Silver X Mining Corp. — Audit Report / Information 2023

Apr 5, 2023

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• Silver X Mining Corp.

Nueva Recuperada Project, Huancavelica, Peru

Preliminary Economic Assessment

Effective Date: 31 October 2022 Report Date: 4 April 2023

Qualified Persons:

Paulo Laymen, Chilean Mining Commission QP Allen David Heyl, CPG (AIPG) Adam Johnston, FAusIMM, CP (Met)

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LoM Consultants Ltd

Belo Horizonte Álvares Cabral 593, Office 1303 Lourdes, 30.130-193, BELO HORIZONTE MG BRAZIL Tel: +55 (31) 3222-6286 Fax: +55 (31) 3222-6286 brazil@lomconsultants.com Website www.lomconsultants.com

IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 Technical Report, in accordance with Form 43-101F1, for SilverX Mining Corp. by LOM Consultants (LOM). This report is intended to be used SilverX Mining Corp., subject to the terms and conditions of its contract with LoM Consultants. That contract permits SilverX Mining Corp., to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to provincial securities legislation. Except for the purposes legislated under provincial securities law, any other use of this report by any third party is at that party’s sole risk.

Issued by: Office Doc Ref: 230330_P_Draft_Project Number 080_SilverX_NuevaRecuperada PEA_Report_V27.docx Last Edited: 03/04/2023 4:09:00 PM

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Date and Signature Page

LOM Consultants

Álvares Cabral 593, Office 1303 Lourdes, 30.130-193, Belo Horizonte – Minas Gerais - Brazil

Preliminary Economic Assessment, Nueva Recuperada Project, Huancavelica, Peru

Project Manager: Paulo Laymen, Principal Consultant (Mining), Mining Chilean Mining Commission

Effective Date: October 31, 2022 Date of Report: April 4, 2023

Original document signed

Paulo Laymen, Mining Commission of Chile (Mining)

Qualified Person (QP)

Original document signed

Allen David Heyl, CPG (AIPG)

Qualified Person (QP)

Original document signed

Adam Johnston, FAusIMM, CP (Met)

Qualified Person (QP)

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1	Summary ........................................................................................................................... 25	Summary ........................................................................................................................... 25
	1.1	Property description and ownership ....................................................................... 25
	1.2	Geology and mineralization .................................................................................... 27
	1.3	Exploration and drilling ........................................................................................... 27
	1.4	Mineral processing and metallurgical testing .......................................................... 28
	1.5	Mineral resource estimate ...................................................................................... 28
	1.6	Mineral reserve estimate ........................................................................................ 30
	1.7	Mining methods ...................................................................................................... 30
	1.8	Recovery methods ................................................................................................. 31
	1.9	Project infrastructure .............................................................................................. 32
	1.10	Environmental studies and permitting ..................................................................... 33
	1.11	Capital and operating costs .................................................................................... 33
	1.12	Economic analysis ................................................................................................. 34
	1.13	Recommendations ................................................................................................. 34
		1.13.1 Resource estimation ............................................................................... 34
		1.13.2 Mining .................................................................................................... 34
		1.13.3 Waste management ............................................................................... 35
		1.13.4 Metallurgy and processing ...................................................................... 35
		1.13.5 Infrastructure and logistics ...................................................................... 35
		1.13.6 Costs estimation ..................................................................................... 36
2	Introduction ........................................................................................................................ 37
	2.1	Terms of Reference and Purpose of the Report ..................................................... 37
	2.2	Non-IFRS Financial Measures ............................................................................... 37
	2.3	Cautionary Note Regarding Forward-Looking Information ...................................... 38
	2.4	Qualifications ......................................................................................................... 39
	2.5	QPs Site Visits ....................................................................................................... 39
3	Reliance on Other Experts ................................................................................................. 41
4	Property description and location ....................................................................................... 42
	4.1	Introduction ............................................................................................................ 42
	4.2	Property and Title in Peru ....................................................................................... 42
		4.2.1 Regulatory Oversight .............................................................................. 42
		4.2.2 Mineral Tenure ....................................................................................... 44
		4.2.3 Surface Rights ........................................................................................ 45
		4.2.4 Water Rights .......................................................................................... 45
		4.2.5 Environmental Considerations ................................................................ 45
		4.2.6 Permits ................................................................................................... 46
		4.2.7 Other Considerations ............................................................................. 46
		4.2.8 Taxes ..................................................................................................... 47
	4.3	Project Ownership .................................................................................................. 47
	4.4	Mineral Tenure ....................................................................................................... 47

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	4.5	Surface rights ......................................................................................................... 49
	4.6	Water rights ............................................................................................................ 49
	4.7	Royalties and Encumbrances ................................................................................. 50
	4.8	Property Agreements ............................................................................................. 52
	4.9	Permitting Considerations ...................................................................................... 52
	4.10	Environmental Considerations ................................................................................ 53
	4.11	Social License Considerations ............................................................................... 53
5	Accessibility, climate, local resources, infrastructure and physiography ............................. 55
	5.1	Accessibility ........................................................................................................... 55
	5.2	Climate ................................................................................................................... 55
	5.3	Local Resources and Infrastructure ........................................................................ 58
		5.3.1 Population .............................................................................................. 59
		5.3.2 Access ................................................................................................... 60
		5.3.3 Telecommunications .............................................................................. 63
	5.4	Electrical Power supply .......................................................................................... 64
	5.5	Physiography ......................................................................................................... 65
	5.6	Seismicity ............................................................................................................... 65
	5.7	Project Infrastructure .............................................................................................. 66
		5.7.1 Mine Facilities ........................................................................................ 66
		5.7.2 Processing Facilities ............................................................................... 67
		5.7.3 Tailings Facilities .................................................................................... 67
		5.7.4 Water ..................................................................................................... 68
		5.7.5 Electricity ................................................................................................ 68
6	History	............................................................................................................................... 69
	6.1	Past exploration and production ............................................................................. 69
	6.2	Recent production .................................................................................................. 71
7	Geological setting and mineralization ................................................................................ 72
	7.1	Regional geology ................................................................................................... 72
	7.2	Local geology ......................................................................................................... 76
	7.3	Property geology .................................................................................................... 77
		7.3.1 Sedimentary rocks .................................................................................. 77
		7.3.2 Igneous rocks ......................................................................................... 78
	7.4	Structural geology .................................................................................................. 79
		7.4.1 Main structures in Huachocolpa district .................................................. 80
	7.5	Mineralization ......................................................................................................... 82
8	Deposit types ..................................................................................................................... 87
9	Exploration ........................................................................................................................ 89
	9.1	Tangana Sector ...................................................................................................... 91
		9.1.1 Location ................................................................................................. 91

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	9.1.2	Veins ...................................................................................................... 93
	9.1.3	Expectations ........................................................................................... 98
9.2	Cauca Sector ......................................................................................................... 98
	9.2.1	Location ................................................................................................. 98
	9.2.2	Veins ...................................................................................................... 99
	9.2.3	Expectations ......................................................................................... 100
9.3	Tangana West Sector........................................................................................... 101
	9.3.1	Location ............................................................................................... 101
	9.3.1	Veins .................................................................................................... 101
9.4	San Antonio Sector .............................................................................................. 102
	9.4.1	Location ............................................................................................... 102
	9.4.2	Vein ...................................................................................................... 104
	9.4.3	Expectations ......................................................................................... 105
9.5	San Antonio Northwest Sector ............................................................................. 106
	9.5.1	Location ............................................................................................... 106
	9.5.2	Veins .................................................................................................... 106
9.6	Pucapunta – Rescatada Sector ............................................................................ 107
	9.6.1	Location ............................................................................................... 107
9.7	Positivas............................................................................................................... 109
	9.7.1	Location ............................................................................................... 109
	9.7.2	Veins .................................................................................................... 109
	9.7.3	Expectations ......................................................................................... 111
9.8	Angélica Sector .................................................................................................... 113
	9.8.1	Location ............................................................................................... 113
	9.8.2	Veins .................................................................................................... 113
9.9	Huachocolpa Sur .................................................................................................. 113
	9.9.1	Location ............................................................................................... 113
	9.9.1	Veins .................................................................................................... 113
	9.9.1	Expectations ......................................................................................... 113
9.10	Tetehorno Sector ................................................................................................. 114
	9.10.1	Location ............................................................................................... 114
	9.10.2	Veins .................................................................................................... 115
	9.10.3	Expectations ......................................................................................... 115
9.11	Blenda Rubia – Micaela Sector ............................................................................ 117
	9.11.1	Location ............................................................................................... 117
	9.11.2	Veins .................................................................................................... 118
	9.11.3	Expectations ......................................................................................... 120
9.12	María Luz Sector .................................................................................................. 120
	9.12.1	Veins .................................................................................................... 122
	9.12.2	Expectations ......................................................................................... 124
9.13	Esperanza ............................................................................................................ 124
	9.13.1	Location ............................................................................................... 124

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		9.13.1 Veins .................................................................................................... 125
		9.13.2 Expectations ......................................................................................... 129
	9.14	Sample Collection ................................................................................................ 129
10	Drilling ............................................................................................................................. 132
11	Sample preparation, analyses, and security .................................................................... 135
	11.1	Sampling methods ............................................................................................... 135
	11.2	Reception, Inspection and Verification ................................................................. 135
		11.2.1 Sample Preparation .............................................................................. 135
		11.2.2 Chemical Analyses ............................................................................... 136
		11.2.3 Chemical Analyses Reports ................................................................. 136
		11.2.4 Storage of samples, rejects, and pulps ................................................. 136
		11.2.5 Return of Sample Pulps and Rejects .................................................... 136
		11.2.6 QAQC .................................................................................................. 137
12	Data verification ............................................................................................................... 139
	12.1	Geology Data Verification ..................................................................................... 139
	12.2	Metallurgy and Mineral Processing Data Verification ............................................ 140
13	Mineral processing and metallurgical testing ................................................................... 141
	13.1	Introduction .......................................................................................................... 141
	13.2	2021 and 2022 UNI Testwork ............................................................................... 141
		13.2.1 Samples ............................................................................................... 141
		13.2.2 Flotation ............................................................................................... 142
		13.2.3 Mineralogy............................................................................................ 143
	13.3	2022 Plant Performance ....................................................................................... 143
		13.3.1 Tonnage ............................................................................................... 145
		13.3.2 Lead recovery ...................................................................................... 145
		13.3.3 Zinc recovery ........................................................................................ 146
		13.3.4 Silver recovery ..................................................................................... 147
		13.3.5 Gold recovery ....................................................................................... 148
		13.3.6 Flotation ............................................................................................... 149
		13.3.7 Comminution ........................................................................................ 150
		13.3.8 Filtration ............................................................................................... 150
		13.3.9 Reagents consumption ......................................................................... 151
	13.4	Concentrate Quality ............................................................................................. 151
	13.5	Minor elements..................................................................................................... 152
	13.6	Metallurgical Variability ......................................................................................... 153
14	Mineral Resource estimates ............................................................................................ 154
	14.1	Introduction .......................................................................................................... 154
	14.2	Disclosure ............................................................................................................ 154
	14.3	Compliant resource classifications ....................................................................... 156

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	14.4	Tangana	veins modelled resource estimation ...................................................... 158
		14.4.1	Tangana veins geological model .......................................................... 158
		14.4.2	Supplied data, data transformations and data validation....................... 159
		14.4.3	Data preparation .................................................................................. 159
		14.4.4	Data Validation ..................................................................................... 160
		14.4.5	Tangana Veins Modeled Resource Estimation Process ....................... 160
	14.5	Estimation Assumptions, Methods and Parameters ............................................. 161
		14.5.1	Compositing ......................................................................................... 162
		14.5.2	Capping ................................................................................................ 163
	14.6	Variogram analysis ............................................................................................... 164
		14.6.1	Continuity Analysis ............................................................................... 164
		14.6.2	Variogram Modeling ............................................................................. 164
		14.6.3	Variable Anisotropy .............................................................................. 165
		14.6.4	Declustering ......................................................................................... 166
	14.7	Block Model Construction ..................................................................................... 166
		14.7.1	Sample Search Parameters ................................................................. 167
		14.7.2	Grade Interpolation ............................................................................... 167
		14.7.3	Density ................................................................................................. 167
		14.7.4	Model validation ................................................................................... 168
		14.7.5	Global estimation validation .................................................................. 168
		14.7.6	Block model resource classification ...................................................... 168
		14.7.7	Modelled block vein estimation parameters .......................................... 169
		14.7.8	Nueva Recuperada Property Inverse of the Squared Distance
			Method (ID2) Modelled Mineral Resource Estimations ......................... 172
	14.8	Nueva Recuperada Property Polygonal Method Mineral Resources .................... 174
		14.8.1	Measured Polygonal Method Mineral Resources ................................. 175
		14.8.2	Indicated Polygonal Method Mineral Resources ................................... 175
		14.8.3	Inferred Polygonal Method Mineral Resources ..................................... 176
	14.9	Nueva Recuperada Property Combined Mineral Resource Estimations ............... 176
15	Mineral Reserve		estimates .............................................................................................. 179
16	Mining	Methods ............................................................................................................... 180
	16.1	Current Operation ................................................................................................ 181
	16.2	Geotechnical Considerations ................................................................................ 184
	16.3	Hydrogeological Considerations ........................................................................... 186
	16.4	Mine Planning ...................................................................................................... 187
		16.4.1	Mining Method ...................................................................................... 187
		16.4.2	Production Rate ................................................................................... 188
		16.4.3	NSR calculation .................................................................................... 189
		16.4.4	Economic Cut-off .................................................................................. 190
		16.4.5	Mining Inventories ................................................................................ 190
		16.4.6	Mine Layout .......................................................................................... 193

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		16.4.7 Mine Scheduling ................................................................................... 194
	16.5	Grade Control ...................................................................................................... 196
	16.6	Mining Equipment ................................................................................................ 196
	16.7	Ventilation ............................................................................................................ 197
	16.8	Surface Mine Infrastructure .................................................................................. 197
17	Recovery methods ........................................................................................................... 198
	17.1	Introduction .......................................................................................................... 198
	17.2	Process Flowsheet ............................................................................................... 198
	17.3	Process Design Criteria ........................................................................................ 199
	17.4	Process Description ............................................................................................. 200
		17.4.1 Process Overview ................................................................................ 201
		17.4.2 Crushing ............................................................................................... 201
		17.4.3 Coarse Stockpile and Crushed Material Handling ................................ 201
		17.4.4 Grinding, Classification, and Lead Flotation Circuit ............................... 202
		17.4.5 Gold Concentration .............................................................................. 202
		17.4.6 Flotation Process.................................................................................. 202
		17.4.7 Concentrate Dewatering ....................................................................... 203
		17.4.8 Tailings Dewatering Process and Disposal ........................................... 203
	17.5	Energy, Water, Reagents and Consumables ........................................................ 204
		17.5.1 Energy .................................................................................................. 204
		17.5.2 Water ................................................................................................... 204
		17.5.3 Reagents and Consumables ................................................................ 205
		17.5.4 Compressed Air Services ..................................................................... 206
	17.6	Comments and Recommendations ...................................................................... 206
18	Project	infrastructure ....................................................................................................... 208
	18.1	Introduction .......................................................................................................... 208
	18.2	Access ................................................................................................................. 208
	18.3	Internal Roads ...................................................................................................... 209
	18.4	General Project Facilities ..................................................................................... 209
	18.5	RoM Stockpile ...................................................................................................... 210
	18.6	Waste Dump ........................................................................................................ 210
	18.7	Tailings Storage Facility ....................................................................................... 211
	18.8	Water Management .............................................................................................. 216
	18.9	Camp and Accommodation .................................................................................. 217
	18.10	Power Facilities .................................................................................................... 217
	18.11	Fuel Facilities ....................................................................................................... 217
	18.12	Water Supply ....................................................................................................... 217
19	Market	studies and contracts ........................................................................................... 218
	19.1	Market Studies ..................................................................................................... 218
		19.1.1 Zinc Concentrate .................................................................................. 218

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		19.1.2 Lead-Silver Concentrate ....................................................................... 219
	19.2	Metal Price Projections ......................................................................................... 219
	19.3	Contracts .............................................................................................................. 219
20	Environmental studies, permitting and social or community impact ................................. 220
	20.1	Introduction .......................................................................................................... 220
	20.2	Environmental Baseline ........................................................................................ 221
		20.2.1 Water Resources and Quality ............................................................... 221
		20.2.2 Noise Levels ......................................................................................... 223
		20.2.3 Vegetation ............................................................................................ 224
		20.2.4 Fauna ................................................................................................... 226
		20.2.5 Fragile Ecosystems .............................................................................. 228
		20.2.6 Characterization of Expansion Areas.................................................... 229
	20.3	Social Baseline..................................................................................................... 230
		20.3.1 Demographic Aspects .......................................................................... 230
		20.3.2 Education ............................................................................................. 231
		20.3.3 Health ................................................................................................... 231
		20.3.4 Housing and Basic Services ................................................................. 231
		20.3.5 Communications .................................................................................. 232
		20.3.6 Economic Activities .............................................................................. 232
		20.3.7 Archaeology ......................................................................................... 233
	20.4	Environmental Monitoring and Follow-Up Programs ............................................. 233
		20.4.1 Air Quality ............................................................................................ 234
		20.4.2 Noise levels .......................................................................................... 235
		20.4.3 Water quality ........................................................................................ 235
		20.4.4 Soil Quality ........................................................................................... 237
		20.4.5 Monitoring of Flora and Fauna.............................................................. 237
	20.5	Sustainability Policies ........................................................................................... 238
	20.6	Identification of Environmental and Social Impacts ............................................... 238
	20.7	Permitting Management ....................................................................................... 240
		20.7.1 Environmental Impact Study for Capacity Expansion to 2,500 tpd ........ 241
		20.7.2 Complementary Permits (Capacity Expansion to 2,500 tpd) ................. 242
	20.8	Mine Closure Plan ................................................................................................ 243
		20.8.1 Closure Activities: High Profile Items .................................................... 243
	20.9	Social Consideration ............................................................................................ 245
21	Capital	and operating costs ............................................................................................. 246
	21.1	Introduction .......................................................................................................... 246
	21.2	Capital Cost Estimates ......................................................................................... 246
		21.2.1 Basis of Estimate.................................................................................. 246
		21.2.2 Labour Costs ........................................................................................ 246
		21.2.3 Material Costs ...................................................................................... 246
		21.2.4 Contingency ......................................................................................... 246

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		21.2.5	Mine Capital Costs ............................................................................... 246
		21.2.6	Process Capital Costs .......................................................................... 248
		21.2.7	Tailings capital costs ............................................................................ 248
		21.2.8	General infrastructure ........................................................................... 249
		21.2.9	Accommodation and general facilities CAPEX ..................................... 249
		21.2.10	Studies ................................................................................................. 249
		21.2.11	Sustaining Capital ................................................................................ 250
		21.2.12	Contingency ......................................................................................... 250
		21.2.13	Capital Cost Summary ......................................................................... 250
	21.3	Operating Cost Estimates .................................................................................... 250
		21.3.1	Basis of Estimate.................................................................................. 251
		21.3.2	Current operation costs ........................................................................ 251
		21.3.3	Mine operational costs ......................................................................... 253
		21.3.4	Processing operational costs ................................................................ 254
		Power	255
		Reagents 255
		Process Labour Cost ............................................................................................ 256
		Maintenance ........................................................................................................ 256
		21.3.5	Overheads............................................................................................ 256
		21.3.6	Mine closure cost ................................................................................. 257
		21.3.7	Community program ............................................................................. 257
		21.3.8	Concentrates Transport ........................................................................ 258
		21.3.9	Operating Cost Summary ..................................................................... 258
22	Economic analysis ........................................................................................................... 259
	22.1	Cautionary Statements ......................................................................................... 259
	22.2	Methodology Used ............................................................................................... 260
	22.3	Main Assumptions ................................................................................................ 260
		22.3.1	Mineral Resource, Mine Plan, and Mine Life ........................................ 260
		22.3.2	Metallurgical Recoveries ...................................................................... 261
		22.3.3	Metal Prices ......................................................................................... 261
		22.3.4	Smelting and Refining Terms ............................................................... 261
		22.3.5	Capital Costs ........................................................................................ 262
		22.3.6	Operating Costs ................................................................................... 262
	22.4	Financial	Model Parameters ................................................................................. 262
		22.4.1	Discount Rate ....................................................................................... 262
		22.4.2	Royalties .............................................................................................. 262
		22.4.3	Working Capital .................................................................................... 263
		22.4.4	Taxes ................................................................................................... 264
		22.4.5	Closure Costs and Salvage Value ........................................................ 264
		22.4.6	Financing ............................................................................................. 264
		22.4.7	Inflation ................................................................................................ 264

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		22.4.8 Operating and Capital Costs, Economic Analysis ................................. 264
	22.5	Economic analysis ............................................................................................... 268
	22.6	Sensitivity Analysis ............................................................................................... 270
23	Adjacent properties .......................................................................................................... 272
24	Other	relevant data and information................................................................................. 273
25	Interpretation and conclusions ......................................................................................... 274
	25.1	Geology and mineral resource estimate ............................................................... 274
	25.2	Mineral processing and metallurgical testing ........................................................ 276
	25.3	Mining .................................................................................................................. 276
	25.4	Recovery methods ............................................................................................... 277
	25.5	Project infrastructure ............................................................................................ 277
	25.6	Environmental studies and permitting ................................................................... 278
	25.7	Capital and operating costs .................................................................................. 278
	25.8	Economic analysis ............................................................................................... 278
26	Recommendations ........................................................................................................... 279
	26.1	Resource estimation ............................................................................................ 279
	26.2	Mining .................................................................................................................. 280
	26.3	Waste management ............................................................................................. 281
	26.4	Metallurgy and processing ................................................................................... 281
	26.5	Infrastructure and logistics ................................................................................... 282
	26.6	Costs estimation ................................................................................................... 282
27	References ...................................................................................................................... 284
28	Certificates ...................................................................................................................... 285

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Tables

s
Table	1.1	Nueva Recuperada Mineral Resources as at October 31, 2022 ............. 30
Table	4.1	Surface and number of concessions under the Silver X control .............. 47
Table	4.2	Concessions assigned to the Tangana Mining Unit ................................ 48
Table	5.1	Annual rainfall ........................................................................................ 57
Table	5.2	Hourly maximum rainfall ......................................................................... 57
Table	6.1.	Nueva Recuperada Annual Production ................................................... 71
Table	7.1	Sequence of formations which are the most important local hosts for
		mineralization ......................................................................................... 76
Table	9.1	Vein Sectors and Number of Veins and Splits per System ..................... 91
Table	9.2	Cumulative Exploration Expenditures of Silver X (US$) .......................... 91
Table	10.1	Silver X Drilling ..................................................................................... 134
Table	12.1	Site Visit Sample Assay Validation – Huachocolpa (Dec 2021) ............ 139
Table	13.1	Head Grade of the samples tested ....................................................... 141
Table	13.2	Sample 2021 batch flotation test results ............................................... 142
Table	13.3	Sample 2022 batch flotation test results ............................................... 142
Table	13.4	Average use of consumables at the Nueva Recuperada plant ............. 151
Table	13.5	Typical concentrate quality at the Nueva Recuperada plant, 2022 ....... 152
Table	14.1	Vein thickness statistics........................................................................ 160
Table	14.2	Metal summary statistics all samples .................................................... 162
Table	14.3	Vein composite leng/ths ....................................................................... 162
Table	14.4	Vein grade estimations ......................................................................... 163
Table	14.5	Top cut capping .................................................................................... 164
Table	14.6	Variography summary parameters ....................................................... 166
Table	14.7	Vein density calculations ...................................................................... 167
Table	14.8	Global estimation validation .................................................................. 168
Table	14.9	Vein estimation parameters .................................................................. 169
Table	14.10	Nueva Recuperada ID2 Mineral Resources reported as of October 31,
		2022 for the Tangana 1 Vein ................................................................ 173
Table	14.11	Nueva Recuperada ID2 Method Mineral Resources reported as of
		October 31, 2022 for the Tangana 2 Vein ............................................. 173
Table	14.12	Nueva Recuperada ID2 Method Mineral Resources reported as of
		October 31, 2022 for the Cauca Vein ................................................... 173
Table	14.13	Nueva Recuperada ID2 Method Mineral Resources reported as of
		October 31, 2022 for the Morlupo Vein ................................................. 173
Table	14.14	Nueva Recuperada ID2 Method Mineral Resources reported as of
		October 31, 2022 for the four modelled veins of Tangana .................... 174
Table	14.15	Nueva Recuperada Property ID2 Measured and Indicated Mineral
		Resources ............................................................................................ 176
Table	14.16	Nueva Recuperada Property Polygonal Method Measured and
		Indicated Mineral Resources ................................................................ 176
Table	14.17	Nueva Recuperada Property Combined Measured and Indicated
		Mineral Resources ............................................................................... 177
Table	14.18	Nueva Recuperada Property Combined Inferred Mineral Resources.... 177

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Table	14.19	Nueva Recuperada Mineral Resources as at October 31, 2022 ........... 177
Table	16.1	UCS by rock type at San Antonio ......................................................... 185
Table	16.2	Geotechnical parameters for Tangana samples ................................... 186
Table	16.3	Rock mass quality by rock type ............................................................ 186
Table	16.4	Recharge rate in the project area ......................................................... 187
Table	16.5	Production rate definition by several empirical methods ....................... 188
Table	16.6	Metal prices .......................................................................................... 189
Table	16.7	Commercial costs ................................................................................. 189
Table	16.8	Metallurgical recoveries and payables .................................................. 189
Table	16.9	NSR cut-off break-down ....................................................................... 190
Table	16.10	Mining inventories by mine ................................................................... 193
Table	16.11	Development rates ............................................................................... 194
Table	17.1	Process design criteria ......................................................................... 200
Table	17.2	Installed power for the Tangana process plant ..................................... 204
Table	18.1	Tangana TSF design parameters ......................................................... 212
Table	20.1	Geomorphological parameters of hydrographic units ............................ 222
Table	20.2	Estimated flows .................................................................................... 223
Table	20.3	Noise levels results (Source: Recovered Noise Monitoring, 2020) ........ 223
Table	20.4	Vegetation Species .............................................................................. 224
Table	20.5	Conservation category of vegentation .................................................. 225
Table	20.6	Endemic vegetation .............................................................................. 226
Table	20.7	Fauna ................................................................................................... 226
Table	20.8	Domestic fauna .................................................................................... 227
Table	20.9	Conservation category and endemic fauna .......................................... 227
Table	20.10	Location of air quality stations (2022) ................................................... 234
Table	20.11	Location of environmental noise monitoring stations (2022) ................. 235
Table	20.12	Surface Water Quality Monitoring Stations (2022) ................................ 236
Table	20.13	Groundwater Quality Monitoring Stations (2022) .................................. 236
Table	20.14	Effluent Monitoring Station ................................................................... 237
Table	20.15	Location of soil quality monitoring stations ........................................... 237
Table	20.16	Location of biological monitoring stations (flora and fauna) .................. 237
Table	20.17.	Environmental Management Instruments and Approved Closure
		Plans .................................................................................................... 240
Table	20.18	Current permits .................................................................................... 240
Table	20.19	Mine closure plan ................................................................................. 241
Table	21.1	Infill drilling Capex ................................................................................ 247
Table	21.2	Development CAPEX ........................................................................... 247
Table	21.3	Mine infrastructure and facilities CAPEX .............................................. 247
Table	21.4	Summary of the total mine CAPEX (with contingency) ......................... 247
Table	21.5	Process plant capex ............................................................................. 248
Table	21.6	Tailings storage facility associated cost ................................................ 248
Table	21.7	General infrastructure Capex ............................................................... 249

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Table	21.8	Accommodation and general facilities Capex ....................................... 249
Table	21.9	Studies Capex ...................................................................................... 249
Table	21.10	Capex contingency ............................................................................... 250
Table	21.11	Capex summary ................................................................................... 250
Table	21.12.	Operating cost for Nueva Recuperada operation in 2022 ..................... 253
Table	21.13.	Mining unit cost .................................................................................... 253
Table	21.14.	Mining OPEX ........................................................................................ 254
Table	21.15.	Processing OPEX................................................................................. 254
Table	21.16.	Reagents .............................................................................................. 255
Table	21.17.	Process workforce ................................................................................ 256
Table	21.18.	Reagents consumption and cost .......................................................... 256
Table	21.19.	Overheads............................................................................................ 257
Table	21.20.	Community programs (part of the ESG) OPEX ..................................... 257
Table	21.21.	Tangana OPEX .................................................................................... 258
Table	22.1	Metallurgical recoveries ........................................................................ 261
Table	22.2	Long term metal prices ......................................................................... 261
Table	22.3	Key economic parameters .................................................................... 265
Table	22.4	Summary Production. Years 2025, 2026, 2030, 2035, LOM total ......... 265
Table	22.5	Mine Opex. Years 2024, 2025, 2030, 2035, LOM total ......................... 266
Table	22.6	Processing Opex. Years 2025, 2026, 2030, 2035, LOM total ............... 266
Table	22.7	Overheads and others. Years 2025, 2026, 2030, 2035, LOM total) ...... 267
Table	22.8	Drilling and Studies Capex. Years 2025, 2026, 2030, 2033, LOM total
		............................................................................................................. 267
Table	22.9	Financial summary of the PEA ............................................................. 268
Table	22.10	Initial Capital Expenditure ..................................................................... 269
Table	22.11	Summary Opex and Capex. Years 2025, 2026, 2030, 2035, LOM total
		............................................................................................................. 269
Table	22.12	Cash cost per ounce and AISC ............................................................ 270
Table	22.13	Sensitivity analysis: metal prices and capital costs ............................... 270
Table	22.14	Sensitivity analysis: throughput and operating Costs ............................ 271
Table	27.1	References ........................................................................................... 284

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Figures

es
Figure	1.1 Project location. ................................................................................................ 26
Figure	1.2	Tangana material included in the mine plan scheduling ......................... 31
Figure	1.3	Simplified process flowsheet .................................................................. 32
Figure	4.1	Location of the Project in the Huancavelica Department......................... 43
Figure	4.2	Mining rights ........................................................................................... 48
Figure	4.3.	Mining concessions and royalty agreeements ........................................ 51
Figure	5.1	Routes from Callao port to Huachocolpa town. Source: Google Maps,
		2022 ....................................................................................................... 55
Figure	5.2	Weather stations in the area. Source: Servicio Nacional de
		Meteorología e Hidrología del Perú, 2023 .............................................. 56
Figure	5.3	Monthly rainfall. Source: Buenaventura from the Acobamba weather
		station .................................................................................................... 57
Figure	5.4	Maximum and minimum temperatures per month ................................... 58
Figure	5.5	Settlements in the project area. Source: IGN Perú, 2023 ....................... 60
Figure	5.6	Logistical corridors. IGN Perú, 2022 ....................................................... 60
Figure	5.7	National and Departmental road network. Source: IGN Perú, 2022 ........ 61
Figure	5.8	Local roads connecting to National Road PE-28D. ................................. 61
Figure	5.9	Distance from connection with PE-28D to El Callao. Source: Google
		Maps, 2022 ............................................................................................ 62
Figure	5.10	Route from the Project to PE-28A through Nueva Recuperada Plant. .... 63
Figure	5.11	Mobile signal in Huachocolpa district. Not Scaled. Source: IGN Perú,
		2022 ....................................................................................................... 64
Figure	5.12	Power lines in the area. Source IGN Perú, 2022 completed with field
		site visit .................................................................................................. 65
Figure	5.13	Seismic zones in Perú. Source: Ministerio de Vivienda, Sanidad y
		Planeamiento ......................................................................................... 66
Figure	5.14	Tailings deposits Nos. 3 & 4. Source: Silver X, 2022 .............................. 67
Figure	6.1	Historic BVN workings on the Tangana 1 Vein, Level 4680 .................... 70
Figure	6.2.	Monthly production per month at Nueva Recuperada mines in 2022. ..... 71
Figure	7.1	Regional geological map Nueva Recuperada property (Silver
		X/INGEMMET) ....................................................................................... 73
Figure	7.2	Regional geological map legend ............................................................. 74
Figure	7.3	Regional Stratigraphic Column (INGEMMET) ......................................... 75
Figure	7.4	Chunumayo Formation and Pucara Group Limestones in the Positivas
		Sector ..................................................................................................... 78
Figure	7.5	Huachocolpa Group Andesitic Breccia from near the Cauca Vein .......... 79
Figure	7.6	Schematic of the Chonta fault as structural control of the polymetallic
		tensional veins (BVN/MMTP) ................................................................. 81
Figure	7.7	View of Chonta fault looking to the East ................................................. 81
Figure	7.8	Mesothermal vein breccia specimen from Blenda Rubia Vein showing
		galena, sphalerite, pyrite, chalcopyrite and euhedral quartz forming a
		crustiform infill around lithic clasts .......................................................... 82

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Figure	7.9	Massive Galena and Sphalerite with minor Pyrite from the Blenda
		Rubia Vein.............................................................................................. 83
Figure	7.10	Mixed Epithermal Colloform and Mesothermal subhedral and
		euhedral Quartz, Rhodocrosite and Pyrite from Tangana 1 Vein, Level
		4680 ....................................................................................................... 83
Figure	7.11	Epithermal Colloform Quartz and Ginguro Banding from the Maria Luz
		Sector ..................................................................................................... 84
Figure	7.12	Mixed Epithermal Colloform and Crustiform Banding with
		Mesothermal sub- and euhedral Quartz, Galena, Sphalerite and Pyrite
		from Tangana No.1 Vein, Level 4680 ..................................................... 84
Figure	7.13	Stibnite and Pyrite in euhedral Quartz vein from Ticquillo Subsector,
		Esperanza .............................................................................................. 85
Figure	7.14	Barite in euhedral Quartz vein, Ticquillo sub-sector, Esperanza ............. 85
Figure	7.15	San Antonio Breccia Vein, Galena, Sphalerite, Pyrite, subhedral
		Quartz and Calcite .................................................................................. 86
Figure	7.16	Native Gold with Pyrite and subhedral Quartz from Tangana 1 vein,
		level 4680 ............................................................................................... 86
Figure	8.1	Model of Low/Medium/High Sulphide Epithermal Systems with
		Polymetallic Mineralized veins (After Hedenquist, 1996) ........................ 87
Figure	9.1	Nueva Recuperada Project Concessions and known Veins (Silver
		X/Ingemmet 3/25/22) .............................................................................. 90
Figure	9.2	The Tangana Sector (Source Silver X/INGEMMET 3/25/22) .................. 92
Figure	9.3	Tangana 1 vein, Level 4620 ................................................................... 94
Figure	9.4	Tangana 1 vein, channel sample, Level 4620 ......................................... 94
Figure	9.5	Tangana 1 Vein, Level 4680, 2.0+ m wide .............................................. 95
Figure	9.6	Tangana 1 Vein, Level 4680, galena, sphalerite and pyrite .................... 95
Figure	9.7	Tangana 1 Vein Long Section showing 2021-22 exploration drill
		campaigns and BVN and Silver X workings ............................................ 96
Figure	9.8	Tangana 1 vein, Level 4680, a portion of the veining representing 80
		cm width of a 2 m wide vein. Colloform banded subhedral quartz,
		euhedral quartz, rhodocrosite, galena, sphalerite, and pyrite .................. 96
Figure	9.9	Tangana vein system looking to the north, showing from left to right
		Tangana 4, 3, Estrella, and 1 - 2 (2019) ................................................. 97
Figure	9.10	Looking to the WNW, Tangana 2 vein (approx. 1.6 km long), Estrella
		Vein ........................................................................................................ 98
Figure	9.11	Cauca Vein Long Section looking northeast ........................................... 99
Figure	9.12	CAU-002: 157.35 – 159.15 m : 1.1 m @ 1.46 g/t Au, 71.22 g/t Ag, 0.86
		% Pb and 0.81 % Zn including 0.4 m @ 5.5 g/t Au, 261.24 g/t Ag, 2.9
		% Pb, 2.1 % Zn and 0.3 % Cu .............................................................. 100
Figure	9.13	Cauca Vein float, epithermal ginguro sulfide banding ........................... 101
Figure	9.14	Tangana West – Pucapunta Sectors .................................................... 102
Figure	9.15	Figure 9.10 The San Antonio Sector (Source Silver X/INGEMMET
		3/25/22) ................................................................................................ 103
Figure	9.16	San Antonio mine looking from the east-northeast: the San Antonio
		Vein strikes from the portals to the ridge saddle at the upper right
		where it becomes the San Antonio Northwest Vein. The Positivas 1

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		Vein cuts through the small gap on the ridge line above the mine
		portals striking towards the San Antonio Vein to the right of the portals.
		(Photo taken in 2019) ........................................................................... 104
Figure	9.17	San Antonio plan view Level 4400 (MMTP, 4/30/19) ............................ 105
Figure	9.18	DDH U-REC-19-002 intercept cutting San Antonio vein at 36 m ........... 105
Figure	9.19	San Antonio Long Section (Silver X Jan 2022) showing workings,
		drilling and resource blocks .................................................................. 106
Figure	9.20	Native Gold with pyrites in partially silicified limestones, San Antonio
		NW Vein ............................................................................................... 107
Figure	9.21	Pucapunta Sector Veins ....................................................................... 108
Figure	9.22	Pucapunta mines in Long Section ........................................................ 109
Figure	9.23	The Positivas Sector (Source Silver X/INGEMMET 3/25/22) ................ 110
Figure	9.24	The Positivas veins looking to the NW: a system of sub-parallel veins
		with a NW-SE strike in strongly argillaceously altered host ................... 111
Figure	9.25	The Positivas No.2 Vein ....................................................................... 112
Figure	9.26	Face View of Gaby Vein (1m wide) in the Lowest Level, Positivas
		Sector ................................................................................................... 112
Figure	9.27	The Huachocolpa Sur Sector (Source MMTP/INGEMMET 7/31/19) ..... 114
Figure	9.28	The Tetehorno Sector (Source MMTP/INGEMMET 7/31/19) ................ 116
Figure	9.29	Tetehorno looking northeast, Kolpa mines access road visible ............. 117
Figure	9.30	The Blenda Rubia Sector (Source MMTP/INGEMMET 7/31/19) ........... 118
Figure	9.31	Vein from the Micaela sub-Sector ......................................................... 119
Figure	9.32	Blenda Rubia Portal ............................................................................. 120
Figure	9.33	The Maria Luz Sector (Source Silver X/INGEMMET 3/25/22) ............... 121
Figure	9.34	Kasandra portal at Maria Luz, the vein visible behind the blue pressure
		tank ...................................................................................................... 122
Figure	9.35	Epithermal Ag-bearing veins with colloform subhedral and euhedral
		quartz and ginguro sulfide textures ....................................................... 123
Figure	9.36	Upper portion of the Maria Luz Sector .................................................. 123
Figure	9.37	The Esperanza Sector (Source Silver X/INGEMMET 3/25/22) ............. 124
Figure	9.38	View of the Esperanza 2001 West vein system looking north with Rico
		Antimonio sub-sector on right side of photo .......................................... 125
Figure	9.39	Long section of mineralized shoots in the Esperanza 2001 W vein ...... 126
Figure	9.40	Long section of mineralized shoots in the Esperanza 2001 E vein.
		Note the mineralized sectors without mine extraction ........................... 126
Figure	9.41	Esperanza East sub-sector looking towards southeast ......................... 127
Figure	9.42	Rico Antimonio sub-sector looking towards west .................................. 127
Figure	9.43	View of the Germana Sub-Sector looking towards southwest ............... 128
Figure	9.44	Ticquillo sub-sector looking towards west ............................................. 128
Figure	9.45	Acchisayhua sub-sector looking towards southwest ............................. 129
Figure	9.46	Surface outcrop channel sample .......................................................... 131
Figure	9.47	Recuperada Core Storage facility ......................................................... 131
Figure	10.1	Underground diamond drilling at San Antonio ...................................... 133
Figure	10.2	Mineralized core intercepts of the San Antonio vein ............................. 133

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Figure	11.1	An Example of historic BVN QAQC, tracking of inserted Ag standards
		assays .................................................................................................. 137
Figure	11.2	An Example of Silver X QAQC, tracking of inserted Pb standards
		assays .................................................................................................. 138
Figure	11.3	An Example of Silver X QAQC, comparison of duplicates Pb analysis . 138
Figure	13.1	Tangana 1 stopes and 2022 production workings ................................ 143
Figure	13.2	Tangana 1 and Tangana 2 production workings in 2022 ...................... 144
Figure	13.3	Cauca stopes with respect to Tangana 1 and Tangana 2 ..................... 144
Figure	13.4	Plant throughput performance in 2022 .................................................. 145
Figure	13.5	Plant lead recovery ............................................................................... 145
Figure	13.6	2022 plant lead recovery vs feed grade ................................................ 146
Figure	13.7	2022 plant zinc recovery....................................................................... 146
Figure	13.8	2022 plant zinc recovery vs feed grade ................................................ 147
Figure	13.9	2022 plant silver recovery ..................................................................... 147
Figure	13.10	2022 plant silver recovery vs feed grade .............................................. 148
Figure	13.11	2022 plant gold recovery ...................................................................... 148
Figure	13.12	Plant performance vs laboratory batch testwork – lead ........................ 149
Figure	13.13	Plant performance vs laboratory batch testwork – zinc ......................... 150
Figure	13.14	2022 plant lead concentrate quality ...................................................... 151
Figure	13.15	2022 plant zinc concentrate quality ...................................................... 152
Figure	14.1	General relationship between Exploration Results, Mineral Resources
		and Mineral Reserves (CRIRSCO, 2013) ............................................. 157
Figure	14.2	Tangana Geological Veins Model – Left to right: Tangana 1, Tangana
		2, Morlupo and Cauca Vein .................................................................. 159
Figure	14.3	Tangana 1 vein histograms .................................................................. 164
Figure	14.4	Tangana 1 example of vein log probability plots ................................... 165
Figure	14.5	Tangana 1 vein example of semi-variograms and cross validation ....... 165
Figure	14.6	Longitudinal section showing Mineral Resource classifications for the
		Tangana 1 vein .................................................................................... 170
Figure	14.7	Longitudinal section showing Mineral Resource classifications for the
		Cauca vein ........................................................................................... 171
Figure	14.8	Longitudinal section showing Mineral Resource classifications for the
		Tangana 2 vein .................................................................................... 171
Figure	14.9	Longitudinal section showing Mineral Resource classifications for the
		Morlupo vein ......................................................................................... 172
Figure	16.1	Tangana 1, Tangana 2, Morlupo and Cauca veins ............................... 181
Figure	16.2	Existing mining excavations at Tangana ............................................... 182
Figure	16.3	Monthly mining records ........................................................................ 183
Figure	16.4	RoM and material processed records ................................................... 183
Figure	16.5	GSI template for geotechnical mapping ................................................ 184
Figure	16.6	Example of geotechnical mapping at Tangana ..................................... 185
Figure	16.7	Typical overhand cut-and-fill mining method. Source: H. Hamrin, 1997
		............................................................................................................. 188
Figure	16.8	Mining inventory of Tangana 1 ............................................................. 191

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Figure	16.9	Mining inventory of Tangana 2 ............................................................. 191
Figure	16.10	Mining inventory of Cauca .................................................................... 192
Figure	16.11	Mining inventory of Morlupo ................................................................. 192
Figure	16.12	Typical panel layout .............................................................................. 194
Figure	16.13	Tangana material selected for processing scheduling .......................... 195
Figure	16.14	Development scheduling ...................................................................... 195
Figure	16.15	Mined grades ....................................................................................... 196
Figure	17.1	Process flowsheet ................................................................................ 199
Figure	17.2	Water balance for the Tangana plant.................................................... 205
Figure	18.1	Location of the Nueva Recuperada process plant and Tangana
		project. Not Scaled. Source: Google Earth, 2020 ................................. 208
Figure	18.2	Tangana main access. Source: IGN Perú, 2022 ................................... 209
Figure	18.3	Tangana waste dump. Coordinate System: WGS84 – UTM18S. Aerial
		picture source: Microsoft Corporation, 2023 Drawing source:
		MiningSense, 2023 ............................................................................... 210
Figure	18.4	Construction stages for the external wall of the TSF. Source:
		MiningSense, 2023 ............................................................................... 211
Figure	18.5	TSF options. Coordinate System: WGS84 – UTM18S. Source:
		MiningSense, 2023 ............................................................................... 212
Figure	18.6	TSF main components in plan view. Coordinate System ...................... 213
Figure	18.7	TSF drainage system in plan view. Coordinate System: WGS84 –
		UTM18S. Source: MiningSense, 2023 .................................................. 215
Figure	18.8	Typical TSF section scheme. Source: MiningSense, 2023 ................... 215
Figure	20.1	SiverX operations at Huachocolpa (Source: SilverX, 2022) .................. 220
Figure	20.2.	Hydrographic location of project ........................................................... 221
Figure	20.3.	Bofedales areas in the region ............................................................... 229
Figure	20.4	Expansion areas considered in the EIA (Source: SilverX, 2022) ........... 230
Figure	20.5	Monitoring points for current activities .................................................. 234
Figure	20.6	Complementary Permits ....................................................................... 243
Figure	21.1	Monthly OPEX evolution in 2022 .......................................................... 252
Figure	21.2	Monthly OPEX evolution in 2022 – all in cost for mine .......................... 252
Figure	22.1	NSR map (source: Silver X, 2022) ........................................................ 263

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Useful Definitions

This list contains definitions of symbols, units, abbreviations, and terminologies that may be unfamiliar to the reader.

Abbreviation	Meaning
$	dollar sign
%	percentage sign
°C	Celsius sign
µm	micrometre
3D	three dimensional
AAS	atomic absorption spectroscopy
Ag	silver symbol
ASL	above sea level
ATV	acoustic televiewer
Au	gold symbol
B/H	bench height
bcm	bank cubic metre
BD	bulk density
C	cohesion
CAPEX	capital expenditure
CC	correlation coefficient
CIM	Canadian Institute of Mining
Cu	copper symbol
dmt	dry metric tonne
DTM	digital terrain model
DXF	drawing exchange format
DYKE	A sub-vertical intrusion of volcanic rock
E	east
E–W	east-west
FEL	front end loader
FoS	factor of safety
FS	feasibility study
FSL	full supply level
FW	footwall
g	gram
g/cc	gram per cubic centimetre, a density measure, see Kg/m3
g/t	gram per tonne
GB	geotechnical berm

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Abbreviation	Meaning
GBI	geotechnical blockiness index
GDM	geotechnical domain model
GIS	geographic information system
GPS	global positioning system
GSBW	geotechnical safety berm width
GTR	grind –throughput recovery
ha	hectares
HARD	half absolute relative difference, used in conjunction with the statistical analysis of duplicate sampling. HARD plots measure precision of duplicate sample pairs using the absolute difference between pairs divided by the mean of the pair.
HME	heavy mining equipment
Hr	hydraulic radius
HW	hanging wall
ICP	inductively coupled plasma
IDS	a modelling algorithm where points are weighted by the square of the distance
IOSA	indicative overall slope angles
IRA	inter ramp angle
JORC Code	Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), 2012.
k	thousand
kg	kilogram
kg/m3	kilograms per cubic metre, the SI unit for measuring density, a density of 1000 kg/m3 is equivalent to 1 g/cc or 1 t/m3or 1t/bcm
kj	kilojoule
kL	kilolitre
KNA	Kriging neighbourhood analysis
kt	kilotonne
kV	kilovolt
kW	kilowatt
L	litre
L/s	litres per second
lcm	loose cubic metre
LOM	LOM Consultants Ltd.
LoM	life of mine
m	metre
M	million
Ma	Million years ago
m RL	metres reduced level

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Abbreviation	Meaning
m3	cubic metre
mE	metres east
MIK	multiple indicator kriging
mL	millilitre
ML	megalitre
mN	metres north
MRMR	mining rock mass rating
mS	metres south
Mt	million tonnes
Mtpa	million tonnes per annum
MVA	mega volt amperes
MW	megawatt
N	north
NE	northeast
NPV	net present value
NSR	net smelter return
NW	northwest
OB	overburden
OPEX	operating expenditure
OS	oversize
oz	troy ounces
Pb	lead symbol
Pnn	percentage of material passing a size measure. For example, P80 indicates that 80% of the material is smaller than a specified size.
PCAF	processing cost adjustment factor
PFS	pre-feasibility study
PMF	probable maximum flood
Q	Barton Q value
Q’	modified Q value
QA/QC	Quality assurance / quality control
QP	Qualified Person
QQ	quantile / quantile plot
RC	reverse circulation
RF	revenue factor
RL	reduced level
RMR	rock mass rating
ROM	run of mine
RQD	rock quality designation

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Abbreviation	Meaning
S	south
SE	southeast
SG	specific gravity also known as density
SW	southwest
t	tonne
t/m3	tonnes per cubic metre, a density measure, see Kg/m3
t/bcm	tonnes per bcm, a density measure, see Kg/m3
tpa	tonnes per annum
TSF	tailings storage facility
TTD	thickened tailings disposal
UTM	Universal Transverse Mercator projection, all data in this report has been referenced the WGS 84 datum projected to UTM Zone 22 South
W	west
WFS	waste storage facility
wmt	wet metric tonne
WSF	water storage facility
Zn	zinc symbol

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1 Summary

LOM Consultants (LOM) was retained by SilverX Mining Corp. (Silver X or the Company) to compile a Preliminary Economic Assessment (PEA) for the Nueva Recuperada property (the Property) which is comprised of the Tangana Polymetallic Project (Tangana Project), located in the municipality of Huancavelica, Peru.

The study consisted mainly of the update of the Mineral Resource estimates, as a result of additional drilling and metallurgical test work, underground mine design, mine schedule, mine infrastructure definition and costs estimates, providing an order of magnitude technical and economic evaluation of the potential viability of Mineral Resources.

Once constructed, the Tangana Project will consist of a set of underground mines that will supply RoM to a processing plant located near the mine portal, 25 km from the existing Recuperada processing facility. The Tangana Project aims to increase the total production from 700 tpd to 1,500 tpd.

SilverX has previously filed NI 43-101 technical reports which include Mineral Resource Estimates including the most recent report as referred to in Section 14. The Mineral Resource disclosed in this report supersedes all previous estimates for the Project.

1.1 Property description and ownership

The .Property is included in the Huachocolpa mining district where SilverX has several different mining assets. The approximate center of the global asset is located at coordinates N- 8,552,580 and E-505,560 (Datum: WGS 84, Zone 18S) as shown in Figure 1.1 at an average altitude of 4200 – 5100 masl.

From administrative point of view, the Project is subject to the jurisdiction of the Huachocolpa district, Huancavelica Province, and the Carhuapata district, Angaraes Province; both within the Huancavelica Department, at some 479 km to the SE of Lima (Perú). The lands in which the Project is located belong to the Comunidad Campesina de Huachocolpa and to its appendices Corralpampa y Cercado Huachocolpa.

Hydrographically, the Property is located in the Huachocolpa river basin, which is a sub-basin of the Lircay river, a tributary of the Mantaro river.

The Company’s assets include 230 mining concessions covering approximately 20,472 Ha.

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Figure 1.1 Project location.

