Form 6-K FIRST MAJESTIC SILVER For: Mar 31

March 31, 2021 7:15 AM EDT

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2021

Commission File Number 001-34984

FIRST MAJESTIC SILVER CORP.
(Translation of registrant's name into English)

925 West Georgia Street, Suite 1800, Vancouver BC V6C 3L2
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[           ] Form 20-F   [ x ] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [           ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [           ]


SUBMITTED HEREWITH

Exhibits

Exhibit   Description
     
99.1   NI-43-101Technical Report on Mineral Resource and Mineral Reserve Estimates for San Dimas Silver/Gold Mine
99.2   NI-43-101Technical Report on Mineral Resource and Mineral Reserve Estimates for Santa Elena Silver/Gold Mine
99.3   NI-43-101Technical Report on Mineral Resource and Mineral Reserve Estimates for La Encontada Silver Mine
99.4   San Dimas QP Consent - Ramon Mendoza Reyes
99.5   San Dimas QP Consent - Persio Pellegrini Rosario
99.6   San Dimas QP Consent - Joaquin Merino
99.7   San Dimas QP Consent - Maria Elena Vazquez
99.8   Santa Elena QP Consent - Greg Kulla
99.9   Santa Elena QP Consent - Maria Elena Vazquez
99.10   Santa Elena QP Consent - Persio Pellegrini Rosario
99.11   Santa Elena QP Consent - Philip James Spurgeon
99.12   Santa Elena QP Consent - Ramon Mendoza Reyes
99.13   La Encantada QP Consent - Ramon Mendoza Reyes
99.14   La Encantada QP Consent - Brian Boutilier
99.15   La Encantada QP Consent - David Rowe
99.16   La Encantada QP Consent - Maria Elena Vazquez
99.17   La Encantada QP Consent - Persio Pellegrini Rosario
99.18   San Dimas Certificate of Qualified Person - Ramon Mendoza Reyes
99.19   San Dimas Certificate of Qualified Person - Persio Pellegrini Rosario
99.20   San Dimas Certificate of Qualified Person - Joaquin Merino
99.21   San Dimas Certificate of Qualified Person - Maria Elena Vazquez
99.22   Santa Elena Certificate of Qualified Person - Greg Kulla
99.23   Santa Elena Certificate of Qualified Person - Maria Elena Vazquez
99.24   Santa Elena Certificate of Qualified Person - Persio Pellegrini Rosario
99.25   Santa Elena Certificate of Qualified Person - Philip James Spurgeon
99.26   Santa Elena Certificate of Qualified Person - Ramon Mendoza Reyes
99.27   La Encantada Certificate of Qualified Person - Ramon Mendoza Reyes
99.28   La Encantada Certificate of Qualified Person - Brian Boutilier
99.29   La Encantada Certificate of Qualified Person - David Rowe
99.30   La Encantada Certificate of Qualified Person - Maria Elena Vazquez
99.31   La Encantada Certificate of Qualified Person - Persio Pellegrini Rosario

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FIRST MAJESTIC SILVER CORP.  
   
By:  
   
/s/ Connie Lillico  
Connie Lillico  
Corporate Secretary  
   
March 31, 2021  

 





First Majestic Silver Corp.

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

NI 43-101 Technical Report on

Mineral Resource and Mineral Reserve Estimates

Qualified Persons:

Ramón Mendoza Reyes, P.Eng.

Joaquín Merino, P.Geo.

María Elena Vázquez, P.Geo.

Persio P. Rosario, P.Eng.

Report Prepared For:

First Majestic Silver Corp.

Report Effective Date

December 31, 2020


CERTIFICATE OF QUALIFIED PERSON

Ramón Mendoza Reyes, P.Eng.

Vice President of Technical Services

First Majestic Silver Corp.

925 West Georgia Street, Suite 1800

Vancouver, BC, Canada, V6C 3L2

I, Ramón Mendoza Reyes, P.Eng., am employed as Vice President of Technical Services with First Majestic Silver Corp. (First Majestic).

This certificate applies to the technical report entitled "San Dimas Silver/Gold Mine, Durango and Sinaloa States, Mexico, NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Estimates" that has an effective date of December 31, 2020.

I graduated from the National Autonomous University of Mexico with a Bachelor of Science Degree in Mining Engineering in 1989, and also obtained a Master of Science Degree in Mining and Earth Systems Engineering from the Colorado School of Mines in Golden, Colorado, in 2003.

I am a member of the Engineers and Geoscientists British Columbia (P.Eng. #158547).

I have practiced my profession continuously since 1990, and have been involved in precious and base metal mine projects and operations in Mexico, Canada, the United States of America, Chile, Peru, and Argentina.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).

I visited the San Dimas Silver/Gold Mine on several occasions during 2018 and 2019. My most recent site inspection was on February 13 and 14, 2020.

I am responsible for Sections 1.1, 1.8.2, 1.9, 1.11 to 1.14, 1.15.8, 1.15.10, 2, 3, 4, 15, 16, 18 to 24, 25.1, 25.7 to 25.9, 25.11 to 25.16, 26.1.8, 26.2.2 and 27 of the Technical Report.

I am not independent of First Majestic as that term is described in Section 1.5 of NI 43-101.

I have been involved with the San Dimas Silver/Gold Mine overseeing technical and operational aspects including mine planning, mining operations and mineral reserves estimation, since the acquisition by First Majestic in May 2018.

I have read NI 43-101, and the sections of the Technical Report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

"signed and sealed"

Ramón Mendoza Reyes, P.Eng.

Dated: March 10, 2021

 

a


CERTIFICATE OF QUALIFIED PERSON

Joaquín J. Merino-M., P. Geo.

Senior Geologist Consultant

First Majestic Silver Corp.

925 West Georgia Street, Suite 1800

Vancouver, BC, Canada, V6C 3L2

I, Joaquin J. Merino-M., am contracted as Senior Geologist Consultant with First Majestic Silver Corp. (First Majestic).

This certificate applies to the technical report entitled "San Dimas Silver/Gold Mine, Durango and Sinaloa States, Mexico, NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Estimates" that has an effective date of December 31, 2020.

I graduated from the University of Seville, Spain, with a Bachelor in Geological Sciences degree in 1991, and obtained a Master of Science degree in Economic Geology from Queens University, ON, Canada, in 2000.

I am a member of the Association of Professional Geoscientists of Ontario (P.Geo. #1652).

I have practiced my profession continuously since 1993.  I have held technical positions working with resource estimation, mineral exploration, project evaluation, geological modeling, mine production and reconciliation matters with projects and operations in Canada, Mexico, Peru, Ecuador, Chile, Bolivia, Brazil, Colombia, Venezuela, Argentina, Australia, Papua New Guinea, Spain, Portugal, and Finland.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).

I visited the San Dimas Silver/Gold Mine on a monthly regular basis from 2016 to 2019. My most recent rotation and site inspection was from November 21 to December 20, 2019.

I am responsible for Sections 1.2 to 1.5, 1.8.1, 1.15.1, 1.15.3, 1.15.4, 5 to 10, 14, 25.2, 25.3, 25.6, 26.1.1, 26.1.3 and 26.1.4 of the Technical Report.

I am not independent of First Majestic as that term is described in Section 1.5 of NI 43-101.

I have been involved with the San Dimas Silver-Gold Mine overseeing technical and operational aspects including exploration, target generation, mine reconciliation, and mineral resources estimation, since 2016.

I have read NI 43-101, and the sections of the Technical Report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

"signed and sealed"

Joaquin J. Merino-M., P.Geo.

Dated: March 10, 2021

 

b


CERTIFICATE OF QUALIFIED PERSON

María Elena Vázquez Jaimes, P. Geo.

Geological Database Manager,

First Majestic Silver Corp.

925 West Georgia Street, Suite 1800

Vancouver, BC, Canada, V6C 3L2

I, María Elena Vázquez Jaimes, P.Geo., am employed as Geological Database Manager with First Majestic Silver Corp. (First Majestic).

This certificate applies to the technical report entitled "San Dimas Silver/Gold Mine, Durango and Sinaloa States, Mexico, NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Estimates" that has an effective date of December 31, 2020 (the Technical Report).

I graduated from the National Autonomous University of Mexico with a Bachelor in Geological Engineering degree in 1995 and obtained a Master of Science degree in Geology from the "Ensenada Center for Scientific Research and Higher Education", Ensenada, BC, Mexico, in 2000.

I am a member of the Engineers and Geoscientists British Columbia (P.Geo. #35815).

I have practiced my profession continuously since 1995.  I have held technical positions working with geological databases, conducting quality assurance and quality control programs, managing geological databases, performing data verification activities, and conducting and supervising logging and sampling procedures for mining companies with projects and operations in Canada, Mexico, Peru, Ecuador, Brazil, Colombia and Argentina. I have served as the Geologic Database Manager for First Majestic since 2013, and I direct the QAQC programs, sampling and assay procedures, and database verification for all their mines in Mexico.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).

I visited the San Dimas Silver-Gold Mine on several occasions in 2019 and 2020. My most recent site inspection was from February 24 to February 28, 2020.

I am responsible for Sections 1.6, 1.15.2, 11, 12, 25.4, and 26.1.2 of the Technical Report.

I am not independent of First Majestic as that term is described in Section 1.5 of NI 43-101.

I have been directly involved with the San Dimas Silver-Gold Mine in my role as the Geological Database Manager since 2019.

I have read NI 43-101, and the sections of the Technical Report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed in order to make the Technical Report not misleading.

 

"signed and sealed"

Maria Elena Vazquez Jaimes, P.Geo.

Dated: March 10, 2021

 

c


CERTIFICATE OF QUALIFIED PERSON

Persio Pellegrini Rosario, P.Eng.

Vice President of Processing, Metallurgy & Innovation

First Majestic Silver Corp.

925 West Georgia Street, Suite 1800

Vancouver, BC, Canada, V6C 3L2

I, Persio Pellegrini Rosario, P.Eng., am employed as Vice President of Processing, Metallurgy & Innovation with First Majestic Silver Corp. (First Majestic).

This certificate applies to the technical report "San Dimas Silver/Gold Mine, Durango and Sinaloa States, Mexico, NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Estimates" that has an effective date of December 31, 2020.

I am a graduate of the University of British Columbia, where, in 2003 and 2010, respectively, I obtained a Master in Applied Sciences (MASc) and the Doctor in Philosophy (PhD) degrees in Mineral Processing through the Mining and Mineral Processing Department.

I am a member of the Engineers and Geoscientists British Columbia (P.Eng. # 32355).

I have practiced my profession continuously since 2003 and acquired extensive experience in the design and optimization of mineral processing flowsheets through the elaboration and management of metallurgical test programs and the interpretation of their results. I have been involved in precious and base metal mine projects and operations in Mexico, Canada, the United States of America, Brazil, Chile, Peru, Argentina, and Russia.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).

I carried out a site inspection of the San Dimas Silver/Gold Mine on August 20, 2019.

I am responsible for sections 1.7, 1.10, 1.15.5 to 1.15.7, 1.15.9, 13, 17, 25.5, 25.10, 26.1.5 to 26.1.7 and 26.2.1 of the Technical Report.

I am not independent of First Majestic as that term is described in Section 1.5 of NI 43-101.

I have been involved with the San Dimas Silver/Gold Mine overseeing technical and operational aspects including processing and metallurgy, since joining First Majestic in January 5, 2021. Prior to that, I was involved in modernization projects in 2019 as a technical consultant for First Majestic.

I have read NI 43-101, and the sections of the Technical Report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

"signed and sealed"

Persio Pellegrini Rosario, P.Eng.

Dated: March 10, 2021

 

d


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

 

Table of Contents

1. SUMMARY 1
1.1. Project Description, Location and Access 1
1.1.1. Property Description, Ownership, and Location 1
1.1.2. Mineral Tenure, Royalties, and Surface Rights, and Permitting 1
1.1.3. Accessibility, Local Resources, Infrastructure and Physiography 2
1.2. History 3
1.2.1. Ownership History 3
1.2.2. Production History 3
1.3. Geological Setting, Mineralization and Deposit Types 3
1.3.1. Regional Geology 3
1.3.2. Local Geology and Volcanogenic Stratigraphy 4
1.3.3. Intrusive Rocks 4
1.3.4. Structural Geology 4
1.3.5. Mineralization 5
1.3.6. Mineral Deposits 5
1.3.7. Deposit Types 6
1.4. Exploration 6
1.5. Drilling 7
1.6. Sampling, Analysis and Data Verification 7
1.6.1. Sampling Methods 7
1.6.2. Density 8
1.6.3. Laboratories 8
1.6.4. Sample Preparation 8
1.6.5. Analysis 9
1.6.6. Quality Assurance and Quality Control 9
1.6.7. Data Verification 9
1.7. Mineral Processing and Metallurgical Testing 10
1.8. Mineral Resource and Mineral Reserve Estimates 11
1.8.1. Mineral Resource Estimates 11
1.8.2. Mineral Reserve Estimates 15
1.9. Mining Operations 18
1.10. Processing and Recovery Operations 19
1.11. Infrastructure, Permitting and Compliance Activities 19
1.11.1. Infrastructure 19
1.11.2. Permitting 20
1.11.3. Compliance 21
1.12. Capital and Operating Costs 21
1.13. Economic Analysis Supporting Mineral Reserve Declaration 22
1.14. Conclusions 22
1.15. Recommendations 22
1.15.1. Exploration 22
1.15.2. Production Channel Samples 23

 

i March 2021

 


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
1.15.3. Resource Estimation using Polygonal Method 23
1.15.4. Reconciliation 23
1.15.5. Expansion of the Leaching Circuit 23
1.15.6. Fine Grinding 24
1.15.7. Tailings Filtering- Phase 1 24
1.15.8. "Cuevecillas" Water Storage Dam 24
1.15.9. Tailings Filtering - Phase 2 24
1.15.10. "Cuevecillas" Water Storage Dam - Phase 2 24
2. INTRODUCTION 25
2.1. Terms of Reference 25
2.2. Cut-off and Effective Dates 25
2.3. Qualified Persons 25
2.4. Site Visits 25
2.5. Sources of Information 26
2.6. Previously Filed Technical Reports 26
2.7. Units, Currency and Abbreviations 27
3. RELIANCE ON OTHER EXPERTS 28
4. PROPERTY DESCRIPTION AND LOCATION 29
4.1. Location 29
4.2. Ownership 29
4.3. Mineral Tenure 29
4.4. Royalties 39
4.5. Surface Rights 39
4.6. Permitting Considerations 40
4.7. Environmental Considerations 40
4.8. Existing Environmental Liabilities 40
4.9. Significant Factors and Risks 40
5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY 41
5.1. Accessibility 41
5.2. Climate 43
5.3. Local Resources and Infrastructure 44
5.4. Physiography 44
5.5. Comment on Section 5 45
6. HISTORY 46
6.1. Ownership History 46
6.2. Exploration History 47
6.3. Production History 49
7. GEOLOGICAL SETTING AND MINERALIZATION 51
7.1. Regional Geology 51
7.2. Local Geology 53
7.2.1. Stratigraphy 53
7.2.2. Lower Volcanic Complex (LVC) 54
7.2.3. Upper Volcanic Group (UVG) 55
7.2.4. Intrusive Rocks 55

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
7.2.5. Structural Geology 55
7.3. Mineralization 58
7.4. Deposit Descriptions 61
7.4.1. West Block 65
7.4.2. Graben Block 66
7.4.3. Central Block 67
7.4.4. Tayoltita Block 68
7.4.5. Santa Rita Area 69
7.4.6. El Cristo Area 70
7.4.7. Alto De Arana Area 71
7.4.8. San Vicente Area 72
7.4.9. Ventanas Prospect 73
7.5. Comments on Section 7 73
8. MINERAL DEPOSIT TYPES 74
8.1. Geological Setting 74
8.2. Mineralization 74
8.3. Alteration 75
8.4. Applicability of the Low-Sulphidation Epithermal Model to San Dimas 75
8.5. Comments on Section 8 78
9. EXPLORATION 79
9.1. Introduction 79
9.2. Grids and Surveys 80
9.3. Geological Mapping 81
9.3.1. Surface Geological Mapping 81
9.3.2. Underground Geological Mapping 83
9.4. Geochemical Sampling 84
9.5. Geophysics 88
9.6. Remote Sensing 89
9.7. Tunnelling 91
9.8. Petrology, Mineralogy, and Research studies 92
9.9. Exploration Potential 93
10. DRILLING 94
10.1. Drill Methods 95
10.2. Drill Hole Logging Procedure 100
10.3. Core Recovery 100
10.4. Collar Survey 100
10.5. Downhole Survey 100
10.6. Geotechnical Drilling 101
10.7. Drill Core Interval Length/True Thickness 101
10.8. Comments on Section 10 102
11. SAMPLE PREPARATION, ANALYSES AND SECURITY 103
11.1. Sampling Methods 103
11.1.1. Channel 103
11.1.2. Core 103

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
11.2. Density 104
11.3. Laboratories 104
11.4. Sample Preparation and Analysis 105
11.4.1. Sample Preparation 105
11.4.2. Analysis 105
11.5. Quality Assurance and Quality Control 107
11.5.1. Overview 107
11.5.2. SRMs/CRMs 107
11.5.3. Blanks 109
11.5.4. Inter-Laboratory Bias Assessment (Check Assays) 112
11.5.5. Databases 114
11.6. Sample Security 114
11.6.1. Channel Samples 114
11.6.2. Drill Core Samples 114
11.7. Comment on Section 11 115
12. DATA VERIFICATION 116
12.1. Legacy Data 116
12.2. First Majestic 116
12.3. Site Visits 117
12.4. Comment on Section 12 117
13. METALLURGICAL TESTING 118
13.1. Overview 118
13.2. Metallurgical Testing 118
13.2.1. Mineralogy 118
13.2.2. Monthly Composite Samples 119
13.2.3. Sample Preparation 119
13.3. Comminution Evaluations 119
13.4. Cyanidation, Reagent and Grind Size Evaluations 120
13.5. Oxidant Studies 121
13.6. Extra-Fine Grinding 123
13.7. Recovery Estimates 124
13.8. Metallurgical Variability 126
13.9. Deleterious Elements 127
14. MINERAL RESOURCE ESTIMATES 128
14.1. Introduction 128
14.2. Block Model-Based Mineral Resource Estimation 128
14.2.1. Overview 128
14.2.2. Sample Database 129
14.2.3. Geological Interpretation and Modeling 129
14.2.4. Exploratory Sample Data Analysis 133
14.2.5. Composite Sample Preparation 134
14.2.6. Evaluation of Composite Sample Outlier Values 137
14.2.7. Variography 137
14.2.8. Bulk Density 140

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
14.2.9. Resource Estimation Process 140
14.2.10. Block Model Validation 143
14.2.11. Mineral Resource Classification 148
14.3 Polygonal Method for Resource Estimation 150
14.3.1 Polygonal Estimation of Tonnage and Grade 151
14.3.2 Mineral Resource Classification for the Polygonal Method Estimates 152
14.4 Reasonable Prospects for Eventual Economic Extraction 152
14.5 Mineral Resource Estimate Statement 153
14.6 Factors that May Affect the Mineral Resource Estimate 156
14.7 Comments on Section 14 156
15. MINERAL RESERVES ESTIMATES 157
15.1. Methodology 157
15.2. Net Smelter Revenue and Cut-off Grades 158
15.3. Block Model Preparation 160
15.4. Dilution 161
15.5. Mining Loss 162
15.6. Mineral Reserve Estimates 164
15.7. Mineral Reserves Statement 165
15.8. Factors that May Affect the Mineral Reserve Estimates 167
16. MINING METHODS 168
16.1. General Description 168
16.2. Mining Methods and Mine Design 169
16.2.1. Geotechnical and Hydrogeological Considerations 169
16.2.2. Development and Access 171
16.2.3. Mining Methods and Stope Design 173
16.2.4. Ore and Waste Haulage 175
16.3. Mine Services 175
16.3.1. Ventilation 175
16.3.2. Backfill 177
16.3.3. Dewatering 177
16.3.4. Water Supply 178
16.3.5. Power Supply 179
16.3.6. Compressed Air 179
16.3.7. Explosives 179
16.4. Production and Scheduling 179
16.4.1. Development Schedule 179
16.4.2. Production Schedule 180
16.4.3. Equipment and Manpower 181
17. RECOVERY METHODS 183
17.1. Introduction 183
17.1.1. Process Flowsheet 183
17.2. Processing Plant Configuration 185
17.2.1. Plant Feed 185
17.2.2. Crushing 186

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
17.2.3. Grinding 186
17.2.4. Sampling 187
17.2.5. Cyanide Leaching circuit 187
17.2.6. Counter Current Decantation System 188
17.2.7. Merrill Crowe and Precipitate Handling 189
17.2.8. Tailings Management 189
18. INFRASTRUCTURE 191
18.1. Local Infrastructure 191
18.2. Transportation and Logistics 191
18.3. Waste Rock Storage Facilities 192
18.4. Tailings Storage Facilities 192
18.5. Camps and Accommodation 193
18.6. Power and Electrical 193
18.7. Communications 195
18.8. Water Supply 196
19. MARKET CONSIDERATION AND CONTRACTS 197
19.1. Market Considerations 197
19.2. Commodity Price Guidance 197
19.3. Product and Sales Contracts 198
19.4. Streaming Agreement 198
19.5. Deleterious Elements 198
19.6. Supply and Services Contracts 198
19.7. Comments on Section 19 199
20. ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT 200
20.1. General 200
20.2. Environmental Studies, Permits and Issues 200
20.2.1. Surface Hydrology 201
20.2.2. Surface Water Geochemistry 201
20.2.3. Hydrogeology 201
20.2.4. Soil 201
20.2.5. Air Quality 202
20.2.6. Noise 202
20.2.7. Flora and Fauna 202
20.2.8. Social and Cultural Baseline Studies 202
20.2.9. Historical and Cultural Aspects 203
20.3. Tailings Handling and Disposal 203
20.4. Waste Material Handling and Disposal 204
20.5. Mine Effluent Management 204
20.6. Process Water Management 204
20.7. Hazardous Waste Management 204
20.8. Monitoring 205
20.9. Permits 206
20.10. Closure Plan 208
20.11. Corporate Social Responsibility 210

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
20.11.1. Ejidos 210
21. CAPITAL AND OPERATING COST 212
21.1. Capital Costs 212
21.2. Operating Costs 212
22. ECONOMIC ANALYSIS 214
23. ADJACENT PROPERTIES 214
24. OTHER RELEVANT DATA AND INFORMATION 214
25. INTERPRETATION AND CONCLUSIONS 215
25.1. Mineral Tenure, Surface Rights and Agreements 215
25.2. Geology and Mineralization 215
25.3. Exploration and Drilling 215
25.4. Data Analysis 216
25.5. Metallurgical Testwork 216
25.6. Mineral Resource Estimates 217
25.7. Mineral Reserve Estimates 218
25.8. Mine Plan 218
25.9. Operations Continuity 219
25.10. Processing 219
25.11. Infrastructure 219
25.12. Markets and Contracts 220
25.13. Permitting, Environmental and Social Considerations 220
25.14. Capital and Operating Cost Estimates 220
25.15. Economic Analysis Supporting Mineral Reserve Declaration 221
25.16. Conclusions 221
26. RECOMMENDATIONS 222
26.1. Phase 1 222
26.1.1. Exploration 222
26.1.2. Production Channel Samples 222
26.1.3. Resource Estimation using Polygonal Method 223
26.1.4. Reconciliation 223
26.1.5. Expansion of the CCD Circuit 223
26.1.6. Fine Grinding 223
26.1.7. Tailings Filtering 224
26.1.8. "Cuevecillas" Water Storage Dam 225
26.2. Phase 2 225
26.2.1. Tailings Filtering 225
26.2.2. "Cuevecillas" Water Storage Dam 225
27. REFERENCES 226

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

List of Tables

Table 1-1: Input Parameters for Evaluation of Reasonable Prospects of Eventual Economic Extraction. 13
Table 1-2: San Dimas Measured and Indicated Mineral Resource Estimate (effective date December 31, 2020) 14
Table 1-3: San Dimas Inferred Mineral Resource Estimate (effective date December 31, 2020) 14
Table 1-4: Economic Parameters assumed for calculation of NSR. 15
Table 1-5: San Dimas Mineral Reserves Statement (Effective Date December 31, 2020) 17
Table 1-6 San Dimas Life-of-Mine Development Schedule 18
Table 1-7 San Dimas Life-of-Mine Production Schedule 19
Table 1-8: San Dimas Mining Capital Costs Summary (Sustaining Capital) 21
Table 1-9: San Dimas Operating Costs 22
Table 1-10: San Dimas Annual Operating Costs 22
Table 2-1: Site Visit Dates and Scope of Personal Inspection 26
Table 2-2: List of Abbreviations and Units 27
Table 4-1: Summary of the Six Concessions Group, San Dimas Mine. 35
Table 4-2: San Dimas Concessions Group List 36
Table 4-3: Candelero Concessions Group List 37
Table 4-4: Ventanas Concession Group List 38
Table 4-5: Lechuguillas Concessions Group List 38
Table 4-6: Cebollas Concessions Group List 39
Table 4-7: Truchas Concessions Group List 39
Table 6-1: Summary History of San Dimas Property 46
Table 6-2: San Dimas Monthly Production After First Majestic's Acquisition 50
Table 7-1: List of Veins by Mine Zone in the San Dimas and Ventanas Concessions Groups 62
Table 10-1: Distribution of Exploration Drilling in San Dimas by Mine Zone 94
Table 10-2: Representative Drill Hole Intercepts, Jael, Jessica, Regina, and Robertita Veins 99
Table 11-1: Laboratories 105
Table 11-2: Analytical Methods 106
Table 11-3: Summary of Inter-Laboratory Bias Check Results 112
Table 13-1: Grindability Test Results for Different Composite Samples (2020) 120
Table 13-2: Metallurgical Recoveries achieved in San Dimas 2018-2020 125
Table 14-1: Mineral Resource Estimation and Modelling Methods by Mine Zone 128
Table 14-2: Diamond Drill Hole and Production Channel Data by Mine Zone, San Dimas 129
Table 14-3: Percentage of Composite Samples Capped by Domain 137
Table 14-4: Remaining Metal content by Domain after Capping 137
Table 14-5: Summary of Ag-Au Estimation Parameters for the San Dimas Block Models 141
Table 14-6: Input Parameters for Evaluation of Reasonable Prospects of Eventual Economic Extraction. 153
Table 14-7: San Dimas Measured and Indicated Mineral Resource Estimate 155
Table 14-8: San Dimas Inferred Mineral Resource Estimate (effective date December 31, 2020) 155
Table 15-1: Economic Parameters Assumed for Calculation of NSR. 159

