CINCO DE MAYO PROJECT
Mexico
Located in the prolific Chihuahua Trough CRD belt of northern Mexico, Cinco de Mayo comprise the Upper Manto deposit, a major carbonate replacement discovery, and the Pozo Seco molybdenum gold deposit a secondary asset four kilometres away.
OVERVIEW
Cinco de Mayo (“Cinco de Mayo” or the “Project”) is located in north central Chihuahua State, Mexico, approximately 190 km northwest of the state capital of Chihuahua City. The Project consists of 29 concessions totaling more than 25,000 hectares in the Municipio de Buenaventura. Apollo has an exploration, earn in and option agreement with Pan American Silver and its subsidiary, Minera Pozo Seco.
Cinco de Mayo’s primary asset is the Upper Manto deposit, a Pb Zn Ag (Au) carbonate replacement deposit (CRD) with a historical Inferred resource of 12.45 million tonnes grading 385 g/t silver equivalent (see Upper Manto section). Upper Manto shares many characteristics with Mexico’s largest CRDs and hosts the Pegaso Zone, a high-grade discovery below the historical resource that remains open along strike and at depth.
Four kilometres to the west, across a small mountain range, the Project also hosts the Pozo Seco molybdenum gold deposit, a smaller, shallower deposit with its own historical resource (see Pozo Seco section).
All future field work at Cinco de Mayo, including the drilling required to bring the Upper Manto resource current, is contingent on Apollo first securing social license with the local community.
PROJECT LOCATION AND ACCESS
Cinco de Mayo is located immediately west of the village of Benito Juárez, in the Municipio de Buenaventura, Chihuahua State. The Project is easily reached by driving north from Chihuahua City on Federal Highway 45D for approximately 92 km to Highway 7D, then northwest for a further 108 km to the town of Ricardo Flores Magón, then with local dirt roads providing access to the Property itself.
The nearest railway is 80 km to the east at Villa Ahumada, and international air service is available at both Chihuahua City and Ciudad Juárez. A high-tension power line crosses the southern part of the Property, roughly eight kilometres south of the Project, and Apollo expects any future development to draw on the Mexican national grid.
TENURE
Concessions
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Total Land Package
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The Project is held under an option and earn in agreement between Apollo and Pan American, through MAG’s subsidiary Minera Pozo Seco, S.A. de C.V. To exercise the option and acquire a 100% indirect interest, Apollo must first obtain the licensing and permits needed to access and conduct mining activities on the Project, then complete no less than 20,000 metres of exploration drilling within five years. On exercise, and subject to TSX Venture Exchange approval, Apollo will issue Pan American shares equal to 19.9% of Apollo’s then outstanding common shares. The concessions carry a 2.5% net smelter return royalty payable to Minera Cascabel.
Access to the Project has been restricted since 2012 due to community relations and social licensing matters with local stakeholders. Apollo is in ongoing discussions with the local community to restore access and secure the social license needed to resume exploration.
Upper Manto Deposit
The Upper Manto deposit is a textbook carbonate replacement deposit (CRD), consisting of two parallel, overlapping manto bodies known as the Jose Manto and the Bridge Zone. CRDs have contributed 40% of Mexico’s historic silver production, and the largest examples in the country, including Santa Eulalia, Naica and San Pedro Corralitos, sit along the same structural trend as Cinco de Mayo: the western bounding fault of the Chihuahua Trough.
Between 2006 and 2012, MAG Silver drilled 151 holes (97,682 m) on the Upper Manto. In 2012, RPA (now part of SLR Consulting) estimated a historical Inferred Mineral Resource of 12.45 million tonnes grading 132 g/t silver, 0.24 g/t gold, 2.86% lead and 6.47% zinc, for 385 g/t silver equivalent. Contained metal totals 52.7 million ounces of silver, 96,000 ounces of gold, 785 million pounds of lead and 1,777 million pounds of zinc (see cautionary notes section).
Pegaso Zone
A deeper hole drilled in 2012, CM-12-431, intersected 61.6 m of massive sulphide grading 89 g/t Ag, 0.77 g/t Au, 0.13% Cu, 2.1% Pb and 7.3% Zn, including a higher-grade interval of 31.9 m at 117 g/t Ag, 1.12 g/t Au, 0.16% Cu, 2.7% Pb and 9.3% Zn (see cautionary notes section). This intercept, named the Pegaso Zone, sits below the modelled resource and was never included in the 2012 estimate. Apollo considers it a high-priority target with the potential to add a significant, higher-grade zone at depth.