(Source: Roger Cavos, 2005. Mining Potential in the Huancavelica Region)

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1.2 Geology and mineralization

The Nueva Recuperada property is situated in the Huachocolpa quadrangle (27-N) which covers a portion of the Huancavelica and Ayacucho departments totalling 3,348 km[2] in the central portion of the Western Cordillera of the Peruvian Andes. The oldest rocks in Peru are Proterozoic, but the Peruvian Andes have undergone multiple orogenies and rock depositional events since at least the Devonian Period (419 ma) up to the present day. The most important epoch for the Nueva Recuperada Property and the surrounding region was the Miocene (23 – 5.3 ma), when the Quechua I-III orogenies occurred.

The Nueva Recuperada property covers a large area within the Huachocolpa mining district containing Ag/Au/Pb/Zn/Cu epithermal/mesothermal metallogenetic veins and other deposit types mainly hosted in Cenozoic volcanic rocks. Silver-gold along with lead-zinc-copper mineralization isfound in high, intermediate and low sulphidation veins, mantos, disseminations, porphyries and skarns.

The basement at the Nueva Recuperada property is a thick sequence of Paleozoic-Mesozoic sedimentary rocks including the well-endowed Pucara limestone sequence. Located above these units is a massive Cenozoic volcanic sequence which includes rhyolitic tuffs, andesitic to rhyodacite lavas, breccias and pyroclastic rocks of the Huachocolpa Group. Hydrothermal alteration associated with doming has caused intense argillic alteration in contact with volcanic and sedimentary rocks.

Mineralized structures are prevalent in the Miocene volcano-sedimentary rocks such as the Apacheta unit and Caudalosa formation of the Huachocolpa group which host the Tangana, Positivas, Blenda Rubia, Maria Luz, Huachocolpa Sur, Rico Antimonio, Esperanza veins and others, and in the carbonate-sedimentary rocks of the Jurassic such as the Pucara group which is the principal Peruvian metallotect for Ag-Pb-Zn deposits.

1.3 Exploration and drilling

Silver X’s exploration efforts on veins with the highest potential for economic production at the same time as conducting a comprehensive program across the entire Nueva Recuperada property. Silver X has separated the portfolio of vein systems on the Nueva Recuperada property into two main units for logistical and operational reasons: the Tangana Mining Unit in the north and the Esperanza Mining Unit in the south. Within these two units there are eleven main mineralized sectors (Table 9.1). To date, a total of 541 veins and splits have been identified on the property (Table 9.1).

Exploration expenditure by Silver X from 2017 through 2022 was US$13.56 M including geology, sampling, social, environmental, administrative, mine preparation and drifting and legal costs as detailed in Table 9.2. The Company’s focus has been on assimilating historic data and field checking the various vein sectors and neighboring properties. In their generative field work important discoveries have been made, including the economic potential of the veins in the San Antonio, Tangana, Cauca, Pucapunta, Maria Luz and Positivas sectors, along with the identification of disseminated, volcanic-hosted, epithermal and porphyry systems and other positive exploration results mentioned below.

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The style of mineralization is typically intermediate sulfidation, lower epithermal to upper mesothermal veins hosted in andesitic pyroclastic breccia flows. At lower levels, they are hosted in andesitic lavas and mineralized with galena, sphalerite, pyrite, chalcopyrite and native gold in a gangue of subhedral to euhedral quartz, calcite and rhodochrosite. Mineralization at Tangana is mostly hosted in normal fault structures in epithermal, colloform, subhedral quartz banding and crustiform euhedral quartz, occasionally cut by post-mineral, andesite dikes. Historic BVN production occurred from 1960 to 1975 with 234,098 t of ore extracted.

1.4 Mineral processing and metallurgical testing

The metallurgical investigation for this PEA is based on:

• 2021 and 2022 flotation tests performed by the National University of Engineering (UNI) in Lima, Peru.

• 2022 data from a campaign where an existing concentrator operating on site at Nueva Recuperada treated Tangana material.

The Tangana mining unit is composed of several, kilometric length veins of 2 to 3 m in width. These veins are described as the product of a single katathermal genetic process, at several kilometres depth with concurrent intense alteration of the host rocks. Visual geological logging indicates that the mineral assemblages and textures are similar in these veins.

It has been assumed that the metallurgical response will be similar for each of these veins. Further sampling and metallurgical testing would be required to confirm this at the next stage of study.

The metallurgical studies show that the production of two type of concentrates is achievable i.e. a Pb/Au/Ag concentrate including Ag and Au and a Zn concentrate.

Variability testwork is planned for the next stage of the project.

1.5 Mineral resource estimate

Mineral resources that are not mineral reserves do not have demonstrated economic viability. The preliminary economic assessment is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

The author has reviewed the data used in the modeled resource estimation generated by the current activities carried out by Silver X including surveys, mapping, sampling, production as well as drilling by Silver X. The author has also previously reviewed the data and generated polygonal method resource estimates for the other vein sectors of the Nueva Recuperada Property for the prior NI 43-101 Technical Report of early 2022 that are also included in this report. In the author’s opinion, the Nueva Recuperada Property contains compliant, Current Inverse Squared Distance Method (ID2) and Polygonal Method Mineral Resources based on several factors outlines on Section 14, including:

• The author’s review of historic technical reports and current Silver X technical reports

• The surface and subsurface expression of mineralized veins throughout the project; mineral grade and width continuity demonstrated over considerable vein strike and dip;

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• The abundance of formerly and now reopened operating mines on the property with strong correlations of grades and widths with the Historic data

• Currently operating mines on adjoining properties containing similar mineralization to that on the Nueva Recuperada Property;

• Verification by Silver X drilling and drifting to prove new resources that were inferred by previous surface sampling surveys. Current results of exploration and development work and processing carried out by Silver X during 2018-2022 (i.e. San Antonio, Tangana, Cauca, Blenda Rubia and others);

• Four years of demonstrated sales of concentrates processed from the mineral extracted from the veins;

A sub-blocked model was built using the parameters specified in Section 14 report. Quantitative kriging neighborhood analysis (QKNA) was undertaken on the Tangana veins to determine the optimal search parameters for the mineral resource estimates.

Estimation of grades into blocks was performed using multiple kriging methods for grade interpolation including ordinary kriging (OK), nearest neighbor (NN), and inverse distance squared (ID2) or inverse distance weighting and the results compared. Parameters were derived from block size selection, search neighborhood optimization, and variogram modeling. The sample data were composited and, where necessary, top cut prior to estimation.

There has been a total of eight density measurements taken at Tangana as of October 31, 2022. These were all taken underground. While this is sparse in data and spatial coverage of density measurements, the estimated density average of 2.88 is considered to be adequate as the constant value of the average density for to estimation of the four veins.

The techniques for validation of the estimated tonnes and grades included visual inspection of the model and samples in plan, section, and in three-dimensions; cross-validation; global estimate validation through the comparison of declustered sample statistics with the average estimated grade per domain; and local estimate validation through the generation of slice validation plots.

Silver X used estimation quality measures to aid in assignment of resource confidence classifications for the veins block models. The Mineral Resource confidence classification of the Tangana resource block models incorporated the confidence in the drill hole and channel data, the geological interpretation, geological continuity, data density and orientation, spatial grade continuity exploitation and estimation quality. The resource models were coded as Inferred, Indicated, and Measured in accordance with the 2014 CIM standards.

As a Qualified Person, the author has been able to classify the Nueva Recuperada Property Combined ID2 and Polygonal Mineral Resource Estimate into separate categories of confidence according to the industry standards laid out under CIM standards. As such, the author has determined that the estimated Mineral Resources in all categories both Inverse Squared Distance Method (ID2) and Polygonal Method are Compliant, Current and consist of Inferred, Indicated and Measured Mineral Resources. The resources are shown in Tables 14.16, 14.17, 14.18 and 14.19.

The updated combined estimates for Silver X Mining Corporation’s Nueva Recuperada Property Mineral Resources using prior and current compliant data are as shown in Table 1.1.

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Table 1.1 Nueva Recuperada Mineral Resources (effective date October 31, 2022)

Resource	**Tonnage **		Grades	Grades		Contained Metal	Contained Metal	Contained Metal
Category	Mt	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (Moz)	Au (kOz)	Pb (kt)	Zn (kt)
Total Measured	1.94	80.54	1.91	1.71	1.18	5.02	119.09	33.19	22.96
Total Indicated	1.67	59.52	0.86	1.45	1.43	3.02	51.2	24.2	23.8
Total M+I	3.61	70.82	1.43	1.59	1.30	8.04	170.28	**57.37 **	46.78
Total Inferred	12.44	151.22	0.34	1.78	1.90	58.31	119.0	204.1	213.3

Notes to Mineral Resources Table:

1. CIM (2014) definitions were followed for Mineral Resources. The Qualified Person for the Mineral Resources estimate is David Heyl, CPG (AIPG).

2. Mineral Resources are reported using a US$60.00/t NSR cut-off value.

3. 1. Forecast long term metal prices used for the NSR calculation are: Ag: US$22.56/oz; Au: US$ 1,746.11/oz; Pb: US$0.93/lb; Zn: US$ 1.25/lb
4. 1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
5. 1. Numbers may not add due to rounding.

1.6 Mineral reserve estimate

This PEA does not support an estimate of Mineral Reserves, since a Pre-Feasibility or Feasibility Study is required for reporting of Mineral Reserve categories as per the NI 43-101 code.

Mining inventories were derived from the resource model described in the previous section. Inferred resources were used to define mineable tonnes.

Inferred resources are regarded as too speculative geologically to have the economic considerations applied to them. Hence, there is no certainty that the PEA results will be materialised.

1.7 Mining methods

The selected mining method is overhand cut and fill configured in two steps i.e. mining first the vein containing the mineralized material and later the waste alongside the hanging wall and/or the footwall to create a minimum mining width. The waste mined is further used as fill material to set ground for mining the upper slice. In summary, a bottom-up mining sequence is undertaken following the veins strike. The method can be well adapted to the variations of the vein geometries.

Mineralized material will be hauled to the surface by dumpers through the Tangana mine portal. This access is also connected to the Morlupo, Cauca and Tangana veins.

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Mining inventories for Tangana 1, Tangana 2, Cauca and Morlupo were created based on a NSR cut-off of US$60/t which is based on a combination of historical records and projections completed by Silver X. This cut-off includes all costs incurred with RoM and waste mining, processing, tailings and overheads. The inventories for the other veins were derived by applying the mining modifying factors from Tangana 1, Tangana 2, Cauca and Morlupo, including dilution, mining recovery and the conversion ratio of resource-to-mining inventory (43% average). The total diluted inventory reached 5.3 Mt at 1.69% Zn, 2.27% Pb, 1.1 g/t Au and 92.6 g/t Ag.

A preliminary mine scheduling was performed assuming a production rate of 1,500 tpd the combined deposits. It was constrained by both individual activity rates for each vein and the mine fleet capacities. The results indicate a total life of mine of 13 years.

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----- Start of picture text -----

600,000
500,000
400,000
300,000
200,000
100,000
-
0 1 2 3 4 5 6 7 8 9 10 11 12
Year
Tangana 1 Tangana 2 Morlupo Cauca Tangana main others
Tangana W San Antonio San Antonio NW Positivas Angelica
Huachocolpa sur Tetehorno Pucapunta
ROM production (t)
----- End of picture text -----

Figure 1.2 Tangana material included in the mine plan scheduling

1.8 Recovery methods

An existing Nueva Recuperada process plant is located 22 km south from the future site for a new Tangana processing plant.

This new Tangana processing plant is the basis of this study. Much of the process design criteria have been assumed, based on experience at the existing Nueva Recuperada concentrator, and on experience with operations treating similar mineralization and of a similar scale.

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A processing rate of 1,500 tpd of mineralization will be achieved through traditional primary and secondary crushing, rod mill primary grinding, secondary ball mill grinding, bulk flotation of lead, copper, silver, and gold, and zinc flotation, followed by concentrate thickening and filtration. Additionally, a gravity concentrator will be used to recover coarse gold from a fraction of the cyclone underflow, which will then be cleaned on a shaking table.

The tailings will be thickened, filtered, and disposed of in either a subaerial tailings storage facility, or as underground mine backfill.

Process water will be recycled as much as possible to minimize water usage.

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Figure 1.3 Simplified process flowsheet

1.9 Project infrastructure

The mine site infrastructure consists mainly of:

• Waste dump for initial development (waste will be generally accommodated as backfill in the underground voids);

• RoM stockpile 1-month capacity;

• Tailings storage facility;

• Water management systems: sediment ponds, ditches and sumps;

The general project facilities to create in the Tangana area are:

• Offices

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• Camp and accommodation.

• Substation

• Workshop

• Warehouse

• Control access

• Medical service

• Energy distribution

• Water supply

• Industrial water treatment plant

Domestic water treatment plant

1.10 Environmental studies and permitting

Silver X's operations in Peru are carried out in the community of Huachocolpa, located in the district of the same name, province and department of Huancavelica.

Silver X is currently operating the Nueva Recuperada processing facility under an environmental instrument known as the Environmental Adaptation and Management Plan (“PAMA”) . The aforementioned PAMAs allowed the mining unit to operate until 2014 at which point the first Supporting Technical Report (“ITS”) was filed which permitted expansion of the tailings pond. Then, in 2021, a second ITS was filed to expand the plant capacity from 600 tpd to 720 tpd.

For the development of the Project, the first step in terms of environmental permits is the approval of an Environmental Impact Study (EIA), which has been prepared since October 2021 and is estimated to be submitted for evaluation before the Ministry of Environment in Peru the first quarter of 2023 and its approval is obtained at the end of that same year.

A new agreement is being negotiated with the community of Huachocolpa to obtain the right of use in the new area for the project expansion.

The characterization of the current area of our operations and the preliminary results of the evaluation that are being carried out as part of the EIA for the Project area and the expansion zones are the subject of the new agreement under negotiation.

A conceptual mine closure plan was completed for the project.

1.11 Capital and operating costs

Capital and operating costs have been estimated at a level appropriate for a Preliminary Economic Assessment level. Overall accuracy is estimated at ±40% for both capital and operating costs.

The capital cost estimate (capex) is based on a combination of experience from existing operations, reference projects and escalation factors as appropriate with the conceptual nature of this PEA. An initial capital expenditure of U$61M was estimated including contingency.

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The operating cost estimate was mainly based on data provided by Silver X derived from the current operations at Nueva Recuperada.

1.12 Economic analysis

At this preliminary stage, the project presents reasonable prospects of being economically viable with a positive post-tax Net Present Value of US$175M, a post-tax payback period of 4 years and an Internal Rate of Return (IRR) of 39%.

1.13 Recommendations

1.13.1 Resource estimation

• To progress to a PFS it is needed to convert Inferred resources to at least at Indicated category. Additional infill drilling and metallurgical testwork campaigns are required.

1.13.2 Mining

• The mining method selected for Tangana is cut and fill based on the mining techniques currently in place. However, it is recommended to further evaluate alternative mining methods which may unlock economic benefits for the project such as sublevel stoping. Specifically, the company is currently implementing the sub-level open stoping method (long hole) in some areas of the mine. A close monitoring of this system including dilution, losses, cycle time, explosives consumption, productivity, development requirements should be carried out to confirm the potential of the method.

• In the absence of a comprehensive geotechnical study, all key geotechnical design parameters were derived from data collected and empirical experience from the current underground workings. A full geotechnical study is highly recommended prior to the commencement of the next stage of the project.

• Existing hydrogeological information is restricted to the depleted mine named Angélica located 500 m south of Positivas and San Antonio (September, 2009). At the moment all hydrogeological aspects have been estimated based on the current experience from the operations. A conceptual hydrogeological study is required to be completed on the main veins for the next stage. The study should cover all key hydrogeological aspects such as:

• Confirm the basis for a reliable and suitable water supply.

• Identify major mine drainage, dewatering and infrastructure elements of material significance, including diversions and discharges as necessary.

• Identify hydrological and groundwater effects or major impacts from the mine.

• Confirm groundwater conditions around the tailings facilities.

• A constant 15% dilution applied to the mineral and 92% mining recovery for all sectors of the mine. These values are based on historical records from San Antonio and Tangana. Further investigation is required to determine specific dilution and mining recovery factors for individual veins that reflect local geotechnical conditions.

• A constant NSR cut-off of US$60/t was applied to generate the underground inventories. Preliminary sensitivity analysis showed that the economic feasibility is highly dependent on NSR and mining costs. Further mine planning iterations should consider the use of specific cut-offs for each vein for the definition of mining inventories that capture local mining adjustment cost factors.

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• A ventilation study should be completed for the next stage in order to ensure that associated infrastructure and costs are accurately estimated.

• The combination of waste rock backfill and hydraulic fill is a potential opportunity for the future. This combination should be tested in order to understand if the hydraulic backfill can be done co-disposing it with the waste rock backfill producing surface in the mined stopes in which the equipment can continue the upwards mining. With a potential mine backfill, the footprint of the surface waste management facilities would be reduced and a reduction in costs could be expected.

• Development requirements were derived from typical mining panel layouts. It is recommended that future iterations include detailed 3D layouts for each vein to increase the accuracy of the mine plan.

1.13.3 Waste management

• Waste rock and tailings materials have to be tested to define the environmental behaviour for the long term on surface. This could reduce eventually the requirements for the tailings management facility and waste rock dumps.

• The assumption done in this PEA is that the tailings can be filtered. It is required to probe this with testwork done on the material used for metallurgical variability testwork or by creating specific samples for this purpose.

1.13.4 Metallurgy and processing

• The metallurgical information is based mainly on the performance of the current plant, treating material similar to the Tangana mineralization in this study. Metallurgical variability testwork should be developed based on representative samples of the expected future mine plan. This testwork would reduce risk and improve definition with respect to recoveries, concentrate qualities, throughput, and operating cost projections.Metallurgical testwork should be conducted, and a trade-off developed to evaluate gold recovery to either the lead concentrate, to a separate concentrate, or to dore.

• Similarlly, testwork and engineering should be developed to evaluate the separation of lead and copper to different concentrates.

• Silver-X is developing studies to test the suitability of using “ore sorting” technology to preconcentrate low grade feed, increasing reserves, increasing throughput, reducing processing opex and reducing the tailings facility requirements.

1.13.5 Infrastructure and logistics

• The proposed track for exporting the concentrates is by a road passing through Minera Kolpa operation. Although it is a public road sometimes the road is cut because of works in the Kolpa operation. This can be easily anticipated by a communication with the neighbours and with the alternative track through Nueva Recuperada plant or connecting by gallery with West Tangana could reduce potential any risk in that regard.

• The mobile connection is not fully warrantee in the area. Based on the expected usage with the new Tangana plant it is recommended to begin the contacts with the mobile operators to warrantee signal coverage.

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• The transport between the different veins in the Tangana Mining Unit will be done in some cases on surface. The existing tracks connecting the different veins have to be improved and, in some cases, a new path should be defined. The permitting aspects with the authorities and the communities should include those tracks improvement that would be considered a positive impact in the area.

• Some of the distances between veins would be reduced by developing galleries connecting, for instance, San Antonio and Tangana. This type of gallery could be considered as an investigation gallery, due to the presence of occurrences in the area. to reduce CAPEX to be enlarged later as a transport gallery.

• The transport system for the Tangana project considers trucking as the main alternative. A system involving mine train, conveyors or similar systems could reduce OPEX in the future. Especially in areas where the conveyor is descending to the future plant site a reduction of power consumption is expected.

• For the future stages of the project it is recommended to locate a weather station in the new Tangana plant area.

• The existing power line is able to provide around 3 MW. The requirements for the new plant are expected to be 3 MW so the power line has to be upgraded to maintain the power supply to the Nueva Recuperada facility and the new Tangana facility. A potential reduction in power supply could be by installing power generation systems at Tangana, based on a combination of solar power, wind, geothermal, hydraulic, aerothermic. A simple study for those alternative power sources is recommended.

1.13.6 Costs estimation

• An integrated cost model for the entire operation would be useful for the future stages of the PEA. This would reduce the usage of different source data and all the costs would be more comparable and homogenous for the future costs estimation.

• An study based on first principles to understand better the mine costs would be necessary to help in the decision of which aspects of the operation are to be subcontracted and which ones are done with own sources. Some of the outputs of the study could be the limitation in time for some contracts with the potential agreement with contractors for the acquisition of the equipment and the incorporation of part of the workforce in the company staff. This could reduce costs in the future and could help to increase the strategical decisions on the operation.

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2 Introduction

2.1 Terms of Reference and Purpose of the Report

LOM Consultants (LOM) was retained by SilverX Mining Corp. (Silver X or the Company) to compile a Preliminary Economic Assessment (PEA) for the Nueva Recuperada property (the Property), located in the municipality of Huancavelica, Peru.

Once constructed, the Tangana Project will consist of a set of underground mines that will supply mineralization to a processing plant located near the mine portal, 25 km from the Recuperada processing facility. The Tangana project aims to increase the total production from 700 tpd to 1,500 tpd.

SilverX has previously filed a NI 43-101 technical reports which include Mineral Resource Estimates including the most recent report as referred to in Section 14. The Mineral Resource disclosed in this report supersedes all previous estimates for the Property.

The information, conclusions, opinions and estimates contained herein are based on:

• Information available to LOM at the time of preparing this Technical Report.

• Assumptions, conditions and qualifications as set forth in this Technical Report.

• Data, reports and other information supplied by SilverX and other third-party sources.

2.2 Non-IFRS Financial Measures

This Technical Report contains certain forward-looking non-IFRS financial measures. [Cash cost per Ag Eq ounce produced and AISC per Ag Eq ounce produced] included in this Technical Report are non-IFRS financial ratios based on cash cost and AISC, respectively, which are non-IFRS financial measures. Management believes that non-IFRS financial measures and non-IFRS ratios, when supplementing measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS financial measures and non-IFRS ratios do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For a discussion of the use of non-IFRS financial measures and reconciliations thereof to the most directly comparable IFRS measures, please refer to NonIFRS Performance Measures in the Company’s MD&A for the nine months ended September 30, 2022, which is available on the Company’s SEDAR profile at www.sedar.com, and which is incorporated herein by reference.

For the nine months ended September 30, the following historical non-IFRS financial measures were reported in the Company’s MD&A: Cash cost – US$11,105,597; Cash cost per Ag Eq ounce produced – US$18.8; AISC – US$15,929,064; and AISC per Ag Eq ounce produced – US$26.9.

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2.3 Cautionary Note Regarding Forward-Looking Information

This Technical Report contains “forward looking information” within the meaning of applicable securities laws. Forward looking information includes statements that use forward looking terminology such as “may”, “could”, “would”, “will”, “should”, “intend”, “target”, “plan”, “expect”, “budget”, “estimate”, “forecast”, “schedule”, “anticipate”, “believe”, “continue”, “potential”, “view” or the negative or grammatical variation thereof or other variations thereof or comparable terminology.

Forward-looking statements include, but are not limited, to statements with respect to the economic and study parameters of the project Mineral Resource estimates; the cost and timing of any development of the project; the proposed mine plan and mining methods; dilution and extraction recoveries; processing method and rates and production rates; projected metallurgical recoveries; infrastructure requirements; capital, operating and sustaining cost estimates; the projected life of mine and other expected attributes of the project; the net present value (NPV) and internal rate of return (IRR) and payback period of capital; capital; future metal prices; the timing of the environmental assessment process; changes to the project configuration that may be requested as a result of stakeholder or government input to the environmental assessment process; government regulations and permitting timelines; estimates of reclamation obligations; requirements for additional capital; environmental risks; and general business and economic conditions.

All forward-looking statements in this Report are based upon assumptions discussed in the Technical Report and other reasonable assumptions, estimates, analysis and opinions of the authors of the Technical Report made in light of their respective and perception of trends, current conditions and expected developments, and other factors that they believes are relevant and reasonable in the circumstances at the date such statements are made. Many of these assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct. The assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking information.

Material assumptions regarding forward-looking statements are discussed in this Report, where applicable and are also set out under ‘‘Risk Factors” sections of the Company’s management’s discussion and analysis (“MD&A”), available on SEDAR at www.sedar.com. In addition to, and subject to, such specific assumptions discussed in more detail elsewhere in this Report, the forward-looking statements in this Report are subject to the following assumptions:

• There being no significant disruptions affecting the development and operation of the project.

• The availability of certain consumables and services and the prices for power and other key supplies being approximately consistent with assumptions in the Report.

• Labor and materials costs being approximately consistent with assumptions in the Report.

• The timelines for prior consultation and wet season/dry season baseline data collection being generally consistent with PEA assumptions and permitting and arrangements with stakeholders being consistent with current expectations as outlined in the Report.

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• All environmental approvals, required permits, licenses and authorizations will be obtained from the relevant governments and other relevant stakeholders.

• Certain tax rates, including the allocation of certain tax attributes, being applicable to the project.

• The availability of financing for planned development activities.

• The timelines for exploration and development activities on the Project.

• Assumptions made in Mineral Resource estimate and the financial analysis based on that estimate, including, but not limited to, geological interpretation, grades, commodity price assumptions, extraction and mining recovery rates, geotechnical, hydrological and hydrogeological assumptions, capital and operating cost estimates, and general marketing, political, business and economic conditions.

The Company cautions that the foregoing lists of important assumptions and factors that may affect future results are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information contained herein. There can be no assurance that forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information.

Forward looking information contained herein is made as of the date of this Technical Report and the Company disclaims any obligation to update or revise any forward-looking information, whether as a result of new information, future events or results or otherwise, except as and to the extent required by applicable securities laws.

2.4 Qualifications

The following individuals, by virtue of their education, experience and professional association, are considered Qualified Persons (QP) as defined in the NI 43-101 standard, for this report, and are members in good standing of appropriate professional institutions. The QPs are responsible for the specific sections as follows:

• Paulo Laymen, BEng Mining, Member of the Chilean Mining Commission (RM), LOM Principal Consultant (Mining), is the QP responsible for Sections 1, 2, 3, 15, 16, 18, 19, 20, 21, 22, 24, and portions of 25 and 26.

• David Heyl, CPG (AIPG), Independent Consultant (Geology), is the QP responsible for Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 23, and portions of 25 and 26.

• Adam Johnston, FAusIMM, CP (Met), Transmin Principal Consultant (Metallurgy), is the QP responsible for Section 1.4, 1.8, 12.2, 13, 17, 22.3.2, 25.4 and 26.4.

2.5 QPs Site Visits

Paulo Laymen, mining consultant, visited the Project site on December 6[th] , 2022.

David Heyl, mineral resource consultant, conducted a site visit of the Project between 18 and 20 of October 2022.

Adam Johnston, metallurgical consultant, has not visited the Project.

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The purpose of the site visit was to visit the core shed, verify the project’s exploration procedures, visit the current underground operations and beneficiation plant at Nueva Recuperada, interview project personnel and to collect relevant information on the Tangana site.

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3 Reliance on Other Experts

The PEA is a report in compliance with the methodology and format outlined in National Instrument 43-101, companion policy NI 43-101CP and Form 43-101F1.

The Qualified Person(s) for this report are:

• Paulo Laymen, a Principal Consultant of LOM.

• David Heyl, Independent Consultant, for the Mineral Resource statement;

• Adam Johnston, Transmin’s Principal Consultant, for the mineral characterization, metallurgical studies and mineral processing;

Other experts in the writing of this report are:

• Jesús Montero, Mining Sense’s Principal Consultant, for the project infrastructure and cost estimate, market studies and economic evaluation;

• Pilar Garcia, Silver X, for the environmental, social, permitting studies and mine closure.

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4 Property description and location

4.1 Introduction

The Tangana Mining Unit (or the “Project”) is included in the Huachocolpa mining district where SilverX has several different mining assets. The approximate centre of the global asset is located at coordinates N-8,552,580 and E-505,560 (Datum: WGS 84, Zone 18S) as shown in Figure 4.1 at an average elevation of 4200 – 5100 masl.

From administrative point of view, the Project is subject to the jurisdiction of the Huachocolpa district, Huancavelica Province, Huancavelica Department, at some 479 km to the SE of Lima (Perú). The lands in which the Project is located belong to the Comunidad Campesina de Huachocolpa and to its appendices Corralpampa y Cercado Huachocolpa.

Hydrographically, the Project is located in the Huachocolpa river basin, which is a sub-basin of the Lircay river, a tributary of the Mantaro river.

The Company assets include 230 mining concessions covering approximately 20,472 Ha.

4.2 Property and Title in Peru

4.2.1 Regulatory Oversight

The right to explore, extract, process and/or produce minerals in Peru is primarily regulated by mining laws and regulations enacted by Peruvian Congress and the executive branch of government, under the General Mining Law, Ley General de Minería, 3 June 1992.

Mining concessions granted to individuals or other entities authorize the title holder to perform all minerals related activates from exploration to exploitation: reconnaissance; prospecting; exploration; exploitation (mining); general labor; beneficiation; commercialization; mineral transport; and mineral storage outside a mining facility.

Once titled, mining concessions are irrevocable for so long as the fees are paid to the federal government on time. A provisional claim is applied for and title is granted if no other claim exists over the same area.

The Ministry of Energy and Mines (MINEM) is the authority that regulates mining activities. MINEM also grants mining concessions to local or foreign individuals or legal entities, through a specialized body called The Institute of Geology, Mining and Metallurgy (Ingemmet).

Other relevant regulatory authorities include the Ministry of Environment (MINAM), the National Environmental Certification Authority (SENACE), and the Supervisory Agency for Investment in Energy and Mining (Osinergmin). The Environmental Evaluation and Oversight Agency (OEFA) monitor environmental compliance.

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Source: Roger Cavos, 2005. Mining Potential in the Huancavelica Region. S

Figure 4.1 Location of the Project in the Huancavelica Department

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4.2.2 Mineral Tenure

Mining concessions can be granted separately for metallic and non-metallic minerals. Concessions can range in size from a minimum of 100 Ha to a maximum of 1,000 Ha.

A granted mining concession will remain valid providing the concession owner:

• Pays annual concession taxes or validity fees (‘Derecho de Vigencia’); currently US$ 3.00/Ha is paid. Failure to pay the applicable license fees for two consecutive years will result in the cancellation of the mining concession.

• Meets minimum expenditure commitments or production levels. The minima are divided into two classes:

• Achieve “Minimum Annual Production” by the first semester of the specific Year counted from the year after the concession was granted or pay a penalty for nonproduction on a sliding scale, as defined by Legislative Decree N° 1320 which became effective on 1 January 2019. “Minimum Annual Production” is defined as one tax unit (UIT) per hectare per year, which is S/ 4,200 in 2019 (about US$1,220).

• Alternatively, no penalty is payable if a “Minimum Annual Investment” is made of at least 10 times the amount of the penalty.

The penalty structure sets out that if a concession holder cannot reach the minimum annual production on the first semester of the 11th year from the year in which the concessions were granted, the concession holder will be required to pay a penalty equivalent to 2% of the applicable minimum production per year per hectare until the 15th year. If the concession holder cannot reach the minimum annual production on the first semester of the 16th year from the year in which the concessions were granted, the concession holder will be required to pay a penalty equivalent to 5% of the applicable minimum production per year per hectare until the 20th year. If the holder cannot reach the minimum annual production on the first semester of the 20th year from the year in which the concessions were granted, the holder will be required to pay a penalty equivalent to 10% of the applicable minimum production per year per hectare until the 30th year. Finally, if the holder cannot reach the minimum annual production during this period, the mining concessions will automatically expire.

The new legislation means that titleholders of mining concessions which were granted before December 2008 will be obliged to pay the penalty from 2019 if the titleholder did not reach either the Minimum Annual Production or make the Minimum Annual Investment in 2018.

Mining concessions will lapse automatically if any of the following events take place:

• The annual fee is not paid for two consecutive years.

• The applicable penalty is not paid for two consecutive years.

• The Minimum Annual Production Target is not met within 30 years following the year after

• the concession was granted.

Beneficiation concessions follow the same rules as for mining concessions. A fee must be paid that reflects the nominal capacity of the processing plant or level of production. Failure to pay such processing fees or fines for two years would result in the loss of the beneficiation concession.

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4.2.3 Surface Rights

Mining companies must negotiate agreements with surface landholders or establish easements. Where surface rights are held by communities, such easements must be approved by a qualified majority of at least two thirds of registered community members. In the case of surface lands owned by communities included in the indigenous community database maintained by the Ministry of Culture, it is necessary to go through a prior consultation process before administrative acts, such as the granting of environmental permits, are finalized. For the purchase of surface lands owned by the government, an acquisition process with the Peruvian state must be followed through the Superintendence of National Properties.

Expropriation procedures have been considered for cases in which landowners are reluctant to allow mining companies to have access to a mineral deposit. Once a decision has been made by the Government, the administrative decision can only be judicially appealed by the original landowner as to the amount of compensation to be paid.

4.2.4 Water Rights

Water rights are governed by Law 29338, the Law on Water Resources, and are administered by the National Water Authority (ANA) which is part of the Ministry of Agriculture. There are three types of water rights:

• License: this right is granted in order to use the water for a specific purpose in a specific place. The license is valid until the activity for which it was granted terminates, for example, a beneficiary concession.

• Permission: this temporary right is granted during periods of surplus water availability.

• Authorization: this right is granted for a specified quantity of water and for a specific purpose. The grant period is two years, which may be extended for an additional year, for example, for drilling.

In order to maintain valid water rights, the grantee must:

• Make all required payments including water tariffs.

• Abide by the conditions of the water right in that water is only used for the purpose granted.

Water rights can be transferred or mortgaged. However, in the case of the change of the title holder of a mining concession or the owner of the surface land who is also the beneficiary of a water right, the new title holder or owner can obtain the corresponding water right.

4.2.5 Environmental Considerations

MINAM is the environmental authority, although the administrative authority is the Directorate of Environmental Affairs (DGAAM) of MINEM. The environmental regulations for mineral exploration activities were defined by Supreme Decree No. 020- 2008-EM of 2008. New regulations for exploration were defined in 2017 by Supreme Decree No. 042-2017-EM.

Environmental permits for mineral exploration programs are divided into two classes. Class I permits allow construction and drilling for up to 20 platforms with a maximum disturbance of 10 Ha, and Class II permit provides for more than 20 drill locations or for a disturbance area of greater than 10 Ha.

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An Environmental Technical Report (‘Ficha Técnica Ambiental‘ or FTA) is a study prepared for approval of exploration activities with non-significative environmental impacts and less than 20 drilling platforms: Class I, and Environmental Impact Declaration (‘Declaración de Impacto Ambiental’ or DIA) has to be presented for Category I exploration activities which have a maximum of 40 drilling platforms or disturbance of surface areas of up to 10 Ha.

A semi-detailed Environmental Impact Study is required for Class II exploration programs which have between 40–700 drilling platforms or a surface disturbance of more than 10 Ha. The environmental authority has 96 working days to make observations. The total process including preparation of the study by a registered environmental consulting company can take 6–8 months.

A full Environmental Impact Study (‘Estudio de Impacto Ambiental Detallado’ or EIA) must be presented for new mine construction and operation. The preparation and authorization of such a study can take 2-3 years. Section 20.7 includes details of the EIA that Silver X has been developing.

4.2.6 Permits

In order to start mineral exploration activities, a company is required to comply with the following requirements and obtain a resolution of approval from MINEM, as defined by Supreme Decree No. 020-2012-EM of 6 June 2012:

• Resolution of approval of the Environmental Impact Declaration.

• Work program.

• A statement from the concession holder indicating that it is owner of the surface land, or if not, that it has authorization from the owners of the surface land to perform exploration activities.

• Water License, Permission or Authorization to use water.

• Mining concession titles.

• A certificate of non-existence of archaeological remains (CIRA) whereby the Ministry of Culture certifies that there are no monuments or remains within a project area. However, even with a CIRA, exploration companies can only undertake earth movement under the direct supervision of an onsite archaeologist.

4.2.7 Other Considerations

Producing mining companies must submit, and receive approval for, an environmental impact study that includes a social relations plan, certification that there are no archaeological remains in the area and a draft mine closure plan. Closure plans must be accompanied by payment of a monetary guarantee.

In April 2012, Peru’s Government approved the Consulta Previa Law (prior consultation) and its regulations approved by Supreme Decree Nº 001-2012-MC. This requires prior consultation with any indigenous communities as determined by the Ministry of Culture, before any infrastructure or projects, in particular, mining and energy projects are developed in their areas.

Mining companies also have to separately obtain water rights from the National Water Authority and surface lands rights from individual landowners.

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4.2.8 Taxes

Corporate income tax in Peru is charged at a flat rate of 30%. However, mining companies must also pay an additional tax varying from 2 to 8.4% of net operating profit.

4.3 Project Ownership

The Project is held 100% by Silver X through its various wholly owned subsidiaries Recuperada SAC, Corongo Exploraciones SAC, Minera Tangana SAC, San Antonio Mining SAC, and Tangana Mines Peru S.A.C.

The company consolidated several properties from 2017 to 2020, including some purchase options agreements with some local owners.

4.4 Mineral Tenure

In the Huachocolpa district there are several mining claims, for which the titleholder is SilverX and its subsidiaries companies; others are a 100% ownership with an NSR and others are third party agreements. The ones owned by Silver X are:

The mining concessions in the Huachocolpa mining district are summarised in the Table 4.1.

In total there are 241 concessions covering a total of 25,114 hectares. Of those concessions, 106 are included in the Tangana Mining Unit, covering 12,840 hectares. The following table shows the total number of concessions under the control of Silver X subsidiaries.

Table 4.1 Surface and number of concessions under the Silver X control

Company name	Area(Ha)	Concessions(number)
Assigned to Recuperada S.A.C.	5,421	11
Compose Corongo Exploraciones S.A.C.	1,689	35
CONTRACT TO BE FORMALIZED	3,071	10
MiningSense Gold Peru S.A.C.	1,000	1
Recuperada S.A.C.	12,318	147
San Antonio MiningS.A.C.	437	5
Tangana Mines Peru S.A.C.	1,177	32
Total	25,114	241

The permits/licenses comprising the Tangana Mining Unit area and under the area of influence to be part of this PEA are included in Table 4.2.

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Table 4.2 Concessions assigned to the Tangana Mining Unit

Company name	Area (Ha)	Concessions (number)
Assigned to Recuperada S.A.C.	3,939	8
Corongo Exploraciones S.A.C.	566	9
CONTRACT TO BE FORMALIZED	1,219	3
Recuperada S.A.C.	6,603	63
San Antonio MiningS.A.C.	437	5
Tangana Mines Peru S.A.C.	76	18
Total	12,840	106

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Figure 4.2 Mining rights

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The author is not aware of any significant factors and risks that may affect access, title or the right or ability to perform work at Tangana except the formalization of the agreement for 10 of the 241 concessions. In Peru mining and exploration titles both expire on June 30th of each year. The annual concession lease payment must be made prior to that date each year. However, in Peru a concession holder is given a one year grace period to make good on delinquent payments.

The concessions sold by Pan American Silver (PAS) to Mines and Metals Trading (Peru) MMTP (later to be part of SilverX from a merger with OroX Mining Corp.) are subject to a 3% Net Smelter Return royalty to PAS (with no cap).

4.5 Surface rights

It should be noted that the Project has the complete support of the local communities, the Comunidades Campesinas de Huachocolpa and Carhuapata, which are the owners of the surface rights. Community members have offered open-hearted assistance in developing any type of mining activities in the area. The plant has been operating for approximately 60 years. There is an existing agreement signed in 2008 with the Comunidad Campesina de Huachocolpa with Compañia de Minas Buenaventura (BVN), who was the historical operator of the district, for the operational surface rights of the “Comunidad” through 2023. It includes a commitment for future cessation of mining related activities to complete progressive mine closure procedures as required by Peruvian law.

In order to carry out mining activities, easement agreements that allow use of’ and usufruct of such land are required. There are currently three easement and usufruct agreements, as detailed:

• Agreement 01: which was transferred from Buenaventura and is in force until 2023, has an extension of 1,800 hectares, where plant facilities, current tailings dam and auxiliary areas such as camp, sanitary landfill and others are located.

• Agreement 02: signed with the community for 338 hectares in the area called Tangana that was signed by Recuperada in 2019 for 5 years, where the zone includes the mine areas, clearings, exploration area and right of way for the mineral transfer routes.

• Agreement 03: signed with the community for 294 hectares in the area called San Antonio, which was signed by Recuperada in 2019 for 5 years, where the zone includes the mine areas, clearings, exploration area and right of way for the mineral transfer routes.

To date there is an easement agreement for 2,432 hectares within the Huachocolpa community and negotiations are underway with the community for 1,000 hectares for a period of 15 years which will allow the development of expansion areas included in the EIA.

4.6 Water rights

Water rights for exploration and operation are granted by the National Water Authority. Currently there are two water use licenses that are permanent, since they do not expire, and a discharge authorization that allows the discharge of excess water generated by the mining process.

• Water Use License for population use, approval for R.A. N° 040-2018-ANA-AAA X MANTARO-ALA HUANCAVELICA. This water permit does not expire.

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• Water Use License for industrial use, approval R.A. Nº 403-2017 ANA-AAA X MANTAROALA HUANCAVELICA. This water permit does not expire.

• Water discharge permits, approval for R.D. N° 041-2022-ANA-DGCRH. This discharge permit is valid until February 2024

4.7 Royalties and Encumbrances

Peru imposes a sliding scale Net Smelter Return royalty (NSR) on all precious and base metal production of 1% on all gross proceeds from production up to US$60,000,000, a 2% NSR on proceeds between US$60,000,000 and US$120,000,000 and a 3% NSR on proceeds in excess of US$120,000,000.

Silver X has several royalty agreements:

• A 3% NSR with Triple Flag Precious Metals Corp. on all concessions acquired from Pan American Silver in 2018. See Figure 4.3

• A 2% NSR with Barrick Misquichilca S.A. on Lily 19 concession. A 1% NSR can be bought at any time for USD 1 mil.

• A 4% NSR with owners of Las Animas concessions (Tangana West).

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Figure 4.3. Mining concessions and royalty agreeements

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4.8 Property Agreements

Silver X has concluded agreements to allow for exploration and operation activities with neighbouring communities in the San Antonio and Tangana areas within Huachocolpa Community who is the owner of the land. Silver X must have easement agreements that allow use of and usufruct of such land. There are currently three easement and usufruct agreements, as detailed:

• Agreement 01: which was transferred from Buenaventura and is in force until 2023, has an extension of 1,800 hectares, as per 4.5 (above), where plant facilities, current tailings dam and auxiliary areas such as camp, sanitary landfill and others are located.

• Agreement 02: signed with the community for 338 hectares in the area called Tangana that was signed by Recuperada in 2019 for 5 years, where the zone includes the mine areas, clearings, exploration area and right of way for the mineral transfer routes.

• Agreement 03: signed with the community for 294 hectares in the area called San Antonio, which was signed by Recuperada in 2019 for 5 years, where the zone includes the mine areas, clearings, exploration area and right of way for the mineral transfer routes.

4.9 Permitting Considerations

The Recuperada property and its mining operations are fully permitted under Peruvian law. BVN implemented a temporary closure of the Recuperada plant in 2014. In 2018 MMTP communicated to the Ministry of Mines and Energy (MINEM) and of the Environment (MINAM) the reinitiation of operations at Nueva Recuperada. Silver X has updated the operational notices and the required closure rehabilitation plan. Silver X has maintained the status of the operational notice and property evaluations. Plant testing operations started in July 2018. The less explored areas within the project have been given a lower priority for exploration and development.

Whilst BVN owned the Recuperada property they conducted extensive studies under the Environmental Law of 1994 to comply with the Program for the Adequacy and Management of the Environment (Programa de Adecuación de Manejo Ambiental or PAMA) filings. Since assuming ownership of the Project, Silver X has completed permitting under the Small Miners regime of Peruvian mining law in order to reopen the following mine sectors: Blenda Rubia, San Antonio, Esperanza, Tangana and Positivas. The operating permits for these mine sectors were obtained by the end of 2020. Silver X is now working towards completing a new EIA by 2023 for the Company’s entire holdings in the Huachocolpa mining district.

Nueva Recuperada currently operates within the medium size mining regime (350 tpd to 5,000 tpd). Silver X has embarked on updating the Environmental and Social Impact Assessment (EIA) to permit expanded operations across both of the wholly owned Tangana silverpolymetallic mining units. The EIA is a key component of a comprehensive environmental and social permitting process covering mining infrastructure and existing tailings facility for a total study area of 4,900 hectares and includes an expansion of production capacity at the Company’s processing plant to 2,500 tpd from the current 720 tpd and a new 8,000,000 m[3] capacity tailings storage facility with an aggressive target to expand silver production at Nueva Recuperada to 5 Moz Ag per year by 2024.

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Whilst the social risk is the largest potential risk for mining projects, mine operation and permitting risks are minimal in Peru. Both local communities involved in the EIA process are long-term mining communities in which a large percentage of the population are skilled miners. Both communities continue to welcome investment by the mining industry. Environmental and cultural risks are minor, as is government permitting risk.

4.10 Environmental Considerations

Detailed considerations are included in Section 20.

Under Law No. 28271, the responsibility for the remediation of environmental liabilities lies with the person or company that generated the liability. In the case of historical liabilities where entity or person who generated the liability is unknown, the state-owned company Activos Mineros S.A.C. is charged with remediation on behalf of the government.

Remediation activities in process and the expectation of the future ones is covered by a welldesigned and approved environmental control and remediation program that was put in place during BVN’s tenure prior to MMTP reopening operations in 2018 under the same operating conditions and agreements, along with some modification to the closure agreement. As a result, Silver X is evaluating certain mines and running the plant as well as implementing a re-start at other prospective mines and exploration and development targets. Activity has been postponed at what are considered to be, both geologically and economically, less well-defined targets. Extensive studies were completed at the production plant and at the currently non-operational Esperanza mine in order to comply with the environmental laws of 1994 and to meet the requirements for PAMA and EIA filings. To maintain the currency of these filings, Silver X continues to conduct monthly sampling at four effluent monitoring stations.

The effectiveness of the Company’s control and remediation program is illustrated by the abundance of trout in the principal stream of the project, the Rio Pallcapampa and the healthy condition of livestock herds grazing within the project area. The Nueva Recuperada property has an environmental bond of US$ 3.8 M in favor of the Peruvian Ministry of Mines and Energy to guarantee overall expenses of any eventual mine closure. In case of bankruptcy or other situations of force majeure, the government can execute that bond and rehabilitate the mining operations.

The Comunidades Campesinas of Huachocolpa and of Carhuapata deem the PAMA of primary importance. It consists of a group of projects agreed with the Peruvian Government with the purposes of reducing the impact of mine-metallurgical activity. The main objective of the PAMA was to establish thresholds that allow mine operation without exceeding maximum limits of polluting materials in both liquid and solid discharges. Under this program, Comunidad de Huachocolpa’s contractors can also extract mineralized material from Silver X properties for processing in the plant, with subsequent sale of concentrates to Trafigura.

4.11 Social License Considerations

The existing relations with the community have always been favorable, since the Huachocolpa community has a mining tradition, and they are aware that this activity creates socio-economic benefit within their territories whereby good neighborly relations persist.

In order to carry out mining activities, easement agreements have been negotiated that allow the use of and usufruct of such land. There are currently three easement and usufruct agreements, which guarantee Silver X’s social license to operate:

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• Agreement 01: which was transferred from Buenaventura and is in force until 2023, has an extension of 1,800 hectares, where plant facilities, current tailings dams and auxiliary areas such as camp, sanitary landfill and others are located.

• Agreement 02: signed with the community for 338 hectares in the area called Tangana that was signed by Recuperada in 2019 for 5 years, where the zone includes the mine areas, clearings, exploration area and right of way for the mineral transfer routes.

• Agreement 03: signed with the community for 294 hectares in the area called San Antonio, which was signed by Recuperada in 2019 for 5 years, where the zone includes the mine areas, clearings, exploration area and right of way for the mineral transfer routes, as per 4.5 (above).

To date we have an easement agreement for 2,432 hectares within the Huachocolpa community and negotiations are ongoing for 1,000 hectares for a period of 15 years, which will allow the development of the expansion areas included in the EIA.

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5 Accessibility, climate, local resources, infrastructure and physiography

5.1 Accessibility

Recuperada is accessible from Lima by two routes:

• El Callao – Pisco – Rumichaca – A. Huayraccasa – Huachocolpa – a total of 540 km.

• El Callao – Huancayo – Lircay – Huachocolpa – a total of 566 km.

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Figure 5.1 Routes from Callao port to Huachocolpa town. Source: Google Maps, 2022

The port from where concentrates are being sold is El Callao, close to Lima. Trucking time is 8 hours and distance is around 471 km.

5.2 Climate

The local climate is typical of the “Puna” biome of altitudes above 4,000 masl of the southcentral Peruvian Andes with distinct wet and dry seasons. Temperatures are cool to cold ranging from -10° C to 22° C through the year. The warmer, wet season is from November to April and the colder, dry season from May to October. Operations run continuously throughout the year.

Temperatures rarely rise above 25° C during the wet season when dense fog can be common and significant electrical storm activity can develop. Rain, hail and sometimes snow can fall, usually over short time periods where individual rainfall events can be severe with up to 2.5 centimeters falling in an hour.

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The closest weather stations in the area are shown in next figure.

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Figure 5.2 Weather stations in the area. Source: Servicio Nacional de Meteorología e Hidrología del Perú, 2023

The study area does not have precipitation measurement records; the closest data is from the Lircay station at a height of 3,271 meters above sea level. The difference in altitude with the project area, more than 1,000 meters means that the recorded data in this station is not considered as the most representative and hence an average from various stations is considered.

The hydrological study developed for the expansion of the dams associated with the Nueva Recuperada processing plant, in RECRECIMIENTO DEL DEPOSITO DE RELAVES No. 3-4 - U.P. RECUPERADA, OM Ingeniería y Laboratorio S.R.L., May 2014, concluded that the annual rainfall range between 621mm and 1,536mm, with an average of 994mm.

The annual rainfall for the four stations with data closer to the Project can be seen in the next table.

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Figure 5.3 Monthly rainfall. Source: Buenaventura from the Acobamba weather station

Table 5.1 Annual rainfall

Station	Longitude	Latitude	Elevation masl	Rainfall (mm)
Lircay	74º43'	12º58'	3513	775.8
Túnel Cero	75º5'	13º15'	4475	914.5
Acobamba	74º33'	12º51'	3356	695.9
Huancavelica	75º2'	12º46'	3770	970.1

The maximum rainfall for 24 hours is obtained from the OM Ingeniería y Laboratorio report, calculated for the Pallcapampa catchment area that joins the Huachocolpa valley at Huancavelica town. The next table shows the 24 hours rainfall for different periods.

Table 5.2 Hourly maximum rainfall

Recurrence interval(years)	Rainfall(mm)
100	79.1
200	92.3
500	113.0

A 113 mm in 24 hours is selected as design criteria for the calculations.

The reference for temperature is the “Estudio Hidrogeológico Proyecto Angélica - Rublo Chico”, Water Production SAC, Septiembre 2009. Both projects, located at 4,250 masl for Angélica and 4500 masl for Rublo Chico are close to the Project, and the calculated average temperature is between 5ºC and 3ºC.

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The next figure shows the variation of temperature registered in the Tunel Cero station, altitude 4,520 masl – very similar to the project altitude.

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Figure 5.4 Maximum and minimum temperatures per month

Humidity: Based on the Angostura station, located at 4,200 masl, relative humidity is 55.7% with a maximum of 80% and a minimum of 31%. The dry season corresponds to May-August (Water Production, 2009).

Sunlight hours: For elevation above 4,000 masl, during the dry season sunlight can be 6 to 8 hours per day. During wet season, it is usually cloudy although the average sunlight hours are 3 to 4 hours (Water Production, 2009).