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
Table 15-2: Initial Cut-Off Grade Applied to Longhole 159
Table 15-3: Initial Cut-Off Grade Applied to Cut-and-Fill 160
Table 15-4: Dilution and Mining Loss Parameters 164
Table 15-5: San Dimas Mineral Reserves Statement (effective date December 31, 2020) 166
Table 16-1: San Dimas Geotechnical Units 169
Table 16-2: Development Profiles 171
Table 16-3: San Dimas Development 2018 to 2020 172
Table 16-4: Fresh Air Requirement 177
Table 16-5: San Dimas Life-of-Mine Development Schedule 180
Table 16-6: San Dimas Life-of-Mine Production Schedule 181
Table 16-7: Breakdown of Personnel as of December 2020 181
Table 16-8: Equipment Summary as of December 2020 182
Table 17-1: Leach Time Retention Time in the San Dimas Plant 188
Table 19-1: Metal Prices Used for the June 2020 Mineral Resource and Mineral Reserve Estimates 197
Table 20-1: Summary of Surface Hydrology Studies 201
Table 20-2: Summary of Surface Water Studies 201
Table 20-3: Summary of Soil Sampling Studies 201
Table 20-4: Air Quality Studies 202
Table 20-5: Noise Impact Studies 202
Table 20-6: Flora and Fauna Studies 202
Table 20-7: Summary of Social Studies 203
Table 20-8: Tailings and Waste Rock Studies 204
Table 20-9: Environmental Monitoring Activities 205
Table 20-10: Major Permits Issued 207
Table 20-11: Permits in Process 208
Table 20-12: Closure Cost Estimate 2020 209
Table 21-1: San Dimas Mining Capital Costs Summary (Sustaining Capital) 212
Table 21-2: San Dimas Operating Costs 213
Table 21-3: San Dimas Annual Operating Costs 213

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

List of Figures

Figure 4-1: Location Map, San Dimas mine. 29
Figure 4-2: Map of the Concession Outlines for the San Dimas Mine 30
Figure 4-3: Map of the San Dimas Concessions Group 31
Figure 4-4: Map of the Candelero Concessions Group 32
Figure 4-5: Map of the Ventanas Concessions Group 33
Figure 4-6: Map of the Lechuguillas Concessions Group 33
Figure 4-7: Map of the Cebollas Concessions Group 34
Figure 4-8: Map of the Truchas Concessions Group 34
Figure 5-1: Road Access to San Dimas mine 42
Figure 5-2: Access Road from San Ignacio to Tayoltita 43
Figure 5-3: Processing Plant, Airstrip and Rugged Terrain, Aerial View looking East 44
Figure 6-1: Map showing Mining Tunnels at the Time the Property was Acquired by Wheaton River 48
Figure 6-2: San Dimas Production from 2003 to 2020 49
Figure 7-1: Physiographic Provinces around the San Dimas Mining District 51
Figure 7-2: Regional Geological Map of Central Sierra Madre Occidental 52
Figure 7-3: Stratigraphic Column, San Dimas District 53
Figure 7-4: Geological Map of San Dimas Mining District 54
Figure 7-5: Structural Map of San Dimas Concessions Group 56
Figure 7-6: Geological Section Across the San Dimas Concessions Group 57
Figure 7-7: The Jessica Vein Within the Favourable Zone, Vertical Section 59
Figure 7-8: Paragenetic Vein Sequence, San Dimas 60
Figure 7-9: Roberta Vein, Central Block, San Dimas 61
Figure 7-10: Deposit Geology Map 63
Figure 7-11: Vein Map, San Dimas 64
Figure 7-12: Longitudinal section, San Antonio Vein, West Block, San Dimas 65
Figure 7-13: Longitudinal Section, Victoria Vein, Graben Block, San Dimas 66
Figure 7-14: Longitudinal Section, Pozolera Vein, Central Block, San Dimas 67
Figure 7-15: Longitudinal Section, San Luis Vein, Tayoltita Block, San Dimas 68
Figure 7-16: Longitudinal Section, Magdalena Vein, Santa Rita Area, San Dimas 69
Figure 7-17: Longitudinal Section, Camichin Vein, El Cristo Area, San Dimas 70
Figure 7-18: Longitudinal Section, Alto de Arana Vein, Alto de Arana Area, San Dimas 71
Figure 7-19: Longitudinal section, San Vicente Vein, San Vicente Area, San Dimas 72
Figure 8-1: Genetic Model for Epithermal Deposits 75
Figure 8-2: Geochemical Zonation model San Dimas 77
Figure 8-3: Example Section of the Favourable Zone for Mineralization, San Dimas 78
Figure 9-1: San Dimas Concessions Group 79
Figure 9-2: Areas Explored in San Dimas Project in 2020 80
Figure 9-3: Geological Map, San Dimas Project 82
Figure 9-4: Geological Map, Ventanas Area 83
Figure 9-5: Geological Map, Jessica Vein 84
Figure 9-6: Surface Gold Anomaly Map, San Dimas Area 85

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
Figure 9-7: Longitudinal Section for Luz-Reyes Vein showing Gold Isograds, San Dimas Area 86
Figure 9-8: Geological Map and Gold-Equivalent Anomalies, Ventanas Area 87
Figure 9-9: Magnetic Field Reduced to Pole, San Dimas Mining Area 89
Figure 9-10: Aster Image, San Dimas Mining Area 90
Figure 9-11: Satellite Image Magnetic Tilt Derivative Inversion and Alteration, San Dimas Area 91
Figure 9-12: Main Mining Tunnels, San Dimas Mining Area 92
Figure 10-1: Plan view of drilling at San Dimas by Mine Zones 96
Figure 10-2: Vertical Section, Jael Vein 97
Figure 10-3: Vertical Section, Jessica Vein 97
Figure 10-4: Vertical Section, Regina Vein 98
Figure 10-5: Vertical Section, Robertita Vein 99
Figure 10-6: Vertical Section and Plan View, Jessica Vein Drilling Setup 102
Figure 11-1: Example of 2019 High-Grade SRM Gold and Silver Standard Charts, San Dimas Laboratory 109
Figure 11-2: Example of 2019 Time Sequence Blank Performance Charts, San Dimas Laboratory 111
Figure 11-3: Inter-Laboratory Bias Check, San Dimas and Central Laboratories 113
Figure 13-1: Typical Distribution of Minerals 119
Figure 13-2: Comparison of Au & Ag Extractions Between Mill and Laboratory Performances 121
Figure 13-3: Comparative Results at Bench Scale: Plant Conditions Versus Oxidant Addition - 2018 122
Figure 13-4: Comparative Results at Bench Scale: Plant Conditions Versus Oxidant Addition - 2019 123
Figure 13-5: Comparative Results Using an Extra-Fine Particle Size 124
Figure 13-6: Histogram of Daily Metallurgical Recovery of Silver from Jan-2018 to Dec 2020 125
Figure 13-7: Histogram of Daily Metallurgical Recovery of Gold from Jan-2018 to Dec 2020 126
Figure 14-1: Plan-view Location of Estimation Domains by Mine Zone 130
Figure 14-2: Faulted Geological Model for the Jael Vein, Vertical and Plan Views 131
Figure 14-3: Faulted Geological Model for the Jessica Vein, Vertical and Plan Views 131
Figure 14-4: Faulted Geological Model for the Regina Vein, Vertical and Plan Views 132
Figure 14-5: Faulted Geological Model for the Robertita Vein, Vertical and Plan Views 133
Figure 14-6: Example of Hard Boundary Contact Analysis for Silver for the Jessica Vein. 134
Figure 14-7: Sample Interval Lengths, Composited vs. Uncomposited, Jessica Vein 135
Figure 14-8: Sample Interval Lengths, Composited vs. Uncomposited, Jael Vein 135
Figure 14-9: Sample Interval Lengths, Composited vs. Uncomposited, Regina Vein 136
Figure 14-10: Sample Interval Lengths, Composited vs. Uncomposited, Robertita Vein 136
Figure 14-11: Variogram Model for the Jessica Vein 138
Figure 14-12: Variogram Model for the Jael Vein 138
Figure 14-13: Variogram Model for the Regina Vein 139
Figure 14-14: Variogram Model for the Robertita Vein 139
Figure 14-15: Estimation Passes for the Jael Vein, Vertical Section 141
Figure 14-16: Estimation Passes for the Jessica Vein, Vertical Section 142
Figure 14-17: Estimation Passes for the Regina Vein, Vertical Section 142
Figure 14-18: Estimation Passes for the Robertita Vein, Vertical Section 143
Figure 14-19: Jael Ag Block Model and Composite Sample Values, Vertical Section 144

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
Figure 14-20: Jessica Ag Block Model and Composite Sample Values, Vertical Section 144
Figure 14-21: Regina Ag Block Model and Composite Sample Values, Vertical Section 145
Figure 14-22: Robertita Ag Block Model and Composite Sample Values, Vertical Section 145
Figure 14-23: Swath Plot in Y across the Jael Vein, Ag Values 146
Figure 14-24: Swath Plot in Y across the Jessica Vein, Ag Values 146
Figure 14-25: Swath Plot in Y across the Regina Vein, Ag Values 147
Figure 14-26: Swath Plot in Y across the Robertita Vein, Ag Values 147
Figure 14-27: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Jael Vein 149
Figure 14-28: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Jessica Vein 149
Figure 14-29: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Regina Vein 150
Figure 14-30: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Robertita Vein 150
Figure 14-31: Distribution of Polygonal Resources by Mine Zone 151
Figure 14-32: Example of 2D Polygons in a Schematic Long Section 152
Figure 15-1: Schematic Example of Dilution 162
Figure 15-2: Dilution and Mining Loss (longhole mining methods) 163
Figure 15-3: Dilution and Ore Loss (cut-and-fill mining method) 164
Figure 16-1: San Dimas Mining Areas 168
Figure 16-2: Typical Ground Support Patterns 170
Figure 16-3: Jessica Vein Access Development 172
Figure 16-4: Cut-and-Fill Long Section Schematic 173
Figure 16-5: Longhole Uphole Stope Section 174
Figure 16-6: Ventilation System 176
Figure 16-7: Pumps Station Typical Arrangement 178
Figure 17-1: San Dimas Schematic Crushing Plant Flowsheet 184
Figure 17-2: San Dimas Processing Plant Flowsheet 185
Figure 18-1: San Dimas Infrastructure Map 191
Figure 18-2: Tailings Storage Facility - Overall Plan Site 193
Figure 18-3: Las Truchas Dam - Aerial View 194
Figure 18-4: Las Truchas Hydroelectric Plant 194
Figure 18-5: San Dimas Energy Consumption 195
Figure 26-1: Dual Circuit with Stirred Mill for Partial Secondary Grinding 224

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1. SUMMARY

Mr. Ramón Mendoza Reyes, Mr. Joaquín Merino, Ms. María Elena Vázquez and Mr. Persio P. Rosario prepared this technical report (the Report) on the San Dimas Silver/Gold Mine (the San Dimas mine or the Project), located in the state of Durango, Mexico.  The mine is owned and operated by Primero Empresa Minera, S.A. de C.V. (Primero Empresa), which is an indirectly wholly-owned subsidiary of First Majestic Silver Corp. (First Majestic).  First Majestic acquired the San Dimas mine from Primero Mining Corp. in May 2018.

The Report provides information on Mineral Resource and Mineral Reserve estimates, and mine and process operations and planning for the San Dimas mine. The Mineral Resource and Mineral Reserve estimates are reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves (May 2014; the 2014 CIM Definition Standards).

1.1. Project Description, Location and Access

1.1.1. Property Description, Ownership, and Location

The San Dimas Silver/Gold mine (San Dimas mine) is an underground silver and gold mine which First Majestic acquired in 2018 from Primero Mining Corp. The mine is operated by Primero Empresa Minera, S.A. de C.V. (Primero Empresa) which is an indirectly wholly-owned subsidiary of First Majestic Silver Corp. (First Majestic).

The San Dimas mine is located near the town of Tayoltita on the borders of the States of Durango and Sinaloa, approximately 125 km northeast of Mazatlán, Sinaloa, and 150 km west of the city of Durango, in Durango State, Mexico. The San Dimas mine is centered on latitude 24°06'38"N and longitude 105°55'36"W.

Mining operations can be conducted year-round in the San Dimas mine.

1.1.2. Mineral Tenure, Royalties, and Surface Rights, and Permitting

The San Dimas mine consists of 119 individual concessions covering 71,839 ha in total that have been organized into six groups of concessions: the San Dimas, Candelero, Ventanas, Lechuguillas, Cebollas and Truchas concessions groups.

In 2013, the Mexican Federal government introduced a mining royalty, effective January 1, 2014, based on 7.5% of taxable earnings before interest and depreciation. In addition, precious metal mining companies must pay a 0.5% royalty on revenues from gold, silver, and platinum. There is no other royalty to be paid on the San Dimas mining concessions.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

First Majestic has a purchase agreement with Wheaton Precious Metals. Wheaton Precious Metals invested $220 million as an advance deposit in May 2018 which entitles Wheaton Precious Metals to receive 25% of the gold equivalent production from the San Dimas mine (based on a fixed exchange ratio of 70 silver ounces to 1 gold ounce) in exchange for ongoing payments equal to the lesser of $606 (subject to a 1% annual inflation adjustment) and the prevailing market price, for each gold equivalent ounce delivered under the agreement. The exchange ratio includes a provision to adjust the gold to silver ratio if the average gold to silver ratio moves above or below 90:1 or 50:1, respectively, for a period of six months.

First Majestic (and its predecessor companies) secured surface rights by either acquisition of private and public land or by entering into temporary occupation agreements with surrounding Ejido communities. The surface right agreements in place with the communities provide for use of surface land for exploration activities and mine-related ventilation infrastructure. Current agreements cover the operation for the LOM plan presented in the Report.

San Dimas holds the necessary permits to operate, including the Environmental License, water rights concessions, federal land occupation concessions, among others.

1.1.3. Accessibility, Local Resources, Infrastructure and Physiography

The San Dimas mine is located 1 km from the center of Tayoltita, a town with approximately 6,000 inhabitants. Access to the San Dimas area is by air or road from the city of Durango and Mazatlán. Flights from either Mazatlán or Durango to the town of Tayoltita require approximately 40 minutes. Road access from Durango is through a 112 km paved road plus 120 km service road to Tayoltita, this trip requires about six and a half hours.

Mining activities at the San Dimas mine are performed by a combination of First Majestic personnel and contract workers. Mining operations are conducted year-round.

Water for the mining operations is obtained from wells and from the Piaxtla River. First Majestic also supplies water to Tayoltita from an underground thermal spring at the historic Santa Rita mine.

The main infrastructure of the San Dimas district consists of roads, a townsite, an airport, the Tayoltita mill crushing and processing facilities, the Tayoltita/Cupias dry-stack tailings facilities, the Las Truchas hydroelectric generation facilities, a portable diesel power generation site, and the San Dimas mine.  The main administrative offices and employee houses, the warehouses, assay laboratory, core shack and other facilities are located in Tayoltita.

The San Dimas mine is located in the central part of the Sierra Madre Occidental, a mountain range characterized by rugged topography with steep, often vertical, walled valleys and narrow canyons. Elevations vary from 2,400 metres above mean sea level (masl) on the high peaks to elevations of 400 masl in the valley floor of the Piaxtla River.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.2. History

1.2.1. Ownership History

The San Dimas mine area contains a series of epithermal gold silver veins that have been mined intermittently since 1757. Modern mining began in the 1880s, when the American San Luis Mining Company acquired the Tayoltita mine and American Colonel Daniel Burns took control of the Candelaria mine and began working in the area. Work on the property has continued under numerous different owners to the present.

In 1961, Minas de San Luis, a company owned by Mexican interests, acquired 51% of the San Dimas group of properties and assumed operations of the mine. In 1978, the remaining 49% interest in the mine was obtained by Luismin S.A. de C.V (Luismin). In 2002, Wheaton River Minerals Ltd. (Wheaton River) acquired the property from Luismin and in 2005 Wheaton River merged with Goldcorp Inc. (Goldcorp). Under its prior name Mala Noche Inc., Primero Mining Corp. (Primero) acquired the San Dimas mine from subsidiaries of Goldcorp in August 2010. In May 2018, First Majestic acquired 100% interest in the San Dimas mine through acquisition of Primero.

1.2.2. Production History

Historical production through December 2020 from the San Dimas district is estimated at more than 748 Moz of silver and more than 11 Moz of gold, placing the district third in Mexico for precious metal production after Pachuca and Guanajuato. The majority of this production is prior to First Majestic's acquisition of the property in 2018. The average production rate by First Majestic during 2019-2020 at the San Dimas Mine was 1,975 tpd.

1.3. Geological Setting, Mineralization and Deposit Types

1.3.1. Regional Geology

The San Dimas mining district is located in the central part of the Sierra Madre Occidental (SMO), near the Sinaloa-Durango state border.

The SMO consists of Late Cretaceous to early Miocene igneous rocks including two major volcanic successions totalling approximately 3,500 m in thickness and are separated by erosional and depositional unconformities: the Lower Volcanic Complex (LVC) and Upper Volcanic Group (UVG).

The LVC consists of predominantly intermediate volcanic and intrusive rocks formed between approximately 100 and 50 Ma. After a transition period, UVG volcanism consisted of primarily of silicic ignimbrites were deposited during two ignimbrite episodes at approximately 35-29 Ma along the entire province and at approximately 24-20 Ma in the southern SMO. Mafic lavas are found intercalated within the ignimbrite successions since 33 Ma.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.3.2. Local Geology and Volcanogenic Stratigraphy

The LVC has traditionally been divided into local geological units based on field observations. From base to top, these are the Socavón rhyolite, the Buelna andesite, and the Portal rhyolite, which are a sequence of interlayered tuffs and lesser lava flows of felsic to intermediate composition. The lower part of the sequence consists of the more than 700 m thick Socavón rhyolite, which is host to several productive veins in the district. This overlain by the Buelna andesite and the Portal Rhyolite which range from 50-250 m in thickness.

The lower sequence of rhyolitic rocks is unconformably overlain by a succession of andesitic lava flows and volcanogenic sedimentary rocks including the Productive Andesite (> 750 m thick), Las Palmas rhyo-andesite tuffs and flows (>300 m thick), and the volcanogenic sedimentary unit the Camichin Unit.

The UVG sits unconformably on the LVC and consists of the lower Guarisamey andesite and the Capping Rhyolite. The Capping Rhyolite consists of rhyolitic ash flows and air-fall tuffs and may reach as much as 1,500 m in thickness in the eastern part of the district.

1.3.3. Intrusive Rocks

The LVC and UVG volcanic rocks are intruded by intermediate rocks, consisting of the Arana intrusive andesite and the Arana intrusive diorite, and a felsic suite comprising the Piaxtla granite and the Santa Lucia, Bolaños, and Santa Rita dikes. The basic dikes intrude both the LVC and the UVG.

1.3.4. Structural Geology

The most prominent structures at San Dimas are major north-northwest-trending normal faults with opposite vergence that divide the district into five fault-bounded blocks that are tilted to the east-northeast or west-northwest. The major faults exhibit northeast-southwest extension, and dips vary from nearly vertical to approximately 55°. East-west to west-southwest-east-northeast striking fractures, perpendicular to the major normal faults, are often filled by quartz veins, dacite porphyry dikes, and pebble dikes.

Three deformational events are related to the development of the major faults, veins, and dikes. The late Eocene D1 event represents tension gashes with an east-west to northeast-southwest orientation and a slight right-lateral offset.  D1 structures host the first hydrothermal vein systems. The early Oligocene D2 event produced north-south-trending right-lateral strike-slip to transtensional faults and is related to the development of a second set of hydrothermal veins. The O late Oligocene-Miocene D3 deformation produced the major fault blocks that affected the entire district along northwest-southeast-striking normal faults. The northwest-southeast D3 extensional faulting and erosion exposed the silver and gold mineralization and tilted all the succession prior to the deposition of a ∼24 Ma ignimbrite package.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.3.5. Mineralization

Within the San Dimas district, the mineralization is typical of epithermal vein structures with banded and drusy textures. Epithermal-style veins occupy east-west-trending fractures, except in the southern part of the Tayoltita Block where they strike mainly northeast, and in the Santa Rita area where they strike north-northwest.

The "favourable zone" concept for San Dimas was developed in the mid-1970s in the Tayoltita Block based on the San Luis vein. Mine geologists observed that bonanza grades along the San Luis vein were spatially related to the Productive andesite unit and/or to the interface between the Productive andesite and the Portal rhyolite and/or the Buelna andesite. This spatial association of vein-hosted mineralization with a favorable host-rock zone within the volcanic sequence is now recognized in other fault blocks and constitutes a major exploration criterion for the district.

The silver- and gold-rich quartz veins formed in two different phases. The east-west striking veins developed first, followed by a second system of north-northeast-striking veins. Veins pinch and swell and commonly exhibit bifurcation, horse-tailing, and sigmoidal structures. The veins have been followed underground from a few metres in strike-length to more than 1,500 m. One of these veins, the Jessica Vein, extends for more than 1,000 m in the Central Block.

Three major stages of mineralization have been recognized in the district: (1) early stage; (2) ore forming stage; and (3) late-stage quartz. The minerals characteristic of the ore-forming stage consist of white, to light grey, medium to coarse grained crystalline quartz with intergrowths of base metal sulphides (sphalerite, chalcopyrite and galena) as well as pyrite, argentite, polybasite, stromeyerite, native silver and electrum. The veins are formed by filling previous fractures and typical textures observed include crustification, comb structure, colloform banding and brecciation.

1.3.6. Mineral Deposits

A total of 118 silver and gold mineralized quartz veins have been recognized in the San Dimas Concessions Group, which represents 38% of the total property area. Another seven veins have been mapped to some extent in the Ventana Concessions Group. The known veins are grouped by mine zone in the San Dimas Concessions Group and in the Ventana Concessions Group. All Mineral Resources reported for San Dimas are hosted in the deposits that have been found in the San Dimas Concessions Group.

The local geology is characterized by north-northwest-south-southeast-oriented fault blocks that are bounded by major faults. The veins are generally west-southwest-east-northeast-oriented, within a corridor approximately 10 km wide. The veins are often truncated by the north-northwest-south-southeast-trending major faults, separating the original veins into segments. These segments are named as individual veins and grouped within the mine zones by fault block.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The mine zone groupings of veins are, from west to east: West Block, Graben Block, Central Block, Tayoltita Block, Alto de Arana Block (also know as Arana HW), San Vicente, El Cristo and Santa Rita.

1.3.7. Deposit Types

The vein-hosted mineral deposits within the San Dimas Mine district are considered to be examples of silver- and gold-bearing epithermal quartz veins that formed in a low-sulphidation setting. Epithermal veins are typically localized along structures but may also form in permeable lithologies. Upward-flaring ore zones centred on structurally controlled hydrothermal conduits are typical. Large to small veins and stockworks are common. Vein systems can be laterally extensive, but the associated ore shoots have relatively restricted vertical extent. High-grade ores are commonly form within dilational faults zones near flexures and fault splays. Textures typical of low-sulphidation quartz vein deposits include open-space filling, symmetrical and other layering, crustification, comb structure, colloform banding and complex brecciation.

1.4. Exploration

The San Dimas Mine district has been the subject of modern exploration and mine development activities since the early 1970s, and a considerable information database has been developed from both exploration and mining activities. Exploration uses information from surface and underground mapping, sampling, and drilling together with extensive underground mine tunneling to help identify targets. Other exploration activities include prospecting, geochemical surface sampling, geophysical and remote sensing surveys.

Most of the exploration activities carried out in the San Dimas mine area, centered around the Piaxtla River where exposures of silver-gold veins were found. Outside of this area, the Lechuguilla and Ventana Concessions Group areas were explored to some extent during 2008 and 2015-16. The remainder of the concessions have had limited or no exploration as they are covered by thick piles of post-mineral ignimbrites.

The most important exploration strategy at San Dimas has been underground mine tunnelling from south to north since the favorable horizon concept was first proposed in 1975 by Luismin. Tunnelling consists of advancing mine development to the north at the preferred elevation to intersect quartz veins mapped at surface. This method discovered veins with no surface exposure, such as the Jessica vein, which currently is a major contributor to silver and gold production. This exploration strategy has successfully been used by all companies after Luismin, resulting in more than 500 km of underground mine development.

The San Dimas exploration potential remains open in all the mine zones. As the mine was developed to the north, new veins were found. South of the Piaxtla River, the El Cristo area has potential for new quartz vein discoveries. The West Block is currently being explored by tunnelling. Opportunities to intercept the projection of fault-offset quartz veins from the Graben Block are considered good.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.5. Drilling

Drilling in the San Dimas district is focused on the identification and delineation of vein-hosted silver and gold resources by using structural and stratigraphic knowledge of the district, and preferred vein trends. Since the "favourable horizon" for mineral deposits concept emerged in 1975, the exploration drilling strategy has focused on core drilling perpendicular to the preferred vein orientation within the mine zones, which has proven to be the most effective method of exploration in the area. Core drilling is predominantly done from underground stations, as the rugged topography (i.e., access to surface drill stations) and the great drilling distance from surface locations to the target(s) makes surface drilling challenging and expensive. Over 1,059,000 m of core drilling has been completed since 2000, and from 2018 through December 2020, more than 230,600 m of drilling was completed.

1.6. Sampling, Analysis and Data Verification

1.6.1. Sampling Methods

Core Samples

Diamond drill core of BTW, BQ and NQ diameter is delivered to the core logging facility where San Dimas geologists select and mark sample intervals according to lithological contacts, mineralization, alteration, and structural features. Sample intervals range from 0.25-1.20 m in length within mineralized structures to 0.5-1.20 m in length when sampling waste rock.

Drill core intervals selected for sampling are cut in half using a diamond saw.  Softer rocks are split using a hydraulic guillotine splitter. One half of the core is retained in the core box for further inspection and the other half is placed in a sample bag. For smaller diameter delineation drill core (TT-46) the entire core is sampled for analysis. 

The sample number is printed with a marker on the core box beside the sampled interval, and a sample tag is inserted into the sample bag. Sample bags are tied with string and placed in rice bags for shipping.

Channel Samples

Since 2013, underground mine production channel samples for ore control and channel samples for resource estimation have been collected at San Dimas.  Earlier channel samples were taken either across the roof of developments or across the roof in developments. From 2016 to present, production channel samples for ore control and channel samples for resource estimation are routinely taken across the mine development face and within stopes.

Channel sampling for resource estimation is supervised by San Dimas geologists and undertaken using a hammer and chisel with a tarpaulin laid below to collect the samples. Sample lengths range from 0.20-1.20 m. Sample intervals are first marked with a line across the face perpendicular to the vein dip, respecting vein/wall contacts and textural or mineralogical features. The samples are taken as a rough channel along the marked line, with an emphasis on representative volume sampling. The sample is collected on the tarpaulin, broken with a hammer, and quartered and homogenized to obtain a 3 kg sample. The sample is bagged and labelled with sample number and location details.  Sketches and photographs are recorded of the face sampled, showing the samples' physical location from surveying and the measured width of each sample. Since 2011, all channel samples are dispatched to the San Dimas Laboratory.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.6.2. Density

Bulk density measurements were systematically taken on drill core since October 2012.  Since 2016, specific gravity measurements were collected on 10 cm or longer whole core vein samples using the unsealed water immersion method.  The samples are weighed in air, recorded, then placed in a basket suspended in the water and the weight is again recorded. The samples are not waxed or sealed.  The formula used is:

Specific gravity (SG) = Weight in air / (Weight in air - Weight in water)

Based on this method, an average bulk density value of 2.6 t/m3 was determined. 

