Santander Mine

Santander is located within the Miocene metallogenic belt of central and northern Perú. It extends for at least 900 km along the Western Cordillera and adjacent Altiplano and is characterized by several hydrothermal mineral deposits of different types that formed between about 6 million and 20 million years ago. The belt is centred east of the Mesozoic and early Palaeocene Coastal batholiths and lies on mature continental crust that has undergone multiple episodes of compressive deformation from at least middle Palaeozoic to latest Neogene time. Mineralization is interpreted to have occurred pre–lower Miocene Quechua I compressive event and spanned later Quechua II tectonism. Mineral deposits are predominantly hosted by shelf carbonates and other sedimentary rocks of Late Triassic, Jurassic, and Cretaceous age and by volcanic and intrusive rocks mainly of Neogene age. Base metal and precious metal mineralization was intimately associated in time and space with the eruption of calc-alkali volcanic rocks of intermediate composition and the emplacement of mineralogically and geochemically similar dykes and stocks.

Santander hosts intrusion-related, carbonate-hosted, distal ‘passive’ replacement deposits, or carbon replacement deposits (CRDs). Controls on mineralization vary, however, with the majority of mineralization displaying very strong structural and lithological controls. The Santander CRDs, in common with those in other districts, displays a strong mineralogic/metallic zonation: a ‘classic’ lateral or vertical zonation (from distal to proximal) would be Mn » Ag » Pb+Ag » Zn » Cu+Au. Santander is underlain by an approximately 2,600-metre thick package of Cretaceous clastic and carbonate sedimentary rocks known as the Goyllarisquisga Group, within which an approximately 1,000-metre thick sequence of massive limestones and limestone-shales of the Jumasha and Chulec Formations are the principal hosts identified to date. Pre-mineralization diabase dykes and sills are locally present within the section. The entire sequence is tightly folded into a series of orogen-parallel, northwest-trending anticlines and synclines. The lower, predominantly clastic part of the section has been thrust over the mainly carbonate-rich upper portion (the favourable host rocks) along the regional northwest-trending Santander Fault Zone. Unconformably overlying the tightly folded Cretaceous sediments are moderately folded and faulted andesitic Tertiary volcanics of the Calipuy Formation. Syn-mineralization intrusive activity, considered to be the heat and fluid sources that produced base metal mineralization, has not been recognized on the property to date. This absence is empirically considered indicative of a relatively large CRD system, and such bodies are inferred to be present at depth (>800 metres) on the property.

Santander (Magistral) Mineral Reserves as at December 31, 2017^{(1, 2, 3)}

		Grade			Contained Metal
Resource Category	Million tonnes	Zn %	Pb %	Ag g/t	Zn M lbs	Pb M lbs	Ag K oz
Proven	0.46	3.83	0.76	26.44	38.8	7.7	391
Probable	1.46	4.55	0.74	32.04	146.5	23.8	1,504
Proven & Probable	1.93	4.38	0.75	30.79	186.4	31.9	1,911

(1) All mineral reserves have been estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) — Definition Standards adopted by CIM Council on May 10, 2014 (the “CIM Definition Standards”). Numbers may not add due to rounding.

(2) The technical report entitled “Mineral Reserve Estimation Technical Report for the Santander Zinc Mine, Province de Huaral, Perú” dated March 31, 2017, is the current technical report for the Santander property.

(3) The Santander Magistral Underground Mine mineral reserve estimate is reported based on optimized stopes designed on an incremental net smelter return cut-off-value of US$50/tonne with metal prices of: US$1.16/lb zinc, US$0.91/lb lead, US$18.50/oz silver. The Santander Magistral Underground Mine mineral reserve estimate has been prepared by technical consultants to the Company with an effective date of December 31, 2017, under the supervision of and approved by Professional Geologist Aline Cote (OGQ), a Qualified Person as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). Ms. Cote is an employee of a related party to the Company and accordingly, is not independent.

Santander (Magistral) Mineral Resources as at December 31, 2017^{(1, 2, 3)}

		Grade			Contained Metal
Resource Category	Million tonnes	Zn %	Pb %	Ag g/t	Zn M lbs	Pb M lbs	Ag K oz
Measured	1.06	4.16	0.77	27.26	97.0	18.0	927
Indicated	1.93	5.10	0.85	38.19	217.0	36.2	2,370
Measured & Indicated	2.99	4.77	0.82	34.32	314.2	54.0	3,297
Inferred	3.08	5.08	0.51	31.67	344.8	34.6	3,135

(1) All mineral reserves have been estimated in accordance with the CIM Definition Standards. Numbers may not add due to rounding.

(2) The technical report entitled “Mineral Reserve Estimation Technical Report for the Santander Zinc Mine, Province de Huaral, Perú” dated March 31, 2017, is the current technical report for the Santander property.

(3) The Santander Magistral Underground Mine mineral resource estimate is reported based on net smelter return cut-off-value of US$40/tonne with metal prices of: US$1.16/lb zinc, US$0.91/lb lead, US$18.50/oz silver. The Santander Magistral Underground Mine mineral resource estimate has been prepared by the mine geology department and non-independent resource geology consultants to the Company with an effective date of December 31, 2017, under the supervision of and approved by Professional Geologist Aline Cote (OGQ), a Qualified Person as defined in NI 43-101. Ms. Cote is an employee of a related party to the Company and accordingly, is not independent.

Santander (Pipe) Mineral Resources as at December 31, 2017^{(1, 2, 4)}

		Grade			Contained Metal
Resource Category	Million tonnes	Zn %	Pb %	Ag g/t	Zn M lbs	Pb M lbs	Ag K oz
Inferred	10.10	4.09	0.18	15.00	910.7	40.1	4,871

(1) All mineral reserves have been estimated in accordance with the CIM Definition Standards. Numbers may not add due to rounding.

(2) The technical report entitled “Mineral Reserve Estimation Technical Report for the Santander Zinc Mine, Province de Huaral, Perú” dated March 31, 2017, is the current technical report for the Santander property.

(4) The Santander Pipe Underground Deposit mineral resource estimate is reported based on Gross Metal Value cut-off-value of US$40/tonne with metal prices of: US$1.13/lb zinc, US$1.00/lb lead, US$18.00/oz silver. The Santander Pipe Underground Deposit mineral resource estimate was prepared and approved by Gilles Arseneau (P.Geo.), a consultant with Arseneau Consulting Services Inc, who is an independent Qualified Person as defined in NI 43-101, with an effective date of November 6, 2016.

	2018 Zinc Production (payable)	2018 Lead Production (payable)	2018 Silver Production (payable)	Annual Operating Cost Guidance (per tonne)
Santander	55-58 million lbs (24,950 – 26,320 tonnes)	11.0-11.6 million lbs (5,000 – 5,300 tonnes)	654-687 k ozs	$38-$42

Constitutes forward-looking information; see “Cautionary Note Regarding Forward-Looking Statements”.

Santander Zinc Mine Reserves and Resources Report (March 31, 2017)