Wind velocity: Average wind velocity range between 10 km/h to 30 km/h in Rublo Chico which is very close to the project (Water Production, 2009).

Evaporation: Above 4,000 masl, where the minimum temperature is usually below 0.0ºC evaporation is 255.6 mm/year at Mina Angélica, very close to the project (Water Production, 2009).

Hydrological balance: From the 908 mm/year rainfall, 28% (255.6 mm/year) ievaporates, 67% (609.6 mm) is excess that has to be managed as runoff and the rest is retained in the soil (Water Production, 2009).

5.3 Local Resources and Infrastructure

Huachocolpa is the nearest town located 16 km from Recuperada with some 3,000 inhabitants. Huachocolpa has basic services such as gas stations, restaurants and housing. Livestock consists mainly of alpacas and sheep.

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Nueva Recuperada processing facility, located 20km to the South of the San Antonio area, includes an exploration camp, tailings storage areas, waste disposal areas, a processing plant and ancillary facilities. Water is available for mining and exploration from the basin of the Huachocolpa, Palcapampa, and Llucllucha rivers less than 300m from the Recuperada operations. The mine’s water source is less than 1,250m away. Basic food supplies are provided from Huachocolpa town which is 16km away.

Unskilled and skilled mining labor is available locally. Electricity is available from a power line (22 KVA) that ends at the plant. The electrical lines come from Substation Ingenio at Lircay, presently owned by ElectroCentro and managed by Conenhua.

5.3.1 Population

The Peruvian District of Huachocolpa is one of the nineteen districts of the Province of Huancavelica, located in the Department of Huancavelica, under the administration of the Regional Government of Huancavelica, in the Central Andes area of Peru. It is bordered to the north by the districts of Huancavelica and Moya; to the south with the districts of Izcuchaca and Conayca; to the east with the Mantaro River; and, to the west with the Conayca District.

The main town in the district is Huachocolpa town, located at 3,956m above sea level, in the confluence of the rivers Pallcapampa, Quebrada Huachocolpa and Quebrada Jatumhuaycco to form the Huachocolpa River. The Huachocolpa River runs from the town eastwards before joining the Lircay River. The population is 1,875 habitants in the town and around 3,000 in the municipality. There are some services, including police, schools, hotels, and restaurants.

There are some smaller population centers distributed around the project area. In Tangana West no populated places are known, in Tangana Main there are several locations with some population, mainly temporary, like Cauca and Tangana close to the existing Tangana Mine, and to the South, the Accurupampa, Totorapampa and Tetehorno hamlets. There are also some farms like Ccasahuasi and Peñaspata. In Tangana East there are three small population centers: Pallcca Huayocc, Pacchapata and Ranracucho.

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Figure 5.5 Settlements in the project area. Source: IGN Perú, 2023

5.3.2 Access

The main logistical corridor in the area which encompasses the Huachocolpa district from west, north and east is the ALC09, also called the PE-28D, of the National Road Network, which is asphalted and in good repair.

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Figure 5.6 Logistical corridors. IGN Perú, 2022

There are also local roads connecting the TMU with the PE-28D.

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Figure 5.7 National and Departmental road network. Source: IGN Perú, 2022

Access to the PE-28D is via the HV-115 which belongs to the Huancavelica Department Road Network. Distances to the PE-28D are as follows:

• Section 1: The HV-895, 12km of poorly maintained track from Tangana site to Quebrada Huachocolpa river bridge and the HV-115; then

• Section 2: 24.3km of well-maintained track through via the HV-115 to the PE-28D

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Figure 5.8 Local roads connecting to National Road PE-28D.

From the junction of the connection of the HV-115 with the PE-28D at the Chontaccasa site, the PE-28D heads 23.5 km south to Santa Inés where it connects with the PE-28E. 30.3 km further along, this road reaches the PE-28A at Rumichaca which then reaches San Clemente, near Pisco, 247 km to the west near the coast. From San Clemente, the Panamericana highway (National Highway 1S) runs North for 229 km to El Callao harbor. The total road distance from the TMU to El Callao is 566 km.

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Figure 5.9 Distance from connection with PE-28D to El Callao. Source: Google Maps, 2022

As an alternative route that connects the TMU with Nueva Recuperada plant is as follows:

• Proposed PEA Plant to Tangana mine site: 6 km of poorly maintained track;

• Local road HV-895 from Tangana mine site to the HV-115 at Huachocolpa river bridge: 11.6 km of poorly maintained track;

• Huachocolpa river bridge to Nueva Recuperada plant: 10.7km of well-maintained track via 2 km of Departmental route HV-115 , and 8.7 km along local route HV-894 ;.

• Nueva Recuperada to PE-28A national route at Ccarhuacclicapa (Ayacucho Department) along 50.5km of well-maintained track via local route HV-894 and minor departmental route HV-116.

The total distance to El Callao by this route is similarly approximately 570 km.

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Figure 5.10 Route from the Project to PE-28A through Nueva Recuperada Plant.

Source: Google Earth, 2020

5.3.3 Telecommunications

There is limited to no telephone coverage in the Project area such that the Company will need to make a request to telephony providers for coverage in the area.

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Figure 5.11 Mobile signal in Huachocolpa district. Not Scaled. Source: IGN Perú, 2022

5.4 Electrical Power supply

There are various power lines in the area. Currently the most important is located 3 km south of the Tangana Mine.

The power line carries 22 KVA up-valley from the Lircay Ingenio hydroelectric plant which is at present owned by ElectroCentro and managed by Conenhua. From the Ingenio plant the supply connects with the national power grid at Cascabamba near Huancavelica. The Ingenio plant is powered by the Rio Opamayo.

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Figure 5.12 Power lines in the area. Source IGN Perú, 2022 completed with field site visit

5.5 Physiography

The Project is located in the Andes Mountains. The topography of the Project area is mountainous, with elevations ranging from between 4,200 masl up to 4,800 masl, with the highest point at 5,000 masl. Valley sides are steep and gullied. Dry valleys are inundated with alluvial gravel ranging in size fraction from clay to boulder.

The Tangana valley flows southwards to the Quebrada Huachocolpa which flows east to Huachocolpa town where it merges with the Pallccapampa river located 5.5 km east of the Mine. Waters in the San Antonio valley in the Tangana East area, flow directly to the river confluence at Huachocolpa which is subject to flooding.

Vegetation is minimal consisting of Ichu grass, thorn bushes, cactus and high-altitude succulents. Native animal life is typified by fish, vicuñas, deer, pumas, foxes and vizcachas. Avian life comprises mainly Andean geese, ducks, hawks and occasional condors.

5.6 Seismicity

According to the E.030 Peruvian Technical Regulation for Seismic Design, the Project is located within Seismic Zone 3 (Figure 5-1).

Considering that most of the facilities will be founded directly over bedrock (sedimentary sequences), at this stage of the study, a peak ground acceleration (in rock, with 10% of probability of exceedance in 50 years) of 0.35 g can be considered for the purposes of the PEA. In the case of slope stability analysis, a figure of 50% of the peak ground acceleration can be used.

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Figure 5.13

Seismic zones in Perú. Source: Ministerio de Vivienda, Sanidad y Planeamiento

5.7 Project Infrastructure

5.7.1 Mine Facilities

The existing Nueva Recuperada plant infrastructure includes the typical components of an underground mining operation, including processing plant, water treatment plant laboratories, storage facilities, maintenance, processing plant workshop, first aid medical area, offices, water and power lines, water treatment plant, access roads, control access and camp, which can house 300 workers plus staff. For several of the mine sectors, the property has the necessary equipment such as mine ventilation, electrical power, tracking, compressed air, water supply, explosives storage, pumping and other ancillary facilities. The majority of these facilities are at the Tangana Mine and the Nueva Recuperada plant. These facilities are detailed in Section 18 of this PEA document along with new facilities and infrastructure that will be needed for the proposed new Tangana processing plant and expanded Tangana Mining Unit.

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5.7.2 Processing Facilities

The proposed Tangana plant will be built as a separate processing facility and forms the core of this PEA .

The existing Nueva Recuperada plant contains a flotation concentrator facility which is outside the scope of this report but currently treats material from the TMU from the south of the Huachocolpa mining district. It has the capacity to treat up to 252,000 tonnes of RoM per year at 720 tpd. It produces separate zinc concentrate, lead/silver/gold concentrate and has the possibility of producing a separate gold concentrate and comprises crushing, grinding, flotation, thickening, filtration, and reagent preparation and concentrate storage areas. The plant area also includes offices, a metallurgical laboratory, and a stockpile area. Once the proposed new, Tangana plant has been commissioned, the Nueva Recuperada plant will continue to be operated by Silver X to process material from the southern end of the Huachocolpa mining district.

5.7.3 Tailings Facilities

The active tailings deposits occupy a total area of approximately 4.5 Ha which was increased in 2020 giving the deposits a useful life up to 2025 (Fig. 5.1). Silver X is planning to expand the capacity of the tailings facilities to accommodate many more years of production.

A new tailings storage facility will be built to accommodate part of the tailings produced in the new Tangana processing plant.

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Figure 5.14 Tailings deposits Nos. 3 & 4. Source: Silver X, 2022

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5.7.4 Water

Water for the existing Nueva Recuperada plant comes from the Pallcapampa River in a water line 1,250 meters long with a flow rate of 12.00 litres per second which is combined with recirculated water from the tailings dams which themselves provide 45% of the water required for the plant operations.

The plant consumes an average of 6.5 m[3] water / tonne of dried concentrates.

5.7.5 Electricity

Electricity for the Project is supplied by a 22 KVA power line, connected to the national grid nearby Huachocolpa.

In emergency back-up, the plant has a CAT 1,200 KW generator. The project’s internal transmission lines are rated at 22 KVA and have been recently maintained to full potential. The transmission line from Ingenio to below Huachocolpa has a design capacity of less than 7,600 KW. At times, the Nueva Recuperada plant, and the Caudalosa Chica mine have consumed their respective maximums 4,000 KW and 3,600 KW simultaneously with negative results. This problem has recently worsened with the reopening of the Caudalosa plant. Typical Nueva Recuperada monthly electrical consumption was 2GWh when the original mine and plant were operating continuously.

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6 History

6.1 Past exploration and production

Since Pre-Columbian times there has been mining activity in the area of the Nueva Recuperada property. It was an area of noted mining operations in both colonial and republican eras. The chronicles of Marcos Jimenez de la Espada in the 1800’s references mining silver at the Huachocolpa mine in from 1586.

In 1920 Agustín Arias Carrasco traveled to the site and started extracting mineralized material from small mine workings. In 1940 the Obradovich brothers (Minera Huanca Company) initiated their mine operations in the Rublo area of Caudalosa Chica and built a concentration plant and the Ingenio hydroelectric plant. Production was also started also at the Caudalosa Chica, Emmita, Coquito, Asia, Grau, Consuelo, Teresita, and Isabel mines at this time. In 1956 Dr. Alberto Benavides, owner of Minera Buenaventura visited Huachocolpa hoping to find a way to augment the production from his key mine in Julcani. In 1957 he bought Recuperada mine which was already producing Ag, Pb and Zn ore from veins that were being sold to the local Banco Minero plant at Caudalosa Chica.

In 1960 the original concentration plant was built with a mine capacity, at that time, of 120 tonnes per day with a nominal capacity of 200 tonnes per day. At the same time, several more mining operations were acquired and opened: Teresa in 1959, Tangana, Blenda Rubia and Maloya in 1960. In total 36 mines were opened and operated by BVN within their project area. As BVN closed down each mine the final year remnant reserve/resource estimations were well documented. Diamond drilling is documented from 1969 to 2013, totaling 117,976.15 m.

Eventually BVN started relinquishing concessions for formerly producing mine sectors that they considered no longer of importance. These included Tangana, Cauca, Angelina, Positivas and Maria Luz. The plant was expanded from 400 Tpd to 600 Tpd in 2010. Mine sectors such as Teresita, Esperanza and Blenda Rubia were yielding Ag, Pb and Zn ore before closure of the plant in 2014.

After closure only the Blenda Rubia and Teresita concessions were held by BVN. In 2014, BVN decided to put Nueva Recuperada and several other projects into care and maintenance following its growth as a mid-scale mining business focusing solely on large-scale projects. MMTP initiated conversations to buy the Project with BVN in late 2016 and acquired it in 2017.

PAS started its district-wide field exploration and evaluation with a 2012 program to determine if the Huachocolpa district held sufficient resource potential and economic viability for their corporate goals. These activities were partly focused on the 168 concessions (now belonging to Silver X) that it had acquired having been abandoned by BVN and others. The PAS field teams mostly conducted surface field work since most mine workings were inaccessible due to mine closure regulations. Field evaluations continued into 2013 whereunder PAS personnel collected 1,049 samples, 76 QAQC check samples as well as completing extensive field mapping. The PAS vein sampling was verified by Silver X and by the author.

Peruvian Metals (formerly Duran Ventures) successfully explored Huancavelica in the Huachocolpa district for over a decade. They identified several potentially economic veins which were subsequently sold to Silver X in 2020.

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During BVN’s ownership, the Project had an active production life of 52 years (1957-2013) with a few years of inactivity due to terrorism or low metal prices. Their mining operations extracted 3,719,900 t of ore from multiple orebodies at different times under differing mining methods based on mineralization style and structure and economic factors including metal prices, production costs, surface permitting and contracts with third parties. Recognizing the potential of the area, new exploration activity was initiated by MMTP in 2017 and continued as Silver X from 2020 to 2022 to generate mineral resources and reserves.

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Figure 6.1 Historic BVN workings on the Tangana 1 Vein, Level 4680

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6.2 Recent production

During 2022 (February to November) the production at Nueva Recuperada was 79,900 t that was completed with another 3,749 t coming from third parties producers in the region. The data are based on the internal reports of Silver X called “Sistema de Informacion Gerencial” per month.

Figure 6.2 shows the evolution of the production in the district per month in 2022 with a constant increase in production, achieving in October 2022 almost 14,000 t.

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----- Start of picture text -----

Monthly production
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
1 2 3 4 5 6 7 8 9 10 11
Month
Mines of the group (t) Third parties mines (t)
Tonnes per month
----- End of picture text -----

Figure 6.2. Monthly production per month at Nueva Recuperada mines in 2022.

Prior to 2022, Nueva Recuperada used to process minerals from various sources. The historical production reported on previous Technical Reports is shown in Table 6.1.

Table 6.1. Nueva Recuperada Annual Production

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7 Geological setting and mineralization

The Nueva Recuperada property is situated in the Huachocolpa quadrangle (27-N) which covers a portion of the Huancavelica and Ayacucho departments totaling 3,348 km[2] in the central portion of the Western Cordillera of the Peruvian Andes. The oldest rocks in Peru are Proterozoic, but the Peruvian Andes have undergone multiple orogenies and rock depositional events since at least the Devonian Period (419 ma) up to the present day. The most important epoch for the Nueva Recuperada project and the surrounding region was the Miocene (23 – 5.3 ma), when the Quechua I-III orogenies occurred.

7.1 Regional geology

There exist a variety of groups of lithologies and ages in the region around the Nueva Recuperada property within the Huachocolpa district (Figure 7.1). The regional stratigraphic column (Figure 7.2) consists of a sequence of sedimentary, metamorphic, and igneous rocks that extend from the Paleozoic era to the present day Quaternary period.

The oldest rocks in the region are the metasediments of the Excelsior Group belonging to the Devonian period comprising slates, schists, phyllites and sandstones which have experienced various phases of tectonic activity resulting in weak to moderate regional metamorphism and strong folding and fracturing. The upper Devonian to the Lower Carboniferous was an orogenic period of widespread calc-alkaline plutonism and molasse sedimentation in transtensional basins. Immediately above the Excelsior Group in angular unconformity is the Ambo Group of the Lower to Middle Carboniferous period, composed of a thick sequence of shales and sandstones.

The Tarma/Copacabana Group of the Middle Carboniferous to Lower Permian period is composed of limestones, mudstones and sandstones which form an important host for mineralization. The thickest sequences of these sediments were deposited in a series of rifts resulting from strike-slip faulting and are classified together since they are not easily differentiated.

Fault-controlled subsidence gradually diminished and ceased by the Late Permian. Relaxation of the previous extensional basin-forming stresses resulted in widespread regional subsidence and the formation of a broad epeiric sea. The Mitu Group was deposited in this basin in angular unconformity during the Upper Permian to Lower Triassic period. It is represented by a thick series of clastic molasse as layers of red sandstone. In its final phases there are signs of alkaline volcanism, possibly reflecting tectonic rifting or back-arc extension. It is also a host for mineralization.

The Pucara Group comprises a series of Upper Triassic to Lower Jurassic limestones and is recognized as the start of the Mesozoic Era that overlaps the Mitu Group in angular unconformity. The Pucara basin was a regional sag which evolved from the Mitu basin as a sequence of limestones, fine-grained organic-rich clastics, black shales and evaporites which are a well-documented host for mineralization.

Unconformably overlying the Pucara are the Chunumayo Formation limestones, mudstones, and sandstones of the Middle Jurassic period.

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Figure 7.1 Regional geological map Nueva Recuperada property (Silver X/INGEMMET)

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Figure 7.2 Regional geological map legend

Locally conformable above the Jurassic sequence is the Goyllarisquizga Group of the Lower to Middle Cretaceous period. It is composed of continental, fluvial clastic sandstones, mudstones, coal layers, conglomerates, basalt flows and evaporites deposited at a late stage in the Pucara basin when rifting reinitiated. Lying conformably above this, a series of formations are (Figure 7.3): the Chayllacatana Formation composed of olivanic basalts and volcanosediments; then the Chulec Formation calcareous shales and thin-bedded limestones; then the Pariatambo Formation carbonates and sandstones.

This upper Mesozoic sequence was subsequently deeply eroded as a consequence of folding and uplift during later tectonism.

The Casapalca Formation straddles the late Cretaceous, Mesozoic era events into the Paleocene epoch, sitting discordantly on the rest of the Mesozoic. It comprises mudstones, evaporites carbonates and red molasse, clastic layers formed from late erosion during the Peruana orogenies. The Socos Formation, as described in the same region, is comparable and perhaps contemporaneous, and both are possibly contemporaneous with the earliest Inca I orogenic phase.

The volcanic and volcano-sedimentary sequences of the Paleogene-Neogene are markers for volcanic belts occurring in discrete pulses during subduction of the Nazca Plate under South America. All the Paleogene-Neogene volcanic sequences are confined to the western part of the region and bounded eastwards by a regional fault system (the Chonta) which resulted in the uplift of Paleozoic-Mesozoic era rocks. The stratigraphy displays an increase in explosive volcanism over time, markedly in the Huachocolpa Group, which is composed of several, subhorizontal levels which cover most of the quadrangle: the Apacheta, Chahuarma, Rumihuasi and Portuguesa formations.

Intense folding during the Quechua II orogen affected all the Paleogene formations during the Mid-Miocene to Pliocene.

Volcanic deposits of the Tantará Formation of the Middle Eocene epoch are exposed towards the west of the region (Castrovirreyna): rocks are mostly andesitic to dacitic breccias and lavas contemporaneous with the Inca II orogenic phase.

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Figure 7.3 Regional Stratigraphic Column (INGEMMET)

Dacitic lavas, breccias and pyroclastic which form the suprajacent sequence of the Sacsaquero Formation are also contemporaneous with the middle Eocene, late Inca II orogenic phase.

The Lower Miocene, volcano-sedimentary sequences of the Castrovirreyna Formation unconformably overlie the Sacsaquero comprising water-lain andesites/dacites tuffs and pyroclastic breccias interbedded with clay-rich sandstones, mudstones, cherts, limestones, and conglomerates, contemporaneous with the Inca IV orogenic phase.

The Castrovirreyna Formation is in turn overlain by the Lower Miocene Rumichaca Formation formed during the volcanism active during the contemporaneous Inca IV orogenic phase and composed of lacustrine sediments, andesitic/dacitic tuffs, pyroclastic flows, travertine deposits and clay-rich conglomerates.

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There follows a sequence of formations which are the most important local hosts for mineralization as shown in Table 7.1.

Table 7.1 Sequence of formations which are the most important local hosts for mineralization

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7.2 Local geology

The Nueva Recuperada property covers a large area within the Huachocolpa mining district containing Ag/Au/Pb/Zn/Cu epithermal/mesothermal metallogenetic veins and other deposit types mainly hosted in Cenozoic volcanic rocks.

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Silver-gold along with lead-zinc-copper mineralization is found in high, intermediate and low sulphidation veins, mantos, disseminations, porphyries and skarns The NW-SE faults of the Chonta system and the N-S fault of the Huancayo-Julcani system have localized metallic deposits on both sides of the Chonta fault. There is significant silver-gold-arsenic mineralization in Triassic-Jurassic age carbonate rocks of the Pucara Group.

This is the case for other high, intermediate and low sulphidation deposits containing Ag/Au (Pb-Zn-Cu) in the Julcani, Caudalosa Grande, Caudalosa Chica, Recuperada, Chonta and other deposits in the region between latitudes 12° to 13°30´ South and the NW-SE faults of the Oroya-Huancavelica and Chonta systems.

7.3 Property geology

The basement at the Nueva Recuperada property is a thick sequence of Paleozoic-Mesozoic sedimentary rocks (Figs. 7.3 & 7.4) including the well-endowed Pucara limestone sequence. Located above these units is a massive Cenozoic volcanic sequence which includes rhyolitic tuffs, andesitic to rhyodacite lavas, breccias and pyroclastic rocks of the Huachocolpa Group. Hydrothermal alteration associated with doming has caused intense argillic alteration in contact with volcanic and sedimentary rocks.

Mineralized structures are prevalent in the Miocene volcano-sedimentary rocks such as the Apacheta unit and Caudalosa formation of the Huachocolpa group which host the Tangana, Positivas, Blenda Rubia, Maria Luz, Huachocolpa Sur, Rico Antimonio, Esperanza veins and others, and in the carbonate-sedimentary rocks of the Jurassic such as the Pucara group which is the principal Peruvian metallotect for Ag-Pb-Zn deposits.

7.3.1 Sedimentary rocks

There are four Groups of sedimentary rocks: the Pucará, Chunumayo, Goyllarisquizga, and Chonta.

The Triassic to lower Jurassic Pucará Group limestones outcrop in the Huachocolpa area represented by three units: the Chambará (between the Pirata and Mauricio mines); Aramachay (San Antonio, Angelica, Luchito and Betty mines); and Condorsinga (Luchito mine). The middle Jurassic Chunumayo Formation limestone outcrops in the area of Positivas (Figure 7.4).

The Goyllarisquizga Group includes quartzites and red shales and sandstones of the lower Cretaceous which sit below the Chulec unit.

The mid-Cretaceous Chonta Group includes sandstones, shales and limestones.

The Permian Mitu Group is located to the west of’ and parallel to the NW-SE striking Chonta fault. It consists of mudstones and siltstones with gastropods and volcanic shales. (María Luz, Hallazgo, and Escopeta mines).

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Figure 7.4 Chunumayo Formation and Pucara Group Limestones in the Positivas Sector

7.3.2 Igneous rocks

The Apacheta y Caudalosa volcano-sedimentary units of the Huachocolpa Group are the main mineralization hosts in the Nueva Recuperada project area (Figure 7.5). They comprise early sedimentary rocks, volcanics including lavas, breccias, tufts dacitic-rhyolitic domes and other intrusions. Lesser volcanic units include the Yahuarcocha, Sacsaquero, Castrovirreyna and Caudalosa formations.

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Figure 7.5 Huachocolpa Group Andesitic Breccia from near the Cauca Vein

7.4 Structural geology

Three out of the four recognized Tertiary structural events, common to Central Peru (Peruana, Inca, and Quechua) can be recognized in the Huachocolpa district.

The first event is Upper Eocene–Inferior Oligocene in age which produced an east-west shortening and north-south fold axes affecting Mesozoic formations towards the east. The north-south axial folds affect both the Mesozoic and Tertiary sediments in the Huachocolpa district and smaller scale folds overprint the Chonta formation and the Castrovirreyna volcanics.

The second, Lower Miocene event produced north-south shortening resulting in N45°E – S 45°W brittle structures in the high plateaus and more ductile structures in the cordillera but are not observed in the Huachocolpa district.

The third, Mid-Miocene caused folding followed by brittle destruction of the folds due to northsouth shortening in both the cordillera and plateaus.

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The fourth, Upper Miocene-Lower Pliocene resulted in east-west shortening and widespread destruction of earlier structures.

The Chonta fault extends for more than 400 km in the central Peruvian Andes striking N45°W with a sub-vertical dip. The Chonta is an inverse fault that originated during the Inferior Miocene (21 to 14Ma) Quechua I, compressive event associated with the Castrovirreyna syncline. Inverse movement continued through the various Quechua orogenies through the upper Miocene Quechua III phase when sinistral movement was reactivated until 3.9 Ma when all tectonic activity ceased.

7.4.1 Main structures in Huachocolpa district

The two main structures are the Chonta and the Huachocolpa faults. Mesozoic and Tertiary rocks display NS fold axes, whilst the Chonta formation and the Castrovirreyna volcanics exhibit smaller scale folding. There are also dome structures of volcanic origin and several other key alignments in this region (Figure 7.6 and Figure 7.7).

A) The Chonta Fault is a regional, NW-SE striking structure that serves as the contact between the Chonta Formation to the west and the Lava Domes and Apacheta formation of the Huachocolpa Group to the east. Interpretation of satellite imagery describes mainly dextral horizontal movement along this fault, notwithstanding that local mapping indicates that the last movement was sinistral in nature.

B) The Huachocolpa Fault is up to 30 m wide and strikes along the NS, Atoccmarca valley resulting in contact between volcanics and domes to the west with Mesozoic sedimentary formations of the Pucara Group to the east as observed in the Positivas and Angelica mine sectors. There are also numerous parallel faults parallel in the Atoccmarca valley.

In addition to these two main faults there are other key structural alignments:

• Vein systems striking Az. 60-90 (Caudalosa Chica, Teresita and Esperanza)

• Vein systems striking Az. 130 (Tangana, Positivas and San Antonio)

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Figure 7.6 Schematic of the Chonta fault as structural control of the polymetallic tensional veins (BVN/MMTP)

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Figure 7.7 View of Chonta fault looking to the East

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7.5 Mineralization

Mineralization in the Huachocolpa district is typically low to intermediate sulphidation, lower epithermal to mesothermal veins, but also mesothermal Fe and Cu bearing skarns, high sulphidation epithermal disseminated bodies, hot springs deposits and mesothermal porphyries. Ore-shoots in the veins at the Nueva Recuperada project are generally localized at the junctions of abundant cross-cutting mineralized veins and at preferential changes in strike and dip. Some of the district’s veins are currently being exploited by Silver X and local subcontractors who allowed the author to have access to their workings and veins. Veins are typically 0.3 – 4.0 m wide, averaging approximately 1.0 m with exposed strike leng/ths of 0.3 to 3.0 kms and demonstrated vertical extension of over 500 m. Principal vein minerals display classic epithermal and mesothermal-textured, banded and brecciated veins containing argentiferous galena, sphalerite, pyrite, minor chalcopyrite, tetrahedrite/friebergite and native gold (Figure 7.8). Gangue minerals include chalcedony, subhedral to euhedral quartz, calcite, rhodochrosite, rhodonite and barite.

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Figure 7.8 Mesothermal vein breccia specimen from Blenda Rubia Vein showing galena, sphalerite, pyrite, chalcopyrite and euhedral quartz forming a crustiform infill around lithic clasts

Intrusive rocks have metasomatically and hydrothermally altered the Pucara Formation limestones to create mineralized exoskarns. Magnetite, pyroxene and (grossular?) garnet-rich skarn zones have been mapped adjoining argillic alteration with high trace element values and some minor disseminated chalcopyrite.

High sulphidation epithermal disseminated mineralization is found in different areas at high altitudes exhibiting a solfataric assemblage of clays, alunite, pyrite and silicification typified by opal and chalcedony veins. There are small to very large hot spring deposits of travertine, silica and sometimes gossan, the largest of which is located immediately north of the town of Huachocolpa with a horizontal extent of over three hectares.

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Porphyry mineralization in the district displays primary sericite, quartz veinlets, broader silicification, pyrite and chalcopyrite and has been mapped at the Arcopunco and Terciopelo project areas. Figure 7.9 to Figure 7.16 show examples of the mineralization.

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Figure 7.9 Massive Galena and Sphalerite with minor Pyrite from the Blenda Rubia Vein

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Figure 7.10 Mixed Epithermal Colloform and Mesothermal subhedral and euhedral Quartz, Rhodocrosite and Pyrite from Tangana 1 Vein, Level 4680

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• Figure 7.11 Epithermal Colloform Quartz and Ginguro Banding from the Maria Luz Sector

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Figure 7.12 Mixed Epithermal Colloform and Crustiform Banding with Mesothermal suband euhedral Quartz, Galena, Sphalerite and Pyrite from Tangana No.1 Vein, Level 4680

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Figure 7.13 Stibnite and Pyrite in euhedral Quartz vein from Ticquillo Subsector, Esperanza

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Figure 7.14 Barite in euhedral Quartz vein, Ticquillo sub-sector, Esperanza

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Figure 7.15 San Antonio Breccia Vein, Galena, Sphalerite, Pyrite, subhedral Quartz and Calcite

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Figure 7.16 Native Gold with Pyrite and subhedral Quartz from Tangana 1 vein, level 4680

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8 Deposit types

The characteristics and alignments noted above describe the principal deposits at the Nueva Recuperada property as comprising a group of lower epithermal to mesothermal, low to intermediate sulphidation veins. The majority of veins outcrop for between 1 to 2 km; thickness varies from a few centimeters to more than three meters; veins extend down-dip from 300 to 500 metres. Mineralization continuity is occasionally offset by faulting. High-grade, valuable ore-shoots occur where veins intersect.

Fluid flow, temperature and the relative position of mineral deposits related to a generative porphyry system is demonstrated by Hedenquist’s model of epithermal systems (Figure 8.1). Vein deposits in the district do contain notable levels typical of intermediate mineralization, with moderate to high copper, high gold and arsenic contents and associated sulfosalts such as tetrahedrite-tennantite-freibergite. Sphalerites are of moderate to low iron content which are more common in lower temperature sulphidation systems. There appears to be a district-wide zoning with increasing copper and gold tenor towards the north and northwest, approaching known porphyry deposits and the Chonta fault, respectively. The likely interpretation is that the veins are relatively distal horizontally to the fluid source porphyry systems. The relative uniformity of the mineralization over an area of more than 200 square kilometres suggests that fluid flows were interconnected and of substantial size. The main mineralizing events occurred between 8 Ma and 4.6 Ma. Sericite in the Teresa veins give an age estimate of 6.4 Ma, dating it to the Quechua III orogenic phase.

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Figure 8.1 Model of Low/Medium/High Sulphide Epithermal Systems with Polymetallic Mineralized veins (After Hedenquist, 1996)

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A preliminary interpretation ascribed to Silver X and PAS describes five pulses or phases of mineralization at Nueva Recuperada defined by five zones with clear mineralogy and grade differentiation:

• Zone 1 represented by the Esperanza sector and others contains predominantly Pb (3 to 4 %) / Zn (3 to 7 %) and high grades of Ag and Sb;

• Zone 2 represented by Blenda Rubia – Micaela sector, Caudalosa, Caudalosa Chica and others contains grades of 3 to 5 % Pb/Zn and lower Ag grades;

• Zone 3 in the north represented by the San Antonio, Angélica, Positivas, Tangana, Cauca and other veins hosted in volcanic and sedimentary rocks returns grades averaging >5 % Pb, 3 to 5 % Zn and lower Ag and Au grades;

• Zone 4 in the south is represented by the Maria Luz sector displaying epithermal banding containing higher Ag grades and low Pb and Zn (<1 %) contents; and

• Zone 5 in the Pucapunta sector displays intermediate to high sulfidation mineralogy.

Exploration in the property is planned on several levels, concurrently prioritizing past producing mines with known vein intersections, drill-testing for extensions, confirming vein continuity by underground drifting and identifying potential exploration targets at surface.

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9 Exploration

In late 2020, Silver X focused exploration efforts on veins with the highest potential for economic production at the same time as conducting a comprehensive program across the entire Nueva Recuperada property. Silver X has separated the portfolio of vein systems on the Nueva Recuperada property into two main units for logistical and operational reasons: the Tangana Mining Unit in the north and the Esperanza Mining Unit in the south. Within these two units there are eleven main mineralized sectors (Table 9.1) based on reporting by Silver X, BVN, PAS, Peruvian Metals, GEMIN and an AMEC technical review. To date, a total of 541 veins and splits have been identified on the property (Table 9.1).

Exploration expenditure by Silver X from 2017 through 2022 was US$13.56 M including geology, sampling, social, environmental, administrative, mine preparation and drifting and legal costs as detailed in Table 9.2. The Company’s focus has been on assimilating historic data and field checking the various vein sectors and neighboring properties. In their generative field work important discoveries have been made, including the economic potential of the veins in the San Antonio, Tangana, Cauca, Pucapunta, Maria Luz and Positivas sectors, along with the identification of disseminated, volcanic-hosted, epithermal and porphyry systems and other positive exploration results mentioned below.

Silver X field personnel have checked, mapped and collected over 4,171 rock geochemistry samples on the property since November 2020. Both surface and underground samples have been collected. The sampling followed standard field and underground geologic mapping guidelines such that the mapping and sampling completed to date is considered to meet industry standards for quality and to be representative with no obvious biases present. Most of the rock samples are channel samples that are focused on vein structures, spaced ten meters apart on surface sites, while underground spacing is more tightly controlled with intervals of from one to three meters.

Silver X exploration mapping and sampling has confirmed data collected by prior operators and has led to the current development of the San Antonio, Tangana, Cauca, Pucapunta, Maria Luz, and Positivas mines. Positive exploration results have led to further exploration programs to include drilling and mine reopenings planned for sectors including Angelica, Tangana West, Blenda Rubia, Esperanza and San Antonio Northwest.

Data obtained from Buenaventura and Pan American Silver exploration programs is considered to be materially reliable with respect to the quantity and quality of the Nueva Recuperada project resources.

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Figure 9.1 Nueva Recuperada Project Concessions and known Veins (Silver X/Ingemmet 3/25/22)

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Table 9.1 Vein Sectors and Number of Veins and Splits per System

Vein sectors	Number of veins and splits	Comments
Tangana Mining Unit
Tangana	68	All these sectors were visited by the Author.
Cauca	42
Tangana West	9
San Antonio	5
San Antonio Northwest	4
Pucapunta	21
Positivas	33
Angelica	10
Huachocolpa Sur	22
Tetehorno	52	This sector was not visited.
Esperanza MiningUnit
Blenda Rubia - Micaela	37	All these sectors were visited by the Author.
María Luz	67
Esperanza	171
Total	541

Table 9.2 Cumulative Exploration Expenditures of Silver X (US$)

Item	2017	2018	2019	2020	2021	2022	Total
Administration	$162,097	$251,348	$1,625,783	$1,183,787	$1,729,358	$1,314,634	6,267,007
External advisors	$479,568	$31,062	$185,280	$63,444	$104,345	$148,159	$1,011,858
Geology	$39,988	$122,157	$383,664	$292,050	$601,308	$345,030	$1,784,197
Mine	$0	$48,646	$1,678,912	$1,800,790	$538,300	$504,459	$4,571,107
Sample	$5,904	$45,804	$294,111	$131,613	$401,472	$377,926	$1,256,830
Social	$8,148	$18,529	$83,666	$75,922	$94,547	$237,886	$518,698
Environmental	$25,802	$16,274	$221,764	$162,528	$478,707	$344,406	$1,249,481
Legal	$2,606	$6,838	$51,525	$4,322	$114,389	$238,674	$418,354
Total	**$724,113 **	**$540,658 **	**$4,524,705 **	**$3,714,456 **	**$4,062,426 **	**$3,511,175 **	$17,077,533

9.1 Tangana Sector

9.1.1 Location

20 km to the north of the Recuperada plant (Figure 9.2).

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Figure 9.2 The Tangana Sector (Source Silver X/INGEMMET 3/25/22)

(Showing concession numbers, concession boundaries in blue and veins in red)

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9.1.2 Veins

The style of mineralization is typically intermediate sulfidation, lower epithermal to upper mesothermal veins hosted in andesitic pyroclastic breccia flows. At lower levels, they are hosted in andesitic lavas and mineralized with galena, sphalerite, pyrite, chalcopyrite and native gold in a gangue of subhedral to euhedral quartz, calcite and rhodochrosite. Mineralization at Tangana is mostly hosted in normal fault structures in epithermal, colloform, subhedral quartz banding and crustiform euhedral quartz, occasionally cut by post-mineral, andesite dikes. Historic BVN production occurred from 1960 to 1975 with 234,098 t of ore extracted. The four, main Tangana sector veins have a horizontal extent of approximately 2.5 kms each and a vertical extent of approximately 960 m from 4,120 to 5,080 masl. There are 68 veins and splits so far identified including:

• Tangana 1 vein, which has been reopened on the 4680 and 4620 levels (Figure 9.3 to Figure 9.8) and currently under development along the strike of the vein to the WNW at the 4680 level beyond the former BVN workings. It had replaced the San Antonio vein as the main producer for Nueva Recuperada. The vein dips to the southeast and has an average width of 1.29 m ranging between 0.11 and 10.6 metres. The current average grades from Silver X development are 75.03 g/t Ag, 1.73% Pb, 1.78 % Zn, 1.75 g/t Au and 0.21% Cu from the Measured + Indicated Resources according to the block model along with unexpected, bonanza grade pockets with native gold running up to percentage point in gold content (Fig. 9.20).

• Tangana 2 vein has an average strike of N 70° W dips 75° towards northeast (as opposed to southwest at Tangana 1) and has an average width of 0.85 m ranging between 0.14 to 6.0m and outcrops for 1.6 km (Figure 9.10). Tangana 2 vein was a significant producer for Buenaventura.

• The Morlupo vein is a semi parallel to Tangana 2. It was mined by BVN and has surface expression of 1.1 km of strike, an average thickness of 1.49 m returning values of 57.75 g/t Ag, 1.40% Pb, 0.87% Zn, 0.88 g/t Au and 0.02% Cu from the Measured + Indicated Resources according to the block model.

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Figure 9.3 Tangana 1 vein, Level 4620

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Figure 9.4 Tangana 1 vein, channel sample, Level 4620

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Figure 9.5 Tangana 1 Vein, Level 4680, 2.0+ m wide

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Figure 9.6 Tangana 1 Vein, Level 4680, galena, sphalerite and pyrite

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Figure 9.7 Tangana 1 Vein Long Section showing 2021-22 exploration drill campaigns and BVN and Silver X workings

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Figure 9.8 Tangana 1 vein, Level 4680, a portion of the veining representing 80 cm width of a 2 m wide vein. Colloform banded subhedral quartz, euhedral quartz, rhodocrosite, galena, sphalerite, and pyrite

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• To the southeast and subparallel to Tangana 1, the Tangana 3 vein has an average thickness of 1.7m and has returned assay values of 102 g/t Ag, 5.44 % Pb, 2.87 % Zn, 0.30 g/t Au and 0.14 % Cu from outcrop. Tangana 3 was not exploited by BVN.

• The Estrella vein outcrops for 1km along a strike of N 60° E, dipping to the southwest (Figure 9.9 and Figure 9.10). It intersects the Tangana 2 & 3 veins and wasn’t exploited by BVN. Average thickness is 0.70m and outcrop samples returned assay values of 45 g/t Ag, 1.21 % Pb, 0.88 % Zn, 0.81 g/t Au and 0.15 % Cu.

• Tangana 4 vein is situated 50m to the southwest of’ and sub-parallel to the Estrella vein with similar widths. The vein has an average thickness of 0.80m. Outcrop samples returned assay values of 138 g/t Ag, 1.39 % Pb, 0.74 % Zn, 0.22 g/t Au and 0.13 % Cu. It was not exploited by BVN.

• The Gaby (Tangana 5) vein has an average strike of N 65° W and average dip of 78° NE. It is located to the south of the Estrella vein and outcrops for 2.0 km with a thickness between 0.70 m to 1.00 m. Outcrop sampling returned assay values of 98 g/t Ag, 0.39 % Pb, 0.11 % Zn, 0.46 g/t Au and 0.02 % Cu.

• The Vizcacha has an average strike N 70° W and average dip of 73° SW. It outcrops for 600 m and returned assays grades of 4 g/t Ag, 0.14 % Pb, 0.20 % Zn, 0.30 g/t Au and 0.01% Cu.

• The Tangana 6 - 9 veins are an extension of the NW-SE striking array of veins further to the south. These veins are strongly oxidized structures with variable widths (0.3 – 2.0 m) which have returned assay values over 100 g/t Ag.

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Figure 9.9 Tangana vein system looking to the north, showing from left to right Tangana 4, 3, Estrella, and 1 - 2 (2019)

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Figure 9.10 Looking to the WNW, Tangana 2 vein (approx. 1.6 km long), Estrella Vein

9.1.3 Expectations

Silver X is planning to continue and accelerate both surface exploration and underground exploration drifting and drilling. The aim is to have development fronts on the Estrella, Tangana 3 and Tangana 4 veins and to reopen the previous, lowest level of workings of Tangana 2 to exploit unmined, historic ore blocks.

9.2 Cauca Sector

9.2.1 Location

16 km to the north of the Recuperada plant: the Cauca vein is located 400 m north of Tangana 1 (Figure 9.11).

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Figure 9.11 Cauca Vein Long Section looking northeast

9.2.2 Veins

Cauca vein outcrops for 2.4 km with along an average strike of N 75 W and dips at a high angle northeast, trending sub-parallel to Tangana 2. It has an average width of 1.39 m at surface and extends vertically from 4,600 to almost 5,000 masl. Mineralization is of epithermal/mesothermal, intermediate to low sulfidation type and contains galena, sphalerite, pyrite and tetrahedrite in ginguro, colloform and crustiform banded subhedral to euhedral quartz with a clay and barite gangue (Figure 9.13).

Cauca vein is hosted in volcanic breccia and dome lithologies which display an argillic alteration halo from 5 – 20 m wide dominated by kaolinite, illite and smectite. Assay values from outcrop have returned an average of 127 g/t Ag, 3.35 % Pb, 2.81 % Zn, 0.22 g/t Au and 0.05 % Cu. The Cauca vein was mined by Buenaventura from 1964 to 1976 producing 33,814 t of ore. Silver X has driven a crosscut from Tangana 1 vein accessing under the BVN workings at the 4680 level.

In early 2020, Silver X drilled two holes, intercepting the Cauca structure with positive results:

• CAU-001: 1.4 m @ 1.23 g/t Au, 22 g/t Ag, 0.17 % Pb and 0.1 % Zn

• CAU-002: 1.74 m @ 0.47 g/t Au, 21.7 g/t Ag, 0.6 % Pb and 1.59 % Zn; & 1.1 m @ 1.46 g/t Au, 71.2 g/t Au, 0.86 % Pb and 0.81 % Zn (Figure 9.12)

With the communication in 2022 to the lower part of the Cauca Vein, Silver X initiated underground exploration and development. The Cauca Vein has been found to have an average of 65.67 g/t Ag, 1.06 % Pb, 0.72 % Zn, 1.82 g/t Au and 0.03% Cu from the Measured + Indicated Resources according to the block model.

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Figure 9.12 CAU-002: 157.35 – 159.15 m : 1.1 m @ 1.46 g/t Au, 71.22 g/t Ag, 0.86 % Pb and 0.81 % Zn including 0.4 m @ 5.5 g/t Au, 261.24 g/t Ag, 2.9 % Pb, 2.1 % Zn and 0.3 % Cu

9.2.3 Expectations

Silver X will continue both surface exploration and underground drifting and drilling. Cauca may become the main production vein if results show its merit.

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Figure 9.13 Cauca Vein float, epithermal ginguro sulfide banding

9.3 Tangana West Sector

9.3.1 Location

18 km to the north of the Recuperada plant; Tangana West is 2.5 km to the north of Tangana Mine (Figure 9.14).

9.3.1 Veins

Las Animas vein is an east - west structure which outcrops along 1.5 km of strike with an average width of 1.22 m with 0.23 g/t of Au, 569.23 g/t of Ag, 0.25% of Cu, 0.98% of Pb and 0.55% of Zn. Mineralization outcrops vertically from 4600 to 5050 masl.

At the highest point of the vein, it is mostly massive barite indicating that economic mineralization may be preserved at lower levels. The vein was emplaced along the contact of a dome intruding a volcano-sedimentary sequence. The Las Animas vein has at least four short, conjugate veins splays containing intense tetrahedrite-friebergite mineralization which show signs of prior artisanal exploitation during the 1970s.

The vein is highly oxidized at surface with outcrops displaying manganese oxides, barite and quartz. Sulphides are mainly pyrite and tetrahedrite-freibergite and were recorded from among 20 channel samples that returned potentially economic silver grades along 1.5 km of strike.

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Figure 9.14 Tangana West – Pucapunta Sectors

9.4 San Antonio Sector

9.4.1 Location

12 km to the north of Recuperada plant (Fig. 9.16).

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Figure 9.15 Figure 9.10 The San Antonio Sector (Source Silver X/INGEMMET 3/25/22)

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9.4.2 Vein

San Antonio is a mesothermal breccia vein hosted in limestones of the Chunumayo Formation and Pucara Group, between 0.35 m to 8 m wide, averaging 2.97 m underground with an average strike of N 55° W and an average dip of 78° SW (Fig. 9.16). It has been mapped along 3km of strike but has been separated into two sectors under logistical and geological criteria. Surface outcrop, trenching and small underground workings were cited in PAS reports. Mineralization is galena, sphalerite and pyrite with a gangue of calcite and minor euhedral quartz. There are at least two sub-parallel veins in the system and the Positivas 1 vein appears to intersect them.

Underground access to the vein is via five portals. A 15 m reconnaissance adit was developed along the vein in 2018 at the 4460 m level which revealed that the vein was mostly oxidized and had an average strike of N 60° W and dip of 80° SW. Average thickness was 0.50 m with grades of 494 g/t Ag, 20.48 % Pb, 2.66 % Zn, 0.06 g/t Au and 0.02 % Cu. Subsequent adits were driven to test the vein at 4420 m, 4400 m, 4330 m and down to the 4260 m level.

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• Figure 9.16 San Antonio mine looking from the east-northeast: the San Antonio Vein strikes from the portals to the ridge saddle at the upper right where it becomes the San Antonio Northwest Vein. The Positivas 1 Vein cuts through the small gap on the ridge line above the mine portals striking towards the San Antonio Vein to the right of the portals. (Photo taken in 2019)

Average strike is N 50° W with a dip of 85° SW at the 4400 level where access has been developed along 100 m of strike (Fig. 9.17). Average breccia vein thickness was 4 m returning assay grades from sulfides of 135 g/t Ag, 4.88 % Pb, 3.5 % Zn; 0.12 g/t Au and 0.01 % Cu.

Exploration drilling in March 2019 intersected down dip and strike continuation of the San Antonio vein with widths of 2.0 - 2.5 m in four out of five diamond drill holes which launched intensive exploration and development of the San Antonio vein. Between 2019 and 2021 a total of 47 drillholes with 6,706.6 m were drilled. Silver X is continuing to explore this vein.

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Figure 9.17 San Antonio plan view Level 4400 (MMTP, 4/30/19)

9.4.3 Expectations

At present, exploration and development at San Antonio consists of diamond drilling to expand the resource to resume development. Silver X has extracted 200,849 t with grades of 52.56 g/t Ag, 2.36 Pb % and 2.30 % Zn from 2019 to 2021. Development is planned down to the 4180 level.

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Figure 9.18 DDH U-REC-19-002 intercept cutting San Antonio vein at 36 m

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Figure 9.19 San Antonio Long Section (Silver X Jan 2022) showing workings, drilling and resource blocks

9.5 San Antonio Northwest Sector

9.5.1 Location

14 km to the north of the Recuperada plant (Fig. 9.23).

9.5.2 Veins

The San Antonio Northwest vein is the continuation of the San Antonio Vein at its most westerly and highest altitude. It is hosted in the limestones of the Chunumayo Formation and in the Tertiary Huachocolpa volcanics. There are a few small mines along the 2.5 km vein in the sector where the vein is from 0.3 to 1.5 m wide and contains galena, sphalerite, pyrite, realgar and native gold (Fig. 9.20) along with quartz and barite gangue. This area contains many small, narrow showings, some with structures <20 cm wide in a strongly argillized and silicified host. Assay results have returned characteristic polymetallic mineralization grading up to 0.8 g/t Ag, 1.25 % Pb and 4.92 % Zn along with occasional gold enrichment up to 1.965 g/t Au.

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Figure 9.20 Native Gold with pyrites in partially silicified limestones, San Antonio NW Vein

9.6 Pucapunta – Rescatada Sector

9.6.1 Location

10 km to the northwest of the Recuperada plant (Fig. 9.1).

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Figure 9.21 Pucapunta Sector Veins

Pucapunta-Rescatada is an area of 3 x 2 km containing at least 21 veins. The two principal veins are Asia and Hilda which were mined by BVN until 2010. BVN resource inventory documents show that there are many blocks that were not mined. The veins average 1 m wide and contain higher level sulfides including pyrite, chalcopyrite, arsenopyrite, tetrahedrite/freibergite along with galena and sphalerite/marmatite in quartz gangue.

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Figure 9.22 Pucapunta mines in Long Section

9.7 Positivas

9.7.1 Location

16 km to the north of the Recuperada plant (Fig. 9.23)

9.7.2 Veins

Positiva 1 vein has a reported width of 1.2 m and strikes approximately east-west towards the San Antonio vein which is at variance with the majority of veins in the sector. Surface and underground showings hosted in Chunumayo Formation and Pucara Group limestones display massive pyrite, sphalerite and galena with traces of tetrahedrite and chalcopyrite.

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The other Positivas veins in the main Positivas zone are northwest striking in a Tertiary volcanic sequence with intense silica-clay alteration (Fig. 9.24). Bedding dips 70° - 80° towards WSW. The silica-clay alteration zone is 3 x 1 km and enveloped by the Positiva 2 vein to the west and the Gaby and Santa Rosa veins to the east (Figs 9.24 - 9.26). There are also a series of auxiliary tensional structures between Santa Rosa and Positiva 2 distributed over a 200 m band with variable orientations from N 50° W, parallel to the Positiva 2 vein, to N 70° W. The main Positivas veins are variably highly oxidized and contain sulfides including galena, sphalerite and pyrite along with chalcedonic to euhedral quartz gangue and calcite.

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Figure 9.23 The Positivas Sector (Source Silver X/INGEMMET 3/25/22)

(Showing concession numbers, concession boundaries in blue and veins in red)

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Figure 9.24 The Positivas veins looking to the NW: a system of sub-parallel veins with a NW-SE strike in strongly argillaceously altered host

The Gaby vein has been interpreted to be the northwest continuation of the Angelica vein. The PAS estimations record vein thickness ranging from 0.5 to 1.4 metres with grades of 116.31 g/t Ag, 0.62 g/t Au, 4.25 % Pb and 1.63 % Zn as independently verified by both Silver X and the author. Third party contractors have reported production estimated at 7,200 t from the Gaby vein during the last two years (Fig. 9.27). BVN reported production of 1,478 t from the Positivas sector between 1963 and 1964 which, it is assumed, came from the Gaby vein. Currently there are two small mining operations run by contractors in the sector and, in 2020, workings were developed under the old workings on the Positivas 1 vein.