1.6.3. Laboratories

Since 2004, four different laboratories have been used for sample preparation and analysis. These include: (1) First Majestic's San Dimas Laboratory, no certified and not independent of First Majestic, used primarily for ore control and production related sampling such as process control and channel samples; (2) SGS Durango, certified under ISO 7025 and independent of First Majestic, used for drill core and channel samples; (3) ALS-Chemex Zacatecas, certified under ISO 7025 and independent of First Majestic, used for check assays; and (4) First Majestic's Central Laboratory located at the La Parrilla Mine, certified under ISO 9001 and not independent of First Majestic, used as the primary laboratory for drill core and checks on channel samples.

1.6.4. Sample Preparation

Prior to 2018 channel and drill core samples were dried, crushed and pulverized. Since 2018, samples are dried at 110°C, crushed to 80% passing 2 mm using a Marcy jaw and Hermo crushers, split into 250 g subsamples using a Jones splitter, and pulverized using an ESSA pulveriser to 80% passing 75 μm. At SGS Durango, drill core and channel check samples were dried at 105°C, split to 3.5 kg, crushed 75% passing 2 mm, and split into a 250 g subsample which was pulverized to 85% passing 75 μm.  At the Central Laboratory, drill core and channel check samples are dried at 100°C for eight hours, crushed to 85% passing 2 mm, split into a 250 g subsample, and pulverized to 85% passing 75 μm.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.6.5. Analysis

There is no detailed information describing sample analysis for drill core and channel samples submitted to the San Dimas Laboratory before 2018. In general, samples were analyzed for gold using a 10 g fire assay (FA) with a gravimetric finish.  Between 2013 and 2018, drill core and channel check samples sent to SGS Durango were analyzed for gold by a 30 g FA atomic absorption spectroscopy (AAS) method. Samples returning >10 g/t Au were reanalyzed by a 30 g FA gravimetric method.  Silver was analyzed by a 2 g, three-acid digestion AAS method.  Silver values >300 g/t were analyzed by a 30 g FA gravimetric method. A multi-element suite was analyzed by a 0.25 g, aqua regia digestion inductively-coupled plasma (ICP) optical emission spectroscopy (OES) method.

Since 2018, channel samples submitted to the San Dimas Laboratory are analyzed for gold using a 30 g FA AAS method and by gravimetric finish if the doré bead is greater than 12 mg. Silver is determined using 30 g FA gravimetric finish. Drill core and channel check samples submitted to the Central Laboratory are analyzed for gold by a two-acid digestion AAS method. Samples with gold values >10 g/t are reanalyzed by a 30 g, FA gravimetric method. Silver values are determined using a 2 g, three-acid digestion, AAS method. Samples with silver values >300 g/t are analyzed by a 30 g, FA gravimetric method.  All exploration samples are analysed by a two-acid multi-element ICP OES method.

1.6.6. Quality Assurance and Quality Control

There is limited information as to whether a formal quality assurance and quality control (QAQC) program was in place prior to 2013.

From 2013 to 2018, the QAQC program for the San Dimas Laboratory samples included insertion of a standard reference material (SRM) and a blank in every batch of 20 samples. 

From 2013 to 2018, the QAQC program for the SGS Durango Laboratory channel and core samples included insertion of a SRM and a blank in every batch of 20 samples. In 2013, 5% of the coarse reject and pulp duplicates from core samples were randomly selected for analysis at SGS Durango and 5% of pulp checks from core samples were analyzed at ALS laboratory.

In 2019, First Majestic revised the QAQC program to include insertion of three certified reference material (CRM) samples and three blanks in every batch of 50 channel samples analyzed at the San Dimas Laboratory and one CRM and two blanks in every batch of 26 drill core and channel check samples submitted to the Central Laboratory.

1.6.7. Data Verification

Data verification conducted by First Majestic includes a review of drill hole and channel sample data collected for several veins (the verification dataset) and included data transcription error checks for assay results, drill hole collar and channel location checks, downhole survey deviation checks, visual inspection of core, and an assessment of accuracy and contamination of primary and check channel samples for silver and gold.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

A 1% selection of the gold and silver results recorded in the verification dataset were compared with electronic copies and final laboratory certificates from the Central, SGS Durango and San Dimas Laboratories. No significant errors were observed. In addition, a random selection of high-grade gold and silver results were verified against the original laboratory certificates. No significant transcription errors were observed.

All drill hole collar and channel locations in the verification dataset were inspected in three dimensions by comparing drill hole locations with their relationship to underground topography. No significant position errors were observed.

Numerous site visits were also completed by the Qualified Persons (QPs) responsible for this technical report. Site visits focused specifically on data verification reviewed current drill core and channel logging and sampling procedures and inspected drill core, core photos, core logs, and QAQC reports. Spot checks were completed by comparing lithology records in the database with archived core. No significant issues were observed.

1.7. Mineral Processing and Metallurgical Testing

The San Dimas mine is operating, and the initial test data supporting plant design are superceded by decades of plant performance data. Metallurgical testing, along with mineralogical investigation, is periodically performed. Even when the results are within the expected processing performance, the plant is continually running tests to optimize metal recoveries and operating costs. Composite samples are analyzed monthly to determine the metallurgic behaviour of the mineralized material fed into the processing plant. This metallurgical testing is carried out by the Central Laboratory.

To investigate the effect a grinding size on metal liberation and recovery and to identify possible opportunities to improve plant performance, some tests using extra-fine grinding (P80 = 15 to 28 µm) were carried out on a July 2019 composite sample.  Overall, the results indicate that particle size liberation is a relevant factor. The finer the grind, the greater recoveries were, as long as an excess of slimes was not generated. The slimes were reduced when the grinding process was carried out in two stages. The best results were achieved when leaching was split in two products: the primary mill fines and the regrind product. This investigation demonstrated that there is an opportunity to achieve higher metal recoveries with the implementation of a regrinding processing stage.

The metallurgical recovery projections assumed in the life-of-mine (LOM) plan are supported by the historical performance in the processing plant as well as on the results of recent testing performed at the SGS Lakefield Laboratory in 2019. The metal recovery estimates for the LOM plan and the financial analysis were projected as 94.0% for Ag and 96.5% for Au.  The recovery  assumptions were based on the plant performance from 2018 to 2020 and the results of testing carried out on a representative mineralization sample conducted in 2019. The 2019 sample consisted 46.4 t of material compiled from 26 different stopes and development faces of eight different veins of the Central Block and the Sinaloa Graben. The Central Block veins sampled include Jessica, Gertrudis, Roberta, Robertita, Jael and Regina veins; and the veins sampled from the Sinaloa Graben were the Victoria and Alexa veins. The estimated metal of these eight veins represents 66% of the metal projected to be mined in the LOM plan.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Due to the purity of the San Dimas doré, which exceeds 97% silver and gold, no penalties are applied by the refineries for the presence of other heavy metals.

1.8. Mineral Resource and Mineral Reserve Estimates

1.8.1. Mineral Resource Estimates

The majority of the Mineral Resource estimates at San Dimas were completed using block modeling techniques. Some of the minor vein resource estimates are still based on two-dimensional polygonal estimation methods, and all polygonal resource estimates were classified as Inferred Mineral Resources.

The Mineral Resource estimates based on block models are constrained by the three-dimensional geological interpretation and modelled domains for vein-hosted mineral deposits. The modelled domains were constructed using information collected by mine geology staff and interpreted by geologists. Information used included underground geological mapping, drill hole logs and drill hole assays, production channel sampling and assays. The interpreted boundaries of the domain models strictly adhered to the contacts of quartz veins with the surrounding country rock to produce reasonable representations of the deposit locations and volumes.

Exploratory data analysis was completed for gold and silver sample assay values for each of the estimation domains to assess the statistical and spatial characteristics of the sample data. Contact analysis was completed for each of the mineral resource domains to review the change in metal grade across the domain contacts by the use of boundary plots.  Hard boundaries were used during the creation of composite samples during mineral resource estimation.

The selected composite sample length varied by domain with the most common composite sample length being 1.0 m. The assay sample intervals were composited within the limits of the domain boundaries and then tagged with the appropriate domain code. Drill hole and channel composite samples were evaluated for high-grade outliers and those outliers were capped to values considered appropriate for each domain.

Mineral Resources were estimated into sub-block models rotated parallel to the resource domain trend. Parent block grades were estimated using inverse distance weighting to the second power (ID2) interpolation. The block estimates were made with multiple passes to limit the influence the channel production samples at longer ranges: Pass 1 was a restrictive short-range pass that used channel and drill hole composite samples, and subsequent less restrictive passes used drill hole samples only. An average bulk density value of 2.6 t/m3 was used in estimation for all resource domains.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Validation of the silver and gold grade estimations in the block models was completed for each of the resource estimation domains, and included visual inspection comparing the composite sample silver and gold grades to the estimated block values; comparison of the global mean composite grades to the block model mean grade for each resource domain; and comparison of local block grade trends to composited sample grades along the three block model axes with swath grade trend plots.

The Mineral Resource estimates were classified into Measured, Indicated, or Inferred categories and considered confidence in the geological interpretation and models, confidence in the continuity of metal grades, and the sample support for the estimation and reliability of the sample data. Blocks were flagged to consider for the Measured category if the nominal drill hole spacing from the nearest 3 drill holes was <15 m or the blocks were within 15 m of a mined development with production channel samples and geological control. Blocks were flagged to consider for the Indicated category if the nominal drill hole spacing was <30 m or the blocks were within 30 m of a mined development with production channel samples and geological control. Blocks were flagged to consider for the Inferred category if the nominal drill hole spacing was <45 m.

Mineral Resources estimated using polygonal methods commenced with an orthogonal polygon being drawn on a vertical longitudinal section with the vein sample intersection centered in the polygon. The shape and size of the polygon depended on the geological interpretation and thickness of the veins. This ranged between 25 m x 25 m for veins <1.0 m in thickness to 50 m by 50 m for veins >1.5 m thick.

The polygon volume was estimated by length x height x vein thickness or was estimated using AutoCAD software for more complex shapes. The gold and silver grades for the vein sample interval were assigned to the polygon. In cases where there were multiple intercepts within a polygon, the silver and gold grades were estimated using a length-weighted average.  To estimate the contained metal the silver and gold grades were multiplied by the true vein thickness for each of the intercepts within the polygon, and then the resulting numbers were totalled and divided by the sum of the total true thicknesses.

All polygonal estimates are currently assigned to the Inferred category. The remaining Inferred polygonal resource estimates are reduced every year as they are converted to block model estimates or depleted by mining.

The silver-equivalent (Ag-Eq) grade was calculated considering economic parameters, metal price assumptions, metallurgical recovery, and the metal payable terms. These economic parameters result in a silver equivalent (Ag-Eq) cut-off grade of 255 g/t.  The Ag-Eq metal grades for the Mineral Resource estimates were calculated as follow:

Ag-Eq g/t = Ag g/t + (Au g/t * Au Factor)

Au Factor = Au Revenue / Ag Revenue

Au Revenue = (Au Metal Price / 31.1035) x Au Recovery x Au Payable

Ag Revenue = (Ag Metal Price / 31.1035) x Ag Recovery x Ag Payable


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The Mineral Resource estimates were evaluated for reasonable prospects for eventual economic extraction using the silver-equivalent (Ag-Eq) cut-off grade and by application of input parameters based on mining and processing information from actual operations performance during 2018 and 2019.  Longhole and cut-and-fill mining methods are assumed with minimum mining widths of 1.6 and 1.2 m, respectively. The Vulcan underground stope analyser software was used to identify the blocks that represent potentially mineable shapes that exceeded the cut-off value while complying with the aggregate of economic parameters set out in Table 1-1.

Table 1-1: Input Parameters for Evaluation of Reasonable Prospects of Eventual Economic Extraction.

Concept

Units

Values

Direct Mining Cost

$/t

94.4

Indirect and G&A Costs

$/t

49.7

Sustaining Costs

$/t

35.2

Metallurgical Recovery Ag

%

93.2

Metallurgical Recovery Au

%

96.4

Metal Payable Ag and Au

%

99.95

Metal Price Ag

$/oz Ag

18.50

Metal price Au

$/oz Au

1,750 .00

The mineral resource estimates for San Dimas are summarized in Table 1-2 and Table 1-3 using a silver equivalent (Ag-Eq) cut-off grade of 255 g/t. Measured and Indicated Mineral Resources are reported inclusive of Mineral Reserves and have an effective date of December 31, 2020. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 1-2: San Dimas Measured and Indicated Mineral Resource Estimate (effective date December 31, 2020)

Table 1-3: San Dimas Inferred Mineral Resource Estimate (effective date December 31, 2020)

1) Mineral Resource estimates have been classified in accordance with the 2014 CIM Definition Standards.

2) The Mineral Resource estimates have an effective date of December 31, 2020.

3) Drill hole and production channel sample data collected through a cut-off date of June 30, 2020 were used to produce the estimates.

4) The Mineral Resource estimates account for mining depletion through December 31, 2020.

5) The information provided was prepared and reviewed by Mizrain Sumoza under the supervision of Joaquín Merino, P.Geo.

6) The silver-equivalent (Ag-Eq) grade was estimated considering metal price assumptions, metallurgical recovery, and the metal payable terms.

Ag-Eq = Ag Grade + (Au Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).

a. Metal prices considered for Mineral Resources estimates were $18.50/oz Ag and $1,750/oz Au.

b. Metallurgical recovery used was 93.2% for silver and 96.4% for gold.

c. Metal payable used was 99.95% for silver and gold.

7) The reasonable prospects for eventual economic extraction was tested using a silver-equivalent cut-off grade to constrain resources. The cut-off grade was prepared under the assumption of the operation of a mechanized underground mining method, the treatment of the material in a leaching plant and that silver Dore will be produced and sold to a refinery. Operating mining costs are assumed to be $59/t at a nominal production rate of 1.0 Mt/a. Processing costs are assumed to be $30/t, and indirect and general and administrative costs to be $51/t. The resulting cut-off grade that equals estimated payables with the assumed costs was 255 g/t Ag-Eq.

8) Tonnage is expressed in thousands of tonnes; metal content is expressed in thousands of ounces.

9) Totals may not add up due to rounding.

10) Measured and Indicated Mineral Resources are reported inclusive of Mineral Reserves.  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Factors that may materially impact the Mineral Resource estimates include: Mineral Resources reported using polygonal assumptions may have the confidence classification reassigned when the polygons are converted into block models that use best practice estimation methods; changes to the assumptions used to generate the silver-equivalent grade cut-off grade including metal price and exchange rates; changes to interpretations of mineralization geometry and continuity; changes to geotechnical, mining, and metallurgical recovery assumptions; assumptions as to the continued ability to access the site, retain mineral and surface rights titles, maintain environment and other regulatory permits, and maintain the social license to operate.

1.8.2. Mineral Reserve Estimates

The mineral reserves estimation process consists of converting Mineral Resources into Mineral Reserves by identifying material that exceeds the mining cut-off grades while conforming to specified geometrical constraints determined by the applicable mining method and applying modifying factors such as mining dilution and mining recovery factors. If the Mineral Resources comply with the previous constraints, Measured Resources could be converted to Proven Reserves and Indicated Resources could be converted to Probable Reserves, in some instances Measured Resources could be converted to Probable Reserves if any or more of the modifying factors reduces the confidence of the estimates.

The silver equivalent (Ag-Eq) grade is the variable that was used as indicator to segregate if the revenue from the mineralized material in a block, that is part of the Measured and Indicated Mineral Resources, exceeds the operating and capital costs.

Net Smelting Return formulas were derived from the assumed economic parameters shown in Table 1-4.

Table 1-4: Economic Parameters assumed for calculation of NSR.

Three types of cut-off grades (COG) have been determined for the San Dimas mine: general COG, incremental COG, and marginal COG. The COGs are expressed in silver-equivalent diluted grades, reflecting the grade that the run-of-mine (ROM) material will carry before is fed to the processing plant.

The planned dilution assumes a minimum mining width, which will depend on the applied mining method. The minimum mining width for cut-and-fill using jackleg drills was 0.8 m, while when using jumbo drills was 2.5 m. In the case of longhole mining, the minimum mining width assumed was 1.2 m. Table 15.3 shows a summary of dilution and mining loss factors.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The estimated overbreak in each side of the designed stope is 0.2 m for the two mining methods, longhole and cut-and-fill. An extra dilution from the backfill floor of 0.3 m for longhole and 0.2 m for cut-and-fill is also assumed. The unplanned dilution assumed was an additional 8% of the extracted material before becoming plant-feed.

Other than for sill mining, average mining loss throughout each mining block for both cut-and-fill and longhole mining has been assumed to be 5%. A factor of 25% has been used for sill pillars.

San Dimas Mineral Reserves are presented in Table 1-5.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 1-5: San Dimas Mineral Reserves Statement (Effective Date December 31, 2020)

(1) Mineral Reserves have been classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101.

(2) The Mineral Reserve statement provided in the table above have an effective date of December 31, 2020 and are based on resource models prepared with drill-hole and production channel sample data collected with a cut-off date of June 30, 2020.

(3) The Mineral Reserve estimates account for mining depletion through December 31, 2020.

The information provided was prepared and reviewed under the supervision of Ramón Mendoza Reyes, PEng, and a Qualified Person ("QP") for the purposes of NI 43-101.

(4) Silver-equivalent grade (Ag-Eq) is estimated considering metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the selling contract.

      (a) The Ag-Eq grade formula used was:

Ag-Eq Grade = Ag Grade + Au Grade * (Au Recovery * Au Payable * Au Price) / (Ag Recovery * Ag Payable * Ag Price).

      (b) Metal prices considered for Mineral Reserves estimates were $17.50/oz Ag and $1,700/oz Au.

      (c) Other key assumptions and parameters include: Metallurgical recoveries of 93.2% for silver, 96.4% for gold; metal payable of 99.95% for silver and 99.95% for gold; direct mining costs of $55.28/t for Longhole and $63.09/t for Cut and Fill, processing costs of $31.32/t mill feed, indirect and G&A costs of $49.66/t and sustaining costs of $42.28/t for Longhole and $44.28/t for Cut and Fill.

(5) A two-step constraining approach has been implemented to estimate reserves for each mining method in use: A General Cut-Off Grade (GC) was used to delimit new mining areas that will require development of access, infrastructure and all sustaining costs. A second Incremental Cut-Off Grade (IC) was considered to include adjacent mineralized material which recoverable value pays for all associated costs, including but not limited to the variable cost of mining and processing, indirect costs, treatment, administration costs and plant sustaining costs but excludes the access development assumed to be covered by the block above the GC grade.

(6) Modifying factors for conversion of resources to reserves include consideration for planned dilution due to geometric aspects of the designed stopes and economic zones, and additional dilution consideration due to unplanned events, materials handling and other operating aspects. Mineable shapes were used as geometric constraints.

(7) Tonnage is expressed in thousands of tonnes; metal content is expressed in thousands of ounces. Metal prices and costs expressed in USD.

(8) Numbers have been rounded as required by reporting guidelines. Totals may not sum due to rounding.

The QP is not aware of any known mining, metallurgical, environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the mineral reserve estimates, other than discussed herein.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.9. Mining Operations

The San Dimas mine includes five underground gold and silver mining areas: West Block (San Antonio mine), Sinaloa Graben Block (Graben Block), Central Block, Tayoltita Block, and the Arana Hanging-wall Block (Santa Rita mine).

Mining activities are conducted by both First Majestic and contractor personnel. Two mining methods are currently being used at San Dimas, cut-and-fill and Longhole mining. Cut-and-fill is carried out by either jumbo or jackleg drills, whereas Longhole is carried out with pneumatic and electro-hydraulic drills. Primary access is provided by adits and internal ramps. Vein thickness varies from 0.1 m up to 10 m, with the average between 1.5 - 2.0 m. Some veins have a strike length of more than 1,500 m. Vein dips vary from 35° to 85°, the latter being decidedly more prevalent.

Ground conditions throughout most of the San Dimas underground workings are considered good. Bolting is used systematically in the main haulage ramps, drifts, and underground infrastructure. For those sectors that present unfavorable rock quality, shotcrete, mesh and/or steel arches are used.

Groundwater inflow has not been a significant concern in the San Dimas mine area. Dewatering systems in San Dimas consist of main and auxiliary pumps in place at each of the mine areas.

The San Dimas ventilation system consists of an exhaust air extraction system through its main fans located on surface. These fans generate the necessary pressure change for fresh air to enter through the portals and ventilation raises.

The development schedule for the LOM plan is presented in Table 1-6.

Table 1-6 San Dimas Life-of-Mine Development Schedule

The production schedule for the LOM plan is presented in Table 1-7.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 1-7 San Dimas Life-of-Mine Production Schedule

A total of 4.0 Mt of ore is considered to be mined and processed with grades of 330 g/t Ag and 3.77 g/t Au. Total metal produced is estimated at 42.4 Moz Ag and 484 koz Au.

1.10. Processing and Recovery Operations

The processing plant at San Dimas has been successfully operating for several years and continuously achieve high levels of recoveries for silver and gold. The process is based on cyanide tank leaching and Merrill-Crowe of ground plant-feed to produce silver/gold doré bars. The installed plant capacity is for 3,000 tonnes per day. However, the current throughput levels are around 2,000 tonnes per day. The average feed contains head grades in the order of 300 g/t Ag and 3.6 g/t Au.

The San Dimas processing plant is built as a single train with the crushing area split from the remaining areas and connected through a belt conveyor to transfer the crushed product from the screening underflow to the fine-ore bins. The remaining areas are the following: Grinding circuits, Leach tanks, CCD tanks, Merrill-Crowe, Smelting and Tailings Filtration and stacking.

The metallurgical recovery projections assumed in the LOM plan are supported by the historical performance in the processing plant as well as on the results of recent testing performed in SGS Lakefield Laboratory in 2019.

The metal recovery estimates for the LOM plan and the financial analysis were assumed as 94.0% for Ag and 96.5% for Au.

1.11. Infrastructure, Permitting and Compliance Activities

1.11.1. Infrastructure

The infrastructure in San Dimas is fully developed to support current mining and mineral processing activities, with part of its facilities located in the town of Tayoltita.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The main infrastructure of San Dimas consists of access roads, the San Dimas mines, which are divided into five mining areas, crushing and processing facilities known as the Tayoltita mill, the Tayoltita/Cupias tailings facilities, an assays laboratory, offices and staff camp, the Las Truchas hydro-electric generation facilities, a diesel-powered emergency generation plant, a local airport and infrastructure supporting the inhabitants of the Tayoltita townsite including a local clinic, schools and sport facilities.

Most of the personnel and light supplies for the San Dimas mine arrive on First Majestic's regular flights from Mazatlán and Durango. Heavy equipment and main supplies are brought by road from Durango and Mazatlán.

Electrical power is provided by a combination of First Majestic's own hydroelectric generation system (Las Truchas) and the Federal Power Commission supply system (CFE). First Majestic operates the hydroelectric generation plant, which is interconnected with the CFE power grid, and a series of back-up diesel generators for emergencies.

The source of water for industrial use comes mainly from mine dewatering stations but mainly from the recycled filtered-tailings water after it has been treated, the balance is sourced from the Santa Rita well which fills from the Piaxtla River. About 80% of the water required for processing activities is being treated and recycled.

Drinking water is supplied by First Majestic to the town of Tayoltita from an underground thermal spring located at the Santa Rita mine.

1.11.2. Permitting

Environmental and social studies are routinely performed in San Dimas to characterize existing conditions and to support the preparation of Risk Assessments and Accident Prevention Programs for the operation and are documented as part of the Environmental Management System implemented by First Majestic.

San Dimas is an operating mine, as such it holds all major environmental permits and licenses required by the Mexican authorities to carry out mineral extracting activities in the mining complex.

The main environmental permit is the environmental license "Licencia Ambiental Unica" (LAU) under which the mine operates its industrial facilities in accordance with the Mexican environmental protection laws administered by SEMARNAT as the agency in charge of environment and natural resources. The most recent update to the main environmental permit was approved in July 2019.

Table 20-10 contains a list of the major permits issued to San Dimas. Permits that are in process are listed in Table 20-11.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.11.3. Compliance

The San Dimas mine has implemented the First Majestic Environmental Management System, which supports the implementation of environmental policy and is applied to standardize tasks and strengthen a culture focused on minimizing environmental impacts.  The EMS is based on the requirements of the international standard ISO 14001:2015 and the requirements to obtain the Certificate of Clean Industry, issued by the Mexican environmental authorities, the Ministry of Environment and Natural Resources (SEMARNAT), through the Federal Attorney for Environmental Protection in Mexico (PROFEPA). The EMS includes an annual compliance program to review all environmental obligations.

In May 2018, the San Dimas mine received the Clean Industry Certification for improvements to its environmental management practices at the mine.

In February 2020, for the ninth consecutive year, the San Dimas mine was awarded the Socially Responsible Company (ESR) designation by the Mexican Center for Philanthropy (CEMEFI).

1.12. Capital and Operating Costs

The LOM plan includes estimates for sustaining capital expenditures for the planned mining and processing activities.

Sustaining capital expenditures will mostly be allocated for on-going development, infill drilling, mine equipment rebuilding, major overhauls or replacements, plant maintenance and on-going refurbishing, and for tailings management facilities expansion as needed. Table 1-8 shows the San Dimas Capital Costs for the major components.

A summary of the San Dimas operating costs resulting from the LOM plan and the cost model used for assessing economic viability is presented in Table 1-9. A summary of the annual operating expense is presented in Table 1-10.

Table 1-8: San Dimas Mining Capital Costs Summary (Sustaining Capital)


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 1-9: San Dimas Operating Costs

Table 1-10: San Dimas Annual Operating Costs

1.13. Economic Analysis Supporting Mineral Reserve Declaration

First Majestic is using the provision for producing issuers, whereby producing issuers may exclude the information required under Item 22 for technical reports on properties currently in production and where no material expansion of current production is planned.

An economic analysis to support presentation of Mineral Reserves was conducted.  Under the assumptions presented in this Report, the operations show a positive cash flow, and can support Mineral Reserve estimation.

1.14. Conclusions

Under the assumptions used in this Report, the San Dimas mine has positive economics for the LOM plan, which supports the Mineral Reserve statement.

1.15. Recommendations

1.15.1. Exploration

A 120,000 m annual exploration program is recommended to identify new areas to support mineral resource conversion to higher confidence categories and to look for new discoveries. This drill program is estimated to costs $12.0M dollars per year excluding related underground access development costs.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

An annual prospect generation program consisting of prospecting, soil and rock geochemical surveys, mapping, and geophysical surveys is recommended, with an estimated cost of $250k per year.

The amounts and estimated cost of these recommended exploration programs should be reviewed annually.

1.15.2. Production Channel Samples

A study to assess channel sample quality is recommended and could consist of a comparison of channels samples with paired un-sawn channel samples. This study is estimated to cost $7,500 and the estimate execution time is one month.

1.15.3. Resource Estimation using Polygonal Method

The polygonal resource estimation at San Dimas has been migrated to implicit modeling followed by block model estimation techniques for all Indicated and Measured Mineral Resources. It is recommended this process to be continued until all the domains are estimated using block modeling techniques. This study is estimated to cost $150k and the estimate execution time is one year.

1.15.4. Reconciliation

A reconciliation system for the San Dimas mine operation, based on the mine value chain concept, is being implemented at the mine. It is recommended that reconciliation monitoring be used to continuously improve the comparison of estimates to measured results all along the mine value chain to highlight opportunities to improve the traceability, identification and control of temporary storage areas, transfers and materials handling practices.

The estimated time to complete the implementation of the integral reconciliation system at San Dimas is 12-18 months at a cost of $200k.

