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 Resources 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 National Instrument NI 43-101.
2. The Mineral Resources information provided above is based on mineral resource estimates prepared as of December 31, 2019 by FMS Internal QPs, who have the appropriate relevant qualifications, and experience in geology and resource estimation. The information provided was compiled by David Rowe, CPG, Internal QP for First Majestic, and reviewed by Ramon Mendoza Reyes, PEng, Internal QP for First Majestic.
3. Metal prices considered for Mineral Resources estimates were $18.50/oz Ag, $1,450/oz Au.

The Ermitaño Project area contains a network of east–west trending low sulphidation epithermal veins and stockwork within an area of 1,200 metres long 600 metres wide.   Vein textures suggest a shallower level of exposure in the low sulphidation epithermal environment compared to Santa Elena. Surface sampling includes 946 chip and channel samples which average 0.12 gpt Au and ranging up to 6.67 gpt Au

Low sulphidation epithermal silver and gold mineralization is hosted in the steep dipping Ermitaño and Ermitaño Splay structures. The structures host green and white massive, banded, and bladed and stockwork quartz, calcite, and adularia. The veins are commonly brecciated and are associated with argillic alteration. Sulphide and iron oxide after sulphide and pyrolusite occur locally. The bulk of Inferred mineralization disclosed in 2018 is hosted in the Ermitaño Splay. Drilling of the Ermitaño Splay has delineated an east-west striking structure approximately 500 metres long, 400 metres down dip, with mineralized true thicknesses ranging from 0.9 to 30.0 metres, averaging 11.0 metres. Mineralization in the Splay remains open up-dip and down-dip to the west. The Ermitaño Splay separates from the Ermitaño structure which is delineated by drilling over an approximate 1,000 metre southwest strike length and 400 metre dip length.  Mineralized true thickness range from 0.8 to 11.0 metres, averaging 4.0 metres.

Oblique view of Ermitaño and Ermitaño Splay

Plan view of Ermitaño and Ermitaño Splay

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.