan, no financial surety (bonding) has thus far been required of mining companies. Environmental damages, if not remediated by the owner/operator, can give rise to civil, administrative and criminal liability, depending on the action or
omission carried out. PROFEPA is responsible for the enforcement and recovery for those damages, or any other person or group of people with an interest in the matter. Also, recent reforms introduced class actions as a means to demand environmental
responsibility from damage to natural resources. 

  
  

					
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	21	Capital and Operating Costs 

 SRK has not assessed any capital or operating cost
assumptions as a part of this study, beyond the general costs provided to SRK for determination of cut-off grade for the mineral resource statement. 

  
  

					
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	22	Economic Analysis 

 SRK has not conducted any economic analysis as a part of this
study. 

  
  

					
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	23	Adjacent Properties 

 As noted in Figure
4-2, a number of mining claims within the Cusi area are not controlled by Sierra Metals. Mineral resources are not reported within these areas. No publicly disclosed mineral resource or reserve estimates exist
for these areas. 

  
  

					
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	24	Other Relevant Data and Information 

 SRK is not aware of any additional relevant
data and information for the mineral resource estimation at this time. 

  
  

					
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	25	Interpretation and Conclusions 

  

	25.1	Exploration 

 SRK is of the opinion that the exploration efforts at Cusi are
sufficient for the definition of mineral resources. The primary exploration method at Cusi has been diamond core drilling followed by limited underground development, which has been successful in delineating a system of discrete epithermal veins and
related stockwork mineralization. The drilling appears to be able to target and identify mineralized structures with reasonable efficacy, and the majority of drilling is oriented in a fashion designed to approximate true thicknesses of the veins.
The exploration planning suffers from a lack of focus, and should be designed to maximize conversion of higher grade Inferred areas with less dense drilling to Indicated, or extending mineralization away from known areas accessed through channel
sampling. Efforts should be focused on a single structure or perhaps two structures to continue to develop these areas along strike and down dip, rather than scattered around several veins with very limited drilling. 

Mine development is also used for exploration, as direct access of the veins along underground drifts is an excellent and efficient way
for Cusi to understand the mineralization on a more local basis. More effort should be made to improve underground survey data, channel sampling consistency, and 3D asbuilt data. 

SRK notes that recent efforts are improving the quality of the drilling and information through more complete and thorough survey data
(for drilling and underground development), as well as modern QA/QC programs which are delivering reasonable results. This lends additional confidence to recently-defined resources or newly drilled portions of historic areas. 

SRK also notes that struggles for the internal Malpaso Mill laboratory, identified in this document as well as previous technical
reports, appear to continue. These are related to significant differences between the values reported for identical samples between Malpaso and third-party laboratories. These issues, combined with historic deficiencies in downhole surveying and
QA/QC detract from the overall confidence in quality of the data. 
 SRK is aware that Malpaso and Dia Bras are currently implementing
procedures to improve the collection and reporting of data supporting mineral resource estimations. This includes improving down hole surveys, improved channel sampling and mine working surveys, acquiring commercial standards for QA/QC (October
2016), and improvements of the Malpaso Mill to make sample preparation procedures and analyses consistent with ISO-certified laboratories like ALS. SRK is of the opinion that a combination of these factors,
once demonstrated to be in full use and functioning appropriately, will result in a significant portion of the Indicated resource being converted to Measured. 
  

	25.2	Mineral Resource Estimate 

 The geologic model has been constructed by Dia Bras
geologists, and refined by SRK using Leapfrog GeoTM software. Drilling and channel sample data, as well as sectional interpretation was used in development of the 3D geology shapes, defining veins and stockwork zones. These are used as resource
domains to constrain and control the interpolation of grade during the estimation. 

  
  

					
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 SRK built individual block models for the main resource areas, which have been rotated
and sub-blocked to better fit the geologic contacts in each area. Grade was interpolated from capped and composited sample data using an inverse distance squared algorithm, with sample selection criteria
designed to decluster the channel sample data compared to the drilling. A nested three-pass estimation was used, with decreasing data selection criteria. 