1.15.5. Expansion of the Leaching Circuit

To increase the washing performance of the leaching circuit, an additional thickener can facilitate the reduction of the concentration of precious metals in the final tailings solution.

The installation of an additional thickener is estimated to cost $17.0 M with an estimated project execution time of 12-18 months. It is recommended that the project be assessed for implementation.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

1.15.6. Fine Grinding

First Majestic has found that fine grinding can improve both silver and gold recoveries. It is recommended that a dual circuit and a re-grinding high intensity grinding mill (HIG-mill) be installed. This project is estimated to cost $20.0 M with an estimated project execution time of 12-18 months. It is recommended that the project be assessed for implementation.

1.15.7. Tailings Filtering- Phase 1

If the fine-grinding concept is applied, the current system may not be able to achieve the required moisture content for the dry stacking tailings deposition. It is recommended that a value engineering study be carried out to rationalize capital requirements, to analyze the possibility of installing one filter-press, and to use the current belt-filters as backup. The estimated cost of this study is $0.5 M, with an estimated study time of 6 months.

1.15.8. "Cuevecillas" Water Storage Dam

Engineering studies have been conducted to assess the opportunity of building a storage and flow-regulator dam upstream from the existing Las Truchas dam at Cuevecillas. These studies suggest that the implementation of a regulator dam will result in less plant downtime from power blackouts, improvements in gas emissions, and potentially reduced operating costs.

A Phase 1 study is recommended for a feasibility analysis to be completed to confirm economic viability and estimate return of investment. The cost of this study is estimated at $50k and will take 3 months to be completed.

1.15.9. Tailings Filtering - Phase 2

If Phase 1 of the Tailings Filtering study confirms viability, a second phase could follow for the installation of the filter-press, with an estimated cost of $30.0M and an estimated project execution time of 12-18 months.

1.15.10. "Cuevecillas" Water Storage Dam - Phase 2

If Phase 1 of the Cuevecillas Water Storage Dam study confirms viability, a second phase could follow for the construction of the dam. The cost estimate from the preliminary engineering design is estimated at $35 M with an estimated project execution time of 24-36 months.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

2. INTRODUCTION

Mr. Ramón Mendoza Reyes, Mr. Joaquín Merino, Ms. María Elena Vázquez and Mr. Persio P. Rosario prepared this technical report (the Report) on the San Dimas Silver/Gold Mine (the San Dimas mine or the Property), located in the state of Durango, Mexico.  The mine is owned and operated by Primero Empresa Minera, S.A. de C.V. (Primero Empresa), which is an indirectly wholly-owned subsidiary of First Majestic Silver Corp. (First Majestic).  First Majestic acquired the San Dimas mine from Primero Mining Corp. in May 2018.

2.1. Terms of Reference

The Report provides information on Mineral Resource and Mineral Reserve estimates and mine and process operations and planning for the San Dimas mine.

The Mineral Resource and Mineral Reserve estimates are reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves (May 2014; the 2014 CIM Definition Standards).

2.2. Cut-off and Effective Dates

The cut-off date for drilling, production related sampling and economic parameters related to the Mineral Resource and Mineral Reserve estimates is June 30, 2020.

The cut-off date for information on mineral tenure and permitting, scientific and technical information, production, operating costs, and mining depletion is December 31, 2020.

The overall effective date of this Report is December 31, 2020.

2.3. Qualified Persons

This Technical Report has been prepared by employees of First Majestic under the supervision of the following First Majestic Qualified Persons (QPs):

  • Ramón Mendoza Reyes, P.Eng., Vice President of Technical Services;

  • Joaquín Merino, P.Geo., Senior Advisor in Geology;

  • María Elena Vázquez, P.Geo., Geological Data-base Manager.

  • Persio P. Rosario, P.Eng., Vice President of Processing, Metallurgy and Innovation.

2.4. Site Visits

The date of site visits performed by the QPs, and their scope of personal inspection is provided in Table 2-1.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 2-1: Site Visit Dates and Scope of Personal Inspection

QP

Dates

Scope of Personal Inspection

Ramón Mendoza Reyes

Multiple occasions since 2018, most recent site visit and inspection on February 13-14, 2020

Inspection of geotechnical and operative aspects at the underground mine to assess the performance of the mining methods, and the dilution and mining recovery conditions. Discussion with technical staff on reconciliation practices.

Discussions with First Majestic staff on environmental, permitting, land access and community relations with different stakeholders.

Joaquín M. Merino

Multiple occasions since 2016, most recent 30-day rotation and inspection from November 21 to December 20, 2019.

Review the exploration process and data.

Geological modeling and interpretation.

Field site inspection of the operation.

Inspection of the mine laboratory.

Resource estimation protocols and procedures.

Data quality reviews.

María Elena Vázquez

Two occasions in 2019.  Most recent inspection from February 24-28, 2020

Inspection of drill cores with emphasis on mineralization, alteration and structure.

Evaluation and validation of recent and historic drill hole data.

Evaluation of recent and historic quality assurance/quality control (QAQC) data and protocols.

Persio P. Rosario

Site visit and personal inspection on Aug 20, 2019

Inspection of the processing plant and the site infrastructure to assess processing performance and general operating conditions.

2.5. Sources of Information

For the purposes of this Report, all information, data, and figures contained or used in its compilation have been provided by First Majestic unless otherwise stated. Reports and documents listed in Section 27 were used to support the preparation of the Report.

Specialist input was sought from First Majestic staff, where appropriate, to support the preparation of the Report.

The Qualified Persons for this report have reviewed the latest information available from the effective date of the report to the signature date of the report and there are no material changes to the information reported here.

2.6. Previously Filed Technical Reports

First Majestic has not previously filed a technical report on the San Dimas mine.

Prior to First Majestic's acquisition of the Property, there were two technical reports filed on the San Dimas mine:

  • Voicu G., Shannon M. and Webster R., 2014: Technical Report on the San Dimas Property, in the San Dimas District, Durango and Sinaloa States, Mexico: technical report prepared by Primero Mining Corp. of Vancouver, Canada and AMC Mining Consultants (Canada) Ltd (AMC) of Vancouver, Canada, prepared for Primero Mining Corp.

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
  • Spring V., and Watts G., 2010: Technical Report on the Tayoltita, Santa Rita and San Antonio Mines in the San Dimas District, Durango State, Mexico: technical report prepared by Watts, Griffis and MacOuat Ltd, Ontario, Canada, prepared for Goldcorp Inc. and Mala Noche Resources Corp.

2.7. Units, Currency and Abbreviations

Units of measurement are metric unless otherwise noted. All costs are expressed in United States dollars unless otherwise noted. Common and standard abbreviations are used wherever possible. Table 2-2 shows the list of abbreviations used:

Table 2-2: List of Abbreviations and Units

Distances:

mm - millimetre

Other:

tpd - tonnes per day

 

cm - centimetre

 

ktpd - 1,000 tonnes per day

 

m - metre

 

Mtpa - 1,000,000 tonnes per year

 

km - kilometre

ft - foot

 

kW - kilowatt

CFE - Federal Commission of Electricity

 

masl - metres above sea level

 

MW - megawatt

Areas:

m2 - square metre

 

kVA - kilovolt-ampere

 

ha - hectare

 

MVA - Megavolt-ampere

 

km2 - square kilometre

 

kWh - kilowatt hour

Weights:

oz - troy ounces

 

MWh - megawatt hour

 

koz - 1,000 troy ounces

 

°C - degrees Celsius

 

Moz - million troy ounces

 

Ag - silver

 

lb - pound

 

Au - gold

 

g - grams

 

Pb - lead

 

kg - kilograms

 

Zn - zinc

 

t - tonne (1,000 kg)

 

Cu - copper

 

kt - 1,000 tonnes

 

Mn - manganese

 

Mt - 1,000,000 tonnes

 

Ag-Eq - silver equivalent

SMO - Sierra Madre Occidental

LVC - Lower Volcanic Complex

UVG - Upper Volcanic Group

asl  - above sea level

Time:

min - minute

Assay/Grade:

g/t - grams per tonne

 

hr - hour

 

g/L - grams per litre

 

op hr - operating hour

 

ppm - parts per million

 

d - day

 

ppb - parts per billion

 

yr - year

Currency:

$ - United States dollar

Volume/Flow:

m3- cubic metre

 

 

 

m3/hr - cubic metres per hour

 

 

 

gpm - gallons per minute (water)

 

 

 

cfm - cubic feet per minute (air)

 

 

 

cu yd - cubic yards

 

 



San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

3. RELIANCE ON OTHER EXPERTS

This section is not relevant to this Report.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

4. PROPERTY DESCRIPTION AND LOCATION

4.1. Location

The San Dimas mine is located near the town of Tayoltita on the borders of the States of Durango and Sinaloa, approximately 125 km northeast of Mazatlán, Sinaloa, and 150 km west of the city of Durango, in Durango State, Mexico. The San Dimas mine is centered on latitude 24°06'38" N and longitude 105°55'36" W (Figure 4-1).

Figure 4-1: Location Map, San Dimas mine.

Note: Figure prepared by First Majestic, March 2020.

4.2. Ownership

In May 2018, First Majestic acquired the San Dimas mine from Primero Mining Corp.  Operations are conducted by First Majestic's indirectly wholly-owned subsidiary, Primero Empresa. 

4.3. Mineral Tenure

In Mexico, mineral rights can be held by private parties through mining concessions granted by the federal government via the Mines Directorate of the Ministry of Economy. The San Dimas property consists of 119 individual concessions covering 71,839 ha in total that have been organized into six concessions groups to facilitate land management. These concessions groups are: San Dimas, Candelero, Ventanas, Lechuguillas, Cebollas and Truchas. A concession location map is shown in Figure 4-2 , and the individual concessions groups are shown in Figure 4-3 to Figure 4-8.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 4-2: Map of the Concession Outlines for the San Dimas Mine

Note: Figure prepared by First Majestic, May 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 4-3: Map of the San Dimas Concessions Group

Note: Figure prepared by First Majestic, March 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 4-4: Map of the Candelero Concessions Group

Note: Figure prepared by First Majestic, March 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 4-5: Map of the Ventanas Concessions Group

Note: Figure prepared by First Majestic, March 2020.

Figure 4-6: Map of the Lechuguillas Concessions Group

Note: Figure prepared by First Majestic, March 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 4-7: Map of the Cebollas Concessions Group

Note: Figure prepared by First Majestic, March 2020.

Figure 4-8: Map of the Truchas Concessions Group

 

Note: Figure prepared by First Majestic, March 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Current mining operations and the Mineral Resource and Mineral Reserve estimates are located within the San Dimas concessions group.

Table 4-1 to Table 4-7 list the concessions by concession group. Concessions have expiry dates ranging from 2029 to 2070, of which 13 have renewal applications applied for, as shown in Table 4-1.

Table 4-1: Summary of the Six Concessions Group, San Dimas Mine.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 4-2: San Dimas Concessions Group List

Concession

Title

Size (Ha)

Status

State

Area

Valid to

San Manuel

151174

104

Active

Durango

SAN DIMAS

2069-03-23

Chela

153116

254

Active

Durango

SAN DIMAS

2070-07-13

Resurgimiento

165046

93

Active

Durango

SAN DIMAS

2029-08-22

Yolanda

165489

10

Active

Durango

SAN DIMAS

2029-10-10

San Luis 1

165682

391

Active

Durango

SAN DIMAS

2029-11-27

San Luis 2

165683

474

Active

Durango

SAN DIMAS

2029-11-27

San Luis 3

165981

307

Active

Durango

SAN DIMAS

2030-02-03

El Reliz

166004

8

Active

Durango

SAN DIMAS

2030-02-19

Carrizo

166615

2

In Process

Durango

SAN DIMAS

In Process

San Daniel

172411

322

Active

Sinaloa

SAN DIMAS

2033-12-14

Castellana Uno

176291

108

Active

Durango

SAN DIMAS

2035-08-25

Libia Estela

177195

151

Active

Durango

SAN DIMAS

2036-03-03

Promontorio

177826

2

Active

Durango

SAN DIMAS

2036-03-28

San Miguel

178938

66

Active

Durango

SAN DIMAS

2036-10-27

San Vicente Fracc. Suroeste

179299

300

Active

Sinaloa

SAN DIMAS

2036-12-07

Ampliación de El Reliz

179954

96

Active

Durango

SAN DIMAS

2037-03-22

La Castellana

180164

90

Active

Durango

SAN DIMAS

2037-03-23

Hueco Dos

180165

0

In Process

Durango

SAN DIMAS

In Process

Juan Manuel

180260

16

In Process

Durango

SAN DIMAS

In Process

Ampl. Noche Buena en Frapopan

180679

234

Active

Durango

SAN DIMAS

2037-07-13

San Vicente Fracc. Norte

180933

430

Active

Sinaloa

SAN DIMAS

2037-08-13

Noche Buena en Frapopan

182516

400

In Process

Durango

SAN DIMAS

In Process

Ampl. Nuevo Contra Estaca Fracción B

183980

406

Active

Sinaloa

SAN DIMAS

2038-11-24

Guarisamey III

184239

115

Active

Durango

SAN DIMAS

2039-02-14

Ampl. Nuevo Contra Estaca Fracción A

184991

319

Active

Sinaloa

SAN DIMAS

2039-12-12

El Favorable

185109

452

In Process

Durango

SAN DIMAS

In Process

Nuevo Contra Estaca Fracc. W

185479

324

Active

Sinaloa

SAN DIMAS

2039-12-13

Armida Sur

185763

5

In Process

Durango

SAN DIMAS

In Process

La Fe

185842

39

Active

Durango

SAN DIMAS

2039-12-13

Juan Manuel Dos

185853

4

Active

Durango

SAN DIMAS

2039-12-13

Guarisamey Fracción B

185891

330

Active

Durango

SAN DIMAS

2039-12-13

Guarisamey Fracción A

185892

378

Active

Durango

SAN DIMAS

2039-12-13

Armida Sur Fracc. II

186277

3

In Process

Durango

SAN DIMAS

In Process

Ampl. Nuevo Contra Estaca Fracción C

186378

474

Active

Sinaloa

SAN DIMAS

2040-03-28

San Miguel I

186901

172

Active

Durango

SAN DIMAS

2040-05-16

San Miguel II

186902

452

Active

Durango

SAN DIMAS

2040-05-16

Hueco Guarisamey

186949

6

Active

Durango

SAN DIMAS

2040-05-16

Armida Sur Fracc. I

189878

1

In Process

Durango

SAN DIMAS

In Process

Hueco Tayoltita

191055

28

Active

Durango

SAN DIMAS

2041-05-28

La Soledad

191661

21

Active

Durango

SAN DIMAS

2041-12-18



San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Concession

Title

Size (Ha)

Status

State

Area

Valid to

Juan Manuel Tres

194784

335

Active

Durango

SAN DIMAS

2042-06-14

Guarisamey II

195198

89

Active

Durango

SAN DIMAS

2042-08-24

Armida

195215

98

Active

Durango

SAN DIMAS

2042-08-24

Nuevo Contra Estaca Fracc. E

196309

376

Active

Sinaloa

SAN DIMAS

2043-07-15

Guarisamey IV Fracción A

196363

320

Active

Durango

SAN DIMAS

2043-07-15

Tayoltita Norte

196367

2,650

Active

Durango

SAN DIMAS

2043-07-15

Ampliación SW Contra Estaca

198339

663

Active

Sinaloa

SAN DIMAS

2043-11-18

Alicia II

198408

204

Active

Durango

SAN DIMAS

2043-11-25

Tayoltita

198571

2,320

Active

Durango

SAN DIMAS

2043-11-29

Tayoltita Oeste

201555

1,395

Active

Sinaloa

SAN DIMAS

2045-10-19

Guarisamey V Fracc. 1

203798

333

Active

Durango

SAN DIMAS

2046-09-29

Guarisamey Sur

208834

3,026

Active

Durango

SAN DIMAS

2048-12-14

Guarisamey Norte

209396

489

In Process

Durango

SAN DIMAS

In Process

Contra Estaca Norte

209592

237

Active

Sinaloa

SAN DIMAS

2049-08-02

Guarisamey IV Fracción B

209606

321

Active

Durango

SAN DIMAS

2049-08-02

San Luis Norte 1

215251

175

Active

Durango

SAN DIMAS

2052-02-13

San Luis Norte 2

215252

66

Active

Durango

SAN DIMAS

2052-02-13

San Luis Norte 3

215253

839

Active

Durango

SAN DIMAS

2052-02-13

Tayoltita Sur

215615

784

Active

Durango

SAN DIMAS

2046-12-11

San Miguel 3

223676

3

Active

Durango

SAN DIMAS

2055-02-01

Guarisamey Sur Oeste

223782

359

Active

Durango

SAN DIMAS

2055-02-14

Frac. Ampl. Noche Buena en Frapopan

236605

11

Active

Durango

SAN DIMAS

2060-07-27

El Tecolote

231443

2,490

Active

Durango

SAN DIMAS

2046-09-29

Guarisamey V Fracc. NE

203799

253

Active

Durango

SAN DIMAS

2046-09-29

Ampl. Tayoltita Norte

215331

1,950

Active

Durango

CANDELERO

2044-04-18

Tahonitas

221050

283

Active

Durango

CANDELERO

2053-11-13

Table 4-3: Candelero Concessions Group List

Concession

Title

Size (Ha)

Status

State

Area

Valid to

Candelero Uno Fracc. Uno

245214

51

Active

Sinaloa

CANDELERO

2066-11-14

Candelero Dos

245571

699

Active

Sinaloa

CANDELERO

2067-08-30

Candelero Uno Fracc. Dos

245215

65

Active

Sinaloa

CANDELERO

2066-11-14

Santa Cruz Tres

245320

489

Active

Sinaloa

CANDELERO

2066-11-22

Candelero II

245653

195

Active

Sinaloa

CANDELERO

2067-10-14

Santa Cruz

245319

58

Active

Sinaloa

CANDELERO

2066-11-22

Candelero Dos Fracc. 1

245450

228

Active

Sinaloa

CANDELERO

2067-02-27



San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 4-4: Ventanas Concession Group List

Concession

Title

Size (Ha)

Status

State

Area

Valid to

La Prieta

151613

9

Active

Durango

VENTANAS

2069-07-10

María Elena

167072

22

Active

Durango

VENTANAS

2030-08-28

El Rosario

167073

15

Active

Durango

VENTANAS

2030-08-28

Mina Grande

167074

9

Active

Durango

VENTANAS

2030-08-28

Buen Dia

167075

57

Active

Durango

VENTANAS

2030-08-28

Noche Buena

167076

55

Active

Durango

VENTANAS

2030-08-28

Josefina

167077

3

Active

Durango

VENTANAS

2030-08-28

San Cayetano

167078

22

Active

Durango

VENTANAS

2030-08-28

California

167079

6

Active

Durango

VENTANAS

2030-08-28

San Miguel

167080

64

Active

Durango

VENTANAS

2030-08-28

Concepción

169369

6

Active

Durango

VENTANAS

2031-11-11

Mala Noche

184834

499

Active

Durango

VENTANAS

2039-12-04

Los Chabelos

186020

197

Active

Durango

VENTANAS

2039-12-13

Los Muros

203662

30

Active

Durango

VENTANAS

2046-09-12

Ampl. La Prieta

203983

110

Active

Durango

VENTANAS

2046-11-25

Cuquita

204383

41

Active

Durango

VENTANAS

2047-02-12

Tayoltita I Fracc. A

210494

226

Active

Durango

VENTANAS

2049-10-07

Tayoltita I Fracc. B

210773

440

Active

Durango

VENTANAS

2049-11-25

Mala Noche Fracc. Sur

214781

191

Active

Durango

VENTANAS

2039-12-04

El Colorín Fracción Sur

214785

151

Active

Durango

VENTANAS

2038-12-04

Ampliación El Rosario

214786

88

Active

Durango

VENTANAS

2039-10-30

Nuevo Ventanas Fracc. E

214787

55

Active

Durango

VENTANAS

2040-12-04

San Cayetano

214788

351

Active

Durango

VENTANAS

2041-12-18

Nuevo Ventanas Fracc. W

214789

195

Active

Durango

VENTANAS

2039-10-09

Mala Noche Oeste

214842

280

Active

Durango

VENTANAS

2043-07-15

Ampliación Mina Grande

215332

117

Active

Durango

VENTANAS

2047-01-30

Mala Noche Norte Fracc. 1

215614

126

Active

Durango

VENTANAS

2044-04-18

Mala Noche Norte Fracc. 2

215731

104

Active

Durango

VENTANAS

2044-04-18

Nuevo Mala Noche

243489

775

Active

Durango

VENTANAS

2064-10-09

Ampl. Mala Noche Frac. 2

388392

1,180

In Process

Durango

VENTANAS

In Process

Ampl. Mala Noche Frac. 1

388391

2,250

In Process

Durango

VENTANAS

In Process

Table 4-5: Lechuguillas Concessions Group List

Concession

Title

Size (Ha)

Status

State

Area

Valid to

El Gavilán 2

230976

990

Active

Durango

CAUSITAS

2057-11-21

El Gavilán 3

230977

3,191

Active

Durango

CAUSITAS

2057-11-21

El Alacrán

231975

455

In Process

Durango

CAUSITAS

In Process

San José de Causas

231525

20,341

Active

Durango

CAUSITAS

2058-03-06

El Cuervo

231442

2,042

Active

Durango

LECHUGUILLA

2058-02-27

Tayoltita Sur Uno

245230

2,847

Active

Durango

LECHUGUILLA

2066-11-14



San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 4-6: Cebollas Concessions Group List

Concession

Title

Size (Ha)

Status

State

Area

Valid to

Temehuaya 2

231439

2,679

Active

Durango

CEBOLLAS

2058-02-27

Anexo Cebollas

245158

433

Active

Durango

CEBOLLAS

2066-11-07

Nuevo Cebollas Siete

246738

368

Active

Durango

CEBOLLAS

2068-11-08

Nuevo Cebollas Seis

245619

200

Active

Durango

CEBOLLAS

2067-09-07

Nuevo Cebollas Tres

245568

40

Active

Durango

CEBOLLAS

2067-08-17

Nuevo Cebollas Cuatro

38889

699

In Process

Durango

CEBOLLAS

In Process

Table 4-7: Truchas Concessions Group List

Concessions

Title

Size (Ha)

Status

State

Area

Valid to

Ejido Huahuapan

228062

500

Active

Durango

TRUCHAS

2056-09-28

Truchas Uno

228067

59

Active

Durango

TRUCHAS

2056-09-28

Truchas Dos

228068

82

Active

Durango

TRUCHAS

2056-09-28

As per Mexican requirements for grant of tenure, the concessions comprising the San Dimas mining district have been surveyed on the ground by a licensed surveyor.

All applicable payments and reports have been submitted to the relevant authorities, and the licenses are in good standing as at the Report effective date. 

4.4. Royalties

In 2013, the Mexican Federal government introduced a mining royalty, effective January 1, 2014, based on 7.5% of taxable earnings before interest and depreciation. In addition, precious metal mining companies must pay a 0.5% royalty on revenues from gold, silver, and platinum. There is no other royalty to be paid on the San Dimas mine mining concessions.

Discussion on the streaming agreement with Wheaton Precious Metals International Ltd. (Wheaton Precious Metals) is provided in Section 19 of this Report.

4.5. Surface Rights

Surface rights in Mexico are separate from mineral rights. Under the mining law, mining rights holders have the right to use and access areas that are planned for exploration or exploitation. First Majestic (and its predecessor companies) secured surface rights by either acquisition of private and public land or by entering into temporary occupation agreements with surrounding communities.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The local communities are Ejidos, village lands communally held in the traditional system of surface land tenure that combine communal ownership with individual use. The most relevant Ejido in the area is the Ejido San Dimas as more than 70% of the production comes from mineralization located under this Ejido. Agreements with Ejido San Dimas are in place for the use of surface land for exploration activities and ventilation infrastructure. The second most relevant Ejido in terms of surface rights is the Rincon de Calabazas Ejido covering prospective ground in the San Dimas concessions group. An agreement dated October 2019 with the Rincon de Calabazas Ejido allows First Majestic to occupy surface land for exploration activities and ventilation infrastructure for a period of seven and a half years.  It is expected that the agreement will be able to be renewed at the end of the current agreement period.

4.6. Permitting Considerations

The San Dimas mine holds the necessary permits to operate, including the Environmental License, water rights concessions, federal land occupation concessions, among others. Details of the permits held in support of operations are discussed in Section 20 of this report.

4.7. Environmental Considerations

Environmental considerations are discussed in Section 20 of this Report.

4.8. Existing Environmental Liabilities

Environmental liabilities for the operation are typical of those that would be expected to be associated with an operating underground precious metals mine, including the future closure and reclamation of mine portals and ventilation infrastructure, access roads, processing facilities, hydroelectric plant, power lines, dry-stacked tailings and all surface infrastructure that supports the operations.

Primero Empresa is currently mitigating two past environmental liabilities: reclamation of the old San Antonio milling facilities (Contraestaca) and closure/reclamation of the old San Antonio tailings facilities. Reclamation of the old San Antonio mill has started with the dismantling of mills, structures and tanks. The remining work to reclaim the old San Antonio mill site and the tailings facility is ongoing with funds allocated in the asset retirement obligation (ARO).

Additional information on the environmental considerations for the San Dimas mine is provided in Section 20.

4.9. Significant Factors and Risks

To the extent known to the QPs, there are no other significant factors and risks that may affect access, title, or the legal right or ability to perform work on the San Dimas mine that are not discussed in this Report.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY

5.1. Accessibility

The San Dimas mine is located within the San Dimas district and approximately 1 km from the center of Tayoltita, a town with approximately 6,000 inhabitants.

Access to the San Dimas area is by air or road from the cities of Durango and Mazatlán. The town of Tayoltita has an airstrip and a licensed airport, First Majestic owns and operates a fully licensed airline company, Primero Transportes Aereos, S.A. de C.V., which owns and maintains a Havilland Twin Otter aircraft and a helicopter, both of which are based at Tayoltita. Other commercial air-transportation companies schedule regular daily flights to Tayoltita. Flights from either Mazatlán or Durango to the town of Tayoltita require approximately 40 minutes. Most of the transportation of personnel and light supplies, as well as emergency transportation, is attended to by First Majestic's regular flights from Mazatlán and Durango to and from the site. Heavy equipment and supplies are brought in by road from Durango.

Originally, road access to the San Dimas district was from the town of San Ignacio, Sinaloa, along a 55 km-long narrow mule trail carved in the steep valley wall above the high-water level of the Piaxtla River. A rough road, paralleling the original mule trail, now follows the riverbed to San Ignacio, but the road is only accessible for approximately six months of the year during the dry season. San Ignacio is connected to Mazatlán by approximately 70 km of paved roads. The trip from Mazatlan to Tayoltita requires about six hours.

The access from Durango City is an all-year route via a 112 km-long paved road from Durango to the town of Santa Lucia and a 120 km service road from Santa Lucia to Tayoltita. This trip takes about six and a half hours.

Figure 5-1 shows the access by road to San Dimas and the property location with respect to Mazatlán and Durango.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 5-1: Road Access to San Dimas mine

Note: Figure prepared by First Majestic, March 2020.