9.7.3 Expectations

This sector shows good potential. The Positivas sector vein system runs for 2.5 km with an exposed vertical extent close to 550 m. Veins are notably present as high-angle outcrops where chip samples taken by PAS and Silver X returned strongly anomalous results including silver values from 31 to 500 g/t Ag. Drilling and restarting the Positivas 1 vein is planned once permitting is obtained.

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Figure 9.25 The Positivas No.2 Vein

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Figure 9.26 Face View of Gaby Vein (1m wide) in the Lowest Level, Positivas Sector

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9.8 Angélica Sector

9.8.1 Location

3.5 km north of the Recuperada plant (Fig. 9.24).

9.8.2 Veins

The Angelica vein is 1.5 km long with an average width of 0.7 m. It has at least 200 m of vertical extent and has several subsidiary veins. BVN extracted 63,000 tonnes from the vein between 2007 and 2012. The veins are hosted in the Mesozoic Chunumayo and Pucara limestones with mineralization very similar to San Antonio: galena, sphalerite, pyrite with a quartz and calcite gangue.

9.9 Huachocolpa Sur

9.9.1 Location

10km to the North-Northwest of the Recuperada plant (Fig 9.28); 300m Southwest of the town of Huachocolpa.

9.9.1 Veins

The local host rocks are: green garnet skarns in the Pucara limestones adjacent to the boundary of a possible caldera; and the late Tertiary age Huachocolpa Formation. The latter is composed of andesitic-dacitic-rhyolitic lavas, pyroclastic flows and breccias, tuffs and domes. The veins contain galena, sphalerite and pyrite with quartz and calcite gangue. The sector is an area of intersection of vein trends striking N - S, N 45 E, E - W and N 50 W. Four veins were exploited:

The Luz Vein strikes N 80 W, dips towards 80 NE and contains galena, sphalerite and pyrite with quartz and calcite gangue. Vein width varies from 0.4 to 1.1 m.

The Porfiada Vein strikes N 50 W dips towards 80 NE and contains galena, sphalerite and pyrite with quartz and calcite gangue. It was operated by BVN from1962 to 1967 and produced 13,194 T.

The Flor Vein has notably higher grades than other veins in the sector. It strikes N 75 E, dips towards 80 NW and contains galena, sphalerite and pyrite, with quartz and calcite gangue. Vein width varies from 0.3 – 1.5 m. The mine has three known levels.

The Rocio Vein strikes N 85 W, dips towards 75 NE and contains galena sphalerite and pyrite with quartz and calcite gangue. Vein width varies from 0.5 – 1.2 m. The mine has one known level.

9.9.1 Expectations

Silver X is planning to continue field exploration in this sector during 2023.

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Figure 9.27 The Huachocolpa Sur Sector (Source MMTP/INGEMMET 7/31/19)

(Showing concession numbers, concession boundaries in blue and veins in red)

9.10 Tetehorno Sector

9.10.1 Location

6 km to the Northwest of the Recuperada plant (Fig. 9.29).

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9.10.2 Veins

These veins are located south and southwest from Huachocolpa Sur and immediately northeast and north of the important Caudalosa Chica (Kolpa) mine sector. They are hosted by the late Tertiary Huachocolpa Formation, adjacent to and inside the boundary of a possible caldera. The Huachocolpa Formation is composed of andesitic-dacitic-rhyolitic lavas, pyroclastic flows and breccias, tuffs and domes. The veins are zoned, varying from intermediate to high sulphidation and contain galena, sphalerite, enargite, luzonite, chalcopyrite and pyrite with quartz, alunite and calcite gangue with strong argillic alteration in the host rock. The sector is an area of intersecting vein trends striking N 45-80 E, E - W and N 50 W with widths of 0.6 to 0.8 m. Numerous veins are exposed and three were reported to have been exploited by PAS:

• Vein 1: Containing galena, sphalerite and pyrite with quartz and calcite gangue with a width of 0.6 m;

• Vein 2: Striking E - W, dipping towards 60 S, contains galena, sphalerite, chalcopyrite and pyrite with quartz and calcite gangue with a width of 0.6 m;

• Vein 3: striking N 80 W, dipping towards 75 SW, contains galena, sphalerite, chalcopyrite and pyrite, with quartz and calcite gangue with a width of 0.8 m.

9.10.3 Expectations

Field evaluations leading to drilling are planned.

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Figure 9.28 The Tetehorno Sector (Source MMTP/INGEMMET 7/31/19)

(Showing concession numbers, concession boundaries in blue and veins in red)

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Figure 9.29 Tetehorno looking northeast, Kolpa mines access road visible

9.11 Blenda Rubia – Micaela Sector

9.11.1 Location

1 km to the south - southwest of the Recuperada plant (Fig. 9.31).

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Figure 9.30 The Blenda Rubia Sector (Source MMTP/INGEMMET 7/31/19)

(Showing concession numbers, concession boundaries in blue and veins in red)

9.11.2 Veins

The host is the late, Tertiary age Huachocolpa formation composed of andesitic-dacitic-rhyolitic lavas, pyroclastic flows and breccias, tuffs and domes.

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The Blenda Rubia sector was intermittently in production from 1960 to 2013 producing 290,025 t of ore. BVN reported an average grade in 1997 to be 159.23 g/t Ag, 3.64 % Pb, and 7.06 % Zn at a width of 1.45 m. The 37 identified veins in the sector are mesothermal, low sulphidation veins containing galena, sphalerite, pyrite with euhedral quartz and calcite gangue (Fig. 9.32). Post mineral faults are notable. Veins are sub-vertical and confined to two main strike directions N 70-90 E and N 70 W. The principal vein is Blenda Rubia, striking N 80 E with an observed width of 1.5 m at the re-opened portal (Fig.33). It outcrops as one of the most impressive veins in the region. It is sub-parallel to the large Teresita vein which was the most important of Nueva Recuperada’s mines (1,321,668 t production) and may be the extension of the Mayola vein (114,197 t production). A third-party contractor supplied ore to the Recuperada plant in 2019 from development works.

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Figure 9.31 Vein from the Micaela sub-Sector

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Figure 9.32 Blenda Rubia Portal

9.11.3 Expectations

Silver X is planning to re-open the mine to drill and develop the workings via accessible fronts in 2023.

9.12 María Luz Sector

Location: 7 km to the southwest of the Recuperada plant (Fig 9.34).

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Figure 9.33 The Maria Luz Sector (Source Silver X/INGEMMET 3/25/22)

(Showing concession numbers, concession boundaries in blue and veins in red)

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9.12.1 Veins

The sector is bisected by the major northwest trending Chonta fault. Epithermal veins are hosted in the Mid to Late Tertiary volcanic Tantara, Sacsachero and Huachocolpa Formations which are composed of andesitic-dacitic-rhyolitic lavas, pyroclastic flows and breccias, tuffs and domes (Fig. 9.37). The Maria Luz rhyolitic porphyry intrusive hosts many of the veins. Silver X considers that the sector hosts some of the highest Ag tenors on the property including occurrences of 15 – 20 ounces per tonne Ag. The demonstrated vertical extent to the mineralization is a minimum of 410m, with outcroppings at up to 5,000 masl. To date, six veins have been partially developed with third party mine contractors currently inactive.

The Maria Luz sector was in production from 1987 to 1995 producing 117,185 t of ore from several veins. BVN reported its 2009 reserves (partially accessible) at 82,445 t with 419.23 g/t Ag, 0.4 % Pb and 0.7 % Zn with a vein width of 0.93 m. BVN resources were measured at 60,490 t with 552.65 g/t Ag, 0.48 % Pb and 0.88 % Zn with a vein width of 0.95 m.

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Figure 9.34 Kasandra portal at Maria Luz, the vein visible behind the blue pressure tank

The veins are epithermal, intermediate sulphidation in nature containing galena, sphalerite, pyrite, polybasite, argentite, proustite, pyrargyrite, marcasite, arsenopyrite, chalcopyrite, tetrahedrite, tennantite, freibergite and bournonite with colloform, subhedral quartz, rhodochrosite and calcite gangue (Fig. 9.36). Several veins were exploited on three levels. Veins are not defined by a single orientation but have numerous strikes.

Overall, the Maria Luz sector has 67 identified veins and splits and disseminated mineralization potential and encompasses the Luz Angela and El Palomo areas.

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Figure 9.35 Epithermal Ag-bearing veins with colloform subhedral and euhedral quartz and ginguro sulfide textures

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Figure 9.36 Upper portion of the Maria Luz Sector

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9.12.2 Expectations

Silver X is planning to continue field work, drifting and drilling in 2023. There are third party contractors that will resume developing underground workings on some veins to access historic ore blocks via the lowest level of workings.

9.13 Esperanza

9.13.1 Location

16 km to the south-east of the Recuperada plant (Fig 9.38).

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Figure 9.37 The Esperanza Sector (Source Silver X/INGEMMET 3/25/22)

(Showing concession sub-sectors in yellow, concession boundaries in blue and veins in red).

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9.13.1 Veins

A minimum of 171 veins and splits are hosted in Tertiary age volcanic and intrusive rocks of the Huachocolpa formation, which is composed of intermediate, dacitic/granodioritic sequences of lavas, tuffs, breccias, domes and other intrusives. Veins in the Esperanza area are mesothermal, subhedral to euhedral textured and polymetallic. They are known for their higher Ag tenor compared to those further north on the Nueva Recuperada property. Stibnite is frequently found in the mine dumps and its presence was catered to in the design of the Recuperada plant.

The Esperanza sector extends at least seven kilometres north to south and four kilometres east to west. It encompasses six subsectors: Esperanza, Rico Antimonio, Germana, Ticquillo, Acchisayhua and Quellomachay, all of which have been past producers.

• Esperanza

In the main portion of Esperanza, twenty-three veins and splits have been recognized. BVN reported a total of 523,913 t production from the Esperanza sector during the years 1970 through 2013. The veins are narrow, with widths of 0.3 to 1.7 metres. Average, historic resource grades over the entire sector were reported by BVN to be 256.58 g/t Ag, 2.94 % Pb and 4.84 % Zn. The Esperanza mine started producing in 1983, was halted in 1985 and restarted in 1989. The sector produced ore from multiple veins until 2014 (Fig 9.39). When the Esperanza production was reinitiated in 1989, it focused on the Nancy Luz – Camucha veins. Mine operations by BVN were conducted at the 590, 630, and 680 levels (Fig 9.40 & 9.41). Meanwhile, exploration and development by BVN had been initiated at 520, 595, 650 and 700 levels with plans to reach 750 and 800 levels to the west, and 680 and 730 levels to the east. It is important to note that exploration drilling below the 520 level by BVN was limited albeit successful and the core is currently being relogged by Silver X.

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Figure 9.38 View of the Esperanza 2001 West vein system looking north with Rico Antimonio sub-sector on right side of photo

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Figure 9.39 Long section of mineralized shoots in the Esperanza 2001 W vein

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Figure 9.40 Long section of mineralized shoots in the Esperanza 2001 E vein. Note the mineralized sectors without mine extraction

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Figure 9.41 Esperanza East sub-sector looking towards southeast

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Figure 9.42 Rico Antimonio sub-sector looking towards west

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• Rico Antimonio:

The Esperanza operations produced ore for a couple of years from the adjoining Rico Antimonio sub-sector with reportedly of high Sb and Ag grades. (Fig.43).

• Germana: Silver X considers the Germana sub-sector which is located to the north and adjoining the Esperanza sub-sector to be very prospective for exploration with more than triple the identified veins and splits compared to the Esperanza sub-sector (Fig.9.44).

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Figure 9.43 View of the Germana Sub-Sector looking towards southwest

• Ticquillo

Adjoining the Germana sub-sector to the south, the Ticquillo sub-sector contains numerous veins as well as part of a mineralized porphyry system to the west (Fig9.45).

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Figure 9.44 Ticquillo sub-sector looking towards west

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• Acchisayhua and Quellomachay

South of’ and adjoining Esperanza, this sub-sector contains few veins but includes part of a mineralized porphyry system to the west (Fig.9.46). There is a small underground mine on ground adjoining Quellomachay.

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Figure 9.45 Acchisayhua sub-sector looking towards southwest

9.13.2 Expectations

Silver X plans to reopen some levels and conduct exploration drilling throughout the Esperanza sector now that permitting has been obtained in 2023.

9.14 Sample Collection

Silver X has collected thousands of rock samples on various sectors of the property. These were mostly focused on exploration and development of the Recuperada project. All surface, drilling and underground samples have been collected. The sampling completed to date is considered to meet industry standards for quality and to be representative with no obvious biases present. Most of the rock samples are channel samples that are focused on vein structures, spaced ten metres apart on surface sites, while underground spacing is more tightly controlled with intervals from one to three meters.

Trench, “channel”, and “chip” sampling are the most common techniques used for collecting representative samples and assessing grade in vein-type deposits. On the Nueva Recuperada property much of the sampling was channel sampling in underground workings.

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The objective of these three sampling methods is to collect a representative portion of the mineralized material at an identified point on the vein structures under evaluation. The purpose is to record the metal and other elemental values of the vein through analysis of that portion of the vein allowing for interpretation and correlation with other parts of the entire vein. The portion collected is known as the sample and is comprised of rock fragments with a unique location and number. Silver X has collected and assayed thousands of samples at Nueva Recuperada, usually weighting between 3 to 5 kilograms. The samples are normally collected using a resistant plastic or cloth bag. The normal, technical sampling procedure used at the Nueva Recuperada project consists of the following steps:

• Recording the sample location;

• Cleaning the surface which has been selected for sampling;

• Laying out a clean plastic or cloth sheet below the sample site;

• Marking the space where the sample will be taken with two parallel guide lines separated by 10 to 20 cm, limiting channel leng/ths to 1.5 m, 0.5 m for vein samples;

• Collecting the sample from within the guidelines to a depth of 5 cm with a pick hammer, chisel or rock saw, taking care to ensure that the sample collected is proportional throughout the process, so that one part of the sample is not over-represented and that samples are taken perpendicular to vein strike direction;

• Where mineralized vein structures are fully exposed in surface outcrop, sampling is done from one side of the mineralized structure to the other. Minimum sample leng/ths are dependent on width of available outcrop;

• Mineralized sample fragments, without any external contamination, are collected in the resistant plastic or cloth bag. Depending on the width, leng/th, depth and bulk density of the channel sample, approximately 3-5 kg per sample are collected for analysis;

• The bag is clearly identified inside with a uniquely numbered sample ticket and the number written or a duplicate ticket stapled to the outside;

• The sample is described in writing in a notebook/tablet and the resulting channel often photographed. Channel sample leng/th and location coordinates are registered. A geological description of the sample is recorded;

• Samples are stored on site in clearly labelled bags in a secure storage facility attached to the Company core-shed;

• QAQC control samples are inserted into the sample lot prior to shipment;

• The bags are securely transported to a certified laboratory with a unique job number associated with delivery of the sample lot;

• The samples’ lot number and unique laboratory reception number are used as identifiers for “chain of custody” and are tracked through the assay and analysis process for subsequent incorporation into the database once QAQC sign-off on analytical results has been received.

Formerly BVN used somewhat old-fashioned methods of core storage on site at Nueva Recuperada. Silver X has created a new core and sample storage facility at the Recuperada camp and is using it to store newly drilled core and to store old, BVN core once re-logged.

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Figure 9.46 Surface outcrop channel sample

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Figure 9.47 Recuperada Core Storage facility

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10 Drilling

Diamond drilling exploration and trenching was conducted by BVN on the Nueva Recuperada property in various successful exploration campaigns after they acquired the Recuperada Mines in 1957 until they sold it to MMTP in 2017. The amount of BVN drilling is reported as 117,976.15 m and comprises hundreds of diamond drill holes. The Silver X drilling is summarized in Table 10.1. BVN drilling was conducted from standard sized underground and surface drills and Pack-Sak drills. Silver X has been relogging the BNV cores and has completed relogging of 43,316.41m. BVN trench data over 8,809 samples is currently being evaluated. PAS conducted trenching on veins in several sectors, most specifically on the San Antonio vein where the PAS data has been verified and has helped Silver X define the resource in this sector.

Silver X has been conducting subterranean exploratory diamond drilling and drifting in various areas of interest in the Nueva Recuperada project, completing 15,503.2 metres of diamond coring since March 2019. Core recoveries are excellent at over 90%. There appear to be no factors of concern for drilling, sampling or core recovery that could materially impact the accuracy and reliability of drill results. The historic, NI 43-101 compliant drilling data compiled by BVN has not been used by the author in this report beyond confirmation of volume and mineralization type as well as vein positions and extensions, but specifically not for grade calculations for the purpose of resource estimation. The PAS trenching data has been verified by the author and Silver X and has been used in part for the initial San Antonio vein grade calculations.

Silver X plans to continue with an aggressive 25,000 m drilling campaign at Nueva Recuperada that started in 2021 and continuing through 2023, including some 4,424.7 m of diamond coring on the San Antonio vein, 7,816.5m in Tangana and more than 13,000 m over the rest of the property. The 2023 exploration drilling program has been planned to include targets in Esperanza, Tangana, Cauca, Ccasahuasi, Positivas and Maria Luz sectors.

BVN used’ and Silver X continues to use industry standard drilling and drill core handling procedures including:

• Personnel and equipment safety and awareness when operating;

• Environmental damage prevention and remediation;

• Core handling from inner tube to core boxes and markups;

• Downhole surveying;

• Core quick logging, followed by geomechanics logging, sample markup, photographs, detailed logging and core sampling using diamond saws;

• Core sample tracking under a QAQC program.

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Figure 10.1 Underground diamond drilling at San Antonio

The BVN core has been studied and roughly a half has been re-logged to date. Silver X drilling has been successful in confirming and finding vein mineralization at San Antonio, Tangana 1, Tangana 2, Tangana 3, Morlupo and Cauca which has been crucial for the physical verification and validation of historic data allowing new resource estimates to be made.

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Figure 10.2 Mineralized core intercepts of the San Antonio vein

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Table 10.1 Silver X Drilling

Sector	No Drillhole	Drilled meters	Year	Machine
San Antonio	18	2,253	2019
San Antonio	28	5,269	2021	LM75-32 & RD1000-3
Tangana	12	2,933	2021	LM75-32 & RD1000-3
Tangana & Cauca	23	4,599	2022	LM-75-32
Total	73	15,503

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11 Sample preparation, analyses, and security

Data used in this report comes from Silver X operations and exploration activities. Silver X uses the assay laboratory on-site at the Recuperada plant for monitoring underground and mill feed grades with check assays made by CERTIMIN. For exploration, Silver X is currently using CERTIMIN’s laboratory in Lima as well. Both on- and off-site laboratories were visited in the period from December 27, 2021 to January 4, 2022 and again in October 2022. The author had previously inspected the Actlabs and ALS Chemex laboratories in Lima used by BVN and PAS. The CERTIMIN lab is fully certified whilst certification of the on-site, plant laboratory is pending but weekly, third party assay controls are being met.

11.1 Sampling methods

The samples are shipped by Company 4x4 vehicle from the field to either the plant laboratory or to the certified and independent CERTIMIN analytical laboratory facility in Lima using the following procedures:

Bagged samples are securely transported to the certified laboratory with a unique job number associated with the delivery of sample lots, with QAQC control samples inserted into the sample run by trained QAQC staff: both fine and coarse blank samples, field duplicates and twin samples are inserted into each batch of field samples prior to shipment. The QAQC control samples, including the random insertion of certified reference materials, are designed to test the integrity of the samples by providing an independent check on precision, accuracy and possibilities of contamination during sample preparation and analytical procedure at the laboratory. The sample lot numbers and unique laboratory reception number identifiers are used to record “chain of custody” and are tracked through the assay and analysis process and for subsequent incorporation into the database once QAQC sign-off on analytical results has been received.

11.2 Reception, Inspection and Verification

The laboratories have protocols with specific, observed procedures including the training of personnel responsible for the reception of mineral samples through an adequate custody chain. Laboratory personnel check the condition of samples at reception, the identification records, weights, humidity and other characteristics. Once agreement has been established between the sample dispatch data and the sample reception data, the sample is passed to preparation.

11.2.1 Sample Preparation

The normal CERTIMIN sample preparation procedure is:

• Drying the samples at 60ºC for 24 hours;

• Coarse crushing of rock chip and drill samples to 70% passing 6mm;

• Fine crushing to 90% passing through a 10# ASTM (2mm) mesh;

• Homogenization of the crushed sample followed by splitting using a rotary splitter to a 250g fraction;

• Pulverization of the 250g fraction to 85% passing 200# ASTM (75µm) mesh;

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• Splitting of the sample and re-pulverizing one split to 85% passing 75 microns.

11.2.2 Chemical Analyses

• CERTIMIN complies with ISO 9001, OHSAS 18001 and is a fully recognized and certified facility.

• After the samples have been prepared for analysis (code G0640), the sample pulps are analyzed for gold, silver and multi-elements using relevant CERTIMIN analytical procedures.

• All samples are analyzed for gold using 30g nominal weight fire assay with an ICP finish (code G0108). Where analytical results from G0108 are >10g/t Au, the analysis is repeated with 30g nominal weight fire assay and a gravimetric finish (code G0014).

• For multi-element analysis, a 10g split of the pulp is treated by a four acid digestion ICPAES/ICP-MS method (code G0176). Where multi-element results from G0176 are greater than 100ppm for Ag, the analysis is repeated with an ore-grade, four acid digestion method (Code G0002). Where multi-element results from G0176 are greater than 10,000ppm for Cu, Pb or Zn, the analysis is repeated with ore-grade, four acid digestion methods, respectively codes G0039, G0077 and G0388. The four-acid digestion effectively decomposes almost all minerals.

• Periodically, duplicate sample pulps are sent to independent umpire laboratories for review and checking of CERTIMIN analytical results.

11.2.3 Chemical Analyses Reports

Reports of the different chemical analyses are delivered as Certificates that include quality control for each sample batch. Electronic reports of chemical analysis by batch are reported in Excel and PDF. ACTLABS certificates of PAS samples are also available, but past BVN certificates are not available.

11.2.4 Storage of samples, rejects, and pulps

After reporting the chemical analysis, CERTIMIN stores the pulps and rejects for a period of two months with no charge from the moment that the Certificate is issued. After that, the laboratory will apply a storage charge.

11.2.5 Return of Sample Pulps and Rejects

CERTIMIN delivers all pulps and rejects to Silver X in Lima as sealed, quality of return products. Silver X then ships the rejects and pulps to the Nueva Recuperada core facility to be stored. Samples and pulps from the Recuperada plant laboratory are transferred to the Silver X geology department for storage.

The author is confident that during the period in which BVN was in charge of Nueva Recuperada production, sampling assurance and QAQC controls were conducted and documented to meet industry standards. Additional confidence in BVN QAQC procedures is afforded by the correlation between mineral resource tonnages and grades reported in maps and technical documentation and actual production data. PAS sampling methods and analyses are also considered reliable because PAS has well defined procedures and certificates covering historic PAS data has been kept at Act Labs.

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The writer is confident that the exploration data generated by Silver X and used for this Technical Report meets the highest industry standards for sample preparation, security and analytical procedures.

11.2.6 QAQC

Silver X Mining has introduced a fully, NI 43-101 compliant quality assurance/quality control (QAQC) protocol for all its exploration projects. With the objective of assuring best practice compliance, resource and exploration related assay results are not reported until the results of internal QAQC procedures have been reviewed and approved.

The QAQC procedures for Silver X were reviewed by the author and meet industry standards. Silver X follows industry standard sampling and transfer protocols (above, 11.1) to and from the CERTIMIN laboratory in Lima. CERTIMIN has industry standard internal QAQC protocols and has achieved the highest accreditation to international standards (ISO 9001, OHSAS). Within CERTIMIN the internal QAQC procedures include the insertion of blanks, standards and duplicates, and the tracking and evaluation of the results to ensure meeting analytical standards (Fig 11.2, 11.3).

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Figure 11.1 An Example of historic BVN QAQC, tracking of inserted Ag standards assays

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Figure 11.2 An Example of Silver X QAQC, tracking of inserted Pb standards assays

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Figure 11.3 An Example of Silver X QAQC, comparison of duplicates Pb analysis

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12 Data verification

12.1 Geology Data Verification

The author has physically examined and confirmed drill intercepts at the Recuperada project, the surface extension of continuous outcrops and underground exposures of veins at San Antonio, San Antonio Northwest, Blenda Rubia-Micaela, Tangana 1, Tangana 2, Positivas, Cauca, Tangana West, Pucapunta, Huachocolpa Sur, Angelica, Esperanza and María Luz sectors, as well as validating their thickness where accessible. Grades and locations for many of the historic results coming from PAS and BVN sampling were confirmed by Silver X mapping with samples certified by CERTIMIN. Additional historic workings and veins that have been physically verified and validated include San Antonio Northwest, Blenda Rubia-Micaela, Tangana, Positivas, Cauca, Pucapunta, Blenda Rubia and María Luz Sectors. The historic data for the majority of the mineralization sectors has now been physically verified and validated giving weight to’ and increasing confidence in the veracity of historical data for the other sectors.

Historic BVN silver grades and reserve tonnages between 1957 and 2014 correlate well with real production data. Examination of historic BVN resource calculation and estimation data and written corporate procedures shows that BVN staff performed professionally and to industry standards. Historic BVN surface and underground mine maps have been verified by the exploration and development work of Silver X. The BVN, PAS, Peruvian Metals, Gemin and Silver X data is considered adequate and acceptable for use in this report. This is some of the same data that was used recently for the production forecasts by Silver X: in one case, Tangana, current production figures correlate well with data from the same veins and blocks left in place by BVN; in other cases, future production will come from new sectors that have the same intrinsic nature as the mineable sectors exploited by BVN.

Table 12.1 Site Visit Sample Assay Validation – Huachocolpa (Dec 2021)

Location	Sample	Sample	Minz	Au	Ag	Cu	Pb	Zn
	Type	Size	Type	ppm	ppm	ppm	ppm	ppm
Tangana 1 Nv 4620 Tangana 1 Nv 4680	Channel Channel Channel Channel Channel	0.50 0.50 0.50 0.30 0.70	Vein Vein Vein Vein Vein	0.136 0.108 0.276 0.333 0.438	120 87.3 57.8 119 157	5498 7257 3953 7292 3238	1.64% 1.80% 5724 1.79% 5.74%	1.69% 2.34% 6000 3.22% 3.32%
Animas SE Animas SE	Comp Grab Select Grab		Vein Breccia	0.179 2.572	96.8 41.7	477 125	4.55% 6076	1.81% 5651
Cauca NW	OC Channel Chip OC Channel Chip OC ChannelChip	1.00 0.50 0.50	Vein Vein Vein	0.371 0.168 0.005	6.1 5.5 4.3	194 122 90.8	2950 1588 975	469 264 245
Ccasahuasi	OC Channel Chip		Dissem Vol Minz	0.181	11.7	11.9	421	71.8
San AntonioNW 4800Adit	Comp Chip		Vein	0.415	56	1286	3.14%	5.50%
Pucapunta Level 4600 AsiaPortal NV 4735	Select Dump CompDump		Vein Vein	24.46 2.019	353 69.6	1.64% 3009	2.77% 2474	16.16% 4240
San Antonio SN 4260	ChannelChip	1.80	Breccia	0.134	234	299	13.01%	8.64%
MariaLuz	SelectDump Grab		Vein	0.034	19.7	23	436	278

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12.2 Metallurgy and Mineral Processing Data Verification

Bernardino Alegría, process consultant from Transmin visited the La Recuperada concentrator between 7 and 8th December, 2022. The purpose of the site visit was to visit the core shed, verify the project’s exploration procedures, visit the current underground operations and beneficiation plant at Nueva Recuperada, interview project personnel and to collect relevant information on the Tangana site.

The following were used to verify the data collected from the plant campaigns:

• Metallurgical accounting balances from the 2022 treatment campaigns were closed and reconciled with mine production reports and concentrate sold on a monthly basis in order to ensure accuracy and accountability.

• The plant sampling, flow measurements, sample preparation, concentrate dispatch, and assay laboratory facilities were visited in order to assess their reliability.

• Supervising staff were interviewed and documentation was reviewed in order to gain a better understanding of their compliance, procedures and policies.

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13 Mineral processing and metallurgical testing

13.1 Introduction

The metallurgical investigation for this PEA is based on:

• 2021 and 2022 Flotation tests performed by the National University of Engineering (UNI) in Lima, Peru.

• 2022 data from an existing concentrator operating on site at Nueva Recuperada.

• Substantial data was also available from reports commissioned by the previous owners (Buenaventura) at the Nueva Recuperada plant, but the representivity of this data is not clear.

Chapters 7 and 8 inform that the Tangana Mining Unit (TMU) is composed of several, kilometric leng/th veins of 2 to 3 m in width. These veins are described by geologists as the product of a single katathermal genetic process, at several kilometres depth with concurrent intense alteration of the host rocks. Visual geological logging indicates that the mineral assemblages and textures are similar in these veins.

At this stage, it has been assumed that the metallurgical response will be similar for each of these veins. Further sampling and metallurgical testing would be required to confirm this at the next stage of study.

13.2 2021 and 2022 UNI Testwork

In 2021, researchers from the Faculty of Geology, Mining and Metallurgical Engineering of the National University of Engineering conducted two metallurgical flotation tests on polymetallic minerals at the Nueva Recuperada plant. A second flotation study was also conducted in 2022 on a different sample.

These testwork results are only indicative, and should not be used for decisions, as the testwork was not done to industry standards, lacked detail and supervision. Test condition representivity and sample representivity were not established.

13.2.1 Samples

Two samples were taken from the 4650 level of development of the Tangana vein. The exact sample location, sampling method, and dates were not recorded.

Table 13.1 Head Grade of the samples tested

Head grade	Pb (%)	Cu (%)	Ag (oz/st)	Zn (%)	Au (g/t)
Sample 2021	5.70	0.85	9.83	7.39	0.62
Sample 2022	3.50	0.18	2.77	1.77	2.29

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13.2.2 Flotation

Each sample was subjected to:

• an open batch flotation test producing bulk Cu-Pb, and Zn concentrates

• an open batch flotation test producing differential Cu, Pb, and Zn concentrates

Each test was completed using the sample parameters:

• 1 kg charge of material

• 60% passing 75 µm primary grind size

• A classic reagent regime based on strong doses of collectors and depressants, different to the current operating plant regime that has been proposed for the new concentrator, as the basis of this report.

• No attempt to optimize the flotation times, reagents, or grind size were made.

Table 13.2 Sample 2021 batch flotation test results

Stream	Mass
			Grade				Recovery,%
	%	Pb,%	Cu,%	Ag, oz/st	Zn,%	Pb	Cu	Ag	Zn
Assayed feed	100.0	5.7	0.9	9.8	7.4	100.0	100.0	100.0	100.0
Conc. Bulk Cu-Pb	6.6	62.3	7.9	77.9	2.7	74.7	66.6	62.0	2.5
Mids Bulk Cu-Pb	8.9	12.1	2.1	19.6	22.7	19.7	23.7	21.0	28.8
Conc.Rougher Bulk Cu- Pb	15.4	33.5	4.6	44.4	14.2	94.3	90.2	83.1	31.3
Conc. Zn	7.5	1.3	0.5	9.5	55.5	1.8	5.1	8.7	59.5
Mids Zn	6.3	0.8	0.2	2.4	5.5	0.9	1.9	1.8	5.0
Conc. Rougher Zn	13.8	1.1	0.4	6.2	32.6	2.7	7.0	10.5	64.5
Tails	70.8	0.2	0.0	0.8	0.4	3.0	2.7	6.5	4.2
Calculated feed	100.0	5.5	0.8	8.2	7.0	100.0	100.0	100.0	100.0

Table 13.3 Sample 2022 batch flotation test results

Stream	Mass
			Grade				Recovery,%
	%	Pb,%	Cu,%	Ag, oz/st	Zn,%	Pb	Cu	Ag	Zn
Assayed feed	100.0	3.5	0.2	2.8	1.8	100.0	100.0	100.0	100.0
Conc. Bulk Cu-Pb	4.2	69.2	2.6	48.9	2.1	84.7	57.0	76.1	4.4
Mids Bulk Cu-Pb	2.1	2.9	0.4	5.0	3.2	1.8	5.0	4.0	3.4
Conc.Rougher Bulk Cu- Pb	6.3	46.7	1.9	34.0	2.5	86.5	61.9	80.0	7.8
Conc. Zn	3.0	2.5	0.5	3.4	50.1	2.3	8.5	3.9	75.6
Mids Zn	7.4	1.2	0.3	3.2	3.3	2.6	11.9	8.9	12.4
Conc. Rougher Zn	10.4	1.6	0.4	3.3	16.8	4.9	20.3	12.8	88.0
Tails	83.3	0.4	0.0	0.2	0.1	8.6	17.7	7.2	4.2
Calculated feed	100.0	3.4	0.2	2.7	2.0	100.0	100.0	100.0	100.0

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These batch results are compared with the 2022 closed plant campaign results.

13.2.3 Mineralogy

In 2021, a sub-sample was extracted from the sample tested for flotation and sent to the Faculty of Geology, Mining and Metallurgical Engineering at the National University of Engineering for mineralogical analysis. Polished briquettes were manufactured using the sample and subjected to a polarization microscope examination to determine the mineralogical composition, ascertain the presence of economic minerals and their textures.

The sample analysed in 2021 contained galena (6%), chalcopyrite (2%), covellite (2%), sphalerite (5%) and pyrite (17%) as sulphides, along with a silica-iron oxide. Gangue comprises 68% of the sample.

The sample showed primary sulphides and secondary copper sulphides, from three sources – chalcopyrite, covellite and bornite. Quartz was the main gangue material.

There were chalcopyrite inclusions in the sphalerite and mixed grains of galena and chalcopyrite which may reduce efficiency in separating the copper, lead and zinc into separate concentrates.

Free gold was observed, suggesting that a gravity concentration circuit would be useful.

13.3 2022 Plant Performance

The existing Nueva Recuperada plant has been operating for several decades. Since 2019 it has been operated by Silver X, and since April 2022 it has been treating material from the Tangana zone, that is a part of the resource discussed in this report. The production was all from the Tangana 1 Vein, which lies to the southwest of the Tangana 2 Vein.

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Figure 13.1 Tangana 1 stopes and 2022 production workings

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Figure 13.2 Tangana 1 and Tangana 2 production workings in 2022

The Cauca and Mor veins are separate and distant to the material treated in 2022, and so are not represented by the 2022 Nueva Recuperada plant performance.

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Figure 13.3 Cauca stopes with respect to Tangana 1 and Tangana 2

The resource geologists expect that the veins in the resource have similar geometallurgical characteristics and have likely been formed from similar mineralization events. Geochemical analysis and visual logging have indicated that these veins likely have a similar mineralogical composition, primarily consisting of sulphide-based minerals and exhibiting similar metal content. In conclusion, no tests have been done on material from the wider Tangana zone, other than Tangana 1 vein, or the Cauca zone, and so the historical plant performance is adequate for a resource estimate for a PEA level study, however substantial sampling and testing will be required prior to declaring reserves for the project.

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13.3.1 Tonnage

The objective has been to operate at 550 tpd, but the plant is old and inefficient. There are no automated control, measurement, or sampling equipment installed, and so production and performance has been variable, and typically lower than 500 tpd. Much of the shortfall is due to lack of feed available from mining operations. Figure 13 1 shows the plant throughout in 2022.

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Figure 13.4 Plant throughput performance in 2022

13.3.2 Lead recovery

Figure 13 2 shows a time plot of plant lead flotation recovery to the lead concentrate. No explanation has been given for the periods of low recovery, it is assumed that through metallurgical testwork, and plant improvements, that the long term performance will be 89% Pb recovery (orange line).

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Figure 13.5 Plant lead recovery

Figure 13 3 shows the 2022 plant lead recovery vs feed grade. The expected feed lead head grade is shown as a yellow line for reference.

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Figure 13.6 2022 plant lead recovery vs feed grade

13.3.3 Zinc recovery

Figure 13 2 shows a time plot of plant zinc flotation recovery to the zinc concentrate. No explanation has been given for the periods of low recovery, it is assumed that through metallurgical testwork, and plant improvements, that the long term performance will be 84% Zn recovery (orange line).

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Figure 13.7 2022 plant zinc recovery

Figure 13 3 shows the 2022 plant zinc recovery vs feed grade. The expected feed zinc head grade is shown as a yellow line for reference.

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Figure 13.8 2022 plant zinc recovery vs feed grade

13.3.4 Silver recovery

Figure 13 2 shows a time plot of plant silver flotation recovery to the lead concentrate. No explanation has been given for the variability of the silver recovery, it is assumed that through metallurgical testwork, and plant improvements, that the long term performance will be 85% Ag recovery (orange line).

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Figure 13.9 2022 plant silver recovery

Figure 13 3 shows the 2022 plant silver recovery vs feed grade. The expected feed silver head grade is shown as a yellow line for reference.

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Figure 13.10 2022 plant silver recovery vs feed grade

13.3.5 Gold recovery

Figure 13 2 shows a time plot of plant gold flotation recovery to the lead concentrate plus the intermittent recovery of gold to a gravity concentrate. There seems to be coarse gold present in Tangana so the accuracy of the metallurgical accounting has been poor. Nonetheless, plant results in the latter half of 2022 do indicate that relatively high gold recovery can be achieved through gravity recovery and flotation to a lead/copper concentrate.

It is assumed that through metallurgical testwork, and plant improvements, that the long term performance will be 76% Au recovery (orange line).

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Figure 13.11 2022 plant gold recovery

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13.3.6 Flotation

The 2021/2022 laboratory tests conducted were preliminary and did not rigorously test the principal parameters such as grind size, reagents, and flotation rates. Nonetheless, the results obtained in the batch testwork compares reasonably to the plant performance on the Tangana material. Both concentrate grades and recovery rates were sufficiently similar in the laboratory to support the performance predictions.

Figure 13.12 shows the laboratory batch data vs the closed plant results in 2022 for recovery and concentrate grade of lead. The comparison suggests that plant performance was similar to the laboratory testwork performance.

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Figure 13.12 Plant performance vs laboratory batch testwork – lead

Figure 13 13 shows the laboratory batch data vs the closed plant results in 2022 for recovery and concentrate grade of zinc. The comparison suggests that plant performance was similar to the laboratory testwork performance in terms of overall recovery and grade expected, but was not confirmed with a locked cycle test, so the plant data is likely more reliable.

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Figure 13.13 Plant performance vs laboratory batch testwork – zinc

There is no available test related to the gold recovery in the gold concentrate. The gold analysis at the existent operation has been recently implemented so there are no historic data about this.

13.3.7 Comminution

No comminution testwork has been conducted.

There is insufficient data available from the operating plant to estimate an operating work index for design purposes.

It is recommended that further work be done before the next stage of study:

• Representative samples be taken and tested for hardness and abrasion.

• A plant survey be taken from the existing plant to estimate the operating work index of the material.

13.3.8 Filtration

There is no test on filtering, but the lead and zinc concentrates produced and commercialized from the existent Nueva Recuperada plant prove that the products are suitable for filtering in a press filter.

The suitability of the tailings for filtering has not yet been demonstrated. A test program including characterization of the tailings and their suitability for paste storage should be conducted in order to provide data for the design of the paste plant and tailings facility.

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13.3.9 Reagents consumption

Based on data from the Nueva Recuperada facility, the average usage rate of reagents and materials between January and August 2022 is outlined in the following table.

Table 13.4 Average use of consumables at the Nueva Recuperada plant

REAGENT	kg/t
Lime for pH control	1.6
Zinc sulfate depressor	0.13
Copper sulfate activator	0.21
SIPX collector	0.06
MIBC frother	0.03
Sodium cyanide	0.003
Frother	0.03
Aerophine collector	0.001
STEEL
Grinding media	0.72

13.4 Concentrate Quality

Insufficient variability flotation testwork has been conducted to confidently project concentrate quality for all areas of the resource. It has been assumed for this report that the concentrate grades will be:

• 55% Pb in the lead concentrate

• 52% Zn in the zinc concentrate

These projections are supported by the 2022 production data from treating Tangana mineralization at the Nueva Recuperada plant, including an assumption that the new concentrator will include froth washing, which will increase the concentrate grades slightly.

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Figure 13.14 2022 plant lead concentrate quality

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Figure 13.15 2022 plant zinc concentrate quality

13.5 Minor elements

The assays of the concentrates sold from the 2022 Tangana production campaign were reviewed as indicators of precious and deleterious element grades to be expected in the concentrates.

Precious metal (gold and silver) grades in the concentrates depend on the ratio of the precious metal to base metal grades in the feed, and the recovery of each to the concentrate.

• The zinc concentrates were analysed for Zn, Ag, As, Fe, Hg, SiO[2] , Cl, and F.

• The lead concentrates were analysed for Pb, Ag, Au, Cu, As, Sb, Bi, and Hg.

Table 13.5 Typical concentrate quality at the Nueva Recuperada plant, 2022

Species	Units	Lead concentrate	Zinc concentrate
Pb	%	50-60%
Zn	%		48-53
Cu	%	5
Ag	g/t	2000	100-200
Au	g/t	20-100
As	%	1	0.2
Sb	%	1.5
Bi	%	0.1
Fe	%		5-8
Hg	g/t	10-20	20-40
Cl	g/t		0-80
F	g/t		0-200
SiO2	%		2-3

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While the concentrates were considered clean and commercial by the buyers, the arsenic and antimony grades were elevated in the lead concentrates. This is likely due to the silver minerals recovered that also contain these metals, so reducing them via flotation would not be beneficial, as silver would be lost. Further investigation into the modality of the arsenic and antimony is recommended.

Further locked cycle flotation testwork on representative samples from each vein and mineralization type is recommended prior to the next stage of development.

13.6 Metallurgical Variability

Variability testwork is an important step in the development process of a flotation concentrator. It allows for the evaluation of the variability of mineral types and how the flotation process responds to them. Such testwork is necessary to ensure that the flotation process is robust and can accommodate the range of mineral types in the resource.

Variability testwork should include testing a range of representative samples at the lab-scale, assessing the response of the process for each. The results of these tests are then used to develop a model that can be used to predict metallurgical performance for the resource.

In the case of the Tangana concentrator development, variability testwork has not yet been done, and should be completed prior to the next stage of development.

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14 Mineral Resource estimates

14.1 Introduction

The following describes in detail the initial, model with the Inverse Squared Distance Method (ID2) Nueva Recuperada Mineral Resource estimations and methodologies generated in 2022. These include modeled estimations for the four principal, currently active Tangana veins Tangana 1, Tangana 2, Morlupo and Cauca. In additionally the polygonal method estimations for multiple other veins within the Nueva Recuperada Property are described.

14.2 Disclosure

A crucial factor in any Mineral Resource estimation is how outside forces can materially affect a property's economics. It is positive for the Nueva Recuperada Property that there are excellent relationships and goodwill with the communities and also with the government, especially regarding the environment. This is clearly important for the present and future prospects for economic extraction of the property's mineral resources. Unlike so many mining projects, the property does not have major impediments in these areas and, in the current socio-political-economic environment, it has good, long term prospects for continuing extraction of economically valuable mineral.

The author has reviewed the data used in the modeled resource estimation generated by the current activities carried out by Silver X including surveys, mapping, sampling, production as well as drilling by Silver X. Also, historic data was used in creating the geologic model after validation of its content and locations. This review included: inspection of drill core and mine and plant reporting records; visiting mine workings and outcrops, sampling of veins underground with subsequent analysis at the plant and CERTIMIN laboratories; checking sample coordinates and confirmation of vein locations; a review of QA/QC procedures employed by both Silver X and CERTMIN; examination of mineral content data and tonnage estimates to conclude that surface data, production and drilling data are validated as adequate and correct.

The author has also previously reviewed the data and generated polygonal method resource estimates for the other vein sectors of the Nueva Recuperada Property for the prior NI 43-101 Technical Report of early 2022 that are also included in this report. This included the current activities carried out by Silver X and the historic data of BVN, PAS, Peruvian Metals and Gemin including surveys, mapping, sampling, production as well as the drilling by BVN and Silver X. The prior review included: inspection of drill core and mine and plant reporting records; visiting mine workings and outcrop sampling of veins with subsequent analysis at the CERTIMIN laboratory; checking sample coordinates and confirmation of vein locations; a review of QA/QC procedures employed by both Silver X and CERTMIN; examination of mineral content data and tonnage estimates to conclude that surface data, production and drilling data are validated as adequate and correct.

The resource estimate for each of the modeled veins are detailed in Table 14.11, 14.12, 14.13, 14.14 and 14.15, and are based on the tonnages and results extant on October 31, 2022 after discounts of mined volumes are made.

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Under the author’s supervision a modeled estimation of the main Tangana subsector veins Tangana 1, Cauca, Tangana 2 and Morlupo was generated which was used to define the current, modeled resources at the four Tangana veins of the Nueva Recuperada property. The previously reported, polygonal method resources for the other sectors have then been included as a separate resource category detailed in Tables 14.16, 14.17, 14.18 and 14.19.

In the author’s opinion, the Nueva Recuperada Property contains compliant, Current Inverse Squared Distance Method (ID2) and Polygonal Method Mineral Resources based on the following factors:

The author’s review of historic technical reports on the existing vein systems at the Nueva Recuperada Property as recorded by BMV, PAS, MMTP and Gemin and the concurrence between those reports and exploration data as well as tonnage and grade production data accumulated during the BVN operational period;

The author’s review of current Silver X technical reports on the existing vein systems at the Nueva Recuperada Property and the concurrence between those reports and historic exploration data as well as tonnage and grade production data accumulated during the BVN operational period;

The surface and subsurface expression of mineralized veins throughout the project;

Mineral grade and width continuity demonstrated over considerable vein strike and dip;

The assay certificates of Act Labs Laboratories for the PAS data and its in-situ verification by Silver X and the author;

Silver X corporate sampling and QAQC procedures;

The abundance of formerly and now reopened operating mines on the property with strong correlations of grades and widths with the Historic data;

Currently operating mines on adjoining properties containing similar mineralization to that on the Nueva Recuperada Property;

Verification by Silver X drilling and drifting to prove new resources that were inferred by previous surface sampling surveys;

The extensive period of mine production from veins that have still not been exhausted;

The existence of prepared underground access to structures that contain potentially viable mineral for extraction (i.e. Tangana 1 and 2, Morlupo and Cauca mines);

Current results of exploration and development work and processing carried out by Silver X during 2018-2022 (i.e. San Antonio, Tangana, Cauca, Blenda Rubia and others);

Four years of demonstrated sales of concentrates processed from the mineral extracted from the veins;

Familiarity of the Peruvian mining professionals and workers in the area with this type of mineral deposit;

The ability for the author to access existing mine workings during the site visits;

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The author’s knowledge of comparable, economically extractable mineral resources elsewhere;

The available logistics on the property for accessing mineral resources with reasonable prospects for eventual economic extraction;

The existence of several potentially mineable vein resources that have been left in situ since BVN operations ceased in 2014;

The interest and enthusiasm of the Huachocolpa Community for continued mining operations in the project; and

The technical reports, data, audits and sketches inherited from the previous owners.

These are updated compliant estimates using current data, prior, compliant estimates (2022), and historical data. The current and validated historic NI 43-101 compliant underground exploration and development, drilling and surface trenching data has been used in this report by the author beyond confirmation of volumes and mineralization and the levels of knowledge and confidence, and for grade calculations for the purpose of economic estimations of resources. Current and validated historic NI 43-101 compliant drilling and trenching data has been used for grade calculations for the purpose of economic estimation of resources in writing this report. The current and validated historic NI 43-101 data has been employed for confirmation of volumes and mineralization and for estimating vein positions and extensions. The source of resource calculation grades includes data from Silver X’s production, validated historic resources, new exploration data, historic BVN production reports and BVN and PAS exploration reports.

14.3 Compliant resource classifications

“A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling” (CRIRSCO, 2013).

This report provides Silver X with a Mineral Resource estimate and a classification of resources reported in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves, May 10, 2014 (CIM, 2014) compliant with NI 43-101 reporting. The manner in which resources are classified is shown in Fig. 14.9. Accordingly, the Resources have been classified as Measured, Indicated or Inferred. The resource estimates were originally conducted by Silver X and reviewed and revised by the author.

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Figure 14.1 General relationship between Exploration Results, Mineral Resources and Mineral Reserves (CRIRSCO, 2013)

Per CIM, 2014 :

(1) Measured Resources : “Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.

A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proved Mineral Reserve or to a Probable Mineral Reserve.

Mineralization may be classified as a Measured Mineral Resource when the nature, quality, amount and distribution of data are such as to leave no reasonable doubt, in the opinion of the Competent Person determining the Mineral Resource, that the tonnage and grade of the mineralization can be estimated to within close limits, and that any variation from the estimate would be unlikely to significantly affect potential economic viability.

This category requires a high level of confidence in, and understanding of, the geology and the controls of the mineral deposit.

Confidence in the estimate is sufficient to allow the application of technical and economic parameters and to enable an evaluation of economic viability with a high level of confidence.

Measured Resources can be converted to Mineral Reserves if certain Modifying Factors are appropriate. Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors. Modifying Factors are also used to convert Mineral Reserves into Mineral Resources as is applicable as changes mandate such conversions ”(CIM, 2014).

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(2): Indicated Resources : “An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.

Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Pre-Feasibility Study which can serve as the basis for major development decisions.” (CIM, 2014).

(3): Inferred Resources : “An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

An Inferred Mineral Resource is based on limited information and sampling gathered through appropriate sampling techniques from locations such as outcrops, trenches, pits, workings and drill holes. Inferred Mineral Resources must not be included in the economic analysis, production schedules, or estimated mine life in publicly disclosed Pre-Feasibility or Feasibility Studies, or in the Life of Mine plans and cash flow models of developed mines. Inferred Mineral Resources can only be used in economic studies as provided under NI 43-101.” (CIM, 2014).

14.4 Tangana veins modelled resource estimation

14.4.1 Tangana veins geological model

The geological model constructed for the modeled resource estimation of the four principal Tangana veins (Fig. 14.1) was built as a wire frame with historic and recent information. Historic information is mainly of vein level mapping plans, long sections and calculations of historic resources and some historic vein level sampling.

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Figure 14.2 Tangana Geological Veins Model – Left to right: Tangana 1, Tangana 2, Morlupo and Cauca Vein

14.4.2 Supplied data, data transformations and data validation

Silver X information used in the 2022 estimation is sourced from the company internal database. The database was used for the estimation with the Inverse Squared Distance Method (ID2) of the Tangana 1, Tangana 2, Morlupo, Cauca and also the Polygonal Method veins.

14.4.3 Data preparation

Collar, survey, lithology, and assay data exported from the Silver X data base were imported into Leapfrog (Geologic Model) and Datamine (Estimation) softwares and used to build three dimensional representations of the drill holes and sample channels. Assay values at or below the detection limits were corrected to half the detection limits. The number of surface drill holes, underground drill holes and channels available for the geologic interpretation process is shown in Table 14-1.

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14.4.4 Data Validation

An extensive data validation process was conducted by Silver X staff and Mineral Resource groups of Silver X prior to Mineral Resource estimation. Validation checks were also performed upon importation into the softwares and included searches for overlaps or gaps in sample and geology intervals, inconsistent drill hole identifiers, and missing data. No significant discrepancies were identified.

