Mercedes is a 2000 tonnes per day underground gold-silver mine located in the State of Sonora in northern Mexico. The Mercedes property is located 250 kilometres northeast of Hermosillo and 300 kilometres south of Tucson, Arizona. Power supply to the mine is provided by a 65-kilometre, 115 kV power line, from the town of Magdalena de Kino.

Several exploration targets exist on the project that the Company has identified to extend the mine life. Prior to the testing along the several kilometers of the unexplored main northwest vein systems that the existing mines sit on, the focus of the current exploration program is to identify potential targets close to existing infrastructure on the property. The targets for 2017 include:

  1. Identifying parallel veins by drilling cross sections from surface and underground.
  2. Expansion drilling of the recently discovered steeply dipping vein in Diluvio as well as expanding Diluvio to the west.
  3. Testing several targets within and near mine underground drilling for prioritization and follow-up
  4. Remnant style definition drilling near historically mined veins showing potential to add significant mine life from overlooked areas.

In addition to this extensive exploration program, the focus since acquiring the mine has been and continues to be cost reduction and increasing efficiencies and through-put. Specifically, the primary mining method has been modified to overhand cut and fill from longhole mining. As well, a portion of the mobile fleet has been replaced with smaller equipment to reduce dilution, the salvaging and re-using materials in the mine, the shift to repairing more equipment on site as opposed to sending offsite, the reduction of the number of contracting firms employed, and improving ground support and paste backfill designs and quality control have all contributed to aid in improving the performance of Mercedes.

The Company’s 2018 production guidance for Mercedes is 70,000 to 75,000 ozs Au at cash cost of US$875 - $925/ oz Au and all-in sustaining costs of US$1000 - $1050/oz Au.

The geology of north-central Sonora displays a complex history of tectonic and magmatic activity. Gold-silver mineralization on the Mercedes Property is hosted within epithermal low sulphidation veins, stockworks, and breccia zones. Over 15 kilometres of veins have been identified within or marginal to the andesite-filled basins, which constitute the primary exploration target on the Project.