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Dolores is an open pit silver-gold mine located in the Sierra Madre mountain range in Chihuahua, Mexico, and was acquired in 2012 as part of Pan American’s acquisition of Minefinders Corporation Ltd. Silver and gold mineralization is present as structurally controlled, low to medium sulphidation epithermal veins, silica stock works, breccias, and replacements. Mining operations are carried out via a conventional truck and shovel open pit. Ore is treated by crushing, cyanide heap leaching, and precipitation of gold and silver from the cyanide solution in a Merrill-Crowe circuit to produce silver and gold doré from melting of the precipitate. The crushing plant has a nominal capacity of 16,200 tonnes per day.


Dolores produced 4.0 million ounces of silver in 2014, 14% more than in 2013, as a result of increased stacking rates and improvements to silver recoveries, which more than offset a decrease to average silver grades. Improved recoveries in 2014 were realized from the benefits of a multi-stage leach process, whereby solutions recovered from the leaching of ore stacked on pad 2 were further enriched by the leaching of newly stacked ore on pad 3. In addition, increased heap leach surface area on pad 3 enhanced recovery rates due to longer primary leach cycles.

Gold production rose slightly to 66,800 ounces in 2014 from 65,200 ounces in 2013, as higher throughput was partially offset by a 5% decrease in gold grades and recoveries.

Dolores’s cash costs per ounce were $12.94 in 2014, a significant increase from 2013’s cash costs of $7.47 due to a large inventory variation swing as ore stockpiles grew in 2013 and were reduced in 2014 on expected mine sequencing. In addition, gold by-product credits declined on lower realized prices.

Dolores’ 2014 all-in sustaining costs per silver ounce sold (“AISCSOS”) rose 12% to $27.02 due to higher production costs, including increases in net realizable value (“NRV”) adjustments, and lower by-product credits. The increase in AISCSOS was partially offset by larger quantities of payable silver ounces sold, as well as reductions in sustaining capital and exploration expenses.


Dolores’ 2015 silver production is expected to increase to between 4.00 million and 4.15 million ounces, from 3.98 million in 2014. Stacking rates are expected to be largely similar this year; however, silver production is forecast to rise as a result of higher silver grades, partially offset by an expected in-heap inventory build-up. Similarly, gold grades are expected to improve significantly, but are also expected to be partially offset by in-heap inventory build-up, which is forecast to result in gold production of between 75,000 ounces and 80,000 ounces, up from 66,800 ounces produced in 2014.

Cash costs per silver ounce are expected to decrease from $12.94 per silver ounce in 2014 to between $8.50 and $10.00 per ounce in 2015, due to higher silver and gold production, in addition to the continuation of the downward trend in certain costs associated with lower oil prices and lower demand for certain consumables, as well as a weaker Mexican Peso.

Dolores’ 2015 sustaining capital is expected to rise from $27.6 million spent in 2014 to between $30.0 million and $35.0 million, which will be spent primarily on pre-stripping activities, mining equipment rehabilitation and the installation of a contingent process solution treatment plant to address unexpectedly large precipitation and/or power outage events.

In 2015, AISCSOS at Dolores is expected to decline to between $17.00 and $18.50 per ounce from $27.02 per ounce in 2014, mainly on the expectation that we will not incur NRV adjustments on inventories in 2015.

Project capital expenditures relating primarily to a new power line installation and process plant optimization projects are expected to require between $15.0 million and $17.0 million in 2015.


On May 11, 2015, the Company announced that its Board of Directors approved the investment of $112.4 million required to expand the Dolores mine by adding a pulp agglomeration circuit to improve silver and gold recoveries, as well as by developing an underground mine to extract mineral resources that exist beneath and to the south of the ultimate open pit (the “Project”).

In its news release dated June 23, 2014, Pan American announced positive results of a preliminary economic assessment (“PEA”), which indicated that the Project had the potential to generate excellent after-tax economic returns at metal prices of $22 per silver ounce and $1,300 per gold ounce. A decision on whether or not to proceed with the Project was deferred at that time, in order to further de-risk the project. The Company has refined the metallurgical, capital and operating cost estimates, and gained further confidence in the performance of the mine’s mineral resource model.

The economic model for the Project has been updated to recognize current economic conditions, including lower costs for reagents and diesel and favorable movements in the Mexican Peso vs US Dollar exchange rate, partially offset by modestly increased capital cost estimates for the construction of the pulp agglomeration plant, the underground mine and additional leach pad capacity.

Expansion Project – Scope

The scope of the Project remains virtually unchanged from the PEA dated effective May 31, 2014, with construction of a 5,600 tpd pulp agglomeration plant estimated over a period of approximately 18 months and development of a 1,500 tpd underground mine over 24 months. Upon Project completion, Dolores’ total heap ore placement rate will increase from today’s 16,500 tpd to approximately 20,000 tpd, in time to capitalize and improve overall recovery rates from the higher grade material that exists deeper in the deposit and which are scheduled to be mined starting in 2017 as pre-stripping waste mining continues to advance at a satisfactory pace. The higher grade material from the open pit and underground will be ground and cement agglomerated with the crushed lower grade portion of the open pit mined material and together conveyed to the heap leach pad for leaching. The Project contemplates commissioning the pulp agglomeration plant at the beginning of 2017.
Underground development of the mine access ramp has already started and will continue through 2017 to access the high grade material, with underground production expected to reach capacity of 1,500 tpd in 2018. A mechanized and highly-efficient open stoping mining method is planned in order to take advantage of the anticipated good ground conditions, based on the geotechnical studies conducted on our available drill core in the area of the mineralized zones.