Vein Model Construction

Host lithology grade information is limited in the underground channel sampling, so it was decided to set a low-grade cut-off of sub detectable levels for each metal to differentiate host rock from the vein. This was largely done by visual examination of the grades as they interacted across the sample locations. The samples were selectively sampled between low-grade and high-grade material with a clear break between materials. Once the grade filter was applied to cull out the samples less than detectable, the remaining samples were used to construct hangingwall and footwall surfaces for the vein sections such that the surfaces would encompass the material comprising the vein while allowing the implicit modeling function to project the vein walls as they moved away from the data.

Vein Thickness

The total modeled vein thickness statistics are available in Table 14.1. These statistics are for all four veins and are calculated from the wireframe shape which takes into account thinning trends implied from the provided grade interval thicknesses. The veins thickness range is 0.1 m – 10.6 m, with an average thickness of the four veins is 1.29 m.

Table 14.1 Vein thickness statistics

Vein	Minimum	Average	Maximum
Tangana 1	0.11	1.29	10.6
Tangana 2	0.14	0.85	6.0
Cauca	0.10	1.39	8.0
Morlupo	0.20	1.49	8.9
Average	0.14	1.29	8.3

14.4.5 Tangana Veins Modeled Resource Estimation Process

The recent, current, non-historic database information was used in the resource estimation modeling and includes systematic underground vein mapping and channel sampling, diamond drill holes, their interceptions, and systematic surface channel sampling.

Database

The drillhole database is comprised of 2,299 total samples, including from 42 underground drillholes and 2,186 combined underground and surface channel samples taken during the course of the current mine exploration and development (see Table 14.2). Assays for gold, silver, copper, lead, and zinc were provided; lithologic values were supplied.

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The resource estimation relies on channel samples and drill holes. The Tangana veins have been lightly explored currently by using a drilling pattern spaced between approximal 50 m or less apart along strike and dip. Exploration drilling data is supplemented by current underground information including channel samples taken at approximately 3 m intervals perpendicular to the strike of the mineralization. Geological confidence and estimation quality are closely related to data density and this is reflected in the classification of resource confidence categories.

The lower proportion of the Au assay population compared to the overall sample population, and the high recovered values of Au per tonne required an atypical solution from the QP’s overseeing the modeled resource estimation. It was determined by the QP’s that using the plant reported, recovered Au calculated grade from exploration and development (2.25 gm/T from 53,547.18 T) for the five months July - November 2022 from the three veins currently in exploration and development could reasonably be used as the constant Au grades for the four veins in the estimation of measured resources.

The metal values were examined both for grade distribution and estimation purposes as well as for use in defining the mineralized vein domains to be estimated. The logarithmic metal grade distribution histograms for all samples were calculated with summary statistics.

14.5 Estimation Assumptions, Methods and Parameters

The 2022 Mineral Resource estimates for the four veins Tangana 1, Tangana 2, Morlupo y Cauca were prepared in the following steps:

• Data validation as performed by Silver X

• Data preparation including importation from software package

• Geological interpretation and modeling of mineralization domains

• Coding of drill hole and channel data within mineralized domains

• Sample leng/th compositing of both drill holes and channel samples

• Analysis of extreme data values and application of top cuts

• Exploratory data analysis of the key constituents – silver, gold, lead, zinc, copper and density

• Variogram analysis and modeling

• Derivation of kriging plan

• Kriging neighborhood analysis and creation of block models

• Grade interpolation of Ag, Au, Pb, Zn, and sample leng/th, assignment of density values

• Validation of grade estimates against input sample data

• Assignment of an NSR based on long term metal prices, metallurgical recoveries, commercial contracts, and average concentrate grades

• Depletion of blocks identified as extracted or inaccessible

• Mineral Resource tabulation and reporting based on NSR cut-off grades.

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Table 14.2 Metal summary statistics all samples

Vein	Sample Type	Overall	Ag-Cu-Pb-Zn	Au
Cauca	Channel	281	281	153
	Core	13	13	13
	Vein Total	294	294	166
Morlupo	Channel	89	89	57
	Core	29	29	29
	Vein Total	118	118	86
Tangana 1	Channel	1675	1675	409
	Core	188	188	188
	Vein Total	1863	1863	597
Tangana 2	Channel	173	173	155
	Core	18	18	18
	Vein Total	191	191	173
	Total Estimation Samples	2466	2466	1022

14.5.1 Compositing

Compositing of sample leng/ths was undertaken so that the samples used in statistical analyses and estimations have similar support (i.e., leng/th). Tangana principal veins drill holes and surface channels sampled the intercepts at a maximum leng/th of one meter per sample and the underground channel samples were collected at a maximum leng/th of one-half meter per sample, varying interval leng/ths depending on the leng/th of intersected geological features and the true thickness of the vein structure. Sample leng/ths were examined for each vein and composited according to the maximum sample leng/th of one meter (Table 14.3). The composited and raw sample data were compared to ensure no sample leng/th loss or metal loss had occurred.

Table 14.3 Vein composite leng/ths

Vein	Composite Leng/th (m)
Tangana 1	1
Tangana 2	1
Morlupo	1
Cauca	1

The Datamine COMPDH downhole compositing process was used to composite the samples within the estimation domains (i.e. composites do not cross over the mineralized domain boundaries). The COMPDH parameter MODE was set to a value of one meter to allow adjusting of the composite leng/th while keeping it as close as possible to the composite interval; this is done to minimize sample loss.

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Statistical Analysis of Composites

Data analysis was performed on composites identified in each geological vein (Table 14.4). The vein samples were composited within these domains as detailed below. Statistical and graphical analysis (including histograms, probability plots, scatter plots) were investigated for each vein.

Table 14.4 Vein grade estimations

Vein	Grade	Count	Minimum	Maximum	Mean	Variance	Std. Dev.
Tangana 1	Ag (g/t)	1075	0.20	2034.00	100.47	21986.08	148.28
	Cu (%)	1075	0.0003	3.36	0.26	0.10	0.32
	Pb (%)	1075	0.001	25.69	2.25	7.00	2.65
	Zn(%)	1075	0.001	18.28	2.42	7.57	2.75
Tangana 2	Ag (g/t)	127	0.07	2028.00	100.35	48405.27	220.01
	Cu (%)	127	0.0003	2.75	0.16	0.12	0.35
	Pb (%)	127	0.002	23.59	2.01	15.76	3.97
	Zn(%)	127	0.01	14.54	1.13	6.17	2.48
Cauca	Ag (g/t)	320	0.50	1124.00	61.01	19091.08	138.17
	Cu (%)	320	0.001	1.02	0.03	0.01	0.09
	Pb (%)	320	0.01	24.70	1.18	8.28	2.88
	Zn(%)	320	0.005	10.39	0.80	2.23	1.49
Morlupo	Ag (g/t)	109	0.1	500.00	85.45	12358.64	111.17
	Cu (%)	109	0.001	0.53	0.04	0.00	0.07
	Pb (%)	109	0.003	13.59	2.06	7.73	2.78
	Zn(%)	109	0.012	14.00	1.34	6.33	2.52

14.5.2 Capping

Top cuts of extreme grade values prevent over-estimating disproportionately high-grade samples. Whenever the domain contains an extreme grade value, this extreme grade will overly influence the estimated grade. Silver X examined the grades of all metals except Au to be estimated (Ag, Pb, Zn, and Cu) to identify the presence and nature of extreme grade values. This was done by examining the sample histogram, log histogram, log-probability plot, and by examining the spatial location of extreme values. Top cut thresholds were determined by examination of the same statistical plots and by examination of the effect of top cuts on the mean, variance, and coefficient of variation (CV) of the sample data. Top cut thresholds used for each vein are shown in Table 14.5.

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Table 14.5 Top cut capping

Vein	Ag (g/t)	Cu(%)	Pb(%)	Zn(%)
Tangana 1	699	1.6	14	14
Tangana 2	340	0.6	13	6
Cauca	611	0.4	12	8
Morlupo	345	0.18	7	6

14.6 Variogram analysis

14.6.1 Continuity Analysis

Variography was done differentiating each vein area as separate domains. Continuity analysis of the spatial correlation of grade values between sample pairs was done to determine the major axis of spatial continuity. The Tangana veins grade distribution was found to have a lognormal distribution therefore traditional experimental variograms tend to be poor in quality. To counteract this, data was transformed into a normal score distribution for continuity analysis.

Horizontal, across strike and down dip continuity maps were examined (and their underlying variograms) for Ag, Au, Cu, Pb, and Zn to determine the directions of greatest and least continuity. As each vein has a distinct strike and dip direction analysis was only required to ascertain if a plunge direction was present.

14.6.2 Variogram Modeling

Variograms were modeled for the major, semi-major, and minor axes (vein strike, dip, and width) for each vein with each element. Variograms create a mathematical model of the spatial variance along each dimension that can be used by the kriging algorithms for the resource estimations. The variograms were calculated using a semi-variogram calculation. The variogram studies for Tangana 1 vein-silver (Ag) can be seen in Figures 14.2-14.4, with the variogram parameters shown in Table 14.6.

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Figure 14.3 Tangana 1 vein histograms

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Figure 14.4 Tangana 1 example of vein log probability plots

The variography studies showed that the veins and their respective metals have acceptable variances in distribution on strike and dip ranging from 25 to 70 meters.

14.6.3 Variable Anisotropy

While the vein shapes are relatively planar, there is enough local variability to justify using a non-linear estimation method. As such, variable anisotropy was utilized during the estimation process wherein each block would have a different search ellipse assigned to it based on the orientation of the vein surfaces nearest to the block. This variability allows the estimation to more closely mimic the undulations of the vein.

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Figure 14.5 Tangana 1 vein example of semi-variograms and cross validation

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14.6.4 Declustering

Cell declustering was calculated in order to minimize the influence of clustered high-grade data on outlying material.

Table 14.6 Variography summary parameters

						Ranges Directions	Ranges Directions	Ranges Directions	Rotation	Rotation	Rotation	Rotation
Vein	Element	Capping	Nugg et	Variogram Model	Sill	Directio n 1	Directio n 2	Directio n 3	Angles	Directio n 1	Directio n 2	Direction 3
Tangana 1	Ag	699	0.21	Spherical	0.48	17	35	4	Dip	5	82.9	5
					0.31	392	40	80	Azimuth	144.6	339.9	205
	Cu	1.6	0.18		0.46	17	21	2	Dip	0	80	10
					0.36	218	87	12	Azimuth	110	20	200
	Pb	14	0.13		0.39	58	44	4	Dip	-24.6	63.2	10
					0.48	330	51	22	Azimuth	114.6	10	200
	Zn	14	0.14		0.24	29	41	1	Dip	-19.7	67.7	10
					0.62	600	68	11	Azimuth	108.6	79.5	195
Tangana 2	Ag	340	0.21	Spherical	0.12	26	43	2	Dip	-4.8	-74.2	15
					0.67	250	96	21	Azimuth	133.7	26.3	45
	Cu	0.6	0.26		0.16	56	65	1	Dip	-28	-56.8	15
					0.58	213	115	11	Azimuth	121.5	334.1	40
	Pb	13	0.06		0.08	20	35	2	Dip	4.8	-74.2	15
					0.86	246	121	40	Azimuth	136.3	63.7	45
	Zn	6	0.3		0.05	36	35	1	Dip	4.8	-72.4	15
					0.65	176	121	40	Azimuth	136.3	63.7	45
Cauca*	Ag	611	0.43	Spherical	0.34	54	20	1	Dip	0	90	0
					0.23	461	40	6	Azimuth	120	0	210
	Cu	0.4	0.32		0.26	12	20	20	Dip	5	85	0
					0.42	48	40	40	Azimuth	105	285	195
	Pb	12	0.46		0.1	42	20	20	Dip	-10	80	0
					0.44	463	40	40	Azimuth	115	115	205
	Zn	8	0.18		0.44	26	20	20	Dip	-10	80	0
					0.38	72	40	40	Azimuth	120	120	210
Morlupo*	Ag	345	0.11	Spherical					Dip
									Azimuth
	Cu	0.18	0.11						Dip
									Azimuth
	Pb	7	0.11						Dip
									Azimuth
	Zn	6	0.11						Dip
									Azimuth
	* Poor data variogram elaboration

14.7 Block Model Construction

A sub-blocked model was built using the parameters specified in Table 14.7. Datamine allows blocks to use a variable height, which provides more flexibility for filling in narrow units than a standard sub-block routine may provide. The minimum height allowed for blocks to be built was 0.1 m, which effectively created blocks through the entire vein domain with no gaps. Block size was selected principally based on the narrow vein mineralized domain geometry, and the planned narrow vein resuing mining method. Quantitative kriging neighborhood analysis (QKNA) was also used to assess the optimum block size based on kriging efficiency (KE) and slope of regression (ZZ) in the veins where variogram models had been established (Tangana 1, Tangana 2, Cauca y Morlupo)..

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14.7.1 Sample Search Parameters

Quantitative kriging neighborhood analysis (QKNA) was undertaken on the Tangana veins to determine the optimal search parameters for the mineral resource estimates. This analysis had results which were consistent with the Silver X modeling experience and the geology of the deposit, showed that the best estimation results in terms of slope of regression, kriging efficiency and kriging variance were obtained using the following search strategy:

• A search range of 30 m to 60 m along strike and dip and 0.5 m to 10 m across the vein.

• A minimum of 3 composites per estimate

• A maximum of 16 composites per estimate

The search ellipsoids were compressed along the vein thickness axis to narrow disks so as to confine the extents of the search, perpendicular to each vein in waste rock. The search ellipsoids have the same orientations as the continuity directions derived from the variograms studies.

Dynamic search ellipsoids were used so that where a second search would be generated equal to two times the maximum variogram range and requiring a minimum of six composites was used wherever the first search did not encounter enough samples to perform an estimate. If enough samples were still not encountered, a third search equal to three times the primary search range and requiring one composite was used.

14.7.2 Grade Interpolation

Estimation of grades into blocks was performed using multiple kriging methods for grade interpolation including ordinary kriging (OK), nearest neighbor (NN), and inverse distance squared (ID2) or inverse distance weighting (Table 14.8) and the results compared. Parameters were derived from block size selection, search neighborhood optimization, and variogram modeling. The sample data were composited and, where necessary, top cut prior to estimation.

14.7.3 Density

There has been a total of eight density measurements taken at Tangana as of October 31, 2022. These were all taken underground. While this is sparse in data and spatial coverage of density measurements, the estimated density average of 2.88 is considered to be adequate as the constant value of the average density for to estimation of the four veins.

Table 14.7 Vein density calculations

Vein	No. Of Sample	Mean	Minimum	Maximum	Variance
All veins	8	2.88	2.65	3.23	0.04

In support of this density factor for the property resource estimations, there have been three different density factors used by different companies in the past. These differences are probably due to differences in corporate emphasis as well as from first-hand experience.

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BVN who operated the property for over 50 years had the respected metallurgical laboratory Plenge, test the specific gravity (density) for them in 2013 and the result was 3.2. PAS used 2.6, an amount commonly used by exploration companies rather than for a specific production operation. Gemin used 3.5, a higher-than-expected number. Silver X and the author agreed that 2.6 was a sufficiently conservative density factor to be used in the Polygonal Method resource estimates.

14.7.4 Model validation

The techniques for validation of the estimated tonnes and grades included visual inspection of the model and samples in plan, section, and in three-dimensions; cross-validation; global estimate validation through the comparison of declustered sample statistics with the average estimated grade per domain; and local estimate validation through the generation of slice validation plots.

14.7.5 Global estimation validation

Global validation of the estimate involves comparing the mean ordinary kriged grade for each vein against the mean declustered grade generated using a nearest neighbor (NN) versus inverse distance squared (ID2) estimation approach. Analysis was performed by classification to ensure low confidence areas do not distort the results from higher confidence regions (Table 14.9).

The results for blocks are regarded as reasonable, with differences being generally less than 5 %. Differences greater than 5 % are due to either the over estimation of the NN grade can be due to the presence of isolated high-grade composites or due to low overall grade concentrations.

Table 14.8 Global estimation validation

Vein	Ag (g/t)	Ag (g/t)	Ag (g/t)	Pb (%)	Pb (%)	Pb (%)	Zn (%)	Zn (%)	Zn (%)
	ID2	NN	Diff (%)	ID2	NN	Diff (%)	ID2	NN	Diff (%)
Tangana 1	54.9	56.6	1.7	1.3	1.1	0.2	1.5	1.6	0.1
Tangana 2	41.8	47.5	5.7	1.5	1.7	0.2	0.6	0.7	0.1
Cauca	49.7	32.0	17.7	0.9	0.8	0.1	0.9	1.2	0.3
Morlupo	76.9	56.9	20	1.9	1.5	0.4	3.0	2.7	0.3

14.7.6 Block model resource classification

Silver X used estimation quality measures to aid in assignment of resource confidence classifications for the veins block models. The Mineral Resource confidence classification of the Tangana resource block models incorporated the confidence in the drill hole and channel data, the geological interpretation, geological continuity, data density and orientation, spatial grade continuity exploitation and estimation quality. The resource models were coded as Inferred, Indicated, and Measured in accordance with the 2014 CIM standards. Classification was based on the following steps:

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• Blocks estimated using primary search neighborhoods were considered for the Measured Resource category

• Blocks estimated using secondary search neighborhoods were considered for the Indicated Resource category

• Blocks estimated using tertiary search neighborhoods were considered as Inferred Resources

• Distribution values were assessed and the classification adjusted to consider this information

• Perimeter strings were digitized and the block model coded as either CATE=1 (Measured), CATE=2 (Indicated), CATE =3 (Inferred) and CATE =0 (Without Category)

Table 14.9 Vein estimation parameters

Estimation Type	Grade Cap				Ellipse Orientation	Sample Count	Sample Count	Outlet Restriction	Outlet Restriction
			Ranges
Tangana 1 Vein		Major	Semi	Minor		Min	Max	Distance	Cap Applied
ID2	699	17	35	4	Set to Variogram Orientation	2	32	50	699
OK	699	17	35	4	Set to Variogram Orientation	2	32	50	699
NN	699	17	35	4	Set to Variogram Orientation	2	32	50	699
Tangana 2 Vein
ID2	340	26	43	2	Set to Variogram Orientation	2	32	50	340
OK	340	26	43	2	Set to Variogram Orientation	2	32	50	340
NN	340	26	43	2	Set to Variogram Orientation	2	32	50	340
Cauca Vein
ID2	611	54	20	6	Set to Variogram Orientation	2	32	50	611
OK	611	54	20	6	Set to Variogram Orientation	2	32	50	611
NN	611	54	20	6	Set to Variogram Orientation	2	32	50	611
Morlupo Vein
ID2	345	17	35	4	Set to Variogram Orientation	2	32	50	345
OK	345	17	35	4	Set to Variogram Orientation	2	32	50	345
NN	345	17	35	4	Set to Variogram Orientation	2	32	50	345

14.7.7 Modelled block vein estimation parameters

The parameter results of the estimations are summarized in Table 14.10. It has been found that using the inverse of the squared distance method is most appropriate with the orientation of the variogram for the veins. In Figures 14.5 – 14.8 long sections of the veins with their resource categorizations can be seen. The resource classification process developed distances for the influence of confidence levels that were established as 30, 60 and 120 meters apart from the data points along the veins.

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Figure 14.6 Longitudinal section showing Mineral Resource classifications for the Tangana 1 vein

Blocks were also categorized into Measured and Indicated categories using the following criteria:

• Measured: Average sample distance of less than or equal to 30m (the range of the Major axis, and a minimum of 5 samples per block

• Indicated: Average sample distance greater than 30m and less than or equal to 60m, and a minimum of 5 samples per block

• All other blocks that are categorized as Inferred: Average sample distance greater than 60 m and less than or equal to120 m.

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• Figure 14.7 Longitudinal section showing Mineral Resource classifications for the Cauca vein

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Figure 14.8 Longitudinal section showing Mineral Resource classifications for the Tangana 2 vein

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Figure 14.9 Longitudinal section showing Mineral Resource classifications for the Morlupo vein

14.7.8 Nueva Recuperada Property Inverse of the Squared Distance Method (ID2) Modelled Mineral Resource Estimations

As a Qualified Person, the author has been able to classify the Nueva Recuperada Property Modelled Mineral Resource Estimate into separate categories of confidence according to the industry standards laid out under CIM standards. As such, the author has determined that the estimated Mineral Resources in all categories both with the inverse of the squared distance method and the polygonal method are Compliant, Current and consist of Inferred, Indicated and Measured Mineral Resources.

The updated estimates for Silver X Mining Corporation’s Nueva Recuperada Property Modelled Mineral Resources using current, compliant data, with effective date October 31, 2022 are as follows (Table 14.15):

• Modelled Inferred Mineral Resources: 2,522,268 t with grades of 36.97g/t Ag, 0.46 g/t Au, 0.80 % Pb and 0.89 % Zn

• Modeled Indicated Mineral Resources: 1,352,576 t with grades of 45.89 g/t Ag, 1.125 g/t Au, 1.17 % Pb and 1.09 % Zn

• Modeled Measured Mineral Resources of 1,812,539 t with grades of 77.32 g/t Ag, 2.25 g/t Au, 1.72 % Pb and 1.13 % Zn

The total combined Current and Compliant, Modeled Measured and Indicated Mineral Resources are 3,165,115 t with grades of 63.89 g/t Ag, 1.77 g/t Au, 1.48 % Pb and 1.11 % Zn (Table 14.15).

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Table 14.10 Nueva Recuperada ID2 Mineral Resources reported as of October 31, 2022 for the Tangana 1 Vein

VEIN	RESOURCES	TONNES	Ag g/t	Au g/t	Cu %	Pb %	Zn %
Tangana 1	Measured	550,354	92.83	2.25	0.25	2.05	1.89
Tangana 1	Indicated	448,614	53.19	1.13	0.17	1.33	1.65
Tangana 1	Measured + Indicated	998,968	75.03	1.75	0.21	1.73	1.78
Tangana 1	Inferred	623,038	30.42	0.56	0.10	0.62	0.84

Table 14.11 Nueva Recuperada ID2 Method Mineral Resources reported as of October 31, 2022 for the Tangana 2 Vein

VEIN	RESOURCES	TONNES	Ag g/t	Au g/t	Cu %	Pb %	Zn %
Tangana 2	Measured	297,899	62.88	2.25	0.08	2.46	1.14
Tangana 2	Indicated	243,016	29.71	1.13	0.07	1.14	0.47
Tangana 2	Measured + Indicated	540,915	47.98	1.75	0.08	1.87	0.84
Tangana 2	Inferred	291,366	25.90	0.56	0.07	0.54	0.26

Table 14.12 Nueva Recuperada ID2 Method Mineral Resources reported as of October 31, 2022 for the Cauca Vein

VEIN	RESOURCES		Ag g/t	Au g/t	Cu %	Pb %	Zn %
		TONNES
Cauca	Measured	578,179	81.86	2.25	0.03	1.19	0.63
Cauca	Indicated	364,073	39.96	1.13	0.02	0.85	0.87
Cauca	Measured + Indicated	942,252	65.67	1.82	0.03	1.06	0.72
Cauca	Inferred	705,409	32.75	0.56	0.02	0.63	1.12

Table 14.13 Nueva Recuperada ID2 Method Mineral Resources reported as of October 31, 2022 for the Morlupo Vein

VEIN	RESOURCES		Ag g/t	Au g/t	Cu %	Pb %	Zn %
		TONNES
Morlupo	Measured	386,106	59.57	1.13	0.02	1.44	0.77
Morlupo	Indicated	296,873	55.39	0.56	0.02	1.34	0.99
Morlupo	Measured + Indicated	682,979	57.75	0.88	0.02	1.40	0.87
Morlupo	Inferred	902,455	48.36	0.28	0.02	1.14	0.93

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Table 14.14 Nueva Recuperada ID2 Method Mineral Resources reported as of October 31, 2022 for the four modelled veins of Tangana

Modelled Resources	Mt	Au (g/t)	Ag (g/t)	Pb (%)	Zn (%)	Cu (%)	Ag (Moz)	Au (Koz)	Pb (kt)	Zn (kt)	Cu (kt)
Tangana Measured	1.81	2.01	77.3	1.72	1.13	0.10	4.5	117.1	31.2	20.5	2.0
Tangana Indicated	1.35	1.12	45.9	1.17	1.09	0.08	2.0	48.7	15.8	14.7	0.9
Measured + Indicated	3.17	1.63	63.9	1.48	1.11	0.09	6.5	165.8	47.0	35.2	1.5
Tangana Inferred	2.52	0.46	37.0	0.80	0.89	0.05	3.0	37.3	20.2	22.4	0.2

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The preliminary economic assessment is preliminary in nature that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

14.8 Nueva Recuperada Property Polygonal Method Mineral Resources

As a Qualified Person, the author has been able to classify the Nueva Recuperada Property Polygonal Method Mineral Resource Estimate into separate categories of confidence according to the industry standards laid out under CIM standards. As such, the author has determined that the estimated Mineral Resources in all categories both with the inverse of the squared distance method and the polygonal method are Compliant, Current and consist of Inferred, Indicated and Measured Mineral Resources.

Since the January 1st of 2022 technical report was issued, SilverX has made many development and exploration advances in the Nueva Recuperada project including expanding the number of explored/operating veins/mines (SilverX or contracted third party) from eight to twelve, and validating the historic BVN resources on a total of 12 veins/mines.

In mid-2022 SilverX determined that it wanted an update of the compliant resources, including conversions from historic to current where possible, upgrades from Inferred to Indicated and Measured, and a modeled estimation on the main Tangana veins. After review and consideration, the author has determined that for the Polygonal Method SilverX multiple mineralization sector estimated Mineral Resources of the Nueva Recuperada property is compliant with categories in the CIM Definition Standards for Mineral Resources and Mineral Reserves, May 10, 2014 (CIM, 2014) and thus compliant for NI 43-101 reporting. As mentioned previously by the author, the basis of the updated Silver X compliant resource estimate is the latest, SilverX development and exploration data combined with the prior SilverX 2022 compliant estimate. This estimate was calculated using the same methods as used for the 2019 and 2022 compliant estimate.

The updated, Polygonal Method estimates for SilverX Mining Corporation’s Nueva Recuperada Property Mineral Resources using prior and current compliant data, with effective date October 31, 2022 are as follows:

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14.8.1 Measured Polygonal Method Mineral Resources

The Nueva Recuperada property has, in several of its vein sectors, resources calculated with the polygonal method that can be classified as current and compliant Measured Mineral Resources. These include the Pucapunta, María Luz, and San Antonio Sectors. The resources are shown in Table 14.16.

Per CIM definitions, “Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.

A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.

Mineralization may be classified as a Measured Mineral Resource when the nature, quality, amount and distribution of data are such as to leave no reasonable doubt, in the opinion of the Competent Person determining the Mineral Resource, that the tonnage and grade of the mineralization can be estimated to within close limits, and that any variation from the estimate would be unlikely to significantly affect potential economic viability.

14.8.2 Indicated Polygonal Method Mineral Resources

The Nueva Recuperada property has, in several of its vein sectors, resources calculated with the polygonal method that can be classified as current and compliant Indicated Mineral Resources. These include the Pucapunta, María Luz, San Antonio and Blenda Rubia Sectors. The resources are shown in Table 14.17.

Per CIM definitions, “An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.

Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Pre-Feasibility Study which can serve as the basis for major development decisions.” (CIM, 2014).

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14.8.3 Inferred Polygonal Method Mineral Resources

The Nueva Recuperada property has, in several of its vein sectors, resources calculated with the polygonal method that can be classified as current and compliant Inferred Mineral Resources. The resources are shown in Table 14.19.

Per CIM definitions, “An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration”.

14.9 Nueva Recuperada Property Combined Mineral Resource Estimations

As a Qualified Person, the author has been able to classify the Nueva Recuperada Property Combined ID2 and Polygonal Mineral Resource Estimate into separate categories of confidence according to the industry standards laid out under CIM standards. As such, the author has determined that the estimated Mineral Resources in all categories both Inverse Squared Distance Method (ID2) and Polygonal Method are Compliant, Current and consist of Inferred, Indicated and Measured Mineral Resources. The resources are shown in Tables 14.16, 14.17, 14.18 and 14.19.

Table 14.15 Nueva Recuperada Property ID2 Measured and Indicated Mineral Resources

ID2 Method Resources	Mt	Au (g/t)	Ag (g/t)	Pb (%)	Zn (%)	Cu (%)	Ag (Moz)	Au (Koz)	Pb (kt)	Zn (kt)	Cu (kt)
Tangana ID2 Measured Resources	1.81	2.01	77.3	1.72	1.13	0.10	4.5	117.1	31.2	20.5	2.0
Tangana ID2 Indicated Resources	1.35	1.12	45.9	1.17	1.09	0.08	2.0	48.7	15.8	14.7	0.9
Tangana ID2 Measured + Indicated Resources	3.17	1.63	63.9	1.48	1.11	0.09	6.5	165.8	47.0	35.2	1.5

Table 14.16 Nueva Recuperada Property Polygonal Method Measured and Indicated Mineral Resources

Polygonal Method Resources	Mt	Au (g/t)	Ag (g/t)	Pb (%)	Zn (%)	Cu (%)	Ag (Moz)	Au (Koz)	Pb (kt)	Zn (kt)	Cu (kt)
Polygonal Method Measured Resources	0.13	0.46	126.7	4.07	1.69	0.00	0.5	1.9	5.1	2.1	0.0
Polygonal Method Indicated Resources	0.31	0.26	118.2	3.80	2.67	0.00	1.2	2.6	11.9	8.4	0.0
Polygonal Method Measured + Indicated Resources	0.44	0.32	120.7	3.88	2.39	0.00	1.7	4.5	17.1	10.5	0.0

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Table 14.17 Nueva Recuperada Property Combined Measured and Indicated Mineral Resources

Combined M+I Resources	Mt	Au (g/t)	Ag (g/t)	Pb (%)	Zn (%)	Cu (%)	Ag (Moz)	Au (Koz)	Pb (kt)	Zn (kt)	Cu (kt)
Combined Measured Resources	1.94	1.91	80.5	1.87	1.17	0.09	5.0	119.0	36.3	22.6	1.8
Combined Indicated Resources	1.67	0.96	59.5	1.67	1.39	0.06	3.2	51.3	27.8	23.1	0.6
Combined Measured + Indicated Resources	3.61	1.47	70.82	1.78	1.27	0.08	8.2	170.3	64.1	45.7	1.2

Table 14.18 Nueva Recuperada Property Combined Inferred Mineral Resources

Combined Inferred Resources	Mt	Au (g/t)	Ag (g/t)	Pb (%)	Zn (%)	Cu (%)	Ag (Moz)	Au (Koz)	Pb (kt)	Zn (kt)	Cu (kt)
ID2 Method Inferred Resources	2.52	0.46	37.0	0.80	0.89	0.05	3.0	37.3	20.2	22.4	0.2
Polygonal Method Inferred Resources	9.37	0.27	183.6	1.96	2.04	0.00	55.3	81.7	183.9	190.9	0.0
Combined Inferred Resources	11.89	0.31	152.50	1.72	1.79	0.01	58.3	119.0	204.1	213.3	0.0

As a Qualified Person, the author has been able to classify the Nueva Recuperada Property combined Mineral Resource Estimate into separate categories of confidence according to the industry standards laid out under CIM standards. As such, the author has determined that the combined estimated Mineral Resources in all categories both with the Inverse Squared Distance Method (ID2) and Polygonal Method are Compliant, Current and consist of Inferred, Indicated and Measured Mineral Resources.

The updated combined estimates for Silver X Mining Corporation’s Nueva Recuperada Property Mineral Resources using prior and current compliant data, with effective date October 31, 2022 are as shown in Table 14.19.

Table 14.19 Nueva Recuperada Mineral Resources as at October 31, 2022

Resource	**Tonnage **		Grades	Grades		Contained Metal	Contained Metal	Contained Metal
Category	Mt	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (Moz)	Au (kOz)	Pb (kt)	Zn (kt)
Total Measured	1.94	80.54	1.91	1.71	1.18	5.02	119.09	33.19	22.96
Total Indicated	1.67	59.52	0.86	1.45	1.43	3.02	51.2	24.2	23.8
Total M+I	3.61	70.82	1.43	1.59	1.30	8.04	170.28	**57.37 **	46.78
Total Inferred	12.44	151.22	0.34	1.78	1.90	58.31	119.0	204.1	213.3

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

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The preliminary economic assessment is preliminary in nature that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

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15 Mineral Reserve estimates

This PEA does not support an estimate of Mineral Reserves since a Pre-Feasibility or Feasibility level Study is required for reporting of Mineral Reserve categories as per the NI 43101 code.

Mining inventories were derived from the resource model described in the previous section. Inferred resources were used to define mineable tonnes.

Inferred resources are regarded as too speculative geologically to have the economic considerations applied to them. Hence, there is no certainty that the PEA results will be materialised.

Mineable mining inventory can be found in Section 15.

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16 Mining Methods

The mineralization is composed of sub-vertical veins converging on each other within a single geological core.

The veins that are currently being mined are Tangana 1, Tangana 2 and Cauca which share the same main access and services (water, power supply). Historically, San Antonio was also mined. Currently, exploration activities are being developed.

The following veins are included in the PEA and shown in Figure 16.1:

• Tangana 1

• Tangana 2

• Cauca

• Morlupo

A conceptual mine plan was developed for these veins based on resource block models. 3D mining inventories were thus derived for each vein.

Additionally, other veins were added to the mine plan, listed below:

• Tangana Main others:

• Estrella

• Gaby

• Oriente

• Isabel

• Tangana 6

• Tangana 4

• Tangana W

• San Antonio NW

• San Antonio

• Positivas

• Angelica

• Huachocolpa Sur

• Tetehorno

• Pucapunta

Generally, the veins have a 1.0 m average width.

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The resources from these veins were estimated by the Silver X Geology’s team out of preliminary exploration data. While no block models were created for these veins their resources are part of the Nueva Recuperada’s consolidated Mineral Resource statement. In the absence of block models, the mine plan was completed by extrapolating all key mining modifying factors derived from Tangana 1, Tangana 2, Cauca and Morlupo, such as conversion ratio resource-to-mining inventory, dilution, mining recovery and economic cut-off.

The Base Case for the PEA encompasses the treatment of the RoM in a new processing facility which shall be constructed near the Tangana portal.

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Figure 16.1 Tangana 1, Tangana 2, Morlupo and Cauca veins

16.1 Current Operation

The current Nueva Recuperada processing facility is fed by mineralized material from Tangana mainly. Historically, the mineralised material was also sourced from San Antonio and Positivas mines. The production target is achieved with minor contributions from small miners operating in the region (approximately, 6% of total mineralised material feed between April to August, 2022).

The current mining method is overhand cut and fill with backfill from waste rock and tailings. A 3D view of the existing mining excavations at Tangana area is presented in Figure 16.2.

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The mineralised areas are drill and blasted. Further, the material is loaded by LHDs and hauled to the surface by dumpers to a RoM stockpile near the portal. The material selected for processing is then re-handled and hauled by 25-t road trucks to the Nueva Recuperada plant located 22 km to the South.

The mining fleet is mainly operated through renting contracts by which suppliers ensure the mining equipment availability. The current mining equipment fleet is comprised of:

• 2 Scoops (2 yd[3] ); 1 Scoop (6 yd[3] ); 2 Scoops (4 yd[3] )

• 2 Dumper (10t)

• 2 Narrow Vein Jumbo (one of them is adapted for vertical drilling)

• 1 Jumbo

The explosive used in the current operation is cartridge emulsion for every blast.

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Figure 16.2 Existing mining excavations at Tangana

The mine operates on a roster of 14 days on followed by 7 days off, 12 hours per shift, 365 days a year. Mining production rates are scheduled assuming 9 hours of productive time per shift to cover breaks, meetings, maintenance, and travel time. The workforce is comprised of 66 workers.

Recent mining records are presented in Figure 16.3.

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Figure 16.3 Monthly mining records

The processing plant capacity at Nueva Recuperada is 600 tpd, however, only 300-400 tpd are currently treated as a result of bottlenecks at the mine. According to Silver X, the processing facility can be upgraded to 720 tpd with minimum changes. This PEA’s concept is based on the construction of a similar processing plant near Tangana. Production records are shown in

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Figure 16.4 RoM and material processed records

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The tailings generated at Nueva Recuperada are pumped as slurry to existing tailings storage facilities (TSFs) called Relavera 3 and Relavera 4. A new TSF is envisaged for the Tangana project.

Currently two products are being produced: Zn concentrate and Pb-Ag concentrate. Due to the increase in gold grade, a new product will be separated as a gold concentrate. The deleterious elements in the concentrates are not an issue at current production levels. The main deleterious element is arsenic which is limited to <3% As.

16.2 Geotechnical Considerations

Geotechnical information available at the moment is limited to the mapping of historical stopes and drives mined at San Antonio located 3-km from Tangana. The mapping consists of geotechnical data collection across the drive recording rock mass rating (RMR) or geological streng/th index (GSI).

Protocols for geotechnical mapping are in place. Figure 16.5 illustrates a template used for the geotechnical team to assist on the geotechnical mapping. GSI and RMR mapping are completed on a monthly basis. An example of geotechnical mapping at Tangana is presented in Figure 16.6.

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Figure 16.5 GSI template for geotechnical mapping

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Figure 16.6 Example of geotechnical mapping at Tangana

Uniaxial compressive streng/th (UCS) was estimated by Schmidt hammers along sides and back of drives. Empirical correlations were used to determine UCS and Young's Modulus, proposed by Katz, Reches and Roegiers. Typical UCSs measured at San Antonio mine are shown in Table 16.1.

Table 16.1 UCS by rock type at San Antonio

Rock type	Maximum	Average	Minimum
Limestone	167 Mpa; RMR= 60; GSI.= 55;	156 Mpa; RMR= 47; GSI.= 42	144 Mpa; RMR= 44; GSI= 39
Orebody	142 Mpa; RMR= 53; GSI= 48	137 Mpa; RMR= 40; GSI= 35	135 Mpa; RMR= 34; GSI= 29

A constant RMR of 50 is considered for Tangana. Some samples were tested to determine a number of geotechnical characteristics. The results are summarized in Table 16.2.

Streng/th distribution in the rock mass has been calculated for the upper part of the deposit. The calculated value has been simplified to K=1 although the estimation is between 1.08 to 1.28. It has to be noted that at depth, generally, K factor tends to be reduced to 1 or even less.

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Table 16.2 Geotechnical parameters for Tangana samples

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Rock mass properties have been defined with the main rock types at San Antonio as shown in Table 16.3.

Table 16.3 Rock mass quality by rock type

Rock type	G.S.I.	RMR89‘
Fresh Limestone	60	55 - 65
Weathered Limestone	55	50 - 60
Orebody hangingwall	45	45 - 55
Orebody footwall	45	45- 60

The main joint sets at San Antonio showed the following characteristics:

• 1st Family System: N 01º: N 05 ° to N 10 ° with Dip from 35 to 70º.

• 2nd Family System: N 350º E with Dip from 40 to 70 NW.

16.3 Hydrogeological Considerations

Existing hydrogeological information is summarized in the report “Estudios hidrogeológico Proyecto Angélica-Rublo Chico”, Water Production SAC, September 2009. This study was completed on the depleted mine named Angélica located 500 m south of Positivas and San Antonio.

Local geology at San Antonio consists of dolomite limestones and sandstones, in alternating layers of different widths. The sequence continues with a thick sequence of thin limestone layers. Estimated permeability is in the range of 0.04 m/d to 1.1 m/d based on similar materials in the area.

The Tangana area geology comprises lava, breccia and tuff materials stratigraphically located over the limestones of the San Antonio area. The permeability of this type of rock due to its porosity and the high frequency of fractures is expected to be around 9.2 m/d to 14.4 m/d.

The hillsides are covered by a variable detritic deposits comprising glacial beds in the canyons and alluvial deposits in the lower valleys. The thickness of those deposits varies between 10 to 30m with a permeability of between 10 m/d to 20 m/d.

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The San Antonio orebody is approximately 1.5 km in leng/th and extends from 4,810 masl to 4,372 masl. Baseline water level in the area is defined by the Jatunhuaico river that forms the eastern creek of the San Antonio area at 4,300 masl.

It is expected that drainage for San Antonio can be directed through a gallery that connects level 4,300 with the mine bottom. For the Tangana area, mineralized veins extend from 5,060 masl to the mine bottom at 4,580 masl with the base level defined by Tangana creek at 4,580 masl.

Table 16.4 shows the potential water recharge, maximum and minimum rainfall per month in the area with an infiltration rate estimated at 15%. According to comments during a recent site visit, water is pumped from the Tangana mine at a rate of 20 l/sec which is reasonable considering that the pumps do not work continuously: 12 l/sec is considered an appropriate rate for each of the veins being mined at Tangana.

Table 16.4 Recharge rate in the project area

Area	Rainfall	Infiltration	Catchment area	Catchment area
	mm/year	mm/year	Ha	l/sec
San Antonio	994	149.1	104	4.9
Tangana 1 vein	994	149.1	252	11.9

16.4 Mine Planning

16.4.1 Mining Method

The selected mining method is overhand cut and fill configured in two steps i.e. mining first the vein containing the mineralized material and later the waste alongside the hanging wall and/or the footwall to create a minimum mining width. The waste mined is further used as fill material to set ground for mining the upper slice. In summary, a bottom-up mining sequence is undertaken following the veins strike. The method can be well adapted to the variations of the veins geometry.

The veins are organized in levels/panels 60 m high with a maximum leng/th of 300 m. Generally, the long term sequence entails mining the upper levels first followed by the lower panels. The panel preparation begins with the development of a decline which connects the footwall transport drive to the panel bottom elevation. Further, a crosscut is excavated to access the vein.

The ore-drifts are drilled in 2.5 m x 3.0 m sections at variable depth depending on the extraction area. Subsequently, the excavation is enlarged to 3.5 m x 3.5 m sections to accommodate large equipment and enable access to the upper cut. Then, successively upward cuts are undertaken, i.e. first sub-cut of 1.5 m to 2 m followed by a second sub-cut of 1 to 1.5m. The total cut reaches 3.5 to 4 m with a maximum total open height of 7 m.

Mineralized material will be hauled to the surface by dumpers through the Tangana mine portal. This access is also connected to the Morlupo, Cauca and Tangana veins.

The mining method is illustrated in Figure 16.7.

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Figure 16.7 Typical overhand cut-and-fill mining method. Source: H. Hamrin, 1997

16.4.2 Production Rate

The potential production rate has been estimated as a function of the mineralization tonnages using several empirical methods developed by the mining industry over the time. The results applied to the Tangana project are shown in Table 16.5.

Table 16.5 Production rate definition by several empirical methods

Formulae	Units	Tangana	Cauca	Tangana + Cauca	Single deposit
Taylor	Mtpa	0.39	0.22	0.61	0.52
Tatman	Mtpa	0.49	0.22	0.71	0.40
Mackenzie	Mtpa	0.32	0.18	0.50	0.43
Jimeno	Mtpa	0.28	0.16	0.44	0.37
**Average **	**Mtpa **	0.37	0.20	0.56	0.43
Taylor	tpd	1,185	679	1,864	1,586
Tatman	tpd	1,480	663	2,143	1,216
Mackenzie	tpd	960	548	1,508	1,289
Jimeno	tpd	842	492	1,334	1,116
Average	tpd	1,117	595	1,712	1,302

A production rate of 1,500 tpd was set for the combined deposits.

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16.4.3 NSR calculation

Nueva Recuperada currently produces two types of concentrates: a Pb concentrate including Ag and Au, and a Zn concentrate. A third Au concentrate will be evaluated in the future. This PEA is therefore based on the assumption that two concentrates will be generated.

Table 16.6, Table 16.7 and Table 16.8 summarize the data used for the NSR calculation. These data are based on market studies and forecasts developed by Silver X.

The NSR formulae derived from the aforementioned data is presented below:

(Ag(oz⁄(t)×14.29 + Au(g⁄(t)×33.40 + Pb(%)×14.64 + Zn(%)×14.90))

Table 16.6 Metal prices

Element	Unit	Price
Ag	$/oz	21
Au	$/oz	1,700
Zn	$/t	3,000
Pb	$/t	2,000

Table 16.7 Commercial costs

Parameter	Unit	Cost
Selling TC Zn	$/t	334.3
Selling TC Pb	$/t	233.4
Average penalties Zn	$/t	0.0
Average penalties Pb	$/t	48.2
Transport of Concentrates	$/t	34.0
Delivery supervision	$/t	1.0
Lab analysis for concentrates	$/t	4.5

Table 16.8 Metallurgical recoveries and payables

Concentrate	Element	Recovery	Payable
Pb conc	Ag	88%	95%
	Au	75%	95%
	Zn	6%
	Pb	88%	95%
	Cu	81%	50%
Zn conc	Ag	7%	70%
	Au	10%
	Zn	84%	85%
	Pb	6%
	Cu	0%

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16.4.4 Economic Cut-off

A break-down of the cut-off NSR is shown in Table 16.9. These costs are based on a combination of historical records and projections completed by Silver X. The cut-off varies from US$64/t to US$50/t depending on whether mining costs include development or not. For simplicity, an average cut-off NSR of $ 60/t RoM was considered in the PEA. This cut-off includes all costs incurred by material selected for processing and waste mining, processing, tailings and overheads.

Table 16.9 NSR cut-off break-down

Cost	Units	Value
Mining (all in cost)	US$/t	40
Mining	US$/t	26
Processing	US$/t	16
G&A	US$/t	8
Total cost all in cost(mine)	US$/t	64
Total cost	US$/t	50

16.4.5 Mining Inventories

A preliminary mining inventory was generated for Tangana 1, Tangana 2, Cauca and Morlupo based on the following assumptions:

• NSR cut-off $ 60/t RoM, which approximately equals to $ 35/t mined (mineral and waste);

• Stope dimensions: 3.5m (width) x 16.0 m (leng/th x 4.0m (height) to reflect a cut and fill method. The mineral will be mined and hauled to the plant whilst the waste will be used as backfill.

• Level intervals of 60 m high separated by sill pillars of 4 m.

• 15% dilution applied to the mineral and 92% mining recovery. These values are based on historical records from San Antonio and Tangana.

The inventories of the other veins were derived by applying the mining modifying factors from Tangana 1, Tangana 2, Cauca and Morlupo, including dilution, mining recovery and the conversion ratio of resource-to-mining inventory (43% average). The mining inventories created are shown in Figure 16.8, Figure 16.9, Figure 16.10 and Figure 16.11. A summary of the mining inventories by mine is presented in Table 16.10.

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Figure 16.8 Mining inventory of Tangana 1

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Figure 16.9 Mining inventory of Tangana 2

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Figure 16.10 Mining inventory of Cauca

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Figure 16.11 Mining inventory of Morlupo

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Table 16.10 Mining inventories by mine

Mine	Diluted Tonnage	Ag g/t	Au g/t	Pb %	Zn %
Tangana 1	723,191	77.80	1.53	2.07	1.81
Tangana 2	487,486	47.28	1.43	2.61	2.19
Morlupo	537,958	66.04	0.58	1.51	0.66
Estrella	82,976	54.75	1.10	1.41	0.82
Gaby	185,867	118.95	0.73	0.46	0.10
Oriente	69,700	75.90	1.10	2.28	0.57
Oriente	69,700	75.90	1.10	2.28	0.57
Isabel	73,572	21.90	0.73	1.05	1.57
Tangana 6	108,422	158.98	1.46	0.83	0.02
Tangana 4	54,211	46.45	0.37	4.96	0.11
Cauca	671,457	72.78	1.68	0.94	0.59
Tangana W	533,953	113.29	1.09	2.92	2.33
San Antonio	55,318	63.82	0.36	2.95	1.63
San Antonio NW	325,267	94.40	1.09	2.92	2.33
Positivas	577,515	157.09	0.73	3.16	2.25
Angelica	232,334	94.40	0.36	2.92	2.33
Huachocolpa sur	231,027	149.54	-	3.83	3.94
Tetehorno	7,321	74.02	-	4.05	6.54
Pucapunta	254,461	94.40	1.09	2.92	2.33
Total	5,281,737	92.55	1.06	2.27	1.69

16.4.6 Mine Layout

A typical layout was conceptualized to develop a panel by cut and fill as illustrated in Figure 16.12. This layout was offset to every panel of the mining inventory in order to estimate the requirements for meters of development.

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Figure 16.12 Typical panel layout

16.4.7 Mine Scheduling

The mine scheduling was developed using Excel. It was constrained by both individual activity rates and the mine fleet capacities. Precedence/dependence among activities were set to achieve a realistically and practical sequence while meeting the production target.

Productivity rates applied to each activity are summarized in Table 16.11.

Table 16.11 Development rates

Excavation	Unit	Rate	Unit	Rate	Faces / Mine	Unit	Rate / Mine
Declines	m/month	75	m/year	900	4	m/year	3,600
Footwall drives	m/month	60	m/year	720	8	m/year	5,760
Production drives	m/month	60	m/year	720	8	m/year	5,760

The results of the mine scheduling are presented in Figure 16.13 and Figure 16.14.

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----- Start of picture text -----

600,000
500,000
400,000
300,000
200,000
100,000
-
0 1 2 3 4 5 6 7 8 9 10 11 12
Year
Tangana 1 Tangana 2 Morlupo Cauca Tangana main others
Tangana W San Antonio San Antonio NW Positivas Angelica
Huachocolpa sur Tetehorno Pucapunta
ROM production (t)
----- End of picture text -----

Figure 16.13 Tangana material selected for processing scheduling

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----- Start of picture text -----

18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
0 1 2 3 4 5 6 7 8 9 10 11 12
Production drives Ramp 3.5x3.5 (+) Ramp 3.5x3.5 (-)
Ramp 4.5x4.5 (-) Crosscut 4.5x4.5 Crosscut 3.5x3.5
Development (m)
----- End of picture text -----

Figure 16.14 Development scheduling

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----- Start of picture text -----

6.00
5.00
4.00
3.00
2.00
1.00
0.00
0 1 2 3 4 5 6 7 8 9 10 11 12
Au g Ag oz Cu % Pb % Zn %
Grades
----- End of picture text -----

Figure 16.15 Mined grades

16.5 Grade Control

A grade control system will be in place to estimate in advance the RoM quality to feed the plant. A blending strategy will be crucial to keep steady head grades by mining a variety of veins.

The grade control will be set for the stages of:

• Pre-production. It is considered reasonable to developing exploration drive every 250 m with sampling every 50 m. Samples lengths are estimated at 0.5 m.

• Production. Wall definition of the orebody across drives and sampling of 25% of blastholes.

16.6 Mining Equipment

The underground mobile equipment fleet will fall into the following categories:

• Mucking (LHDs);

• Haulage (dumpers);

• Drilling: jumbos, production drills and bolting equipment;

• Raise bore and slots;

• Ancillary: flatbeds, boom trucks, fuel and lube trucks, explosive trucks, shotcrete mixers and sprayers;

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• Light vehicles.

The support equipment will include fans and ventilation equipment, pumping and water handling equipment, power distribution equipment, data and communications equipment and maintenance equipment (fixed shop furnishing).

16.7 Ventilation

Given the proximity of the orebodies to the surface, ventilation will rely on drives connecting the mining levels to the surface.

16.8 Surface Mine Infrastructure

Mine infrastructure facilities will include internal haul roads, a mining truck workshop, a fuel storage facility, an explosives storage magazine, warehouses, dry changing rooms, offices, backfill plant (hydraulic slurry), water and power distribution and communications.

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17 Recovery methods

17.1 Introduction

The existing Nueva Recuperada process plant is located 22 km south from the future site for Tangana process plant.

