San Marcial

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San Marcial is a silver resource project, illustrating the potential for future open pit development, with high-grade gold mineralization discovered in recent drilling. The 1,250-hectare property is located 98 kilometres east-southeast of Mazatlán, in the state of Sinaloa, and 5 kilometres south of the Company’s Plomosas Mine Area. The Area currently contains an NI 43-101 resource estimate of 36 Moz AgEq (indicated) and 11 Moz AgEq (inferred)**, allowing for future expansion. The San Marcial deposit remains open along strike and at depth. The following royalty interest and purchase rights are related to the San Marcial property: 0.75% NSR to Silver Standard, with the ability to purchase back in full for US$1.25M and 3.0% net production royalty to Industrial Met-Sin, with the opportunity to purchase back in full or part for US$0.6M per each 1%.

Amended NI 43-101 Resource Estimation and Technical Report – June 2020. Click here to see the full technical report.

A pit shell analysis using a base case of US$18.50 silver price and a cut-off value of 30 g/t, provided a pit constrained Indicated resource estimate of 7.5 Mt with an average grade of 118 g/t silver, 0.51% zinc, and 0.32% lead, and additional pit constrained Inferred resource of 2.5 Mt with an average grade of 77 g/t silver, 0.27% zinc, and 0.11% lead. The pit has a 3:1 strip ratio. Under the pit, there is an Indicated resource estimate of 0.1 Mt with an average grade of 79 g/t silver, 0.54% zinc, and 0.26% lead, and additional Inferred resource of 0.9 Mt with an average grade of 131 g/t silver, 0.59% zinc, and 0.09% lead.

The San Marcial deposit remains open along strike and at depth.

REGIONAL GEOLOGY

The San Marcial prospects lie in an intersection of a major crustal East-West structure with North-Northwest trending structures within the Rosario Mining District, located on the western edge of the Sierra Madre Occidental. The geology at San Marcial can be sub-divided into two distinct underlying rock types. The Upper Volcanic Group of basal conglomerates, rhyolites and dacites occurring in the higher and more mountainous portions of the Project. This unit lies on the erosional surface above the Lower Volcanic Group. And the Lower Volcanic Group consists of an epiclastic sequence of lapilli tuffs and volcanic ash, with intercalated dacites and trachyandesites. The known silver prospects at San Marcial are hosted along what appears to be a narrow set of northwest trending fault structures with a 60° Northeast dip, near the prospective unconformity. The San Marcial resource area hosts a low sulphidation epithermal system, rich in silver and gold.

MINERALIZATION STYLES AT SAN MARCIAL

The area displays low sulphidation epithermal systems rich in silver.

Several different styles of mineralization have been identified at the San Marcial Project including two main types of breccia hosting Ag and Au mineralization:

— Hematitic hydrothermal breccia: hematite + calcite + quartz

— Siliceous hydrothermal breccia: chlorite + quartz + pyrite

The resource area is dominated by the low sulphidation epithermal style environment described above, and the two styles of associated hydrothermal breccia. The San Marcial breccia-hosted deposit is strongly associated with a Northwest-Southeast oriented structural trend, and possibly affected by other cross cutting structural features. While San Marcial is considered a silver deposit, the multi-phase mineralization creates a multi-commodity deposit with zinc and lead closely associated with the silver.

In addition to the breccia and fault hosted mineralization at San Marcial, there are zones of vein and stockwork mineralization, generally peripheral to the breccia-hosting silver mineralization.

Recent exploration by GR Silver has identified additional occurrences of mineralization in the footwall below the San Marcial fault/breccia package. The volcanics in the footwall display flow banded features typical of a lava dome geological setting and are cut by several dykes. They also possess vein stockwork mineralization in contrast to the breccia mineralization of the main zone, with core assays as high as 1.1 g/t gold related to disseminated sulphide. Silver rich breccia style mineralization, returning grades of up to 1m at 501 g/t silver have been identified in areas outside of the current resource indicating zones for potential drill follow-up.