The pulp agglomeration plant will allow the Company to harvest increased silver and gold recoveries of 18% and 13%, respectively for the high-grade material fed to the pulp agglomeration plant. In addition the time required for ultimate silver recovery will be reduced from 6 years to 2 years and the time for ultimate gold recovery will be reduced from 3 years to 1 year for all material processed through the pulp agglomeration plant.

After Project completion, annual silver production will increase approximately 40% to 6.3 million ounces and gold production will rise approximately 52% to 205,700 ounces for the first five years. Life of mine, the Project will boost silver production by approximately 8.9 million ounces and gold production by 257,400 ounces.

Updated Operating and Capital Costs

Cost savings currently being realized and the increased production rates from the addition of the pulp agglomeration plant and underground mine will significantly reduce operating unit costs. These unit cost savings will drive cash costs per ounce down 63% to a negative $(11.28) per silver ounce, net of by-product gold credits for the first five years of operation, and 13% to a negative $(8.46) over the life of the project when compared to continuing with the existing open pit and heap leach circuit.

The new initial capital investment has been estimated at $112.4 million, $7.9 million higher than the original estimate disclosed in the PEA, primarily due to some necessary scope additions. The pulp agglomeration plant will require an investment of $73 million, while underground mine development and construction is estimated to be $39.4 million.

Sustaining capital costs over life-of-mine are estimated at $173.9 million, $3.6 million higher than the original estimate disclosed in the PEA, primarily due to anticipated increases in heap leach pad construction cost estimates, offset by reduced underground tonnages (due to lower metal prices and a deeper ultimate pit design). The differential sustaining capital over the life of the mine is now $42.5 million versus the differential capital in the PEA of $51.5 million.

Economic Evaluation

The Project’s estimated life-of-mine internal rate of return (“IRR”), NPV and payback period at the different price scenarios used is detailed in the following table:

Scenario IRR NPV @ 8% Payback Period
Low Case (Ag $17.00/oz, Au $1,150/oz) 26% $28 million 26 months
Low Case (Ag $17.00/oz, Au $1,150/oz) 35% $46 million 23 months
High Case (Ag $20.00/oz, Au $1,350/oz 43% $65 million 21 months

The Company believes that Dolores’ expansion provides a healthy IRR at the Company’s current long-term reserve prices and can be entirely financed using its current balance sheet. The Project is considered relatively low-risk given it is an organic growth project of a stable operating asset in Mexico, at a time when industry costs are trending downward, particularly in engineering, equipment procurement and construction contracting for the execution of the Project.

Technical information relating to the Project has been reviewed and approved by Michael Steinmann, P.Geo., President, Martin Wafforn, P.Eng., VP Technical Services, and Americo Delgado, P.Eng., Director Metallurgy, who are Qualified Persons for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (”NI 43-101”). For further technical information relating to the Project, please refer the NI 43-101 technical report entitled “Technical Report for the Dolores Property, Chihuahua, Mexico – Preliminary Economic Assessment of a Pulp Agglomeration Treatment and Underground Option” with an effective date of May 31, 2014, filed on SEDAR at

(1) The results of the PEA are preliminary in nature, in that it includes inferred mineral resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves have no demonstrated economic viability.

Mineral Reserves and Resources

Management estimates that the Proven and Probable mineral reserves for the Dolores mine, as at December 31, 2014, are as follows:

Dolores Mineral Reserves 1, 2

Reserve Category Tonnes (Mt) Grams of Silver per tonne Grams of Gold per tonne
Proven 28.1 32 0.91
Probable 31.8 35 0.88
TOTAL 59.9 33 0.89


1. Estimated using a price of $18.50 per ounce of silver and $1,250 per ounce of gold.

2. Mineral Reserve estimates for Dolores were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., and Martin G. Wafforn, P.Eng., as Qualified Persons as that term is defined in NI 43-101.


Management estimates that mineral resources at Dolores, as at December 31, 2014, are as follows:

Dolores Mineral Resources 1, 2

Resource Category Tonnes (Mt) Grams of Silver per tonne Grams of Gold per tonne
Measured 13.4 17 0.27
Indicated 21.9 26 0.63
Inferred 4.9 28 1.05


1. These mineral resources are in addition to Dolores mineral reserves. Estimated resources are constrained within an optimized open pit shell and mineable underground shapes using metal prices of $30 per ounce of silver and $1,400 per ounce gold.

2. Mineral resource estimates for Dolores were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., and Martin G. Wafforn, P.Eng., as Qualified Persons as that term is defined in NI 43-101.


Mineral reserve estimates are based on a number of assumptions that include metallurgical, taxation and economic parameters. Increasing costs or increasing taxation could have a negative impact on the estimation of mineral reserves. There are currently no known factors that may have a material negative impact on the estimate of mineral reserves or mineral resources at Dolores.

Technical Report
Name Dolores
Location Chihuahua State, Mexico
Mine Type Open Pit
Ownership 100%
Products Silver and gold doré
Capacity 16,200 tpd
Deposit Type Epithermal veins, stockworks, breccias, and replacements