The following sections describe the processing flowsheet, equipment, key consumables and utilities required for this new Tangana concentrator.

17.2 Process Flowsheet

A processing rate of 1,500 t/d of mineralization will be achieved through traditional primary and secondary crushing, rod mill primary grinding, secondary ball mill grinding, bulk flotation of lead, copper, silver, and gold, and zinc flotation, followed by concentrate thickening and filtration. Additionally, a gravity concentrator will be used to recover coarse gold from a fraction of the cyclone underflow, which will then be cleaned on a shaking table.

The concentrator plant will produce three concentrates:

• a lead–silver concentrate which is anticipated to assay 55% Pb and between 51 and 99 oz/t Ag.

• a zinc concentrate which is anticipated to assay 52% Zn.

• a coarse gold concentrate that will be sold to a third party refinery.

The tailings will be thickened, filtered, and disposed of in either a subaerial tailings storage facility, or as underground mine backfill.

Process water will be recycled as much as possible to minimize water usage.

Figure 17.1 shows the general process block diagram.

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Figure 17.1 Process flowsheet

17.3 Process Design Criteria

Much of the process design criteria have been assumed, based on experience at the existing Nueva Recuperada concentrator and on experience with operations treating similar mineralization and of a similar scale.

The plant has been designed on a fit-for-purpose basis, considering a project life of about 15 years. The design will accommodate the nominal performance requirement with a small degree of flexibility for upsets and variability but has no consideration or allowance for any expansion. A summary of the design criteria is shown in Table 17.1.

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Table 17.1 Process design criteria

CLASSIFICATION	DESCRIPTION	VALUE	UNITS	DATA SOURCE
Location and climate	Altitude above sea leve	4,600	mm snm	estimated
	Prevailing wind direction (V/I)	N/E		general data Huancavelica internet
	Mine-plant distance	500	m	general data Huancavelica internet
	Total annual precipitation	830	mm	general data Huancavelica internet
	relative humidity	57	%	general data Huancavelica internet
	Protection of equipment against frost	yes		climate thematic studyHuancavelica
	Average Maximum Temp	17.2	oC	general data Huancavelica internet
	Average minimum temp	-1.8	oC	general data Huancavelica internet
	seismic risk	medium		Seismic Hazard Zoning Map Provinces (Government)
Feed characteristics	wet	3	%	existentplant data
	abrasion index (A)	0.3	g	estimated
	Clay in the ROM	<5	%	Client estimation
	headgrade Ag	2.37	oz/t	existentplant data
	head grade Pb	1.47	%	existent plant data
	head grade Zn	1.48	%	existent plant data
	ROM D80	900	mm	typical
	ROM D100	1000	mm	typical
	ROM Granel	2	g/cm3	estimated
	ROM annual production	499,950	t/year	client estimation
	SG ROM	2.74	g/cm3	existentplant data
	Wi rod mill	22	kWh/t	estimation from existent plant department
	Wi ball mill	17	kWh/t	estimation from existent plant department
	Wi crushing	18	kWh/t	estimation from existentplant department
	granel density Pb concentrate	2.9	t/m3	estimation from existent plant department
	granel density Zn concentrate	2.7	t/m3	estimation from existent plant department
	granel densityfiltered tailings	2.3	t/m3	estimated
	wet tailings	12	%	typical
	wet pb concentrate	6	%	typical
	wet zn concentrate	6	%	typical
	Ag grade in Pb concentrate	53	oz/t	existentplant data
	Pb grade in Pb concentrate	55	%	existent plant data
	Zn grade in Zn concentrate	52	%	existent plant data
General operations	operatinghoursper shift	12	hours	existentplant data
	operating days per year	1	days	existent plant data
	shifts at plant	2	shifts	existent plant data
	design safetyfactor(minimum)	10	%	estimated
	availability crushing area	85	%	estimated
	availability rest of the plant	90	%	estimated

17.4 Process Description

This section describes the process planned at the new Tangana process plant.

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17.4.1 Process Overview

The processing plant will consist of the following unit operations:

• Primary jaw crushing;

• Secondary screening and cone crushing;

• Crushed RoM bin;

• Rod mill primary grinding;

• Ball mill secondary grinding in a closed circuit with hydrocyclone classification;

• Gravity concentrator;

• Bulk circuit, including rougher flotation, cleaner flotation;

• Zinc circuit, including rougher flotation, regrind, cleaner flotation;

• Concentrate dewatering (bulk and zinc concentrates);

• Flotation tailings thickening, filtration and stacking onto a filtered TSF;

• Tailings backfill plant;

• Fresh and reclaim water supply;

• Reagent preparation and distribution.

17.4.2 Crushing

Material will be reclaimed from the RoM Bin using a vibrating grizzly feeder. From the vibrating grizzly it will pass to the trommel where process water will be added in order to remove clays.

These fine materials and the majority of the water will flow directly to the mill pump box

downstream.

A conveyor will be used to feed the primary crusher of the coarse material which will be discharged onto the primary crusher discharge conveyor. This conveyor will be fitted with a metal detector to protect downstream equipment against tramp metal.

Material crushed in the primary crusher will report to the vibrating screen. The vibrating screen will classify material. Oversize will be fed the secondary crusher. The screen undersize will be collected on a horizontal belt and returned to the secondary crusher. The secondary crusher product will report to the fine feed bin.

17.4.3 Coarse Stockpile and Crushed Material Handling

The milling feed bin will discharge onto two successive conveyors which will feed the rod mill at a lower rate than the crushing process. A weight meter will be provided on the conveyor that feeds the rod mill to control its feed rate.

The surplus material from the milling feed bin will overflow from the top of the bin and be fed to the crushed material stock through a conveyor equipped with a weight meter.

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The material stored in the crushed material stock can be reclaimed from a reclaim bin and discharged into the rod mill feed conveyors if the crushing area is not functioning, or if the crushing rate is lower than expected.

The nominal capacity of the milling feed bin will be calculated to ensure continuous operation in the milling area for two days while the crushing area is not operating due to maintenance.

17.4.4 Grinding, Classification, and Lead Flotation Circuit

The primary grind size feeding the flotation area will be P80 = 90 µm. The material crushed at the crushing area will feed the rod mill from the crushed material stockpile. The rod mill feed will be provided with a weight meter and will also be supplied with process water and milk of lime reagent. This rod mill will reduce material from 45 mm down to 2.2 mm and will be provided with a screen to remove metallic materials from the circuit. The rod mill product will be discharged into the mill pump box, which will also receive fines and water from the trommel at the beginning of the crushing area, plus additional water if necessary. All these materials will feed the cyclones battery in order to classify at the required size for flotation (P80 = 74 µm). The coarse fraction will return to the ball mill. The ball mill will reduce the material size from 3.3 mm down to 75 µm, with the size product being controlled by a particle size analyzer.

17.4.5 Gold Concentration

A gravity bowl concentrator will scalp coarse gold from the grinding circuit after milling. A shaking table will then be employed to clean the bowl concentrate up to a commercial quality, after which it will be stored in a secure area until shipment. The gravity tailings material will be directed to the flotation process.

17.4.6 Flotation Process

The bulk flotation circuit will process material to recover copper, lead, and silver. The flotation circuit will include a rougher, cleaner, and scavenger stages. The rougher stage will involve the conditioning of the grinding area product with reagents and the subsequent flotation of the material. The conditioned material will then be transferred to the rougher flotation cell, where air will be injected and the copper, lead, and silver minerals will be recovered. The rougher concentrates will then be transferred to the cleaner stage, where additional reagents will be added and the copper, lead, and silver minerals will be further concentrated. The concentrate from the cleaner stage will be transferred to the scavenger flotation cell where a portion of the lead and silver will be recovered. The final concentrate from the scavenger stage will then be thickened and filtered.

The zinc flotation circuit involves multiple stages of activation, conditioning, rougher, cleaner, and scavenger flotation, followed by thickening and filtration to produce a high-quality concentrate. This process is designed to maximize the recovery of the sphalerite minerals and produce a concentrate that is easy to handle and transport.

The bulk tailings flotation is then subjected to activation, where reagents such as copper sulfate are added to activate the sphalerite minerals. This enhances the hydrophobicity of the sphalerite particles, making them more susceptible to flotation.

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The activated material is then conditioned, where the pH is adjusted to the desired level and a frother is added to create a stable froth. This allows for improved selectivity and better recovery of the sphalerite minerals.

The conditioned material is then subjected to rougher flotation, where air is introduced into the flotation cell to create bubbles. The sphalerite particles attach to the bubbles and float to the top of the cell, forming a concentrate. The tails are discarded.

The rougher concentrate will be reground to P80 = 54 µm to improve the liberation of the

sphalerite from the gangue minerals.

The reground concentrate from the rougher flotation is then subjected to cleaner flotation, where additional reagents may be added to improve the selectivity of the sphalerite minerals. The concentrate is then cleaned, producing a final concentrate.

The tails from the cleaner flotation are then subjected to scavenger flotation, where additional air is introduced to float any remaining sphalerite minerals. The concentrate from this stage is then combined with the rougher concentrate for further cleaning.

Flotation circuit control will be aided by an inline analyser.

17.4.7 Concentrate Dewatering

The thickening, filtration, storage and dispatch of bulk and zinc concentrates are designed to produce a dry concentrate that is easy to handle, store, and transport.

The concentrates from the flotation circuit will be thickened to remove any excess water using a high-rate thickener. This will result in thickened concentrates with a solids content of around 60 - 70%.

The thickened concentrates will then be filtered to remove any remaining free moisture using a filter press. This results in a filter cake that is easy to handle and transport.

Each concentrate filter cake will then be stored in a covered storage area, to protect it from moisture and other environmental factors.

The dispatch process will involve loading each concentrate onto trucks by front end loader that will transport each concentrate to a smelter or a market for further processing.

The overflow water from the thickeners and the filtered water from the filters will be recycled for use in the process.

17.4.8 Tailings Dewatering Process and Disposal

The tailings coming from the zinc scavenging flotation bank will feed the tailings thickener to be dewatered to about 57% solids. The tailings thickener underflow will be report to the tailings filter where a level of 12% moisture will be achieved by pressure filtration.

The tailings thickener overflow and the filtering water of the tailings filter will be collected in the tailings thickener overflow tank and will be recycled to be used in the process.

The disc filters used to process the tailings will use fresh water.

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Dry tailings will be transferred to be definitively stored in the tailings facility or be used to fill the different mine chambers in order to provide stability for the underground operation if required through the tailings conveyors. A front-end loader will be provided to support the discharge operation of the tailings from the conveyors to the tailings facility.

17.5 Energy, Water, Reagents and Consumables

17.5.1 Energy

The installed power requirement is estimated at 3,015 kW, as summarized in Table 17.2.

Table 17.2 Installed power for the Tangana process plant

	kw installed	Utilization	12h shift per day	Annual operation hours	Annual consumption (kWh)
Crushing	434	85%	1	3,366	993,374
Milling	1,600	90%	2	7,128	8,211,456
Flotation	250	90%	2	7,128	1,283,040
Thickening and filtering	310	90%	2	7,128	1,590,970
Tailings	280	90%	2	7,128	1,437,005
Teagents	21	90%	2	7,128	107,775
Water and services	110	90%	2	7,128	564,538
Buildings and mobile equipment	10	90%	2	7,128	51,322
	3,015				14,239,479

The incoming power line will feed the main electrical substation with energy from the Peruvian national grid.

Emergency diesel generators will be installed onsite to supply power for critical standby instances.

17.5.2 Water

In the elaboration of this Preliminary Economic Assessment only high level evaluations have been made. For future studies the quality testing of different sources has to be performed in order to reduce the processing risk in terms of metal recovery and concentrate grades.

The processing plant includes three main water systems

• Process water is recycled in the processing plant. Process water will be added during grinding, used in flotation and then recovered by thickening and filtration of the products.

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• Raw water will be used as makeup water for the process, for reagent preparation, to generate potable water and for fire services.

• Potable water will be used for human consumption.

Two potential sources of fresh water have been considered:

• Rainfall and runoff courses. This source should be investigated in more detail for dry seasons. A complete water balance with reservoirs should be done to secure the water inflow to the processing plant covering the production year.

• Underground mine dewatering system.

Borehole wells could also be a source of water.

It has been assumed that 1.9 m³/t of water will be required for the process. The water balance of the facility is presented in Figure 17.2.

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Figure 17.2 Water balance for the Tangana plant

Dewatering water will be pumped from the mine at around 20 l/s (72 m³/h). This water will mainly be used for the mine operation. Supply of additional 67 m³/h makeup water would be needed for the processing plant, likely from other sources such a wells field or a river water concession.

17.5.3 Reagents and Consumables

Major reagents to be used within the process include:

• Lime (pH control)

• Depressant

• Zinc sulphate (depressant)

• Sodium cyanide (lead flotation)

• Copper sulphate (zinc activator)

• MIBC (frother)

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• Collectors:

• Sodium isopropyl xanthate

• Potassium amyl xanthate

• Thionocarbamate

• Aerophine

• Dithiophosphate

• Steel rods and balls for grinding

• Flocculant (thickening)

The estimation for ;consumables is detailed in Chapter 13 and it is based on the current operation of Silver X at the existing Nueva Recuperada process plant.

17.5.4 Compressed Air Services

The processing plant will be served by two duty and standby air compressor systems which will independently generate normal plant and instrumentation quality compressed air services.

Each of the compressor systems will have its own primary air receiver. The Instrument air compressor package will also have a dedicated dryer to ensure the production of dry and oil free compressed air. Smaller secondary plant air receivers will be located adjacent to remote users as and where required.

17.6 Comments and Recommendations

This report has been prepared based on assumed information and limited metallurgical testwork. Before completing a prefeasibility study, it is recommended that the process be developed through testing and design:

1. Define the process scope and objectives:

2. a. Identify the mineral types and corresponding processing requirements

3. b. Define the plant capacity and throughput

4. c. Decide if a bulk copper-lead-silver-gold concentrate will be sold, or if separate gold and copper concentrates will be produced separately from a lead-silver concentrate.

5. Collect and analyse data:

a. Obtain representative core samples for mineralogical and metallurgical testing for the main mineral types, and to cover the range of mineral types in the resource with respect to rock type, grades, mineralogy and spatial distribution

b. Optimize the process with respect to flowsheet, equipment sizing, reagent selection, and grind size based on the main mineral types

c. Evaluate the geometallurgical variability of different veins based on point samples from throughout the minable resource

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• d. Validate the process flowsheet using bulk pilot testing at the Nueva Recuperada plant

• e. Determine engineering design criteria through testwork, particularly for materials handling, tailings management and water management.

• Develop process design:

• a. Develop the most suitable process flowsheet based on the data obtained, and the metallurgical testwork results

• b. Estimate throughput, metal recovery, operating costs, and product quality by mining phase, based on the chosen process design.

• Design plant layouts and structures:

• a. Evaluate the existing infrastructure and available resources

• i. Services such as power, water, and logistical support

• ii. Access routes for construction, operations, and product transport

• b. Develop the plant layout.

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18 Project infrastructure

18.1 Introduction

The Project is located 11 km north of the Nueva Recuperada plant. The trucking distance (one way) is almost 25 km as shown in Figure 18.1.

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Figure 18.1 Location of the Nueva Recuperada process plant and Tangana project. Not Scaled. Source: Google Earth, 2020

Some of the infrastructure can be shared between both plants, for example:

• Laboratory

• Administration Offices

• Camp

• Warehouses

Nevertheless, the existing facilities have been considered as part of the proposed new facility to be built, so that the influence of each of the facilities can be seen in the CAPEX.

18.2 Access

Access to the Tangana processing plant will be via the HV-115 public gravel road. From the HV-115 a 12k m local track has to be upgraded to be used by the services, trucks and personnel. The track needs to be rebuilt because the current conditions of the track are inadequate for ease of passage for suppliers and personnel. As such, a new route is planned along with soil stabilization, reduction of the gradient in some areas, an increase in the radius of some curves and improvement of drainage along its leng/th.

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These improvements will allow access to the Totorapampa camp at 2.5 km along the proposed new road which will be maintained to support the Tangana Mining Unit. The camp is connected to the Tangana Plant by an existing, 12km track.

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Figure 18.2 Tangana main access. Source: IGN Perú, 2022

18.3 Internal Roads

The Tangana Mining Unit will require connection between the different project areas , not only the camp but also the different veins to be exploited that will not be accessed by underground workings.

The internal roads needed are:

• Internal road to San Antonio area

• Internal road from Cauca to Tangana West

The following figure shows the main internal roads to be considered in the project.

18.4 General Project Facilities

The project facilities to create in the Tangana area are:

• Offices

• Substation

• Workshop

• Warehouse

• Control access

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• Medical service

• Energy distribution

• Water supply

• Industrial water treatment plant

• Domestic water treatment plant

18.5 RoM Stockpile

Stockpiles will be necessary to blend material from different areas of the deposit and from different deposits. A compacted area with capacity to hold one month’s production will be 3 m high on a base measuring 1ha.

The base will be built with waste using a slope angle of 24 degrees.

18.6 Waste Dump

Dumps will be placed near the mine access in order to create a platform using waste material that will be enlarged when the new development produces waste that cannot be stored underground. It is expected that 50% of the waste produced will be accommodated as backfill within mined-out voids. and will never need surface disposal. The remainder may be used for construction purposes. The existing waste dump has a total volume of 0.22M m[3] .

The planned waste dump for Tangana will be 50 m high with a 24 degree slope angle with a plan surface of 3.6 ha.

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Figure 18.3 Tangana waste dump. Coordinate System: WGS84 – UTM18S. Aerial picture source: Microsoft Corporation, 2023 Drawing source: MiningSense, 2023

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18.7 Tailings Storage Facility

The Tangana Tailings Storage Facility (TSF) will have capacity for at least 12 years production. The tailings production rate will be 1,500 tpd, that means around 5.7 Mt of tailings will be produced in 12 years. It is expected that 50% of the tailings will be backfilled, so a it is estimated a total of 2.9 Mt will be stored on surface according to the mine plan shown in the section 16 for almost 12 years production. The assumption, in any case has been to create a tailings facility with enough capacity for the total tailings production over the 12 years.

One of the priorities of the Tangana project will be to manage tailings using best practises, filtering the tailings so that can be stacked. By doing in that way it will be easier to be rehabilitated and safer from an environmental point of view compared to the standard slurry type facilities being used in the area.

The tailings density at Tangana has been estimated to be somewhat higher than at Nueva Recuperada due to the use of more efficient filters and a process regimen that is more focused on the generation of dry tailings. A density of 1.7 t/m3 has been calculated for the filtered tailings with an expected total volume of 3.3 Mm3.

Since tailings will be filtered and compacted to a higher degree than is the case at the existing Nueva Recuperada TSF, the dam will be lower in height and steeper in slope than the existing tailings dam. Although the tailings facility is not located next to a river, improved dewatering will ensure long-term stability against potential erosion at the base. The tailings dam will therefore be sloped, so as to drain the water as quickly as possible and to avoid concentrating of water that could cause erosion.

From the toe wall, each 5m height an external support of waste rock will be placed on top of the filtered tailings. A typical construction stage plan is shown in Figure 18.4.

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Figure 18.4 Construction stages for the external wall of the TSF. Source: MiningSense, 2023

The proposed tailings storage facility will have a tailings storage capacity of 3.3 Mm3 from the 4,545 masl up to the projected maximum elevation of 4,625 masl, in order to be able to manage potential backfilling changes.

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Several options have been evaluated for the location of the tailings dam.

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Figure 18.5 TSF options. Coordinate System: WGS84 – UTM18S. Source: MiningSense, 2023

The option selected is located in the Viscachayoc creek and named as Viscachayoc 1. It guarantees the least impact on the wetlands in the area in addition to reducing the environmental footprint of the project as much as possible; it also reduces the transport distance and guarantees at least 12 years of mine operation.

The design parameters are presented in Table 18.1.

Table 18.1 Tangana TSF design parameters

Parameter	Units	Value
Total footprint	Ha	14.6
Maximum height(verticalprojection)	m	63
Total volume	Mm3	3.5
Toe Dam surface	Ha	1.5
Toe Dam volume	m3	65,000
External dam slope angle	º	18
Internal dam slope angle	º	24
Surface to be waterproofed(real)	Ha	14.6
Tailing storage capacity	Mm3	3.3

The total footprint of the TSF is close to 15 Ha. Of this, 1.5 Ha correspond to the toe dam itself. The area occupied by the tailings, in plan, is 13.1 Ha. The surface area, necessary to calculate the amount of waterproofing (HDPE) to be used, is 14.6 Ha (13.7 Ha horizontal).

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All the material that can be reused as topsoil will be stockpiled separately and reused for the final rehabilitation of the TSF. It is estimated that around 73,000 m[3] of topsoil can be stockpiled between the TSF and the guard channel.

All unsuitable material from the base of the dam will have to be removed, such as organic soils, clays and silts, prior to construction. Material that can be compacted and used in the actual construction of the dam will be used under strict quality control, the rest, except topsoil, will be stockpiled and used to backfill the tailings dam together with the tailings themselves.

The material required for the construction of the dam will come mainly from the development of mining operations, the levelling of the plant and the levelling of the tailings pond itself. The backfill material for the dam will preferably be rocky, of sufficient size to be spread in layers 0.5 m thick. Upstream of the dam the material used will be a mixture of coarse and fine material to improve compaction. The construction of the toe wall or dam will be carried out in the first phase. Each new flitch thereafter will increase the tailings facility with an external dam wall.

A guard channel will be constructed above the TSF to prevent runoff from entering the tailings dam area. This channel, with an average slope of 3%, will have energy dissipation elements at the steepest points of potential erosion. The total leng/th of the channel is 1,217 m and will be located around the north-east to south-west edges of the dam. The easternmost edge is separated from the rest of the dam by higher ground which will protect it from run-off. The existing road that cuts through this area will be widened to serve as a base from which to excavate the channel during construction. A minimum width of 2 m at the base and slopes of 45º have been calculated with an estimated excavation volume of 18,000 m[3] . In principle, as most of the excavation will be in solid rock, concrete walls are not considered necessary. The real surface area of the channel will be 12,841 m[2] – a useful metric to calculate the volume of gunite required in construction.

The main TSF components are shown in Figure 18.6.

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Figure 18.6 TSF main components in plan view. Coordinate System

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The TSF water will be managed in such a way that all water in contact with the tailings dam elements, either in the basin or the dam itself, will be managed as contact water.

There will be an external drainage system, consisting of the underdrain, the ditches for collecting water from the outer foot of the dam, the guard channel and the outer basin. This water, in principle of good quality, may be reused in the processing plant without prior treatment other than decanting. In any case, its quality will be monitored. The water from inside the tailings pond will be managed by the internal drainage system. This water, which is likely to be laden with metals and have an acid pH due to the sulphides contained in the tailings, will have to be treated and managed appropriately before being discharged or reused.

The natural watercourses onto which the TSF will be installed will be used as an underdrain below the waterproofing of the tailings dam and filled with coarse material, such as gravel, and enclosed by a geotextile to prevent it from becoming saturated with fines. The leng/th of the drain, some 600m, means that around 1,300m[3] of gravel and around 6,000 m[2] of geotextile will be required. The outlet of this drain will be downstream of the TSF, connecting with the water collection basin of the dam, the TSF External Pond.

Once the topsoil has been removed, the tailings dam basin will be prepared for installation of the waterproofing system: the ground will be levelled and compacted. This base will be profiled to eliminate any sharp edges that could damage the waterproofing system. A geotextile of sufficient weight will be placed on the compacted material, free of edges and, in order to further reduce the risk of puncturing, a 2mm thick, high density polyethylene layer that will be placed on top of the geotextile which will form the base upon which the tailings will be distributed. It is estimated that an area of 14 Ha will be covered and waterproofed by the geotextile and polyethylene.

The surface area of the basin defined by the guard channel and the crest of the tailings dam is 17.2 Ha, which must be taken into account when determining the volume of rainwater to be collected by the tailings dam.

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Figure 18.7 TSF drainage system in plan view. Coordinate System: WGS84 – UTM18S. Source: MiningSense, 2023

The internal drainage system will consist of one or more filter pits, which will be constructed by stacking prefabricated concrete rings in the dam as it is filled with tailings. Water thus collected cannot percolate due to the existence of the waterproofing and will be pumped-out regularly to keep the piezometric level of the tailings as low as possible. The axis of the watercourse on which the tailings dam will be built will serve as a reference for the location of these wells, which will be located at 250 m intervals and whose final distribution will be made once the rheology and permeability of the filtered tailings are known.

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Figure 18.8 Typical TSF section scheme. Source: MiningSense, 2023 All the services necessary for the construction of the TSF will be deployed from the future Tangana facilities, which will include an industrial water treatment plant, a domestic water treatment plant, a mining camp with all services, electrical and water supply.

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The tailings produced are expected to be transported by truck, although it is not ruled out that they could be pumped and filtered at the facility itself. The material will be dumped in as thin and as extensive surface area possible to reduce the humidity and improve the compaction of the filtered tailings. In principle, dumping will be done from south to north to reduce transport distance and to keep the lowermost part of the tailings pond open to favour drainage and prevent the accumulation of rainwater.

The volume of water generated in the tailings pond will be largely a function of the moisture content of the tailings themselves. It has been assumed that the tailings will have a moisture content of 10%, which may be lost primarily through evaporation. A positive rainwaterevaporation balance of 609.6 mm per year has been assumed. This water will have to be managed in the tailings dam. Considering the catchment area generated by the tailings dam, it is estimated that 96,000 m[3] will be generated at the tailings dam and will have to be treated at the industrial water treatment plant if it cannot be used directly at the processing plant. A runoff coefficient of 60% has been considered for the unsealed area.

Since the water storage capacity of the tailings dam is well defined, it is not likely that excessive pumping capacity will be required, whereby it should be possible to pump water from inside the tailings dam at a gradual rate of 13 m[3] /hour.

The volume of water collected in the external basin and from uncovered areas has been calculated at 3 m[3] /hour across the whole year, assuming the known reservoir capacity.

Access for construction and operation will take advantage of a road linking the future Tangana plant with the tailings dam. It will be necessary to improve the road and create pipe crossings to allow water from the guard channel to run under the road in a controlled manner.

The construction of the tailings dam will be carried out in phases allowing for two to three years of tailings to be backfilled in each phase. The preparation of the drainage system and the first dam will take six months which will be carried out in parallel with construction of the processing plant.

As in the case of the Nueva Recuperada tailings dam, the Tangana TSF will have a control system of alternating piezometers and inclinometers every 100m to monitor the performance of the dam. In addition, topographical control milestones will be installed to monitor any differential settlement and displacement of the dam crest. Downstream, piezometers will be installed to monitor groundwater quality and water table.

An operation and control system will be defined to draw up action protocols based on exceeding certain thresholds for definable safety control.

18.8 Water Management

Water from the mine will be drained from the lowest level in the workings via existing access in the mine. The PEA details a system of pumping all mine water via the main ramp or ventilation shafts in order to be used at the processing plant. This implies a system with intermediate pumping stations.

The amount of water ingress at the mine needing to be pumped is estimated in 12 l/sec.

A water pond with three months processing capacity will be placed near the plant. The approximate volume resolves to a rate of 6 m[3] /hour for a total of 12,000 m[3] .

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18.9 Camp and Accommodation

The camp needed is similar to the existing camp at the Nueva Recuperada plant. Accommodation for 250 workers has been estimated, and current plans consider locating the camp in the Totorapampa area.

18.10 Power Facilities

Installed power required for the processing plant is approximately 3 MW.

18.11 Fuel Facilities

A station for fuel storage will be located inside of the project facilities in order to supply the fleet of vehicles, mobile equipment, portable compressors and other equipment working on the project.

18.12 Water Supply

The water needed for the camp is coming from a drillhole to be designed based on a dedicated hydrogeological model.

The water needed for the processing plant will be a combination of:

• Pumped water from the mine (0-10 m[3] /h)

• Water pumped from the TSF (0-10 m[3] /h)

• Field of wells (approximately 3 wells) (after an approval concession) (50 m[3] /h)

• Water pumped from the Huachocolpa river (approximately 3.5 km pipeline) (after an approval concession) (to complete up to 67 m[3] /h)

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19 Market studies and contracts

19.1 Market Studies

Silver X completed a comprehensive market study for the Nueva Recuperada property. The QPs reviewed the studies and analysis. It is the QP’s opinion that the results support the long range pricing assumptions and other marketing premises used in this report.

19.1.1 Zinc Concentrate

Zinc prices are currently in the range of US$ 1.30–1.55/lb, having reached a 2022 high of US$ 2/lb in April 2022.

Spot treatment charges (TCs) paid to smelters have recently increased from 2022 benchmark, indicating a higher availability of zinc concentrates in the market. It is forecast that the benchmark TC for 2023 will be above US$ 290/t and is not expected to decrease during the second half of 2023.

The increase compared to the 2022 benchmark is due to the fact that after the Russia-Ukraine war, prices in Europe (LBMA) rose drastically, causing the closure of many smelters on this continent. During this time, prices in Europe increased while those in China remained stable. This meant that China could not buy imported material and had to buy from their own local stocks.

That had an immediate effect on the TCs during the following months.

Due to the high stocks that were generated, particularly in Europe, a bullish TC market is expected in the short term. However, as stocks are reduced and already having similar ChinaLBMA prices, it is expected that in the medium term (2024 onwards) the TCs can be reduced to a range of (US$150 - US$250/t).

Overall, the global zinc concentrate market is forecast to be in deficit throughout 2023 and 2024.

Over the long term, an average TC in the region of US$ 230/t is regarded as a reasonable figure for financial analysis purposes. This figure includes any price participation that may be applicable.

Concentrate Marketability

The expected grade of the zinc concentrate is 50% Zn, which is considered a medium-grade zinc concentrate and typical of concentrates from many zinc deposits in central Peru. The preliminary economic analysis assumes that the smelter pays for 85% of zinc content in the concentrate subject to a minimum deduction of eight units and pays 70% of silver content after a deduction of 3 oz/t.

The expected arsenic content (~0.5% As) means that the proportion of production that can be sold to smelters in China could be high. Also, due to the expected low Ag content of concentrates, the Ag becomes payable by any receiver, making South Korea and Europe other alternatives for international delivery.

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The clean nature of the zinc concentrate is very attractive to those traders that blend concentrates.

Based on current exchange rates, a figure of US$ 34 per wet metric tonne (wmt) is regarded as an appropriate figure to cover the inland freight costs of transporting concentrate produced at Recuperada to the port of Callao. Based on the proposed marketing strategy an average sea freight cost of around US$ 64/wmt is regarded as a reasonable assumption for financial modelling purposes. Port costs are likely to be in the range of US$ 22/wmt.

19.1.2 Lead-Silver Concentrate

Lead prices are currently in the range of US$ 0.90 – 1.10/lb.

Despite the Russian-Ukrainian war and many leading smelters shutting down, the lead TC market has been stable due to a substantial increase in the processing capacity of the active smelters and a considerable reduction in stocks. It is forecast that the benchmark TC for 2023 will be around US$ 131/t and is not expected to have much variation during the second half of 2023.

Transport and shipping costs are the same as those for the zinc concentrates. No lead smelter is currently operational in Peru, so it is presumed that the concentrates referred to in this study will be shipped to Asia. Over the long term, an average TC of US$ 131/t for the lead–silver concentrate and a silver refining charge (RC) of $1.725/oz Ag is regarded as reasonable for budgeting purposes.

Concentrate Marketability

The expected grade of the lead–silver concentrate is 50% Pb, while silver is expected to be in the range of 2,000–3,000 g/t i. It is assumed that the smelter will pay for 95% of lead content in the concentrate subject to a minimum deduction of three units. For silver in the lead–silver concentrate, the smelter typically pays for 95% subject to a minimum deduction of 50 g/dmt.

The expected As grade for the Recuperada lead-silver concentrate its between 0.5-1 % which, alongside silver assays, indicates the prospective delivery would be to South Korea.

No additional penalties are expected on the lead–silver concentrate.

19.2 Metal Price Projections

Project economics were estimated based on a long-term metal price of US$1.36/lb for zinc as established by Silver X. The long-term metal prices of US$0.90/lb for lead and US$ 21.00/oz for silver were also established by Silver X as conservative prices for this estimation.

19.3 Contracts

Recuperada has a contract with Trafigura for 100% production of their zinc concentrate for delivery to DAP Callao. The contract expires at Q4 2025.

Recuperada has a contract with Trafigura for 100% production of the lead-silver concentrate for delivery to DAP Callao. The contract expires at Q4 2025.

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20 Environmental studies, permitting and social or community impact

20.1 Introduction

Silver X's operations in Peru are carried out in the community of Huachocolpa, located in the district of the same name, province and department of Huancavelica. The operating capacity is currently 720 tpd, with a processing plant in the area called Corralpampa and mine areas in the Tangana and Maria Luz areas, as shown in Figure 20.1.

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Figure 20.1 SiverX operations at Huachocolpa (Source: SilverX, 2022)

All necessary social, environmental and operational permits have been obtained proportionate to the mine capacity. However, based on the latest geological results, the development of a new project called Recuperada (hereinafter the “Project”), will be included in the portfolio, which will increase capacity to 2,500 tpd.

In order to develop the Project, the first environmental permitting step is the approval of an Environmental Impact Study (EIA) which was completed in October 2021. It is estimated that

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the study will be submitted for evaluation by the Ministry of Environment in Peru in the first quarter of 2023, and approval is expected at the end of 2023. A new easement agreement is being negotiated with the community of Huachocolpa to obtain the right of use and usufruct for this expansion of the Project area. There is an active exploration program, as detailed in section 9, which has the necessary social and environmental permitting for implementation. Hereunder is social and environmental information on current operations and the proposed expansion.

20.2 Environmental Baseline

Hereunder presented is a description of the current area of operations and a preliminary evaluation of the proposed expansion of the Project area.

20.2.1 Water Resources and Quality

Operations are located in the Mantaro river basin in the central Andes, contained within Huancavelica and Acobamba Provinces. This is a humid climatic region with a basinal area of 34,400 km[2] up to its confluence with the river Apurímac to form the Ene River. The Pallcapampa and Huachocolpa micro-watersheds are tributaries to the Huachocolpa River, which is a tributary of the Lircay River which, combined with other tributaries, merges with the Urubamba River which flows into the Huarpa River which, in turn, flows into the Mantaro River. The Mantaro itself is a tributary of the broad Atlantic basin as shown in Figure 20.2 of the hydrography.

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Figure 20.2. Hydrographic location of project

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Source: August, 2021. Cartographic Database - National Geographic Institute (IGN), National Institute of Statistics and Informatics (INEI), Ministry of Transport and Communications (MTC), National Water Authority (ANA) and Recuperada Production Unit. The geomorphological characteristics of both micro-basins where our operations are located are detailed in Table 20.1.

Table 20.1. Geomorphological parameters of hydrographic units

parameters	Symbol	Unit	Hydrographic Unit	Hydrographic Unit
			Pallccapampa	Huachocolpa
Minimum level of the micro-watershed	C min	masl	3955	3978
Maximum height of the micro-basin	C max .	masl	5050	5100
Maximum height of the main channel	cc	masl	4750	4950
Total unevenness of the Basin	Hc	km	1.1	1.12
Hbed difference	hca	km	0.795	0.972
Basin Area	A	km2	121,333	85.83
Basin Perimeter	P	km	52.47	45.86
Main channel leng/th	L	km	19.02	14.19
BASIN SHAPE
middle width	ap	km	6.38	6.05
Compactness or Gravelius coefficient	kc	km/km2	1.33	1.39
Form Factor	ff		0.34	0.43
radius of circularity	rc		0.55	0.51
equivalent rectangle
Major Side	L	km	20.26	18.22
minor side	he	km	5.99	4.71
HYDROGRAPHIC NETWORK SYSTEM:
Order number of the rivers		Order	3rd	4th
Total leng/th of watercourses		km	86,497	76.37
Number of perennial and intermittent currents		no	36	33
current density	dc	n/km2	0.3	0.38
drainage density	dd	km/km2	0.71	0.89
Average slope of the river or main course	YE	%	4.18	6.85
concentration time	tc	hr .	5.14	3.75
RELIEF PARAMETER
Average altitude of the Basin	hmm	masl	4503	4539
basin slope	sc	%	18.28	23.82

Source: Modification of the Mine Closure Plan of the Recovered Mining Production Unit, 2017.

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Water courses in the immediate project area are short with moderately steep slopes within elongate, oval micro-basins within which flooding is frequent during the rainy season.

INCLAM PERU and ANA (2015) carried out a study entitled “Water Resources Evaluation in the Mantaro Basin” based on historic observations from the Moya Hydrometric station during 1965-2013. The records show an average flow of 25.3 m[3] /s emanating from a drainage area 1,739.33 km[2] , which amounts to a flow of 14.55 l/s per km[2] (Table 20.2).

Table 20.2 Estimated flows

Basins	Drainage area (km2)	Jan	Feb	Sea	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Averag e (m3/s)
Moya reception basin	1739.33	39.5	57.4	58.1	37.3	20.2	14.5	12.1	10.8	10.5	11.1	13.3	22.3	25.6
Pallccapampa	121.33	2,759	4,005	4,050	2,600	1,407	1,008	0.845	0.750	0.731	0.772	0.927	1,556	1.8
Huachocolpa	85.83	1,951	2,833	2,865	1,839	0.995	0.713	0.598	0.531	0.517	0.546	0.656	1,101	1.3

Source: Modification of the Mine Closure Plan of the Recovered Mining Production Unit, 2017.

Ecological impact has been defined using the "General Guidelines to determine ecological flows" based on the hydrological study RJ No. 118-2019-ANA0F[1] , which determined that water required for mining activity will consume 10 % of the flow of the Pallccapampa river, specifically, 0.168 m[3] /s, the impact of which permits survival of all forms of aquatic life that exist within that drainage.

20.2.2 Noise Levels

Diurnal and nocturnal noise levels within the area of the plant are below 80 dBA and 70 dBA respectively, which values are below the Environmental Quality Standards (ECA) established under Peruvian law and pose no risk to the health of workers and nor to natural species in the environment.

Table 20.3 Noise levels results (Source: Recovered Noise Monitoring, 2020)

Parameter	Unit	Jun-20	Jun-20	Dec-20	Dec-20	RCT Noise
		RCT-1	RCT-2	RCT-1	RCT-2
LaeqT daytime noise	dB(A)	54.8	47.2	63.9	60.5	80
Maximum daytime noise	dB(A)	68.5	60.1	77.3	75.2
Daytime noise Minimum	dB(A)	43.3	38.2	54.9	54
LaeqT night noise	dB(A)	47.2	45.8	56.6	56.7	70
Maximum night noise	dB(A)	60.1	57.6	70.1	76

1Tennant established the following criteria : 1) 10 % of average annual flow is the recommended minimum to maintain a habitat that allows survival of most forms of aquatic life in the short term; 2) 30 % of average annual flow is recommended to maintain adequate habitat for the survival of the various forms of aquatic life; 3) 60% of average annual flow is recommended for a habitat with excellent to exceptional characteristics for most forms of aquatic life, during the initial growth periods (García, et al., 1999; Maunder & Hindley, 2005; Pyrce, 2004).

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Minimum night noise dB(A) 38.2 35.4 55.6 54.3

20.2.3 Vegetation

Characterization is presented based on valid and current technical studies for Peru. In the area of current operations, the following life zones were identified: Humid Páramo - Subalpine Subtropical ( pmh-SaS ), which occupies the eastern parts of the Andes in North, Central and South portions and between 3,900 masl and 4,500 masl, where the maximum annual average bio temperature is 6.9 ºC and the minimum annual average is 4.6 ºC (Caylloma, Arequipa).

Maximum average, annual precipitation is 1,088.5 millimeters per year and the minimum average is 513.4 millimeters per year. Topography can be described as extensive areas of gently to slightly undulating hills with rocky outcrops intersected by moderate to steep drainages. Plant life comprises an abundant mixture of grasses and other perennial herbs, predominantly Festuca dolychophylla , Calamagrostis vicunarum and Stipa ichu, in addition to lesser occurrence of Lachemilla pinnata and Hypochaeris taraxacoids .

On the other hand, the following plant formations were identified:

• Pajonal, which is composed of bundles of grasses such as Festuca dolychophylla, Stipa ichu and Calamagrostis vicunarum, accompanied by other lesser species such as Hypochaeris taraxacoides and Paranephelius ovatus .

• Bofedal which develops in humid or partially flooded, high Andean areas and is characterized by a simple structure of very compact, flat pads of convex pulviniform herbaceous plants, predominantly Distichia muscoides, Werneria pygmaea and Plantago rigida.

• Roquedal which comprises residual patches on steep rocky slopes covered by lichens and mosses including Calamagrostis vicunarum and Stipa ichu.

• Flora is also characterized by species of poaceae as influenced by the conditions and characteristics of the zone as part of the livelihood of livestock and wild animals. Table 20.4 presents the flora species:

Table 20.4 Vegetation Species

Class	Family	Species	Common name	Applications
Equisetopsida	Pteridaceae	Adiantum subvoluble	Fern	Ornamental
Liliopsida	Juncaceae	Distichia muscoids	Champa Star	Gas
Liliopsida	Juncaceae	Inula racemosa	Um sutu	Forage
Liliopsida	Poaceae	Achiacne pulvinata	Paco paco	Forage
Liliopsida	Poaceae	Agrostis tolucensis	Water grass _	Forage
Liliopsida	Poaceae	Calamagrostis vicunarum	Crespillo	Forage
Liliopsida	Poaceae	Fescue dolychophylla	Chilihua	Forage
Liliopsida	Poaceae	Muhlenbergia peruviana	Llapa grass	Forage
Liliopsida	Poaceae	Stipa ichu	Ichu	Forage
Magnoliopsida	Asteraceae	Chuquiraga spinosa	Chuquiraga	Medicinal
Magnoliopsida	Asteraceae	Hypochaeris sessiliflora	NC	Medicinal
Magnoliopsida	Asteraceae	Hypochaeris taraxacoid	Bitter chicory	Medicinal

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Class	Family	Species	Common name	Applications
Magnoliopsida	Asteraceae	Paranephelius ovatus	Anu jinchu	NC
Magnoliopsida	Asteraceae	Perezia multiflora	Foreshortening	Medicinal
Magnoliopsida	Asteraceae	Senecio adenophyllus	Tola	Gas
Magnoliopsida	Asteraceae	Senecio comosus	Hujchor	Medicinal
Magnoliopsida	Asteraceae	Senecio evacoid	Ningri ningri	NC
Magnoliopsida	Asteraceae	Senecio nutans	Huishcash	Medicinal
Magnoliopsida	Asteraceae	Senecio rufescens	NC	Gas
Magnoliopsida	Asteraceae	Taraxacum office	Dandelion	Medicinal
Magnoliopsida	Asteraceae	Werneria pygmaea	NC	Forage
Magnoliopsida	Ephedraceae	Ephedra rupestris	Pinco pinco	Medicinal
Magnoliopsida	Fabaceae	Astragalus chickpea	Chickpea	Forage
Magnoliopsida	Gentianaceae	Gentian sedifolia	P'enqa-p'enqa	Medicinal
Magnoliopsida	Gentianaceae	Gentianella sad	NC	Medicinal
Magnoliopsida	Geraniaceae	Geranium sessiliflorum	Eyeball	Forage
Magnoliopsida	Orobanchaceae	Castilleja pumila	Castilleja	NC
Magnoliopsida	Plantaginaceae	Plantago rigid	Champagne	Gas
Magnoliopsida	Rnunculaceae	Buttercups flagelliformes	Buttercups	Ornamental
Magnoliopsida	Urticaceae	Hives urens	Nettle	Medicinal
Magnoliopsida	Valerianaceae	Valerian globularis	Valerian	Medicinal
Magnolioside	Malvaceae	Acaulimalva stuebelii	Altea	Medicinal
Magnolioside	Malvaceae	Nototrich pinnate	NC	Medicinal
Magnolioside	Rosaceae	Alchemilla diplophylla	Herbaceous	NC
Magnolioside	Rosaceae	Lachemilla pinnate	lachemilla	NC

Source : Detailed Environmental Plan of the Recovered Production Unit, approved through RD No. 173-2020-MINEM-DGAAM.

Details of the density of floral species per m[2 ] in the area of operations are categorized by national legislation according to Peruvian standard DS 043 – 2006 – AG, CITES and by international standards by IUCN as summarized in Table 20.5.

Table 20.5 Conservation category of vegentation

		Conservation	category for flora	category for flora
Species	Common name	Supreme Decree 043-2006-AG	CITES	IUCN RED LIST
Chuquiraga spinosa	Chuquiraga	NT	-	-
Ephedra rupestris	pincopinco	CR	-	LC
Senecio nutans	Huishcash	vou	-	-

Source : Detailed Environmental Plan of the Recovered Production Unit , approved through RD No. 173-2020-MINEM-DGAAM.

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Endemic species are detailed in Table 20.6 which presents those identified according to the Red Book of endemic plants of Peru (León et al, 2006).

Table 20.6 Endemic vegetation

Species	Common name	Endemic species
Acaulimalva stuebelii	Altea	AND
Gentianella sad	NC	AND
Senecio comosus	Hujchor	AND
Valerianglobularis	Valerian	AND

Source : Detailed Environmental Plan of the Recovered Production Unit , approved through RD No. 173-2020-MINEM-DGAAM

20.2.4 Fauna

Birds represent the main faunal group in the area of Tangana operations as a function of the higher altitude habitat. The main species are presented in Table 20.7.

Table 20.7 Fauna

Order	Family	Species	Common name	Applications
Accipitriformes	Accipitridae	Geranoaetus polyosome	Variable Harrier	Ceremonial
Falconiformes	Falconidae	Phalcoboenus megalopterus	Cara cara
Anseriformes	Anatidae	Anas flavirostris	Black duck	-
Anseriformes	Anatidae	Lophonetta specularioides	Crested duck	-
Anseriformes	Anatidae	Chloephaga melanoptera	Huallata	Ceremonial
Columbiformes	Columbidae	Metriopelia ceciliae	Spotted Dove	-
Charadriiformes	Laridae	Larus serranus	Andean gull	-
Charadriiformes	Charadriidae	Vanellus shine	Lique Lique	-
Passerines	Furnariidae	Modest asthenes	Cordilleran canastero	-
Passerines	Furnariidae	Upucerthia helskii	Bandurrita	-
Passerines	Furnariidae	Cinclodes cunicularia	Barred-wing clapper	-
Passerines	Thraupidae	Diuca speculifera	White-winged Diuca	-
Passerines	Thraupidae	Phrygilus commoners	Ash-breasted Finch	Ornamental
Passerines	Thraupidae	Phrygilus unicolor	Plumbeous sierra finch	-
Passerines	Thraupidae	sScalis uropygialis	Shiny-backed Parsnip	Ornamental
Passerines	Fringillidae	Carduelis uropygialis	Mountain goldfinch	-
Passerines	Tyrannidae	Muscisaxicola juninensis	Sleepyhead	Ornamental
Passerines	Tyrannidae	Muscisaxicola maculirostris	Sleepyhead	Ornamental
Passerines	Tyrannidae	Lessonia oreas	-	-
Passerines	Turdidae	Turdus chiguanco	Chiguanco thrush	-
Passerines	Emberezidae	Zonotrichia capensis	Rufous-collared Sparrow	-
Piciformes	Picidae	Collapse rupicola	Andean woodpecker	Medicinal Ornamental

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Order	Family	Species	Common name	Applications
Rodentia	Chinchillidae	Lagidium peruanum	Peruvian vizcacha	Ceremonial Ornament
carnivore	Canidae	lycalopex culpaeus	Fox	Food
Rodentia	Cricetidae	Auliscomys pictus	Painted long-eared mouse	-
Reptile	Liolaemidae	Liolaemuswalkeri	Walkeri'slizard	-

Source : Detailed Environmental Plan of the Recovered Production Unit , approved through RD No. 173-2020-MINEM-DGAAM

Additionally, the domestic fauna present in the surroundings of the area of influence is presented in Table 20.8.

Table 20.8 Domestic fauna

Family	Species	Common name
Camelidae	Lamaglama	Call
	Vicuna pacos	Alpaca
Canidae	Canis familiaris	Dog

Source : Detailed Environmental Plan of the Recovered Production Unit , approved through RD No. 173-2020-MINEM-DGAAM.

The species protected by national regulations as endemic species are presented in Table 20.9.

Table 20.9 Conservation category and endemic fauna

Species	Common name	Wildlife conservation category	Wildlife conservation category	Wildlife conservation category	endemic species
		SD 004-2014- MNAGRI	CITES	IUCN RED LIST
Anas flavirostris	Black duck	-	-	LC	-
Modest asthenes	Cordilleran canastero	-	-	LC	-
Auliscomys pictus	Painted long-eared mouse	-	-	LC	-
Carduelis uropygialis	Mountain goldfinch	-	-	LC	-
Chloephaga melanoptera	Huallata	-	-	LC	-
Cinclodes cunicularia	Barred-wing clapper	-	-	-	-
Rupicolous collapse	Andean woodpecker	-	-	LC	-
Diuca speculifera	White-winged Diuca	-	-	LC	-
Geranoaetus polyosome	Variable Harrier	-	-	LC	-
Lagidium peruanum	Peruvian vizcacha	-	-	LC	-
Larus serranus	Andean gull	-	-	LC	-
Lesonia oreas	Rock fowl	-	-	LC	-
Liolaemus walkeri	Aalkeri's lizard	-	-	DD	-
Lophonetta specularioides	Ccrested duck	-	-	LC	-
Lycalopex culpaeus	Fox	-	-	LC	-

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Species	Common name	Wildlife conservation category	Wildlife conservation category	Wildlife conservation category	endemic species
		SD 004-2014- MNAGRI	CITES	IUCN RED LIST
Metriopelia ceciliae	Spotted Dove	-	-	LC	-
Muscisaxicola juninensis	Sleepyhead	-	-	LC	-
Muscisaxicola maculirostris	Sleepyhead	-	-	LC	-
Phalcoboenus megalopterus	Caracara	-	II	LC	-
Phrygilus commoners	Ash-breasted Finch	-	-	LC	-
Phrygilus unicolor	Leaden finch	-	-	LC	-
Sicalis uropygialis	Shiny-backed Parsnip	-	-	LC	-
Turdus chiguanco	Chiguanco thrush	-	-	LC	-
Upucerthia jelskii	Bandurrita	-	-	LC	-
Vanellus shine	Lique Lique	-	-	LC	-
Zonotrichia capensis	Rufous-collared Sparrow	-	-	LC	-

Source : Detailed Environmental Plan of the Recovered Production Unit , approved through RD No. 173-2020-MINEM-DGAAM

20.2.5 Fragile Ecosystems

Based on Peruvian regulations, the "Bofedal" is considered a fragile ecosystem in accordance with what is described in Article 99 of the General Environmental Law No. 28611 and its amendments and the revision of the Sectoral List of Fragile Ecosystems of SERFOR (Service National Forestry and Wildlife).

The Bofedal is a plant community that develops in humid or partially flooded high Andean areas. It is characterized by perennial vegetation within the semi-arid landscape of the high Andes, with a simple, flat, cushion-like structure, within which pulviniform herbaceous plants predominate, especially Distichia muscoides, Werneria pygmaea and Plantago rigido. The following bofedales areas have been identified within the project area as presented in Figure 20.3Figure 20.3.