In 2009 the Mexican Government approved a 90 km road improvement from the town of San Ignacio to the Town of Tayoltita. This road includes two main sections, a 10 km paved road from San Ignacio to San Juan and an 80 km gravel road from San Juan to Tayoltita, which was under construction at the Report effective date. A significant improvement is expected when transporting oversize goods and materials, once the project is completed in 2022, as it reduces the travel time from Mazatlán to Tayoltita from six hours to three and a half hours approximately. Figure 5-2 shows the access road from San Ignacio to Tayoltita.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 5-2: Access Road from San Ignacio to Tayoltita

Note: Figure prepared by First Majestic, March 2020.

5.2. Climate

The climate of the San Dimas area is semi-tropical, characterized by relatively high temperatures and humidity, with hot summers (maximum around 39°C) and mild winters (minimum 11°C). At higher elevations in the Sierra, frosty nights occur in the winter (November through March). The majority of the precipitation occurs in the summer (June through September); however, tropical rainstorms between October and January can result in considerable additional rainfall. The average annual rainfall fluctuates between 66 and 108 mm. Exceptionally, in 2019 the annual rainfall was 488 mm.

The Las Truchas hydroelectric plant provides energy to the San Dimas operation. The water is collected from streams into a water dam located on the plateau. The power generated by the Las Truchas hydroelectric plant is relevant for the operation in terms of cost effectiveness and reliability as power from the grid provided by the Federal Commission of Electricity (CFE) is more expensive and has frequent short outages that can disrupt the operations.

As prolonged drought conditions could affect operations, First Majestic is assessing the economic merit of expanding the hydro dam capacity, discussed in Section 26.

Weather does not affect the mining and processing operations, and these activities are carried out on a year-round basis.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

5.3. Local Resources and Infrastructure

Tayoltita is the largest population centre in the region. Including mining personnel, the town has approximately 6,000 inhabitants. Population outside of this center is sparse. Subsistence farming, ranching, timber cutting, and mining are the predominant activities in the region.

Mining activities at the San Dimas mine are performed by a combination of First Majestic personnel and contract workers.

Water for the mining operations is obtained from wells and from the Piaxtla River. First Majestic also supplies water to Tayoltita from an underground thermal spring at the historic Santa Rita mine.

Figure 5-3 shows an aerial view of the mill in the foreground, the airstrip in the center, and the rugged terrain within which San Dimas is situated.

Details of the infrastructure that supports the San Dimas mine are provided in Section 18 of this Report.

Figure 5-3: Processing Plant, Airstrip and Rugged Terrain, Aerial View looking East

Note: Image taken by First Majestic, January 2019.

5.4. Physiography

The San Dimas mine is located in the central part of the Sierra Madre Occidental, a mountain range characterized by rugged topography with steep, often vertical, walled valleys and narrow canyons. Elevations vary from 2,400 metres above mean sea level (masl) on the high peaks to elevations of 400 masl in the valley floor of the Piaxtla River.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The main drainage in the San Dimas area is the Piaxtla River and its tributaries. The Piaxtla River is a short coastal river whose source is in the Sierra Madre, close to the Durango-Sinaloa state border, and which flows into the Pacific Ocean. The Piaxtla River has a length of 220 km and drains a basin of 11,473 km².

Vegetation at the mid-to-higher elevations is dominated by pines, junipers, and to a lesser extent, oaks, while the lower slopes and valleys are covered with thick brush, cacti, and grass.

5.5. Comment on Section 5

In the opinion of the QPs, the existing local infrastructure, availability of staff, methods whereby goods are transported to the San Dimas mine area are well-established and well understood by First Majestic and can support the declaration of Mineral Resources and Mineral Reserves (see discussion in Section 18).

All necessary primary infrastructure for the current operations is operational, being maintained and is sufficient for the projected life-of-mine (LOM) plan (see discussion in Section 18).

Surface rights for infrastructure and mining are discussed in Section 4.5.

Operations are currently conducted year-round.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

6. HISTORY

6.1. Ownership History

Table 6-1 summarizes the Project ownership history.

Table 6-1: Summary History of San Dimas Property

Time Period

Milestone

1757-1810

There is record of Hispanic mining production in the area during the 16th and 17th centuries Spaniards exploited the high-grade areas of the Los Queleles and other gold and silver mines

1810-1821

Mexican War of Independence. Mining activities ceased in the region.

1821-1880

The region remained isolated with minor mining activities.

1880-1882

Mining activities were reactivated by William Randolph Hearst, who purchased the old Tayoltita mine under the name of the San Luis Mining Company.

1883

Colonel Burns took control of the Candelaria mine.

1883-1904

The Contraestaca (San Antonio) mine was discovered, together with several large, high-grade deposits.

1904

A mill and a flotation plant/cyanide circuit were built for the first time in Mexico.

1940

Candelaria mined out. The mineral rights were purchased by the San Luis Mining Company.

1941

The San Dimas group of properties was consolidated under the ownership of the San Luis Mining Company.

1959

Mexican law governing natural resources requires that 51% of the ownership of a mining company must be held by Mexican nationals.

1961

Minas de San Luis S.A. de C.V., a company owned by Mexican interests, acquires 51% of the San Dimas group of properties.

1962-1977

The mine is operated by a partnership between the San Luis Mining Company and Minas de San Luis S.A. de C.V.

1978

A subsidiary of Minas de San Luis S.A. de C.V., Luismin, acquires the remaining 49% of the San Luis Mining Company.

1982

Luismin acquired the Ventanas Concessions Group

1978-2001

Luismin, as sole operator, operates continuously with an average production rate of 700 tpd.

2002

Luismin sells the San Dimas operations to Wheaton River Minerals Ltd. (Wheaton River).

2003

Production rate is increased to 1,600 tpd.

2005

Wheaton River merges with Goldcorp. Inc.

2006

Production rate is increased to 2,100 tpd.

2010

Mala Noche Inc. acquires a 100% interest in the San Dimas mine, enters into a streaming contract with Wheaton Precious Metals, successor to Wheaton River.

2011

Mala Noche Inc. changes its name to Primero Mining Corp. (Primero).

2011-2018

Primero is mine operator, with a production peak of 2,800 tpd in 2016. Primero increased the land position by acquiring an interest in the Lechuguillas Concessions Group.

2018

In May 2018, First Majestic acquires a 100% interest in the San Dimas Project through acquisition of Primero. The streaming contract with Wheaton Precious Metals is renegotiated.

 


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

6.2. Exploration History

In the San Dimas mining district, there are historical records that mention workings as far back as 1757, but it would not be until 1890 that there would be formal operations by the American-owned San Luis Mining Company and the Mexican-owned Candelaria Company. Later, in the 1960s, higher-grade discoveries would lead to the first deep drilling campaigns and to excavation of the initial long mining tunnels.

In 1975, the first 4.5km-long tunnel, the longest in the district at the time, was completed at the Tayoltita mine, this being an area where mineralization discoveries such as the San Luis vein had taken place following the Favorable Zone (see Section 7.4) concept aided by field geology. In the 1980s, American and Mexican groups commenced operations that led to the first geophysical and geochemical exploration in the southeast of the area known as the Tayoltita Block. As a result of the exploration the Santa Rita vein was discovered in what became known as the Santa Rita Area.

By the late 1980s and early 1990s, the Favorable Zone concept and Ag:Au ratios supported by fluid inclusion and thermal fusion studies led to discovery of the San Antonio area on the western side of the Tayoltita mine. After acquisition of the property by Luismin, there was a significant reduction in exploration activities throughout the whole mining district.

Wheaton River completed long drill holes together with excavation of long tunnels that were perpendicular to the general trend of veins. Examples of these tunnels include San Luis, Santa Anita, and Sinaloa Graben (Figure 6-1), where significant intersections and new high-grade veins were discovered. Exploration of these veins by drilling and the development of tunneling continued during the Primero ownership period. The Sinaloa Graben and San Fernando tunnels were extended to the north, intercepting more veins, which are currently in production.

Exploration and drilling activities conducted by First Majestic are summarized in Section 9 and Section 10 of this Report.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 6-1: Map showing Mining Tunnels at the Time the Property was Acquired by Wheaton River

Note: Figure modified by First Majestic after Goldcorp., 2010, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

6.3. Production History

Historical production to date from the San Dimas district is estimated at more than 748 Moz of silver and more than 11 Moz of gold (Enriquez et al., 2018), placing the district third in Mexico for precious metal production after Pachuca and Guanajuato. Historical production from 2003 to 2020 for the San Dimas mine is shown in Figure 6-2, exceeding 100 Moz of silver and 1.8 Moz of gold. The majority of this production is prior to First Majestic's acquisition of the property in May 2018.

The average throughput during 2019 and 2020 at the San Dimas mine was 1,975 and 2,037 tpd, respectively. Table 6-2 shows the monthly production of the San Dimas mine since First Majestic acquired the property. 

Figure 6-2: San Dimas Production from 2003 to 2020

Note: Figure prepared by First Majestic, January 2021.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 6-2: San Dimas Monthly Production After First Majestic's Acquisition


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7. GEOLOGICAL SETTING AND MINERALIZATION

7.1. Regional Geology

Information on the regional setting for the Project has been summarized primarily from Montoya et al. (2019, 2020) and Enriquez et al. (2001).

The San Dimas mining district is located in the central part of the Sierra Madre Occidental (SMO), near the Sinaloa-Durango state border. As a physiographic province, the SMO comprises a high plateau with an average elevation exceeding 2000m above sea level, extending from the Mexico-US border to the Trans-Mexican Volcanic Belt. Numerous epithermal deposits have been found along the SMO (Figure 7-1).

Figure 7-1: Physiographic Provinces around the San Dimas Mining District

Note: Figure from Montoya el al., 2019.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The SMO includes primarily Late Cretaceous to early Miocene igneous rocks formed during two main periods of continental magmatic activity (Ferrari et al., 2018a) (Figure 7-2).

Figure 7-2: Regional Geological Map of Central Sierra Madre Occidental

Note: from Montoya et al., 2019. Showing the Main Post-Eocene Extensional Structures and Principal Mining Districts. San Dimas enclosed within the white frame.

Two major volcanic successions from these periods represent approximately 3,500 m in thickness and are separated by erosional and depositional unconformities. They are known as Lower Volcanic Complex (LVC) and Upper Volcanic Group (UVG)

The LVC consists of predominantly intermediate volcanic and intrusive rocks, the so-called Laramide magmatic arc, which developed during east-verging subduction of the Farallon plate beneath the North America continent between approximately 100 and 50 Ma (Gastil, 1975; Henry et al., 2003; McDowell et al., 2001; Ortega-Gutiérrez et al., 2014; Valencia-Moreno et al., 2017).

After a transitional period that lasted until the late Eocene (Ferrari et al., 2018a), volcanism became markedly silicic and then bimodal, forming the UVG. Silicic ignimbrites represent the overwhelming component of this volcanism, which makes the Sierra Madre Occidental one of the largest silicic volcanic provinces on Earth (Bryan and Ferrari, 2013). Most of these rocks were deposited during two ignimbrite episodes at approximately 35-29 Ma along the entire province and at approximately 24-20 Ma in the southern SMO (Ferrari et al.,2002, 2007; McDowell and McIntosh, 2012). Mafic lavas, often with an intraplate affinity, are found intercalated within the ignimbrite successions since 33 Ma (Ferrari et al., 2018a; 2018b).


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.2. Local Geology

This section is primarily summarized from Montoya et al., 2019, and Enriquez and Rivera, 2001.

In the San Dimas district, the local geology is defined by the LVC and the UVG. These volcanic successions are separated by erosional and depositional unconformities and are intruded by intermediate and basic rocks.

7.2.1. Stratigraphy

A general stratigraphic column for the San Dimas district is provided in Figure 7-3 and a general geology map of the area is included as Figure 7-4.

Figure 7-3: Stratigraphic Column, San Dimas District

Note: Figure from Montoya et al., 2019.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 7-4: Geological Map of San Dimas Mining District

Note: Figure prepared by First Majestic, August 2020. Polylines in red represent mineralized veins.

7.2.2. Lower Volcanic Complex (LVC)

The LVC has traditionally been divided into informal geological units, primarily based on field observations. From base to top, these are the Socavón rhyolite, the Buelna andesite, and the Portal rhyolite, defined as a sequence of interlayered tuffs and lesser lava flows of felsic to intermediate composition (Locke, 1918; Davidson, 1932; Henshaw, 1953):

  • The Socavón rhyolite is more than 700 m thick and is host to several productive veins in the district;
  • The Buelna andesite, which is remarkably persistent throughout the area, is well-bedded, and ranges in thickness from 20-75 m;
  • The Portal rhyolite is a grey, cream- to purple-coloured rock containing potassic feldspar and quartz that cement small (5-10 mm) volcanic rock fragments. It ranges in thickness from 50-250 m and is also prevalent throughout the district.

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

These rocks are unconformably overlain by a succession of informally named andesitic lavas and sedimentary rocks, from base to top, including:

  • The Productive andesite, >750 m thick, divided into two varieties based on grain size, but which are of identical mineralogy.  One variety is fragmental (varying from a lapilli tuff to coarse agglomerate), and the other has a porphyritic texture (1-2 mm plagioclase phenocrysts);
  • The Las Palmas formation, composed of purple to red interbedded rhyolitic and andesite tuffs and flows, and >300 m thick;
  • The Camichin unit, comprises green epiclastic conglomerates at the base and red arkoses and shales at the top, with a total thickness of approximately 300 m. This unit crops out extensively in the Tayoltita area.

7.2.3. Upper Volcanic Group (UVG)

In the San Dimas district, the UVG is informally divided into a subordinate lower unit composed mainly of lavas of intermediate composition, the Guarisamey andesite, and an upper unit, the Capping rhyolite. The Capping rhyolite consists of rhyolitic ash flows and air-fall tuffs, may reach as much as 1,500 m in thickness in the eastern part of the district; however, within most of the district it is averages about 1,000 m thick.

7.2.4. Intrusive Rocks

The two volcano-volcaniclastic successions are intruded by intermediate rocks, consisting of the Arana intrusive andesite and the Arana intrusive diorite (Henshaw, 1953), and a felsic suite comprising the Piaxtla granite and Santa Lucia, Bolaños, and Santa Rita dikes. The basic dikes intrude both the LVC and the UVG.

7.2.5. Structural Geology

The structural context for the San Dimas district was investigated by Ballard (1980), who focused on the structural control of mineralization in the Tayoltita mine, and by Horner and Enriquez (1999), who studied the structural geology and tectonic controls for the district as a whole.

Figure 7-5 shows the structural geology in the San Dimas group of concessions where the mining operations take place. The geology within this group of concessions has been studied in more detail. The most prominent structures are major north-northwest-trending normal faults with opposite vergence that divide the district into five fault-bounded blocks that are tilted to the east-northeast or west-northwest (Enriquez and Rivera, 2001).


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 7-5: Structural Map of San Dimas Concessions Group

Note: Figure prepared by First Majestic, January 2020.

All the major faults exhibit northeast-southwest extension.  Dips vary from nearly vertical to approximately 55° (Horner and Enriquez, 1999). East-west to west-southwest-east-northeast striking fractures, perpendicular to the major normal faults, are often filled by quartz veins, dacite porphyry dikes, and pebble dikes.  These are later cut by rhyolite porphyry dikes that intruded north-south to north-northwest-south-southeast trending fissures (Smith et al., 1982). Horner and Enriquez (1999) grouped the development of major faults, veins, and dikes into three deformational events:

  • D1: Represented by tension gashes with an east-west to northeast-southwest orientation and a slight right-lateral offset. Developed in the late Eocene. These structures host the first hydrothermal vein systems;
  • D2:  Produced north-south-trending right-lateral strike-slip to transtensional faults due to a rotation of the maximum horizontal principal stress to an approximate northeast-southwest position. In this stage, interpreted to have occurred in the early Oligocene, a second set of hydrothermal veins developed;

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
  • D3: Produced the major block faulting that affected the entire district along northwest-southeast-striking normal faults, which in some cases reactivated the former strike-slip faults during the late Oligocene-Miocene period. These faults host bimodal dikes, which are part of the UVG.

The northwest-southeast (D3 event) extensional fault systems exposed the mineralization and tilted all the succession prior to the deposition of a ∼24 Ma ignimbrite package.

Very recent studies indicate that an older west-southwest-east-northeast trending normal fault system with up to 1 km of displacement must exist between the San Dimas area and the Causita and Ventanas areas to the south. This fault system, currently buried beneath Oligocene-Miocene ignimbrites, may have controlled the intrusion of the Piaxtla batholith and played a crucial role in the preservation of the large vein systems in the San Dimas district in a tectonic depression setting.

Figure 7-6 is a geological section across the San Dimas district perpendicular to the main faults showing the five tilted fault blocks. In most cases, the faults post-date the mineralizing event in age and offset both the LVC and UVG.

Figure 7-6: Geological Section Across the San Dimas Concessions Group

Note: Figure prepared by First Majestic August 2020, after Goldcorp.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.3. Mineralization

Within the San Dimas district, the mineralization is typical of epithermal vein structures with banded and drusy textures. Epithermal-style veins occupy east-west-trending fractures, except in the southern part of the Tayoltita Block where they strike mainly northeast, and in the Santa Rita area where they strike north-northwest (see Section 7.4 for block and area descriptions).

The Favourable Zone concept for San Dimas was developed in the mid seventies in the Tayoltita Block, based on the San Luis vein, which was mined out in the late 1990s. The mine geologists observed that bonanza grades along the San Luis vein were spatially related to the Productive andesite unit and/or to the interphase between the Productive andesite and the Portal rhyolite and/or the Buelna andesite. This spatial association of vein-hosted mineralization to a favorable zone within the volcanic sequence is now recognized in other fault blocks and constitutes a major exploration criterion for the district.

The veins were formed in two different phases. The east-west striking veins developed first, followed by a second system of north-northeast-striking veins. Veins pinch and swell and commonly exhibit bifurcation, horse-tailing, and sigmoidal structures. They vary in width from a fraction of a centimeter to as much as 8 m wide, but average 1.5-2.0 m. The veins have been followed underground from a few meters in strike-length to more than 1,500 m. An example of these veins, the Jessica Vein, which extends for more than 1,000 m in the Central Block, is illustrated in Figure 7-7.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 7-7: The Jessica Vein Within the Favourable Zone, Vertical Section

Note: Figure prepared by First Majestic August 2020. Black dots represent exploration and delineation drilling intercepts. The Favorable Zone, the interphase between Productive andesite and rhyolite, is positioned between the two red dotted lines.

Three major stages of mineralization have been recognized in the district:

  • Early stage;

  • Ore-forming stage;

  • Late-stage quartz.

These three distinct sub-stages of the ore-forming stage can be discriminated by distinctive mineral assemblages with ore-grade mineralization occurring in all three sub-stages:

  • Quartz-chlorite-adularia;

  • Quartz-rhodonite;

  • Quartz-calcite.

The paragenetic sequence for vein formation is summarized in Figure 7-8.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 7-8: Paragenetic Vein Sequence, San Dimas

Note: Figure prepared by Silver Wheaton (now Wheaton Precious Metals),

after Clarke, 1986; and Enriquez, 1995.

QTZ=quartz, CHL=chlorite, AD=adularia, RHOD=rhodochrosite, CAL= calcite

The ore-forming vein stage mineralogy consists primarily of white to light grey, medium-to-coarse-grained crystalline quartz. The quartz contains intergrowths of base metal sulphides (sphalerite, chalcopyrite, and galena) as well as pyrite, argentite, polybasite [(Ag,Cu)6(Sb,As)2S7], stromeyerite (AgCuS), native silver, and electrum. The veins are formed by filling previous fractures and typical textures observed include crustification, comb structure, colloform banding and brecciation. Figure 7-9 is a photograph of the Roberta vein in the San Dimas district.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 7-9: Roberta Vein, Central Block, San Dimas

Note: Photo by First Majestic, May 2020.

Mineralized shoots within the veins have variable strike lengths (5-600 m); however, most average 150 m in strike-length. Down-dip extensions of mineralized shoots are up to 200 m in length and are generally less than the strike length.

7.4. Deposit Descriptions

A total of 118 mineralized quartz veins were recognized in the San Dimas Concessions Group, which represents 38% of the total property area. Another seven veins have been mapped to some extent in the Ventana Concessions Group. Table 7-1 presents the list of known veins by mine zone in the San Dimas Concessions Group and in the Ventana Concessions Group.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 7-1: List of Veins by Mine Zone in the San Dimas and Ventanas Concessions Groups




San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

All the Mineral Resources estimated for San Dimas are hosted in the deposits that have been found in the San Dimas Concessions Group. There are no resource estimates outside of this area.

The local geology is characterized by north-northwest-south-southeast-oriented fault blocks that are bounded by major faults. The veins are generally west-southwest-east-northeast-oriented, forming a corridor about 10 km wide. This package was truncated by the north-northwest-south-southeast-trending major faults, separating the original veins into segments. These segments are named as individual veins and grouped by mine zones by fault block

These mine zones are, from west to east: West Block, Graben Block, Central Block, Tayoltita Block, Alto de Arana Block (also know as Arana HW), San Vicente, El Cristo and Santa Rita. Figure 7-10 shows the location of the mine zones in the San Dimas concessions area.

Figure 7-10: Deposit Geology Map

Note: Figure prepared by First Majestic, August 2020.

A description for each of the mine zones is presented in the following sub-sections. Figure 7-11 shows the location of the veins and the orientation of representative cross sections.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 7-11: Vein Map, San Dimas

Note: Figure prepared by First Majestic August 2020. The representative sections for each mine zone are named in the map.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.1. West Block

The West Block is limited to the west by the Don Porfirio Fault and to the east by the Sinaloa Fault. It covers an area of 2,700 m in the northeast-southwest direction and 7,700 m in the southeast-northwest direction. In this approximately 21 km2 of surface, a total of 17 veins have been identified. The veins are hosted by the Portal rhyolite and Productive andesite stratigraphic units and andesitic intrusions.

The strike direction of the veins in this block is east-northeast-west-southwest, dipping at 30-60° to the northwest. The highest vein in elevation is San Rafael, located at 1,100 masl; and the lowest is Santa Rosa vein at 340 masl.  The strike length varies from 100-500 m. The average thickness is 1.5 m, the distance between veins varies between <80 m to 300 m.

Figure 7-12 shows a longitudinal section for the San Antonio vein.

Figure 7-12: Longitudinal section, San Antonio Vein, West Block, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.2. Graben Block

The Graben Block is limited to the west by the Sinaloa Fault and to the east by the Limoncito Fault. It covers an area of 1,200 m in the northeast-southwest direction and 6,000 m in the southeast-northwest direction. Within this approximately 7 km2 area, a total of eight veins have been identified. The veins are hosted by the Portal rhyolite and Productive andesite stratigraphic units and dioritic rocks.

The strike for most of the veins is northeast-southwest dipping from 30-90° to the northwest. The highest vein in elevation is Santa Regina, located at 1,060 masl and the lowest is Victoria at 250 masl. The strike length varies from 100-1000 m. The average thickness is 2 m, and the distance between veins varies from <100 m to 300 m.

Figure 7-13 shows a longitudinal section for the Victoria vein.

Figure 7-13: Longitudinal Section, Victoria Vein, Graben Block, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.3. Central Block

The Central Block is limited to the west by the Limoncito Fault and to the east by the Guamuchil Fault. It covers an area of 3,200 m in the northeast-southwest direction by 8,500 m in the southeast-northwest direction. Within the block, a total of 21 veins have been identified in the last two decades. The veins are hosted by the Portal rhyolite and Productive andesite stratigraphic units and intrusive dioritic rocks.

Two significant veins in the Central Block are the Roberta and Robertita veins, which are 1,500 long by 500 m high by 2.5 m average thickness.  These two veins are almost mined-out. The Santa Jessica vein, which is one of the main veins in the district, is also hosted in the Central Block. The veins in Central Block show northeast-southwest strike direction, dipping to the northwest. In terms of elevation the highest vein is Santa Jessica at 1,231 masl and the lowest is Robertita at 110 masl. Within the veins, the high-grade mineralized shoots generally plunge to the northeast. The distance between veins varies from <100 m to 500 m.

Figure 7-14 shows a longitudinal section for the Pozolera vein.

Figure 7-14: Longitudinal Section, Pozolera Vein, Central Block, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.4. Tayoltita Block

The Tayoltita Block, also known as the East Block, is limited to the west by the Guamuchil Fault and to the east by the Arana Fault. It covers an area of 1,800 m in the northeast-southwest direction and 3,500 m in the southeast-northwest direction. Within the block, a total of 43 veins have been identified. The veins are hosted by the Portal rhyolite and Productive andesite stratigraphic units and andesitic intrusions.

The largest vein in this block was San Luis vein, which was mined out in the past and was the only vein known to have a north-south orientation. The remaining known veins are northeast-southwest oriented. The highest vein in elevation is San Luis, located at 1,900 masl; and the lowest is Vein-36, which is at 470 masl. The strike length varies from 80-1,800 m and the average thickness is 1.5 m. The distance between veins varies from <100 m to 350 m.

Figure 7-15 shows a longitudinal section for the San Luis vein.

Figure 7-15: Longitudinal Section, San Luis Vein, Tayoltita Block, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.5. Santa Rita Area

The Santa Rita area is between the Peña Fault and the Piaxtla river, in the southeast of the Tayoltita Concessions Group. It covers an area of 1,700 m in the northeast-southwest direction and 3,500 m in the southeast-northwest direction. In this approximately 6 km2 of surface area, a total of 19 veins have been identified. The veins are hosted by Portal rhyolite, Productive andesite and Camichin stratigraphic units.

The veins are northeast-southwest-oriented, dipping from 20-90°. The highest vein in elevation is Promontorio, located at 930 masl and the lowest is the Marisa vein at 300 masl. The strike length varies from 80-250 m. The vein thickness varies from 0.3-3.0 m, and the distance between veins varies from <100 m to 400 m.

Figure 7-16 shows a longitudinal section for the Magdalena vein.

Figure 7-16: Longitudinal Section, Magdalena Vein, Santa Rita Area, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.6. El Cristo Area

The El Cristo area is located south of the Piaxtla River. It covers an area of 1,300 m in the northeast-southwest direction and 2,600 m in the southeast-northwest direction. In this approximately 3.5 km2 of surface area, seven veins have been identified. The veins are hosted in the northern half by the Piaxtla granodiorite intrusion and in the southern half by the Productive andesite. The vein strike is northeast-southwest, dipping at 68° NW. The highest vein in elevation is Camichin, located at 1,160 masl and the lowest is the Gertrudis vein at 480 masl. The strike length varies from 70-300 m, the vein thickness varies from 0.5-1.3 m, and the distance between veins varies from <100 m to 300 m.

Figure 7-17 shows a longitudinal section for the Camichin vein.

Figure 7-17: Longitudinal Section, Camichin Vein, El Cristo Area, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.7. Alto De Arana Area

The Alto de Arana area is the eastern most area of the Toyoltita Concessions Group and is located in the uplifted Arana fault block. The area is 900 m in the northeast-southwest direction and 1,500 m in the southeast-northwest direction. In this approximately 5.5 km2 surface area, a vein of the same name is the only vein system that has been identified so far. The Alto de Arana vein strikes north-south, dipping to the northeast. The vein was identified at 800 masl elevation and has an average thickness of 2.0 m.

Figure 7-18 shows a longitudinal section for the Alto de Arana vein.