SRK is of the opinion that the Mineral Resource Estimate has been conducted in a manner consistent with industry best practices and that
the data and information supporting the stated mineral resources is sufficient for declaration of Indicated and Inferred classifications of resources. SRK has not classified any of the resources in the Measured category due to aforementioned
uncertainties regarding the data supporting the Mineral Resource Estimate. 
 These deficiencies include: 

 

	 	●	 	 The lack of a historic QA/QC program, which has only been supported by a recent resampling and modern QA/QC program for
a limited number of holes. This will be required in order to achieve Measured resources which generally are supported by high resolution drilling or sampling data that feature consistently implemented and monitored QA/QC. 

 

	 	●	 	 The lack of consistently-implemented down-hole surveys in the historic drilling. Observations from the survey data which
has been done to date show significant down-hole deviations that influence the exact position of mineralized intervals. These discrepancies are confirmed by nearby workings that project the mineralized structures in a different position than that
defined by the unsurveyed holes. 

  

	 	●	 	 The lack of industry-standard 3D survey asbuilt data delineating mined areas. This has been defined using a combination
of the existing survey data, as well as polygons defining other areas thought to be mined. SRK believes these polygons to be conservative, as it is likely that pillar areas or other partially mined areas exist within the limits of the polygons, but
are being excluded by this rudimentary methodology. 

  

	25.3	Metallurgy and Mineral Processing 

 The metallurgical balance as stated by Dia Bras
is based on actual production data as reported to SRK. SRK is of the opinion that this is more than sufficient support for the statement of mineral resources, where the cut-off grade is based partially on
expectations of recovery. 
 Cusi’s highly variable fresh feed head grades pose a challenge to the steady metallurgical
performance of the processing facilities. 
  

	25.4	Foreseeable Impacts of Risks 

 SRK notes that the main risk associated with the
mineral resources at Cusi are in areas where historic drilling or poorly surveyed channel sampling defines the shape of the vein. It has been demonstrated, where new data juxtaposes old, that there can be material offsets to the projections of the
structures. This will predominantly affect older areas of the Cusi mine, many of which have been mined out, although SRK notes newer areas where the effect is material on the statement of mineral resources. 

Ongoing risk associated with the performance of the Malpaso Mill internal laboratory is difficult to quantify, and is probably not
material to the declaration of mineral resources beyond the reduction in 

  
  

					
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confidence noted in this report. SRK finds the discrepancies between Malpaso and third party laboratories to be troubling in the sense of defining precision for the analytical work that would
support a Measured resource, unfortunately and notably in the vicinity of the workings where all channel samples are supported by Malpaso analyses. 

SRK is aware that Sierra is aggressively pursuing improvements to the methods and procedures at Cusi, and that these will be ongoing in
the coming year. 

  
  

					
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	26	Recommendations 

  

	26.1	Recommended Work Programs and Costs 

 SRK has the following recommendations for
additional work to be performed at the Cusi mine: 
  

	 	●	 	 Identify and drill areas that are dominantly supported by channel sample data. This should be done at a regular spacing
of approximately 25 m. 

  

	 	○ 	 	 Further to this, SRK notes opportunities where significant areas of veins have very few drillholes, but exhibit very
high grades, resulting in local high grade Inferred blocks that could theoretically be converted to Indicated with additional drilling. These should be prioritized. 

 

	 	●	 	 Continue the implementation of the current QA/QC program as documented by Dia Bras internal reports. This program is
robust and appropriate for the type of deposit. 

  

	 	●	 	 Abandon the practice of using the current internal blanks for QA/QC. A thoroughly washed silica sand is readily
available in Mexico and would be a reasonable alternative. The results of the current practices hint at either significant contamination issues during the preparation phase of sample analysis, or a contaminated blank material. In either case, this
should be resolved as soon as possible. Continue the use of newly acquired commercial standards for new QA/QC. 

