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Guanaceví //

Guanaceví is located 260 kilometres northwest of the city of Durango, in Mexico’s fifth-largest silver mining district, and the mining properties cover approximately 4,200 hectares. Guanaceví is accessible by state highway and municipal roads, and features good local infrastructure, including power from the state power grid and skilled local labour readily available in the nearby town of Guanaceví. The mining district is characterized by multiple low-sulfidation epithermal veins, typically thousands of metres long, up to 700 metres deep, ranging from one to five metres thick.

Since acquiring the property, we have discovered seven high-grade silver- gold ore bodies, developed several new mines, and modernized and expanded the 1,200 tpd processing plant that produces doré bars. The mine provides steady employment for 500 people and engages 482 contractors.

In 2018, silver production was 1,963,773 oz and gold production was 5,224 oz for total silver equivalent production of 2.4 million oz (using a 80:1 silver: gold ratio). During the year, Guanaceví continued to face operational challenges and fell short of guidance. The remaining reserves at the two operating mines, Porvenir Norte and Santa Cruz, are now deeper, narrower and lower grade compared to prior years, resulting in lower production from and higher costs than anticipated. The permitting and development of two new shallower, wider, higher grade orebodies, Milache and Santa Cruz Sur (SCS), was delayed but finally commenced in H2, 2018. At year-end, the Milache orebody had three underground levels open, and producing lower grade development ore with grades increasing with depth as modeled. A new ramp was collared late in the year to develop the SCS orebody. Management expects both new orebodies will reach their planned production rates during 2019 and will provide sufficient ore and flexibility to meet the designed capacity of the plant.

Guanacevi 2018 Results

2. 2019 silver equivalents are converted using an 80:1 gold: silver ratio. 2018 silver equivalents have been reinstated from a 75:1 gold: silver ratio to an 80:1 gold: silver ratio.
3. Cash costs per ounce and AISC per ounce are examples of Non-IFRS measures. See disclosure in quarterly MD&A for information on “Non-GAAP” measures found on the company website. Costs are presented in US $, net of by-product credits.
4. All-in sustaining costs (AISC) include mining, processing, direct overhead, corporate G&A, on-site exploration, share-based compensation, reclamation, and sustaining capital net of gold credits.
5. For full details, refer to the complete Reserves and Resources table provided on our website.