The historical Upper Manto estimate is not a current mineral resource. Please refer to the cautionary notes for further information regarding Upper Manto historical mineral resource estimates.
Pozo Seco Deposit
Pozo Seco is a molybdenum gold deposit located four kilometres west of Upper Manto, across the Sierra Santa Lucia. Mineralization is hosted in brecciated limestone along a two-kilometre strike length and sits closer to surface than Upper Manto, making it a candidate for open pit mining if advanced.
In 2010, RPA estimated a historical Indicated Mineral Resource of 29.1 million tonnes grading 0.147% molybdenum and 0.25 g/t gold, containing 94.0 million pounds of molybdenum and 230,000 ounces of gold, along with a historical Inferred Mineral Resource of 23.4 million tonnes grading 0.103% molybdenum and 0.17 g/t gold, containing 53.2 million pounds of molybdenum and 129,000 ounces of gold.
Apollo does not intend to complete additional work at Pozo Seco in the foreseeable future, with exploration and development activity mainly focused on Upper Manto.
The historical Pozo Seco estimate is not a current mineral resource. Please refer to the cautionary notes for further information regarding Pozo Seco historical mineral resource estimates.
GEOLOGY
Cinco de Mayo sits on the western margin of the Chihuahua Trough, a Jurassic marine basin that hosts several of Mexico’s largest CRDs. The Project area is dominated by the Sierra Santa Lucia, a northwest trending limestone range roughly 12 km long and 3.5 km wide. Cinco de Mayo Ridge is an elongate limestone ridge, 400 m wide by 2,000 m long off the east side of the Sierra Santa Lucia. The Sierra Santa
Lucia lies directly above the western bounding fault of the Chihuahua Trough and there is strong local evidence that this fault functioned subsequently as a major shear zone. There are numerous mineralization and alteration occurrences associated with this fault zone throughout the Sierra Santa Lucia and adjacent hills. CRDs form when metal rich magmas intrude structurally prepared carbonate host rocks, producing zoned systems that range from central skarns and chimneys near the source intrusion to flat lying, silver rich mantos at their outer edges. In the Upper Manto deposit, mineralization occurs as manto bodies, massive sulphide layers, garnet pyroxene skarn and calcite veining, a full range consistent with the CRD model and with the deposit’s position along the same trend as Santa Eulalia and Naica.
TECHNICAL REPORTS
Cautionary Notes
Upper Manto:
The Upper Manto Historical Mineral resource was estimated by RPA and used an NSR cut-off value of US$100 per tonne. NSR values calculated in US$ using factors of $0.60 per g/t Ag, $12.32 per g/t Au, $18.63 per % Pb and $14.83 per % Zn. These factors are based on metal prices of US$27.00/oz Ag, US$1,500/oz Au, $1.15/lb Pb, and $1.20/lb Zn and estimated recoveries and smelter terms. The resource has an effective date of September 1, 2012 (see MAG Silver press release dated July 18, 2012, for details).
Pozo Seco:
The Pozo Seco historical mineral resource was estimated by RPA. The cut-off grade of 0.022% Mo was estimated using a Mo price of US$17/lb and assumed operating costs and recoveries. The resource has an effective date of July 12, 2010. See Ross, D., 2010, Technical Report on the Pozo Seco Mineral Resource Estimate, Cinco de Mayo Project, Chihuahua, Mexico, NI 43-101 Report, September 10, 2010
The reader is cautioned not to treat these historical estimates or any part of it as a current mineral resource or reserve. T An independent Qualified Person has not completed sufficient work to classify this as a current mineral resource or reserve and therefore the Company is not treating this historical estimate as a current mineral resource or mineral reserve. The reliability of the historical estimate is considered reasonable and relevant to be included here in that it simply demonstrates the mineral potential of the Cinco de Mayo Project.
Qualified Person
The scientific and technical data on this page was reviewed and approved by Isabelle Lépine, M.Sc., P.Geo., Apollo’s Director, Mineral Resources. Ms. Lépine is a registered professional geologist in British Columbia and a Qualified Person as defined by National Instrument 43-101 and is not independent of the Company.