  

	 	●	 	 All analyses supporting a mineral resource estimation should continue to be analyzed by an ISO-certified independent laboratory such as ALS Minerals. The intra-lab performance of check samples shows significant and unexpected deviations between ALS and the internal
Dia Bras lab. 

  

	 	●	 	 Every drillhole exceeding 50 m should be surveyed via Reflex or other appropriate survey tool. 

 

	 	●	 	 SRK strongly recommends implementing the practice of consistent use of a total station GPS for surveying of drillhole
and channel samples, as well as mine workings. Discrepancies between the three types of data occur regularly where they are closely spaced, and reduce confidence in the estimate. 

 

	 	○ 	 	 A 3D mine survey could be accomplished relatively easily and for minimal cost, and could be conducted on a quarterly
basis to develop a better working understanding of mined material to be used in reconciliation processes. 

  

	 	●	 	 Evaluate more detailed resource estimation procedures incorporating other means of dealing with the highly clustered
data. 

  

	 	●	 	 Develop a simple method of reconciling the resource models to production, using stope shapes and grades derived from
channel sampling. 

  

	 	●	 	 SRK recommends that Cusi evaluate the maximum head grade the mill is able to receive without compromising quality of its
lead concentrate because of the high presence of zinc (currently grading at about 9%). Improving selectivity will likely improve the overall lead grade in concentrate that needs to be at 50% Pb or higher to achieve better economic value.

  

	26.1.1	Costs 

 SRK notes that the costs for the majority of recommended work are likely to
be a part of normal operating budgets, which Cusi has as an operating mine. These are cost estimates, and would 

  
  

					
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depend on actual contractor costs and scope to be determined by Dia Bras/Sierra Metals. SRK notes that the recommendations for metallurgy, mine design, geotechnical studies, or economic analysis
are not included in these costs, and that these recommendations solely impact the quality of the mineral resource estimation. 

Table 26-1: Summary of Costs for Recommended Work 

 

																					
	Item	  	Cost (US$)	 	  	 	 	  	 	 	  	 	 	  	 	 
	Drilling	  	 	$2,000,000	 	  				  				  				  			
	Underground 3D Survey    	  	 	$60,000	 	  				  				  				  			

  
  

					
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	27	References 

 CIM (2014). Canadian Institute of Mining, Metallurgy
and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines, May 10, 2014. 

Ciesieski, A. (2007) Dia Bras Exploration Inc., Cusihuiriachic Property, Geology and Geochemistry of Mineralized
Zones, H13-10 Sheet. Chihuahua State (Mexico), Montreal, December 2007. 

Dia Bras Mexicana S.A. de C.V. (2016-2017) Unpublished Company Data and Information, Provided to SRK over the course of
this study and for its express purposes. 
 Geostat Systems International Inc. (2008) Dia Bras Exploration Inc.,
Cusi Project, Chihuahua state, Mexico, Resource Estimate Technical Report, June 16, 2008. 
 Meinert, LD
(2007) Mineralogy of high grade Ag zones in the Cusihuiriachic district, April 13, 2007. 
 Meinert, LD
(2007b) Mineralogy, assay and fluid inclusion characteristics of quartz-sulfide veins of the Cusihuiriachic district, Chihuahua, Mexico, January 17, 2007. 

Gustavson (2014) NI 43-101 Technical Report on Resources, Cusihuiriachic
Property, Chihuahua, Mexico, Prepared for Sierra Metals, May 9, 2014 
 RPA (2006) Technical Report on the
Cusi Silver Project, Mexico, NI 43-101 Report, December 20, 2006 

  
  

					
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	28	Glossary 

 The Mineral Resources and Mineral Reserves have been classified
according to CIM (CIM, 2014). Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the Reserves have been classified as Proven, and Probable based on the Measured and Indicated Resources as defined below. 

