On September 29, 2020, Azucar announced the initial mineral resource estimate for the Norte Zone of the El Cobre Property.

The Norte Zone is one of five copper-gold porphyry zones identified to date within the El Cobre Project and has been the focus of the majority of exploration work conducted at the El Cobre Project since 2016.

Highlights:

• Indicated Mineral Resource of 1.2Moz AuEq (million ounce gold equivalent) using the base case NSR (net smelter return) cutoff of US$12/tonne, comprised of 47.2 million tonnes grading at 0.77 g/t AuEq (0.49 g/t Au, 0.21% Cu and 1.4 g/t Ag);
• Inferred Mineral Resource of 1.4 Moz AuEq using the base case NSR cutoff of US$12/tonne, comprised of 64.2 million tonnes grading at 0.66 g/t AuEq (0.42 g/t Au, 0.18% Cu and 1.3 g/t Ag);
• Amenable to an open pit mining method;
• Potential for resource expansion at depth within the Norte Zone as well as at other significant porphyry bodies identified across 5km strike length at the Project.

The Mineral Resource Estimate (MRE) and NSR cut-off sensitivities are presented in the table below with the base case cutoff at $US12.00 NSR highlighted. The favorable infrastructure at the El Cobre Project suggests that the threshold for economic mineralization will be low relative to many other deposits.The Norte Zone is approximately 0.6 km x 0.4 km along an E-W strike.  Sulphide mineralization, which extends up to 900 metres depth, consists of disseminated and vein-hosted chalcopyrite and trace bornite (Cu mineralization) exposed in surface outcrops and intersected in drill core.

Table. Indicated and Inferred Mineral Resource and Sensitivity Analysis

Notes for Mineral Resource Table:

1. The Mineral Resource Estimate was prepared by Sue Bird M.Sc., P.Eng. of Moose Mountain Technical Services, the QP, in accordance with NI 43-101, and with an effective date of August 3, 2020.
2. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
3. The NSR and AuEq values were calculated using US$1,500/oz gold, US$3.00/lb copper and US$18/oz silver, and using metallurgical recoveries of 88% for gold and copper, and 70% for silver.  Smelter terms and offsite costs have been applied as follows: gold payable = 94%, copper payable = 96.5%, silver payable = 90%, gold refining costs = US$5.00/oz, silver refining costs = US$0.50/oz, copper treatment and offsite (transportation) costs = US$0.30/lb. NSR royalty = 2.5%.  The final equations for NSR and AuEq are:
   NSR = Au*(US$44.04*88%) + Cu%*(US$2.53*88%) + Ag*(US$0.49*70%);
   AuEq = Au(g/t) +1.27*Cu(%) + 0.009*Ag(g/t).
4. The MRE has been confined by a “reasonable prospects of eventual economic extraction” pit using 45 degree slopes, with the pit size determined at a gold price of US$1,950/oz, a copper price of US$4.50/lb and a silver price of US$28.50/oz. The mining costs used are US$2.00/tonne. A process cost of US$12.00/tonne is used as the cutoff of processed material.
5. The specific gravity of the deposit is estimated to be 2.68
6. Numbers may not add due to rounding.

The Norte Zone MRE is classified in accordance with guidelines established by the Canadian Institute of Mining (CIM) “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines” dated November 29, 2019 and CIM “Definition Standards for Mineral Resources and Mineral Reserves” dated May 10, 2014.

How does this initial Norte Zone resource compare with our similar deposit types? The attached chart shows several such deposits, along with the Norte Zone. The bubble size represents the resource tonnage, and the gold and copper grades are shown on the x and y axes, respectively.

Source: USGS (2008) and company websites
Value/tonne lines use US$1500/oz Au and US$3.00/lb Cu, and assume 100% recoveries.

The drillhole database used to calculated the MRE is comprised of 45 exploration diamond drillholes completed between 2008 and 2019 totalling 28,448 metres, containing a total of 27,173.12m of drill core analyzed for gold and copper by fire assay and Inductively Coupled Plasma – Atomic Emission Spectroscopy (“ICP-AES”), with four acid digestion. Sample intervals within the mineralized domains ranged from 0.45m to 3.81m in length, with 98% of the intervals having a length of 3.0 metres or less. 

The Norte Zone 3D geological model created by Azucar integrates assay and geological data collected from diamond core drilling; surface geologic mapping; soil geochemical; and geophysical surveys. Based on these data, the Norte Zone is modelled as an east-west elongate 600 metre x 400 metre subvertical zone of porphyry copper-gold mineralization extending to a maximum depth of approximately 900 metres vertically below surface. Mineralization is constrained by 3D geological solids representing host diorite intrusive, and peripheral andesite and dacite tuff volcanic rocks. Length-weighted averaged composites of 3 metre core length, restricted to each rock type, were calculated and used for exploratory data analysis and resource estimation. Assays were capped by zone and domain based on cumulative probability plots to remove outliers. The modelled variograms from each domain were used for resource estimation.

A block model with a regularized cell size of 20 m by 20 m by 10 m was used to estimate grade for each metal using Ordinary Kriging (OK). The percentage of each block below the overburden surface and within each domain is used for interpolation and the resource calculations. A total of 489 density measurements have been collected at site. Based on this data, the specific gravity (sg) within the sulphide material is consistent with a mean value of 2.68. The final grade estimates are validated visually by comparing each block’s metal estimates to the raw downhole assay data and statistically by comparing the modelled grades to the de-clustered composite grades (NN model), by swath plots and by grade-tonnage curves.

For further information please review the Technical Report, dated November 13, 2020, and titled “NI 43-101 Technical Report Mineral Resource Estimate on the El Cobre Copper-Gold-Silver Property Veracruz State, Mexico”. The Technical Report is available on this website and under the Company’s profile on SEDAR (www.sedar.com). The Technical Report was authored by Kris Raffle, P.Geo. of APEX Geoscience Ltd., and Sue Bird, M.Sc., P.Eng. of Moose Mountain Technical Services both of whom act as independent consultants to the Company, and are Qualified Persons (QPs) as defined by National Instrument 43-101.