Figure 7-18: Longitudinal Section, Alto de Arana Vein, Alto de Arana Area, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.8. San Vicente Area

The San Vicente area is located north of the West Block mine zone. It is the continuation of the West fault block, but for mining purposes the San Vicente Area has been kept separate. It covers an area of 1,500 m in the northeast-southwest direction and 800 m in the southeast-northwest direction. In this approximately 1.2 km2 of surface area, two veins have been identified. Both veins show a general northeast-southwest orientation dipping 65° NW and are hosted by Productive andesite. The highest vein in elevation is San Vicente vein at 1,275 masl and the lowest is San Juan vein at 810 masl. The strike length varies from 150-550 m, the vein thickness varies from 0.5-2.0 m, and the distance between the two veins is 80 m.

Figure 7-19 shows a longitudinal section for the San Vicente vein.

Figure 7-19: Longitudinal section, San Vicente Vein, San Vicente Area, San Dimas

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

7.4.9. Ventanas Prospect

This area has been explored intermittently over the years since the 1970s. The last major exploration campaign was in 2015-2016. The quartz veins in the Ventana area are oriented east-west, dipping at 70°S (e.g., Rivereña, Eleonor, Guadalupe, El Carmen and Valenciana veins) and northwest-southeast, dipping at 50°NE (e.g., Mala Noche and La Prieta veins). The largest vein is Mala Noche with a strike extent of more than 1,000 m and has been tested to 200 m depth by exploratory adits and drilling. The area retains exploration potential.

7.5. Comments on Section 7

In the opinion of the QPs, the knowledge of the deposit settings, lithologies, mineralization style and setting, geological controls, and structural and alteration controls on mineralization is sufficient to support Mineral Resource and Mineral Reserve estimation.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

8. MINERAL DEPOSIT TYPES

The mineral deposits within the San Dimas mine district are considered to be examples of silver- and gold-bearing epithermal quartz veins that formed in a low-sulphidation setting.

The description for the low-sulphidation epithermal model is taken from Pantaleyev (1996).

8.1. Geological Setting

Low-sulphidation epithermal mineral deposits are formed in high-level hydrothermal systems from depths of ~1 km to surficial hot spring settings. Deposition is controlled by regional- and local-scale fracture systems related to grabens, (resurgent) calderas, intrusive dome complexes and rarely, maar diatremes.  Extensional structures in volcanic fields (normal faults, fault splays, ladder veins and cymoid loops, etc.) are common; locally graben or caldera-fill volcaniclastic rocks are present.  High-level (subvolcanic) stocks and/or dikes and pebble breccia diatremes occur in some areas.  Locally resurgent or domal structures are related to underlying intrusive bodies.

Most volcanic rocks can host epithermal deposits; however, calc-alkaline andesitic compositions are the most common.  Some deposits occur in areas with bimodal volcanism and extensive subaerial ash flow deposits.  A less common association is with alkalic intrusive and shoshonitic volcanic rocks.  Epiclastic sediments can be associated with mineralization that develops in intra-volcanic basins and structural depressions.

Epithermal veins are typically localized along structures but may also form in permeable lithologies. Upward-flaring mineralized zones centred on structurally controlled hydrothermal conduits are typical.  Large to small veins and stockworks are common.  Vein systems can be laterally extensive, but the associated mineralized shoots have relatively restricted vertical extent.  High-grade mineralized shoots are commonly formed within dilational faults zones near flexures and fault splays. 

Textures typical of low-sulphidation quartz vein deposits include open-space filling, symmetrical and other layering, crustification, comb structure, colloform banding and complex brecciation.

8.2. Mineralization

Epithermal vein deposits commonly possess metal zoning along strike and vertically.  Deposits are commonly zoned vertically over a limited 250-350 m extent from a base metal poor, gold-silver-rich top to a relatively silver-rich base metal zone and an underlying base metal-rich zone grading at depth into a sparse base metal, pyritic zone.  From surface to depth, metal zones can contain gold-silver-arsenic-antimony-mercury, gold-silver-lead-zinc-copper, or silver-lead-zinc. 

Pyrite, electrum, gold, silver, argentite; chalcopyrite, sphalerite, galena, tetrahedrite, silver sulphosalt and/or selenide minerals are common mineral species.  Quartz, amethyst, chalcedony, quartz pseudomorphs after calcite, calcite; adularia, sericite, barite, fluorite, calcium-magnesium-manganese-iron carbonate minerals such as rhodochrosite, hematite, and chlorite are the most common gangue minerals.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

8.3. Alteration

Silicification is extensive in epithermal vein-hosted mineral deposits as multiple generations of quartz and chalcedony are commonly accompanied by adularia and calcite.  Pervasive silicification in vein envelopes can be flanked by sericite-illite-kaolinite assemblages. Intermediate argillic alteration (kaolinite-illite-montmorillonite) can form adjacent to some veins and advanced argillic alteration (kaolinite-alunite-pyrophyllite) may form along the tops of mineralized zones.  Propylitic alteration dominates peripherally and at depth.

Figure 8-1 shows the genetic model for epithermal deposits proposed by Hedenquist et al., (1998).

Figure 8-1: Genetic Model for Epithermal Deposits

Note: Figure from Hedenquist et al., (1998).

8.4. Applicability of the Low-Sulphidation Epithermal Model to San Dimas

The vein-hosted silver and gold mineral deposits at San Dimas are considered to be low-sulphidation epithermal type deposits based on the following characteristics:


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates
  • Mineralization is deposited along a regional-scale extensional fault and fracture system; an environment typical of low sulfidation systems;
  • The mineral deposits formed in the andesitic and rhyolitic volcanic rocks of the LVC; such rocks are typical host rocks for epithermal deposits;
  • Silver and gold mineralization are hosted by quartz veins that possess colloform and banded textures, typical of epithermal low sulphidation deposits. Additional structural-textural features, such as hydrothermal breccias cemented by quartz-calcite, stockworks, and cymoid loops, are also common;
  • The quartz veins possess a geochemical zonation in silver, gold, and base metals. Typically, the silver grades are higher closer to surface while base metals, particularly zinc, increase at lower levels in the system. Figure 8-2 shows the generalized geochemical model for the San Dimas deposits;
  • The veins are continuous along strike for distances up to 1,500 m; the original veins may have been several kilometers long, but these veins were truncated by post-mineral faulting;
  • Vertically, the vein-hosted mineralization is restricted within 75-650 m of the surface, which represents the high-level elevation where the second boiling zone occurs, and locally has been called the Favorable Zone. Figure 8-3 shows a schematic section of the Favourable Zone using the Guadalupe vein as an example;
  • Dilatational zones serve as structural traps forming mineralized shoots, and the morphology of the veins in San Dimas is usually "pinch and swell".

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 8-2: Geochemical Zonation model San Dimas

Note: Figure from Rivera, (2003).


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 8-3: Example Section of the Favourable Zone for Mineralization, San Dimas

Note: Figure prepared by First Majestic, June 2020.

8.5. Comments on Section 8

In the opinion of the QP, the deposits in the San Dimas mine area are considered to be examples of low sulfidation epithermal deposits. The QP believes that a low sulfidation epithermal model is appropriate as an exploration model for the San Dimas mine area and to inform the geological interpretation and the geological modelling for Mineral Resource estimation.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

9. EXPLORATION

9.1. Introduction

The San Dimas district has been the subject of modern exploration and mine development activities since the early 1970s, and a considerable information database has been developed from both exploration and mining activities. Exploration uses information from surface and underground mapping, sampling, and drilling together with extensive underground mine tunneling to help determine targets. Other activities include prospecting, geochemical surface sampling, geophysical and remote sensing surveys.

Most of the exploration activities were carried out in the San Dimas mine areas, centered around the Piaxtla River where exposures of the silver-gold veins were found, many of which have been mined out (Figure 9-1).

Figure 9-1: San Dimas Concessions Group

Note: Figure prepared by First Majestic, June 2020. Quartz veins highlighted in red.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Outside of this area, the Lechuguilla and Ventana Concessions Group areas were explored to some extent during 2008 and 2015-16. The remainder of the concessions have had limited or no exploration as they are covered by thick piles of post-mineral ignimbrites. Figure 9-2 shows the San Dimas Project and the areas subject to exploration in the last 50 years.

Figure 9-2: Areas Explored in San Dimas Project in 2020

Note: Figure prepared by First Majestic, June 2020. The mine zones located in the area in red, exploration areas in dark blue.

9.2. Grids and Surveys

Prior to 2019, the operations used UTM NAD27, Zone 13N, for locations within the mine zones, and for drill collar purposes, and all plans related to that grid.  First Majestic transitioned to UTM WSG84 in 2019.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

9.3. Geological Mapping

9.3.1. Surface Geological Mapping

About 60% of the Project area is covered by post-mineral ignimbrites which overlie the andesitic units hosting silver and gold mineralization. Aerial photo interpretation was used in the mid-1970s to identify erosional windows through the ignimbrites that exposed the andesitic units of the LVC. The largest erosional window is centered on the Piaxtla River, which is enclosed by the San Dimas Concessions Group.

The andesite, rhyolite, and intrusive units exposed in the erosional window were of geological interest as they were associated with the favourable horizon and were mapped in detail. The geological mapping focused on identifying outcropping veins that were located on surface and projected at depth to be explored by tunneling and drilling. Regional-scale geological mapping was also conducted. Figure 9-3 shows a geological map of the San Dimas mining district.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-3: Geological Map, San Dimas Project

Note: Figure prepared by First Majestic, June 2020.

Very little detailed geological mapping existed outside the San Dimas mining area until 2005 when Capstone, through an option agreement with Goldcorp, carried out an exploration campaign in the Ventanas area, which had seen mining activity in the 1950s. Primero continued with the exploration work in this area and produced geological maps of the primary veins. Figure 9-4 shows the Ventanas geological map produced at 1:5,000.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-4: Geological Map, Ventanas Area

Note: Figure prepared by First Majestic June 2020.

9.3.2. Underground Geological Mapping

Underground geological mapping is completed daily by mine geologists. It is a critical for exploration, geological interpretation, modeling, resource estimation, and the grade control process for the mine. Figure 9-5 shows an example of an underground geological map at 1:1,000 scale for the Jessica vein.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-5: Geological Map, Jessica Vein

Note: Figure prepared by First Majestic, June 2020. Jessica vein in red, faults in blue.

9.4. Geochemical Sampling

Multiple geochemical surveys were completed at San Dimas, particularly in the 1970s and in the 1980s over the Tayoltita Block and Central Block zones.

The most common geochemical survey method was systematic rock chip channel sampling every 10-20 m along strike and perpendicular to outcropping veins. The sample intervals were variable, usually 1.0 m or less. The areas between outcrops were covered by 20 by 20 m soil sampling grids.

The samples were assayed, and the data plotted on geological maps. Where possible, trenching across soil silver and gold anomalies exposed the quartz veins for additional rock chip sampling. The geochemical anomalies were projected to depth to generate targets that were explored by drilling from surface and/or tunneling. Figure 9-6 shows the surface gold anomaly map in the San Dimas mining zone produced by a sampling campaign carried out in 2000 by Luismin. A total of 1,126 rock chip samples were collected and assayed for Au, Ag, Pb, Cu, Zn, Mo, Mn, As, Fe, Sb and Ca.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-6: Surface Gold Anomaly Map, San Dimas Area

Note: Figure prepared by Luismin, March 2000. - Isograds in g/t Au.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-7 shows a longitudinal section of the Luz-Reyes vein, located in the West Block. The surface isograde gold anomaly was modeled to depth.

Figure 9-7: Longitudinal Section for Luz-Reyes Vein showing Gold Isograds, San Dimas Area

Note: Figure prepared by First Majestic, after Luismin, March 2000. Contours shown are in g/t Au. Green is <1 g/t Au, yellow is 1-3 g/t Au, orange is 3-5 g/t Au, and red is >5 g/t Au.

Additional geochemical surface sampling was also completed in more recent exploration campaigns. Figure 9-8 shows the geology map and gold-equivalent anomalies in the Ventanas area produced by Primero during 2015-2016. Based on results from trenching at surface and underground sampling from the historic accessible mine levels, three veins were selected to be followed up with drilling: San Pedro, Mala Noche, and Macho Bayo. A total of 48 drill holes (15,600 m) were completed. The results were not conclusive and no additional exploration activities were conducted.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-8: Geological Map and Gold-Equivalent Anomalies, Ventanas Area

Note: Figure prepared by Primero Mining Corp. 2016.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

9.5. Geophysics

Limited geophysical surveys were completed due to a combination of the rugged terrain and the proven efficiency of the geochemical sampling methods to localize the favourable horizon.

In 2005, McPhar Geosurveys Ltd (McPhar) was engaged by Goldcorp to conduct a high-resolution airborne radiometric and magnetic survey over the San Dimas mining area to enhance the general understanding of the regional geology of the area. The flights were carried out by Heliservicios Internacionales, S. A. de C. V. using a Bell 206 Long Ranger helicopter.

The survey flight lines covered 2,261 km over an area of 203 km2. Spacing between points measured at ground level was 30 m for magnetic and 45 m for radiometric readings. The orientation of the flight was from north to south and the lines were flown with a 100 m spacing. Perpendicular flights, east to west, were done every kilometer.

The radiometric and magnetic collected data was processed by McPhar. Electromagnetic data were filtered and levelled using both automated and manual levelling procedures. Apparent resistivity was calculated from in-phase and quadrature data. The apparent resistivity dataset was also levelled and filtered. Radiometric data were processed using standard procedures recommended by International Atomic Energy Association.

All data were gridded with the cell size of 30 m. Figure 9-9 shows the magnetic field reduced to pole. The interpretation identified intrusive bodies such as Arna, Piaxtla, the Intrusive andesite, and seven areas of prospective interest tagged as A, B, C, D, E, F and G.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-9: Magnetic Field Reduced to Pole, San Dimas Mining Area

Note: Figure prepared by Goldcorp Mexico, 2005.

9.6. Remote Sensing

ASTER imagery covering the San Dimas mining area was acquired in 2002 by Wheaton River. The image was crosstalk corrected, processed to surface reflectance, and analyzed. The objective was to outline structural and alteration features that could be related to mineralization in the district. Figure 9-10 shows the interpreted zones of clay alteration in light blue and vein swarms in red.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-10: Aster Image, San Dimas Mining Area

Note: Figure prepared by Wheaton River, 2002.

In 2013, Primero compiled historical remote sensing data, which included previous airborne magnetic and radiometric data acquired in 2005 at 100 m line-spacing and the ASTER imagery acquired in 2002.

The objectives were to correlate the geophysical responses with observable structures and mineralization identified from field mapping in the district and identify interesting structural and alteration features that may be related to mineralization in the district.

Figure 9-11 shows the combination of the alteration map obtained from the ASTER image and the magnetic data. The inferred alteration zones tend to follow northeast-trending magnetic discontinuities.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-11: Satellite Image Magnetic Tilt Derivative Inversion and Alteration, San Dimas Area

Note: Figure prepared by McPhar Geosurveys Ltd., December 2005.

9.7. Tunnelling

The most important exploration strategy at San Dimas has been underground mine tunnelling from south to north since the favorable horizon concept was first proposed in 1975 by Luismin. Tunnelling consists of advancing mine development to the north at the preferred elevation to intersect quartz veins mapped at surface. This method discovered veins with no surface exposure, such as the Jessica vein, which currently is a major contributor to silver and gold production. The tunnels were used to establish underground exploration drilling platforms, and to extract the ore. This exploration strategy has successfully been used by all companies after Luismin, resulting in more than 500 km of underground mine development.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 9-12: Main Mining Tunnels, San Dimas Mining Area

Note: Figure prepared by First Majestic, March 2020.

9.8. Petrology, Mineralogy, and Research studies

Numerous petrographic studies have been conducted over the years by the different companies (e.g., Clarke et al., 1988; Petersen, 1997; Conrad et al., 1995; Enriquez et al., 2001; Montoya et al., 2020)

Between 2017 and 2020, Universidad Nacional Autónoma de Mexico, conducted a complete petrographic and fluid inclusions study as part of a Ph.D. thesis (Montoya, 2020). Samples were collected from the San Dimas mining areas as well as from the Ventanas area.  Conclusions of this study are:

"San Dimas exhibits multiple mineralization events during different magmatic and tectonic episodes from Late Cretaceous to early Oligocene. Mineralogical, fluid inclusions (FI), stable and noble gases isotope analyses suggest that the San Dimas deposit consist of two different mineralization styles: 1) Ag-dominant epithermal Eocene veins that occurred at temperatures up to ~350 °C developed at ca. 2-3 km depth, associated to the final stages of intrusion of the Piaxtla batholith, with FI dominated by a crustal component, and 2) epithermal low sulfidation Au-dominant Oligocene veins which were developed at 250 °C, at shallower depths (< 1 km), associated to the feeding fractures of rhyolitic domes developed at the end of the main ignimbrite flare up of the Sierra Madre Occidental, with FI showing crustal fluids variably mixed with a magmatic component".


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

9.9. Exploration Potential

The San Dimas exploration potential remains open in all the mine zones. As the mine was developed to the north, new veins were found. South of the Piaxtla River, the El Cristo area has potential for new quartz vein discoveries. The West Block is currently being explored by tunnelling. Opportunities to intercept the projection of fault-offset quartz veins from the Graben Block are considered good.

The exploration carried out in the Ventanas area is not yet conclusive. Further exploration campaigns could result in more vein discoveries.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

10. DRILLING

Since the Favourable Zone for mineral deposits concept emerged in 1975, the exploration strategy has focused on underground mining development and core drilling perpendicular to the preferred vein orientation within the mine zones, which has proven to be the most effective method of exploration in the area. Core drilling is predominantly done from underground stations, as the rugged topography (i.e., access to surface drill stations) and the great drilling distance from surface locations to the target(s) makes surface drilling challenging and expensive.

Over 1,026,000 m of core drilling has been carried out since 2000.

Drilling in San Dimas took place over five different periods:

  • Prior to 2000, most of the exploration was carried out in the Tayoltita mine zone through tunnelling with very little underground drilling, with the objective of verifying the extent of the veins in that zone along strike and at depth. No written details on the logging procedures in place prior to the 2000 campaign are available;
  • Drilling between 2000-2004 was carried out by Luismin in the Tayoltita mine zone, mostly in the Aurora and Elisa Mantos veins;
  • Core drilling increased substantially during the period 2004-2010. The Central Block was explored from surface until access was gained by underground development;
  • Core drilling was again increased during the Primero operations period, from 2010-2018. Several veins such as the Elian, Arantxa, and Victoria veins were discovered in the Graben Block. The Jessica vein in the Central Block was first discovered by tunnelling and then explored by drilling. The Ventanas and Lechugillas areas were also drilled during this period.
  • From May 2018 First Majestic has continued drilling in Central Block (the extension along strike of the Jessica vein), the Graben Block, and the Tayoltita Block.

Table 10-1 shows the metres of drilling completed by zone since the year 2000.

Table 10-1: Distribution of Exploration Drilling in San Dimas by Mine Zone


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

10.1. Drill Methods

All drill holes at San Dimas are completed using core drilling. No reverse circulation (RC) drilling has ever been conducted.

Prior to 2011, all drilling was classified as exploration drilling. From 2011 to 2020, drilling was classified as either delineation drilling, which was designed to potentially define the orebody with target points located generally 25-40 m from development and in a 30 x 30 m pattern; or exploration drilling, which was designed to explore the extension of known veins and test new targets in a 60 x 60 m pattern.

Since January 2020, under First Majestic management, core drilling as been classified as:

  • Resource sustaining delineation drilling, designed to guide mine development;
  • Resource sustaining infill drilling, designed to provide support to upgrade resource classifications from Inferred to Indicated category. Infill drilling is often setup in a 30 x 30 m spaced pattern;
  • Near mine exploration drilling, designed to identify extensions of mineralization surrounding known mineral resources. This often consists of drilling along the extension of the known orebodies. The setup is often 50 x 50 m or more;
  • Brownfield exploration drilling, designed to identify mineralization outside of the existing mine plan that can use existing mine infrastructure;
  • Greenfield exploration drilling, designed to identify new discoveries that could require new mineral processing infrastructure.

Underground drilling is carried out with both company equipment and contractor equipment, while surface drilling is mostly carried out by contractors. The most common type of drilling equipment is Sandvik DE-130, DE-140 and DE-142 rigs, with a depth capacity from 500-850 m. The drill rigs for surface drilling have diesel engines while the underground rigs operate with an electric system. A total of nine rigs, including contractors, are currently operating 12 hours per shift.

Core drilling included HQ (63.5 mm core diameter), NQ (47.6 mm), BQ (36.4 mm) and AQTT (27 mm). Since 2013, NQ diameter is most commonly used for surface and underground drilling.  For drill holes longer than 700 m, HQ diameter is reduced to BTW (42.01 mm).

Termite drill rigs owned by First Majestic have been used since 2009, are capable of drilling up to 150 m, and are mostly used for underground delineation or infill drill holes. The drilling barrel type used for delineation drilling is TT46 producing core of 35 mm in diameter.

Figure 10-1 is a plan view map of all drilling in the mine zones and shows that more than 95% of all the drilling is within the San Dimas mine area.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 10-1: Plan view of drilling at San Dimas by Mine Zones

Note: Figure prepared by First Majestic, June 2020.

Drilling in the San Dimas district is focused on the identification and delineation of vein-hosted silver and gold mineralization by using structural and stratigraphic knowledge of the district, preferred vein trends, and Au:Ag ratios. These criteria have been successfully applied in the discoveries made since the early 1970s. Figure 10-2 to Figure 10-5 are vertical section examples of drilling associated with four representative veins shown, Jael, Jessica, Regina and Robertita. In these figures, m.s.n.m stands for metres above sea level. 

Table 10-2 lists examples of typical intercepts, including high, medium, and low silver and gold values as well as the intercept thickness in metres, for the same four vein examples.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 10-2: Vertical Section, Jael Vein

Note: Figure prepared by First Majestic, 2020.

Figure 10-3: Vertical Section, Jessica Vein

Note: Figure prepared by First Majestic, 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 10-4: Vertical Section, Regina Vein

Note: Figure prepared by First Majestic, 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 10-5: Vertical Section, Robertita Vein

Note: Figure prepared by First Majestic, 2020.

Table 10-2: Representative Drill Hole Intercepts, Jael, Jessica, Regina, and Robertita Veins


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

10.2. Drill Hole Logging Procedure

Drill core is boxed and transported to the core shed facilities where the core is logged and processed. The core facility has an office where the drilling programs are managed.

Historically, core was logged on paper on a columnar log and rock codes assigned at the time of data entry. Since 2013 the logged drill hole data are captured digitally using Core Logger.

Sampling is generally completed only on the known veins with an adequate interval of waste rock around the vein, with sample intervals placed on the contacts. The sample width is between 0.5-1 m. All core is labelled and photographed. The core is generally split for sampling with a diamond saw, although some softer rocks have been split using a hydraulic guillotine splitter. Samples are then bagged and tagged with sample identifiers, and since January 2019 are sent the First Majestic's Central Laboratory (Central Laboratory). Prior to 2019, samples were shipped to the SGS laboratory based in Durango (SGS Durango).

10.3. Core Recovery

The rock quality at San Dimas is generally good in the mineralized intercept as well as in the wall rock. The core is received in the core shack and the pieces are reconstructed. The length of the core is measured and compared with the downhole length recorded in the core box.

A 95% recovery in the mineralized zone is considered acceptable, and the average recovery is 97%. Recoveries between 85% and 95% are usually related to fault zones, intensely altered zones, or rock cavities like vugs and geodes.

The QP reviewed the recovery data for drill holes and agrees with the Geology Department's assessment of overall good recoveries.

10.4. Collar Survey

Collar coordinates and downhole azimuth and inclination are determined using total station equipment, before and after hole completion. The surveyors orient the rigs and provide proper initial alignment and inclination to the drilling rods. Collar locations are plotted and verified in plan view and cross section by geologists. This method is used in surface and underground drilling.

10.5. Downhole Survey

Goldcorp established a procedure in 2008 that continues to be used consisting of down hole azimuth and inclination readings using Reflex equipment first at 12 m and then every 30-50 m downhole depending on the inclination of the hole and the rock type. The trace of the hole is validated by the geologist and the database manager. This method has been used in surface and underground drilling.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

10.6. Geotechnical Drilling

Geotechnical logging consists of descriptions of the fracturing degree of the mineralized veins and host rock on both sides of the vein contact, visual determination of the rock-quality designation (RQD) and rock resistance, and descriptions of the fracture types. This method has been used in surface and underground drilling.

10.7. Drill Core Interval Length/True Thickness

Drill holes are typically drilled to obtain the best intersection possible, such that the intersected interval is as close as possible to the true width, while giving vertical coverage. The minimum angle allowed to intercept the veins is 30°. This procedure is applicable to both surface and underground drilling.

As a result, the mineralized vein interval length observed in the drill holes does not correspond to the true thickness in most cases. The true thickness is determined by three-dimensional geological modeling.

Figure 10-6 shows a typical underground set up for drilling where the Jessica vein is drilled from a station located in the Noche Buena vein. Drill hole inclination can be negative (downward) or positive (upward).


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 10-6: Vertical Section and Plan View, Jessica Vein Drilling Setup

Note: Figure prepared by First Majestic, 2020.

10.8. Comments on Section 10

In the opinion of the QP, the quantity and quality of the lithological, geotechnical, structural, collar, and downhole survey data collected since 2000 are sufficient to support Mineral Resource and Mineral Reserve estimation.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

11. SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1. Sampling Methods

11.1.1. Channel

Prior to 2013, underground mine production channel samples for grade control and channel samples for resource estimation were taken across the roof at 1.5 m intervals in developments and at 3 m intervals in stopes using 3 m vertical cuts.  From 2013-2016, production channel samples and channel samples for resource estimation were taken across the roof at 3 m intervals in developments and at 3 m intervals in stopes using 6-12 m vertical cuts. From 2016 to present, production channel samples for grade control and channel samples for resource estimation are routinely taken across the mine development face at 3 m intervals and within stopes using 3-6 m vertical cuts.

Channel sampling for resource estimation is supervised by San Dimas geologists and undertaken using a hammer and chisel with a tarpaulin laid below to collect the samples. Sample lengths range from 0.20-1.20 m. Sample intervals are first marked with a line across the face perpendicular to the vein dip, respecting vein/wall contacts and textural or mineralogical features. The samples are taken as a rough channel along the marked line, with an emphasis on representative volume sampling. The sample is collected on the tarpaulin, broken with a hammer, and quartered and homogenized to obtain a 3 kg sample. The sample is bagged and labelled with sample number and location details.  Sketches and photographs are recorded of the face sampled, showing the samples' physical location from surveying and the measured width of each sample. Since 2011, all channel samples are dispatched to the San Dimas Laboratory.

11.1.2. Core

Since 2011, drill core sampling is undertaken by First Majestic's geologists who select and mark sample intervals according to lithological contacts, mineralization, alteration, and structural features. Sample intervals range from 0.25-1.20 m in length from within mineralized structures and from 0.5-1.20 from hanging wall and footwall waste rock to obtain a minimum sample weight of 0.3-1 kg. 

Drill core intervals selected for sampling are cut in half using a diamond saw.  Softer rocks are split using a hydraulic guillotine splitter. One half of the core is retained in the core box for further inspection and the other half is placed in a sample bag. For smaller diameter delineation drill core (TT-46) the entire core is sampled for analysis. 