 

	28.1	Mineral Resources 

 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.

  

	28.2	Mineral Reserves 

 A Mineral Reserve is the economically mineable part of a
Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or
Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. 

  
  

					
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 The reference point at which Mineral Reserves are defined, usually the point where the
ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed
as to what is being reported. The public disclosure of a Mineral Reserve must be demonstrated by a Pre-Feasibility Study or Feasibility Study. This has not been done as a part of this study. 

A Probable Mineral Reserve is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral
Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve. 

A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high
degree of confidence in the Modifying Factors. 
  

	28.3	Definition of Terms 

 The following general mining terms may be used in this
report. 
 Table 28-1: Definition of Terms 

 

			
	Term	 	Definition
	Assay	 	The chemical analysis of mineral samples to determine the metal content.
	Capital Expenditure	 	All other expenditures not classified as operating costs.
	Composite	 	Combining more than one sample result to give an average result over a larger distance.
	Concentrate	 	A metal-rich product resulting from a mineral enrichment process such as gravity concentration or flotation, in which most of the desired
mineral has been separated from the waste material in the ore.
	Crushing	 	Initial process of reducing ore particle size to render it more amenable for further processing.
	Cut-off Grade (CoG)    	 	The grade of mineralized rock, which determines as to whether or not it is economic to recover its gold content by further
concentration.
	Dilution	 	Waste, which is unavoidably mined with ore.
	Dip	 	Angle of inclination of a geological feature/rock from the horizontal.
	Fault	 	The surface of a fracture along which movement has occurred.
	Footwall	 	The underlying side of an orebody or stope.
	Gangue	 	Non-valuable components of the ore.
	Grade	 	The measure of concentration of gold within mineralized rock.
	Hangingwall	 	The overlying side of an orebody or slope.
	Haulage	 	A horizontal underground excavation which is used to transport mined ore.
	Hydrocyclone	 	A process whereby material is graded according to size by exploiting centrifugal forces of particulate materials.
	Igneous	 	Primary crystalline rock formed by the solidification of magma.
	Kriging	 	An interpolation method of assigning values from samples to blocks that minimizes the estimation error.
	Level	 	Horizontal tunnel the primary purpose is the transportation of personnel and materials.
	Lithological	 	Geological description pertaining to different rock types.
	LoM Plans	 	Life-of-Mine plans.
	LRP	 	Long Range Plan.
	Material Properties	 	Mine properties.
	Milling	 	A general term used to describe the process in which the ore is crushed and ground and subjected to physical or chemical treatment to
extract the valuable metals to a concentrate or finished product.
	Mineral/Mining Lease	 	A lease area for which mineral rights are held.
	Mining Assets	 	The Material Properties and Significant Exploration Properties.
	Ongoing Capital	 	Capital estimates of a routine nature, which is necessary for sustaining operations.
	Ore Reserve	 	See Mineral Reserve.

  
  

					
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	Term	 	Definition
	Pillar	 	Rock left behind to help support the excavations in an underground mine.
	RoM	 	Run-of-Mine.
	Sedimentary	 	Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks.
	Shaft	 	An opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and waste.
	Sill	 	A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection of
magma into planar zones of weakness.
	Smelting	 	A high temperature pyrometallurgical operation conducted in a furnace, in which the valuable metal is collected to a molten matte or
doré phase and separated from the gangue components that accumulate in a less dense molten slag phase.
	Stope	 	Underground void created by mining.
	Stratigraphy	 	The study of stratified rocks in terms of time and space.
	Strike	 	Direction of line formed by the intersection of strata surfaces with the horizontal plane, always perpendicular to the dip
direction.
	Sulfide	 	A sulfur bearing mineral.
	Tailings	 	Finely ground waste rock from which valuable minerals or metals have been extracted.
	Thickening	 	The process of concentrating solid particles in suspension.
	Total Expenditure    	 	All expenditures including those of an operating and capital nature.
	Variogram	 	A statistical representation of the characteristics (usually grade).