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Figure 20.3. Bofedales areas in the region

Source: October 2020. Cartographic Database - National Geographic Institute (IGN), National Institute of Statistics and Informatics (INEI), Ministry of Transport and Communications (MTC).

20.2.6 Characterization of Expansion Areas

Work is currently underway on an Environmental Impact Assessment (“EIA”) for the Tangana Project, to define the Environmental Baseline for the area of influence of the expansion of the project following a preliminary evaluation as shown in Figure 20.4.

As part of the EIA, a study area was defined to evaluate physical and biological environments.

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Figure 20.4 Expansion areas considered in the EIA (Source: SilverX, 2022)

20.3 Social Baseline

Both the existing operations and those planned for the Tangana expansion are located in territory owned by the Huachocolpa community which is located in Huachocolpa District in Huancavelica Department and Province. The community comprises eight villages and towns: the District Capital, Huachocolpa, Corralpampa, Chuñumayo, Alto Sihua, Atoccmarca, Totorapampa, Pallccahuayco and Yanaututo.

The Ministry of Culture recognises these communities as being made up of indigenous Quechua peoples within a peasant community (“Communidad Campesina”) recorded as early as 1937.

20.3.1 Demographic Aspects

The 2017 Census collected information on the entire settled population whether they are community members or not. The census recorded a total population of 1,343 inhabitants in Huachocolpa, of whom 1,053 (78 %) reside in Huachocolpa itself and Corralpampa which houses 63 people (4.7 %).

A temporary immigrant population attracted by the opportunity of work in the mining industry come from a diversity of places including Carhuapata (Lircay District), Huancavelica, Huancayo and Puno. At the end of their contracts, these workers tend to return to their places of origin.

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On the other hand the main destination of residents who have emigrated from Huachocolpa tend to go to Huancavelica and other places in the region where there is mining activity. The main motivation for this emigration is the search for salaried work in mining due to their experience in the sector.

20.3.2 Education

Huachocolpa District contains 14 Educational Institutions (“IEs”) with 531 registered students and 58 teachers distributed between Huachocolpa and the rest of the community. In Huachocolpa itself there is one preschool, one primary and one secondary school. In Corralpampa there are two preschools and a primary school. All institutions are dependent on the public sector.

The Ricardo Palma IE in Huachocolpa is the only educational secondary level institute with students from all communities within all Huachocolpa communities. Students from Alto Sihua, Chuñumayo, Pallccahuaycco and Totorapampa reach the school on foot whilst students from the Corralpampa complex are transported by bus as provided by Recuperada SAC since 2019.

20.3.3 Health

Two health centers are registered in Huachocolpa: one in the center of Huachocolpa and one in Corralpampa at the Recuperada complex.

The center at Huachocolpa is publicly funded to provide healthcare to all residents of the Huachocolpa District accessible to members of all eight, Huachocolpa communities including Corralpampa residents. Hours of operation are Monday through Sunday from 7:00 a.m. to 7:00 p.m. with emergency care available 24 hours a day.

The working healthcare staff comprises one doctor, one nurse, a nursing technician, and a dental surgeon. There are two ambulances available to make transfers to healthcare facilities in Huancavelica. The most frequent treatment needs for children, youth and adults are acute diarrhea and acute respiratory infection.

Recuperada healthcare center is privately funded establishment providing healthcare to all Recuperada workers, including those who are residents of all the Huachocolpa communities. Hours of operation are Monday through Sunday from 7:00 a.m. to 7:00 p.m. with emergency care available 24 hours a day.

Healthcare personnel comprises two nursing technicians and a doctor. It has an ambulance to make transfers to Huachocolpa, Huancavelica or Huancayo. They have six residential spaces of which four are in use The most frequent treatment needs are for acute diarrhea, acute respiratory infection and ophthalmological and dermatological conditions.

20.3.4 Housing and Basic Services

The majority of houses in rural areas have dirt floors, whereas some in Huachocolpa town itself have tiled or wooden floors.

House walls are mainly adobe or rammed earth with a few brick-built constructions in the center of Huachocolpa. Roofs are mostly corrugated with a few made up of tiles.

Water for household consumption comes from a reservoir below the Castillaranra spring, ten minutes from Huachocolpa, which is then piped to all houses in the community. The same system prevails at the Corralpampa Appendix and the other minor communities, with water treatment the responsibility of the Municipality of Huachocolpa District.

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A few houses still have outdoor latrines, but the majority of homes in Huachocolpa and Corralpampa have indoor toilets and bathrooms. Access to this service was promoted and concluded by the previous mayor.

Most homes have mains electricity as provided by Electrocentro. Any service outages are due to collapse of electricity poles or strikes during electrical storms. An average family will pay S/ 50 per month for electricity, whereas at Corralpampa, all homes have electricity as provided by signed agreement with Recuperada.

20.3.5 Communications

Between them, Entel and Movistar have provided mobile telephony since 2009. Some homes also have satellite internet services provided by Movistar. Most families have cable television provided via post or pre-payment plans with DirectTV.

At Corralpampa Appendix Movistar is the telephony provider and approximately five homes have a satellite internet connection as required by law to provide virtual education. Some ten homes have access to satellite TV.

20.3.6 Economic Activities

Each community member is allocated an agricultural plot on which the majority grow barley and potatoes along with lesser amounts of wheat, peas, oca, olluco and mashua tubers, broad beans, and quinoa.

Potatoes and barley are sown in November and harvested in June. The majority of production

is for self-consumption.

Llama and alpaca husbandry occurs in the upper reaches of the community. Llama breeding is in decline due to the wider foraging area required compared to that of alpacas. Some families raise sheep, cows and horses along with guinea pigs and rabbits.

Families living at lower altitudes tend to raise sheep and cows; conversely families at higher levels generally dedicate themselves to camelid husbandry;, such is the case at Corralpampa.

Alpacas are raised for their meat for local consumption, either fresh or dried, and sold for S/ 10 per kg, whilst merchants from Lircay, Huancayo and Huancavelica buy alpaca wool which currently sells for S/ 8 per pound.

Mining provides salaried employment for the adult, mainly male population which experience has enabled some to seek employment outside the district.

The close proximity of the Recuperada operation and Corralpampa ensures a close socioeconomic relationship.

The final aspect of commercial activity is provided by five grocery and general stores, warehouses and periodic market days in Huachocolpa supported by merchants from different parts of the region. The smaller communities have warehouses and kiosks: for example, Corralpampa has three kiosks providing basic necessities. Organizational and Cultural Structure. As with all Andean peasant communities, Huachocolpa has a representative Board of Directors of seven: the President, Vice President, Secretary, Treasurer, Prosecutor and two others.

The President represents the community when dealing with other communities and public or private institutions when negotiating agreements on behalf of the community. The Vice President represents the community in the absence of the President. The Secretary receives, files, communicates and issues official documentation on behalf of the current Board of

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Directors. The Treasurer keeps account of expenses incurred and income generated by the community.

The Prosecutor is charge of coordinating with the Justice of the Peace to address problems related to law and order in the community. The two, untitled members communicate the activities of the Board of Directors to the community at large as well as supporting the Secretary. Huachocolpa currently has 560, registered community members.

The majority of the population speak Quechua as their mother tongue. There are those also who speak Spanish as their mother tongue. The former speak Quechua when with family and Spanish when in public. The latter have no problems communicating since use of Spanish has become widespread.

The majority of the population self-identifies as “Quechua” since they speak Quechua and because of their attachment to their community. Many families are inter-related.

Both Catholicism and Evangelical worship are practised in Huachocolpa. The main Catholic church is located in the central square, whilst the Evangelicals have two Pentecostal churches. The Catholic Church community celebrates a series of holidays around venerated images, whilst the Pentecostalists practise prayer and brotherhood among themselves.

These are the festivities and customs of the various faith groups during the year.

20.3.7 Archaeology

There are no archaeological remains in the project area and, in the expansion area, Certificates of Non-Existence of Archaeology (CIRA) are being processed to guarantee that no impact will occur on archaeological remains.

20.4 Environmental Monitoring and Follow-Up Programs

Peruvian Government regulation requires monitoring of all activities to ensure that environmental baselines are met covering the following areas:

• Air quality

• Ambient noise quality

• Water quality

• Soil quality

• Terrestrial and aquatic life forms

Results of the monitoring exercise must fall below government environmental quality levels (“ECAs”) and ensure that monitoring equipment is maintained in good working condition. The

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following figure shows the location of current monitoring stations which will be maintained throughout the proposed expansion:

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Source: October 2020. Cartographic Database - National Geographic Institute (IGN), National Institute of Statistics and Informatics (INEI), Ministry of Transport and Communications (MTC).

Figure 20.5 Monitoring points for current activities

20.4.1 Air Quality

Air quality is monitored under the air quality monitoring and data management protocol, approved by RD No. 1404/2005/DIGESA/ SA in order to protect the health of workers and preserve the local ecosystem. The following table shows the current air quality monitoring stations which will be maintained through the proposed expansion.

Table 20.10 Location of air quality stations (2022)

Station Description Coordinates UTM Datum WGS84 Zone 18 L

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		East (m)	North (m)
RCT-1	Located 5 meters from the sentry box of the industrial zone of Corralpampa .	505595	8553059
RCT-2	Located 8 meters from the water catchment pool for the concentrator plant.	505257	8552135

The results of air quality monitoring will be compared with the values of the National Environmental Quality Standards for Air established in Supreme Decree No. 003-2017-MINAM or the current standard as applicable.

The Air Quality Monitoring and Data Management Protocol does not specify which parameters to monitor if the emission source is mining exploration; therefore, it is proposed that parameters used will be those that are used as the commitment enshrined in the current environmental monitoring management protocols.

Six monthly reporting to the relevant authority will continue. The laboratory in charge will be accredited by the Instituto Nacional de Calidad (“INACAL”). The calibration certificate of the monitoring equipment, the test reports, the chain of custody and the certificate of the INACAL accredited laboratory will be included in the report.

20.4.2 Noise levels

The values established by the Regulation of National Environmental Quality Standards for Noise (DS N° 085-2003-PCM) will be used for comparison with results of monitoring on site. Monitoring will evaluate the equivalent continuous sound pressure level (“Leq”) as expressed in decibels (dB) during both day and nighttime operations. The monitoring stations currently in service are presented below:

Table 20.11 Location of environmental noise monitoring stations (2022)

Station	Description	Coordinates UTM Datum WGS84 Zone 18S	Coordinates UTM Datum WGS84 Zone 18S
		East (m)	North (m)
RCT 1	Corralpampa industrial zone.	505595	8553059
RCT 2	Located 8 m from the water catchment pool for the concentratorplant.	505257	8552135

Environmental noise is monitored under industrial zoning parameters which include operations for the extraction of raw materials.

The calibration certificate of monitoring equipment, test reports, the chain of custody and the certificate of INACAL accreditation will be included in six monthly reporting.

20.4.3 Water quality

Surface water quality monitoring is carried out and periodically reported to the Competent Water Authority.

The following table shows the location of the Surface Water Quality monitoring stations, with three located on the Pallcapampa River.

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Rivers in the study area are designated Category Three suitable for “Irrigation of vegetables and domestic animal consumption according to Peruvian Environmental Quality Standards (“Estándares de Calidad Ambiental” or “ECA”) for water (DS N° 004-2017-MINAM). Water quality results will be compared to the guidelines established for this category. The parameters monitored are: acidity, temperature, electrical conductivity, dissolved oxygen, oils and grease, cyanide, arsenic, cadmium, chromium, copper, lead, mercury and zinc contents.

Table 20.12 Surface Water Quality Monitoring Stations (2022)

Code	Dii	coordinates , Zone 18S	coordinates , Zone 18S	Elevation (masl)
	escrpton	East (m)	North (m)
ER-7	Pallcapampa River, waters above discharge ER - 31 and waters under the pithead Blenda Rubia, and waters above the collection point.	505,306	8,550,833	4,340
ER-14	Pallcapampa River, waters below the ER -31 discharge and waters under the collection point.	506,036	8,553,506	4,005
CA-01	Pallcapampa River, waters above the mine entrance location Blenda Rubia .	504,935	8,550,379	4,350
CA-02	Qda . Huachocolpa waters above the location of the Angelica Mine entrance.	504,203	8,559,309	4,098
AC-03	Qda. Huachocolpa waters above the location of the Angelica Mine entrance.	504,398	8,559,370	4,095

Monitoring is quarterly as prescribed by Directorial Resolution No. 159-2017-ANA-DGCRH. The laboratory in charge of carrying out laboratory analysis will be accredited by INACAL.

Groundwater quality is also monitored in the project area at the following station.

Table 20.13 Groundwater Quality Monitoring Stations (2022)

Code	Description		, Zone 18S	Elevation ( masl .)
		coordinates
		East (m)	North (m)
PZ-R3-4	Located between Tailings Dam No. 3 and 4	505729	8552652	4184

In the absence of a groundwater quality regulation and considering that most water resources may be used by the local population, laboratory results are compared with national environmental standards for Category 3 surface water, which denotes: subcategories D1 and D2 for vegetable irrigation and domestic animal consumption; and Category 1 with subcategory A1 for water that can be made potable by disinfection; both categories according to Supreme Decree No. 004-2017-MINAM.

As a complementary exercise, the results are also contrasted with the Environmental Quality Standards of the Dominican Republic 2004, but it should be noted that this comparison is used purely for reference, since the characteristics of groundwater are mainly due to the type of rock, soil and subsoil from which it is drawn which is different from that of other Latin American countries.

The parameters monitored are total metals, dissolved metals, cyanide, total suspended solids, nitrates, sulfides, sulfates, chromium VI, chemical oxygen demand, biochemical oxygen demand, oils and grease and heat tolerant coliforms.

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Monitoring is quarterly as prescribed by Directorial Resolution No. 159-2017-ANA-DGCRH. The laboratory in charge of carrying out laboratory analysis will be accredited by INACAL. Finally, the quality of effluents generated in the operation is monitored at a station located in the lower part of the tailings dam:

Table 20.14 Effluent Monitoring Station

Code	Description	coordinates , Zone 18S	coordinates , Zone 18S	Elevation ( masl .)
		East (m)	North (m)
ER-31	Effluent treaty from Tailings Dam No. 3 and 4	505816	8552725	4230

Maximum Permissible Limits designated under DS N° 010-2010-MINAM are used to gauge the quality of liquid effluents discharged from mining and metallurgical activities. The parameters considered are acidity, total suspended solids, oils and greases, total cyanide, total arsenic, total cadmium, hexavalent chromium, total copper, iron (dissolved), lead, mercury and zinc.

The monitoring frequency is quarterly, according to Directorial Resolution No. 159-2017-ANADGCRH.

20.4.4 Soil Quality

Monitoring stations for soil quality standards are located as follows:

Table 20.15 Location of soil quality monitoring stations

Station	Description	Coordinates UTM Datum WGS84 Zone 18 L	Coordinates UTM Datum WGS84 Zone 18 L
		East (m)	North (m)
ITS-01	Located 15 m to the south of the Angelica mine entrance.	504282	8559472
ITS-02	Located 5 m from the valve.	505304	8552646
SU-03	Located near the Blenda Rubia entrance.	504987	8550557

Semi-annual monitoring will consider industrial zoning given that the site deals with extraction processes for raw materials. The frequency is semi-annual.

The contractor in charge of monitoring and analyses of samples will have INACAL accreditation.

20.4.5 Monitoring of Flora and Fauna

Monitoring of flora and fauna is conducted using the following stations:

Table 20.16 Location of biological monitoring stations (flora and fauna)

Taxa	monitoring stations _	Coordinates UTM Datum WGS84 Zone 18 South	Coordinates UTM Datum WGS84 Zone 18 South	Elevation (masl )	plant formation
		North	This
Flora	PF-01	506435	8553410	4301	rocky
	PF-06	506814	8553669	4322	rocky

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Taxa	monitoring stations _	Coordinates UTM Datum WGS84 Zone 18 South	Coordinates UTM Datum WGS84 Zone 18 South	Elevation (masl )	plant formation
		North	This
	PF-07	506899	8553750	4323	pajonal
	PF-08	506178	8549188	4624	pajonal
	PF-09	505795	8551344	4290	bofedal
	PF-10	504084	8559338	4103	pajonal
Fauna	WP1	506435	8553410	4301	rocky
	WP3	506390	8553558	4289	rocky
	WP4	506026	8553014	4273	pajonal
	WP5	504084	8559338	4103	pajonal
	WP6	505795	8551344	4290	bofedal

The biological monitoring parameters are, in the case of flora and fauna: density, abundance, diversity, vegetation cover, endemic species and whether protected by national and international legislation.

The monitoring frequency at the operational stage is every six months to cover both wet and dry seasons.

20.5 Sustainability Policies

All activities in the areas of operation are based on the following criteria:

• Environmentally correct practices that minimize impact in the area of operations.

• Socially responsible actions, with a strong commitment to neighboring populations.

• Economically viable investment.

20.6 Identification of Environmental and Social Impacts

There are two areas of environmental monitoring and control: the first is at the plant with a capacity of 720 tonnes per day along with the tailings dam; the second comprises auxiliary areas such as the mine camp. This area has been industrialized for more than 60 years, so some environmental and social aspects may be positive or negative as a result. The main, potential socio-environmental impacts are described below:

• Alteration of air quality

The main threat to air quality is dust resulting from loading and hauling material extracted from the mine due and to trucking along unpaved access roads within the mining unit as follows:

Emissions from diesel combustion results in CO, NOx and SO[2] generated by vehicles, machinery and/or equipment such as trucks, dump trucks, tanks and batteries used in the transport of equipment, materials and personnel, and the disposal of tailings;

Gas emissions including CO, NOx and SO[2] and particulate matter (PM 10 and PM 2.5) from machinery operation are minimal, as corroborated every six months through the Monitoring Program carried out by the Company with levels consistently lower than current environmental regulations.

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Control measures are applied to reduce impact on air quality by: a) irrigation of roads, RoM stockpiles and quarries to control dust during the dry season; and b) ensuring that vehicles undergo preventive maintenance to ensure the lowest possible generation of emissions.

• Variation in noise levels

Environmental noise levels may be increased due to the use of vehicles, machinery and/or equipment in mine and plant activities. However, the closest sensor to operational activities is located in Huachocolpa, approximately 6 km from the operation, which is home to the largest population in the district. In any case, noise pollution will not impact the local population.

• Variation in soil quality

The Company operates a solid waste management program covering potential hydrocarbon spills, recycling of any reusable waste and landfilling of non-reusable waste. A plan is presented annually which incorporate contingencies for any major event.

• Variation in surface water quality

The concentrator plant is authorized to discharge treated industrial water from the tailings pond which may cause variations in the concentration of physio-chemical characteristics at the point of discharge into the Pallccapampa river. The current effluent treatment is efficient and reduces the pH level and the concentration of heavy metals to levels compliant with current environmental regulations (Maximum Permissible Limits and Environmental Quality Standards). The Company monitors water and effluent quality on a quarterly basis, the results of which are compliant with environmental regulations.

• Wildlife considerations

Operations are located in a high Andean zone which is the natural habitat of various wild species of plant and animal. Noise pollution and the discharge of treated industrial water is reported every six months to monitor the impact on local flora and fauna during both dry and wet seasons in order to build up a picture of variability year on year.

• Local employment generation

The Company prioritizes hiring skilled and unskilled labor from the local population (Community of Huachocolpa) and granting additional benefits to respective families such as food and housing. The Company currently derives 70% of the labor force from the local community.

• Boosting the local economy

Development of operations has generated jobs for contractor companies, jobs created indirectly by the transport of equipment and machinery, along with cleaning, food and accommodation services. There is a knock-on effect for local businesses whereby as operations grow, so more employment is created with new families involved with more capital that creates new businesses and positively impacts existing businesses.

The EIA lists the following, likely effects caused by expansion of plant capacity to 2,500 tpd, a new tailings dam and waste rock management:

• Temporary reduction in air quality, due to earth moving during initial phase of construction.

• Increased noise levels, due to movement of machinery and equipment during the construction phase.

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• Some change in soil quality and wildlife activity due to alteration of local ecosystems.

• Positive impact on local communities due to generation of employment and revitalization of the local economy as construction and operational stages will create new jobs and services.

20.7 Permitting Management

In Peru, all mining activities must have the necessary environmental and operational permits prior to the start of operations. Initially, the approval of the environmental permits called Environmental Management Instruments (“IGA”) must be obtained and, depending on the particulars of their operation additional authorizations may be required.

The existing mining unit is more than 60 years old and the first IGA was an Environmental Adaptation and Management Plan (“PAMA”) as detailed in the following table:

Table 20.17. Environmental Management Instruments and Approved Closure Plans

Item	Instrument	Resolution	Date
1	Environmental Adaptation and Management Program - PAMA (approval)	RD No. 037-97-EM/DGM	01-24-1997
2	Environmental Adaptation and Management Program - PAMA (execution)	RD No. 098-2003-EM/DGM	04-23-2003
3	Supporting Technical Report (ITS)	RD No. 347-2014-MEM/AAM	07-09-2014
4	Detailed Environmental Plan (PAD)	RD No. 173-2020/MINEM- DGAAM	18-12-2020
5	Second Supporting Technical Report ( TS)	RD No. RD_198_2021_MINEM_DGAAM	10-10-2021

The aforementioned PAMAs allowed the mining unit to operate until 2014 at which point the first Supporting Technical Report (“ITS”) was filed which permitted expansion of the tailings pond. Then, in 2021, a second ITS was filed to expand the plant capacity from 600 tpd to 720 tpd.

The mining unit has a series of operating authorizations that are compliant with the Peruvian government regulations as detailed in the following table.

Table 20.18 Current permits

Item	Instrument	Resolution	Date
1	Water Use License for population use.	RA N° 040-2018-ANA-AAA X MANTARO-ALA HUANCAVELICA	22-02-2018
2	Water Use License for industrial purposes.	RA Nº 403-2017 ANA-AAA X MANTARO-ALA HUANCAVELICA	13-12-2017
3	Authorization for discharge of treated industrial wastewater.	RD No. 041-2022-ANA-DGCRH	02-16-2022
4	Modification of the "Corralpampa Concentrator" Beneficiation Concession for the growth of the R3-4 tailings deposit, installation of new equipment and calibration of existing equipment in the copper flotation circuits without expansion of installed capacity.	RD No. 0483-2014-MEM-DGM/V	21-10-2014
5	Authorization for the operation of 19 additional pieces of equipment and modification of the Corralpampa Concentrator to an expanded capacity of 600 tpd.	RD No. 216-2010-MEM-DGM/V	05-17-2010
6	Authorization for the expansion and definitive operation of the Corralpampa Concentrator at 400 tpd	RD No. 500-71-EM/DGM	06-10-1971

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Item	Instrument	Resolution	Date
7	Title of the Benefit Estate called Corralpampa Concentrator	RD No. 1637	07-12-1962
8	Technical Mining Report, which approves the increase in processing capacity to 720 tpd	RD No. 461 MINEM DGM	21.11.22
9	Adaptation Plan for LMP and ECA	RD_222_2021_MINEM_DGAAM	02.12.2021

There are two water licenses which allow permanent supply to operations with no necessity for renewal unless additional volume is required. The LMP and ECA Adaptation Plan has been approved, which states that operations comply with environmental quality standards and maximum permissible limits under Peruvian regulation.

Since the start of operations there has been an approved Closure Plan which establishes the useful life of mine and how the closure program would be implemented. To date, there have been four closure plan updates since the useful life of the mine has increased. The latest modification established a useful life of two to ten years along with a reduction in the financial guarantee from US$ 5.16 million to US$ 2.8 million.

Table 20.19 Mine closure plan

Item	Instrument	Resolution	Date
1	Mine Closure Plan (PCM)	RD No. 116-2009-MEM/AAM	05-14-2009
2	Update of the Mine Closure Plan (APCM)	RD No. 109-2017-MEM- DGAAM	11-04-2017
3	First Modification of the Mine Closure Plan (MPCM)	RD No. 363-2017-MEM- DGAAM	22-12-2017
4	Second Modification of the Mine Closure Plan (SMPCM)	RD No. 060 -2021/MINEM- DGAAM	04-14-2021

Operations are now permitted for a throughput of 720 tpd, whilst an EIA is being prepared to expand production to 2,500 tpd.

20.7.1 Environmental Impact Study for Capacity Expansion to 2,500 tpd

The EIA is a key component of a comprehensive environmental and social permitting process that, once approved, will allow for a streamlined expansion of operations. The assessment covers the Tangana, Maria Luz, San Antonio and Tangana West polymetallic Mining Units and associated mining infrastructure for a total study area of 4,900 Ha. The key components of the EIA include:

• New plant in the Tangana area with a capacity of 1,500 tpd, which allows the processing of all the mineral generated in the northern part of the district.

• Expansion of capacity of the processing plant from 720 tpd to 1,000 tpd to be carried out in the same area as the current plant to cater to material mined in the south of the district.

• • Increasing capacity of the current tailings dams Nos. 3 and 4 by two meters in height, from 4,243 masl to 4,245 masl.

• Construction of tailings dam No. 6 to be located between tailings dam No. 5 and tailings dams Nos. 3 and 4.

• Construction of tailings dam No. 7 in the northern part of the Tangana concession with a capacity of 8 M m[3] .

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• Expansion of landfill site approximately 1 km south of the existing mining plant, en route to the Esperanza Zone.

• Domestic wastewater treatment plant (PTARD) for the disposal and treatment of effluents from the camp.

• Industrial wastewater treatment plant (PTARI) for the disposal and treatment of effluents from the processing plant.

• Waste dumps

The EIA systematically assesses the impacts of the expansion Project on the physical, biological, social/socioeconomic and cultural environment and identifies measures necessary to avoid, mitigate or compensate for adverse impact and enhance positive impact where feasible. The following items are considered in the EIA:

• Starting in September 2021, the Base Line describes the social and environmental characteristics in the Project area with data from both wet and dry seasons already available.

• The Project Description includes details of the Project's components and facilities.

• The Impact Identification/Impact Prediction details all impacts likely to be caused by the

• project.

• The Environmental and Social Management Plan (“PGAS”) details the measures and procedures covering environmental and social management of the project in the short and long term.

• Stakeholder engagement describes the continuous process of the EIA focusing on a wide range of activities, including information sharing, consultations, alliance building and negotiations. The first participatory workshop has already been held and a second planned for after the EIA has been presented to the National Environmental Certification Service for Sustainable Investments (“SENACE” - an agency attached to the Ministry of the Environment of Peru) when a public hearing will be held as part of the evaluation process.

Preparation of the EIA is on track for the first quarter of 2023 and approval is expected by the end of the year.

20.7.2 Complementary Permits (Capacity Expansion to 2,500 tpd)

Additional permits must be obtained for the following stages of the project in addition to the PEA, based on to operational requirements as specified by the TUPA which may vary depending on the complexity of the operations to be permitted:

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Preliminary Economic Assessment
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----- Start of picture text -----

DESARROLLO EXPLOTACIÓN (OPERACIÓN)
Autorización de uso de terreno superficial
Certificado de Inexistencia de Restos Arqueológicos (CIRA)
Aprox: 110 dias hábiles
Estudio de Impacto Ambiental
(aprox: 24 meses)
Autorización de inicio/reinicio de actividades de desarrollo, preparación y explotación Autorización de inicio/reinicio de actividades de desarrollo, preparación y explotación
(incluye aprobación de Plan de Minado y Botaderos) (incluye aprobación de Plan de Minado y Botaderos)
FASE I (Aprox: 6 meses) FASE II (Aprox. 2 meses)
Licencia de uso de aguas:
Paso 1: Auto. De Ejecución de Estudios
Paso 2: Aprobación de Estudios
Paso 3: Autoricación de Ejecución de Obras
Paso 4: Licencia de Uso de Agua
Aprox: 8 meses
Autorización de vertimiento de aguas residuales domésticas o
industriales tratadas
Aprox: 5 meses
Concesión de beneficio:
Fase 1: Autorización de Construcción
Fase 2: Título de Concesión
Aprox: 12 meses
Plan de Cierre (nivel de Factibilidad)
Aprox: 8 meses
Certificado de Operación Minera
Aprox: 45 dias hábiles
Licencia de Funcionamiento de Polvorín
Aprox: 30 dias hábiles
Autorización Semestral para uso de explosivos, insumos y
conexos (Autorización Global)
Aprox: 30 dias hábiles
Licencia de manipulador de explosivos
Aprox: 20 dias hábiles
Certificado de Usuario de Insumos Químicos Fiscalizados
Aprox: 45 dias hábiles
Autorización para la operación de estaciones de servicio privado de
telecomunicaciones
Aprox: 120 días hábiles
Autorización para la generación eléctrica
Aprox: 30 dias hábiles
Concesión definitiva de generación y/o transmisión eléctrica
Aprox: 120 dias hábiles
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Figure 20.6 Complementary Permits

20.8 Mine Closure Plan

The Mine Closure Plan was approved in 2021 and details a progressive closing plan leading to Final Closure executed using both in-house and contracted resources.

After the Final Closure stage, post closure monitoring of physicochemical conditions of waste rock and tailings and socioeconomic impacts will be tracked under the following headings:

• Environment, which aims to integrate any physical and geochemical changes to the Project area to a state similar to pre-operational conditions.

• Socio-economic, which aims to promote alternative economic activity in order to minimize socio-economic impact in surrounding areas.

• Safety, which aims to prevent any potential deterioration of mine closure installations through a process of continuous monitoring and reporting.

20.8.1 Closure Activities: High Profile Items

• Mine portals

The closure of mine entrances is included in the Progressive Closure scenario involving three types of plug in order to achieve physicochemical stability and restrict access to mine workings:

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In the case of Dry mine entrances, a Type I concrete plug consisting of a cyclopean concrete wall 0.50 meters thick will be built to prevent entry of people and animals. The wall will be built with Type V Portland Cement with a one meter thick anchor, over-excavated to one meter, built with simple concrete then capped with locally sourced rock to reestablish topography and revegetated where appropriate.

For mine entrances with less than 2 l/s water flow, a Type II, one meter thick hermetic plug will be built using reinforced concrete at the entrance in order to prevent oxidation of any remaining sulfides and consequent increase in pH of water emanating from the mine(s). As a stability measure, the roof box, floor box and gable ends will be over-excavated to depths of 0.5 m, 1.0 m and 0.5 m respectively.

Two steel reinforcements rows will be incorporated. Consolidation shots will ensure that any discontinuities are sealed. Drainage channels will be excavated depending on local conditions. The construction will be capped with locally sourced rock to re-establish topography and revegetated where appropriate.

For mine entrances with greater than 2 l/s water flow, a Type III, 5 m thick hermetic plug will be built using reinforced concrete (f'c = 280 kg/cm[2] ), at a distance of 5.0 meters from the mine entrance. As a stability measure, the roof box, floor box and gable ends will be over-excavated to a depth of 0.5 m, 1.0 m and 0.5 m respectively.

Twelve rows of 3/8'', 0.2 m steel reinforcements will be incorporated 0.4 m apart. Consolidation shots will ensure that any discontinuities are sealed. Drainage channels will be drilled with a 5 – 8 cm diameter 1.25 meters apart.

The construction will be capped with locally sourced rock to re-establish topography and revegetated where appropriate.

• Raises

Physical stability will be achieved with construction of a reinforced concrete slab (f'c = 210 kg/cm[2] ) 0.25 meters thick, supported around the entire perimeter by lateral excavation of 0.5 meters into surrounding rock.

• Dumps (dumps)

Levelling of the dumps will aim to achieve a profile that blends with the original topography of the area.

Stabilization will include measures to stop oxidation of any remanent sulfides and prevent leachate excursions.

The layering and thickness of geotextile profiles used for final covering of dumps will depend on climatic and soil conditions in the immediate area as listed hereunder.

Type I: a layer of permeable, granular material 0.20 m thick installed on top of rock which contains no acid-generating sulfide.

Type II: a composite layer of permeable, granular material 0.15 m thick covered by organic material 0.15 m thick, revegetated with native species.

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Type III: a composite layer placed over potentially acidic material consisting of geomembrane, granular material 0.20 m thick, then organic material 0.30 m thick revegetated with native species. Type III is designed for geochemical stability as prescribed in the Environmental Guide for the Management of Acid Mine Drainage as published by the Peruvian Ministry of Energy and Mines.

• Tailings Deposits

In order to achieve hydrological stability, crest channels will be constructed to capture surface runoff. The exact geochemical dimensions of the channels will be decided during the operational stage of the project, but will likely be trapezoidal in section, 1.20 m wide by 0.6 m high by 0.30 m wide at the base with a concrete lining (f'c = 210 kg/cm[2] ) having a roughness of n = 0.014 in order to reduce flow rate that may be caused by the high angle of the tailings.

The tailings themselves will be re-contoured and revegetated to blend with the topography in the immediate area.

20.9 Social Consideration

The Social Baseline study conducted with respect to mine operations in the Huachocolpa community detail the following easement and land use agreements:

• Agreement One was adopted from an original agreement with the previous owners (Compañia de Minas Buenaventura SL) and is in force until 2023 with an aerial extent of 1,800 hectares covering plant facilities, tailings dams and auxiliary areas such as camp and sanitary landfill.

• Agreement Two extends across 338 hectares in the Tangana area and was signed in 2019 for five years and covers the mine areas, clearings, exploration area and right of way for the transport of mineral.

• Agreement Three extends across 294 hectares in the San Antonio area and was signed in 2019 for five years and covers the mine areas, clearings, exploration area and right of way for the transport of mineral.

There are existing easement agreements for 2,432 hectares within the Huachocolpa community and negotiations are ongoing for a further 1,000 hectares for a period of 15 years to cover development of the proposed expansion as described in the EIA.

Neighborly ties with the community have always been favorable since Huachocolpa is a traditional community which is aware of the socio-economic benefits of mining activity in its territory. To date, 70% of mine staff are from the Huachocolpa community which, alongside contracts with 40 locally established companies has a positive impact on the local economy.

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21 Capital and operating costs

21.1 Introduction

The following chapters describe the cost estimation methodology and the main figures for the Project.

21.2 Capital Cost Estimates

Capital cost estimation considers the capital cost of the mine, process, tailings facility and sustaining capital. Materials cost has been included in the aforementioned items. Capital cost for labour required during the pre- and post- operation has not considered at this stage.

21.2.1 Basis of Estimate

The expected accuracy for the CAPEX estimation is in the range of ±35%. The costs are expressed in Q4-2022 US$ and use following exchange rates:

To Euro: 1.00 US$ = 1.05 EUR

To Sol: 1.00 US$ = 4.15 EUR

21.2.2 Labour Costs

Labour costs for pre- and post- operations have not been considered at this stage of the Project as it is in operation and the pre-production costs are part of the current operating costs.

21.2.3 Material Costs

Material costs has been included in the cost of the mine, process, tailings facility and sustaining capital.

21.2.4 Contingency

A 20% contingency is applied to CAPEX estimation.

21.2.5 Mine Capital Costs

Infill drilling is required to increase the mineral resources confidence and develop more accurate mine plans. This cost is based on a drilling cost of US$175/m. A total of 177,500m for the Tangana Mining Unit is expected during the first 8 years of the Project. It also includes access costs and associated studies to update the mineral resources. Table 21.1 shows the CAPEX associated to drilling activities.

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The mine development has been calculated based on contractors’ quotations for 2022. It has been applied a contractors overhead on the unit cost per meter and type of development. The development is based on the mine plan for Tangana 1 & 2, Morlupo and Cauca and factorized for the other veins. An extra of 2,125m has been considered for the connection of the different veins in the Tangana Main area. Table 21.2 shows the development CAPEX.

Table 21.1 Infill drilling Capex

Drilling Capex	m	US$ '000s
Surface drilling	65,000	11,375
In-fill drilling	112,500	14,063
Access		480
Studies and others		866
Total		26,784

Table 21.2 Development CAPEX

Development CAPEX	m	US$'000s
Ramp 4.5x4.5 (-)	45,126	24,956
Crosscut 4.5x4.5	29,200	20,247
Crosscut 3.5x3.5	18,050	9,982
Others (ore pass, vent. raise)	41,325	24,175
Contractor overheads		12,168
Total		91,528

Mine infrastructure and associated facilities is calculated based on the Silver X experience over the past months. The mine infrastructure CAPEX can be found in Table 21.3.

Table 21.3 Mine infrastructure and facilities CAPEX

Item	US$'000s
Bins	1,750
Support/Geotech	700
Air System	1,120
Compressors	1,400
Facilities	1,120
Roads and accesses	1,400
Total	7,490

A summary of the total mine CAPEX is shown in Table 21.4 including the associated contingency.

Table 21.4 Summary of the total mine CAPEX (with contingency)

Item	US$ ´000s
Drilling	26,784
Mine Development	91,528
Infrastructure & Facilities	7,490
Total	125,802

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21.2.6 Process Capital Costs

Capital costs for processing equipment is based on 2022 vendors’ quotes for major equipment items and factorized for other items based on similar project costs collected over the past three years. In the case of costs related to packaging, transport, installation of equipment, civil engineering, structural works, painting, piping and I&C, the estimate provided is a percentage of the major equipment capital costs. Spare parts for commissioning, two years of operation and first fill have been included here, also as a percentage of the major equipment capital costs.

Table 21.5 provides a summary of the plant capital cost.

Table 21.5 Process plant capex

Item	US$ '000s
Crushing	524
Milling	1,339
Flotation	2,870
Thickening and filtering	757
Tailings	856
Reagents	201
Water and air	1,500
Process buildings	752
Lab equipment and sampling system	120
Mobile equipment	126
Civils, erection, electrical, etc.	18,089
EPCM	1,357
Construction management(owner costs)	1,221
Expenses	136
Total	29,848

21.2.7 Tailings capital costs

Tailings costs include the construction of the Tailings Storage Facility (TSF) and infrastructure for the tailings transport. The unit cost has been calculated based on contractors’ costs for expansions of the existing facilities in the area. A summary is provided in Table 21.6.

Table 21.6 Tailings storage facility associated cost

Item	US$ ’000s
Prelaminar(accesses, mobilization)	177
Topsoil removal	125
External drainage system	935
Perimetral wall	2,166
Clay compacting, geotextile andpolyethylene	2,649
Internal water level control	200
Total	6,252

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21.2.8 General infrastructure

The main infrastructure for the project is estimated based on Silver X experience for this type of facilities. A summary is provided in Table 21.7.

Table 21.7 General infrastructure Capex

Item	US’000$
Mine backfill infrastructure	2,000
Power Lines & Substation	2,625
Workshops	625
Laboratory	350
Ore Yard	200
Concentrates Yard	200
Sustaining Capex	1,800
Total	5,800

21.2.9 Accommodation and general facilities CAPEX

Infrastructure capital cost considers different items related to the main facilities located in the project, such as the offices, camp, power infrastructures, IT, vehicles for general use, ambulance and fire tender. Table 21.8 shows a summary of them.

Table 21.8 Accommodation and general facilities Capex

Item	US$ '000s
Offices	250
Hotel/Houses	400
Access Roads	150
Sustaining Capex	960
Totalgeneral infrastructure	1,760

21.2.10 Studies

CAPEX has been calculated for studies and reporting needed to apply for permits to mine Tangana at 1,500 tpd, processing the RoM in a new processing plant with a new tailings storage facility. Table 21.9 presents the CAPEX associated to these studies.

Table 21.9 Studies Capex

Studies CAPEX	US$ '000s
EIA	400
New Tailings/Backfilling	2,578
Geology, Mine	250
Studies, Engineering	650
Total	3,878

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21.2.11 Sustaining Capital

Sustaining capital has been applied to general infrastructure CAPEX as US$ 150,000 for the general facilities with contingency of 10 %. Sustaining CAPEX for the tailings facility is based on deferred costs for four construction stages during years 0, 3, 6 and 9. Initial construction CAPEX for year 0 for the TMF is calculated on 52% of the total CAPEX of the facility. Sustaining CAPEX for the plant is not applied since a maintenance cost is included in the operating cost.

The sustaining CAPEX amount is shown in previous tables where applicable

21.2.12 Contingency

A 20% contingency has been applied to CAPEX. Table 21.10 shows the contingency breakdown.

Table 21.10 Capex contingency

Area	US$ '000s
Mine	18,307
Plant	5,970
Tailings facilities	1,250
General infrastructure	1,560
General facilities	352
Studies and engineering	776
Total contingency	28,215

21.2.13 Capital Cost Summary

The capital cost summary is shown Table 21.11.

Table 21.11 Capex summary

Total CAPEX	US$'000s
Mine	125,802
Plant	29,848
Tailings Storage Facilities	6,252
General infrastructure	7,800
General facilities	1,760
Studies and engineering	3,878
Contingency	28,215
Total	203,554

US$ 61.45M is considered up-front CAPEX.

21.3 Operating Cost Estimates

Operating costs consider the OPEX for the mine and process operations, the tailings handling and storage, power, reagents, mobile equipment, labour, maintenance, consumables and services. Infrastructure operating costs have not been considered at this stage of the process.

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21.3.1 Basis of Estimate

The expected accuracy for the OPEX estimation is in the range of ±35%. The costs are expressed in Q3-2020 US$ and use following exchange rates:

To Euro: 1.00 US$ = 1.10 EUR

To Sol: 1.00 US$ = 4.15 EUR

21.3.2 Current operation costs

The cost distribution for the current operation has been analyzed over the past few months (Figure 21.1). The mine OPEX over recent months has been calculated multiplying total mine expenditure of the operation by the proportion of tonnes mined, not related to new developments or to waste as a proportion of the total tonnes mined.

The following groups of costs are considered:

• Mine: mine production, including labour and consumables for mining activities.

• Processing: plant production, including labour and consumables for mineral processing activities.

• Technical services:

• Geology

• Maintenance

• Laboratory

• Communities

• Environmental

• Logistics

• Projects and Engineering

• Health and Safety

• Planning

• General and Administration:

• Commercial

• Admin

• IT

• Financing control

• Management

• Overhead

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Figure 21.1 Monthly OPEX evolution in 2022 Figure 21.2 shows the OPEX distribution assuming all mining cost in OPEX, independently if the expenditure is for waste or for mineralised material excavation.

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Figure 21.2 Monthly OPEX evolution in 2022 – all in cost for mine

Table 21.12 shows the costs per tonne of ore during 2022.

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Table 21.12. Operating cost for Nueva Recuperada operation in 2022

Item	OPEX (US$/t)	All in OPEX (US$/t)
Mine	42	68
Plant	16	16
Technical Services	26	26
General and Admin	36	36
Total	120	146

21.3.3 Mine operational costs

It has been considered that mine operation will be subcontracted. Costs used are based on contractor quotations from June’22 and the existing experience on the area.

Operating unit costs are shown in Table 21.13.

Table 21.13. Mining unit cost

Item	Units	Value
Stoping	US$/t	15.94
Preparation(Added togalleries)	US$/t	0.99
Drives	US$/m	553.03
Energy	US$/t	2.00
Decline 3.5x3.5(+)	US$/m	568.48
Decline 3.5x3.5(-)	US$/m	568.48
Decline(-) 4.5x4.5	US$/m	730.81
Decline(+) 4x4	US$/m	568.48
Drifting 3.5x3.5	US$/m	553.03
Crosscut 4.5x4.5	US$/m	693.37
Other development	US$/m	585.00
Overheads	US$/month	84,500.00
RoM Transportation	US$/t*km	0.25
Distance toplant	km	0.50

Based on the costs incurred by individual mining units, the mining OPEX excluding associated CAPEX is shown in Table 21.14.

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Table 21.14. Mining OPEX

Item	US'000$	US$/t RoM
Stoping	86,262	15.01
Production drives (Gallery & Sub- level)	14,974	2.61
Preparation Decline 3.5x3.5 (+)	10,261	1.79
Preparation Decline 3.5x3.5 (-)	9,721	1.69
Preparation (additional)	5,336	0.93
Energy	11,496	2.00
RoM transport to plant	718.47	0.13
Total mine OPEX		24.14

The average mining cost on OPEX is US$24.1/t. If the development included in CAPEX is added (all-in mine OPEX), the total mining operating cost (all-in cost) is US$40.1/t.

21.3.4 Processing operational costs

Process operating costs have been estimated based on costs provided by Silver X. The costs have been broken down into the following items: power consumption, reagents, labour, maintenance and mobile equipment, as shown in Table 21.15.

Table 21.15. Processing OPEX

Item	US$/t	US'000$
Rod milling	0.38	2,178
Balls milling	0.70	4,000
Reagents	1.64	9,408
Laboratory	0.64	3,699
Power	1.71	9,829
Plant maintenance	0.71	4,081
Labor operations	3.67	21,094
Mobile equipment	0.19	1,092
Material handling	0.50	2,874
Tailings management	5.00	28,739
Contingency	6%	5,228
Total	16.04	92,223

These items have been detailed in the following paragraphs.

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Power

The power consumption has been estimated considering the utilization factor for each equipment component. The costs have been estimated at US$0.04/kWh and 80% energy efficiency.

Reagents

The reagent consumption estimation has been based on data provided from SilverX derived from Recuperada process operation. Local costs have been also provided by SilverX (Table 21.16)

Table 21.16. Reagents

Reagent	Units	$/unit	Consumption Jan-Aug 2022 (kg/t ROM)	Unit cost ($/t)	Annual cost ($/year)
LIME	KG	0.15	1.594	0.234	117,192
ZINC SULFATE	KG	1.50	0.132	0.198	98,995
COPPER SULFATE	KG	3.48	0.212	0.737	368,575
XANTATO ISOPROPILICO SODIO (Z-11)	KG	2.95	0.061	0.180	89,785
MIBC	KG	4.07	0.030	0.124	62,066
SODIUM CIANURE	KG	3.70	0.003	0.012	6,142
FlOTTEC 8020	KG	7.00	0.001	0.004	2,032
F-4234	KG	5.20	0.029	0.149	74,628
C-113	KG	2.20	0.000	-	-
Ap-3418	KG	2.10	0.001	0.002	800
AEROFLOAT 242	KG	2.00	0.000	0.000	54
STEEL	unit	$/unit
BALLS1"(0.154kg)	KG	1.50	0.135	0.202	101,118
BALLS 2" (0.60 kg)	KG	1.50	0.142	0.214	106,820
BALLS3" (1.49 kg)	KG	1.50	0.187	0.280	140,145
ROD 3" (130kg)	KG	1.50	0.253	0.379	189,418
Petrol	unit	$/unit
Petrol for mobile equipment			estimated	0.190	95,000
Total				2.906	1,452,770

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Process Labour Cost

For the personnel cost, two shifts per day has been assumed, apart from the people not working on shifts. A total of 128 workers will operate de processing plant. Insurances, taxes and variable overheads have been included in the estimation. Different salaries considering the workers experience have been assumed. A summary of the cost per category is provided in Table 21.17

Table 21.17. Process workforce

Category	1	2	3	4	Variable overheads
Management	72,000	55,000	44,000	36,000	30%
Salary Daywork	9,600	9,000	8,400	7,500	30%
Salary Shiftwork	9,700	9,200	8,700	8,472	45%

The total process labour cost calculated per tonne processed is US$3.67/t.

Maintenance

Maintenance cost has been estimated as a percentage of the main equipment capital cost as detailed in Table 21.18.

Table 21.18. Reagents consumption and cost

Item	Percentage of Capital	Direct Capital Cost$	Maintenance Cost $/yr	Unit Cost $/t
Crushing	6%	523,623	31,417	0.06
Milling	5%	1,339,000	64,272	0.13
Flotation	4%	2,869,568	114,783	0.23
Thickening and filtering	4%	756,865	30,275	0.06
Tailings	5%	856,235	38,531	0.08
Reagents	4%	201,362	8,054	0.02
Water and air	4%	1,500,025	52,501	0.11
Process buildings and mobile equipment	2%	878,051	17,561	0.04
Total			357,394	0.71

21.3.5 Overheads

It has been considered an overhead cost based on expenditure per year for different areas as per actual costs for the existing operation. While these costs will be shared between the existing operation and the Tangana Mining Unit, they were applied entirely to the PEA economic model. This approach is considered conservative. The cost per tonne of RoM is thus estimated as US$8.18/t. The total overhead costs are shown in Table 21.19.

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Table 21.19. Overheads

Item	US$/year	US'000$ LOM
General Maintenance	15,000	2,062.23
Systems	2,500	343.71
Security	50,000	6,874.11
Meals	20,000	2,749.64
Transportation	4,000	549.93
Lima Office	665,446	8,422.45
TechServices	301,569	3,455.03
Head Office	1,690,063	19,362.80
Environment	5,000	927.41
Geology	5,000	927.41
Engineering	5,000	927.41
Health & Safety	5,000	438.58
Total	2,768,578	47,041

21.3.6 Mine closure cost

The costs associated to the mine closure were distributed between Year 5 and Year 13, one year after production scheduled for the PEA. The total cost considered for the closure plan is US$10.5M.

21.3.7 Community program

Following the current community program in place, a similar approach has been considered for the PEA Tangana Mining Unit operation. Table 21.20 shows the associated cost for the community program.

Table 21.20. Community programs (part of the ESG) OPEX

Community Programs	US$/year	US'000$ LOM
Various	5,000	927
Scholarships	10,000	1,855
Programs	5,000	927
Total	20,000	3,710

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21.3.8 Concentrates Transport

The transport of concentrates is based on actual costs. The estimated cost for the transport of concentrates to El Callao port is US$40/t.

21.3.9 Operating Cost Summary

The operating cost summary is estimated as US$69.41/t in case of all-in cost for mine OPEX and US$53.49/t if the developments costs are excluded from the calculations. The OPEX breakdown per tonne and LOM is shown in Table 21.21.

Table 21.21. Tangana OPEX

OPEX(US$/t)	US'000$ LOM	US$/t
Mine(all in cost)	230,296	40.07
Mine(onlyOPEX)	138,768	24.14
Processplant	92,223	16.04
Overheads	47,041	8.18
PDC Closure Plan	10,500	1.83
CommunityPrograms	3,710	0.65
Transport Concentrates	15,203	2.65
Total OPEX(mine all in cost)	398,973	69.41
Total OPEX(mine onlyOPEX)	307,445	53.49

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22 Economic analysis

22.1 Cautionary Statements

Certain information and statements contained in this section and in the Report are estimates in nature. Forward-looking statements include, but are not limited, to statements with respect to the economic and study parameters of the project Mineral Resource estimates; the cost and timing of any development of the project; the proposed mine plan and mining methods; dilution and extraction recoveries; processing method and rates and production rates; projected metallurgical recoveries; infrastructure requirements; capital, operating and sustaining cost estimates; the projected life of mine and other expected attributes of the project; the net present value (NPV) and internal rate of return (IRR) and payback period of capital; capital; future metal prices; the timing of the environmental assessment process; changes to the project configuration that may be requested as a result of stakeholder or government input to the environmental assessment process; government regulations and permitting timelines; estimates of reclamation obligations; requirements for additional capital; environmental risks; and general business and economic conditions.

All forward-looking statements in this Report are necessarily based on opinions and estimates made as of the date such statements are made and are subject to important risk factors and uncertainties, many of which cannot be controlled or predicted. Material assumptions regarding forward-looking statements are discussed in this Report, where applicable. In addition to, and subject to, such specific assumptions discussed in more detail elsewhere in this Report, the forward-looking statements in this Report are subject to the following assumptions:

• There being no significant disruptions affecting the development and operation of the

• project.

• The availability of certain consumables and services and the prices for power and other key supplies being approximately consistent with assumptions in the Report.

• Labor and materials costs being approximately consistent with assumptions in the Report.

