Location: Guanajuato, Mexico
Ownership: 100%
Metals: Gold, silver, copper
Royalty: 3.75%
The Cerro del Gallo deposit covers an area of 16,940.9 hectares (“ha”) and consists of 15 contiguous mining concessions. The concessions include areas of historical mines formerly worked for high grade vein-hosted gold and silver.
The Cerro del Gallo deposit is located in the state of Guanajuato in central Mexico, approximately 30 km west of the Guanajuato International Airport, 55 kilometres west of the city of Leon and major facilities and in an active mining district. The property is accessible by road, rail and air services. A skilled local workforce, grid power, water, sealed roads, equipment suppliers and established transport routes are additional project assets.
Notes for Historical reserve and Resource Estimates
The historical resource and reserve estimates presented above in respect of the Cerro Del Gallo Project (the “Historical Reserve and Resource Estimates”) are reflected in the following technical report:
Pre-Feasibility Study, NI 43-101 Technical Report, Cerro del Gallo Heap Leach Project, Guanajuato, Mexico, prepared for Argonaut Gold by Kappes, Cassiday & Associates with an effective date of January 31, 2020 and a Mineral Reserve Estimate effective date of October 24, 2019 (the “Cerro del Gallo Technical Report”). The estimates in the Cerro del Gallo Report were based on the following assumptions:
The Historical Resource and Reserve Estimates were reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM (2014 edition) (the “CIM Standards”). No statement was provided as to whether the Cerro del Gallo reserve and resource estimates were prepared using the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (November 2019; 2019 CIM Best Practice Guidelines) and the historical estimate may not be consistent with those guidelines in all aspects. All tonnage information has been rounded to reflect the relative uncertainty in the estimates; therefore, there may be small differences in the totals.
In accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) the Historical Resource Estimates use the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource”, “inferred mineral resource”, “mineral reserve”, “probable mineral reserve” and “proven mineral reserve”, having the same meanings ascribed to those terms as in the CIM Standards.
As the Historical Reserve and Resource Estimates pre-date the Company’s agreement to acquire the Projects, the Company is treating them as “historical estimates” under NI 43-101, but they remain relevant as the most recent mineral reserve and resource estimates for the Projects. No more recent estimates or data are available to Heliostar.
Further drilling and resource modeling would be required to upgrade or verify the Historical Reserve and Resource Estimates as current mineral reserves or mineral resources for the Cerro del Gallo and accordingly, they should be relied upon only as a historical reserve and resource estimates of Argonaut, which pre-dates the Company’s agreement to acquire the Projects.
The Company intends to prepare new mineral reserve and resource estimates from first principles for Cerro de Gallo. The QP agrees with the Company’s intended approach, which should include the following steps:
A “Qualified Person” under NI 43-101 has not done sufficient work to classify the Historical Reserve and Resource Estimates as current mineral reserves or mineral resources. Accordingly, a Qualified Person of the Company has not independently verified the Historical Reserve and Resource Estimates nor the other information contained herein, and the Company is not treating the Historical Reserve and Resource Estimates as current mineral reserves or mineral resources. There can be no assurance that any of the Historical Reserve and Resource Estimates, in whole or in part, will ever become economically viable. In addition, mineral resources are not mineral reserves and do not have demonstrated economic viability. Even if classified as a current resource, there is no certainty as to whether further exploration will result in any inferred mineral resources being upgraded to an indicated or measured mineral resource category.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Cerro del Gallo is located in central Mexico, in the Mesa Central physiographic province at the intersection of two geological provinces: the Sierra Madre Oriental and the Trans-Mexican Volcanic Belt.
The oldest rocks in the Cerro del Gallo area are a deformed and regionally metamorphosed volcano-sedimentary sequence of Triassic to Cretaceous age called the Esperanza Formation. The Esperanza Formation is mainly carbonaceous and calcareous shale interbedded with arenite, limestone and andesite to basaltic flows, all of which have been weakly metamorphosed to phyllites, slates and marble.
Around Cerro del Gallo, the Esperanza Formation consists of layered sediments of argillaceous and arenaceous composition, with fragmental volcanic rocks of broadly intermediate composition. All the deposits were affected by lower greenschist facies regional metamorphism.
The sedimentary and volcanic rocks around Cerro del Gallo form the Esperanza Inlier, which is surrounded by Tertiary age rhyolitic flows, rhyolitic tuffs, trachyte andesite and andesites.