  

	28.4	Abbreviations 

 The following abbreviations may be used in this report. 

Table 28-2: Abbreviations 

 

			
	Abbreviation	 	Unit or Term
	Ag	 	silver
	Au	 	gold
	AuEq	 	gold equivalent grade
	°C	 	degrees Centigrade
	CoG	 	cut-off grade
	cm	 	centimeter
	cm2	 	square centimeter
	cm3	 	cubic centimeter
	cfm	 	cubic feet per minute
	°	 	degree (degrees)
	dia.	 	diameter
	EIS	 	Environmental Impact Statement
	EMP	 	Environmental Management Plan
	g	 	gram
	gal	 	gallon
	g/L	 	gram per liter
	gpm	 	gallons per minute
	g/t	 	grams per tonne
	ha	 	hectares
	ID2	 	inverse-distance squared
	ID3	 	inverse-distance cubed
	kg	 	kilograms
	km	 	kilometer
	km2	 	square kilometer
	koz	 	thousand troy ounce
	kt	 	thousand tonnes
	kt/d	 	thousand tonnes per day
	kt/y	 	thousand tonnes per year

  
  

					
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	Abbreviation	 	Unit or Term
	kV	 	kilovolt
	kW	 	kilowatt
	kWh	 	kilowatt-hour
	L	 	liter
	lb	 	pound
	LoM	 	Life-of-Mine
	m	 	meter
	m2	 	square meter
	m3	 	cubic meter
	masl	 	meters above sea level
	mg/L	 	milligrams/liter
	mm	 	millimeter
	mm2	 	square millimeter
	mm3	 	cubic millimeter
	Moz	 	million troy ounces
	Mt	 	million tonnes
	m.y.	 	million years
	NI 43-101	 	Canadian National Instrument 43-101
	oz	 	troy ounce
	%	 	percent
	ppb	 	parts per billion
	ppm	 	parts per million
	QA/QC	 	Quality Assurance/Quality Control
	RC	 	rotary circulation drilling
	RoM	 	Run-of-Mine
	RQD	 	Rock Quality Description
	SEC	 	U.S. Securities & Exchange Commission
	t	 	tonne (metric ton) (2,204.6 pounds)
	t/h	 	tonnes per hour
	t/d	 	tonnes per day
	t/y	 	tonnes per year
	TSF	 	tailings storage facility
	V	 	volts
	W	 	watt
	y	 	year

  
  

					
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Report – Cusi Mine, Mexico
	  	Appendices

  

 

  
 Appendices 

 
  

  
  

					
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Report – Cusi Mine, Mexico
	  	Appendices

  

 

  
 Appendix A: Certificates of
Qualified Persons 
  
  

  
  

					
	JL/SH	  		  	April 14, 2017

							
	

	  		  		  	 SRK Consulting (U.S.), Inc.
 Suite 600

1125 Seventeenth Street
 Denver, CO 80202

 
 T: 303.985.1333

F: 303.985.9947
  

denver@srk.com
 www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Matthew Hastings, MSc Geology, MAusIMM (CP) do hereby certify that: 
  

	1.	I am Senior Consultant Resource Geologist of SRK Consulting (U.S.), Inc., 1125 Seventeenth Street, Suite 600, Denver, CO, USA, 80202. 

 

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources, Cusi Mine, Mexico” with an Effective Date of January 31, 2017 (the
“Technical Report”). 

  

	3.	I graduated with a degree in B.S.-Geology from University of Georgia in 2005. In addition, I have obtained a M.S.-Geology from University of Nevada-Reno in 2007. I am a CP of the MAusIMM and Certified Professional
Geology, PGL-1343. I have worked as a Geologist for a total of 10 years since my graduation from university. My relevant experience includes working in exploration and mineral resource definition for precious
metals, base metals, iron ore, and rare earth element deposits worldwide. 

  

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I visited the Cusi Mine property on March 11, 2015 for three days. 

