The La Colorada vein mine inferred mineral resources included in the Revised PEA are mainly the eastward extension of existing mineral reserves in the NC2 and Mariana veins of the operating mine, and in a parallel set of recently discovered veins and replacement-style mineralization to the south of the existing Candelaria mine development. The skarn deposit mineral resources are indicated in the blue shaded areas in the image below, and are mainly below the bottom of the La Colorada vein mine. Skarn mineralization is polymetallic sulfide mineralization varying from silver-rich to zinc rich.
The three skarn zones occur on east south-east trend, parallel to the overall trend of the La Colorada vein mine, extending from 1,800m elevation to below 800m elevation. Each of the zones measures approximately 300m to 500m wide along strike and 300m to 500 m thick across strike. The resource model for the skarn deposit was updated in the Company's mineral resources and mineral reserves as at June 30, 2024 and was used to define the mining studies, mine plans and production schedules used for the Revised PEA.
The updated mineral resource estimate for the skarn deposit is based on the same resource model as the previous estimate but updated using mining assumptions consistent with the long hole stoping mining method and for the cutoff grade assumptions in the Revised PEA. Some mineral resources were not incorporated into the current strategic plan for the La Colorada vein mine, as the mining sequence was optimized to prioritize the earlier extraction of higher-grade material to improve overall project economics. In addition, mineral resources for which infrastructure and development requirements for access is not supported at this stage of the project, were excluded from the strategic mine plan.
Sub-level open stope mining with paste backfill was selected as the preferred mining method for extracting mineral resources from the skarn deposit, prioritizing lower initial capital requirements, reduced geotechnical risk, and preservation of existing infrastructure, which allows for extended operation of the La Colorada vein mine and development of the recently identified vein extensions in the eastern portion of the La Colorada property. The skarn deposit will be mined using a transverse, long hole stoping sequence to sustain an average mining rate of approximately 13,000 tpd over a 37-year operating period following completion and commissioning of the La Colorada Skarn Project. Mined-out stopes will be backfilled with a tailings paste fill to maintain stability, allow safe extraction of adjacent stopes and maximize mining recovery.
Effective ventilation and heat management are key design considerations due to the region?s high geothermal gradient. The ventilation system is designed to deliver fresh chilled air through the production shaft and exhaust through two return air shafts, with a secondary circuit connected to the existing Guadalupe return air shaft and the initial 588 Level decline. A second return shaft will be completed during the production ramp-up period.
The ventilation design assumes a diesel mining fleet but retains flexibility to incorporate battery electric vehicles in the future. The La Colorada Skarn Project mine plan includes an estimated 6-year construction and development period during which approximately 30 km of lateral development and 5 km of vertical development will be completed to access and prepare for production from the high-grade portions of the skarn deposit. The Expanded La Colorada Mine incorporates high grade skarn mineral resources and La Colorada vein mine mineral reserves and resources, reflecting the potential contribution of the newly identified silver mineral resource in the eastern Candelaria area.
Approximately 155 million tonnes of skarn mineral resources are expected to be mined as part of the Revised PEA, with production ramping up to the nominal 13,000 tpd rate 2 years following completion of Project construction. The existing La Colorada vein mine is expected to continue operating at approximately 2 ktpd for the first 17 years, and then gradually decline with depletion expected around Year 20 after the La Colorada Skarn Project is constructed and commissioned. There are approximately 7.7 million tonnes of vein mine mineral resources not currently included in the La Colorada vein mine mineral reserves that are expected to be mined and contribute to the overall incremental project economics.
Considering the recent exploration success in the eastern portion of the property, there is potential to further extend both the vein and skarn mine production, as additional mineral resources are defined. In addition, the new infrastructure to access the skarn deposit is expected to provide improved access, ventilation and materials handling to the eastern portion of the vein mine and may create further opportunities to expand La Colorada vein mine production at higher silver grades. Metallurgical testing completed for the La Colorada Skarn Project demonstrates that the skarn mineralization responds well to conventional selective flotation mineral processing methods to produce high-quality silver-bearing lead and zinc mineral concentrates with high metal recoveries.
The La Colorada Skarn Project includes building a larger, 15,000 tpd processing plant adjacent to the existing 2,000 tpd La Colorada vein mine infrastructure, which will be decommissioned, allowing mineralized material from both deposits to be processed in a common processing facility and thereby reducing unit operating costs. The selective flotation circuit is expected to produce high-quality marketable concentrates grading approximately 61% lead with 1,800 g/t silver in the lead concentrate and 59% zinc with approximately 140 g/t silver in the zinc concentrate. Overall silver recovery is estimated at approximately 89.7% with the majority, 77.8%, reporting to the lead concentrate and approximately 11.9% reporting to the zinc concentrate.
Life-of-mine average recoveries are estimated to be approximately 93.4% for zinc and 87.7% for lead. The proposed processing facility is designed to treat 5.5 Mt of mineralized material per year (15,000 tpd) using a conventional comminution and selective flotation flowsheet. Production material will be ground in a SAG?ball mill?pebble crusher circuit followed by a staged selective flotation process to produce separate silver-bearing lead and zinc concentrates.
Chemical analysis of the concentrates indicates low levels of impurities and deleterious elements, consistent with products expected to be readily marketable. The remaining tailings from the Expanded La Colorada Mine that are not used for paste fill underground will be stored in a conventional tailings storage facility that will be developed in stages and eventually undergo a closure phase where the surface will be vegetated and stabilized into a long-term landform.