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The sample number is printed with a marker on the core box beside the sampled interval, and a sample tag is inserted into the sample bag. Sample bags are tied with string and placed in rice bags for shipping.

11.2. Density

Bulk density measurements were systematically taken on drill core since October 2012.  Since 2016, specific gravity measurements were collected on 10 cm or longer whole core vein samples using the unsealed water immersion method.  The samples are weighed in air, recorded, then placed in a basket suspended in the water and the weight is again recorded. The samples are not waxed or sealed.  The formula used is:

Specific gravity (SG) = Weight in air / (Weight in air - Weight in water)

Based on this method, an average bulk density value of 2.6 t/m3 was determined. 

In 2015, SGS Durango determined a bulk density of 2.6 t/m3 based on analysis of 350 samples from various veins using a wax coat water immersion method.

The regular SG measurements made by San Dimas geologists are used to check for variation from the 2.6 t/m3 bulk density value reported by SGS Durango but are not compiled in a database.

11.3. Laboratories

The laboratories used for sample preparation and analysis are summarized in Table 11-1.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 11-1: Laboratories

Laboratory

Drilling Period

Certification

Independent

Comments

San Dimas Laboratory

2004-2019

None

No

Primary laboratory for grade control and production samples.

Sample preparation and analysis.

Located at the San Dimas mine.

SGS Durango

2011-2018

ISO 9001:2008

ISO/IEC 7025

Yes

Primary laboratory for exploration drill core, delineation drill core and channel samples. Sample preparation and analysis. Located in Durango, Durango state, Mexico.

ALS

2013-2015

ISO 9001

ISO/IEC 7025

Yes

Secondary laboratory for check assays. Independent laboratory located in Zacatecas, Zacatecas state, Mexico. Sample Preparation and analysis.

Central Laboratory

2018-2020

ISO 9001 - 2008 in June 2015 and ISO 9001 - 2015 in June 2018

No

Primary laboratory for exploration drill-core, delineation drill-core, and channel -check samples.

Sample preparation and analysis.

Located at La Parrilla Mine.

11.4. Sample Preparation and Analysis

11.4.1. Sample Preparation

There is no detailed information describing sample preparation for channel and drill core samples applied at the San Dimas Laboratory before 2018. In general, the samples were dried, crushed, and pulverized. Since 2018, samples are dried at 110oC, crushed to 80% passing 2 mm using a Marcy jaw and Hermo crushers, split into 250-g subsamples using a Jones splitter, and pulverized using an ESSA pulveriser to 80% passing 75 μm.

At SGS Durango, drill core and channel check samples were dried at 105°, split to 3.5 kg, crushed 75% passing 2 mm, and split into a 250 g subsample which was pulverized to 85% passing 75 μm.

At the Central Laboratory, drill core and channel check samples are dried at 100oC for eight hours, crushed to 85% passing 2 mm, split into a 250 g subsample, and pulverized to 85% passing 75 μm.

11.4.2. Analysis

Analytical methods by laboratory are summarized in Table 11-2.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 11-2: Analytical Methods

Laboratory

Code

Element

Limits

Description

ALS

Unknown

Au g/t

unknown

30 g FA and gravimetric method

Unknown

Ag g/t

Unknown

30 g FA and gravimetric method

San Dimas Laboratory

(2018-2019)

ASAG-16

Au g/t

0.01

30 g, fire assay AAS finish.  Gravimetric finish if doré bead is above 12 mg

ASAG-16

Ag g/t

5

30 g, fire assay gravimetric finish

AWAA-100

Pb %

0.002- 50

2-acid partial digestion by AAS.

SGS Durango

(2013-2020)

GE_FAA313

Au g/t

0.005-10

30 g, Au by fire assay, AAS finish.

GO_FAG303

Au g/t

1

30 g, Au by lead fusion fire assay gravimetric finish. Over limit method.

GO_FAG323

Au g/t

0.01

30 g, Au by lead fusion fire assay, AAS finish.

GE_AAS21E

Ag g/t

0.3-100

2 g, 3-acid digestion, AAS finish.

GO_FAG313

Ag g/t

10

30 g, Ag by fire assay, gravimetric finish.

GE_ICP14B

Ag ppm

2-100

0.25 g, aqua-regia digestion ICP-OES.

GO_FAG323

Ag g/t

10

30 g, Au by lead fusion fire assay, gravimetric finish

GE_AAS12E

Ag g/t

0.3-100

2 g, 2-acid digestion, AAS finish.

GE_ICP14B

Multi-element

Various

0.25 g, aqua-regia digestion ICP-OES.

Central Laboratory

(2018-2020)

AUAA-13

Au g/t

0.01-10

20 g fire assay with  AAS finish.

ASAG-14

Au g/t

10

20 g fire assay gravimetric finish. Over limit method.

AAG-13

Ag g/t

0.5-300

2 g, 3-acid digest, AAS finish.

ASAG-12

Ag g/t

5

30 g, fire assay gravimetric finish.

ICP34BM

Multi-element

Various

2-acid partial digestion ICP

There is no detailed information describing sample analysis for drill core and channel samples submitted to the San Dimas Laboratory before 2018. In general, samples were analyzed for gold using a 10 g fire assay with a gravimetric finish.  Since 2018, channel samples submitted to the mine laboratory are analyzed for gold using a 30 g fire assay (FA) atomic absorption spectroscopy (AAS) method and by gravimetric finish if the doré bead is greater than 12 mg. Silver is determined using 30 g FA gravimetric finish. All samples received by the San Dimas Laboratory are logged into a laboratory information management system (LIMS).

Between 2013 and 2018, drill core and channel check samples sent to SGS Durango were analyzed for gold by a 30 g FA AAS method. Samples returning >10 g/t Au were reanalyzed by a 30 g FA gravimetric method.  Silver was analyzed by a 2 g, three-acid digestion AAS method.  Silver values >300 g/t were analyzed by a 30 g FA gravimetric method. A multi-element suite was analyzed by a 0.25 g, aqua regia digestion inductively coupled plasma (ICP) optical emission spectroscopy (OES) method.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

In 2013, drill core check samples at ALS were assayed for gold and silver using a 30 g FA and gravimetric method.

Since 2018, drill core and channel check samples submitted to the Central Laboratory are analyzed for gold by 20g FA AAS method. Samples with gold values >10 g/t are reanalyzed by a 30 g, FA gravimetric method. Silver values are determined using a 2 g, three-acid digestion, AAS method. Samples with silver values >300 g/t are analyzed by a 30 g, FA gravimetric method.  All exploration samples are analysed by a two-acid multi-element ICP OES method.

11.5. Quality Assurance and Quality Control

11.5.1. Overview

There is limited information as to whether a formal quality assurance and quality control (QAQC) program was in place prior to 2013.

From 2013 to 2018, the QAQC program for the San Dimas Laboratory samples included insertion of a standard reference material (SRM) and a blank in every batch of 20 samples. 

From 2013 to 2018, the QAQC program for the SGS Durango channel and core samples included insertion of a SRM and a blank in every batch of 20 samples. In 2013, 5% of the coarse reject and pulp duplicates from core samples were randomly selected for analysis at SGS Durango and 5% of pulp checks from core samples were analyzed at ALS laboratory.

In 2019, First Majestic revised the QAQC program to include insertion of three certified reference material (CRM) samples and three blanks in every batch of 50 channel samples analyzed at the San Dimas Laboratory and one CRM and two blanks in every batch of 26 drill core and channel check samples submitted to the Central Laboratory.

SRMs were prepared using material collected from a variety of vein deposits from San Dimas mining district. SGS Durango determined the expected value from a round-robin analysis by five laboratories.

Blanks were prepared using material collected from andesitic and granitic intrusive outcrop near San Dimas. They did not undergo a round-robin analysis.

CRMs were purchased from CDN Resource Laboratories Ltd.

11.5.2. SRMs/CRMs

There is no detailed information describing assessment of accuracy from SRMs before 2013.

For samples analysed between 2014 and 2020, accuracy was assessed in terms of bias of the mean values returned for SRMs and CRMs relative to the expected value. SRM and CRM sample results for gold and silver were plotted on date-sequenced performance charts to investigate for outliers, defined as results that were above or below mean plus or minus three times the standard deviation. 


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Between 2014 and 2018, the accuracy assessment identified very few errors such as mislabeling of samples. After exclusion of these errors, most of the CRM and SRM results for drill core and channel samples assayed at SGS Durango indicate no significant bias for gold and silver. In 2015, a local high bias was noted for the high-grade gold standard and a local low bias for low-grade silver standards inserted with channel samples.

During 2019, the accuracy assessment showed that very few errors, such as mislabeling of samples, were identified for samples submitted to the Central Laboratory, and error rates ranging from 1-9% were observed for samples submitted to the San Dimas laboratory. The 9% error rate is related to only 22 samples and is not considered significant. After exclusion of these errors, SRMs and CRMs for gold and silver from San Dimas and Central Laboratory show an acceptable level of bias relative to the expected values. One low-grade silver SRM shows a marginal but acceptable low bias. One low-grade gold CRM and one high-grade gold CRM show a marginal but acceptable high and low bias.

There is indication of some failures in the SRMs and CRMs (outliers = mean ±3STD). Since 2014, the practice has been to reassay outliers identified in areas of significant mineralization. There is no detailed information describing the reassay of the outliers detected from assessments conducted between 2014 and 2020.

An example of a time-sequence standard chart for the San Dimas Laboratory is provided as Figure 11-1. The period represented by the figure is for the year 2019.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 11-1: Example of 2019 High-Grade SRM Gold and Silver Standard Charts, San Dimas Laboratory

Note: Figure prepared by First Majestic, March 2020.

11.5.3. Blanks

There is no detailed information about monitoring contamination before 2013.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

For samples analyzed between 2014 and 2019, contamination was assessed by San Dimas geologists in terms of the values returned for blanks above two times the detection limit (failures) using sample number sequence performance charts.

From 2014 to 2018, during the blank assessment, a few errors were identified such as mislabeling of samples. After exclusion of these errors, no significant contamination was evident.

During 2019 and 2020, the blank assessment identified a few errors such as mislabeling of samples. After exclusion of these errors, no significant contamination was evident.

Since 2013, the practice has been to reassay failures of samples in areas of significant mineralization which exceed two-times the detection limits.  The failure rate between 2014 and 2018 is as high as 15% and shows continuous improvement through 2018 when failure rates are 2-3%. From 2019 to 2020, the failure rate was 11% at the San Dimas Laboratory and 1% at Central Laboratory. There is no detailed information describing the reassay of outliers. High failure rates are likely related to the quality of the blank material.

An example of blank sequence performance charts for gold and silver results for 2019 is included as Figure 11-2.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 11-2: Example of 2019 Time Sequence Blank Performance Charts, San Dimas Laboratory

Note: Figure prepared by First Majestic, March 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

11.5.4. Inter-Laboratory Bias Assessment (Check Assays)

Since 2018, a channel duplicate sample taken every third interval has been submitted to the Central Laboratory to provide a check on the original assays performed at the San Dimas laboratory. These samples are also used for resource estimation. A reduced mean axis (RMA) analysis for paired channel samples collected from the Jael, Jessica, Regina, and Robertita veins between January 18, 2019 and January 20, 2020 (after removing outliers) indicates no significant inter-laboratory bias.

A summary of the 2019-2020 channel sample check results evaluating the potential for laboratory bias between San Dimas Laboratory and Central Laboratory is presented in Table 11-3. 

Table 11-3: Summary of Inter-Laboratory Bias Check Results

Element

Count

Outliers

Bias

Au

1957

5%

-2%

Ag

1957

5%

-4%

An example check chart is shown in Figure 11-3 for the 2019 results.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 11-3: Inter-Laboratory Bias Check, San Dimas and Central Laboratories

Note: Figure prepared by First Majestic, March 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

11.5.5. Databases

Collar, down-hole survey, lithology, structures, alteration, and assays are stored in a Gems database.

Logging data is captured using Core Logger. Assay data were received from the laboratories via emails in comma-separated value (CSV) data files. Core logger and assay files are imported into the Gems database. The Gems import process includes a series of built-in checks for errors at all stages, from header to individual tables. After data are imported, visual checks are done to ensure that the data were imported properly. The Gems database is backed up daily. The backup files are located on the San Dimas and Durango office servers.

11.6. Sample Security

11.6.1. Channel Samples

Throughout historical and current mine operations, channel samples have been transported from sampling areas to the San Dimas Laboratory by company trucks. The San Dimas Laboratory keeps the samples in a secured and fenced area during analysis. After analysis, samples are disposed of in the processing plant. 

11.6.2. Drill Core Samples

Since the early drilling stages, drill core has been transported by personnel from First Majestic and predecessor companies and by drilling contractors' trucks from drilling locations to a secured core storage warehouse where the core is logged and processed. The core storage warehouse is located at Tayoltita, 100 m from the airport terminal, and is currently secured and guarded by First Majestic security personnel.

Upon completion of logging and sampling, all samples are securely sealed, and chain of custody documents are issued for all shipments. Samples are transported to the external laboratory using a company contractor.

The analytical results from these samples are received by authorized First Majestic personnel using secure digital transfer transmissions, and these results are restricted to qualified First Majestic personnel until their publication.

Remaining drill-core and laboratory reject samples are stored at the core storage warehouse.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

11.7. Comment on Section 11

Sample preparation, analysis, and quality-control measures used at the primary and secondary laboratories meet current industry standards and are providing reliable gold and silver results for channel and core samples. 

The specific gravity measurement method is providing reliable results.

Sample security procedures used are providing reliable integrity to the samples results. Current quality control procedures for SG sampling should be modified to include monitoring reports and a 5% check at a secondary laboratory using wax coat water immersion methods. 

There is little information supporting sampling methods, sample preparation, and analysis for pre-2013 data. Pre-2013 data represents less than 2% of the database, and therefore does not represent a material concern for overall data reliability informing the Mineral Resource estimates.

First Majestic is continually monitoring results and addressing issues as they occur. At the end of 2019, under Central Laboratory management, the San Dimas Laboratory received new equipment for sample preparation and analysis, revised sample preparation and analysis procedures, and provided employee training. All samples received by the San Dimas Laboratory are now logged in and sorted by a LIMS. Assay results are reported using the LIMS and include results from inserted laboratory quality control samples.

Production channel and drill hole samples used to support grade estimation have been assessed for laboratory accuracy but have not been assessed for laboratory precision. The QAQC insertions for production channel and drill hole samples should be modified to include field, coarse and pulp duplicates to assesses precision.

The field sampling procedure for production channel samples has some risk of introducing sampling bias but this possible bias has not yet been assessed.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

12. DATA VERIFICATION

12.1. Legacy Data

In 2011, AMC Mining Consultants (Canada) Ltd (AMC) completed data verification in support of the San Dimas 2011 Mineral Resource and Mineral Reserve estimation and identified several deficiencies, including issues with the mine laboratory.

By 2013, the San Dimas operations had addressed these issues by submitting all new drill core and check channel samples to an independent commercial laboratory for preparation and analysis.

A subsequent data review by AMC in 2013 concluded that the results were reasonable and suitable for supporting resource estimation at the time.

12.2. First Majestic

Data verification conducted by First Majestic includes a review of drill hole and channel sample data collected for the Jael, Jessica, Regina, and Robertita veins (the verification dataset) and included data transcription error checks for assay results, drill hole collar and channel location checks, downhole survey deviation checks, visual inspection of core, and an assessment of accuracy and contamination of primary and check channel samples for silver and gold. Site visits were also completed.

Drill hole collar coordinates and downhole survey data were imported to the database from digital format files. Logged attributes data were entered directly into the database through core logging software. No transcription error checks were made for these data. An inspection for gaps, overlap, and duplicates identified no issues.

A 1% selection of the gold and silver results recorded in the verification dataset were compared with electronic copies and final laboratory certificates from the Central, SGS Durango and San Dimas Laboratories. No significant errors were observed. In addition, a random selection of high-grade gold and silver results were verified against the original laboratory certificates. No significant transcription errors were observed.

All drill hole collar and channel locations in the verification dataset were inspected in three dimensions by comparing drill hole locations with their relationship to underground topography. No significant position errors were observed.

All downhole survey records in the verification dataset were inspected mathematically for angular deviation tolerance greater than 5°/30 m. No significant deviations were observed. Visual spot checks of five drill hole traces in three dimensions revealed no unusual kinks or bends.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Three drill holes from the verification dataset were visually inspected. Observed lithology, mineralogy, sample lengths, and sample numbers were compared to the logged data. No significant differences were observed.

Verification of assay accuracy and contamination is provided in Section 11 of this Report.

12.3. Site Visits

Ms. María Elena Vázquez Jaimes, P.Geo., visited San Dimas mine on two occasions in 2019 and, most recently, between February 24-28, 2020. During these visits, Ms. Vazquez reviewed current drill core and channel logging and sampling procedures and inspected drill core, core photos, core logs, and QAQC reports. She also undertook spot checks by comparing lithology records in the database with archived core. No significant issues were observed. 

12.4. Comment on Section 12

The data verification completed by First Majestic identified no significant sample location, grade accuracy and contamination, or transcription error issues. The database is considered suitable to support Mineral Resource estimation.

Concerns identified by previous operators regarding the quality of data collected before 2013 are mitigated in part because only a small portion of the Mineral Resource estimates are supported by this data.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

13. METALLURGICAL TESTING

13.1. Overview

The San Dimas mine is an operating mine, and the initial test data supporting plant design are superseded by decades of processing plant performance data.

13.2. Metallurgical Testing

Metallurgical testing, along with mineralogical investigation, is periodically performed. Even when the results are within the expected processing performance, the plant is continually running tests to optimize metal recoveries and operating costs. Metallurgical testing assists in several ways, such as the fine tuning of reagents usage, the maintenance of optimum particle size, variations in the backwash circuit, and testing of new reagents.

Composite samples are analyzed monthly to determine the metallurgic behaviour of the mineralized material fed into the processing plant. This metallurgical testing is carried out by the Central Laboratory.

13.2.1. Mineralogy

Throughout the San Dimas mining district, the most abundant mineralogical species, both metallic and non-metallic include:

  • Metallic minerals (in order of abundance): pyrite (FeS2), galena (PbS), chalcopyrite (CuFeS2), sphalerite ((Zn, Fe)S), iron (Fe), argentite (Ag2S), native silver (Ag), hemimorphite (Zn4(Si2O7)(OH)2·H2O), and electrum; 
  • Non-metallic minerals (in order of abundance): quartz (SiO2), chlorite ((Mg,Fe)3(Si,Al)4O10(OH)2-(Mg,Fe)3(OH)6), kaolinite (Al2Si2O5(OH)4), feldspar (KAlSi3O8 - NaAlSi3O8 - CaAl2Si2O8), and calcite (CaCO3).

The typical mineralogy is provided in Figure 13-1.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 13-1: Typical Distribution of Minerals

Note: Figure prepared by First Majestic, March 2020.

13.2.2. Monthly Composite Samples

A sample is taken from the material fed into the mills on a daily and a per-shift basis. A representative amount from each sample is taken based on the milled tonnage of each shift and a monthly composite is accumulated.

The monthly composite sample is prepared by the plant's metallurgist, with the support of the San Dimas Laboratory staff, and is forwarded to the Central Laboratory for analysis.

One of the objectives of this program is the compilation of a database that will demonstrate the relationship between the results of the metallurgical tests at laboratory scale and the actual performance of the process cyanidation plant.

13.2.3. Sample Preparation

Samples submitted to the Central Laboratory are dried, and then crushed to -10 or 6 mesh, depending on the test work planned.

13.3. Comminution Evaluations

Since July 2018, First Majestic has been running tests to estimate the Bond ball mill work index (BWi) of the monthly composite samples.

Table 13-1 shows the results of the Bond ball mill grindability tests (at 270 mesh closing screen) for the period from July 2018 to October 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 13-1: Grindability Test Results for Different Composite Samples (2020)

Sample ID

Bond Ball Mill Work Index

kWh/t Metric

Feed µm

Discharge    µm

 

270M

F80

P80

2018

July

18.20

2469

45

August

18.20

2428

46

September

17.40

1950

40

October

17.40

2055

40

November

18.50

2386

39

December

18.30

2109

39

2019

January

18.50

1975

55

November

18.20

2037

39

2020

October

17.76

2051

36

Statistics of the 9 samples

 

 

 

 

Average

18.05

 

 

 

Standard Deviation

0.43

 

 

 

Minimum

17.40

 

 

 

25th Percentile

17.76

 

 

 

Median

18.20

 

 

 

75th Percentile

18.30

 

 

 

Maximum

18.50

 

 

The BWI results demonstrate a low level of variability with values ranging from 17.4-18.5 kWh/t. In addition to the October composite sample, a master composite for the 2021 forecast plant feed was also tested in 2020 and resulted in a BWI of 18.4 kWh/t which also fits within the range of observed values for the last three years.

13.4. Cyanidation, Reagent and Grind Size Evaluations

In addition to the analysis of repeatability for the metallurgical recovery of gold and silver for each monthly composite, and depending on the problems or needs experienced during the months prior to the monthly sample being collected, a series of tests can be conducted that may include the following:

  • Standard cyanidation (under similar conditions to those in the plant: grinding size, addition of reagents and cyanidation times);
  • Testing with different reagents;
  • Testing with different grinding sizes.

Results are shared with the plant operation personnel to facilitate continuous improvement initiatives.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

As an example of the continuous monitoring of plant performance through the work conducted by the Central Laboratory, Figure 13-2 shows a comparison between the monthly mill performance and the Central Laboratory monthly composites results, in terms of metallurgical recovery for gold.

Figure 13-2: Comparison of Au & Ag Extractions Between Mill and Laboratory Performances

Note: Figure prepared by First Majestic, January 2020.

As it can be observed, during the months when the plant performed in line with forecasts (Au recovery > 95%), the laboratory vs. plant results are mostly within a 1% to 1.5% difference.  An exception occurred in May 2019 due to operational issues.

13.5. Oxidant Studies

In the continuous effort to optimize plant performance, oxidant addition tests have been performed. The addition of some oxidants favours sulphide oxidation, in particular argentite. Oxygen is fundamental in the gold and silver leaching reaction. The oxidants that have been tested in 2018-2019 include:

  • Lead (II) nitrate (Pb(NO3)2);
  • Litharge (PbO);
  • Liquid oxygen;

San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

GoldiLOX (sold by Gekko). Figure 13-3 and Figure 13-4 illustrate the general tendency toward the more oxidizing agents that are added, the better the sulphur oxidation results the better the metal recoveries. All tests used P80 of 100 µm, NaCN of 2,000 ppm, and a leach time of 107 hours.

Figure 13-3: Comparative Results at Bench Scale: Plant Conditions Versus Oxidant Addition - 2018

Note: Figure prepared by First Majestic, January 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 13-4: Comparative Results at Bench Scale: Plant Conditions Versus Oxidant Addition - 2019

Note: Figure prepared by First Majestic, January 2020.

13.6. Extra-Fine Grinding

To investigate the effect a grinding size on metal liberation and recovery and to identify possible opportunities to improve plant performance, some tests using extra-fine grinding (P80 = 15 to 28 µm) have been carried out on a July 2019 composite sample.  The programs tested three different routes:

  • Fine grinding alternative 1:

    • Grinding (100 µm) → leaching → regrinding (minus 30 µm) → leaching;

  • Fine grinding alternative 2:

    • "Dual system":

      • grinding (100 µm grinding) →  classification into two streams: "coarse" > 20 µm AND "fines" < 20 µm;

      • "fines" → leaching;

      • "coarse" → regrinding (minus 30 µm) → leaching;

  • Fine grinding alternative 3:

    • Grinding (100 µm) → regrinding (minus 30 µm) → leaching. 


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Cyanide concentration at 2,000 ppm was the same for all the tests. There was no addition of lead (II) nitrate or litharge. The only oxidant agent used, in some cases, was GoldiLOX. Retention time was invariably 107 hours.

Laboratory results are summarized in Figure 13-5. 

Figure 13-5: Comparative Results Using an Extra-Fine Particle Size

Note: Figure prepared by First Majestic, January 2020.

Overall, the results indicate that particle size liberation is a relevant factor. The finer the grind the greater recoveries were, as long as an excess of slimes was not generated. The slimes were reduced when the grinding process is carried out in two stages. The best results were achieved when leaching was split in two products: the primary mill fines and the regrind product.

This investigation demonstrated that there is an opportunity to achieve higher metal recoveries with the implementation of a regrinding processing stage.

13.7. Recovery Estimates

The metallurgical recovery projections assumed in the LOM plan are supported by the historical performance in the processing plant as well as on the results of recent testing performed at the SGS Lakefield laboratory in 2019.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The metal recovery estimates for the LOM plan and the financial analysis were projected as 94.0% for Ag and 96.5% for Au; the assumption of these recoveries was based on the plant performance from 2018 to 2020 and the results of testing carried out on a representative sample compiled in 2019 (the 2019 sample). Table 13-2 shows the metallurgical recovery achieved at the San Dimas processing plant for the past three years.

Table 13-2: Metallurgical Recoveries achieved in San Dimas 2018-2020

Year

Production

Recovery

Recovery

k ton

% Ag

% Au

2018(1)

435

94.5%

96.7%

2019

692

93.0%

96.5%

2020

713

93.9%

96.3%

Yearly Average

690

93.7%

96.5%

Note: (1) 2018 results includes production from May to December.

Figure 13-6 and Figure 13-7 show the histogram of daily metallurgical recovery registered in the San Dimas processing plant, the bin corresponding to the projected recovery used in the LOM plan and the economic analysis is highlighted.

Figure 13-6: Histogram of Daily Metallurgical Recovery of Silver from Jan-2018 to Dec 2020

Note:  Figure prepared by First Majestic, January 2021.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 13-7: Histogram of Daily Metallurgical Recovery of Gold from Jan-2018 to Dec 2020

Note: Figure prepared by First Majestic, January 2021.

Potential recovery improvements observed during several recent investigations and optimization initiatives have not been taken in consideration for the recovery forecasts to be used in the LOM plan; however, there is potential for improvements, i.e., the investigation on the effect of oxidants, as described in Section 13-5 of this Report.

13.8. Metallurgical Variability

The 2019 sample, examined in the SGS laboratory test, consisted of 46.4 t of material compiled from 26 different stopes and development faces of eight different veins of the Central Block and the Sinaloa Graben. The Central Block veins sampled include Jessica, Gertrudis, Roberta, Robertita, Jael and Regina veins; and the veins sampled from the Sinaloa Graben were the Victoria and Alexa veins. The estimated metal of these eight veins represents 66% of the metal projected to be mined in the LOM plan.

The sample contains material from the veins and its host rocks in proportions intended to replicate the expected mining dilution. A master composite of the sample was prepared and ground to slightly coarser specifications, when compared to the operating conditions of the San Dimas plant and resulted with a head-grade of 304 g/t Ag and 4.3 g/t Au. The results of seven different leaching tests show silver extraction of ranging from 90-94% and gold extraction ranging from 96-97%. These results are expected to be improved in the San Dimas plant, particularly for silver, as the effect of washing is not considered in the type of test carried out.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

The sample is described as material from an epithermal deposit of low-sulfidation quartz-calcite veins hosted in igneous rocks on the hanging and footwall typical of the San Dimas mining district. The vein material is white quartz, from crystalline to milky in appearance, with limited calcite content and shows silver sulphide minerals associated with gold, as secondary minerals it contains rhodonite in bands, adularia, and chlorite as alteration. The host rock is identified as light to dark-green andesite displaying a low to medium-propylitic alteration revealing the presence of chlorite minerals and epidote with very little presence of disseminated iron sulphides (pyrite). In less extent, the host rock is described as light-grey colored rhyolite with fragments of the same composition showing silicified areas and low propylitic alteration.