  

	6.	I am responsible for the preparation of Geology and Mineral Resources, Sections 4-12 and 14, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have had prior involvement with the property that is the subject of the Technical Report. The nature of my prior involvement is a series of operational reviews and gap analyses that were conducted for Sierra Metals
prior to the technical work supporting the technical report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

 Dated this 14th Day of April, 2017. 
 “Signed and Sealed” 

 
 Matthew Hastings, MSc Geology, MAusIMM (CP) 

 

															
	 U.S. Offices:
	  	 	Canadian Offices:	 	  	 	Group Offices:	 
	Anchorage	 	907.677.3520	  	 	Saskatoon		 	 	306.955.4778	 	  	 	Africa	 
	Clovis	 	559.452.0182	  	 	Sudbury		 	 	705.682.3270	 	  	 	Asia	 
	Denver	 	303.985.1333	  	 	Toronto		 	 	416.601.1445	 	  	 	Australia	 
	Elko	 	775.753.4151	  	 	Vancouver		 	 	604.681.4196	 	  	 	Europe	 
	Fort Collins	 	970.407.8302	  	 	Yellowknife		 	 	867.873.8670	 	  	 	North America	 
	Reno	 	775.828.6800	  				 				  	 	South America	 
	Tucson	 	520.544.3688	  				 				  			

  

							
	

	  		  		  	 SRK Consulting (U.S.), Inc.
 Suite 600

1125 Seventeenth Street
 Denver, CO 80202

 
 T: 303.985.1333

F: 303.985.9947
  

denver@srk.com
 www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Daniel H. Sepulveda, B.Sc, SME-RM, do hereby certify that: 

 

	1.	I am Associate Consultant (Metallurgy) of SRK Consulting (U.S.), Inc., 1125 Seventeenth Street, Suite 600, Denver, CO, USA, 80202. 

  

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources, Cusi Mine, Mexico” with an Effective Date of January 31, 2017 (the
“Technical Report”). 

  

	3.	I graduated with a degree in Extractive Metallurgy from University of Chile in 1992. I am a registered member of the Society of Mining, Metallurgy, and Exploration, Inc. (SME), member No 4206787RM. I have worked as a
Metallurgist for a total of 23 years since my graduation from university. My relevant experience includes: employee of several mining companies, engineering & construction companies, and as a consulting engineer. 

 

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I visited the Cusi Mine property on October 19, 2016 for two days. 

  

	6.	I am responsible for Mineral Processing and Metallurgical Testing Sections 13, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have had prior involvement with the property that is the subject of the Technical Report. The nature of my prior involvement is a series of operational reviews and gap analyses that were conducted for Sierra Metals
prior to the technical work supporting the Technical Report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

 Dated this 14th Day of April, 2017. 
 “Signed and Sealed” 

 
 Daniel H. Sepulveda, B.Sc, SME-RM 
  

															
	 U.S. Offices:
	  	 	Canadian Offices:	 	  	 	Group Offices:	 
	Anchorage	 	907.677.3520	  	 	Saskatoon		 	 	306.955.4778	 	  	 	Africa	 
	Clovis	 	559.452.0182	  	 	Sudbury		 	 	705.682.3270	 	  	 	Asia	 
	Denver	 	303.985.1333	  	 	Toronto		 	 	416.601.1445	 	  	 	Australia	 
	Elko	 	775.753.4151	  	 	Vancouver		 	 	604.681.4196	 	  	 	Europe	 
	Fort Collins	 	970.407.8302	  	 	Yellowknife		 	 	867.873.8670	 	  	 	North America	 
	Reno	 	775.828.6800	  				 				  	 	South America	 
	Tucson	 	520.544.3688	  				 				  			

  

							
	

	  		  		  	 SRK Consulting (U.S.), Inc.
 5250 Neil Road, Suite
300
 Reno, Nevada 89502
  

T: (775) 828-6800
 F: (775) 828-6820

 
 reno@srk.com

www.srk.com

 CERTIFICATE OF QUALIFIED PERSON 

I, Mark Allan Willow, SME-RM do hereby certify that: 
  

	1.	I am Practice Leader of SRK Consulting (U.S.), Inc., 5250 Neil Road, Reno, Nevada 89502. 

  

	2.	This certificate applies to the technical report titled “NI 43-101 Technical Report on Resources, Cusi Mine, Mexico” with an Effective Date of January 31, 2017 (the
“Technical Report”). 

