Ownership: 60% Candelaria Mining Corp.

Land Package: 3,516.14 ha

Description: The Pinos District project is an advanced stage development project that consists of 29

Location: The Pinos Property is located in the municipality of Pinos, Zacatecas state in north-central Mexico near the town of Pinos, Zacatecas. The Property lies 405 air-kilometres northwest of Mexico City and lies 67 km west-northwest of the city of San Luis Potosí, 113 km east-southeast of the city of Zacatecas, and 85 km northeast of the city of Aguascalientes (Figure A).

The project plant and offices are located at ≈ 22° 18’ 45” N Latitude and 101° 35’ 26.5” W Longitude. The property lies in the Mexican Altiplano at elevations ranging from 2,360 to 2,800 m above sea level. Excellent location within the Fresnillo – Guanajuato Trend, current major mines of Minera Frisco, Fresnillo and Panamerican Silver.

FIgure A

Access: Access to the Pinos Project is by four-lane paved highway between the cities of Zacatecas and San Luis Potosi, followed by two-lane paved road to the western boundary of the town of Pinos, Zacatecas.  Pinos is the local source of skilled workers, water, and power for the project.

Climate: Sunny, semi-arid, and temperate with temperatures ranging from 12oC to 18oC.  Annual precipitation averages 480 mm.  In wet years precipitation has been as much as 730 mm.  Most rain falls between July and October.  Frost may occur in December-February with an occasional dusting of snow on the upper slopes northeast of the town of Pinos

Geology and Mineralization: Gold and silver mineralization occurs in epithermal quartz and quartz-calcite veins concentrated in two principal trends in the western part of the concession block: the roughly north-south Candelaria – San Ramón trend, and the north-northeast – south-southwest Cinco Estrellas – La Paz trend (Figure B).  Most of the development in the district has occurred on these trends.  Vein trends commonly have accompanying anastomosing stringers and veinlets. 

Veins are composite, consisting of silica-cemented breccia, silica, calcite, and inclusions of fault breccia. In detail, veins exhibit features typical of epithermal systems with splits on large and small scales.  Irregular bends and vein breccia are common. Vein textures include vugs, colliform banding, chalcedonic silica, cockaded banding, and bladed, boiling textures are frequently observed.

In the northern part of the project area, at the Tanous vein and shaft, veins cut rhyolite and trachyte of the Pinos Volcanic Complex.

Contacts between vein and wallrock are sharp with little or no alteration seen in the wallrock.  Zones of brecciation contain a network of smaller veinlets in a silicified groundmass adjacent to silica veins; these breccia zones are variably mineralized.  In the northern part of the area, intense hematite alteration is observed in wall rocks.  Hematization is likely related to the proximity to the Pinos volcanic complex.

Veins are continuous, range in thickness from 0.5 to 3.2 meters, with an average thickness of 1.2-1.5 m, dip steeply to the west, and occupy normal faults cutting the sedimentary host rocks.  Normal fault geometry is evidenced by local drag folding on beds.

Veins are hosted by Cretaceous carbonates and argillites.  Mapping by the Mexican Geological Service (Servicio Geológico Mexicano, 1999) identifies the host rocks as lower Cretaceous Taraises Fm.  McLeroy and others (1981) consider the host rocks to be the upper Cretaceous Cuesta del Cura Fm.  Branco geologists consider that the host rocks are lower Cretaceous (Albian stage) that are more related to the Guerrero Terrain than to the Valles-San Luis Potosí Platform to the east (H. González, 2014, personal communication).

Mine workings extend in most places to about 120m below the surface, with mineralization maintaining its values to that level.

Figure B

Recent exploration results:

The recently completed drilling campaign began in May 2016 and was carried out on one of the principal vein structures in the district, the Cinco Estrellas vein, over a strike length of 2.2 km.  Drilling tested down-dip extensions of known vein mineralization, below existing workings, as well as the possibility of previously unknown veins parallel to the principal vein.

Highlights of the 2016 Pinos drilling program.  Gold equivalent values are calculated on the basis of prices of US$1,266 per troy ounce gold and US$17.50 per tory ounce silver.

Status: Since acquiring a controlling interest in the Pinos District, Candelaria has completed sampling, completed a 4,500m drill program and is currently performing engineering studies for development of the underground workings and construction of a 200 tpd mill.