The type of material comprising the sample shows large similarities with the material to be extracted in the mine, as found in the exposed faces of development and in the exploration drilling core. The geological and mineralogical conditions of the material planned to be mined is similar to the plant feed that has been historically mined in San Dimas.

13.9. Deleterious Elements

Due to the purity of the San Dimas doré, which exceeds 97% silver and gold, no penalties are applied by the refineries for the presence of other heavy metals or any deleterious elements.

A treatment charge is levied by weight on the doré produced at the San Dimas Plant, due to the trace presence of heavy metals, including copper, lead, zinc, and iron in the doré. The treatment charge is considered reasonable and is included in the cut-off grade calculation.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

14. MINERAL RESOURCE ESTIMATES

14.1. Introduction

Information from drill core, production channel samples, technical information including economic parameters, and mining depletion were used as the basis for the mineral resource estimates. The majority of the Mineral Resource estimates were completed using block modeling techniques, but some of the Mineral Resources are still based on two-dimensional polygonal estimation methods. All polygonal resource estimates were classified as Inferred Mineral Resources. Three-dimensional geological modeling was completed for 66 of the 118 veins, of which 61 veins were modeled using Leapfrog Geo and five veins using GEOVIA Surpac.  Each of the veins was modelled as a single resource estimation domain.  A total of 40 of the 66 domains were estimated using GEOVIA Gems and 26 domains with Leapfrog EDGE. Table 14-1 shows where the domains are located, and the modeling methods used for each domain.

Table 14-1: Mineral Resource Estimation and Modelling Methods by Mine Zone

Mine Zone

Model

Estimation

Leapfrog
Geo

Surpac

Not Modelled

Total

Leapfrog
EDGE

Gems

Polygonal

Total

West Block

3

0

14

17

3

0

14

17

Graben Block

5

0

3

8

5

0

3

8

Central Block

15

5

1

21

15

5

1

21

Tayoltita Block

27

0

16

43

0

27

16

43

Santa Rita Area

8

0

11

19

0

8

11

19

El Cristo Area

3

0

4

7

3

0

4

7

Alto Arana Area

0

0

1

1

0

0

1

1

San Vicente Area

0

0

2

2

0

0

2

2

Total

61

5

52

118

26

40

52

118

The geological modelling, data analysis, and block model estimations were completed by Mizrain Sumoza, a First Majestic employee, under the supervision of Joaquín Merino, P. Geo.

14.2. Block Model-Based Mineral Resource Estimation

14.2.1. Overview

The block model-based Mineral Resource estimates are based on the current database of exploration drill holes and production channel samples, geological mapping of underground levels, geological interpretations and geological models, as well as surface topography and underground mining development wireframes.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Geostatistical analysis, analysis of semi-variograms, and validation of the model blocks were completed with Leapfrog EDGE and GEOVIA Gems.  Stope analysis to determine reasonable prospects for eventual economic extraction was completed with Maptek Vulcan.

Due to the large number of veins that are modelled and estimated at San Dimas, the following sub-sections use the Jael, Jessica, Regina, and Robertita veins to illustrate the resource estimation procedures followed. These four veins represent 43% of the Measured and Indicated Mineral Resource categories.

14.2.2. Sample Database

The drill hole and channel sample database was reviewed, verified, and supports that the QAQC program was reasonable. The estimate is supported by core drilling and production channel samples. Table 14-2 summarizes the drill hole and production channel sample data used in the estimates by mine zones.

Table 14-2: Diamond Drill Hole and Production Channel Data by Mine Zone, San Dimas

Vein

Mine Zone

Core Drilling

Channel Sampling

# Samples

Meters

# Samples

Meters

All Veins

West Block

103

32,120

389

487

Graben Block

1,071

289,935

11,598

29,420

Central Block

2,048

485,227

57,039

120,785

Tayoltita Block

335

66,568

7,896

14,494

Santa Rita Area

100

21,514

2,820

6,108

El Cristo Area

113

31,996

695

1,299

Alto Arana Area

20

13,242

NA

NA

San Vicente Area

3

1,015

NA

NA

 

Total

3,793

941,618

80,437

172,594

14.2.3. Geological Interpretation and Modeling

The Mineral Resource estimates were constrained by the three-dimensional geological interpretation and modelled domains for vein-hosted mineral deposits at San Dimas. The modelled domains were constructed using information collected by mine geology staff and interpreted by geologists. Information used included underground geological mapping, drill hole logs and drill hole assays, production channel sampling and assays. The interpreted boundaries of the domain models strictly adhered to the contacts of quartz veins with the surrounding country rock to produce reasonable representations of the deposit locations and volumes.  The domains also incorporated numerous faulted sub-domains that were identified by the underground mine. Each vein was modelled as a single estimation domain.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-1 shows the location of the modelled domains, and examples of the geological models constructed for the Jael, Jessica, Regina, and Robertita veins are provided in Figure 14-2, Figure 14-3, Figure 14-4, and Figure 14-5 respectively.

Figure 14-1: Plan-view Location of Estimation Domains by Mine Zone

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-2: Faulted Geological Model for the Jael Vein, Vertical and Plan Views

Note: Figure prepared by First Majestic, August 2020. The Mineral Resource domain for the quartz vein is
shown in red. Drill hole intercepts and channel samples shown in colored dots

Figure 14-3: Faulted Geological Model for the Jessica Vein, Vertical and Plan Views

Note: Figure prepared by First Majestic, August 2020. The mineral resource domain for the quartz vein is
shown in red. Drill hole intercepts and channel samples shown in colored dots.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-4: Faulted Geological Model for the Regina Vein, Vertical and Plan Views

Note: Figure prepared by First Majestic, August 2020. The mineral resource domain for the quartz vein is
shown in red. Drill hole intercepts and channel samples shown in colored dots.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-5: Faulted Geological Model for the Robertita Vein, Vertical and Plan Views

Note: Figure prepared by First Majestic, August 2020. The mineral resource domain for the quartz vein is
shown in red. Drill hole intercepts and channel samples shown in colored dots.

14.2.4. Exploratory Sample Data Analysis

Exploratory data analysis was completed for gold and silver sample assay values for each of the estimation domains to assess the statistical and spatial characteristics of the sample data. The sample data were examined in three dimensions to determine the spatial distribution of mineralized intervals and to look for possible mixed sample populations.

Contact analysis was completed for each of the mineral resource domains to review the change in metal grade across the domain contacts by the use of boundary plots. Evaluations showed that there is a sharp grade change across the contact indicating hard boundary conditions, and therefore, hard boundaries were used during the creation of composite samples during mineral resource estimation. The composite samples were restricted to their respective estimation domain. Figure 14-6 shows an example of contact analysis for silver for the Jessica vein.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-6: Example of Hard Boundary Contact Analysis for Silver for the Jessica Vein.

Note:  Figure prepared by First Majestic, August 2020.

14.2.5. Composite Sample Preparation

To select an appropriate composite sample length, the sample intervals were reviewed for each resource domain. The selected composite length varied by domain with the most common composite sample length being 1.0 m. The assay sample intervals were composited within the limits of the domain boundaries and then tagged with the appropriate domain code. Any short residual composite samples left at the end of the vein intersection were distributed evenly across the vein composite intervals.

Figure 14-7 to Figure 14-10 show the sample interval lengths before and after compositing for the Jessica, Jael, Regina and Robertita veins.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-7: Sample Interval Lengths, Composited vs. Uncomposited, Jessica Vein

Note: Figure prepared by First Majestic, August 2020.

Figure 14-8: Sample Interval Lengths, Composited vs. Uncomposited, Jael Vein

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-9: Sample Interval Lengths, Composited vs. Uncomposited, Regina Vein

Note: Figure prepared by First Majestic, August 2020.

Figure 14-10: Sample Interval Lengths, Composited vs. Uncomposited, Robertita Vein

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

14.2.6. Evaluation of Composite Sample Outlier Values

Drill hole and channel composite samples were evaluated for high-grade outliers and those outliers were capped to values considered appropriate for the estimation. The outlier values were identified for both gold and silver from inflection points of cumulative probability plots at the high end of the grade distributions. The spatial distribution of such outliers was also investigated. To quantify the impact of capping, the resource was evaluated to assess the change in metal content for the estimation.

Table 14-3 shows the percentage of the outlier values that were capped. Table 14-4 shows the impact of the capping on the metal content by domain.

Table 14-3: Percentage of Composite Samples Capped by Domain

 

 

Silver

Gold

Domains

Number Composites

Capping

g/t Ag

Number Capped

% Capped

Capping

g/t Au

Number Capped

% Capped

Jessica

8,568

8,400

202

2.4%

60

227

2.6%

Jael

3,825

3,000

82

2.1%

40

88

2.3%

Regina

3,660

1,400

77

2.1%

12

70

1.9%

Robertita

17,383

5,800

373

2.1%

160

285

1.6%

Table 14-4: Remaining Metal content by Domain after Capping

Metal Content After Capping

Domains

Ag

Au

t. oz

t. oz

Jessica

95%

92%

Jael

90%

82%

Regina

88%

81%

Robertita

93%

92%

14.2.7. Variography

The dominant trends for gold and silver mineralization were identified based on the three-dimensional numeric models for the metal in each domain that were created using the radial basis function in Leapfrog Geo. To establish the metal grade continuity for the veins, model variograms for gold and silver composite values were developed along the trends identified, and the nugget values were established from downhole variograms.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-11 to Figure 14-14 show the variogram plots and trend ellipsoids for the Jael, Jessica, Regina, and Robertita domains.

Figure 14-11: Variogram Model for the Jessica Vein

Note: Figure prepared by First Majestic, August 2020.

Figure 14-12: Variogram Model for the Jael Vein

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-13: Variogram Model for the Regina Vein

Note: Figure prepared by First Majestic, August 2020.

Figure 14-14: Variogram Model for the Robertita Vein

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

14.2.8. Bulk Density

An average bulk density value of 2.6 t/m3 was used in estimation for all resource domains (refer to discussion in Section 11.2).

14.2.9. Resource Estimation Process

A separate block model was developed for each estimation domain. The block models were rotated so that the x and y axes lay parallel to the domains and the minimum z direction was perpendicular to the domain. A sub-blocked model was created that consisted of primary parent blocks that were sub-divided into smaller sub-blocks whenever triggering surfaces intersected them. The selected parent block sizes were based on the exploratory drill hole sample spacing and the mining methods. Block models typically used 10 m x 10 m x 1 m parent blocks (x, y, z) that were sub-blocked to 1 x 1 m x variable heights, with a minimum of 0.1 m (x, y, z). Gold and silver grades were estimated into the parent blocks.

Block grades were estimated primarily by inverse distance weighting to the second power (ID2) and less commonly by ordinary kriging (OK). After inspection of the estimated gold and silver grades many of the block models were judged to perform better with ID2 than with OK.  The method chosen in each case considered the characteristics of the domain, data spacing, variogram quality, and which method produced the best representation of grade continuity.

All channel samples that were used during construction of the geological models were reviewed. Only those channels that completely cross the mineralized deposit were used during grade estimation.  Channel samples that cross only a portion of the mineralized deposit were generally excluded as non-representative samples of the mineralization.

The channel sampling method has some risk of collecting samples that could result in local bias and poor precision. However, the large number of samples collected and used in the estimation may compensate for this issue resulting in accurate results. There remains a risk that the channel samples could suffer from a systematic sampling issue that could also result in poor accuracy. These risks are recognized and addressed during resource grade estimation by eliminating the undue influence of channel samples over drill hole samples for blocks estimated at longer distances.

The grade estimation was completed two or three successive passes when channel samples were used. The first pass used all composites, including channel samples, and only estimated blocks within a restricted short distance from the channel samples. The second or third longer passes applied less restrictive criteria using drill hole composites only.

Examples of the gold-silver estimation parameters for each of the Jael, Jessica, Regina, and Robertita domains are included in Table 14-5.

Figure 14-15 to Figure 14-18 show the blocks estimated by each of the three passes for the Jael, Jessica, Regina, and Robertita veins, respectively.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 14-5: Summary of Ag-Au Estimation Parameters for the San Dimas Block Models

Estimation Domain

Jael

Jessica

Regina

Robertita

Pass

Pass 1

Pass 2

Pass3

Pass 1

Pass 2

Pass3

Pass 1

Pass 2

Pass3

Pass 1

Pass 2

Pass3

Value Clipping Upper (g /t  Ag)

3000

3000

3000

8400

8400

8400

1400

1400

1400

5800

5800

5800

Value Clipping Upper (g /t  Au)

40

40

40

60

60

60

12

12

12

160

160

160

Search Ellipsoid Orientation

 

 

 

 

 

 

 

 

 

 

 

 

Dip

60

60

60

56

56

56

50

50

50

83

83

83

Dip-Azimuth

340

340

340

341

341

341

295

295

295

162

162

162

Pitch

55

55

55

140

140

140

140

140

140

46

46

46

Search Ellipsoid Length (m)

 

 

 

 

 

 

 

 

 

 

 

 

Maximum

25

110

160

30

160

200

25

90

140

30

120

140

Intermediate 

20

70

70

15

90

90

20

70

80

25

80

80

Minimum

15

15

15

20

60

60

15

50

60

20

15

60

Minimum Samples

13

7

3

11

7

3

13

7

3

13

7

3

Maximum Samples

30

16

16

30

16

16

30

16

16

30

16

16

Drill Hole Limit

 

 

 

 

 

 

 

 

 

 

 

 

Max Samples Per Drill Hole

3

3

3

3

3

3

3

3

3

3

3

3

Figure 14-15: Estimation Passes for the Jael Vein, Vertical Section

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-16: Estimation Passes for the Jessica Vein, Vertical Section

Note: Figure prepared by First Majestic, August 2020.

Figure 14-17: Estimation Passes for the Regina Vein, Vertical Section

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-18: Estimation Passes for the Robertita Vein, Vertical Section

Note: Figure prepared by First Majestic, August 2020.

14.2.10. Block Model Validation

Validation of the silver and gold grade estimations in the block models was completed for each of the resource estimation domains. The procedure was conducted as follows:

  • Comparison of wireframe domain volumes to block model volumes for the domains;
  • Visual inspection comparing the composite sample silver and gold grades to the estimated block values;
  • Comparison of the gold and silver grades in "well-informed" parental blocks with the average sample values of the composited samples contained within those blocks using scatter plots.
  • Comparison of the global mean composite grades to the block model mean grade for each resource domain;
  • Comparison of local block grade trends to composited sample grades along the three block model axes (i.e., easting, northing, and elevation) with swath grade trend plots.

The silver and gold estimated block grades were visually inspected in vertical sections. This review indicated that the supporting composite sample grades closely matched the estimated block values.

Figure 14-19 to Figure 14-22 show the estimated block model silver grades and the composite sample grades used in the estimation for the Jael, Jessica, Regina and Robertita veins, respectively.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-19: Jael Ag Block Model and Composite Sample Values, Vertical Section

Note: Figure prepared by First Majestic, August 2020.

Figure 14-20: Jessica Ag Block Model and Composite Sample Values, Vertical Section

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-21: Regina Ag Block Model and Composite Sample Values, Vertical Section

Note: Figure prepared by First Majestic, August 2020.

Figure 14-22: Robertita Ag Block Model and Composite Sample Values, Vertical Section

Note: Figure prepared by First Majestic, August 2020.

The block model estimates were validated by comparing the estimated block grades for gold and silver to nearest neighbor (NN) block estimates and to the composite sample values in swath plots oriented in three directions.  The estimated block grades, NN grades, and composite sample grade trends are similar in all directions for all resource domains. Figure 14-23 to Figure 14-26 and show swath plots for silver grades estimated by ID2, OK, and NN along the y-axis for the Jael, Jessica, Regina, and Robertita veins.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-23: Swath Plot in Y across the Jael Vein, Ag Values

Note: Figure prepared by First Majestic, August 2020.

Figure 14-24: Swath Plot in Y across the Jessica Vein, Ag Values

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-25: Swath Plot in Y across the Regina Vein, Ag Values

Note: Figure prepared by First Majestic, August 2020.

Figure 14-26: Swath Plot in Y across the Robertita Vein, Ag Values

Note: Figure prepared by First Majestic, August 2020.

Since the June 30, 2020 cut-off date for sample data used in the Mineral Resource estimates, additional drilling and production channel sampling from new mine developments has been completed and reviewed. This new data supports both the geological model and the mineral resource estimates. Overall, the validation supports that the current resource estimates are a reasonable representation of the input sample data.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

14.2.11. Mineral Resource Classification

The Mineral Resource estimates were classified into Measured, Indicated, or Inferred categories and considered the following factors:

  • Confidence in the geological interpretation and models;
  • Confidence in the continuity of metal grades;
  • The sample support for the estimation and reliability of the sample data;
  • Areas that were mined producing reliable production channel samples and detailed geological control.

The primary method of sample support used for the Mineral Resource classification was the calculation of the nominal drill hole spacing required to support confidence classifications.  The nominal drill hole spacing was produced by an estimation pass for each block in the model that used three composite samples with a maximum of one sample per drill hole, which required three separate drill holes. The average distance for each block to the three closest drill holes was estimated, and then nominal drill hole spacing was estimated by dividing the average distance to drill holes by 0.7.

Blocks were flagged to consider for the Measured category if the nominal drill hole spacing was <15 m or the blocks were within 15 m of a mined development with production channel samples and geological control.

Blocks were flagged to consider for the Indicated category if the nominal drill hole spacing was <30 m or the blocks were within 30 m of a mined development with production channel samples and geological control.

Blocks were flagged to consider for the Inferred category if the nominal drill hole spacing was <45 m. 

For the blocks flagged by the classification criteria developed, wireframes were constructed to encompass block model zones for Measured, Indicated, and Inferred categories. This process allowed for review of the geological confidence assigned to the deposit along with drill hole support and expanded certain areas but excluded others from the classification. Blocks were finally assigned to a classification category by the respective wireframe if the centroid of the block fell inside the wireframe.

Additional sample and underground mapping data collected since June 30, 2020 has been reviewed and supports the mineral resource classifications presented here. Figure 14-27 to Figure 14-30, are projected vertical sections showing the Measured, Indicated, and Inferred Mineral Resource classification categories for the Jael, Jessica, Regina, and Robertita veins, respectively.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-27: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Jael Vein

Note: Figure prepared by First Majestic, August 2020.

Figure 14-28: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Jessica Vein

Note: Figure prepared by First Majestic, August 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-29: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Regina Vein

Note: Figure prepared by First Majestic, August 2020.

Figure 14-30: Measured, Indicated, and Inferred Mineral Resource Confidence Assignments, Robertita Vein

Note: Figure prepared by First Majestic, August 2020.

14.3 Polygonal Method for Resource Estimation

Prior to 2011, Mineral Resources and Mineral Reserves were estimated by a polygonal method on projected vertical long sections for individual veins. These estimates were consolidated into a database that included a listing of veins in the different mining zones, which are the fault-bounded blocks discussed in Section 7. These entries were tabulated and graphically represented in both a Mineral Resource and a Mineral Reserve book, or compendiums, which were produced each year.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Block model techniques have been applied since 2011, and no new domains have been estimated by polygonal method.  However, there remain 52 minor veins and remnants of previously-mined veins that have Mineral Resources estimated using the polygonal method. All mineral resources estimated by polygonal methods are currently assigned to the Inferred Mineral Resource category.

Figure 14-31 is a pie chart outlining the mine zones where polygonal estimates are located.

Figure 14-31: Distribution of Polygonal Resources by Mine Zone

Note: Figure prepared by First Majestic, August 2020.

14.3.1 Polygonal Estimation of Tonnage and Grade

An orthogonal polygon was drawn on a vertical longitudinal section with the vein sample intersection centered in the polygon. An example of these polygons is shown on the schematic longitudinal section for the Alto de Arana vein in Figure 14-32.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Figure 14-32: Example of 2D Polygons in a Schematic Long Section

Note: Figure prepared by First Majestic, August 2020.

The shape and size of the polygon depended on the geological interpretation and thickness of the veins. This ranged between 25 m x 25 m for veins <1.0 m in thickness to 50 m x 50 m for veins >1.5 m thick.

The polygon volume was estimated by length x height x vein thickness or was estimated using AutoCAD software for more complex shapes.

The gold and silver grades for the vein sample interval were assigned to the polygon. In cases where there were multiple intercepts within a polygon, the silver and gold grades were estimated using a length-weighted average.

To estimate the contained metal the silver and gold grades were multiplied by the true vein thickness for each of the intercepts within the polygon, and then the resulting numbers were totalled and divided by the sum of the total true thicknesses. The process was validated by the Head of the Geology department in San Dimas by independently repeating the process on a subgroup of veins.

14.3.2 Mineral Resource Classification for the Polygonal Method Estimates

All polygonal estimates are currently assigned to the Inferred Mineral Resource category. In total, Inferred Mineral Resources estimated using polygonal methods represent approximately 49% of the total Inferred Mineral Resource estimates for the San Dimas mine. The Inferred Mineral Resource using the polygonal method are reduced every year as they are converted to block model estimates or depleted by mining.

14.4 Reasonable Prospects for Eventual Economic Extraction

The Mineral Resource estimates were evaluated for reasonable prospects for eventual economic extraction by application of input parameters based on mining and processing information from actual operations performance during 2019 and 2020. The economic parameters assumed for Mineral Resource estimates include operating costs, metallurgical recovery, metal prices and other parameters are shown in Table 14-6.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 14-6: Input Parameters for Evaluation of Reasonable Prospects of Eventual Economic Extraction.

Concept

Units

Values

Direct Mining Cost

$/t

94.4

Indirect and G&A Costs

$/t

49.7

Sustaining Costs

$/t

35.2

Metallurgical Recovery Ag

%

93.2

Metallurgical Recovery Au

%

96.4

Metal Payable Ag and Au

%

99.95

Metal Price Ag

$/oz Ag

18.50

Metal price Au

$/oz Au

1,750.00

Longhole and cut-and-fill mining methods are assumed with minimum mining widths of 1.6 m and 1.2 m, respectively.

These economic parameters result in a silver equivalent (Ag-Eq) cut-off grade of 255 g/t.  The Ag-Eq metal grades for the Mineral Resource estimates were calculated as follow:

  • Ag-Eq g/t = Ag g/t + (Au g/t * Au Factor);
    • Au Factor = Au Revenue / Ag Revenue;
      • Au Revenue = (Au Metal Price / 31.1035) x Au Recovery x Au Payable;
      • Ag Revenue = (Ag Metal Price / 31.1035) x Ag Recovery x Ag Payable.

The Vulcan underground stope analyser software was used to identify the blocks that represent potentially mineable shapes that exceeded the cut-off value while complying with the aggregate of economic parameters. For constraining resources deemed to be extracted by underground methods, the use of this tool provides an advantage based on the ability to aggregate blocks into the minimum stope dimensions and eliminate outliers that do not comply with these conditions. The underground stope analyser was used on the six most important metal deposits at San Dimas as defined by their total estimated mineral resources which together represent 47% of the Measured and Indicated Mineral Resource categories.

14.5 Mineral Resource Estimate Statement

The QP for the Mineral Resource estimates is Mr. Joaquín Merino, P. Geo., who is First Majestic's Senior Advisor in Geology. Mineral Resources are reported using the 2014 CIM Definition Standards assuming underground mining methods, and a cut-off grade of 255 g/t Ag-Eq.  The effective date for the mineral resource estimates is December 31, 2020.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Measured and Indicated Mineral Resource estimates are provided in Table 14-7, and Inferred Mineral Resource estimates are included in Table 14-8. Measured and Indicated Mineral Resources are reported inclusive of those Mineral Resources converted to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

Table 14-7: San Dimas Measured and Indicated Mineral Resource Estimate

(effective date December 31, 2020)

Table 14-8: San Dimas Inferred Mineral Resource Estimate (effective date December 31, 2020)

1) Mineral Resource estimates have been classified in accordance with the 2014 CIM Definition Standards.

2) The Mineral Resource estimates have an effective date of December 31, 2020

3) Drill hole and production channel sample data collected through a cut-off date of June 30, 2020 were used to produce the estimates.

4) Mineral Resource estimates account for mining depletion through December 31, 2020.

5) The information provided was prepared and reviewed by Mizrain Sumoza under the supervision of Joaquín Merino, P.Geo.

6) The silver-equivalent (Ag-Eq) grade was estimated considering metal price assumptions, metallurgical recovery, and the metal payable terms.

Ag-Eq = Ag Grade + (Au Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).

a. Metal prices considered for Mineral Resources estimates were $18.50/oz Ag and $1,750/oz Au.

b. Metallurgical recovery used was 93.2% for silver and 96.4% for gold.

c. Metal payable used was 99.95% for silver and gold.

7) The reasonable prospects for eventual economic extraction was tested using a silver-equivalent cut-off grade to constrain resources. The cut-off grade was prepared under the assumption of the operation of a mechanized underground mining method, the treatment of the material in a leaching plant and that silver Dore will be produced and sold to a refinery. Operating mining costs are assumed to be $59/t at a nominal production rate of 1.0 Mt/a. Processing costs are assumed to be $30/t, and indirect and general and administrative costs to be $51/t. The resulting cut-off grade that equals estimated payables with the assumed costs was 255 g/t Ag-Eq.

8) Tonnage is expressed in thousands of tonnes; metal content is expressed in thousands of ounces.

9) Totals may not add up due to rounding.

10) Measured and Indicated Mineral Resources are reported inclusive of Mineral Reserves.  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico

Technical Report on Mineral Resource and

Mineral Reserve Estimates

14.6 Factors that May Affect the Mineral Resource Estimate

Factors that may materially impact the Mineral Resource estimates include:

  • Mineral Resources reported using polygonal assumptions may have the confidence classification assigned amended when the polygons are converted into block models that use best practice estimation methods;
  • Changes to the assumptions used to generate the silver-equivalent grade cut-off grade including metal price and exchange rates;
  • Changes to interpretations of mineralization geometry and continuity;
  • Changes to geotechnical, mining, and metallurgical recovery assumptions;
  • Assumptions as to the continued ability to access the site, retain mineral and surface rights titles, maintain environment and other regulatory permits, and maintain the social license to operate.
  • The production channel sampling method has some risk of non-representative sampling that could result in poor accuracy locally. In addition, there is potential for the large number of channel samples to overwhelm samples from the drill holes in some areas. This is recognized and addressed during resource estimation by restricting the area of influence related to these samples to very short ranges.

14.7 Comments on Section 14

The QP for First Majestic is of the opinion that the Mineral Resource Estimates for San Dimas were estimated according to industry best practices and conform to the 2014 CIM Definition Standards for Mineral Resources. In the opinion of First Majestic, the resource estimates reported here are a reasonable representation of the mineral resources found on the property at the current level of sampling.


San Dimas Silver/Gold Mine

Durango and Sinaloa States, Mexico