Ermitaño

Ermitaño is approximately 145 kilometres northeast of Hermosillo and contiguous with Santa Elena Mine near the intersection of 29° 59´ 29.25” north latitude and 110° 05´24.95” west longitude and 12km west of Banamichi.  

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 Reserves statement provided in the table above is based on internal estimates prepared as of June 30, 2021. The information provided was prepared and reviewed under the supervision of Ramon Mendoza Reyes, PEng, and a Qualified Person ("QP") for the purposes of NI 43-101.
3. The cut-offs were estimated considering metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the selling contract.
   1. Silver-equivalent grades were estimated for Santa Elena underground mine and the Leach Pad material.
   2. Cut-off value was estimated for the Ermitaño project material.
   3. Metal prices considered for Mineral Reserves estimates were $24.00 /oz Ag and $1,700.00 /oz Au. Metal prices used in the Mineral Resources estimates were $26.00/oz Ag and $1,850/oz Au.
4. Measured and Indicated Mineral Resources are reported inclusive of Mineral Reserves.
5. Mineral Resource estimates are classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101.
6. The Mineral Resource estimates are based on internal estimates prepared as of June 30, 2021. The information provided was reviewed and prepared by Phillip Spurgeon, P.Geo., a First Majestic employee.

Low sulphidation epithermal gold and silver mineralization at Ermitaño is hosted in a steep north dipping vein consisting of green, pink, and white massive, banded, bladed, and stockwork quartz, calcite, and adularia. Gold occurs as native gold or electrum, and silver occurs as electrum, acanthite, and argentite. Sulphide abundance is typically <1–2%, dominated by pyrite with minor galena, sphalerite, pyrrhotite, and chalcopyrite. Drilling of the Ermitaño vein has delineated an east-west striking structure approximately 1,800 metres long, 550 metres down dip, with mineralized true thicknesses averaging 6 metres and ranging between 0.2 metres and 20 metres. Mineralization remains open down-dip in the eastern area of the vein.

Geological Model for the Ermitaño Vein (Core and Marginal Vein Domains Combined)

Plan View Location of the Domains, Ermitaño

Since 2016, the Company has completed approximately 72,270 metres of diamond drilling on the property to define the current Indicated Resource of 4.7 million ounces of silver and 311,000 ounces of gold, or 30.4 million silver equivalent ounces grading an average 449 AgEq g/t (70 g/t silver and 4.59 g/t gold). In addition, Inferred Resources totaling 7.0 million ounces of silver and 370,000 ounces of gold, or 37.5 million silver equivalent ounces grading an average 312 AgEq g/t (58 g/t silver and 3.08 g/t gold) have been defined.

The Company is planning to release a Preliminary Economic Assessment (“PEA”) for Ermitaño with an effective cut-off date of June 30, 2020 and an updated Resource statement, with an effective cut-off date of December 31, 2020, by the end of the first quarter of 2021.

Furthermore, the Company is currently conducting hydrogeological and geotechnical drilling which will be used as key study work for an upcoming Pre-Feasibility Study (“PFS”) on the project. The PFS is expected to be released in the second half of 2021 and will define initial Reserves, production rates, costs and estimated life of mine for the Ermitaño project. A further 13,900 metres of exploration drilling is planned in 2021 with the intent of increasing resources confidence and adding new mineral resources .

In 2021, the Company has budgeted a total of $42.1 million to be invested at Ermitaño and expects to begin initial test block mining by mid-2021 to assess the geotechnical conditions, subject to delineation drilling results, and extract approximately 30,000 to 60,000 tonnes of material to be used for industrial metallurgical testing. Investment in development will prepare Ermitaño for initial limited mine production in the second half of 2021 followed by additional stope preparation and ramp up activities in early 2022. Procurement for the underground mining fleet is expected to occur in the first half of 2021. In addition, blending and batching test work is expected to be completed by mid-year to determine the ideal processing procedure to apply at the Santa Elena processing plant.

Ermitaño Splay Grade x Thickness Long Section

Note: Holes EW16-01 to EW16-04 were announced on January 17, 2017 (see press release at https://www.firstmajestic.com/news/2017/index.php?content_id=312). Holes EW16-06 and EW 17-09 were announced on January 9, 2018 (see press release at https://www.firstmajestic.com/news/index.php?content_id=340). Gold equivalent (“Gold-Equiv”) is calculated using a gold to silver ratio of 1:80.

After detailed geological logging, all drill core samples were split on site by diamond saw. One half of the core was submitted to Bureau Veritas Mineral Laboratories at the laboratory in Vancouver, British Columbia, Canada and to SGS Laboratories at the laboratories in Durango and Hermosillo, Mexico. The remaining half core is retained on-site for verification and reference purposes.