San acacio deposit


Defiance has updated its previous Indicated and Inferred Mineral Resource to ensure its consistency with the current mining environment and metals economics. The updated Resource increased the Silver Equivalent Cut-off Grade by 54% resulting in a new Silver Equivalent Grade of 192.89 g/t Ag. Total contained Silver Equivalent ounces increased to 17,917,000. This inferred resource is hosted within 1km of the vein system which is over 5.6km long and has vein widths up to 20m.


Highlights

Using a silver equivalent (“AgEq”)* cut-off grade of 100 grams tonne (“g/t”), highlights of the estimate include:

San Acacio Inferred Resource

Vein
Tonnes > Cut-off (tonnes) Grade>Cut-off Contained Metal
Ag(g/t) Au (g/t) AgEq (g/t) Ag (ozs) Au (ozs) AgEq (ozs)
VETA G
2,150,000 192.43 0.19 204.66 13,302,000 10,000 14,147,000
VETA C
739,000 153.28 0.08 158.66 3,642,000 1,900 3,770,000
TOTAL
2,889,000 182.42 0.16 192.89 16,944,000 11,900 17,917,000

The Zacatecas Silver District is one of the most prolific silver producing areas in the world, having produced in excess of 681 million ounces of Silver during the period 1546 to 1895 (Geological Mining Monograph of the State of Zacatecas). The San Acacio Mine controls approximately 50% of the historic workings on the Veta Grande system which has estimated past production of in excess of 200 million ounces of silver (Reference R. Burk, July 1994, Summary of Property Evaluation Veta Grande, San Acacio for Minera Teck S.A. de C.V.).


Mineral Resource Estimate

The data consists of diamond drill holes, underground chip samples, underground drill holes and surface trench samples with assays for silver, gold, copper, lead and zinc from three vein structures, Veta G (Main vein) and Veta C (Hanging wall vein or HW). Samples include both mineralized quartz breccia vein and mineralized backfill material in old stopes. Of a total of 203 composites across the three veins 99 had assays for Cu, Pb and Zn. While a few of the Pb and Zn values are approaching economic grades the majority are well below. At this time only Ag and Au were estimated into the resource. All of the resource is categorized as inferred. Results at various silver equivalent cut-off grades are tabulated below.

San Acacio Veta G Inferred Resource

Ag Cut-off (g/t) Tonnes > Cut-off (tonnes) Grade>Cut-off Contained Metal
Ag (g/t) Au (g/t) Ag (ozs) Au (ozs)
40.0 2,810,000 160.12 0.17 14,466,000 20,000
50.0 2,500,000 174.71 0.18 14,043,000 10,000
60.0 2,360,000 182.03 0.18 13,812,000 10,000
65.0 2,280,000 185.99 0.18 13,634,000 10,000
70.0 2,250,000 187.47 0.18 13,562,000 10,000
75.0 2,240,000 187.94 0.18 13,535,000 10,000
80.0 2,230,000 188.78 0.18 13,535,000 10,000
85.0 2,190,000 190.60 0.19 13,420,000 10,000
90.0 2,160,000 191.74 0.19 13,316,000 10,000
95.0 2,150,000 192.49 0.19 13,306,000 10,000
100.0 2,120,000 193.77 0.19 13,207,000 10,000
110.0 2,040,000 197.40 0.19 12,947,000 10,000
120.0 1,980,000 199.56 0.19 12,704,000 10,000

Table 28 San Acacio Veta C Inferred Resource

Ag Cut-off (g/t) Tonnes > Cut-off (tonnes) Grade>Cut-off Contained Metal
Ag (g/t) Au (g/t) Ag (ozs) Au (ozs)
40.0 935,000 136.88 0.07 4,115,000 2,100
50.0 931,000 137.33 0.07 4,111,000 2,100
60.0 924,000 137.97 0.07 4,099,000 2,100
65.0 906,000 139.40 0.07 4,061,000 2,000
70.0 853,000 143.88 0.08 3,946,000 2,200
75.0 826,000 146.25 0.08 3,884,000 2,100
80.0 805,000 148.04 0.08 3,832,000 2,100
85.0 785,000 149.72 0.08 3,779,000 2,000
90.0 768,000 151.06 0.08 3,730,000 2,000
95.0 741,000 153.15 0.08 3,649,000 1,900
100.0 729,000 154.05 0.08 3,611,000 1,900
110.0 693,000 156.44 0.08 3,486,000 1,800
120.0 636,000 160.28 0.09 3,277,000 1,800

*2015 - The results can also be presented in terms of a Silver Equivalent. Using a gold price of $1270/ oz Au and silver price of $19.60 the silver equivalent value would be silver content plus 65 times the gold content. (Note: total contained AgEq values may not add exactly because of rounding). Metallurgical recoveries are not taken into account.

The resource estimate was completed by Gary Giroux, MASc., P.Eng. of Giroux Consultants Ltd. using industry standard methods that conform with the CIM Mineral Resource and Mineral Reserve definitions referred to in National Instrument 43-101, Standards of Disclosure for Mineral Projects, and utilizing Gemcom GEMS V.6.2.3.2TM software.

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