• The timelines for prior consultation and wet season/dry season baseline data collection being generally consistent with PEA assumptions and permitting and arrangements with stakeholders being consistent with current expectations as outlined in the Report.

• All environmental approvals, required permits, licenses and authorizations will be obtained from the relevant governments and other relevant stakeholders.

• Certain tax rates, including the allocation of certain tax attributes, being applicable to the project.

• The availability of financing for planned development activities.

• The timelines for exploration and development activities on the Project.

• Assumptions made in Mineral Resource estimate and the financial analysis based on that estimate, including, but not limited to, geological interpretation, grades, commodity price assumptions, extraction and mining recovery rates, geotechnical, hydrological and hydrogeological assumptions, capital and operating cost estimates, and general marketing, political, business and economic conditions.

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The production schedules and financial analysis annualized cash flow table are presented with conceptual years shown. Years shown in these tables are for illustrative purposes only. If additional mining, technical, and engineering studies are conducted, these may alter the project assumptions as discussed in this Report and may result in changes to the calendar timelines presented.

The preliminary economic analysis is partly based on Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the PEA based on these Mineral Resources will be realized.

22.2 Methodology Used

The financial analysis was carried out using a discounted cash flow (DCF) methodology. Net annual cash flows were estimated projecting yearly cash inflows (or revenues) and subtracting projected yearly cash outflows (such as capital and operating costs, royalties, and taxes). These annual cash flows were discounted back to the date of beginning of capital expenditure at year 2025 (year 0) and totaled to determine the NPV of the project at selected discount rates. Discount rates of 8% and 10% were used.

In addition, the IRR, expressed as the discount rate that yields an NPV of zero and the payback period, expressed as the estimated time from the start of production until all initial capital expenditures have been recovered, were also estimated.

Sensitivities to variations in commodity prices, grades, initial capital costs and operating costs were carried out to identify potential impacts on NPV and IRR.

All monetary amounts are presented in constant Q4-2022 US$. For discounting purposes, cash flows are assumed to occur at the end of each period. Revenue is recognized at the time of production.

22.3 Main Assumptions

A financial model was completed based on the mine plan, which assumes a nominal mine and processing capacity of 1,500 tpd. The plan is also based on other inputs such as mining inventory and rates, processing throughputs and metallurgical recoveries, capital and operating costs, royalties, government royalty and taxation parameters.

22.3.1 Mineral Resource, Mine Plan, and Mine Life

The PEA mine plan is based on the subset of Mineral Resources stated in Section 14.

The financial model was completed based on the mine plan, which assumes the commencement of production in 2025 with only 6 months of production at the daily rate of 1,500 tonnes, totaling 246,000 tonnes. From 2026 to 2035, 10 years of operation at 540,000 tpd, with a final year’s production of 110,000 tonnes.

A Life of Mine (“LOM”) for 12 years is based on a mining inventory of 5.75 Mt, including dilution, derived from Measured, Indicated and Inferred resources.

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22.3.2 Metallurgical Recoveries

Table 22.1 presents the summary of the metallurgical recovery for the project.

Table 22.1 Metallurgical recoveries

Recoveries	Recoveries	Recoveries
Au Ag Pb Zn	% % % %	76.0% 85.0% 89.0% 84.0%

22.3.3 Metal Prices

In the financial model the following metal prices were used for the first two years, with longterm flat projections after 2027. Those prices were adopted from CIBC’s Metal Prices Consensus, 1 February 2023.

Table 22.2 Long term metal prices

	Units	2025 2026 2027 2028 2029 2030
Ag price Au price Pb Price Zn Price Cu Price	USD/oz USD/oz USD/mt USD/mt USD/mt	22.15 22.40 22.56 22.56 22.56 22.56 1,781.00 1,750.00 1,746.00 1,746.00 1,746.00 1,746.00 2,050.30 2,050.30 2,050.30 2,050.30 2,050.30 2,050.30 2,888.06 2,777.83 2,755.78 2,755.78 2,755.78 2,755.78 8,487.80 8,950.78 9,127.15 9,127.15 9,127.15 9,127.15

22.3.4 Smelting and Refining Terms

Treatment and refining charges for lead-silver-gold concentrates as well as zinc concentrates have been estimated in accordance with the company’s current agreement with international traders.

The following payability factors have been applied:

• Lead–silver concentrate: Lead: pay for 95.0 % of lead content, subject to a minimum deduction of three units. Silver: pay for 95.0 % of silver content, subject to a minimum deduction of 50 g/dmt. Gold: pay for 95.0 % of the gold content, subject to a minimum deduction of 1.25 g/dmt.

• Zinc concentrate: Zinc: pay for 85.0 % of the zinc content, subject to a minimum deduction of eight units. Silver: pay for 70.0 % of silver content after a previous deduction of 3 oz/dmt"

In the portion of the zinc concentrate to be sold to Asian markets, it was assumed that the indium content in the zinc concentrate is not directly payable but provides a treatment charge credit.

The zinc concentrate is assumed to be subject to a penalty of US$1.50 per each 1.0 % Fe above 8.0 % Fe.

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22.3.5 Capital Costs

Capital cost assumptions are outlined in Section 21. A construction period of 12 months was considered (starting in 2024). In Year 0 the development, preparation and mining of stopes begins. Year 2026 corresponds to the first year of production at a rate of 1,500 tpd. Capital costs were applied in the financial model excluding IGV/GST (IGV is the General Sales Tax in Peru).

Initial Capital Costs include mine development and plant construction with a design capacity of 1,500 tonnes per day (“tpd”) and a dry-stacked tailings storage facility.

22.3.6 Operating Costs

Operating cost assumptions are outlined in Section 21.3. For the purpose of this PEA, it has been assumed that the mine will be run by contractors. Operating costs were applied in the financial model excluding IGV.

22.4 Financial Model Parameters

22.4.1 Discount Rate

The net present value (“NPV”) was calculated from the cash flow generated by the project using a set of discount rates, 8 % and 10 %. Those discount rates were selected by Silver X’ management based on a benchmark analysis of recent mining project reports in Peru and other similar projects in Latin America. It considers risks associated with the project, commodity prices and country risks.

22.4.2 Royalties

Royalties are discussed in Section 4.7. Silver X estimates that approximately 60 % of the future production in Tangana will be subject to royalty payments.

The following concessions include royalties:

• Concessions Acquired from Pan American Silver in 2018: 3.0 % NSR with Triple Flag (See Figure 1)

• Concessions in Tangana West: 4.0 % NSR

• Concessions Pucapunta: 3.0 % NSR.

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Figure 22.1 NSR map (source: Silver X, 2022)

22.4.3 Working Capital

A working capital allocation was included in the cash flow model.

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22.4.4 Taxes

The following tax considerations have been applied:

• Modified mining royalty (Law N° 29788)

• Special mining tax (Law N° 29789)

• Employee profit sharing of 8.0 % of taxable income after loss carry-forward

• Complementary mining pension fund as 0.50 % of taxable income after loss carry- forward and employee profit sharing

• Corporate income tax rate of 29.50 %

• Tax loss carried forward to a maximum of four consecutive years after the year of the loss.

Tax depreciation is straight line and was split into the following categories:

• Pre-operational expense (depreciated in the first year of production)

• 1 year (expensed when incurred)

• 5 years (or 20 % per year)

• 10 years (or 10 % per year)

22.4.5 Closure Costs and Salvage Value

A provision of US$ 10.5M, equivalent to the 5.0 % of the total capital cost based on benchmarking, was included to account for closure costs.

No salvage value was considered.

22.4.6 Financing

The preliminary economic analysis is based on 38.0 % equity financing, 62.0 % debt, for total financing US$ 65 M.

22.4.7 Inflation

No escalation or inflation has been applied. All amounts are in real (constant) terms.

22.4.8 Operating and Capital Costs, Economic Analysis

The project is anticipated to generate an after-tax NPV of US$ 198 M at an 8.0 % discount rate, an IRR of 39.0 % and a payback period of four years.

Cash costs were consolidated per silver equivalent that includes Au, Zn and Pb credits. A life of mine (“LOM”) all-in sustaining cash cost (AISC) was also consolidated. These are presented in Table 22.3.

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Table 22.3 Key economic parameters

Key Parameters	Units	Values
Total Throughput	tonnes	5,747,789
AgEq. Production	oz	46,766,446
Cash Cost	USD/oz AgEq	8.66
AISC	USD/oz AgEq	16.01
Gross Revenue	USDM	1,060
EBITDA	USDM	575
FCF	USDM	302

Table 22.4 displays a summary of all key production parameters over the life of mine (LOM). With an average annual production of concentrates of approximately 35,000 tonnes of Pb/Ag/Au concentrates and Zinc concentrates; Tangana shall produce approximately 1.5 Moz Ag per year and 4.2 Moz AgEq.

Table 22.4 Summary Production. Years 2025, 2026, 2030, 2035, LOM total

Summary Production	Units	2025 2026 2030 2035	Total
RoM Pb Concentrates Zn Concentrates	tpa tpa tpa	246,701 540,000 540,000 530,860 7,070 20,539 21,066 20,271 6,081 18,434 16,354 15,346	5,747,789 216,788 163,294
Total Concentrates	tpa	13,151 38,973 37,419 35,616	380,082
Grades(Diluted)		2025 2026 2030 2035 Total
Au Ag Cu Pb Zn	g oz % % %	1.58 1.44 0.95 0.57 2.47 2.08 3.10 3.40 0.22 0.15 0.58 0.24 1.77 2.35 2.41 2.36 1.53 2.11 1.87 1.79	1.07 3.04 0.32 2.33 1.76
Stoping Production Dev.	t t	232,310 508,500 508,500 499,893 14,391 31,500 31,500 30,967	5,412,501 335,288
Metal Recovered		2025 2026 2030 2035 Total
Au Ag Pb Zn	g oz t t	296,404 589,706 388,330 228,218 517,490 956,369 1,423,931 1,535,457 3,889 11,296 11,586 11,149 3,162 9,586 8,504 7,980	4,692,302 14,873,674 119,233 84,913
Ag Eq (Produced)	oz	2,055,988 4,660,273 4,481,937 4,091,321	47,858,218

The mining operating expenditure (“Opex”) (excluding mine development and preparation) has been estimated in US$24.14/t RoM, with an additional US$15.92/t RoM as capital expenditure (“Capex”) as shown in Table 22.5.

Milling and processing Opex has been estimated to be slightly above US$16.00/t RoM, which is in line with the current processing cost as shown in Table 22.6.

General and Administrative costs (“G&A”), environmental and social, marketing and sales and other costs; total US$13.30/t RoM as indicated in Table 22.7.

The costs associated to infill drilling and studies are shown in Table 22.8.

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Table 22.5 Mine Opex. Years 2024, 2025, 2030, 2035, LOM total

Mine Opex	Units	2024 2025 2030 2035 Total	2024 2025 2030 2035 Total
Annual production Concentrates Production	t t	246,701 540,000 540,000 110,227 13,151 38,973 41,540 13,843	5,747,789 380,082
Production Dev. Ramp 3.5x3.5 (+) Ramp 3.5x3.5 (-)	m m m	600 2,100 3,097 519 1,000 1,400 1,664 346 2,400 1,200 1,387 328	27,075 18,050 17,100
Ramp 4.5x4.5 (-) Crosscut 4.5x4.5 Crosscut 3.5x3.5 Others(Windows,Raises)	m m m m	4,500 2,500 4,161 865 2,400 1,800 2,800 519 1,800 1,200 1,664 346 3,620 2,880 3,893 793	45,126 29,200 18,050 41,325
Total	m	16,320 13,080 18,666 3,717	195,927
Mine Cost(Opex+Dev)	USD	15,000,263 18,385,571 21,654,571 5,168,865	230,296,285
Stoping Production Dev. Ramp 3.5x3.5 (+) Ramp 3.5x3.5 (-) Preparation (adittional) Energy Ramp 4.5x4.5 (-) Crosscut 4.5x4.5 Crosscut 3.5x3.5 Others (Ventanas, Chimene Contractor Overhead Transport	USD USD USD USD USD USD USD USD USD a USD USD USD	3,702,474 8,104,286 8,104,286 1,654,285 331,820 1,161,369 1,712,537 287,153 568,477 795,868 946,183 196,781 1,364,345 682,172 788,673 186,424 229,017 501,291 501,291 102,326 493,402 1,080,000 1,080,000 220,455 2,488,649 1,382,583 2,301,195 478,588 1,664,083 1,248,062 1,941,172 360,019 995,459 663,640 920,478 191,435 2,117,700 1,684,800 2,277,257 463,620 1,014,000 1,014,000 1,014,000 1,014,000 30,838 67,500 67,500 13,778	86,262,449 14,973,548 10,261,133 9,721,073 5,335,769 11,495,577 24,955,913 20,246,570 9,982,365 24,175,415 12,168,000 718,474
Opex Opex	USD USD/t	6,720,372 12,392,487 13,200,470 2,661,202 22.95 24.45 24.14	138,768,022 24.14
Capex	USD	8,279,891 5,993,085 8,454,101 2,507,663	91,528,263

Table 22.6 Processing Opex. Years 2025, 2026, 2030, 2035, LOM total

Recuperada OPEX	Units	2025 2026 2030 2035 Total
Tonnage Daily Concentrates Production	tpm tpd tpm	246,701 540,000 540,000 530,860 5,747,789 1,645 1,500 1,500 1,475 13,151 38,973 37,419 35,616 380,082
Processing Plant OPEX	USD	3,945,609 8,661,045 8,661,045 8,518,690 92,223,017
Rods Milling Balls Milling Reagents Laboratory Power Plant Maintenance Labor Operations Mobile equipment Ore Handling Tailings Handling Contingency	USD USD USD USD USD USD USD USD USD USD USD	93,500 204,660 204,660 201,196 2,178,412 171,704 375,840 375,840 369,479 4,000,461 403,818 883,912 883,912 868,951 9,408,401 132,298 340,800 340,800 343,867 3,699,196 421,859 923,400 923,400 907,771 9,828,718 175,158 383,400 383,400 376,911 4,080,930 905,393 1,981,800 1,981,800 1,948,257 21,094,384 46,873 102,600 102,600 100,863 1,092,080 123,351 270,000 270,000 265,430 2,873,894 1,233,505 2,700,000 2,700,000 2,654,301 28,738,943 238,151 494,634 494,634 481,664 5,227,598
Unit Costs	USD/t	15.99 16.04 16.04 16.05 16.04

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Table 22.7 Overheads and others. Years 2025, 2026, 2030, 2035, LOM total)

OPEX- G&A	Units	2025 2026 2030 2035 Total
Overheads	USD	1,825,166 3,962,489 3,962,489 3,962,489 47,040,727
General Maintenance Systems Security Meals Transportation	USD USD USD USD USD	82,234 180,000 180,000 180,000 2,062,234 13,706 30,000 30,000 30,000 343,706 274,112 600,000 600,000 600,000 6,874,112 109,645 240,000 240,000 240,000 2,749,645 21,929 48,000 48,000 48,000 549,929
Lima Office TechServices Head Office	USD USD USD	304,012 665,446 665,446 665,446 8,422,455 137,773 301,569 301,569 301,569 3,455,035 772,111 1,690,063 1,690,063 1,690,063 19,362,799
Environment Geology Enginering Health & Safety	USD USD USD USD	27,411 60,000 60,000 60,000 927,411 27,411 60,000 60,000 60,000 927,411 27,411 60,000 60,000 60,000 927,411 27,411 27,411 27,411 27,411 438,580
Cost per tonne	USD/t	7.40 7.34 7.34 7.46 8.18
PDC Closure Plan	USD	- - 500,000 500,000 10,500,000
Community Programs	USD	109,645 240,000 240,000 240,000 3,709,645
Various Scholarships Programs	USD USD USD	27,411 60,000 60,000 60,000 927,411 54,822 120,000 120,000 120,000 1,854,822 27,411 60,000 60,000 60,000 927,411
Transport Concentrate	s USD	526055.85 1,558,914 1,496,764 1,424,660 15,203,285

Table 22.8 Drilling and Studies Capex. Years 2025, 2026, 2030, 2033, LOM total

Units	2025 2026 2030 2033	Total
m m m m	5,000 5,000 5,000 5,000 2,500 2,500 2,500 12,500 12,500 12,500 12,500 17,500 20,000 20,000 20,000 2,563,750 3,065,000 3,015,000 3,015,000 875,000 1,312,500 1,312,500 1,312,500 1,562,500 1,562,500 1,562,500 1,562,500 2,437,500 2,875,000 2,875,000 2,875,000	45,000 20,000 112,500 177,500 - 26,783,750 11,375,000 14,062,500 25,437,500
USD
USD USD USD
USD USD	30,000 30,000 30,000 30,000 30,000 30,000	- 240,000 240,000
USD USD USD USD	- 60,000 60,000 60,000 100,000 100,000 50,000 50,000 26,250 30,000 30,000 30,000 126,250 130,000 80,000 80,000	480,000 600,000 266,250 866,250

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22.5 Economic analysis

Table 22.9 shows the results of the financial evaluation. The Project shows positive economics, with an After-Tax NPV of US$175M at 10.0% discount rate and an After-Tax IRR of 39.0%.

Table 22.9 Financial summary of the PEA

Parameter		Units	Values
Net Present Value (10%)	Pre-Tax	$ Million	227.7
	After- Tax	$ Million	175.2
Internal Rate of Return (IRR)	Pre-Tax	%	49
	After- Tax	%	39
After-Tax Payback		Years	4
Initial Capital		$ Million	60.9
Sustaining Capital (including closure costs)		$ Million	142.6
Total Cash Operating Cost		$/t	53
Total Sustaining Capital		$/t	25
Long term Metal Prices
Silver Gold Lead Zinc		$/oz $/oz $/lb $/lb	22.56 1,746 0.93 1.25

Overall, the Project achieved 12 years life-of-mine at a capacity of 1,500 tonnes per day based on a mining inventory of 5.75 Mt. An average annual production of 4.28 Moz of silver equivalent (“AgEq”) is envisaged throughout the life-of-mine.

The initial capex of $61M is estimated for the new processing facility, dry-stacked tailings and mine development. Table 22.10 shows that the processing plant accounts for the largest expenditure (approximately US$30M). A contingency provision reached almost US$10M.

The Project presents a Life of the Mine sustaining capital of approximately US$140M

approximately.

It was estimated an Opex of US$53.49/t, with a total expenditure of US$307M over the life of the mine. Average mine operating expenditure is US$24.14/t, processing is US$16.04/t and total G&A is US$8.08/t.

A summary of the cost estimates is shown in Table 22.11.

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Table 22.10 Initial Capital Expenditure

Initial Capital Expenditure	US$ Million
Mine	$10.9
Processing plant	$29.8
Tailings and facilities	$6.9
Camps and roads	$0.8
EPCM & Owner's cost and studies	$2.8
Total pre-contingency	$51.2
Contingency	$9.7
Total	$60.9

Table 22.11 Summary Opex and Capex. Years 2025, 2026, 2030, 2035, LOM total

Summary Opex & Capex	Units	2025 2026 2030 2035 Total
Throughput	t	246,701 540,000 540,000 530,860 5,747,789
636 1,799 2,237 2,165
OPEX	USD'000	13,127 26,815 28,297 27,462 307,445
Nueva Recuperada Processing Plant Overheads Closure Plan (PDC) Communities Transport of Concentrates	USD'000 USD'000 USD'000 USD'000 USD'000 USD'000	6,406 14,422 14,860 14,646 168,677 3,946 8,661 8,661 8,519 92,223 1,825 3,962 3,962 3,962 47,041 - - 500 500 10,500 110 240 240 240 3,710 526 1,559 1,497 1,425 15,203
Mine RoM Transport	USD'000 USD'000 USD'000	6,720 12,392 13,437 12,816 138,768 6,690 12,325 13,369 12,750 138,050 31 68 68 66 718
CAPEX	USD'000	61,452 11,368 14,458 10,720 203,554
Processing Plant and Tailin	USD´000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000	48,417 576 336 336 59,445 - - - - - 29,848 - - - 29,848 6,872 150 150 150 14,052 800 80 80 80 1,760 2,828 250 50 50 3,878 8,070 96 56 56 9,907
Asset Acquisition Plant Equipment Tailings and Facilities Camps and Roads Studies, Engineering Contingency
Mine - Tangana Drilling Mine Development Infrastructure Facilities Roads and Access Contingency	USD´000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000	13,035 10,792 14,122 10,384 144,109 2,564 3,065 3,015 - 26,784 8,280 5,993 8,810 8,208 91,528 355 355 355 355 4,970 80 80 80 80 1,120 100 100 100 100 1,400 1,656 1,199 1,762 1,642 18,307
Unit Costs Summary 2025 2026 2030 2035 Total
Mining and Hauling Processing Marketing and Sales (concent Environmental and Social G&A	USD/t USD/t USD/t USD/t USD/t	27.24 22.95 24.88 24.14 24.14 15.99 16.04 16.04 16.05 16.04 2.13 2.89 2.77 2.68 2.65 0.44 0.44 1.37 1.39 2.47 7.40 7.34 7.34 7.46 8.18
	USD/t	53.21 49.66 52.40 51.73 53.49

With an average annual production of 4.28 Moz AgEq, the project shows a cash cost of US$8.60/oz AgEq. The all-in sustained cost (AISC) is set at US$16.2/oz AgEq, accounting for an overall capital expenditure of US$4.2 /ozAgEq.

Table 22.12 shows all specifics of the AISC.

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Table 22.12 Cash cost per ounce and AISC

Cash Costper Ounce 2025 2026 2030 2035 Total	Cash Costper Ounce 2025 2026 2030 2035 Total		Units	LOM Avg
Total cash cost USDM $37.3 $34.1 $40.4 $11.0 Silver Eq. Production Moz 4.66 4.21 4.88 1.36	411 47.86		USDM/y oz/y USD/oz	36.17 4.28 8.60
Cash cost per oz Ag USD/oz $8.0 $8.1 $8.3 $8.1 $8.6
			Units	LOM Avg
			USD/oz USD/oz USD/oz USD/oz USD/oz	8.60 1.84 4.25 0.56 0.98
			USD/oz	$16.2

22.6 Sensitivity Analysis

A sensitivity analysis was performed considering variations in metal prices, feed metal grades, initial capital and operating costs on the after-tax NPV 8.0 % and on IRR. The results of this analysis are presented in Table 22.13 and Table 22.14.

The Project is most sensitive to fluctuations in metal prices as well as feed grades. With reduction in either prices or grades of 30%, the project reached the lowest NPV at US$25M. On the contrary, a 30% increase in prices against the benchmark, can boost the net present value beyond US$300M.

The Project shows less elasticity against mine throughput or operating costs, staying positive even in a 30% downside scenario.

Table 22.13 Sensitivity analysis: metal prices and capital costs

Metal Prices
USDM 0% Change in Input from Base	Downside Base Case Upside
	C -30.0% 0.0% +30.0%
NPV8%(Recuperada) AGX Corporate NAV EBITDA FCF	$24.9 $175.0 $318.8 $15.6 $165.8 $309.5 $256.7 $574.7 $892.7 $55.2 $304.8 $539.6
Capital Costs
USDM 0% Change in Input from Base	Downside Base Case Upside
	C +30.0% 0.0% -30.0%
NPV8%(Recuperada) AGX Corporate NAV EBITDA FCF	$138.3 $175.0 $210.7 $129.0 $165.8 $201.4 $574.7 $574.7 $574.7 $256.5 $304.8 $350.0

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Table 22.14 Sensitivity analysis: throughput and operating Costs

Mine Throughput
USDM	0%	Downside	Base Case	Upside
Change in Input from Base		-30.0%	0.0%	+30.0%
NPV8%(Recuperada)		$65.8	$175.0	$281.3
AGX Corporate NAV		$56.5	$165.8	$272.1
EBITDA		$342.3	$574.7	$807.6
FCF		$124.4	$304.8	$477.4
Operating Costs
USDM	0%	Downside	Base Case	Upside
Change in Input from Base		+30.0%	0.0%	-30.0%
NPV8%(Recuperada)		$140.3	$175.0	$209.4
AGX Corporate NAV		$131.1	$165.8	$200.1
EBITDA		$496.6	$574.7	$652.8
FCF		$246.1	$304.8	$362.5

In addition to these sensitivities, a scenario considering a mine plan including only Tangana 1, Tangana 2, Morlupo and Cauca was modelled. The results still showed a positive NPV of US$35M.

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23 Adjacent properties

There is no information from adjacent properties applicable to the Tangana project for disclosure in this report.

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24 Other relevant data and information

There is no other relevant data and information to disclose that makes the Technical Report misleading.

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25 Interpretation and conclusions

25.1 Geology and mineral resource estimate

The Nueva Recuperada property covers a large area within the Huachocolpa mining district containing Ag/Au/Pb/Zn/Cu epithermal/mesothermal metallogenetic veins and other deposit types mainly hosted in Cenozoic volcanic rocks. Silver-gold along with lead-zinc-copper mineralization isfound in high, intermediate and low sulphidation veins, mantos, disseminations, porphyries and skarns.

The style of mineralization is typically intermediate sulfidation, lower epithermal to upper mesothermal veins hosted in andesitic pyroclastic breccia flows. At lower levels, they are hosted in andesitic lavas and mineralized with galena, sphalerite, pyrite, chalcopyrite and native gold in a gangue of subhedral to euhedral quartz, calcite and rhodochrosite. Mineralization at Tangana is mostly hosted in normal fault structures in epithermal, colloform, subhedral quartz banding and crustiform euhedral quartz, occasionally cut by post-mineral, andesite dikes. Historic BVN production occurred from 1960 to 1975 with 234,098 t of ore extracted.

Silver X’s exploration efforts on veins with the highest potential for economic production at the same time as conducting a comprehensive program across the entire Nueva Recuperada property. Silver X has separated the portfolio of vein systems on the Nueva Recuperada property into two main units for logistical and operational reasons: the Tangana Mining Unit in the north and the Esperanza Mining Unit in the south. Within these two units there are eleven main mineralized sectors. To date, a total of 541 veins and splits have been identified on the property.

Exploration expenditure by Silver X from 2017 through 2022 was US$13.56 M including geology, sampling, social, environmental, administrative, mine preparation and drifting and legal costs as detailed in Table 9.2. The Company’s focus has been on assimilating historic data and field checking the various vein sectors and neighboring properties. In their generative field work important discoveries have been made, including the economic potential of the veins in the San Antonio, Tangana, Cauca, Pucapunta, Maria Luz and Positivas sectors, along with the identification of disseminated, volcanic-hosted, epithermal and porphyry systems and other positive exploration results mentioned below.

The author has reviewed the data used in the modeled resource estimation generated by the current activities carried out by Silver X including surveys, mapping, sampling, production as well as drilling by Silver X. The author has also previously reviewed the data and generated polygonal method resource estimates for the other vein sectors of the Nueva Recuperada Property for the prior NI 43-101 Technical Report of early 2022 that are also included in this report.

In the author’s opinion, the Nueva Recuperada Property contains compliant, Current Inverse Squared Distance Method (ID2) and Polygonal Method Mineral Resources based on several factors outlines on Section 14, including:

• The author’s review of historic technical reports and current Silver X technical reports

• The surface and subsurface expression of mineralized veins throughout the project; mineral grade and width continuity demonstrated over considerable vein strike and dip;

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• The abundance of formerly and now reopened operating mines on the property with strong correlations of grades and widths with the Historic data

• Currently operating mines on adjoining properties containing similar mineralization to that on the Nueva Recuperada Property;

• Verification by Silver X drilling and drifting to prove new resources that were inferred by previous surface sampling surveys. Current results of exploration and development work and processing carried out by Silver X during 2018-2022 (i.e. San Antonio, Tangana, Cauca, Blenda Rubia and others);

• Four years of demonstrated sales of concentrates processed from the mineral extracted from the veins;

• The interest and enthusiasm of the Huachocolpa Community for continued mining operations in the project; and

A sub-blocked model was built using the parameters specified in Section 14 report. Quantitative kriging neighborhood analysis (QKNA) was undertaken on the Tangana veins to determine the optimal search parameters for the mineral resource estimates.

Estimation of grades into blocks was performed using multiple kriging methods for grade interpolation including ordinary kriging (OK), nearest neighbor (NN), and inverse distance squared (ID2) or inverse distance weighting and the results compared. Parameters were derived from block size selection, search neighborhood optimization, and variogram modeling. The sample data were composited and, where necessary, top cut prior to estimation.

There have been a total of eight density measurements taken at Tangana as of October 31, 2022. These were all taken underground. While this is sparse in data and spatial coverage of density measurements, the estimated density average of 2.88 is considered to be adequate as the constant value of the average density for to estimation of the four veins.

The techniques for validation of the estimated tonnes and grades included visual inspection of the model and samples in plan, section, and in three-dimensions; cross-validation; global estimate validation through the comparison of declustered sample statistics with the average estimated grade per domain; and local estimate validation through the generation of slice validation plots.

Silver X used estimation quality measures to aid in assignment of resource confidence classifications for the veins block models. The Mineral Resource confidence classification of the Tangana resource block models incorporated the confidence in the drill hole and channel data, the geological interpretation, geological continuity, data density and orientation, spatial grade continuity exploitation and estimation quality. The resource models were coded as Inferred, Indicated, and Measured in accordance with the 2014 CIM standards.

As a Qualified Person, the author has been able to classify the Nueva Recuperada Property Combined ID2 and Polygonal Mineral Resource Estimate into separate categories of confidence according to the industry standards lay out under CIM standards. As such, the author has determined that the estimated Mineral Resources in all categories both Inverse Squared Distance Method (ID2) and Polygonal Method are Compliant, Current and consist of Inferred, Indicated and Measured Mineral Resources. The resources are shown in Tables 14.16, 14.17, 14.18 and 14.19.

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The updated combined estimates for Silver X Mining Corporation’s Nueva Recuperada Property Mineral Resources using prior and current compliant data, with effective date October 31, 2022 are as follows:

• Inferred Mineral Resources: 11,893,198 t with grades of 152.5 g/t Ag, 0.31 g/t Au, 1.72% Pb and 1.79% Zn (Table 14.19 above)

• Indicated Mineral Resources: 1,666,598 t with grades of 59.5 g/t Ag, 0.96 g/t Au, 1.67%

• Pb and 1.39% Zn/ t (Table 14.18 above)

• Measured Mineral Resources of 1,938,863 t with grades of 80.5 g/t Ag, 1.91 g/t Au, 1.87% Pb and 1.17% Zn (Table 14.18 above)

The total combined Current and Compliant, Measured and Indicated Mineral Resources are 3,605,461 t with grades of 70.8 g/t Ag, 1.47 g/t Au, 1.78 % Pb and 1.27 % Zn (Table 14.18).

25.2 Mineral processing and metallurgical testing

The metallurgical investigation for this PEA is based on:

• 2021 and 2022 Flotation tests performed by the National University of Engineering (UNI) in Lima, Peru.

• 2022 data from an existing concentrator operating on site at Nueva Recuperada.

• Substantial data was also available from reports commissioned by the previous owners (Buenaventura) at the Nueva Recuperada plant, but the representivity of this data is not clear.

The Tangana mining complex is composed of several veins. These veins are described as the product of a single katathermal genetic process. Visual geological logging indicates that the mineral assemblages and textures are similar in these veins.

At this stage, it has been assumed that the metallurgical response will be similar for each of these veins. Further sampling and metallurgical testing would be required to confirm this at the next stage of study.

The metallurgical studies show that the production of two type of concentrates are achievable i.e. a Pb/Ag/Au concentrate and a Zn concentrate.

Variability test-works are planned for the next stage of the project.

25.3 Mining

The selected mining method is overhand cut and fill configured in two steps i.e. mining first the vein containing the mineralized material and later the waste alongside the hanging wall and/or the footwall to create a minimum mining width. The waste mined is further used as fill material to set ground for mining the upper slice. In summary, a bottom-up mining sequence is undertaken following the veins strike. The method can be well adapted to the variations of the veins geometry.

Mineralized material will be hauled to the surface by dumpers through the Tangana mine portal. This access is also connected to the Morlupo, Cauca and Tangana veins.

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Mining inventories for Tangana 1, Tangana 2, Cauca and Morlupo were created based on a NSR cut-off of US$ 60/t which is based on a combination of historical records and projections completed by Silver X. This cut-off includes all cost incurred with RoM and waste mining, processing, tailings and overheads. The inventories for the other veins were derived by applying the mining modifying factors from Tangana 1, Tangana 2, Cauca and Morlupo, including dilution, mining recovery and the conversion ratio of resource-to-mining inventory (43% average). The total diluted inventory reached 5.3 Mt at 1.69% Zn, 2.27% Pb, 1.1g/t Au and 92.6 g/t Ag.

A preliminary mine scheduling was performed assuming a production rate of 1,500 tpd was set for the combined deposits. It was constrained by both individual activities rates and the mine fleet capacities. The results indicate a total life of 13 years.

25.4 Recovery methods

The existing Nueva Recuperada process plant is located 22 km south from the future site for Tangana process plant. Much of the process design criteria have been assumed, based on experience at the existing Nueva Recuperada concentrator, and on experience with operations treating similar mineralization and of a similar same scale.

A processing rate of 1,500 tpd of mineralization will be achieved through traditional primary and secondary crushing, rod mill primary grinding, secondary ball mill grinding, bulk flotation of lead, copper, silver, and gold, and zinc flotation, followed by concentrate thickening and filtration. Additionally, a gravity concentrator will be used to recover coarse gold from a fraction of the cyclone underflow, which will then be cleaned on a shaking table.

The tailings will be thickened, filtered, and disposed of in either a subaerial tailings storage facility, or as underground mine backfill.

Process water will be recycled as much as possible to minimize water usage.

25.5 Project infrastructure

The mine site infrastructure consists mainly of:

• Waste dump for initial development (waste will be generally accommodated as backfill in the underground voids);

• RoM stockpile 1-month capacity;

• Tailings storage facility;

• Water management systems: sediment ponds, ditches and sumps.

The general project facilities to create in the Tangana area are:

• Offices

• Camp and accommodation;

• Substation

• Workshop

• Warehouse

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• Access control

• Medical service

• Energy distribution

• Water supply

• Industrial water treatment plant

• Domestic water treatment plant

25.6 Environmental studies and permitting

Silver X's operations in Peru are carried out in the community of Huachocolpa, located in the district of the same name, province and department of Huancavelica.

For the development of the Project, the first step in terms of environmental permits is the approval of an Environmental Impact Study (EIA), which has been prepared since October 2021 and is estimated to be submitted for evaluation before the Ministry of Environment in Peru the first quarter of 2023 and its approval is obtained at the end of that same year.

A new agreement is being negotiated with the community of Huachocolpa to obtain the right of

use the new area for the project expansion.

The characterization of the current area of our operations and the preliminary results of the evaluation that are being carried out as part of the EIA for the Project area and the expansion zones.

A conceptual mine closure plan was completed for the project.

25.7 Capital and operating costs

Capital and operating costs have been estimated at a level appropriate for a Preliminary Economic Assessment level. Overall accuracy is estimated at ±40% for both capital and operating costs.

The capital cost estimate (capex) is based on a combination of experience from existing operations, reference projects and escalation factors as appropriate with the conceptual nature of this PEA. An initial capital expenditure of US$ 61M was estimated including contingency.

The operating cost estimate was mainly based on data provided by Silver X derived from the current operations at Nueva Recuperada.

25.8 Economic analysis

At this preliminary stage, the project presents reasonable prospects of being economically viable with a positive post-tax Net Present Value of US$ 175M, a post-tax payback period of 4 years and an Internal Rate of Return (IRR) of 39%.

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26 Recommendations

26.1 Resource estimation

Mining narrow veins is challenging: veins can narrow rapidly, be irregular, fragmented and faulted, compromising the economic viability of orebodies unexpectedly. This nature of vein deposits then requires good data management and supervisory integration for a safe and profitable mining operation. At Nueva Recuperada the staff is experienced and capable to complete the required tasks for exploration and development. For mine planning purposes, Silver X Mining Corp should continue exploration and development with detailed structural, geochemical and mineralogical data collection to assist and guide mine planning. The following activities are recommended:

• To progress to a PFS it is needed to convert Inferred resources to at least at Indicated category. Additional infill drilling and metallurgical testwork campaigns are required.

• Continue underground exploration fronts in Tangana, drifting across the set of various Tangana veins to rapidly expand resources and potentially reserves.

• Continue to develop 3-D geological models of veins and their ore-shoots to create a verifiable grid that incorporates structure, lithology, alteration zonings (Terraspec), sulfide and gangue mineralogies, geophysics, trace elements, primary metal grades and vein thicknesses in order to estimate resources and ore shoots with the input of data from both exploration and production;

• Medium-term exploration should be focused on the Esperanza (Plata) area, sector of the highest economic value; where abundant veins and past production data will likely bring substantial resources.

• Construct and compile a single reliable secure drilling and sampling database for the entire mine area, which can be easily verified, audited, and shared internally.

• Developing and documenting internal standards and procedures for geological interpretation, modelling, estimation and reporting of Mineral Resources.

• Silver X implement short term grade control models to track and reconcile with the resource models and mine production.

• Promptly conduct a detailed mineralization variability study, preferably from sampling on the veins in drifts, for each vein sector to determine the spacing between drillholes for indicated and measured resource definition. From these studies, cost/benefit analyses can be generated to decide whether grid drilling can be used, or whether wide spaced drilling followed by drifting is most effective;

• Develop a higher education initiative with local inhabitants so that students get appropriate technical or university training to enable them to work in Silver X operations;

• Consider VLF geophysical surveys for vein exploration;

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26.2 Mining

• The mining method selected for Tangana is cut and fill based on the mining techniques currently in place. However, it is recommended to further evaluate alternative mining methods which may unlock economic benefits for the project such as sublevel stoping. Specifically, the company is currently implementing the sub-level open stoping method (long hole) in some areas of the mine. A close monitoring of this system including dilution, losses, cycle time, explosives consumption, productivity, development requirements should be carried out to confirm the potential of the method.

• In the absence of a comprehensive geotechnical study, all key geotechnical design parameters were derived from data collected and empirical experience from the current underground workings. A full geotechnical study is highly recommended prior to the commencement of the next stage of the project.

• Existing hydrogeological information is restricted to the depleted mine named Angélica located 500 m south of Positivas and San Antonio (September, 2009). At the moment all hydrogeological aspects have been estimated based on the current experience from the operations. A conceptual hydrogeological study is required to be completed on the main veins for the next stage. The study should cover all key hydrogeological aspects such as:

• Confirm the basis for a reliable and suitable water supply.

• Identify major mine drainage, dewatering and infrastructure elements of material significance, including diversions and discharges as necessary.

• Identify hydrological and groundwater effects or major impacts from the mine.

• Confirm groundwater conditions around the tailings facilities.

• A constant 15% dilution applied to the mineral and 92% mining recovery for all sectors of the mine. These values are based on historical records from San Antonio and Tangana. Further investigation is required to determine specific dilution and mining recovery factors for individual veins that reflect local geotechnical conditions.

• A constant NSR cut-off of US$60/t was applied to generate the underground inventories. Preliminary sensitivity analysis showed that the economic feasibility is highly dependent on NSR and mining costs. Further mine planning iterations should consider the use of specific cut-offs for each vein for the definition of mining inventories that capture local mining adjustment cost factors.

• A ventilation study should be completed for the next stage in order to ensure that associated infrastructure and costs are accurately estimated.

• The combination of waste rock backfill and hydraulic fill is a potential opportunity for the future. This combination should be tested in order to understand if the hydraulic backfill can be done co-disposing it with the waste rock backfill producing surface in the mined stopes in which the equipment can continue the upwards mining. With a potential mine backfill, the footprint of the surface waste management facilities would be reduced and a reduction in costs could be expected.

• Development requirements were derived from typical mining panel layouts. It is recommended that future iterations include detailed 3D layouts for each vein to increase the accuracy of the mine plan.

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26.3 Waste management

• Waste rock and tailings materials have to be tested to define the environmental behaviour for the long term on surface. This could reduce eventually the requirements for the tailings management facility and waste rock dumps.

• The assumption done in this PEA is that the tailings can be filtered. It is required to probe this with testwork done on the material used for metallurgical variability testwork or by creating specific samples for this purpose.

26.4 Metallurgy and processing

• Improve recovery rates: Identify opportunities to improve recovery rates of base and precious metals through more efficient processing methods, such as optimizing the grinding and flotation circuits.

• Investigate other technologies: The current proposed flowsheet is based on the existing La Recuperada plant design. There are opportunities for improved efficiencies and performance via technologies such as “ore-sorting”, SAG milling, and pneumatic cell flotation.

• Evaluate potential by-products: Conduct a thorough evaluation of potential by-products that could be produced during the base metal processing, such as precious metals concentrates or doré, or separate copper and lead concentrates.

• Variability testing is an important component of a geometallurgical program, as it helps to identify the variability of the mineral deposit and to develop an optimized processing flow sheet that takes into account the variability of the resource. The following is recommended:

• Collect Representative Samples: Representative samples should be collected from different parts of the deposit, covering grade, spatial, mineralogical, and rock-type distributions.

• Analyze Mineralogy and Metallurgical Characteristics: Samples should be analyzed for mineralogy and metallurgical characteristics using analytical techniques such as XRD, automated SEM to determine the mineralogy and mineral associations of the mineralization types, as well as their liberation properties.

• Conduct Bench-Scale Testing: Bench-scale testing should be conducted on the samples to determine their metallurgical properties, including the response to processing stages such as grinding, flotation, and tailings management.

• Evaluate Variability: Based on the results of the bench-scale testing, an evaluation of the variability of the deposit should be conducted.

• Develop a Geometallurgical Model: Using the results of the variability testing, a geometallurgical model should be developed that incorporates the mineralogy, metallurgical properties, and variability of the deposit. This model should be used to optimize the processing flowsheet, and to develop a mine plan that takes into account the variability of the deposit.

• Implement Environmental Safeguards: Ensure that environmental considerations are integrated into the design and operation of the concentrator. This can include implementing water treatment and tailings management systems to minimize the impact on the environment.

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• Further work on water quality, water management, and the effect on flotation should be incorporated into the next phase of study.

26.5 Infrastructure and logistics

• The proposed track for exporting the concentrates is by a road passing through Minera Kolpa operation. Although it is a public road sometimes the road is cut because of works in the Kolpa operation. This can be easily anticipated by a communication with the neighbours and with the alternative track through Nueva Recuperada plant or connecting by gallery with West Tangana could reduce potential any risk in that regard.

• The mobile connection is not fully warrantee in the area. Based on the expected usage with the new Tangana plant it is recommended to begin the contacts with the mobile operators to warrantee signal coverage.

• The transport between the different veins in the Tangana Mining Unit will be done in some cases on surface. The existing tracks connecting the different veins have to be improved and, in some cases, a new path should be defined. The permitting aspects with the authorities and the communities should include those tracks improvement that would be considered a positive impact in the area.

• Some of the distances between veins would be reduced by developing galleries connecting, for instance, San Antonio and Tangana. This type of gallery could be considered as an investigation gallery, due to the presence of occurrences in the area. to reduce CAPEX to be enlarged later as a transport gallery.

• The transport system for the Tangana project considers trucking as the main alternative. A system involving mine train, conveyors or similar systems could reduce OPEX in the future. Especially in areas where the conveyor is descending to the future plant site a reduction of power consumption is expected.

• For the future stages of the project it is recommended to locate a weather station in the new Tangana plant area.

• The existing power line is able to provide around 3 MW. The requirements for the new plant are expected to be 3 MW so the power line has to be upgraded to maintain the power supply to the Nueva Recuperada facility and the new Tangana facility. A potential reduction in power supply could be by installing power generation systems at Tangana, based on a combination of solar power, wind, geothermal, hydraulic, aerothermic. A simple study for those alternative power sources is recommended.

26.6 Costs estimation

• It is recommended that an integrated cost model be developed for the entire operation to improve the accuracy and comparability of cost estimates for future stages of the PEA. This model should incorporate all costs related to the project and reduce the usage of different source data, resulting in more homogenous and reliable cost estimates.

• Furthermore, it is recommended that a study be conducted based on first principles to better understand the mine costs. This study should identify the different aspects of the operation that can be subcontracted and those that should be done with own resources. By doing so, the company can determine the optimal balance between subcontracting and in-house operations to reduce costs in the long run.

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• The study could also identify the appropriate time frame for subcontracted work and facilitate agreements with contractors for the acquisition of equipment and the incorporation of part of the workforce into the company's staff. This strategic decision could help reduce future costs and increase operational efficiency.

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27 References

Table 27.1 References

Author	Title
Isaaks, E.H., and Srivastava,	An introduction to applied geostatistics. Oxford University Press (New
R.M., 1989	York) 561pp.
CIM, 2010	CIM DEFINITION STANDARDS - For Mineral Resources and Mineral
	Reserves. Prepared by the CIM Standing Committee on Reserve Definitions. Adopted by CIM Council on 27 November, 2010
JORC, 2004	The Australasian Code for Reporting of Exploration Results, Mineral
	Resources and Ore Reserves. Prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy,
	Australian Institute of Geoscientists and Minerals Council of Australia
	(JORC).
CIM, 2003	CIM Estimation of Mineral Resources and Mineral Reserves Best
	Practice Guidelines, adopted by CIM Council on November 23, 2003
Journel, A.G., and Huijbreg/ts,	Mining geostatistics. Academic Press (London), 695pp.
Ch.J., 1978
David, M., 1977	Geostatistical ore reserve estimation. Developments in
	Geomathematics 2. Elsevier (Amsterdam), 364pp.
Silver X 2022	(Internal) Production reports, and concentrate sales documentation

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28 Certificates

CERTIFICATE of QUALIFIED PERSON

I, Allen David V. Heyl, certified professional geologist (CPG), of P.O. Box 4054, Evergreen, Colorado, USA, 80437 do hereby certify that:

1. I am the co-author of the technical report titled “Nueva Recuperada Project Preliminary; Huancavelica, Peru. Economic Assessment” and dated effective 31 October 2022 (the “Technical Report”) prepared for Silver X Mining Corp. (“Silver X”).

2. I am a graduate of the Ft. Lewis College, in 1982, and hold a Bachelors of Science degree in Geology.

I am currently a registered member of the American Institute of Professional Geologists, registered CPG No.11277 since 2010.

I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43- 101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43101) and past relevant work experience, I am a “qualified person” for purposes of NI 43-101. I have been practicing my profession as a geologist for mining companies and as a consultant since 1983. I am a consulting CPG to the mining and mineral industries.

1. I have visited the Nueva Recuperada Property (the “Property”) from October 18 to October 20, 2022 as a site visit and to review project data.

2. I am the responsible for the items 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 23, and portions of items 25, 26 and 27 contained in the Technical Report.

3. I am independent of Silver X as set out in Section 1.5 of NI 43-101.

4. I have had prior involvement with the Property that is the subject of the Technical Report. I have acted as the Silver X QP since March of 2021 on a time remuneration basis and have prepared Silver X’s prior technical report with an effective date of January 1, 2022.

5. I have read NI 43-101 and Form 43-101F1 and certify that items of this Technical Report that I am responsible for have been prepared in compliance with the foregoing instrument and form.

6. As at the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all of the scientific and technical information that is required to be disclosed to ensure that the Technical Report is not misleading.

7. I have no interest in the property that is the subject of this Technical Report, either directly or indirectly. I have acted as the Silver X QP since March of 2021 on a time remuneration basis and have prepared Silver X’s prior technical report with an effective date of January 1, 2022.

Dated at Tombstone, Arizona, USA, April 4, 2023.

Original document signed by

Allen David V. Heyl, CPG

Independent Consultant (Geology)

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CERTIFICATE of QUALIFIED PERSON

I, Paulo Laymen, MAusIMM, ChMC (QP), Av. Álvares Cabral 593 Belo Horizonte, CEP 30.170-812, Brazil, do hereby certify that:

1. I am the co-author of the technical report titled “Nueva Recuperada Project, Huancavelica, Peru. Preliminary Economic Assessment” and dated effective 31 October 2022 (the “Technical Report”) prepared for Silver X Mining Corp. (“Silver X”).

2. I am a graduate of Universidad Politécnica de Madrid, Spain, with a Bachelor and Master in Mining Engineering, 2002.

I am a graduate of Universidad de Chile with a Diploma in Block Cave Engineering, 2015.

I am a Registered Member in good standing of Chilean Mining Commission (Comisión Calificadora de Competencias en Recursos y Reservas de Chile), Membership number #0320.

I am a Member in good standing of the Australasian Institute of Mining and Metallurgy, Membership number #320977.

My relevant experience is that of a Mining Engineer with over 20 years’ mining experience in Europe, South America, Africa, Central Asia and Middle East. I have worked in a range of roles including mine planning and operation manager of open pit and underground mines. I specialize in long term mine planning with competencies in several open pit and underground mining methods for a variety of mineral commodities.

1. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43- 101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43101) and past relevant work experience, I am a “qualified person” for purposes of NI 43-101.

2. I have visited the Nueva Recuperada Property (the “Property”) on December 6th, 2022.

3. I am the responsible for the sections 1, 2, 3, 15, 16, 18, 19, 20, 21, 22, 24, and portions of 25 and 26 contained in the Technical Report.

4. I am independent of Silver X as set out in Section 1.5 of NI 43-101.

5. I have not acted as a Qualified Person in the preparation of a previous Technical Report for the Property that is the subject of the Technical Report.

6. I have read NI 43-101 and Form 43-101F1 and certify that items of this Technical Report that I am responsible for have been prepared in compliance with the foregoing instrument and form.

7. As at the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all of the scientific and technical information that is required to be disclosed to ensure that the Technical Report is not misleading.

8. I have no interest in the property that is the subject of this Technical Report, either directly or indirectly.

Original document signed by

Paulo Laymen, ChMC (RM)

Principal Consultant (Mining)

LOM Consultants Ltd (LOM)

Dated at Belo Horizonte, Brazil, April 4, 2023.

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CERTIFICATE of QUALIFIED PERSON

I, Adam Johnston FAusIMM CP (Met) of 10 Cavendish Gardens, Fleet, UK, do hereby certify that:

1. I am the co-author of the technical report titled “Nueva Recuperada Project, Huancavelica, Peru. Preliminary Economic Assessment” and dated effective 31 October 2022 (the “Technical Report”) prepared for Silver X Mining Corp. (“Silver X”).

2. I am a “qualified person” for the purposes of National Instrument 43-101 (“NI 43-101”). My qualifications as a qualified person are as follows. I am a graduate of the Western Australian School of Mines with Bachelor of Minerals Engineering), 1995. I am registered as a Chartered Professional with the Australian Institute of Mining and Metallurgy. I have worked as metallurgist for a total of 27 years since my graduation. My experience for the purpose of the Technical Report is in the metallurgical testing, plant design, and plant operations of base metal and precious metal ores.

3. I have read the definition of ‘qualified person’ set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association and past relevant work experience, I fulfil the requirements of a ‘qualified person’ for the purposes of the Instrument.

4. I have not visited the Nueva Recuperada property.

5. I am responsible for the preparation of the 1.4, 1.8, 12.2, 13, 17, 22.3.2, 25.4 and 26.4 sections of the Technical Report.

6. I am independent of the issuer as defined in section 1.5 of NI 43-101.

7. I have not had prior involvement with the property that is the subject of the Technical Report.

8. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with the foregoing instrument and form.

9. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all the scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated at Fleet, UK, April 4, 2023

Original document signed by

Adam Johnston, FAusIMM CP (Metallurgy)

Transmin Metallurgical Consultants

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