Name: Mercedes mine.

Location: The Mercedes mining operation is located in the state of Sonora, north-west Mexico, within the Cucurpe municipality.

Mine Owner/s: Premier Gold Mines.

Brief Description: Mercedes is a 2 000 t/d underground gold/silver mine. The Mercedes operation comprises five separate underground mines –  Mercedes, Barrancas-Lagunas, Lupita, Diluvio and Rey de Oro – all accessed by declines.

Operations are exploiting low sulphidation quartz veins and quartz veinlet stockwork for gold and silver.

Brief History: The Mercedes vein was discovered in 1936. The mine areas were first examined by Meridian Gold’s predecessor FMC Gold Company in 1993 as part of a regional exploration programme in Mexico. No further work was recommended at the time as the restricted nature of mineralisation precluded obvious openpit development opportunities.

The Mercedes district was revisited in 1999 as part of a programme focusing on high-grade low-sulphidation vein systems. Based on the excellent potential of the district, Merdian Gold acquired the property and fieldwork was initiated.

Meridian geologists completed surface and underground mapping and sampling by September 2000. The surface evaluation identified 11 separate target areas. Five areas had historic mining activities and were the focus of the first phase of a reverse circulation drilling programme. Veins or stockwork zones were encountered in all five areas by drilling. Mercedes had at least one drill intercept assaying greater than 10 g/t gold.

In 2002, Meridian entered into a joint venture (JV) with Fischer-Watt Corporation to continue exploration at Mercedes. Fischer-Watt conducted limited metallurgical testing and developed a preliminary design for underground development on the Mercedes vein area south of Corona de Oro. The JV was terminated in 2004 and the property was returned to Meridian.

Exploration conducted in 2005 resulted in the discovery of the bonanza-grade Corona de Oro shoot in the Mercedes vein. Drilling increased between 2006 and 2007, focusing on the Mercedes, Klondike, and Lupita veins.

In October 2007, Yamana Gold took control of the property. An aggressive drilling and development programme was completed to bring the mine to a feasibility study stage.

The Mercedes mine began production in 2011.

The mine was sold to Premier Gold Mines in 2016.

Primary Metals: Gold/silver.

Secondary Metals: None stated.

Geology/Mineralisation: Two north-west-trending arches, with exposed Jurassic marine sediments and Cretaceous lithic and quartz-lithic tuff units, dominate the local geology. The arches have been intruded by at least three stages of dikes and small stocks, ranging in composition from andesite to latite and rhyolite. Marginal to the north-west-trending arches, andesitic volcanic flows and flow breccias have been deposited in at least three west-north-west-trending basins. Dikes of andesite and latite crosscut the andesite flow package.

Gold-silver mineralisation on the Mercedes property is hosted within epithermal low sulphidation (adularia-sericite) veins, stockwork, and breccia zones.

More than 16.5 km of veins have been identified within or marginal to the andesite-filled basins, which constitute the primary exploration target on the property. Major veins typically trend 30º north to 70º west at 60º to 90º dips, following the major regional structural pattern. Veins typically dip at greater than 60º, but locally range as low as 25º. Post-mineral latite dikes fill some of the same north-west-trending structures that host some of the veins, locally destroying mineralisation as emplaced. The mineralised zones display a combination of fissure vein, stockwork and breccia morphologies that change rapidly on strike and dip. The zones range in width from less than 1 m to composite vein/stockwork/breccia zones of up to 15 m wide. In the Diluvio zone, gold-silver-bearing vein/stockwork zones locally attain thicknesses of more than 100 m. The length of individual veins varies from 100 m to more than 3 km. Property-wide, gold-silver-bearing veins occur over a vertical range of 700 m (600 m to 1 300 m).

Mineralogical studies have identified opaque minerals, including iron oxides, pyrite, gold, electrum, stibnite and rare pyrargyrite, within a gangue of substantial chalcedony, quartz and carbonate. Metallurgical studies have identified the presence of very small quantities of native gold and silver, electrum, pyrargyrite, stibnite, galena, sphalerite and chalcopyrite in heavy mineral concentrates. Copper minerals, such as malachite and chrysocolla, are the most common as fracture fillings in breccias at Klondike, although rare specks are also seen in the Mercedes and Lupita-Diluvio veins.

Reserves: Total proven and probable reserves as at December 31, 2018, were estimated at 94 150 t grading 3.80 g/t gold and 36.25 g/t silver.

Resources: Total measured and indicated resources as at December 31, 2018, were estimated at 511 920 t grading 3.71 g/t gold and 47.84 g/t silver. Inferred resources were estimated at 240 020 t grading 3.69 g/t gold and 50.39 g/t silver.

Mining Method: The mine uses underground modified overhand cut-and-fill, narrow-vein longitudinal longhole mining, and longhole open stoping methods.

Major Infrastructure and Equipment:

• Mine and mill infrastructure, including office buildings, shops and equipment.
• A tailings storage facility, with plans in place for further expansion to contain tailings production until the end of 2022.
• Local water supplies from the mines and dewatering wells.
• Electric power from the national grid through a 65 km 115 kV power line.
• Mine ventilation fans and ventilation systems.
• Haulage roads from the five mine areas to the plant.
• Stockpile areas.
• Maintenance and administrative office facilities.
• Core storage and exploration offices.
• Security gates and manned security posts at mine entries.
• Access road network connecting the mine infrastructure to public roads.
• Processing is through wet milling with a Merrill-Crowe recovery system.

Prospects: The focus remains on adding near mine resources and reserves, supporting mine production, extensions of the main mine trend and testing new geological targets.

Contact Details:
Premier Gold Mines
Tel + 1 807 346 1390
Email info@premiergoldmines.com
Website https://www.premiergoldmines.com