  

	3.	I graduated with Bachelor’s degree in Fisheries and Wildlife Management from the University of Missouri in 1987 and a Master’s degree in Environmental Science and Engineering from the Colorado School of Mines
in 1995. I have worked as Biologist/Environmental Scientist for a total of 22 years since my graduation from university. My relevant experience includes environmental due diligence/competent persons evaluations of developmental phase and operational
phase mines through the world, including small gold mining projects in Panama, Senegal, Peru, Ecuador, Philippines, and Colombia; open pit and underground coal mines in Russia; several large copper and iron mines and processing facilities in Mexico
and Brazil; bauxite operations in Jamaica; and a coal mine/coking operation in China. My Project Manager experience includes several site characterization and mine closure projects. I work closely with the U.S. Forest Service and U.S. Bureau of Land
Management on permitting and mine closure projects to develop uniquely successful and cost effective closure alternatives for the abandoned mining operations. Finally, I draw upon this diverse background for knowledge and experience as a human
health and ecological risk assessor with respect to potential environmental impacts associated with operating and closing mining properties, and have experienced in the development of Preliminary Remediation Goals and hazard/risk calculations for
site remedial action plans under CERCLA activities according to current U.S. EPA risk assessment guidance. 

  

	  .	I am a Certified Environmental Manager (CEM) in the State of Nevada (#1832) in accordance with Nevada Administrative Code NAC 459.970 through 459.9729. Before any person consults for a fee in matters concerning: the
management of hazardous waste; the investigation of a release or potential release of a hazardous substance; the sampling of any media to determine the release of a hazardous substance; the response to a release or cleanup of a hazardous substance;
or the remediation soil or water contaminated with a hazardous substance, they must be certified by the Nevada Division of Environmental Protection, Bureau of Corrective Action; 

 

	  	I am a Registered Member (No. 4104492) of the Society for Mining, Metallurgy & Exploration Inc. (SME). 

  

	4.	I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. 

  

	5.	I did not visit the Cusi Mine property. 

  

	6.	I am responsible for Environmental Studies, Permitting and Social or Community Impact Section 20, and portions of Sections 1, 25 and 26 summarized therefrom, of this Technical Report. 

 

	7.	I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 

  

	8.	I have not had prior involvement with the property that is the subject of the Technical Report. 

  

	9.	I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for have been prepared in compliance with
that instrument and form. 

  

															
	 U.S. Offices:
	  	 	Canadian Offices:	 	  	 	Group Offices:	 
	Anchorage	 	907.677.3520	  	 	Saskatoon		 	 	306.955.4778	 	  	 	Africa	 
	Clovis	 	559.452.0182	  	 	Sudbury		 	 	705.682.3270	 	  	 	Asia	 
	Denver	 	303.985.1333	  	 	Toronto		 	 	416.601.1445	 	  	 	Australia	 
	Elko	 	775.753.4151	  	 	Vancouver		 	 	604.681.4196	 	  	 	Europe	 
	Fort Collins	 	970.407.8302	  	 	Yellowknife		 	 	867.873.8670	 	  	 	North America	 
	Reno	 	775.828.6800	  				 				  	 	South America	 
	Tucson	 	520.544.3688	  				 				  			

  

					
	 SRK Consulting
	  	Page 2

  

 

	10.	As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required
to be disclosed to make the Technical Report not misleading. 

 Dated this 14th Day of April, 2017.

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